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Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No.

L-27952 February 15, 1982 TESTATE ESTATE OF JOSE EUGENIO RAMIREZ, MARIA LUISA PALACIOS, Administratrix, petitioner-appellee, vs. MARCELLE D. VDA. DE RAMIREZ, ET AL., oppositors, JORGE and ROBERTO RAMIREZ, legatees, oppositors- appellants.

Cuenta de Ahorros Philippine Trust

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Co................................................................................ .............. 2,350.73 TOTAL......................................... ..................... P512,976.97 MENOS: Deuda al Banco de las Islas Filipinas, garantizada con prenda de las acciones de La Carlota ......... P 5,000,00

ABAD SANTOS, J.: The main issue in this appeal is the manner of partitioning the testate estate of Jose Eugenio Ramirez among the principal beneficiaries, namely: his widow Marcelle Demoron de Ramirez; his two grandnephews Roberto and Jorge Ramirez; and his companion Wanda de Wrobleski. The task is not trouble-free because the widow Marcelle is a French who lives in Paris, while the companion Wanda is an Austrian who lives in Spain. Moreover, the testator provided for substitutions. Jose Eugenio Ramirez, a Filipino national, died in Spain on December 11, 1964, with only his widow as compulsory heir. His will was admitted to probate by the Court of First Instance of Manila, Branch X, on July 27, 1965. Maria Luisa Palacios was appointed administratrix of the estate. In due time she submitted an inventory of the estate as follows: INVENTARIO Una sexta parte (1/6) proindiviso de un te rreno, con sus mejoras y edificaciones, situadoen la Escolta, Manila............................................................. P500,000.00 Una sexta parte (1/6) proindiviso de dos parcelas de terreno Rizal................... 658.34 situadas en Antipolo, VALOR LIQUIDO..................................... ...... P507,976.97 The testamentary dispositions are as follows: A.En nuda propiedad, a D. Roberto y D. Jorge Ramirez, ambas menores de edad, residentes en Manila, I.F., calle 'Alright, No. 1818, Malate, hijos de su sobrino D. Jose Ma. Ramirez, con sustitucion vulgar a favor de sus respectivos descendientes, y, en su defecto, con sustitucion vulgar reciprocal entre ambos. El precedente legado en nuda propiedad de la participacion indivisa de la finca Santa Cruz Building, lo ordena el testador a favor de los legatarios nombrados, en atencion a que dicha propiedad fue creacion del querido padre del otorgante y por ser aquellos continuadores del apellido Ramirez, B.Y en usufructo a saber: a. En cuanto a una tercera parte, a favor de la esposa del testador, Da. Marcelle Ramirez, domiciliada en IE PECO, calle del General Gallieni No. 33, Seine Francia, con sustitucion vulgar u fideicomisaria a favor de Da. Wanda de Wrobleski, de Palma de Mallorca, Son Rapina Avenida de los Reyes 13, b.Y en cuanto a las dos terceras partes restantes, a favor de la nombrada Da. Wanda de Nrobleski con sustitucion vulgar v fideicomisaria a saber: En cuanto a la mitad de dichas dos terceras partes, a favor de D. Juan Pablo Jankowski, de Son Rapina Palma de Mallorca; y encuanto a la mitad restante, a favor de su sobrino, D. Horace V. Ramirez, San Luis Building, Florida St. Ermita, Manila, I.F. A pesar de las sustituciones fideiconiisarias precedentemente ordinadas, las usufiructuarias nombradas conjuntamente con los nudo propietarios, podran en cualquier memento vender a tercero los bienes objeto delegado, sin intervencion alguna de los titulares fideicomisaarios. On June 23, 1966, the administratrix submitted a project of partition as follows: the property of the deceased is to be divided into two parts. One part shall go to the widow 'en pleno dominio" in satisfaction of her legitime; the other part or "free portion" shall go to Jorge and Roberto Ramirez "en nuda propriedad." Furthermore, one third (1/3) of the free

Cuatrocientos noventa y uno (491) acciones de la 'Central Azucarera de la Carlota a P17.00 por accion ................................................................................8,3 47.00 Diez mil ochocientos (10,806) acciones de la 'Central Luzon Milling Co.', disuelta y en liquidacion a P0.15 por ..............................................1,620.90 accion seize

portion is charged with the widow's usufruct and the remaining two-thirds (2/3) with a usufruct in favor of Wanda. Jorge and Roberto opposed the project of partition on the grounds: (a) that the provisions for vulgar substitution in favor of Wanda de Wrobleski with respect to the widow's usufruct and in favor of Juan Pablo Jankowski and Horacio V. Ramirez, with respect to Wanda's usufruct are invalid because the first heirs Marcelle and Wanda) survived the testator; (b) that the provisions for fideicommissary substitutions are also invalid because the first heirs are not related to the second heirs or substitutes within the first degree, as provided in Article 863 of the Civil Code; (c) that the grant of a usufruct over real property in the Philippines in favor of Wanda Wrobleski, who is an alien, violates Section 5, Article III of the Philippine Constitution; and that (d) the proposed partition of the testator's interest in the Santa Cruz (Escolta) Building between the widow Marcelle and the appellants, violates the testator's express win to give this property to them Nonetheless, the lower court approved the project of partition in its order dated May 3, 1967. It is this order which Jorge and Roberto have appealed to this Court. 1. The widow's legitime. The appellant's do not question the legality of giving Marcelle one-half of the estate in full ownership. They admit that the testator's dispositions impaired his widow's legitime. Indeed, under Art. 900 of the Civil Code "If the only survivor is the widow or widower, she or he shall be entitled to one-half of the hereditary estate." And since Marcelle alone survived the deceased, she is entitled to one-half of his estate over which he could impose no burden, encumbrance, condition or substitution of any kind whatsoever. (Art. 904, par. 2, Civil Code.) It is the one-third usufruct over the free portion which the appellants question and justifiably so. It appears that the court a quo approved the usufruct in favor of Marcelle because the testament provides for a usufruct in her favor of one-third of the estate. The court a quo erred for Marcelle who is entitled to one-half of the estate "en pleno dominio" as her legitime and which is more than what she is given under the will is not entitled to have any additional share in the estate. To give Marcelle more than her legitime will run counter to the testator's intention for as stated above his dispositions even impaired her legitime and tended to favor Wanda. 2. The substitutions. It may be useful to recall that "Substitution is the appoint- judgment of another heir so that he may enter into the inheritance in default of the heir originally instituted." (Art. 857, Civil Code. And that there are several kinds of substitutions, namely: simple or common, brief or compendious, reciprocal, and fideicommissary (Art. 858, Civil Code.) According to Tolentino, "Although the Code enumerates four classes, there are really only two principal classes of substitutions: the simple and the fideicommissary. The others are merely variations of these two." (111 Civil Code, p. 185 [1973].) The simple or vulgar is that provided in Art. 859 of the Civil Code which reads: ART. 859. The testator may designate one or more persons to substitute the heir or heirs instituted in case such heir or heirs should die before him, or should not wish, or should be incapacitated to accept the inheritance. A simple substitution, without a statement of the cases to which it refers, shall comprise the three mentioned in the preceding paragraph, unless the testator has otherwise provided. The fideicommissary substitution is described in the Civil Code as follows:

with the obligation to preserve and to transmit to a second heir the whole or part of inheritance, shall be valid and shall take effect, provided such substitution does not go beyond one degree from the heir originally instituted, and provided further that the fiduciary or first heir and the second heir are living at time of the death of the testator. It will be noted that the testator provided for a vulgar substitution in respect of the legacies of Roberto and Jorge Ramirez, the appellants, thus: con sustitucion vulgar a favor de sus respectivos descendientes, y, en su defecto, con substitution vulgar reciprocal entre ambos. The appellants do not question the legality of the substitution so provided. The appellants question the sustitucion vulgar y fideicomisaria a favor de Da. Wanda de Wrobleski" in connection with the one-third usufruct over the estate given to the widow Marcelle However, this question has become moot because as We have ruled above, the widow is not entitled to any usufruct. The appellants also question the sustitucion vulgar y fideicomisaria in connection with Wanda's usufruct over two thirds of the estate in favor of Juan Pablo Jankowski and Horace v. Ramirez. They allege that the substitution in its vulgar aspect as void because Wanda survived the testator or stated differently because she did not predecease the testator. But dying before the testator is not the only case for vulgar substitution for it also includes refusal or incapacity to accept the inheritance as provided in Art. 859 of the Civil Code, supra. Hence, the vulgar substitution is valid. As regards the substitution in its fideicommissary aspect, the appellants are correct in their claim that it is void for the following reasons: (a) The substitutes (Juan Pablo Jankowski and Horace V. Ramirez) are not related to Wanda, the heir originally instituted. Art. 863 of the Civil Code validates a fideicommissary substitution "provided such substitution does not go beyond one degree from the heir originally instituted." What is meant by "one degree" from the first heir is explained by Tolentino as follows: Scaevola Maura, and Traviesas construe "degree" as designation, substitution, or transmission. The Supreme Court of Spain has decidedly adopted this construction. From this point of view, there can be only one tranmission or substitution, and the substitute need not be related to the first heir. Manresa, Morell and Sanchez Roman, however, construe the word "degree" as generation, and the present Code has obviously followed this interpretation. by providing that the substitution shall not go beyond one degree "from the heir originally instituted." The Code thus clearly indicates that the second heir must be related to and be one generation from the first heir. From this, it follows that the fideicommissary can only be either a child or a parent of the first heir. These are the only relatives who are one generation or degree from the fiduciary (Op. cit., pp. 193-194.) (b) There is no absolute duty imposed on Wanda to transmit the usufruct to the substitutes as required by Arts. 865 and 867 of the Civil Code. In fact, the appellee admits "that the testator contradicts the establishment of a fideicommissary substitution when he permits the properties subject of the usufruct to be sold upon mutual agreement of the usufructuaries and the naked owners." (Brief, p. 26.) 3. The usufruct of Wanda.

ART. 863. A fideicommissary substitution by virtue of which the fiduciary or first heir instituted is entrusted

The appellants claim that the usufruct over real properties of the estate in favor of Wanda is void because it violates the constitutional prohibition against the acquisition of lands by aliens. The 1935 Constitution which is controlling provides as follows: SEC. 5. Save in cases of hereditary succession, no private agricultural land shall be transferred or assigned except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain in the Philippines. (Art. XIII.) The court a quo upheld the validity of the usufruct given to Wanda on the ground that the Constitution covers not only succession by operation of law but also testamentary succession. We are of the opinion that the Constitutional provision which enables aliens to acquire private lands does not extend to testamentary succession for otherwise the prohibition will be for naught and meaningless. Any alien would be able to circumvent the prohibition by paying money to a Philippine landowner in exchange for a devise of a piece of land. This opinion notwithstanding, We uphold the usufruct in favor of Wanda because a usufruct, albeit a real right, does not vest title to the land in the usufructuary and it is the vesting of title to land in favor of aliens which is proscribed by the Constitution. IN VIEW OF THE FOREGOING, the estate of Jose Eugenio Ramirez is hereby ordered distributed as follows: One-half (1/2) thereof to his widow as her legitime; One-half (1/2) thereof which is the free portion to Roberto and Jorge Ramirez in naked ownership and the usufruct to Wanda de Wrobleski with a simple substitution in favor of Juan Pablo Jankowski and Horace V. Ramirez. The distribution herein ordered supersedes that of the court a quo. No special pronouncement as to costs. SO ORDERED. Republic SUPREME Manila EN BANC G.R. No. L-8327 December 14, 1955 of the Philippines COURT

"Subsequently, on May 26, 1952, the donor executed another notarial instrument entitled "Revocacion de Donacion Mortis Causa" (Exhibit B) purporting to set aside the preceding conveyance; and on August 26, 1952, she brought action in the Court of First Instance to recover the land conveyed, on the ground (1) that the donation being mortis causa, it had been lawfully revoked by the donor; and (2) even it if were a donation inter vivos, the same was invalidated because (a) it was not properly accepted; (b) because the donor did not reserve sufficient property for her own maintenance, and (c) because the donee was guilty of ingratitute, for having refused to support the donor. Issues having been joined, and trial had, the Court of First Instance denied the recovery sought, and Antonina Cuevas thereupon appealed. The Court of Appeals forwarded the case to this Court because, the case having been submitted on a stipulation of facts, the appellant raised only questions of law. The first issue tendered converns the true nature of the deed "Exhibit A"; whether it embodies a donation inter vivos, or a disposition of property mortis causa revocable freely by the transferor at any time before death. 1 It has been rules that neither the designation mortis causa, nor the provision that a donation is "to take effect at the death of the donor", is a controlling criterion in defining the true nature of donations (Laureta vs. Mata, 44 Phil., 668; Concepcion vs. Concepcion, 91 Phil., 823). Hence, the crux of the controversy revolves around the following provisions of the deed of donation: Dapat maalaman ni Crispulo Cuevas na samantalang ako ay nabubuhay, and lupa na ipinagkakaloob ko sa kaniya ay ako pa rin and patuloy na mamomosecion, makapagparatrabaho, makikinabang at ang iba pang karapatan sa pagmamayari ay sa akin pa rin hanggang hindo ko binabawian ny buhay ng Maykapal at ito naman ay hindi ko nga iya-alis pagkat kung ako ay mamatay na ay inilalaan ko sa kaniya. There is an apparent conflict in the expression above quoted, in that the donor reserves to herself "the right of possession, cultivation, harvesting and other rights and attributes of ownership while I am not deprived of life by the Almighty"; but right after, the same donor states that she "will not takle away" (the property) "because I reserve it for him (the donee) when I die." The question to be decided is whetehr the donor intended to part with the title to the property immediately upon the execution of the deed, or only later, when she had died. If the first, the donation is operative inter vivos; if the second, we would be confronted with a disposition mortis causa, void from the beginning because the formalities of testaments were not observed (new Civil Code, Arts. 728 and 828; heirs of Bonsato vs. Court of Appeals, 250 Off. Gaz. (8), p. 3568; Tuason vs. Posadas, 54 Phil., 289; Sent. Trib. Sup. of Spain, 8 July 1943). We agree with the Court below that the decisive proof that the present donation is operative inter vivor lies in the final phrase to the effect that the donor will not dispose or take away ("hindi ko nga iya-alis" in the original) the land "because I am reserving it to him upon my death." By these words the donor expressly renounced the right to freely dispose of the property in favor of another (a right essential to full ownership) and manifested the irrevocability of the conveyance of the naked title to the property in favor of the donee. As stated in our decision in Bonsato vs. Court of Appeals, ante, such irrevocability is characteristic of donations inter vivos, because it is incompatible with the idea of a disposition post mortem. Witness article 828 of the New Civil Code, that provides: ART. 828. A will may be revoked by the testator at any time before his death. Any waiver or restriction of this right is void. It is apparent from the entire context of the deed of donation that the donor intended that she should retain the entire beneficial ownership during her lifetime, but that the naked title should irrevocably pass to the donee. It is only thus that all the expressions heretofore discussed can be

ANTONINA CUEVAS, plaintiff-appellant, vs. CRISPULO CUEVAS, defendant-appellee. Pedro D. Maldia Teodoro P. Santiago for appellee. for appellant.

REYES, J. B. L., J.: On September 18, 1950, Antonina Cuevas executed a notarized conveyance entitled "Donacin Mortis Causa," ceding to her nephew Crispulo Cuevas the northern half of a parcel of unregistered land in barrio Sinasajan, municipality of Penaranda, Province of Nueva Ecija (Exhibit A). In the same instrument appears the acceptance of Crispulo Cuevas.

given full effect; and when the donor stated that she would continue to retain the "possession, cultivation, harvesting and all other rights and attributes of ownership," she meant only the dominium utile, not the full ownership. As the Court below correctly observed, the words "rights and attributes of ownership" should be construed ejusdem generis with the preceding rights of "possession, cultivation and harvesting" expressly enumerated in the deed. Had the donor meant to retain full or absolute ownership she had no need to specify possession, cultivation and harvesting, since all these rights are embodied in full or absolute ownership; nor would she then have excluded the right of free disposition from the "rights and attributes of ownership" that she reserved for herself.lawphi1.net Hence, the Court below rightly concluded that the deed Exhibit A was a valid donation inter vivos, with reservation of beneficial title during the lifetime of the donor. We may add that it is highly desirable that all those who are called to prepare or notarize deeds of donation should call the attention of the donors to the necessity of clearly specifying whether, notwithstanding the donation, they wish to retain the right to control and dispose at will of the property before their death, without need of the consent or intervention of the beneficiary, since the express reservation of such right would be conclusive indication that the liberality is to exist only at the donor's death, and therefore, the formalities of testaments should be observed; while, a converso, the express waiver of the right of free disposition would place the inter vivos character of the donation beyond dispute (Heirs of Bonsato vs. Court of Appeals, 50 Off. Gaz. (8), p. 3568). The argument that there was no sufficient acceptance, because the deed "merely recites that (1) the donee has duly read all the contents of this donation; (2) that he 'shall fully respect all its terms'; and (3) that 'for the act of benevolence' he is expressing his gratitude" but there is no show of acceptance (Appellant's brief, p. 7), is without basis. To respect the terms of the donation, and at the same time express gratitude for the donor's benevolence, constitutes sufficient acceptance, If the donee did not accept, what had he to be grateful about? We are no longer under the formulary system of the Roman law, when specific expressions had to be used under paid of nullity. Also unmeritoriious is the contention that the donation is void because the donor failed to reserve enough for ther own support. As we have seen, she expressly reserved to herself all the benefits derivable from the donated property as long as she lived. During that time, she suffered no diminution of income. If that was not enough to support her, the deficiency was not dur to the donation. Finally, the donee is not rightfully chargeaboe with ingratitude, because it was expressly stipulated that the donee had a total income of only P30 a month, out of which he had to support himself, his wife and his two children. Evidently his means did not allow him to add the donor's support to his own burdens. Wherefore, the decision appealed from is affirmed. No costs in this instance, appellant having obtained leave to litigate as a pauper. So ordered. Paras, C. J., Bengzon, Padilla, Montemayor, Reyes, A., Jugo, Bautista Angelo, Labrador, and Concepcion, JJ., concur. Republic SUPREME Manila THIRD DIVISION G.R. No. L-44628 August 27, 1987 CONSUELO SEVILLE JUTIC, JUAN JUTIC, CELESTINO SEVILLE, TIBURCIO SEVILLE, RAVELLO SEVILLE, SONITA SEVILLE, LUCY SEVILLE, EPIFANIA SEVILLE, NARACY SEVILLE, EMMANUEL SEVILLE, ORLANDO MANICAN, and PACIFICO MANICAN, petitioners, vs. of the Philippines COURT

THE COURT OF APPEALS, MANILA, VICENTE SULLAN, TRINIDAD SULLAN, TERESITA SULLAN, ULYSSES SULLAN, ALEJANDRINO SULLAN, BUENAVENTURA SEVILLE, and ZOILO SEVILLE, respondents.

GUTIERREZ, JR., J.: This is a petition to review on appeal by certiorari the decision of the Court of Appeals which affirmed the decision of the then Court of First Instance of Davao del Norte, Branch 9. The dispositive portion of the decision reads: WHEREFORE, the decision appealed from is hereby affirmed and this case is remanded to the court a quo for implementation of, and compliance with Rule 69, Revised Rules of Court, and to partition the property in accordance with the rights as herein determined, defined and declared, with costs against defendants-appellants. (p. 48, Petitioner's brief) Vicente Sullan and the other respondents filed a complaint with the then Court of First Instance at Tagum, Davao del Norte against the petitioners for partition and accounting of the properties of Arsenio Seville, alleging they are heirs of the decedent. The petitioners, averred the following in their answer: xxx xxx xxx 7. That the defendants are the owners of Lots 170 and 172 and improvements thereon, containing an area of 11.9499 and 9.6862 hectares, respectively, both covered by Original Certificates of Title No. P15964 . 8. That defendants are the surviving heirs of Melquiades Seville. Melquiades Seville in turn is the brother of the deceased Arsenio Seville. Arsenio Seville died ahead. Melquiades Seville died later. During the lifetime of Arsenio Seville he executed an instrument ... . xxx xxx xxx 9. That Melquiades Seville and his family have been in actual possession, occupation and cultivation of Lots Nos. 170 and 172, Cad-283, since 1954 continuously and peacefully in concept of owner, up to the time of his death, and had introduced valuable improvements thereon. After his demise his heirs, the defendants herein, succeeded to the occupation and possession of the said parcel of land and improvements with the knowledge of the plaintiffs and with the acquiescence of Arsenio Seville during his lifetime. 10. That even during the lifetime of the deceased Arsenio Seville it had been his desire, intention and his wish that Lots 170 and 172 shall be owned by Melquiades Seville, the father of the herein defendants. 11. That the ownership over the said Lots l7O and l72, Cad-283 and improvements had been vested, transmitted, conveyed and/or descended unto the defendants by virtue of Exhibit "1" of this answer and through continuous possession and cultivation of the land since 1954 continuously up to the present, in

concept of owner as alleged under paragraph "9" hereof. 12. That by reason of this unfounded action by the plaintiffs, defendants have been compelled to engage services of counsel for which they bound themselves to pay P3,000.00 as attomey's fees. 13. That Melquiades Seville during his lifetime had taken legal steps to perfect titles to these parcels of land in his name." (pp. 11, 14-15, Record on Appeal). On September 19, 1972, the trial court rendered judgment in favor of the private respondents. The petitioners appealed to the Court of Appeals. The Court of Appeals affirmed the trial court's decision. Involved in this appeal is the issue of whether or not there was a valid donation from Arsenio Seville to Melquiades Seville. The facts of the case are briefly stated as follows During his lifetime, Arsenio Seville owned (1) a parcel of agricultural land described as Lot No. 170 situated at Anquibit, Asuncion (Saug), Davao del Norte containing an area of 11-9499 hectares, more or less; (2) a parcel of agricultural land described as Lot No. 172 likewise situated at Anquibit, Asuncion (Saug), Davao del Norte with an area of 9.6862 hectares; (3) a residential house erected on Lot 172; (4) rice and corn mills and their respective paraphernalia valued at P5,000.00; and (5) five (5) carabaos in the possession of the then defendants (pp. 6-9, Petitioners' brief). On March 4, 1963, Arsenio Seville executed an affidavit in favor of Melquiades Seville, which reads: AFFIDAVIT I, ARSENIO SEVILLE, of legal age, WIDOWER, Filipino, and a resident of Anquibit, Cambanogoy, Saug, Davao, Philippines, after having been duly sworn to in accordance with law do hereby depose and say, as follows: That I am the declared and legal owner of a certain parcel of land otherwise known as Lot Nos. 172 and 170 Cad- 283, containing an area of 21.6361 has., and situated at Cambanogoy, Saug, Davao and covered by HA No. V-77791 (E-69793) and approved by the Director of Lands as per Order issued on March 5, 1954; That I am a widower as indicated above and that I have no one to inherit all my properties except my brother Melquiades Seville who appears to be the only and rightful person upon whom I have the most sympathy since I have no wife and children; That it is my desire that in case I will die I will assign all my rights, interest, share and participation over the above- mentioned property and that he shall succeed to me in case of my death, however, as long as I am alive I will be the one to possess, enjoy and benefit from the produce of my said land and that whatever benefits it will give me in the future I shall be the one to enjoy it; That I make this affidavit to make manifest my intention and desire as to the way the abovementioned property shall be dispose of and for whatever purpose it may serve.

xxx xxx xxx

(p. 7. Appellees' brief; Exh. 4, p. 52, Folder of Exhibits). On May 24, 1968, Arsenio Seville mortgaged said properties to the Philippine National Bank in consideration of a loan. This was done with the knowledge and acquiescence of Melquiades Seville. On May 15, 1970, Arsenio Seville died intestate, single, without issue, and without any debt. He was survived by his brothers, Buenaventura Seville and Zoilo Seville who are included as respondents; brother Melquiades Seville; and sisters Encarnacion Seville and Petra Seville. Thereafter, Melquiades died and is survived by his children Consuelo, Celestino, Tiburcio, Ravelo, Sonita, Lucy, Epifania, Naracy and Emmanuel, all surnamed Seville. Sisters Encarnacion and Petra died later. Encarnacion is survived by her children Trinidad, Teresita, Ulysses and Alejandrino, all surnamed Sullan and her husband Vicente Sullan while Petra Seville is survived by her children Orlando Manican and Pacifico Manican. The children of Melquiades Seville are now claiming exclusive ownership of the properties and improvements thereon on the basis of the instrument executed by Arsenio Seville in favor of Melquiades Seville and on their alleged actual possession, occupation, and cultivation of Lots Nos. 170 and 172 since 1954 continuously and peacefully in the concept of owner up to the time of Arsenio Seville's death. The petitioners assign the following alleged errors of the respondent court: I THE COURT OF APPEALS ERRED IN NOT CONSIDERING THE AFFIDAVIT IN QUESTION A DEED OR INSTRUMENT OF DONATION INTER VIVOS: II

THE COURT OF APPEALS ERRED IN NOT RULING CATEGORICALLY THAT ARSENIO SEVILLE COULD VALIDLY DISPOSE OR DONATE THE PROPERTIES IN QUESTION. III THE COURT OF APPEALS ERRED IN NOT VACATING THE JUDGMENT OF THE LOWER COURT AND ENTERED (SIC) A NEW ONE HOLDING THAT THE AFFIDAVIT IN QUESTION IS A DEED OF DONATION AND THAT THE DONATION IS A DONATION INTER VIVOS THUS VALIDLY CONVEYING THE LAND UNTO THE DONEE MELQUIADES SEVILLE. (p. 10, Petitioners' brief). All the above assigned errors discuss the issues as relating to a donation. The trial court was correct in stating that "a close reading reveals that Exhibit 4 is not a donation inter vivos or mortis causa but a mere declaration of an intention and a desire. Certainly, it is not a concrete and formal act of giving or donating. The form and contents of said Exhibit 4 amply support this conclusion." (p. 3 7, Record on Appeal). A discussion of the different kinds of donations and the requisites for their effectivity is irrelevant in the case at bar. There clearly was no intention to transfer ownership from Arsenio Seville to Melquiades Seville at the time of the instrument's execution. It was a mere intention or a desire on the part of Arsenio Seville that in the event of his death at some future time, his properties should go to Melquiades Seville. In Aldaba v. Court of Appeals (27 SCRA 263, 269-270) we ruled on a similar expression of an intention, as follows: The question to be resolved in the instant case is: Was there a disposition of the property in question made by the deceased Belen Aldaba in favor of herein petitioners? The note, Exhibit 6, considered alone, was, as held by the Court of Appeals, confirming the opinion of the lower court, only an indication of the intention of Belen Aldaba to donate to the petitioners the property occupied by the latter. We agree with this conclusion of the trial court and the Court of Appeals. The note, in fact, expressed that the property was really intended for the petitioners, "talagang iyan ay para sa inyo." If the property was only intended for petitioners then, at the time of its writing, the property had not yet been disposed of in their favor. There is no evidence in the record that such intention was effectively carried out after the writing of the note. Inasmuch as the mere expression of an intention is not a promise, because a promise is an undertaking to carry the intention into effect, (17 American Jurisprudence, 2d p. 334) We cannot, considering Exhibit 6 alone, conclude that the deceased promised, much less did convey, the property in question to the petitioners. ... . It is quite apparent that Arsenio Seville was thinking of succession ("... in case I win die, I will assign all my rights, share and participation over the above-mentioned properties and that he shall succeed to me in case of my death ..."). Donations which are to take effect upon the death of the donor partake of the nature of testamentary provisions and shall be governed by the rules established in the title on succession (Art. 728, Civil Code). The petitioners likewise contend that the document was a valid donation as only donations are accepted by the donees. However, the petitioners could not have accepted something, which by the terms of the supposed "donation" was not given to them at the time. The affidavit could not transmit ownership except in clear and express terms. Furthermore, the homestead application was later prosecuted in the name of Arsenio Seville and the land, much later, was mortgaged by him to the Philippine National Bank (Annex 1, p. 100, Rollo) in consideration of a loan. Arsenio dealt with the land and entered into transactions as its owner. All these happened with the knowledge and acquiescence of the

supposed donee, Melquiades Seville. Contrary to the petitioners' allegations in their brief, there was no immediate transfer of title upon the execution of Exhibit 4. Contrary to what the petitioners aver, private respondents as legal heirs of Arsenio Seville have actual and substantial interests in the subject of litigation thus qualifying them as real parties-in-interest. Common ownership is shown by the records. Therefore, any claim of ownership of the petitioners is not based on Exhibit 4 but on the fact that they are heirs of Arsenio Seville together with the private respondents. It is likewise significant to note the respondents' assertion that the signed affidavit is a forgery because Arsenio Seville was illiterate during his lifetime. He could not write his name. He executed documents by affixing his thumbmark as shown in the Real Estate Mortgage (Exhibit A-4), which he executed on May 24, 1968 in favor of the Philippine National Bank. The real estate mortgage came much later or more than five years after the supposed donation (Exhibit 4) to Melquiades Seville where Arsenio Seville allegedly affixed his signature. This fact was not disputed by the petitioners. Moreover, the petitioners' actions do not support their claim of ownership. During the lifetime of Arsenio Seville, he paid the PNB amortization out of his personal funds and out of the income on his property. The payments were not continued by the petitioners when Arsenio Seville died so much so that the property was extrajudicially foreclosed and had to be repurchased by Zoilo Seville, one of the respondents, through installment arrangements. (Deed of Promise to Sell appended as Annex 4 to respondents' brief). The actions of the respondents are in consonance with their claim of co-ownership. Finally, it is a well-established rule that the factual findings of the trial court are generally not disturbed except where there is a clear cause or a strong reason appearing in the record to warrant a departure from such findings (Alcaraz v. Racimo, 125 SCRA 328; People v. Tala, 141 SCRA 240; and People v. Alcid, 135 SCRA 280). There is no such clear cause or strong reason in this case. WHEREFORE, the petition is hereby DISMISSED. The judgment of the Court of Appeals is AFFIRMED. SO ORDERED. FIRST DIVISION

[G.R. No. 131953. June 5, 2002]

MA. ESTELA MAGLASANG, NICOLAS CABATINGAN and MERLY S. CABATINGAN, petitioners, vs. THE HEIRS OF CORAZON CABATINGAN, namely, LUZ M. BOQUIA, PERLA M. ABELLA, ESTRELLA M. CAETE, LOURDES M. YUSON, and JULIA L. MAYOL, HEIRS OF GENOVIVA C. NATIVIDAD namely, OSCAR C. NATIVIDAD, OLGA NATIVIDAD, ODETTE NATIVIDAD, OPHELIA NATIVIDAD, RICHARD NATIVIDAD, RAYMUND NATIVIDAD, RICHIE NATIVIDAD, SONIA NATIVIDAD and ENCARNACION CABATINGAN VDA. DE TRINIDAD, ALFREDO CABATINGAN and JESUSA C. NAVADA, respondents. DECISION AUSTRIA-MARTINEZ, J.: Posed for resolution before the Court in this petition for review on certiorari filed under Rule 45 of the Rules of Court is the sole issue of

whether the donations made by the late Conchita Cabatingan are donationsinter vivos or mortis causa. The facts of the case are as follows: On February 17, 1992, Conchita Cabatingan executed in favor of her brother, petitioner Nicolas Cabatingan, a Deed of Conditional of Donation (sic) Inter Vivos for House and Lot covering one-half () portion of the formers house and lot located at Cot -cot, Liloan, Cebu.[1] Four (4) other deeds of donation were subsequently executed by Conchita Cabatingan on January 14, 1995, bestowing upon: (a) petitioner Estela C. Maglasang, two (2) parcels of land - one located in Cogon, Cebu (307 sq. m.) and the other, a portion of a parcel of land in Masbate (50,232 sq. m.); (b) petitioner Nicolas Cabatingan, a portion of a parcel of land located in Masbate (80,000 sq. m.); and (c) petitioner Merly S. Cabatingan, a portion of the Masbate property (80,000 sq. m.).[2] These deeds of donation contain similar provisions, to wit: That for and in consideration of the love and affection of the DONOR for the DONEE, x x x the DONOR does hereby, by these presents, transfer, convey, by way of donation, unto the DONEE the above-described property, together with the buildings and all improvements existing thereon, to become effective upon the death of the DONOR; PROVIDED, HOWEVER, that in the event that the DONEE should die before the DONOR, the present donation shall be deemed automatically rescinded and of no further force and effect; x x x[3] (Emphasis Ours) On May 9, 1995, Conchita Cabatingan died. Upon learning of the existence of the foregoing donations, respondents filed with the Regional Trial Court of Mandaue, Branch 55, an action for Annulment And/Or Declaration of Nullity of Deeds of Donations and Accounting, docketed as Civil Case No. MAN-2599, seeking the annulment of said four (4) deeds of donation executed on January 14, 1995. Respondents allege, inter alia, that petitioners, through their sinister machinations and strategies and taking advantage of Conchita Cabatingans fragile condition, caused the execution of the deeds of donation, and, that the documents are void for failing to comply with the provisions of the Civil Code regarding formalities of wills and testaments, considering that these are donations mortis causa.[4] Respondents prayed that a receiver be appointed in order to preserve the disputed properties, and, that they be declared as co-owners of the properties in equal shares, together with petitioner Nicolas Cabatingan.[5] Petitioners in their Amended Answer, deny respondents allegations contending that Conchita Cabatingan freely, knowingly and voluntarily caused the preparation of the instruments. [6] On respondents motion, the court a quo rendered a partial judgment on the pleadings on December 2, 1997 in favor of respondents, with the following dispositive portion: WHEREREFORE, and in consideration of all the foregoing, judgment is hereby rendered in favor of the plaintiffs and against the defendant and unwilling co-plaintiff with regards (sic) to the four Deeds of Donation Annexes A, A-1, B and Annex C which is the subject of this partial decision by: Declaring the four Deeds of Donation as null and void ab initio for being a donation Mortis Causa and for failure to comply with formal and solemn requisite under Art. 806 of the New Civil Code; b) To declare the plaintiffs and defendants as well as unwilling co-plaintiff as the heirs of the deceased Conchita Cabatingan and therefore hereditary co-owners of the properties subject of this partial decision, as mandated under Art. 777 of the New Civil Code; SO ORDERED.[7] The court a quo ruled that the donations are donations mortis causa and therefore the four (4) deeds in question executed on January 14, 1995

are null and void for failure to comply with the requisites of Article 806 of the Civil Code on solemnities of wills and testaments.[8] Raising questions of law, petitioners elevated the court a quos decision to this Court,[9] alleging that: THE LOWER COURT PALPABLY DISREGARDED THE LONG-ANDWELL-ESTABLISHED RULINGS OF THIS HONORABLE SUPREME COURT ON THE CHARACTERIZATION OF DONATIONS AS INTER VIVOS OR MORTIS CAUSA AND, INSTEAD, PROCEEDED TO INTERPRET THE DONATIONS IN QUESTION IN A MANNER CONTRARY THERETO.[10] Petitioners insist that the donations are inter vivos donations as these were made by the late Conchita Cabatingan in consideration of the love and affection of the donor for the donee, and there is nothing in the deeds which indicate that the donations were made in consideration of Cabatingans death.[11] In addition, petitioners contend that the stipulation on rescission in case petitioners die ahead of Cabatingan is a resolutory condition that confirms the nature of the donation as inter vivos. Petitioners arguments are bereft of merit. In a donation mortis causa, the right of disposition is not transferred to the donee while the donor is still alive.[12] In determining whether a donation is one of mortis causa, the following characteristics must be taken into account: (1) It conveys no title or ownership to the transferee before the death of the transferor; or what amounts to the same thing, that the transferor should retain the ownership (full or naked) and control of the property while alive; (2) That before his death, the transfer should be revocable by the transferor at will, ad nutum; but revocability may be provided for indirectly by means of a reserved power in the donor to dispose of the properties conveyed; and (3) That the transfer should be void if the transferor should survive the transferee.[13] In the present case, the nature of the donations as mortis causa is confirmed by the fact that the donations do not contain any clear provision that intends to pass proprietary rights to petitioners prior to Cabatingans death.[14] The phrase to become effective upon the death of the DONOR admits of no other interpretation but that Cabatingan did not intend to transfer the ownership of the properties to petitioners during her lifetime. Petitioners themselves expressly confirmed the donations as mortis causa in the following Acceptance and Attestation clauses, uniformly found in the subject deeds of donation, to wit: That the DONEE does hereby accept the foregoing donation mortis causa under the terms and conditions set forth therein, and avail herself of this occasion to express her profound gratitude for the kindness and generosity of the DONOR. xxx SIGNED by the above-named DONOR and DONEE at the foot of this Deed of Donation mortis causa, which consists of two (2) pages x x x.[15] That the donations were made in consideration of the love and affection of the donor does not qualify the donations as inter vivos because transfers mortis causa may also be made for the same reason. [16] Well in point is National Treasurer of the Phils. v. Vda. de Meimban. [17] In said case, the questioned donation contained the provision:

"That for and in consideration of the love and affection which the DONOR has for the DONEE, the said Donor by these presents does hereby give, transfer, and convey unto the DONEE, her heirs and assigns a portion of ONE HUNDRED THOUSAND (100,000) SQUARE METERS, on the southeastern part Pro-indiviso of the above described property. (The portion herein donated is within Lot 2-B of the proposed amendment Plan Subdivision of Lots Nos. 1 and 2, Psu-109393), with all the buildings and improvements thereon, to become effective upon the death of the DONOR. (italics supplied.)" [18] Notably, the foregoing provision is similar to that contained in the donation executed by Cabatingan. We held in Meimban case that the donation is a mortis causa donation, and that the above quoted provision establishes the donors intention to transfer the ownership and possession of the donated property to the donee only after the formers death. Further: As the donation is in the nature of a mortis causa disposition, the formalities of a will should have been complied with under Article 728 of the Civil Code, otherwise, the donation is void and would produce no effect. As we have held in Alejandro v. Geraldez (78 SCRA 245,253), If the donation is made in contemplation of the donors death, meaning that the full or naked ownership of the donated properties will pass to the donee because of the donors death, then it is at that time that the donation takes effect, and it is a donation mortis causa which should be embodied in a last will and testament. (Citing Bonsato v. Court of Appeals, 95 Phil. 481).[19] We apply the above rulings to the present case. The herein subject deeds expressly provide that the donation shall be rescinded in case petitioners predecease Conchita Cabatingan. As stated in Reyes v. Mosqueda,[20] one of the decisive characteristics of a donation mortis causa is that the transfer should be considered void if the donor should survive the donee. This is exactly what Cabatingan provided for in her donations. If she really intended that the donation should take effect during her lifetime and that the ownership of the properties donated be transferrred to the donee or independently of, and not by reason of her death, she would have not expressed such proviso in the subject deeds. Considering that the disputed donations are donations mortis causa, the same partake of the nature of testamentary provisions[21] and as such, said deeds must be executed in accordance with the requisites on solemnities of wills and testaments under Articles 805 and 806 of the Civil Code, to wit: ART. 805. Every will, other than a holographic will, must be subscribed at the end thereof by the testator himself or by the testators name written by some other person in his presence, and by his express direction, and attested and subscribed by three or more credible witnesses in the presence of the testator and of one another. The testator or the person requested by him to write his name and the instrumental witnesses of the will, shall also sign, as aforesaid, each and every page thereof, except the last, on the left margin, and all the pages shall be numbered correlatively in letters placed on the upper part of each page. The attestation shall state the number of pages used upon which the will is written , and the fact that the testator signed the will and every page thereof, or caused some other person to write his name, under his express direction, in the presence of the instrumental witnesses, and that the latter witnessed and signed the will and all the pages thereof in the presence of the testator and of one another. If the attestation clause is in a language not known to the witnesses, it shall be interpreted to them. (n) ART. 806. Every will must be acknowledged before a notary public by the testator and the witnesses. The notary public shall not be required to retain a copy of the will, or file another with the office of the Clerk of Court. (n)

The deeds in question although acknowledged before a notary public of the donor and the donee, the documents were not executed in the manner provided for under the above-quoted provisions of law. Thus, the trial court did not commit any reversible error in declaring the subject deeds of donation null and void. WHEREFORE, the petition is hereby DENIED for lack of merit. SO ORDERED. THIRD DIVISION

[G. R. No. 123968. April 24, 2003]

URSULINA GANUELAS, METODIO GANUELAS and ANTONIO GANUELAS, vs. HON. ROBERT T. CAWED, Judge of the Regional Trial Court of San Fernando, La Union (Branch 29), LEOCADIA G. FLORES, FELICITACION G. AGTARAP, CORAZON G. SIPALAY and ESTATE OF ROMANA GANUELAS DE LA ROSA, represented by GREGORIO DELA ROSA, Administrator, respondent. DECISION CARPIO-MORALES, J.: The present petition for review under Rule 45 of the Rules of Court assails, on a question of law, the February 22, 1996 decision[1] of the Regional Trial Court of San Fernando, La Union, Branch 29, in Civil Case No. 3947, an action for declaration of nullity of a deed of donation. The facts, as culled from the records of the case, are as follows: On April 11, 1958, Celestina Ganuelas Vda. de Valin (Celestina) executed a Deed of Donation of Real Property[2] covering seven parcels of land in favor of her niece Ursulina Ganuelas (Ursulina), one of herein petitioners. The pertinent quoted verbatim: xxx That, for and in consideration of the love and affection which the DONOR has for the DONEE, and of the faithful services the latter has rendered in the past to the former, the said DONOR does by these presents transfer and convey, by way of DONATION, unto the DONEE the property above, described, to become effective upon the death of the DONOR; but in the event that the DONEE should die before the DONOR, the present donation shall be deemed rescinded and of no further force and effect. x x x.[3] On June 10, 1967, Celestina executed a document denominated as Revocation of Donation[4] purporting to set aside the deed of donation. More than a month later or on August 18, 1967, Celestina died without issue and any surviving ascendants and siblings. After Celestinas death, Ursulina had been sharing the produce of the donated properties with private respondents Leocadia G. Flores, et al., nieces of Celestina. In 1982, or twenty-four years after the execution of the Deed of Donation, Ursulina secured the corresponding tax declarations, in her name, over the donated properties, to wit: Tax Declarations Nos. 18108, 18109, 18110, 18111, 18112, 18113 and 18114, and since then, she refused to give private respondents any share in the produce of the properties despite repeated demands. provision of the deed of donation reads,

Private respondents were thus prompted to file on May 26, 1986 with the RTC of San Fernando, La Union a complaint[5] against Ursulina, along with Metodio Ganuelas and Antonio Ganuelas who were alleged to be unwilling plaintiffs. The complaint alleged that the Deed of Donation executed by Celestina in favor of Ursulina was void for lack of acknowledgment by the attesting witnesses thereto before notary public Atty. Henry Valmonte, and the donation was a disposition mortis causa which failed to comply with the provisions of the Civil Code regarding formalities of wills and testaments, hence, it was void. The plaintiffs-herein private respondents thus prayed that judgment be rendered ordering Ursulina to return to them as intestate heirs the possession and ownership of the properties. They likewise prayed for the cancellation of the tax declarations secured in the name of Ursulina, the partition of the properties among the intestate heirs of Celestina, and the rendering by Ursulina of an accounting of all the fruits of the properties since 1982 and for her to return or pay the value of their shares. The defendants-herein petitioners alleged in their Answer[6] that the donation in favor of Ursulina was inter vivos as contemplated under Article 729 of the Civil Code,[7] hence, the deed did not have to comply with the requirements for the execution of a valid will; the Revocation of Donation is null and void as the ground mentioned therein is not among those provided by law to be the basis thereof; and at any rate, the revocation could only be legally enforced upon filing of the appropriate complaint in court within the prescriptive period provided by law, which period had, at the time the complaint was filed, already lapsed. By Decision of February 22, 1996, the trial court, holding that the provision in the Deed of Donation that in the event that the DONEE should predecease the DONOR, the donation shall be deemed rescinded and of no further force and effect is an explicit indication that the deed is a donation mortis causa,[8] found for the plaintiffs-herein private respondents, thus: WHEREFORE the Court renders judgment declaring null and void the Deed of Donation of Real Property executed by Celestina Ganuelas, and orders the partition of the estate of Celestina among the intestate heirs. SO ORDERED.[9] The trial court also held that the absence of a reservation clause in the deed implied that Celestina retained complete dominion over her properties, thus supporting the conclusion that the donation is mortis causa,[10] and that while the deed contained an attestation clause and an acknowledgment showing the intent of the donor to effect a postmortem disposition, the acknowledgment was defective as only the donor and donee appear to have acknowledged the deed before the notary public, thereby rendering the entire document void.[11] Lastly, the trial court held that the subsequent execution by Celestina of the Revocation of Donation showed that the donor intended the revocability of the donation ad nutum, thus sustaining its finding that the conveyance was mortis causa.[12] On herein petitioners argument that the Revocation of Donation was void as the ground mentioned therein is not one of those allowed by law to be a basis for revocation, the trial court held that the legal grounds for such revocation as provided under the Civil Code arise only in cases of donations inter vivos, but not in donations mortis causa which are revocable at will during the lifetime of the donor. The trial court held, in any event, that given the nullity of the disposition mortis causa in view of a failure to comply with the formalities required therefor, the Deed of Revocation was a superfluity.[13] Hence, the instant petition for review, petitioners contending that the trial court erred: I. . . . WHEN IT DECLARED NULL AND VOID THE DONATION EXECUTED BY CELESTINA GANUELAS; . . . WHEN IT UPHELD THE REVOCATION OF DONATION; . . . IN RENDERING ITS DECISION ADVERSE TO PETITIONER URSULINA GANUELAS.[14]

Petitioners argue that the donation contained in the deed is inter vivos as the main consideration for its execution was the donors affection for the donee rather than the donors death;[15] that the provision on the effectivity of the donationafter the donors deathsimply meant that absolute ownership would pertain to the donee on the donors death;[16] and that since the donation isinter vivos, it may be revoked only for the reasons provided in Articles 760,[17] 764[18] and 765[19] of the Civil Code. In a letter of March 16, 1998,[20] private respondent Corazon Sipalay, reacting to this Courts January 28, 1998 Resolution requiring private respondents to SHOW CAUSE why they should not be disciplinarily dealt with or held in contempt for failure to submit the n ame and address of their new counsel, explains that they are no longer interested in pursuing the case and are willing and ready to waive whatever rights they have over the properties subject of the donation. Petitioners, who were required to comment on the letter, by Comment of October 28, 1998,[21] welcome private respondents gesture but pray that for the sake of enriching jurisprudence, their [p]etition be given due course and resolved. The issue is thus whether the donation is inter vivos or mortis causa. Crucial in the resolution of the issue is the determination of whether the donor intended to transfer the ownership over the properties upon the execution of the deed.[22] Donation inter vivos differs from donation mortis causa in that in the former, the act is immediately operative even if the actual execution may be deferred until the death of the donor, while in the latter, nothing is conveyed to or acquired by the donee until the death of the donortestator.[23] The following ruling of this Court in Alejandro v. Geraldez is illuminating:[24] If the donation is made in contemplation of the donors death, meaning that the full or naked ownership of the donated properties will pass to the donee only because of the donors death, then it is at that time that the donation takes effect, and it is a donation mortis causa which should be embodied in a last will and testament. But if the donation takes effect during the donors lifetime or independently of the donors death, meaning that the full or naked ownership (nuda proprietas) of the donated properties passes to the donee during the donors lifetime, not by reason of his death but because of the deed of donation, then the donation is inter vivos. The distinction between a transfer inter vivos and mortis causa is important as the validity or revocation of the donation depends upon its nature. If the donation is inter vivos, it must be executed and accepted with the formalities prescribed by Articles 748[25] and 749[26] of the Civil Code, except when it is onerous in which case the rules on contracts will apply. If it is mortis causa, the donation must be in the form of a will, with all the formalities for the validity of wills, otherwise it is void and cannot transfer ownership.[27] The distinguishing characteristics of a donation mortis causa are the following: 1. It conveys no title or ownership to the transferee before the death of the transferor; or, what amounts to the same thing, that the transferor should retain the ownership (full or naked) and control of the property while alive; 2. That before his death, the transfer should be revocable by the transferor at will, ad nutum; but revocability may be provided for indirectly by means of a reserved power in the donor to dispose of the properties conveyed; 3. That the transfer should be void if the transferor should survive the transferee.[28] In the donation subject of the present case, there is nothing therein which indicates that any right, title or interest in the donated properties was to be transferred to Ursulina prior to the death of Celestina.

II.

III.

The phrase to become effective upon the death of the DONOR admits of no other interpretation but that Celestina intended to transfer the ownership of the properties to Ursulina on her death, not during her lifetime.[29] More importantly, the provision in the deed stating that if the donee should die before the donor, the donation shall be deemed rescinded and of no further force and effect shows that the donation is a postmortem disposition. As stated in a long line of cases, one of the decisive characteristics of a donation mortis causa is that the transfer should be considered void if the donor should survive the donee.[30] More. The deed contains an attestation clause expressly confirming the donation as mortis causa: SIGNED by the above-named donor, Celestina Ganuelas, at the foot of this deed of donation mortis causa, consisting of two (2) pages and on the left margin of each and every page thereof in the joint presence of all of us who at her request and in her presence and that of each other have in like manner subscribed our names as witnesses.[31] (Emphasis supplied) To classify the donation as inter vivos simply because it is founded on considerations of love and affection is erroneous. That the donation was prompted by the affection of the donor for the donee and the services rendered by the latter is of no particular significance in determining whether the deed constitutes a transfer inter vivos or not, because a legacy may have an identical motivation. [32] In other words, love and affection may also underline transfers mortis causa.[33] In Maglasang v. Heirs of Cabatingan,[34] the deeds of donation contained provisions almost identical to those found in the deed subject of the present case: That for and in consideration of the love and affection of the DONOR for the DONEE, x x x the DONOR does hereby, by these presents, transfer, convey, by way of donation, unto the DONEE the above-described property, together with the buildings and all improvements existing thereon, to become effective upon the death of the DONOR; PROVIDED, HOWEVER, that in the event that the DONEE should die before the DONOR, the present donation shall be deemed automatically rescinded and of no further force and effect. (Underscoring supplied) In that case, this Court held that the donations were mortis causa, for the above-quoted provision conclusively establishes the donors intention to transfer the ownership and possession of the donated property to the donee only after the formers death. Like in the present case, the deeds therein did not contain any clear provision that purports to pass proprietary rights to the donee prior to the donors death. As the subject deed then is in the nature of a mortis causa disposition, the formalities of a will under Article 728 of the Civil Code should have been complied with, failing which the donation is void and produces no effect.[35] As noted by the trial court, the attesting witnesses failed to acknowledge the deed before the notary public, thus violating Article 806 of the Civil Code which provides: Art. 806. Every will must be acknowledged before a notary public by the testator and the witnesses. The notary public shall not be required to retain a copy of the will, or file another with the office of the Clerk of Court. (Emphasis supplied) The trial court did not thus commit any reversible error in declaring the Deed of Donation to be mortis causa. WHEREFORE, the petition is hereby DENIED for lack of merit. SO ORDERED. THIRD DIVISION

[G.R. No. 103577. October 7, 1996]

ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A. CORONEL, ANNABELLE C. GONZALES (for herself and on behalf of Floraida C. Tupper, as attorney-in-fact), CIELITO A. CORONEL, FLORAIDA A. ALMONTE, and CATALINA BALAIS MABANAG, petitioners, vs. THE COURT OF APPEALS, CONCEPCION D. ALCARAZ and RAMONA PATRICIA ALCARAZ, assisted by GLORIA F. NOEL as attorney-in-fact, respondents. DECISION MELO, J.: The petition before us has its roots in a complaint for specific performance to compel herein petitioners (except the last named, Catalina Balais Mabanag) to consummate the sale of a parcel of land with its improvements located along Roosevelt Avenue in Quezon City entered into by the parties sometime in January 1985 for the price of P1,240,000.00. The undisputed facts of the case were summarized by respondent court in this wise: On January 19, 1985, defendants-appellants Romulo Coronel, et. al. (hereinafter referred to as Coronels) executed a document entitled Receipt of Down Payment (Exh. A) in favor of plaintiff Ramona Patricia Alcaraz (hereinafter referred to as Ramona) which is reproduced hereunder: RECEIPT OF DOWN PAYMENT P1,240,000.00 - Total amount 50,000.00 - Down payment -----------------------------------------P1,190,000.00 - Balance Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of Fifty Thousand Pesos purchase price of our inherited house and lot, covered by TCT No. 119627 of the Registry of Deeds of Quezon City, in the total amount of P1,240,000.00. We bind ourselves to effect the transfer in our names from our deceased father, Constancio P. Coronel, the transfer certificate of title immediately upon receipt of the down payment above-stated. On our presentation of the TCT already in or name, We will immediately execute the deed of absolute sale of said property and Miss Ramona Patricia Alcaraz shall immediately pay the balance of theP1,190,000.00. Clearly, the conditions appurtenant to the sale are the following: 1. Ramona will make a down payment of Fifty Thousand (P50,000.00) pesos upon execution of the document aforestated; 2. The Coronels will cause the transfer in their names of the title of the property registered in the name of their deceased father upon receipt of the Fifty Thousand (P50,000.00) Pesos down payment; 3. Upon the transfer in their names of the subject property, the Coronels will execute the deed of absolute sale in favor of Ramona and the latter will pay the former the whole balance of One Million One Hundred Ninety Thousand (P1,190,000.00) Pesos.

On the same date (January 15, 1985), plaintiff-appellee Concepcion D. Alcaraz (hereinafter referred to as Concepcion), mother of Ramona, paid the down payment of Fifty Thousand (P50,000.00) Pesos (Exh. B, Exh. 2). On February 6, 1985, the property originally registered in the name of the Coronels father was transferred in their names under TCT No. 327043 (Exh. D; Exh 4) On February 18, 1985, the Coronels sold the property covered by TCT No. 327043 to intervenor-appellant Catalina B. Mabanag (hereinafter referred to as Catalina) for One Million Five Hundred Eighty Thousand (P1,580,000.00) Pesos after the latter has paid Three Hundred Thousand (P300,000.00) Pesos (Exhs. F-3; Exh. 6-C) For this reason, Coronels canceled and rescinded the contract (Exh. A) with Ramona by depositing the down payment paid by Concepcion in the bank in trust for Ramona Patricia Alcaraz. On February 22, 1985, Concepcion, et. al., filed a complaint for a 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; Exh. 7). On June 5, 1985, a new title over the subject property was issued in the name of Catalina under TCT No. 351582 (Exh. H; Exh. 8). (Rollo, pp. 134-136) In the course of the proceedings before the trial court (Branch 83, RTC, Quezon City) the parties agreed to submit the case for decision solely on the basis of documentary exhibits. Thus, plaintiffs therein (now private respondents) proffered their 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 (30) days within which to simultaneously submit their respective memoranda, and an additional 15 days within which to submit their corresponding comment or reply thereto, after which, the case would be deemed submitted for resolution. On April 14, 1988, the case was submitted for resolution before Judge Reynaldo Roura, who was then temporarily detailed to preside over Branch 82 of the RTC of Quezon City. On March 1, 1989, judgment was handed down by Judge Roura from his regular bench at Macabebe, Pampanga for the Quezon City branch, disposing as follows: WHEREFORE, judgment for specific performance is hereby rendered ordering defendant to execute in favor of plaintiffs a deed of absolute sale covering that parcel of land embraced in and covered by Transfer Certificate of Title No. 327403 (now TCT No. 331582) of the Registry of Deeds for Quezon City, together with all the improvements existing thereon free from all liens and encumbrances, and once accomplished, to immediately deliver the said document of sale to plaintiffs and upon receipt thereof, the plaintiffs are ordered to pay defendants the whole balance of 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 intervenor and all other persons claiming under them are hereby ordered to vacate the subject property and deliver possession thereof to plaintiffs. Plaintiffs claim for damages and attorneys fees, as well as the counterclaims of defendants and intervenors are hereby dismissed.

No pronouncement as to costs. So Ordered. Macabebe, Pampanga for Quezon City, March 1, 1989. (Rollo, p. 106) A motion for reconsideration was filed by petitioners before the new presiding judge of the Quezon City RTC but the same was denied by Judge Estrella T. Estrada, thusly: The prayer contained in the instant motion, i.e., to annul the decision and to render anew decision by the undersigned Presiding Judge should be denied for the following reasons: (1) The instant case became submitted for decision as of April 14, 1988 when the parties terminated the presentation of their respective documentary evidence and when the Presiding Judge at that time was Judge Reynaldo Roura. The fact that they were allowed to file memoranda at some future date did not change the fact that the hearing of the case was terminated before Judge Roura and therefore the same should be submitted to him for decision; (2) When the defendants and intervenor did not object to the authority of Judge Reynaldo Roura to decide the case prior to the rendition of the decision, when they met for the first time before the undersigned Presiding Judge at the hearing of a pending incident in Civil Case No. Q46145 on November 11, 1988, they were deemed to have acquiesced thereto and they are now estopped from questioning said authority of Judge Roura after they received the decision in question which happens to be 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 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 cases submitted to him for decision or resolution because he continued as Judge of the Regional Trial Court and is of co-equal rank with the undersigned Presiding Judge. The standing rule and supported by jurisprudence is that a Judge to whom a case is submitted for decision has the authority to decide the case notwithstanding his transfer to another branch or region of the same court (Sec. 9, Rule 135, Rule of Court). Coming now to the twin prayer for reconsideration of the Decision dated March 1, 1989 rendered in the instant case, resolution of which now pertains to the undersigned Presiding Judge, after a meticulous examination of the documentary evidence presented by the parties, she is convinced that the Decision of March 1, 1989 is supported by evidence and, therefore, should not be disturbed. IN VIEW OF THE FOREGOING, the Motion for Reconsideration and/or to Annul Decision and Render Anew Decision by the Incumbent Presiding Judge dated March 20, 1989 is hereby DENIED. SO ORDERED. Quezon City, Philippines, July 12, 1989. (Rollo, pp. 108-109) Petitioners thereupon interposed an appeal, but on December 16, 1991, the Court of Appeals (Buena, Gonzaga-Reyes, Abad-Santos (P), JJ.) rendered its decision fully agreeing with the trial court. Hence, the instant petition which was filed on March 5, 1992. The last pleading, private respondents Reply Memorandum, was filed on September 15, 1993. The case was, however, re-raffled to undersigned ponente only on August 28, 1996, due to the voluntary inhibition of the Justice to whom the case was last assigned. While we deem it necessary to introduce certain refinements in the disquisition of respondent court in the affirmance of the trial courts decision, we definitely find the instant petition bereft of merit.

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 determination of the legal significance of the document entitled Receipt of Down Payment which was offered in evidence by both parties. There is no dispute as to the fact that the said document embodied the binding contract between Ramona Patricia Alcaraz on the one hand, and the heirs of Constancio P. Coronel on the other, pertaining to a particular house and lot covered by TCT No. 119627, as defined in Article 1305 of the Civil Code of the Philippines which reads as follows: Art. 1305. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. While, it is the position of private respondents that the Receipt of Down Payment embodied a perfected contract of sale, which perforce, they seek to enforce by means of an action for specific performance, petitioners on their part insist that what the document signified was a mere executory contract to sell, subject to certain suspensive conditions, and because of the absence of Ramona P. Alcaraz, who left for the United States of America, said contract could not possibly ripen into a contract of absolute sale. Plainly, such variance in the contending parties contention is brought about by the way each interprets the terms and/or conditions set forth in said private instrument. Withal, based on whatever relevant and admissible evidence may be available on 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 said document was executed. The Civil Code defines a contract of sale, thus: Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. Sale, by its very nature, is a consensual contract because it is perfected by mere consent. The essential elements of a contract of sale are the following: a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; b) c) Determinate subject matter; and Price certain in money or its equivalent.

with the prospective buyer becomes demandable as provided in Article 1479 of the Civil Code which states: Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor of the promise is supported by a consideration distinct from the price. A contract to sell may thus be defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price. A contract to sell as defined hereinabove, may not even be considered as a conditional contract of sale where the seller may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not occur. If the suspensive condition is not fulfilled, the perfection of the contract of sale is completely abated (cf. Homesite and Housing Corp. vs. Court of Appeals, 133 SCRA 777 [1984]). However, if the suspensive condition is fulfilled, the contract of sale is thereby perfected, such that if there had already been previous delivery of the property subject of the sale to the buyer, ownership thereto automatically transfers to the buyer by operation of law without any further act having to be performed by the seller. In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, ownership will not automatically transfer to the buyer although the property may have been previously delivered to him. The prospective seller still has to convey title to the prospective buyer by entering into a contract of absolute sale. It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases where the subject 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 contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property. There is no double sale in such case. Title to the property will transfer to the buyer after registration because there is no defect in the owner-sellers title per se, but the latter, of course, may be sued for damages by the intending buyer. In a conditional contract of sale, however, upon the fulfillment of the suspensive condition, the sale becomes absolute and this will definitely affect the sellers title thereto. In fact, if there had been previous delivery of the subject property, the sellers ownership or title to the property is automatically transferred to the buyer such that, the seller will no longer have any title to transfer to any third person. Applying Article 1544 of the Civil Code, such second buyer of the property who may have had actual or constructive knowledge of such defect in the sellers title, or at least was charged with the obligation to discover such defect, cannot be a registrant in good faith. Such second buyer cannot defeat the first buyers title. In case a title is issued to the second buyer, the first buyer may seek reconveyance of the property subject of the sale. With the above postulates as guidelines, we now proceed to the task of deciphering the real nature of the contract entered into by petitioners and private respondents. It is a canon in the interpretation of contracts that the words used therein should be given their natural and ordinary meaning unless a technical meaning was intended (Tan vs. Court of Appeals, 212 SCRA 586 [1992]). Thus, when petitioners declared in the said Receipt of Down Payment that they -Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of Fifty Thousand Pesos purchase price of our inherited

Under this definition, a Contract to Sell may not be considered as a Contract of Sale because the first essential element is lacking. In a contract to sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer ownership of the property subject of the contract to sell until the happening of an event, which for present purposes we shall take as the full payment of the purchase price. What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him. In other words the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and thus, ownership is retained by the prospective seller without further remedies by the prospective buyer. In Roque vs. Lapuz (96 SCRA 741 [1980]), this Court had occasion to rule: Hence, We hold that the contract between the petitioner and the respondent was a contract to sell where the ownership or title is retained by the seller and is not to pass until the full payment of the price, such payment being a positive suspensive condition and failure of which is not a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force. Stated positively, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, the prospective sellers obligation to sell the subject property by entering into a contract of sale

house and lot, covered by TCT No. 1199627 of the Registry of Deeds of Quezon City, in the total amount of P1,240,000.00. without any reservation of title until full payment of the entire purchase price, the natural and ordinary idea conveyed is that they sold their property. When the Receipt of Down payment is considered in its entirety, it becomes more manifest that there was a clear intent on the part of petitioners to transfer title to the buyer, but since the transfer certificate of title was still in the name of petitioners father, they could not fully effect such transfer although the buyer was then willing and able to immediately pay the purchase price. 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, now in their names, to the latter and to execute the deed of absolute sale whereupon, the latter shall, in turn, pay the entire balance of the purchase price. The agreement could not have been a contract to sell because the sellers herein made no express reservation of ownership or title to the subject parcel of land. Furthermore, the circumstance which prevented the parties from entering into an absolute contract of sale pertained to the sellers themselves (the certificate of title was not in their names) and not the full payment of the purchase price. Under the established facts and circumstances of the case, the Court may safely presume that, had the certificate of title been in the names of petitioners-sellers at that time, there would have been no reason why an absolute contract of sale could not have been executed and consummated right there and then. Moreover, unlike in a contract to sell, petitioners in the case at bar did not merely promise to sell the property to private respondent upon the fulfillment of the suspensive condition. On the contrary, having already agreed to sell the subject property, they undertook to have the certificate of title change to their names and immediately thereafter, to execute the written deed of absolute sale. Thus, the parties did not merely enter into a contract to sell where the sellers, after compliance by the buyer with certain terms and conditions, promised to sell the property to the latter. What may be perceived from the respective undertakings of the parties to the contract is that petitioners had already agreed to sell the house and lot they inherited from their father, completely willing to transfer ownership of the subject house and lot to the buyer if the documents were then in order. It just so happened, however, that the transfer certificate of title was then still in the name of their father. It was more expedient to first effect the 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 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 certificate of title is issued in their names, petitioners were committed to immediately execute the deed of absolute sale. Only then will the obligation of the buyer to pay the remainder of the purchase price arise. 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 who intends to buy the property in installment by withholding ownership over the property until the buyer effects full payment therefor, in the contract entered into in the case at bar, the sellers were the ones who were unable to enter into a contract of 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 in this case who, as it were, had the impediment which prevented, so to speak, the execution of an contract of absolute sale. What is clearly established by the plain language of the subject document is that when the said Receipt of Down Payment was prepared and signed by petitioners Romulo A. Coronel, et. al.,the parties had agreed to a conditional contract of sale, consummation of which is subject only to the successful transfer of the certificate of title from the name of petitioners father, Constancio P. Coronel, to their names. The Court significantly notes that this suspensive condition was, in fact, fulfilled on February 6, 1985 (Exh. D; Exh. 4). Thus, on said date, the conditional contract of sale between petitioners and private respondent Ramona P. Alcaraz became obligatory, the only act required for the consummation thereof being the delivery of the property by means of the execution of the deed of absolute sale in a public instrument, which petitioners unequivocally committed themselves to do as evidenced by the Receipt of Down Payment.

Article 1475, in correlation with Article 1181, both of the Civil Code, plainly applies to the case at bench. Thus, Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts. Art. 1181. In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition. Since the condition contemplated by the parties which is the issuance of a certificate of title in petitioners names was fulfilled on February 6, 1985, the respective obligations of the parties under the contract of sale became mutually demandable, that is, petitioners, as sellers, were obliged to present the transfer certificate of title already in their names to private respondent Ramona P. Alcaraz, the buyer, and to immediately execute the deed of absolute sale, while the buyer on her part, was obliged to forthwith pay the balance of the purchase price amounting toP1,190,000.00. It is also significant to note that in the first paragraph in page 9 of their petition, petitioners conclusively admitted that: 3. The petitioners-sellers Coronel bound themselves to effect the transfer in our names from our deceased father Constancio P. Coronel, the transfer certificate of title immediately upon receipt of the downpayment abovestated". The sale was still subject to this suspensive condition. (Emphasis supplied.) (Rollo, p. 16) Petitioners themselves recognized that they entered into a contract of sale subject to a suspensive condition. Only, they contend, continuing in the same paragraph, that: . . . Had petitioners-sellers not complied with this condition of first transferring the title to the property under their names, there could be no perfected contract of sale. (Emphasis supplied.) (Ibid.) not aware that they have set their own trap for themselves, for Article 1186 of the Civil Code expressly provides that: Art. 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment. Besides, it should be stressed and emphasized that what is more controlling than these mere hypothetical arguments is the fact that the condition herein referred to was actually and indisputably fulfilled on February 6, 1985, when a new title was issued in the names of petitioners as evidenced by TCT No. 327403 (Exh. D; Exh. 4). The inevitable conclusion is that on January 19, 1985, as evidenced by the document denominated as Receipt of Down Payment (Exh. A; Exh. 1), the parties entered into a contract of sale subject to the suspensive condition that the sellers shall effect the issuance of new certificate title from that of their fathers name to their names and that, on February 6, 1985, this condition was fulfilled (Exh. D; Exh. 4). We, therefore, hold that, in accordance with Article 1187 which pertinently provides Art. 1187. The effects of conditional obligation to give, once the condition has been fulfilled, shall retroact to the day of the constitution of the obligation . . .

In obligations to do or not to do, the courts shall determine, in each case, the retroactive effect of the condition that has been complied with. the rights and obligations of the parties with respect to the perfected contract of sale became mutually due and demandable as of the time of fulfillment or occurrence of the suspensive condition on February 6, 1985. As of that point in time, reciprocal obligations of both seller and buyer arose. Petitioners also argue there could been no perfected contract on January 19, 1985 because they were then not yet the absolute owners of the inherited property. We cannot sustain this argument. Article 774 of the Civil Code defines Succession as a mode of transferring ownership as follows: Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent and value of the inheritance of a person are transmitted through his death to another or others by his will or by operation of law. Petitioners-sellers in the case at bar being the sons and daughters of the decedent Constancio P. Coronel are compulsory heirs who were called to succession by operation of law. Thus, at the point their father drew his last breath, petitioners stepped into his shoes insofar as the subject property is concerned, such that any rights or obligations pertaining thereto became binding and enforceable upon them. It is expressly provided that rights to the succession are transmitted from the moment of death of the decedent (Article 777, Civil Code; Cuison vs. Villanueva, 90 Phil. 850 [1952]). Be it also noted that petitioners claim that succession may not be declared unless the creditors have been paid is rendered moot by the fact that they were able to effect the transfer of the title to the property from the decedents name to their names on February 6, 1985. Aside from this, petitioners are precluded from raising their supposed lack of capacity to enter into an agreement at that time and they cannot be allowed to now take a posture contrary to that which they took when they entered into the agreement with private respondent Ramona P. Alcaraz. The Civil Code expressly states that: Art. 1431. Through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon. Having represented themselves as the true owners of the subject property at the time of sale, petitioners cannot claim now that they were not yet the absolute owners thereof at that time. Petitioners also contend that although there was in fact a perfected contract of sale between them and Ramona P. Alcaraz, the latter breach her reciprocal obligation when she rendered impossible the consummation thereof by going to the United States of America, without leaving her address, telephone number, and Special Power of Attorney (Paragraphs 14 and 15, Answer with Compulsory Counterclaim to the Amended Complaint, p. 2; Rollo, p. 43), for which reason, so petitioners conclude, they were correct in unilaterally rescinding the contract of sale. 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 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 Court). The records are absolutely bereft of any supporting evidence to substantiate petitioners allegations. We have stressed time and again that allegations must be proven by sufficient evidence (Ng Cho Cio vs. Ng Diong, 110 Phil. 882 [1961]; Recaro vs. Embisan, 2 SCRA 598 [1961]). Mere allegation is not an evidence (Lagasca vs. De Vera, 79 Phil. 376 [1947]). Even assuming arguendo that Ramona P. Alcaraz was in the United States of America on February 6, 1985, we cannot justify petitioners-sellers act of unilaterally and extrajudicially rescinding the contract of sale, there being no express stipulation authorizing the sellers

to extrajudicially rescind the contract of sale. (cf. Dignos vs. CA, 158 SCRA 375 [1988]; Taguba vs. Vda. De Leon, 132 SCRA 722 [1984]) Moreover, petitioners are estopped from raising the alleged absence of Ramona P. Alcaraz because although the evidence on record shows that the sale was in the name of Ramona P. Alcaraz as the buyer, the sellers had been dealing with Concepcion D. Alcaraz, Ramonas mother, who had acted for and in behalf of her daughter, if not also in her own behalf. Indeed, the down payment was made by Concepcion D. Alcaraz with her own personal Check (Exh. B; Exh. 2) for and in behalf of Ramona P. Alcaraz. There is no evidence showing that petitioners ever questioned Concepcions authority to represent Ramona P. Alcaraz when they accepted her personal check. Neither did they raise any objection as regards payment being effected by a third person. Accordingly, as far as petitioners are concerned, the physical absence of Ramona P. Alcaraz is not a ground to rescind the contract of sale. Corollarily, Ramona P. Alcaraz cannot even be deemed to be in default, insofar as her obligation to pay the full purchase price is concerned. Petitioners who are precluded from setting up the defense of the physical absence of Ramona P. Alcaraz as above-explained offered no proof whatsoever to show that they actually presented the new transfer certificate of title in their names and signified their willingness and readiness to execute the deed of absolute sale in accordance with their agreement. Ramonas corresponding obligation to pay the balance of the purchase price in the amount of P1,190,000.00 (as buyer) never became due and demandable and, therefore, she cannot be deemed to have been in default. Article 1169 of the Civil Code defines when a party in a contract involving reciprocal obligations may be considered in default, to wit: Art. 1169. Those obliged to deliver or to do something, incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation. xxx In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfill his obligation, delay by the other begins. (Emphasis supplied.) There is thus neither factual nor legal basis to rescind the contract of sale between petitioners and respondents. With the foregoing conclusions, the sale to the other petitioner, Catalina B. Mabanag, gave rise to a case of double sale where 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 to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof to the person who presents the oldest title, provided there is good faith. 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 registered with the Registry of Deeds of Quezon City giving rise to the issuance of a new certificate of title in the name of Catalina B. Mabanag on June 5, 1985. Thus, the second paragraph of Article 1544 shall apply. The above-cited provision on double sale presumes title or ownership to pass to the buyer, the exceptions being: (a) when 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 two buyers, when the second buyer, in good faith, acquires possession of the property ahead of the first buyer. Unless, the second buyer satisfies these

requirements, title or ownership will not transfer to him to the prejudice of the first buyer. In his commentaries on the Civil Code, an accepted authority on the subject, now a distinguished member of the Court, Justice Jose C. Vitug, explains: The governing principle is prius tempore, potior jure (first in time, stronger in right). Knowledge by the first buyer of the second sale cannot defeat the first buyers rights except when the second buyer first registers in good faith the second sale (Olivares vs. Gonzales, 159 SCRA 33). Conversely, knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register, since knowledge taints his registration with bad faith (see also Astorga vs. Court of Appeals, G.R. No. 58530, 26 December 1984). In Cruz vs. Cabana (G.R. No. 56232, 22 June 1984, 129 SCRA 656), it was held that it is essential, to merit the protection of Art. 1544, second paragraph, that the second realty buyer must act in good faith in registering his deed of sale (citing Carbonell vs. Court of Appeals, 69 SCRA 99, Crisostomo vs. CA, G.R. No. 95843, 02 September 1992). (J. Vitug, Compendium of Civil Law and Jurisprudence, 1993 Edition, p. 604). Petitioners point out that the notice of lis pendens in the case at bar was annotated on the title of the subject property only on February 22, 1985, whereas, the second sale between petitioners Coronels and petitioner Mabanag was supposedly perfected prior thereto or on February 18, 1985. The idea conveyed is that at the time petitioner Mabanag, the second buyer, bought the property under a clean title, she was unaware of any adverse claim or previous sale, for which reason she is a buyer in good faith. We are not persuaded by such argument. In a case of double sale, what finds relevance and materiality is not whether or not the second buyer in good faith but whether or not said second buyer registers such second sale in good faith, that is, without knowledge of any defect in the title of the property sold. As clearly borne out by the evidence in this case, petitioner Mabanag could not have in good faith, registered the sale entered into on February 18, 1985 because as early as February 22, 1985, a notice of lis pendens had been annotated on the transfer certificate of title in the names of petitioners, whereas petitioner Mabanag registered the said sale sometime in April, 1985. At the time of registration, therefore, petitioner Mabanag knew that the same property had already been previously sold to private respondents, or, at least, she was charged with knowledge that a previous buyer is claiming title to the same property. Petitioner Mabanag cannot close her eyes to the defect in petitioners title to the property at the time of the registration of the property. This Court had occasions to rule that: If a vendee in a double sale registers the sale after he has acquired knowledge that there was a previous sale of the same property to a third party or that another person claims said property in a previous sale, the registration will constitute a registration in bad faith and will not confer upon him any right. (Salvoro vs. Tanega, 87 SCRA 349 [1978]; citing Palarca vs. Director of Land, 43 Phil. 146; Cagaoan vs. Cagaoan, 43 Phil. 554; Fernandez vs. Mercader, 43 Phil. 581.) Thus, the sale of the subject parcel of land between petitioners and Ramona P. Alcaraz, perfected on February 6, 1985, prior to that between petitioners and Catalina B. Mabanag on February 18, 1985, was correctly upheld by both the courts below. Although there may be ample indications that there was in fact an agency between Ramona as principal and Concepcion, her mother, as agent insofar as the subject contract of sale is concerned, the issue of whether or not Concepcion was also acting in her own behalf as a cobuyer is not squarely raised in the instant petition, nor in such assumption disputed between mother and daughter. Thus, We will not touch this issue and no longer disturb the lower courts ruling on this point. WHEREFORE, premises considered, the instant petition is hereby DISMISSED and the appealed judgment AFFIRMED.

SO ORDERED. SPECIAL FIRST DIVISION

[G.R. No. 145982. September 13, 2004]

FRANK N. LIU, deceased, substituted by his surviving spouse Diana Liu, and children, namely: Walter, Milton, Frank, Jr., Henry and Jockson, all surnamed Liu, Rebecca Liu Shui and Pearl Liu Rodriguez, petitioners, vs. ALFREDO LOY, JR., TERESITA A. LOY and ESTATE OF JOSE VAO, respondents. RESOLUTION CARPIO, J.: The Loys seek a reconsideration of the Decision dated 3 July 2003 of this Court declaring void the deeds of sale of Lot Nos. 5 and 6 executed by Teodoro Vao in favor of Alfredo Loy, Jr. and Teresita Loy. We held that Lot Nos. 5 and 6 belong to Frank Liu[1] since the probate court approved his deeds of sale in accordance with Section 8,[2] Rule 89 of the Rules of Court. The deeds of sale of the Loys lacked a valid probate court approval. As a result, we ordered the Estate of Jose Vao to reimburse the Loys the amounts they paid for Lot Nos. 5 and 6, with interest at 6% annually from 4 June 1976, the date of filing of the complaint, until finality of the decision, and 12% annually thereafter until full payment. The Court heard the parties on oral arguments on 10 March 2004 and granted them time to submit their memoranda. Frank Liu filed his memorandum on 29 March 2004 while the Loys filed their memorandum on 25 March 2004 by registered mail. The issues that the Loys raise in their motion for reconsideration are not new. The Court already considered and discussed extensively these issues in the assailed Decision. We find no compelling reason to reconsider the assailed Decision. The Loys insist that the transaction between Teodoro Vao and Benito Liu, the predecessor-in-interest of Frank Liu, is a contract to sell. In contrast, the transactions between Teodoro Vao and Alfredo Loy, Jr. and Teresita A. Loy were contracts of sale. According to the Loys, the contract to sell did not transfer ownership of Lot Nos. 5 and 6 to Benito Liu or Frank Liu because it was only a promise to sell subject to the full payment of the consideration. On the other hand, the contracts of sale in favor of the Loys transferred ownership, as the conveyances were absolute.[3] As we held in our Decision, a prior contract to sell made by the decedent during his lifetime prevails over a subsequent contract of sale made by the administrator without probate court approval. It is immaterial if the prior contract is a mere contract to sell and does not immediately convey ownership. Frank Lius contract to sell became valid and effective upon its execution and bound the estate to convey the property upon full payment of the consideration. It is apparent from Teodoro Vaos letter[4] dated 16 October 1954 that the reason why Frank Liu stopped further payments on the lots, leaving a balance of P1,000, was because Teodoro Vao could not yet transfer the titles to Benito Liu, the predecessor-in-interest of Frank Liu. It would appear that Frank Liu and Teodoro Vao lost contact with each other thereafter and it was only on 25 January 1964 that Frank Liu wrote Teodoro Vao informing the latter that he was ready to pay the balance of the purchase price of the lots. Teodoro Vao did not reply to Frank Lius letter. On 22 April 1966, Benito Liu sold to Frank Liu the lots, including Lot Nos. 5 and 6, which Benito Liu purchased from Teodoro Vao on 13 January 1950. Frank Liu sent three letters dated 21 March 1968, 7 June 1968 and 29 July 1968 to Teodoro Vao reiterating his request for the execution of the deed of sale covering the lots in his favor but to no avail. On 19 August 1968, Teodoro Vao sold Lot No. 6 to Teresita Loy and on 16 December 1969, he sold Lot No. 5 to Alfredo Loy,

Jr. The sales to the Loys were made after Frank Liu offered to pay the balance of the purchase price of the lots and after he repeatedly requested for the execution of the deeds of sale in his favor. The sale of the lots by Teodoro Vao to Benito Liu was valid. The sale was made by Teodoro Vao on 13 January 1950 in his capacity as attorney-in-fact of Jose Vao. The sale to Benito Liu was made during the lifetime of Jose Vao, not after the death of Jose Vao who died on 28 January 1950.[5] The power of attorney executed by Jose Vao in favor of Teodoro Vao remained valid during the lifetime of Jose Vao. In his letter dated 16 October 1954, Teodoro Vao stated that on 30 June 1954, the Supreme Court allowed the probate of the will of Jose Vao. Teodoro Vao likewise mentioned in the letter that in July 1954, the Supreme Court held that all the sales made by Teodoro Vao of the properties of his father were legal.[6] Thus, Benito Lius deed of sale in favor of Frank Liu covering the lots sold to him by Teodoro Vao constitutes a valid charge or claim against the estate of Jose Vao. The Loys reiterate their contention that Teodoro Vao, as administrator and sole heir to the properties, can sell the lots to them since the rights of an heir are transmitted from the moment of death of the testator. Although a property under estate proceedings cannot be sold without judicial approval, the Loys allege that in their case, the probate court later approved the sales to them, thereby ratifying the sales.[7] Well-settled is the rule that an administrator needs court approval to sell estate property, otherwise the sale is void.[8] Court approval of the sale of estate property is clearly required under Rule 89 of the Rules of Court, which enumerates the instances when the court may allow the sale or encumbrance of estate property. Section 7 of Rule 89 of the Rules of Court even provides for the regulations for granting authority to sell, mortgage or otherwise encumber estate property. [9] More importantly, Section 91[10] of Act No. 496 (Land Registration Act) and Section 88[11] of Presidential Decree No. 1529 (Property Registration Decree) specifically require court approval for any sale of registered land by an executor or administrator. The laws, Rules of Court, jurisprudence and regulations explicitly require court approval before any sale of estate property by an executor or administrator can take effect. The purpose of requiring court approval is to protect creditors. In this case, Frank Liu is a creditor, and he is the person the law seeks to protect. The orders of the probate court dated 19 and 23 March 1976 approving the contracts of the Loys are void. The orders did not ratify the sales because there was already a prior order of the probate court dated 24 February 1976 approving the sale of Lot Nos. 5 and 6 to Frank Liu. Hence, the probate court had already lost jurisdiction over Lot Nos. 5 and 6 since the lots no longer formed part of the Estate of Jose Vao. In fact, the administratrix of the estate filed a motion for reconsideration of the orders of the probate court approving the contracts of the Loys because she already executed a deed of sale covering Lot Nos. 5 and 6 in favor of Frank Liu. The Loys impliedly admitted that their contracts of sale dated 19 August 1968 and 16 December 1969 were ineffective when they belatedly asked in 1976 for court approval of the sales. If the Loys believed that their deeds of sale in 1968 and 1969 were valid, they would not have asked for court approval in 1976. By asking for court approval, they necessarily admitted that without court approval, the sale to them was ineffectual. The Loys are not buyers and registrants in good faith considering that they bought from a seller who was not a registered owner. Teodoro Vao signed both contracts of sale but the titles to the lots sold were in the name of Estate of Jose Vao. And since the titles to Lot Nos. 5 and 6 were in name of Estate of Jose Vao, the Loys were on notice that court approval was needed for the sale of estate property. The exparte motion for the court approval of the sales filed by the Loys some seven or eight years after the sales transaction reveals a less than honest actuation, prompting the administratrix to object to the courts approval. WHEREFORE, we DENY the motion for reconsideration. SO ORDERED. EN BANC

[G. R. No. 4275. March 23, 1909.] PAULA CONDE, Plaintiff-Appellee, vs. ROMAN ABAYA, DefendantAppellant.

DECISION ARELLANO, C.J.: From the hearing of the appeal interposed by Roman Abaya in the special proceedings brought in the Court of First Instance of La Laguna for the settlement of the intestate estate and the distribution of the property of Casiano Abaya it appears: chanrobles virtualawlibrary I. As antecedents: chanrobles virtualawlibrary that Casiano Abaya, unmarried, the son of Romualdo Abaya and Sabina Labadia, died on the 6th of April 1899; that Paula Conde, as the mother of the natural children Jose and Teopista Conde, whom she states she had by Casiano Abaya, on the 6th of November, 1905, moved the settlement of the said intestate succession; that an administrator having been appointed for the said estate on the 25th of November, 1905, Roman Abaya, a son of the said Romualdo Abaya and Sabina Labadia, the parents of the late Casiano Abaya, came forward and opposed said appointment and claimed it for himself as being the nearest relative of the deceased; that this was granted by the court below on the 9th of January, 1906; that on the 17th of November, 1906, Roman Abaya moved that, after due process of law, the court declare him to be the sole heir of Casiano Abaya, to the exclusion of all other persons, especially of Paula Conde, and to be therefore entitled to take possession of all the property of said estate, and that it be adjudicated to him; and that on November 22, 1906, the court ordered the publication of notices for the declaration of heirs and distribution of the property of the estate. II. That on the 28th of November, 1906, Paula Conde, in reply to the foregoing motion of Roman Abaya, filed a petition wherein she stated that she acknowledged the relationship alleged by Roman Abaya, but that she considered that her right was superior to his and moved for a hearing of the matter, and, in consequence of the evidence that she intended to present she prayed that she be declared to have preferential rights to the property left by Casiano Abaya, and that the same be adjudicated to her together with the corresponding products thereof. III. That the trial was held, both parties presenting documentary and oral evidence, and the court below entered the following judgment: chanrobles virtualawlibrary That the administrator of the estate of Casiana Abaya should recognize Teopista and Jose Conde as being natural children of Casiano Abaya; that the Petitioner Paula Conde should succeed to the hereditary rights of her children with respect to the inheritance of their deceased natural father Casiano Abaya; and therefore, it is hereby declared that she is the only heir to the property of the said intestate estate, to the exclusion of the administrator, Roman Abaya. IV. That Roman Abaya excepted to the foregoing judgment, appealed to this court, and presented the following statement of errors: chanrobles virtualawlibrary 1. The fact that the court below found that an ordinary action for the acknowledgment of natural children under articles 135 and 137 of the Civil Code, might be brought in special probate proceedings. 2. The finding that after the death of a person claimed to be an unacknowledged natural child, the mother of such presumed natural child, as heir to the latter, may bring an action to enforce the acknowledgment of her deceased child in accordance with articles 135 and 137 of the Civil Code. 3. The finding in the judgment that the alleged continuous possession of the deceased children of Paula Conde of the status of natural children of the late Casiano Abaya, has been fully proven in these proceedings; and 4. On the hypothesis that it was proper to adjudicate the property of this intestate estate to Paula Conde, as improperly found by the court below, the court erred in not having declared that said property should be reserved in favor of relatives of Casiano Abaya to the third degree, and in not having previously demanded securities from Paula Conde to guarantee the transmission of the property to those who might fall within the reservation.

As to the first error assigned, the question is set up as to whether in special proceedings for the administration and distribution of an intestate estate, an action might be brought to enforce the acknowledgment of the natural child of the person from whom the inheritance is derived, that is to say, whether one might appear as heir on the ground that he is a recognized natural child of the deceased, not having been so recognized by the deceased either voluntarily or compulsory by reason of a preexisting judicial decision, but asking at the same time that, in the special proceeding itself, he be recognized by the presumed legitimate heirs of the deceased who claim to be entitled to the succession opened in the special proceeding. According to section 782 of the Code of Civil Procedure If there shall be a controversy before the Court of First Instance as to who the lawful heirs of the deceased person are, or as to the distributive share to which each person is entitled under the law, the testimony as to such controversy shall be taken in writing by the judge, under oath and signed by witness. Any party in interest whose distributive share is affected by the determination of such controversy, may appeal from the judgment of the Court of First Instance determining such controversy to the Supreme Court, within the time and in the manner provided in the last preceding section. This court has decided the present question in the manner shown in the case of Juana Pimental vs. Engracio Palanca (5 Phil. Rep. 436.) cralaw The main question with regard to the second error assigned, is whether or not the mother of a natural child now deceased, but who survived the person who, it is claimed, was his natural father, also deceased, may bring an action for the acknowledgment of the natural filiation in favor of such child in order to appear in his behalf to receive the inheritance from the person who is supposed to be his natural father. In order to decide in the affirmative the court below has assigned the following as the only foundation: chanrobles virtualawlibrary In resolving a similar question Manresa says: chanrobles virtualawlibrary An acknowledgment can only be demanded by the natural child and his descendants whom it shall benefit, and should they be minors or otherwise incapacitated, such person as legally represents them; the mother may ask it in behalf of her child so long as he is under her authority. On this point no positive declaration has been made, undoubtedly because it was not considered necessary. A private action is in question and the general rule must be followed. Elsewhere the same author adds: chanrobles virtualawlibrary It may so happen that the child dies before four years have expired after attaining majority, or that the document supporting his petition for acknowledgment is discovered after his death, such death perhaps occurring after his parents had died, as is supposed by article 137, or during their lifetime. In any case such right of action shall pertain to the descendants of the child whom the acknowledgment may interest. (See Commentaries to arts. 135 and 137, Civil Code. Vol. I.) cralaw The above doctrine, advanced by one of the most eminent commentators of the Civil Code, lacks legal and doctrinal foundation. The power to transmit the right of such action by the natural child to his descendants cannot be sustained under the law, and still less to his mother. It is without any support in law because the rule laid down in the code is most positive, limiting in form, when establishing the exception for the exercise of such right of action after the death of the presumed parents, as is shown hereafter. It is not supported by any doctrine, because up to the present time no argument has been presented, upon which even an approximate conclusion could be based. Although the Civil Code considerably improved the condition of recognized natural children, granting them rights and actions that they did not possess under the former laws, they were not, however, placed upon the same plane as legitimate ones. The difference that separates these two classes of children is still great, as proven by so many articles dealing with the rights of the family and with succession in relation to the members thereof. It may be laid down as a legal maxim, that whatever the code does not grant to the legitimate children, or in connection with their rights, must still less be understood as granted to recognized natural children or in connection with their rights. There is not a single exception in its provisions. If legitimacy is the attribute that constitutes the basis of the absolute family rights of the child, the acknowledgment of the natural child is, among illegitimate ones, that which unites him to the family of the father

or the mother who recognizes him, and affords him a participation in the rights of the family, relatively advantageous according to whether they are alone or whether they concur with other individuals of the family of his purely natural father or mother. Thus, in order to consider the spirit of the Civil Code nothing is more logical than to establish a comparison between an action to claim the legitimacy, and one to enforce acknowledgment. Art. 118. The action to claim its legitimacy may be brought by the child at any time of its lifetime and shall be transmitted to its heirs, should it die during minority or in a state of insanity. In such cases the heirs shall be allowed a period of five years in which to institute the action. The action already instituted by the child is transmitted by its death to the heirs, if it has not lapsed before then. Art. 137. The actions for the acknowledgment of natural children can be instituted only during the life of the presumed parents, except in the following cases: chanrobles virtualawlibrary 1. If the father or mother died during the minority of the child, in which case the latter may institute the action before the expiration of the first four years of its majority. 2. If, after the death of the father or mother, some instrument, before unknown, should be discovered in which the child is expressly acknowledged. In this case the action must be instituted within the six months following the discovery of such instrument. On this supposition the first difference that results between one action and the other consists in that the right of action for legitimacy lasts during the whole lifetime of the child, that is, it can always be brought against the presumed parents or their heirs by the child itself, while the right of action for the acknowledgment of a natural child does not last his whole lifetime, and, as a general rule, it cannot be instituted against the heirs of the presumed parents, inasmuch as it can be exercised only during the life of the presumed parents. With regard to the question at issue, that is, the transmission to the heirs of the presumed parents of the obligation to admit the legitimate filiation, or to recognize the natural filiation, there exists the most radical difference in that the former continues during the life of the child who claims to be legitimate, and he may demand it either directly and primarily from the said presumed parents, or indirectly and secondarily from the heirs of the latter; while the second does not endure for life; as a general rule, it only lasts during the life of the presumed parents. Hence the other difference, derived as a consequence, that an action for legitimacy is always brought against the heirs of the presumed parents in case of the death of the latter, while the action for acknowledgment is not brought against the heirs of such parents, with the exception of the two cases prescribed by article 137 transcribed above. So much for the passive transmission of the obligation to admit the legitimate filiation, or to acknowledge the natural filiation. As to the transmission to the heirs of the child of the latters action to claim his legitimacy, or to obtain the acknowledgment of his natural filiation, it is seen that the code grants it in the first case, but not the second. It contains provisions for the transmission of the right of action which, for the purpose of claiming his legitimacy inheres in the child, but it does not say a word with regard to the transmission of the right to obtain the acknowledgment of the natural filiation. Therefore, the respective corollary of each of the two above-cited articles is: chanrobles virtualawlibrary (1) That the right of action which devolves upon the child to claim his legitimacy under article 118, may be transmitted to his heirs in certain cases designated in the said article; (2) That the right of action for the acknowledgment of natural children to which article 137 refers, can never be transmitted, for the reason that the code makes no mention of it in any case, not even as an exception. It is most illogical and contrary to every rule of correct interpretation, that the right of action to secure acknowledgment by the natural child should be presumed to be transmitted, independently, as a rule, to his heirs, while the right of action to claim legitimacy from his predecessor is not expressly, independently, or, as a general rule, conceded to the heirs of the legitimate child, but only relatively and as an exception. Consequently, the pretension that the right of action on the part of the child to obtain the acknowledgment of his natural filiation is transmitted to

his descendants is altogether unfounded. No legal provision exists to sustain such pretension, nor can an argument of presumption be based on the lesser claim when there is no basis for the greater one, and when it is only given as an exception in well-defined cases. It is placing the heirs of the natural child on a better footing than the heirs of the legitimate one, when, as a matter of fact, the position of a natural child is no better than, nor even equal to, that of a legitimate child. From the express and precise precepts of the code the following conclusions are derived: chanrobles virtualawlibrary The right of action that devolves upon the child to claim his legitimacy lasts during his whole life, while the right to claim the acknowledgment of a natural child lasts only during the life of his presumed parents. Inasmuch as the right of action accruing to the child to claim his legitimacy lasts during his whole life, he may exercise it either against the presumed parents, or their heirs; while the right of action to secure the acknowledgment of a natural child, since it does not last during his whole life, but depends on that of the presumed parents, as a general rule can only be exercised against the latter. Usually the right of action for legitimacy devolving upon the child is of a personal character and pertains exclusively to him, only the child may exercise it at any time during his lifetime. As an exception, and in three cases only, it may be transmitted to the heirs of the child, to wit, if he died during his minority, or while insane, or after action had been already instituted. An action for the acknowledgment of a natural child may, as an exception, be exercised against the heirs of the presumed parents in two cases: chanrobles virtualawlibrary first, in the event of the death of the latter during the minority of the child, and second, upon the discovery of some instrument of express acknowledgment of the child, executed by the father or mother, the existence of which was unknown during the life of the latter. But as such action for the acknowledgment of a natural child can only be exercised by him. It cannot be transmitted to his descendants, or to his ascendants. In support of the foregoing cited: chanrobles virtualawlibrary the following authorities may be

a wide difference between the advantages granted to a legitimate child and to a natural one. (Ibid., Vol. II, 171.) cralaw Navarro Amandi (Cuestionario del Codigo Civil) raises the question: chanrobles virtualawlibrary Can the heirs of a natural child claim the acknowledgment in those cases wherein the father or mother are under obligation to acknowledge? And says: chanrobles virtualawlibrary Opinions are widely divergent. The court of Rennes held (on April 13, 1844) that the right of investigation forms a part of the estate of the child, and along with his patrimony is transmitted to his heirs. The affirmation is altogether too categorical to be admissible. If it were correct the same thing would happen as when the legitimacy of a child is claimed, and as already seen, the right of action to demand the legitimacy is not transmitted to the heirs in every case and as an absolute right, but under certain limitations and circumstances. Now, were we to admit the doctrine of the court of Rennes, the result would be that the claim for natural filiation would be more favored than one for legitimate filiation. This would be absurd, because it cannot be conceived that the legislator should have granted a right of action to the heirs of the natural child, which is only granted under great limitations and in very few cases to those of a legitimate one. Some persons insist that the same rules that govern legitimate filiation apply by analogy to natural filiation, and that in this conception the heirs of the natural child are entitled to claim it in the cases prescribed by article 118. The majority, however, are inclined to consider the right to claim acknowledgment as a personal right, and consequently, not transmissive to the heirs. Really there are not legal grounds to warrant the transmission. (Vol. 2, 229.) cralaw In a decision like the present one it is impossible to bring forward the argument of analogy for the purpose of considering that the heirs of the natural child are entitled to the right of action which article 118 concedes to the heirs of the legitimate child. The existence of a provision for the one case and the absence thereof for the other is a conclusive argument that inclusio unius est exclusio alterius, and it cannot be understood that the provision of law should be the same when the same reason does not hold in the one case as in the other. The theory of the law of transmission is also entirely inapplicable in this case. This theory, which in the Roman Law expressed the general rule that an heir who did not accept an inheritance during his lifetime was incapacitated from transmitting it to his own heirs, included at the same time the idea that if the inheritance was not transmitted because the heir did not possess it, there were, however, certain things which the heir held and could transmit. Such was the law and the right to accept the inheritance, for the existing reason that all rights, both real and personal, shall pass to the heir; quia haeres representat defunctum in omnibus et per omnia. According to article 659 of the Civil Code, the inheritance includes all the property, rights, and obligations of a person, which are not extinguished by his death. If the mother is the heir of her natural child, and the latter, among other rights during his lifetime was entitled to exercise an action for his acknowledgment against his father, during the life of the latter, or after his death in some of the excepting cases of article 137, such right, which is a portion of his inheritance, is transmitted to his mother as being his heir, and it was so understood by the court of Rennes when it considered the right in question, not as a personal and exclusive right of the child which is extinguished by his death, but as any other right which might be transmitted after his death. This right of supposed transmission is even less tenable than that sought to be sustained by the argument of analogy. The right of action pertaining to the child to claim his legitimacy is in all respects superior to that of the child who claims acknowledgment as a natural child. And it is evident that the right of action to claim his legitimacy is not one of those rights which the legitimate child may transmit by inheritance to his heirs; it forms no part of the component rights of his inheritance. If it were so, there would have been no necessity to establish its transmissibility to heirs as an exception in the terms and conditions of article 118 of the code. So that, in order that it may constitute a portion of the childs inheritance, it is necessary that the conditions and the terms contained in article 118 shall be present, since without them, the right that the child held during his lifetime, being personal and exclusive in principle, and therefore, as a general rule not susceptible of transmission, would and should have been extinguished by his death. Therefore, where no express provision like that of article 118 exists, the right of action for the acknowledgment of a natural child is, in

Sanchez Roman, in his Treatise on Civil Law, propounds the question as to whether said action should be considered transmissive to the heirs or descendants of the natural child, whether he had or had not exercised it up to the time of his death, and decides it as follows; There is an entire absence of legal provisions, and at most, it might be deemed admissible as a solution, that the right of action to claim the acknowledgment of a natural child is transmitted by analogy to his heirs on the same conditions and terms that it is transmitted to the descendants of a legitimate child, to claim his legitimacy, under article 118, but nothing more; because on this point nothing warrants placing the heirs of a natural child on a better footing than those of the legitimate child, and even to compare them would not fail to be a strained and questionable matter, and one of great difficulty for decision by the courts, for the simple reason that for the heirs of the legitimate child, the said article 118 exists, while for those of the natural child, as we have said, there is no provision in the code authorizing the same, although on the other hand there is none that prohibits it. (Vol. V.) cralaw Diaz Guijarro and Martinez Ruiz in their work on The Civil Code as construed by the supreme court of Spain, commenting upon article 137, say: chanrobles virtualawlibrary Article 118, taking into account the privileges due to the legitimacy of children, grants them the right to claim said legitimacy during their lifetime, and even authorizes the transmission of said right for the space of five years to the heirs thereof, if the child die during his minority or in a state of insanity. But as article 137 is based on the consideration that in the case of a natural child, ties are less strong and sacred in the eyes of the law, it does not fix such a long and indefinite period for the exercise of the action; it limits it to the life of the parents, excepting in the two cases mentioned in said article; and it does not allow, as does article 118, the action to pass on to the heirs, inasmuch as, although it does not prohibit it, and for that reason it might be deemed on general principles of law to consent to it, such a supposition is inadmissible for the reason that a comparison of both articles shows that the silence of the law in the latter case is not, nor can it be, an omission, but a deliberate intent to establish

principle and without exception, extinguished by his death, and cannot be transmitted as a portion of the inheritance of the deceased child. On the other hand, it said right of action formed a part of the childs inheritance, it would be necessary to establish the doctrine that the right to claim such an acknowledgment from the presumed natural father and from his heirs is an absolute right of the heirs of the child, not limited by certain circumstances as in the case of the heirs of a legitimate child; and if it is unreasonable to compare a natural child with a legitimate one to place the heirs of a natural child and his inheritance on a better footing than those of a legitimate child would not only be unreasonable, but, as stated in one of the above citations, most absurd and illegal in the present state of the law and in accordance with the general principles thereof. For all of the foregoing reasons we hereby reverse the judgment appealed from in all its parts, without any special ruling as to the costs of this instance. Mapa, Johnson, Carson and Willard, JJ., concur. SECOND DIVISION

On November 15, 1983, Grepalife issued Certificate No. B-18558, as insurance coverage of Dr. Leuterio, to the extent of his DBP mortgage indebtedness amounting to eighty-six thousand, two hundred (P86,200.00) pesos. On August 6, 1984, Dr. Leuterio died due to massive cerebral hemorrhage. Consequently, DBP submitted a death claim to Grepalife. Grepalife denied the claim alleging that Dr. Leuterio was not physically healthy when he applied for an insurance coverage on November 15, 1983. Grepalife insisted that Dr. Leuterio did not disclose he had been suffering from hypertension, which caused his death. Allegedly, such non-disclosure constituted concealment that justified the denial of the claim. On October 20, 1986, the widow of the late Dr. Leuterio, respondent Medarda V. Leuterio, filed a complaint with the Regional Trial Court of Misamis Oriental, Branch 18, against Grepalife for Specific Performance with Damages.[5] During the trial, Dr. Hernando Mejia, who issued the death certificate, was called to testify. Dr. Mejias findings, based partly from the information given by the respondent widow, stated that Dr. Leuterio complained of headaches presumably due to high blood pressure. The inference was not conclusive because Dr. Leuterio was not autopsied, hence, other causes were not ruled out. On February 22, 1988, the trial court rendered a decision in favor of respondent widow and against Grepalife. On May 17, 1993, the Court of Appeals sustained the trial courts decision. Hence, the present petition. Petitioners interposed the following assigned errors: "1. THE LOWER COURT ERRED IN HOLDING DEFENDANT-APPELLANT LIABLE TO THE DEVELOPMENT BANK OF THE PHILIPPINES (DBP) WHICH IS NOT A PARTY TO THE CASE FOR PAYMENT OF THE PROCEEDS OF A MORTGAGE REDEMPTION INSURANCE ON THE LIFE OF PLAINTIFFS HUSBAND WILFREDO LEUTERIO ONE OF ITS LOAN BORROWERS, INSTEAD OF DISMISSING THE CASE AGAINST DEFENDANTAPPELLANT [Petitioner Grepalife] FOR LACK OF CAUSE OF ACTION. 2. THE LOWER COURT ERRED IN NOT DISMISSING THE CASE FOR WANT OF JURISDICTION OVER THE SUBJECT OR NATURE OF THE ACTION AND OVER THE PERSON OF THE DEFENDANT. 3. THE LOWER COURT ERRED IN ORDERING DEFENDANT-APPELLANT TO PAY TO DBP THE AMOUNT OF P86,200.00 IN THE ABSENCE OF ANY EVIDENCE TO SHOW HOW MUCH WAS THE ACTUAL AMOUNT PAYABLE TO DBP IN ACCORDANCE WITH ITS GROUP INSURANCE CONTRACT WITH DEFENDANT-APPELLANT. 4. THE LOWER COURT ERRED IN - HOLDING THAT THERE WAS NO CONCEALMENT OF MATERIAL INFORMATION ON THE PART OF WILFREDO LEUTERIO IN HIS APPLICATION FOR MEMBERSHIP IN THE GROUP LIFE INSURANCE PLAN BETWEEN DEFENDANT-APPELLANT OF THE INSURANCE CLAIM ARISING FROM THE DEATH OF WILFREDO LEUTERIO.[6] Synthesized below are the assigned errors for our resolution: 1. Whether the Court of Appeals erred in holding petitioner liable to DBP as beneficiary in a group life insurance contract from a complaint filed by the widow of the decedent/mortgagor? 2. Whether the Court of Appeals erred in not finding that Dr. Leuterio concealed that he had hypertension, which would vitiate the insurance contract? 3. Whether the Court of Appeals erred in holding Grepalife liable in the amount of eighty six thousand, two hundred (P86,200.00) pesos without proof of the actual outstanding mortgage payable by the mortgagor to DBP.

[G.R. No. 113899. October 13, 1999]

GREAT PACIFIC LIFE ASSURANCE CORP., petitioner vs. COURT OF APPEALS AND MEDARDA V. LEUTERIO, respondents. DECISION QUISUMBING, J.: This petition for review, under Rule 45 of the Rules of Court, assails the Decision[1] dated May 17, 1993, of the Court of Appeals and its Resolution[2] dated January 4, 1994 in CA-G.R. CV No. 18341. The appellate court affirmed in toto the judgment of the Misamis Oriental Regional Trial Court, Branch 18, in an insurance claim filed by private respondent against Great Pacific Life Assurance Co. The dispositive portion of the trial courts decision reads: WHEREFORE, judgment is rendered adjudging the defendant GREAT PACIFIC LIFE ASSURANCE CORPORATION as insurer under its Group policy No. G-1907, in relation to Certification B-18558 liable and ordered to pay to the DEVELOPMENT BANK OF THE PHILIPPINES as creditor of the insured Dr. Wilfredo Leuterio, the amount of EIGHTY SIX THOUSAND TWO HUNDRED PESOS (P86,200.00); dismissing the claims for damages, attorneys fees and litigation expenses in the complaint and counterclaim, with costs against the defendant and dismissing the complaint in respect to the plaintiffs, other than the widowbeneficiary, for lack of cause of action.[3] The facts, as found by the Court of Appeals, are as follows: A contract of group life insurance was executed between petitioner Great Pacific Life Assurance Corporation (hereinafter Grepalife) and Development Bank of the Philippines (hereinafter DBP). Grepalife agreed to insure the lives of eligible housing loan mortgagors of DBP. On November 11, 1983, Dr. Wilfredo Leuterio, a physician and a housing debtor of DBP applied for membership in the group life insurance plan. In an application form, Dr. Leuterio answered questions concerning his health condition as follows: 7. Have you ever had, or consulted, a physician for a heart condition, high blood pressure, cancer, diabetes, lung, kidney or stomach disorder or any other physical impairment? Answer: No. If so give details ___________. 8. Are you now, to the best of your knowledge, in good health? Answer: [ x ] Yes [ ] No.[4]

Petitioner alleges that the complaint was instituted by the widow of Dr. Leuterio, not the real party in interest, hence the trial court acquired no jurisdiction over the case. It argues that when the Court of Appeals affirmed the trial courts judgment, Grepalife was held liable to pay the proceeds of insurance contract in favor of DBP, the indispensable party who was not joined in the suit. To resolve the issue, we must consider the insurable interest in mortgaged properties and the parties to this type of contract. The rationale of a group insurance policy of mortgagors, otherwise known as the mortgage redemption insurance, is a device for the protection of both the mortgagee and the mortgagor. On the part of the mortgagee, it has to enter into such form of contract so that in the event of the unexpected demise of the mortgagor during the subsistence of the mortgage contract, the proceeds from such insurance will be applied to the payment of the mortgage debt, thereby relieving the heirs of the mortgagor from paying the obligation.[7] In a similar vein, ample protection is given to the mortgagor under such a concept so that in the event of death; the mortgage obligation will be extinguished by the application of the insurance proceeds to the mortgage indebtedness.[8] Consequently, where the mortgagor pays the insurance premium under the group insurance policy, making the loss payable to the mortgagee, the insurance is on the mortgagors interest, and the mortgagor continues to be a party to the contract. In this type of policy insurance, the mortgagee is simply an appointee of the insurance fund, such loss-payable clause does not make the mortgagee a party to the contract.[9] Section 8 of the Insurance Code provides: Unless the policy provides, where a mortgagor of property effects insurance in his own name providing that the loss shall be payable to the mortgagee, or assigns a policy of insurance to a mortgagee, the insurance is deemed to be upon the interest of the mortgagor, who does not cease to be a party to the original contract, and any act of his, prior to the loss, which would otherwise avoid the insurance, will have the same effect, although the property is in the hands of the mortgagee, but any act which, under the contract of insurance, is to be performed by the mortgagor, may be performed by the mortgagee therein named, with the same effect as if it had been performed by the mortgagor. The insured private respondent did not cede to the mortgagee all his rights or interests in the insurance, the policy stating that: In the event of the debtors death before his indebtedness with the Credito r [DBP] shall have been fully paid, an amount to pay the outstanding indebtedness shall first be paid to the creditor and the balance of sum assured, if there is any, shall then be paid to the beneficiary/ies designated by the debtor.[10]When DBP submitted the insurance claim against petitioner, the latter denied payment thereof, interposing the defense of concealment committed by the insured. Thereafter, DBP collected the debt from the mortgagor and took the necessary action of foreclosure on the residential lot of private respondent. [11] In Gonzales La O vs. Yek Tong Lin Fire & Marine Ins. Co.[12] we held: Insured, being the person with whom the contract was made, is primarily the proper person to bring suit thereon. * * * Subject to some exceptions, insured may thus sue, although the policy is taken wholly or in part for the benefit of another person named or unnamed, and although it is expressly made payable to another as his interest may appear or otherwise. * * * Although a policy issued to a mortgagor is taken out for the benefit of the mortgagee and is made payable to him, yet the mortgagor may sue thereon in his own name, especially where the mortgagees interest is less than the full amount recoverable under the policy, * * *. And in volume 33, page 82, of the same work, we read the following: Insured may be regarded as the real party in interest, although he has assigned the policy for the purpose of collection, or has assigned as collateral security any judgment he may obtain.[13] And since a policy of insurance upon life or health may pass by transfer, will or succession to any person, whether he has an insurable interest or not, and such person may recover it whatever the insured might have recovered,[14] the widow of the decedent Dr. Leuterio may file the suit against the insurer, Grepalife.

The second assigned error refers to an alleged concealment that the petitioner interposed as its defense to annul the insurance contract. Petitioner contends that Dr. Leuterio failed to disclose that he had hypertension, which might have caused his death. Concealment exists where the assured had knowledge of a fact material to the risk, and honesty, good faith, and fair dealing requires that he should communicate it to the assured, but he designedly and intentionally withholds the same.[15] Petitioner merely relied on the testimony of the attending physician, Dr. Hernando Mejia, as supported by the information given by the widow of the decedent. Grepalife asserts that Dr. Mejias technical diagnosis of the cause of death of Dr. Leuterio was a duly documented hospital record, and that the widows declaration that her husband had possible hypertension several years ago should not be considered as hearsay, but as part of res gestae. On the contrary the medical findings were not conclusive because Dr. Mejia did not conduct an autopsy on the body of the decedent. As the attending physician, Dr. Mejia stated that he had no knowledge of Dr. Leuterios any previous hospital confinement.[16] Dr. Leuterios death certificate stated that hypertension was only the possible cause of death. The private respondents statement, as to the medical history of her husband, was due to her unreliable recollection of events. Hence, the statement of the physician was properly considered by the trial court as hearsay. The question of whether there was concealment was aptly answered by the appellate court, thus: The insured, Dr. Leuterio, had answered in his insurance application that he was in good health and that he had not consulted a doctor or any of the enumerated ailments, including hypertension; when he died the attending physician had certified in the death certificate that the former died of cerebral hemorrhage, probably secondary to hypertension. From this report, the appellant insurance company refused to pay the insurance claim. Appellant alleged that the insured had concealed the fact that he had hypertension. Contrary to appellants allegations, there was no sufficient proof that the insured had suffered from hypertension. Aside from the statement of the insureds widow who was not even sure if the medicines taken by Dr. Leuterio were for hypertension, the appellant had not proven nor produced any witness who could attest to Dr. Leuterios medical history... xxx Appellant insurance company had failed to establish that there was concealment made by the insured, hence, it cannot refuse payment of the claim.[17] The fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the contract. [18] Misrepresentation as a defense of the insurer to avoid liability is an affirmative defense and the duty to establish such defense by satisfactory and convincing evidence rests upon the insurer.[19] In the case at bar, the petitioner failed to clearly and satisfactorily establish its defense, and is therefore liable to pay the proceeds of the insurance. And that brings us to the last point in the review of the case at bar. Petitioner claims that there was no evidence as to the amount of Dr. Leuterios outstanding indebtedness to DBP at the time of the mortgagors death. Hence, for private respondents failure to establish the same, the action for specific performance should be dismissed. Petitioners claim is without merit. A life insurance policy is a valued policy.[20] Unless the interest of a person insured is susceptible of exact pecuniary measurement, the measure of indemnity under a policy of insurance upon life or health is the sum fixed in the policy. [21] The mortgagor paid the premium according to the coverage of his insurance, which states that: The policy states that upon receipt of due proof of the Debtors de ath during the terms of this insurance, a death benefit in the amount of P86,200.00 shall be paid.

In the event of the debtors death before his indebtedness with the creditor shall have been fully paid, an amount to pay the outstanding indebtedness shall first be paid to the Creditor and the balance of the Sum Assured, if there is any shall then be paid to the beneficiary/ies designated by the debtor.[22] (Emphasis omitted) However, we noted that the Court of Appeals decision was promulgated on May 17, 1993. In private respondents memorandum, she states that DBP foreclosed in 1995 their residential lot, in satisfaction of mortgagors outstanding loan. Considering this supervening event, the insurance proceeds shall inure to the benefit of the heirs of the deceased person or his beneficiaries. Equity dictates that DBP should not unjustly enrich itself at the expense of another (Nemo cum alterius detrimenio protest). Hence, it cannot collect the insurance proceeds, after it already foreclosed on the mortgage. The proceeds now rightly belong to Dr. Leuterios heirs represented by his widow, herein private respondent Medarda Leuterio. WHEREFORE, the petition is hereby DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. CV 18341 is AFFIRMED with MODIFICATION that the petitioner is ORDERED to pay the insurance proceeds amounting to Eighty-six thousand, two hundred (P86,200.00) pesos to the heirs of the insured, Dr. Wilfredo Leuterio (deceased), upon presentation of proof of prior settlement of mortgagors indebtedness to Development Bank of the Philippines. Costs against petitioner. SO ORDERED. Republic SUPREME Manila FIRST DIVISION G.R. No. L-46978 October 12, 1987 ERNESTO ROBLES, petitioner, vs. HON. DELFIN FL. BATACAN, HON. CONRADO M. VASQUEZ, HON. JOSE B. JIMENEZ. ATANACIO GERONIMO and BENEDICTO GERONIMO, respondents. of the Philippines COURT

only work he did was watch over the petitioner"s land and make brooms out of the fallen coconut leaves he would gather. He sold these brooms and kept the proceeds for himself without sharing them with the petitioner. 4 After trial, the Court of Agrarian Relations * rendered judgment recognizing the defendant as the agricultural tenant of the plaintiff and ordering the payment to him of the sum of P12,000.00 as his tenancy share. 5 Not satisfied, the petitioner went to the Court of Appeals, ** which affirmed the challenged decision in toto. 6 The petitioner is now before us and faults the respondent court with grave abuse of discretion for upholding the trial court. We do not agree that the respondent court erred. On the contrary, we find that its findings are supported by the evidence of record and in accord with the applicable law and doctrine. Thus, on the nature of the work performed by Severino Geronimo, it quoted with approval the conclusion of the trial court that he "was the tenant on the subject parcel for quite a time and was recognized by Ernesto Robles as such," discharging such tasks as supervising the harvest, cutting down bushes, clearing the land, picking up the fallen nuts, and paying the laborers, like the coconut gatherers and huskers, from his 1/3 share. 7 This was based on the declarations of several witnesses, 8 including the petitioner himself, and the several documents presented by Atanacio in which his father was described by the petitioner as his "kasama" to whom was being given his "bahagui" or share. 9 As for the private respondent's right to succeed his father, the respondent court was correct in affirming the ruling of the trial court that, as the son of Severino Geronimo, Atanacio had the right to take over as agricultural tenant in the petitioner"s land in accordance with R.A. No. 1199 and R.A. No. 3844.10 Obviously, Atanacio was the only heir interested in succeeding his father as his brother, Benedicto, had not seen fit to claim his right and in fact defaulted in resisting the petitioner"s claims in the ejectment suit. Significantly, when in his prayer the petitioner asks for authority to appoint the said Benedicto to succeed his father, it is presumably as his watcher only and not as agricultural tenant. The petitioner"s consistent claim, it should be noted, is that Severino Geronimo was not his tenant but only his watcher. The Court gave cited due course to this petition to enable the parties to argue on the amount of damages in view of the apparent lack of a credible basis therefor as observed by the trial court. 11 In his memorandum, the petitioner says the basis should be the weight of the coconut harvested and then, consistent with his main thesis, urges that no damages should be awarded at all.12 The private respondent says that the basis should be the number of nuts harvested and then asks that the damages be doubled.13 In his reply, realizing probably that the matter may have gotten out of hand, the petitioner now counters that the private respondent cannot claim an increase in the amount of damages because he has not, providentially, appealed the same. 14 This is correct and estops the private respondent. In La Mallorca v. Court of Appeals,15 the Court said: The increase of the award of damages from P3,000.00 to P6,000.00 by the Court of Appeals, however, cannot be sustained. Generally, the Appellate Court can only pass upon the consider questions or issues raised and argued in appellant"s brief, plaintiff did not appeal from that portion of judgment of the trial court awarding them damages. Neither does it appear that, as appellees to the Court of Appeals, plaintiffs have pointed out in their brief inadequacy of the award or that the inclusion of the figure P3,000.00 was merely a clerical error, in order that the matter may be treated as an exception to the general rule. Thus, the court of Appeals committed error in raising the amount for damages. In Dy v. Kuizon, 16 we declared:

CRUZ, J.: The central figure in this case is Severino Geronimo, who worked in the petitioner's land for twenty years until 1969 and died the following year at the age of 86. The central question in this case is the nature of the work he performed and the compensation he was supposed to receive. After his death, an ejectment suit was filed against his two sons by the petitioner, who claimed they had no right to remain in his land.1 Benedicto Geronimo did not choose to answer and so was declared in default. 2 The other defendant. Atanacio Geronimo, averred that he was entitled to succeed his father as the petitioner's agricultural tenant in accordance with R.A. No. 1199 and Section 9 of R.A. No. 3844. The private respondent's position is that his father was an agricultural tenant of the petitioner during the twenty years the former worked in the latter"s land. Hence, in accordance with the aforementioned laws, he could remain in the petitioner"s land under the same terms and conditions of the original tenancy share arrangement entered into between his father and the petitioner. His share should also be P100.00 more or less per harvest every forty days during the time he continued discharging his father"s work as his statutory successor. 3 The petitioner, for his part, insists that Severino Geronimo was never an agricultural tenant of his but worked merely as a watcher in his land. He did receive the sum of P100.00 every harvest but not as his share therein for that amount was given to him as a reward for his past services. The

It is a well-settled rule in this jurisdiction that whenever an appeal is taken in a civil case, an appellee who has not himself appealed cannot obtain from the appellate court any affirmative relief other than the ones granted in the decision of the court below. An appellee who is not appellant may assign errors in his brief where his purpose is to maintain the judgment on other grounds, but he may not do so if this purpose is to have the judgment modified or reversed for, in such a case, he must appeal. Here, the respondent did not appeal and so it was error for the Court of Appeals to award him a relief not granted by the lower court. In Madrideo v. Hon. Court of Appeals, 17 our ruling was: ... whenever an appeal is taken in a civil case, an appellee who has not appealed cannot obtain from the appellate court any affirmative relief other than the ones granted in the decision of the court below. The latest decision on this matter is Aguilar v. Chan,18 where the Court noted that although the actual damages suffered by the plaintiff-appellee exceeded the amount awarded to her by the lower court, this amount could not be increased because she had not appealed. The trial court had the opportunity to assess the evidence first-hand and so was in the best position to determine the factual relationship between the parties as well as the share to which the private respondent was entitled. We do not find that the respondent court committed grave abuse of discretion in affirming the decision of the court a quo and see no reason to reverse it. We too affirm. WHEREFORE, the petition is DENIED, with costs against the petitioner. This decision is immediately executory. SO ORDERED. SECOND DIVISION

violation of any of which shall entitle the vendor to cancel x x x this Deed of Absolute Sale and reenter the property; The purpose of the sale be 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, and therefore, the vendee shall not sell, convey, lease or sublease, or otherwise encumber the property in favor of any other party 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; x x x (Underscoring supplied).[3] A day after the issuance of TCT No. 436465, or on February 20, 1974, Macaria Vda. de Caiquep sold the subject lot to private respondent, Maximo Menez, Jr., as evidenced by a Deed of Absolute Sale (Exhibit D).[4] This deed was notarized but was not registered immediately upon its execution in 1974 because GSIS prohibited him from registering the same in view of the five-year prohibition to sell during the period ending in 1979. Sometime in 1979, for being suspected as a subversive, an Arrest, Search and Seizure Order (ASSO) was issued against private respondent. Military men ransacked his house in Cainta, Rizal. Upon learning that he was wanted by the military, he voluntarily surrendered and was detained for two (2) years. When released, another order for his re-arrest was issued so he hid in Mindanao for another four (4) years or until March 1984. In December of 1990, he discovered that the subject TCT was missing. He consulted a lawyer but the latter did not act immediately on the matter. Upon consulting a new counsel, an Affidavit of Loss[5] was filed with the Register of Deeds of Pasig and a certified copy[6] of TCT No. 436465 was issued. Private respondent also declared the property for tax purposes and obtained a certification thereof from the Assessors Office.[7] Private respondent sent notices to the registered owner at her address appearing in the title and in the Deed of Sale. And, with his counsel, he searched for the registered owner in Metro Manila and Rizal and as far as Samar, Leyte, Calbayog City, Tacloban City, and in Eastern and Northern Samar. However, their search proved futile. On July 8, 1992, private respondent filed a petition docketed as LRC Case No. R-4659 with the RTC, Branch 154, Pasig, Metro Manila for the issuance of owners duplicate copy of TCT No. 436465 to replace the lost one. To show he was the owner of the contested lot, he showed the Deed of Absolute Sale, Exhibit D. The petition was set for hearing and the courts order dated July 10, 1992 was published once in Malaya, a nationally circulated newspaper in the Philippines.[8] During the hearing on September 3, 1992, only Menez and his counsel appeared. The Register of Deeds who was not served notice, and the Office of the Solicitor General and the Provincial Prosecutor who were notified did not attend. On September 18, 1992, there being no opposition, Menez presented his evidence ex-parte. The trial court granted his petition in its decision[9] dated September 30, 1992, the dispositive portion of which reads: WHEREFORE, the petition is hereby GRANTED and the Registry of Deeds of Pasig, Metro Manila, is hereby directed to issue a new Owners Duplicate Copy of Transfer Certificate of Title No. 436465 based on the original thereon filed in his office which shall contain the memorandum of encumbrance and an additional memorandum of the fact that it was issued in place of the lost duplicate and which shall, in all respect, be entitled to like faith and credit as the original duplicate, for all legal intents and purposes. Issuance of new owners duplicate copy shall be made only after this decision shall have become final and executory. The said lost owners duplicate is hereby declared null and void. Petitioner shall pay all legal fees in connection with the issuance of the new owners copy.

[G.R. No. 121940. December 4, 2001]

JESUS SAN AGUSTIN, petitioner, vs. HON. COURT OF APPEALS and MAXIMO MENEZ, JR., respondents. DECISION QUISUMBING, J.: This petition for review on certiorari seeks the reversal of the decision[1] of the Court of Appeals dated May 19, 1995, affirming that of the Regional Trial Court in LRC Case No. R-4659. The relevant facts, as summarized by the CA, are as follows: On February 11, 1974, the Government Service Insurance System (GSIS) sold to a certain Macaria Vda. de Caiquep, a parcel of residential land with an area of 168 square meters located in Rosario, Pasig City and denominated as Lot 13, Block 7, Pcs-5816 of the Government Service and Insurance System Low Cost Housing Project (GSISLCHP). The sale is evidenced by a Deed of Absolute Sale. [2] On February 19, 1974, the Register of Deeds of Rizal issued in the name of Macaria Vda. de Caiquep, Transfer Certificate of Title (TCT) No. 436465 with the following encumbrance annotated at the back of the title: This Deed of Absolute Sale is subject to the conditions enumerated below which shall be permanent encumbrances on the property, the

Let copies of this Order be furnished the petitioner; the registered owner of his given address in the title, in the deed of sale, and in the tax declaration; the Registry of Deeds of Pasig; the Office of the Solicitor General; and the Provincial Fiscal of Pasig, Metro Manila. SO ORDERED.[10] On October 13, 1992, herein petitioner, Jesus San Agustin, received a copy of the abovecited decision. He claimed this was the first time he became aware of the case of her aunt, Macaria Vda. de Caiquep who, according to him, died sometime in 1974. Claiming that he was the present occupant of the property and the heir of Macaria, he filed his Motion to Reopen Reconstitution Proceedings[11] on October 27, 1992. On December 3, 1992, RTC issued an order denying said motion.[12] Petitioner filed an appeal with the Court of Appeals which, as earlier stated, was denied in its decision of May 19, 1995. Petitioner moved for a reconsideration, but it was denied in a resolution dated September 11, 1995.[13] Thus, the present petition, attributing the following errors to the court a quo: A. THE RESPONDENT COURT GRAVELY ERRED IN HOLDING THAT LRC CASE NO. R-4659 BEING ONLY A PETITION FOR THE ISSUANCE OF A NEW OWNERS DUPLICATE OF TITLE, THERE IS NO NEED OF PERSONAL NOTICE TO THE PETITIONER, THE ACTUAL POSSESSOR [WHO HAS] AND ACTUALLY BEEN PAYING THE REAL ESTATE TAX, DESPITE PRIVATE RESPONDENTS KNOWLEDGE OF ACTUAL POSSESSION OF AND INTEREST OVER THE PROPERTY COVERED BY TCT NO. 436465.[14] B. RESPONDENT COURT GRAVELY ERRED IN HOLDING THAT THE SALE BETWEEN THE PRIVATE RESPONDENT AND MACARIA VDA. DE CAIQUEP IS NOT NULL AND VOID AND UNDER ARTICLE 1409 OF THE CIVIL CODE SPECIFICALLY PARAGRAPH (7) THEREOF WHICH REFERS TO CONTRACTS EXPRESSLY PROHIBITED OR DECLARED VOID BY LAW.[15] Considering the above assignment of errors, let us resolve the corresponding issues raised by petitioner. The first issue involves private respondents alleged failure to send notice to petitioner who is the actual possessor of the disputed lot. Stated briefly, is petitioner entitled to notice? Our finding is in the negative. Presidential Decree No. 1529, otherwise known as the Property Registration Decree is decisive. It provides: Sec. 109. Notice and replacement of lost duplicate certificate. In case of loss or theft of an owners duplicate certificate of 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 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 produced by a person applying for the entry of a new certificate to him or for the registration of any instrument, a sworn statement of the fact of such loss or destruction may be filed by the registered owner or other person in interest and registered. Upon the petition of the registered owner or other person in interest, the court may, after notice and due hearing, direct the issuance of a new duplicate certificate, which shall contain a memorandum of the fact that it is issued in place of the lost duplicate certificate, but shall in all respects be entitled to like faith and credit as the original duplicate, and shall thereafter be regarded as such for all purposes of this decree. In Office of Court Administrator vs. Matas, A.M. No. RTJ-92-836, 247 SCRA 9, 16-17 (1995), we held:

In the case at bar, the respective certificate of title of the properties in question on file with the Register of Deeds are existing, and it is the owners copy of the certificate of title that was alleged to have been lost or destroyed. Thus, it is Section 109 of P.D. 1529 which was approved on June 11, 1978 that becomes effective and is applicable, a reading of which shows that it is practically the same as Section 109 of Act No. 496, governing reconstitution of a duplicate certificate of title lost or destroyed. Consequently, it is sufficient that the notice under Section 109 is sent to the Register of Deeds and to those persons who are known to have, or appear to have, an interest in the property as shown in the Memorandum of encumbrances at the back of the original or transfer certificate of title on file in the office of the Register of Deeds. From a legal standpoint, there are no other interested parties who should be notified, except those abovementioned since they are the only ones who may be deemed to have a claim to the property involved. A person dealing with registered property is not charged with notice of encumbrances not annotated on the back of the title. (Italics supplied.) Here, petitioner does not appear to have an interest in the property based on the memorandum of encumbrances annotated at the 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 present occupant thereof is not annotated in the said memorandum of encumbrances. Neither was his claim entered on the 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 pendency of LRC Case No. R-4659. Clearly, petitioner is not entitled to notice. Noteworthy is the fact that there was compliance by private respondent of the RTCs order of publication of the petition in a newspaper of general circulation. This is sufficient notice of the petition to the public at large. Petitioner contends that as possessor or actual occupant of the lot in controversy, he is entitled under the law to be notified. He relies on Alabang Development Corporation vs. Valenzuela, G.R. No. L-54094, 116 SCRA 261, 277 (1982), which held that in reconstitution proceedings, courts must make sure that indispensable parties, i.e., the actual owners and possessors of the lands involved, are duly served with actual and personal notice of the petition. As pointed out by the appellate court, his reliance on Alabang is misplaced because the cause of action in that case is based on Republic Act No. 26, entitled An Act Providing A Special Procedure for the Reconstitution of Torrens Certificate of Title Lost or Destroyed, while the present case is based on Section 109 of P.D. 1529 as above explained. Under Republic Act No. 26, reconstitution is validly made only in case the original copy of the certificate of title with the 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 one having interest in the property involved, he is deprived of his day in court and the order of reconstitution is null and void.[16] The case at bar is not for reconstitution, but merely for replacement of lost duplicate certificate. On the second assigned error, petitioner contends that Exhibit D is null and void under Article 1409 of the Civil Code, specifically paragraph (7),[17] because the deed of sale was executed within the fiveyear prohibitory period under Commonwealth Act No. 141, as amended, otherwise known as The Public Land Act.[18] We find petitioners contention less than meritorious. We agree with respondent court that the proscription under Com. Act No. 141 on sale within the 5-year restrictive period refers to homestead lands only. Here the lot in dispute is not a homestead land, as found by the trial and appellate courts. Said lot is owned by GSIS, under TCT No. 10028 in its proprietary capacity. Moreover, as far as the violation of the 5-year restrictive condition imposed by GSIS in its contract with petitioners predecessor-in-interest is concerned, it is the GSIS and not petitioner who had a cause of action against private respondent. Vide the instructive case of Sarmiento vs. Salud: The condition that the appellees Sarmiento spouses could not resell the property except to the People's Homesite and Housing Corporation (PHHC for short) within the next 25 years after appellees' purchasing the lot is manifestly a condition in favor of the PHHC, and not one in favor of the Sarmiento spouses. The condition conferred no actionable right on

appellees herein, since it operated as a restriction upon their jus disponendi of the property they bought, and thus limited their right of ownership. It follows that on the assumption that the mortgage to appellee Salud and the foreclosure sale violated the condition in the Sarmiento contract, only the PHHC was entitled to invoke the condition aforementioned, and not the Sarmientos. The validity or invalidity of the sheriff's foreclosure sale to appellant Salud thus depended exclusively on the PHHC; the latter could attack the sale as violative of its right of exclusive reacquisition; but it (PHHC) also could waive the condition and treat the sale as good, in which event, the sale can not be assailed for breach of the condition aforestated.[19] 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 our view, the contract of sale remains valid between the parties, unless and until annulled in the proper suit filed by the rightful party, the GSIS. For now, the said contract of sale is binding upon the heirs of Macaria Vda. de Caiquep, including petitioner 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, xxx 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 petitioners predecessorin-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. SO ORDERED. THIRD DIVISION [G.R. No. 113725. June 29, 2000] JOHNNY S. RABADILLA,[1] petitioner, vs. COURT OF APPEALS AND MARIA MARLENA[2] COSCOLUELLA Y BELLEZA VILLACARLOS, respondents. DECISION PURISIMA, J.: This is a petition for review of the decision of the Court of Appeals,[3] dated December 23, 1993, in CA-G.R. No. CV-

35555, which set aside the decision of Branch 52 of the Regional Trial Court in Bacolod City, and ordered the defendants-appellees (including herein petitioner), as heirs of Dr. Jorge Rabadilla, to reconvey title over Lot No. 1392, together with its fruits and interests, to the estate of Aleja Belleza. The antecedent facts are as follows: In a Codicil appended to the Last Will and Testament of testatrix Aleja Belleza, Dr. Jorge Rabadilla, predecessor-ininterest of the herein petitioner, Johnny S. Rabadilla, was instituted as a devisee of 511, 855 square meters of that parcel of land surveyed as Lot No. 1392 of the Bacolod Cadastre. The said Codicil, which was duly probated and admitted in Special Proceedings No. 4046 before the then Court of First Instance of Negros Occidental, contained the following provisions: "FIRST I give, leave and bequeath the following property owned by me to Dr. Jorge Rabadilla resident of 141 P. Villanueva, Pasay City: (a) Lot No. 1392 of the Bacolod Cadastre, covered by Transfer Certificate of Title No. RT-4002 (10942), which is registered in my name according to the records of the Register of Deeds of Negros Occidental. (b) That should Jorge Rabadilla die ahead of me, the aforementioned property and the rights which I shall set forth hereinbelow, shall be inherited and acknowledged by the children and spouse of Jorge Rabadilla. xxx FOURTH (a)....It is also my command, in this my addition (Codicil), that should I die and Jorge Rabadilla shall have already received the ownership of the said Lot No. 1392 of the Bacolod Cadastre, covered by Transfer Certificate of Title No. RT-4002 (10942), and also at the time that the lease of Balbinito G. Guanzon of the said lot shall expire, Jorge Rabadilla shall have the obligation until he dies, every year to give to Maria Marlina Coscolluela y Belleza, Seventy (75) (sic) piculs of Export sugar and Twenty Five (25) piculs of Domestic sugar, until the said Maria Marlina Coscolluela y Belleza dies. FIFTH (a) Should Jorge Rabadilla die, his heir to whom he shall give Lot No. 1392 of the Bacolod Cadastre, covered by Transfer Certificate of Title No. RT-4002 (10492), shall have the obligation to still give yearly, the sugar as specified in the Fourth paragraph of his testament, to Maria Marlina Coscolluela y Belleza on the month of December of each year. SIXTH I command, in this my addition (Codicil) that the Lot No. 1392, in the event that the one to whom I have left and bequeathed, and his heir shall later sell, lease, mortgage this said Lot, the buyer, lessee, mortgagee, shall have also the obligation to respect and deliver yearly ONE HUNDRED (100) piculs of

sugar to Maria Marlina Coscolluela y Belleza, on each month of December, SEVENTY FIVE (75) piculs of Export and TWENTY FIVE (25) piculs of Domestic, until Maria Marlina shall die, lastly should the buyer, lessee or the mortgagee of this lot, not have respected my command in this my addition (Codicil), Maria Marlina Coscolluela y Belleza, shall immediately seize this Lot No. 1392 from my heir and the latter's heirs, and shall turn it over to my near desendants, (sic) and the latter shall then have the obligation to give the ONE HUNDRED (100) piculs of sugar until Maria Marlina shall die. I further command in this my addition (Codicil) that my heir and his heirs of this Lot No. 1392, that they will obey and follow that should they decide to sell, lease, mortgage, they cannot negotiate with others than my near descendants and my sister."[4] Pursuant to the same Codicil, Lot No. 1392 was transferred to the deceased, Dr. Jorge Rabadilla, and Transfer Certificate of Title No. 44498 thereto issued in his name. Dr. Jorge Rabadilla died in 1983 and was survived by his wife Rufina and children Johnny (petitioner), Aurora, Ofelia and Zenaida, all surnamed Rabadilla. On August 21, 1989, Maria Marlena Coscolluela y Belleza Villacarlos brought a complaint, docketed as Civil Case No. 5588, before Branch 52 of the Regional Trial Court in Bacolod City, against the above-mentioned heirs of Dr. Jorge Rabadilla, to enforce the provisions of subject Codicil. The Complaint alleged that the defendant-heirs violated the conditions of the Codicil, in that: 1. Lot No. 1392 was mortgaged to the Philippine National Bank and the Republic Planters Bank in disregard of the testatrix's specific instruction to sell, lease, or mortgage only to the near descendants and sister of the testatrix. 2. Defendant-heirs failed to comply with their obligation to deliver one hundred (100) piculs of sugar (75 piculs export sugar and 25 piculs domestic sugar) to plaintiff Maria Marlena Coscolluela y Belleza from sugar crop years 1985 up to the filing of the complaint as mandated by the Codicil, despite repeated demands for compliance. 3. The banks failed to comply with the 6th paragraph of the Codicil which provided that in case of the sale, lease, or mortgage of the property, the buyer, lessee, or mortgagee shall likewise have the obligation to deliver 100 piculs of sugar per crop year to herein private respondent. The plaintiff then prayed that judgment be rendered ordering defendant-heirs to reconvey/return-Lot No. 1392 to the surviving heirs of the late Aleja Belleza, the cancellation of TCT No. 44498 in the name of the deceased, Dr. Jorge Rabadilla, and the issuance of a new certificate of title in the names of the surviving heirs of the late Aleja Belleza. On February 26, 1990, the defendant-heirs were declared in default but on March 28, 1990 the Order of Default was lifted, with respect to defendant Johnny S. Rabadilla, who filed his Answer, accordingly. During the pre-trial, the parties admitted that: On November 15, 1998, the plaintiff (private respondent) and a certain Alan Azurin, son-in-law of the herein petitioner who was lessee of the property and acting as attorney-in-fact of defendant-heirs, arrived at an amicable settlement and entered

into a Memorandum of Agreement on the obligation to deliver one hundred piculs of sugar, to the following effect: "That for crop year 1988-89, the annuity mentioned in Entry No. 49074 of TCT No. 44489 will be delivered not later than January of 1989, more specifically, to wit: 75 piculs of 'A' sugar, and 25 piculs of 'B' sugar, or then existing in any of our names, Mary Rose Rabadilla y Azurin or Alan Azurin, during December of each sugar crop year, in Azucar Sugar Central; and, this is considered compliance of the annuity as mentioned, and in the same manner will compliance of the annuity be in the next succeeding crop years. That the annuity above stated for crop year 1985-86, 1986-87, and 1987-88, will be complied in cash equivalent of the number of piculs as mentioned therein and which is as herein agreed upon, taking into consideration the composite price of sugar during each sugar crop year, which is in the total amount of ONE HUNDRED FIVE THOUSAND PESOS (P105,000.00). That the above-mentioned amount will be paid or delivered on a staggered cash installment, payable on or before the end of December of every sugar crop year, to wit: For 1985-86, TWENTY SIX THOUSAND TWO HUNDRED FIFTY (P26,250.00) Pesos, payable on or before December of crop year 1988-89; For 1986-87, TWENTY SIX THOUSAND TWO HUNDRED FIFTY (P26,250.00) Pesos, payable on or before December of crop year 1989-90; For 1987-88, TWENTY SIX THOUSAND TWO HUNDRED FIFTY (P26,250.00) Pesos, payable on or before December of crop year 1990-91; and For 1988-89, TWENTY SIX THOUSAND TWO HUNDRED FIFTY (P26,250.00) Pesos, payable on or before December of crop year 1991-92."[5] However, there was no compliance with the aforesaid Memorandum of Agreement except for a partial delivery of 50.80 piculs of sugar corresponding to sugar crop year 1988 1989. On July 22, 1991, the Regional Trial Court came out with a decision, dismissing the complaint and disposing as follows: "WHEREFORE, in the light of the aforegoing findings, the Court finds that the action is prematurely filed as no cause of action against the defendants has as yet arose in favor of plaintiff. While there maybe the non-performance of the command as mandated exaction from them simply because they are the children of Jorge Rabadilla, the title holder/owner of the lot in question, does not warrant the filing of the present complaint. The remedy at bar must fall. Incidentally, being in the category as creditor of the left estate, it is opined that plaintiff may initiate the intestate proceedings, if only to establish the heirs of Jorge Rabadilla and in order to give full

meaning and semblance to her claim under the Codicil. In the light of the aforegoing findings, the Complaint being prematurely filed is DISMISSED without prejudice. SO ORDERED."[6] On appeal by plaintiff, the First Division of the Court of Appeals reversed the decision of the trial court; ratiocinating and ordering thus: "Therefore, the evidence on record having established plaintiff-appellant's right to receive 100 piculs of sugar annually out of the produce of Lot No. 1392; defendants-appellee's obligation under Aleja Belleza's codicil, as heirs of the modal heir, Jorge Rabadilla, to deliver such amount of sugar to plaintiffappellant; defendants-appellee's admitted noncompliance with said obligation since 1985; and, the punitive consequences enjoined by both the codicil and the Civil Code, of seizure of Lot No. 1392 and its reversion to the estate of Aleja Belleza in case of such non-compliance, this Court deems it proper to order the reconveyance of title over Lot No. 1392 from the estates of Jorge Rabadilla to the estate of Aleja Belleza. However, plaintiff-appellant must institute separate proceedings to re-open Aleja Belleza's estate, secure the appointment of an administrator, and distribute Lot No. 1392 to Aleja Belleza's legal heirs in order to enforce her right, reserved to her by the codicil, to receive her legacy of 100 piculs of sugar per year out of the produce of Lot No. 1392 until she dies. Accordingly, the decision appealed from is SET ASIDE and another one entered ordering defendants-appellees, as heirs of Jorge Rabadilla, to reconvey title over Lot No. 1392, together with its fruits and interests, to the estate of Aleja Belleza. SO ORDERED."[7] Dissatisfied with the aforesaid disposition by the Court of Appeals, petitioner found his way to this Court via the present petition, contending that the Court of Appeals erred in ordering the reversion of Lot 1392 to the estate of the testatrix Aleja Belleza on the basis of paragraph 6 of the Codicil, and in ruling that the testamentary institution of Dr. Jorge Rabadilla is a modal institution within the purview of Article 882 of the New Civil Code. The petition is not impressed with merit. Petitioner contends that the Court of Appeals erred in resolving the appeal in accordance with Article 882 of the New Civil Code on modal institutions and in deviating from the sole issue raised which is the absence or prematurity of the cause of action. Petitioner maintains that Article 882 does not find application as there was no modal institution and the testatrix intended a mere simple substitution - i.e. the instituted heir, Dr. Jorge Rabadilla, was to be substituted by the testatrix's "near descendants" should the obligation to deliver the fruits to herein private respondent be not complied with. And since the testatrix died single and without issue, there can be no valid substitution and such testamentary provision cannot be given any effect. The petitioner theorizes further that there can be no valid substitution for the reason that the substituted heirs are not definite, as the substituted heirs are merely referred to as "near descendants" without a definite identity or reference as to who are the "near descendants" and therefore, under Articles

843[8] and 845[9] of the New Civil Code, the substitution should be deemed as not written. The contentions of petitioner are untenable. Contrary to his supposition that the Court of Appeals deviated from the issue posed before it, which was the propriety of the dismissal of the complaint on the ground of prematurity of cause of action, there was no such deviation. The Court of Appeals found that the private respondent had a cause of action against the petitioner. The disquisition made on modal institution was, precisely, to stress that the private respondent had a legally demandable right against the petitioner pursuant to subject Codicil; on which issue the Court of Appeals ruled in accordance with law. It is a general rule under the law on succession that successional rights are transmitted from the moment of death of the decedent[10] and compulsory heirs are called to succeed by operation of law. The legitimate children and descendants, in relation to their legitimate parents, and the widow or widower, are compulsory heirs.[11] Thus, the petitioner, his mother and sisters, as compulsory heirs of the instituted heir, Dr. Jorge Rabadilla, succeeded the latter by operation of law, without need of further proceedings, and the successional rights were transmitted to them from the moment of death of the decedent, Dr. Jorge Rabadilla. Under Article 776 of the New Civil Code, inheritance includes all the property, rights and obligations of a person, not extinguished by his death. Conformably, whatever rights Dr. Jorge Rabadilla had by virtue of subject Codicil were transmitted to his forced heirs, at the time of his death. And since obligations not extinguished by death also form part of the estate of the decedent; corollarily, the obligations imposed by the Codicil on the deceased Dr. Jorge Rabadilla, were likewise transmitted to his compulsory heirs upon his death. In the said Codicil, testatrix Aleja Belleza devised Lot No. 1392 to Dr. Jorge Rabadilla, subject to the condition that the usufruct thereof would be delivered to the herein private respondent every year. Upon the death of Dr. Jorge Rabadilla, his compulsory heirs succeeded to his rights and title over the said property, and they also assumed his (decedent's) obligation to deliver the fruits of the lot involved to herein private respondent. Such obligation of the instituted heir reciprocally corresponds to the right of private respondent over the usufruct, the fulfillment or performance of which is now being demanded by the latter through the institution of the case at bar. Therefore, private respondent has a cause of action against petitioner and the trial court erred in dismissing the complaint below. Petitioner also theorizes that Article 882 of the New Civil Code on modal institutions is not applicable because what the testatrix intended was a substitution - Dr. Jorge Rabadilla was to be substituted by the testatrix's near descendants should there be noncompliance with the obligation to deliver the piculs of sugar to private respondent. Again, the contention is without merit. Substitution is the designation by the testator of a person or persons to take the place of the heir or heirs first instituted. Under substitutions in general, the testator may either (1) provide for the designation of another heir to whom the property shall pass in case the original heir should die before him/her, renounce the inheritance or be incapacitated to inherit, as in a simple substitution,[12] or (2) leave his/her property to one person with the express charge that it be transmitted subsequently to another or others, as in a fideicommissary substitution.[13] The Codicil sued upon contemplates neither of the two. In simple substitutions, the second heir takes the inheritance in default of the first heir by reason of incapacity, predecease or

renunciation.[14] In the case under consideration, the provisions of subject Codicil do not provide that should Dr. Jorge Rabadilla default due to predecease, incapacity or renunciation, the testatrix's near descendants would substitute him. What the Codicil provides is that, should Dr. Jorge Rabadilla or his heirs not fulfill the conditions imposed in the Codicil, the property referred to shall be seized and turned over to the testatrix's near descendants. Neither is there a fideicommissary substitution here and on this point, petitioner is correct. In a fideicommissary substitution, the first heir is strictly mandated to preserve the property and to transmit the same later to the second heir.[15] In the case under consideration, the instituted heir is in fact allowed under the Codicil to alienate the property provided the negotiation is with the near descendants or the sister of the testatrix. Thus, a very important element of a fideicommissary substitution is lacking; the obligation clearly imposing upon the first heir the preservation of the property and its transmission to the second heir. "Without this obligation to preserve clearly imposed by the testator in his will, there is no fideicommissary substitution."[16] Also, the near descendants' right to inherit from the testatrix is not definite. The property will only pass to them should Dr. Jorge Rabadilla or his heirs not fulfill the obligation to deliver part of the usufruct to private respondent. Another important element of a fideicommissary substitution is also missing here. Under Article 863, the second heir or the fideicommissary to whom the property is transmitted must not be beyond one degree from the first heir or the fiduciary. A fideicommissary substitution is therefore, void if the first heir is not related by first degree to the second heir.[17] In the case under scrutiny, the near descendants are not at all related to the instituted heir, Dr. Jorge Rabadilla. The Court of Appeals erred not in ruling that the institution of Dr. Jorge Rabadilla under subject Codicil is in the nature of a modal institution and therefore, Article 882 of the New Civil Code is the provision of law in point. Articles 882 and 883 of the New Civil Code provide: Art. 882. The statement of the object of the institution or the application of the property left by the testator, or the charge imposed on him, shall not be considered as a condition unless it appears that such was his intention. That which has been left in this manner may be claimed at once provided that the instituted heir or his heirs give security for compliance with the wishes of the testator and for the return of anything he or they may receive, together with its fruits and interests, if he or they should disregard this obligation. Art. 883. When without the fault of the heir, an institution referred to in the preceding article cannot take effect in the exact manner stated by the testator, it shall be complied with in a manner most analogous to and in conformity with his wishes. The institution of an heir in the manner prescribed in Article 882 is what is known in the law of succession as an institucion sub modo or a modal institution. In a modal institution, the testator states (1) the object of the institution, (2) the purpose or application of the property left by the testator, or (3) the charge imposed by the testator upon the heir.[18] A "mode" imposes an obligation upon the heir or legatee but it does not affect the efficacy of his rights to the succession.[19] On the other hand, in a conditional testamentary disposition, the condition must happen or be fulfilled in order for the heir to be entitled to succeed the testator. The condition suspends but does not obligate; and the mode obligates but does not suspend.[20] To some extent, it is similar to a resolutory condition.[21]

From the provisions of the Codicil litigated upon, it can be gleaned unerringly that the testatrix intended that subject property be inherited by Dr. Jorge Rabadilla. It is likewise clearly worded that the testatrix imposed an obligation on the said instituted heir and his successors-in-interest to deliver one hundred piculs of sugar to the herein private respondent, Marlena Coscolluela Belleza, during the lifetime of the latter. However, the testatrix did not make Dr. Jorge Rabadilla's inheritance and the effectivity of his institution as a devisee, dependent on the performance of the said obligation. It is clear, though, that should the obligation be not complied with, the property shall be turned over to the testatrix's near descendants. The manner of institution of Dr. Jorge Rabadilla under subject Codicil is evidently modal in nature because it imposes a charge upon the instituted heir without, however, affecting the efficacy of such institution. Then too, since testamentary dispositions are generally acts of liberality, an obligation imposed upon the heir should not be considered a condition unless it clearly appears from the Will itself that such was the intention of the testator. In case of doubt, the institution should be considered as modal and not conditional.[22] Neither is there tenability in the other contention of petitioner that the private respondent has only a right of usufruct but not the right to seize the property itself from the instituted heir because the right to seize was expressly limited to violations by the buyer, lessee or mortgagee. In the interpretation of Wills, when an uncertainty arises on the face of the Will, as to the application of any of its provisions, the testator's intention is to be ascertained from the words of the Will, taking into consideration the circumstances under which it was made.[23] Such construction as will sustain and uphold the Will in all its parts must be adopted.[24] Subject Codicil provides that the instituted heir is under obligation to deliver One Hundred (100) piculs of sugar yearly to Marlena Belleza Coscuella. Such obligation is imposed on the instituted heir, Dr. Jorge Rabadilla, his heirs, and their buyer, lessee, or mortgagee should they sell, lease, mortgage or otherwise negotiate the property involved. The Codicil further provides that in the event that the obligation to deliver the sugar is not respected, Marlena Belleza Coscuella shall seize the property and turn it over to the testatrix's near descendants. The non-performance of the said obligation is thus with the sanction of seizure of the property and reversion thereof to the testatrix's near descendants. Since the said obligation is clearly imposed by the testatrix, not only on the instituted heir but also on his successors-in-interest, the sanction imposed by the testatrix in case of non-fulfillment of said obligation should equally apply to the instituted heir and his successors-in-interest. Similarly unsustainable is petitioner's submission that by virtue of the amicable settlement, the said obligation imposed by the Codicil has been assumed by the lessee, and whatever obligation petitioner had become the obligation of the lessee; that petitioner is deemed to have made a substantial and constructive compliance of his obligation through the consummated settlement between the lessee and the private respondent, and having consummated a settlement with the petitioner, the recourse of the private respondent is the fulfillment of the obligation under the amicable settlement and not the seizure of subject property. Suffice it to state that a Will is a personal, solemn, revocable and free act by which a person disposes of his property, to take effect after his death.[25] Since the Will expresses the manner in which a person intends how his properties be disposed, the wishes and desires of the testator must be strictly followed. Thus, a Will cannot be the subject of a compromise agreement which would thereby defeat the very purpose of making a Will.

WHEREFORE, the petition is hereby DISMISSED and the decision of the Court of Appeals, dated December 23, 1993, in CA-G.R. No. CV-35555 AFFIRMED. No pronouncement as to costs SO ORDERED. Republic SUPREME Manila THIRD DIVISION of the Philippines COURT

therein, he was informed that Fortunato Santiago, (Puentevella) and Alvarez were in possession of Lot 773. 2

Fuentebella

It is on record that on May 19, 1938, Fortunato D. Santiago was issued Transfer Certificate of Title No. RF 2694 (29797) covering Lot 773-A with an area of 37,818 square meters. 3 TCT No. RF 2694 describes Lot 773A as a portion of Lot 773 of the cadastral survey of Murcia and as originally registered under OCT No. 8804. The bigger portion of Lot 773 with an area of 118,831 square meters was also registered in the name of Fortunato D. Santiago on September 6, 1938 Under TCT No. RT-2695 (28192 ). 4 Said transfer certificate of title also contains a certification to the effect that Lot 773-B was originally registered under OCT No. 8804. On May 30, 1955, Santiago sold Lots 773-A and 773-B to Monico B. Fuentebella, Jr. in consideration of the sum of P7,000.00. 5 Consequently, on February 20, 1956, TCT Nos. T-19291 6 and T-19292 were issued in Fuentebella's name. After Fuentebella's death and during the settlement of his estate, the administratrix thereof (Arsenia R. Vda. de Fuentebella, his wife) filed in Special Proceedings No. 4373 in the Court of First Instance of Negros Occidental, a motion requesting authority to sell Lots 773-A and 773B. 7 By virtue of a court order granting said motion, 8 on March 24, 1958, Arsenia Vda. de Fuentebella sold said lots for P6,000.00 to Rosendo Alvarez. 9 Hence, on April 1, 1958 TCT Nos. T-23165 and T-23166 covering Lots 773-A and 773-B were respectively issued to Rosendo Alvarez. 10 Two years later or on May 26, 1960, Teodora Yanes and the children of her brother Rufino, namely, Estelita, Iluminado and Jesus, filed in the Court of First Instance of Negros Occidental a complaint against Fortunato Santiago, Arsenia Vda. de Fuentebella, Alvarez and the Register of Deeds of Negros Occidental for the "return" of the ownership and possession of Lots 773 and 823. They also prayed that an accounting of the produce of the land from 1944 up to the filing of the complaint be made by the defendants, that after court approval of said accounting, the share or money equivalent due the plaintiffs be delivered to them, and that defendants be ordered to pay plaintiffs P500.00 as damages in the form of attorney's fees. 11 During the pendency in court of said case or on November 13, 1961, Alvarez sold Lots 773-A, 773-B and another lot for P25,000.00 to Dr. Rodolfo Siason. 12 Accordingly, TCT Nos. 30919 and 30920 were issued to Siason, 13who thereafter, declared the two lots in his name for assessment purposes. 14 Meanwhile, on November 6, 1962, Jesus Yanes, in his own behalf and in behalf of the other plaintiffs, and assisted by their counsel, filed a manifestation in Civil Case No. 5022 stating that the therein plaintiffs "renounce, forfeit and quitclaims (sic) any claim, monetary or otherwise, against the defendant Arsenia Vda. de Fuentebella in connection with the above-entitled case." 15 On October 11, 1963, a decision was rendered by the Court of First Instance of Negros Occidental in Civil Case No. 5022, the dispositive portion of which reads: WHEREFORE, judgment is rendered, ordering the defendant Rosendo Alvarez to reconvey to the plaintiffs lots Nos. 773 and 823 of the Cadastral Survey of Murcia, Negros Occidental, now covered by Transfer Certificates of Title Nos. T-23165 and T23166 in the name of said defendant, and thereafter to deliver the possession of said lots to the plaintiffs. No special pronouncement as to costs. SO ORDERED. 16 It will be noted that the above-mentioned manifestation of Jesus Yanes was not mentioned in the aforesaid decision.

G.R. No. L-68053 May 7, 1990 LAURA ALVAREZ, FLORA ALVAREZ and RAYMUNDO ALVAREZ, petitioners, vs. THE HONORABLE INTERMEDIATE APELLATE COURT and JESUS YANES, ESTELITA YANES, ANTONIO YANES, ROSARIO YANES, and ILUMINADO YANES, respondents. Francisco G. Banzon for petitioner. Renecio R. Espiritu for private respondents.

FERNAN, C.J.: This is a petition for review on certiorari seeking the reversal of: (a) the decision of the Fourth Civil Cases Division of the Intermediate Appellate Court dated August 31, 1983 in AC-G.R. CV No. 56626 entitled "Jesus Yanes et al. v. Dr. Rodolfo Siason et al." affirming the decision dated July 8, 1974 of the Court of First Instance of Negros Occidental insofar as it ordered the petitioners to pay jointly and severally the private respondents the sum of P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B of the cadastral survey of Murcia, Negros Occidental and reversing the subject decision insofar as it awarded the sums of P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral damages and attorney's fees, respectively and (b) the resolution of said appellate court dated May 30, 1984, denying the motion for reconsideration of its decision. The real properties involved are two parcels of land identified as Lot 773A and Lot 773-B which were originally known as Lot 773 of the cadastral survey of Murcia, Negros Occidental. Lot 773, with an area of 156,549 square meters, was registered in the name of the heirs of Aniceto Yanes under Original Certificate of Title No. RO-4858 (8804) issued on October 9, 1917 by the Register of Deeds of Occidental Negros (Exh. A). Aniceto Yanes was survived by his children, Rufino, Felipe and Teodora. Herein private respondents, Estelita, Iluminado and Jesus, are the children of Rufino who died in 1962 while the other private respondents, Antonio and Rosario Yanes, are children of Felipe. Teodora was survived by her child, Jovita (Jovito) Alib. 1 It is not clear why the latter is not included as a party in this case. Aniceto left his children Lots 773 and 823. Teodora cultivated only three hectares of Lot 823 as she could not attend to the other portions of the two lots which had a total area of around twenty-four hectares. The record does not show whether the children of Felipe also cultivated some portions of the lots but it is established that Rufino and his children left the province to settle in other places as a result of the outbreak of World War II. According to Estelita, from the "Japanese time up to peace time", they did not visit the parcels of land in question but "after liberation", when her brother went there to get their share of the sugar produced

However, execution of said decision proved unsuccessful with respect to Lot 773. In his return of service dated October 20, 1965, the sheriff stated that he discovered that Lot 773 had been subdivided into Lots 773-A and 773-B; that they were "in the name" of Rodolfo Siason who had purchased them from Alvarez, and that Lot 773 could not be delivered to the plaintiffs as Siason was "not a party per writ of execution." 17 The execution of the decision in Civil Case No. 5022 having met a hindrance, herein private respondents (the Yaneses) filed on July 31, 1965, in the Court of First Instance of Negros Occidental a petition for the issuance of a new certificate of title and for a declaration of nullity of TCT Nos. T-23165 and T-23166 issued to Rosendo Alvarez. 18 Thereafter, the court required Rodolfo Siason to produce the certificates of title covering Lots 773 and 823. Expectedly, Siason filed a manifestation stating that he purchased Lots 773-A, 773-B and 658, not Lots 773 and 823, "in good faith and for a valuable consideration without any knowledge of any lien or encumbrances against said properties"; that the decision in the cadastral proceeding 19 could not be enforced against him as he was not a party thereto; and that the decision in Civil Case No. 5022 could neither be enforced against him not only because he was not a party-litigant therein but also because it had long become final and executory. 20 Finding said manifestation to be well-founded, the cadastral court, in its order of September 4, 1965, nullified its previous order requiring Siason to surrender the certificates of title mentioned therein. 21 In 1968, the Yaneses filed an ex-parte motion for the issuance of an alias writ of execution in Civil Case No. 5022. Siason opposed it. 22 In its order of September 28, 1968 in Civil Case No. 5022, the lower court, noting that the Yaneses had instituted another action for the recovery of the land in question, ruled that at the judgment therein could not be enforced against Siason as he was not a party in the case. 23 The action filed by the Yaneses on February 21, 1968 was for recovery of real property with damages. 24 Named defendants therein were Dr. Rodolfo Siason, Laura Alvarez, Flora Alvarez, Raymundo Alvarez and the Register of Deeds of Negros Occidental. The Yaneses prayed for the cancellation of TCT Nos. T-19291 and 19292 issued to Siason (sic) for being null and void; the issuance of a new certificate of title in the name of the Yaneses "in accordance with the sheriffs return of service dated October 20, 1965;" Siason's delivery of possession of Lot 773 to the Yaneses; and if, delivery thereof could not be effected, or, if the issuance of a new title could not be made, that the Alvarez and Siason jointly and severally pay the Yaneses the sum of P45,000.00. They also prayed that Siason render an accounting of the fruits of Lot 773 from November 13, 1961 until the filing of the complaint; and that the defendants jointly and severally pay the Yaneses moral damages of P20,000.00 and exemplary damages of P10,000.00 plus attorney's fees of P4, 000.00. 25 In his answer to the complaint, Siason alleged that the validity of his titles to Lots 773-A and 773-B, having been passed upon by the court in its order of September 4, 1965, had become res judicata and the Yaneses were estopped from questioning said order. 26 On their part, the Alvarez stated in their answer that the Yaneses' cause of action had been "barred by res judicata, statute of limitation and estoppel." 27 In its decision of July 8, 1974, the lower court found that Rodolfo Siason, who purchased the properties in question thru an agent as he was then in Mexico pursuing further medical studies, was a buyer in good faith for a valuable consideration. Although the Yaneses were negligent in their failure to place a notice of lis pendens "before the Register of Deeds of Negros Occidental in order to protect their rights over the property in question" in Civil Case No. 5022, equity demanded that they recover the actual value of the land because the sale thereof executed between Alvarez and Siason was without court approval. 28 The dispositive portion of the decision states: IN VIEW OF THE FOREGOING CONSIDERATION, judgment is hereby rendered in the following manner: A. The case against the defendant Dr. Rodolfo Siason and the Register of Deeds are (sic) hereby dismmissed,

B. The defendants, Laura, Flora and Raymundo, all surnamed Alvarez being the legitimate children of the deceased Rosendo Alvarez are hereby ordered to pay jointly and severally the plaintiffs the sum of P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B of Murcia Cadastre, Negros Occidental; the sum of P2,000.00 as actual damages suffered by the plaintiff; the sum of P5,000.00 representing moral damages and the sum of P2.000 as attorney's fees, all with legal rate of interest from date of the filing of this complaint up to final payment. C. The cross-claim filed by the defendant Dr. Rodolfo Siason against the defendants, Laura, Flora and Raymundo, all surnamed Alvarez is hereby dismissed. D. Defendants, Laura, Flora and Raymundo, all surnamed Alvarez are hereby ordered to pay the costs of this suit. SO ORDERED. 29 The Alvarez appealed to the then Intermediate Appellate Court which in its decision of August 31, 1983 30 affirmed the lower court's decision "insofar as it ordered defendants-appellants to pay jointly and severally the plaintiffs-appellees the sum of P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B of the cadastral survey of Murcia, Negros Occidental, and is reversed insofar as it awarded the sums of P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral damages and attorney's fees, respectively." 31 The dispositive portion of said decision reads: WHEREFORE, the decision appealed from is affirmed insofar as it ordered defendants-appellants to pay jointly and severally the plaintiffs- appellees the sum of P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B of the cadastral survey of Murcia, Negros Occidental, and is reversed insofar as it awarded the sums of P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral damages and attorney's fees, respectively. No costs. SO ORDERED. 32 Finding no cogent reason to grant appellants motion for reconsideration, said appellate court denied the same. Hence, the instant petition. ln their memorandum petitioners raised the following issues: 1. Whethere or not the defense of prescription and estoppel had been timely and properly invoked and raised by the petitioners in the lower court. 2. Whether or not the cause and/or causes of action of the private respondents, if ever there are any, as alleged in their complaint dated February 21, 1968 which has been docketed in the trial court as Civil Case No. 8474 supra, are forever barred by statute of limitation and/or prescription of action and estoppel. 3. Whether or not the late Rosendo Alvarez, a defendant in Civil Case No. 5022, supra and father of the petitioners become a privy and/or party to the waiver (Exhibit 4-defendant Siason) in Civil Case No. 8474, supra where the private respondents had unqualifiedly and absolutely waived, renounced and quitclaimed all their alleged rights and interests, if ever there is any, on Lots Nos. 773-A and 773-B of Murcia Cadastre as appearing in their written

manifestation dated November 6, 1962 (Exhibits "4" Siason) which had not been controverted or even impliedly or indirectly denied by them. 4. Whether or not the liability or liabilities of Rosendo Alvarez arising from the sale of Lots Nos. 773-A and 773-B of Murcia Cadastre to Dr. Rodolfo Siason, if ever there is any, could be legally passed or transmitted by operations (sic) of law to the petitioners without violation of law and due process . 33 The petition is devoid of merit. As correctly ruled by the Court of Appeals, it is powerless and for that matter so is the Supreme Court, to review the decision in Civil Case No. 5022 ordering Alvarez to reconvey the lots in dispute to herein private respondents. Said decision had long become final and executory and with the possible exception of Dr. Siason, who was not a party to said case, the decision in Civil Case No. 5022 is the law of the case between the parties thereto. It ended when Alvarez or his heirs failed to appeal the decision against them. 34 Thus, it is axiomatic that when a right or fact has been judicially tried and determined by a court of competent jurisdiction, so long as it remains unreversed, it should be conclusive upon the parties and those in privity with them in law or estate. 35 As consistently ruled by this Court, every litigation must come to an end. Access to the court is guaranteed. But there must be a limit to it. Once a litigant's right has been adjudicated in a valid final judgment of a competent court, he should not be granted an unbridled license to return for another try. The prevailing party should not be harassed by subsequent suits. For, if endless litigation were to be allowed, unscrupulous litigations will multiply in number to the detriment of the administration of justice. 36 There is no dispute that the rights of the Yaneses to the properties in question have been finally adjudicated in Civil Case No. 5022. As found by the lower court, from the uncontroverted evidence presented, the Yaneses have been illegally deprived of ownership and possession of the lots in question. 37 In fact, Civil Case No. 8474 now under review, arose from the failure to execute Civil Case No. 5022, as subject lots can no longer be reconveyed to private respondents Yaneses, the same having been sold during the pendency of the case by the petitioners' father to Dr. Siason who did not know about the controversy, there being no lis pendens annotated on the titles. Hence, it was also settled beyond question that Dr. Siason is a purchaser in good faith. Under the circumstances, the trial court did not annul the sale executed by Alvarez in favor of Dr. Siason on November 11, 1961 but in fact sustained it. The trial court ordered the heirs of Rosendo Alvarez who lost in Civil Case No. 5022 to pay the plaintiffs (private respondents herein) the amount of P20,000.00 representing the actual value of the subdivided lots in dispute. It did not order defendant Siason to pay said amount. 38 As to the propriety of the present case, it has long been established that the sole remedy of the landowner whose property has been wrongfully or erroneously registered in another's name is to bring an ordinary action in the ordinary court of justice for reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for damages. 39 "It is one thing to protect an innocent third party; it is entirely a different matter and one devoid of justification if deceit would be rewarded by allowing the perpetrator to enjoy the fruits of his nefarious decided As clearly revealed by the undeviating line of decisions coming from this Court, such an undesirable eventuality is precisely sought to be guarded against." 40 The issue on the right to the properties in litigation having been finally adjudicated in Civil Case No. 5022 in favor of private respondents, it cannot now be reopened in the instant case on the pretext that the defenses of prescription and estoppel have not been properly considered by the lower court. Petitioners could have appealed in the former case but they did not. They have therefore foreclosed their rights, if any, and they cannot now be heard to complain in another case in order to defeat

the enforcement of a judgment which has longing become final and executory. Petitioners further contend that the liability arising from the sale of Lots No. 773-A and 773-B made by Rosendo Alvarez to Dr. Rodolfo Siason should be the sole liability of the late Rosendo Alvarez or of his estate, after his death. Such contention is untenable for it overlooks the doctrine obtaining in this jurisdiction on the general transmissibility of the rights and obligations of the deceased to his legitimate children and heirs. Thus, the pertinent provisions of the Civil Code state: Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent of the value of the inheritance, of a person are transmitted through his death to another or others either by his will or by operation of law. Art. 776. The inheritance includes all the property, rights and obligations of a person which are not extinguished by his death. Art. 1311. Contract stake effect only between the parties, their assigns and heirs except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the property received from the decedent. As explained by this Court through Associate Justice J.B.L. Reyes in the case of Estate of Hemady vs. Luzon Surety Co., Inc. 41 The binding effect of contracts upon the heirs of the deceased party is not altered by the provision of our Rules of Court that money debts of a deceased must be liquidated and paid from his estate before the residue is distributed among said heirs (Rule 89). The reason is that whatever payment is thus made from the state is ultimately a payment by the heirs or distributees, since the amount of the paid claim in fact diminishes or reduces the shares that the heirs would have been entitled to receive. Under our law, therefore. the general rule is that a party's contractual rights and obligations are transmissible to the successors. The rule is a consequence of the progressive "depersonalization" of patrimonial rights and duties that, as observed by Victorio Polacco has characterized the history of these institutions. From the Roman concept of a relation from person to person, the obligation has evolved into a relation from patrimony to patrimony with the persons occupying only a representative position, barring those rare cases where the obligation is strictly personal, i.e., is contracted intuitu personae, in consideration of its performance by a specific person and by no other. xxx xxx xxx Petitioners being the heirs of the late Rosendo Alvarez, they cannot escape the legal consequences of their father's transaction, which gave rise to the present claim for damages. That petitioners did not inherit the property involved herein is of no moment because by legal fiction, the monetary equivalent thereof devolved into the mass of their father's hereditary estate, and we have ruled that the hereditary assets are always liable in their totality for the payment of the debts of the estate. 42

It must, however, be made clear that petitioners are liable only to the extent of the value of their inheritance. With this clarification and considering petitioners' admission that there are other properties left by the deceased which are sufficient to cover the amount adjudged in favor of private respondents, we see no cogent reason to disturb the findings and conclusions of the Court of Appeals. WHEREFORE, subject to the clarification herein above stated, the assailed decision of the Court of Appeals is hereby AFFIRMED. Costs against petitioners. SO ORDERED. Republic SUPREME Manila FIRST DIVISION G.R. No. L-33187 March 31, 1980 CORNELIO PAMPLONA alias GEMINIANO PAMPLONA and APOLONIA ONTE, petitioners, vs. VIVENCIO MORETO, VICTOR MORETO, ELIGIO MORETO, MARCELO MORETO, PAULINA MORETO, ROSARIO MORETO, MARTA MORETO, SEVERINA MENDOZA, PABLO MENDOZA, LAZARO MENDOZA, VICTORIA TUIZA, JOSEFINA MORETO, LEANDRO MORETO and LORENZO MENDOZA, respondents. E.P. Caguioa for petitioners. Benjamin C. Yatco for respondents. of the Philippines COURT

Alipio Moreto died intestate on June 30, 1943 leaving as his heir herein plaintiff Josefina Moreto. Pablo Moreto died intestate on April 25, 1942 leaving no issue and as his heirs his brother plaintiff Leandro Moreto and the other plaintiffs herein. On May 6, 1946, Monica Maniega died intestate in Calamba, Laguna. On July 30, 1952, or more than six (6) years after the death of his wife Monica Maniega, Flaviano Moreto, without the consent of the heirs of his said deceased wife Monica, and before any liquidation of the conjugal partnership of Monica and Flaviano could be effected, executed in favor of Geminiano Pamplona, married to defendant Apolonia Onte, the deed of absolute sale (Exh. "1") covering lot No. 1495 for P900.00. The deed of sale (Exh. "1") contained a description of lot No. 1495 as having an area of 781 square meters and covered by transfer certificate of title No. 14570 issued in the name of Flaviano Moreto, married to Monica Maniega, although the lot was acquired during their marriage. As a result of the sale, the said certificate of title was cancelled and a new transfer certificate of title No. T-5671 was issued in the name of Geminiano Pamplona married to Apolonia Onte (Exh. "A"). After the execution of the above-mentioned deed of sale (Exh. "1"), the spouses Geminiano Pamplona and Apolonia Onte constructed their house on the eastern part of lot 1496 as Flaviano Moreto, at the time of the sale, pointed to it as the land which he sold to Geminiano Pamplona. Shortly thereafter, Rafael Pamplona, son of the spouses Geminiano Pamplona and Apolonia Onte, also built his house within lot 1496 about one meter from its boundary with the adjoining lot. The vendor Flaviano Moreto and the vendee Geminiano Pamplona thought all the time that the portion of 781 square meters which was the subject matter of their sale transaction was No. 1495 and so lot No. 1495 appears to be the subject matter in the deed of sale (Exh. "1") although the fact is that the said portion sold thought of by the parties to be lot No. 1495 is a part of lot No. 1496. From 1956 to 1960, the spouses Geminiano Pamplona and Apolonio Onte enlarged their house and they even constructed a piggery corral at the back of their said house about one and one-half meters from the eastern boundary of lot 1496. On August 12, 1956, Flaviano Moreto died intestate. In 1961, the plaintiffs demanded on the defendants to vacate the premises where they had their house and piggery on the ground that Flaviano Moreto had no right to sell the lot which he sold to Geminiano Pamplona as the same belongs to the conjugal partnership of Flaviano and his deceased wife and the latter was already dead when the sale was executed without the consent of the plaintiffs who are the heirs of Monica. The spouses Geminiano Pamplona and Apolonia Onte refused to vacate the premises occupied by them and hence, this suit was instituted by the heirs of Monica Maniega seeking for the declaration of the nullity of the deed of sale of July 30, 1952 above-mentioned as regards one-half of the property subject matter of said deed; to declare the plaintiffs as the rightful owners of the other half of said lot; to allow the plaintiffs to redeem the one-half portion thereof sold to the defendants. "After payment of the other half of the purchase price"; to order the defendants to vacate the portions occupied by them; to order the defendants to pay actual and moral damages and attorney's fees to the plaintiffs; to order the defendants to pay plaintiffs P120.00 a year from August 1958 until they have vacated the premises occupied by them for the use and occupancy of the same. The defendants claim that the sale made by Flaviano Moreto in their favor is valid as the lot sold is registered in the name of Flaviano Moreto and they are purchasers believing in good faith that the vendor was the sole owner of the lot sold. After a relocation of lots 1495, 1496 and 4545 made by agreement of the parties, it was found out that there was mutual error between Flaviano Moreto and the defendants in the execution of the deed of sale because while the said deed recited that the lot sold is lot No. 1495, the real intention of the parties is that it was a portion consisting of 781 square meters of lot No. 1496 which was the subject matter of their sale transaction.

GUERRERO, J.: This is a petition for certiorari by way of appeal from the decision of the Court of Appeals 1 in CA-G.R. No. 35962-R, entitled "Vivencio Moreto, et al., Plaintiff-Appellees vs. Cornelio Pamplona, et al., DefendantsAppellants," affirming the decision of the Court of First Instance of Laguna, Branch I at Bian. The facts, as stated in the decision appealed from, show that: Flaviano Moreto and Monica Maniega were husband and wife. During their marriage, they acquired adjacent lots Nos. 1495, 4545, and 1496 of the Calamba Friar Land Estate, situated in Calamba, Laguna, containing 781-544 and 1,021 square meters respectively and covered by certificates of title issued in the name of "Flaviano Moreto, married to Monica Maniega." The spouses Flaviano Moreto and Monica Maniega begot during their marriage six (6) children, namely, Ursulo, Marta, La Paz, Alipio, Pablo, and Leandro, all surnamed Moreto. Ursulo Moreto died intestate on May 24, 1959 leaving as his heirs herein plaintiffs Vivencio, Marcelo, Rosario, Victor, Paulina, Marta and Eligio, all surnamed Moreto. Marta Moreto died also intestate on April 30, 1938 leaving as her heir plaintiff Victoria Tuiza. La Paz Moreto died intestate on July 17, 1954 leaving the following heirs, namely, herein plaintiffs Pablo, Severina, Lazaro, and Lorenzo, all surnamed Mendoza.

After trial, the lower court rendered judgment, the dispositive part thereof being as follows: WHEREFORE, judgment is hereby rendered for the plaintiffs declaring the deed of absolute sale dated July 30, 1952 pertaining to the eastern portion of Lot 1496 covering an area of 781 square meters null and void as regards the 390.5 square meters of which plaintiffs are hereby declared the rightful owners and entitled to its possession. The sale is ordered valid with respect to the eastern one-half (1/2) of 1781 square meters of Lot 1496 measuring 390.5 square meters of which defendants are declared lawful owners and entitled to its possession. After proper survey segregating the eastern one-half portion with an area of 390.5 square meters of Lot 1496, the defendants shall be entitled to a certificate of title covering said portion and Transfer Certificate of Title No. 9843 of the office of the Register of Deeds of Laguna shall be cancelled accordingly and new titles issued to the plaintiffs and to the defendants covering their respective portions. Transfer Certificate of Title No. 5671 of the office of the Register of Deeds of Laguna covering Lot No. 1495 and registered in the name of Cornelio Pamplona, married to Apolonia Onte, is by virtue of this decision ordered cancelled. The defendants are ordered to surrender to the office of the Register of Deeds of Laguna the owner's duplicate of Transfer Certificate of Title No. 5671 within thirty (30) days after this decision shall have become final for cancellation in accordance with this decision. Let copy of this decision be furnished the Register of Deeds for the province of Laguna for his information and guidance. With costs against the defendants. 2 The defendants-appellants, not being satisfied with said judgment, appealed to the Court of Appeals, which affirmed the judgment, hence they now come to this Court. The fundamental and crucial issue in the case at bar is whether under the facts and circumstances duly established by the evidence, petitioners are entitled to the full ownership of the property in litigation, or only one-half of the same. There is no question that when the petitioners purchased the property on July 30, 1952 from Flaviano Moreto for the price of P900.00, his wife Monica Maniega had already been dead six years before, Monica having died on May 6, 1946. Hence, the conjugal partnership of the spouses Flaviano Moreto and Monica Maniega had already been dissolved. (Article 175, (1) New Civil Code; Article 1417, Old Civil Code). The records show that the conjugal estate had not been inventoried, liquidated, settled and divided by the heirs thereto in accordance with law. The necessary proceedings for the liquidation of the conjugal partnership were not instituted by the heirs either in the testate or intestate proceedings of the deceased spouse pursuant to Act 3176 amending Section 685 of Act 190. Neither was there an extra-judicial partition between the surviving spouse and the heirs of the deceased spouse nor was an ordinary action for partition brought for the purpose. Accordingly, the estate became the property of a community between the surviving husband, Flaviano Moreto, and his children with the deceased Monica Maniega in the concept of a co-ownership. The community property of the marriage, at the dissolution of this bond by the death of one of the spouses, ceases to belong to the legal partnership

and becomes the property of a community, by operation of law, between the surviving spouse and the heirs of the deceased spouse, or the exclusive property of the widower or the widow, it he or she be the heir of the deceased spouse. Every co-owner shall have full ownership of his part and in the fruits and benefits derived therefrom, and he therefore may alienate, assign or mortgage it, and even substitute another person in its enjoyment, unless personal rights are in question. (Marigsa vs. Macabuntoc, 17 Phil. 107) In Borja vs. Addision, 44 Phil. 895, 906, the Supreme Court said that "(t)here is no reason in law why the heirs of the deceased wife may not form a partnership with the surviving husband for the management and control of the community property of the marriage and conceivably such a partnership, or rather community of property, between the heirs and the surviving husband might be formed without a written agreement." In Prades vs. Tecson, 49 Phil. 230, the Supreme Court held that "(a)lthough, when the wife dies, the surviving husband, as administrator of the community property, has authority to sell the property with ut the concurrence of the children of the marriage, nevertheless this power can be waived in favor of the children, with the result of bringing about a conventional ownership in common between the father and children as to such property; and any one purchasing with knowledge of the changed status of the property will acquire only the undivided interest of those members of the family who join in the act of conveyance. It is also not disputed that immediately after the execution of the sale in 1952, the vendees constructed their house on the eastern part of Lot 1496 which the vendor pointed out to them as the area sold, and two weeks thereafter, Rafael who is a son of the vendees, also built his house within Lot 1496. Subsequently, a cemented piggery coral was constructed by the vendees at the back of their house about one and one-half meters from the eastern boundary of Lot 1496. Both vendor and vendees believed all the time that the area of 781 sq. meters subject of the sale was Lot No. 1495 which according to its title (T.C.T. No. 14570) contains an area of 781 sq. meters so that the deed of sale between the parties Identified and described the land sold as Lot 1495. But actually, as verified later by a surveyor upon agreement of the parties during the proceedings of the case below, the area sold was within Lot 1496. Again, there is no dispute that the houses of the spouses Cornelio Pamplona and Apolonia Onte as well as that of their son Rafael Pamplona, including the concrete piggery coral adjacent thereto, stood on the land from 1952 up to the filing of the complaint by the private respondents on July 25, 1961, or a period of over nine (9) years. And during said period, the private respondents who are the heirs of Monica Maniega as well as of Flaviano Moreto who also died intestate on August 12, 1956, lived as neighbors to the petitioner-vendees, yet lifted no finger to question the occupation, possession and ownership of the land purchased by the Pamplonas, so that We are persuaded and convinced to rule that private respondents are in estoppel by laches to claim half of the property, in dispute as null and void. Estoppel by laches is a rule of equity which bars a claimant from presenting his claim when, by reason of abandonment and negligence, he allowed a long time to elapse without presenting the same. (International Banking Corporation vs. Yared, 59 Phil. 92) We have ruled that at the time of the sale in 1952, the conjugal partnership was already dissolved six years before and therefore, the estate became a co-ownership between Flaviano Moreto, the surviving husband, and the heirs of his deceased wife, Monica Maniega. Article 493 of the New Civil Code is applicable and it provides a follows: Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involve. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership.

We agree with the petitioner that there was a partial partition of the coownership when at the time of the sale Flaviano Moreto pointed out the area and location of the 781 sq. meters sold by him to the petitionersvendees on which the latter built their house and also that whereon Rafael, the son of petitioners likewise erected his house and an adjacent coral for piggery. Petitioners point to the fact that spouses Flaviano Moreto and Monica Maniega owned three parcels of land denominated as Lot 1495 having an area of 781 sq. meters, Lot 1496 with an area of 1,021 sq. meters, and Lot 4545 with an area of 544 sq. meters. The three lots have a total area of 2,346 sq. meters. These three parcels of lots are contiguous with one another as each is bounded on one side by the other, thus: Lot 4545 is bounded on the northeast by Lot 1495 and on the southeast by Lot 1496. Lot 1495 is bounded on the west by Lot 4545. Lot 1496 is bounded on the west by Lot 4545. It is therefore, clear that the three lots constitute one big land. They are not separate properties located in different places but they abut each other. This is not disputed by private respondents. Hence, at the time of the sale, the co-ownership constituted or covered these three lots adjacent to each other. And since Flaviano Moreto was entitled to one-half pro-indiviso of the entire land area or 1,173 sq. meters as his share, he had a perfect legal and lawful right to dispose of 781 sq. meters of his share to the Pamplona spouses. Indeed, there was still a remainder of some 392 sq. meters belonging to him at the time of the sale. We reject respondent Court's ruling that the sale was valid as to one-half and invalid as to the other half for the very simple reason that Flaviano Moreto, the vendor, had the legal right to more than 781 sq. meters of the communal estate, a title which he could dispose, alienate in favor of the vendees-petitioners. The title may be pro-indiviso or inchoate but the moment the co-owner as vendor pointed out its location and even indicated the boundaries over which the fences were to be erectd without objection, protest or complaint by the other co-owners, on the contrary they acquiesced and tolerated such alienation, occupation and possession, We rule that a factual partition or termination of the coownership, although partial, was created, and barred not only the vendor, Flaviano Moreto, but also his heirs, the private respondents herein from asserting as against the vendees-petitioners any right or title in derogation of the deed of sale executed by said vendor Flaiano Moreto. Equity commands that the private respondents, the successors of both the deceased spouses, Flaviano Moreto and Monica Maniega be not allowed to impugn the sale executed by Flaviano Moreto who indisputably received the consideration of P900.00 and which he, including his children, benefitted from the same. Moreover, as the heirs of both Monica Maniega and Flaviano Moreto, private respondents are dutybound to comply with the provisions of Articles 1458 and 1495, Civil Code, which is the obligation of the vendor of the property of delivering and transfering the ownership of the whole property sold, which is transmitted on his death to his heirs, the herein private respondents. The articles cited provide, thus: Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other part to pay therefore a price certain in money or its equivalent. A contract of sale may be absolute or conditionial. Art. 1495. The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which is the object of the sale. Under Article 776, New Civil Code, the inheritance which private respondents received from their deceased parents and/or predecessorsin-interest included all the property rights and obligations which were not extinguished by their parents' death. And under Art. 1311, paragraph 1, New Civil Code, the contract of sale executed by the deceased Flaviano Moreto took effect between the parties, their assigns and heirs, who are the private respondents herein. Accordingly, to the private respondents is transmitted the obligation to deliver in full ownership the whole area of 781 sq. meters to the petitioners (which was the original obligation of their

predecessor Flaviano Moreto) and not only one-half thereof. Private respondents must comply with said obligation. The records reveal that the area of 781 sq. meters sold to and occupied by petitioners for more than 9 years already as of the filing of the complaint in 1961 had been re-surveyed by private land surveyor Daniel Aranas. Petitioners are entitled to a segregation of the area from Transfer Certificate of Title No. T-9843 covering Lot 1496 and they are also entitled to the issuance of a new Transfer Certificate of Title in their name based on the relocation survey. WHEREFORE, IN VIEW OF THE FOREGOING, the judgment appealed from is hereby AFFIRMED with modification in the sense that the sale made and executed by Flaviano Moreto in favor of the petitionersvendees is hereby declared legal and valid in its entirely. Petitioners are hereby declared owners in full ownership of the 781 sq. meters at the eastern portion of Lot 1496 now occupied by said petitioners and whereon their houses and piggery coral stand. The Register of Deeds of Laguna is hereby ordered to segregate the area of 781 sq. meters from Certificate of Title No. 9843 and to issue a new Transfer Certificate of Title to the petitioners covering the segregated area of 781 sq. meters. No costs. SO ORDERED. Republic SUPREME Manila EN BANC G.R. No. L-44837 November 23, 1938 of the Philippines COURT

SOCORRO LEDESMA and ANA QUITCO LEDESMA, plaintiffsappellees, vs. CONCHITA MCLACHLIN, ET AL., defendants-appellants. Adriano T. de Simeon Bitanga for appellees. la Cruz for appellants.

VILLA-REAL, J.: This case is before us by virtue of an appeal taken by the defendants Conchita McLachlin, Lorenzo Quitco, Jr., Sabina Quitco, Rafael Quitco and Marcela Quitco, from the decision of the Court of First Instance of Occidental Negros, the dispositive part of which reads: For the foregoing considerations, the court renders judgment in this case declaring Ana Quitco Ledesma an acknowledged natural daughter of the deceased Lorenzo M. Quitco, for legal purposes, but absolving the defendants as to the prayer in the first cause of action that the said Ana Quitco Ledesma be declared entitled to share in the properties left by the deceased Eusebio Quitco. As to the second cause of action, the said defendants are ordered to pay to the plaintiff Socorro Ledesma, jointly and severally, only the sum of one thousand five hundred pesos(P1,500), with legal interest thereon from the filing of this complaint until fully paid. No pronouncement is made as to the costs. So ordered.

In support of their appeal, the appellants assign the following errors allegedly committed by the trial court in its aforesaid decision: 1. That the trial court erred in holding, that the action for the recovery of the sum of P1,500, representing the last installment of the note Exhibit C has not yet prescribed. 2. That the trial court erred in holding that the property inherited by the defendants from their deceased grandfather by the right of representation is subject to the debts and obligations of their deceased father who died without any property whatsoever.lawphi1.net 3. That the trial court erred in condemning the defendants to pay jointly and severally the plaintiff Socorro Ledesma the sum of P1,500. The only facts to be considered in the determination of the legal questions raised in this appeal are those set out in the appealed decision, which have been established at the trial, namely: In the year 1916, the plaintiff Socorro Ledesma lived maritally with Lorenzo M. Quitco, while the latter was still single, of which relation, lasting until the year 1921, was born a daughter who is the other plaintiff Ana Quitco Ledesma. In 1921, it seems hat the relation between Socorro Ledesma and Lorenzo M. Quitco came to an end, but the latter executed a deed (Exhibit A), acknowledging the plaintiff Ana Quitco Ledesma as his natural daughter and on January 21, 1922, he issued in favor of the plaintiff Socorro Ledesma a promissory note (Exhibit C), of the following tenor: P2,000. For value received I promise to pay Miss Socorro Ledesma the sum of two thousand pesos (P2,000). Philippine currency under the following terms: Two hundred and fifty pesos (P250) to be paid on the first day of March 1922; another two hundred and fifty pesos (P250)to be paid on the first day of November 1922; the remaining one thousand and five hundred (P1,500) to be paid two years from the date of the execution of this note. San Enrique, Occ. Negros, P. I., Jan. 21, 1922. Subsequently, Lorenzo M. Quitco married the defendant Conchita McLachlin, with whom he had four children, who are the other defendants. On March 9, 1930, Lorenzo M. Quitco died (Exhibit 5), and, still later, that is, on December 15, 1932, his father Eusebio Quitco also died, and as the latter left real and personal properties upon his death, administration proceedings of said properties were instituted in this court, the said case being known as the "Intestate of the deceased Eusebio Quitco," civil case No. 6153 of this court. Upon the institution of the intestate of the deceased Eusebio Quitco and the appointment of the committee on claims and appraisal, the plaintiff Socorro Ledesma, on August 26, 1935, filed before said committee the aforequoted promissory note for payment, and the commissioners, upon receipt of said promissory note, instead of passing upon it, elevated the same to this court en consulta (Exhibit F), and as the Honorable Jose Lopez Vito, presiding over the First Branch, returned said consulta and refrained from giving his opinion thereon (Exhibit C), the aforesaid commissioners on claims and appraisal, alleging lack of jurisdiction to pass upon the claim, denied he same (Exhibit H). On November 14, 1933 (Exhibit I), the court issued an order of declaration of heirs in the intestate of the deceased Eusebio Quitco, and as Ana Quitco Ledesma was not included among the declared heirs, Socorro Ledesma, as mother of Ana Quitco Ledesma, asked for the reconsideration of said order, a petition which the court denied. From the order denying the said petition no appeal was taken, and in lieu

thereof there was filed the complaint which gives rise to this case. The first question to be decided in this appeal, raised in the first assignment of alleged error, is whether or not the action to recover the sum of P1,500, representing the last installment for the payment of the promissory note Exhibit C, has prescribed. According to the promissory note Exhibit C, executed by the deceased Lorenzo M. Quitco, on January 21, 1922, the last installment of P1,500 should be paid two years from the date of the execution of said promissory note, that is, on January 21, 1924. The complaint in the present case was filed on June 26, 1934, that is, more than ten years after he expiration of the said period. The fact that the plaintiff Socorro Ledesma filed her claim, on August 26, 1933, with the committee on claims and appraisal appointed in the intestate of Eusebio Quitco, does not suspend the running of the prescriptive period of the judicial action for the recovery of said debt, because the claim for the unpaid balance of the amount of the promissory note should no have been presented in the intestate of Eusebio Quitco, the said deceased not being the one who executed the same, but in the intestate of Lorenzo M. Quitco, which should have been instituted by the said Socorro Ledesma as provided in section 642 of the Code of Civil Procedure, authorizing a creditor to institute said case through the appointment of an administrator for the purpose of collecting his credit. More than ten years having thus elapsed from the expiration of the period for the payment of said debt of P1,500, the action for its recovery has prescribed under section 43, No. 1, of the Code of Civil Procedure. The first assignment of alleged error is, therefore, well-founded. As to the second assignment of alleged error, consisting in that the trial court erred in holding that the properties inherited by the defendants from their deceased grandfather by representation are subject to the payment of debts and obligations of their deceased father, who died without leaving any property, while it is true that under the provisions of articles 924 to 927 of the Civil Code, a children presents his father or mother who died before him in the properties of his grandfather or grandmother, this right of representation does not make the said child answerable for the obligations contracted by his deceased father or mother, because, as may be seen from the provisions of the Code of Civil Procedure referring to partition of inheritances, the inheritance is received with the benefit of inventory, that is to say, the heirs only answer with the properties received from their predecessor. The herein defendants, as heirs of Eusebio Quitco, in representation of their father Lorenzo M. Quitco, are not bound to pay the indebtedness of their said father from whom they did not inherit anything. The second assignment of alleged error is also well-founded. Being a mere sequel of the first two assignments of alleged errors, the third assignment of error is also well-founded. For the foregoing considerations, we are of the opinion and so hold: (1) That the filing of a claim before the committee on claims and appraisal, appointed in the intestate of the father, for a monetary obligation contracted by a son who died before him, does not suspend the prescriptive period of the judicial action for the recovery of said indebtedness; (2) that the claim for the payment of an indebtedness contracted by a deceased person cannot be filed for its collection before the committee on claims and appraisal, appointed in the intestate of his father, and the propertiesinherited from the latter by the children of said deceased do not answer for the payment of the indebtedness contracted during the lifetime of said person. Wherefore, the appealed judgment is reversed, and the defendants are absolved from the complaint, with the costs to the appellees. So ordered. SECOND DIVISION

[G.R. No. 129008. January 13, 2004]

of the administration proceedings.[12] On April 29, 1996, petitioners filed a Motion to Set Affirmative Defenses for Hearing[13] on the aforesaid ground. The lower court denied the motion in its Order[14] dated June 27, 1996, on the ground that respondents, as heirs, are the real parties-ininterest especially in the absence of an administrator who is yet to be appointed in S.P. Case No. 5118. Petitioners moved for its reconsideration[15] but the motion was likewise denied.[16] This prompted petitioners to file before the Court of Appeals their Petition for Certiorari under Rule 65 of the Rules of Court docketed as CA G.R. S.P. No. 42053.[17] Petitioners averred that the RTC committed grave abuse of discretion in issuing the assailed order which denied the dismissal of the case on the ground that the proper party to file the complaint for the annulment of the extrajudicial settlement of the estate of the deceased is the estate of the decedent and not the respondents.[18] The Court of Appeals rendered the assailed Decision[19] dated January 31, 1997, stating that it discerned no grave abuse of discretion amounting to lack or excess of jurisdiction by the public respondent judge when he denied petitioners motion to set affirmative defenses for hearing in view of its discretionary nature. A Motion for Reconsideration was filed by petitioners but it was denied.[20] Hence, the petition before this Court. The issue presented by the petitioners before this Court is whether the heirs have legal standing to prosecute the rights belonging to the deceased subsequent to the commencement of the administration proceedings.[21] Petitioners vehemently fault the lower court for denying their motion to set the case for preliminary hearing on their affirmative 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 holding of a preliminary hearing on an affirmative defense lies in the discretion of the court. This is clear from the Rules of Court, thus: SEC. 5. Pleadings grounds as affirmative defenses.- Any of the grounds for dismissal provided for in this rule, except improper venue, may be pleaded as an affirmative defense, and a preliminary hearing may be had thereon as if a motion to dismiss had been filed.[22] (Emphasis supplied.) Certainly, the incorporation of the word may in the provision is clearly indicative of the optional character of the preliminary hearing. The word denotes discretion and cannot be construed as having a mandatory effect.[23] Subsequently, the electivity of the proceeding was firmed up beyond cavil by the 1997 Rules of Civil Procedure with the inclusion of the phrase in the discretion of the Court, apart from the retention of the word may in Section 6,[24] in Rule 16 thereof. Just as no blame of abuse of discretion can be laid on the lower courts doorstep for not hearing petitioners affirmative defense, it cannot likewise be faulted for recognizing the legal standing of the respondents as heirs to bring the suit. Pending the filing of administration proceedings, the heirs without doubt have legal personality to bring suit in behalf of the estate of the decedent in accordance with the provision of Article 777 of the New Civil Code that (t)he rights to succession are transmitted from the moment of the death of the decedent. The provision in turn is the foundation of the principle that the property, rights and obligations to the extent and value of the inheritance of a person are transmitted through his death to another or others by his will or by operation of law.[25] Even if administration proceedings have already been commenced, the heirs may still bring the suit if an administrator has not yet been appointed. This is the proper modality despite the total lack of advertence to the heirs in the rules on party representation, namely Section 3, Rule 3[26] and Section 2, Rule 87[27] of the Rules of Court. In fact, in the case of Gochan v. Young,[28] this Court recognized the legal standing of the heirs to represent the rights and properties of the decedent under administration pending the appointment of an administrator. Thus:

TEODORA A. RIOFERIO, VERONICA O. EVANGELISTA assisted by her husband ZALDY EVANGELISTA, ALBERTO ORFINADA, and ROWENA O. UNGOS, assisted by her husband BEDA UNGOS, petitioners, vs. COURT OF APPEALS, ESPERANZA P. ORFINADA, LOURDES P. ORFINADA, ALFONSO ORFINADA, NANCY P. ORFINADA, ALFONSO JAMES P. ORFINADA, CHRISTOPHER P. ORFINADA and ANGELO P. ORFINADA,respondents. DECISION TINGA, J.: Whether the heirs may bring suit to recover property of the estate pending the appointment of an administrator is the issue in this case. This Petition for Review on Certiorari, under Rule 45 of the Rules of Court, seeks to set aside the Decision[1] of the Court of Appeals in CAG.R. SP No. 42053 dated January 31, 1997, as well as its Resolution[2] dated March 26, 1997, denying petitioners motion for reconsideration. On May 13, 1995, Alfonso P. Orfinada, Jr. died without a will in Angeles City leaving several personal and real properties located in Angeles City, Dagupan City and Kalookan City.[3] He also left a widow, respondent Esperanza P. Orfinada, whom he married on July 11, 1960 and with whom he had seven children who are the herein respondents, namely: Lourdes P. Orfinada, Alfonso Clyde P. Orfinada, Nancy P. Orfinada-Happenden, Alfonso James P. Orfinada, Christopher P. Orfinada, Alfonso Mike P. Orfinada (deceased) and Angelo P. Orfinada.[4] Apart from the respondents, the demise of the decedent left in mourning his paramour and their children. They are petitioner Teodora Riofero, who became a part of his life when he entered into an extramarital relationship with her during the subsistence of his marriage to Esperanza sometime in 1965, and co-petitioners Veronica[5], Alberto and Rowena.[6] On November 14, 1995, respondents Alfonso James and Lourdes Orfinada discovered that on June 29, 1995, petitioner Teodora Rioferio and her children executed an Extrajudicial Settlement of Estate of a Deceased Person with Quitclaim involving the properties of the estate of the decedent located in Dagupan City and that accordingly, the Registry of Deeds in Dagupan issued Certificates of Titles Nos. 63983, 63984 and 63985 in favor of petitioners Teodora Rioferio, Veronica OrfinadaEvangelista, Alberto Orfinada and Rowena Orfinada-Ungos. Respondents also found out that petitioners were able to obtain a loan of P700,000.00 from the Rural Bank of Mangaldan Inc. by executing a Real Estate Mortgage over the properties subject of the extra-judicial settlement.[7] On December 1, 1995, respondent Alfonso Clyde P. Orfinada III filed a Petition for Letters of Administration docketed as S.P. Case No. 5118 before the Regional Trial Court of Angeles City, praying that letters of administration encompassing the estate of Alfonso P. Orfinada, Jr. be issued to him.[8] On December 4, 1995, respondents filed a Complaint for the Annulment/Rescission of Extra Judicial Settlement of Estate of a Deceased Person with Quitclaim, Real Estate Mortgage and Cancellation of Transfer Certificate of Titles with Nos. 63983, 63985 and 63984 and Other Related Documents with Damages against petitioners, the Rural Bank of Mangaldan, Inc. and the Register of Deeds of Dagupan City before the Regional Trial Court, Branch 42, Dagupan City.[9] On February 5, 1996, petitioners filed their Answer to the aforesaid complaint interposing the defense that the property subject of the contested deed of extra-judicial settlement pertained to the properties originally belonging to the parents of Teodora Riofero[10] and that the titles thereof were delivered to her as an advance inheritance but the decedent had managed to register them in his name. [11] Petitioners also raised the affirmative defense that respondents are not the real parties-in-interest but rather the Estate of Alfonso O. Orfinada, Jr. in view of the pendency

The above-quoted rules,[29] while permitting an executor or administrator to represent or to bring suits on behalf of the deceased, do not prohibit the heirs from representing the deceased. These rules are easily applicable to cases in which an administrator has already been appointed. But no rule categorically addresses the situation in which special proceedings for the settlement of an estate have already been instituted, yet no administrator has been appointed. In such instances, the heirs cannot be expected to wait for the appointment of an administrator; then wait further to see if the administrator appointed would care enough to file a suit to protect the rights and the interests of the deceased; and in the meantime do nothing while the rights and the properties of the decedent are violated or dissipated. Even if there is an appointed administrator, jurisprudence recognizes two exceptions, viz: (1) if the executor or administrator is unwilling or refuses to bring suit;[30] and (2) when the administrator is alleged to have participated in the act complained of[31] and 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 compelling when there is no appointed administrator, if not more, as where there is an appointed administrator but he is either disinclined to bring suit or is one of the guilty parties himself. All told, therefore, the rule that the heirs have no legal standing to sue for the recovery of property of the estate during the pendency of administration proceedings has three exceptions, the third being when there is no appointed administrator such as in this case. 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 warranted. WHEREFORE, the petition for review is DENIED. The assailed decision and resolution of the Court of Appeals are hereby AFFIRMED. No costs. SO ORDERED. FIRST DIVISION

property. Respondents, who occupied the southern half portion of the land, did not object to the construction. Flordeliza Flora and her husband Wilfredo declared the property for taxation purposes[4] and paid the corresponding taxes thereon.[5] Likewise, Maximo Calpatura, the son of Tomas cousin, built a small house on the northern portion of the property. On April 8, 1991, respondents filed a complaint for declaration of nullity of sale and delivery of possession of the northern half portion of the subject property against petitioners Flordeliza Calpatura Flora, Dominador Calpatura and Tomas Calpatura, Jr. before the Regional Trial Court of Quezon City, Branch 100, docketed as Civil Case No. Q-918404.[6] Respondents alleged that the transaction embodied in the Agreement to Purchase and Sale between Narcisa and Tomas was one of mortgage and not of sale; that Narcisas children tried to redeem the mortgaged property but they learned that the blank document which their mother had signed was transformed into a Deed of Absolute Sale; that Narcisa could not have sold the northern half portion of the property considering that she was prohibited from selling the same within a period of 25 years from its acquisition, pursuant to the condition annotated at the back of the title;[7] that Narcisa, as natural guardian of her children, had no authority to sell the northern half portion of the property which she and her children co-owned; and that only P5,000.00 out of the consideration of P10,500.00 was paid by Tomas. In their answer, petitioners countered that Narcisa owned 9/14 of the property, consisting of as her share in the conjugal partnership with her first husband and 1/7 as her share in the estate of her deceased husband; that the consideration of the sale in the amount of P10,500.00 had been fully paid as of April 1, 1968; that Narcisa sold her conjugal share in order to support her minor children; that Narcisas claim was barred by laches and prescription; and that the Philippine Homesite and Housing Corporation, not the respondents, was the real party in interest to question the sale within the prohibited period. On April 2, 1997, the court a quo[8] dismissed the complaint. It found that the sale was valid; that the Agreement to Purchase and Sale and the Deed of Absolute Sale were duly executed; that the sum of P10,500.00 as selling price for the subject property was fully paid there being no demand for the payment of the remaining balance; that the introduction of improvements thereon by the petitioners was without objection from the respondents; and that Roberto and Erlinda failed to contest the transaction within four years after the discovery of the alleged fraud and reaching the majority age in violation of Article 1391 of the Civil Code.[9] Petitioners appealed the decision to the Court of Appeals, where it was docketed as CA-G.R. CV No. 56843. On October 3, 2002, a decision[10] was rendered by the Court of Appeals declaring that respondents were co-owners of the subject property, thus the sale was valid only insofar as Narcisas 1/7 undivided share thereon was concerned. The dispositive portion of the said decision reads: WHEREFORE, the appealed Decision is AFFIRMED, with the MODIFICATION that the sale in dispute is declared valid only with respect to the one-seventh (1/7) share of plaintiff-appellant NARCISA H. PRADO in the subject property, which is equivalent to 78.8857 square meters. In all other respects, the same decision stands. No pronouncement as to costs. SO ORDERED.[11] Petitioner filed a motion for reconsideration which was denied in a Resolution dated January 14, 2003.[12] Hence this petition for review on the following assigned errors: I THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION IN MODIFYING THE DECISION RENDERED BY THE REGIONAL TRIAL COURT WITHOUT TAKING INTO CONSIDERATION THAT, ASIDE FROM THE DECLARATION OF THE VALIDITY OF THE SALE, THE PETITIONERS HEREIN HAVE TAKEN ACTUAL POSSESSION OF THE SAID ONE-HALF (1/2) TO THE EXCLUSION OF THE RESPONDENTS AND INTRODUCED IMPROVEMENTS THEREON.

[G.R. No. 156879. January 20, 2004]

FLORDELIZA CALPATURA FLORA, DOMINADOR CALPATURA and TOMAS CALPATURA, JR., Heirs of TOMAS CALPATURA, SR., petitioners, vs. ROBERTO, ERLINDA, DANIEL, GLORIA, PATRICIO, JR. and EDNA, all surnamed PRADO and NARCISA PRADO, respondents. DECISION YNARES-SANTIAGO, J.: The property under litigation is the northern half portion of a residential land consisting of 552.20 square meters, more or less, situated at 19th Avenue, Murphy, Quezon City and covered by Transfer Certificate of Title No. 71344 issued on August 15, 1963 by the Register of Deeds of Quezon City in the name of Narcisa Prado and her children by her first husband, Patricio Prado, Sr., namely, Roberto, Erlinda, Daniel, Gloria, Patricio, Jr. and Edna, respondents herein. The pertinent facts are as follows: On December 19, 1959, Patricio Prado, Sr. died. Narcisa subsequently married Bonifacio Calpatura. In order to support her minor children with her first husband, Narcisa and her brother-in-law, Tomas Calpatura, Sr., executed on April 26, 1968 an Agreement of Purchase and Sale whereby the former agreed to sell to the latter the northern half portion of the property for the sum of P10,500.00.[1] On July 28, 1973, Narcisa executed a Deed of Absolute Sale in favor of Tomas over the said property.[2] In 1976, Tomas daughter, Flordeliza Calpatura Flora, built a twostorey duplex with firewall[3] on the northern half portion of the

II THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION IN MODIFYING THE DECISION RENDERED BY THE REGIONAL TRIAL COURT WITHOUT TAKING INTO CONSIDERATION THE CLEAR AND UNEQUIVOCAL STATEMENT IN THE SALE THAT THE SAME PERTAINS TO THE CONJUGAL SHARE OF RESPONDENT NARCISA PRADO AND THE OTHER RESPONDENTS HAD NO FINANCIAL CAPACITY TO ACQUIRE THE SAID PROPERTY SINCE THEY WERE MINORS THEN AT THE ISSUANCE OF THE SAID TCT NO. 71344 ON AUGUST 15, 1963. III THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION IN NOT DECLARING THE HEREIN RESPONDENTS GUILTY OF LACHES IN FILING THE INSTANT CASE ONLY ON APRIL 8, 1991, THAT IS 18 YEARS AFTER THE SAID SALE WITH THE PETITIONERS TAKING ACTUAL POSSESSION OF SAID PORTION OF THE PROPERTY. IV THAT THE DECISION OF THE HON. COURT OF APPEALS WILL UNDULY ENRICH THE RESPONDENTS AT THE EXPENSE OF THE HEREIN PETITIONERS.[13] At the outset, it must be stressed that only questions of law may be raised in petitions for review before this Court under Rule 45 of the Rules of Court.[14] It was thus error for petitioners to ascribe to the Court of Appeals grave abuse of discretion. This procedural lapse notwithstanding, in the interest of justice, this Court shall treat the issues as cases of reversible error.[15] The issues for resolution are: (1) Is the subject property conjugal or paraphernal? (2) Is the transaction a sale or a mortgage? (3) Assuming that the transaction is a sale, what was the area of the land subject of the sale? Article 160 of the Civil Code, which was in effect at the time the sale was entered into, provides that all property of the marriage is presumed to belong to the conjugal partnership unless it is proved that it pertains exclusively to the husband or to the wife. Proof of acquisition during the marriage is a condition sine qua non in order for the presumption in favor of conjugal ownership to operate.[16] In the instant case, while Narcisa testified during cross-examination that she bought the subject property from Peoples Homesite Housing Corporation with her own funds,[17] she, however admitted in the Agreement of Purchase and Sale and the Deed of Absolute Sale that the property was her conjugal share with her first husband, Patricio, Sr.[18] A verbal assertion that she bought the land with her own funds is inadmissible to qualify the terms of a written agreement under the parole evidence rule.[19] The so-called parole evidence rule forbids any addition to or contradiction of the terms of a written instrument by testimony or other evidence purporting to show that, at or before the execution of the parties written agreement, other or different terms were agreed upon by the parties, varying the purport of the written contract. Whatever is not found in the writing is understood to have been waived and abandoned.[20] Anent the second issue, the Deed of Absolute Sale executed by Narcisa in favor of Tomas is contained in a notarized[21] document. In Spouses Alfarero, et al. v. Spouses Sevilla, et al.,[22] it was held that a public document executed and attested through the intervention of a notary public is evidence of the facts in a clear, unequivocal manner therein expressed. Otherwise stated, public or notarial documents, or those instruments duly acknowledged or proved and certified as provided by law, may be presented in evidence without further proof, the certificate of acknowledgment being prima facie evidence of the execution of the instrument or document involved. In order to contradict the presumption of regularity of a public document, evidence must be clear, convincing, and more than merely preponderant.

It is well-settled that in civil cases, the party that alleges a fact has the burden of proving it.[23] Except for the bare allegation that the transaction was one of mortgage and not of sale, respondents failed to adduce evidence in support thereof. Respondents also failed to controvert the presumption that private transactions have been fair and regular.[24] Furthermore, Narcisa, in fact did not deny that she executed an Affidavit allowing spouses Wilfredo and Flordeliza Flora to construct a firewall between the two-storey duplex and her house sometime in 1976. The duplex was made of strong materials, the roofing being galvanized sheets. While the deed of sale between Tomas and Narcisa was never registered nor annotated on the title, respondents had knowledge of the possession of petitioners of the northern half portion of the property. Obviously, respondents recognized the ownership of Tomas, petitioners predecessor-in-interest. Respondents belatedly claimed that only P5,000.00 out of the P10,500.00 consideration was paid. Both the Agreement of Purchase and Sale and the Deed of Absolute Sale state that said consideration was paid in full. Moreover, the presumption is that there was sufficient consideration for a written contract.[25] The property being conjugal, upon the death of Patricio Prado, Sr., one-half of the subject property was automatically reserved to the surviving spouse, Narcisa, as her share in the conjugal partnership. Particios rights to the other half, in turn, were transmitted upon his death to his heirs, which includes his widow Narcisa, who is entitled to the same share as that of each of the legitimate children. Thus, as a result of the death of Patricio, a regime of coownership arose between Narcisa and the other heirs in relation to the property. The remaining one-half was transmitted to his heirs by intestate succession. By the law on intestate succession, his six children and Narcisa Prado inherited the same at one-seventh (1/7) each pro indiviso.[26] Inasmuch as Narcisa inherited one-seventh (1/7) of her husband's conjugal share in the said property and is the owner of onehalf (1/2) thereof as her conjugal share, she owns a total of 9/14 of the subject property. Hence, Narcisa could validly convey her total undivided share in the entire property to Tomas. Narcisa and her children are deemed co-owners of the subject property. Neither can the respondents invoke the proscription of encumbering the property within 25 years from acquisition. In Sarmiento, et al. v. Salud, et al.,[27] it was held that: xxx The condition that the appellees Sarmiento spouses could not resell the property except to the Peoples Homesite and Housing Corporation (PHHC for short) within the next 25 years after appellees purchasing the lot is manifestly a condition in favor of the PHHC, and not one in favor of the Sarmiento spouses. The condition conferred no actionable right on appellees herein, since it operated as a restriction upon their jus disponendi of the property they bought, and thus limited their right of ownership. It follows that on the assumption that the mortgage to appellee Salud and the foreclosure sale violated the condition in the Sarmiento contract, only the PHHC was entitled to invoke the condition aforementioned, and not the Sarmientos. The validity or invalidity of the sheriff's foreclosure sale to appellant Salud thus depended exclusively on the PHHC; the latter could attack the sale as violative of its right of exclusive reacquisition; but it (PHHC) also could waive the condition and treat the sale as good, in which event, the sale can not be assailed for breach of the condition aforestated. Finally, no particular portion of the property could be identified as yet and delineated as the object of the sale considering that the property had not yet been partitioned in accordance with the Rules of Court.[28] While Narcisa could validly sell one half of the subject property, her share being 9/14 of the same, she could not have particularly conveyed the northern portion thereof before the partition, the terms of which was still to be determined by the parties before the trial court. WHEREFORE, the Decision of the Court of Appeals on October 3, 2002, as well as the Resolution dated January 14, 2003 is PARTLY AFFIRMED subject to the following MODIFICATIONS: 1) Narcisa Prado is entitled to 9/14 of the residential land consisting of 552.20 square meters, more or less, situated at 19th Avenue, Murphy, Quezon City and covered by Transfer Certificate of Title No. 71344;

2)

the sale of the undivided one half portion thereof by Narcisa Prado in favor of Tomas Calpatura, Sr. is valid.

Furthermore, the case is REMANDED to the court of origin, only for the purpose of determining the specific portion being conveyed in favor of Tomas Calpatura, Sr. pursuant to the partition that will be agreed upon by the respondents. SO ORDERED. Republic SUPREME Manila SECOND DIVISION G.R. No. L-60174 February 16, 1983 EDUARDO FELIPE, HERMOGENA V. FELIPE AND VICENTE V. FELIPE, petitioners, vs. HEIRS OF MAXIMO ALDON, NAMELY: GIMENA ALMOSARA, SOFIA ALDON, SALVADOR ALDON, AND THE HONORABLE COURT OF APPEALS, respondents. Romulo D. San Juan for petitioner. Gerundino Castillejo for private respondent. of the Philippines COURT

PREMISES CONSIDERED, the decision appealed from is hereby REVERSED and SET ASIDE, and a new one is hereby RENDERED, ordering the defendants-appellees to surrender the lots in question as well as the plaintiffs'-appellants' muniments of title thereof to said plaintiffs-appellants, to make an accounting of the produce derived from the lands including expenses incurred since 1951, and to solidarity turn over to the plaintiffs-appellants the NET monetary value of the profits, after deducting the sum of P1,800.00. No attorney's fees nor moral damages are awarded for lack of any legal justification therefor. No. costs. The ratio of the judgment is stated in the following paragraphs of the decision penned by Justice Edgardo L. Paras with the concurrence of Justices Venicio Escolin and Mariano A. Zosa: One of the principal issues in the case involves the nature of the aforementioned conveyance or transaction, with appellants claiming the same to be an oral contract of mortgage or antichresis, the redemption of which could be done anytime upon repayment of the P1,800.00 involved (incidentally the only thing written about the transaction is the aforementioned receipt re the P1,800). Upon the other hand, appellees claim that the transaction was one of sale, accordingly, redemption was improper. The appellees claim that plaintiffs never conveyed the property because of a loan or mortgage or antichresis and that what really transpired was the execution of a contract of sale thru a private document designated as a 'Deed of Purchase and Sale' (Exhibit 1), the execution having been made by Gimena Almosara in favor of appellee Hermogena V. Felipe. After a study of this case, we have come to the conclusion that the appellants are entitled to recover the ownership of the lots in question. We so hold because although Exh. 1 concerning the sale made in 1951 of the disputed lots is, in Our opinion, not a forgery the fact is that the sale made by Gimena Almosara is invalid, having been executed without the needed consent of her husband, the lots being conjugal. Appellees' argument that this was an issue not raised in the pleadings is baseless, considering the fact that the complaint alleges that the parcels 'were purchased by plaintiff Gimena Almosara and her late husband Maximo Aldon' (the lots having been purchased during the existence of the marriage, the same are presumed conjugal) and inferentially, by force of law, could not, be disposed of by a wife without her husband's consent. The defendants are now the appellants in this petition for review. They invoke several grounds in seeking the reversal of the decision of the Court of Appeals. One of the grounds is factual in nature; petitioners claim that "respondent Court of Appeals has found as a fact that the 'Deed of Purchase and Sale' executed by respondent Gimena Almosara is not a forgery and therefore its authenticity and due execution is already beyond question." We cannot consider this ground because as a rule only questions of law are reviewed in proceedings under Rule 45 of the Rules of Court subject to well-defined exceptions not present in the instant case. The legal ground which deserves attention is the legal effect of a sale of lands belonging to the conjugal partnership made by the wife without the consent of the husband. It is useful at this point to re-state some elementary rules: The husband is the administrator of the conjugal partnership. (Art. 165, Civil Code.) Subject to certain exceptions, the husband cannot alienate or encumber any real property of the conjugal partnership without the wife's consent. (Art. 166, Idem.) And the wife cannot bind the conjugal partnership

ABAD SANTOS, J.: Maximo Aldon married Gimena Almosara in 1936. The spouses bought several pieces of land sometime between 1948 and 1950. In 1960-62, the lands were divided into three lots, 1370, 1371 and 1415 of the San Jacinto Public Land Subdivision, San Jacinto, Masbate. In 1951, Gimena Almosara sold the lots to the spouses Eduardo Felipe and Hermogena V. Felipe. The sale was made without the consent of her husband, Maximo. On April 26, 1976, the heirs of Maximo Aldon, namely his widow Gimena and their children Sofia and Salvador Aldon, filed a complaint in the Court of First Instance of Masbate against the Felipes. The complaint which was docketed as Civil Case No. 2372 alleged that the plaintiffs were the owners of Lots 1370, 1371 and 1415; that they had orally mortgaged the same to the defendants; and an offer to redeem the mortgage had been refused so they filed the complaint in order to recover the three parcels of land. The defendants asserted that they had acquired the lots from the plaintiffs by purchase and subsequent delivery to them. The trial court sustained the claim of the defendants and rendered the following judgment: a. declaring the defendants to be the lawful owners of the property subject of the present litigation; b. declaring the complaint in the present action to be without merit and is therefore hereby ordered dismissed; c. ordering the plaintiffs to pay to the defendants the amount of P2,000.00 as reasonable attorney's fees and to pay the costs of the suit. The plaintiffs appealed the decision to the Court of Appeals which rendered the following judgment:

without the husband's consent, except in cases provided by law. (Art. 172, Idem.) In the instant case, Gimena, the wife, sold lands belonging to the conjugal partnership without the consent of the husband and the sale is not covered by the phrase "except in cases provided by law." The Court of Appeals described the sale as "invalid" - a term which is imprecise when used in relation to contracts because the Civil Code uses specific names in designating defective contracts, namely: rescissible (Arts. 1380 et seq.), voidable(Arts. 1390 et seq.), unenforceable (Arts. 1403, et seq.), and void or inexistent (Arts. 1409 et seq.) The sale made by Gimena is certainly a defective contract but of what category? The answer: it is a voidable contract. According to Art. 1390 of the Civil Code, among the voidable contracts are "[T]hose where one of the parties is incapable of giving consent to the contract." (Par. 1.) In the instant case-Gimena had no capacity to give consent to the contract of sale. The capacity to give consent belonged not even to the husband alone but to both spouses. The view that the contract made by Gimena is a voidable contract is supported by the legal provision that contracts entered by the husband without the consent of the wife when such consent is required, are annullable at her instance during the marriage and within ten years from the transaction questioned. (Art. 173, Civil Code.) Gimena's contract is not rescissible for in such contract all the essential elements are untainted but Gimena's consent was tainted. Neither can the contract be classified as unenforceable because it does not fit any of those described in Art. 1403 of the Civil Code. And finally, the contract cannot be void or inexistent because it is not one of those mentioned in Art. 1409 of the Civil Code. By process of elimination, it must perforce be a voidable contract. The voidable contract of Gimena was subject to annulment by her husband only during the marriage because he was the victim who had an interest in the contract. Gimena, who was the party responsible for the defect, could not ask for its annulment. Their children could not likewise seek the annulment of the contract while the marriage subsisted because they merely had an inchoate right to the lands sold. The termination of the marriage and the dissolution of the conjugal partnership by the death of Maximo Aldon did not improve the situation of Gimena. What she could not do during the marriage, she could not do thereafter. The case of Sofia and Salvador Aldon is different. After the death of Maximo they acquired the right to question the defective contract insofar as it deprived them of their hereditary rights in their father's share in the lands. The father's share is one-half (1/2) of the lands and their share is two-thirds (2/3) thereof, one-third (1/3) pertaining to the widow. The petitioners have been in possession of the lands since 1951. It was only in 1976 when the respondents filed action to recover the lands. In the meantime, Maximo Aldon died. Two questions come to mind, namely: (1) Have the petitioners acquired the lands by acquisitive prescription? (2) Is the right of action of Sofia and Salvador Aldon barred by the statute of limitations? Anent the first question, We quote with approval the following statement of the Court of Appeals: We would like to state further that appellees [petitioners herein] could not have acquired ownership of the lots by prescription in view of what we regard as their bad faith. This bad faith is revealed by testimony to the effect that defendantappellee Vicente V. Felipe (son of appellees Eduardo Felipe and Hermogena V. Felipe) attempted in December 1970 to have Gimena Almosara sign a ESCOLIN, J.:

ready-made document purporting to self the disputed lots to the appellees. This actuation clearly indicated that the appellees knew the lots did not still belong to them, otherwise, why were they interested in a document of sale in their favor? Again why did Vicente V. Felipe tell Gimena that the purpose of the document was to obtain Gimena's consent to the construction of an irrigation pump on the lots in question? The only possible reason for purporting to obtain such consent is that the appellees knew the lots were not theirs. Why was there an attempted improvement (the irrigation tank) only in 1970? Why was the declaration of property made only in 1974? Why were no attempts made to obtain the husband's signature, despite the fact that Gimena and Hermogena were close relatives? An these indicate the bad faith of the appellees. Now then, even if we were to consider appellees' possession in bad faith as a possession in the concept of owners, this possession at the earliest started in 1951, hence the period for extraordinary prescription (30 years) had not yet lapsed when the present action was instituted on April 26, 1976. As to the second question, the children's cause of action accrued from the death of their father in 1959 and they had thirty (30) years to institute it (Art. 1141, Civil Code.) They filed action in 1976 which is well within the period. WHEREFORE, the decision of the Court of Appeals is hereby modified. Judgment is entered awarding to Sofia and Salvador Aldon their shares of the lands as stated in the body of this decision; and the petitioners as possessors in bad faith shall make an accounting of the fruits corresponding to the share aforementioned from 1959 and solidarity pay their value to Sofia and Salvador Aldon; costs against the petitioners. SO ORDERED. Republic SUPREME Manila SECOND DIVISION G.R. No. L-60101 August 31, 1983 EASTERN SHIPPING vs. JOSEPHINE LUCERO, respondents. LINES, INC., petitioner, of the Philippines COURT

Valera, Cainglet & Dala Law Office for petitioner. Jose R. Millares for private respondent.

Petition for review filed by the Eastern Shipping Lines, Inc. to set aside the decision of the National Labor Relations Commission, which affirmed the judgment rendered by the National Seamen Board, the dispositive portion of which reads as follows: WHEREFORE, respondent is hereby ordered to pay complainant her monthly allotments from March, 1980 up to the amount of P54,562.00 within ten (10) days from receipt of this decision. Respondent is likewise further ordered to pay complainant her future monthly allotment up to the arrival of the M/V EASTERN MINICON in the port of Manila or after

four (4) years when the presumptive established by law takes effect.

death

The material facts that gave rise to this petition are as follows: On October 31, 1979, Capt. Julio J. Lucero, Jr. was appointed by petitioner Eastern Shipping Lines, Inc., Company for short, as master/captain to its vessel M/V Eastern Minicon plying the HongkongManila route, with the salary of P5,560.00 exclusive of ship board allowances and other benefits. Under the contract, his employment was good for one (1) round trip only, i.e., the contract would automatically terminate upon arrival of the vessel at the Port of Manila, unless renewed. It was further agreed that part of the captain's salary, while abroad, should be paid to Mrs. Josephine Lucero, his wife, in Manila. On February 16, 1980, while the vessel was enroute from Hongkong to Manila where it was expected to arrive on February 18, 1980, Capt. Lucero sent three (3) messages to the Company's Manila office: First Message: 1 February l6,1980 0700 GMT Via Intercom EMINICON Urgent Eastship Manila REGRET TO INFORM YOU ENCOUNTERED BOISTEROUS WEATHER WITH STRONG NORTHEASTERLY WINDS WITH GAIL FORCE CAUSING THE VESSEL ROLLING AND PITCHING VIOLENTLY VESSEL NOW INCLINING 15 TO 20 DEGREES PORT FEARING MIGHT JETTISON CARGO ON DECK IF EVERYTHING COME TO WORSE SITUATION HOWEVER TRYING UTMOST BEST TO FACILITATE EVERYTHING IN ORDER STOP NO FIX POSITIONS FROM NOON 15th UP TO 0600 HRS TO DATE NEED ASSISTANCE APPROXIMATE DR POSITIONS AT 0600 HRS 10TH WITHIN THE VICINITY LATITUDE 20-02, ON LONGTITUDE 110-02, OE COURSE 120 DEGREES REGARDS ... LUCERO Second Message: 2 February l6/80 1530 GMT VIA INTERCOM EMICON EAST SHIP MANILA RYC NOTED ACCORDINGLY SINCE WASTE PAPER CARGO ON PORT SIDE AND HAD BEEN WASH OUT VESSEL AGAIN LISTING ON STARBOARD SIDE REGRET WE HAVE TO JETTISON STARBOARD SIDE WASTE PAPER CARGO IN ORDER TO BALANCE THE VESSEL NOW ALMOST BACK TO NORMAL POSITION HOWEVER VESSEL STILL LABORING VIOLENTLY REGARDS LUCERO Third Message: 3 FEBRUARY 16/80 2150 HRS PHILIPPINE COAST GUARD

NEED IMMEDIATE ASSISTANCE POSITION 19-35 N 116-40 E SEAWATER ENTERING INSIDE HATCH VESSEL INCLINING 15 TO 20 DEGREES PORT IF POSSIBLE SEND IMMEDIATE ASSISTANCE VESSEL IN DANGER PREPARING TO ABANDON ANYTIME MASTER Acting on these radio messages, the Company, respondent below, took the following steps: RESPONDENT informed of the grave situation, immediately reported the matter to the Philippine Coast Guard for search and rescue operation and the same was coordinated with the U.S. Air Force based at Clark Air Base. Respondent also released radio messages to all vessels passing the Hongkong/Manila route requesting them to be very cautious and vigilant for possible survivors and to scan the area whether there are signs of debris from the ill-fated vessel "EASTERN MINICON" which has foundered In the meantime, two (2) vessels of the respondent were also dispatched to the area last reported by the Master for search and rescue operation, but the collective efforts of all parties concerned yielded negative results, (p. 79, Rollo) Subsequently, the Lloyds of London, insurer of the M/V Eastern Minicon through its surveyors, confirmed the loss of the vessel. Thereafter, the Company paid the corresponding death benefits to the heirs of the crew members, except respondent Josephine Lucero, who refused to accept the same. On July 16, 1980, Mrs. Lucerofiled a complaint with -the National Seamen Board, Board for short, for payment of her accrued monthly allotment of P3,183.00, which the Company had stopped since March 1980 and for continued payment of said allotments until the M/V Minicon shall have returned to the port of Manila. She contended that the contract of employment entered into by her husband with the Company was on a voyage-to-voyage basis, and that the same was to terminate only upon the vessel's arrival in Manila. Upon the other hand, the Company maintained that Mrs. Lucero was no longer entitled to such allotments because: [a] the Lloyds of London had already confirmed the total loss of the vessel and had in fact settled the company's insurance claim and [b] the Company, with the approval of the Board, had likewise paid the corresponding death benefits to the heirs of the other seamen The Company further invoked the provisions of Article 643 of the Code of Commerce, to wit: Art. 643. If the vessel and her cargo should be totally lost, by reason of capture or wreck, all rights shall be extinguished, both as regards the crew to demand any wages whatsoever, and as regards the ship agent to recover the advances made. xxx xxx xxx On May 19, 1981, the Board rendered the aforecited judgment in favor of Mrs. Josephine Lucero and against petitioner Company. The Board held that the presumption of death could not be applied because the four-year period provided for by Article 391(l) of the Civil Code had not yet expired; and that the payment of death benefits to the heirs of the other crew 'members was based upon a voluntary agreement entered into by and between the heirs and the Company, and did not bind respondent Mrs. Lucero who was not a party thereto. On appeal, the respondent National Labor Relations Conunission affirmed the said decision. It held that:

Within the context of the foregoing circumstances, the only recourse is to presume the vessel totally lost and its crew members dead. But in this connection, the question that comes to the fore is: When will the presumption arise? Article 391 of the Civil Code provides the answer, to wit: Art. 391. The following shall be presumed dead for all purposes, including the division of the estate among the heirs: (1) A person on board a vessel lost during a sea voyage, or an aeroplane which is missing, who has not been heard of for four years since the loss of the vessel or aeroplane;... By the aforequoted law, it is quite clear that the person to be presumed dead should first "not been heard of for four years since the loss of the vessel" before he can be presumed dead for all purposes. Applied to Capt. LUCERO, it is evidently premature to presume him dead as four years has not yet expired. Thus, even in Judge Advocate General vs. Gonzales, et al., (CA) 48 O.G. 5329, the very case cited by the respondent herein, the court Id. in the case of the missing soldier that although nothing was heard of him since 7 May 1942, the fact of his death is not presumed until seven years after 1942. Since Capt. LUCERO cannot yet be presumed dead as demonstrated hereinabove, it logically follows that as of now, he is presumed have It is of no moment to Us that the vessel was conceded by the Lloyds of London to have been totally lost which, in the first place, was admittedly merely based on presumption as even the whereabouts of the vessel remains unknown. Similarly, even the agreement, which formed the basis of the Decision of the NSB ordering payment of death benefits to the heirs of some of the crew must have been predicated upon a presumption of death of the crew members concerned. Such circumstances do not suffice to establish the actual death of Capt. LUCERO. xxx xxx xxx Indeed, by the terms of the appointment of Capt. LUCERO, his engagement terminates upon the return of the vessel at the Port of Manila. He is considered to be still working entitling his spouse to allotment until the vessel returns or until it is officially declared totally lost, or until the presumption of his death becomes effective in which case the burden of proving that he is alive is shifted to his wife for purposes of continuing her allotment. We are unable to agree with the reasoning and conclusion of the respondent NLRC. It is undisputed that on February 16, 1980, the Company received three (3) radio messages from Capt. Lucero on board the M/V Eastern Minicon the last of which, received at 9:50 p.m. of that day, was a call for immediate assistance in view of the existing "danger": "sea water was entering the hatch"; the vessel "was listing 50 to 60 degrees port," and they were "preparing to abandon the ship any time.' After this message, nothing more has been heard from the vessel or its crew until the present time. There is thus enough evidence to show the circumstances attending the loss and disappearance of the M/V Eastern Minicon and its crew. The foregoing facts, quite logically. are sufficient to lead Us to a moral certainty that the vessel had sunk and that the persons aboard had perished with it. upon this premise, the rule on presumption of death under Article 391 (1) of the Civil Code must yield to the rule of preponderance of evidence. As this Court said in Joaquin vs. Navarro 4 "Where there are facts, known or knowable, from which a

rational conclusion can be made, the presumption does not step in, and the rule of preponderance of evidence controls." Of similar import is the following pronouncement from American Jurisprudence: 5 Loss of Vessel. Where a vessel sets out on a voyage and neither the vessel nor those who went in her are afterward heard of, the presumption arises, after the utmost limit of time for her to have completed the voyage and for news of her arrival at any commercial port of the world to have been received, that the vessel has been lost and that all on board have perished. The presumption of death in such cases does not rest on the fact alone that the person in question has been absent and unheard from for a specific length of time, but also on the fact that the vessel has not been heard front The question, moreover, is not whether it is impossible that the person may be alive, but whether the circumstances do not present so strong a probability of his death that a court should act thereon. The presumption of death from absence of tidings of the vessel on which the absentee sailed is strengthened by proof of a storm to which the vessel probably was exposed. The presumption is even stronger where it appears affirmatively that the vessel was lost at sea, that nothing has been heard of a particular person who sailed thereon, and that a sufficient time has elapsed to permit the receipt of news of any possible survivors of the disaster. In People vs. Ansang 6 where, in open sea, the appellant aboard a vinta ignited three home-made bombs and threw them at the boat occupied by the victims, and the said boat was later washed ashore and the passengers thereof were never heard or seen again by anybody, this Court convicted the appellant of multiple murder, holding that the victims were dead. Similarly, in People vs. Sasota, 7 the claim of the appellants therein that there was no conclusive evidence of death of the victim because his body was never found was overruled by this Court in this wise: In a case of murder or homicide, it is not necessary to recover the body or to show where it can be found. 'Mere are cases like death at sea, where the finding or recovery of the body is impossible. It is enough that the death and the criminal agency be proven. There are even cases where said death and the intervention of the criminal agency that caused it may be presumed or established by circumstantial evidence. Moreover, it may be remembered that in several treason cages decided by this Court, where besides the act of treason the accused is held responsible for the death of persons he had or tortured and later taken away, where the victims were never later seen or heard from, it has been presumed that they were lulled or otherwise criminally disposed of or liquidated by the accused this, for the purpose of fixing the penalty. If in the foregoing criminal cases, where the proof required for conviction must be beyond reasonable doubt, the rule of presumption was not applied and the fact of death was deemed established, with more reason is this Court justified in entering a finding of death. Indeed, We cannot permit Article 391 to override, or be substituted for, the facts established in this case which logically indicate to a moral certainty that Capt. Lucero died shortly after he had sent his last radio message at 9:50 p.m. on February 16, 1980.

In view of the conclusion arrived at above, We deem it unnecessary to discuss the other issued raised in this case, they being mere adjuncts to the principa issue already disposed of. WHEREFORE, the decision of the NLRC subject of this petition is hereby set aside, and the complaint of respondent Josephine Lucero dismissed. However, Mrs. Lucero is entitled to death benefits. No costs. SO ORDERED. Republic SUPREME Manila FIRST DIVISION G.R. No. 126334 November 23, 2001 of the Philippines COURT

Petitioner filed a motion to dismiss the complaint on the grounds of improper venue, lack of jurisdiction over the nature of the 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 dismiss. It held that venue was properly laid because, while realties were involved, the action was directed against a particular person on the basis of his personal liability; hence, the action is not only a personal action but also an action in personam. As regards petitioner's argument of lack of jurisdiction over the action because the prescribed docket fee was not paid considering the huge amount involved in the claim, the trial court noted that a request for accounting was made in order that the exact value of the partnership may be ascertained and, thus, the correct docket fee may be paid. Finally, the trial court held that the heirs of 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 rights to the succession are transmitted from the moment of the death of the decedent.6 The following day, respondents filed an amended complaint,7 incorporating the additional prayer that petitioner be ordered to "sell all (the partnership's) assets and thereafter pay/remit/deliver/surrender/yield to the plaintiffs" their corresponding share in the proceeds thereof. In due time, petitioner filed a manifestation and motion to dismiss,8arguing that the trial court did not acquire jurisdiction over the case due to the plaintiffs' failure to pay the proper docket fees. Further, in a supplement to his motion to dismiss, 9 petitioner also raised prescription as an additional ground warranting the outright dismissal of the complaint. On June 15, 1995, the trial court issued an Order, 10 denying the motion to dismiss inasmuch as the grounds raised therein were basically the same as the earlier motion to dismiss which has been denied. Anent the issue of prescription, the trial court ruled that prescription begins to run only upon the dissolution of the partnership when the final accounting is done. Hence, prescription has not set in the absence of a final accounting. Moreover, an action based on a written contract prescribes in ten years from the time the right of action accrues. Petitioner filed a petition for certiorari Appeals,11 raising the following issues: before the Court of

EMILIO EMNACE, petitioner, vs. COURT OF APPEALS, ESTATE OF VICENTE TABANAO, SHERWIN TABANAO, VICENTE WILLIAM TABANAO, JANETTE TABANAO DEPOSOY, VICENTA MAY TABANAO VARELA, ROSELA TABANAO and VINCENT TABANAO, respondents. YNARES-SANTIAGO, J.: Petitioner Emilio Emnace, Vicente Tabanao and Jacinto Divinagracia were partners in a business concern known as Ma. Nelma Fishing Industry. Sometime in January of 1986, they decided to dissolve their partnership and executed an agreement of partition and distribution of the partnership properties among them, consequent to Jacinto Divinagracia's withdrawal from the partnership.1 Among the assets to be distributed were five (5) fishing boats, six (6) vehicles, two (2) parcels of land located at Sto. Nio and Talisay, Negros Occidental, and cash deposits in the local branches of the Bank of the Philippine Islands and Prudential Bank. Throughout the existence of the partnership, and even after Vicente Tabanao's untimely demise in 1994, petitioner failed to submit to Tabanao's heirs any statement of assets and liabilities of the partnership, and to render an accounting of the 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 assets of the partnership, amounting to P30,000,000.00, or the sum of P10,000,000.00, despite formal demand for payment thereof.2 Consequently, Tabanao' s heirs, respondents herein, filed against petitioner an action for accounting, payment of shares, division of assets and damages.3 In their complaint, respondents prayed as follows: 1. Defendant be ordered to render the proper accounting of all the assets and liabilities of the partnership at bar; and 2. After due notice and hearing defendant be ordered pay/remit/deliver/surrender/yield to the plaintiffs the following: to

I. Whether or not respondent Judge acted without jurisdiction or with grave abuse of discretion in taking cognizance of a case despite the failure to pay the required docket fee; II. Whether or not respondent Judge acted without jurisdiction or with grave abuse of discretion in insisting to try the case which involve (sic) a parcel of land situated outside of its territorial jurisdiction; III. Whether or not respondent Judge acted without jurisdiction or with grave abuse of discretion in allowing the estate of the deceased to appear as party plaintiff, when there is no intestate case and filed by one who was never appointed by the court as administratrix of the estates; and IV. Whether or not respondent Judge acted without jurisdiction or with grave abuse of discretion in not dismissing the case on the ground of prescription. On August 8, 1996, the Court of Appeals rendered the assailed decision,12 dismissing the petition for certiorari, upon a finding that no grave abuse of discretion amounting to lack or excess of jurisdiction was committed by the trial court in issuing the questioned orders denying petitioner's motions to dismiss. Not satisfied, petitioner filed the instant petition for review, raising the same issues resolved by the Court of Appeals, namely: I. Failure to pay the proper docket fee;

A. No less than One Third (1/3) of the assets, properties, dividends, cash, land(s), fishing vessels, trucks, motor vehicles, and other forms and substance of treasures which belong and/or should belong, had accrued and/or must accrue to the partnership; B. No less than Two Hundred Thousand Pesos (P200,000.00) as moral damages; C. Attorney's fees equivalent to Thirty Percent (30%) of the entire share/amount/award which the Honorable Court may resolve the plaintiffs as entitled to plus P1,000.00 for every appearance in court. 4

II. Parcel of land subject of the case pending before the trial court is outside the said court's territorial jurisdiction; III. Lack of capacity to sue on the part of plaintiff heirs of Vicente Tabanao; and IV. Prescription of the plaintiff heirs' cause of action.

immediately ascertained as to the exact amount. This second class of claims, where the exact amount still has to be finally determined by the courts based on evidence presented, falls squarely under the third paragraph of said Section 5(a), which provides: In case the value of the property or estate or the sum claimed is less or more in accordance with the appraisal of the court, the difference of fee shall be refunded or paid as the case may be. (Underscoring ours) In Pilipinas Shell Petroleum Corporation v. Court of Appeals, 19 this Court pronounced that the above-quoted provision "clearly contemplates an Initial payment of the filing fees corresponding to the estimated amount of the claim subject to adjustment as to what later may be proved."20 Moreover, we reiterated therein the principle that the payment of filing fees cannot be made contingent or dependent on the result of the case. Thus, an initial payment of the docket fees based on an estimated amount must be paid simultaneous with the filing of the complaint. Otherwise, the court would stand to lose the filing fees should the judgment later turn out to be adverse to any claim of the respondent heirs. The matter of payment of docket fees is not a mere triviality. These fees are necessary to defray court expenses in the handling of cases. Consequently, in order to avoid tremendous losses to the judiciary, and to the government as well, the payment of docket fees cannot be made dependent on the outcome of the case, except when the claimant is a pauper-litigant. Applied to the instant case, respondents have a specific claim - 1/3 of the value of all the partnership assets - but they did not allege a specific amount. They did, however, estimate the partnership's total assets to be worth Thirty Million Pesos (P30,000,000.00), in a letter21 addressed to petitioner. Respondents cannot now say that they are unable to make an estimate, for the said letter and the admissions therein form part of the records of this case. They cannot avoid paying the initial docket fees by conveniently omitting the said amount in their amended complaint. This estimate can be made the basis for the initial docket fees that respondents should pay. Even if it were later established that the amount proved was less or more than the amount alleged or estimated, Rule 141, Section 5(a) of the Rules of Court specifically provides that the court may refund the 'excess or exact additional fees should the initial payment be insufficient. It is clear that it is only the difference between the amount finally awarded and the fees paid upon filing of this complaint that is subject to adjustment and which may be subjected to alien. In the oft-quoted case of Sun Insurance Office, Ltd. v. Hon. Maximiano Asuncion,22 this Court held that when the specific claim "has been left for the determination by the court, the additional filing fee therefor shall constitute a lien on the judgment and it shall be the responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the additional fee." Clearly, the rules and jurisprudence contemplate the initial payment of filing and docket fees based on the estimated claims of the plaintiff, and it is only when there is a deficiency that a lien may be constituted on the judgment award until such additional fee is collected. Based on the foregoing, the trial court erred in not dismissing the complaint outright despite their failure to pay the proper docket fees. Nevertheless, as in other procedural rules, it may be liberally construed in certain cases if only to secure a just and speedy disposition of an action. While the rule is that the payment of the docket fee in the proper amount should be adhered to, there are certain exceptions which must be strictly construed.23 In recent rulings, this Court has relaxed the strict adherence to the Manchester doctrine, allowing the plaintiff to pay the proper docket fees within a reasonable time before the expiration of the applicable prescriptive or reglementary period.24

It can be readily seen that respondents' primary and ultimate objective in instituting the action below was to recover 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 they are actually asking is for the trial court to compel petitioner to pay and turn over their share, or the equivalent value thereof, from the proceeds of the sale of the partnership assets. They also assert that until and unless a proper accounting is done, the exact value of the partnership' s assets, as well as their corresponding share therein, cannot be ascertained. Consequently, they feel justified in not having paid the commensurate docket fee as required by the Rules of Court.1wphi1.nt We do not agree. The trial court does not have to employ guesswork in ascertaining the estimated value of the partnership's assets, for respondents themselves voluntarily pegged the worth thereof at Thirty Million Pesos (P30,000,000.00). Hence, this case is one which is really not beyond pecuniary estimation, but rather partakes of the nature of a simple collection case where the value of the subject assets or amount demanded is pecuniarily determinable.13 While it is true that the exact value of the partnership's total assets cannot be shown with certainty at the time of filing, respondents can and must ascertain, through informed and practical estimation, the amount they expect to collect from the partnership, particularly from petitioner, in order to determine the proper amount of docket and other fees.14 It is thus imperative for respondents to pay the corresponding docket fees in order that the trial court may acquire jurisdiction over the action.15 Nevertheless, unlike in the case of Manchester Development Corp. v. Court of Appeals,16 where there was clearly an effort to defraud the government in avoiding to pay the correct docket fees, we see no attempt to cheat the courts on the part of respondents. In fact, the lower courts have noted their expressed desire to remit to the court "any payable balance or lien on whatever award which the Honorable Court may grant them in this case should there be any deficiency in the payment of the 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 far is inadequate is not an indication that they are trying to avoid paying the required amount, but may simply be due to an inability to pay at the time of filing. This consideration may have moved the trial court and the Court of Appeals to declare that the unpaid docket fees shall be considered a lien on the judgment award. Petitioner, however, argues that the trial court and the Court of Appeals erred in condoning the non-payment of the proper legal fees and in allowing the same to become a lien on the monetary or property judgment that may be rendered in favor of respondents. There is merit in petitioner's assertion. The third paragraph of Section 16, Rule 141 of the Rules of Court states that: The legal fees shall be a lien on the monetary or property judgment in favor of the pauper-litigant. Respondents cannot invoke the above provision in their favor because it specifically applies to pauper-litigants. Nowhere in the records does it appear that respondents are litigating as paupers, and as such are exempted from the payment of court fees.18 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: (1) those which are immediately ascertainable; and (2) those which cannot be

In the recent case of National Steel Corp. v. Court of Appeals,25 this Court held that: The court acquires jurisdiction over the action if the filing of the initiatory pleading is accompanied by the payment 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 of the fees within such reasonable time as the court may grant, unless, of course, prescription has set in the meantime. It does not follow, however, that the trial court should have dismissed the complaint for failure of private respondent to pay the correct amount of docket fees. Although the payment of the proper docket fees is a jurisdictional requirement, the trial court may allow the plaintiff in an action to pay the same within a reasonable time before the expiration of the applicable prescriptive or reglementary period. If the plaintiff fails to comply within this requirement, the defendant should timely raise the issue of jurisdiction or else he would be considered in estoppel. In the latter case, the balance between the appropriate docket fees and the amount actually paid by the plaintiff will be considered a lien or any award he may obtain in his favor. (Underscoring ours) Accordingly, the trial court in the case at bar should determine the proper docket fee based on the estimated amount that respondents seek to collect from petitioner, and direct them to pay the same within a reasonable time, provided the applicable prescriptive or reglementary period has not yet expired, Failure to comply therewith, and upon motion by petitioner, the immediate dismissal of the complaint shall issue on jurisdictional grounds. 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 below is a personal action which, under the Rules, may be commenced and tried where the defendant resides or may be found, or where the plaintiffs reside, at the election of the latter.26 Petitioner, however, insists that venue was improperly laid since the action is a real action involving a parcel of land that is located outside the territorial jurisdiction of the court a quo. This contention is not well-taken. The records indubitably show that respondents are asking that the assets of the partnership be accounted for, sold and distributed according to the agreement of the partners. The fact that two of the assets of the partnership are parcels of land does not materially change the nature of the action. It is an action in personam because it is an action against a person, namely, petitioner, on the basis of his personal liability. It is not an action in rem where the action is against the thing itself instead of against the person.27 Furthermore, there 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 of the partnership under liquidation happen to be parcels of land. The time-tested case of Claridades v. Mercader, et al.,28 settled this issue thus: The fact that plaintiff prays for the sale of the assets of the partnership, including the fishpond in question, did not change the nature or character of the action, such sale being merely a necessary incident of the liquidation of the partnership, which should precede and/or is part of its process of dissolution. The action filed by respondents not only seeks redress against petitioner. It also seeks the enforcement of, and petitioner's compliance with, the contract that the partners executed to formalize the partnership's dissolution, as well as to implement the liquidation and partition of the partnership's assets. Clearly, it is a personal action that, in effect, claims a debt from petitioner and seeks the performance of a personal duty on his part.29 In fine, respondents' complaint seeking the liquidation and partition 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

reside.30 Besides, venue has nothing to do with jurisdiction for venue touches more upon the substance or merits of the case. 31 As it is, venue in this case was properly laid and the trial court correctly ruled so. On the third issue, petitioner asserts that the surviving spouse of Vicente Tabanao has no legal capacity to sue since she was never appointed as administratrix or executrix of his estate. Petitioner's objection in this regard is misplaced. The surviving spouse does not need to be appointed as executrix or administratrix of the estate before she can file the action. She and her children are complainants in their own right as successors of Vicente Tabanao. From the very moment of Vicente Tabanao' s death, his rights insofar as the partnership was concerned were transmitted to his heirs, for rights to the succession are transmitted from the moment of death of the decedent.32 Whatever claims and rights Vicente Tabanao had against the partnership and petitioner were transmitted to respondents by operation of law, more particularly by succession, which is a mode of acquisition by virtue of which the property, rights and obligations to the extent of the value of the inheritance of a person are transmitted. 33Moreover, respondents became owners of their respective hereditary shares from the moment Vicente Tabanao died.34 A prior settlement of the estate, or even the appointment of Salvacion Tabanao as executrix or administratrix, is not necessary for any of the heirs to acquire legal capacity to sue. As successors who stepped into the shoes of their decedent upon his death, they can commence any action originally pertaining to the decedent.35 From the moment of his death, his rights as a partner and to demand fulfillment of petitioner's obligations as outlined in their dissolution agreement were transmitted to respondents. They, therefore, had the capacity to sue and seek the court's intervention to compel petitioner to fulfill his obligations. Finally, petitioner contends that the trial court should have dismissed the complaint on the ground of prescription, arguing that respondents' action prescribed four (4) years after it accrued in 1986. The trial court and the Court of Appeals gave scant consideration to petitioner's hollow arguments, and rightly so. The three (3) final stages of a partnership are: (1) dissolution; (2) winding-up; and (3) termination.36 The partnership, although dissolved, continues to exist and its legal personality is retained, at which time it completes the winding up of its affairs, including the partitioning and distribution of the net partnership assets to the partners. 37 For as long as the partnership exists, any of the partners may demand an accounting of the partnership's business. Prescription of the said right starts to run only upon the dissolution of the partnership when the final accounting is done.38 Contrary to petitioner's protestations that respondents' right to inquire into the business affairs of the partnership accrued in 1986, prescribing four (4) years thereafter, prescription had not even begun to run in the absence of a final accounting. Article 1842 of the Civil Code provides: The right to an account of his interest shall accrue to any partner, or his legal representative as against the winding up partners or the surviving partners or the person or partnership continuing the business, at the date of dissolution, in the absence of any agreement to the contrary. Applied in relation to Articles 1807 and 1809, which also deal with the duty to account, the above-cited provision states that the right to demand an accounting accrues at the date of dissolution in the absence of any agreement to the contrary. When a final 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 is precisely what respondents are seeking in their action before the trial court, since petitioner has failed or refused to render an accounting of the partnership's business and assets. Hence, the said action is not barred by prescription.

In fine, the trial court neither erred nor abused its discretion when it denied petitioner's motions to dismiss. Likewise, the Court of Appeals did not commit reversible error in upholding the trial court's orders. Precious time has been lost just to settle this preliminary issue, with petitioner resurrecting the very same arguments from the trial court all the way up to the Supreme Court. The litigation of the merits and substantial issues of this controversy is now long overdue and must proceed without further delay. WHEREFORE, in view of all the foregoing, the instant petition is DENIED for lack of merit, and the case isREMANDED to the Regional Trial Court of Cadiz City, Branch 60, which is ORDERED to determine the proper docket fee based on the estimated amount that plaintiffs therein seek to collect, and direct said plaintiffs to pay the same within a reasonable time, provided the applicable prescriptive or reglementary period has not yet expired. Thereafter, the trial court is ORDERED to conduct the appropriate proceedings in Civil Case No. 416-C. Costs against petitioner.1wphi1.nt SO ORDERED. Republic SUPREME Manila SECOND DIVISION G.R. No. L-50261 May 31, 1982 IN THE MATTER OF GUARDIANSHIP OF THE MINORS CECILIA, REBECCA, FLORIDA, RAPHAEL, RODOLFO, LUISITO, TEODORO, all surnamed LAVIDES, ALBERTO C. LAVIDES, petitioner, vs. CITY COURT OF LUCENA, Branch I, respondent. of the Philippines COURT

On November 22, 1978, petitioner filed a motion for confirmation and approval of a Deed of Exchange Agreement dated November 18, 1978. While this latter motion was still pending consideration, the respondent court, now presided by Honorable Judge Jose J. Parentela, Jr., reviewed the records of the case and finding that the undivided estate left by the deceased was worth at least P35,000.00, dismissed the case in an Order dated December 5, 1978, for lack of jurisdiction, revoked the appointment of petitioner as guardian and annulled all proceedings taken prior to the issuance of the said order of December 5, 1978. Petitioner filed a motion for reconsideration of said order which was denied by respondent city court in its order dated December 27, 1978. Hence, this instant petition, petitioner raising the following issues, namely: a. Whether or not respondent city court's jurisdiction over a petition for general guardianship is based on the total value of the estate or on the value of the individual share of the minors in the estate of their deceased mother; and b. Whether or not the promulgation of the Revised Rules of Court which was made effective on January 1, 1964 overruled the doctrine laid down by this Honorable Tribunal in the case of "Delgado vs. Gamboa," G. R. No. L-14326, February 28, 1962, 4 SCRA 505. It appears that respondent city court dismissed the petition for guardianship on ground of lack of jurisdiction 1) because a perusal of the records of the case shows that the undivided estate left by the deceased is worth P35,000.00 which is clearly outside its jurisdiction, pursuant to Section 1, Rule 92 of the Revised Rules of Court, and 2) because of this Court's ruling in the case of Delgado vs. Gamboa, supra, to the effect that the concurrent jurisdiction of the Justice of the Peace Courts with the Court of First Instance over the guardianship of the person and properties of the minors and incompetents cannot be exercised when the estate has a value in excess of the jurisdictional amount for the former courts. Petitioner, on the other hand, contends that in the case of petition for guardianship of more than one minor, the individual share of each minor which is then the estate of said minors determines the jurisdiction of the court pursuant to Section 1, Rule 92 of the Revised Rules of Court; that inasmuch as there are seven (7) minor children sought to be placed under guardianship and that the total value of the estate is P35,000.00, then by simple mathematical computation, the value of the property of each minor is P5,000.00, already a determined estate, which is well within the jurisdiction of the respondent city court; that the case of Delgado vs. Gamboa, promulgated in 1962, invoked by respondent city court in dismissing his petition has been overruled and abandoned by the promulgation of the Revised Rules of Court, which took effect in 1964. Section 1, Rule 92 of the Revised Rules of Court granting concurrent jurisdiction to the municipal and city courts with the Court of First Instance in the appointment of guardians, provides: Section 1. Where to institute proceedings. Guardianship of the person or estate of a minor or incompetent may be instituted in the Court of First Instance of the province, or in the justice of the peace court of the municipality, or in the municipal court of the chartered city where the minor or incompetent person resides, and if he resides in a foreign country, in the Court of First Instance of the province wherein his property or part thereof is situated; provided, however, that where the value of the property of such minor or incompetent exceeds the jurisdiction of the justice of the peace or municipal court, the proceedings shall be instituted in the Court of First Instance. In the City of Manila the proceedings shall be instituted in the Juvenile and Domestic Relations Court.

DE CASTRO, J.: This is a petition for review on certiorari of the two (2) orders of respondent City Court of Lucena, Branch I, one dated December 5, 1978 dismissing petitioner's petition for guardianship for lack of jurisdiction and the other, dated December 27, 1978 denying petitioner's motion for reconsideration of the order of December 5, 1978. There is no dispute as to the following facts: Upon the death of his wife, petitioner Alberto Lavides instituted on April 5, 1971 before respondent City Court a guardianship proceeding (Special Proceeding No. 0609) with respect to the person and property of their seven (7) minor children named Cecilia, Rebecca, Florida, Raphael, Rodolfo, Luisito and Teodoro, all surnamed Lavides. Said petition alleged that the estate left by the deceased wife of herein petitioner, mother of the above- named minors, has a total value of thirty-five thousand pesos (P35,000.00) or an amount of P5,000.00 pertaining to each minor. Although there had been no previous settlement of the estate of the deceased, petitioner was appointed and qualified as judicial guardian on May 10, 1971. On June 23, 1971, respondent City Court, then presided by Honorable Judge Filemon Juntereal, upon motion, authorized petitioner to settle the estate extrajudicially and to sell a portion thereof consisting of shares of stocks. Pursuant to said authority, petitioner extrajudicially settled the estate, and on August 28, 1971, sold the said shares of stocks for the sum of P64,512.00

The above section, in clear terms, grants concurrent jurisdiction between municipal and city court and Courts of First Instance in the appointment of guardians either with respect to the person or property of the minor or incompetent, except that where the value of the property of such minor or incompetent exceeds the jurisdiction of the municipal or city courts, the guardianship proceedings shall be instituted in the Court of First Instance. It is clear, therefore, that the value of the property of the minor or incompetent sought to be placed in guardianship determines which court has jurisdiction. And that property referred to is the individual estate of the minor so much so that when there are more than one minor or in competent sought to be placed under guardianship, what determines which court has jurisdiction is the value of the individual property of each minor or incompetent. In the case at bar, it appears that respondent city court dismissed the petition for guardianship on ground of lack of jurisdiction because a perusal of the record of the case shows that the undivided estate left by the deceased mother is worth P35,000.00 which amount is clearly outside its jurisdiction. This reasoning must be rejected for it overlooks the fact that the petition for guardianship filed by herein petitioner before the respondent city court clearly alleged that the individual estate or share of each of the seven minor children sought to be placed under guardianship is P5,000.00, which amount is well within the jurisdiction of the respondent city court (Section 88, Judiciary Act of 1948, as amended by R.A. No. 3828). That the respondent city court has jurisdiction over the case cannot be denied, for the rule is well-settled that jurisdiction of the court over the subject matter is determined by the allegations of the complaint and/or petition. 1 That each of the seven (7) minor children became owner of a one- seventh (1/7) share or an amount of P5,000 from the estate left by the deceased mother valued at P35,000.00 upon the death of the latter cannot also be denied for Article 777 of the New Civil Code expressly provides that "the rights to the succession are transmitted from the moment of death of the decedent," and from then on, the heir becomes the absolute owner of the decedent's property, subject of the rights and obligations of the decedent and he cannot be deprived of such right except by methods provided for by law. 2 Respondent city court, however, would also base its dismissal of the case in the light of this Court's ruling in the case of Delgado vs. Gamboa, supra, to the effect that the concurrence of jurisdiction between Courts of First Instance and inferior courts over guardianship of the minors or incompetents cannot be exercised when the estate has a value in excess of the jurisdictional amount for the latter courts. The respondent Court, however, overlooked one vital fact. A more careful examination of the facts of said case, decided in 1962, reveals that it involved guardianship proceeding over the person and property of three (3) minor children of decedent and an undivided estate valued at P7,000.00. That would make a share of P2,333.33 for each minor child, which amount is also in excess of the jurisdictional amount for inferior courts. 3 In the case at bar, there are seven (7) minor children to share in an undivided estate valued at P35,000.00 or a share of P5,000.00 for each minor, which amount is well within the jurisdiction of the respondent city court, 4 which, therefore, cannot validly invoke the case of Delgado vs. Gamboa to support its dismissal of the petition for guardianship. For what is decisive is not the total value of the estate of the decedent, but the value of the individual share of each of the minor heirs for whom a guardian is sought to be appointed individually not collectively. But petitioner would contend, as raised in the second issue of this petition, that the doctrine laid down by this Court in the aforecited case of Delgado vs. Gamboa, has been overruled by the promulgation of the Revised Rules of Court, particularly Section 1 of Rule 92, He argued that the case of Delgado vs. Gamboa, promulgated on February 28, 1962, was decided when Section 1, Rule 93 of the former Rules of Court was still effective, which rule commands that guardianship shall be originally cognizable by the Court of First Instance; that when the Revised Rules of Court took effect on January 1, 1964, the institution of guardianship proceedings is now governed by Section 1 of Rule 92 which states that

guardianship proceedings may be instituted in the Courts of First Instance or in the municipal courts. A perusal of the case of Delgado vs. Gamboa, decided when Section 1 of former Rule 93, as amended by R.A. No. 643, was still effective, shows that it merely restated and confirmed the doctrine laid down in the case of Morales vs. Marquez, G. R. No. L-7463, May 27, 1955, which in effect, expounded the grant of concurrent jurisdiction between inferior courts and Court of First Instance, as provided for by R.A. No. 643. And a comparison of the provisions of Section 1 of former Rule 93, as amended, and Section 1 of the present Rule 92 shows that the latter rule restates the former rule. Under the former rule, municipal or city courts have concurrent jurisdiction with the Court of First Instance in cases where the value of the property of such minor or incompetent falls within the jurisdiction of the former courts. Likewise, under the present rule, concurrent jurisdiction was also granted except that "where the value of the property of such minor or incompetent exceeds the jurisdiction of the inferior courts, the proceedings shall, be instituted in the Court of First Instance." The criterion, therefore, in determining in which court the guardianship proceeding shall be instituted under the provision of both the former Rule 93 and the present Rule 92 remains the same. Hence, it cannot be accurately stated that the Delgado ruling has been abandoned. In any case, the Delgado doctrine, as already demonstrated, does not militate against petitioner's contention that the City has jurisdiction over the instant guardianship case. Lastly, there is still one aspect of this case which must not be overlooked. It is not disputed that the respondent City Court has entertained and granted petitioner's petition for guardianship in its Order as early as May 10, 1971 and has exercised its jurisdiction by granting authority to petitioner to settle the estate extrajudicially and to sell a portion thereof consisting of shares of stock; that after the lapse of seven (7) years or on November 22, 1978, respondent City Court dismissed the case for lack of jurisdiction, revoked the appointment of petitioner as guardian and annulled all proceedings taken. Would it serve the interest of justice to dismiss the case at this stage and let a new petition for guardianship be filed in another court? To draw a tenuous jurisdictional line is to undermine stability in litigations. The time to be lost, effort wasted, anxiety augmented, additional expenses incurredthese are considerations which weigh heavily if this situation is allowed to happen. As aptly stated by the petitioner."To let the respondent court reverse its stand now will pave a pattern of judicial instability which, to reason and logic, is definitely not healthy administration of justice and not inducive of court's veneration." 5 IN VIEW OF THE FOREGOING, the Order of respondent City Court of December 5, 1978 dismissing the petition and the Order of December 27, 1978 denying petitioner's motion for reconsideration thereof are hereby set aside and the case is remanded to it for further proceedings. No costs. SO ORDERED. Republic SUPREME Manila FIRST DIVISION G.R. No. L-41715 June 18, 1976 ROSALIO BONILLA (a minor) SALVACION BONILLA (a minor) and PONCIANO BONILLA (their father) who represents the minors, petitioners, vs. LEON BARCENA, MAXIMA ARIAS BALLENA, ESPERANZA BARCENA, MANUEL BARCENA, AGUSTINA NERI, widow of JULIAN of the Philippines COURT

TAMAYO and HON. LEOPOLDO GIRONELLA of the Court of First Instance of Abra,respondents. Federico Paredes for petitioners. Demetrio V. Pre for private respondents.

MARTIN, J: This is a petition for review 1 of the Order of the Court of First Instance of Abra in Civil Case No. 856, entitled Fortunata Barcena vs. Leon Barcena, et al., denying the motions for reconsideration of its order dismissing the complaint in the aforementioned case. On March 31, 1975 Fortunata Barcena, mother of minors Rosalio Bonilla and Salvacion Bonilla and wife of Ponciano Bonilla, instituted a civil action in the Court of First Instance of Abra, to quiet title over certain parcels of land located in Abra. On May 9, 1975, defendants filed a written motion to dismiss the complaint, but before the hearing of the motion to dismiss, the counsel for the plaintiff moved to amend the complaint in order to include certain allegations therein. The motion to amend the complaint was granted and on July 17, 1975, plaintiffs filed their amended complaint. On August 4, 1975, the defendants filed another motion to dismiss the complaint on the ground that Fortunata Barcena is dead and, therefore, has no legal capacity to sue. Said motion to dismiss was heard on August 14, 1975. In said hearing, counsel for the plaintiff confirmed the death of Fortunata Barcena, and asked for substitution by her minor children and her husband, the petitioners herein; but the court after the hearing immediately dismissed the case on the ground that a dead person cannot be a real party in interest and has no legal personality to sue. On August 19, 1975, counsel for the plaintiff received a copy of the order dismissing the complaint and on August 23, 1975, he moved to set aside the order of the dismissal pursuant to Sections 16 and 17 of Rule 3 of the Rules of Court. 2 On August 28, 1975, the court denied the motion for reconsideration filed by counsel for the plaintiff for lack of merit. On September 1, 1975, counsel for deceased plaintiff filed a written manifestation praying that the minors Rosalio Bonilla and Salvacion Bonilla be allowed to substitute their deceased mother, but the court denied the counsel's prayer for lack of merit. From the order, counsel for the deceased plaintiff filed a second motion for reconsideration of the order dismissing the complaint claiming that the same is in violation of Sections 16 and 17 of Rule 3 of the Rules of Court but the same was denied. Hence, this petition for review. The Court reverses the respondent Court and sets aside its order dismissing the complaint in Civil Case No. 856 and its orders denying the motion for reconsideration of said order of dismissal. While it is true that a person who is dead cannot sue in court, yet he can be substituted by his heirs in pursuing the case up to its completion. The records of this case show that the death of Fortunata Barcena took place on July 9, 1975 while the complaint was filed on March 31, 1975. This means that when the complaint was filed on March 31, 1975, Fortunata Barcena was still alive, and therefore, the court had acquired jurisdiction over her person. If thereafter she died, the Rules of Court prescribes the procedure whereby a party who died during the pendency of the proceeding can be substituted. Under Section 16, Rule 3 of the Rules of Court "whenever a party to a pending case dies ... it shall be the duty of his attorney to inform the court promptly of such death ... and to give the name and residence of his executor, administrator, guardian or other legal

representatives." This duty was complied with by the counsel for the deceased plaintiff when he manifested before the respondent Court that Fortunata Barcena died on July 9, 1975 and asked for the proper substitution of parties in the case. The respondent Court, however, instead of allowing the substitution, dismissed the complaint on the ground that a dead person has no legal personality to sue. This is a grave error. Article 777 of the Civil Code provides "that the rights to the succession are transmitted from the moment of the death of the decedent." From the moment of the death of the decedent, the heirs become the absolute owners of his property, subject to the rights and obligations of the decedent, and they cannot be deprived of their rights thereto except by the methods provided for by law. 3 The moment of death is the determining factor when the heirs acquire a definite right to the inheritance whether such right be pure or contingent. 4 The right of the heirs to the property of the deceased vests in them even before judicial declaration of their being heirs in the testate or intestate proceedings. 5 When Fortunata Barcena, therefore, died her claim or right to the parcels of land in litigation in Civil Case No. 856, was not extinguished by her death but was transmitted to her heirs upon her death. Her heirs have thus acquired interest in the properties in litigation and became parties in interest in the case. There is, therefore, no reason for the respondent Court not to allow their substitution as parties in interest for the deceased plaintiff. Under Section 17, Rule 3 of the Rules of Court "after a party dies and the claim is not thereby extinguished, the court shall order, upon proper notice, the legal representative of the deceased to appear and be substituted for the deceased, within such time as may be granted ... ." The question as to whether an action survives or not depends on the nature of the action and the damage sued for. 6 In the causes of action which survive the wrong complained affects primarily and principally property and property rights, the injuries to the person being merely incidental, while in the causes of action which do not survive the injury complained of is to the person, the property and rights of property affected being incidental. 7 Following the foregoing criterion the claim of the deceased plaintiff which is an action to quiet title over the parcels of land in litigation affects primarily and principally property and property rights and therefore is one that survives even after her death. It is, therefore, the duty of the respondent Court to order the legal representative of the deceased plaintiff to appear and to be substituted for her. But what the respondent Court did, upon being informed by the counsel for the deceased plaintiff that the latter was dead, was to dismiss the complaint. This should not have been done for under the same Section 17, Rule 3 of the Rules of Court, it is even the duty of the court, if the legal representative fails to appear, to order the opposing party to procure the appointment of a legal representative of the deceased. In the instant case the respondent Court did not have to bother ordering the opposing party to procure the appointment of a legal representative of the deceased because her counsel has not only asked that the minor children be substituted for her but also suggested that their uncle be appointed as guardian ad litem for them because their father is busy in Manila earning a living for the family. But the respondent Court refused the request for substitution on the ground that the children were still minors and cannot sue in court. This is another grave error because the respondent Court ought to have known that under the same Section 17, Rule 3 of the Rules of Court, the court is directed to appoint a guardian ad litem for the minor heirs. Precisely in the instant case, the counsel for the deceased plaintiff has suggested to the respondent Court that the uncle of the minors be appointed to act as guardian ad litem for them. Unquestionably, the respondent Court has gravely abused its discretion in not complying with the clear provision of the Rules of Court in dismissing the complaint of the plaintiff in Civil Case No. 856 and refusing the substitution of parties in the case. IN VIEW OF THE FOREGOING, the order of the respondent Court dismissing the complaint in Civil Case No. 856 of the Court of First Instance of Abra and the motions for reconsideration of the order of dismissal of said complaint are set aside and the respondent Court is

hereby directed to allow the substitution of the minor children, who are the petitioners therein for the deceased plaintiff and to appoint a qualified person as guardian ad litem for them. Without pronouncement as to costs. SO ORDERED. Republic SUPREME Manila THIRD DIVISION G.R. No. L-41171 July 23, 1987 of the Philippines COURT

GUTIERREZ, JR., J.: These cases before us all stem from SP. PROC. NO. 916-R of the then Court of First Instance of Cebu. G.R. No. 41171 Vito Borromeo, a widower and permanent resident of Cebu City, died on March 13, 1952, in Paranaque, Rizal at the age of 88 years, without forced heirs but leaving extensive properties in the province of Cebu. On April 19, 1952, Jose Junquera filed with the Court of First Instance of Cebu a petition for the probate of a one page document as the last will and testament left by the said deceased, devising all his properties to Tomas, Fortunato and Amelia, all surnamed Borromeo, in equal and undivided shares, and designating Junquera as executor thereof. The case was docketed as Special Proceedings No. 916-R. The document, drafted in Spanish, was allegedly signed and thumbmarked by the deceased in the presence of Cornelio Gandionco, Eusebio Cabiluna, and Felixberto Leonardo who acted as witnesses. Oppositions to the probate of the will were filed. On May 28, 1960, after due trial, the probate court held that the document presented as the will of the deceased was a forgery. On appeal to this Court, the decision of the probate court disallowing the probate of the will was affirmed inTestate Estate of Vito Borromeo, Jose H. Junquera et al. v. Crispin Borromeo et al. (19 SCRA 656). The testate proceedings was converted into an intestate proceedings. Several parties came before the court filing claims or petitions alleging themselves as heirs of the intestate estate of Vito Borromeo. The following petitions or claims were filed:

INTESTATE ESTATE OF THE LATE VITO BORROMEO, PATROCINIO BORROMEO-HERRERA, petitioner, vs. FORTUNATO BORROMEO and HON. FRANCISCO P. BURGOS, Judge of the Court of First Instance of Cebu, Branch II, respondents. x - - - - - - - - - - - - - - - - - - - - - - -x No. L-55000 July 23, 1987

IN THE MATTER OF THE ESTATE OF VITO BORROMEO, DECEASED, PILAR N. BORROMEO, MARIA B. PUTONG, FEDERICO V. BORROMEO, JOSE BORROMEO, CONSUELO B. MORALES, AND CANUTO V. BORROMEO, JR., heirs-appellants, vs. FORTUNATO BORROMEO, claimant-appellee. x - - - - - - - - - - - - - - - - - - - - - - -x No. L-62895 July 23, 1987

JOSE CUENCO BORROMEO, petitioner, vs. HONORABLE COURT OF APPEALS, HON. FRANCISCO P. BURGOS, As presiding Judge of the (now) Regional Trial Court, Branch XV, Region VII, RICARDO V. REYES, as Administrator of the Estate of Vito Borromeo in Sp. Proc. No. 916-R, NUMERIANO G. ESTENZO and DOMINGO L. ANTIGUA, respondents. x - - - - - - - - - - - - - - - - - - - - - - -x No. L-63818 July 23, 1987

1. On August 29, 1967, the heirs of Jose Ma. Borromeo and Cosme Borromeo filed a petition for declaration of heirs and determination of heirship. There was no opposition filed against said petition. 2. On November 26, 1967, Vitaliana Borromeo also filed a petition for declaration as heir. The heirs of Jose Ma. Borromeo and Cosme Borromeo filed an opposition to this petition. 3. On December 13, 1967, Jose Barcenilla, Jr., Anecita Ocampo de Castro, Ramon Ocampo, Lourdes Ocampo, Elena Ocampo, Isagani Morre, Rosario Morre, Aurora Morre, Lila Morre, Lamberto Morre, and Patricia Morre, filed a petition for declaration of heirs and determination of shares. The petition was opposed by the heirs of Jose and Cosme Borromeo. 4. On December 2, 1968, Maria Borromeo Atega, Luz Borromeo, Hermenegilda Borromeo Nonnenkamp, Rosario Borromeo, and Fe Borromeo Queroz filed a claim. Jose Cuenco Borromeo, Crispin Borromeo, Vitaliana Borromeo and the heirs of Carlos Borromeo represented by Jose Talam filed oppositions to this claim. When the aforementioned petitions and claims were heard jointly, the following facts were established: 1. Maximo Borromeo and Hermenegilda Galan, husband and wife (the latter having predeceased the former), were survived by their eight (8) children, namely, Jose Ma. Borromeo Cosme Borromeo Pantaleon Borromeo

DOMINGO ANTIGUA AND RICARDO V. REYES, as Administrator of the Intestate Estate of VITO BORROMEO, Sp. Proceedings No. 916R, Regional Trial Court of Cebu, joined by HON. JUDGE FRANCISCO P. BURGOS, as Presiding Judge of Branch XV of the Regional Trial Court of Cebu, as a formal party, and ATTYS. FRANCIS M. ZOSA, GAUDIOSO RUIZ and NUMERIANO ESTENZO, petitioners, vs. HONORABLE INTERMEDIATE APPELLATE COURT, JOSE CUENCO BORROMEO, and PETRA O. BORROMEO, respondents. x - - - - - - - - - - - - - - - - - - - - - - -x No. L-65995 July 23, 1987

PETRA BORROMEO, VITALIANA BORROMEO, AMELINDA BORROMEO, and JOSE CUENCO BORROMEO,petitioners, vs. HONORABLE FRANCISCO P. BURGOS, Presiding Judge of Branch XV, Regional Trial Court of Cebu; RICARDO V. REYES, Administrator of the Estate of VITO BORROMEO in Sp. Proc. No. 916-R; and DOMINGO L. ANTIGUA, respondents.

Vito Borromeo Paulo Borromeo Anecita Borromeo Quirino Borromeo and Julian Borromeo 2. Vito Borromeo died a widower on March 13, 1952, without any issue, and all his brothers and sisters predeceased him. 3. Vito's brother Pantaleon Borromeo died leaving the following children:

cc. Canuto Borromeo, Jr. dd. Jose Borromeo ee. Consuelo Borromeo ff. Pilar Borromeo gg. Salud Borromeo hh. Patrocinio Borromeo Herrera c. Maximo Borromeo, who died in July, 1948 d. Matilde Borromeo, who died on Aug. 6, 1946

a. Ismaela Borromeo,who died on Oct. 16, 1939 b. Teofilo Borromeo, who died on Aug. 1, 1955, or 3 years after the death of Vito Borromeo. He was married to Remedios Cuenco Borromeo, who died on March 28, 1968. He had an only son-Atty. Jose Cuenco Borromeo one of the petitioners herein. c. Crispin Borromeo, who is still alive. cc. Hermenegilda Borromeo Nonnenkamp 4. Anecita Borromeo, sister of Vito Borromeo, died ahead of him and left an only daughter, Aurora B. Ocampo, who died on Jan. 30, 1950 leaving the following children: a. Anecita Ocampo Castro b. Ramon Ocampo c. Lourdes Ocampo 1. Jose Cuenco Borromeo d. Elena Ocampo, all living, and 2. Judge Crispin Borromeo e. Antonieta Ocampo Barcenilla (deceased), survived by claimant Jose Barcenilla, Jr. 5. Cosme Borromeo, another brother of Vito Borromeo, died before the war and left the following children: a. Marcial Borromeo 6. Asuncion Borromeo b. Carlos Borromeo,who died on Jan. 18, 1965,survived by his wife, Remedios Alfonso, and his only daughter, Amelinda Borromeo Talam c. Asuncion Borromeo d. Florentina Borromeo, who died in 1948. e. Amilio Borromeo, who died in 1944. f. Carmen Borromeo, who died in 1925. The last three died leaving no issue. 6. Jose Ma. Borromeo, another brother of Vito Borromeo, died before the war and left the following children: a. Exequiel Borromeo,who died on December 29, 1949 b. Canuto Borromeo, who died on Dec. 31, 1959, leaving the following children: aa. Federico Borromeo bb. Marisol Borromeo (Maria B. Putong, Rec. p. 85) On August 25, 1972, respondent Fortunato Borromeo, who had earlier claimed as heir under the forged will, filed a motion before the trial court praying that he be declared as one of the heirs of the deceased Vito On April 21 and 30, 1969, the declared heirs, with the exception of Patrocinio B. Herrera, signed an agreement of partition of the properties of the deceased Vito Borromeo which was approved by the trial court, in its order of August 15, 1969. In this same order, the trial court ordered the administrator, Atty Jesus Gaboya, Jr., to partition the properties of the deceased in the way and manner they are divided and partitioned in the said Agreement of Partition and further ordered that 40% of the market value of the 4/9 and 5/9 of the estate shall be segregated. All attorney's fees shall be taken and paid from this segregated portion. 7. Marcial Borromeo 8. Amelinda Borromeo de Talam, and 9. The heirs of Canuto Borromeo The court also ordered that the assets of the intestate estate of Vito Borromeo shall be divided into 4/9 and 5/9 groups and distributed in equal and equitable shares among the 9 abovenamed declared intestate heirs. 3. Vitaliana Borromeo 4. Patrocinio Borromeo Herrera 5. Salud Borromeo On April 10, 1969, the trial court, invoking Art. 972 of the Civil Code, issued an order declaring the following, to the exclusion of all others, as the intestate heirs of the deceased Vito Borromeo: dd. Rosario Borromeo ee. Fe Borromeo Queroz e. Andres Borromeo, who died on Jan. 3, 1923, but survived by his children: aa. Maria Borromeo Atega bb. Luz Borromeo

Borromeo, alleging that he is an illegitimate son of the deceased and that in the declaration of heirs made by the trial court, he was omitted, in disregard of the law making him a forced heir entitled to receive a legitime like all other forced heirs. As an acknowledged illegitimate child, he stated that he was entitled to a legitime equal in every case to fourfifths of the legitime of an acknowledged natural child. Finding that the motion of Fortunato Borromeo was already barred by the order of the court dated April 12, 1969 declaring the persons named therein as the legal heirs of the deceased Vito Borromeo, the court dismissed the motion on June 25, 1973. Fortunato Borromeo filed a motion for reconsideration. In the memorandum he submitted to support his motion for reconsideration, Fortunato changed the basis for his claim to a portion of the estate. He asserted and incorporated a Waiver of Hereditary Rights dated July 31, 1967, supposedly signed by Pilar N. Borromeo, Maria B. Putong, Jose Borromeo, Canuto V. Borromeo, Jr., Salud Borromeo, Patrocinio Borromeo-Herrera, Marcial Borromeo, Asuncion Borromeo, Federico V. Borromeo, Consuelo B. Morales, Remedios Alfonso and Amelinda B. Talam In the waiver, five of the nine heirs relinquished to Fortunato their shares in the disputed estate. The motion was opposed on the ground that the trial court, acting as a probate court, had no jurisdiction to take cognizance of the claim; that respondent Fortunato Borromeo is estopped from asserting the waiver agreement; that the waiver agreement is void as it was executed before the declaration of heirs; that the same is void having been executed before the distribution of the estate and before the acceptance of the inheritance; and that it is void ab initio and inexistent for lack of subject matter. On December 24, 1974, after due hearing, the trial court concluding that the five declared heirs who signed the waiver agreement assigning their hereditary rights to Fortunato Borromeo had lost the same rights, declared the latter as entitled to 5/9 of the estate of Vito Borromeo. A motion for reconsideration of this order was denied on July 7, 1975. In the present petition, the petitioner seeks to annul and set aside the trial court's order dated December 24, 1974, declaring respondent Fortunato Borromeo entitled to 5/9 of the estate of Vito Borromeo and the July 7, 1975 order, denying the motion for reconsideration. The petitioner argues that the trial court had no jurisdiction to take cognizance of the claim of respondent Fortunato Borromeo because it is not a money claim against the decedent but a claim for properties, real and personal, which constitute all of the shares of the heirs in the decedent's estate, heirs who allegedly waived their rights in his favor. The claim of the private respondent under the waiver agreement, according to the petitioner, may be likened to that of a creditor of the heirs which is improper. He alleges that the claim of the private respondent under the waiver agreement was filed beyond the time allowed for filing of claims as it was filed only sometime in 1973, after there had been a declaration of heirs (April 10, 1969), an agreement of partition (April 30, 1969), the approval of the agreement of partition and an order directing the administrator to partition the estate (August 15, 1969), when in a mere memorandum, the existence of the waiver agreement was brought out. It is further argued by the petitioner that the document entitled " waiver of Hereditary Rights" executed on July 31, 1967, aside from having been cancelled and revoked on June 29, 1968, by Tomas L. Borromeo, Fortunato Borromeo and Amelia Borromeo, is without force and effect because there can be no effective waiver of hereditary rights before there has been a valid acceptance of the inheritance the heirs intend to transfer. Pursuant to Article 1043 of the Civil Code, to make acceptance or repudiation of inheritance valid, the person must be certain of the death of the one from whom he is to inherit and of his right to the inheritance. Since the petitioner and her co-heirs were not certain of their right to the inheritance until they were declared heirs, their rights were,

therefore, uncertain. This view, according to the petitioner, is also supported by Article 1057 of the same Code which directs heirs, devicees, and legatees to signify their acceptance or repudiation within thirty days after the court has issued an order for the distribution of the estate. Respondent Fortunato Borromeo on the other hand, contends that under Article 1043 of the Civil Code there is no need for a person to be first declared as heir before he can accept or repudiate an inheritance. What is required is that he must first be certain of the death of the person from whom he is to inherit and that he must be certain of his right to the inheritance. He points out that at the time of the signing of the waiver document on July 31, 1967, the signatories to the waiver document were certain that Vito Borromeo was already dead as well as of their rights to the inheritance as shown in the waiver document itself. With respect to the issue of jurisdiction of the trial court to pass upon the validity of the waiver of hereditary rights, respondent Borromeo asserts that since the waiver or renunciation of hereditary rights took place after the court assumed jurisdiction over the properties of the estate it partakes of the nature of a partition of the properties of the estate needing approval of the court because it was executed in the course of the proceedings. lie further maintains that the probate court loses jurisdiction of the estate only after the payment of all the debts of the estate and the remaining estate is distributed to those entitled to the same. The prevailing jurisprudence on waiver of hereditary rights is that "the properties included in an existing inheritance cannot be considered as belonging to third persons with respect to the heirs, who by fiction of law continue the personality of the former. Nor do such properties have the character of future property, because the heirs acquire a right to succession from the moment of the death of the deceased, by principle established in article 657 and applied by article 661 of the Civil Code, according to which the heirs succeed the deceased by the mere fact of death. More or less, time may elapse from the moment of the death of the deceased until the heirs enter into possession of the hereditary property, but the acceptance in any event retroacts to the moment of the death, in accordance with article 989 of the Civil Code. The right is vested, although conditioned upon the adjudication of the corresponding hereditary portion." (Osorio v. Osorio and Ynchausti Steamship Co., 41 Phil., 531). The heirs, therefore, could waive their hereditary rights in 1967 even if the order to partition the estate was issued only in 1969. In this case, however, the purported "Waiver of Hereditary Rights" cannot be considered to be effective. For a waiver to exist, three elements are essential: (1) the existence of a right; (2) the knowledge of the existence thereof; and (3) an intention to relinquish such right. (People v. Salvador, (CA) 53 O.G. No. 22, p. 8116, 8120). The intention to waive a right or advantage must be shown clearly and convincingly, and when the only proof of intention rests in what a party does, his act should be so manifestly consistent with, and indicative of an intent to, voluntarily relinquish the particular right or advantage that no other reasonable explanation of his conduct is possible (67 C.J., 311). (Fernandez v. Sebido, et al., 70 Phil., 151, 159). The circumstances of this case show that the signatories to the waiver document did not have the clear and convincing intention to relinquish their rights, Thus: (1) On October 27, 1967. Fortunato, Tomas, and Amelia Borromeo filed a pleading entitled "Compliance" wherein they submitted a proposal for the amicable settlement of the case. In that Compliance, they proposed to concede to all the eight (8) intestate heirs of Vito Borromeo all properties, personal and real, including all cash and sums of money in the hands of the Special Administrator, as of October 31, 1967, not contested or claimed by them in any action then pending in the Court of First Instance of Cebu. In turn, the heirs would waive and concede to them all the 14 contested lots. In this document, the respondent recognizes and concedes that the petitioner, like the other signatories to the waiver document, is an heir of the deceased Vito

Borromeo, entitled to share in the estate. This shows that the "Waiver of Hereditary Rights" was never meant to be what the respondent now purports it to be. Had the intent been otherwise, there would not be any reason for Fortunato, Tomas, and Amelia Borromeo to mention the heirs in the offer to settle the case amicably, and offer to concede to them parts of the estate of the deceased; (2) On April 21 and 30, 1969, the majority of the declared heirs executed an Agreement on how the estate they inherited shall be distributed. This Agreement of Partition was approved by the trial court on August 15, 1969; (3) On June 29, 1968, the petitioner, among others, signed a document entitled Deed of Assignment" purporting to transfer and assign in favor of the respondent and Tomas and Amelia Borromeo all her (Patrocinio B. Herrera's) rights, interests, and participation as an intestate heir in the estate of the deceased Vito Borromeo. The stated consideration for said assignment was P100,000.00; (4) On the same date, June 29, 1968, the respondent Tomas, and Amelia Borromeo (assignees in the aforementioned deed of assignment) in turn executed a "Deed of Reconveyance" in favor of the heirs-assignors named in the same deed of assignment. The stated consideration was P50,000.00; (5) A Cancellation of Deed of Assignment and Deed of Reconveyance was signed by Tomas Borromeo and Amelia Borromeo on October 15, 1968, while Fortunato Borromeo signed this document on March 24, 1969. With respect to the issue of jurisdiction, we hold that the trial court had jurisdiction to pass upon the validity of the waiver agreement. It must be noted that in Special Proceedings No. 916-R the lower court disallowed the probate of the will and declared it as fake. Upon appeal, this Court affirmed the decision of the lower court on March 30, 1967, in G.R. No. L18498. Subsequently, several parties came before the lower court filing claims or petitions alleging themselves as heirs of the intestate estate of Vito Borromeo. We see no impediment to the trial court in exercising jurisdiction and trying the said claims or petitions. Moreover, the jurisdiction of the trial court extends to matters incidental and collateral to the exercise of its recognized powers in handling the settlement of the estate. In view of the foregoing, the questioned order of the trial court dated December 24, 1974, is hereby SET ASIDE. G.R. No. 55000 This case was originally an appeal to the Court of Appeals from an order of the Court of First Instance of Cebu, Branch 11, dated December 24, 1974, declaring the waiver document earlier discussed in G.R. No. 41171 valid. The appellate court certified this case to this Court as the questions raised are all of law. The appellants not only assail the validity of the waiver agreement but they also question the jurisdiction of the lower court to hear and decide the action filed by claimant Fortunato Borromeo. The appellants argue that when the waiver of hereditary right was executed on July 31, 1967, Pilar Borromeo and her children did not yet possess or own any hereditary right in the intestate estate of the deceased Vito Borromeo because said hereditary right was only acquired and owned by them on April 10, 1969, when the estate was ordered distributed. They further argue that in contemplation of law, there is no such contract of waiver of hereditary right in the present case because there was no object, which is hereditary right, that could be the subject matter of said waiver, and, therefore, said waiver of hereditary right was not only null and void ab initio but was inexistent. With respect to the issue of jurisdiction, the appellants contend that without any formal pleading filed by the lawyers of Fortunato Borromeo for the approval of the waiver agreement and without notice to the parties concerned, two things which are necessary so that the lower court would

be vested with authority and jurisdiction to hear and decide the validity of said waiver agreement, nevertheless, the lower court set the hearing on September 25, 1973 and without asking for the requisite pleading. This resulted in the issuance of the appealed order of December 24, 1974, which approved the validity of the waiver agreement. The appellants contend that this constitutes an error in the exercise of jurisdiction. The appellee on the other hand, maintains that by waiving their hereditary rights in favor of Fortunato Borromeo, the signatories to the waiver document tacitly and irrevocably accepted the inheritance and by virtue of the same act, they lost their rights because the rights from that moment on became vested in Fortunato Borromeo. It is also argued by the appellee that under Article 1043 of the Civil Code there is no need for a person to be declared as heir first before he can accept or repudiate an inheritance. What is required is that he is certain of the death of the person from whom he is to inherit, and of his right to the inheritance. At the time of the signing of the waiver document on July 31, 1967, the signatories to the waiver document were certain that Vito Borromeo was already dead and they were also certain of their right to the inheritance as shown by the waiver document itself. On the allegation of the appellants that the lower court did not acquire jurisdiction over the claim because of the alleged lack of a pleading invoking its jurisdiction to decide the claim, the appellee asserts that on August 23, 1973, the lower court issued an order specifically calling on all oppositors to the waiver document to submit their comments within ten days from notice and setting the same for hearing on September 25, 1973. The appellee also avers that the claim as to a 5/9 share in the inheritance involves no question of title to property and, therefore, the probate court can decide the question. The issues in this case are similar to the issues raised in G.R. No. 41171. The appellants in this case, who are all declared heirs of the late Vito Borromeo are contesting the validity of the trial court's order dated December 24, 1974, declaring Fortunato Borromeo entitled to 5/9 of the estate of Vito Borromeo under the waiver agreement. As stated in G.R. No. 41171, the supposed waiver of hereditary rights can not be validated. The essential elements of a waiver, especially the clear and convincing intention to relinquish hereditary rights, are not found in this case. The October 27, 1967 proposal for an amicable settlement conceding to all the eight (8) intestate heirs various properties in consideration for the heirs giving to the respondent and to Tomas, and Amelia Borromeo the fourteen (14) contested lots was filed inspite of the fact that on July 31, 1967, some of the heirs had allegedly already waived or sold their hereditary rights to the respondent. The agreement on how the estate is to be distributed, the June 29, 1968 deed of assignment, the deed of reconveyance, and the subsequent cancellation of the deed of assignment and deed of reconveyance all argue against the purported waiver of hereditary rights. Concerning the issue of jurisdiction, we have already stated in G.R. No. 41171 that the trial court acquired jurisdiction to pass upon the validity of the waiver agreement because the trial court's jurisdiction extends to matters incidental and collateral to the exercise of its recognized powers in handling the settlement of the estate. The questioned order is, therefore, SET ASIDE. G.R. No. 62895 A motion dated April 28, 1972, was filed by Atty. Raul M. Sesbreno, representative of some of the heirs-distributees, praying for the immediate closure of Special Proceeding No. 916-R. A similar motion

dated May 29, 1979 was filed by Atty. Jose Amadora. Both motions were grounded on the fact that there was nothing more to be done after the payment of all the obligations of the estate since the order of partition and distribution had long become final. Alleging that respondent Judge Francisco P. Burgos failed or refused to resolve the aforesaid motions, petitioner Jose Cuenco Borromeo-filed a petition for mandamus before the Court of Appeals to compel the respondent judge to terminate and close Special Proceedings No. 916-R. Finding that the inaction of the respondent judge was due to pending motions to compel the petitioner, as co-administrator, to submit an inventory of the real properties of the estate and an accounting of the cash in his hands, pending claims for attorney's fees, and that mandamus will not lie to compel the performance of a discretionary function, the appellate court denied the petition on May 14, 1982. The petitioner's motion for reconsideration was likewise denied for lack of merit. Hence, this petition. The petitioner's stand is that the inaction of the respondent judge on the motion filed on April 28, 1972 for the closure of the administration proceeding cannot be justified by the filing of the motion for inventory and accounting because the latter motion was filed only on March 2, 1979. He claimed that under the then Constitution, it is the duty of the respondent judge to decide or resolve a case or matter within three months from the date of its submission. The respondents contend that the motion to close the administration had already been resolved when the respondent judge cancelled all settings of all incidents previously set in his court in an order dated June 4, 1979, pursuant to the resolution and restraining order issued by the Court of Appeals enjoining him to maintain status quo on the case. As stated in G.R. No. 41171, on April 21 and 30, 1969, the declared heirs, with the exception of Patrocinio B. Herrera, signed an agreement of partition of the properties of the deceased Vito Borromeo which was approved by the trial court, in its order dated August 15, 1969. In this same order, the trial court ordered the administrator, Atty. Jesus Gaboya, Jr., to partition the properties of the deceased in the way and manner they are divided and partitioned in the said Agreement of Partition and further ordered that 40% of the market value of the 4/9 and 5/9 of the estate shall be segregated and reserved for attorney's fees. According to the manifestation of Judge Francisco Burgos dated July 5, 1982, (p. 197, Rollo, G. R. No. 41171) his court has not finally distributed to the nine (9) declared heirs the properties due to the following circumstances: 1. The court's determination of the market value of the estate in order to segregate the 40% reserved for attorney's fees; 2. The order of December 24, 1974, declaring Fortunato Borromeo as beneficiary of the 5/9 of the estate because of the waiver agreement signed by the heirs representing the 5/9 group which is still pending resolution by this Court (G.R. No. 4117 1); 3. The refusal of administrator Jose Cuenco Borromeo to render his accounting; and 4. The claim of Marcela Villegas for 1/2 of the estate causing annotations of notices of lis pendens on the different titles of the properties of the estate. Since there are still real properties of the estate that were not vet distributed to some of the declared heirs, particularly the 5/9 group of heirs due to the pending resolution of the waiver agreement, this Court in its resolution of June 15, 1983, required the judge of the Court of First Instance of Cebu, Branch 11, to expedite the determination of Special

Proceedings No. 916-R and ordered the co-administrator Jose Cuenco Borromeo to submit an inventory of real properties of the estate and to render an accounting of cash and bank deposits realized from rents of several properties. The matter of attorney's fees shall be discussed in G.R. No. 65995. Considering the pronouncements stated in: 1. G.R. No. 41171 & G.R. No. 55000, setting aside the Order of the trial court dated December 24, 1974; 2. G.R. No. 63818, denying the petition for review seeking to modify the decision of the Intermediate Appellate Court insofar as it disqualifies and inhibits Judge Francisco P. Burgos from further hearing the Intestate Estate of Vito Borromeo and ordering the remand of the case to the Executive,Judge of the Regional trial Court of Cebu for re-raffling; and 3. G.R. No. 65995, granting the petition to restrain the respondents from further acting on any and all incidents in Special proceedings No. 916-11 because of the affirmation of the decision of the Intermediate Appellate Court in G.R. No. 63818. the trial court may now terminate and close Special Proceedings No. 916R, subject to the submission of an inventory of the real properties of the estate and an accounting of the call and bank deposits of the petitioner, as co-administrator of the estate, if he has not vet done so, as required by this Court in its Resolution dated June 15, 1983. This must be effected with all deliberate speed. G.R. No. 63818 On June 9, 1979, respondents Jose Cuenco Borromeo and Petra 0. Borromeo filed a motion for inhibition in the Court of First Instance of Cebu, Branch 11, presided over by Judge Francisco P. Burgos to inhibit the judge from further acting in Special Proceedings No. 916-R. 'The movants alleged, among others, the following: xxx xxx xxx

6. To keep the agitation to sell moving, Atty. Antigua filed a motion for the production of the certificates of title and to deposit the same with the Branch Clerk of Court, presumably for the ready inspection of interested buyers. Said motion was granted by the Hon. Court in its order of October 2, 1978 which, however, became the subject of various motions for reconsideration from heirs-distributees who contended that as owners they cannot be deprived of their titles for the flimsy reasons advanced by Atty, Antigua. In view of the motions for reconsideration, Atty Antigua ultimately withdraw his motions for production of titles. 7. The incident concerning the production of titles triggered another incident involving Atty. Raul H. Sesbreno who was then the counsel of herein movants Petra O. Borromeo and Amelinda B. Talam In connection with said incident, Atty. Sesbreno filed a pleading which the tion. presiding, Judge Considered direct contempt because among others, Atty. Sesbreno insinuated that the Hon. Presiding Judge stands to receive "fat commission" from the sale of the entire property. Indeed, Atty. Sesbreno was seriously in danger of being declared in contempt of court with the dim prospect of suspension from the practice of his profession. But obviously to extricate himself from the prospect of contempt and suspension. Atty. Sesbreno chose rapproachment and ultimately joined forces with Atty. Antigua, et al., who, together, continued to harass administrator xxx xxx xxx

9. The herein movants are informed and so they allege, that a brother of the Hon. Presiding Judge is married to a sister of Atty. Domingo L. Antigua. 10. There is now a clear tug of war bet ween Atty. Antigua, et al. who are agitating for the sale of the entire estate or to buy out the individual heirs, on the one hand, and the herein movants, on the other, who are not willing to sell their distributive shares under the terms and conditions presently proposed. In this tug of war, a pattern of harassment has become apparent against the herein movants, especially Jose Cuenco Borromeo. Among the harassments employed by Atty Antigua et al. are the pending motions for the removal of administrator Jose Cuenco Borromeo, the subpoena duces tecum issued to the bank which seeks to invade into the privacy of the personal account of Jose Cuenco Borromeo, and the other matters mentioned in paragraph 8 hereof. More harassment motions are expected until the herein movants shall finally yield to the proposed sale. In such a situation, the herein movants beg for an entirely independent and impartial judge to pass upon the merits of said incidents. 11. Should the Hon. Presiding Judge continue to sit and take cognizance of this proceeding, including the incidents above-mentioned, he is liable to be misunderstood as being biased in favor of Atty Antigua, et al. and prejudiced against the herein movants. Incidents which may create this impression need not be enumerated herein. (pp. 39-41, Rollo) The motion for inhibition was denied by Judge Francisco P. Burgos. Their motion for reconsideration having been denied, the private respondents filed a petition for certiorari and/or prohibition with preliminary injunction before the Intermediate Appellate Court. In the appellate court, the private respondents alleged, among others, the following: xxx xxx xxx

(b) The proposed sale cannot be legally done without the conformity of the heirs-distributees, and petitioners have openly refused the sale, to the great disappointment of respondent. (c) The shot gun motion of Atty. Antigua and similar incidents are clearly intended to harass and embarrass administrator Jose Cuenco Borromeo in order to pressure him into acceding to the proposed sale. (d) Respondent has shown bias and prejudice against petitioners by failing to resolve the claim for attorney's fees filed by Jose Cuenco Borromeo and the late Crispin Borromeo. Similar claims by the other lawyers were resolved by respondent after petitioners refused the proposed sale. (pp. 41-43, Rollo) On March 1, 1983, the appellate court rendered its decision granting the petition for certiorari and/or prohibition and disqualifying Judge Francisco P. Burgos from taking further cognizance of Special Proceedings No. 916-R. The court also ordered the transmission of the records of the case to the Executive Judge of the Regional Trial Court of Region VII for reraffling. A motion for reconsideration of the decision was denied by the appellate court on April 11, 1983. Hence, the present petition for review seeking to modify the decision of the Intermediate Appellate Court insofar as it disqualifies and inhibits Judge Francisco P. Burgos from further hearing the case of Intestate Estate of Vito Borromeo and orders the remand of the case to the Executive Judge of the Regional Trial Court of Cebu for re-raffling. The principal issue in this case has become moot and academic because Judge Francisco P. Burgos decided to retire from the Regional Trial Court of Cebu sometime before the latest reorganization of the judiciary. However, we decide the petition on its merits for the guidance of the judge to whom this case will be reassigned and others concerned. The petitioners deny that respondent Jose Cuenco Borromeo has been harassed. They contend that Judge Burgos has benn shown unusual interest in the proposed sale of the entire estate for P6,700,000.00 in favor of the buyers of Atty. Antigua. They claim that this disinterest is shown by the judge's order of March 2, 1979 assessing the property of the estate at P15,000,000.00. They add that he only ordered the administrator to sell so much of the properties of the estate to pay the attorney's fees of the lawyers-claimants. To them, the inhibition of Judge Burgos would have been unreasonable because his orders against the failure of Jose Cuenco Borromeo, as administrator, to give an accounting and inventory of the estate were all affirmed by the appellate court. They claim that the respondent court, should also have taken judicial notice of the resolution of this Court directing the said judge to "expedite the settlement and adjudication of the case" in G.R. No. 54232. And finally, they state that the disqualification of judge Burgos would delay further the closing of the administration proceeding as he is the only judge who is conversant with the 47 volumes of the records of the case. Respondent Jose Cuenco Borromeo, to show that he had been harassed. countered that Judge Burgos appointed Ricardo V. Reyes as co-administrator of the estate on October 11, 1972, yet Borromeo was singled out to make an accounting of what t he was supposed to have received as rentals for the land upon which the Juliana Trade Center is erected, from January, 1977 to February 1982, inclusive, without mentioning the withholding tax for the Bureau of Internal Revenue. In order to bolster the agitation to sell as proposed by Domingo L. Antigua, Judge Burgos invited Antonio Barredo, Jr., to a series of conferences from February 26 to 28, 1979. During the conferences, Atty. Antonio Barredo, Jr., offered to buy the shares of the heirs-distributees presumably to cover up the projected sale initiated by Atty. Antigua. On March 2, 1979, or two days after the conferences, a motion was filed by petitioner Domingo L. Antigua praying that Jose Cuenco Borromeo be

16. With all due respect, petitioners regret the necessity of having to state herein that respondent Hon. Francisco P. Burgos has shown undue interest in pursing the sale initiated by Atty. Domingo L. Antigua, et al. Significantly, a brother of respondent Hon. Francisco P. Burgos is married to a sister of Atty. Domingo L. Antigua. 17. Evidence the proposed sale of the entire properties of the estate cannot be legally done without the conformity of the heirs-distributees because the certificates of title are already registered in their names Hence, in pursuit of the agitation to sell, respondent Hon. Francisco P. Burgos urged the heirs-distributees to sell the entire property based on the rationale that proceeds thereof deposited in the bank will earn interest more than the present income of the so called estate. Most of the heirsdistributees, however. have been petitioner timid to say their piece. Only the 4/9 group of heirs led by Jose Cuenco Borromeo have had the courage to stand up and refuse the proposal to sell clearly favored by respondent Hon. Francisco P. Burgos. xxx xxx xxx

20. Petitioners will refrain from discussing herein the merits of the shotgun motion of Atty. Domingo L. Antigua as well as other incidents now pending in the court below which smack of harassment against the herein petitioners. For, regardless of the merits of said incidents, petitioners respectfully contend that it is highly improper for respondent Hon. Francisco P. Burgos to continue to preside over Sp. Proc. No. 916R by reason of the following circumstances: (a) He has shown undue interest in the sale of the properties as initiated by Atty. Domingo L. Antigua whose sister is married to a brother of respondent.

required to file an inventory when he has already filed one to account for cash, a report on which the administrators had already rendered: and to appear and be examined under oath in a proceeding conducted by Judge Burgos lt was also prayed that subpoena duces tecum be issued for the appearance of the Manager of the Consolidated Bank and Trust Co., bringing all the bank records in the name of Jose Cuenco Borromeo jointly with his wife as well as the appearance of heirs-distributees Amelinda Borromeo Talam and another heir distributee Vitaliana Borromeo. Simultaneously with the filing of the motion of Domingo Antigua, Atty. Raul H. Sesbreno filed a request for the issuance of subpoena duces tecum to the Manager of Consolidated Bank and 'Trust Co., Inc.; Register of Deeds of Cebu City; Register of Deeds for the Province of Cebu and another subpoena duces tecum to Atty. Jose Cuenco Borromeo. On the same date, the Branch Clerk of Court issued a subpoena duces tecum to the Managert of the bank, the Register of deeds for the City of Cebu, the Register of Deeds for the Province, of Cebu. and to Jose Cuenco Borromeo. On the following day, March 3, 1979, Atty Gaudioso v. Villagonzalo in behalf of the heirs of Marcial Borromeo who had a common cause with Atty Barredo, Jr., joined petitioner Domingo L. Antigua by filing a motion for relief of the administrator. On March 5, 1979, Atty. Villagonzalo filed a request for the issuance of a subpoena duces tecum to private respondent Jose Cuenco Borromeo to bring and produce all the owners" copies of the titles in the court presided order by Judge Burgos. Consequently. the Branch Clerk of Court issued a subpoena duces tecum commanding Atty. Jose Cuenco Borromeo to bring and produce the titles in court. All the above-incidents were set for hearing on June 7, 1979 but on June 14, 1979, before the date of the hearing, Judge Burgos issued an order denying the private respondents' motion for reconsideration and the motion to quash the subpoena.1avvphi1 It was further argued by the private respondents that if ,judge Francisco P. Burgos is not inhibited or disqualified from trying Sp. Proc. No. 916-R, there would be a miscarriage of justice Because for the past twelve years, he had not done anything towards the closure of the estate proceedings except to sell the properties of the heirs-distributees as initiated by petitioner Domingo L. Antigua at 6.7 million pesos while the Intestate Court had already evaluated it at 15 million pesos. The allegations of the private respondents in their motion for inhibition, more specifically, the insistence of the trial judge to sell the entire estate at P6,700,000.00, where 4/9 group of heirs objected, cannot easily be ignored. Suspicion of partiality on the part of a trial judge must be avoided at all costs. In the case of Bautista v. Rebeuno(81 SCRA 535), this Court stated: ... The Judge must maintain and preserve the trust and faith of the parties litigants. He must hold himself above reproach and suspicion. At the very first sign of lack of faith and trust to his actions, whether well grounded or not, the Judge has no other alternative but inhibit himself from the case. A judge may not be legally Prohibited from sitting in a litigation, but when circumstances appear that will induce doubt to his honest actuations and probity in favor or of either partly or incite such state of mind, he should conduct a careful self-examination. He should exercise his discretion in a way that the people's faith in the Courts of Justice is not impaired, "The better course for the Judge under such circumstances is to disqualify himself "That way he avoids being misunderstood, his reputation for probity and objectivity is preserve ed. what is more important, the Ideal of impartial administration of justice is lived up to.

In this case, the fervent distrust of the private respondents is based on sound reasons. As Earlier stated, however, the petition for review seeking to modify the decision of the Intermediate Appellate Court insofar as it disqualifies and inhibits Judge Francisco P. Burgos from further hearing the Intestate Estate of Vito Borromeo case and ordering the remand of the case to the Executive Judge of the Regional Trial Court for re-raffling should be DENIED for the decision is not only valid but the issue itself has become moot and academic. G.R. No. 65995 The petitioners seek to restrain the respondents from further acting on any and all incidents in Special Proceedings No. 916-R during the pendency of this petition and No. 63818. They also pray that all acts of the respondents related to the said special proceedings after March 1, 1983 when the respondent Judge was disqualified by the appellate court be declared null and void and without force and effect whatsoever. The petitioners state that the respondent Judge has set for hearing all incidents in Special Proceedings No. 916-R, including the reversion from the heirs-distributees to the estate, of the distributed properties already titled in their names as early as 1970, notwithstanding the pending inhibition case elevated before this Court which is docketed as G.R. No. 63818. The petitioners further argue that the present status of Special Proceeding No. 916-R requires only the appraisal of the attorney's fees of the lawyers-claimants who were individually hired by their respective heirs-clients, so their attorney's fees should be legally charged against their respective clients and not against the estate. On the other hand, the respondents maintain that the petition is a dilatory one and barred by res judicata because this Court on July 8, 1981, in G.R. No. 54232 directed the respondent Judge to expedite the settlement and liquidation of the decedent's estate. They claim that this resolution, which was already final and executory, was in effect reversed and nullified by the Intermediate Appellate Court in its case-AC G.R.-No. SP 11145 when it granted the petition for certiorari and or prohibition and disqualified Judge Francisco P. Burgos from taking further cognizance of Special Proceedings No. 916R as well as ordering the transmission of the records of the case to the Executive Judge of the Regional Trial Court of Region VII for re-raffling on March 1, 1983, which was appealed to this Court by means of a Petition for Review (G.R. No. 63818). We agree with the petitioners' contention that attorney's fees are not the obligation of the estate but of the individual heirs who individually hired their respective lawyers. The portion, therefore, of the Order of August 15, 1969, segregating the exhorbitantly excessive amount of 40% of the market value of the estate from which attorney's fees shall be taken and paid should be deleted. Due to our affirmance of the decision of the Intermediate Appellate Court in G.R. No. 63818, we grant the petition. WHEREFORE, (1) In G.R. No. 41171, the order of the respondent judge dated December 24, 1974, declaring the respondent entitled to 5/9 of the estate of the late Vito Borromeo and the order dated July 7, 1975, denying the petitioner's motion for reconsideration of the aforementioned order are hereby SET ASIDE for being NULL and VOID; (2) In G.R. No. 55000, the order of the trial court declaring the waiver document valid is hereby SET ASIDE; (3) In G.R. No. 63818, the petition is hereby DENIED. The issue in the decision of the Intermediate Appellate Court disqualifying and ordering the inhibition of Judge Francisco P. Burgos from further hearing Special

Proceedings No. 916-R is declared moot and academic. The judge who has taken over the sala of retired Judge Francisco P. Burgos shall immediately conduct hearings with a view to terminating the proceedings. In the event that the successor-judge is likewise disqualified, the order of the Intermediate Appellate Court directing the Executive Judge of the Regional Trial Court of Cebu to re-raffle the case shall be implemented: (4) In G.R. No. 65995, the petition is hereby GRANTED. 'The issue seeking to restrain Judge Francisco P. Burgos from further acting in G.R. No. 63818 is MOOT and ACADEMIC: (5) In G.R, No, 62895, the trial court is hereby ordered to speedily terminate the close Special Proceedings No. 916-R, subject to the submission of an inventory of the real properties of the estate and an accounting of the cash and bank deposits by the petitioner-administrator of the estate as required by this Court in its Resolution dated June 15, 1983; and (6) The portion of the Order of August 15, 1969, segregating 40% of the market value of the estate from which attorney's fees shall be taken and paid should be, as it is hereby DELETED. The lawyers should collect from the heirs-distributees who individually hired them, attorney's fees according to the nature of the services rendered but in amounts which should not exceed more than 20% of the market value of the property the latter acquired from the estate as beneficiaries. SO ORDERED. THIRD DIVISION

On April 20, 1989, the three sets of heirs of the decedent, Evarista M. dela Merced, referring to (1) the abovenamed heirs of Francisco; (2) Teresita P. Rupisan and (3) the nine [9] legitimate children of Eugenia, executed an extrajudicial settlement, entitled Extrajudicial Settlement of the Estate of the Deceased Evarista M. dela Merced adjudicating the properties of Evarista to them, each set with a share of one-third (1/3) pro-indiviso. On July 26 ,1990, private respondent Joselito P. Dela Merced , illegitimate son of the late Francisco de la Merced, filed a Petition for Annulment of the Extrajudicial Settlement of the Estate of the Deceased Evarista M. Dela Merced with Prayer for a Temporary Restraining Order, alleging that he was fraudulently omitted from the said settlement made by petitioners, who were fully aware of his relation to the late Francisco. Claiming successional rights, private respondent Joselito prayed that he be included as one of the beneficiaries, to share in the one-third (1/3) pro-indiviso share in the estate of the deceased Evarista, corresponding to the heirs of Francisco. On August 3, 1990, the trial court issued the temporary restraining order prayed for by private respondent Joselito, enjoining the sale of any of the real properties of the deceased Evarista. After trial, however, or on June 10, 1992, to be definite, the trial court dismissed the petition, lifted the temporary restraining order earlier issued, and cancelled the notice of lis pendens on the certificates of title covering the real properties of the deceased Evarista. In dismissing the petition, the trial court stated: The factual setting of the instant motion after considering the circumstances of the entire case and the other evidentiary facts and documents presented by the herein parties points only to one issue which goes into the very skeleton of the controversy, to wit: Whether or not the plaintiff may participate in the intestate estate of the late Evarista M. Dela Merced in his capacity as representative of his alleged father, Francisdo Dela Merced, brother of the deceased, whose succession is under consideration. xxx xxx xxx

[G.R. No. 126707. February 25, 1999]

BLANQUITA E. DELA MERCED, LUISITO E. DELA MERCED, BLANQUITA M. MACATANGAY, MA. OLIVIA M. PAREDES, TERESITA P. RUPISAN, RUBEN M. ADRIANO, HERMINIO M. ADRIANO, JOSELITO M. ADRIANO, ROGELIO M. ADRIANO, WILFREDO M. ADRIANO, VICTOR M. ADRIANO, CORAZON A. ONGOCO, JASMIN A. MENDOZA and CONSTANTINO M. ADRIANO, petitioners, vs. JOSELITO P. DELA MERCED,respondent. DECISION PURISIMA, J.: 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. 41283, which reversed the decision, dated June 10, 1992, of the Regional Trial Court, Branch 67, Pasig City, in Civil Case No. 59705. The facts of the case are, as follows: On March 23, 1987, Evarista M. dela Merced died intestate, without issue. She left five (5) parcels of land situated in Orambo, Pasig City. At the time of her death, Evarista was survived by three sets of heirs, viz: (1) Francisco M. dela Merced, her legitimate brother ; (2) Teresita P. Rupisan, her niece who is the only daughter of Rosa de la Merced-Platon (a sister who died in 1943) ; and (3) the legitimate children of Eugenia dela Merced-Adriano (another sister of Evarista who died in 1965), namely: Herminio, Ruben, Joselito, Rogelio, Wilfredo, Victor and Constantino, all surnamed Adriano, Corazon Adriano-Ongoco and Jasmin Adriano-Mendoza. Almost a year later or on March 19, 1988, to be precise, Francisco (Evaristas brother) died. He was survived by his wife Blanquita Errea dela Merced and their three legitimate children, namely, Luisito E. dela Merced, Blanquita M. Macatangay and Ma. Olivia M. Paredes.

It is to be noted that Francisco Dela Merced, alleged father of the herein plaintiff, is a legitimate child, not an illegitimate. Plaintiff, on the other hand, is admittedly an illegitimate child of the late Francisco Dela Merced. Hence, as such, he cannot represent his alleged father in the succession of the latter in the intestate estate of the late Evarista Dela Merced, because of the barrier in Art. 992 of the New Civil Code which states that: An illegitimate child has no right to inherit ab intestato from the legitimate children and relatives of his father or mother, nor shall such children or relatives inherit in the same manner from the illegitimate child. 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. x x x (Rollo, p. 87-88) Not satisfied with the dismissal of his petition, the private respondent appealed to the Court of Appeals. In its Decision of October 17,1996, the Court of Appeals reversed the decision of the trial court of origin and ordered the petitioners to execute an amendatory agreement which shall form part of the original settlement, so as to include private respondent Joselito as a co-heir to the estate of Francisco, which estate includes one-third (1/3) pro indiviso of the latters inheritance from the deceased Evarista. The relevant and dispositive part of the Decision of the Court of Appeals, reads: x x x xxx xxx

It is a basic principle embodied in Article 777, New Civil Code that the rights to the succession are transmitted from the moment of the death of

the decedent, so that Francisco dela Merced inherited 1/3 of his sisters estate at the moment of the latters death. Said 1/3 of Evaristas estate formed part of Franciscos estate which was subsequently transmitted upon his death on March 23, 1987 to his legal heirs, among whom is appellant as his illegitimate child. Appellant became entitled to his share in Franciscos estate from the time of the latters death in 1987. The extrajudicial settlement therefore is void insofar as it deprives plaintiffappellant of his share in the estate of Francisco M. dela Merced. As a consequence, the cancellation of the notice of lis pendens is not in order because the property is directly affected. Appellant has the right to demand a partition of his fathers estate which includes 1/3 of the property inherited from Evarista dela Merced. WHEREFORE, premises considered, the appealed decision is hereby REVERSED and SET ASIDE. Defendants-appellees are hereby ordered to execute an amendatory agreement/settlement to include herein plaintiff-appellant Joselito dela Merced as co-heir to the estate of Francisco dela Merced which includes 1/3 of the estate subject of the questioned Deed of Extrajudicial Settlement of the Estate of Evarista M. dela Merced dated April 20, 1989. The amendatory agreement/settlement shall form part of the original Extrajudicial Settlement. With costs against defendants-appellees. SO ORDERED. (Rollo, p. 41) In the Petition under consideration, petitioners insist that being an illegitimate child, private respondent Joselito is barred from inheriting from Evarista because of the provision of Article 992 of the New Civil Code, which lays down an impassable barrier between the legitimate and illegitimate families. The Petition is devoid of merit. Article 992 of the New Civil Code is not applicable because involved here is not a situation where an illegitimate child would inherit ab intestato from a legitimate sister of his father, which is prohibited by the aforesaid provision of law. Rather, it is a scenario where an illegitimate child inherits from his father, the latters share in or portion of, what the latter already inherited from the deceased sister, Evarista. 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 the rights to succession are transmitted from the moment of death of the decedent. Since Evarista died ahead of her brother Francisco, the latter inherited a portion of the estate of the former as one of her heirs. Subsequently, when Francisco died, his heirs, namely: his spouse, legitimate children, and the private respondent, Joselito, an illegitimate child, inherited his (Franciscos) share in the estate of Evarista. It bears stressing that Joselito does not claim to be an heir of Evarista by right of representation but participates in his own right, as an heir of the late Francisco, in the latters share (or portion thereof) in the estate of Evarista. Petitioners argue that if Joselito desires to assert successional rights to the intestate estate of his father, the proper forum should be in the settlement of his own fathers intestate estate, as this Court held in the case of Gutierrez vs. Macandog (150 SCRA 422 [1987]) Petitioners reliance on the case of Gutierrez vs. Macandog (supra) is misplaced. The said case involved a claim for support filed by one Elpedia Gutierrez against the estate of the decedent, Agustin Gutierrez, Sr., when she was not even an heir to the estate in question, at the time, and the decedent had no obligation whatsoever to give her support. Thus, this Court ruled that Elpedia should have asked for support pendente lite before the Juvenile and Domestic Relations Court in which court her husband (one of the legal heirs of the decedent) had instituted a case for legal separation against her on the ground of an attempt 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. 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 decedent Evarista, ownership of which had been transmitted to his father upon the death of Evarista. There is no legal obstacle for private respondent

Joselito, admittedly the son of the late Francisco, to inherit in his own right as an heir to his fathers estate, which estate includes a one -third (1/3) undivided share in the estate of Evarista. WHEREFORE, for lack of merit, the Petition is hereby DENIED and the Appealed Decision of the Court of Appeals AFFIRMED in toto. SO ORDERED. Republic SUPREME Manila EN BANC of the Philippines COURT

G.R. No. L-28394 November 26, 1970 PEDRO vs. SILVESTRE appellees. GAYON, plaintiff-appellant, GAYON and GENOVEVA DE GAYON, defendants-

German M. Lopez for plaintiff-appellant. Pedro R. Davila for defendants-appellees.

CONCEPCION, C.J.: Appeal, taken by plaintiff Pedro Gayon, from an order of the Court of First Instance of Iloilo dismissing his complaint in Civil Case No. 7334 thereof. The records show that on July 31, 1967, Pedro Gayon filed said complaint against the spouses Silvestre Gayon and Genoveva de Gayon, alleging substantially that, on October 1, 1952, said spouses executed a deed copy of which was attached to the complaint, as Annex "A" whereby they sold to Pedro Gelera, for the sum of P500.00, a parcel of unregistered land therein described, and located in the barrio of Cabubugan, municipality of Guimbal, province of Iloilo, including the improvements thereon, subject to redemption within five (5) years or not later than October 1, 1957; that said right of redemption had not been exercised by Silvestre Gayon, Genoveva de Gayon, or any of their heirs or successors, despite the expiration of the period therefor; that said Pedro Gelera and his wife Estelita Damaso had, by virtue of a deed of sale copy of which was attached to the complaint, as Annex "B" dated March 21, 1961, sold the aforementioned land to plaintiff Pedro Gayon for the sum of P614.00; that plaintiff had, since 1961, introduced thereon improvements worth P1,000; that he had, moreover, fully paid the taxes on said property up to 1967; and that Articles 1606 and 1616 of our Civil Code require a judicial decree for the consolidation of the title in and to a land acquired through a conditional sale, and, accordingly, praying that an order be issued in plaintiff's favor for the consolidation of ownership in and to the aforementioned property. In her answer to the complaint, Mrs. Gayon alleged that her husband, Silvestre Gayon, died on January 6, 1954, long before the institution of this case; that Annex "A" to the complaint is fictitious, for the signature thereon purporting to be her signature is not hers; that neither she nor her deceased husband had ever executed "any document of whatever nature in plaintiff's favor"; that the complaint is malicious and had embarrassed her and her children; that the heirs of Silvestre Gayon had to "employ the services of counsel for a fee of P500.00 and incurred expenses of at least P200.00"; and that being a brother of the deceased Silvestre Gayon, plaintiff "did not exert efforts for the amicable settlement of the case" before filing his complaint. She prayed, therefore, that the same be dismissed and that plaintiff be sentenced to pay damages.

Soon later, she filed a motion to dismiss, reproducing substantially the averments made in her answer and stressing that, in view of the death of Silvestre Gayon, there is a "necessity of amending the complaint to suit the genuine facts on record." Presently, or on September 16, 1967, the lower court issued the order appealed from, reading: Considering the motion to dismiss and it appearing from Exhibit "A" annexed to the complaint that Silvestre Gayon is the absolute owner of the land in question, and considering the fact that Silvestre Gayon is now dead and his wife Genoveva de Gayon has nothing to do with the land subject of plaintiff's complaint, as prayed for, this case is hereby dismissed, without pronouncement as to costs. 1 A reconsideration of this order having been denied, plaintiff interposed the present appeal, which is well taken. Said order is manifestly erroneous and must be set aside. To begin with, it is not true that Mrs. Gayon "has nothing to do with the land subject of plaintiff's complaint." As the widow of Silvestre Gayon, she is one of his compulsory heirs 2and has, accordingly, an interest in the property in question. Moreover, her own motion to dismiss indicated merely "a necessity of amending the complaint," to the end that the other successors in interest of Silvestre Gayon, instead of the latter, be made parties in this case. In her opposition to the aforesaid motion for reconsideration of the plaintiff, Mrs. Gayon alleged, inter alia, that the "heirs cannot represent the dead defendant, unless there is a declaration of heirship." Inasmuch, however, as succession takes place, by operation of law, "from the moment of the death of the decedent" 3and "(t)he inheritance includes all the property, rights and obligations of a person which are not extinguished by his death," 4it follows that if his heirs were included as defendants in this case, they would be sued, not as "representatives" of the decedent, but as owners of an aliquot interest in the property in question, even if the precise extent of their interest may still be undetermined and they have derived it from the decent. Hence, they may be sued without a previous declaration of heirship, provided there is no pending special proceeding for the settlement of the estate of the decedent. 5 As regards plaintiff's failure to seek a compromise, as an alleged obstacle to the present case, Art. 222 of our Civil Code provides: No suit shall be filed or maintained between members of the same family unless it should appear that earnest efforts toward a compromise have been made, but that the same have failed, subject to the limitations in article 2035. It is noteworthy that the impediment arising from this provision applies to suits "filed or maintained between members of the same family." This phrase, "members of the same family," should, however, be construed in the light of Art. 217 of the same Code, pursuant to which: Family relations shall include those: (1) Between husband and wife; (2) Between parent and child; (3) Among other ascendants and their descendants; (4) Among brothers and sisters. Mrs. Gayon is plaintiff's sister-in-law, whereas her children are his nephews and/or nieces. Inasmuch as none of them is included in the enumeration contained in said Art. 217 which should be construed strictly, it being an exception to the general rule and Silvestre Gayon must necessarily be excluded as party in the case at bar, it follows that the same does not come within the purview of Art. 222, and plaintiff's failure to seek a compromise before filing the complaint does not bar the same.

WHEREFORE, the order appealed from is hereby set aside and the case remanded to the lower court for the inclusion, as defendant or defendants therein, of the administrator or executor of the estate of Silvestre Gayon, if any, in lieu of the decedent, or, in the absence of such administrator or executor, of the heirs of the deceased Silvestre Gayon, and for further proceedings, not inconsistent with this decision, with the costs of this instance against defendant-appellee, Genoveva de Gayon. It is so ordered. Republic SUPREME Manila THIRD DIVISION G.R. No. L-55076 September 21, 1987 MATILDE S. PALICTE, petitioner, vs. HON. JOSE O. RAMOLETE as Presiding Judge of Court of First Instance of Cebu, Branch III, and MARCELO SOTTO, Administrator, respondents. of the Philippines COURT

GUTIERREZ, JR., J.: This is a petition for review on certiorari of the order of the then Court of First Instance of Cebu declaring the deed of redemption executed for the petitioner null and void and denying the petitioner's motion that the Registrar of Deeds of the City of Cebu be directed to transfer the Owner's Duplicate Certificates of Title to Lot Nos. 1049, 1051, and 1052 from Filemon Sotto to her and to issue a new Owner's Duplicate Certificate of Title to Lot 2179-C in her name. On July 5, 1979, a sale at public auction was held pursuant to a writ of execution issued on February 5, 1979 by the respondent judge and to a court order dated June 4, 1979 in the case of Pilar Teves, et al. vs Marcelo Sotto, Administrator, Civil Case No. R-10027, for the satisfaction of judgment in the amount of P725,270.00. The following properties belonging to the late Don Filemon Sotto and administered by respondent Marcelo Sotto were levied upon: 1. Parcel of land on Lot No. 1049, covered by TCT No. 27640 of the Banilad Friar Lands Estate, Cebu City; 2. Parcel of land on Lot No. 1052, covered by TCT No. 27642 of the Banilad Friar Lands Estate, Cebu City; 3. Parcel of land on Lot No. 1051,covered by TCT No. 27641 of the Banilad Friad Lands Estate, Cebu City; 4. Parcel of land on Lot No. 5253 of the Cebu Cadastre, Cebu City, covered by TCT No. 27639; 5. Parcel of land situated at Mantalongon, Dalaguete, Cebu, covered by TD No. 010661, with an area of 76-708; (sic) 6. Parcel of land on Lot No. 4839 of the Upon Cadastre, at Barrio Sa-ac Mactan Island, with an area of Forty Four Thousand Six Hundred Forty Four (44,644) square meters more or less;

7. Residential House of strong materials, situated on a Government lot at Lahug, Cebu City; 8. Residential House of strong materials, situated at Central, Cebu City. " (Rollo, p. 40) Seven of the above-described properties were awarded to Pilar Teves, who alone bid for them for the amount of P217,300.00. The residential house situated on a government lot at Lahug, Cebu City, was awarded to lone bidder Asuncion Villarante for the amount of P10,000.00. Within the period for redemption, petitioner Matilde S. Palicte, as one of the heirs of the late Don Filemon Sotto, redeemed from purchaser Pilar Teves, four (4) lots for the sum of P60,000.00. A deed of redemption dated July 29, 1980, executed by Deputy Provincial Sheriff Felipe V. Belandres and approved by the Clerk of Court, Esperanza Garcia as Ex-Officio Sheriff, was issued for these lots: 1. A parcel of land or Lot No. 2179-C-PDI-25027 Cebu Cadastre, Cebu City, bid at P20,000.00; 2. A parcel of land or Lot No. 1052, covered by TCT No. 27642, of the Banilad Friar Lands Estate, Cebu City, bid at P15,000.00; 3. A parcel of land or Lot No.1051,covered by TCT No. 27641, of the Banilad Friar Lands Estate, Cebu City, at P5,000.00; 4. A parcel of land or Lot No. 1049, covered by TCT No. 27640, of the Banilad Friar Lands Estate, Cebu City, at P20,000.00. (Rollo, p. 42) On July 24, 1980, petitioner Palicte filed a motion with respondent Judge Ramolete for the transfer to her name of the titles to the four (4) parcels of land covered by the deed of redemption. This motion was opposed by the plaintiffs in Civil Case No. R-10027, entitled "Pilar Teves, et al. vs Marcelo Sotto, administrator" on several grounds, principal among which, is that movant, Palicte, is not one of those authorized to redeem under the provisions of the Rules of Court. A hearing on the said motion, with both parties adducing evidence was held. The lower court held that although Palicte is one of the declared heirs in Spl. Proc. No. 2706-R, she does not qualify as a successor-in-interest who may redeem the real properties sold. It ruled that the deed of redemption is null and void. The motion of Palicte was denied. Hence, the present petition. The petitioner raises the following assignment of errors: A RESPONDENT JUDGE ERRED IN RULING THAT THE JUDGMENT DEBTOR ENTITLED TO REDEEM UNDER SECTION 29(a), RULE 39 OF THE REVISED RULES OF COURT REAL PROPERTY SOLD ON EXECUTION AGAINST THE ESTATE OF THE DECEDENT IS ONLY THE ADMINISTRATOR OF THE ESTATE, OR HIS SUCCESSOR-ININTEREST.

B RESPONDENT JUDGE ERRED IN RULING THAT PETITIONER, WHO IS A DECLARED HEIR OF THE DECEDENT, IS NOT THE JUDGMENT DEBTOR NOR DOES SHE QUALIFY AS A SUCCESSOR-ININTEREST OF THE ADMINISTRATOR OF THE ESTATE ENTITLED TO RIGHT OF REDEMPTION UNDER SECTION 29(a), RULE 39 OF THE RULES OF COURT. C RESPONDENT JUDGE ERRED IN RULING THAT ALTHOUGH PETITIONER IS A DECLARED HEIR OF THE DECEDENT, HER RIGHT TO THE ESTATE, LIKE THAT OF REDEMPTION OF CERTAIN ESTATE PROPERTY, COULD ONLY ARISE AFTER DISTRIBUTION OF THE ESTATE AS THERE IS STILL JUDGMENT DEBT CHARGEABLE AGAINST THE ESTATE. D RESPONDENT JUDGE ERRED IN RULING THAT PETITIONER'S REDEMPTION OF FOUR (4) PARCELS OF LAND OF THE ESTATE OF THE DECEDENT SOLD ON EXECUTION OF JUDGMENT AGAINST THE ESTATE IS NULL AND VOID AND INEFFECTIVE. (Rollo, pp. 17-18) These assigned errors center on whether or not petitioner Palicte may validly exercise the right of redemption under Sec. 29, Rule 39 of the Rules of Court. We answer in the affirmative. Sec. 29 of Rule 39 provides: SEC. 29. Who may redeem real property so sold. Real property sold as provided in the last preceding section, or any part thereof sold separately, may be redeemed in the manner hereinafter provided, by the following persons: (a) The judgment debtor, or his successor in interest in the whole or any part of the property; (b) A creditor having a lien by attachment, judgment or mortgage on the property sold, or on some part thereof, subsequent to the judgment under which the property was sold. Such redeeming creditor is termed a redemptioner. Under Subsection (a), property sold subject to redemption may be redeemed by the judgment debtor or his successor-in-interest in the whole or any part of the property. Does Matilde Palicte fall within the term "successor-in-interest"? Magno vs Viola and Sotto (61 Phil. 80, 84-85) states that: The rule is that the term "successor-in-interest" includes one to whom the debtor has transferred his statutory right of redemption (Big Sespe Oil Co. vs Cochran, 276 Fed., 216, 223); one to whom the debtor has conveyed his interest in the property for the purpose of redemption (Southern California Lumber Co. vs. McDowell, 105 Cal, 99; 38 Pac., 627; Simpson vs. Castle, 52 Cal., 644; Schumacher vs. Langford, 20 Cal. App., 61; 127 Pac., 1057); one who succeeds to the interest of the debtor by operation of law (XI McKinney's California Jurisprudence, 99); one or more joint debtors who

were joint owners of the property sold (Emerson vs. Yosemite Gold Min. etc. Co., 149 Cal., 50; 85 Pac., 122); the wife as regards her husband's homestead by reason of the fact that some portion of her husband' title passes to her (Hefner vs. Urton, 71 Cal., 479; 12 Pac., 486). This court has held that a surety can not redeem the property of the principal sold on execution because the surety, by paying the debt of the principal, stands in the place of the creditor, not of the debtor, and consequently is not a successor in interest in the property. (G. Urruitia & Co. vs. Moreno and Reyes, 28 Phil., 260, 268). (Emphasis supplied). In the case at bar, petitioner Palicte is the daughter of the late Don Filemon Sotto whose estate was levied upon on execution to satisfy the money judgment against it. She is one of the declared heirs in Special Proceeding No. 2706-R. As a legitimate heir, she qualifies as a successor-in- interest. Art. 777 of the Civil Code states that: The rights to the succession are transmitted from the moment of the death of the decedent. At the moment of the decedent's death, the heirs start to own the property, subject to the decedent's liabilities. In fact, they may dispose of the same even while the property is under administration. (Barretto vs. Tuason, 59 Phil. 845; Jakosalem vs. Rafols, 73 Phil. 628). If the heirs may dispose of their shares in the decedent's property even while it is under administration. With more reason should the heirs be allowed to redeem redeemable properties despite the presence of an administrator. The respondents contend that the petitioner must positively prove that the three other co-heirs, the administrator, and the intestate court had expressly agreed to the redemption of the disputed parcels of land. We see no need for such prior approval. While it may have been desirable, it is not indispensable under the circumstances of this case. What is important is that all of them acquiesced in the act of redeeming property for the estate. The petitioner contends that the administrator and the three other heirs agreed to the redemption. There is, however. no clear proof of such approval. What is beyond dispute from the records is that they did not disapprove nor reprobate the acts of the petitioner. There is likewise nothing in the records to indicate that the redemption was not beneficial to the estate of Don Filemon Sotto. It may be true that the interest of a specific heir is not yet fixed and determinate pending the order of distribution but, nonetheless, the heir's interest in the preservation of the estate and the recovery of its properties is greater than anybody else's, definitely more than the administrator's who merely holds it for the creditors, the heirs, and the legatees. The petitioner cites precedents where persons with inchoate or contingent interest were allowed to exercise the right of redemption as "successors-in-interest," e.g. Director of Lands vs. Lagniton (103 Phil. 889, 892) where a son redeemed the property of his parents sold on execution and Rosete vs. Provincial Sheriff of Zambales (95 Phil. 560, 564), where a wife by virtue of what the Court called "inchoate right of dower or contingent interest" redeemed a homestead as successor-ininterest of her husband. In fact, the Court was explicit in Lagniton that: ... The right of a son, with respect to the property of a father or mother, is also an inchoate or contingent interest, because upon the death of the father or the mother or both, he will have a right to inherit said conjugal property. If any holder of an inchoate interest is a successor in interest with right to redeem a property sold on execution, then the son is such a successor in interest, as he has an inchoate right to the property of his father.

The lower court, therefore, erred in considering the person of the administrator as the judgment debtor and as the only "successor-ininterest." The estate of the deceased is the judgment debtor and the heirs who will eventually acquire that estate should not be prohibited from doing their share in its preservation. Although petitioner Palicte validly redeemed the properties, her motion to transfer the titles of the four (4) parcels of land covered by the Deed of Redemption from registration in the name of Filemon Sotto to her name cannot prosper at this time. Otherwise, to allow such transfer of title would amount to a distribution of the estate. As held in the case of Philippine Commercial and Industrial Bank vs. Escolin (56 SCRA 267, 345- 346): Indeed, the law on the matter is specific, categorical and unequivocal. Section 1 of Rule 90 provides: SECTION 1. When order for distribution of residue made. When the debts, funeral charges, and expenses of administration, the allowance to the widow, and inheritance tax, if any, chargeable to the estate in accordance with law, have been paid, the court, on the application of the executor or administrator, or of a person interested in the estate, and after hearing upon notice, shall assign the residue of the estate to the persons entitled to the same, naming them and the proportions, or parts, to which each is entitled, and such persons may demand and recover their respective shares from the executor or administrator, or any other person having the same in his possession. If there is a controversy before the court as to who are the lawful heirs of the deceased person or as to the distributive shares to which each person is entitled under the law, the controversy shall be heard and decided as in ordinary cases. No distribution shall be allowed until the payment of the obligations above mentioned has been made or provided for, unless the distributees, or any of them, give a bond, in a sum to be fixed by the court, conditioned for the payment of said obligations within such time as the court directs. These provisions cannot mean anything less than that in order that a proceeding for the settlement of the estate of a deceased may be deemed ready for final closure, (1) there should have been issued already an order of distribution or assignment of the estate of the decedent among or to those entitled thereto by will or by law, but (2) such order shall not be issued until after it is shown that the "debts, funeral expenses, expenses of administration, allowances, taxes, etc., chargeable to the estate" have been paid, which is but logical and proper, (3) besides, such an order is usually issued upon proper and specific application for the purpose of the interested party or parties, and not of the court." The other heirs are, therefore, given a six months period to join as coredemptioners in the redemption made by the petitioner before the motion to transfer titles to the latter's name may be granted. WHEREFORE, the petition is hereby GRANTED. The respondent court's orders declaring the deed of redemption null and void and denying the motion to transfer title over the redeemed properties to Matilda Palicte are REVERSED and SET ASIDE, subject to the right of the other heirs to join in the redemption as stated above. SO ORDERED.

Republic SUPREME Manila FIRST DIVISION

of

the

Philippines COURT

Locsin, were surveyed cadastrally and registered in the name of "Mariano Locsin, married to Catalina Jaucian.'' 2 Mariano Locsin executed a Last Will and Testament instituting his wife, Catalina, as the sole and universal heir of all his properties. 3 The will was drawn up by his wife's nephew and trusted legal adviser, Attorney Salvador Lorayes. Attorney Lorayes disclosed that the spouses being childless, they had agreed that their properties, after both of them shall have died should revert to their respective sides of the family, i.e., Mariano's properties would go to his "Locsin relatives" (i.e., brothers and sisters or nephews and nieces), and those of Catalina to her "Jaucian relatives." 4 Don Mariano Locsin died of cancer on September 14, 1948 after a lingering illness. In due time, his will was probated in Special Proceedings No. 138, CFI of Albay without any opposition from both sides of the family. As directed in his will, Doa Catalina was appointed executrix of his estate. Her lawyer in the probate proceeding was Attorney Lorayes. In the inventory of her husband's estate 5 which she submitted to the probate court for approval, 6 Catalina declared that "all items mentioned from Nos. 1 to 33 are the private properties of the deceased and form part of his capital at the time of the marriage with the surviving spouse, while items Nos. 34 to 42 are conjugal." 7 Among her own and Don Mariano's relatives, Doa Catalina was closest to her nephew, Attorney Salvador Lorayes, her nieces, Elena Jaucian, Maria Lorayes-Cornelio and Maria Olbes-Velasco, and the husbands of the last two: Hostilio Cornelio and Fernando Velasco. 8 Her trust in Hostilio Cornelio was such that she made him custodian of all the titles of her properties; and before she disposed of any of them, she unfailingly consulted her lawyer-nephew, Attorney Salvador Lorayes. It was Atty. Lorayes who prepared the legal documents and, more often than not, the witnesses to the transactions were her niece Elena Jaucian, Maria Lorayes-Cornelio, Maria Olbes-Velasco, or their husbands. Her niece, Elena Jaucian, was her life-long companion in her house. Don Mariano relied on Doa Catalina to carry out the terms of their compact, hence, nine (9) years after his death, as if in obedience to his voice from the grave, and fully cognizant that she was also advancing in years, Doa Catalina began transferring, by sale, donation or assignment, Don Mariano's as well as her own, properties to their respective nephews and nieces. She made the following sales and donation of properties which she had received from her husband's estate, to his Locsin nephews and nieces: EXHIBIT DATE PARTICULARS AREA/SQ.M. PRICE WITNESSES

G.R. No. 89783 February 19, 1992 MARIANO B. LOCSIN, JULIAN J. LOCSIN, JOSE B. LOCSIN, AUREA B. LOCSIN, MATILDE L. CORDERO, SALVADOR B. LOCSIN and MANUEL V. DEL ROSARIO, petitioners, vs. THE HON. COURT OF APPEALS, JOSE JAUCIAN, FLORENTINO JAUCIAN, MERCEDES JAUCIAN ARBOLEDA, HEIRS OF JOSEFINA J. BORJA, HEIRS OF EDUARDO JAUCIAN and HEIRS OF VICENTE JAUCIAN,respondents. Aytona Law Office and Siquia Law Offices for petitioners. Mabella, Sangil & Associates for private respondents.

NARVASA, C.J.: Reversal of the decision of the Court of Appeals in CA-G.R. No. CV11186 affirming with modification the judgment of the Regional Trial Court of Albay in favor of the plaintiffs in Civil Case No. 7152 entitled "Jose Jaucian, et al. v. Mariano B. Locsin, et al.," an action for recovery of real property with damages is sought. in these proceedings initiated by petition for review on certiorari in accordance with Rule 45 of the Rules of Court. The petition was initially denied due course and dismissed by this Court. It was however reinstated upon a second motion for reconsideration filed by the petitioners, and the respondents were required to comment thereon. The petition was thereafter given due course and the parties were directed to submit their memorandums. These, together with the evidence, having been carefully considered, the Court now decides the case. First, the facts as the Court sees them in light of the evidence on record: The late Getulio Locsin had three children named Mariano, Julian and Magdalena, all surnamed Locsin. He owned extensive residential and agricultural properties in the provinces of Albay and Sorsogon. After his death, his estate was divided among his three (3) children as follows: (a) the coconut lands of some 700 hectares in Bual, Pilar, Sorsogon, were adjudicated to his daughter, Magdalena Locsin; (b) 106 hectares of coconut lands were given to Julian Locsin, father of the petitioners Julian, Mariano, Jose, Salvador, Matilde, and Aurea, all surnamed Locsin; (c) more than forty (40) hectares of coconut lands in Bogtong, eighteen (18) hectares of riceland in Daraga, and the residential lots in Daraga, Albay and in Legazpi City went to his son Mariano, which Mariano brought into his marriage to Catalina Jaucian in 1908. Catalina, for her part, brought into the marriage untitled properties which she had inherited from her parents, Balbino Jaucian and Simona Anson. These were augmented by other properties acquired by the spouses in the course of their union, 1 which however was not blessed with children. Eventually, the properties of Mariano and Catalina were brought under the Torrens System. Those that Mariano inherited from his father, Getulio

23 Jan. 26, 1957 Deed favor of Mariano Locsin

of

Absolute

Sale

in

962

481

1-JRL Apr. 7, 1966 Deed of Sale in favor of 430,203 P 20,000 Jose R. Locsin 1-JJL Mar. 22, 1967 Deed of Sale in favor of 5,000 P 1,000 Hostilio Cornello Julian Locsin (Lot 2020) Helen M. Jaucian 1 Nov. 29, 1974 favor Matilde and Salvador Locsin 2 Feb. 4, 1975 favor Matilde and Salvador Locsin 3 Sept. 9, 1975 favor Matilde and Salvador Locsin Deed Aurea L. of Donation in 26,509 Locsin, Cordero

Deed of Aurea L.

Donation

in

34,045 Locsin, Cordero

Deed of Aurea L.

Donation

in

(Lot

2059) Locsin, Cordero

4 July 15, 1974 Deed of Absolute Sale in 1,424 Hostilio Cornelio favor of Aurea B. Locsin Fernando Velasco 5 July 15, 1974 Deed of Absolute Sale in 1,456 P 5,750 Hostilio Cornelio favor of Aurea B. Locsin Elena Jaucian 6 July 15, 1974 Deed of Absolute Sale in 1,237 P 5,720 - ditto favor of Aurea B. Locsin 7 July 15, 1974 Deed of Absolute Sale in 1,404 P 4,050 - ditto favor of Aurea B. Locsin 15 Nov. 26, 1975 Deed of Sale in favor of 261 P 4,930 - ditto Aurea Locsin 16 Oct. 17, 1975 Deed of Sale in favor of 533 P 2,000 Delfina Anson Aurea Locsin M. Acabado 17 Nov. 26, 1975 Deed of Sale in favor of 373 P 1,000 Leonor Satuito Aurea Locsin Mariano B. Locsin 19 Sept. 1, 1975 Conditional Donation in 1,130 P 3,000 - ditto favor of Mariano Locsin 1-MVRJ Dec. 29, 1972 Deed of Reconveyance 1,5110.66 P 1,000 Delfina Anson in favor of Manuel V. del (Lot 2155) Antonio Illegible Rosario whose maternal grandfather was Getulio Locsin 2-MVRJ June 30, 1973 Deed of Reconveyance 319.34 P 500 Antonio Illegible in favor of Manuel V. del (Lot 2155) Salvador Nical Rosario but the rentals from bigger portion of Lot 2155 leased to Filoil Refinery were assigned to Maria Jaucian Lorayes Cornelio Of her own properties, Doa Catalina conveyed the following to her own nephews and nieces and others: EXHIBIT DATE PARTICULARS AREA/SQ.M. PRICE 2-JJL July 16, 1964 Deed of Sale in favor 5,000 P 1,000 Vicente Jaucian (lot 2020) (6,825 sqm. when resurveyed) 24 Feb. 12, 1973 in favor Maquiniana 26 July 15, favor Maquiniana 1973 Deed of of Absolute Sale 100 Francisco P 1,000 M.

30 Apr. 3, 1973 Deed favor of Inocentes Motocinos 31 Feb. 12, 1973 Deed favor of Casimiro Mondevil 32 Mar. 1, 1973 favor of Juan Saballa 25 Dec. 28, 1973 of Rogelio Marticio Deed

of

Absolute

Sale

in

31

1,000

of

Absolute Sale

in 150

P 1,500

of

Absolute

Sale

in

112

1,200

Deed of

Absolute Sale

in 250 P 2,500

Doa Catalina died on July 6, 1977. Four years before her death, she had made a will on October 22, 1973 affirming and ratifying the transfers she had made during her lifetime in favor of her husband's, and her own, relatives. After the reading of her will, all the relatives agreed that there was no need to submit it to the court for probate because the properties devised to them under the will had already been conveyed to them by the deceased when she was still alive, except some legacies which the executor of her will or estate, Attorney Salvador Lorayes, proceeded to distribute. In 1989, or six (6) years after Doa Catalina's demise, some of her Jaucian nephews and nieces who had already received their legacies and hereditary shares from her estate, filed action in the Regional Trial Court of Legaspi City (Branch VIII, Civil Case No. 7152) to recover the properties which she had conveyed to the Locsins during her lifetime, alleging that the conveyances were inofficious, without consideration, and intended solely to circumvent the laws on succession. Those who were closest to Doa Catalina did not join the action. After the trial, judgment was rendered on July 8, l985 in favor of the plaintiffs (Jaucian), and against the Locsin defendants, the dispositive part of which reads: WHEREFORE, this Court renders judgment for the plaintiffs and against the defendants: (1) declaring the, plaintiffs, except the heirs of Josefina J. Borja and Eduardo Jaucian, who withdrew, the rightful heirs and entitled to the entire estate, in equal portions, of Catalina Jaucian Vda. de Locsin, being the nearest collateral heirs by right of representation of Juan and Gregorio, both surnamed Jaucian, and full-blood brothers of Catalina; (2) declaring the deeds of sale, donations, reconveyance and exchange and all other instruments conveying any part of the estate of Catalina J. Vda. de Locsin including, but not limited to those in the inventory of known properties (Annex B of the complaint) as null and void ab-initio; (3) ordering the Register of Deeds of Albay and/or Legazpi City to cancel all certificates of title and other transfers of the real properties, subject of this case, in the name of defendants, and derivatives therefrom, and issue new ones to the plaintiffs; (4) ordering the defendants, jointly and severally, to reconvey ownership and possession of all such properties to the plaintiffs, together with all muniments of title properly endorsed and delivered, and all the fruits and incomes received by the defendants from the estate of Catalina, with legal interest from the filing of this action; and where reconveyance and delivery cannot be effected for reasons that might have intervened and prevent the same, defendants shall pay for the value of such properties, fruits and incomes received by them, also with legal interest from the filing, of this case

Deed

of Absolute of

Sale

in

130

P 1,300 Francisco

27 May 3, 1973 Deed favor of Ireneo Mamia 28 May 3, 1973 Deed favor of Zenaida Buiza 29 May 3, 1973 Deed favor of Felisa Morjella

of

Absolute

Sale

in

100

1,000

of

Absolute

Sale

in

75

750

of

Absolute

Sale

in

150

1,500

(5) ordering each of the defendants to pay the plaintiffs the amount of P30,000.00 as exemplary damages; and the further sum of P20,000.00 each as moral damages; and (6) ordering the defendants to pay the plaintiffs attorney's fees and litigation expenses, in the amount of P30,000.00 without prejudice to any contract between plaintiffs and counsel. Costs against the defendants. 9 The Locsins appealed to the Court of Appeals (CA-G.R. No. CV-11186) which rendered its now appealed judgment on March 14, 1989, affirming the trial court's decision. The petition has merit and should be granted. The trial court and the Court of Appeals erred in declaring the private respondents, nephews and nieces of Doa Catalina J. Vda. de Locsin, entitled to inherit the properties which she had already disposed of more than ten (10) years before her death. For those properties did not form part of her hereditary estate, i.e., "the property and transmissible rights and obligations existing at the time of (the decedent's) death and those which have accrued thereto since the opening of the succession." 10 The rights to a person's succession are transmitted from the moment of his death, and do not vest in his heirs until such time. 11 Property which Doa Catalina had transferred or conveyed to other persons during her lifetime no longer formed part of her estate at the time of her death to which her heirs may lay claim. Had she died intestate, only the property that remained in her estate at the time of her death devolved to her legal heirs; and even if those transfers were, one and all, treated as donations, the right arising under certain circumstances to impugn and compel the reduction or revocation of a decedent's gifts inter vivos does not inure to the respondents since neither they nor the donees are compulsory (or forced) heirs. 12 There is thus no basis for assuming an intention on the part of Doa Catalina, in transferring the properties she had received from her late husband to his nephews and nieces, an intent to circumvent the law in violation of the private respondents' rights to her succession. Said respondents are not her compulsory heirs, and it is not pretended that she had any such, hence there were no legitimes that could conceivably be impaired by any transfer of her property during her lifetime. All that the respondents had was an expectancy that in nowise restricted her freedom to dispose of even her entire estate subject only to the limitation set forth in Art. 750, Civil Code which, even if it were breached, the respondents may not invoke: Art. 750. The donation may comprehend all the present property of the donor or part thereof, provided he reserves, in full ownership or in usufruct, sufficient means for the support of himself, and of all relatives who, at the time of the acceptance of the donation, are by law entitled to be supported by the donor. Without such reservation, the donation shall be reduced on petition of any person affected. (634a) The lower court capitalized on the fact that Doa Catalina was already 90 years old when she died on July 6, 1977. It insinuated that because of her advanced years she may have been imposed upon, or unduly influenced and morally pressured by her husband's nephews and nieces (the petitioners) to transfer to them the properties which she had inherited from Don Mariano's estate. The records do not support that conjecture. For as early as 1957, or twenty-eight (28) years before her death, Doa Catalina had already begun transferring to her Locsin nephews and nieces the properties which she received from Don Mariano. She sold a 962-sq.m. lot on January 26, 1957 to his nephew and namesake Mariano Locsin II. 13 On April 7, 1966, or 19 years before she passed away, she also sold a 43 hectare land to another Locsin nephew, Jose R. Locsin. 14 The next year, or on March 22, 1967, she sold a 5,000-sq.m. portion of Lot 2020 to Julian Locsin. 15

On March 27, 1967, Lot 2020 16 was partitioned by and among Doa Catalina, Julian Locsin, Vicente Jaucian and Agapito Lorete. 17 At least Vicente Jaucian, among the other respondents in this case, is estopped from assailing the genuineness and due execution of the sale of portions of Lot 2020 to himself, Julian Locsin, and Agapito Lorete, and the partition agreement that he (Vicente) concluded with the other co-owners of Lot 2020. Among Doa, Catalina's last transactions before she died in 1977 were the sales of property which she made in favor of Aurea Locsin and Mariano Locsin in 1975. 18 There is not the slightest suggestion in the record that Doa Catalina was mentally incompetent when she made those dispositions. Indeed, how can any such suggestion be made in light of the fact that even as she was transferring properties to the Locsins, she was also contemporaneously disposing of her other properties in favor of the Jaucians? She sold to her nephew, Vicente Jaucian, on July 16, 1964 (21 years before her death) one-half (or 5,000 sq.m.) of Lot 2020. Three years later, or on March 22, 1967, she sold another 5000 sq.m. of the same lot to Julian Locsin. 19 From 1972 to 1973 she made several other transfers of her properties to her relatives and other persons, namely: Francisco Maquiniana, Ireneo Mamia, Zenaida Buiza, Feliza Morjella, Inocentes Motocinos, Casimiro Mondevil, Juan Saballa and Rogelio Marticio. 20 None of those transactions was impugned by the private respondents. In 1975, or two years before her death, Doa Catalina sold some lots not only to Don Mariano's niece, Aurea Locsin, and his nephew, Mariano Locsin II, 21 but also to her niece, Mercedes Jaucian Arboleda. 22 If she was competent to make that conveyance to Mercedes, how can there be any doubt that she was equally competent to transfer her other pieces of property to Aurea and Mariano II? The trial court's belief that Don Mariano Locsin bequeathed his entire estate to his wife, from a "consciousness of its real origin" which carries the implication that said estate consisted of properties which his wife had inherited from her parents, flies in the teeth of Doa Catalina's admission in her inventory of that estate, that "items 1 to 33 are the private properties of the deceased (Don Mariano) and forms (sic) part of his capital at the time of the marriage with the surviving spouse, while items 34 to 42 are conjugal properties, acquired during the marriage." She would have known better than anyone else whether the listing included any of her paraphernal property so it is safe to assume that none was in fact included. The inventory was signed by her under oath, and was approved by the probate court in Special Proceeding No. 138 of the Court of First Instance of Albay. It was prepared with the assistance of her own nephew and counsel, Atty. Salvador Lorayes, who surely would not have prepared a false inventory that would have been prejudicial to his aunt's interest and to his own, since he stood to inherit from her eventually. This Court finds no reason to disbelieve Attorney Lorayes' testimony that before Don Mariano died, he and his wife (Doa Catalina), being childless, had agreed that their respective properties should eventually revert to their respective lineal relatives. As the trusted legal adviser of the spouses and a full-blood nephew of Doa Catalina, he would not have spun a tale out of thin air that would also prejudice his own interest. Little significance, it seems, has been attached to the fact that among Doa Catalina's nephews and nieces, those closest to her: (a) her lawyer-nephew Attorney Salvador Lorayes; (b) her niece and companion Elena Jaucian: (c) her nieces Maria Olbes-Velasco and Maria LorayesCornelio and their respective husbands, Fernando Velasco and Hostilio Cornelio, did not join the suit to annul and undo the dispositions of property which she made in favor of the Locsins, although it would have been to their advantage to do so. Their desistance persuasively demonstrates that Doa Catalina acted as a completely free agent when she made the conveyances in favor of the petitioners. In fact, considering their closeness to Doa Catalina it would have been well-nigh impossible for the petitioners to employ "fraud, undue pressure, and subtle manipulations" on her to make her sell or donate her properties to them.

Doa Catalina's niece, Elena Jaucian, daughter of her brother, Eduardo Jaucian, lived with her in her house. Her nephew-in-law, Hostilio Cornelio, was the custodian of the titles of her properties. The sales and donations which she signed in favor of the petitioners were prepared by her trusted legal adviser and nephew, Attorney Salvador Lorayes. The (1) deed of donation dated November 19, 1974 23 in favor of Aurea Locsin, (2) another deed of donation dated 24 February 4, 1975 in favor of Matilde Cordero, and (3) still another deed dated September 9, 1975 25 in favor of Salvador Lorayes, were all witnessed by Hostilio Cornelio (who is married to Doa Catalina's niece, Maria Lorayes) and Fernando Velasco who is married to another niece, Maria Olbes. 26 The sales which she made in favor of Aurea Locsin on July 15, 1974 27were witnessed by Hostilio Cornelio and Elena Jaucian. Given those circumstances, said transactions could not have been anything but free and voluntary acts on her part. Apart from the foregoing considerations, the trial court and the Court of Appeals erred in not dismissing this action for annulment and reconveyance on the ground of prescription. Commenced decades after the transactions had been consummated, and six (6) years after Doa Catalina's death, it prescribed four (4) years after the subject transactions were recorded in the Registry of Property, 28 whether considered an action based on fraud, or one to redress an injury to the rights of the plaintiffs. The private respondents may not feign ignorance of said transactions because the registration of the deeds was constructive notice thereof to them and the whole world. 29 WHEREFORE, the petition for review is granted. The decision dated March 14, 1989 of the Court of Appeals in CA-G.R. CV No. 11186 is REVERSED and SET ASIDE. The private respondents' complaint for annulment of contracts and reconveyance of properties in Civil Case No. 7152 of the Regional Trial Court, Branch VIII of Legazpi City, is DISMISSED, with costs against the private respondents, plaintiffs therein. SO ORDERED. Republic SUPREME Manila THIRD DIVISION of the Philippines COURT

1. That the defendant or any person acting in his behalf surrender and transfer possession of the land in question (covered by TCT No. 28170 to the plaintiff; 2. That the defendant render an accounting of the fruits he received from the aforementioned property from August 1976 until possession is transferred to the plaintiff, said accounting to be approved by the court; 3. That in keeping with the findings of this court, the Register of Deeds, Lucena City, should, as he is hereby ordered cancel Entry No. 35285 in TCT No. 28170, said entry being an annotation of the adverse claim of defendant Apolinar Zabella inscribed on Feb. 17, 1977; 4. That the defendant pay to plaintiff the amount of P2,500.00 as attorney's fees and P1,000.00 as expenses of litigation. 3 Petitioner filed the aforementioned complaint on 12 July 1977 after she had been allegedly dispossessed of the property in question by private respondent Apolinar Zabella in 1976, and after the latter had caused to be annotated in Transfer Certificate of Title (TCT) No. 28170 an affidavit of adverse claim on 17 February 1977. She prayed therein that, inter alia, she be restored to the possession of the said property and that the adverse claim be cancelled. 4 As disclosed by the pleadings and the challenged decision, the antecedent facts are as follows: Juan Zabella and Anastacio Llenares were co-owners, in equal shares, of a parcel of land situated in barrio Silangang Mayao of the then Municipality, now City, of Lucena. In the cadastral survey of the said municipality, the lot was designated as Cadastral Lot No. 4804-D. This designation was later changed to Lot. No. 5015. On 21 December 1929, Anastacio Llenares sold his one-half (1/2) share in the lot to Ariston Zabella, private respondent's father. Subsequently, after due proceedings, the cadastral court awarded Lot. No. 5015 to Juan Zabella and Anastacio Llenares in equal shares. Decree No. 54398 was issued to both of them and on the basis thereof, Original Certificate of Title (OCT) No. 43073 was issued in their names on July 1937. Anastacio Llenares passed away on 27 March 1931 leaving the petitioner, his only child, as his sole heir. On the other hand, Juan Zabella and niece Irene Catapat. On 5 February 1960, Rosario and Irene adjudicated to themselves Juan Zabella's one-half (1/2) share in the lot. This adjudication was annotated in OCT No. 43073. Rosario died on 5 June 1962 leaving, as her only heirs, her children Godofredo, Noemi, Natividad, Olimpio and Numeriana, all surnamed Zaracena. On 22 June 1976, petitioner, as the sole heir of Anastacio Llenares, adjudicated to herself, by way of a Salaysay ng Pagmamana ng Nagiisang Tagapagmana (Exhibit "A"), the one-half (1/2) share in the property belonging to Anastacio Llenares. This fact was likewise annotated in OCT No. 43073. On 26 August 1976, however, OCT No. 43073 was cancelled and in its place, TCT No. T-27166 was issued for the entire lot. On 16 February 1977, private respondent Zabella filed an adverse claim which was duly annotated in TCT No. T-27166. As a consequence of a Kasunduan ng Pagsusukat (Exhibit "I") executed by and between Irene Catapat and the heirs of Rosario Zabella Zaracena, Lot No. 5015 was subsidivided into Lot. Nos. 5015-A, 5015-B and 5015-C. Lot No. 5015-A, which comprises one-half (1/2) of Lot No. 5015 corresponding to Anastacio's share, was allotted to the petitioner. TCT No. T-27166 was thereafter cancelled and separate Transfer

G.R. No. 98709 May 13, 1993 MAGDALENA LLENARES, petitioner, vs. HON. COURT OF APPEALS and APOLINAR ZABELLA, respondents.

DAVIDE, JR., J.: Petitioner availed of this recourse under Rule 45 of the Revised Rules of Court to obtain a reversal of the Decision of the Seventh Division of Court of Appeals in CA-G.R. CV No. 09853, promulgated on 24 April 1990, 1 and the reinstatement of the 4 April 1986 Decision of Branch 57 of the Regional Trial Court (RTC), Lucena City, in a case2 involving the recovery of the possession and quieting of title over a parcel of land. The dispositive portion of the trial court's decision reads as follows: WHEREFORE, judgment is hereby rendered for the plaintiff who is declared the true and absolute owner of the land covered by TCT No. 28170 (Registry of Deeds, Lucena City) particularly described in par. 2 of plaintiff's complaint and it is hereby ordered

Certificate of Title were issued for each of the subdivided lots. TCT No. 28170 was issued in the petitioner's name for Lot No. 5015-A. As regards the issue of possession, the petitioner's evidence discloses that since she was only four (4) years old when her father died, her cousin Rosario Zabella administered the land in question until 1959 when she (petitioner) placed Rufo Orig as tenant therein. The latter worked as such, delivering to the petitioner her share of the harvest until 1976, when he stopped doing so as he was ordered by the private respondent not to give the petitioner her share anymore. Private respondent allegedly claimed ownership over the property. Petitioner further proved that she had been paying the land taxes on the property until the filing of the case. On the other hand, according to his own version, private respondent and his siblings took possession of that portion of the land sold by Anastacio Llenares after Ariston Zabella's death on 21 March 1930. He then converted the same into riceland. It was irrigated in 1955 and he has been paying the irrigation charges since 1960. Moreover, he and his coheirs have been in possession of the property without interference by any party until "the present." 5 The trial court limited the issues to the following: whether the private respondent had acquired absolute ownership of the land in question by prescription and whether the plaintiff's (petitioner) action is barred by laches. 6 In finding for the petitioner, the lower court made the following disquisitions: It is beyond cavil that the land in question (then part of a big parcel) has been registered and titled in the name of plaintiff's father Anastacio Llenares since July 28, 1937 even as it is now registered in the name of plaintiff who made an affidavit of selfadjudification on June 22, 1976 being the only child of Anastacio Llenares. Anastacio Llenares became the registered owner by virtue of a cadastral proceedings, a proceedings in rem that is binding and conclusive against the whole world. No evidence of irregularity or fraud in the issuance of the title has been adduced, and even if there is intrinsic fraud, the period of one year within which to ventilate this infirmity has long expired. It is a postulate in law that "no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession. Prescription is unavailing not only against the registered owner but also against his hereditary successors because the latter merely step into the shoes of the decedent by operation of law and are merely the continuation of the personality of their predecessor in interest." (Barcelona vs. Barcelona, 100 Phil. 251). On this score alone, defendant's claim of prescription should fail. The court also notes, in passing, that defendant's evidence does not convincingly establish that he possessed the property publicly, exclusively and peacefully in the concept of owner. For one thing, he has not even paid any realty tax on the property as the property is not declared for taxation purposes in his name. The court is neither impressed with the credibility of defendant's witnesses. For example, the witness Sergio Dalida testified that in 1918 the land in litigation was in the possession of Ariston Zabella (T.S.N. 8-21-84 p. 8). There seems to be no truth to this because the property was bought by Ariston Zabella only in the year 1929. And then, there was that other witness Cosme Ranillo who unequivocally admitted during cross-examination that he was coached by the defendant (vide: t.s.n. 11-20-84 p. 24-26). As regards the Deed of Sale of the property in litigation in favor of Ariston Zabella (Exh. "1") which is apparently the cornerstone of defendant's claim over the property the court concurs with the submission of the plaintiff that after final judgment has been rendered in the cadastral proceedings, all rights or

claims prior thereto are deemed barred by the principle of res judicata. Hence after the finality of the judgment in the cadastral case, the Deed of Sale has lost its efficacy being functus oficio. With respect to the defense of laches so emphatically and exhaustively discussed by defendant's counsel in his brief we find this to be devoid of merit because of the following cogent reasons, viz: Firstly, the defense of laches was never interposed or pleaded in the answer filed by the defendant. Not even in our most gratuitous moment can we see a nuance of this defense being asserted in the answer: It is a rule of procedure that defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. (Sec. 2 Rule 9 of the Rules of Court). Secondly, the evidence shows that plaintiff has not been sleeping on her rights. According to her she was dispossessed of the land in 1976. It is admitted by the defendant that in 1977, plaintiff lodged a complaint against the defendant regarding the land in question with the Presidential Action Committee On Land Problems (PACLAP) as (sic) Camp Wilhelm, Lucena City. And then the instant action was filed in court on July 12, 1977. On the contrary it is the defendant and/or his predeccessor in interest who have been sleeping on their rights if any. They did not assert their right of ownership over the land in question arising from the Deed of Sale during the cadastral proceedings in the year 1937 or thereabout (sic). Except for filing an adverse claim on February 17, 1977, defendant has not taken any step to have the title of the property and its tax declaration transferred to his name. Thirdly, as adverted to, a title once registered cannot be defeated even by adverse, open and notorious possession. In the same vein, laches, too, may not be considered a valid defense for claiming ownership of registered land. Where prescription would not lie, neither would laches be available (De La Cruz vs. De La Cruz, CAG.R. No. 4700-R, Aug. 14, 1950; Adove vs, Lopez, CA-G.R. No. 18060-R, Aug. 30, 1957. 7 From this adverse decision, the private respondent appealed to the respondent Court of Appeals, which docketed the case as CA-G.R. CV No. 09853. He asked the respondent Court to reverse the RTC because

the latter erred: (a) in not considering the unsullied testimonial and documentary evidence for the appellant; (b) in appreciating the plaintiffappellee's flimsy and insufficient testimonial evidence; (c) in not declaring that prescription and laches were raised by the defendant; (d) in declaring that the failure to present to the cadastral court the deed of absolute sale bars the appellant (private respondent) from proving his ownership over the land in suit; and (e) in rendering judgment in favor of the petitioner. 8 In its Decision, the respondent Court upheld the private respondent's position and decreed as follows: WHEREFORE, the appealed decision is reversed and another one entered (1) declaring defendant-appellant the true and lawful owner of the 12,501 square meters of land described in and covered by Transfer Certificate of Title No. T28170 of the Registry of Deeds of Lucena City; (2) ordering the plaintiff-appellee to execute to the defendant-appellant the proper deed of conveyance transferring full ownership of Transfer Certificate of Title No. T-28170 to the said defendant-appellant; (3) ordering the Register of Deeds of Lucena City to cancel said Transfer Certificate of Title No. T-28170 and to issue thereafter a new one in the name of defendant-appellant, in the event the plaintiffappellee shall fail or refuse to execute the conveyance; (4) ordering the plaintiff-appellee to pay attorney's fees of P10,000.00. Costs against the plaintiff-appellee. 9 In resolving the appeal against the petitioner, the respondent Court stressed the fact that although OCT No. 43073 was issued in 1937, it was only on 26 August 1976 that the petitioner initially moved "to change the registered ownership" of the property with the issuance of TCT No. 27166. At that time, petitioner was already forty-nine (49) years old. In short, the respondent Court observed that she allowed twenty-eight (28) years to pass from the time she attained the age of majority before taking any affirmative action to protect her rights over the property. It thus concluded that "suspicion then is not altogether unjustified that the inaction was because the appellee knew of the sale by her father Juan Zabella (sic)," and that such knowledge is notice "that appellee had no right over half of the land. " 10 Anent the petitioner's contention that the private respondent is not only guilty of laches but that prescription had already set in against him, the respondent Court ruled that the former's evidence speaks otherwise because after TCT No. T-27166 was issued on 26 August 1976, the private respondent promptly filed his adverse claim, thereby making of record his interest in the land. Thus, neither prescription nor laches applies against him. 11 Public respondent also overturned the trail court's finding that the petitioner was in possession of the property until she was dispossessed in 1976 by the private respondent principally because it was in the third quarter of 1977 that she (petitioner) declared the questioned property in her name, and had paid land taxes thereon only for the same third quarter of 1977. The other tax payments were not in her name, but in the names of Godofredo Zaracena and Juan Zabella. The respondent Court opined that "[N]ormally, one who claims possession in ownership will declare the property in his name and will pay taxes on it," 12 and concluded that the petitioner's claimed possession "is not possession in law that deserves protection and recognition." 13 On the other hand, it gave credit to the private respondent's version chiefly because he has been paying irrigation charges since 1960.

Aggrieved thereby, the petitioner took this recourse, and raises the following issues: 1. Whether or not the alleged sale of a property by virtue of an instrument which was not filed or registered under Act 3344 and was not submitted before the Cadastral Court during the hearing thereof may deprived (sic) an adjudicated-declared owner the (sic) enjoyment of possession and the improvements thereof. 2. Whether or not a party in (sic) whose title was vested by virtue of a rendition of judgment and issuance of the decree of registration in a judicial proceeding in rem which as such, binds the whole world and who ever claim (sic) thereafter on the said land are (sic) deemed barred under the principle of res judicata. 3. Whether (sic) or not property covered by Torence (sic) Title can be acquired by prescription or adverse possession. 14 After the private respondent filed his Comment, We gave due course to the petition and directed both parties to submit their respective Memoranda, which they complied with. The petition is impressed with merit. 1. In the first place, the public respondent's factual findings on the issuance of possession on the basis of which it rejected the findings of fact and conclusions of the trial court are conjectural and speculative. Hence, We cannot be bound by such findings under the rule that findings of fact of the Court of Appeals are conclusive on this Court. 15 The trial court gave credence to the petitioner's account that she had legally possessed the property in question until 1976, categorically ruling that the private respondent's "evidence does not convincingly establish that he possessed the property publicly, exclusively and peacefully in the concept of owner." 16 The reasons for this pronouncement have already been given. Clearly, these matters are inexorably anchored on the witnesses' credibility. It is a settled judicial precept that the issue of the credibility of witnesses is primarily addressed to the trial court since it is in a better position to decide such a question, having seen and heard the witnesses and having observed their deportment and manner of testifying during the trial. 17 Moreover, its findings on such credibility carry great weight and respect, and will be sustained by the appellate court unless certain facts of substance and value have been overlooked which, if considered, might affect the result of the case. 18 That the petitioner neither declared the property in her name nor paid the taxes thereon until 1977 is not, contrary to the public respondent's conclusion, fatal to her cause. Until 27 June 1976, the property remained covered by OCT No. 43073 in the names of Juan Zabella and Anastacio Llenares. The private respondent's alleged claim was not annotated thereon. There is, as well, no evidence to show that the private respondent had earlier made any extrajudicial or judicial demands to enforce his claim on the property based on the so-called deed of sale which Anastacio had executed on 21 December 1929 in favor of Ariston Zabella, the private respondent's predecessor-in-interest. Since the petitioner is Anastacio Llenares's sole heir, the continued existence of OCT No. 43073 fully protected her rights; and her failure to declare for taxation purposes the one-half (1/2) portion of the land pertaining to Anastacio did not, therefore, prejudice her because the payments of the real estate taxes by other such as Godofredo Zaracena and Juan Zabella, as found by the public respondent per Exhibits "C", "C-1" and "C-2" 19 for and in behalf of the registered owners benefited the registered owners themselves and their successors-in-interest. On the other, the private respondent neither had the property declared in his name for taxation purposes nor paid the real estate taxes thereon. All that he paid, and this was only beginning in 1960, were the irrigation charges. And yet, the respondent Court resolved the issue in his favor. This palpable inconsistency on the part of the Court of Appeals defies all logic.

Furthermore, the respondent Court's conclusion that the petitioner made no move to have the property declared in her name or pay the real estate taxes thereon before 1976 because she knew all along about the 1929 sale executed by her father to Ariston Zabella, is plain speculation and, as characterized by the public respondent, a mere "suspicion," thus: . . . The suspicion then is not altogether unjustified that the inaction was because the appellee knew of the sale by her father to Juan (sic) Zabella. . . . 20 Such a suspicion has no basis at all. The parties do not dispute the fact that at the time of Anastacio Llenares' death on 27 March 1931, the petitioner was only four (4) years old. The deed of sale was executed by Anastacio Llenares on 21 December 1929, when the petitioner was only two (2) years old. Being at that time very much below the age of reason, the petitioner could not have been expected to be aware of the existence of the said deed of sale, much less understand its contents. The evidence failed to show that the private respondent informed the petitioner of such a sale at any time before the former filed the adverse claim on 17 February 1977. 2. Secondly, the respondent Court erroneously applied the rule on prescription against the petitioner and not against the private respondent. The evidence conclusively established that at an appropriate cadastral proceedings, Lot No. 5015 was awarded by the cadastral court to Juan Zabella and Anastacio Llenares in equalpro-indiviso shares; the decision became final; and on 28 July 1937, OCT No. 43073 was issued in favor of Juan Zabella and Anastacio Llenares. It was only on 17 February 1977, or after the lapse of over thirty-nine (39) years, that the private respondent, as a successor-in-interest of Ariston Zabella, took the first legal step i.e., the filing of the affidavit of adverse claim to protect and preserve his supposed right acquired under the deed of sale. Unfortunately, however, this move did not produce any legal effect. An adverse claim under Section 110 of the Land Registration Act (Act No. 496), the governing law at that time, referred to a claim of "any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registration." 21 In the instant case, the private respondent's "adverse claim" is one based on a transaction which had occurred long before the rendition of the decision in the cadastral proceedings and the issuance of OCT No. 43073. This seems to have escaped the attention of the public respondent which instead concluded that it was the petitioner who did not take any legal action from 1937, when OCT No. 43073 was issued, until 26 August 1976, when TCT NO. 27166 was issued following her execution on 22 June 1976 of the affidavit of "self-adjudication." This conclusion has no basis. As has been earlier adverted to, the continued existence of OCT No. 43073 in Juan Zabella's name protected the petitioner as the sole heir of Anastacio Llenares. There is no law which requires her, as a sole heir, to execute an affidavit of adjudication and cause both the cancellation of the OCT and the issuance of a new one in her name and in the names of the heirs of co-owner Juan Zabella in order to transfer the ownership of the property to her, or protect her rights and interests therein. The transfer in her favor took place, ipso jure, upon the death of Anastacio Llenares. 22 3. Finally, the so-called deed of sale executed by Anastacio Llenares in 1929 had lost its efficacy after the judgment in the cadastral proceedings adjudicating Lot No. 5015 to him and Juan Zabella became final. Ariston Zabella, the vendee in the said sale, did not file any answer in the cadastral proceedings or advance any claims on the said lot. It is to be noted that the proceedings under the Cadastral Act (Act No. 2259, as amended) 23 are judicial and in rem. As such, they bind the whole world. The final judgment rendered therein is deemed to have settled the status of the land subject thereof; any claim over it not noted thereon by other parties is therefore deemed barred under the principle of res judicata. 24 In a cadastal proceeding, the Government is actually the plaintiff and all the claimants are defendants. 25 This is because the former, represented by the Solicitor General, institutes the proceedings by a petition against the holders, claimants, possessors or occupants of such lands or any part thereof while the latter, or those claiming interest in the entire land or any part of it, whether named in the notice or not, are required to appear before the court and file an answer on or before the return day or within such further time as may be followed by the court. 26 All conflicting interest shall be adjudicated therein and the decree awarded in favor of the party entitled to the land; when it has become final, the decree shall serve as the basis for an original certificate of title in favor of the said party. This

shall have the same effect as a certificate of title granted under the Land Registration Act. 27 A party fraudulently deprived of his property in a cadastral proceeding may nevertheless file, within one (1) year from the entry of the decree, a petition for review. 28 After the lapse of the said period, if the property has not yet passed on to an innocent purchaser for value, an action for conveyance may still be filed by the aggrieved party.29 In the instant case, that action for conveyance could have only been based on an implied trust in Article 1456 of the Civil Code: Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. It is now settled that an action for the conveyance of property based on an implied or constructive trust prescribes in ten (10) years. 30 WHEREFORE, judgment is hereby rendered GRANTING the instant petition, ANNULING the challenged decision of the public respondent Court of Appeals of 24 April 1991 in CA-G.R. CV No. 09853 and REINSTATING the decision of the trial court subject of the appeal in the latter case. Costs against the private respondent. SO ORDERED. Feliciano, Bidin, Romero and Melo, JJ. Republic SUPREME Manila SECOND DIVISION G.R. No. 77029 August 30, 1990 BIENVENIDO, ESTELITA, MACARIO, LUIS, ADELAIDE, ENRIQUITA and CLAUDIO, all surnamed, GEVERO,petitioners, vs. INTERMEDIATE APPELLATE COURT and DEL MONTE DEVELOPMENT CORPORATION, respondents. Carlito B. Somido for petitioners. Benjamin N. Tabios for private respondent. of the Philippines COURT

PARAS, J.: This is a petition for review on certiorari of the March 20, 1988 decision 1 of the then Intermediate Appellate Court (now Court of Appeals) in AC-GR CV No. 69264, entitled Del Monte Development Corporation vs. Enrique Ababa, et al., etc. affirming the decision 2 of the then Court of First Instance (now Regional Trial Court) of Misamis Oriental declaring the plaintiff corporation as the true and absolute owner of that portion of Lot 476 of the Cagayan Cadastre, particularly Lot No. 2476-D of the subdivision plan (LRC) Psd-80450, containing an area of Seven Thousand Eight Hundred Seventy Eight (7,878) square meters more or less. As found by the Appellate Court, the facts are as follows: The parcel of land under litigation is Lot No. 2476 of the Subdivision Plan Psd-37365 containing an area

of 20,119 square meters and situated at Gusa, Cagayan de Oro City. Said lot was acquired by purchase from the late Luis Lancero on September 15, 1964 as per Deed of Absolute Sale executed in favor of plaintiff and by virtue of which Transfer Certificate of Title No. 4320 was issued to plaintiff (DELCOR for brevity). Luis Lancero, in turn acquired the same parcel from Ricardo Gevero on February 5, 1952 per deed of sale executed by Ricardo Gevero which was duly annotated as entry No. 1128 at the back of Original Certificate of Title No. 7610 covering the mother lot identified as Lot No. 2476 in the names of Teodorica Babangha 1/2 share and her children: Maria; Restituto, Elena, Ricardo, Eustaquio and Ursula, all surnamed surnamed Gevero, 1/2 undivided share of the whole area containing 48,122 square meters. Teodorica Babangha died long before World War II and was survived by her six children aforementioned. The heirs of Teodorica Babangha on October 17,1966 executed an Extra-Judicial Settlement and Partition of the estate of Teodorica Babangha, consisting of two lots, among them was lot 2476. By virtue of the extra-judicial settlement and partition executed by the said heirs of Teodorica Babangha, Lot 2476-A to Lot 2476-I, inclusive, under subdivision plan (LRC) Psd-80450 duly approved by the Land Registration Commission, Lot 2476-D, among others, was adjudicated to Ricardo Gevero who was then alive at the time of extra-judicial settlement and partition in 1966. Plaintiff (private respondent herein) filed an action with the CFI (now RTC) of Misamis Oriental to quiet title and/or annul the partition made by the heirs of Teodorica Babangha insofar as the same prejudices the land which it acquired a portion of lot 2476. Plaintiff now seeks to quiet title and/or annul the partition made by the heirs of Teodorica Babangha insofar as the same prejudices the land which it acquired, a portion of Lot 2476. Plaintiff proved that before purchasing Lot 2476-A it first investigated and checked the title of Luis Lancero and found the same to be intact in the office of the Register of Deeds of Cagayan de Oro City. The same with the subdivision plan (Exh. "B"), the corresponding technical description (Exh. "P") and the Deed of Sale executed by Ricardo Gevero all of which were found to be unquestionable. By reason of all these, plaintiff claims to have bought the land in good faith and for value, occupying the land since the sale and taking over from Lancero's possession until May 1969, when the defendants Abadas forcibly entered the property. (Rollo, p. 23) After trial the court a quo on July 18, 1977 rendered judgment, the dispositive portion of which reads as follows: WHEREFORE, premises considered, judgment is hereby rendered declaring the plaintiff corporation as the true and absolute owner of that portion of Lot No. 2476 of the Cagayan Cadastre, particularly Lot No. 2476-D of the subdivision plan (LRC) Psd-80450, containing an area of SEVEN THOUSAND EIGHT HUNDRED SEVENTY EIGHT (7,878) square meters, more or less. The other portions of Lot No. 2476 are hereby adjudicated as follows: Lot No. 2476 B to the heirs of Elena Gevero; Lot No. 2476 C to the heirs of Restituto Gevero;

Lot No. 2476 E to the defendant spouses Enrique C. Torres and Francisca Aquino; Lot No. 2476 F to the defendant spouses Eduard Rumohr and Emilia Merida Rumohf ; Lot Nos. 2476-H, 2476-I and 2476 G to defendant spouses Enrique Abada and Lilia Alvarez Abada. No adjudication can be made with respect to Lot No. 2476-A considering that the said lot is the subject of a civil case between the Heirs of Maria Gevero on one hand and the spouses Daniel Borkingkito and Ursula Gevero on the other hand, which case is now pending appeal before the Court of Appeals. No pronouncement as to costs, SO ORDERED. (Decision, Record on Appeal, p. 203; Rollo, pp. 21-22) From said decision, defendant heirs of Ricardo Gevero (petitioners herein) appealed to the IAC (now Court of Appeals) which subsequently, on March 20, 1986, affirmed the decision appealed from. Petitioners, on March 31, 1986, filed a motion for reconsideration ( Rollo, p. 28) but was denied on April 21, 1986. Hence, the present petition. This petition is devoid of merit. Basically, the issues to be resolved in the instant case are: 1) whether or not the deed of sale executed by Ricardo Gevero to Luis Lancero is valid; 2) in the affirmative, whether or not the 1/2 share of interest of Teodorica Babangha in one of the litigated lots, lot no. 2476 under OCT No. 7610 is included in the deed of sale; and 3) whether or not the private respondents' action is barred by laches. Petitioners maintain that the deed of sale is entirely invalid citing alleged flaws thereto, such as that: 1) the signature of Ricardo was forged without his knowledge of such fact; 2) Lancero had recognized the fatal defect of the 1952 deed of sale when he signed the document in 1968 entitled "Settlement to Avoid the Litigation"; 3) Ricardo's children remained in the property notwithstanding the sale to Lancero; 4) the designated Lot No. is 2470 instead of the correct number being Lot No. 2476; 5) the deed of sale included the share of Eustaquio Gevero without his authority; 6) T.C.T. No. 1183 of Lancero segregated the area of 20,119 square meters from the bigger area (OCT No. 7616) without the consent of the other coowners; 7) Lancero caused the 1952 Subdivision survey without the consent of the Geveros' to bring about the segregation of the 20,119 square meters lot from the mother lot 2476 which brought about the issuance of his title T-1183 and to DELCOR's title T4320, both of which were illegally issued; and 8) the area sold as per document is 20,649 square meters whereas the segregated area covered by TCT No. T-1183 of Lancero turned out to be 20,119 square meters (Petitioners Memorandum, pp. 62-78). As to petitioners' claim that the signature of Ricardo in the 1952 deed of sale in favor of Lancero was forged without Ricardo's knowledge of such fact (Rollo, p. 71) it will be observed that the deed of sale in question was executed with all the legal formalities of a public document. The 1952 deed was duly acknowledged by both parties before the notary public, yet petitioners did not bother to rebut the legal presumption of the regularity of the notarized document (Dy v. Sacay, 165 SCRA 473 [1988]); Nuguid v. C.A., G.R. No. 77423, March 13, 1989). In fact it has long been settled that a public document executed and attested through the intervention of the notary public is evidence of the facts in clear, unequivocal manner therein expressed. It has the presumption of regularity and to contradict all these, evidence must be clear, convincing and more than merely preponderant (Rebuleda v. I.A.C., 155 SCRA 520-521 [1987]). Forgery

cannot be presumed, it must be proven (Siasat v. IAC, No. 67889, October 10, 1985). Likewise, petitioners allegation of absence of consideration of the deed was not substantiated. Under Art. 1354 of the Civil Code, consideration is presumed unless the contrary is proven. As to petitioners' contention that Lancero had recognized the fatal defect of the 1952 deed when he signed the document in 1968 entitled "Settlement to Avoid Litigation" (Rollo, p. 71), it is a basic rule of evidence that the right of a party cannot be prejudiced by an act, declaration, or omission of another (Sec. 28. Rule 130, Rules of Court). This particular rule is embodied in the maxim "res inter alios acta alteri nocere non debet." Under Section 31, Rule 130, Rules of Court "where one derives title to property from another, the act, declaration, or omission of the latter, while holding the title, in relation to the property is evidence against the former." It is however stressed that the admission of the former owner of a property must have been made while he was the owner thereof in order that such admission may be binding upon the present owner (City of Manila v. del Rosario, 5 Phil. 227 [1905]; Medel v. Avecilla, 15 Phil. 465 [1910]). Hence, Lanceros' declaration or acts of executing the 1968 document have no binding effect on DELCOR, the ownership of the land having passed to DELCOR in 1964. Petitioners' claim that they remained in the property, notwithstanding the alleged sale by Ricardo to Lancero (Rollo, p. 71) involves a question of fact already raised and passed upon by both the trial and appellate courts. Said the Court of Appeals: Contrary to the allegations of the appellants, the trial court found that Luis Lancero had taken possession of the land upon proper investigation by plaintiff the latter learned that it was indeed Luis Lancero who was the owner and possessor of Lot 2476 D. . . . (Decision, C.A., p. 6). As a finding of fact, it is binding upon this Court (De Gola-Sison v. Manalo, 8 SCRA 595 [1963]; Gaduco vs. C.A., 14 SCRA 282 [1965]; Ramos v. Pepsi-Cola, 19 SCRA 289 [1967]; Tan v. C.A., 20 SCRA 54 [1967]; Ramirez Tel. Co. v. Bank of America, 33 SCRA 737 [1970]; Lucero v. Loot, 25 SCRA 687 [1968]; Guerrero v. C.A., 142 SCRA 130 [1986]). Suffice it to say that the other flaws claimed by the petitioners which allegedly invalidated the 1952 deed of sale have not been raised before the trial court nor before the appellate court. It is settled jurisprudence that an issue which was neither averred in the complaint nor raised during the trial in the court below cannot be raised for the first time on appeal as it would be offensive to the basic rules of fair play, justice and due process. (Matienzo v. Servidad, 107 SCRA 276 [1981]; Dela Santa v. C.A., 140 SCRA 44 [1985]; Dihiansan v. C.A., 157 SCRA 434 [1987]; Anchuelo v. IAC, 147 SCRA 434 [1987]; Dulos Realty and Development Corporation v. C.A., 157 SCRA [1988]; Kamos v. IAC, G.R. No. 78282, July 5, 1989). Petitioners aver that the 1/2 share of interest of Teodorica (mother of Ricardo) in Lot 2476 under OCT No. 7610 was not included in the deed of sale as it was intended to limit solely to Ricardos' proportionate share out of the undivided 1/2 of the area pertaining to the six (6) brothers and sisters listed in the Title and that the Deed did not include the share of Ricardo, as inheritance from Teodorica, because the Deed did not recite that she was deceased at the time it was executed (Rollo, pp. 67-68). The hereditary share in a decedents' estate is transmitted or vested immediately from the moment of the death of the "causante" or predecessor in interest (Civil Code of the Philippines, Art. 777), and there is no legal bar to a successor (with requisite contracting capacity) disposing of his hereditary share immediately after such death, even if the actual extent of such share is not determined until the subsequent liquidation of the estate (De Borja v. Vda. de Borja, 46 SCRA 577 [1972]). Teodorica Babangha died long before World War II, hence, the rights to the succession were transmitted from the moment of her death. It is therefore incorrect to state that it was only in 1966, the date of extrajudicial partition, when Ricardo received his share in the lot as inheritance from his mother Teodorica. Thus, when Ricardo sold his

share over lot 2476 that share which he inherited from Teodorica was also included unless expressly excluded in the deed of sale. Petitioners contend that Ricardo's share from Teodorica was excluded in the sale considering that a paragraph of the aforementioned deed refers merely to the shares of Ricardo and Eustaquio (Rollo, p. 67-68). It is well settled that laws and contracts shall be so construed as to harmonize and give effect to the different provisions thereof (Reparations Commission v. Northern Lines, Inc., 34 SCRA 203 [1970]), to ascertain the meaning of the provisions of a contract, its entirety must be taken into account (Ruiz v. Sheriff of Manila, 34 SCRA 83 [1970]). The interpretation insisted upon by the petitioners, by citing only one paragraph of the deed of sale, would not only create contradictions but also, render meaningless and set at naught the entire provisions thereof. Petitioners claim that DELCOR's action is barred by laches considering that the petitioners have remained in the actual, open, uninterrupted and adverse possession thereof until at present (Rollo, p. 17). An instrument notarized by a notary public as in the case at bar is a public instrument (Eacnio v. Baens, 5 Phil. 742). The execution of a public instrument is equivalent to the delivery of the thing (Art. 1498, 1st Par., Civil Code) and is deemed legal delivery. Hence, its execution was considered a sufficient delivery of the property (Buencamino v. Viceo, 13 Phil. 97; [1906]; Puato v. Mendoza, 64 Phil. 457 [1937]; Vda. de Sarmiento v. Lesaca, 108 Phil. 900 [1960]; Phil. Suburban Development Corp. v. Auditor Gen., 63 SCRA 397 (1975]). Besides, the property sold is a registered land. It is the act of registration that transfers the ownership of the land sold. (GSIS v. C.A., G.R. No. 42278, January 20, 1989). If the property is a registered land, the purchaser in good, faith has a right to rely on the certificate of title and is under no duty to go behind it to look for flaws (Mallorca v. De Ocampo, No. L-26852, March 25, 1970; Unchuan v. C.A., 161 SCRA 710 [1988]; Nuguid v. CA-G.R. No. 77427, March 13, 1989). Under the established principles of land registration law, the person dealing with registered land may generally rely on the correctness of its certificate of title and the law will in no way oblige him to go behind the certificate to determine the condition of the property (Tiongco v. de la Merced, L-2446, July 25, 1974; Lopez vs. CA., G.R. No. 49739, January 20, 1989; Davao Grains Inc. vs. IAC, 171 SCRA 612 [1989]). This notwithstanding, DELCOR did more than that. It did not only rely on the certificate of title. The Court of Appeals found that it had first investigated and checked the title (T.C.T. No. T-1183) in the name of Luis Lancero. It likewise inquired into the Subdivision Plan, the corresponding technical description and the deed of sale executed by Ricardo Gevero in favor of Luis Lancero and found everything in order. It even went to the premises and found Luis Lancero to be in possession of the land to the exclusion of any other person. DELCOR had therefore acted in good faith in purchasing the land in question. Consequently, DELCOR's action is not barred by laches. The main issues having been disposed of, discussion of the other issues appear unnecessary. PREMISES CONSIDERED, the instant petition is hereby DISMISSED and the decision of the Court of Appeals is hereby AFFIRMED. SO ORDERED.

Republic SUPREME Manila EN BANC

of

the

Philippines COURT

DECISION June 18, 1937 G.R. No. L-43082

6. I direct that ten (10) years after my death my property be given to the above mentioned Matthew Hanley to be disposed of in the way he thinks most advantageous. xxxxxxxxx 8. I state at this time I have one brother living, named Malachi Hanley, and that my nephew, Matthew Hanley, is a son of my said brother, Malachi Hanley. The Court of First Instance of Zamboanga considered it proper for the

PABLO LORENZO, as trustee of the estate of Thomas Hanley, deceased, vs. JUAN POSADAS, JR., Collector of Internal Revenue, defendantappellant. Pablo Lorenzo and Delfin Joven for plaintiff-appellant. best interests of the estate to appoint a trustee to administer the real properties which, under the will, were to pass to Matthew Hanley ten years after the two executors named in the will, was, on March 8, 1924, appointed trustee. Moore took his oath of office and gave bond on March 10, 1924. He acted as trustee until February 29, 1932, when he resigned and the plaintiff herein was appointed in his stead. During the incumbency of the plaintiff as trustee, the defendant Collector of Internal Revenue, alleging that the estate left by the deceased at the time of his death consisted of realty valued at P27,920 and personalty valued at P1,465, and allowing a deduction of P480.81, assessed against the estate an inheritance tax in the amount of P1,434.24 which, together with the penalties for delinquency in payment consisting of a 1 per cent monthly interest from July 1, 1931 to the date of payment and a surcharge of 25 per cent on the tax, amounted to P2,052.74. On March 15, 1932, the defendant filed a motion in the testamentary proceedings pending before the Court of First Instance of Zamboanga (Special It appears that on May 27, 1922, one Thomas Hanley died in Zamboanga, Zamboanga, leaving a will (Exhibit 5) and considerable amount of real and personal properties. On june 14, 1922, proceedings for the probate of his will and the settlement and distribution of his estate were begun in the Court of First Instance of Zamboanga. The will was admitted to probate. Said will provides, among other things, as follows: 4. I direct that any money left by me be given to my nephew Matthew Hanley. In his appeal, plaintiff contends that the lower court erred: 5. I direct that all real estate owned by me at the time of my death be not sold or otherwise disposed of for a period of ten (10) years after my death, and that the same be handled and managed by the executors, and proceeds thereof to be given to my nephew, Matthew Hanley, at Castlemore, Ballaghaderine, County of Rosecommon, Ireland, and that he be directed that the same be used only for the education of my brothers children and their descendants. II. In holding, in effect, that there was delinquency in the payment of inheritance tax due on the estate of said deceased. III. In holding that the inheritance tax in question be based upon the value of the estate upon the death of the testator, and not, as it should have been held, upon the value thereof at the expiration of the period of ten I. In holding that the real property of Thomas Hanley, deceased, passed to his instituted heir, Matthew Hanley, from the moment of the death of the former, and that from the time, the latter became the owner thereof. proceedings No. 302) praying that the trustee, plaintiff herein, be ordered to pay to the Government the said sum of P2,052.74. The motion was granted. On September 15, 1932, the plaintiff paid said amount under protest, notifying the defendant at the same time that unless the amount was promptly refunded suit would be brought for its recovery. The defendant overruled the plaintiffs protest and refused to refund the said amount hausted, plaintiff went to court with the result herein above indicated. plaintiff-appellant,

Office of the Solicitor-General Hilado for defendant-appellant. LAUREL, J.: On October 4, 1932, the plaintiff Pablo Lorenzo, in his capacity as trustee of the estate of Thomas Hanley, deceased, brought this action in the Court of First Instance of Zamboanga against the defendant, Juan Posadas, Jr., then the Collector of Internal Revenue, for the refund of the amount of P2,052.74, paid by the plaintiff as inheritance tax on the estate of the deceased, and for the collection of interst thereon at the rate of 6 per cent per annum, computed from September 15, 1932, the date when the aforesaid tax was [paid under protest. The defendant set up a counterclaim for P1,191.27 alleged to be interest due on the tax in question and which was not included in the original assessment. From the decision of the Court of First Instance of Zamboanga dismissing both the plaintiffs complaint and the defendants counterclaim, both parties appealed to this court.

years after which, according to the testators will, the property could be and was to be delivered to the instituted heir. IV. In not allowing as lawful deductions, in the determination of the net amount of the estate subject to said tax, the amounts allowed by the court as compensation to the trustees and paid to them from the decedents estate. V. In not rendering judgment in favor of the plaintiff and in denying his motion for new trial. The defendant-appellant contradicts the theories of the plaintiff and assigns the following error besides: The lower court erred in not ordering the plaintiff to pay to the defendant the sum of P1,191.27, representing part of the interest at the rate of 1 per cent per month from April 10, 1924, to June 30, 1931, which the plaintiff had failed to pay on the inheritance tax assessed by the defendant against the estate of Thomas Hanley. The following are the principal questions to be decided by this court in this appeal: (a) When does the inheritance tax accrue and when must it be satisfied? (b) Should the inheritance tax be computed on the basis of the value of the estate at the time of the testators death, or on its value ten years later? (c) In determining the net value of the estate subject to tax, is it proper to deduct the compensation due to trustees? (d) What law governs the case at bar? Should the provisions of Act No. 3606 favorable to the tax-payer be given retroactive effect? (e) Has there been delinquency in the payment of the inheritance tax? If so, should the additional interest claimed by the defendant in his appeal be paid by the estate? Other points of incidental importance, raised by the parties in their briefs, will be touched upon in the course of this opinion. (a) The accrual of the inheritance tax is distinct from the obligation to pay the same. Section 1536 as amended, of the Administrative Code, imposes the tax upon every transmission by virtue of inheritance, devise, bequest, gift mortis causa, or advance in anticipation of

his death. (Bondad vs. Bondad, 34 Phil. 232. See also, Mijares vs. Nery, 3 Phil. 195; Suilong & Co., vs. Chio-Taysan, 12 Phil. 13; Lubrico vs. Arbado, 12 Phil. 391; Innocencio vs. Gat-Pandan, 14 Phil. 491; Aliasas vs.Alcantara, 16 Phil. 489; Ilustre vs. Alaras Frondosa, 17 Phil. 321; Malahacan vs. Ignacio, 19 Phil. 434; Bowa vs. Briones, 38 Phil. 27; Osario vs. Osario & Yuchausti Steamship Co., 41 Phil. 531; Fule vs. Fule, 46 Phil. 317; Dais vs. Court of First Instance of Capiz, 51 Phil. 396; Baun vs. Heirs of Baun, 53 Phil. 654.) Plaintiff, however, asserts that while article 657 of the Civil Code is applicable to testate as well as intestate succession, it operates only in so far as forced heirs are concerned. But the language of article 657 of the Civil Code is broad and makes no distinction between different classes of heirs. That article does not speak of forced heirs; it does not even use the word heir. It speaks of the rights of succession and the transmission thereof from the moment of death. The provision of section 625 of the Code of Civil Procedure regarding the authentication and probate of a will as a necessary condition to effect transmission of property does not affect the general rule laid down in article 657 of the Civil Code. The authentication of a will implies its due execution but once probated and allowed the transmission is effective as of the death of the testator in accordance with article 657 of the Civil Code. Whatever may be the time when actual transmission of the inheritance takes place, succession takes place in any event at the moment of the decedents death. The time when the heirs legally succeed to the inheritance may differ from the time when the heirs actually receive such inheritance. Poco importa, says Manresa commenting on article 657 of the Civil Code, que desde el falleimiento del causante, hasta que el heredero o legatario entre en posesion de los bienes de la herencia o del legado, transcurra mucho o poco tiempo, pues la adquisicion ha de retrotraerse al momento de la muerte, y asi lo ordena el articulo 989, que debe considerarse como complemento del presente. (5 Manresa, 305; see also, art. 440, par. 1, Civil Code.) Thomas Hanley having died on May 27, 1922, the inheritance tax accrued as of the date. From the fact, however, that Thomas Hanley died on May 27, 1922, it does not follow that the obligation to pay the tax arose as of the date. The time for the payment on inheritance tax is clearly fixed by section 1544 of the Revised Administrative Code as amended by Act No. 3031, in relation to section 1543 of the same Code. The two sections follow: SEC. 1543. Exemption of certain acquisitions and transmissions. The following shall not be taxed: (a) The merger of the usufruct in the owner of the naked title. (b) The transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the trustees.

inheritance,devise, or bequest. The tax therefore is upon transmission or the transfer or devolution of property of a decedent, made effective by his death. (61 C. J., p. 1592.) It is in reality an excise or privilege tax imposed on the right to succeed to, receive, or take property by or under a will or the intestacy law, or deed, grant, or gift to become operative at or after death. According to article 657 of the Civil Code, the rights to the succession of a person are transmitted from the moment of his death. In other words, said Arellano, C. J., . . . the heirs succeed immediately to all of the property of the deceased ancestor. The property belongs to the heirs at the moment of the death of the ancestor as completely as if the ancestor had executed and delivered to them a deed for the same before

(c) The transmission from the first heir, legatee, or donee in favor of another beneficiary, in accordance with the desire of the predecessor. In the last two cases, if the scale of taxation appropriate to the new beneficiary is greater than that paid by the first, the former must pay the difference. SEC. 1544. When tax to be paid. The tax fixed in this article shall be paid: (a) In the second and third cases of the next preceding section, before entrance into possession of the property. (b) In other cases, within the six months subsequent to the death of the predecessor; but if judicial testamentary or intestate proceedings shall be instituted prior to the expiration of said period, the payment shall be made by the executor or administrator before delivering to each beneficiary his share. If the tax is not paid within the time hereinbefore prescribed, interest at the rate of twelve per centum per annum shall be added as part of the tax; and to the tax and interest due and unpaid within ten days after the date of notice and demand thereof by the collector, there shall be further added a surcharge of twenty-five per centum. A certified of all letters testamentary or of administration shall be furnished the Collector of Internal Revenue by the Clerk of Court within thirty days after their issuance. It should be observed in passing that the word trustee, appearing in subsection (b) of section 1543, should read fideicommissary or cestui que trust. There was an obvious mistake in translation from the Spanish to the English version. The instant case does fall under subsection (a), but under subsection (b), of section 1544 above-quoted, as there is here no fiduciary heirs, first heirs, legatee or donee. Under the subsection, the tax should have been paid before the delivery of the properties in question to P. J. M. Moore as trustee on March 10, 1924. (b) The plaintiff contends that the estate of Thomas Hanley, in so far as the real properties are concerned, did not and could not legally pass to the instituted heir, Matthew Hanley, until after the expiration of ten years from the death of the testator on May 27, 1922 and, that the inheritance tax should be based on the value of the estate in 1932, or ten years after the testators death. The plaintiff introduced evidence tending to show that in 1932 the real properties in question had a reasonable value of only P5,787. This amount added to the value of the personal property left by the deceased, which the plaintiff admits is P1,465, would generate an inheritance tax which, excluding deductions, interest and surcharge, would amount only to about P169.52.

If death is the generating source from which the power of the estate to impose inheritance taxes takes its being and if, upon the death of the decedent, succession takes place and the right of the estate to tax vests instantly, the tax should be measured by the value of the estate as it stood at the time of the decedents death, regardless of any subsequent contingency value of any subsequent increase or decrease in value. (61 C. J., pp. 1692, 1693; 26 R. C. L., p. 232; Blakemore and Bancroft, Inheritance Taxes, p. 137. See also Knowlton vs. Moore, 178 U.S., 41; 20 Sup. Ct. Rep., 747; 44 Law. ed., 969.) The right of the state to an inheritance tax accrues at the moment of death, and hence is ordinarily measured as to any beneficiary by the value at that time of such property as passes to him. Subsequent appreciation or depreciation is immaterial. (Ross, Inheritance Taxation, p. 72.) Our attention is directed to the statement of the rule in Cyclopedia of Law of and Procedure (vol. 37, pp. 1574, 1575) that, in the case of contingent remainders, taxation is postponed until the estate vests in possession or the contingency is settled. This rule was formerly followed in New York and has been adopted in Illinois, Minnesota, Massachusetts, Ohio, Pennsylvania and Wisconsin. This rule, however, is by no means entirely satisfactory either to the estate or to those interested in the property (26 R. C. L., p. 231.). Realizing, perhaps, the defects of its anterior system, we find upon examination of cases and authorities that New York has varied and now requires the immediate appraisal of the postponed estate at its clear market value and the payment forthwith of the tax on its out of the corpus of the estate transferred. (In re Vanderbilt, 172 N. Y., 69; 69 N. E., 782; In re Huber, 86 N. Y. App. Div., 458; 83 N. Y. Supp., 769; Estate of Tracy, 179 N. Y., 501; 72 N. Y., 519; Estate of Brez, 172 N. Y., 609; 64 N. E., 958; Estate of Post, 85 App. Div., 611; 82 N. Y. Supp., 1079. Vide also, Saltoun vs. Lord Advocate, 1 Peter. Sc. App., 970; 3 Macq. H. L., 659; 23 Eng. Rul. Cas., 888.) California adheres to this new rule (Stats. 1905, sec. 5, p. 343). But whatever may be the rule in other jurisdictions, we hold that a transmission by inheritance is taxable at the time of the predecessors death, notwithstanding the postponement of the actual possession or enjoyment of the estate by the beneficiary, and the tax measured by the value of the property transmitted at that time regardless of its appreciation or depreciation. (c) Certain items are required by law to be deducted from the appraised gross in arriving at the net value of the estate on which the inheritance tax is to be computed (sec. 1539, Revised Administrative Code). In the case at bar, the defendant and the trial court allowed a deduction of only P480.81. This sum represents the expenses and disbursements of the executors until March 10, 1924, among which were their fees and the proven debts of the deceased. The plaintiff contends that the

compensation and fees of the trustees, which aggregate P1,187.28 (Exhibits C, AA, EE, PP, HH, JJ, LL, NN, OO), should also be deducted under section 1539 of the Revised Administrative Code which provides, in part, as follows: In order to determine the net sum which must bear the tax, when an inheritance is concerned, there shall be deducted, in case of a resident, . . . the judicial expenses of the testamentary or intestate proceedings, . . . . A trustee, no doubt, is entitled to receive a fair compensation for his services (Barney vs. Saunders, 16 How., 535; 14 Law. ed., 1047). But from this it does not follow that the compensation due him may lawfully be deducted in arriving at the net value of the estate subject to tax. There is no statute in the Philippines which requires trustees commissions to be deducted in determining the net value of the estate subject to inheritance tax (61 C. J., p. 1705). Furthermore, though a testamentary trust has been created, it does not appear that the testator intended that the duties of his executors and trustees should be separated. (Ibid.; In re Vannecks Estate, 161 N. Y. Supp., 893; 175 App. Div., 363; In re Collards Estate, 161 N. Y. Supp., 455.) On the contrary, in paragraph 5 of his will, the testator expressed the desire that his real estate be handled and managed by his executors until the expiration of the period of ten years therein provided. Judicial expenses are expenses of administration (61 C. J., p. 1705) but, in State vs. Hennepin County Probate Court (112 N. W., 878; 101 Minn., 485), it was said: . . . The compensation of a truste e, earned, not in the administration of the estate, but in the management thereof for the benefit of the legatees or devises, does not come properly within the class or reason for exempting administration expenses. . . . Service rendered in that behalf have no reference to closing the estate for the purpose of a distribution thereof to those entitled to it, and are not required or essential to the perfection of the rights of the heirs or legatees. . . . Trusts . . . of the character of that here before the court, are created for the the benefit of those to whom the property ultimately passes, are of voluntary creation, and intended for the preservation of the estate. No sound reason is given to support the contention that such expenses should be taken into consideration in fixing the value of the estate for the purpose of this tax. (d) The defendant levied and assessed the inheritance tax due from the estate of Thomas Hanley under the provisions of section 1544 of the Revised Administrative Code, as amended by section 3 of Act No. 3606. But Act No. 3606 went into effect on January 1, 1930. It, therefore, was not the law in force when the testator died on May 27, 1922. The law at the time was section 1544 above-mentioned, as amended by Act No. 3031, which took effect on March 9, 1922. It is well-settled that inheritance taxation is governed by the statute in force at the time of the death of the decedent (26 R. C. L., p. 206; 4

Cooley on Taxation, 4th ed., p. 3461). The taxpayer can not foresee and ought not to be required to guess the outcome of pending measures. Of course, a tax statute may be made retroactive in its operation. Liability for taxes under retroactive legislation has been one of the incidents of social life. (Seattle vs. Kelleher, 195 U. S., 360; 49 Law. ed., 232 Sup. Ct. Rep., 44.) But legislative intent that a tax statute should operate retroactively should be perfectly clear. (Scwab vs. Doyle, 42 Sup. Ct. Rep., 491; Smietanka vs. First Trust & Savings Bank, 257 U. S., 602; Stockdale vs. Insurance Co., 20 Wall., 323; Lunch vs. Turrish, 247 U. S., 221.) A statute should be considered as prospective in its operation, whether it enacts, amends, or repeals an inheritance tax, unless the language of the statute clearly demands or expresses that it shall have a retroactive effect, . . . . (61 C. J., P. 1602.) Though the last paragraph of section 5 of Regulations No. 65 of the Department of Finance makes section 3 of Act No. 3606, amending section 1544 of the Revised Administrative Code, applicable to all estates the inheritance taxes due from which have not been paid, Act No. 3606 itself contains no provisions indicating legislative intent to give it retroactive effect. No such effect can begiven the statute by this court. The defendant Collector of Internal Revenue maintains, however, that certain provisions of Act No. 3606 are more favorable to the taxpayer than those of Act No. 3031, that said provisions are penal in nature and, therefore, should operate retroactively in conformity with the provisions of article 22 of the Revised Penal Code. This is the reason why he applied Act No. 3606 instead of Act No. 3031. Indeed, under Act No. 3606, (1) the surcharge of 25 per cent is based on the tax only, instead of on both the tax and the interest, as provided for in Act No. 3031, and (2) the taxpayer is allowed twenty days from notice and demand by the Collector of Internal Revenue within which to pay the tax, instead of ten days only as required by the old law. Properly speaking, a statute is penal when it imposes punishment for an offense committed against the state which, under the Constitution, the Executive has the power to pardon. In common use, however, this sense has been enlarged to include within the term penal statutes all status which command or prohibit certain acts, and establish penalties for their violation, and even those which, without expressly prohibiting certain acts, impose a penalty upon their commission (59 C. J., p. 1110). Revenue laws, generally, which impose taxes collected by the means ordinarily resorted to for the collection of taxes are not classed as penal laws, although there are authorities to the contrary. (See Sutherland, Statutory Construction, 361; Twine Co. vs. Worthington, 141 U. S., 468; 12 Sup. Ct., 55; Rice vs. U. S., 4 C. C. A., 104; 53 Fed., 910; Com. vs. Standard Oil Co., 101 Pa. St., 150; State vs. Wheeler, 44 P., 430; 25 Nev. 143.) Article 22 of the Revised Penal Code is not applicable to the

case at bar, and in the absence of clear legislative intent, we cannot give Act No. 3606 a retroactive effect. (e) The plaintiff correctly states that the liability to pay a tax may arise at a certain time and the tax may be paid within another given time. As stated by this court, the mere failure to pay ones tax does not render one delinquent until and unless the entire period has elapsed within which the taxpayer is authorized by law to make such payment without being subjected to the payment of penalties for failure to pay his taxes within the prescribed period. (U. S. vs. Labadan, 26 Phil. 239.) The defendant maintains that it was the duty of the executor to pay the inheritance tax before the delivery of the decedents property to the trustee. Stated otherwise, the defendant contends that delivery to the trustee was delivery to the cestui que trust, the beneficiary in this case, within the meaning of the first paragraph of subsection (b) of section 1544 of the Revised Administrative Code. This contention is well taken and is sustained. The appointment of P. J. M. Moore as trustee was made by the trial court in conformity with the wishes of the testator as expressed in his will. It is true that the word trust is not mentioned or used in the will but the intention to create one is clear. No particular or technical words are required to create a testamentary trust (69 C. J., p. 711). The words trust and trustee, though apt for the purpose, are not necessary. In fact, the use of these two words is not conclusive on the question that a trust is created (69 C. J., p. 714). To create a trust by will the testator must indicate in the will his intention so to do by using language sufficient to separate the legal from the equitable estate, and with sufficient certainty designate the beneficiaries, their interest in the trust, the purpose or object of the trust, and the property or subject matter thereof. Stated otherwise, to constitute a valid testamentary trust there must be a concurrence of three circumstances: (1) Sufficient words to raise a trust; (2) a definite subject; (3) a certain or ascertain object; statutes in some jurisdictions expressly or in effect so providing. (69 C. J., pp. 705,706.) There is no doubt that the testator intended to create a trust. He ordered in his will that certain of his properties be kept together undisposed during a fixed period, for a stated purpose. The probate court certainly exercised sound judgment in appointment a trustee to carry into effect the provisions of the will (see sec. 582, Code of Civil Procedure). P. J. M. Moore became trustee on March 10, 1924. On that date trust estate vested in him (sec. 582 in relation to sec. 590, Code of Civil Procedure). The mere fact that the estate of the deceased was placed in trust did not remove it from the operation of our inheritance tax laws or exempt it from the payment of the inheritance tax. The corresponding inheritance tax should have been paid on or before March 10, 1924, to escape the penalties of the laws. This is so for the reason already stated that the delivery of the estate to the trustee was in esse delivery of the

same estate to the cestui quetrust, the beneficiary in this case. A trustee is but an instrument or agent for the cestui que trust (Shelton vs. King, 299 U. S., 90; 33 Sup. Ct. Rep., 689; 57 Law. ed., 1086). When Moore accepted the trust and took possession of the trust estate he thereby admitted that the estate belonged not to him but to his cestui que trust (Tolentino vs. Vitug, 39 Phil.126, cited in 65 C. J., p. 692, n. 63). He did not acquire any beneficial interest in the estate. He took such legal estate only as the proper execution of the trust required (65 C. J., p. 528) and, his estate ceased upon the fulfillment of the testators wishes. The estate then vested absolutely in the beneficiary (65 C. J., p. 542). The highest considerations of public policy also justify the conclusion we have reached. Were we to hold that the payment of the tax could be postponed or delayed by the creation of a trust of the type at hand, the result would be plainly disastrous. Testators may provide, as Thomas Hanley has provided, that their estates be not delivered to their beneficiaries until after the lapse of a certain period of time. In the case at bar, the period is ten years. In other cases, the trust may last for fifty years, or for a longer period which does not offend the rule against perpetuities. The collection of the tax would then be left to the will of a private individual. The mere suggestion of this result is a sufficient warning against the acceptance of the essential to the very existence of government. (Dobbins vs. Erie Country, 16 Pet., 435; 10 Law. ed., 1022; Kirkland vs. Hotchkiss, 100 U. S., 491; 25 Law. ed., 558; Lane County vs. Oregon, 7 Wall., 71; 19 Law. ed., 101; Union Refrigerator Transit Co. vs. Kentucky, 199 U. S., 194; 26 Sup. Ct. Rep., 36; 50 Law. ed., 150; Charles River Bridge vs. Warren Bridge, 11 Pet., 420; 9 Law. ed., 773.) The obligation to pay taxes rests not upon the privileges enjoyed by, or the protection afforded to, a citizen by the government but upon the necessity of money for the support of the state (Dobbins vs. Erie Country, supra). For this reason, no one is allowed to object to or resist the payment of taxes solely because no personal benefit to him can be pointed out. (Thomas vs. Gay, 169 U. S., 264; 18 Sup. Ct. Rep., 340; 43 Law. ed., 740.) While courts will not enlarge, by construction, the governments power of taxation (Bromley vs. McCaughn, 280 U. S., 124; 74 Law. ed., 226; 50 Sup. Ct. Rep., 46) they also will not place upon tax laws so loose a construction as to permit evasions on merely fanciful and insubstantial distinctions. (U. S. vs. Watts, 1 Bond., 580; Fed. Cas. No. 16,653; U. S. vs. Wigglesirth, 2 Story, 369; Fed. Cas. No. 16,690, followed in Froelich & Kuttner vs. Collector of Customs, 18 Phil. 461, 481; Castle Bros., Wolf & Sons vs. McCoy, 21 Phil. 300; Muoz & Co. vs. Hord, 12 Phil. 624; Hongkong & Shanghai Banking Corporation vs. Rafferty, 39 Phil. 145; Luzon Stevedoring Co. vs. Trinidad, 43 Phil. 803.) When proper, a tax statute should be construed to avoid the possibilities of tax evasion. Construed this way, the statute, without resulting in injustice to the taxpayer, becomes fair to the government.

That taxes must be collected promptly is a policy deeply intrenched in our tax system. Thus, no court is allowed to grant injunction to restrain the collection of any internal revenue tax ( sec. 1578, Revised Administrative Code; Sarasola vs. Trinidad, 40 Phil. 252). In the case of Lim Co Chui vs. Posadas (47 Phil. 461), this court had occasion to demonstrate trenchment adherence to this policy of the law. It held that the fact that on account of riots directed against the Chinese on October 18, 19, and 20, 1924, they were prevented from praying their internal revenue taxes on time and by mutual agreement closed their homes and stores and remained therein, does not authorize the Collector of Internal Revenue to extend the time prescribed for the payment of the taxes or to accept them without the additional penalty of twenty five per cent. (Syllabus, No. 3.) . . . It is of the utmost importance, said the Supreme Court of the United States, . . . that the modes adopted to enforce the taxes levied should be interfered with as little as possible. Any delay in the proceedings of the officers, upon whom the duty is developed of collecting the taxes, may derange the operations of government, and thereby, cause serious detriment to the public. (Dows vs. Chicago, 11 Wall., 108; 20 Law. ed., 65, 66; Churchill and Tait vs. Rafferty, 32 Phil. 580.) It results that the estate which plaintiff represents has been delinquent in the payment of inheritance tax and, therefore, liable for the payment of interest and surcharge provided by law in such cases. The delinquency in payment occurred on March 10, 1924, the date when Moore became trustee. The interest due should be computed from that date and it is error on the part of the defendant to compute it one month later. The provisions cases is mandatory (see and cf. Lim Co Chui vs. Posadas,supra), and neither the Collector of Internal Revenue or this court may remit or decrease such interest, no matter how heavily it may burden the taxpayer. To the tax and interest due and unpaid within ten days after the date of notice and demand thereof by the Collector of Internal Revenue, a surcharge of twenty-five per centum should be added (sec. 1544, subsec. (b), par. 2, Revised Administrative Code). Demand was made by the Deputy Collector of Internal Revenue upon Moore in a communication dated October 16, 1931 (Exhibit 29). The date fixed for the payment of the tax and interest was November 30, 1931. November 30 being an official holiday, the tenth day fell on December 1, 1931. As the tax and interest due were not paid on that date, the estate became liable for the payment of the surcharge. In view of the foregoing, it becomes unnecessary for us to discuss the fifth error assigned by the plaintiff in his brief.

We shall now compute the tax, together with the interest and surcharge due from the estate of Thomas Hanley in accordance with the conclusions we have reached. At the time of his death, the deceased left real properties valued at P27,920 and personal properties worth P1,465, or a total of P29,385. Deducting from this amount the sum of P480.81, representing allowable deductions under section 1539 of the Revised Administrative Code, we have P28,904.19 as the net value of the estate subject to inheritance tax. The primary tax, according to section 1536, subsection (c), of the Revised Administrative Code, should be imposed at the rate of one per centum upon the first ten thousand pesos and two per centum upon the amount by which the share exceed thirty thousand pesos, plus an additional two hundred per centum. One per centum of ten thousand pesos is P100. Two per centum of P18,904.19 is P378.08. Adding to these two sums an additional two hundred per centum, or P965.16, we have as primary tax, correctly computed by the defendant, the sum of P1,434.24. To the primary tax thus computed should be added the sums collectible under section 1544 of the Revised Administrative Code. First should be added P1,465.31 which stands for interest at the rate of twelve per centum per annum from March 10, 1924, the date of delinquency, to September 15, 1932, the date of payment under protest, a period covering 8 years, 6 months and 5 days. To the tax and interest thus computed should be added the sum of P724.88, representing a surcharge of 25 per cent on both the tax and interest, and also P10, the compromise sum fixed by the defendant (Exh. 29), giving a grand total of P3,634.43. As the plaintiff has already paid the sum of P2,052.74, only the sums of P1,581.69 is legally due from the estate. This last sum is P390.42 more than the amount demanded by the defendant in his counterclaim. But, as we cannot give the defendant more than what he claims, we must hold that the plaintiff is liable only in the sum of P1,191.27 the amount stated in the counterclaim. The judgment of the lower court is accordingly modified, with costs against the plaintiff in both instances. So ordered. Republic SUPREME Manila EN BANC G.R. No. L-21993 June 21, 1966 of the Philippines COURT

ANGELA RODRIGUEZ, MARIA RODRIGUEZ, ET AL., petitioners, vs. HON. JUAN DE BORJA, as Judge of the Court of First Instance of

Bulacan, Branch III, ANATOLIA PANGILINAN and ADELAIDA JACALAN, respondents. Lorenzo Somulong Torres and Torres for respondents. REYES, J.B.L., J.: Petitioners Angela, Maria, Abelardo and Antonio, surnamed Rodriguez, petition this Court for a writ of certiorariand prohibition to the Court of First Instance of Bulacan, for its refusal to grant their motion to dismiss its Special Proceeding No. 1331, which said Court is alleged to have taken cognizance of without jurisdiction. The facts and issues are succinctly narrated in the order of the respondent court, dated June 13, 1963 (Petition, Annex 0), in this wise: It is alleged in the motion to dismiss filed by Angela, Maria, Abelardo and Antonio Rodriguez, through counsel, that this Court "has no jurisdiction to try the above-entitled case in view of the pendency of another action for the settlement of the estate of the deceased Rev. Fr. Celestino Rodriguez in the Court of First Instance of Rizal, namely, Sp. Proceedings No. 3907 entitled 'In the matter of the Intestate Estate of the deceased Rev. Fr. Celestino Rodriguez which was filed ahead of the instant case". The records show that Fr. Celestino Rodriguez died on February 12, 1963 in the City of Manila; that on March 4, 1963, Apolonia Pangilinan and Adelaida Jacalan delivered to the Clerk of Court of Bulacan a purported last will and testament of Fr. Rodriguez; that on March 8, 1963, Maria Rodriguez and Angela Rodriguez, through counsel filed a petition for leave of court to allow them to examine the alleged will; that on March 11, 1963 before the Court could act on the petition, the same was withdrawn; that on March 12, 1963, aforementioned petitioners filed before the Court of First Instance of Rizal a petition for the settlement of the intestate estate of Fr. Rodriguez alleging, among other things, that Fr. Rodriguez was a resident of Paraaque, Rizal, and died without leaving a will and praying that Maria Rodriguez be appointed as Special Administratrix of the estate; and that on March 12, 1963 Apolonia Pangilinan and Adelaida Jacalan filed a petition in this Court for the probation of the will delivered by them on March 4, 1963. It was stipulated by the parties that Fr. Rodriguez was born in Paraaque, Rizal; that he was Parish priest of the Catholic Church of Hagonoy, Bulacan, from the year 1930 up to the time of his death in 1963; that he was buried in Paraaque, and that he left real properties in Rizal, Cavite, Quezon City and Bulacan. The movants contend that since the intestate proceedings in the Court of First Instance of Rizal was filed at 8:00 A.M. on March 12, 1963 while the petition for probate was filed in the Court of First Instance of Bulacan at 11:00 A.M. on the same date, the latter Court has no jurisdiction to entertain the petition for probate, citing as authority in support thereof the case of Ongsingco Vda. de Borja vs. Tan and De Borja, G.R. No. 7792, July 27, 1955. The petitioners Pangilinan and Jacalan, on the other hand, take the stand that the Court of First Instance of Bulacan acquired jurisdiction over the case upon delivery by them of the will to the Clerk of Court on March 4, 1963, and that the case in this Court therefore has precedence over the case filed in Rizal on March 12, 1963. The Court of First Instance, as previously stated denied the motion to dismiss on the ground that a difference of a few hours did not entitle one proceeding to preference over the other; that, as early as March 7, movants were aware of the existence of the purported will of Father Rodriguez, deposited in the Court of Bulacan, since they filed a petition to examine the same, and that movants clearly filed the intestate for petitioners.

proceedings in Rizal "for no other purpose than to prevent this Court (of Bulacan) from exercising jurisdiction over the probate proceedings". Reconsideration having been denied, movants, now petitioners, came to this Court, relying principally on Rule 73, section 1 of the Rules of Court, and invoking our ruling in Ongsingco vs. Tan and De Borja, L-7792, July 27, 1955. SECTION 1. Where estate of deceased persons settled. If the decedent is an inhabitant of the Philippines at the time of his death, whether a citizen or an alien, his will shall be proved, or letters of administration granted, and his estate settled, in the Court of First Instance in the province in which he resides at the time of his death, and if he is an inhabitant of a foreign country, the Court of First Instance of any province which he had estate. The court first taking cognizance of the settlement of the estate of a decedent, shall exercise jurisdiction to the exclusion of all other courts. The jurisdiction assumed by a court, as far as it depends on the place of residence of the decedent, or of the location of his estate, shall not be contested in a suit or proceeding, except in an appeal from that court, in the original case, or when the want of jurisdiction appears on the record. We find this recourse to be untenable. The jurisdiction of the Court of First Instance of Bulacan became vested upon the delivery thereto of the will of the late Father Rodriguez on March 4, 1963, even if no petition for its allowance was filed until later, because upon the will being deposited the court could, motu proprio, have taken steps to fix the time and place for proving the will, and issued the corresponding notices conformably to what is prescribed by section 3, Rule 76, of the Revised Rules of Court (Section 3, Rule 77, of the old Rules): SEC. 3. Court to appoint time for proving will. Notice thereof to be published. When a will is delivered to, or a petition for the allowance of a will is filed in, the Court having jurisdiction, such Court shall fix a time and place for proving the will when all concerned may appear to contest the allowance thereof, and shall cause notice of such time and place to be published three (3) weeks successively, previous to the time appointed, in a newspaper of general circulation in the province. But no newspaper publication shall be made where the petition for probate has been filed by the testator himself. The use of the disjunctive in the words "when a will is delivered to OR a petition for the allowance of a will is filed" plainly indicates that the court may act upon the mere deposit therein of a decedent's testament, even if no petition for its allowance is as yet filed. Where the petition for probate is made after the deposit of the will, the petition is deemed to relate back to the time when the will was delivered. Since the testament of Fr. Rodriguez was submitted and delivered to the Court of Bulacan on March 4, while petitioners initiated intestate proceedings in the Court of First Instance of Rizal only on March 12, eight days later, the precedence and exclusive jurisdiction of the Bulacan court is incontestable. 1wph1.t But, petitioners object, section 3 of revised Rule 76 (old Rule 77) speaks of a will being delivered to "the Court having jurisdiction," and in the case at bar the Bulacan court did not have it because the decedent was domiciled in Rizal province. We can not disregard Fr. Rodriguez's 33 years of residence as parish priest in Hagonoy, Bulacan (1930-1963); but even if we do so, and consider that he retained throughout some animus revertendi to the place of his birth in Paraaque, Rizal, that detail would not imply that the Bulacan court lacked jurisdiction. As ruled in previous decisions, the power to settle decedents' estates is conferred by law upon all courts of first instance, and the domicile of the testator only affects the venue but not the jurisdiction of the Court (In re Kaw Singco, 74 Phil. 239; Reyes vs. Diaz, 73 Phil. 484; Bernabe vs. Vergara, 73 Phil. 676). Neither party denies that the late Fr. Rodriguez is deceased, or that he left personal property in Hagonoy, province of Bulacan (t.s.n. p. 46, hearing of June 11, 1963, Annex "H", Petition, Rec., p. 48). That is sufficient in the case before us. In the Kaw Singco case (ante) this Court ruled that:

"... If we consider such question of residence as one affecting the jurisdiction of the trial court over the subject-matter, the effect shall be that the whole proceedings including all decisions on the different incidents which have arisen in court will have to be annulled and the same case will have to be commenced anew before another court of the same rank in another province. That this is of mischievous effect in the prompt administration of justice is too obvious to require comment. (Cf. Tanunchuan vs. Dy Buncio & Co., G.R. No. 48206, December 31, 1942). Furthermore, section 600 of Act No. 190, providing that the estate of a deceased person shall be settled in the province where he had last resided, could not have been intended as defining the jurisdiction of the probate court over the subject matter, because such legal provision is contained in a law of procedure dealing merely with procedural matters, and, as we have said time and again, procedure is one thing and jurisdiction over the subject matter is another. (Attorney General vs. Manila Railroad Company, 20 Phil. 523.) The law of jurisdiction Act No. 136, Section 56, No. 5 confers upon Courts of First Instance jurisdiction over all probate cases independently of the place of residence of the deceased.1 Since, however, there are many Courts of First Instance in the Philippines, the Law of Procedure, Act No. 190, section 600, fixes the venue or the place where each case shall be brought. Thus, the place of residence of the deceased is not an element of jurisdiction over the subject matter but merely of venue. And it is upon this ground that in the new Rules of Court the province where the estate of a deceased person shall be settled is properly called "venue" (Rule 75, section 1.) Motion for reconsideration is denied. The estate proceedings having been initiated in the Bulacan Court of First Instance ahead of any other, that court is entitled to assume jurisdiction to the exclusion of all other courts, even if it were a case of wrong venue by express provisions of Rule 73 (old Rule 75) of the Rules of Court, since the same enjoins that: The Court first taking cognizance of the settlement of the estate of a decedent shall exercise jurisdiction to the exclusion of all other courts. (Sec. 1) This disposition presupposes that two or more courts have been asked to take cognizance of the settlement of the estate. Of them only one could be of proper venue, yet the rule grants precedence to that Court whose jurisdiction is first invoked, without taking venue into account. There are two other reasons that militate against the success of petitioners. One is that their commencing intestate proceedings in Rizal, after they learned of the delivery of the decedent's will to the Court of Bulacan, was in bad faith, patently done with a view to divesting the latter court of the precedence awarded it by the Rules. Certainly the order of priority established in Rule 73 (old Rule 75) was not designed to convert the settlement of decedent's estates into a race between applicants, with the administration of the properties as the price for the fleetest. The other reason is that, in our system of civil law, intestate succession is only subsidiary or subordinate to the testate, since intestacy only takes place in the absence of a valid operative will. Says Article 960 of the Civil Code of the Philippines: ART. 960. Legal or intestate succession takes place: (1) If a person dies without a will, or with a void will, or one which has subsequently lost its validity; (2) When the will does not institute an heir to, or dispose of all the property belonging to the testator. In such case, legal succession shall take place only with respect to the property in which the testator has not disposed; (3) If the suspensive condition attached to the institution of heir does not happen or is not fulfilled, or if the heir dies before the

testator, or repudiates the inheritance, there being no substitution, and no right of accretion takes place; (4) When the heir instituted is incapable of succeeding, except in cases provided in this Code. Therefore, as ruled in Castro, et al. vs. Martinez, 10 Phil. 307, "only after final decision as to the nullity of testate succession could an intestate succession be instituted in the form of pre-established action". The institution of intestacy proceedings in Rizal may not thus proceed while the probate of the purported will of Father Rodriguez is pending. We rule that the Bulacan Court of First Instance was entitled to priority in the settlement of the estate in question, and that in refusing to dismiss the probate. proceedings, said court did not commit any abuse of discretion. It is the proceedings in the Rizal Court that should be discontinued. Wherefore, the writ of certiorari applied for is denied. Costs against petitioners Rodriguez. Republic SUPREME Manila SECOND DIVISION of the Philippines COURT

G.R. No. L-39247 June 27, 1975 In the Matter of the Petition to Approve the Will of Leodegaria Julian. FELIX BALANAY, JR., petitioner, vs. HON. ANTONIO M. MARTINEZ, Judge of the Court of First Instance of Davao, Branch VI; AVELINA B. ANTONIO and DELIA B. LANABAN, respondents. Roberto M. Sarenas for petitioner. Jose B. Guyo for private respondents.

AQUINO, J.: Felix Balanay, Jr. appealed by certiorari from the order of the Court of First Instance of Davao dated February 28, 1974, declaring illegal and void the will of his mother, Leodegaria Julian, converting the testate proceeding into an intestate proceeding and ordering the issuance of the corresponding notice to creditors (Special Case No. 1808). The antecedents of the appeal are as follows: Leodegaria Julian, a native of Sta. Maria, Ilocos Sur, died on February 12, 1973 in Davao City at the age of sixty-seven. She was survived by her husband, Felix Balanay, Sr., and by their six legitimate children named Felix Balanay, Jr., Avelina B. Antonio, Beatriz B. Solamo, Carolina B. Manguiob, Delia B. Lanaban and Emilia B. Pabaonon. Felix J. Balanay, Jr. filed in the lower court a petition dated February 27, 1973 for the probate of his mother's notarial will dated September 5, 1970 which is written in English. In that will Leodegaria Julian declared (a) that she was the owner of the "southern half of nine conjugal lots (par. II); (b) that she was the absolute owner of two parcels of land which she inherited from her father (par. III), and (c) that it was her desire that her properties should not be divided among her heirs during her husband's lifetime and that their legitimes should be satisfied out of the fruits of her properties (Par. IV).

Then, in paragraph V of the will she stated that after her husband's death (he was eighty-two years old in 1973) her paraphernal lands and all the conjugal lands (which she described as "my properties") should be divided and distributed in the manner set forth in that part of her will. She devised and partitioned the conjugal lands as if they were all owned by her. She disposed of in the will her husband's one half share of the conjugal assets. * Felix Balanay, Sr. and Avelina B. Antonio opposed the probate of the will on the grounds of lack of testamentary capacity, undue influence, preterition of the husband and alleged improper partition of the conjugal estate. The oppositors claimed that Felix Balanay, Jr. should collate certain properties which he had received from the testatrix. Felix Balanay, Jr., in his reply to the opposition, attached thereto an affidavit of Felix Balanay, Sr. dated April 18, 1973 wherein he withdrew his opposition to the probate of the will and affirmed that he was interested in its probate. On the same date Felix Balanay, Sr. signed an instrument captioned "Conformation (sic) of Division and Renunciation of Hereditary Rights" wherein he manifested that out of respect for his wife's will he "waived and renounced' his hereditary rights in her estate in favor of their six children. In that same instrument he confirmed the agreement, which he and his wife had perfected before her death, that their conjugal properties would be partitioned in the manner indicated in her will. Avelina B. Antonio, an oppositor, in her rejoinder contended that the affidavit and "conformation" of Felix Balanay, Sr. were void. The lower court in its order of June 18, 1973 "denied" the opposition and reset for hearing the probate of the will. It gave effect to the affidavit and conformity of Felix Balanay, Sr. In an order dated August 28, 1973 it appointed its branch clerk of court as special administrator of the decedent's estate. Mrs. Antonio moved for the reconsideration of the lower court's order of June 18, 1973 on the grounds (a) that the testatrix illegally claimed that she was the owner of the southern half of the conjugal lots and (b) that she could not partition the conjugal estate by allocating portions of the nine lots to her children. Felix Balanay, Jr., through his counsel, Hermenegildo Cabreros, opposed that motion. The lower court denied it in its order of October 15, 1973. In the meanwhile, another lawyer appeared in the case. David O. Montaa, Sr., claiming to be the lawyer of petitioner Felix Balanay, Jr. (his counsel of record was Atty. Cabreros), filed a motion dated September 25, 1973 for "leave of court to withdraw probate of alleged will of Leodegaria Julian and requesting authority to proceed by intestate estate proceeding." In that motion Montaa claimed to be the lawyer not only of the petitioner but also of Felix Balanay, Sr., Beatriz B. Solamo, Carolina B. Manguiob and Emilia B. Pabaonon. Montaa in his motion assailed the provision of the will which partitioned the conjugal assets or allegedly effected a compromise of future legitimes. He prayed that the probate of the will be withdrawn and that the proceeding be converted into an intestate proceeding. In another motion of the same date he asked that the corresponding notice to creditors be issued. Avelina B. Antonio and Delia B. Lanaban, through Atty. Jose B. Guyo, in their comments dated October 15, 1973 manifested their conformity with the motion for the issuance of a notice to creditors. They prayed that the will be declared void for being contrary to law and that an intestacy be declared. The lower court, acting on the motions of Atty. Montaa, assumed that the issuance of a notice to creditors was in order since the parties had agreed on that point. It adopted the view of Attys. Montaa and Guyo that the will was void. So, in its order of February 28, 1974 it dismissed the petition for the probate, converted the testate proceeding into an intestate proceeding, ordered the issuance of a notice to creditors and set the intestate proceeding for hearing on April 1 and 2, 1974. The lower court did not abrogate its prior orders of June 18 and October 15, 1973. The notice to creditors was issued on April 1, 1974 and published on May 2, 9 and 16 in the Davao Star in spite of petitioner's motion of April 17, 1974 that its publication be held in abeyance.

Felix Balanay, Jr., through a new counsel, Roberto M. Sarenas, in a verified motion dated April 15, 1974, asked for the reconsideration of the lower court's order of February 28, 1974 on the ground that Atty. Montaa had no authority to withdraw the petition for the allowance of the will. Attached to the motion was a copy of a letter dated March 27, 1974 addressed to Atty. Montaa and signed by Felix Balanay, Jr., Beatriz V. Solamo, Carolina B. Manguiob and Emilia B. Pabaonon, wherein they terminated Montaa's services and informed him that his withdrawal of the petition for the probate of the will was without their consent and was contrary to their repeated reminder to him that their mother's will was "very sacred" to them. Avelina B. Antonio and Delia B. Lanaban opposed the motion for reconsideration. The lower court denied the motion in its order of June 29, 1974. It clarified that it declared the will void on the basis of its own independent assessment of its provisions and not because of Atty. Montaa's arguments. The basic issue is whether the probate court erred in passing upon the intrinsic validity of the will, before ruling on its allowance or formal validity, and in declaring it void. We are of the opinion that in view of certain unusual provisions of the will, which are of dubious legality, and because of the motion to withdraw the petition for probate (which the lower court assumed to have been filed with the petitioner's authorization), the trial court acted correctly in passing upon the will's intrinsic validity even before its formal validity had been established. The probate of a will might become an idle ceremony if on its face it appears to be intrinsically void. Where practical considerations demand that the intrinsic validity of the will be passed upon, even before it is probated, the court should meet the issue (Nuguid vs. Nuguid, 64 O.G. 1527, 17 SCRA 449. Compare with Sumilang vs. Ramagosa, L-23135, December 26, 1967, 21 SCRA 1369; Cacho vs. Udan, L-19996, April 30, 1965, 13 SCRA 693).1wph1.t But the probate court erred in declaring, in its order of February 28, 1974 that the will was void and in converting the testate proceeding into an intestate proceeding notwithstanding the fact that in its order of June 18, 1973 , it gave effect to the surviving husband's conformity to the will and to his renunciation of his hereditary rights which presumably included his one-half share of the conjugal estate. The rule is that "the invalidity of one of several dispositions contained in a will does not result in the invalidity of the other dispositions, unless it is to be presumed that the testator would not have made such other dispositions if the first invalid disposition had not been made" (Art. 792, Civil Code). "Where some of the provisions of a will are valid and others invalid, the valid parts will be upheld if they can be separated from the invalid without defeating the intention of the testator or interfering with the general testamentary scheme, or doing injustice to the beneficiaries" (95 C.J.S. 873). The statement of the testatrix that she owned the "southern half of the conjugal lands is contrary to law because, although she was a coowner thereof, her share was inchoate and proindiviso (Art. 143, Civil Code; Madrigal and Paterno vs. Rafferty and Concepcion, 38 Phil. 414). But That illegal declaration does not nullify the entire will. It may be disregarded. The provision of the will that the properties of the testatrix should not be divided among her heirs during her husband's lifetime but should be kept intact and that the legitimes should be paid in cash is contrary to article 1080 of the Civil Code which reads: ART. 1080. Should a person make a partition of his estate by an act inter vivos, or by will, such partition shall be respected, insofar as it does not prejudice the legitime of the compulsory heirs. A parent who, in the interest of his or her family, to keep any agricultural, industrial, or manufacturing enterprise intact, may avail himself of the right granted him in this article, by ordering that the

legitime of the other children to whom the property is not assigned be paid in cash. (1056a) The testatrix in her will made a partition of the entire conjugal estate among her six children (her husband had renounced his hereditary rights and his one-half conjugal share). She did not assign the whole estate to one or more children as envisaged in article 1080. Hence, she had no right to require that the legitimes be paid in cash. On the other hand, her estate may remain undivided only for a period of twenty years. So, the provision that the estate should not be divided during her husband's lifetime would at most be effective only for twenty years from the date of her death unless there are compelling reasons for terminating the coownership (Art. 1083, Civil Code). Felix Balanay, Sr. could validly renounce his hereditary rights and his one-half share of the conjugal partnership (Arts. 179[1] and 1041, Civil Code) but insofar as said renunciation partakes of a donation of his hereditary rights and his one-half share in the conjugal estate (Art. 1060[1] Civil Code), it should be subject to the limitations prescribed in articles 750 and 752 of the Civil Code. A portion of the estate should be adjudicated to the widower for his support and maintenance. Or at least his legitime should be respected. Subject to the foregoing observations and the rules on collation, the will is intrinsically valid and the partition therein may be given effect if it does not prejudice the creditors and impair the legitimes. The distribution and partition would become effective upon the death of Felix Balanay, Sr. In the meantime, the net income should be equitably divided among the children and the surviving spouse. It should be stressed that by reason of the surviving husband's conformity to his wife's will and his renunciation of his hereditary rights, his one-half conjugal share became a part of his deceased wife's estate. His conformity had the effect of validating the partition made in paragraph V of the will without prejudice, of course, to the rights of the creditors and the legitimes of the compulsory heirs. Article 793 of the Civil Code provides that "property acquired after the making of a will shall only pass thereby, as if the testator had it at the time of making the will, should it expressly appear by the will that such was his intention". Under article 930 of the Civil Code "the legacy or devise of a thing belonging to another person is void, if the testator erroneously believed that the thing pertained to him. But if the thing bequeathed, though not belonging to the testator when he made the will, afterwards becomes his, by whatever title, the disposition shall take effect." In the instant case there is no doubt that the testatrix and her husband intended to partition the conjugal estate in the manner set forth in paragraph V of her will. It is true that she could dispose of by will only her half of the conjugal estate (Art. 170, Civil Code) but since the husband, after the dissolution of the conjugal partnership, had assented to her testamentary partition of the conjugal estate, such partition has become valid, assuming that the will may be probated. The instant case is different from the Nuguid case, supra, where the testatrix instituted as heir her sister and preterited her parents. Her will was intrinsically void because it preterited her compulsory heirs in the direct line. Article 854 of the Civil Code provides that "the preterition or omission of one, some, or all of the compulsory heirs in the direct line, whether living at the time of the execution of the will or born after the death of the testator, shall annul the institution of heir; but the devises and legacies, shall be valid insofar as they are not inofficious." Since the preterition of the parents annulled the institution of the sister of the testatrix and there were no legacies and devises, total intestacy resulted (.Art. 960[2], Civil Code).1wph1.t In the instant case, the preterited heir was the surviving spouse. His preterition did not produce intestacy. Moreover, he signified his conformity to his wife's will and renounced his hereditary rights. . It results that the lower court erred in not proceeding with the probate of the will as contemplated in its uncancelled order of June 18, 1973. Save

in an extreme case where the will on its face is intrinsically void, it is the probate court's duty to pass first upon the formal validity of the will. Generally, the probate of the will is mandatory (Art. 838, Civil Code; Guevara vs. Guevara, 74 Phil. 479 and 98 Phil. 249; Fernandez vs. Dimagiba, L-23638, October 12, 1967, 21 SCRA 428). As aptly stated by Mr. Justice Barredo, "the very existence of a purported testament is in itself prima facie proof that the supposed testator has willed that his estate should be distributed in the manner therein provided, and it is incumbent upon the state that, if legally tenable, such desire be given effect independent of the attitude of the parties affected thereby" (Resolution, Vda. de Precilla vs. Narciso, L-27200, August 18, 1972, 46 SCRA 538, 565). To give effect to the intention and wishes of the testatrix is the first and principal law in the matter of testaments (Dizon-Rivera vs. Dizon, L24561, June 30, 1970, 33 SCRA 554, 561). Testacy is preferable to intestacy. An interpretation that will render a testamentary disposition operative takes precedence over a construction that will nullify a provision of the will (Arts. 788 and 791, Civil Code). Testacy is favored. Doubts are resolved in favor of testacy especially where the will evinces an intention on the part of the testator to dispose of practically his whole estate. So compelling is the principle that intestacy should be avoided and that the wishes of the testator should prevail that sometimes the language of the will can be varied for the purpose of giving it effect (Austria vs. Reyes, L-23079, February 27, 1970, 31 SCRA 754, 762). As far as is legally possible, the expressed desire of the testator must be followed and the dispositions of the properties in his will should be upheld (Estorque vs. Estorque, L-19573, June 30, 1970, 33 SCRA 540, 546). The law has a tender regard for the wishes of the testator as expressed in his will because any disposition therein is better than that which the law can make (Castro vs. Bustos, L-25913, February 28, 1969, 27 SCRA 327, 341). Two other errors of the lower court may be noticed. It erred in issuing a notice to creditors although no executor or regular administrator has been appointed. The record reveals that it appointed a special administrator. A notice to creditors is not in order if only a special administrator has been appointed. Section 1, Rule 86 of the Rules of Court, in providing that "immediately after granting letters of testamentary or of administration, the court shall issue a notice requiring all persons having money claims against the decedent to file them in the office of the clerk of said court" clearly contemplates the appointment of an executor or regular administrator and not that of a special administrator. It is the executor or regular administrator who is supposed to oppose the claims against the estate and to pay such claims when duly allowed (See. 10, Rule 86 and sec. 1, Rule 88, Rules of Court). We also take this occasion to point out that the probate court's appointment of its branch clerk of court as special administrator (p. 30, Rollo) is not a salutary practice because it might engender the suspicion that the probate Judge and his clerk of court are in cahoots in milking the decedent's estate. Should the branch clerk of court commit any abuse or devastavit in the course of his administration, the probate Judge might find it difficult to hold him to a strict accountability. A court employee should devote his official time to his official duties and should not have as a sideline the administration of a decedent's estate. WHEREFORE, the lower court's orders of February 28, and June 29, 1974 are set aside and its order of June 18, 1973, setting for hearing the petition for probate, is affirmed. The lower court is directed to conduct further proceedings in Special Case No. 1808 in consonance with this opinion. Costs, against the private respondents. SO ORDERED.