G.R. No. L-15088 January 31, 1961
That the land continued to be declared in the name of
TORIBIA FONTANILLA PACIO, SANTIAGO PACIO,
ESPERANZA PACIO, and ROSARIO PACIO, plaintiffs-
appellants,
vs.
MANUELA PACIO BILLON, BRIGIDA PACIO, and DOMINGA
PACIO, defendants-appellees.
Alfredo F. Tadiar for plaintiffs-appellants.
Camilo Z. Nisce for defendants-appellees.
BENGZON, J.:
In 1901, Flaviano Pacio married Severa Jucutan. Herein
defendants were their children. Severa died in 1930; and
thereafter Flavio married the plaintiff Toribia Fontanilla, who bore
him the other four plaintiffs.
The dispute between the parties in the La Union court of first
instance, concerned two parcels of land which defendants
allegedly retained without any right thereto. The litigants later
agreed to a partition of the first parcel, and the court so decreed.
As to the second parcel, a hearing was held, and it was awarded
to the defendants, on the ground that it had been donated propter
nuptias to Severa, in 1901, by Flaviano Pacio, who was then
admittedly the owner.
According to the stipulation of facts:
. . . a donation propter nuptias was made in a private
instrument by Flaviano Pacio in favor of his first wife
Severa Jucutan, before their marriage on June 4, 1901 .
.;
3.
Flaviano Pacio notwithstanding this donation propter
nuptias until 1956 when the same was changed in the
name of the defendants Brigida, Manuela and Dominga,
all surnamed Pacio;
4. That land taxes were paid in the name of Flaviano
Pacio as shown by tax receipts for the years 1931, 1933,
1934, 1935, 1940, 1942, 1943, 1944, 1945, 1946, 1947,
1948, 1949, 1955, and 1956;
5. That Flaviano Pacio died on November 2, 1951;
xxx xxx xxx
8. That defendants lived with their father and the second
wife, Toribia Fontanilla, from the date of their marriage in
1933, except Manuela who left on the date of her
marriage in 1941, and returned in 1946, and Dominga
who left in 1943 and Brigida is presently living with the
other defendants;
9. That while the plaintiffs and the defendants lived
together during the said period, they equally shared all the
harvests reaped from the land in the litigation;
10. That the land taxes were paid on both parcels (a) and
(b) in the names of the defendants starting with the year
1957 when the tax declarations were changed into their
names on December 20, 1956; . . .,"
The plaintiffs-appellants contend that the donation was void,
because it was not made in a public instrument. They are right.
Art. 633 of the Spanish Civil Code states that "In order that a
donation of real property be valid it must be made by public
instrument in which the property donated must be specifically
described and the amount of the encumbrances to be assumed by the first and second marriage. Subject of course to the rights
by the donee expressed . . .." . of his surviving spouse, the plaintiff Toribia Fontanilla.

And this Court has held that a donation propter nuptias of real Reversing the decision in so far as this parcel is concerned, we
property written on a private instrument is not valid even between hereby order the return of the expediente to the court below for
the parties.1 further proceedings on partition in accordance with these views.

The trial judge said "a donation propter nuptias in order to be

valid between the donor and the donee, need not be embodied in
a public instrument as such formality is only necessary for
registration purposes in the Office of the Register of Deeds" so as
to bind third persons. He was obviously applying the new
principles in the Philippine Civil Code effective in the year
1950.2 But in 1901 when the gift was made, the law was
contained in the Spanish Civil Code, according to which, even
between the parties, the donation must be in a public instrument.

Realizing the force of plaintiffs' point, defendants emphasize that

the deed of donation constituted a title on which to base
acquisitive prescription, inasmuch as Severa possessed the land
from 1901 to March 1930 when she died. The stipulation of facts
says nothing about such possession. True, there was a witness,
Monica Pacio, who testified; but she stated that both husband
and wife held possession of the land, and the stipulation says that
from 1933 the parties shared the harvests equally. At any rate, it
is obvious that normally, prescription by adverse possession can
not exist between husband and wife. See Article 1109 Civil Code
of the Philippines.

Espique v. Espique3 on which the appellees rely is not controlling

because the prescription there mentioned did not refer to
possession by the wife as against her husband.

It follows that Flaviano Pacio continued to be the owner of the

land as the donation had no effect and there was no prescription.
Upon his death, the land became the joint property of his children
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-15499 February 28, 1962
ANGELA M. BUTTE, plaintiff-appellant,
vs.
MANUEL UY and SONS, INC., defendant-appellee.
Delgado, Flores and Macapagal for plaintiff-appellant.
Pelaez and Jalandoni for defendant-appellee.
REYES, J.B.L., J.:
Appeal from a decision of the Court of First instance of Manila
dismissing the action for legal redemption filed by plaintiff-
appellant.
It appears that Jose V. Ramirez, during his lifetime, was a co-
owner of a house and lot located at Sta. Cruz, Manila, as shown
by Transfer Certificate of Title No. 52789, issued in the name of
the following co-owners: Marie Garnier Vda. de Ramirez, 1/6;
Jose V. Ramirez, 1/6; Jose E. Ramirez, 1/6; Rita de Ramirez, 1/6;
and Jose Ma. Ramirez, 1/6.
On October 20, 1951, Jose V. Ramirez died. Subsequently,
Special Proceeding No. 15026 was instituted to settle his estate,
that included the one-sixth (1/6) undivided share in the
aforementioned property. And although his last will and
testament, wherein he bequeathed his estate to his children and
grandchildren and one-third (1/3) of the free portion to Mrs.
Angela M. Butte, hereinafter referred to as plaintiff-appellant, has
been admitted to probate, the estate proceedings are still pending
up to the present on account of the claims of creditors which
exceed the assets of the deceased. The Bank of the Philippine
Islands was appointed judicial administrator.
Meanwhile, on December 9, 1958, Mrs. Marie Garnier Vda. de
Ramirez, one of the co-owners of the late Jose V. Ramirez in the
Sta. Cruz property, sold her undivided 1/6 share to Manuel Uy &
Sons, Inc. defendant-appellant herein, for the sum of
P500,000.00. After the execution by her attorney-in-fact, Mrs.
Elsa R. Chambers, of an affidavit to the effect that formal notices
of the sale had been sent to all possible redemptioners, the deed
of sale was duly registered and Transfer Certificate of Title No.
52789 was cancelled in lieu of which a new one was issued in the
name of the vendee and the other-co-owners.
On the same day (December 9, 1958), Manuel Uy & Sons, Inc.
sent a letter to the Bank of the Philippine Islands as judicial
administrator of the estate of the late Jose V. Ramirez informing it
of the above-mentioned sale. This letter, together with that of the
bank, was forwarded by the latter to Mrs. Butte c/o her counsel
Delgado, Flores & Macapagal, Escolta, Manila, and having
received the same on December 10, 1958, said law office
delivered them to plaintiff-appellant's son, Mr. Miguel Papa, who
in turn personally handed the letters to his mother, Mrs. Butte, on
December 11 and 12, 1958. Aside from this letter of defendant-
appellant, the vendor, thru her attorney-in-fact Mrs. Chambers,
wrote said bank on December 11, 1958 confirming vendee's letter
regarding the sale of her 1/6 share in the Sta. Cruz property for
the sum of P500,000.00. Said letter was received by the bank on
December 15, 1958 and having endorsed it to Mrs. Butte's
counsel, the latter received the same on December 16, 1958.
Appellant received the letter on December 19, 1958.
On January 15, 1959, Mrs. Angela M. Butte, thru Atty.
Resplandor Sobretodo, sent a letter and a Philippine National
Bank cashier's check in the amount of P500,000.00 to Manuel Uy
& Sons, Inc. offering to redeem the 1/6 share sold by Mrs. Marie
Garnier Vda. de Ramirez. This tender having been refused,
plaintiff on the same day consigned the amount in court and filed
the corresponding action for legal redemption. Without prejudice
to the determination by the court of the reasonable and fair
market value of the property sold which she alleged to be grossly
excessive, plaintiff prayed for conveyance of the property, and for
actual, moral and exemplary damages.
After the filing by defendant of its answer containing a
counterclaim, and plaintiff's reply thereto, trial was held, after
which the court rendered decision on May 13, 1959, dismissing
plaintiff's complaint on the grounds that she has no right to
redeem the property and that, if ever she had any, she exercised
the same beyond the statutory 30-day period for legal
redemptions provided by the Civil Code. The counterclaim of
defendant for damages was likewise dismissed for not being
sufficiently established. Both parties appealed directly to this
Court.
Based on the foregoing facts, the main issues posed in this
appeal are: (1) whether or not plaintiff-appellant, having been
bequeathed 1/3 of the free portion of the estate of Jose V.
Ramirez, can exercise the right of legal redemption over the 1/6
share sold by Mrs. Marie Garnier Vda. de Ramirez despite the
presence of the judicial administrator and pending the final
distribution of her share in the testate proceedings; and (2)
whether or not she exercised the right of legal redemption within
the period prescribed by law.
The applicable law involved in the present case is contained in
Articles 1620, p. 1, and 1623 of the Civil Code of the Philippines,
which read as follows:
ART. 1620. A co-owner of a thing may exercise the right
of redemption in case the shares of all the other-co-
owners or of any of them, are sold to a third person. If the
price of the alienation is grossly excessive, the
redemptioner shall pay only a reasonable one.
Should two or more co-owners desire to exercise the right
of redemption, they may only do so in proportion to the
share they may respectively have in the thing owned in
common. (1522a)
ART. 1623. The right of legal predemption or redemption
shall not be exercised except within thirty days from the
notice in writing by the respective vendor, or by the
vendor, as the case may be. The deed of sale shall not be
accorded in the Registry of Property, unless accompanied
by an affidavit of the vendor that he has given written
notice thereof at all possible redemptioners.
The right of redemption of co-owners excludes that of
adjoining owners. (1524a)
That the appellant Angela M. Butte is entitled to exercise the right
of legal redemption is clear. As testamentary heir of the estate of
J.V. Ramirez, she and her co-heirs acquired an interest in the
undivided one-sixth (1/6) share owned by her predecessor
(causante) in the Santa Cruz property, from the moment of the
death of the aforesaid co-owner, J.V. Ramirez. By law, the rights
to the succession of a deceased persons are transmitted to his
heirs from the moment of his death, and the right of succession
includes all property rights and obligations that survive the
decedent.
ART. 776. The inheritance includes all the property, rights
and obligations of a person which are not extinguished by
his death. (659)
ART. 777. The rights to the succession are transmitted
from the moment of the death of the decedent. (657a)
ART. 947. The legatee or devisee acquires a right to the
pure and simple legacies or devisees from the death of
the testator, and transmits it to his heirs. (881a)
The principle of transmission as of the time of the predecessor's
death is basic in our Civil Code, and is supported by other related
articles. Thus, the capacity of the heir is determined as of the time
the decedent died (Art. 1034); the legitime is to be computed as
of the same moment(Art. 908), and so is the in officiousness of
the donation inter vivos (Art. 771). Similarly, the legacies of credit
and remission are valid only in the amount due and outstanding
at the death of the testator (Art. 935),and the fruits accruing after
that instant are deemed to pertain to the legatee (Art. 948).
As a consequence of this fundamental rule of succession, the
heirs of Jose V. Ramirez acquired his undivided share in the Sta.
Cruz property from the moment of his death, and from that
instant, they became co-owners in the aforesaid property,
together with the original surviving co-owners of their decedent
(causante). A co-owner of an undivided share is necessarily a co-
owner of the whole. Wherefore, any one of the Ramirez heirs, as
such co-owner, became entitled to exercise the right of legal
redemption (retracto de comuneros) as soon as another co-owner
(Maria Garnier Vda. de Ramirez) had sold her undivided share to
a stranger, Manuel Uy & Sons, Inc. This right of redemption
vested exclusively in consideration of the redemptioner's share
which the law nowhere takes into account.
The situation is in no wise altered by the existence of a judicial
administrator of the estate of Jose V. Ramirez while under the
Rules of Court the administrator has the right to the possession of
the real and personal estate of the deceased, so far as needed
for the payment of the decedent's debts and the expenses of
administration (sec. 3, Rule 85), and the administrator may bring
or defend actions for the recovery or protection of the property or
rights of the deceased (sec. 2, Rule 88), such rights of
possession and administration do not include the right of legal
redemption of the undivided share sold to Uy & Company by Mrs.
Garnier Ramirez. The reason is obvious: this right of legal
redemption only came into existence when the sale to Uy & Sons,
Inc. was perfected, eight (8) years after the death of Jose V.
Ramirez, and formed no part of his estate. The redemption right
vested in the heirs originally, in their individual capacity, they did
not derivatively acquire it from their decedent, for when Jose V.
Ramirez died, none of the other co-owners of the Sta. Cruz
property had as yet sold his undivided share to a stranger.
Hence, there was nothing to redeem and no right of redemption;
and if the late Ramirez had no such right at his death, he could
not transmit it to his own heirs. Much less could Ramirez acquire
such right of redemption eight years after his death, when the
sale to Uy & Sons, Inc. was made; because death extinguishes
civil personality, and, therefore, all further juridical capacity to
acquire or transmit rights and obligations of any kind (Civil Code
of the Phil., Art. 42).
It is argued that the actual share of appellant Mrs. Butte in the
estate of Jose V. Ramirez has not been specifically determined
as yet, that it is still contingent; and that the liquidation of estate of
Jose V. Ramirez may require the alienation of the decedent's
undivided portion in the Sta. Cruz property, in which event Mrs.
Butte would have no interest in said undivided portion. Even if it
were true, the fact would remain that so long as that undivided
share remains in the estate, the heirs of Jose V. Ramirez own it,
as the deceased did own it before his demise, so that his heirs
are now as much co-owners of the Sta. Cruz property as Jose V.
Ramirez was himself a co-owner thereof during his lifetime. As
co-owners of the property, the heirs of Jose V. Ramirez, or any
one of them, became personally vested with right of legal
redemption as soon as Mrs. Garnier sold her own pro-indiviso
interest to Uy & Sons. Even if subsequently, the undivided share
of Ramirez (and of his heirs) should eventually be sold to satisfy
the creditors of the estate, it would not destroy their ownership of
it before the sale, but would only convey or transfer it as in turn
sold (of it actually is sold) to pay his creditors. Hence, the right of
any of the Ramirez heirs to redeem the Garnier share will not be
retroactively affected. All that the law requires is that the legal
redemptioner should be a co-owner at the time the undivided
share of another co-owner is sold to a stranger. Whether or not
the redemptioner will continue being a co-owner after exercising
the legal redemptioner is irrelevant for the purposes of law.
Nor it can be argued that if the original share of Ramirez is sold
by the administrator, his heirs would stand in law as never having
acquired that share. This would only be true if the inheritance is
repudiated or the heir's quality as such is voided. But where the
heirship is undisputed, the purchaser of hereditary property is not
deemed to have acquired the title directly from the deceased
Ramirez, because a dead man can not convey title, nor from the
administrator who owns no part of the estate; the purchaser can
only derive his title from the Ramirez heirs, represented by the
administrator, as their trustee or legal representative.
The right of appellant Angela M. Butte to make the redemption
being established, the next point of inquiry is whether she had
made or tendered the redemption price within the 30 days from
notices as prescribed by law. This period, be it noted, is
peremptory, because the policy of the law is not to leave the
purchaser's title in uncertainty beyond the established 30-day
period. In considering whether or not the offer to redeem was
timely, we think that the notice given by the vendee (buyer)
should not be taken into account. The text of Article 1623 clearly
and expressly prescribes that the thirty days for making the
redemption are to be counted from notice in writing by the vendor.
Under the old law (Civ. Code of 1889, Art. 1524), it was
immaterial who gave the notice; so long as the redeeming co-
owner learned of the alienation in favor of the stranger, the
redemption period began to run. It is thus apparent that the
Philippine legislature in Article 1623 deliberately selected a
particular method of giving notice, and that method must be
deemed exclusive (39 Am. Jur., 237; Payne vs. State, 12 S.W.
[2d] 528). As ruled in Wampler vs. Lecompte, 150 Atl. 458 (affd.
in 75 Law Ed. [U.S.] 275) —
Why these provisions were inserted in the statute we are
not informed, but we may assume until the contrary is
shown, that a state of facts in respect thereto existed,
which warranted the legislature in so legislating.
The reasons for requiring that the notice should be given by the
seller, and not by the buyer, are easily divined. The seller of an
undivided interest is in the best position to know who are his co-
owners that under the law must be notified of the sale. Also, the
notice by the seller removes all doubts as to the fact of the sale,
its perfection; and its validity, the notice being a reaffirmation
thereof, so that the party need not entertain doubt that the seller
may still contest the alienation. This assurance would not exist if
the notice should be given by the buyer.
The notice which became operative is that given by Mrs.
Chambers, in her capacity as attorney-in-fact of the vendor Marie
Garnier Vda. de Ramirez. Under date of December 11, 1958, she
wrote the Administrator Bank of the Philippine Islands that her
principal's one-sixth (1/6) share in the Sta. Cruz property had
been sold to Manuel Uy & Sons, Inc. for P500,000.00. The Bank
received this notice on December 15, 1958, and on the same day
endorsed it to Mrs. Butte, care of Delgado, Flores and Macapagal
(her attorneys), who received the same on December 16, 1958.
Mrs. Butte tendered redemption and upon the vendee's refusal,
judicially consigned the price of P500,000.00 on January 15,
1959. The latter date was the last one of the thirty days allowed
by the Code for the redemption, counted by excluding December
16, 1958 and including January 15, 1959, pursuant to Article 13
of the Civil Code. Therefore, the redemption was made in due
time.
The date of receipt of the vendor's notice by the Administrator
Bank (December 15) can not be counted as determining the start
of thirty days; for the Administrator of the estate was not a proper
redemptioner, since, as previously shown, the right to redeem the
share of Marie Garnier did not form part of the estate of Jose V.
Ramirez.
We find no jurisdiction for appellant's claim that the P500,000,00.
paid by Uy & Sons, Inc. for the Garnier share is grossly
excessive. Gross excess cannot be predicated on mere individual
estimates of market price by a single realtor.
The redemption and consignation having been properly made,
the Uy counterclaim for damages and attorney's fees predicated
on the assumption that plaintiff's action was clearly unfounded,
becomes untenable.

PREMISES CONSIDERED, the judgment appealed from is

hereby reversed and set aside, and another one entered:

(a) Declaring the consignation of P500,000,00 made by

appellant Angela M. Butte duly and properly made;

(b) Declaring that said appellant properly exercised in due

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

(c) Ordering appellant Manuel Uy & Sons, Inc. to accept

the consigned price and to convey to Angela M. Butte the
undivided portion above referred to, within 30 days from
the time our decision becomes final, and subsequently to
account for the rentals and fruits of the redeemed share
from and after January 15, 1958, until its conveyance;
and.

(d) Ordering the return of the records to the court of origin

for further proceedings conformable to this opinion.

Without finding as to costs.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion,

Barrera and Dizon, JJ., concur.
Paredes and De Leon, JJ., took no part.
G.R. No. 162784 June 22, 2007
NATIONAL HOUSING AUTHORITY, petitioner,
vs.
SEGUNDA ALMEIDA, COURT OF APPEALS, and RTC of SAN
PEDRO, LAGUNA, BR. 31, respondents.
DECISION
PUNO, C.J.:
This is a Petition for Review on Certiorari under Rule 45 filed by
the National Housing Authority (NHA) against the Court of
Appeals, the Regional Trial Court of San Pedro Laguna, Branch
31, and private respondent Segunda Almeida.
On June 28, 1959, the Land Tenure Administration (LTA)
awarded to Margarita Herrera several portions of land which are
part of the Tunasan Estate in San Pedro, Laguna. The award is
evidenced by an Agreement to Sell No. 3787.1 By virtue of
Republic Act No. 3488, the LTA was succeeded by the
Department of Agrarian Reform (DAR). On July 31, 1975, the
DAR was succeeded by the NHA by virtue of Presidential Decree
No. 757.2 NHA as the successor agency of LTA is the petitioner in
this case.
The records show that Margarita Herrera had two children:
Beatriz Herrera-Mercado (the mother of private respondent) and
Francisca Herrera. Beatriz Herrera-Mercado predeceased her
mother and left heirs.
Margarita Herrera passed away on October 27, 1971.3
On August 22, 1974, Francisca Herrera, the remaining child of
the late Margarita Herrera executed a Deed of Self-Adjudication
claiming that she is the only remaining relative, being the sole
surviving daughter of the deceased. She also claimed to be the
exclusive legal heir of the late Margarita Herrera.
The Deed of Self-Adjudication was based on a Sinumpaang
Salaysay dated October 7, 1960, allegedly executed by Margarita
Herrera. The pertinent portions of which are as follows:
SINUMPAANG SALAYSAY
SA SINO MAN KINAUUKULAN;
Akong si MARGARITA HERRERA, Filipina, may 83 taong
gulang, balo, kasalukuyang naninirahan at tumatanggap
ng sulat sa Nayon ng San Vicente, San Pedro Laguna, sa
ilalim ng panunumpa ay malaya at kusang loob kong
isinasaysay at pinagtitibay itong mga sumusunod:
1. Na ako ay may tinatangkilik na isang lagay na lupang
tirikan (SOLAR), tumatayo sa Nayon ng San Vicente, San
Pedro, Laguna, mayroong PITONG DAAN AT
PITUMPU'T ISANG (771) METRONG PARISUKAT ang
laki, humigit kumulang, at makikilala sa tawag na Lote 17,
Bloke 55, at pag-aari ng Land Tenure Administration;
2. Na ang nasabing lote ay aking binibile, sa
pamamagitan ng paghuhulog sa Land Tenure
Administration, at noong ika 30 ng Julio, 1959, ang
Kasunduang sa Pagbibile (AGREEMENT TO SELL No.
3787) ay ginawa at pinagtibay sa Lungsod ng Maynila, sa
harap ng Notario Publico na si G. Jose C. Tolosa, at
lumalabas sa kaniyang Libro Notarial bilang Documento
No. 13, Pagina No. 4; Libro No. IV, Serie ng 1959;
3. Na dahilan sa ako'y matanda na at walang ano mang
hanap buhay, ako ay nakatira at pinagsisilbihan nang
aking anak na si Francisca Herrera, at ang tinitirikan o
 solar na nasasabi sa unahan ay binabayaran ng kaniyang
sariling cuarta sa Land Tenure Administration;
4. Na alang-alang sa nasasaysay sa unahan nito,
sakaling ako'y bawian na ng Dios ng aking buhay, ang
lupang nasasabi sa unahan ay aking ipinagkakaloob sa
nasabi kong anak na FRANCISCA HERRERA, Filipina,
nasa katamtamang gulang, kasal kay Macario Berroya,
kasalukuyang naninirahan at tumatanggap ng sulat sa
Nayong ng San Vicente, San Pedro Laguna, o sa
kaniyang mga tagapagmana at;
5. Na HINIHILING KO sa sino man kinauukulan, na
sakaling ako nga ay bawian na ng Dios ng aking buhay ay
KILALANIN, IGALANG at PAGTIBAYIN ang nilalaman sa
pangalan ng aking anak na si Francisca Herrera ang
loteng nasasabi sa unahan.
SA KATUNAYAN NG LAHAT, ako ay nag-didiit ng
hinlalaki ng kanan kong kamay sa ibaba nito at sa
kaliwang gilid ng unang dahon, dito sa Lungsod ng
Maynila, ngayong ika 7 ng Octubre, 1960.4
The said document was signed by two witnesses and notarized.
The witnesses signed at the left-hand side of both pages of the
document with the said document having 2 pages in total.
Margarita Herrera placed her thumbmark5above her name in the
second page and at the left-hand margin of the first page of the
document.
The surviving heirs of Beatriz Herrera-Mercado filed a case for
annulment of the Deed of Self-Adjudication before the then Court
of First Instance of Laguna, Branch 1 in Binan, Laguna (now,
Regional Trial Court Branch 25). The case for annulment was
docketed as Civil Case No. B-1263.6
On December 29, 1980, a Decision in Civil Case No. B-1263
(questioning the Deed of Self-Adjudication) was rendered and the
deed was declared null and void.7
During trial on the merits of the case assailing the Deed of Self-
Adjudication, Francisca Herrera filed an application with the NHA
to purchase the same lots submitting therewith a copy of the
"Sinumpaang Salaysay" executed by her mother. Private
respondent Almeida, as heir of Beatriz Herrera-Mercado,
protested the application.
In a Resolution8 dated February 5, 1986, the NHA granted the
application made by Francisca Herrera, holding that:
From the evidence of the parties and the records of the
lots in question, we gathered the following facts: the lots
in question are portions of the lot awarded and sold to the
late Margarita Herrera on July 28, 1959 by the defunct
Land Tenure Administration; protestant is the daughter of
the late Beatriz Herrera Mercado who was the sister of
the protestee; protestee and Beatriz are children of the
late Margarita Herrera; Beatriz was the transferee from
Margarita of Lot Nos. 45, 46, 47, 48 and 49, Block 50; one
of the lots transferred to Beatriz, e.g. Lot 47, with an area
of 148 square meters is in the name of the protestant;
protestant occupied the lots in question with the
permission of the protestee; protestee is a resident of the
Tunasan Homesite since birth; protestee was born on the
lots in question; protestee left the place only after
marriage but resided in a lot situated in the same
Tunasan Homesite; her (protestee) son Roberto Herrera
has been occupying the lots in question; he has been
there even before the death of the late Margarita
Herrera; on October 7, 1960, Margarita Herrera
executed a "Sinumpaang Salaysay" whereby she
waived or transferred all her rights and interest over
the lots in question in favor of the protestee; and
 protestee had paid the lots in question in full on March 8,
1966 with the defunct Land Tenure Administration.
This Office finds that protestee has a better preferential right to
purchase the lots in question.9
Private respondent Almeida appealed to the Office of the
President.10 The NHA Resolution was affirmed by the Office of the
President in a Decision dated January 23, 1987.11
On February 1, 1987, Francisca Herrera died. Her heirs executed
an extrajudicial settlement of her estate which they submitted to
the NHA. Said transfer of rights was approved by the NHA.12 The
NHA executed several deeds of sale in favor of the heirs of
Francisca Herrera and titles were issued in their
favor.13 Thereafter, the heirs of Francisca Herrera directed
Segunda Mercado-Almeida to leave the premises that she was
occupying.
Feeling aggrieved by the decision of the Office of the President
and the resolution of the NHA, private respondent Segunda
Mercado-Almeida sought the cancellation of the titles issued in
favor of the heirs of Francisca. She filed a Complaint on February
8, 1988, for "Nullification of Government Lot's Award," with the
Regional Trial Court of San Pedro, Laguna, Branch 31.
In her complaint, private respondent Almeida invoked her forty-
year occupation of the disputed properties, and re-raised the fact
that Francisca Herrera's declaration of self-adjudication has been
adjudged as a nullity because the other heirs were disregarded.
The defendant heirs of Francisca Herrera alleged that the
complaint was barred by laches and that the decision of the
Office of the President was already final and executory.14 They
also contended that the transfer of purchase of the subject lots is
perfectly valid as the same was supported by a consideration and
that Francisca Herrera paid for the property with the use of her
own money.15 Further, they argued that plaintiff's occupation of
the property was by mere tolerance and that they had been
paying taxes thereon.16
The Regional Trial Court issued an Order dated June 14, 1988
dismissing the case for lack of jurisdiction.17 The Court of Appeals
in a Decision dated June 26, 1989 reversed and held that the
Regional Trial Court had jurisdiction to hear and decide the case
involving "title and possession to real property within its
jurisdiction."18 The case was then remanded for further
proceedings on the merits.
A pre-trial was set after which trial ensued.
On March 9, 1998, the Regional Trial Court rendered a Decision
setting aside the resolution of the NHA and the decision of the
Office of the President awarding the subject lots in favor of
Francisca Herrera. It declared the deeds of sale executed by
NHA in favor of Herrera's heirs null and void. The Register of
Deeds of Laguna, Calamba Branch was ordered to cancel the
Transfer Certificate of Title issued. Attorney's fees were also
awarded to private respondent.
The Regional Trial Court ruled that the "Sinumpaang Salaysay"
was not an assignment of rights but a disposition of property
which shall take effect upon death. It then held that the said
document must first be submitted to probate before it can transfer
property.
Both the NHA and the heirs of Francisca Herrera filed their
respective motions for reconsideration which were both denied on
July 21, 1998 for lack of merit. They both appealed to the Court of
Appeals. The brief for the heirs of Francisca Herrera was denied
admission by the appellate court in a Resolution dated June 14,
2002 for being a "carbon copy" of the brief submitted by the NHA
and for being filed seventy-nine (79) days late.
On August 28, 2003, the Court of Appeals affirmed the decision
of the Regional Trial Court, viz:
There is no dispute that the right to repurchase the
subject lots was awarded to Margarita Herrera in 1959.
There is also no dispute that Margarita executed a
"Sinumpaang Salaysay" on October 7, 1960. Defendant
NHA claims that the "Sinumpaang Salaysay" is, in effect,
a waiver or transfer of rights and interest over the subject
lots in favor of Francisca Herrera. This Court is disposed
to believe otherwise. After a perusal of the "Sinumpaang
Salaysay" of Margarita Herrera, it can be ascertained
from its wordings taken in their ordinary and grammatical
sense that the document is a simple disposition of her
estate to take effect after her death. Clearly the Court
finds that the "Sinumpaang Salaysay" is a will of
Margarita Herrera. Evidently, if the intention of Margarita
Herrera was to merely assign her right over the lots to her
daughter Francisca Herrera, she should have given her
"Sinumpaang Salaysay" to the defendant NHA or to
Francisca Herrera for submission to the defendant NHA
after the full payment of the purchase price of the lots or
even prior thereto but she did not. Hence it is apparent
that she intended the "Sinumpaang Salaysay" to be her
last will and not an assignment of rights as what the NHA
in its resolution would want to make it appear. The
intention of Margarita Herrera was shared no less by
Francisca Herrera who after the former's demise
executed on August 22, 1974 a Deed of Self-Adjudication
claiming that she is her sole and legal heir. It was only
when said deed was questioned in court by the surviving
heirs of Margarita Herrera's other daughter, Beatriz
Mercado, that Francisca Herrera filed an application to
purchase the subject lots and presented the "Sinumpaang
Salaysay" stating that it is a deed of assignment of
rights.19
The Court of Appeals ruled that the NHA acted arbitrarily in
awarding the lots to the heirs of Francisca Herrera. It upheld the
trial court ruling that the "Sinumpaang Salaysay" was not an
assignment of rights but one that involved disposition of property
which shall take effect upon death. The issue of whether it was a
valid will must first be determined by probate.
Petitioner NHA elevated the case to this Court.
Petitioner NHA raised the following issues:
A. WHETHER OR NOT THE RESOLUTION OF THE
NHA AND THE DECISION OF THE OFFICE OF THE
PRESIDENT HAVE ATTAINED FINALITY, AND IF SO,
WHETHER OR NOT THE PRINCIPLE OF
ADMINISTRATIVE RES JUDICATA BARS THE COURT
FROM FURTHER DETERMINING WHO BETWEEN THE
PARTIES HAS PREFERENTIAL RIGHTS FOR AWARD
OVER THE SUBJECT LOTS;
B. WHETHER OR NOT THE COURT HAS
JURISDICTION TO MAKE THE AWARD ON THE
SUBJECT LOTS; AND
C. WHETHER OR NOT THE AWARD OF THE SUBJECT
LOTS BY THE NHA IS ARBITRARY.
We rule for the respondents.
Res judicata is a concept applied in review of lower court
decisions in accordance with the hierarchy of courts. But
jurisprudence has also recognized the rule of administrative res
judicata: "the rule which forbids the reopening of a matter once
judicially determined by competent authority applies as well to the
judicial and quasi-judicial facts of public, executive or
administrative officers and boards acting within their jurisdiction
as to the judgments of courts having general judicial powers . . . It
has been declared that whenever final adjudication of persons
invested with power to decide on the property and rights of the
citizen is examinable by the Supreme Court, upon a writ of error
or a certiorari, such final adjudication may be pleaded as res
judicata."20 To be sure, early jurisprudence were already mindful
that the doctrine of res judicata cannot be said to apply
exclusively to decisions rendered by what are usually understood
as courts without unreasonably circumscribing the scope thereof
and that the more equitable attitude is to allow extension of the
defense to decisions of bodies upon whom judicial powers have
been conferred.
In Ipekdjian Merchandising Co., Inc. v. Court of Tax
Appeals,21 the Court held that the rule prescribing that
"administrative orders cannot be enforced in the courts in the
absence of an express statutory provision for that purpose" was
relaxed in favor of quasi-judicial agencies.
In fine, it should be remembered that quasi-judicial powers will
always be subject to true judicial power—that which is held by the
courts. Quasi-judicial power is defined as that power of
adjudication of an administrative agency for the "formulation of a
final order."22 This function applies to the actions, discretion and
similar acts of public administrative officers or bodies who are
required to investigate facts, or ascertain the existence of facts,
hold hearings, and draw conclusions from them, as a basis for
their official action and to exercise discretion of a judicial
nature.23 However, administrative agencies are not considered
courts, in their strict sense. The doctrine of separation of powers
reposes the three great powers into its three (3) branches—the
legislative, the executive, and the judiciary. Each department is
co-equal and coordinate, and supreme in its own sphere.
Accordingly, the executive department may not, by its own fiat,
impose the judgment of one of its agencies, upon the judiciary.
Indeed, under the expanded jurisdiction of the Supreme Court, it
is empowered to "determine whether or not there has been grave
abuse of discretion amounting to lack or excess of jurisdiction on
the part of any branch or instrumentality of the
Government."24 Courts have an expanded role under the 1987
Constitution in the resolution of societal conflicts under the grave
abuse clause of Article VIII which includes that duty to check
whether the other branches of government committed an act that
falls under the category of grave abuse of discretion amounting to
lack or excess of jurisdiction.25
Next, petitioner cites Batas Pambansa Blg. 129 or the Judiciary
Reorganization Act of 198026 where it is therein provided that the
Intermediate Appellate Court (now, Court of Appeals) shall
exercise the "exclusive appellate jurisdiction over all final
judgments, decisions, resolutions, orders or awards, of the
Regional Trial Courts and Quasi-Judicial agencies,
instrumentalities, boards or commissions, except those falling
within the jurisdiction of the Supreme Court in accordance with
the Constitution…"27 and contends that the Regional Trial Court
has no jurisdiction to rule over awards made by the NHA.
Well-within its jurisdiction, the Court of Appeals, in its decision of
August 28, 2003, already ruled that the issue of the trial court's
authority to hear and decide the instant case has already been
settled in the decision of the Court of Appeals dated June 26,
1989 (which has become final and executory on August 20, 1989
as per entry of judgment dated October 10, 1989).28 We find no
reason to disturb this ruling. Courts are duty-bound to put an end
to controversies. The system of judicial review should not be
misused and abused to evade the operation of a final and
executory judgment.29 The appellate court's decision becomes the
law of the case which must be adhered to by the parties by
reason of policy.30
Next, petitioner NHA contends that its resolution was grounded
on meritorious grounds when it considered the application for the
purchase of lots. Petitioner argues that it was the daughter
Francisca Herrera who filed her application on the subject lot; that
it considered the respective application and inquired whether she
had all the qualifications and none of the disqualifications of a
possible awardee. It is the position of the petitioner that private
respondent possessed all the qualifications and none of the
disqualifications for lot award and hence the award was not done
arbitrarily.
The petitioner further argues that assuming that the "Sinumpaang
Salaysay" was a will, it could not bind the NHA.31That, "insofar as
[the] NHA is concerned, it is an evidence that the subject lots
were indeed transferred by Margarita Herrera, the original
awardee, to Francisca Herrera was then applying to purchase the
same before it."32
We are not impressed. When the petitioner received the
"Sinumpaang Salaysay," it should have noted that the effectivity
of the said document commences at the time of death of the
author of the instrument; in her words "sakaling ako'y bawian na
ng Dios ng aking buhay…" Hence, in such period, all the interests
of the person should cease to be hers and shall be in the
possession of her estate until they are transferred to her heirs by
virtue of Article 774 of the Civil Code which provides that:
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.33
By considering the document, petitioner NHA should have noted
that the original applicant has already passed away. Margarita
Herrera passed away on October 27, 1971.34 The NHA issued its
resolution35 on February 5, 1986. The NHA gave due course to
the application made by Francisca Herrera without considering
that the initial applicant's death would transfer all her property,
rights and obligations to the estate including whatever interest
she has or may have had over the disputed properties. To the
extent of the interest that the original owner had over the
property, the same should go to her estate. Margarita Herrera
had an interest in the property and that interest should go to her
estate upon her demise so as to be able to properly distribute
them later to her heirs—in accordance with a will or by operation
of law.
The death of Margarita Herrera does not extinguish her interest
over the property. Margarita Herrera had an existing Contract to
Sell36 with NHA as the seller. Upon Margarita Herrera's demise,
this Contract to Sell was neither nullified nor revoked. This
Contract to Sell was an obligation on both parties—Margarita
Herrera and NHA. Obligations are transmissible.37 Margarita
Herrera's obligation to pay became transmissible at the time of
her death either by will or by operation of law.
If we sustain the position of the NHA that this document is not a
will, then the interests of the decedent should transfer by virtue of
an operation of law and not by virtue of a resolution by the NHA.
For as it stands, NHA cannot make another contract to sell to
other parties of a property already initially paid for by the
decedent. Such would be an act contrary to the law on
succession and the law on sales and obligations.38
When the original buyer died, the NHA should have considered
the estate of the decedent as the next "person"39likely to stand in
to fulfill the obligation to pay the rest of the purchase price. The
opposition of other heirs to the repurchase by Francisca Herrera
should have put the NHA on guard as to the award of the lots.
Further, the Decision in the said Civil Case No. B-1263
(questioning the Deed of Self-Adjudication) which rendered the
deed therein null and void40 should have alerted the NHA that
there are other heirs to the interests and properties of the
decedent who may claim the property after a testate or intestate
proceeding is concluded. The NHA therefore acted arbitrarily in
the award of the lots.
We need not delve into the validity of the will. The issue is for the
probate court to determine. We affirm the Court of Appeals and
the Regional Trial Court which noted that it has an element of
testamentary disposition where (1) it devolved and transferred
property; (2) the effect of which shall transpire upon the death of
the instrument maker.41

IN VIEW WHEREOF, the petition of the National Housing

Authority is DENIED. The decision of the Court of Appeals in CA-
G.R. No. 68370 dated August 28, 2003, affirming the decision of
the Regional Trial Court of San Pedro, Laguna in Civil Case No.
B-2780 dated March 9, 1998, is hereby AFFIRMED.

No cost.

SO ORDERED.
 [G.R. No. L-8437. November 28, 1956.]
ESTATE OF K. H. HEMADY, deceased, vs. LUZON SURETY CO., INC.,
claimant-Appellant.
DECISION
REYES, J. B. L., J.:
Appeal by Luzon Surety Co., Inc., from an order of the Court of First
Instance of Rizal, presided by Judge Hermogenes Caluag, dismissing
its claim against the Estate of K. H. Hemady (Special Proceeding No.
Q-293) for failure to state a cause of action.
The Luzon Surety Co. had filed a claim against the Estate based on
twenty different indemnity agreements, or counter bonds, each
subscribed by a distinct principal and by the deceased K. H. Hemady,
a surety solidary guarantor) in all of them, in consideration of the
Luzon Surety Co.’s of having guaranteed, the various principals in
favor of different creditors. The twenty counterbonds, or indemnity
agreements, all contained the following stipulations:
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“Premiums. — As consideration for this suretyship, the undersigned
jointly and severally, agree to pay the COMPANY the sum of
________________ (P______) pesos, Philippines Currency, in
advance as premium there of for every __________ months or
fractions thereof, this ________ or any renewal or substitution
thereof is in effect.
Indemnity. — The undersigned, jointly and severally, agree at all
times to indemnify the COMPANY and keep it indemnified and hold
and save it harmless from and against any and all damages, losses,
costs, stamps, taxes, penalties, charges, and expenses of whatsoever
kind and nature which the COMPANY shall or may, at any time sustain
or incur in consequence of having become surety upon this bond or
any extension, renewal, substitution or alteration thereof made at
the instance of the undersigned or any of them or any order executed
on behalf of the undersigned or any of them; and to pay, reimburse
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and make good to the COMPANY, its successors and assigns, all sums
and amount of money which it or its representatives shall pay or
cause to be paid, or become liable to pay, on account of the
undersigned or any of them, of whatsoever kind and nature, including
15% of the amount involved in the litigation or other matters growing
out of or connected therewith for counsel or attorney’s fees, but in
no case less than P25. It is hereby further agreed that in case of
extension or renewal of this ________ we equally bind ourselves for
the payment thereof under the same terms and conditions as above
mentioned without the necessity of executing another indemnity
agreement for the purpose and that we hereby equally waive our
right to be notified of any renewal or extension of this ________
which may be granted under this indemnity agreement.
Interest on amount paid by the Company. — Any and all sums of
money so paid by the company shall bear interest at the rate of
12% per annum which interest, if not paid, will be accummulated
and added to the capital quarterly order to earn the same interests
as the capital and the total sum thereof, the capital and interest, shall
be paid to the COMPANY as soon as the COMPANY shall have become
liable therefore, whether it shall have paid out such sums of money
or any part thereof or not.
xxx xxx xxx
Waiver. — It is hereby agreed upon by and between the undersigned
that any question which may arise between them by reason of this
document and which has to be submitted for decision to Courts of
Justice shall be brought before the Court of competent jurisdiction in
the City of Manila, waiving for this purpose any other venue. Our right
to be notified of the acceptance and approval of this indemnity
agreement is hereby likewise waived.
xxx xxx xxx
Our Liability Hereunder. — It shall not be necessary for the COMPANY
to bring suit against the principal upon his default, or to exhaust the
property of the principal, but the liability hereunder of the
undersigned indemnitor shall be jointly and severally, a primary one,
the same as that of the principal, and shall be exigible immediately
upon the occurrence of such default.” (Rec. App. pp. 98- 102.)
The Luzon Surety Co., prayed for allowance, as a contingent claim, of
the value of the twenty bonds it had executed in consideration of the
counterbonds, and further asked for judgment for the unpaid
premiums and documentary stamps affixed to the bonds, with 12 per
cent interest thereon.
Before answer was filed, and upon motion of the administratrix of
Hemady’s estate, the lower court, by order of September 23, 1953,
dismissed the claims of Luzon Surety Co., on two grounds: (1) that
the premiums due and cost of documentary stamps were not
contemplated under the indemnity agreements to be a part of the
undertaking of the guarantor (Hemady), since they were not liabilities
incurred after the execution of the counterbonds; and (2) that
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“whatever losses may occur after Hemady’s death, are not
chargeable to his estate, because upon his death he ceased to be
guarantor.”
Taking up the latter point first, since it is the one more far reaching in
effects, the reasoning of the court below ran as follows:
“The administratrix further contends that upon the death of Hemady,
his liability as a guarantor terminated, and therefore, in the absence
of a showing that a loss or damage was suffered, the claim cannot be
considered contingent. This Court believes that there is merit in this
contention and finds support in Article 2046 of the new Civil Code. It
should be noted that a new requirement has been added for a person
to qualify as a guarantor, that is: integrity. As correctly pointed out
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by the Administratrix, integrity is something purely personal and is
not transmissible. Upon the death of Hemady, his integrity was not
transmitted to his estate or successors. Whatever loss therefore, may
occur after Hemady’s death, are not chargeable to his estate because
upon his death he ceased to be a guarantor.
Another clear and strong indication that the surety company has
exclusively relied on the personality, character, honesty and integrity
of the now deceased K. H. Hemady, was the fact that in the printed
form of the indemnity agreement there is a paragraph entitled
‘Security by way of first mortgage, which was expressly waived and
renounced by the security company. The security company has not
demanded from K. H. Hemady to comply with this requirement of
giving security by way of first mortgage. In the supporting papers of
the claim presented by Luzon Surety Company, no real property was
mentioned in the list of properties mortgaged which appears at the
back of the indemnity agreement.” (Rec. App., pp. 407-408).
chanroblesvirtuallawlibrary We find this reasoning untenable. Under the present Civil Code
(Article 1311), as well as under the Civil Code of 1889 (Article 1257),
the rule is that —
“Contracts take effect only as between the parties, their assigns and
heirs, except in the case where the rights and obligations arising from
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the contract are not transmissible by their nature, or by stipulation
or by provision of law.”
While in our successional system the responsibility of the heirs for
the debts of their decedent cannot exceed the value of the
inheritance they receive from him, the principle remains intact that
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these heirs succeed not only to the rights of the deceased but also to
his obligations. Articles 774 and 776 of the New Civil Code (and
Articles 659 and 661 of the preceding one) expressly so provide,
thereby confirming Article 1311 already quoted.
“ART. 774. — Succession is a mode of acquisition by virtue of which
the property, rights and obligations to the extent of the value of the
inheritance, of a person are transmitted through his death to another
or others either by his will or by operation of law.”
“ART. 776. — The inheritance includes all the property, rights and
obligations of a person which are not extinguished by his death.”
In Mojica vs. Fernandez, 9 Phil. 403, this Supreme Court ruled:
chanroblesvirtuallawlibrary
“Under the Civil Code the heirs, by virtue of the rights of succession
are subrogated to all the rights and obligations of the deceased
(Article 661) and cannot be regarded as third parties with respect to
a contract to which the deceased was a party, touching the estate of
the deceased (Barrios vs. Dolor, 2 Phil. 44).
xxx xxx xxx
“The principle on which these decisions rest is not affected by the
provisions of the new Code of Civil Procedure, and, in accordance
with that principle, the heirs of a deceased person cannot be held to
be “third persons” in relation to any contracts touching the real
estate of their decedent which comes in to their hands by right of
inheritance; they take such property subject to all the obligations
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resting thereon in the hands of him from whom they derive their
rights.”
(See also Galasinao vs. Austria, 51 Off. Gaz. (No. 6) p. 2874 and de
Guzman vs. Salak, 91 Phil., 265).
The binding effect of contracts upon the heirs of the deceased party
is not altered by the provision in our Rules of Court that money debts
of a deceased must be liquidated and paid from his estate before the
residue is distributed among said heirs (Rule 89). The reason is that
whatever payment is thus made from the estate is ultimately a
payment by the heirs and distributees, since the amount of the paid
claim in fact diminishes or reduces the shares that the heirs would
have been entitled to receive.
Under our law, therefore, the general rule is that a 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. The transition is marked by the
disappearance of the imprisonment for debt.
Of the three exceptions fixed by Article 1311, the nature of the
obligation of the surety or guarantor does not warrant the conclusion
that his peculiar individual qualities are contemplated as a principal
inducement for the contract. What did the creditor Luzon Surety Co.
expect of K. H. Hemady when it accepted the latter as surety in the
counterbonds? Nothing but the reimbursement of the moneys that
the Luzon Surety Co. might have to disburse on account of the
obligations of the principal debtors. This reimbursement is a payment
of a sum of money, resulting from an obligation to give; and to the
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Luzon Surety Co., it was indifferent that the reimbursement should
be made by Hemady himself or by some one else in his behalf, so long
as the money was paid to it.
The second exception of Article 1311, p. 1, is intransmissibility by
stipulation of the parties. Being exceptional and contrary to the
general rule, this intransmissibility should not be easily implied, but
must be expressly established, or at the very least, clearly inferable
from the provisions of the contract itself, and the text of the
agreements sued upon nowhere indicate that they are non-
transferable.
“(b) Intransmisibilidad por pacto. — Lo general es la transmisibilidad
de darechos y obligaciones; le excepcion, la intransmisibilidad.
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Mientras nada se diga en contrario impera el principio de la
transmision, como elemento natural a toda relacion juridica, salvo las
personalisimas. Asi, para la no transmision, es menester el pacto
expreso, porque si no, lo convenido entre partes trasciende a sus
herederos.
Siendo estos los continuadores de la personalidad del causante,
sobre ellos recaen los efectos de los vinculos juridicos creados por sus
antecesores, y para evitarlo, si asi se quiere, es indespensable
convension terminante en tal sentido.
Por su esencia, el derecho y la obligacion tienden a ir más allá de las
personas que les dieron vida, y a ejercer presion sobre los sucesores
de esa persona; cuando no se quiera esto, se impone una
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The lower court sought to infer such a limitation from Art. 2056, to
the effect that “one who is obliged to furnish a guarantor must
present a person who possesses integrity, capacity to bind himself,
and sufficient property to answer for the obligation which he
guarantees”. It will be noted, however, that the law requires these
qualities to be present only at the time of the perfection of the
contract of guaranty. It is self-evident that once the contract has
become perfected and binding, the supervening incapacity of the
guarantor would not operate to exonerate him of the eventual
liability he has contracted; and if that be true of his capacity to bind
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estipulacion limitativa expresamente de la transmisibilidad o de
cuyos tirminos claramente se deduzca la concresion del concreto a
las mismas personas que lo otorgon.” (Scaevola, Codigo Civil, Tomo
XX, p. 541-542) (Emphasis supplied.)
himself, it should also be true of his integrity, which is a quality
mentioned in the article alongside the capacity.
The foregoing concept is confirmed by the next Article 2057, that runs
as follows: chanroblesvirtuallawlibrary

Because under the law (Article 1311), a person who enters into a
“ART. 2057. — If the guarantor should be convicted in first instance
contract is deemed to have contracted for himself and his heirs and
of a crime involving dishonesty or should become insolvent, the
assigns, it is unnecessary for him to expressly stipulate to that effect;
creditor may demand another who has all the qualifications required
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hence, his failure to do so is no sign that he intended his bargain to

in the preceding article. The case is excepted where the creditor has
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terminate upon his death. Similarly, that the Luzon Surety Co., did not
required and stipulated that a specified person should be guarantor.”
require bondsman Hemady to execute a mortgage indicates nothing
more than the company’s faith and confidence in the financial From this article it should be immediately apparent that the
stability of the surety, but not that his obligation was strictly personal. supervening dishonesty of the guarantor (that is to say, the
disappearance of his integrity after he has become bound) does not
The third exception to the transmissibility of obligations under Article
terminate the contract but merely entitles the creditor to demand a
1311 exists when they are “not transmissible by operation of law”.
replacement of the guarantor. But the step remains optional in the
The provision makes reference to those cases where the law
creditor: it is his right, not his duty; he may waive it if he
expresses that the rights or obligations are extinguished by death, as
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is the case in legal support (Article 300), parental authority (Article
327), usufruct (Article 603), contracts for a piece of work (Article
1726), partnership (Article 1830 and agency (Article 1919). By
contract, the articles of the Civil Code that regulate guaranty or
suretyship (Articles 2047 to 2084) contain no provision that the
guaranty is extinguished upon the death of the guarantor or the
surety.
chooses, and hold the guarantor to his bargain. Hence Article 2057 of
the present Civil Code is incompatible with the trial court’s stand that
the requirement of integrity in the guarantor or surety makes the
latter’s undertaking strictly personal, so linked to his individuality
that the guaranty automatically terminates upon his death.
The contracts of suretyship entered into by K. H. Hemady in favor of
Luzon Surety Co. not being rendered intransmissible due to the
nature of the undertaking, nor by the stipulations of the contracts
themselves, nor by provision of law, his eventual liability thereunder The foregoing ruling is of course without prejudice to the remedies
necessarily passed upon his death to his heirs. The contracts, of the administratrix against the principal debtors under Articles 2071
therefore, give rise to contingent claims provable against his estate and 2067 of the New Civil Code.
under section 5, Rule 87 (2 Moran, 1952 ed., p. 437; Gaskell & Co.
Our conclusion is that the solidary guarantor’s liability is not
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vs. Tan Sit, 43 Phil. 810, 814).

extinguished by his death, and that in such event, the Luzon Surety
“The most common example of the contigent claim is that which Co., had the right to file against the estate a contingent claim for
arises when a person is bound as surety or guarantor for a principal reimbursement. It becomes unnecessary now to discuss the estate’s
who is insolvent or dead. Under the ordinary contract of suretyship liability for premiums and stamp taxes, because irrespective of the
the surety has no claim whatever against his principal until he himself solution to this question, the Luzon Surety’s claim did state a cause
pays something by way of satisfaction upon the obligation which is of action, and its dismissal was erroneous.
secured. When he does this, there instantly arises in favor of the
Wherefore, the order appealed from is reversed, and the records are
surety the right to compel the principal to exonerate the surety. But
ordered remanded to the court of origin, with instructions to proceed
until the surety has contributed something to the payment of the
in accordance with law. Costs against the
debt, or has performed the secured obligation in whole or in part, he
Administratrix- Appellee. SO ORDERED.
has no right of action against anybody — no claim that could be
reduced to judgment. (May vs. Vann, 15 Pla., 553; Gibson vs. chan roblesvirtualawlibrary
Paras, C.J., Bengzon, Padilla, Montemayor, Bautista Angelo,
Mithell, 16 Pla., 519; Maxey vs. Carter, 10 Yarg. [Tenn.], 521 Reeves
chan roblesvirtualawlibrary
Labrador, Concepcion, Endencia and Felix, JJ., concur.
vs. Pulliam, 7 Baxt. [Tenn.], 119; Ernst vs. Nou, 63 Wis., 134.)” chan roble svirtualawlibrary

For Defendant administratrix it is averred that the above doctrine

refers to a case where the surety files claims against the estate of the
principal debtor; and it is urged that the rule does not apply to the
chan roblesvirtualawlibrary

case before us, where the late Hemady was a surety, not a principal
debtor. The argument evinces a superficial view of the relations
between parties. If under the Gaskell ruling, the Luzon Surety Co., as
guarantor, could file a contingent claim against the estate of the
principal debtors if the latter should die, there is absolutely no reason
why it could not file such a claim against the estate of Hemady, since
Hemady is a solidary co-debtor of his principals. What the Luzon
Surety Co. may claim from the estate of a principal debtor it may
equally claim from the estate of Hemady, since, in view of the existing
solidarity, the latter does not even enjoy the benefit of exhaustion of
the assets of the principal debtor.
G.R. No. 109972 April 29, 1996
ZOSIMA VERDAD, petitioner,
vs.
THE HON. COURT OF APPEALS, SOCORRO C. ROSALES,
AURORA ROSALES, NAPOLEON ROSALES, ANTONIO
ROSALES, FLORENDA ROSALES, ELENA ROSALES AND
VIRGINIA ROSALES, respondents.
VITUG, J.:p
The petitioner, Zosima Verdad, is the purchaser of a 248-square meter residential lot
(identified to be Lot No. 529, Ts-65 of the Butuan Cadastre, located along Magallanes
Street, now Marcos M. Calo St., Butuan City). Private respondent, Socorro Cordero Vda. de
Rosales, seeks to exercise a right of legal redemption over the subject property and traces
her title to the late Macaria Atega, her mother-in-law, who died intestate on 08 March 1956.
During her lifetime, Macaria contracted two marriages: the first
with Angel Burdeos and the second, following the latter's death,
with Canuto Rosales. At the time of her own death, Macaria was
survived by her son Ramon A. Burdeos and her grandchild (by
her daughter Felicidad A. Burdeos) Estela Lozada of the first
marriage and her children of the second marriage, namely, David
Rosales, Justo Rosales, Romulo Rosales, and Aurora Rosales.
Socorro Rosales is the widow of David Rosales who himself,
some time after Macaria's death, died intestate without an issue.
In an instrument, dated 14 June 1982, the heirs of Ramon
Burdeos, namely, his widow Manuela Legaspi Burdeos and
children Felicidad and Ramon, Jr., sold to petitioner Zosima
Verdad (their interest on) the disputed lot supposedly for the price
of P55,460.00. In a duly notarized deed of sale, dated 14
November 1982, it would appear, however, that the lot was sold
for only P23,000.00. Petitioner explained that the second deed
was intended merely to save on the tax on capital gains.
Socorro discovered the sale on 30 March 1987 while she was at
the City Treasurer's Office. On 31 March 1987, she sought the
intervention of the Lupong Tagapayapa of Barangay 9, Princess
Urduja, for the redemption of the property. She tendered the sum
of P23,000.00 to Zosima. The latter refused to accept the amount
for being much less than the lot's current value of P80,000.00. No
settlement having been reached before the Lupong Tagapayapa,
private respondents, on 16 October 1987, initiated against
petitioner an action for "Legal Redemption with Preliminary
Injunction" before the Regional Trial Court of Butuan City.
On 29 June 1990, following the reception of evidence, the trial
court handed down its decision holding, in fine, that private
respondents' right to redeem the property had already lapsed.
An appeal to the Court of Appeals was interposed by private
respondents. The appellate court, in its decision of 22 April 1993,
reversed the court a quo; thus:
WHEREFORE, premises considered, the
judgment appealed from is hereby REVERSED,
and a new one is accordingly entered declaring
plaintiff-appellant, Socorro C. Rosales, entitled to
redeem the inheritance rights (Art. 1088, NCC)
or pro indiviso share (Art. 1620, NCC) of the Heirs
of Ramon Burdeos, Sr. in Lot 529, Ts-65 of the
Butuan Cadastre, within the remaining ELEVEN
(11) DAYS from finality hereon, unless written
notice of the sale and its terms are received in the
interim, under the same terms and conditions
appearing under Exhibit "J" and after returning the
purchase price of P23,000.00 within the foregoing
period. No cost.1
In her recourse to this Court, petitioner assigned the following
"errors:" That —
 The Honorable Court of Appeals erred in
declaring Socorro C. Rosales is entitled to redeem
the inheritance rights (Article 1088, NCC) or pro-
indiviso share (Article 1620, NCC) of the heirs of
Ramon Burdeos, Sr. in Lot 529, Ts-65 of the
Butuan Cadastre, for being contrary to law and
evidence.
The Honorable Court of Appeals erred in ignoring
the peculiar circumstance, in that, the
respondents' actual knowledge, as a factor in the
delay constitutes laches.
The Honorable Court of Appeals erred in
concluding that Socorro C. Rosales, in effect,
timely exercised the right of legal redemption
when referral to Barangay by respondent signifies
bona fide intention to redeem and; that,
redemption is properly made even if there is no
offer of redemption in legal tender.
The Honorable Court of Appeals erred in ruling
that the running of the statutory redemption period
is stayed upon commencement of Barangay
proceedings.2
Still, the thrust of the petition before us is the alleged incapacity of
private respondent Socorro C. Rosales to redeem the property,
she being merely the spouse of David Rosales, a son of Macaria,
and not being a co-heir herself in the intestate estate of Macaria.
We rule that Socorro can. It is true that Socorro, a daughter-in-
law (or, for that matter, a mere relative by affinity), is not an
intestate heir of her parents-in-law;3 however, Socorro's right to
the property is not because she rightfully can claim heirship in
Macaria's estate but that she is a legal heir of her husband, David
Rosales, part of whose estate is a share in his mother's
inheritance.
David Rosales, incontrovertibly, survived his mother's death.
When Macaria died on 08 March 1956 her estate passed on to
her surviving children, among them David Rosales, who
thereupon became co-owners of the property. When David
Rosales himself later died, his own estate, which included
his undivided interest over the property inherited from Macaria,
passed on to his widow Socorro and her co-heirs pursuant to the
law on succession.
Art. 995. In the absence of legitimate descendants
and ascendants, and illegitimate children and their
descendants, whether legitimate or illegitimate,
the surviving spouse shall inherit the entire estate,
without prejudice to the rights of brothers and
sisters, nephews and nieces, should there be any,
under article 1001.
xxx xxx xxx
Art. 1001. Should brothers and sisters or their
children survive with the widow or widower, the
latter shall be entitled to one-half of the
inheritance and the brothers and sisters or their
children to the other half.4
Socorro and herein private respondents, along with the
co-heirs of David Rosales, thereupon became co-
owners of the property that originally descended from
Macaria.
When their interest in the property was sold by the Burdeos heirs
to petitioner, a right of redemption arose in favor of private
respondents; thus:
 Art. 1619. Legal redemption is the right to be
subrogated, upon the same terms and conditions
stipulated in the contract, in the place of one who
acquires a thing by purchase or dation in
payment, or by any other transaction whereby
ownership is transmitted by onerous title.
Art. 1620. A co-owner of a thing may exercise the
right of redemption in case the shares of all the
other co-owners or of any of them, are sold to a
third person. If the price of the alienation is grossly
excessive, the redemptioner shall pay only a
reasonable one.
We hold that the right of redemption was timely exercised by
private respondents. Concededly, no written notice of the sale
was given by the Burdeos heirs (vendors) to the co-
owners5 required under Article 1623 of the Civil
Code —
Art. 1623. The right of legal pre-emption or
redemption shall not be exercised except within
thirty days from the notice in writing by the
prospective vendor, or by the vendor, as the case
may be. The deed of safe shall not be recorded in
the Registry of Property, unless accompanied by
an affidavit of the vendor that he has given written
notice thereof to all possible redemptioners.
Hence, the thirty-day period of redemption had yet to
commence when private respondent Rosales sought to
exercise the right of redemption on 31 March 1987, a day
after she discovered the sale from the Office of the City
Treasurer of Butuan City, or when the case was initiated,
on 16 October 1987, before the trial court.
The written notice of sale is mandatory. This Court has long
established the rule that notwithstanding actual knowledge of a
co-owner, the latter is still entitled to a written notice from the
selling co-owner in order to remove all uncertainties about the
sale, its terms and conditions, as well as its efficacy and status.6
Even in Alonzo vs. Intermediate Appellate Court,7 relied upon by
petitioner in contending that actual knowledge should be an
equivalent to a written notice of sale, the Court made it clear that
it was not reversing the prevailing jurisprudence; said the Court:
We realize that in arriving at our conclusion today,
we are deviating from the strict letter of the law,
which the respondent court understandably
applied pursuant to existing jurisprudence. The
said court acted properly as it had no competence
to reverse the doctrines laid down by this Court in
the above-cited cases. In fact, and this should be
clearly stressed, we ourselves are not abandoning
the De Conejero and Buttle doctrines. What we
are doing simply is adopting an exception to the
general rule, in view of the peculiar circumstances
of this case.8
In Alonzo, the right of legal redemption was invoked
several years, not just days or months, after the
consummation of the contracts of sale. The complaint for
legal redemption itself was there filed more than thirteen
years after the sales were concluded.
Relative to the question posed by petitioner on private
respondents' tender of payment, it is enough that we quote, with
approval, the appellate court; viz.:
In contrast, records dearly show that an amount
was offered, as required in Sempio vs. Del
Rosario, 44 Phil. 1 and Daza vs. Tomacruz, 58
 Phil. 414, by the redemptioner-appellant during
the barangay conciliation proceedings (Answer,
par. 8) but was flatly rejected by the appellee, not
on the ground that it was not the purchase price
(though it appeared on the face of the deed of
sale, Exh. "J-1"), nor that it was offered as partial
payment thereof, but rather that it was

All given, we find no error in the appellate court's finding that

private respondents are entitled to the redemption of the subject
property.

WHEREFORE, the petition is DENIED and the assailed decision

of the Court of Appeals is AFFIRMED. Costs against petitioner.

SO ORDERED.
 G.R. No. L-770 April 27, 1948
ANGEL T. LIMJOCO, Petitioner, vs. INTESTATE
ESTATE OF PEDRO O. FRAGRANTE,
deceased, Respondent.
Angel Limjoco, Jr. and Delfin L. Gonzales for
petitioner.
Bienvenido A. Tan for respondent.
HILADO, J.:
Under date of May 21, 1946, the Public Service
Commission, through Deputy Commissioner Fidel
Ibañez, rendered its decision in case No. 4572 of
Pedro O. Fragante, as applicant for a certificate of
public convenience to install, maintain and
operate an ice plant in San Juan, Rizal, whereby
said commission held that the evidence therein
showed that the public interest and convenience
will be promoted in a proper and suitable manner
"by authorizing the operation and maintenance of
another ice plant of two and one-half (2-�) tons
in the municipality of San Juan; that the original
applicant Pedro O. Fragante was a Filipino Citizen
at the time of his death; and that his intestate
estate is financially capable of maintaining the
proposed service". The commission, therefore,
overruled the opposition filed in the case and
ordered "that under the provisions of section 15
of Commonwealth Act No. 146, as amended a
certificate of public convenience be issued to the
Intestate Estate of the deceased Pedro Fragante,
authorizing said Intestate Estate through its
Special or Judicial Administrator, appointed by the
proper court of competent jurisdiction, to
maintain and operate an ice plant with a daily
productive capacity of two and one-half (2-1/2)
tons in the Municipality of San Juan and to sell the
ice produced from said plant in the said
Municipality of San Juan and in the Municipality of
Mandaluyong, Rizal, and in Quezon City", subject
to the conditions therein set forth in detail
(petitioner's brief, pp. 33-34). chan roble svirtualawl ibra ry c han robles v irt ual law li bra ry
Petitioner makes four assignments of error in his
brief as follows:
1. The decision of the Public Service Commission
is not in accordance with law. c hanroblesv irt ualawli bra rychan rob les vi rtual law lib rary
2. The decision of the Public Service Commission
is not reasonably supported by evidence. chanro blesvi rt ualawlib ra ry cha nrob les vi rtua l law lib rary
3. The Public Service Commission erred in not
giving petitioner and the Ice and Cold Storage
Industries of the Philippines, Inc., as existing
operators, a reasonable opportunity to meet the
increased demand. chan roble svi rtu alawlibra ry c han robles v irt ual law li bra ry
4. The decision of the Public Service Commission
is an unwarranted departure from its announced
policy with respect to the establishment and
operation of ice plant. (Pp. 1-2, petitioner's brief.)
In his argument petitioner contends that it was
error on the part of the commission to allow the
substitution of the legal representative of the
estate of Pedro O. Fragante for the latter as party
applicant in the case then pending before the
commission, and in subsequently granting to said
estate the certificate applied for, which is said to
be in contravention of law.cha nrob lesvi rtua lawlib rary
If Pedro O. Fragante had not died, there can be
no question that he would have had the right to
prosecute his application before the commission
to its final conclusion. No one would have denied
him that right. As declared by the commission in
its decision, he had invested in the ice plant in
question P 35,000, and from what the commission
said regarding his other properties and business,
he would certainly have been financially able to
maintain and operate said plant had he not died.
His transportation business alone was netting him
about P1,440 a month. He was a Filipino citizen
and continued to be such till his demise. The
commission declared in its decision, in view of the
evidence before it, that his estate was financially
able to maintain and operate the ice plant. The
aforesaid right of Pedro O. Fragante to prosecute
said application to its conclusion was one which
by its nature did not lapse through his death.
Hence, it constitutes a part of the assets of his
estate, for which a right was property despite the
possibility that in the end the commission might
have denied application, although under the facts
chan roble s virtual law lib rary
of the case, the commission granted the
application in view of the financial ability of the
estate to maintain and operate the ice plant.
Petitioner, in his memorandum of March 19, 1947,
admits (page 3) that the certificate of public
convenience once granted "as a rule, should
descend to his estate as an asset". Such
certificate would certainly be property, and the
right to acquire such a certificate, by complying
with the requisites of the law, belonged to the
decedent in his lifetime, and survived to his estate
and judicial administrator after his death.
cha nrob lesvi rtua lawlib rary chan roble s virtual law l ib rary
If Pedro O. Fragrante had in his lifetime secured
an option to buy a piece of land and during the
life of the option he died, if the option had been
given him in the ordinary course of business and
not out of special consideration for his person,
there would be no doubt that said option and the
right to exercise it would have survived to his
estate and legal representatives. In such a case
there would also be the possibility of failure to
acquire the property should he or his estate or
legal representative fail to comply with the
conditions of the option. In the case at bar Pedro
O. Fragrante's undoubted right to apply for and
acquire the desired certificate of public
convenience - the evidence established that the
public needed the ice plant - was under the law
conditioned only upon the requisite citizenship
and economic ability to maintain and operate the
service. Of course, such right to acquire or obtain
such certificate of public convenience was subject
to failure to secure its objective through
nonfulfillment of the legal conditions, but the
situation here is no different from the legal
standpoint from that of the option in the
illustration just given.
Rule 88, section 2, provides that the executor or
administrator may bring or defend actions, among
other cases, for the protection of the property or
rights of the deceased which survive, and it says
that such actions may be brought or defended "in
the right of the deceased".
Rule 82, section 1, paragraph (a), mentions
among the duties of the executor or
administrator, the making of an inventory of all
goods, chattels, rights, credits, and estate of the
deceased which shall come to his possession or
knowledge, or to the possession of any other
person for him. c hanro blesvi rt ualawlib ra ry cha nrob les vi rtual law li brary
In his commentaries on the Rules of Court
(Volume II, 2nd ed., pages 366, 367) the present
chief Justice of this Court draws the following
conclusion from the decisions cited by him:
Therefore, unless otherwise expressly provided by
law, any action affecting the property
or rights (emphasis supplied) of a deceased
person which may be brought by or against him if
he were alive, may likewise be instituted and
cha nrob lesvi rtua lawlib rary
chan roble s virtual law l ib rary
chanro blesvi rt ualawlib ra ry
cha nrob les vi rtual law lib rary
prosecuted by or against the administrator, unless
the action is for recovery of money, debt or
interest thereon, or unless, by its very nature, it
cannot survive, because death extinguishes the
right . . . .
It is true that a proceeding upon the application
for a certificate of public convenience before the
Public Service Commission is not an "action". But
the foregoing provisions and citations go to prove
that the decedent's rights which by their nature
are not extinguished by death go to make up a
part and parcel of the assets of his estate which,
being placed under the control and management
of the executor or administrator, can not be
exercised but by him in representation of the
estate for the benefit of the creditors, devisees or
legatees, if any, and the heirs of the decedent.
And if the right involved happens to consist in the
prosecution of an unfinished proceeding upon an
application for a certificate of public convenience
of the deceased before the Public Service
Commission, it is but logical that the legal
representative be empowered and entitled in
behalf of the estate to make the right effective in
that proceeding. c hanroblesv irt ualawli bra ry cha nrob les virtua l law lib rary
Manresa (Vol. III, 6th ed., p. 11) says that No. 10
of article 334 and article 336 of the Civil Code,
respectively, consider as immovable and movable
things rights which are not material. The same
eminent commentator says in the cited volume
(p. 45) that article 336 of the Civil Code has been
deficiently drafted in that it is not sufficiently
expressive of all incorporeal rights which are
also property for juridical purposes.
Corpus Juris (Vol. 50, p. 737) states that in the
broad sense of the term, property includes,
among other things, "an option", and "the
certificate of the railroad commission permitting
the operation of a bus line", and on page 748 of
the same volume we read:
However, these terms (real property, as estate or
interest) have also been declared to include every
species of title, inchoate or complete, and
embrace rights which lie in contract, whether
executory or executed. (Emphasis supplied.)
Another important question raised by petitioner is
whether the estate of Pedro O. Fragrante is a
"person" within the meaning of the Public Service
Act.chan roble svirtualawl ibra ry c hanro bles vi rt ual law li bra ry
Words and Phrases, First Series, (Vol. 6, p, 5325),
states the following doctrine in the jurisdiction of
the State of Indiana:
As the estate of the decedent is in law regarded
as a person, a forgery committed after the death
of the man whose name purports to be signed to
the instrument may be prosecuted as with the
intent to defraud the estate. Billings vs. State,
chan roble svirtualawl ibra ry
107 Ind., 54, 55, 6 N. E. 914, 7 N. E. 763, 57 Am.
Rep. 77.
c han robles v irt ual law libra ry
The Supreme Court of Indiana in the decision
cited above had before it a case of forgery
committed after the death of one Morgan for the
purpose of defrauding his estate. The objection
was urged that the information did not aver that
the forgery was committed with the intent to
defraud any person. The Court, per Elliott, J.,
disposed of this objection as follows:
. . . The reason advanced in support of this
proposition is that the law does not regard the
estate of a decedent as a person. This intention
(contention) cannot prevail. The estate of the
decedent is a person in legal contemplation. "The
word "person" says Mr. Abbot, "in its legal
signification, is a generic term, and includes
artificial as well as natural persons," 2 Abb. Dict.
271; Douglas vs. Pacific, etc. Co., 4 Cal. 304;
Planters', etc., Bank vs. Andrews, 8 Port. (Ala.)
404. It said in another work that 'persons are of
two kinds: natural and artificial. A natural person
is a human being. Artificial persons include (1) a
collection or succession of natural persons
forming a corporation; (2) a collection of property
to which the law attributes the capacity of having
rights and duties. The latter class of artificial
persons is recognized only to a limited extent in
our law. "Examples are the estate of a bankrupt
or deceased person." 2 Rapalje & L. Law Dict.
954. Our own cases inferentially recognize the
correctness of the definition given by the authors
from whom we have quoted, for they declare that
it is sufficient, in pleading a claim against a
decedent's estate, to designate the defendant as
the estate of the deceased person, naming
him. Ginn vs. Collins, 43 Ind. 271. Unless we
accept this definition as correct, there would be a
failure of justice in cases where, as here, the
forgery is committed after the death of a person
whose name is forged; and this is a result to be
avoided if it can be done consistent with principle.
We perceive no difficulty in avoiding such a result;
for, to our minds, it seems reasonable that the
estate of a decedent should be regarded as an
artificial person. It is the creation of law for the
purpose of enabling a disposition of the assets to
be properly made, and, although natural persons
as heirs, devises, or creditors, have an interest in
the property, the artificial creature is a distinct
legal entity. The interest which natural persons
have in it is not complete until there has been a
due administration; and one who forges the name
of the decedent to an instrument purporting to be
a promissory note must be regarded as having
intended to defraud the estate of the decedent,
and not the natural persons having diverse
interests in it, since ha cannot be presumed to
have known who those persons were, or what was
the nature of their respective interest. The
fraudulent intent is against the artificial person, -
the estate - and not the natural persons who have
direct or contingent interest in it. (107 Ind. 54,
55, 6 N.E. 914-915.)
In the instant case there would also be a failure of
justice unless the estate of Pedro O. Fragrante is
considered a "person", for quashing of the
proceedings for no other reason than his death
would entail prejudicial results to his investment
amounting to P35,000.00 as found by the
commission, not counting the expenses and
disbursements which the proceeding can be
presumed to have occasioned him during his
lifetime, let alone those defrayed by the estate
thereafter. In this jurisdiction there are ample
precedents to show that the estate of a deceased
person is also considered as having legal
personality independent of their heirs. Among the
most recent cases may be mentioned that of
"Estate of Mota vs. Concepcion, 56 Phil., 712,
717, wherein the principal plaintiff was the estate
of the deceased Lazaro Mota, and this Court gave
judgment in favor of said estate along with the
other plaintiffs in these words:
. . . the judgment appealed from must be
affirmed so far as it holds that defendants
Concepcion and Whitaker are indebted to he
plaintiffs in the amount of P245,804.69 . . . .
Under the regime of the Civil Code and before the
enactment of the Code of Civil Procedure, the
heirs of a deceased person were considered in
contemplation of law as the continuation of his
personality by virtue of the provision of article
661 of the first Code that the heirs succeed to all
the rights and obligations of the decedent by the
mere fact of his death. It was so held by this
Court in Barrios vs. Dolor, 2 Phil., 44, 46.
However, after the enactment of the Code of Civil
Procedure, article 661 of the Civil Code was
abrogated, as held in Suiliong & Co. vs. Chio-
Taysan, 12 Phil., 13, 22. In that case, as well as
in many others decided by this Court after the
innovations introduced by the Code of Civil
Procedure in the matter of estates of deceased
persons, it has been the constant doctrine that it
is the estate or the mass of property, rights and
assets left by the decedent, instead of the heirs
directly, that becomes vested and charged with
his rights and obligations which survive after his
demise. cha nrob lesvi rtua lawlib rary chan roble s virtual law l ib rary
The heirs were formerly considered as the
continuation of the decedent's personality simply
by legal fiction, for they might not have been
flesh and blood - the reason was one in the
nature of a legal exigency derived from the
principle that the heirs succeeded to the rights
and obligations of the decedent. Under the
present legal system, such rights and obligations
as survive after death have to be exercised and
fulfilled only by the estate of the deceased. And if
the same legal fiction were not indulged, there
would be no juridical basis for the estate,
represented by the executor or administrator, to
exercise those rights and to fulfill those
obligations of the deceased. The reason and
purpose for indulging the fiction is identical and
the same in both cases. This is why according to
the Supreme Court of Indiana in Billings vs.
State, supra, citing 2 Rapalje & L. Dictionary, 954,
among the artificial persons recognized by law
figures "a collection of property to which the law
attributes the capacity of having rights and
duties", as for instance, the estate of a bankrupt
or deceased person. chanrob lesvi rtua lawlib rary chan roble s virtual law l ib rary
Petitioner raises the decisive question of whether
or not the estate of Pedro O. Fragrante can be
considered a "citizen of the Philippines" within the
meaning of section 16 of the Public Service Act,
as amended, particularly the proviso thereof
expressly and categorically limiting the power of
the commission to issue certificates of public
convenience or certificates of public convenience
and necessity "only to citizens of the Philippines
or of the United States or to corporations,
copartnerships, associations, or joint-stock
companies constituted and organized under the
laws of the Philippines", and the further proviso
that sixty per centum of the stock or paid-up
capital of such entities must belong entirely to
citizens of the Philippines or of the United
States.chan roble svirtualawl ibra ry c hanrobles vi rt ual law li bra ry
Within the Philosophy of the present legal system,
the underlying reason for the legal fiction by
which, for certain purposes, the estate of the
deceased person is considered a "person" is the
avoidance of injustice or prejudice resulting from
the impossibility of exercising such legal rights
and fulfilling such legal obligations of the
decedent as survived after his death unless the
fiction is indulged. Substantially the same reason
is assigned to support the same rule in the
jurisdiction of the State of Indiana, as announced
in Billings vs. State, supra, when the Supreme
Court of said State said:
. . . It seems reasonable that the estate of a
decedent should be regarded as an artificial
person. it is the creation of law for the purpose of
enabling a disposition of the assets to be properly
made . . . .
Within the framework and principles of the
constitution itself, to cite just one example, under
the bill of rights it seems clear that while the civil
rights guaranteed therein in the majority of cases
relate to natural persons, the term "person" used
in section 1 (1) and (2) must be deemed to
include artificial or juridical persons, for otherwise
these latter would be without the constitutional
guarantee against being deprived of property
without due process of law, or the immunity from
unreasonable searches and seizures. We take it
that it was the intendment of the framers to
include artificial or juridical, no less than natural,
persons in these constitutional immunities and in
others of similar nature. Among these artificial or
juridical persons figure estates of deceased
persons. Hence, we hold that within the
framework of the Constitution, the estate of Pedro
O. Fragrante should be considered an artificial or
juridical person for the purposes of the settlement
and distribution of his estate which, of course,
include the exercise during the judicial
administration thereof of those rights and the
fulfillment of those obligations of his which
survived after his death. One of those rights was
the one involved in his pending application before
the Public Service Commission in the instant case,
consisting in the prosecution of said application to
its final conclusion. As stated above, an injustice
would ensue from the opposite course. chan rob l esvirt ualawli bra ry cha nrob les vi rtua l law lib rary
How about the point of citizenship? If by legal
fiction his personality is considered extended so
that any debts or obligations left by, and
surviving, him may be paid, and any surviving
rights may be exercised for the benefit of his
creditors and heirs, respectively, we find no sound
and cogent reason for denying the application of
the same fiction to his citizenship, and for not
considering it as likewise extended for the
purposes of the aforesaid unfinished proceeding
before the Public Service Commission. The
outcome of said proceeding, if successful, would
in the end inure to the benefit of the same
creditors and the heirs. Even in that event
petitioner could not allege any prejudice in the
legal sense, any more than he could have done if
Fragrante had lived longer and obtained the
desired certificate. The fiction of such extension of
his citizenship is grounded upon the same
principle, and motivated by the same reason, as
the fiction of the extension of personality. The
fiction is made necessary to avoid the injustice of
subjecting his estate, creditors and heirs, solely
by reason of his death to the loss of the
investment amounting to P35,000, which he has
already made in the ice plant, not counting the
other expenses occasioned by the instant
proceeding, from the Public Service Commission
of this Court. cha nrob lesvi rtua lawlib rary
We can perceive no valid reason for holding that
within the intent of the constitution (Article IV),
its provisions on Philippine citizenship exclude the
legal principle of extension above adverted to. If
for reasons already stated our law indulges the
fiction of extension of personality, if for such
reasons the estate of Pedro O. Fragrante should
be considered an artificial or juridical person
herein, we can find no justification for refusing to
declare a like fiction as to the extension of his
citizenship for the purposes of this proceeding.
virtua l law lib rary
Pedro O. Fragrante was a Filipino citizen, and as
such, if he had lived, in view of the evidence of
record, he would have obtained from the
commission the certificate for which he was
applying. The situation has suffered but one
change, and that is, his death. His estate was that
of a Filipino citizen. And its economic ability to
appropriately and adequately operate and
maintain the service of an ice plant was the same
that it received from the decedent himself. In the
absence of a contrary showing, which does not
exist here, his heirs may be assumed to be also
Filipino citizens; and if they are not, there is the
simple expedient of revoking the certificate or
enjoining them from inheriting it.c hanro blesvi rt ualawlib ra ry cha nrob les vi rtua l law lib rary
Upon the whole, we are of the opinion that for the
purposes of the prosecution of said case No. 4572
chan roble s virtual law lib rary
of the Public Service Commission to its final
conclusion, both the personality and citizenship of
Pedro O. Fragrante must be deemed extended,
within the meaning and intent of the Public
Service Act, as amended, in harmony with the
constitution: it is so adjudged and decreed. chanro blesvi rtua lawlib rary chan rob les vi rtual law lib rary
Decision affirmed, without costs. So ordered. chanro blesvi rtua lawlib rary chan rob les vi rtual law lib rary
Moran, C.J., Pablo, Bengzon, Briones, Padilla and
Tuason, JJ., concur.
Paras, J., I hereby certify that Mr. Justice Feria
cha nro blesvi rt ualawlib ra ry chan rob les
voted with the majority.
G.R. No. L-23638 October 12, 1967
DIONISIO FERNANDEZ, EUSEBIO REYES and LUISA
REYES, petitioners,
vs.
ISMAELA DIMAGIBA, respondent.
----------------------------------------
G.R. No. L-23662 October 12, 1967
MARIANO REYES, CESAR REYES, LEONOR REYES and
PACIENCIA REYES, petitioners,
vs.
ISMAELA DIMAGIBA, respondent.
Jose D. Villena for petitioners.
Antonio Barredo and Exequiel M. Zaballero for respondent.
REYES, J.B.L., Actg. C.J.:
The heirs intestate of the late Benedicta de los Reyes have
petitioned for a review of the decision of the Court of Appeals (in
CA-G. R. No. 31221-R) affirming that of the Court of First
Instance of Bulacan, in Special Proceeding No. 831 of said Court,
admitting to probate the alleged last will and testament of the
deceased, and overruling the opposition to the probate.
It appears from the record that on January 19, 1955, Ismaela
Dimagiba, now respondent, submitted to the Court of First
Instance a petition for the probate of the purported will of the late
Benedicta de los Reyes, executed on October 22, 1930, and
annexed to the petition. The will instituted the petitioner as the
sole heir of the estate of the deceased. The petition was set for
hearing, and in due time, Dionisio Fernandez, Eusebio Reyes and
Luisa Reyes and one month later, Mariano, Cesar, Leonor and
Paciencia, all surnamed Reyes, all claiming to be heirs intestate
of the decedent, filed oppositions to the probate asked. Grounds
advanced for the opposition were forgery, vices of consent of the
testatrix, estoppel by laches of the proponent and revocation of
the will by two deeds of conveyance of the major portion of the
estate made by the testatrix in favor of the proponent in 1943 and
1944, but which conveyances were finally set aside by this
Supreme Court in a decision promulgated on August 3, 1954, in
cases G.R. Nos. L-5618 and L-5620 (unpublished).
After trial on the formulated issues, the Court of First Instance, by
decision of June 20, 1958, found that the will was genuine and
properly executed; but deferred resolution on the questions of
estoppel and revocation "until such time when we shall pass upon
the intrinsic validity of the provisions of the will or when the
question of adjudication of the properties is opportunely
presented."
Oppositors Fernandez and Reyes petitioned for reconsideration,
and/or new trial, insisting that the issues of estoppel and
revocation be considered and resolved; whereupon, on July 27,
1959, the Court overruled the claim that proponent was in
estoppel to ask for the probate of the will, but "reserving unto the
parties the right to raise the issue of implied revocation at the
opportune time."
On January 11, 1960, the Court of First Instance appointed
Ricardo Cruz as administrator for the sole purpose of submitting
an inventory of the estate, and this was done on February 9,
1960.
On February 27, 1962, after receiving further evidence on the
issue whether the execution by the testatrix of deeds of sale of
the larger portion of her estate in favor of the testamentary heir,
made in 1943 and 1944, subsequent to the execution of her 1930
testament, had revoked the latter under Article 957(2) of the 1950
Civil Code (Art. 869 of the Civil Code of 1889), the trial Court
resolved against the oppositors and held the will of the late
Benedicta de los Reyes "unaffected and unrevoked by the deeds
of sale." Whereupon, the oppositors elevated the case to the
Court of Appeals.
The appellate Court held that the decree of June 20, 1958,
admitting the will to probate, had become final for lack of
opportune appeal; that the same was appealable independently
of the issue of implied revocation; that contrary to the claim of
oppositors-appellants, there had been no legal revocation by the
execution of the 1943 and 1944 deeds of sale, because the latter
had been made in favor of the legatee herself, and affirmed the
decision of the Court of First Instance.
Oppositors then appealed to this Court.
In this instance, both sets of oppositors-appellants pose three
main issues: (a) whether or not the decree of the Court of First
Instance allowing the will to probate had become final for lack of
appeal; (b) whether or not the order of the Court of origin dated
July 27, 1959, overruling the estoppel invoked by oppositors-
appellants had likewise become final; and (c) whether or not the
1930 will of Benedicta de los Reyes had been impliedly revoked
by her execution of deeds of conveyance in favor of the
proponent on March 26, 1943 and April 3, 1944.
As to the first point, oppositors-appellants contend that the order
allowing the will to probate should be considered interlocutory,
because it fails to resolve the issues of estoppel and revocation
propounded in their opposition. We agree with the Court of
Appeals that the appellant's stand is untenable. It is elementary
that a probate decree finally and definitively settles all questions
concerning capacity of the testator and the proper execution and
witnessing of his last will and testament, irrespective of whether
its provisions are valid and enforceable or otherwise. (Montañano
vs. Suesa, 14 Phil. 676; Mercado vs. Santos, 66 Phil. 215;
Trillana vs. Crisostomo, 89 Phil. 710). As such, the probate order
is final and appealable; and it is so recognized by express
provisions of Section 1 of Rule 109, that specifically prescribes
that "any interested person may appeal in special proceedings
from an order or judgment . . . where such order or judgment: (a)
allows or disallows a will."
Appellants argue that they were entitled to await the trial Court's
resolution on the other grounds of their opposition before taking
an appeal, as otherwise there would be a multiplicity of recourses
to the higher Courts. This contention is without weight, since Rule
109, section 1, expressly enumerates six different instances when
appeal may be taken in special proceedings.
There being no controversy that the probate decree of the Court
below was not appealed on time, the same had become final and
conclusive. Hence, the appellate courts may no longer revoke
said decree nor review the evidence upon which it is made to
rest. Thus, the appeal belatedly lodged against the decree was
correctly dismissed.
The alleged revocation implied from the execution of the deeds of
conveyance in favor of the testamentary heir is plainly irrelevant
to and separate from the question of whether the testament was
duly executed. For one, if the will is not entitled to probate, or its
probate is denied, all questions of revocation become superfluous
in law, there is no such will and hence there would be nothing to
revoke. Then, again, the revocation invoked by the oppositors-
appellants is not an express one, but merely implied from
subsequent acts of the testatrix allegedly evidencing an
abandonment of the original intention to bequeath or devise the
properties concerned. As such, the revocation would not affect
the will itself, but merely the particular devise or legacy. Only
the total and absolute revocation can preclude probate of the
revoked testament (Trillana vs. Crisostomo, supra.).
As to the issue of estoppel, we have already ruled in Guevara vs.
Guevara, 98 Phil. 249, that the presentation and probate of a will
are requirements of public policy, being primarily designed to
protect the testator's, expressed wishes, which are entitled to
respect as a consequence of the decedent's ownership and right
of disposition within legal limits. Evidence of it is the duty imposed
on a custodian of a will to deliver the same to the Court, and the
fine and imprisonment prescribed for its violation (Revised Rule
75). It would be a non sequitur to allow public policy to be evaded
on the pretext of estoppel. Whether or not the order overruling the
allegation of estoppel is still appealable or not, the defense is
patently unmeritorious and the Court of Appeals correctly so
ruled.
The last issue, that of revocation, is predicated on paragraph 2 of
Article 957 of the Civil Code of 1950 (Art. 869 of the Code of
1889), which recites:
Art. 957. The legacy or devise shall be without effect:
(1) . . . .
(2) If the testator by any title or for any cause alienates
the thing bequeathed or any part thereof, it being
understood that in the latter case the legacy or devise
shall be without effect only with respect to the part thus
alienated. If after the alienation the thing should again
belong to the testator, even if it be by reason of nullity of
the contract, the legacy or devise shall not thereafter be
valid, unless the reacquisition shall have been effected by
virtue of the exercise of the right of repurchase;
xxx xxx xxx
It is well to note that, unlike in the French and Italian Codes, the
basis of the quoted provision is a presumed change of intention
on the part of the testator. As pointed out by Manresa in his
Commentaries on Article 869 of the Civil Code (Vol. 6, 7th Ed., p.
743) —
Este caso se funda en la presunta voluntad del testador.
Si este, despues de legar, se desprende de la cosa por
titulo lucrativo u oneroso, hace desaparecer su derecho
sobra ella, dando lugar a la presuncion de que ha
cambiado de voluntad, y no quiere que el legado se
cumpla. Mas para que pueda presumirse esa voluntad, es
necesario que medien actos del testador que la indiquen.
Si la perdida del derecho sobre la cosa ha sido
independiente de la voluntad del testador, el legado
podraquedar sin efecto, mas no en virtud del numero 2
del articulo 869, que exige siempre actos voluntarios de
enajenacion por parte del mismo testador.
As observed by the Court of Appeals, the existence of any such
change or departure from the original intent of the testatrix,
expressed in her 1930 testament, is rendered doubtful by the
circumstance that the subsequent alienations in 1943 and 1944
were executed in favor of the legatee herself, appellee Dimagiba.
In fact, as found by the Court of Appeals in its decision annulling
these conveyances (affirmed in that point by this Supreme Court
in Reyes vs. Court of Appeals and Dimagiba, L-5618 and L-5620,
promulgated on July 31, 1954), "no consideration whatever was
paid by respondent Dimagiba" on account of the transfers,
thereby rendering it even more doubtful whether in conveying the
property to her legatee, the testatrix merely intended to comply in
advance with what she had ordained in her testament, rather than
an alteration or departure therefrom.1 Revocation being an
exception, we believe, with the Courts below, that in the
circumstances of the particular case, Article 957 of the Civil Code
of the Philippines, does not apply to the case at bar.
Not only that, but even if it were applicable, the annulment of the
conveyances would not necessarily result in the revocation of the
legacies, if we bear in mind that the findings made in the decision
decreeing the annulment of the subsequent 1943 and 1944
deeds of sale were also that
it was the moral influence, originating from their
confidential relationship, which was the only cause for the
execution of Exhs. A and B (the 1943 and 1944
conveyances). (Decision, L-5618 and L-5620).
If the annulment was due to undue influence, as the quoted
passage implies, then the transferor was not expressing her own
free will and intent in making the conveyances. Hence, it can not
be concluded, either, that such conveyances established a
decision on her part to abandon the original legacy.

True it is that the legal provision quoted prescribes that the

recovery of the alienated property "even if it be by reason of the
nullity of the contract" does not revive the legacy; but as pointed
out by Scaevola (Codigo Civil, Vol. XV, 4th Ed., pp. 324-325) the
"nullity of the contract" can not be taken in an absolute
sense.2 Certainly, it could not be maintained, for example, that if a
testator's subsequent alienation were avoided because the
testator was mentally deranged at the time, the revocatory effect
ordained by the article should still ensue. And the same thing
could be said if the alienation (posterior to the will) were avoided
on account of physical or mental duress. Yet, an alienation
through undue influence in no way differs from one made through
violence or intimidation. In either case, the transferor is not
expressing his real intent,3 and it can not be held that there was in
fact an alienation that could produce a revocation of the anterior
bequest.

In view of the foregoing considerations, the appealed decision of

the Court of Appeals is hereby affirmed. Costs against appellants
Reyes and Fernandez. So ordered.

Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and

Fernando, JJ., concur.
Concepcion, C.J. and Bengzon, J.P., J., are on leave, took no
part.
Guinto v. Medina, 50 O.G. #1 p.
199, October 7, 1953.
FACTS
Leon Guinto filed an action for forcible entry against Santiago Medina
alleging that he has been in possession of the said parcel of land since
1934 and that Medina by means of force and intimidation deprived him
of his possession thereof. The trial court ruled in favor of Guinto but it
dismissed the prayer for damages. Pending appeal, Medina died.
Medina was substituted by his heirs. The Court awarded the damages
appealed.

ISSUE
Whether or not the heirs of Medina are liable for damages, and if in
the affirmative to what extent.

RULING
YES. The action to recover damages survives notwithstanding the
death of the adverse party whom damages are sought to be
recovered. In this case, the heirs of Medina are liable to pay the
damages as they are merely substituted in the place of Medina upon
his death. However, their liability is only to the extent of the value of
the property, which they might have received from the deceased
defendant.
G.R. No. 165748 September 14, 2011
HEIRS OF POLICRONIO M. URETA, SR., namely: CONRADO
B. URETA, MACARIO B. URETA, GLORIA URETA-
GONZALES, ROMEO B. URETA, RITA URETA-SOLANO,
NENA URETA-TONGCUA, VENANCIO B. URETA, LILIA
URETA-TAYCO, and HEIRS OF POLICRONIO B. URETA, JR.,
namely: MIGUEL T. URETA, RAMON POLICRONIO T. URETA,
EMMANUEL T. URETA, and BERNADETTE T.
URETA, Petitioners,
vs.
HEIRS OF LIBERATO M. URETA, namely: TERESA F. URETA,
AMPARO URETA-CASTILLO, IGNACIO F. URETA, SR.,
EMIRITO F. URETA, WILKIE F. URETA, LIBERATO F. URETA,
JR., RAY F. URETA, ZALDY F. URETA, and MILA JEAN
URETA CIPRIANO; HEIRS OF PRUDENCIA URETA
PARADERO, namely: WILLIAM U. PARADERO, WARLITO U.
PARADERO, CARMENCITA P. PERLAS, CRISTINA P.
CORDOVA, EDNA P. GALLARDO, LETICIA P. REYES;
NARCISO M. URETA; VICENTE M. URETA; HEIRS OF
FRANCISCO M. URETA, namely: EDITA T. URETA-REYES
and LOLLIE T. URETA-VILLARUEL; ROQUE M. URETA;
ADELA URETA-GONZALES; HEIRS OF INOCENCIO M.
URETA, namely: BENILDA V. URETA, ALFONSO V. URETA II,
DICK RICARDO V. URETA, and ENRIQUE V. URETA;
MERLINDA U. RIVERA; JORGE URETA; ANDRES URETA,
WENEFREDA U. TARAN; and BENEDICT
URETA, Respondents.
x - - - - - - - - - - - - - - - -x
G.R. No. 165930
HEIRS OF LIBERATO M. URETA, namely: TERESA F. URETA,
AMPARO URETA-CASTILLO, IGNACIO F. URETA, SR.,
EMIRITO F. URETA, WILKIE F. URETA, LIBERATO F. URETA,
JR., RAY F. URETA, ZALDY F. URETA, and MILA JEAN
URETA CIPRIANO; HEIRS OF PRUDENCIA URETA
PARADERO, namely: WILLIAM U. PARADERO, WARLITO U.
PARADERO, CARMENCITA P. PERLAS, CRISTINA P.
CORDOVA, EDNA P. GALLARDO, LETICIA P. REYES;
NARCISO M. URETA; VICENTE M. URETA; HEIRS OF
FRANCISCO M. URETA, namely: EDITA T. URETA-REYES
and LOLLIE T. URETA-VILLARUEL; ROQUE M. URETA;
ADELA URETA-GONZALES; HEIRS OF INOCENCIO M.
URETA, namely: BENILDA V. URETA, ALFONSO V. URETA II,
DICK RICARDO V. URETA, and ENRIQUE V. URETA;
MERLINDA U. RIVERA; JORGE URETA; ANDRES URETA,
WENEFREDA U. TARAN; and BENEDICT URETA,Petitioners,
vs.
HEIRS OF POLICRONIO M. URETA, SR., namely: CONRADO
B. URETA, MACARIO B. URETA, GLORIA URETA-
GONZALES, ROMEO B. URETA, RITA URETA-SOLANO,
NENA URETA-TONGCUA, VENANCIO B. URETA, LILIA
URETA-TAYCO, and HEIRS OF POLICRONIO B. URETA, JR.,
namely: MIGUEL T. URETA, RAMON POLICRONIO T. URETA,
EMMANUEL T. URETA, and BERNADETTE T.
URETA, Respondents.
DECISION
MENDOZA, J.:
These consolidated petitions for review on certiorari under Rule
45 of the 1997 Revised Rules of Civil Procedure assail the April
20, 2004 Decision1 of the Court of Appeals (CA), and its October
14, 2004 Resolution2 in C.A.-G.R. CV No. 71399, which affirmed
with modification the April 26, 2001 Decision3 of the Regional Trial
Court, Branch 9, Kalibo, Aklan (RTC) in Civil Case No. 5026.
The Facts
In his lifetime, Alfonso Ureta (Alfonso) begot 14 children, namely,
Policronio, Liberato, Narciso, Prudencia, Vicente, Francisco,
Inocensio, Roque, Adela, Wenefreda, Merlinda, Benedicto, Jorge,
and Andres. The children of Policronio (Heirs of Policronio), are
opposed to the rest of Alfonso’s children and their
descendants (Heirs of Alfonso).
Alfonso was financially well-off during his lifetime. He owned
several fishpens, a fishpond, a sari-sari store, a passenger jeep,
and was engaged in the buying and selling of copra. Policronio,
the eldest, was the only child of Alfonso who failed to finish
schooling and instead worked on his father’s lands.
Sometime in October 1969, Alfonso and four of his children,
namely, Policronio, Liberato, Prudencia, and Francisco, met at
the house of Liberato. Francisco, who was then a municipal
judge, suggested that in order to reduce the inheritance taxes,
their father should make it appear that he had sold some of his
lands to his children. Accordingly, Alfonso executed four (4)
Deeds of Sale covering several parcels of land in favor of
Policronio,4 Liberato,5Prudencia,6 and his common-law wife,
Valeriana Dela Cruz.7 The Deed of Sale executed on October 25,
1969, in favor of Policronio, covered six parcels of land, which are
the properties in dispute in this case.
Since the sales were only made for taxation purposes and no
monetary consideration was given, Alfonso continued to own,
possess and enjoy the lands and their produce.
When Alfonso died on October 11, 1972, Liberato acted as the
administrator of his father’s estate. He was later succeeded by his
sister Prudencia, and then by her daughter, Carmencita Perlas.
Except for a portion of parcel 5, the rest of the parcels transferred
to Policronio were tenanted by the Fernandez Family. These
tenants never turned over the produce of the lands to Policronio
or any of his heirs, but to Alfonso and, later, to the administrators
of his estate.
Policronio died on November 22, 1974. Except for the said
portion of parcel 5, neither Policronio nor his heirs ever took
possession of the subject lands.
On April 19, 1989, Alfonso’s heirs executed a Deed of Extra-
Judicial Partition,8 which included all the lands that were covered
by the four (4) deeds of sale that were previously executed by
Alfonso for taxation purposes. Conrado, Policronio’s eldest son,
representing the Heirs of Policronio, signed the Deed of Extra-
Judicial Partition in behalf of his co-heirs.
After their father’s death, the Heirs of Policronio found tax
declarations in his name covering the six parcels of land. On June
15, 1995, they obtained a copy of the Deed of Sale executed on
October 25, 1969 by Alfonso in favor of Policronio.
Not long after, on July 30, 1995, the Heirs of Policronio allegedly
learned about the Deed of Extra-Judicial Partition involving
Alfonso’s estate when it was published in the July 19, 1995 issue
of the Aklan Reporter.
Believing that the six parcels of land belonged to their late father,
and as such, excluded from the Deed of Extra-Judicial Partition,
the Heirs of Policronio sought to amicably settle the matter with
the Heirs of Alfonso. Earnest efforts proving futile, the Heirs of
Policronio filed a Complaint for Declaration of Ownership,
Recovery of Possession, Annulment of Documents, Partition, and
Damages9 against the Heirs of Alfonso before the RTC on
November 17, 1995 where the following issues were submitted:
(1) whether or not the Deed of Sale was valid; (2) whether or not
the Deed of Extra-Judicial Partition was valid; and (3) who
between the parties was entitled to damages.
The Ruling of the RTC
On April 26, 2001, the RTC dismissed the Complaint of the Heirs
of Policronio and ruled in favor of the Heirs of Alfonso in a
decision, the dispositive portion of which reads:
WHEREFORE, the Court finds that the preponderance of
evidence tilts in favor of the defendants, hence the instant case is
hereby DISMISSED.
The counterclaims are likewise DISMISSED.
With costs against plaintiffs.
SO ORDERED.
The RTC found that the Heirs of Alfonso clearly established that
the Deed of Sale was null and void. It held that the Heirs of
Policronio failed to rebut the evidence of the Heirs of Alfonso,
which proved that the Deed of Sale in the possession of the
former was one of the four (4) Deeds of Sale executed by Alfonso
in favor of his 3 children and second wife for taxation purposes;
that although tax declarations were issued in the name of
Policronio, he or his heirs never took possession of the subject
lands except a portion of parcel 5; and that all the produce were
turned over by the tenants to Alfonso and the administrators of
his estate and never to Policronio or his heirs.
The RTC further found that there was no money involved in the
sale. Even granting that there was, as claimed by the Heirs of
Policronio, ₱2,000.00 for six parcels of land, the amount was
grossly inadequate. It was also noted that the aggregate area of
the subject lands was more than double the average share
adjudicated to each of the other children in the Deed of Extra-
Judicial Partition; that the siblings of Policronio were the ones
who shared in the produce of the land; and that the Heirs of
Policronio only paid real estate taxes in 1996 and 1997. The RTC
opined that Policronio must have been aware that the transfer
was merely for taxation purposes because he did not
subsequently take possession of the properties even after the
death of his father.
The Deed of Extra-Judicial Partition, on the other hand, was
declared valid by the RTC as all the heirs of Alfonso were
represented and received equal shares and all the requirements
of a valid extra-judicial partition were met. The RTC considered
Conrado’s claim that he did not understand the full significance of
his signature when he signed in behalf of his co-heirs, as a
gratutitous assertion. The RTC was of the view that when he
admitted to have signed all the pages and personally appeared
before the notary public, he was presumed to have understood
their contents.
Lastly, neither party was entitled to damages. The Heirs of
Alfonso failed to present testimony to serve as factual basis for
moral damages, no document was presented to prove actual
damages, and the Heirs of Policronio were found to have filed the
case in good faith.
The Ruling of the CA
Aggrieved, the Heirs of Policronio appealed before the CA, which
rendered a decision on April 20, 2004, the dispositive portion of
which reads as follows:
WHEREFORE, the appeal is PARTIALLY GRANTED. The
appealed Decision, dated 26 April 2001, rendered by Hon. Judge
Dean R. Telan of the Regional Trial Court of Kalibo, Aklan,
Branch 9, is hereby AFFIRMED with MODIFICATION:
1.) The Deed of Sale in favor of Policronio Ureta, Sr.,
dated 25 October 1969, covering six (6) parcels of land is
hereby declared VOID for being ABSOLUTELY
SIMULATED;
 2.) The Deed of Extra-Judicial Partition, dated 19 April
1989, is ANNULLED;
3.) The claim for actual and exemplary damages are
DISMISSED for lack of factual and legal basis.
The case is hereby REMANDED to the court of origin for the
proper partition of ALFONSO URETA’S Estate in accordance with
Rule 69 of the 1997 Rules of Civil Procedure. No costs at this
instance.
SO ORDERED.
The CA affirmed the finding of the RTC that the Deed of Sale was
void. It found the Deed of Sale to be absolutely simulated as the
parties did not intend to be legally bound by it. As such, it
produced no legal effects and did not alter the juridical situation of
the parties. The CA also noted that Alfonso continued to exercise
all the rights of an owner even after the execution of the Deed of
Sale, as it was undisputed that he remained in possession of the
subject parcels of land and enjoyed their produce until his death.
Policronio, on the other hand, never exercised any rights
pertaining to an owner over the subject lands from the time they
were sold to him up until his death. He never took or attempted to
take possession of the land even after his father’s death, never
demanded delivery of the produce from the tenants, and never
paid realty taxes on the properties. It was also noted that
Policronio never disclosed the existence of the Deed of Sale to
his children, as they were, in fact, surprised to discover its
existence. The CA, thus, concluded that Policronio must have
been aware that the transfer was only made for taxation
purposes.
The testimony of Amparo Castillo, as to the circumstances
surrounding the actual arrangement and agreement between the
parties prior to the execution of the four (4) Deeds of Sale, was
found by the CA to be unrebutted. The RTC’s assessment of the
credibility of her testimony was accorded respect, and the
intention of the parties was given the primary consideration in
determining the true nature of the contract.
Contrary to the finding of the RTC though, the CA annulled the
Deed of Extra-Judicial Partition due to the incapacity of one of the
parties to give his consent to the contract. It held that before
Conrado could validly bind his co-heirs to the Deed of Extra-
Judicial Partition, it was necessary that he be clothed with the
proper authority. The CA ruled that a special power of attorney
was required under Article 1878 (5) and (15) of the Civil Code.
Without a special power of attorney, it was held that Conrado
lacked the legal capactiy to give the consent of his co-heirs, thus,
rendering the Deed of Extra-Judicial Partition voidable under
Article 1390 (1) of the Civil Code.
As a consequence, the CA ordered the remand of the case to the
RTC for the proper partition of the estate, with the option that the
parties may still voluntarily effect the partition by executing
another agreement or by adopting the assailed Deed of Partition
with the RTC’s approval in either case. Otherwise, the RTC may
proceed with the compulsory partition of the estate in accordance
with the Rules.
With regard to the claim for damages, the CA agreed with the
RTC and dismissed the claim for actual and compensatory
damages for lack of factual and legal basis.
Both parties filed their respective Motions for Reconsideration,
which were denied by the CA for lack of merit in a Resolution
dated October 14, 2004.
In their Motion for Reconsideration, the Heirs of Policronio argued
that the RTC violated the best evidence rule in giving credence to
the testimony of Amparo Castillo with regard to the simulation of
the Deed of Sale, and that prescription had set in precluding any
question on the validity of the contract.
The CA held that the oral testimony was admissible under Rule
130, Section 9 (b) and (c), which provides that
evidence aliunde may be allowed to explain the terms of the
written agreement if the same failed to express the true intent and
agreement of the parties thereto, or when the validity of the
written agreement was put in issue. Furthermore, the CA found
that the Heirs of Policronio waived their right to object to
evidence aliunde having failed to do so during trial and for raising
such only for the first time on appeal. With regard to prescription,
the CA ruled that the action or defense for the declaration of the
inexistence of a contract did not prescribe under Article 1410 of
the Civil Code.
On the other hand, the Heirs of Alfonso argued that the Deed of
Extra-Judicial Partition should not have been annulled, and
instead the preterited heirs should be given their share. The CA
reiterated that Conrado’s lack of capacity to give his co-heirs’
consent to the extra-judicial settlement rendered the same
voidable.
Hence, the present Petitions for Review on Certiorari.
The Issues
The issues presented for resolution by the Heirs of Policronio in
G.R. No. 165748 are as follows:
I.
Whether the Court of Appeals is correct in ruling that
the Deed of Absolute Sale of 25 October 1969 is void
for being absolutely fictitious and in relation
therewith, may parol evidence be entertained to
thwart its binding effect after the parties have both
died?
Assuming that indeed the said document is
simulated, whether or not the parties thereto
including their successors in interest are estopped to
question its validity, they being bound by Articles
1412 and 1421 of the Civil Code?
II.
Whether prescription applies to bar any question
respecting the validity of the Deed of Absolute Sale
dated 25 October 1969? Whether prescription applies
to bar any collateral attack on the validity of the deed
of absolute sale executed 21 years earlier?
III.
Whether the Court of Appeals correctly ruled in
nullifying the Deed of Extrajudicial Partition because
Conrado Ureta signed the same without the written
authority from his siblings in contravention of Article
1878 in relation to Article 1390 of the Civil Code and
in relation therewith, whether the defense of
ratification and/or preterition raised for the first time
on appeal may be entertained?
The issues presented for resolution by the Heirs of
Alfonso in G.R. No. 165930 are as follows:
I.
Whether or not grave error was committed by the
Trial Court and Court of Appeals in declaring the
Deed of Sale of subject properties as absolutely
simulated and null and void thru parol evidence
based on their factual findings as to its fictitious
nature, and there being waiver of any objection based
on violation of the parol evidence rule.
II.
Whether or not the Court of Appeals was correct in
holding that Conrado Ureta’s lack of capacity to give
his co-heirs’ consent to the Extra-Judicial Partition
rendered the same voidable.
III.
Granting arguendo that Conrado Ureta was not
authorized to represent his co-heirs and there was no
ratification, whether or not the Court of Appeals was
correct in ordering the remand of the case to the
Regional Trial Court for partition of the estate of
Alfonso Ureta.
IV.
Since the sale in favor of Policronio Ureta Sr. was null
and void ab initio, the properties covered therein
formed part of the estate of the late Alfonso Ureta and
was correctly included in the Deed of Extrajudicial
Partition even if no prior action for nullification of the
sale was filed by the heirs of Liberato Ureta.
V.
Whether or not the heirs of Policronio Ureta Sr. can
claim that estoppel based on Article 1412 of the Civil
Code as well as the issue of prescription can still be
raised on appeal.
These various contentions revolve around two major issues, to
wit: (1) whether the Deed of Sale is valid, and (2) whether the
Deed of Extra-Judicial Partition is valid. Thus, the assigned errors
shall be discussed jointly and in seriatim.
The Ruling of the Court
Validity of the Deed of Sale
Two veritable legal presumptions bear on the validity of the Deed
of Sale: (1) that there was sufficient consideration for the contract;
and (2) that it was the result of a fair and regular private
transaction. If shown to hold, these presumptions infer prima facie
the transaction’s validity, except that it must yield to the evidence
adduced.10
As will be discussed below, the evidence overcomes these two
presumptions.
Absolute Simulation
First, the Deed of Sale was not the result of a fair and regular
private transaction because it was absolutely simulated.
The Heirs of Policronio argued that the land had been validly sold
to Policronio as the Deed of Sale contained all the essential
elements of a valid contract of sale, by virtue of which, the subject
properties were transferred in his name as evidenced by the tax
declaration. There being no invalidation prior to the execution of
the Deed of Extra-Judicial Partition, the probity and integrity of the
Deed of Sale should remain undiminished and accorded respect
as it was a duly notarized public instrument.
The Heirs of Policronio posited that his loyal services to his father
and his being the eldest among Alfonso’s children, might have
prompted the old man to sell the subject lands to him at a very
low price as an advance inheritance. They explained that
Policronio’s failure to take possession of the subject lands and to
claim their produce manifests a Filipino family practice wherein a
child would take possession and enjoy the fruits of the land sold
by a parent only after the latter’s death. Policronio simply treated
the lands the same way his father Alfonso treated them - where
his children enjoyed usufructuary rights over the properties, as
opposed to appropriating them exclusively to himself. They
contended that Policronio’s failure to take actual possession of
the lands did not prove that he was not the owner as he was
merely exercising his right to dispose of them. They argue that it
was an error on the part of the CA to conclude that ownership by
Policronio was not established by his failure to possess the
properties sold. Instead, emphasis should be made on the fact
that the tax declarations, being indicia of possession, were in
Policronio’s name.
They further argued that the Heirs of Alfonso failed to appreciate
that the Deed of Sale was clear enough to convey the subject
parcels of land. Citing jurisprudence, they contend that there is a
presumption that an instrument sets out the true agreement of the
parties thereto and that it was executed for valuable
consideration,11 and where there is no doubt as to the intention of
the parties to a contract, the literal meaning of the stipulation shall
control.12Nowhere in the Deed of Sale is it indicated that the
transfer was only for taxation purposes. On the contrary, the
document clearly indicates that the lands were sold. Therefore,
they averred that the literal meaning of the stipulation should
control.
The Court disagrees.
The Court finds no cogent reason to deviate from the finding of
the CA that the Deed of Sale is null and void for being absolutely
simulated. The Civil Code provides:
Art. 1345. Simulation of a contract may be absolute or relative.
The former takes place when the parties do not intend to be
bound at all; the latter, when the parties conceal their true
agreement.
Art. 1346. An absolutely simulated or fictitious contract is void. A
relative simulation, when it does not prejudice a third person and
is not intended for any purpose contrary to law, morals, good
customs, public order or public policy binds the parties to their
real agreement.
Valerio v. Refresca13 is instructive on the matter of simulation of
contracts:
In absolute simulation, there is a colorable contract but it has no
substance as the parties have no intention to be bound by it. The
main characteristic of an absolute simulation is that the apparent
contract is not really desired or intended to produce legal effect or
in any way alter the juridical situation of the parties. As a result,
an absolutely simulated or fictitious contract is void, and the
parties may recover from each other what they may have given
under the contract. However, if the parties state a false cause in
the contract to conceal their real agreement, the contract is
relatively simulated and the parties are still bound by their real
agreement. Hence, where the essential requisites of a contract
are present and the simulation refers only to the content or terms
of the contract, the agreement is absolutely binding and
enforceable between the parties and their successors in interest.
Lacking, therefore, in an absolutely simulated contract is consent
which is essential to a valid and enforceable contract.14 Thus,
where a person, in order to place his property beyond the reach
of his creditors, simulates a transfer of it to another, he does not
really intend to divest himself of his title and control of the
property; hence, the deed of transfer is but a sham.15 Similarly, in
this case, Alfonso simulated a transfer to Policronio purely for
taxation purposes, without intending to transfer ownership over
the subject lands.
The primary consideration in determining the true nature of a
contract is the intention of the parties. If the words of a contract
appear to contravene the evident intention of the parties, the
latter shall prevail. Such intention is determined not only from the
express terms of their agreement, but also from the
contemporaneous and subsequent acts of the parties.16 The true
intention of the parties in this case was sufficiently proven by the
Heirs of Alfonso.
The Heirs of Alfonso established by a preponderance of
evidence17 that the Deed of Sale was one of the four (4)
absolutely simulated Deeds of Sale which involved no actual
monetary consideration, executed by Alfonso in favor of his
children, Policronio, Liberato, and Prudencia, and his second
wife, Valeriana, for taxation purposes.
Amparo Castillo, the daughter of Liberato, testified, to wit:
Q: Now sometime in the year 1969 can you recall if your
grandfather and his children [met] in your house?
A: Yes sir, that was sometime in October 1969 when they [met] in
our house, my grandfather, my late uncle Policronio Ureta, my
late uncle Liberato Ureta, my uncle Francisco Ureta, and then my
auntie Prudencia Ureta they talk[ed] about, that idea came from
my uncle Francisco Ureta to [sell] some parcels of land to his
children to lessen the inheritance tax whatever happened to my
grandfather, actually no money involved in this sale.
Q: Now you said there was that agreement, verbal agreement.
[W]here were you when this Alfonso Ureta and his children
gather[ed] in your house?
A: I was near them in fact I heard everything they were talking
[about]
xxx
Q: Were there documents of sale executed by Alfonso Ureta in
furtherance of their verbal agreement?
A: Yes sir.
Q: To whom in particular did your grandfather Alfonso Ureta
execute this deed of sale without money consideration according
to you?
A: To my uncle Policronio Ureta and to Prudencia Ureta
Panadero.
Q: And who else?
A: To Valeriana dela Cruz.
Q: How about your father?
A: He has.18
The other Deeds of Sale executed by Alfonso in favor of his
children Prudencia and Liberato, and second wife Valeriana, all
bearing the same date of execution, were duly presented in
evidence by the Heirs of Alfonso, and were uncontested by the
Heirs of Policronio. The lands which were the subject of these
Deeds of Sale were in fact included in the Deed of Extra-Judicial
Partition executed by all the heirs of Alfonso, where it was
expressly stipulated:
That the above-named Amparo U. Castillo, Prudencia U.
Paradero, Conrado B. Ureta and Merlinda U. Rivera do hereby
recognize and acknowledge as a fact that the properties presently
declared in their respective names or in the names of their
respective parents and are included in the foregoing instrument
are actually the properties of the deceased Alfonso Ureta and
were transferred only for the purpose of effective administration
and development and convenience in the payment of taxes and,
therefore, all instruments conveying or affecting the transfer of
said properties are null and void from the beginning.19
As found by the CA, Alfonso continued to exercise all the rights of
an owner even after the execution of the Deeds of Sale. It was
undisputed that Alfonso remained in possession of the subject
lands and enjoyed their produce until his death. No credence can
be given to the contention of the Heirs of Policrionio that their
father did not take possession of the subject lands or enjoyed the
fruits thereof in deference to a Filipino family practice. Had this
been true, Policronio should have taken possession of the subject
lands after his father died. On the contrary, it was admitted that
neither Policronio nor his heirs ever took possession of the
subject lands from the time they were sold to him, and even after
the death of both Alfonso and Policronio.
It was also admitted by the Heirs of Policronio that the tenants of
the subject lands never turned over the produce of the properties
to Policronio or his heirs but only to Alfonso and the
administrators of his estate. Neither was there a demand for their
delivery to Policronio or his heirs. Neither did Policronio ever pay
real estate taxes on the properties, the only payment on record
being those made by his heirs in 1996 and 1997 ten years after
his death. In sum, Policronio never exercised any rights
pertaining to an owner over the subject lands.
The most protuberant index of simulation of contract is the
complete absence of an attempt in any manner on the part of the
ostensible buyer to assert rights of ownership over the subject
properties. Policronio’s failure to take exclusive possession of the
subject properties or, in the alternative, to collect rentals, is
contrary to the principle of ownership. Such failure is a clear
badge of simulation that renders the whole transaction void. 20
It is further telling that Policronio never disclosed the existence of
the Deed of Sale to his children. This, coupled with Policronio’s
failure to exercise any rights pertaining to an owner of the subject
lands, leads to the conclusion that he was aware that the transfer
was only made for taxation purposes and never intended to bind
the parties thereto.
As the above factual circumstances remain unrebutted by the
Heirs of Policronio, the factual findings of the RTC, which were
affirmed by the CA, remain binding and conclusive upon this
Court.21
It is clear that the parties did not intend to be bound at all, and as
such, the Deed of Sale produced no legal effects and did not alter
the juridical situation of the parties. The Deed of Sale is,
therefore, void for being absolutely simulated pursuant to Article
1409 (2) of the Civil Code which provides:
Art. 1409. The following contracts are inexistent and void from the
beginning:
xxx
(2) Those which are absolutely simulated or fictitious;
xxx
For guidance, the following are the most fundamental
characteristics of void or inexistent contracts:
1) As a general rule, they produce no legal effects
whatsoever in accordance with the principle "quod nullum
est nullum producit effectum."
2) They are not susceptible of ratification.
3) The right to set up the defense of inexistence or
absolute nullity cannot be waived or renounced.
4) The action or defense for the declaration of their
inexistence or absolute nullity is imprescriptible.
 5) The inexistence or absolute nullity of a contract cannot
be invoked by a person whose interests are not directly
affected.22
Since the Deed of Sale is void, the subject properties were
properly included in the Deed of Extra-Judicial Partition of the
estate of Alfonso.
Absence and Inadequacy of Consideration
The second presumption is rebutted by the lack of consideration
for the Deed of Sale.
In their Answer,23 the Heirs of Alfonso initially argued that the
Deed of Sale was void for lack of consideration, and even
granting that there was consideration, such was inadequate. The
Heirs of Policronio counter that the defenses of absence or
inadequacy of consideration are not grounds to render a contract
void.
The Heirs of Policronio contended that under Article 1470 of the
Civil Code, gross inadequacy of the price does not affect a
contract of sale, except as it may indicate a defect in the consent,
or that the parties really intended a donation or some other act or
contract. Citing jurisprudence, they argued that inadequacy of
monetary consideration does not render a conveyance inexistent
as liberality may be sufficient cause for a valid contract, whereas
fraud or bad faith may render it either rescissible or voidable,
although valid until annulled.24 Thus, they argued that if the
contract suffers from inadequate consideration, it remains valid
until annulled, and the remedy of rescission calls for judicial
intervention, which remedy the Heirs of Alfonso failed to take.
It is further argued that even granting that the sale of the subject
lands for a consideration of ₱2,000.00 was inadequate, absent
any evidence of the fair market value of the land at the time of its
sale, it cannot be concluded that the price at which it was sold
was inadequate.25 As there is nothing in the records to show that
the Heirs of Alfonso supplied the true value of the land in 1969,
the amount of ₱2,000.00 must thus stand as its saleable value.
On this issue, the Court finds for the Heirs of Alfonso.
For lack of consideration, the Deed of Sale is once again found to
be void. It states that Policronio paid, and Alfonso received, the
₱2,000.00 purchase price on the date of the signing of the
contract:
That I, ALFONSO F. URETA, x x x for and in consideration of the
sum of TWO THOUSAND (₱2,000.00) PESOS, Philippine
Currency, to me in hand paid by POLICRONIO M. URETA, x x x,
do hereby CEDE, TRANSFER, and CONVEY, by way of absolute
sale, x x x six (6) parcels of land x x x.26 [Emphasis ours]
Although, on its face, the Deed of Sale appears to be supported
by valuable consideration, the RTC found that there was no
money involved in the sale.27 This finding was affirmed by the CA
in ruling that the sale is void for being absolutely simulated.
Considering that there is no cogent reason to deviate from such
factual findings, they are binding on this Court.
It is well-settled in a long line of cases that where a deed of sale
states that the purchase price has been paid but in fact has never
been paid, the deed of sale is null and void for lack of
consideration.28 Thus, although the contract states that the
purchase price of ₱2,000.00 was paid by Policronio to Alfonso for
the subject properties, it has been proven that such was never in
fact paid as there was no money involved. It must, therefore,
follow that the Deed of Sale is void for lack of consideration.
Given that the Deed of Sale is void, it is unnecessary to discuss
the issue on the inadequacy of consideration.
Parol Evidence and Hearsay
The Heirs of Policronio aver that the rules on parol evidence and
hearsay were violated by the CA in ruling that the Deed of Sale
was void.
They argued that based on the parol evidence rule, the Heirs of
Alfonso and, specifically, Amparo Castillo, were not in a position
to prove the terms outside of the contract because they were not
parties nor successors-in-interest in the Deed of Sale in question.
Thus, it is argued that the testimony of Amparo Castillo violates
the parol evidence rule.
Stemming from the presumption that the Heirs of Alfonso were
not parties to the contract, it is also argued that the parol
evidence rule may not be properly invoked by either party in the
litigation against the other, where at least one of the parties to the
suit is not a party or a privy of a party to the written instrument in
question and does not base a claim on the instrument or assert a
right originating in the instrument or the relation established
thereby.29
Their arguments are untenable.
The objection against the admission of any evidence must be
made at the proper time, as soon as the grounds therefor become
reasonably apparent, and if not so made, it will be understood to
have been waived. In the case of testimonial evidence, the
objection must be made when the objectionable question is asked
or after the answer is given if the objectionable features become
apparent only by reason of such answer.30 In this case, the Heirs
of Policronio failed to timely object to the testimony of Amparo
Castillo and they are, thus, deemed to have waived the benefit of
the parol evidence rule.
Granting that the Heirs of Policronio timely objected to the
testimony of Amparo Castillo, their argument would still fail.
Section 9 of Rule 130 of the Rules of Court provides:
Section 9. Evidence of written agreements. — When the terms of
an agreement have been reduced to writing, it is considered as
containing all the terms agreed upon and there can be, between
the parties and their successors in interest, no evidence of such
terms other than the contents of the written agreement.
However, a party may present evidence to modify, explain or add
to the terms of written agreement if he puts in issue in his
pleading:
(a) An intrinsic ambiguity, mistake or imperfection in the
written agreement;
(b) The failure of the written agreement to express the
true intent and agreement of the parties thereto;
(c) The validity of the written agreement; or
(d) The existence of other terms agreed to by the parties
or their successors in interest after the execution of the
written agreement.
The term "agreement" includes wills.
[Emphasis ours]
Paragraphs (b) and (c) are applicable in the case at bench.
The failure of the Deed of Sale to express the true intent and
agreement of the parties was clearly put in issue in the
Answer31 of the Heirs of Alfonso to the Complaint. It was alleged
that the Deed of Sale was only made to lessen the payment of
estate and inheritance taxes and not meant to transfer ownership.
The exception in paragraph (b) is allowed to enable the court to
ascertain the true intent of the parties, and once the intent is
clear, it shall prevail over what the document appears to be on its
face.32 As the true intent of the parties was duly proven in the
present case, it now prevails over what appears on the Deed of
Sale.
The validity of the Deed of Sale was also put in issue in the
Answer, and was precisely one of the issues submitted to the
RTC for resolution.33 The operation of the parol evidence rule
requires the existence of a valid written agreement. It is, thus, not
applicable in a proceeding where the validity of such agreement
is the fact in dispute, such as when a contract may be void for
lack of consideration.34 Considering that the Deed of Sale has
been shown to be void for being absolutely simulated and for lack
of consideration, the Heirs of Alfonso are not precluded from
presenting evidence to modify, explain or add to the terms of the
written agreement.
The Heirs of Policronio must be in a state of confusion in arguing
that the Heirs of Alfonso may not question the Deed of Sale for
not being parties or successors-in-interest therein on the basis
that the parol evidence rule may not be properly invoked in a
proceeding or litigation where at least one of the parties to the
suit is not a party or a privy of a party to the written instrument in
question and does not base a claim on the instrument or assert a
right originating in the instrument or the relation established
thereby. If their argument was to be accepted, then the Heirs of
Policronio would themselves be precluded from invoking the parol
evidence rule to exclude the evidence of the Heirs of Alfonso.
Indeed, the applicability of the parol evidence rule requires that
the case be between parties and their successors-in-interest.35 In
this case, both the Heirs of Alfonso and the Heirs of Policronio
are successors-in-interest of the parties to the Deed of Sale as
they claim rights under Alfonso and Policronio, respectively. The
parol evidence rule excluding evidence aliunde, however, still
cannot apply because the present case falls under two
exceptions to the rule, as discussed above.
With respect to hearsay, the Heirs of Policronio contended that
the rule on hearsay was violated when the testimony of Amparo
Castillo was given weight in proving that the subject lands were
only sold for taxation purposes as she was a person alien to the
contract. Even granting that they did not object to her testimony
during trial, they argued that it should not have been appreciated
by the CA because it had no probative value whatsoever.36
The Court disagrees.
It has indeed been held that hearsay evidence whether objected
to or not cannot be given credence for having no probative
value.37 This principle, however, has been relaxed in cases
where, in addition to the failure to object to the admissibility of the
subject evidence, there were other pieces of evidence presented
or there were other circumstances prevailing to support the fact in
issue. In Top-Weld Manufacturing, Inc. v. ECED S.A.,38 this Court
held:
Hearsay evidence alone may be insufficient to establish a fact in
an injunction suit (Parker v. Furlong, 62 P. 490) but, when no
objection is made thereto, it is, like any other evidence, to be
considered and given the importance it deserves. (Smith v.
Delaware & Atlantic Telegraph & Telephone Co., 51 A 464).
Although we should warn of the undesirability of issuing
judgments solely on the basis of the affidavits submitted, where
as here, said affidavits are overwhelming, uncontroverted by
competent evidence and not inherently improbable, we are
constrained to uphold the allegations of the respondents
regarding the multifarious violations of the contracts made by the
petitioner.
In the case at bench, there were other prevailing circumstances
which corroborate the testimony of Amparo Castillo. First, the
other Deeds of Sale which were executed in favor of Liberato,
Prudencia, and Valeriana on the same day as that of Policronio’s
were all presented in evidence. Second, all the properties subject
therein were included in the Deed of Extra-Judicial Partition of the
estate of Alfonso. Third, Policronio, during his lifetime, never
exercised acts of ownership over the subject properties (as he
never demanded or took possession of them, never demanded or
received the produce thereof, and never paid real estate taxes
thereon). Fourth, Policronio never informed his children of the
sale.
As the Heirs of Policronio failed to controvert the evidence
presented, and to timely object to the testimony of Amparo
Castillo, both the RTC and the CA correctly accorded probative
weight to her testimony.
Prior Action Unnecessary
The Heirs of Policronio averred that the Heirs of Alfonso should
have filed an action to declare the sale void prior to executing the
Deed of Extra-Judicial Partition. They argued that the sale should
enjoy the presumption of regularity, and until overturned by a
court, the Heirs of Alfonso had no authority to include the land in
the inventory of properties of Alfonso’s estate. By doing so, they
arrogated upon themselves the power of invalidating the Deed of
Sale which is exclusively vested in a court of law which, in turn,
can rule only upon the observance of due process. Thus, they
contended that prescription, laches, or estoppel have set in to
militate against assailing the validity of the sale.
The Heirs of Policronio are mistaken.
A simulated contract of sale is without any cause or
consideration, and is, therefore, null and void; in such case, no
independent action to rescind or annul the contract is necessary,
and it may be treated as non-existent for all purposes.39 A void or
inexistent contract is one which has no force and effect from the
beginning, as if it has never been entered into, and which cannot
be validated either by time or ratification. A void contract
produces no effect whatsoever either against or in favor of
anyone; it does not create, modify or extinguish the juridical
relation to which it refers.40 Therefore, it was not necessary for the
Heirs of Alfonso to first file an action to declare the nullity of the
Deed of Sale prior to executing the Deed of Extra-Judicial
Partition.
Personality to Question Sale
The Heirs of Policronio contended that the Heirs of Alfonso are
not parties, heirs, or successors-in-interest under the
contemplation of law to clothe them with the personality to
question the Deed of Sale. They argued that under Article 1311 of
the Civil Code, contracts take effect only between the parties,
their assigns and heirs. Thus, the genuine character of a contract
which personally binds the parties cannot be put in issue by a
person who is not a party thereto. They posited that the Heirs of
Alfonso were not parties to the contract; neither did they appear
to be beneficiaries by way of assignment or inheritance. Unlike
themselves who are direct heirs of Policronio, the Heirs of Alfonso
are not Alfonso’s direct heirs. For the Heirs of Alfonso to qualify
as parties, under Article 1311 of the Civil Code, they must first
prove that they are either heirs or assignees. Being neither, they
have no legal standing to question the Deed of Sale.
They further argued that the sale cannot be assailed for being
barred under Article 1421 of the Civil Code which provides that
the defense of illegality of a contract is not available to third
persons whose interests are not directly affected.
Again, the Court disagrees.
Article 1311 and Article 1421 of the Civil Code provide:
Art. 1311. Contracts take effect only between the parties, their
assigns and heirs, x x x
Art. 1421. The defense of illegality of contracts is not available to
third persons whose interests are not directly affected.
The right to set up the nullity of a void or non-existent contract is
not limited to the parties, as in the case of annullable or voidable
contracts; it is extended to third persons who are directly affected
by the contract. Thus, where a contract is absolutely simulated,
even third persons who may be prejudiced thereby may set up its
inexistence.41 The Heirs of Alfonso are the children of Alfonso,
with his deceased children represented by their children
(Alfonso’s grandchildren). The Heirs of Alfonso are clearly his
heirs and successors-in-interest and, as such, their interests are
directly affected, thereby giving them the right to question the
legality of the Deed of Sale.
Inapplicability of Article 842
The Heirs of Policronio further argued that even assuming that
the Heirs of Alfonso have an interest in the Deed of Sale, they
would still be precluded from questioning its validity. They posited
that the Heirs of Alfonso must first prove that the sale of Alfonso’s
properties to Policronio substantially diminished their
successional rights or that their legitimes would be unduly
prejudiced, considering that under Article 842 of the Civil Code,
one who has compulsory heirs may dispose of his estate
provided that he does not contravene the provisions of the Civil
Code with regard to the legitime of said heirs. Having failed to do
so, they argued that the Heirs of Alfonso should be precluded
from questioning the validity of the Deed of Sale.
Still, the Court disagrees.
Article 842 of the Civil Code provides:
Art. 842. One who has no compulsory heirs may dispose by will
of all his estate or any part of it in favor of any person having
capacity to succeed.
One who has compulsory heirs may dispose of his estate
provided he does not contravene the provisions of this Code with
regard to the legitime of said heirs.
This article refers to the principle of freedom of disposition by will.
What is involved in the case at bench is not a disposition by will
but by Deed of Sale. Hence, the Heirs of Alfonso need not first
prove that the disposition substantially diminished their
successional rights or unduly prejudiced their legitimes.
Inapplicability of Article 1412
The Heirs of Policronio contended that even assuming that the
contract was simulated, the Heirs of Alfonso would still be barred
from recovering the properties by reason of Article 1412 of the
Civil Code, which provides that if the act in which the unlawful or
forbidden cause does not constitute a criminal offense, and the
fault is both on the contracting parties, neither may recover what
he has given by virtue of the contract or demand the performance
of the other’s undertaking. As the Heirs of Alfonso alleged that the
purpose of the sale was to avoid the payment of inheritance
taxes, they cannot take from the Heirs of Policronio what had
been given to their father.
On this point, the Court again disagrees.
Article 1412 of the Civil Code is as follows:
Art. 1412. If the act in which the unlawful or forbidden cause
consists does not constitute a criminal offense, the following rules
shall be observed:
(1) When the fault is on the part of both contracting parties,
neither may recover what he has given by virtue of the contract,
or demand the performance of the other’s undertaking;
(2) When only one of the contracting parties is at fault, he cannot
recover what he has given by reason of the contract, or ask for
the fulfillment of what has been promised him. The other, who is
not at fault, may demand the return of what he has given without
any obligation to comply with his promise.
Article 1412 is not applicable to fictitious or simulated contracts,
because they refer to contracts with an illegal cause or subject-
matter.42 This article presupposes the existence of a cause, it
cannot refer to fictitious or simulated contracts which are in reality
non-existent.43 As it has been determined that the Deed of Sale is
a simulated contract, the provision cannot apply to it.
Granting that the Deed of Sale was not simulated, the provision
would still not apply. Since the subject properties were included
as properties of Alfonso in the Deed of Extra-Judicial Partition,
they are covered by corresponding inheritance and estate taxes.
Therefore, tax evasion, if at all present, would not arise, and
Article 1412 would again be inapplicable.
Prescription
From the position that the Deed of Sale is valid and not void, the
Heirs of Policronio argued that any question regarding its validity
should have been initiated through judicial process within 10
years from its notarization in accordance with Article 1144 of the
Civil Code. Since 21 years had already elapsed when the Heirs of
Alfonso assailed the validity of the Deed of Sale in 1996,
prescription had set in. Furthermore, since the Heirs of Alfonso
did not seek to nullify the tax declarations of Policronio, they had
impliedly acquiesced and given due recognition to the Heirs of
Policronio as the rightful inheritors and should, thus, be barred
from laying claim on the land.
The Heirs of Policronio are mistaken.
Article 1410 of the Civil Code provides:
Art. 1410. The action for the declaration of the inexistence of a
contract does not prescribe.
This is one of the most fundamental characteristics of void or
inexistent contracts.44
As the Deed of Sale is a void contract, the action for the
declaration of its nullity, even if filed 21 years after its execution,
cannot be barred by prescription for it is imprescriptible.
Furthermore, the right to set up the defense of inexistence or
absolute nullity cannot be waived or renounced.45 Therefore, the
Heirs of Alfonso cannot be precluded from setting up the defense
of its inexistence.
Validity of the Deed of Extra-Judicial Partition
The Court now resolves the issue of the validity of the Deed of
Extra-Judicial Partition.
Unenforceability
The Heirs of Alfonso argued that the CA was mistaken in
annulling the Deed of Extra-Judicial Partition due to the incapacity
of Conrado to give the consent of his co-heirs for lack of a special
power of attorney. They contended that what was involved was
not the capacity to give consent in behalf of the co-heirs but the
authority to represent them. They argue that the Deed of Extra-
Judicial Partition is not a voidable or an annullable contract under
Article 1390 of the Civil Code, but rather, it is an unenforceable
or, more specifically, an unauthorized contract under Articles
1403 (1) and 1317 of the Civil Code. As such, the Deed of Extra-
Judicial Partition should not be annulled but only be rendered
unenforceable against the siblings of Conrado.
They further argued that under Article 1317 of the Civil Code,
when the persons represented without authority have ratified the
unauthorized acts, the contract becomes enforceable and
binding. They contended that the Heirs of Policronio ratified the
Deed of Extra-Judicial Partition when Conrado took possession of
one of the parcels of land adjudicated to him and his siblings, and
when another parcel was used as collateral for a loan entered
into by some of the Heirs of Policronio. The Deed of Extra-
Judicial Partition having been ratified and its benefits accepted,
the same thus became enforceable and binding upon them.
The Heirs of Alfonso averred that granting arguendo that Conrado
was not authorized to represent his co-heirs and there was no
ratification, the CA should not have remanded the case to the
RTC for partition of Alfonso’s estate. They argued that the CA
should not have applied the Civil Code general provision on
contracts, but the special provisions dealing with succession and
partition. They contended that contrary to the ruling of the CA, the
extra-judicial parition was not an act of strict dominion, as it has
been ruled that partition of inherited land is not a conveyance but
a confirmation or ratification of title or right to the
land.46 Therefore, the law requiring a special power of attorney
should not be applied to partitions.
On the other hand, the Heirs of Policronio insisted that the CA
pronouncement on the invalidity of the Deed of Extra-Judicial
Partition should not be disturbed because the subject properties
should not have been included in the estate of Alfonso, and
because Conrado lacked the written authority to represent his
siblings. They argued with the CA in ruling that a special power of
attorney was required before Conrado could sign in behalf of his
co-heirs.
The Heirs of Policronio denied that they ratified the Deed of
Extra-Judicial Partition. They claimed that there is nothing on
record that establishes that they ratified the partition. Far from
doing so, they precisely questioned its execution by filing a
complaint. They further argued that under Article 1409 (3) of the
Civil Code, ratification cannot be invoked to validate the illegal act
of including in the partition those properties which do not belong
to the estate as it provides another mode of acquiring ownership
not sanctioned by law.
Furthermore, the Heirs of Policronio contended that the defenses
of unenforceability, ratification, and preterition are being raised for
the first time on appeal by the Heirs of Alfonso. For having failed
to raise them during the trial, the Heirs of Alfonso should be
deemed to have waived their right to do so.
The Court agrees in part with the Heirs of Alfonso.
To begin, although the defenses of unenforceability, ratification
and preterition were raised by the Heirs of Alfonso for the first
time on appeal, they are concomitant matters which may be taken
up. As long as the questioned items bear relevance and close
relation to those specifically raised, the interest of justice would
dictate that they, too, must be considered and resolved. The rule
that only theories raised in the initial proceedings may be taken
up by a party thereto on appeal should refer to independent, not
concomitant matters, to support or oppose the cause of action.47
In the RTC, the Heirs of Policronio alleged that Conrado’s
consent was vitiated by mistake and undue influence, and that he
signed the Deed of Extra-Judicial Partition without the authority or
consent of his co-heirs.
The RTC found that Conrado’s credibility had faltered, and his
claims were rejected by the RTC as gratuitous assertions. On the
basis of such, the RTC ruled that Conrado duly represented his
siblings in the Deed of Extra-Judicial Partition.
On the other hand, the CA annulled the Deed of Extra-Judicial
Partition under Article 1390 (1) of the Civil Code, holding that a
special power of attorney was lacking as required under Article
1878 (5) and (15) of the Civil Code. These articles are as follows:
Art. 1878. Special powers of attorney are necessary in the
following cases:
xxx
(5) To enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously or for a
valuable consideration;
xxx
(15) Any other act of strict dominion.
Art. 1390. The following contracts are voidable or annullable,
even though there may have been no damage to the contracting
parties:
(1) Those where one of the parties is incapable of giving consent
to a contract;
(2) Those where the consent is vitiated by mistake, violence,
intimidation, undue influence or fraud.
These contracts are binding, unless they are annulled by a proper
action in court. They are susceptible of ratification.
This Court finds that Article 1878 (5) and (15) is inapplicable to
the case at bench. It has been held in several cases48 that
partition among heirs is not legally deemed a conveyance of real
property resulting in change of ownership. It is not a transfer of
property from one to the other, but rather, it is a confirmation or
ratification of title or right of property that an heir is renouncing in
favor of another heir who accepts and receives the inheritance. It
is merely a designation and segregation of that part which
belongs to each heir. The Deed of Extra-Judicial Partition cannot,
therefore, be considered as an act of strict dominion. Hence, a
special power of attorney is not necessary.
In fact, as between the parties, even an oral partition by the heirs
is valid if no creditors are affected. The requirement of a written
memorandum under the statute of frauds does not apply to
partitions effected by the heirs where no creditors are involved
considering that such transaction is not a conveyance of property
resulting in change of ownership but merely a designation and
segregation of that part which belongs to each heir.49
Neither is Article 1390 (1) applicable. Article 1390 (1)
contemplates the incapacity of a party to give consent to a
contract. What is involved in the case at bench though is not
Conrado’s incapacity to give consent to the contract, but rather
his lack of authority to do so. Instead, Articles 1403 (1), 1404, and
1317 of the Civil Code find application to the circumstances
prevailing in this case. They are as follows:
Art. 1403. The following contracts are unenforceable, unless they
are ratified:
(1) Those entered into in the name of another person by one who
has been given no authority or legal representation, or who has
acted beyond his powers;
Art. 1404. Unauthorized contracts are governed by Article 1317
and the principles of agency in Title X of this Book.
Art. 1317. No one may contract in the name of another without
being authorized by the latter, or unless he has by law a right to
represent him.
A contract entered into in the name of another by one who has no
authority or legal representation, or who has acted beyond his
powers, shall be unenforceable, unless it is ratified, expressly or
impliedly, by the person on whose behalf it has been executed,
before it is revoked by the other contracting party.
Such was similarly held in the case of Badillo v. Ferrer:
The Deed of Extrajudicial Partition and Sale is not a voidable or A: The way I remember I signed that in our house.
an annullable contract under Article 1390 of the New Civil Code.
Article 1390 renders a contract voidable if one of the parties is Q: And who requested or required you to sign this document?
incapable of giving consent to the contract or if the contracting
party’s consent is vitiated by mistake, violence, intimidation, A: My aunties.
undue influence or fraud. x x x
Q: Who in particular if you can recall?
The deed of extrajudicial parition and sale is an unenforceable or,
more specifically, an unauthorized contract under Articles 1403(1)
A: Nay Pruding Panadero.
and 1317 of the New Civil Code.50
Q: You mean that this document that you signed was brought to
Therefore, Conrado’s failure to obtain authority from his co-heirs
your house by your Auntie Pruding Pa[r]adero [who] requested
to sign the Deed of Extra-Judicial Partition in their behalf did not
you to sign that document?
result in his incapacity to give consent so as to render the
contract voidable, but rather, it rendered the contract valid but
unenforceable against Conrado’s co-heirs for having been A: When she first brought that document I did not sign that said
entered into without their authority. document because I [did] no[t] know the contents of that
document.
A closer review of the evidence on record, however, will show
that the Deed of Extra-Judicial Partition is not unenforceable but, Q: How many times did she bring this document to you [until] you
in fact, valid, binding and enforceable against all the Heirs of finally signed the document?
Policronio for having given their consent to the contract. Their
consent to the Deed of Extra-Judicial Partition has been proven A: Perhaps 3 times.
by a preponderance of evidence.
Q: Can you tell the court why you finally signed it?
Regarding his alleged vitiated consent due to mistake and undue
influence to the Deed of Extra-Judicial Partition, Conrado A: Because the way she explained it to me that the land of my
testified, to wit: grandfather will be partitioned.

Q: Mr. Ureta you remember having signed a document entitled Q: When you signed this document were your brothers and
deed of extra judicial partition consisting of 11 pages and which sisters who are your co-plaintiffs in this case aware of your act to
have previously [been] marked as Exhibit I for the plaintiffs? sign this document?

A: Yes sir. A: They do not know.

Q: Can you recall where did you sign this document? xxx
Q: After you have signed this document did you inform your
brothers and sisters that you have signed this document?
No I did not. 51
xxx
Q: Now you read the document when it was allegedly brought to
your house by your aunt Pruding Pa[r]adero?
A: I did not read it because as I told her I still want to ask the
advise of my brothers and sisters.
Q: So do I get from you that you have never read the document
itself or any part thereof?
A: I have read the heading.
xxx
Q: And why is it that you did not read all the pages of this
document because I understand that you know also how to read
in English?
A: Because the way Nay Pruding explained to me is that the
property of my grandfather will be partitioned that is why I am so
happy.
xxx
Q: You mean to say that after you signed this deed of extra
judicial partition up to the present you never informed them?
A: Perhaps they know already that I have signed and they read
already the document and they have read the document.
Q: My question is different, did you inform them?
A: The document sir? I did not tell them.
Q: Even until now?
A: Until now I did not inform them.52
This Court finds no cogent reason to reverse the finding of the
RTC that Conrado’s explanations were mere gratuitous
assertions not entitled to any probative weight. The RTC found
Conrado’s credibility to have faltered when he testified that
perhaps his siblings were already aware of the Deed of Extra-
Judicial Partition. The RTC was in the best position to judge the
credibility of the witness’ testimony. The CA also recognized that
Conrado’s consent was not vitiated by mistake and undue
influence as it required a special power of attorney in order to
bind his co-heirs and, as such, the CA thereby recognized that his
signature was binding to him but not with respect to his co-heirs.
Findings of fact of the trial court, particularly when affirmed by the
CA, are binding to this Court.53
Furthermore, this Court notes other peculiarities in Conrado’s
testimony. Despite claims of undue influence, there is no
indication that Conrado was forced to sign by his aunt, Prudencia
Paradero. In fact, he testified that he was happy to sign because
his grandfather’s estate would be partitioned. Conrado, thus,
clearly understood the document he signed. It is also worth noting
that despite the document being brought to him on three separate
occasions and indicating his intention to inform his siblings about
it, Conrado failed to do so, and still neglected to inform them even
after he had signed the partition. All these circumstances negate
his claim of vitiated consent. Having duly signed the Deed of
Extra-Judicial Partition, Conrado is bound to it. Thus, it is
enforceable against him.
Although Conrado’s co-heirs claimed that they did not authorize
Conrado to sign the Deed of Extra-Judicial Partition in their
behalf, several circumstances militate against their contention.
First, the Deed of Extra-Judicial Partition was executed on April
19, 1989, and the Heirs of Policronio claim that they only came to
know of its existence on July 30, 1995 through an issue of the
Aklan Reporter. It is difficult to believe that Conrado did not inform
his siblings about the Deed of Extra-Judicial Partition or at least
broach its subject with them for more than five years from the
time he signed it, especially after indicating in his testimony that
he had intended to do so.
Second, Conrado retained possession of one of the parcels of
land adjudicated to him and his co-heirs in the Deed of Extra-
Judicial Partition.
Third, after the execution of the partition on April 19, 1989 and
more than a year before they claimed to have discovered the
existence of the Deed of Extra-Judicial Partition on July 30, 1995,
some of the Heirs of Policronio, namely, Rita Solano, Macario
Ureta, Lilia Tayco, and Venancio Ureta executed on June 1,
1994, a Special Power of Attorney54 in favor of their sister Gloria
Gonzales, authorizing her to obtain a loan from a bank and to
mortgage one of the parcels of land adjudicated to them in the
Deed of Extra-Judicial Partition to secure payment of the loan.
They were able to obtain the loan using the land as collateral,
over which a Real Estate Mortgage55 was constituted. Both the
Special Power of Attorney and the Real Estate Mortgage were
presented in evidence in the RTC, and were not controverted or
denied by the Heirs of Policronio.
Fourth, in the letter dated August 15, 1995, sent by the counsel of
the Heirs of Policronio to the Heirs of Alfonso requesting for
amicable settlement, there was no mention that Conrado’s
consent to the Deed of Extra-Judicial Partition was vitiated by
mistake and undue influence or that they had never authorized
Conrado to represent them or sign the document on their behalf.
It is questionable for such a pertinent detail to have been omitted.
The body of said letter is reproduced hereunder as follows:
Greetings:
Your nephews and nieces, children of your deceased brother
Policronio Ureta, has referred to me for appropriate legal action
the property they inherited from their father consisting of six (6)
parcels of land which is covered by a Deed of Absolute Sale
dated October 25, 1969. These properties ha[ve] already been
transferred to the name of their deceased father immediately after
the sale, machine copy of the said Deed of Sale is hereto
attached for your ready reference.
Lately, however, there was published an Extra-judicial Partition of
the estate of Alfonso Ureta, which to the surprise of my clients
included the properties already sold to their father before the
death of said Alfonso Ureta. This inclusion of their property is
erroneous and illegal because these properties were covered by
the Deed of Absolute Sale in favor of their father Policronio Ureta
no longer form part of the estate of Alfonso Ureta. Since
Policronio Ureta has [sic] died in 1974 yet, these properties have
passed by hereditary succession to his children who are now the
true and lawful owners of the said properties.
My clients are still entitled to a share in the estate of Alfonso
Ureta who is also their grandfather as they have stepped into the
shoes of their deceased father Policronio Ureta. But this estate of
Alfonso Ureta should already exclude the six (6) parcels of land
covered by the Deed of Absolute Sale in favor of Policronio Ureta.
My clients cannot understand why the properties of their late
father [should] be included in the estate of their grandfather and
be divided among his brothers and sisters when said properties
should only be divided among themselves as children of
Policronio Ureta.
Since this matter involves very close members of the same
family, I have counseled my clients that an earnest effort towards
a compromise or amicable settlement be first explored before
resort to judicial remedy is pursued. And a compromise or
amicable settlement can only be reached if all the parties meet
and discuss the problem with an open mind. To this end, I am
suggesting a meeting of the parties on September 16, 1995 at
2:00 P.M. at B Place Restaurant at C. Laserna St., Kalibo, Aklan.
It would be best if the parties can come or be represented by their
duly designated attorney-in-fact together with their lawyers if they
so desire so that the problem can be discussed unemotionally
and intelligently.
I would, however, interpret the failure to come to the said meeting
as an indication that the parties are not willing to or interested in
amicable settlement of this matter and as a go signal for me to
resort to legal and/or judicial remedies to protest the rights of my
clients.
Thank you very much.56
Based on the foregoing, this Court concludes that the allegation
of Conrado’s vitiated consent and lack of authority to sign in
behalf of his co-heirs was a mere afterthought on the part of the
Heirs of Policronio. It appears that the Heirs of Policronio were
not only aware of the existence of the Deed of Extra-Judicial
Partition prior to June 30, 1995 but had, in fact, given Conrado
authority to sign in their behalf. They are now estopped from
questioning its legality, and the Deed of Extra-Judicial Partition is
valid, binding, and enforceable against them.
In view of the foregoing, there is no longer a need to discuss the
issue of ratification.
Preterition
The Heirs of Alfonso were of the position that the absence of the
Heirs of Policronio in the partition or the lack of authority of their
representative results, at the very least, in their preterition and not
in the invalidity of the entire deed of partition. Assuming there was
actual preterition, it did not render the Deed of Extra-Judicial
Partition voidable. Citing Article 1104 of the Civil Code, they aver
that a partition made with preterition of any of the compulsory
heirs shall not be rescinded, but the heirs shall be proportionately
obliged to pay the share of the person omitted. Thus, the Deed of
Extra-Judicial Partition should not have been annulled by the CA.
Instead, it should have ordered the share of the heirs omitted to
be given to them.
The Heirs of Alfonso also argued that all that remains to be
adjudged is the right of the preterited heirs to represent their
father, Policronio, and be declared entitled to his share. They
contend that remand to the RTC is no longer necessary as the
issue is purely legal and can be resolved by the provisions of the
Civil Code for there is no dispute that each of Alfonso’s heirs
received their rightful share. Conrado, who received Policronio’s
share, should then fully account for what he had received to his
other co-heirs and be directed to deliver their share in the
inheritance.
These arguments cannot be given credence.
Their posited theory on preterition is no longer viable. It has
already been determined that the Heirs of Policronio gave their
consent to the Deed of Extra-Judicial Partition and they have not
been excluded from it. Nonetheless, even granting that the Heirs
of Policronio were denied their lawful participation in the partition,
the argument of the Heirs of Alfonso would still fail.
Preterition under Article 854 of the Civil Code is as follows:
Art. 854. 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.
If the omitted compulsory heirs should die before the testator, the
institution shall be effectual, without prejudice to the right of
representation.
Preterition has been defined as the total omission of a
compulsory heir from the inheritance. It consists in the silence of
1âwphi1
properties were transferred only for the purpose of effective
administration and development convenience in the payment of
taxes and, therefore, all instruments conveying or effecting the
transfer of said properties are null and void from the beginning
(Exhs. 1-4, 7-d).58
Considering that the Deed of Sale has been found void and the
Deed of Extra-Judicial Partition valid, with the consent of all the
Heirs of Policronio duly given, there is no need to remand the
case to the court of origin for partition.
1ªvvph!1

the testator with regard to a compulsory heir, omitting him in the

testament, either by not mentioning him at all, or by not giving him
anything in the hereditary property but without expressly
disinheriting him, even if he is mentioned in the will in the latter
case.57 Preterition is thus a concept of testamentary succession
and requires a will. In the case at bench, there is no will involved.
Therefore, preterition cannot apply.
Remand Unnecessary
WHEREFORE, the petition in G.R. No. 165748 is DENIED. The
petition in G.R. No. 165930 is GRANTED. The assailed April 20,
2004 Decision and October 14, 2004 Resolution of the Court of
Appeals in CA-G.R. CV No. 71399, are hereby MODIFIED in this
wise:
(1) The Deed of Extra-Judicial Partition, dated April 19,
1989, is VALID, and

The Deed of Extra-Judicial Partition is in itself valid for complying (2) The order to remand the case to the court of origin is
with all the legal requisites, as found by the RTC, to wit: hereby DELETED.

A persual of the Deed of Extra-judicial Partition would reveal that SO ORDERED.

all the heirs and children of Alfonso Ureta were represented
therein; that nobody was left out; that all of them received as JOSE CATRAL MENDOZA
much as the others as their shares; that it distributed all the Associate Justice
properties of Alfonso Ureta except a portion of parcel 29
containing an area of 14,000 square meters, more or less, which
was expressly reserved; that Alfonso Ureta, at the time of his
death, left no debts; that the heirs of Policronio Ureta, Sr. were
represented by Conrado B. Ureta; all the parties signed the
document, was witnessed and duly acknowledged before Notary
Public Adolfo M. Iligan of Kalibo, Aklan; that the document
expressly stipulated that the heirs to whom some of the properties
were transferred before for taxation purposes or their children,
expressly recognize and acknowledge as a fact that the