"x x x a compulsory counterclaim is auxiliary to the proceeding in the original suit

and derives its jurisdictional support therefrom, inasmuch as it arises out of or is

necessarily connected with the transaction or occurrence that is the subject matter of
the complaint. It follows that if the court does not have jurisdiction to entertain the
main action of the case and dismisses the same, then the compulsory counterclaim,
being ancilliary to the main action, must likewise be dismissed since no jurisdiction
remained for any grant of relief under the counterclaim.[15]
"The aforementioned doctrine is in consonance with the primary objective of a
counterclaim which is to avoid and prevent circuity of action by allowing the entire
controversy between the parties to be litigated and finally determined in one action,
wherever this can be done with justice to all parties concerned."[16]
Furthermore, there is no denying the fact that it was private respondent herself who
caused the dismissal of her counterclaim for not only did she fail to object to, but she
actually moved for the dismissal of the complaint.[17] In the words of Justice Abad
Santos,
"x x x The petitioner (private respondent in this case) does not object to the
dismissal of the civil case but nonetheless wants her counterclaim therein to subsist.
Impossible. A person cannot eat his cake and have it at the same time. If the civil
case is dismissed, so also is the counterclaim filed therein."[18]

G.R. No. 115088. June 20, 1996

THIRD DIVISION
INTESTATE ESTATE OF AMADO B. DALISAY, represented by Special Administratrix
PRECIOSA D. TIROL, petitioner, vs. HON. ROMEO D. MARASIGAN and LOURDES
OPPUS, respondents.

Section 3, Rule 17 of the 1997 Rules of Court

provides:
SEC. 3. Dismissal due to fault of plaintiff. If, for no
justifiable cause, the plaintiff failsto appear on the
date of the presentation of his evidence in chief on the
complaint, orto prosecute his action for an
unreasonable length of time, or to comply with these
Rules or any order of the court, the complaint may be
dismissed upon motion of the defendant or upon the
courts own motion, without prejudice to the right of

the defendant to prosecute his counterclaim in the

same or in a separate action. This dismissal
shall have the effect of an adjudication upon the
merits,
unless
otherwise
declared
by
the
court. (Emphases supplied)
A judgment is revived only when the same cannot be enforced by motion, that is,
after five years from the time it becomes final. A revived judgment can be enforced
by motion within five years from its finality. After said five years, how may the revived
judgment be enforced? Appellee contends that by that time ten years or more would
have elapsed since the first judgment becomes final, so that an action to enforce
said judgment would then be barred by the statute of limitations.
Appellee's theory relates the period of prescription to the date the original judgment
became final. Such a stand is inconsistent with the accepted view that a judgment
reviving a previous one is a new and different judgment. The inconsistency becomes
clearer when we consider that the causes of action in the three cases are different.
In the original case, the action was premised on the unpaid promissory note signed
by Joaquin Bondoc in favor of the Philippine National Bank; in the second case, the
Philippine National Bank's cause of action was the judgment rendered in Civil Case
No. 8040; and in the present case, the basis is the judgment rendered in Civil Case
No. 30663. Parenthetically, even the amounts involved are different.
The source of Section 6 aforecited is Section 447 of the Code of Civil Procedure
which in turn was derived from the Code of Civil Procedure of California. The rule
followed in California in this regard is that a proceeding by separate ordinary action
to revive a judgment is a new action rather than a continuation of the old, and results
in a new judgment constituting a new cause of action, upon which a new period of
limitations begins to run.3
The judgment in Civil Case No. 30663, which provided the cause of action in the
case at bar, was rendered on February 20, 1957 and became final in the same year.
Pursuant to Article 1144(3) of the New Civil Code the action upon such judgment
must be brought within ten years from 1957 or until 1967. The instant case instituted
in the courta quo on June 7, 1962 is well within the prescriptive period.

rtc-special agrarian court must adopt the proper

procedure in determining just compensation
Here, the RTC failed to observe the basic rules of procedure and the fundamental
requirements in determining just compensation for the property. Firstly, it dispensed
with the hearing and merely ordered the parties to submit their respective
memoranda. Such action is grossly erroneous since the determination of just

compensation involves the examination of the following factors specified in Section

17 of RA 6657, as amended:
1. the cost of the acquisition of the land;
2. the current value of like properties;
3. its nature, actual use and income;
4. the sworn valuation by the owner, the tax declarations;
5. the assessment made by government assessors;
6. the social and economic benefits contributed by the farmers and the farmworkers
and by the government to the property, and;
7. the non-payment of taxes or loans secured from any government financing
institution on the said land, if any.
Obviously, these factors involve factual matters which can be established only during
a hearing wherein the contending parties present their respective evidence. In fact,
to underscore the intricate nature of determining the valuation of the land, Section 58
of the same law even authorizes the Special Agrarian Courts to appoint
commissioners for such purpose. [Emphasis supplied].

XXX

In determining the valuation of the subject property, the RTC-SAC should consider
the factors provided under Section 1725 of RA 6657 mentioned above. We fully
explained the current doctrine in the proper determination of just compensation in
Lee v. Land Bank of the Philippines26 using the formula provided in AO No. 598.27 Furthermore, upon its own initiative, or at the instance of any of the parties, the
RTC-SAC may appoint one or more commissioners to examine, investigate and
ascertain facts relevant to the dispute pursuant to Section 58 28 of RA 6657.

SECOND DIVISION

[G.R. NO. 160394 : November 27, 2009]

LAND BANK OF THE PHILIPPINES, Petitioner, v. AGUSTIN C.
DIZON, Respondent.
DECISION

the party who seeks to challenge the foreclosure

proceedings has the burden of evidence to rebut
the same
At the outset, it bears emphasis that foreclosure proceedings have in their favor the
presumption of regularity and the party who seeks to challenge the proceedings has
the burden of evidence to rebut the same.15 In this case, respondent failed to prove
that Prudential Bank has not complied with the notice requirement of the law.
Sections 2, 3, and 4 of Act No. 3135 laid down the procedure regarding foreclosure
sale:

chanroblesvirtuallawlib rary

Sec. 2. Said sale cannot be made legally outside of the province in which the
property sold is situated; and in case the place within said province in which the sale
is to be made is subject to stipulation, such sale shall be made in said place or in the
municipal building of the municipality in which the property or part thereof is situated.
Sec. 3. Notice shall be given by posting notices of the sale for not less than twenty
days in at least three public places of the municipality or city where the property is
situated, and if such property is worth more than four hundred pesos, such notice
shall also be published once a week for at least three consecutive weeks in a
newspaper

of

general

circulation

in

the

municipality

or

city.

Sec. 4. The sale shall be made at public auction, between the hours of nine in the
morning and four in the afternoon; and shall be under the direction of the sheriff of
the province, the justice or auxiliary justice of the peace of the municipality in which
such sale has to be made, or a notary public of said municipality, who shall be
entitled to collect a fee of five pesos each day of actual work performed, in addition
to his expenses.

In Philippine National Bank v. Maraya, Jr., 16 we elucidated that one of the most
important requirements of Act No. 3135 is that the notice of the time and place of

sale shall be given. If the sheriff acts without notice, or at a time and place other than
that designated in the notice, the sheriff acts without warrant of law. 17 In this case,
the property sold in the public auction is located in Quezon City and the foreclosure
sale proceeded as scheduled at 10:00 oclock in the morning on 26 August 1996 at
the Hall of Justice in Quezon City with Prudential Bank as the winning bidder,
registering

the

highest

bid

of

P396,000.00.

In Century Savings Bank v. Samonte18 citing Olizon v. Court of Appeals,19 the Court
reiterated the purpose of the rule on notice, to wit:

chanroblesvirtuallawlibra ry

The object of a notice of sale is to inform the public of the nature and condition of the
property to be sold, and of the time, place and terms of the sale. Notices are given
for the purpose of securing bidders and to prevent a sacrifice of the property. If these
objects are attained, immaterial errors and mistakes will not affect the sufficiency of
the notice; but if mistakes or omissions occur in the notices of sale, which are
calculated to deter or mislead bidders, to depreciate the value of the property, or to
prevent it from bringing a fair price, such mistakes or omissions will be fatal to the
validity of the notice, and also to the sale made pursuant thereto. 20
The mistakes and omissions referred to in the above-cited ruling which would
invalidate notice pertain to those which: 1) are calculated to deter or mislead bidders,
2) to depreciate the value of the property, or 3) to prevent it from bringing a fair price.

BANK
OF
THE
PHILIPPINE
ISLANDS
(FORMERLY
PRUDENTIAL
BANK), Petitioner, v. SPOUSES DAVID M. CASTRO AND CONSUELO B.
CASTRO, Respondents,FIRST DIVISION/G.R. No. 195272, January
14, 2015

whether to go into declaration of nullity of marriage

Here are steps or suggestions in deciding whether to step out of the ring or not:
1. Make sure it is the last resort. As stated in a previous post, love and marriage are
supposed to be forever. Try all options, like counseling, to make it work. If theres no
progress, weigh your options. On the other side of the scale is the reality that getting
into another relationship or marriage, while the first marital bond is still existing, is a
sure way of courting criminal liability (adultery, concubinage, bigamy). A subsequent
petition for declaration of nullity/annulment of marriage is not a defense in the
criminal action.

2. Realize that it will cost you. Getting out of marriage is sometimes more expensive
than getting into one. Expenses include the fees for your lawyer or counsel, filing
fees, professional fees for the psychiatrist or psychologist (if the ground
is psychological incapacity), etc.
3. Discuss the custody of children, visitation rights, property arrangements
and support. Custody over children and separation of properties in annulment are
among the most bitter issues in annulment. As much as possible, discuss and agree
on these matters beforehand.
4. Make sure to invoke a valid ground. Marriage is an inviolable social institution and
any doubt is resolved in its favor. Hence, make sure theres sufficient basis to go
through the procedure discussed below.
The procedure provided under the Rules on Declaration of Absolute Nullity of Void
Marriages and Annulment of Voidable Marriages is discussed below. Please note
that a petition for annulment refers to voidable marriages, which are valid until
annulled by the court, while a petition for declaration of nullity refers to marriages
that are considered void or inexistent from the very beginning. There are other
differences (e.g., legitimate status of children, property relations between the
spouses, prescription and ratification), but lets leave those for another day. For
convenience, we shall refer to both petitions as annulment.
1. Preparation and filing of the petition. The petition may be filed, at the option of the
spouse who filed it (called the petitioner), in the Family Court of the province or city
where the petitioner or the other spouse (called the respondent) resides for the last
6 months prior to the date of filing, or in the case of a non-resident respondent,
7where he/she may be found in the Philippines. An Overseas Filipino Worker (OFW)
may file the petition even while abroad. Incidentally, upon filing of the petition or
anytime thereafter, the court may issue provisional and protective orders.
2. Service of Summons. In simplest terms, this is giving notice to the respondent.
Where the respondent cannot be located at the given address or the whereabouts
are unknown and cannot be ascertained by diligent inquiry, service of summons may
be done by publication. This is crucial because the court cannot validly proceed
without service of summons.
3. Answer. The respondent must answer within 15 days from service of summons
(or within 30 days from the last issue of publication in case of service of summons by
publication). Unlike in civil cases, the respondent in annulment proceedings is not

declared in default if no answer is filed, but the public prosecutor shall be ordered to
investigate whether collusion exists between the parties.
4. Investigation report of public prosecutor. The public prosecutor prepares a report
on whether there is collusion between the parties. If the court is convinced that
collusion exists, it shall dismiss the petition; otherwise, the court shall set the case
for pre-trial conference. The Rules dispensed with the requirement, as provided
in Molina, that the Solicitor General issue a certification stating his reasons for his
agreement or opposition to the petition.
5. Pre-trial conference. During the mandatory pre-trial conference, the court and the
parties deal with certain matters, such as stipulation of facts, for the purpose of
expediting the proceedings. The petition may be dismissed if the petitioner fails to
appear during pre-trial. At this stage, the court may also refer the issues to a
mediator who shall assist the parties in reaching an agreement on matters not
prohibited by law (no compromise allowed in civil status of persons, validity of
marriage or of legal separation, grounds for legal separation, jurisdiction of courts,
and future support and legitime). The court may also require a social worker to
conduct a case study and submit a report at least 3 days before the pre-trial
conference, or at any stage of the case whenever necessary.
6. Trial. This is the stage where the ground for annulment is proved and opposed.
The court may order the exclusion from the courtroom of all persons, including
members of the press, who do not have a direct interest in the case.
7. Decision. After the trial proper, the court renders its decision, which is different
from the Decree of annulment. A decision, whether granting or dismissing the
petition, becomes final upon the expiration of 15 days from notice to the parties.
8. Appeal. The aggrieved party or the Solicitor General may appeal from the
decision within 15 days from notice of denial of the motion for reconsideration or new
trial.
9. Liquidation, partition and distribution, custody, support of common children and
delivery of their presumptive legitimes. These are done upon entry of the judgment
granting the petition.
10. Issuance of Decree of annulment. The court issues the Decree after: (i)
registration of the entry of judgment granting the annulment in the Civil Registry
where the marriage was celebrated and in the Civil Registry of the place where the
court is located; (ii) registration of the approved partition and distribution of the
properties of the spouses in the proper Register of Deeds where the real properties

are located; and (iii) delivery of the childrens presumptive legitimes in cash,
property, or sound securities.
11. Registration of the Decree. The Decree must be registered in the Civil Registry
where the marriage was registered, the Civil Registry of the place where the court is
situated, and in the National Census and Statistics Office

Valerio E. Kalaw vs. Ma. Elena Fernandez (G.R. No.

166357, 14 January 2015)
SC relaxes rules on psychological incapacity as ground to annul marriages, says
the news title in a popular newspaper. The title naturally got my interest, not because
I am filing a petition for nullity of marriage, but because we are handling petitions
based on psychological incapacity under under Article 36 of the Family Code. While
the news article does not mention the title of the case, it is clearly abundant that it
refers to the 2015 case of Valerio E. Kalaw vs. Ma. Elena Fernandez (G.R. No.
166357, 14 January 2015). I combed the case to check how the Supreme Court
relaxed the rules on petitions for declaration of nullity of marriage based on
psychological incapacity. Unfortunately, I cannot find a confirmation of such
relaxation in the rules. To have a fruitful discussion, allow me to humbly point to ten
matters in the case that might be of interest to those who are searching for answers.

1. The rules provided in Molina remains valid

Practitioners refer to the guidelines for the interpretation and application of Article 36
as the Molina Doctrine, considering that the set of guidelines were first compiled in
the 1997 case of Republic vs. Court of Appeals and Roridel Olaviano Molina (G.R.
No. 108763). There are eight guidelines, as follows:
(1) The burden of proof to show the nullity of the marriage belongs to the plaintiff.
(2) The root cause of the psychological incapacity must be medically or clinically
identified, alleged in the complaint, sufficiently proven by experts and clearly
explained in the decision.
(3) The incapacity must be proven to be existing at the time of the celebration of
the marriage.
(4) Such incapacity must also be shown to be medically or clinically permanent or
incurable.
(5) Such illness must be grave enough to bring about the disability of the party to
assume the essential obligations of marriage.

(6) The essential marital obligations must be those embraced by Articles 68 up to 71

of the Family Code as regards the husband and wife, as well as Articles 220, 221
and 225 of the same Code in regard to parents and their children.
(7) Interpretations given by the National Appellate Matrimonial Tribunal of the
Catholic Church in the Philippines, while not controlling or decisive, should be given
great respect by our courts.
(8) The trial court must order the prosecuting attorney or fiscal and the Solicitor
General to appear as counsel for the state.
In Kalaw, the Supreme Court categorically stated that we are not suggesting the
abandonment of Molina in this case. The set of guidelines in Molina, therefore,
stays. The pronouncement in Kalaw that is closest to relaxation of the guidelines is
this: The foregoing guidelines have turned out to be rigid, such that their application
to every instance practically condemned the petitions for declaration of nullity to the
fate of certain rejection. There is no doubt that theMolina Doctrine is strict, but there
is also no doubt that countless petitions have been granted pursuant to its
guidelines. In other words, there appears to be no relaxation of the rules.

2. Expert testimony is decisive

If theres anything in Kalaw that can be construed as a relaxation or departure from
the Molina Doctrine, its the rule on expert witnesses. Guideline No. 2
in Molina provides that the root cause of the psychological incapacity must be
medically or clinically identified, alleged in the complaint, sufficiently proven by
experts and clearly explained in the decision. However, it has been established in
previous cases that expert testimony is not a requisite in psychological incapacity
cases. In other words, the absence of an expert witness does not automatically
result to a denial of the petition. In a number of cases, including the case
of Mendoza vs. Republic (G.R. No. 157649, 12 November 2012), the Supreme Court
had the occasion to state that the expert opinions of psychologists are not
conditions sine qua non in the granting of petitions for declaration of nullity of
marriage, although the Court added that the actual medical examinationwas to
be dispensed with only if the totality of evidence presented was enough to support a
finding of his psychological incapacity.
The requirement of the totality of evidence, on the other hand, is not new. It has
been discussed in similar cases prior to Kalaw.
Going back to the value of expert testimonies, the Supreme Court in Kalaw restated
the rule that in the task of ascertaining the presence of psychological incapacity as
a ground for the nullity of marriage, the courts, which are concededly not endowed

with expertise in the field of psychology, must of necessity rely on the opinions of
experts in order to inform themselves on the matter, and thus enable themselves to
arrive at an intelligent and judicious judgment.
Incidentally, in one of our cases, the judge noted that it is for the court not the
psychologist to conclude that one or both parties is/are psychologically
incapacitated. Indeed, the existence of psychological incapacity is a legal
conclusion, which is within the exclusive province of the court, but this does not
preclude the expert witness from expressing a similar opinion, pointing to the exact
condition or personality disorder of the spouse/s.

3. The psychologist need not personally examine the incapacitated

spouse
The usual objection raised against the testimony of the expert witness, especially
when the services of the expert witness has been obtained by the petitioner-spouse
and there is a conclusion that the respondent-spouse is psychologically
incapacitated, is the usual inability of the psychologist to examine or interview the
respondent spouse. In Kalaw, the Supreme Court reiterated the rule that the lack of
personal examination and interview of the person diagnosed with personality
disorderdid not per se invalidate the findings of the experts.
The opinion of the expert opinion should not be lightly brushed aside in the presence
of the totality of evidence in the case. This is the reason why, in the cases we are
handling, we require the client to present other witnesses to corroborate the clients
testimony on the facts which constitute the basis for the finding of the personality
disorder and, ultimately, psychological incapacity. While clients initially complain
about the presentation of other witnesses, we make it a point to carefully explain that
this is needed to avoid an outright denial of the petition.

4. Article 36 is patterned after Church doctrines

It has been said that the Philippines is the only country in the whole world that does
not have divorce. This, of course, did not deter the Office of the Solicitor General
(OSG) to make, in the language of the Supreme Court, an exaggeration
in Molina that Article 36 is the most liberal divorce procedure in the world. In Kalaw,
the Supreme Court noted that it was sensitive to the exaggeration of the OSG
when it enunciated the rigid rules in Molina. The unintended consequences
of Molina, however, has taken its toll on people who have to live with deviant
behavior, moral insanity and sociopathic personality anomaly, which, like termites,
consume little by little the very foundation of their families, our basic social
institutions. Far from what was intended by the Court, Molina has become a strait-

jacket, forcing all sizes to fit into and be bound by it. Wittingly or unwittingly, the
Court, in conveniently applying Molina, has allowed diagnosed sociopaths,
schizophrenics, nymphomaniacs, narcissists and the like, to continuously debase
and pervert the sanctity of marriage. Ironically, the Roman Rota has annulled
marriages on account of the personality disorders of the said individuals.
Article 36 is patterned after Church rules. As noted in Molina, Since the purpose of
including such provision in our Family Code is to harmonize our civil laws with the
religious faith of our people, it stands to reason that to achieve such harmonization,
great persuasive weight should be given to decisions of such appellate tribunal.
Ideally subject to our law on evidence what is decreed as canonically invalid
should also be decreed civilly void.

5. Article 36 protects the family

The usual argument against Article 36, providing for psychological incapacity as a
ground to declare the nullity of marriage, is that it weakens the family. On the
contrary, as reiterated by the Supreme Court in Kalaw, Article 36 protects the
institution of marriage. According to the Supreme Court, the fulfillment of the
constitutional mandate for the State to protect marriage as an inviolable social
institution only relates to a valid marriage. No protection can be accorded to a
marriage that is null and void ab initio, because such a marriage has no legal
existence.
Indeed, Article 36 of the Family Code, in classifying marriages contracted by a
psychologically incapacitated person as a nullity, should be deemed as an
implement of this constitutional protection of marriage. Given the avowed State
interest in promoting marriage as the foundation of the family, which in turn serves
as the foundation of the nation, there is a corresponding interest for the State to
defend against marriages ill-equipped to promote family life. Void ab initio marriages
under Article 36 do not further the initiatives of the State concerning marriage and
family, as they promote wedlock among persons who, for reasons independent of
their will, are not capacitated to understand or comply with the essential obligations
of marriage.
[Part 1 of 2]
Ademption, or ademption by extinction, is a common law doctrine used in
the law of wills to determine what happens when property bequeathed under a will is
no longer in the testator's estate at the time of the testator's death.[1] For a devise
(bequest) of a specific item of property (a specific gift), such property is
considered adeemed, and the gift fails. For example, if a will bequeathed the
testator's car to a specific beneficiary, but the testator owned no car at the time of his

or her death, the gift would be adeemed and the aforementioned beneficiary would
receive no gift at all.
General bequests or general gifts - gifts of cash amounts - are never adeemed. If
the cash in the testator's estate is not sufficient to satisfy the gift, then other assets
in the residuary estate will need to be sold to raise the necessary cash.
Some property lies in a "gray" area, in which the testator's specific intent must be
determined. For example, where the testator bequeathes "500 shares of stock" in a
company, this may be read as a general bequest (that the estate should purchase
and convey the particular stocks to the beneficiary), or it may be read as a specific
bequest, particularly if the testator used a possessive ("my 500 shares"). Such a gift
is deemed to be a demonstrative gift. Such demonstrative gifts are deemed to be a
hybrid of both specific and general gifts. If one were to bequeath "500 shares of
stock," most states would deem that to be a demonstrative gift. The resultant gift to
the heir receiving "500 shares," would be the date of death value of 500 shares of
that particular stock.
Ademption may be waived if the property leaves the estate after the testator has
been declared incompetent. Furthermore, in some cases the beneficiary will be
entitled to the proceeds from the sale of property, or to theinsurance payout for
property that is lost or destroyed.
To avoid confusion as to what may or may not be adeemed, sometimes the phrase
"if owned by me at my death" is placed into the articles of a will in which property is
being bequeathed.
As for the sale of land under an executory contract, traditional case law agrees that
ademption occurs upon the death of the testator and that the proceeds of sale, when
the closing occurs, should not pass to the specific devisee of the property. However,
the more modern view and the Uniform Probate Code, which has been adopted by
some states, disagrees. These jurisdictions find that when property subject to
specific devise is placed under contract of sale before the decedent's death, the
proceeds of the sale will pass to the specific devisee.

corre cases

G.R. No. 142403 March 26, 2003

ALEJANDRO GABRIEL and ALFREDO GABRIEL, petitioners,
vs.
SPOUSES PABLO MABANTA and ESCOLASTICA COLOBONG, DEVELOPMENT
BANK OF THE PHILIPPINES (Isabela Branch) and ZENAIDA TAN-REYES,
respondents.

FACTS:

On October 25, 1975 spouses Mabanta mortgaged 2 parcels of land with the DBP as
collateral for a P14,000 loan. In 1980, they sold the lots to Susana Soriano with the
right to repurchase the property within 2 years. They failed to do repurchase. In
1984, they convinced petitioner Alejandro Gabriel to purchase the lot from Soriano
as a result, DBP had to restructure the loan making Gabriel as the mortgagor. In
1982 however, one lot was sold to Zenaida Tan-Reyes by the spouses Mabanta who
in turn filed an intervention to the case after not being a party in the instant case.
As a result, the petitioners filed for damages, and specific performance which the
trial court ruled in their favor holding that the sale between the spouses Mabanta
and Tan-Reyes null and void. On appeal, the CA modified the trial courts decision
holding that the second sale was indeed valid.

ISSUE:
Whether or not the second sale in 1982 to Tan-Reyes is valid.

HELD:
Article 1544 of the Civil Code provides that should immovable property be sold to
different vendees, the ownership shall belong to the first person in good faith to
record it in the registry of property. Unfortunately, the registration made by Zenaida
Tan-Reyes of her deed of sale was not in good faith, and for this reason in
accordance with the same Article 1544, the land shall pertain to the person who in
good faith was first in possession. There is no question that it is the Gabriels who
are in possession of the land.

G.R. No. 83432 May 20, 1991

RADIOWEALTH FINANCE COMPANY, petitioner,
vs.
MANUELITO S. PALILEO, respondent.

FACTS:
In April 1970, defendant spouses Enrique Castro and Herminio R. Castro (spouse
Castro) sold to herein respondent Manuelito Palileo a parcel of unregistered coconut
land in Surigao del Norte. The sale is evidenced by a notarized Deed of Absolute
Sale, but the deed was not registered in the Registry of Property for unregistered

lands in the province of Surigao del Norte. Since the execution of the deed of sale,
Palileo who was then employed in Lianga, Surigao del Sur, exercised acts of
ownership over the land through his mother Rafaela Palileo, as administratrix or
overseer. Manuelito Palileo has continuously paid the real estate taxes on said land
from 1971 until the present.
In November 1976, the CFI of Manila rendered a judgment was rendered against
defendant Enrique T. Castro to pay herein petitioner Radiowealth Finance Company
(Radiowealth), the sum of P22,350.35 with interest rate of 16% per annum from
November 2, 1975 until fully paid, and upon the finality of the judgment, a writ of
execution was issued. The Provincial Sheriff Marietta E. Eviota, through defendant
Deputy Provincial Sheriff Leopoldo Risma, levied upon and finally sold at public
auction the subject land that defendant Enrique Castro had sold to Palileo in 1970.
The said Provincial Sheriff executed a certificate of sale was by the in favor of
Radiowealth as the only bidder, and upon expiration of the redemption period, she
also executed a deed of final sale. Both documents were registered with the
Registry of Deeds.
Learning of what happened to the land, Palileo filed an action for recovery of the
subject property. The court a quo rendered a decision in favor of Palileo, which the
Court of Appeals affirmed.

ISSUE:
Who is the rightful owner of the subject property?

COURT RULING:
The Supreme Court likewise affirmed the appellate courts decision on this case.
There is no doubt that had the subject property been a registered land, this case
would have been decided in favor of Radiowealth since it was the company that had
its claim first recorded in the Registry of Deeds for it is the act of registration that
operates to convey and affect registered land. Therefore, a bonafide purchaser of a
registered land at an execution sale acquires a good title as against a prior
transferee, if such transfer was unrecorded.
However, a different set of rules applies in the case at bar which deals with a parcel
of unregistered land. Under Act No. 3344, registration of instruments affecting
unregistered lands is "without prejudice to a third party with a better right." The
afore quoted phrase has been held by the Supreme Court to mean that the mere
registration of a sale in one's favor does not give him any right over the land if the
vendor was not anymore the owner of the land having previously sold the same to

somebody else even if the earlier sale was unrecorded. Applying this principle, the
Court of Appeals correctly held that the execution sale of the unregistered land in
favor of petitioner is of no effect because the land no longer belonged to the
judgment debtor as of the time of the said execution sale.

G.R. No. 170405 February 2, 2010

RAYMUNDO S. DE LEON, Petitioner,
vs.
BENITA T. ONG. Respondent.
Facts:
On March 10, 1993, Raymundo S. De Leon (petitioner) sold 3 parcels of land to
Benita T. Ong (respondent). The said properties were mortgaged to a financial
institution; Real Savings & Loan Association Inc. (RSLAI). The parties then executed
a notarized deed of absolute sale with assumption of mortgage. As indicated in the
deed of mortgage, the parties stipulated that the petitioner (de leon) shall execute a
deed of assumption of mortgage in favor of Ong (respondent) after full payment of
the P415,000.00 They also agreed that the respondent (Ong) shall assume the
mortgage. The respondent then subsequently gave petitioner P415,000.00 as
partial payment. On the other hand, de leon handed the keys to Ong and de leon
wrote a letter to inform RSLAI that the mortgage will be assumed by Ong.
Thereafter, the respondent took repairs and made improvements in the properties.
Subsequently, respondent learned that the same properties were sold to a certain
Viloria after March 10, 1993 and changed the locks, rendering the keys given to her
useless. Respondent proceeded to RSLAI but she was informed that the mortgage
has been fully paid and that the titles have been given to the said person.
Respondent then filed a complaint for specific performance and declaration of
nullity of the second sale and damages. The petitioner contended that respondent
does not have a cause of action against him because the sale was subject to a
condition which requires the approval of RSLAI of the mortgage. Petitioner reiterated
that they only entered into a contract to sell. The RTC dismissed the case. On
appeal, the CA upheld the sale to respondent and nullified the sale to Viloria.
Petitioner moved for reconsideration to the SC.

Issue:
Whether the parties entered into a contract of sale or a contract to sell?

Held:
In a contract of sale, the seller conveys ownership of the property to the buyer upon
the perfection of the contract. The non-payment of the price is a negative resolutory
condition. Contract to sell is subject to a positive suspensive condition. The buyer
does not acquire ownership of the property until he fully pays the purchase price. In
the present case, the deed executed by the parties did not show that the owner
intends to reserve ownership of the properties. The terms and conditions affected
only the manner of payment and not the immediate transfer of ownership. It was
clear that the owner intended a sale because he unqualifiedly delivered and
transferred ownership of the properties to the respondent.

CRB vs. CA and HEIRS OF DELA CRUZ

G.R. No. 132161
January 17, 2005
FACTS: The Madrid brothers
Isabela.

were the registered owners of Lot A situated in

Said lot was subdivided into several lots. Rizal Madrid sold part of his share
identified lot A-7 to Gamiao and Dayag by virtue of a Deed of Sale, to which his
brothers offered no objection as evidenced by their Joint Affidavit .The deed of sale
was not registered with the ORD of Isabela. However, Gamiao and Dayag declared
the property in their names on a Tax Declaration. Gamiao and Dayag sold the
subject southern half of lot to Teodoro dela Cruz, and the northern half to
Hernandez. Thereupon, Teodoro dela Cruz and Hernandez took possession of and
cultivated the portions of the property respectively sold to them (Later Restituto
Hernandez donated the northern half to his daughter. The children of Teodoro dela
Cruz continued possession of the southern half after their fathers death.) In a Deed
of Sale the Madrid brothers conveyed all their rights and interests over lot A-7 to
Marquez which the former confirmed . The deed of sale was registered with the ORD
of Isabela. Subsequently, Marquez subdivided lot A-7 into eight (8) lots. On the
same date, Marquez and his spouse, Mercedita Mariana, mortgaged 4 lots to the
Consolidated Rural Bank, Inc. of Cagayan Valley (hereafter, CRB) to secure a loan.
These deeds of real estate mortgage were registered with the ORD. As Marquez
defaulted in the payment of his loan, CRB caused the foreclosure of the mortgages
in its favor and the lots were sold to it as the highest bidder. The Heirs-now
respondents filed a case for reconveyance and damages for the southern portion of
Lot No. 7036-A (hereafter, the subject property) against Marquez and CRB. The RTC
handed down a decision in favor of Marquez. The Heirs interposed an appeal with
the CA, which upheld the claim of the Heirs. Hence, the instant CRB petition.
ISSUE: WON Art. 1544 of the Civil Code (double sale) applicable in this case

HELD: NO.
The petition is denied, and the decision as modified is affirmed. Like the lower
court, the appellate court resolved the present controversy by applying the rule on
double sale provided in Article 1544 of the Civil Code. They, however, arrived at
different conclusions. The RTC made CRB and the other defendants win, while the
Court of Appeals decided the case in favor of the Heirs.
Article 1544 of the Civil Code reads, thus:
ART. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property. Should it be immovable
property, the ownership shall belong to the person acquiring it who in good faith
first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in possession; and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith. The provision is not applicable
in the present case. It contemplates a case of double or multiple sales by a single
vendor. It cannot be invoked where the two different contracts of sale are made by
two different persons, one of them not being the owner of the property sold. And
even if the sale was made by the same person, if the second sale was made when
such person was no longer the owner of the property, because it had been acquired
by the first purchaser in full dominion, the second purchaser cannot acquire any
right. In the case at bar, the subject property was not transferred to several
purchasers by a single vendor. In the first deed of sale, the vendors were Gamiao
and Dayag whose right to the subject property originated from their acquisition
thereof from Rizal Madrid with the conformity of all the other Madrid brothers. On
the other hand, the vendors in the other or later deed were the Madrid brothers but
at that time they were no longer the owners since they had long before disposed of
the property in favor of Gamiao and Dayag.
In a situation where not all the requisites are present which would warrant the
application of Art. 1544, the principle of prior tempore, potior jure or simply he
who is first in time is preferred in right, should apply. The only essential requisite of
this rule is priority in time; in other words, the only one who can invoke this is the
first vendee. Undisputedly, he is a purchaser in good faith because at the time he
bought the real property, there was still no sale to a second vendee. In the instant
case, the sale to the Heirs by Gamiao and Dayag, who first bought it from Rizal
Madrid, was anterior to the sale by the Madrid brothers to Marquez. The Heirs also
had possessed the subject property first in time. Thus, applying the principle, the
Heirs, without a scintilla of doubt, have a superior right to the subject property.
Moreover, it is an established principle that no one can give what one does not
havenemo dat quod non habet. Accordingly, one can sell only what one owns or is
authorized to sell, and the buyer can acquire no more than what the seller can
transfer legally.53 In this case, since the Madrid brothers were no longer the owners
of the subject property at the time of the sale to Marquez, the latter did not acquire
any right to it.

Balatbat v. CA

Facts:
A parcel of land was acquired by plaintiff Aurelio Roque and Maria Mesina during their conjugal
union. Maria died on August 28, 1966. On June 15, 1977, Aurelio filed a case for partition. The
trial court held that Aurelio is entitled to the portion at his share in the conjugal property, and
1/5 of the other half which formed part of Marias estate, divided equally among him at his 4
children. The decision having become final and executory, the Register of Deeds of Manila
issued a transfer certificate of title on October 5, 1979 according to the ruling of the court. On
April 1, 1980, Aurelio sold his 6/10 share to spouses Aurora Tuazon-Repuyan and Jose
Repuyan, as evidenced by a deed of absolute sale. On June 21, 1980, Aurora caused the
annotation of her affidavit of adverse claim. On August 20, 1980, Aurelio filed a complaint for
rescission of contract grounded on the buyers failure to pay the balance of the purchase price.
On February 4, 1982, another deed of absolute sale was executed between Aurelio and his
children, and herein petitioner Clara Balatbat, involving the entire lot. Balatbat filed a motion for
the issuance of writ of possession, which was granted by the court on September 20, 1982,
subject to valid rights and interests of third persons. Balatbat filed a motion to intervene in the
rescission case, but did not file her complaint in intervention. The court ruled that the sale
between Aurelio and Aurora is valid.
Issues:(1) Whether the alleged sale to private respondents was merely executory(2) Whether
there was double sale(3) Whether petitioner is a buyer in good faith and for value
Held:(1) Contrary to petitioner's contention that the sale dated April 1, 1980 in favor of private
respondents Repuyan was merely executory for the reason that there was no delivery of the
subject property and that consideration/price was not fully paid, we find the sale as
consummated, hence, valid and enforceable. The Court dismissed vendor's Aurelio Roque
complaint for rescission of the deed of sale and declared that the Sale dated April 1, 1980, as
valid and enforceable. No appeal having been made, the decision became final and
executory.The execution of the public instrument, without actual delivery of the thing, transfers
the ownership from the vendor to the vendee, who may thereafter exercise the rights of an
owner over the same. In the instant case, vendor Roque delivered the owner's certificate of title
to herein private respondent. The provision of Article 1358 on the necessity of a public
document is only for convenience, not for validity or enforceability. It is not a requirement for the
validity of a contract of sale of a parcel of land that this be embodied in a public instrument. A
contract of sale being consensual, it is perfected by the mere consent of the parties. Delivery of
the thing bought or payment of the price is not necessary for the perfection of the contract; and
failure of the vendee to pay the price after the execution of the contract does not make the sale
null and void for lack of consideration but results at most in default on the part of the vendee, for
which the vendor may exercise his legal remedies.

(2) Article 1544 of the Civil Code provides that in case of double sale of an immovable property,
ownership shall be transferred (1) to the person acquiring it who in good faith first recorded it in
the Registry of Property; (2) in default thereof, to the person who in good faith was first in
possession; and (3) in default thereof, to the person who presents the oldest title, provided there
is good faith. In the case at bar, vendor Aurelio Roque sold 6/10 portion of his share to private

respondents Repuyan on April 1, 1980. Subsequently, the same lot was sold again by vendor
Aurelio Roque (6/10) and his children (4/10), represented by the Clerk of Court pursuant to
Section 10, Rule 39 of the Rules of Court, on February 4, 1982. Undoubtedly, this is a case of
double sale contemplated under Article 1544 of the New Civil Code. Evidently, private
respondents Repuyan's caused the annotation of an adverse claim on the title of the subject
property on July 21, 1980. The annotation of the adverse claim in the Registry of Property is
sufficient compliance as mandated by law and serves notice to the whole world. On the other
hand, petitioner filed a notice of lis pendens only on February 2, 1982. Accordingly, private
respondents who first caused the annotation of the adverse claim in good faith shall have a
better right over herein petitioner. As between two purchasers, the one who has registered the
sale in his favor, has a preferred right over the other who has not registered his title even if the
latter is in actual possession of the immovable property. Further, even in default of the first
registrant or first in possession, private respondents have presented the oldest title. Thus,
private respondents who acquired the subject property in good faith and for valuable
consideration established a superior right as against the petitioner.
(3) Petitioner cannot be considered as a buyer in good faith. If petitioner did investigate before
buying the land on February 4, 1982, she should have known that there was a pending case
and an annotation of adverse claim was made in the title of the property before the Register of
Deeds and she could have discovered that the subject property was already sold to the private
respondents. It is incumbent upon the vendee of the property to ask for the delivery of the
owner's duplicate copy of the title from the vendor. One who purchases real estate with
knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto
in good faith as against the true owner of the land or of an interest therein; and the same rule
must be applied to one who has knowledge of facts which should have put him upon such
inquiry and investigation as might be necessary to acquaint him with the defects in the title of his
vendor. Good faith, or the want of it is not a visible, tangible fact that can be seen or touched,
but rather a state or condition of mind which can only be judged of by actual or fancied tokens or
signs.

ANAMA VS. COURT OF APPEALS

GR. No. 128609, January 29, 2004
Facts:
The property was previously owned by Douglas Anamas parents, who
mortgaged it to Philippine Savings Bank and later was foreclosed. Douglas and the
PSBank entered into an agreement denominated as a Contract to Buy whereby the
bank agreed to sell to Douglas the said land with all the improvements thereon. The
Contract to Buy provides that Anama shall purchase the property of a certain
amount and shall pay to the PSBank; it also provides that Anama shall apply with
the bank for a loan, the proceeds of which answer for the balance of the purchase
price; should the petitioner fail to comply with any of the terms of contract, all

amounts paid are forfeited in favor of PSBank, the latter having the option either to
demand full payment of total price or to rescind the contract. Anama was able to
pay the first and second installments; however, he failed to pay the third
installment when it became due. There were several transactions between them to
settle the amount due. But later, the bank executed an Affidavit of Cancellation
rescinding the contract, and forfeited the payments made by Anama which were
applied as rentals of the use of the property. Anama was then advised to vacate the
property despite his opposition to the rescission of the Contract to Buy. The bank
sold the property to spouses Co, in whose favor TCT was issued. Anama then filed a
case for Declaration of Nullity of Deed of Sale, Cancellation of TCT,and Specific
Performance
with
Damages.
Issue:
Whether the rescission of the Contract to Buy was valid.
Held:
Since Anama failed to pay the third installment, PSBank was entitled to
rescind the Contract to Buy. The contract provides the Bank two options in the event
that petitioner fails to pay any of the installments. This was either (1) to rescind the
contract outright and forfeit all amounts paid by the petitioner, or (2) to demand the
satisfaction of the contract and insist on the full payment of the total price. After
petitioner repeatedly failed to pay the third installment, the Bank chose to exercise
the
first
option.
The Contract to Buy is actually a contract to sell whereby the vendor reserves
ownership of the property and is not to pass until full payment. Such payment is a
positive suspensive condition, the failure of which is not a breach but simply an
event that prevents the obligation of the vendor to convey title from acquiring
binding force. Since ownership of the subject property was not pass to petitioner
until full payment of the purchase price, his failure to pay on the date stipulated, or
in the extension granted, prevented the obligation for the Bank to pass title of the
property to Anama. The bank could validly sell the property to the spouses Co, the
right of the bank to sell the property being unequivocal.

corre's cases

ISAIAS F. FABRIGAS AND MARCELINA R. FABRIGAS

VS. SAN FRANCISCO DEL MONTE, INC.
G.R. No. 152346, November 25, 2005

FACTS:
Spouses Fabrigas(petitioner) and respondent San francisco Del Monte, Inc.
(Del Monte) entered into an agreement, denominated as Contract to Sell
No. 2482-V, whereby the latter agreed to sell to Spouses Fabrigas a parcel
of residential land. The said lot was worth P109,200.00 and it was

registered in the name of respondent Del Monte. The agreement

stipulated that Spouses Fabrigas shall pay P30,000.00 as downpayment
and the balance within ten years in monthly successive installments of
P1,285.69. After paying P30,000.00, Spouses Fabrigas took possession of
the property but failed to make any installment payments on the balance
of the purchase price. Despite the demand letter made by Del Monte and
the grace period given still the said Spouses did not comply with their
obligations.

On January 21, 1985, petitioner Marcelina and Del Monte entered into
another agreement denominated as Contract to Sell No. 2941-V, covering
the same property but under restructed terms of payment. Under the
second contract, the parties agreed on a new purchase price of
P131,642.58, the amount of P26,328.52 as downpayment and the balance
to be paid in monthly installments of P2,984.60 each. After the said deal,
the petitioner made some delinquent installments paying less than the
stated amount, to which Del Monte made a demand letter to the
petitioners. And this time they ordered the cancellation of the Contract to
Sell No. 2941-V

ISSUE:
Whether or not the Contract to Sell No. 2941-V was valid.

HELD:
The Court quotes with approval the following factual observations of the
trial court, which cannot be disturbed in this case, to wit:The Court notes
that defendant, Marcelina Fabrigas, although she had to sign contract No.
2491-V, to avoid forfeiture of her downpayment, and her other monthly
amortizations, was entirely free to refuse to accept the new contract.
There was no clear case of intimidation or threat on the part of plaintiff in
offering the new contract to her. At most, since she was of sufficient
intelligence to discern the agreement she is entering into, her signing
of Contract No. 2491-V is taken to be valid and binding. The fact that she
has paid monthly amortizations subsequent to the execution
of Contract to Sell No. 2491-V, is an indication that she had recognized
the validity of such contract. . . .

In sum, Contract to Sell No. 2491-V is valid and binding. There is nothing
to prevent respondent Del Monte from enforcing its contractual

stipulations and pursuing the proper court action to hold petitioners liable
for their breach thereof.

MYRNA RAMOS VS. SUSANA S. SARAO AND JONAS RAMOSG.R. NO.

149756, February 11, 2005
FACTS:
On February 21, 1991, Spouses Jonas Ramos and Myrna Ramos executed
a contract over their conjugal house and lot in favor of Susana S. Sarao
for and in consideration of P1,310,430. Entitled DEED OF SALE
UNDER PACTO DE RETRO, the contract,inter alia, granted the Ramos
spouses the option to repurchase the property within six months from
February 21, 1991, for P1,310,430 plus an interest of 4.5 percent a
month. It was further agreed that should the spouses fail to pay the
monthly interest or to exercise the right to repurchase within the
stipulated period, the conveyance would be deemed an absolute sale.On
July 30, 1991, Myrna Ramos tendered to Sarao the amount of
P1,633,034.20 in the form of two managers checks, which the latter
refused to accept for being allegedly insufficient.

ISSUE: Whether or not the subject Deed of Sale under Pacto de Retro was,
and is in reality and under the law an equitable mortgage.

HELD: The pivotal issue in the instant case is whether the parties
intended the contract to be a bona fide pacto de retro sale or an equitable
mortgage. In a pacto de retro, ownership of the property sold is
immediately transferred to the vendee a retro, subject only to the
repurchase by the vendor a retro within the stipulated period. The
vendor a retros failure to exercise the right of repurchase within the
agreed time vests upon the vendee a retro, by operation of law, absolute
title to the property. Such title is not impaired even if the
vendee a retro fails to consolidate title under Article 1607 of the Civil
Code. On the other hand, an equitable mortgage is a contract that
--although lacking the formality, the form or words, or other requisites
demanded by a statute -- nevertheless reveals the intention of the parties
to burden a piece or pieces of real property as security for a debt. The
essential requisites of such a contract are as follows: (1) the parties enter
into what appears to be a contract of sale, but (2) their intention is to
secure an existing debt by way of a mortgage. The nonpayment of the

debt when due gives the mortgagee the right to foreclose the mortgage,
sell the property, and apply the proceeds of the sale to the satisfaction of
the loan obligation. There is no single conclusive test to determine
whether a deed absolute on its face is really a simple loan
accommodation secured by a mortgage. However, the law enumerates
several instances that show when a contract is presumed to be an
equitable mortgage, as follows:
Article 1602. The contract shall be presumed to be an equitable
mortgage,
in
any
of
the
following
cases:
(1) When the price of a sale with right to repurchase is unusually
inadequate;(2) When the vendor remains in possession as lessee or
otherwise;(3) When upon or after the expiration of the right to repurchase
another instrument extending the period of redemption or granting a new
period is executed;(4) When the purchaser retains for himself a part of the
purchase price;(5) When the vendor binds himself to pay the taxes on the
thing sold;(6) In any other case where it may be fairly inferred that the
real intention of the parties is that the transaction shall secure the
payment of a debt or the performance of any other obligation.

RIZALINO, SUBSTITUTED BY HIS HEIRS, JOSEFINA, ROLANDO AND

FERNANDO, ERNESTO, LEONORA, BIBIANO, JR., LIBRADO AND
ENRIQUETA, ALL SURNAMED OESMER VS. PARAISO DEVELOPMENT
CORPORATION
[ G.R. NO. 157493, February 05, 2007 ]
FACTS:
Petitioners (Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, and Enriquita,
all surnamed Oesmer, together with Adolfo Oesmer and Jesus Oesmer,
are brothers and sisters, and the co-owners of undivided shares of two
parcel of land. Respondent Paraiso Development Corporation bought from
petitioners their respective share of the lot except the Adolfo and Jesus
share. After the said meeting, a Contract to Sell was created between the
parties, on which the petitioners affirming their signatures in the said
contract.
Then the petitioners withdrew from the said contract and ask for the
rescission to which they allege that they never sign the contract, the
agent has no authority from the petitioners, that said petitioner was
illiterate to sign the contract, etc.
ISSUE:

Whether or not there was a perfected contract between petitioners and

respondents.

HELD:
It is well-settled that contracts are perfected by mere consent, upon the
acceptance by the offeree of the offer made by the offeror. From that
moment, the parties are bound not only to the fulfillment of what has
been expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith, usage and
law. To produce a contract, the acceptance must not qualify the terms of
the offer. However, the acceptance may be express or implied. For
a contract to arise, the acceptance must be made known to the offeror.
Accordingly, the acceptance can be withdrawn or revoked before it is
made known to the offeror. In the case at bar, the Contract to Sell was
perfected when the petitioners consented to the sale to the respondent of
their shares in the subject parcels of land by affixing their signatures on
the said contract. Such signatures show their acceptance of what has
been stipulated in the Contract to Sell and such acceptance was made
known to respondent corporation when the duplicate copy of
the Contract to Sell was returned to the latter bearing petitioners'
signatures.

CARLOS B. DE GUZMAN VS. TOYOTA CUBAO, INC.

G.R. NO. 141480, November 29, 2006

FACTS:
On November 27, 1997, petitioner purchased from respondent a brand
new white Toyota Hi-Lux 2.4 SS double cab motor vehicle, 1996 model, in
the amount of P508,000. Petitioner made a down payment of P152,400,
leaving a balance of P355,600 which was payable in 36 months with 54%
interest. The vehicle was delivered to petitioner two days later. On
October 18, 1998, petitioner demanded the replacement of the engine of
the vehicle because it developed a crack after traversing Marcos Highway
during a heavy rain. Petitioner asserted that respondent should replace
the engine with a new one based on an implied warranty. Respondent
countered that the alleged damage on the engine was not covered by a
warranty.

ISSUE:
Whether or not there was an implied warranty.

FACTS:
Under Article 1599 of the Civil Code, once an express warranty is
breached, the buyer can accept or keep the goods and maintain an action
against the seller for damages. In the absence of an existing express
warranty on the part of the respondent, as in this case, the allegations in
petitioner's complaint for damages were clearly anchored on the
enforcement of an implied warranty against hidden defects, i.e., that the
engine of the vehicle which respondent had sold to him was not defective.
By filing this case, petitioner wants to hold respondent responsible for
breach of implied warranty for having sold a vehicle with defective
engine. Such being the case, petitioner should have exercised this right
within six months from the delivery of the thing sold. [7] Since petitioner
filed the complaint on April 20, 1999, or more than nineteen months
counted from November 29, 1997 (the date of the delivery of the motor
vehicle), his cause of action had become time-barred.
Petitioner contends that the subject motor vehicle comes within the
context of Republic Act No. 7394. Thus, petitioner relies on Article 68 (f)
(2) in relation to Article 169 of Republic Act No. 7394. Article 4 (q) of the
said law defines "consumer products and services" as goods, services and
credits, debts or obligations which are primarily for personal, family,
household or agricultural purposes, which shall include, but not limited to,
food, drugs, cosmetics, and devices. The following provisions of Republic
Act No. 7394 state: Art. 67. Applicable Law on Warranties. The
provisions of the Civil Code on conditions and warranties shall govern all
contracts of sale with conditions and warranties. Art. 68. Additional
Provisions on Warranties. In addition to the Civil Code provisions on
sale with warranties, the following provisions shall govern the sale of
consumer products with warranty:e) Duration of warranty. The seller and
the consumer may stipulate the period within which the express warranty
shall be enforceable. If the implied warranty on merchantability
accompanies an express warranty, both will be of equal duration.Any
other implied warranty shall endure not less than sixty (60) days nor more
than one (1) year following the sale of new consumer products. f) Breach
of warranties.

NATALIA CARPENA OPULENCIA VS. COURT OF APPEALS, ALADIN

SIMUNDAC AND MIGUEL OLIVAN
G.R. No. 125835, July 30, 1998

FACTS:
Natalie Carpena Opulencia(petitioner) executed a contract to sell in favor
of the respondents namely Aladin Simundac and Miguel Oliven a lot. Said
respondents had already paid petitioner a downpayment worth
P300,000.00. And said respondents brought an action for specific
perfrormance to the petitioner. However, she put forward the following
affirmative defenses: that the property subject of the contract formed part
of the Estate of Demetrio Carpena (petitioners father), in respect of
which a petition for probate was filed with the Regional Trial Court; that at
the time the contract was executed, the parties were aware of the
pendency of the probate proceeding; that the contract to sell was not
approved by the probate court; that realizing the nullity of the contract
[petitioner] had offered to return the downpayment received from [private
respondents], but the latter refused to accept it.

ISSUE:
Whether or not the Contract to Sell executed by the petitioner and private
respondents without the requisite probate court approval is valid.

FACTS:
Hereditary rights are vested in the heir or heirs from the moment of the
decedents death. Petitioner, therefore, became the owner of her
hereditary share the moment her father died. Thus, the lack of judicial
approval does not invalidate the Contract to Sell, because the petitioner
has the substantive right to sell the whole or a part of her share in the
estate of her late father. Under the old Civil Code Article 440 of the Civil
Code provides that the possession of hereditary property is deemed to be
transmitted to the heir without interruption from the instant of the death
of the decedent, in case the inheritance be accepted. And Manresa with
reason states that upon the death of a person, each of his heirs becomes
the undivided owner of the whole estate left with respect to the part or
portion which might be adjudicated to him, a community of ownership
being thus formed among the coowners of the estate while it remains
undivided. xxx And according to article 399 of the Civil Code, every part
owner may assign or mortgage his part in the common property, and the
effect of such assignment or mortgage shall be limited to the portion

which may be allotted him in the partition upon the dissolution of the
community.

Hence, where some of the heirs, without the concurrence of the others,
sold a property left by their deceased father, this Court, speaking thru its
then Chief Justice Cayetano Arellano, said that the sale was valid, but that
the effect thereof was limited to the share which may be allotted to the
vendors upon the partition of the estate.

cases for reading

G.R. No. 156437

March 1, 2004

NATIONAL HOUSING AUTHORITY,

vs.
GRACE BAPTIST CHURCH and the COURT OF APPEALS,
Facts: On June 13, 1986, respondent Grace Baptist Church (hereinafter,
the Church) wrote a letter to petitioner National Housing Authority (NHA),
manifesting its interest in acquiring Lots 4 and 17 of the General Mariano
Alvarez Resettlement Project in Cavite. In its letter-reply dated July 9,
1986, petitioner informed respondent: In reference to your request letter
dated 13 June 1986, regarding your application for Lots 4 and 17, Block C3-CL, we are glad to inform you that your request was granted and you
may now visit our Project Office at General Mariano Alvarez for processing
of your application to purchase said lots. On February 22, 1991, the NHAs
Board of Directors passed Resolution No. 2126, approving the sale of the subject
lots to respondent Church at the price of P700.00 per square meter, or a total price
of P430,500.00. The Church was duly informed of this Resolution through a letter
sent by the NHA.On April 8, 1991, the Church tendered to the NHA a
managers check in the amount of P55,350.00, purportedly in full
payment of the subject properties. The Church insisted that this was the
price quoted to them by the NHA Field Office, as shown by an unsigned
piece
of
paper
with
a
handwritten
computation
scribbled
thereon.Petitioner NHA returned the check, stating that the amount was
insufficient considering that the price of the properties have changed. The
Church made several demands on the NHA to accept their tender of
payment, but the latter refused. Thus, the Church instituted a complaint
for specific performance and damages against the NHA with the Regional
Trial Court of Quezon City.

Issue: Can the NHA be compelled to sell the subject lots to Grace Baptist
Church in the absence of any perfected contract of sale between the
parties?
Ruling: No. The contract has not been perfected.In the case at bar, the
offer of the NHA to sell the subject property, as embodied in Resolution
No. 2126, was similarly not accepted by the respondent. Thus, the alleged
contract involved in this case should be more accurately denominated
as inexistent. There being no concurrence of the offer and acceptance, it
did not pass the stage of generation to the point of perfection. As such, it
is without force and effect from the very beginning or from its incipiency,
as if it had never been entered into, and hence, cannot be validated
either by lapse of time or ratification. Equity can not give validity to a void
contract, and this rule should apply with equal force to inexistent
contracts. We note from the records, however, that the Church, despite
knowledge that its intended contract of sale with the NHA had not been
perfected, proceeded to introduce improvements on the disputed land. On
the other hand, the NHA knowingly granted the Church temporary use of
the subject properties and did not prevent the Church from making
improvements thereon. Thus, the Church and the NHA, who both acted in
bad faith, shall be treated as if they were both in good faith. In this
connection, Article 448 of the Civil Code provides:The owner of the land
on which anything has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works, sowing or planting,
after payment of the indemnity provided for in articles 546 and 548, or to
oblige the one who built or planted to pay the price of the land, and the
one who sowed, the proper rent. However, the builder or planter cannot
be obliged to buy the land and if its value is considerably more than that
of the building or trees. In such case, he shall pay reasonable rent, if the
owner of the land does not choose to appropriate the building or trees
after proper indemnity. The parties shall agree upon the terms of the
lease and in case of disagreement, the court shall fix the terms thereof.

G.R. No. 151815 February 23, 2005

SPOUSES JUAN NUGUID AND ERLINDA T. NUGUID,
vs.
HON. COURT OF APPEALS AND PEDRO P. PECSON
Facts: Pedro P. Pecson owned a commercial lot located at 27 Kamias
Road, Quezon City, on which he built a four-door two-storey apartment
building. For failure to pay realty taxes, the lot was sold at public auction
by the City Treasurer of Quezon City to Mamerto Nepomuceno, who in

turn sold it for P103,000 to the spouses Juan and Erlinda Nuguid.Pecson
challenged the validity of the auction sale before the RTC of Quezon City .
In its Decision, dated February 8, 1989, the RTC upheld the spouses title
but declared that the four-door two-storey apartment building was not
included in the auction sale. This was affirmed in toto by the Court of
Appeals and thereafter by this Court, in its Decision dated May 25, 1993,
in G.R. No. 105360 entitled Pecson v. Court of Appeals.
On June 23, 1993, by virtue of the Entry of Judgment of the aforesaid
decision in G.R. No. 105360, the Nuguids became the uncontested owners
of the 256-square meter commercial lot.
As a result, the Nuguid spouses moved for delivery of possession of the
lot and the apartment building.
In the same order the RTC also directed Pecson to pay the same amount
of monthly rentals to the Nuguids as paid by the tenants occupying the
apartment units or P21,000 per month from June 23, 1993, and allowed
the offset of the amount of P53,000 due from the Nuguids against the
amount of rents collected by Pecson from June 23, 1993 to September 23,
1993 from the tenants of the apartment.
Pecson duly moved for reconsideration, but on November 8, 1993, the
RTC issued a Writ of Possession, directing the deputy sheriff to put the
spouses Nuguid in possession of the subject property with all the
improvements thereon and to eject all the occupants therein.

Issue: W/Not the Nuguids should reimburse Pecson for the benefits
derived from the apartment building.
Ruling: Yes. It is not disputed that the construction of the four-door twostorey apartment, subject of this dispute, was undertaken at the time
when Pecson was still the owner of the lot. When the Nuguids became the
uncontested owner of the lot on June 23, 1993, by virtue of entry of
judgment of the Courts decision, dated May 25, 1993, in G.R. No. 105360,
the apartment building was already in existence and occupied by tenants.
In its decision dated May 26, 1995 in G.R. No. 115814, the Court declared
the rights and obligations of the litigants in accordance with Articles 448
and 546 of the Civil Code. These provisions of the Code are directly
applicable to the instant case.
Under Article 448, the landowner is given the option, either to
appropriate the improvement as his own upon payment of the proper
amount of indemnity or to sell the land to the possessor in good faith.
Relatedly, Article 546 provides that a builder in good faith is entitled to
full reimbursement for all the necessary and useful expenses incurred; it

also gives him right of retention until full reimbursement is made. While
the law aims to concentrate in one person the ownership of the land and
the improvements thereon in view of the impracticability of creating a
state of forced co-ownership, it guards against unjust enrichment insofar
as the good-faith builders improvements are concerned. The right of
retention is considered as one of the measures devised by the law for the
protection of builders in good faith. Its object is to guarantee full and
prompt reimbursement as it permits the actual possessor to remain in
possession while he has not been reimbursed (by the person who
defeated him in the case for possession of the property) for those
necessary expenses and useful improvements made by him on the thing
possessed. Accordingly, a builder in good faith cannot be compelled to
pay rentals during the period of retention nor be disturbed in his
possession by ordering him to vacate. In addition, as in this case, the
owner of the land is prohibited from offsetting or compensating the
necessary and useful expenses with the fruits received by the builderpossessor in good faith. Otherwise, the security provided by law would be
impaired. This is so because the right to the expenses and the right to the
fruits both pertain to the possessor, making compensation juridically
impossible; and one cannot be used to reduce the other.
As we earlier held, since petitioners opted to appropriate the
improvement for themselves as early as June 1993, when they applied for
a writ of execution despite knowledge that the auction sale did not
include the apartment building, they could not benefit from the lots
improvement, until they reimbursed the improver in full, based on the
current market value of the property.Given the circumstances of the
instant case where the builder in good faith has been clearly denied his
right of retention for almost half a decade, we find that the increased
award of rentals by the RTC was reasonable and equitable. The petitioners
had reaped all the benefits from the improvement introduced by the
respondent during said period, without paying any amount to the latter as
reimbursement for his construction costs and expenses. They should
account and pay for such benefits.

PROGRAMME INCORPORATED, vs. PROVINCE OF BATAAN

G.R. No. 144635 June 26, 2006

Facts: BASECO was the owner of Piazza Hotel and Mariveles Lodge, both

located in Mariveles, Bataan. On May 14, 1986, BASECO granted

petitioner a contract of lease over Piazza Hotel at a monthly rental
of P6,500 for three years,i.e., from January 1, 1986 to January 1, 1989,
subject to renewal by mutual agreement of the parties. After the
expiration of the three-year lease period, petitioner was allowed to
continue operating the hotel on monthly extensions of the lease.
In April 1989, however, the Presidential Commission on Good
Government (PCGG) issued a sequestration order against BASECO
pursuant to Executive Order No. 1 of former President Corazon
C. Aquino. Among the properties provisionally seized and taken over was
the lot on which Piazza Hotel stood.On July 19, 1989, however, Piazza
Hotel was sold at a public auction for non-payment of taxes to respondent
Province of Bataan. The title of the property was transferred to
respondent. BASECOs Transfer Certificate of Title (TCT) No. T-59631 was
cancelled and a new one, TCT No. T-128456, was issued to the Province
of Bataan.
On July 21, 1989, petitioner filed a complaint for preliminary
injunction and collection of sum of money against BASECO (Civil Case No.
129-ML). Respondent, as the new owner of the property, filed a motion
for leave to intervene on November 22, 1990. After its motion was
granted, respondent filed a complaint-in-intervention praying, inter alia,
that petitioner be ordered to vacate Piazza Hotel and Mariveles Lodge for
lack of legal interest.

Issue: W/Not the petitioner is a possessor in goodfaith of the Piazza Hotel

and Mariveles Lodge.

Ruling: The evidence clearly established respondents ownership of

Piazza Hotel. First, the title of the land on which Piazza Hotel stands was
in the name of respondent. Second, Tax Declaration No. 12782 was in the
name of respondent as owner of Piazza Hotel.Third, petitioner was
doubtlessly just a lessee. In the lease contract annexed to the complaint,
petitioner in fact admittedBASECOs (respondents predecessor-ininterest) ownership then of the subject property.
Furthermore, petitioners reference to Article 448 of the
Civil Code to justify its supposed rights as possessor in good faith was
erroneous.
The benefits granted to a possessor in good faith cannot be maintained
by the lessee against the lessor because, such benefits are intended to
apply only to a case where one builds or sows or plants on land which he
believes himself to have a claim of title and not to lands wherein ones
only interest is that of a tenant under a rental contract, otherwise, it
would always be in the power of a tenant to improve his landlord out of
his property. Besides, as between lessor and lessee, the Code applies
specific provisions designed to cover their rights.
Hence, the lessee cannot claim reimbursement, as a matter of right, for
useful improvements he has made on the property, nor can he assert a
right of retention until reimbursed. His only remedy is to remove the
improvement if the lessor does not choose to pay its value; but the court
cannot give him the right to buy the land.
Petitioners assertion that Piazza Hotel was constructed at (its)
expense found no support in the records. Neither did any document or
testimony prove this claim. At best, what was confirmed was that
petitioner managed and operated the hotel. There was no evidence that
petitioner was the one which spent for the construction or renovation of
the property. And since petitioners alleged expenditures were never
proven, it could not even seek reimbursement of one-half of the value of
the improvements upon termination of the lease under Article 1678 of the
Civil Code.
Finally, both the trial and appellate courts declared that the land as well
as the improvement thereon (Piazza Hotel) belonged to respondent. We
find no reason to overturn this factual conclusion.

G.R. No. 105387 November 11, 1993

JOHANNES SCHUBACK & SONS PHILIPPINE TRADING
CORPORATION
vs.
THE HON. COURT OF APPEALS, RAMON SAN JOSE, JR.,
Facts: Sometime in 1981, defendant established contact with
plaintiff through the Philippine Consulate General in Hamburg, West
Germany, because he wanted to purchase MAN bus spare parts from
Germany. Plaintiff communicated with its trading partner. Johannes
Schuback and Sohne Handelsgesellschaft m.b.n. & Co. (Schuback
Hamburg) regarding the spare parts defendant wanted to order.On
October 16, 1981, defendant submitted to plaintiff a list of the parts
(Exhibit B) he wanted to purchase with specific part numbers and
description. Plaintiff referred the list to Schuback Hamburg for quotations.
Upon receipt of the quotations, plaintiff sent to defendant a letter dated
25 November, 1981 (Exh. C) enclosing its offer on the items listed by
defendant.On December 4, 1981, defendant informed plaintiff that he
preferred genuine to replacement parts, and requested that he be given
15% on all items (Exh. D).On December 17, 1981, plaintiff submitted its
formal offer (Exh. E) containing the item number, quantity, part number,
description, unit price and total to defendant. On December, 24, 1981,
defendant informed plaintiff of his desire to avail of the prices of the parts
at that time and enclosed Purchase Order No. 0101 dated 14 December
1981 (Exh. F to F-4). Said Purchase Order contained the item number,
part number and description. Defendant promised to submit the quantity
per unit he wanted to order on December 28 or 29 (Exh. F).
On October 18, 1982, Plaintiff again reminded defendant of his order and
advised that the case may be endorsed to its lawyers (Exh. L).
Defendant replied that he did not make any valid Purchase Order and
that there was no definite contract between him and plaintiff (Exh. M).
Plaintiff sent a rejoinder explaining that there is a valid Purchase Order
and suggesting that defendant either proceed with the order and open a
letter of credit or cancel the order and pay the cancellation fee of 30% of
F.O.B. value, or plaintiff will endorse the case to its lawyers (Exh. N).

Issue: whether or not a contract of sale has been perfected between the
parties.

Ruling: Article 1319 of the Civil Code states: "Consent is manifested by

the meeting of the offer and acceptance upon the thing and the cause
which are to constitute the contract. The offer must be certain and the
acceptance absolute. A qualified acceptance constitutes a counter offer."
The facts presented to us indicate that consent on both sides has been
manifested.The offer by petitioner was manifested on December 17, 1981
when petitioner submitted its proposal containing the item number,
quantity, part number, description, the unit price and total to private
respondent. On December 24, 1981, private respondent informed
petitioner of his desire to avail of the prices of the parts at that time and
simultaneously enclosed its Purchase Order No. 0l01 dated December 14,
1981. At this stage, a meeting of the minds between vendor and vendee
has occurred, the object of the contract: being the spare parts and the
consideration, the price stated in petitioner's offer dated December 17,
1981 and accepted by the respondent on December 24,1981.Although
said purchase order did not contain the quantity he wanted to order,
private respondent made good, his promise to communicate the same on
December 29, 1981. At this juncture, it should be pointed out that private
respondent was already in the process of executing the agreement
previously reached between the parties. While we agree with the trial
court's conclusion that indeed a perfection of contract was reached
between the parties, we differ as to the exact date when it occurred, for
perfection took place, not on December 29, 1981. Although the quantity
to be ordered was made determinate only on December 29, 1981,
quantity is immaterial in the perfection of a sales contract. What is of
importance is the meeting of the minds as to the object and cause, which
from the facts disclosed, show that as of December 24, 1981, these
essential elements had already occurred.
On the part of the buyer, the situation reveals that private respondent
failed to open an irrevocable letter of credit without recourse in favor of
Johannes Schuback of Hamburg, Germany. This omission, however. does
not prevent the perfection of the contract between the parties, for the
opening of the letter of credit is not to be deemed a suspensive condition.
The facts herein do not show that petitioner reserved title to the goods
until private respondent had opened a letter of credit. Petitioner, in the
course of its dealings with private respondent, did not incorporate any
provision declaring their contract of sale without effect until after the
fulfillment of the act of opening a letter of credit.

G.R. No. 74470 March 8, 1989

NATIONAL GRAINS AUTHORITY and WILLLAM CABAL,
vs.
THE INTERMEDIATE APPELLATE COURT and LEON SORIANO
Facts: On August 23, 1979, private respondent Leon Soriano offered to
sell palay grains to the NFA, through William Cabal, the Provincial
Manager of NFA stationed at Tuguegarao, Cagayan. He submitted the
documents required by the NFA for pre-qualifying as a seller, namely: (1)
Farmer's Information Sheet accomplished by Soriano and certified by a
Bureau of Agricultural Extension (BAEX) technician, Napoleon Callangan,
(2) Xerox copies of four (4) tax declarations of the riceland leased to him
and copies of the lease contract between him and Judge Concepcion
Salud, and (3) his Residence Tax Certificate. Private respondent Soriano's
documents were processed and accordingly, he was given a quota of
2,640 cavans of palay. The quota noted in the Farmer's Information Sheet
represented the maximum number of cavans of palay that Soriano may

sell to the NFA.In the afternoon of August 23, 1979 and on the following
day, August 24, 1979, Soriano delivered 630 cavans of palay. The palay
delivered during these two days were not rebagged, classified and
weighed. when Soriano demanded payment of the 630 cavans of palay,
he was informed that its payment will be held in abeyance since Mr. Cabal
was still investigating on an information he received that Soriano was not
a bona tide farmer and the palay delivered by him was not produced from
his farmland but was taken from the warehouse of a rice trader, Ben de
Guzman. On August 28, 1979, Cabal wrote Soriano advising him to
withdraw from the NFA warehouse the 630 cavans Soriano delivered
stating that NFA cannot legally accept the said delivery on the basis of the
subsequent certification of the BAEX technician, Napoleon Callangan that
Soriano is not a bona fide farmer.Instead of withdrawing the 630 cavans
of palay, private respondent Soriano insisted that the palay grains
delivered be paid. He then filed a complaint for specific performance
and/or collection of money with damages on November 2, 1979, against
the National Food Authority and Mr. William Cabal, Provincial Manager of
NFA with the Court of First Instance of Tuguegarao.

Issue: whether or not there was a contract of sale in the case at bar.

Ruling: Article 1458 of the Civil Code of the Philippines defines sale as a
contract whereby one of the contracting parties obligates himself to
transfer the ownership of and to deliver a determinate thing, and the
other party to pay therefore a price certain in money or its equivalent. A
contract, on the other hand, is a meeting of minds between two (2)
persons whereby one binds himself, with respect to the other, to give
something or to render some service (Art. 1305, Civil Code of the
Philippines). The essential requisites of contracts are: (1) consent of the
contracting parties, (2) object certain which is the subject matter of the
contract, and (3) cause of the obligation which is established (Art. 1318,
Civil Code of the Philippines.
In the case at bar, Soriano initially offered to sell palay grains
produced in his farmland to NFA. When the latter accepted the offer by
noting in Soriano's Farmer's Information Sheet a quota of 2,640 cavans,
there was already a meeting of the minds between the parties. The object
of the contract, being the palay grains produced in Soriano's farmland and
the NFA was to pay the same depending upon its quality. The fact that the
exact number of cavans of palay to be delivered has not been determined
does not affect the perfection of the contract. Article 1349 of the New
Civil Code provides: ". . .. The fact that the quantity is not determinate
shall not be an obstacle to the existence of the contract, provided it is

possible to determine the same, without the need of a new contract

between the parties." In this case, there was no need for NFA and Soriano
to enter into a new contract to determine the exact number of cavans of
palay to be sold. Soriano can deliver so much of his produce as long as it
does not exceed 2,640 cavans.
The acceptance referred to which determines consent is the acceptance
of the offer of one party by the other and not of the goods delivered as
contended by petitioners.From the moment the contract of sale is
perfected, it is incumbent upon the parties to comply with their mutual
obligations or "the parties may reciprocally demand performance" thereof.
(Article 1475, Civil Code, 2nd par.).The reason why NFA initially refused
acceptance of the 630 cavans of palay delivered by Soriano is that it
(NFA) cannot legally accept the said delivery because Soriano is allegedly
not a bona fide farmer. The trial court and the appellate court found that
Soriano was a bona fide farmer and therefore, he was qualified to sell
palay grains to NFA.

what is brought to collation is not the donated

property itself, but the value of the property at the
time it was donated.
THIRD DIVISION
[ G.R. No. 112483, October 08, 1999 ]
ELOY IMPERIAL, PETITIONER VS. COURT OF APPEALS,
REGIONAL TRIAL COURT OF LEGASPI CITY, CESAR VILLALON,
JR., TERESA VILLALON, ANTONIO VILLALON, AUGUSTO
VILLALON, ROBERTO VILLALON, RICARDO VILLALON AND
ESTHER VILLALON, RESPONDENTS.
DECISION
GONZAGA-REYES, J.:
Petitioner seeks to set aside the Decision of the Court of Appeals in C.A.-G.R. CV No.
31976[1], affirming the Decision of the Regional Trial Court of Legazpi City [2], which
rendered inofficious the donation made by Leoncio Imperial in favor of herein
petitioner, to the extent that it impairs the legitime of Victor Imperial, and ordering

petitioner to convey to herein private respondents, heirs of said Victor Imperial, that
portion of the donated land proportionate to Victor Imperials legitime.
Leoncio Imperial was the registered owner of a 32,837-square meter parcel of land
covered by Original Certificate of Title No. 200, also known as Lot 45 of the
Cadastral Survey of Albay. On July 7, 1951, Leoncio sold the said lot for P1.00 to his
acknowledged natural son, petitioner herein, who then acquired title over the land
and proceeded to subdivide it into several lots. Petitioner and private respondents
admit that despite the contracts designation as one of Absolute Sale, the
transaction was in fact a donation.
On July 28, 1953, or barely two years after the donation, Leoncio filed a complaint
for annulment of the said Deed of Absolute Sale, docketed as Civil Case No. 1177, in
the then Court of First Instance of Albay, on the ground that he was deceived by
petitioner herein into signing the said document. The dispute, however, was
resolved through a compromise agreement, approved by the Court of First Instance
of Albay on November 3, 1961[3], under which terms: (1) Leoncio recognized the
legality and validity of the rights of petitioner to the land donated; and (2) petitioner
agreed to sell a designated 1,000-square meter portion of the donated land, and to
deposit the proceeds thereof in a bank, for the convenient disposal of Leoncio. In
case of Leoncios death, it was agreed that the balance of the deposit will be
withdrawn by petitioner to defray burial costs.
On January 8, 1962, and pending execution of the above judgment, Leoncio died,
leaving only two heirs --- the herein petitioner, who is his acknowledged natural son,
and an adopted son, Victor Imperial. On March 8, 1962, Victor was substituted in
place of Leoncio in the above-mentioned case, and it was he who moved for
execution of judgment. On March 15, 1962, the motion for execution was duly
granted.
Fifteen years thereafter, or on July 26, 1977, Victor died single and without issue,
survived only by his natural father, Ricardo Villalon, who was a lessee of a portion of
the disputed land. Four years hence, or on September 25, 1981, Ricardo died,
leaving as his only heirs his two children, Cesar and Teresa Villalon.
Five years thereafter, or sometime in 1986, Cesar and Teresa filed a complaint for
annulment of the donation with the Regional Trial Court of Legazpi City, docketed as
Civil Case No. 7646. Petitioner moved to dismiss on the ground of res judicata, by
virtue of the compromise judgment rendered by the Court of First Instance of Albay.
The trial court granted the motion to dismiss, but the Court of Appeals reversed the
trial courts order and remanded the case for further proceedings.
On October 18, 1989, Cesar and Teresa filed an amended complaint in the same
case, Civil Case No. 7646, for Annulment of Documents, Reconveyance and
Recovery of Possession with the Regional Trial Court of Legazpi City, seeking the
nullification of the Deed of Absolute Sale affecting the above property, on grounds
of fraud, deceit and inofficiousness. In the amended complaint, it was alleged that
petitioner caused Leoncio to execute the donation by taking undue advantage of
the latters physical weakness and mental unfitness, and that the conveyance of
said property in favor of petitioner impaired the legitime of Victor Imperial, their
natural brother and predecessor-in-interest. [4]
In his Answer, petitioner: (1) alleged that Leoncio had conveyed sufficient property
to Victor to cover his legitime, consisting of 563 hectares of agricultural land in

Manito, Albay; (2) reiterated the defense of res judicata, and (3) raised the
additional defenses of prescription and laches.
Plaintiff Cesar Villalon died on December 26, 1989, while the case was pending in
the Regional Trial Court, and was substituted in this action by his sons, namely,
Antonio, Roberto, Augusto, Ricardo and Cesar, Jr., all surnamed Villalon, and his
widow, Esther H. Villalon.
The RTC held the donation to be inofficious and impairing the legitime of Victor, on
the basis of its finding that at the time of Leoncios death, he left no property other
than the 32,837-square meter parcel of land which he had donated to petitioner.
The RTC went on further to state that petitioners allegation that other properties
existed and were inherited by Victor was not substantiated by the evidence. [5]
The legitime of Victor was determined by the trial court in this manner:
Considering that the property donated is 32,837 square meters, one half of that or
16,418 square meters becomes the free portion of Leoncio which could be absorbed
in the donation to defendant. The other half, which is also 16,418 square meters is
where the legitime of the adopted son Victor Imperial has to be taken.
The proportion of the legitime of the legitimate child (including the adopted child) in
relation to the acknowledged natural child (defendant) is 10 is to 5[,] with the
acknowledged natural child getting of thelegitime of the legitimate (adopted)
child, in accordance with Art. 895 of the New Civil Code which provides:
The legitime of each of the acknowledged natural children and each of the natural
children by legal fiction shall consist of one-half of the legitime of each of the
legitimate children or descendants.
From the 16,418 square meters left (after the free portion has been taken) plaintiffs
are therefore entitled to 10,940 square meters while defendant gets 5,420 square
meters.[6]
The trial court likewise held that the applicable prescriptive period is 30 years under
Article 1141 of the Civil Code[7], reckoned from March 15, 1962, when the writ of
execution of the compromise judgment in Civil Case 1177 was issued, and that the
original complaint having been filed in 1986, the action has not yet prescribed. In
addition, the trial court regarded the defense of prescription as having been waived,
this not being one of the issues agreed upon at pre-trial.
Thus, the dispositive portion of the RTCs Decision of December 13, 1990 reads:
WHEREFORE, premises considered, the Deed of Absolute Sale otherwise known as
Doc. No. 8; Book No. 14; Page No. 1; Series of 1951 of the Notarial file of Pompeyo
B. Calleja which is considered a donation, is hereby reduced proportionately insofar
as it affected the legitime of the late Victor Imperial, which share is inherited by the
plaintiffs herein, to the extent that plaintiffs are ordered to be given by defendant a
portion of 10,940 square meters thereof.
In order to avoid further conflict, the 10,940 share to be given to plaintiffs should
include the portion which they are presently occupying, by virtue of the extended
lease to their father Ricardo Villalon, where the bungalow in question stands.
The remaining portion to be given to plaintiffs may come from any other portion
that may be agreed upon by the parties, otherwise, this court will appoint a
commissioner to undertake the partition.

The other 21,897 square meters should go to the defendant as part of

his legitime and by virtue of the reduced donation.
No pronouncement as to damages as they were not sufficiently proved.
SO ORDERED.[8]
The Court of Appeals affirmed the RTC Decision in toto.
Before us, petitioner questions the following findings of respondent court: (1) that
there was no res judicata, there being no identity of parties and cause of action
between the instant case and Civil Case No. 1177; (2) that private respondents had
a right to question the donation; (3) that private respondents action is barred by
prescription, laches and estoppel; and (4) that the donation was inofficious and
should be reduced.
It is an indispensable requirement in res judicata that there be, between the first
and second action, identity of parties, of subject matter and of cause of action. [9] A
perusal of the records leads us to conclude that there is no identity of parties and of
cause of action as between Civil Case No. 1177 and Civil Case No. 7646. Civil Case
No. 1177 was instituted by Leoncio in his capacity as donor of the questioned
donation. While it is true that upon his death, Victor was substituted as plaintiff of
the action, such does not alter the fact that Victors participation in the case was in
representation of the interests of the original plaintiff, Leoncio. The purpose behind
the rule on substitution of parties is to ensure that the deceased party would
continue to be properly represented in the suit through the duly appointed legal
representative of the estate[10], or his heir, as in this case, for which no court
appointment is required.[11] Petitioners argument, therefore, that there is substantial
identity between Leoncio and private respondents, being heirs and successors-ininterest of Victor, is unavailing.
Moreover, Leoncios cause of action as donor of the property was fraud, purportedly
employed upon him by petitioner in the execution of the donation. While the same
circumstances of fraud and deceit are alleged in private respondents complaint, it
also raises the additional ground of inofficiousness of donation.
Contrary to petitioners contentions, inofficiousness of donation does not, and could
not, form part of Leoncios cause of action in Civil Case No. 1177. Inofficiousness as
a cause of action may arise only upon the death of the donor, as the value of the
donation will then be contrasted with the net value of the estate of the donordeceased.[12]
Consequently, while in Civil Case No. 1177, Leoncio sought the revocation in full of
the donation on ground of fraud, the instant case actually has two alternative
causes of action. First, for fraud and deceit, under the same circumstances as
alleged in Leoncios complaint, which seeks the annulment in full of the donation,
and which the trial court correctly dismissed because the compromise agreement in
Civil Case No. 1177 served as a ratification and waiver on the part of Leoncio of
whatever defects in voluntariness and consent may have been attendant in the
making of the donation. The second cause of action is the alleged inofficiousness of
the donation, resulting in the impairment of Victors legitime, which seeks the
annulment, not of the entire donation, but only of that portion diminishing
the legitime.[13] It is on the basis of this second cause of action that private
respondents prevailed in the lower courts.

Petitioner next questions the right of private respondents to contest the donation.
Petitioner sources his argument from Article 772 of the Civil Code, thus:
Only those who at the time of the donors death have a right to the legitime and
their heirs and successors in interest may ask for the reduction of inofficious
donations. xxx
As argued by petitioner, when Leoncio died on January 8, 1962, it was only Victor
who was entitled to question the donation. However, instead of filing an action to
contest the donation, Victor asked to be substituted as plaintiff in Civil Case No.
1177 and even moved for execution of the compromise judgment therein.
No renunciation of legitime may be presumed from the foregoing acts. It must be
remembered that at the time of the substitution, the judgment approving the
compromise agreement has already been rendered. Victor merely participated in
the execution of the compromise judgment. He was not a party to the compromise
agreement.
More importantly, our law on succession does not countenance tacit repudiation of
inheritance. Rather, it requires anexpress act on the part of the heir. Thus, under
Article 1051 of Civil Code:
The repudiation of an inheritance shall be made in a public or authentic instrument,
or by petition presented to the court having jurisdiction over the testamentary or
intestate proceedings.
Thus, when Victor substituted Leoncio in Civil Case No. 1177 upon the latters
death, his act of moving for execution of the compromise judgment cannot be
considered an act of renunciation of his legitime. He was, therefore, not precluded
or estopped from subsequently seeking the reduction of the donation, under Article
772. Nor are Victors heirs, upon his death, precluded from doing so, as their right to
do so is expressly recognized under Article 772, and also in Article 1053:
If the heir should die without having accepted or repudiated the inheritance, his
right shall be transmitted to his heirs.
Be that as it may, we find merit in petitioners other assignment of errors. Having
ascertained this action as one for reduction of an inofficious donation, we cannot
sustain the holding of both the trial court and the Court of Appeals that the
applicable prescriptive period is thirty years, under Article 1141 of the Civil Code.
The sense of both courts that this case is a real action over an immovable allots
undue credence to private respondents description of their complaint, as one for
Annulment of Documents, Reconveyance and Recovery of Possession of Property,
which suggests the action to be, in part, a real action enforced by those with claim
of title over the disputed land.
Unfortunately for private respondents, a claim for legitime does not amount to a
claim of title. In the recent case ofVizconde vs. Court of Appeals[14], we declared that
what is brought to collation is not the donated property itself, but the value of the
property at the time it was donated. The rationale for this is that the donation is a
real alienation which conveys ownership upon its acceptance, hence, any increase
in value or any deterioration or loss thereof is for the account of the heir or donee. [15]
What, then, is the prescriptive period for an action for reduction of an inofficious
donation? The Civil Code

specifies the following instances of

reduction or revocation of donations: (1) four years, in

cases of subsequent birth, appearance, recognition or
adoption of a child;[16](2) four years, for noncompliance with conditions of the donation;[17] and (3)
at any time during the lifetime of the donor and his
relatives entitled to support, for failure of the donor to
reserve property for his or their support.
[18]

Interestingly, donations as in the instant case,[19] the

reduction of which hinges upon the allegation of
impairment oflegitime, are not controlled by a
particular prescriptive period, for which reason we
must resort to the ordinary rules of prescription.
Under Article 1144 of the Civil Code, actions upon an obligation created by law must
be brought within ten years from the time the right of action accrues. Thus, the tenyear prescriptive period applies to the obligation to reduce inofficious donations,
required under Article 771 of the Civil Code, to the extent that they impair
the legitime of compulsory heirs.
From when shall the ten-year period be reckoned? The case of Mateo vs. Lagua, 29
SCRA 864, which involved the reduction for inofficiousness of a donation propter
nuptias, recognized that the cause of action to enforce a legitimeaccrues upon the
death of the donor-decedent. Clearly so, since it is only then that the net estate may
be ascertained and on which basis, the legitimes may be determined.
It took private respondents 24 years since the death of Leoncio to initiate this case.
The action, therefore, has long prescribed.
As for the trial courts holding that the defense of prescription had been waived, it
not being one of the issues agreed upon at pre-trial, suffice it to say that while the
terms of the pre-trial order bind the parties as to the matters to be taken up in trial,
it would be the height of injustice for us to adhere to this technicality when the fact
of prescription is manifest in the pleadings of the parties, as well as the findings of
fact of the lower courts.[20]
A perusal of the factual antecedents reveals that not only has prescription set in,
private respondents are also guilty of estoppel by laches. It may be recalled that
Leoncio died on January 8, 1962. Fifteen years later, Victor died, leaving as his sole
heir Ricardo Villalon, who also died four years later. While Victor was alive, he gave
no indication of any interest to contest the donation of his deceased father. As we
have discussed earlier, the fact that he actively participated in Civil Case No. 1177
did not amount to a renunciation of his inheritance and does not preclude him from
bringing an action to claim his legitime. These are matters that Victor could not
possibly be unaware of, considering that he is a lawyer [21]. Ricardo Villalon was even
a lessee of a portion of the donated property, and could have instituted the action
as sole heir of his natural son, or at the very least, raised the matter oflegitime by

way of counterclaim in an ejectment case [22] filed against him by petitioner in 1979.
Neither does it help private respondents cause that five years have elapsed since
the death of Ricardo in 1981 before they filed their complaint with the RTC.
Estoppel by laches is the failure or neglect for an unreasonable or unexplained
length of time to do that which, by exercising due diligence, could or should have
been done earlier, warranting a presumption that the person has abandoned his
right or declined to assert it.[23] We find the necessity for the application of the
principle of estoppel by laches in this case, in order to avoid an injustice.
A final word on collation of donations. We observe that after finding the donation to
be inofficious because Leoncio had no other property at the time of his death, the
RTC computed the legitime of Victor based on the area of the donated property.
Hence, in its dispositive portion, it awarded a portion of the property to private
respondents as Victors legitime. This was upheld by the Court of Appeals.
Our rules of succession require that before any conclusion as to the legal share due
to a compulsory heir may be reached, the following steps must be taken: (1) the net
estate of the decedent must be ascertained, by deducting all the payable
obligations and charges from the value of the property owned by the deceased at
the time of his death; (2) the value of all donations subject to collation would be
added to it.[24]
Thus, it is the value of the property at the time it is donated, and not the property
itself, which is brought to collation. Consequently, even when the donation is found
inofficious and reduced to the extent that it impaired Victorslegitime, private
respondents will not receive a corresponding share in the property donated. Thus, in
this case where the collatable property is an immovable, what may be received is:
(1) an equivalent, as much as possible, in property of the same nature, class and
quality;[25] (2) if such is impracticable, the equivalent value of the
impaired legitime in cash or marketable securities;[26] or (3) in the absence of cash or
securities in the estate, so much of such other property as may be necessary, to be
sold in public auction.[27]
We believe this worth mentioning, even as we grant the petition on grounds of
prescription and laches.
ACCORDINGLY, the decision of the Court of Appeals in C.A. G.R. CV No. 31976,
affirming in toto the decision of the Regional Trial Court in Civil Case No. 7646, is
reversed and set aside. No costs.
SO ORDERED.

THIRD DIVISION
[ G.R. NO. 154942, August 16, 2005 ]
ROLANDO SANTOS, PETITIONER, VS. CONSTANCIA SANTOS ALANA,
RESPONDENT.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, assailing the Decision[1] dated March 7, 2002 and Resolution dated July

24, 2002 of the Court of Appeals in C.A.-G.R. CV No. 40728.

A brief narration of the factual antecedents follows:
Rolando Santos, petitioner, and Constancia Santos Alana, respondent, are half-blood siblings
both asserting their claim over a 39-square meter lot located at 1339-B Andalucia St., Sta. Cruz,
Manila. It was registered in the name of their father, Gregorio Santos, under Transfer Certificate
of Title (TCT) No. 14278 of the Registry of Deeds of Manila. He died intestate on March 10,
1986.
During his lifetime, or on January 16, 1978, Gregorio donated the lot to petitioner which the
latter accepted on June 30, 1981. The deed of donation ("Pagsasalin ng Karapatan at Pag-aari")
was annotated on Gregorio's title.
On April 8, 1981, Gregorio sold the lot to petitioner as per a Deed of Absolute Sale.
On June 26, 1981, by virtue of the annotated deed of donation, TCT No. 14278 in Gregorio's
name was cancelled and in lieu thereof, TCT No. 144706 was issued by the Registry of Deeds of
Manila in petitioner's name.
On January 11, 1991, respondent Constancia Santos filed with the Regional Trial Court of
Manila, Branch 15, a complaint for partition and reconveyance against petitioner. She alleged
that during his lifetime, her father Gregorio denied having sold the lot to petitioner; that she
learned of the donation in 1978; and that the donation is inofficious as she was deprived of
her legitime.
In his answer, petitioner countered that respondent's suit is barred by prescription considering
that she is aware that he has been in possession of the lot as owner for more than ten (10) years;
and that the lot was sold to him by his father, hence, respondent can no longer claim her legitime.
The trial court found that the Deed of Absolute Sale was not signed by the parties nor was it
registered in the Registry of Deeds. Thus, it is not a valid contract. What is valid is the deed of
donation as it was duly executed by the parties and registered.
The trial court then held that since Gregorio did not own any other property, the donation to
petitioner is inofficious because it impaired respondent's legitime.
The dispositive portion of the trial court's Decision reads:
"WHEREFORE, premises considered, judgment is hereby rendered declaring the Deed of
Donation inofficious insofar as it impair the legitime of the plaintiff which is the of the subject
property.
The Registry of Deeds of Manila is hereby ordered to cancel the entry in TCT No. 14278 of the
Deed of Donation dated January 16, 1978 and to cancel TCT No. 144706 issued based on said
entry.
The parties are enjoined to institute the proper action for the settlement of the Estate of Gregorio
Santos and for the eventual partition of the estate."[2]
On appeal, the Court of Appeals affirmed the trial court's Decision, holding that:
"There are in the instant case two documents by which the subject property was purportedly
transferred to the defendant - a deed of donation and a deed of sale.
xxx
There can, therefore, be no way by which the appellant may successfully convince us that
Gregorio Santos sold the property in dispute to him and such sale can bind the appellee so
as to remove the case from the realm of the law on donations.

Moreover, as aptly put by the trial court:

'In general one who has disposed his property would not and could not have disposed the same
again unless the previous act was rendered invalid or ineffective.
The validity of the Deed of Donation was never assailed by the defendant. In fact, it was
impliedly recognized as valid by defendant by registering the same to the Registry of Deeds.
It is the honest belief of this Court, given the circumstances, i.e., the existence of the vendor and
the vendee in the Deed of Absolute Sale and the registration of the Deed of Donation despite the
supposed previous execution of (the) Deed of Absolute Sale, that there was no valid deed of
sale executed and that the true and real agreement between Gregorio Santos and Rolando
Santos was that of a donation.
Furthermore, considering that defendant himself registered the Deed of Donation, he cannot now
close his eyes and deny the existence of the same by alleging that there had been a deed of sale
executed previously." (Appealed Decision, supra, at pp. 238-239)
xxx
While a person may dispose of his property by donation, there is a limitation to the same. The
law provides that no person may give or receive, by way of donation, more than he may give or
receive by will, and any donation which may exceed the foregoing is considered inofficious. x x
x The donation shall be inofficious in all that it may exceed this limitation. (Article 752, Civil
Code) The said donation may correspondingly be reduced insofar as it exceeds the portion that
may be freely disposed of by will (ART. 761).
xxx
It has been undisputedly shown that the subject property was the only property of the deceased
Gregorio Santos at the time of his death on March 10, 1986 (Exhibit "K", Original Record, p.
163); and that he made no reservation for the legitime of the plaintiff-appellee, his daughter (See
paragraph 2, Complaint and paragraph 2, Answer, Ibid., at pp 1 and 12) and compulsory
heir. Clearly, the rule on officiousness applies. x x x
xxx
Defendant-appellant finally argues that since plaintiff-appellee knew of the donation since 1978,
while the donor Gregorio Santos was still alive, her assailing the said donation only on January
11, 1991 or thirteen years after, has effectively barred her from instituting the present action. The
foregoing is apparently groundless and without merit.
The inofficiousness of a donation cannot be determined until after the death of the donor because
prior to his death, the value of his estate cannot be determined or computed. Determination of the
value of the deceased's estate will require the collation of all properties or rights, donated or
conveyed by gratuitous title to the compulsory heirs in order that they may be included in the
computation for the determination of the legitime of each heir and for the account of partition
(Art. 1061, Civil Code)."[3]
Hence, the instant petition.
The findings of the courts below that (1) Gregorio donated to petitioner the subject lot; (2) the
Deed of Absolute Sale is void; and (3) Gregorio's only property is the said lot - are all factual in
nature which are not within the domain of this Court for it is not a trier of facts.[4] Basic is it that
findings of fact by the trial court, especially when affirmed on appeal, as in this case, are
conclusive and binding upon this Court. [5]
The issues which involve questions of law are: (1) whether the donation is inofficious; and (2)
whether the respondent's action has prescribed.

I. Whether the donation is inofficious.

It bears reiterating that under Article 752 of the Civil Code, the donation is inofficoius if it
exceeds this limitation -no person may give or receive, by way of donation, more than he
may give or receive by will. In Imperial vs. Court of Appeals,[6] we held that inofficiousness
may arise only upon the death of the donor as the value of donation may then be contrasted with
the net value of the estate of the donor deceased.
At this point, we emphasize that as found by the trial court, Gregorio did not sell the lot to
petitioner. He donated it. The trial court also found that the donation is inofficious as it impairs
respondent's legitime; that at the time of Gregorio's death, he left no property other than the lot
now in controversy he donated to petitioner; and that the deceased made no reservation for
the legitime of respondent, his daughter and compulsory heir. These findings were affirmed by
the Court of Appeals.
Pursuant to Article 752 earlier cited, Gregorio could not donate more than he may give by will.
Clearly, by donating the entire lot to petitioner, we agree with both lower courts that Gregorio's
donation is inofficious as it deprives respondent of her legitime, which, under Article 888 of the
Civil Code, consists of one-half (1/2) of the hereditary estate of the father and the mother. Since
the parents of both parties are already dead, they will inherit the entire lot, each being entitled to
one-half (1/2) thereof.
II. Whether respondent's suit is barred by prescription.
In Imperial vs. Court of Appeals,[7] we held that "donations, the reduction of which hinges upon
the allegation of impairment of legitime (as in this case), are not controlled by a particular
prescriptive period, for which reason, we must resort to the ordinary rules of prescription. Under
Article 1144 of the Civil Code, actions upon an obligation created by law must be brought within
ten years from the time the right of action accrues. Thus, the ten-year prescriptive period applies
to the obligation to reduce inofficious donations, required under Article 771 of the Civil Code,
[8]
to the extent that they impair the legitime of compulsory heirs.
From when shall the ten-year period be reckoned? In Mateo vs. Lagua,[9] involving the reduction,
for inofficiousness, of a donation propter nuptias, we held that the cause of action to enforce
a legitime accrues upon the death of the donor-decedent. Clearly so, since it is only then that the
net estate may be ascertained and on which basis, the legitimes may be determined.
Here, Gregorio died in 1986. Consequently, respondent had until 1996 within which to file the
action. Records show that she filed her suit in 1992, well within the prescriptive period.
WHEREFORE, the petition is DENIED. The challenged Decision and Resolution of the Court
of Appeals in CA-G.R. CV No. 40728 are hereby AFFIRMED, with modification in the sense
that the subject deed of donation being inofficious, one half (1/2) of the lot covered by TCT No.
14278 of the Registry of Deeds of Manila is awarded to Constancia Santos Alana, respondent,
the same being her legitime. The remaining one-half (1/2) shall be retained by petitioner,
Rolando Santos, as his legitime and by virtue of the donation.
Costs against petitioner.
SO ORDERED.

THIRD DIVISION
[ G.R. No. 189776, December 15, 2010 ]
AMELIA P. ARELLANO, REPRESENTED BY HER DULY APPOINTED
GUARDIANS, AGNES P. ARELLANO AND NONA P. ARELLANO,

PETITIONER, VS. FRANCISCO PASCUAL AND MIGUEL PASCUAL,

RESPONDENTS.
DECISION
CARPIO MORALES, J.:
Angel N. Pascual Jr. died intestate on January 2, 1999 leaving as heirs his siblings, namely:
petitioner Amelia P. Arellano who is represented by her daughters[1] Agnes P. Arellano (Agnes)
and Nona P. Arellano, and respondents Francisco Pascual and Miguel N. Pascual.[2]
In a petition for "Judicial Settlement of Intestate Estate and Issuance of Letters of
Administration," docketed as Special Proceeding Case No. M-5034, filed by respondents on
April 28, 2000 before the Regional Trial Court (RTC) of Makati, respondents alleged, inter alia,
that a parcel of land (the donated property) located in Teresa Village, Makati, which was, by
Deed of Donation, transferred by the decedent to petitioner the validity of which donation
respondents assailed, "may be considered as an advance legitime" of petitioner.
Respondent's nephew Victor was, as they prayed for, appointed as Administrator of the estate by
Branch 135 of the Makati RTC.[3]
Respecting the donated property, now covered in the name of petitioner by Transfer Certificate
of Title No. 181889 of the Register of Deeds of Makati, which respondents assailed but which
they, in any event, posited that it "may be considered as an advance legitime" to petitioner, the
trial court, acting as probate court, held that it was precluded from determining the validity of the
donation.
Provisionally passing, however, upon the question of title to the donated property only for the
purpose of determining whether it formed part of the decedent's estate,[4] the probate court found
the Deed of Donation valid in light of the presumption of validity of notarized documents. It
thus went on to hold that it is subject to collation following Article 1061 of the New Civil Code
which reads:[5]
Every compulsory heir, who succeeds with other compulsory heirs, must bring into the mass of
the estate any property or right which he may have received from the decedent, during the
lifetime of the latter, by way of donation, or any other gratuitous title in order that it may be
computed in the determination of the legitime of each heir, and in the account of the partition.
The probate court thereafter partitioned the properties of the intestate estate. Thus it disposed:
WHEREFORE, premises considered, judgment is hereby rendered declaring that:

1. The property covered by TCT No. 181889 of the Register of Deeds of Makati as part of
the estate of Angel N. Pascual;
2. The property covered by TCT No. 181889 to be subject to collation;
3. 1/3 of the rental receivables due on the property at the mezzanine and the 3rd floor of Unit
1110 Tanay St., Makati City form part of the estate of Angel N. Pascual;
4. The following properties form part of the estate of Angel N. Pascual:
1.

1/3 share in the House and Lot at 1110 Tanay St., Rizal Village Makati TCT No.
348341 and 1/3 share in the rental income thereon;

2.

1/3 share in the Vacant Lot with an area of 271 square meters located at Tanay St.,
Rizal Village, Makati City, TCT No. 119063;

3.

Agricultural land with an area of 3.8 hectares located at Puerta Galera Mindoro
covered by OCT No. P-2159;

4.

Shares of stocks in San Miguel Corporation covered by the following Certificate

Numbers: A0011036, A006144, A082906, A006087, A065796, A11979, A049521,
C86950, C63096, C55316, C54824, C120328, A011026, C12865, A10439, A021401,
A007218, A0371, S29239, S40128, S58308, S69309;

5.

Shares of stocks in Paper Industries Corp. covered by the following Certificate

Numbers: S29239, S40128, S58308, S69309, A006708, 07680, A020786, S18539,
S14649;

6.

share in Eduardo Pascual's shares in Baguio Gold Mining Co.;

7.

Cash in Banco De Oro Savings Account No. 2 014 12292 4 in the name of Nona
Arellano;

8.

Property previously covered by TCT No. 119053 now covered by TCT No.
181889, Register of Deeds of Makati City;

9.

Rental receivables from Raul Arellano per Order issued by Branch 64 of the Court
on November 17, 1995.

5. AND the properties are partitioned as follows:

1.
2.

To heir Amelia P. Arellano-the property covered by TCT No. 181889;

To heirs Francisco N. Pascual and Miguel N. Pascual-the real properties covered
by TCT Nos. 348341 and 119063 of the Register of Deeds of Makati City and the
property covered by OCT No. 2159, to be divided equally between them up to the extent
that each of their share have been equalized with the actual value of the property in 5(a)
at the time of donation, the value of which shall be determined by an independent
appraiser to be designated by Amelia P. Arellano, Miguel N. Pascual and Francisco N.
Pascual. If the real properties are not sufficient to equalize the shares, then Francisco's
and Miguel's shares may be satisfied from either in cash property or shares of stocks, at
the rate of quotation. The remaining properties shall be divided equally among
Francisco, Miguel and Amelia. (emphasis and underscoring supplied)

Before the Court of Appeals, petitioner faulted the trial court in holding that
I
. . . THE PROPERTY DONATED TO APPELLANT AMELIA PASCUAL ARELLANO
IS PART OF THE ESTATE OF ANGEL PASCUAL, JR.
II
. . . THE PROPERTY DONATED TO APPELLANT IS SUBJECT TO COLLATION UNDER
ARTICLE 1061 OF THE NEW CIVIL CODE.
III
. . . APPELLEES WHO ARE MERELY COLLATERAL RELATIVES OF DECEASED ANGEL
N. PASCUAL JR. AS HIS COMPULSORY HEIRS ENTITLED TO LEGITIMES.
xxxx
and
V

. . . IN NOT PARTITIONING THE ESTATE OF ANGEL N. PASCUAL

JR. EQUALLY AMONG HIS LEGAL OR INTESTATE HEIRS.[6] (underscoring supplied)
By Decision[7] of July 20, 2009, the Court of Appeals found petitioner's appeal "partly
meritorious." It sustained the probate court's ruling that the property donated to petitioner is
subject to collation in this wise:
Bearing in mind that in intestate succession, what governs is the rule on equality of division, We
hold that theproperty subject of donation inter vivos in favor of Amelia is subject to
collation. Amelia cannot be considered a creditor of the decedent and we believe that under the
circumstances, the value of such immovable though not strictly in the concept of
advance legitime, should be deducted from her share in the net hereditary estate. The trial court
therefore committed no reversible error when it included the said property as forming part of the
estate of Angel N. Pascual.[8] (citation omitted; emphasis and underscoring supplied)
The appellate court, however, held that, contrary to the ruling of the probate court, herein
petitioner "was able to submit prima facie evidence of shares of stocks owned by the [decedent]
which have not been included in the inventory submitted by the administrator."
Thus, the appellate court disposed, quoted verbatim:
WHEREFORE, premises considered, the present appeal is hereby PARTLY GRANTED. The
Decision dated January 29, 2008 of the Regional Trial Court of Makati City, Branch 135 in
Special Proceeding Case No. M-5034 is hereby REVERSED and SET ASIDE insofar as the
order of inclusion of properties of the Intestate Estate of Angel N. Pascual, Jr. as well as
the partition and distribution of the same to the co-heirs are concerned.
The case is hereby REMANDED to the said court for further proceedings in accordance with the
disquisitions herein.[9] (underscoring supplied)
Petitioner's Partial Motion for Reconsideration[10] having been denied by the appellate court by
Resolution[11] of October 7, 2009, the present petition for review on certiorari was filed, ascribing
as errors of the appellate court its ruling
I
. . . THAT THE PROPERTY DONATED BY ANGEL N. PASCUAL, JR. TO PETITIONER
AMELIA PASCUAL ARELLANO IS PART OF HIS ESTATE AT THE TIME OF HIS DEATH.
II
. . . THAT THE PROPERTY DONATED TO PETITIONER IS SUBJECT TO
COLLATION UNDER ARTICLE 1061 OF THE NEW CIVIL CODE.
III
. . . THAT RESPONDENTS ARE COMPULSORY HEIRS OF THEIR DECEASED
BROTHER ANGEL N. PASCUAL JR. AND ARE ENTITLED TO LEGITIMES.
IV
. . . IN NOT PARTITIONING THE ESTATE OF ANGEL N. PASCUAL,
JR. EQUALLY AMONG PETITIONER AND RESPONDENTS, AS HIS LEGAL OR
INTESTATE HEIRS.[12] (underscoring supplied)
Petitioners thus raise the issues of whether the property donated to petitioner is subject to
collation; and whether the property of the estate should have been ordered equally distributed
among the parties.

On the first issue:

The term collation has two distinct concepts: first, it is a mere mathematical operation by the
addition of the value of donations made by the testator to the value of the hereditary estate;
and second, it is the return to the hereditary estate of property disposed of by lucrative title by the
testator during his lifetime.[13]
The purposes of collation are to secure equality among the compulsory heirs in so far as is
possible, and to determine the free portion, after finding the legitime, so that inofficious
donations may be reduced.[14]
Collation takes place when there are compulsory heirs, one of its purposes being to determine
the legitime and the free portion. If there is no compulsory heir, there is no legitime to be
safeguarded.[15]
The records do not show that the decedent left any primary, secondary, or concurring compulsory
heirs. He was only survived by his siblings, who are his collateral relatives and, therefore, are
not entitled to any legitime - that part of the testator's property which he cannot dispose of
because the law has reserved it for compulsory heirs.[16]
The compulsory heirs may be classified into (1) primary, (2) secondary, and (3) concurring. The
primary compulsory heirs are those who have precedence over and exclude other compulsory
heirs; legitimate children and descendants are primary compulsory heirs. The secondary
compulsory heirs are those who succeed only in the absence of the primary heirs; the legitimate
parents and ascendants are secondary compulsory heirs. The concurring compulsory heirs are
those who succeed together with the primary or the secondary compulsory heirs; the illegitimate
children, and the surviving spouse are concurring compulsory heirs.[17]
The decedent not having left any compulsory heir who is entitled to any legitime, he was at
liberty to donate all his properties, even if nothing was left for his siblings-collateral relatives to
inherit. His donation to petitioner, assuming that it was valid,[18] is deemed as donation made to a
"stranger," chargeable against the free portion of the estate.[19] There being no compulsory heir,
however, the donated property is not subject to collation.
On the second issue:
The decedent's remaining estate should thus be partitioned equally among his heirs-siblingscollateral relatives, herein petitioner and respondents, pursuant to the provisions of the Civil
Code, viz:
Art. 1003. If there are no descendants, ascendants, illegitimate children, or a surviving
spouse, the collateral relatives shall succeed to the entire estate of the deceased in accordance
with the following articles. (underscoring supplied)
Art. 1004. Should the only survivors be brothers and sisters of the full blood, they shall inherit
in equal shares. (emphasis and underscoring supplied)
WHEREFORE, the petition is GRANTED. The Court of Appeals Decision ordering the
collation of the property donated to petitioner, Amelia N. Arellano, to the estate of the deceased
Angel N. Pascual, Jr. is set aside.
Let the records of the case be REMANDED to the court of origin, Branch 135 of the Makati
Regional Trial Court, which is ordered to conduct further proceedings in the case for the purpose
of determining what finally forms part of the estate, and thereafter to divide whatever remains of
it equally among the parties.

SO ORDERED.

FIRST DIVISION
[ G.R. No. 126376, November 20, 2003 ]
SPOUSES BERNARDO BUENAVENTURA AND CONSOLACION JOAQUIN,
SPOUSES JUANITO EDRA AND NORA JOAQUIN, SPOUSES RUFINO
VALDOZ AND EMMA JOAQUIN, AND NATIVIDAD JOAQUIN,
PETITIONERS, VS. COURT OF APPEALS, SPOUSES LEONARDO
JOAQUIN AND FELICIANA LANDRITO, SPOUSES FIDEL JOAQUIN AND
CONCHITA BERNARDO, SPOUSES TOMAS JOAQUIN AND SOLEDAD
ALCORAN, SPOUSES ARTEMIO JOAQUIN AND SOCORRO ANGELES,
SPOUSES ALEXANDER MENDOZA AND CLARITA JOAQUIN, SPOUSES
TELESFORO CARREON AND FELICITAS JOAQUIN, SPOUSES DANILO
VALDOZ AND FE JOAQUIN, AND SPOUSES GAVINO JOAQUIN AND LEA
ASIS, RESPONDENTS.
DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari[1] to annul the Decision[2] dated 26 June 1996 of the
Court of Appeals in CA-G.R. CV No. 41996. The Court of Appeals affirmed the Decision[3] dated
18 February 1993 rendered by Branch 65 of the Regional Trial Court of Makati ("trial court") in
Civil Case No. 89-5174. The trial court dismissed the case after it found that the parties executed
the Deeds of Sale for valid consideration and that the plaintiffs did not have a cause of action
against the defendants.
The Facts
The Court of Appeals summarized the facts of the case as follows:
Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of plaintiffs
Consolacion, Nora, Emma and Natividad as well as of defendants Fidel, Tomas, Artemio, Clarita,
Felicitas, Fe, and Gavino, all surnamed JOAQUIN. The married Joaquin children are joined in
this action by their respective spouses.
Sought to be declared null and void ab initio are certain deeds of sale of real property executed
by defendant parents Leonardo Joaquin and Feliciana Landrito in favor of their co-defendant
children and the corresponding certificates of title issued in their names, to wit:
1. Deed of Absolute Sale covering Lot 168-C-7 of subdivision plan (LRC) Psd-256395
executed on 11 July 1978, in favor of defendant Felicitas Joaquin, for a consideration of
P6,000.00 (Exh. "C"), pursuant to which TCT No. [36113/T-172] was issued in her name
(Exh. "C-1");

2. Deed of Absolute Sale covering Lot 168-I-3 of subdivision plan (LRC) Psd-256394
executed on 7 June 1979, in favor of defendant Clarita Joaquin, for a consideration of
P1[2],000.00 (Exh. "D"), pursuant to which TCT No. S-109772 was issued in her name
(Exh. "D-1");
3. Deed of Absolute Sale covering Lot 168-I-1 of subdivision plan (LRC) Psd-256394
executed on 12 May 1988, in favor of defendant spouses Fidel Joaquin and Conchita

Bernardo, for a consideration of P54,[3]00.00 (Exh. "E"), pursuant to which TCT No.
155329 was issued to them (Exh. "E-1");

4. Deed of Absolute Sale covering Lot 168-I-2 of subdivision plan (LRC) Psd-256394
executed on 12 May 1988, in favor of defendant spouses Artemio Joaquin and Socorro
Angeles, for a consideration of P[54,3]00.00 (Exh. "F"), pursuant to which TCT No.
155330 was issued to them (Exh. "F-1"); and
5. Absolute Sale of Real Property covering Lot 168-C-4 of subdivision plan (LRC) Psd256395 executed on 9 September 1988, in favor of Tomas Joaquin, for a consideration of
P20,000.00 (Exh. "G"), pursuant to which TCT No. 157203 was issued in her name (Exh.
"G-1").
[6. Deed of Absolute Sale covering Lot 168-C-1 of subdivision plan (LRC) Psd-256395 executed
on 7 October 1988, in favor of Gavino Joaquin, for a consideration of P25,000.00 (Exh. "K"),
pursuant to which TCT No. 157779 was issued in his name (Exh. "K-1").]
In seeking the declaration of nullity of the aforesaid deeds of sale and certificates of title,
plaintiffs, in their complaint, aver:
- XX-

The deeds of sale, Annexes "C," "D," "E," "F," and "G," [and "K"] are simulated as
they are, are NULL AND VOID AB INITIO because a)

Firstly, there was no actual valid consideration for the deeds of sale xxx over the
properties in litis;

b)

Secondly, assuming that there was consideration in the sums reflected in the questioned
deeds, the properties are more than three-fold times more valuable than the measly
sums appearing therein;

c)

Thirdly, the deeds of sale do not reflect and express the true intent of the parties
(vendors and vendees); and

d)

Fourthly, the purported sale of the properties in litis was the result of a deliberate
conspiracy designed to unjustly deprive the rest of the compulsory heirs (plaintiffs
herein) of their legitime.

- XXI Necessarily, and as an inevitable consequence, Transfer Certificates of Title Nos. 36113/T-172,
S-109772, 155329, 155330, 157203 [and 157779] issued by the Registrar of Deeds over the
properties in litis xxx are NULL AND VOID AB INITIO.
Defendants, on the other hand aver (1) that plaintiffs do not have a cause of action against them
as well as the requisite standing and interest to assail their titles over the properties in litis; (2)
that the sales were with sufficient considerations and made by defendants parents voluntarily, in
good faith, and with full knowledge of the consequences of their deeds of sale; and (3) that the
certificates of title were issued with sufficient factual and legal basis.[4] (Emphasis in the original)
The Ruling of the Trial Court
Before the trial, the trial court ordered the dismissal of the case against defendant spouses
Gavino Joaquin and Lea Asis.[5] Instead of filing an Answer with their co- defendants, Gavino
Joaquin and Lea Asis filed a Motion to Dismiss.[6] In granting the dismissal to Gavino Joaquin
and Lea Asis, the trial court noted that "compulsory heirs have the right to a legitime but such
right is contingent since said right commences only from the moment of death of the decedent
pursuant to Article 777 of the Civil Code of the Philippines."[7]

After trial, the trial court ruled in favor of the defendants and dismissed the complaint. The trial
court stated:
In the first place, the testimony of the defendants, particularly that of the xxx father will show
that the Deeds of Sale were all executed for valuable consideration. This assertion must prevail
over the negative allegation of plaintiffs.
And then there is the argument that plaintiffs do not have a valid cause of action against
defendants since there can be no legitime to speak of prior to the death of their parents. The court
finds this contention tenable. In determining the legitime, the value of the property left at the
death of the testator shall be considered (Art. 908 of the New Civil Code). Hence, the legitime of
a compulsory heir is computed as of the time of the death of the decedent. Plaintiffs therefore
cannot claim an impairment of their legitime while their parents live.
All the foregoing considered, this case is DISMISSED.
In order to preserve whatever is left of the ties that should bind families together, the
counterclaim is likewise DISMISSED.
No costs.
SO ORDERED.[8]
The Ruling of the Court of Appeals
The Court of Appeals affirmed the decision of the trial court. The appellate court ruled:
To the mind of the Court, appellants are skirting the real and decisive issue in this case, which is,
whether xxx they have a cause of action against appellees.
Upon this point, there is no question that plaintiffs-appellants, like their defendant brothers and
sisters, are compulsory heirs of defendant spouses, Leonardo Joaquin and Feliciana Landrito,
who are their parents. However, their right to the properties of their defendant parents, as
compulsory heirs, is merely inchoate and vests only upon the latter's death. While still alive,
defendant parents are free to dispose of their properties, provided that such dispositions are not
made in fraud of creditors.
Plaintiffs-appellants are definitely not parties to the deeds of sale in question. Neither do they
claim to be creditors of their defendant parents. Consequently, they cannot be considered as real
parties in interest to assail the validity of said deeds either for gross inadequacy or lack of
consideration or for failure to express the true intent of the parties. In point is the ruling of the
Supreme Court in Velarde, et al. vs. Paez, et al., 101 SCRA 376, thus:
The plaintiffs are not parties to the alleged deed of sale and are not principally or subsidiarily
bound thereby; hence, they have no legal capacity to challenge their validity.
Plaintiffs-appellants anchor their action on the supposed impairment of their legitime by the
dispositions made by their defendant parents in favor of their defendant brothers and sisters. But,
as correctly held by the court a quo, "thelegitime of a compulsory heir is computed as of the time
of the death of the decedent. Plaintiffs therefore cannot claim an impairment of
their legitime while their parents live."
With this posture taken by the Court, consideration of the errors assigned by plaintiffs-appellants
is inconsequential.
WHEREFORE, the decision appealed from is hereby AFFIRMED, with costs against plaintiffsappellants.
SO ORDERED.[9]
Hence, the instant petition.

Issues
Petitioners assign the following as errors of the Court of Appeals:
1. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE CONVEYANCE
IN QUESTION HAD NO VALID CONSIDERATION.

2. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT EVEN ASSUMING

THAT THERE WAS A CONSIDERATION, THE SAME IS GROSSLY INADEQUATE.
3. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE DEEDS OF
SALE DO NOT EXPRESS THE TRUE INTENT OF THE PARTIES.
4. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE CONVEYANCE
WAS PART AND PARCEL OF A CONSPIRACY AIMED AT UNJUSTLY DEPRIVING
THE REST OF THE CHILDREN OF THE SPOUSES LEONARDO JOAQUIN AND
FELICIANA LANDRITO OF THEIR INTEREST OVER THE SUBJECT
PROPERTIES.
5. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT PETITIONERS HAVE
A GOOD, SUFFICIENT AND VALID CAUSE OF ACTION AGAINST THE PRIVATE
RESPONDENTS.[10]
The Ruling of the Court
We find the petition without merit.
We will discuss petitioners' legal interest over the properties subject of the Deeds of Sale before
discussing the issues on the purported lack of consideration and gross inadequacy of the prices of
the Deeds of Sale.
Whether Petitioners have a legal interest
over the properties subject of the Deeds of Sale
Petitioners' Complaint betrays their motive for filing this case. In their Complaint, petitioners
asserted that the "purported sale of the properties in litis was the result of a deliberate conspiracy
designed to unjustly deprive the rest of the compulsory heirs (plaintiffs herein) of their legitime."
Petitioners' strategy was to have the Deeds of Sale declared void so that ownership of the lots
would eventually revert to their respondent parents. If their parents die still owning the lots,
petitioners and their respondent siblings will then co-own their parents' estate by hereditary
succession.[11]
It is evident from the records that petitioners are interested in the properties subject of the Deeds
of Sale, but they have failed to show any legal right to the properties. The trial and appellate
courts should have dismissed the action for this reason alone. An action must be prosecuted in
the name of the real party-in-interest.[12]
[T]he question as to "real party-in-interest" is whether he is "the party who would be benefitted
or injured by the judgment, or the `party entitled to the avails of the suit.'"
xxx
In actions for the annulment of contracts, such as this action, the real parties are those who are
parties to the agreement or are bound either principally or subsidiarily or are prejudiced in their
rights with respect to one of the contracting parties and can show the detriment which would
positively result to them from the contract even though they did not intervene in it (Ibaez v.
Hongkong & Shanghai Bank, 22 Phil. 572 [1912]) xxx.
These are parties with "a present substantial interest, as distinguished from a mere expectancy or

future, contingent, subordinate, or consequential interest.... The phrase `present substantial

interest' more concretely is meant such interest of a party in the subject matter of the action as
will entitle him, under the substantive law, to recover if the evidence is sufficient, or that he has
the legal title to demand and the defendant will be protected in a payment to or recovery by
him."[13]
Petitioners do not have any legal interest over the properties subject of the Deeds of Sale. As the
appellate court stated, petitioners' right to their parents' properties is merely inchoate and vests
only upon their parents' death. While still living, the parents of petitioners are free to dispose of
their properties. In their overzealousness to safeguard their future legitime, petitioners forget that
theoretically, the sale of the lots to their siblings does not affect the value of their parents' estate.
While the sale of the lots reduced the estate, cash of equivalent value replaced the lots taken from
the estate.
Whether the Deeds of Sale are void
for lack of consideration
Petitioners assert that their respondent siblings did not actually pay the prices stated in the Deeds
of Sale to their respondent father. Thus, petitioners ask the court to declare the Deeds of Sale
void.
A contract of sale is not a real contract, but a consensual contract. As a consensual contract, a
contract of sale becomes a binding and valid contract upon the meeting of the minds as to price.
If there is a meeting of the minds of the parties as to the price, the contract of sale is valid,
despite the manner of payment, or even the breach of that manner of payment. If the real price is
not stated in the contract, then the contract of sale is valid but subject to reformation. If there is
no meeting of the minds of the parties as to the price, because the price stipulated in the contract
is simulated, then the contract is void.[14] Article 1471 of the Civil Code states that if the price in
a contract of sale is simulated, the sale is void.
It is not the act of payment of price that determines the validity of a contract of sale. Payment of
the price has nothing to do with the perfection of the contract. Payment of the price goes into the
performance of the contract. Failure to pay the consideration is different from lack of
consideration. The former results in a right to demand the fulfillment or cancellation of the
obligation under an existing valid contract while the latter prevents the existence of a valid
contract.[15]
Petitioners failed to show that the prices in the Deeds of Sale were absolutely simulated. To
prove simulation, petitioners presented Emma Joaquin Valdoz's testimony stating that their
father, respondent Leonardo Joaquin, told her that he would transfer a lot to her through a deed
of sale without need for her payment of the purchase price.[16]The trial court did not find the
allegation of absolute simulation of price credible. Petitioners' failure to prove absolute
simulation of price is magnified by their lack of knowledge of their respondent siblings' financial
capacity to buy the questioned lots.[17] On the other hand, the Deeds of Sale which petitioners
presented as evidence plainly showed the cost of each lot sold. Not only did respondents' minds
meet as to the purchase price, but the real price was also stated in the Deeds of Sale. As of the
filing of the complaint, respondent siblings have also fully paid the price to their respondent
father.[18]
Whether the Deeds of Sale are void
for gross inadequacy of price
Petitioners ask that assuming that there is consideration, the same is grossly inadequate as to
invalidate the Deeds of Sale.
Articles 1355 of the Civil Code states:
Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a
contract, unless there has been fraud, mistake or undue influence. (Emphasis supplied)

Article 1470 of the Civil Code further provides:

Art. 1470. Gross inadequacy of price does not affect a contract of sale, except as may indicate a
defect in the consent, or that the parties really intended a donation or some other act or contract.
(Emphasis supplied)
Petitioners failed to prove any of the instances mentioned in Articles 1355 and 1470 of the Civil
Code which would invalidate, or even affect, the Deeds of Sale. Indeed, there is no requirement
that the price be equal to the exact value of the subject matter of sale. All the respondents
believed that they received the commutative value of what they gave. As we stated in Vales v.
Villa: [19]
Courts cannot follow one every step of his life and extricate him from bad bargains, protect him
from unwise investments, relieve him from one-sided contracts, or annul the effects of foolish
acts. Courts cannot constitute themselves guardians of persons who are not legally incompetent.
Courts operate not because one person has been defeated or overcome by another, but because he
has been defeated or overcome illegally. Men may do foolish things, make ridiculous contracts,
use miserable judgment, and lose money by them - indeed, all they have in the world; but not for
that alone can the law intervene and restore. There must be, in addition, a violation of the law,
the commission of what the law knows as an actionable wrong, before the courts are authorized
to lay hold of the situation and remedy it. (Emphasis in the original)
Moreover, the factual findings of the appellate court are conclusive on the parties and carry
greater weight when they coincide with the factual findings of the trial court. This Court will not
weigh the evidence all over again unless there has been a showing that the findings of the lower
court are totally devoid of support or are clearly erroneous so as to constitute serious abuse of
discretion.[20] In the instant case, the trial court found that the lots were sold for a valid
consideration, and that the defendant children actually paid the purchase price stipulated in their
respective Deeds of Sale. Actual payment of the purchase price by the buyer to the seller is a
factual finding that is now conclusive upon us.
WHEREFORE, we AFFIRM the decision of the Court of Appeals in toto. SO ORDERED.

FIRST DIVISION
[ G.R. No. 65800, October 03, 1986 ]
PARTENZA LUCERNA VDA. DE TUPAS, PETITIONER-APPELLANT, VS.
BRANCH XLIII OF THE HON. REGIONAL TRIAL COURT OF NEGROS
OCCIDENTAL, RESPONDENT, AND TUPAS FOUNDATION, INC., PRIVATE
RESPONDENT-APPELLEE.
DECISION
NARVASA, J.:
Involved in this appeal is the question of whether or not a donation inter vivos by a donor now
deceased is inofficious and should be reduced at the instance of the donor's widow.
Epifanio R. Tupas died on August 20, 1978 in Bacolod City, childless, leaving his widow,
Partenza Lucerna, as his only surviving compulsory heir. He also left a will dated May 18, 1976,
which was admitted to probate on September 30, 1980 in Special Proceedings No. 13994 of the
Court of First Instance of Negros Occidental. Among the assets listed in his will were lots Nos.
837, 838 and 839 of the Sagay Cadastre, admittedly his private capital. However, at the time of
his death, these lots were no longer owned by him, he having donated them the year before (on
August 2, 1977) to the Tupas Foundation, Inc., which had thereafter obtained title to said lots.
Claiming that said donation had left her practically destitute of any inheritance, Tupas' widow
brought suit against Tupas Foundation, Inc. in the same Court of First Instance of Negros
Occidental (docketed as Civil Case No. 16089) to have the donation declared inofficious insofar
as it prejudiced her legitime, therefore reducible "* * * by one-half or such proportion as * * *
(might be deemed) justified * * *" and "* * * the resulting deduction * * *" restored and
conveyed or delivered to her. The complaint also prayed for attorney's fees and such other relief
as might be proper.

The Trial Court did not see things her way. Upon the facts above stated, on which the parties
stipulated , said Court dismissed the complaint for lack of merit, rejecting her claim on several
grounds, viz.:
"* * * (1) Article 900 relied upon by plaintiff is not applicable because the properties which were
disposed of by way of donation one year before the death of Epifanio Tupas were no longer part
of his hereditary estateat the time of his death on August 20, 1978; (2) the donated properties
were Epifanio's capital or separate estate; and (3) Tupas Foundation, Inc. being a stranger and not
a compulsory heir, the donation inter vivosmade in its favor was not subject to collation under
Art. 1061, C.C."
[1]

[2]

The Trial Court is in error on all counts and must be reversed.

A person's prerogative to make donations is subject to certain limitations, one of which is that he
cannot give by donation more than he can give by will (Art. 752, Civil Code) . If he does, so
much of what is donated as exceeds what he can give by will is deemed inofficious and the
donation is reducible to the extent of such excess, though without prejudice to its taking effect in
the donor's lifetime or the donee's appropriating the fruits of the thing donated (Art. 771, Civil
Code). Such a donation is, moreover, collationable, that is, its value is imputable into the
hereditary estate of the donor at the time of his death for the purpose of determining the legitime
of the forced or compulsory heirs and the freely disposable portion of the estate. This is true as
well of donations to strangers as of gifts to compulsory heirs, although the language of Article
1061 of the Civil Code would seem to limit collation to the latter class of donations. And this
has been held to be a long-established rule in Liguez vs. Honorable Court of Appeals, et al., ,
where this Court said:
"* * * Hence, the forced heirs are entitled to have the donation set aside in so far as inofficious:
i.e., in excess of the portion of free disposal (Civil Code of 1889, Articles 636, 645), computed as
provided in Articles 818 and 819, and bearing in mind that 'collationable gifts' under Article 818
should include gifts made not only in favor of the forced heirs, but even those made in favor of
strangers, as decided by the Supreme Court of Spain in its decisions of 4 May 1899 and 16 June
1902. So that in computing the legitimes, the value of the property donated to herein appellant,
Conchita Liguez, should be considered part of the donor's estate. Once again, only the court of
origin has the requisite data to determine whether the donation is inofficious or not."
[3]

[4]

[5]

The fact, therefore, that the donated property no longer actually formed part of the estate of the
donor at the time of his death cannot be asserted to prevent its being brought to collation.
Indeed, it is an obvious proposition that collation contemplates and particularly applies to
gifts inter vivos . The further fact that the lots donated were admittedly capital separate property
of the donor is of no moment, because a claim of inofficiousness does not assert that the donor
gave what was not his, but that he gave more than what was within his power to give.
Since it is clear that the questioned donation is collationable and that, having been made to a
stranger (to the donor) it is, by law chargeable to the freely disposable portion of the donor's
estate, to be reduced insofar as inofficious, i.e., it exceeds said portion and thus impairs the
legitime of the compulsory heirs, in order to find out whether it is inofficious or not, recourse
must be had to the rules established by the Civil Code for the determination of the legitime and,
by extension, of the disposable portion. These rules are set forth in Articles 908, 909 and 910 of
the Code, on the basis of which the following step-by-step procedure has been correctly outlined:
(1) determination of the value of the property which remains at the time of the testator's death;
[6]

[7]

(2) determination of the obligations, debts, and charges which have to be paid out or deducted
from the value of the property thus left;
(3) the determination of the difference between the assets and the liabilities, giving rise to the
hereditary estate;
(4) the addition to the net value thus found, of the value, at the time they were made, of
donations subject to collation; and
(5) the determination of the amount of the legitimes by getting from the total thus found the
portion that the law provides as the legitime of each respective compulsory heir.
[8]

Deducting the legitimes from the net value of the hereditary estate leaves the freely disposable
portion by which the donation in question here must be measured. If the value of the donation at

the time it was made does not exceed that difference, then it must be allowed to stand. But if it
does, the donation is inofficious as to the excess and must be reduced by the amount of said
excess. In this case, if any excess be shown, it shall be returned or reverted to the petitionerappellant as the sole compulsory heir of the deceased Epifanio R. Tupas.
For obvious reasons, this determination cannot now be made, as it requires appreciation of data
not before this Court and may necessitate the production of evidence in the Court a quo.
WHEREFORE, the appealed decision is reversed and petitioner-appellant Partenza Lucerna
Vda. de Tupas is adjudged entitled to so much of the donated property in question, as may be
found in excess of the freely disposable portion of the estate of Epifanio B. Tupas, determined in
the manner above-indicated. Let the case be remanded to the Trial Court for further appropriate
proceedings in accordance with this decision.
SO ORDERED.

The rule regarding prescription cannot be pleaded

between them except when one heir openly and
adversely occupies the property for a period
sufficiently long to entitle him to ownership under
the law. In other words, as long as other heirs
acknowledge their ownership or do not set up any
adverse title to the property, prescription is
unavailable.
SECOND DIVISION
[ G.R. No. 94699, January 24, 1992 ]
REV. FR. VICENTE CORONEL, RODOLFO CORONEL, GERARDO
CORONEL, SANTOS CORONEL AND DOMINGA CORONEL,
PETITIONERS, VS. HON. COURT OF APPEALS, REV. FR.
RUSTICO CUEVAS, PRISCILLANO CUEVAS, LOURDES CUEVAS
SEBASTIAN, NATALIA CUEVAS GARCIA AND BRIGIDA CUEVAS
JUDI, RESPONDENTS.
DECISION
PARAS, J.:
This is a petition for review of the decision * of the Court of Appeals dated July 31,
1990 in CA-G.R. No. 13312 entitled "Rev. Fr. Rustico Cuevas, et al., PlaintiffsAppellees v. Rev. Fr. Vicente Coronel, et al., Defendants-Appellants," which
confirmed the decision of the trial court with slight modification.
The facts are as follows:

The petitioners are the children and compulsory heirs of the late Gaudencio Coronel;
while the respondents are the children and compulsory heirs of the late Querubin
Cuevas. In turn, their respective ascendants Gaudencio Coronel and Querubin
Cuevas are the legitimate, exclusive and compulsory heirs of Bernarda David Lim
who died on June 20, 1934 in Betis, Guagua, Pampanga.
Among the properties left by Bernarda David Lim, subject to a Deed of Partition and
Grant dated March 12, 1940, is a parcel of land situated at the Barrio of San Nicolas,
Municipality of Guagua, Province of Pampanga, containing an area of 1158 square
meters more or less designated as Item No. VIII.
In accordance with the aforesaid deed, the lot in question was distributed and
adjudicated as follows:
"(a) 430 square meters to Teodora Henson, in consideration of the services rendered
to the late Bernarda Lim;
(b) The remaining portion of said lot clearly remain a community property among
the heirs, that is, the party of the first part (Bernarda Sunglao and Rosario Sunglao),
the party of the second part (Jose Cuevas, Patricia Cuevas, Cesar Cuevas, Catalina
Cuevas and Querubin Cuevas) or the party of the third part, GaudencioCoronel and
Salvador Coronel; and party of the fourth part (Bonifacia David, and Lucia David)."
(p. 58, Rollo) (Underscoring supplied).
Further, the father of the respondents was given the right to occupy the whole lot as
his house where his family resides was built on lot 5967 and inasmuch as the lot
shall remain intact staying as a community property for ten (10) years.
Then on June 24, 1971 Gaudencio Coronel y David filed an application for original
registration of title under Act No. 496 swearing among others that he was the owner
in fee simple and the only one in occupation of the lot which resulted in Original
Certificate of Title No. 5770 dated February 7, 1972. After Gaudencio Coronel died,
his heirs, herein petitioners, executed a Deed of Partition among themselves and a
Transfer Certificate of Title No. 151931-R was issued in their names on December 7,
1978.
Respondents learned of this fraudulent transfer only on February 1984 when Natalia
Cuevas-Garcia and her husband were being sued by petitioners for unlawful
detainer before the Municipal Trial Court of Guagua, Pampanga, Branch II, alleging
that on the strength of the aforestated TCT No. 151931-R they now have a right to
eject the present occupants Natalia Cuevas-Garcia, her husband and family. So the
Cuevas clan sought the help of their barangay court but the Coronel clan refused to
give up the lot involved forcing the former to litigate.
This led to herein respondents filing of Civil Case No. G-1533 entitled Rev. Fr.
Rustico Cuevas, et al., Plaintiffs, v. Rev. Fr. Vicente Coronel, et al., Defendants, filed
before the Regional Trial Court of Guagua, Pampanga, Branch LIII, culminating in the
following dispositive portion of its decision dated July 18, 1986, to wit:
"PREMISES CONSIDERED, judgment is hereby rendered in favor of the plaintiffs
against the defendants.
(1) Ordering the defendants to reconvey to the plaintiffs one twelve (1/12) portion of
the lot in question covered by TCT.
(2) Ordering the defendants to pay litigation expenses in the amount of P10,000.00,
attorney's fee in the amount of P5,000.00 and P2,000.00 appearance fees.

(3) Costs against the defendants." (p. 71, Rollo)

Herein petitioners appealed to the Court of Appeals, which rendered a decision, with
the following dispositive portion:
"In view of the foregoing, no reversible error having been found, the appeal is
dismissed. The decision is affirmed with the modification that the award of litigation
expenses is reduced to Eight Thousand (P8,000.00) Pesos."
Hence, this petition with three assigned errors:
I
The Honorable Court of Appeals committed a serious error of law in not holding that
the action for reconveyance based on trust had prescribed and/or is barred by
laches, because the action was brought more ten (10) years after the repudiation of
the trust;
II
The Honorable Court of Appeals committed a serious error of law in not holding that
the present action constitutes a collateral attack on the transfer Certificate of Title
which is not allowed by law;
III
The Honorable Court of Appeals committed a serious error of law in awarding
litigation expenses, attorney's fees and appearance fees, without making express
findings of facts and law in violation of the rule that such findings must be made to
justify such awards. (p. 14, Rollo)
all of which had previously been correctly answered by the trial court and
respondent Court of Appeals.
The petition is actually without merit.
This case is governed by Article 494 of the Civil Code, to wit:
"No prescription shall run in favor of a co-owner or co-heir against his co-owners or
co-heirs so long as he expressly or impliedly recognizes the co-ownership."
A careful analysis of the instant action actually yields a simple case. Records bear
out that herein petitioners merely stepped into the shoes of their late father
Gaudencio Coronel who co-owned together with the late father of the respondents
and others, the designated community of property adjudicated by their late
ancestor and ascendant Bernarda David Lim. When Gaudencio Coronel applied for
the Torrens Title of the property, he was merely the designated administrator, and
at the same time, one of the co-owners along with those enumerated in the first,
second, third, and fourth parts. (pp. 58, 62, Rollo).
In fact, the petitioners late father lied upon swearing in the aforesaid application
that he was the owner in fee simple and sole occupant of the lot involved, the truth
of the matter being that all those years, it was the late Querubin Cuevas and family
who were occupying the lot. For his misrepresentation the Torrens Title was issued
which act should not be tolerated much less rewarded with the awarding of the
whole lot instead of being deservingly punished. Nevertheless, the law is still lenient
to petitioners as the only "punishment" meted out to them despite the
aforementioned fraud of their late ascendant (Gaudencio Coronel) is the

reconveyance of 1/12 of the lot in question plus their being ordered to pay damages
in the form of P8,000.00 litigation fees, P5,000.00 attorney's fees, and P2,000.00
appearance fees (all duly proven) instead of suffering a forfeiture of any part of the
lot they share in common with respondents (Lopez, et al. vs. Gonzaga, et al., 10
SCRA 167 and Caragay-Layno vs. CA, 133 SCRA 718).
Quoting from the respondents' Memorandum dated August 9, 1991
"In the case of Cordova et al., vs. Cordova, et al., L-9966, January 14, 1958 this
Honorable Court ruled

The rule regarding prescription cannot be

pleaded between them except when one heir
openly and adversely occupies the property
for a period sufficiently long to entitle him to
ownership under the law. In other words, as
long as other heirs acknowledge their
ownership or do not set up any adverse title
to the property, prescription is unavailable.
Pursuant to the foregoing, it is necessary that who pleads prescription against coowners or co-heirs, must be in possession and occupying the property openly and
adversely to the exclusion of his co-owner or co-heir. But in the instant case,
Gaudencio Coronel and his children who are the herein petitioners are never (sic) in
possession of the property in question. As a matter of fact, it is being occupied then
by Querubin Cuevas and his family, respondents herein, up to the present time.
Thus, in the cases of Santos vs. Heirs of Crisostomo, 41 Phil. 342 and Bargayo vs.
Commot 40 Phil. 857 this Honorable Court held
The other requirement of prescription in favor of a co-owner is continuous, open,
peaceful, public adverse possession for a period of time required under the law.
xxxx
In this instant case, it is indubitable that Gaudencio Coronel, the late father of the
herein petitioners, fraudulently deprived Querubin Cuevas, the late father of the
herein respondents, of his lawful share over the land in question when he solely
applied for the registration of the whole lot in his name, knowingly fully well that he
only owned One Twelve (1/12) share of Lot No. 5697. The fraudulent acts
deliberately committed by Gaudencio Coronel directly caused damage to Querubin
Cuevas and to his heirs. As such the herein respondents are entitled to recover their
share and the damages they suffered." (pp.162-163, Rollo)

All the coowners who are the legitimateheirs should be

given their due share.
Further, no one should enrich himself at the expense of another.

Thus, the appealed decision further states:

"It bears repetition that in registering the lot in question exclusively in his name to
the exclusion of the otherheirs the late Gaudencio Coronel actually committed fraud
and misrepresentation with respect to that remaining portion of 4835 square meters
owned by him and the other co-heirs. In the partition and grant the other coheirs who are entitled to the remaining portion are Bernarda Sunglao, Rosario
Sunglao, the plaintiffsheirs of Querubin Cuevas, Jose Cuevas, Patria Cuevas, Cesar
Cuevas, Catalina Cuevas, Gaudencio Coronel and Salvador Coronel, Bonifacia David
and finally Lucia David, all twelve (12) of them. Each of them owns 1/12 portion of
the lot in question." (Decision dated July 18, 1986 of RTC, Br. LIII, Guagua,
Pampanga, penned by Judge Abraham Abonas).
WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED with costs
against petitioners.
SO ORDERED.

SECOND DIVISION
[ G.R. No. 129505, January 31, 2000 ]
OCTAVIO S. MALOLES II, PETITIONER, VS. PACITA DE LOS REYES
PHILLIPS, RESPONDENT.
[G.R. NO. 133359. JANUARY 31, 2000]
OCTAVIO S. MALOLES II, PETITIONER, VS. COURT OF APPEALS, HON.
FERNANDO V. GOROSPE, JR., IN HIS OFFICIAL CAPACITY AS
PRESIDING JUDGE OF RTC-MAKATI, BRANCH 61, AND PACITA
PHILLIPS AS THE ALLEGED EXECUTRIX OF THE ALLEGED WILL OF
THE LATE DR. ARTURO DE SANTOS, RESPONDENTS.
DECISION
MENDOZA, J.:
These are petitions for review on certiorari of the decisions of the Thirteenth and the Special
Eighth Divisions of the Court of Appeals which ruled that petitioner has no right to intervene in
the settlement of the estate of Dr. Arturo de Santos. The cases were consolidated considering that
they involve the same parties and some of the issues raised are the same.
The facts which gave rise to these two petitions are as follows:
On July 20, 1995, Dr. Arturo de Santos, Filipino and a resident of Makati City, filed a petition for
probate of his will[1] in the Regional Trial Court, Branch 61, Makati, docketed as Sp. Proc. No.
M-4223. In his petition, Dr. De Santos alleged that he had no compulsory heirs; that he had
named in his will as sole legatee and devisee the Arturo de Santos Foundation, Inc.; that he
disposed by his will his properties with an approximate value of not less than P2,000,000.00; and
that copies of said will were in the custody of the named executrix, private respondent Pacita de
los Reyes Phillips. A copy of the will[2] was annexed to the petition for probate.

On February 16, 1996, Judge Fernando V. Gorospe, Jr. of RTC-Makati, Branch 61 issued an
order granting the petition and allowing the will. The order reads:
On 03 August 1995, the Court issued an Order setting the hearing of the petition on 12
September 1995, at 8:30 oclock in the morning, copies of which were served to Arturo de
Santos Foundation, Inc. and Ms. Pacita de los Reyes Phillips (Officers Return, dated 04
September 1995 attached to the records). When the case was called for hearing on the date set,
no oppositor appeared nor any written opposition was ever filed and on motion of petitioner, he
was allowed to adduce his evidence in support of the petition.
Petitioner personally appeared before this Court and was placed on the witness stand and was
directly examined by the Court through "free wheeling" questions and answers to give this Court
a basis to determine the state of mind of the petitioner when he executed the subject will. After
the examination, the Court is convinced that petitioner is of sound and disposing mind and not
acting on duress, menace and undue influence or fraud, and that petitioner signed his Last Will
and Testament on his own free and voluntary will and that he was neither forced nor influenced
by any other person in signing it.
Furthermore, it appears from the petition and the evidence adduced that petitioner in his lifetime,
executed his Last Will and Testament (Exhs. "A", "A-1", "A-2", "A-4", "A-5") at his residence
situated at 9 Bauhinia corner Intsia Streets, Forbes Park, Makati City; said Last Will and
Testament was signed in the presence of his three (3) witnesses, namely, to wit: Dr. Elpidio
Valencia (Exhs. "A-6", "A-7", "A-8", "A-16", "A-16-A"), Atty. Edward J. Berenguer (Exhs. "A3", "A-3-A", "A-9", "A-10", & "A-11"), and Atty. Victoria C. delos Reyes (Exhs. "A-12", "A13", "A-14", "A-17", & "A-18"), who in turn, in the presence of the testator and in the presence
of each and all of the witnesses signed the said Last Will and Testament and duly notarized
before Notary Public Anna Melissa L. Rosario (Exh. "A-15"); on the actual execution of the Last
Will and Testament, pictures were taken (Exhs. "B" to "B-3").
Petitioner has no compulsory heirs and Arturo de Santos Foundation, Inc., with address at No. 9
Bauhinia corner Intsia Streets, Forbes Park, Makati City has been named as sole legatee and
devisee of petitioners properties, real and personal, approximately valued at not less than P2
million, Ms. Pacita de los Reyes Phillips was designated as executor and to serve as such without
a bond.
From the foregoing facts, the Court finds that the petitioner has substantially established the
material allegations contained in his petition. The Last Will and Testament having been executed
and attested as required by law; that testator at the time of the execution of the will was of sane
mind and/or not mentally incapable to make a Will; nor was it executed under duress or under
the influence of fear or threats; that it was in writing and executed in the language known and
understood by the testator duly subscribed thereof and attested and subscribed by three (3)
credible witnesses in the presence of the testator and of another; that the testator and all the
attesting witnesses signed the Last Will and Testament freely and voluntarily and that the testator
has intended that the instrument should be his Will at the time of affixing his signature thereto.
WHEREFORE, as prayed for by the petitioner (testator himself) the petition for the allowance of
the Last Will and Testament of Arturo de Santos is hereby APPROVED and ALLOWED.
Shortly after the probate of his will, Dr. De Santos died on February 26, 1996.
On April 3, 1996, petitioner Octavio S. Maloles II filed a motion for intervention claiming that,
as the only child of Alicia de Santos (testators sister) and Octavio L. Maloles, Sr., he was the
sole full-blooded nephew and nearest of kin of Dr. De Santos. He likewise alleged that he was a
creditor of the testator. Petitioner thus prayed for the reconsideration of the order allowing the
will and the issuance of letters of administration in his name.
On the other hand, private respondent Pacita de los Reyes Phillips, the designated executrix of
the will, filed a motion for the issuance of letters testamentary with Branch 61. Later, however,

private respondent moved to withdraw her motion. This was granted, while petitioner was
required to file a memorandum of authorities in support of his claim that said court (Branch 61)
still had jurisdiction to allow his intervention.[3]
Petitioner filed his memorandum of authorities on May 13, 1996. On the other hand, private
respondent, who earlier withdrew her motion for the issuance of letters testamentary in Branch
61, refiled a petition for the same purpose with the Regional Trial Court, Makati, which was
docketed as Sp. Proc. No. M-4343 and assigned to Branch 65.
Upon private respondents motion, Judge Salvador Abad Santos of Branch 65 issued an order,
dated June 28, 1996, appointing her as special administrator of Dr. De Santoss estate.
On July 29, 1996, petitioner sought to intervene in Sp. Proc. No. M-4343 and to set aside the
appointment of private respondent as special administrator. He reiterated that he was the sole and
full blooded nephew and nearest of kin of the testator; that he came to know of the existence of
Sp. Proc. No. M-4343 only by accident; that the probate proceedings in Sp. Proc. No. M-4223
before Branch 61 of the same court was still pending; that private respondent misdeclared the
true worth of the testators estate; that private respondent was not fit to be the special
administrator of the estate; and that petitioner should be given letters of administration for the
estate of Dr. De Santos.
On August 28, 1996, Judge Abad Santos ordered the transfer of Sp. Proc. No. M-4343 to Branch
61, on the ground that "[it] is related to the case before Judge Gorospe of RTC Branch 61 . . ."
It appears, however, that in Sp. Proc. No. M-4223, Judge Gorospe had denied on August 26,
1996 petitioners motion for intervention. Petitioner brought this matter to the Court of Appeals
which, in a decision[4] promulgated on February 13, 1998, upheld the denial of petitioners
motion for intervention.
Meanwhile, Judge Gorospe issued an order, dated September 4, 1996, returning the records of
Sp. Proc. No. M-4343 to Branch 65 on the ground that there was a pending case involving the
Estate of Decedent Arturo de Santos pending before said court. The order reads:
Acting on the ORDER dated 28 August 1996 of Branch 65, this Court, transferring this case to
this Branch 61 on the ground that this case is related with a case before this Court, let this case
be returned to Branch 65 with the information that there is no related case involving the ESTATE
OF DECEDENT ARTURO DE SANTOS pending before this Branch.
There is, however, a case filed by ARTURO DE SANTOS, as petitioner under Rule 76 of the
Rules of Court for the Allowance of his will during his lifetime docketed as SP. PROC. NO. M4223 which was already decided on 16 February 1996 and has become final.
It is noted on records of Case No. M-4223 that after it became final, herein Petitioner Pacita de
los Reyes Phillips filed a MOTION FOR THE ISSUANCE OF LETTERS TESTAMENTARY,
which was subsequently withdrawn after this Court, during the hearing, already ruled that the
motion could not be admitted as the subject matter involves a separate case under Rule 78 of the
Rules of Court, and movant withdrew her motion and filed this case (No. 4343).
Octavio de Santos Maloles [II] filed a MOTION FOR INTERVENTION before Case No. M4223 and this motion was already DENIED in the order (Branch 61) of 26 August 1996 likewise
for the same grounds that the matter is for a separate case to be filed under Rule 78 of the Rules
of Court and cannot be included in this case filed under Rule 76 of the Rules of Court.
It is further noted that it is a matter of policy that consolidation of cases must be approved by the
Presiding Judges of the affected Branches.
Initially, in his decision dated September 23, 1996,[5] Judge Abad Santos appeared firm in his
position that " . . . it would be improper for (Branch 65) to hear and resolve the petition (Sp.
Proc. No. M-4343)," considering that the probate proceedings were commenced with Branch 61.

He thus ordered the transfer of the records back to the latter branch. However, he later recalled
his decision and took cognizance of the case "to expedite the proceedings." Thus, in his Order,
dated October 21, 1996, he stated:
Considering the refusal of the Hon. Fernando V. Gorospe, Jr. of Branch 61 to continue hearing
this case notwithstanding the fact that said branch began the probate proceedings of the estate of
the deceased and must therefore continue to exercise its jurisdiction to the exclusion of all others,
until the entire estate of the testator had been partitioned and distributed as per Order dated 23
September 1996, this branch (Regional Trial Court Branch 65) shall take cognizance of the
petition if only to expedite the proceedings, and under the concept that the Regional Trial Court
of Makati City is but one court.
Furnish a copy of this order to the Office of the Chief justice and the Office of the Court
Administrator, of the Supreme Court; the Hon. Fernando V. Gorospe, Jr.; Pacita De Los Reyes
Phillips, Petitioner; and Octavio de Santos Maloles, Intervenor.
On November 4, 1996, Judge Abad Santos granted petitioners motion for intervention. Private
respondent moved for a reconsideration but her motion was denied by the trial court. She then
filed a petition for certiorari in the Court of Appeals which, on February 26, 1997, rendered a
decision[6] setting aside the trial courts order on the ground that petitioner had not shown any
right or interest to intervene in Sp. Proc. No. M-4343.
Hence, these petitions which raise the following issues:
1. Whether or not the Honorable Regional Trial Court - Makati, Branch 61 has lost
jurisdiction to proceed with the probate proceedings upon its issuance of an order
allowing the will of Dr. Arturo de Santos
2. Whether or not the Honorable (Regional Trial Court - Makati, Branch 65) acquired
jurisdiction over the petition for issuance of letters testamentary filed by (private)
respondent.
3. Whether or not the petitioner, being a creditor of the late Dr. Arturo de Santos, has a right
to intervene and oppose the petition for issuance of letters testamentary filed by the
respondent.
4. Whether or not (private) respondent is guilty of forum shopping in filing her petition for
issuance of letters testamentary with the Regional Trial Court - Makati, Branch 65
knowing fully well that the probate proceedings involving the same testate estate of the
decedent is still pending with the Regional Trial Court - Makati, Branch 61.
First. Petitioner contends that the probate proceedings in Branch 61 of RTC-Makati did not
terminate upon the issuance of the order allowing the will of Dr. De Santos. Citing the cases
of Santiesteban v. Santiesteban[7] andTagle v. Manalo,[8] he argues that the proceedings must
continue until the estate is fully distributed to the lawfulheirs, devisees, and legatees of the
testator, pursuant to Rule 73, 1 of the Rules of Court. Consequently, petitioner contends that
Branch 65 could not lawfully act upon private respondents petition for issuance of letters
testamentary.
The contention has no merit.
In cases for the probate of wills, it is well-settled that the authority of the court is limited to
ascertaining the extrinsic validity of the will, i.e., whether the testator, being of sound mind,
freely executed the will in accordance with the formalities prescribed by law.[9]
Ordinarily, probate proceedings are instituted only after the death of the testator, so much so that,
after approving and allowing the will, the court proceeds to issue letters testamentary and settle
the estate of the testator. The cases cited by petitioner are of such nature. In fact, in most
jurisdictions, courts cannot entertain a petition for probate of the will of a living testator under
the principle of ambulatory nature of wills.[10]

However, Art. 838 of the Civil Code authorizes the filing of a petition for probate of the will
filed by the testator himself. It provides:
Civil Code, Art. 838. No will shall pass either real or personal property unless it is proved and
allowed in accordance with the Rules of Court.
The testator himself may, during his lifetime, petition the court having jurisdiction for the
allowance of his will. In such case, the pertinent provisions of the Rules of Court for the
allowance of wills after the testators death shall govern.
The Supreme Court shall formulate such additional Rules of Court as may be necessary for the
allowance of wills on petition of the testator.
Subject to the right of appeal, the allowance of the will, either during the lifetime of the testator
or after his death, shall be conclusive as to its due execution.
Rule 76, 1 likewise provides:
Sec. 1 Who may petition for the allowance of will. - Any executor, devisee, or legatee named in a
will, or any other person interested in the estate, may, at any time after the death of the testator,
petition the court having jurisdiction to have the will allowed, whether the same be in his
possession or not, or is lost or destroyed.
The testator himself may, during his lifetime, petition in the court for the allowance of his will.
The rationale for allowing the probate of wills during the lifetime of testator has been explained
by the Code Commission thus:
Most of the cases that reach the courts involve either the testamentary capacity of the testator or
the formalities adopted in the execution of wills. There are relatively few cases concerning the
intrinsic validity of testamentary dispositions. It is far easier for the courts to determine the
mental condition of a testator during his lifetime than after his death. Fraud, intimidation and
undue influence are minimized. Furthermore, if a will does not comply with the requirements
prescribed by law, the same may be corrected at once. The probate during the testators life,
therefore, will lessen the number of contest upon wills. Once a will is probated during the
lifetime of the testator, the only questions that may remain for the courts to decide after the
testators death will refer to the intrinsic validity of the testamentary dispositions. It is possible,
of course, that even when the testator himself asks for the allowance of the will, he may be acting
under duress or undue influence, but these are rare cases.
After a will has been probated during the lifetime of the testator, it does not necessarily mean
that he cannot alter or revoke the same before his death. Should he make a new will, it would
also be allowable on his petition, and if he should die before he has had a chance to present such
petition, the ordinary probate proceeding after the testators death would be in order.[11]
Thus, after the allowance of the will of Dr. De Santos on February 16, 1996, there was nothing
else for Branch 61 to do except to issue a certificate of allowance of the will pursuant to Rule 73,
12 of the Rules of Court. There is, therefore, no basis for the ruling of Judge Abad Santos of
Branch 65 of RTC-Makati that Branch 61 of the Regional Trial Court of Makati having begun the probate proceedings of the
estate of the deceased, it continues and shall continue to exercise said jurisdiction to the
exclusion of all others. It should be noted that probate proceedings do not cease upon the
allowance or disallowance of a will but continues up to such time that the entire estate of the
testator had been partitioned and distributed.
The fact that the will was allowed during the lifetime of the testator meant merely that the
partition and distribution of the estate was to be suspended until the latters death. In other
words, the petitioner, instead of filing a new petition for the issuance of letters testamentary,
should have simply filed a manifestation for the same purpose in the probate court.[12]
Petitioner, who defends the order of Branch 65 allowing him to intervene, cites Rule 73, 1
which states:
Where estate of deceased persons settled. - If the decedent is an inhabitant of the Philippines at
the time of his death, whether a citizen or an alien, his will shall be proved, or letters of

administration granted, and his estate settled, in the Court of First Instance in the province in
which he resides at the time of his death, and if he is an inhabitant of a foreign country, the Court
of First Instance of any province in which he had estate. The court first taking cognizance of the
settlement of the estate of a decedent, shall exercise jurisdiction to the exclusion of all other
courts. The jurisdiction assumed by a court, so far as it depends on the place of residence of the
decedent, or of the location of his estate, shall not be contested in a suit or proceeding, except in
an appeal from that court, in the original case, or when the want of jurisdiction appears on the
record.
The above rule, however, actually provides for the venue of actions for the settlement of the
estate of deceased persons. In Garcia Fule v. Court of Appeals, it was held:[13]
The aforequoted Section 1, Rule 73 (formerly Rule 75, Section 1), specifically the clause "so far
as it depends on the place of residence of the decedent, or of the location of the state," is in
reality a matter of venue, as the caption of the Rule indicates: "Settlement of Estate of Deceased
Persons. Venue and Processes." It could not have been intended to define the jurisdiction over the
subject matter, because such legal provision is contained in a law of procedure dealing merely
with procedural matters. Procedure is one thing, jurisdiction over the subject matter is another.
The power or authority of the court over the subject matter "existed was fixed before procedure
in a given cause began." That power or authority is not altered or changed by procedure, which
simply directs the manner in which the power or authority shall be fully and justly exercised.
There are cases though that if the power is not exercised conformably with the provisions of the
procedural law, purely, the court attempting to exercise it loses the power to exercise it legally.
However, this does not amount to a loss of jurisdiction over the subject matter. Rather, it means
that the court may thereby lose jurisdiction over the person or that the judgment may thereby be
rendered defective for lack of something essential to sustain it. The appearance of this provision
in the procedural law at once raises a strong presumption that it has nothing to do with the
jurisdiction of the court over the subject matter. In plain words, it is just a matter of method, of
convenience to the parties.
Indeed, the jurisdiction over probate proceedings and settlement of estates with approximate
value of over P100,000.00 (outside Metro Manila) or P200,000.00 (in Metro Manila) belongs to
the regional trial courts under B.P. Blg. 129, as amended. The different branches comprising each
court in one judicial region do not possess jurisdictions independent of and incompatible with
each other.[14]
It is noteworthy that, although Rule 73, 1 applies insofar as the venue of the petition for probate
of the will of Dr. De Santos is concerned, it does not bar other branches of the same court from
taking cognizance of the settlement of the estate of the testator after his death. As held in the
leading case of Bacalso v. Ramolote:[15]
The various branches of the Court of First Instance of Cebu under the Fourteenth Judicial
District, are a coordinate and co-equal courts, and the totality of which is only one Court of First
Instance. The jurisdiction is vested in the court, not in the judges. And when a case is filed in one
branch, jurisdiction over the case does not attach to the branch or judge alone, to the exclusion of
the other branches. Trial may be held or proceedings continue by and before another branch or
judge. It is for this reason that Section 57 of the Judiciary Act expressly grants to the Secretary of
Justice, the administrative right or power to apportion the cases among the different branches,
both for the convenience of the parties and for the coordination of the work by the different
branches of the same court. The apportionment and distribution of cases does not involve a grant
or limitation of jurisdiction, the jurisdiction attaches and continues to be vested in the Court of
First Instance of the province, and the trials may be held by any branch or judge of the court.
Necessarily, therefore, Branch 65 of the RTC of Makati City has jurisdiction over Sp. Proc. No.
M-4343.
Second. Petitioner claims the right to intervene in and oppose the petition for issuance of letters
testamentary filed by private respondent. He argues that, as the nearest next of kin and creditor of
the testator, his interest in the matter is material and direct. In ruling that petitioner has no right
to intervene in the proceedings before Branch 65 of RTC-Makati City, the Court of Appeals held:
The private respondent herein is not an heir or legatee under the will of the decedent Arturo de
Santos. Neither is he a compulsory heir of the latter. As the only and nearest collateral relative of

the decedent, he can inherit from the latter only in case of intestacy. Since the decedent has left a
will which has already been probated and disposes of all his properties the private respondent
can inherit only if the said will is annulled. His interest in the decedents estate is, therefore, not
direct or immediate.
His claim to being a creditor of the estate is a belated one, having been raised for the first time
only in his reply to the opposition to his motion to intervene, and, as far as the records show, not
supported by evidence.
. . . . [T]he opposition must come from one with a direct interest in the estate or the will, and the
private respondent has none. Moreover, the ground cited in the private respondents opposition,
that the petitioner has deliberately misdeclared the truth worth and value of the estate, is not
relevant to the question of her competency to act as executor. Section 2, Rule 76 of the Rules of
Court requires only an allegation of the probable value and character of the property of the
estate. The true value can be determined later on in the course of the settlement of the estate.[16]
Rule 79, 1 provides:
Opposition to issuance of letters testamentary. Simultaneous petition for administration. - Any
person interested in a will may state in writing the grounds why letters testamentary should not
issue to the persons named therein as executors, or any of them, and the court, after hearing upon
notice, shall pass upon the sufficiency of such grounds. A petition may, at the same time, be filed
for letters of administration with the will annexed.
Under this provision, it has been held that an "interested person" is one who would be benefited
by the estate, such as an heir, or one who has a claim against the estate, such as a creditor, and
whose interest is material and direct, not merely incidental or contingent.[17]
Even if petitioner is the nearest next of kin of Dr. De Santos, he cannot be considered an "heir" of
the testator. It is a fundamental rule of testamentary succession that one who has
no compulsory or forced heirs may dispose of his entire estate by will. Thus, Art. 842 of the Civil
Code provides:
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 legitimate of said heirs.
Compulsory heirs are limited to the testators (1) Legitimate children and descendants, with respect to their legitimate parents and ascendants;
(2) In default of the foregoing, legitimate parents and ascendants, with respect to their
legitimate children and descendants;
(3) The widow or widower;
(4) Acknowledged natural children, and natural children by legal fiction;
(5) Other illegitimate children referred to in Article 287 of the Civil Code.[18]
Petitioner, as nephew of the testator, is not a compulsory heir who may have been preterited in
the testators will.
Nor does he have any right to intervene in the settlement proceedings based on his allegation that
he is a creditor of the deceased. Since the testator instituted or named an executor in his will, it is
incumbent upon the Court to respect the desires of the testator. As we stated in Ozaeta v. Pecson:
[19]

The choice of his executor is a precious prerogative of a testator, a necessary concomitant of his
right to dispose of his property in the manner he wishes. It is natural that the testator should
desire to appoint one of his confidence, one who can be trusted to carry out his wishes in the
disposal of his estate. The curtailment of this right may be considered a curtailment of the right
to dispose.

Only if the appointed executor is incompetent, refuses the trust, or fails to give bond may the
court appoint other persons to administer the estate.[20] None of these circumstances is present in
this case.
Third. Petitioner contends that private respondent is guilty of forum shopping when she filed the
petition for issuance of letters testamentary (Sp. Proc. No. M-4343) while the probate
proceedings (Sp. Proc. No. M-4223) were still pending. According to petitioner, there is identity
of parties, rights asserted, and reliefs prayed for in the two actions which are founded on the
same facts, and a judgment in either will result in res judicata in the other.
This contention has no merit. As stated earlier, the petition for probate was filed by Dr. De
Santos, the testator, solely for the purpose of authenticating his will. Upon the allowance of his
will, the proceedings were terminated.
On the other hand, the petition for issuance of letters testamentary was filed by private
respondent, as executor of the estate of Dr. De Santos, for the purpose of securing authority from
the Court to administer the estate and put into effect the will of the testator. The estate settlement
proceedings commenced by the filing of the petition terminates upon the distribution and
delivery of the legacies and devises to the persons named in the will. Clearly, there is no identity
between the two petitions, nor was the latter filed during the pendency of the former. There was,
consequently, no forum shopping.
WHEREFORE, the petition is DENIED and the decisions of the Court of Appeals are hereby
AFFIRMED.
SO ORDERED.

SECOND DIVISION
[ G.R. No. 177099, June 08, 2011 ]
EDUARDO G. AGTARAP, PETITIONER, VS. SEBASTIAN AGTARAP,
JOSEPH AGTARAP, TERESA AGTARAP, WALTER DE SANTOS, AND
ABELARDO DAGORO, RESPONDENTS.
[G.R. NO. 177192]
SEBASTIAN G. AGTARAP, PETITIONER, VS. EDUARDO G. AGTARAP,
JOSEPH AGTARAP, TERESA AGTARAP, WALTER DE SANTOS, AND
ABELARDO DAGORO, RESPONDENTS.
DECISION
NACHURA, J.:
Before us are the consolidated petitions for review on certiorari of petitioners Sebastian G.
Agtarap (Sebastian) [1]and Eduardo G. Agtarap (Eduardo), [2] assailing the Decision dated
November 21, 2006 [3] and the Resolution dated March 27, 2007 [4] of the Court of Appeals (CA)
in CA-G.R. CV No. 73916.
The antecedent facts and proceedings-On September 15, 1994, Eduardo filed with the Regional Trial Court (RTC), Branch 114, Pasay
City, a verified petition for the judicial settlement of the estate of his deceased father Joaquin
Agtarap (Joaquin). It was docketed as Special Proceedings No. 94-4055.
The petition alleged that Joaquin died intestate on November 21, 1964 in Pasay City without any

known debts or obligations. During his lifetime, Joaquin contracted two marriages, first with
Lucia Garcia (Lucia), [5] and second with Caridad Garcia (Caridad). Lucia died on April 24,
1924. Joaquin and Lucia had three children--Jesus (died without issue), Milagros, and Jose
(survived by three children, namely, Gloria, [6] Joseph, and Teresa [7]). Joaquin married Caridad
on February 9, 1926. They also had three children--Eduardo, Sebastian, and Mercedes (survived
by her daughter Cecile). At the time of his death, Joaquin left two parcels of land with
improvements in Pasay City, covered by Transfer Certificates of Title (TCT) Nos. 873-(38254)
and 874-(38255). Joseph, a grandson of Joaquin, had been leasing and improving the said
realties and had been appropriating for himself P26,000.00 per month since April 1994.
Eduardo further alleged that there was an imperative need to appoint him as special administrator
to take possession and charge of the estate assets and their civil fruits, pending the appointment
of a regular administrator. In addition, he prayed that an order be issued (a) confirming and
declaring the named compulsory heirs of Joaquin who would be entitled to participate in the
estate; (b) apportioning and allocating unto the named heirs their aliquot shares in the estate in
accordance with law; and (c) entitling the distributees the right to receive and enter into
possession those parts of the estate individually awarded to them.
On September 26, 1994, the RTC issued an order setting the petition for initial hearing and
directing Eduardo to cause its publication.
On December 28, 1994, Sebastian filed his comment, generally admitting the allegations in the
petition, and conceding to the appointment of Eduardo as special administrator.
Joseph, Gloria, and Teresa filed their answer/opposition. They alleged that the two subject lots
belong to the conjugal partnership of Joaquin with Lucia, and that, upon Lucia's death in April
1924, they became the pro indivisoowners of the subject properties. They said that their
residence was built with the exclusive money of their late father Jose, and the expenses of the
extensions to the house were shouldered by Gloria and Teresa, while the restaurant (Manong's
Restaurant) was built with the exclusive money of Joseph and his business partner. They
opposed the appointment of Eduardo as administrator on the following grounds: (1) he is not
physically and mentally fit to do so; (2) his interest in the lots is minimal; and (3) he does not
possess the desire to earn. They claimed that the best interests of the estate dictate that Joseph be
appointed as special or regular administrator.
On February 16, 1995, the RTC issued a resolution appointing Eduardo as regular administrator
of Joaquin's estate. Consequently, it issued him letters of administration.
On September 16, 1995, Abelardo Dagoro filed an answer in intervention, alleging that Mercedes
is survived not only by her daughter Cecile, but also by him as her husband. He also averred that
there is a need to appoint a special administrator to the estate, but claimed that Eduardo is not the
person best qualified for the task.
After the parties were given the opportunity to be heard and to submit their respective proposed
projects of partition, the RTC, on October 23, 2000, issued an Order of Partition, [8] with the
following disposition-In the light of the filing by the heirs of their respective proposed projects of partition and the
payment of inheritance taxes due the estate as early as 1965, and there being no claim in Court
against the estate of the deceased, the estate of JOAQUIN AGTARAP is now consequently - ripe
- for distribution among the heirs minus the surviving spouse Caridad Garcia who died on
August 25, 1999.
Considering that the bulk of the estate property were acquired during the existence of the second
marriage as shown by TCT No. (38254) and TCT No. (38255) which showed on its face that
decedent was married to Caridad Garcia, which fact oppositors failed to contradict by evidence
other than their negative allegations, the greater part of the estate is perforce accounted by the

second marriage and the compulsory heirs thereunder.

The Administrator, Eduardo Agtarap rendered a true and just accounting of his administration
from his date of assumption up to the year ending December 31, 1996 per Financial and
Accounting Report dated June 2, 1997 which was approved by the Court. The accounting report
included the income earned and received for the period and the expenses incurred in the
administration, sustenance and allowance of the widow. In accordance with said Financial and
Accounting Report which was duly approved by this Court in its Resolution dated July 28, 1998
- the deceased JOAQUIN AGTARAP left real properties consisting of the following:
I LAND:
Two lots and two buildings with one garage quarter located at #3030 Agtarap St., Pasay City,
covered by Transfer Certificate of Title Nos. 38254 and 38255 and registered with the Registry
of Deeds of Pasay City, Metro Manila, described as follows:
TCT NO.
LOT NO.
AREA/SQ.M. ZONAL VALUE
38254
745-B-1
1,335 sq. m.
P5,000.00
38255
745-B-2
1,331 sq. m.
P5,000.00
TOTAL------------------------------------------------------------

AMOUNT
P6,675,000.00
P6,655,000.00
P13,330,000.00

II BUILDINGS AND IMPROVEMENTS:

BUILDING I (Lot # 745-B-1) ---------------------------------------BUILDING II (Lot # 745-B-2) --------------------------------------Building Improvements -----------------------------------------------Restaurant -----------------------------------------------------------TOTAL ------------------------------------------------------------TOTAL NET WORTH -----------------------------------------------

P350,000.00
320,000.00
97,500.00
80,000.00
P847,500.00
P14,177,500.00

WHEREFORE, the net assets of the estate of the late JOAQUIN AGTARAP with a total value of
P14,177,500.00, together with whatever interest from bank deposits and all other incomes or
increments thereof accruing after the Accounting Report of December 31, 1996, after deducting
therefrom the compensation of the administrator and other expenses allowed by the Court, are
hereby ordered distributed as follows:
TOTAL ESTATE - P14,177,500.00
CARIDAD AGTARAP - of the estate as her conjugal share - P7,088,750.00, the other half of
P7,088,750.00 - to be divided among the compulsory heirs as follows:
1) JOSE (deceased)
2) MILAGROS (deceased)
3) MERCEDES (deceased)
4) SEBASTIAN
5) EDUARDO
6) CARIDAD

-P1,181,548.30
-P1,181,548.30
-P1,181,548.30
-P1,181,548.30
-P1,181,548.30
-P1,181,548.30

The share of Milagros Agtarap as compulsory heir in the amount of P1,181,548.30 and who died
in 1996 will go to Teresa Agtarap and Joseph Agtarap, Walter de Santos and half brothers
Eduardo and Sebastian Agtarap in equal proportions.
TERESA AGTARAP
JOSEPH AGTARAP
WALTER DE SANTOS -

P236,291.66
P236,291.66
P236,291.66

SEBASTIAN AGTARAP EDUARDO AGTARAP -

P236,291.66
P236,291.66

Jose Agtarap died in 1967. His compulsory heirs are as follows:

COMPULSORY HEIRS:
GLORIA - (deceased) - represented by
1)
Walter de Santos -2)
3)
4)

- P295,364.57
- P295,364.57
- P295,364.57
- P295,364.57

JOSEPH AGTARAP
TERESA AGTARAP
PRISCILLA AGTARAP

Hence, Priscilla Agtarap will inherit P295,364.57.

Adding their share from Milagros Agtarap, the following heirs of the first marriage stand to
receive the total amount of:
HEIRS OF THE FIRST MARRIAGE:
1) JOSEPH AGTARAP -

P236,291.66 -share from Milagros Agtarap

P295,364.57 - as compulsory heir of
P531,656.23 Jose Agtarap

2) TERESA AGTARAP -

P236,291.66 - share from Milagros Agtarap

P295,364.57 - as compulsory heir of
P531,656.23 Jose Agtarap

3) WALTER DE SANTOS - P236,291.66 - share from Milagros Agtarap

P295,364.57 - as compulsory heir of
P531,656.23 Jose Agtarap
HEIRS OF THE SECOND MARRIAGE:
a) CARIDAD AGTARAP

Total of

P7,088,750.00
P1,181,458.30
P8,270,208.30

- died on August 25, 1999

- as conjugal share
- as compulsory heir

b) SEBASTIAN AGTARAP

-- as compulsory heir
P1,181,458.38
P 236,291.66- share from Milagros

c) EDUARDO AGTARAP

-- as compulsory heir
P1,181,458.38
P 236,291.66- share from Milagros

d) MERCEDES

- as represented by Abelardo Dagoro as

the surviving spouse of a compulsory heir
P1,181,458.38

REMAINING HEIRS OF CARIDAD AGTARAP:

1) SEBASTIAN AGTARAP
2) EDUARDO AGTARAP
MERCEDES AGTARAP (Predeceased Caridad Agtarap)
In sum, Sebastian Agtarap and Eduardo Agtarap stand to inherit:
SEBASTIAN -

P4,135,104.10
P1,181,458.30
P 236,291.66
P5,522,854.06

- share from Caridad Garcia

- as compulsory heir
- share from Milagros

EDUARDO -

P4,135,104.10
P1,181,458.30
P 236,291.66
P5,522,854.06

- share from Caridad Garcia

- as compulsory heir
- share from Milagros

SO ORDERED. [9]
Eduardo, Sebastian, and oppositors Joseph and Teresa filed their respective motions for
reconsideration.
On August 27, 2001, the RTC issued a resolution [10] denying the motions for reconsideration of
Eduardo and Sebastian, and granting that of Joseph and Teresa. It also declared that the real
estate properties belonged to the conjugal partnership of Joaquin and Lucia. It also directed the
modification of the October 23, 2000 Order of Partition to reflect the correct sharing of
the heirs. However, before the RTC could issue a new order of partition, Eduardo and Sebastian
both appealed to the CA.
On November 21, 2006, the CA rendered its Decision, the dispositive portion of which reads-WHEREFORE, premises considered, the instant appeals are DISMISSED for lack of merit.
The assailed Resolution dated August 27, 2001 is AFFIRMED and pursuant thereto, the subject
properties (Lot No. 745-B-1 [TCT No. 38254] and Lot No. 745-B-2 [TCT No. 38255]) and the
estate of the late Joaquin Agtarap are hereby partitioned as follows:
The two (2) properties, together with their improvements, embraced by TCT No. 38254 and TCT
No. 38255, respectively, are first to be distributed among the following:
Lucia Mendietta

of the property. But since she is deceased, her share shall be

inherited by Joaquin, Jesus, Milagros and Jose in equal shares.

Joaquin Agtarap

of the property and of the other half of the property which

pertains to Lucia Mendietta's share.

Jesus Agtarap

of Lucia Mendietta's share. But since he is already deceased

(and died without issue), his inheritance shall, in turn, be
acquired by Joaquin Agtarap.

Milagros Agtarap

of Lucia Mendietta's share. But since she died in 1996

without issue, 5/8 of her inheritance shall be inherited by
Gloria (represented by her husband Walter de Santos and her
daughter Samantha), Joseph Agtarap and Teresa Agtarap, (in
representation of Milagros' brother Jose Agtarap) and 1/8 each
shall be inherited by Mercedes (represented by her husband
Abelardo Dagoro and her daughter Cecile), Sebastian Eduardo,

all surnamed Agtarap.

Jose Agtarap

of Lucia Mendietta's share. But since he died in 1967, his

inheritance shall be acquired by his wife Priscilla, and children
Gloria (represented by her husband Walter de Santos and her
daughter Samantha), Joseph Agtarap and Teresa in equal
shares.

Then, Joaquin Agtarap's estate, comprising three-fourths (3/4) of the subject properties and its
improvements, shall be distributed as follows:
Caridad Garcia

1/6 of the estate. But since she died in 1999, her share shall be
inherited by her children namely Mercedes Agtarap
(represented by her husband Abelardo Dagoro and her
daughter Cecilia), Sebastian Agtarap and Eduardo Agtarap in
their own right, dividing the inheritance in equal shares.

Milagros Agtarap

1/6 of the estate. But since she died in 1996 without issue, 5/8
of her inheritance shall be inherited by Gloria (represented by
her husband Walter de Santos and her daughter Samantha),
Joseph Agtarap and Teresa Agtarap, (in representation of
Milagros' brother Jose Agtarap) and 1/8 each shall be inherited
by Mercedes (represented by her husband Abelardo Dagoro
and her daughter Cecile), Sebastian and Eduardo, all surnamed
Agtarap.

Jose Agtarap

1/6 of the estate. But since he died in 1967, his inheritance

shall be acquired by his wife Priscilla, and children Gloria
(represented by her husband Walter de Santos and her daughter
Samantha), Joseph Agtarap and Teresa Agtarap in equal shares.

Mercedes Agtarap

1/6 of the estate. But since she died in 1984, her inheritance
shall be acquired by her husband Abelardo Dagoro and her
daughter Cecile in equal shares.

Sebastian Agtarap

1/6 of the estate.

Eduardo Agtarap

1/6 of the estate.

SO ORDERED. [11]
Aggrieved, Sebastian and Eduardo filed their respective motions for reconsideration.
In its Resolution dated March 27, 2007, the CA denied both motions. Hence, these petitions
ascribing to the appellate court the following errors:
G.R. No. 177192
1. - The Court of Appeals erred in not considering the aforementioned important facts [12] which
alter its Decision;
2. - The Court of Appeals erred in not considering the necessity of hearing the issue of
legitimacy of respondents as heirs;
3. - The Court of Appeals erred in allowing violation of the law and in not applying the
doctrines of collateral attack, estoppel, and res judicata. [13]

G.R. No. 177099

THE COURT OF APPEALS (FORMER TWELFTH DIVISION) DID NOT ACQUIRE
JURISDICTION OVER THE ESTATE OF MILAGROS G. AGTARAP AND ERRED IN
DISTRIBUTING HER INHERITANCE FROM THE ESTATE OF JOAQUIN AGTARAP
NOTWITHSTANDING THE EXISTENCE OF HER LAST WILL AND TESTAMENT IN
VIOLATION OF THE DOCTRINE OF PRECEDENCE OF TESTATE PROCEEDINGS OVER
INTESTATE PROCEEDINGS.
II.
THE COURT OF APPEALS (FORMER TWELFTH DIVISION) ERRED IN DISMISSING
THE DECISION APPEALED FROM FOR LACK OF MERIT AND IN AFFIRMING THE
ASSAILED RESOLUTION DATED AUGUST 27, 2001 OF THE LOWER COURT HOLDING
THAT THE PARCELS OF LAND COVERED BY TCT NO. 38254 AND TCT (NO.) 38255 OF
THE REGISTRY OF DEEDS FOR THE CITY OF PASAY BELONG TO THE CONJUGAL
PARTNERSHIP OF JOAQUIN AGTARAP MARRIED TO LUCIA GARCIA MENDIETTA
NOTWITHSTANDING THEIR REGISTRATION UNDER THEIR EXISTING
CERTIFICATES OF TITLE AS REGISTERED IN THE NAME OF JOAQUIN
AGTARAP, CASADO CON CARIDAD GARCIA. UNDER EXISTING JURISPRUDENCE,
THE PROBATE COURT HAS NO POWER TO DETERMINE THE OWNERSHIP OF THE
PROPERTY DESCRIBED IN THESE CERTIFICATES OF TITLE WHICH SHOULD BE
RESOLVED IN AN APPROPRIATE SEPARATE ACTION FOR A TORRENS TITLE UNDER
THE LAW IS ENDOWED WITH INCONTESTABILITY UNTIL IT HAS BEEN SET ASIDE
IN THE MANNER INDICATED IN THE LAW ITSELF. [14]
As regards his first and second assignments of error, Sebastian contends that Joseph and Teresa
failed to establish by competent evidence that they are the legitimate heirs of their father Jose,
and thus of their grandfather Joaquin. He draws attention to the certificate of title (TCT No.
8026) they submitted, stating that the wife of their father Jose is Presentacion Garcia, while they
claim that their mother is Priscilla. He avers that the marriage contracts proffered by Joseph and
Teresa do not qualify as the best evidence of Jose's marriage with Priscilla, inasmuch as they
were not authenticated and formally offered in evidence. Sebastian also asseverates that he
actually questioned the legitimacy of Joseph and Teresa as heirs of Joaquin in his motion to
exclude them as heirs, and in his reply to their opposition to the said motion. He further claims
that the failure of Abelardo Dagoro and Walter de Santos to oppose his motion to exclude them
as heirs had the effect of admitting the allegations therein. He points out that his motion was
denied by the RTC without a hearing.
With respect to his third assigned error, Sebastian maintains that the certificates of title of real
estate properties subject of the controversy are in the name of Joaquin Agtarap, married to
Caridad Garcia, and as such are conclusive proof of their ownership thereof, and thus, they are
not subject to collateral attack, but should be threshed out in a separate proceeding for that
purpose. He likewise argues that estoppel applies against the children of the first marriage, since
none of them registered any objection to the issuance of the TCTs in the name of Caridad and
Joaquin only. He avers that the estate must have already been settled in light of the payment of
the estate and inheritance tax by Milagros, Joseph, and Teresa, resulting to the issuance of TCT
No. 8925 in Milagros' name and of TCT No. 8026 in the names of Milagros and Jose. He also
alleges that res judicata is applicable as the court order directing the deletion of the name of
Lucia, and replacing it with the name of Caridad, in the TCTs had long become final and
executory.
In his own petition, with respect to his first assignment of error, Eduardo alleges that the CA
erroneously settled, together with the settlement of the estate of Joaquin, the estates of Lucia,
Jesus, Jose, Mercedes, Gloria, and Milagros, in contravention of the principle of settling only one
estate in one proceeding. He particularly questions the distribution of the estate of Milagros in
the intestate proceedings despite the fact that a proceeding was conducted in another court for the

probate of the will of Milagros, bequeathing all to Eduardo whatever share that she would
receive from Joaquin's estate. He states that this violated the rule on precedence of testate over
intestate proceedings.
Anent his second assignment of error, Eduardo contends that the CA gravely erred when it
affirmed that the bulk of the realties subject of this case belong to the first marriage of Joaquin to
Lucia, notwithstanding that the certificates of title were registered in the name of Joaquin
Agtarap casado con ("married to") Caridad Garcia. According to him, the RTC, acting as an
intestate court with limited jurisdiction, was not vested with the power and authority to
determine questions of ownership, which properly belongs to another court with general
jurisdiction.
The Court's Ruling
As to Sebastian's and Eduardo's common issue on the ownership of the subject real properties,
we hold that the RTC, as an intestate court, had jurisdiction to resolve the same.
The general rule is that the jurisdiction of the trial court, either as a probate or an intestate court,
relates only to matters having to do with the probate of the will and/or settlement of the estate of
deceased persons, but does not extend to the determination of questions of ownership that arise
during the proceedings. [15] The patent rationale for this rule is that such court merely exercises
special and limited jurisdiction. [16] As held in several cases, [17] a probate court or one in charge
of estate proceedings, whether testate or intestate, cannot adjudicate or determine title to
properties claimed to be a part of the estate and which are claimed to belong to outside parties,
not by virtue of any right of inheritance from the deceased but by title adverse to that of the
deceased and his estate. All that the said court could do as regards said properties is to determine
whether or not they should be included in the inventory of properties to be administered by the
administrator. If there is no dispute, there poses no problem, but if there is, then the parties, the
administrator, and the opposing parties have to resort to an ordinary action before a court
exercising general jurisdiction for a final determination of the conflicting claims of title.
However, this general rule is subject to exceptions as justified by expediency and convenience.
First, the probate court may provisionally pass upon in an intestate or a testate proceeding the
question of inclusion in, or exclusion from, the inventory of a piece of property without prejudice
to the final determination of ownership in a separate action. [18] Second, if the interested parties
are all heirs to the estate, or the question is one of collation or advancement, or the parties
consent to the assumption of jurisdiction by the probate court and the rights of third parties are
not impaired, then the probate court is competent to resolve issues on ownership. [19] Verily, its
jurisdiction extends to matters incidental or collateral to the settlement and distribution of the
estate, such as the determination of the status of each heir and whether the property in the
inventory is conjugal or exclusive property of the deceased spouse. [20]
We hold that the general rule does not apply to the instant case considering that the parties are
all heirs of Joaquin and that no rights of third parties will be impaired by the resolution of the
ownership issue. More importantly, the determination of whether the subject properties are
conjugal is but collateral to the probate court's jurisdiction to settle the estate of Joaquin.
It should be remembered that when Eduardo filed his verified petition for judicial settlement of
Joaquin's estate, he alleged that the subject properties were owned by Joaquin and Caridad since
the TCTs state that the lots were registered in the name of Joaquin Agtarap, married to Caridad
Garcia. He also admitted in his petition that Joaquin, prior to contracting marriage with Caridad,
contracted a first marriage with Lucia. Oppositors to the petition, Joseph and Teresa, however,
were able to present proof before the RTC that TCT Nos. 38254 and 38255 were derived from a
mother title, TCT No. 5239, dated March 17, 1920, in the name of FRANCISCO VICTOR
BARNES Y JOAQUIN AGTARAP, el primero casado con Emilia Muscat, y el Segundo con Lucia
Garcia Mendietta (FRANCISCO VICTOR BARNES y JOAQUIN AGTARAP, the first married

to Emilia Muscat, and the second married to Lucia Garcia Mendietta). [21] When TCT No. 5239
was divided between Francisco Barnes and Joaquin Agtarap, TCT No. 10864, in the name of
Joaquin Agtarap, married to Lucia Garcia Mendietta, was issued for a parcel of land, identified as
Lot No. 745 of the Cadastral Survey of Pasay, Cadastral Case No. 23, G.L.R.O. Cadastral Record
No. 1368, consisting of 8,872 square meters. This same lot was covered by TCT No. 5577
(32184) [22] issued on April 23, 1937, also in the name of Joaquin Agtarap, married to Lucia
Garcia Mendietta.
The findings of the RTC and the CA show that Lucia died on April 24, 1924, and subsequently,
on February 9, 1926, Joaquin married Caridad. It is worthy to note that TCT No. 5577 (32184)
contained an annotation, which reads-Ap-4966 - NOTA: Se ha enmendado el presente certificado de titulo, tal como aparece,
tanchando las palabras "con Lucia Garcia Mendiet[t]a" y poniendo en su lugar, entre lineas y en
tinta encarnada, las palabras "en segundas nupcias con Caridad Garcia", en complimiento de un
orden de fecha 28 de abril de 1937, dictada por el Hon. Sixto de la Costa, juez del Juzgado de
Primera Instancia de Rizal, en el expediente cadastal No. 23, G.L.R.O. Cad. Record No. 1368;
copia de cual orden has sido presentada con el No. 4966 del Libro Diario, Tomo 6.0 y, archivada
en el Legajo T-No. 32184.
Pasig, Rizal, a 29 abril de 1937. [23]
Thus, per the order dated April 28, 1937 of Hon. Sixto de la Costa, presiding judge of the Court
of First Instance of Rizal, the phrase con Lucia Garcia Mendiet[t]a was crossed out and replaced
by en segundas nuptias con Caridad Garcia, referring to the second marriage of Joaquin to
Caridad. It cannot be gainsaid, therefore, that prior to the replacement of Caridad's name in TCT
No. 32184, Lucia, upon her demise, already left, as her estate, one-half (1/2) conjugal share in
TCT No. 32184. Lucia's share in the property covered by the said TCT was carried over to the
properties covered by the certificates of title derivative of TCT No. 32184, now TCT Nos. 38254
and 38255. And as found by both the RTC and the CA, Lucia was survived by
her compulsory heirs - Joaquin, Jesus, Milagros, and Jose.
Section 2, Rule 73 of the Rules of Court provides that when the marriage is dissolved by the
death of the husband or the wife, the community property shall be inventoried, administered, and
liquidated, and the debts thereof paid; in the testate or intestate proceedings of the deceased
spouse, and if both spouses have died, the conjugal partnership shall be liquidated in the testate
or intestate proceedings of either. Thus, the RTC had jurisdiction to determine whether the
properties are conjugal as it had to liquidate the conjugal partnership to determine the estate of
the decedent. In fact, should Joseph and Teresa institute a settlement proceeding for the intestate
estate of Lucia, the same should be consolidated with the settlement proceedings of Joaquin,
being Lucia's spouse. [24] Accordingly, the CA correctly distributed the estate of Lucia, with
respect to the properties covered by TCT Nos. 38254 and 38255 subject of this case, to
her compulsory heirs.
Therefore, in light of the foregoing evidence, as correctly found by the RTC and the CA, the
claim of Sebastian and Eduardo that TCT Nos. 38254 and 38255 conclusively show that the
owners of the properties covered therein were Joaquin and Caridad by virtue of the registration
in the name of Joaquin Agtarap casado con (married to) Caridad Garcia, deserves scant
consideration. This cannot be said to be a collateral attack on the said TCTs. Indeed, simple
possession of a certificate of title is not necessarily conclusive of a holder's true ownership of
property. [25] A certificate of title under the Torrens system aims to protect dominion; it cannot be
used as an instrument for the deprivation of ownership. [26] Thus, the fact that the properties were
registered in the name of Joaquin Agtarap, married to Caridad Garcia, is not sufficient proof that
the properties were acquired during the spouses' coverture.[27] The phrase "married to Caridad
Garcia" in the TCTs is merely descriptive of the civil status of Joaquin as the registered owner,
and does not necessarily prove that the realties are their conjugal properties. [28]

Neither can Sebastian's claim that Joaquin's estate could have already been settled in 1965 after
the payment of the inheritance tax be upheld. Payment of the inheritance tax, per se, does not
settle the estate of a deceased person. As provided in Section 1, Rule 90 of the Rules of Court-SECTION 1. When order for distribution of residue made. -- When the debts, funeral charges,
and expenses of administration, the allowance to the widow, and inheritance tax, if any,
chargeable to the estate in accordance with law, have been paid, the court, on the application of
the executor or administrator, or of a person interested in the estate, and after hearing upon
notice, shall assign the residue of the estate to the persons entitled to the same, naming them and
the proportions, or parts, to which each is entitled, and such persons may demand and recover
their respective shares from the executor or administrator, or any other person having the same in
his possession. If there is a controversy before the court as to who are the lawful heirs of the
deceased person or as to the distributive share to which each person is entitled under the law, the
controversy shall be heard and decided as in ordinary cases.
No distribution shall be allowed until the payment of the obligations above mentioned has been
made or provided for, unless the distributees, or any of them, give a bond, in a sum to be fixed by
the court, conditioned for the payment of said obligations within such time as the court directs.
Thus, an estate is settled and distributed among the heirs only after the payment of the debts of
the estate, funeral charges, expenses of administration, allowance to the widow, and inheritance
tax. The records of these cases do not show that these were complied with in 1965.
As regards the issue raised by Sebastian on the legitimacy of Joseph and Teresa, suffice it to say
that both the RTC and the CA found them to be the legitimate children of Jose. The RTC found
that Sebastian did not present clear and convincing evidence to support his averments in his
motion to exclude them as heirs of Joaquin, aside from his negative allegations. The RTC also
noted the fact of Joseph and Teresa being the children of Jose was never questioned by Sebastian
and Eduardo, and the latter two even admitted this in their petitions, as well as in the stipulation
of facts in the August 21, 1995 hearing. [29] Furthermore, the CA affirmed this finding of fact in
its November 21, 2006 Decision. [30]
Also, Sebastian's insistence that Abelardo Dagoro and Walter de Santos are not heirs to the estate
of Joaquin cannot be sustained. Per its October 23, 2000 Order of Partition, the RTC found that
Gloria Agtarap de Santos died on May 4, 1995, and was later substituted in the proceedings
below by her husband Walter de Santos. Gloria begot a daughter with Walter de Santos,
Georgina Samantha de Santos. The RTC likewise noted that, on September 16, 1995, Abelardo
Dagoro filed a motion for leave of court to intervene, alleging that he is the surviving spouse of
Mercedes Agtarap and the father of Cecilia Agtarap Dagoro, and his answer in intervention. The
RTC later granted the motion, thereby admitting his answer on October 18, 1995. [31] The CA
also noted that, during the hearing of the motion to intervene on October 18, 1995, Sebastian and
Eduardo did not interpose any objection when the intervention was submitted to the RTC for
resolution. [32]
Indeed, this Court is not a trier of facts, and there appears no compelling reason to hold that both
courts erred in ruling that Joseph, Teresa, Walter de Santos, and Abelardo Dagoro rightfully
participated in the estate of Joaquin. It was incumbent upon Sebastian to present competent
evidence to refute his and Eduardo's admissions that Joseph and Teresa were heirs of Jose, and
thus rightful heirs of Joaquin, and to timely object to the participation of Walter de Santos and
Abelardo Dagoro. Unfortunately, Sebastian failed to do so. Nevertheless, Walter de Santos and
Abelardo Dagoro had the right to participate in the estate in representation of the
Joaquin's compulsory heirs, Gloria and Mercedes, respectively. [33]
This Court also differs from Eduardo's asseveration that the CA erred in settling, together with
Joaquin's estate, the respective estates of Lucia, Jesus, Jose, Mercedes, and Gloria. A perusal of
the November 21, 2006 CA Decision would readily show that the disposition of the properties
related only to the settlement of the estate of Joaquin. Pursuant to Section 1, Rule 90 of the Rules

of Court, as cited above, the RTC was specifically granted jurisdiction to determine who are the
lawful heirs of Joaquin, as well as their respective shares after the payment of the obligations of
the estate, as enumerated in the said provision. The inclusion of Lucia, Jesus, Jose, Mercedes,
and Gloria in the distribution of the shares was merely a necessary consequence of the settlement
of Joaquin's estate, they being his legal heirs.
However, we agree with Eduardo's position that the CA erred in distributing Joaquin's estate
pertinent to the share allotted in favor of Milagros. Eduardo was able to show that a separate
proceeding was instituted for the probate of the will allegedly executed by Milagros before the
RTC, Branch 108, Pasay City. [34] While there has been no showing that the alleged will of
Milagros, bequeathing all of her share from Joaquin's estate in favor of Eduardo, has already
been probated and approved, prudence dictates that this Court refrain from distributing Milagros'
share in Joaquin's estate.
It is also worthy to mention that Sebastian died on January 15, 2010, per his Certificate of
Death. [35] He is survived by his wife Teresita B. Agtarap (Teresita) and his children Joaquin
Julian B. Agtarap (Joaquin Julian) and Ana Ma. Agtarap Panlilio (Ana Ma.).
Henceforth, in light of the foregoing, the assailed November 21, 2006 Decision and the March
27, 2007 Resolution of the CA should be affirmed with modifications such that the share of
Milagros shall not yet be distributed until after the final determination of the probate of her
purported will, and that Sebastian shall be represented by hiscompulsory heirs.
WHEREFORE, the petition in G.R. No. 177192 is DENIED for lack of merit, while the
petition in G.R. No. 177099 is PARTIALLY GRANTED, such that the Decision dated
November 21, 2006 and the Resolution dated March 27, 2007 of the Court of Appeals
are AFFIRMED with the following MODIFICATIONS: that the share awarded in favor of
Milagros Agtarap shall not be distributed until the final determination of the probate of her will,
and that petitioner Sebastian G. Agtarap, in view of his demise on January 15, 2010, shall be
represented by his wife Teresita B. Agtarap and his children Joaquin Julian B. Agtarap and Ana
Ma. Agtarap Panlilio.
These cases are hereby remanded to the Regional Trial Court, Branch 114, Pasay City, for further
proceedings in the settlement of the estate of Joaquin Agtarap. No pronouncement as to costs.
SO ORDERED.

FIRST DIVISION
[ G.R. No. 63680, March 23, 1990 ]
JACOBA T. PATERNO, TOMAS T. PATERNO, AND MARIA LUCIA
PATERNO, PETITIONERS, VS. BEATRIZ PATERNO, BERNARDO
PATERNO AND THE INTERMEDIATE APPELLATE COURT,
RESPONDENTS.
DECISION
NARVASA, J.:
In the Juvenile and Domestic Relations Court of Manila, now defunct, there was filed by Feliza
Orihuela, as guardian ad litem of her children, Beatriz Paterno and Bernardo Paterno, a
complaint praying that the latter be declared illegitimate (adulterous) children of, and
consequently entitled to inherit from, the deceased Jose P. Paterno. According to Feliza, Beatriz
and Bernardo had been begotten of her illicit liaison with Jose P. Paterno, a married man, and
should thus be counted among the latter's compulsory heirs in accordance with Article 887 of
the Civil Code. Feliza prayed in her complaint for: (1) the invalidation of the extrajudicial
partition of Jose Paterno's estate executed by his widow, Jacoba T. Paterno, and his legitimate
[1]

[2]

children, Luis T. Paterno, Vicente T. Paterno, Tomas T. Paterno, Susana T. Paterno and Maria
Lucia T. Paterno, said partition having deprived the minor plaintiffs of their legitimes; (2) the
extension to Beatriz and Bernardo of support; and (3) the payment to them of actual, moral and
exemplary damages, as well as attorney's fees.
The answer with counterclaim filed for the widow and her children aforenamed inter
alia asserted as affirmative defense that the "plaintiffs are guilty of laches as they should have
exercised their right of action, if any, against the deceased Dr. Jose P. Paterno during his lifetime
in order to give the latter an opportunity to admit or deny the same, death having sealed his
lips."
It appears that "upon defendants' filing their answer, the Honorable N. Almeda-Lopez started
reception of plaintiffs' evidence. However, on January 11, 1964, prior to a scheduled
continuation of the hearing, the Honorable Judge C. Juliano-Agrava who ** (succeeded Judge
Almeda-Lopez) required the parties to show cause why the case should not be dismissed for lack
of jurisdiction. On April 4, 1964, and after both parties had submitted their respective
memoranda, the court finally ordered the dismissal of the case, for the reason that where an
illegitimate child seeks to participate in the estate of the deceased putative father, the action
becomes essentially one for recovery of plaintiffs supposed share in the estate and the question
of paternity becomes merely an incident thereto. As the main issue falls within the jurisdiction
of the ordinary courts, the incidental question of paternity should also be resolved therein, if the
splitting of causes of action is to be avoided.**."
The plaintiffs perfected an appeal to this Court, which was docketed as G.R. No. L-23060. The
appeal resulted in the reversal of the challenged order. In a decision rendered on June 30, 1967,
this Court set aside "the order of dismissal appealed from, insofar as it affects the issue of
paternity," and returned the case "to the Juvenile and Domestic Relations Court for determination
of that particular issue." Said the Court:
"** The issue to be determined ** is which of plaintiffs' claim (filiation or participation [in the
decedent's estate]) constitutes the main cause and which is merely an incident thereto.
[3]

[4]

[5]

[6]

"**
"** Clearly before the claim to participate in the estate may be prosecuted, plaintiffs right to
succeed must first be established. Differently stated, plaintiffs' main action is that for recognition
of their status as illegitimate children of the deceased, upon which the right to share in the
hereditary estate of the putative father would rest. (This matter is without doubt within the
jurisdiction of the JDRC.)
"**
"In granting to the Juvenile and Domestic Relations Court such incidental powers generally
possessed by the court of first instance, the law ** (however) could not have intended to confer
on this special tribunal jurisdiction over all subject matter cognizable by the ordinary court of
first instance. The term 'incidental powers' must refer to the authority to issue such orders or
writs and take such measures as might be necessary to carry out the functions of the Juvenile and
Domestic Relations Court. (Hence, the matter of the participation in the estate of the decedent is
not within its competence; it is within the jurisdiction of the court of first instance.)
The above conclusion will not constitute a violation of the rule against splitting of cause of
action. The prohibition provided in the Rules of Court is against the institution of more than one
suit for a single cause of action. (Sec. 3, Rule 2 ** ). But, as alleged in the complaint, the bases
for plaintiffs' various claims would not be the same. By the creation of the Juvenile and
Domestic Relations Court, with its exclusive jurisdiction over cases involving paternity and
acknowledgment, recognition of children and recovery of hereditary shares can no longer be
properly joined as cause of action, since each lies within the jurisdiction of a different tribunal.
The case having been thereafter remanded to and tried by the Juvenile and Domestic Relations
Court (JDRC), that Court rendered judgment on April 14, 1970 dismissing the complaint on the
ground of prescription, its view being that the action for compulsory recognition should have
been commenced within the lifetime of the alleged father, and on the ground that plaintiffs had
failed to present "clear, strong and convincing" evidence of their filiation. Dismissed as well was
the defendants' counterclaim. The plaintiffs elevated the case to the Court of Appeals, where
basically, they imputed to the JDRC two (2) errors, to wit:
[7]

[8]

[9]

1) holding that they (plaintiffs) had lost whatever right of action they might otherwise have had,
when they failed to file the corresponding action during the lifetime of their putative parent, Jose
P. Paterno; and
2) ruling that plaintiffs' evidence was in part incompetent and in any event did not constitute
"clear, strong and convincing proof" of plaintiffs' filiation.
The Court of Appeals reversed the judgment of the JDRC. In a decision promulgated on August
16, 1982, said Court, after an extensive review of the evidence adduced by the parties before
the JDRC -- observing in this connection that as against the plaintiffs' (illegitimate children's)
"witnesses and documentary evidence, Mrs. Jacoba Paterno, widow of the decedent, stood alone
to deny the claim of the plaintiffs-appellants" -- reached the following conclusions:
"It is true there appear to be certain inconsistencies in plaintiffs' evidence as pointed out by the
trial court, but in the final analysis, these inconsistencies are only minor matters which, to Our
mind, instead strengthened the entire plaintiffs' evidence. Had these witnesses been very
elaborate, thorough and precise, We would have entertain(ed) some doubts. In fact, the evidence
is so convincing, clear, positive that We noted that, after trial and assessment of the evidence, the
trial court was constrained, perhaps, in consonance with its conscience, to admit that 'in
evaluating plaintiffs' evidence ** the court cannot definitely state that their (plaintiffs') claim is
false.' The trial court was convinced that plaintiffs-appellants Beatriz and Bernando and Virginia
are the children of Dr. Jose P. Paterno, but being of the opinion that spurious children's right of
action to compel recognition as such is lost forever upon the demise of the putative father, found
against the plaintiffs.
[10]

"We hold, after going over the records, that there are sufficient evidence, clear and convincing,
establishing the filiation of plaintiffs-appellants Beatriz and Bernardo Paterno as spurious
children of Dr. Jose P. Paterno; that Jose P. Paterno died when they were still minors and the
present action for the establishment of their filiation to Dr. Jose P. Paterno was filed before they
reach(ed) the age of majority and within the period of limitation, within which cases of this
nature should be instituted to establish paternity and filiation.
[11]

"WHEREFORE, finding the Court a quo in error, the decision appealed from is hereby
REVERSED and another one entered, declaring plaintiffs-appellants Beatriz and Bernardo
Paterno illegitimate (spurious) children of Dr. Jose P. Paterno, deceased, begotten out of wedlock
with Felisa Orihuela (who is herein appointed guardian ad litem) conceived and born when the
deceased was cohabiting with the latter, (and) having enjoyed and continued possessing the
status as children of the deceased Dr. Jose P. Paterno.
"We are not in a position to pass on, much less, grant the other prayers of the appellants
contained in their brief except as to costs, inasmuch as the directive of Our Supreme Court in the
case of Paterno, et al. vs. Paterno, et al., L-32060, June 30, 1964, 020 SCRA 585, returning this
case to the court of origin, specifically states:
'WHEREFORE, the order of dismissal appealed from, insofar as it affects the issue of paternity
is hereby set aside, and the case returned to the Juvenile and Domestic Relations Court for
determination of that particular issue.'"
Mrs. Jacoba T. Paterno, the widow, and her legitimate children have appealed to this Court
on certiorari. In these proceedings, they claim that the Court of Appeals erred in 1) holding the evidence of the enjoyment by Beatriz and Bernardo Paterno of the status of
children of the deceased Jose Paterno, to be strong, clear and convincing;
2) failing to take account of a) the suspicious nature of the alleged letter of the decedent to Feliza, mother of Beatriz and
Bernardo (Exh. G), it being in English although Feliza was "not adequately conversant in
English;"
b) the suspect character of Beatriz's alleged baptismal certificate in that it "does not even state
the given name" (Exh. B);
c) the lack of specific evidence of cohabitation between the decedent and Feliza during the
periods of conception of their alleged children;
d) the "contradictory and conflicting evidence on direct acts by petitioner vis-a-vis the status of
private respondents;"

3) failing to apply the doctrine in Clemea v. Clemea, 24 SCRA (1968), 720, to the effect that
doubts in paternity suits are resolved against the claimant.
Such questions as whether certain items of evidence should be accorded probative value or
weight, or rejected as feeble or spurious, or whether or not the proofs on one side or the other are
clear and convincing and adequate to establish a proposition in issue, are without doubt questions
of fact. Whether or not the body of proofs presented by a party, weighed and analyzed in
relation to contrary evidence submitted by adverse party, may be said to be strong, clear and
convincing; whether or not certain documents presented by one side should be accorded full faith
and credit in the face of protests as to their spurious character by the other side; whether or not
inconsistencies in the body of proofs of a party are of such gravity as to justify refusing to give
said proofs weight -- all these are issues of fact. Questions like these are not reviewable by this
Court which, as a rule, confines its review of cases decided by the Court of Appeals only to
questions of law raised in the petition and therein distinctly set forth. But it is questions of this
type which the petitioners have precisely submitted for resolution to this Court. Therefore, in
accordance with established rule and practice, those issues will not be considered by this Court,
the resolutions thereon by the Court of Appeals being final.
It may however be noted in passing that, as recapitulated in painstaking detail in the Decision of
the Court of Appeals, the dovetailing and mutually corroborative testimony of the private
respondents, their mother Felisa Orihuela, and Teresa Miranda and Anselmo Macapinlac, the late
Dr. Jose P. Paterno's retainers to whose care and company he entrusted his illegitimate family,
does indeed compel acceptance of the fact that from their birth until Dr. Paterno's death, said
respondents were treated as, and enjoyed the status of, his children by blood.
The gist of that testimony is to the effect that Dr. Paterno had borne the expenses of the birth and
baptism of said children, who were born in the same year (1938) within eleven months of each
other; that in that year, after the birth of the first child, Beatriz, mother and daughter had moved
from A. Luna in San Juan, Rizal, to Rubi Street in San Andres Bukid, Manila, where the second
child, Bernardo, and a third, Virginia, who died at four, were born; that in 1940, the family
moved to a house in A. Lake Street in San Juan, Rizal purchased by Dr. Paterno; that in both
places, they had lived with and been maintained by Dr. Paterno in the company of the Miranda
and Macapinlac families; that shortly before the outbreak of the war in December 1941, Dr.
Paterno left for Hongkong where he stayed until war's end; that in his absence, mother and
children received monthly support from Don Vicente Madrigal at the instance of Dr. Paterno who
was Madrigal's brother-in-law; that for sometime after Liberation, they lived in the Madrigal
compound in Gen. Luna, Paco, Manila; that when Dr. Paterno thereafter returned to the
Philippines and until he again left for Hongkong, he lived with mother and children, first in
Antipolo, Rizal and later in Marilao, Bulacan; that when Felisa decided to get married -- this
while Dr. Paterno was in Hongkong on his second sojourn there -- she sought and received the
forgiveness of his wife, Doa Jacoba, who even consented to act as sponsor at her wedding; that
when Dr. Paterno returned once more from Hongkong, to be assigned to the Madrigal cement
plant in Binangonan, Rizal, he made it a point to see that Beatriz and Bernardo went or were
brought to visit him, especially during weekends, and on these occasions, he and the children
slept in his room in the same bed, he would tell them to come or send word to him for anything
they might need, and would give them money when they left; that Beatriz, then about thirteen or
fourteen, was being sent to school in Sta. Isabel College by Dr. Paterno, who did the same for
Bernardo, who was enrolled at the University of Santo Tomas; that these reunions continued until
he fell ill and had to keep to his house in Mendoza St., Quiapo, Manila, and Doa Jacoba forbade
the children to see him on the excuse that he might suffer a relapse; that on the some five
occasions that they tried to see Dr. Paterno in his residence while he lay sick, the children were
given money by Doa Jacoba upon leaving; and that after his death and burial, Doa Jacoba gave
them money for their tuition.
Hence, even if, against all applicable law and precedent, this Court were minded to substitute its
own assessment of such testimony, as supported by the documents also presented by the private
respondents, for that of the Court of Appeals, it would reach no different conclusion. True,
certain inconsistencies may be noted in the testimony given by the witnesses for the private
respondents, but it is on the whole unanimous and consistent as to the really crucial fact that Dr.
Paterno treated and acted towards said respondents, from their birth onward, in a manner only a
real father would and leaving little doubt that he recognized and considered them as in truth his
[12]

[13]

[14]

[15]

children. The simple denials of the widow, petitioner Jacoba T. Paterno, do not suffice to refute
such proof.
The action for recognition (or to establish filiation) having been timely filed -- having been
instituted after the demise of the putative parent and before the attainment of the age of majority
of the children concerned -- and the ground invoked therefor having been satisfactorily proven,
the Court of Appeals committed no error in declaring and confirming the status of the private
respondents as illegitimate children of the late Dr. Jose P. Paterno.
WHEREFORE, the appealed judgment of the Court of Appeals is AFFIRMED, with costs
against the petitioners.
SO ORDERED.
[16]

THIRD DIVISION
[ G.R. No. 154203, July 08, 2003 ]
REY CARLO A. RIVERA AND GLADYS ABAGA RIVERA, PETITIONERS,
VS. VIRGILIO RIVERA, RESPONDENT.
DECISION
PUNO, J.:
In this petition for review under Rule 45 of the Rules of Court, petitioners assail the March 21,
2002 Decision of the Court of Appeals, in connection with an ejectment case, docketed as Civil
Case No. 7529, ordering them to vacate the disputed premises and pay rentals.
The subject of the dispute is a 228-square meter lot with a two-storey duplex house located in
Pasig City. The property was originally owned by spouses Remigio Rivera, Sr. and Consuelo
Rivera. The spouses had eleven (11) children, two of whom were Remigio, Jr. (petitioners'
father) and respondent Virgilio Rivera.
In 1974, when the spouses migrated to the United States, they asked their son Remigio, Jr. and
his children (two of whom are petitioners Rey Carlo and Gladys Rivera) to occupy one unit of
the duplex house without payment of rentals. In 1985, respondent, another son of the spouses,
moved into the other unit of the duplex house and likewise occupied it gratuitously.
After Remigio, Sr. died in 1992, his widow Consuelo and their eleven (11) children executed an
extrajudicial settlement[1] where the children voluntarily waived their hereditary rights to four (4)
real properties owned by their parents, including the lot with the duplex house, in favor of their
mother Consuelo.
In 1993, Remigio, Jr. together with his three (3) sons migrated to the United States, leaving
behind petitioners who continued to reside in one of the units of the duplex house. Respondent
likewise migrated to the U.S.
On April 6, 1999, Consuelo sold the duplex house and lot to respondent for five hundred
thousand pesos (P500,000.00).[2] At the time of the sale, both Consuelo and respondent were
residing in the same house in San Jose, California. In the Deed of Sale, Consuelo and respondent
were represented by respondent's daughters Ma. Theresa R. Ferreria and Ma. Dolores A. Rivera.
Title to the property was subsequently transferred in the name of respondent.
Respondent, represented by his daughter Dolores, asked petitioners to sign a lease contract over
the unit of the duplex house they were occupying, covering the period from April 30, 1999 to
June 30, 1999, with a monthly rental of P6,000.00.
As the petitioners refused to sign the lease contract or vacate the premises, respondent,[3] through
his daughter Dolores, filed an unlawful detainer case (Civil Case No. 7529) against them before
the Metropolitan Trial Court (MeTC) of Pasig City. In the complaint, [4] it was alleged: that

respondent is the registered owner of the duplex house; that he merely tolerated petitioners'
occupancy of one of the units thereof, conditioned upon the execution of the lease contract
between the parties; that petitioners initially agreed thereto as they claimed they would remain in
the unit only for a few more months; and that after respondent caused the preparation of the lease
contract, petitioners refused to sign it or vacate the property.
In their Answer with counterclaim,[5] petitioners alleged that the deed of sale between Consuelo
and Virgilio Rivera was fictitious. They claimed that their occupancy of the premises was not by
mere tolerance as they have a right to occupy it as co-owners. Hence, they averred that they
could not be compelled to pay rentals for the use of the property. Petitioners likewise raised the
affirmative defense that respondent had no cause of action against them as no title was conferred
to him because: the deed of sale was fictitious; the subject property was part of the conjugal
property of Remigio, Sr. and Consuelo and after the former's death, all
the compulsory heirs executed an extrajudicial settlement transferring all the conjugal properties
to Consuelo out of love and respect for her; Consuelo and all the compulsory heirs have migrated
to the States; Consuelo was living with respondent in the States; Consuelo and respondent hid
from the other heirs the transfer of the subject property to respondent; the deed of sale was
executed in the Philippines through a special power of attorney granted by respondent to his
daugthers, Ma. Theresa Rivera-Ferreria and Ma. Dolores Rivera; assuming that the sale was
legitimate, Consuelo did not notify petitioners thereof, with deliberate intent and bad faith to
disinherit her grandchildren, petitioners herein, in violation of their right of first refusal, having
resided in the premises since birth, or for more than 20 years; the P500,000 consideration for the
sale was clearly inadequate; assuming that the sale was valid, it nonetheless deprived the
othercompulsory heirs of their share over the subject property; and with the attendant defects in
the sale of the property, no right or title was transferred to respondent.
The trial court rendered judgment in the ejectment case in favor of respondent, thus:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and
against defendants Rey Carlo Rivera and Gladys Rivera in the manner following:
1. Ordering the defendants and all persons claiming rights under them to immediately
vacate the subject premises unlawfully withheld from the plaintiff;
2. Ordering the defendants to pay plaintiff the sum of P5,000.00 as and by way of unpaid
rentals from April to September 1999, without prejudice to collecting the reasonable
compensation for occupancy that may be forthcoming until defendants vacate the
premises;
3. Ordering defendants to pay plaintiff the sum of P10,000.00 as and by way of attorney's
fees; and
4. Ordering the defendants to pay the costs of suit.
SO ORDERED.
Petitioners appealed the decision to the Regional Trial Court (RTC) on the grounds that: (a) the
respondent had no right over the property as he did not have actual or prior physical possession
thereof; (b) the non-existent lease contract was not binding between the parties; and (c)
respondent's title was not indefeasible.
On March 16, 2001, the RTC reversed the decision of the MeTC and ruled in favor of the
petitioners. It held that there was no valid contract of lease between the parties and petitioners
occupied the subject property in the concept of a co-owner.[6]
On appeal, the Court of Appeals, in its Decision dated March 21, 2002, reversed the RTC's
decision and reinstated the original decision of the MeTC.[7] It held that as registered owner of
the land, respondent is entitled to possession thereof.
Hence, this petition for review with petitioners raising the following issues: (a) whether
petitioners, being in actual physical possession of the property since 1974, are entitled to

continue in possession of the premises until the issue of ownership thereof is resolved by a court
of competent jurisdiction; (b) whether Civil Case No. 7529, the ejectment case, is beyond the
jurisdiction of the municipal trial court; (c) whether respondent holds the subject property in trust
for the legitimate heirs at the time the ejectment case was filed; and (d) whether petitioners, who
are in actual physical possession of the premises, exercised the right of a co-owner in
representation of their father, Remigio Rivera, Jr.
We find no merit in the petition.
We cannot sustain petitioners' contention that as they had actual, physical possession of the
property as co-owners, in representation of their father Remigio, Jr., they are entitled to remain in
the premises. In an unlawful detainer case, prior physical possession by the plaintiff is not
necessary. It is enough that he shows that he has a better right of possession. Actual, prior
physical possession of a property by a party is indispensable only in forcible entry cases, not in
unlawful detainer cases where the defendant is necessarily in prior lawful possession of the
property but his possession eventually becomes unlawful upon termination or expiration of his
right to possess.[8] Thus, the fact that petitioners were in prior physical possession of the duplex
unit does not automatically entitle them to continue in said possession and does not give them a
better right to the property.
Petitioners claim that the unlawful detainer suit should have been dismissed as the respondent
relied only on his title to the property in bringing the action. They contend that respondent's
assertion of ownership in the unlawful detainer case removed it from the jurisdiction of the
MeTC. Moreover, they insist that their possession of the property was not merely by tolerance of
the original owners and later on by the respondent as they assert their father's right as co-owner
of the property.
Again, petitioners' arguments must fail. It is well-settled that a person who occupies the land of
another at the latter's tolerance or permission, without any contract between them, is necessarily
bound by an implied promise that he will vacate upon demand, failing which, a summary action
for ejectment may be filed against him.[9] In the case at bar, respondent's allegations in his
complaint specifically show that petitioners occupied the subject unit only with the express
permission of the spouses as the original owners. Thus, when title to the property passed on to
respondent by virtue of a contract of sale, petitioners' refusal to sign the lease contract prepared
by the respondent for their use of the duplex unit rendered their continued occupation thereof
unlawful.
Although petitioners impugned the validity of respondent's title over the property as they claimed
to have the right to occupy it as co-owner, this allegation did not divest the MeTC of jurisdiction
over the unlawful detainer suit. It is settled that the sole issue in an ejectment case is physical or
material possession. Neither a claim of juridical possession nor an assertion of ownership by the
defendant can deprive the court of jurisdiction over the disputed property.[10] Courts in ejectment
cases are mandated to decide questions of ownership whenever it is necessary to decide the
question of possession. They cannot be divested of jurisdiction over ejectment cases just because
the defendants assert ownership over the litigated property.[11]
The underlying reason for this ruling is to prevent the defendant from trifling with the summary
nature of an ejectment suit by the simple expedient of asserting ownership over the disputed
property.[12]
In the case at bar, the lower court properly adjudicated ownership of the property to respondent
in the unlawful detainer case on the basis of his title thereto. Full ownership of the subject
property was surrendered to Consuelo Rivera upon the death of Remigio, Sr. through an
extrajudicial partition signed by all the compulsory heirs. Thus, Consuelo had every right to
dispose of the property as she deemed fit. Moreover, the lower court correctly ruled that
petitioners had no hereditary rights over the property in representation or substitution of their
father as the latter was still alive.

We stress, however, that this adjudication, is only an initial determination of ownership for the
purpose of settling the issue of possession, the issue of ownership being inseparably linked
thereto. The lower court's adjudication of ownership in the ejectment case is merely provisional
and would not bar or prejudice an action between the same parties involving title to the property.
[13]

Lastly, respondent rightfully omitted Remigio, Jr. as party in the illegal detainer case as he was
not the one in actual, physical possession of the subject property, but petitioners. While
petitioners insist that the TCT issued to respondent shows that the property was part of the
inheritance left by Remigio, Sr. which gives them the right to assert and protect the interest of
their father Remigio, Jr. over his share in the property, this issue, coupled with the alleged
fictitious or fraudulent sale of the property to respondent, must be tried by petitioners in a
separate proceeding only for that purpose as it is settled that an unlawful detainer case resolves
only the issue of physical or material possession.[14]
IN VIEW WHEREOF, the petition is DENIED. The impugned decision of the Court of
Appeals, dated March 21, 2002, is AFFIRMED. Costs against petitioners.
SO ORDERED.

FIRST DIVISION
[ G.R. NO. 152483, July 14, 2006 ]
RURAL BANK OF SIATON, (NEGROS ORIENTAL), INC., PETITIONER, VS.
FELIX MACAJILOS AND QUIRICO MACAJILOS, JR., RESPONDENTS.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari assails the April 18, 2001 Decision[1] of the Court of
Appeals in CA-G.R. CV No. 51290, which affirmed the July 12, 1995 Decision[2] of the Regional
Trial Court of Negros Oriental, Dumaguete City, Branch 39 in Civil Case No. 9049, and the
November 12, 2001 Resolution[3] denying petitioner Rural Bank of Siaton, Inc.'s (RBSI) motion
for reconsideration.
The controversy arose from the complaint for removal of cloud over title to and/or recovery of
real property and damages filed by Felix Macajilos and Quirico Macajilos, Jr. (Macajilos) against
RBSI and Fidela Macalipay (Fidela) on July 27, 1987.
In their complaint,[4] Macajilos alleged that they are the children of the late Gregoria Macalipay
Macajilos who during her lifetime owned and possessed a parcel of residential land situated at
Poblacion, Siaton, Negros Oriental with an area of 441 square meters; that upon Gregoria's death
on July 25, 1959, Macajilos inherited the subject property as compulsory heirs of Gregoria, their
father Quirico Macajilos, Sr. having predeceased Gregoria; that in 1975, Macajilos allowed
Juanito Macalipay, a nephew of Gregoria to build a house on the subject property where he lived
together with his wife Fidela, and their son, Lamberto; that Fidela and Lamberto continued to
live in the house even after the death of Juanito; that on February 12, 1975, Fidela executed an
"Affidavit of Heirship" before a Notary Public at Dumaguete City falsely claiming to be the sole
heir of Gregoria Macalipay and adjudicating to herself the subject property; that the tax
declaration in the name of Gregoria Macalipay was cancelled and transferred to the name of
Fidela under Tax Declaration No. 022478; that Lamberto was the manager of RBSI when Fidela
obtained a loan using as collateral the subject property; that Fidela defaulted thus the subject
property was foreclosed and sold at public auction with RBSI as the only and highest bidder; that
Fidela failed to redeem the property thus RBSI was able to transfer the tax declaration to its
name; that Macajilos have always been in actual possession under claim of ownership of the

subject property from the time of their mother's death up to the present; that RBSI knew that
Fidela did not own the subject property; that Macajilos filed a criminal case for estafa through
falsification of public document (Criminal Case No. 9096 before the Municipal Trial Court in
Cities, Dumaguete City, Branch I) against Fidela and Lamberto immediately upon discovery of
the foreclosure sale; that in her counter affidavit in the preliminary investigation of that criminal
case, Fidela denied that she signed the "Affidavit of Heirship".
In its answer,[5] RBSI claimed it considered Fidela to be the owner of the subject property as she
was in actual physical possession thereof when she applied for a loan; that Macajilos maliciously
built a house on the subject property pretending to be the owners thereof; that, if they owned the
subject property, they are already in estoppel since the mortgage document was duly registered
with the Register of Deeds and they have constructive notice thereof; that the extrajudicial
foreclosure and the public auction proceedings were duly published and that the Sheriff's
Certificate of Sale in favor of RBSI and the final deed of sale were registered with the Register
of Deeds of the Province of Negros Oriental.
On the other hand, Fidela averred in her answer[6] that the property belonged to her late husband,
Juanito Macalipay; that she lacks formal education and anything she did was the work of her son,
Lamberto, who was at the time the manager of RBSI.
After trial, the trial court found in favor of Macajilos, thus:
WHEREFORE, on the basis of the foregoing discussion, judgment is hereby rendered:
1. Declaring the foreclosure of the mortgaged property null and void ab initio;
2. Declaring [Macajilos] the rightful owners of the land subject matter of this case;
3. Ordering the Provincial Assessor's Office to cancel Tax Dec. No. 022478 in the name of Fidela
Macalipay and issue another Tax Declaration in the name of Felix Macajilos and Quirico
Macajilos covering the same property;
4. Ordering the Rural Bank of Siaton, Inc. to immediately release from mortgage the land
covered by Tax Dec. 022478 in the name of Fidela Macalipay; and
5. Ordering the Rural Bank of Siaton, Inc. to pay [Macajilos] the following:
a. P10,000.00 as moral damages;
b. P10,000.00 as exemplary damages;
c. P5,000.00 as attorney's fees; and
d. costs of the suit.
SO ORDERED.[7]
The trial court noted that RBSI failed to ascertain whether Fidela was the lawful owner of the
property being mortgaged. Rather, it relied on the tax declaration in Fidela's name and the
"Affidavit of Ownership and Possession" that she executed. No investigator inspected the
premises. Thus, the trial court ruled that RBSI must suffer for its failure to investigate and
determine the lawful owner of the subject property who turned out to be Macajilos.
The Court of Appeals denied RBSI's appeal and affirmed the decision of the trial court in toto.
Hence, this petition.
The assigned errors revolve around four principal issues: (1) who between Macajilos and RBSI
has a superior right over the property, (2) assuming the Macajilos brothers have a better right,
whether RBSI was a mortgagee-buyer in good faith of the subject property, (3) assuming the
Macajilos brothers have a better right, whether they are barred from recovering the subject
property due to estoppel and laches, and (4) whether the award of damages in favor of Macajilos
was proper.

RBSI principally raises questions of fact that have been settled by the court a quo. As a general
rule, questions of fact are not covered by a petition for review under Rule 45 of the Rules of
Court because it is limited to a review of errors of law committed by the appellate court
especially so in the case at bar where the findings of fact of the trial court and Court of Appeals
coincide and are, thus, binding on this Court.[8] However, RBSI claims that the instant case falls
under recognized exceptions to this general rule because the lower courts' conclusions are
grounded entirely on speculations, surmises or conjectures,[9] and are based on a misapprehension
of facts.[10]
After a review of the records, we rule that RBSI failed to impugn the ruling of the lowers courts
on the main issue of ownership over the subject property. However, the award of damages should
be modified by deleting the award of exemplary damages for lack of factual and legal bases.
Anent the first issue, RBSI contends that Fidela owned the mortgaged property based on her
answer to the complaint where she asserted that she inherited the subject property from her late
husband, Juanito Macalipay. It argues that the lower courts should not have given credence to the
subsequent repudiation by Fidela of her ownership over the subject property during the pre-trial
conference as the same was done allegedly in exchange for her being dropped from the instant
case.
The contention lacks merit.
To begin with, Fidela was not dropped from the case. During the hearing on April 18, 1988, the
trial court sought to have Fidela dropped from the case considering her admission during the pretrial conference that Macajilos owned the subject property. However, counsel for Macajilos
objected.[11] Consequently, Atty. Rosalinda Ybaez continued to represent Fidela throughout the
trial of this case.
Moreover, RBSI has failed to produce evidence to show that Fidela's admission was not freely
and knowingly given. While it is true that Fidela was no longer presented as a witness after the
pre-trial conference for reasons not borne out by the records, this does not necessarily mean that
her repudiation of ownership over the subject property was prompted by ill-will against RBSI.
The pre-trial order dated December 2, 1987 reflected Fidela's admissions during the pre-trial
conference:
2. Co-defendant Fidela Macalipay's claims: that the property in question did really belong to
plaintiffs [herein respondents Macajilos brothers] by virtue of their rightful succession to the
same; that it was her own son, Lamberto Macalipay, who subsequently became an officer-incharge as manager of co-defendant Rural Bank of Siaton, who so maneuvered her into signing
certain documents, in effect making her a debtor of Rural Bank of Siaton, which circumstances
were never explained to her by her son Lamberto Macalipay; and that as a consequence of it, said
Rural Bank of Siaton did grant a loan to her although the proceeds of said loan only went into the
hands of Lamberto Macalipay, her son; that Fidela Macalipay recognizes the fact that she
absolutely had nothing, and in fact still has nothing, to do with the property in question, the
same property's ownership being always that of plaintiffs, which ownership she recognizes;
[12]
(Italics supplied)
Although the records do not contain the transcript during the pre-trial conference, it should be
noted that on April 18, 1988, the trial court recalled the events that transpired during the pre-trial
conference where Fidela freely and knowingly acknowledged that Macajilos were the rightful
owners of the subject property, thus:
COURT:
Then, what happened now[?] Did you convince Fidela that she was just a daughter-in law? In
this case, Fidela was a daughter-in-law of...
Logronio:[13]

The first cousin of the plaintiffs.

COURT:
Fidela Macalipay whom you are representing is merely the daughter...
Ybaez:[14]
Is the mother of Lamberto...
COURT:
Wait a minute, ... is the wife of the plaintiff's cousin?
Ybaez:
Yes, your honor.
COURT:
And even her husband, the plaintiff's cousin, had nothing to do with this property, right?
Ybaez:
Yes, that is what the defendant...
COURT:
And even your client, the co-defendant Fidela Macalipay, admits that it was only her son,
Lamberto, who soon became OIC...
Logronio:
Who was the OIC at the time.
COURT:
Yes, who soon became the OIC of the Rural Bank who did something using Fidela's name. Is that
correct?
Logronio:
Yes, your honor.
xxxx
COURT:
But Fidela said, "Yes, the plaintiff really owned this property," admitting it.
Ybaez:
Yes, your honor.
COURT:
What is the problem of this case now?

Logronio:
So, we have no more problem with Fidela, as far as ownership is concerned. Our target now is
the Rural Bank of Siaton who appears to have purchased this property and the foreclosure, and
have it transferred to their name and even threatening to eject the plaintiffs who are the real
owners x x x.[15] (Emphasis supplied)
As regards Fidela's initial assertion of ownership over the subject property, we agree with the
findings of the Court of Appeals that the same should not be given weight. It bears stressing that
only a thumb mark appears on top of her printed name at the last page of her answer and the
name of the lawyer who prepared the same was not even indicated. The records also show that
Fidela's answer was belatedly filed with the trial court. In her opposition[16] to the motion to have
her declared in default, there was a plea for understanding and a statement that the attached
answer was prepared by an unnamed lawyer, without being formally engaged, out of pity and
compassion for Fidela who was an indigent. Thus, as between the allegations in the answer
which was merely thumbmarked by Fidela and prepared by an unknown lawyer, and her
admissions in open court with the assistance of her counsel of record, Atty. Rosalinda Ybaez,
during the pre-trial conference of this case, the lower courts correctly gave weight to the latter.
At any rate, the lower courts' finding that the subject property rightly belonged to Macajilos was
not principally grounded on Fidela's admission. Rather, this admission merely confirmed the
undisputed documentary evidence which showed Gregoria Macalipay as the owner of the subject
property and the same passed on to her two sons upon her death. The records show that Tax
Declaration No. 858[17] covering the period prior to the year 1949,[18] Tax Declaration No.
13895[19] for the year 1949, Tax Declaration No. 25864[20] for the year 1969 and Tax Declaration
No. 10651[21] for the year 1974 over the subject property were all in the name of Gregoria
Macalipay. It is true that tax declarations or realty tax payments are not conclusive evidence of
ownership, however, they constitute good indicia of possession in the concept of owner and a
claim of title over the subject property.[22] Coupled with her uncontested actual possession of the
subject property, these tax declarations constitute strong evidence of ownership over the subject
property by Gregoria Macalipay,[23] the mother of herein respondents Macajilos.
The tax declarations in the name of Gregoria Macalipay takes on great significance because
Fidela tacked her claim of ownership to that of Gregoria Macalipay. In 1975, Fidela had Tax
Declaration No. 10651 in the name of Gregoria Macalipay cancelled through the execution of an
"Affidavit of Heirship" where she claimed to be the sole heir of Gregoria Macalipay. Yet, she
was merely the wife of Juanito who was a nephew of Gregoria. Neither she nor Juanito could
inherit from Gregoria whose compulsory heirs are respondents Macajilos. Clearly, the "Affidavit
of Heirship" was fraudulent and could never be Fidela's source of ownership over the subject
property. Neither could Tax Declaration No. 022478 in the name of Fidela and the "Affidavit of
Ownership and Possession" be the source of any derivative right of ownership of RBSI over the
subject property considering that these documents were the products of the aforementioned
fraudulent scheme. Thus, the trial court correctly ruled that the mortgage over the subject
property and the foreclosure proceedings were a nullity, and that respondents Macajilos brothers
should be declared the lawful owners of the subject property.
We note that in its Memorandum,[24] RBSI contended, among others, that should this Court rule
in favor of Macajilos, the mortgage should be declared valid insofar as the one-half portion of
the subject property is concerned, based on the alleged admission by respondent Quirico
Macajilos, Jr. on cross-examination that there was an oral settlement of the estate of Gregoria
Macalipay where respondents Macajilos brothers agreed that the subject property should be
apportioned between respondent Quirico Macajilos, Jr. and Fidela Macalipay.
This issue is being raised by RBSI for the first time on appeal and only belatedly in its
memorandum before this Court. Well-settled is the rule that points of law, theories, issues and
arguments not adequately brought to the attention of the trial court need not be, and ordinarily
will not be, considered by a reviewing court as they cannot be raised for the first time on appeal.

[25]

An issue which was neither averred in the complaint nor raised during the trial in the court
below cannot be raised for the first time on appeal as it would be offensive to the basic rules of
fair play, justice and due process.[26] Thus, we cannot bend backwards to examine this issue
raised by RBSI at this late stage in the proceedings.
Be that as it may, even if we were to consider RBSI's new theory and, thus, assume that the
aforementioned oral settlement did take place, the relinquishment of respondent Felix Macajilos'
one-half share in the subject property in favor of Fidela would amount to an oral donation of real
property which, under Article 749[27] of the Civil Code, is null and void.[28] This void donation to
Fidela did not ripen into ownership through acquisitive prescription because, as will be discussed
in detail shortly, RBSI was a mortgagee-buyer in bad faith. Only six years had elapsed from the
auction sale to the filing of the instant case, which is less than the required 30-year-period for
extraordinary acquisitive prescription[29] to set in.
Anent the second issue, we agree with the trial court and the Court of Appeals that RBSI was a
mortgagee-buyer in bad faith. The subject property was mortgaged three times by Fidela to
RBSI, to wit: in 1975 for P2,000.00, in 1976 for 10,000.00, and in 1978 for P12,300.00. After
fully paying the first two mortgage debts, Fidela failed to pay the third thus the property was
extrajudicially foreclosed and sold at public auction with RBSI as the only and highest bidder.
However, in contracting the aforesaid mortgages, RBSI failed to exercise the proper diligence in
verifying the true owners of the subject property. Certainly, a mortgagee is not expected to
conduct an exhaustive investigation on the history of the mortgagor's title but RBSI, especially
because it is a banking institution, must have at least exercised due diligence before entering into
said contract. Banks are expected to exercise more care and prudence than private individuals in
their dealings because their business is impressed with public interest.[30]
It is a standard practice for banks before approving a loan to send representatives to the premises
of the land offered as collateral and to investigate who are the real owners thereof.[31] However,
in the case at bar, no investigator was sent to the location of the subject property to verify the real
owners thereof. Instead, RBSI relied solely on Tax Declaration No. 022478 in the name of Fidela
as well as the "Affidavit of Possession and Ownership" that RBSI required her to execute.
[32]
Atty. Teodoro Singson, a witness for RBSI, explained that when RBSI was established in
1974, there was so much money coming from the Central Bank that the bank was in a hurry to
grant loans and was not strict with the documents presented by prospective borrowers as
collateral.[33]
What is more, Atty. Singson admitted that RBSI was aware that Tax Declaration No. 022478 in
the name of Fidela was previously in the name of Gregoria Macalipay and that the tax
declaration was transferred to the name of Fidela through the "Affidavit of Heirship" she
executed naming her as the sole heir of Gregoria Macalipay.[34] However, it did not take steps to
ascertain whether Fidela was, indeed, the sole heir of Gregoria Macalipay. Rather, it placed full
faith on the false representation of Fidela that her husband, Juanito Macalipay, was the son of
Gregoria Macalipay.[35] To make matters worse, neither did it inquire from Lamberto, son of
Fidela, who was then the manager of the bank when the first loan was granted to her in 1975, as
to whether his father, Juanito Macalipay, was the son of Gregoria Macalipay.[36]
As its defense, RBSI dwells on the alleged error of the trial court in finding Lamberto as the
manager of RBSI when the mortgage debts were contracted when in fact Lamberto was a mere
clerk-typist. However, the records show that RBSI categorically admitted during the pre-trial
conference that Lamberto was the manager of the bank when the loan transactions took place.
[37]
Even in its Reply[38] dated June 21, 2002 filed before this Court, RBSI admitted that Lamberto
was the officer-in-charge (OIC) of the bank prior to 1978 or when the first two mortgage debts
were contracted by his mother, Fidela, and that Lamberto was demoted to the rank of a clerktypist only in 1978.[39]
At any rate, we need not belabor this point because whether Lamberto was an OIC or a mere
clerk-typist of the bank when the mortgage debts were contracted will not excuse RBSI from

exercising prudence in verifying the true owners of the subject property. The fact that Lamberto
was the son of its prospective debtor, Fidela, should have prompted RBSI to be more cautious in
granting the loan.
Based on the foregoing, it is clear that RBSI chose to close its eyes to facts which should have
put a reasonable man on his guard.[40] Far from being prudent, RBSI hastily granted the loan
without investigation, and placed full faith on the false documents submitted by Fidela.
Consequently, it cannot now claim that it acted in good faith on the belief that there was no
defect in the title of Fidela.
While the findings of the lower courts that RBSI was a mortgagee-buyer in bad faith is in accord
with the evidence on record, we must point out, however, that they overlooked the fact that the
subject property is an unregistered piece of land. As we ruled in David v. Bandin,[41] which was
reiterated in Sales v. Court of Appeals,[42] "the issue of good faith or bad faith of a buyer is
relevant only where the subject of the sale is a registered land but not where the property is an
unregistered land. One who purchases an unregistered land does so at his peril. His claim of
having bought the land in good faith, i.e., without notice that some other person has a right to, or
interest in, the property, would not protect him if it turns out that the seller does not actually own
the property." Nevertheless, the application of this doctrine will not affect the outcome of this
case. RBSI bought the property during the auction sale at its own peril and must suffer the
consequences of its failure to investigate the true owners of the subject property who turned out
to be respondents Macajilos brothers. Although the discussion on RBSI's bad faith would now
seem superfluous given the application of this doctrine, the finding of bad faith is still relevant in
the resolution of the last issue with respect to the award of damages.
Anent the third issue, we likewise agree with the findings of the Court of Appeals that
respondent Macajilos brothers are not barred by laches or estoppel from recovering the
ownership of the subject property. They are not estopped from denying the representations of
Fidela that she owns the subject property because they were never privy to the loan agreements
between the bank and Fidela. The fact that the mortgages and subsequent foreclosure
proceedings were duly registered with the register of deeds will not cure their nullity because
Fidela never owned the subject property.
Neither can respondent Macajilos brothers be said to have slept on their rights. Essentially,
laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that
which, by the exercise of due diligence, could or should have been done earlier; it is negligence
or omission to assert a right within a reasonable time, warranting a presumption that the party
entitled to assert it has either abandoned or declined to assert it.[43]
In the case at bar, respondents Macajilos brothers performed acts which showed their intent to
assert their rightful ownership over the subject property. Specifically, in 1980, respondent
Quirico Macajilos, Jr. came across the notice of public auction of the subject property in the
public market.[44] Upon investigation with the provincial assessor's office, he discovered that
Fidela had mortgaged the subject property to RBSI by transferring the tax declaration to her
name after falsely claiming in the "Affidavit of Heirship" that she was the sole heir of Gregoria
Macalipay.
Consequently, in 1981 or within a year from the discovery of the fraudulent scheme perpetuated
by Fidela, respondents Macajilos brothers filed a criminal case against Fidela and Lamberto for
estafa through falsification of public document.[45] After knowing about the foreclosure of the
subject property, respondent Quirico Macajilos, Jr. took possession of the subject property[46] and
demanded Fidela to vacate. In 1987, the instant case to remove cloud over the title and/or
recovery of real property and damages was filed by respondents Macajilos brothers against RBSI
as an off-shoot of the latter's demand on respondent Quirico Macajilos to vacate the subject
property. All in all, these acts show that respondents Macajilos brothers did not sleep on their
rights but reasonably took steps to assert their ownership over the subject property.

Anent the fourth issue, we note that the task of fixing the amount of damages primarily rests with
the trial court as the circumstances of each case may warrant provided that the bases therefor are
fully established.[47] In the case at bar, the trial court awarded moral and exemplary damages as
well as attorney's fees in view of its finding that RBSI acted in bad faith.[48] As previously
discussed, this finding of bad faith by the trial court is sufficiently supported by the evidence on
record. However, the award of exemplary damages should be deleted since there is no clear and
convincing proof that RBSI acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner to warrant the imposition of the same.[49]
WHEREFORE, the petition is PARTLY GRANTED. The April 18, 2001 Decision and
November 12, 2001 Resolution of the Court of Appeals in CA-G.R. CV No. 51290 which
affirmed the July 12, 1995 Decision of the Regional Trial Court of Negros Oriental, Dumaguete
City, Branch 39 in Civil Case No. 9049 declaring respondents Felix Macajilos and Quirico
Macajilos, Jr. the rightful owners of the subject property, are AFFIRMED with
theMODIFICATION that the award of exemplary damages is DELETED for lack of basis.
SO ORDERED.

The reserva troncal is a special rule designed

primarily to assure the return of the reservable
property to the third degree relatives belonging to
the line from which the property originally came,
and avoid its being dissipated into and by the
relatives of the inheriting ascendant (reservista). "*
* *.
FIRST DIVISION
[G.R. No. L-28032. September 24, 1986]
FRANCISCA TIOCO DE PAPA, MANUEL TIOCO, NICOLAS TIOCO and
JANUARIO PAPA, plaintiffs-appellees, vs. DALISAY TONGKO CAMACHO,
PRIMO TONGKO and GODOFREDO CAMACHO, defendants-appellants.

DECISION
NARVASA, J.:
This case which involves the application of Article 891 of the Civil Code
on reserva troncal, was submitted for judgment in the lower court by all
the parties on the following "Stipulation of Facts and Partial Compromise":

"1. They stipulate that the defendant Dalisay D. Tongko-Camacho and the
plaintiffs, Francisca Tioco de Papa, Manuel Tioco and Nicolas Tioco, are
legitimate relatives, plaintiffs being said defendant's grandaunt and
granduncles.
2. They stipulate that plaintiffs and defendant Dalisay D. TongkoCamacho have as a common ancestor the late Balbino Tioco (who had a
sister by the name of Romana Tioco), father of plaintiffs and great
grandfather of defendant. The family relationship of the parties is as
shown in the chart attached hereto as Annex 'A' and made an integral
part of this stipulation.
3. They stipulate that Romana Tioco during her lifetime gratuitously
donated four (4) parcels of land to her niece Toribia Tioco (legitimate
sister of plaintiffs), which parcels of land are presently covered by Transfer
Certificates of Title Nos. A-64165, 64166 and 64167 of the Registry of
Deeds of Manila, copies of which are attached to this stipulation as
Annexes 'B', 'B-1', and 'B-2'.
4. They stipulate that Toribia Tioco died intestate in 1915, survived by her
husband, Eustacio Dizon, and their two legitimate children, Faustino Dizon
and Trinidad Dizon (mother of defendant Dalisay D. Tongko-Camacho) and
leaving the afore-mentioned four (4) parcels of land as the inheritance of
her said two children in equal pro-indiviso shares.
5. They stipulate that in 1928, Balbino Tioco died intestate, survived by
his legitimate children by his wife Marciana Felix (among them plaintiffs)
and legitimate grandchildren Faustino Dizon and Trinidad Dizon. In the
partition of his estate, three (3) parcels of land now covered by Transfer
Certificates of Title Nos. 16545 and 16554 of the Registry of Deeds of
Manila, copies of which are attached hereto as Annexes 'C' and 'C-1', were
adjudicated as the inheritance of the late Toribia Tioco, but as she had
predeceased her father, Balbino Tioco, the said three (3) parcels of land
devolved upon her two legitimate children Faustino Dizon and Trinidad
Dizon in equal pro-indiviso shares.
6. They stipulate that in 1937, Faustino Dizon died intestate, single and
without issue, leaving his one-half (1/2) pro-indiviso share in the seven (7)
parcels of land above-mentioned to his father, Eustacio Dizon, as his sole
intestate heir, who received the said property subject to a reserva troncal
which was subsequently annotated on the Transfer Certificates of Title
Annexes 'B', 'B-2', 'C' and 'C-1'.
7. They stipulate that in 1939 Trinidad Dizon-Tongko died intestate, and
her rights and interests in the parcels of land above-mentioned were
inherited by her only legitimate child, defendant Dalisay D. TongkoCamacho, subject to the usufructuary right of her surviving husband,
defendant Primo Tongko.

8. They stipulate that on June 14, 1965, Eustacio Dizon died intestate,
survived his only legitimate descendant, defendant Dalisay D. TongkoCamacho.
9. The parties agree that defendant Dalisay D. Tongko-Camacho now
owns one-half () of all the seven (7) parcels of land above-mentioned as
her inheritance from her mother, Trinidad Dizon-Tongko.
10. Defendant Dalisay D. Tongko-Camacho also claims, upon legal advice,
the other half of the said seven (7) parcels of land above-mentioned by
virtue of the reserva troncal imposed thereon upon the death of Faustino
Dizon and under the laws on intestatesuccession; but the plaintiffs, also
upon legal advice, oppose her said claim because they claim three-fourths
(3/4) of the one-half pro-indiviso interest in said parcel of land, which
interest was inherited by Eustacio Dizon from Faustino Dizon, or threeeights (3/8) of the said parcels of land, by virtue of their being also third
degree relatives of Faustino Dizon.
11. The parties hereby agree to submit for judicial determination in this
case the legal issue of whether defendant Dalisay D. Tongko-Camacho is
entitled to the whole of the seven (7) parcels of land in question, or
whether the plaintiffs, as third degree relatives of Faustino Dizon are
reservatarios (together with said defendant) of the one-half pro-indiviso
share therein which was inherited by Eustacio Dizon from his son Faustino
Dizon, and entitled to three-fourths (3/4) of said one-half pro-indiviso
share, or three eights (3/8) of said seven (7) parcels of land, and,
therefore, to three-eights (3/8) of the rentals collected and to be collected
by defendant Dalisay P. Tongko Camacho from the tenants of said parcels
of land, minus the expenses and/or real estate taxes corresponding to
plaintiffs' share in the rentals.
12. In view of the fact that the parties are close blood relatives and have
acted upon legal advice in pursuing their respective claims, and in order
to restore and preserve harmony in their family relations, they hereby
waive all their claims against each other for damages (other than legal
interest on plaintiffs' share in the rentals which this Honorable Court may
deem proper to award), attorney's fees and expenses of litigation which
shall be borne by the respective parties."
On the basis thereof, the lower Court declared the plaintiffs Francisco
Tioco, Manuel Tioco and Nicolas Tioco, as well as the defendant Dalisay
Tongko-Camacho, entitled, as reservatarios, to one-half of the seven
parcels of land in dispute, in equal proportions, rendering judgment as
follows:
"* * *. Resolving, therefore, the legal question submitted by the parties,
the court holds that plaintiffs Francisca Tioco, Manuel Tioco and Nicolas
Tioco are entitled to three-fourths (3/4) of one-half (1/2) pro-indiviso
shares or three-eights (3/8) of the seven (7) parcels of land involved in

this action. Consequently, they are, likewise, entitled to three-eights (3/8)

of the rentals collected and to be collected by the defendant Dalisay D.
Tioco Camacho from the tenants of the said parcels of land, minus the
expenses and/or real estate taxes corresponding to plaintiffs' share in the
rentals.
IN VIEW OF THE FOREGOING, and inasmuch as the parties expressly
waived all their claims against each other for damages including
attorney's fees and expenses of litigation other than the legal interests on
plaintiffs' share in the rentals, the court renders judgment adjudging the
plaintiffs entitled to three-eights (3/8) of the seven (7) parcels of land
described in Transfer Certificate of Title Nos. T-64165, T-64166, T-64167,
T-16546 and T-16554 of the Registry of Deeds of Manila. The defendant
Dalisay D. Tioco-Camacho is hereby ordered to make an accounting of all
rents received by her on the properties involved in this action for the
purpose of determining the legal interests which should be paid to the
plaintiffs on their shares in the rentals of the property in question.
SO ORDERED."
Not satisfied, the defendant appealed to this Court.
The issue raised is whether, as contended by the plaintiffs-appellees and
ruled by the lower Court, all relatives of the praeposituswithin the third
degree in the appropriate line succeed without distinction to the
reservable property upon the death of the reservista, as seems to be
implicit in Art. 891 of the Civil Code, which reads:
"Art. 891. The ascendant who inherits from his descendant any property
which the latter may have acquired by gratuitous title from another
ascendant, or a brother or sister, is obliged to reserve such property as he
may have acquired by operation of law for the benefit of relatives who are
within the third degree and who belong to the line from which said
property came. (811)",
or, as asserted by the defendant-appellant, the rights of said relatives are
subject
to,
and
should
be
determined
by,
the
rules onintestate succession.
That question has already been answered in Padura vs. Baldovino, where
the reservatario was survived by eleven nephews and nieces of
the praepositus in the line of origin, four of whole blood and seven of half
blood, and the claim was also made that all eleven were entitled to the
reversionary property in equal shares. This Court, speaking through Mr.
Justice J.B.L. Reyes, declared the principles of intestacy to be controlling, and
ruled that the nephews and nieces of whole blood were each entitled to a
share double that of each of the nephews and nieces of half blood in
accordance with Article 1006 of the Civil Code. Said the Court:

"The issue in this appeal may be formulated as follows: In a case of reserva

troncal, where the onlyreservatarios (reservees) surviving the reservista, and
belonging to the line of origin, are nephews of the descendant (prepositus),
but some are nephews of the half blood and the others are nephews of the
whole blood, should the reserved properties be apportioned among
then equally, or should the nephews of the whole blood take a share twice as
large as that of the nephews of the half blood?
"* * *.
The case is one of first impression and has divided the Spanish
commentators on the subject. After mature reflection, we have concluded
that
the
position
of
the
appellants
is

The reserva troncal is a special rule designed

primarily to assure the return of the reservable
property to the third degree relatives belonging to the
line from which the property originally came, and
avoid its being dissipated into and by the relatives of
the inheriting ascendant (reservista).
correct.

"* * *.
The stated purpose of the reserva is accomplished once the property has
devolved to the specified relatives of the line of origin. But from this time
on, there is no further occasion for its application. In the relations
between one reservatario and another of the same degree there is no call
for applying Art. 891 any longer; wherefore, the respective share of each
in the reversionary property should be governed by the ordinary
rules of intestate succession. In this spirit the jurisprudence of this Court
and that of Spain has resolved that upon the death of the
ascendant reservista, the reservable property should pass, not to all
the reservatarios as a class but only to those nearest in degree to the
descendant (prepositus) excluding those reservatarios of more remote
degree (Florentino vs. Florentino, 40 Phil. 489-490; T.S. 8 Nov. 1894; Dir.
Gen. de los Registros, Resol. 20 March 1905). And within the third degree
of relationship from the descendant (prepositus), the right of
representation operates in favor of nephews (Florentino vs.
Florentino,supra).
"Following the order prescribed by law in legitimate succession, when
there are relatives of the descendant within the third degree, the right of
the nearest relative, called reservatario, over the property which the
reservista (person holding it subject to reservation)should return to him,
excludes that of the one more remote. The right of representation cannot
be alleged when the one claiming same as a reservatario of the
reservable property is not among the relatives within the third degree
belonging to the line from which such property came, inasmuch as the

right granted by the Civil Code in Article 811 is in the highest degree
personal and for the exclusive benefit of designated persons who are
within the third degree of the person from whom the reservable property
came. Therefore, relatives of the fourth and the succeeding degrees can
never be considered as reservatarios, since the law does not recognize
them as such.
"In spite of what has been said relative to the right of representation on
the part of one alleging his right as reservatario who is not within the third
degree of relationship, nevertheless there is right of representation on the
part of reservatarios who are within the third degree mentioned by law, as
in the case of nephews of the deceased person from whom the reservable
property came. * * *." (Florentino vs. Florentino, 40 Phil. 480, 489-490)
(Emphasis supplied) (See also Nieva and Alcala vs. Alcala and de Ocampo,
41 Phil. 915)
Proximity of degree and right of representation are basic principles
of ordinary intestate succession; so is the rule that whole blood brothers
and nephews are entitled to a share double that of brothers and nephews
of half blood. If in determining the rights of thereservatarios inter se,
proximity of degree and the right of representation of nephews are made
to apply, the rule of double share for immediate collaterals of the whole
blood should be likewise operative.
In other words, the reserva troncal merely determines the group of
relatives (reservatarios) to whom the property should be returned;
but within that group, the individual right to the property should be
decided by the applicable rules of ordinary intestatesuccession, since Art.
891 does not specify otherwise. This conclusion is strengthened by the
circumstance that the reserva being an exceptional case, its application
should be limited to what is strictly needed to accomplish the purpose of
the law. As expressed by Manresa in his Commentaries (Vol. 6, 6th Ed., p.
250):
"* * * creandose un verdadero estado excepcional del derecho, no debe
ampliarse, sino mas bien restringirse, el alcance del precepto,
manteniendo la excepcion mientras fuere necesaria y estuviese
realmente contenida en la disposicion, y aplicando las reglas generales y
fundamentales del Codigo en materia de sucesion, en aquellos extremos
no resueltos de un modo expreso, y que quedan fuera de la propia esfera
de accion de la reserva que se crea."
The restrictive interpretation is the more imperative in view of the new
Civil Code's hostility to successional reservas and reversions, as
exemplified by the suppression of the reserva viudal and the reversion
legal of the Code of 1889 (Art. 812 and 968-980)."
Reversion of the reservable property being governed by the
rules on intestate succession, the plaintiffs-appellees must be held

without any right thereto because, as aunt and uncles, respectively, of

Faustino
Dizon
(the praepositus),
they
are
excluded from thesuccession by his niece, the defendant-appellant,
although they are related to him within the same degree as the latter. To
this effect is Abellana vs. Ferraris where Arts. 1001, 1004, 1005 and 1009
of the Civil Code were cited and applied:
"Nevertheless, the trial court was correct when it held that, in case of
intestacy, nephews and nieces of the de cujus exclude all other collaterals
(aunts and uncles, first cousins, etc.) from the succession. This is readily
apparent from articles 1001, 1004, 1005, and 1009 of the Civil Code of
the Philippines, that provide as follows:
"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."
"Art. 1004. Should the only survivors be brothers and sisters of the full
blood, they shall inherit in equal shares."
"Art. 1005. Should brothers and sisters survive together with nephews
and nieces who are the children of the decedent's brothers and sisters of
the full blood, the former shall inherit per capita, and the latter per
stirpes."
"Art. 1009. Should there be neither brothers nor sisters, nor children of
brothers or sisters, the other collateral relatives shall succeed to the
estate."
Under the last article (1009), the absence of brothers, sisters, nephews
and nieces of the decedent is a precondition to the other collaterals
(uncles, cousins, etc.) being called to the succession. This was also and
more clearly the case under the Spanish Civil Code of 1889, that
immediately preceded the Civil Code now in force (R.A. 386). Thus,
Articles 952 and 954 of the Code of 1889 prescribed as follows:
"Art. 952. In the absence of brothers or sisters and of nephews or nieces,
children of the former, whether of the whole blood or not, the surviving
spouse, if not separated by a final decree of divorce shall succeed to the
entire estate of the deceased."
"Art. 954. Should there be neither brothers nor sisters, nor children of
brothers or sisters, nor a surviving spouse, the other collateral relatives
shall succeed to the estate of deceased.
The latter shall succeed without distinction of lines or preference among
than by reason of the whole blood."
It will be seen that under the preceding articles, brothers and sisters and
nephews and nieces inherited ab intestato ahead of the surviving spouse,

while other collaterals succeeded only after the widower or widow. The
present Civil Code of the Philippines merely placed the spouse on a par
with the nephews and nieces and brothers and sisters of the deceased,
but without altering the preferred position of the latter vis a vis the other
collaterals."
"* * *.
We, therefore, hold, and so rule, that under our laws of succession, a
decedent's uncles and aunts may not succeed ab intestato so long as
nephews and nieces of the decedent survive and are willing and qualified
to succeed. * * *"
This conclusion is fortified by the observation, also made in Padura, supra,
that as to the reservable property, the reservatarios do not inherit from
the reservista, but from the descendant praepositus:
"* * *. It is likewise clear that the reservable property is no part of the
estate of the reservista, who may not dispose of it by will, as long as there
are reservatarios existing (Arroyo vs. Gerona, 58 Phil. 237). The latter,
therefore, do not inherit from the reservista, but from the
descendant prepositus,
of
whom
the reservatarios are
the
heirs mortis causa, subject to the condition that they must survive
the reservista. (Sanchez Roman, Vol. VI, Tomo 2, p. 286; Manresa,
Commentaries, Vol. 6, 6th Ed., pp. 274, 310) * * *."
To the same effect is Cano vs. Director of Lands, where it was ruled that
intestacy proceedings to determine the right of areservatario are not
necessary where the final decree of the land court ordering issuance of
title
in
the
name
of
the reservista over
property
subject
to reserva troncal identifies the reservatario and there are no other
claimants to the latter's rights as such:
"The contention that an intestacy proceeding is still necessary rests upon
the assumption that the reservatario will succeed in, or inherit, the
reservable
property
from
the reservista.
This
is
not
true.
The reservatario is not the reservista's successor mortis causanor is the
reservable
property
part
of
the reservista's estate;
the reservatario receives the property as a conditional heir of the
descendant (prepositus), said property merely reverting to the line of
origin from which it had temporarily and accidentally strayed during
the reservista's lifetime. The authorities are all agreed that there
being reservatarios that survive the reservista, the matter must be
deemed to have enjoyed no more than a life interest in the reservable
property.
It is a consequence of these principles that upon the death of
the reservista, the reservatario nearest to the prepositus (the appellee in
this case) becomes, automatically and by operation of law, the owner of
the reservable property. As already stated, that property is no part of the

estate of the reservista, and does not even answer for the debts of the
latter. * * *."
Had the reversionary property passed directly from the praepositus, there
is no doubt that the plaintiffs-appellees would have been excluded by the
defendant-appellant under the rules of intestate succession. There is no
reason why a different result should obtain simply because "the
transmission of the property was delayed by the interregnum of
the reserva"; i.e., the property took a "detour" through an ascendant -thereby giving rise to the reservation -- before its transmission to
the reservatario.
Upon the stipulated facts, and by virtue of the rulings already cited, the
defendant-appellant Dalisay Tongko-Camacho is entitled to the entirety of
the reversionary property to the exclusion of the plaintiffs-appellees.
WHEREFORE, the appealed judgment of the lower Court is reversed and
set aside and the complaint is dismissed, with costs against the plaintiffsappellants.
SO ORDERED.

FIRST DIVISION
REPUBLIC OF THE PHILIPPINES,
represented by the DIRECTOR OF
LANDS,
Petitioner,

- versus -

REGISTER OF DEEDS OF ROXAS

CITY, ELIZABETH LEE, and
PACITA YU-LEE,
Respondents.

G.R. No. 158230

Present:
PUNO, C.J., Chairperson,
CARPIO,
CORONA,
AZCUNA, and
LEONARDO-DE CASTRO, JJ.

Promulgated:
July 16, 2008

x-------------------------------------------------- x

DECISION
CARPIO, J.:

The Case
This is a petition for review of the Decision dated 12 July 2002 and the
Resolution dated 9 May 2003 of the Court of Appeals in CA-G.R. CV No.
53890.
The Facts
In March 1936, Lee Liong, a Chinese citizen, bought Lot No. 398
from Vicenta Arcenas, Francisco, Carmen Ramon, Mercedes, Concepcion,
Mariano, Jose, and Manuel, all surnamedDinglasan. Lot No. 398, with an area of
1,574
square
meters,
is
located
at
the
corner
of Roxas
Avenue and Pavia Street in Roxas City. In February 1944, Lee Liong died intestate
and was survived by his widow Ang Chia, and his sons Lee Bing Hoo and Lee Bun
Ting. On 30 June 1947, the surviving heirs of Lee Liong extrajudicially settled the
estate of the deceased and partitioned among themselves Lot No. 398. When Lee
Bing Hoo and Lee Bun Ting died, Lot No. 398 wastransferred by succession to
their respective wives, Elizabeth Lee (Elizabeth) and Pacita Yu-Lee (Pacita).
In the 1956 case of Dinglasan v. Lee Bun Ting, involving Lot
No. 398,
the Court held that even if the sale of the property was null and void for violating
the constitutional prohibition on the sale of land to an alien, still the doctrine
of in pari delicto barred the sellers from recovering the title to the property. Eleven
years later, in the case of Lee Bun Ting v. Judge Aligaen, the Court ordered the trial
court to dismiss the complaint of the Dinglasans for the recovery of Lot No. 398.
Applying the doctrine of res judicata, the Court held that the case was a
mere relitigation of the same issues previously adjudged with finality in
the Dinglasan case, involving the same parties or their privies and concerning the
same subject matter.
On 7 September 1993, Elizabeth and Pacita (private respondents) filed a
petition for reconstitution of title of Lot No. 398 because the records of the
Register of Deeds, Roxas City were burned during the war. On 3 October 2001, the
Court held that the trial courts order of reconstitution was void for lack of factual
support because it was based merely on the plan and technical description
approved by the Land Registration Authority.
Meanwhile, on 26 January 1995, petitioner Republic of the Philippines
(petitioner), through the Office of the Solicitor General (OSG), filed with the
Regional Trial Court of Roxas City a Complaint for Reversion of Title against
private respondents and the Register of Deeds of RoxasCity, praying that (1) the
sale of Lot No. 398 to Lee Liong be set aside for being null and void abinitio; and
(2) Lot No. 398 be reverted to the public domain for the States disposal in
accordance with law.

In their Answer, private respondents invoked as affirmative defenses: (1)

prescription; (2) private ownership of Lot No. 398; and (3) Lee Liongs being a
buyer in good faith and for value. Furthermore, private respondents claimed that
as Filipino citizens, they are qualified to acquire Lot No. 398 by succession.
The Register of Deeds of Roxas City did not file an answer.
On 7 May 1996, the trial court rendered a decision ordering the reversion of
Lot No. 398 to the State.
On appeal, the Court of Appeals rendered its Decision dated 12 July 2002,
reversing the trial courts decision and declaring private respondents as the
absolute and lawful owners of Lot No. 398. Petitioner moved for reconsideration,
which the Court of Appeals denied in its Resolutiondated 9 May 2003.
Hence, this petition for review.

The Ruling of the Trial Court

The trial court ordered the reversion of Lot No. 398 to the State. The trial
court held that private respondents could not have acquired a valid title over Lot
No. 398 because the sale of the lot to their predecessor-in-interest Lee Liong was
null and void. Being an innocent purchaser in good faith and for value did not cure
Lee Liongs disqualification as an alien who is prohibited from acquiring land
under the Constitution. The trial court further held that prescription cannot be
invoked against the State as regards an action for reversion or reconveyance of
land to the State.

The Ruling of the Court of Appeals

The Court of Appeals agreed with the trial court that the State is not barred
by prescription. However, the Court of Appeals held that the trial court erred in
ordering the reversion of Lot No. 398 to the State. Although the sale of Lot No.
398 to Lee Liong violated the constitutional prohibition on aliens acquiring land,
the Court of Appeals noted that Lot No. 398 had already been acquired by
private respondents through succession. The transfer of Lot No. 398 to private
respondents, who are Filipino citizens qualified to acquire lands, can no longer be
impugned on the basis of the invalidity of the initial transfer. The flaw in the
original transaction is considered cured and the title of the transferee is deemed
valid considering that the objective of the constitutional proscription against alien
ownership of lands, that is to keep our lands in Filipino hands, has been achieved.

The Issue
Petitioner raises the lone issue that:
THE COURT OF APPEALS GRAVELY ERRED WHEN IT REVERSED AND SET
ASIDE THE APPEALED DECISION AND DECLARED PRIVATE RESPONDENTS THE
ABSOLUTE AND LAWFUL OWNERS AND POSSESSORS OF LOT NO. 398 OF
ROXAS CITY CADASTRE CONSIDERING THAT LEE LIONG, WHO IS AN ALIEN,
AND THUS, CONSTITUTIONALLY PROHIBITED TO OWN REAL PROPERTY IN THE
PHILIPPINES, ACQUIRED NO RIGHT OR TITLE OVER SUBJECT LOT WHICH HE
COULD HAVE TRANSMITTED BY SUCCESSION TO PRIVATE RESPONDENTS
PREDECESSORS-IN-INTEREST.

The Ruling of the Court

The petition is without merit.
Petitioner argues that since the sale of Lot No. 398 to Lee Liong was void,
Lot No. 398 never became part of the deceased Lee Liongs estate. Hence, Lot No.
398 could not be transmitted bysuccession to Lee Liongs surviving heirs and
eventually to private respondents.
We do not subscribe to petitioners position.
The circumstances of this
case are similar to the case of De Castro v. Teng Queen Tan, wherein a residential
lot was sold to a Chinese citizen. Upon the death of the alien vendee, his heirs
entered into an extrajudicial settlement of the estate of the deceased and the subject
land was transferred to a son who was a naturalized Filipino. Subsequently, the
vendor of the lot filed a suit for annulment of sale for alleged violation of the
Constitution prohibiting the sale of land to aliens. Independently of the doctrine
of in pari delicto, the Court sustained the sale, holding that while the vendee was
an alien at the time of the sale, the land has since become the property of a
naturalized Filipino citizen who is constitutionally qualified to own land.
Similarly, in this case, upon the death of the original vendee who was a
Chinese citizen, his widow and two sons extrajudicially settled his estate, including
Lot
No.
398.
When
the
two
sons
died,
Lot
No.
398
was transferred by succession to their respective spouses, herein private
respondents who are Filipino citizens.
We now discuss whether reversion proceedings is still viable considering
that Lot No. 398 has already been transfered to Filipino citizens. In the
reconstitution case of Lee v. Republic of the Philippines involving Lot No. 398, this

Court explained that the OSG may initiate an action

for reversion or escheat of
lands which were sold to aliens disqualified from acquiring lands under the
Constitution. However, in the case of Lot No. 398, the fact that it was already
transferred to Filipinos militates against escheat proceedings, thus:
Although ownership of the land cannot revert to the original sellers, because of the
doctrine of pari delicto, the Solicitor General may initiate an action for reversion or escheat
of the land to the State, subject to other defenses, as hereafter set forth.
In this case, subsequent circumstances militate against escheat proceedings
because the land is now in the hands of Filipinos. The original vendee, Lee Liong, has
since died and the land has been inherited by his heirs and subsequently their heirs,
petitioners herein [Elizabeth Lee and Pacita Yu Lee]. Petitioners are Filipino citizens, a
fact the Solicitor General does not dispute.
The constitutional proscription on alien ownership of lands of the public or private
domain was intended to protect lands from falling in the hands of non-Filipinos. In this case,
however, there would be no more public policy violated since the land is in the hands of
Filipinos qualified to acquire and own such land. If land is invalidly transferred to an alien
who subsequently becomes a citizen or transfers it to a citizen, the flaw in the original
transaction is considered cured and the title of the transferee is rendered valid. Thus, the
subsequent transfer of the property to qualified Filipinos may no longer be impugned on the
basis of invalidity of the initial transfer. The objective of the constitutional provision to keep
our lands in Filipino hands has been achieved. (Emphasis supplied)

In this case, the reversion proceedings was initiated only after almost 40
years from the promulgation of the case of Dinglasan v. Lee Bun Ting, where the
Court held that the sale of Lot No. 398 was null and void for violating the
constitutional prohibition on the sale of land to an alien. If petitioner had
commenced reversion proceedings when Lot No. 398 was still in the hands of the
original vendee who was an alien disqualified to hold title thereto, then reversion
of the land to the State would undoubtedly be allowed. However, this is not the
case here. When petitioner instituted the action for reversion of title in 1995, Lot
No. 398 had already been transferred by succession to private respondents who are
Filipino citizens.
Since Lot No. 398 has already been transferred to Filipino citizens, the flaw
in the original transaction is considered cured. As held in Chavez v. Public Estates
Authority:
Thus, the Court has ruled consistently that where a Filipino citizen sells land to an
alien who later sells the land to a Filipino, the invalidity of the first transfer is corrected by
the subsequent sale to a citizen. Similarly, where the alien who buys the land subsequently

acquires Philippine citizenship, the sale was validated since the purpose of the constitutional
ban to limit land ownership to Filipinos has been achieved. In short, the law disregards the
constitutional disqualification of the buyer to hold land if the land is subsequently
transferred to a qualified party, or the buyer himself becomes a qualified
party. (Emphasis supplied)

Clearly, since Lot No. 398 has already been transferred to private
respondents who are Filipino citizens, the prior invalid sale to Lee Liong can no
longer be assailed. Hence, reversion proceedings will no longer prosper since the
land is now in the hands of Filipino citizens.
WHEREFORE, we DENY the petition. We AFFIRM the Decision dated
12 July 2002 and the Resolution dated 9 May 2003 of the Court of Appeals in
CA-G.R. CV No. 53890.
SO ORDERED.
[G.R. NO. 117246. August 21, 1995]
BENIGNO MANUEL, LIBERATO MANUEL, LORENZO MANUEL, PLACIDA
MANUEL, MADRONA MANUEL, ESPERANZA MANUEL, AGAPITA MANUEL,
BASILISA
MANUEL,
EMILIA
MANUEL
and
NUMERIANA
MANUEL,petitioners, vs. HON. NICODEMO T. FERRER, Presiding Judge, Regional Trial
Court, Branch 37, Lingayen, Pangasinan, MODESTA BALTAZAR and ESTANISLAOA
MANUEL, respondents.
DECISION
VITUG, J.:
The property involved in this petition for review on certiorari is the inheritance left by an
illegitimate child who died intestate without any surviving descendant or ascendant.
Petitioners, the legitimate children of spouses Antonio Manuel and Beatriz Guiling, initiated
this suit. During his marriage with Beatriz, Antonio had an extra-marital affair with one
Ursula Bautista. From this relationship, Juan Manuel was born. Several years passed before
Antonio Manuel, his wife Beatriz, and his mistress Ursula finally crossed the bar on,
respectively, 06 August 1960, 05 February 1981, and 04 November 1976.
Juan Manuel, the illegitimate son of Antonio, married Esperanza Gamba. In consideration of
the marriage, a donation propter nuptias over a parcel of land, with an area of 2,700 square
meters, covered by Original Certificate of Title ("OCT") No. P-20594 was executed in favor
of Juan Manuel by Laurenciana Manuel. Two other parcels of land, covered by OCT P19902 and Transfer Certificate of Title ("TCT") No. 41134, were later bought by Juan and
registered in his name. The couple were not blessed with a child of their own. Their desire
to have one impelled the spouses to take private respondent Modesta Manuel-Baltazar into
their fold and so raised her as their own "daughter."
On 03 June 1980, Juan Manuel executed in favor of Estanislaoa Manuel a Deed of Sale Con
Pacto de Retro (with a 10-year period of redemption) over a one-half (1/2) portion of his

land covered by TCT No. 41134. Juan Manuel died intestate on 21 February 1990. Two
years later, or on 04 February 1992, Esperanza Gamba also passed away.
On 05 March 1992, a month after the death of Esperanza, Modesta executed an Affidavit of
Self-Adjudication claiming for herself the three parcels of land covered by OCT P-20594,
OCT P-19902 and TCT No. 41134 (all still in the name of Juan Manuel). Following the
registration of the document of adjudication with the Office of the Register of Deeds, the
three titles (OCT P-20594, OCT P-19902 and TCT No. 41134) in the name of Juan Manuel
were canceled and new titles, TCT No. 184223, TCT No. 184224 and TCT No. 184225, were
issued in the name of Modesta Manuel-Baltazar. On 19 October 1992, Modesta executed in
favor of her co-respondent Estanislaoa Manuel a Deed of Renunciation and Quitclaim over
the unredeemed one-half (1/2) portion of the land (now covered by TCT No. 184225) that
was sold to the latter by Juan Manuel under the 1980 Deed of Sale Con Pacto de Retro.
These acts of Modesta apparently did not sit well with petitioners. In a complaint filed
before the Regional Trial Court of Lingayen, Pangasinan, the petitioners sought the
declaration of nullity of the aforesaid instruments.
The case, there being no material dispute on the facts, was submitted to the court a quo for
summary judgment.
The trial court, in its now assailed 15th August 1994 decision, dismissed the complaint
holding that petitioners, not being heirs abintestato of their illegitimate brother Juan Manuel,
were not the real parties-in-interest to institute the suit. Petitioners were also ordered to
jointly and severally (solidarily) pay (a) respondent Modesta Manuel-Baltazar the sum of
P5,000.00 for moral damages, P5,000.00 for exemplary damages, P5,000.00 for attorney's
fees and P500.00 for litigation expenses and (b) Estanislaoa Manuel the sum of P5,000.00 for
moral damages, P5,000.00 for exemplary damages and P500.00 for attorney's fees.
Petitioners' motion for reconsideration was denied by the trial court.
The petition before us raises the following contentions: That "1. THE LOWER COURT (HAS) FAILED TO CONSIDER THE LAST PARAGRAPH OF
ARTICLE 994 OF THE NEW CIVIL CODE, AS THE CONTROLLING LAW
APPLICABLE BY VIRTUE OF THE ADMITTED FACTS, AND NOT ARTICLE 992 OF
THE SAME CODE.
2 THE LOWER COURT, IN NOT ANNULLING ALL THE ACTS OF, AND VOIDING ALL
DOCUMENTS EXECUTED BY, RESPONDENT MODESTA BALTAZAR, WHO
ARROGATED UNTO HERSELF THE RIGHTS OF AN HEIR TO THE ESTATE OF
DECEDENT JUAN MANUEL, (HAS) VIRTUALLY GRANTED SAID RESPONDENT
THE STATUS OF AN HEIR MANIFESTLY CONTRARY TO LAW, MORALS AND
PUBLIC POLICY.
3. TO ENFORCE ONE'S RIGHT WHEN THEY ARE VIOLATED IS NEVER A LEGAL
WRONG."
Petitioners argue that they are the legal heirs over one-half of Juan's intestate estate (while
the other half would pertain to Juan's surviving spouse) under the provision of the last
paragraph of Article 994 of the Civil Code, providing thusly:
"Art. 994. In default of the father or mother, an illegitimate child shall be succeeded by his
or her surviving spouse, who shall be entitled to the entire estate.

"If the widow or widower should survive with brothers and sisters, nephews and nieces, she
or he shall inherit one-half of the estate, and the latter the other half." (Underscoring
supplied.)
Respondents, in turn, submit that Article 994 should be read in conjunction with Article 992
of the Civil Code, which reads:
"Art. 992. An illegitimate child has no right to inherit ab intestato from the legitimate
children and relatives of his father or mother; nor shall such children or relative inherit in the
same manner from the illegitimate child." (Underscoring supplied.)
Article 992, a basic postulate, enunciates what is so commonly referred to in
the rules on succession as the "principle of absolute separation between the legitimate family
and the illegitimate family." The doctrine rejects succession ab intestato in the collateral
line between legitimate relatives, on the one hand, and illegitimate relatives, on other hand,
although it does not totally disavowsuch succession in the direct line. Since the rule is
predicated on the presumed will of the decedent, it has no application, however, on
testamentary dispositions.
This "barrier" between the members of the legitimate and illegitimate family in intestacy is
explained by a noted civilist. His thesis:
"What is meant by the law when it speaks of brothers and sisters, nephews and nieces, as
legal or intestate heirs of an illegitimate child? It must be noted that under Art. 992 of the
Code, there is a barrier dividing members of the illegitimate family from members of the
legitimate family. It is clear that by virtue of this barrier, the legitimate brothers and sisters
as well as the children, whether legitimate or illegitimate, of such brothers and sisters, cannot
inherit from the illegitimate child. Consequently, when the law speaks of 'brothers and
sisters, nephews and nieces' as legal heirs of an illegitimate child, it refers to illegitimate
brothers and sisters as well as to the children, whether legitimate or illegitimate, of such
brothers and sisters." (Emphasis supplied)
The Court, too, has had occasions to explain this "iron curtain," firstly, in the early case of
Grey v. Fabie and, then, in the relatively recent cases of Diaz v. Intermediate Appellate Court
and De la Puerta v. Court of Appeals. In Diaz, we have said:
"Article 992 of the New Civil Code x x x prohibits absolutely a succession ab
intestato between the illegitimate child and the legitimate children and relatives of the father
or mother of said legitimate child. They may have a natural tie of blood, but this is not
recognized by law for the purposes of Article 992. Between the legitimate family and the
illegitimate family there is presumed to be an intervening antagonism and incompatibility.
The illegitimate child is disgracefully looked down upon by the legitimate family; the
legitimate family is, in turn, hated by the illegitimate child; the latter considers the privileged
condition of the former, and the resources of which it is thereby deprived; the former, in turn,
sees in the illegitimate child nothing but the product of sin, palpable evidence of a blemish
broken in life; the law does no more than recognize this truth, by avoiding further grounds of
resentment."
The rule in Article 992 has consistently been applied by the Court in several other cases.
Thus, it has ruled that where the illegitimate child had half-brothers who were legitimate, the
latter had no right to the former's inheritance; that the legitimate collateral relatives of the
mother cannot succeed from her illegitimate child; that a natural child cannot represent his

natural fatherin the succession to the estate of the legitimate grandparent; that the natural
daughter cannot succeed to the estate of her deceased uncle who is a legitimate brother of her
natural father; and that an illegitimate child has no right to inherit ab intestato from the
legitimate children and relatives of his father. Indeed, the law on succession is animated by a
uniform general intent, and thus no part should be rendered inoperative by, but must always
be construed in relation to, any other part as to produce a harmonious whole.
In passing, we might, in easy graphic presentation, collate the order of preference and
concurrence in intestacy expressed in Article 978 through Article 1014, inclusive, of the Civil
Code; viz:
Order of Preference

Order of Concurrence

(a) Legitimate Children and Descendants

(a)

Legitimate Children and Descendants, Illegitimate Children

and Descendants, and Surviving Spouse

(b) Legitimate Parents and Ascendants

(b)

Legitimate Parents and Ascendants, Illegitimate Children

and Descendants, and Surviving Spouse

(c) Illegitimate Children and Descendants (in the absence of ICDs (c)
and LPAs, the Illegitimate Parents)
(d) Surviving Spouse
(d)

Illegitimate Children and Descendants and Surviving

Spouse
Surviving Spouse and Illegitimate Parents

(e) Brothers and Sisters/Nephews and Nieces

(e)

Brothers and Sisters/Nephews and Nieces and Surviving

Spouse

(f) Other Collateral Relatives (within the fifth civil degree)

(g) State

(f)
(g)

Alone
Alone

In her answer to the complaint, Modesta candidly admitted that she herself is not an intestate
heir of Juan Manuel. She is right. A ward (ampon), without the benefit of formal (judicial)
adoption, is neither a compulsory nor a legal heir.
We must hold, nevertheless, that the complaint of petitioners seeking the nullity of the
Affidavit of Self-Adjudication executed by Modesta, the three (3) TCT's issued to her favor,
as well as the Deed of Renunciation and Quitclaim in favor of Estanislaoa Manuel, was
properly dismissed by the trial court. Petitioners, not being the real "parties-in-interest in
the case, had neither the standing nor the cause of action to initiate the complaint.
The Court, however, sees no sufficient reason to sustain the award of amounts for moral and
exemplary damages, attorney's fees and litigation expenses. An adverse result of a suit in
law does not mean that its advocacy is necessarily so wrongful as to justify an assessment of
damages against the actor.
WHEREFORE, the appealed decision of the Regional Trial Court of Pangasinan (Branch
37) is AFFIRMED, except insofar as it has awarded moral and exemplary damages, as well
as attorney's fees and litigation expenses, in favor of private respondents, which portion is
hereby DELETED. No special pronouncement on costs.
SO ORDERED.
[G.R. No. 66574. June 17, 1987]
ANSELMA DIAZ, guardian of VICTOR, RODRIGO, ANSELMINA and MIGUEL, all
surnamed SANTERO, petitioners, and FELIXBERTA PACURSA, guardian of FEDERICO
SANTERO, et al., vs. INTERMEDIATE APPELLATE COURT and FELISA PAMUTI
JARDIN, respondents.

"a)
"b)
"c)
"e)

DECISION
PARAS, J.:
Private respondent filed a Petition dated January 23, 1976 with the Court of First Instance of
Cavite in Sp. Proc. Case No. B-21, "In The Matter of the Intestate Estate of the late Simona
Pamuti Vda. de Santero", praying among other things, that the corresponding letters of
Administration be issued in her favor and that she be appointed as special administratrix of
the properties of the deceased Simona Pamuti Vda. de Santero.
It is undisputed: 1) that Felisa Pamuti Jardin is a niece of Simona Pamuti Vda. de Santero
who together with Felisa's mother Juliana were the only legitimate children of the spouses
Felipe Pamuti and Petronila Asuncion; 2) that Juliana married Simon Jardin and out of their
union were born Felisa Pamuti and another child who died during infancy; 3) that Simona
Pamuti Vda. de Santero is the widow of Pascual Santero and the mother of Pablo Santero; 4)
that Pablo Santero was the only legitimate son of his parents Pascual Santero and Simona
Pamuti Vda. de Santero; 5) that Pascual Santero died in 1970; Pablo Santero in 1973 and Si mona Santero in 1976' 6) that Pablo Santero, at the time of his death was survived by his
mother Simona Santero and his six minor natural children to wit: four minor children with
Anselma Diaz and two minor children with Felixberta Pacursa.
Judge Jose Raval in his Orders dated December 1, 1976 and December 9, 1976 declared
Felisa Pamuti Jardin as the sole legitimate heir of Simona Pamuti Vda. de Santero.
Before the trial court, there were 4 interrelated cases filed to wit:
Sp. Proc. No. B-4 - is the Petition for for the Letters of Administration of the Intestate Estate
of Pablo Santero;
Sp. Proc. No. B-5 - is the Petition for the Letters of Administration of the Intestate Estate of
Pascual Santero;
Sp. Proc. No. B-7 - is the Petition for Guardianship over the properties of an Incompetent
Person, Simona Pamuti Vda. de Santero;
Sp. Proc. No. B-21 - is the Petition for Settlement of the Intestate Estate of Simona Pamuti
Vda. de Santero."
Felisa Jardin upon her Motion to Intervene in Sp. Proceedings Nos. B-4 and B-5, was
allowed to intervene in the intestate estates of Pablo Santero and Pascual Santero by Order of
the Court dated August 24, 1977.
Petitioner Anselma Diaz, as guardian of her minor children, filed her "Opposition and
Motion to Exclude Felisa Pamuti-Jardin dated March 13, 1980, from further taking part or
intervening in the settlement of the intestate estate of Simona Pamuti Vda. de Santero, as
well as in the intestate estates of Pascual Santero and Pablo Santero.
Felixberta Pacursa guardian for her minor children, filed thru counsel, her Manifestation of
March 14, 1980 adopting the Opposition and Motion to Exclude Felisa Pamuti, filed by
Anselma Diaz.
On May 20, 1980, Judge Ildefonso M. Bleza issued an order excluding Felisa Jardin "from
further taking part or intervening in the settlement of the intestate estate of Simona Pamuti
Vda. de Santero, as well as in the intestate estates of Pascual Santero and Pablo Santero and
declared her to be, not an heir of the deceased Simona Pamuti Vda. de Santero."
After her Motion for Reconsideration was denied by the trial court in its order dated
November 1, 1980, Felisa P. Jardin filed her appeal to the Intermediate Appellate Court in

CA-G.R. No. 69814-R. A decision was rendered by the Intermediate Appellate Court on
December 14, 1983 (reversing the decision of the trial court) the dispositive portion of which
reads "WHEREFORE, finding the Order appealed from not consistent with the facts and law
applicable, the same is hereby set aside and another one entered sustaining the Orders of
December 1 and 9, 1976 declaring the petitioner as the sole heir of Simona Pamuti Vda. de
Santero and ordering oppositors-appellees not to interfere in the proceeding for the
declaration of heirship in the estate of Simona Pamuti Vda. de Santero."
"Costs against the oppositors-appellees."
The Motion for Reconsideration filed by oppositors-appellees (petitioners herein) was denied
by the same respondent court in its order dated February 17, 1984 hence, the present petition
for Review with the following:
ASSIGNMENT OF ERRORS
I.
The Decision erred in ignoring the right to intestate succession of
petitioners grandchildren Santero as direct descending line (Art. 978) and/or
natural/"illegitimate children" (Art. 988) and prefering a niece, who is a collateral relative
(Art. 1003);
II.
The Decision erred in denying the right of representation of the natural
grandchildren Santero to represent their father Pablo Santero in the succession to the intestate
estate of their grandmother Simona Pamuti Vda. de Santero (Art. 982);
III.
The Decision erred in mistaking the intestate estate of the
grandmother Simona Pamuti Vda. de Santero as the estate of "legitimate child or relative" of
Pablo Santero, her son and father of the petitioners grandchildren Santero;
IV.
The Decision erred in ruling that petitioner-appellant Felisa P. Jardin who is
a niece and therefore a collateral relative of Simona Pamuti Vda. de Santero excludes the
natural children of
her
son
Pablo
Santero,
who
are
her
direct descendants and/orgrand children;
V.
The Decision erred in applying Art. 992, when Arts. 988, 989 and 990 are the
applicable provisions of law onintestate succession; and
VI.
The Decision erred in considering the orders of December 1 and December 9,
1976 which are provisional and interlocutory as final and executory.
The real issue in this case may be briefly stated as follows- who are the legal heirs of Simona
Pamuti Vda. de Santero- her niece Felisa Pamuti Jardin or her grandchildren (the natural
children of Pablo Santero)?
The dispute at bar refers only to the intestate estate of Simona Pamuti Vda. de Santero and
the issue here is whether oppositors-appellees (petitioners herein) as illegitimate children of
Pablo Santero could inherit from Simona Pamuti Vda. de Santero, by right of representation
of their father Pablo Santero who is a legitimate child of Simona Pamuti Vda. de Santero.
Now then what is the appropriate law on the matter? Petitioners contend in their pleadings
that Art. 990 of the New Civil Code is the applicable law on the case. They contend that said
provision of the New Civil Code modifies the rule in Article 941 (Old Civil Code) and
recognizes the right of representation (Art. 970) to descendants, whether legitimate or
illegitimate and that Art. 941, Spanish Civil Code denied illegitimate children the right to
represent their deceased parents and inherit from their deceased grandparents, but that Rule

was expressly changed and/or amended by Art. 990 New Civil Code which expressly grants
the illegitimate children the right to represent their deceased father (Pablo Santero) in the
estate of their grandmother, (Simona Pamuti)"
Petitioners' contention holds no water. Since the hereditary conflict refers solely to the
intestate estate of Simona Pamuti Vda. de Santero, who is the legitimate mother of Pablo
Santero, the applicable law is the provision of Art. 992 of the Civil Code which reads as
follows:
ART. 992. An illegitimate child has no right to inherit ab intestato from the legitimate
children and relatives of his father or mother; nor shall such children or relatives inherit in
the same manner from the illegitimate child. (943a)
Pablo Santero is a legitimate child, he is not an illegitimate child. On the other hand, the
oppositors (petitioners herein) are the illegitimate children of Pablo Santero.
Article 992 of the New Civil Code provides a barrier or iron curtain in that it
prohibits absolutely a succession ab intestato between the illegitimate child and the
legitimate children and relatives of the father or mother of said legitimate child. They may
have a natural tie of blood, but this is not recognized by law for the purposes of Art. 992.
Between the legitimate family and the illegitimate family there is presumed to be an
intervening antagonism and incompatibility. The illegitimate child is disgracefully looked
down upon by the legitimate family; the family is in turn, hated by the illegitimate child; the
latter considers the privileged condition of the former, and the resources of which it is
thereby deprived; the former, in turn, sees in the illegitimate child nothing but the product of
sin, palpable evidence of a blemish broken in life; the law does no more than recognize this
truth, by avoiding further grounds of resentment.
Thus, petitioners herein cannot represent their father Pablo Santero in the succession of the
latter to the intestate estate of his legitimate mother Simona Pamuti Vda. de Santero, because
of the barrier provided for under Art. 992 of the New Civil Code.
In answer to the erroneous contention of petitioners that Article 941 of the Spanish Civil
Code is changed by Article 990 of the New Civil Code, We are reproducing herewith the
Reflections of the illustrious Hon. Justice Jose B.L. Reyes which also finds full support from
other civilists, to wit:
"In the Spanish Civil Code of 1889 the right of representation was admitted only within the
legitimate family; so much so that Article 943 of that Code prescribed that an illegitimate
child can not inherit ab intestato from the legitimate children and relatives of his father and
mother. The Civil Code of the Philippines apparently adhered to this principle since it
reproduced Article 943 of the Spanish Code in its own Art. 992, but with fine inconsistency,
in subsequent articles (990, 995 and 998) our Code allows the hereditary portion of the
illegitimate child to pass to his own descendants, whether legitimate or illegitimate. So that
while Art. 992 prevents the illegitimate issue of a legitimate child from representing him
in the intestate succession of the grandparent, the illegitimates of an illegitimate child can
now do so. This difference being indefensible and unwarranted, in the future revision of the
Civil Code we shall have to make a choice and decide either that the illegitimate issue enjoys
in all cases the right of representation, in which case Art. 992 must be suppressed; or
contrariwise maintain said article and modify Articles 995 and 998. The first solution would
be more in accord with an enlightened attitude vis-a-vis illegitimate children. (Reflections

on the Reformof Hereditary succession, JOURNAL of the Integrated Bar of the Philippines,
First Quater, 1976, Volume 4, Number 1, pp. 40-41).
It is therefore clear from Article 992 of the New Civil Code that the phrase "legitimate
children and relatives of his father or mother" includes Simona Pamuti Vda. de Santero as
the word "relative" includes all the kindred of the person spoken of. The record shows that
from the commencement of this case the only parties who claimed to be the legitimate heirs
of the late Simona Pamuti Vda. de Santero are Felisa Pamuti Jardin and the six minor natural
or illegitimate children of Pablo Santero. Since petitioners herein are barred by the
provisions of Article 992, the respondent Intermediate Appellate Court did not commit any
error in holding Felisa Pamuti-Jardin to be the sole legitimate heir to the intestate estate of
the late Simona Pamuti Vda. de Santero.
Lastly, petitioners claim that the respondent Intermediate Appellate Court erred in ruling that
the Orders of the Court a quo dated December 1, 1976 and December 9, 1976 are final and
executory. Such contention is without merit. The Hon. Judge Jose Raval in his order dated
December 1, 1976 held that the oppositors (petitioners herein) are not entitled to intervene
and hence not allowed to intervene in the proceedings for the declaration of the heirship in
the intestate estate of Simona Pamuti Vda. de Santero. Subsequently, Judge Jose Raval
issued an Order, dated December 9, 1976, which declared Felisa Pamuti-Jardin to be the sole
legitimate heir of Simona Pamuti. The said Orders were never made the subjects of either a
motion for reconsideration or a perfected appeal. Hence, said orders which long became
final and executory are already removed from the power of jurisdiction of the lower court to
decide anew. The only power retained by the lower court, after a judgment has become final
and executory is to order its execution. The respondent Court did not err therefore in ruling
that the Order of the Court a quo dated May 30, 1980 excluding Felisa Pamuti-Jardin as
intestate heir of the deceased Simona Pamuti Vda. de Santero "is clearly a total reversal of an
Order which has become final and executory, hence null and void."
WHEREFORE, this petition is hereby DISMISSED, and the assailed decision is hereby
AFFIRMED.
SO ORDERED.

ALONZO Q. ANCHETA,
Petitioner,

G.R. No. 139868

Present:

- versus -

PANGANIBAN, C.J. (Chairperson)

YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.

CANDELARIA GUERSEYDALAYGON,
Promulgated:
Respondent.
June 8, 2006
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION
AUSTRIA-MARTINEZ, J.:

Spouses Audrey ONeill (Audrey) and W. Richard Guersey (Richard) were

American citizens who have resided in the Philippines for 30 years. They have an
adopted daughter, Kyle Guersey Hill (Kyle). On July 29, 1979, Audrey died, leaving
a will. In it, she bequeathed her entire estate to Richard, who was also designated
as executor. The will was admitted to probate before the Orphans Court of
Baltimore, Maryland, U.S.A, which named James N. Phillips as executor due to
Richards renunciation of his appointment. The court also named Atty. Alonzo
Q. Ancheta (petitioner) of the Quasha Asperilla Ancheta Pena & Nolasco Law
Offices as ancillary administrator.
In 1981, Richard married Candelaria Guersey-Dalaygon (respondent) with
whom he has two children, namely, Kimberly and Kevin.
On October 12, 1982, Audreys will was also admitted to probate by the then
Court of First Instance of Rizal, Branch 25, Seventh Judicial District, Pasig, in
Special Proceeding No. 9625. As administrator of Audreys estate in the Philippines,
petitioner filed an inventory and appraisal of the following properties: (1) Audreys
conjugal share in real estate with improvements located at 28 Pili Avenue, Forbes
Park, Makati, Metro Manila, valued at P764,865.00 (Makati property); (2) a current
account in Audreys name with a cash balance of P12,417.97; and (3) 64,444 shares
of stock in A/G Interiors, Inc. worth P64,444.00.
On July 20, 1984, Richard died, leaving a will, wherein he bequeathed his entire
estate to respondent, save for his rights and interests over the A/G Interiors, Inc.
shares, which he left to Kyle. The will was also admitted to probate by the Orphans
Court of Ann Arundel, Maryland, U.S.A, and James N. Phillips was likewise
appointed as executor, who in turn, designated Atty. William Quasha or any member
of the Quasha Asperilla Ancheta Pena & Nolasco Law Offices, as ancillary
administrator.
Richards will was then submitted for probate before the Regional Trial Court of
Makati, Branch 138, docketed as Special Proceeding No. M-888. Atty. Quasha was
appointed as ancillary administrator on July 24, 1986.

On October 19, 1987, petitioner filed in Special Proceeding No. 9625, a

motion to declare Richard and Kyle as heirs of Audrey. Petitioner also filed on
October 23, 1987, a project of partition of Audreys estate, with Richard being
apportioned the undivided interest in the Makati property, 48.333 shares in A/G
Interiors, Inc., and P9,313.48 from the Citibank current account; and Kyle, the
undivided interest in the Makati property, 16,111 shares in A/G Interiors, Inc.,
and P3,104.49 in cash.
The motion and project of partition was granted and approved by the trial court
in its Order dated February 12, 1988. The trial court also issued an Order on April 7,
1988, directing the Register of Deeds of Makati to cancel TCT No. 69792 in the
name of Richard and to issue a new title in the joint names of the Estate of W.
Richard Guersey ( undivided interest) and Kyle ( undivided interest); directing the
Secretary of A/G Interiors, Inc. to transfer 48.333 shares to the Estate of W.
Richard Guersey and 16.111 shares to Kyle; and directing the Citibank to release the
amount of P12,417.97 to the ancillary administrator for distribution to the heirs.
Consequently, the Register of Deeds of Makati issued on June 23, 1988, TCT
No. 155823 in the names of the Estate of W. Richard Guersey and Kyle.
Meanwhile, the ancillary administrator in Special Proceeding No. M-888 also
filed a project of partition wherein 2/5 of Richards undivided interest in the Makati
property was allocated to respondent, while 3/5 thereof were allocated to Richards
three children. This was opposed by respondent on the ground that under the law of
the State of Maryland, a legacy passes to the legatee the entire interest of the
testator in the property subject of the legacy. Since Richard left his entire estate
to respondent, except for his rights and interests over the A/G Interiors, Inc, shares,
then his entire undivided interest in the Makati property should be given to
respondent.
The trial court found merit in respondents opposition, and in its Order dated
December 6, 1991, disapproved the project of partition insofar as it affects the
Makati property. The trial court also adjudicated Richards entire undivided
interest in the Makati property to respondent.
On October 20, 1993, respondent filed with the Court of Appeals (CA) an
amended complaint for the annulment of the trial courts Orders dated February 12,
1988 and April 7, 1988, issued in Special Proceeding No. 9625. Respondent
contended that petitioner willfully breached his fiduciary duty when he disregarded
the laws of the State of Maryland on the distribution of Audreys estate in accordance
with her will. Respondent argued that since Audrey devised her entire estate to
Richard, then the Makati property should be wholly adjudicated to him, and not
merely thereof, and since Richard left his entire estate, except for his rights and

interests over the A/G Interiors, Inc., to respondent, then the entire Makati property
should now pertain to respondent.
Petitioner filed his Answer denying respondents allegations. Petitioner
contended that he acted in good faith in submitting the project of partition before the
trial court in Special Proceeding No. 9625, as he had no knowledge of the State of
Marylands laws on testate and intestate succession. Petitioner alleged that he
believed that it is to the best interests of the surviving children that Philippine law be
applied as they would receive their just shares. Petitioner also alleged that the
orders sought to be annulled are already final and executory, and cannot be set
aside.
On March 18, 1999, the CA rendered the assailed Decision annulling the trial
courts Orders dated February 12, 1988 and April 7, 1988, in Special Proceeding No.
9625. The dispositive portion of the assailed Decision provides:
WHEREFORE, the assailed Orders of February 12, 1998 and April 7, 1988
are hereby ANNULLED and, in lieu thereof, a new one is entered ordering:
(a) The adjudication of the entire estate of Audrey ONeill Guersey in favor of
the estate of W. Richard Guersey; and
(b) The cancellation of Transfer Certificate of Title No. 15583 of the Makati
City Registry and the issuance of a new title in the name of the estate of W. Richard
Guersey.
SO ORDERED.
Petitioner filed a motion for reconsideration, but this was denied by the CA per
Resolution dated August 27, 1999.
Hence, the herein petition for review on certiorari under Rule 45 of the Rules
of Court alleging that the CA gravely erred in not holding that:
A) THE ORDERS OF 12 FEBRUARY 1988 AND 07 APRIL 1988 IN SPECIAL
PROCEEDINGS NO. 9625 IN THE MATTER OF THE PETITION FOR PROBATE
OF THE WILL OF THE DECEASED AUDREY GUERSEY, ALONZO Q. ANCHETA,
ANCILLARY ADMINISTRATOR, ARE VALID AND BINDING AND HAVE LONG
BECOME FINAL AND HAVE BEEN FULLY IMPLEMENTED AND EXECUTED AND
CAN NO LONGER BE ANNULLED.
B) THE ANCILLARY ADMINISTRATOR HAVING ACTED IN GOOD FAITH, DID
NOT COMMIT FRAUD, EITHER EXTRINSIC OR INTRINSIC, IN THE
PERFORMANCE OF HIS DUTIES AS ANCILLARY ADMINISTRATOR OF AUDREY

ONEIL GUERSEYS ESTATE IN THE PHILIPPINES, AND THAT NO FRAUD,

EITHER EXTRINSIC OR INTRINSIC, WAS EMPLOYED BY [HIM] IN PROCURING
SAID ORDERS.

Petitioner reiterates his arguments before the CA that the Orders

dated February 12, 1988 and April 7, 1988 can no longer be annulled
because it is a final judgment, which is conclusive upon the administration
as to all matters involved in such judgment or order, and will determine for
all time and in all courts, as far as the parties to the proceedings are
concerned, all matters therein determined, and the same has already been
executed.
Petitioner also contends that that he acted in good faith in performing
his duties as an ancillary administrator. He maintains that at the time of the
filing of the project of partition, he was not aware of the relevant laws of the
State of Maryland, such that the partition was made in accordance with
Philippine laws. Petitioner also imputes knowledge on the part of
respondent with regard to the terms of Aubreys will, stating that as early as
1984, he already apprised respondent of the contents of the will and how
the estate will be divided.
Respondent argues that petitioners breach of his fiduciary duty as
ancillary administrator of Aubreys estate amounted to extrinsic fraud.
According to respondent, petitioner was duty-bound to follow the express
terms of Aubreys will, and his denial of knowledge of the laws of Maryland
cannot stand because petitioner is a senior partner in a prestigious law firm
and it was his duty to know the relevant laws.
Respondent also states that she was not able to file any opposition to the
project of partition because she was not a party thereto and she learned of the
provision of Aubreys will bequeathing entirely her estate to Richard only after Atty.
Ancheta filed a project of partition in Special Proceeding No. M-888 for the
settlement of Richards estate.
A decree of distribution of the estate of a deceased person vests the title to
the land of the estate in the distributees, which, if erroneous may be corrected by a
timely appeal. Once it becomes final, its binding effect is like any other judgment in
rem. However, in exceptional cases, a final decree of distribution of the estate may
be set aside for lack of jurisdiction or fraud. Further, in Ramon v. Ortuzar, the Court
ruled that a party interested in a probate proceeding may have a final liquidation set

aside when he is left out by reason of circumstances beyond his control or through
mistake or inadvertence not imputable to negligence.
The petition for annulment was filed before the CA on October 20, 1993,
before the issuance of the 1997 Rules of Civil Procedure; hence, the applicable law
is Batas Pambansa Blg. 129 (B.P. 129) or the Judiciary Reorganization Act of 1980.
An annulment of judgment filed under B.P. 129 may be based on the ground that a
judgment is void for want of jurisdiction or that the judgment was obtained by
extrinsic fraud. For fraud to become a basis for annulment of judgment, it has to be
extrinsic or actual, and must be brought within four years from the discovery of the
fraud.
In the present case, respondent alleged extrinsic fraud as basis for the
annulment of the RTC Orders dated February 12, 1988 and April 7, 1988. The CA
found merit in respondents cause and found that petitioners failure to follow the
terms of Audreys will, despite the latters declaration of good faith, amounted to
extrinsic fraud. The CA ruled that under Article 16 of the Civil Code, it is the national
law of the decedent that is applicable, hence, petitioner should have distributed
Aubreys estate in accordance with the terms of her will. The CA also found that
petitioner was prompted to distribute Audreys estate in accordance with Philippine
laws in order to equally benefit Audrey and Richard Guerseys adopted daughter,
Kyle Guersey Hill.
Petitioner contends that respondents cause of action had already prescribed
because as early as 1984, respondent was already well aware of the terms of
Audreys will, and the complaint was filed only in 1993. Respondent, on the other
hand, justified her lack of immediate action by saying that she had no opportunity to
question petitioners acts since she was not a party to Special Proceeding No. 9625,
and it was only after Atty. Anchetafiled the project of partition in Special Proceeding
No. M-888, reducing her inheritance in the estate of Richard that she was prompted
to seek another counsel to protect her interest.
It should be pointed out that the prescriptive period for annulment of judgment
based on extrinsic fraud commences to run from the discovery of the fraud or
fraudulent act/s. Respondents knowledge of the terms of Audreys will is
immaterial in this case since it is not the fraud complained of. Rather, it is petitioners
failure to introduce in evidence the pertinent law of the State of Maryland that is the
fraudulent act, or in this case, omission, alleged to have been committed against
respondent, and therefore, the four-year period should be counted from the time of
respondents discovery thereof.
Records bear the fact that the filing of the project of partition of Richards
estate, the opposition thereto, and the order of the trial court disallowing the project
of partition in Special Proceeding No. M-888 were all done in 1991. Respondent

cannot be faulted for letting the assailed orders to lapse into finality since it was only
through Special Proceeding No. M-888 that she came to comprehend the
ramifications of petitioners acts. Obviously, respondent had no other recourse
under the circumstances but to file the annulment case. Since the action for
annulment was filed in 1993, clearly, the same has not yet prescribed.
Fraud takes on different shapes and faces. In Cosmic Lumber Corporation v.
Court of Appeals, the Court stated that man in his ingenuity and fertile imagination
will always contrive new schemes to fool the unwary.
There is extrinsic fraud within the meaning of Sec. 9 par. (2), of B.P. Blg. 129,
where it is one the effect of which prevents a party from hearing a trial, or real
contest, or from presenting all of his case to the court, or where it operates upon
matters, not pertaining to the judgment itself, but to the manner in which it was
procured so that there is not a fair submission of the controversy. In other words,
extrinsic fraud refers to any fraudulent act of the prevailing party in the litigation
which is committed outside of the trial of the case, whereby the defeated party has
been prevented from exhibiting fully his side of the case by fraud or deception
practiced on him by his opponent. Fraud is extrinsic where the unsuccessful party
has been prevented from exhibiting fully his case, by fraud or deception practiced on
him by his opponent, as by keeping him away from court, a false promise of a
compromise; or where the defendant never had any knowledge of the suit, being
kept in ignorance by the acts of the plaintiff; or where an attorney fraudulently or
without authority connives at his defeat; these and similar cases which show that
there has never been a real contest in the trial or hearing of the case are reasons for
which a new suit may be sustained to set aside and annul the former judgment and
open the case for a new and fair hearing.
The overriding consideration when extrinsic fraud is alleged is that the
fraudulent scheme of the prevailing litigant prevented a party from having his day in
court.
Petitioner is the ancillary administrator of Audreys estate. As such, he
occupies a position of the highest trust and confidence, and he is required to
exercise reasonable diligence and act in entire good faith in the performance of that
trust. Although he is not a guarantor or insurer of the safety of the estate nor is he
expected to be infallible, yet the same degree of prudence, care and judgment which
a person of a fair average capacity and ability exercises in similar transactions of his
own, serves as the standard by which his conduct is to be judged.
Petitioners failure to proficiently manage the distribution of Audreys estate
according to the terms of her will and as dictated by the applicable law amounted to
extrinsic fraud. Hence the CA Decision annulling the RTC Orders dated February
12, 1988 and April 7, 1988, must be upheld.

It is undisputed that Audrey Guersey was an American citizen domiciled in

Maryland, U.S.A. During the reprobate of her will in Special Proceeding No. 9625, it
was shown, among others, that at the time of Audreys death, she was residing in the
Philippines but is domiciled in Maryland, U.S.A.; her Last Will and Testament dated
August 18, 1972 was executed and probated before the Orphans Court in Baltimore,
Maryland, U.S.A., which was duly authenticated and certified by the Register of Wills
of Baltimore City and attested by the Chief Judge of said court; the will was admitted
by the Orphans Court of Baltimore City on September 7, 1979; and the will was
authenticated by the Secretary of State of Maryland and the Vice Consul of the
Philippine Embassy.
Being a foreign national, the intrinsic validity of Audreys will, especially with
regard as to who are her heirs, is governed by her national law, i.e., the law of the
State of Maryland, as provided in Article 16 of the Civil Code, to wit:
Art. 16. Real property as well as personal property is subject to the law of the
country where it is situated.
However, intestate and testamentary succession, both with respect to
the order of succession and to the amount of successional rights and to the
intrinsic validity of testamentary provisions, shall be regulated by the national
law of the person whose succession is under consideration, whatever may be
the nature of the property and regardless of the country wherein said property
may be found. (Emphasis supplied)
Article 1039 of the Civil Code further provides that capacity to succeed is
governed by the law of the nation of the decedent.
As a corollary rule, Section 4, Rule 77 of the Rules of Court on Allowance of
Will Proved Outside the Philippines and Administration of Estate Thereunder, states:
SEC. 4. Estate, how administered.When a will is thus allowed, the court
shall grant letters testamentary, or letters of administration with the will annexed, and
such letters testamentary or of administration, shall extend to all the estate of the
testator in the Philippines. Such estate, after the payment of just debts and
expenses of administration, shall be disposed of according to such will, so far
as such will may operate upon it; and the residue, if any, shall be disposed of as is
provided by law in cases of estates in the Philippines belonging to persons who are
inhabitants of another state or country. (Emphasis supplied)
While foreign laws do not prove themselves in our jurisdiction and our courts
are not authorized to take judicial notice of them; however, petitioner, as ancillary

administrator of Audreys estate, was duty-bound to introduce in evidence the

pertinent law of the State of Maryland.
Petitioner admitted that he failed to introduce in evidence the law of the State
of Maryland on Estates and Trusts, and merely relied on the presumption that such
law is the same as the Philippine law on wills and succession. Thus, the trial court
peremptorily applied Philippine laws and totally disregarded the terms of Audreys
will. The obvious result was that there was no fair submission of the case before the
trial court or a judicious appreciation of the evidence presented.
Petitioner insists that his application of Philippine laws was made in good
faith. The Court cannot accept petitioners protestation. How can petitioner honestly
presume that Philippine laws apply when as early as the reprobate of Audreys will
before the trial court in 1982, it was already brought to fore that Audrey was a U.S.
citizen, domiciled in the State of Maryland. As asserted by respondent, petitioner is
a senior partner in a prestigious law firm, with a big legal staff and a large library.
He had all the legal resources to determine the applicable law. It was incumbent
upon him to exercise his functions as ancillary administrator with reasonable
diligence, and to discharge the trust reposed on him faithfully. Unfortunately,
petitioner failed to perform his fiduciary duties.
Moreover, whether his omission was intentional or not, the fact remains that
the trial court failed to consider said law when it issued the assailed RTC Orders
dated February 12, 1988 and April 7, 1988, declaring Richard and Kyle as Audreys
heirs, and distributing Audreys estate according to the project of partition submitted
by petitioner. This eventually prejudiced respondent and deprived her of her
full successional right to the Makati property.
In GSIS v. Bengson Commercial Bldgs., Inc., the Court held that when the
rule that the negligence or mistake of counsel binds the client deserts its proper
office as an aid to justice and becomes a great hindrance and chief enemy, its rigors
must be relaxed to admit exceptions thereto and to prevent a miscarriage of justice,
and the court has the power to except a particular case from the operation of the rule
whenever the purposes of justice require it.
The CA aptly noted that petitioner was remiss in his responsibilities as
ancillary administrator of Audreys estate. The CA likewise observed that the
distribution made by petitioner was prompted by his concern over Kyle, whom
petitioner believed should equally benefit from the Makati property. The CA correctly
stated, which the Court adopts, thus:
In claiming good faith in the performance of his duties and responsibilities,
defendant Alonzo H. Anchetainvokes the principle which presumes the law of the
forum to be the same as the foreign law (Beam vs. Yatco, 82 Phil. 30, 38) in the

absence of evidence adduced to prove the latter law (Slade Perkins vs. Perkins, 57
Phil. 205, 210). In defending his actions in the light of the foregoing principle,
however, it appears that the defendant lost sight of the fact that his primary
responsibility as ancillary administrator was to distribute the subject estate in
accordance with the will of Audrey ONeill Guersey. Considering the principle
established under Article 16 of the Civil Code of the Philippines, as well as the
citizenship and the avowed domicile of the decedent, it goes without saying that the
defendant was also duty-bound to prove the pertinent laws of Maryland on the
matter.
The record reveals, however, that no clear effort was made to prove the
national law of Audrey ONeill Guerseyduring the proceedings before the court a
quo. While there is claim of good faith in distributing the subject estate in
accordance with the Philippine laws, the defendant appears to put his actuations in a
different light as indicated in a portion of his direct examination, to wit:
x x x
It would seem, therefore, that the eventual distribution of the estate of Audrey
ONeill Guersey was prompted by defendant Alonzo H. Anchetas concern that the
subject realty equally benefit the plaintiffs adopted daughter KyleGuersey.
Well-intentioned though it may be, defendant Alonzo H. Anchetas action
appears to have breached his duties and responsibilities as ancillary administrator of
the subject estate. While such breach of duty admittedly cannot be considered
extrinsic fraud under ordinary circumstances, the fiduciary nature of the said
defendants position, as well as the resultant frustration of the decedents last
will, combine to create a circumstance that is tantamount to extrinsic fraud.
Defendant Alonzo H. Anchetas omission to prove the national laws of the decedent
and to follow the latters last will, in sum, resulted in the procurement of the subject
orders without a fair submission of the real issues involved in the case. (Emphasis
supplied)
This is not a simple case of error of judgment or grave abuse of discretion, but
a total disregard of the law as a result of petitioners abject failure to discharge his
fiduciary duties. It does not rest upon petitioners pleasure as to which law should
be made applicable under the circumstances. His onus is clear. Respondent was
thus excluded from enjoying full rights to the Makati property through no fault or
negligence of her own, as petitioners omission was beyond her control. She was in
no position to analyze the legal implications of petitioners omission and it was
belatedly that she realized the adverse consequence of the same. The end result
was a miscarriage of justice. In cases like this, the courts have the legal and moral
duty to provide judicial aid to parties who are deprived of their rights.

The trial court in its Order dated December 6, 1991 in Special Proceeding No.
M-888 noted the law of the State of Maryland on Estates and Trusts, as follows:
Under Section 1-301, Title 3, Sub-Title 3 of the Annotated Code of the Public
General Laws of Maryland on Estates and Trusts, all property of a decedent shall
be subject to the estate of decedents law, and upon his death shall pass directly to
the personal representative, who shall hold the legal title for administration and
distribution, while Section 4-408 expressly provides that unless a contrary intent is
expressly indicated in the will, a legacy passes to the legatee the entire interest of
the testator in the property which is the subject of the legacy. Section 7-101, Title 7,
Sub-Title 1, on the other hand, declares that a personal representative is a
fiduciary and as such he is under the general duty to settle and distribute the estate
of the decedent in accordance with the terms of the will and the estate of decedents
law as expeditiously and with as little sacrifice of value as is reasonable under the
circumstances.
In her will, Audrey devised to Richard her entire estate, consisting of the
following: (1) Audreys conjugal share in the Makati property; (2) the cash amount
of P12,417.97; and (3) 64,444 shares of stock in A/G Interiors, Inc.
worthP64,444.00. All these properties passed on to Richard upon Audreys death.
Meanwhile, Richard, in his will, bequeathed his entire estate to respondent, except
for his rights and interests over the A/G Interiors, Inc. shares, which he left to Kyle.
When Richard subsequently died, the entire Makati property should have then
passed on to respondent. This, of course, assumes the proposition that the law of
the State of Maryland which allows a legacy to pass to the legatee the entire estate
of the testator in the property which is the subject of the legacy, was sufficiently
proven in Special Proceeding No. 9625. Nevertheless, the Court may take judicial
notice thereof in view of the ruling inBohanan v. Bohanan. Therein, the Court took
judicial notice of the law of Nevada despite failure to prove the same. The Court
held, viz.:
We have, however, consulted the records of the case in the court below and
we have found that during the hearing on October 4, 1954 of the motion of
Magdalena C. Bohanan for withdrawal of P20,000 as her share, the foreign law,
especially Section 9905, Compiled Nevada Laws, was introduced in evidence by
appellants' (herein) counsel as Exhibit "2" (See pp. 77-79, Vol. II, and t.s.n. pp. 2444, Records, Court of First Instance). Again said law was presented by the counsel
for the executor and admitted by the Court as Exhibit "B" during the hearing of the
case on January 23, 1950 before Judge Rafael Amparo (see Records, Court of First
Instance, Vol. 1).
In addition, the other appellants, children of the testator, do not dispute the
above-quoted provision of the laws of the State of Nevada. Under all the above
circumstances, we are constrained to hold that the pertinent law of Nevada,

especially Section 9905 of the Compiled Nevada Laws of 1925, can be taken judicial
notice of by us, without proof of such law having been offered at the hearing of the
project of partition.
In this case, given that the pertinent law of the State of Maryland has been
brought to record before the CA, and the trial court in Special Proceeding No. M-888
appropriately took note of the same in disapproving the proposed project of partition
of Richards estate, not to mention that petitioner or any other interested person for
that matter, does not dispute the existence or validity of said law, then Audreys and
Richards estate should be distributed according to their respective wills, and not
according to the project of partition submitted by petitioner. Consequently, the entire
Makati property belongs to respondent.
Decades ago, Justice Moreland, in his dissenting opinion in Santos v.
Manarang, wrote:
A will is the testator speaking after death. Its provisions have substantially the
same force and effect in the probate court as if the testator stood before the court in
full life making the declarations by word of mouth as they appear in the will. That was
the special purpose of the law in the creation of the instrument known as the last will
and testament. Men wished to speak after they were dead and the law, by the
creation of that instrument, permitted them to do so x x x All doubts must be
resolved in favor of the testator's having meant just what he said.
Honorable as it seems, petitioners motive in equitably distributing Audreys
estate cannot prevail over Audreys and Richards wishes. As stated in Bellis v.
Bellis:
x x x whatever public policy or good customs may be involved in our system of
legitimes, Congress has not intended to extend the same to the succession of
foreign nationals. For it has specifically chosen to leave, inter alia, the amount of
successional rights, to the decedent's national Law. Specific provisions must prevail
over general ones.
Before concluding, the Court notes the fact that Audrey and Richard Guersey were
American citizens who owned real property in the Philippines, although records do
not show when and how the Guerseys acquired the Makati property.
Under Article XIII, Sections 1 and 4 of the 1935 Constitution, the privilege to acquire
and exploit lands of the public domain, and other natural resources of the
Philippines, and to operate public utilities, were reserved to Filipinos and entities
owned or controlled by them. In Republic v. Quasha, the Court clarified that the
Parity Rights Amendment of 1946, which re-opened to American citizens and
business enterprises the right in the acquisition of lands of the public domain, the

disposition, exploitation, development and utilization of natural resources of the

Philippines, does not include the acquisition or exploitation of private agricultural
lands. The prohibition against acquisition of private lands by aliens was carried on to
the 1973 Constitution under Article XIV, Section 14, with the exception of private
lands acquired by hereditary succession and when the transfer was made to a
former natural-born citizen, as provided in Section 15, Article XIV. As it now stands,
Article XII, Sections 7 and 8 of the 1986 Constitution explicitly prohibits non-Filipinos
from acquiring or holding title to private lands or to lands of the public domain,
except only by way of legalsuccession or if the acquisition was made by a former
natural-born citizen.
In any case, the Court has also ruled that if land is invalidly transferred to an alien
who subsequently becomes a citizen or transfers it to a citizen, the flaw in the
original transaction is considered cured and the title of the transferee is rendered
valid. In this case, since the Makati property had already passed on to respondent
who is a Filipino, then whatever flaw, if any, that attended the acquisition by
the Guerseys of the Makati property is now inconsequential, as the objective of the
constitutional provision to keep our lands in Filipino hands has been achieved.
WHEREFORE, the petition is denied. The Decision dated March 18, 1999
and the Resolution dated August 27, 1999 of the Court of Appeals are AFFIRMED.
Petitioner is ADMONISHED to be more circumspect in the performance of his
duties as an official of the court.
No pronouncement as to costs.
SO ORDERED.

[G.R. No. 140975. December 8, 2000]

OFELIA HERNANDO BAGUNU, petitioner, vs. PASTORA PIEDAD, respondent.

DECISION
VITUG, J.:
On 28 August 1995, herein petitioner Ofelia Hernando Bagunu moved to intervene in
Special Proceedings No. 3652, entitled "In the Matter of the Intestate Proceedings of
the Estate of Augusto H. Piedad," pending before the Regional Trial Court ("RTC"),
Branch 117, of Pasay City. Asserting entitlement to a share of the estate of the late
Augusto H. Piedad, petitioner assailed the finality of the order of the trial court
awarding the entire estate to respondent Pastora Piedad contending that the
proceedings were tainted with procedural infirmities, including an incomplete
publication of the notice of hearing, lack of personal notice to the heirs and creditors,
and irregularity in the disbursements of allowances and withdrawals by the
administrator of the estate. The trial court denied the motion, prompting petitioner to
raise her case to the Court of Appeals. Respondent sought the dismissal of the
appeal on the thesis that the issues brought up on appeal only involved pure

questions of law. Finding merit in that argument, the appellate court dismissed the
appeal, citing Section 2(c) of Rule 41 of the 1997 Revised Rules on Civil Procedure
which would require all appeals involving nothing else but questions of law to be
raised before the Supreme Court by petition for review oncertiorari in accordance
with Rule 45 thereof and consistently with Circular 2-90 of the Court.
In a well-written resolution, the Court of Appeals belabored the distinctions between
questions of law and questions of fact, thus:
"There is a question of law in a given case when the doubt or difference arises as to
what the law is on a certain state of facts, and there is a question of fact when the
doubt or difference arises as to the truth or the falsehood of alleged facts. There is
question of fact when the query necessarily invites calibration of the whole evidence
considering mainly the credibility of witnesses, existence and relevance of specific
surrounding circumstances, and their relation to each other and to the whole and the
probabilities of the situation."
Justice Eugenio S. Labitoria, speaking for the appellate court, ratiocinated that
whether or not the RTC erred in denying the intervention considering (1) that the
intervenor-appellant had a prima facie interest over the case, (2) that the jurisdiction
over the person of the proper parties was not acquired in view of the deficient
publication or notice of hearing, and (3) that the proceedings had yet to be closed
and terminated, were issues which did not qualify as "questions of fact" as to place
the appeal within the jurisdiction of the appellate court; thus:
"The issues are evidently pure questions of law because their resolution are based
on facts not in dispute. Admitted are the facts that intervenor-appellant is a collateral
relative within the fifth degree of Augusto H. Piedad; that she is the daughter of the
first cousin of Augusto H. Piedad; that as such, intervenor-appellant seek to inherit
from the estate of Augusto H. Piedad; that the notice of hearing was published for
three consecutive weeks in a newspaper of general circulation; that there was no
order of closure of proceedings that has been issued by the intestate court; and that
the intestate court has already issued an order for the transfer of the remaining
estate of Augusto H. Piedad to petitioner-appellee.
"These facts are undisputed.
"In this case, there is no doubt nor difference that arise as to the truth or falsehood
on alleged facts. The question as to whether intervenor-appellant as a collateral
relative within the fifth civil degree, has legal interest in the intestate proceeding
which would justify her intervention; the question as to whether the publication of
notice of hearing made in this case is defective which would amount to lack of
jurisdiction over the persons of the parties and the question as to whether the
proceedings has already been terminated when the intestate court issued the order
of transfer of the estate of Augusto H. Piedad to petitioner-appellee, in spite the
absence of an order of closure of the intestate court, all call for the application and
interpretation of the proper law. There is doubt as to what law is applicable on a
certain undisputed state of facts.
"The resolution of the issues raised does not require the review of the evidence, nor
the credibility of witnesses presented, nor the existence and relevance of specific

surrounding circumstances. Resolution on the issues may be had even without

going to examination of facts on record."
Still unsatisfied, petitioner contested the resolution of the appellate court in the
instant petition for review on certiorari.
The Court finds no reversible error in the ruling of the appellate court. But let us set
aside the alleged procedural decrepitude and take on the basic substantive issue.
Specifically, can petitioner, a collateral relative of the fifth civil degree, inherit
alongside respondent, a collateral relative of the third civil degree? Elsewise stated,
does the rule of proximity in intestate succession find application among collateral
relatives?
Augusto H. Piedad died without any direct descendants or ascendants. Respondent
is the maternal aunt of the decedent, a third-degree relative of the decedent, while
petitioner is the daughter of a first cousin of the deceased, or a fifth-degree relative
of the decedent.
The various provisions of the Civil Code on succession embody an almost complete
set of law to govern, either by will or by operation of law, the transmission of
property, rights and obligations of a person upon his death. Each article is
construed in congruity with, rather than in isolation of, the system set out by the
Code.
The rule on proximity is a concept that favors the relatives nearest in degree to the
decedent and excludes the more distant ones except when and to the extent that the
right of representation can apply. Thus, Article 962 of the Civil Code provides:
"ART. 962. In every inheritance, the relative nearest in degree excludes the
more distant ones, saving the right of representation when it properly takes
place.
"Relatives in the same degree shall inherit in equal shares, subject to the provisions
of article 1006 with respect to relatives of the full and half blood, and of article 987,
paragraph 2, concerning division between the paternal and maternal lines."
By right of representation, a more distant blood relative of a decedent is, by
operation of law, "raised to the same place and degree" of relationship as that of a
closer blood relative of the same decedent. The representative thereby steps into
the shoes of the person he represents and succeeds, not from the latter, but from the
person to whose estate the person represented would have succeeded.
"ART. 970.
Representation is a right created by fiction of law, by virtue of
which the representative is raised to the place and the degree of the person
represented, and acquires the rights which the latter would have if he were
living or if he could have inherited."
"ART. 971.
The representative is called to the succession by the law and not
by the person represented. The representative does not succeed the person
represented but the one whom the person represented would have succeeded."
In the direct line, right of representation is proper only in the descending, never in the
ascending, line. In the collateral line, the right of representation may only take place
in favor of the children of brothers or sisters of the decedent when such children
survive with their uncles or aunts.

"ART. 972.
The right of representation takes place in the direct
descending line, but never in the ascending.
"In the collateral line, it takes place only in favor of the children of brothers or
sisters, whether they be of the full or half blood."
"ART. 974.
Whenever there is succession by representation, the division of the
estate shall be made per stirpes, in such manner that the representative or
representatives shall not inherit more than what the person they represent would
inherit, if he were living or could inherit."
"ART. 975.
When children of one or more brothers or sisters of the
deceased survive, they shall inherit from the latter by representation, if they
survive with their uncles or aunts. But if they alone survive, they shall inherit
in equal portions."
The right of representation does not apply to "other collateral relatives within the fifth
civil degree" (to which group both petitioner and respondent belong) who are sixth in
the order of preference following, firstly, the legitimate children and
descendants, secondly, the legitimate parents and ascendants, thirdly, the
illegitimate children and descendants, fourthly, the surviving spouse, and fifthly, the
brothers and sisters/nephews and nieces, of the decedent. Among collateral
relatives, except only in the case of nephews and nieces of the decedent concurring
with their uncles or aunts, the rule of proximity, expressed in Article 962,
aforequoted, of the Code, is an absolute rule. In determining the degree of
relationship of the collateral relatives to the decedent, Article 966 of the Civil Code
gives direction.
"Article 966. x x x
"In the collateral line, ascent is made to the common ancestor and then descent is
made to the person with whom the computation is to be made. Thus, a person is
two degrees removed from his brother, three from his uncle, who is the brother of his
father, four from his first cousin and so forth."
Accordingly

Respondent, being a relative within the third civil degree, of the late Augusto H.
Piedad excludes petitioner, a relative of the fifth degree, from succeeding ab
intestato to the estate of the decedent.
The provisions of Article 1009 and Article 1010 of the Civil Code
"Article 1009. Should there be neither brothers nor sisters nor children of brothers or
sisters, the other collateral relatives shall succeed to the estate.

"The latter shall succeed without distinction of lines or preference among them by
reason of relationship by the whole blood."
"Article 1010. The right to inherit ab intestato shall not extend beyond the fifth
degree of relationship in the collateral line." invoked by petitioner do not at all support her cause. The law means only that
among the other collateral relatives(the sixth in the line of succession), no
preference or distinction shall be observed "by reason of relationship by the whole
blood." In fine, a maternal aunt can inherit alongside a paternal uncle, and a first
cousin of the full blood can inherit equally with a first cousin of the half blood, but an
uncle or an aunt, being a third-degree relative, excludes the cousins of the decedent,
being in the fourth-degree of relationship; the latter, in turn, would
have priority in successionto a fifth-degree relative.
WHEREFORE, the instant Petition is DENIED. No costs.
SO ORDERED.
Melo, (Chairman), Panganiban, and Gonzaga-Reyes, JJ., concur.
Rollo, p. 30.
Rollo, p. 31.
Supreme Court E-Library SearchFIRST

DIVISION

[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.
SYLLABUS
1. CIVIL LAW; SUCCESSION; RIGHT TO REDEEM PROPERTY AS LEGAL HEIR
OF HUSBAND, PART OF WHOSE ESTATE IS A SHARE IN HIS MOTHERS
INHERITANCE. - 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.
Socorros right to the property is not because she rightfully can claim heirship in Macarias
estate but that she is a legal heir of her husband, David Rosales, part of whose estate is a
share in his mothers inheritance. David Rosales, incontrovertibly, survived his mothers
death. When Macaria died 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. 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.
2. ID.; ID.; RIGHT OF REDEMPTION; WRITTEN NOTICE OF SALE,
MANDATORY. - When their interest in the property was sold by the Burdeos heirs to
petitioner, a right of redemption arose in favor of private respondents. This 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-owners required under Article

1623 of the Civil Code. 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 coowner in order to remove all uncertainties about the sale, its terms and conditions, as well as
its efficacy and status.
APPEARANCES OF COUNSEL
Jessie C. Ligan for petitioner.
Federico A. Calo for private respondents.
DECISION
VITUG, J.:
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 latters 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 Macarias
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 Treasurers 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 lots 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.
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 bonafide 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.
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; however, Socorro s right to
the property is not because she rightfully can claim heirship in Macarias estate but that she
is a legal heir of her husband, David Rosales, part of whose estate is a share in his mothers
inheritance.
David Rosales, incontrovertibly, survived his mothers 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.
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 coowners 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 sale 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.
Even in Alonzo vs. Intermediate Appellate Court, 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.
In Alonzo, the right of legal redemption was invoked several years, notjust 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 clearly 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 unconscionable based upon its present value. (Answer, par. 8).
All given, we find no error in the appellate courts 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. 126707. February 25, 1999]

BLANQUITA E. DELA MERCED, LUISITO E. DELA MERCED, BLANQUITA M.
MACATANGAY, MA. OLIVIA M. PAREDES, TERESITA P. RUPISAN, RUBEN M.
ADRIANO, HERMINIO M. ADRIANO, JOSELITO M. ADRIANO, ROGELIO M.
ADRIANO, WILFREDO M. ADRIANO, VICTOR M. ADRIANO, CORAZON A.
ONGOCO, JASMIN A. MENDOZA and CONSTANTINO M. ADRIANO, petitioners,
vs. JOSELITO P. DELA MERCED, respondent.
DECISION
PURISIMA, J.:
This is a Petition for Review on Certiorari of the Decision of the Court of Appeals, dated
October 17, 1996, in CA-G.R. CV No. 41283, which reversed the decision, dated June 10,
1992, of the Regional Trial Court, Branch 67, Pasig City, in Civil Case No. 59705.
The facts of the case are, as follows:
On March 23, 1987, Evarista M. dela Merced died intestate, without issue. She left five (5)
parcels of land situated in Orambo, Pasig City.
At the time of her death, Evarista was survived by three sets of heirs, viz: (1) Francisco M.
dela Merced, her legitimate brother ; (2) Teresita P. Rupisan, her niece who is the only
daughter of Rosa de la Merced-Platon (a sister who died in 1943) ; and (3) the legitimate
children of Eugenia dela Merced-Adriano (another sister of Evarista who died in 1965),
namely: Herminio, Ruben, Joselito, Rogelio, Wilfredo, Victor and Constantino, all surnamed
Adriano, Corazon Adriano-Ongoco and Jasmin Adriano-Mendoza.
Almost a year later or on March 19, 1988, to be precise, Francisco (Evaristas brother) died.
He was survived by his wife Blanquita Errea dela Merced and their three legitimate children,
namely, Luisito E. dela Merced, Blanquita M. Macatangay and Ma. Olivia M. Paredes.
On April 20, 1989, the three sets of heirs of the decedent, Evarista M. dela Merced, referring
to (1) the abovenamed heirs of Francisco; (2) Teresita P. Rupisan and (3) the nine [9]
legitimate children of Eugenia, executed an extrajudicial settlement, entitled Extrajudicial
Settlement of the Estate of the Deceased Evarista M. dela Merced adjudicating the
properties of Evarista to them, each set with a share of one-third (1/3) pro-indiviso.
On July 26 ,1990, private respondent Joselito P. Dela Merced , illegitimate son of the late
Francisco de la Merced, filed a Petition for Annulment of the Extrajudicial Settlement of the
Estate of the Deceased Evarista M. Dela Merced with Prayer for a Temporary Restraining
Order, alleging that he was fraudulently omitted from the said settlement made by
petitioners, who were fully aware of his relation to the late Francisco. Claiming successional
rights, private respondent Joselito prayed that he be included as one of the beneficiaries, to

share in the one-third (1/3) pro-indiviso share in the estate of the deceased Evarista,
corresponding to the heirs of Francisco.
On August 3, 1990, the trial court issued the temporary restraining order prayed for by
private respondent Joselito, enjoining the sale of any of the real properties of the deceased
Evarista.
After trial, however, or on June 10, 1992, to be definite, the trial court dismissed the petition,
lifted the temporary restraining order earlier issued, and cancelled the notice of lis pendens
on the certificates of title covering the real properties of the deceased Evarista.
In dismissing the petition, the trial court stated:
The factual setting of the instant motion after considering the circumstances of the entire
case and the other evidentiary facts and documents presented by the herein parties points
only to one issue which goes into the very skeleton of the controversy, to wit: Whether or
not the plaintiff may participate in the intestate estate of the late Evarista M. Dela Merced in
his capacity as representative of his alleged father, Francisdo Dela Merced, brother of
the deceased, whose succession is under consideration.
xxx
xxx
xxx
It is to be noted that Francisco Dela Merced, alleged father of the herein plaintiff, is a
legitimate child, not an illegitimate. Plaintiff, on the other hand, is admittedly an illegitimate
child of the late Francisco Dela Merced. Hence, as such, he cannot represent his alleged
father in the succession of the latter in the intestate estate of the late Evarista Dela Merced,
because of the barrier in Art. 992 of the New Civil Code which states that:
An illegitimate child has no right to inherit ab intestato from the legitimate children and
relatives of his father or mother, nor shall such children or relatives inherit in the same
manner from the illegitimate child.
The application of Art. 992 cannot be ignored in the instant case, it is clearly worded in such
a way that there can be no room for any doubts and ambiguities. This provision of the law
imposes a barrier between the illegitimate and the legitimate family. x x x (Rollo, p. 87-88)
Not satisfied with the dismissal of his petition, the private respondent appealed to the Court
of Appeals.
In its Decision of October 17,1996, the Court of Appeals reversed the decision of the trial
court of origin and ordered the petitioners to execute an amendatory agreement which shall
form part of the original settlement, so as to include private respondent Joselito as a co-heir
to the estate of Francisco, which estate includes one-third (1/3) pro indiviso of the latters
inheritance from the deceased Evarista.
The relevant and dispositive part of the Decision of the Court of Appeals, reads:
x x x
xxx
xxx
It is a basic principle embodied in Article 777, New Civil Code that the
rights to the succession are transmitted from the moment of the death of the decedent, so that
Francisco dela Merced inherited 1/3 of his sisters estate at the moment of the latters death.
Said 1/3 of Evaristas estate formed part of Franciscos estate which was subsequently
transmitted upon his death on March 23, 1987 to his legal heirs, among whom is appellant as
his illegitimate child. Appellant became entitled to his share in Franciscos estate from the
time of the latters death in 1987. The extrajudicial settlement therefore is void insofar as it
deprives plaintiff-appellant of his share in the estate of Francisco M. dela Merced. As a

consequence, the cancellation of the notice of lis pendens is not in order because the
property is directly affected. Appellant has the right to demand a partition of his fathers
estate which includes 1/3 of the property inherited from Evarista dela Merced.
WHEREFORE, premises considered, the appealed decision is hereby REVERSED and SET
ASIDE. Defendants-appellees are hereby ordered to execute an amendatory
agreement/settlement to include herein plaintiff-appellant Joselito dela Merced as co-heir to
the estate of Francisco dela Merced which includes 1/3 of the estate subject of the questioned
Deed of Extrajudicial Settlement of the Estate of Evarista M. dela Merced dated April 20,
1989. The amendatory agreement/settlement shall form part of the original Extrajudicial
Settlement. With costs against defendants-appellees.
SO ORDERED. (Rollo, p. 41)
In the Petition under consideration, petitioners insist that being an illegitimate child, private
respondent Joselito is barred from inheriting from Evarista because of the provision of
Article 992 of the New Civil Code, which lays down an impassable barrier between the
legitimate and illegitimate families.
The Petition is devoid of merit.
Article 992 of the New Civil Code is not applicable because involved here is not a situation
where an illegitimate child would inherit ab intestato from a legitimate sister of his father,
which is prohibited by the aforesaid provision of law. Rather, it is a scenario where an
illegitimate child inherits from his father, the latters share in or portion of, what the latter
already inherited from the deceased sister, Evarista.
As opined by the Court of Appeals, the law in point in the present case is Article 777 of the
New Civil Code, which provides that the rights to succession are transmitted from the
moment of death of the decedent.
Since Evarista died ahead of her brother Francisco, the latter inherited a portion of the estate
of the former as one of her heirs. Subsequently, when Francisco died, his heirs, namely: his
spouse, legitimate children, and the private respondent, Joselito, an illegitimate child,
inherited his (Franciscos) share in the estate of Evarista. It bears stressing that Joselito does
not claim to be an heir of Evarista by right of representation but participates in his own right,
as an heir of the late Francisco, in the latters share (or portion thereof) in the estate of
Evarista.
Petitioners argue that if Joselito desires to assert successional rights to the intestate estate of
his father, the proper forum should be in the settlement of his own fathers intestate estate, as
this Court held in the case of Gutierrez vs. Macandog (150 SCRA 422 [1987])
Petitioners reliance on the case of Gutierrez vs. Macandog (supra) is misplaced. The said
case involved a claim for support filed by one Elpedia Gutierrez against the estate of the
decedent, Agustin Gutierrez, Sr., when she was not even an heir to the estate in question, at
the time, and the decedent had no obligation whatsoever to give her support. Thus, this Court
ruled that Elpedia should have asked for support pendente lite before the Juvenile and
Domestic Relations Court in which court her husband (one of the legal heirs of the decedent)
had instituted a case for legal separation against her on the ground of an attempt against his
life. When Mauricio (her husband) died, she should have commenced an action for the
settlement of the estate of her husband, in which case she could receive whatever allowance
the intestate court would grant her.

The present case, however, relates to the rightful and undisputed right of an heir to the share
of his late father in the estate of the decedent Evarista, ownership of which had been
transmitted to his father upon the death of Evarista. There is no legal obstacle for private
respondent Joselito, admittedly the son of the late Francisco, to inherit in his own right as an
heir to his fathers estate, which estate includes a one-third (1/3) undivided share in the
estate of Evarista.
WHEREFORE, for lack of merit, the Petition is hereby DENIED and the Appealed
Decision of the Court of Appeals AFFIRMED in toto.
SO ORDERED.
[G.R. No. 118464. December 21, 1998]
HEIRS OF IGNACIO CONTI and ROSARIO CUARIO, petitioners, vs. COURT OF
APPEALS and LYDIA S. REYES as Attorney-in-Fact of JOSEFINA S. REYES,
BERNARDITA S. PALILIO, HERMINIA S. PALILIO, REMEDIOS A. SAMPAYO,
ILUMINADA A. SAMPAYO, ENRICO A. SAMPAYO, CARLOS A. SAMPAYO,
GENEROSO C. SAMPAYO, MYRNA C. SAMPAYO, ROSALINO C. SAMPAYO,
MANUEL C. SAMPAYO, DELIA A. SAMPAYO, CORAZON C. SAMPAYO, NILO C.
SAMPAYO, and LOLITA A. SAMPAYO in her own behalf and as Attorney-in-Fact of
NORMA A. SAMPAYO, respondents.
DECISION
BELLOSILLO, J.:
This petition for review on certiorari seeks to reverse the 30 March 1994 Decision and 21
December 1994 Resolution of respondent Court of Appeals which upheld the right of
private respondents as heirs of Lourdes Sampayo to demand partition under Art. 494 of the
Civil Code.
Lourdes Sampayo and Ignacio Conti, married to Rosario Cuario, were the co-owners of the
property in litigation consisting of a 539-square meter lot at the corner of Zamora and
Abellanosa Streets, Lucena City, covered by TCT No. T15374, with a house erected
thereon. On 17 March 1986 Lourdes Sampayo died intestate without issue. Subsequently, on
1 April 1987 private respondents Josefina S. Reyes, Bernardita S. Palilio, Herminia S.
Palilio, Remedios A. Sampayo, Iluminada A. Sampayo, Enrico A. Sampayo, Carlos A.
Sampayo, Generoso C. Sampayo, Myrna C. Sampayo, Rosalina C. Sampayo, Manuel C.
Sampayo, Delia A. Sampayo, Corazon C. Sampayo, Nilo C. Sampayo, Lolita A. Sampayo
and Norma A. Sampayo, all represented by their Attorney-in-Fact Lydia S. Reyes, with Lolita
A. Sampayo acting also in her own behalf and as Attorney-in-Fact of Norma A. Sampayo, all
claiming to be collateral relatives of the deceased Lourdes Sampayo, filed an action for
partition and damages before RTCBr. 54, Lucena City.
The spouses Ignacio Conti and Rosario Cuario refused the partition on the ground that
private respondents failed to produce any document to prove that they were the rightful heirs
of Lourdes Sampayo. On 30 August 1987 Ignacio Conti died and was substituted as partydefendant by his children Asuncion, Francisco, Milagros, Joselito, Luisito, Diego and
Teresita, all surnamed Conti.
At the trial, private respondents presented Lydia Sampayo Reyes and Adelaida Sampayo to
prove that they were the collateral heirs of the deceased Lourdes Sampayo and therefore

entitled to her rights as co-owner of the subject lot. Bringing with her the original copy of
her certificate of live birth showing that her father was Inocentes Reyes and her
mother was Josefina Sampayo, Lydia Sampayo Reyes testified that she was one of the
nieces of Lourdes Sampayo, being the daughter of Josefina Sampayo, the only living sibling
of Lourdes. Lydia also testified that Lourdes had another sister named Remedios J.
Sampayo who died in 1948, and two brothers, Manuel J. Sampayo and Luis J. Sampayo who
died in 1983 and 1960, respectively. To prove that Josefina, Remedios, Luis and Manuel
were siblings of Lourdes, their baptismal certificates together with a photocopy of the birth
certificate of Manuel Sampayo were offered in evidence. These documents showed that
their father and mother, like Lourdes Sampayo, were Antonio Sampayo and Brigida Jaraza.
The certificates of baptism presented as part of the testimony of Lydia Sampayo Reyes were
prepared by Rev. Franklin C. Rivero who duly certified that all data therein written were in
accordance with the church records, hence, the lower left portion of the documents bearing
the seal of the church with the notation as to where the documents were logged in particular.
The baptismal certificates were presented in lieu of the birth certificates because the
repository of those documents, the Office of the Civil Registrar of Lucena City, had
been razed by fire on two separate occasions, 27 November 1974 and 30 August 1983, thus
all civil registration records were totally burned. On the other hand, a photocopy of Manuel's
birth certificate dated 25 October 1919 (Exh. "I") showed that it was issued by the Local
Civil Registrar of Lucena, Tayabas (now Lucena City).
Adelaida Sampayo, widow of Manuel Sampayo, testified that her husband Manuel was the
brother of the deceased Lourdes, and with the death of Manuel, Luis and Remedios, the only
living sibling of Lourdes was Josefina.
To rebut whatever rights the alleged heirs of Lourdes had over the subject lot, petitioners
presented Rosario Cuario Conti, Rosa Ladines Malundas and Rodolfo Espineli. Rosario
testified that the subject property was co-owned in equal shares by her husband Ignacio
Conti and Lourdes Sampayo and that her family (Rosario) had been staying in the subject
property since 1937. In fact, she said that her late husband Ignacio Conti paid for the real
estate taxes and spent for the necessary repairs and improvements thereonbecause by
agreement Lourdes would leave her share of the property to them.
However, as correctly found by the trial court, no will, either testamentary or holographic,
was presented by petitioners to substantiate this claim. Rosario also disclosed that
when Lourdes died her remains were taken by her relatives from their house. When cross
examined on who those relatives were, she replied that the only one she remembered was
Josefina since there were many relatives who came. When asked who Josefina's parents
were, she said she could not recall. Likewise, when asked who the parents of Lourdes
were, Rosario denied having ever known them.
Another witness, Rosa Ladines Malundas, narrated that she used to be the neighbor and
hairdresser of the deceased Lourdes Sampayo who told her that upon her death her share
would go to Ignacio Conti whom she considered as her brother since both of them were
"adopted" by their foster parents Gabriel Cord and Anastacia Allarey Cord, although she
admitted that she did not know whether Lourdes had other relatives.
According to another witness, Rodolfo Espineli, he took pictures of the tombs bearing the
tombstones of Gabriel Cord and Anastacia Allarey Cord and Ignacio Conti as well as that of

Lourdes Sampayo who was supposed to have been interred beside her "adoptive" parents.
However, as revealed by Rosario during her direct examination, Lourdes was not in fact
interred there because her relatives took her remains.
On 4 April 1991 the trial court declared private respondents as the rightful heirs of Lourdes
Sampayo. It further ordered private respondents and petitioners to submit a project of
partition of the residential house and lot for confirmation by the court.
Petitioners elevated the case to the Court of Appeals contending that the trial court erred
in finding that private respondents were the heirs of Lourdes Sampayo and that they were
entitled to the partition of the lot and the improvements thereon.
On 30 March 1994 the Court of Appeals affirmed the assailed RTC decision and heldIn the instant case, plaintiffs [now private respondents] were able to prove and establish by
preponderance of evidence that they are the collateral heirs of deceased Lourdes Sampayo
and therefore the lower court did not err in ordering herein plaintiffs [now private
respondents] and defendants [now petitioners] to submit a project of partition of the
residential house and lot owned in common by the deceased Lourdes Sampayo and defendant
spouses Conti for confirmation by the court x x x x Considering our earlier finding that the
lower court did not err in declaring herein plaintiffs [now private respondents] as heirs of
deceased Sampayo and therefore entitled to inherit her property, the argument of the
appellants [now petitioners] that the plaintiffs [now private respondents] are not entitled to
partition is devoid of merit (insertions in [ ] supplied).
Respondent court also ruled, citing Hernandez v. Padua and Marabilles v. Quito, that a prior
and separate judicial declaration of heirship was not necessary and that private respondents
became the co-owners of the portion of the property owned and registered in the name of
Lourdes Sampayo upon her death and, consequently, entitled to the immediate possession
thereof and all other incidents/rights of ownership as provided for by law including the right
to demand partition under Art. 777 of the Civil Code,and Ilustre v. Alaras
Frondosa holding that the property belongs to the heirs at the moment of death of the
decedent, as completely as if he had executed and delivered to them a deed for the same
before his death.
The appellate court subsequently denying a motion for reconsideration upheld the
probative value of the documentary and testimonial evidence of private respondents and
faulted petitioners for not having subpoenaed Josefina if they believed that she was a vital
witness in the case. Hence, petitioners pursued this case arguing that a complaint for partition
to claim a supposed share of the deceased co-owner cannot prosper without prior settlement
of the latter's estate and compliance with all legal requirements, especially publication, and
private respondents were not able to prove by competent evidence their relationship with the
deceased.
There is no merit in the petition. A prior settlement of the estate is not essential before the
heirs can commence any action originally pertaining to the deceased as we explained in
Quison v. Salud Claro Quison died in 1902. It was proven at the trial that the present plaintiffs are next of
kin and heirs, but it is said by the appellants that they are not entitled to maintain this action
because there is no evidence that any proceedings have been taken in court for the settlement
of the estate of Claro Quison, and that without such settlement, the heirs cannot maintain this

action. There is nothing in this point. As well by the Civil Code as by the Code of Civil
Procedure, the title to the property owned by a person who dies intestate passes at once to his
heirs.
Such transmission is, under the present law, subject to the claims of
administration and the property may be taken from the heirs for the purpose of paying
debts and expenses, but this does not prevent an immediate passage of the title, upon the
death of the intestate, from himself to his heirs. Without some showing that a judicial
administrator had been appointed in proceedings to settle the estate of Claro Quison, the
right of the plaintiffs to maintain this action is established.
Conformably with the foregoing and taken in conjunction with Arts. 777 and 494 of the Civil
Code, from the death of Lourdes Sampayo her rights as a co-owner, incidental to which is the
right to ask for partition at any time or to terminate the co-ownership, were transmitted to her
rightful heirs. In so demanding partition private respondents merely exercised the right
originally pertaining to the decedent, their predecessor-in-interest.
Petitioners' theory as to the requirement of publication would have been correct had the
action been for the partition of the estate of Lourdes Sampayo, or if we were dealing with
extrajudicial settlement by agreement between heirs and the summary settlement of estates of
small value. But what private respondents are pursuing is the mere segregation of Lourdes'
one-half share which they inherited from her through intestate succession. This is a simple
case of ordinary partition between co-owners. The applicable law in point is Sec. 1 of Rule
69 of the Rules of Court Sec. 1. Complaint in an action for partition of real estate. - A person having the right to
compel the partition of real estate may do so as in this rule prescribed, setting forth in his
complaint the nature and extent of his title and an adequate description of the real estate of
which partition is demanded and joining as defendants all the other persons interested in the
property.
A cursory reading of the aforecited rule shows that publication is not required as erroneously
maintained by petitioners. There are two (2) simultaneous issues in an action for partition.
First, whether the plaintiff is indeed a co-owner of the property sought to be partitioned,
and second, if answered in the affirmative, the manner of the division of the property, i.e.,
what portion should go to which co-owner. Thus, in this case, we must determine whether
private respondents, by preponderance of evidence, have been able to establish that they are
co-owners by way of succession as collateral heirs of the late Lourdes Sampayo as they
claim to be, either a sister, a nephew or a niece. These, private respondents were able to
prove in the trial court as well as before respondent Court of Appeals.
Petitioners however insist that there was no such proof of filiation because: (a) mere
photocopies of birth certificates do not prove filiation; (b) certifications on non-availability
of records of birth do not prove filiation; (c) baptismal certificates do not prove filiation of
alleged collateral relatives of the deceased; and, (d) the testimonies of Lydia S. Reyes,
alleged daughter of Josefina Reyes, and Adelaida Sampayo, alleged sister-in-law of Josefina
and Lourdes, were incompetent as Lydia was made to testify on events which happened
before her birth while Adelaida testified on matters merely narrated to her.
We are not persuaded. Altogether, the documentary and testimonial evidence submitted are
competent and adequate proofs that private respondents are collateral heirs of Lourdes

Sampayo. Private respondents assert that they are co-owners of one-half (1/2) pro-indiviso
share of the subject property by way of legal or intestate succession.
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. Legal orintestate succession takes
place if a person dies without a will, or with a void will, or one which has subsequently lost
its validity. If there are no descendants, ascendants, illegitimate children, or a surviving
spouse, the collateral relatives shall succeed to the entire estate of the decedent. It was
established during the trial that Lourdes died intestate and without issue. Private
respondents as sister, nephews and nieces now claim to be the collateral relatives of Lourdes.
Under Art. 172 of the Family Code, the filiation of legitimate children shall be proved by
any other means allowed by the Rules of Court and special laws, in the absence of a record
of birth or a parents admission of such legitimate filiation in a public or private document
duly signed by the parent. Such other proof of ones filiation may be a baptismal certificate,
a judicial admission, a family Bible in which his name has been entered, common reputation
respecting his pedigree, admission by silence, the testimonies of witnesses and other kinds of
proof admissible under Rule 130 of the Rules of Court. By analogy, this method of
proving filiation may also be utilized in the instant case.
Public documents are the written official acts, or records of the official acts of the sovereign
authority, official bodies and tribunals, and public officers, whether of the Philippines, or of a
foreign country. The baptismal certificates presented in evidence by private respondents are
public documents. Parish priests continue to be the legal custodians of the parish records
and are authorized to issue true copies, in the form of certificates, of the entries contained
therein.
The admissibility of baptismal certificates offered by Lydia S. Reyes, absent the
testimony of the officiating priest or the official recorder, was settled in People v. Ritter,
citing U.S. v. de Vera (28 Phil. 105 [1914]), thus x x x the entries made in the Registry Book may be considered as entries made in the course
of the business under Section 43 of Rule 130, which is an exception to the hearsay rule. The
baptisms administered by the church are one of its transactions in the exercise of
ecclesiastical duties and recorded in the book of the church during the course of its business.
It may be argued that baptismal certificates are evidence only of the administration of the
sacrament, but in this case, there were four (4) baptismal certificates which, when taken
together, uniformly show that Lourdes, Josefina, Remedios and Luis had the same set of
parents, as indicated therein. Corroborated by the undisputed testimony of Adelaida
Sampayo that with the demise of Lourdes and her brothers Manuel, Luis and sister
Remedios, the only sibling left was Josefina Sampayo Reyes, such baptismal certificates
have acquired evidentiary weight to prove filiation.
Petitioners' objection to the photocopy of the certificate of birth of Manuel Sampayo was
properly discarded by the court a quo and respondent Court of Appeals. According to Sec.
3, par. (1), Rule 130, of the Rules of Court, when the subject of inquiry is the contents of a
document, no evidence shall be admissible other than the original document itself except
when the original has been lost or destroyed or cannot be produced in court, without bad
faith on the part of the offeror. The loss or destruction of the original certificate of birth of

Manuel J. Sampayo was duly established by the certification issued by the Office of the
Local Civil Registrar of Lucena City to the effect that its office was completely destroyed by
fire on 27 November 1974 and 30 August 1983, respectively, and as a consequence thereof,
all civil registration records were totally burned.
Apparently, there seems to be some merit in petitioners contention that the testimony of
Adelaida Sampayo cannot prove filiation for being hearsay considering that there was no
declaration ante litem motam as required by the rules, i.e., that the declaration relating to
pedigree was made before the controversy occurred. Nonetheless, petitioners made no move
to dispute her testimony in open court when she was mentioning who the brothers and sisters
of Lourdes were. As correctly observed by the trial court in explicit terms, "the documentary
and testimonial evidence were not disputed by defendants" (now petitioners). Notably, when
Rosario Cuario Conti took the witness stand, she admitted that she was not aware of the
identities of the parents of the deceased. Clearly, this runs counter to the relationship akin
to filial bonding which she professed she had enjoyed with the decedent. As wife of
Ignacio Conti, she was supposedly a "sister-in-law" of the deceased Lourdes Sampayo who
regarded Ignacio as a brother. However, in sum, we rule that all the pieces of evidence
adduced, taken together, clearly preponderate to the right of private respondents to maintain
the action for partition. Absent any reversible error in the assailed Decision and Resolution
of the Court of Appeals, this petition for review on certiorari will not lie.
WHEREFORE, the petition is DENIED. The assailed Decision dated 30 March 1994 and
Resolution dated 21 December 1994 of the Court of Appeals are AFFIRMED. Costs
against petitioners.
SO ORDERED.

IN THE MATTER OF THE INTESTATE

ESTATES OF THE DECEASED JOSEFA
DELGADO AND GUILLERMO RUSTIA

G.R. No. 155733

CARLOTA DELGADO VDA. DE DE LA ROSA and other HEIRS OF

LUIS DELGADO, namely, HEIRS OF CONCHA VDA. DE AREVALO, HEIRS
OF LUISA DELGADO VDA. DE DANAO,
ANGELA DELGADO
ARESPACOCHAGA, TERESA DELGADO PERLAS, CAROLINA DELGADOARESPACOCHAGA, RODOLFO DELGADO,
BENJAMIN DELGADO,
GLICERIA DELGADO and CLEOFAS DELGADO; and HEIRS OF GORGONIO
DELGADO, namely, RAMON DELGADO CAMPO, CARLOS DELGADO
CAMPO, CLARITA DELGADO CAMPO-REIZA, YOLANDA DELGADO
ENCINAS, FELISA DELGADO CAMPO-ENCINAS and MELINDA DELGADO
CAMPO-MADARANG,
Petitioners,
Present :
PUNO, J., Chairman,
SANDOVAL-GUTIERREZ,
-versus AZCUNA and

CORONA,

GARCIA, JJ.
HEIRS OF MARCIANA RUSTIA VDA. DE DAMIAN, NAMELY, GUILLERMO R.
DAMIAN AND JOSE R. DAMIAN; HEIRS OF HORTENCIA RUSTIA CRUZ,
NAMELY, TERESITA CRUZ-SISON, HORACIO R. CRUZ, JOSEFINA CRUZRODIL, AMELIA CRUZ-ENRIQUEZ AND FIDEL R. CRUZ, JR.; HEIRS OF
ROMAN RUSTIA, SR., NAMELY, JOSEFINA RUSTIA ALBANO, VIRGINIA
RUSTIA PARAISO, ROMAN RUSTIA, JR., SERGIO RUSTIA, FRANCISCO
RUSTIA, LETICIA RUSTIA-MIRANDA; AND GUILLERMINA RUSTIA, AS
OPPOSITORS;[1] AND GUILLERMA RUSTIA, AS INTERVENOR,[2]
Respondents.[3]
Promulgated :
January 27, 2006

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION
CORONA, J.:

In this petition for review on certiorari, petitioners seek to reinstate the May
11, 1990 decision of the Regional Trial Court (RTC) of Manila, Branch 55, [4] in SP
Case No. 97668, which was reversed and set aside by the Court of Appeals in its
decision[5] dated October 24, 2002.

FACTS OF THE CASE

This case concerns the settlement of the intestate estates of Guillermo Rustia
and Josefa Delgado.[6] The main issue in this case is relatively simple: who,
between petitioners and respondents, are the lawful heirs of the decedents.
However, it is attended by several collateral issues that complicate its resolution.
The claimants to the estates of Guillermo Rustia and Josefa Delgado may be
divided into two groups: (1) the alleged heirs of Josefa Delgado, consisting of her
half- and full-blood siblings, nephews and nieces, and grandnephews and
grandnieces, and (2) the alleged heirs of Guillermo Rustia, particularly, his sisters,
[7] his nephews and nieces,[8] his illegitimate child,[9] and the de factoadopted
child[10] (ampun-ampunan) of the decedents.
THE ALLEGED HEIRS OF JOSEFA DELGADO

The deceased Josefa Delgado was the daughter of Felisa [11] Delgado by one
Lucio Campo. Aside from Josefa, five other children were born to the couple,
namely, Nazario, Edilberta, Jose, Jacoba, and Gorgonio, all surnamed Delgado.
Felisa Delgado was never married to Lucio Campo, hence, Josefa and her fullblood siblings were all natural children of Felisa Delgado.
However, Lucio Campo was not the first and only man in Felisa Delgados
life. Before him was Ramon Osorio[12] with whom Felisa had a son, Luis Delgado.
But, unlike her relationship with Lucio Campo which was admittedly one without
the benefit of marriage, the legal status of Ramon Osorios and Felisa Delgados
union is in dispute.
The question of whether Felisa Delgado and Ramon Osorio ever got married
is crucial to the claimants because the answer will determine whether their
successional
rights
fall
within
the
ambit
of
the
rule
against reciprocal intestate succession between legitimate and illegitimate relatives.
[13] If Ramon Osorio and Felisa Delgado had been validly married, then their only
child Luis Delgado was a legitimate half-blood brother of Josefa Delgado and
therefore excluded from the latters intestate estate. He and his heirs would be
barred by the principle of absolute separation between the legitimate and
illegitimate families. Conversely, if the couple were never married, Luis Delgado
and his heirs would be entitled to inherit from Josefa Delgados intestate estate, as
they would all be within the illegitimate line.
Petitioners allege that Ramon Osorio and Felisa Delgado were never
married. In support thereof, they assert that no evidence was ever presented to
establish it, not even so much as an allegation of the date or place of the alleged
marriage. What is clear, however, is that Felisa retained the surname Delgado. So
did Luis, her son with Ramon Osorio. Later on, when Luis got married, his Partida
de Casamiento[14] stated that he was hijo natural de Felisa Delgado (the natural
child of Felisa Delgado),[15] significantly omitting any mention of the name and
other circumstances of his father.[16] Nevertheless, oppositors (now respondents)
insist that the absence of a record of the alleged marriage did not necessarily mean
that no marriage ever took place.
Josefa Delgado died on September 8, 1972 without a will. She was survived
by Guillermo Rustia and some collateral relatives, the petitioners herein. Several
months later, on June 15, 1973, Guillermo Rustia executed an affidavit of
selfadjudication of the remaining properties comprising her estate.
THE MARRIAGE OF GUILLERMO RUSTIA AND JOSEFA DELGADO

Sometime in 1917, Guillermo Rustia proposed marriage to Josefa

Delgado[17] but whether a marriage in fact took place is disputed. According to

petitioners, the two eventually lived together as husband and wife but were never
married. To prove their assertion, petitioners point out that no record of the
contested marriage existed in the civil registry. Moreover, a baptismal certificate
naming Josefa Delgado as one of the sponsors referred to her as Seorita or
unmarried woman.
The oppositors (respondents here), on the other hand, insist that the absence
of a marriage certificate did not of necessity mean that no marriage transpired.
They maintain that Guillermo Rustia and Josefa Delgado were married on June 3,
1919 and from then on lived together as husband and wife until the death of Josefa
on September 8, 1972. During this period spanning more than half a century, they
were known among their relatives and friends to have in fact been married. To
support their proposition, oppositors presented the following pieces of evidence:
1.

2.

Certificate of Identity No. 9592 dated [December 1, 1944] issued to Mrs.

Guillermo J. Rustia by Carlos P. Romulo, then Resident Commissioner to the United
States of the Commonwealth of the Philippines;
Philippine Passport No. 4767 issued to Josefa D. Rustia on June 25, 1947;

3.

Veterans Application for Pension or Compensation for Disability Resulting

from Service in the Active Military or Naval Forces of the United States- Claim No. C4, 004, 503 (VA Form 526) filed with the Veterans Administration of the United States
of America by Dr. Guillermo J. Rustia wherein Dr. Guillermo J. Rustia himself [swore]
to his marriage to Josefa Delgado in Manila on 3 June 1919; [18]

4.

Titles to real properties in the name of Guillermo Rustia indicated that he

was married to Josefa Delgado.

THE ALLEGED HEIRS OF GUILLERMO RUSTIA

Guillermo Rustia and Josefa Delgado never had any children. With no
children of their own, they took into their home the youngsters Guillermina Rustia
Rustia and Nanie Rustia. These children, never legally adopted by the couple, were
what was known in the local dialect as ampun-ampunan.
During his life with Josefa, however, Guillermo Rustia did manage to father
an illegitimate child,[19] the intervenor-respondent Guillerma Rustia, with one
Amparo Sagarbarria. According to Guillerma, Guillermo Rustia treated her as his
daughter, his own flesh and blood, and she enjoyed open and continuous
possession of that status from her birth in 1920 until her fathers demise. In fact,
Josefa Delgados obituary which was prepared by Guillermo Rustia, named the

intervenor-respondent as one of their children. Also, her report card from the
University of Santo Tomas identified Guillermo Rustia as her parent/guardian.[20]
Oppositors (respondents here) nonetheless posit that Guillerma Rustia has
no interest in the intestate estate of Guillermo Rustia as she was never duly
acknowledged as an illegitimate child. They contend that her right to compulsory
acknowledgement prescribed when Guillermo died in 1974 and that she cannot
claim voluntary acknowledgement since the documents she presented were not the
authentic writings prescribed by the new Civil Code.[21]
On January 7, 1974, more than a year after the death of Josefa Delgado,
Guillermo Rustia filed a petition for the adoption [22] of their ampunampunan Guillermina Rustia. He stated under oath [t]hat he ha[d] no legitimate,
legitimated, acknowledged natural children or natural children by legal
fiction.[23] The petition was overtaken by his death on February 28, 1974.
Like Josefa Delgado, Guillermo Rustia died without a will. He was survived
by his sisters Marciana Rustia vda. de Damian and Hortencia Rustia-Cruz, and by
the children of his predeceased brother Roman Rustia Sr., namely, Josefina Rustia
Albano, Virginia Rustia Paraiso, Roman Rustia, Jr., Sergio Rustia, Francisco Rustia
and Leticia Rustia Miranda.[24]

ANTECEDENT PROCEEDINGS

On May 8, 1975, Luisa Delgado vda. de Danao, the daughter of Luis

Delgado, filed the original petition for letters of administration of the intestate
estates of the spouses Josefa Delgado and Guillermo Rustia with the RTC of
Manila, Branch 55.[25] This petition was opposed by the following: (1) the sisters of
Guillermo Rustia, namely, Marciana Rustia vda. de Damian and Hortencia RustiaCruz;[26] (2) the heirs of Guillermo Rustias late brother, Roman Rustia, Sr., and (3)
the ampun-ampunan Guillermina Rustia Rustia. The opposition was grounded on
the theory that Luisa Delgado vda. de Danao and the other claimants were barred
under the law from inheriting from their illegitimate half-blood relative Josefa
Delgado.
In November of 1975, Guillerma Rustia filed a motion to intervene in the
proceedings, claiming she was the only surviving descendant in the direct line of
Guillermo Rustia. Despite the objections of the oppositors (respondents herein),
the motion was granted.
On April 3, 1978, the original petition for letters of administration was
amended to state that Josefa Delgado and Guillermo Rustia were never married but
had merely lived together as husband and wife.

On January 24, 1980, oppositors (respondents herein) filed a motion to

dismiss the petition in the RTC insofar as the estate of Guillermo Rustia was
concerned. The motion was denied on the ground that the interests of the
petitioners and the other claimants remained in issue and should be properly
threshed out upon submission of evidence.
On March 14, 1988, Carlota Delgado vda. de de la Rosa substituted for her
sister, Luisa Delgado vda. de Danao, who had died on May 18, 1987.
On May 11, 1990, the RTC appointed Carlota Delgado vda. de de la Rosa as
administratrix of both estates.[27] The dispositive portion of the decision read:
WHEREFORE, in view of all the foregoing, petitioner and her co-claimants to
the estate of the late Josefa Delgado listed in the Petitions, and enumerated
elsewhere in this Decision, are hereby declared as the only legal heirs of the said
Josefa Delgado who died intestate in the City of Manila on September 8, 1972, and
entitled to partition the same among themselves in accordance with the proportions
referred to in this Decision.
Similarly, the intervenor Guillerma S. Rustia is hereby declared as the sole
and only surviving heir of the late Dr. Guillermo Rustia, and thus, entitled to the
entire estate of the said decedent, to the exclusion of the oppositors and the other
parties hereto.
The Affidavit of Self-Adjudication of the estate of Josefa Delgado executed by
the late Guillermo J. Rustia on June 15, 1973 is hereby SET ASIDE and declared of
no force and effect.
As the estates of both dece[d]ents have not as yet been settled, and their
settlement [is] considered consolidated in this proceeding in accordance with law, a
single administrator therefor is both proper and necessary, and, as the petitioner
Carlota Delgado Vda. de dela Rosa has established her right to the appointment as
administratrix of the estates, the Court hereby APPOINTS her as the
ADMINISTRATRIX of the intestate estate of the decedent JOSEFA DELGADO in
relation to the estate of DR. GUILLERMO J. RUSTIA.
Accordingly, let the corresponding LETTERS OF ADMINISTRATION issue to
the petitioner CARLOTA DELGADO VDA. DE DE LA ROSA upon her filing of the
requisite bond in the sum of FIVE HUNDRED THOUSAND PESOS (P500,000.00).
Finally, oppositor GUILLERMINA RUSTIA RUSTIA is hereby ordered to cease
and desist from her acts of administration of the subject estates, and is likewise
ordered to turn over to the appointed administratix all her collections of the rentals

and income due on the assets of the estates in question, including all documents,
papers, records and titles pertaining to such estates to the petitioner and appointed
administratix CARLOTA DELGADO VDA. DE DE LA ROSA, immediately upon
receipt of this Decision. The same oppositor is hereby required to render an
accounting of her actual administration of the estates in controversy within a period
of sixty (60) days from receipt hereof.
SO ORDERED.[28]

On May 20, 1990, oppositors filed an appeal which was denied on the
ground that the record on appeal was not filed on time. [29] They then filed a petition
for certiorari and mandamus[30] which was dismissed by the Court of Appeals.[31]
However, on motion for reconsideration and after hearing the parties oral
arguments, the Court of Appeals reversed itself and gave due course to oppositors
appeal in the interest of substantial justice.[32]
In a petition for review to this Court, petitioners assailed the resolution of
the Court of Appeals, on the ground that oppositors failure to file the record on
appeal within the reglementary period was a jurisdictional defect which nullified
the appeal. On October 10, 1997, this Court allowed the continuance of the appeal.
The pertinent portion of our decision[33] read:
As a rule, periods prescribed to do certain acts must be followed. However,
under exceptional circumstances, a delay in the filing of an appeal may be excused
on grounds of substantial justice.
xxx

xxx

xxx

The respondent court likewise pointed out the trial courts pronouncements as
to certain matters of substance, relating to the determination of the heirs of the
decedents and the party entitled to the administration of their estate, which were to
be raised in the appeal, but were barred absolutely by the denial of the record on
appeal upon too technical ground of late filing.
xxx

xxx

xxx

In this instance, private respondents intention to raise valid issues in the

appeal is apparent and should not have been construed as an attempt to delay or
prolong the administration proceedings.
xxx

xxx

xxx

A review of the trial courts decision is needed.

xxx

xxx

xxx

WHEREFORE, in view of the foregoing considerations, the Court

hereby AFFIRMS the Resolution dated November 27, 1991 of the Court of Appeals
in CA-G.R. SP No. 23415, for the APPROVAL of the private respondents Record on
Appeal and the CONTINUANCE of the appeal from the Manila, Branch LV Regional
Trial Courts May 11, 1990 decision.
SO ORDERED.

Acting on the appeal, the Court of Appeals[34] partially set aside the trial
courts decision. Upon motion for reconsideration,[35] the Court of Appeals
amended its earlier decision.[36] The dispositive portion of the amended decision
read:
With
the
further
modification,
our
assailed
decision
is RECONSIDERED and VACATED. Consequently, the decision of the trial court
is REVERSED and SET ASIDE. A new one is hereby RENDERED declaring: 1.)
Dr. Guillermo Rustia and Josefa Delgado Rustia to have been legally married; 2.)
the intestate estate of Dr. Guillermo Rustia, Jacoba Delgado-Encinas and the
children of Gorgonio Delgado (Campo) entitled to partition among themselves the
intestate estate of Josefa D. Rustia in accordance with the proportion referred to in
this decision; 3.) the oppositors-appellants as the legal heirs of the late Dr. Guillermo
Rustia and thereby entitled to partition his estate in accordance with the proportion
referred to herein; and 4.) the intervenor-appellee Guillerma S. Rustia as ineligible to
inherit from the late Dr. Guillermo Rustia; thus revoking her appointment as
administratrix of his estate.
The letters of administration of the intestate estate of Dr. Guillermo Rustia in
relation to the intestate estate of Josefa Delgado shall issue to the nominee of the
oppositors-appellants upon his or her qualification and filing of the requisite bond in
the sum of FIVE HUNDRED THOUSAND PESOS (P500,000.00).
Oppositor-appellant Guillermina Rustia Rustia is hereby ordered to cease and
desist from her acts of administration of the subject estates and to turn over to the
appointed administrator all her collections of the rentals and incomes due on the
assets of the estates in question, including all documents, papers, records and titles
pertaining to such estates to the appointed administrator, immediately upon notice of
his qualification and posting of the requisite bond, and to render an accounting of her
(Guillermina Rustia Rustia) actual administration of the estates in controversy within

a period of sixty (60) days from notice of the administrators qualification and posting
of the bond.
The issue of the validity of the affidavit of self-adjudication executed by Dr.
Guillermo Rustia on June 15, 1973 is REMANDED to the trial court for further
proceedings to determine the extent of the shares of Jacoba Delgado-Encinas and
the children of Gorgonio Delgado (Campo) affected by the said adjudication.

Hence, this recourse.

The issues for our resolution are:
1. whether there was a valid marriage between Guillermo Rustia and Josefa Delgado;
2. who the legal heirs of the decedents Guillermo Rustia and Josefa Delgado are;
3. who should be issued letters of administration.
THE MARRIAGE OF GUILLERMO RUSTIA AND JOSEFA DELGADO

A presumption is an inference of the existence or non-existence of a fact

which courts are permitted to draw from proof of other facts. Presumptions are
classified into presumptions of law and presumptions of fact. Presumptions of law
are, in turn, either conclusive or disputable.[37]
Rule 131, Section 3 of the Rules of Court provides:
Sec. 3. Disputable presumptions. The following presumptions are satisfactory if
uncontradicted, but may be contradicted and overcome by other evidence:
xxx

xxx

xxx

(aa) That a man and a woman deporting themselves as husband and wife have
entered into a lawful contract of marriage;
xxx

xxx

xxx

In this case, several circumstances give rise to the presumption that a valid
marriage existed between Guillermo Rustia and Josefa Delgado. Their cohabitation
of more than 50 years cannot be doubted. Their family and friends knew them to be
married. Their reputed status as husband and wife was such that even the original
petition for letters of administration filed by Luisa Delgado vda. de Danao in 1975
referred to them as spouses.

Yet, petitioners maintain that Josefa Delgado and Guillermo Rustia had
simply lived together as husband and wife without the benefit of marriage. They
make much of the absence of a record of the contested marriage, the testimony of a
witness[38] attesting that they were not married, and a baptismal certificate which
referred to Josefa Delgado as Seorita or unmarried woman.[39]
We are not persuaded.
First, although a marriage contract is considered a primary evidence of
marriage, its absence is not always proof that no marriage in fact took place.
[40] Once the presumption of marriage arises, other evidence may be presented in
support thereof. The evidence need not necessarily or directly establish the
marriage but must at least be enough to strengthen the presumption of marriage.
Here, the certificate of identity issued to Josefa Delgado as Mrs. Guillermo Rustia,
[41] the passport issued to her as Josefa D. Rustia,[42] the declaration under oath of no
less than Guillermo Rustia that he was married to Josefa Delgado [43] and the titles
to the properties in the name of Guillermo Rustia married to Josefa Delgado,
more than adequately support the presumption of marriage. These are public
documents which are prima facie evidence of the facts stated therein.[44] No clear
and convincing evidence sufficient to overcome the presumption of the truth of the
recitals therein was presented by petitioners.
Second, Elisa vda. de Anson, petitioners own witness whose testimony they
primarily relied upon to support their position, confirmed that Guillermo Rustia
had proposed marriage to Josefa Delgado and that eventually, the two had lived
together as husband and wife. This again could not but strengthen the
presumption of marriage.
Third, the baptismal certificate[45] was conclusive proof only of the baptism
administered by the priest who baptized the child. It was no proof of the veracity
of the declarations and statements contained therein,[46] such as the alleged single or
unmarried (Seorita) civil status of Josefa Delgado who had no hand in its
preparation.
Petitioners failed to rebut the presumption of marriage of Guillermo Rustia
and Josefa Delgado. In this jurisdiction, every intendment of the law leans toward
legitimizing matrimony. Persons dwelling together apparently in marriage are
presumed to be in fact married. This is the usual order of things in society and, if
the parties are not what they hold themselves out to be, they would be living in
constant violation of the common rules of law and propriety. Semper praesumitur
pro matrimonio. Always presume marriage.[47]
THE LAWFUL HEIRS OF JOSEFA DELGADO

To determine who the lawful heirs of Josefa Delgado are, the questioned
status of the cohabitation of her mother Felisa Delgado with Ramon Osorio must
first be addressed.
As mentioned earlier, presumptions of law are either conclusive or
disputable. Conclusive presumptions are inferences which the law makes so
peremptory that no contrary proof, no matter how strong, may overturn them. [48] On
the other hand, disputable presumptions, one of which is the presumption of
marriage, can be relied on only in the absence of sufficient evidence to the
contrary.
Little was said of the cohabitation or alleged marriage of Felisa Delgado and
Ramon Osorio. The oppositors (now respondents) chose merely to rely on the
disputable presumption of marriage even in the face of such countervailing
evidence as (1) the continued use by Felisa and Luis (her son with Ramon Osorio)
of the surname Delgado and (2) Luis Delgados and Caridad ConcepcionsPartida
de Casamiento[49] identifying Luis as hijo natural de Felisa Delgado (the natural
child of Felisa Delgado).[50]
All things considered, we rule that these factors sufficiently overcame the
rebuttable presumption of marriage. Felisa Delgado and Ramon Osorio were never
married. Hence, all the children born to Felisa Delgado out of her relations with
Ramon Osorio and Lucio Campo, namely, Luis and his half-blood siblings
Nazario, Edilberta, Jose, Jacoba, Gorgonio and the decedent Josefa, all surnamed
Delgado,[51] were her natural children.[52]
Pertinent to this matter is the following observation:
Suppose, however, that A begets X with B, and Y with another woman, C; then X
and Y would be natural brothers and sisters, but of half-blood relationship. Can they
succeed each other reciprocally?
The law prohibits reciprocal succession between illegitimate children and
legitimate children of the same parent, even though there is unquestionably a tie of
blood between them. It seems that to allow an illegitimate child to succeed ab
intestato (from) another illegitimate child begotten with a parent different from that of
the former, would be allowing the illegitimate child greater rights than a legitimate
child. Notwithstanding this, however, we submit that
succession should be allowed, even when the illegitimate brothers and sisters are
only of the half-blood. The reason impelling the prohibition on reciprocal
successions between legitimate and illegitimate families does not apply to the case
under consideration. That prohibition has for its basis the difference in category
between illegitimate and legitimate relatives. There is no such difference when all
the children are illegitimate children of the same parent, even if begotten with

different persons. They all stand on the same footing before the law, just like
legitimate children of half-blood relation.
We submit, therefore, that
the rules regarding succession of legitimate brothers and sisters should be
applicable to them. Full blood illegitimate brothers and sisters should receive double
the portion of half-blood brothers and sisters; and if all are either of the full blood or
of the half-blood, they shall share equally.[53]

Here, the above-named siblings of Josefa Delgado were related to her by

full-blood, except Luis Delgado, her half-brother. Nonetheless, since they were all
illegitimate, they may inherit from each other. Accordingly, all of them are entitled
to inherit from Josefa Delgado.
We note, however, that the petitioners before us are already the nephews,
nieces, grandnephews and grandnieces of Josefa Delgado. Under Article 972 of the
new Civil Code, the right of representation in the collateral line takes place only in
favor of the children of brothers and sisters (nephews and nieces). Consequently, it
cannot be exercised by grandnephews and grandnieces.[54] Therefore, the only
collateral relatives of Josefa Delgado who are entitled to partake of her intestate
estate are her brothers and sisters, or their children who were still alive at the time
of her death on September 8, 1972. They have a vested right to participate in the
inheritance.[55] The records not being clear on this matter, it is now for the trial
court to determine who were the surviving brothers and sisters (or their children) of
Josefa Delgado at the time of her death. Together with Guillermo Rustia, [56] they
are entitled to inherit from Josefa Delgado in accordance with Article 1001 of the
new Civil Code:[57]

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 one-half.

Since Josefa Delgado had heirs other than Guillermo Rustia, Guillermo
could not have validly adjudicated Josefas estate all to himself. Rule 74, Section 1
of the Rules of Court is clear. Adjudication by an heir of the decedents entire
estate to himself by means of an affidavit is allowed only if he is the sole heir to
the estate:
SECTION 1. Extrajudicial settlement by agreement between heirs. If the decedent
left no will and no debts and the heirs are all of age, or the minors are represented
by their judicial or legal representatives duly authorized for the purpose, the parties
may, without securing letters of administration, divide the estate among themselves
as they see fit by means of a public instrument filed in the office of the register of

deeds, and should they disagree, they may do so in an ordinary action of partition. If
there is only one heir, he may adjudicate to himself the estate by means of an
affidavit filed in the office of the register of deeds. x x x (emphasis supplied)

THE LAWFUL HEIRS OF GUILLERMO RUSTIA

Intervenor (now co-respondent) Guillerma Rustia is an illegitimate

child[58] of Guillermo Rustia. As such, she may be entitled to successional rights
only upon proof of an admission or recognition of paternity.[59] She, however,
claimed the status of an acknowledged illegitimate child of Guillermo Rustia
only after the death of the latter on February 28, 1974 at which time it was already
the new Civil Code that was in effect.
Under the old Civil Code (which was in force till August 29, 1950),
illegitimate children absolutely had no hereditary rights. This draconian edict was,
however, later relaxed in the new Civil Code which granted certain successional
rights to illegitimate children but only on condition that they were first recognized
or acknowledged by the parent.
Under the new law, recognition may be compulsory or voluntary.
[60] Recognition is compulsory in any of the following cases:
(1)
(2)
(3)
(4)

in cases of rape, abduction or seduction, when the period of the offense

coincides more or less with that of the conception;
when the child is in continuous possession of status of a child of the alleged
father (or mother)[61] by the direct acts of the latter or of his family;
when the child was conceived during the time when the mother cohabited with
the supposed father;
when the child has in his favor any evidence or proof that the defendant is his
father. [62]

On the other hand, voluntary recognition may be made in the record of birth, a
will, a statement before a court of record or in any authentic writing.[63]
Intervenor Guillerma sought recognition on two grounds: first, compulsory
recognition through the open and continuous possession of the status of an
illegitimate child and second, voluntary recognition through authentic writing.
There was apparently no doubt that she possessed the status of an
illegitimate child from her birth until the death of her putative father Guillermo
Rustia. However, this did not constitute acknowledgment but a mere ground by

which she could have compelled acknowledgment through the courts.

[64] Furthermore, any (judicial) action for compulsory acknowledgment has a dual
limitation: the lifetime of the child and the lifetime of the putative parent. [65] On
the death of either, the action for compulsory recognition can no longer be filed.
[66] In this case, intervenor Guillermas right to claim compulsory acknowledgment
prescribed upon the death of Guillermo Rustia on February 28, 1974.
The claim of voluntary recognition (Guillermas second ground) must
likewise fail. An authentic writing, for purposes of voluntary recognition, is
understood as a genuine or indubitable writing of the parent (in this case,
Guillermo Rustia). This includes a public instrument or a private writing admitted
by the father to be his.[67] Did intervenors report card from the University of Santo
Tomas and Josefa Delgados obituary prepared by Guillermo Rustia qualify as
authentic writings under the new Civil Code? Unfortunately not. The report card of
intervenor Guillerma did not bear the signature of Guillermo Rustia. The fact that
his name appears there as intervenors parent/guardian holds no weight since he
had no participation in its preparation. Similarly, while witnesses testified that it
was Guillermo Rustia himself who drafted the notice of death of Josefa Delgado
which was published in the SUNDAY TIMES on September 10, 1972, that
published obituary was not the authentic writing contemplated by the law.
What could have been admitted as an authentic writing was the original
manuscript of the notice, in the handwriting of Guillermo Rustia himself and
signed by him, not the newspaper clipping of the obituary. The failure to present
the original signed manuscript was fatal to intervenors claim.
The same misfortune befalls the ampun-ampunan, Guillermina Rustia
Rustia, who was never adopted in accordance with law. Although a petition for her
adoption was filed by Guillermo Rustia, it never came to fruition and was
dismissed upon the latters death. We affirm the ruling of both the trial court and
the Court of Appeals holding her a legal stranger to the deceased spouses and
therefore not entitled to inherit from them ab intestato. We quote:
Adoption is a juridical act, a proceeding in rem, which [created] between two
persons a relationship similar to that which results from legitimate paternity and
filiation. Only an adoption made through the court, or in pursuance with the
procedure laid down under Rule 99 of the Rules of Court is valid in this jurisdiction.
It is not of natural law at all, but is wholly and entirely artificial. To establish the
relation, the statutory requirements must be strictly carried out, otherwise, the
adoption is an absolute nullity. The fact of adoption is never presumed, but must be
affirmatively [proven] by the person claiming its existence. [68]

Premises considered, we rule that two of the claimants to the estate of

Guillermo Rustia, namely, intervenor Guillerma Rustia and the ampun-

ampunan Guillermina Rustia Rustia, are not lawful heirs of the decedent. Under
Article 1002 of the new Civil Code, if there are no descendants, ascendants,
illegitimate children, or surviving spouse, the collateral relatives shall succeed to
the entire estate of the deceased. Therefore, the lawful heirs of Guillermo Rustia
are the remaining claimants, consisting of his sisters,[69] nieces and nephews.[70]

ENTITLEMENT TO LETTERS OF ADMINISTRATION

An administrator is a person appointed by the court to administer the

intestate estate of the decedent. Rule 78, Section 6 of the Rules of Court prescribes
an order of preference in the appointment of an administrator:
Sec. 6. When and to whom letters of administration granted. If no executor is
named in the will, or the executor or executors are incompetent, refuse the trust, or
fail to give a bond, or a person dies intestate, administration shall be granted:
(a)

To the surviving husband or wife, as the case may be, or next of kin, or both, in
the discretion of the court, or to such person as such surviving husband or wife, or
next of kin, requests to have appointed, if competent and willing to serve;

(b)

If such surviving husband or wife, as the case may be, or next of kin, or the
person selected by them, be incompetent or unwilling, or if the husband or widow or
next of kin, neglects for thirty (30) days after the death of the person to apply for
administration or to request that the administration be granted to some other person,
it may be granted to one or more of the principal creditors, if competent and willing to
serve;

(c)

If there is no such creditor competent and willing to serve, it may be granted to

such other person as the court may select.

In the appointment of an administrator, the principal consideration is the

interest in the estate of the one to be appointed. [71] The order of preference does not
rule out the appointment of co-administrators, specially in cases where
justice and equity demand that opposing parties or factions be represented in the
management of the estates,[72] a situation which obtains here.
It is in this light that we see fit to appoint joint administrators, in the persons of
Carlota Delgado vda. de de la Rosa and a nominee of the nephews and nieces of
Guillermo Rustia. They are the next of kin of the deceased spouses Josefa Delgado
and Guillermo Rustia, respectively.

WHEREFORE, the petition (which seeks to reinstate the May 11, 1990
decision of the RTC Manila, Branch 55) is hereby DENIED. The assailed October
24, 2002 decision of the Court of Appeals is AFFIRMED with the following
modifications:
1.
2.

3.

4.

Guillermo Rustias June 15, 1973 affidavit of self-adjudication is

hereby ANNULLED.
the intestate estate of Guillermo Rustia shall inherit half of the intestate
estate of Josefa Delgado. The remaining half shall pertain to (a) the full and halfsiblings of Josefa Delgado who survived her and (b) the children of any of Josefa
Delgados full- or half-siblings who may have predeceased her, also surviving at
the time of her death. Josefa Delgados grandnephews and grandnieces are
excluded from her estate. In this connection, the trial court is hereby ordered to
determine the identities of the relatives of Josefa Delgado who are entitled to share
in her estate.
Guillermo Rustias estate (including its one-half share of Josefa Delgados
estate) shall be inherited by Marciana Rustia vda. de Damian and Hortencia Rustia
Cruz (whose respective shares shall be per capita) and the children of the late
Roman Rustia, Sr. (who survived Guillermo Rustia and whose respective shares
shall be per stirpes). Considering that Marciana Rustia vda. deDamian and
Hortencia Rustia Cruz are now deceased, their respective shares shall pertain to
their estates.
Letters of administration over the still unsettled intestate estates of
Guillermo Rustia and Josefa Delgado shall issue to Carlota Delgado vda. de de la
Rosa and to a nominee from among the heirs of Guillermo Rustia, as joint
administrators, upon their qualification and filing of the requisite bond in such
amount as may be determined by the trial court.
No pronouncement as to costs.

SO ORDERED.
[G.R. No. 149751. March 11, 2005]
PURIFICACION
BALILO-MONTERO
and
JOVENCIO BALILO, petitioners,
vs. EUGENIA SEPTIMO, CONSUELO ROBLES and PLACIDO ROBLES, respondents.
DECISION
CALLEJO, SR., J.:
Jose Balilo was the owner of a parcel of land, with an area of 7.7837 hectares, located in San
Jose, Occidental Mindoro, covered by Homestead Patent No. 46784 issued on February 21,
1938. Based on the said patent, Original Certificate of Title (OCT) No. 3014 was issued to
and under his name by the Register of Deeds.[1]
On August 12, 1943, Jose Balilo died intestate.[2] Sometime in 1948, Niniana Balilo, the
sister of Jose Balilo, filed a petition in the Court of First Instance (CFI) of Pampanga, for the
guardianship of the property and the person of Jovencio Balilo whom she alleged to be the

son of her brother, Jose Balilo; hence, her nephew. The case was docketed as Special
Proceeding No. 262. Niniana filed a motion in the said case, for authority to execute, for and
in behalf of her ward, a deed of absolute sale over the property covered by OCT No. 3014 in
favor of Jose Septimo for P750.00. The CFI granted the motion. Niniana executed the deed
of absolute sale over the property in favor of Jose Septimo who, thereafter, declared the
property in his name for taxation purposes and paid the realty taxes thereon.
However, Jose Septimo failed to register the deed in the Office of the Register of Deeds and,
consequently, to secure a torrens title over the property in his name. The guardianship case
was terminated on September 24, 1951 per the Order of the CFI of even date.[3]
Thereafter, on October 12, 1963, Jovencio Balilo filed a complaint against Jose Septimo in
the CFI of Occidental Mindoro, to compel the latter to resell the property to him. The case
was docketed as Civil Case No. R-159. Jovencio alleged therein that he was the only
legitimate child of the spouses Jose Balilo and Juana Villarama, and that the latter died on
August 30, 1946. He prayed that, after due proceedings, judgment be rendered in his favor,
thus:
WHEREFORE, it is most respectfully prayed that an order be issued requiring the Defendant
to resell the said Lot No. 1649, Pls-33, situated in San Jose, Occidental Mindoro, to the
herein Plaintiff upon tender to the herein Defendant the sum of SEVEN HUNDRED FIFTY
(P750.00) PESOS, Philippine Currency, or any such sum as this Honorable Court finds just
and fair, and requiring said Defendant to deliver possession of said homestead land to the
herein Plaintiff.
Plaintiff further prays for other relief as may be deemed just and proper in the premises. [4]
Jovencio amended the complaint and impleaded Placido Robles as party-defendant, on his
claim that the latter purchased a five-hectare portion of the property before the complaint was
filed. On November 8, 1966, the CFI rendered judgment dismissing the complaint. The CFI
ruled that Jovencio had no right to repurchase the property, the five-year period under
Section 119 of Commonwealth Act No. 141 having long expired. Jovencio failed to appeal
the decision.[5]
On March 3, 1987, Purificacion Balilo-Montero filed a complaint with the Regional Trial
Court (RTC) of San Jose, Occidental Mindoro, Branch 46, against the respondents, Eugenia
Septimo, the surviving spouse of Jose Septimo, and the spouses Placido Robles and
Consuelo Robles, for recovery of possession of the said property. However, despite the
allegation in his complaint in Civil Case No. R-159 that he was the only legitimate child of
Jose Balilo, she impleaded Jovencio Balilo as party-plaintiff.
The complaint alleged, inter alia, that the parties were the children and only legal heirs of the
late Jose Balilo who, before his death, was the owner of Lot No. 1649 covered by OCT No.
3014 located in San Jose, Occidental Mindoro; only a year before the complaint was filed,
Purificacion learned that she was one of the co-owners of the property; that the respondents
claimed ownership over the property and installed tenants thereon; and despite their
demands, the respondents and their tenants refused to do so.
Jovencio and Purificacion prayed that, after due proceedings, judgment be rendered in their
favor:
WHEREFORE, it is respectfully prayed of this Honorable Court that judgment be rendered
for the plaintiffs and against the defendants:

1.
Restoring possession of the landholdings in question unto the plaintiffs;
2.
Ordering defendants to reimburse plaintiffs the rentals on the landholdings to be
determined by this Honorable Court;
3.
Ordering the defendants to pay the plaintiffs the sum of P20,000.00 as attorneys fees
and litigation expenses;
4.
Ordering the defendants to pay the costs of suit; and
5.
Extending unto the plaintiffs such other reliefs to which they may be entitled in law
and equity.[6]
The summons and complaint were served on respondents Eugenia Septimo and Consuelo
Robles. As per the return of the sheriff, Placido Robles was already dead.
In her answer to the complaint, respondent Eugenia Septimo alleged that her late husband
Jose Septimo had purchased the property from Jovencio Balilo, through his guardian, and
that the sale was approved by the CFI of Pampanga in Special Proceeding No. 262. She
specifically denied, for lack of information sufficient to form a belief as to the truth thereof,
the allegation of Purificacion Montero that she was one of Jose Balilos children and one of
his heirs. Consuelo Robles was declared in default for her failure to file her answer to the
complaint.[7]
On October 15, 1991, the trial court rendered judgment in favor of Jovencio and
Purificacion. The fallo of the decision reads:
Premises thoroughly and fairly considered, judgment is hereby rendered:
1.
Ordering defendant Eugenia Septimo as successor-in-interest of decedent Jose Septimo
to recovery (sic) to plaintiff Purificacion Balilo-Montero one-half of the parcel of agricultural
land covered by Original Certificate of Title No. 3014;
2.
Denying claim for damages; and
3.
Dismissing counterclaim.
SO ORDERED.[8]
Only respondent Eugenia Septimo appealed the decision to the Court of Appeals (CA), where
she alleged the following:
I.
That the trial court erred in finding that the plaintiff Purificacion Balilo-Montero did
not lost (sic) her right to recover the property from the defendants, because she was not a
party to the sale and for not having actual knowledge on the guardianship proceedings.
II.
That the trial court erred in ruling that the sale of the land by the legal guardian of
Jovencio Balilo duly authorized and approved by the Court which (sic) the guardianship
proceedings was being held did not affect the share of plaintiff Purificacion Balilo-Montero
because the sale was not registered.
III.
The trial court erred in ordering defendant Eugenia Septimo to reconvey 1/2 of the
property in question covered by TCT No. T-3014 to plaintiff Purificacion Balilo-Montero. [9]
In a Decision dated April 11, 2001, the CA affirmed with modification the decision of the
trial court. The CA applied the Old Civil Code on testate succession, and ruled that the
property was registered in the name of Jose Balilo whose civil status was stated as single.
Considering that he was survived by Purificacion Montero, his wife Juana Villarama and
their son Jovencio Balilo when he died in 1943; and when Juana Villarama died intestate,
was, in turn, survived by her son Jovencio Balilo and Purificacion Montero, Jovencio was
entitled to two-thirds undivided portion of the property, while Purificacion Montero was

entitled to one-third undivided portion of the property. Respondent Eugenia Septimo did not
file any motion for the reconsideration of the decision. However, Purificacion Montero filed
a motion for the partial reconsideration of the decision, alleging that, applying the provisions
of the Old Civil Code on intestate succession, she was entitled to an undivided one-half
portion of the property. The CA, however, denied the said motion.
Purificacion Montero, now the petitioner, filed the instant petition for review, contending
that:
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE PETITIONER
IS ENTITLED ONLY TO ONE-THIRD (1/3) SHARE OF THE PROPERTY SOUGHT TO
BE RECOVERED HEREIN, SAID ADJUDICATION FINDING NO LEGAL SUPPORT
UNDER THE CIVIL CODE OF SPAIN WHICH WAS THE LAW THEN PREVAILING.[10]
The petitioner maintains that the CA should have applied the provisions of the Old Civil
Code on intestate succession because Jose Balilo died intestate in 1943 before the New Civil
Code took effect. She posits that she and Jovencio Balilo were entitled to inherit the
property from Jose Balilo in equal shares, because there is no competent evidence on record
to prove that Jose Balilo and Juana Villarama, the mother of Jovencio, were married.
The petition is granted.
We agree with the contention of the petitioner that there is no evidence on record that Jose
Balilo and Juana Villarama were married, or that they cohabited with each other as husband
and wife. Even Jovencio Balilo opted not to testify. Neither was Jose Balilo survived by any
ascendants. However, we agree with the ruling of the CA that Jose Balilo and Gertrudes
Nicdao were not, likewise, married.
The contention of the petitioner that the CA erred in applying the
law on testate succession under the Old Civil Code is, likewise, correct. The appellate court
should have applied the provisions of the Old Civil Code on intestate succession considering
that Jose Balilo died intestate in 1943, before the effectivity of the New Civil Code.
Article 931 of the Old Civil Code provides that when a person dies intestate, his legitimate
children and their descendants succeed him, without distinction of sex, or age, even though
they spring from different marriages. Article 932 of the same Code provides that the children
of the deceased shall always inherit from him in their own right, dividing the inheritance in
equal shares. Moreover, under Article 939 of the Old Civil Code, in the absence of
legitimate descendants or ascendants, the natural children legally acknowledged and those
legitimated by royal succession shall succeed to the entire estate of the deceased.
When Jose Balilo died intestate on August 12, 1943, he was survived by his daughter, the
petitioner herein, his son Jovencio Balilo, and Gertrudes Nicdao and Juana Villarama.
Conformably to Article 939 of the Old Civil Code, only the petitioner and Jovencio Balilo
inherited the property in equal shares, to the exclusion of Juana Villarama and Gertrudes
Nicdao. Neither of them was the lawful wife of Jose Balilo. Besides, under Article 946 of
the Old Civil Code, the surviving spouse shall inherit only in default of the persons
enumerated in the three sections next preceding.
Consequently, when Jovencio Balilo, through his guardian Niniana Balilo, executed the deed
of absolute sale over the entire property on May 26, 1948 in favor of Jose Septimo, the latter
did not acquire title over the entire property, but only to an undivided one-half portion
thereof which Jovencio Balilo had inherited from Jose Balilo. Jose Septimo could not have

purchased and acquired the other half of the property from Jovencio Balilo because the latter
was not the owner thereof. Hence, the CA erred in holding that Jovencio Balilo inherited an
undivided two-thirds portion of the property, and that Jose Septimo acquired title over the
said two-thirds undivided portion.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed
Decision and Resolution of the Court of Appeals are REVERSED AND SET ASIDE. The
Decision of the Regional Trial Court is REINSTATED. No pronouncement as to costs.
SO ORDERED.

[G.R. No. 119064. August 22, 2000]

NENG KAGUI KADIGUIA MALANG, petitioner, vs. HON. COROCOY MOSON,

Presiding Judge of 5th Sharia District Court, Cotabato City, HADJI MOHAMMAD
ULYSSIS MALANG, HADJI ISMAEL MALINDATU MALANG, FATIMA MALANG,
DATULNA MALANG, LAWANBAI MALANG, JUBAIDA KADO MALANG, NAYO
OMAL MALANG and MABAY GANAP MALANG, respondents.
DECISION
GONZAGA-REYES, J.:

Presented for resolution in this special civil action of certiorari is the issue of whether
or not the regime of conjugal partnership of gains governed the property relationship
of two Muslims who contracted marriage prior to the effectivity of the Code of Muslim
Personal Laws of the Philippines (hereafter, P.D. 1083 or Muslim Code). The
question is raised in connection with the settlement of the estate of the deceased
husband.
Hadji Abdula Malang, a Muslim, contracted marriage with Aida (Kenanday) Limba.
They begot three sons named Hadji Mohammad Ulyssis, Hadji Ismael Malindatu and
Datulna, and a daughter named Lawanbai. Hadji Abdula Malang was engaged in
farming, tilling the land that was Aidas dowry (mahr or majar). Thereafter, he
bought a parcel of land in Sousa, Cotabato. Hadji Abdula and Aida already had two
children when he married for the second time another Muslim named Jubaida Kado
in Kalumamis, Talayan, Maguindanao. No child was born out of Hadji Abdulas
second marriage. When Aida, the first wife, was pregnant with their fourth child,
Hadji Abdula divorced her.
In 1965, Hadji Abdula married another Muslim, Nayo H. Omar but they were
childless. Thereafter, Hadji Abdula contracted marriage with Hadji Mabai (Mabay) H.
Adziz in Kalumamis, Talayan, Maguindanao and soon they had a daughter named
Fatima (Kueng). Hadji Abdula and Hadji Mabai stayed in that place to farm while
Hadji Abdula engaged in the business of buying and selling of rice, corn and other
agricultural products. Not long after, Hadji Abdula married three other Muslim
women named Saaga, Mayumbai and Sabai but he eventually divorced them.
Hadji Abdula then migrated to Tambunan where, in 1972, he married petitioner Neng
Kagui Kadiguia Malang, his fourth wife, excluding the wives he had divorced. They
established residence in Cotabato City but they were childless. For a living, they
relied on farming and on the business of buying and selling of agricultural products.

Hadji Abdula acquired vast tracts of land in Sousa and Talumanis, Cotabato City,
some of which were cultivated by tenants. He deposited money in such banks as
United Coconut Planters Bank, Metrobank and Philippine Commercial and Industrial
Bank.
On December 18, 1993, while he was living with petitioner in Cotabato City, Hadji
Abdula died without leaving a will. On January 21, 1994, petitioner filed with the
Sharia District Court in Cotabato City a petition for the settlement of his estate with a
prayer that letters of administration be issued in the name of her niece, Tarhata
Lauban.
Petitioner claimed in that petition that she was the wife of Hadji Abdula; that his other
legal heirs are his three children named Teng Abdula, Keto Abdula and Kueng
Malang, and that he left seven (7) parcels of land, five (5) of which are titled in Hadji
Abdulas name married to Neng P. Malang, and a pick-up jeepney.
On February 7, 1994, the Sharia District Court ordered the publication of the
petition. After such publication or on March 16, 1994, Hadji Mohammad Ulyssis
Malang (Hadji Mohammad, for brevity), the eldest son of Hadji Abdula, filed his
opposition to the petition. He alleged among other matters that his fathers surviving
heirs are as follows: (a) Jubaida Malang, surviving spouse; (b) Nayo Malang,
surviving spouse; (c) Mabay Malang, surviving spouse; (d) petitioner Neng Malang,
surviving spouse; (e) oppositor Hadji Mohammad Ulyssis Malang who is also known
as Teng Abdula, son; (f) Hadji Ismael Malindatu Malang, also known as Keto
Abdula, son, (g) Fatima Malang, also known as Kueng Malang, daughter; (h)
Datulna Malang, son, and (i) Lawanbai Malang, daughter. Oppositor Hadji
Mohammad Ulyssis Malang alleged that since he and his brother, Hadji Ismael
Malindatu Malang, had helped their father in his business, then they were more
competent to be administrators of his estate.
On March 30, 1994, Jubaida Malang, Ismael Malindatu Malang, Nayo Malang,
Fatima Malang, Mabay Malang, Datulna Malang and Lawanbai Malang filed an
opposition to the petition, adopting as their own the written opposition of Hadji
Mohammad.
On April 7, 1994, the Sharia District Court issued an Order appointing Hadji
Mohammad administrator of his fathers properties outside Cotabato City. The same
order named petitioner and Hadji Ismael Malindatu Malang as joint administrators of
the estate in Cotabato City. Each administrator was required to post a bond in the
amount of P100,000.00. On April 13, 1994, letters of administration were issued to
Hadji Mohammad after he had posted the required bond. He took his oath on the
same day. The following day, Hadji Ismael and petitioner likewise filed their
respective bonds and hence, they were allowed to take their oath as administrators.
On April 25, 1994 and May 3, 1994, petitioner filed two motions informing the court
that Hadji Abdula had outstanding deposits with nine (9) major banks. Petitioner
prayed that the managers of each of those banks be ordered to submit a bank
statement of the outstanding deposit of Hadji Abdula. The Sharia District Court
having granted the motions,Assistant Vice President Rockman O. Sampuha of
United Coconut Planters Bank informed the court that as of April 24, 1994, the

outstanding deposit of Hadji Abdula amounted to one million five hundred twenty
thousand four hundred pesos and forty-eight centavos (P1,520,400.48). The Senior
Manager of the Cotabato branch of Metrobank also certified that as of December 18,
1993, Hadji Abdula Malang or Malindatu Malang had on savings deposit the
balance of three hundred seventy-eight thousand four hundred ninety-three pesos
and 32/100 centavos (P378,493.32). PCIB likewise issued a certification that Hadji
Abdula had a balance of eight hundred fifty pesos (P850.00) in his current account
as of August 11, 1994.
During the pendency of the case, petitioner suffered a congestive heart failure that
required immediate medical treatment. On May 5, 1994, she filed a motion praying
that on account of her ailment, she be allowed to withdraw from UCPB the amount of
three hundred thousand pesos (P300,000.00) that shall constitute her advance
share in the estate of Hadji Abdula. After due hearing, the Sharia District Court
allowed petitioner to withdraw the sum of two hundred fifty thousand pesos
(P250,000.00).
On May 12, 1994, the Sharia District Court required petitioner and Hadji Ismael as
joint administrators to submit an inventory and appraisal of all properties of Hadji
Abdula. In compliance therewith, Hadji Ismael submitted an inventory showing that in
Cotabato City, Hadji Abdula had seven (7) residential lots with assessed value
ranging from P5,020.00 to P25,800.00, an agricultural land with assessed value of
P860.00, three (3) one-storey residential buildings, and one (1) two-storey residential
building. All these properties were declared for taxation purposes in Hadji Abdulas
name.
For her part, petitioner submitted an inventory showing that Hadji Abdula married to
Neng Malang had seven (7) residential lots with a total assessed value of
P243,840.00 in Cotabato City, an Isuzu pick-up jeepney valued at P30,000.00 and
bank deposits.
In the Memorandum that she filed with the Sharia District Court, petitioner asserted
that all the properties located in Cotabato City, including the vehicle and bank
deposits, were conjugal properties in accordance with Article 160 of the Civil Code
and Article 116 of the Family Code while properties located outside of Cotabato City
were exclusive properties of the decedent.
On the other hand, the oppositors contended in their own Memorandum that all the
properties left by Hadji Abdula were his exclusive properties for various reasons.
First, Hadji Abdula had no conjugal partnership with petitioner because his having
contracted eight (8) marriages with different Muslim women was in violation of the
Civil Code that provided for a monogamous marriage; a conjugal partnership
presupposes a valid civil marriage, not a bigamous marriage or a common-law
relationship. Second, the decedent adopted a complete separation of property
regime in his marital relations; while his wives Jubaida Kado, Nayo Hadji Omal
and Mabay Ganap Hadji Adzis contributed to the decedents properties, there is
no evidence that petitioner had contributed funds for the acquisition of such
properties. Third, the presumption that properties acquired during the marriage are
conjugal properties is inapplicable because at the time he acquired the properties,

the decedent was married to four (4) women. Fourth, the properties are not conjugal
in nature notwithstanding that some of these properties were titled in the name of the
decedent married to Neng Malang because such description is not conclusive of
the conjugal nature of the property. Furthermore, because petitioner admitted in her
verified petition that the properties belonged to the estate of decedent, she was
estopped from claiming, after formal offer of evidence, that the properties were
conjugal in nature just because some of the properties were titled in Hadji Abdulas
name married to Neng Malang. Fifth, if it is true that the properties were conjugal
properties, then these should have been registered in the names of both petitioner
and the decedent.
In its Order of September 26, 1994, the Sharia District Court presided by Judge
Corocoy D. Moson held that there was no conjugal partnership of gains between
petitioner and the decedent primarily because the latter married eight times. The
Civil Code provision on conjugal partnership cannot be applied if there is more than
one wife because conjugal partnership presupposes a valid civil marriage, not a
plural marriage or a common-law relationship. The court further found that the
decedent was the chief, if not the sole, breadwinner of his families and that
petitioner did not contribute to the properties unlike the other wives named Jubaida,
Nayo and Mabay. The description married to Neng Malang in the titles to the real
properties is no more than that -- the description of the relationship between
petitioner and the decedent. Such description is insufficient to prove that the
properties belong to the conjugal partnership of gains. The court stated:
In the instant case, decedent had four (4) wives at the time he acquired the
properties in question. To sustain the contention of the petitioner that the properties
are her conjugal property with the decedent is doing violence to the provisions of the
Civil Code. Be it noted that at the time of the marriage of the petitioner with the
decedent, there were already three (3) existing marriages. Assuming for the
moment that petitioner and the decedent had agreed that the property regime
between them will be governed by the regime of conjugal partnership property, that
agreement is null and void for it is against the law, public policy, public order, good
moral(s) and customs.
Under Islamic law, the regime of property relationship is complete separation of
property, in the absence of any stipulation to the contrary in the marriage settlements
or any other contract (Article 38, P.D. 1083). There being no evidence of such
contrary stipulation or contract, this Court concludes as it had begun, that the
properties in question, both real and personal, are not conjugal, but rather, exclusive
property of the decedent.
Thus, the Sharia District Court held that the Islamic law should be applied in the
distribution of the estate of Hadji Abdula and accordingly disposed of the case as
follows:
WHEREFORE, premises considered, the Court orders the following:
1) That the estate shall pay the corresponding estate tax, reimburse the funeral
expenses in the amount of P50,000.00, and the judicial expenses in the amount of
P2,040.80;

2) That the net estate, consisting of real and personal properties, located in Talayan,
Maguindanao and in Cotabato City, is hereby ordered to be distributed and
adjudicated as follows:
a) Jubaida Kado Malang
------------------------- 2/64 of the estate
b) Nayo Omar Malang
------------------------- 2/64
- do c) Mabai Aziz Malang
------------------------- 2/64
- do d) Neng Kagui Kadiguia Malang ------------------- 2/64
- do e) Mohammad Ulyssis Malang-------------------------14/64
- do f) Ismael Malindatu Malang---------------------------14/64
- do g) Datulna Malang
------------------------- 14/64
- do h) Lawanbai Malang
------------------------- 7/64
- do i) Fatima (Kueng) Malang ------------------------- 7/64
- do Total------------------------ 64/64
3) That the amount of P250,000.00 given to Neng Kagui Kadiguia Malang by way
of advance be charged against her share and if her share is not sufficient, to return
the excess; and
4) That the heirs are hereby ordered to submit to this court their Project of Partition
for approval, not later than three (3) months from receipt of this order.
SO ORDERED.
On October 4, 1994, petitioner filed a motion for the reconsideration of that Order.
The oppositors objected to that motion. On January 10, 1995, the Sharia District
Court denied petitioners motion for reconsideration. Unsatisfied, petitioner filed a
notice of appeal. However, on January 19, 1995, she filed a manifestation
withdrawing the notice of appeal on the strength of the following provisions of P.D.
No. 1083:
Art. 145. Finality of Decisions The decisions of the Sharia District Courts whether
on appeal from the Sharia Circuit Court or not shall be final. Nothing herein
contained shall affect the original and appellate jurisdiction of the Supreme Court as
provided in the Constitution.
Petitioner accordingly informed the court that she would be filing an original action
of certiorari with the Supreme Court.
On March 1, 1995, petitioner filed the instant petition for certiorari with preliminary
injunction and/or restraining order. She contends that the Sharia District Court
gravely erred in: (a) ruling that when she married Hadji Abdula Malang, the latter
had three existing marriages with Jubaida Kado Malang, Nayo Omar Malang and
Mabay Ganap Malang and therefore the properties acquired during her marriage
could not be considered conjugal, and (b) holding that said properties are not
conjugal because under Islamic Law, the regime of relationship is complete
separation of property, in the absence of stipulation to the contrary in the marriage
settlement or any other contract.
As petitioner sees it, the law applicable on issues of marriage and property regime
is the New Civil Code, under which all property of the marriage is presumed to
belong to the conjugal partnership. The Sharia Court, meanwhile, viewed the Civil
Code provisions on conjugal partnership as incompatible with plural marriage, which

is permitted under Muslim law, and held the applicable property regime to be
complete separation of property under P.D. 1083.
Owing to the complexity of the issue presented, and the fact that the case is one of
first impression --- this is a singular situation where the issue on what law governs
the property regime of a Muslim marriage celebrated prior to the passage of the
Muslim Code has been elevated from a Sharia court for the Courts resolution --- the
Court decided to solicit the opinions of two amici curiae, Justice Ricardo C.
Puno and former Congressman Michael O. Mastura. The Court extends its warmest
thanks to the amici curiae for their valuable inputs in their written memoranda and in
the hearing of June 27, 2000.
Resolution of the instant case is made more difficult by the fact that very few of the
pertinent dates of birth, death, marriage and divorce are established by the record.
This is because, traditionally, Muslims do not register acts, events or judicial decrees
affecting civil status. It also explains why the evidence in the instant case consisted
substantially of oral testimonies.
What is not disputed is that: Hadji Abdula contracted a total of eight marriages,
counting the three which terminated in divorce; all eight marriages were celebrated
during the effectivity of the Civil Code and before the enactment of the Muslim Code;
Hadji Abdula divorced four wives --- namely, Aida, Saaga, Mayumbai and Sabai --all divorces of which took place before the enactment of the Muslim Code; and, Hadji
Abdula died on December 18, 1993, after the Muslim Code and Family Code took
effect, survived by four wives (Jubaida, Nayo, Mabay and Neng) and five children,
four of whom he begot with Aida and one with Mabay. It is also clear that the
following laws were in force, at some point or other, during the marriages of Hadji
Abdula: the Civil Code, which took effect on August 30, 1950; Republic Act No. 394
(R.A. 394), authorizing Muslim divorces, which was effective from June 18, 1949 to
June 13, 1969; the Muslim Code, which took effect February 4, 1977; and the Family
Code, effective August 3, 1988.
Proceeding upon the foregoing, the Court has concluded that the record of the case
is simply inadequate for purposes of arriving at a fair and complete resolution of the
petition. To our mind, any attempt at this point to dispense with the basic issue given
the scantiness of the evidence before us could result in grave injustice to the parties
in this case, as well as cast profound implications on Muslim families similarly or
analogously situated to the parties herein. Justice and accountability dictate a
remand; trial must reopen in order to supply the factual gaps or, in Congressman
Masturas words, missing links, that would be the bases for judgment and
accordingly, allow respondent court to resolve the instant case. In ordering thus,
however, we take it as an imperative on our part to set out certain guidelines in the
interpretation and application of pertinent laws to facilitate the task of respondent
court.
It will also be recalled that the main issue presented by the petition --- concerning the
property regime applicable to two Muslims married prior to the effectivity of the
Muslim Code --- was interposed in relation to the settlement of the estate of the
deceased husband. Settlement of estates of Muslims whose civil acts predate the

enactment of the Muslim Code may easily result in the application of the Civil Code
and other personal laws, thus convincing the Court that it is but propitious to go
beyond the issue squarely presented and identify such collateral issues as are
required to be resolved in a settlement of estate case. As amicus
curiae Congressman Mastura puts it, the Court does not often come by a case as
the one herein, and jurisprudence will be greatly enriched by a discussion of the
watershed of collateral issues that this case presents.
The Court has identified the following collateral issues, which we hereby present in
question form: (1) What law governs the validity of a Muslim marriage celebrated
under Muslim rites before the effectivity of the Muslim Code? (2) Are multiple
marriages celebrated before the effectivity of the Muslim Code valid? (3) How do the
Courts pronouncements in People vs. Subano, 73 Phil. 692 (1942), and People vs.
Dumpo, 62 Phil. 246 (1935), affect Muslim marriages celebrated before the
effectivity of the Muslim Code? (4) What laws govern the property relationship of
Muslim multiple marriages celebrated before the Muslim Code? (5) What
law governs the succession to the estate of a Muslim who died after the Muslim
Code and the Family Code took effect? (6) What laws apply to the dissolution of
property regimes in the cases of multiple marriages entered into before the Muslim
Code but dissolved (by the husbands death) after the effectivity of the Muslim
Code? and (7) Are Muslim divorces effected before the enactment of the Muslim
Code valid?
The succeeding guidelines, which derive mainly from the Compliance of amicus
curiae Justice Puno, are hereby laid down by the Court for the reference of
respondent court, and for the direction of the bench and bar:
First Collateral Issue: The Law(s) Governing Validity of Muslim Marriages Celebrated Before the Muslim Code

The time frame in which all eight marriages of Hadji Abdula were celebrated was
during the effectivity of the Civil Code which, accordingly, governs the marriages.
Article 78 of the Civil Code recognized the right of Muslims to contract marriage in
accordance with their customs and rites, by providing that --Marriages between Mohammedans or pagans who live in the non-Christian
provinces may be performed in accordance with their customs, rites or practices. No
marriage license or formal requisites shall be necessary. Nor shall the persons
solemnizing these marriages be obliged to comply with article 92.
However, thirty years after the approval of this Code, all marriages performed
between Muslims or other non-Christians shall be solemnized in accordance with the
provisions of this Code. But the President of the Philippines, upon recommendation
of the Commissioner of National Integration, may at any time before the expiration of
said period, by proclamation, make any of said provisions applicable to the Muslims
and non-Christian inhabitants of any of the non-Christian provinces.
Notably, before the expiration of the thirty-year period after which Muslims are
enjoined to solemnize their marriages in accordance with the Civil Code, P.D. 1083
or the Muslim Code was passed into law. The enactment of the Muslim Code on
February 4, 1977 rendered nugatory the second paragraph of Article 78 of the Civil

Code which provides that marriages between Muslims thirty years after the approval
of the Civil Code shall be solemnized in accordance with said Code.
Second and Third Collateral Issues: The Validity of Muslim Multiple Marriages Celebrated Before the Muslim Code; The Effect of People vs.
Subanoand People vs. Dumpo

Prior to the enactment of P.D. 1083, there was no law in this jurisdiction which
sanctioned multiple marriages. It is also not to be disputed that the only law in force
governing marriage relations between Muslims and non-Muslims alike was the Civil
Code of 1950.
The Muslim Code, which is the first comprehensive codification of Muslim personal
laws, also provides in respect of acts that transpired prior to its enactment:
Art. 186. Effect of code on past acts. --- (1) Acts executed prior to the effectivity of
this Code shall be governed by the laws in force at the time of their execution, and
nothing herein except as otherwise specifically provided, shall affect their validity or
legality or operate to extinguish any right acquired or liability incurred thereby.
The foregoing provisions are consistent with the principle that all laws operate
prospectively, unless the contrary appears or is clearly, plainly and unequivocably
expressed or necessarily implied; accordingly, every case of doubt will be resolved
against the retroactive opertion of laws. Article 186 aforecited enunciates the general
rule of the Muslim Code to have its provisions applied prospectively, and implicitly
upholds the force and effect of a pre-existing body of law, specifically, the Civil Code
--- in respect of civil acts that took place before the Muslim Codes enactment.
Admittedly, an apparent antagonism arises when we consider that what the
provisions of the Civil Code contemplate and nurture is a monogamous marriage.
Bigamous or polygamous marriages are considered void and inexistent from the
time of their performance. The Family Code which superseded the Civil Code
provisions on marriage emphasizes that a subsequent marriage celebrated before
the registration of the judgment declaring a prior marriage void shall likewise be
void. These provisions illustrate that the marital relation perceived by the Civil Code
is one that is monogamous, and that subsequent marriages entered into by a person
with others while the first one is subsisting is by no means countenanced.
Thus, when the validity of Muslim plural marriages celebrated before the enactment
of the Muslim Code was touched upon in two criminal cases, the Court applied the
perspective in the Civil Code that only one valid marriage can exist at any given
time.
In People vs. Subano, supra, the Court convicted the accused of homicide, not
parricide, since --(f)rom the testimony of Ebol Subano, father of the deceased, it appears that the
defendant has three wives and that the deceased was the last in point of time.
Although the practice of polygamy is approved by custom among these nonChristians, polygamy, however, is not sanctioned by the Marriage Law , which merely
recognizes tribal marriage rituals. The deceased, under our law, is not thus the
lawful wife of the defendant and this precludes conviction for the crime of parricide.
In People vs. Dumpo, supra, Mora Dumpo was prosecuted for bigamy when, legally
married to Moro Hassan, she allegedly contracted a second marriage with Moro

Sabdapal. The Court acquitted her on the ground that it was not duly proved that
the alleged second marriage had all the essential requisites to make it valid were it
not for the subsistence of the first marriage. As it appears that the consent of the
brides father is an indispensable requisite to the validity of a Muslim marriage, and
as Mora Dumpos father categorically affirmed that he did not give his consent to her
union with Moro Sabdapal, the Court held that such union could not be a marriage
otherwise valid were it not for the existence of the first one, and resolved to acquit
her of the charge of bigamy.
The ruling in Dumpo indicates that, had it been proven as a fact that the second
marriage contained all the essential requisites to make it valid, a conviction for
bigamy would have prospered.
Fourth Collateral Issue: Law(s) Governing Property Relations of Muslim Marriages Celebrated Before the Muslim Code

This is the main issue presented by the instant petition. In keeping with our holding
that the validity of the marriages in the instant case is determined by the Civil Code,
we hold that it is the same Code that determines and governs the property relations
of the marriages in this case, for the reason that at the time of the celebration of the
marriages in question the Civil Code was the only law on marriage relations,
including property relations between spouses, whether Muslim or non-Muslim.
Inasmuch as the Family Code makes substantial amendments to the Civil Code
provisions on property relations, some of its provisions are also material, particularly
to property acquired from and after August 3, 1988.
Which law would govern depends upon: (1) when the marriages took place; (2)
whether the parties lived together as husband and wife; and (3) when and how the
subject properties were acquired.
Following are the pertinent provisions of the Civil Code:
Art. 119. The future spouses may in the marriage settlements agree upon absolute
or relative community of property, or upon complete separation of property, or upon
any other regime. In the absence of marriage settlements, or when the same are
void, the system of relative community or conjugal partnership of gains as
established in this Code shall govern the property relations between husband and
wife.
Art. 135. All property brought by the wife to the marriage, as well as all property she
acquires during the marriage, in accordance with article 148, is paraphernal.
Art. 136. The wife retains the ownership of the paraphernal property.
Art. 142. By means of the conjugal partnership of gains the husband and wife place
in a common fund the fruits of their separate property and the income from their
work or industry, and divide equally, upon the dissolution of the marriage or of the
partnership, the net gains or benefits obtained indiscriminately by either spouse
during the marriage.
Art. 143. All property of the conjugal partnership of gains is owned in common by
the husband and wife.
The Civil Code also provides in Article 144:
When a man and a woman live together as husband and wife, but they are not
married, or their marriage is void from the beginning, the property acquired by either

or both of them through their work or industry or their wages and salaries shall be
governed by the rules on co-ownership.
In a long line of cases, this Court has interpreted the co-ownership provided in
Article 144 of the Civil Code to require that the man and woman living together as
husband and wife without the benefit of marriage or under a void marriage must not
in any way be incapacitated to marry. Situating these rulings to the instant case,
therefore, the co-ownership contemplated in Article 144 of the Civil Code cannot
apply to Hadji Abdulas marriages celebrated subsequent to a valid and legally
existing marriage, since from the point of view of the Civil Code Hadji Abdula is not
capacitated to marry. However, the wives in such marriages are not precluded from
proving that property acquired during their cohabitation with Hadji Abdula is
their exclusive property, respectively. Absent such proof, however, the presumption is
that property acquired during the subsistence of a valid marriage --- and in the Civil
Code, there can only be one validly existing marriage at any given time --- is
conjugal property of such subsisting marriage.
With the effectivity of the Family Code on August 3, 1988, the following provisions of
the said Code are pertinent:
Art. 147. When a man and a woman who are capacitated to marry each other live
exclusively with each other as husband and wife without the benefit of marriage or
under a void marriage, their wages and salaries shall be owned by them in equal
shares and the property acquired by both of them through their work or industry shall
be governed by the rules on co-ownership.
In the absence of proof to the contrary, properties acquired while they lived together
shall be presumed to have been obtained by their joint efforts, work or industry, and
shall be owned by them in equal shares. For purposes of this Article, a party who
did not participate in the acquisition of the other party of any property shall be
deemed to have contributed jointly in the acquisition thereof if the formers efforts
consisted in the care and maintenance of the family and of the household.
Neither party can encumber or dispose by acts inter vivos of his or her share in the
property acquired during cohabitation and owned in common, without the consent of
the other, until after the termination of the cohabitation.
When only one of the parties to a void marriage is in good faith, the share of the
party in bad faith in the co-ownership shall be forfeited in favor of their common
children. In case of default or of waiver by any or all of the common children or their
descendants, each vacant share shall belong to the respective surviving
descendants. In the absence of descendants, such share shall belong to the
innocent party. In all cases, the forfeiture shall take place upon termination of the
cohabitation.
Art. 148. In cases of cohabitation not falling under the preceding Article, only the
properties acquired by both of the parties through their actual joint contribution of
money, property, or industry shall be owned by them in common in proportion to their
respective contributions. In the absence of proof to the contrary, their contributions
and corresponding shares are presumed to be equal. The same rule and
presumption shall apply to joint deposits of money and evidences of credit.

If one of the parties is validly married to another, his or her share in the co-ownership
shall accrue to the absolute community or conjugal partnership existing in such valid
marriage. If the party who acted in bad faith is not validly married to another, his or
her share shall be forfeited in the manner provided in the last paragraph of the
preceding Article.
The foregoing rules on forfeiture shall likewise apply even if both parties are in bad
faith.
It will be noted that while the Civil Code merely requires that the parties live together
as husband and wife the Family Code in Article 147 specifies that they
live exclusively with each other as husband and wife. Also, in contrast to Article
144 of the Civil Code as interpreted by jurisprudence, Article 148 of the Family Code
allows for co-ownership in cases of cohabitation where, for instance, one party has a
pre-existing valid marriage, provided that the parties prove their actual joint
contribution of money, property, or industry and only to the extent of their
proportionate interest therein. The rulings in Juaniza vs. Jose, 89 SCRA
306, Camporodendo vs. Garcia, 102 Phil. 1055, and related cases are embodied in
the second paragraph of Article 148, which declares that the share of the party
validly married to another shall accrue to the property regime of such existing
marriage.
Fifth and Sixth Collateral Issues: Law(s) on Succession and Dissolution of Property Regimes

Hadji Abdula died intestate on December 16, 1993. Thus, it is the Muslim Code
which
should
determine
the
identification
of
the
heirs
in
the
order of intestate succession and the respective shares of the heirs.
Meanwhile, the status and capacity to succeed on the part of the individual parties
who entered into each and every marriage ceremony will depend upon the law in
force at the time of the performance of the marriage rite.
The status and capacity to succeed of the children will depend upon the law in
force at the time of conception or birthof the child. If the child was conceived or born
during the period covered by the governance of the Civil Code, the Civil Code
provisions on the determination of the legitimacy or illegitimacy of the child would
appear to be in point. Thus, the Civil Code provides:
Art. 255. Children born after one hundred and eighty days following the celebration
of the marriage, and before three hundred days following its dissolution or the
separation of the spouses shall be presumed to be legitimate.
Against this presumption no evidence shall be admitted other than that of the
physical impossibility of the husbands having access to his wife within the first one
hundred and twenty days of the three hundred which preceded the birth of the child.
This physical impossibility may be caused:
(1) By the impotence of the husband;
(2) By the fact that the husband and wife were living separately, in such a way that
access was not possible;
(3) By the serious illness of the husband.
Art. 256. The child shall be presumed legitimate, although the mother may have
declared against its legitimacy or may have been sentenced as an adulteress.

If the child was conceived or born during the period covered by the governance of
the Muslim Code, i.e., from February 4, 1977 up to the death of Hadji Abdula on
December 18, 1993, the Muslim Code determines the legitimacy or illegitimacy of
the child. Under the Muslim Code:
Art. 58. Legitimacy, how established. --- Legitimacy of filiation is established by the
evidence of valid marriage between the father and the mother at the time of the
conception of the child.
Art. 59. Legitimate children. --(1) Children conceived in lawful wedlock shall be presumed to be legitimate.
Whoever claims illegitimacy of or impugns such filiation must prove his allegation.
(2) Children born after six months following the consummation of marriage or within
two years after the dissolution of the marriage shall be presumed to be legitimate.
Against this presumption no evidence shall be admitted other than that of physical
impossibility of access between the parents at or about the time of the conception of
the child.
Art. 60. Children of subsequent marriage. --- Should the marriage be dissolved and
the wife contracts another marriage after the expiration of her idda, the child born
within six months from the dissolution of the prior marriage shall be presumed to
have been conceived during the former marriage, and if born thereafter, during the
latter.
Art. 61. Pregnancy after dissolution. --- If, after the dissolution of marriage, the wife
believes that she is pregnant by her former husband, she shall, within thirty days
from the time she became aware of her pregnancy, notify the former husband or his
heirs of that fact. The husband or his heirs may ask the court to take measures to
prevent a simulation of birth.
Upon determination of status and capacity to succeed based on the foregoing
provisions, the provisions on legalsuccession in the Muslim Code will apply. Under
Article 110 of the said Code, the sharers to an inheritance include:
(a) The husband, the wife;
(b) The father, the mother, the grandfather, the grandmother;
(c) The daughter and the sons daughter in the direct line;
(d) The full sister, the consanguine sister, the uterine sister and the uterine brother.
When the wife survives with a legitimate child or a child of the decedents son, she is
entitled to one-eighth of the hereditary estate; in the absence of such descendants,
she shall inherit one-fourth of the estate. The respective shares of the other sharers,
as set out in Article 110 abovecited, are provided for in Articles 113 to 122 of P.D.
1083.
Seventh Collateral Issue: Muslim Divorces Before the Effectivity of the Muslim Code

R.A. 394 authorized absolute divorce among Muslims residing in non-Christian

provinces, in accordance with Muslim custom, for a period of 20 years from June 18,
1949 (the date of approval of R.A. 394) to June 13, 1969. Thus, a Muslim divorce
under R.A. 394 is valid if it took place from June 18, 1949 to June 13, 1969.

From the seven collateral issues that we discussed, we identify four corollary issues
as to further situate the points of controversy in the instant case for the guidance of
the lower court. Thus:
1. Which of the several marriages was validly and legally existing at the time of the
opening of the succession of Hadji Abdula when he died in 1993? The validly and
legally existing marriage would be that marriage which was celebrated at a time
when there was no other subsisting marriage standing undissolved by a valid divorce
or by death. This is because all of the marriages were celebrated during the
governance of the Civil Code, under the rules of which only one marriage can exist
at any given time.
Whether or not the marriage was validly dissolved by a Muslim divorce depends
upon the time frame and the applicable law. A Muslim divorce under R.A. No. 394 is
valid if it took place from June 18, 1949 to June 13, 1969, and void if it took place
from June 14, 1969.
2. There being a dispute between the petitioner and the oppositors as regards the
heirship of the children begotten from different marriages, who among the surviving
children are legitimate and who are illegitimate? The children conceived and born of
a validly existing marriage as determined by the first corollary issue are legitimate.
The fact and time of conception or birth may be determined
by proof or presumption depending upon the time frame and the applicable law.
3. What properties constituted the estate of Hadji Abdula at the time of his death on
December 18, 1993? The estate of Hadji Abdula consists of the following:
a. Properties acquired during the existence of a valid marriage as determined by the
first corollary issue are conjugal properties and should be liquidated and divided
between the spouses under the Muslim Code, this being the law in force at the time
of Hadji Abdulas death.
b. Properties acquired under the conditions prescribed in Article 144 of the Civil
Code during the period August 30, 1950 to August 2, 1988 are conjugal properties
and should be liquidated and divided between the spouses under the Muslim Code.
However, the wives other than the lawful wife as determined under the first corollary
issue may submit their respective evidence to prove that any of such property is
theirs exclusively.
c. Properties acquired under the conditions set out in Articles 147 and 148 of the
Family Code during the period from and after August 3, 1988 are governed by the
rules on co-ownership.
d. Properties acquired under conditions not covered by the preceding paragraphs
and obtained from the exclusive efforts or assets of Hadji Abdula are his exclusive
properties.
4. Who are the legal heirs of Hadji Abdula, and what are their shares in intestacy?
The following are Hadji Abdulas legal heirs: (a) the lawful wife, as determined under
the first corollary issue, and (2) the children, as determined under the second
corollary issue. The Muslim Code, which was already in force at the time of Hadji
Abdulas death, will govern the determination of their respective shares.

As we have indicated early on, the evidence in this case is inadequate to resolve in
its entirety the main, collateral and corollary issues herein presented and a remand
to the lower court is in order. Accordingly, evidence should be received to supply the
following proofs: (1) the exact dates of the marriages performed in accordance with
Muslim rites or practices; (2) the exact dates of the dissolutions of the marriages
terminated by death or by divorce in accordance with Muslim rites and practices,
thus indicating which marriage resulted in a conjugal partnership under the criteria
prescribed by the first, second, and third collateral issues and the first corollary
issue; (3) the exact periods of actual cohabitation (common life under a common
roof) of each of the marriages during which time the parties lived together; (4) the
identification of specific properties acquired during each of the periods of
cohabitation referred to in paragraph 3 above, and the manner and source of
acquisition, indicating joint or individual effort, thus showing the asset as owned
separately, conjugally or in co-ownership; and (5) the identities of the children
(legitimate or illegitimate) begotten from the several unions, the dates of their
respective conceptions or births in relation to paragraphs 1 and 2 above, thereby
indicating their status as lawful heirs.
Amicus curiae Congressman Mastura agrees that since the marriage of petitioner to
decedent took place in 1972 the Civil Code is the law applicable on the issue of
marriage settlement, but espouses that customs or established practices among
Muslims in Mindanao must also be applied with the force of law to the instant
case. Congressman Masturas disquisition has proven extremely helpful in
impressing upon us the background in which Islamic law and the Muslim Code need
to be interpreted, particularly the interconnectedness of law and religion for
Muslims and the impracticability of a strict application of the Civil Code to plural
marriages recognized under Muslim law. Regrettably, the Court is duty-bound to
resolve the instant case applying such laws and rights as are in existence at the time
the pertinent civil acts took place. Corollarily, we are unable to supplant governing
law with customs, albeit how widely observed. In the same manner, we cannot
supply a perceived hiatus in P.D. 1083 concerning the distribution of property
between divorced spouses upon one of the spouses death. 51
WHEREFORE, the decision dated September 26, 1994 of the Fifth Sharia District
Court of Cotabato City in Special Proceeding No. 94-40 is SET ASIDE, and the
instant petition is REMANDED for the reception of additional evidence and the
resolution of the issues of the case based on the guidelines set out in this Decision.
SO ORDERED.

recto law
EN BANC
G.R. No. L-25951

June 30, 1969

FILIPINAS INVESTMENT & FINANCE CORPORATION, plaintiff-appellant,

vs.

JULIAN R. VITUG, JR. and SUPREME SALES & DEVELOPMENT

CORPORATION, defendants-appellees.
Wilhelmina V. Joven for plaintiff-appellant.
Antonio V. Borromeo for defendants-appellants.
BARREDO, J.:
Appeal from an order of dismissal by the Court of First Instance of Manila, in its Civil
Case No. 60915, entitled Filipinas Investment & Finance Corporation vs. Julian R.
Vitug, Jr. and Supreme Sales & Development Corporation, of the amended
complaint of July 16, 1965 of plaintiff-appellant Filipinas Investment & Finance
Corporation whereby it sought to recover from defendant-appellee Supreme Sales &
Development Corporation the deficiency that resulted after it had foreclosed the
chattel mortgage on and sold at public auction, the car of the other defendant, Julian
Vitug, Jr. who had failed to pay to appellee installments due on the promissory note
representing the purchase price of said car which he had bought from the same,
appellant being the assignee of appellee of its rights in the said promissory note.
The material allegations in appellant's amended complaint are:
The defendant, Julian R. Vitug, executed and delivered to appellee a promissory
note in the amount of P14,605.00 payable in monthly installments according to a
schedule of payments; the payment of the aforesaid amount which was the purchase
price of a motor vehicle, a 4-door Consul sedan, bought by said defendant from
appellee, was secured by a chattel mortgage over such automobile; on the same
day, appellee negotiated the above-mentioned promissory note in favor of appellant
Filipinas Investment & Finance Corporation, assigning thereto all its rights, title and
interests to the same, the assignment including the right of recourse against
appellee; defendant Vitug defaulted in the payment of part of the installment which
fell due on January 6, 1965, as well as the subsequent three consecutive monthly
installments which he was supposed to have paid on February 6, March 6 and April
6, 1965; there being a provision in the aforesaid promissory note and chattel
mortgage that failure to pay the installments due would result in the entire obligation
becoming due and demandable, appellant demanded from appellee the payment of
such outstanding balance; in turn, appellee "authorized (appellant) to take such
action as may be necessary to enable (it) to take possession of the ... motor
vehicle." Pursuant to such authority, appellant secured possession of the mortgaged
vehicle by means of a writ of replevin duly obtained from the court, preparatory to
the foreclosure of the mortgage, but said writ became unnecessary because upon
learning of the same, defendant Vitug voluntarily surrendered the car to appellant;
thereafter, the said car was sold at public auction, but the proceeds still left a

deficiency of P8,349.35, plus interest of 12% per annum from April 21, 1965; and
appellant, the above foreclosure and sale notwithstanding, would hold appellee liable
for the payment of such outstanding balance, plus attorney's fees and costs.
On August 4, 1965, appellee filed an urgent motion to dismiss on the ground, inter
alia, that under Article 1484 of the Civil Code of the Philippines, which particular
provision is otherwise known as the Recto Law, appellant has no cause of action
against appellee. Said provision is as follows:
ART. 1484. In a contract of sale of personal property the price of which is
payable in installments, the vendor may exercise any of the following
remedies: (1) Exact fulfillment of the obligation should the vendee fail to pay;
(2) Cancel the sale, should the vendee's failure to pay cover two or more
installments; (3) Foreclose the chattel mortgage on the thing sold, if one has
been constituted, should the vendee's failure to pay cover two or more
installments. In this case, he shall have no further action against the
purchaser to recover any unpaid balance of the price. Any agreement to the
contrary shall be void.
In its order of August 30, 1965, subject of this appeal, the lower court found the
aforesaid ground to be meritorious and, as already stated, the amended complaint
was dismissed as to appellee Supreme Sales & Development Corporation.
According to the order of dismissal:
It is undisputed in the instant case that the amount of P14,605.00 mentioned
as consideration in both the promissory note and the chattel mortgage in the
instant case represents the selling price of one (1) automobile New Ford
Consul 315 4-door Sedan, payable in the installments mentioned in said
documents. Under pars. 5 and 9 of the amended complaint, the writ of
replevin was obtained in the instant case for purposes of foreclosure of
mortgage. In applying for a writ of replevin, the plaintiff thereby made his
choice, namely, to foreclose the mortgage covering said automobile; and
having accepted said automobile from defendant Julian R. Vitug, Jr., what
remains is for the plaintiff to sell said automobile through either a judicial or an
extrajudicial foreclosure of said mortgage, without benefit of a deficiency
judgment or deficiency collection ... should the proceeds of the foreclosure
sale be less than the balance of the installment sale price of said automobile
due and collectible.
On September 23, 1965, appellant filed a motion for reconsideration but this was
denied on October 26, 1965, hence, this appeal.

The principal error assigned by appellant has reference to the applicability of Art.
1484 of the Civil Code, as amended, to the facts of this case. Appellant maintains
that: .
II
THE TRIAL COURT ERRED IN HOLDING THAT ARTICLE 1484 OF THE
CIVIL CODE OF THE PHILIPPINES IS APPLICABLE TO THE
TRANSACTION BETWEEN PLAINTIFF-APPELLANT AND DEFENDANTAPPELLEE.
Under the facts alleged in the amended complaint which are deemed admitted by
the motion to dismiss, 1 this assignment of error must be sustained.
The specific allegations in the amended complaint which have material bearing on
the issue herein are:
4. On November 4, 1964, defendant Supreme Sales & Development
Corporation, with notice to defendant Julian R. Vitug, Jr. negotiated in favor of
(endorsed and delivered to) plaintiff the above-mentioned promissory note,
Annex "A", on a with recourse basis whereby in case of the failure and/or
refusal of the maker thereof, defendant Julian R. Vitug, Jr. to pay the
obligation under the said promissory note, plaintiff shall have the right to
recourse against the said defendant corporation.
On the same date, the said defendant corporation, with notice to
defendant Julian R. Vitug, Jr., assigned to plaintiff its rights, title, and interests
to the aforesaid promissory note and chattel mortgage, Annexes "A" and "B"
hereof, as shown by the Deed of Assignment executed by defendant Supreme
Sales & Development Corporation in favor of plaintiff, a copy of which is
hereto attached as Annex "C" and made an integral part hereof, which
assignment is also subject to the right of recourse above-mentioned.
13. The defendant corporation is liable to plaintiff for the entire balance of the
obligation covered by the promissory note, Annex "A", and secured by the
chattel mortgage, Annex "B", as a general endorser of the promissory note,
Annex "A", and assignor of the chattel mortgage on a with- recourse basis.
But should plaintiff be able to sell the above-described motor vehicle, then the
said defendant corporation is liable to the plaintiff for the payment of the
balance of the obligation after applying thereto the proceeds of the sale of the
said vehicle. (Record on Appeal, pp. 12 and 15.)

Thus it can be seen that the assignment made by appellee to appellant of the
promissory note and mortgage of defendant Vitug was on a with-recourse basis. In
other words, there was a definite and clear agreement between appellant and
appellee that should appellant fail to secure full recovery from defendant Vitug, the
right was reserved to appellant to seek recourse for the deficiency against appellee.
Accordingly, the question for resolution by the Court now is whether or not this
provision regarding recourse contained in the agreement between appellant and
appellee violates the Recto Law which declares null and void any agreement in
contravention thereof. We do not believe that it does.
As pointed out in appellant's brief, the transaction between appellant and appellee
was purely an ordinary discounting transaction whereby the promissory note
executed by defendant Vitug was negotiated by appellee in favor of appellant for a
valuable consideration at a certain discount, accompanied by an assignment also of
the chattel mortgage executed by said defendant to secure the payment of his
promissory note and with the express stipulation that should there be any deficiency,
recourse could be had against appellee. Stated otherwise, the remedy presently
being sought is not against the buyer of the car or the defendant Vitug but against
the seller, independent of whether or not such seller may have a right of recovery
against the buyer, which, in this case, he does not have under the Recto Law. It is
clear to Us, on the other hand, that under said law, what Congress seeks to protect
are only the buyers on installment who more often than not have been victimized by
sellers who, before the enactment of this law, succeeded in unjustly enriching
themselves at the expense of the buyers because aside from recovering the goods
sold, upon default of the buyer in the payment of two installments, still retained for
themselves all amounts already paid, in addition, furthermore, to other damages,
such as attorney's fees, and costs. Surely, Congress could not have intended to
impair and much less do away with the right of the seller to make commercial use of
his credit against the buyer, provided said buyer is not burdened beyond what this
law allows.1awphil.nt
We are not unmindful that in the case of Cruz, et al. vs. the same Filipinas
Investment & Finance Corporation, L-24772, May 27, 1968, 23 SCRA 791, this Court
broadened the scope of the Recto Law beyond its letter and held that within its spirit,
a seller of goods on installment does not have any right of action against a third
party who, in addition to the buyer's mortgage of the goods sold, furnishes additional
security for the payment of said installments or the purchase price of said goods. In
that case, it was held:.

It is here agreed that plaintiff Cruz failed to pay several installments as

provided in the contract; that there was extrajudicial foreclosure of the chattel
mortgage on the said motor vehicle; and that defendant-appellant itself bought
it at the public auction duly held thereafter, for a sum less than the purchaser's
outstanding obligation. Defendant-appellant, however, sought to collect the
supposed deficiency by going against the real estate mortgage which was
admittedly constituted on the land of plaintiff Reyes as additional security to
guarantee the performance of Cruz' obligation, claiming that what is being
withheld from the vendor, by the proviso of Article 1484 of the Civil Code, is
only the right to recover against the purchaser, and not a recourse to the
additional security put up, not by the purchaser himself, but by a third person.
There is no merit in this contention. To sustain appellants argument is to
overlook the fact that if the guarantor should be compelled to pay the balance
of the purchase price, the guarantor will in turn be entitled to recover what she
had paid from the debtor vendee (Art. 2066, Civil Code); so that ultimately, it
will be the vendee who will be made to bear the payment of the balance of the
price, despite the earlier foreclosure of the chattel mortgage given by him.
Thus, the protection given by Article 1484 would be indirectly subverted, and
public policy overturned.
As can be seen, that ease of Cruz was entirely different from this one at bar. In that
case, herein appellant Filipinas Investment & Finance Corporation was trying to
recover from the guarantor of the buyer, whereas in the present case, it is precisely
stipulated in effect, that the Filipinas Investment & Finance Corporation had a right of
recourse against the seller should the buyer fail to pay the assigned credit in full.
It is the contention of appellee that since what were assigned to appellant were only
whatever rights it had against the buyer, it should follow that inasmuch as appellee
has no right to recover from the defendant beyond the proceeds of the foreclosure
sale, the appellant, as assignee, should also have no right to recover any deficiency.
We do not view the matter that way. The very fact that the assignee was given the
stipulated right of recourse against the assignor negates the idea that the parties
contemplated to limit the recovery of the assignee to only the proceeds of the
mortgage sale.
ACCORDINGLY, the order of dismissal of the lower court is reversed and this case is
ordered remanded to the lower court for further proceedings, with costs against
appellee Supreme Sales & Development Corporation.

Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Sanchez, Castro, Capistrano

and Teehankee, JJ., concur.
Dizon and Fernando, JJ., took no part.
Footnotes
1

Evidence seems to have been presented by appellee and admitted by the

trial court in connection with the motion to dismiss. While it is obvious that
said evidence is relevant, the same cannot be taken into account, since the
motion to dismiss is based on the ground that the amended complaint states
no cause of action and, therefore, all material facts alleged in the complaint
must be deemed admitted for purposes of said motion.

hidden defects

FIRST DIVISION
[ G.R. No. L-30965, November 29, 1983 ]
G.A. MACHINERIES, INC., PETITIONER, VS. HORACIO
YAPTINCHAY, DOING BUSINESS UNDER THE NAME AND
STYLE "HI-WAY EXPRESS" AND THE COURT OF APPEALS,
RESPONDENTS.
DECISION
GUTIERREZ, JR., J.:
Petitioner G. A. Machineries, Inc. (hereinafter referred to as GAMI) seeks the
reversal of the decision of the Court of First Instance of Rizal, affirmed by the Court
of Appeals in the original case entitled Horacio Yaptinchay, doing business under the
name and style "Hi-way Express", v. G. A. Machineries Inc. for recovery of damages.
The antecedent facts of the case are not seriously disputed and are summarized by
the Court of Appeals as follows:
"Sometime early in January, 1962 appellant GAMI, thru a duly authorized agent,
offered to sell a brand-new Fordson Diesel Engine to appellee Horacio Yaptinchay,
owner of the freight hauling business styled 'Hi-Way Express'. Relying on the

representations of appellant's representative that the engine offered for sale was
brand-new, appellee agreed to purchase the same at the price of
P7,590.00. Pursuant to the contract of sale thus entered into, appellant delivered
to appellee, on January 27, 1962, one (1) FordsonDiesel Engine assembly, Model 6D, with Engine Serial No. A-212193, at 1500 RPM, with fly wheel, fly wheel housing,
fuel injection assembly, exhauster, fuel filter, oil filter, fuel lift pump, plus conversion
kit for F-500, subject to the standard warranties, particularly the representation,
relied upon by appellee, that the same was brand-new. Said engine was installed by
appellant in Unit No. 6 of the Hi-Way Express.
"Within the week after its delivery, however, the engine in question started to have a
series of malfunctions which necessitated successive trips to appellant's repair
shop. Thus, it first sprang an oil leak such that, on February 6, 1962, it was brought
in to '1. Adjust idling of engine and tappete clearance; 2. Inspect and remedy oil
leaks of engine; 3. Replace clutch disc and pressure plate w/original; and
4. Replace release bearing hub trunion bolt' (Exhibit C). Thereafter, the
malfunctioning persisted and, on inspection, appellee's mechanic noticed a worn out
screw which made appellee suspicious about the age of the engine. This
prompted appellee, thru his lawyer, to write appellant a letter, dated February 10,
1962, protesting that the engine was not brand-new as represented (Exhibit
E). Because of the recurringdefects, the engine was again submitted to appellant's
shop to '1. Inspect engine oil leaks on cylinder head; 2. Check up propeller shaft
(vibrating at high speed); and 3. Tighten bolts of pump.' (Exhibit F). All these
notwithstanding, the engine could still not be returned into operation because it
continued not to function well. In fact, it was sent back to appellant's shop on the
same day it was delivered after the last repair work done on it. Another check up
was thereafter required to be made on March 5, 1962 (Exhibit G). Then, again,
on March 10, 1962, the engine was back at the repair shop to '1. Inspect leaks on
No. 1 & 5 high pressure pipe; and 2. Change engine oil with flushing & oil element'
(Exhibit H). Still, the oil leaks remained unchecked and, on July 2, 1962, one last
effort to '1. Remedy engine oil leaks' (Exhibit 1) was made, but all to no avail
because, instead of improving, the engine's condition became worse as
itdeveloped engine knock and appellee had to stop its operation altogether
due to its unserviceability.
"These repeatedly recurring defects and continued failure of appellant to put the
engine in good operating condition only served to firm up in appellee's mind the
suspicion that the engine sold to him was not brand-new as represented. He then
sought the assistance of the PC Criminal Investigation Service to check on the

authenticity of the serial number of the engine, with due notice to

appellant. Scientific examination and verification tests revealed that
the original motor number of the engine aforesaid was
tampered. Further inquiries by appellee from the Manila Trading Company, which
also handles theimportation and distribution of similar engines, also disclosed that,
unlike the engine delivered to appelleewhose engine body and injection pump were
painted with two different colors, brand-new engines are painted with only one color
all over.
"Thus convinced that a fraudulent misrepresentation as to the character of the
engine had been perpetrated upon him, appellee made demands from appellant for
indemnification for damages and eventually instituted the present suit.
"In its defense, appellant interposed prescription of the action, denied the imputation
of misrepresentation, and disputed the propriety and amount of damages claimed."
xxx
After trial on the merits, the trial court ruled in favor of plaintiff Yaptinchay as follows:
"FOR ALL THE FOREGOING CONSIDERATIONS, the Court hereby renders
judgment ordering the defendant, G.A. Machineries Inc., to pay the
plaintiff, Horacio Yaptinchay, actual damages sustained in the sum of P54,000.48; to
reimburse the purchase price of the Fordson diesel engine in the amount of
P7,590.00; and to pay attorney's fees to plaintiff's counsel on the sum of P2,000.00
and costs.
"Plaintiff is, likewise, ordered to return the Fordson diesel engine with serial number
A-21219 to the defendant."
Defendant GAMI appealed the decision to the Court of Appeals. As stated earlier,
the decision was affirmed by the Appellate Court. A motion for reconsideration was
denied. Hence, the instant petition.
Petitioner GAMI raises the following alleged errors of judgment of the respondent
court:
I
THE COURT OF APPEALS ERRED IN NOT APPLYING THE PRESCRIPTIVE
PERIOD OF ARTICLE 1571 OF THE CIVIL CODE TO THE CASE AT BAR.
II

THE COURT OF APPEALS ERRED IN APPLYING THE DOCTRINE IN THE CASE

OF ASOCIACION ZANJERA CASILIAN vs. CRUZ, 46 O.G. 4813, 4820
REGARDING ADMISSION BY FAILURE TO REBUT, TO THE ISSUE OF ACTUAL
DAMAGES, WHICH MUST BE PROVED BY THE BEST AND COMPETENT
EVIDENCE.
III
THE COURT OF APPEALS ERRED IN AWARDING ACTUAL DAMAGES IN THE
FORM OF UNREALIZED PROFITS (LUCRUM CESSANTE) WHEN THE ISSUE
RAISED BY THE PLEADINGS REFERS ONLY TO ALLEGED ACTUAL DAMAGES
IN THE FORM OF DAMNUM EMERGENTE.
IV
THE COURT OF APPEALS ERRED IN FINDING THAT THE FORDSON DIESEL
ENGINE DELIVERED BY PETITIONER TO RESPONDENT HORACIO
YAPTINCHAY WAS NOT BRAND NEW, REACHING SUCH FINDING BY WAY OF A
MANIFESTLY MISTAKEN INFERENCE AND ON THE BASIS
OF AMISAPPREHENSION OF FACTS AND SOLELY ON THE GROUND OF
SPECULATION, SURMISES ANDCONJECTURES.
The assignments of errors raise the following issues: 1) whether or not the
respondent's cause of action against the petitioner had already prescribed at the
time the complaint was filed in the trial court; 2) whether or not the factual findings of
both the trial and appellate courts as regards the subject Fordson diesel engine are
supported by evidence and 3) whether or not the award of damages was justified
considering evidence on record.
The first issue is premised on the petitioner's proposition that the respondent's cause
of action was for breach ofwarranty against hidden defects as provided under
Articles 1561 and 1566 of the Civil Code. Article 1571 of the Civil Code provides for
a six-month prescriptive period from the delivery of the thing sold for the filing of an
action for breach of warranty against hidden defects. According to
petitioner GAMI when respondent Yaptinchay filed the case with the trial court, more
than six months had already lapsed from the time the alleged defective engine was
delivered and, therefore, the action had prescribed.
The petitioner contends that Yaptinchay's asserted cause of action was premised
and anchored on the delivery by the defendant of a DEFECTIVE ENGINE and that
the allegations in the complaint that the engine was not brand new are clearly mere
specifications of the precise nature of the hidden defects.

A cursory reading of the complaint shows that the petitioner's arguments are not
well-taken.
The main thrust of the complaint is the contention that the Fordson diesel engine
delivered by the petitioner to the respondent was not brand-new contrary to the
representations of the former and the expectations of the latter. The complaint was
couched in a manner which shows that instead of the brand-new Fordson diesel
engine which was bought by the respondent from the petitioner, another engine
which was not brand new was delivered resulting in the damages sought to be
recovered. It is evident therefore, that the complaint was for a breach of a contract
of sale rather than a breach of warranty against hidden defects. This is so because
an action for breach of warranty againsthidden defects presupposes that the thing
sold is the same thing delivered but with hidden defects. Consequently, the sixmonth prescriptive period under Article 1571 of the Civil Code is not applicable.
The petitioner takes exception to the factual findings of the appellate court and
argues: 1) the fact that the Fordsondiesel engine developed oil leaks does not
necessarily imply that the said engine was not brand new and 2) the testimony of
laboratory technician Captain Garcia of the Philippine Constabulary to the effect that
the motor or serial number of the engine was tampered does not deserve credence.
The first argument is premised on the proposition that even brand-new engines in
many cases develop oil leaks. To support this proposition the petitioner presented
documentary evidence (Exhibits "5", "7", "8", "9", "10", "11", "12", "13", "14",
"15", "16", and "17") consisting of job orders for allegedly brand new engines which
developed oil leaks.
An examination of the documentary evidence shows that the job orders were for
twelve (12) different engines. Moreover, the petitioner's witness who testified on the
said job orders admitted that some engines were repaired only after a few
months. On the other hand, the subject Fordson diesel engine was repaired on the
complaint not only of oil leaks but also replacement of clutch disc and pressure
plate, replacement of release bearing hub trunion belt, and other defects within a
week after it was delivered to the respondents or on February 6, 1962 (Exhibit
"C"). Thereafter it was returned for more repairs on February 28, 1962 (Exhibit "F"),
on March 10, 1962 (Exhibit "H") and on July 2, 1962 (Exhibit "I"). The documentary
evidence of the petitioner consisting of the job orders of the supposed brand-new
engines which also developed oil leaks is no reason to doubt the trial court's and
appellate court's factual findings. Infact, the documentary evidence and the

admissions of the petitioner's witness enhance the respondent's allegation that

the Fordson diesel engine sold to him was not brand-new.
The second argument questions Captain Garcia's findings that the original motor
number of the engine was tamperedas shown by the presence of fragmentary
numbers which appeared in the engine when he conducted a macro-etching test
thereon by applying acid on the surface of said engine. The petitioner
emphasizes Captain Garcia's alleged testimony that "x x x what he calls fragmentary
numeral" is not definitely a numeral or a fragment of a numeral and states that
the same could have been caused by any molecular pressure applied to the area of
the metal where it appeared. In effect, the petitioner insists that the supposed
fragmentary numerals could have been merely scratchesor indentations near the
serial number of the motor which might have been caused by sparks from
the welding process.
The arguments are not well-taken. First, the statements attributed to Captain Garcia
are not accurate. An examination of the record shows that Captain Garcia positively
stated the fragmentary numeral to be a numeral or anumber but in the absence of
key portions he could not positively identify the exact number or numeral. He
discounted the possibility that such fragmentary numerals could be mere
scratches. Second, the witness did not categorically state that any molecular
pressure could have caused the fragmentary numeral. Hence, Captain Garcia under
cross-examination stated:
"Q. This fragmentary numeral could be caused deliberately by tampering with the
engine number or by other factor such as scratches or burning by other foreign
element, is that right?
"A

No, sir, they can be caused by scraping but not by scratching, because by

scraping there is molecular disturbance of metal.

"Q When you say molecular disturbance does it mean you first apply in the area, or
would it disturb the molecule in or around that area?
"A

Once you stamped the number, you impressed it and there is molecular

disturbance in the structure of the metal.

"Q If the metal is burned, there is also molecular disturbance in the metal, is that
correct?
"A

The metal will only expand.

"Q There is no spark of the machine could not cause the molecular disturbance in
the steam, is that right?
"A

It cannot"

(T.S.N., Iluminado C. Palisoc, February 5, 1965, pp. 99-100)

The petitioner's argument that the Court of Appeals findings are based on manifestly
mistaken inferences, misapprehension of facts, and purely on speculation, surmises,
and conjectures is without merit.
The Fordson diesel engine delivered to the respondent was not brand-new.
We agree with the Court of Appeals that:
"Indeed, it would be too much to say that the successive malfunctions of the engine,
the defects and other discrepancies therein that cropped up so soon after its
delivery, the numerous trips it had to appellant's repair shop the demonstrable
tampering with its serial number, and its ultimate breakdown despite appellant's
attempts to put it into good working order could be attributed to mere coincidence. If
all these mean anything at all, it can only be that the engine aforesaid was not really
brand new.
The petitioner committed a breach of contract against the respondent. The
misrepresentation of the quality of the subject Fordson diesel engine is tantamount
to fraud or bad faith. The return of the P7,590.00 purchase price with legal interest
from the date of purchase and computed pursuant to our ruling in Viloria v. Court of
Appeals (G.R. No. 63398, June 29, 1983) is justified. The next question refers to the
award of actual damages in the amount of P54,000.48. This amount covers the
probable income which the respondent failed to realize because of the breach of
contract. Is the award of damages in the form of lucro cessante justified?
The law on the matter is spelled out in Raagas v. Traya (22 SCRA 839), where we
stated:
"x x x In Abubakar Tan v. Tian Ho, L-18820, December 29, 1962
and Lim Giok v. Bataan Cigar and Cigarette Factory, L-15861, April 16, 1960, we
held that even if the allegations regarding the amount of damages in the complaint
are not specifically denied in the answer, such damages are not deemed
admitted. In Tomassi v. Villa-Abrille, L-7047, August 21,
1958, Suntay Tanjangco v. Jovellanos, et al., L-12332, June 30,1960, and Delfin v.
Court of Agrarian Relations, et al., L-23348, March 14, 1967, 1967 A PHILD 453, we
declared in no uncertain terms that actual damages must be proved, and that a court

cannot rely on 'speculation, conjecture or guesswork' as to the fact and amount of

damages, but must depend on actual proof that damages had been suffered and on
evidence of the actual amount.x x x"
The fact that the defendant does not dispute the amount of this kind of damages
does not necessarily imply that the other party outright is entitled to the award of
damages.
Article 2200 of the Civil Code entitles the respondent to recover as
compensatory damages not only the value of the loss suffered but also prospective
profits while Article 2201 entitles the respondent to recover all damages which may
be attributed to the non-performance of the obligation. However, in order to recover
this kind of damages, the plaintiff must prove his case " 'When the existence of a loss is established, absolute certainty as to its amount is
not required. The benefit to be derived from a contract which one of the parties has
absolutely failed to perform is of necessity to some extent, a matter of speculation,
but the injured party is not to be denied all remedy for that reason alone. He must
produce the best evidence of which his case is susceptible and if that evidence
warrants the inference that he has been damaged by the loss of profits which he
might with reasonable certainty have anticipated but for the defendant's wrongful act,
he is entitled to recover." (Cerreno v. Tan Chuco, 28 Phil. 312 quoted in Central Bank
of the Philippines v. Court of Appeals, 63 SCRA 431, 457).
Applying the foregoing test to the instant case, we find the evidence of the
respondent insufficient to be considered within the purview of "best evidence". The
bare assertion of the respondent that he lost about P54,000.00 and the
accompanying documentary evidence presented to prove the amount lost are
inadequate if not speculative. The document itself merely shows that everytime a
truck travels, Mr. Yaptinchay earns P369.88. This amount is then multiplied by the
number of trips which the truck was allegedly unable to make. The estimates were
prepared by a certain Dionisio M. Macasieb whose identity was not even revealed by
the respondent. Mr. Yaptinchay was in the freight truck business. He had several
freight trucks among them the truck with the subject Fordson diesel engine, covering
the route from Manila to Baguio. To prove actual damages, it would have been easy
to present the averageactual profits realized by the other freight trucks plying the
Manila-Baguio route. With the presentation of such actual income the court could
have arrived with reasonable certainty at the amount of actual damages suffered by
the respondent. We rule that the award of actual damages in the amount of
P54,000.08 is not warranted by the evidence on record.

WHEREFORE, the decision appealed from is hereby modified. The award of actual
damages in the amount of P54,000.48 is deleted. The petitioner shall also
pay six (6%) percent interest per annum on the P7,590.00 purchase price
from January 27, 1962 to July 29, 1974 and twelve (12%) percent
interest per annum from July 30, 1974 until the purchase
price is reimbursed. In all other respects, the appealed decision is affirmed.
SO ORDERED.

hidden defects

SECOND DIVISION
[ G.R. No. 173575, February 02, 2011 ]
IMMACULATE CONCEPTION ACADEMY AND THE LATE DR. PAULO
C. CAMPOS SUBSTITUTED BY HIS HEIRS, DR. JOSE PAULO
E. CAMPOS, ATTY. PAULO E. CAMPOS, JR. AND DR. ENRIQUE
E. CAMPOS,[1] PETITIONERS, VS. AMA COMPUTER COLLEGE,
INCORPORATED, RESPONDENT.
DECISION
ABAD, J.:
This case is about the rescission of a lease contract on the ground that the building
turned out to be structurally unsafe even as the lessee had previously inspected the
same.
The Facts and the Case
Immaculate Conception Academy (ICA) owned a three-storey building in
Dasmarias, Cavite. The property caught the eye of AMA Computer College, Inc.
(AMA) and it sought to buy the same but did not succeed. Subsequently, after
inspecting the building, AMA settled on leasing it. [2] The parties signed a contract of
lease for 10 years from September 22, 1997 to September 21, 2007. The agreed
rent was P561,000.00 plus VAT per month. In accordance with the contract, AMA
paid ICA P500,000.00 in earnest money, three months advance rentals, and security

deposit.
After the signing of the contract, officials of AMA re-inspected the building and began
renovating it for the upcoming school year. But during an inspection, AMA's Chief
Operating Officer for its Cavite Campus noted several cracks on the floor and walls
of the building's second storey. This prompted more inspections. Eventually, AMA
applied with the municipal engineer's office for an occupancy permit. [3] After
inspection, Municipal Engineer Gregorio C. Bermejo wrote AMA a letter dated
September 29, 1997, detailing his findings and conclusion, thus:
xxxx
[The] inspection reveals the following defects in the building, such as:
1. Multiple cracks in the second floor slabs showing signs of insufficient or
improper reinforcements.
2. Deflections in the second floor slabs and bears ranging from 20 mm to 50
mm which are beyond normal and allowable.
3. Unusual vibrations in the second floor level which are apparent when
subjected to live loadings.
Based from the above observations we are in doubt as to the structural
soundness and stability of that three-storey building. Whether it can
withstand against any natural calamity is presently under question. We are
convinced that the building is structurally unsafe for human occupancy. [4]
On the same date, September 29, 1997, AMA wrote ICA demanding the return of all
that it paid within 24 hours from notice. AMA cited the building's structural deficiency,
which it regarded as a violation of ICA's implied warranty againsthidden defects.
AMA did not pursue the lease contract and instead leased another property from a
different party.
When its request for reimbursement remained unheeded, AMA filed an action [5] for
breach of contract and damages with prayer for the issuance of a writ of preliminary
attachment against ICA before the Regional Trial Court (RTC) of Dasmarias,
Cavite. In its complaint, AMA alleged that ICA (represented by the late Dr. Paulo C.
Campos) fraudulently entered into the lease agreement, fraudulently breached the

same, and violated its implied warranty against hiddendefects; that despite
knowledge of the instability of the building, ICA insisted on offering it to AMA; and
that ICA had been unable to produce the building's certificate of occupancy. AMA
prayed for restitution of the amounts it paid to ICA with interest and award of
exemplary damages and attorney's fees.
In its Answer, ICA denied that AMA asked for the building's certificate of occupancy.
ICA alleged that it was AMA's responsibility to secure the certificate from the
municipal government as stipulated in the contract. Further, ICA claims that it never
misrepresented the condition of the building and that AMA inspected it before
entering into the contract of lease.
In its Decision dated April 8, 2003, the RTC took AMA's side and ruled that the latter
entered into the lease contract without knowing the actual condition of the building.
The RTC held that ICA failed to disclose the building's condition, thus justifying
AMA's rescission of the contract. The RTC ordered ICA to return the P4,072,150.00
it got from AMA, representing five months security deposit and three months
advance rentals plus interest of 6% per annum, from January 19, 1998 until full
payment and, further, to pay AMA P300,000.00 and P200,000.00 as exemplary
damages and attorney's fees, respectively.[6]
On appeal,[7] the Court of Appeals (CA) rendered a Decision dated February 27,
2006, holding that ICA did not violate its implied warranty against hidden defects,
misrepresent the building's condition, or act in bad faith since AMA inspected the
building before it entered into the lease agreement. It should have noticed the
patent cracks on the second floor. Still, the CA ruled that AMA was justified in
rescinding the lease contract considering ICA's default in repairing the defects in the
building's structure. The CA held that AMA's demand for the certificate of
occupancy amounted to a demand for repairs. Thus, the CA affirmed the decision of
the RTC but deleted the grant of exemplary damages and attorney's fees. ICA now
turns to this Court for succor.
The Issues Presented
The issues presented in this case are:
1. Whether or not AMA was justified in rescinding the contract of lease either on
account of ICA's fraudulent representation regarding the condition of its building or
on account of its failure to make repairs on the same upon demand; and

2. Whether or not ICA and Dr. Campos are entitled to their claims for
damages against AMA.
The Court's Rulings
One. The Court is not convinced that AMA was justified in rescinding the contract of
lease on account of ICA's alleged fraudulent representation regarding the true
condition of its building. The fact is that AMA's representatives inspected the building
to determine if it was suitable for their school's needs. The cracks on the floor and
on the walls were too obvious to suggest to them that something was amiss. It was
their fault that they did not check the significance of such signs. ICA for its part was
candid about the condition of the building and did not in fact deny AMA access to it.
Apparently, AMA did not, at the beginning, believe that the cracks on the floor and on
the walls were of a serious nature. It realized that such cracks were manifestations
of structural defects only when it sought the issuance of a municipal occupancy
permit. The local building official inspected the cracks and concluded that they
compromised the building's structural safety.
The CA ruled that, upon the discovery of the building's structural defects, AMA had
the right to seek their repair by ICA on the strength of the following stipulations in
their contract:[8]
xxxx
LESSEE shall comply with any and all laws, ordinances, regulations or orders
of national or local governments concerned arising from the occupation
and/or sanitation of the leased PROPERTY.
xxxx
8. REPAIRS - LESSEE hereby agrees that all minor repairs or those caused by
the use of the leased PROPERTY or use due to any ordinary wear and tear
shall be for the account of the LESSEE while the major repairs or those
affecting the structural condition of the building and those due to fortuitous
events shall be for the account of the LESSOR. (Underscoring supplied)
The CA ruled that AMA's demand for ICA to produce a certificate of occupancy

covering the building from the local building official amounted to a demand for ICA to
undertake a repair of its structural defects.
But this ruling reads from AMA's letter a demand for repair that was not there. AMA
simply asked ICA to produce a certificate of occupancy for the building even when
the contract placed on AMA the responsibility for complying with the government's
occupancy requirement. Indeed, it was AMA that applied for the certificate of
occupancy.[9] A demand to repair the defects in the building's structure, a clearly
difficult and costly proposition, cannot be so easily implied from AMA's demand that
ICA produce such certificate.
True, the quoted provision of the lease contract requires ICA to undertake major
repairs "affecting the structural condition of the building and those due to fortuitous
events." But AMA's outright rescission of the lease contract and demand that ICA
return the deposit and advance rentals it got within 24 hours from such demand
precluded ICA, first, from contesting the findings of the local building official or
getting some structural specialists to verify such findings or,second, from making the
required repair. Clearly, AMA's hasty rescission of the contract gave ICA no chance
to exercise its options.
AMA belatedly invokes Article 1660 of the Civil Code which reads:
Art. 1660. If a dwelling place or any other building intended for human
habitation is in such a condition that its use brings imminent and serious
danger to life or health, the lessee may terminate the lease at once by
notifying the lessor, even if at the time the contract was perfected the former
knew of the dangerous condition or waived the right to rescind the lease on
account of this condition.
AMA is actually changing its theory of the case. It claimed in its complaint that it
was entitled to rescind the contract of lease because ICA fraudulently hid from it the
structural defects of its building. The CA did not agree with this theory but held that
AMA was nonetheless entitled to rescind the contract for failure of ICA to make the
repairs mentioned in the contract. Now, AMA claims that it has a statutory right to
rescind the lease contract on the ground mentioned in Article 1660, even if it may be
deemed to have initially waived such right.
Article 1660 is evidently intended to protect human lives. If ICA's building was
structurally defective and in danger of crashing down during an earthquake or after it

is made to bear the load of a crowd of students, AMA had no right to waive
those defects. It can rescind the lease contract under Article 1660. But this
assumes that the defects were irremediable and that the parties had no agreement
for rectifying them. As pointed out above, the lease contract implicitly gave ICA the
option to repair structural defects at its expense. If that had been done as the
contract provides, the risk to human lives would have been removed and the right to
rescind, rendered irrelevant.
In any event, the fact is that the local building official found ICA's building structurally
defective and unsafe. Such finding is presumably true. [10] For this reason, ICA has
no justification for keeping AMA's deposit and advance rentals. Still, the Court holds
that AMA is not entitled to recover more than the return of its deposit and advance
rental considering that, contrary to AMA's claim, ICA acted in good faith and did not
mislead it about the condition of the building.
Two. Aside from seeking the dismissal of the complaint, ICA and Dr. Campos
separately seek moral and exemplary damages in the amount of P90 million and
P10 million plus attorney's fees and cost of suit.
To be entitled to moral damages, ICA needed to prove that it had a good reputation
and that AMA's action besmirched the same.[11] Such proof is wanting in this case.
As for Dr. Campos, he has amply proved that he suffered mental anguish, serious
anxiety, and social humiliation following AMA's unfounded accusation that he
fraudulently misled AMA regarding the structural condition of ICA's building.
However, due to his untimely demise before the finality of this case, his claim for
moral damages does not survive and is not transmissible to his substitutes, for being
extremely personal to him.[12]
Since AMA acted in a reckless, wanton, oppressive, and malevolent manner in
imputing fraud and deceit on ICA and Dr. Campos, the Court finds ground for
awarding them exemplary damages. Further, the Court holds that, having been
compelled to litigate in order to protect their interests, ICA and Dr. Campos are also
entitled to attorney's fees.
WHEREFORE, the Court GRANTS the petition and REVERSES and SETS
ASIDE the Decision of the Court of Appeals in CA-G.R. CV 82266 dated February
27, 2006. Further, the Court:

1. DIRECTS petitioner Immaculate Conception Academy to return to respondent

AMA Computer College, Inc. its security deposit and advance rentals for the lease of
the subject building totaling P4,072,150.00 plus interest of 6% per annum from the
date of the finality of this decision until it is fully paid; and
2. DIRECTS respondent AMA Computer College, Inc. to pay the heirs of Dr. Paulo
C. Campos, namely, Jose Paulo, Paulo, Jr., and Enrique, all surnamed Campos and
the Immaculate Conception Academy P100,000.00 as exemplary damages and
P50,000.00 as attorney's fees.
SO ORDERED.

warranty against hidden defects

THIRD DIVISION
[ G.R. No. 148173, December 10, 2004 ]
SUPERCARS MANAGEMENT & DEVELOPMENT CORPORATION,
REPRESENTED BY ITS PRESIDENT BENIGNO CHAN,
PETITIONER, VS. THE LATE FILEMON FLORES,
SUBSTITUTED BY HIS SURVIVING SPOUSE, NORA C.
FLORES,[1] RESPONDENT.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari assailing the Decision[2] dated
November 29, 2000 and Resolution[3]dated April 26, 2001, both issued by the Court
of Appeals in CA-G.R. CV No. 40419, entitled Filemon Flores vs. Supercars
Management & Development Corporation, Mamerto Catley, Pablito Marquez, and
Rizal Commercial Banking Corporation.
In the second week of December 1988, Filemon Flores, respondent, purchased from
Supercars Management and Development Corporation, petitioner, an Isuzu Carter
Crew Cab for P212,000.00 payable monthly with a down payment equivalent to 30%

of the price or P63,600.00. The balance was to be financed by the Rizal Commercial
Banking Corporation (RCBC). The sale was coursed through Pablito Marquez,
petitioners salesman.
Upon delivery of the vehicle on December 27, 1988, respondent paid petitioner the
30% down payment, plus premium for the vehicles comprehensive insurance policy
amounting to P7,374.80. The RCBC financed the balance of the purchase price. Its
payment was secured by a chattel mortgage of the same vehicle.
A day after the vehicle was delivered, respondent used it for his familys trip to
Bauang, La Union. While traversing the national highway in Tarlac, Tarlac, the fan
belt of the vehicle snapped. Then its brakes hardened after several stops and did not
function properly; the heater plug did not also function; the engine could not start;
and the fuel consumption increased.[4]
Upon their return to Manila in the first week of January 1989, respondent complained
to petitioner about the defects of the vehicle. Marquez then had the vehicle repaired
and returned it to respondent that same day, assuring the latter that it was already in
good condition.
But after driving the vehicle for a few days, the same defects resurfaced, prompting
respondent to send petitioner a letter dated January 30, 1989 rescinding the contract
of sale and returning the vehicle due to breach of warrantyagainst hidden defects. A
copy of the letter was furnished RCBC.
In response to respondents letter, petitioner directed Marquez to have the vehicle
fixed. Thereafter, he returned the vehicle to respondent with the assurance that it
has no more defects. However, when respondent drove it for a few days, he found
that the vehicle was still defective.
Hence, on February 7, 1989, respondent sent petitioner another letter restating that
he is rescinding the contract of sale, a copy of which was furnished RCBC. On
February 9, 1989, he returned the vehicle to petitioner. Later, Marquez and Mamerto
Catley, petitioners salesman, tried to convince respondent to accept the vehicle as it
had been completely repaired. But respondent refused.
On March 1, 1989, respondent sent petitioner a letter demanding the refund of his
down payment, plus the premium he paid for the vehicles insurance.

Petitioner failed to comply with petitioners demand. Consequently, respondent

stopped paying the monthly amortization for the vehicle.
On March 21, 1989, RCBC sent respondent a letter demanding that he settle his
past overdue accounts for February 15 and March 15, 1989. In reply, respondent,
through a letter dated March 31, 1989, informed RCBC that he had rescinded the
contract of sale and had returned the vehicle to petitioner. This prompted RCBC to
file with the Office of the Clerk of Court and Ex-Officio Sheriff, Regional Trial Court,
Quezon City, a Petition for Extra-judicial Foreclosure of Chattel Mortgage.
On June 2, 1989, a Notice of Sheriffs Sale of the vehicle was set.
On June 1, 1989, respondent filed with the same Office
a Manifestation/Motion asking for the postponement of the scheduled auction sale
until such time that petitioner and/or RCBC shall have reimbursed him of the amount
he paid for the vehicle; and that should the auction sale be conducted, the proceeds
thereof equivalent to the amount he spent be withheld and turned over to him.
The auction sale proceeded as scheduled. RCBC, being the highest bidder,
purchased the vehicle. Subsequently, RCBC sold the vehicle to a third party.
On November 3, 1989, respondent filed with the Regional Trial Court (RTC), Branch
150, Makati City a complaint[5] for rescission of contract with
damages against petitioner, Marquez, Catley and RCBC, docketed as Civil Case No.
89-5566.
In their separate answers, petitioner, Marquez and Catley denied having committed
any breach of warranty againsthidden defects, claiming that the vehicle had only
minor and inconsequential defects which were promptly and satisfactorily repaired
by petitioner Supercars pursuant to its warranty as the seller.[6] For its part, RCBC
claimed that it has no liability whatsoever against respondent because it merely
enforced its right under the chattel mortgage law. All the defendants prayed for the
dismissal of the complaint.
On April 13, 1992, the RTC rendered its Decision in favor of respondent
and against the defendants, thus:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendants, ordering the latter to jointly and severally pay the plaintiff as follows:
1.

the amount of P70,974.80 representing the 30% down payment and premium
paid for one year comprehensive motor vehicle insurance plus interests at the rate of
14% per annum from date of filing of this complaint on October 30, 1989 until fully
paid;

2.

the sum of P50,000.00 as moral damages;

3.

the sum of P25,000.00 as exemplary damages;

4.

the sum of P20,000.00 as attorneys fees; and

5.

the costs of suit.

SO ORDERED.[7]
Upon motion for reconsideration by RCBC, the RTC, in an Order dated December
21, 1992, modified its Decision by absolving RCBC from any liability and dismissing
the complaint against it, thus:
xxx
Going into the merits of defendant banks contention that it has valid and
meritorious defense which should ultimately exculpate it from any liability, jointly and
severally, with the other defendants, the Court, after a careful review of the evidence
on hand, reconsiders its Decision insofar as the said bank is concerned. The valid
exercise by the plaintiff of its right to rescind the contract of sale for the purchase of
the motor vehicle in question does not apply to defendant bank. Said contract is
effective only as againstdefendant Supercars Management and Development
Corporation, which must principally suffer the consequence of its breach of the
contract.
This Court likewise takes notice of the fact that since the motor vehicle was
voluntarily surrendered by the plaintiff and that defendant bank merely exercised its
right under the chattel mortgage law, no fault can be attributed to the latter. The fact
that the plaintiff sent a letter to the Office of the City Sheriff of Quezon City, copy
furnished the bank, seeking the postponement of the auction sale of the subject
motor vehicle, will not and cannot be considered as a valid ground to hold said bank
liable for only exercising its rights under the law. At most, the liability must really be
imputed only against defendants Supercars Management and Development
Corporation, Mamerto Catley and Pablito Marquez.

WHEREFORE, considering the foregoing premises, the Decision of this Court dated
April 13, 1992, insofar as it holds defendant Rizal Commercial Banking Corporation
jointly and severally liable to the plaintiff, is hereby MODIFIED and the
case against said bank DISMISSED. Similarly, the compulsory
counterclaim against the plaintiff is likewise dismissed.
The dispositive portion of the same Decision insofar as the rest of the defendants
are concerned is hereby maintained and affirmed in toto.
SO ORDERED.[8]
From the above Decision and Order, petitioner, Marquez and Catley interposed an
appeal to the Court of Appeals, docketed as CA-G.R. CV No. 40419. In a Decision
dated November 29, 2000, the Appellate Court affirmed the RTC Decision with
modification in the sense that the complaint against Marquez and Catley was
dismissed, thus:
xxx
It is with respect to appellants Catley and Marquez liability that we are minded to
modify the (appealed) Decision. The two being mere employees (of appellant
Supercars Management and Development Corporation), they cannot be held liable
to refund the amount claimed by Flores. Nor can they be made liable for damages
and attorneys fees, there being no clear evidence that they had a hand in giving rise
thereto.
WHEREFORE, the appealed Amended Decision is AFFIRMED, with the
MODIFICATION that the complaint insofar as defendants-appellants Mamerto Catley
and Pablito Marquez is hereby DISMISSED.
SO ORDERED.[9]
Petitioner filed a motion for reconsideration but denied in a Resolution dated April
26, 2001.[10]
Hence, the instant petition.
Petitioner contends that respondent has no right to rescind the contract of
sale[11] because the motor vehicle in question, as found by the RTC and the Court

of Appeals, is already in the hands of a third party, one Mr. Lim an innocent
purchaser for value.[12] Thus, both courts erred in ordering petitioner to refund
respondent of the amounts he paid for the vehicle.
The issue here is whether respondent has the right to rescind the contract of sale
and to claim damages as a result thereof.
We rule for respondent.
Respondents complaint filed with the RTC seeks to recover from petitioner the
money he paid for the vehicle due to the latters breach of
his warranty against hidden defects under Articles 1547,[13] 1561,[14] and 1566[15] of
the Civil Code. The vehicle, after it was delivered to respondent, malfunctioned
despite repeated repairs by petitioner. Obviously, the vehicle has hidden defects.
A hidden defect is one which is unknown or could not have been known to the
vendee.[16]
The findings of both the RTC and Court of Appeals that petitioner committed a
breach of warranty against hiddendefects are fully supported by the records. The
Appellate Court correctly ruled:
The evidence clearly shows that Flores [now respondent] was justified in opting to
rescind the sale given the hidden defects of the vehicle, allowance for the repair of
which he patiently extended, but which repair did not turn out to be satisfactory.
xxx
For when by letters of January 30, 1989 and February 7, 1989, which were followed
up by another dated March 1, 1989, Flores declared his rescission of the sale, which
rescission was not impugned or opposed by appellants as in fact they accepted the
return of the vehicle on February 9, 1989, such extra-judicial rescission x x x
produced legal effect (UP vs. de los Angeles, 35 SCRA 102 [1970]; Tolentino
Commentaries and Jurisprudence on the Civil Code, citing Magdalena Estate v.
Myrick, 71 Phil. 344 [1940-1941]).
x x x[17]

It is well within respondents right to recover damages from petitioner who committed
a breach of warranty againsthidden defects. Article 1599 of the Civil Code partly
provides:
Article 1599. Where there is a breach of warranty by the seller, the buyer may, at his
election:
xxx
(4) Rescind the contract of sale and refuse to receive the goods, or if the goods have
already been received, return them or offer to return them to the seller and recover
the price or any part thereof which has been paid.
When the buyer has claimed and been granted a remedy in anyone of these ways,
no other remedy can thereafter be granted, without prejudice to the provisions of the
second paragraph of Article 1191.
x x x. (Underscoring supplied)
Petitioners contention that under Article 1191 of the Civil Code, rescission can no
longer be availed of as the vehicle was already in the hands of an innocent
purchaser for value lacks merit. Rescission is proper if one of the parties to a
contract commits a substantial breach of its provisions. It creates an obligation to
return the object of the contract. It can be carried out only when the one who
demands rescission can return whatever he may be obliged to restore. Rescission
abrogates the contract from its inception and requires a mutual restitution of the
benefits received.[18]Petitioner is thus mandated by law to give back to respondent
the purchase price upon his return of the vehicle. Records show that at the time
respondent opted to rescind the contract, the vehicle was still in his possession. He
returned it to petitioner who, without objection, accepted it. Accordingly, the 30%
down payment equivalent to P63,600.00, plus the premium for the comprehensive
insurance amounting to P7,374.80 paid by respondent should be returned by
petitioner.
As further stated by the Court of Appeals:
Appellants invocation of Article 1191 of the Civil Code in support of his argument
that as the vehicle had been sold to a third party, rescission can no longer ensue is
misplaced.

For, Flores is asking for the refund of the downpayment and payment for insurance
premiums. This brings us to appellants final argument.
Appellants professed excuse from their inability to give refund that refund would
necessitate the return of the subject motor vehicle which is impossible because it is
now in the hands of an innocent purchaser for value miserably fails.
x x x appellant Supercars was paid the balance of the purchase price by RCBC and,
therefore, in addition to the downpayment given by Flores, it had been fully paid for
the vehicle.
Ergo, Supercars had nothing more to do with the vehicle. [19]
However, the lower courts award of P50,000.00 as moral damages and P25,000.00
as exemplary damages to respondent is erroneous. While no proof of pecuniary loss
is necessary in order that moral damages may be awarded, the amount of indemnity
being left to the discretion of the court, it is nevertheless essential that the claimant
satisfactorily prove the existence of the factual basis of the damage and its causal
relation to defendants acts. Moral damages are in the category of an award
designed to compensate the claimant for actual injury suffered and not to impose a
penalty to the wrongdoer. This has not been proved by respondent.
In contracts and quasi-contracts, the court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent
manner.[20] Likewise, respondent failed to establish that petitioner acted in such
manner.
As to the award of attorneys fees, the same must be deleted since the award of
moral and exemplary damages are eliminated.[21] Moreover, the trial court did not
give any justification for granting it in its decision. It is now settled that awards of
attorneys fees must be based on findings of fact and law, stated in the decision of
the trial court.[22]
WHEREFORE, the petition is DENIED. The assailed Decision dated September 20,
1999 and Resolution dated February 1, 2000 of the Court of Appeals in CA-G.R. CV
No. 52177 are AFFIRMED with MODIFICATION. The award of moral and exemplary
damages and attorneys fees are DELETED. Costs against petitioner.
SO ORDERED.

equitable mortgage 3

FIRST DIVISION
[ G.R. NO. 162112, July 03, 2007 ]
DOMINGO R. LUMAYAG AND FELIPA N. LUMAYAG, PETITIONERS,
VS. HEIRS OF JACINTO NEMEO AND DALMACIA
DAYANGCO-NEMEO, REPRESENTED BY MELITON NEMEO,
RESPONDENTS.
DECISION
GARCIA, J.:
Challenged and sought to be set aside in this petition for review on certiorari under
Rule 45 of the Rules of Court is the decision [1] dated September 30, 2003 of the
Court of Appeals (CA), as reiterated in its resolution [2] of January 9, 2004 in CA-G.R.
CV No. 63230, affirming, with modification, an earlier decision of the Regional Trial
Court (RTC) of Ozamiz City which ruled that the instrument entitled Deed of Sale
with Pacto De Retro executed in favor of the herein petitioners by the respondents is
actually an equitable mortgage.
The facts:
During their lifetime, the spouses Jacinto Nemeo and Dalmacia DayangcoNemeo, predecessors-in-interest of the herein respondent heirs, owned two (2)
parcels of coconut land located in Manaca, Ozamiz City. The parcels are: Lot No.
4049, with an area of five (5) hectares and covered by Original Certificate of Title
(OCT) No. 0-1743 and Lot No. 4035 C-4, consisting of 4,420 square meters and
covered by Tax Declaration No. 13750.
In 1979, Dalmacia died survived by her husband, Jacinto, and their six (6) children,
to wit: Meliton, Eleuteria, Timoteo, Justo, Saturnino (now deceased) and Felipa.
On February 25, 1985, Jacinto, joined by his five (5) children, namely, Meliton,
Eleuteria, Timoteo, Justo and Saturnino, conveyed to his daughter Felipa and the

latter's husband Domingo Lumayag the aforementioned Lot Nos. 4049 and 4035 C4. The instrument of conveyance is denominated as Deed of Sale with Pacto De
Retro.[3]Thereunder, it was stipulated that the consideration for the alleged sale of the
two (2) aforementioned lots was Twenty Thousand Pesos (P20,000.00) and that the
vendors a retro have the right to repurchase the same lots within five (5) years from
the date of the execution of the instrument on February 25, 1985. It was likewise
agreed thereunder that in the event no purchase is effected within the said stipulated
period of five (5) years "conveyance shall become absolute and irrevocable without
the necessity of drawing up a new absolute deed of sale, subject to the requirements
of law regarding consolidation of ownership of real property."
On April 4, 1985, Jacinto died while undergoing treatment at the MHARS General
Hospital in Ozamiz City.
More than a decade later, or on August 28, 1996, the spouses Domingo Lumayag
and Felipa Nemeo-Lumayag filed with the RTC of Ozamiz City a petition for the
reconstitution of the owner's duplicate copy of OCT No. 0-1743 covering Lot No.
4049, one of the two lots subject of the earlier Deed of Sale with Pacto De Retro. In
that petition, the Lumayags alleged that said owner's duplicate copy of OCT No. 01743 was in Domingo's possession but the same was lost when a typhoon hit and
destroyed the couple's house in Talisay, Cebu on November 12, 1990. The petition
was opposed by the other heirs of Jacinto and Dalmacia who claimed that the
owner's duplicate copy of the same OCT was actually in the possession and custody
of their brother Meliton Nemeo, the administrator of the property, when it was
burned in a fire on May 22, 1992. In an order dated December 20, 1996, [4] the RTC
resolved said petition by ordering the issuance of a new owner's duplicate copy of
OCT No. 0-1743 and its delivery to the heirs of Jacinto and Dalmacia.
Such were the state of things when, on December 24, 1996, in the same RTC, the
heirs of Jacinto and Dalmacia, namely, their children Meliton, Eleuteria, Timoteo and
Justo and grandchildren Ricky and Daisy who are the heirs of Saturnino, (hereinafter
collectively referred to as the respondent heirs) filed against the spouses Domingo
Lumayag and Felipa N. Lumayag a complaint[5] for Declaration of Contract
as Equitable Mortgage, Accounting and Redemption with Damages. In their
complaint, docketed in the trial court as Civil Case No. 96-69 and raffled to Branch
35 thereof, the plaintiff heirs prayed that the Deed of Sale with Pacto De
Retro executed on February 25, 1985 in favor of the defendant spouses Domingo
Lumayag and Felipa N. Lumayag over Lot Nos. 4049 and 4035 C-4 be declared as

anequitable mortgage and considered as already redeemed, with accounting and

damages.
Essentially, the complaint alleged that the subject Deed of Sale with Pacto De
Retro was executed only for the purpose of securing the payment of a loan of
P20,000.00 obtained from the defendant spouses in connection with the medication
and hospitalization of the then ailing Jacinto Nemeo. To support their claim that the
contract in question was an equitable mortgage, the plaintiff heirs materially pointed
out the following: (1) the grossly inadequate price of the subject lots considering that
Lot No. 4049 with an area of 5 hectares has a market value of P40,760.00 and an
assessed value of P15,230.00, as shown by Tax Declaration No. 94-07335-A, while
Lot No. 4035 C-4 with an area of 4,420 square meters has a market value of
P4,120.00 and an assessed value of P1,460.00, per Tax Declaration No. 94-07355A; (2) their (plaintiffs') continued payment of realty taxes; (3) the land title and tax
declaration remained in the names of Jacinto Nemeo and Dalmacia DayangcoNemeo; (4) their possession, particularly Justo Nemeo's, of the subject lots with
the petitioner spouses only given two-thirds share of the harvest therefrom; and (5)
the pactum commissorium stipulation in the subject contract. Thus, the heirs pray for
a judgment (a) declaring the subject Deed of Sale with Pacto de Retro as
an equitable mortgage and considering the lots subject thereof as redeemed; (b)
ordering the defendant spouses to render an accounting of the fruits and/or income
of the coconut lands from 1985 to 1996 and to return whatever remains of the
amount with interest at the legal rate after deducting the P20,000.00 loan; and (c)
ordering the same defendants to pay litigation expenses and attorney's fees.
In their Answer,[6] the spouses Lumayag denied that the contract in question was
an equitable mortgage and claimed that the amount of P20,000.00 received by the
plaintiff heirs was the consideration for the sale of the two lots and not a loan. By
way of affirmative defenses, the spouses Lumayag asserted that the action was
already barred by laches and prescription and the complaint itself states no cause of
action.
With the pre-trial conference having failed to bring the parties to any amicable
settlement, trial on the merits ensued.
Eventually, in a decision[7] dated February 3, 1999, the trial court adjudged the
subject Deed of Sale with Pacto De Retro as an equitable mortgage and ordered the

defendant spouses to reconvey Lot Nos. 4049 and 4035 C-4 to the plaintiff heirs for
P20,000.00. We quote the fallo of the decision:
WHEREFORE, in the light of the foregoing, judgment is hereby rendered to wit:

1.

Declaring the Deed of Sale with Pacto de Retro marked annex "A" to the
Complaint as equitablemortgage;
2.
Ordering the defendants to reconvey the properties in litigation to the plaintiffs
in the amount of P20,000.00 within 30 days after the decision has become final and
executory;
3.
Ordering the defendants to pay the cost of this suit.
SO ORDERED.
Dissatisfied, both parties appealed to the CA. Unfortunately, for failure of the plaintiff
heirs to submit their appeal brief, their appeal was dismissed, leaving that of the
defendant spouses which was docketed as CA-G.R. CV No. 63230.
As stated at the threshold hereof, the appellate court, in its Decision of September
30, 2003, affirmed that of the trial court but with the modification that the mortgaged
properties are subject to foreclosure should the respondents fail to redeem the same
within thirty (30) days from finality of the decision. More specifically, the CA decision
dispositively reads:
WHEREFORE, premises considered, the Decision dated February 3, 1999 rendered
by the Regional Trial Court, Branch 35, Ozamiz City in Civil Case No. 96-69 is
hereby AFFIRMED with MODIFICATION, in that [petitioners] could foreclose the
mortgaged properties in the event [private respondents] fail to exercise their right of
redemption within thirty (30) days from the finality of this decision.
SO ORDERED. (Words in brackets supplied.)
Explains the CA in its decision:
xxx xxx xxx

In the instant case, we hold that the deed of sale with pacto de retro is actually
an equitable mortgage. For one, the supposed price for the sale with pacto de
retro in the amount of P20,000.00 is unusually inadequate for the two (2) parcels of
land, the total area of which is almost 5.5 hectares. Also, [respondents heirs]
remained in possession of the subject properties even after the execution of the
subject instrument. Not only did [respondent heirs] retain possession of the subject

properties, they also paid for the realty taxes of the same. Indeed, as the trial court
found the transaction was one of anequitable mortgage,
Finally, the subject instrument provides that if the vendors a-retro, herein plaintiffsappellants, fails to exercise their right to redeem or repurchase the subject properties
within the period stipulated upon, then the conveyance shall be deemed to be an
absolute and irrevocable sale, without the necessity of executing any further deed.
Such stipulation is void for being a pactum commissorium. xxx
Having ruled that the instrument executed by the parties is one of
an equitable mortgage, [respondent heirs] can now redeem the mortgaged
properties from [petitioner spouses] within thirty (30) days from finality of this
decision. Otherwise, [petitioner spouses] would be given the option to foreclose the
mortgaged properties, for as a rule, in a real estate mortgage, when the principal
obligation is not paid when due, the mortgagee has the right to foreclose
the mortgage and to have the property seized and sold with the view of applying the
proceeds to the payment of the obligation. xxx. (Words in brackets supplied).
With their motion for reconsideration having been denied by the appellate court in its
equally impugned Resolution of January 9, 2004, petitioners are now with this
Court via the instant recourse on their submission that:
I
HON. COURT OF APPEALS GRAVELY ERRED IN NOT REVERSING THE
DECISION OF THE TRIAL COURT AND DISMISSING THE PRIVATE
RESPONDENTS' COMPLAINT ON GROUNDS OF LACHES AND OR
PRESCRIPTION.
II
HON. COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE DEED OF
SALE WITH PACTO DE RETRO IS ACTUALLY AN EQUITABLE MORTGAGE.

III

THE DECISION RENDERED BY THE HON. COURT OF APPEALS IS NOT

SUPPORTED BY THE EVIDENCE AND CONTRARY TO LAW. [8]
We DENY.

Petitioners initially put the CA to task for not dismissing the case considering that the
titles to the subject parcels of land had already been consolidated to them by
operation of law because the five (5)-year prescriptive period for the respondents to
repurchase expired in 1990.
Under a pacto de retro sale, title to and ownership of property are immediately
vested in the vendee a retro, subject only to the resolutory condition that the vendor
repurchases it within the stipulated period.[9] The failure of the vendor a retro to
repurchase the property vests upon the vendee a retro by operation of law the
absolute title and ownership over the property sold. [10]
Here, there is no issue as regards the fact that the subject Deed of Sale with Pacto
De Retro provided for a 5-year redemption period which expired on February 25,
1990. Evidently, then, the failure of the respondent heirs to redeem the properties
within the stipulated period indubitably vested the absolute title to and ownership
thereof to the petitioners. But such consequence would only be true if the
contract that was executed between the parties was indeed a pacto de
retro sale and not an equitable mortgage.
The two (2) courts below unanimously found that the subject Deed of Sale with
Pacto De Retro, while purporting to be a sale, is in truth and in fact
an equitable mortgage. Such factual finding, more so when supported by the
evidence, as here, commands not only respect but even finality and is binding on
this Court.[11]
An equitable mortgage has been defined "as one which although lacking in some
formality, or form or words, or other requisites demanded by a statute, nevertheless
reveals the intention of the parties to charge real property as security for a debt, and
contains nothing impossible or contrary to law." [12]
Article 1602 of the Civil Code enumerates the instances when a contract, regardless
of its nomenclature, may be presumed to be an equitable mortgage, to wit:
(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another instrument

extending the period of redemption or granting a new period is executed;

(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intention of the
parties is that the transaction shall secure the payment of a debt or the performance
of any other obligation.
In any of the foregoing case, any money, fruits, or other benefit to be received by the
vendee as rent or otherwise shall be considered as interest which shall be subject to
the usury laws.
Article 1604 of the Civil Code provides that the provisions of Article 1602 shall also
apply to a contract purporting to be an absolute sale, and, in case of doubt, a
contract purporting to be a sale with right to repurchase shall be construed as
an equitable mortgage.[13]
The law requires the presence of any one and not the concurrence of all of the
circumstances enumerated under Article 1602, supra, to conclude that the
transaction is one of equitable mortgage. So it is that in Socorro Taopo Banga v.
Sps. Jose and Emeline Bello,[14] this Court, citing Aguirre v. CA,[15] unequivocally
ruled:
The presence of even one of the circumstances in Article 1602 is sufficient basis to
declare a contract as one of equitable mortgage. The explicit provision of Article
1602 that any of those circumstances would suffice to construe a contract of sale to
be one of equitable mortgage is in consonance with the rule that law favors the least
transmission of property rights. To stress, the existence of any one of the
conditions under Article 1602, not a concurrence, nor an overwhelming
number of such circumstances, suffices to give rise to the presumption that
the contract is an equitablemortgage. (Emphasis ours)
Here, the CA correctly found the presence of not merely one but four (4)
circumstances indicative of the true nature of the subject transaction as
an equitable mortgage, to wit: (a) gross inadequacy of the contract price of
P20,000.00 for two (2) parcels of land, the total area of which is almost 5.5 hectares;
(b) respondent heirs remained in possession of the subject property even after the
execution of the supposedly Deed of Sale with Pacto de Retro; (c) said respondents'

payment of realty taxes; and (d) the provision on pactum commissorium.

While we are not in full accord with the CA in its observation that the consideration of
the sale with right to repurchase is grossly inadequate since the market value and
assessed value of the two lots were not made on or before the date the subject
contract was executed on February 25, 1985 but only on June 8, 1994, still, there
are other circumstances convincing enough to support a conclusion that the
transaction in question is really an equitable mortgage.
Evidence is extant on record that the respondent heirs, as vendors a retro, remained
in possession of the subject lots after the execution of the deed of sale with right to
repurchase. In stark contrast, evidence is wanting that petitioners ever enjoyed
possession thereof. If the transaction was really a sale with right to repurchase, as
claimed by the petitioners, then the latter should have asserted their rights for the
immediate delivery of the lots to them instead of allowing some of the respondents to
freely stay in the premises. Well-settled to the point of being elementary is the
doctrine that where the vendor remains in physical possession of the land as lessee
or otherwise, the contract should be treated as an equitable mortgage.[16]
As well, that the parties intended to enter into an equitable mortgage is further
accentuated by respondents' continued payment of the real property taxes
subsequent to the alleged sale. Payment of those taxes is a usual burden attached
to ownership and when, as here, such payment is coupled with continuous
possession of the property, it constitutes evidence of great weight that a person
under whose name the realty taxes were declared has a valid and rightful claim over
the land.[17]
Lastly, the stipulation in the subject deed reading: "if we fail to exercise our rights to
repurchase as herein granted within the period stipulated, then this conveyance shall
become absolute and irrevocable without the necessity of drawing a new absolute
Deed of Sale, subject to the requirements of law regarding consolidation of
ownership of real property," - is considered a pactum commissorium. This stipulation
is contrary to the nature of a true pacto de retrosale since in such sale, ownership of
the property sold is immediately transferred to the vendee a retro upon execution of
the sale, subject only to the repurchase of a vendor a retro within the stipulated
period.[18] Undoubtedly, the aforementioned stipulation is a pactum
commissorium because it enables the mortgagee to acquire ownership of the
mortgaged properties without need of any foreclosure proceedings which is a nullity

being contrary to the provisions of Article 2088[19] of the Civil Code. Indeed, the
inclusion of such stipulation in the deed shows the intention to mortgagerather than
to sell.
WHEREFORE, the instant petition is DENIED, and the assailed decision and
resolution of the CA in CA-G.R. CV No. 63230 are AFFIRMED.
Costs against petitioners.
SO ORDERED.

equitable mortgage 2

THIRD DIVISION
[ G.R. NO. 159048, October 11, 2005 ]
BENNY GO, PETITIONER, VS. ELIODORO BACARON,
RESPONDENT.
DECISION
PANGANIBAN, J.:
The present Contract, which purports to be an absolute deed of sale, should be
deemed an equitable mortgage for the following reasons: (1) the consideration has
been proven to be unusually inadequate; (2) the supposed vendor has remained in
possession of the property even after the execution of the instrument; and (3) the
alleged seller has continued to pay the real estate taxes on the property.
The Case
Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to
set aside the October 17, 2002 Decision[2] and the May 20, 2003 Resolution[3] of the
Court of Appeals (CA) in CA-GR CV No. 67218. The assailed Decision disposed as
follows:
"WHEREFORE, premises considered, the Decision dated February 24, 2000 of the
Regional Trial Court of Davao City, Branch 12, in Civil Case No. 25,101-97 is hereby

REVERSED and SET ASIDE and a new one is hereby rendered ordering the
reformation of the subject instrument, such that the same must be considered
a mortgage contract and not a transfer of right. Costs against [petitioner]." [4]
The assailed Resolution denied Reconsideration.
The Facts
The antecedents are narrated by the CA as follows:
"As evidenced by the Transfer of Rights dated October 1, 1993, Eliodoro Bacaron
conveyed a 15.3955-hectare parcel of land located in Langub, Talomo, Davao City,
in favor of Benny Go for P20,000.00.
"About a year thereafter, Bacaron, seeking to recover his property, went to Go to pay
his alleged P20,000.00 "loan" but the latter refused to receive the same and to return
his property saying that the transaction between the two of them was a sale and not
a mortgage as claimed by Bacaron.
"Consequently, on March 5, 1997, Eliodoro Bacaron, as plaintiff [herein respondent],
filed a Complaint for Reformation of Instrument with Damages and prayer for the
issuance of a writ of preliminary injunction, with the Regional Trial Court of Davao
City, Branch 12, against the [petitioner] Benny Go, which case was docketed as Civil
Case No. 25,101-97.
"In his Complaint, [respondent] alleged that in the middle part of 1993, he suffered
business reversals which prompted him, being in urgent need of funds, to borrow
P20,000.00 from the [petitioner]. He however averred that prior to extending said
loan to him, the [petitioner] required him to execute a document purporting to be
a Transfer of Rights but was told that the same would only be a formality as he could
redeem the unregistered land the moment he pays the loan. Admitting that he signed
the instrument despite knowing that the same did not express the true intention of
the parties' agreement, i.e., that the transaction was a mere equitable mortgage, the
[respondent] explained that he did so only because he was in a very tight financial
situation and because he was assured by the [petitioner] that he could redeem his
property. To support this claim, [respondent] stressed the fact that the consideration
in the instrument was merely P20,000.00, which is grossly inadequate as the selling
price of a 15-hectare land considering that, at that time, the market value of land in
Davao City amounts to P100,000.00 per hectare. [Respondent] narrated that a year
thereafter, or in a middle part of 1994, he was able to raise the P20,000.00 and went

to the [petitioner] to pay his loan but the latter refused to accept his payment,
insisting that the transaction entered into by the parties was not
an equitable mortgage, as the [respondent] insists, but a real transfer of right over
the property. Because of said refusal, [respondent] continued, he was compelled to
refer the matter to his lawyer in order to request the [petitioner] to accept his
payment otherwise he would file the necessary action in court. Despite said formal
demand by the [respondent], however, [petitioner] allegedly continued to refuse to
recognize the "equitable mortgage", prompting [respondent] to consign the
P20,000.00 with the Clerk of Court of the RTC of Davao City, Branch 12. He thus
insisted that it is [petitioner] who is "dead wrong" in not recognizing
the equitablemortgage since, aside from the fact that the consideration was
unusually inadequate, [respondent] allegedly remained in possession of the
property.
"[Respondent] thus prayed for an award for moral damages, in view of the
[petitioner's] evident bad faith in refusing to recognize the equitable mortgage, and
for attorney's fees as [petitioner's] alleged stubbornness compelled him to engage
the services of counsel. He likewise sought an award for exemplary damages to
deter others from committing similar acts and at the same time asked the court to
issue a writ of preliminary injunction and/or temporary restraining order to prevent
[petitioner] from dispossessing [respondent] of the subject property or from
disposing of the same in favor of third parties as these acts would certainly work
injustice for and cause irreparable damage to the [respondent]. The prayer for the
issuance of a restraining order was however denied by the court in an Order.
"[Petitioner] filed his Answer on May 5, 1997, denying [respondent's] claim that the
transaction was only an equitable mortgage and not an actual transfer of right. He
asserted that the truth of the matter was that when [respondent] suffered business
reverses, his accounts with the [petitioner], as evidenced by postdated checks, cash
vouchers and promissory notes, remained unpaid and his total indebtedness,
exclusive of interests, amounted to P985,423.70. [Petitioner] further averred that, in
order to avoid the filing of cases against him, [respondent] offered to pay his
indebtedness through dacion en pago, giving the land in question as full payment
thereof. In addition, he stressed that considering that the property is still untitled and
the [respondent] bought the same from one Meliton Bacarro for only P50,000.00, it is
most unreasonable for him to agree to accept said land in exchange for over a
million pesos of indebtedness. He claimed though that he was only forced to do so
when [respondent] told him that if he did not accept the offer, other creditors would

grab the same.

"By way of affirmative defenses, the [petitioner] pointed out that [respondent] has no
cause of action against him as the [respondent] failed to comply with the essential
requisites for an action for reformation of instrument. He moreover alleged that the
[respondent] is in estoppel because, by his own admission, he signed the document
knowing that the same did not express the true intention of the parties. Further,
[petitioner] claimed that there was a valid transfer of the property herein since the
consideration is not only the actual amount written in the instrument but it also
includes the outstanding obligation of [respondent] to the [petitioner] amounting to
almost P1 million.
"As counterclaim, [petitioner] averred that, because of this baseless complaint, he
suffered mental anguish, wounded feelings and besmirched reputation, entitling him
to moral damages amounting to P20,000.00, and that in order to deter others from
doing similar acts, exemplary damages amounting to P20,000.00 should likewise be
awarded in his favor. [Petitioner] also prayed for attorney's fees and litigation
expenses claiming that, because he was constrained to litigate, he was forced to hire
the services of counsel.
xxxxxxxxx
"Trial ensued and thereafter the trial court rendered its Decision dated February 24,
2000 dismissing the complaint while finding the [petitioner's] counterclaim
meritorious. In making said ruling, the lower court, citing Article 1350 (should be
1359) of the New Civil Code, found that [respondent] failed to establish the existence
of all the requisites for an action for reformation by clear, convincing and competent
evidence. Considering [respondent's] own testimony that he read the document and
fully understood the same, signing it without making any complaints to his lawyer,
the trial court held that the evidence on record shows that the subject instrument had
been freely and voluntarily entered into by the parties and that the same expresses
the true intention of the parties. The court further noted that the [respondent's] wife
even signed the document and that the same had been duly acknowledged by the
parties before a notary public as their "true act and voluntary deed."
"The trial court likewise observed that, contrary to [respondent's] claim that the
transaction was a meremortgage of the property, the terms of the instrument are
clear and unequivocable that the property subject of the document was "sold,
transferred, ceded and conveyed" to the [petitioner] "by way of absolute sale," and

hence, no extrinsic aids are necessary to ascertain the intention of the parties as the
same is determinable from the document itself. Moreover, said court emphasized
that considering the fact that [respondent] is an educated person, having studied in
an exclusive school like Ateneo de Davao, and an experienced businessman, he is
presumed to have acted with due care and to have signed the instrument with full
knowledge of its contents and import. [Respondent's] claim that he merely borrowed
money from the [petitioner] and mortgaged the property subject of litigation to
guarantee said loan was thus found to be specious by the court, which found that
the [respondent] was actually indebted to the [petitioner] for almost a million pesos
and that the true consideration of the sale was in fact said outstanding obligation.
"With respect to [respondent's] alleged possession of the property and payment of
real estate taxes, both of which were relied upon by the [respondent] to boost his
assertion that the transaction was merely anequitable mortgage, the trial court said
that his claim of possession is belied by the fact that the actual occupants of the
property recognize that the [petitioner] owns the same and in fact said occupants
prevented [respondent's] wife from entering the premises. The court, noting that the
[petitioner] also paid the realty taxes, was also of the opinion that [respondent]
merely made such payments in order to lay the basis of his allegation that the
contract was a mere equitable mortgage.
"Accordingly, the court held that [respondent] is also not entitled to his other claims
and that his unfounded action caused [petitioner] to an award for moral damages, in
addition to the expenses he incurred in defending his cause, i.e. services of a lawyer
and transportation and other expenses, which justifies an award for the
reimbursement of his expenses and attorney's fees.' [5]
Ruling of the Court of Appeals

Granting respondent's appeal, the appellate court ruled that the Contract entered
into by the parties should be deemed an equitable mortgage, because the
consideration for the sale was grossly inadequate. By continuing to harvest the
crops and supervise his workers, respondent remained in control of the property.
True, upon the institution of this case, petitioner paid the required real estate taxes
that were still in arrears. Respondent, however paid the taxes for 1995, 1996 and
1997 -- the years between the dates when the alleged absolute sale was entered
into on October 1, 1993, and when this case was instituted on March 5, 1997. [6]

Granting respondent's prayer for reformation of the Contract, the CA ruled that the
instrument failed to reflect the true intention of the parties because of petitioner's
inequitable conduct.[7]
Hence, this Petition.[8]
The Issues

Petitioner raises the following issues for this Court's consideration:

"I.

Whether o[r] not the Court of Appeals erred in ruling that there was
inadequate consideration.
"II.

Whether o[r] not the Court of Appeals erred in ruling that the respondent
remained in possession of the land in question.
"III.

Whether or not the Court of Appeals erred in ruling that the taxes were not
paid by the petitioner.
"IV.

Whether or not the Court of Appeals erred in ruling that reformation is

proper."[9]
Simply put, these are the issues to be resolved: (1) whether the agreement entered
into by the parties was one forequitable mortgage or for absolute sale; and (2)
whether the grant of the relief of contract reformation was proper.
The Court's Ruling
The Petition has no merit.
First Issue:
Equitable Mortgage

An equitable mortgage has been defined "as one which although lacking in some
formality, or form or words, or other requisites demanded by a statute, nevertheless
reveals the intention of the parties to charge real property as security for a debt, and
contains nothing impossible or contrary to law." [10]
The instances in which a contract of sale is presumed to be
an equitable mortgage are enumerated in Article 1602 of the Civil Code as follows:
"Art. 1602. The contract shall be presumed to be an equitable mortgage, in any
of the following cases:
(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another
instrument extending the period of redemption or granting a new period is
executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intention of
the parties is that the transaction shall secure the payment of a debt or the
performance of any other obligation.
In any of the foregoing cases, any money, fruits, or other benefit to be received
by the vendee as rent or otherwise shall be considered as interest which shall
be subject to the usury laws."
Furthermore, Article 1604 of the Civil Code provides that "[t]he provisions of Article
1602 shall also apply to a contract purporting to be an absolute sale."
In the present case, three of the instances enumerated in Article 1602 -- grossly
inadequate consideration, possession of the property, and payment of realty taxes
--attended the assailed transaction and thus showed that it was indeed
anequitable mortgage.

Inadequate Consideration
Petitioner Go avers that the amount of P20,000 was not unusually inadequate. He
explains that the present parties entered into a Dacion en Pago, whereby
respondent conveyed the subject property as payment for his outstanding debts to
petitioner -- debts supposedly amounting to P985,243.70. [11] To substantiate his
claim, petitioner presented the checks that respondent had issued, as well as the
latter's testimony purportedly admitting the genuineness and due execution of the
checks and the existence of the outstanding debts.[12] Petitioner Go contends that
respondent failed to establish by sufficient evidence that those debts had already
been paid.[13] Petitioner relies on the trial court's finding that respondent knowingly
and intentionally entered into a contract of sale, not an equitable mortgage.[14]
On the other hand, Respondent Bacaron argues that the value of the property at the
time of the alleged sale was P120,000 per hectare, and that the indicated sale
amount of P20,000 was thus grossly iniquitous.[15] Allegedly, the previous cash
advances secured from petitioner's father had been settled, as evidenced by the fact
that petitioner did not negotiate further or encash the checks; the latter could have
done so, if the obligation was still extant.[16]Respondent points out that he paid for
that obligation with the coprax he had previously delivered to the father. [17]Petitioner
allegedly admitted this fact, though inadvertently, when he testified that respondent
had already paid some of the latter's previous cash advances. [18] Otherwise,
petitioner would have then set off his own debt to respondent (amounting to
P214,000) against the amount of almost one million pesos that the latter supposedly
owed him.[19]
Checks have the character of negotiability. At the same time, they may constitute
evidence of indebtedness.[20] Those presented by petitioner may indeed evince
respondent's indebtedness to him in the amounts stated on the faces of those
instruments. He, however, acknowledges (1) that respondent paid some of the
obligations through the coprax delivered to petitioner's father; and (2) that petitioner
owed and subsequently paid respondent P214,000.[21]
The parties' respective arguments show that the sum of P20,000, by itself, is
inadequate to justify the purported absolute Transfer of Rights. [22] Petitioner's claim
that there was a dacion en pago is not reflected on the instrument executed by the
parties. That claim, however, confirms the inadequacy of the P20,000 paid in

consideration of the Transfer of Rights; hence, the Contract does not reflect the true
intention of the parties. As to what their true intention was -- whether dacion en
pago or equitable mortgage -- will have to be determined by some other means.
Possession
According to Article 1602(2) of the New Civil Code, one of the instances showing
that a purported contract of sale is presumed to be an equitable mortgage is when
the supposed vendor remains in possession of the property even after the
conclusion of the transaction.
In general terms, possession is the holding of a thing or the enjoyment of a right,
whether by material occupation or by the fact that the right -- or, as in this case, the
property -- is subjected to the will of the claimant. [23] In Director of Lands v. Heirs of
Abaldonado,[24] the gathering of the products of and the act of planting on the land
were held to constitute occupation, possession and cultivation.
In the present case, the witnesses of respondent swore that they had seen him
gather fruits and coconuts on the property. Based on the cited case, the witnesses'
testimonies sufficiently establish that even after the execution of the assailed
Contract, respondent has remained in possession of the property. The testimonies
proffered by petitioner's witnesses merely indicated that they were tenants of the
property. Petitioner only informed them that he was the new owner of the property.
This attempt at a factual presentation hardly signifies that he exercised possession
over the property. As held by the appellate court, petitioner's other witness (Redoa)
was unconvincing, because he could not even say whether he resided within the
premises.[25]
The factual findings of the trial court and the CA are conflicting and, hence, may be
reviewed by this Court.[26]Normally, the findings of the trial court on the credibility of
witnesses should be respected. Here, however, their demeanor while testifying is not
at issue. What is disputed is the substance of their testimonies -- the facts to which
they testified. Assuming that the witnesses of petitioner were indeed credible, their
testimonies were insufficient to establish that he enjoyed possession over the
property.
Payment of Realty Taxes

Finally, petitioner asserts that the trial court's finding that he paid the realty taxes
should also be given corresponding weight.[27]
Respondent counters with the CA's findings that it was he who paid realty taxes on
the property. The appellate court concluded that he had paid taxes for the years
1995, 1996 and 1997 within each of those years; hence, before the filing of the
present controversy. In contrast, petitioner paid only the remaining taxes due on
October 17, 1997, or after the case had been instituted. This fact allegedly proves
that respondent has remained in possession of the property and continued to be its
owner.[28] He argues that if he had really transferred ownership, he would have been
foolish to continue paying for those taxes.[29]
On this point, we again rule for respondent.
Petitioner indeed paid the realty taxes on the property for the years 1980 to 1997.
The records show that the payments were all simultaneously made only on October
31, 1997, evidently in the light of the Complaint respondent had filed before the trial
court on March 5, 1997.[30] On the other hand, respondent continued to pay for the
realty taxes due on the property for the years 1995, 1996 and 1997. [31]
That the parties intended to enter into an equitable mortgage is bolstered by
respondent's continued payment of the real property taxes subsequent to the alleged
sale. Payment of those taxes is a usual burden attached to ownership. Coupled with
continuous possession of the property, it constitutes evidence of great weight that a
person under whose name the realty taxes were declared has a valid and rightful
claim over the land.[32]
That the parties intended to enter into an equitable mortgage is also shown by the
fact that the "seller" was driven to obtain the loan at a time when he was in urgent
need of money; and that he signed the Deed of Sale, despite knowing that it did not
express the real intention of the parties.[33] In the present proceedings, the collapse
of his business prompted respondent to obtain the loan. [34] Petitioner himself
admitted that at the time they entered into the alleged absolute sale, respondent had
suffered from serious business reversals.[35]
Second Issue:
Reformation of Instrument

Petitioner claims that the CA erred in granting the remedy of reformation of

contracts. He avers that the failure of the instrument to express the parties' true
agreement was not due to his mistake; or to fraud, inequitable conduct, or accident.
[36]

We rule for respondent.

Ultimately, it is the intention of the parties that determines whether a contract is one
of sale or of mortgage.[37] In the present case, one of the parties to the contract
raises as an issue the fact that their true intention or agreement is not reflected in the
instrument. Under this circumstance, parol evidence becomes admissible and
competent evidence to prove the true nature of the instrument. [38] Hence, unavailing
is the assertion of petitioner that the interpretation of the terms of the Contract is
unnecessary, and that the parties clearly agreed to execute an absolute deed of
sale. His assertion does not hold, especially in the light of the provisions of Article
1604 of the Civil Code, under which even contracts purporting to be absolute sales
are subject to the provisions of Article 1602.
Moreover, under Article 1605 of the New Civil Code, the supposed vendor may ask
for the reformation of the instrument, should the case be among those mentioned in
Articles 1602 and 1604. Because respondent has more than sufficiently established
that the assailed Contract is in fact an equitable mortgage rather than an absolute
sale, he is allowed to avail himself of the remedy of reformation of contracts.
WHEREFORE, the Petition is hereby DENIED, and the assailed Decision and
Resolution AFFIRMED.
SO ORDERED.

equitable mortgage
The Facts

The antecedents are narrated by the CA as follows:

"As evidenced by the Transfer of Rights dated October 1, 1993, Eliodoro Bacaron
conveyed a 15.3955-hectare parcel of land located in Langub, Talomo, Davao City,
in favor of Benny Go for P20,000.00.

"About a year thereafter, Bacaron, seeking to recover his property, went to Go to pay
his alleged P20,000.00 "loan" but the latter refused to receive the same and to return
his property saying that the transaction between the two of them was a sale and not
a mortgage as claimed by Bacaron.
"Consequently, on March 5, 1997, Eliodoro Bacaron, as plaintiff [herein respondent],
filed a Complaint for Reformation of Instrument with Damages and prayer for the
issuance of a writ of preliminary injunction, with the Regional Trial Court of Davao
City, Branch 12, against the [petitioner] Benny Go, which case was docketed as Civil
Case No. 25,101-97.
"In his Complaint, [respondent] alleged that in the middle part of 1993, he suffered
business reversals which prompted him, being in urgent need of funds, to borrow
P20,000.00 from the [petitioner]. He however averred that prior to extending said
loan to him, the [petitioner] required him to execute a document purporting to be
a Transfer of Rights but was told that the same would only be a formality as he could
redeem the unregistered land the moment he pays the loan. Admitting that he signed
the instrument despite knowing that the same did not express the true intention of
the parties' agreement, i.e., that the transaction was a mere equitable mortgage, the
[respondent] explained that he did so only because he was in a very tight financial
situation and because he was assured by the [petitioner] that he could redeem his
property. To support this claim, [respondent] stressed the fact that the consideration
in the instrument was merely P20,000.00, which is grossly inadequate as the selling
price of a 15-hectare land considering that, at that time, the market value of land in
Davao City amounts to P100,000.00 per hectare. [Respondent] narrated that a year
thereafter, or in a middle part of 1994, he was able to raise the P20,000.00 and went
to the [petitioner] to pay his loan but the latter refused to accept his payment,
insisting that the transaction entered into by the parties was not
an equitable mortgage, as the [respondent] insists, but a real transfer of right over
the property. Because of said refusal, [respondent] continued, he was compelled to
refer the matter to his lawyer in order to request the [petitioner] to accept his
payment otherwise he would file the necessary action in court. Despite said formal
demand by the [respondent], however, [petitioner] allegedly continued to refuse to
recognize the "equitable mortgage", prompting [respondent] to consign the
P20,000.00 with the Clerk of Court of the RTC of Davao City, Branch 12. He thus
insisted that it is [petitioner] who is "dead wrong" in not recognizing
the equitablemortgage since, aside from the fact that the consideration was

unusually inadequate, [respondent] allegedly remained in possession of the

property.
"[Respondent] thus prayed for an award for moral damages, in view of the
[petitioner's] evident bad faith in refusing to recognize the equitable mortgage, and
for attorney's fees as [petitioner's] alleged stubbornness compelled him to engage
the services of counsel. He likewise sought an award for exemplary damages to
deter others from committing similar acts and at the same time asked the court to
issue a writ of preliminary injunction and/or temporary restraining order to prevent
[petitioner] from dispossessing [respondent] of the subject property or from
disposing of the same in favor of third parties as these acts would certainly work
injustice for and cause irreparable damage to the [respondent]. The prayer for the
issuance of a restraining order was however denied by the court in an Order.
"[Petitioner] filed his Answer on May 5, 1997, denying [respondent's] claim that the
transaction was only an equitable mortgage and not an actual transfer of right. He
asserted that the truth of the matter was that when [respondent] suffered business
reverses, his accounts with the [petitioner], as evidenced by postdated checks, cash
vouchers and promissory notes, remained unpaid and his total indebtedness,
exclusive of interests, amounted to P985,423.70. [Petitioner] further averred that, in
order to avoid the filing of cases against him, [respondent] offered to pay his
indebtedness through dacion en pago, giving the land in question as full payment
thereof. In addition, he stressed that considering that the property is still untitled and
the [respondent] bought the same from one Meliton Bacarro for only P50,000.00, it is
most unreasonable for him to agree to accept said land in exchange for over a
million pesos of indebtedness. He claimed though that he was only forced to do so
when [respondent] told him that if he did not accept the offer, other creditors would
grab the same.
"By way of affirmative defenses, the [petitioner] pointed out that [respondent] has no
cause of action against him as the [respondent] failed to comply with the essential
requisites for an action for reformation of instrument. He moreover alleged that the
[respondent] is in estoppel because, by his own admission, he signed the document
knowing that the same did not express the true intention of the parties. Further,
[petitioner] claimed that there was a valid transfer of the property herein since the
consideration is not only the actual amount written in the instrument but it also
includes the outstanding obligation of [respondent] to the [petitioner] amounting to
almost P1 million.

"As counterclaim, [petitioner] averred that, because of this baseless complaint, he

suffered mental anguish, wounded feelings and besmirched reputation, entitling him
to moral damages amounting to P20,000.00, and that in order to deter others from
doing similar acts, exemplary damages amounting to P20,000.00 should likewise be
awarded in his favor. [Petitioner] also prayed for attorney's fees and litigation
expenses claiming that, because he was constrained to litigate, he was forced to hire
the services of counsel.
xxxxxxxxx
"Trial ensued and thereafter the trial court rendered its Decision dated February 24,
2000 dismissing the complaint while finding the [petitioner's] counterclaim
meritorious. In making said ruling, the lower court, citing Article 1350 (should be
1359) of the New Civil Code, found that [respondent] failed to establish the existence
of all the requisites for an action for reformation by clear, convincing and competent
evidence. Considering [respondent's] own testimony that he read the document and
fully understood the same, signing it without making any complaints to his lawyer,
the trial court held that the evidence on record shows that the subject instrument had
been freely and voluntarily entered into by the parties and that the same expresses
the true intention of the parties. The court further noted that the [respondent's] wife
even signed the document and that the same had been duly acknowledged by the
parties before a notary public as their "true act and voluntary deed."
"The trial court likewise observed that, contrary to [respondent's] claim that the
transaction was a meremortgage of the property, the terms of the instrument are
clear and unequivocable that the property subject of the document was "sold,
transferred, ceded and conveyed" to the [petitioner] "by way of absolute sale," and
hence, no extrinsic aids are necessary to ascertain the intention of the parties as the
same is determinable from the document itself. Moreover, said court emphasized
that considering the fact that [respondent] is an educated person, having studied in
an exclusive school like Ateneo de Davao, and an experienced businessman, he is
presumed to have acted with due care and to have signed the instrument with full
knowledge of its contents and import. [Respondent's] claim that he merely borrowed
money from the [petitioner] and mortgaged the property subject of litigation to
guarantee said loan was thus found to be specious by the court, which found that
the [respondent] was actually indebted to the [petitioner] for almost a million pesos
and that the true consideration of the sale was in fact said outstanding obligation.

"With respect to [respondent's] alleged possession of the property and payment of

real estate taxes, both of which were relied upon by the [respondent] to boost his
assertion that the transaction was merely anequitable mortgage, the trial court said
that his claim of possession is belied by the fact that the actual occupants of the
property recognize that the [petitioner] owns the same and in fact said occupants
prevented [respondent's] wife from entering the premises. The court, noting that the
[petitioner] also paid the realty taxes, was also of the opinion that [respondent]
merely made such payments in order to lay the basis of his allegation that the
contract was a mere equitable mortgage.
"Accordingly, the court held that [respondent] is also not entitled to his other claims
and that his unfounded action caused [petitioner] to an award for moral damages, in
addition to the expenses he incurred in defending his cause, i.e. services of a lawyer
and transportation and other expenses, which justifies an award for the
reimbursement of his expenses and attorney's fees.' [5]
Ruling of the Court of Appeals

Granting respondent's appeal, the appellate court ruled that the Contract entered
into by the parties should be deemed an equitable mortgage, because the
consideration for the sale was grossly inadequate. By continuing to harvest the
crops and supervise his workers, respondent remained in control of the property.
True, upon the institution of this case, petitioner paid the required real estate taxes
that were still in arrears. Respondent, however paid the taxes for 1995, 1996 and
1997 -- the years between the dates when the alleged absolute sale was entered
into on October 1, 1993, and when this case was instituted on March 5, 1997. [6]
Granting respondent's prayer for reformation of the Contract, the CA ruled that the
instrument failed to reflect the true intention of the parties because of petitioner's
inequitable conduct.[7]
Hence, this Petition.[8]
The Issues

Petitioner raises the following issues for this Court's consideration:

"I.

Whether o[r] not the Court of Appeals erred in ruling that there was
inadequate consideration.
"II.

Whether o[r] not the Court of Appeals erred in ruling that the respondent
remained in possession of the land in question.
"III.

Whether or not the Court of Appeals erred in ruling that the taxes were not
paid by the petitioner.
"IV.

Whether or not the Court of Appeals erred in ruling that reformation is

proper."[9]
Simply put, these are the issues to be resolved: (1) whether the agreement entered
into by the parties was one forequitable mortgage or for absolute sale; and (2)
whether the grant of the relief of contract reformation was proper.
The Court's Ruling
The Petition has no merit.
First Issue:
Equitable Mortgage

An equitable mortgage has been defined "as one which although lacking in some
formality, or form or words, or other requisites demanded by a statute, nevertheless
reveals the intention of the parties to charge real property as security for a debt, and
contains nothing impossible or contrary to law." [10]
The instances in which a contract of sale is presumed to be
an equitable mortgage are enumerated in Article 1602 of the Civil Code as follows:
"Art. 1602. The contract shall be presumed to be an equitable mortgage, in any
of the following cases:

(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another
instrument extending the period of redemption or granting a new period is
executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intention of
the parties is that the transaction shall secure the payment of a debt or the
performance of any other obligation.
In any of the foregoing cases, any money, fruits, or other benefit to be received
by the vendee as rent or otherwise shall be considered as interest which shall
be subject to the usury laws."
Furthermore, Article 1604 of the Civil Code provides that "[t]he provisions of Article
1602 shall also apply to a contract purporting to be an absolute sale."
In the present case, three of the instances enumerated in Article 1602 -- grossly
inadequate consideration, possession of the property, and payment of realty taxes
--attended the assailed transaction and thus showed that it was indeed
anequitable mortgage.
Inadequate Consideration
Petitioner Go avers that the amount of P20,000 was not unusually inadequate. He
explains that the present parties entered into a Dacion en Pago, whereby
respondent conveyed the subject property as payment for his outstanding debts to
petitioner -- debts supposedly amounting to P985,243.70. [11] To substantiate his
claim, petitioner presented the checks that respondent had issued, as well as the
latter's testimony purportedly admitting the genuineness and due execution of the
checks and the existence of the outstanding debts.[12] Petitioner Go contends that
respondent failed to establish by sufficient evidence that those debts had already

been paid.[13] Petitioner relies on the trial court's finding that respondent knowingly
and intentionally entered into a contract of sale, not an equitable mortgage.[14]
On the other hand, Respondent Bacaron argues that the value of the property at the
time of the alleged sale was P120,000 per hectare, and that the indicated sale
amount of P20,000 was thus grossly iniquitous.[15] Allegedly, the previous cash
advances secured from petitioner's father had been settled, as evidenced by the fact
that petitioner did not negotiate further or encash the checks; the latter could have
done so, if the obligation was still extant.[16]Respondent points out that he paid for
that obligation with the coprax he had previously delivered to the father. [17]Petitioner
allegedly admitted this fact, though inadvertently, when he testified that respondent
had already paid some of the latter's previous cash advances. [18] Otherwise,
petitioner would have then set off his own debt to respondent (amounting to
P214,000) against the amount of almost one million pesos that the latter supposedly
owed him.[19]
Checks have the character of negotiability. At the same time, they may constitute
evidence of indebtedness.[20] Those presented by petitioner may indeed evince
respondent's indebtedness to him in the amounts stated on the faces of those
instruments. He, however, acknowledges (1) that respondent paid some of the
obligations through the coprax delivered to petitioner's father; and (2) that petitioner
owed and subsequently paid respondent P214,000.[21]
The parties' respective arguments show that the sum of P20,000, by itself, is
inadequate to justify the purported absolute Transfer of Rights. [22] Petitioner's claim
that there was a dacion en pago is not reflected on the instrument executed by the
parties. That claim, however, confirms the inadequacy of the P20,000 paid in
consideration of the Transfer of Rights; hence, the Contract does not reflect the true
intention of the parties. As to what their true intention was -- whether dacion en
pago or equitable mortgage -- will have to be determined by some other means.
Possession
According to Article 1602(2) of the New Civil Code, one of the instances showing
that a purported contract of sale is presumed to be an equitable mortgage is when
the supposed vendor remains in possession of the property even after the
conclusion of the transaction.

In general terms, possession is the holding of a thing or the enjoyment of a right,

whether by material occupation or by the fact that the right -- or, as in this case, the
property -- is subjected to the will of the claimant. [23] In Director of Lands v. Heirs of
Abaldonado,[24] the gathering of the products of and the act of planting on the land
were held to constitute occupation, possession and cultivation.
In the present case, the witnesses of respondent swore that they had seen him
gather fruits and coconuts on the property. Based on the cited case, the witnesses'
testimonies sufficiently establish that even after the execution of the assailed
Contract, respondent has remained in possession of the property. The testimonies
proffered by petitioner's witnesses merely indicated that they were tenants of the
property. Petitioner only informed them that he was the new owner of the property.
This attempt at a factual presentation hardly signifies that he exercised possession
over the property. As held by the appellate court, petitioner's other witness (Redoa)
was unconvincing, because he could not even say whether he resided within the
premises.[25]
The factual findings of the trial court and the CA are conflicting and, hence, may be
reviewed by this Court.[26]Normally, the findings of the trial court on the credibility of
witnesses should be respected. Here, however, their demeanor while testifying is not
at issue. What is disputed is the substance of their testimonies -- the facts to which
they testified. Assuming that the witnesses of petitioner were indeed credible, their
testimonies were insufficient to establish that he enjoyed possession over the
property.
Payment of Realty Taxes
Finally, petitioner asserts that the trial court's finding that he paid the realty taxes
should also be given corresponding weight.[27]
Respondent counters with the CA's findings that it was he who paid realty taxes on
the property. The appellate court concluded that he had paid taxes for the years
1995, 1996 and 1997 within each of those years; hence, before the filing of the
present controversy. In contrast, petitioner paid only the remaining taxes due on
October 17, 1997, or after the case had been instituted. This fact allegedly proves
that respondent has remained in possession of the property and continued to be its
owner.[28] He argues that if he had really transferred ownership, he would have been
foolish to continue paying for those taxes.[29]

On this point, we again rule for respondent.

Petitioner indeed paid the realty taxes on the property for the years 1980 to 1997.
The records show that the payments were all simultaneously made only on October
31, 1997, evidently in the light of the Complaint respondent had filed before the trial
court on March 5, 1997.[30] On the other hand, respondent continued to pay for the
realty taxes due on the property for the years 1995, 1996 and 1997. [31]
That the parties intended to enter into an equitable mortgage is bolstered by
respondent's continued payment of the real property taxes subsequent to the alleged
sale. Payment of those taxes is a usual burden attached to ownership. Coupled with
continuous possession of the property, it constitutes evidence of great weight that a
person under whose name the realty taxes were declared has a valid and rightful
claim over the land.[32]
That the parties intended to enter into an equitable mortgage is also shown by the
fact that the "seller" was driven to obtain the loan at a time when he was in urgent
need of money; and that he signed the Deed of Sale, despite knowing that it did not
express the real intention of the parties.[33] In the present proceedings, the collapse
of his business prompted respondent to obtain the loan. [34] Petitioner himself
admitted that at the time they entered into the alleged absolute sale, respondent had
suffered from serious business reversals.[35]
Second Issue:
Reformation of Instrument

Petitioner claims that the CA erred in granting the remedy of reformation of

contracts. He avers that the failure of the instrument to express the parties' true
agreement was not due to his mistake; or to fraud, inequitable conduct, or accident.
[36]

We rule for respondent.

Ultimately, it is the intention of the parties that determines whether a contract is one
of sale or of mortgage.[37] In the present case, one of the parties to the contract
raises as an issue the fact that their true intention or agreement is not reflected in the
instrument. Under this circumstance, parol evidence becomes admissible and

competent evidence to prove the true nature of the instrument. [38] Hence, unavailing
is the assertion of petitioner that the interpretation of the terms of the Contract is
unnecessary, and that the parties clearly agreed to execute an absolute deed of
sale. His assertion does not hold, especially in the light of the provisions of Article
1604 of the Civil Code, under which even contracts purporting to be absolute sales
are subject to the provisions of Article 1602.
Moreover, under Article 1605 of the New Civil Code, the supposed vendor may ask
for the reformation of the instrument, should the case be among those mentioned in
Articles 1602 and 1604. Because respondent has more than sufficiently established
that the assailed Contract is in fact an equitable mortgage rather than an absolute
sale, he is allowed to avail himself of the remedy of reformation of contracts.
WHEREFORE, the Petition is hereby DENIED, and the assailed Decision and
Resolution AFFIRMED.
SO ORDERED.

A redhibitory defect must be an imperfection or defect

of such nature as to engender a certain degree of
importance.

SECOND DIVISION
[ G.R. No. 73913, January 31, 1989 ]
JERRY T. MOLES, PETITIONER, VS. INTERMEDIATE APPELLATE
COURT AND MARIANO M. DIOLOSA, RESPONDENTS.
DECISION
REGALADO, J.:
This petition for review on certiorari assails the decision of the then Intermediate
Appellate Court[1] dismissing the complaint filed by herein petitioner against the
herein private respondent in the former Court of First Instance of Negros Occidental
in Civil Case No. 13821 thereof.[2]

The factual backdrop of this controversy, as culled from the records, [3] shows that on
May 17, 1978, petitioner Jerry T.Moles commenced a suit against private respondent
Mariano M. Diolosa in the aforesaid trial court, Branch IV in Bacolod City, for
rescission of contract with damages. Private respondent moved to dismiss on the
ground of improper venue, invoking therefor Sales Invoice No. 075A executed
between petitioner and private respondent on April 23, 1977 which provides that "all
judicial actions arising from this contract shall be instituted in the City of Iloilo". [4] This
was opposed by petitioner who averred that there is no formal document evidencing
the sale which is substantially verbal in character. In an order dated June 23, 1978,
the trial court denied the motion to dismiss, holding that the question of venue could
not be resolved at said stage of the case. The subsequent motion for
reconsideration was likewise denied.
Consequently, private respondent, invoking the aforesaid venue stipulation,
proceeded to this Court on a petition for prohibition with preliminary injunction in
G.R. No. 49078, questioning the validity of the order denying his aforesaid two
motions and seeking to enjoin the trial court from further proceeding with the case.
This petition was dismissed for lack of merit in a resolution of the Court, dated
February 7, 1979, and which became final on March 15, 1979. Thereafter, private
respondent filed his answer and proceeded to trial.
The aforecited records establish that sometime in 1977, petitioner needed a linotype
printing machine for his printing business, the LM Press at Bacolod City, and applied
for an industrial loan with the Development Bank of the Philippines (hereinafter,
DBP) for the purchase thereof. An agent of Smith, Bell and Co. who is a friend of
petitioner introduced the latter to private respondent, owner of the Diolosa Publishing
House in Iloilo City, who had two available machines. Thereafter, petitioner went to
Iloilo City to inspect the two machines offered for sale and was informed that the
same were secondhand but functional.
On his second visit to the Diolosa Publishing House, petitioner together with Rogelio
Yusay, a letterpress machine operator, decided to buy the linotype machine, Model
14. The transaction was basically verbal in nature but to facilitate the loan
application with the DBP, a pro forma invoice, dated April 23, 1977 and reflecting the
amount of P50,000.00 as the consideration of the sale, was signed by petitioner with
an addendum that payment had not yet been made but that he promised to pay the
full amount upon the release of his loan from the aforementioned bank on or before

the end of the month.[5] Although the agreed selling price was only P40,000.00, the
amount on the invoice was increased by P10,000.00, said increase being intended
for the purchase of new matrices for said machine.
Sometime between April and May, 1977, the machine was delivered to petitioner's
publishing house at Tangub, Bacolod City where it was installed by one Crispino
Escurido, an employee of respondent Diolosa. Another employee of the Diolosa
Publishing House, Tomas Plondaya, stayed at petitioner's house for almost a month
to train the latter's cousin in operating the machine. [6]
Under date of August 29, 1977, private respondent issued a certification wherein he
warranted that the machine sold was in "A-1 condition", together with other express
warranties.[7]
Prior to the release of the loan, a representative from the DBP, Bacolod Branch,
supposedly inspected the machine but he merely looked at it to see that it was there.
[8]

The inspector's recommendation was favorable and, thereafter, petitioner's loan of

P50,000.00 was granted and released. However, before payment was made to
private respondent, petitioner required the former, in a letter dated September 30,
1977, to accomplish the following, with the explanations indicated by him:
1) Crossed check for P15,407.10 representing:
a)

P10,000.00

- Overprice in the machine;

b)

P 203.00

- Freight and handling of the machine;

c)

P 203.00

- Share in the electric repair; and

d)

P 5,000.00

- Insurance that Crispin will come back and repair the

linotype machine at seller's account as provided in the
contract; after Crispin has put everything in order when he
goes home on Sunday he will return the check of
P15,000.00.

2) Official receipt in the amount of P50,000.00 as full payment of the linotype

machine.
These were immediately complied with by private respondent and on the same day,
September 30, 1977, he received the DBP check for P50,000.00. [9]

It is to be noted that aforesaid official receipt No. 0451, dated September 30, 1977
and prepared and signed by private respondent, expressly states that he received
from the petitioner "the DBP check for P50,000.00 issued in our favor in full payment
of one (1) Unit Model 14 Linotype Machine as per Pro forma Invoice dated April 23,
1977".[10]
On November 29, 1977, petitioner wrote private respondent that the machine was
not functioning properly as it needed a new distributor bar. In the same letter,
petitioner unburdened himself of his grievances and sentiments in this wise:
"We bought this machine in good faith because we trusted you very much being our
elder brother in printing and publishing business. We did not hire anybody to look
over the machine, much more ask for a rebate in your price of P40,000.00 and
believed what your trusted two men, Tomas and Crispin, said although they were
hiding the real and actual condition of the machine for your business protection.
"Until last week, we found out the worst ever to happen to us. We have been
cheated because the expert of the Linotype machine from Manila says, that the most
he will buy your machine is at P5,000.00 only. x x x."[11]
Private respondent made no reply to said letter, so petitioner engaged the services
of other technicians. Later, after several telephone calls regarding the defects in the
machine, private respondent sent two technicians to make the necessary repairs but
they failed to put the machine in running condition. In fact, since then petitioner was
never able to use the machine.[12]
On February 18, 1978, not having received from private respondent the action
requested in his preceding letter as hereinbefore stated, petitioner again wrote
private respondent, this time with the warning that he would be forced to seek legal
remedies to protect his interests.[13]
Obviously in response to the foregoing letter, private respondent decided to
purchase a new distributor bar and, on March 16, 1978, private respondent delivered
this spare part to petitioner through one Pedro Candido. However, when thereafter
petitioner asked private respondent to pay for the price of the distributor bar, the
latter asked petitioner to share the cost with him. Petitioner thus finally decided to
indorse the matter to his lawyer.
An expert witness for the petitioner, one Gil Legaspina, declared that he inspected

the linotype machine involved in this case at the instance of petitioner. In his
inspection thereof, he found the following defects: (1) the vertical automatic stop
lever in the casting division was worn out; (2) the justification lever had a slight
breach (balana in the dialect); (3) the distributor bar was worn out; (4) the partition at
the entrance channel had a tear; (5) there was no "pie stacker" tube entrance; and
(6) the slouch arm lever in the driving division was worn out.
It turned out that the said linotype machine was the same machine that witness
Legaspina had previously inspected for Sy Brothers, a firm which also wanted to buy
a linotype machine for their printing establishment. Having found defects in said
machine, the witness informed Sy Brothers about his findings, hence the purchase
was aborted. In his opinion, major repairs were needed to put the machine back in
good running condition.[14]
After trial, the court a quo rendered a decision the dispositive portion of which reads:
"IN VIEW OF THE FOREGOING CONSIDERATIONS, judgment is hereby rendered
as follows:
(1)

Decreeing the rescission of the contract of sale involving one linotype machine

No. 14 between the defendant as seller and the plaintiff as buyer;

(2)

Ordering the plaintiff to return to the defendant at the latter's place of business

in Iloilo City the linotype machine aforementioned together with all accessories that
originally were delivered to the plaintiff;
(3)

Ordering the defendant to return to the plaintiff the sum of Forty Thousand

Pesos (P40,000.00) representing the price of the linotype machine, plus interest at
the legal rate counted from May 17, 1978 when this action was instituted, until fully
paid;
(4)

Ordering the defendant to indemnify the plaintiff the sum of Four Thousand

Five Hundred Pesos (P4,500.00) representing unearned income or actual damages;

(5)

Ordering the defendant to pay the plaintiff the sum of One Thousand Pesos

(P1,000.00) for attorney's fees.

Costs against the defendant."[15]

From this decision, private respondent appealed to the Intermediate Appellate Court
which reversed the judgment of the lower court and dismissed petitioner's complaint,
hence the present petition.
We find merit in petitioner's cause.
On the matter of venue, private respondent relies on the aforementioned Sales
Invoice No. 075A which allegedly requires that the proper venue should be Iloilo City
and not Bacolod City. We agree with petitioner that said document is not the
contract evidencing the sale of the linotype machine, it being merely a preliminary
memorandum of a proposal to buy one linotype machine, using for such purpose a
printed form used for printing job orders in private respondent's printing business.
As hereinbefore explained, this issue on venue was brought to Us by private
respondent in a special civil action for prohibition with preliminary injunction in G.R.
No. 49078. After considering the allegations contained, the issues raised and the
arguments adduced in said petition, as well as the comments thereto, the Court
dismissed the petition for lack of merit. Respondent court erred in reopening the
same issue on appeal, with a contrary ruling.
Furthermore, it was error for the respondent court, after adopting the factual findings
of the lower court, to reverse the latter's holding that the sales invoice is merely
a pro forma memorandum. The records do not show that this finding is grounded
entirely on speculation, surmises or conjectures as to warrant a reversal thereof. [16] In
fact, as hereinbefore stated, private respondent expressly admitted in his official
receipt No. 0451, dated September 30, 1977, that the said sales invoice was merely
a pro forma invoice. Consequently, the printed provisions therein, especially since
the printed form used was for purposes of other types of transactions, could not have
been intended by the parties to govern their transaction on the printing machine. It
is obvious that a venue stipulation, in order to bind the parties, must have been
intelligently and deliberately intended by them to exclude their case from the
reglementary rules on venue. Yet, even such intended variance may not necessarily
be given judicial approval, as, for instance, where there are no restrictive or
qualifying words in the agreement indicating that venue cannot be laid in any place
other than that agreed upon by the parties,[17] and in contracts of adhesion.[18]
Now, when an article is sold as a secondhand item, a question arises as to whether
there is an implied warranty of its quality or fitness. It is generally held that in the
sale of a designated and specific article sold as secondhand, there is no implied

warranty as to its quality or fitness for the purpose intended, at least where it is
subject to inspection at the time of the sale. On the other hand, there is also
authority to the effect that in a sale of secondhand articles there may be, under
some circumstances, an implied warranty of fitness for the ordinary purpose of the
article sold or for the particular purpose of the buyer. [19]
In a line of decisions rendered by the United States Supreme Court, it had
theretofore been held that there is no implied warranty as to the condition,
adaptation, fitness, or suitability for the purpose for which made, or the quality, of an
article sold as and for a secondhand article. [20]
Thus, in finding for private respondent, the respondent court cited the ruling in Sison
vs. Ago, et al.[21] to the effect that unless goods are sold as to raise an implied
warranty, as a general rule there is no implied warranty in the sale of secondhand
articles.[22]
Said general rule, however, is not without exceptions. Article 1562 of our Civil Code,
which was taken from the Uniform Sales Act, provides:
"Art. 1562. In a sale of goods, there is an implied warranty or condition as to the
quality or fitness of the goods, as follows:
(1)

Where the buyer, expressly or by implication, makes known to the seller the

particular purpose for which the goods are acquired, and it appears that the buyer
relies on the seller's skill or judgment (whether he be the grower or manufacturer or
not), there is an implied warranty that the goods shall be reasonably fit for such
purpose;"
xxx

xxx

xxx

In Drumar Mining Co. vs. Morris Ravine Mining Co.,[23] the District Court of Appeals,
3rd District, California, in applying a similar provision of law, ruled:
"There is nothing in the Uniform Sales Act declaring there is no implied warranty in
the sale of secondhand goods. Section 1735 of the Civil Code declares there is no
implied warranty or condition as to the quality or fitness for any particular purpose, of
goods supplied under a contract to sell, or a sale, except (this general statement is
followed by an enumeration of several exceptions). It would seem that the
legislature intended this section to apply to all sales of goods, whether new or

secondhand. In subdivision 1 of this section, this language is used: 'Where the

buyer x x x makes known to the seller the particular purpose for which the goods are
required, and it appears that the buyer relies on the seller's skill or judgment x x x
there is an implied warranty that the goods shall be reasonably fit for such purpose.'"
Furthermore, and of a more determinative role in this case, a perusal of past
American decisions[24] likewise reveals a uniform pattern of rulings to the effect that
an express warranty can be made by and also be binding on the seller even in the
sale of a secondhand article.
In the aforecited case of Markman vs. Hallbeck, while holding that there was an
express warranty in the sale of a secondhand engine, the court said that it was not
error to refuse an instruction that upon the sale of secondhand goods no warranty
was implied, since secondhand goods might be sold under such circumstances as to
raise an implied warranty.
To repeat, in the case before Us, a certification to the effect that the linotype
machine bought by petitioner was in A-1 condition was issued by private respondent
in favor of the former. This cannot but be considered as an express warranty.
However, it is private respondent's submission, that the same is not binding on him,
not being a part of the contract of sale between them. This contention is bereft of
substance.
It must be remembered that the certification was a condition sine qua non for the
release of petitioner's loan which was to be used as payment for the purchase price
of the machine. Private respondent failed to refute this material fact. Neither does
he explain why he made that express warranty on the condition of the machine if he
had not intended to be bound by it. In fact, the respondent court, in declaring that
petitioner should have availed of the remedy of requiring repairs as provided for in
said certification, thereby considered the same as part and parcel of the verbal
contract between the parties.
On the basis of the foregoing circumstances, the inescapable conclusion is that
private respondent is indeed bound by the express warranty he executed in favor of
herein petitioner.
We disagree with respondent court that private respondent's express warranty as to
the A-1 condition of the machine was merely "dealer's talk". Private respondent was
not a dealer of printing or linotype machines to whom could be ascribed the
supposed resort to the usual exaggerations of trade in said items. His certification

as to the condition of the machine was not made to induce petitioner to purchase it
but to confirm in writing for purposes of the financing aspect of the transaction his
representations thereon. Ordinarily, what does not appear on the face of the written
instrument should be regarded as dealer's or trader's talk; [25] conversely, what is
specifically represented as true said document, as in the instant case, cannot be
considered as mere dealer's talk.
On the question as to whether the hidden defects in the machine is sufficient to
warrant a rescission of the contract between the parties, We have to consider the
rule on redhibitory defects contemplated in Article 1561 of the Civil Code. A
redhibitory defect must be an imperfection or defect of such nature as to engender a
certain degree of importance. An imperfection or defect of little consequence does
not come within the category of being redhibitory. [26]
As already narrated, an expert witness for the petitioner categorically established
that the machine required major repairs before it could be used. This, plus the fact
that petitioner never made appropriate use of the machine from the time of purchase
until an action was filed, attest to the major defects in said machine, by reason of
which the rescission of the contract of sale is sought. The factual finding, therefore,
of the trial court that the machine is not reasonably fit for the particular purpose for
which it was intended must be upheld, there being ample evidence to sustain the
same.
At a belated stage of this appeal, private respondent came up for the first time with
the contention that the action for rescission is barred by prescription. While it is true
that Article

1571 of the Civil Code provides for a prescriptive

period of six months for a redhibitory action, a cursory reading of

the ten preceding articles to which it refers will reveal that said rule may be applied
only in case of implied warranties.

The present case involves one

with an express warranty. Consequently, the general rule

on rescission of contract, which is four years[27] shall
apply.

Considering that the original case for rescission was filed only one year

after the delivery of the subject machine, the same is well within the prescriptive
period. This is aside from the doctrinal rule that the defense of prescription is waived
and cannot be considered on appeal if not raised in the trial court, [28] and this case
does not have the features for an exception to said rule.

WHEREFORE, the judgment of dismissal of the respondent court is hereby

REVERSED and SET ASIDE, and the decision of the court a quo is hereby
REINSTATED.
SO ORDERED.