EN BANC

[G.R. No. L-8437. November 28, 1956.]

ESTATE OF K. H. HEMADY, deceased, v. LUZON SURETY CO., INC., claimant-appellant.

Claro M. Recto for appellee.

Tolentino & Garcia and D. R. Cruz for appellant.

SYLLABUS

1. CONTRACTS; BINDING EFFECT OF CONTRACTS UPON HEIRS OF DECEASED PARTY.

— The binding effect of contracts upon the heirs of the deceased party is not altered by
the provision in the Rules of Court that money debts of a deceased must be liquidated
and paid from his estate before the residue is distributed among said heirs (Rule 39).
The reason is that whatever payment is thus made from the estate is ultimately a
payment is thus made from the estate is ultimately a payment by the heirs and
distributes, since the amount of the paid claim in fact diminishes or reduces the shares
that the heirs would have been entitled to receive. The general rule, therefore, is that a
party’s contractual rights and obligations are transmissible to the successors.

2. ID.; SURETYHIP; NATURE OF OBLIGATION OF SURETY. — The nature of the obligation

of the surety or guarantor does not warrant the conclusion that his peculiar individual
qualities are contemplated as a principal inducement for the contract. The creditor
expects of the surety nothing but the reimbursement of the moneys that said creditor
might have to disburse on account of the obligations of the principal debtors. This
reimbursement is a payment of a sum of money, resulting from an obligation to give;
and to the creditor, it was indifferent that the reimbursement should be made by the
surety himself or by some one else in his behalf, so long as the money was paid to it.

3. ID.; ID.; QUALIFICATION OF GUARANTOR; SUPERVENING INCAPACITY OF

GUARANTOR, EFFECT ON CONTRACT. — The qualification of integrity in the guarantor
or surety is required to be present only at the time of the perfection of the contract of
guaranty. Once the contract of guaranty has become perfected and binding, the
supervening dishonesty of the guarantor (that is to say, the disappearance of his
integrity after he has become bound) does not terminate the contract but merely entitles
the creditor to demand a replacement of the guarantor. But the step remains optional in
the creditor; it is his right, not his duty, he may waive it if he chooses, and hold the
guarantor to his bargain.

DECISION

REYES, J. B. L., J.:

Appeal by Luzon Surety Co., Inc., from an order of the Court of First Instance of Rizal,
presided by Judge Hermogenes Caluag, dismissing its claim against the Estate of K. H.
Hemady (Special Proceeding No. Q-293) for failure to state a cause of action.

The Luzon Surety Co. had filed a claim against the Estate based on twenty different
indemnity agreements, or counter bonds, each subscribed by a distinct principal and by
the deceased K. H. Hemady, a surety solidary guarantor) in all of them, in consideration
of the Luzon Surety Co.’s of having guaranteed, the various principals in favor of
different creditors. The twenty counterbonds, or indemnity agreements, all contained
the following stipulations:chanroblesvirtual 1awlibrary

"Premiums. — As consideration for this suretyship, the undersigned jointly and severally,
agree to pay the COMPANY the sum of ________________ (P______) pesos, Philippines
Currency, in advance as premium there of for every __________ months or fractions
thereof, this ________ or any renewal or substitution thereof is in effect.

Indemnity. — The undersigned, jointly and severally, agree at all times to indemnify the
COMPANY and keep it indemnified and hold and save it harmless from and against any
and all damages, losses, costs, stamps, taxes, penalties, charges, and expenses of
whatsoever kind and nature which the COMPANY shall or may, at any time sustain or
incur in consequence of having become surety upon this bond or any extension, renewal
, substitution or alteration thereof made at the instance of the undersigned or any of
them or any order executed on behalf of the undersigned or any of them; and to pay,
reimburse and make good to the COMPANY, its successors and assigns, all sums and
amount of money which it or its representatives shall pay or cause to be paid, or
become liable to pay, on account of the undersigned or any of them, of whatsoever kind
and nature, including 15% of the amount involved in the litigation or other matters
growing out of or connected therewith for counsel or attorney’s fees, but in no case less
than P25. It is hereby further agreed that in case of extension or renewal of this ________
we equally bind ourselves for the payment thereof under the same terms and conditions
as above mentioned without the necessity of executing another indemnity agreement
for the purpose and that we hereby equally waive our right to be notified of any renewal
or extension of this ________ which may be granted under this indemnity agreement.

Interest on amount paid by the Company. — Any and all sums of money so paid by the
company shall bear interest at the rate of 12% per annum which interest, if not paid, will
be accummulated and added to the capital quarterly order to earn the same interests as
the capital and the total sum thereof, the capital and interest, shall be paid to the
COMPANY as soon as the COMPANY shall have become liable therefore, whether it
shall have paid out such sums of money or any part thereof or not.

x       x       x

Waiver. — It is hereby agreed upon by and between the undersigned that any question
which may arise between them by reason of this document and which has to be
submitted for decision to Courts of Justice shall be brought before the Court of
competent jurisdiction in the City of Manila, waiving for this purpose any other venue.
Our right to be notified of the acceptance and approval of this indemnity agreement is
hereby likewise waived.

x       x       x

Our Liability Hereunder. — It shall not be necessary for the COMPANY to bring suit
against the principal upon his default, or to exhaust the property of the principal, but the
liability hereunder of the undersigned indemnitor shall be jointly and severally, a primary
one, the same as that of the principal, and shall be exigible immediately upon the
occurrence of such default." (Rec. App. pp. 98- 102.)

The Luzon Surety Co., prayed for allowance, as a contingent claim, of the value of the
twenty bonds it had executed in consideration of the counterbonds, and further asked
for judgment for the unpaid premiums and documentary stamps affixed to the bonds,
with 12 per cent interest thereon.

Before answer was filed, and upon motion of the administratrix of Hemady’s estate, the
lower court, by order of September 23, 1953, dismissed the claims of Luzon Surety Co.,
on two grounds: (1) that the premiums due and cost of documentary stamps were not
contemplated under the indemnity agreements to be a part of the undertaking of the
guarantor (Hemady), since they were not liabilities incurred after the execution of the
counterbonds; and (2) that "whatever losses may occur after Hemady’s death, are not
chargeable to his estate, because upon his death he ceased to be guarantor."
chanrob1es virtual 1aw library

Taking up the latter point first, since it is the one more far reaching in effects, the
reasoning of the court below ran as follows:chanroblesvirtual 1awlibrary

"The administratrix further contends that upon the death of Hemady, his liability as a
guarantor terminated, and therefore, in the absence of a showing that a loss or damage
was suffered, the claim cannot be considered contingent. This Court believes that there
is merit in this contention and finds support in Article 2046 of the new Civil Code. It
should be noted that a new requirement has been added for a person to qualify as a
guarantor, that is: integrity. As correctly pointed out by the Administratrix, integrity is
something purely personal and is not transmissible. Upon the death of Hemady, his
integrity was not transmitted to his estate or successors. Whatever loss therefore, may
occur after Hemady’s death, are not chargeable to his estate because upon his death he
ceased to be a guarantor.

Another clear and strong indication that the surety company has exclusively relied on
the personality, character, honesty and integrity of the now deceased K. H. Hemady, was
the fact that in the printed form of the indemnity agreement there is a paragraph entitled
‘Security by way of first mortgage, which was expressly waived and renounced by the
security company. The security company has not demanded from K. H. Hemady to
comply with this requirement of giving security by way of first mortgage. In the
supporting papers of the claim presented by Luzon Surety Company, no real property
was mentioned in the list of properties mortgaged which appears at the back of the
indemnity agreement." (Rec. App., pp. 407-408).
We find this reasoning untenable. Under the present Civil Code (Article 1311), as well as
under the Civil Code of 1889 (Article 1257), the rule is that — "Contracts take effect only
as between the parties, their assigns and heirs, except in the case where the rights and
obligations arising from the contract are not transmissible by their nature, or by
stipulation or by provision of law."chanrob1es virtual 1aw library

While in our successional system the responsibility of the heirs for the debts of their
decedent cannot exceed the value of the inheritance they receive from him, the principle
remains intact that these heirs succeed not only to the rights of the deceased but also
to his obligations. Articles 774 and 776 of the New Civil Code (and Articles 659 and 661
of the preceding one) expressly so provide, thereby confirming Article 1311 already
quoted.

"ART. 774. — Succession is a mode of acquisition by virtue of which the property, rights
and obligations to the extent of the value of the inheritance, of a person are transmitted
through his death to another or others either by his will or by operation of law."
chanrob1es virtual 1aw library

"ART. 776. — The inheritance includes all the property, rights and obligations of a person
which are not extinguished by his death."chanrob1es virtual 1aw library

In Mojica v. Fernandez, 9 Phil. 403, this Supreme Court ruled:chanroblesvirtual

1awlibrary

"Under the Civil Code the heirs, by virtue of the rights of succession are subrogated to all
the rights and obligations of the deceased (Article 661) and can not be regarded as third
parties with respect to a contract to which the deceased was a party, touching the
estate of the deceased (Barrios v. Dolor, 2 Phil. 44).

x       x       x

"The principle on which these decisions rest is not affected by the provisions of the new
Code of Civil Procedure, and, in accordance with that principle, the heirs of a deceased
person cannot be held to be "third persons" in relation to any contracts touching the real
estate of their decedent which comes in to their hands by right of inheritance; they take
such property subject to all the obligations resting thereon in the hands of him from
whom they derive their rights."chanrob1es virtual 1aw library

(See also Galasinao v. Austria, 51 Off. Gaz. (No. 6) p. 2874 and de Guzman v. Salak, 91
Phil., 265).

The binding effect of contracts upon the heirs of the deceased party is not altered by
the provision in our Rules of Court that money debts of a deceased must be liquidated
and paid from his estate before the residue is distributed among said heirs (Rule 89).
The reason is that whatever payment is thus made from the estate is ultimately a
payment by the heirs and distributees, since the amount of the paid claim in fact
diminishes or reduces the shares that the heirs would have been entitled to receive.

Under our law, therefore, the general rule is that a party’s contractual rights and
obligations are transmissible to the successors. The rule is a consequence of the
progressive "depersonalization" of patrimonial rights and duties that, as observed by
Victorio Polacco, has characterized the history of these institutions. From the Roman
concept of a relation from person to person, the obligation has evolved into a relation
from patrimony to patrimony, with the persons occupying only a representative position,
barring those rare cases where the obligation is strictly personal, i.e., is contracted
intuitu personae, in consideration of its performance by a specific person and by no
other. The transition is marked by the disappearance of the imprisonment for debt.

Of the three exceptions fixed by Article 1311, the nature of the obligation of the surety or
guarantor does not warrant the conclusion that his peculiar individual qualities are
contemplated as a principal inducement for the contract. What did the creditor Luzon
Surety Co. expect of K. H. Hemady when it accepted the latter as surety in the
counterbonds? Nothing but the reimbursement of the moneys that the Luzon Surety Co.
might have to disburse on account of the obligations of the principal debtors. This
reimbursement is a payment of a sum of money, resulting from an obligation to give;
and to the Luzon Surety Co., it was indifferent that the reimbursement should be made
by Hemady himself or by some one else in his behalf, so long as the money was paid to
it.

The second exception of Article 1311, p. 1, is intransmissibility by stipulation of the

parties. Being exceptional and contrary to the general rule, this intransmissibility should
not be easily implied, but must be expressly established, or at the very least, clearly
inferable from the provisions of the contract itself, and the text of the agreements sued
upon nowhere indicate that they are non-transferable.

"(b) Intransmisibilidad por pacto. — Lo general es la transmisibilidad de darechos y

obligaciones; le excepcion, la intransmisibilidad. Mientras nada se diga en contrario
impera el principio de la transmision, como elemento natural a toda relacion juridica,
salvo las personalisimas. Asi, para la no transmision, es menester el pacto expreso,
porque si no, lo convenido entre partes trasciende a sus herederos.

Siendo estos los continuadores de la personalidad del causante, sobre ellos recaen los
efectos de los vinculos juridicos creados por sus antecesores, y para evitarlo, si asi se
quiere, es indespensable convension terminante en tal sentido.

Por su esencia, el derecho y la obligacion tienden a ir más allá de las personas que les
dieron vida, y a ejercer presion sobre los sucesores de esa persona; cuando no se
quiera esto, se impone una estipulacion limitativa expresamente de la transmisibilidad o
de cuyos tirminos claramente se deduzca la concresion del concreto a las mismas
personas que lo otorgon." (Scaevola, Codigo Civil, Tomo XX, p. 541-542) (Emphasis
supplied.)

Because under the law (Article 1311), a person who enters into a contract is deemed to
have contracted for himself and his heirs and assigns, it is unnecessary for him to
expressly stipulate to that effect; hence, his failure to do so is no sign that he intended
his bargain to terminate upon his death. Similarly, that the Luzon Surety Co., did not
require bondsman Hemady to execute a mortgage indicates nothing more than the
company’s faith and confidence in the financial stability of the surety, but not that his
obligation was strictly personal.

The third exception to the transmissibility of obligations under Article 1311 exists when
they are "not transmissible by operation of law". The provision makes reference to those
cases where the law expresses that the rights or obligations are extinguished by death,
as is the case in legal support (Article 300), parental authority (Article 327), usufruct (
Article 603), contracts for a piece of work (Article 1726), partnership (Article 1830 and
agency (Article 1919). By contract, the articles of the Civil Code that regulate guaranty or
suretyship (Articles 2047 to 2084) contain no provision that the guaranty is extinguished
upon the death of the guarantor or the surety.

The lower court sought to infer such a limitation from Art. 2056, to the effect that "one
who is obliged to furnish a guarantor must present a person who possesses integrity,
capacity to bind himself, and sufficient property to answer for the obligation which he
guarantees". It will be noted, however, that the law requires these qualities to be present
only at the time of the perfection of the contract of guaranty. It is self-evident that once
the contract has become perfected and binding, the supervening incapacity of the
guarantor would not operate to exonerate him of the eventual liability he has contracted;
and if that be true of his capacity to bind himself, it should also be true of his integrity,
which is a quality mentioned in the article alongside the capacity.

The foregoing concept is confirmed by the next Article 2057, that runs as
follows:chanroblesvirtual 1awlibrary

"ART. 2057. — If the guarantor should be convicted in first instance of a crime involving
dishonesty or should become insolvent, the creditor may demand another who has all
the qualifications required in the preceding article. The case is excepted where the
creditor has required and stipulated that a specified person should be guarantor."
chanrob1es virtual 1aw library

From this article it should be immediately apparent that the supervening dishonesty of
the guarantor (that is to say, the disappearance of his integrity after he has become
bound) does not terminate the contract but merely entitles the creditor to demand a
replacement of the guarantor. But the step remains optional in the creditor: it is his right,
not his duty; he may waive it if he chooses, and hold the guarantor to his bargain. Hence
Article 2057 of the present Civil Code is incompatible with the trial court’s stand that the
requirement of integrity in the guarantor or surety makes the latter’s undertaking strictly
personal, so linked to his individuality that the guaranty automatically terminates upon
his death.

The contracts of suretyship entered into by K. H. Hemady in favor of Luzon Surety Co.
not being rendered intransmissible due to the nature of the undertaking, nor by the
stipulations of the contracts themselves, nor by provision of law, his eventual liability
thereunder necessarily passed upon his death to his heirs. The contracts, therefore, give
rise to contingent claims provable against his estate under section 5, Rule 87 (2 Moran,
1952 ed., p. 437; Gaskell & Co. v. Tan Sit, 43 Phil. 810, 814).

"The most common example of the contigent claim is that which arises when a person
is bound as surety or guarantor for a principal who is insolvent or dead. Under the
ordinary contract of suretyship the surety has no claim whatever against his principal
until he himself pays something by way of satisfaction upon the obligation which is
secured. When he does this, there instantly arises in favor of the surety the right to
compel the principal to exonerate the surety. But until the surety has contributed
something to the payment of the debt, or has performed the secured obligation in whole
or in part, he has no right of action against anybody — no claim that could be reduced to
judgment. (May v. Vann, 15 Pla., 553; Gibson v. Mithell, 16 Pla., 519; Maxey v. Carter, 10
Yarg. [Tenn.], 521 Reeves v. Pulliam, 7 Baxt. [Tenn.], 119; Ernst v. Nou, 63 Wis., 134.)"
chanrob1es virtual 1aw library

For defendant administratrix it is averred that the above doctrine refers to a case where
the surety files claims against the estate of the principal debtor; and it is urged that the
rule does not apply to the case before us, where the late Hemady was a surety, not a
principal debtor. The argument evinces a superficial view of the relations between
parties. If under the Gaskell ruling, the Luzon Surety Co., as guarantor, could file a
contingent claim against the estate of the principal debtors if the latter should die, there
is absolutely no reason why it could not file such a claim against the estate of Hemady,
since Hemady is a solidary co-debtor of his principals. What the Luzon Surety Co. may
claim from the estate of a principal debtor it may equally claim from the estate of
Hemady, since, in view of the existing solidarity, the latter does not even enjoy the
benefit of exhaustion of the assets of the principal debtor.

The foregoing ruling is of course without prejudice to the remedies of the administratrix
against the principal debtors under Articles 2071 and 2067 of the New Civil Code.

Our conclusion is that the solidary guarantor’s liability is not extinguished by his death,
and that in such event, the Luzon Surety Co., had the right to file against the estate a
contingent claim for reimbursement. It becomes unnecessary now to discuss the
estate’s liability for premiums and stamp taxes, because irrespective of the solution to
this question, the Luzon Surety’s claim did state a cause of action, and its dismissal was
erroneous.

Wherefore, the order appealed from is reversed, and the records are ordered remanded
to the court of origin, with instructions to proceed in accordance with law. Costs against
the Administratrix- Appellee. So ordered.

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

Endencia and Felix, JJ., concur.

G.R. No. L-68053 May 7, 1990

LAURA ALVAREZ, FLORA ALVAREZ and RAYMUNDO ALVAREZ, petitioners, 

vs.
THE HONORABLE INTERMEDIATE APELLATE COURT and JESUS YANES, ESTELITA
YANES, ANTONIO YANES, ROSARIO YANES, and ILUMINADO YANES, respondents.

Francisco G. Banzon for petitioner.

Renecio R. Espiritu for private respondents.

FERNAN, C.J.:

This is a petition for review on certiorari seeking the reversal of: (a) the decision of the
Fourth Civil Cases Division of the Intermediate Appellate Court dated August 31, 1983 in
AC-G.R. CV No. 56626 entitled "Jesus Yanes et al. v. Dr. Rodolfo Siason et al."
 affirming the decision dated July 8, 1974 of the Court of First Instance of Negros
Occidental insofar as it ordered the petitioners to pay jointly and severally the private
respondents the sum of P20,000.00 representing the actual value of Lots Nos. 773-A
and 773-B of the cadastral survey of Murcia, Negros Occidental and reversing the
subject decision insofar as it awarded the sums of P2,000.00, P5,000.00 and P2,000.00
as actual damages, moral damages and attorney's fees, respectively and (b) the
resolution of said appellate court dated May 30, 1984, denying the motion for
reconsideration of its decision.

The real properties involved are two parcels of land identified as Lot 773-A and Lot 773-
B which were originally known as Lot 773 of the cadastral survey of Murcia, Negros
Occidental. Lot 773, with an area of 156,549 square meters, was registered in the name
of the heirs of Aniceto Yanes under Original Certificate of Title No. RO-4858 (8804)
issued on October 9, 1917 by the Register of Deeds of Occidental Negros (Exh. A).

Aniceto Yanes was survived by his children, Rufino, Felipe and Teodora. Herein private
respondents, Estelita, Iluminado and Jesus, are the children of Rufino who died in 1962
while the other private respondents, Antonio and Rosario Yanes, are children of Felipe.
Teodora was survived by her child, Jovita (Jovito) Alib. 1 It is not clear why the latter is
not included as a party in this case.

Aniceto left his children Lots 773 and 823. Teodora cultivated only three hectares of Lot
823 as she could not attend to the other portions of the two lots which had a total area
of around twenty-four hectares. The record does not show whether the children of
Felipe also cultivated some portions of the lots but it is established that Rufino and his
children left the province to settle in other places as a result of the outbreak of World
War II. According to Estelita, from the "Japanese time up to peace time", they did not
visit the parcels of land in question but "after liberation", when her brother went there to
get their share of the sugar produced therein, he was informed that Fortunato Santiago,
Fuentebella (Puentevella) and Alvarez were in possession of Lot 773. 2

It is on record that on May 19, 1938, Fortunato D. Santiago was issued Transfer
Certificate of Title No. RF 2694 (29797) covering Lot 773-A with an area of 37,818
square meters. 3 TCT No. RF 2694 describes Lot 773-A as a portion of Lot 773 of the
cadastral survey of Murcia and as originally registered under OCT No. 8804.

The bigger portion of Lot 773 with an area of 118,831 square meters was also
registered in the name of Fortunato D. Santiago on September 6, 1938 Under TCT No.
RT-2695 (28192 ). 4 Said transfer certificate of title also contains a certification to the
effect that Lot 773-B was originally registered under OCT No. 8804.

On May 30, 1955, Santiago sold Lots 773-A and 773-B to Monico B. Fuentebella, Jr. in
consideration of the sum of P7,000.00. 5 Consequently, on February 20, 1956, TCT Nos.
T-19291 and T-19292 were issued in Fuentebella's name. 6

After Fuentebella's death and during the settlement of his estate, the administratrix
thereof (Arsenia R. Vda. de Fuentebella, his wife) filed in Special Proceedings No. 4373
in the Court of First Instance of Negros Occidental, a motion requesting authority to sell
Lots 773-A and 773-B. 7 By virtue of a court order granting said motion, 8 on March 24,
1958, Arsenia Vda. de Fuentebella sold said lots for P6,000.00 to Rosendo Alvarez. 9
 Hence, on April 1, 1958 TCT Nos. T-23165 and T-23166 covering Lots 773-A and 773-B
were respectively issued to Rosendo Alvarez. 10
Two years later or on May 26, 1960, Teodora Yanes and the children of her brother
Rufino, namely, Estelita, Iluminado and Jesus, filed in the Court of First Instance of
Negros Occidental a complaint against Fortunato Santiago, Arsenia Vda. de Fuentebella,
Alvarez and the Register of Deeds of Negros Occidental for the "return" of the ownership
and possession of Lots 773 and 823. They also prayed that an accounting of the
produce of the land from 1944 up to the filing of the complaint be made by the
defendants, that after court approval of said accounting, the share or money equivalent
due the plaintiffs be delivered to them, and that defendants be ordered to pay plaintiffs
P500.00 as damages in the form of attorney's fees. 11

During the pendency in court of said case or on November 13, 1961, Alvarez sold Lots
773-A, 773-B and another lot for P25,000.00 to Dr. Rodolfo Siason. 12Accordingly, TCT
Nos. 30919 and 30920 were issued to Siason, 13 who thereafter, declared the two lots
in his name for assessment purposes. 14

Meanwhile, on November 6, 1962, Jesus Yanes, in his own behalf and in behalf of the
other plaintiffs, and assisted by their counsel, filed a manifestation in Civil Case No.
5022 stating that the therein plaintiffs "renounce, forfeit and quitclaims (sic) any claim,
monetary or otherwise, against the defendant Arsenia Vda. de Fuentebella in connection
with the above-entitled case." 15

On October 11, 1963, a decision was rendered by the Court of First Instance of Negros
Occidental in Civil Case No. 5022, the dispositive portion of which reads:

WHEREFORE, judgment is rendered, ordering the defendant Rosendo Alvarez to

reconvey to the plaintiffs lots Nos. 773 and 823 of the Cadastral Survey of Murcia,
Negros Occidental, now covered by Transfer Certificates of Title Nos. T-23165 and T-
23166 in the name of said defendant, and thereafter to deliver the possession of said
lots to the plaintiffs. No special pronouncement as to costs.

SO ORDERED. 16

It will be noted that the above-mentioned manifestation of Jesus Yanes was not
mentioned in the aforesaid decision.

However, execution of said decision proved unsuccessful with respect to Lot 773. In his
return of service dated October 20, 1965, the sheriff stated that he discovered that Lot
773 had been subdivided into Lots 773-A and 773-B; that they were "in the name" of
Rodolfo Siason who had purchased them from Alvarez, and that Lot 773 could not be
delivered to the plaintiffs as Siason was "not a party per writ of execution." 17
The execution of the decision in Civil Case No. 5022 having met a hindrance, herein
private respondents (the Yaneses) filed on July 31, 1965, in the Court of First Instance
of Negros Occidental a petition for the issuance of a new certificate of title and for a
declaration of nullity of TCT Nos. T-23165 and T-23166 issued to Rosendo Alvarez. 18
 Thereafter, the court required Rodolfo Siason to produce the certificates of title
covering Lots 773 and 823.

Expectedly, Siason filed a manifestation stating that he purchased Lots 773-A, 773-B
and 658, not Lots 773 and 823, "in good faith and for a valuable consideration without
any knowledge of any lien or encumbrances against said properties"; that the decision in
the cadastral proceeding 19 could not be enforced against him as he was not a party
thereto; and that the decision in Civil Case No. 5022 could neither be enforced against
him not only because he was not a party-litigant therein but also because it had long
become final and executory. 20 Finding said manifestation to be well-founded, the
cadastral court, in its order of September 4, 1965, nullified its previous order requiring
Siason to surrender the certificates of title mentioned therein. 21

In 1968, the Yaneses filed an ex-parte motion for the issuance of an alias writ of
execution in Civil Case No. 5022. Siason opposed it. 22 In its order of September 28,
1968 in Civil Case No. 5022, the lower court, noting that the Yaneses had instituted
another action for the recovery of the land in question, ruled that at the judgment therein
could not be enforced against Siason as he was not a party in the case. 23

The action filed by the Yaneses on February 21, 1968 was for recovery of real property
with damages. 24Named defendants therein were Dr. Rodolfo Siason, Laura Alvarez,
Flora Alvarez, Raymundo Alvarez and the Register of Deeds of Negros Occidental. The
Yaneses prayed for the cancellation of TCT Nos. T-19291 and 19292 issued to Siason (
sic) for being null and void; the issuance of a new certificate of title in the name of the
Yaneses "in accordance with the sheriffs return of service dated October 20, 1965;"
Siason's delivery of possession of Lot 773 to the Yaneses; and if, delivery thereof could
not be effected, or, if the issuance of a new title could not be made, that the Alvarez and
Siason jointly and severally pay the Yaneses the sum of P45,000.00. They also prayed
that Siason render an accounting of the fruits of Lot 773 from November 13, 1961 until
the filing of the complaint; and that the defendants jointly and severally pay the Yaneses
moral damages of P20,000.00 and exemplary damages of P10,000.00 plus attorney's
fees of P4, 000.00. 25

In his answer to the complaint, Siason alleged that the validity of his titles to Lots 773-A
and 773-B, having been passed upon by the court in its order of September 4, 1965, had
become res judicata and the Yaneses were estopped from questioning said order. 26 On
their part, the Alvarez stated in their answer that the Yaneses' cause of action had been "
barred by res judicata, statute of limitation and estoppel." 27

In its decision of July 8, 1974, the lower court found that Rodolfo Siason, who purchased
the properties in question thru an agent as he was then in Mexico pursuing further
medical studies, was a buyer in good faith for a valuable consideration. Although the
Yaneses were negligent in their failure to place a notice of lis pendens "before the
Register of Deeds of Negros Occidental in order to protect their rights over the property
in question" in Civil Case No. 5022, equity demanded that they recover the actual value
of the land because the sale thereof executed between Alvarez and Siason was without
court approval. 28 The dispositive portion of the decision states:

IN VIEW OF THE FOREGOING CONSIDERATION, judgment is hereby rendered in the

following manner:

A. The case against the defendant Dr. Rodolfo Siason and the Register of Deeds are (sic
) hereby dismmissed,

B. The defendants, Laura, Flora and Raymundo, all surnamed Alvarez being the
legitimate children of the deceased Rosendo Alvarez are hereby ordered to pay jointly
and severally the plaintiffs the sum of P20,000.00 representing the actual value of Lots
Nos. 773-A and 773-B of Murcia Cadastre, Negros Occidental; the sum of P2,000.00 as
actual damages suffered by the plaintiff; the sum of P5,000.00 representing moral
damages and the sum of P2.000 as attorney's fees, all with legal rate of interest from
date of the filing of this complaint up to final payment.

C. The cross-claim filed by the defendant Dr. Rodolfo Siason against the defendants,
Laura, Flora and Raymundo, all surnamed Alvarez is hereby dismissed.

D. Defendants, Laura, Flora and Raymundo, all surnamed Alvarez are hereby ordered to
pay the costs of this suit.

SO ORDERED. 29

The Alvarez appealed to the then Intermediate Appellate Court which in its decision of
August 31, 1983 30affirmed the lower court's decision "insofar as it ordered defendants
-appellants to pay jointly and severally the plaintiffs-appellees the sum of P20,000.00
representing the actual value of Lots Nos. 773-A and 773-B of the cadastral survey of
Murcia, Negros Occidental, and is reversed insofar as it awarded the sums of P2,000.00,
P5,000.00 and P2,000.00 as actual damages, moral damages and attorney's fees,
respectively." 31 The dispositive portion of said decision reads:
WHEREFORE, the decision appealed from is affirmed insofar as it ordered defendants-
appellants to pay jointly and severally the plaintiffs- appellees the sum of P20,000.00
representing the actual value of Lots Nos. 773-A and 773-B of the cadastral survey of
Murcia, Negros Occidental, and is reversed insofar as it awarded the sums of P2,000.00,
P5,000.00 and P2,000.00 as actual damages, moral damages and attorney's fees,
respectively. No costs.

SO ORDERED. 32

Finding no cogent reason to grant appellants motion for reconsideration, said appellate
court denied the same.

Hence, the instant petition. ln their memorandum petitioners raised the following issues:

1. Whethere or not the defense of prescription and estoppel had been timely and
properly invoked and raised by the petitioners in the lower court.

2. Whether or not the cause and/or causes of action of the private respondents, if ever
there are any, as alleged in their complaint dated February 21, 1968 which has been
docketed in the trial court as Civil Case No. 8474 supra, are forever barred by statute of
limitation and/or prescription of action and estoppel.

3. Whether or not the late Rosendo Alvarez, a defendant in Civil Case No. 5022, supra
and father of the petitioners become a privy and/or party to the waiver (Exhibit 4-
defendant Siason) in Civil Case No. 8474, supra where the private respondents had
unqualifiedly and absolutely waived, renounced and quitclaimed all their alleged rights
and interests, if ever there is any, on Lots Nos. 773-A and 773-B of Murcia Cadastre as
appearing in their written manifestation dated November 6, 1962 (Exhibits "4" Siason)
which had not been controverted or even impliedly or indirectly denied by them.

4. Whether or not the liability or liabilities of Rosendo Alvarez arising from the sale of
Lots Nos. 773-A and 773-B of Murcia Cadastre to Dr. Rodolfo Siason, if ever there is any,
could be legally passed or transmitted by operations (sic) of law to the petitioners
without violation of law and due process . 33

The petition is devoid of merit.

As correctly ruled by the Court of Appeals, it is powerless and for that matter so is the
Supreme Court, to review the decision in Civil Case No. 5022 ordering Alvarez to
reconvey the lots in dispute to herein private respondents. Said decision had long
become final and executory and with the possible exception of Dr. Siason, who was not
a party to said case, the decision in Civil Case No. 5022 is the law of the case between
the parties thereto. It ended when Alvarez or his heirs failed to appeal the decision
against them. 34

Thus, it is axiomatic that when a right or fact has been judicially tried and determined by
a court of competent jurisdiction, so long as it remains unreversed, it should be
conclusive upon the parties and those in privity with them in law or estate. 35 As
consistently ruled by this Court, every litigation must come to an end. Access to the
court is guaranteed. But there must be a limit to it. Once a litigant's right has been
adjudicated in a valid final judgment of a competent court, he should not be granted an
unbridled license to return for another try. The prevailing party should not be harassed
by subsequent suits. For, if endless litigation were to be allowed, unscrupulous
litigations will multiply in number to the detriment of the administration of justice. 36

There is no dispute that the rights of the Yaneses to the properties in question have
been finally adjudicated in Civil Case No. 5022. As found by the lower court, from the
uncontroverted evidence presented, the Yaneses have been illegally deprived of
ownership and possession of the lots in question. 37 In fact, Civil Case No. 8474 now
under review, arose from the failure to execute Civil Case No. 5022, as subject lots can
no longer be reconveyed to private respondents Yaneses, the same having been sold
during the pendency of the case by the petitioners' father to Dr. Siason who did not
know about the controversy, there being no lis pendens annotated on the titles. Hence, it
was also settled beyond question that Dr. Siason is a purchaser in good faith.

Under the circumstances, the trial court did not annul the sale executed by Alvarez in
favor of Dr. Siason on November 11, 1961 but in fact sustained it. The trial court ordered
the heirs of Rosendo Alvarez who lost in Civil Case No. 5022 to pay the plaintiffs (
private respondents herein) the amount of P20,000.00 representing the actual value of
the subdivided lots in dispute. It did not order defendant Siason to pay said amount. 38

As to the propriety of the present case, it has long been established that the sole
remedy of the landowner whose property has been wrongfully or erroneously registered
in another's name is to bring an ordinary action in the ordinary court of justice for
reconveyance or, if the property has passed into the hands of an innocent purchaser for
value, for damages. 39 "It is one thing to protect an innocent third party; it is entirely a
different matter and one devoid of justification if deceit would be rewarded by allowing
the perpetrator to enjoy the fruits of his nefarious decided As clearly revealed by the
undeviating line of decisions coming from this Court, such an undesirable eventuality is
precisely sought to be guarded against." 40
The issue on the right to the properties in litigation having been finally adjudicated in
Civil Case No. 5022 in favor of private respondents, it cannot now be reopened in the
instant case on the pretext that the defenses of prescription and estoppel have not been
properly considered by the lower court. Petitioners could have appealed in the former
case but they did not. They have therefore foreclosed their rights, if any, and they cannot
now be heard to complain in another case in order to defeat the enforcement of a
judgment which has longing become final and executory.

Petitioners further contend that the liability arising from the sale of Lots No. 773-A and
773-B made by Rosendo Alvarez to Dr. Rodolfo Siason should be the sole liability of the
late Rosendo Alvarez or of his estate, after his death.

Such contention is untenable for it overlooks the doctrine obtaining in this jurisdiction
on the general transmissibility of the rights and obligations of the deceased to his
legitimate children and heirs. Thus, the pertinent provisions of the Civil Code state:

Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and
obligations to the extent of the value of the inheritance, of a person are transmitted
through his death to another or others either by his will or by operation of law.

Art. 776. The inheritance includes all the property, rights and obligations of a person
which are not extinguished by his death.

Art. 1311. Contract stake effect only between the parties, their assigns and heirs except
in case where the rights and obligations arising from the contract are not transmissible
by their nature, or by stipulation or by provision of law. The heir is not liable beyond the
value of the property received from the decedent.

As explained by this Court through Associate Justice J.B.L. Reyes in the case of Estate
of Hemady vs. Luzon Surety Co., Inc. 41

The binding effect of contracts upon the heirs of the deceased party is not altered by
the provision of our Rules of Court that money debts of a deceased must be liquidated
and paid from his estate before the residue is distributed among said heirs (Rule 89).
The reason is that whatever payment is thus made from the state is ultimately a
payment by the heirs or distributees, since the amount of the paid claim in fact
diminishes or reduces the shares that the heirs would have been entitled to receive.

Under our law, therefore. the general rule is that a party's contractual rights and
obligations are transmissible to the successors.
The rule is a consequence of the progressive "depersonalization" of patrimonial rights
and duties that, as observed by Victorio Polacco has characterized the history of these
institutions. From the Roman concept of a relation from person to person, the obligation
has evolved into a relation from patrimony to patrimony with the persons occupying
only a representative position, barring those rare cases where the obligation is strictly
personal, i.e., is contracted intuitu personae, in consideration of its performance by a
specific person and by no other.

xxx xxx xxx

Petitioners being the heirs of the late Rosendo Alvarez, they cannot escape the legal
consequences of their father's transaction, which gave rise to the present claim for
damages. That petitioners did not inherit the property involved herein is of no moment
because by legal fiction, the monetary equivalent thereof devolved into the mass of their
father's hereditary estate, and we have ruled that the hereditary assets are always liable
in their totality for the payment of the debts of the estate. 42

It must, however, be made clear that petitioners are liable only to the extent of the value
of their inheritance. With this clarification and considering petitioners' admission that
there are other properties left by the deceased which are sufficient to cover the amount
adjudged in favor of private respondents, we see no cogent reason to disturb the
findings and conclusions of the Court of Appeals.

WHEREFORE, subject to the clarification herein above stated, the assailed decision of
the Court of Appeals is hereby AFFIRMED. Costs against petitioners.

SO ORDERED.

Gutierrez, Jr., Feliciano and Cortes, JJ., concur.

Bidin J., took no part.

G.R. No. L-28040 August 18, 1972

TESTATE ESTATE OF JOSEFA TANGCO, JOSE DE BORJA, administrator-appellee;

JOSE DE BORJA, as administrator, CAYETANO DE BORJA, MATILDE DE BORJA and
CRISANTO DE BORJA (deceased) as Children of Josefa Tangco, appellees, 

vs.

TASIANA VDA. DE DE BORJA, Special Administratrix of the Testate Estate of Francisco

de Borja, appellant. .

G.R. No L-28568 August 18, 1972

TESTATE ESTATE OF THE LATE FRANCISCO DE BORJA, TASIANA O. VDA. DE DE

BORJA, special Administratrix appellee, 

vs.

JOSE DE BORJA, oppositor-appellant.

G.R. No. L-28611 August 18, 1972

TASIANA 0. VDA. DE BORJA, as Administratrix of the Testate Estate of the late

Francisco de Borja, plaintiff-appellee, 

vs.
JOSE DE BORJA, as Administrator of the Testate Estate of the late Josefa Tangco,
 defendant-appellant.

L-28040

Pelaez, Jalandoni & Jamir for administrator-appellee.

Quiogue & Quiogue for appellee Matilde de Borja.

Andres Matias for appellee Cayetano de Borja.

Sevilla & Aquino for appellant.

L-28568

Sevilla & Aquino for special administratrix-appellee.

Pelaez, Jalandoni & Jamir for oppositor-appellant.

L-28611

Sevilla & Aquino for plaintiff-appellee.

Pelaez, Jalandoni & Jamir and David Gueverra for defendant-appellant.

REYES, J.B.L., J.:p

Of these cases, the first, numbered L-28040 is an appeal by Tasiana Ongsingco Vda. de
de Borja, special administratrix of the testate estate of Francisco de Borja,1 from the
approval of a compromise agreement by the Court of First Instance of Rizal, Branch I, in
its Special Proceeding No. R-7866, entitled, "Testate Estate of Josefa Tangco, Jose de
Borja, Administrator".

Case No. L-28568 is an appeal by administrator Jose Borja from the disapproval of the
same compromise agreement by the Court of First Instance of Nueva Ecija, Branch II, in
its Special Proceeding No. 832, entitled, "Testate Estate of Francisco de Borja, Tasiana
O. Vda. de de Borja, Special Administratrix".

And Case No. L-28611 is an appeal by administrator Jose de Borja from the decision of
the Court of First Instance of Rizal, Branch X, in its Civil Case No. 7452, declaring the
Hacienda Jalajala Poblacion, which is the main object of the aforesaid compromise
agreement, as the separate and exclusive property of the late Francisco de Borja and
not a conjugal asset of the community with his first wife, Josefa Tangco, and that said
hacienda pertains exclusively to his testate estate, which is under administrator in
Special Proceeding No. 832 of the Court of First Instance of Nueva Ecija, Branch II.

It is uncontested that Francisco de Borja, upon the death of his wife Josefa Tangco on 6
October 1940, filed a petition for the probate of her will which was docketed as Special
Proceeding No. R-7866 of the Court of First Instance of Rizal, Branch I. The will was
probated on 2 April 1941. In 1946, Francisco de Borja was appointed executor and
administrator: in 1952, their son, Jose de Borja, was appointed co-administrator. When
Francisco died, on 14 April 1954, Jose became the sole administrator of the testate
estate of his mother, Josefa Tangco. While a widower Francisco de Borja allegedly took
unto himself a second wife, Tasiana Ongsingco. Upon Francisco's death, Tasiana
instituted testate proceedings in the Court of First Instance of Nueva Ecija, where, in
1955, she was appointed special administratrix. The validity of Tasiana's marriage to
Francisco was questioned in said proceeding.
The relationship between the children of the first marriage and Tasiana Ongsingco has
been plagued with several court suits and counter-suits; including the three cases at bar
, some eighteen (18) cases remain pending determination in the courts. The testate
estate of Josefa Tangco alone has been unsettled for more than a quarter of a century.
In order to put an end to all these litigations, a compromise agreement was entered into
on 12 October 1963,2 by and between "[T]he heir and son of Francisco de Borja by his
first marriage, namely, Jose de Borja personally and as administrator of the Testate
Estate of Josefa Tangco," and "[T]he heir and surviving spouse of Francisco de Borja by
his second marriage, Tasiana Ongsingco Vda. de Borja, assisted by her lawyer, Atty. Luis
Panaguiton Jr." The terms and conditions of the compromise agreement are as follows:

AGREEMENT

THIS AGREEMENT made and entered into by and between

The heir and son of Francisco de Borja by his first marriage, namely, Jose de Borja
personally and as administrator of the Testate Estate of Josefa Tangco,

AND

The heir and surviving spouse of Francisco de Borja by his second marriage, Tasiana
Ongsingco Vda. de Borja, assisted by her lawyer, Atty. Luis Panaguiton Jr.

WITNESSETH

THAT it is the mutual desire of all the parties herein terminate and settle, with finality,
the various court litigations, controversies, claims, counterclaims, etc., between them in
connection with the administration, settlement, partition, adjudication and distribution
of the assets as well as liabilities of the estates of Francisco de Borja and Josefa
Tangco, first spouse of Francisco de Borja.
THAT with this end in view, the parties herein have agreed voluntarily and without any
reservations to enter into and execute this agreement under the following terms and
conditions:

1. That the parties agree to sell the Poblacion portion of the Jalajala properties
situated in Jalajala, Rizal, presently under administration in the Testate Estate of Josefa
Tangco (Sp. Proc. No. 7866, Rizal), more specifically described as follows:

Linda al Norte con el Rio Puwang que la separa de la jurisdiccion del Municipio de Pililla
de la Provincia de Rizal, y con el pico del Monte Zambrano; al Oeste con Laguna de Bay;
por el Sur con los herederos de Marcelo de Borja; y por el Este con los terrenos de la
Familia Maronilla

with a segregated area of approximately 1,313 hectares at the amount of P0.30 per
square meter.

2. That Jose de Borja agrees and obligates himself to pay Tasiana Ongsingco Vda.
de de Borja the total amount of Eight Hundred Thousand Pesos (P800,000) Philippine
Currency, in cash, which represent P200,000 as his share in the payment and P600,000
as pro-rata shares of the heirs Crisanto, Cayetano and Matilde, all surnamed de Borja
and this shall be considered as full and complete payment and settlement of her
hereditary share in the estate of the late Francisco de Borja as well as the estate of
Josefa Tangco, Sp. Proc. No. 832-Nueva Ecija and Sp. Proc. No. 7866-Rizal, respectively
, and to any properties bequeathed or devised in her favor by the late Francisco de Borja
by Last Will and Testament or by Donation Inter Vivos or Mortis Causa or purportedly
conveyed to her for consideration or otherwise. The funds for this payment shall be
taken from and shall depend upon the receipt of full payment of the proceeds of the
sale of Jalajala, "Poblacion."

3. That Tasiana Ongsingco Vda. de de Borja hereby assumes payment of that

particular obligation incurred by the late Francisco de Borja in favor of the Rehabilitation
Finance Corporation, now Development Bank of the Philippines, amounting to
approximately P30,000.00 and also assumes payment of her 1/5 share of the Estate
and Inheritance taxes on the Estate of the late Francisco de Borja or the sum of P3,500.
00, more or less, which shall be deducted by the buyer of Jalajala, "Poblacion" from the
payment to be made to Tasiana Ongsingco Vda. de Borja under paragraph 2 of this
Agreement and paid directly to the Development Bank of the Philippines and the heirs-
children of Francisco de Borja.

4. Thereafter, the buyer of Jalajala "Poblacion" is hereby authorized to pay directly

to Tasiana Ongsingco Vda. de de Borja the balance of the payment due her under
paragraph 2 of this Agreement (approximately P766,500.00) and issue in the name of
Tasiana Ongsingco Vda. de de Borja, corresponding certified checks/treasury warrants,
who, in turn, will issue the corresponding receipt to Jose de Borja.

5. In consideration of above payment to Tasiana Ongsingco Vda. de de Borja, Jose

de Borja personally and as administrator of the Testate Estate of Josefa Tangco, and
Tasiana Ongsingco Vda. de de Borja, for themselves and for their heirs, successors,
executors, administrators, and assigns, hereby forever mutually renounce, withdraw,
waive, remise, release and discharge any and all manner of action or actions, cause or
causes of action, suits, debts, sum or sums of money, accounts, damages, claims and
demands whatsoever, in law or in equity, which they ever had, or now have or may have
against each other, more specifically Sp. Proceedings Nos. 7866 and 1955, CFI-Rizal,
and Sp. Proc. No. 832-Nueva Ecija, Civil Case No. 3033, CFI Nueva Ecija and Civil Case
No. 7452-CFI, Rizal, as well as the case filed against Manuel Quijal for perjury with the
Provincial Fiscal of Rizal, the intention being to completely, absolutely and finally release
each other, their heirs, successors, and assigns, from any and all liability, arising wholly
or partially, directly or indirectly, from the administration, settlement, and distribution of
the assets as well as liabilities of the estates of Francisco de Borja and Josefa Tangco,
first spouse of Francisco de Borja, and lastly, Tasiana Ongsingco Vda. de de Borja
expressly and specifically renounce absolutely her rights as heir over any hereditary
share in the estate of Francisco de Borja.

6. That Tasiana Ongsingco Vda. de de Borja, upon receipt of the payment under
paragraph 4 hereof, shall deliver to the heir Jose de Borja all the papers, titles and
documents belonging to Francisco de Borja which are in her possession and said heir
Jose de Borja shall issue in turn the corresponding receive thereof.

7. That this agreement shall take effect only upon the fulfillment of the sale of the
properties mentioned under paragraph 1 of this agreement and upon receipt of the total
and full payment of the proceeds of the sale of the Jalajala property "Poblacion",
otherwise, the non-fulfillment of the said sale will render this instrument NULL AND
VOID AND WITHOUT EFFECT THEREAFTER.

IN WITNESS WHEREOF, the parties hereto have her unto set their hands in the City of
Manila, Philippines, the 12th of October, 1963.

On 16 May 1966, Jose de Borja submitted for Court approval the agreement of 12
October 1963 to the Court of First Instance of Rizal, in Special Proceeding No. R-7866;
and again, on 8 August 1966, to the Court of First Instance of Nueva Ecija, in Special
Proceeding No. 832. Tasiana Ongsingco Vda. de de Borja opposed in both instances.
The Rizal court approved the compromise agreement, but the Nueva Ecija court
declared it void and unenforceable. Special administratrix Tasiana Ongsingco Vda. de
de Borja appealed the Rizal Court's order of approval (now Supreme Court G.R. case No.
L-28040), while administrator Jose de Borja appealed the order of disapproval (G.R.
case No. L-28568) by the Court of First Instance of Nueva Ecija.

The genuineness and due execution of the compromised agreement of 12 October 1963
is not disputed, but its validity is, nevertheless, attacked by Tasiana Ongsingco on the
ground that: (1) the heirs cannot enter into such kind of agreement without first
probating the will of Francisco de Borja; (2) that the same involves a compromise on the
validity of the marriage between Francisco de Borja and Tasiana Ongsingco; and (3)
that even if it were valid, it has ceased to have force and effect.

In assailing the validity of the agreement of 12 October 1963, Tasiana Ongsingco and
the Probate Court of Nueva Ecija rely on this Court's decision in Guevara vs. Guevara. 74
Phil. 479, wherein the Court's majority held the view that the presentation of a will for
probate is mandatory and that the settlement and distribution of an estate on the basis
of intestacy when the decedent left a will, is against the law and public policy. It is
likewise pointed out by appellant Tasiana Ongsingco that Section 1 of Rule 74 of the
Revised Rules explicitly conditions the validity of an extrajudicial settlement of a
decedent's estate by agreement between heirs, upon the facts that "(if) the
decedent left no will and no debts, and the heirs are all of age, or the minors are
represented by their judicial and legal representatives ..." The will of Francisco de Borja
having been submitted to the Nueva Ecija Court and still pending probate when the 1963
agreement was made, those circumstances, it is argued, bar the validity of the
agreement.

Upon the other hand, in claiming the validity of the compromise agreement, Jose de
Borja stresses that at the time it was entered into, on 12 October 1963, the governing
provision was Section 1, Rule 74 of the original Rules of Court of 1940, which allowed
the extrajudicial settlement of the estate of a deceased person regardless of whether he
left a will or not. He also relies on the dissenting opinion of Justice Moran, in Guevara vs
. Guevara, 74 Phil. 479, wherein was expressed the view that if the parties have already
divided the estate in accordance with a decedent's will, the probate of the will is a
useless ceremony; and if they have divided the estate in a different manner, the probate
of the will is worse than useless.

The doctrine of Guevara vs. Guevara, ante, is not applicable to the case at bar. This is
apparent from an examination of the terms of the agreement between Jose de Borja
and Tasiana Ongsingco. Paragraph 2 of said agreement specifically stipulates that the
sum of P800,000 payable to Tasiana Ongsingco —

shall be considered as full — complete payment — settlement of her hereditary share in

the estate of the late Francisco de Borja as well as the estate of Josefa Tangco, ... and
to any properties bequeathed or devised in her favor by the late Francisco de Borja by
Last Will and Testament or by Donation Inter Vivos or Mortis Causa or purportedly
conveyed to her for consideration or otherwise.

This provision evidences beyond doubt that the ruling in the Guevara case is not
applicable to the cases at bar. There was here no attempt to settle or distribute the
estate of Francisco de Borja among the heirs thereto before the probate of his will. The
clear object of the contract was merely the conveyance by Tasiana Ongsingco of any
and all her individual share and interest, actual or eventual in the estate of Francisco de
Borja and Josefa Tangco. There is no stipulation as to any other claimant, creditor or
legatee. And as a hereditary share in a decedent's estate is transmitted or vested
immediately from the moment of the death of such causante or predecessor in interest
(Civil Code of the Philippines, Art. 777)3 there is no legal bar to a successor (with
requisite contracting capacity) disposing of her or his hereditary share immediately
after such death, even if the actual extent of such share is not determined until the
subsequent liquidation of the estate.4 Of course, the effect of such alienation is to be
deemed limited to what is ultimately adjudicated to the vendor heir. However, the
aleatory character of the contract does not affect the validity of the transaction; neither
does the coetaneous agreement that the numerous litigations between the parties (the
approving order of the Rizal Court enumerates fourteen of them, Rec. App. pp. 79-82)
are to be considered settled and should be dismissed, although such stipulation, as
noted by the Rizal Court, gives the contract the character of a compromise that the law
favors, for obvious reasons, if only because it serves to avoid a multiplicity of suits.

It is likewise worthy of note in this connection that as the surviving spouse of Francisco
de Borja, Tasiana Ongsingco was his compulsory heir under article 995 et seq. of the
present Civil Code. Wherefore, barring unworthiness or valid disinheritance, her
successional interest existed independent of Francisco de Borja's last will and
testament and would exist even if such will were not probated at all. Thus, the
prerequisite of a previous probate of the will, as established in the Guevara and
analogous cases, can not apply to the case of Tasiana Ongsingco Vda. de de Borja.

Since the compromise contract Annex A was entered into by and between "Jose de
Borja personally and as administrator of the Testate Estate of Josefa Tangco" on the
one hand, and on the other, "the heir and surviving spouse of Francisco de Borja by his
second marriage, Tasiana Ongsingco Vda. de de Borja", it is clear that the transaction
was binding on both in their individual capacities, upon the perfection of the contract,
even without previous authority of the Court to enter into the same. The only difference
between an extrajudicial compromise and one that is submitted and approved by the
Court, is that the latter can be enforced by execution proceedings. Art. 2037 of the Civil
Code is explicit on the point:
8. Art. 2037. A compromise has upon the parties the effect and authority of res
judicata; but there shall be no execution except in compliance with a judicial
compromise.

It is argued by Tasiana Ongsingco that while the agreement Annex A expressed no

definite period for its performance, the same was intended to have a resolutory period
of 60 days for its effectiveness. In support of such contention, it is averred that such a
limit was expressly stipulated in an agreement in similar terms entered into by said
Ongsingco with the brothers and sister of Jose de Borja, to wit, Crisanto, Matilde and
Cayetano, all surnamed de Borja, except that the consideration was fixed at P600,000 (
Opposition, Annex/Rec. of Appeal, L-28040, pp. 39- 46) and which contained the
following clause:

III. That this agreement shall take effect only upon the consummation of the sale of
the property mentioned herein and upon receipt of the total and full payment of the
proceeds of the sale by the herein owner heirs-children of Francisco de Borja, namely,
Crisanto, Cayetano and Matilde, all surnamed de Borja; Provided that if no sale of the
said property mentioned herein is consummated, or the non-receipt of the purchase
price thereof by the said owners within the period of sixty (60) days from the date
hereof, this agreement will become null and void and of no further effect.

Ongsingco's argument loses validity when it is considered that Jose de Borja was not a
party to this particular contract (Annex 1), and that the same appears not to have been
finalized, since it bears no date, the day being left blank "this — day of October 1963";
and while signed by the parties, it was not notarized, although plainly intended to be so
done, since it carries a proposed notarial ratification clause. Furthermore, the
compromise contract with Jose de Borja (Annex A), provides in its par. 2 heretofore
transcribed that of the total consideration of P800, 000 to be paid to Ongsingco, P600,
000 represent the "prorata share of the heirs Crisanto, Cayetano and Matilde all
surnamed de Borja" which corresponds to the consideration of P600,000 recited in
Annex 1, and that circumstance is proof that the duly notarized contract entered into wit
Jose de Borja under date 12 October 1963 (Annex A), was designed to absorb and
supersede the separate unformalize agreement with the other three Borja heirs. Hence,
the 60 days resolutory term in the contract with the latter (Annex 1) not being repeated
in Annex A, can not apply to the formal compromise with Jose de Borja. It is moreover
manifest that the stipulation that the sale of the Hacienda de Jalajala was to be made
within sixty days from the date of the agreement with Jose de Borja's co-heirs (Annex 1)
was plainly omitted in Annex A as improper and ineffective, since the Hacienda de
Jalajala (Poblacion) that was to be sold to raise the P800,000 to be paid to Ongsingco
for her share formed part of the estate of Francisco de Borja and could not be sold until
authorized by the Probate Court. The Court of First Instance of Rizal so understood it,
and in approving the compromise it fixed a term of 120 days counted from the finality of
the order now under appeal, for the carrying out by the parties for the terms of the
contract.

This brings us to the plea that the Court of First Instance of Rizal had no jurisdiction to
approve the compromise with Jose de Borja (Annex A) because Tasiana Ongsingco was
not an heir in the estate of Josefa Tangco pending settlement in the Rizal Court, but she
was an heir of Francisco de Borja, whose estate was the object of Special Proceeding
No. 832 of the Court of First Instance of Nueva Ecija. This circumstance is irrelevant,
since what was sold by Tasiana Ongsingco was only her eventual share in the estate of
her late husband, not the estate itself; and as already shown, that eventual share she
owned from the time of Francisco's death and the Court of Nueva Ecija could not bar
her selling it. As owner of her undivided hereditary share, Tasiana could dispose of it in
favor of whomsoever she chose. Such alienation is expressly recognized and provided
for by article 1088 of the present Civil Code:

Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before the
partition, any or all of the co-heirs may be subrogated to the rights of the purchaser by
reimbursing him for the price of the sale, provided they do so within the period of one
month from the time they were notified in writing of the sale of the vendor.

If a sale of a hereditary right can be made to a stranger, then a fortiori sale thereof to a

coheir could not be forbidden.

Tasiana Ongsingco further argues that her contract with Jose de Borja (Annex "A") is
void because it amounts to a compromise as to her status and marriage with the late
Francisco de Borja. The point is without merit, for the very opening paragraph of the
agreement with Jose de Borja (Annex "A") describes her as "the heir and surviving
spouse of Francisco de Borja by his second marriage, Tasiana Ongsingco Vda. de de
Borja", which is in itself definite admission of her civil status. There is nothing in the text
of the agreement that would show that this recognition of Ongsingco's status as the
surviving spouse of Francisco de Borja was only made in consideration of the cession
of her hereditary rights.

It is finally charged by appellant Ongsingco, as well as by the Court of First Instance of

Nueva Ecija in its order of 21 September 1964, in Special Proceedings No. 832 (
Amended Record on Appeal in L-28568, page 157), that the compromise agreement of
13 October 1963 (Annex "A") had been abandoned, as shown by the fact that, after its
execution, the Court of First Instance of Nueva Ecija, in its order of 21 September 1964,
had declared that "no amicable settlement had been arrived at by the parties", and that
Jose de Borja himself, in a motion of 17 June 1964, had stated that the proposed
amicable settlement "had failed to materialize".

It is difficult to believe, however, that the amicable settlement referred to in the order
and motion above-mentioned was the compromise agreement of 13 October 1963,
which already had been formally signed and executed by the parties and duly notarized.
What the record discloses is that some time after its formalization, Ongsingco had
unilaterally attempted to back out from the compromise agreement, pleading various
reasons restated in the opposition to the Court's approval of Annex "A" (Record on
Appeal, L-20840, page 23): that the same was invalid because of the lapse of the
allegedly intended resolutory period of 60 days and because the contract was not
preceded by the probate of Francisco de Borja's will, as required by this Court'
s Guevarra vs. Guevara ruling; that Annex "A" involved a compromise affecting
Ongsingco's status as wife and widow of Francisco de Borja, etc., all of which
objections have been already discussed. It was natural that in view of the widow's
attitude, Jose de Borja should attempt to reach a new settlement or novatory agreement
before seeking judicial sanction and enforcement of Annex "A", since the latter step
might ultimately entail a longer delay in attaining final remedy. That the attempt to reach
another settlement failed is apparent from the letter of Ongsingco's counsel to Jose de
Borja quoted in pages 35-36 of the brief for appellant Ongsingco in G.R. No. 28040; and
it is more than probable that the order of 21 September 1964 and the motion of 17 June
1964 referred to the failure of the parties' quest for a more satisfactory compromise.
But the inability to reach a novatory accord can not invalidate the original compromise (
Annex "A") and justifies the act of Jose de Borja in finally seeking a court order for its
approval and enforcement from the Court of First Instance of Rizal, which, as heretofore
described, decreed that the agreement be ultimately performed within 120 days from
the finality of the order, now under appeal.

We conclude that in so doing, the Rizal court acted in accordance with law, and,
therefore, its order should be upheld, while the contrary resolution of the Court of First
Instance of Nueva Ecija should be, and is, reversed.

In her brief, Tasiana Ongsingco also pleads that the time elapsed in the appeal has
affected her unfavorably, in that while the purchasing power of the agreed price of P800,
000 has diminished, the value of the Jalajala property has increased. But the fact is that
her delay in receiving the payment of the agreed price for her hereditary interest was
primarily due to her attempts to nullify the agreement (Annex "A") she had formally
entered into with the advice of her counsel, Attorney Panaguiton. And as to the
devaluation de facto of our currency, what We said in Dizon Rivera vs. Dizon, L-24561,
30 June 1970, 33 SCRA 554, that "estates would never be settled if there were to be a
revaluation with every subsequent fluctuation in the values of currency and properties
of the estate", is particularly opposite in the present case.

Coming now to Case G.R. No. L-28611, the issue is whether the Hacienda de Jalajala (
Poblacion), concededly acquired by Francisco de Borja during his marriage to his first
wife, Josefa Tangco, is the husband's private property (as contended by his second
spouse, Tasiana Ongsingco), or whether it forms part of the conjugal (ganancial)
partnership with Josefa Tangco. The Court of First Instance of Rizal (Judge Herminio
Mariano, presiding) declared that there was adequate evidence to overcome the
presumption in favor of its conjugal character established by Article 160 of the Civil
Code.

We are of the opinion that this question as between Tasiana Ongsingco and Jose de
Borja has become moot and academic, in view of the conclusion reached by this Court
in the two preceding cases (G.R. No. L-28568), upholding as valid the cession of
Tasiana Ongsingco's eventual share in the estate of her late husband, Francisco de
Borja, for the sum of P800,000 with the accompanying reciprocal quit-claims between
the parties. But as the question may affect the rights of possible creditors and legatees,
its resolution is still imperative.

It is undisputed that the Hacienda Jalajala, of around 4,363 hectares, had been originally
acquired jointly by Francisco de Borja, Bernardo de Borja and Marcelo de Borja and their
title thereto was duly registered in their names as co-owners in Land Registration Case
No. 528 of the province of Rizal, G.L.R.O. Rec. No. 26403 (De Barjo vs. Jugo, 54 Phil. 465
). Subsequently, in 1931, the Hacienda was partitioned among the co-owners: the Punta
section went to Marcelo de Borja; the Bagombong section to Bernardo de Borja, and the
part in Jalajala proper (Poblacion) corresponded to Francisco de Borja (V. De Borja vs.
De Borja 101 Phil. 911, 932).

The lot allotted to Francisco was described as —

Una Parcela de terreno en Poblacion, Jalajala: N. Puang River; E. Hermogena Romero; S.

Heirs of Marcelo de Borja O. Laguna de Bay; containing an area of 13,488,870 sq. m.
more or less, assessed at P297,410. (Record on Appeal, pages 7 and 105)

On 20 November 1962, Tasiana O. Vda. de Borja, as Administratrix of the Testate Estate

of Francisco de Borja, instituted a complaint in the Court of First Instance of Rizal (Civil
Case No. 7452) against Jose de Borja, in his capacity as Administrator of Josefa
Tangco (Francisco de Borja's first wife), seeking to have the Hacienda above described
declared exclusive private property of Francisco, while in his answer defendant (now
appellant) Jose de Borja claimed that it was conjugal property of his parents (Francisco
de Borja and Josefa Tangco), conformably to the presumption established by Article
160 of the Philippine Civil Code (reproducing Article 1407 of the Civil Code of 1889), to
the effect that:

Art. 160. All property of the marriage is presumed to belong to the conjugal partnership,
unless it be proved that it pertains exclusively to the husband or to the wife.

Defendant Jose de Borja further counterclaimed for damages, compensatory, moral and
exemplary, as well as for attorney's fees.
After trial, the Court of First Instance of Rizal, per Judge Herminio Mariano, held that the
plaintiff had adduced sufficient evidence to rebut the presumption, and declared the
Hacienda de Jalajala (Poblacion) to be the exclusive private property of the late
Francisco de Borja, and his Administratrix, Tasiana Ongsingco Vda. de Borja, to be
entitled to its possession. Defendant Jose de Borja then appealed to this Court.

The evidence reveals, and the appealed order admits, that the character of the Hacienda
in question as owned by the conjugal partnership De Borja-Tangco was solemnly
admitted by the late Francisco de Borja no less than two times: first, in the Reamended
Inventory that, as executor of the estate of his deceased wife Josefa Tangco, he filed in
the Special Proceedings No. 7866 of the Court of First Instance of Rizal on 23 July 1953
(Exhibit "2"); and again, in the Reamended Accounting of the same date, also filed in the
proceedings aforesaid (Exhibit "7"). Similarly, the plaintiff Tasiana O. Vda. de Borja,
herself, as oppositor in the Estate of Josefa Tangco, submitted therein an inventory
dated 7 September 1954 (Exhibit "3") listing the Jalajala property among the "Conjugal
Properties of the Spouses Francisco de Borja and Josefa Tangco". And once more,
Tasiana Ongsingco, as administratrix of the Estate of Francisco de Borja, in Special
Proceedings No. 832 of the Court of First Instance of Nueva Ecija, submitted therein in
December, 1955, an inventory wherein she listed the Jalajala Hacienda under the
heading "Conjugal Property of the Deceased Spouses Francisco de Borja and Josefa
Tangco, which are in the possession of the Administrator of the Testate Estate of the
Deceased Josefa Tangco in Special Proceedings No. 7866 of the Court of First Instance
of Rizal" (Exhibit "4").

Notwithstanding the four statements aforesaid, and the fact that they are plain
admissions against interest made by both Francisco de Borja and the Administratrix of
his estate, in the course of judicial proceedings in the Rizal and Nueva Ecija Courts,
supporting the legal presumption in favor of the conjugal community, the Court below
declared that the Hacienda de Jalajala (Poblacion) was not conjugal property, but the
private exclusive property of the late Francisco de Borja. It did so on the strength of the
following evidences: (a) the sworn statement by Francis de Borja on 6 August 1951 (
Exhibit "F") that —
He tomado possession del pedazo de terreno ya delimitado (equivalente a 1/4 parte,
337 hectareas) adjunto a mi terreno personal y exclusivo (Poblacion de Jalajala, Rizal).

and (b) the testimony of Gregorio de Borja, son of Bernardo de Borja, that the entire
Hacienda had been bought at a foreclosure sale for P40,100.00, of which amount P25,
100 was contributed by Bernardo de Borja and P15,000. by Marcelo de Borja; that upon
receipt of a subsequent demand from the provincial treasurer for realty taxes the sum
of P17,000, Marcelo told his brother Bernardo that Francisco (son of Marcelo) wanted
also to be a co-owner, and upon Bernardo's assent to the proposal, Marcelo issue a
check for P17,000.00 to pay the back taxes and said that the amount would represent
Francisco's contribution in the purchase of the Hacienda. The witness further testified
that —

Marcelo de Borja said that that money was entrusted to him by Francisco de Borja when

he was still a bachelor and which he derived from his business transactions. (Hearing, 2
February 1965, t.s.n., pages 13-15) (Emphasis supplied)

The Court below, reasoning that not only Francisco's sworn statement overweighed the
admissions in the inventories relied upon by defendant-appellant Jose de Borja since
probate courts can not finally determine questions of ownership of inventoried property,
but that the testimony of Gregorio de Borja showed that Francisco de Borja acquired his
share of the original Hacienda with his private funds, for which reason that share can
not be regarded as conjugal partnership property, but as exclusive property of the buyer,
pursuant to Article 1396(4) of Civil Code of 1889 and Article 148(4) of the Civil Code of
the Philippines.

The following shall be the exclusive property of each spouse:

xxx xxx xxx

(4) That which is purchased with exclusive money of the wife or of the husband.
We find the conclusions of the lower court to be untenable. In the first place, witness
Gregorio de Borja's testimony as to the source of the money paid by Francisco for his
share was plain hearsay, hence inadmissible and of no probative value, since he was
merely repeating what Marcelo de Borja had told him (Gregorio). There is no way of
ascertaining the truth of the statement, since both Marcelo and Francisco de Borja were
already dead when Gregorio testified. In addition, the statement itself is improbable,
since there was no need or occasion for Marcelo de Borja to explain to Gregorio how
and when Francisco de Borja had earned the P17,000.00 entrusted to Marcelo. A ring of
artificiality is clearly discernible in this portion of Gregorio's testimony.

As to Francisco de Borja's affidavit, Exhibit "F", the quoted portion thereof (ante, page 14
) does not clearly demonstrate that the "mi terreno personal y exclusivo (Poblacion de
Jalajala, Rizal) " refers precisely to the Hacienda in question. The inventories (Exhibits 3
and 4) disclose that there were two real properties in Jalajala owned by Francisco de
Borja, one of 72.038 sq. m., assessed at P44,600, and a much bigger one of 1,357.260.
70 sq. m., which is evidently the Hacienda de Jalajala (Poblacion). To which of these
lands did the affidavit of Francisco de Borja (Exhibit "F") refer to? In addition, Francisco's
characterization of the land as "mi terreno personal y exclusivo" is plainly self-serving,
and not admissible in the absence of cross examination.

It may be true that the inventories relied upon by defendant-appellant (Exhibits "2", "3", "4
" and "7") are not conclusive on the conjugal character of the property in question; but as
already noted, they are clear admissions against the pecuniary interest of the declarants
, Francisco de Borja and his executor-widow, Tasiana Ongsingco, and as such of much
greater probative weight than the self-serving statement of Francisco (Exhibit "F").
Plainly, the legal presumption in favor of the conjugal character of the Hacienda de
Jalajala (Poblacion) now in dispute has not been rebutted but actually confirmed by
proof. Hence, the appealed order should be reversed and the Hacienda de Jalajala (
Poblacion) declared property of the conjugal partnership of Francisco de Borja and
Josefa Tangco.

No error having been assigned against the ruling of the lower court that claims for
damages should be ventilated in the corresponding special proceedings for the
settlement of the estates of the deceased, the same requires no pro announcement
from this Court.

IN VIEW OF THE FOREGOING, the appealed order of the Court of First Instance of Rizal
in Case No. L-28040 is hereby affirmed; while those involved in Cases Nos. L-28568 and
L-28611 are reversed and set aside. Costs against the appellant Tasiana Ongsingco Vda
. de Borja in all three (3) cases.

G.R. No. L-41715 June 18, 1976

ROSALIO BONILLA (a minor) SALVACION BONILLA (a minor) and PONCIANO BONILLA (

their father) who represents the minors, Petitioners, vs. LEON BARCENA, MAXIMA
ARIAS BALLENA, ESPERANZA BARCENA, MANUEL BARCENA, AGUSTINA NERI, widow
of JULIAN TAMAYO and HON. LEOPOLDO GIRONELLA of the Court of First Instance of
Abra, Respondents.

Federico Paredes for petitioners.chanrobles virtual law library

Demetrio V. Pre for private respondents.

MARTIN, J:

This is a petition for review 1 of the Order of the Court of First Instance of Abra in Civil
Case No. 856, entitled Fortunata Barcena vs. Leon Barcena, et al., denying the motions
for reconsideration of its order dismissing the complaint in the aforementioned case.
chanrobles virtual law library

On March 31, 1975 Fortunata Barcena, mother of minors Rosalio Bonilla and Salvacion
Bonilla and wife of Ponciano Bonilla, instituted a civil action in the Court of First
Instance of Abra, to quiet title over certain parcels of land located in Abra.chanrobles
virtual law library

On May 9, 1975, defendants filed a written motion to dismiss the complaint, but before
the hearing of the motion to dismiss, the counsel for the plaintiff moved to amend the
complaint in order to include certain allegations therein. The motion to amend the
complaint was granted and on July 17, 1975, plaintiffs filed their amended complaint.
chanrobles virtual law library
On August 4, 1975, the defendants filed another motion to dismiss the complaint on the
ground that Fortunata Barcena is dead and, therefore, has no legal capacity to sue. Said
motion to dismiss was heard on August 14, 1975. In said hearing, counsel for the
plaintiff confirmed the death of Fortunata Barcena, and asked for substitution by her
minor children and her husband, the petitioners herein; but the court after the hearing
immediately dismissed the case on the ground that a dead person cannot be a real
party in interest and has no legal personality to sue.chanrobles virtual law library

On August 19, 1975, counsel for the plaintiff received a copy of the order dismissing the
complaint and on August 23, 1975, he moved to set aside the order of the dismissal
pursuant to Sections 16 and 17 of Rule 3 of the Rules of Court. 2

On August 28, 1975, the court denied the motion for reconsideration filed by counsel for
the plaintiff for lack of merit. On September 1, 1975, counsel for deceased plaintiff filed
a written manifestation praying that the minors Rosalio Bonilla and Salvacion Bonilla be
allowed to substitute their deceased mother, but the court denied the counsel's prayer
for lack of merit. From the order, counsel for the deceased plaintiff filed a second
motion for reconsideration of the order dismissing the complaint claiming that the
same is in violation of Sections 16 and 17 of Rule 3 of the Rules of Court but the same
was denied.chanrobles virtual law library

Hence, this petition for review.chanrobles virtual law library

The Court reverses the respondent Court and sets aside its order dismissing the
complaint in Civil Case No. 856 and its orders denying the motion for reconsideration of
said order of dismissal. While it is true that a person who is dead cannot sue in court,
yet he can be substituted by his heirs in pursuing the case up to its completion. The
records of this case show that the death of Fortunata Barcena took place on July 9,
1975 while the complaint was filed on March 31, 1975. This means that when the
complaint was filed on March 31, 1975, Fortunata Barcena was still alive, and therefore,
the court had acquired jurisdiction over her person. If thereafter she died, the Rules of
Court prescribes the procedure whereby a party who died during the pendency of the
proceeding can be substituted. Under Section 16, Rule 3 of the Rules of Court "whenever
a party to a pending case dies ... it shall be the duty of his attorney to inform the court
promptly of such death ... and to give the name and residence of his executor,
administrator, guardian or other legal representatives." This duty was complied with by
the counsel for the deceased plaintiff when he manifested before the respondent Court
that Fortunata Barcena died on July 9, 1975 and asked for the proper substitution of
parties in the case. The respondent Court, however, instead of allowing the substitution,
dismissed the complaint on the ground that a dead person has no legal personality to
sue. This is a grave error. Article 777 of the Civil Code provides "that the rights to the
succession are transmitted from the moment of the death of the decedent." From the
moment of the death of the decedent, the heirs become the absolute owners of his
property, subject to the rights and obligations of the decedent, and they cannot be
deprived of their rights thereto except by the methods provided for by law. 3 The
moment of death is the determining factor when the heirs acquire a definite right to the
inheritance whether such right be pure or contingent. 4The right of the heirs to the
property of the deceased vests in them even before judicial declaration of their being
heirs in the testate or intestate proceedings. 5When Fortunata Barcena, therefore, died
her claim or right to the parcels of land in litigation in Civil Case No. 856, was not
extinguished by her death but was transmitted to her heirs upon her death. Her heirs
have thus acquired interest in the properties in litigation and became parties in interest
in the case. There is, therefore, no reason for the respondent Court not to allow their
substitution as parties in interest for the deceased plaintiff.chanrobles virtual law library

Under Section 17, Rule 3 of the Rules of Court "after a party dies and the claim is not
thereby extinguished, the court shall order, upon proper notice, the legal representative
of the deceased to appear and be substituted for the deceased, within such time as may
be granted ... ." The question as to whether an action survives or not depends on the
nature of the action and the damage sued for. 6 In the causes of action which survive
the wrong complained affects primarily and principally property and property rights, the
injuries to the person being merely incidental, while in the causes of action which do not
survive the injury complained of is to the person, the property and rights of property
affected being incidental. 7 Following the foregoing criterion the claim of the deceased
plaintiff which is an action to quiet title over the parcels of land in litigation affects
primarily and principally property and property rights and therefore is one that survives
even after her death. It is, therefore, the duty of the respondent Court to order the legal
representative of the deceased plaintiff to appear and to be substituted for her. But
what the respondent Court did, upon being informed by the counsel for the deceased
plaintiff that the latter was dead, was to dismiss the complaint. This should not have
been done for under the same Section 17, Rule 3 of the Rules of Court, it is even the
duty of the court, if the legal representative fails to appear, to order the opposing party
to procure the appointment of a legal representative of the deceased. In the instant
case the respondent Court did not have to bother ordering the opposing party to procure
the appointment of a legal representative of the deceased because her counsel has not
only asked that the minor children be substituted for her but also suggested that their
uncle be appointed as guardian ad litem for them because their father is busy in Manila
earning a living for the family. But the respondent Court refused the request for
substitution on the ground that the children were still minors and cannot sue in court.
This is another grave error because the respondent Court ought to have known that
under the same Section 17, Rule 3 of the Rules of Court, the court is directed to appoint
a guardian ad litem for the minor heirs. Precisely in the instant case, the counsel for the
deceased plaintiff has suggested to the respondent Court that the uncle of the minors
be appointed to act as guardian ad litem for them. Unquestionably, the respondent
Court has gravely abused its discretion in not complying with the clear provision of the
Rules of Court in dismissing the complaint of the plaintiff in Civil Case No. 856 and
refusing the substitution of parties in the case.chanrobles virtual law library

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

SO ORDERED.

Teehankee (Chairman), Makasiar, Esguerra and Muñoz Palma, JJ., concur.

G.R. No. 149017             November 28, 2008

VALENTE RAYMUNDO,petitioner, 
vs.
TEOFISTA ISAGON VDA. DE SUAREZ, DANILO I. SUAREZ, EUFROCINA SUAREZ,
MARCELO I. SUAREZ, JR, EVELYN SUAREZ, ET AL., respondents.

DECISION

NACHURA, J.:

This petition, filed under Rule 65 of the Rules of Court, assails the Court of Appeals (CA)
Decision1 and Resolution2 in CA-G.R. SP No. 58090 which reversed, set aside and
recalled the Regional Trial Court (RTC) Orders3 in Civil Case No. 51203.

First, the long settled facts.

Marcelo and Teofista Isagon Suarez'4 marriage was blessed with both material wealth
and progeny in herein respondents, namely, Danilo,5 Eufrocina, Marcelo Jr., Evelyn, and
Reggineo,6 all surnamed Suarez. During their marriage, governed by the conjugal
partnership of gains regime, they acquired numerous properties, which included the
following: (1) a parcel of land situated in Barrio Caniogan, Pasig with an area of 348
square meters covered by Transfer Certificate of Title (TCT) No. 30680; (2) property
located in Pinagbuhatan, Pasig, with an area of 1,020 square meters under Tax
Declaration No. A-016-01003; and (3) Lot Nos. 5, 6 & 7, Block 2 covered by Tax
Declaration No. A-01700723 (subject properties).

After the death of Marcelo Sr. in 1955, Teofista and herein respondents, as well as
Elpidio Suarez,7 executed an Extrajudicial Settlement of Estate,8 partitioning Marcelo Sr
.'s estate, thus:

WHEREAS, the said deceased is survived by the parties hereto who are his only legal
heirs: TEOFISTA ISAGON, being the surviving spouse, and EUFROCINA S. ANDRES,
ELPIDIO SUAREZ, DANILO SUAREZ, EVELYN SUAREZ, MARCELO SUAREZ, JR. and
REGGINEO SUAREZ, being the legitimate children of the deceased with the said
TEOFISTA ISAGON;

WHEREAS, the minors ELPIDIO, SUAREZ, DANILO SUAREZ, EVELYN SUAREZ, MARCELO
SUAREZ, JR. and REGGINEO SUAREZ are represented herein by EUFROCINA S. ANDRES,
in her capacity as the guardian and legal administrator of the property of the said
minors;

WHEREAS, there are no known debts or financial obligations of whatever nature and
amount against the estate of the deceased;

NOW, THEREFORE, in consideration of the foregoing premises, the Parties have agreed
to settle and liquidate the assets of the conjugal partnership between the deceased and
TEOFISTA ISAGON, and to settle and adjudicate the estate of the said deceased, by and
pursuance to these presents, in the following manner, to wit:

1. That TEOFISTA ISAGON, as the surviving spouse and partner of the deceased, shall
receive in absolute and exclusive ownership the following properties as her lawful share
in the assets of the conjugal partnership of gains between her and the deceased, to wit:

(a) Half (1/2) interest and participation in the parcel of land covered by Tax Declaration
No. 6938, situated at Sitio Pantayan, Municipality of Taytay, Province of Rizal;

(b) Half (1/2) interest and participation in the parcel of land covered by Tax Declaration
No. 6939, situated at Sitio Pantayan, Municipality of Taytay, Province of Rizal;
(c) Half (1/2) interest and participation in the parcel of land covered by TCT No. 38291,
situated at Barrio Rosario, Municipality of Pasig, Province of Rizal;

(d) Half (1/2) interest and participation in the parcel of land covered by TCT No. 38290,
situated at Barrio Rosario, Municipality of Pasig, Province of Rizal;

(e) TWELVE THOUSAND FIVE HUNDRED THIRTY PESOS AND NINETY (P12,530.90)
deposited with the Commercial Bank and Trust Company of the Philippines, and THIRTY
-NINE PESOS (P39.00) deposited with Prudential Bank.

2. That the Parties TEOFISTA ISAGON, EUFROCINA S. ANDRES, ELPIDIO SUAREZ,

DANILO SUAREZ, EVELYN SUAREZ, MARCELO SUAREZ, JR. and REGGINEO SUAREZ,
shall each and all receive and be entitled to a share equivalent to one-seventh (1/7) of
the estate of the deceased MARCELO SUAREZ, which estate is comprised of the
following properties, to wit:

(a) A parcel of land covered by TCT No. 30680, situated at Barrio Kaniogan, Municipality
of Pasig, Province of Rizal, with an assessed value of P4,150.00.

(b) Three (3) parcels of land covered by TCT Nos. 33982, 33983 and 33984, situated at
Barrio Pineda, Municipality of Pasig, Province of Rizal, with an assessed value of P560.
00.

(c) A parcel of land covered by TCT 33986, situated at Barrio Pineda, Municipality of
Pasig, Province of Rizal, with an assessed value of P440.00.

(d) Two (2) parcels of land, being Lots Nos. 42 and 44 of the amendment-subdivision
plan TY-4653-Amd., being a portion of Lot 2 described on the original plan II-4653, G.L.R.
O. Record No. _____, situated at Barrio Santolan, Municipality of Pasig, Province of Rizal,
with a total assessed value of P590.00.

(e) Two parcels of land, being Lots Nos. 43 and 45 of the amendment-subdivision plan
TY-4653-Amd., being a portion of Lot 2 described on the original plan II-4653, G.L.R.O.
Record No. _______, situated at Barrio Santolan, Municipality of Pasig, Province of Rizal,
with a total assessed value of P1,190.00.

(f) A parcel of land, being Lot No. 6, Block 269 of the subdivision plan pos-112, being a
portion of Lot 2, Block 348, Psd-3188, G.L.R.O. Record Nos. 375,699 and 917, situated at
San Felipe Neri, Province of Rizal, with an assessed value of P6,340.00.

(g) A parcel of land covered by OCT No. 391, situated in the Municipality of Taytay,
Province of Rizal, with an assessed value of P1,840.00.
(h) TWELVE THOUSAND (12,000) shares of stock of the Consolidated Mines, Inc.
represented by Certificate No. 71-5-B (for 1,000 shares) and Certificate No. 12736 (for
11,000 shares).

PROVIDED, that their title to the properties hereinabove mentioned shall be in common
and the share of each heir being pro indiviso.

Curiously, despite the partition, title to the foregoing properties, explicitly identified in
the Extrajudicial Settlement of Estate as forming part of Marcelo's and Isagon's
property regime, remained in the couple's name. Not surprisingly, Teofista continued to
administer and manage these properties. On the whole, apart from those now owned
exclusively by Teofista, all the properties were held pro indiviso by Teofista and her
children; and respective titles thereto were not changed, with Teofista as de
factoadministrator thereof.

In 1975, Rizal Realty Corporation (Rizal Realty) and Teofista, the latter owning ninety
percent (90%) of the former's shares of stock, were sued by petitioner Valente
Raymundo, his wife Violeta, Virginia Banta and Maria Concepcion Vito (plaintiffs) in
consolidated cases for Rescission of Contract and Damages, docketed as Civil Case
Nos. 21736 to 21739. Thereafter, in 1975, the then Court of First Instance (CFI) of Rizal,
Branch 1, rendered judgment: (1) rescinding the respective contracts of plaintiffs with
Rizal Realty and Teofista, and (2) holding the two defendants solidarily liable to plaintiffs
for damages in the aggregate principal amount of about P70,000.00.9

When the judgment of the CFI became final and executory, herein subject properties
were levied and sold on execution on June 24, 1983 to satisfy the judgment against
Teofista and Rizal Realty. The aforementioned plaintiffs were the highest bidder, and
bought the levied properties for the amount of P94,170.00. As a result, a certificate of
sale was issued to them and registered in their favor on August 1, 1983. On July 31,
1984, the Provincial Sheriff of Rizal issued a final deed of sale over the subject
properties.

Parenthetically, before expiration of the redemption period, or on June 21, 1984, herein
respondents filed a revindicatory action against petitioner Valente, Violeta, Virginia and
Maria Concepcion, docketed as Civil Case No. 51203, for the annulment of the auction
sale and recovery of ownership of the levied properties. Essentially, respondents alleged
in their complaint that they cannot be held liable for the judgment rendered against their
mother, Teofista, not having been impleaded therein; and consequently, the subject
properties, which they own pro indiviso with their mother, can neither be levied nor be
sold on execution.
Meanwhile, the RTC, Branch 151, formerly the CFI, Branch 1, in Civil Case Nos. 21376 to
21379, issued an Order10directing Teofista: (1) to vacate the subject properties, (2) to
desist from despoiling, dismantling, removing or alienating the improvements thereon, (
3) to place petitioner Valente, Violeta, Virginia and Maria Concepcion in peaceful
possession thereof, and (4) to surrender to them the owner's duplicate copy of the
torrens title and other pertinent documents. Herein respondents, joined by their mother,
Teofista, filed a Motion for Reconsideration arguing that the subject properties are co-
owned by them and further informing the RTC of the filing and pendency of Civil Case
No. 51203. Nonetheless, the trial court denied Teofista's and herein respondents'
motion, reiterated its previous order, which included, among others, the order for
Teofista and all persons claiming right under her, to vacate the lots subject of the
judicial sale.

Undaunted, Teofista and herein respondents filed a petition for certiorari before the CA

to annul the foregoing orders. The appellate court, on July 6, 1987, dismissed Teofista's
and herein respondents' petition, thus:

We believe this petition cannot prosper for two reasons. First, as purported case
for certiorari it fails to show how the respondent judge had acted without or in excess of
jurisdiction or with grave abuse of discretion. The two orders being assailed were
preceded by a final judgment, a corresponding writ of execution, a levy on execution and
a judicial sale, all of which enjoy a strong sense presumption of regularity.

Secondly, as far as [petitioner] Teofista Suarez is concerned, she cannot complain

about the levy because she was a party in the consolidated cases where judgment was
rendered against her in her personal capacity. Since she did not appeal from the
decision, she cannot say that the judgment is erroneous for an obligation that belong to
the corporation. And with respect to the children of Teofista Suarez, who are co-
petitioners in this proceedings [herein respondents], suffice it to point out that not being
parties in the consolidated cases, what they should have done was to immediately file a
third party claim. The moment levy was made on the parcels of land, which they claim
are theirs by virtue of hereditary succession, they should have seasonably filed such
claim to protect their rights. As the record discloses, however, the children chose to
remain silent, and even allowed the auction sale to be held, filing almost a year later a
half-hearted complaint to annul the proceedings which they allowed to be dismissed by
not diligently prosecuting it.

In Santos v. Mojica (10 SCRA 318), a partition case with third- party claimants, the
Supreme Court came out with the following ruling: "The procedure (a petition
for certiorari) followed by him (a petitioner not party to the original partition case) in
vindicating his right is not the one sanctioned by law, for he should have filed a separate
and independent action making parties therein the sheriff and the plaintiffs responsible
for the execution xxx. It can, therefore, be said that (he) acted improperly in filing the
present petition because his remedy was to file a separate and independent action to
vindicate his ownership over the land.

WHEREFORE, the petition is denied and the restraining order previously issued is
DISSOLVED, with costs against petitioners.11

On the other litigation front concerning Civil Case No. 51203, a writ of preliminary
injunction was issued by the RTC Pasig, Branch 155, on February 25, 1985, enjoining
petitioner Valente, Violeta, Virginia and Maria Concepcion from transferring to third
parties the levied properties based on its preliminary finding that the auctioned
properties are co-owned by Teofista and herein respondents. Subsequently, however,
Civil Case No. 51203 was dismissed by the RTC, Branch 155, at the instance of
petitioner Valente for failure of herein respondents to prosecute. But in yet another turn
of events, the RTC, Branch 155, lifted its previous order of dismissal and directed the
issuance of alias summons.

Thus, it was now petitioner Valente's, Violeta's, Virginia's and Maria Concepcion's turn to
file a petition for certiorari with the CA, assailing the various orders of the RTC, Branch
155, which all rejected their bid to dismiss Civil Case No. 51203. The CA granted their
petition, thus:

And the fact that herein private respondents, as the legal heirs of Teofista Vda. de
Suarez and supposedly not parties in Civil Case Nos. 21376 - 21379 does not preclude
the application of the doctrine of res judicatasince, apart from the requisites
constitutive of this procedural tenet, they were admittedly the children of Teofista
Suarez, who is the real party-in-interest in the previous final judgment. As successors-in-
interest of Teofista Suarez, private respondents merely stepped into the shoes of their
mother in regard to the levied pieces of property. Verily, there is identity of parties, not
only where the parties in both actions are the same, but where there is privity with them
as in the cases of successors-in-interest by title subsequent to the commencement of
the action or where there is substantial identity.

Finally, the action to annul the judicial sale filed by herein private respondents is not the
reinvindicatory suit, much less the third party claim contemplated by Section 17 of Rule
39.

WHEREFORE, the petition for certiorari is hereby granted and the questioned orders
dated February 25, 1985, May 19, 1989 and February 26, 1990 issued in Civil Case No.
51203 are hereby annulled; further respondent judge is ordered to dismiss Civil Case No.
51203.12

From this ruling, herein respondents appealed to the Supreme Court. In Suarez v. Court
of Appeals,13 we reversed the appellate court, thus:

Even without touching on the incidents and issues raised by both petitioner [herein
respondents] and private respondents [petitioner Valente, Violeta, Virginia and Maria
Concepcion] and the developments subsequent to the filing of the complaint, [w]e
cannot but notice the glaring error committed by the trial court.

It would be useless to discuss the procedural issue on the validity of the execution and
the manner of publicly selling en masse the subject properties for auction. To start with,
only one-half of the 5 parcels of land [subject properties] should have been the subject
of the auction sale.

The law in point is Article 777 of the Civil Code, the law applicable at the time of the
institution of the case:

The rights to the succession are transmitted from the moment of the death of the
decedent."

Article 888 further provides:

"The legitime of the legitimate children and descendants consists of one-half of the
hereditary estate of the father and of the mother.

The latter may freely dispose of the remaining half, subject to the rights of illegitimate
children and of the surviving spouse as hereinafter provided."

Article 892, par. 2 likewise provides:

"If there are two or more legitimate children or descendants, the surviving spouse shall
be entitled to a portion equal to the legitime of each of the legitimate children or
descendants."

Thus, from the foregoing, the legitime of the surviving spouse is equal to the legitime of
each child.

The proprietary interest of petitioners [herein respondents] in the levied and auctioned
property is different from and adverse to that of their mother [Teofista]. Petitioners [
herein respondents] became co-owners of the property not because of their mother [
Teofista] but through their own right as children of their deceased father [Marcelo Sr.].
Therefore, petitioners [herein respondents] are not barred in any way from instituting the
action to annul the auction sale to protect their own interest.

WHEREFORE, the decision of the Court of Appeals dated July 27, 1990 as well as its
Resolution of August 28, 1990 are hereby REVERSED and set aside; and Civil Case No.
51203 is reinstated only to determine that portion which belongs to petitioners and to
annul the sale with regard to said portion.

It was at this point when another series of events transpired, culminating in the present
petition.

Upon our reinstatement of Civil Case No. 51203, each and every pleading filed by herein
respondents, as plaintiffs therein, was hotly contested and opposed by therein
defendants, including petitioner Valente. Moreover, even at that stage, when the case
had been remanded with a directive to "determine that portion which belongs to [herein
respondents] and to annul the sale with regard to said portion," Civil Case No. 51203
had to be re-raffled and transferred, for varied reasons, to the different court branches in
Pasig City. In between all these, petitioner Valente, along with the other defendants,
repeatedly filed a Motion to Dismiss Civil Case No. 51203 for the purported failure of
herein respondents to prosecute the case. Most of these Motions to Dismiss were
denied.

With each transfer of Civil Case No. 51203, the judge to which the case was raffled had
to study the records anew. Expectedly, part of the records went missing and were lost.
On April 12, 1993, the Clerk of Court of RTC, Branch 71, to which Civil Case No. 51203
was remanded, filed a report on the records of the case, to wit:

1. The first volume of the record in the above-entitled case was recorded as received on
June 20, 1990, by Sheriff Alejandro O. Loquinario;

2. That the staff of Branch 71 at this time was sharing a small room with Branch 161 at
the First Floor of the Justice Hall, and as the Branch was newly formed, it had no
equipment or furniture of its own, and was still undermanned;

3. That sometime in August 1990, Branch 71 moved to the staffroom of Branch 159 at
the Second Floor of the Justice Hall;

4. That on October 25, 1990, this Court received a Notice of Judgment dated October 22
, 1990 from the Court of Appeals that ruled the dismissal of the above-entitled case, and
as per standing instructions of Judge Graduacion A. Reyes-Claravall, the same was
bound as volume 2 of the case;
5. That just before the Christmas vacation in 1991, the branch was forced to hastily
move all of its records and equipment to branch 69, because of the unexpected notice
we received that the room we were occupying was to be demolished in order to meet
the schedule for the renovation of the building;

6. That unfortunately, the room was demolished before the undersigned could make a
last check to see if everything was transferred;

7. That it was only later on that this office discovered that important documents were
indeed lost, including transcripts of stenographic notes in a case that was submitted for
decision;

8. That sometime in May 1992, the branch moved its Office to its present location;

9. That on March 8, 1993, this Court received a copy of a Decision of the Supreme Court
reversing the earlier ruling of the Court of Appeals;

10. That it was at this time that the first volume of this case, which was bundled along
with other cases which were decided and/or archived, was reported as missing;

11. That from the time the same was found to be missing, Judge Claravall ordered that
a search for the same be made in all of the offices wherein this branch was forced to
share a room with, as well as the Court of Appeals, in the event that the same was
transmitted to said Court;

12. That all the efforts were in vain, as said record could not be located anywhere;

13. That the undersigned now concludes that the first volume of the above-entitled case
was probably lost during the renovation of the Justice Hall Building, and will have to be
reconstituted with the use of documents in the possession of the parties, or documents
entered as exhibits in other Courts.14

In this regard, herein respondents filed a Motion for Reconstitution of Records15 of the
case. Initially, petitioner Valente, and the other defendants -- Violeta, Virginia and Maria
Concepcion -- opposed the motion.16 However, the trial court eventually granted the
motion for reconstitution, and ordered petitioner Valente and the other defendants to
submit a copy of their Answer filed thereat and copies of other pleadings pertinent to
the case.17

Thereafter, three (3) incidents, among numerous others, set off by the parties' pleadings,
are worth mentioning, to wit:
1. A Motion for Leave to File and Admit Supplemental Complaint18 filed by herein
respondents. The Supplemental Complaint additionally prayed that the levy and sale at
public auction of the subject properties be annulled and set aside, as the bid price was
unconscionable and grossly inadequate to the current value of the subject properties.
The Supplemental Complaint further sought a re-bidding with respect to Teofista's
share in the subject properties. Finally, it prayed that TCT No. 6509 in the name of
petitioner Valente, Violeta, Virginia and Maria Concepcion be cancelled and TCT No.
30680 in the name of Marcelo Suarez, married to Teofista Isagon, be reinstated.

2. A Manifestation and Motion (to Execute/Enforce Decision dated September 4, 1992

of the Supreme Court)19 filed by herein respondents pointing out that the Supreme
Court itself had noted the current increased value of the subject properties and that
petitioner Valente, Violeta, Virginia and Maria Concepcion unjustly enriched themselves
in appropriating the subject properties worth millions then, for a measly bid price of P94,
170.00, for a judgment obligation worth only P70,000.00.

3. An Urgent Motion [to direct compliance by plaintiffs (herein respondents) with

Supreme Court Decision or to consider the matter submitted without evidence on the
part of plaintiffs]20 filed by therein defendants, including herein petitioner Valente,
pointing out that plaintiffs (herein respondents) have yet to comply with the RTC, Branch
67 Order commanding them to submit (to the RTC) any evidence showing settlement of
the estate of the deceased Marcelo Suarez, in order for the court to determine the
portion in the estate which belongs to Teofista. The Urgent Motion stated in paragraph
2, thus:

2. The defendants [including herein petitioner Valente] did everything possible to

expedite the disposition of this case while the plaintiffs [herein respondents] did
everything possible to DELAY the disposition of the same obviously because the
plaintiffs [herein respondents] are in full possession and enjoyment of the property in
dispute. In its decision of September 4, 1992, the SUPREME COURT nullified TWO final
and executory DECISIONS of the Court of Appeals in an unprecedented action. In said
decision, the Supreme Court ordered the plaintiffs [herein respondents] to establish with
evidence their personality as heirs of Marcelo Suarez, and after being able to do so, to
adduce evidence that would determine what portion belongs to plaintiffs hence the
above matters need be litigated upon before the RTC can "annul the sale with regard to
said portion" (belonging to the plaintiffs alleged heirs).

On these incidents, the records reveal the following Orders issued by the different
branches of the RTC:
1. Order dated March 17, 1995, issued by Presiding Judge Rodrigo B. Lorenzo of Branch
266, Pasig City, admitting herein respondents' Supplemental Complaint.21

2. Order dated January 22, 1996, issued by Judge Apolinario B. Santos resolving: (a)
herein respondents' Manifestation and Motion (to execute/enforce Decision dated
September 4, 1992 of the Supreme Court), and (b) therein defendants' (including herein
petitioner Valente's) Request for Answer to Written Interrogatories.22 The RTC, Branch
67, resolved the incidents, thus:

From the foregoing uncontroverted facts, this Court is convinced beyond a shadow of
doubt that the Decision of the Supreme Court of September 4, 1992, being the final
arbiter in any judicial dispute, should be implemented for the following reasons:

xxxx

On the request for Answers to Written Interrogatories filed by the defendants, it is

obvious that at this stage of the proceedings where the Supreme Court had already
pronounced the undisputed facts, which binds this court, the answer sought to be
elicited through written interrogatories, therefore, are entirely irrelevant, aside from
having been filed way out of time.

WHEREFORE, premises considered, this court, implements the decision of the Supreme
Court dated September 4, 1992 which mandates that:

"xxx and Civil Case No. 51203 is reinstated only to determine that portion which belongs
to petitioner and to annul the sale with regard to said portion."

In order to enforce such mandate of the Supreme Court, this court orders that:

a. The auction sale of the five (5) parcels of land and all prior and subsequent
proceedings in relation thereto are declared null and void.

b. Transfer Certificate of Title No. 6509 in the name of defendant Valente Raymundo is
also declared null and void, and the Register of Deeds of Rizal, Pasig City, is ordered to
issue a new one in the name of the deceased Marcelo Suarez or to reinstate Transfer
Certificate of Title No. 30680 in the name of Marcelo Suarez.

c. Teofista Suarez is ordered to reimburse the amount of P94,170.00, plus legal interest
from the date of issuance of this order, and failing which, the portion of the estate of
Marcelo Suarez belonging to the surviving spouse, Teofista Suarez, may be levied on
execution.
d. [Herein respondents], including Teofista Suarez, are hereby ordered to submit to this
court any evidence showing settlement of the estate of the deceased, Marcelo Suarez,
in order for this court to determine the portion in the estate which belongs to Teofista
Suarez.

Therein defendants, including petitioner Valente, filed a Motion for Reconsideration

which the trial court denied on May 29, 1996.

3. Order dated September 10, 1996, issued by Judge Santos denying the appeal
interposed by petitioner Valente from the January 22, 1996 and May 29, 1996 Orders,
ruling that these are interlocutory orders, and, therefore, not appealable.23

4. Order dated April 8, 1999, issued by Pairing Judge Santiago Estrella which declared,
thus:

Considering that counsel for the plaintiffs does not have the birth certificates of the
heirs of the plaintiff to prove their affiliation with the deceased which is one of the
matters written in the decision of the higher court which must be complied with, and in
order for counsel for the plaintiffs [herein respondents] to have the opportunity to
complete all documentary evidence and in view of abbreviating the proceedings and as
prayed for, today's scheduled pre-trial is re-set for the last time to May 19, 1999 at 8:30 a
.m.

In this connection, counsel for plaintiffs [herein respondents] is advised to secure all the
documentary evidence she needs material to this case which will expedite the
disposition of this case.24

This last Order and therein defendants' Urgent Motion spawned another contentious
issue between the parties. In this connection, Judge Estrella issued an Order25 requiring
the parties to file their respective position papers due to the "divergent views on the
nature of the hearing that should be conducted in compliance with" our decision in
Suarez. Both parties duly filed their position papers, with herein respondents attaching
thereto a copy of the Extrajudicial Settlement of Estate executed by the heirs of Marcelo
Suarez in 1957.

In resolving this latest crossfire between the parties, the RTC, Branch 67, issued an
Order dated January 11, 2000, which reads, in part:

This Court is of the view that the Honorable Supreme Court is not a trier of facts,
precisely it directed that the records of this case be remanded to the Regional Trial
Court for further proceedings.
xxxx

It is a matter of record that there was no trial on the merits completed in the Regional
Trial Court. xxx The Supreme Court reversed the judgment of the Court of Appeals and
ordered the reinstatement of Civil Case No. 51203. Naturally, there was no trial on the
merits before this Court that allowed the parties to adduce evidence to establish their
respective claims in the plaintiffs' [herein respondents] complaint and in the defendants'
[including petitioner Valente] counter-claim, respectively. It is in this context that the
Honorable Supreme Court reinstated the "action [of herein respondents] to annul the
auction sale to protect their [herein respondents] own interest.

While this Court is of the view that trial on the merits is necessary for the purpose of
giving the plaintiffs [herein respondents] a chance to adduce evidence to sustain their
complaint and the defendants [including petitioner Valente] to prove their defense,
consistent with the directive of the Honorable Supreme Court (in its Decision
promulgated on September 4, 1992), the Court is, however, confronted with the very
recent decision of the Honorable Supreme Court in "Heirs of Guido Yaptinchay, et al. vs.
Del Rosario, et al., G.R. No. 124320, March 2, 1999" where it held that -

The declaration of heirship must be made in an administration proceeding, and not in an

independent civil action. This doctrine was reiterated in Solve vs. Court of Appeals (182
SCRA 119, 128). The trial court cannot make a declaration of heirship in the civil action
for the reason that such a declaration can only be made in a special proceeding. Under
Section 3, Rule 1 of the 1997 Revised Rules of Court, a civil action is defined as "one by
which a party sues another for the enforcement or protection of a right, or the
prevention or redress of a wrong" while a special proceeding is "a remedy by which a
party seeks to establish a status, a right, or a particular fact." It is then decisively clear
that the declaration of heirship can be made only in a special proceeding inasmuch as
the petitioners here are seeking the establishment of a status or right.

In as much as the leading case on the matter is that of "Heirs of Yaptinchay v. Del
Rosario, G.R. No. 124320, March 2, 1999" it is left with no choice but to obey said latter
doctrine.

WHEREFORE, the foregoing premises considered, this Court holds that in the light of the
doctrine laid down in the case of "Heirs of Yaptinchay vs. Del Rosario, G.R. No. 124320,
March 2, 1999" this case is dismissed without prejudice to the plaintiffs' [herein
respondents'] filing a special proceeding consistent with said latest ruling.26

Herein respondents moved for reconsideration thereof which, however, was denied by
the RTC, Branch 67 on March 14, 2000.27
Consequently, herein respondents filed a petition for certioraribefore the CA alleging
grave abuse of discretion in the trial court's order dismissing Civil Case No. 51203
without prejudice. All the defendants in the trial court were impleaded as private
respondents in the petition. Yet, curiously, only petitioner Valente filed a Comment
thereto. The appellate court granted the petition, recalled and set aside RTC, Branch 67's
Orders dated January 11, 2000 and March 14, 2000, and reinstated Judge Santos'
Orders dated May 29, 1996 and September 6, 1996. It disposed of the petition, thus:

We agree with [herein respondents].

On September 4, 1992, the Supreme Court (G.R. No. 94918) reversed the decision of the
Court of Appeals and mandates that Civil Case No. 51203 be reinstated in order to
determine the portion in the estate which belongs to Teofista Suarez. The sale of the
parcels of land was declared null and void. Necessarily, the title (TCT No. 5809) in the
name of respondents was also declared null and void. xxx

xxxx

Hon. Apolinario Santos of Br. 67, Regional Trial Court, Pasig City, on January 22, 1996
and on motion of [herein respondents], issued an order to execute/enforce the decision
of the Supreme Court xxx.

xxxx

[Petitioner Valente, Violeta, Virginia and Maria Concepcion] filed a notice of appeal on
the order of Judge Santos. The appeal, on motion of [herein respondents] was denied on
September 10, 1996. Obviously, the decision of the Supreme Court had become final
and executory. Likewise, both orders of Judge Santos dated May 29, 1996 denying the
motion for reconsideration and the denial of the notice of appeal dated September 6,
1996 had also become final and executory.

The denial of petitioner Valente's Motion for Reconsideration prompted the filing of this
present petition for certiorari.

Petitioner Valente posits that the appellate court committed grave abuse of discretion in
recalling and setting aside the Orders of Judge Estrella and reinstating those of Judge
Santos because:

1. The CA ruled that the Orders dated May 29, 1996 and September 6, 1996 issued by
Judge Santos were final and executory, and yet the latter did not allow an appeal to be
taken therefrom ratiocinating that the questioned orders were interlocutory, and
therefore, not appealable; and
2. The CA ignored and violated the Supreme Court's ruling in Heirs of Yaptinchay v. Del
Rosario28 which held that a declaration of heirship must be made in a special
proceeding and not in a civil action.

We find the petition bereft of merit.

At the outset, we note that petitioner Valente incorrectly filed a petition for certiorari to
appeal the CA decision. Petitioner should have filed a petition for review
on certiorari under Rule 45 of the Rules of Court. Simply imputing in a petition that the
decision sought to be reviewed is tainted with grave abuse of discretion does not
magically transform a petition into a special civil action for certiorari. The CA decision
disposed of the merits of a special civil action, an original petition, filed thereat by herein
respondents. That disposition is a final and executory order, appealable to, and may be
questioned before, this Court by persons aggrieved thereby, such as petitioner Valente,
via Rule 45.

On this score alone, the petition should have been dismissed outright. However, we
have disregarded this procedural flaw and now resolve this case based on the merits or
lack thereof.

Petitioner asseverates that the assailed CA ruling "is unfair and it amounts to a trickery
to prevent an appeal against a final order by claiming that the appealed order is merely
interlocutory and later maintain that the same order has become final after declaring it
to be interlocutory."

We reject petitioner's paltry contention. Petitioner apparently does not comprehend the
distinction between an interlocutory order which is final and executory, and a final order
which disposes of the controversy or case; much less, understand the available
remedies therefrom.

We have defined an interlocutory order as referring to something between the

commencement and the end of the suit which decides some point or matter but it is not
the final decision on the whole controversy.29 It does not terminate or finally dismiss or
finally dispose of the case, but leaves something to be done by the court before the
case is finally decided on the merits.30 Upon the other hand, a final order is one which
leaves to the court nothing more to do to resolve the case.31

On more than one occasion, we laid down the test to ascertain whether an order is
interlocutory or final i.e., "Does it leave something to be done in the trial court with
respect to the merits of the case?" If it does, it is interlocutory; if it does not, it is final.
The key test to what is interlocutory is when there is something more to be done on the
merits of the case.32 The Orders dated May 29, 1996 and September 6, 1996 issued by
Judge Santos are interlocutory, and therefore, not appealable, as they leave something
more to be done on the merits of the case. In fact, in paragraph (d) of Judge Santos'
Order dated May 29, 1996, herein respondents were directed to submit evidence
showing settlement of the estate of the deceased Marcelo Sr.

Contrary to petitioner Valente's stance, there is no trickery or chicanery in the CA's

distinction between an interlocutory and a final order. Indeed, as ruled by the CA, the
RTC Order denying petitioner Valente's Notice of Appeal attained finality when he failed
to file a petition for certiorari under Rule 65 of the Rules of Court.

We cannot overemphasize the rule that the correct identification of the nature of an
assailed order determines the remedies available to an aggrieved party. The old Rules
of Court in Section 2, Rule 41 reads, thus:

SEC. 2. Judgments or orders subject to appeal.-Only final judgments or orders shall be

subject to appeal. No interlocutory or incidental judgment or order shall stay the
progress of an action, nor shall it be the subject of appeal until final judgment or order is
rendered for one party or the other.

xxxx

With the advent of the 1997 Rules of Civil Procedure, Section 1, Rule 41 now provides
for the appropriate remedy to be taken from an interlocutory order, thus:

SECTION 1. Subject of appeal. - An appeal may be taken from a judgment or final order
that completely disposes of the case, or of a particular matter therein when declared by
these Rules to be appealable.

No appeal may be taken from:

xxx

(c) An interlocutory order;

xxx

In all the above instances where the judgment or final order is not appealable, the
aggrieved party may file an appropriate special civil action under Rule 65.

Clearly, the denial of therein defendants' (including petitioner Valente's) appeal from the
Orders dated May 29, 1996 and September 6, 1996 was in order. Thus, the CA decision
affirming the RTC's denial was correct.
Further, on this crucial distinction as applied to this case, petitioner Valente filed a
petition for certiorari from the CA decision in CA-G.R. SP No. 58090, which is not an
interlocutory order. It is a final order which completely disposed of the merits of the
case with nothing more left to be done therein. The correct and available remedy
available to petitioner Valente was, as previously discussed, a petition for review
on certiorari under Rule 45 of the Rules of Court.

In fine, petitioner Valente erroneously sought relief through reversed remedies. He tried
to appeal the interlocutory orders of the RTC which are unappealable. Thus, the RTC
properly denied his Notice of Appeal, and the CA correctly upheld the RTC. He should
have filed a petition for certiorari; under Rule 65. On the other hand, from the final order
of the CA, he comes before this Court on a petition for certiorari under Rule 65, when the
proper remedy is an appeal by certiorari under Rule 45.

In the recent case of Jan-Dec Construction Corporation v. Court of Appeals33 we ruled

in this wise:

As a rule, the remedy from a judgment or final order of the CA is appeal via petition for
review under Rule 45 of the Rules.

Under Rule 45, decisions, final orders or resolutions of the CA in any case, i.e.,
regardless of the nature of the action or proceedings involved, may be appealed to the
Court by filing a petition for review, which would be but a continuation of the appellate
process over the original case. It seeks to correct errors of judgment committed by the
court, tribunal, or officer. In contrast, a special civil action for certiorari under Rule 65 is
an independent action based on the specific grounds therein provided and proper only if
there is no appeal or any plain, speedy and adequate remedy in the ordinary course of
law. It is an extraordinary process for the correction of errors of jurisdiction and cannot
be availed of as a substitute for the lost remedy of an ordinary appeal.

Independently of this procedural infirmity, even on the merits of the case, the petition
does not fare otherwise. It must be dismissed for lack of merit.

Petitioner Valente insists that, following our ruling in Heirs of Yaptinchay v. Del Rosario,
34 herein respondents must first be declared heirs of Marcelo Sr. before they can file an
action to annul the judicial sale of what is, undisputedly, conjugal property of Teofista
and Marcelo Sr.

We disagree. Our ruling in Heirs of Yaptinchay is not applicable.

Herein respondents' status as legitimate children of Marcelo Sr. and Teofista ― and
thus, Marcelo Sr.'s heirs ― has been firmly established, and confirmed by this Court
in Suarez v. Court of Appeals.35 True, this Court is not a trier of facts,36but as the final
arbiter of disputes,37 we found and so ruled that herein respondents are children, and
heirs of their deceased father, Marcelo Sr. This having been settled, it should no longer
have been a litigated issue when we ordered a remand to the lower court. In short,
petitioner Valente's, Violeta's, Virginia's, and Maria Concepcion's representation in the
RTC that our ruling in Suarez required herein respondents to present evidence of their
affiliation with the deceased, Marcelo Sr., is wrong.

As was set forth in the dispositive portion of Suarez, "Civil Case No. 51203 is reinstated
only to determine that portion which belongs to [herein respondents] and to annul the
sale with regard to said portion." There is clearly no intimation in our decision for the
RTC to have to determine an already settled issue i.e., herein respondents' status as
heirs of Marcelo Sr.

Moreover, petitioner Valente cannot assail, directly or indirectly, the status of herein
respondents as legitimate children of Marcelo Sr. and Teofista, and likewise demand
that herein respondents first prove their filiation to Marcelo Sr. The following records
bear out Marcelo, Sr.'s and Teofista's paternity of herein respondents, and the latter's
status as legitimate children:

1. The CA decision in CA-G.R. SP Nos. 10646 to 10649 where Teofista, along with herein
respondents, questioned the RTC, Branch 151's Orders dated October 10, 1984 and
October 14, 1986. Although the CA ruled against Teofista and herein respondents, it
explicitly recognized the latter's status as legitimate children of Teofista and Marcelo Sr
.; and38

2. The CA decision in CA-G.R. SP No. 20320 which incorrectly ruled that herein
respondents were, as children of Teofista, merely successors-in-interest of the latter to
the property and by virtue thereof, bound by the judgment in Civil Case Nos. 21376 to
21379 consistent with the doctrine of res judicata.39 We subsequently reversed this
ruling on the wrong application of res judicata in the conclusive case of Suarez. We
retained and affirmed, however, the CA's factual finding of herein respondents' status as
heirs of Marcelo Sr. We categorically held therein that "the proprietary interest of [herein
respondents] in the levied and auctioned [properties] is different from and adverse to
that of [Teofista]. [Herein respondents] became co-owners of the property not because
of [Teofista] but through their own right as children of their deceased father [, Marcelo
Sr.]."

Clearly, herein respondents' long possessed status of legitimate children of Marcelo Sr.
and Teofista cannot be indirectly or directly attacked by petitioner Valente in an action
to annul a judicial sale.

Articles 262,40 263,41 265 and 26642 of the Civil Code, the applicable law at the time of
Marcelo's death, support the foregoing conclusion, to wit:

Art. 262. The heirs of the husband may impugn the legitimacy of the child only in the
following cases:

(1) If the husband should die before the expiration of the period fixed for bringing his
action;

(2) If the husband should die after the filing of the complaint, without having desisted
from the same;

(3) If the child was born after the death of the husband.

Art. 263. The action to impugn the legitimacy of the child shall be brought within one
year from the recording of birth in the Civil Register, if the husband should be in the
same place, or in a proper case, any of his heirs.

If he or his heirs are absent, the period shall be eighteen months if they should reside in
the Philippines; and two years if abroad. If the birth of the child has been concealed, the
term shall be counted from the discovery of the fraud.

Art. 265. The filiation of legitimate children is proved by the record of birth appearing in
the Civil Register, or by an authentic document or a final judgment.

Art. 266. In the absence of the titles indicated in the preceding article, the filiation shall
be proved by the continuous possession of status of a legitimate child.

In Heirs of Yaptinchay, the complaint for annulment and/or declaration of nullity of

certain TCT's was dismissed for failure of the petitioners to demonstrate "any proof or
even a semblance of it" that they had been declared the legal heirs of the deceased
couple, the spouses Yaptinchay. In stark contrast, the records of this case reveal a
document, an Extrajudicial Settlement of Marcelo Sr.'s estate, which explicitly
recognizes herein respondents as Marcelo Sr.'s legitimate children and heirs. The same
document settles and partitions the estate of Marcelo Sr. specifying Teofista's
paraphernal properties, and separates the properties she owns in common with her
children, herein respondents. Plainly, there is no need to re-declare herein respondents
as heirs of Marcelo Sr., and prolong this case interminably.

Petitioner Valente, along with Violeta, Virginia and Maria Concepcion, became owners of
the subject properties only by virtue of an execution sale to recover Teofista's judgment
obligation. This judgment obligation is solely Teofista's, and payment therefor cannot be
made through an execution sale of properties not absolutely owned by her. These
properties were evidently conjugal properties and were, in fact, even titled in the name
of Marcelo, Sr. married to Teofista. Thus, upon Marcelo Sr.'s death, by virtue of
compulsory succession, Marcelo Sr.'s share in the conjugal partnership was transmitted
by operation of law to his compulsory heirs.

Compulsory succession is a distinct kind of succession, albeit not categorized as such

in Article 77843 of the Civil Code. It reserves a portion of the net estate of the decedent
in favor of certain heirs, or group of heirs, or combination of heirs, prevailing over all
kinds of succession.44 The portion that is so reserved is the legitime. Article 886 of the
Civil Code defines legitime as "that part of the testator's property which he cannot
dispose of because the law has reserved it for certain heirs who are, therefore, called
compulsory heirs." Herein respondents are primary compulsory heirs,45excluding
secondary compulsory heirs,46 and preferred over concurring compulsory heirs in the
distribution of the decedent's estate.47

Even without delving into the Extrajudicial Settlement of Marcelo Sr.'s estate in 1957, it
must be stressed that herein respondents' rights to the succession vested from the
moment of their father's death.48 Herein respondents' ownership of the subject
properties is no longer inchoate; it became absolute upon Marcelo's death, although
their respective shares therein remained pro indiviso. Ineluctably, at the time the subject
properties were sold on execution sale to answer for Teofista's judgment obligation, the
inclusion of herein respondents' share therein was null and void.

In fine, Teofista's ownership over the subject properties is not absolute. Significantly,
petitioner Valente does not even attempt to dispute the conjugal nature of the subject
properties. Since Teofista owns only a portion of the subject properties, only that portion
could have been, and was actually, levied upon and sold on auction by the provincial
sheriff of Rizal. Thus, a separate declaration of heirship by herein respondents is not
necessary to annul the judicial sale of their share in the subject properties.

We note the recent case of Portugal v. Portugal-Beltran,49where we scrutinized our

rulings in Heirs of Yaptinchay and the cited cases of Litam v. Rivera50 and Solivio v.
Court of Appeals,51 and Guilas v. CFI Judge of Pampanga52 cited in Solivio. We ruled
thus:

The common doctrine in Litam, Solivio and Guilas in which the adverse parties are

putative heirs to the estate of a decedent or parties to the special proceedings for its
settlement is that if the special proceedings are pending, or if there are no special
proceedings filed but there is, under the circumstances of the case, a need to file one,
then the determination of, among other issues, heirship should be raised and settled in
said special proceedings. Where special proceedings had been instituted but had been
finally closed and terminated, however, or if a putative heirs has lost the right to have
himself declared in the special proceedings as co-heir and he can no longer ask for its
re-opening, then an ordinary civil action can be filed for his declaration as heir in order to
bring about the annulment of the partition or distribution or adjudication of a property or
properties belonging to the estate of the deceased.

In the case at bar, respondent, believing rightly or wrongly that she was the sole heir to
Portugal's estate, executed on February 15, 1988 the questioned Affidavit of
Adjudication under the second sentence of Rule 74, Section of the Revised Rules of
Court. Said rule is an exception to the general rule that when a person dies leaving
property, it should be judicially administered and the competent court should appoint a
qualified administrator, in the order established in Sec. 6, Rule 78 in case the deceased
left no will, or in case he did, he failed to name an executor therein.

xxx

It appearing, however, that in the present case the only property of the intestate estate
of Portugal is the Caloocan parcel of land, to still subject it, under the circumstances of
the case, to a special proceeding which could be long, hence, not expeditious, just to
establish the status of petitioners as heirs is not only impractical; it is burdensome to
the estate with the costs and expenses of an administration proceedings. And it is
superfluous in light of the fact that the parties to the civil case-subject of the present
case, could and had already in fact presented evidence before the trial court which
assumed jurisdiction over the case upon the issues it defined during pre-trial.

In fine, under the circumstances of the present case, there being no compelling reason
to still subject Portugal's estate to administration proceedings since a determination of
petitioners' status as heirs could be achieved in the civil case filed by petitioners xxx.53

All told, under the circumstances, in addition to the already settled status of herein
respondents as heirs of Marcelo Sr., there is no need to dismiss Civil Case No. 51203
and require herein respondents to institute a separate special proceeding for a
declaration of their heirship.

WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of
Appeals in CA-G.R. SP No. 58090 is AFFIRMED. The Orders dated May 29, 1996 and
September 6, 1996 issued by Judge Santos are REINSTATED. Costs against the
petitioner.
SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice

G.R. No. 82027 March 29, 1990

ROMARICO G. VITUG, petitioner, 
vs.
THE HONORABLE COURT OF APPEALS and ROWENA FAUSTINO-CORONA,
 respondents.

Rufino B. Javier Law Office for petitioner.

Quisumbing, Torres & Evangelista for private respondent.

SARMIENTO, J.:

This case is a chapter in an earlier suit decided by this Court 1 involving the probate of
the two wills of the late Dolores Luchangco Vitug, who died in New York, U. S.A., on
November 10, 1980, naming private respondent Rowena Faustino-Corona executrix. In
our said decision, we upheld the appointment of Nenita Alonte as co-special
administrator of Mrs. Vitug's estate with her (Mrs. Vitug's) widower, petitioner Romarico
G. Vitug, pending probate.

On January 13, 1985, Romarico G. Vitug filed a motion asking for authority from the
probate court to sell certain shares of stock and real properties belonging to the estate
to cover allegedly his advances to the estate in the sum of P667,731.66, plus interests,
which he claimed were personal funds. As found by the Court of Appeals, 2the alleged
advances consisted of P58,147.40 spent for the payment of estate tax, P518,834.27 as
deficiency estate tax, and P90,749.99 as "increment thereto." 3According to Mr. Vitug,
he withdrew the sums of P518,834.27 and P90,749.99 from savings account No. 35342-
038 of the Bank of America, Makati, Metro Manila.

On April 12, 1985, Rowena Corona opposed the motion to sell on the ground that the
same funds withdrawn from savings account No. 35342-038 were conjugal partnership
properties and part of the estate, and hence, there was allegedly no ground for
reimbursement. She also sought his ouster for failure to include the sums in question
for inventory and for "concealment of funds belonging to the estate." 4

Vitug insists that the said funds are his exclusive property having acquired the same
through a survivorship agreement executed with his late wife and the bank on June 19,
1970. The agreement provides:

We hereby agree with each other and with the BANK OF AMERICAN NATIONAL TRUST
AND SAVINGS ASSOCIATION (hereinafter referred to as the BANK), that all money now
or hereafter deposited by us or any or either of us with the BANK in our joint savings
current account shall be the property of all or both of us and shall be payable to and
collectible or withdrawable by either or any of us during our lifetime, and after the death
of either or any of us shall belong to and be the sole property of the survivor or survivors
, and shall be payable to and collectible or withdrawable by such survivor or survivors.

We further agree with each other and the BANK that the receipt or check of either, any or
all of us during our lifetime, or the receipt or check of the survivor or survivors, for any
payment or withdrawal made for our above-mentioned account shall be valid and
sufficient release and discharge of the BANK for such payment or withdrawal. 5

The trial courts 6 upheld the validity of this agreement and granted "the motion to sell
some of the estate of Dolores L. Vitug, the proceeds of which shall be used to pay the
personal funds of Romarico Vitug in the total sum of P667,731.66 ... ." 7

On the other hand, the Court of Appeals, in the petition for certiorari filed by the herein
private respondent, held that the above-quoted survivorship agreement constitutes a
conveyance mortis causa which "did not comply with the formalities of a valid will as
prescribed by Article 805 of the Civil Code," 8 and secondly, assuming that it is a mere
donation inter vivos, it is a prohibited donation under the provisions of Article 133 of the
Civil Code. 9

The dispositive portion of the decision of the Court of Appeals states:

WHEREFORE, the order of respondent Judge dated November 26, 1985 (Annex II,
petition) is hereby set aside insofar as it granted private respondent's motion to sell
certain properties of the estate of Dolores L. Vitug for reimbursement of his alleged
advances to the estate, but the same order is sustained in all other respects. In addition,
respondent Judge is directed to include provisionally the deposits in Savings Account
No. 35342-038 with the Bank of America, Makati, in the inventory of actual properties
possessed by the spouses at the time of the decedent's death. With costs against
private respondent. 10

In his petition, Vitug, the surviving spouse, assails the appellate court's ruling on the
strength of our decisions in Rivera v. People's Bank and Trust Co. 11 and Macam v.
Gatmaitan 12 in which we sustained the validity of "survivorship agreements" and
considering them as aleatory contracts. 13

The petition is meritorious.

The conveyance in question is not, first of all, one of mortis causa, which should be
embodied in a will. A will has been defined as "a personal, solemn, revocable and free
act by which a capacitated person disposes of his property and rights and declares or
complies with duties to take effect after his death." 14 In other words, the bequest or
device must pertain to the testator. 15 In this case, the monies subject of savings
account No. 35342-038 were in the nature of conjugal funds In the case relied on, Rivera
v. People's Bank and Trust Co., 16 we rejected claims that a survivorship agreement
purports to deliver one party's separate properties in favor of the other, but simply, their
joint holdings:

xxx xxx xxx

... Such conclusion is evidently predicated on the assumption that Stephenson was the
exclusive owner of the funds-deposited in the bank, which assumption was in turn
based on the facts (1) that the account was originally opened in the name of
Stephenson alone and (2) that Ana Rivera "served only as housemaid of the deceased."
But it not infrequently happens that a person deposits money in the bank in the name of
another; and in the instant case it also appears that Ana Rivera served her master for
about nineteen years without actually receiving her salary from him. The fact that
subsequently Stephenson transferred the account to the name of himself and/or Ana
Rivera and executed with the latter the survivorship agreement in question although
there was no relation of kinship between them but only that of master and servant,
nullifies the assumption that Stephenson was the exclusive owner of the bank account.
In the absence, then, of clear proof to the contrary, we must give full faith and credit to
the certificate of deposit which recites in effect that the funds in question belonged to
Edgar Stephenson and Ana Rivera; that they were joint (and several) owners thereof; and
that either of them could withdraw any part or the whole of said account during the
lifetime of both, and the balance, if any, upon the death of either, belonged to the
survivor. 17

xxx xxx xxx

In Macam v. Gatmaitan, 18 it was held:

xxx xxx xxx

This Court is of the opinion that Exhibit C is an aleatory contract whereby, according to
article 1790 of the Civil Code, one of the parties or both reciprocally bind themselves to
give or do something as an equivalent for that which the other party is to give or do in
case of the occurrence of an event which is uncertain or will happen at an indeterminate
time. As already stated, Leonarda was the owner of the house and Juana of the Buick
automobile and most of the furniture. By virtue of Exhibit C, Juana would become the
owner of the house in case Leonarda died first, and Leonarda would become the owner
of the automobile and the furniture if Juana were to die first. In this manner Leonarda
and Juana reciprocally assigned their respective property to one another conditioned
upon who might die first, the time of death determining the event upon which the
acquisition of such right by the one or the other depended. This contract, as any other
contract, is binding upon the parties thereto. Inasmuch as Leonarda had died before
Juana, the latter thereupon acquired the ownership of the house, in the same manner as
Leonarda would have acquired the ownership of the automobile and of the furniture if
Juana had died first. 19

xxx xxx xxx

There is no showing that the funds exclusively belonged to one party, and hence it must
be presumed to be conjugal, having been acquired during the existence of the marita.
relations. 20

Neither is the survivorship agreement a donation inter vivos, for obvious reasons,

because it was to take effect after the death of one party. Secondly, it is not a donation
between the spouses because it involved no conveyance of a spouse's own properties
to the other.

It is also our opinion that the agreement involves no modification petition of the
conjugal partnership, as held by the Court of Appeals, 21 by "mere stipulation" 22 and
that it is no "cloak" 23 to circumvent the law on conjugal property relations. Certainly,
the spouses are not prohibited by law to invest conjugal property, say, by way of a joint
and several bank account, more commonly denominated in banking parlance as an "
and/or" account. In the case at bar, when the spouses Vitug opened savings account No
. 35342-038, they merely put what rightfully belonged to them in a money-making
venture. They did not dispose of it in favor of the other, which would have arguably been
sanctionable as a prohibited donation. And since the funds were conjugal, it can not be
said that one spouse could have pressured the other in placing his or her deposits in the
money pool.

The validity of the contract seems debatable by reason of its "survivor-take-all" feature,
but in reality, that contract imposed a mere obligation with a term, the term being death.
Such agreements are permitted by the Civil Code. 24

Under Article 2010 of the Code:

ART. 2010. By an aleatory contract, one of the parties or both reciprocally bind
themselves to give or to do something in consideration of what the other shall give or
do upon the happening of an event which is uncertain, or which is to occur at an
indeterminate time.

Under the aforequoted provision, the fulfillment of an aleatory contract depends on

either the happening of an event which is (1) "uncertain," (2) "which is to occur at an
indeterminate time." A survivorship agreement, the sale of a sweepstake ticket, a
transaction stipulating on the value of currency, and insurance have been held to fall
under the first category, while a contract for life annuity or pension under Article 2021,
 et sequentia, has been categorized under the second. 25 In either case, the element of
risk is present. In the case at bar, the risk was the death of one party and survivorship of
the other.

However, as we have warned:

xxx xxx xxx

But although the survivorship agreement is per se not contrary to law its operation or
effect may be violative of the law. For instance, if it be shown in a given case that such
agreement is a mere cloak to hide an inofficious donation, to transfer property in fraud
of creditors, or to defeat the legitime of a forced heir, it may be assailed and annulled
upon such grounds. No such vice has been imputed and established against the
agreement involved in this case. 26

xxx xxx xxx

There is no demonstration here that the survivorship agreement had been executed for
such unlawful purposes, or, as held by the respondent court, in order to frustrate our
laws on wills, donations, and conjugal partnership.

The conclusion is accordingly unavoidable that Mrs. Vitug having predeceased her
husband, the latter has acquired upon her death a vested right over the amounts under
savings account No. 35342-038 of the Bank of America. Insofar as the respondent court
ordered their inclusion in the inventory of assets left by Mrs. Vitug, we hold that the
court was in error. Being the separate property of petitioner, it forms no more part of the
estate of the deceased.

WHEREFORE, the decision of the respondent appellate court, dated June 29, 1987, and
its resolution, dated February 9, 1988, are SET ASIDE.

No costs.

SO ORDERED.

Melencio-Herrera (Chairperson), Paras, Padilla and Regalado JJ., concur.

FACTS: This case is a chapter in an earlier suit decided by this Court involving the
probate of the two wills of the late Dolores Luchangco Vitug, who died in New York, U. S.
A. naming private respondent Rowena Faustino-Corona executrix. In said decision, the
court upheld the appointment of Nenita Alonte as co-special administrator of Mrs.
Vitug’s estate with her (Mrs. Vitug’s) widower, petitioner Romarico G. Vitug, pending
probate.

Romarico G. Vitug filed a motion asking for authority from the probate court to sell
certain shares of stock and real properties belonging to the estate to cover allegedly his
advances to the estate, plus interests, which he claimed were personal funds. As found
by the CA the alleged advances were spent for the payment of estate tax, deficiency
estate tax, and “increment thereto.”

Rowena Corona opposed the motion to sell on the ground that the same funds
withdrawn were conjugal partnership properties and part of the estate, and hence, there
was allegedly no ground for reimbursement. She also sought his ouster for failure to
include the sums in question for inventory and for “concealment of funds belonging to
the estate.”

Vitug insists that the said funds are his exclusive property having acquired the same
through a survivorship agreement executed with his late wife and the bank.

The trial courts upheld the validity of such agreement.

On the other hand, the CA held that the survivorship agreement constitutes a
conveyance mortis causa which “did not comply with the formalities of a valid will as
prescribed by Article 805 of the Civil Code,” and secondly, assuming that it is a mere
donation inter vivos, it is a prohibited donation under the provisions of Article 133 of the
Civil Code.
ISSUE: W/N the survivorship agreement between the spouses Vitug constitutes a
donation?

HELD: NO. The conveyance in question is not, first of all, one of mortis causa, which
should be embodied in a will. A will has been defined as “a personal, solemn, revocable
and free act by which a capacitated person disposes of his property and rights and
declares or complies with duties to take effect after his death.” In other words, the
bequest or device must pertain to the testator. In this case, the monies subject of
savings account No. 35342-038 were in the nature of conjugal funds In the case relied
on, Rivera v. People’s Bank and Trust Co., we rejected claims that a survivorship
agreement purports to deliver one party’s separate properties in favor of the other, but
simply, their joint holdings.

There is no showing that the funds exclusively belonged to one party, and hence it must
be presumed to be conjugal, having been acquired during the existence of the marital
relations.

Neither is the survivorship agreement a donation inter vivos, for obvious reasons,
because it was to take effect after the death of one party. Secondly, it is not a donation
between the spouses because it involved no conveyance of a spouse’s own properties
to the other.

It is also our opinion that the agreement involves no modification petition of the
conjugal partnership, as held by the Court of Appeals, by “mere stipulation”  and that it is
no “cloak” to circumvent the law on conjugal property relations. Certainly, the spouses
are not prohibited by law to invest conjugal property, say, by way of a joint and several
bank account, more commonly denominated in banking parlance as an “and/or”
account. In the case at bar, when the spouses Vitug opened savings account No. 35342-
038, they merely put what rightfully belonged to them in a money-making venture. They
did not dispose of it in favor of the other, which would have arguably been sanctionable
as a prohibited donation.

The conclusion is accordingly unavoidable that Mrs. Vitug having predeceased her
husband, the latter has acquired upon her death a vested right over the amounts under
savings account No. 35342-038 of the Bank of America. Insofar as the respondent court
ordered their inclusion in the inventory of assets left by Mrs. Vitug, we hold that the
court was in error. Being the separate property of petitioner, it forms no more part of the
estate of the deceased.