succesion 1st batch of cases.docx

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SECOND DIVISIONG.R. No. 149926 February 23, 2005UNION BANK OF THE PHILIPPINES, petitioner,vs.EDMUND SANTIBAEZ and FLORENCE SANTIBAEZ ARIOLA, respondents.D E C I S I O N

CALLEJO, SR.,J.:

Before us is a petition for review on certiorari under Rule 45 of the Revised Rules of Court which seeks thereversal of the Decision1of the Court of Appeals dated May 30, 2001 in CA-G.R. CV No. 48831 affirming the

dismissal2of the petitioners complaint in Civil Case No. 18909 by the Regional Trial Court (RTC) of Makati City,

Branch 63.

The antecedent facts are as follows:

On May 31, 1980, the First Countryside Credit Corporation (FCCC) and Efraim M. Santibaez entered into a loanagreement3in the amount of P128,000.00. The amount was intended for the payment of the purchase price of

one (1) unit Ford 6600 Agricultural All-Purpose Diesel Tractor. In view thereof, Efraim and his son, Edmund,executed a promissory note in favor of the FCCC, the principal sum payable in five equal annual amortizationsof P43,745.96 due on May 31, 1981 and every May 31st thereafter up to May 31, 1985.

On December 13, 1980, the FCCC and Efraim entered into another loan agreement,4this time in the amount

ofP123,156.00. It was intended to pay the balance of the purchase price of another unit of Ford 6600 Agricultural

All-Purpose Diesel Tractor, with accessories, and one (1) unit Howard Rotamotor Model AR 60K. Again, Efraimand his son, Edmund, executed a promissory note for the said amount in favor of the FCCC. Aside from such

promissory note, they also signed a Continuing Guaranty Agreement5

for the loan dated December 13, 1980.

Sometime in February 1981, Efraim died, leaving a holographic will.6Subsequently in March 1981, testate

proceedings commenced before the RTC of Iloilo City, Branch 7, docketed as Special Proceedings No. 2706. OnApril 9, 1981, Edmund, as one of the heirs, was appointed as the special administrator of the estate of thedecedent.7During the pendency of the testate proceedings, the surviving heirs, Edmund and his sister Florence

Santibaez Ariola, executed a Joint Agreement8dated July 22, 1981, wherein they agreed to divide between

themselves and take possession of the three (3) tractors; that is, two (2) tractors for Edmund and one (1) tractorfor Florence. Each of them was to assume the indebtedness of their late father to FCCC, corresponding to thetractor respectively taken by them.

On August 20, 1981, a Deed of Assignment with Assumption of Liabilities 9was executed by and between FCCCand Union Savings and Mortgage Bank, wherein the FCCC as the assignor, among others, assigned all its assetsand liabilities to Union Savings and Mortgage Bank.

Demand letters10for the settlement of his account were sent by petitioner Union Bank of the Philippines (UBP)to Edmund, but the latter failed to heed the same and refused to pay. Thus, on February 5, 1988, the petitionerfiled a Complaint

11for sum of money against the heirs of Efraim Santibaez, Edmund and Florence, before the

RTC of Makati City, Branch 150, docketed as Civil Case No. 18909. Summonses were issued against both, but theone intended for Edmund was not served since he was in the United States and there was no information on hisaddress or the date of his return to the Philippines .

12Accordingly, the complaint was narrowed down to

respondent Florence S. Ariola.

On December 7, 1988, respondent Florence S. Ariola filed her Answer13and alleged that the loan docum

not bind her since she was not a party thereto. Considering that the joint agreement signed by her abrother Edmund was not approved by the probate court, it was null and void; hence, she was not liablepetitioner under the joint agreement.

On January 29, 1990, the case was unloaded and re- raffled to the RTC of Makati City, Branch 63.14

Consetrial on the merits ensued and a decision was subsequently rendered by the court dismissing the comp

lack of merit. The decretal portion of the RTC decision reads:

WHEREFORE, judgment is hereby rendered DISMISSING the complaint for lack of merit.15

The trial court found that the claim of the petitioner should have been filed with the probate court befothe testate estate of the late Efraim Santibaez was pending, as the sum of money being claimed

obligation incurred by the said decedent. The trial court also found that the Joint Agreement apexecuted by his heirs, Edmund and Florence, on July 22, 1981, was, in effect, a partition of the estatdecedent. However, the said agreement was void, considering that it had not been approved by the court, and that there can be no valid partition until after the will has been probated. The trial court declared that petitioner failed to prove that it was the now defunct Union Savings and Mortgage Bank tthe FCCC had assigned its assets and liabilities. The court also agreed to the contention of respondent FloAriola that the list of assets and liabilities of the FCCC assigned to Union Savings and Mortgage Bankclearly refer to the decedents account. Ruling that the joint agreement executed by the heirs was null a

the trial court held that the petitioners cause of action against respondent Florence S. Ariola must ne

fail.

The petitioner appealed from the RTC decision and elevated its case to the Court of Appeals (CA), assign

following as errors of the trial court:

1. THE COURTA QUOERRED IN FINDING THAT T HE JOINT AGREEMENT (EXHIBIT A) SHO

APPROVED BY THE PROBATE COURT.

2. THE COURTA QUOERRED IN FINDING THAT THERE CAN BE NO VALID PARTITION AMONG THUNTIL AFTER THE WILL HAS BEEN PROBATED.

3. THE COURTA QUO ERRED IN NOT FINDING THAT THE DEFENDANT HAD WAIVED HER R

HAVE THE CLAIM RE-LITIGATED IN THE ESTATE PROCEEDING.16

The petitioner asserted before the CA that the obligation of the deceased had passed to his legitimate and heirs, in this case, Edmund and Florence; the unconditional signing of the joint agreement marked a

"A" estopped respondent Florence S. Ariola, and that she cannot deny her liability under the said docum

the agreement had been signed by both heirs in their personal capacity, it was no longer necessary to the same before the probate court for approval; the property partitioned in the agreement was not one enumerated in the holographic will made by the deceased; and the active participation of the heirs, parrespondent Florence S. Ariola, in the present ordinary civil action was tantamount to a waiver to re-litig

claim in the estate proceedings.
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On the other hand, respondent Florence S. Ariola maintained that the money claim of the petitioner should have

been presented before the probate court.17

The appellate court found that the appeal was not meritorious and held that the petitioner should have filed itsclaim with the probate court as provided under Sections 1 and 5, Rule 86 of the Rules of Court. It further heldthat the partition made in the agreement was null and void, since no valid partition may be had until after thewill has been probated. According to the CA, page 2, paragraph (e) of the holographic will covered the subject

properties (tractors) in generic terms when the deceased referred to them as "all other properties." Moreover,the active participation of respondent Florence S. Ariola in the case did not amount to a waiver. Thus, the CAaffirmed the RTC decision, viz.:

WHEREFORE, premises considered, the appealed Decision of the Regional Trial Court of Makati City, Branch 63, ishereby AFFIRMED in toto.

SO ORDERED.18

In the present recourse, the petitioner ascribes the following errors to the CA:

I.

THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THE JOINT AGREEMENT SHOULD BE APPROVEDBY THE PROBATE COURT.

II.

THE COURT OF APPEALS ERRED IN FINDING THAT THERE CAN BE NO VALID PARTITION AMONG THE HEIRS OFTHE LATE EFRAIM SANTIBAEZ UNTIL AFTER THE WILL HAS BEEN PROBATED.

III.

THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE RESPONDENT HAD WAIVED HER RIGHT TO HAVE THECLAIM RE-LITIGATED IN THE ESTATE PROCEEDING.

IV.

RESPONDENTS CAN, IN FACT, BE HELD JOINTLY AND SEVERALLY LIABLE WITH THE PRINCIPAL DEBTOR THE LATEEFRAIM SANTIBAEZ ON THE STRENGTH OF THE CONTINUING GUARANTY AGREEMENT EXECUTED IN FAVOR OFPETITIONER-APPELLANT UNION BANK.

V.

THE PROMISSORY NOTES DATED MAY 31, 1980 IN THE SUM OF P128,000.00 AND DECEMBER 13, 1980 IN THE

AMOUNT OF P123,000.00 CATEGORICALLY ESTABLISHED THE FACT THAT THE RESPONDENTS BOUND

THEMSELVES JOINTLY AND SEVERALLY LIABLE WITH THE LATE DEBTOR EFRAIM SANTIBAEZ IN FAVOR OFPETITIONER UNION BANK.19

The petitioner claims that the obligations of the deceased were transmitted to the heirs as provided in

774 of the Civil Code; there was thus no need for the probate court to approve the joint agreement whheirs partitioned the tractors owned by the deceased and assumed the obligations related theretorespondent Florence S. Ariola signed the joint agreement without any condition, she is now estoppasserting any position contrary thereto. The petitioner also points out that the holographic will of the ddid not include nor mention any of the tractors subject of the complaint, and, as such was beyond the athe said will. The active participation and resistance of respondent Florence S. Ariola in the ordinary civagainst the petitioners claim amounts to a waiver of the right to have the claim presented in the

proceedings, and to allow any one of the heirs who executed the joint agreement to escape liability tovalue of the tractors under consideration would be equivalent to allowing the said heirs to enrich themsthe damage and prejudice of the petitioner.

The petitioner, likewise, avers that the decisions of both the trial and appellate courts failed to considerthat respondent Florence S. Ariola and her brother Edmund executed loan documents, all estathe vinculum jurisor the legal bond between the late Efraim Santibaez and his heirs to be in the natsolidary obligation. Furthermore, the Promissory Notes dated May 31, 1980 and December 13, 1980 exethe late Efraim Santibaez, together with his heirs, Edmund and respondent Florence, made the obsolidary as far as the said heirs are concerned. The petitioner also proffers that, considering the provisions of the continuing guaranty agreement and the promissory notes executed by the named respothe latter must be held liable jointly and severally liable thereon. Thus, there was no need for the petitfile its money claim before the probate court. Finally, the petitioner stresses that both surviving heirs arsued in their respective personal capacities, not as heirs of the deceased.

In her comment to the petition, respondent Florence S. Ariola maintains that the petitioner is trying to rsum of money from the deceased Efraim Santibaez; thus the claim should have been filed with the court. She points out that at the time of the execution of the joint agreement there was already an probate proceedings of which the petitioner knew about. However, to avoid a claim in the probate courmight delay payment of the obligation, the petitioner opted to require them to execute tagreement.1a\^/phi1.net

According to the respondent, the trial court and the CA did not err in declaring that the agreement was void. She asserts that even if the agreement was voluntarily executed by her and her brother Edmund, istill have been subjected to the approval of the court as it may prejudice the estate, the heirs or third

Furthermore, she had not waived any rights, as she even stated in her answer in the court a quothat tshould be filed with the probate court. Thus, the petitioner could not invoke or claim that she is in estopp

Respondent Florence S. Ariola further asserts that she had not signed any continuing guaranty agreeme

was there any document presented as evidence to show that she had caused herself to be boundobligation of her late father.

The petition is bereft of merit.

The Court is posed to resolve the following issues: a) whether or not the partition in the Agreement exethe heirs is valid; b) whether or not the heirs assumption of the indebtedness of the deceased is validwhether the petitioner can hold the heirs liable on the obligation of the deceased.1awphi1.nt
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At the outset, well-settled is the rule that a probate court has the jurisdiction to determine all the properties of

the deceased, to determine whether they should or should not be included in the inventory or list of propertiesto be administered.20The said court is primarily concerned with the administration, liquidation and distributionof the estate.21

In our jurisdiction, the rule is that there can be no valid partition among the heirs until after the will has beenprobated:

In testate succession, there can be no valid partition among the heirs until after the will has been probated. Thelaw enjoins the probate of a will and the public requires it, because unless a will is probated and notice thereofgiven to the whole world, the right of a person to dispose of his property by will may be rendered nugatory. The

authentication of a will decides no other question than such as touch upon the capacity of the testator and thecompliance with those requirements or solemnities which the law prescribes for the validity of a will.22

This, of course, presupposes that the properties to be partitioned are the same properties embraced in thewill.23In the present case, the deceased, Efraim Santibaez, left a holographic will24which contained, inter alia,the provision which reads as follows:

(e) All other properties, real or personal, which I own and may be discovered later after my demise, shall be

distributed in the proportion indicated in the immediately preceding paragraph in favor of Edmund and Florence,my children.

We agree with the appellate court that the above-quoted is an all-encompassing provision embracing all theproperties left by the decedent which might have escaped his mind at that time he was making his will, andother properties he may acquire thereafter. Included therein are the three (3) subject tractors. This being so, any

partition involving the said tractors among the heirs is not valid. The joint agreement25executed by Edmund andFlorence, partitioning the tractors among themselves, is invalid, specially so since at the time of its execution,there was already a pending proceeding for the probate of their late fathers holographic will covering the said

tractors.

It must be stressed that the probate proceeding had already acquired jurisdiction over all the properties of thedeceased, including the three (3) tractors. To dispose of them in any way without the probate courts approval is

tantamount to divesting it with jurisdiction which the Court cannot allow.26

Every act intended to put an end toindivision among co-heirs and legatees or devisees is deemed to be a partition, although it should purport to bea sale, an exchange, a compromise, or any other transaction.

27Thus, in executing any joint agreement which

appears to be in the nature of an extra-judicial partition, as in the case at bar, court approval is imperative, andthe heirs cannot just divest the court of its jurisdiction over that part of the estate. Moreover, it is within the

jurisdiction of the probate court to determine the identity of the heirs of the decedent.28

In the instant case,there is no showing that the signatories in the joint agreement were the only heirs of the decedent. When it wasexecuted, the probate of the will was still pending before the court and the latter had yet to determine who the

heirs of the decedent were. Thus, for Edmund and respondent Florence S. Ariola to adjudicate unto themselvesthe three (3) tractors was a premature act, and prejudicial to the other possible heirs and creditors who mayhave a valid claim against the estate of the deceased.

The question that now comes to fore is whether the heirs assumption of the indebtedness of the decedent is

binding. We rule in the negative. Perusing the joint agreement, it provides that the heirs as parties thereto "haveagreed to divide between themselves and take possession and use the above-described chattel and each of them

to assume the indebtedness corresponding to the chattel taken as herein after stated which is in favor

Countryside Credit Corp."29

The assumption of liability was conditioned upon the happening of an eventthat each heir shall take possession and use of their respective share under the agreement. It wadependent on the validity of the partition, and that they were to assume the indebtedness correspondinchattel that they were each to receive. The partition being invalid as earlier discussed, the heirs in effecreceive any such tractor. It follows then that the assumption of liability cannot be given any force and eff

The Court notes that the loan was contracted by the decedent.l^vvphi1.netThe petitioner, purportedly aof the late Efraim Santibaez, should have thus filed its money claim with the probate court in accordanSection 5, Rule 86 of the Revised Rules of Court, which provides:

Section 5. Claims which must be filed under the notice. If not filed barred; exceptions . All claims foagainst the decedent, arising from contract, express or implied, whether the same be due, not contingent, all claims for funeral expenses for the last sickness of the decedent, and judgment for moneythe decedent, must be filed within the time limited in the notice; otherwise they are barred forever, excthey may be set forth as counterclaims in any action that the executor or administrator may bring agaclaimants. Where an executor or administrator commences an action, or prosecutes an action commenced by the deceased in his lifetime, the debtor may set forth by answer the claims he has agadecedent, instead of presenting them independently to the court as herein provided, and mutual claims

set off against each other in such action; and if final judgment is rendered in favor of the defendant, theso determined shall be considered the true balance against the estate, as though the claim had been pr

directly before the court in the administration proceedings. Claims not yet due, or contingent, may be aat their present value.

The filing of a money claim against the decedents estate in the probate court is mandatory .30As we he

vintage case of Py Eng Chong v. Herrera:

31

This requirement is for the purpose of protecting the estate of the deceased by informing the exeadministrator of the claims against it, thus enabling him to examine each claim and to determine whethproper one which should be allowed. The plain and obvious design of the rule is the speedy settlemenaffairs of the deceased and the early delivery of the property to the distributees, legatees, or heirs. `Tstrictly requires the prompt presentation and disposition of the claims against the decedent's estate in settle the affairs of the estate as soon as possible, pay off its debts and distribute the residue.

32

Perusing the records of the case, nothing therein could hold private respondent Florence S. Ariola accofor any liability incurred by her late father. The documentary evidence presented, particularly the pronotes and the continuing guaranty agreement, were executed and signed only by the late Efraim Santibahis son Edmund. As the petitioner failed to file its money claim with the probate court, at most, it may after Edmund as co-maker of the decedent under the said promissory notes and continuing guaranty, osubject to any defenses Edmund may have as against the petitioner. As the court had not acquired juri

over the person of Edmund, we fi nd it unnecessary to delve into the matter further.

We agree with the finding of the trial court that the petitioner had not sufficiently shown that it i s the suin-interest of the Union Savings and Mortgage Bank to which the FCCC assigned its assets and liabilitiepetitioner in its complaint alleged that "by virtue of the Deed of Assignment dated August 20, 1981 execand between First Countryside Credit Corporation and Union Bank of the Philippines "

34Howedocumentary evidence35clearly reflects that the parties in the deed of assignment with assumption of li
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were the FCCC, and the Union Savings and Mortgage Bank, with the conformity of Bancom Philippine Holdings,Inc. Nowhere can the petitioners participation therein as a party be found. Furthermore, no documentary or

testimonial evidence was presented during trial to show that Union Savings and Mortgage Bank is now, in fact,petitioner Union Bank of the Philippines. As the trial court declared in its decision:

*T+he court also finds merit to the contention of defendant that plaintiff failed to prove or did not present

evidence to prove that Union Savings and Mortgage Bank is now the Union Bank of the Philippines. Judicial

notice does not apply here. "The power to take judicial notice is to [be] exercised by the courts with caution;care must be taken that the requisite notoriety exists; and every reasonable doubt upon the subject should bepromptly resolved in the negative." (Republic vs. Court of Appeals, 107 SCRA 504).36

This being the case, the petitioners personality to file the complaint is wanting. Consequently, it failed toestablish its cause of action. Thus, the trial court did not err in dismissing the complaint, and the CA in affirmingthe same.

IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED. The assailed Court of Appeals Decision isAFFIRMED. No costs.

SO ORDERED.

EN BANC

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

ESTATE OF K. H. HEMADY, deceased, vs. LUZON SURETY CO., INC., claimant-Appellant.

D E C I S I O N

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:chanroblesvirtuallawlibrary

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 ther

effect.

Indemnity. The undersigned, jointly and severally, agree at all times to indemnify the COMPANY and

indemnified and hold and save it harmless from and against any and all damages, losses, costs, stamps

penalties, charges, and expenses of whatsoever kind and nature which the COMPANY shall or may, at a

sustain or incur in consequence of having become surety upon this bond or any extension, renewal, sub

or alteration thereof made at the instance of the undersigned or any of them or any order executed on b

the undersigned or any of them; chan roblesvirtualawlibraryand to pay, reimburse and make good

COMPANY, its successors and assigns, all sums and amount of money which it or its representatives sha

cause to be paid, or become liable to pay, on account of the undersigned or any of them, of whatsoever nature, including 15% of the amount involved in the litigation or other matters growing out of or co

therewith for counsel or attorneys fees, but in no case less than P25. It is hereby further agreed that in

extension or renewal of this ________ we equally bind ourselves f or the payment thereof under the sam

and conditions as above mentioned without the necessity of executing another indemnity agreement

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 sh

interest at the rate of 12% per annum which interest, if not paid, will be accummulated and added to th

quarterly order to earn the same interests as the capital and the total sum thereof, the capital and inter

be paid to the COMPANY as soon as the COMPANY shall have become liable therefore, whether it shall h

out such sums of money or any part thereof or not.

x x x x x x x x x

Waiver. It is hereby agreed upon by and between the undersigned that any question which may arise b

them by reason of this document and which has to be submitted for decision to Courts of Justice

brought before the Court of competent jurisdiction in the City of Manila, waiving for this purpose an

venue. Our right to be notified of the acceptance and approval of this indemnity agreement is hereby

waived.

x x x x x x x x x

Our Liability Hereunder. It shall not be necessary for the COMPANY to bring suit against the principal

default, or to exhaust the property of the principal, but the liability hereunder of the undersigned inde

shall be jointly and severally, a primary one, the same as that of the principal, and shall be exigible imm

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 bond

executed in consideration of the counterbonds, and further asked for judgment for the unpaid premi

documentary stamps affixed to the bonds, with 12 per cent interest thereon.
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Before answer was filed, and upon motion of the administratrix of Hemadys estate, the lower court, by order of

September 23, 1953, dismissed the claims of Luzon Surety Co., on two grounds:chanroblesvirtuallawlibrary (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; chan roblesvirtualawlibraryand (2) that whatever losses may occur

after Hemadys death,are not chargeable to his estate, because upon his death he ceased to be guarantor.

Taking up the latter point first, since it is the one more far reaching in effects, the reasoning of the court below

ran as follows:chanroblesvirtuallawlibrary

The administratrix further contends that upon the death of Hemady, his liability as a guarantor terminated, andtherefore, 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:chanroblesvirtuallawlibrary 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 occ ur after Hemadys 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.

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.

ART. 776. The inheritance includes all the property, rights and obligations of a person which

extinguished by his death.

In Mojica vs. Fernandez, 9 Phil. 403, this Supreme Court ruled:chanroblesvirtuallawlibrary

Under the Civil Code the heirs, by virtue of the rights of succession are subrogated to all the rig

obligations of the deceased (Article 661) and cannot be regarded as third parties with respect to a con

which the deceased was a party, touching the estate of the deceased (Barrios vs. Dolor, 2 Phil. 44).

x x x x x x x x x

The principle on which these decisions rest is not affected by the provisions ofthe new Code of Civil Pr

and, in accordance with that principle, the heirs of a deceased person cannot be held to be third pers

relation to any contracts touching the real estate of their decedent which comes in to their hands by

inheritance; chan roblesvirtualawlibrarythey take such property subject to all the obligations resting th

the hands of him from w hom they derive their rights.

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

The binding effect of contracts upon the heirs of the deceased party is not altered by the provision in ou

of Court that money debts of a deceased must be liquidated and paid from his estate before the re

distributed among said heirs (Rule 89). The reason is that whatever payment is thus made from the e

ultimately a payment by the heirs and distributees, since the amount of the paid claim in fact dimin

reduces the shares that the heirs would have been entitled to receive.

Under our law, therefore, the general rule is that a partys contractual rights and obligations are transmi

the successors. The rule is a c onsequence of the progressive depersonalization of patrimonial rights an

that, as observed by Victorio Polacco, has characterized the history of these institutions. From the

concept of a relation from person to person, the obligation has evolved into a relation from patrim

patrimony, with the persons occupying only a representative position, barring those rare cases wh

obligation is strictly personal, i.e., is contracted intuitu personae, in consideration of its performance by a

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 d

warrant the conclusion that his peculiar individual qualities are contemplated as a principal inducement

contract. What did the creditor Luzon Surety Co. expect of K. H. Hemady when it accepted the latter as s

the counterbonds? Nothing but the reimbursement of the moneys that the Luzon Surety Co. might

disburse on account of the obligations of the principal debtors. This reimbursement is a payment of a

money, resulting from an obligation to give; chan roblesvirtualawlibraryand to the Luzon Surety Co.

indifferent that the reimbursement should be made by Hemady himself or by some one else in his behalf

as the money was paid to it.

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

and contrary to the general rule, this intransmissibility should not be easily implied, but must be e


6/36

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; chan

roblesvirtualawlibraryle 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 ms all de las personas que les dieron vida, y a ejercer

presion sobre los sucesores de esa persona; chan roblesvirtualawlibrarycuando 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; chan

roblesvirtualawlibraryhence, 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 companys 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 i n 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 toexonerate him of the eventual liability he has contracted; chan roblesvirtualawlibraryand 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:chanroblesvirtuallawlibrary

ART. 2057. If the guarantor should be convicted in first instance of a crime involving dishonesty o

become insolvent, the creditor may demand another who has all the qualifications required in the pr

article. The case is excepted where the creditor has required and stipulated that a specified person sh

guarantor.

From this article it should be immediately apparent that the supervening dishonesty of the guarantor (t

say, the disappearance of his integrity after he has become bound) does not terminate the contract but

entitles the creditor to demand a replacement of the guarantor. But the step remains optiona

creditor:chanroblesvirtuallawlibrary it is his right, not his duty; chan roblesvirtualawlibraryhe may waiv

chooses, and hold the guarantor to his bargain. Hence Article 2057 of the present Civil Code is incompat

the trial courts stand that the requirement of integrity in the guarantor or surety makes the latters undstrictly 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 re

intransmissible due to the nature of the undertaking, nor by the stipulations of the contracts themselves

provision of law, his eventual liability thereunder necessarily passed upon his death to his heirs. The co

therefore, give rise to contingent claims provable against his estate under section 5, Rule 87 (2 Moran, 1

p. 437; chan roblesvirtualawlibraryGaskell & Co. vs. Tan Sit, 43 Phil. 810, 814).

The most common example of the contigent claim is that which arises when a person is bound as s

guarantor for a principal who is insolvent or dead. Under the ordinary contract of suretyship the surety

claim whatever against his principal until he himself pays something by way of satisfaction upon the ob

which is secured. When he does this, there instantly arises in favor of the surety the right to compel the

to exonerate the surety. But until the surety has contributed something to the payment of the debt

performed the secured obligation in whole or in part, he has no right of action against anybody no cl

could be reduced to judgment. (May vs. Vann, 15 Pla., 553; chan roblesvirtualawlibraryGibson vs. Mi

Pla., 519; chan roblesvirtualawlibraryMaxey vs. Carter, 10 Yarg. [Tenn.], 521 Reeves vs. Pulliam, 7 Baxt.

119; chan roblesvirtualawlibraryErnst vs. Nou, 63 Wis., 134.)

For Defendantadministratrix it is averred that the above doctrine refers to a case where the surety file

against the estate of the principal debtor; chan roblesvirtualawlibraryand it is urged that the rule does n

to the case before us, where the late Hemady was a surety, not a principal debtor. The argument ev

superficial view of the relations between parties. If under the Gaskell ruling, the Luzon Surety Co., as gu

could file a contingent claim against the estate of the principal debtors if the latter should die, there is ab

no reason why it could not file such a claim against the estate of Hemady, since Hemady is a solidary c

of his principals. What the Luzon Surety Co. may claim from the estate of a principal debtor it may equa

from the estate of Hemady, since, in view of the existing solidarity, the latter does not even enjoy the b

exhaustion of the assets of the principal debtor.

The foregoing ruling is of course without prejudice to the remedies of the administratrix against the p

debtors under Articles 2071 and 2067 of the New Civil Code.

Our conclusion is that the solidary guarantors liability is not extinguished by his death, and that in such

the Luzon Surety Co., had the right to file against the estate a contingent claim for reimbursement. It b


7/36

unnecessary now to discuss the estates liability for premiums and stamp taxes, because irrespective of the

solution to this question, the Luzon Suretys 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.

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 reversingthe 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. 1It 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 the

was informed that Fortunato Santiago, Fuentebella (Puentevella) and Alvarez were in possession of Lot 7

It is on record that on May 19, 1938, Fortunato D. Santiago was issued Transfer Certificate of Title No.

(29797) covering Lot 773-A with an area of 37,818 square meters.3TCT No. RF 2694 describes Lot 77

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 n

Fortunato D. Santiago on September 6, 1938 Under TCT No. RT-2695 (28192 ).4Said transfer certificat

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 th

P7,000.00. 5Consequently, on February 20, 1956, TCT Nos. T-19291 and T-19292 were issued in Fuent

name.6

After Fuentebella's death and during the settlement of his estate, the administratrix thereof (Arsenia R.

Fuentebella, his wife) filed in Special Proceedings No. 4373 in the Court of First Instance of Negros Occid

motion requesting authority to sell Lots 773-A and 773-B.7By virtue of a court order granting said mot

March 24, 1958, Arsenia Vda. de Fuentebella sold said lots for P6,000.00 to Rosendo Alvarez. 9Hence, on

1958 TCT Nos. T-23165 and T-23166 covering Lots 773-A and 773-B were respectively issued to R

Alvarez.10

Two years later or on May 26, 1960, Teodora Yanes and the children of her brother Rufino, namely,

Iluminado and Jesus, filed in the Court of First Instance of Negros Occidental a complaint against Fo

Santiago, Arsenia Vda. de Fuentebella, Alvarez and the Register of Deeds of Negros Occidental for the "rethe ownership and possession of Lots 773 and 823. They also prayed that an accounting of the produc

land from 1944 up to the filing of the complaint be made by the defendants, that after court approval

accounting, the share or money equivalent due the plaintiffs be delivered to them, and that defend

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

lot for P25,000.00 to Dr. Rodolfo Siason.12Accordingly, TCT Nos. 30919 and 30920 were issued to Siason

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 plainti

assisted by their counsel, filed a manifestation in Civil Case No. 50 22 stating that the therein plaintiffs "re

forfeit and quitclaims (sic) any claim, monetary or otherwise, against the defendant Arsenia Vda. de Fue

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 C

No. 5022, the dispositive portion of which reads:

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

Nos. 773 and 823 of the Cadastral Survey of Murcia, Negros Occidental, now covered by Transfer Certifi


8/36

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, i n 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.18Thereafter, 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 proceeding19could 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 itsprevious 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.22In 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, havi

passed upon by the court in its order of September 4, 1965, had become res judicataand the Yanes

estopped from questioning said order. 26On their part, the Alvarez stated in their answer that the Y anese

of action had been "barred byres judicata, statute of limitation and estoppel."27

In its decision of July 8, 1974, the lower court found that Rodolfo Siason, who purchased the prope

question thru an agent as he was then in Mexico pursuing further medical studies, was a buyer in good fa

valuable consideration. Although the Yaneses were negligent in their failure to place a notic

pendens"before the Register of Deeds of Negros Occidental in order to protect their rights over the pro

question" in Civil Case No. 5022, equity demanded that they recover the actual value of the land beca

sale thereof executed between Alvarez and Siason was without court approval.28

The dispositive portiodecision 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 dismmiss

B. The defendants, Laura, Flora and Raymundo, all surnamed Alvarez being the legitimate children

deceased Rosendo Alvarez are hereby ordered to pay jointly and severally the plaintiffs the sum of P20

representing the actual value of Lots Nos. 773-A and 773-B of Murcia Cadastre, Negros Occidental; the

P2,000.00 as actual damages suffered by the plaintiff; the sum of P5,000.00 representing moral damages

sum of P2.000 as attorney's fees, all with legal r ate of interest from date of the f iling of this complaint up

payment.

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

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

SO ORDERED.29

The Alvarez appealed to the then Intermediate Appellate Court which in its decision of Aug

198330affirmed the lower court's decision "insofar as it ordered defendants-appellants to pay joi

severally the plaintiffs-appellees the sum of P20,000.00 representing the actual value of Lots Nos. 77

773-B of the cadastral survey of Murcia, Negros Occidental, and is reversed insofar as it awarded the

P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral damages and attorney's fees, respectively

dispositive portion of said decision reads:

WHEREFORE, the decision appealed from is affirmed insofar as it ordered defendants-appellants to paand severally the plaintiffs- appellees the sum of P20,000.00 representing the actual value of Lots Nos. 77

773-B of the cadastral survey of Murcia, Negros Occidental, and is reversed insofar as it awarded the

P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral damages and attorney's fees, respectiv

costs.


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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 a nd those in privity with

them in law or estate. 35As 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.37In 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 peti

father to Dr. Siason who did not know about the controversy, there being no lis pendens annotated on t

Hence, it was also settled beyond question that Dr. Siason i s a purchaser in good faith.

Under the circumstances, the trial court did not annul the sale executed by Alvarez in favor of Dr. Si

November 11, 1961 but in fact sustained it. The trial court ordered the heirs of Rosendo Alvarez who los

Case No. 5022 to pay the plaintiffs (private respondents herein) the amount of P20,000.00 represen

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 lan

whose property has been wrongfully or erroneously registered in another's name is to bring an ordinary

the ordinary court of justice for reconveyance or, if the property has passed into the hands of an i

purchaser for value, for damages.39

"It is one thing to protect an innocent third party; it is entirely a d

matter and one devoid of justification if deceit would be rewarded by allowing the perpetrator to enjoy t

of his nefarious decided As clearly revealed by the undeviating line of decisions coming from this Court,

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

of private respondents, it cannot now be reopened in the instant case on the pretext that the defe

prescription and estoppel have not been properly considered by the lower court. Petitioners cou

appealed in the former case but they did not. They have therefore foreclosed their rights, if any, and the

now be heard to complain in another case in order to defeat the enforcement of a judgment which has

become final and executory.

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

death.

Such contention is untenable for it overlooks the doctrine obtaining in this jurisdiction on the

transmissibility of the rights and obligations of the deceased to his legitimate children and heirs. Th

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 th

of the value of the inheritance, of a person are transmitted through his death to another or others eithe

will or by operation of law.

Art. 776. The inheritance includes all the property, rights and obligations of a person which are not extin

by his death.

Art. 1311. Contract stake effect only between the parties, their assigns and heirs except in case where th

and obligations arising from the contract are not transmissible by their nature, or by stipulation or by p

of law. The heir is not liable beyond the value of the property received from the decedent.


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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 intheir 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 ar e 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.

EN BANC

G.R. No. L-4963 January 29, 1953

MARIA USON,plaintiff-appellee,

vs.

MARIA DEL ROSARIO, CONCEPCION NEBREDA, CONRADO NEBREDA, DOMINADOR NEBREDA, AND FAUSTINO

NEBREDA, Jr.,defendants-appellants.

Priscilo Evangelista for a

Brigido G. Estrada for appellant.

BAUTISTA ANGELO,J.:

This is an action for recovery of the ownership and possession of five (5) parcels of land situated

Municipality of Labrador, Province of Pangasinan, filed by Maria Uson against Maria del Rosario and h

children named Concepcion, Conrado, Dominador, and Faustino, surnamed Nebreda, who are all of min

before the Court of First Instance of Pangasinan.

Maria Uson was the lawful wife of Faustino Nebreda who upon his death in 1945 left the lands involved

litigation. Faustino Nebreda left no other heir except his widow Maria Uson. However, plaintiff claims th

Faustino Nebreda died in 1945, his common-law wife Maria del Rosario took possession illegally of sa

thus depriving her of their possession and enjoyment.

Defendants in their answer set up as special defense that on February 21, 1931, Maria Uson and her h

the late Faustino Nebreda, executed a public document whereby they agreed to separate as husband a

and, in consideration of their separation, Maria Uson was given a parcel of land by way of alimony and i

she renounced her right to inherit any other property that may be left by her husband upon his death (Ex

After trial, at which both parties presented their respective evidence, the court rendered decision orde

defendants to restore to the plaintiff the ownership and possession of the lands in dispute without

pronouncement as to costs. Defendants interposed the present appeal.

There is no dispute that Maria Uson, plaintiff-appellee, is the lawful wife of Faustino Nebreda, former othe five parcels of lands litigated in the present case. There is likewise no dispute that Maria del Rosario

the defendants-appellants, was merely a common-law wife of the late Faustino Nebreda with whom

four illegitimate children, her now co-defendants. It likewise appears that Faustino Nebreda died in 194

prior to the effectivity of the new Civil Code. With this background, it is evident that when Faustino Nebr

in 1945 the five parcels of land he was seized of at the time passed from the moment of his death to

heir, his widow Maria Uson (Article 657, old Civil Code).As this Court aptly said, "The property belong

heirs at the moment of the death of the ancestor as completely as if the ancestor had executed and deli

them a deed for the same before his death" (Ilustre vs. Alaras Frondosa, 17 Phil., 321). From that m

therefore, the rights of inheritance of Maria Uson over the lands in question became vested.

The claim of the defendants that Maria Uson had relinquished her right over the lands in question beca

expressly renounced to inherit any future property that her husband may acquire and leave upon his d

the deed of separation they had entered into on February 21, 193 1, cannot be entertained for the simpl

that future inheritance cannot be the subject of a contract nor can it be renounced (1 Manresa, 1

edition; Tolentino on Civil Code, p. 12; Osorio vs. Osorio and Ynchausti Steamship Co., 41 Phil., 531).

But defendants contend that, while it is true that the four minor defendants are illegitimate children of

Faustino Nebreda and under the old Civil Code are not entitled to any successional rights, however, un

new Civil Code which became in force in June, 1950, they are given the status and rights of natural child


11/36

are entitled to the successional rights which the law accords to the latter (article 2264 and article 287, new Civil

Code), and because these successional rights were declared for the first time in the new code, they shall be given

retroactive effect even though the event which gave rise to them may have occurred under the prior legislation

(Article 2253, new Civil Code).

There is no merit in this claim. Article 2253 above referred to provides indeed that rights which are declared for

the first time shall have retroactive effect even though the event which gave rise to them may have occurred

under the former legislation, but this is so only when the new rights do not prejudice any vested or acquired

right of the same origin. Thus, said article provides that "if a right should be declared for the first time in this

Code, it shall be effective at once, even though the act or event which gives rise thereto may have been done or

may have occurred under the prior legislation, provided said new right does not prejudice or impair any vestedor acquired right, of the same origin." As already stated in the early part of this decision, the right of ownership

of Maria Uson over the lands in question became vested in 1945 upon the death of her late husband and this is

so because of the imperative provision of the law which commands that the rights to succession are transmitted

from the moment of death (Article 657, old Civil Code). The new right recognized by the new Civil Code in favor

of the illegitimate children of the deceased cannot, therefore, be asserted to the impairment of the vested right

of Maria Uson over the lands in dispute.

As regards the claim that Maria Uson, while her deceased husband was lying in state, in a gesture of pity or

compassion, agreed to assign the lands in question to the minor children for the reason that they were acquired

while the deceased was living with their mother and Maria Uson wanted to assuage somewhat the wrong she

has done to them, this much can be said; apart from the fact that this claim is disputed, we are of the opinion

that said assignment, if any, partakes of the nature of a donation of real property, inasmuch as it involves no

material consideration, and in order that it may be valid it shall be made in a public document and must be

accepted either in the same document or in a separate one (Article 633, old Civil Code). Inasmuch as this

essential formality has not been followed, it results that the alleged assignment or donation has no valid effect.

WHEREFORE, the decision appealed from is affirmed, without costs.

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,

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,

administratrix of the testate estate of Francisco de Borja,1from the approval of a compromise agreemen

Court of First Instance of Rizal, Branch I, in its Special Proceeding No. R-7866, entitled, "Testate Estate o

Tangco, Jose de Borja, Administrator".

Case No. L-28568 is an appeal by administrator Jose Borja from the disapproval of the same com

agreement by the Court of First Instance of Nueva Ecija, Branch II, in its Special Proceeding No. 832, e

"Testate Estate of Francisco de Borja, Tasiana O. Vda. de de Borja, Special Administratrix".

And Case No. L-28611 is a n appeal by administrator Jose de Borja from the decision of the Court of First

of Rizal, Branch X, in its Civil Case No. 7452, declaring the Hacienda Jalajala Poblacion, which is the main

the aforesaid compromise agreement, as the separate and exclusive property of the late Francisco de B

not a conjugal asset of the community with his first wife, Josefa Tangco, and that said hacienda


12/36

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 insaid 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:

A G R E E M E N T

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,

A N D

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.

W I T N E S S E T H

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 Franciscode 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 Jalajal

presently under administration in the Testate Estate of Josefa Tangco (Sp. Proc. No. 7866, Rizal

specifically described as follows:

Linda al Norte con el Rio Puwang que la separa de la jurisdiccion del Municipio de Pililla de la Provincia d

con el pico del Monte Zambrano; al Oeste con Laguna de Bay; por el Sur con los herederos de Marcelo d

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 am

Eight Hundred Thousand Pesos (P800,000) Philippine Currency, in cash, which represent P200,000 as his

the payment and P600,000 as pro-rata shares of the heirs Crisanto, Cayetano and Matilde, all surnamed

and this shall be considered as fu ll and complete payment and settlement of her hereditary share in the e

the late Francisco de Borja as well as the estate of Josefa Tangco, Sp. Proc. No. 832-Nueva Ecija and Sp. P

7866-Rizal, respectively, and to any properties bequeathed or devised in her favor by the late Francisco

by Last Will and Testament or by Donation Inter Vivos or Mortis Causa or purportedly conveyed to

consideration or otherwise. The funds for this payment shall be taken from and shall depend upon the re

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 incurre

late Francisco de Borja in favor of the Rehabilitation Finance Corporation, now Development Bank

Philippines, amounting to approximately P30,000.00 and also assumes payment of her 1/5 share of th

and Inheritance taxes on the Estate of the late Francisco de Borja or the sum of P3,500.00, more or les

shall be deducted by the buyer o f Jalajala, "Poblacion" from the payment to be made to Tasiana Ongsingde Borja under paragraph 2 of this Agreement and paid directly to the Development Bank of the Philipp

the heirs-children of Francisco de Borja.

4. Thereafter, the buyer of Jalajala "Poblacion" is hereby authorized to pay dir ectly to Tasiana Ongsingco

de Borja the balance of the payment due her under paragraph 2 of this Agreement (approximately P766

and issue in the name of Tasiana Ongsingco Vda. de de Borja, corresponding certified checks/treasury w

who, in turn, will issue the corresponding receipt to Jose de Borj

succesion 1st batch of cases.docx

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