Succession Cases

Wills & Succession Cases

[Batch 1: Articles 774-803]

Estate of Hemady vs Luzon SuretySicad vs CA

Uson vs Del Rosario DKC Holding Corp. vs CADe Borja vs Vda. De Borja

Go Ong vs CAButte vs Manuel Uy & Sons

Reganon vs ImperialRamirez vs Baltazar

Noceda vs CANufable vs Nufable

Blas vs SantosReyes vs RTC, Makati

Neri vs AkutinSeangio vs Reyes

Dizon-Rivera vs DizonVitug vs CA

Parish Priest of Victoria, Tarlac vs RigorBellis vs Bellis

Bagtas vs PaguioBugnao vs Ubag

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TITLE IVSUCCESSION

CHAPTER 1General Provisions

Article 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. (n)Article 775. In this Title, "decedent" is the general term applied to the person whose property is transmitted through succession, whether or not he left a will. If he left a will, he is also called the testator. (n)Article 776. The inheritance includes all the property, rights and obligations of a person which are not extinguished by his death. (659)Article 777. The rights to the succession are transmitted from the moment of the death of the decedent. (657a)Article 778. Succession may be:(1) Testamentary;(2) Legal or intestate; or(3) Mixed. (n)Article 779. Testamentary succession is that which results from the designation of an heir, made in a will executed in the form prescribed by law. (n)Article 780. Mixed succession is that effected partly by will and partly by operation of law. (n)Article 781. The inheritance of a person includes not only the property and the transmissible rights and obligations existing at the time of his death, but also those which have accrued thereto since the opening of the succession. (n)Article 782. An heir is a person called to the succession either by the provision of a will or by operation of law. Devisees and legatees are persons to whom gifts of real and personal property are respectively given by virtue of a will. (n)

CHAPTER 2Testamentary Succession

SECTION 1Wills

SUBSECTION 1. Wills in General

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Article 783. A will is an act whereby a person is permitted, with the formalities prescribed by law, to control to a certain degree the disposition of this estate, to take effect after his death. (667a)Article 784. The making of a will is a strictly personal act; it cannot be left in whole or in part to the discretion of a third person, or accomplished through the instrumentality of an agent or attorney. (670a)Article 785. The duration or efficacy of the designation of heirs, devisees or legatees, or the determination of the portions which they are to take, when referred to by name, cannot be left to the discretion of a third person. (670a)Article 786. The testator may entrust to a third person the distribution of specific property or sums of money that he may leave in general to specified classes or causes, and also the designation of the persons, institutions or establishments to which such property or sums are to be given or applied. (671a)Article 787. The testator may not make a testamentary disposition in such manner that another person has to determine whether or not it is to be operative. (n)Article 788. If a testamentary disposition admits of different interpretations, in case of doubt, that interpretation by which the disposition is to be operative shall be preferred. (n)Article 789. When there is an imperfect description, or when no person or property exactly answers the description, mistakes and omissions must be corrected, if the error appears from the context of the will or from extrinsic evidence, excluding the oral declarations of the testator as to his intention; and when an uncertainty arises upon the face of the will, as to the application of any of its provisions, the testator's intention is to be ascertained from the words of the will, taking into consideration the circumstances under which it was made, excluding such oral declarations. (n)Article 790. The words of a will are to be taken in their ordinary and grammatical sense, unless a clear intention to use them in another sense can be gathered, and that other can be ascertained.Technical words in a will are to be taken in their technical sense, unless the context clearly indicates a contrary intention, or unless it satisfactorily appears that the will was drawn solely by the testator, and that he was unacquainted with such technical sense. (675a)Article 791. The words of a will are to receive an interpretation which will give to every expression some effect, rather than one which will render any of the expressions inoperative; and of two modes of interpreting a will, that is to be preferred which will prevent intestacy. (n)Article 792. The invalidity of one of several dispositions contained in a will does not result in the invalidity of the other dispositions, unless it is to be presumed that the testator would not have made such other dispositions if the first invalid disposition had not been made. (n)Article 793. Property acquired after the making of a will shall only pass thereby, as if the testator had possessed it at the time of making the will, should it expressly appear by the will that such was his intention. (n)Article 794. Every devise or legacy shall cover all the interest which the testator could device or bequeath in the property disposed of, unless it clearly appears from the will that he intended to convey a less interest. (n)

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Article 795. The validity of a will as to its form depends upon the observance of the law in force at the time it is made. (n)

SUBSECTION 2. Testamentary Capacity and IntentArticle 796. All persons who are not expressly prohibited by law may make a will. (662)Article 797. Persons of either sex under eighteen years of age cannot make a will. (n)Article 798. In order to make a will it is essential that the testator be of sound mind at the time of its execution. (n)Article 799. To be of sound mind, it is not necessary that the testator be in full possession of all his reasoning faculties, or that his mind be wholly unbroken, unimpaired, or unshattered by disease, injury or other cause.It shall be sufficient if the testator was able at the time of making the will to know the nature of the estate to be disposed of, the proper objects of his bounty, and the character of the testamentary act. (n)Article 800. The law presumes that every person is of sound mind, in the absence of proof to the contrary.The burden of proof that the testator was not of sound mind at the time of making his dispositions is on the person who opposes theprobate of the will; but if the testator, one month, or less, before making his will was publicly known to be insane, the person who maintains the validity of the will must prove that the testator made it during a lucid interval. (n)Article 801. Supervening incapacity does not invalidate an effective will, nor is the will of an incapable validated by the supervening of capacity. (n) Article 802. A married woman may make a will without the consent of her husband, and without the authority of the court. (n)Article 803. A married woman may dispose by will of all her separate property as well as her share of the conjugal partnership or absolute community property. (n)

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Estate of Hemady vs Luzon Surety

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 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; chan roblesvirtualawlibraryand 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 x x x x x x

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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 x x x 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: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 Hemady’s death, are not chargeable to his estate, because upon his death he ceased to be guarantor.”

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

“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: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 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.”

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 are not extinguished by his death.”

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

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

x x x x x x 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; chan roblesvirtualawlibrarythey take such property subject to all the obligations resting thereon in the hands of him from whom they derive their rights.”

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

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

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

Of the three exceptions fixed by Article 1311, the nature of the obligation of the surety or guarantor does not warrant the conclusion that his peculiar individual qualities are contemplated as a principal inducement for the contract. What did the creditor Luzon Surety Co. expect of K. H. Hemady when it accepted the latter as surety in the counterbonds? Nothing but the reimbursement of the moneys that the Luzon Surety Co. might have to disburse on account of the obligations of the principal debtors. This reimbursement is a payment of a sum of money, resulting from an obligation to give; chan roblesvirtualawlibraryand 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; 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 más allá 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 company’s faith and confidence in the financial stability of the surety, but not that his obligation was strictly personal.

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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; 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 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.”

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: chanroblesvirtuallawlibrary it is his right, not his duty; chan roblesvirtualawlibraryhe 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; 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 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 vs. Vann, 15 Pla., 553; chan roblesvirtualawlibraryGibson vs. Mithell, 16 Pla., 519; chan roblesvirtualawlibraryMaxey vs. Carter, 10 Yarg. [Tenn.], 521 Reeves vs. Pulliam, 7 Baxt. [Tenn.], 119; chan roblesvirtualawlibraryErnst vs. Nou, 63 Wis., 134.)”

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; chan roblesvirtualawlibraryand 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.

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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.

Sicad vs CATHIRD DIVISION

[G.R. No. 125888. August 13, 1998]

SPOUSES ERNESTO and EVELYN SICAD, petitioners, vs. COURT OF APPEALS, CATALINO VALDERRAMA, JUDY CRISTINA M. VALDERRAMA and JESUS ANTONIO VALDERRAMA, respondents.

DECISIONNARVASA, C.J.:

The issue raised in the appeal by certiorari at bar centers on the character of a deed of donation executed by the late Aurora Virto Vda. De Montinola of the City of Iloilo as either inter vivos or mortis causa. That deed, entitled DEED OF DONATION INTER VIVOS,[1] was executed by Montinola on December 11, 1979. It named as donees her grandchildren, namely: Catalino Valderrama, Judy Cristina M. Valderrama and Jesus Antonio Valderrama; and treated of a parcel of land, Lot 3231 of the Cadastral Survey of Panay, Capiz, covered by Transfer Certificate Title No. T-16105 in the name of Montinola. The deed also contained the signatures of the donees in acknowledgment of the acceptance of the donation.

Montinolas Secretary, Gloria Salvilla, afterwards presented the deed for recording in the Property Registry, and the Register of Deeds cancelled TCT No. T-16105 (the donors title) and, in it place, issued TCT No. T-16622 on February 7, 1980, in the names of the donees. [2] Montinola however retained the owners duplicate copy of the new title (No. T-16622), as well as the property itself, until she transferred the same ten (10) years later, on July 10, 1990, to the spouses, Ernesto and Evelyn Sicad.

On March 12, 1987, Aurora Montinola drew up a deed of revocation of the donation, [3] and caused it to be annotated as an adverse claim on TCT No. T-16622 (issued, as aforestated, in her grandchildrens names). Then on August 24, 1990, she filed a petition with the Regional Trial Court in Roxas City for the cancellation of said TCT No. T-16622 and the reinstatement of TCT No. T-16105 (in her name), the case being docketed as Special Proceeding No. 3311. Her petition was founded on the theory that the donation to her three (3) grandchildren was one mortis causa which thus had to comply with the formalities of a will; and since it had not, the donation was void and could not effectively serve as basis for the cancellation of TCT No. T-16105 and the issuance in its place of TCT No. T-16622.

The donees (Montinolas grandchildren) opposed the petition. In their opposition dated August 29, 1990, they averred that the donation in their favor was one inter vivos which, having fully complied with the requirements therefor set out in Article 729 of the Civil Code, was perfectly valid and efficacious. They also

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http://sc.judiciary.gov.ph/jurisprudence/1998/aug1998/125888.htm#_edn3



expressed doubt about the sincerity of their grandmothers intention to recover the donated property, since she had not pursued the matter of its revocation after having it annotated as an adverse claim.

The case, originally treated as a special proceeding, was subsequently considered by the lower Court as an ordinary civil action in view of the allegations and issues raised in the pleadings. Pre-trial was had, followed by trial on the merits which was concluded with the filing of the parties memoranda. The Trial Court then rendered judgment on March 27, 1991, holding that the donation was indeed one inter vivos, and dismissing Aurora Montinolas petition for lack of merit. [4] The matter of its revocation was not passed upon.

Montinola elevated the case to the Court of Appeals, her appeal being docketed as CA-G.R. CV No. 33202. She however died on March 10, 1993,[5] while appeal was pending.

Shortly after Montinolas demise, a Manifestation and Motion dated March 31, 1993 was filed by Ernesto Sicad and Evelyn Bofill-Sicad, herein petitioners,[6] in which they (a) alleged that they had become the owners of the property covered by TCT No. T-16622 in virtue of a deed of definite sale dated May 25, 1992 accomplished by Montinola in their favor, which was confirmed by an affidavit dated November 26, 1997 also executed by the latter, and (b) prayed that they be substituted as appellants and allowed to prosecute the case in their own behalf.

Another motion was subsequently presented under date of April 7, 1993, this time by the legal heirs of Aurora Montinola, namely: Ofelia M. de Leon, Estela M. Jaen and Teresita M. Valderrma. They declared that they were not interested in pursuing the case, and asked that the appeal be withdrawn. Montinolas counsel opposed the motion.

On June 21, 1993, the Court of Appeals issued a Resolution: (a) ordering the substitution of the persons above mentioned Ofelia M. de Leon, Estela M. Jaen and Teresita M. Valderama as plaintiffs-appellant in place of the late Aurora Montinola, as well as the joinder of the spouses Ernesto and Evelyn Bofill-Sicad as additional appellants;[7] and (b) denying the motion for the withdrawal of the appeal.

On June 30, 1995, the Eighth Division of the Court of Appeals promulgated its Decision on the case affirming the judgment of the Regional Trial Court;[8] and on July 31, 1996, it denied the separate motions for reconsideration filed by Ofelia M. de Leon, Estela M. Jaen, and Teresita M. Valderrama, on the one hand, and by the spouses, Ernest and Evelyn Sicad, on the other.[9]

The Sicad Spouses have appealed to this Court; and here, they contend that the following errors were committed by the Appellate Tribunal, to wit:

1) ** in ruling that the donation was inter vivos and in not giving due weight to the revocation of the donation; and

2) ** in not ordering that the case be remanded for further reception of evidence. [10]

The Comment filed for private respondents (the donees) under date of December 19, 1996 deals with what they consider the principal issue in this case ** (i.e.) whether the donation is mortis causa or inter vivos and set forth the argument that the donor clearly intended to effect the immediate transfer of ownership to the donees, that the prohibition in the deed of donation against selling the property within ten (10) years after the death of the donor does not indicate that the donation is mortis causa, that the donors alleged act of physically keeping the title does not suggest any intention to defer the effectivity of the donation, that the payment of real property taxes is consistent with the donors reservation of the right of usufruct, that the donors intent is not determined by ** (her) self-serving post execution declarations, the donation was never effectively revoked, and petitioners have waived their right to question the proceedings in the trial court.[11]

The Reply of the Sicad Spouses dated March 14, 1997 reiterates their thesis that the donation was mortis causa, that the circumstances surrounding the execution of the deed, and the subsequent actions of the donor incontrovertibly signify the donors intent to transfer the property only after her death, that the donor did not intend to give effect to the donation, and that the procedure adopted by the Trial Court in the case was fatally defective.[12] A Rejoinder dated April 3, 1997 was then submitted by the Valderamas, traversing the assertions of the Reply.[13]

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Considering the focus of the opposing parties, and their conflicting theories, on the intention of Aurora Montinola in executing the document entitled Deed of Donation Inter Vivos, it is needful to review the circumstances of the signing of that document by Montinola, as ostensible donor, and her grandchildren, as ostensible donees.

The evidence establishes that on December 11, 1979, when the deed of donation prepared by Montinols lawyer (Atty. Treas) was read and explained by the latter to the parties.Montinola expressed her wish that the donation take effect only after ten (10) years from her death, and that the deed include a prohibition on the sale of the poperty for such period.Accordingly, a new proviso was inserted in the deed reading: however, the donees shall not sell or encumber the properties herein donated within 10 years after the death of the donor.[14]The actuality of the subsequent insertion of this new proviso is apparent on the face of the instrument; the intercalation is easily perceived and identified it was clearly typed on a different machine, and is crammed into the space between the penultimate paragraph of the deed and that immediately preceding it.[15]

Not only did Aurora Montinola ordered the insertion in the deed of that restrictive proviso, but also, after recordation of the deed of donation, she never stopped treating the property as her own. She continued, as explicitly authorized in the deed itself, to possess he property, enjoy its fruits and otherwise exercise the rights of dominion, paying the property taxes as they fell due all these she did until she transferred the property to the Sicad Spouses on July 10, 1990. She did not give the new certificate of title to the ostensible donees but retained too, until she delivered it to the Sicads on the occasion of the sale of the property to them. In any event, the delivery of the title to the donees would have served no useful purpose since, as just stated, they were prohibited to effect any sale or encumbrance thereof for a period of ten (10) years after the ostensible donors decease. And consistent with these acts denoting retention of ownership of the property was Montinolas openly expressed view that the donation was ineffectual and could not be given affect even after ten (10) years from her death. For this view she sought to obtain judicial approval. She brought suit on August 24, 1990 to cancel TCT no. T-16622 (issued to her grandchildren) premised precisely on the invalidity of the donation for failure to comply with the requisites of testamentary dispositions. Before that, she attempted to undo the conveyance to her grandchildren by execution a deed of revocation of the donation on March 12, 1987, and causing annotation thereof as an adverse claim on said TCT No. T-16622. She also exercised indisputable acts of ownership over said property by executing, as just stated, deeds intended to pass title over it to third parties petitioner herein.[16]

As already intimated, the real nature of a deed is to be ascertained by both its language and the intention of the parties as demonstrated by the circumstances attendant upon its execution. In this respect, case law has laid down significant parameters. Thus, in a decision handed down in 1946,[17] this Court construed a deed purporting to be a donation inter vivos to be in truth one mortis causa because it stipulated (like the one now being inquired into) that all rents, proceeds, fruits, of the donated properties shall remain for the exclusive benefit and disposal of the donor, Margarita David, during her lifetime; and that, without the knowledge and consent of the donor, the donated properties could not be disposed of in any way, whether by sale, mortgage, barter, or in any other way possible. On these essential premises, the Court said, such a donation must be deemed one mortis causa, because the combined effect of the circumstances surrounding the execution of the deed of donation and of the above-quoted clauses thereof ** (was that) the most essential elements of ownership the right to dispose of the donated properties and the right to enjoy the products, profits, possession remained with Margarita David during her lifetime, and would accrue to the donees only after Margarita Davids death. So, too, in the case at bar, did these rights remain with Aurora Montinola during her lifetime, and could not pass to the donees until ten (10) years after her death.

In another case decided in 1954 involving similar issue, Bonsato v. Court of Appeals,[18] this Court emphasized that the decisive characteristics of a donation mortis causa, which it had taken into account in David v. Sison, were that the donor not only reserved for herself all the fruits of the property allegedly conveyed, but what is even more important, especially provided that without knowledge and consent of the donor, the donated properties could not be disposed of in any way,; thereby denying to the transferees the most essential attribute of ownership, the power to dispose of the properties.

A donation which purports to be one inter vivos but withholds form the donee that right to dispose of the donated property during the donors lifetime is in truth one mortis causa. In a donation mortis causa the right of disposition is not transferred to the donee while the donor is still alive.[19]

11







In the instant case, nothing of any consequence was transferred by the deed of donation in question to Montinolas grandchildren, the ostensible donees. They did not get possession of the property donated. They did not acquire the right to the fruits thereof, or any other right of dominion over the property. More importantly, they did not acquire the right to dispose of the property this would accrue to them only after ten (10) years from Montinolas death. Indeed, they never even laid hands on the certificate of title to the same. They were therefore simply paper owners of the donated property. All these circumstances, including, to repeat, the explicit provisions of the deed of donation reserving the exercise of rights of ownership to the donee and prohibiting the sale or encumbrance of the property until ten (10) years after her death ineluctably lead to the conclusion that the donation in question was a donation mortis causa, contemplating a transfer of ownership to the donees only after the donors demise.

The case of Alejandro v. Geraldez[20] cited by the Court of Appeals in support of its challenged judgment is not quite relevant. For in the deed of donation there in issue, there was a partial relinquishment of the right to dispose of the property, in the event only that this became necessary to defray the expenses and support of the donors. That limited right to dispose of the donated lots, said this Court, implies that ownership had passed to ** (the donees) by means of the donation and **, therefore, the donation was already effective during the donors lifetime. That is the characteristic of a donation inter vivos. On the other hand, in the case at bar, the donees were expressly prohibited to make any disposition of any nature or for any purpose whatever during the donors lifetime, and until ten (10) years after her death a prohibition which, it may be added, makes inapplicable the ruling in Castro v. Court of Appeals [21]where no such prohibition was imposed, and the donor retained only the usufruct over the property.

The Valderramas argument that the donation is inter vivos in character and that the prohibition against their disposition of the donated property is merely a condition which, if violated, would give cause for its revocation, begs the question. It assumes that they have the right to make a disposition of the property, which they do not. The argument also makes no sense, because if they had the right to dispose of the property and did in fact dispose of it to a third person, the revocation of the donation they speak of would be of no utility or benefit to the donor, since such a revocation would not necessarily result in the restoration of the donors ownership and enjoyment of the property.

It is also error to suppose that the donation under review should be deemed one inter vivos simply because founded on considerations of love and affection. In Alejandro v. Geraldez,supra,[22] this Court also observed that the fact that the donation is given in consideration of love and affection ** is not a characteristic of donation inter vivos (solely) because transfersmortis causa may also be made for the same reason. Similarly, in Bonsato v. Court of Appeals, supra, this Court opined that the fact that the conveyance was due to the affection of the donor to the donees and services rendered by the latter,is of no particular significance in determining whether the deeds, Exh. 1 and 2, constitute transfers inter vivos or not, because a legacy may have identical motivation.[23]

Finally, it is germane to advert to the legal principle in Article 1378 of the Civil Code to the effect that in the case of doubt relative to a gratuitous contract, the construction must be that entailing the least transmission of rights and interests.[24]

The donation in question, though denominated inter vivos, is in truth one mortis causa; it is void because the essential requisites for its validity have not been complied with.

WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 33202 dated June 30, 1995 as well as the Resolution denying reconsideration thereof and the Decision of the Regional Trial Court in Special Case No. 3311 are SET ASIDE. The Deed of Donation Inter Vivos (Exh. A) executed by Aurora Virto Vda. De Montinola on December 11, 1979 in favor of Catalino M. Valderrama, Judy Cristina M. Valderrama and Jesus Antonio M. Valderrama is declared null and void. The Register of Deed of Roxas City is directed to cancel Transfer Certificate of Title No. T-16622, revive and reinstate Transfer Certificate of Title No. T-16105.

SO ORDERED.

Romero, Kapunan, and Purisima, JJ., concur.

12






Uson vs. Del RosarioRepublic of the Philippines

SUPREME COURT

Manila

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.

BAUTISTA ANGELO, J.:

This is an action for recovery of the ownership and possession of five (5) parcels of land situated in the Municipality of Labrador, Province of Pangasinan, filed by Maria Uson against Maria del Rosario and her four children named Concepcion, Conrado, Dominador, and Faustino, surnamed Nebreda, who are all of minor age, 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 in this litigation. Faustino Nebreda left no other heir except his widow Maria Uson. However, plaintiff claims that when Faustino Nebreda died in 1945, his common-law wife Maria del Rosario took possession illegally of said lands 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 husband, the late Faustino Nebreda, executed a public document whereby they agreed to separate as husband and wife and, in consideration of their separation, Maria Uson was given a parcel of land by way of alimony and in return she renounced her right to inherit any other property that may be left by her husband upon his death (Exhibit 1).

After trial, at which both parties presented their respective evidence, the court rendered decision ordering the defendants to restore to the plaintiff the ownership and possession of the lands in dispute without special pronouncement as to costs. Defendants interposed the present appeal.

13

There is no dispute that Maria Uson, plaintiff-appellee, is the lawful wife of Faustino Nebreda, former owner of the five parcels of lands litigated in the present case. There is likewise no dispute that Maria del Rosario, one of the defendants-appellants, was merely a common-law wife of the late Faustino Nebreda with whom she had four illegitimate children, her now co-defendants. It likewise appears that Faustino Nebreda died in 1945 much prior to the effectivity of the new Civil Code. With this background, it is evident that when Faustino Nebreda died in 1945 the five parcels of land he was seized of at the time passed from the moment of his death to his only heir, his widow Maria Uson (Article 657, old Civil Code).As this Court aptly said, "The property belongs to the heirs at the moment of the death of the ancestor as completely as if the ancestor had executed and delivered to them a deed for the same before his death" (Ilustre vs. Alaras Frondosa, 17 Phil., 321). From that moment, 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 because she expressly renounced to inherit any future property that her husband may acquire and leave upon his death in the deed of separation they had entered into on February 21, 1931, cannot be entertained for the simple reason that future inheritance cannot be the subject of a contract nor can it be renounced (1 Manresa, 123, sixth 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 the late Faustino Nebreda and under the old Civil Code are not entitled to any successional rights, however, under the new Civil Code which became in force in June, 1950, they are given the status and rights of natural children and 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 vested or 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.

Paras, C.J., Pablo, Bengzon, Padilla, Tuason, Montemayor, Reyes, Jugo and Labrador, JJ., concur.

14

DKC Holding Corp. vs CAFIRST DIVISION

[G.R. No. 118248. April 5, 2000]

DKC HOLDINGS CORPORATION, petitioner, vs. COURT OF APPEALS, VICTOR U. BARTOLOME and REGISTER OF DEEDS FOR METRO MANILA, DISTRICT III, respondents. francis

D E C I S I O N

YNARES_SANTIAGO, J.:

This is a petition for review on certiorari seeking the reversal of the December 5, 1994 Decision of the Court of Appeals in CA-G.R. CV No. 40849 entitled "DKC Holdings Corporation vs. Victor U. Bartolome, et al.",[1] affirming in toto the January 4, 1993 Decision of the Regional Trial Court of Valenzuela, Branch 172,[2] which dismissed Civil Case No. 3337-V-90 and ordered petitioner to pay P30,000.00 as attorneys fees.

The subject of the controversy is a 14,021 square meter parcel of land located in Malinta, Valenzuela, Metro Manila which was originally owned by private respondent Victor U. Bartolomes deceased mother, Encarnacion Bartolome, under Transfer Certificate of Title No. B-37615 of the Register of Deeds of Metro Manila, District III. This lot was in front of one of the textile plants of petitioner and, as such, was seen by the latter as a potential warehouse site.

On March 16, 1988, petitioner entered into a Contract of Lease with Option to Buy with Encarnacion Bartolome, whereby petitioner was given the option to lease or lease with purchase the subject land, which option must be exercised within a period of two years counted from the signing of the Contract. In turn, petitioner undertook to pay P3,000.00 a month as consideration for the reservation of its option. Within the two-year period, petitioner shall serve formal written notice upon the lessor Encarnacion Bartolome of its desire to exercise its option. The contract also provided that in case petitioner chose to lease the property, it may take actual possession of the premises. In such an event, the lease shall be for a period of six years,

15

http://sc.judiciary.gov.ph/jurisprudence/2000/apr2000/118248.html#_ftn2


renewable for another six years, and the monthly rental fee shall be P15,000.00 for the first six years and P18,000.00 for the next six years, in case of renewal.

Petitioner regularly paid the monthly P3,000.00 provided for by the Contract to Encarnacion until her death in January 1990. Thereafter, petitioner coursed its payment to private respondent Victor Bartolome, being the sole heir of Encarnacion. Victor, however, refused to accept these payments. iska

Meanwhile, on January 10, 1990, Victor executed an Affidavit of Self-Adjudication over all the properties of Encarnacion, including the subject lot. Accordingly, respondent Register of Deeds cancelled Transfer Certificate of Title No. B-37615 and issued Transfer Certificate of Title No. V-14249 in the name of Victor Bartolome.

On March 14, 1990, petitioner served upon Victor, via registered mail, notice that it was exercising its option to lease the property, tendering the amount of P15,000.00 as rent for the month of March. Again, Victor refused to accept the tendered rental fee and to surrender possession of the property to petitioner.

Petitioner thus opened Savings Account No. 1-04-02558-I-1 with the China Banking Corporation, Cubao Branch, in the name of Victor Bartolome and deposited therein the P15,000.00 rental fee for March as well as P6,000.00 reservation fees for the months of February and March.

Petitioner also tried to register and annotate the Contract on the title of Victor to the property. Although respondent Register of Deeds accepted the required fees, he nevertheless refused to register or annotate the same or even enter it in the day book or primary register.

Thus, on April 23, 1990, petitioner filed a complaint for specific performance and damages against Victor and the Register of Deeds,[3] docketed as Civil Case No. 3337-V-90 which was raffled off to Branch 171 of the Regional Trial Court of Valenzuela. Petitioner prayed for the surrender and delivery of possession of the subject land in accordance with the Contract terms; the surrender of title for registration and annotation thereon of the Contract; and the payment of P500,000.00 as actual damages, P500,000.00 as moral damages, P500,000.00 as exemplary damages and P300,000.00 as attorneys fees.

Meanwhile, on May 8, 1990, a Motion for Intervention with Motion to Dismiss[4] was filed by one Andres Lanozo, who claimed that he was and has been a tenant-tiller of the subject property, which was agricultural riceland, for forty-five years. He questioned the jurisdiction of the lower court over the property and invoked the Comprehensive Agrarian Reform Law to protect his rights that would be affected by the dispute between the original parties to the case. ella

On May 18, 1990, the lower court issued an Order[5] referring the case to the Department of Agrarian Reform for preliminary determination and certification as to whether it was proper for trial by said court.

On July 4, 1990, the lower court issued another Order[6] referring the case to Branch 172 of the RTC of Valenzuela which was designated to hear cases involving agrarian land, after the Department of Agrarian Reform issued a letter-certification stating that referral to it for preliminary determination is no longer required.

On July 16, 1990, the lower court issued an Order denying the Motion to Intervene,[7] holding that Lanozos rights may well be ventilated in another proceeding in due time.

After trial on the merits, the RTC of Valenzuela, branch 172 rendered its Decision on January 4, 1993, dismissing the Complaint and ordering petitioner to pay Victor P30,000.00 as attorneys fees. On appeal to the CA, the Decision was affirmed in toto.

Hence, the instant Petition assigning the following errors:

(A)

FIRST ASSIGNMENT OF ERROR

16






THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE PROVISION ON THE NOTICE TO EXERCISE OPTION WAS NOT TRANSMISSIBLE.

(B)

SECOND ASSIGNMENT OF ERROR

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE NOTICE OF OPTION MUST BE SERVED BY DKC UPON ENCARNACION BARTOLOME PERSONALLY.

(C) nigel

THIRD ASSIGNMENT OF ERROR

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE CONTRACT WAS ONE-SIDED AND ONEROUS IN FAVOR OF DKC.

(D)

FOURTH ASSIGNMENT OF ERROR

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE EXISTENCE OF A REGISTERED TENANCY WAS FATAL TO THE VALIDITY OF THE CONTRACT.

(E)

FIFTH ASSIGNMENT OF ERROR

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PLAINTIFF-APPELLANT WAS LIABLE TO DEFENDANT-APPELLEE FOR ATTORNEYS FEES.[8]

The issue to be resolved in this case is whether or not the Contract of Lease with Option to Buy entered into by the late Encarnacion Bartolome with petitioner was terminated upon her death or whether it binds her sole heir, Victor, even after her demise.

Both the lower court and the Court of Appeals held that the said contract was terminated upon the death of Encarnacion Bartolome and did not bind Victor because he was not a party thereto.

Article 1311 of the Civil Code provides, as follows-

"ART. 1311. Contracts take 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 he received from the decedent. brnado

x x x x x x x x x."

The general rule, therefore, is that heirs are bound by contracts entered into by their predecessors-in-interest except when the rights and obligations arising therefrom are not transmissible by (1) their nature, (2) stipulation or (3) provision of law.

In the case at bar, there is neither contractual stipulation nor legal provision making the rights and obligations under the contract intransmissible. More importantly, the nature of the rights and obligations therein are, by their nature, transmissible.

17


The nature of intransmissible rights as explained by Arturo Tolentino, an eminent civilist, is as follows:

"Among contracts which are intransmissible are those which are purely personal, either by provision of law, such as in cases of partnerships and agency, or by the very nature of the obligations arising therefrom, such as those requiring special personal qualifications of the obligor. It may also be stated that contracts for the payment of money debts are not transmitted to the heirs of a party, but constitute a charge against his estate. Thus, where the client in a contract for professional services of a lawyer died, leaving minor heirs, and the lawyer, instead of presenting his claim for professional services under the contract to the probate court, substituted the minors as parties for his client, it was held that the contract could not be enforced against the minors; the lawyer was limited to a recovery on the basis of quantum meruit."[9]

In American jurisprudence, "(W)here acts stipulated in a contract require the exercise of special knowledge, genius, skill, taste, ability, experience, judgment, discretion, integrity, or other personal qualification of one or both parties, the agreement is of a personal nature, and terminates on the death of the party who is required to render such service."[10] marinella

It has also been held that a good measure for determining whether a contract terminates upon the death of one of the parties is whether it is of such a character that it may be performed by the promissors personal representative. Contracts to perform personal acts which cannot be as well performed by others are discharged by the death of the promissor. Conversely, where the service or act is of such a character that it may as well be performed by another, or where the contract, by its terms, shows that performance by others was contemplated, death does not terminate the contract or excuse nonperformance.[11]

In the case at bar, there is no personal act required from the late Encarnacion Bartolome. Rather, the obligation of Encarnacion in the contract to deliver possession of the subject property to petitioner upon the exercise by the latter of its option to lease the same may very well be performed by her heir Victor.

As early as 1903, it was held that "(H)e who contracts does so for himself and his heirs."[12] In 1952, it was ruled that if the predecessor was duty-bound to reconvey land to another, and at his death the reconveyance had not been made, the heirs can be compelled to execute the proper deed for reconveyance. This was grounded upon the principle that heirs cannot escape the legal consequence of a transaction entered into by their predecessor-in-interest because they have inherited the property subject to the liability affecting their common ancestor.[13]

It is futile for Victor to insist that he is not a party to the contract because of the clear provision of Article 1311 of the Civil Code. Indeed, being an heir of Encarnacion, there is privity of interest between him and his deceased mother. He only succeeds to what rights his mother had and what is valid and binding against her is also valid and binding as against him.[14] This is clear from Paraaque Kings Enterprises vs. Court of Appeals,[15] where this Court rejected a similar defense-alonzo

With respect to the contention of respondent Raymundo that he is not privy to the lease contract, not being the lessor nor the lessee referred to therein, he could thus not have violated its provisions, but he is nevertheless a proper party. Clearly, he stepped into the shoes of the owner-lessor of the land as, by virtue of his purchase, he assumed all the obligations of the lessor under the lease contract. Moreover, he received benefits in the form of rental payments. Furthermore, the complaint, as well as the petition, prayed for the annulment of the sale of the properties to him. Both pleadings also alleged collusion between him and respondent Santos which defeated the exercise by petitioner of its right of first refusal.

In order then to accord complete relief to petitioner, respondent Raymundo was a necessary, if not indispensable, party to the case. A favorable judgment for the petitioner will necessarily affect the rights of respondent Raymundo as the buyer of the property over which petitioner would like to assert its right of first option to buy.

18








In the case at bar, the subject matter of the contract is likewise a lease, which is a property right. The death of a party does not excuse nonperformance of a contract which involves a property right, and the rights and obligations thereunder pass to the personal representatives of the deceased. Similarly, nonperformance is not excused by the death of the party when the other party has a property interest in the subject matter of the contract.[16]

Under both Article 1311 of the Civil Code and jurisprudence, therefore, Victor is bound by the subject Contract of Lease with Option to Buy.

That being resolved, we now rule on the issue of whether petitioner had complied with its obligations under the contract and with the requisites to exercise its option. The payment by petitioner of the reservation fees during the two-year period within which it had the option to lease or purchase the property is not disputed. In fact, the payment of such reservation fees, except those for February and March, 1990 were admitted by Victor.[17] This is clear from the transcripts, to wit-

"ATTY. MOJADO:

One request, Your Honor. The last payment which was allegedly made in January 1990 just indicate in that stipulation that it was issued November of 1989 and postdated Janaury 1990 and then we will admit all. rodp;fo

COURT:

All reservation fee?

ATTY. MOJADO:

Yes, Your Honor.

COURT:

All as part of the lease?

ATTY. MOJADO:

Reservation fee, Your Honor. There was no payment with respect to payment of rentals."[18]

Petitioner also paid the P15,000.00 monthly rental fee on the subject property by depositing the same in China Bank Savings Account No. 1-04-02558-I-1, in the name of Victor as the sole heir of Encarnacion Bartolome,[19] for the months of March to July 30, 1990, or a total of five (5) months, despite the refusal of Victor to turn over the subject property.[20]

Likewise, petitioner complied with its duty to inform the other party of its intention to exercise its option to lease through its letter dated Match 12, 1990,[21] well within the two-year period for it to exercise its option. Considering that at that time Encarnacion Bartolome had already passed away, it was legitimate for petitioner to have addressed its letter to her heir.

It appears, therefore, that the exercise by petitioner of its option to lease the subject property was made in accordance with the contractual provisions. Concomitantly, private respondent Victor Bartolome has the obligation to surrender possession of and lease the premises to petitioner for a period of six (6) years, pursuant to the Contract of Lease with Option to Buy. micks

Coming now to the issue of tenancy, we find that this is not for this Court to pass upon in the present petition. We note that the Motion to Intervene and to Dismiss of the alleged tenant, Andres Lanozo, was denied by the lower court and that such denial was never made the subject of an appeal. As the lower court stated in its Order, the alleged right of the tenant may well be ventilated in another proceeding in due time.

19







WHEREFORE, in view of the foregoing, the instant Petition for Review is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 40849 and that of the Regional Trial Court of Valenzuela in Civil Case No. 3337-V-90 are both SET ASIDE and a new one rendered ordering private respondent Victor Bartolome to:

(a) surrender and deliver possession of that parcel of land covered by Transfer Certificate of Title No. V-14249 by way of lease to petitioner and to perform all obligations of his predecessor-in-interest, Encarnacion Bartolome, under the subject Contract of Lease with Option to Buy;

(b) surrender and deliver his copy of Transfer Certificate of Title No. V-14249 to respondent Register of Deeds for registration and annotation thereon of the subject Contract of Lease with Option to Buy;

(c) pay costs of suit. Sc

Respondent Register of Deeds is, accordingly, ordered to register and annotate the subject Contract of Lease with Option to Buy at the back of Transfer Certificate of Title No. V-14249 upon submission by petitioner of a copy thereof to his office.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur. Scmis

De Borja vs. Vda. De BorjaRepublic of the Philippines

SUPREME COURTManila

EN BANC

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.

20

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

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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 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.

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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 decedentleft 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.

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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:

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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".

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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

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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.

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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.

Concepcion, C.J., Makalintal, Zaldivar, Castro, Teehankee, Barredo, Makasiar, Antonio and Esguerra, JJ., concur.

Fernando, J., took no part.

Footnotes

1 She died during the pendency of these appeals, being substituted by Atty. Luis Panaguiton Jr., administrator of the estate (S.C. Resolution, 27 February 1970).

2 Annex A, Record on Appeal, G.R. No. L-28040, pp. 16-21.

3 Also: Osorio vs. Osorio Steamship Co., 41 Phil. 531; Baun vs. Heirs of Baun, 53 Phil. 654; Barretto vs. Tuason, 59 Phil. 845; Cuevas vs. Abesamis, 71 Phil. 147; Jayme vs. Gamboa, 75 Phil. 479; Iballe vs. Po.

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4 Garcia vs. David, 67 Phil. 279; Jakosalem vs. Rafols, 73 Phil. 628.

Go Ong vs CARepublic of the Philippines

SUPREME COURTManila

SECOND DIVISION

G.R. No. 75884 September 24, 1987

JULITA GO ONG, FOR HERSELF AND AS JUDICIAL GUARDIAN OF STEVEN GO ONG, petitioners, vs.THE HON. COURT OF APPEALS, ALLIED BANKING CORPORATION and the CITY SHERIFF OF QUEZON CITY, respondents.

PARAS, J.:

This is a petition for review on certiorari of the March 21, 1986 Decision * of the Court of Appeals in AC-G.R. CV No. 02635, "Julita Ong etc. vs. Allied Banking Corp. et al." affirming, with modification, the January 5, 1984 Decision of the Regional Trial Court of Quezon City in Civil Case No. Q-35230.

The uncontroverted facts of this case, as found by the Court of Appeals, are as follows:

...: Two (2) parcels of land in Quezon City Identified as Lot No. 12, Block 407, Psd 37326 with an area of 1960.6 sq. m. and Lot No. 1, Psd 15021, with an area of 3,660.8 sq. m. are covered by Transfer Certificate of Title No. 188705 in the name of "Alfredo Ong Bio Hong married to Julita Go Ong "(Exh. D). Alfredo Ong Bio Hong died on January 18, 1975 and Julita Go Ong was appointed administratrix of her husband's estate in Civil Case No. 107089. The letters of administration was registered on TCT No. 188705 on October 23, 1979. Thereafter, Julita Go Ong sold Lot No. 12 to Lim Che Boon, and TCT No. 188705 was partially cancelled and TCT No. 262852 was issued in favor of Lim Che Boon covering Lot No. 12 (Exh. D-4). On June 8, 1981

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Julita Go Ong through her attorney-in-fact Jovita K. Yeo (Exh. 1) mortgaged Lot No. 1 to the Allied Banking Corporation to secure a loan of P900,000.00 obtained by JK Exports, Inc. The mortgage was registered on TCT No. 188705 on the same date with the following notation: "... mortgagee's consent necessary in case of subsequent alienation or encumbrance of the property other conditions set forth in Doc. No. 340, Page No. 69, Book No. XIX, of the Not. Public of Felixberto Abad". On the loan there was due the sum of P828,000.00 and Allied Banking Corporation tried to collect it from Julita Go Ong, (Exh. E). Hence, the complaint alleging nullity of the contract for lack of judicial approval which the bank had allegedly promised to secure from the court. In response thereto, the bank averred that it was plaintiff Julita Go Ong who promised to secure the court's approval, adding that Julita Go Ong informed the defendant that she was processed the sum of P300,000.00 by the JK Exports, Inc. which will also take charge of the interest of the loan.

Concluding, the trial court ruled:

Absent (of) any evidence that the property in question is the capital of the deceased husband brought into the marriage, said property should be presumed as acquired during the marriage and, therefore, conjugal property,

After the dissolution of the marriage with the death of plaintiff's husband, the plaintiff acquired, by law, her conjugal share, together with the hereditary rights thereon. (Margate vs. Rabacal, L-14302, April 30, 1963). Consequently, the mortgage constituted on said property, upon express authority of plaintiff, notwithstanding the lack of judicial approval, is valid, with respect to her conjugal share thereon, together with her hereditary rights.

On appeal by petitioner, respondent Court of Appeals affirmed, with modification, the appealed decision (Record, pp. 19-22). The dispositive portion of the appellate court's decision reads:

WHEREFORE, with the modification that the extrajudicial foreclosure proceedings instituted by defendant against plaintiff shall be held in abeyance to await the final result of Civil Case No. 107089 of the Court of First Instance of Manila, 6th Judicial District Branch XXXII, entitled "IN THE MATTER OF THE INTESTATE ESTATE OF THE LATE ALFREDO ONG BIO: JULITA GO ONG, ADMINISTRATRIX". In pursuance with which the restraining order of the lower court in this case restraining the sale of the properties levied upon is hereby ordered to continue in full force and effect coterminous with the final result of Civil Case No. 107089, the decision appealed from is hereby affirmed. Costs against plaintiff-appellant.

SO ORDERED.

On April 8, 1986, petitioner moved for the reconsideration of the said decision (Ibid., pp. 24-29), but in a Resolution dated September 11, 1986, respondent court denied the motion for lack of merit (Ibid., p. 23). Hence, the instant petition (Ibid., pp. 6-17).

The Second Division of this Court, in a Resolution dated November 19, 1986 (Rollo, p. 30), without giving due course to the petition, resolved to require private respondent to comment thereon and it did on February 19, 1987 (Ibid., pp. 37-42). Thereafter, in a Resolution dated April 6, 1987, the petition was given due course and the parties were required to file their respective memoranda (Ibid., p. 43).

Petitioner filed her Memorandum on May 13, 1987 (Ibid., pp. 45-56), while private respondent filed its Memorandum on May 20, 1987 (Ibid., pp. 62-68).

The sole issue in this case is —

WHETHER OR NOT THE MORTGAGE CONSTITUTED OVER THE PARCEL OF LAND UNDER PETITIONER'S ADMINISTRATION IS NULL AND VOID FOR WANT OF JUDICIAL APPROVAL.

The instant petition is devoid of merit.

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The well-settled rule that the findings of fact of the trial court are entitled to great respect, carries even more weight when affirmed by the Court of Appeals as in the case at bar.

In brief, the lower court found: (1) that the property under the administration of petitioner — the wife of the deceased, is a community property and not the separate property of the latter; (2) that the mortgage was constituted in the wife's personal capacity and not in her capacity as administratrix; and (3) that the mortgage affects the wife's share in the community property and her inheritance in the estate of her husband.

Petitioner, asserting that the mortgage is void for want of judicial approval, quoted Section 7 of Rule 89 of the Rules of Court and cited several cases wherein this Court ruled that the regulations provided in the said section are mandatory.

While petitioner's assertion may have merit insofar as the rest of the estate of her husband is concerned the same is not true as regards her conjugal share and her hereditary rights in the estate. The records show that petitioner willingly and voluntarily mortgaged the property in question because she was processed by JK Exports, Inc. the sum of P300,000.00 from the proceeds of the loan; and that at the time she executed the real estate mortgage, there was no court order authorizing the mortgage, so she took it upon herself, to secure an order.

Thus, in confirming the findings of the lower court, as supported by law and the evidence, the Court of Appeals aptly ruled that Section 7 of Rule 89 of the Rules of Court is not applicable, since the mortgage was constituted in her personal capacity and not in her capacity as administratrix of the estate of her husband.

Nevertheless, petitioner, citing the cases of Picardal, et al. vs. Lladas (21 SCRA 1483) and Fernandez, et al. vs. Maravilla (10 SCRA 589), further argues that in the settlement proceedings of the estate of the deceased spouse, the entire conjugal partnership property of the marriage is under administration. While such may be in a sense true, that fact alone is not sufficient to invalidate the whole mortgage, willingly and voluntarily entered into by the petitioner. An opposite view would result in an injustice. Under similar circumstances, this Court applied the provisions of Article 493 of the Civil Code, where the heirs as co-owners shall each have the full ownership of his part and the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even effect of the alienation or mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership (Philippine National Bank vs. Court of Appeals, 98 SCRA 207 [1980]).

Consequently, in the case at bar, the trial court and the Court of Appeals cannot be faulted in ruling that the questioned mortgage constituted on the property under administration, by authority of the petitioner, is valid, notwithstanding the lack of judicial approval, with respect to her conjugal share and to her hereditary rights. The fact that what had been mortgaged was in custodia legis is immaterial, insofar as her conjugal share and hereditary share in the property is concerned for after all, she was the ABSOLUTE OWNER thereof. This ownership by hers is not disputed, nor is there any claim that the rights of the government (with reference to taxes) nor the rights of any heir or anybody else have been prejudiced for impaired. As stated by Associate Justice (later Chief Justice) Manuel Moran in Jakosalem vs. Rafols, et al., 73 Phil. 618 —

The land in question, described in the appealed decision, originally belonged to Juan Melgar. The latter died and the judicial administration of his estate was commenced in 1915 and came to a close on December 2, 1924, only. During the pendency of the said administration, that is, on July 5, 1917, Susana Melgar, daughter of the deceased Juan Melgar, sold the land with the right of repurchase to Pedro Cui, subject to the stipulation that during the period for the repurchase she would continue in possession of the land as lessee of the purchase. On December 12, 1920, the partition of the estate left by the deceased Juan Melgar was made, and the land in question was adjudicated to Susana Melgar. In 1921, she conveyed, in payment of professional fees, one-half of the land in favor of the defendant-appellee Nicolas Rafols, who entered upon the portion thus conveyed and has been in possession thereof up to the present. On July 23, 1921, Pedro Cui brought an action to recover said half of the land from Nicolas Rafols and the other half from the other defendants, and while that case was pending, or about August 4, 1925, Pedro Cui donated the whole land in question to Generosa Teves, the herein plaintiff-appellant, after trial, the lower court rendered a decision absolving Nicolas Rafols as to the one-half of the land conveyed to him by Susana Melgar, and declaring the plaintiff owner of the other half by express acknowledgment of the other defendants. The plaintiff appealed from that part of the judgment which is favorable to Nicolas Rafols.

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The lower court absolved Nicolas Rafols upon the theory that Susana Melgar could not have sold anything to Pedro Cui because the land was then in custodia legis, that is, under judicial administration. This is error. That the land could not ordinary be levied upon while in custodia legis, does not mean that one of the heirs may not sell the right, interest or participation which he has or might have in the lands under administration. The ordinary execution of property in custodia legis is prohibited in order to avoid interference with the possession by the court. But the sale made by an heir of his share in an inheritance, subject to the result of the pending administration, in no wise stands in the way of such administration.

The reference to judicial approval in Sec. 7, Rule 89 of the Rules of Court cannot adversely affect the substantiverights of private respondent to dispose of her Ideal [not inchoate, for the conjugal partnership ended with her husband's death, and her hereditary rights accrued from the moment of the death of the decedent (Art. 777, Civil Code) share in the co-heirship and/or co-ownership formed between her and the other heirs/co-owners (See Art. 493, Civil Code, supra.). Sec. 7, Art. 89 of the Civil Code applies in a case where judicial approval has to be sought in connection with, for instance, the sale or mortgage of property under administration for the payment, say of a conjugal debt, and even here, the conjugal and hereditary shares of the wife are excluded from the requisite judicial approval for the reason already adverted to hereinabove, provided of course no prejudice is caused others, including the government.

Moreover, petitioner is already estopped from questioning the mortgage. An estoppel may arise from the making of a promise even though without consideration, if it was intended that the promise should be relied upon and in fact it was relied upon, and if a refusal to enforce it would be virtually to sanction the perpetration of fraud or would result in other injustice (Gonzalo Sy Trading vs. Central Bank, 70 SCRA 570).

PREMISES CONSIDERED, the instant petition is hereby DENIED and the assailed decision of the Court of Appeals is hereby AFFIRMED.

SO ORDERED.

Yap (Chairman), Melencio-Herrera, Padilla and Sarmiento, JJ., concur.

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Butte vs. Manuel and SonsRepublic of the Philippines

SUPREME COURTManila

EN BANC

G.R. No. L-15499 February 28, 1962

ANGELA M. BUTTE, plaintiff-appellant, vs.MANUEL UY and SONS, INC., defendant-appellee.

Delgado, Flores and Macapagal for plaintiff-appellant.Pelaez and Jalandoni for defendant-appellee.

REYES, J.B.L., J.:

Appeal from a decision of the Court of First instance of Manila dismissing the action for legal redemption filed by plaintiff-appellant.

It appears that Jose V. Ramirez, during his lifetime, was a co-owner of a house and lot located at Sta. Cruz, Manila, as shown by Transfer Certificate of Title No. 52789, issued in the name of the following co-owners: Marie Garnier Vda. de Ramirez, 1/6; Jose V. Ramirez, 1/6; Jose E. Ramirez, 1/6; Rita de Ramirez, 1/6; and Jose Ma. Ramirez, 1/6.

On October 20, 1951, Jose V. Ramirez died. Subsequently, Special Proceeding No. 15026 was instituted to settle his estate, that included the one-sixth (1/6) undivided share in the aforementioned property. And although his last will and testament, wherein he bequeathed his estate to his children and grandchildren and one-third (1/3) of the free portion to Mrs. Angela M. Butte, hereinafter referred to as plaintiff-appellant, has been admitted to probate, the estate proceedings are still pending up to the present on account of the claims of creditors which exceed the assets of the deceased. The Bank of the Philippine Islands was appointed judicial administrator.

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Meanwhile, on December 9, 1958, Mrs. Marie Garnier Vda. de Ramirez, one of the co-owners of the late Jose V. Ramirez in the Sta. Cruz property, sold her undivided 1/6 share to Manuel Uy & Sons, Inc. defendant-appellant herein, for the sum of P500,000.00. After the execution by her attorney-in-fact, Mrs. Elsa R. Chambers, of an affidavit to the effect that formal notices of the sale had been sent to all possible redemptioners, the deed of sale was duly registered and Transfer Certificate of Title No. 52789 was cancelled in lieu of which a new one was issued in the name of the vendee and the other-co-owners.

On the same day (December 9, 1958), Manuel Uy & Sons, Inc. sent a letter to the Bank of the Philippine Islands as judicial administrator of the estate of the late Jose V. Ramirez informing it of the above-mentioned sale. This letter, together with that of the bank, was forwarded by the latter to Mrs. Butte c/o her counsel Delgado, Flores & Macapagal, Escolta, Manila, and having received the same on December 10, 1958, said law office delivered them to plaintiff-appellant's son, Mr. Miguel Papa, who in turn personally handed the letters to his mother, Mrs. Butte, on December 11 and 12, 1958. Aside from this letter of defendant-appellant, the vendor, thru her attorney-in-fact Mrs. Chambers, wrote said bank on December 11, 1958 confirming vendee's letter regarding the sale of her 1/6 share in the Sta. Cruz property for the sum of P500,000.00. Said letter was received by the bank on December 15, 1958 and having endorsed it to Mrs. Butte's counsel, the latter received the same on December 16, 1958. Appellant received the letter on December 19, 1958.

On January 15, 1959, Mrs. Angela M. Butte, thru Atty. Resplandor Sobretodo, sent a letter and a Philippine National Bank cashier's check in the amount of P500,000.00 to Manuel Uy & Sons, Inc. offering to redeem the 1/6 share sold by Mrs. Marie Garnier Vda. de Ramirez. This tender having been refused, plaintiff on the same day consigned the amount in court and filed the corresponding action for legal redemption. Without prejudice to the determination by the court of the reasonable and fair market value of the property sold which she alleged to be grossly excessive, plaintiff prayed for conveyance of the property, and for actual, moral and exemplary damages.

After the filing by defendant of its answer containing a counterclaim, and plaintiff's reply thereto, trial was held, after which the court rendered decision on May 13, 1959, dismissing plaintiff's complaint on the grounds that she has no right to redeem the property and that, if ever she had any, she exercised the same beyond the statutory 30-day period for legal redemptions provided by the Civil Code. The counterclaim of defendant for damages was likewise dismissed for not being sufficiently established. Both parties appealed directly to this Court.

Based on the foregoing facts, the main issues posed in this appeal are: (1) whether or not plaintiff-appellant, having been bequeathed 1/3 of the free portion of the estate of Jose V. Ramirez, can exercise the right of legal redemption over the 1/6 share sold by Mrs. Marie Garnier Vda. de Ramirez despite the presence of the judicial administrator and pending the final distribution of her share in the testate proceedings; and (2) whether or not she exercised the right of legal redemption within the period prescribed by law.

The applicable law involved in the present case is contained in Articles 1620, p. 1, and 1623 of the Civil Code of the Philippines, which read as follows:

ART. 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the other-co-owners or of any of them, are sold to a third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one.

Should two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to the share they may respectively have in the thing owned in common. (1522a)

ART. 1623. The right of legal predemption or redemption shall not be exercised except within thirty days from the notice in writing by the respective vendor, or by the vendor, as the case may be. The deed of sale shall not be accorded in the Registry of Property, unless accompanied by an affidavit of the vendor that he has given written notice thereof at all possible redemptioners.

The right of redemption of co-owners excludes that of adjoining owners. (1524a)

That the appellant Angela M. Butte is entitled to exercise the right of legal redemption is clear. As testamentary heir of the estate of J.V. Ramirez, she and her co-heirs acquired an interest in the undivided one-sixth (1/6) share owned by her predecessor (causante) in the Santa Cruz property, from the moment of the death of the aforesaid co-owner, J.V. Ramirez. By law, the rights to the succession of a deceased persons are transmitted to

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his heirs from the moment of his death, and the right of succession includes all property rights and obligations that survive the decedent.

ART. 776. The inheritance includes all the property, rights and obligations of a person which are not extinguished by his death. (659)

ART. 777. The rights to the succession are transmitted from the moment of the death of the decedent. (657a)

ART. 947. The legatee or devisee acquires a right to the pure and simple legacies or devisees from the death of the testator, and transmits it to his heirs. (881a)

The principle of transmission as of the time of the predecessor's death is basic in our Civil Code, and is supported by other related articles. Thus, the capacity of the heir is determined as of the time the decedent died (Art. 1034); the legitime is to be computed as of the same moment(Art. 908), and so is the in officiousness of the donation inter vivos (Art. 771). Similarly, the legacies of credit and remission are valid only in the amount due and outstanding at the death of the testator (Art. 935),and the fruits accruing after that instant are deemed to pertain to the legatee (Art. 948).

As a consequence of this fundamental rule of succession, the heirs of Jose V. Ramirez acquired his undivided share in the Sta. Cruz property from the moment of his death, and from that instant, they became co-owners in the aforesaid property, together with the original surviving co-owners of their decedent (causante). A co-owner of an undivided share is necessarily a co-owner of the whole. Wherefore, any one of the Ramirez heirs, as such co-owner, became entitled to exercise the right of legal redemption (retracto de comuneros) as soon as another co-owner (Maria Garnier Vda. de Ramirez) had sold her undivided share to a stranger, Manuel Uy & Sons, Inc. This right of redemption vested exclusively in consideration of the redemptioner's share which the law nowhere takes into account.

The situation is in no wise altered by the existence of a judicial administrator of the estate of Jose V. Ramirez while under the Rules of Court the administrator has the right to the possession of the real and personal estate of the deceased, so far as needed for the payment of the decedent's debts and the expenses of administration (sec. 3, Rule 85), and the administrator may bring or defend actions for the recovery or protection of the property or rights of the deceased (sec. 2, Rule 88), such rights of possession and administration do not include the right of legal redemption of the undivided share sold to Uy & Company by Mrs. Garnier Ramirez. The reason is obvious: this right of legal redemption only came into existence when the sale to Uy & Sons, Inc. was perfected, eight (8) years after the death of Jose V. Ramirez, and formed no part of his estate. The redemption right vested in the heirs originally, in their individual capacity, they did not derivatively acquire it from their decedent, for when Jose V. Ramirez died, none of the other co-owners of the Sta. Cruz property had as yet sold his undivided share to a stranger. Hence, there was nothing to redeem and no right of redemption; and if the late Ramirez had no such right at his death, he could not transmit it to his own heirs. Much less could Ramirez acquire such right of redemption eight years after his death, when the sale to Uy & Sons, Inc. was made; because death extinguishes civil personality, and, therefore, all further juridical capacity to acquire or transmit rights and obligations of any kind (Civil Code of the Phil., Art. 42).

It is argued that the actual share of appellant Mrs. Butte in the estate of Jose V. Ramirez has not been specifically determined as yet, that it is still contingent; and that the liquidation of estate of Jose V. Ramirez may require the alienation of the decedent's undivided portion in the Sta. Cruz property, in which event Mrs. Butte would have no interest in said undivided portion. Even if it were true, the fact would remain that so long as that undivided share remains in the estate, the heirs of Jose V. Ramirez own it, as the deceased did own it before his demise, so that his heirs are now as much co-owners of the Sta. Cruz property as Jose V. Ramirez was himself a co-owner thereof during his lifetime. As co-owners of the property, the heirs of Jose V. Ramirez, or any one of them, became personally vested with right of legal redemption as soon as Mrs. Garnier sold her own pro-indiviso interest to Uy & Sons. Even if subsequently, the undivided share of Ramirez (and of his heirs) should eventually be sold to satisfy the creditors of the estate, it would not destroy their ownership of it before the sale, but would only convey or transfer it as in turn sold (of it actually is sold) to pay his creditors. Hence, the right of any of the Ramirez heirs to redeem the Garnier share will not be retroactively affected. All that the law requires is that the legal redemptioner should be a co-owner at the time the undivided share of another co-owner is sold to a stranger. Whether or not the redemptioner will continue being a co-owner after exercising the legal redemptioner is irrelevant for the purposes of law.

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Nor it can be argued that if the original share of Ramirez is sold by the administrator, his heirs would stand in law as never having acquired that share. This would only be true if the inheritance is repudiated or the heir's quality as such is voided. But where the heirship is undisputed, the purchaser of hereditary property is not deemed to have acquired the title directly from the deceased Ramirez, because a dead man can not convey title, nor from the administrator who owns no part of the estate; the purchaser can only derive his title from the Ramirez heirs, represented by the administrator, as their trustee or legal representative.

The right of appellant Angela M. Butte to make the redemption being established, the next point of inquiry is whether she had made or tendered the redemption price within the 30 days from notices as prescribed by law. This period, be it noted, is peremptory, because the policy of the law is not to leave the purchaser's title in uncertainty beyond the established 30-day period. In considering whether or not the offer to redeem was timely, we think that the notice given by the vendee (buyer) should not be taken into account. The text of Article 1623 clearly and expressly prescribes that the thirty days for making the redemption are to be counted from notice in writing by the vendor. Under the old law (Civ. Code of 1889, Art. 1524), it was immaterial who gave the notice; so long as the redeeming co-owner learned of the alienation in favor of the stranger, the redemption period began to run. It is thus apparent that the Philippine legislature in Article 1623 deliberately selected a particular method of giving notice, and that method must be deemed exclusive (39 Am. Jur., 237; Payne vs. State, 12 S.W. [2d] 528). As ruled in Wampler vs. Lecompte, 150 Atl. 458 (affd. in 75 Law Ed. [U.S.] 275) —

Why these provisions were inserted in the statute we are not informed, but we may assume until the contrary is shown, that a state of facts in respect thereto existed, which warranted the legislature in so legislating.

The reasons for requiring that the notice should be given by the seller, and not by the buyer, are easily divined. The seller of an undivided interest is in the best position to know who are his co-owners that under the law must be notified of the sale. Also, the notice by the seller removes all doubts as to the fact of the sale, its perfection; and its validity, the notice being a reaffirmation thereof, so that the party need not entertain doubt that the seller may still contest the alienation. This assurance would not exist if the notice should be given by the buyer.

The notice which became operative is that given by Mrs. Chambers, in her capacity as attorney-in-fact of the vendor Marie Garnier Vda. de Ramirez. Under date of December 11, 1958, she wrote the Administrator Bank of the Philippine Islands that her principal's one-sixth (1/6) share in the Sta. Cruz property had been sold to Manuel Uy & Sons, Inc. for P500,000.00. The Bank received this notice on December 15, 1958, and on the same day endorsed it to Mrs. Butte, care of Delgado, Flores and Macapagal (her attorneys), who received the same on December 16, 1958. Mrs. Butte tendered redemption and upon the vendee's refusal, judicially consigned the price of P500,000.00 on January 15, 1959. The latter date was the last one of the thirty days allowed by the Code for the redemption, counted by excluding December 16, 1958 and including January 15, 1959, pursuant to Article 13 of the Civil Code. Therefore, the redemption was made in due time.

The date of receipt of the vendor's notice by the Administrator Bank (December 15) can not be counted as determining the start of thirty days; for the Administrator of the estate was not a proper redemptioner, since, as previously shown, the right to redeem the share of Marie Garnier did not form part of the estate of Jose V. Ramirez.

We find no jurisdiction for appellant's claim that the P500,000,00. paid by Uy & Sons, Inc. for the Garnier share is grossly excessive. Gross excess cannot be predicated on mere individual estimates of market price by a single realtor.

The redemption and consignation having been properly made, the Uy counterclaim for damages and attorney's fees predicated on the assumption that plaintiff's action was clearly unfounded, becomes untenable.

PREMISES CONSIDERED, the judgment appealed from is hereby reversed and set aside, and another one entered:

(a) Declaring the consignation of P500,000,00 made by appellant Angela M. Butte duly and properly made;

(b) Declaring that said appellant properly exercised in due time the legal redemption of the one-sixth (1/6) undivided portion of the land covered by Certificate of Title No. 59363 of the Office of the Register

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of Deeds of the City of Manila, sold on December 9, 1958 by Marie Garnier Vda. de Ramirez to appellant Manuel Uy & Sons, Inc.

(c) Ordering appellant Manuel Uy & Sons, Inc. to accept the consigned price and to convey to Angela M. Butte the undivided portion above referred to, within 30 days from the time our decision becomes final, and subsequently to account for the rentals and fruits of the redeemed share from and after January 15, 1958, until its conveyance; and.

(d) Ordering the return of the records to the court of origin for further proceedings conformable to this opinion.

Without finding as to costs.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Barrera and Dizon, JJ., concur.Paredes and De Leon, JJ., took no part.

Reganon vs. ImperialRepublic of the Philippines

SUPREME COURTManila

EN BANC

G.R. No. L-24434 January 17, 1968

HEIRS OF PEDRO REGANON, JOVENCIA REGANON, MENCIA REGANON, JOSEFA REGANON, VIOLETA REGANON, and FLORA REGANON, plaintiffs-appellees, vs.RUFINO IMPERIAL, defendant-appellant.

Torcuato L. Galon for plaintiffs-appellees. V. Lacaya for defendant-appellant.

BENGZON, J.P., J.:

This is an appeal from the orders dated June 9, 1964, July 14, 1964 and August 11, 1964, respectively, of the Court of First Instance of Zamboanga del Norte (Dipolog, Branch II).

The facts of the case are admitted by both parties.

On February 22, 1963, the heirs of Pedro Reganon filed a complaint for recovery of ownership and possession of about one-hectare portion of a parcel of land (Lot No. 1 or Lot No. 4952, situated at Miasi, Polanco, Zamboanga del Norte, covered by O.T.C. No. 1447, with an area of 7.9954 hectares), with damages, against Rufino Imperial.

Defendant not having filed an answer within the reglementary period, the plaintiffs on April 8, 1963 filed a motion to declare the former in default. The trial court granted the motion in its order dated April 10, 1963.

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On April 23, 1963, the plaintiffs presented their evidence ex parte before the Clerk of Court acting as Commissioner. The court a quo on May 6, 1963, rendered a decision declaring the plaintiffs lawful owners of the land in question and entitled to its peaceful possession and enjoyment; ordering defendant immediately to vacate the portion occupied by him and to restore the peaceful possession thereof to plaintiffs; and sentencing defendant to pay plaintiffs the amount of P1,929.20 and the costs.

On November 29, 1963, the plaintiffs filed a motion for issuance of a writ of execution. This was granted by the trial court in its order of December 9, 1963.

The Deputy Provincial Sheriff submitted on February 8, 1964 a sheriff's return of proceedings reporting the garnishment and sale of a carabao and goat belonging to defendant for P153.00, and the attachment and sale of defendant's parcel of land covered by Tax Declaration No. 4694, situated in Sicet, Polanco, Zamboanga del Norte, for P500.00 — both sales having been made to the only bidder, plaintiffs' counsel Atty. Vic T. Lacaya.

On March 13, 1964, the Philippine National Bank deposited in the Philippine National Bank-Dipolog Branch the residuary estate of its former ward, Eulogio Imperial, in the sum of P10,303.80, pursuant to an order of Branch I of the Court of First Instance of Zamboanga del Norte in Sp. Proc. No. R-145.

On May 25, 1964, the heirs of said Eulogio Imperial, one of whom is defendant, executed a Deed of Extrajudicial Partition of the residuary estate, wherein was apportioned P1,471.97 as defendant Rufino Imperial's share.

Informed of this development, the plaintiffs filed on June 5, 1964 an ex parte motion for issuance of an alias writ of execution and of an order directing the manager, or the representative, of the Philippine National Bank-Dipolog Branch, to hold the share of defendant and deliver the same to the provincial sheriff of the province to be applied to the satisfaction of the balance of the money judgment. This was granted by the trial court (Branch II) in its order dated June 9, 1964.

On June 17, 1964, the Deputy Provincial Sheriff issued a sheriffs notification for levy addressed to defendant, giving notice of the garnishment of the rights, interests, shares and participation that defendant may have over the residuary estate of the late Eulogio Imperial, consisting of the money deposited in the Philippine National Bank-Dipolog Branch.

Defendant, through counsel, appearing for the first time before the trial court, on June 24, 1964 filed a motion for reconsideration of the order dated June 9, 1964, and to quash the alias writ of execution issued pursuant to it, to which plaintiffs filed their opposition on July 6, 1964. On July 14, 1964, the trial court denied defendant's aforesaid motion.

Defendant's second motion for reconsideration likewise having denied by the trial court in its order of August 11, 1964, defendant appealed to Us, raising the following issues:

(1) Upon the death of a ward, is the money accumulated in his guardianship proceedings and deposited in a bank, still considered in custodia legis and therefore cannot be attached?

(2) Is the residuary estate of a U.S. veteran, which consists in the aggregate accumulated sum from the monthly allowances given him by the United States Veterans Administration (USVA) during his lifetime, exempt from execution?

Defendant-appellant argues that the property of an incompetent under guardianship is in custodia legis and therefore can not be attached.

It is true that in a former case 1 it was held that property under custodia legis can not be attached. But this was under the old Rules of Court. The new Rules of Court 2 now specifically provides for the procedure to be followed in case what is attached is in custodia legis. 3 The clear import of this new provision is that property under custodia legis is now attachable, subject to the mode set forth in said rule.

Besides, the ward having died, the guardianship proceedings no longer subsist:

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The death of the ward necessarily terminates the guardianship, and thereupon all powers and duties of the guardian cease, except the duty, which remains, to make a proper accounting and settlement in the probate court. 4

As a matter of fact, the guardianship proceedings was ordered conditionally closed by Branch I of the Court of First Instance of Zamboanga del Norte in which it was pending, in its order of February 8, 1964, where it stated —

In the meantime, the guardian Philippine National Bank is hereby directed to deposit the residuary estate of said ward with its bank agency in Dipolog, this province, in the name of the estate of the deceased ward Eulogio Imperial, preparatory to the eventual distribution of the same to the heirs when the latter shall be known, and upon proof of deposit of said residuary estate, the guardian Philippine National Bank shall forthwith be relieved from any responsibility as such, and this proceeding shall be considered closed and terminated. 5

And the condition has long been fulfilled, because on March 13, 1964 the Philippine National Bank-Manila deposited the residuary estate of the ward with the Philippine National Bank-Dipolog Branch, evidenced by a receipt attached to the records in Sp. Proc. No. R-145. 6

When Eulogio Imperial died on September 13, 1962, the rights to his succession — from the moment of his death — were transmitted to his heirs, one of whom is his son and heir, defendant-appellant herein. 7 This automatic transmission can not but proceed with greater ease and certainty than in this case where the parties agree that the residuary estate is not burdened with any debt. For,

The rights to the succession of a person are transmitted from the moment of death, and where, as in this case, the heir is of legal age and the estate is not burdened with any debts, said heir immediately succeeds, by force of law, to the dominion, ownership, and possession of the properties of his predecessor and consequently stands legally in the shoes of the latter. 8

That the interest of an heir in the estate of a deceased person may be attached for purposes of execution, even if the estate is in the process of settlement before the courts, is already a settled matter in this jurisdiction. 9

It is admitted that the heirs of Eulogio Imperial, including herein defendant-appellant, have on May 25, 1964 executed a Deed of Extrajudicial Partition. This instrument suffices to settle the entire estate of the decedent — provided all the requisites for its validity are fulfilled 10 — even without the approval of the court. Therefore, the estate for all practical purposes have been settled. The heirs are at full liberty to withdraw the residuary estate from the Philippine National Bank-Dipolog Branch and divide it among themselves. The only reason they have not done so is because of the alleged illegal withdrawal from said estate of the amount of P1,080.00 by one Gloria Gomez by authority of Branch I of the Court of First Instance of Zamboanga del Norte, which incident is now on appeal before the Court of Appeals. This appeal, however, does not detract any from the fact that the guardianship proceedings is closed and terminated and the residuary estate no longer under custodia legis.

Finally, it is defendant-appellant's position that the residuary estate of Eulogio Imperial, a former U.S. veteran, having been set aside from the monthly allowances given him by the United States Veterans Administration (USVA) during his lifetime, is exempt from execution.

Any pension, annuity, or gratuity granted by a Government to its officers or employees in recognition of past services rendered, is primordially aimed at tiding them over during their old age and/or disability. This is therefore a right personalissima, purely personal because founded on necessity. It requires no argument to show that where the recipient dies, the necessity motivating or underlying its grant necessarily ceases to be. Even more so in this case where the law 11 providing for the exemption is calculated to benefit U.S. veterans residing here, and is therefore merely a manifestation of comity.

Besides, as earlier stated, the heirs of Eulogio Imperial, one of whom is appellant, have already executed a Deed of Extrajudicial Partition — the end result of which is that the property is no longer the property of the estate but of the individual heirs. And it is settled that:

When the heirs by mutual agreement have divided the estate among themselves, one of the heirs can not therefore secure the appointment of an administrator to take charge of and administer the estate or a

39

part thereof. The property is no longer the property of the estate, but of the individual heirs, whether it remains undivided or not. 12

WHEREFORE, the orders appealed from are hereby affirmed, with costs against defendant-appellant. So ordered.1äwphï1.ñët

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.

Ramirez vs BaltazarRepublic of the Philippines

SUPREME COURTManila

EN BANC

G.R. No. L-25049 August 30, 1968

FILEMON RAMIREZ, MONICA RAMIREZ, and JOSE EGUARAS, plaintiffs-appellants, vs.ARTEMIO BALTAZAR, ET AL., defendants-appellees.

Eduardo M. Peralta for plaintiffs-appellants. Tomas P. Anonuevo for defendants-appellees Artemio Baltazar and Susana Flores. Tirso Caballero for defendant-appellee Artemio Diawan.

ANGELES, J.:

On appeal from an order dismissing the complaint, on motion to dismiss, in Civil Case No. SC-319 of the Court of First Instance of Laguna.

It appears that on 6 January 1959, Victoriana Eguaras single, made and executed a real estate mortgage over a parcel of land, owned by her in fee simple, as security for a loan of P2,170.00 in favor of the spouses Artemio Baltazar and Susana Flores.

Upon the demise of the mortgagor, the mortgagees, as creditors of the deceased, on 16 September 1960 filed a petition for the intestate proceedings of her estate, in the Court of First Instance of Laguna, docketed as Civil Case No. SC-99 wherein said mortgages, as petitioners, alleged that Filemon Ramirez and Monica Ramirez are the heirs of the deceased. Filemon Ramirez was appointed administrator of the estate; however, having failed to

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qualify, on 16 January 1961, the court appointed Artemio Diawan, then a deputy clerk of court, administrator of the estate who, in due time, qualified for the office.

On 19 April 1961, the mortgagees, Artemio Baltazar and Susana Flores, filed a complaint for foreclosure of the aforesaid mortgage, against Artemio Diawan, in his capacity as administrator of the estate, docketed as Civil Case No. SC-292 of the Court of First Instance of Laguna. The defendant-administrator was duly served with summons but he failed to answer, whereupon, on petition of the plaintiffs said defendant was declared in default. The case was referred to a commissioner to receive the evidence for the plaintiffs, and defendant-administrator, as deputy clerk of court, acted as such hearing commissioner. 1äwphï1.ñët

On 16 August 1961, decision was rendered decreeing the foreclosure of the mortgaged property and the sale thereof, if, within ninety days from finality of the decision, the obligation was not fully paid. The judgment not having been satisfied, a writ of execution was issued for the sale of the mortgaged property, and after compliance with the requirements of the law regarding the sending, posting and publication of the notice of sale, the Sheriff sold the property at public auction to the highest bidder, who happened to be the plaintiffs themselves, for the sum of P2,888.50 covering the amount of the judgment, plus the expenses of the sale and the Sheriff's fees. On petition of the plaintiffs, the sale was confirmed by the court on 26 January 1962.

On 6 February 1962, Filemon Ramirez, Monica Ramirez and Jose Eguaras, the first two being the heirs named in the petition for intestate proceedings, filed a complaint designated "For the Annulment of all Proceedings in said Civil Case No. SC-292 for the Foreclosure of the Mortgage", against the spouses Artemio Baltazar and Susana Flores, and Artemio Diawan, in his capacity as administrator of the estate of Victoriana Eguaras, deceased, and Silverio Talabis, in his capacity as deputy provincial sheriff of Laguna, docketed as Civil Case No. SC-319 of the Court of First Instance of Laguna.

The facts hereinabove narrated are, succinctly, contained in the complaint in said Civil Case No. SC-319, with the additional averments that the defendant Diawan, the deputy clerk of court appointed as administrator of the intestate estate of the deceased, acted in collusion with the other defendants Artemio Baltazar and Susana Flores, deliberately and in fraud of the plaintiffs: (a) in allowing the reglementary period within which to file an answer to lapse without notifying and/or informing the said plaintiffs of the complaint for foreclosure, as a result of which he was declared in default to the prejudice of the estate which he represents; (b) that had the plaintiffs (Monica and Filemon) been notified of the pendency of the case, the defendant administrator could have interposed a counterclaim because payment in the sum of P1,548.52 had been made and received by the mortgagees on account of the debt; (c) in presiding as hearing officer in the ex parte hearing in Civil Case No. 292, to receive evidence for plaintiffs therein, notwithstanding the fact that there was another deputy clerk of court available who could have acted in his stead, as a result of which an anomalous situation was created whereby he was a defendant and at the same time a commissioner receiving evidence against himself as administrator; (d) in allowing judgment to become final without notifying the plaintiffs; (e) in deliberately, allowing the 90-day period within which to make payment to expire without notifying the heirs, as a result of which the said heirs were not afforded an opportunity to make payments ordered by the Court in its decision; and (f) in refusing to help the heirs seek postponement of the auction sale. It is also alleged that it was only when the property foreclosed was published for sale at public auction that the heirs came to know about the foreclosure proceedings.

The defendants spouses, Artemio Baltazar and Susana Flores, filed a motion to dismiss the complaint on the ground that the plaintiffs have no legal capacity to sue; defendant Diawan likewise moved to dismiss on two grounds: that plaintiffs have no legal capacity to sue and that the complaint states no cause of action. 1äwphï1.ñët

Despite vigorous opposition interposed by the plaintiffs against the aforesaid motions to dismiss, the court, on 13 March 1962, dismissed the complaint with costs against the plaintiffs, reasoning thus: that "upon consideration of the evidence, said defendant could not have offered any evidence to avoid the foreclosure of the mortgage which the Court found to be in order. Under the circumstances and with the apparent disinterestedness of Filemon and Rolando to qualify as administrator when appointed, there could not have been any connivance and/or collusion between plaintiffs in this case and Artemio Diawan as administrator"; and that plaintiffs have no legal capacity to sue since their status as legal heirs of the deceased has yet to be determined precisely in Special Proceeding No. SC-99, and until such status is so fixed by the Court, they have no cause of action against defendants.

In that order of 13 March 1962, the court also denied plaintiffs' petition for the issuance of a writ of preliminary injunction to enjoin defendants from entering and taking physical possession of the land in question on the

41

ground "that possession thereof was effected and delivered by the Provincial Sheriff to Artemio Baltazar and Susana Flores on February, 1962."

Reconsideration of the aforesaid order having been denied, the plaintiffs took the present appeal where they assigned the following errors: (1) in holding that plaintiffs-appellants have no legal capacity to sue until their status as legal heirs of the deceased is determined in Special Proceeding No. SC-99; (2) in ruling that there was no collusion or connivance among the defendants-appellees, despite the fact that the issue in the motion to dismiss is purely legal, not factual; and (3) in denying the petition for a writ of preliminary injunction.

At the outset, let it be remembered that the defendants-appellees, in availing themselves of the defense that the plaintiffs-appellants had not been declared to be the heirs of the deceased Victoriana Eguaras, have overlooked the fact that the (defendants-appellees) themselves in their petition for intestate proceedings (Case SC-99) have alleged that Filemon Ramirez and Monica Ramirez, two of herein plaintiffs-appellants, are the heirs of the deceased. Insofar as defendants-appellees are concerned, it is our opinion that they are estopped from questioning the heirship of these two named persons to the estate of the deceased.

There is no question that the rights to succession are automatically transmitted to the heirs from the moment of the death of the decedent.1 While, as a rule, the formal declaration or recognition to such successional rights needs judicial confirmation, this Court has, under special circumstances, protected these rights from encroachments made or attempted before the judicial declaration.2 In Pascual vs. Pascual,3 it was ruled that although heirs have no legal standing in court upon the commencement of testate or intestate proceedings, this rule admits of an exception as "when the administrator fails or refuses to act in which event the heirs may act in his place."

A similar situation obtains in the case at bar. The administrator is being charged to have been in collusion and connivance with the mortgagees of a property of the deceased, allowing its foreclosure without notifying the heirs, to the prejudice of the latter. Since the ground for the present action to annul the aforesaid foreclosure proceedings is the fraud resulting from such insidious machinations and collusion in which the administrator has allegedly participated, it would be farfetched to expect the said administrator himself to file the action in behalf of the estate. And who else but the heirs, who have an interest to assert and to protect, would bring the action? Inevitably, this case should fall under the exception, rather than the general rule that pending proceedings for the settlement of the estate, the heirs have no right to commence an action arising out of the rights belonging to the deceased.

On the second point raised, We fully agree with the plaintiffs-appellants that the lower court had gone too far in practically adjudicating the case on the merits when it made the observation that "there could not have been any connivance and/or collusion between plaintiffs in this case and Artemio Diawan as administrator." A thorough scrutiny of the allegations in the motions to dismiss filed by defendants-appellees does not indicate that that question was ever put at issue therein. On the other hand, the controversy — on the existence or inexistence of collusion between the parties as a result of which judgment was rendered against the estate — is the very core of the complaint that was dismissed. Undoubtedly, the cause of action is based on Section 30, Rule 132 of the Rules of Court.

We are not, however, in accord with the third assigned error — the denial of the motion for the issuance of preliminary injunction — for it puts at issue the factual finding made by the lower court that the defendants had already been placed in possession of the property. At this stage of the proceeding, and considering the nature of the case before Us, such a question is, at this time, beyond the competence of the Court.

PREMISES CONSIDERED, the order appealed from is hereby set aside insofar as it dismissed the complaint in Civil Case No. SC-319, and the records be remanded to the lower court for further proceedings. Costs against defendants-appellees. The Clerk of Court is directed to furnish a copy of this decision to the Department of Justice for its information.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro and Fernando, JJ., concur.

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Noceda vs CA

THIRD DIVISION

[G.R. No. 119730. September 2, 1999]

RODOLFO NOCEDA, petitioner, vs. COURT OF APPEALS and AURORA ARBIZO DIRECTO, respondents.

D E C I S I O NGONZAGA-REYES, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court seeks to reverse the decision dated March 31, 1995 of the respondent Court of Appeals[1] in CA GR CV No. 38126, affirming with modification the decision of the Regional Trial Court, Branch 71, of Iba, Zambales, [2] in an action by private respondent against petitioner for recovery of possession and ownership and rescission/annulment of donation.

The facts of the case as summarized by the respondent Court are as follows:[3]

On June 1, 1981, plaintiff Aurora Directo, defendant Rodolfo Noceda, and Maria Arbizo, the daughter, grandson, and widow, respectively, of the late Celestino Arbizo, who died in 1956, extrajudicially settled a parcel of land, Lot 1121, located at Bitaog, San Isidro, Cabangan,

43

Zambales, which was said to have an area of 66,530 square meters. Plaintiff Directos share was 11,426 square meters, defendant Noceda got 13,294 square meters, and the remaining 41,810 square meters went to Maria Arbizo (Exhibit G). On the same date, plaintiff Directo donated 625 square meters of her share to defendant Noceda, who is her nephew being the son of her deceased sister, Carolina (Exhibit D). However, on August 17, 1981, another extrajudicial settlement-partition of Lot 1121 was executed by plaintiff Directo, defendant Noceda, and Maria Arbizo. Three fifths of the said land went to Maria Arbizo while plaintiff Directo and defendant Noceda got only one-fifth each. In said extrajudicial settlement-partition as well as in the Tax Declaration 16-0032 over Lot 1121 in the name of the late Celestino Arbizo, the said parcel of land was said to have an area of only 29,845 square meters (Exhibit C). Sometime in 1981, defendant Noceda constructed his house on the land donated to him by plaintiff Directo. Plaintiff Directo fenced the portion allotted to her in the extrajudicial settlement, excluding the donated portion, and constructed thereon three huts. But in 1985, defendant Noceda removed the fence earlier constructed by plaintiff Directo, occupied the three huts (3) and fenced the entire land of plaintiff Directo without her consent.Plaintiff Directo demanded from defendant Noceda to vacate her land, but the latter refused. Hence, plaintiff Directo filed the present suit, a complaint for the recovery of possession and ownership and rescission/annulment of donation, against defendant Noceda before the lower court. During the trial, the lower court ordered that a relocation survey of Lot 1121 be conducted by Engr. Edilberto Quejada of the Bureau of Lands. After the survey of Lot 1121 in the presence of both parties, Engr. Edilberto Quejada reported that the area of Lot 1121 stated in the extrajudicial settlement-partition of August 17, 1981 was smaller than the actual area of Lot 1121 which is 127,298 square meters. Engr. Quejada subdivided Lot 1121, excluding the portions occupied by third persons, known as Lot 8, the salvage zone and the road lot, on the basis of the actual occupancy of Lot 1121 by the heirs of the late Celestino Arbizo and the extrajudicial settlement-partition of August 17, 1981. The portion denominated as Lot A, with an area of 12,957 square meters was the share of defendant Noceda; Lot C, with the same area as that of Lot A, was the share of plaintiff Directo, a portion of which was donated to defendant Noceda; and Lot B, with an area of 38,872 square meters, went to Maria Arbizo (Exhibit E).

On November 6, 1991, the Regional Trial Court, Branch 71, of Iba, Zambales rendered a decision, the dispositive portion of which reads as follows:[4]

WHEREFORE, in view of the foregoing considerations, the Court hereby renders judgment:

(a) Declaring the Extra-Judicial Settlement-Partition dated August 19, 1981, valid;

(b) Declaring the Deed of Donation dated June 1, 1981, revoked;

(c) Ordering the defendant to vacate and reconvey that donated portion of Lot 2, Lot 1121 subject of the Deed of Donation dated June 1, 1981 to the plaintiff or her heirs or assigns;

(d) Ordering the defendant to remove the house built inside the donated portion at the defendants expense or pay a monthly rental of P300.00 Philippine Currency;

(e) Ordering the defendant to pay attorneys fees in the amount of P5,000.00; and

(f) To pay the cost.

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Rodolfo Nocedo appealed to the respondent Court which affirmed the trial court as follows:[5]

WHEREFORE, judgment is hereby rendered, ORDERING defendant Rodolfo Noceda to VACATE the portion known as Lot C of Lot 1121 per Exhibit E, which was allotted to plaintiff Aurora Arbizo Directo. Except for this modification, the Decision, dated November 6, 1991, of the RTC-Iba, Zambales, Branch 71, in Civil Case No. RTC-354-I, is hereby AFFIRMED in all other respects. Costs against defendant Rodolfo Noceda.

Dissatisfied, petitioner filed the instant petition for review with the following assignment of errors:[6]

THE COURT OF APPEALS ERRED IN HOLDING THAT THE SUBJECT PROPERTY IDENTIFIED AS LOT 1121 CONTAINS AN AREA IN EXCESS OF THAT STATED IN ITS TAX DECLARATION.

THE COURT OF APPEALS ERRED IN HOLDING THAT LOT 1121 SHOULD BE PARTITIONED IN ACCORDANCE WITH THE EXTRA-JUDICIAL SETTLEMENT DATED 17 AUGUST 1981.

THE COURT OF APPEALS ERRED IN ADJUDICATING AND ALLOTING LOT C AS APPEARING IN THE SURVEY PLAN PREPARED BY GEODETIC ENGINEER EDILBERTO QUEJADA TO THE RESPONDENT.

THE COURT OF APPEALS ERRED IN FINDING THAT THE PETITIONER USURPED AN AREA ADJUDICATED TO THE RESPONDENT.

THE COURT OF APPEALS ERRED IN REVOKING THE DEED OF DONATION DATED 1 JUNE 1981.

The first issue raised refers to the actual area of the subject lot known as Lot 1121, which was registered under Tax Declaration No. 16-0032 under the name of the late Celestino Arbizo. Petitioner claims that Tax Declaration No. 16-0032 contains only an area of 29,845 sq. meter; thus the respondent Court exceeded its judicial authority when it sustained the lower courts findings that the subject property actually contains an area of 127,289 square meters.

We find the argument unmeritorious. The records disclose that the trial court in an Order dated June 8, 1987 gave both parties to this case the chance to have the subject property re-surveyed by a licensed surveyor to determine the actual area of Lot 1121. [7] Plaintiff Aurora Directo filed a motion/compliance where she suggested that Geodetic Engineer Edilberto V. Quejada of the Bureau of Lands, Iba, Zambales be commissioned to undertake the survey[8] said motion was also sent to defendants counsel, Atty. Eufracio Pagunuran for Comment,[9] but Atty. Pagunuran however failed to file his Comment within the given period. Thus the trial court designated Engineer Quejada to undertake the survey of Lot 1121. [10] Petitioner Noceda through counsel belatedly filed his Comment without any opposition to the appointment of Engineer Quejada but proposed that the latter be tasked to solely (a) re-survey, determine and identify the metes and bounds of the lot covered by Tax Declaration No. 16-0032; (b) to identify the areas occupied by the parties therein; and (c) to conduct the re-survey with notice and in the presence of the parties therein and their respective counsels.[11] The Comment was not, however, acted upon by the trial court in view of its earlier Order directing Engineer Quejada to undertake the survey of the land.[12] Engr. Quejada conducted the survey with the conformity and in the presence of both parties, taking into consideration the extrajudicial partition dated August 17, 1981, deed of donation dated June 1, 1981 executed by plaintiff Aurora Directo in favor of defendant Rodolfo Noceda and the actual area occupied by the parties,[13] as well as the sketch plan[14] and the technical description of Lot 1121 taken from the Records Section of the Bureau of Lands, Manila. [15] The report and the survey plan submitted by Engr. Quejada were approved by the Trial Court in an Order dated

45

December 7, 1987.[16] These circumstances show that the lower court ordered the re-survey of the lot to determine the actual area of Lot 1121 and such survey was done with the conformity and in the presence of both parties. The actual land area based on the survey plan which was conducted in the presence of both parties, showed a much bigger area than the area declared in the tax declaration but such differences are not uncommon as early tax declarations are, more often than not, based on approximation or estimation rather than on computation.[17] We hold that the respondent court did not err in sustaining the trial courts findings that the actual area of Lot 1121 is 127,289 square meters.

Petitioner also contends that said judicial determination improperly encroaches on the rights and claims of third persons who were never impleaded below; that the subject lot was also declared in the name of one Cecilia Obispo and a Free Patent over the said lot was also issued in her name and that there are several residential houses constructed and existing on Lot 8 of lot 1121, thus these possessors/occupants of Lot 8 should be joined as defendants for their non-inclusion would be fatal to respondents cause of action.

We find no merit in this argument. The respondent Court correctly ratiocinated on this issue as follows:[18]

The fact that Cecilia Obispo has tax declarations in her name over Lot 1121 and several persons occupied a portion thereof did not make them indispensable parties in the present case. Defendant Noceda merely presented the tax declarations in the name of Cecilia Obispo without the alleged free patent in her name. Moreover, no evidence was presented showing that Cecilia Obispo possessed or claimed possession of Lot 1121. Tax receipts and declarations of ownership for tax purposes are not conclusive evidence of ownership of property (Republic vs. Intermediate Appellate Court, 224 SCRA 285).

It was not necessary that the occupants of a portion of Lot 1121, designated as Lot 8, be impleaded in the present case. Lot 8, though part of Lot 1121, was excluded by Engr. Quejada in determining the respective portions of Lot 1121 occupied by plaintiff Directo, defendant Noceda and Maria Arbizo pursuant to the extrajudicial settlement which they executed on August 17, 1981. The result of the present suit shall not in any way affect the occupants of Lot 8, since the issues involved in the present case are the usurpation by defendant Noceda of the land adjudicated to plaintiff Directo and the propriety of the cancellation of the deed of donation in favor of defendant Noceda due to his ingratitude to plaintiff Directo.

Notably, defendants counsel requested for the appearance of Cecilia Obispo and despite notice to her to appear in court and bring with her the alleged free patent in her name, [19] she failed to appear and even failed to intervene to protect whatever interest and right she has over the subject lot. As to the other possessors of residential houses in Lot 8 of Lot 1121, they are not considered as indispensable parties to this case. A party is not indispensable to the suit if his interest in the controversy or subject matter is distinct and divisible from the interest of the other parties and will not necessarily be prejudiced by a judgment which does complete justice to the parties in court.[20] Private respondent is not claiming the entire area of Lot 1121 but only a portion thereof which was adjudicated to her based on the August 17, 1981 extrajudicial settlement and which was denominated in the survey plan as Lot C of Lot 1121; thus there was no need to implead the occupants of Lot 8.

Petitioner further claims that the subject property could not be partitioned based on the extrajudicial settlement-partition dated August 17, 1981, since the distributive share of the heirs of the late Celestino Arbizo and the area of Lot 1121 stated therein were different from the extrajudicial settlement executed on June 1, 1981; that the discrepancies between the two deeds of partition with respect to the area of Lot 1121 and the respective share of the parties therein indicated that they never intended that any of the deeds to be the final determination of the portions of Lot 1121 allotted to them; that the extrajudicial settlement-partition of August 17, 1981 could not effectively subdivide Lot 1121 because it partitioned only 29,845 square meters, and not its actual area of 127,298 square meters.

46

We see no cogent reason to disturb the findings of the respondent Court as follows:[21]

The discrepancies between the extrajudicial settlements executed by plaintiff Directo, defendant Noceda and Maria Arbizo on June 1, 1981 and August 17, 1981 only meant that the latter was intended to supersede the former. The signature of defendant Noceda in the extrajudicial settlement of August 17, 1981 would show his conformity to the new apportionment of Lot 1121 among the heirs of the late Celestino Arbizo. The fact that defendant Noceda occupied the portion allotted to him in the extrajudicial settlement, as well as the donated portion of the share of plaintiff Directo, presupposes his knowledge of the extent of boundaries of the portion of Lot 1121 allotted to him. Moreover, the statement in the extrajudicial settlement of August 17, 1981 with respect to the area of Lot 1121, which was 29,845 square meters, is not conclusive because it was found out, after the relocation survey was conducted on Lot 1121, that the parties therein occupied an area larger than what they were supposed to possess per the extrajudicial settlement- partition of August 17, 1981.

Although in the extrajudicial settlement dated August 17, 1981 the heirs of Celestino Arbizo partitioned only a 29,845 square meter lot to conform with the area declared under tax declaration 16-0032 yet the heirs were each actually occupying a bigger portion the total area of which exceeded 29,845 square meters. This was confirmed by Geodetic Engineer Quejada in his report submitted to the trial court where he stated among other things:[22]

7. that upon computation of actual survey, it is informed (sic) that the area dated (sic) as per extrajudicial settlement-partition in the name of Celestino Arbizo was smaller than the computed lots of their actual occupancy as per survey on the ground;

8. The Lot A, Lot B, and Lot C as appearing on prepared plan for ready reference was subdivided, base (sic) on stated sharing as per EXTRA JUDICIAL SETTLEMENT-PARTITION base (sic) on actual occupancy.

The survey conducted on Lot 1121 was only a confirmation of the actual areas being occupied by the heirs taking into account the percentage proportion adjudicated to each heir on the basis of their August 17, 1981 extrajudicial settlement.

Petitioner further alleges that the said partition tries to vest in favor of a third person, Maria Arbizo, a right over the said property notwithstanding the absence of evidence establishing that she is an heir of the late Celestino Arbizo since Maria Arbizo was never impleaded as a party in this case and her interest over Lot 1121 was not established.

Such contention deserves scant consideration. We find no compelling basis to disturb the finding of the trial court on this factual issue, as follows:[23]

In effect, the defendant denies the allegation of the plaintiff that Maria Arbizo was the third wife of Celestino Arbizo and Agripina is her half sister with a common father. On this point, the Court believes the version of the plaintiff. The Court observes that in the Extra-Judicial Settlement-Partition(Exhibit C), Maria Arbizo is named one of the co-heirs of the defendant, being the widow of his grandfather, Celestino Arbizo. The names of Anacleto and Agripina do not also appear in the Extra-judicial Settlement and Partition because according to the plaintiff, they had sold their shares to Maria Arbizo. And the defendant is one of the signatories to the said Deed of Extra-judicial Settlement-Partition acknowledged before Notary Public Artemio Maranon. Under the circumstances, the Court is convinced that the defendant knew that Maria Arbizo was the widow of Celestino Arbizo and he knew of the sale of the share of Anacleto Arbizo his share, as well as that of Agripina. When the defendant signed the Extra-Judicial Settlement, he was already an adult since when he testified in 1989, he gave his age as 50 years

47

old. So that in 1981, he was already 41 years old. If he did not know all of these, the defendant would have not agreed to the sharing and signed this document and acknowledged it before the Notary Public. And who could have a better knowledge of the relationship of Agripina and Maria Arbizo to Celestino Arbizo than the latters daughter? Besides, at the time of the execution of the Extra-Judicial Settlement-Partition by the plaintiff and defendant, they were still in good terms. There was no reason for the plaintiff to favor Maria Arbizo and Agripina Arbizo over the defendant. Furthermore, the defendant had failed to support his allegation that when his grandfather died he had no wife and child.

We likewise find unmeritorious petitioners claim that there exist no factual and legal basis for the adjudication of Lot C of Lot 1121 to private respondent Aurora Directo. It bears stress that the relocation survey plan prepared by Geodetic Engineer Quejada was based on the extrajudicial settlement dated August 17, 1981, and the actual possession by the parties and the technical description of Lot 1121. It was established by the survey plan that based on the actual possession of the parties, and the extrajudicial settlement among the heirs the portion denominated as Lot C of Lot 1121 of the survey plan was being occupied by private respondent Aurora Directo and it was also shown that it is in Lot C where the 625 square meter area donated by private respondent Directo to petitioner is located. There is no obstacle to adjudicate Lot C to private respondent as her rightful share allotted to her in the extrajudicial settlement.

Petitioner argues that he did not usurp the property of respondent Directo since, to date, the metes and bounds of the parcel of land left by their predecessor in interest, Celestino Arbizo, are still undetermined since no final determination as to the exact areas properly pertaining to the parties herein; hence they are still considered as co-owners thereof.

We do not agree.

In this case the source of co-ownership among the heirs was intestate succession. Where there are two or more heirs, the whole estate of the decedent is, before its partition, owned in common by such heirs subject to the payment of debts of the deceased.[24] Partition, in general, is the separation, division and assignment of a thing held in common among those to whom it may belong. [25] The purpose of partition is to put an end to co-ownership. It seeks a severance of the individual interest of each co-owner, vesting in each a sole estate in specific property and giving to each one a right to enjoy his estate without supervision or interference from the other.[26] And one way of effecting a partition of the decedents estate is by the heirs themselves extrajudicially. The heirs of the late Celestino Arbizo namely Maria Arbizo, Aurora A. Directo (private respondent) and Rodolfo Noceda (petitioner) entered into an extrajudicial settlement of the estate on August 17, 1981 and agreed to adjudicate among themselves the property left by their predecessor-in-interest in the following manner:

To Rodolfo Noceda goes the northern one-fifth (1/5) portion containing an area of 5,989 sq. meters;

To Maria Arbizo goes the middle three-fifths (3/5) portion;

and To Aurora Arbizo goes the southern one-fifth (1/5) portion.[27]

In the survey plan submitted by Engineer Quejada, the portions indicated by red lines and numbered alphabetically were based on the percentage proportion in the extrajudicial settlement and the actual occupancy of each heir which resulted to these divisions as follows:[28]

Lot A; the area is 2,957 sq.m.- goes to Rodolfo A. Noceda (1/5)

Lot B; 38,872 sq.m Maria Arbizo (3/5)

48

Lot C 12,957 sq.m. Aurora Arbizo (1/5)

Thus, the areas allotted to each heir are now specifically delineated in the survey plan. There is no co-ownership where portion owned is concretely determined and identifiable, though not technically described, or that said portions are still embraced in one and the same certificate of title does not make said portions less determinable or identifiable, or distinguishable, one from the other, nor that dominion over each portion less exclusive, in their respective owners.[29] A partition legally made confers upon each heir the exclusive ownership of the property adjudicated to him.[30]

We also find unmeritorious petitioners argument that since there was no effective and real partition of the subject lot there exists no basis for the charge of usurpation and hence there is also no basis for finding ingratitude against him. It was established that petitioner Noceda occupied not only the portion donated to him by private respondent Aurora Arbizo-Directo but he also fenced the whole area of Lot C which belongs to private respondent Directo, thus petitioners act of occupying the portion pertaining to private respondent Directo without the latters knowledge and consent is an act of usurpation which is an offense against the property of the donor and considered as an act of ingratitude of a donee against the donor. [31] The law does not require conviction of the donee; it is enough that the offense be proved in the action for revocation.[32]

Finally, petitioner contends that granting revocation is proper, the right to enforce the same had already prescribed since as admitted by private respondent, petitioner usurped her property in the first week of September 1985 while the complaint for revocation was filed on September 16, 1986, thus more than one (1) year had passed from the alleged usurpation by petitioner of private respondents share in Lot 1121. We are not persuaded. The respondent Court rejected such argument in this wise:

Article 769 of the New Civil Code states that: The action granted to the donor by reason of ingratitude cannot be renounced in advance. This action prescribes within one year to be counted from the time the donor had knowledge of the fact and it was possible for him to bring the action. As expressly stated, the donor must file the action to revoke his donation within one year from the time he had knowledge of the ingratitude of the donee. Also, it must be shown that it was possible for the donor to institute the said action within the same period. The concurrence of these two requisites must be shown by defendant Noceda in order to bar the present action. Defendant Noceda failed to do so. He reckoned the one year prescriptive period from the occurrence of the usurpation of the property of plaintiff Directo in the first week of September, 1985, and not from the time the latter had the knowledge of the usurpation. Moreover, defendant Noceda failed to prove that at the time plaintiff Directo acquired knowledge of his usurpation, it was possible for plaintiff Directo to institute an action for revocation of her donation.

The action to revoke by reason of ingratitude prescribes within one (1) year to be counted from the time (a) the donor had knowledge of the fact; (b) provided that it was possible for him to bring the action. It is incumbent upon petitioner to show proof of the concurrence of these two conditions in order that the one (1) year period for bringing the action be considered to have already prescribed. No competent proof was adduced by petitioner to prove his allegation. In Civil Cases, the party having the burden of proof must establish his case by preponderance of evidence.[33] He who alleges a fact has the burden of proving it and a mere allegation is not evidence.[34]

Factual findings of the Court of Appeals, supported by substantial evidence on record are final and conclusive on the parties and carry even more weight when the Court of Appeals affirms the factual findings of the trial court;[35] for it is not the function of this Court to re-examine all over again the oral and documentary evidence submitted by the parties unless the findings of fact of the Court of Appeals are not supported by the evidence on record or the judgment is based on the misapprehension of facts. [36] The jurisdiction of this court is thus limited to reviewing errors of law unless there is a showing that the findings complained of are totally devoid of support in the record or that they are so glaringly erroneous as to constitute serious abuse of discretion.[37] We find no such showing in this case.

49

We find that both the trial court and the respondent Court had carefully considered the questions of fact raised below and the respondent Courts conclusions are based on the evidence on record. No cogent reason exists for disturbing such findings.[38] We also note that petitioner in this petition merely rehashed the same issues and arguments raised in the respondent Court in whose decision we find no reversible error. Clearly, petitioner failed to present any substantial argument to justify a reversal of the assailed decision.

WHEREFORE, the petition for review is hereby DENIED. Costs against appellant.

SO ORDERED.

Melo, (Chairman), Vitug, Panganiban, and Purisima, JJ., concur.

Nufable vs NufableTHIRD DIVISION

[G.R. No. 126950. July 2, 1999]

NELSON NUFABLE, SILMOR NUFABLE and AQUILINA NUFABLE petitioners, vs. GENEROSA NUFABLE, VILFOR NUFABLE, MARCELO NUFABLE, and the COURT OF APPEALS, respondents.

D E C I S I O NGONZAGA-REYES, J.:

This petition for review on certiorari seeks to reverse and set aside the Decision dated November 25, 1995 of the Fifth Division[1] of the Court of Appeals for allegedly being contrary to law.

The following facts as found by the Court of Appeals are undisputed:

Edras Nufable owned an untitled parcel of land located at Poblacion, Manjuyod, Negros Oriental, consisting of 948 square meters, more or less. He died on August 9, 1965 and was survived by his children, namely: Angel Custodio, Generosa, Vilfor and Marcelo, all surnamed Nufable. Upon petition for probate filed by said heirs and after due publication and hearing, the then Court of First Instance of Negros Oriental (Branch II) issued an Order dated March 30,

50

1966 admitting to probate the last will and testament executed by the deceased Edras Nufable (Exhs. B, C and C-1).

On June 6, 1966, the same court issued an Order approving the Settlement of Estate submitted by the heirs of the late Esdras Nufable, portions of which read:

KNOW ALL MEN BY THESE PRESENTS:

We, ANGEL CUSTODIO NUFABLE, GENEROSA NUFABLE, VILFOR NUFABLE, and MARCELO NUFABLE, all of legal ages (sic), Filipinos, and with residence and postal address at Manjuyod, Negros Oriental, Philippines,

- HEREBY DECLARE AND MAKE MANIFEST -

1. That on August 9, 1965, Rev. Fr. Esdras Nufable died leaving (a) Last Will and Testament (marked Exh. G) disposing (of) his properties or estate in favor of his four legitimate children, namely: Angel Custodio Nufable, Generosa Nufable, Vilfor Nufable and Marcelo Nufable;

2. That on March 30, 1966, the said Last Will and Testament was probated by the Honorable Court, Court of First Instance of Negros Oriental, and is embodied in the same order appointing an Administratrix, Generosa Nufable, but to qualify only if she put up a necessary bond of P1,000.00;

3. That herein legitimate children prefer not to appoint an Administratrix, as agreed upon (by) all the heirs, because they have no objection as to the manner of disposition of their share made by the testator, the expenses of the proceedings and that they have already taken possession of their respective shares in accordance with the will;

4. That the herein heirs agreed, as they hereby agree to settle the estate in accordance with the terms and condition of the will in the following manner, to wit:

a) That the parcel of land situated in Poblacion Manjuyod, Negros Oriental remains undivided for community ownership but respecting conditions imposed therein (sic) in the will;

xxx xxx xxx.

(Exhs. E and E-1)

Two months earlier, or on March 15, 1966, spouses Angel Custodio and Aquilina Nufable mortgaged the entire property located at Manjuyod to the Development Bank of the Philippines [DBP] (Pre-trial Order, dated January 7, 1992, p. 103, Original Records). Said mortgagors became delinquent for which reason the mortgaged property was foreclosed by DBP on February 26, 1973 (id.).

On January 11, 1980, Nelson Nufable, the son of Angel Custodio Nufable (who died on August 29, 1978 [TSN, Testimony of Nelson Nufable, Hearing of August 18, 1992, p. 17]), purchased said property from DBP (Exh. 1).

51

Generosa, Vilfor and Marcelo, all surnamed Nufable filed with the lower court a complaint dated July 25, 1985 To Annul Fraudulent Transactions, to Quiet Title and To Recover Damages against Nelson Nufable, and wife, Silnor Nufable and his mother Aquilina Nufable. Plaintiffs pray:

WHEREFORE, plaintiffs pray this Honorable Court that after trial judgment be rendered ordering:

(a) That the said Deed of Sale (Annex C) executed by the Development Bank of the Philippines in favor of the defendants be declared null and void as far as the three fourths () rights which belongs (sic) to the plaintiffs are concerned;

'(b) That the said three fourths () rights over the above parcel in question be declared as belonging to the plaintiffs at one fourth right to each of them;

(c) To order the defendants to pay jointly and severally to the plaintiffs by way of actual and moral damages the amount of P10,000.00 and another P5,000.00 as Attorneys fees, and to pay the costs.

(d) Plus any other amount which this Court may deem just and equitable. (p. 6, Original Records)

In their Answer, defendants contend:

4. Paragraph 4 is denied, the truth being that the late Angel Nufable was the exclusive owner of said property, that as such owner he mortgaged the same to the Development Bank of the Philippines on March 15, 1966, that said mortgage was foreclosed and the DBP became the successful bidder at the auction sale, that ownership was consolidated in the name of the DBP, and that defendant Nelson Nufable bought said property from the DBP thereafter. During this period, the plaintiffs never questioned the transactions which were public, never filed any third party claim nor attempted to redeem said property as redemptioners, and that said Deed of Sale, Annex B to the complaint, is fictitious, not being supported by any consideration; (pp. 20-21, id.)

The Deed of Sale (Annex B), referred to by the parties is a notarized Deed of Sale, dated July 12, 1966 (marked as Exhibit H) by virtue of which, spouses Angel and Aquilina Nufable, as vendors, sold portion of the subject property to herein plaintiffs for and in consideration of P1,000.00 (Exh. 5).[2]

On November 29, 1995, the Court of Appeals rendered judgment, the dispositive portion[3] of which reads:

WHEREFORE, the appealed decision of the lower court is REVERSED and SET ASIDE. A new judgment is hereby entered declaring plaintiffs-appellants as the rightful co-owners of the subject property and entitled to possession of southern portion thereof; and defendant-appellee Nelson Nufable to portion.

No award on damages.

No costs.

52

Defendants-appellees Motion for Reconsideration was denied for lack of merit in the Resolution of the Court of Appeals[4] dated October 2, 1996.

Hence, the present petition. Petitioners raise the following grounds for the petition:

1. The Honorable Court of Appeals erred in considering as controlling the probate of the Last Will and Testament of Esdras Nufable, the probate thereof not being an issue in this case;

2. The Honorable Court of Appeals erred in not considering the fact that the Development Bank of the Philippines became the absolute, exclusive, legal, and rightful owner of the land in question, from whom petitioner Nelson Nufable acquired the same by purchase and that, therefore, no award can be made in favor of private respondents unless and until the Development Bank of the Philippines title thereto is first declared null and void by the court.

The Court of Appeals, in its decision, stated that the trial court failed to take into consideration the probated will of the late Esdras Nufable bequeathing the subject property to all his four children. [5] In the present petition, petitioners present the issue of whether or not the Last Will and Testament of Esdras Nufable and its subsequent probate are pertinent and material to the question of the right of ownership of petitioner Nelson Nufable who purchased the land in question from, and as acquired property of, the Development Bank of the Philippines (DBP, for short). They contend that the probate of the Last Will and Testament of Esdras Nufable did not determine the ownership of the land in question as against third parties.

As a general rule, courts in probate proceedings are limited only to passing upon the extrinsic validity of the will sought to be probated, the due execution thereof, the testators testamentary capacity and the compliance with the requisites or solemnities prescribed by law. Said court at this stage of the proceedings is not called upon to rule on the intrinsic validity or efficacy of the provision of the will.[6] The question of the intrinsic validity of a will normally comes only after the court has declared that the will has been duly authenticated.

The records show that upon petition for probate filed by the heirs of the late Esdras Nufable, an Order dated March 30, 1966 was issued by then Court of First Instance of Negros Oriental, Branch II, admitting to probate the last will and testament executed by the decedent.[7] Thereafter, on June 6, 1966, the same court approved the Settlement of Estate submitted by the heirs of the late Esdras Nufable wherein they agreed (T)hat the parcel land situated in Poblacion Manjuyod, Negros Oriental remains undivided for community ownership but respecting conditions imposed therein (sic) in the will. [8] In paragraph 3 thereof, they stated that they have no objection as to the manner of disposition of their share made by the testator, the expenses of the proceeding and that they have already taken possession of their respective shares in accordance with the will. Verily, it was the heirs of the late Esdras Nufable who agreed among themselves on the disposition of their shares. The probate court simply approved the agreement among the heirs which approval was necessary for the validity of any disposition of the decedents estate.[9]

It should likewise be noted that the late Esdras Nufable died on August 9, 1965. When the entire property located at Manjuyod was mortgaged on March 15, 1966 by his son Angel Custodio with DBP, the other heirs of Esdras - namely: Generosa, Vilfor and Marcelo - had already acquired successional rights over the said property. This is so because of the principle contained in Article 777 of the Civil Code to the effect that the rights to the succession are transmitted from the moment of death of the decedent. Accordingly, for the purpose of transmission of rights, it does not matter whether the Last Will and Testament of the late Esdras Nufable was admitted on March 30, 1966 or thereafter or that the Settlement of Estate was approved on June 6, 1966 or months later. It is to be noted that the probated will of the late Esdras Nufable specifically referred to the subject property in stating that the land situated in the Poblacion, Manjuyod, Negros Oriental, should not be divided because this must remain in common for them, but it is necessary to allow anyone of them brothers and sisters to construct a house therein. [10] It was therefor the will of the decedent that the subject property should remain undivided, although the restriction should not exceed twenty (20) years pursuant to Article 870[11] of the Civil Code.

53

Thus, when Angel Nufable and his spouse mortgaged the subject property to DBP on March 15, 1966, they had no right to mortgage the entire property. Angels right over the subject property was limited only to pro indiviso share. As co-owner of the subject property, Angels right to sell, assign or mortgage is limited to that portion that may be allotted to him upon termination of the co-ownership. Well-entrenched is the rule that a co-owner can only alienate his pro indiviso share in the co-owned property.[12]

The Court of Appeals did not err in ruling that Angel Custodio Nufable had no right to mortgage the subject property in its entirety. His right to encumber said property was limited only to pro indivisoshare of the property in question.[13] Article 493 of the Civil Code spells out the rights of co-owners over a co-owned property. Pursuant to said Article, a co-owner shall have full ownership of his part and of the fruits and benefits pertaining thereto. He has the right to alienate, assign or mortgage it, and even substitute another person in its enjoyment. As a mere part owner, he cannot alienate the shares of the other co-owners. The prohibition is premised on the elementary rule that no one can give what he does not have.[14]

Moreover, respondents stipulated that they were not aware of the mortgage by petitioners of the subject property.[15] This being the case, a co-owner does not lose his part ownership of a co-owned property when his share is mortgaged by another co-owner without the formers knowledge and consent [16] as in the case at bar. It has likewise been ruled that the mortgage of the inherited property is not binding against co-heirs who never benefitted.[17]

Furthermore, the Deed of Sale dated June 17, 1966 marked as Exhibit H executed by spouses Angel and Aquilina Nufable in favor of respondents Generosa, Vilfor and Marcelo wherein the former sold, ceded and transferred back to the latter the portion of the subject property bolsters respondents claim that there was co-ownership. Petitioner Nelson himself claimed that he was aware of the aforesaid Deed of Sale.[18]

Anent the second ground of the petition, petitioners allege that the Development Bank of the Philippines acquired ownership of the land in question through foreclosure, purchase and consolidation of ownership. Petitioners argue that if petitioner Nelson Nufable had not bought said land from the DBP, private respondents, in order to acquire said property, must sue said bank for the recovery thereof, and in so doing, must allege grounds for the annulment of documents evidencing the banks ownership thereof. Petitioners contend that since petitioner Nelson Nufable simply bought the whole land from the bank, they cannot be deprived of the ownership of without making any pronouncement as to the legality or illegality of the banks ownership of said land. It is argued that there was no evidence to warrant declaration of nullity of the banks acquisition of said land; and that neither was there a finding by the court that the bank illegally acquired the said property.

As adverted to above, when the subject property was mortgaged by Angel Custodio, he had no right to mortgage the entire property but only with respect to his pro indiviso share as the property was subject to the successional rights of the other heirs of the late Esdras. Moreover, in case of foreclosure, a sale would result in the transmission of title to the buyer which is feasible only if the seller can be in a position to convey ownership of the things sold.[19] And in one case,[20] it was held that a foreclosure would be ineffective unless the mortgagor has title to the property to be foreclosed. Therefore, as regards the remaining pro indiviso share, the same was held in trust for the party rightfully entitled thereto, [21] who are the private respondents herein.

Pursuant to Article 1451 of the Civil Code, when land passes by succession to any person and he causes the legal title to be put in the name of another, a trust is established by implication of law for the benefit of the true owner. Likewise, under Article 1456 of the same Code, if property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. In the case of Noel vs. Court of Appeals, [22] this Court held that a buyer of a parcel of land at a public auction to satisfy a judgment against a widow acquired only one-half interest on the land corresponding to the share of the widow and the other half belonging to the heirs of her husband became impressed with a constructive trust in behalf of said heirs.

Neither does the fact that DBP succeeded in consolidating ownership over the subject property in its name terminate the existing co-ownership. Registration of property is not a means of acquiring ownership.[23] When the subject property was sold to and consolidated in the name of DBP, it being the winning bidder

54

in the public auction, DBP merely held the portion in trust for the private respondents.When petitioner Nelson purchased the said property, he merely stepped into the shoes of DBP and acquired whatever rights and obligations appertain thereto.

This brings us to the issue of whether or not the DBP should have been impleaded as party-defendant in the case at bar. Petitioners contend that DBP was never impleaded and that due process requires that DBP be impleaded so that it can defend its sale to petitioner Nelson Nufable; and that it was the duty of private respondents, and not of petitioner Nelson, to implead the bank and ask for the annulment of documents evidencing the banks ownership of the disputed land.

In the Rejoinder to the Reply, private respondents that the non-inclusion of DBP as a necessary party was not questioned by petitioners from the time the Complaint was filed until the case was finished. It was only after the adverse decision by the respondent Court of Appeals that petitioners raised the issue.

At the outset, it should be stated that petitioners never raised this issue in their Answer and pursuant to Section 2, Rule 9 of the Rules of Court, defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived.

Nonetheless, the rule is that indispensable parties, i.e., parties in interest without whom no final determination can be had of an action, shall be joined either as plaintiffs or defendants; the inclusion as a party being compulsory.[24] On the other hand, in case of proper or necessary parties, i.e., persons who are not indispensable but ought to be parties if complete relief is to be accorded as between those already parties, the court may, in its discretion, proceed in the action without making such persons parties, and the judgment rendered therein shall be without prejudice to the rights of such persons. [25] Proper parties, therefore, have been described as parties whose presence is necessary in order to adjudicate the whole controversy, but whose interests are so far separable that a final decree can be made in their absence without affecting them.[26] Any claim against a party may be severed and proceeded with separately.[27]

The pivotal issue to be determined is whether DBP is an indispensable party in this case.

Private respondents do not question the legality of the foreclosure of the mortgaged property and the subsequent sale of the same to DBP. The subject property was already purchased by petitioner Nelson from DBP and the latter, by such sale, transferred its rights and obligations to the former. Clearly, petitioners interest in the controversy is distinct and separable from the interest of DBP and a final determination can be had of the action despite the non-inclusion of DBP as party-defendant. Hence, DBP, not being an indispensable party, did not have to be impleaded in this case.

WHEREFORE, there being no reversible error in the decision appealed from, the petition for review on certiorari is hereby DENIED.

SO ORDERED.

Vitug, Panganiban, and Purisima, JJ., concur.Romero, J., (Chairman), on official business leave abroad.

55

Blas vs. SantosRepublic of the Philippines

SUPREME COURTManila

EN BANC

G.R. No. L-14070 March 29, 1961

MARIA GERVACIO BLAS, MANUEL GERVACIO BLAS, LEONCIO GERVACIO BLAS and LODA GERVACIO BLAS, plaintiffs-appellants, vs.ROSALINA SANTOS, in her capacity as Special Administratrix of the Estate of the deceased MAXIMA SANTOS VDA. DE BLAS, in Sp. Proc. No. 2524, Court of First Instance of Rizal, defendants-appellants. MARTA GERVACIO BLAS and DR. JOSE CHIVI, defendants-appellants.

Teofilo Sison and Nicanor Sison for plaintiffs-appellants.De los Santos, Caluag, Pascal and Felizardo for defendants-appellees.

LABRADOR, J.:

This action was instituted by plaintiffs against the administration of the estate of Maxima Santos, to secure a judicial declaration that one-half of the properties left by Maxima Santos Vda. de Blas, the greater bulk of which are set forth and described in the project of partition presented in the proceedings for the administration of the estate of the deceased Simeon Blas, had been promised by the deceased Maxima Santos to be delivered upon her death and in her will to the plaintiffs, and requesting that the said properties so promised be adjudicated to the plaintiffs. The complaint also prays for actual damages in the amount of P50,000. (Record on Appeal, pp. 1-65.) The alleged promise of the deceased Maxima Santos is contained in a document executed by Maxima Santos on December 26, 1936 attached to the complaint as Annex "H" and introduced at the trial as Exhibit "A". (Ibid., pp. 258-259.) The complaint also alleges that the plaintiffs are entitled to inherit certain properties

56

enumerated in paragraph 3 thereof, situated in Malabon, Rizal and Obando, Bulacan, but which properties have already been in included in the inventory of the estate of the deceased Simeon Blas and evidently partitioned and conveyed to his heirs in the proceedings for the administration of his (Simeon Blas) estate.

Defendant, who is the administratrix of the estate of the deceased Maxima Santos Vda. de Blas, filed an answer with a counterclaim, and later, an amended answer and a counterclaim. The said amended answer admits the allegations of the complaint as to her capacity as administratrix the death of Simeon Blas on January 3, 1937; the fact that Simeon Blas and Marta Cruz begot three children only one of whom, namely, Eulalio Blas, left legitimate descendants; that Simeon Blas contracted a second marriage with Maxima Santos on June 28, 1898. She denies for lack of sufficient information and belief, knowledge edge of the first marriage of Simeon Blas to Marta Cruz, the averment that Simeon Blas and Marta Cruz acquired properties situated in Obando, Bulacan, that said properties were utilized as capital, etc. As special defenses, she alleges that the properties of the spouses Blas and Santos had been settled and liquidated in the project of partition of the estate of said Simeon Blas; that pursuant to the project of partition, plaintiffs and some defendants had already received the respective properties adjudicated to them; that the plaintiffs and the defendants Marta Geracio and Jose Chivi are estopped from impugning the validity of the project of partition of the estate of the deceased Simeon Blas and from questioning the ownership in the properties conveyed in the project of partition to Maxima Santos as her own exclusive property; that the testament executed by Maxima Santos is valid, the plain plaintiffs having no right to recover any portion of Maxima Santos' estate now under administration by the court. A counterclaim for the amount of P50,000 as damages is also included in the complaint, as also a cross-claim against Marta Gervacio Blas and Jose Chivi.

Trial of the case was Conducted and, thereafter, the court, Hon. Gustave Victoriano, presiding, rendered judgment dismissing the complaint, with costs against plaintiff, and dismissing also the counterclaim and cross-claim decision ,the plaintiffs filed by the defendants. From this district have appealed to this Court.

The facts essential to an understanding of the issues involved in the case may be briefly summarized as follows: Simeon Blas contracted a first marriage with Marta Cruz sometime before 1898. They had three children, only one of whom, Eulalio, left children, namely, Maria Gervacio Blas, one of the plaintiffs, Marta Gervacio Blas, one of the defendants, and Lazaro Gervacio Blas. Lazaro died in 1950, and is survived by three legitimate children who are plaintiffs herein, namely, Manuel Gervacio Blas, Leoncio Gervacio Blas and Loida Gervacio Blas. Marta Cruz died in 1898, and the following year, Simeon Blas contracted a second marriage with Maxima Santos. At the time of this second marriage, no liquidation of the properties required by Simeon Blas and Marta Cruz was made. Three of the properties left are fishponds located in Obando, Bulacan. Maxima Santos does not appear to have apported properties to her marriage with Simeon Blas.

On December 26, 1936, only over a week before over a week before his death on January 9, 1937, Simeon Blas executed a last will and testament. In the said testament Simeon Blas makes the following declarations:

I

2. Sa panahon ng aking pangalawang asawa, MAXIMA SANTOS DE BLAS, ay nagkaroon ako at nakatipon ng mga kayamanan (bienes) at pag-aari (propriedades) na ang lahat ng lupa, palaisdaan at iba pang pag-aari ay umaabot sa halagang ANIM NA RAAN PITONG PU'T WALONG DAAN LIBO WALONG DAAN WALONG PUNG PISO (678,880-00) sang-ayon sa mga halaga sa amillarimento (valor Amillarado.)

II

1. Ang kalahati ng lahat ng aming pag-aari, matapos mabayaran ang lahat ng aking o aming pag-kakautang na mag-asawa, kung mayroon man, yayamang ang lahat ng ito ay kita sa loob ng matrimonio (bienes ganaciales) ay bahagi ng para sa aking asawa, MAXIMA SANTOS DE BLAS, sang-ayon sa batas. (Record on Appeal, pp. 250-251.)

The above testamentary provisions may be translated as follows:

I

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2. During my second marriage with Maxima Santos de Blas, I possessed and acquired wealth and properties, consisting of lands, fishponds and other kinds of properties, the total assessed value of which reached the amount P678,880.00.

II

1. One-half of our properties, after the payment of my and our indebtedness, all these properties having been acquired during marriage (conjugal properties), constitutes the share of my wife Maxima Santos de Blas, according to the law.

At the time of the execution of said will, Andres Pascual a son-in-law of the testator, and Avelina Pascual and others, were present. Andres Pascual had married a descendant by the first marriage. The will was prepared by Andres Pascual, with the help of his nephew Avelino Pascual. The testator asked Andres Pascual to prepare a document which was presented in court as Exhibit "A", thus:

Q — Was there anybody who asked you to prepare this document?

A — Don Simeon Blas asked me to prepare this document (referring to Exhibit "A"), (t.s.n., Sarmiento to, P. 24).

The reason why the testator ordered the preparation of Exhibit "A" was because the properties that the testator had acquired during his first marriage with Marta Cruz had not been liquidated and were not separated from those acquired during the second marriage. Pascual's testimony is as follows:

Q — To whom do you refer with the word "they"?

A — Simeon Blas and his first wife, Marta Cruz. When Marta Cruz died they had not made a liquidation of their conjugal properties and so all those properties were included all in the assets of the second marriage, and that is the reason why this document was prepared. (t.s.n., Sarmiento, p. 36.)

The above testimony is fully corroborated by that of Leoncio Gervacio, son-in-law of Simeon Blas.

Q — Please state to the Court?

A — My children were claiming from their grandfather Simeon Blas the properties left by their grandmother Marta Cruz in the year 1936.

Q — And what happened with that claim of your children against Simeon Blas regarding the assets or properties of the first marriage that were left after the death of Marta Cruz in 1936?

A — The claim was not pushed through because they reached into an agreement whereby the parties Simeon Blas Maxima Santos, Maria Gervacio Bias, Marta Gervacio Blas and Lazaro Gervacio Blas agreed that Simeon Blas and Maxima Blas will give one-half of the estate of Simeon Blas. (t.s.n., Sarmiento, pp. 143-144).

The document which was thus prepared and which is marked as Exhibit "A" reads in Tagalog, thus:

MAUNAWA NG SINO MANG MAKABABASA:

Na akong si MAXIMA SANTOS DE BLAS, nasa hustong gulang, kasal kay SIMEON BLAS, taga bayan ng Malabon, Rizal, Philippines, sa pamamagitan ng kasulatang ito ay malaya kong ipinahahayag:

Na aking nabasa at naunawa ang testamento at huling kalooban na nilagdaan ng aking asawa, SIMEON BLAS, at ipinahahayag ko sa ilalim ng aking karangalan at sa harap ng aking asawa na igagalang at pagpipitaganan ang lahat at bawa't isang bahagi ng nabanggit na testamento at ipinangangako ko pa sa pamamagitan ng kasulatang ito na ang lahat ng maiiwang pag-aari at kayamanan naming mag-asawa, na nauukol at bahaging para sa akin sa paggawa ko naman ng aking testamento ay ipagkakaloob ko ang kalahati (½) sa mga herederos at legatarios o pinamamanahan ng aking nabanggit na asawa,

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SIMEON BLAS, sa kaniyang testamento, na ako'y makapipili o makahihirang na kahit kangino sa kanila ng aking pagbibigyan at pamamanahan sang-ayon sa paggalang, paglilingkod, at pakikisama ng gagawin sa akin.

SA KATUNAYAN NG LAHAT NG ITO ay nilagdaan ko ang kasulatang ito ngayon ika 26 ng Diciembre ng taong 1936, dito sa San Francisco del Monte, San Juan, Rizal, Philippines. (Exh. "A", pp. 29-30 — Appellant's brief).

(Fdo.) MAXIMA SANTOS DE BLAS

and which, translated into English, reads as follows:

KNOW ALL MEN BY THESE PRESENTS:

That I MAXIMA SANTOS DE BLAS, of legal age, married to SIMEON BLAS, resident of Malabon, Rizal, Philippines, voluntarily state:

That I have read and knew the contents of the will signed by my husband, SIMEON BLAS, (2) and I promise on my word of honor in the presence of my husband that I will respect and obey all and every disposition of said will (3) and furthermore, I promise in this document that all the properties my husband and I will leave, the portion and share corresponding to me when I make my will, I will give one-half (½) to the heirs and legatees or the beneficiaries named in the will of my husband, (4) and that I can select or choose any of them, to whom I will give depending upon the respect, service and treatment accorded to me.

IN WITNESS WHEREOF, I signed this document this 26th day of December, 1936 at San Francisco del Monte, San Juan, Rizal, Philippines. (Exh. "A", pp. 30-31, Appellant's brief).

(Sgd.) MAXIMA SANTOS DE BLAS

The court below held that said Exhibit "A" has not created any right in favor of plaintiffs which can serve as basis for the complaint; that neither can it be considered as a valid and enforceable contract for lack of consideration and because it deals with future inheritance. The court also declared that Exhibit "A" is not a will because it does not comply with the requisites for the execution of a will; nor could it be considered as a donation, etc.

Both the court below in its decision and the appellees in their brief before us, argue vehemently that the heirs of Simeon Blas and his wife Marta Cruz can no longer make any claim for the unliquidated conjugal properties acquired during said first marriage, because the same were already included in the mass of properties constituting the estate of the deceased Simeon Blas and in the adjudications made by virtue of his will, and that the action to recover the same has prescribed. This contention is correct. The descendants of Marta Cruz can no longer claim the conjugal properties that she and her husband may have required during their marriage although no liquidation of such properties and delivery thereof to the heirs of Marta Cruz have been made, no action to recover said propertied having been presented in the proceedings for the settlement of the estate of Simeon Blas.

But the principal basis for the plaintiffs' action in the case at bar is the document Exhibit "A". It is not disputed that this document was prepared at the instance of Simeon Blas for the reason that the conjugal properties of me on Blas for the reason his first marriage had not been liquidated; that it was prepared at the same time as the will of Simeon Blas on December 26, 1936, at the instance of the latter himself. It is also not disputed that the document was signed by Maxima Santos and one copy thereof, which was presented in court as Exhibit "A", was kept by plaintiffs' witness Andres Pascual.

Plaintiffs-appellants argue before us that Exhibit "A" is both a trust agreement and a contract in the nature of a compromise to avoid litigation. Defendants-appellees, in answer, claim that it is neither a trust agreement nor a compromise a agreement. Considering that the properties of the first marriage of Simeon Blas had not been liquidated when Simeon Blas executed his will on December 26, 1936', and the further fact such properties where actually , and the further fact that included as conjugal properties acquired during the second marriage,

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we find, as contended by plaintiffs-appellants that the preparation and execution of Exhibit "A" was ordered by Simeon Blas evidently to prevent his heirs by his first marriage from contesting his will and demanding liquidation of the conjugal properties acquired during the first marriage, and an accounting of the fruits and proceeds thereof from the time of the death of his first wife.

Exhibit "A", therefore, appears to be the compromise defined in Article 1809 of the Civil Code of Spain, in force at the time of the execution of Exhibit "A", which provides as follows:

Compromise is a contract by which each of the parties in interest, by giving, promising, or retaining something avoids the provocation of a suitor terminates one which has already the provocation been instituted. (Emphasis supplied.)

Exhibit "A" states that the maker (Maxima Santos) had read and knew the contents of the will of her husband read and knew the contents of the will Simeon Blas — she was evidently referring to the declaration in the will(of Simeon Blas) that his properties are conjugal properties and one-half thereof belongs to her (Maxima Santos) as her share of the conjugal assets under the law. The agreement or promise that Maxima Santos makes in Exhibit "A" is to hold one-half of her said share in the conjugal assets in trust for the heirs and legatees of her husband in his will, with the obligation of conveying the same to such of his heirs or legatees as she may choose in her last will and testament. It is to be noted that the conjugal properties referred to are those that were actually existing at that time, December 26, 1936. Simeon Blas died on January 9, 1937. On June 2, 1937, an inventory of the properties left by him, all considered conjugal, was submitted by Maxima Santos herself as administratrix of his estate. A list of said properties is found in Annex "E", the complete inventory submitted by Maxima Santos Vda. de Blas, is administratrix of the estate of her husband, dated March 10, 1939. The properties which were given to Maxima Santos as her share in the conjugal properties are also specified in the project of partition submitted by said Maxima Santos herself on March 14, 1939. (Record on Appeal, pp. 195-241.) Under Exhibit "A", therefore, Maxima Santos contracted the obligation and promised to give one-half of the above indicated properties to the heirs and legatees of Simeon Blas.

Counsel for the defendant-appellee claims Exhibit "A" is a worthless piece of paper because it is not a will nor a donation mortis causa nor a contract. As we have in indicated above, it is a compromise and at the same time a contract with a sufficient cause or consideration. It is also contended that it deals with future inheritance. We do not think that Exhibit "A" is a contract on future inheritance. it is an obligation or promise made by the maker to transmit one-half of her share in the conjugal properties acquired with her husband, which properties are stated or declared to be conjugal properties in the will of the husband. The conjugal properties were in existence at the time of the execution of Exhibit "A" on December 26, 1936. As a matter of fact, Maxima Santos included these properties in her inventory of her husband's estate of June 2, 1937. The promise does not refer to any properties that the maker would inherit upon the death of her husband, because it is her share in the conjugal assets. That the kind of agreement or promise contained in Exhibit "A" is not void under Article 1271 of the old Civil Code, has been decided by the Supreme Court of Spain in its decision of October 8, 19154, thus:

Que si bien el art. 1271 del Codigo civil dispone que sobre la herenciafutura no se podra celebrar otros contratos que aquellos cuyo objecto seapracticar entre vivos la division de un caudal, conforme al articulo 1056, esta prohibicion noes aplicable al caso, porque la obligacion que contrajoel recurr en contrato privado de otorgar testamento e instituir heredera a su subrina de los bienes que adquirio en virtud de herencia, procedentes desu finada consorte que le quedasen sobrantes despues de pagar las deudas, y del ganacial que se expresa, asi como de reconocer, ademas, con alguna cosaa otros sobrinos, se refiere a bienes conocidos y determinados existentes cuando tal compromisi se otorgo, y no a la universalidad de una herencia que, sequn el art. 659 del citado Codigo civil, as determina a muerte, constituyendola todos los bienes, derechos y obligaciones que por ella no sehayan extinguido: ..." (Emphasis supplied.)

It will be noted that what is prohibited to be the subject matter of a contract under Article 1271 of the Civil Code is "future inheritance." To us future inheritance is any property or right not in existence or capable of determination at the time of the contract, that a person may in the future acquire by succession. The properties subject of the contract Exhibit "A" are well defined properties, existing at the time of the agreement, which Simeon Blas declares in his statement as belonging to his wife as her share in the conjugal partnership. Certainly his wife's actual share in the conjugal properties may not be considered as future inheritance because they were actually in existence at the time Exhibit "A" was executed.

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The trial court held that the plaintiffs-appellants in the case at bar are concluded by the judgement rendered in the proceedings for the settlement of the estate of Simeon Blas for the reason that the properties left by him belonged to himself and his wife Maxima Santos; that the project of partition in the said case, adjudicating to Maxima Santos one-half as her share in the conjugal properties, is a bar to another action on the same subject matter, Maxima Santos having become absolute owner of the said properties adjudicated in her favor. As already adverted to above, these contentions would be correct if applied to the claim of the plaintiffs-appellants that said properties were acquired with the first wife of Simeon Blas, Marta Cruz. But the main ground upon which plaintiffs base their present action is the document Exhibit "A", already fully considered above. As this private document contains the express promise made by Maxima Santos to convey in her testament, upon her death, one-half of the conjugal properties she would receive as her share in the conjugal properties, the action to enforce the said promise did not arise until and after her death when it was found that she did not comply with her above-mentioned promise. (Art. 1969, old Civil Code.) The argument that the failure of the plaintiffs-appellants herein to oppose the project of partition in the settlement of the estate of Simeon Blas, especially that portion of the project which assigned to Maxima Santos one-half of all the conjugal properties bars their present action, is, therefore, devoid of merit. It may be added that plaintiffs-appellants did not question the validity of the project of partition precisely because of the promise made by Maxima Santos in the compromise Exhibit "A"; they acquised in the approval of said project of partition because they were relying on the promise made by Maxima Santos in Exhibit "A", that she would transmit one-half of the conjugal properties that she was going to receive as her share in the conjugal partnership upon her death and in her will, to the heirs and legatees of her husband Simeon Blas.

Neither can the claim of prescription be considered in favor of the defendants. The right of action arose at the time of the death of Maxima Santos on October 5,1956, when she failed to comply with the promise made by her in Exhibit "A". The plaintiffs-appellants immediately presented this action on December 27, 1956, upon learning of such failure on the part of Maxima Santos to comply with said promise. This defense is, therefore, also without merit.

It is next contended by the defendant-appellee that Maxima Santos complied with her above-mentioned promise, — that Andres Pascual, Tomasa Avelino, Justo Garcia, Ludovico Pimpin and Marta Gervacio Blas were given substancial legacies in the will and testament of Maxima Santos. To determine whether she had actually complied with the promise made in Exhibit "A", there is herein set forth a list only of the fishponds and their respective areas as contained in the list of properties she acquired as her share in the conjugal partnership, which list includes, besides many ricelands as well as residential lots, thus:

31. Paco, Obando, Bulacan 5.8396 has.32. Pangjolo, Obando 3.5857 " 34. Batang Pirasuan, Lubao, Pampanga 11.9515 " 35. Calangian, Lubao, Pampanga 30.2059 " 38. Bakuling, Lubao, Pampanga 215.4325 " 39. Bakuling, Lubao, Pampanga 8.3763 " 40. Bangkal, Sinubli 23.0730 " 41. Tagulod, 6.8692 "

44. Bangkal Pugad(a) 34.2779 " (b) 51.7919 "

(c) 2.5202 "

45. Magtapat Bangkal, Lubao, Pampanga(a) 18.0024 " (b) 7.3265 "

(c) 53.5180 " 46. Pinanganakan, Lubao, Pampanga 159.0078 " 47. Emigdio Lingid, Lubao, Pampanga 34.5229 "

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48. Propios, Lubao, Pampanga 80.5382 " 49. Batang Mabuanbuan, Sexmoan, Pampanga 43.3350 " 50. Binatang Mabuanbuan, Sexmoan, Pampanga 3.5069 " 51. Sapang Magtua, Sexmoan, Pampanga 56,8242 " 52. Kay Limpin, Sexmoan, Pampanga 5.0130 " 53. Calise Mabalumbum, Sexmoan, Pampanga 23.8935 " 54. Messapinit Kineke, Sexmoan, Pampanga

(a) 5.2972 " (b) 5.9230 "

(c) 1.4638 " (d) 1.4638 " (e) 2.8316 "

(f) 10.4412 " (g) 3.9033 " (h) 11.9263 " (i) 6.0574 "

55. Dalang, Banga, Sexmoan, Pampanga 23.3989 " 62. Alaminos, Pangasinan 147.1242 " 80. Mangasu Sexmoan, Pampanga 10.000 " 81. Don Tomas, Sexmoan, Pampanga 21.6435 " 82. Matikling, Lubao, Pampanga 16.0000 " Total area ............................... 1045.7863 " (See Record on Record, pp. 195-241.)

In her will, Maxima Santos devised to Marta Gervacio Blas the 80-hectare fishpond situated in Lubao, Pampanga. The fishpond devised is evidently that designated as "Propios" in Lubao, Pampanga, item No. 8 in the list of properties adjudicated to her in the project of partition. (Record on Appeal, p. 215.) Considering that the total area of the fishponds amount to 1045.7863 hectares, the 80 hectares devised to Marta Gervacio Blas is not even one-tenth of the total area of the fishponds. Add to this the fact that in the will she imposed upon Marta Gervacio Blas de Chivi an existing obligation on said fishponds, namely, its lease in 1957 and the duty to pay out of the rentals thereof an obligation to the Rehabilitation Finance Corporation RFC (Ibid., pp. 262-263.) Angelina Blas was given only a lot of 150 square meters in Hulong Duhat, Malabon, Rizal, and Leony Blas, the sum of P300.00 (Ibid., p. 264.)

It is evident from a consideration of the above figures and facts that Maxima Santos did not comply with her obligation to devise one-half of her conjugal properties to the heirs and legatees of her husband. She does not state that she had complied with such obligation in her will. If she intended to comply therewith by giving some of the heirs of Simeon Blas the properties mentioned above, the most that can be considered in her favor is to deduct the value of said properties from the total amount of properties which she had undertaken to convey upon her death.

All the issues in the pleadings of the parties and in their respective briefs, have now been fully discussed and considered. Reiterating what we have stated above, we declare that by Exhibit "A", a compromise to avoid

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litigation, Maxima Santos promised to devise to the heirs and legatees of her husband Simeon Blas, one-half of the properties she received as her share in the conjugal partnership of herself and her husband, which share is specified in the project of partition submitted by herself on March 14, 1939 in the settlement of the estate of her husband, and which is found on pages 195 to 240 of the record on appeal and on pages 27 to 46 of the project of partition, submitted by Maxima Santos herself before the Court of First Instance of Rizal in Civil Case No. 6707, entitled "Testamentaria del Finado Don Simeon Blas, Maxima Santos Vda. de Bias, Administradora"; and that she failed to comply with her aforementioned obligation. (Exhibit "A")

WHEREFORE, the judgment appealed from is hereby reversed and the defendant-appellee, administratrix of the estate of Maxima Santos, is ordered to convey and deliver one-half of the properties adjudicated o Maxima Santos as her share in the conjugal properties in said Civil Case No. 6707, entitled "Testamentaria del Finado Don Simeon Blas, Maxima Santos Vda. de Blas, Administradora", to the heirs and the legatees of her husband Simeon Blas. Considering that all said heirs and legatees, designated in the will of Simeon Blas as the persons for whose benefit Exhibit "A" had been executed, have not appeared in these proceedings, the record is hereby remanded to the court below, with instructions that, after the conveyance of the properties hereinabove ordered had been effected, the said heirs and legatees (of Simeon Blas) file adversary pleadings to determine the participation of each and every one of them in said properties. Costs against the defendant- appellee Rosalina Santos.

Padilla, Parades and Dizon, JJ., concur.Reyes, J.B.L. and Barrera, JJ., concur in a separate opinion.Bengzon, C.J., reserves his vote.Concepcion, J., took no part.

Separate Opinions

REYES, J.B.L., J., concurring:

I concur in the opinion of Mr. Justice Labrador, and would only add that the doctrine in the decision of 8 October 1915 of the Supreme Court of Spain, applied in the main opinion, is not a mere accident nor an isolated instance, but one of a series of decisions reaffirming the legal proposition therein laid down. Thus, the Presiding Justice Castan of the Spanish Tribunal Supremo, in volume 3 of his Treaties on Civil Law (1951 Edition, page 344, footnote 2), observes that:

(2) IA sentencia de 16 de mayo de 1940 declare que segun la doctrina sentada por el Tribunal Supremo en sua fallos de 8 de Octubre de 1915 y 26 de Octubre de 1926 y por la Direction de los Registros en au resolution de 19 de mayo de 1917, la prohibition contenida en el art. 1271 se refiere unica y exclusivamente a los paetos sobre la universalidad de una heren cia que, segun el art. 659, se determine a la muerte del cau sante constituyendola todos los bienes, derechos y obligaciones que por ella no se hayan extinguido y no al pacto sobre bienes conocidos y determinados, existentes cuando tal compromiso se otorgo, en el dominio del cedente.

And in a later decision of 25 April 1951, the Supreme Court of Spain once ore insisted on the rule that a successional agreement concerning property already owned by the grantor at the time the contract was perfected is not banned by, Article 1271 of the Spanish Civil Code according to Article 1847 of the Civil Code of the Philippines):

CONSIDERANDO: Que el tercer motive del recurso de doña M. G. G., y el sexto del formulado por doña D. G. G., hacen roferencia a la ultima de las tres cuestiones que son ob jato del debate en ambos recurso interpuestos esto es la dis cutida cesion que las hermanas senoras G. G., hoy recurrentes, hicieron a doña C. A. de la mitad de los bienes muebles e innuebles que recibiesen por herencia de doña M. P., procedentes de la de doña M. A. P., antes N., consignada en documents privado de fecha 2 de noviembre de 1929, firmado y reconocida su autenticidad por las tres senoras interesa das, cuya validez y eficacia es objeto de la cuarta pieza de los presentee autos acumulados y si se examination con determiento el documento aludido y el acto que en el se consigna habra de advertirse de modo notorio que se halla afectado de vicio de nulidadporque su objeto son unos bienes que clara mente se petpresa que han de entrar en el patrimonio de las cendentes mediantes una transmission hereditaria, lo

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que conatituye el pacto sobre herencia futura prohibido por el parrafo segundo del articulo 1271 del Codigo Civil, ya que no se concreta sobre bienes conocido y determinados, existentes en el del cedents cuando el compromiso de otorgo, sino que se refiem a la universalidad de que habrian de adra la muerte del causante sentido en el que conforme a la jurisprudencia de esta Sala es de plena aplicacion la norma a tiva antes citada, y al no haberio asi entendido la Sala de instancia, ha incurrido en la infmccion de interpreter erro to y por ello ha hecho aplicacion de indebida de dicho precepto y precede la estimacion de los motivo que aprincipio se citan y que denuncian la estimada infraccion, produciendo la casacion de la sentencia recurrida en el extremo a que los dichos motives se refieren. (Sentencia 25 abril 1951) (Emphasis Supplied)

It can thus be seen that the constant authoritative in interpretation of the prohibition against agreements involving future inheritance requires not only that a future succession be contemplated but also that the subject matter of the bargain should be either the universality or complex or mass of property owned by the grantor at the time of his death, or else an aliquot portion thereof. Castan, in his Treaties already mentioned, sums up the rulings in this wise:

Por otra parte, se ha de entender: 1. Que la cesion oenajenacion de los derechos hereditarios puede bacerse una vez falle cido el causante, aunque no se haya entrado en possession matetrial de los bienes 2. Que la prohibition legal se refiere solo a los contratos concluidos sobre la herencia misma o alguna de sus cuotas, no sobre objetos aislados que, eventualmente, hayan de adquirirse a virtud de la herencia.

It has been contended that the doctrine thus stated confuses future inheritance (herencia futura) with future property(bienes futuros). This is a misapprehension. In construing the term "future inheritance" as the contingent universality or complex of property rights and obligations that are passed to the heirs upon the death of the grantor, the rule advocated merely correlates the prohibition against contracts over "future inheritance" with the definition of "inheritance" given in Article 659 of the Spanish Civil Code, which is now Article 776 of the Civil Code of the Philippines:

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

The inheritance of a person may, and usually does, include not only property that he already owns at a given time, but also his future property, that is to say, the property that he may subsequently acquire. But it may include only future property whenever he should dispose of the present property before he dies. And future inheritance may include only property he already owns at any given moment, if he should thereafter acquire no other property until his death. In any case, the inheritance or estate cons of the totality of and liabilities he holds at the time of his demise, and not what he at any other time. If the questioned contract envisages all or a fraction of that contingent mass, then it is a contract over herencia futurall otherwise it is not. The statutory prohibition, in other words, is not so much concerned with the process of transfer as with the subject matter of the bargain. It is addressed to "future inheritance", not "future succession".

Of course, it can be said that every single item of property that a man should hold at any given instant of his life may become a part of his inheritance if he keeps it long enough. But is that mere possibility (or even probability) sufficient to do upon a contract over an individual item of existing property the outlaw brand of "contract over future inheritance"? If it should ever be, then no agreement concerning present property can escape the legal ban. No donation inter vivos, no reversionary clause, no borrowing of money, and no alienation, not even a contract of sale (or other contract in praisenti for that matter), with or without deferred delivery, will avoid the reproach that it concerns or affects the grantor's "future inheritance". It is permissible to doubt whether the law ever contemplated the sweeping away of the entire contractual system so carefully regulated in the Code.

The restrictive interpretation given by the Spanish Supreme Court to the codal prohibition of agreements involving future inheritance is justified not only by the fact that the prohibition limits contractual freedom (and therefore, should not be given extensive interpretation), but also because there is no real or substantial difference between (1) an agreement whereby a person, for a valuable consideration, agrees to bequeath some of the property he already owns, and (2) a contract whereby he dispose of that property, subject to the condition that he will be entitled to its usufruct until the time he dies. The court has repeatedly sanctioned even donations inter vivos wherein the donor has reserved to elf the right to enjoy the donated property for the remainder of his days, and riders the actual transfer of on to the time of his death (Guzman vs. Ibea 67 Phil. 633;

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Balagui vs Dongso, 53 Phil. 673; Laureta vs. Mata, 44 Phil. 668). Whatever objection is raised against the effects of the first kind of contracts can be made to apply to the second.

Mature reflection will show that where present (existing) property is the object of the bargain, all arguments brandished against Conventions over future succession (post mortem) are just as applicable to other contracts de praesenti with deferred execution, the validity of which has never been questioned. Thus, the loss of the power to bequeath the bargained property to persons of the grantor's choice, and the awakening of the grantee's desire for the early death of the grantor (the Roman "votum mortis captandae") in order to obtain prompt control of the contracted goods, occur in both cases. In truth, the latter ground would bar even a contract of life insurance in favor of a stated beneficiary. It may also be noted that since the later part of the nineteenth century, the civilists have recognized that the progress in social relations has rendered such objections obsolete (Puig Peña, Derecho Civil, Vol. V, part I, 613 et seq.).

But where the contract involves the universality of the estate that will be left at a person's death (the "herencia future" as understood by the Spanish Tribunal Supreno), there is another reason which I believe to be the true justification for the legal interdiction, and it is this: that if a man were to be allowed to bargain away all the property he expects to leave behind (i.e., his estate as a whole), he would practically remain without any incentive to practice thrift and frugality or to conserve and invest his earnings and property. He would then be irresistibly drawn to be a wasteful spend-thrift, a social parasite, without any regard for his future, because whatever he leaves belong to another by virtue of his contract. The disastrous effects upon family and society if such agreements were to be held binding can be readily imagined. Hence, the interpretation given to Article 1271 (now Art. 1347) by the Supreme Court of Spain appears amply supported by practical reasons, and there is no ground to deny its application.

Much emphasis has been placed on the provisions of the contract Exhibit "A" that the widow, Maxima Santos de Blas, would execute a testament in favor of the appellees. To me this is purely secondary, since it is merely the method selected by the parties for carrying out the widow's agreement to convey to the appellees the property in question without her losing its enjoyment during her natural life, and does not affect the substance or the validity of the transaction. To ensure the widow's possession of the property and the perception of its fruits while she was alive the means logically selected was to return it by will, since such a conveyance could only be operative after death. There might be a doubt as to the validity of this arrangement if the widows promise had been purely gratuitous, because then it could be argued that the promise involved a hybrid donation mortis causa yet irrevocable;1 but here the obligation to return is concededly irrevocable and supported by adequate consideration duly received in advance.

Since the agreement in the instant case did not refer to the future estate of the widow of Blas, but only to part of her present property at the time the contract was made; since the promise to retransfer one-half of her conjugal share was supported by adequate consideration as shown in the main decision; since the contract obviated protracted litigation and complicated accounting in settling the conjugal partnership of Blas and his first (deceased) wife; and since the testament that the widow promised to make was merely the mode chosen to perform the contract and carry out the promised devolution of the property, being thus of secondary importance, I can see no reason for declaring the entire arrangement violative of the legal interdiction of contracts over future inheritance, and disappoint the legitimate expectation held by the heirs of the first wife during all these years.

BARRERA, J., concurring:

It seems to me clear that the document Exhibit "A", basis of the action of the plaintiffs-appellants, refers specifically to and affects solely the share of the grantor Maxima Santos in the conjugal properties as determined and specified in the will of her husband Simeon Blas, whose provisions, which she expressly acknowledged to have read and understood, constitute the raison d'etre of her promise to deliver or convey, by will, one-half of that specific share to the heirs and legatees named in her husband's will (who are his heirs by his first marriage). Nowhere in the document Exhibit "A" is there reference, to hereditary estate that she herself would leave behind at the time of her own demise which legally would be her "future inheritance." For this reason, I believe the contractual obligation assumed by Maxima Santos in virtue of Exhibit "A" does not come within the prohibition of Article 1271 of the Spanish Civil Code, now Article 1347 of the Civil Code of the Philippines.

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I, therefore, concur in the opinions of Justices Labrador and Reyes.

BAUTISTA ANGELO, J., dissenting:

While I agree with the theory that the document Exhibit "A" does not involve a contract on future inheritance but a promise made by Maxima Santos to transmit one-half of her share in the conjugal property acquired during her marriage to Simeon Blas to the heirs and legatees of the latter, I am however of the opinion that herein appellants have no cause of action because Maxima Santos has Substantially complied with her promise.

It should be noted that Maxima Santos' promise to transmit is predicated on the condition that she can freely choose and select from among the heirs and legatees of her husband those to whom she would like to give and bequeath depending on the respect, service and companionship that they may render to her. Her commitment is not an absolute promise to give to all but only to whom she may choose and select. And here this promise has been substantially complied with.

Thus, it appears that Maxima Santos selected eight such heirs and legatees instituted in the will of her husband. Note that appellant Marta Gervacio Bias, who has given a legacy of only P38,000.00 in the will of Simeon Blas, who was given by her a legacy worth around P400,000.00, appellants Loida Gervacio Blas (or Luding Blas) and Leoncio (Leony) Gervacio Blas were given a legacy of P300.00 each every year to last during their lifetime; And Lorenzo Santos was given a legacy of two fishponds and one-tenth of the whole residuary estate. It may be stated that although appellant Maria Gervacio Blas was not given any legacy in Maxima Santos' will, yet her son Simeon Dungao was given a legacy of a residential land in Tonsuya, Malabon.

I, therefore, consider not in keeping with the nature of the pledge made by Maxima Santos the decision of the majority in ordering her administratrix to convey and deliver one-half of her share in the conjugal property to all the heirs and legatees of her husband Simeon Blas, because only such heirs and legatees are entitled to share in the property as may be selected by Maxima Santos, and this she has already done. For these reasons, I dissent.

Footnotes

REYES, J., concurring:

1 Note that the original "pactum successorium" was essentially gratuitous: "che e essenzialmente a titulo gratuito" (Stolfi Diritto Civile Vol. 6)

Reyes vs. RTC Makati Branch 142

G.R. No. 165744 August 11, 2008

OSCAR C. REYES, petitioner,

vs.

HON. REGIONAL TRIAL COURT OF MAKATI, Branch 142, ZENITH INSURANCE CORPORATION, and RODRIGO C. REYES, respondents.

D E C I S I O N

BRION, J.:

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This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to set aside the Decision of the Court of Appeals (CA)1 promulgated on May 26, 2004 in CA-G.R. SP No. 74970. The CA Decision affirmed the Order of the Regional Trial Court (RTC), Branch 142, Makati City dated November 29, 20022 in Civil Case No. 00-1553 (entitled "Accounting of All Corporate Funds and Assets, and Damages") which denied petitioner Oscar C. Reyes’ (Oscar) Motion to Declare Complaint as Nuisance or Harassment Suit.

BACKGROUND FACTS

Oscar and private respondent Rodrigo C. Reyes (Rodrigo) are two of the four children of the spouses Pedro and Anastacia Reyes. Pedro, Anastacia, Oscar, and Rodrigo each owned shares of stock of Zenith Insurance Corporation (Zenith), a domestic corporation established by their family. Pedro died in 1964, while Anastacia died in 1993. Although Pedro’s estate was judicially partitioned among his heirs sometime in the 1970s, no similar settlement and partition appear to have been made with Anastacia’s estate, which included her shareholdings in Zenith. As of June 30, 1990, Anastacia owned 136,598 shares of Zenith; Oscar and Rodrigo owned 8,715,637 and 4,250 shares, respectively.3

On May 9, 2000, Zenith and Rodrigo filed a complaint4 with the Securities and Exchange Commission (SEC) against Oscar, docketed as SEC Case No. 05-00-6615. The complaint stated that it is "a derivative suit initiated and filed by the complainant Rodrigo C. Reyes to obtain an accounting of the funds and assets of ZENITH INSURANCE CORPORATION which are now or formerly in the control, custody, and/or possession of respondent [herein petitioner Oscar] and to determine the shares of stock of deceased spouses Pedro and Anastacia Reyes that were arbitrarily and fraudulently appropriated [by Oscar] for himself [and] which were not collated and taken into account in the partition, distribution, and/or settlement of the estate of the deceased spouses, for which he should be ordered to account for all the income from the time he took these shares of stock, and should now deliver to his brothers and sisters their just and respective shares."5 [Emphasis supplied.]

In his Answer with Counterclaim,6 Oscar denied the charge that he illegally acquired the shares of Anastacia Reyes. He asserted, as a defense, that he purchased the subject shares with his own funds from the unissued stocks of Zenith, and that the suit is not a bona fide derivative suit because the requisites therefor have not been complied with. He thus questioned the SEC’s jurisdiction to entertain the complaint because it pertains to the settlement of the estate of Anastacia Reyes.

When Republic Act (R.A.) No. 87997 took effect, the SEC’s exclusive and original jurisdiction over cases enumerated in Section 5 of Presidential Decree (P.D.) No. 902-A was transferred to the RTC designated as a special commercial court.8 The records of Rodrigo’s SEC case were thus turned over to the RTC, Branch 142, Makati, and docketed as Civil Case No. 00-1553.

On October 22, 2002, Oscar filed a Motion to Declare Complaint as Nuisance or Harassment Suit.9 He claimed that the complaint is a mere nuisance or harassment suit and should, according to the Interim Rules of Procedure for Intra-Corporate Controversies, be dismissed; and that it is not a bona fide derivative suit as it partakes of the nature of a petition for the settlement of estate of the deceased Anastacia that is outside the jurisdiction of a special commercial court. The RTC, in its Order dated November 29, 2002 (RTC Order), denied the motion in part and declared:

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A close reading of the Complaint disclosed the presence of two (2) causes of action, namely: a) a derivative suit for accounting of the funds and assets of the corporation which are in the control, custody, and/or possession of the respondent [herein petitioner Oscar] with prayer to appoint a management committee; and b) an action for determination of the shares of stock of deceased spouses Pedro and Anastacia Reyes allegedly taken by respondent, its accounting and the corresponding delivery of these shares to the parties’ brothers and sisters. The latter is not a derivative suit and should properly be threshed out in a petition for settlement of estate.

Accordingly, the motion is denied. However, only the derivative suit consisting of the first cause of action will be taken cognizance of by this Court.10

Oscar thereupon went to the CA on a petition for certiorari, prohibition, and mandamus11 and prayed that the RTC Order be annulled and set aside and that the trial court be prohibited from continuing with the proceedings. The appellate court affirmed the RTC Order and denied the petition in its Decision dated May 26, 2004. It likewise denied Oscar’s motion for reconsideration in a Resolution dated October 21, 2004.

Petitioner now comes before us on appeal through a petition for review on certiorari under Rule 45 of the Rules of Court.

ASSIGNMENT OF ERRORS

Petitioner Oscar presents the following points as conclusions the CA should have made:

1. that the complaint is a mere nuisance or harassment suit that should be dismissed under the Interim Rules of Procedure of Intra-Corporate Controversies; and

2. that the complaint is not a bona fide derivative suit but is in fact in the nature of a petition for settlement of estate; hence, it is outside the jurisdiction of the RTC acting as a special commercial court.

Accordingly, he prays for the setting aside and annulment of the CA decision and resolution, and the dismissal of Rodrigo’s complaint before the RTC.

THE COURT’S RULING

We find the petition meritorious.

The core question for our determination is whether the trial court, sitting as a special commercial court, has jurisdiction over the subject matter of Rodrigo’s complaint. To resolve it, we rely on the judicial principle that "jurisdiction over the subject matter of a case is conferred by law and is determined by the allegations of the complaint, irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein."12

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JURISDICTION OF SPECIAL COMMERCIAL COURTS

P.D. No. 902-A enumerates the cases over which the SEC (now the RTC acting as a special commercial court) exercises exclusive jurisdiction:

SECTION 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnership, and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:

a) Devices or schemes employed by or any acts of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, members of associations or organizations registered with the Commission.

b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members, or associates, respectively; and between such corporation, partnership or association and the State insofar as it concerns their individual franchise or right to exist as such entity; and

c) Controversies in the election or appointment of directors, trustees, officers, or managers of such corporations, partnerships, or associations.

The allegations set forth in Rodrigo’s complaint principally invoke Section 5, paragraphs (a) and (b) above as basis for the exercise of the RTC’s special court jurisdiction. Our focus in examining the allegations of the complaint shall therefore be on these two provisions.

Fraudulent Devices and Schemes

The rule is that a complaint must contain a plain, concise, and direct statement of the ultimate facts constituting the plaintiff’s cause of action and must specify the relief sought.13 Section 5, Rule 8 of the Revised Rules of Court provides that in all averments of fraud or mistake, the circumstances constituting fraud or mistake must be stated with particularity.14 These rules find specific application to Section 5(a) of P.D. No. 902-A which speaks of corporate devices or schemes that amount to fraud or misrepresentation detrimental to the public and/or to the stockholders.

In an attempt to hold Oscar responsible for corporate fraud, Rodrigo alleged in the complaint the following:

3. This is a complaint…to determine the shares of stock of the deceased spouses Pedro and Anastacia Reyes that were arbitrarily and fraudulently appropriated for himself [herein petitioner Oscar] which were not collated and taken into account in the partition, distribution, and/or settlement of the estate of the deceased Spouses Pedro and

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Anastacia Reyes, for which he should be ordered to account for all the income from the time he took these shares of stock, and should now deliver to his brothers and sisters their just and respective shares with the corresponding equivalent amount of P7,099,934.82 plus interest thereon from 1978 representing his obligations to the Associated Citizens’ Bank that was paid for his account by his late mother, Anastacia C. Reyes. This amount was not collated or taken into account in the partition or distribution of the estate of their late mother, Anastacia C. Reyes.

3.1. Respondent Oscar C. Reyes, through other schemes of fraud including misrepresentation, unilaterally, and for his own benefit, capriciously transferred and took possession and control of the management of Zenith Insurance Corporation which is considered as a family corporation, and other properties and businesses belonging to Spouses Pedro and Anastacia Reyes.

x x x x

4.1. During the increase of capitalization of Zenith Insurance Corporation, sometime in 1968, the property covered by TCT No. 225324 was illegally and fraudulently used by respondent as a collateral.

x x x x

5. The complainant Rodrigo C. Reyes discovered that by some manipulative scheme, the shareholdings of their deceased mother, Doña Anastacia C. Reyes, shares of stocks and [sic] valued in the corporate books at P7,699,934.28, more or less, excluding interest and/or dividends, had been transferred solely in the name of respondent. By such fraudulent manipulations and misrepresentation, the shareholdings of said respondent Oscar C. Reyes abruptly increased to P8,715,637.00 [sic] and becomes [sic] the majority stockholder of Zenith Insurance Corporation, which portion of said shares must be distributed equally amongst the brothers and sisters of the respondent Oscar C. Reyes including the complainant herein.

x x x x

9.1 The shareholdings of deceased Spouses Pedro Reyes and Anastacia C. Reyes valued at P7,099,934.28 were illegally and fraudulently transferred solely to the respondent’s [herein petitioner Oscar] name and installed himself as a majority stockholder of Zenith Insurance Corporation [and] thereby deprived his brothers and sisters of their respective equal shares thereof including complainant hereto.

x x x x

10.1 By refusal of the respondent to account of his [sic] shareholdings in the company, he illegally and fraudulently transferred solely in his name wherein [sic] the shares of stock of the deceased Anastacia C. Reyes [which] must be properly collated and/or distributed equally amongst the children, including the complainant Rodrigo C. Reyes herein, to their damage and prejudice.

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x x x x

11.1 By continuous refusal of the respondent to account of his [sic] shareholding with Zenith Insurance Corporation[,] particularly the number of shares of stocks illegally and fraudulently transferred to him from their deceased parents Sps. Pedro and Anastacia Reyes[,] which are all subject for collation and/or partition in equal shares among their children. [Emphasis supplied.]

Allegations of deceit, machination, false pretenses, misrepresentation, and threats are largely conclusions of law that, without supporting statements of the facts to which the allegations of fraud refer, do not sufficiently state an effective cause of action.15 The late Justice Jose Feria, a noted authority in Remedial Law, declared that fraud and mistake are required to be averred with particularity in order to enable the opposing party to controvert the particular facts allegedly constituting such fraud or mistake.16

Tested against these standards, we find that the charges of fraud against Oscar were not properly supported by the required factual allegations. While the complaint contained allegations of fraud purportedly committed by him, these allegations are not particular enough to bring the controversy within the special commercial court’s jurisdiction; they are not statements of ultimate facts, but are mere conclusions of law: how and why the alleged appropriation of shares can be characterized as "illegal and fraudulent" were not explained nor elaborated on.

Not every allegation of fraud done in a corporate setting or perpetrated by corporate officers will bring the case within the special commercial court’s jurisdiction. To fall within this jurisdiction, there must be sufficient nexus showing that the corporation’s nature, structure, or powers were used to facilitate the fraudulent device or scheme. Contrary to this concept, the complaint presented a reverse situation. No corporate power or office was alleged to have facilitated the transfer of the shares; rather, Oscar, as an individual and without reference to his corporate personality, was alleged to have transferred the shares of Anastacia to his name, allowing him to become the majority and controlling stockholder of Zenith, and eventually, the corporation’s President. This is the essence of the complaint read as a whole and is particularly demonstrated under the following allegations:

5. The complainant Rodrigo C. Reyes discovered that by some manipulative scheme, the shareholdings of their deceased mother, Doña Anastacia C. Reyes, shares of stocks and [sic] valued in the corporate books at P7,699,934.28, more or less, excluding interest and/or dividends, had been transferred solely in the name of respondent. By such fraudulent manipulations and misrepresentation, the shareholdings of said respondent Oscar C. Reyes abruptly increased to P8,715,637.00 [sic] and becomes [sic] the majority stockholder of Zenith Insurance Corporation, which portion of said shares must be distributed equally amongst the brothers and sisters of the respondent Oscar C. Reyes including the complainant herein.

x x x x

9.1 The shareholdings of deceased Spouses Pedro Reyes and Anastacia C. Reyes valued at P7,099,934.28 were illegally and fraudulently transferred solely to the respondent’s [herein petitioner Oscar] name and installed himself as a majority stockholder of Zenith Insurance Corporation [and] thereby deprived his brothers and sisters of their respective equal shares thereof including complainant hereto. [Emphasis supplied.]

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In ordinary cases, the failure to specifically allege the fraudulent acts does not constitute a ground for dismissal since such defect can be cured by a bill of particulars. In cases governed by the Interim Rules of Procedure on Intra-Corporate Controversies, however, a bill of particulars is a prohibited pleading.17 It is essential, therefore, for the complaint to show on its face what are claimed to be the fraudulent corporate acts if the complainant wishes to invoke the court’s special commercial jurisdiction.

We note that twice in the course of this case, Rodrigo had been given the opportunity to study the propriety of amending or withdrawing the complaint, but he consistently refused. The court’s function in resolving issues of jurisdiction is limited to the review of the allegations of the complaint and, on the basis of these allegations, to the determination of whether they are of such nature and subject that they fall within the terms of the law defining the court’s jurisdiction. Regretfully, we cannot read into the complaint any specifically alleged corporate fraud that will call for the exercise of the court’s special commercial jurisdiction. Thus, we cannot affirm the RTC’s assumption of jurisdiction over Rodrigo’s complaint on the basis of Section 5(a) of P.D. No. 902-A.18

Intra-Corporate Controversy

A review of relevant jurisprudence shows a development in the Court’s approach in classifying what constitutes an intra-corporate controversy. Initially, the main consideration in determining whether a dispute constitutes an intra-corporate controversy was limited to a consideration of the intra-corporate relationship existing between or among the parties.19 The types of relationships embraced under Section 5(b), as declared in the case of Union Glass & Container Corp. v. SEC,20 were as follows:

a) between the corporation, partnership, or association and the public;

b) between the corporation, partnership, or association and its stockholders, partners, members, or officers;

c) between the corporation, partnership, or association and the State as far as its franchise, permit or license to operate is concerned; and

d) among the stockholders, partners, or associates themselves. [Emphasis supplied.]

The existence of any of the above intra-corporate relations was sufficient to confer jurisdiction to the SEC, regardless of the subject matter of the dispute. This came to be known as the relationship test.

However, in the 1984 case of DMRC Enterprises v. Esta del Sol Mountain Reserve, Inc.,21 the Court introduced the nature of the controversy test. We declared in this case that it is not the mere existence of an intra-corporate relationship that gives rise to an intra-corporate controversy; to rely on the relationship test alone will divest the regular courts of their jurisdiction for the sole reason that the dispute involves a corporation, its directors, officers, or stockholders. We saw that there is no legal sense in disregarding or minimizing the value of the nature of the transactions which gives rise to the dispute.

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Under the nature of the controversy test, the incidents of that relationship must also be considered for the purpose of ascertaining whether the controversy itself is intra-corporate.22 The controversy must not only be rooted in the existence of an intra-corporate relationship, but must as well pertain to the enforcement of the parties’ correlative rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation. If the relationship and its incidents are merely incidental to the controversy or if there will still be conflict even if the relationship does not exist, then no intra-corporate controversy exists.

The Court then combined the two tests and declared that jurisdiction should be determined by considering not only the status or relationship of the parties, but also the nature of the question under controversy.23 This two-tier test was adopted in the recent case of Speed Distribution, Inc. v. Court of Appeals:24

To determine whether a case involves an intra-corporate controversy, and is to be heard and decided by the branches of the RTC specifically designated by the Court to try and decide such cases, two elements must concur: (a) the status or relationship of the parties; and (2) the nature of the question that is the subject of their controversy.

The first element requires that the controversy must arise out of intra-corporate or partnership relations between any or all of the parties and the corporation, partnership, or association of which they are stockholders, members or associates; between any or all of them and the corporation, partnership, or association of which they are stockholders, members, or associates, respectively; and between such corporation, partnership, or association and the State insofar as it concerns their individual franchises. The second element requires that the dispute among the parties be intrinsically connected with the regulation of the corporation. If the nature of the controversy involves matters that are purely civil in character, necessarily, the case does not involve an intra-corporate controversy.

Given these standards, we now tackle the question posed for our determination under the specific circumstances of this case:

Application of the Relationship Test

Is there an intra-corporate relationship between the parties that would characterize the case as an intra-corporate dispute?

We point out at the outset that while Rodrigo holds shares of stock in Zenith, he holds them in two capacities: in his own right with respect to the 4,250 shares registered in his name, and as one of the heirs of Anastacia Reyes with respect to the 136,598 shares registered in her name. What is material in resolving the issues of this case under the allegations of the complaint is Rodrigo’s interest as an heir since the subject matter of the present controversy centers on the shares of stocks belonging to Anastacia, not on Rodrigo’s personally-owned shares nor on his personality as shareholder owning these shares. In this light, all reference to shares of stocks in this case shall pertain to the shareholdings of the deceased Anastacia and the parties’ interest therein as her heirs.

Article 777 of the Civil Code declares that the successional rights are transmitted from the moment of death of the decedent. Accordingly, upon Anastacia’s death, her children acquired legal title to her estate (which title includes her

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shareholdings in Zenith), and they are, prior to the estate’s partition, deemed co-owners thereof.25 This status as co-owners, however, does not immediately and necessarily make them stockholders of the corporation. Unless and until there is compliance with Section 63 of the Corporation Code on the manner of transferring shares, the heirs do not become registered stockholders of the corporation. Section 63 provides:

Section 63. Certificate of stock and transfer of shares. – The capital stock of stock corporations shall be divided into shares for which certificates signed by the president or vice-president, countersigned by the secretary or assistant secretary, and sealed with the seal of the corporation shall be issued in accordance with the by-laws. Shares of stock so issued are personal property and may be transferred by delivery of the certificate or certificates indorsed by the owner or his attorney-in-fact or other person legally authorized to make the transfer. No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation so as to show the names of the parties to the transaction, the date of the transfer, the number of the certificate or certificates, and the number of shares transferred. [Emphasis supplied.]

No shares of stock against which the corporation holds any unpaid claim shall be transferable in the books of the corporation.

Simply stated, the transfer of title by means of succession, though effective and valid between the parties involved (i.e., between the decedent’s estate and her heirs), does not bind the corporation and third parties. The transfer must be registered in the books of the corporation to make the transferee-heir a stockholder entitled to recognition as such both by the corporation and by third parties.26

We note, in relation with the above statement, that in Abejo v. Dela Cruz27 and TCL Sales Corporation v. Court of Appeals28 we did not require the registration of the transfer before considering the transferee a stockholder of the corporation (in effect upholding the existence of an intra-corporate relation between the parties and bringing the case within the jurisdiction of the SEC as an intra-corporate controversy). A marked difference, however, exists between these cases and the present one.

In Abejo and TCL Sales, the transferees held definite and uncontested titles to a specific number of shares of the corporation; after the transferee had established prima facie ownership over the shares of stocks in question, registration became a mere formality in confirming their status as stockholders. In the present case, each of Anastacia’s heirs holds only an undivided interest in the shares. This interest, at this point, is still inchoate and subject to the outcome of a settlement proceeding; the right of the heirs to specific, distributive shares of inheritance will not be determined until all the debts of the estate of the decedent are paid. In short, the heirs are only entitled to what remains after payment of the decedent’s debts;29 whether there will be residue remains to be seen. Justice Jurado aptly puts it as follows:

No succession shall be declared unless and until a liquidation of the assets and debts left by the decedent shall have been made and all his creditors are fully paid. Until a final liquidation is made and all the debts are paid, the right of the heirs to inherit remains inchoate. This is so because under our rules of procedure, liquidation is necessary in order to determine whether or not the decedent has left any liquid assets which may be transmitted to his heirs.30 [Emphasis supplied.]

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Rodrigo must, therefore, hurdle two obstacles before he can be considered a stockholder of Zenith with respect to the shareholdings originally belonging to Anastacia. First, he must prove that there are shareholdings that will be left to him and his co-heirs, and this can be determined only in a settlement of the decedent’s estate. No such proceeding has been commenced to date. Second, he must register the transfer of the shares allotted to him to make it binding against the corporation. He cannot demand that this be done unless and until he has established his specific allotment (and prima facie ownership) of the shares. Without the settlement of Anastacia’s estate, there can be no definite partition and distribution of the estate to the heirs. Without the partition and distribution, there can be no registration of the transfer. And without the registration, we cannot consider the transferee-heir a stockholder who may invoke the existence of an intra-corporate relationship as premise for an intra-corporate controversy within the jurisdiction of a special commercial court.

In sum, we find that – insofar as the subject shares of stock (i.e., Anastacia’s shares) are concerned – Rodrigo cannot be considered a stockholder of Zenith. Consequently, we cannot declare that an intra-corporate relationship exists that would serve as basis to bring this case within the special commercial court’s jurisdiction under Section 5(b) of PD 902-A, as amended. Rodrigo’s complaint, therefore, fails the relationship test.

Application of the Nature of Controversy Test

The body rather than the title of the complaint determines the nature of an action.31 Our examination of the complaint yields the conclusion that, more than anything else, the complaint is about the protection and enforcement of successional rights. The controversy it presents is purely civil rather than corporate, although it is denominated as a "complaint for accounting of all corporate funds and assets."

Contrary to the findings of both the trial and appellate courts, we read only one cause of action alleged in the complaint. The "derivative suit for accounting of the funds and assets of the corporation which are in the control, custody, and/or possession of the respondent [herein petitioner Oscar]" does not constitute a separate cause of action but is, as correctly claimed by Oscar, only an incident to the "action for determination of the shares of stock of deceased spouses Pedro and Anastacia Reyes allegedly taken by respondent, its accounting and the corresponding delivery of these shares to the parties’ brothers and sisters." There can be no mistake of the relationship between the "accounting" mentioned in the complaint and the objective of partition and distribution when Rodrigo claimed in paragraph 10.1 of the complaint that:

10.1 By refusal of the respondent to account of [sic] his shareholdings in the company, he illegally and fraudulently transferred solely in his name wherein [sic] the shares of stock of the deceased Anastacia C. Reyes [which] must be properly collated and/or distributed equally amongst the children including the complainant Rodrigo C. Reyes herein to their damage and prejudice.

We particularly note that the complaint contained no sufficient allegation that justified the need for an accounting other than to determine the extent of Anastacia’s shareholdings for purposes of distribution.

Another significant indicator that points us to the real nature of the complaint are Rodrigo’s repeated claims of illegal and fraudulent transfers of Anastacia’s shares by Oscar to the prejudice of the other heirs of the decedent; he cited these allegedly fraudulent acts as basis for his demand for the collation and distribution of Anastacia’s shares

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to the heirs. These claims tell us unequivocally that the present controversy arose from the parties’ relationship as heirs of Anastacia and not as shareholders of Zenith. Rodrigo, in filing the complaint, is enforcing his rights as a co-heir and not as a stockholder of Zenith. The injury he seeks to remedy is one suffered by an heir (for the impairment of his successional rights) and not by the corporation nor by Rodrigo as a shareholder on record.

More than the matters of injury and redress, what Rodrigo clearly aims to accomplish through his allegations of illegal acquisition by Oscar is the distribution of Anastacia’s shareholdings without a prior settlement of her estate – an objective that, by law and established jurisprudence, cannot be done. The RTC of Makati, acting as a special commercial court, has no jurisdiction to settle, partition, and distribute the estate of a deceased. A relevant provision – Section 2 of Rule 90 of the Revised Rules of Court – that contemplates properties of the decedent held by one of the heirs declares:

Questions as to advancement made or alleged to have been made by the deceased to any heir may be heard and determined by the court having jurisdiction of the estate proceedings; and the final order of the court thereon shall be binding on the person raising the questions and on the heir. [Emphasis supplied.]

Worth noting are this Court’s statements in the case of Natcher v. Court of Appeals:32

Matters which involve settlement and distribution of the estate of the decedent fall within the exclusive province of the probate court in the exercise of its limited jurisdiction.

x x x x

It is clear that trial courts trying an ordinary action cannot resolve to perform acts pertaining to a special proceeding because it is subject to specific prescribed rules. [Emphasis supplied.]

That an accounting of the funds and assets of Zenith to determine the extent and value of Anastacia’s shareholdings will be undertaken by a probate court and not by a special commercial court is completely consistent with the probate court’s limited jurisdiction. It has the power to enforce an accounting as a necessary means to its authority to determine the properties included in the inventory of the estate to be administered, divided up, and distributed. Beyond this, the determination of title or ownership over the subject shares (whether belonging to Anastacia or Oscar) may be conclusively settled by the probate court as a question of collation or advancement. We had occasion to recognize the court’s authority to act on questions of title or ownership in a collation or advancement situation in Coca v. Pangilinan33 where we ruled:

It should be clarified that whether a particular matter should be resolved by the Court of First Instance in the exercise of its general jurisdiction or of its limited probate jurisdiction is in reality not a jurisdictional question. In essence, it is a procedural question involving a mode of practice "which may be waived."

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As a general rule, the question as to title to property should not be passed upon in the testate or intestate proceeding. That question should be ventilated in a separate action. That general rule has qualifications or exceptions justified by expediency and convenience.

Thus, the probate court may provisionally pass upon in an intestate or testate proceeding the question of inclusion in, or exclusion from, the inventory of a piece of property without prejudice to its final determination in a separate action.

Although generally, a probate court may not decide a question of title or ownership, yet if the interested parties are all heirs, or the question is one of collation or advancement, or the parties consent to the assumption of jurisdiction by the probate court and the rights of third parties are not impaired, the probate court is competent to decide the question of ownership. [Citations omitted. Emphasis supplied.]

In sum, we hold that the nature of the present controversy is not one which may be classified as an intra-corporate dispute and is beyond the jurisdiction of the special commercial court to resolve. In short, Rodrigo’s complaint also fails the nature of the controversy test.

DERIVATIVE SUIT

Rodrigo’s bare claim that the complaint is a derivative suit will not suffice to confer jurisdiction on the RTC (as a special commercial court) if he cannot comply with the requisites for the existence of a derivative suit. These requisites are:

a. the party bringing suit should be a shareholder during the time of the act or transaction complained of, the number of shares not being material;

b. the party has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of directors for the appropriate relief, but the latter has failed or refused to heed his plea; and

c. the cause of action actually devolves on the corporation; the wrongdoing or harm having been or being caused to the corporation and not to the particular stockholder bringing the suit.34

Based on these standards, we hold that the allegations of the present complaint do not amount to a derivative suit.

First, as already discussed above, Rodrigo is not a shareholder with respect to the shareholdings originally belonging to Anastacia; he only stands as a transferee-heir whose rights to the share are inchoate and unrecorded. With respect to his own individually-held shareholdings, Rodrigo has not alleged any individual cause or basis as a shareholder on record to proceed against Oscar.

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Second, in order that a stockholder may show a right to sue on behalf of the corporation, he must allege with some particularity in his complaint that he has exhausted his remedies within the corporation by making a sufficient demand upon the directors or other officers for appropriate relief with the expressed intent to sue if relief is denied.35 Paragraph 8 of the complaint hardly satisfies this requirement since what the rule contemplates is the exhaustion of remedies within the corporate setting:

8. As members of the same family, complainant Rodrigo C. Reyes has resorted [to] and exhausted all legal means of resolving the dispute with the end view of amicably settling the case, but the dispute between them ensued.

Lastly, we find no injury, actual or threatened, alleged to have been done to the corporation due to Oscar’s acts. If indeed he illegally and fraudulently transferred Anastacia’s shares in his own name, then the damage is not to the corporation but to his co-heirs; the wrongful transfer did not affect the capital stock or the assets of Zenith. As already mentioned, neither has Rodrigo alleged any particular cause or wrongdoing against the corporation that he can champion in his capacity as a shareholder on record.36

In summary, whether as an individual or as a derivative suit, the RTC – sitting as special commercial court – has no jurisdiction to hear Rodrigo’s complaint since what is involved is the determination and distribution of successional rights to the shareholdings of Anastacia Reyes. Rodrigo’s proper remedy, under the circumstances, is to institute a special proceeding for the settlement of the estate of the deceased Anastacia Reyes, a move that is not foreclosed by the dismissal of his present complaint.

WHEREFORE, we hereby GRANT the petition and REVERSE the decision of the Court of Appeals dated May 26, 2004 in CA-G.R. SP No. 74970. The complaint before the Regional Trial Court, Branch 142, Makati, docketed as Civil Case No. 00-1553, is ordered DISMISSED for lack of jurisdiction.

SO ORDERED.

Neri vs. AkutinRepublic of the Philippines

SUPREME COURTManila

EN BANC

G.R. No. L-47799 June 13, 1941

78

Administration of the estate of Agripino Neri y Chavez. ELEUTERIO NERI, ET AL., petitioners, vs.IGNACIA AKUTIN AND HER CHILDREN, respondents.

Ozamiz & Capistrano for petitioners.Gullas, Leuterio, Tanner & Laput for respondents.

MORAN, J.:

Agripino Neri y Chavez, who died on December 12, 1931, had by his first marriage six children named Eleuterio, Agripino, Agapito, Getulia, Rosario and Celerina; and by his second marriage with Ignacia Akutin, five children named Gracia, Godofredo, Violeta, Estela Maria, and Emma. Getulia, daughter in the first marriage, died on October 2, 1923, that is, a little less than eight years before the death of said Agripino Neri y Chavez, and was survived by seven children named Remedios, Encarnacion, Carmen, Trinidad, Luz, Alberto and Minda. In Agripino Neri's testament, which was admitted to probate on March 21, 1932, he willed that his children by the first marriage shall have no longer any participation in his estate, as they had already received their corresponding shares during his lifetime. At the hearing for the declaration of heirs, the trial court found, contrary to what the testator had declared in his will, that all his children by the first and second marriages intestate heirs of the deceased without prejudice to one-half of the improvements introduced in the properties during the existence of the last conjugal partnership, which should belong to Ignacia Akutin. The Court of Appeals affirmed the trial court's decision with the modification that the will was "valid with respect to the two-thirds part which the testator could freely dispose of. "This judgment of the Court of Appeals is now sought to be reviewed in this petition for certiorari.

The decisive question here raised is whether, upon the foregoing facts, the omission of the children of the first marriage annuls the institution of the children of the first marriage as sole heirs of the testator, or whether the will may be held valid, at least with respect to one-third of the estate which the testator may dispose of as legacy and to the other one-third which he may bequeath as betterment, to said children of the second marriage.

The Court of Appeals invoked the provisions of article 851 of the Civil Code, which read in part as follows:

Disinheritance made without a statement of the cause, or for a cause the truth of which, if contradicted, is not proven, ... shall annul the institution of the heir in so far as it prejudices the person disinherited; but the legacies, betterments, and other testamentary dispositions, in so far as they do no encroach upon the legitime, shall be valid.

The appellate court thus seemed to have rested its judgment upon the impression that the testator had intended to disinherit, though ineffectively, the children of the first marriage. There is nothing in the will that supports this conclusion. True, the testator expressly denied them any share in his estate; but the denial was predicated, not upon the desire to disinherit, but upon the belief, mistaken though it was, that the children by the first marriage had already received more than their corresponding shares in his lifetime in the form of advancement. Such belief conclusively negatives all inference as to any intention to disinherit, unless his statement to that effect is prove to be deliberately fictitious, a fact not found by the Court of Appeals. The situation contemplated in the above provision is one in which the purpose to disinherit is clear, but upon a cause not stated or not proved, a situation which does not obtain in the instant case.

The Court of Appeals quotes Manresa thus:

En el terreno de los principios, la solucion mas justa del problema que hemos hecho notar al comentar el articulo, seria distinguir el caso en que el heredero omitido viviese al otorgarse el testamento, siendo conocida su existencia por el testador, de aquel en que, o naciese despues, o se ignorase su existencia, aplicando en el primer caso la doctrina del articulo 851, y en el segundo la del 814. (6 Manresa, 354-355.)

But it must be observed that this opinion is founded on mere principles (en el terreno de los principios) and not on the express provisions of the law. Manresa himself admits that according to law, "no existe hoy cuestion alguna en esta materia: la pretericion produce siempre los mismos efectos, ya se refiera a personas vivas al hacer el testamento o nacidas despues. Este ultimo grupo solo puede hacer relacion a los descendientes legitimos, siempre que ademas tengan derecho a legitima." (6 Manresa, 381.)

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Appellants, on the other hand, maintain that the case is one of voluntary preterition of four of the children by the first marriage, and of involuntary preterition of the children by the deceased Getulia, also of the first marriage, and is thus governed by the provisions of article 814 of the Civil Code, which read in part as follows:

The preterition of one or all of the forced heirs in the direct line, whether living at the time of the execution of the will or born after the death of the testator, shall void the institution of heir; but the legacies and betterments shall be valid, in so far as they are not inofficious.

Preterition consists in the omission in the testator's will of the forced heirs or anyone of them, either because they are not mentioned therein, or, though mentioned, they are neither instituted as heirs nor are expressly disinherited.(Cf. 6 Manresa, 346.) In the instant case, while the children of the first marriage were mentioned in the will, they were not accorded any share in the heriditary property, without expressly being disinherited. It is, therefore, a clear case of preterition as contended by appellants. The omission of the forced heirs or anyone of them, whether voluntary or involuntary, is a preterition if the purpose to disinherit is not expressly made or is not at least manifest.

Except as to "legacies and betterments" which "shall be valid in so far as they are not inofficious" (art. 814 of the Civil Code), preterition avoids the institution of heirs and gives rise to intestate succession. (Art. 814, Civil Code; Decisions of the Supreme Court of Spain of June 17, 1908 and February 27, 1909.) In the instant case, no such legacies or betterments have been made by the testator. "Mejoras" or betterments must be expressly provided, according to articles 825 and 828 of the Civil Code, and where no express provision therefor is made in the will, the law would presume that the testator had no intention to that effect. (Cf. 6 Manresa, 479.) In the will here in question, no express betterment is made in favor of the children by the second marriage; neither is there any legacy expressly made in their behalf consisting of the third available for free disposal. The whole inheritance is accorded the heirs by the second marriage upon the mistaken belief that the heirs by the first marriage have already received their shares. Were it not for this mistake, the testator's intention, as may be clearly inferred from his will, would have been to divide his property equally among all his children.

Judgment of the Court of Appeals is reversed and that of the trial court affirmed, without prejudice to the widow's legal usufruct, with costs against respondents.

Avanceña, C.J., Diaz, Laurel and Horrilleno, JJ., concur.

Seangio vs ReyesRepublic of the Philippines

SUPREME COURTManila

SECOND DIVISION

G.R. Nos. 140371-72 November 27, 2006

80

DY YIENG SEANGIO, BARBARA D. SEANGIO and VIRGINIA D. SEANGIO, Petitioners, vs.HON. AMOR A. REYES, in her capacity as Presiding Judge, Regional Trial Court, National Capital Judicial Region, Branch 21, Manila, ALFREDO D. SEANGIO, ALBERTO D. SEANGIO, ELISA D. SEANGIO-SANTOS, VICTOR D. SEANGIO, ALFONSO D. SEANGIO, SHIRLEY D. SEANGIO-LIM, BETTY D. SEANGIO-OBAS and JAMES D. SEANGIO, Respondents.

D E C I S I O N

AZCUNA, J.:

This is a petition for certiorari1 with application for the issuance of a writ of preliminary injunction and/or temporary restraining order seeking the nullification of the orders, dated August 10, 1999 and October 14, 1999, of the Regional Trial Court of Manila, Branch 21 (the RTC), dismissing the petition for probate on the ground of preterition, in the consolidated cases, docketed as SP. Proc. No. 98-90870 and SP. Proc. No. 99-93396, and entitled, "In the Matter of the Intestate Estate of Segundo C. Seangio v. Alfredo D. Seangio, et al." and "In the Matter of the Probate of the Will of Segundo C. Seangio v. Dy Yieng Seangio, Barbara D. Seangio and Virginia Seangio."

The facts of the cases are as follows:

On September 21, 1988, private respondents filed a petition for the settlement of the intestate estate of the late Segundo Seangio, docketed as Sp. Proc. No. 98–90870 of the RTC, and praying for the appointment of private respondent Elisa D. Seangio–Santos as special administrator and guardian ad litem of petitioner Dy Yieng Seangio.

Petitioners Dy Yieng, Barbara and Virginia, all surnamed Seangio, opposed the petition. They contended that: 1) Dy Yieng is still very healthy and in full command of her faculties; 2) the deceased Segundo executed a general power of attorney in favor of Virginia giving her the power to manage and exercise control and supervision over his business in the Philippines; 3) Virginia is the most competent and qualified to serve as the administrator of the estate of Segundo because she is a certified public accountant; and, 4) Segundo left a holographic will, dated September 20, 1995, disinheriting one of the private respondents, Alfredo Seangio, for cause. In view of the purported holographic will, petitioners averred that in the event the decedent is found to have left a will, the intestate proceedings are to be automatically suspended and replaced by the proceedings for the probate of the will.

On April 7, 1999, a petition for the probate of the holographic will of Segundo, docketed as SP. Proc. No. 99–93396, was filed by petitioners before the RTC. They likewise reiterated that the probate proceedings should take precedence over SP. Proc. No. 98–90870 because testate proceedings take precedence and enjoy priority over intestate proceedings.2

The document that petitioners refer to as Segundo’s holographic will is quoted, as follows:

Kasulatan sa pag-aalis ng mana

Tantunin ng sinuman

Ako si Segundo Seangio Filipino may asawa naninirahan sa 465-A Flores St., Ermita, Manila at nagtatalay ng maiwanag na pag-iisip at disposisyon ay tahasan at hayagang inaalisan ko ng lahat at anumang mana ang paganay kong anak na si Alfredo Seangio dahil siya ay naging lapastangan sa akin at isan beses siya ng sasalita ng masama harapan ko at mga kapatid niya na si Virginia Seangio labis kong kinasama ng loob ko at sasabe rin ni Alfredo sa akin na ako nasa ibabaw gayon gunit daratin ang araw na ako nasa ilalim siya at siya nasa ibabaw.

Labis kong ikinasama ng loob ko ang gamit ni Alfredo ng akin pagalan para makapagutang na kuarta siya at kanya asawa na si Merna de los Reyes sa China Bangking Corporation na millon pesos at hindi ng babayad at hindi ng babayad ito ay nagdulot sa aking ng malaking kahihiya sa mga may-ari at stockholders ng China Banking.

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At ikinagalit ko pa rin ang pagkuha ni Alfredo at ng kanyang asawa na mga custome[r] ng Travel Center of the Philippines na pinagasiwaan ko at ng anak ko si Virginia.

Dito ako nagalit din kaya gayon ayoko na bilanin si Alfredo ng anak ko at hayanan kong inaalisan ng lahat at anoman mana na si Alfredo at si Alfredo Seangio ay hindi ko siya anak at hindi siya makoha mana.

Nila[g]daan ko ngayon ika 20 ng Setyembre 1995 sa longsod ng Manila sa harap ng tatlong saksi. 3

(signed)

Segundo Seangio

Nilagdaan sa harap namin

(signed)

Dy Yieng Seangio (signed)

Unang Saksi ikalawang saksi

(signed)

ikatlong saksi

On May 29, 1999, upon petitioners’ motion, SP. Proc. No. 98–90870 and SP. Proc. No. 99–93396 were consolidated.4

On July 1, 1999, private respondents moved for the dismissal of the probate proceedings5 primarily on the ground that the document purporting to be the holographic will of Segundo does not contain any disposition of the estate of the deceased and thus does not meet the definition of a will under Article 783 of the Civil Code. According to private respondents, the will only shows an alleged act of disinheritance by the decedent of his eldest son, Alfredo, and nothing else; that all other compulsory heirs were not named nor instituted as heir, devisee or legatee, hence, there is preterition which would result to intestacy. Such being the case, private respondents maintained that while procedurally the court is called upon to rule only on the extrinsic validity of the will, it is not barred from delving into the intrinsic validity of the same, and ordering the dismissal of the petition for probate when on the face of the will it is clear that it contains no testamentary disposition of the property of the decedent.

Petitioners filed their opposition to the motion to dismiss contending that: 1) generally, the authority of the probate court is limited only to a determination of the extrinsic validity of the will; 2) private respondents question the intrinsic and not the extrinsic validity of the will; 3) disinheritance constitutes a disposition of the estate of a decedent; and, 4) the rule on preterition does not apply because Segundo’s will does not constitute a universal heir or heirs to the exclusion of one or more compulsory heirs.6

On August 10, 1999, the RTC issued its assailed order, dismissing the petition for probate proceedings:

A perusal of the document termed as "will" by oppositors/petitioners Dy Yieng Seangio, et al., clearly shows that there is preterition, as the only heirs mentioned thereat are Alfredo and Virginia. [T]he other heirs being omitted, Article 854 of the New Civil Code thus applies. However, insofar as the widow Dy Yieng Seangio is concerned, Article 854 does not apply, she not being a compulsory heir in the direct line.

As such, this Court is bound to dismiss this petition, for to do otherwise would amount to an abuse of discretion. The Supreme Court in the case of Acain v. Intermediate Appellate Court [155 SCRA 100 (1987)] has made its position clear: "for … respondents to have tolerated the probate of the will and allowed the case to progress when, on its face, the will appears to be intrinsically void … would have been an exercise in futility. It would have meant a waste of time, effort, expense, plus added futility. The trial court could have denied its probate outright or could have passed upon the intrinsic validity of the testamentary provisions before the extrinsic validity of the will was resolved(underscoring supplied).

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WHEREFORE, premises considered, the Motion to Suspend Proceedings is hereby DENIED for lack of merit. Special Proceedings No. 99–93396 is hereby DISMISSED without pronouncement as to costs.

SO ORDERED.7

Petitioners’ motion for reconsideration was denied by the RTC in its order dated October 14, 1999.

Petitioners contend that:

THE RESPONDENT JUDGE ACTED IN EXCESS OF HER JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION AND DECIDED A QUESTION OF LAW NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN ISSUING THE QUESTIONED ORDERS, DATED 10 AUGUST 1999 AND 14 OCTOBER 1999 (ATTACHMENTS "A" AND "B" HEREOF) CONSIDERING THAT:

I

THE RESPONDENT JUDGE, WITHOUT EVEN COMPLYING WITH SECTIONS 3 AND 4 OF RULE 76 OF THE RULES OF COURT ON THE PROPER PROCEDURE FOR SETTING THE CASE FOR INITIAL HEARING FOR THE ESTABLISHMENT OF THE JURISDICTIONAL FACTS, DISMISSED THE TESTATE CASE ON THE ALLEGED GROUND THAT THE TESTATOR’S WILL IS VOID ALLEGEDLY BECAUSE OF THE EXISTENCE OF PRETERITION, WHICH GOES INTO THE INTRINSIC VALIDITY OF THE WILL, DESPITE THE FACT THAT IT IS A SETTLED RULE THAT THE AUTHORITY OF PROBATE COURTS IS LIMITED ONLY TO A DETERMINATION OF THE EXTRINSIC VALIDITY OF THE WILL, I.E., THE DUE EXECUTION THEREOF, THE TESTATOR’S TESTAMENTARY CAPACITY AND THE COMPLIANCE WITH THE REQUISITES OR SOLEMNITIES PRESCRIBED BY LAW;

II

EVEN ASSUMING ARGUENDO THAT THE RESPONDENT JUDGE HAS THE AUTHORITY TO RULE UPON THE INTRINSIC VALIDITY OF THE WILL OF THE TESTATOR, IT IS INDUBITABLE FROM THE FACE OF THE TESTATOR’S WILL THAT NO PRETERITON EXISTS AND THAT THE WILL IS BOTH INTRINSICALLY AND EXTRINSICALLY VALID; AND,

III

RESPONDENT JUDGE WAS DUTY BOUND TO SUSPEND THE PROCEEDINGS IN THE INTESTATE CASE CONSIDERING THAT IT IS A SETTLED RULE THAT TESTATE PROCEEDINGS TAKE PRECEDENCE OVER INTESTATE PROCEEDINGS.

Petitioners argue, as follows:

First, respondent judge did not comply with Sections 3 and 4 of Rule 76 of the Rules of Court which respectively mandate the court to: a) fix the time and place for proving the will when all concerned may appear to contest the allowance thereof, and cause notice of such time and place to be published three weeks successively previous to the appointed time in a newspaper of general circulation; and, b) cause the mailing of said notice to the heirs, legatees and devisees of the testator Segundo;

Second, the holographic will does not contain any institution of an heir, but rather, as its title clearly states,Kasulatan ng Pag-Aalis ng Mana, simply contains a disinheritance of a compulsory heir. Thus, there is no preterition in the decedent’s will and the holographic will on its face is not intrinsically void;

Third, the testator intended all his compulsory heirs, petitioners and private respondents alike, with the sole exception of Alfredo, to inherit his estate. None of the compulsory heirs in the direct line of Segundo were preterited in the holographic will since there was no institution of an heir;

Fourth, inasmuch as it clearly appears from the face of the holographic will that it is both intrinsically and extrinsically valid, respondent judge was mandated to proceed with the hearing of the testate case; and,

83

Lastly, the continuation of the proceedings in the intestate case will work injustice to petitioners, and will render nugatory the disinheritance of Alfredo.

The purported holographic will of Segundo that was presented by petitioners was dated, signed and written by him in his own handwriting. Except on the ground of preterition, private respondents did not raise any issue as regards the authenticity of the document.

The document, entitled Kasulatan ng Pag-Aalis ng Mana, unmistakably showed Segundo’s intention of excluding his eldest son, Alfredo, as an heir to his estate for the reasons that he cited therein. In effect, Alfredo was disinherited by Segundo.

For disinheritance to be valid, Article 916 of the Civil Code requires that the same must be effected through a will wherein the legal cause therefor shall be specified. With regard to the reasons for the disinheritance that were stated by Segundo in his document, the Court believes that the incidents, taken as a whole, can be considered a form of maltreatment of Segundo by his son, Alfredo, and that the matter presents a sufficient cause for the disinheritance of a child or descendant under Article 919 of the Civil Code:

Article 919. The following shall be sufficient causes for the disinheritance of children and descendants, legitimate as well as illegitimate:

(1) When a child or descendant has been found guilty of an attempt against the life of the testator, his or her spouse, descendants, or ascendants;

(2) When a child or descendant has accused the testator of a crime for which the law prescribes imprisonment for six years or more, if the accusation has been found groundless;

(3) When a child or descendant has been convicted of adultery or concubinage with the spouse of the testator;

(4) When a child or descendant by fraud, violence, intimidation, or undue influence causes the testator to make a will or to change one already made;

(5) A refusal without justifiable cause to support the parents or ascendant who disinherit such child or descendant;

(6) Maltreatment of the testator by word or deed, by the child or descendant;8

(7) When a child or descendant leads a dishonorable or disgraceful life;

(8) Conviction of a crime which carries with it the penalty of civil interdiction.

Now, the critical issue to be determined is whether the document executed by Segundo can be considered as a holographic will.

A holographic will, as provided under Article 810 of the Civil Code, must be entirely written, dated, and signed by the hand of the testator himself. It is subject to no other form, and may be made in or out of the Philippines, and need not be witnessed.

Segundo’s document, although it may initially come across as a mere disinheritance instrument, conforms to the formalities of a holographic will prescribed by law. It is written, dated and signed by the hand of Segundo himself. An intent to dispose mortis causa[9] can be clearly deduced from the terms of the instrument, and while it does not make an affirmative disposition of the latter’s property, the disinheritance of Alfredo, nonetheless, is an act of disposition in itself. In other words, the disinheritance results in the disposition of the property of the testator Segundo in favor of those who would succeed in the absence of Alfredo.10

Moreover, it is a fundamental principle that the intent or the will of the testator, expressed in the form and within the limits prescribed by law, must be recognized as the supreme law in succession. All rules of construction are designed to ascertain and give effect to that intention. It is only when the intention of the testator is contrary to law, morals, or public policy that it cannot be given effect.11

84

Holographic wills, therefore, being usually prepared by one who is not learned in the law, as illustrated in the present case, should be construed more liberally than the ones drawn by an expert, taking into account the circumstances surrounding the execution of the instrument and the intention of the testator.12 In this regard, the Court is convinced that the document, even if captioned as Kasulatan ng Pag-Aalis ng Mana, was intended by Segundo to be his last testamentary act and was executed by him in accordance with law in the form of a holographic will. Unless the will is probated,13 the disinheritance cannot be given effect.14

With regard to the issue on preterition,15 the Court believes that the compulsory heirs in the direct line were not preterited in the will. It was, in the Court’s opinion, Segundo’s last expression to bequeath his estate to all his compulsory heirs, with the sole exception of Alfredo. Also, Segundo did not institute an heir16 to the exclusion of his other compulsory heirs. The mere mention of the name of one of the petitioners, Virginia, in the document did not operate to institute her as the universal heir. Her name was included plainly as a witness to the altercation between Segundo and his son, Alfredo. 1âwphi1

Considering that the questioned document is Segundo’s holographic will, and that the law favors testacy over intestacy, the probate of the will cannot be dispensed with. Article 838 of the Civil Code provides that no will shall pass either real or personal property unless it is proved and allowed in accordance with the Rules of Court. Thus, unless the will is probated, the right of a person to dispose of his property may be rendered nugatory.17

In view of the foregoing, the trial court, therefore, should have allowed the holographic will to be probated. It is settled that testate proceedings for the settlement of the estate of the decedent take precedence over intestate proceedings for the same purpose.18

WHEREFORE, the petition is GRANTED. The Orders of the Regional Trial Court of Manila, Branch 21, dated August 10, 1999 and October 14, 1999, are set aside. Respondent judge is directed to reinstate and hear SP Proc. No. 99-93396 for the allowance of the holographic will of Segundo Seangio. The intestate case or SP. Proc. No. 98-90870 is hereby suspended until the termination of the aforesaid testate proceedings.

No costs.

SO ORDERED.

ADOLFO S. AZCUNAAssociate Justice

Dizon-Rivera vs DizonRepublic of the Philippines

SUPREME COURTManila

EN BANC

G.R. No. L-24561 June 30, 1970

MARINA DIZON-RIVERA, executrix-appellee, vs.ESTELA DIZON, TOMAS V. DIZON, BERNARDITA DIZON, JOSEFINA DIZON, ANGELINA DIZON and LILIA DIZON, oppositors-appellants.

85

Punzalan, Yabut & Eusebio for executrix-appellee.

Leonardo Abola for oppositors-appellants.

TEEHANKEE, J.:

Appeal from orders of the Court of First Instance of Pampanga approving the Executrix-appellee's project of partition instead of Oppositors-Appellants' proposed counter-project of partition. 1

On January 28, 1961, the testatrix, Agripina J. Valdez, a widow, died in Angeles, Pampanga, and was survived by seven compulsory heirs, to wit, six legitimate children named Estela Dizon, Tomas V. Dizon, Bernardita Dizon, Marina Dizon (herein executrix-appellee), Angelina Dizon and Josefina Dizon, and a legitimate granddaughter named Lilia Dizon, who is the only legitimate child and heir of Ramon Dizon, a pre-deceased legitimate son of the said decedent. Six of these seven compulsory heirs (except Marina Dizon, the executrix-appellee) are the oppositors-appellants.

The deceased testatrix left a last will executed on February 2, 1960 and written in the Pampango dialect. Named beneficiaries in her will were the above-named compulsory heirs, together with seven other legitimate grandchildren, namely Pablo Rivera, Jr., Gilbert D. Garcia, Cayetano Dizon, Francisco Rivera, Agripina Ayson, Jolly Jimenez and Laureano Tiambon.

In her will, the testatrix divided, distributed and disposed of all her properties appraised at P1,801,960.00 (except two small parcels of land appraised at P5,849.60, household furniture valued at P2,500.00, a bank deposit in the sum of P409.95 and ten shares of Pampanga Sugar Development Company valued at P350.00) among her above-named heirs.

Testate proceedings were in due course commenced 2 and by order dated March 13, 1961, the last will and testament of the decedent was duly allowed and admitted to probate, and the appellee Marina Dizon-Rivera was appointed executrix of the testatrix' estate, and upon her filing her bond and oath of office, letters testamentary were duly issued to her.

After the executrix filed her inventory of the estate, Dr. Adelaido Bernardo of Angeles, Pampanga was appointed commissioner to appraise the properties of the estate. He filed in due course his report of appraisal and the same was approved in toto by the lower court on December 12, 1963 upon joint petition of the parties.

The real and personal properties of the testatrix at the time of her death thus had a total appraised value of P1,811,695.60, and the legitime of each of the seven compulsory heirs amounted to P129,362.11. 3 (¹/7 of the half of the estate reserved for the legitime of legitimate children and descendants). 4 In her will, the testatrix "commanded that her property be divided" in accordance with her testamentary disposition, whereby she devised and bequeathed specific real properties comprising practically the entire bulk of her estate among her six children and eight grandchildren. The appraised values of the real properties thus respectively devised by the testatrix to the beneficiaries named in her will, are as follows:

1. Estela Dizon ....................................... P 98,474.80 2. Angelina Dizon .................................. 106,307.063. Bernardita Dizon .................................. 51,968.17 4. Josefina Dizon ...................................... 52,056.39 5. Tomas Dizon ....................................... 131,987.41 6. Lilia Dizon .............................................. 72,182.47 7. Marina Dizon ..................................... 1,148,063.71 8. Pablo Rivera, Jr. ...................................... 69,280.009. Lilia Dizon, Gilbert Garcia, Cayetano Dizon, Francisco Rivera, Agripina Ayson, Dioli or Jolly Jimenez, Laureano Tiamzon ................. 72,540.00 Total Value ...................... P1,801,960.01

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The executrix filed her project of partition dated February 5, 1964, in substance adjudicating the estate as follows:

(1) with the figure of P129,254.96 as legitime for a basis Marina (exacultrix-appellee) and Tomas (appellant) are admittedly considered to have received in the will more than their respective legitime, while the rest of the appellants, namely, Estela, Bernardita, Angelina, Josefina and Lilia received less than their respective legitime;

(2) thus, to each of the latter are adjudicated the properties respectively given them in the will, plus cash and/or properties, to complete their respective legitimes to P129,254.96; (3) on the other hand, Marina and Tomas are adjudicated the properties that they received in the will less the cash and/or properties necessary to complete the prejudiced legitime mentioned in number 2 above;

(4) the adjudications made in the will in favor of the grandchildren remain untouched. <äre||anº•1àw>

On the other hand oppositors submitted their own counter-project of partition dated February 14, 1964, wherein they proposed the distribution of the estate on the following basis:

(a) all the testamentary dispositions were proportionally reduced to the value of one-half (½) of the entire estate, the value of the said one-half (½) amounting to P905,534.78; (b) the shares of the Oppositors-Appellants should consist of their legitime, plus the devises in their favor proportionally reduced; (c) in payment of the total shares of the appellants in the entire estate, the properties devised to them plus other properties left by the Testatrix and/or cash are adjudicated to them; and (d) to the grandchildren who are not compulsory heirs are adjudicated the properties respectively devised to them subject to reimbursement by Gilbert D. Garcia, et al., of the sums by which the devise in their favor should be proportionally reduced.

Under the oppositors' counter-project of partition, the testamentary disposition made by the testatrix of practically her whole estate of P1,801,960.01, as above stated, were proposed to be reduced to the amounts set forth after the names of the respective heirs and devisees totalling one-half thereof as follows:

1. Estela Dizon ........................................... P 49,485.56 2. Angelina Dizon ......................................... 53,421.42 3. Bernardita Dizon ....................................... 26,115.04 4. Josefina Dizon .......................................... 26,159.38 5. Tomas V. Dizon ......................................... 65,874.04 6. Lilia Dizon .................................................. 36,273.13 7. Marina Dizon ........................................... 576,938.82 8. Pablo Rivera, Jr. ......................................... 34,814.50 9. Grandchildren Gilbert Garcia et al .......... 36,452.80

T o t a l ................................................... P905,534.78

while the other half of the estate (P905,534.78) would be deemed as constituting the legitime of the executrix-appellee and oppositors-appellants, to be divided among them in seven equal parts of P129,362.11 as their respective legitimes.

The lower court, after hearing, sustained and approved the executrix' project of partition, ruling that "(A)rticles 906 and 907 of the New Civil Code specifically provide that when the legitime is impaired or prejudiced, the same shall be completed and satisfied. While it is true that this process has been followed and adhered to in the two projects of partition, it is observed that the executrix and the oppositors differ in respect to the source from which the portion or portions shall be taken in order to fully restore the impaired legitime. The proposition of the oppositors, if upheld, will substantially result in a distribution of intestacy, which is in controversion of Article 791 of the New Civil Code" adding that "the testatrix has chosen to favor certain heirs in her will for reasons of her own, cannot be doubted. This is legally permissible within the limitation of the law, as aforecited." With reference to the payment in cash of some P230,552.38, principally by the executrix as the largest beneficiary of the will to be paid to her five co-heirs, the oppositors (excluding Tomas Dizon), to complete their impaired legitimes, the lower court ruled that "(T)he payment in cash so as to make the proper adjustment to meet with the

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requirements of the law in respect to legitimes which have been impaired is, in our opinion, a practical and valid solution in order to give effect to the last wishes of the testatrix."

From the lower court's orders of approval, oppositors-appellants have filed this appeal, and raise anew the following issues: .

1. Whether or not the testamentary dispositions made in the testatrix' will are in the nature of devises imputable to the free portion of her estate, and therefore subject to reduction;

2. Whether the appellants are entitled to the devise plus their legitime under Article 1063, or merely to demand completion of their legitime under Article 906 of the Civil Code; and

3. Whether the appellants may be compelled to accept payment in cash on account of their legitime, instead of some of the real properties left by the Testatrix;

which were adversely decided against them in the proceedings below.

The issues raised present a matter of determining the avowed intention of the testatrix which is "the life and soul of a will." 5 In consonance therewith, our Civil Code included the new provisions found in Articles 788 and 791 thereof that "(I)f a testamentary disposition admits of different interpretations, in case of doubt, that interpretation by which the disposition is to be operative shall be preferred" and "(T)he words of a will are to receive an interpretation which will give to every expression some effect, rather than one which will render any of the expressions inoperative; and of two modes of interpreting a will, that is to be preferred which will prevent intestacy." In Villanueva vs. Juico 6 for violation of these rules of interpretation as well as of Rule 123, section 59 of the old Rules of Court, 7 the Court, speaking through Mr. Justice J.B.L. Reyes, overturned the lower court's decision and stressed that "the intention and wishes of the testator, when clearly expressed in his will, constitute the fixed law of interpretation, and all questions raised at the trial, relative to its execution and fulfillment, must be settled in accordance therewith, following the plain and literal meaning of the testator's words, unless it clearly appears that his intention was otherwise." 8

The testator's wishes and intention constitute the first and principal law in the matter of testaments, and to paraphrase an early decision of the Supreme Court of Spain, 9 when expressed clearly and precisely in his last will amount to the only law whose mandate must imperatively be faithfully obeyed and complied with by his executors, heirs and devisees and legatees, and neither these interested parties nor the courts may substitute their own criterion for the testator's will. Guided and restricted by these fundamental premises, the Court finds for the appellee.

1. Decisive of the issues at bar is the fact that the testatrix' testamentary disposition was in the nature of a partition of her estate by will. Thus, in the third paragraph of her will, after commanding that upon her death all her obligations as well as the expenses of her last illness and funeral and the expenses for probate of her last will and for the administration of her property in accordance with law, be paid, she expressly provided that "it is my wish and I command that my property be divided" in accordance with the dispositions immediately thereafter following, whereby she specified each real property in her estate and designated the particular heir among her seven compulsory heirs and seven other grandchildren to whom she bequeathed the same. This was a valid partition 10 of her estate, as contemplated and authorized in the first paragraph of Article 1080 of the Civil Code, providing that "(S)hould a person make a partition of his estate by an act inter vivos or by will, such partition shall be respected, insofar as it does not prejudice the legitime of the compulsory heirs." This right of a testator to partition his estate is subject only to the right of compulsory heirs to their legitime. The Civil Code thus provides the safeguard for the right of such compulsory heirs:

ART. 906. Any compulsory heir to whom the testator has left by any title less than the legitime belonging to him may demand that the same be fully satisfied.

ART. 907. Testamentary dispositions that impair or diminish the legitime of the compulsory heirs shall be reduced on petition of the same, insofar as they may be inofficious or excessive.

This was properly complied with in the executrix-appellee's project of partition, wherein the five oppositors-appellants namely Estela, Bernardita, Angelina, Josefina and Lilia, were adjudicated the properties respectively distributed and assigned to them by the testatrix in her will, and the differential to complete their respective legitimes of P129,362.11 each were taken from the cash and/or properties of the executrix-appellee, Marina, and their co-oppositor-appellant, Tomas, who admittedly were favored by the testatrix and received in the partition by will more than their respective legitimes.

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2. This right of a testator to partition his estate by will was recognized even in Article 1056 of the old Civil Code which has been reproduced now as Article 1080 of the present Civil Code. The only amendment in the provision was that Article 1080 "now permits any person (not a testator, as under the old law) to partition his estate by actinter vivos." 11 This was intended to repeal the then prevailing doctrine 12 that for a testator to partition his estate by an actinter vivos, he must first make a will with all the formalities provided by law. Authoritative commentators doubt the efficacy of the amendment 13 but the question does not here concern us, for this is a clear case of partition by will, duly admitted to probate, which perforce must be given full validity and effect. Aside from the provisions of Articles 906 and 907 above quoted, other codal provisions support the executrix-appellee's project of partition as approved by the lower court rather than the counter-project of partition proposed by oppositors-appellants whereby they would reduce the testamentary disposition or partition made by the testatrix to one-half and limit the same, which they would consider as mere devises or legacies, to one-half of the estate as the disposable free portion, and apply the other half of the estate to payment of the legitimes of the seven compulsory heirs. Oppositors' proposal would amount substantially to a distribution by intestacy and pro tanto nullify the testatrix' will, contrary to Article 791 of the Civil Code. It would further run counter to the provisions of Article 1091 of the Civil Code that "(A) partition legally made confers upon each heir the exclusive ownership of the property adjudicated to him."

3. In Habana vs. Imbo, 14 the Court upheld the distribution made in the will of the deceased testator Pedro Teves of two large coconut plantations in favor of his daughter, Concepcion, as against adverse claims of other compulsory heirs, as being a partition by will, which should be respected insofar as it does not prejudice the legitime of the compulsory heirs, in accordance with Article 1080 of the Civil Code. In upholding the sale made by Concepcion to a stranger of the plantations thus partitioned in her favor in the deceased's will which was being questioned by the other compulsory heirs, the Court ruled that "Concepcion Teves by operation of law, became the absolute owner of said lots because 'A partition legally made confers upon each heir the exclusive ownership of the property adjudicated to him' (Article 1091, New Civil Code), from the death of her ancestors, subject to rights and obligations of the latter, and, she can not be deprived of her rights thereto except by the methods provided for by law (Arts. 657, 659, and 661, Civil Code). 15 Concepcion Teves could, as she did, sell the lots in question as part of her share of the proposed partition of the properties, especially when, as in the present case, the sale has been expressly recognized by herself and her co-heirs ..."

4. The burden of oppositors' contention is that the testamentary dispositions in their favor are in the nature of devises of real property, citing the testatrix' repeated use of the words "I bequeath" in her assignment or distribution of her real properties to the respective heirs. From this erroneous premise, they proceed to the equally erroneous conclusion that "the legitime of the compulsory heirs passes to them by operation of law and that the testator can only dispose of the free portion, that is, the remainder of the estate after deducting the legitime of the compulsory heirs ... and all testamentary dispositions, either in the nature of institution of heirs or of devises or legacies, have to be taken from the remainder of the testator's estate constituting the free portion." 16

Oppositors err in their premises, for the adjudications and assignments in the testatrix' will of specific properties to specific heirs cannot be considered all devises, for it clearly appear from the whole context of the will and the disposition by the testatrix of her whole estate (save for some small properties of little value already noted at the beginning of this opinion) that her clear intention was to partition her whole estate through her will. The repeated use of the words "I bequeath" in her testamentary dispositions acquire no legal significance, such as to convert the same into devises to be taken solely from the free one-half disposable portion of the estate. Furthermore, the testatrix' intent that her testamentary dispositions were by way of adjudications to the beneficiaries as heirs and not as mere devisees, and that said dispositions were therefore on account of the respective legitimes of the compulsory heirs is expressly borne out in the fourth paragraph of her will, immediately following her testamentary adjudications in the third paragraph in this wise: "FOURTH: I likewise command that in case any of those I named as my heirs in this testament any of them shall die before I do, his forced heirs under the law enforced at the time of my death shall inherit the properties I bequeath to said deceased." 17

Oppositors' conclusions necessarily are in error. The testamentary dispositions of the testatrix, being dispositions in favor of compulsory heirs, do not have to be taken only from the free portion of the estate, as contended, for the second paragraph of Article 842 of the Civil Code precisely provides that "(O)ne who has compulsory heirs may dispose of his estate provided he does not contravene the provisions of this Code with regard to the legitime of said heirs." And even going by oppositors' own theory of bequests, the second paragraph of Article 912 Civil Code covers precisely the case of the executrix-appellee, who admittedly was favored by the testatrix with the large bulk of her estate in providing that "(T)he devisee who is entitled to a legitime may retain the entire property, provided its value does not exceed that of the disposable portion and of the share pertaining to him as legitime." For "diversity of apportionment is the usual reason for making a testament; otherwise, the decedent might as well die intestate." 18 Fundamentally, of course, the dispositions by the testatrix constituted a partition by will, which by mandate of Article 1080 of the Civil Code and of the other

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cited codal provisions upholding the primacy of the testator's last will and testament, have to be respected insofar as they do not prejudice the legitime of the other compulsory heirs.

Oppositors' invoking of Article 1063 of the Civil Code that "(P)roperty left by will is not deemed subject to collation, if the testator has not otherwise provided, but the legitime shall in any case remain unimpaired" and invoking of the construction thereof given by some authorities that "'not deemed subject to collation' in this article really means not imputable to or chargeable against the legitime", while it may have some plausibility 19 in an appropriate case, has no application in the present case. Here, we have a case of a distribution and partition of the entire estate by the testatrix, without her having made any previous donations during her lifetime which would require collation to determine the legitime of each heir nor having left merely some properties by will which would call for the application of Articles 1061 to 1063 of the Civil Code on collation. The amount of the legitime of the heirs is here determined and undisputed.

5. With this resolution of the decisive issue raised by oppositors-appellants, the secondary issues are likewise necessarily resolved. Their right was merely to demand completion of their legitime under Article 906 of the Civil Code and this has been complied with in the approved project of partition, and they can no longer demand a further share from the remaining portion of the estate, as bequeathed and partitioned by the testatrix principally to the executrix-appellee.

Neither may the appellants legally insist on their legitime being completed with real properties of the estate instead of being paid in cash, per the approved project of partition. The properties are not available for the purpose, as the testatrix had specifically partitioned and distributed them to her heirs, and the heirs are called upon, as far as feasible to comply with and give effect to the intention of the testatrix as solemnized in her will, by implementing her manifest wish of transmitting the real properties intact to her named beneficiaries, principally the executrix-appellee. The appraisal report of the properties of the estate as filed by the commissioner appointed by the lower court was approved in toto upon joint petition of the parties, and hence, there cannot be said to be any question — and none is presented — as to fairness of the valuation thereof or that the legitime of the heirs in terms of cash has been understated. The plaint of oppositors that the purchasing value of the Philippine peso has greatly declined since the testatrix' death in January, 1961 provides no legal basis or justification for overturning the wishes and intent of the testatrix. The transmission of rights to the succession are transmitted from the moment of death of the decedent (Article 777, Civil Code) and accordingly, the value thereof must be reckoned as of then, as otherwise, estates would never be settled if there were to be a revaluation with every subsequent fluctuation in the values of the currency and properties of the estate. There is evidence in the record that prior to November 25, 1964, one of the oppositors, Bernardita, accepted the sum of P50,000.00 on account of her inheritance, which, per the parties' manifestation, 20 "does not in any way affect the adjudication made to her in the projects of partition of either party as the same is a mere advance of the cash that she should receive in both projects of partition." The payment in cash by way of making the proper adjustments in order to meet the requirements of the law on non-impairment of legitimes as well as to give effect to the last will of the testatrix has invariably been availed of and sanctioned. 21 That her co-oppositors would receive their cash differentials only now when the value of the currency has declined further, whereas they could have received them earlier, like Bernardita, at the time of approval of the project of partition and when the peso's purchasing value was higher, is due to their own decision of pursuing the present appeal.

ACCORDINGLY, the orders appealed from are hereby affirmed. Without cost.

Vitug vs CA

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 82027 March 29, 1990

90

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, 2 the 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." 3 According 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

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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 inRivera 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

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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.

93

SO ORDERED.

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

Parish Priest of Victoria, Tarlac vs RigorRepublic of the Philippines

SUPREME COURTManila

SECOND DIVISION

G.R. No. L-22036 April 30, 1979

TESTATE ESTATE OF THE LATE REVEREND FATHER PASCUAL RIGOR. THE PARISH PRIEST OF THE ROMAN CATHOLIC CHURCH OF VICTORIA, TARLAC, petitioner-appellant, vs.

94

BELINA RIGOR, NESTORA RIGOR, FRANCISCA ESCOBAR DE RIGOR and JOVITA ESCOBAR DE FAUSTO,respondents-appellees.

D. Tañedo, Jr. for appellants.

J. Palanca, Sr. for appellee.

AQUINO, J.:

This case is about the efficaciousness or enforceability of a devise of ricelands located at Guimba, Nueva Ecija, with a total area of around forty- four hectares That devise was made in the will of the late Father Pascual Rigor, a native of Victoria Tarlac, in favor of his nearest male relative who would study for the priesthood.

The parish priest of Victoria, who claimed to be a trustee of the said lands, appealed to this Court from the decision of the Court of Appeals affirming the order of the probate court declaring that the said devise was inoperative (Rigor vs. Parish Priest of the Roman Catholic Church of Victoria, Tarlac, CA-G.R. No. 24319-R, August 1, 1963).

The record discloses that Father Rigor, the parish priest of Pulilan, Bulacan, died on August 9, 1935, leaving a will executed on October 29, 1933 which was probated by the Court of First Instance of Tarlac in its order of December 5, 1935. Named as devisees in the will were the testators nearest relatives, namely, his three sisters: Florencia Rigor-Escobar, Belina Rigor-Manaloto and Nestora Rigor-Quiambao. The testator gave a devise to his cousin, Fortunato Gamalinda.

In addition, the will contained the following controversial bequest (paragraphing supplied to facilitate comprehension of the testamentary provisions):

Doy y dejo como legado CUATRO (4) PARCELAS de terreno palayeros situados en el municipiooo de Guimba de la provinciaaa de NUEVA ECIJA, cuyo num. de CERTIFICADO DE TRANSFERENCIA DE TITULO SON; — Titulo Num. 6530, mide 16,249 m. cuadrados de superficie Titulo Num. 6548, mide 242,998 m. cuadrados de superficie y annual 6525, mide 62,665 m. cuadrados de superficie; y Titulo Num. 6521, mide 119,251 m. cuadrados de superficie; a cualquier pariente mio varon mas cercano que estudie la carrera eclesiatica hasta ordenarse de Presbiterado o sea Sacerdote; las condiciones de estate legado son;

(1.a) Prohibe en absoluto la venta de estos terrenos arriba situados objectos de este legado;

(2.a) Que el legatario pariente mio mas cercano tendra derecho de empezar a gozar y administrar de este legado al principiar a curzar la Sagrada Teologio, y ordenado de Sacerdote, hasta su muerte; pero que pierde el legatario este derecho de administrar y gozar de este legado al dejar de continuar sus estudios para ordenarse de Presbiterado (Sacerdote).

Que el legatario una vez Sacerdote ya estara obligado a celebrar cada año VEINTE (20) Misas rezadas en sufragio de mi alma y de mis padres difuntos, y si el actual legatario, quedase excomulgado, IPSO FACTO se le despoja este legado, y la administracion de esto pasara a cargo del actual Parroco y sus sucesores de la Iglecia Catolica de Victoria, Tarlac.

Y en intervalo de tiempo que no haya legatario acondicionado segun lo arriba queda expresado, pasara la administracion de este legado a cargo del actual Parroco Catolico y sus sucesores, de Victoria, Tarlac.

El Parroco administrador de estate legado, acumulara, anualmente todos los productos que puede tener estate legado, ganando o sacando de los productos anuales el CINCO (5) por ciento para su administracion, y los derechos correspondientes de las VEINTE (20) Misas rezadas que debiera el Parroco celebrar cada año, depositando todo lo restante de los productos de estate legado, en un banco, a nombre de estate legado.

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To implement the foregoing bequest, the administratix in 1940 submitted a project containing the following item:

5. LEGACY OF THE CHURCH

That it be adjudicated in favor of the legacy purported to be given to the nearest male relative who shall take the priesthood, and in the interim to be administered by the actual Catholic Priest of the Roman Catholic Church of Victoria, Tarlac, Philippines, or his successors, the real properties hereinbelow indicated, to wit:

Title No. Lot No.

Area in Has.

Tax Dec.

Ass. Value

T-6530

3663 1.6249

18740

P 340.00

T-6548

3445-C

24.2998

18730

7,290.00

T-6525

3670 6.2665

18736

1,880.00

T-6521

3666 11.9251

18733

3,580.00

Total amount and value — 44.1163 P13,090.00

Judge Roman A. Cruz in his order of August 15, 1940, approving the project of partition, directed that after payment of the obligations of the estate (including the sum of P3,132.26 due to the church of the Victoria parish) the administratrix should deliver to the devisees their respective shares.

It may be noted that the administratrix and Judge Cruz did not bother to analyze the meaning and implications of Father Rigor's bequest to his nearest male relative who would study for the priesthood. Inasmuch as no nephew of the testator claimed the devise and as the administratrix and the legal heirs believed that the parish priest of Victoria had no right to administer the ricelands, the same were not delivered to that ecclesiastic. The testate proceeding remained pending.

About thirteen years after the approval of the project of partition, or on February 19, 1954, the parish priest of Victoria filed in the pending testate proceeding a petition praying for the appointment of a new administrator (succeeding the deceased administration Florencia Rigor), who should deliver to the church the said ricelands, and further praying that the possessors thereof be ordered to render an accounting of the fruits. The probate court granted the petition. A new administrator was appointed. On January 31, 1957 the parish priest filed another petition for the delivery of the ricelands to the church as trustee.

The intestate heirs of Father Rigor countered with a petition dated March 25, 1957 praying that the bequest be d inoperative and that they be adjudged as the persons entitled to the said ricelands since, as admitted by the parish priest of Victoria, "no nearest male relative of" the testator "has ever studied for the priesthood" (pp. 25 and 35, Record on Appeal). That petition was opposed by the parish priest of Victoria.

Finding that petition to be meritorious, the lower court, through Judge Bernabe de Aquino, declared the bequest inoperative and adjudicated the ricelands to the testator's legal heirs in his order of June 28, 1957. The parish priest filed two motions for reconsideration.

Judge De Aquino granted the respond motion for reconsideration in his order of December 10, 1957 on the ground that the testator had a grandnephew named Edgardo G. Cunanan (the grandson of his first cousin) who was a seminarian in the San Jose Seminary of the Jesuit Fathers in Quezon City. The administrator was directed to deliver the ricelands to the parish priest of Victoria as trustee.

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The legal heirs appealed to the Court of Appeals. It reversed that order. It held that Father Rigor had created a testamentary trust for his nearest male relative who would take the holy orders but that such trust could exist only for twenty years because to enforce it beyond that period would violate "the rule against perpetuities. It ruled that since no legatee claimed the ricelands within twenty years after the testator's death, the same should pass to his legal heirs, citing articles 888 and 912(2) of the old Civil Code and article 870 of the new Civil Code.

The parish priest in this appeal contends that the Court of Appeals erred in not finding that the testator created a public charitable trust and in not liberally construing the testamentary provisions so as to render the trust operative and to prevent intestacy.

As refutation, the legal heirs argue that the Court of Appeals d the bequest inoperative because no one among the testator's nearest male relatives had studied for the priesthood and not because the trust was a private charitable trust. According to the legal heirs, that factual finding is binding on this Court. They point out that appellant priest's change of theory cannot be countenanced in this appeal .

In this case, as in cases involving the law of contracts and statutory construction, where the intention of the contracting parties or of the lawmaking body is to be ascertained, the primary issue is the determination of the testator's intention which is the law of the case (dicat testor et erit lex. Santos vs. Manarang, 27 Phil. 209, 215; Rodriguez vs. Court of Appeals, L-28734, March 28, 1969, 27 SCRA 546).

The will of the testator is the first and principal law in the matter of testaments. When his intention is clearly and precisely expressed, any interpretation must be in accord with the plain and literal meaning of his words, except when it may certainly appear that his intention was different from that literally expressed (In re Estate of Calderon, 26 Phil. 333).

The intent of the testator is the cardinal rule in the construction of wills." It is "the life and soul of a will It is "the first greatest rule, the sovereign guide, the polestar, in giving effect to a will". (See Dissent of Justice Moreland in Santos vs. Manarang, 27 Phil. 209, 223, 237-8.)

One canon in the interpretation of the testamentary provisions is that "the testator's intention is to be ascertained from the words of the wilt taking into consideration the circumstances under which it was made", but excluding the testator's oral declarations as to his intention (Art. 789, Civil Code of the Philippines).

To ascertain Father Rigor's intention, it may be useful to make the following re-statement of the provisions of his will.

1. that he bequeathed the ricelands to anyone of his nearest male relatives who would pursue an ecclesiastical career until his ordination as a priest.

2. That the devisee could not sell the ricelands.

3. That the devisee at the inception of his studies in sacred theology could enjoy and administer the ricelands, and once ordained as a priest, he could continue enjoying and administering the same up to the time of his death but the devisee would cease to enjoy and administer the ricelands if he discontinued his studies for the priesthood.

4. That if the devisee became a priest, he would be obligated to celebrate every year twenty masses with prayers for the repose of the souls of Father Rigor and his parents.

5. That if the devisee is excommunicated, he would be divested of the legacy and the administration of the riceland would pass to the incumbent parish priest of Victoria and his successors.

6. That during the interval of time that there is no qualified devisee as contemplated above, the administration of the ricelands would be under the responsibility of the incumbent parish priest of Victoria and his successors, and

7. That the parish priest-administrator of the ricelands would accumulate annually the products thereof, obtaining or getting from the annual produce five percent thereof for his administration and the fees corresponding to the twenty masses with prayers that the parish priest would celebrate for each year, depositing the balance of the income of the devise in the bank in the name of his bequest.

97

From the foregoing testamentary provisions, it may be deduced that the testator intended to devise the ricelands to his nearest male relative who would become a priest, who was forbidden to sell the ricelands, who would lose the devise if he discontinued his studies for the priesthood, or having been ordained a priest, he was excommunicated, and who would be obligated to say annually twenty masses with prayers for the repose of the souls of the testator and his parents.

On the other hand, it is clear that the parish priest of Victoria would administer the ricelands only in two situations: one, during the interval of time that no nearest male relative of the testator was studying for the priesthood and two, in case the testator's nephew became a priest and he was excommunicated.

What is not clear is the duration of "el intervalo de tiempo que no haya legatario acondicionado", or how long after the testator's death would it be determined that he had a nephew who would pursue an ecclesiastical vocation. It is that patent ambiguity that has brought about the controversy between the parish priest of Victoria and the testator's legal heirs.

Interwoven with that equivocal provision is the time when the nearest male relative who would study for the priesthood should be determined. Did the testator contemplate only his nearest male relative at the time of his death? Or did he have in mind any of his nearest male relatives at anytime after his death?

We hold that the said bequest refers to the testator's nearest male relative living at the time of his death and not to any indefinite time thereafter. "In order to be capacitated to inherit, the heir, devisee or legatee must be living at the moment the succession opens, except in case of representation, when it is proper" (Art. 1025, Civil Code).

The said testamentary provisions should be sensibly or reasonably construed. To construe them as referring to the testator's nearest male relative at anytime after his death would render the provisions difficult to apply and create uncertainty as to the disposition of his estate. That could not have been his intention.

In 1935, when the testator died, his nearest leagal heirs were his three sisters or second-degree relatives, Mrs. Escobar, Mrs. Manaloto and Mrs. Quiambao. Obviously, when the testator specified his nearest male relative, he must have had in mind his nephew or a son of his sister, who would be his third-degree relative, or possibly a grandnephew. But since he could not prognosticate the exact date of his death or state with certitude what category of nearest male relative would be living at the time of his death, he could not specify that his nearest male relative would be his nephew or grandnephews (the son of his nephew or niece) and so he had to use the term "nearest male relative".

It is contended by the legal heirs that the said devise was in reality intended for Ramon Quiambao, the testator's nephew and godchild, who was the son of his sister, Mrs. Quiambao. To prove that contention, the legal heirs presented in the lower court the affidavit of Beatriz Gamalinda, the maternal grandmother of Edgardo Cunanan, who deposed that after Father Rigor's death her own son, Valentin Gamalinda, Jr., did not claim the devise, although he was studying for the priesthood at the San Carlos Seminary, because she (Beatriz) knew that Father Rigor had intended that devise for his nearest male relative beloning to the Rigor family (pp. 105-114, Record on Appeal).

Mrs. Gamalinda further deposed that her own grandchild, Edgardo G. Cunanan, was not the one contemplated in Father Rigor's will and that Edgardo's father told her that he was not consulted by the parish priest of Victoria before the latter filed his second motion for reconsideration which was based on the ground that the testator's grandnephew, Edgardo, was studying for the priesthood at the San Jose Seminary.

Parenthetically, it should be stated at this juncture that Edgardo ceased to be a seminarian in 1961. For that reason, the legal heirs apprised the Court of Appeals that the probate court's order adjudicating the ricelands to the parish priest of Victoria had no more leg to stand on (p. 84, Appellant's brief).

Of course, Mrs. Gamalinda's affidavit, which is tantamount to evidence aliunde as to the testator's intention and which is hearsay, has no probative value. Our opinion that the said bequest refers to the testator's nephew who was living at the time of his death, when his succession was opened and the successional rights to his estate became vested, rests on a judicious and unbiased reading of the terms of the will.

Had the testator intended that the "cualquier pariente mio varon mas cercano que estudie la camera eclesiatica" would include indefinitely anyone of his nearest male relatives born after his death, he could have so specified in

98

his will He must have known that such a broad provision would suspend for an unlimited period of time the efficaciousness of his bequest.

What then did the testator mean by "el intervalo de tiempo que no haya legatario acondicionado"? The reasonable view is that he was referring to a situation whereby his nephew living at the time of his death, who would like to become a priest, was still in grade school or in high school or was not yet in the seminary. In that case, the parish priest of Victoria would administer the ricelands before the nephew entered the seminary. But the moment the testator's nephew entered the seminary, then he would be entitled to enjoy and administer the ricelands and receive the fruits thereof. In that event, the trusteeship would be terminated.

Following that interpretation of the will the inquiry would be whether at the time Father Rigor died in 1935 he had a nephew who was studying for the priesthood or who had manifested his desire to follow the ecclesiastical career. That query is categorically answered in paragraph 4 of appellant priest's petitions of February 19, 1954 and January 31, 1957. He unequivocally alleged therein that "not male relative of the late (Father) Pascual Rigor has ever studied for the priesthood" (pp. 25 and 35, Record on Appeal).

Inasmuch as the testator was not survived by any nephew who became a priest, the unavoidable conclusion is that the bequest in question was ineffectual or inoperative. Therefore, the administration of the ricelands by the parish priest of Victoria, as envisaged in the wilt was likewise inoperative.

The appellant in contending that a public charitable trust was constituted by the testator in is favor assumes that he was a trustee or a substitute devisee That contention is untenable. A reading of the testamentary provisions regarding the disputed bequest not support the view that the parish priest of Victoria was a trustee or a substitute devisee in the event that the testator was not survived by a nephew who became a priest.

It should be understood that the parish priest of Victoria could become a trustee only when the testator's nephew living at the time of his death, who desired to become a priest, had not yet entered the seminary or, having been ordained a priest, he was excommunicated. Those two contingencies did not arise, and could not have arisen in this case because no nephew of the testator manifested any intention to enter the seminary or ever became a priest.

The Court of Appeals correctly ruled that this case is covered by article 888 of the old Civil Code, now article 956, which provides that if "the bequest for any reason should be inoperative, it shall be merged into the estate, except in cases of substitution and those in which the right of accretion exists" ("el legado ... por qualquier causa, no tenga efecto se refundira en la masa de la herencia, fuera de los casos de sustitucion y derecho de acrecer").

This case is also covered by article 912(2) of the old Civil Code, now article 960 (2), which provides that legal succession takes place when the will "does not dispose of all that belongs to the testator." There being no substitution nor accretion as to the said ricelands the same should be distributed among the testator's legal heirs. The effect is as if the testator had made no disposition as to the said ricelands.

The Civil Code recognizes that a person may die partly testate and partly intestate, or that there may be mixed succession. The old rule as to the indivisibility of the testator's win is no longer valid. Thus, if a conditional legacy does not take effect, there will be intestate succession as to the property recovered by the said legacy (Macrohon Ong Ham vs. Saavedra, 51 Phil. 267).

We find no merit in the appeal The Appellate Court's decision is affirmed. Costs against the petitioner.

SO ORDERED

Fernando, C.J.(Actg. ), Barredo (Actg. Chairman), Antonio, Concepcion, Jr., and Santos, JJ., concur.

Abad Santos, J., took no part.

99

Bellis vs BellisRepublic of the Philippines

SUPREME COURTManila

EN BANC

G.R. No. L-23678 June 6, 1967

TESTATE ESTATE OF AMOS G. BELLIS, deceased. PEOPLE'S BANK and TRUST COMPANY, executor. MARIA CRISTINA BELLIS and MIRIAM PALMA BELLIS, oppositors-appellants, vs.EDWARD A. BELLIS, ET AL., heirs-appellees.

Vicente R. Macasaet and Jose D. Villena for oppositors appellants.Paredes, Poblador, Cruz and Nazareno for heirs-appellees E. A. Bellis, et al.Quijano and Arroyo for heirs-appellees W. S. Bellis, et al.

100

J. R. Balonkita for appellee People's Bank & Trust Company.Ozaeta, Gibbs and Ozaeta for appellee A. B. Allsman.

BENGZON, J.P., J.:

This is a direct appeal to Us, upon a question purely of law, from an order of the Court of First Instance of Manila dated April 30, 1964, approving the project of partition filed by the executor in Civil Case No. 37089 therein. 1äwphï1.ñët

The facts of the case are as follows:

Amos G. Bellis, born in Texas, was "a citizen of the State of Texas and of the United States." By his first wife, Mary E. Mallen, whom he divorced, he had five legitimate children: Edward A. Bellis, George Bellis (who pre-deceased him in infancy), Henry A. Bellis, Alexander Bellis and Anna Bellis Allsman; by his second wife, Violet Kennedy, who survived him, he had three legitimate children: Edwin G. Bellis, Walter S. Bellis and Dorothy Bellis; and finally, he had three illegitimate children: Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis.

On August 5, 1952, Amos G. Bellis executed a will in the Philippines, in which he directed that after all taxes, obligations, and expenses of administration are paid for, his distributable estate should be divided, in trust, in the following order and manner: (a) $240,000.00 to his first wife, Mary E. Mallen; (b) P120,000.00 to his three illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis, Miriam Palma Bellis, or P40,000.00 each and (c) after the foregoing two items have been satisfied, the remainder shall go to his seven surviving children by his first and second wives, namely: Edward A. Bellis, Henry A. Bellis, Alexander Bellis and Anna Bellis Allsman, Edwin G. Bellis, Walter S. Bellis, and Dorothy E. Bellis, in equal shares. 1äwphï1.ñët

Subsequently, or on July 8, 1958, Amos G. Bellis died a resident of San Antonio, Texas, U.S.A. His will was admitted to probate in the Court of First Instance of Manila on September 15, 1958.

The People's Bank and Trust Company, as executor of the will, paid all the bequests therein including the amount of $240,000.00 in the form of shares of stock to Mary E. Mallen and to the three (3) illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis, various amounts totalling P40,000.00 each in satisfaction of their respective legacies, or a total of P120,000.00, which it released from time to time according as the lower court approved and allowed the various motions or petitions filed by the latter three requesting partial advances on account of their respective legacies.

On January 8, 1964, preparatory to closing its administration, the executor submitted and filed its "Executor's Final Account, Report of Administration and Project of Partition" wherein it reported, inter alia, the satisfaction of the legacy of Mary E. Mallen by the delivery to her of shares of stock amounting to $240,000.00, and the legacies of Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis in the amount of P40,000.00 each or a total of P120,000.00. In the project of partition, the executor — pursuant to the "Twelfth" clause of the testator's Last Will and Testament — divided the residuary estate into seven equal portions for the benefit of the testator's seven legitimate children by his first and second marriages.

On January 17, 1964, Maria Cristina Bellis and Miriam Palma Bellis filed their respective oppositions to the project of partition on the ground that they were deprived of their legitimes as illegitimate children and, therefore, compulsory heirs of the deceased.

Amos Bellis, Jr. interposed no opposition despite notice to him, proof of service of which is evidenced by the registry receipt submitted on April 27, 1964 by the executor.1

After the parties filed their respective memoranda and other pertinent pleadings, the lower court, on April 30, 1964, issued an order overruling the oppositions and approving the executor's final account, report and administration and project of partition. Relying upon Art. 16 of the Civil Code, it applied the national law of the decedent, which in this case is Texas law, which did not provide for legitimes.

Their respective motions for reconsideration having been denied by the lower court on June 11, 1964, oppositors-appellants appealed to this Court to raise the issue of which law must apply — Texas law or Philippine law.

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In this regard, the parties do not submit the case on, nor even discuss, the doctrine of renvoi, applied by this Court in Aznar v. Christensen Garcia, L-16749, January 31, 1963. Said doctrine is usually pertinent where the decedent is a national of one country, and a domicile of another. In the present case, it is not disputed that the decedent was both a national of Texas and a domicile thereof at the time of his death.2 So that even assuming Texas has a conflict of law rule providing that the domiciliary system (law of the domicile) should govern, the same would not result in a reference back (renvoi) to Philippine law, but would still refer to Texas law. Nonetheless, if Texas has a conflicts rule adopting the situs theory (lex rei sitae) calling for the application of the law of the place where the properties are situated, renvoi would arise, since the properties here involved are found in the Philippines. In the absence, however, of proof as to the conflict of law rule of Texas, it should not be presumed different from ours.3 Appellants' position is therefore not rested on the doctrine of renvoi. As stated, they never invoked nor even mentioned it in their arguments. Rather, they argue that their case falls under the circumstances mentioned in the third paragraph of Article 17 in relation to Article 16 of the Civil Code.

Article 16, par. 2, and Art. 1039 of the Civil Code, render applicable the national law of the decedent, in intestate or testamentary successions, with regard to four items: (a) the order of succession; (b) the amount of successional rights; (e) the intrinsic validity of the provisions of the will; and (d) the capacity to succeed. They provide that —

ART. 16. Real property as well as personal property is subject to the law of the country where it is situated.

However, intestate and testamentary successions, both with respect to the order of succession and to the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession is under consideration, whatever may he the nature of the property and regardless of the country wherein said property may be found.

ART. 1039. Capacity to succeed is governed by the law of the nation of the decedent.

Appellants would however counter that Art. 17, paragraph three, of the Civil Code, stating that —

Prohibitive laws concerning persons, their acts or property, and those which have for their object public order, public policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determinations or conventions agreed upon in a foreign country.

prevails as the exception to Art. 16, par. 2 of the Civil Code afore-quoted. This is not correct. Precisely, Congressdeleted the phrase, "notwithstanding the provisions of this and the next preceding article" when they incorporated Art. 11 of the old Civil Code as Art. 17 of the new Civil Code, while reproducing without substantial change the second paragraph of Art. 10 of the old Civil Code as Art. 16 in the new. It must have been their purpose to make the second paragraph of Art. 16 a specific provision in itself which must be applied in testate and intestate succession. As further indication of this legislative intent, Congress added a new provision, under Art. 1039, which decrees that capacity to succeed is to be governed by the national law of the decedent.

It is therefore evident that whatever public policy or good customs may be involved in our System of legitimes, Congress has not intended to extend the same to the succession of foreign nationals. For it has specifically chosen to leave, inter alia, the amount of successional rights, to the decedent's national law. Specific provisions must prevail over general ones.

Appellants would also point out that the decedent executed two wills — one to govern his Texas estate and the other his Philippine estate — arguing from this that he intended Philippine law to govern his Philippine estate. Assuming that such was the decedent's intention in executing a separate Philippine will, it would not alter the law, for as this Court ruled in Miciano v. Brimo, 50 Phil. 867, 870, a provision in a foreigner's will to the effect that his properties shall be distributed in accordance with Philippine law and not with his national law, is illegal and void, for his national law cannot be ignored in regard to those matters that Article 10 — now Article 16 — of the Civil Code states said national law should govern.

The parties admit that the decedent, Amos G. Bellis, was a citizen of the State of Texas, U.S.A., and that under the laws of Texas, there are no forced heirs or legitimes. Accordingly, since the intrinsic validity of the provision of the will and the amount of successional rights are to be determined under Texas law, the Philippine law on legitimes cannot be applied to the testacy of Amos G. Bellis.

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Wherefore, the order of the probate court is hereby affirmed in toto, with costs against appellants. So ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar, Sanchez and Castro, JJ., concur.

Bagtas vs PaguioRepublic of the Philippines

SUPREME COURTManila

EN BANC

G.R. No. L-6801 March 14, 1912

JULIANA BAGTAS, plaintiffs-appellee, vs.ISIDRO PAGUIO, ET AL., defendants-appellants.

Salas and Kalaw for appellants. Jose Santiago for appellee.

TRENT, J.:

103

This is an appeal from an order of the Court of First Instance of the Province of Bataan, admitting to probate a document which was offered as the last will and testament of Pioquinto Paguio y Pizarro. The will purports to have been executed in the pueblo of Pilar, Province of Bataan, on the 19th day of April, 1908. The testator died on the 28th of September, 1909, a year and five months following the date of the execution of the will. The will was propounded by the executrix, Juliana Bagtas, widow of the decedent, and the opponents are a son and several grandchildren by a former marriage, the latter being the children of a deceased daughter.

The basis of the opposition to the probation of the will is that the same was not executed according to the formalities and requirements of the law touching wills, and further that the testator was not in the full of enjoyment and use of his mental faculties and was without the mental capacity necessary to execute a valid will.

The record shows that the testator, Pioquinto Paguio, for some fourteen of fifteen years prior to the time of his death suffered from a paralysis of the left side of his body; that a few years prior to his death his hearing became impaired and that he lost the power of speech. Owing to the paralysis of certain muscles his head fell to one side, and saliva ran from his mouth. He retained the use of his right hand, however, and was able to write fairly well. Through the medium of signs he was able to indicate his wishes to his wife and to other members of his family.

At the time of the execution of the will there were present the four testamentary witnesses, Agustin Paguio, Anacleto Paguio, and Pedro Paguio, and attorney, Señor Marco, and one Florentino Ramos. Anacleto Paguio and the attorney have since died, and consequently their testimony was not available upon the trial of the case in the lower court. The other three testamentary witnesses and the witness Florentino Ramos testified as to the manner in which the will was executed. According to the uncontroverted testimony of these witnesses the will was executed in the following manner:

Pioquinto Paguio, the testator, wrote out on pieces of paper notes and items relating to the disposition of his property, and these notes were in turn delivered to Señor Marco, who transcribed them and put them in form. The witnesses testify that the pieces of paper upon which the notes were written are delivered to attorney by the testator; that the attorney read them to the testator asking if they were his testamentary dispositions; that the testator assented each time with an affirmative movement of his head; that after the will as a whole had been thus written by the attorney, it was read in a loud voice in the presence of the testator and the witnesses; that Señor Marco gave the document to the testator; that the latter, after looking over it, signed it in the presence of the four subscribing witnesses; and that they in turn signed it in the presence of the testator and each other.

These are the facts of record with reference to the execution of the will and we are in perfect accord with the judgment of the lower court that the formalities of the Code of Civil Procedure have been fully complied with.

This brings us now to a consideration of appellants' second assignment of error, viz, the testator's alleged mental incapacity at the time of the execution of the will. Upon this point considerable evidence was adduced at the trial. One of the attesting witnesses testified that at the time of the execution of the will the testator was in his right mind, and that although he was seriously ill, he indicated by movements of his head what his wishes were. Another of the attesting witnesses stated that he was not able to say whether decedent had the full use of his mental faculties or not, because he had been ill for some years, and that he (the witnesses) was not a physician. The other subscribing witness, Pedro Paguio, testified in the lower court as a witness for the opponents. He was unable to state whether or not the will was the wish of the testator. The only reasons he gave for his statement were the infirmity and advanced age of the testator and the fact that he was unable to speak. The witness stated that the testator signed the will, and he verified his own signature as a subscribing witness.

Florentino Ramos, although not an attesting witness, stated that he was present when the will was executed and his testimony was cumulative in corroboration of the manner in which the will was executed and as to the fact that the testator signed the will. This witness also stated that he had frequently transacted matters of business for the decedent and had written letters and made inventories of his property at his request, and that immediately before and after the execution of the will he had performed offices of his character. He stated that the decedent was able to communicate his thoughts by writing. The testimony of this witness clearly indicates the presence of mental capacity on the part of the testator. Among other witnesses for the opponents were two physician, Doctor Basa and Doctor Viado. Doctor Basa testified that he had attended the testator some four or five years prior to his death and that the latter had suffered from a cerebral congestion from which the paralysis resulted. The following question was propounded to Doctor Basa:

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Q. Referring to mental condition in which you found him the last time you attended him, do you think he was in his right mind?

A. I can not say exactly whether he was in his right mind, but I noted some mental disorder, because when I spoke to him he did not answer me.

Doctor Basa testified at more length, but the substance of his testimony is that the testator had suffered a paralysis and that he had noticed some mental disorder. He does not say that the testator was not in his right mind at the time of the execution of the will, nor does he give it at his opinion that he was without the necessary mental capacity to make a valid will. He did not state in what way this mental disorder had manifested itself other than that he had noticed that the testator did not reply to him on one occasion when he visited him.

Doctor Viado, the other physician, have never seen the testator, but his answer was in reply to a hypothetical question as to what be the mental condition of a person who was 79 years old and who had suffered from a malady such as the testator was supposed to have had according to the testimony of Doctor Basa, whose testimony Doctor Viado had heard. He replied and discussed at some length the symptoms and consequences of the decease from which the testator had suffered; he read in support of his statements from a work by a German Physician, Dr. Herman Eichost. In answer, however, to a direct question, he stated that he would be unable to certify to the mental condition of a person who was suffering from such a disease.

We do not think that the testimony of these two physicians in any way strengthens the contention of the appellants. Their testimony only confirms the fact that the testator had been for a number of years prior to his death afflicted with paralysis, in consequence of which his physician and mental strength was greatly impaired. Neither of them attempted to state what was the mental condition of the testator at the time he executed the will in question. There can be no doubt that the testator's infirmities were of a very serious character, and it is quite evident that his mind was not as active as it had been in the earlier years of his life. However, we can not include from this that he wanting in the necessary mental capacity to dispose of his property by will.

The courts have been called upon frequently to nullify wills executed under such circumstances, but the weight of the authority is in support if the principle that it is only when those seeking to overthrow the will have clearly established the charge of mental incapacity that the courts will intervene to set aside a testamentary document of this character. In the case of Bugnao vs. Ubag (14 Phil. Rep., 163), the question of testamentary capacity was discussed by this court. The numerous citations there given from the decisions of the United States courts are especially applicable to the case at bar and have our approval. In this jurisdiction the presumption of law is in favor of the mental capacity of the testator and the burden is upon the contestants of the will to prove the lack of testamentary capacity. (In the matter of the will of Cabigting, 14 Phil. Rep., 463; in the matter of the will of Butalid, 10 Phil. Rep., 27; Hernaez vs. Hernaez, 1 Phil. Rep., 689.)

The rule of law relating to the presumption of mental soundness is well established, and the testator in the case at bar never having been adjudged insane by a court of competent jurisdiction, this presumption continues, and it is therefore incumbent upon the opponents to overcome this legal presumption by proper evidence. This we think they have failed to do. There are many cases and authorities which we might cite to show that the courts have repeatedly held that mere weakness of mind and body, induced by age and disease do not render a person incapable of making a will. The law does not require that a person shall continue in the full enjoyment and use of his pristine physical and mental powers in order to execute a valid will. If such were the legal standard, few indeed would be the number of wills that could meet such exacting requirements. The authorities, both medical and legal, are universal in statement that the question of mental capacity is one of degree, and that there are many gradations from the highest degree of mental soundness to the lowest conditions of diseased mentality which are denominated as insanity and idiocy.

The right to dispose of property by testamentary disposition is as sacred as any other right which a person may exercise and this right should not be nullified unless mental incapacity is established in a positive and conclusive manner. In discussing the question of testamentary capacity, it is stated in volume 28, 70, of the American and English Encyclopedia of Law, that —

Contrary to the very prevalent lay impression, perfect soundness of mind is not essential to testamentary capacity. A testator may be afflicted with a variety of mental weaknesses, disorders, or peculiarities and still be capable in law of executing a valid will. (See the numerous cases there cited in support of this statement.)

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The rule relating to testamentary capacity is stated in Buswell on Insanity, section 365, and quoted with approval inCampbell vs. Campbell (130 Ill., 466), as follows:

To constitute a sound and disposing mind, it is not necessary that the mind shall be wholly unbroken, unimpaired, or unshattered by disease or otherwise, or that the testator should be in the full possession of his reasoning faculties.

In note, 1 Jarman on Wills, 38, the rule is thus stated:

The question is not so much, that was the degree of memory possessed by the testator, as, had he a disposing memory? Was he able to remember the property he was about to bequeath, the manner of disturbing it, and the objects of his bounty? In a word, were his mind and memory sufficiently sound to enable him to know and understand the business in which he was engaged at the time when he executed his will. (See authorities there cited.)

In Wilson vs. Mitchell (101 Penn., 495), the following facts appeared upon the trial of the case: The testator died at the age of nearly 102 years. In his early years he was an intelligent and well informed man. About seven years prior to his death he suffered a paralytic stroke and from that time his mind and memory were mush enfeebled. He became very dull of hearing and in consequence of the shrinking of his brain he was affected with senile cataract causing total blindness. He became filthy and obscene in his habits, although formerly he was observant of the properties of life. The court, in commenting upon the case, said:

Neither age, nor sickness, nor extreme distress, nor debility of body will affect the capacity to make a will, if sufficient intelligence remains. The failure of memory is not sufficient to create the incapacity, unless it be total, or extend to his immediate family or property. . . .

x x x x x x x x x

Dougal (the testator) had lived over one hundred years before he made the will, and his physical and mental weakness and defective memory were in striking contrast with their strength in the meridian of his life. He was blind; not deaf, but hearing impaired; his mind acted slowly, he was forgetful or recent events, especially of names, and repeated questions in conversation; and sometimes, when aroused for sleep or slumber, would seem bewildered. It is not singular that some of those who had known him when he was remarkable for vigor and intelligence, are of the opinion that his reason was so far gone that he was incapable of making a will, although they never heard him utter an irrational expression.

In the above case the will was sustained. In the case at bar we might draw the same contrast as was pictured by the court in the case just quoted. The striking change in the physical and mental vigor of the testator during the last years of his life may have led some of those who knew him in his earlier days to entertain doubts as to his mental capacity to make a will, yet we think that the statements of the witnesses to the execution of the will and statements of the conduct of the testator at that time all indicate that he unquestionably had mental capacity and that he exercised it on this occasion. At the time of the execution of the will it does not appear that his conduct was irrational in any particular. He seems to have comprehended clearly what the nature of the business was in which he was engaged. The evidence show that the writing and execution of the will occupied a period several hours and that the testator was present during all this time, taking an active part in all the proceedings. Again, the will in the case at bar is perfectly reasonable and its dispositions are those of a rational person.

For the reasons above stated, the order probating the will should be and the same is hereby affirmed, with costs of this instance against the appellants.

Arellano, C.J., Torres, Mapa, Johnson, Carson and Moreland, JJ., concur.

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Bugnao vs. UbagRepublic of the Philippines

SUPREME COURTManila

EN BANC

G.R. No. 4445 September 18, 1909

CATALINA BUGNAO, proponent-appellee, vs.FRANCISCO UBAG, ET AL., contestants-appellants.

Rodriguez and Del Rosario for appellants. Fernando Salas for appellee.

CARSON, J.:

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This is an appeal from an order of the Court of First Instance of Oriental Negros, admitting to probate a document purporting to be the last will and testament of Domingo Ubag, deceased. The instrument was propounded by his widow, Catalina Bugnao, the sole beneficiary thereunder, and probate was contested by the appellants, who are brothers and sisters of the deceased, and who would be entitled to share in the distribution of his estate, if probate were denied, as it appears that the deceased left no heirs in the direct ascending or descending line.

Appellants contend that the evidence of record is not sufficient to establish the execution of the alleged will in the manner and form prescribed in section 618 of the Code of Civil Procedure; and that at the time when it is alleged that the will was executed, Ubag was not of sound mind and memory, and was physically and mentally incapable of making a will.

The instrument propounded for probate purports to be the last will and testament of Domingo Ubag, signed by him in the presence of three subscribing and attesting witnesses, and appears upon its face to have been duly executed in accordance with the provisions of the Code of Civil Procedure touching the making of wills.

Two of the subscribing witnesses, Victor J. Bingtoy and Catalino Mariño, testified in support of the will, the latter being the justice of the peace of the municipality wherein it was executed; and their testimony was corroborated in all important details by the testimony of the proponent herself, who was present when the will was made. It does not appear from the record why the third subscribing witness was not called; but since counsel for the contestants makes no comment upon his absence, we think it may safely be inferred that there was some good and sufficient reason therefore. In passing, however, it may be well to observe that, when because of death, sickness, absence, or for any other reason, it is not practicable to call to the witness stand all the subscribing witnesses to a will offered for probate, the reason for the absence of any of these witnesses should be made to appear of record, and this especially in cases such as the one at bar, wherein there is a contests.

The subscribing witnesses gave full and detailed accounts of the execution of the will and swore that the testator, at the time of its execution, was of sound mind and memory, and in their presence attached his signature thereto as his last will and testament, and that in his presence and in the presence of each other, they as well as the third subscribing witness. Despite the searching and exhaustive cross-examination to which they were subjected, counsel for appellants could point to no flaw in their testimony save an alleged contradiction as to a single incident which occurred at or about the time when the will was executed a contradiction, however, which we think is more apparent than real. One of the witnesses stated that the deceased sat up in bed and signed his name to the will, and that after its execution food was given him by his wife; while the other testified that he was assisted into a sitting position, and was given something to eat before he signed his name. We think the evidence discloses that his wife aided the sick man to sit up in bed at the time when he signed his name to the instrument, and that he was given nourishment while he was in that position, but it is not quite clear whether this was immediately before or after, or both before and after he attached his signature to the will. To say that the sick man sat up or raised himself up in bed is not necessarily in conflict with the fact that he received assistance in doing so; and it is not at all improbable or impossible that nourishment might have been given to him both before and after signing the will, and that one witness might remember the former occasion and the other witness might recall the latter, although neither witness could recall both. But, however this may have been, we do not think that a slight lapse of memory on the part of one or the other witness, as to the precise details of an unimportant incident, to which his attention may not have been particularly directed, is sufficient to raise a doubt as to the veracity of these witnesses, or as to the truth and accuracy of their recollection of the fact of the execution of the instrument. Of course, a number of contradictions in the testimony of alleged subscribing witnesses to a will as to the circumstances under which it was executed, or even a single contradiction as to a particular incident, where the incident was of such a nature that the intention of any person who was present must have been directed to it, and where the contradictory statements in regard to it are so clear and explicit as to negative the possibility or probability of mistake, might well be sufficient to justify the conclusion that the witnesses could not possibly have been present, together, at the time when it is alleged the will was executed; but the apparent contradictions in the testimony of the witnesses in the case at bar fall far short of raising a doubt a to their veracity, and on the other hand their testimony as a whole gives such clear, explicit, and detailed account of all that occurred, and is so convincing and altogether satisfactory that we have no doubt that the trial judge who heard them testify properly accepted their testimony as worthy of entire confidence and belief.

The contestants put upon the stand four witnesses for the purpose of proving that at the time and on the occasion when the subscribing witnesses testified that the will was executed, these witnesses were not in the house with the testator, and that the alleged testator was at that time in such physical and mental condition that it was impossible for him to have made a will. Two of these witnesses, upon cross-examination, admitted that

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they were not in the house at or between the hours of four and six in the afternoon of the day on which the will is alleged to have been made, this being the time at which the witnesses in support of the will testified that it was executed. Of the other witnesses, one is a contestant of the will, Macario Ubag, a brother of the testator, and the other, Canuto Sinoy, his close relative. These witnesses swore that they were in the house of the deceased, where he was lying ill, at or about the time when it is alleged that the will was executed, and that at that time the alleged subscribing witnesses were not in the house, and the alleged testator was so sick that he was unable to speak, to understand, or to make himself understood, and that he was wholly incapacitated to make a will. But the testimony of Macario Ubag is in our opinion wholly unworthy of credence. In addition to his manifest interest in the result of the investigation, it clearly discloses a fixed and settled purpose to overthrow the will at all costs, and to that end an utter disregard of the truth, and readiness to swear to any fact which he imagined would aid in securing his object. An admittedly genuine and authentic signature of the deceased was introduced in evidence for comparison with the signature attached to the will, but this witness in his anxiety to deny the genuineness of the signature of his brother to the will, promptly and positively swore that the admittedly genuine signature was not his brother's signature, and only corrected his erroneous statement in response to a somewhat suggestive question by his attorney which evidently gave him to understand that his former answer was likely to prejudice his own cause. On cross-examination, he was forced to admit that because his brother and his brother's wife (in those favor the will was made) were Aglipayanos, he and his other brothers and sisters had not visited them for many months prior to the one particular occasion as to which testified; and he admitted further, that, although he lived near at hand, at no time thereafter did he or any of the other members of his family visit their dying brother, and that they did not even attend the funeral. If the testimony of this witness could be accepted as true, it would be a remarkable coincidence indeed, that the subscribing witnesses to the alleged will should have falsely pretended to have joined in its execution on the very day, and at the precise hour, when this interested witness happened to pay his only visit to his brother during his last illness, so that the testimony of this witness would furnish conclusive evidence in support of the allegations of the contestants that the alleged will was not executed at the time and place or in the manner and form alleged by the subscribing witnesses. We do not think that the testimony of this witness nor any of the other witnesses for the contestants is sufficient to raise even a doubt as to the truth of the testimony of the subscribing witnesses as to the fact of the execution of the will, or as to the manner and from in which it was executed.

In the course of the proceedings, an admittedly genuine signature of the deceased was introduced in evidence, and upon a comparison of this signature with the signature attached to the instrument in question, we are wholly of the opinion of the trial judge, who held in this connection as follows:

No expert evidence has been adduced with regard to these two signatures, and the presiding judge of this court does not claim to possess any special expert knowledge in the matter of signatures; nevertheless, the court has compared these two signatures, and does not find that any material differences exists between the same. It is true that the signature which appears in the document offered for authentication discloses that at the time of writing the subscriber was more deliberate in his movements, but two facts must be acknowledge: First, that the testator was seriously ill, and the other fact, that for some reason which is not stated the testator was unable to see, and was a person who was not in the habit of signing his name every day.

These facts should sufficiently explain whatever difference may exist between the two signatures, but the court finds that the principal strokes in the two signatures are identical.

That the testator was mentally capable of making the will is in our opinion fully established by the testimony of the subscribing witnesses who swore positively that, at the time of its execution, he was of sound mind and memory. It is true that their testimony discloses the fact that he was at that time extremely ill, in an advanced stage of tuberculosis complicated with severe intermittent attacks of asthma; that he was too sick to rise unaided from his bed; that he needed assistance even to rise himself to a sitting position; and that during the paroxysms of asthma to which he was subject he could not speak; but all this evidence of physical weakness in no wise establishes his mental incapacity or a lack of testamentary capacity, and indeed the evidence of the subscribing witnesses as to the aid furnished them by the testator in preparing the will, and his clear recollection of the boundaries and physical description of the various parcels of land set out therein, taken together with the fact that he was able to give to the person who wrote the will clear and explicit instructions as to his desires touching the disposition of his property, is strong evidence of his testamentary capacity.

Counsel for appellant suggests that the fact that the alleged will leaves all the property of the testator to his widow, and wholly fails to make any provision for his brothers or sisters, indicates a lack of testamentary capacity and undue influence; and because of the inherent improbability that a man would make so unnatural

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and unreasonable a will, they contend that this fact indirectly corroborates their contention that the deceased never did in fact execute the will. But when it is considered that the deceased at the time of his death had no heirs in the ascending or descending line; that a bitter family quarrel had long separated him from his brothers and sisters, who declined to have any relations with the testator because he and his wife were adherents of the Aglipayano Church; and that this quarrel was so bitter that none of his brothers or sisters, although some of them lived in the vicinity, were present at the time of his death or attended his funeral; we think the fact that the deceased desired to leave and did leave all of his property to his widow and made no provision for his brothers and sisters, who themselves were grown men and women, by no means tends to disclose either an unsound mind or the presence of undue influence on the part of his wife, or in any wise corroborates contestants' allegation that the will never was executed.

It has been said that "the difficulty of stating standards or tests by which to determine the degree of mental capacity of a particular person has been everywhere recognized, and grows out of the inherent impossibility of measuring mental capacity, or its impairment by disease or other causes" (Greene vs. Greene, 145 III., 264, 276); and that "it is probable that no court has ever attempted to lay down any definite rule in respect to the exact amount of mental capacity requisite for the making of a valid will, without appreciating the difficulty of the undertaking" (Trish vs.Newell, 62 III., 196, 203).

Between the highest degree of soundness of mind and memory which unquestionably carries with it full testamentary capacity, and that degree of mental aberration generally known as insanity or idiocy, there are numberless degrees of mental capacity or incapacity, and while on one hand it has been held that "mere weakness of mind, or partial imbecility from the disease of body, or from age, will not render a person incapable of making a will, a weak or feeble minded person may make a valid will, provided he has understanding memory sufficient to enable him to know what he is about, and how or to whom he is disposing of his property" (Lodge vs. Lodge, 2 Houst. (Del.), 418); that, "To constitute a sound and disposing mind, it is not necessary that the mind should be unbroken or unimpaired, unshattered by disease or otherwise" (Sloan vs. Maxwell, 3 N. J. Eq., 563); that "it has not been understood that a testator must possess these qualities (of sound and disposing mind and memory) in the highest degree. . . . Few indeed would be the wills confirmed, if this is correct. Pain, sickness, debility of body, from age or infirmity, would, according to its violence or duration, in a greater or less degree, break in upon, weaken, or derange the mind, but the derangement must be such as deprives him of the rational faculties common to man" (Den. vs. Vancleve, 5 N. J. L.,680); and, that "Sound mind does not mean a perfectly balanced mind. The question of soundness is one of degree" (Boughton vs. Knight, L. R.,3 P. & D., 64; 42 L. J. P., 25); on the other hand, it has been held that "testamentary incapacity does not necessarily require that a person shall actually be insane or of an unsound mind. Weakness of intellect, whether it arises from extreme old age from disease, or great bodily infirmities or suffering, or from all these combined, may render the testator incapable of making a valid will, providing such weakness really disqualifies her from knowing or appreciating the nature, effects, or consequences of the act she is engaged in" (Manatt vs. Scott, 106 Iowa, 203; 68 Am. St. Rep., 293, 302).

But for the purposes of this decision it is not necessary for us to attempt to lay down a definition of testamentary capacity which will cover all possible cases which may present themselves, because, as will be seen from what has already been said, the testator was, at the time of making the instrument under consideration, endowed with all the elements of mental capacity set out in the following definition of testamentary capacity which has been frequently announced in courts of last resort in England and the United States; and while is some cases testamentary capacity has been held to exist in the absence of proof of some of these elements, there can be no question that, in the absence of proof of very exceptional circumstances, proof of the existence of all these elements in sufficient to establish the existence of testamentary capacity.

Testamentary capacity is the capacity to comprehend the nature of the transaction which the testator is engaged at the time, to recollect the property to be disposed of and the person who would naturally be supposed to have claims upon the testator, and to comprehend the manner in which the instrument will distribute his property among the objects of his bounty.

(Cf. large array of cases cited in support of this definition in the Encyclopedia of Law, vol. 23, p. 71, second edition.)

In our opinion, the evidence of record establishes in a strikingly conclusive manner the execution of the instrument propounded as the last will and testament of the deceased; that it was made in strict conformity with the requisites prescribed by law; and that, at the time of its execution, the deceased was of sound mind and memory, and executed the instrument of his own free will and accord.

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The order probating the will should be land is hereby affirmed, with the cost of this instance against the appellants.

Arellano, C. J., Torres, Johnson, and Moreland, JJ., concur.

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