cases in wills (full 1-30) (1)

7/28/2019 Cases in Wills (Full 1-30) (1)

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1. G.R. No. L-8018 October 26, 1955

GIL ATUN, ET AL., plaintiffs-appellants,vs.EUSEBIO NUEZ, ET AL., defendants-appellees.

Doroteo L. Serrano for appellants.Alfredo S. Rebueno for appellees.

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

Appeal from an order of the Court of First Instance of Albay dismissing the complaint for recovery of aparcel of registered land upon a motion to dismiss filed by defendants after plaintiffs had closed theirevidence. The land in question is located in Legaspi City and registered in the name of Estefania Atun,deceased aunt of plaintiffs, under Original Certificate of Title No. 11696 of the Registry of Property ofAlbay. The complaint was filed on August 7, 1950.

The evidence for the plaintiffs-appellants shows that they inherited the land in question from theirwidowed aunt Estefania Atun (sister of their deceased father Nicolas Atun), who died without any issue;that they had possessed the land from 1927 to 1930, when plaintiff Gil Atun delivered the same toSilvestra Nuez (sister of defendant-appellee Eusebio Nuez) for cultivation, for which Silvestra paid theAtuns a part of the harvest as rental; that in 1940, Silvestra turned over the land to defendant EusebioNuez, who thereafter refused to recognize plaintiffs' ownership or to deliver their share of theproduce; and that defendant Eusebio Nuez in turn sold the land to his co-defendant Diego Belga, whotook the property with the knowledge that it belonged, not to Nuez, but to plaintiffs.

Upon a demurrer to the evidence, filed by defendants after plaintiffs had rested their case, the lowerCourt dismissed the complaint on the ground that the period of ten years within which plaintiffs could

have filed an action for recovery thereof under section 40 of Act 190 (computed from the time plaintiffslost possession of the land in 1940), had already elapsed, hence their action had prescribed; and thatfurthermore, plaintiffs failed to prove their alleged ownership of the land in question, so that thepresumption that defendants, being possessors, are the lawful owners thereof, had not been overcome.Plaintiffs' motion for reconsideration of the order of dismissal of the complaint having been denied, theyappealed to the Court of Appeals, which forwarded the case to us because the appeal raises question oflaw.

The sole issue herein is whether the trial court erred in dismissing plaintiffs-appellants' complaint on theground of prescription of action.

The dismissal is erroneous. The land in question is admittedly covered by a Torrens title in the name of

Estefania Atun, deceased aunt of plaintiffs. Section 40 of Act 496 expressly provides that no title toregistered land in derogation to that of the registered owner shall be acquired by prescription oradverse possession. And this Court has repeatedly held that the right of the registered owner to recoverpossession of the registered property is equally imprescriptible, since possession is a mere consequenceof ownership. (Manlapas vs. Llorente, 48 Phil., 298, 308; Eugenio vs. Perdido, supra, p. 41; J. M. Tuason& Co., Inc. vs. Bolaos, 95 Phil., 106.)


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We are aware, of course, that title by adverse possession (acquisitive prescription) is distinct from thestatute of limitations (extinctive prescription) and the operation and effects of such distinction has beenexplored during the discussions of this petition for review.

But we have finally agreed that, as to the lands registered under the Torrens system, ten years' adversepossession may not be permitted to defeat the owners' right to possessionwhich is the necessaryincident of ownership. Otherwise loss of the land by prescription would be indirectly approved, inviolation of sec. 46 of the Land Registration Act. This statute, being a later enactment, may be said tohave partially amended the Statute of Limitations established in Act No. 190 in so far as the registeredlands are concerned. (Juan Eugenio, et al. vs. Silvina Perdido, et al., L-7083, May 19, 1955.)

And if prescription is unavailing against the registered owner, it must be equally unavailing against thelatter's hereditary successors, because they merely step into the shoes of the decedent by operation oflaw (new Civil Code, Art. 777; Art. 657, old), the title or right undergoing no change by its transmissionmortis causa.

The lower Court also erred in ruling that plaintiffs-appellants have failed to show a better title than that

of defendants who are presumed to possess with just title. As the land in question still stands registeredin the name of Estefania Atun, now deceased, the present owners thereof would be her legal heirs. It isof record that Estefania Atun died without any issue or ascendants and left as her only surviving heirsthe children of her brother Nicolas, plaintiffs herein; and the rule is settled that the legal heirs of adeceased may file an action arising out of a right belonging to their ancestor, without a separate judicialdeclaration of their status as such, provided there is no pending special proceeding for the settlement ofthe decedent's estate (Mendoza Vda. de Bonnevie vs. Cecilia Vda. de Pardo, 59 Phil., 486; Gov't. of P.I.vs. Serafica, 61 Phil., 93; Uy Coque vs. Sioca, 45 Phil., 430).

Pursuant to the rule that reversal on appeal of a ruling upholding a defendant's demurrer to theevidence imports in civil cases loss of his right to submit evidence in his behalf, in order to discourage

prolonged litigations (Arroyo vs. Azur, 76 Phil., 493, and cases therein cited), judgment must berendered according to plaintiffs' evidence, which supports their claim of ownership of the land inquestion, and for damages in the amount of P500 (t. s. n., p. 21).

Wherefore, the order appealed from is reversed; plaintiffs-appellants Gil Atun, Camila Atun, andDorotea Atun are declared the lawful owners in common of the lot in question; and defendants-appellees Eusebio Nuez and Diego Belga are ordered to surrender possession thereof to the plaintiffs,and to indemnify the latter in the amount of P500 by way of damages. Costs against defendants-appellees in both instances. So ordered.


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Quitco Ledesma as his natural daughter and on January 21, 1922, he issued in favor of the plaintiffSocorro Ledesma a promissory note (Exhibit C), of the following tenor:

P2,000. For value received I promise to pay Miss Socorro Ledesma the sum of two thousand pesos(P2,000). Philippine currency under the following terms: Two hundred and fifty pesos (P250) to be paidon the first day of March 1922; another two hundred and fifty pesos (P250)to be paid on the first day ofNovember 1922; the remaining one thousand and five hundred (P1,500) to be paid two years from thedate of the execution of this note. San Enrique, Occ. Negros, P. I., Jan. 21, 1922.

Subsequently, Lorenzo M. Quitco married the defendant Conchita McLachlin, with whom he hadfour children, who are the other defendants. On March 9, 1930, Lorenzo M. Quitco died (Exhibit 5), and,still later, that is, on December 15, 1932, his father Eusebio Quitco also died, and as the latter left realand personal properties upon his death, administration proceedings of said properties were instituted inthis court, the said case being known as the "Intestate of the deceased Eusebio Quitco," civil case No.6153 of this court.

Upon the institution of the intestate of the deceased Eusebio Quitco and the appointment of the

committee on claims and appraisal, the plaintiff Socorro Ledesma, on August 26, 1935, filed before saidcommittee the aforequoted promissory note for payment, and the commissioners, upon receipt of saidpromissory note, instead of passing upon it, elevated the same to this court en consulta (Exhibit F), andas the Honorable Jose Lopez Vito, presiding over the First Branch, returned said consulta and refrainedfrom giving his opinion thereon (Exhibit C), the aforesaid commissioners on claims and appraisal,alleging lack of jurisdiction to pass upon the claim, denied he same (Exhibit H).

On November 14, 1933 (Exhibit I), the court issued an order of declaration of heirs in theintestate of the deceased Eusebio Quitco, and as Ana Quitco Ledesma was not included among thedeclared heirs, Socorro Ledesma, as mother of Ana Quitco Ledesma, asked for the reconsideration ofsaid order, a petition which the court denied. From the order denying the said petition no appeal was

taken, and in lieu thereof there was filed the complaint which gives rise to this case.

The first question to be decided in this appeal, raised in the first assignment of alleged error, iswhether or not the action to recover the sum of P1,500, representing the last installment for thepayment of the promissory note Exhibit C, has prescribed.

According to the promissory note Exhibit C, executed by the deceased Lorenzo M. Quitco, onJanuary 21, 1922, the last installment of P1,500 should be paid two years from the date of the executionof said promissory note, that is, on January 21, 1924. The complaint in the present case was filed onJune 26, 1934, that is, more than ten years after he expiration of the said period. The fact that theplaintiff Socorro Ledesma filed her claim, on August 26, 1933, with the committee on claims andappraisal appointed in the intestate of Eusebio Quitco, does not suspend the running of the prescriptive

period of the judicial action for the recovery of said debt, because the claim for the unpaid balance ofthe amount of the promissory note should no have been presented in the intestate of Eusebio Quitco,the said deceased not being the one who executed the same, but in the intestate of Lorenzo M. Quitco,which should have been instituted by the said Socorro Ledesma as provided in section 642 of the Codeof Civil Procedure, authorizing a creditor to institute said case through the appointment of anadministrator for the purpose of collecting his credit. More than ten years having thus elapsed from theexpiration of the period for the payment of said debt of P1,500, the action for its recovery hasprescribed under section 43, No. 1, of the Code of Civil Procedure.


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The first assignment of alleged error is, therefore, well-founded.

As to the second assignment of alleged error, consisting in that the trial court erred in holding thatthe properties inherited by the defendants from their deceased grandfather by representation aresubject to the payment of debts and obligations of their deceased father, who died without leaving anyproperty, while it is true that under the provisions of articles 924 to 927 of the Civil Code, a childrenpresents his father or mother who died before him in the properties of his grandfather or grandmother,this right of representation does not make the said child answerable for the obligations contracted byhis deceased father or mother, because, as may be seen from the provisions of the Code of CivilProcedure referring to partition of inheritances, the inheritance is received with the benefit ofinventory, that is to say, the heirs only answer with the properties received from their predecessor. Theherein defendants, as heirs of Eusebio Quitco, in representation of their father Lorenzo M. Quitco, arenot bound to pay the indebtedness of their said father from whom they did not inherit anything.

The second assignment of alleged error is also well-founded.

Being a mere sequel of the first two assignments of alleged errors, the third assignment of error isalso well-founded.

For the foregoing considerations, we are of the opinion and so hold: (1) That the filing of a claimbefore the committee on claims and appraisal, appointed in the intestate of the father, for a monetaryobligation contracted by a son who died before him, does not suspend the prescriptive period of thejudicial action for the recovery of said indebtedness; (2) that the claim for the payment of anindebtedness contracted by a deceased person cannot be filed for its collection before the committeeon claims and appraisal, appointed in the intestate of his father, and the propertiesinherited from thelatter by the children of said deceased do not answer for the payment of the indebtedness contractedduring the lifetime of said person.

Wherefore, the appealed judgment is reversed, and the defendants are absolved from thecomplaint, with the costs to the appellees. So ordered.


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3. G.R. No. L-770 April 27, 1948

ANGEL T. LIMJOCO, petitioner,vs.INTESTATE ESTATE OF PEDRO O. FRAGRANTE, deceased, respondent.

Angel Limjoco, Jr. and Delfin L. Gonzales for petitioner.Bienvenido A. Tan for respondent.

HILADO, J.:

Under date of May 21, 1946, the Public Service Commission, through Deputy Commissioner Fidel Ibaez,rendered its decision in case No. 4572 of Pedro O. Fragante, as applicant for a certificate of publicconvenience to install, maintain and operate an ice plant in San Juan, Rizal, whereby said commissionheld that the evidence therein showed that the public interest and convenience will be promoted in aproper and suitable manner "by authorizing the operation and maintenance of another ice plant of twoand one-half (2-) tons in the municipality of San Juan; that the original applicant Pedro O. Fragante was

a Filipino Citizen at the time of his death; and that his intestate estate is financially capable ofmaintaining the proposed service". The commission, therefore, overruled the opposition filed in thecase and ordered "that under the provisions of section 15 of Commonwealth Act No. 146, as amended acertificate of public convenience be issued to the Intestate Estate of the deceased Pedro Fragante,authorizing said Intestate Estate through its Special or Judicial Administrator, appointed by the propercourt of competent jurisdiction, to maintain and operate an ice plant with a daily productive capacity oftwo and one-half (2-1/2) tons in the Municipality of San Juan and to sell the ice produced from said plantin the said Municipality of San Juan and in the Municipality of Mandaluyong, Rizal, and in Quezon City",subject to the conditions therein set forth in detail (petitioner's brief, pp. 33-34).

Petitioner makes four assignments of error in his brief as follows:

1. The decision of the Public Service Commission is not in accordance with law.

2. The decision of the Public Service Commission is not reasonably supported by evidence.

3. The Public Service Commission erred in not giving petitioner and the Ice and Cold Storage Industriesof the Philippines, Inc., as existing operators, a reasonable opportunity to meet the increased demand.

4. The decision of the Public Service Commission is an unwarranted departure from its announced policywith respect to the establishment and operation of ice plant. (Pp. 1-2, petitioner's brief.)

In his argument petitioner contends that it was error on the part of the commission to allow the

substitution of the legal representative of the estate of Pedro O. Fragante for the latter as partyapplicant in the case then pending before the commission, and in subsequently granting to said estatethe certificate applied for, which is said to be in contravention of law.

If Pedro O. Fragante had not died, there can be no question that he would have had the right toprosecute his application before the commission to its final conclusion. No one would have denied himthat right. As declared by the commission in its decision, he had invested in the ice plant in question P35,000, and from what the commission said regarding his other properties and business, he would


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certainly have been financially able to maintain and operate said plant had he not died. Histransportation business alone was netting him about P1,440 a month. He was a Filipino citizen andcontinued to be such till his demise. The commission declared in its decision, in view of the evidencebefore it, that his estate was financially able to maintain and operate the ice plant. The aforesaid right ofPedro O. Fragante to prosecute said application to its conclusion was one which by its nature did notlapse through his death. Hence, it constitutes a part of the assets of his estate, for which a right wasproperty despite the possibility that in the end the commission might have denied application, althoughunder the facts of the case, the commission granted the application in view of the financial ability of theestate to maintain and operate the ice plant. Petitioner, in his memorandum of March 19, 1947, admits(page 3) that the certificate of public convenience once granted "as a rule, should descend to his estateas an asset". Such certificate would certainly be property, and the right to acquire such a certificate, bycomplying with the requisites of the law, belonged to the decedent in his lifetime, and survived to hisestate and judicial administrator after his death.

If Pedro O. Fragrante had in his lifetime secured an option to buy a piece of land and during the life ofthe option he died, if the option had been given him in the ordinary course of business and not out ofspecial consideration for his person, there would be no doubt that said option and the right to exercise

it would have survived to his estate and legal representatives. In such a case there would also be thepossibility of failure to acquire the property should he or his estate or legal representative fail to complywith the conditions of the option. In the case at bar Pedro O. Fragrante's undoubted right to apply forand acquire the desired certificate of public convenience the evidence established that the publicneeded the ice plant was under the law conditioned only upon the requisite citizenship and economicability to maintain and operate the service. Of course, such right to acquire or obtain such certificate ofpublic convenience was subject to failure to secure its objective through nonfulfillment of the legalconditions, but the situation here is no different from the legal standpoint from that of the option in theillustration just given.

Rule 88, section 2, provides that the executor or administrator may bring or defend actions, among

other cases, for the protection of the property or rights of the deceased which survive, and it says thatsuch actions may be brought or defended "in the right of the deceased".

Rule 82, section 1, paragraph (a), mentions among the duties of the executor or administrator, themaking of an inventory of all goods, chattels, rights, credits, and estate of the deceased which shallcome to his possession or knowledge, or to the possession of any other person for him.

In his commentaries on the Rules of Court (Volume II, 2nd ed., pages 366, 367) the present chief Justiceof this Court draws the following conclusion from the decisions cited by him:

Therefore, unless otherwise expressly provided by law, any action affecting the property or rights(emphasis supplied) of a deceased person which may be brought by or against him if he were alive, may

likewise be instituted and prosecuted by or against the administrator, unless the action is for recovery ofmoney, debt or interest thereon, or unless, by its very nature, it cannot survive, because deathextinguishes the right . . . .

It is true that a proceeding upon the application for a certificate of public convenience before the PublicService Commission is not an "action". But the foregoing provisions and citations go to prove that thedecedent's rights which by their nature are not extinguished by death go to make up a part and parcel ofthe assets of his estate which, being placed under the control and management of the executor or


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administrator, can not be exercised but by him in representation of the estate for the benefit of thecreditors, devisees or legatees, if any, and the heirs of the decedent. And if the right involved happens toconsist in the prosecution of an unfinished proceeding upon an application for a certificate of publicconvenience of the deceased before the Public Service Commission, it is but logical that the legalrepresentative be empowered and entitled in behalf of the estate to make the right effective in thatproceeding.

Manresa (Vol. III, 6th ed., p. 11) says that No. 10 of article 334 and article 336 of the Civil Code,respectively, consider as immovable and movable things rights which are not material. The sameeminent commentator says in the cited volume (p. 45) that article 336 of the Civil Code has beendeficiently drafted in that it is not sufficiently expressive of all incorporeal rights which are also propertyfor juridical purposes.

Corpus Juris (Vol. 50, p. 737) states that in the broad sense of the term, property includes, among otherthings, "an option", and "the certificate of the railroad commission permitting the operation of a busline", and on page 748 of the same volume we read:

However, these terms (real property, as estate or interest) have also been declared to include everyspecies of title, inchoate or complete, and embrace rights which lie in contract, whether executory orexecuted. (Emphasis supplied.)

Another important question raised by petitioner is whether the estate of Pedro O. Fragrante is a"person" within the meaning of the Public Service Act.

Words and Phrases, First Series, (Vol. 6, p, 5325), states the following doctrine in the jurisdiction of theState of Indiana:

As the estate of the decedent is in law regarded as a person, a forgery committed after the death of the

man whose name purports to be signed to the instrument may be prosecuted as with the intent todefraud the estate. Billings vs. State, 107 Ind., 54, 55, 6 N. E. 914, 7 N. E. 763, 57 Am. Rep. 77.

The Supreme Court of Indiana in the decision cited above had before it a case of forgery committedafter the death of one Morgan for the purpose of defrauding his estate. The objection was urged thatthe information did not aver that the forgery was committed with the intent to defraud any person. TheCourt, per Elliott, J., disposed of this objection as follows:

. . . The reason advanced in support of this proposition is that the law does not regard the estate of adecedent as a person. This intention (contention) cannot prevail. The estate of the decedent is a personin legal contemplation. "The word "person" says Mr. Abbot, "in its legal signification, is a generic term,and includes artificial as well as natural persons," 2 Abb. Dict. 271; Douglas vs. Pacific, etc. Co., 4 Cal.

304; Planters', etc., Bank vs. Andrews, 8 Port. (Ala.) 404. It said in another work that 'persons are of twokinds: natural and artificial. A natural person is a human being. Artificial persons include (1) a collectionor succession of natural persons forming a corporation; (2) a collection of property to which the lawattributes the capacity of having rights and duties. The latter class of artificial persons is recognized onlyto a limited extent in our law. "Examples are the estate of a bankrupt or deceased person." 2 Rapalje &L. Law Dict. 954. Our own cases inferentially recognize the correctness of the definition given by theauthors from whom we have quoted, for they declare that it is sufficient, in pleading a claim against adecedent's estate, to designate the defendant as the estate of the deceased person, naming him. Ginn


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vs. Collins, 43 Ind. 271. Unless we accept this definition as correct, there would be a failure of justice incases where, as here, the forgery is committed after the death of a person whose name is forged; andthis is a result to be avoided if it can be done consistent with principle. We perceive no difficulty inavoiding such a result; for, to our minds, it seems reasonable that the estate of a decedent should beregarded as an artificial person. It is the creation of law for the purpose of enabling a disposition of theassets to be properly made, and, although natural persons as heirs, devises, or creditors, have aninterest in the property, the artificial creature is a distinct legal entity. The interest which naturalpersons have in it is not complete until there has been a due administration; and one who forges thename of the decedent to an instrument purporting to be a promissory note must be regarded as havingintended to defraud the estate of the decedent, and not the natural persons having diverse interests init, since ha cannot be presumed to have known who those persons were, or what was the nature oftheir respective interest. The fraudulent intent is against the artificial person, the estate and notthe natural persons who have direct or contingent interest in it. (107 Ind. 54, 55, 6 N.E. 914-915.)

In the instant case there would also be a failure of justice unless the estate of Pedro O. Fragrante isconsidered a "person", for quashing of the proceedings for no other reason than his death would entailprejudicial results to his investment amounting to P35,000.00 as found by the commission, not counting

the expenses and disbursements which the proceeding can be presumed to have occasioned him duringhis lifetime, let alone those defrayed by the estate thereafter. In this jurisdiction there are ampleprecedents to show that the estate of a deceased person is also considered as having legal personalityindependent of their heirs. Among the most recent cases may be mentioned that of "Estate of Mota vs.Concepcion, 56 Phil., 712, 717, wherein the principal plaintiff was the estate of the deceased LazaroMota, and this Court gave judgment in favor of said estate along with the other plaintiffs in these words:

. . . the judgment appealed from must be affirmed so far as it holds that defendants Concepcion andWhitaker are indebted to he plaintiffs in the amount of P245,804.69 . . . .

Under the regime of the Civil Code and before the enactment of the Code of Civil Procedure, the heirs of

a deceased person were considered in contemplation of law as the continuation of his personality byvirtue of the provision of article 661 of the first Code that the heirs succeed to all the rights andobligations of the decedent by the mere fact of his death. It was so held by this Court in Barrios vs.Dolor, 2 Phil., 44, 46. However, after the enactment of the Code of Civil Procedure, article 661 of theCivil Code was abrogated, as held in Suiliong & Co. vs. Chio-Taysan, 12 Phil., 13, 22. In that case, as wellas in many others decided by this Court after the innovations introduced by the Code of Civil Procedurein the matter of estates of deceased persons, it has been the constant doctrine that it is the estate orthe mass of property, rights and assets left by the decedent, instead of the heirs directly, that becomesvested and charged with his rights and obligations which survive after his demise.

The heirs were formerly considered as the continuation of the decedent's personality simply by legalfiction, for they might not have been flesh and blood the reason was one in the nature of a legal

exigency derived from the principle that the heirs succeeded to the rights and obligations of thedecedent. Under the present legal system, such rights and obligations as survive after death have to beexercised and fulfilled only by the estate of the deceased. And if the same legal fiction were notindulged, there would be no juridical basis for the estate, represented by the executor or administrator,to exercise those rights and to fulfill those obligations of the deceased. The reason and purpose forindulging the fiction is identical and the same in both cases. This is why according to the Supreme Courtof Indiana in Billings vs. State, supra, citing 2 Rapalje & L. Dictionary, 954, among the artificial persons


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recognized by law figures "a collection of property to which the law attributes the capacity of havingrights and duties", as for instance, the estate of a bankrupt or deceased person.

Petitioner raises the decisive question of whether or not the estate of Pedro O. Fragrante can beconsidered a "citizen of the Philippines" within the meaning of section 16 of the Public Service Act, asamended, particularly the proviso thereof expressly and categorically limiting the power of thecommission to issue certificates of public convenience or certificates of public convenience andnecessity "only to citizens of the Philippines or of the United States or to corporations, copartnerships,associations, or joint-stock companies constituted and organized under the laws of the Philippines", andthe further proviso that sixty per centum of the stock or paid-up capital of such entities must belongentirely to citizens of the Philippines or of the United States.

Within the Philosophy of the present legal system, the underlying reason for the legal fiction by which,for certain purposes, the estate of the deceased person is considered a "person" is the avoidance ofinjustice or prejudice resulting from the impossibility of exercising such legal rights and fulfilling suchlegal obligations of the decedent as survived after his death unless the fiction is indulged. Substantiallythe same reason is assigned to support the same rule in the jurisdiction of the State of Indiana, as

announced in Billings vs. State, supra, when the Supreme Court of said State said:

. . . It seems reasonable that the estate of a decedent should be regarded as an artificial person. it is thecreation of law for the purpose of enabling a disposition of the assets to be properly made . . . .

Within the framework and principles of the constitution itself, to cite just one example, under the bill ofrights it seems clear that while the civil rights guaranteed therein in the majority of cases relate tonatural persons, the term "person" used in section 1 (1) and (2) must be deemed to include artificial orjuridical persons, for otherwise these latter would be without the constitutional guarantee against beingdeprived of property without due process of law, or the immunity from unreasonable searches andseizures. We take it that it was the intendment of the framers to include artificial or juridical, no less

than natural, persons in these constitutional immunities and in others of similar nature. Among theseartificial or juridical persons figure estates of deceased persons. Hence, we hold that within theframework of the Constitution, the estate of Pedro O. Fragrante should be considered an artificial orjuridical person for the purposes of the settlement and distribution of his estate which, of course,include the exercise during the judicial administration thereof of those rights and the fulfillment of thoseobligations of his which survived after his death. One of those rights was the one involved in his pendingapplication before the Public Service Commission in the instant case, consisting in the prosecution ofsaid application to its final conclusion. As stated above, an injustice would ensue from the oppositecourse.

How about the point of citizenship? If by legal fiction his personality is considered extended so that anydebts or obligations left by, and surviving, him may be paid, and any surviving rights may be exercised

for the benefit of his creditors and heirs, respectively, we find no sound and cogent reason for denyingthe application of the same fiction to his citizenship, and for not considering it as likewise extended forthe purposes of the aforesaid unfinished proceeding before the Public Service Commission. Theoutcome of said proceeding, if successful, would in the end inure to the benefit of the same creditorsand the heirs. Even in that event petitioner could not allege any prejudice in the legal sense, any morethan he could have done if Fragrante had lived longer and obtained the desired certificate. The fiction ofsuch extension of his citizenship is grounded upon the same principle, and motivated by the samereason, as the fiction of the extension of personality. The fiction is made necessary to avoid the injustice


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of subjecting his estate, creditors and heirs, solely by reason of his death to the loss of the investmentamounting to P35,000, which he has already made in the ice plant, not counting the other expensesoccasioned by the instant proceeding, from the Public Service Commission of this Court.

We can perceive no valid reason for holding that within the intent of the constitution (Article IV), itsprovisions on Philippine citizenship exclude the legal principle of extension above adverted to. If forreasons already stated our law indulges the fiction of extension of personality, if for such reasons theestate of Pedro O. Fragrante should be considered an artificial or juridical person herein, we can find nojustification for refusing to declare a like fiction as to the extension of his citizenship for the purposes ofthis proceeding.

Pedro O. Fragrante was a Filipino citizen, and as such, if he had lived, in view of the evidence of record,he would have obtained from the commission the certificate for which he was applying. The situationhas suffered but one change, and that is, his death. His estate was that of a Filipino citizen. And itseconomic ability to appropriately and adequately operate and maintain the service of an ice plant wasthe same that it received from the decedent himself. In the absence of a contrary showing, which doesnot exist here, his heirs may be assumed to be also Filipino citizens; and if they are not, there is the

simple expedient of revoking the certificate or enjoining them from inheriting it.

Upon the whole, we are of the opinion that for the purposes of the prosecution of said case No. 4572 ofthe Public Service Commission to its final conclusion, both the personality and citizenship of Pedro O.Fragrante must be deemed extended, within the meaning and intent of the Public Service Act, asamended, in harmony with the constitution: it is so adjudged and decreed.

Decision affirmed, without costs. So ordered.


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

MARIA USON, plaintiff-appellee,vs.MARIA DEL ROSARIO, CONCEPCION NEBREDA, CONRADO NEBREDA, DOMINADOR NEBREDA, ANDFAUSTINO NEBREDA, Jr., defendants-appellants.

Priscilo Evangelista for appellee.Brigido G. Estrada for appellant.

BAUTISTA ANGELO, J.:

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

After trial, at which both parties presented their respective evidence, the court rendered decisionordering the defendants to restore to the plaintiff the ownership and possession of the lands in disputewithout special pronouncement as to costs. Defendants interposed the present appeal.

There is no dispute that Maria Uson, plaintiff-appellee, is the lawful wife of Faustino Nebreda, formerowner of the five parcels of lands litigated in the present case. There is likewise no dispute that Mariadel Rosario, one of the defendants-appellants, was merely a common-law wife of the late FaustinoNebreda with whom she had four illegitimate children, her now co-defendants. It likewise appears thatFaustino 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 thetime passed from the moment of his death to his only heir, his widow Maria Uson (Article 657, old CivilCode).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 samebefore his death" (Ilustre vs. Alaras Frondosa, 17 Phil., 321). From that moment, therefore, the rights ofinheritance 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 questionbecause she expressly renounced to inherit any future property that her husband may acquire and leaveupon his death in the deed of separation they had entered into on February 21, 1931, cannot beentertained for the simple reason that future inheritance cannot be the subject of a contract nor can it


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be renounced (1 Manresa, 123, sixth edition; Tolentino on Civil Code, p. 12; Osorio vs. Osorio andYnchausti Steamship Co., 41 Phil., 531).

But defendants contend that, while it is true that the four minor defendants are illegitimate children ofthe 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 andrights 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 forthe first time in the new code, they shall be given retroactive effect even though the event which gaverise 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 aredeclared for the first time shall have retroactive effect even though the event which gave rise to themmay have occurred under the former legislation, but this is so only when the new rights do not prejudiceany vested or acquired right of the same origin. Thus, said article provides that "if a right should bedeclared for the first time in this Code, it shall be effective at once, even though the act or event whichgives 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 alreadystated in the early part of this decision, the right of ownership of Maria Uson over the lands in questionbecame vested in 1945 upon the death of her late husband and this is so because of the imperativeprovision of the law which commands that the rights to succession are transmitted from the moment ofdeath (Article 657, old Civil Code). The new right recognized by the new Civil Code in favor of theillegitimate children of the deceased cannot, therefore, be asserted to the impairment of the vestedright 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 pityor 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 assuagesomewhat the wrong she has done to them, this much can be said; apart from the fact that this claim isdisputed, we are of the opinion that said assignment, if any, partakes of the nature of a donation of realproperty, inasmuch as it involves no material consideration, and in order that it may be valid it shall bemade 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 thatthe alleged assignment or donation has no valid effect.

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


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5. Margarito vs. Marquez

6. G.R. No. L-4170 January 31, 1952

Intestate of the late AGUSTIN MONTILLA, SR.; PEDRO LITONJUA, a movant-appellant,vs.AGUSTIN B. MONTILLA, JR., administrator-appellee;CLAUDIO MONTILLA, oppositor-appellee.

Carlos Hilado and Jose V. Corua for the administrator.Jose M. Estacion for movant. Gaudencio Occeo and Jose Ur. Carbonell for oppositor.

PARAS, C.J.:

In Civil Case No. 868 of the court of First Instance of Negros Occidental, Pedro L. Litonjua obtained ajudgment against Claudio Montilla for the payment of the sum of P4,000 with legal interest, plus costsamounting to P39.00 In due time, a writ of execution was issued, but no property of Claudio Montilla

was found which could be levied upon.

On June 12, 1950 Pedro L. Litonjua filed in special Proceeding No 32 of the Court of First Instance ofNegros Occidental, Intestate Estate of Agustin Montilla, Sr., deceased, a motion praying that theinterest, property and participation of Claudio Montilla, one of the heirs of Agustin Montilla, Sr., in thelatter's intestate estate be sold and out of the proceed the judgment debt of Claudio Montilla in favor ofPedro L. Litonjua be paid. This motion was opposed by Claudio Montilla and by Agustin Montilla, Jr.,administrator of the intestate estate.

On August 7, 1950, the Court of First Instance of Negros Occidental issued an order denying the motion.From this order Pedro L. Litonjua appealed. In the case of Ortiga Brothers and Co. vs. Enage and Yap

Tico, 18 Phil. 345, it was held that the creditor of the heirs of a deceased person is entitled to collect hisclaim out of the property which pertains by inheritance to said heirs, only after the debts of the testateor intestate succession have been paid and when the net assets that are divisible among the heirs areknown, because the debts of the deceased must first be paid before his heirs can inherit. It was thereinalso held that a person who is not a creditor of a deceased, testate or intestate, has no right to interveneeither in the proceedings brought in connection with the estate or in the settlement of the succession.We quote hereunder pertinent passages of the decision.

A person who, having claim against a deceased person which should be considered by the committeedoes not, after publication of the required notice, exhibit his claim to the committee as provided by law,shall be barred from recovering such demand or from pleading the same as an offset to any action,under the provisions of section 695 of the Code of Civil Procedure, excepting the case referred to in

section 701 of the same; with still less reason can one who is not a creditor of the said deceasedintervene in the proceedings relative to the latter's intestate estate and to the settlement of hissuccession (article 1034 of the Civil Code), because such creditor has no right or interest that call for theprotection of the law and the courts, except in any remainder which may be found due the heir.

It is true that Yap Tico, as the creditor of the widow and heirs of the deceased Ildefonso, is entitled tocollect what is due him out of the property left by the latter and which was inherited by such widow andheirs, but it is no less that only after all the debts of the said estate have been paid can it be known what


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net remainder will be left for division among the heirs, because the debts of the deceased must be paidbefore his heirs can inherit. (Arts. 659 et seq. 1026, 1027, and 1032 of the civil Code, and secs. 734 etseq., Code of Civil Code Procedure.)

An execution cannot legally be levied upon the property of an intestate succession to pay the debts ofthe widow and heirs of the deceased, until the credits held against the latter at the time of his deathshall have been paid can the remaining property that pertains to the said debtors heirs can be attached(Art. 1034, aforecited, Civil Code.) (pp. 350-251)

The foregoing pronouncements are perfectly applicable to the case at bar, because the appellant is not acreditor of the deceased Agustin Montilla, Sr. and he seeks to collect his claim out of the inheritance ofClaudio Montilla, an heir, before the net assets of the intestate estate have been determined.

Wherefore, the appealed order is affirmed, and it is so ordered with costs against the appellant.


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7. G.R. No. L-22601 October 28, 1966

PRIMA G. CARRILLO and LORENZO LICUP, plaintiffs and appellants,vs.FRANCISCA SALAK DE PAZ and ERNESTO BAUTISTA, defendants and appellees.

Filemon Cajator for plaintiffs and appellants.Tomas Besa for defendants and appellees.

BENGZON, J.P., J.:

This is an appeal from an order of the Court of First Instance of Tarlac dismissing a suit to recoverownership and possession of 2/3 of 1/2 of Lot No. 221 of the Cadastral Survey of Tarlac.

Severino Salak and Petra Garcia were the owners of Lot No. 221 of the Cadastral Survey of Tarlac,covered by Original Certificate of Title No. 41543, with an area of 1,334 square meters. Petra Garcia diedon September 21, 1941. On August 16, 1943, Severino Salak sold to Honoria Salak for P812.00 his

portion of said lot. A year later, on December 5, 1944, Severino Salak died.

Sometime in January 1945, Honoria Salak and other members of her family died massacred by theJapanese.

As a result, two settlement proceedings were instituted in the Court of First Instance of Tarlac: (1)Special Proceeding No. 3, to settle the estates of Severino Salak and Petra Garcia and (2) SpecialProceeding No. 23, to settle the estates of the Salak family (parents Simeon Salak and Isabel Carrillo; andchildren Adolfo, Honoria, Consuelo and Ligaya).

On September 4, 1946, a Project of Partition was submitted in Special Proceeding No. 3, which the court

approved on November 19, 1946. Said project adjudicated inter alia Lot No. 221, which was giventhereunder to Francisca Salak de Paz (1/4 of it in her capacity as heir, and the other 3/4 by purchaseand/or exchange with her co-heirs, Rita Sahagun, Aurea Sahagun and Ernesto Bautista). From 1946 up tothe present Francisca Salak has possessed all of Lot No. 221.

On the other hand, in Special Proceeding No. 23, on February 26, 1948, the court a quo held that theheirs entitled to the estates of the Salak family were Agustina de Guzman Vda. de Carillo (3/4 share) andErnesto Bautista (1/4 share), applying the survivorship presumption [Rule 123, Sec. 69(ii), now Rule 131,Sec. 5(jj) of the Rules of Court], thus: (1) Simeon Salak died first his properties went to the childrenAdolfo, Honoria, Consuelo and Ligaya (1/4 each); (2) Honoria, Consuelo and Ligaya died next Honoria's and Consuelo's properties went to their mother, Isabel; those of Ligaya went to her son,Ernesto Bautista;1 (3) Isabel died next her properties went to her son Adolfo; and (4) Adolfo died last his properties went to his maternal grandmother, Agustina. Agustina thereby succeeded to theproperties that came by intes-state succession from Honoria Salak and Isabel Carrillo, including of LotNo. 221.

On November 9, 1948, Agustina de Guzman Vda. de Carrillo filed an action in the Court of First Instanceof Tarlac (docketed therein as Case No. 351) against the heirs in Special Proceeding No. 3 to recover ofLot No. 221 which as aforementioned has been possessed by Francisca Salak de Paz.


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On April 24, 1950, Agustina died.

On June 8, 1950 the Court of Appeals affirmed the decision of the Court of First Instance of Tarlac inSpecial Proceeding No. 23, and further decreed that the properties inherited by Agustina de GuzmanVda. de Carrillo were subject to reserva troncal.

On November 6, 1950, Ernesto Bautista filed a petition in Special Proceeding No. 23 for the execution ofthe judgment therein. Said petition was heard on November 10, 1959, after a copy was served on thelawyer of Prima Carrillo, the latter being a party thereto as administratix of the estate of her deceasedmother Agustina. Acting on said petition, the lower court issued its order of November 14, 1950, whichreads in part:

. . . the Court, in view of the death of the reservista, Doa Agustina de Guzman Vda. de Carrillo, declaresall the interest of the said reservista Doa Agustina de Guzman Vda. de Carrillo as well as that of herheirs in the three-fourths share adjudged to the reservista, definitely terminated, and that the reservee,the minor Ernesto Bautista, is entitled to the immediate delivery to him of the said three-fourths sharedeclared reserved to him in the decision of the Court of Appeals of June 8, 1950. . . . (Record on Appeals,

pp. 213-214)

On December 20, 1960, the lower court dismissed Civil Case No. 351. The order of dismissal reads inpart:

By virtue of the existence of third-degree relatives of Adolfo Salak, the portion of Lot No. 221, inheritedby Agustina de Guzman was never released from the reserva, so as to convert the ownership of Agustinade Guzman into an absolute one. Upon her death on April 24, 1950, therefore, the property did not passby inheritance to her legal heirs, but rather reverted to the family trunk of the Isabel-Adolfo line. Suchbeing the case, the estate of Agustina de Guzman, the Present plaintiff in this case, has no cause ofaction against the defendants.

In resume, the adjudication in Special Proceeding No. 23, Intestate Estate of the late Simeon Salak andIsabel Carrillo, which included Lot No. 221, has become res judicata which cannot be disturbed in thiscase. (Record on Appeal, p. 209)

On April 22, 1963, Prima Carrillo and Lorenzo Licup filed the present suit for recovery of 2/3 of 1/2 ofNo. 221 against Francisca Salak de Paz and Ernesto Bautista.2

On June 20, 1963, defendants Francisco Salak de Paz and Ernesto Bautita filed a motion to dismiss uponthe grounds that the cause of action is barred by prior judgement and by the statute of limitations.

On November 19, 1963, the court a quo dismissed the complaint on the ground of res judicata, finding

the suit barred by the order of delivery dated November 14, 1950 in Special Proceeding No. 23.

Plaintiffs Prima Carrillo and Lorenzo Licup thereupon appealed to Us upon questions of law.

Several grounds were advanced to support the motion to dismiss: that the cause of action is barred byprior judgment and by the statute of limitations. Although the action was dismissed by the lower courtexpressly upon the ground of res judicata, it did not totally disregard the defense of prescription. Thus,said court pointed out that:


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Prima Carrillo being then the administratrix of the estate of her mother, she is also deemed to havebeen notified of the petition for execution of judgment in Special Proceeding No. 23, and of the order ofNovember 14, 1950. As of then, therefore, Prima Carrillo (even though as administratrix) personallyknew that Ernesto Bautista claimed to be the sole reservee of all the properties inherited by Da.Agustina from the Salak Family, among which was Lot No. 221 in question, but she did not file anyopposition thereto. It was her opportunity to assert her right as reservee by opposing the petition or,failing in this, to contest or to ask to be relieved from the order of November 14, 1950. Instead, sheallowed about thirteen (13) years before she commenced the present action. (Decision, Record onAppeal, pp. 214-215; emphasis supplied)

At any rate, this Court can resolve this appeal on the issue of prescription. As ruled in the cases of GarciaValdez vs. Soterana Tuazon, 40 Phil. 943 and Relativo v. Castro, 76 Phil. 563, when the trial judge decidesa case in favor of a party on a certain ground, the appellate court may uphold the decision below uponsome other point which was ignored or erroneously decided in favor of the appellant by the trial court.

Reserva troncal in this jurisdiction is treated in Article 891 of the new Civil Code and Article 811 of the

old Civil Code, which states:

The ascendant who inherits from his descendant any property which the latter may have acquired bygratuitous title from another ascendant, or a brother or sister, is obliged to reserve such property as hemay have acquired by operation of law for the benefit of relatives who are within the third degree andwho belong to the line from which said property came.

The reserva troncal arose as had been finally decided by the Court of Appeals in Special ProceedingNo. 23 when Agustina acquired by operation of law all the properties of her descendant Adolfo(grandson), who acquired them by gratuitous title from another ascendant, Isabel (Adolfo's mother).

According to Manresa, the reserva is extinguished upon the death of the reservista, as it then becomes aright of full ownership on the part of the reservatarios, who can bring a reivindicatory suit therefor.Nonetheless, this right, if not exercised within the time for recovering real properties, can be lost byprescription:

Pero extinguida la reserva por la muerte del reservista, cambian por completo las relaciones ycondiciones juridicas de las personas y de las cosas, como ya se ha indicado. La obligacion de reservar seconvierte en la de entregar los bienes a quien correspondan, obligacion que pasa a la herencia delreservista fallecido y deben complir sus herederos. Y el derecho a la reserva se convierte en el derechoal dominio pleno de esos bienes. Si a la muerte del reservista se comple la condicion resolutoria deexistir parientes dentro del tercer grado que pertenezcan a la linea de donde los bienes proceden, aestos parientes pasa desde aquel momento por ministerio de la ley el dominio absoluto de aquellos

bienes, y, por consiguiente, el derecho para reclamarlos, pudiendo disponer libremente de aquellos o deeste, y transmitirlos a sus herederos, puesto que la ley no lo prohibe. Y si no sobrevive al reservistaninguno de dichos parientes, queda extinguida la obligacion de reservar, por no haberse complidoaquella condicion resolutoria impuesta por la ley, y en su virtud vuelven los bienes al pleno dominio delascendiente, y pertenecen a su herencia conforme al art. 651. Y como nada ordena la ley en sentidocontrario, tenemos por indudable que no tiene el caracter de personalisimo ninguno de esos derechos,que nacen con la extincion de la reserva, pertenecen a la herencia y se transmiten a los herederos,


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aunque el causante no los hubiere ejercitado por si mismo, salvo cases de renuncia, incapacidad oprescripcion.

xxx xxx xxx

C) Extincion de la reserva.Las mismas condiciones exigidas para el nacimiento de la reserva sonnecesarias para su existencia. Al faltar una de ellas, la reserva muerte. Tres son, por tanto, las principalescausas de extincion:

1.a. Muerte del ascendiente.Sea el que quiera el destino definitivo de los bienes, en virtud de lanaturaleza condicional de los derechos que crea el art. 811, es lo cierto que la reserva, como tal, una veznecida a compaa al ascendiente obligado a ella hasta su muerte. Muerto el ascendiente, cesa todaobligacion de reservar; falta el sujeto pasivo de la reserva.

xxx xxx xxx

Ademas de las tres causas expresadas, pueden sealarse otras que expondremos a continuacion.

xxx xxx xxx

Y 5.a La prescripcion, si se disfrutan como libres los bienes por los herederos del ascendiente duranteel tiempo y con las condiciones marcadas por la ley. (Manresa, Comentarios Al Codigo Civil Espaol, Vol.6, 1911 Ed., pp. 288-289, 316-318).

Scaevola also states the view that prescription can apply against the reservatarios to cut off their right tothe reservable property:

f) Prescipcion.Este modo extintivo de los derechos tiene solo applicacion a los parientes del

tercer grado del descendiente, porque no habiendo reserva si no acepta el ascendiente, no hay quehablar de prescripcion extintiva respecto de el.

Tocante a los parientes con derecho a la reserva, es aplicable la doctrina, porque pueden no ejercer suderecho por ignorar la muerte del descendiente opor otra causa.

Dada esta posibilidad, entendemos que, tratandose de un derecho real sobre bienes inmuebles,prescribira a los treinta aos (art. 1.693) (1), contados desde la aceptacion de la herencia por elascendiente, momento determinante del derecho al ejercicio de la reserva (art. 1.969) ; transcurridos,pues, treinta aos desde la aceptacion sin que los parientes favorecidos por la ley hayan solicitado laconstitucion de la reserva, se extenguira esta, y el ascendiente o sus derecho-habientes adquiriran elpleno dominio de los bienes reservables por su naturaleza, pero que no fueron objeto de reserva.

(Scaevola, Codigo Civil Comentado, Vol. 14, 1944 Ed., p. 360).

Plaintiffs-appellants herein, as reservatarios, had the right to claim the property 2/3 of 1/2 of Lot No.221 from Francisca Salak de Paz, who has been possessing it in the concept of an owner, from April24, 1950 when Agustina died. And the Court of Appeals' decision affirming the existence of reservatroncal, promulgated on June 8, 1950, rendered it all the more doubtless that such right had accrued intheir favor from the time Agustina died. It is clear, therefore, that the right or cause of action accrued infavor of the plaintiffs-reservatarios herein on April 24, 1950.


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Section 40 of the Code of Civil Procedure fixes 10 years as the period of prescription for actions torecover real property, counted from the time the cause of action accrued. This is the applicable lawbecause Article 1116 of the New Civil Code provides that "Prescription already running before theeffectivity of this Code [August 30, 1950] shall be governed by laws previously in force."

Plaintiffs-appellants' suit herein, having been filed only on April 22, 1963, or more than ten (10) yearsfrom April 24, 1950, has prescribed.

And having reached such conclusion, We deem it unnecessary to pass upon the question of whether thesuit is also barred on the ground of res judicata.

WHEREFORE, the order of dismissal appealed from is hereby affirmed on the ground of prescription,with costs against appellants. So ordered.


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8. [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 JudgeHermogenes 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 indemnityagreements, 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 indemnityagreements, all contained the following stipulations:chanroblesvirtuallawlibrary

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

Indemnity. The undersigned, jointly and severally, agree at all times to indemnify the COMPANY andkeep 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 anyextension, renewal, substitution or alteration thereof made at the instance of the undersigned or any ofthem or any order executed on behalf of the undersigned or any of them; chanroblesvirtualawlibraryand to pay, reimburse and make good to the COMPANY, its successors andassigns, all sums and amount of money which it or its representatives shall pay or cause to be paid, orbecome 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 connectedtherewith for counsel or attorneys 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 underthe same terms and conditions as above mentioned without the necessity of executing anotherindemnity agreement for the purpose and that we hereby equally waive our right to be notified of anyrenewal 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 shallbear interest at the rate of 12% per annum which interest, if not paid, will be accummulated and addedto the capital quarterly order to earn the same interests as the capital and the total sum thereof, thecapital and interest, shall be paid to the COMPANY as soon as the COMPANY shall have become liabletherefore, 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 arisebetween them by reason of this document and which has to be submitted for decision to Courts ofJustice shall be brought before the Court of competent jurisdiction in the City of Manila, waiving for thispurpose any other venue. Our right to be notified of the acceptance and approval of this indemnityagreement 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 principalupon his default, or to exhaust the property of the principal, but the liability hereunder of theundersigned 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 ithad executed in consideration of the counterbonds, and further asked for judgment for the unpaidpremiums and documentary stamps affixed to the bonds, with 12 per cent interest thereon.

Before answer was filed, and upon motion of the administratrix of Hemadys estate, the lower court, byorder of September 23, 1953, dismissed the claims of Luzon Surety Co., on twogrounds:chanroblesvirtuallawlibrary (1) that the premiums due and cost of documentary stamps werenot 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; chanroblesvirtualawlibraryand (2) that whatever losses may occur after Hemadys death, are not chargeable

to his estate, because upon his death he ceased to be guarantor.

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

The administratrix further contends that upon the death of Hemady, his liability as a guarantorterminated, and therefore, in the absence of a showing that a loss or damage was suffered, the claimcannot be considered contingent. This Court believes that there is merit in this contention and findssupport in Article 2046 of the new Civil Code. It should be noted that a new requirement has beenadded for a person to qualify as a guarantor, that is:chanroblesvirtuallawlibrary integrity. As correctlypointed out by the Administratrix, integrity is something purely personal and is not transmissible. Uponthe death of Hemady, his integrity was not transmitted to his estate or successors. Whatever losstherefore, may occur after Hemadys death, are not chargeable to his estate because upon his death he

ceased to be a guarantor.

Another clear and strong indication that the surety company has exclusively relied on the personality,

character, honesty and integrity of the now deceased K. H. Hemady, was the fact that in the printedform of the indemnity agreement there is a paragraph entitled Security by way of first mortgage, whichwas expressly waived and renounced by the security company. The security company has not demandedfrom K. H. Hemady to comply with this requirement of giving security by way of first mortgage. In thesupporting papers of the claim presented by Luzon Surety Company, no real property was mentioned inthe list of properties mortgaged which appears at the back of the indemnity agreement. (Rec. App., pp.

407-408).


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We find this reasoning untenable. Under the present Civil Code (Article 1311), as well as under the CivilCode 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 orby provision of law.

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

ART. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligationsto the extent of the value of the inheritance, of a person are transmitted through his death to anotheror 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 notextinguished by his death.

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

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

obligations of the deceased (Article 661) and cannot be regarded as third parties with respect to acontract to which the deceased was a party, touching the estate of the deceased (Barrios vs. Dolor, 2Phil. 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 bethird 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 theobligations 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 inour Rules of Court that money debts of a deceased must be liquidated and paid from his estate beforethe 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 claimin 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 partys contractual rights and obligations aretransmissible 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 ofthese institutions. From the Roman concept of a relation from person to person, the obligation hasevolved into a relation from patrimony to patrimony, with the persons occupying only a representative


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position, barring those rare cases where the obligation is strictly personal, i.e., is contracted intuitupersonae, in consideration of its performance by a specific person and by no other. The transition ismarked 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 guarantordoes not warrant the conclusion that his peculiar individual qualities are contemplated as a principalinducement for the contract. What did the creditor Luzon Surety Co. expect of K. H. Hemady when itaccepted the latter as surety in the counterbonds? Nothing but the reimbursement of the moneys thatthe Luzon Surety Co. might have to disburse on account of the obligations of the principal debtors. Thisreimbursement is a payment of a sum of money, resulting from an obligation to give; chanroblesvirtualawlibraryand to the Luzon Surety Co., it was indifferent that the reimbursement should bemade 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. Beingexceptional and contrary to the general rule, this intransmissibility should not be easily implied, butmust be expressly established, or at the very least, clearly inferable from the provisions of the contractitself, 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; chanroblesvirtualawlibraryle excepcion, la intransmisibilidad. Mientras nada se diga en contrario impera elprincipio 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 trasciendea sus herederos.

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

Por su esencia, el derecho y la obligacion tienden a ir ms all de las personas que les dieron vida, y aejercer presion sobre los sucesores de esa persona; chan roblesvirtualawlibrarycuando no se quieraesto, se impone una estipulacion limitativa expresamente de la transmisibilidad o de cuyos tirminosclaramente 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 contractedfor himself and his heirs and assigns, it is unnecessary for him to expressly stipulate to that effect; chanroblesvirtualawlibraryhence, his failure to do so is no sign that he intended his bargain to terminateupon his death. Similarly, that the Luzon Surety Co., did not require bondsman Hemady to execute amortgage indicates nothing more than the companys faith and confidence in the financial stability ofthe surety, but not that his obligation was strictly personal.

The third exception to the transmissibility of obligations under Article 1311 exists when they are not

transmissible by operation of law. The provision makes reference to those cases where the lawexpresses that the rights or obligations are extinguished by death, as is the case in legal support (Article300), 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 thatregulate guaranty or suretyship (Articles 2047 to 2084) contain no provision that the guaranty isextinguished upon the death of the guarantor or the surety.


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The lower court sought to infer such a limitation from Art. 2056, to the effect that one who is obliged

to furnish a guarantor must present a person who possesses integrity, capacity to bind himself, andsufficient property to answer for the obligation which he guarantees. It will be noted, however, thatthe law requires these qualities to be present only at the time of the perfection of the contract ofguaranty. It is self-evident that once the contract has become perfected and binding, the superveningincapacity of the guarantor would not operate to exonerate him of the eventual liability he hascontracted; chan roblesvirtualawlibraryand if that be true of his capacity to bind himself, it should alsobe 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 asfollows:chanroblesvirtuallawlibrary

ART. 2057. If the guarantor should be convicted in first instance of a crime involving dishonesty orshould become insolvent, the creditor may demand another who has all the qualifications required inthe preceding article. The case is excepted where the creditor has required and stipulated that aspecified 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 thecontract but merely entitles the creditor to demand a replacement of the guarantor. But the stepremains optional in the creditor:chanroblesvirtuallawlibrary it is his right, not his duty; chanroblesvirtualawlibraryhe may waive it if he chooses, and hold the guarantor to his bargain. Hence Article2057 of the present Civil Code is incompatible with the trial courts stand that the requirement ofintegrity in the guarantor or surety makes the latters 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 contractsthemselves, nor by provision of law, his eventual liability thereunder necessarily passed upon his deathto his heirs. The contracts, therefore, give rise to contingent claims provable against his estate undersection 5, Rule 87 (2 Moran, 1952 ed., p. 437; chan roblesvirtualawlibraryGaskell & Co. vs. Tan Sit, 43Phil. 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 suretyshipthe surety has no claim whatever against his principal until he himself pays something by way ofsatisfaction upon the obligation which is secured. When he does this, there instantly arises in favor ofthe surety the right to compel the principal to exonerate the surety. But until the surety has contributedsomething 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, 15Pla., 553; chan roblesvirtualawlibraryGibson vs. Mithell, 16 Pla., 519; chan roblesvirtualawlibraryMaxeyvs. Carter, 10 Yarg. [Tenn.], 521 Reeves vs. Pulliam, 7 Baxt. [Tenn.], 119; chan roblesvirtualawlibraryErnstvs. Nou, 63 Wis., 134.)

For Defendant administratrix it is averred that the above doctrine refers to a case where the surety filesclaims against the estate of the principal debtor; chan roblesvirtualawlibraryand it is urged that the ruledoes not apply to the case before us, where the late Hemady was a surety, not a principal debtor. The


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argument evinces a superficial view of the relations between parties. If under the Gaskell ruling, theLuzon Surety Co., as guarantor, could file a contingent claim against the estate of the principal debtors ifthe latter should die, there is absolutely no reason why it could not file such a claim against the estate ofHemady, since Hemady is a solidary co-debtor of his principals. What the Luzon Surety Co. may claimfrom the estate of a principal debtor it may equally claim from the estate of Hemady, since, in view ofthe existing solidarity, the latter does not even enjoy the benefit of exhaustion of the assets of theprincipal debtor.

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

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

event, the Luzon Surety Co., had the right to file against the estate a contingent claim forreimbursement. It becomes unnecessary now to discuss the estates liability for premiums and stamp

taxes, because irrespective of the solution to this question, the Luzon Suretys claim did state a cause of

action, and its dismissal was erroneous.

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


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9. G.R. No. L-5064 February 27, 1953

BIENVENIDO A. IBARLE, plaintiff-appellant,vs.ESPERANZA M. PO, defendant-appellant.

Quirico del Mar for appellant.Daniel P. Tumulak and Conchita F. Miel appellee.

TUASON, J.:

This action commenced in the Court of First Instance of Cebu to annul a deed of sale conveying to thedefendant, in consideration of P1,700, one undivided half of a parcel of land which previously had beensold, along with the other half, by the same vendor to the plaintiff's grantors. judgment was against theplaintiff.

The case was submitted for decision upon an agreed statement of facts, the pertinent parts of which are

thus summarized in the appealed decision:

1st. That Leonard j. Winstanley and Catalina Navarro were husband and wife, the former having diedon June 6, 1946 leaving heir the surviving spouse and some minor children;

2nd. hat upon the death of L.J. Winstanley, he left a parcel of land described under TransferCertificate of title No. 2391 of the Registry of Deeds of the Province of Cebu;

3rd. That the above mentioned property was a conjugal property;

4th. That on April 15, 1946, the surviving spouse Catalina Navarro Vda. de Winstanley sold the entire

parcel of land to the spouses Maria Canoy, alleging among other things, that she needed money for thesupport of her children;

5th. That on May 24, 1947, the spouses Maria Canoy and Roberto Canoy sold the same parcel of landto the plaintiff in this case named Bienvenido A. Ebarle;

6th. That the two deeds of sale referred to above were not registered and have never been registeredup to the date;

7th. That on January 17, 1948 surviving spouse Catalina Navarro Vda. de Winstanley, after herappointment as guardian of her children by this court (Special proceeding no. 212-R) sold one-half of theland mentioned above to Esperanza M. Po, defendant in the instant case, which portion belongs to the

children of the above named spouses.

As stated by the trial Judge, the sole question for determination is the validity of the sale to EsperanzaM. Po, the last purchaser. This question in turn depends upon the validity of the prior ale to Maria Canoyand Roberto Canoy.


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Article 657 of the old Civil Code provides: "The rights to the succession of a person are transmitted fromthe moment of his death." in a slightly different language, this article is incorporated in the new CivilCode as article 777.

Manresa, commending on article 657 of the Civil Code of Spain, says:

The moment of death is the determining factor when the heirs acquire a definite right to theinheritance, whether such right be pure or contingent. It is immaterial whether a short or long period oftime lapses between the death of the predecessor and the entry into possession of the property of theinheritance because the right is always deemed to be retroactive from the moment of death. (5Manresa, 317.)

The above provision and comment make it clear that when Catalina Navarro Vda. de Winstanley sold theentire parcel to the Canoy spouses, one-half of it already belonged to the seller's children. No formal orjudicial declaration being needed to confirm the children's title, it follows that the first sale was null andvoid in so far as it included the children's share.

On the other hand, the sale to the defendant having been made by authority of the competent courtwas undeniably legal and effective. The fact that it has not been recorded is of no consequence. Ifregistration were necessary, still the non-registration would not avail the plaintiff because it was due tono other cause than his own opposition.

The decision will be affirmed subject to the reservation, made in said decision, of the right of theplaintitff and/or the Canoy spouses to bring such action against Catalina Navarro Vda. de Winstanley asmay be appropriate for such damages as they may have incurred by reason of the voiding of the sale intheir favor.


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10. .R. No. L-16544LEONARDO OSORIO, plaintiff-appellee,vs.TOMASA OSORIO, administratrix of the estate of Petrona Reyes, and THE YNCHAUSTI STEAMSHIP CO.,defendants-appellants.

Fernandez and Ansaldo for appellants.Carlos Ledesma for appellee.

Villamor (Ignacio), J.:

The plaintiff seeks to recover 610 shares of stock of Ynchausti Steamship Co. and the dividendscorresponding to them, which were included in the inventory of the properties of the deceased Da.Maria Petrona Reyes, whose estate is administered by the defendant. The facts of this case are:

D. Antonio Osorio had formed with Ynchausti & Co., a joint account association for the exploitation of

the shipping business, he being the owner of the one-third of the companys capital. This capitalamounted to P500,000, of which P166,666.66, that is, one-third belonged to D. Antonio Osorio. Upon hisdeath, his heirs agreed to authorize the defendant Da. Tomasa Osorio, then administratrix of the estateof the deceased, to present a project of partition, and said administratix inserted in the project with theconsent of all the heirs, among the properties which belonged to the widow Da. Petrona Reyes, the sumof P94,000 as her part in the share of the estate in the shipping business of Ynchausti & Co., that is, a

little over P166,666.66, which was the share in said business of the deceased Osorio during his lifetime.The project of partition was approved on May 10, 1915, with the consent of the heirs, by the Court ofFirst Instance of Cavite, which had cognizance of the testamentary and administration proceedings ofthe state of the deceased Osorio.

On February 28, 1914, the widow of D. Antonio Osorio, Da. Petrona Reyes, now also deceased, executedbefore the notary D. Florencio Gonzales Diez a document of gift in favor of her son D. Leonardo Osorio,the plaintiff, giving to him one-half of her share in the one-third part which belonged to her husband inthe shipping business of Ynchausti & Co., a donation which was duly accepted by the donee D. LeonardoOsorio, who signed said document with the plaintiff. On that date, February 28, 1914, the estate of D.Antonio Osorio was not yet distributed among his heirs, and the donor Da. Petrona Reyes in order tocorrect the error in said document, wherein it was stated that said half was adjudicated to her as part ofher conjugal property, when the partition was yet being effected, executed another document datedJuly 3, 1915, maintaining said donation in effect in the sense that she ceded and donated to her son D.Leonardo Osorio, for the same reasons stated in the document of February 28, 1914, al interest orparticipation in said shipping business of Ynchausti & Co., which was adjudicated to her in the division ofthe estate of D. Antonio Osorio, which division was approved by the Court of First Instance of Cavite on

May 10, 1915.

After the death of D. Antonio Osorio and before the distribution of the estate, Ynchausti & Co.purchased the steamer Governor Forbes and recognized the heirs of D. Antonio Osorio as having aninterest to the extent of one-third in the ownership and business of said steamer. It was agreed upon byall the interested parties that the share of Da. Petrona Reyes, widow of Osorio, in the vessel GovernorForbes, at the time of the incorporation of The Ynchausti Steamship Co. was P61,000, equivalent to

610 shares of stock of said corporation. Said sum was deposited with the Steamship Co. until the final


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settlement of the question that had arisen between the heirs of Da. Petrona Reyes as to the ownershipthereof for, while the plaintiff alleges that, by virtue of the donation made in his favor by Da. PetronaReyes, he is the owner of said shares and of their value which is P61,000; the defendant on the otherhand contends that said shares are not included in the donation in question and belong to the heirs ofDa. Petrona Reyes. Such as the facts which gave rise to this litigation.

The trial court rendered judgment in the case, declaring that the 610 shares of stock in dispute and theirdividends belong to the plaintiff, and ordered the defendant Da. Tomasa Osorio, administratrix of theestate of Da. Petrona Reyes, to exclude them from the inventory and her accounts, and the otherdefendant The Ynchausti Steamship Co. to inscribe them in the name of the plaintiff D. Leonardo

Osorio, delivering to him the dividends corresponding thereto, and denied the counterclaim for the sumof P45,000, on the ground that said sum represents the dividends corresponding to the P94,000adjudicated to Da. Petrona Reyes, in the partition of the estate of D. Antonio Osorio, and donated by herto the defendant in the counterclaim.

The case having been appealed to this court, counsel for the defendant and appellant, in summing uptheir arguments in support of the errors assigned in their brief, maintain the two following propositions:

1. The donation made by Da. Petrona Reyes in favor of the plaintiff was of no value and effect; and

2. That, supposing said donation valid, the 610 shares of stock, the value of which is P61,000, cannot beconsidered as included among them.

The document of donation dated February 28, 1914, attacked by the appellant, is as follows:

Know all me by these presents: That I, Petrona Reyes, of age, widow of D. Antonio Osorio and residentof the Province of Cavite, Philippine Islands, being in possession of all my senses, freely and voluntarily

cases in wills (full 1-30) (1)

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