Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

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

LAURA ALVAREZ, FLORA ALVAREZ and RAYMUNDO ALVAREZ, petitioners,

vs.

THE HONORABLE INTERMEDIATE APELLATE COURT and JESUS YANES, ESTELITA YANES, ANTONIO YANES, ROSARIO YANES,

and ILUMINADO YANES, respondents.

Francisco G. Banzon for petitioner.

Renecio R. Espiritu for private respondents.

FERNAN, C.J.:

This is a petition for review on certiorari seeking the reversal of: (a) the decision of the Fourth Civil Cases Division of the

Intermediate Appellate Court dated August 31, 1983 in AC-G.R. CV No. 56626 entitled "Jesus Yanes et al. v. Dr. Rodolfo Siason

et al." affirming the decision dated July 8, 1974 of the Court of First Instance of Negros Occidental insofar as it ordered the

petitioners to pay jointly and severally the private respondents the sum of P20,000.00 representing the actual value of Lots

Nos. 773-A and 773-B of the cadastral survey of Murcia, Negros Occidental and reversing the subject decision insofar as it

awarded the sums of P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral damages and attorney's fees, respectively

and (b) the resolution of said appellate court dated May 30, 1984, denying the motion for reconsideration of its decision.

The real properties involved are two parcels of land identified as Lot 773-A and Lot 773-B which were originally known as Lot

773 of the cadastral survey of Murcia, Negros Occidental. Lot 773, with an area of 156,549 square meters, was registered in

the name of the heirs of Aniceto Yanes under Original Certificate of Title No. RO-4858 (8804) issued on October 9, 1917 by the

Register of Deeds of Occidental Negros (Exh. A).

Aniceto Yanes was survived by his children, Rufino, Felipe and Teodora. Herein private respondents, Estelita, Iluminado and

Jesus, are the children of Rufino who died in 1962 while the other private respondents, Antonio and Rosario Yanes, are

children of Felipe. Teodora was survived by her child, Jovita (Jovito) Alib. 1 It is not clear why the latter is not included as a

party in this case.

Aniceto left his children Lots 773 and 823. Teodora cultivated only three hectares of Lot 823 as she could not attend to the

other portions of the two lots which had a total area of around twenty-four hectares. The record does not show whether the

children of Felipe also cultivated some portions of the lots but it is established that Rufino and his children left the province to

settle in other places as a result of the outbreak of World War II. According to Estelita, from the "Japanese time up to peace

time", they did not visit the parcels of land in question but "after liberation", when her brother went there to get their share of

the sugar produced therein, he was informed that Fortunato Santiago, Fuentebella (Puentevella) and Alvarez were in

possession of Lot 773. 2

It is on record that on May 19, 1938, Fortunato D. Santiago was issued Transfer Certificate of Title No. RF 2694 (29797)

covering Lot 773-A with an area of 37,818 square meters. 3 TCT No. RF 2694 describes Lot 773-A as a portion of Lot 773 of the

cadastral survey of Murcia and as originally registered under OCT No. 8804.

The bigger portion of Lot 773 with an area of 118,831 square meters was also registered in the name of Fortunato D. Santiago

on September 6, 1938 Under TCT No. RT-2695 (28192 ). 4 Said transfer certificate of title also contains a certification to the

effect that Lot 773-B was originally registered under OCT No. 8804.

On May 30, 1955, Santiago sold Lots 773-A and 773-B to Monico B. Fuentebella, Jr. in consideration of the sum of

P7,000.00. 5 Consequently, on February 20, 1956, TCT Nos. T-19291 and T-19292 were issued in Fuentebella's name. 6

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

his wife) filed in Special Proceedings No. 4373 in the Court of First Instance of Negros Occidental, a motion requesting

authority to sell Lots 773-A and 773-B. 7 By virtue of a court order granting said motion, 8 on March 24, 1958, Arsenia Vda. de

Fuentebella sold said lots for P6,000.00 to Rosendo Alvarez. 9 Hence, on April 1, 1958 TCT Nos. T-23165 and T-23166 covering

Lots 773-A and 773-B were respectively issued to Rosendo Alvarez. 10

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

Jesus, filed in the Court of First Instance of Negros Occidental a complaint against Fortunato Santiago, Arsenia Vda. de

Fuentebella, Alvarez and the Register of Deeds of Negros Occidental for the "return" of the ownership and possession of Lots

773 and 823. They also prayed that an accounting of the produce of the land from 1944 up to the filing of the complaint be

made by the defendants, that after court approval of said accounting, the share or money equivalent due the plaintiffs be

delivered to them, and that defendants be ordered to pay plaintiffs P500.00 as damages in the form of attorney's fees. 11

During the pendency in court of said case or on November 13, 1961, Alvarez sold Lots 773-A, 773-B and another lot for

P25,000.00 to Dr. Rodolfo Siason. 12 Accordingly, TCT Nos. 30919 and 30920 were issued to Siason, 13 who thereafter, declared

the two lots in his name for assessment purposes. 14

Meanwhile, on November 6, 1962, Jesus Yanes, in his own behalf and in behalf of the other plaintiffs, and assisted by their

counsel, filed a manifestation in Civil Case No. 5022 stating that the therein plaintiffs "renounce, forfeit and quitclaims (sic) any

claim, monetary or otherwise, against the defendant Arsenia Vda. de Fuentebella in connection with the above-entitled

case." 15

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

dispositive portion of which reads:

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

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

of Title Nos. T-23165 and T-23166 in the name of said defendant, and thereafter to deliver the possession of

said lots to the plaintiffs. No special pronouncement as to costs.

SO ORDERED. 16

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

However, execution of said decision proved unsuccessful with respect to Lot 773. In his return of service dated October 20,

1965, the sheriff stated that he discovered that Lot 773 had been subdivided into Lots 773-A and 773-B; that they were "in the

name" of Rodolfo Siason who had purchased them from Alvarez, and that Lot 773 could not be delivered to the plaintiffs as

Siason was "not a party per writ of execution." 17

The execution of the decision in Civil Case No. 5022 having met a hindrance, herein private respondents (the Yaneses) filed on

July 31, 1965, in the Court of First Instance of Negros Occidental a petition for the issuance of a new certificate of title and for

a declaration of nullity of TCT Nos. T-23165 and T-23166 issued to Rosendo Alvarez. 18 Thereafter, the court required Rodolfo

Siason to produce the certificates of title covering Lots 773 and 823.

Expectedly, Siason filed a manifestation stating that he purchased Lots 773-A, 773-B and 658, not Lots 773 and 823, "in good

faith and for a valuable consideration without any knowledge of any lien or encumbrances against said properties"; that the

decision in the cadastral proceeding 19 could not be enforced against him as he was not a party thereto; and that the decision

in Civil Case No. 5022 could neither be enforced against him not only because he was not a party-litigant therein but also

because it had long become final and executory. 20 Finding said manifestation to be well-founded, the cadastral court, in its

order of September 4, 1965, nullified its previous order requiring Siason to surrender the certificates of title mentioned

therein. 21

In 1968, the Yaneses filed an ex-parte motion for the issuance of an alias writ of execution in Civil Case No. 5022. Siason

opposed it. 22 In its order of September 28, 1968 in Civil Case No. 5022, the lower court, noting that the Yaneses had instituted

another action for the recovery of the land in question, ruled that at the judgment therein could not be enforced against

Siason as he was not a party in the case. 23

The action filed by the Yaneses on February 21, 1968 was for recovery of real property with damages. 24 Named defendants

therein were Dr. Rodolfo Siason, Laura Alvarez, Flora Alvarez, Raymundo Alvarez and the Register of Deeds of Negros

Occidental. The Yaneses prayed for the cancellation of TCT Nos. T-19291 and 19292 issued to Siason (sic) for being null and

void; the issuance of a new certificate of title in the name of the Yaneses "in accordance with the sheriffs return of service

dated October 20, 1965;" Siason's delivery of possession of Lot 773 to the Yaneses; and if, delivery thereof could not be

effected, or, if the issuance of a new title could not be made, that the Alvarez and Siason jointly and severally pay the Yaneses

the sum of P45,000.00. They also prayed that Siason render an accounting of the fruits of Lot 773 from November 13, 1961

until the filing of the complaint; and that the defendants jointly and severally pay the Yaneses moral damages of P20,000.00

and exemplary damages of P10,000.00 plus attorney's fees of P4, 000.00. 25

In his answer to the complaint, Siason alleged that the validity of his titles to Lots 773-A and 773-B, having been passed upon

by the court in its order of September 4, 1965, had become res judicata and the Yaneses were estopped from questioning said

order. 26 On their part, the Alvarez stated in their answer that the Yaneses' cause of action had been "barred by res judicata,

statute of limitation and estoppel." 27

In its decision of July 8, 1974, the lower court found that Rodolfo Siason, who purchased the properties in question thru an

agent as he was then in Mexico pursuing further medical studies, was a buyer in good faith for a valuable consideration.

Although the Yaneses were negligent in their failure to place a notice of lis pendens"before the Register of Deeds of Negros

Occidental in order to protect their rights over the property in question" in Civil Case No. 5022, equity demanded that they

recover the actual value of the land because the sale thereof executed between Alvarez and Siason was without court

approval. 28 The dispositive portion of the decision states:

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

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

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

deceased Rosendo Alvarez are hereby ordered to pay jointly and severally the plaintiffs the sum of P20,000.00

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

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

the sum of P2.000 as attorney's fees, all with legal rate of interest from date of the filing of this complaint up

to final payment.

C. The cross-claim filed by the defendant Dr. Rodolfo Siason against the defendants, Laura, Flora and

Raymundo, all surnamed Alvarez is hereby dismissed.

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

suit.

SO ORDERED. 29

The Alvarez appealed to the then Intermediate Appellate Court which in its decision of August 31, 1983 30 affirmed the lower

court's decision "insofar as it ordered defendants-appellants to pay jointly and severally the plaintiffs-appellees the sum of

P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B of the cadastral survey of Murcia, Negros Occidental,

and is reversed insofar as it awarded the sums of P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral damages and

attorney's fees, respectively." 31 The dispositive portion of said decision reads:

WHEREFORE, the decision appealed from is affirmed insofar as it ordered defendants-appellants to pay jointly

and severally the plaintiffs- appellees the sum of P20,000.00 representing the actual value of Lots Nos. 773-A

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

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

No costs.

SO ORDERED. 32

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

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

1. Whethere or not the defense of prescription and estoppel had been timely and properly invoked and raised

by the petitioners in the lower court.

2. Whether or not the cause and/or causes of action of the private respondents, if ever there are any, as

alleged in their complaint dated February 21, 1968 which has been docketed in the trial court as Civil Case No.

8474 supra, are forever barred by statute of limitation and/or prescription of action and estoppel.

3. Whether or not the late Rosendo Alvarez, a defendant in Civil Case No. 5022, supra and father of the

petitioners become a privy and/or party to the waiver (Exhibit 4-defendant Siason) in Civil Case No.

8474, supra where the private respondents had unqualifiedly and absolutely waived, renounced and

quitclaimed all their alleged rights and interests, if ever there is any, on Lots Nos. 773-A and 773-B of Murcia

Cadastre as appearing in their written manifestation dated November 6, 1962 (Exhibits "4" Siason) which had

not been controverted or even impliedly or indirectly denied by them.

4. Whether or not the liability or liabilities of Rosendo Alvarez arising from the sale of Lots Nos. 773-A and 773-

B of Murcia Cadastre to Dr. Rodolfo Siason, if ever there is any, could be legally passed or transmitted by

operations (sic) of law to the petitioners without violation of law and due process . 33

The petition is devoid of merit.

As correctly ruled by the Court of Appeals, it is powerless and for that matter so is the Supreme Court, to review the decision

in Civil Case No. 5022 ordering Alvarez to reconvey the lots in dispute to herein private respondents. Said decision had long

become final and executory and with the possible exception of Dr. Siason, who was not a party to said case, the decision in

Civil Case No. 5022 is the law of the case between the parties thereto. It ended when Alvarez or his heirs failed to appeal the

decision against them. 34

Thus, it is axiomatic that when a right or fact has been judicially tried and determined by a court of competent jurisdiction, so

long as it remains unreversed, it should be conclusive upon the parties and those in privity with them in law or estate. 35 As

consistently ruled by this Court, every litigation must come to an end. Access to the court is guaranteed. But there must be a

limit to it. Once a litigant's right has been adjudicated in a valid final judgment of a competent court, he should not be granted

an unbridled license to return for another try. The prevailing party should not be harassed by subsequent suits. For, if endless

litigation were to be allowed, unscrupulous litigations will multiply in number to the detriment of the administration of

justice. 36

There is no dispute that the rights of the Yaneses to the properties in question have been finally adjudicated in Civil Case No.

5022. As found by the lower court, from the uncontroverted evidence presented, the Yaneses have been illegally deprived of

ownership and possession of the lots in question. 37 In fact, Civil Case No. 8474 now under review, arose from the failure to

execute Civil Case No. 5022, as subject lots can no longer be reconveyed to private respondents Yaneses, the same having

been sold during the pendency of the case by the petitioners' father to Dr. Siason who did not know about the controversy,

there being no lis pendens annotated on the titles. Hence, it was also settled beyond question that Dr. Siason is a purchaser in

good faith.

Under the circumstances, the trial court did not annul the sale executed by Alvarez in favor of Dr. Siason on November 11,

1961 but in fact sustained it. The trial court ordered the heirs of Rosendo Alvarez who lost in Civil Case No. 5022 to pay the

plaintiffs (private respondents herein) the amount of P20,000.00 representing the actual value of the subdivided lots in

dispute. It did not order defendant Siason to pay said amount. 38

As to the propriety of the present case, it has long been established that the sole remedy of the landowner whose property

has been wrongfully or erroneously registered in another's name is to bring an ordinary action in the ordinary court of justice

for reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for damages. 39 "It is one

thing to protect an innocent third party; it is entirely a different matter and one devoid of justification if deceit would be

rewarded by allowing the perpetrator to enjoy the fruits of his nefarious decided As clearly revealed by the undeviating line of

decisions coming from this Court, such an undesirable eventuality is precisely sought to be guarded against." 40

The issue on the right to the properties in litigation having been finally adjudicated in Civil Case No. 5022 in favor of private

respondents, it cannot now be reopened in the instant case on the pretext that the defenses of prescription and estoppel have

not been properly considered by the lower court. Petitioners could have appealed in the former case but they did not. They

have therefore foreclosed their rights, if any, and they cannot now be heard to complain in another case in order to defeat the

enforcement of a judgment which has longing become final and executory.

Petitioners further contend that the liability arising from the sale of Lots No. 773-A and 773-B made by Rosendo Alvarez to Dr.

Rodolfo Siason should be the sole liability of the late Rosendo Alvarez or of his estate, after his death.

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

rights and obligations of the deceased to his legitimate children and heirs. Thus, the pertinent provisions of the Civil Code

state:

Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to the

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

either by his will or by operation of law.

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

extinguished by his death.

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

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

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

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

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

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

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

ultimately a payment by the heirs or distributees, since the amount of the paid claim in fact diminishes or

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

Under our law, therefore. the general rule is that a party's contractual rights and obligations are transmissible

to the successors.

The rule is a consequence of the progressive "depersonalization" of patrimonial rights and duties that, as

observed by Victorio Polacco has characterized the history of these institutions. From the Roman concept of a

relation from person to person, the obligation has evolved into a relation from patrimony to patrimony with

the persons occupying only a representative position, barring those rare cases where the obligation is strictly

personal, i.e., is contracted intuitu personae, in consideration of its performance by a specific person and by

no other.

xxx xxx xxx

Petitioners being the heirs of the late Rosendo Alvarez, they cannot escape the legal consequences of their father's

transaction, which gave rise to the present claim for damages. That petitioners did not inherit the property involved herein is

of no moment because by legal fiction, the monetary equivalent thereof devolved into the mass of their father's hereditary

estate, and we have ruled that the hereditary assets are always liable in their totality for the payment of the debts of the

estate. 42

It must, however, be made clear that petitioners are liable only to the extent of the value of their inheritance. With this

clarification and considering petitioners' admission that there are other properties left by the deceased which are sufficient to

cover the amount adjudged in favor of private respondents, we see no cogent reason to disturb the findings and conclusions

of the Court of Appeals.

WHEREFORE, subject to the clarification herein above stated, the assailed decision of the Court of Appeals is hereby

AFFIRMED. Costs against petitioners.

SO ORDERED.

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

Bidin J., took no part.

Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 77029 August 30, 1990

BIENVENIDO, ESTELITA, MACARIO, LUIS, ADELAIDE, ENRIQUITA and CLAUDIO, all surnamed, GEVERO,petitioners,

vs.

INTERMEDIATE APPELLATE COURT and DEL MONTE DEVELOPMENT CORPORATION, respondents.

Carlito B. Somido for petitioners.

Benjamin N. Tabios for private respondent.

PARAS, J.:

This is a petition for review on certiorari of the March 20, 1988 decision 1 of the then Intermediate Appellate Court (now Court

of Appeals) in AC-GR CV No. 69264, entitled Del Monte Development Corporation vs. Enrique Ababa, et al., etc. affirming the

decision 2 of the then Court of First Instance (now Regional Trial Court) of Misamis Oriental declaring the plaintiff corporation

as the true and absolute owner of that portion of Lot 476 of the Cagayan Cadastre, particularly Lot No. 2476-D of the

subdivision plan (LRC) Psd-80450, containing an area of Seven Thousand Eight Hundred Seventy Eight (7,878) square meters

more or less.

As found by the Appellate Court, the facts are as follows:

The parcel of land under litigation is Lot No. 2476 of the Subdivision Plan Psd-37365 containing an area of

20,119 square meters and situated at Gusa, Cagayan de Oro City. Said lot was acquired by purchase from the

late Luis Lancero on September 15, 1964 as per Deed of Absolute Sale executed in favor of plaintiff and by

virtue of which Transfer Certificate of Title No. 4320 was issued to plaintiff (DELCOR for brevity). Luis Lancero,

in turn acquired the same parcel from Ricardo Gevero on February 5, 1952 per deed of sale executed by

Ricardo Gevero which was duly annotated as entry No. 1128 at the back of Original Certificate of Title No.

7610 covering the mother lot identified as Lot No. 2476 in the names of Teodorica Babangha — 1/2 share and

her children: Maria; Restituto, Elena, Ricardo, Eustaquio and Ursula, all surnamed surnamed Gevero, 1/2

undivided share of the whole area containing 48,122 square meters.

Teodorica Babangha died long before World War II and was survived by her six children aforementioned. The

heirs of Teodorica Babangha on October 17,1966 executed an Extra-Judicial Settlement and Partition of the

estate of Teodorica Babangha, consisting of two lots, among them was lot 2476. By virtue of the extra-judicial

settlement and partition executed by the said heirs of Teodorica Babangha, Lot 2476-A to Lot 2476-I, inclusive,

under subdivision plan (LRC) Psd-80450 duly approved by the Land Registration Commission, Lot 2476-D,

among others, was adjudicated to Ricardo Gevero who was then alive at the time of extra-judicial settlement

and partition in 1966. Plaintiff (private respondent herein) filed an action with the CFI (now RTC) of Misamis

Oriental to quiet title and/or annul the partition made by the heirs of Teodorica Babangha insofar as the same

prejudices the land which it acquired a portion of lot 2476.

Plaintiff now seeks to quiet title and/or annul the partition made by the heirs of Teodorica Babangha insofar as

the same prejudices the land which it acquired, a portion of Lot 2476. Plaintiff proved that before purchasing

Lot 2476-A it first investigated and checked the title of Luis Lancero and found the same to be intact in the

office of the Register of Deeds of Cagayan de Oro City. The same with the subdivision plan (Exh. "B"), the

corresponding technical description (Exh. "P") and the Deed of Sale executed by Ricardo Gevero — all of which

were found to be unquestionable. By reason of all these, plaintiff claims to have bought the land in good faith

and for value, occupying the land since the sale and taking over from Lancero's possession until May 1969,

when the defendants Abadas forcibly entered the property. (Rollo, p. 23)

After trial the court a quo on July 18, 1977 rendered judgment, the dispositive portion of which reads as follows:

WHEREFORE, premises considered, judgment is hereby rendered declaring the plaintiff corporation as the true

and absolute owner of that portion of Lot No. 2476 of the Cagayan Cadastre, particularly Lot No. 2476-D of the

subdivision plan (LRC) Psd-80450, containing an area of SEVEN THOUSAND EIGHT HUNDRED SEVENTY EIGHT

(7,878) square meters, more or less. The other portions of Lot No. 2476 are hereby adjudicated as follows:

Lot No. 2476 – B – to the heirs of Elena Gevero;

Lot No. 2476 – C – to the heirs of Restituto Gevero;

Lot No. 2476 – E – to the defendant spouses Enrique C. Torres and Francisca Aquino;

Lot No. 2476 – F – to the defendant spouses Eduard Rumohr and Emilia Merida Rumohf ;

Lot Nos. 2476-H, 2476-I and 2476 — G — to defendant spouses Enrique Abada and Lilia Alvarez Abada.

No adjudication can be made with respect to Lot No. 2476-A considering that the said lot is the subject of a

civil case between the Heirs of Maria Gevero on one hand and the spouses Daniel Borkingkito and Ursula

Gevero on the other hand, which case is now pending appeal before the Court of Appeals. No pronouncement

as to costs,

SO ORDERED. (Decision, Record on Appeal, p. 203; Rollo, pp. 21-22)

From said decision, defendant heirs of Ricardo Gevero (petitioners herein) appealed to the IAC (now Court of Appeals) which

subsequently, on March 20, 1986, affirmed the decision appealed from.

Petitioners, on March 31, 1986, filed a motion for reconsideration (Rollo, p. 28) but was denied on April 21, 1986.

Hence, the present petition.

This petition is devoid of merit.

Basically, the issues to be resolved in the instant case are: 1) whether or not the deed of sale executed by Ricardo

Gevero to Luis Lancero is valid; 2) in the affirmative, whether or not the 1/2 share of interest of Teodorica Babangha in

one of the litigated lots, lot no. 2476 under OCT No. 7610 is included in the deed of sale; and 3) whether or not the

private respondents' action is barred by laches.

Petitioners maintain that the deed of sale is entirely invalid citing alleged flaws thereto, such as that: 1) the signature of

Ricardo was forged without his knowledge of such fact; 2) Lancero had recognized the fatal defect of the 1952 deed of sale

when he signed the document in 1968 entitled "Settlement to Avoid the Litigation"; 3) Ricardo's children remained in the

property notwithstanding the sale to Lancero; 4) the designated Lot No. is 2470 instead of the correct number being Lot No.

2476; 5) the deed of sale included the share of Eustaquio Gevero without his authority; 6) T.C.T. No. 1183 of Lancero

segregated the area of 20,119 square meters from the bigger area (OCT No. 7616) without the consent of the other co-

owners; 7) Lancero caused the 1952 Subdivision survey without the consent of the Geveros' to bring about the segregation of

the 20,119 square meters lot from the mother lot 2476 which brought about the issuance of his title T-1183 and to DELCOR's

title T4320, both of which were illegally issued; and 8) the area sold as per document is 20,649 square meters whereas the

segregated area covered by TCT No. T-1183 of Lancero turned out to be 20,119 square meters (Petitioners Memorandum, pp.

62-78).

As to petitioners' claim that the signature of Ricardo in the 1952 deed of sale in favor of Lancero was forged without Ricardo's

knowledge of such fact (Rollo, p. 71) it will be observed that the deed of sale in question was executed with all the legal

formalities of a public document. The 1952 deed was duly acknowledged by both parties before the notary public, yet

petitioners did not bother to rebut the legal presumption of the regularity of the notarized document (Dy v. Sacay, 165 SCRA

473 [1988]); Nuguid v. C.A., G.R. No. 77423, March 13, 1989). In fact it has long been settled that a public document executed

and attested through the intervention of the notary public is evidence of the facts in clear, unequivocal manner therein

expressed. It has the presumption of regularity and to contradict all these, evidence must be clear, convincing and more than

merely preponderant (Rebuleda v. I.A.C., 155 SCRA 520-521 [1987]). Forgery cannot be presumed, it must be proven (Siasat v.

IAC, No. 67889, October 10, 1985). Likewise, petitioners allegation of absence of consideration of the deed was not

substantiated. Under Art. 1354 of the Civil Code, consideration is presumed unless the contrary is proven.

As to petitioners' contention that Lancero had recognized the fatal defect of the 1952 deed when he signed the document in

1968 entitled "Settlement to Avoid Litigation" (Rollo, p. 71), it is a basic rule of evidence that the right of a party cannot be

prejudiced by an act, declaration, or omission of another (Sec. 28. Rule 130, Rules of Court). This particular rule is embodied in

the maxim "res inter alios acta alteri nocere non debet." Under Section 31, Rule 130, Rules of Court "where one derives title to

property from another, the act, declaration, or omission of the latter, while holding the title, in relation to the property is

evidence against the former." It is however stressed that the admission of the former owner of a property must have been

made while he was the owner thereof in order that such admission may be binding upon the present owner (City of Manila v.

del Rosario, 5 Phil. 227 [1905]; Medel v. Avecilla, 15 Phil. 465 [1910]). Hence, Lanceros' declaration or acts of executing the

1968 document have no binding effect on DELCOR, the ownership of the land having passed to DELCOR in 1964.

Petitioners' claim that they remained in the property, notwithstanding the alleged sale by Ricardo to Lancero (Rollo, p. 71)

involves a question of fact already raised and passed upon by both the trial and appellate courts. Said the Court of Appeals:

Contrary to the allegations of the appellants, the trial court found that Luis Lancero had taken possession of

the land upon proper investigation by plaintiff the latter learned that it was indeed Luis Lancero who was the

owner and possessor of Lot 2476 D. . . . (Decision, C.A., p. 6).

As a finding of fact, it is binding upon this Court (De Gola-Sison v. Manalo, 8 SCRA 595 [1963]; Gaduco vs. C.A., 14 SCRA 282

[1965]; Ramos v. Pepsi-Cola, 19 SCRA 289 [1967]; Tan v. C.A., 20 SCRA 54 [1967]; Ramirez Tel. Co. v. Bank of America, 33 SCRA

737 [1970]; Lucero v. Loot, 25 SCRA 687 [1968]; Guerrero v. C.A., 142 SCRA 130 [1986]).

Suffice it to say that the other flaws claimed by the petitioners which allegedly invalidated the 1952 deed of sale have not

been raised before the trial court nor before the appellate court. It is settled jurisprudence that an issue which was neither

averred in the complaint nor raised during the trial in the court below cannot be raised for the first time on appeal as it would

be offensive to the basic rules of fair play, justice and due process. (Matienzo v. Servidad, 107 SCRA 276 [1981]; Dela Santa v.

C.A., 140 SCRA 44 [1985]; Dihiansan v. C.A., 157 SCRA 434 [1987]; Anchuelo v. IAC, 147 SCRA 434 [1987]; Dulos Realty and

Development Corporation v. C.A., 157 SCRA [1988]; Kamos v. IAC, G.R. No. 78282, July 5, 1989).

Petitioners aver that the 1/2 share of interest of Teodorica (mother of Ricardo) in Lot 2476 under OCT No. 7610 was not

included in the deed of sale as it was intended to limit solely to Ricardos' proportionate share out of the undivided 1/2 of the

area pertaining to the six (6) brothers and sisters listed in the Title and that the Deed did not include the share of Ricardo, as

inheritance from Teodorica, because the Deed did not recite that she was deceased at the time it was executed (Rollo, pp. 67-

68).

The hereditary share in a decedents' estate is transmitted or vested immediately from the moment of the death of the

"causante" or predecessor in interest (Civil Code of the Philippines, Art. 777), and there is no legal bar to a successor (with

requisite contracting capacity) disposing of 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 (De Borja v. Vda. de Borja, 46 SCRA 577 [1972]).

Teodorica Babangha died long before World War II, hence, the rights to the succession were transmitted from the moment of

her death. It is therefore incorrect to state that it was only in 1966, the date of extrajudicial partition, when Ricardo received

his share in the lot as inheritance from his mother Teodorica. Thus, when Ricardo sold his share over lot 2476 that share which

he inherited from Teodorica was also included unless expressly excluded in the deed of sale.

Petitioners contend that Ricardo's share from Teodorica was excluded in the sale considering that a paragraph of the

aforementioned deed refers merely to the shares of Ricardo and Eustaquio (Rollo, p. 67-68).

It is well settled that laws and contracts shall be so construed as to harmonize and give effect to the different provisions

thereof (Reparations Commission v. Northern Lines, Inc., 34 SCRA 203 [1970]), to ascertain the meaning of the provisions of a

contract, its entirety must be taken into account (Ruiz v. Sheriff of Manila, 34 SCRA 83 [1970]). The interpretation insisted

upon by the petitioners, by citing only one paragraph of the deed of sale, would not only create contradictions but also, render

meaningless and set at naught the entire provisions thereof.

Petitioners claim that DELCOR's action is barred by laches considering that the petitioners have remained in the actual, open,

uninterrupted and adverse possession thereof until at present (Rollo, p. 17).

An instrument notarized by a notary public as in the case at bar is a public instrument (Eacnio v. Baens, 5 Phil. 742). The

execution of a public instrument is equivalent to the delivery of the thing (Art. 1498, 1st Par., Civil Code) and is deemed legal

delivery. Hence, its execution was considered a sufficient delivery of the property (Buencamino v. Viceo, 13 Phil. 97; [1906];

Puato v. Mendoza, 64 Phil. 457 [1937]; Vda. de Sarmiento v. Lesaca, 108 Phil. 900 [1960]; Phil. Suburban Development Corp. v.

Auditor Gen., 63 SCRA 397 (1975]).

Besides, the property sold is a registered land. It is the act of registration that transfers the ownership of the land sold. (GSIS v.

C.A., G.R. No. 42278, January 20, 1989). If the property is a registered land, the purchaser in good, faith has a right to rely on

the certificate of title and is under no duty to go behind it to look for flaws (Mallorca v. De Ocampo, No. L-26852, March 25,

1970; Unchuan v. C.A., 161 SCRA 710 [1988]; Nuguid v. CA-G.R. No. 77427, March 13, 1989).

Under the established principles of land registration law, the person dealing with registered land may generally rely on the

correctness of its certificate of title and the law will in no way oblige him to go behind the certificate to determine the

condition of the property (Tiongco v. de la Merced, L-2446, July 25, 1974; Lopez vs. CA., G.R. No. 49739, January 20, 1989;

Davao Grains Inc. vs. IAC, 171 SCRA 612 [1989]). This notwithstanding, DELCOR did more than that. It did not only rely on the

certificate of title. The Court of Appeals found that it had first investigated and checked the title (T.C.T. No. T-1183) in the

name of Luis Lancero. It likewise inquired into the Subdivision Plan, the corresponding technical description and the deed of

sale executed by Ricardo Gevero in favor of Luis Lancero and found everything in order. It even went to the premises and

found Luis Lancero to be in possession of the land to the exclusion of any other person. DELCOR had therefore acted in good

faith in purchasing the land in question.

Consequently, DELCOR's action is not barred by laches.

The main issues having been disposed of, discussion of the other issues appear unnecessary.

PREMISES CONSIDERED, the instant petition is hereby DISMISSED and the decision of the Court of Appeals is hereby

AFFIRMED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 89783 February 19, 1992

MARIANO B. LOCSIN, JULIAN J. LOCSIN, JOSE B. LOCSIN, AUREA B. LOCSIN, MATILDE L. CORDERO, SALVADOR B. LOCSIN and

MANUEL V. DEL ROSARIO, petitioners,

vs.

THE HON. COURT OF APPEALS, JOSE JAUCIAN, FLORENTINO JAUCIAN, MERCEDES JAUCIAN ARBOLEDA, HEIRS OF JOSEFINA J.

BORJA, HEIRS OF EDUARDO JAUCIAN and HEIRS OF VICENTE JAUCIAN, respondents.

Aytona Law Office and Siquia Law Offices for petitioners.

Mabella, Sangil & Associates for private respondents.

NARVASA, C.J.:

Reversal of the decision of the Court of Appeals in CA-G.R. No. CV-11186 — affirming with modification the judgment of the

Regional Trial Court of Albay in favor of the plaintiffs in Civil Case No. 7152 entitled "Jose Jaucian, et al. v. Mariano B. Locsin, et

al.," an action for recovery of real property with damages — is sought. in these proceedings initiated by petition for review

on certiorari in accordance with Rule 45 of the Rules of Court.

The petition was initially denied due course and dismissed by this Court. It was however reinstated upon a second motion for

reconsideration filed by the petitioners, and the respondents were required to comment thereon. The petition was thereafter

given due course and the parties were directed to submit their memorandums. These, together with the evidence, having

been carefully considered, the Court now decides the case.

First, the facts as the Court sees them in light of the evidence on record:

The late Getulio Locsin had three children named Mariano, Julian and Magdalena, all surnamed Locsin. He owned extensive

residential and agricultural properties in the provinces of Albay and Sorsogon. After his death, his estate was divided among

his three (3) children as follows:

(a) the coconut lands of some 700 hectares in Bual, Pilar, Sorsogon, were adjudicated to his daughter, Magdalena Locsin;

(b) 106 hectares of coconut lands were given to Julian Locsin, father of the petitioners Julian, Mariano, Jose, Salvador, Matilde,

and Aurea, all surnamed Locsin;

(c) more than forty (40) hectares of coconut lands in Bogtong, eighteen (18) hectares of riceland in Daraga, and the residential

lots in Daraga, Albay and in Legazpi City went to his son Mariano, which Mariano brought into his marriage to Catalina Jaucian

in 1908. Catalina, for her part, brought into the marriage untitled properties which she had inherited from her parents, Balbino

Jaucian and Simona Anson. These were augmented by other properties acquired by the spouses in the course of their

union, 1 which however was not blessed with children.

Eventually, the properties of Mariano and Catalina were brought under the Torrens System. Those that Mariano inherited

from his father, Getulio Locsin, were surveyed cadastrally and registered in the name of "Mariano Locsin, married to Catalina

Jaucian.'' 2

Mariano Locsin executed a Last Will and Testament instituting his wife, Catalina, as the sole and universal heir of all his

properties. 3 The will was drawn up by his wife's nephew and trusted legal adviser, Attorney Salvador Lorayes. Attorney

Lorayes disclosed that the spouses being childless, they had agreed that their properties, after both of them shall have died

should revert to their respective sides of the family, i.e., Mariano's properties would go to his "Locsin relatives" (i.e., brothers

and sisters or nephews and nieces), and those of Catalina to her "Jaucian relatives." 4

Don Mariano Locsin died of cancer on September 14, 1948 after a lingering illness. In due time, his will was probated in Special

Proceedings No. 138, CFI of Albay without any opposition from both sides of the family. As directed in his will, Doña Catalina

was appointed executrix of his estate. Her lawyer in the probate proceeding was Attorney Lorayes. In the inventory of her

husband's estate 5 which she submitted to the probate court for approval, 6Catalina declared that "all items mentioned from

Nos. 1 to 33 are the private properties of the deceased and form part of his capital at the time of the marriage with the

surviving spouse, while items Nos. 34 to 42 are conjugal." 7

Among her own and Don Mariano's relatives, Doña Catalina was closest to her nephew, Attorney Salvador Lorayes, her nieces,

Elena Jaucian, Maria Lorayes-Cornelio and Maria Olbes-Velasco, and the husbands of the last two: Hostilio Cornelio and

Fernando Velasco. 8 Her trust in Hostilio Cornelio was such that she made him custodian of all the titles of her properties; and

before she disposed of any of them, she unfailingly consulted her lawyer-nephew, Attorney Salvador Lorayes. It was Atty.

Lorayes who prepared the legal documents and, more often than not, the witnesses to the transactions were her niece Elena

Jaucian, Maria Lorayes-Cornelio, Maria Olbes-Velasco, or their husbands. Her niece, Elena Jaucian, was her life-long

companion in her house.

Don Mariano relied on Doña Catalina to carry out the terms of their compact, hence, nine (9) years after his death, as if in

obedience to his voice from the grave, and fully cognizant that she was also advancing in years, Doña Catalina began

transferring, by sale, donation or assignment, Don Mariano's as well as her own, properties to their respective nephews and

nieces. She made the following sales and donation of properties which she had received from her husband's estate, to his

Locsin nephews and nieces:

EXHIBIT DATE PARTICULARS AREA/SQ.M. PRICE WITNESSES

23 Jan. 26, 1957 Deed of Absolute Sale in 962 P 481

favor of Mariano Locsin

1-JRL Apr. 7, 1966 Deed of Sale in favor of 430,203 P 20,000

Jose R. Locsin

1-JJL Mar. 22, 1967 Deed of Sale in favor of 5,000 P 1,000 Hostilio Cornello

Julian Locsin (Lot 2020) Helen M. Jaucian

1 Nov. 29, 1974 Deed of Donation in 26,509

favor Aurea Locsin,

Matilde L. Cordero

and Salvador Locsin

2 Feb. 4, 1975 Deed of Donation in 34,045

favor Aurea Locsin,

Matilde L. Cordero

and Salvador Locsin

3 Sept. 9, 1975 Deed of Donation in (Lot 2059)

favor Aurea Locsin,

Matilde L. Cordero

and Salvador Locsin

4 July 15, 1974 Deed of Absolute Sale in 1,424 Hostilio Cornelio

favor of Aurea B. Locsin Fernando Velasco

5 July 15, 1974 Deed of Absolute Sale in 1,456 P 5,750 Hostilio Cornelio

favor of Aurea B. Locsin Elena Jaucian

6 July 15, 1974 Deed of Absolute Sale in 1,237 P 5,720 - ditto -

favor of Aurea B. Locsin

7 July 15, 1974 Deed of Absolute Sale in 1,404 P 4,050 - ditto -

favor of Aurea B. Locsin

15 Nov. 26, 1975 Deed of Sale in favor of 261 P 4,930 - ditto -

Aurea Locsin

16 Oct. 17, 1975 Deed of Sale in favor of 533 P 2,000 Delfina Anson

Aurea Locsin M. Acabado

17 Nov. 26, 1975 Deed of Sale in favor of 373 P 1,000 Leonor Satuito

Aurea Locsin Mariano B. Locsin

19 Sept. 1, 1975 Conditional Donation in 1,130 P 3,000 - ditto -

favor of Mariano Locsin

1-MVRJ Dec. 29, 1972 Deed of Reconveyance 1,5110.66 P 1,000 Delfina Anson

in favor of Manuel V. del (Lot 2155) Antonio Illegible

Rosario whose maternal

grandfather was Getulio

Locsin

2-MVRJ June 30, 1973 Deed of Reconveyance 319.34 P 500 Antonio Illegible

in favor of Manuel V. del (Lot 2155) Salvador Nical

Rosario but the rentals

from bigger portion of

Lot 2155 leased to Filoil

Refinery were assigned to

Maria Jaucian Lorayes

Cornelio

Of her own properties, Doña Catalina conveyed the following to her own nephews and nieces and others:

EXHIBIT DATE PARTICULARS AREA/SQ.M. PRICE

2-JJL July 16, 1964 Deed of Sale in favor 5,000 P 1,000

Vicente Jaucian (lot 2020)

(6,825 sqm. when

resurveyed)

24 Feb. 12, 1973 Deed of Absolute Sale 100 P 1,000

in favor of Francisco M.

Maquiniana

26 July 15, 1973 Deed of Absolute Sale in 130 P 1,300

favor of Francisco

Maquiniana

27 May 3, 1973 Deed of Absolute Sale in 100 P 1,000

favor of Ireneo Mamia

28 May 3, 1973 Deed of Absolute Sale in 75 P 750

favor of Zenaida Buiza

29 May 3, 1973 Deed of Absolute Sale in 150 P 1,500

favor of Felisa Morjella

30 Apr. 3, 1973 Deed of Absolute Sale in 31 P 1,000

favor of Inocentes Motocinos

31 Feb. 12, 1973 Deed of Absolute Sale in 150 P 1,500

favor of Casimiro Mondevil

32 Mar. 1, 1973 Deed of Absolute Sale in 112 P 1,200

favor of Juan Saballa

25 Dec. 28, 1973 Deed of Absolute Sale in 250 P 2,500

of Rogelio Marticio

Doña Catalina died on July 6, 1977.

Four years before her death, she had made a will on October 22, 1973 affirming and ratifying the transfers she had made

during her lifetime in favor of her husband's, and her own, relatives. After the reading of her will, all the relatives agreed that

there was no need to submit it to the court for probate because the properties devised to them under the will had already

been conveyed to them by the deceased when she was still alive, except some legacies which the executor of her will or

estate, Attorney Salvador Lorayes, proceeded to distribute.

In 1989, or six (6) years after Doña Catalina's demise, some of her Jaucian nephews and nieces who had already received their

legacies and hereditary shares from her estate, filed action in the Regional Trial Court of Legaspi City (Branch VIII, Civil Case

No. 7152) to recover the properties which she had conveyed to the Locsins during her lifetime, alleging that the conveyances

were inofficious, without consideration, and intended solely to circumvent the laws on succession. Those who were closest to

Doña Catalina did not join the action.

After the trial, judgment was rendered on July 8, l985 in favor of the plaintiffs (Jaucian), and against the Locsin defendants, the

dispositive part of which reads:

WHEREFORE, this Court renders judgment for the plaintiffs and against the defendants:

(1) declaring the, plaintiffs, except the heirs of Josefina J. Borja and Eduardo Jaucian, who withdrew, the

rightful heirs and entitled to the entire estate, in equal portions, of Catalina Jaucian Vda. de Locsin, being the

nearest collateral heirs by right of representation of Juan and Gregorio, both surnamed Jaucian, and full-blood

brothers of Catalina;

(2) declaring the deeds of sale, donations, reconveyance and exchange and all other instruments conveying

any part of the estate of Catalina J. Vda. de Locsin including, but not limited to those in the inventory of known

properties (Annex B of the complaint) as null and void ab-initio;

(3) ordering the Register of Deeds of Albay and/or Legazpi City to cancel all certificates of title and other

transfers of the real properties, subject of this case, in the name of defendants, and derivatives therefrom, and

issue new ones to the plaintiffs;

(4) ordering the defendants, jointly and severally, to reconvey ownership and possession of all such properties

to the plaintiffs, together with all muniments of title properly endorsed and delivered, and all the fruits and

incomes received by the defendants from the estate of Catalina, with legal interest from the filing of this

action; and where reconveyance and delivery cannot be effected for reasons that might have intervened and

prevent the same, defendants shall pay for the value of such properties, fruits and incomes received by them,

also with legal interest from the filing, of this case

(5) ordering each of the defendants to pay the plaintiffs the amount of P30,000.00 as exemplary damages; and

the further sum of P20,000.00 each as moral damages; and

(6) ordering the defendants to pay the plaintiffs attorney's fees and litigation expenses, in the amount of

P30,000.00 without prejudice to any contract between plaintiffs and counsel.

Costs against the defendants. 9

The Locsins appealed to the Court of Appeals (CA-G.R. No. CV-11186) which rendered its now appealed judgment on March

14, 1989, affirming the trial court's decision.

The petition has merit and should be granted.

The trial court and the Court of Appeals erred in declaring the private respondents, nephews and nieces of Doña Catalina J.

Vda. de Locsin, entitled to inherit the properties which she had already disposed of more than ten (10) years before her death.

For those properties did not form part of her hereditary estate, i.e., "the property and transmissible rights and

obligations existing at the time of (the decedent's) death and those which have accrued thereto since the opening of the

succession." 10 The rights to a person's succession are transmitted from the moment of his death, and do not vest in his heirs

until such time. 11 Property which Doña Catalina had transferred or conveyed to other persons during her lifetime no longer

formed part of her estate at the time of her death to which her heirs may lay claim. Had she died intestate, only the property

that remained in her estate at the time of her death devolved to her legal heirs; and even if those transfers were, one and all,

treated as donations, the right arising under certain circumstances to impugn and compel the reduction or revocation of a

decedent's gifts inter vivos does not inure to the respondents since neither they nor the donees are compulsory (or forced)

heirs. 12

There is thus no basis for assuming an intention on the part of Doña Catalina, in transferring the properties she had received

from her late husband to his nephews and nieces, an intent to circumvent the law in violation of the private respondents'

rights to her succession. Said respondents are not her compulsory heirs, and it is not pretended that she had any such, hence

there were no legitimes that could conceivably be impaired by any transfer of her property during her lifetime. All that the

respondents had was an expectancy that in nowise restricted her freedom to dispose of even her entire estate subject only to

the limitation set forth in Art. 750, Civil Code which, even if it were breached, the respondents may not invoke:

Art. 750. The donation may comprehend all the present property of the donor or part thereof, provided he

reserves, in full ownership or in usufruct, sufficient means for the support of himself, and of all relatives who,

at the time of the acceptance of the donation, are by law entitled to be supported by the donor. Without such

reservation, the donation shall be reduced on petition of any person affected. (634a)

The lower court capitalized on the fact that Doña Catalina was already 90 years old when she died on July 6, 1977. It

insinuated that because of her advanced years she may have been imposed upon, or unduly influenced and morally pressured

by her husband's nephews and nieces (the petitioners) to transfer to them the properties which she had inherited from Don

Mariano's estate. The records do not support that conjecture.

For as early as 1957, or twenty-eight (28) years before her death, Doña Catalina had already begun transferring to her Locsin

nephews and nieces the properties which she received from Don Mariano. She sold a 962-sq.m. lot on January 26, 1957 to his

nephew and namesake Mariano Locsin II. 13 On April 7, 1966, or 19 years before she passed away, she also sold a 43 hectare

land to another Locsin nephew, Jose R. Locsin. 14 The next year, or on March 22, 1967, she sold a 5,000-sq.m. portion of Lot

2020 to Julian Locsin. 15

On March 27, 1967, Lot 2020 16 was partitioned by and among Doña Catalina, Julian Locsin, Vicente Jaucian and Agapito

Lorete. 17 At least Vicente Jaucian, among the other respondents in this case, is estopped from assailing the genuineness and

due execution of the sale of portions of Lot 2020 to himself, Julian Locsin, and Agapito Lorete, and the partition agreement

that he (Vicente) concluded with the other co-owners of Lot 2020.

Among Doña, Catalina's last transactions before she died in 1977 were the sales of property which she made in favor of Aurea

Locsin and Mariano Locsin in 1975. 18

There is not the slightest suggestion in the record that Doña Catalina was mentally incompetent when she made those

dispositions. Indeed, how can any such suggestion be made in light of the fact that even as she was transferring properties to

the Locsins, she was also contemporaneously disposing of her other properties in favor of the Jaucians? She sold to her

nephew, Vicente Jaucian, on July 16, 1964 (21 years before her death) one-half (or 5,000 sq.m.) of Lot 2020. Three years later,

or on March 22, 1967, she sold another 5000 sq.m. of the same lot to Julian Locsin. 19

From 1972 to 1973 she made several other transfers of her properties to her relatives and other persons, namely: Francisco

Maquiniana, Ireneo Mamia, Zenaida Buiza, Feliza Morjella, Inocentes Motocinos, Casimiro Mondevil, Juan Saballa and Rogelio

Marticio. 20 None of those transactions was impugned by the private respondents.

In 1975, or two years before her death, Doña Catalina sold some lots not only to Don Mariano's niece, Aurea Locsin, and his

nephew, Mariano Locsin

II, 21 but also to her niece, Mercedes Jaucian Arboleda. 22 If she was competent to make that conveyance to Mercedes, how can

there be any doubt that she was equally competent to transfer her other pieces of property to Aurea and Mariano II?

The trial court's belief that Don Mariano Locsin bequeathed his entire estate to his wife, from a "consciousness of its real

origin" which carries the implication that said estate consisted of properties which his wife had inherited from her parents,

flies in the teeth of Doña Catalina's admission in her inventory of that estate, that "items 1 to 33 are the private properties of

the deceased (Don Mariano) and forms (sic) part of his capital at the time of the marriage with the surviving spouse, while

items 34 to 42 are conjugal properties, acquired during the marriage." She would have known better than anyone else

whether the listing included any of her paraphernal property so it is safe to assume that none was in fact included. The

inventory was signed by her under oath, and was approved by the probate court in Special Proceeding No. 138 of the Court of

First Instance of Albay. It was prepared with the assistance of her own nephew and counsel, Atty. Salvador Lorayes, who surely

would not have prepared a false inventory that would have been prejudicial to his aunt's interest and to his own, since he

stood to inherit from her eventually.

This Court finds no reason to disbelieve Attorney Lorayes' testimony that before Don Mariano died, he and his wife (Doña

Catalina), being childless, had agreed that their respective properties should eventually revert to their respective lineal

relatives. As the trusted legal adviser of the spouses and a full-blood nephew of Doña Catalina, he would not have spun a tale

out of thin air that would also prejudice his own interest.

Little significance, it seems, has been attached to the fact that among Doña Catalina's nephews and nieces, those closest to

her: (a) her lawyer-nephew Attorney Salvador Lorayes; (b) her niece and companion Elena Jaucian: (c) her nieces Maria Olbes-

Velasco and Maria Lorayes-Cornelio and their respective husbands, Fernando Velasco and Hostilio Cornelio, did not join the

suit to annul and undo the dispositions of property which she made in favor of the Locsins, although it would have been to

their advantage to do so. Their desistance persuasively demonstrates that Doña Catalina acted as a completely free agent

when she made the conveyances in favor of the petitioners. In fact, considering their closeness to Doña Catalina it would have

been well-nigh impossible for the petitioners to employ "fraud, undue pressure, and subtle manipulations" on her to make her

sell or donate her properties to them. Doña Catalina's niece, Elena Jaucian, daughter of her brother, Eduardo Jaucian, lived

with her in her house. Her nephew-in-law, Hostilio Cornelio, was the custodian of the titles of her properties. The sales and

donations which she signed in favor of the petitioners were prepared by her trusted legal adviser and nephew, Attorney

Salvador Lorayes. The (1) deed of donation dated November 19,

1974 23 in favor of Aurea Locsin, (2) another deed of donation dated February 4, 1975 24 in favor of Matilde Cordero, and (3)

still another deed dated September 9, 1975 25 in favor of Salvador Lorayes, were all witnessed by Hostilio Cornelio (who is

married to Doña Catalina's niece, Maria Lorayes) and Fernando Velasco who is married to another niece, Maria Olbes. 26The

sales which she made in favor of Aurea Locsin on July 15, 1974 27 were witnessed by Hostilio Cornelio and Elena Jaucian. Given

those circumstances, said transactions could not have been anything but free and voluntary acts on her part.

Apart from the foregoing considerations, the trial court and the Court of Appeals erred in not dismissing this action for

annulment and reconveyance on the ground of prescription. Commenced decades after the transactions had been

consummated, and six (6) years after Doña Catalina's death, it prescribed four (4) years after the subject transactions were

recorded in the Registry of Property, 28 whether considered an action based on fraud, or one to redress an injury to the rights

of the plaintiffs. The private respondents may not feign ignorance of said transactions because the registration of the deeds

was constructive notice thereof to them and the whole world. 29

WHEREFORE, the petition for review is granted. The decision dated March 14, 1989 of the Court of Appeals in CA-G.R. CV No.

11186 is REVERSED and SET ASIDE. The private respondents' complaint for annulment of contracts and reconveyance of

properties in Civil Case No. 7152 of the Regional Trial Court, Branch VIII of Legazpi City, is DISMISSED, with costs against the

private respondents, plaintiffs therein.

SO ORDERED.

NATALIA CARPENA OPULENCIA, petitioner, vs. COURT OF APPEALS, ALADIN SIMUNDAC and MIGUEL OLIVAN, respondents.

D E C I S I O N

PANGANIBAN, J.

Is a contract to sell a real property involved in testate proceedings valid and binding without the approval of the probate

court?

Statement of the Case

This is the main question raised in this petition for review before us, assailing the Decision [1] of the Court of Appeals[2] in

CA-GR CV No. 41994 promulgated on February 6, 1996 and its Resolution[3] dated July 19, 1996. The challenged Decision

disposed as follows:

“WHEREFORE, premises considered, the order of the lower court dismissing the complaint is SET ASIDE and judgment is

hereby rendered declaring the CONTRACT TO SELL executed by appellee in favor of appellants as valid and binding, subject to

the result of the administration proceedings of the testate Estate of Demetrio Carpena.

SO ORDERED.” [4]

Petitioner’s Motion for Reconsideration was denied in the challenged Resolution.[5]

The Facts

The antecedent facts, as succinctly narrated by Respondent Court of Appeals are:

“In a complaint for specific performance filed with the court a quo [herein private respondents] Aladin Simundac and Miguel

Oliven alleged that [herein petitioner] Natalia Carpena Opulencia executed in their favor a “CONTRACT TO SELL” Lot 2125 of

the Sta. Rosa Estate, consisting of 23,766 square meters located in Sta. Rosa, Laguna at P150.00 per square meter; that

plaintiffs paid a downpayment ofP300,000.00 but defendant, despite demands, failed to comply with her obligations under

the contract. [Private respondents] therefore prayed that [petitioner] be ordered to perform her contractual obligations and

to further pay damages, attorney’s fee and litigation expenses.

In her traverse, [petitioner] admitted the execution of the contract in favor of plaintiffs and receipt of P300,000.00 as

downpayment. However, she put forward the following affirmative defenses: that the property subject of the contract formed

part of the Estate of Demetrio Carpena (petitioner’s father), in respect of which a petition for probate was filed with the

Regional Trial Court, Branch 24, Biñan, Laguna; that at the time the contract was executed, the parties were aware of the

pendency of the probate proceeding; that the contract to sell was not approved by the probate court; that realizing the nullity

of the contract [petitioner] had offered to return the downpayment received from [private respondents], but the latter

refused to accept it; that [private respondents] further failed to provide funds for the tenant who demanded P150,00.00 in

payment of his tenancy rights on the land; that [petitioner] had chosen to rescind the contract.

At the pre-trial conference the parties stipulated on [sic] the following facts:

1. That on February 3, 1989, [private respondents] and [petitioner] entered into a contract to sell involving a parcel of

land situated in Sta. Rosa, Laguna, otherwise known as Lot No. 2125 of the Sta. Rosa Estate.

2. That the price or consideration of the said sell [sic] is P150.00 per square meters;

3. That the amount of P300,000.00 had already been received by [petitioner];

4. That the parties have knowledge that the property subject of the contract to sell is subject of the probate

proceedings;

5. That [as] of this time, the probate Court has not yet issued an order either approving or denying the said sale. (p. 3,

appealed Order of September 15, 1992, pp. 109-112, record).

[Private respondents] submitted their evidence in support of the material allegations of the complaint. In addition to

testimonies of witnesses, [private respondents] presented the following documentary evidences: (1) Contract to Sell (Exh A);

(2) machine copy of the last will and testament of Demetrio Carpena (defendant’s father) to show that the property sold by

defendant was one of those devised to her in said will (Exh B); (3) receipts signed by defendant for the downpayment in the

total amount of P300,000.00 (Exhs C, D & E); and (4) demand letters sent to defendant (Exhs F & G).

It appears that [petitioner], instead of submitting her evidence, filed a Demurrer to Evidence. In essence, defendant

maintained that the contract to sell was null and void for want of approval by the probate court. She further argued that the

contract was subject to a suspensive condition, which was the probate of the will of defendant’s father Demetrio Carpena. An

Opposition was filed by [private respondents]. It appears further that in an Order dated December 15, 1992 the court a quo

granted the demurrer to evidence and dismissed the complaint. It justified its action in dismissing the complaint in the

following manner:

It is noteworthy that when the contract to sell was consummated, no petition was filed in the Court with notice to the heirs of

the time and place of hearing, to show that the sale is necessary and beneficial. A sale of properties of an estate as beneficial

to the interested parties must comply with the requisites provided by law, (Sec. 7, Rule 89, Rules of Court) which are

mandatory, and without them, the authority to sell, the sale itself, and the order approving it, would be null and void ab

initio. (Arcilla vs. David, 77 Phil. 718, Gabriel, et al., vs. Encarnacion, et al., L-6736, May 4, 1954; Bonaga vs. Soler, 2 Phil.

755) Besides, it is axiomatic that where the estate of a deceased person is already the subject of a testate or intestate

proceeding, the administrator cannot enter into any transaction involving it without prior approval of the probate

Court. (Estate of Obave, vs. Reyes, 123 SCRA 767).

As held by the Supreme Court, a decedent’s representative (administrator) is not estopped from questioning the validity of his

own void deed purporting to convey land. (Bona vs. Soler, 2 Phil, 755). In the case at bar, the [petitioner,] realizing the

illegality of the transaction[,] has interposed the nullity of the contract as her defense, there being no approval from the

probate Court, and, in good faith offers to return the money she received from the [private respondents]. Certainly, the

administratrix is not estop[ped] from doing so and the action to declare the inexistence of contracts do not prescribe. This is

what precipitated the filing of [petitioner’s] demurrer to evidence.”[6]

The trial court’s order of dismissal was elevated to the Court of Appeals by private respondents who alleged:

“1. The lower court erred in concluding that the contract to sell is null and void, there being no approval of the probate

court.

2. The lower court erred in concluding that [petitioner] in good faith offers to return the money to [private respondents].

3. The lower court erred in concluding that [petitioner] is not under estoppel to question the validity of the contract to sell.

4. The lower court erred in not ruling on the consideration of the contract to sell which is tantamount to plain unjust

enrichment of [petitioner] at the expense of [private respondents].”[7]

Public Respondent’s Ruling

Declaring the Contract to Sell valid, subject to the outcome of the testate proceedings on Demetrio Carpena’s estate, the

appellate court set aside the trial court’s dismissal of the complaint and correctly ruled as follows:

“It is apparent from the appealed order that the lower court treated the contract to sell executed by appellee as one made by

the administratrix of the Estate of Demetrio Carpena for the benefit of the estate. Hence, its main reason for voiding the

contract in question was the absence of the probate court’s approval. Presumably, what the lower court had in mind was the

sale of the estate or part thereof made by the administrator for the benefit of the estate, as authorized under Rule 89 of the

Revised Rules of Court, which requires the approval of the probate court upon application therefor with notice to the heirs,

devisees and legatees.

However, as adverted to by appellants in their brief, the contract to sell in question is not covered by Rule 89 of the Revised

Rules of Court since it was made by appellee in her capacity as an heir, of a property that was devised to her under the will

sought to be probated. Thus, while the document inadvertently stated that appellee executed the contract in her capacity as

“executrix and administratrix” of the estate, a cursory reading of the entire text of the contract would unerringly show that

what she undertook to sell to appellants was one of the “other properties given to her by her late father,” and more

importantly, it was not made for the benefit of the estate but for her own needs. To illustrate this point, it is apropos to refer

to the preambular or preliminary portion of the document, which reads:

WHEREAS, the SELLER is the lawful owner of a certain parcel of land, which is more particularly described as follows:

x x x x x x x x x

x x x x x x x x x

x x x x x x x x x

WHEREAS, the SELLER suffers difficulties in her living and has forced to offer the sale of the above-described property, “which

property was only one among the other properties given to her by her late father,” to anyone who can wait for complete

clearance of the court on the Last Will Testament of her father.

WHEREAS, the SELLER in order to meet her need of cash, has offered for sale the said property at ONE HUNDRED FIFTY PESOS

(150.00) Philippine Currency, per square meter unto the BUYERS, and with this offer, the latter has accepted to buy and/or

purchase the same, less the area for the road and other easements indicated at the back of Transfer Certificate of Title No.

2125 duly confirmed after the survey to be conducted by the BUYER’s Licensed Geodetic Engineer, and whatever area [is]

left. (Emphasis added).

To emphasize, it is evident from the foregoing clauses of the contract that appellee sold Lot 2125 not in her capacity as

executrix of the will or administratrix of the estate of her father, but as an heir and more importantly as owner of said lot

which, along with other properties, was devised to her under the will sought to be probated. That being so, the requisites

stipulated in Rule 89 of the Revised Rules of Court which refer to a sale made by the administrator for the benefit of the estate

do not apply.

x x x x x x x x x

It is noteworthy that in a Manifestation filed with this court by appellants, which is not controverted by appellee, it is

mentioned that the last will and testament of Demetrio Carpena was approved in a final judgment rendered in Special

Proceeding No. B-979 by the Regional Trial Court, Branch 24 Binan, Laguna. But of course such approval does not terminate

the proceeding[s] since the settlement of the estate will ensue. Such proceedings will consist, among others, in the issuance

by the court of a notice to creditors (Rule 86), hearing of money claims and payment of taxes and estate debts (Rule 88) and

distribution of the residue to the heirs or persons entitled thereto (Rule 90). In effect, the final execution of the deed of sale

itself upon appellants’ payment of the balance of the purchase price will have to wait for the settlement or termination of the

administration proceedings of the Estate of Demetrio Carpena. Under the foregoing premises, what the trial court should

have done with the complaint was not to dismiss it but to simply put on hold further proceedings until such time that the

estate or its residue will be distributed in accordance with the approved will.

The rule is that when a demurrer to the evidence is granted by the trial court but reversed on appeal, defendant loses the right

to adduce his evidence. In such a case, the appellate court will decide the controversy on the basis of plaintiff’s evidence. In

the case at bench, while we find the contract to sell valid and binding between the parties, we cannot as yet order appellee to

perform her obligations under the contract because the result of the administration proceedings of the testate Estate of

Demetrio Carpena has to be awaited. Hence, we shall confine our adjudication to merely declaring the validity of the

questioned Contract to Sell.”

Hence, this appeal.[8]

The Issue

Petitioner raises only one issue:

“Whether or not the Contract to Sell dated 03 February 1989 executed by the [p]etitioner and [p]rivate [r]espondent[s]

without the requisite probate court approval is valid.”

The Court’s Ruling

The petition has no merit.

Contract to Sell Valid

In a nutshell, petitioner contends that “where the estate of the deceased person is already the subject of a testate or

intestate proceeding, the administrator cannot enter into any transaction involving it without prior approval of the Probate

Court.”[9] She maintains that the Contract to Sell is void because it was not approved by the probate court, as required by

Section 7, Rule 89 of the Rules of Court:

“SEC. 7. Regulations for granting authority to sell, mortgage, or otherwise encumber estate. – The court having jurisdiction of

the estate of the deceased may authorize the executor or administrator to sell, mortgage, or otherwise encumber real estate,

in cases provided by these rules and when it appears necessary or beneficial, under the following regulations:

xxx”

Insisting that the above rule should apply to this case, petitioner argues that the stipulations in the Contract to Sell

require her to act in her capacity as an executrix or administratrix. She avers that her obligation to eject tenants pertains to

the administratrix or executrix, the estate being the landlord of the said tenants. [10] Likewise demonstrating that she entered

into the contract in her capacity as executor is the stipulation that she must effect the conversion of subject land from

irrigated rice land to residential land and secure the necessary clearances from government offices. Petitioner alleges that

these obligations can be undertaken only by an executor or administrator of an estate, and not by an heir.[11]

The Court is not persuaded. As correctly ruled by the Court of Appeals, Section 7 of Rule 89 of the Rules of Court is not

applicable, because petitioner entered into the Contract to Sell in her capacity as an heiress, not as an executrix or

administratrix of the estate. In the contract, she represented herself as the “lawful owner” and seller of the subject parcel of

land.[12] She also explained the reason for the sale to be “difficulties in her living” conditions and consequent “need of

cash.”[13] These representations clearly evince that she was not acting on behalf of the estate under probate when she entered

into the Contract to Sell. Accordingly, the jurisprudence cited by petitioner has no application to the instant case.

We emphasize that hereditary rights are vested in the heir or heirs from the moment of the decedent’s death.[14] Petitioner, therefore, became the owner of her hereditary share the moment her father died. Thus, the lack of judicial

approval does not invalidate the Contract to Sell, because the petitioner has the substantive right to sell the whole or a part of

her share in the estate of her late father.[15] Thus, in Jakosalem vs. Rafols,[16] the Court resolved an identical issue under the old

Civil Code and held:

“Article 440 of the Civil Code provides that ‘the possession of hereditary property is deemed to be transmitted to the heir

without interruption from the instant of the death of the decedent, in case the inheritance be accepted.’ And Manresa with

reason states that upon the death of a person, each of his heirs ‘becomes the undivided owner of the whole estate left with

respect to the part or portion which might be adjudicated to him, a community of ownership being thus formed among the

coowners of the estate while it remains undivided.’ xxx And according to article 399 of the Civil Code, every part owner may

assign or mortgage his part in the common property, and the effect of such assignment or mortgage shall be limited to the

portion which may be allotted him in the partition upon the dissolution of the community. Hence, where some of the heirs,

without the concurrence of the others, sold a property left by their deceased father, this Court, speaking thru its then Chief

Justice Cayetano Arellano, said that the sale was valid, but that the effect thereof was limited to the share which may be

allotted to the vendors upon the partition of the estate.”

Administration of the Estate Not Prejudiced by the Contract to Sell

Petitioner further contends that “[t]o sanction the sale at this stage would bring about a partial distribution of the

decedent’s estate pending the final termination of the testate proceedings.” [17] This becomes all the more significant in the

light of the trial court’s finding, as stated in its Order dated August 20, 1997, that “the legitime of one of the heirs has been

impaired.”[18]

Petitioner’s contention is not convincing. The Contract to Sell stipulates that petitioner’s offer to sell is contingent on the

“complete clearance of the court on the Last Will Testament of her father.” [19] Consequently, although the Contract to Sell was

perfected between the petitioner and private respondents during the pendency of the probate proceedings, the

consummation of the sale or the transfer of ownership over the parcel of land to the private respondents is subject to the full

payment of the purchase price and to the termination and outcome of the testate proceedings. Therefore, there is no basis

for petitioner’s apprehension that the Contract to Sell may result in a premature partition and distribution of the properties of

the estate. Indeed, it is settled that “the sale made by an heir of his share in an inheritance, subject to the pending

administration, in no wise stands in the way of such administration.”[20]

Estoppel

Finally, petitioner is estopped from backing out of her representations in her valid Contract to Sell with private

respondents, from whom she had already received P300,000 as initial payment of the purchase price. Petitioner may not

renege on her own acts and representations, to the prejudice of the private respondents who have relied on them.[21] Jurisprudence teaches us that neither the law nor the courts will extricate a party from an unwise or undesirable contract

he or she entered into with all the required formalities and with full awareness of its consequences.[22]

WHEREFORE, the petition is hereby DENIED and the assailed Decision of the Court of Appeals AFFIRMED. Costs against

petitioner.

SO ORDERED.

G.R. No. 126334 November 23, 2001

EMILIO EMNACE, petitioner,

vs.

COURT OF APPEALS, ESTATE OF VICENTE TABANAO, SHERWIN TABANAO, VICENTE WILLIAM TABANAO, JANETTE TABANAO

DEPOSOY, VICENTA MAY TABANAO VARELA, ROSELA TABANAO and VINCENT TABANAO, respondents.

YNARES-SANTIAGO, J.:

Petitioner Emilio Emnace, Vicente Tabanao and Jacinto Divinagracia were partners in a business concern known as Ma. Nelma

Fishing Industry. Sometime in January of 1986, they decided to dissolve their partnership and executed an agreement of

partition and distribution of the partnership properties among them, consequent to Jacinto Divinagracia's withdrawal from the

partnership.1 Among the assets to be distributed were five (5) fishing boats, six (6) vehicles, two (2) parcels of land located at

Sto. Niño and Talisay, Negros Occidental, and cash deposits in the local branches of the Bank of the Philippine Islands and

Prudential Bank.

Throughout the existence of the partnership, and even after Vicente Tabanao's untimely demise in 1994, petitioner failed to

submit to Tabanao's heirs any statement of assets and liabilities of the partnership, and to render an accounting of the

partnership's finances. Petitioner also reneged on his promise to turn over to Tabanao's heirs the deceased's 1/3 share in the

total assets of the partnership, amounting to P30,000,000.00, or the sum of P10,000,000.00, despite formal demand for

payment thereof.2

Consequently, Tabanao' s heirs, respondents herein, filed against petitioner an action for accounting, payment of shares,

division of assets and damages.3 In their complaint, respondents prayed as follows:

1. Defendant be ordered to render the proper accounting of all the assets and liabilities of the partnership at bar; and

2. After due notice and hearing defendant be ordered to pay/remit/deliver/surrender/yield to the plaintiffs the

following:

A. No less than One Third (1/3) of the assets, properties, dividends, cash, land(s), fishing vessels, trucks, motor

vehicles, and other forms and substance of treasures which belong and/or should belong, had accrued and/or

must accrue to the partnership;

B. No less than Two Hundred Thousand Pesos (P200,000.00) as moral damages;

C. Attorney's fees equivalent to Thirty Percent (30%) of the entire share/amount/award which the Honorable

Court may resolve the plaintiffs as entitled to plus P1,000.00 for every appearance in court.4

Petitioner filed a motion to dismiss the complaint on the grounds of improper venue, lack of jurisdiction over the nature of the

action or suit, and lack of capacity of the estate of Tabanao to sue.5 On August 30, 1994, the trial court denied the motion to

dismiss. It held that venue was properly laid because, while realties were involved, the action was directed against a particular

person on the basis of his personal liability; hence, the action is not only a personal action but also an action in personam. As

regards petitioner's argument of lack of jurisdiction over the action because the prescribed docket fee was not paid

considering the huge amount involved in the claim, the trial court noted that a request for accounting was made in order that

the exact value of the partnership may be ascertained and, thus, the correct docket fee may be paid. Finally, the trial court

held that the heirs of Tabanao had aright to sue in their own names, in view of the provision of Article 777 of the Civil Code,

which states that the rights to the succession are transmitted from the moment of the death of the decedent.6

The following day, respondents filed an amended complaint,7 incorporating the additional prayer that petitioner be ordered to

"sell all (the partnership's) assets and thereafter pay/remit/deliver/surrender/yield to the plaintiffs" their corresponding share

in the proceeds thereof. In due time, petitioner filed a manifestation and motion to dismiss,8arguing that the trial court did not

acquire jurisdiction over the case due to the plaintiffs' failure to pay the proper docket fees. Further, in a supplement to his

motion to dismiss,9 petitioner also raised prescription as an additional ground warranting the outright dismissal of the

complaint.

On June 15, 1995, the trial court issued an Order,10 denying the motion to dismiss inasmuch as the grounds raised therein were

basically the same as the earlier motion to dismiss which has been denied. Anent the issue of prescription, the trial court ruled

that prescription begins to run only upon the dissolution of the partnership when the final accounting is done. Hence,

prescription has not set in the absence of a final accounting. Moreover, an action based on a written contract prescribes in ten

years from the time the right of action accrues.

Petitioner filed a petition for certiorari before the Court of Appeals,11 raising the following issues:

I. Whether or not respondent Judge acted without jurisdiction or with grave abuse of discretion in taking

cognizance of a case despite the failure to pay the required docket fee;

II. Whether or not respondent Judge acted without jurisdiction or with grave abuse of discretion in insisting to try

the case which involve (sic) a parcel of land situated outside of its territorial jurisdiction;

III. Whether or not respondent Judge acted without jurisdiction or with grave abuse of discretion in allowing the

estate of the deceased to appear as party plaintiff, when there is no intestate case and filed by one who was never

appointed by the court as administratrix of the estates; and

IV. Whether or not respondent Judge acted without jurisdiction or with grave abuse of discretion in not dismissing

the case on the ground of prescription.

On August 8, 1996, the Court of Appeals rendered the assailed decision,12 dismissing the petition for certiorari, upon a finding

that no grave abuse of discretion amounting to lack or excess of jurisdiction was committed by the trial court in issuing the

questioned orders denying petitioner's motions to dismiss.

Not satisfied, petitioner filed the instant petition for review, raising the same issues resolved by the Court of Appeals, namely:

I. Failure to pay the proper docket fee;

II. Parcel of land subject of the case pending before the trial court is outside the said court's territorial jurisdiction;

III. Lack of capacity to sue on the part of plaintiff heirs of Vicente Tabanao; and

IV. Prescription of the plaintiff heirs' cause of action.

It can be readily seen that respondents' primary and ultimate objective in instituting the action below was to recover the

decedent's 1/3 share in the partnership' s assets. While they ask for an accounting of the partnership' s assets and finances,

what they are actually asking is for the trial court to compel petitioner to pay and turn over their share, or the equivalent value

thereof, from the proceeds of the sale of the partnership assets. They also assert that until and unless a proper accounting is

done, the exact value of the partnership' s assets, as well as their corresponding share therein, cannot be ascertained.

Consequently, they feel justified in not having paid the commensurate docket fee as required by the Rules of

Court.1âwphi1.nêt

We do not agree. The trial court does not have to employ guesswork in ascertaining the estimated value of the partnership's

assets, for respondents themselves voluntarily pegged the worth thereof at Thirty Million Pesos (P30,000,000.00). Hence, this

case is one which is really not beyond pecuniary estimation, but rather partakes of the nature of a simple collection case

where the value of the subject assets or amount demanded is pecuniarily determinable.13 While it is true that the exact value

of the partnership's total assets cannot be shown with certainty at the time of filing, respondents can and must ascertain,

through informed and practical estimation, the amount they expect to collect from the partnership, particularly from

petitioner, in order to determine the proper amount of docket and other fees.14 It is thus imperative for respondents to pay

the corresponding docket fees in order that the trial court may acquire jurisdiction over the action.15

Nevertheless, unlike in the case of Manchester Development Corp. v. Court of Appeals,16 where there was clearly an effort to

defraud the government in avoiding to pay the correct docket fees, we see no attempt to cheat the courts on the part of

respondents. In fact, the lower courts have noted their expressed desire to remit to the court "any payable balance or lien on

whatever award which the Honorable Court may grant them in this case should there be any deficiency in the payment of the

docket fees to be computed by the Clerk of Court."17 There is evident willingness to pay, and the fact that the docket fee paid

so far is inadequate is not an indication that they are trying to avoid paying the required amount, but may simply be due to an

inability to pay at the time of filing. This consideration may have moved the trial court and the Court of Appeals to declare that

the unpaid docket fees shall be considered a lien on the judgment award.

Petitioner, however, argues that the trial court and the Court of Appeals erred in condoning the non-payment of the proper

legal fees and in allowing the same to become a lien on the monetary or property judgment that may be rendered in favor of

respondents. There is merit in petitioner's assertion. The third paragraph of Section 16, Rule 141 of the Rules of Court states

that:

The legal fees shall be a lien on the monetary or property judgment in favor of the pauper-litigant.

Respondents cannot invoke the above provision in their favor because it specifically applies to pauper-litigants. Nowhere in

the records does it appear that respondents are litigating as paupers, and as such are exempted from the payment of court

fees.18

The rule applicable to the case at bar is Section 5(a) of Rule 141 of the Rules of Court, which defines the two kinds of claims as:

(1) those which are immediately ascertainable; and (2) those which cannot be immediately ascertained as to the exact

amount. This second class of claims, where the exact amount still has to be finally determined by the courts based on evidence

presented, falls squarely under the third paragraph of said Section 5(a), which provides:

In case the value of the property or estate or the sum claimed is less or more in accordance with the appraisal of the

court, the difference of fee shall be refunded or paid as the case may be. (Underscoring ours)

In Pilipinas Shell Petroleum Corporation v. Court of Appeals,19 this Court pronounced that the above-quoted provision "clearly

contemplates an Initial payment of the filing fees corresponding to the estimated amount of the claim subject to adjustment

as to what later may be proved."20 Moreover, we reiterated therein the principle that the payment of filing fees cannot be

made contingent or dependent on the result of the case. Thus, an initial payment of the docket fees based on an estimated

amount must be paid simultaneous with the filing of the complaint. Otherwise, the court would stand to lose the filing fees

should the judgment later turn out to be adverse to any claim of the respondent heirs.

The matter of payment of docket fees is not a mere triviality. These fees are necessary to defray court expenses in the

handling of cases. Consequently, in order to avoid tremendous losses to the judiciary, and to the government as well, the

payment of docket fees cannot be made dependent on the outcome of the case, except when the claimant is a pauper-litigant.

Applied to the instant case, respondents have a specific claim - 1/3 of the value of all the partnership assets - but they did not

allege a specific amount. They did, however, estimate the partnership's total assets to be worth Thirty Million Pesos

(P30,000,000.00), in a letter21 addressed to petitioner. Respondents cannot now say that they are unable to make an estimate,

for the said letter and the admissions therein form part of the records of this case. They cannot avoid paying the initial docket

fees by conveniently omitting the said amount in their amended complaint. This estimate can be made the basis for the initial

docket fees that respondents should pay. Even if it were later established that the amount proved was less or more than the

amount alleged or estimated, Rule 141, Section 5(a) of the Rules of Court specifically provides that the court may refund the

'excess or exact additional fees should the initial payment be insufficient. It is clear that it is only the difference between the

amount finally awarded and the fees paid upon filing of this complaint that is subject to adjustment and which may be

subjected to alien.

In the oft-quoted case of Sun Insurance Office, Ltd. v. Hon. Maximiano Asuncion,22 this Court held that when the specific claim

"has been left for the determination by the court, the additional filing fee therefor shall constitute a lien on the judgment and

it shall be the responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the

additional fee." Clearly, the rules and jurisprudence contemplate the initial payment of filing and docket fees based on the

estimated claims of the plaintiff, and it is only when there is a deficiency that a lien may be constituted on the judgment award

until such additional fee is collected.

Based on the foregoing, the trial court erred in not dismissing the complaint outright despite their failure to pay the proper

docket fees. Nevertheless, as in other procedural rules, it may be liberally construed in certain cases if only to secure a just and

speedy disposition of an action. While the rule is that the payment of the docket fee in the proper amount should be adhered

to, there are certain exceptions which must be strictly construed.23

In recent rulings, this Court has relaxed the strict adherence to the Manchester doctrine, allowing the plaintiff to pay the

proper docket fees within a reasonable time before the expiration of the applicable prescriptive or reglementary period.24

In the recent case of National Steel Corp. v. Court of Appeals,25 this Court held that:

The court acquires jurisdiction over the action if the filing of the initiatory pleading is accompanied by the payment of

the requisite fees, or, if the fees are not paid at the time of the filing of the pleading, as of the time of full payment of

the fees within such reasonable time as the court may grant, unless, of course, prescription has set in the meantime.

It does not follow, however, that the trial court should have dismissed the complaint for failure of private respondent

to pay the correct amount of docket fees. Although the payment of the proper docket fees is a jurisdictional

requirement, the trial court may allow the plaintiff in an action to pay the same within a reasonable time before the

expiration of the applicable prescriptive or reglementary period. If the plaintiff fails to comply within this requirement,

the defendant should timely raise the issue of jurisdiction or else he would be considered in estoppel. In the latter

case, the balance between the appropriate docket fees and the amount actually paid by the plaintiff will be considered

a lien or any award he may obtain in his favor. (Underscoring ours)

Accordingly, the trial court in the case at bar should determine the proper docket fee based on the estimated amount that

respondents seek to collect from petitioner, and direct them to pay the same within a reasonable time, provided the

applicable prescriptive or reglementary period has not yet expired, Failure to comply therewith, and upon motion by

petitioner, the immediate dismissal of the complaint shall issue on jurisdictional grounds.

On the matter of improper venue, we find no error on the part of the trial court and the Court of Appeals in holding that the

case below is a personal action which, under the Rules, may be commenced and tried where the defendant resides or may be

found, or where the plaintiffs reside, at the election of the latter.26

Petitioner, however, insists that venue was improperly laid since the action is a real action involving a parcel of land that is

located outside the territorial jurisdiction of the court a quo. This contention is not well-taken. The records indubitably show

that respondents are asking that the assets of the partnership be accounted for, sold and distributed according to the

agreement of the partners. The fact that two of the assets of the partnership are parcels of land does not materially change

the nature of the action. It is an action in personam because it is an action against a person, namely, petitioner, on the basis of

his personal liability. It is not an action in rem where the action is against the thing itself instead of against the

person.27 Furthermore, there is no showing that the parcels of land involved in this case are being disputed. In fact, it is only

incidental that part of the assets of the partnership under liquidation happen to be parcels of land.

The time-tested case of Claridades v. Mercader, et al.,28 settled this issue thus:

The fact that plaintiff prays for the sale of the assets of the partnership, including the fishpond in question, did not

change the nature or character of the action, such sale being merely a necessary incident of the liquidation of the

partnership, which should precede and/or is part of its process of dissolution.

The action filed by respondents not only seeks redress against petitioner. It also seeks the enforcement of, and petitioner's

compliance with, the contract that the partners executed to formalize the partnership's dissolution, as well as to implement

the liquidation and partition of the partnership's assets. Clearly, it is a personal action that, in effect, claims a debt from

petitioner and seeks the performance of a personal duty on his part.29 In fine, respondents' complaint seeking the liquidation

and partition of the assets of the partnership with damages is a personal action which may be filed in the proper court where

any of the parties reside.30 Besides, venue has nothing to do with jurisdiction for venue touches more upon the substance or

merits of the case.31 As it is, venue in this case was properly laid and the trial court correctly ruled so.

On the third issue, petitioner asserts that the surviving spouse of Vicente Tabanao has no legal capacity to sue since she was

never appointed as administratrix or executrix of his estate. Petitioner's objection in this regard is misplaced. The surviving

spouse does not need to be appointed as executrix or administratrix of the estate before she can file the action. She and her

children are complainants in their own right as successors of Vicente Tabanao. From the very moment of Vicente Tabanao' s

death, his rights insofar as the partnership was concerned were transmitted to his heirs, for rights to the succession are

transmitted from the moment of death of the decedent.32

Whatever claims and rights Vicente Tabanao had against the partnership and petitioner were transmitted to respondents by

operation of law, more particularly by succession, which 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.33 Moreover, respondents became owners

of their respective hereditary shares from the moment Vicente Tabanao died.34

A prior settlement of the estate, or even the appointment of Salvacion Tabanao as executrix or administratrix, is not necessary

for any of the heirs to acquire legal capacity to sue. As successors who stepped into the shoes of their decedent upon his

death, they can commence any action originally pertaining to the decedent.35 From the moment of his death, his rights as a

partner and to demand fulfillment of petitioner's obligations as outlined in their dissolution agreement were transmitted to

respondents. They, therefore, had the capacity to sue and seek the court's intervention to compel petitioner to fulfill his

obligations.

Finally, petitioner contends that the trial court should have dismissed the complaint on the ground of prescription, arguing

that respondents' action prescribed four (4) years after it accrued in 1986. The trial court and the Court of Appeals gave scant

consideration to petitioner's hollow arguments, and rightly so.

The three (3) final stages of a partnership are: (1) dissolution; (2) winding-up; and (3) termination.36 The partnership, although

dissolved, continues to exist and its legal personality is retained, at which time it completes the winding up of its affairs,

including the partitioning and distribution of the net partnership assets to the partners.37 For as long as the partnership exists,

any of the partners may demand an accounting of the partnership's business. Prescription of the said right starts to run only

upon the dissolution of the partnership when the final accounting is done.38

Contrary to petitioner's protestations that respondents' right to inquire into the business affairs of the partnership accrued in

1986, prescribing four (4) years thereafter, prescription had not even begun to run in the absence of a final accounting. Article

1842 of the Civil Code provides:

The right to an account of his interest shall accrue to any partner, or his legal representative as against the winding up

partners or the surviving partners or the person or partnership continuing the business, at the date of dissolution, in

the absence of any agreement to the contrary.

Applied in relation to Articles 1807 and 1809, which also deal with the duty to account, the above-cited provision states that

the right to demand an accounting accrues at the date of dissolution in the absence of any agreement to the contrary. When a

final accounting is made, it is only then that prescription begins to run. In the case at bar, no final accounting has been made,

and that is precisely what respondents are seeking in their action before the trial court, since petitioner has failed or refused

to render an accounting of the partnership's business and assets. Hence, the said action is not barred by prescription.

In fine, the trial court neither erred nor abused its discretion when it denied petitioner's motions to dismiss. Likewise, the

Court of Appeals did not commit reversible error in upholding the trial court's orders. Precious time has been lost just to settle

this preliminary issue, with petitioner resurrecting the very same arguments from the trial court all the way up to the Supreme

Court. The litigation of the merits and substantial issues of this controversy is now long overdue and must proceed without

further delay.

WHEREFORE, in view of all the foregoing, the instant petition is DENIED for lack of merit, and the case isREMANDED to the

Regional Trial Court of Cadiz City, Branch 60, which is ORDERED to determine the proper docket fee based on the estimated

amount that plaintiffs therein seek to collect, and direct said plaintiffs to pay the same within a reasonable time, provided the

applicable prescriptive or reglementary period has not yet expired. Thereafter, the trial court is ORDERED to conduct the

appropriate proceedings in Civil Case No. 416-C.

Costs against petitioner.1âwphi1.nêt

SO ORDERED.

JOHNNY S. RABADILLA,[1] petitioner, vs. COURT OF APPEALS AND MARIA MARLENA[2] COSCOLUELLA Y BELLEZA

VILLACARLOS, respondents.

D E C I S I O N

PURISIMA, J.:

This is a petition for review of the decision of the Court of Appeals,[3] dated December 23, 1993, in CA-G.R. No. CV-

35555, which set aside the decision of Branch 52 of the Regional Trial Court in Bacolod City, and ordered the

defendants-appellees (including herein petitioner), as heirs of Dr. Jorge Rabadilla, to reconvey title over Lot No. 1392,

together with its fruits and interests, to the estate of Aleja Belleza.

The antecedent facts are as follows:

In a Codicil appended to the Last Will and Testament of testatrix Aleja Belleza, Dr. Jorge Rabadilla, predecessor-in-

interest of the herein petitioner, Johnny S. Rabadilla, was instituted as a devisee of 511, 855 square meters of that

parcel of land surveyed as Lot No. 1392 of the Bacolod Cadastre. The said Codicil, which was duly probated and

admitted in Special Proceedings No. 4046 before the then Court of First Instance of Negros Occidental, contained the

following provisions:

"FIRST

I give, leave and bequeath the following property owned by me to Dr. Jorge Rabadilla resident of 141 P.

Villanueva, Pasay City:

(a) Lot No. 1392 of the Bacolod Cadastre, covered by Transfer Certificate of Title No. RT-4002 (10942), which is

registered in my name according to the records of the Register of Deeds of Negros Occidental.

(b) That should Jorge Rabadilla die ahead of me, the aforementioned property and the rights which I shall set

forth hereinbelow, shall be inherited and acknowledged by the children and spouse of Jorge Rabadilla.

xxx

FOURTH

(a)....It is also my command, in this my addition (Codicil), that should I die and Jorge Rabadilla shall have

already received the ownership of the said Lot No. 1392 of the Bacolod Cadastre, covered by Transfer

Certificate of Title No. RT-4002 (10942), and also at the time that the lease of Balbinito G. Guanzon of the said

lot shall expire, Jorge Rabadilla shall have the obligation until he dies, every year to give to Maria Marlina

Coscolluela y Belleza, Seventy (75) (sic) piculs of Export sugar and Twenty Five (25) piculs of Domestic sugar,

until the said Maria Marlina Coscolluela y Belleza dies.

FIFTH

(a) Should Jorge Rabadilla die, his heir to whom he shall give Lot No. 1392 of the Bacolod Cadastre, covered by

Transfer Certificate of Title No. RT-4002 (10492), shall have the obligation to still give yearly, the sugar as

specified in the Fourth paragraph of his testament, to Maria Marlina Coscolluela y Belleza on the month of

December of each year.

SIXTH

I command, in this my addition (Codicil) that the Lot No. 1392, in the event that the one to whom I have left

and bequeathed, and his heir shall later sell, lease, mortgage this said Lot, the buyer, lessee, mortgagee, shall

have also the obligation to respect and deliver yearly ONE HUNDRED (100) piculs of sugar to Maria Marlina

Coscolluela y Belleza, on each month of December, SEVENTY FIVE (75) piculs of Export and TWENTY FIVE (25)

piculs of Domestic, until Maria Marlina shall die, lastly should the buyer, lessee or the mortgagee of this lot,

not have respected my command in this my addition (Codicil), Maria Marlina Coscolluela y Belleza, shall

immediately seize this Lot No. 1392 from my heir and the latter's heirs, and shall turn it over to my near

desendants, (sic) and the latter shall then have the obligation to give the ONE HUNDRED (100) piculs of sugar

until Maria Marlina shall die. I further command in this my addition (Codicil) that my heir and his heirs of this

Lot No. 1392, that they will obey and follow that should they decide to sell, lease, mortgage, they cannot

negotiate with others than my near descendants and my sister."[4]

Pursuant to the same Codicil, Lot No. 1392 was transferred to the deceased, Dr. Jorge Rabadilla, and Transfer

Certificate of Title No. 44498 thereto issued in his name.

Dr. Jorge Rabadilla died in 1983 and was survived by his wife Rufina and children Johnny (petitioner), Aurora, Ofelia

and Zenaida, all surnamed Rabadilla.

On August 21, 1989, Maria Marlena Coscolluela y Belleza Villacarlos brought a complaint, docketed as Civil Case No.

5588, before Branch 52 of the Regional Trial Court in Bacolod City, against the above-mentioned heirs of Dr. Jorge

Rabadilla, to enforce the provisions of subject Codicil. The Complaint alleged that the defendant-heirs violated the

conditions of the Codicil, in that:

1. Lot No. 1392 was mortgaged to the Philippine National Bank and the Republic Planters Bank in disregard of

the testatrix's specific instruction to sell, lease, or mortgage only to the near descendants and sister of the

testatrix.

2. Defendant-heirs failed to comply with their obligation to deliver one hundred (100) piculs of sugar (75 piculs

export sugar and 25 piculs domestic sugar) to plaintiff Maria Marlena Coscolluela y Belleza from sugar crop

years 1985 up to the filing of the complaint as mandated by the Codicil, despite repeated demands for

compliance.

3. The banks failed to comply with the 6th paragraph of the Codicil which provided that in case of the sale,

lease, or mortgage of the property, the buyer, lessee, or mortgagee shall likewise have the obligation to

deliver 100 piculs of sugar per crop year to herein private respondent.

The plaintiff then prayed that judgment be rendered ordering defendant-heirs to reconvey/return-Lot No. 1392 to the

surviving heirs of the late Aleja Belleza, the cancellation of TCT No. 44498 in the name of the deceased, Dr. Jorge

Rabadilla, and the issuance of a new certificate of title in the names of the surviving heirs of the late Aleja Belleza.

On February 26, 1990, the defendant-heirs were declared in default but on March 28, 1990 the Order of Default was

lifted, with respect to defendant Johnny S. Rabadilla, who filed his Answer, accordingly.

During the pre-trial, the parties admitted that:

On November 15, 1998, the plaintiff (private respondent) and a certain Alan Azurin, son-in-law of the herein petitioner

who was lessee of the property and acting as attorney-in-fact of defendant-heirs, arrived at an amicable settlement

and entered into a Memorandum of Agreement on the obligation to deliver one hundred piculs of sugar, to the

following effect:

"That for crop year 1988-89, the annuity mentioned in Entry No. 49074 of TCT No. 44489 will be delivered not

later than January of 1989, more specifically, to wit:

75 piculs of 'A' sugar, and 25 piculs of 'B' sugar, or then existing in any of our names, Mary

Rose Rabadilla y Azurin or Alan Azurin, during December of each sugar crop year, in Azucar

Sugar Central; and, this is considered compliance of the annuity as mentioned, and in the

same manner will compliance of the annuity be in the next succeeding crop years.

That the annuity above stated for crop year 1985-86, 1986-87, and 1987-88, will be complied in cash

equivalent of the number of piculs as mentioned therein and which is as herein agreed upon, taking into

consideration the composite price of sugar during each sugar crop year, which is in the total amount of ONE

HUNDRED FIVE THOUSAND PESOS (P105,000.00).

That the above-mentioned amount will be paid or delivered on a staggered cash installment, payable on or before the

end of December of every sugar crop year, to wit:

For 1985-86, TWENTY SIX THOUSAND TWO HUNDRED FIFTY (P26,250.00) Pesos, payable on or before December of

crop year 1988-89;

For 1986-87, TWENTY SIX THOUSAND TWO HUNDRED FIFTY (P26,250.00) Pesos, payable on or before December of

crop year 1989-90;

For 1987-88, TWENTY SIX THOUSAND TWO HUNDRED FIFTY (P26,250.00) Pesos, payable on or before December of

crop year 1990-91; and

For 1988-89, TWENTY SIX THOUSAND TWO HUNDRED FIFTY (P26,250.00) Pesos, payable on or before December of

crop year 1991-92."[5]

However, there was no compliance with the aforesaid Memorandum of Agreement except for a partial delivery of

50.80 piculs of sugar corresponding to sugar crop year 1988 -1989.

On July 22, 1991, the Regional Trial Court came out with a decision, dismissing the complaint and disposing as follows:

"WHEREFORE, in the light of the aforegoing findings, the Court finds that the action is prematurely filed as no

cause of action against the defendants has as yet arose in favor of plaintiff. While there maybe the non-

performance of the command as mandated exaction from them simply because they are the children of Jorge

Rabadilla, the title holder/owner of the lot in question, does not warrant the filing of the present complaint.

The remedy at bar must fall. Incidentally, being in the category as creditor of the left estate, it is opined that

plaintiff may initiate the intestate proceedings, if only to establish the heirs of Jorge Rabadilla and in order to

give full meaning and semblance to her claim under the Codicil.

In the light of the aforegoing findings, the Complaint being prematurely filed is DISMISSED without prejudice.

SO ORDERED."[6]

On appeal by plaintiff, the First Division of the Court of Appeals reversed the decision of the trial court; ratiocinating

and ordering thus:

"Therefore, the evidence on record having established plaintiff-appellant's right to receive 100 piculs of sugar

annually out of the produce of Lot No. 1392; defendants-appellee's obligation under Aleja Belleza's codicil, as

heirs of the modal heir, Jorge Rabadilla, to deliver such amount of sugar to plaintiff-appellant; defendants-

appellee's admitted non-compliance with said obligation since 1985; and, the punitive consequences enjoined

by both the codicil and the Civil Code, of seizure of Lot No. 1392 and its reversion to the estate of Aleja Belleza

in case of such non-compliance, this Court deems it proper to order the reconveyance of title over Lot No.

1392 from the estates of Jorge Rabadilla to the estate of Aleja Belleza. However, plaintiff-appellant must

institute separate proceedings to re-open Aleja Belleza's estate, secure the appointment of an administrator,

and distribute Lot No. 1392 to Aleja Belleza's legal heirs in order to enforce her right, reserved to her by the

codicil, to receive her legacy of 100 piculs of sugar per year out of the produce of Lot No. 1392 until she dies.

Accordingly, the decision appealed from is SET ASIDE and another one entered ordering defendants-appellees,

as heirs of Jorge Rabadilla, to reconvey title over Lot No. 1392, together with its fruits and interests, to the

estate of Aleja Belleza.

SO ORDERED."[7]

Dissatisfied with the aforesaid disposition by the Court of Appeals, petitioner found his way to this Court via the

present petition, contending that the Court of Appeals erred in ordering the reversion of Lot 1392 to the estate of the

testatrix Aleja Belleza on the basis of paragraph 6 of the Codicil, and in ruling that the testamentary institution of Dr.

Jorge Rabadilla is a modal institution within the purview of Article 882 of the New Civil Code.

The petition is not impressed with merit.

Petitioner contends that the Court of Appeals erred in resolving the appeal in accordance with Article 882 of the New

Civil Code on modal institutions and in deviating from the sole issue raised which is the absence or prematurity of the

cause of action. Petitioner maintains that Article 882 does not find application as there was no modal institution and

the testatrix intended a mere simple substitution - i.e. the instituted heir, Dr. Jorge Rabadilla, was to be substituted by

the testatrix's "near descendants" should the obligation to deliver the fruits to herein private respondent be not

complied with. And since the testatrix died single and without issue, there can be no valid substitution and such

testamentary provision cannot be given any effect.

The petitioner theorizes further that there can be no valid substitution for the reason that the substituted heirs are

not definite, as the substituted heirs are merely referred to as "near descendants" without a definite identity or

reference as to who are the "near descendants" and therefore, under Articles 843[8] and 845[9] of the New Civil Code,

the substitution should be deemed as not written.

The contentions of petitioner are untenable. Contrary to his supposition that the Court of Appeals deviated from the

issue posed before it, which was the propriety of the dismissal of the complaint on the ground of prematurity of cause

of action, there was no such deviation. The Court of Appeals found that the private respondent had a cause of action

against the petitioner. The disquisition made on modal institution was, precisely, to stress that the private respondent

had a legally demandable right against the petitioner pursuant to subject Codicil; on which issue the Court of Appeals

ruled in accordance with law.

It is a general rule under the law on succession that successional rights are transmitted from the moment of death of

the decedent[10] and compulsory heirs are called to succeed by operation of law. The legitimate children and

descendants, in relation to their legitimate parents, and the widow or widower, are compulsory heirs.[11] Thus, the

petitioner, his mother and sisters, as compulsory heirs of the instituted heir, Dr. Jorge Rabadilla, succeeded the latter

by operation of law, without need of further proceedings, and the successional rights were transmitted to them from

the moment of death of the decedent, Dr. Jorge Rabadilla.

Under Article 776 of the New Civil Code, inheritance includes all the property, rights and obligations of a person, not

extinguished by his death. Conformably, whatever rights Dr. Jorge Rabadilla had by virtue of subject Codicil were

transmitted to his forced heirs, at the time of his death. And since obligations not extinguished by death also form part

of the estate of the decedent; corollarily, the obligations imposed by the Codicil on the deceased Dr. Jorge Rabadilla,

were likewise transmitted to his compulsory heirs upon his death.

In the said Codicil, testatrix Aleja Belleza devised Lot No. 1392 to Dr. Jorge Rabadilla, subject to the condition that the

usufruct thereof would be delivered to the herein private respondent every year. Upon the death of Dr. Jorge

Rabadilla, his compulsory heirs succeeded to his rights and title over the said property, and they also assumed his

(decedent's) obligation to deliver the fruits of the lot involved to herein private respondent. Such obligation of the

instituted heir reciprocally corresponds to the right of private respondent over the usufruct, the fulfillment or

performance of which is now being demanded by the latter through the institution of the case at bar. Therefore,

private respondent has a cause of action against petitioner and the trial court erred in dismissing the complaint below.

Petitioner also theorizes that Article 882 of the New Civil Code on modal institutions is not applicable because what

the testatrix intended was a substitution - Dr. Jorge Rabadilla was to be substituted by the testatrix's near descendants

should there be noncompliance with the obligation to deliver the piculs of sugar to private respondent.

Again, the contention is without merit.

Substitution is the designation by the testator of a person or persons to take the place of the heir or heirs first

instituted. Under substitutions in general, the testator may either (1) provide for the designation of another heir to

whom the property shall pass in case the original heir should die before him/her, renounce the inheritance or be

incapacitated to inherit, as in a simple substitution,[12] or (2) leave his/her property to one person with the express

charge that it be transmitted subsequently to another or others, as in a fideicommissary substitution.[13] The Codicil

sued upon contemplates neither of the two.

In simple substitutions, the second heir takes the inheritance in default of the first heir by reason of incapacity,

predecease or renunciation.[14] In the case under consideration, the provisions of subject Codicil do not provide that

should Dr. Jorge Rabadilla default due to predecease, incapacity or renunciation, the testatrix's near descendants

would substitute him. What the Codicil provides is that, should Dr. Jorge Rabadilla or his heirs not fulfill the conditions

imposed in the Codicil, the property referred to shall be seized and turned over to the testatrix's near descendants.

Neither is there a fideicommissary substitution here and on this point, petitioner is correct. In a fideicommissary

substitution, the first heir is strictly mandated to preserve the property and to transmit the same later to the second

heir.[15] In the case under consideration, the instituted heir is in fact allowed under the Codicil to alienate the property

provided the negotiation is with the near descendants or the sister of the testatrix. Thus, a very important element of

a fideicommissary substitution is lacking; the obligation clearly imposing upon the first heir the preservation of the

property and its transmission to the second heir. "Without this obligation to preserve clearly imposed by the testator

in his will, there is no fideicommissary substitution."[16] Also, the near descendants' right to inherit from the testatrix is

not definite. The property will only pass to them should Dr. Jorge Rabadilla or his heirs not fulfill the obligation to

deliver part of the usufruct to private respondent.

Another important element of a fideicommissary substitution is also missing here. Under Article 863, the second heir

or the fideicommissary to whom the property is transmitted must not be beyond one degree from the first heir or the

fiduciary. A fideicommissary substitution is therefore, void if the first heir is not related by first degree to the second

heir.[17] In the case under scrutiny, the near descendants are not at all related to the instituted heir, Dr. Jorge Rabadilla.

The Court of Appeals erred not in ruling that the institution of Dr. Jorge Rabadilla under subject Codicil is in the nature

of a modal institution and therefore, Article 882 of the New Civil Code is the provision of law in point. Articles 882 and

883 of the New Civil Code provide:

Art. 882. The statement of the object of the institution or the application of the property left by the testator,

or the charge imposed on him, shall not be considered as a condition unless it appears that such was his

intention.

That which has been left in this manner may be claimed at once provided that the instituted heir or his heirs

give security for compliance with the wishes of the testator and for the return of anything he or they may

receive, together with its fruits and interests, if he or they should disregard this obligation.

Art. 883. When without the fault of the heir, an institution referred to in the preceding article cannot take

effect in the exact manner stated by the testator, it shall be complied with in a manner most analogous to and

in conformity with his wishes.

The institution of an heir in the manner prescribed in Article 882 is what is known in the law of succession as

an institucion sub modo or a modal institution. In a modal institution, the testator states (1) the object of the

institution, (2) the purpose or application of the property left by the testator, or (3) the charge imposed by the testator

upon the heir.[18] A "mode" imposes an obligation upon the heir or legatee but it does not affect the efficacy of his

rights to the succession.[19] On the other hand, in a conditional testamentary disposition, the condition must happen or

be fulfilled in order for the heir to be entitled to succeed the testator. The condition suspends but does not obligate;

and the mode obligates but does not suspend.[20] To some extent, it is similar to a resolutory condition.[21]

From the provisions of the Codicil litigated upon, it can be gleaned unerringly that the testatrix intended that subject

property be inherited by Dr. Jorge Rabadilla. It is likewise clearly worded that the testatrix imposed an obligation on

the said instituted heir and his successors-in-interest to deliver one hundred piculs of sugar to the herein private

respondent, Marlena Coscolluela Belleza, during the lifetime of the latter. However, the testatrix did not make Dr.

Jorge Rabadilla's inheritance and the effectivity of his institution as a devisee, dependent on the performance of the

said obligation. It is clear, though, that should the obligation be not complied with, the property shall be turned over

to the testatrix's near descendants. The manner of institution of Dr. Jorge Rabadilla under subject Codicil is evidently

modal in nature because it imposes a charge upon the instituted heir without, however, affecting the efficacy of such

institution.

Then too, since testamentary dispositions are generally acts of liberality, an obligation imposed upon the heir should

not be considered a condition unless it clearly appears from the Will itself that such was the intention of the testator.

In case of doubt, the institution should be considered as modal and not conditional.[22]

Neither is there tenability in the other contention of petitioner that the private respondent has only a right of usufruct

but not the right to seize the property itself from the instituted heir because the right to seize was expressly limited to

violations by the buyer, lessee or mortgagee.

In the interpretation of Wills, when an uncertainty arises on 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.[23] Such construction as will sustain and uphold the Will in all its parts must be

adopted.[24]

Subject Codicil provides that the instituted heir is under obligation to deliver One Hundred (100) piculs of sugar yearly

to Marlena Belleza Coscuella. Such obligation is imposed on the instituted heir, Dr. Jorge Rabadilla, his heirs, and their

buyer, lessee, or mortgagee should they sell, lease, mortgage or otherwise negotiate the property involved. The

Codicil further provides that in the event that the obligation to deliver the sugar is not respected, Marlena Belleza

Coscuella shall seize the property and turn it over to the testatrix's near descendants. The non-performance of the said

obligation is thus with the sanction of seizure of the property and reversion thereof to the testatrix's near

descendants. Since the said obligation is clearly imposed by the testatrix, not only on the instituted heir but also on his

successors-in-interest, the sanction imposed by the testatrix in case of non-fulfillment of said obligation should equally

apply to the instituted heir and his successors-in-interest.

Similarly unsustainable is petitioner's submission that by virtue of the amicable settlement, the said obligation

imposed by the Codicil has been assumed by the lessee, and whatever obligation petitioner had become the obligation

of the lessee; that petitioner is deemed to have made a substantial and constructive compliance of his obligation

through the consummated settlement between the lessee and the private respondent, and having consummated a

settlement with the petitioner, the recourse of the private respondent is the fulfillment of the obligation under the

amicable settlement and not the seizure of subject property.

Suffice it to state that a Will is a personal, solemn, revocable and free act by which a person disposes of his property,

to take effect after his death.[25] Since the Will expresses the manner in which a person intends how his properties be

disposed, the wishes and desires of the testator must be strictly followed. Thus, a Will cannot be the subject of a

compromise agreement which would thereby defeat the very purpose of making a Will.

WHEREFORE, the petition is hereby DISMISSED and the decision of the Court of Appeals, dated December 23, 1993, in

CA-G.R. No. CV-35555 AFFIRMED. No pronouncement as to costs

SO ORDERED.

BELINDA TAREDO, for herself and in representation of her brothers and sisters, and TEOFILA CORPUZ TANEDO, representing

her minor daughter VERNA TANEDO, petitioners, vs. THE COURT OF APPEALS, SPOUSES RICARDO M. TAREDO AND

TERESITA BARERA TAREDO,respondents.

D E C I S I O N

PANGANIBAN, J.:

Is a sale of future inheritance valid? In multiple sales of the same real property, who has preference in ownership? What

is the probative value of the lower court’s finding of good faith in registration of such sales in the registry of property? These

are the main questions raised in this Petition for review on certiorari under Rule 45 of the Rules of Court to set aside and

reverse the Decision1 of the Court of Appeals2 in CA-G.R. CV NO. 24987 promulgated on September 26, 1991 affirming the

decision of the Regional Trial Court, Branch 63, Third Judicial Region, Tarlac, Tarlac in Civil Case No. 6328, and its Resolution

denying reconsideration thereof, promulgated on May 27, 1992.

By the Court’s Resolution on October 25, 1995, this case (along with several others) was transferred from the First to the

Third Division and after due deliberation, the Court assigned it to the undersigned ponenle for the writing of this Decision.

The Facts

On October 20, 1962, Lazardo Tañedo executed a notarized deed of absolute sale in favor of his eldest brother, Ricardo

Tañedo, and the latter’s wife, Teresita Barera, private respondents herein, whereby he conveyed to the latter in consideration

of P1,500.00, “one hectare of whatever share I shall have over Lot No. 191 of the cadastral survey of Gerona, Province of

Tarlac and covered by Title T-l3829 of the Register of Deeds of Tarlac,” the said property being his “future inheritance” from

his parents (Exh. 1). Upon the death of his father Matias, Lazaro executed an “Affidavit of Conformity” dated February 28,

1980 (Exh. 3) to “re-affirm, respect. acknowledge and validate the sale I made in 1962.” On January 13, 1981, Lazaro executed

another notarized deed of sale in favor of private respondents covering his “undivided ONE TWELVE (1/12) of a parcel of land

known as Lot 191 x x (Exh. 4). He acknowledged therein his receipt of P 10,000.00 as consideration therefor. In February 1981,

Ricardo learned that Lazaro sold the same property to his children, petitioners herein, through a deed of sale datedDecember

29, 1980 (Exh. E). On June 7, 1982, private respondents recorded the Deed of Sale (Exh. 4) in their favor in the Registry of

Deeds and the corresponding entry was made in Transfer Certificate of Title No. 166451 (Exh. 5).

Petitioners on July 16, 1982 filed a complaint for rescission (plus damages) of the deeds of sale executed by Lazaro in

favor of private respondents covering the property inherited by Lazaro from his father.

Petitioners claimed that their father, Lazaro, executed an “Absolute Deed of Sale” dated December 29, 1980 (Exit. E),

conveying to his ten children his allotted portion under the extrajudicial partition executed by the heirs of Matias, which deed

included the land in litigation (Lot 191).

Petitioners also presented in evidence: (1) a private writing purportedly prepared and signed by Matias dated December

28, 1978, stating that it was his desire that whatever inheritance Lazaro would receive from him should be given to his

(Lazaro’s) children (Exh. A); (2) a typewritten document dated March 10, 1979 signed by Lazaro in the presence of two

witnesses, wherein he confirmed that he would voluntarily abide by the wishes of his father, Matias, to give to his (Lazaro’s)

children all the property he would inherit from the latter (Exh. B); and (3) a letter dated January 1, 1980 of Lazaro to his

daughter, Carmela, stating that his share in the extrajudicial settlement of the estate of his father was intended for his

children, petitioners herein (Exh. C).

Private respondents, however presented in evidence a “Deed of Revocation of a Deed of Sale” dated March 12,

1981 (Exh. 6), wherein Lazaro revoked the sale in favor of petitioners for the reason that it was “simulated or fictitious -

without any consideration whatsoever.”

Shortly after the case a quo was filed, Lazaro executed a sworn statement (Exh. G) which virtually repudiated the contents

of the Deed of Revocation of a Deed of Sale (Exh. 6) and the Deed of Sale (Exh. 4) in favor of private respondents. However,

Lazaro testified that he sold the property to Ricardo, and that it was a lawyer who induced him to execute a deed of sale in

favor of his children after giving him five pesos (P5.00) to buy a “drink” (TSN September 18, 1985, pp. 204-205).

The trial court decided in favor of private respondents, holding that petitioners failed “to adduce a preponderance of

evidence to support (their) claim.” On appeal, the Court of Appeals affirmed the decision of the trial court, ruling that the

Deed of Sale dated January 13, 1981 (Exh. 9) was valid and that its registration in good faith vested title in said respondents.

The Issues

Petitioners raised the following “errors” in the respondent Court, which they also now allege in the instant Petition:

“I. The trial court erred in concluding that the Contract of Sale of October 20, 1962 (Exhibit 7, Answer) is merely voidable or

annulable and not void ab initio pursuant to paragraph 2 of Article 1347 of the New Civil Code involving as it does a ‘future

inheritance’.

“II. The trial court erred in holding that defendants-appellees acted in good faith in registering the deed of sale of January 13,

1981 (Exhibit 9) with the Register of Deeds of Tarlac and therefore ownership of the land in question passed on to defendants-

appellees.

“III. The trial court erred in ignoring and failing to consider the testimonial and documentary evidence of plaintiffs-appellants

which clearly established by preponderance of evidence that they are indeed the legitimate and lawful owners of the property

in question.

“IV. The decision is contrary to law and the facts of the case and the conclusions drawn from the established facts are illogical

and off-tangent.”

From the foregoing, the issues may be restated as follows:

1. Is the sale of a future inheritance valid?

2. Was the subsequent execution on January 13, 1981 (and registration with the Registry of Property) of a deed of

sale covering the same property to the same buyers valid?

3. May this Court review the findings of the respondent Court (a) holding that the buyers acted in good faith in

registering the said subsequent deed of sale and (b) in “failing to consider petitioners’ evidence”? Are the

conclusions of the respondent Court “illogical and off-tangent”?

The Court’s Ruling

At the outset, let it be clear that the “errors” which are reviewable by this Court in this petition for review on certiorari

are only those allegedly committed by the respondent Court of Appeals and not directly those of the trial court, which is not a

party here. The “assignment of errors” in the petition quoted above are therefore totally misplaced, and for that reason, the

petition should be dismissed. But in order to give the parties substantial justice we have decided to delve into the issues as

above re-stated. The errors attributed by petitioners to the latter (trial) court will be discussed only insofar as they are relevant

to the appellate court’s assailed Decision and Resolution.

The sale made in 1962 involving future inheritance is not really at issue here. In context, the assailed Decision conceded

“it may be legally correct that a contract of sale of anticipated future inheritance is null and void.”3

But to remove all doubts, we hereby categorically rule that, pursuant to Article 1347 of the Civil Code, “(n)o contract may

be entered into upon a future inheritance except in cases expressly authorized by law.”

Consequently, said contract made in 1962 is not valid and cannot be the source of any right nor the creator of any

obligation between the parties.

Hence, the “affidavit of conformity” dated February 28, 1980, insofar as it sought to validate or ratify the 1962 sale, is also

useless and, in the words of the respondent Court, “suffers from the same infirmity.” Even private respondents in their

memorandum4 concede this.

However, the documents that are critical to the resolution of this case are: (a) the deed of sale of January 13, 1981 in

favor of private respondents covering Lazaro’s undivided inheritance of one-twelfth (1/12) share in Lot No. 191, which was

subsequently registered on June 7, 1982; and (b) the deed of sale dated December 29, 1980 in favor of petitioners covering

the same property. These two documents were executed after the death of Matias (and his spouse) and after a deed of

extrajudicial settlement of his (Matias’) estate was executed, thus vesting in Lazaro actual title over said property. In other

words, these dispositions, though conflicting, were no longer infected with the infirmities of the 1962 sale.

Petitioners contend that what was sold on January 13, 1981 was only one-half hectare out of Lot No. 191, citing as

authority the trial court’s decision. As earlier pointed out, what is on review in these proceedings by this Court is the Court of

Appeals’ decision - which correctly identified the subject matter of the January 13, 1981 sale to be the entire undivided 1/12

share of Lazaro in Lot No. 191 and which is the same property disposed of on December 29, 1980 in favor of petitioners.

Critical in determining which of these two deeds should be given effect is the registration of the sale in favor of private

respondents with the register of deeds on June 7, 1982.

Article 1544 of the Civil Code governs the preferential rights of vendees in cases of multiple sales, as follows:

“Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who

may have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in

the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in

the absence thereof, to the person who presents the oldest title, provided there is good faith.”

The property in question is land, an immovable, and following the above-quoted law, ownership shall belong to the buyer

who in good faith registers it first in the registry of property. Thus, although the deed of sale in favor of private respondents

was later than the one in favor of petitioners, ownership would vest in the former because of the undisputed fact of

registration. On the other hand, petitioners have not registered the sale to them at all.

Petitioners contend that they were in possession of the property and that private respondents never took possession

thereof. As between two purchasers, the one who registered the sale in his favor has a preferred right over the other who has

not registered his title, even if the latter is in actual possession of the immovable property.5

As to third issue, while petitioners conceded the fact of registration, they nevertheless contended that it was done in bad

faith. On this issue, the respondent Court ruled:

“Under the second assignment of error, plaintiffs-appellants contend that defendants-appellees acted in bad faith when they

registered the Deed of Sale in their favor as appellee Ricardo already knew of the execution of the deed of sale in favor of the

plaintiffs; appellants cite the testimony of plaintiff Belinda Tafledo to the effect that defendant Ricardo Tañedo called her up

on January 4 or 5, 1981 to tell her that he was already the owner of the land in question ‘but the contract of sale between our

father and us were (sic) already consumated’ (pp. 9-10, tsn, January 6, 1984). This testimony is obviously self-serving, and

because it was a telephone conversation, the deed of sale dated December 29, 1980 was not shown; Belinda merely told her

uncle that there was already a document showing that plaintiffs are the owners (p. 80). Ricardo Tañedo controverted this and

testified that he learned for the first time of the deed of sale executed by Lazaro in favor of his children ‘about a month or

sometime in February 1981’ (p. 111, tsn, Nov. 28, 1984). x x x”6

The respondent Court, reviewing the trial court’s findings, refused to overturn the latter’s assessment of the testimonial

evidence, as follows:

“We are not prepared to set aside the finding of the lower court upholding Ricardo Tanedo’s testimony, as it involves a matter

of credibility of witnesses which the trial judge, who presided at the hearing, was in a better position to resolve.” (Court of

Appeals’ Decision, p. 6.)

In this connection, we note the tenacious allegations made by petitioners, both in their basic petition and in their

memorandum, as follows:

1. The respondent Court allegedly ignored the claimed fact that respondent Ricardo “by fraud and deceit and with

foreknowledge” that the property in question had already been sold to petitioners, made Lazaro execute the

deed of January 13, 1981;

2. There is allegedly adequate evidence to show that only 1/2 of the purchase price of P10,000.00 was paid at the

time of the execution of the deed of sale, contrary to the written acknowledgment, thus showing bad faith;

3. There is allegedly sufficient evidence showing that the deed of revocation of the sale in favor of petitioners “was

tainted with fraud or deceit.”

4. There is allegedly enough evidence to show that private respondents “took undue advantage over the weakness

and unschooled and pitiful situation of Lazaro Tafledo . . .” and that respondent Ricardo Tañedo “exercised moral

ascendancy over his younger brother he being the eldest brother and who reached fourth year college of law and

at one time a former Vice-Governor of Tarlac, while his younger brother only attained first year high school x x x

“;

5. The respondent Court erred in not giving credence to petitioners’ evidence, especially Lazaro

Tañedo’s Sinumpaang Salaysay dated July 27, 1982 stating that Ricardo Tañedo deceived the former in executing

the deed of sale in favor of private respondents.

To be sure, there are indeed many conflicting documents and testimonies as well as arguments over their probative value

and significance. Suffice it to say, however, that all the above contentions involve questions of fact, appreciation of evidence

and credibility of witnesses, which are not proper in this review. It is well-settled that the Supreme Court is not a trier of facts.

In petitions for review under Rule 45 of the Revised Rules of Court, only questions of law may be raised and passed upon.

Absent any whimsical or capricious exercise of judgment, and unless the lack of any basis for the conclusions made by the

lower courts be amply demonstrated, the Supreme Court will not disturb their findings. At most, it appears that petitioners

have shown that their evidence was not believed by both the trial and the appellate courts, and that the said courts tended to

give more credence to the evidence presented by private respondents. But this in itself is not a reason for setting aside such

findings. We are far from convinced that both courts gravely abused their respective authorities and judicial prerogatives.

As held in the recent case of Chua Tiong Tay vs. Court of Appeals and Goidrock Construction and Development Corp.:7

“The Court has consistently held that the factual findings of the trial court, as well as the Court of Appeals, are final and

conclusive and may not be reviewed on appeal. Among the exceptional circumstances where a reassessment of facts found by

the lower courts is allowed are when the conclusion is a finding grounded entirely on speculation, surmises or conjectures;

when the inference made is manifestly absurd, mistaken or Impossible; when there is grave abuse of discretion in the

appreciation of facts; when the judgment is premised on a misapprehension of facts; when the findings went beyond the

issues of the case and the same are contrary to the admissions of both appellant and appellee. After a careful study of the case

at bench, we find none of the above grounds present to justify the re-evaluation of the findings of fact made by the courts

below.”

In the same vein, the ruling in the recent case of South Sea Surety and Insurance Company, Inc. vs. Hon. Court of Appeals,

et al.[8] is equally applicable to the present case:

“We see no valid reason to discard the factual conclusions of the appellate court. x x x (I)t is not the function of this Court to

assess and evaluate all over again the evidence, testimonial and documentary, adduced by the parties, particularly where,

such as here, the findings of both the trial court and the appellate court on the matter coincide.” (italics supplied)

WHEREFORE, the petition is DENIED and the assailed Decision of the Court of Appeals is AFFIRMED. No Costs.

SO ORDERED.

SPS. VIRGILIO F. SANTOS & ESPERANZA

LATI SANTOS, SPS.VICTORINO F. SANTOS, &

LAGRIMAS SANTOS, ERNESTO F. SANTOS, and

TADEO F. SANTOS,

Petitioners,

- versus -

SPS. JOSE LUMBAO and PROSERFINA LUMBAO,

Respondents.

G.R. No. 169129

Present:

YNARES-SANTIAGO, J.,

Chairperson,

AUSTRIA-MARTINEZ,

CALLEJO, SR.,*

CHICO-NAZARIO, and

NACHURA, JJ.

Promulgated:

March 28, 2007

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

D E C I S I O N

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure seeking

to annul and set aside the Decision[1] and Resolution[2] of the Court of Appeals in CA-G.R. CV No. 60450 entitled, Spouses Jose

Lumbao and Proserfina Lumbao v. Spouses Virgilio F. Santos and Esperanza Lati, Spouses Victorino F. Santos and Lagrimas F.

Santos, Ernesto F. Santos and Tadeo F. Santos, dated 8 June 2005 and 29 July 2005, respectively, which granted the appeal

filed by herein respondents Spouses Jose Lumbao and Proserfina Lumbao (Spouses Lumbao) and ordered herein petitioners

Spouses Virgilio F. Santos and Esperanza Lati, Spouses Victorino F. Santos and Lagrimas F. Santos, Ernesto F. Santos and Tadeo

F. Santos to reconvey to respondents Spouses Lumbao the subject property and to pay the latter attorney’s fees and litigation

expenses, thus, reversing the Decision[3] of the Regional Trial Court (RTC) of Pasig City, dated 17 June 1998 which dismissed the

Complaint for Reconveyance with Damages filed by respondents Spouses Lumbao for lack of merit.

Herein petitioners Virgilio, Victorino, Ernesto and Tadeo, all surnamed Santos, are the legitimate and surviving heirs of

the late Rita Catoc Santos (Rita), who died on20 October 1985. The other petitioners Esperanza Lati and Lagrimas Santos are

the daughters-in-law of Rita.

Herein respondents Spouses Jose Lumbao and Proserfina Lumbao are the alleged owners of the 107-square meter lot

(subject property), which they purportedly bought from Rita during her lifetime.

The facts of the present case are as follows:

On two separate occasions during her lifetime, Rita sold to respondents Spouses Lumbao the subject property which is a

part of her share in the estate of her deceased mother, Maria Catoc (Maria), who died intestate on 19 September 1978. On

the first occasion, Rita sold 100 square meters of her inchoate share in her mother’s estate through a document denominated

as “Bilihan ng Lupa,” dated 17 August 1979.[4] Respondents Spouses Lumbao claimed the execution of the aforesaid document

was witnessed by petitioners Virgilio and Tadeo, as shown by their signatures affixed therein. On the second occasion, an

additional seven square meters was added to the land as evidenced by a document also denominated as “Bilihan ng Lupa,”

dated 9 January 1981.[5]

After acquiring the subject property, respondents Spouses Lumbao took actual possession thereof and erected thereon a

house which they have been occupying as exclusive owners up to the present. As the exclusive owners of the subject

property, respondents Spouses Lumbao made several verbal demands upon Rita, during her lifetime, and thereafter upon

herein petitioners, for them to execute the necessary documents to effect the issuance of a separate title in favor of

respondents Spouses Lumbao insofar as the subject property is concerned. Respondents Spouses Lumbao alleged that prior

to her death, Rita informed respondent Proserfina Lumbao she could not deliver the title to the subject property because the

entire property inherited by her and her co-heirs from Maria had not yet been partitioned.

On 2 May 1986, the Spouses Lumbao claimed that petitioners, acting fraudulently and in conspiracy with one another,

executed a Deed of Extrajudicial Settlement,[6]adjudicating and partitioning among themselves and the other heirs, the estate

left by Maria, which included the subject property already sold to respondents Spouses Lumbao and now covered by TCT No.

81729[7] of the Registry of Deeds of Pasig City.

On 15 June 1992, respondents Spouses Lumbao, through counsel, sent a formal demand letter [8] to petitioners but

despite receipt of such demand letter, petitioners still failed and refused to reconvey the subject property to the respondents

Spouses Lumbao. Consequently, the latter filed a Complaint for Reconveyance with Damages[9] before the RTC of Pasig City.

Petitioners filed their Answer denying the allegations that the subject property had been sold to the respondents

Spouses Lumbao. They likewise denied that the Deed of Extrajudicial Settlement had been fraudulently executed because the

same was duly published as required by law. On the contrary, they prayed for the dismissal of the Complaint for lack of cause

of action because respondents Spouses Lumbao failed to comply with the Revised Katarungang Pambarangay Law under

Republic Act No. 7160, otherwise known as the Local Government Code of 1991, which repealed Presidential Decree No.

1508[10] requiring first resort to barangay conciliation.

Respondents Spouses Lumbao, with leave of court, amended their Complaint because they discovered that on 16

February 1990, without their knowledge, petitioners executed a Deed of Real Estate Mortgage in favor of Julieta S. Esplana for

the sum of P30,000.00. The said Deed of Real Estate Mortgage was annotated at the back of TCT No. PT-81729 on 26 April

1991. Also, in answer to the allegation of the petitioners that they failed to comply with the mandate of the Revised

Katarungang Pambarangay Law, respondents Spouses Lumbao said that the Complaint was filed directly in court in order that

prescription or the Statute of Limitations may not set in.

During the trial, respondents Spouses Lumbao presented Proserfina Lumbao and Carolina Morales as their witnesses,

while the petitioners presented only the testimony of petitioner Virgilio.

The trial court rendered a Decision on 17 June 1998, the dispositive portion of which reads as follows:

Premises considered, the instant complaint is hereby denied for lack of merit.

Considering that [petitioners] have incurred expenses in order to protect their interest, [respondents

spouses Lumbao] are hereby directed to pay [petitioners], to wit: 1) the amount ofP30,000.00 as attorney’s

fees and litigation expenses, and 2) costs of the suit.[11]

Aggrieved, respondents Spouses Lumbao appealed to the Court of Appeals. On 8 June 2005, the appellate court

rendered a Decision, thus:

WHEREFORE, premises considered, the present appeal is hereby GRANTED. The appealed Decision

dated June 17, 1998 of the Regional Trial Court of Pasig City, Branch 69 in Civil Case No. 62175 is hereby

REVERSED and SET ASIDE. A new judgment is hereby entered ordering [petitioners] to reconvey 107 square

meters of the subject [property] covered by TCT No. PT-81729 of the Registry of Deeds of Pasig City, Metro

Manila, and to pay to [respondents spouses Lumbao] the sum of P30,000.00 for attorney’s fees and litigation

expenses.

No pronouncement as to costs.[12]

Dissatisfied, petitioners filed a Motion for Reconsideration of the aforesaid Decision but it was denied in the

Resolution of the appellate court dated 29 July 2005 for lack of merit.

Hence, this Petition.

The grounds relied upon by the petitioners are the following:

I. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN REVERSING THE DECISION OF

THE TRIAL COURT, THEREBY CREATING A VARIANCE ON THE FINDINGS OF FACTS OF TWO COURTS.

II. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN ORDERING THE PETITIONERS TO

RECONVEY THE SUBJECT [PROPERTY] TO THE RESPONDENTS [SPOUSES LUMBAO] AND IN NOT RULING

THAT THEY ARE GUILTY OF LACHES, HENCE THEY CANNOT RECOVER THE LOT ALLEGEDLY SOLD TO

THEM.

III. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING HEREIN

PETITIONER[S] TO BE IN GOOD FAITH IN EXECUTING THE “DEED OF EXTRAJUDICIAL SETTLEMENT”

DATED [2 MAY 1986].

IV. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING THAT PETITIONERS

ARE NOT LEGALLY BOUND TO COMPLY WITH THE SUPPOSED BILIHAN NG LUPA DATED [17 AUGUST

1979] AND [9 JANUARY 1981] THAT WERE SUPPOSEDLY EXECUTED BY THE LATE RITA CATOC.

V. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING THAT

RESPONDENTS [SPOUSES LUMBAO’S] ACTION FOR RECONVEYANCE WITH DAMAGES CANNOT BE

SUPPORTED WITH AN UNENFORCEABLE DOCUMENTS, SUCH AS THE BILIHAN NG LUPA DATED [17

AUGUST 1979] AND [9 JANUARY 1981].

VI. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING THAT

RESPONDENTS [SPOUSES LUMBAO’S] COMPLAINT FOR RECONVEYANCE IS DISMISSABLE (SIC) FOR

NON COMPLIANCE OF THE MANDATE OF [P.D. NO.] 1508, AS AMENDED BY Republic Act No. 7160.

VII. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT FINDING THAT

RESPONDENTS [SPOUSES LUMBAO] SHOULD BE HELD LIABLE FOR PETITIONERS’ CLAIM FOR DAMAGES

AND ATTORNEY[‘]S FEES.

Petitioners ask this Court to scrutinize the evidence presented in this case, because they claim that the factual findings

of the trial court and the appellate court are conflicting. They allege that the findings of fact by the trial court revealed that

petitioners Virgilio and Tadeo did not witness the execution of the documents known as “Bilihan ng Lupa”; hence, this finding

runs counter to the conclusion made by the appellate court. And even assuming that they were witnesses to the aforesaid

documents, still, respondents Spouses Lumbao were not entitled to the reconveyance of the subject property because they

were guilty of laches for their failure to assert their rights for an unreasonable length of time. Since respondents Spouses

Lumbao had slept on their rights for a period of more than 12 years reckoned from the date of execution of the second

“Bilihan ng Lupa,” it would be unjust and unfair to the petitioners if the respondents will be allowed to recover the subject

property.

Petitioners allege they are in good faith in executing the Deed of Extrajudicial Settlement because even respondents

Spouses Lumbao’s witness, Carolina Morales, testified that neither petitioner Virgilio nor petitioner Tadeo was present during

the execution of the “Bilihan ng Lupa,” dated 17 August 1979 and 9 January 1981. Petitioners affirm that the Deed of

Extrajudicial Settlement was published in a newspaper of general circulation to give notice to all creditors of the estate subject

of partition to contest the same within the period prescribed by law. Since no claimant appeared to interpose a claim within

the period allowed by law, a title to the subject property was then issued in favor of the petitioners; hence, they are

considered as holders in good faith and therefore cannot be barred from entering into any subsequent transactions involving

the subject property.

Petitioners also contend that they are not bound by the documents denominated as “Bilihan ng Lupa” because the

same were null and void for the following reasons: 1) for being falsified documents because one of those documents made it

appear that petitioners Virgilio and Tadeo were witnesses to its execution and that they appeared personally before the

notary public, when in truth and in fact they did not; 2) the identities of the properties in the “Bilihan ng Lupa,” dated 17

August 1979 and 9 January 1981 in relation to the subject property in litigation were not established by the evidence

presented by the respondents Spouses Lumbao; 3) the right of the respondents Spouses Lumbao to lay their claim over the

subject property had already been barred through estoppel by laches; and 4) the respondents Spouses Lumbao’s claim over

the subject property had already prescribed.

Finally, petitioners claim that the Complaint for Reconveyance with Damages filed by respondents Spouses Lumbao

was dismissible because they failed to comply with the mandate of Presidential Decree No. 1508, as amended by Republic Act

No. 7160, particularly Section 412 of Republic Act No. 7160.

Given the foregoing, the issues presented by the petitioners may be restated as follows:

I. Whether or not the Complaint for Reconveyance with Damages filed by respondents

spouses Lumbao is dismissible for their failure to comply with the mandate of the Revised

Katarungang Pambarangay Law under R.A. No. 7160.

II. Whether or not the documents known as “Bilihan ng Lupa” are valid and enforceable, thus,

they can be the bases of the respondents spouses Lumbao’s action for reconveyance with damages.

III. Whether or not herein petitioners are legally bound to comply with the “Bilihan ng Lupa”

dated 17 August 1979 and 9 January 1981 and consequently, reconvey the subject property to herein

respondents spouses Lumbao.

It is well-settled that in the exercise of the Supreme Court’s power of review, the court is not a trier of facts and does

not normally undertake the re-examination of the evidence presented by the contending parties during the trial of the case

considering that the findings of fact of the Court of Appeals are conclusive and binding on the Court. [13] But, the rule is not

without exceptions. There are several recognized exceptions[14] in which factual issues may be resolved by this Court. One of

these exceptions is when the findings of the appellate court are contrary to those of the trial court. This exception is present

in the case at bar.

Going to the first issue presented in this case, it is the argument of the petitioners that the Complaint for Reconveyance

with Damages filed by respondents Spouses Lumbao should be dismissed for failure to comply with the barangay conciliation

proceedings as mandated by the Revised Katarungang Pambarangay Law under Republic Act No. 7160. This argument cannot

be sustained.

Section 408 of the aforesaid law and Administrative Circular No. 14-93 [15] provide that all disputes between parties

actually residing in the same city or municipality are subject to barangay conciliation. A prior recourse thereto is a pre-

condition before filing a complaint in court or any government offices. Non-compliance with the said condition precedent

could affect the sufficiency of the plaintiff’s cause of action and make his complaint vulnerable to dismissal on ground of lack

of cause of action or prematurity; but the same would not prevent a court of competent jurisdiction from exercising its power

of adjudication over the case before it, where the defendants failed to object to such exercise of jurisdiction.[16]

While it is true that the present case should first be referred to the Barangay Lupon for conciliation because the parties

involved herein actually reside in the same city (Pasig City) and the dispute between them involves a real property, hence, the

said dispute should have been brought in the city in which the real property, subject matter of the controversy, is located,

which happens to be the same city where the contending parties reside. In the event that respondents Spouses Lumbao

failed to comply with the said condition precedent, their Complaint for Reconveyance with Damages can be dismissed. In this

case, however, respondents Spouses Lumbao’s non-compliance with the aforesaid condition precedent cannot be considered

fatal. Although petitioners alleged in their answer that the Complaint for Reconveyance with Damages filed by respondents

spouses Lumbao should be dismissed for their failure to comply with the condition precedent, which in effect, made the

complaint prematurely instituted and the trial court acquired no jurisdiction to hear the case, yet, they did not file a Motion to

Dismiss the said complaint.

Emphasis must be given to the fact that the petitioners could have prevented the trial court from exercising

jurisdiction over the case had they filed a Motion to Dismiss. However, instead of doing so, they invoked the very same

jurisdiction by filing an answer seeking an affirmative relief from it. Worse, petitioners actively participated in the trial of the

case by presenting their own witness and by cross-examining the witnesses presented by the respondents Spouses Lumbao. It

is elementary that the active participation of a party in a case pending against him before a court is tantamount to recognition

of that court’s jurisdiction and a willingness to abide by the resolution of the case which will bar said party from later on

impugning the court’s jurisdiction.[17] It is also well-settled that the non-referral of a case for barangay conciliation when so

required under the law is not jurisdictional in nature and may therefore be deemed waived if not raised seasonably in a

motion to dismiss.[18] Hence, herein petitioners can no longer raise the defense of non-compliance with the barangay

conciliation proceedings to seek the dismissal of the complaint filed by the respondents Spouses Lumbao, because they

already waived the said defense when they failed to file a Motion to Dismiss.

As regards the second issue, petitioners maintain that the “Bilihan ng Lupa,” dated 17 August 1979 and 9 January 1981

are null and void for being falsified documents as it is made to appear that petitioners Virgilio and Tadeo were present in the

execution of the said documents and that the identities of the properties in those documents in relation to the subject

property has not been established by the evidence of the respondents Spouses Lumbao. Petitioners also claim that the

enforceability of those documents is barred by prescription of action and laches.

It is the petitioners’ incessant barking that the “Bilihan ng Lupa” documents dated 17 August 1979 and 9 January 1981

were falsified because it was made to appear that petitioners Virgilio and Tadeo were present in the executions thereof, and

their allegation that even respondents Spouses Lumbao’s witness Carolina Morales proved that said petitioners were not

present during the execution of the aforementioned documents. This is specious.

Upon examination of the aforesaid documents, this Court finds that in the “Bilihan ng Lupa,” dated 17 August 1979,

the signatures of petitioners Virgilio and Tadeo appeared thereon. Moreover, in petitioners’ Answer and Amended Answer to

the Complaint for Reconveyance with Damages, both petitioners Virgilio and Tadeo made anadmission that indeed they acted

as witnesses in the execution of the “Bilihan ng Lupa,” dated 17 August 1979.[19] However, in order to avoid their obligations in

the said “Bilihan ng Lupa,” petitioner Virgilio, in his cross-examination, denied having knowledge of the sale transaction and

claimed that he could not remember the same as well as his appearance before the notary public due to the length of time

that had passed. Noticeably, petitioner Virgilio did not categorically deny having signed the “Bilihan ng Lupa,” dated 17 August

1979 and in support thereof, his testimony in the cross-examination propounded by the counsel of the respondents Spouses

Lumbao is quoted hereunder:

ATTY. CHIU:

Q. Now, you said, Mr. Witness…Virgilio Santos, that you don’t know about this document which was

marked as Exhibit “A” for the [respondents spouses Lumbao]?

ATTY. BUGARING:

The question is misleading, your Honor. Counsel premised the question that he does not have any

knowledge but not that he does not know.

ATTY. CHIU:

Q. Being… you are one of the witnesses of this document? [I]s it not?

WITNESS:

A. No, sir.

Q. I am showing to you this document, there is a signature at the left hand margin of this document

Virgilio Santos, will you please go over the same and tell the court whose signature is this?

A. I don’t remember, sir, because of the length of time that had passed.

Q. But that is your signature?

A. I don’t have eyeglasses… My signature is different.

Q. You never appeared before this notary public Apolinario Mangahas?

A. I don’t remember.[20]

As a general rule, facts alleged in a party’s pleading are deemed admissions of that party and are binding upon him,

but this is not an absolute and inflexible rule. An answer is a mere statement of fact which the party filing it expects to prove,

but it is not evidence.[21] And in spite of the presence of judicial admissions in a party’s pleading, the trial court is still given

leeway to consider other evidence presented.[22] However, in the case at bar, as the Court of Appeals mentioned in its

Decision, “[herein petitioners] had not adduced any other evidence to override the admission made in their [A]nswer that

[petitioners Virgilio and Tadeo] actually signed the [Bilihan ng Lupa dated 17 August 1979] except that they were just misled as

to the purpose of the document, x x x.”[23] Virgilio’s answers were unsure and quibbled. Hence, the general rule that the

admissions made by a party in a pleading are binding and conclusive upon him applies in this case.

On the testimony of respondents Spouses Lumbao’s witness Carolina Morales, this Court adopts the findings made by

the appellate court. Thus -

[T]he trial court gave singular focus on her reply to a question during cross-examination if the [petitioners

Virgilio and Tadeo] were not with her and the vendor [Rita] during the transaction. It must be pointed out that

earlier in the direct examination of said witness, she confirmed that [respondents spouses Lumbao]

actually bought the lot from [Rita] (“nagkabilihan”). Said witness positively identified and confirmed the two

(2) documents evidencing the sale in favor of [respondents spouse Lumbao]. Thus, her subsequent statement

that the [petitioners Virgilio and Tadeo] were not with them during the transaction does not automatically

imply that [petitioners Virgilio and Tadeo] did not at any time sign as witnesses as to the deed of sale attesting

to their mother’s voluntary act of selling a portion of her share in her deceased mother’s property. The rule is

that testimony of a witness must be considered and calibrated in its entirety and not by truncated portions

thereof or isolated passages therein.[24]

Furthermore, both “Bilihan ng Lupa” documents dated 17 August 1979 and 9 January 1981 were duly notarized before

a notary public. It is well-settled that a document acknowledged before a notary public is a public document [25] that enjoys the

presumption of regularity. It is a prima facie evidence of the truth of the facts stated therein and a conclusive presumption of

its existence and due execution.[26] To overcome this presumption, there must be presented evidence that is clear and

convincing. Absent such evidence, the presumption must be upheld. [27] In addition, one who denies the due execution of a

deed where one’s signature appears has the burden of proving that contrary to the recital in the jurat, one never appeared

before the notary public and acknowledged the deed to be a voluntary act. Nonetheless, in the present case petitioners’

denials without clear and convincing evidence to support their claim of fraud and falsity were not sufficient to overthrow the

above-mentioned presumption; hence, the authenticity, due execution and the truth of the facts stated in the aforesaid

“Bilihan ng Lupa” are upheld.

The defense of petitioners that the identities of the properties described in the “Bilihan ng Lupa,” dated 17 August

1979 and 9 January 1981 in relation to the subject property were not established by respondents Spouses Lumbao’s evidence

is likewise not acceptable.

It is noteworthy that at the time of the execution of the documents denominated as “Bilihan ng Lupa,” the entire

property owned by Maria, the mother of Rita, was not yet divided among her and her co-heirs and so the description of the

entire estate is the only description that can be placed in the “Bilihan ng Lupa, dated 17 August 1979 and 9 January 1981”

because the exact metes and bounds of the subject property sold to respondents Spouses Lumbao could not be possibly

determined at that time. Nevertheless, that does not make the contract of sale between Rita and respondents Spouses

Lumbao invalid because both the law and jurisprudence have categorically held that even while an estate remains undivided,

co-owners have each full ownership of their respective aliquots or undivided shares and may therefore alienate, assign or

mortgage them.[28] The co-owner, however, has no right to sell or alienate a specific or determinate part of the thing owned in

common, because such right over the thing is represented by an aliquot or ideal portion without any physical division. In any

case, the mere fact that the deed purports to transfer a concrete portion does not per se render the sale void. The sale is

valid, but only with respect to the aliquot share of the selling co-owner. Furthermore, the sale is subject to the results of the

partition upon the termination of the co-ownership.[29]

In the case at bar, when the estate left by Maria had been partitioned on 2 May 1986 by virtue of a Deed of

Extrajudicial Settlement, the 107- square meter lot sold by the mother of the petitioners to respondents Spouses Lumbao

should be deducted from the total lot, inherited by them in representation of their deceased mother, which in this case

measures 467 square meters. The 107-square meter lot already sold to respondents Spouses Lumbao can no longer be

inherited by the petitioners because the same was no longer part of their inheritance as it was already sold during the lifetime

of their mother.

Likewise, the fact that the property mentioned in the two “Bilihan ng Lupa” documents was described as “a portion of

a parcel of land covered in Tax Declarations No. A-018-01674,” while the subject matter of the Deed of Extrajudicial

Settlement was the property described in Transfer Certificate of Title (TCT) No. 3216 of the Registry of Deeds of the Province

of Rizal in the name of Maria is of no moment because in the “Bilihan ng Lupa,” dated 17 August 1979 and 9 January 1981, it is

clear that there was only one estate left by Maria upon her death. And this fact was not refuted by the petitioners. Besides,

the property described in Tax Declaration No. A-018-01674 and the property mentioned in TCT No. 3216 are both located in

Barrio Rosario, Municipality of Pasig, Province of Rizal, and almost have the same boundaries. It is, thus, safe to state that the

property mentioned in Tax Declaration No. A-018-01674 and in TCT No. 3216 are one and the same.

The defense of prescription of action and laches is likewise unjustifiable. In an action for reconveyance, the decree of

registration is respected as incontrovertible. What is sought instead is the transfer of the property or its title which has been

wrongfully or erroneously registered in another person’s name to its rightful or legal owner, or to the one with a better

right. It is, indeed, true that the right to seek reconveyance of registered property is not absolute because it is subject to

extinctive prescription. However,when the plaintiff is in possession of the land to be reconveyed, prescription cannot set

in. Such an exception is based on the theory that registration proceedings could not be used as a shield for fraud or for

enriching a person at the expense of another.[30]

In the case at bar, the right of the respondents Spouses Lumbao to seek reconveyance does not prescribe because the

latter have been and are still in actual possession and occupation as owners of the property sought to be reconveyed, which

fact has not been refuted nor denied by the petitioners. Furthermore, respondents Spouses Lumbao cannot be held guilty of

laches because from the very start that they bought the 107-square meter lot from the mother of the petitioners, they have

constantly asked for the transfer of the certificate of title into their names but Rita, during her lifetime, and the petitioners,

after the death of Rita, failed to do so on the flimsy excuse that the lot had not been partitioned yet. Inexplicably, after the

partition of the entire estate of Maria, petitioners still included the 107-square meter lot in their inheritance which they

divided among themselves despite their knowledge of the contracts of sale between their mother and the respondents

Spouses Lumbao.

Under the above premises, this Court holds that the “Bilihan ng Lupa” documents dated 17 August 1979 and 9 January

1981 are valid and enforceable and can be made the basis of the respondents Spouses Lumbao’s action for

reconveyance. The failure of respondents Spouses Lumbao to have the said documents registered does not affect its validity

and enforceability. It must be remembered that registration is not a requirement for validity of the contract as between the

parties, for the effect of registration serves chiefly to bind third persons. The principal purpose of registration is merely to

notify other persons not parties to a contract that a transaction involving the property had been entered into. Where the

party has knowledge of a prior existing interest which is unregistered at the time he acquired a right to the same land, his

knowledge of that prior unregistered interest has the effect of registration as to him. [31] Hence, the “Bilihan ng Lupa”

documents dated 17 August 1979 and 9 January 1981, being valid and enforceable, herein petitioners are bound to comply

with their provisions. In short, such documents are absolutely valid between and among the parties thereto.

Finally, the general rule that heirs are bound by contracts entered into by their predecessors-in-interest applies in the

present case. Article 1311[32] of the NCC is the basis of this rule. It is clear from the said provision that whatever rights and

obligations the decedent have over the property were transmitted to the heirs by way of succession, a mode of acquiring the

property, rights and obligations of the decedent to the extent of the value of the inheritance of the heirs. [33] Thus, the 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. Being heirs, there is privity of interest between

them and their deceased mother. They only succeed to what rights their mother had and what is valid and binding against her

is also valid and binding as against them. 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.[34]

In the end, despite the death of the petitioners’ mother, they are still bound to comply with the provisions of the

“Bilihan ng Lupa,” dated 17 August 1979 and 9 January 1981. Consequently, they must reconvey to herein respondents

Spouses Lumbao the 107-square meter lot which they bought from Rita, petitioners’ mother. And as correctly ruled by the

appellate court, petitioners must pay respondents Spouses Lumbao attorney’s fees and litigation expenses for having been

compelled to litigate and incur expenses to protect their interest. [35] On this matter, we do not find reasons to reverse the said

findings.

WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision and Resolution of the Court

of Appeals dated 8 June 2005 and 29 July 2005, respectively, are hereby AFFIRMED. Herein petitioners are ordered to

reconvey to respondents Spouses Lumbao the subject property and to pay the latter attorney’s fees and litigation

expenses. Costs against petitioners.

SO ORDERED.

G.R. No. 162784 June 22, 2007

NATIONAL HOUSING AUTHORITY, petitioner,

vs.

SEGUNDA ALMEIDA, COURT OF APPEALS, and RTC of SAN PEDRO, LAGUNA, BR. 31, respondents.

D E C I S I O N

PUNO, C.J.:

This is a Petition for Review on Certiorari under Rule 45 filed by the National Housing Authority (NHA) against the Court of

Appeals, the Regional Trial Court of San Pedro Laguna, Branch 31, and private respondent Segunda Almeida.

On June 28, 1959, the Land Tenure Administration (LTA) awarded to Margarita Herrera several portions of land which are part

of the Tunasan Estate in San Pedro, Laguna. The award is evidenced by an Agreement to Sell No. 3787.1 By virtue of Republic

Act No. 3488, the LTA was succeeded by the Department of Agrarian Reform (DAR). On July 31, 1975, the DAR was succeeded

by the NHA by virtue of Presidential Decree No. 757.2 NHA as the successor agency of LTA is the petitioner in this case.

The records show that Margarita Herrera had two children: Beatriz Herrera-Mercado (the mother of private respondent) and

Francisca Herrera. Beatriz Herrera-Mercado predeceased her mother and left heirs.

Margarita Herrera passed away on October 27, 1971.3

On August 22, 1974, Francisca Herrera, the remaining child of the late Margarita Herrera executed a Deed of Self-Adjudication

claiming that she is the only remaining relative, being the sole surviving daughter of the deceased. She also claimed to be the

exclusive legal heir of the late Margarita Herrera.

The Deed of Self-Adjudication was based on a Sinumpaang Salaysay dated October 7, 1960, allegedly executed by Margarita

Herrera. The pertinent portions of which are as follows:

SINUMPAANG SALAYSAY

SA SINO MAN KINAUUKULAN;

Akong si MARGARITA HERRERA, Filipina, may 83 taong gulang, balo, kasalukuyang naninirahan at tumatanggap ng

sulat sa Nayon ng San Vicente, San Pedro Laguna, sa ilalim ng panunumpa ay malaya at kusang loob kong isinasaysay

at pinagtitibay itong mga sumusunod:

1. Na ako ay may tinatangkilik na isang lagay na lupang tirikan (SOLAR), tumatayo sa Nayon ng San Vicente, San Pedro,

Laguna, mayroong PITONG DAAN AT PITUMPU'T ISANG (771) METRONG PARISUKAT ang laki, humigit kumulang, at

makikilala sa tawag na Lote 17, Bloke 55, at pag-aari ng Land Tenure Administration;

2. Na ang nasabing lote ay aking binibile, sa pamamagitan ng paghuhulog sa Land Tenure Administration, at noong ika

30 ng Julio, 1959, ang Kasunduang sa Pagbibile (AGREEMENT TO SELL No. 3787) ay ginawa at pinagtibay sa Lungsod ng

Maynila, sa harap ng Notario Publico na si G. Jose C. Tolosa, at lumalabas sa kaniyang Libro Notarial bilang Documento

No. 13, Pagina No. 4; Libro No. IV, Serie ng 1959;

3. Na dahilan sa ako'y matanda na at walang ano mang hanap buhay, ako ay nakatira at pinagsisilbihan nang aking

anak na si Francisca Herrera, at ang tinitirikan o solar na nasasabi sa unahan ay binabayaran ng kaniyang sariling cuarta

sa Land Tenure Administration;

4. Na alang-alang sa nasasaysay sa unahan nito, sakaling ako'y bawian na ng Dios ng aking buhay, ang lupang nasasabi

sa unahan ay aking ipinagkakaloob sa nasabi kong anak na FRANCISCA HERRERA, Filipina, nasa katamtamang gulang,

kasal kay Macario Berroya, kasalukuyang naninirahan at tumatanggap ng sulat sa Nayong ng San Vicente, San Pedro

Laguna, o sa kaniyang mga tagapagmana at;

5. Na HINIHILING KO sa sino man kinauukulan, na sakaling ako nga ay bawian na ng Dios ng aking buhay ay KILALANIN,

IGALANG at PAGTIBAYIN ang nilalaman sa pangalan ng aking anak na si Francisca Herrera ang loteng nasasabi sa

unahan.

SA KATUNAYAN NG LAHAT, ako ay nag-didiit ng hinlalaki ng kanan kong kamay sa ibaba nito at sa kaliwang gilid ng

unang dahon, dito sa Lungsod ng Maynila, ngayong ika 7 ng Octubre, 1960.4

The said document was signed by two witnesses and notarized. The witnesses signed at the left-hand side of both pages of the

document with the said document having 2 pages in total. Margarita Herrera placed her thumbmark5 above her name in the

second page and at the left-hand margin of the first page of the document.

The surviving heirs of Beatriz Herrera-Mercado filed a case for annulment of the Deed of Self-Adjudication before the then

Court of First Instance of Laguna, Branch 1 in Binan, Laguna (now, Regional Trial Court Branch 25). The case for annulment was

docketed as Civil Case No. B-1263.6

On December 29, 1980, a Decision in Civil Case No. B-1263 (questioning the Deed of Self-Adjudication) was rendered and the

deed was declared null and void.7

During trial on the merits of the case assailing the Deed of Self-Adjudication, Francisca Herrera filed an application with the

NHA to purchase the same lots submitting therewith a copy of the "Sinumpaang Salaysay" executed by her mother. Private

respondent Almeida, as heir of Beatriz Herrera-Mercado, protested the application.

In a Resolution8 dated February 5, 1986, the NHA granted the application made by Francisca Herrera, holding that:

From the evidence of the parties and the records of the lots in question, we gathered the following facts: the lots in

question are portions of the lot awarded and sold to the late Margarita Herrera on July 28, 1959 by the defunct Land

Tenure Administration; protestant is the daughter of the late Beatriz Herrera Mercado who was the sister of the

protestee; protestee and Beatriz are children of the late Margarita Herrera; Beatriz was the transferee from Margarita

of Lot Nos. 45, 46, 47, 48 and 49, Block 50; one of the lots transferred to Beatriz, e.g. Lot 47, with an area of 148

square meters is in the name of the protestant; protestant occupied the lots in question with the permission of the

protestee; protestee is a resident of the Tunasan Homesite since birth; protestee was born on the lots in question;

protestee left the place only after marriage but resided in a lot situated in the same Tunasan Homesite; her

(protestee) son Roberto Herrera has been occupying the lots in question; he has been there even before the death of

the late Margarita Herrera; on October 7, 1960, Margarita Herrera executed a "Sinumpaang Salaysay" whereby she 

waived or transferred all her rights and interest over the lots in question in favor of the protestee; and protestee had

paid the lots in question in full on March 8, 1966 with the defunct Land Tenure Administration.

This Office finds that protestee has a better preferential right to purchase the lots in question.9

Private respondent Almeida appealed to the Office of the President.10 The NHA Resolution was affirmed by the Office of the

President in a Decision dated January 23, 1987.11

On February 1, 1987, Francisca Herrera died. Her heirs executed an extrajudicial settlement of her estate which they submitted

to the NHA. Said transfer of rights was approved by the NHA.12 The NHA executed several deeds of sale in favor of the heirs of

Francisca Herrera and titles were issued in their favor.13 Thereafter, the heirs of Francisca Herrera directed Segunda Mercado-

Almeida to leave the premises that she was occupying.

Feeling aggrieved by the decision of the Office of the President and the resolution of the NHA, private respondent Segunda

Mercado-Almeida sought the cancellation of the titles issued in favor of the heirs of Francisca. She filed a Complaint on

February 8, 1988, for "Nullification of Government Lot's Award," with the Regional Trial Court of San Pedro, Laguna, Branch

31.

In her complaint, private respondent Almeida invoked her forty-year occupation of the disputed properties, and re-raised the

fact that Francisca Herrera's declaration of self-adjudication has been adjudged as a nullity because the other heirs were

disregarded. The defendant heirs of Francisca Herrera alleged that the complaint was barred by laches and that the decision of

the Office of the President was already final and executory.14 They also contended that the transfer of purchase of the subject

lots is perfectly valid as the same was supported by a consideration and that Francisca Herrera paid for the property with the

use of her own money.15 Further, they argued that plaintiff's occupation of the property was by mere tolerance and that they

had been paying taxes thereon.16

The Regional Trial Court issued an Order dated June 14, 1988 dismissing the case for lack of jurisdiction.17 The Court of Appeals

in a Decision dated June 26, 1989 reversed and held that the Regional Trial Court had jurisdiction to hear and decide the case

involving "title and possession to real property within its jurisdiction."18The case was then remanded for further proceedings

on the merits.

A pre-trial was set after which trial ensued.

On March 9, 1998, the Regional Trial Court rendered a Decision setting aside the resolution of the NHA and the decision of the

Office of the President awarding the subject lots in favor of Francisca Herrera. It declared the deeds of sale executed by NHA in

favor of Herrera's heirs null and void. The Register of Deeds of Laguna, Calamba Branch was ordered to cancel the Transfer

Certificate of Title issued. Attorney's fees were also awarded to private respondent.

The Regional Trial Court ruled that the "Sinumpaang Salaysay" was not an assignment of rights but a disposition of property

which shall take effect upon death. It then held that the said document must first be submitted to probate before it can

transfer property.

Both the NHA and the heirs of Francisca Herrera filed their respective motions for reconsideration which were both denied on

July 21, 1998 for lack of merit. They both appealed to the Court of Appeals. The brief for the heirs of Francisca Herrera was

denied admission by the appellate court in a Resolution dated June 14, 2002 for being a "carbon copy" of the brief submitted

by the NHA and for being filed seventy-nine (79) days late.

On August 28, 2003, the Court of Appeals affirmed the decision of the Regional Trial Court, viz:

There is no dispute that the right to repurchase the subject lots was awarded to Margarita Herrera in 1959. There is

also no dispute that Margarita executed a "Sinumpaang Salaysay" on October 7, 1960. Defendant NHA claims that the

"Sinumpaang Salaysay" is, in effect, a waiver or transfer of rights and interest over the subject lots in favor of Francisca

Herrera. This Court is disposed to believe otherwise. After a perusal of the "Sinumpaang Salaysay" of Margarita

Herrera, it can be ascertained from its wordings taken in their ordinary and grammatical sense that the document is a

simple disposition of her estate to take effect after her death. Clearly the Court finds that the "Sinumpaang Salaysay"

is a will of Margarita Herrera. Evidently, if the intention of Margarita Herrera was to merely assign her right over the

lots to her daughter Francisca Herrera, she should have given her "Sinumpaang Salaysay" to the defendant NHA or to

Francisca Herrera for submission to the defendant NHA after the full payment of the purchase price of the lots or even

prior thereto but she did not. Hence it is apparent that she intended the "Sinumpaang Salaysay" to be her last will and

not an assignment of rights as what the NHA in its resolution would want to make it appear. The intention of

Margarita Herrera was shared no less by Francisca Herrera who after the former's demise executed on August 22,

1974 a Deed of Self-Adjudication claiming that she is her sole and legal heir. It was only when said deed was

questioned in court by the surviving heirs of Margarita Herrera's other daughter, Beatriz Mercado, that Francisca

Herrera filed an application to purchase the subject lots and presented the "Sinumpaang Salaysay" stating that it is a

deed of assignment of rights.19

The Court of Appeals ruled that the NHA acted arbitrarily in awarding the lots to the heirs of Francisca Herrera. It upheld the

trial court ruling that the "Sinumpaang Salaysay" was not an assignment of rights but one that involved disposition of property

which shall take effect upon death. The issue of whether it was a valid will must first be determined by probate.

Petitioner NHA elevated the case to this Court.

Petitioner NHA raised the following issues:

A. WHETHER OR NOT THE RESOLUTION OF THE NHA AND THE DECISION OF THE OFFICE OF THE PRESIDENT HAVE

ATTAINED FINALITY, AND IF SO, WHETHER OR NOT THE PRINCIPLE OF ADMINISTRATIVE RES JUDICATA BARS THE

COURT FROM FURTHER DETERMINING WHO BETWEEN THE PARTIES HAS PREFERENTIAL RIGHTS FOR AWARD OVER

THE SUBJECT LOTS;

B. WHETHER OR NOT THE COURT HAS JURISDICTION TO MAKE THE AWARD ON THE SUBJECT LOTS; AND

C. WHETHER OR NOT THE AWARD OF THE SUBJECT LOTS BY THE NHA IS ARBITRARY.

We rule for the respondents.

Res judicata is a concept applied in review of lower court decisions in accordance with the hierarchy of courts. But

jurisprudence has also recognized the rule of administrative res judicata: "the rule which forbids the reopening of a matter

once judicially determined by competent authority applies as well to the judicial and quasi-judicial facts of public, executive or

administrative officers and boards acting within their jurisdiction as to the judgments of courts having general judicial powers .

. . It has been declared that whenever final adjudication of persons invested with power to decide on the property and rights

of the citizen is examinable by the Supreme Court, upon a writ of error or a certiorari, such final adjudication may be pleaded

as res judicata."20 To be sure, early jurisprudence were already mindful that the doctrine of res judicata cannot be said to apply

exclusively to decisions rendered by what are usually understood as courts without unreasonably circumscribing the scope

thereof and that the more equitable attitude is to allow extension of the defense to decisions of bodies upon whom judicial

powers have been conferred.

In Ipekdjian Merchandising Co., Inc. v. Court of Tax Appeals,21 the Court held that the rule prescribing that "administrative

orders cannot be enforced in the courts in the absence of an express statutory provision for that purpose" was relaxed in favor

of quasi-judicial agencies.

In fine, it should be remembered that quasi-judicial powers will always be subject to true judicial power—that which is held by

the courts. Quasi-judicial power is defined as that power of adjudication of an administrative agency for the "formulation of a

final order."22 This function applies to the actions, discretion and similar acts of public administrative officers or bodies who are

required to investigate facts, or ascertain the existence of facts, hold hearings, and draw conclusions from them, as a basis for

their official action and to exercise discretion of a judicial nature.23 However, administrative agencies are not considered

courts, in their strict sense. The doctrine of separation of powers reposes the three great powers into its three (3) branches—

the legislative, the executive, and the judiciary. Each department is co-equal and coordinate, and supreme in its own sphere.

Accordingly, the executive department may not, by its own fiat, impose the judgment of one of its agencies, upon the

judiciary. Indeed, under the expanded jurisdiction of the Supreme Court, it is empowered to "determine whether or not there

has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of

the Government."24 Courts have an expanded role under the 1987 Constitution in the resolution of societal conflicts under the

grave abuse clause of Article VIII which includes that duty to check whether the other branches of government committed an

act that falls under the category of grave abuse of discretion amounting to lack or excess of jurisdiction.25

Next, petitioner cites Batas Pambansa Blg. 129 or the Judiciary Reorganization Act of 198026 where it is therein provided that

the Intermediate Appellate Court (now, Court of Appeals) shall exercise the "exclusive appellate jurisdiction over all final

judgments, decisions, resolutions, orders or awards, of the Regional Trial Courts and Quasi-Judicial agencies, instrumentalities,

boards or commissions, except those falling within the jurisdiction of the Supreme Court in accordance with the

Constitution…"27 and contends that the Regional Trial Court has no jurisdiction to rule over awards made by the NHA.

Well-within its jurisdiction, the Court of Appeals, in its decision of August 28, 2003, already ruled that the issue of the trial

court's authority to hear and decide the instant case has already been settled in the decision of the Court of Appeals dated

June 26, 1989 (which has become final and executory on August 20, 1989 as per entry of judgment dated October 10,

1989).28 We find no reason to disturb this ruling. Courts are duty-bound to put an end to controversies. The system of judicial

review should not be misused and abused to evade the operation of a final and executory judgment.29 The appellate court's

decision becomes the law of the case which must be adhered to by the parties by reason of policy.30

Next, petitioner NHA contends that its resolution was grounded on meritorious grounds when it considered the application for

the purchase of lots. Petitioner argues that it was the daughter Francisca Herrera who filed her application on the subject lot;

that it considered the respective application and inquired whether she had all the qualifications and none of the

disqualifications of a possible awardee. It is the position of the petitioner that private respondent possessed all the

qualifications and none of the disqualifications for lot award and hence the award was not done arbitrarily.

The petitioner further argues that assuming that the "Sinumpaang Salaysay" was a will, it could not bind the NHA.31 That,

"insofar as [the] NHA is concerned, it is an evidence that the subject lots were indeed transferred by Margarita Herrera, the

original awardee, to Francisca Herrera was then applying to purchase the same before it."32

We are not impressed. When the petitioner received the "Sinumpaang Salaysay," it should have noted that the effectivity of

the said document commences at the time of death of the author of the instrument; in her words "sakaling ako'y bawian na

ng Dios ng aking buhay…" Hence, in such period, all the interests of the person should cease to be hers and shall be in the

possession of her estate until they are transferred to her heirs by virtue of Article 774 of the Civil Code which provides that:

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.33

By considering the document, petitioner NHA should have noted that the original applicant has already passed away.

Margarita Herrera passed away on October 27, 1971.34 The NHA issued its resolution35 on February 5, 1986. The NHA gave due

course to the application made by Francisca Herrera without considering that the initial applicant's death would transfer all

her property, rights and obligations to the estate including whatever interest she has or may have had over the disputed

properties. To the extent of the interest that the original owner had over the property, the same should go to her estate.

Margarita Herrera had an interest in the property and that interest should go to her estate upon her demise so as to be able to

properly distribute them later to her heirs—in accordance with a will or by operation of law.

The death of Margarita Herrera does not extinguish her interest over the property. Margarita Herrera had an existing Contract

to Sell36 with NHA as the seller. Upon Margarita Herrera's demise, this Contract to Sell was neither nullified nor revoked. This

Contract to Sell was an obligation on both parties—Margarita Herrera and NHA. Obligations are transmissible.37 Margarita

Herrera's obligation to pay became transmissible at the time of her death either by will or by operation of law.

If we sustain the position of the NHA that this document is not a will, then the interests of the decedent should transfer by

virtue of an operation of law and not by virtue of a resolution by the NHA. For as it stands, NHA cannot make another contract

to sell to other parties of a property already initially paid for by the decedent. Such would be an act contrary to the law on

succession and the law on sales and obligations.38

When the original buyer died, the NHA should have considered the estate of the decedent as the next "person"39likely to stand

in to fulfill the obligation to pay the rest of the purchase price. The opposition of other heirs to the repurchase by Francisca

Herrera should have put the NHA on guard as to the award of the lots. Further, the Decision in the said Civil Case No. B-1263

(questioning the Deed of Self-Adjudication) which rendered the deed therein null and void40 should have alerted the NHA that

there are other heirs to the interests and properties of the decedent who may claim the property after a testate or intestate

proceeding is concluded. The NHA therefore acted arbitrarily in the award of the lots.

We need not delve into the validity of the will. The issue is for the probate court to determine. We affirm the Court of Appeals

and the Regional Trial Court which noted that it has an element of testamentary disposition where (1) it devolved and

transferred property; (2) the effect of which shall transpire upon the death of the instrument maker.41

IN VIEW WHEREOF, the petition of the National Housing Authority is DENIED. The decision of the Court of Appeals in CA-G.R.

No. 68370 dated August 28, 2003, affirming the decision of the Regional Trial Court of San Pedro, Laguna in Civil Case No. B-

2780 dated March 9, 1998, is hereby AFFIRMED.

No cost.

SO ORDERED.