Page 1 of 23
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.
DECISION
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
thumbmark5above 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
Page 2 of 23
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."18 The 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.
Page 3 of 23
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.
Page 4 of 23
The petitioner further argues that assuming that the "Sinumpaang Salaysay"
was a will, it could not bind the NHA.31That, "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 Sell 36 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.
[G.R. No. 118248. April 5, 2000]
DKC HOLDINGS CORPORATION, petitioner, vs. COURT OF APPEALS,
VICTOR U. BARTOLOME and REGISTER OF DEEDS FOR METRO
MANILA, DISTRICT III, respondents. francis
DECISION
YNARES_SANTIAGO, J.:
This is a petition for review on certiorari seeking the reversal of the
December 5, 1994 Decision of the Court of Appeals in CA-G.R. CV No.
40849 entitled "DKC Holdings Corporation vs. Victor U. Bartolome, et al.",
[1]
affirming in toto the January 4, 1993 Decision of the Regional Trial Court of
Valenzuela, Branch 172,[2] which dismissed Civil Case No. 3337-V-90 and
ordered petitioner to pay P30,000.00 as attorneys fees.
The subject of the controversy is a 14,021 square meter parcel of land
located in Malinta, Valenzuela, Metro Manila which was originally owned by
Page 5 of 23
private respondent Victor U. Bartolomes deceased mother, Encarnacion
Bartolome, under Transfer Certificate of Title No. B-37615 of the Register of
Deeds of Metro Manila, District III. This lot was in front of one of the textile
plants of petitioner and, as such, was seen by the latter as a potential
warehouse site.
On March 16, 1988, petitioner entered into a Contract of Lease with Option to
Buy with Encarnacion Bartolome, whereby petitioner was given the option to
lease or lease with purchase the subject land, which option must be
exercised within a period of two years counted from the signing of the
Contract. In turn, petitioner undertook to pay P3,000.00 a month as
consideration for the reservation of its option. Within the two-year period,
petitioner shall serve formal written notice upon the lessor Encarnacion
Bartolome of its desire to exercise its option. The contract also provided that
in case petitioner chose to lease the property, it may take actual possession
of the premises. In such an event, the lease shall be for a period of six years,
renewable for another six years, and the monthly rental fee shall be
P15,000.00 for the first six years and P18,000.00 for the next six years, in
case of renewal.
Petitioner regularly paid the monthly P3,000.00 provided for by the Contract
to Encarnacion until her death in January 1990. Thereafter, petitioner
coursed its payment to private respondent Victor Bartolome, being the sole
heir of Encarnacion. Victor, however, refused to accept these payments. iska
Meanwhile, on January 10, 1990, Victor executed an Affidavit of Self-
Adjudication over all the properties of Encarnacion, including the subject lot.
Accordingly, respondent Register of Deeds cancelled Transfer Certificate of
Title No. B-37615 and issued Transfer Certificate of Title No. V-14249 in the
name of Victor Bartolome.
On March 14, 1990, petitioner served upon Victor, via registered mail, notice
that it was exercising its option to lease the property, tendering the amount of
P15,000.00 as rent for the month of March. Again, Victor refused to accept
the tendered rental fee and to surrender possession of the property to
petitioner.
Petitioner thus opened Savings Account No. 1-04-02558-I-1 with the China
Banking Corporation, Cubao Branch, in the name of Victor Bartolome and
deposited therein the P15,000.00 rental fee for March as well as P6,000.00
reservation fees for the months of February and March.
Petitioner also tried to register and annotate the Contract on the title of Victor
to the property. Although respondent Register of Deeds accepted the
required fees, he nevertheless refused to register or annotate the same or
even enter it in the day book or primary register.
 Page 6 of 23

Thus, on April 23, 1990, petitioner filed a complaint for specific performance (B)
and damages against Victor and the Register of Deeds, [3] docketed as Civil
Case No. 3337-V-90 which was raffled off to Branch 171 of the Regional Trial SECOND ASSIGNMENT OF ERROR
Court of Valenzuela. Petitioner prayed for the surrender and delivery of
possession of the subject land in accordance with the Contract terms; the THE HONORABLE COURT OF APPEALS ERRED IN
surrender of title for registration and annotation thereon of the Contract; and RULING THAT THE NOTICE OF OPTION MUST BE
the payment of P500,000.00 as actual damages, P500,000.00 as moral SERVED BY DKC UPON ENCARNACION BARTOLOME
damages, P500,000.00 as exemplary damages and P300,000.00 as PERSONALLY.
attorneys fees.
(C) nigel
Meanwhile, on May 8, 1990, a Motion for Intervention with Motion to
Dismiss[4] was filed by one Andres Lanozo, who claimed that he was and has THIRD ASSIGNMENT OF ERROR
been a tenant-tiller of the subject property, which was agricultural riceland, for
forty-five years. He questioned the jurisdiction of the lower court over the THE HONORABLE COURT OF APPEALS ERRED IN
property and invoked the Comprehensive Agrarian Reform Law to protect his RULING THAT THE CONTRACT WAS ONE-SIDED AND
rights that would be affected by the dispute between the original parties to ONEROUS IN FAVOR OF DKC.
the case. ella
(D)
On May 18, 1990, the lower court issued an Order [5] referring the case to the
Department of Agrarian Reform for preliminary determination and certification FOURTH ASSIGNMENT OF ERROR
as to whether it was proper for trial by said court.
THE HONORABLE COURT OF APPEALS ERRED IN
On July 4, 1990, the lower court issued another Order [6] referring the case to RULING THAT THE EXISTENCE OF A REGISTERED
Branch 172 of the RTC of Valenzuela which was designated to hear cases TENANCY WAS FATAL TO THE VALIDITY OF THE
involving agrarian land, after the Department of Agrarian Reform issued a CONTRACT.
letter-certification stating that referral to it for preliminary determination is no
longer required. (E)

On July 16, 1990, the lower court issued an Order denying the Motion to FIFTH ASSIGNMENT OF ERROR
Intervene,[7] holding that Lanozos rights may well be ventilated in another
proceeding in due time. THE HONORABLE COURT OF APPEALS ERRED IN
RULING THAT PLAINTIFF-APPELLANT WAS LIABLE TO
After trial on the merits, the RTC of Valenzuela, branch 172 rendered its DEFENDANT-APPELLEE FOR ATTORNEYS FEES.[8]
Decision on January 4, 1993, dismissing the Complaint and ordering
petitioner to pay Victor P30,000.00 as attorneys fees. On appeal to the CA, The issue to be resolved in this case is whether or not the Contract of Lease
the Decision was affirmed in toto. with Option to Buy entered into by the late Encarnacion Bartolome with
petitioner was terminated upon her death or whether it binds her sole heir,
Hence, the instant Petition assigning the following errors: Victor, even after her demise.

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

THE HONORABLE COURT OF APPEALS ERRED IN Article 1311 of the Civil Code provides, as follows-
RULING THAT THE PROVISION ON THE NOTICE TO
EXERCISE OPTION WAS NOT TRANSMISSIBLE.

"ART. 1311. Contracts take effect only between the parties,
their assigns and heirs, except in case where the rights and
obligations arising from the contract are not transmissible by
their nature, or by stipulation or by provision of law. The heir
is not liable beyond the value of the property he received
from the decedent. brnado
x x x x x x x x x."
The general rule, therefore, is that heirs are bound by contracts entered into
by their predecessors-in-interest except when the rights and obligations
arising therefrom are not transmissible by (1) their nature, (2) stipulation or
(3) provision of law.
In the case at bar, there is neither contractual stipulation nor legal provision
making the rights and obligations under the contract intransmissible. More
importantly, the nature of the rights and obligations therein are, by their
nature, transmissible.
The nature of intransmissible rights as explained by Arturo Tolentino, an
eminent civilist, is as follows:
"Among contracts which are intransmissible are those which
are purely personal, either by provision of law, such as in
cases of partnerships and agency, or by the very nature of
the obligations arising therefrom, such as those requiring
special personal qualifications of the obligor. It may also be
stated that contracts for the payment of money debts are not
transmitted to the heirs of a party, but constitute a charge
against his estate. Thus, where the client in a contract for
professional services of a lawyer died, leaving minor heirs,
and the lawyer, instead of presenting his claim for
professional services under the contract to the probate court,
substituted the minors as parties for his client, it was held
that the contract could not be enforced against the minors;
the lawyer was limited to a recovery on the basis of quantum
meruit."[9]
In American jurisprudence, "(W)here acts stipulated in a contract require the
exercise of special knowledge, genius, skill, taste, ability, experience,
judgment, discretion, integrity, or other personal qualification of one or both
parties, the agreement is of a personal nature, and terminates on the death
of the party who is required to render such service." [10] marinella
It has also been held that a good measure for determining whether a contract
terminates upon the death of one of the parties is whether it is of such a
Page 7 of 23
character that it may be performed by the promissors personal
representative. Contracts to perform personal acts which cannot be as well
performed by others are discharged by the death of the promissor.
Conversely, where the service or act is of such a character that it may as well
be performed by another, or where the contract, by its terms, shows that
performance by others was contemplated, death does not terminate the
contract or excuse nonperformance.[11]
In the case at bar, there is no personal act required from the late Encarnacion
Bartolome. Rather, the obligation of Encarnacion in the contract to deliver
possession of the subject property to petitioner upon the exercise by the
latter of its option to lease the same may very well be performed by her heir
Victor.
As early as 1903, it was held that "(H)e who contracts does so for himself
and his heirs."[12] In 1952, it was ruled that if the predecessor was duty-bound
to reconvey land to another, and at his death the reconveyance had not been
made, the heirs can be compelled to execute the proper deed for
reconveyance. This was grounded upon the principle that heirs cannot
escape the legal consequence of a transaction entered into by their
predecessor-in-interest because they have inherited the property subject to
the liability affecting their common ancestor. [13]
It is futile for Victor to insist that he is not a party to the contract because of
the clear provision of Article 1311 of the Civil Code. Indeed, being an heir of
Encarnacion, there is privity of interest between him and his deceased
mother. He only succeeds to what rights his mother had and what is valid and
binding against her is also valid and binding as against him. [14] This is clear
from Paraaque Kings Enterprises vs. Court of Appeals, [15] where this Court
rejected a similar defense-alonzo
With respect to the contention of respondent Raymundo that
he is not privy to the lease contract, not being the lessor nor
the lessee referred to therein, he could thus not have
violated its provisions, but he is nevertheless a proper party.
Clearly, he stepped into the shoes of the owner-lessor of the
land as, by virtue of his purchase, he assumed all the
obligations of the lessor under the lease contract. Moreover,
he received benefits in the form of rental payments.
Furthermore, the complaint, as well as the petition, prayed
for the annulment of the sale of the properties to him. Both
pleadings also alleged collusion between him and
respondent Santos which defeated the exercise by petitioner
of its right of first refusal.

In order then to accord complete relief to petitioner,
respondent Raymundo was a necessary, if not
indispensable, party to the case. A favorable judgment for
the petitioner will necessarily affect the rights of respondent
Raymundo as the buyer of the property over which petitioner
would like to assert its right of first option to buy.
In the case at bar, the subject matter of the contract is likewise a lease, which
is a property right. The death of a party does not excuse nonperformance of
a contract which involves a property right, and the rights and obligations
thereunder pass to the personal representatives of the deceased. Similarly,
nonperformance is not excused by the death of the party when the other
party has a property interest in the subject matter of the contract. [16]
Under both Article 1311 of the Civil Code and jurisprudence, therefore, Victor
is bound by the subject Contract of Lease with Option to Buy.
That being resolved, we now rule on the issue of whether petitioner had
complied with its obligations under the contract and with the requisites to
exercise its option. The payment by petitioner of the reservation fees during
the two-year period within which it had the option to lease or purchase the
property is not disputed. In fact, the payment of such reservation fees, except
those for February and March, 1990 were admitted by Victor. [17] This is clear
from the transcripts, to wit-
"ATTY. MOJADO:
One request, Your Honor. The last payment which was
allegedly made in January 1990 just indicate in that
stipulation that it was issued November of 1989 and
postdated Janaury 1990 and then we will admit all. rodp;fo
COURT:
All reservation fee?
ATTY. MOJADO:
Yes, Your Honor.
COURT:
All as part of the lease?
ATTY. MOJADO:
Page 8 of 23
Reservation fee, Your Honor. There was no payment with
respect to payment of rentals."[18]
Petitioner also paid the P15,000.00 monthly rental fee on the subject property
by depositing the same in China Bank Savings Account No. 1-04-02558-I-1,
in the name of Victor as the sole heir of Encarnacion Bartolome, [19] for the
months of March to July 30, 1990, or a total of five (5) months, despite the
refusal of Victor to turn over the subject property. [20]
Likewise, petitioner complied with its duty to inform the other party of its
intention to exercise its option to lease through its letter dated Match 12,
1990,[21] well within the two-year period for it to exercise its option.
Considering that at that time Encarnacion Bartolome had already passed
away, it was legitimate for petitioner to have addressed its letter to her heir.
It appears, therefore, that the exercise by petitioner of its option to lease the
subject property was made in accordance with the contractual provisions.
Concomitantly, private respondent Victor Bartolome has the obligation to
surrender possession of and lease the premises to petitioner for a period of
six (6) years, pursuant to the Contract of Lease with Option to Buy. micks
Coming now to the issue of tenancy, we find that this is not for this Court to
pass upon in the present petition. We note that the Motion to Intervene and to
Dismiss of the alleged tenant, Andres Lanozo, was denied by the lower court
and that such denial was never made the subject of an appeal. As the lower
court stated in its Order, the alleged right of the tenant may well be ventilated
in another proceeding in due time.
WHEREFORE, in view of the foregoing, the instant Petition for Review is
GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 40849
and that of the Regional Trial Court of Valenzuela in Civil Case No. 3337-V-
90 are both SET ASIDE and a new one rendered ordering private respondent
Victor Bartolome to:
(a) surrender and deliver possession of that parcel of land
covered by Transfer Certificate of Title No. V-14249 by way
of lease to petitioner and to perform all obligations of his
predecessor-in-interest, Encarnacion Bartolome, under the
subject Contract of Lease with Option to Buy;
(b) surrender and deliver his copy of Transfer Certificate of
Title No. V-14249 to respondent Register of Deeds for
registration and annotation thereon of the subject Contract of
Lease with Option to Buy;
(c) pay costs of suit. Sc
 Page 9 of 23

Respondent Register of Deeds is, accordingly, ordered to register and Instance of Bohol, the Information on said Criminal Case No. 1922
annotate the subject Contract of Lease with Option to Buy at the back of was filed on March 12, 1955;
Transfer Certificate of Title No. V-14249 upon submission by petitioner of a
copy thereof to his office. 4. That on May 28, 1966, the COURT OF FIRST INSTANCE OF
BOHOL rendered a decision thereof, convicting the said Mauricio
SO ORDERED. Polinar of the crime of serious physical injuries and sentenced him to
pay to the offended party Buenaventura Belamala, now claimant
G.R. No. L-24098 November 18, 1967 herein, the amount of P990.00, plus the amount of P35.80 as
indemnity the amount of P1,000.00 as moral damages;
BUENAVENTURA BELAMALA, petitioner-appellee,
vs. 5. That on June 18, 1956, the accused (the late Mauricio Polinar)
MARCELINO POLINAR, administrator, oppositor-appellant. appealed to the Court of Appeals from the decision of the Court of
First Instance of Bohol;
Juvenal D. Osorio for petitioner-appellee.
Anastacio A. Mumar for administrator, oppositor-appellant. 6. That on July 27, 1956, while the appeal of said Mauricio Polinar
was pending before the Court of Appeals, he died; and that there
REYES, J.B.L., J.: was no Notice or Notification of his death has ever been filed in the
said Court of Appeals;
Appeal from judgment of the Court of First Instance of Bohol (Sp. Proc. No.
369) allowing a money claim of appellee Belamala against the estate of the 7. That the decision of the Court of Appeals in said Criminal Case
deceased Mauricio Polinar, for damages caused to the claimant. Originally No. 1922, has affirmed the decision of the Court of First Instance of
taken to the Court of Appeals, the case was certified to this Court as involving Bohol, in toto, and said decision of the Court of Appeals was
only questions of law. promulgated on March 27, 1958; but said Mauricio Polinar has
already died on July 27, 1956;
Issue in the case is whether the civil liability of an accused of physical injuries
who dies before final judgment, is extinguished by his demise, to the extent 8. That the late Mauricio Polinar is survived by his wife, Balbina
of barring any claim therefor against his estate. Bongato and his children, namely:

There is no dispute as to the facts, which were stipulated, in the court of 1. Narcisa Polinar, Davao
origin, to be as follows (Rec. of Appeal, pp. 41-43): 2. Geronimo Polinar, Pagadian
3. Mariano Polinar, Clarin, Bohol
STIPULATED AGREEMENT OF FACTS 4. Ireneo Polinar, Clarin, Bohol
5. Marcelino Polinar, Clarin, Bohol
xxx xxx xxx 6. Mauro Polinar, Clarin, Bohol
7. Demetrio Polinar, Clarin, Bohol
1. That the claimant Buenaventura Belamala is the same offended
party in Criminal Case No. 1922 filed before the COURT OF FIRST 9. That the parties have reserved to present in Court evidence on
INSTANCE OF BOHOL, against the same Mauricio Polinar above facts not agreed to herein by the parties.
mentioned and against other accused, for Frustrated Murder;
It is to be observed that the reservation of additional evidence was waived by
2. That the administrator Marcelino Polinar is one of the legitimate the parties at the trial (see Decision of trial court, Rec. App. p. 54).
children of the above mentioned Mauricio Polinar now deceased;
The Court a quo, overruling the contention of the Administrator-appellant that
3. That on May 24, 1954, the complaint for Frustrated Murder was the death of the accused prior to final judgment extinguished all criminal and
filed in the Justice of the Peace of Clarin, Bohol against said Mauricio civil liabilities resulting from the offense, in view of Article 89, paragraph 1 of
Polinar, et al, and when said case was remanded to the Court of First the Revised Penal Code, admitted the claim against the estate in the amount
 Page 10 of 23

of P2,025.80 with legal interest from the date claim was filed (30 July 1959)
until paid. No payment was ordered pending final determination of the sum
total of claims admitted against the estate.
Not satisfied with the ruling, the Administrator has appealed, insisting on his
theory in the Court below.
We see no merit in the plea that the civil liability has been extinguished, in
view of the provisions of the Civil Code of the Philippines of 1950 (Rep. Act
No. 386) that became operative eighteen years after the Revised Penal
Code. As pointed out by the Court below, Article 33 of the Civil Code
establishes a civil action for damages on account of physical injuries,
entirely separate and distinct from the criminal action.
Furthermore, it does not appear that the award of the trial Court was based
on evidence submitted to it; apparently it relied merely on the findings in the
criminal case, as embodied in decisions that never became final because the
accused died during the pendency of said case.
WHEREFORE, the decision under appeal is hereby reversed and set aside,
but without prejudice to the action of appellee Belamala against the
Administrator of the Estate of Mauricio Polinar. No costs. So ordered.
WILLIAM ONG GENATO, G.R. No. 171035
Petitioner,

Art. 33. In cases of defamation, fraud, and physical injuries, a civil

action for damages, entirely separate and distinct from the criminal - versus -
action, may be brought by the injured party. Such civil action shall
proceed independently of the criminal prosecution, and shall require Present:
only a preponderance of evidence.
PUNO, C.J., Chairperson,
Assuming that for lack of express reservation, Belamala's civil action for
damages was to be considered instituted together with the criminal action, BENJAMIN BAYHON, MELANIE CARPIO,
still, since both proceedings were terminated without final adjudication, the
civil action of the offended party under Article 33 may yet be enforced BAYHON, BENJAMIN BAYHON, CORONA,
separately. Such claim in no way contradicts Article 108, of the Penal Code,
that imposes the obligation to indemnify upon the deceased offender's heirs,
JR., BRENDA BAYHON, ALINA LEONARDO-DE CASTRO, and
because the latter acquired their decedents obligations only to the extent of
the value of the inheritance (Civil Code, Art. 774). Hence, the obligation of
BAYHON-CAMPOS, IRENE BERSAMIN, JJ.
the offender's heirs under Article 108 ultimately becomes an obligation of the
offender's estate.
BAYHON-TOLOSA, and the minor
The appellant, however, is correct in the contention that the claim should
GINO BAYHON, as represented
have been prosecuted by separate action against the administrator, as
permitted by sections 1 and 2 of Revised Rule 87, since the claim is patently
one "to recover damages for an injury to person or property" (Rule 87, sec. herein by his natural mother
1). Belamala's action can not be enforced by filing a claim against the estate
under Rule 86, because section 5 of that rule explicitly limits the claims to as guardian-ad-litem, JESUSITA Promulgated:
those for funeral expenses, expenses for last sickness, judgments for money
and "claims against the decedent, arising from contract, express or implied;" M. BAYHON,
and this last category (the other three being inapposite) includes only "all
purely personal obligations other than those which have their source Respondents. __________________
in delict or tort" (Leung Ben vs. O'Brien, 38 Phil. 182, 189-194) and
Belamala's damages manifestly have a tortious origin. To this effect was our
ruling in Aguas vs. Llemos, L-18107, Aug. 30, 1962.
x------------------------------------------------x

DECISION
PUNO, C.J.:
At bar is a Petition for Review on Certiorari assailing the Decision of
the Court of Appeals dated September 16, 2005 [1] and Resolution denying the
petitioners motion for reconsideration issued on January 6, 2006.
This is a consolidated case stemming from two civil cases filed
before the Regional Trial Court (RTC) Civil Case No. Q-90-7012 and Civil
Case No. Q-90-7551.
Civil Case No. Q-90-7012
On October 18, 1990, respondents Benjamin M. Bayhon, Melanie
Bayhon, Benjamin Bayhon Jr., Brenda Bayhon, Alina Bayhon-Campos, Irene
Bayhon-Tolosa and the minor Gino Bayhon, as represented by his mother
Jesusita M. Bayhon, filed an action before the RTC, Quezon City, Branch 76,
docketed as Civil Case No. Q-90-7012. In their Complaint, respondents
sought the declaration of nullity of a dacion en pago allegedly executed by
respondent Benjamin Bayhon in favor of petitioner William Ong Genato. [2]
Respondent Benjamin Bayhon alleged that on July 3, 1989, he
obtained from the petitioner a loan amounting to PhP 1,000,000.00; [3] that to
cover the loan, he executed a Deed of Real Estate Mortgage over the
property covered by Transfer Certificate of Title (TCT) No. 38052; that,
however, the execution of the Deed of Real Estate Mortgage was conditioned
upon the personal assurance of the petitioner that the said instrument is only
a private memorandum of indebtedness and that it would neither be
notarized nor enforced according to its tenor.[4]
Respondent further alleged that he filed a separate proceeding for
the reconstitution of TCT No. 38052 before the RTC, Quezon City, Branch
87.[5] Petitioner William Ong Genato filed an Answer in Intervention in the said
proceeding and attached a copy of an alleged dacion en pago covering said
lot.[6] Respondent assailed the dacion en pago as a forgery alleging that
neither he nor his wife, who had died 3 years earlier, had executed it. [7]
In his Answer, petitioner Genato denied the claim of the respondent
regarding the death of the latters wife.[8] He alleged that on the date that the
real estate mortgage was to be signed, respondent introduced to him a
woman as his wife.[9] He alleged that the respondent signed the dacion en
pago and that the execution of the instrument was above-board. [10]
Page 11 of 23
Civil Case No. Q-90-7551
On December 20, 1990, petitioner William Ong Genato filed Civil
Case No. Q-90-7551, an action for specific performance, before the RTC,
Quezon City, Branch 79. In his Complaint, petitioner alleged that respondent
obtained a loan from him in the amount of PhP 1,000,000.00. Petitioner
alleged further that respondent failed to pay the loan and executed on
October 21, 1989 a dacion en pago in favor of the petitioner. The dacion en
pago was inscribed and recorded with the Registry of Deeds of Quezon City.
[11]
Petitioner further averred that despite demands, respondent refused
to execute the requisite documents to transfer to him the ownership of the lot
subject of the dacion en pago. Petitioner prayed, inter alia, for the court to
order the respondent to execute the final deed of sale and transfer of
possession of the said lot.[12]
Decision of the Consolidated Cases
The two cases were consolidated and transferred to the RTC,
Quezon City, Branch 215. On October 9, 1997, the trial court rendered its
Decision. It found that respondent obtained a loan in the amount of PhP
1,000,000.00 from the petitioner on July 3, 1989. The terms of the loan were
interest payment at 5% per month with an additional 3% penalty in case of
nonpayment.[13]
With respect to the dacion en pago, the trial court held that the
parties have novated the agreement. [14] It deduced the novation from the
subsequent payments made by the respondent to the petitioner. Of the
principal amount, the sum of PhP 102,870.00 had been paid: PhP 27,870.00
on March 23, 1990, PhP 55,000.00 on 26 March 1990 and PhP 20,000.00 on
16 November 1990.[15] All payments were made after the purported execution
of the dacion en pago.
The trial court likewise found that at the time of the execution of the
real estate mortgage, the wife of respondent, Amparo Mercado, was already
dead. It held that the property covered by TCT No. 38052 was owned in
common by the respondents and not by respondent Benjamin Bayhon alone.
It concluded that the said lot could not have been validly mortgaged by the
respondent alone; the deed of mortgage was not enforceable and only
served as evidence of the obligation of the respondent. [16]
In sum, the trial court upheld the respondents liability to the petitioner
and ordered the latter to pay the sum of Php 5,647,130.00. [17] This amount
included the principal, the stipulated interest of 5% per month, and the

penalty; and, was calculated from the date of demand until the date the RTC
rendered its judgment.
Appeal to the Court of Appeals
Respondents appealed before the Court of Appeals. On March 28,
2002, respondent Benjamin Bayhon died while the case was still pending
decision.[18] On September 16, 2005, the Court of Appeals rendered a
decision reversing the trial court.
The Court of Appeals held that the real estate mortgage and
the dacion en pago were both void. The appellate court ruled that at the time
the real estate mortgage and the dacion en pago were executed, or on July
3, 1989 and October 21, 1989, respectively, the wife of respondent Benjamin
Bayhon was already dead.[19] Thus, she could not have participated in the
execution of the two documents. The appellate court struck down both
the dacion en pago and the real estate mortgage as being simulated or
fictitious contracts pursuant to Article 1409 of the Civil Code. [20]
The Court of Appeals held further that while the principal obligation is
valid, the death of respondent Benjamin Bayhon extinguished it. [21] The heirs
could not be ordered to pay the debts left by the deceased. [22] Based on the
foregoing, the Court of Appeals dismissed petitioners appeal. Petitioners
motion for reconsideration was denied in a resolution dated January 6, 2006.
[23]
Petition for Review
Petitioner now comes before this Court assailing the decision of the
Court of Appeals and raising the following issues:
Whether or not Benjamin Bayhon is liable to Mr. Genato in
the amount of Php 5,647,130.00 in principal and interest as
of October 3, 1997 and 5% monthly interest thereafter until
the account shall have been fully paid.[24]
The Court of Appeals erred in declaring the Real Estate
Mortgage dated July 3, 1989 and the Dacion en Pago dated
October 21, 1989, null and void.[25]
We shall first tackle the nullity of the dacion en pago.
We affirm the ruling of the appellate court that the subject dacion en
pago is a simulated or fictitious contract, and hence void. The evidence
Page 12 of 23
shows that at the time it was allegedly signed by the wife of the respondent,
his wife was already dead. This finding of fact cannot be reversed.
We now go to the ruling of the appellate court extinguishing the
obligation of respondent. As a general rule, obligations derived from a
contract are transmissible. Article 1311, par.1 of the Civil Code provides:
Contracts take effect only between the parties, their assigns
and heirs, except in case where the rights and obligations
arising from the contract are not transmissible by their
nature, or by stipulation or by provision of law. The heir is not
liable beyond the value of the property he received from the
decedent.
In Estate of Hemady v. Luzon Surety Co., Inc.,[26] the Court,
through Justice JBL Reyes, held:
While in our successional system the responsibility
of the heirs for the debts of their decedent cannot exceed the
value of the inheritance they receive from him, the principle
remains intact that these heirs succeed not only to the
rights of the deceased but also to his
obligations. Articles 774 and 776 of the New Civil Code
(and Articles 659 and 661 of the preceding one) expressly so
provide, thereby confirming Article 1311 already quoted.
"ART. 774. Succession is a mode of
acquisition by virtue of which the property,
rights and obligations to the extent of the
value of the inheritance, of a person are
transmitted through his death to another or
others either by his will or by operation of
law."
"ART. 776. The inheritance includes all the
property, rights and obligations of a person
which are not extinguished by his
death."[27] (Emphasis supplied)
The Court proceeded further to state the general rule:
 Page 13 of 23

Under our law, therefore, the general rule is that
a party's contractual rights and obligations are
transmissible to the successors. The rule is a
consequence of the progressive "depersonalization" of
patrimonial rights and duties that, as observed by Victorio
Polacco, has characterized the history of these institutions.
From the Roman concept of a relation from person to
person, the obligation has evolved into a relation from
patrimony to patrimony, with the persons occupying only a
representative position, barring those rare cases where the
obligation is strictly personal, i.e., is contracted intuitu
personae, in consideration of its performance by a specific
person and by no other. The transition is marked by the
disappearance of the imprisonment for debt. [28] (Emphasis
supplied)
We now go to the interest awarded by the trial court. We note that
the interest has been pegged at 5% per month, or 60% per annum. This is
unconscionable, hence cannot be enforced.[29] In light of this, the rate of
interest for this kind of loan transaction has been fixed in the case of Eastern
Shipping Lines v. Court of Appeals,[30] at 12% per annum, calculated from
October 3, 1989, the date of extrajudicial demand. [31]
Following this formula, the total amount of the obligation of the estate
of Benjamin Bayhon is as follows:
Principal Php 1,000,000.00
Less: Partial Payments 27,870.00
55,000.00

20,000.00

The loan in this case was contracted by respondent. He died while 897,130.00
the case was pending before the Court of Appeals. While he may no longer
be compelled to pay the loan, the debt subsists against his estate. No Plus: Interest
property or portion of the inheritance may be transmitted to his heirs unless
the debt has first been satisfied. Notably, throughout the appellate stage of (12% per annum x
this case, the estate has been amply represented by the heirs of the
deceased, who are also his co-parties in Civil Case No. Q-90-7012. 20 years) 2,153,552.00

The procedure in vindicating monetary claims involving a defendant TOTAL: Php 3,050,682.00
who dies before final judgment is governed by Rule 3, Section 20 of the
Rules of Civil Procedure, to wit: IN VIEW WHEREOF, the decision of the Court of Appeals dated
September 16, 2005 is AFFIRMED with the MODIFICATION that the
When the action is for recovery of money arising from obligation to pay the principal loan and interest contracted by the deceased
contract, express or implied, and the defendant dies before Benjamin Bayhon subsists against his estate and is computed at PhP
entry of final judgment in the court in which the action was 3,050,682.00.
pending at the time of such death, it shall not be dismissed
but shall instead be allowed to continue until entry of final No costs.
judgment. A favorable judgment obtained by the plaintiff
therein shall be enforced in the manner especially provided SO ORDERED.
in these Rules for prosecuting claims against the estate of a
deceased person.
[G.R. No. 126707. February 25, 1999]

BLANQUITA E. DELA MERCED, LUISITO E. DELA MERCED, BLANQUITA

Pursuant to this provision, petitioners remedy lies in filing a claim against the M. MACATANGAY, MA. OLIVIA M. PAREDES, TERESITA P.
estate of the deceased respondent. RUPISAN, RUBEN M. ADRIANO, HERMINIO M. ADRIANO,
JOSELITO M. ADRIANO, ROGELIO M. ADRIANO, WILFREDO M.
ADRIANO, VICTOR M. ADRIANO, CORAZON A. ONGOCO,
JASMIN A. MENDOZA and CONSTANTINO M.

ADRIANO, petitioners, vs. JOSELITO P. DELA
MERCED, respondent.
DECISION
PURISIMA, J.:
This is a Petition for Review on Certiorari of the Decision of the Court of
Appeals, dated October 17, 1996, in CA-G.R. CV No. 41283, which reversed
the decision, dated June 10, 1992, of the Regional Trial Court, Branch 67,
Pasig City, in Civil Case No. 59705.
The facts of the case are, as follows:
On March 23, 1987, Evarista M. dela Merced died intestate, without
issue. She left five (5) parcels of land situated in Orambo, Pasig City.
At the time of her death, Evarista was survived by three sets of heirs,
viz: (1) Francisco M. dela Merced, her legitimate brother ; (2) Teresita P.
Rupisan, her niece who is the only daughter of Rosa de la Merced-Platon (a
sister who died in 1943) ; and (3) the legitimate children of Eugenia dela
Merced-Adriano (another sister of Evarista who died in 1965), namely:
Herminio, Ruben, Joselito, Rogelio, Wilfredo, Victor and Constantino, all
surnamed Adriano, Corazon Adriano-Ongoco and Jasmin Adriano-Mendoza.
Almost a year later or on March 19, 1988, to be precise, Francisco
(Evaristas brother) died. He was survived by his wife Blanquita Errea dela
Merced and their three legitimate children, namely, Luisito E. dela Merced,
Blanquita M. Macatangay and Ma. Olivia M. Paredes.
On April 20, 1989, the three sets of heirs of the decedent, Evarista M.
dela Merced, referring to (1) the abovenamed heirs of Francisco; (2) Teresita
P. Rupisan and (3) the nine [9] legitimate children of Eugenia, executed an
extrajudicial settlement, entitled Extrajudicial Settlement of the Estate of the
Deceased Evarista M. dela Merced adjudicating the properties of Evarista to
them, each set with a share of one-third (1/3) pro-indiviso.
On July 26 ,1990, private respondent Joselito P. Dela
Merced , illegitimate son of the late Francisco de la Merced, filed a Petition
for Annulment of the Extrajudicial Settlement of the Estate of the Deceased
Evarista M. Dela Merced with Prayer for a Temporary Restraining
Order, alleging that he was fraudulently omitted from the said settlement
made by petitioners, who were fully aware of his relation to the late
Francisco. Claiming successional rights, private respondent Joselito prayed
that he be included as one of the beneficiaries, to share in the one-third (1/3)
Page 14 of 23
pro-indiviso share in the estate of the deceased Evarista, corresponding to
the heirs of Francisco.
On August 3, 1990, the trial court issued the temporary restraining order
prayed for by private respondent Joselito, enjoining the sale of any of the real
properties of the deceased Evarista.
After trial, however, or on June 10, 1992, to be definite, the trial court
dismissed the petition, lifted the temporary restraining order earlier issued,
and cancelled the notice of lis pendens on the certificates of title covering the
real properties of the deceased Evarista.
In dismissing the petition, the trial court stated:
The factual setting of the instant motion after considering the circumstances
of the entire case and the other evidentiary facts and documents presented
by the herein parties points only to one issue which goes into the very
skeleton of the controversy, to wit: Whether or not the plaintiff may participate
in the intestate estate of the late Evarista M. Dela Merced in his capacity as
representative of his alleged father, Francisdo Dela Merced, brother of the
deceased, whose succession is under consideration.
xxxxxxxxx
It is to be noted that Francisco Dela Merced, alleged father of the herein
plaintiff, is a legitimate child, not an illegitimate. Plaintiff, on the other hand, is
admittedly an illegitimate child of the late FranciscoDela Merced. Hence, as
such, he cannot represent his alleged father in the succession of the latter in
the intestate estate of the late Evarista Dela Merced, because of the barrier
in Art. 992 of the New Civil Code which states that:
An illegitimate child has no right to inherit ab intestato from the legitimate
children and relatives of his father or mother, nor shall such children or
relatives inherit in the same manner from the illegitimate child.
The application of Art. 992 cannot be ignored in the instant case, it is clearly
worded in such a way that there can be no room for any doubts and
ambiguities. This provision of the law imposes a barrier between the
illegitimate and the legitimate family. x x x (Rollo, p. 87-88)
Not satisfied with the dismissal of his petition, the private respondent
appealed to the Court of Appeals.
In its Decision of October 17,1996, the Court of Appeals reversed the
decision of the trial court of origin and ordered the petitioners to execute an
amendatory agreement which shall form part of the original settlement, so as

to include private respondent Joselito as a co-heir to the estate of Francisco,
which estate includes one-third (1/3) pro indiviso of the latters
inheritance from the deceased Evarista.
The relevant and dispositive part of the Decision of the Court of Appeals,
reads:
xxxxxxxxx
It is a basic principle embodied in Article 777, New Civil Code that the rights
to the succession are transmitted from the moment of the death of the
decedent, so that Francisco dela Merced inherited 1/3 of his sisters estate at
the moment of the latters death. Said 1/3 of Evaristas estate formed part of
Franciscos estate which was subsequently transmitted upon his death on
March 23, 1987 to his legal heirs, among whom is appellant as his illegitimate
child. Appellant became entitled to his share in Franciscos estate from the
time of the latters death in 1987. The extrajudicial settlement therefore is void
insofar as it deprives plaintiff-appellant of his share in the estate of Francisco
M. dela Merced. As a consequence, the cancellation of the notice of lis
pendens is not in order because the property is directly affected.Appellant
has the right to demand a partition of his fathers estate which includes 1/3 of
the property inherited from Evarista dela Merced.
WHEREFORE, premises considered, the appealed decision is hereby
REVERSED and SET ASIDE. Defendants-appellees are hereby ordered to
execute an amendatory agreement/settlement to include herein plaintiff-
appellant Joselito dela Merced as co-heir to the estate of Francisco dela
Merced which includes 1/3 of the estate subject of the questioned Deed of
Extrajudicial Settlement of the Estate of Evarista M. dela Merced dated April
20, 1989. The amendatory agreement/settlement shall form part of the
original Extrajudicial Settlement. With costs against defendants-appellees.
SO ORDERED. (Rollo, p. 41)
In the Petition under consideration, petitioners insist that being an
illegitimate child, private respondent Joselito is barred from inheriting from
Evarista because of the provision of Article 992 of the New Civil Code, which
lays down an impassable barrier between the legitimate and illegitimate
families.
The Petition is devoid of merit.
Article 992 of the New Civil Code is not applicable because involved
here is not a situation where an illegitimate child would inherit ab
intestato from a legitimate sister of his father, which is prohibited by the
aforesaid provision of law. Rather, it is a scenario where an illegitimate child
Page 15 of 23
inherits from his father, the latters share in or portion of, what the latter
already inherited from the deceased sister, Evarista.
As opined by the Court of Appeals, the law in point in the present case is
Article 777 of the New Civil Code, which provides that the rights
to succession are transmitted from the moment of death of thedecedent.
Since Evarista died ahead of her brother Francisco, the latter inherited a
portion of the estate of the former as one of her heirs. Subsequently, when
Francisco died, his heirs, namely: his spouse, legitimate children, and the
private respondent, Joselito, an illegitimate child, inherited his (Franciscos)
share in the estate of Evarista. It bears stressing that Joselito does not claim
to be an heir of Evarista by right of representation but participates in his own
right, as an heir of the late Francisco, in the latters share (or portion thereof)
in the estate of Evarista.
Petitioners argue that if Joselito desires to assert successional rights to
the intestate estate of his father, the proper forum should be in the settlement
of his own fathers intestate estate, as this Court held in the case of Gutierrez
vs. Macandog (150 SCRA 422 [1987])
Petitioners reliance on the case of Gutierrez vs. Macandog (supra) is
misplaced. The said case involved a claim for support filed by one Elpedia
Gutierrez against the estate of the decedent, Agustin Gutierrez, Sr., when
she was not even an heir to the estate in question, at the time, and the
decedent had no obligation whatsoever to give her support. Thus, this Court
ruled that Elpedia should have asked for support pendente lite before the
Juvenile and Domestic Relations Court in which court her husband (one of
the legal heirs of the decedent) had instituted a case for legal separation
against her on the ground of an attempt against his life. When Mauricio (her
husband) died, she should have commenced an action for the settlement of
the estate of her husband, in which case she could receive whatever
allowance the intestate court would grant her.
The present case, however, relates to the rightful and undisputed right of
an heir to the share of his late father in the estate of the decedent Evarista,
ownership of which had been transmitted to his father upon the death of
Evarista. There is no legal obstacle for private respondent Joselito,
admittedly the son of the late Francisco, to inherit in his own right as an heir
to his fathers estate, which estate includes a one-third (1/3) undivided share
in the estate of Evarista.
WHEREFORE, for lack of merit, the Petition is hereby DENIED and the
Appealed Decision of the Court of Appeals AFFIRMED in toto.
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.
DECISION
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 Divinagracias
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.
Nio 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
Tabanaos untimely demise in 1994, petitioner failed to submit to Tabanaos
heirs any statement of assets and liabilities of the partnership, and to render
an accounting of the partnerships finances. Petitioner also reneged on his
promise to turn over to Tabanaos heirs the deceaseds 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, Tabanaos 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;
Page 16 of 23
B. No less than Two Hundred Thousand Pesos (P200,000.00) as moral
damages;
C. Attorneys 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 petitioners
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 a right
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
partnerships) 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, [8] arguing 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 petitioners 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 courts 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 decedents 1/3 share in the
partnerships assets. While they ask for an accounting of the partnerships
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 partnerships assets, as well as their corresponding share therein, cannot
Page 17 of 23
be ascertained.Consequently, they feel justified in not having paid the
commensurate docket fee as required by the Rules of Court.
We do not agree. The trial court does not have to employ guesswork in
ascertaining the estimated value of the partnerships 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
partnerships 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 petitioners 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 partnerships total assets to be
worth Thirty Million Pesos (P30,000,000.00), in a letter [21] 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 a lien.
Page 18 of 23
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 petitioners compliance with,
the contract that the partners executed to formalize the partnerships
dissolution, as well as to implement the liquidation and partition of the
partnerships 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.
Page 19 of 23
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. Petitioners 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 Tabanaos 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 petitioners obligations as outlined in their
dissolution agreement were transmitted to respondents. They, therefore, had
the capacity to sue and seek the courts 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 petitioners 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
partnerships 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 petitioners 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 partnerships 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 petitioners motions to dismiss. Likewise, the Court of Appeals did not
commit reversible error in upholding the trial courts 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 is REMANDED 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.
SO ORDERED.
[G.R. No. 118464. December 21, 1998]
HEIRS OF IGNACIO CONTI and ROSARIO CUARIO, petitioners, vs.
COURT OF APPEALS and LYDIA S. REYES as Attorney-in-Fact
of JOSEFINA S. REYES, BERNARDITA S. PALILIO, HERMINIA S.
PALILIO, REMEDIOS A. SAMPAYO, ILUMINADA A. SAMPAYO,
ENRICO A. SAMPAYO, CARLOS A. SAMPAYO, GENEROSO C.
Page 20 of 23
SAMPAYO, MYRNA C. SAMPAYO, ROSALINO C. SAMPAYO,
MANUEL C. SAMPAYO, DELIA A. SAMPAYO, CORAZON C.
SAMPAYO, NILO C. SAMPAYO, and LOLITA A. SAMPAYO in her
own behalf and as Attorney-in-Fact of NORMA
A. SAMPAYO, respondents.
DECISION
BELLOSILLO, J.:
This petition for review on certiorari seeks to reverse the 30 March 1994
Decision and 21 December 1994 Resolution of
respondent Court of Appeals which upheld the right of private respondents
as heirs of Lourdes Sampayo to demand partition under Art. 494 of the Civil
Code.
Lourdes Sampayo and Ignacio Conti, married to Rosario Cuario, were
the co-owners of the property in litigation consisting of a 539-square meter lot
at the corner of Zamora and Abellanosa Streets, Lucena City, covered by
TCT No. T15374, with a house erected thereon.[1] On 17 March 1986 Lourdes
Sampayo died intestate without issue.[2] Subsequently, on 1 April 1987 private
respondents Josefina S. Reyes, Bernardita S. Palilio, Herminia S. Palilio,
Remedios A. Sampayo, Iluminada A. Sampayo, Enrico A. Sampayo, Carlos
A. Sampayo, Generoso C. Sampayo, Myrna C. Sampayo, Rosalina C.
Sampayo, Manuel C. Sampayo, Delia A. Sampayo, Corazon C. Sampayo,
Nilo C. Sampayo, Lolita A. Sampayo and Norma A. Sampayo, all represented
by their Attorney-in-Fact Lydia S. Reyes, with Lolita A. Sampayo acting also
in her own behalf and as Attorney-in-Fact of Norma A. Sampayo, all claiming
to be collateral relatives of the deceased Lourdes Sampayo, filed an action
for partition and damages before RTCBr. 54, Lucena City. [3]
The spouses Ignacio Conti and Rosario Cuario refused the partition on
the ground that private respondents failed to produce any document to prove
that they were the rightful heirs of Lourdes Sampayo. [4] On 30 August 1987
Ignacio Conti died and was substituted as party-defendant by his children
Asuncion, Francisco, Milagros, Joselito, Luisito, Diego and Teresita, all
surnamed Conti.[5]
At the trial, private respondents presented Lydia Sampayo Reyes and
Adelaida Sampayo to prove that they were the collateral heirs of the
deceased Lourdes Sampayo and therefore entitled to her rights as co-owner
of the subject lot. Bringing with her the original
copy of her certificate of live birth showing that her father was Inocentes Rey
es and her mother was Josefina Sampayo,[6] Lydia Sampayo Reyes testified
that she was one of the nieces of Lourdes Sampayo, being the daughter of
Josefina Sampayo, the only living sibling of Lourdes. Lydia also testified that

Lourdes had another sister named Remedios J. Sampayo who died in 1948,
and two brothers, Manuel J. Sampayo and Luis J. Sampayo who died in
1983 and 1960, respectively. To prove that Josefina, Remedios, Luis and
Manuel were siblings of Lourdes, their baptismal certificates together with a
photocopy of the birth certificate of Manuel Sampayo were offered in
evidence. These documents showed that their father and mother, like
Lourdes Sampayo, were Antonio Sampayo and Brigida Jaraza.
The certificates of baptism presented as part of the testimony of Lydia
Sampayo Reyes were prepared by Rev. Franklin C. Rivero who duly certified
that all data therein written were in accordance with the church records,
hence, the lower left portion of the documents bearing the seal of the church
with the notation as to where the documents were logged in particular. [7] The
baptismal certificates were presented in lieu of the birth certificates because
the repository of those documents, the Office of the Civil Registrar of Lucena
City, had been razed by fire on two separate occasions, 27 November 1974
and 30 August 1983, thus all civil registration records were totally burned.
[8]
On the other hand, a photocopy of Manuel's birth certificate dated 25
October 1919 (Exh. "I")[9] showed that it was issued by the Local Civil
Registrar of Lucena, Tayabas (now Lucena City).
Adelaida Sampayo, widow of Manuel Sampayo, testified that her
husband Manuel was the brother of the deceased Lourdes, and with the
death of Manuel, Luis and Remedios, the only living sibling of Lourdes was
Josefina.[10]
To rebut whatever rights the alleged heirs of Lourdes had over the
subject lot, petitioners presented Rosario Cuario Conti, Rosa Ladines
Malundas and Rodolfo Espineli. Rosario testified that the subject property
was co-owned in equal shares by her husband Ignacio Conti and Lourdes
Sampayo and that her family (Rosario) had been staying in the subject
property since 1937.[11] In fact, she said that her late husband Ignacio Conti
paid for the real estate taxes[12] and spent for the necessary repairs and
improvements thereon[13] because by agreement Lourdes would leave her
share of the property to them.[14]
However, as correctly found by the trial court, no will, either
testamentary or holographic, was presented by petitioners to
substantiate this claim.[15] Rosario also disclosed that when Lourdes died her
remains were taken by her relatives from their house. [16] When cross
examined on who those relatives were, she replied that the only one she
remembered was Josefina since there were many relatives who came. When
asked who Josefina's parents were, she said she could not recall. Likewise,
when asked who the parents of Lourdes were, Rosario denied having ever
known them.[17]
Page 21 of 23
Another witness, Rosa Ladines Malundas, narrated that she used to be
the neighbor and hairdresser of the deceased Lourdes Sampayo who told
her that upon her death her share would go to Ignacio Conti whom she
considered as her brother since both of them were "adopted" by their foster
parents Gabriel Cord and Anastacia Allarey Cord, [18] although she admitted
that she did not know whether Lourdes had other relatives. [19]
According to another witness, Rodolfo Espineli, he took pictures of the
tombs bearing the tombstones of Gabriel Cord and Anastacia Allarey Cord
and Ignacio Conti as well as that of Lourdes Sampayo who was supposed to
have been interred beside her "adoptive" parents. However, as revealed by
Rosario during her direct examination, Lourdes was not in fact interred there
because her relatives took her remains.[20]
On 4 April 1991 the trial court declared private respondents as the
rightful heirs of Lourdes Sampayo. It further ordered private respondents and
petitioners to submit a project of partition of the residential house and lot for
confirmation by the court.[21]
Petitioners elevated the case to the Court of Appeals
contending that the trial court erred in finding that private respondents were
the heirs of Lourdes Sampayo and that they were entitled to the partition of
the lot and the improvements thereon.[22]
On 30 March 1994 the Court of Appeals affirmed the assailed RTC
decision and held[23]-
In the instant case, plaintiffs [now private respondents] were able to prove
and establish by preponderance of evidence that they are the collateral heirs
of deceased Lourdes Sampayo and therefore the lower court did not err in
ordering herein plaintiffs [now private respondents] and defendants [now
petitioners] to submit a project of partition of the residential house and lot
owned in common by the deceased Lourdes Sampayo and defendant
spouses Conti for confirmation by the court x x x x Considering our earlier
finding that the lower court did not err in declaring herein plaintiffs [now
private respondents] as heirs of deceased Sampayo and therefore entitled to
inherit her property, the argument of the appellants [now petitioners] that the
plaintiffs [now private respondents] are not entitled to partition is devoid of
merit (insertions in [ ] supplied).
Respondent court also ruled, citing Hernandez v.
Padua[24] and Marabilles v. Quito[25], that a prior and separate judicial
declaration of heirship was not necessary [26] and that private respondents
became the co-owners of the portion of the property owned and registered in
the name of Lourdes Sampayo upon her death and, consequently, entitled to
the immediate possession thereof and all other incidents/rights of ownership

as provided for by law including the right to demand partition under Art.
777 of the Civil Code,[27] and Ilustre v. Alaras Frondosa[28] holding that the
property belongs to the heirs at the moment of death of the decedent, as
completely as if he had executed and delivered to them a deed for the same
before his death.
The appellate court subsequently denying a motion for reconsideration
upheld the probative value of the documentary and testimonial evidence of
private respondents and faulted petitioners for not having subpoenaed
Josefina if they believed that she was a vital witness in the case. [29] Hence,
petitioners pursued this case arguing that a complaint for partition to claim a
supposed share of the deceased co-owner cannot prosper without prior
settlement of the latter's estate and compliance with all legal requirements,
especially publication, and private respondents were not able to prove by
competent evidence their relationship with the deceased. [30]
There is no merit in the petition. A prior settlement of the estate is not
essential before the heirs can commence any action originally pertaining to
the deceased as we explained in Quison v. Salud [31] -
Claro Quison died in 1902. It was proven at the trial that the present plaintiffs
are next of kin and heirs, but it is said by the appellants that they are not
entitled to maintain this action because there is no evidence that any
proceedings have been taken in court for the settlement of the estate of Claro
Quison, and that without such settlement, the heirs cannot maintain this
action. There is nothing in this point. As well by the Civil Code as by the
Code of Civil Procedure, the title to the property owned by a person who dies
intestate passes at once to his heirs. Such transmission is, under the present
law, subject to theclaims of administration and the property may be taken
from the heirs for the purpose of paying debts and expenses, but this does
not prevent an immediate passage of the title, upon the death of the
intestate, from himself to his heirs. Without
some showing that a judicial administrator had been appointed in
proceedings to settle the estate of Claro Quison, the right of the plaintiffs to
maintain this action is established.
Conformably with the foregoing and taken in conjunction with Arts. 777
and 494[32] of the Civil Code, from the death of Lourdes Sampayo her rights
as a co-owner, incidental to which is the right to ask for partition at any time
or to terminate the co-ownership, were transmitted to her rightful heirs. In so
demanding partition private respondents merely exercised the right originally
pertaining to the decedent, their predecessor-in-interest.
Petitioners' theory as to the requirement of publication would have been
correct had the action been for the partition of the estate of Lourdes
Sampayo, or if we were dealing with extrajudicial settlement by agreement
Page 22 of 23
between heirs and the summary settlement of estates of small value. [33] But
what private respondents are pursuing is the mere segregation of Lourdes'
one-half share which they inherited from her through intestate
succession. This is a simple case of ordinary partition between co-
owners. The applicable law in point is Sec. 1 of Rule 69 of the Rules of Court
-
Sec. 1. Complaint in an action for partition of real estate. - A person having
the right to compel the partition of real estate may do so as in this rule
prescribed, setting forth in his complaint the nature and extent of his title and
an adequate description of the real estate of which partition is demanded and
joining as defendants all the other persons interested in the property.
A cursory reading of the aforecited rule shows that publication is not
required as erroneously maintained by petitioners. There are two (2)
simultaneous issues in an action for partition. First,
whether theplaintiff is indeed a co-owner of the property sought to be
partitioned, and second, if answered in the affirmative, the manner of the
division of the property, i.e., what portion should go to which co-owner.
[34]
Thus, in this case, we must determine whether private respondents, by
preponderance of evidence, have been able to establish that they are co-
owners by way of succession as collateral heirs of the late Lourdes Sampayo
as they claim to be, either a sister, a nephew or a niece. These, private
respondents were able to prove in the trial court as well as before respondent
Court of Appeals.
Petitioners however insist that there was no such proof of
filiation because: (a) mere photocopies of birth certificates do not prove
filiation; (b) certifications on non-availability of records of birth do not prove
filiation; (c) baptismal certificates do not prove filiation of alleged collateral
relatives of the deceased; and, (d) the testimonies of Lydia S. Reyes, alleged
daughter of Josefina Reyes, and Adelaida Sampayo, alleged sister-in-law of
Josefina and Lourdes, were incompetent as Lydia was made to testify on
events which happened before her birth while Adelaida testified on matters
merely narrated to her.[35]
We are not persuaded. Altogether, the documentary and testimonial
evidence submitted are competent and adequate proofs that private
respondents are collateral heirs of Lourdes Sampayo. Private respondents
assert that they are co-owners of one-half (1/2) pro-indiviso share of the
subject property by way of legal or intestate succession.
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.[36] Legal or intestate succession takes place if a person dies

without a will, or with a void will, or one which has subsequently lost its
validity.[37] If there are no descendants, ascendants, illegitimate children, or a
surviving spouse, the collateral relatives shall succeed to the entire estate of
the decedent.[38] It was established during the trial that Lourdes died intestate
and without issue. Private respondents as sister, nephews and nieces now
claim to be the collateral relatives of Lourdes.
Under Art. 172 of the Family Code,[39] the filiation of legitimate
children shall be proved by any other means allowed by the Rules of Court
and special laws, in the absence of a record of birth or a parents admission
of such legitimate filiation in a public or private document duly signed by the
parent. Such other proof of ones filiation may be a baptismal certificate, a
judicial admission, a family Bible in which his name has been entered,
common reputation respecting his pedigree, admission by silence, the
testimonies of witnesses and other kinds of proof admissible under Rule
130 of the Rules of Court.[40]By analogy, this method of proving filiation may
also be utilized in the instant case.
Public documents are the written official acts, or records of the official
acts of the sovereign authority, official bodies and tribunals, and public
officers, whether of the Philippines, or of a foreign country. [41] The baptismal
certificates presented in evidence by private respondents are public
documents. Parish priests continue to be the legal custodians of the parish
records and are authorized to issue true copies, in the form of certificates, of
the entries contained therein.[42]
The admissibility of baptismal certificates offered by Lydia S.
Reyes, absent the testimony of the officiating priest or the official recorder,
was settled in People v. Ritter, citing U.S. v. de Vera (28 Phil. 105 [1914]),
[43]
thus -
x x x the entries made in the Registry Book may be considered as entries
made in the course of the business under Section 43 of Rule 130, which is an
exception to the hearsay rule. The baptisms administered by the church are
one of its transactions in the exercise of ecclesiastical duties and recorded in
the book of the church during the course of its business.
It may be argued that baptismal certificates are evidence only of the
administration of the sacrament, but in this case, there were four (4)
baptismal certificates which, when taken together, uniformly show that
Lourdes, Josefina, Remedios and Luis had the same set of parents, as
indicated therein. Corroborated by the undisputed testimony of Adelaida
Sampayo that with the demise of Lourdes and her brothers Manuel, Luis and
sister Remedios, the only sibling left was Josefina Sampayo Reyes, such
baptismal certificates have acquired evidentiary weight to prove filiation.
Page 23 of 23
Petitioners' objection to the photocopy of the certificate of birth of
Manuel Sampayo was properly discarded by the court a quo and respondent
Court of Appeals. According to Sec. 3, par. (1), Rule 130, of the Rules of
Court, when the subject of inquiry is the contents of a document, no evidence
shall be admissible other than the original document itself except when the
original has been lost or destroyed or cannot be produced in court, without
bad faith on the part of the offeror. The loss or destruction of the original
certificate of birth of Manuel J. Sampayo was duly established by the
certification issued by the Office of the Local Civil Registrar of Lucena City to
the effect that its office was completely destroyed by fire on 27 November
1974 and 30 August 1983, respectively, and as a consequence thereof, all
civil registration records were totally burned.
Apparently, there seems to be some merit in petitioners contention that
the testimony of Adelaida Sampayo cannot prove filiation for being hearsay
considering that there was no declaration ante litem motam as required by
the rules, i.e., that the declaration relating to pedigree was made before the
controversy occurred. Nonetheless, petitioners made no move to dispute her
testimony in open court when she was mentioning who the brothers and
sisters of Lourdes were. As correctly observed by the trial court in explicit
terms, "the documentary and testimonial evidence were not disputed by
defendants" (now petitioners).[44] Notably, when Rosario Cuario Conti took the
witness stand, she admitted that she was not aware of the identities of the
parents of the deceased. Clearly, this runs counter to the relationship akin to
filial bonding which she professed she had enjoyed with the decedent. As
wife of Ignacio Conti, she was supposedly a "sister-in-law" of the deceased
Lourdes Sampayo who regarded Ignacio as a brother. However, in sum, we
rule that all the pieces of evidence adduced, taken together, clearly
preponderate to the right of private respondents to maintain the action for
partition. Absent any reversible error in the assailed Decision and Resolution
of the Court of Appeals, this petition for review on certiorari will not lie.
WHEREFORE, the petition is DENIED. The assailed Decision dated 30
March 1994 and Resolution dated 21 December 1994 of the Court of Appeals
are AFFIRMED. Costs against petitioners.
SO ORDERED.