SUCCESSION
Atty. Louie John D. Lood // EH403 2019-2020
GENERAL PROVISIONS ON SUCCESSION
G.R. No. L-8092 March 14, 1916
RUFINA BONDAD, ET AL., plaintiffs-appellants,
vs.
VENANCIO BONDAD, ET AL., defendants-appellees.
Modesto Reyes for appellants.
Pedro Guevara for appellees.
ARELLANO, C. J.:
Rufina Bondad had two brothers and two sisters,
respectively named Venancio, Placido, Maria, and Paula.
The last named died leaving four children: Eleno,
Estanislao, Raymundo, and Pedro, all surnamed Emlano.
On May 6, 1911, Rufina Bondad brought suit against her
said brothers sisters, and nephews to secure the partition
of the property left to these defendants by their father or
grandfather, respectively, Crisanto Bondad upon his death
on March 17, 1902. She designates the lands to be
divided, which are those specified in the complaint under
the letters (a), (b), (c), (d), (e), (f), (g), (h), (i), and (j).
Documentary and parol evidence was introduced, and the
Court of First Instance of Laguna decided the case by
dismissing the complaint and absolving defendants
therefrom, with the costs against the plaintiff.
The latter appealed, and upon a hearing of her appeal we
find:
(1) That a person who alleges a hereditary right in any
specified real property, must, like any other person who
seeks to recover possession, prove the ownership of his
predecessor-in-interest; otherwise "the possessor by virtue
of ownership has in his favor the legal presumption that he
holds possession by reason of a sufficient title and he
cannot be forced to show it." (Art. 448, Civ. Code.) The
plaintiff did not try to prove her father's ownership in the
property she describes as left by him at his death. She did
no more than present two witnesses whose testimony will
be duly considered hereinafter.
(2) That a person who alleges a hereditary right will be
relieved from proving his predecessor-in-interest's
ownership only when the defendant in possession admits
having received the ownership or possession he enjoys
from that predecessor; but in that case plaintiff must prove
how he came into the possession and ownership of the
thing he claims.
(3) That, in the case at bar, defendants admit that the real
property, specified in the complaint under the letters (a),
(d), (e), (h), (i), and (j), was derived from that source, but
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allege that it was equitably and proportionally partitioned
between the plaintiff and the defendants in 1903.
(4) That they deny that the parcels of land B, C, F, and G
belonged to the intestate estate of the predecessor-in-
interest, Crisanto Bondad, and were derived from this
latter, wherefore it is incumbent upon the plaintiff, and not
upon the defendants, to prove such ownership; and that
without this proof the defendants cannot be disturbed in
their possession.
(5) That Lorenzo Suarez, one of the two witnesses
presented by plaintiff, testified that the said parcels of land,
as the others, were inherited some by Crisanto Bondad,
others by his wife Gliceria Alcantara, while still others were
purchased by both of them, but witness did not specify the
origin or the title of ownership of each individual parcel,
and it is no proof of the ownership of real property to state
the title of origin of the whole, without specifying the title of
ownership of each of its parcels, especially in the case of a
double marriage as it appears that Crisanto Bondad was
married at least twice, once to Gliceria Alcantara and the
second time to Emilia del Rosario. The other witness,
Aniceto Devanadera, specifies only one piece of realty as
having been purchased by Crisanto Bondad, and the rest as
having been inherited by the same.
(6) That, on the other hand, while there was no need of
exhibiting titles to possession, they were nevertheless
exhibited by: Venancio Bondad who holds by purchase from
Juan Martinez, by virtue of a notarial instrument of
September 12, 1908, the lands specified in the complaint
under letter (c), with the identical area, the identical
number of planted coconut trees and the identical
boundaries; the same Venancio Bondad who holds by
purchase from the surviving widow Emilia del Rosario, by
virtue of a notarial instrument of September 30, 1907, the
land specified in the complaint under letter (b), with
identical area, the identical number of coconut trees and
the identical boundaries; Placido Bondad who holds by
purchase from Ceferino Alcantara, by virtue of a notarial
instrument of May 28, 1911, the land specified in the
complaint under letter (f), with nearly the identical number
of coconut trees, boundaries and area; and the same
Placido Bondad, who holds by purchase from Margarita
Bondad, by virtue of a notarial instrument of May 27, 1911,
the land specified in the complaint under letter (g), with
almost the identical number of coconut trees and
boundaries.
(7) That the plaintiff, in describing under letter (h) in her
complaint the coconut land planted with 200 fruit-bearing
coconut trees, says in regard to its boundaries: "On the
south, by the land of the late Crisanto Bondad, now in the
possession of Rufina Bondad . . . " She says that she has
been in possession was only acquired by adjudication; and
that the adjudication was the result of a partition.
It can be shown, as the lower court found, that the partition
has already been made. In the decision rendered in the
case of Ilustre vs. Alaras Frondosa (17 Phil. Rep., 321), this
court said:
 Under the provisions of the Civil Code (arts. 657 to
661), the rights to the succession of a person are
transmitted from the moment of his death; in other
words, the heirs succeed immediately to all of the
property of the deceased ancestor. The property
belongs to the heirs at the moment of the death of
the ancestor as completely as if the ancestor had
executed and delivered to them a deed for the
same before his death. In the absence of debts
existing against the estate, the heirs may enter
upon the administration of the said property
immediately. If they desire to administer it jointly,
they may do so. If they desire to partition it among
themselves and can do this by mutual agreement,
they also have that privilege. The Code of
Procedure in Civil Actions provides how an estate
may be divided by a petition for partition in case
they cannot mutually agree in the division. Where
there are no debts existing against the estate,
there is certainly no occasion for the intervention
of an administrator . . . . The property belonging
absolutely to the heirs, in the absence of existing
debts against the estate, the administrator has no
right whatever to intervene in any way in the
division of the estate among the heirs . . . .
It has been repeatedly shown in the record that there are
no debts outstanding against either succession, and the
complaint itself so states.
The plaintiff makes the following citation from the end of
the decision above referred to: "If there are any heirs of the
estate who have not received their participation, they have
their remedy by petition for partition of the estate." But the
plaintiff has received her share in the land, which, together
with 200 coconut trees, she testifies she has held for the
past ten years.
If, at the present time or in the future, some creditor should
come forward with a claim, or if debts of either or both of
the two intestate estates should appear, prescription after
two years could not be set up against such creditors or
against such debts, because the date from which the
beginning of the two years should be counted, could not be
determined. This is the risk that is incurred in a partition of
these intestate estates and hence the need of making the
partition in writing, that is, so that it would not prejudice any
third person; but among themselves the heirs must abide
by the terms upon which they have agreed.
There is however one fact in the record which has not been
wholly explained and which forms the fifth error assigned by
appellant, to wit, that relative to the land designated under
letter (b) in the complaint. The lower court decided that this
land, planted with 300 coconut trees, belonged to Venancio
Bondad inasmuch as he proved its purchase by the
document Exhibit 2. Venancio Bondad maintains that he
purchased it of Emilia del Rosario on September 30, 1907.
But it is shown that on August 26, 1911, Emilia del Rosario,
the surviving widow, executed the document Exhibit D, in
which she sets forth that she delivered the possession and
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right of enjoyment of apparently the same land to Venancio
Bondad, Placido Bondad, Maria Bondad,
and Rufina Bondad, and that in exchange for it they paid
her the sum of P110.
This document, if authentic, as it appears to be, having
been confirmed by the property assessment declaration
thereof filed by Venancio Bondad (Exhibit A), reveals that
there exists a co-ownership in said land between the four
above mentioned heirs, including the plaintiff Rufina
Bondad. This, however, does not militate against the
partition in question, but rather confirms it. An action for
the division of co-ownership, which is different from that for
partition of a hereditary succession, always lies in behalf of
the interested parties.
The judgment appealed from is affirmed, with the costs of
this instance against the appellant. So ordered.
[G.R. No. L-8437. November 28, 1956.]
ESTATE OF K. H. HEMADY, deceased, vs. LUZON SURETY CO.,
INC., claimant-Appellant.
DECISION
REYES, J. B. L., J.:
Appeal by Luzon Surety Co., Inc., from an order of the Court
of First Instance of Rizal, presided by Judge Hermogenes
Caluag, dismissing its claim against the Estate of K. H.
Hemady (Special Proceeding No. Q-293) for failure to state a
cause of action.
The Luzon Surety Co. had filed a claim against the Estate
based on twenty different indemnity agreements, or counter
bonds, each subscribed by a distinct principal and by the
deceased K. H. Hemady, a surety solidary guarantor) in all of
them, in consideration of the Luzon Surety Co.’s of having
guaranteed, the various principals in favor of different
creditors. The twenty counterbonds, or indemnity
agreements, all contained the following stipulations:
“Premiums. — As consideration for this suretyship, the
undersigned jointly and severally, agree to pay the COMPANY
the sum of ________________ (P______) pesos, Philippines
Currency, in advance as premium there of for every
__________ months or fractions thereof, this ________ or
any renewal or substitution thereof is in effect.
Indemnity. — The undersigned, jointly and severally, agree at
all times to indemnify the COMPANY and keep it indemnified
and hold and save it harmless from and against any and all
damages, losses, costs, stamps, taxes, penalties, charges,
and expenses of whatsoever kind and nature which the
COMPANY shall or may, at any time sustain or incur in
consequence of having become surety upon this bond or any
extension, renewal, substitution or alteration thereof made
at the instance of the undersigned or any of them or any
order executed on behalf of the undersigned or any of
them; and to pay, reimburse and make good to the
COMPANY, its successors and assigns, all sums and amount
of money which it or its representatives shall pay or cause to
be paid, or become liable to pay, on account of the
undersigned or any of them, of whatsoever kind and nature,
including 15% of the amount involved in the litigation or
other matters growing out of or connected therewith for
counsel or attorney’s fees, but in no case less than P25. It is
hereby further agreed that in case of extension or renewal of
this ________ we equally bind ourselves for the payment
thereof under the same terms and conditions as above
mentioned without the necessity of executing another
indemnity agreement for the purpose and that we hereby
equally waive our right to be notified of any renewal or
extension of this ________ which may be granted under this
indemnity agreement.
Interest on amount paid by the Company. — Any and all sums
of money so paid by the company shall bear interest at the
rate of 12% per annum which interest, if not paid, will be
accumulated and added to the capital quarterly order to earn
the same interests as the capital and the total sum thereof,
the capital and interest, shall be paid to the COMPANY as
soon as the COMPANY shall have become liable therefore,
whether it shall have paid out such sums of money or any
part thereof or not.
xxx xxx xxx
Waiver. — It is hereby agreed upon by and between the
undersigned that any question which may arise between
them by reason of this document and which has to be
submitted for decision to Courts of Justice shall be brought
before the Court of competent jurisdiction in the City of
Manila, waiving for this purpose any other venue. Our right
to be notified of the acceptance and approval of this
indemnity agreement is hereby likewise waived.
xxx xxx xxx
Our Liability Hereunder. — It shall not be necessary for the
COMPANY to bring suit against the principal upon his default,
or to exhaust the property of the principal, but the liability
hereunder of the undersigned indemnitor shall be jointly and
severally, a primary one, the same as that of the principal,
and shall be exigible immediately upon the occurrence of
such default.” (Rec. App. pp. 98- 102.)
The Luzon Surety Co., prayed for allowance, as a contingent
claim, of the value of the twenty bonds it had executed in
consideration of the counterbonds, and further asked for
judgment for the unpaid premiums and documentary
stamps affixed to the bonds, with 12 per cent interest
thereon.
Before answer was filed, and upon motion of the
administratrix of Hemady’s estate, the lower court, by order
of September 23, 1953, dismissed the claims of Luzon
Surety Co., on two grounds: (1) that the premiums due and
cost of documentary stamps were not contemplated under
the indemnity agreements to be a part of the undertaking of
the guarantor (Hemady), since they were not liabilities
incurred after the execution of the counterbonds; and (2)
that “whatever losses may occur after Hemady’s death, are
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not chargeable to his estate, because upon his death he
ceased to be guarantor.”
Taking up the latter point first, since it is the one more far
reaching in effects, the reasoning of the court below ran as
follows:
“The administratrix further contends that upon the death of
Hemady, his liability as a guarantor terminated, and
therefore, in the absence of a showing that a loss or damage
was suffered, the claim cannot be considered contingent.
This Court believes that there is merit in this contention and
finds support in Article 2046 of the new Civil Code. It should
be noted that a new requirement has been added for a
person to qualify as a guarantor, that is: integrity. As correctly
pointed out by the Administratrix, integrity is something
purely personal and is not transmissible. Upon the death of
Hemady, his integrity was not transmitted to his estate or
successors. Whatever loss therefore, may occur after
Hemady’s death, are not chargeable to his estate because
upon his death he ceased to be a guarantor.
Another clear and strong indication that the surety company
has exclusively relied on the personality, character, honesty
and integrity of the now deceased K. H. Hemady, was the fact
that in the printed form of the indemnity agreement there is
a paragraph entitled ‘Security by way of first mortgage, which
was expressly waived and renounced by the security
company. The security company has not demanded from K.
H. Hemady to comply with this requirement of giving security
by way of first mortgage. In the supporting papers of the
claim presented by Luzon Surety Company, no real property
was mentioned in the list of properties mortgaged which
appears at the back of the indemnity agreement.” (Rec. App.,
pp. 407-408).
We find this reasoning untenable. Under the present Civil
Code (Article 1311), as well as under the Civil Code of 1889
(Article 1257), the rule is that —
“Contracts take effect only as between the parties, their
assigns and heirs, except in the case where the rights and
obligations arising from the contract are not transmissible by
their nature, or by stipulation or by provision of law.”
While in our successional system the responsibility of the
heirs for the debts of their decedent cannot exceed the value
of the inheritance they receive from him, the principle
remains intact that these heirs succeed not only to the rights
of the deceased but also to his obligations. Articles 774 and
776 of the New Civil Code (and Articles 659 and 661 of the
preceding one) expressly so provide, thereby confirming
Article 1311 already quoted.
“ART. 774. — Succession is a mode of acquisition by virtue
of which the property, rights and obligations to the extent of
the value of the inheritance, of a person are transmitted
through his death to another or others either by his will or by
operation of law.”
“ART. 776. — The inheritance includes all the property, rights
and obligations of a person which are not extinguished by his
death.”
In Mojica vs. Fernandez, 9 Phil. 403, this Supreme Court
ruled:
“Under the Civil Code the heirs, by virtue of the rights of
succession are subrogated to all the rights and obligations
of the deceased (Article 661) and cannot be regarded as
third parties with respect to a contract to which the deceased
was a party, touching the estate of the deceased (Barrios vs.
Dolor, 2 Phil. 44).
xxx xxx xxx
“The principle on which these decisions rest is not affected
by the provisions of the new Code of Civil Procedure, and, in
accordance with that principle, the heirs of a deceased
person cannot be held to be “third persons” in relation to any
contracts touching the real estate of their decedent which
comes in to their hands by right of inheritance; they take
such property subject to all the obligations resting thereon in
the hands of him from whom they derive their rights.”
(See also Galasinao vs. Austria, 51 Off. Gaz. (No. 6) p. 2874
and de Guzman vs. Salak, 91 Phil., 265).
The binding effect of contracts upon the heirs of the
deceased party is not altered by the provision in our Rules of
Court that money debts of a deceased must be liquidated
and paid from his estate before the residue is distributed
among said heirs (Rule 89). The reason is that whatever
payment is thus made from the estate is ultimately a
payment by the heirs and distributees, since the amount of
the paid claim in fact diminishes or reduces the shares that
the heirs would have been entitled to receive.
Under our law, therefore, the general rule is that a party’s
contractual rights and obligations are transmissible to the
successors. The rule is a consequence of the progressive
“depersonalization” of patrimonial rights and duties that, as
observed by Victorio Polacco, has characterized the history
of these institutions. From the Roman concept of a relation
from person to person, the obligation has evolved into a
relation from patrimony to patrimony, with the persons
occupying only a representative position, barring those rare
cases where the obligation is strictly personal, i.e., is
contracted intuitu personae, in consideration of its
performance by a specific person and by no other. The
transition is marked by the disappearance of the
imprisonment for debt.
Of the three exceptions fixed by Article 1311, the nature of
the obligation of the surety or guarantor does not warrant the
conclusion that his peculiar individual qualities are
contemplated as a principal inducement for the contract.
What did the creditor Luzon Surety Co. expect of K. H.
Hemady when it accepted the latter as surety in the
counterbonds? Nothing but the reimbursement of the
moneys that the Luzon Surety Co. might have to disburse on
account of the obligations of the principal debtors. This
reimbursement is a payment of a sum of money, resulting
from an obligation to give; and to the Luzon Surety Co., it was
indifferent that the reimbursement should be made by
Hemady himself or by some one else in his behalf, so long
as the money was paid to it.
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The second exception of Article 1311, p. 1, is
intransmissibility by stipulation of the parties. Being
exceptional and contrary to the general rule, this
intransmissibility should not be easily implied, but must be
expressly established, or at the very least, clearly inferable
from the provisions of the contract itself, and the text of the
agreements sued upon nowhere indicate that they are non-
transferable.
“(b) Intransmisibilidad por pacto. — Lo general es la
transmisibilidad de darechos y obligaciones; le excepcion, la
intransmisibilidad. Mientras nada se diga en contrario
impera el principio de la transmision, como elemento natural
a toda relacion juridica, salvo las personalisimas. Asi, para
la no transmision, es menester el pacto expreso, porque si
no, lo convenido entre partes trasciende a sus herederos.
Siendo estos los continuadores de la personalidad del
causante, sobre ellos recaen los efectos de los vinculos
juridicos creados por sus antecesores, y para evitarlo, si asi
se quiere, es indespensable convension terminante en tal
sentido.
Por su esencia, el derecho y la obligacion tienden a ir más
allá de las personas que les dieron vida, y a ejercer presion
sobre los sucesores de esa persona; cuando no se quiera
esto, se impone una estipulacion limitativa expresamente de
la transmisibilidad o de cuyos tirminos claramente se
deduzca la concresion del concreto a las mismas personas
que lo otorgon.” (Scaevola, Codigo Civil, Tomo XX, p. 541-
542) (Emphasis supplied.)
Because under the law (Article 1311), a person who enters
into a contract is deemed to have contracted for himself and
his heirs and assigns, it is unnecessary for him to expressly
stipulate to that effect; hence, his failure to do so is no sign
that he intended his bargain to terminate upon his death.
Similarly, that the Luzon Surety Co., did not require
bondsman Hemady to execute a mortgage indicates nothing
more than the company’s faith and confidence in the
financial stability of the surety, but not that his obligation
was strictly personal.
The third exception to the transmissibility of obligations
under Article 1311 exists when they are “not transmissible
by operation of law”. The provision makes reference to those
cases where the law expresses that the rights or obligations
are extinguished by death, as is the case in legal support
(Article 300), parental authority (Article 327), usufruct
(Article 603), contracts for a piece of work (Article 1726),
partnership (Article 1830 and agency (Article 1919). By
contract, the articles of the Civil Code that regulate guaranty
or suretyship (Articles 2047 to 2084) contain no provision
that the guaranty is extinguished upon the death of the
guarantor or the surety.
The lower court sought to infer such a limitation from Art.
2056, to the effect that “one who is obliged to furnish a
guarantor must present a person who possesses integrity,
capacity to bind himself, and sufficient property to answer
for the obligation which he guarantees”. It will be noted,
however, that the law requires these qualities to be present
only at the time of the perfection of the contract of guaranty.
It is self-evident that once the contract has become
perfected and binding, the supervening incapacity of the
guarantor would not operate to exonerate him of the
eventual liability he has contracted; and if that be true of his
capacity to bind himself, it should also be true of his integrity,
which is a quality mentioned in the article alongside the
capacity.
The foregoing concept is confirmed by the next Article 2057,
that runs as follows:
“ART. 2057. — If the guarantor should be convicted in first
instance of a crime involving dishonesty or should become
insolvent, the creditor may demand another who has all the
qualifications required in the preceding article. The case is
excepted where the creditor has required and stipulated that
a specified person should be guarantor.”
From this article it should be immediately apparent that the
supervening dishonesty of the guarantor (that is to say, the
disappearance of his integrity after he has become bound)
does not terminate the contract but merely entitles the
creditor to demand a replacement of the guarantor. But the
step remains optional in the creditor: it is his right, not his
duty; he may waive it if he chooses, and hold the guarantor
to his bargain. Hence Article 2057 of the present Civil Code
is incompatible with the trial court’s stand that the
requirement of integrity in the guarantor or surety makes the
latter’s undertaking strictly personal, so linked to his
individuality that the guaranty automatically terminates
upon his death.
The contracts of suretyship entered into by K. H. Hemady in
favor of Luzon Surety Co. not being rendered intransmissible
due to the nature of the undertaking, nor by the stipulations
of the contracts themselves, nor by provision of law, his
eventual liability thereunder necessarily passed upon his
death to his heirs. The contracts, therefore, give rise to
contingent claims provable against his estate under section
5, Rule 87 (2 Moran, 1952 ed., p. 437; Gaskell & Co. vs. Tan
Sit, 43 Phil. 810, 814).
“The most common example of the contigent claim is that
which arises when a person is bound as surety or guarantor
for a principal who is insolvent or dead. Under the ordinary
contract of suretyship the surety has no claim whatever
against his principal until he himself pays something by way
of satisfaction upon the obligation which is secured. When
he does this, there instantly arises in favor of the surety the
right to compel the principal to exonerate the surety. But
until the surety has contributed something to the payment of
the debt, or has performed the secured obligation in whole
or in part, he has no right of action against anybody — no
claim that could be reduced to judgment. (May vs. Vann, 15
Pla., 553; Gibson vs. Mithell, 16 Pla., 519; Maxey vs. Carter,
10 Yarg. [Tenn.], 521 Reeves vs. Pulliam, 7 Baxt. [Tenn.],
119; Ernst vs. Nou, 63 Wis., 134.)”
For Defendant administratrix it is averred that the above
doctrine refers to a case where the surety files claims
against the estate of the principal debtor; and it is urged that
the rule does not apply to the case before us, where the late
Hemady was a surety, not a principal debtor. The argument
evinces a superficial view of the relations between parties. If
under the Gaskell ruling, the Luzon Surety Co., as guarantor,
5
could file a contingent claim against the estate of the
principal debtors if the latter should die, there is absolutely
no reason why it could not file such a claim against the
estate of Hemady, since Hemady is a solidary co-debtor of
his principals. What the Luzon Surety Co. may claim from the
estate of a principal debtor it may equally claim from the
estate of Hemady, since, in view of the existing solidarity, the
latter does not even enjoy the benefit of exhaustion of the
assets of the principal debtor.
The foregoing ruling is of course without prejudice to the
remedies of the administratrix against the principal debtors
under Articles 2071 and 2067 of the New Civil Code.
Our conclusion is that the solidary guarantor’s liability is not
extinguished by his death, and that in such event, the Luzon
Surety Co., had the right to file against the estate a
contingent claim for reimbursement. It becomes
unnecessary now to discuss the estate’s liability for
premiums and stamp taxes, because irrespective of the
solution to this question, the Luzon Surety’s claim did state
a cause of action, and its dismissal was erroneous.
Wherefore, the order appealed from is reversed, and the
records are ordered remanded to the court of origin, with
instructions to proceed in accordance with law. Costs
against the Administratrix- Appellee. SO ORDERED.
G.R. No. L-68053 May 7, 1990
LAURA ALVAREZ, FLORA ALVAREZ and RAYMUNDO
ALVAREZ, petitioners,
vs.
THE HONORABLE INTERMEDIATE APELLATE COURT and
JESUS YANES, ESTELITA YANES, ANTONIO YANES, ROSARIO
YANES, and ILUMINADO YANES, respondents.
FERNAN, C.J.:
This is a petition for review on certiorari seeking the
reversal of: (a) the decision of the Fourth Civil Cases
Division of the Intermediate Appellate Court dated August
31, 1983 in AC-G.R. CV No. 56626 entitled "Jesus Yanes et
al. v. Dr. Rodolfo Siason et al." affirming the decision dated
July 8, 1974 of the Court of First Instance of Negros
Occidental insofar as it ordered the petitioners to pay jointly
and severally the private respondents the sum of
P20,000.00 representing the actual value of Lots Nos.
773-A and 773-B of the cadastral survey of Murcia, Negros
Occidental and reversing the subject decision insofar as it
awarded the sums of P2,000.00, P5,000.00 and
P2,000.00 as actual damages, moral damages and
attorney's fees, respectively and (b) the resolution of said
appellate court dated May 30, 1984, denying the motion
for reconsideration of its decision.
The real properties involved are two parcels of land
identified as Lot 773-A and Lot 773-B which were originally
known as Lot 773 of the cadastral survey of Murcia, Negros
Occidental. Lot 773, with an area of 156,549 square
meters, was registered in the name of the heirs of Aniceto
Yanes under Original Certificate of Title No. RO-4858
(8804) issued on October 9, 1917 by the Register of Deeds
of Occidental Negros (Exh. A).
Aniceto Yanes was survived by his children, Rufino, Felipe
and Teodora. Herein private respondents, Estelita,
Iluminado and Jesus, are the children of Rufino who died in
1962 while the other private respondents, Antonio and
Rosario Yanes, are children of Felipe. Teodora was survived
by her child, Jovita (Jovito) Alib. 1 It is not clear why the
latter is not included as a party in this case.
Aniceto left his children Lots 773 and 823. Teodora
cultivated only three hectares of Lot 823 as she could not
attend to the other portions of the two lots which had a
total area of around twenty-four hectares. The record does
not show whether the children of Felipe also cultivated
some portions of the lots but it is established that Rufino
and his children left the province to settle in other places
as a result of the outbreak of World War II. According to
Estelita, from the "Japanese time up to peace time", they
did not visit the parcels of land in question but "after
liberation", when her brother went there to get their share
of the sugar produced therein, he was informed that
Fortunato Santiago, Fuentebella (Puentevella) and Alvarez
were in possession of Lot 773. 2
It is on record that on May 19, 1938, Fortunato D. Santiago
was issued Transfer Certificate of Title No. RF 2694
(29797) covering Lot 773-A with an area of 37,818 square
meters. 3 TCT No. RF 2694 describes Lot 773-A as a
portion of Lot 773 of the cadastral survey of Murcia and as
originally registered under OCT No. 8804.
The bigger portion of Lot 773 with an area of 118,831
square meters was also registered in the name of
Fortunato D. Santiago on September 6, 1938 Under TCT
No. RT-2695 (28192 ). 4 Said transfer certificate of title
also contains a certification to the effect that Lot 773-B
was originally registered under OCT No. 8804.
On May 30, 1955, Santiago sold Lots 773-A and 773-B to
Monico B. Fuentebella, Jr. in consideration of the sum of
P7,000.00. 5 Consequently, on February 20, 1956, TCT
Nos. T-19291 and T-19292 were issued in Fuentebella's
name. 6
After Fuentebella's death and during the settlement of his
estate, the administratrix thereof (Arsenia R. Vda. de
Fuentebella, his wife) filed in Special Proceedings No. 4373
in the Court of First Instance of Negros Occidental, a motion
requesting authority to sell Lots 773-A and 773-B. 7 By
virtue of a court order granting said motion, 8 on March 24,
1958, Arsenia Vda. de Fuentebella sold said lots for
P6,000.00 to Rosendo Alvarez. 9 Hence, on April 1, 1958
TCT Nos. T-23165 and T-23166 covering Lots 773-A and
773-B were respectively issued to Rosendo Alvarez. 10
Two years later or on May 26, 1960, Teodora Yanes and
the children of her brother Rufino, namely, Estelita,
Iluminado and Jesus, filed in the Court of First Instance of
Negros Occidental a complaint against Fortunato Santiago,
6
Arsenia Vda. de Fuentebella, Alvarez and the Register of
Deeds of Negros Occidental for the "return" of the
ownership and possession of Lots 773 and 823. They also
prayed that an accounting of the produce of the land from
1944 up to the filing of the complaint be made by the
defendants, that after court approval of said accounting,
the share or money equivalent due the plaintiffs be
delivered to them, and that defendants be ordered to pay
plaintiffs P500.00 as damages in the form of attorney's
fees. 11
During the pendency in court of said case or on November
13, 1961, Alvarez sold Lots 773-A, 773-B and another lot
for P25,000.00 to Dr. Rodolfo Siason. 12 Accordingly, TCT
Nos. 30919 and 30920 were issued to Siason, 13 who
thereafter, declared the two lots in his name for
assessment purposes. 14
Meanwhile, on November 6, 1962, Jesus Yanes, in his own
behalf and in behalf of the other plaintiffs, and assisted by
their counsel, filed a manifestation in Civil Case No. 5022
stating that the therein plaintiffs "renounce, forfeit and
quitclaims (sic) any claim, monetary or otherwise, against
the defendant Arsenia Vda. de Fuentebella in connection
with the above-entitled case." 15
On October 11, 1963, a decision was rendered by the Court
of First Instance of Negros Occidental in Civil Case No.
5022, the dispositive portion of which reads:
WHEREFORE, judgment is rendered, ordering the
defendant Rosendo Alvarez to reconvey to the
plaintiffs lots Nos. 773 and 823 of the Cadastral
Survey of Murcia, Negros Occidental, now covered
by Transfer Certificates of Title Nos. T-23165 and
T-23166 in the name of said defendant, and
thereafter to deliver the possession of said lots to
the plaintiffs. No special pronouncement as to
costs.
SO ORDERED. 16
It will be noted that the above-mentioned manifestation of
Jesus Yanes was not mentioned in the aforesaid decision.
However, execution of said decision proved unsuccessful
with respect to Lot 773. In his return of service dated
October 20, 1965, the sheriff stated that he discovered
that Lot 773 had been subdivided into Lots 773-A and 773-
B; that they were "in the name" of Rodolfo Siason who had
purchased them from Alvarez, and that Lot 773 could not
be delivered to the plaintiffs as Siason was "not a party per
writ of execution." 17
The execution of the decision in Civil Case No. 5022 having
met a hindrance, herein private respondents (the Yaneses)
filed on July 31, 1965, in the Court of First Instance of
Negros Occidental a petition for the issuance of a new
certificate of title and for a declaration of nullity of TCT Nos.
T-23165 and T-23166 issued to Rosendo
Alvarez. 18 Thereafter, the court required Rodolfo Siason to
produce the certificates of title covering Lots 773 and 823.
Expectedly, Siason filed a manifestation stating that he
purchased Lots 773-A, 773-B and 658, not Lots 773 and
823, "in good faith and for a valuable consideration without
any knowledge of any lien or encumbrances against said
properties"; that the decision in the cadastral
proceeding 19 could not be enforced against him as he was
not a party thereto; and that the decision in Civil Case No.
5022 could neither be enforced against him not only
because he was not a party-litigant therein but also
because it had long become final and executory. 20 Finding
said manifestation to be well-founded, the cadastral court,
in its order of September 4, 1965, nullified its previous
order requiring Siason to surrender the certificates of title
mentioned therein. 21
In 1968, the Yaneses filed an ex-parte motion for the
issuance of an alias writ of execution in Civil Case No.
5022. Siason opposed it. 22 In its order of September 28,
1968 in Civil Case No. 5022, the lower court, noting that
the Yaneses had instituted another action for the recovery
of the land in question, ruled that at the judgment therein
could not be enforced against Siason as he was not a party
in the case. 23
The action filed by the Yaneses on February 21, 1968 was
for recovery of real property with damages. 24 Named
defendants therein were Dr. Rodolfo Siason, Laura Alvarez,
Flora Alvarez, Raymundo Alvarez and the Register of Deeds
of Negros Occidental. The Yaneses prayed for the
cancellation of TCT Nos. T-19291 and 19292 issued to
Siason (sic) for being null and void; the issuance of a new
certificate of title in the name of the Yaneses "in
accordance with the sheriffs return of service dated
October 20, 1965;" Siason's delivery of possession of Lot
773 to the Yaneses; and if, delivery thereof could not be
effected, or, if the issuance of a new title could not be
made, that the Alvarez and Siason jointly and severally pay
the Yaneses the sum of P45,000.00. They also prayed that
Siason render an accounting of the fruits of Lot 773 from
November 13, 1961 until the filing of the complaint; and
that the defendants jointly and severally pay the Yaneses
moral damages of P20,000.00 and exemplary damages of
P10,000.00 plus attorney's fees of P4, 000.00. 25
In his answer to the complaint, Siason alleged that the
validity of his titles to Lots 773-A and 773-B, having been
passed upon by the court in its order of September 4,
1965, had become res judicata and the Yaneses were
estopped from questioning said order. 26 On their part, the
Alvarez stated in their answer that the Yaneses' cause of
action had been "barred by res judicata, statute of
limitation and estoppel." 27
In its decision of July 8, 1974, the lower court found that
Rodolfo Siason, who purchased the properties in question
thru an agent as he was then in Mexico pursuing further
medical studies, was a buyer in good faith for a valuable
consideration. Although the Yaneses were negligent in their
failure to place a notice of lis pendens "before the Register
of Deeds of Negros Occidental in order to protect their
rights over the property in question" in Civil Case No. 5022,
7
equity demanded that they recover the actual value of the
land because the sale thereof executed between Alvarez
and Siason was without court approval. 28 The dispositive
portion of the decision states:
IN VIEW OF THE FOREGOING CONSIDERATION,
judgment is hereby rendered in the following
manner:
A. The case against the defendant Dr. Rodolfo
Siason and the Register of Deeds are (sic) hereby
dismmissed,
B. The defendants, Laura, Flora and Raymundo, all
surnamed Alvarez being the legitimate children of
the deceased Rosendo Alvarez are hereby ordered
to pay jointly and severally the plaintiffs the sum of
P20,000.00 representing the actual value of Lots
Nos. 773-A and 773-B of Murcia Cadastre, Negros
Occidental; the sum of P2,000.00 as actual
damages suffered by the plaintiff; the sum of
P5,000.00 representing moral damages and the
sum of P2.000 as attorney's fees, all with legal
rate of interest from date of the filing of this
complaint up to final payment.
C. The cross-claim filed by the defendant Dr.
Rodolfo Siason against the defendants, Laura,
Flora and Raymundo, all surnamed Alvarez is
hereby dismissed.
D. Defendants, Laura, Flora and Raymundo, all
surnamed Alvarez are hereby ordered to pay the
costs of this suit.
SO ORDERED. 29
The Alvarez appealed to the then Intermediate Appellate
Court which in its decision of August 31, 1983 30 affirmed
the lower court's decision "insofar as it ordered defendants-
appellants to pay jointly and severally the plaintiffs-
appellees the sum of P20,000.00 representing the actual
value of Lots Nos. 773-A and 773-B of the cadastral survey
of Murcia, Negros Occidental, and is reversed insofar as it
awarded the sums of P2,000.00, P5,000.00 and
P2,000.00 as actual damages, moral damages and
attorney's fees, respectively." 31 The dispositive portion of
said decision reads:
WHEREFORE, the decision appealed from is
affirmed insofar as it ordered defendants-
appellants to pay jointly and severally the plaintiffs-
appellees the sum of P20,000.00 representing the
actual value of Lots Nos. 773-A and 773-B of the
cadastral survey of Murcia, Negros Occidental, and
is reversed insofar as it awarded the sums of
P2,000.00, P5,000.00 and P2,000.00 as actual
damages, moral damages and attorney's fees,
respectively. No costs.
SO ORDERED. 32
Finding no cogent reason to grant appellants motion for
reconsideration, said appellate court denied the same.
Hence, the instant petition. ln their memorandum
petitioners raised the following issues:
1. Whethere or not the defense of prescription and
estoppel had been timely and properly invoked and
raised by the petitioners in the lower court.
2. Whether or not the cause and/or causes of
action of the private respondents, if ever there are
any, as alleged in their complaint dated February
21, 1968 which has been docketed in the trial
court as Civil Case No. 8474 supra, are forever
barred by statute of limitation and/or prescription
of action and estoppel.
3. Whether or not the late Rosendo Alvarez, a
defendant in Civil Case No. 5022, supra and father
of the petitioners become a privy and/or party to
the waiver (Exhibit 4-defendant Siason) in Civil
Case No. 8474, supra where the private
respondents had unqualifiedly and absolutely
waived, renounced and quitclaimed all their
alleged rights and interests, if ever there is any, on
Lots Nos. 773-A and 773-B of Murcia Cadastre as
appearing in their written manifestation dated
November 6, 1962 (Exhibits "4" Siason) which had
not been controverted or even impliedly or
indirectly denied by them.
4. Whether or not the liability or liabilities of
Rosendo Alvarez arising from the sale of Lots Nos.
773-A and 773-B of Murcia Cadastre to Dr. Rodolfo
Siason, if ever there is any, could be legally passed
or transmitted by operations (sic) of law to the
petitioners without violation of law and due
process . 33
The petition is devoid of merit.
As correctly ruled by the Court of Appeals, it is powerless
and for that matter so is the Supreme Court, to review the
decision in Civil Case No. 5022 ordering Alvarez to
reconvey the lots in dispute to herein private respondents.
Said decision had long become final and executory and
with the possible exception of Dr. Siason, who was not a
party to said case, the decision in Civil Case No. 5022 is
the law of the case between the parties thereto. It ended
when Alvarez or his heirs failed to appeal the decision
against them. 34
Thus, it is axiomatic that when a right or fact has been
judicially tried and determined by a court of competent
jurisdiction, so long as it remains unreversed, it should be
conclusive upon the parties and those in privity with them
in law or estate. 35 As consistently ruled by this Court, every
litigation must come to an end. Access to the court is
guaranteed. But there must be a limit to it. Once a litigant's
right has been adjudicated in a valid final judgment of a
competent court, he should not be granted an unbridled
8
license to return for another try. The prevailing party should
not be harassed by subsequent suits. For, if endless
litigation were to be allowed, unscrupulous litigations will
multiply in number to the detriment of the administration of
justice. 36
There is no dispute that the rights of the Yaneses to the
properties in question have been finally adjudicated in Civil
Case No. 5022. As found by the lower court, from the
uncontroverted evidence presented, the Yaneses have
been illegally deprived of ownership and possession of the
lots in question. 37 In fact, Civil Case No. 8474 now under
review, arose from the failure to execute Civil Case No.
5022, as subject lots can no longer be reconveyed to
private respondents Yaneses, the same having been sold
during the pendency of the case by the petitioners' father to
Dr. Siason who did not know about the controversy, there
being no lis pendens annotated on the titles. Hence, it was
also settled beyond question that Dr. Siason is a purchaser
in good faith.
Under the circumstances, the trial court did not annul the
sale executed by Alvarez in favor of Dr. Siason on
November 11, 1961 but in fact sustained it. The trial court
ordered the heirs of Rosendo Alvarez who lost in Civil Case
No. 5022 to pay the plaintiffs (private respondents herein)
the amount of P20,000.00 representing the actual value of
the subdivided lots in dispute. It did not order defendant
Siason to pay said amount. 38
As to the propriety of the present case, it has long been
established that the sole remedy of the landowner whose
property has been wrongfully or erroneously registered in
another's name is to bring an ordinary action in the ordinary
court of justice for reconveyance or, if the property has
passed into the hands of an innocent purchaser for value,
for damages. 39 "It is one thing to protect an innocent third
party; it is entirely a different matter and one devoid of
justification if deceit would be rewarded by allowing the
perpetrator to enjoy the fruits of his nefarious decided As
clearly revealed by the undeviating line of decisions coming
from this Court, such an undesirable eventuality is precisely
sought to be guarded against." 40
The issue on the right to the properties in litigation having
been finally adjudicated in Civil Case No. 5022 in favor of
private respondents, it cannot now be reopened in the
instant case on the pretext that the defenses of
prescription and estoppel have not been properly
considered by the lower court. Petitioners could have
appealed in the former case but they did not. They have
therefore foreclosed their rights, if any, and they cannot
now be heard to complain in another case in order to
defeat the enforcement of a judgment which has longing
become final and executory.
Petitioners further contend that the liability arising from the
sale of Lots No. 773-A and 773-B made by Rosendo Alvarez
to Dr. Rodolfo Siason should be the sole liability of the late
Rosendo Alvarez or of his estate, after his death.
Such contention is untenable for it overlooks the doctrine
obtaining in this jurisdiction on the general transmissibility
of the rights and obligations of the deceased to his
legitimate children and heirs. Thus, the pertinent provisions
of the Civil Code state:
Art. 774. Succession is a mode of acquisition by
virtue of which the property, rights and obligations
to the extent of the value of the inheritance, of a
person are transmitted through his death to
another or others either by his will or by operation
of law.
Art. 776. The inheritance includes all the property,
rights and obligations of a person which are not
extinguished by his death.
Art. 1311. Contract stake effect only between the
parties, their assigns and heirs except in case
where the rights and obligations arising from the
contract are not transmissible by their nature, or by
stipulation or by provision of law. The heir is not
liable beyond the value of the property received
from the decedent.
As explained by this Court through Associate Justice J.B.L.
Reyes in the case of Estate of Hemady vs. Luzon Surety
Co., Inc. 41
The binding effect of contracts upon the heirs of
the deceased party is not altered by the provision
of our Rules of Court that money debts of a
deceased must be liquidated and paid from his
estate before the residue is distributed among said
heirs (Rule 89). The reason is that whatever
payment is thus made from the state is ultimately
a payment by the heirs or distributees, since the
amount of the paid claim in fact diminishes or
reduces the shares that the heirs would have been
entitled to receive.
Under our law, therefore. the general rule is that a
party's contractual rights and obligations are
transmissible to the successors.
The rule is a consequence of the progressive
"depersonalization" of patrimonial rights and duties
that, as observed by Victorio Polacco has
characterized the history of these institutions.
From the Roman concept of a relation from person
to person, the obligation has evolved into a relation
from patrimony to patrimony with the persons
occupying only a representative position, barring
those rare cases where the obligation is strictly
personal, i.e., is contracted intuitu personae, in
consideration of its performance by a specific
person and by no other.
xxx xxx xxx
Petitioners being the heirs of the late Rosendo Alvarez, they
cannot escape the legal consequences of their father's
9
transaction, which gave rise to the present claim for
damages. That petitioners did not inherit the property
involved herein is of no moment because by legal fiction,
the monetary equivalent thereof devolved into the mass of
their father's hereditary estate, and we have ruled that the
hereditary assets are always liable in their totality for the
payment of the debts of the estate. 42
It must, however, be made clear that petitioners are liable
only to the extent of the value of their inheritance. With this
clarification and considering petitioners' admission that
there are other properties left by the deceased which are
sufficient to cover the amount adjudged in favor of private
respondents, we see no cogent reason to disturb the
findings and conclusions of the Court of Appeals.
WHEREFORE, subject to the clarification herein above
stated, the assailed decision of the Court of Appeals is
hereby AFFIRMED. Costs against petitioners.
SO ORDERED.
G.R. No. 113725 June 29, 2000
JOHNNY S. RABADILLA,1 petitioner,
vs.
COURT OF APPEALS AND MARIA MARLENA2 COSCOLUELLA
Y BELLEZA VILLACARLOS, respondents.
DECISION
PURISIMA, J.:
This is a petition for review of the decision of the Court of
Appeals,3 dated December 23, 1993, in CA-G.R. No. CV-
35555, which set aside the decision of Branch 52 of the
Regional Trial Court in Bacolod City, and ordered the
defendants-appellees (including herein petitioner), as heirs
of Dr. Jorge Rabadilla, to reconvey title over Lot No. 1392,
together with its fruits and interests, to the estate of Aleja
Belleza.
The antecedent facts are as follows:
In a Codicil appended to the Last Will and Testament of
testatrix Aleja Belleza, Dr. Jorge Rabadilla, predecessor-in-
interest of the herein petitioner, Johnny S. Rabadilla, was
instituted as a devisee of 511, 855 square meters of that
parcel of land surveyed as Lot No. 1392 of the Bacolod
Cadastre. The said Codicil, which was duly probated and
admitted in Special Proceedings No. 4046 before the then
Court of First Instance of Negros Occidental, contained the
following provisions:
"FIRST
I give, leave and bequeath the following property owned by
me to Dr. Jorge Rabadilla resident of 141 P. Villanueva,
Pasay City:
(a) Lot No. 1392 of the Bacolod Cadastre, covered
by Transfer Certificate of Title No. RT-4002
(10942), which is registered in my name according
to the records of the Register of Deeds of Negros
Occidental.
(b) That should Jorge Rabadilla die ahead of me,
the aforementioned property and the rights which I
shall set forth hereinbelow, shall be inherited and
acknowledged by the children and spouse of Jorge
Rabadilla.
xxx
FOURTH
(a)....It is also my command, in this my addition (Codicil),
that should I die and Jorge Rabadilla shall have already
received the ownership of the said Lot No. 1392 of the
Bacolod Cadastre, covered by Transfer Certificate of Title
No. RT-4002 (10942), and also at the time that the lease
of Balbinito G. Guanzon of the said lot shall expire, Jorge
Rabadilla shall have the obligation until he dies, every year
to give to Maria Marlina Coscolluela y Belleza, Seventy (75)
(sic) piculs of Export sugar and Twenty Five (25) piculs of
Domestic sugar, until the said Maria Marlina Coscolluela y
Belleza dies.
FIFTH
(a) Should Jorge Rabadilla die, his heir to whom he shall
give Lot No. 1392 of the Bacolod Cadastre, covered by
Transfer Certificate of Title No. RT-4002 (10492), shall
have the obligation to still give yearly, the sugar as
specified in the Fourth paragraph of his testament, to Maria
Marlina Coscolluela y Belleza on the month of December of
each year.
SIXTH
I command, in this my addition (Codicil) that the Lot No.
1392, in the event that the one to whom I have left and
bequeathed, and his heir shall later sell, lease, mortgage
this said Lot, the buyer, lessee, mortgagee, shall have also
the obligation to respect and deliver yearly ONE HUNDRED
(100) piculs of sugar to Maria Marlina Coscolluela y
Belleza, on each month of December, SEVENTY FIVE (75)
piculs of Export and TWENTY FIVE (25) piculs of Domestic,
until Maria Marlina shall die, lastly should the buyer, lessee
or the mortgagee of this lot, not have respected my
command in this my addition (Codicil), Maria Marlina
Coscolluela y Belleza, shall immediately seize this Lot No.
1392 from my heir and the latter's heirs, and shall turn it
10
over to my near desendants, (sic) and the latter shall then
have the obligation to give the ONE HUNDRED (100) piculs
of sugar until Maria Marlina shall die. I further command in
this my addition (Codicil) that my heir and his heirs of this
Lot No. 1392, that they will obey and follow that should
they decide to sell, lease, mortgage, they cannot negotiate
with others than my near descendants and my sister."4
Pursuant to the same Codicil, Lot No. 1392 was transferred
to the deceased, Dr. Jorge Rabadilla, and Transfer
Certificate of Title No. 44498 thereto issued in his name.
Dr. Jorge Rabadilla died in 1983 and was survived by his
wife Rufina and children Johnny (petitioner), Aurora, Ofelia
and Zenaida, all surnamed Rabadilla.
On August 21, 1989, Maria Marlena Coscolluela y Belleza
Villacarlos brought a complaint, docketed as Civil Case No.
5588, before Branch 52 of the Regional Trial Court in
Bacolod City, against the above-mentioned heirs of Dr.
Jorge Rabadilla, to enforce the provisions of subject Codicil.
The Complaint alleged that the defendant-heirs violated the
conditions of the Codicil, in that:
1. Lot No. 1392 was mortgaged to the Philippine
National Bank and the Republic Planters Bank in
disregard of the testatrix's specific instruction to
sell, lease, or mortgage only to the near
descendants and sister of the testatrix.
2. Defendant-heirs failed to comply with their
obligation to deliver one hundred (100) piculs of
sugar (75 piculs export sugar and 25 piculs
domestic sugar) to plaintiff Maria Marlena
Coscolluela y Belleza from sugar crop years 1985
up to the filing of the complaint as mandated by
the Codicil, despite repeated demands for
compliance.
3. The banks failed to comply with the 6th
paragraph of the Codicil which provided that in
case of the sale, lease, or mortgage of the
property, the buyer, lessee, or mortgagee shall
likewise have the obligation to deliver 100 piculs of
sugar per crop year to herein private respondent.
The plaintiff then prayed that judgment be rendered
ordering defendant-heirs to reconvey/return-Lot No. 1392
to the surviving heirs of the late Aleja Belleza, the
cancellation of TCT No. 44498 in the name of the
deceased, Dr. Jorge Rabadilla, and the issuance of a new
certificate of title in the names of the surviving heirs of the
late Aleja Belleza.
On February 26, 1990, the defendant-heirs were declared
in default but on March 28, 1990 the Order of Default was
lifted, with respect to defendant Johnny S. Rabadilla, who
filed his Answer, accordingly.
During the pre-trial, the parties admitted that:
On November 15, 1998, the plaintiff (private
respondent) and a certain Alan Azurin, son-in-law of the
herein petitioner who was lessee of the property and acting
as attorney-in-fact of defendant-heirs, arrived at an
amicable settlement and entered into a Memorandum of
Agreement on the obligation to deliver one hundred piculs
of sugar, to the following effect:
"That for crop year 1988-89, the annuity mentioned in Entry
No. 49074 of TCT No. 44489 will be delivered not later
than January of 1989, more specifically, to wit:
75 piculs of 'A' sugar, and 25 piculs of 'B' sugar, or then
existing in any of our names, Mary Rose Rabadilla y Azurin
or Alan Azurin, during December of each sugar crop year, in
Azucar Sugar Central; and, this is considered compliance of
the annuity as mentioned, and in the same manner will
compliance of the annuity be in the next succeeding crop
years.
That the annuity above stated for crop year 1985-86,
1986-87, and 1987-88, will be complied in cash equivalent
of the number of piculs as mentioned therein and which is
as herein agreed upon, taking into consideration the
composite price of sugar during each sugar crop year,
which is in the total amount of ONE HUNDRED FIVE
THOUSAND PESOS (P105,000.00).
That the above-mentioned amount will be paid or delivered
on a staggered cash installment, payable on or before the
end of December of every sugar crop year, to wit:
For 1985-86, TWENTY SIX THOUSAND TWO HUNDRED
FIFTY (P26,250.00) Pesos, payable on or before December
of crop year 1988-89;
For 1986-87, TWENTY SIX THOUSAND TWO HUNDRED
FIFTY (P26,250.00) Pesos, payable on or before December
of crop year 1989-90;
For 1987-88, TWENTY SIX THOUSAND TWO HUNDRED
FIFTY (P26,250.00) Pesos, payable on or before December
of crop year 1990-91; and
For 1988-89, TWENTY SIX THOUSAND TWO HUNDRED
FIFTY (P26,250.00) Pesos, payable on or before December
of crop year 1991-92."5
However, there was no compliance with the aforesaid
Memorandum of Agreement except for a partial delivery of
50.80 piculs of sugar corresponding to sugar crop year
1988 -1989.
On July 22, 1991, the Regional Trial Court came out with a
decision, dismissing the complaint and disposing as
follows:
"WHEREFORE, in the light of the aforegoing
findings, the Court finds that the action is
prematurely filed as no cause of action against the
defendants has as yet arose in favor of plaintiff.
While there maybe the non-performance of the
11
command as mandated exaction from them simply
because they are the children of Jorge Rabadilla,
the title holder/owner of the lot in question, does
not warrant the filing of the present complaint. The
remedy at bar must fall. Incidentally, being in the
category as creditor of the left estate, it is opined
that plaintiff may initiate the intestate proceedings,
if only to establish the heirs of Jorge Rabadilla and
in order to give full meaning and semblance to her
claim under the Codicil.
In the light of the aforegoing findings, the
Complaint being prematurely filed is DISMISSED
without prejudice.
SO ORDERED."6
On appeal by plaintiff, the First Division of the Court of
Appeals reversed the decision of the trial court;
ratiocinating and ordering thus:
"Therefore, the evidence on record having
established plaintiff-appellant's right to receive
100 piculs of sugar annually out of the produce of
Lot No. 1392; defendants-appellee's obligation
under Aleja Belleza's codicil, as heirs of the modal
heir, Jorge Rabadilla, to deliver such amount of
sugar to plaintiff-appellant; defendants-appellee's
admitted non-compliance with said obligation since
1985; and, the punitive consequences enjoined by
both the codicil and the Civil Code, of seizure of Lot
No. 1392 and its reversion to the estate of Aleja
Belleza in case of such non-compliance, this Court
deems it proper to order the reconveyance of title
over Lot No. 1392 from the estates of Jorge
Rabadilla to the estate of Aleja Belleza. However,
plaintiff-appellant must institute separate
proceedings to re-open Aleja Belleza's estate,
secure the appointment of an administrator, and
distribute Lot No. 1392 to Aleja Belleza's legal
heirs in order to enforce her right, reserved to her
by the codicil, to receive her legacy of 100 piculs of
sugar per year out of the produce of Lot No. 1392
until she dies.
Accordingly, the decision appealed from is SET
ASIDE and another one entered ordering
defendants-appellees, as heirs of Jorge Rabadilla,
to reconvey title over Lot No. 1392, together with
its fruits and interests, to the estate of Aleja
Belleza.
SO ORDERED."7
Dissatisfied with the aforesaid disposition by the Court of
Appeals, petitioner found his way to this Court via the
present petition, contending that the Court of Appeals erred
in ordering the reversion of Lot 1392 to the estate of the
testatrix Aleja Belleza on the basis of paragraph 6 of the
Codicil, and in ruling that the testamentary institution of Dr.
Jorge Rabadilla is a modal institution within the purview of
Article 882 of the New Civil Code.
The petition is not impressed with merit.
Petitioner contends that the Court of Appeals erred in
resolving the appeal in accordance with Article 882 of the
New Civil Code on modal institutions and in deviating from
the sole issue raised which is the absence or prematurity of
the cause of action. Petitioner maintains that Article 882
does not find application as there was no modal institution
and the testatrix intended a mere simple substitution - i.e.
the instituted heir, Dr. Jorge Rabadilla, was to be
substituted by the testatrix's "near descendants" should the
obligation to deliver the fruits to herein private respondent
be not complied with. And since the testatrix died single
and without issue, there can be no valid substitution and
such testamentary provision cannot be given any effect.
The petitioner theorizes further that there can be no valid
substitution for the reason that the substituted heirs are
not definite, as the substituted heirs are merely referred to
as "near descendants" without a definite identity or
reference as to who are the "near descendants" and
therefore, under Articles 8438 and 8459 of the New Civil
Code, the substitution should be deemed as not written.
The contentions of petitioner are untenable. Contrary to his
supposition that the Court of Appeals deviated from the
issue posed before it, which was the propriety of the
dismissal of the complaint on the ground of prematurity of
cause of action, there was no such deviation. The Court of
Appeals found that the private respondent had a cause of
action against the petitioner. The disquisition made on
modal institution was, precisely, to stress that the private
respondent had a legally demandable right against the
petitioner pursuant to subject Codicil; on which issue the
Court of Appeals ruled in accordance with law.
It is a general rule under the law on succession that
successional rights are transmitted from the moment of
death of the decedent10 and compulsory heirs are called to
succeed by operation of law. The legitimate children and
descendants, in relation to their legitimate parents, and the
widow or widower, are compulsory heirs.11 Thus, the
petitioner, his mother and sisters, as compulsory heirs of
the instituted heir, Dr. Jorge Rabadilla, succeeded the latter
by operation of law, without need of further proceedings,
and the successional rights were transmitted to them from
the moment of death of the decedent, Dr. Jorge Rabadilla.
Under Article 776 of the New Civil Code, inheritance
includes all the property, rights and obligations of a person,
not extinguished by his death. Conformably, whatever rights
Dr. Jorge Rabadilla had by virtue of subject Codicil were
transmitted to his forced heirs, at the time of his death. And
since obligations not extinguished by death also form part
of the estate of the decedent; corollarily, the obligations
imposed by the Codicil on the deceased Dr. Jorge Rabadilla,
were likewise transmitted to his compulsory heirs upon his
death.
In the said Codicil, testatrix Aleja Belleza devised Lot No.
1392 to Dr. Jorge Rabadilla, subject to the condition that
the usufruct thereof would be delivered to the herein
12
private respondent every year. Upon the death of Dr. Jorge
Rabadilla, his compulsory heirs succeeded to his rights and
title over the said property, and they also assumed his
(decedent's) obligation to deliver the fruits of the lot
involved to herein private respondent. Such obligation of
the instituted heir reciprocally corresponds to the right of
private respondent over the usufruct, the fulfillment or
performance of which is now being demanded by the latter
through the institution of the case at bar. Therefore, private
respondent has a cause of action against petitioner and the
trial court erred in dismissing the complaint below.
Petitioner also theorizes that Article 882 of the New Civil
Code on modal institutions is not applicable because what
the testatrix intended was a substitution - Dr. Jorge
Rabadilla was to be substituted by the testatrix's near
descendants should there be noncompliance with the
obligation to deliver the piculs of sugar to private
respondent.
Again, the contention is without merit.
Substitution is the designation by the testator of a person
or persons to take the place of the heir or heirs first
instituted. Under substitutions in general, the testator may
either (1) provide for the designation of another heir to
whom the property shall pass in case the original heir
should die before him/her, renounce the inheritance or be
incapacitated to inherit, as in a simple substitution,12 or (2)
leave his/her property to one person with the express
charge that it be transmitted subsequently to another or
others, as in a fideicommissary substitution.13 The Codicil
sued upon contemplates neither of the two.
In simple substitutions, the second heir takes the
inheritance in default of the first heir by reason of
incapacity, predecease or renunciation.14 In the case under
consideration, the provisions of subject Codicil do not
provide that should Dr. Jorge Rabadilla default due to
predecease, incapacity or renunciation, the testatrix's near
descendants would substitute him. What the Codicil
provides is that, should Dr. Jorge Rabadilla or his heirs not
fulfill the conditions imposed in the Codicil, the property
referred to shall be seized and turned over to the testatrix's
near descendants.
Neither is there a fideicommissary substitution here and on
this point, petitioner is correct. In a fideicommissary
substitution, the first heir is strictly mandated to preserve
the property and to transmit the same later to the second
heir.15 In the case under consideration, the instituted heir is
in fact allowed under the Codicil to alienate the property
provided the negotiation is with the near descendants or
the sister of the testatrix. Thus, a very important element of
a fideicommissary substitution is lacking; the obligation
clearly imposing upon the first heir the preservation of the
property and its transmission to the second heir. "Without
this obligation to preserve clearly imposed by the testator in
his will, there is no fideicommissary substitution."16 Also,
the near descendants' right to inherit from the testatrix is
not definite. The property will only pass to them should Dr.
Jorge Rabadilla or his heirs not fulfill the obligation to
deliver part of the usufruct to private respondent.
Another important element of a fideicommissary
substitution is also missing here. Under Article 863, the
second heir or the fideicommissary to whom the property is
transmitted must not be beyond one degree from the first
heir or the fiduciary. A fideicommissary substitution is
therefore, void if the first heir is not related by first degree
to the second heir.17 In the case under scrutiny, the near
descendants are not at all related to the instituted heir, Dr.
Jorge Rabadilla.
The Court of Appeals erred not in ruling that the institution
of Dr. Jorge Rabadilla under subject Codicil is in the nature
of a modal institution and therefore, Article 882 of the New
Civil Code is the provision of law in point. Articles 882 and
883 of the New Civil Code provide:
Art. 882. The statement of the object of the institution or
the application of the property left by the testator, or the
charge imposed on him, shall not be considered as a
condition unless it appears that such was his intention.
That which has been left in this manner may be claimed at
once provided that the instituted heir or his heirs give
security for compliance with the wishes of the testator and
for the return of anything he or they may receive, together
with its fruits and interests, if he or they should disregard
this obligation.
Art. 883. When without the fault of the heir, an institution
referred to in the preceding article cannot take effect in the
exact manner stated by the testator, it shall be complied
with in a manner most analogous to and in conformity with
his wishes.
The institution of an heir in the manner prescribed in Article
882 is what is known in the law of succession as
an institucion sub modo or a modal institution. In a modal
institution, the testator states (1) the object of the
institution, (2) the purpose or application of the property
left by the testator, or (3) the charge imposed by the
testator upon the heir.18 A "mode" imposes an obligation
upon the heir or legatee but it does not affect the efficacy
of his rights to the succession.19 On the other hand, in a
conditional testamentary disposition, the condition must
happen or be fulfilled in order for the heir to be entitled to
succeed the testator. The condition suspends but does not
obligate; and the mode obligates but does not
suspend.20 To some extent, it is similar to a resolutory
condition.21
From the provisions of the Codicil litigated upon, it can be
gleaned unerringly that the testatrix intended that subject
property be inherited by Dr. Jorge Rabadilla. It is likewise
clearly worded that the testatrix imposed an obligation on
the said instituted heir and his successors-in-interest to
deliver one hundred piculs of sugar to the herein private
respondent, Marlena Coscolluela Belleza, during the
lifetime of the latter. However, the testatrix did not make
Dr. Jorge Rabadilla's inheritance and the effectivity of his
13
institution as a devisee, dependent on the performance of
the said obligation. It is clear, though, that should the
obligation be not complied with, the property shall be
turned over to the testatrix's near descendants. The
manner of institution of Dr. Jorge Rabadilla under subject
Codicil is evidently modal in nature because it imposes a
charge upon the instituted heir without, however, affecting
the efficacy of such institution.
Then too, since testamentary dispositions are generally
acts of liberality, an obligation imposed upon the heir
should not be considered a condition unless it clearly
appears from the Will itself that such was the intention of
the testator. In case of doubt, the institution should be
considered as modal and not conditional.22
Neither is there tenability in the other contention of
petitioner that the private respondent has only a right of
usufruct but not the right to seize the property itself from
the instituted heir because the right to seize was expressly
limited to violations by the buyer, lessee or mortgagee.
In the interpretation of Wills, when an uncertainty arises on
the face of the Will, as to the application of any of its
provisions, the testator's intention is to be ascertained from
the words of the Will, taking into consideration the
circumstances under which it was made.23 Such
construction as will sustain and uphold the Will in all its
parts must be adopted.24
Subject Codicil provides that the instituted heir is under
obligation to deliver One Hundred (100) piculs of sugar
yearly to Marlena Belleza Coscuella. Such obligation is
imposed on the instituted heir, Dr. Jorge Rabadilla, his
heirs, and their buyer, lessee, or mortgagee should they
sell, lease, mortgage or otherwise negotiate the property
involved. The Codicil further provides that in the event that
the obligation to deliver the sugar is not respected, Marlena
Belleza Coscuella shall seize the property and turn it over to
the testatrix's near descendants. The non-performance of
the said obligation is thus with the sanction of seizure of
the property and reversion thereof to the testatrix's near
descendants. Since the said obligation is clearly imposed
by the testatrix, not only on the instituted heir but also on
his successors-in-interest, the sanction imposed by the
testatrix in case of non-fulfillment of said obligation should
equally apply to the instituted heir and his successors-in-
interest.
Similarly unsustainable is petitioner's submission that by
virtue of the amicable settlement, the said obligation
imposed by the Codicil has been assumed by the lessee,
and whatever obligation petitioner had become the
obligation of the lessee; that petitioner is deemed to have
made a substantial and constructive compliance of his
obligation through the consummated settlement between
the lessee and the private respondent, and having
consummated a settlement with the petitioner, the
recourse of the private respondent is the fulfillment of the
obligation under the amicable settlement and not the
seizure of subject property.
Suffice it to state that a Will is a personal, solemn,
revocable and free act by which a person disposes of his
property, to take effect after his death.25 Since the Will
expresses the manner in which a person intends how his
properties be disposed, the wishes and desires of the
testator must be strictly followed. Thus, a Will cannot be the
subject of a compromise agreement which would thereby
defeat the very purpose of making a Will.
WHEREFORE, the petition is hereby DISMISSED and the
decision of the Court of Appeals, dated December 23,
1993, in CA-G.R. No. CV-35555 AFFIRMED. No
pronouncement as to costs
SO ORDERED.
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:
14
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
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
15
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.
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
16
THE PARTIES HAS PREFERENTIAL RIGHTS FOR
AWARD OVER THE SUBJECT LOTS;
B. WHETHER OR NOT THE COURT HAS
JURISDICTION TO MAKE THE AWARD ON THE
SUBJECT LOTS; AND
C. WHETHER OR NOT THE AWARD OF THE SUBJECT
LOTS BY THE NHA IS ARBITRARY.
We rule for the respondents.
Res judicata is a concept applied in review of lower court
decisions in accordance with the hierarchy of courts. But
jurisprudence has also recognized the rule of
administrative res judicata: "the rule which forbids the
reopening of a matter once judicially determined by
competent authority applies as well to the judicial and
quasi-judicial facts of public, executive or administrative
officers and boards acting within their jurisdiction as to the
judgments of courts having general judicial powers . . . It
has been declared that whenever final adjudication of
persons invested with power to decide on the property and
rights of the citizen is examinable by the Supreme Court,
upon a writ of error or a certiorari, such final adjudication
may be pleaded as res judicata."20 To be sure, early
jurisprudence were already mindful that the doctrine of res
judicata cannot be said to apply exclusively to decisions
rendered by what are usually understood as courts without
unreasonably circumscribing the scope thereof and that the
more equitable attitude is to allow extension of the defense
to decisions of bodies upon whom judicial powers have
been conferred.
In Ipekdjian Merchandising Co., Inc. v. Court of Tax
Appeals,21 the Court held that the rule prescribing that
"administrative orders cannot be enforced in the courts in
the absence of an express statutory provision for that
purpose" was relaxed in favor of quasi-judicial agencies.
In fine, it should be remembered that quasi-judicial powers
will always be subject to true judicial power—that which is
held by the courts. Quasi-judicial power is defined as that
power of adjudication of an administrative agency for the
"formulation of a final order."22 This function applies to the
actions, discretion and similar acts of public administrative
officers or bodies who are required to investigate facts, or
ascertain the existence of facts, hold hearings, and draw
conclusions from them, as a basis for their official action
and to exercise discretion of a judicial nature.23 However,
administrative agencies are not considered courts, in their
strict sense. The doctrine of separation of powers reposes
the three great powers into its three (3) branches—the
legislative, the executive, and the judiciary. Each
department is co-equal and coordinate, and supreme in its
own sphere. Accordingly, the executive department may
not, by its own fiat, impose the judgment of one of its
agencies, upon the judiciary. Indeed, under the expanded
jurisdiction of the Supreme Court, it is empowered to
"determine whether or not there has been grave abuse of
discretion amounting to lack or excess of jurisdiction on the
part of any branch or instrumentality of the
Government."24 Courts have an expanded role under the
1987 Constitution in the resolution of societal conflicts
under the grave abuse clause of Article VIII which includes
that duty to check whether the other branches of
government committed an act that falls under the category
of grave abuse of discretion amounting to lack or excess of
jurisdiction.25
Next, petitioner cites Batas Pambansa Blg. 129 or the
Judiciary Reorganization Act of 198026 where it is therein
provided that the Intermediate Appellate Court (now, Court
of Appeals) shall exercise the "exclusive appellate
jurisdiction over all final judgments, decisions, resolutions,
orders or awards, of the Regional Trial Courts and Quasi-
Judicial agencies, instrumentalities, boards or
commissions, except those falling within the jurisdiction of
the Supreme Court in accordance with the
Constitution…"27 and contends that the Regional Trial Court
has no jurisdiction to rule over awards made by the NHA.
Well-within its jurisdiction, the Court of Appeals, in its
decision of August 28, 2003, already ruled that the issue of
the trial court's authority to hear and decide the instant
case has already been settled in the decision of the Court
of Appeals dated June 26, 1989 (which has become final
and executory on August 20, 1989 as per entry of judgment
dated October 10, 1989).28 We find no reason to disturb
this ruling. Courts are duty-bound to put an end to
controversies. The system of judicial review should not be
misused and abused to evade the operation of a final and
executory judgment.29 The appellate court's decision
becomes the law of the case which must be adhered to by
the parties by reason of policy.30
Next, petitioner NHA contends that its resolution was
grounded on meritorious grounds when it considered the
application for the purchase of lots. Petitioner argues that it
was the daughter Francisca Herrera who filed her
application on the subject lot; that it considered the
respective application and inquired whether she had all the
qualifications and none of the disqualifications of a
possible awardee. It is the position of the petitioner that
private respondent possessed all the qualifications and
none of the disqualifications for lot award and hence the
award was not done arbitrarily.
The petitioner further argues that assuming that the
"Sinumpaang Salaysay" was a will, it could not bind the
NHA.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
17
estate until they are transferred to her heirs by virtue of
Article 774 of the Civil Code which provides that:
Art. 774. Succession is a mode of acquisition by
virtue of which the property, rights and
obligations to the extent of the value of the
inheritance, of a person are transmitted through
his death to another or others either by his will or
by operation of law.33
By considering the document, petitioner NHA should have
noted that the original applicant has already passed away.
Margarita Herrera passed away on October 27, 1971. 34 The
NHA issued its resolution35 on February 5, 1986. The NHA
gave due course to the application made by Francisca
Herrera without considering that the initial applicant's
death would transfer all her property, rights and obligations
to the estate including whatever interest she has or may
have had over the disputed properties. To the extent of the
interest that the original owner had over the property, the
same should go to her estate. Margarita Herrera had an
interest in the property and that interest should go to her
estate upon her demise so as to be able to properly
distribute them later to her heirs—in accordance with a will
or by operation of law.
The death of Margarita Herrera does not extinguish her
interest over the property. Margarita Herrera had an
existing Contract to Sell36 with NHA as the seller. Upon
Margarita Herrera's demise, this Contract to Sell was
neither nullified nor revoked. This Contract to Sell was an
obligation on both parties—Margarita Herrera and NHA.
Obligations are transmissible.37 Margarita Herrera's
obligation to pay became transmissible at the time of her
death either by will or by operation of law.
If we sustain the position of the NHA that this document is
not a will, then the interests of the decedent should
transfer by virtue of an operation of law and not by virtue of
a resolution by the NHA. For as it stands, NHA cannot make
another contract to sell to other parties of a property
already initially paid for by the decedent. Such would be an
act contrary to the law on succession and the law on sales
and obligations.38
When the original buyer died, the NHA should have
considered the estate of the decedent as the next
"person"39likely to stand in to fulfill the obligation to pay the
rest of the purchase price. The opposition of other heirs to
the repurchase by Francisca Herrera should have put the
NHA on guard as to the award of the lots. Further, the
Decision in the said Civil Case No. B-1263 (questioning the
Deed of Self-Adjudication) which rendered the deed therein
null and void40 should have alerted the NHA that there are
other heirs to the interests and properties of the decedent
who may claim the property after a testate or intestate
proceeding is concluded. The NHA therefore acted
arbitrarily in the award of the lots.
We need not delve into the validity of the will. The issue is
for the probate court to determine. We affirm the Court of
Appeals and the Regional Trial Court which noted that it
has an element of testamentary disposition where (1) it
devolved and transferred property; (2) the effect of which
shall transpire upon the death of the instrument maker.41
IN VIEW WHEREOF, the petition of the National Housing
Authority is DENIED. The decision of the Court of Appeals in
CA-G.R. No. 68370 dated August 28, 2003, affirming the
decision of the Regional Trial Court of San Pedro, Laguna in
Civil Case No. B-2780 dated March 9, 1998, is hereby
AFFIRMED.
No cost.
SO ORDERED.
G.R. No. L-28040 August 18, 1972
TESTATE ESTATE OF JOSEFA TANGCO, JOSE DE BORJA,
administrator-appellee; JOSE DE BORJA, as administrator,
CAYETANO DE BORJA, MATILDE DE BORJA and CRISANTO
DE BORJA (deceased) as Children of Josefa
Tangco, appellees,
vs.
TASIANA VDA. DE DE BORJA, Special Administratrix of the
Testate Estate of Francisco de Borja, appellant. .
G.R. No L-28568 August 18, 1972
TESTATE ESTATE OF THE LATE FRANCISCO DE BORJA,
TASIANA O. VDA. DE DE BORJA, special Administratrix
appellee,
vs.
JOSE DE BORJA, oppositor-appellant.
G.R. No. L-28611 August 18, 1972
TASIANA 0. VDA. DE BORJA, as Administratrix of the Testate
Estate of the late Francisco de Borja, plaintiff-appellee,
vs.
JOSE DE BORJA, as Administrator of the Testate Estate of
the late Josefa Tangco, defendant-appellant.
L-28040
Pelaez, Jalandoni & Jamir for administrator-appellee.
Quiogue & Quiogue for appellee Matilde de Borja.
Andres Matias for appellee Cayetano de Borja.
Sevilla & Aquino for appellant.
L-28568
Sevilla & Aquino for special administratrix-appellee.
Pelaez, Jalandoni & Jamir for oppositor-appellant.
L-28611
Sevilla & Aquino for plaintiff-appellee.
18
Pelaez, Jalandoni & Jamir and David Gueverra for
defendant-appellant.
REYES, J.B.L., J.:p
Of these cases, the first, numbered L-28040 is an appeal
by Tasiana Ongsingco Vda. de de Borja, special
administratrix of the testate estate of Francisco de
Borja,1 from the approval of a compromise agreement by
the Court of First Instance of Rizal, Branch I, in its Special
Proceeding No. R-7866, entitled, "Testate Estate of Josefa
Tangco, Jose de Borja, Administrator".
Case No. L-28568 is an appeal by administrator Jose Borja
from the disapproval of the same compromise agreement
by the Court of First Instance of Nueva Ecija, Branch II, in its
Special Proceeding No. 832, entitled, "Testate Estate of
Francisco de Borja, Tasiana O. Vda. de de Borja, Special
Administratrix".
And Case No. L-28611 is an appeal by administrator Jose
de Borja from the decision of the Court of First Instance of
Rizal, Branch X, in its Civil Case No. 7452, declaring the
Hacienda Jalajala Poblacion, which is the main object of the
aforesaid compromise agreement, as the separate and
exclusive property of the late Francisco de Borja and not a
conjugal asset of the community with his first wife, Josefa
Tangco, and that said hacienda pertains exclusively to his
testate estate, which is under administrator in Special
Proceeding No. 832 of the Court of First Instance of Nueva
Ecija, Branch II.
It is uncontested that Francisco de Borja, upon the death of
his wife Josefa Tangco on 6 October 1940, filed a petition
for the probate of her will which was docketed as Special
Proceeding No. R-7866 of the Court of First Instance of
Rizal, Branch I. The will was probated on 2 April 1941. In
1946, Francisco de Borja was appointed executor and
administrator: in 1952, their son, Jose de Borja, was
appointed co-administrator. When Francisco died, on 14
April 1954, Jose became the sole administrator of the
testate estate of his mother, Josefa Tangco. While a
widower Francisco de Borja allegedly took unto himself a
second wife, Tasiana Ongsingco. Upon Francisco's death,
Tasiana instituted testate proceedings in the Court of First
Instance of Nueva Ecija, where, in 1955, she was
appointed special administratrix. The validity of Tasiana's
marriage to Francisco was questioned in said proceeding.
The relationship between the children of the first marriage
and Tasiana Ongsingco has been plagued with several
court suits and counter-suits; including the three cases at
bar, some eighteen (18) cases remain pending
determination in the courts. The testate estate of Josefa
Tangco alone has been unsettled for more than a quarter of
a century. In order to put an end to all these litigations, a
compromise agreement was entered into on 12 October
1963,2 by and between "[T]he heir and son of Francisco de
Borja by his first marriage, namely, Jose de Borja personally
and as administrator of the Testate Estate of Josefa
Tangco," and "[T]he heir and surviving spouse of Francisco
de Borja by his second marriage, Tasiana Ongsingco Vda.
de Borja, assisted by her lawyer, Atty. Luis Panaguiton Jr."
The terms and conditions of the compromise agreement
are as follows:
AGREEMENT
THIS AGREEMENT made and entered into by and
between
The heir and son of Francisco de Borja by his first
marriage, namely, Jose de Borja personally and as
administrator of the Testate Estate of Josefa
Tangco,
AND
The heir and surviving spouse of Francisco de
Borja by his second marriage, Tasiana Ongsingco
Vda. de Borja, assisted by her lawyer, Atty. Luis
Panaguiton Jr.
WITNESSETH
THAT it is the mutual desire of all the parties herein
terminate and settle, with finality, the various court
litigations, controversies, claims, counterclaims,
etc., between them in connection with the
administration, settlement, partition, adjudication
and distribution of the assets as well as liabilities
of the estates of Francisco de Borja and Josefa
Tangco, first spouse of Francisco de Borja.
THAT with this end in view, the parties herein have
agreed voluntarily and without any reservations to
enter into and execute this agreement under the
following terms and conditions:
1. That the parties agree to sell the Poblacion
portion of the Jalajala properties situated in
Jalajala, Rizal, presently under administration in
the Testate Estate of Josefa Tangco (Sp. Proc. No.
7866, Rizal), more specifically described as
follows:
Linda al Norte con el Rio Puwang que la
separa de la jurisdiccion del Municipio de
Pililla de la Provincia de Rizal, y con el pico
del Monte Zambrano; al Oeste con Laguna
de Bay; por el Sur con los herederos de
Marcelo de Borja; y por el Este con los
terrenos de la Familia Maronilla
with a segregated area of approximately
1,313 hectares at the amount of P0.30
per square meter.
2. That Jose de Borja agrees and obligates himself
to pay Tasiana Ongsingco Vda. de de Borja the
total amount of Eight Hundred Thousand Pesos
(P800,000) Philippine Currency, in cash, which
19
represent P200,000 as his share in the payment
and P600,000 as pro-rata shares of the heirs
Crisanto, Cayetano and Matilde, all surnamed de
Borja and this shall be considered as full and
complete payment and settlement of her
hereditary share in the estate of the late Francisco
de Borja as well as the estate of Josefa Tangco, Sp.
Proc. No. 832-Nueva Ecija and Sp. Proc. No. 7866-
Rizal, respectively, and to any properties
bequeathed or devised in her favor by the late
Francisco de Borja by Last Will and Testament or
by Donation Inter Vivos or Mortis Causa or
purportedly conveyed to her for consideration or
otherwise. The funds for this payment shall be
taken from and shall depend upon the receipt of
full payment of the proceeds of the sale of Jalajala,
"Poblacion."
3. That Tasiana Ongsingco Vda. de de Borja hereby
assumes payment of that particular obligation
incurred by the late Francisco de Borja in favor of
the Rehabilitation Finance Corporation, now
Development Bank of the Philippines, amounting
to approximately P30,000.00 and also assumes
payment of her 1/5 share of the Estate and
Inheritance taxes on the Estate of the late
Francisco de Borja or the sum of P3,500.00, more
or less, which shall be deducted by the buyer of
Jalajala, "Poblacion" from the payment to be made
to Tasiana Ongsingco Vda. de Borja under
paragraph 2 of this Agreement and paid directly to
the Development Bank of the Philippines and the
heirs-children of Francisco de Borja.
4. Thereafter, the buyer of Jalajala "Poblacion" is
hereby authorized to pay directly to Tasiana
Ongsingco Vda. de de Borja the balance of the
payment due her under paragraph 2 of this
Agreement (approximately P766,500.00) and
issue in the name of Tasiana Ongsingco Vda. de de
Borja, corresponding certified checks/treasury
warrants, who, in turn, will issue the corresponding
receipt to Jose de Borja.
5. In consideration of above payment to Tasiana
Ongsingco Vda. de de Borja, Jose de Borja
personally and as administrator of the Testate
Estate of Josefa Tangco, and Tasiana Ongsingco
Vda. de de Borja, for themselves and for their
heirs, successors, executors, administrators, and
assigns, hereby forever mutually renounce,
withdraw, waive, remise, release and discharge
any and all manner of action or actions, cause or
causes of action, suits, debts, sum or sums of
money, accounts, damages, claims and demands
whatsoever, in law or in equity, which they ever
had, or now have or may have against each other,
more specifically Sp. Proceedings Nos. 7866 and
1955, CFI-Rizal, and Sp. Proc. No. 832-Nueva
Ecija, Civil Case No. 3033, CFI Nueva Ecija and
Civil Case No. 7452-CFI, Rizal, as well as the case
 filed against Manuel Quijal for perjury with the
Provincial Fiscal of Rizal, the intention being to
completely, absolutely and finally release each
other, their heirs, successors, and assigns, from
any and all liability, arising wholly or partially,
directly or indirectly, from the administration,
settlement, and distribution of the assets as well
as liabilities of the estates of Francisco de Borja
and Josefa Tangco, first spouse of Francisco de
Borja, and lastly, Tasiana Ongsingco Vda. de de
Borja expressly and specifically renounce
absolutely her rights as heir over any hereditary
share in the estate of Francisco de Borja.
6. That Tasiana Ongsingco Vda. de de Borja, upon
receipt of the payment under paragraph 4 hereof,
shall deliver to the heir Jose de Borja all the
papers, titles and documents belonging to
Francisco de Borja which are in her possession
and said heir Jose de Borja shall issue in turn the
corresponding receive thereof.
7. That this agreement shall take effect only upon
the fulfillment of the sale of the properties
mentioned under paragraph 1 of this agreement
and upon receipt of the total and full payment of
the proceeds of the sale of the Jalajala property
"Poblacion", otherwise, the non-fulfillment of the
said sale will render this instrument NULL AND
VOID AND WITHOUT EFFECT THEREAFTER.
IN WITNESS WHEREOF, the parties hereto have her
unto set their hands in the City of Manila,
Philippines, the 12th of October, 1963.
On 16 May 1966, Jose de Borja submitted for Court
approval the agreement of 12 October 1963 to the Court of
First Instance of Rizal, in Special Proceeding No. R-7866;
and again, on 8 August 1966, to the Court of First Instance
of Nueva Ecija, in Special Proceeding No. 832. Tasiana
Ongsingco Vda. de de Borja opposed in both instances. The
Rizal court approved the compromise agreement, but the
Nueva Ecija court declared it void and unenforceable.
Special administratrix Tasiana Ongsingco Vda. de de Borja
appealed the Rizal Court's order of approval (now Supreme
Court G.R. case No. L-28040), while administrator Jose de
Borja appealed the order of disapproval (G.R. case No. L-
28568) by the Court of First Instance of Nueva Ecija.
The genuineness and due execution of the compromised
agreement of 12 October 1963 is not disputed, but its
validity is, nevertheless, attacked by Tasiana Ongsingco on
the ground that: (1) the heirs cannot enter into such kind of
agreement without first probating the will of Francisco de
Borja; (2) that the same involves a compromise on the
validity of the marriage between Francisco de Borja and
Tasiana Ongsingco; and (3) that even if it were valid, it has
ceased to have force and effect.
In assailing the validity of the agreement of 12 October
1963, Tasiana Ongsingco and the Probate Court of Nueva
Ecija rely on this Court's decision in Guevara vs. Guevara.
20
74 Phil. 479, wherein the Court's majority held the view
that the presentation of a will for probate is mandatory and
that the settlement and distribution of an estate on the
basis of intestacy when the decedent left a will, is against
the law and public policy. It is likewise pointed out by
appellant Tasiana Ongsingco that Section 1 of Rule 74 of
the Revised Rules explicitly conditions the validity of an
extrajudicial settlement of a decedent's estate by
agreement between heirs, upon the facts that "(if) the
decedent left no will and no debts, and the heirs are all of
age, or the minors are represented by their judicial and
legal representatives ..." The will of Francisco de Borja
having been submitted to the Nueva Ecija Court and still
pending probate when the 1963 agreement was made,
those circumstances, it is argued, bar the validity of the
agreement.
Upon the other hand, in claiming the validity of the
compromise agreement, Jose de Borja stresses that at the
time it was entered into, on 12 October 1963, the
governing provision was Section 1, Rule 74 of the original
Rules of Court of 1940, which allowed the extrajudicial
settlement of the estate of a deceased person regardless
of whether he left a will or not. He also relies on the
dissenting opinion of Justice Moran, in Guevara vs.
Guevara, 74 Phil. 479, wherein was expressed the view
that if the parties have already divided the estate in
accordance with a decedent's will, the probate of the will is
a useless ceremony; and if they have divided the estate in a
different manner, the probate of the will is worse than
useless.
The doctrine of Guevara vs. Guevara, ante, is not applicable
to the case at bar. This is apparent from an examination of
the terms of the agreement between Jose de Borja and
Tasiana Ongsingco. Paragraph 2 of said agreement
specifically stipulates that the sum of P800,000 payable to
Tasiana Ongsingco —
shall be considered as full — complete payment —
settlement of her hereditary share in the estate of
the late Francisco de Borja as well as the estate of
Josefa Tangco, ... and to any properties
bequeathed or devised in her favor by the late
Francisco de Borja by Last Will and Testament or
by Donation Inter Vivos or Mortis Causa or
purportedly conveyed to her for consideration or
otherwise.
This provision evidences beyond doubt that the ruling in the
Guevara case is not applicable to the cases at bar. There
was here no attempt to settle or distribute the estate of
Francisco de Borja among the heirs thereto before the
probate of his will. The clear object of the contract was
merely the conveyance by Tasiana Ongsingco of any and all
her individual share and interest, actual or eventual in the
estate of Francisco de Borja and Josefa Tangco. There is no
stipulation as to any other claimant, creditor or legatee. And
as a hereditary share in a decedent's estate is transmitted
or vested immediately from the moment of the death of
such causante or predecessor in interest (Civil Code of the
Philippines, Art. 777)3 there is no legal bar to a successor
(with requisite contracting capacity) disposing of her or his
hereditary share immediately after such death, even if the
actual extent of such share is not determined until the
subsequent liquidation of the estate.4 Of course, the effect
of such alienation is to be deemed limited to what is
ultimately adjudicated to the vendor heir. However, the
aleatory character of the contract does not affect the
validity of the transaction; neither does the coetaneous
agreement that the numerous litigations between the
parties (the approving order of the Rizal Court enumerates
fourteen of them, Rec. App. pp. 79-82) are to be considered
settled and should be dismissed, although such stipulation,
as noted by the Rizal Court, gives the contract the character
of a compromise that the law favors, for obvious reasons, if
only because it serves to avoid a multiplicity of suits.
It is likewise worthy of note in this connection that as the
surviving spouse of Francisco de Borja, Tasiana Ongsingco
was his compulsory heir under article 995 et seq. of the
present Civil Code. Wherefore, barring unworthiness or
valid disinheritance, her successional interest existed
independent of Francisco de Borja's last will and testament
and would exist even if such will were not probated at all.
Thus, the prerequisite of a previous probate of the will, as
established in the Guevara and analogous cases, can not
apply to the case of Tasiana Ongsingco Vda. de de Borja.
Since the compromise contract Annex A was entered into
by and between "Jose de Borja personally and as
administrator of the Testate Estate of Josefa Tangco" on
the one hand, and on the other, "the heir and surviving
spouse of Francisco de Borja by his second marriage,
Tasiana Ongsingco Vda. de de Borja", it is clear that the
transaction was binding on both in their individual
capacities, upon the perfection of the contract, even
without previous authority of the Court to enter into the
same. The only difference between an extrajudicial
compromise and one that is submitted and approved by the
Court, is that the latter can be enforced by execution
proceedings. Art. 2037 of the Civil Code is explicit on the
point:
8. Art. 2037. A compromise has upon the parties
the effect and authority of res judicata; but there
shall be no execution except in compliance with a
judicial compromise.
It is argued by Tasiana Ongsingco that while the
agreement Annex A expressed no definite period
for its performance, the same was intended to
have a resolutory period of 60 days for its
effectiveness. In support of such contention, it is
averred that such a limit was expressly stipulated
in an agreement in similar terms entered into by
said Ongsingco with the brothers and sister of Jose
de Borja, to wit, Crisanto, Matilde and Cayetano, all
surnamed de Borja, except that the consideration
was fixed at P600,000 (Opposition, Annex/Rec. of
Appeal, L-28040, pp. 39- 46) and which contained
the following clause:
21
III. That this agreement shall take effect only upon
the consummation of the sale of the property
mentioned herein and upon receipt of the total and
full payment of the proceeds of the sale by the
herein owner heirs-children of Francisco de Borja,
namely, Crisanto, Cayetano and Matilde, all
surnamed de Borja; Provided that if no sale of the
said property mentioned herein is consummated,
or the non-receipt of the purchase price thereof by
the said owners within the period of sixty (60) days
from the date hereof, this agreement will become
null and void and of no further effect.
Ongsingco's argument loses validity when it is considered
that Jose de Borja was not a party to this particular contract
(Annex 1), and that the same appears not to have been
finalized, since it bears no date, the day being left blank
"this — day of October 1963"; and while signed by the
parties, it was not notarized, although plainly intended to be
so done, since it carries a proposed notarial ratification
clause. Furthermore, the compromise contract with Jose de
Borja (Annex A), provides in its par. 2 heretofore transcribed
that of the total consideration of P800, 000 to be paid to
Ongsingco, P600,000 represent the "prorata share of the
heirs Crisanto, Cayetano and Matilde all surnamed de
Borja" which corresponds to the consideration of P600,000
recited in Annex 1, and that circumstance is proof that the
duly notarized contract entered into wit Jose de Borja under
date 12 October 1963 (Annex A), was designed to absorb
and supersede the separate unformalize agreement with
the other three Borja heirs. Hence, the 60 days resolutory
term in the contract with the latter (Annex 1) not being
repeated in Annex A, can not apply to the formal
compromise with Jose de Borja. It is moreover manifest
that the stipulation that the sale of the Hacienda de
Jalajala was to be made within sixty days from the date of
the agreement with Jose de Borja's co-heirs (Annex 1) was
plainly omitted in Annex A as improper and ineffective,
since the Hacienda de Jalajala (Poblacion) that was to be
sold to raise the P800,000 to be paid to Ongsingco for her
share formed part of the estate of Francisco de Borja and
could not be sold until authorized by the Probate Court. The
Court of First Instance of Rizal so understood it, and in
approving the compromise it fixed a term of 120 days
counted from the finality of the order now under appeal, for
the carrying out by the parties for the terms of the contract.
This brings us to the plea that the Court of First Instance of
Rizal had no jurisdiction to approve the compromise with
Jose de Borja (Annex A) because Tasiana Ongsingco was
not an heir in the estate of Josefa Tangco pending
settlement in the Rizal Court, but she was an heir of
Francisco de Borja, whose estate was the object of Special
Proceeding No. 832 of the Court of First Instance of Nueva
Ecija. This circumstance is irrelevant, since what was sold
by Tasiana Ongsingco was only her eventual share in the
estate of her late husband, not the estate itself; and as
already shown, that eventual share she owned from the
time of Francisco's death and the Court of Nueva Ecija
could not bar her selling it. As owner of her undivided
hereditary share, Tasiana could dispose of it in favor of
whomsoever she chose. Such alienation is expressly
recognized and provided for by article 1088 of the present
Civil Code:
Art. 1088. Should any of the heirs sell his
hereditary rights to a stranger before the partition,
any or all of the co-heirs may be subrogated to the
rights of the purchaser by reimbursing him for the
price of the sale, provided they do so within the
period of one month from the time they were
notified in writing of the sale of the vendor.
If a sale of a hereditary right can be made to a stranger,
then a fortiori sale thereof to a coheir could not be
forbidden.
Tasiana Ongsingco further argues that her contract with
Jose de Borja (Annex "A") is void because it amounts to a
compromise as to her status and marriage with the late
Francisco de Borja. The point is without merit, for the very
opening paragraph of the agreement with Jose de Borja
(Annex "A") describes her as "the heir and surviving spouse
of Francisco de Borja by his second marriage, Tasiana
Ongsingco Vda. de de Borja", which is in itself definite
admission of her civil status. There is nothing in the text of
the agreement that would show that this recognition of
Ongsingco's status as the surviving spouse of Francisco de
Borja was only made in consideration of the cession of her
hereditary rights.
It is finally charged by appellant Ongsingco, as well as by
the Court of First Instance of Nueva Ecija in its order of 21
September 1964, in Special Proceedings No. 832
(Amended Record on Appeal in L-28568, page 157), that
the compromise agreement of 13 October 1963 (Annex "A")
had been abandoned, as shown by the fact that, after its
execution, the Court of First Instance of Nueva Ecija, in its
order of 21 September 1964, had declared that "no
amicable settlement had been arrived at by the parties",
and that Jose de Borja himself, in a motion of 17 June
1964, had stated that the proposed amicable settlement
"had failed to materialize".
It is difficult to believe, however, that the amicable
settlement referred to in the order and motion above-
mentioned was the compromise agreement of 13 October
1963, which already had been formally signed and
executed by the parties and duly notarized. What the record
discloses is that some time after its formalization,
Ongsingco had unilaterally attempted to back out from the
compromise agreement, pleading various reasons restated
in the opposition to the Court's approval of Annex "A"
(Record on Appeal, L-20840, page 23): that the same was
invalid because of the lapse of the allegedly intended
resolutory period of 60 days and because the contract was
not preceded by the probate of Francisco de Borja's will, as
required by this Court's Guevarra vs. Guevara ruling; that
Annex "A" involved a compromise affecting Ongsingco's
status as wife and widow of Francisco de Borja, etc., all of
which objections have been already discussed. It was
natural that in view of the widow's attitude, Jose de Borja
should attempt to reach a new settlement or novatory
22
agreement before seeking judicial sanction and
enforcement of Annex "A", since the latter step might
ultimately entail a longer delay in attaining final remedy.
That the attempt to reach another settlement failed is
apparent from the letter of Ongsingco's counsel to Jose de
Borja quoted in pages 35-36 of the brief for appellant
Ongsingco in G.R. No. 28040; and it is more than probable
that the order of 21 September 1964 and the motion of 17
June 1964 referred to the failure of the parties' quest for a
more satisfactory compromise. But the inability to reach a
novatory accord can not invalidate the original compromise
(Annex "A") and justifies the act of Jose de Borja in finally
seeking a court order for its approval and enforcement
from the Court of First Instance of Rizal, which, as
heretofore described, decreed that the agreement be
ultimately performed within 120 days from the finality of
the order, now under appeal.
We conclude that in so doing, the Rizal court acted in
accordance with law, and, therefore, its order should be
upheld, while the contrary resolution of the Court of First
Instance of Nueva Ecija should be, and is, reversed.
In her brief, Tasiana Ongsingco also pleads that the time
elapsed in the appeal has affected her unfavorably, in that
while the purchasing power of the agreed price of
P800,000 has diminished, the value of the Jalajala
property has increased. But the fact is that her delay in
receiving the payment of the agreed price for her hereditary
interest was primarily due to her attempts to nullify the
agreement (Annex "A") she had formally entered into with
the advice of her counsel, Attorney Panaguiton. And as to
the devaluation de facto of our currency, what We said
in Dizon Rivera vs. Dizon, L-24561, 30 June 1970, 33
SCRA 554, that "estates would never be settled if there
were to be a revaluation with every subsequent fluctuation
in the values of currency and properties of the estate", is
particularly opposite in the present case.
Coming now to Case G.R. No. L-28611, the issue is whether
the Hacienda de Jalajala (Poblacion), concededly acquired
by Francisco de Borja during his marriage to his first wife,
Josefa Tangco, is the husband's private property (as
contended by his second spouse, Tasiana Ongsingco), or
whether it forms part of the conjugal (ganancial)
partnership with Josefa Tangco. The Court of First Instance
of Rizal (Judge Herminio Mariano, presiding) declared that
there was adequate evidence to overcome the presumption
in favor of its conjugal character established by Article 160
of the Civil Code.
We are of the opinion that this question as between
Tasiana Ongsingco and Jose de Borja has become moot
and academic, in view of the conclusion reached by this
Court in the two preceding cases (G.R. No. L-28568),
upholding as valid the cession of Tasiana Ongsingco's
eventual share in the estate of her late husband, Francisco
de Borja, for the sum of P800,000 with the accompanying
reciprocal quit-claims between the parties. But as the
question may affect the rights of possible creditors and
legatees, its resolution is still imperative.
It is undisputed that the Hacienda Jalajala, of around 4,363
hectares, had been originally acquired jointly by Francisco
de Borja, Bernardo de Borja and Marcelo de Borja and their
title thereto was duly registered in their names as co-
owners in Land Registration Case No. 528 of the province
of Rizal, G.L.R.O. Rec. No. 26403 (De Barjo vs. Jugo, 54
Phil. 465). Subsequently, in 1931, the Hacienda was
partitioned among the co-owners: the Punta section went to
Marcelo de Borja; the Bagombong section to Bernardo de
Borja, and the part in Jalajala proper (Poblacion)
corresponded to Francisco de Borja (V. De Borja vs. De
Borja 101 Phil. 911, 932).
The lot allotted to Francisco was described as —
Una Parcela de terreno en Poblacion, Jalajala: N.
Puang River; E. Hermogena Romero; S. Heirs of
Marcelo de Borja O. Laguna de Bay; containing an
area of 13,488,870 sq. m. more or less, assessed
at P297,410. (Record on Appeal, pages 7 and
105)
On 20 November 1962, Tasiana O. Vda. de Borja, as
Administratrix of the Testate Estate of Francisco de Borja,
instituted a complaint in the Court of First Instance of Rizal
(Civil Case No. 7452) against Jose de Borja, in his capacity
as Administrator of Josefa Tangco (Francisco de Borja's first
wife), seeking to have the Hacienda above described
declared exclusive private property of Francisco, while in
his answer defendant (now appellant) Jose de Borja
claimed that it was conjugal property of his parents
(Francisco de Borja and Josefa Tangco), conformably to the
presumption established by Article 160 of the Philippine
Civil Code (reproducing Article 1407 of the Civil Code of
1889), to the effect that:
Art. 160. All property of the marriage is presumed
to belong to the conjugal partnership, unless it be
proved that it pertains exclusively to the husband
or to the wife.
Defendant Jose de Borja further counterclaimed for
damages, compensatory, moral and exemplary, as well as
for attorney's fees.
After trial, the Court of First Instance of Rizal, per Judge
Herminio Mariano, held that the plaintiff had adduced
sufficient evidence to rebut the presumption, and declared
the Hacienda de Jalajala (Poblacion) to be the exclusive
private property of the late Francisco de Borja, and his
Administratrix, Tasiana Ongsingco Vda. de Borja, to be
entitled to its possession. Defendant Jose de Borja then
appealed to this Court.
The evidence reveals, and the appealed order admits, that
the character of the Hacienda in question as owned by the
conjugal partnership De Borja-Tangco was solemnly
admitted by the late Francisco de Borja no less than two
times: first, in the Reamended Inventory that, as executor
of the estate of his deceased wife Josefa Tangco, he filed in
the Special Proceedings No. 7866 of the Court of First
Instance of Rizal on 23 July 1953 (Exhibit "2"); and again, in
23
the Reamended Accounting of the same date, also filed in
the proceedings aforesaid (Exhibit "7"). Similarly, the
plaintiff Tasiana O. Vda. de Borja, herself, as oppositor in
the Estate of Josefa Tangco, submitted therein an inventory
dated 7 September 1954 (Exhibit "3") listing the Jalajala
property among the "Conjugal Properties of the Spouses
Francisco de Borja and Josefa Tangco". And once more,
Tasiana Ongsingco, as administratrix of the Estate of
Francisco de Borja, in Special Proceedings No. 832 of the
Court of First Instance of Nueva Ecija, submitted therein in
December, 1955, an inventory wherein she listed the
Jalajala Hacienda under the heading "Conjugal Property of
the Deceased Spouses Francisco de Borja and Josefa
Tangco, which are in the possession of the Administrator of
the Testate Estate of the Deceased Josefa Tangco in
Special Proceedings No. 7866 of the Court of First Instance
of Rizal" (Exhibit "4").
Notwithstanding the four statements aforesaid, and the
fact that they are plain admissions against interest made
by both Francisco de Borja and the Administratrix of his
estate, in the course of judicial proceedings in the Rizal and
Nueva Ecija Courts, supporting the legal presumption in
favor of the conjugal community, the Court below declared
that the Hacienda de Jalajala (Poblacion) was not conjugal
property, but the private exclusive property of the late
Francisco de Borja. It did so on the strength of the following
evidences: (a) the sworn statement by Francis de Borja on
6 August 1951 (Exhibit "F") that —
He tomado possession del pedazo de terreno ya
delimitado (equivalente a 1/4 parte, 337
hectareas) adjunto a mi terreno personal y
exclusivo (Poblacion de Jalajala, Rizal).
and (b) the testimony of Gregorio de Borja, son of Bernardo
de Borja, that the entire Hacienda had been bought at a
foreclosure sale for P40,100.00, of which amount P25,100
was contributed by Bernardo de Borja and P15,000. by
Marcelo de Borja; that upon receipt of a subsequent
demand from the provincial treasurer for realty taxes the
sum of P17,000, Marcelo told his brother Bernardo that
Francisco (son of Marcelo) wanted also to be a co-owner,
and upon Bernardo's assent to the proposal, Marcelo issue
a check for P17,000.00 to pay the back taxes and said that
the amount would represent Francisco's contribution in the
purchase of the Hacienda. The witness further testified that
—
Marcelo de Borja said that that money was
entrusted to him by Francisco de Borja when he
was still a bachelor and which he derived from his
business transactions. (Hearing, 2 February 1965,
t.s.n., pages 13-15) (Emphasis supplied)
The Court below, reasoning that not only Francisco's sworn
statement overweighed the admissions in the inventories
relied upon by defendant-appellant Jose de Borja since
probate courts can not finally determine questions of
ownership of inventoried property, but that the testimony of
Gregorio de Borja showed that Francisco de Borja acquired
his share of the original Hacienda with his private funds, for
which reason that share can not be regarded as conjugal
partnership property, but as exclusive property of the buyer,
pursuant to Article 1396(4) of Civil Code of 1889 and
Article 148(4) of the Civil Code of the Philippines.
The following shall be the exclusive property of each
spouse:
xxx xxx xxx
(4) That which is purchased with exclusive money
of the wife or of the husband.
We find the conclusions of the lower court to be untenable.
In the first place, witness Gregorio de Borja's testimony as
to the source of the money paid by Francisco for his share
was plain hearsay, hence inadmissible and of no probative
value, since he was merely repeating what Marcelo de
Borja had told him (Gregorio). There is no way of
ascertaining the truth of the statement, since both Marcelo
and Francisco de Borja were already dead when Gregorio
testified. In addition, the statement itself is improbable,
since there was no need or occasion for Marcelo de Borja
to explain to Gregorio how and when Francisco de Borja
had earned the P17,000.00 entrusted to Marcelo. A ring of
artificiality is clearly discernible in this portion of Gregorio's
testimony.
As to Francisco de Borja's affidavit, Exhibit "F", the quoted
portion thereof (ante, page 14) does not clearly
demonstrate that the "mi terreno personal y exclusivo
(Poblacion de Jalajala, Rizal) " refers precisely to the
Hacienda in question. The inventories (Exhibits 3 and 4)
disclose that there were two real properties in Jalajala
owned by Francisco de Borja, one of 72.038 sq. m.,
assessed at P44,600, and a much bigger one of
1,357.260.70 sq. m., which is evidently the Hacienda de
Jalajala (Poblacion). To which of these lands did the
affidavit of Francisco de Borja (Exhibit "F") refer to? In
addition, Francisco's characterization of the land as "mi
terreno personal y exclusivo" is plainly self-serving, and not
admissible in the absence of cross examination.
It may be true that the inventories relied upon by
defendant-appellant (Exhibits "2", "3", "4" and "7") are not
conclusive on the conjugal character of the property in
question; but as already noted, they are clear admissions
against the pecuniary interest of the declarants, Francisco
de Borja and his executor-widow, Tasiana Ongsingco, and
as such of much greater probative weight than the self-
serving statement of Francisco (Exhibit "F"). Plainly, the
legal presumption in favor of the conjugal character of the
Hacienda de Jalajala (Poblacion) now in dispute has not
been rebutted but actually confirmed by proof. Hence, the
appealed order should be reversed and the Hacienda de
Jalajala (Poblacion) declared property of the conjugal
partnership of Francisco de Borja and Josefa Tangco.
No error having been assigned against the ruling of the
lower court that claims for damages should be ventilated in
the corresponding special proceedings for the settlement of
24
the estates of the deceased, the same requires no pro
announcement from this Court.
IN VIEW OF THE FOREGOING, the appealed order of the
Court of First Instance of Rizal in Case No. L-28040 is
hereby affirmed; while those involved in Cases Nos. L-
28568 and L-28611 are reversed and set aside. Costs
against the appellant Tasiana Ongsingco Vda. de Borja in
all three (3) cases.
G.R. No. L-14070 March 29, 1961
MARIA GERVACIO BLAS, MANUEL GERVACIO BLAS,
LEONCIO GERVACIO BLAS and LODA GERVACIO
BLAS, plaintiffs-appellants,
vs.
ROSALINA SANTOS, in her capacity as Special
Administratrix of the Estate of the deceased MAXIMA
SANTOS VDA. DE BLAS, in Sp. Proc. No. 2524, Court of First
Instance of Rizal, defendants-appellants. MARTA GERVACIO
BLAS and DR. JOSE CHIVI, defendants-appellants.
Teofilo Sison and Nicanor Sison for plaintiffs-appellants.
De los Santos, Caluag, Pascal and Felizardo for
defendants-appellees.
LABRADOR, J.:
This action was instituted by plaintiffs against the
administration of the estate of Maxima Santos, to secure a
judicial declaration that one-half of the properties left by
Maxima Santos Vda. de Blas, the greater bulk of which are
set forth and described in the project of partition presented
in the proceedings for the administration of the estate of
the deceased Simeon Blas, had been promised by the
deceased Maxima Santos to be delivered upon her death
and in her will to the plaintiffs, and requesting that the said
properties so promised be adjudicated to the plaintiffs. The
complaint also prays for actual damages in the amount of
P50,000. (Record on Appeal, pp. 1-65.) The alleged
promise of the deceased Maxima Santos is contained in a
document executed by Maxima Santos on December 26,
1936 attached to the complaint as Annex "H" and
introduced at the trial as Exhibit "A". (Ibid., pp. 258-259.)
The complaint also alleges that the plaintiffs are entitled to
inherit certain properties enumerated in paragraph 3
thereof, situated in Malabon, Rizal and Obando, Bulacan,
but which properties have already been in included in the
inventory of the estate of the deceased Simeon Blas and
evidently partitioned and conveyed to his heirs in the
proceedings for the administration of his (Simeon Blas)
estate.
Defendant, who is the administratrix of the estate of the
deceased Maxima Santos Vda. de Blas, filed an answer
with a counterclaim, and later, an amended answer and a
counterclaim. The said amended answer admits the
allegations of the complaint as to her capacity as
administratrix the death of Simeon Blas on January 3,
1937; the fact that Simeon Blas and Marta Cruz begot
three children only one of whom, namely, Eulalio Blas, left
legitimate descendants; that Simeon Blas contracted a
second marriage with Maxima Santos on June 28, 1898.
She denies for lack of sufficient information and belief,
knowledge edge of the first marriage of Simeon Blas to
Marta Cruz, the averment that Simeon Blas and Marta Cruz
acquired properties situated in Obando, Bulacan, that said
properties were utilized as capital, etc. As special defenses,
she alleges that the properties of the spouses Blas and
Santos had been settled and liquidated in the project of
partition of the estate of said Simeon Blas; that pursuant to
the project of partition, plaintiffs and some defendants had
already received the respective properties adjudicated to
them; that the plaintiffs and the defendants Marta Geracio
and Jose Chivi are estopped from impugning the validity of
the project of partition of the estate of the deceased
Simeon Blas and from questioning the ownership in the
properties conveyed in the project of partition to Maxima
Santos as her own exclusive property; that the testament
executed by Maxima Santos is valid, the plain plaintiffs
having no right to recover any portion of Maxima Santos'
estate now under administration by the court. A
counterclaim for the amount of P50,000 as damages is
also included in the complaint, as also a cross-claim
against Marta Gervacio Blas and Jose Chivi.
Trial of the case was Conducted and, thereafter, the court,
Hon. Gustave Victoriano, presiding, rendered judgment
dismissing the complaint, with costs against plaintiff, and
dismissing also the counterclaim and cross-claim decision
,the plaintiffs filed by the defendants. From this district
have appealed to this Court.
The facts essential to an understanding of the issues
involved in the case may be briefly summarized as follows:
Simeon Blas contracted a first marriage with Marta Cruz
sometime before 1898. They had three children, only one
of whom, Eulalio, left children, namely, Maria Gervacio Blas,
one of the plaintiffs, Marta Gervacio Blas, one of the
defendants, and Lazaro Gervacio Blas. Lazaro died in
1950, and is survived by three legitimate children who are
plaintiffs herein, namely, Manuel Gervacio Blas, Leoncio
Gervacio Blas and Loida Gervacio Blas. Marta Cruz died in
1898, and the following year, Simeon Blas contracted a
second marriage with Maxima Santos. At the time of this
second marriage, no liquidation of the properties required
by Simeon Blas and Marta Cruz was made. Three of the
properties left are fishponds located in Obando, Bulacan.
Maxima Santos does not appear to have apported
properties to her marriage with Simeon Blas.
On December 26, 1936, only over a week before over a
week before his death on January 9, 1937, Simeon Blas
executed a last will and testament. In the said testament
Simeon Blas makes the following declarations:
I Q — To whom do you refer with the word "they"?
2. Sa panahon ng aking pangalawang asawa,
MAXIMA SANTOS DE BLAS, ay nagkaroon ako at
nakatipon ng mga kayamanan (bienes) at pag-aari
(propriedades) na ang lahat ng lupa, palaisdaan at
25
iba pang pag-aari ay umaabot sa halagang ANIM
NA RAAN PITONG PU'T WALONG DAAN LIBO
WALONG DAAN WALONG PUNG PISO (678,880-00)
sang-ayon sa mga halaga sa amillarimento (valor
Amillarado.)
II
1. Ang kalahati ng lahat ng aming pag-aari,
matapos mabayaran ang lahat ng aking o aming
pag-kakautang na mag-asawa, kung mayroon man,
yayamang ang lahat ng ito ay kita sa loob ng
matrimonio (bienes ganaciales) ay bahagi ng para
sa aking asawa, MAXIMA SANTOS DE BLAS, sang-
ayon sa batas. (Record on Appeal, pp. 250-251.)
The above testamentary provisions may be translated as
follows:
I
2. During my second marriage with Maxima Santos
de Blas, I possessed and acquired wealth and
properties, consisting of lands, fishponds and
other kinds of properties, the total assessed value
of which reached the amount P678,880.00.
II
1. One-half of our properties, after the payment of
my and our indebtedness, all these properties
having been acquired during marriage (conjugal
properties), constitutes the share of my wife
Maxima Santos de Blas, according to the law.
At the time of the execution of said will, Andres Pascual a
son-in-law of the testator, and Avelina Pascual and others,
were present. Andres Pascual had married a descendant by
the first marriage. The will was prepared by Andres Pascual,
with the help of his nephew Avelino Pascual. The testator
asked Andres Pascual to prepare a document which was
presented in court as Exhibit "A", thus:
Q — Was there anybody who asked you to prepare
this document?
A — Don Simeon Blas asked me to prepare this
document (referring to Exhibit "A"), (t.s.n.,
Sarmiento to, P. 24).
The reason why the testator ordered the preparation of
Exhibit "A" was because the properties that the testator had
acquired during his first marriage with Marta Cruz had not
been liquidated and were not separated from those
acquired during the second marriage. Pascual's testimony
is as follows:
A — Simeon Blas and his first wife, Marta Cruz.
When Marta Cruz died they had not made a
liquidation of their conjugal properties and so all
those properties were included all in the assets of
 the second marriage, and that is the reason why
this document was prepared. (t.s.n., Sarmiento, p.
36.)
The above testimony is fully corroborated by that of Leoncio
Gervacio, son-in-law of Simeon Blas.
Q — Please state to the Court?
A — My children were claiming from their
grandfather Simeon Blas the properties left by
their grandmother Marta Cruz in the year 1936.
Q — And what happened with that claim of your
children against Simeon Blas regarding the assets
or properties of the first marriage that were left
after the death of Marta Cruz in 1936?
A — The claim was not pushed through because
they reached into an agreement whereby the
parties Simeon Blas Maxima Santos, Maria
Gervacio Bias, Marta Gervacio Blas and Lazaro
Gervacio Blas agreed that Simeon Blas and
Maxima Blas will give one-half of the estate of
Simeon Blas. (t.s.n., Sarmiento, pp. 143-144).
The document which was thus prepared and which is
marked as Exhibit "A" reads in Tagalog, thus:
MAUNAWA NG SINO MANG MAKABABASA:
Na akong si MAXIMA SANTOS DE BLAS, nasa
hustong gulang, kasal kay SIMEON BLAS, taga
bayan ng Malabon, Rizal, Philippines, sa
pamamagitan ng kasulatang ito ay malaya kong
ipinahahayag:
Na aking nabasa at naunawa ang testamento at
huling kalooban na nilagdaan ng aking asawa,
SIMEON BLAS, at ipinahahayag ko sa ilalim ng
aking karangalan at sa harap ng aking asawa na
igagalang at pagpipitaganan ang lahat at bawa't
isang bahagi ng nabanggit na testamento at
ipinangangako ko pa sa pamamagitan ng
kasulatang ito na ang lahat ng maiiwang pag-aari
at kayamanan naming mag-asawa, na nauukol at
bahaging para sa akin sa paggawa ko naman ng
aking testamento ay ipagkakaloob ko ang kalahati
(½) sa mga herederos at legatarios o
pinamamanahan ng aking nabanggit na asawa,
SIMEON BLAS, sa kaniyang testamento, na ako'y
makapipili o makahihirang na kahit kangino sa
kanila ng aking pagbibigyan at pamamanahan
sang-ayon sa paggalang, paglilingkod, at
pakikisama ng gagawin sa akin.
SA KATUNAYAN NG LAHAT NG ITO ay nilagdaan ko
ang kasulatang ito ngayon ika 26 ng Diciembre ng
taong 1936, dito sa San Francisco del Monte, San
Juan, Rizal, Philippines. (Exh. "A", pp. 29-30 —
Appellant's brief).
26
(Fdo.) MAXIMA SANTOS DE BLAS
and which, translated into English, reads as follows:
KNOW ALL MEN BY THESE PRESENTS:
That I MAXIMA SANTOS DE BLAS, of legal age,
married to SIMEON BLAS, resident of Malabon,
Rizal, Philippines, voluntarily state:
That I have read and knew the contents of the will
signed by my husband, SIMEON BLAS, (2) and I
promise on my word of honor in the presence of
my husband that I will respect and obey all and
every disposition of said will (3) and furthermore, I
promise in this document that all the properties my
husband and I will leave, the portion and share
corresponding to me when I make my will, I will
give one-half (½) to the heirs and legatees or the
beneficiaries named in the will of my husband, (4)
and that I can select or choose any of them, to
whom I will give depending upon the respect,
service and treatment accorded to me.
IN WITNESS WHEREOF, I signed this document this
26th day of December, 1936 at San Francisco del
Monte, San Juan, Rizal, Philippines. (Exh. "A", pp.
30-31, Appellant's brief).
(Sgd.) MAXIMA SANTOS DE BLAS
The court below held that said Exhibit "A" has not created
any right in favor of plaintiffs which can serve as basis for
the complaint; that neither can it be considered as a valid
and enforceable contract for lack of consideration and
because it deals with future inheritance. The court also
declared that Exhibit "A" is not a will because it does not
comply with the requisites for the execution of a will; nor
could it be considered as a donation, etc.
Both the court below in its decision and the appellees in
their brief before us, argue vehemently that the heirs of
Simeon Blas and his wife Marta Cruz can no longer make
any claim for the unliquidated conjugal properties acquired
during said first marriage, because the same were already
included in the mass of properties constituting the estate of
the deceased Simeon Blas and in the adjudications made
by virtue of his will, and that the action to recover the same
has prescribed. This contention is correct. The descendants
of Marta Cruz can no longer claim the conjugal properties
that she and her husband may have required during their
marriage although no liquidation of such properties and
delivery thereof to the heirs of Marta Cruz have been made,
no action to recover said propertied having been presented
in the proceedings for the settlement of the estate of
Simeon Blas.
But the principal basis for the plaintiffs' action in the case
at bar is the document Exhibit "A". It is not disputed that
this document was prepared at the instance of Simeon Blas
for the reason that the conjugal properties of me on Blas
for the reason his first marriage had not been liquidated;
that it was prepared at the same time as the will of Simeon
Blas on December 26, 1936, at the instance of the latter
himself. It is also not disputed that the document was
signed by Maxima Santos and one copy thereof, which was
presented in court as Exhibit "A", was kept by plaintiffs'
witness Andres Pascual.
Plaintiffs-appellants argue before us that Exhibit "A" is both
a trust agreement and a contract in the nature of a
compromise to avoid litigation. Defendants-appellees, in
answer, claim that it is neither a trust agreement nor a
compromise a agreement. Considering that the properties
of the first marriage of Simeon Blas had not been
liquidated when Simeon Blas executed his will on
December 26, 1936', and the further fact such properties
where actually , and the further fact that included as
conjugal properties acquired during the second marriage,
we find, as contended by plaintiffs-appellants that the
preparation and execution of Exhibit "A" was ordered by
Simeon Blas evidently to prevent his heirs by his first
marriage from contesting his will and demanding
liquidation of the conjugal properties acquired during the
first marriage, and an accounting of the fruits and proceeds
thereof from the time of the death of his first wife.
Exhibit "A", therefore, appears to be the compromise
defined in Article 1809 of the Civil Code of Spain, in force
at the time of the execution of Exhibit "A", which provides as
follows:
Compromise is a contract by which each of the
parties in interest, by giving, promising, or retaining
something avoids the provocation of a suitor
terminates one which has already the provocation
been instituted. (Emphasis supplied.)
Exhibit "A" states that the maker (Maxima Santos) had read
and knew the contents of the will of her husband read and
knew the contents of the will Simeon Blas — she was
evidently referring to the declaration in the will(of Simeon
Blas) that his properties are conjugal properties and one-
half thereof belongs to her (Maxima Santos) as her share of
the conjugal assets under the law. The agreement or
promise that Maxima Santos makes in Exhibit "A" is to hold
one-half of her said share in the conjugal assets in trust for
the heirs and legatees of her husband in his will, with the
obligation of conveying the same to such of his heirs or
legatees as she may choose in her last will and testament.
It is to be noted that the conjugal properties referred to are
those that were actually existing at that time, December 26,
1936. Simeon Blas died on January 9, 1937. On June 2,
1937, an inventory of the properties left by him, all
considered conjugal, was submitted by Maxima Santos
herself as administratrix of his estate. A list of said
properties is found in Annex "E", the complete inventory
submitted by Maxima Santos Vda. de Blas, is administratrix
of the estate of her husband, dated March 10, 1939. The
properties which were given to Maxima Santos as her share
in the conjugal properties are also specified in the project
of partition submitted by said Maxima Santos herself on
27
March 14, 1939. (Record on Appeal, pp. 195-241.) Under
Exhibit "A", therefore, Maxima Santos contracted the
obligation and promised to give one-half of the above
indicated properties to the heirs and legatees of Simeon
Blas.
Counsel for the defendant-appellee claims Exhibit "A" is a
worthless piece of paper because it is not a will nor a
donation mortis causa nor a contract. As we have in
indicated above, it is a compromise and at the same time a
contract with a sufficient cause or consideration. It is also
contended that it deals with future inheritance. We do not
think that Exhibit "A" is a contract on future inheritance. it is
an obligation or promise made by the maker to transmit
one-half of her share in the conjugal properties acquired
with her husband, which properties are stated or declared
to be conjugal properties in the will of the husband. The
conjugal properties were in existence at the time of the
execution of Exhibit "A" on December 26, 1936. As a matter
of fact, Maxima Santos included these properties in her
inventory of her husband's estate of June 2, 1937. The
promise does not refer to any properties that the maker
would inherit upon the death of her husband, because it is
her share in the conjugal assets. That the kind of
agreement or promise contained in Exhibit "A" is not void
under Article 1271 of the old Civil Code, has been decided
by the Supreme Court of Spain in its decision of October 8,
19154, thus:
Que si bien el art. 1271 del Codigo civil dispone
que sobre la herenciafutura no se podra celebrar
otros contratos que aquellos cuyo objecto
seapracticar entre vivos la division de un caudal,
conforme al articulo 1056, esta prohibicion noes
aplicable al caso, porque la obligacion que
contrajoel recurr en contrato privado de otorgar
testamento e instituir heredera a su subrina de los
bienes que adquirio en virtud de herencia,
procedentes desu finada consorte que le
quedasen sobrantes despues de pagar las deudas,
y del ganacial que se expresa, asi como de
reconocer, ademas, con alguna cosaa otros
sobrinos, se refiere a bienes conocidos y
determinados existentes cuando tal compromisi se
otorgo, y no a la universalidad de una herencia
que, sequn el art. 659 del citado Codigo civil, as
determina a muerte, constituyendola todos los
bienes, derechos y obligaciones que por ella no
sehayan extinguido: ..." (Emphasis supplied.)
It will be noted that what is prohibited to be the subject
matter of a contract under Article 1271 of the Civil Code is
"future inheritance." To us future inheritance is any
property or right not in existence or capable of
determination at the time of the contract, that a person
may in the future acquire by succession. The properties
subject of the contract Exhibit "A" are well defined
properties, existing at the time of the agreement, which
Simeon Blas declares in his statement as belonging to his
wife as her share in the conjugal partnership. Certainly his
wife's actual share in the conjugal properties may not be
considered as future inheritance because they were 31. Paco, Obando, Bulacan 5.8396 has.
actually in existence at the time Exhibit "A" was executed.
32. Pangjolo, Obando 3.5857 "
The trial court held that the plaintiffs-appellants in the case
at bar are concluded by the judgement rendered in the
proceedings for the settlement of the estate of Simeon Blas 34. Batang Pirasuan, Lubao,
for the reason that the properties left by him belonged to Pampanga 11.9515 "
himself and his wife Maxima Santos; that the project of
partition in the said case, adjudicating to Maxima Santos 35. Calangian, Lubao,
one-half as her share in the conjugal properties, is a bar to Pampanga 30.2059 "
another action on the same subject matter, Maxima Santos
having become absolute owner of the said properties 38. Bakuling, Lubao,
adjudicated in her favor. As already adverted to above, Pampanga 215.4325 "
these contentions would be correct if applied to the claim
of the plaintiffs-appellants that said properties were 39. Bakuling, Lubao,
acquired with the first wife of Simeon Blas, Marta Cruz. But Pampanga 8.3763 "
the main ground upon which plaintiffs base their present
action is the document Exhibit "A", already fully considered
40. Bangkal, Sinubli 23.0730 "
above. As this private document contains the express
promise made by Maxima Santos to convey in her
testament, upon her death, one-half of the conjugal 41. Tagulod, 6.8692 "
properties she would receive as her share in the conjugal
properties, the action to enforce the said promise did not 44. Bangkal Pugad (a) 34.2779 "
arise until and after her death when it was found that she
did not comply with her above-mentioned promise. (Art. (b) 51.7919 "
1969, old Civil Code.) The argument that the failure of the
plaintiffs-appellants herein to oppose the project of (c) 2.5202 "
partition in the settlement of the estate of Simeon Blas,
especially that portion of the project which assigned to
45. Magtapat Bangkal, Lubao,
Maxima Santos one-half of all the conjugal properties bars
Pampanga (a) 18.0024 "
their present action, is, therefore, devoid of merit. It may be
added that plaintiffs-appellants did not question the validity
of the project of partition precisely because of the promise (b) 7.3265 "
made by Maxima Santos in the compromise Exhibit "A";
they acquised in the approval of said project of partition (c) 53.5180 "
because they were relying on the promise made by Maxima
Santos in Exhibit "A", that she would transmit one-half of 46. Pinanganakan, Lubao,
the conjugal properties that she was going to receive as her Pampanga 159.0078 "
share in the conjugal partnership upon her death and in her
will, to the heirs and legatees of her husband Simeon Blas. 47. Emigdio Lingid, Lubao,
Pampanga 34.5229 "
Neither can the claim of prescription be considered in favor
of the defendants. The right of action arose at the time of
the death of Maxima Santos on October 5,1956, when she 48. Propios, Lubao,
failed to comply with the promise made by her in Exhibit "A". Pampanga 80.5382 "
The plaintiffs-appellants immediately presented this action
on December 27, 1956, upon learning of such failure on 49. Batang Mabuanbuan,
the part of Maxima Santos to comply with said promise. Sexmoan, Pampanga 43.3350 "
This defense is, therefore, also without merit.
50. Binatang Mabuanbuan,
It is next contended by the defendant-appellee that Maxima Sexmoan, Pampanga 3.5069 "
Santos complied with her above-mentioned promise, — that
Andres Pascual, Tomasa Avelino, Justo Garcia, Ludovico 51. Sapang Magtua,
Pimpin and Marta Gervacio Blas were given substancial Sexmoan, Pampanga 56,8242 "
legacies in the will and testament of Maxima Santos. To
determine whether she had actually complied with the
52. Kay Limpin, Sexmoan,
promise made in Exhibit "A", there is herein set forth a
Pampanga 5.0130 "
list only of the fishponds and their respective areas as
contained in the list of properties she acquired as her share
in the conjugal partnership, which list includes, besides 53. Calise Mabalumbum,
many ricelands as well as residential lots, thus: Sexmoan, Pampanga 23.8935 "

28
54. Messapinit Kineke, to devise one-half of her conjugal properties to the heirs
Sexmoan, Pampanga (a) 5.2972 " and legatees of her husband. She does not state that she
had complied with such obligation in her will. If she
(b) 5.9230 " intended to comply therewith by giving some of the heirs of
Simeon Blas the properties mentioned above, the most that
can be considered in her favor is to deduct the value of
(c) 1.4638 "
said properties from the total amount of properties which
she had undertaken to convey upon her death.
(d) 1.4638 "
All the issues in the pleadings of the parties and in their
(e) 2.8316 " respective briefs, have now been fully discussed and
considered. Reiterating what we have stated above, we
(f) 10.4412 " declare that by Exhibit "A", a compromise to avoid litigation,
Maxima Santos promised to devise to the heirs and
legatees of her husband Simeon Blas, one-half of the
(g) 3.9033 "
properties she received as her share in the conjugal
partnership of herself and her husband, which share is
(h) 11.9263 " specified in the project of partition submitted by herself on
March 14, 1939 in the settlement of the estate of her
(i) 6.0574 " husband, and which is found on pages 195 to 240 of the
record on appeal and on pages 27 to 46 of the project of
55. Dalang, Banga, Sexmoan, partition, submitted by Maxima Santos herself before the
Pampanga 23.3989 " Court of First Instance of Rizal in Civil Case No. 6707,
entitled "Testamentaria del Finado Don Simeon Blas,
62. Alaminos, Pangasinan 147.1242 " Maxima Santos Vda. de Bias, Administradora"; and that she
failed to comply with her aforementioned obligation.
(Exhibit "A")
80. Mangasu Sexmoan,
Pampanga 10.000 " WHEREFORE, the judgment appealed from is hereby
reversed and the defendant-appellee, administratrix of the
81. Don Tomas, Sexmoan, estate of Maxima Santos, is ordered to convey and deliver
Pampanga 21.6435 " one-half of the properties adjudicated o Maxima Santos as
her share in the conjugal properties in said Civil Case No.
82. Matikling, Lubao, 6707, entitled "Testamentaria del Finado Don Simeon Blas,
Pampanga 16.0000 " Maxima Santos Vda. de Blas, Administradora", to the heirs
and the legatees of her husband Simeon Blas. Considering
Total area that all said heirs and legatees, designated in the will of
............................... 1045.7863 " Simeon Blas as the persons for whose benefit Exhibit "A"
had been executed, have not appeared in these
(See Record on proceedings, the record is hereby remanded to the court
Record, pp. 195-241.) below, with instructions that, after the conveyance of the
properties hereinabove ordered had been effected, the said
In her will, Maxima Santos devised to Marta Gervacio Blas heirs and legatees (of Simeon Blas) file adversary pleadings
the 80-hectare fishpond situated in Lubao, Pampanga. The to determine the participation of each and every one of
fishpond devised is evidently that designated as "Propios" them in said properties. Costs against the defendant-
in Lubao, Pampanga, item No. 8 in the list of properties appellee Rosalina Santos.
adjudicated to her in the project of partition. (Record on
Appeal, p. 215.) Considering that the total area of the
fishponds amount to 1045.7863 hectares, the 80 hectares G.R. No. L-24248 July 31, 1974
devised to Marta Gervacio Blas is not even one-tenth of the
total area of the fishponds. Add to this the fact that in the ANTONIO TUASON, JR., petitioner,
will she imposed upon Marta Gervacio Blas de Chivi an vs.
existing obligation on said fishponds, namely, its lease in JOSE B. LINGAD, as Commissioner of Internal
1957 and the duty to pay out of the rentals thereof an Revenue, respondent.
obligation to the Rehabilitation Finance Corporation RFC
(Ibid., pp. 262-263.) Angelina Blas was given only a lot of Araneta, Mendoza & Papa for petitioner.
150 square meters in Hulong Duhat, Malabon, Rizal, and
Leony Blas, the sum of P300.00 (Ibid., p. 264.) Office of the Solicitor General Arturo A. Alafriz, Assistant
Solicitor General Felicisimo R. Rosete and Special Attorney
It is evident from a consideration of the above figures and Antonio H. Garces for respondent.
facts that Maxima Santos did not comply with her obligation
29
CASTRO, J.:
In this petition for review of the decision of the Court of Tax
Appeals in CTA Case 1398, the petitioner Antonio Tuason,
Jr. (hereinafter referred to as the petitioner) assails the Tax
Court's conclusion that the gains he realized from the sale
of residential lots (inherited from his mother) were ordinary
gains and not gains from the sale of capital assets under
section 34(1) of the National Internal Revenue Code.
The essential facts are not in dispute.
In 1948 the petitioner inherited from his mother several
tracts of land, among which were two contiguous parcels
situated on Pureza and Sta. Mesa streets in Manila, with an
area of 318 and 67,684 square meters, respectively.
When the petitioner's mother was yet alive she had these
two parcels subdivided into twenty-nine lots. Twenty-eight
were allocated to their then occupants who had lease
contracts with the petitioner's predecessor at various times
from 1900 to 1903, which contracts expired on December
31, 1953. The 29th lot (hereinafter referred to as Lot 29),
with an area of 48,000 square meters, more or less, was
not leased to any person. It needed filling because of its
very low elevation, and was planted to kangkong and other
crops.
After the petitioner took possession of the mentioned
parcels in 1950, he instructed his attorney-in-fact, J.
Antonio Araneta, to sell them.
There was no difficulty encountered in selling the 28 small
lots as their respective occupants bought them on a 10-
year installment basis. Lot 29 could not however be sold
immediately due to its low elevation.
Sometime in 1952 the petitioner's attorney-in-fact had Lot
29 filled, then subdivided into small lots and paved with
macadam roads. The small lots were then sold over the
years on a uniform 10-year annual amortization basis. J.
Antonio Araneta, the petitioner's attorney-in-fact, did not
employ any broker nor did he put up advertisements in the
matter of the sale thereof.
In 1953 and 1954 the petitioner reported his income from
the sale of the small lots (P102,050.79 and P103,468.56,
respectively) as long-term capital gains. On May 17, 1957
the Collector of Internal Revenue upheld the petitioner's
treatment of his gains from the said sale of small lots,
against a contrary ruling of a revenue examiner.
In his 1957 tax return the petitioner as before treated his
income from the sale of the small lots (P119,072.18) as
capital gains and included only ½ thereof as taxable
income. In this return, the petitioner deducted the real
estate dealer's tax he paid for 1957. It was explained,
however, that the payment of the dealer's tax was on
account of rentals received from the mentioned 28 lots and
other properties of the petitioner. On the basis of the 1957
opinion of the Collector of Internal Revenue, the revenue
examiner approved the petitioner's treatment of his income
30
from the sale of the lots in question. In a memorandum
dated July 16, 1962 to the Commissioner of Internal
Revenue, the chief of the BIR Assessment Department
advanced the same opinion, which was concurred in by the
Commissioner of Internal Revenue.
On January 9, 1963, however, the Commissioner reversed
himself and considered the petitioner's profits from the
sales of the mentioned lots as ordinary gains. On January
28, 1963 the petitioner received a letter from the Bureau
of Internal Revenue advising him to pay deficiency income
tax for 1957, as follows:
The petitioner's motion for reconsideration of the foregoing
deficiency assessment was denied, and so he went up to
the Court of Tax Appeals, which however rejected his
posture in a decision dated January 16, 1965, and ordered
him, in addition, to pay a 5% Surcharge and 1% monthly
interest "pursuant to Sec. 51(e) of the Revenue Code."
Hence, the present petition.
The petitioner assails the correctness of the opinion below
that as he was engaged in the business of leasing the lots
he inherited from his mother as well other real properties,
his subsequent sales of the mentioned lots cannot be
recognized as sales of capital assets but of "real property
used in trade or business of the taxpayer." The petitioner
argues that (1) he is not the one who leased the lots in
question; (2) the lots were residential, not commercial lots;
and (3) the leases on the 28 small lots were to last until
1953, before which date he was powerless to eject the
lessees therefrom.
The basic issue thus raised is whether the properties in
question which the petitioner had inherited and
subsequently sold in small lots to other persons should be
regarded as capital assets.
1. The National Internal Revenue Code (C.A. 466, as
amended) defines the term "capital assets" as follows:
(1) Capital assets. — The term "capital assets"
means property held by the taxpayer (whether or
not connected with his trade or business), but does
not include stock in trade of the taxpayer or other
property of a kind which would properly be
included in the inventory of the taxpayer if on hand
at the close of the taxable year, or property held by
the taxpayer primarily for sale to customers in the
ordinary course of his trade or business, or
property, used in the trade or business, of a
character which is subject to the allowance for
 depreciation provided in subsection (f) of section
thirty; or real property used in the trade or
business of the taxpayer.
As thus defined by law, the term "capital assets" includes
all the properties of a taxpayer whether or not connected
with his trade or business, except: (1) stock in trade or
other property included in the taxpayer's inventory; (2)
property primarily for sale to customers in the ordinary
course of his trade or business; (3) property used in the
trade or business of the taxpayer and subject to
depreciation allowance; and (4) real property used in trade
or business.1If the taxpayer sells or exchanges any of the
properties above-enumerated, any gain or loss relative
thereto is an ordinary gain or an ordinary loss; the gain or
loss from the sale or exchange of all other properties of the
taxpayer is a capital gain or a capital loss.2
Under section 34(b) (2) of the Tax Code, if a gain is realized
by a taxpayer (other than a corporation) from the sale or
exchange of capital assets held for more than twelve
months, only 50% of the net capital gain shall be taken into
account in computing the net income.
The Tax Code's provision on so-called long-term capital
gains constitutes a statute of partial exemption. In view of
the familiar and settled rule that tax exemptions are
construed in strictissimi juris against the taxpayer and
liberally in favor of the taxing authority,3 the field of
application of the term it "capital assets" is necessarily
narrow, while its exclusions must be interpreted
broadly.4 Consequently, it is the taxpayer's burden to bring
himself clearly and squarely within the terms of a tax-
exempting statutory provision, otherwise, all fair doubts will
be resolved against him.5 It bears emphasis nonetheless
that in the determination of whether a piece of property is a
capital asset or an ordinary asset, a careful examination
and weighing of all circumstances revealed in each case
must be made.6
In the case at bar, after a thoroughgoing study of all the
circumstances relevant to the resolution of the issue
raised, this Court is of the view, and so holds, that the
petitioner's thesis is bereft of merit.
When the petitioner obtained by inheritance the parcels in
question, transferred to him was not merely the duty to
respect the terms of any contract thereon, but as well the
correlative right to receive and enjoy the fruits of the
business and property which the decedent had established
and maintained.7 Moreover, the record discloses that the
petitioner owned other real properties which he was putting
out for rent, from which he periodically derived a
substantial income, and for which he had to pay the real
estate dealer's tax (which he used to deduct from his gross
income).8 In fact, as far back as 1957 the petitioner was
receiving rental payments from the mentioned 28 small
lots, even if the leases executed by his deceased mother
thereon expired in 1953. Under the circumstances, the
petitioner's sales of the several lots forming part of his
rental business cannot be characterized as other than
sales of non-capital assets.
31
The sales concluded on installment basis of the subdivided
lots comprising Lot 29 do not deserve a different
characterization for tax purposes. The following
circumstances in combination show unequivocally that the
petitioner was, at the time material to this case, engaged in
the real estate business: (1) the parcels of land involved
have in totality a substantially large area, nearly seven (7)
hectares, big enough to be transformed into a subdivision,
and in the case at bar, the said properties are located in
the heart of Metropolitan Manila; (2) they were subdivided
into small lots and then sold on installment basis (this
manner of selling residential lots is one of the basic
earmarks of a real estate business); (3) comparatively
valuable improvements were introduced in the subdivided
lots for the unmistakable purpose of not simply liquidating
the estate but of making the lots more saleable to the
general public; (4) the employment of J. Antonio Araneta,
the petitioner's attorney-in-fact, for the purpose of
developing, managing, administering and selling the lots in
question indicates the existence of owner-realty broker
relationship; (5) the sales were made with frequency and
continuity, and from these the petitioner consequently
received substantial income periodically; (6) the annual
sales volume of the petitioner from the said lots was
considerable, e.g., P102,050.79 in 1953; P103,468.56 in
1954; and P119,072.18 in 1957; and (7) the petitioner, by
his own tax returns, was not a person who can be
indubitably adjudged as a stranger to the real estate
business. Under the circumstances, this Court finds no
error in the holding below that the income of the petitioner
from the sales of the lots in question should be considered
as ordinary income.
2. This Court notes, however, that in ordering the petitioner
to pay the deficiency income tax, the Tax Court also
required him to pay a 5% surcharge plus 1% monthly
interest. In our opinion this additional requirement should
be eliminated because the petitioner relied in good faith
upon opinions rendered by no less than the highest officials
of the Bureau of Internal Revenue, including the
Commissioner himself. The following ruling in Connell Bros.
Co. (Phil.) vs. Collector of Internal Revenue9 applies with
reason to the case at bar:
We do not think Section 183(a) of the National
Internal Revenue Code is applicable. The same
imposes the penalty of 25% when the percentage
tax is not paid on time, and contemplates a case
where the liability for the tax is undisputed or
indisputable. In the present case the taxes were
paid, the delay being with reference to the
deficiency, owing to a controversy as to the proper
interpretation if Circulars Nos. 431 and 440 of the
office of respondent-appellee. The controversy was
generated in good faith, since that office itself
appears to have formerly taken the view that the
inclusion of the words "tax included" on invoices
issued by the taxpayer was sufficient compliance
with the requirements of said circulars. 10
ACCORDINGLY, the judgment of the Court of Tax Appeals is over the property including his shares of the
affirmed, except the portion thereof that imposes 5% harvest, damages and expenses arising herein.
surcharge and 1% monthly interest, which is hereby set
aside. No costs. 2) On April 14, 1981, respondent Magin Salipot
filed his answer denying petitioner's allegation of
tenancy over the questioned property and claimed
that petitioner was hired every now and then to
G.R. No. 80129 January 25, 2000 oversee the copra-making of the laborers of
spouses Lim, with remuneration based on the
GERARDO RUPA, SR., petitioner, weight of copra produced. In his affirmative and
vs. special defenses, respondent claimed that he
THE HONORABLE COURT OF APPEALS and MAGIN bought the registered parcel of land from the
SALIPOT, respondents. spouses Lim who in turn bought the same from the
original registered owner Diego Prieto, who was
GONZAGA-REYES, J.: issued OCT-1853, and since both deeds of sale,
one executed by Diego Prieto in favor of the Lim
Before us is a petition for review on certiorari of the
spouses and the second, by the Lim spouses to
Decision1 of the Court of Appeals (CA), dated June 5, 1987,
herein respondent, have not yet been registered or
affirming the dismissal by the Regional Trial Court of
legally conveyed to respondent, the action for
Masbate, Branch 46, of the Complaint for Redemption with
redemption filed by the petitioner against
Damages filed by herein petitioner Gerardo Rupa, Sr.
respondent is pre-mature; that petitioner had
(RUPA) against herein private petitioner respondent Magin
never been a tenant of spouses Lim over the land
Salipot (SALIPOT).
in question; that the right of redemption had
The antecedents as found by the CA are as follows: already been lost by laches or non-use, because
more than 180 days had lapsed since petitioner
1) On March 26, 1981, herein petitioner Gerardo had actual knowledge of the sale in favor of
Rupa filed an action for redemption with damages respondent.
against Magin Salipot before the then Court of
Agrarian Relations, Tenth Regional District, Branch xxx xxx x x x3
IV, Sorsogon, Sorsogon, claiming that he was the
After hearing, the Regional Trial Court of Masbate (which
agricultural share tenant for more than 20 years of
had taken over the Court of Agrarian Relations pursuant to
a parcel of coconut land2 formerly owned by
BP 129) rendered a decision dated July 17, 1985,
Vicente Lim and Patrocinia Yu Lim; that since he
dismissing the complaint on the ground that RUPA was not
assumed tenancy over the questioned property, he
a tenant of the subject property, thus, not entitled to
was the one watching, talking care of and cleaning
exercise the right of redemption over the same. RUPA was
the coconut plantation; he also gathers coconuts
also held liable in attorney's fees in the amount of
every three months and processes them into copra
P5,000.00 and P3,000.00 as litigation expenses. RUPA
which he shares with the Lim spouses under a 50-
filed a notice of appeal. The CA required the parties to file
50% sharing basis; that aside from being a share
their memoranda within a non-extendible period of 15 days
tenant, he is also the overseer of four parcels of
from notice thereof, after which the case shall be
coconut land situated in the sitios of Minuswang
considered submitted for decision with or without
and Comunal, Armenia, Uson, Masbate also owned
memoranda.4 SALIPOT manifested that he was adopting the
by the Lim spouses; that the Lim spouses,
memorandum filed with the court a quo, while no
however, sold the property to herein respondent
memorandum was received from RUPA.5 The decision of
Magin Salipot without any prior written or verbal
the trial court was affirmed in toto by the CA in its judgment
notice to the petitioner in the sum of P5,000.00
promulgated on June 5, 1987, holding as follows:
sometime in January 1981 (Annex A, Deed of
Absolute Sale, Petition); that on February 16, . . ., this Court finds, as the court a quo also held,
1981, petitioner came to know about the sale of that there is no clear and convincing evidence to
the property to the respondent when he was show that plaintiff was a share tenant of spouses
informed in writing by the former landowner, and Lim. The admission made by plaintiff Gerardo Rupa
wanting to buy the property for himself, petitioner in Criminal Case No. 532-U, entitled People of the
sought the assistance of the local office of Agrarian Philippines vs. Mariano Luzong, filed six months
Reform at Masbate, Masbate, but no agreement after this instant case was instituted, negates his
was reached; that the petitioner manifesting his claim of tenancy. Plaintiff RUPA, during the
willingness to redeem the questioned property in proceedings in the Criminal Case, admitted that he
the same amount of P5,000.00 bought by was the overseer and the administrator of five (5)
respondent, deposited the amount with the trial parcels of land, one of which is this land in
court (Annex "B", Petition). Petitioner, thus, prayed question, owned by the Lim spouses in Armenia,
for judgment authorizing his right of redemption

32
Uson, Masbate. This was aptly discussed by the
lower court in its decision as follows:
After an impartial scrutiny and evaluation
of the facts and the law involved, the
Court finds and so rules that, by a
preponderance of proof, plaintiff Gerardo
Rupa, Sr., either on July 30, 1979 or in
January, 1980 (when the two identical
deeds of sale involving the same land in
dispute were respectively executed by the
Lim spouses in favor of defendant Magin
Salipot) was actually not a share-tenant
but the overseer and administrator of the
Lim spouses of their five (5) parcels of
land in Armenia, Uson, Masbate, in the
light of his own admission of such fact and
status, under oath, in no less than a
solemn judicial proceeding which officially
commenced on September 9, 1981,
particularly in Criminal Case No. 532-U of
the MCTC of Dimasalang-Palanas-Uson
(Exhs. 6 and 6-A), more so because seven
(7) months earlier, or specifically on March
21, 1981, he had already commenced the
case at bar in Sorsogon, Sorsogon,
precisely to ventilate his alleged right of
redemption as an ousted share tenant of
the land's former owner. The Court notes
quite emphatically that herein plaintiff, in
making such an admission against his
own interest, was fully aware of the
pendency of this instant suit but such fact
notwithstanding, he nevertheless
disclosed under oath that he was, indeed,
the overseer and administrator (not a
mere share-tenant of the Lim spouses, the
two status being inherently incompatible
(pp. 100-101 Expediente, Decision .
The act, declaration or omission of a party as to a
relevant fact, may be given in evidence against him
(Section 22, Rule 130 of the Rules of Court). At the
time the plaintiff-appellant admitted that he was
the administrator of Vicente Lim, he had already
instituted the action for redemption with damages
against Magin Salipot, wherein he alleged that he
was the share-tenant of the Lim spouses. Knowing
fully well that his right of legal redemption is based
on his status as share-tenant, he still admitted, six
months later, in Crim. Case 532-U, that he was the
administrator of five (5) parcels of land owned by
the Lim spouses in Armenia, Uson, Masbate. His
admission, which is clearly adverse to his own
interest, constitutes an admission receivable
against him. A man's act, conduct and declaration,
whenever made, if voluntary, is admissible against
him for it is fair to presume that they correspond
with the truth, and it is his fault if they do not (US
vs. Ching Po, 23 Phil. 578, 583).
33
Furthermore, the observation of the court a quo is
correct in taking judicial notice of the proceedings
in other causes, because of their close connection
with the matter in controversy. (Moran, Comments
on the Rules of Court, Vol. 5, 1980 ed. P. 48)
Aside from his own admission that he was the
administrator of the Lim spouses, there is no clear
and positive proof that Gerardo Rupa performed
the duties of a tenant in personally tilling and
cultivating the land which he allegedly tenanted.
From the decision rendered in Crim. Case 532-U,
prosecution witnesses Pablito Arnilla and Antonieta
Rongasan admitted that they were the hired
laborers of Gerardo Rupa in tilling the land in
question (Under R.A. 1199, a share tenant must
personally till the land, possibly with the aid of the
immediate farm household). The aforenamed
witnesses may not have been aware of the
implication in admitting that they were the hired
laborers of Gerardo Rupa. Their admission detracts
from the veracity of the claim of Gerardo Rupa that
he personally tilled and cultivated the land as
share tenant. As found by the trial court in the said
criminal case, "the said piece of evidence (referring
to the admissions) of the prosecution is sufficient
to create doubt that there is motive on their part,
to testify falsely in favor of the complainant
Gerardo Rupa, who is so interested in redeeming
the property of Magin Salipot wherein Mariano
Luzong is the tenant (Exh. 6, page 4).
As to Gerardo Rupa's claim of tenancy, Republic
Act 1199, which governs the relations between
landholders and tenants of coconut lands, defines
a tenant as a person who, himself and with the aid
available from within his immediate farm
household, cultivates the land belonging to, or
possessed by another with the latter's consent for
purposes of production and sharing the produce
with the landholder under the share tenancy
system (Sec. 5 (a) RA 1199). A person who does
not work or till the land is not a tenant (Rural
Progress Administration v. Dimson, L-6068, April
26, 1955; Juanito Viernes v. Rodrigo Reyes, CA-GR
No. SP-05989, Feb. 24, 1977). For a person to be
considered a tenant, one must perform personally
all the phases of cultivation with the aid of the
immediate members of his family. Thus, if a tenant
merely hires laborers to do all the labor, he is
deemed to have waived or abandoned his tenancy
rights over the land (Pellejera vs. Lopes. CA-GR No.
SP-06719, Oct. 28, 1971). Thus, absent personal
cultivation on the part of the plaintiff, no share
tenancy relationship can be said to exist between
the Lim spouses and Gerardo Rupa.
There is further evidences to show that Gerardo
Rupa could not have been the tenant of the Lim
spouses over the lot in question at the time of the
sale. In his testimony, Vicente Lim, owner of the
 land in question, testified that Gerardo Rupa was
his comprador or agent of copra, and had never
been his tenant. He also stated that the plaintiff
was the administrator of his five parcels of land in
Arsenia, Uson, Masbate (TSN, March 11, 1985, p.
14). This claim is corroborated by the Municipal
Treasurer of the Municipality of Uson, Masbate,
certifying that Gerardo Rupa had been engaged in
business as copra buyer of Armenia, Uson,
Masbate from May 19, 1978 to October 10, 1979
(Exh. 4).6
Hence, this petition was filed to seek a reversal of the
decision of the CA. According to RUPA, the CA erred in
declaring that he is not a share tenant based on passing
statements contained in a decision in another case and on
the certificate issued by the Office of the Municipal
Treasurer that RUPA was engaged in business as copra
buyer from May 19, 1978 to October 10, 1979.
Consequently, this Court is asked to determine the real
status of RUPA, who claims to be a tenant of the subject
land and entitled to the benefits of tenancy laws. SALIPOT
objects, contending that the instant petition should be
dismissed considering that the issue raised is factual and
that the admission made by RUPA in the course of a judicial
proceeding is a substitute for and reason to dispense with
the actual proof of facts.
We do not agree with the contentions of private respondent
SALIPOT. The CA committed reversible error in relying
mainly on statements made in a decision in another case,
and, secondarily on the certificate of the Municipal
Treasurer as basis for establishing the status of petitioner
as share-tenant in the subject land.
True, whether a person is a tenant or not is basically a
question of fact and the findings of the respondent CA and
the trial court are, generally, entitled to respect and non-
disturbance.7 In Talavero vs. Court of Appeals,8 this Court
held that a factual conclusion made by the trial court that a
person is a tenant farmer, if it is supported by the minimum
evidence demanded by law, is final and conclusive and
cannot be reversed by the appellate tribunals except for
compelling reasons. Inversely, a factual conclusion by the
appellate court that the evidence fails to establish the
status of a person as a tenant farmer is conclusive on the
parties and carries even more weight when said court
affirms the factual findings of the trial court. In the case at
bar, however, we find there are such compelling reasons for
this Court to apply the exception of non-conclusiveness of
the factual findings of the trial and appellate courts on the
ground that the "findings of fact of both courts is premised
on the supposed absence of evidence but is in actuality
contradicted by evidence on record."9 A careful examination
of the record reveals that, indeed, both the trial court and
the appellate court overlooked and disregarded the
overwhelming evidence in favor of RUPA and instead relied
mainly on the statements made in the decision in another
case.
34
A tenant is defined under Section 5 (a) of Republic Act No.
1199 as a person who himself and with the aid available
from within his immediate farm household cultivates the
land belonging to or possessed by another, with the latter's
consent, for purposes of production, sharing the produce
with the landholder under the share tenancy system, or
paying to the landholder a price certain or ascertainable in
produce or in money or both under the leasehold tenancy
system. Briefly stated, for this relationship to exist, it is
necessary that:
1. The parties are the landowner and the tenant;
2. The subject is agricultural land;
3. There is consent;
4. The purpose is agricultural production;
5. There is personal cultivation; and
6. There is sharing of harvests.10
Upon proof of the existence of the tenancy relationship,
RUPA could avail of the benefits afforded by RA 3844 11 , as
amended, particularly, Section 12 thereof which reads:
Sec. 12. Lessee's right of redemption. — In case
the landholding is sold to a third person without
the knowledge of the agricultural lessee, the latter
shall have the right to redeem the same at a
reasonable price and consideration: Provided, That
the entire landholding sold must be
redeemed: Provided, further, That where there are
two or more agricultural lessees, each shall be
entitled to said right of redemption only to the
extent of the area actually cultivated by him. The
right of redemption under this Section may be
exercised within two years from the registration of
the sale, and shall have priority over any other right
of legal redemption.
As correctly pointed out by the CA, this right of redemption
is validly exercised upon compliance with the following
requirements: a) the redemptioner must be an agricultural
lessee or share tenant; b) the land must have been sold by
the owner to a third party without prior written notice of the
sale given to the lessee or lessees and the DAR in
accordance with sec. 11, RA 3844, as amended; c) only the
area cultivated by the agricultural lessee may be redeemed;
d) the right of redemption must be exercised within 180
days from notice; and e) there must be an actual tender or
valid consignation of the entire amount which is reasonable
price of the land sought to be redeemed.12
However, as aforesaid, the CA failed to take into account
the other material evidence on record to arrive at its finding
that RUPA was not a tenant-farmer. The decision dated
March 11, 1985 relied upon by the CA stemmed from
Criminal Case No. 532-U for Malicious Mischief which was
instituted upon a complaint filed by RUPA against one
Mariano Luzong who happens to be the son-in-law of
SALIPOT. According to RUPA, Mariano Luzong destroyed the
banana and cassava plants in his farm in Armenia, Uson,
Masbate. It was stated in the decision that RUPA "claimed
that he is the administrator of the five parcels of land
owned by Patrocinio Lim in Armenia, Uson, Masbate"13 ;
and that the "prosecution witnesses, Pablito Arnilla, and
Antonieta Bongasan, the alleged eyewitnesses to the
destruction of the banana plants and cassava plants
admitted being hired laborers of Gerardo Rupa in tilling the
latter's farm.14
It is believed that the statements in the said decision are
not sufficient basis to overcome the rights of RUPA as
provided in the Constitution and agrarian statutes and
upheld by this Court. The essence of agricultural tenancy
lies in the establishment of owner-cultivatorship and the
economic family-size farm as the basis of Philippine
agriculture, and as a consequence, divert landlord capital
in agriculture to industrial development.15
The statements made in the decision that "[Rupa] claimed
that he was made administrator by the Lim spouses of their
five (5) parcels of land in Armenia, Uson, Masbate" and that
the "prosecution witnesses in that case, namely, Pablito
Arnilla and Antonieta Rongasan admitted that they were
hired laborers of Rupa in tilling the land in question" should
not have been relied upon by the CA to conclusively
disprove the tenancy relationship.
First of all, we must look at the context in which these
statements were made. The admission made by RUPA as
stated in the decision was made, as mentioned earlier, in a
criminal case for malicious mischief which RUPA filed
against one Mariano Luzong, son-in-law of SALIPOT, on the
ground that the latter destroyed the banana and cassava
plants growing in RUPA's farm. Said statement was
apparently made to prove RUPA's standing to file the
complaint and to prove how he could have witnessed the
destruction made by said person.
Second, in claiming that he was administrator of the
property, RUPA, a farmer of limited education must have
used the word "administrator" in a loose sense to mean one
taking care of a certain piece of property by clearing and
planting on the same. As aptly pointed out by counsel for
RUPA during the trial, with no objection from the counsel of
SALIPOT, "under common usage in the locality, the term
administrator is used interchangeably with tenancy. 16
Third, the CA did not bother to explain its finding on the
"inherent incompatibility" between being a tenant-farmer
and an administrator or overseer. According to RUPA, he
was tenant of one parcel of land belonging to the Lim
spouses and administrator or overseer of the other four
parcels of land owned by the said spouses. SALIPOT and
his witnesses had interchangeably claimed RUPA to be an
overseer and a copra agent or copra buyer. As overseer, he
may have been receiving a fixed salary. As tenant under our
legal definition, he may have been sharing the harvests
with the landowner. This may well lead a person to find an
incompatibility between the two. However, one could in fact
be overseer of a parcel of land, supervising the laborers
35
therein and receiving a fixed salary for one's services, and
at the same time, act as tenant farmer in another
landholding.
Fourth, the testimony of the prosecution witnesses that
they were "hired laborers" should not have been given
significant weight by the CA. The rule is well-settled that the
rights of a person cannot be prejudiced by the declaration,
act or omission of another, except as provided by the Rules
of Court in cases of admission by a co-partner, agent,
conspirator and privies. The said witnesses do not come
under any of these exceptions.17
As regards the certificate issued by the Office of the
Treasurer to the effect that RUPA was a copra buyer from
May 19, 1978 to October 10, 1979, we find that this does
not necessarily rule out RUPA's claim that he was tenant-
farmer since 1962. RUPA has satisfactorily explained that
"pursuing two or three lines of work is nothing new. In
coconut lands, harvest seasons come far and in between,
and the tenant can always engage in the business of copra-
buying in the interim."18 Moreover, the dates indicated
therein cover only a short period of time as against RUPA's
claim that he was tenant from 1963 until his ejectment
sometime in 1981.
We are therefore constrained to overturn the appealed
judgment insofar as it ruled that the records do not
establish RUPA'S status as an agricultural tenant. Indeed,
the testimony of RUPA and his witnesses in open court, in
our view, had not been convincingly rebutted and we have
no reason to doubt the veracity of the testimonies of his
witnesses. Certainly, the passing statements contained in
the decision in the criminal case for malicious mischief
cannot overcome the evidentiary value of the testimonies
of said witnesses. A meticulous review of the record would
have found overwhelming evidence in favor of RUPA. A
scrutiny of the entire evidence on hand would be in line
with the State's policy of achieving a dignified existence for
the small farmers free from pernicious institutional
restraints and practices.19
RUPA's evidence to prove the tenancy relationship
consisted of his own testimony and those of his witnesses
Jose V. Seraspi, Gregorio Mortal, Hermogenes Mahinay and
Alfredo Patotoy. The foregoing evidence comes from
persons actually residing where the land is located from
whose declarations it appears that RUPA has physically
possessed the landholding continuously from 1963 until he
was ejected from it. RUPA lives on the landholding and he
has built a house next to the copra kiln. It has also been
established that RUPA has cultivated the land from the time
he has taken possession thereof in 1963, although there
may have already been existing coconut trees in the
landholding. At this point it is apt to quote the disquisition
of this Court in Guerrero vs. Court of Appeals20 regarding
the cultivation of coconut, to wit:
The definition of cultivation is not limited merely to
the tilling, plowing or harrowing of the land. It
includes the promotion of growth and the care of
the plants, or husbanding the ground to forward
 the products of the earth by general industry. The
raising of coconuts is a unique agricultural
enterprise. Unlike rice, the planting of coconut
seedlings does not need harrowing and plowing.
Holes are merely dug on the ground of sufficient
depth and distance; the seedlings placed in the
holes and the surface thereof covered by soil.
Some coconut trees are planted only every thirty to
a hundred years. The major work in raising
coconuts begins when the coconut trees are
already fruit-bearing. Then it is cultivated by
smudging or smoking the plantation, taking care of
the coconut trees, applying fertilizer, weeding and
watering, thereby increasing the produce.
The fact that RUPA has been planting coconut seedlings
and minor crops in the vacant portions of the subject land
as well as cleaning and gathering coconuts to process them
into copra is borne out by the records. Further indicating
the tenancy relationship between the landlord and RUPA is
their agreement to share 50/50. The sharing arrangement
taken together with other factors characteristic of tenancy
shown to be present in the case at bar, strengthens the
claim of RUPA that indeed, he is a tenant.
On the other hand, the stand of SALIPOT that RUPA was
merely a copra agent and overseer and that one
Hermogenes Mahinay was the tenant of the Lims from
1963 up to the time he bought the subject land in 1979 is
belied by the records. SALIPOT offered in evidence his own
testimony and those of witnesses Arnulfo Morata, Felipe
Gelordo, Mariano Luzong and Vicente Lim, Sr. to support
this version.
SALIPOT testified that he is a farmer and resident of
Armenia, Uson, Masbate; that Hermogenes Mahinay was
the tenant of the Lims since 1962 until 1979 when he
purchased the property that he bought the property in July
29 or 30, 1979; that two deed of sale were executed over
the same property, one in July 30, 1979 and another in
January 1981, because he had not yet paid in full the
purchase price; that RUPA was the copra agent of Lim. 21
Vicente Lim, Sr. corroborated the said testimony of
SALIPOT.22 Arnulfo Morata (MORATA) and Felipe Gelordo
(GELORDO) testified that they were both farmers residing in
Armenia, Uson, Masbate; both stated that it was
Hermogenes Mahinay who tenanted the landholding; and
that RUPA was merely the overseer of the same. According
to MORATA he always passes by the subject landholding
because his own land is at the far end of the area but he
never saw RUPA in the subject land.23 However, on cross-
examination, he stated that the first time he saw Mahinay
in the land in question was only in 1979.24 On the other
hand, according to GELORDO, he is familiar with the facts
of the case as he stays on a parcel of land opposite the
subject landholding. He stated that he did not see RUPA
occupy the subject landholding.25 But on cross-examination,
GELORDO admitted that the matters he was testifying on
were told to him by SALIPOT.26
36
It is odd that MORATA and GELORDO testified that they
never saw RUPA in the subject landholding of which
SALIPOT alleged RUPA to have been an administrator. Even
more strange is the testimony of MORATA that he only saw
Mahinay in the subject land sometime in 1979 contrary to
SALIPOT's claim that he has been tenant of the subject land
since 1962. Further, GELORDO admitted that he was
testifying on matters as told to him by SALIPOT. The
testimonies of MORATA and GELORDO are clearly flawed
and detract from their credibility.
Over and above the foregoing, RUPA has successfully
rebutted the claims of SALIPOT in presenting Hermogenes
Mahinay himself in his favor. Hermogenes Mahinay himself
testified that he is a farmer and resident of Malamag, Pio V.
Corpus, Masbate and presently, Armenia, Uson, Masbate;
that he knows the parties in the case; that he transferred
from Pio V. Corpus to Armenia, Uson in 1972; that RUPA
was the one working the subject land; that he stayed in the
land in question for less than a year; that he was never a
tenant of the subject land from 1962 to 1979 contrary to
the claim of SALIPOT.27 On cross-examination, he reiterated
that he was never a tenant but RUPA was; that he executed
an affidavit that RUPA was never a tenant in the land in
question without reading the same because he doesn't
know how to read and write; that he affixed his thumb mark
anyway because he was told that the contents were good;
that he was just told to affix his thumb mark. 28 There is no
reason to doubt the credibility of this witness who has
candidly and straightforwardly denied ever being a tenant
of the subject land.
We are also inclined to believe the position of RUPA that he
came to know of the sale of the land to SALIPOT only on
February 16, 1981 as evidenced by a letter of the same
date of the former landowner Patrocenia Yu Lim to RUPA
informing the latter to give up possession of the land to
SALIPOT as the land had already been sold to the
latter.29 Thus, the action for redemption commenced on
March 26, 1981 was filed within the six-month
reglementary period. SALIPOT is likewise estopped from
claiming that the true purchase price is P15,000.00
instead of P5,000.00 as reflected in the deed of sale,
which was admittedly done to lower the tax liabilities of the
parties to the sale.30 We cannot countenance this act of
misstating the true purchase price as a means to
circumvent our tax laws. Hence, SALIPOT cannot claim that
the amount of P5,000.00 consignated by RUPA is
inadequate for purposes of exercising the right of
redemption.
RUPA has since passed away and the right now devolves to
his heirs, as the right to redeem is a property right which is
transmissible to the heirs.31 The issue on damages and
share of harvests was not raised before the CA for failure of
RUPA to file his memorandum, hence, we cannot pass upon
the same. It is well-settled that a party is not permitted to
raise before the Supreme Court an issue which he did not
raise in the Court of Appeals.32
WHEREFORE, the petition is GRANTED. The assailed
decision of the Court of Appeals, which affirmed that of the
Regional Trial Court, is REVERSED and SET ASIDE.

SO ORDERED.

37