G.R. No.

149926             February 23, 2005

UNION BANK OF THE PHILIPPINES, petitioner,

vs.
EDMUND SANTIBAÑEZ and FLORENCE SANTIBAÑEZ ARIOLA, respondents.

DECISION

CALLEJO, SR., J.:

Before us is a petition for review on certiorari under Rule 45 of the Revised Rules of Court which seeks
the reversal of the Decision1 of the Court of Appeals dated May 30, 2001 in CA-G.R. CV No. 48831
affirming the dismissal2 of the petitioner’s complaint in Civil Case No. 18909 by the Regional Trial Court
(RTC) of Makati City, Branch 63.

The antecedent facts are as follows:

On May 31, 1980, the First Countryside Credit Corporation (FCCC) and Efraim M. Santibañez entered
into a loan agreement3 in the amount of ₱128,000.00. The amount was intended for the payment of the
purchase price of one (1) unit Ford 6600 Agricultural All-Purpose Diesel Tractor. In view thereof, Efraim
and his son, Edmund, executed a promissory note in favor of the FCCC, the principal sum payable in
five equal annual amortizations of ₱43,745.96 due on May 31, 1981 and every May 31st thereafter up
to May 31, 1985.

On December 13, 1980, the FCCC and Efraim entered into another loan agreement,4 this time in the
amount of ₱123,156.00. It was intended to pay the balance of the purchase price of another unit of
Ford 6600 Agricultural All-Purpose Diesel Tractor, with accessories, and one (1) unit Howard
Rotamotor Model AR 60K. Again, Efraim and his son, Edmund, executed a promissory note for the said
amount in favor of the FCCC. Aside from such promissory note, they also signed a Continuing
Guaranty Agreement5 for the loan dated December 13, 1980.

Sometime in February 1981, Efraim died, leaving a holographic will. 6 Subsequently in March 1981,
testate proceedings commenced before the RTC of Iloilo City, Branch 7, docketed as Special
Proceedings No. 2706. On April 9, 1981, Edmund, as one of the heirs, was appointed as the special
administrator of the estate of the decedent.7 During the pendency of the testate proceedings, the
surviving heirs, Edmund and his sister Florence Santibañez Ariola, executed a Joint Agreement 8 dated
July 22, 1981, wherein they agreed to divide between themselves and take possession of the three (3)
tractors; that is, two (2) tractors for Edmund and one (1) tractor for Florence. Each of them was to
assume the indebtedness of their late father to FCCC, corresponding to the tractor respectively taken
by them.

On August 20, 1981, a Deed of Assignment with Assumption of Liabilities 9 was executed by and
between FCCC and Union Savings and Mortgage Bank, wherein the FCCC as the assignor, among
others, assigned all its assets and liabilities to Union Savings and Mortgage Bank.

Demand letters10 for the settlement of his account were sent by petitioner Union Bank of the Philippines
(UBP) to Edmund, but the latter failed to heed the same and refused to pay. Thus, on February 5, 1988,
the petitioner filed a Complaint11 for sum of money against the heirs of Efraim Santibañez, Edmund and
Florence, before the RTC of Makati City, Branch 150, docketed as Civil Case No. 18909. Summonses
were issued against both, but the one intended for Edmund was not served since he was in the United
States and there was no information on his address or the date of his return to the
Philippines.12 Accordingly, the complaint was narrowed down to respondent Florence S. Ariola.

On December 7, 1988, respondent Florence S. Ariola filed her Answer13 and alleged that the loan
documents did not bind her since she was not a party thereto. Considering that the joint agreement
signed by her and her brother Edmund was not approved by the probate court, it was null and void;
hence, she was not liable to the petitioner under the joint agreement.

On January 29, 1990, the case was unloaded and re-raffled to the RTC of Makati City, Branch
63.14 Consequently, trial on the merits ensued and a decision was subsequently rendered by the court
dismissing the complaint for lack of merit. The decretal portion of the RTC decision reads:

WHEREFORE, judgment is hereby rendered DISMISSING the complaint for lack of merit.15

The trial court found that the claim of the petitioner should have been filed with the probate court before
which the testate estate of the late Efraim Santibañez was pending, as the sum of money being claimed
was an obligation incurred by the said decedent. The trial court also found that the Joint Agreement
apparently executed by his heirs, Edmund and Florence, on July 22, 1981, was, in effect, a partition of
the estate of the decedent. However, the said agreement was void, considering that it had not been
approved by the probate court, and that there can be no valid partition until after the will has been
probated. The trial court further declared that petitioner failed to prove that it was the now defunct Union
Savings and Mortgage Bank to which the FCCC had assigned its assets and liabilities. The court also
agreed to the contention of respondent Florence S. Ariola that the list of assets and liabilities of the
FCCC assigned to Union Savings and Mortgage Bank did not clearly refer to the decedent’s account.
Ruling that the joint agreement executed by the heirs was null and void, the trial court held that the
petitioner’s cause of action against respondent Florence S. Ariola must necessarily fail.

The petitioner appealed from the RTC decision and elevated its case to the Court of Appeals (CA),
assigning the following as errors of the trial court:

1. THE COURT A QUO ERRED IN FINDING THAT THE JOINT AGREEMENT (EXHIBIT A)

SHOULD BE APPROVED BY THE PROBATE COURT.

2. THE COURT A QUO ERRED IN FINDING THAT THERE CAN BE NO VALID PARTITION

AMONG THE HEIRS UNTIL AFTER THE WILL HAS BEEN PROBATED.

3. THE COURT A QUO ERRED IN NOT FINDING THAT THE DEFENDANT HAD WAIVED
HER RIGHT TO HAVE THE CLAIM RE-LITIGATED IN THE ESTATE PROCEEDING.16

The petitioner asserted before the CA that the obligation of the deceased had passed to his legitimate
children and heirs, in this case, Edmund and Florence; the unconditional signing of the joint agreement
marked as Exhibit "A" estopped respondent Florence S. Ariola, and that she cannot deny her liability
under the said document; as the agreement had been signed by both heirs in their personal capacity, it
was no longer necessary to present the same before the probate court for approval; the property
partitioned in the agreement was not one of those enumerated in the holographic will made by the
deceased; and the active participation of the heirs, particularly respondent Florence S. Ariola, in the
present ordinary civil action was tantamount to a waiver to re-litigate the claim in the estate
proceedings.
On the other hand, respondent Florence S. Ariola maintained that the money claim of the petitioner
should have been presented before the probate court.17

The appellate court found that the appeal was not meritorious and held that the petitioner should have
filed its claim with the probate court as provided under Sections 1 and 5, Rule 86 of the Rules of Court.
It further held that the partition made in the agreement was null and void, since no valid partition may
be had until after the will has been probated. According to the CA, page 2, paragraph (e) of the
holographic will covered the subject properties (tractors) in generic terms when the deceased referred
to them as "all other properties." Moreover, the active participation of respondent Florence S. Ariola in
the case did not amount to a waiver. Thus, the CA affirmed the RTC decision, viz.:

WHEREFORE, premises considered, the appealed Decision of the Regional Trial Court of Makati City,
Branch 63, is hereby AFFIRMED in toto.

SO ORDERED.18

In the present recourse, the petitioner ascribes the following errors to the CA:

I.

THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THE JOINT AGREEMENT
SHOULD BE APPROVED BY THE PROBATE COURT.

II.

THE COURT OF APPEALS ERRED IN FINDING THAT THERE CAN BE NO VALID PARTITION
AMONG THE HEIRS OF THE LATE EFRAIM SANTIBAÑEZ UNTIL AFTER THE WILL HAS BEEN
PROBATED.

III.

THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE RESPONDENT HAD WAIVED HER
RIGHT TO HAVE THE CLAIM RE-LITIGATED IN THE ESTATE PROCEEDING.

IV.

RESPONDENTS CAN, IN FACT, BE HELD JOINTLY AND SEVERALLY LIABLE WITH THE
PRINCIPAL DEBTOR THE LATE EFRAIM SANTIBAÑEZ ON THE STRENGTH OF THE CONTINUING
GUARANTY AGREEMENT EXECUTED IN FAVOR OF PETITIONER-APPELLANT UNION BANK.

V.

THE PROMISSORY NOTES DATED MAY 31, 1980 IN THE SUM OF ₱128,000.00 AND DECEMBER
13, 1980 IN THE AMOUNT OF ₱123,000.00 CATEGORICALLY ESTABLISHED THE FACT THAT
THE RESPONDENTS BOUND THEMSELVES JOINTLY AND SEVERALLY LIABLE WITH THE LATE
DEBTOR EFRAIM SANTIBAÑEZ IN FAVOR OF PETITIONER UNION BANK.19

The petitioner claims that the obligations of the deceased were transmitted to the heirs as provided in
Article 774 of the Civil Code; there was thus no need for the probate court to approve the joint
agreement where the heirs partitioned the tractors owned by the deceased and assumed the
obligations related thereto. Since respondent Florence S. Ariola signed the joint agreement without any
condition, she is now estopped from asserting any position contrary thereto. The petitioner also points
out that the holographic will of the deceased did not include nor mention any of the tractors subject of
the complaint, and, as such was beyond the ambit of the said will. The active participation and
resistance of respondent Florence S. Ariola in the ordinary civil action against the petitioner’s claim
amounts to a waiver of the right to have the claim presented in the probate proceedings, and to allow
any one of the heirs who executed the joint agreement to escape liability to pay the value of the tractors
under consideration would be equivalent to allowing the said heirs to enrich themselves to the damage
and prejudice of the petitioner.

The petitioner, likewise, avers that the decisions of both the trial and appellate courts failed to consider
the fact that respondent Florence S. Ariola and her brother Edmund executed loan documents, all
establishing the vinculum juris or the legal bond between the late Efraim Santibañez and his heirs to be
in the nature of a solidary obligation. Furthermore, the Promissory Notes dated May 31, 1980 and
December 13, 1980 executed by the late Efraim Santibañez, together with his heirs, Edmund and
respondent Florence, made the obligation solidary as far as the said heirs are concerned. The
petitioner also proffers that, considering the express provisions of the continuing guaranty agreement
and the promissory notes executed by the named respondents, the latter must be held liable jointly and
severally liable thereon. Thus, there was no need for the petitioner to file its money claim before the
probate court. Finally, the petitioner stresses that both surviving heirs are being sued in their respective
personal capacities, not as heirs of the deceased.

In her comment to the petition, respondent Florence S. Ariola maintains that the petitioner is trying to
recover a sum of money from the deceased Efraim Santibañez; thus the claim should have been filed
with the probate court. She points out that at the time of the execution of the joint agreement there was
already an existing probate proceedings of which the petitioner knew about. However, to avoid a claim
in the probate court which might delay payment of the obligation, the petitioner opted to require them to
execute the said agreement.1a\^/phi1.net

According to the respondent, the trial court and the CA did not err in declaring that the agreement was
null and void. She asserts that even if the agreement was voluntarily executed by her and her brother
Edmund, it should still have been subjected to the approval of the court as it may prejudice the estate,
the heirs or third parties. Furthermore, she had not waived any rights, as she even stated in her answer
in the court a quo that the claim should be filed with the probate court. Thus, the petitioner could not
invoke or claim that she is in estoppel.

Respondent Florence S. Ariola further asserts that she had not signed any continuing guaranty
agreement, nor was there any document presented as evidence to show that she had caused herself to
be bound by the obligation of her late father.

The petition is bereft of merit.

The Court is posed to resolve the following issues: a) whether or not the partition in the Agreement
executed by the heirs is valid; b) whether or not the heirs’ assumption of the indebtedness of the
deceased is valid; and c) whether the petitioner can hold the heirs liable on the obligation of the
deceased.1awphi1.nét

At the outset, well-settled is the rule that a probate court has the jurisdiction to determine all the
properties of the deceased, to determine whether they should or should not be included in the inventory
or list of properties to be administered.20 The said court is primarily concerned with the administration,
liquidation and distribution of the estate.21

In our jurisdiction, the rule is that there can be no valid partition among the heirs until after the will has
been probated:

In testate succession, there can be no valid partition among the heirs until after the will has been
probated. The law enjoins the probate of a will and the public requires it, because unless a will is
probated and notice thereof given to the whole world, the right of a person to dispose of his property by
will may be rendered nugatory. The authentication of a will decides no other question than such as
touch upon the capacity of the testator and the compliance with those requirements or solemnities
which the law prescribes for the validity of a will.22

This, of course, presupposes that the properties to be partitioned are the same properties embraced in
the will.23 In the present case, the deceased, Efraim Santibañez, left a holographic will24 which
contained, inter alia, the provision which reads as follows:

(e) All other properties, real or personal, which I own and may be discovered later after my demise,
shall be distributed in the proportion indicated in the immediately preceding paragraph in favor of
Edmund and Florence, my children.

We agree with the appellate court that the above-quoted is an all-encompassing provision embracing
all the properties left by the decedent which might have escaped his mind at that time he was making
his will, and other properties he may acquire thereafter. Included therein are the three (3) subject
tractors. This being so, any partition involving the said tractors among the heirs is not valid. The joint
agreement25 executed by Edmund and Florence, partitioning the tractors among themselves, is invalid,
specially so since at the time of its execution, there was already a pending proceeding for the probate
of their late father’s holographic will covering the said tractors.

It must be stressed that the probate proceeding had already acquired jurisdiction over all the properties
of the deceased, including the three (3) tractors. To dispose of them in any way without the probate
court’s approval is tantamount to divesting it with jurisdiction which the Court cannot allow. 26 Every act
intended to put an end to indivision among co-heirs and legatees or devisees is deemed to be a
partition, although it should purport to be a sale, an exchange, a compromise, or any other
transaction.27 Thus, in executing any joint agreement which appears to be in the nature of an extra-
judicial partition, as in the case at bar, court approval is imperative, and the heirs cannot just divest the
court of its jurisdiction over that part of the estate. Moreover, it is within the jurisdiction of the probate
court to determine the identity of the heirs of the decedent.28 In the instant case, there is no showing
that the signatories in the joint agreement were the only heirs of the decedent. When it was executed,
the probate of the will was still pending before the court and the latter had yet to determine who the
heirs of the decedent were. Thus, for Edmund and respondent Florence S. Ariola to adjudicate unto
themselves the three (3) tractors was a premature act, and prejudicial to the other possible heirs and
creditors who may have a valid claim against the estate of the deceased.

The question that now comes to fore is whether the heirs’ assumption of the indebtedness of the
decedent is binding. We rule in the negative. Perusing the joint agreement, it provides that the heirs as
parties thereto "have agreed to divide between themselves and take possession and use the above-
described chattel and each of them to assume the indebtedness corresponding to the chattel taken as
herein after stated which is in favor of First Countryside Credit Corp."29 The assumption of liability was
conditioned upon the happening of an event, that is, that each heir shall take possession and use of
their respective share under the agreement. It was made dependent on the validity of the partition, and
that they were to assume the indebtedness corresponding to the chattel that they were each to receive.
The partition being invalid as earlier discussed, the heirs in effect did not receive any such tractor. It
follows then that the assumption of liability cannot be given any force and effect.

The Court notes that the loan was contracted by the decedent.l^vvphi1.net The petitioner, purportedly a
creditor of the late Efraim Santibañez, should have thus filed its money claim with the probate court in
accordance with Section 5, Rule 86 of the Revised Rules of Court, which provides:

Section 5. Claims which must be filed under the notice. If not filed barred; exceptions. — All claims for
money against the decedent, arising from contract, express or implied, whether the same be due, not
due, or contingent, all claims for funeral expenses for the last sickness of the decedent, and judgment
for money against the decedent, must be filed within the time limited in the notice; otherwise they are
barred forever, except that they may be set forth as counterclaims in any action that the executor or
administrator may bring against the claimants. Where an executor or administrator commences an
action, or prosecutes an action already commenced by the deceased in his lifetime, the debtor may set
forth by answer the claims he has against the decedent, instead of presenting them independently to
the court as herein provided, and mutual claims may be set off against each other in such action; and if
final judgment is rendered in favor of the defendant, the amount so determined shall be considered the
true balance against the estate, as though the claim had been presented directly before the court in the
administration proceedings. Claims not yet due, or contingent, may be approved at their present value.

The filing of a money claim against the decedent’s estate in the probate court is mandatory. 30 As we
held in the vintage case of Py Eng Chong v. Herrera:31

… This requirement is for the purpose of protecting the estate of the deceased by informing the
executor or administrator of the claims against it, thus enabling him to examine each claim and to
determine whether it is a proper one which should be allowed. The plain and obvious design of the rule
is the speedy settlement of the affairs of the deceased and the early delivery of the property to the
distributees, legatees, or heirs. `The law strictly requires the prompt presentation and disposition of the
claims against the decedent's estate in order to settle the affairs of the estate as soon as possible, pay
off its debts and distribute the residue.32

Perusing the records of the case, nothing therein could hold private respondent Florence S. Ariola
accountable for any liability incurred by her late father. The documentary evidence presented,
particularly the promissory notes and the continuing guaranty agreement, were executed and signed
only by the late Efraim Santibañez and his son Edmund. As the petitioner failed to file its money claim
with the probate court, at most, it may only go after Edmund as co-maker of the decedent under the
said promissory notes and continuing guaranty, of course, subject to any defenses Edmund may have
as against the petitioner. As the court had not acquired jurisdiction over the person of Edmund, we find
it unnecessary to delve into the matter further.

We agree with the finding of the trial court that the petitioner had not sufficiently shown that it is the
successor-in-interest of the Union Savings and Mortgage Bank to which the FCCC assigned its assets
and liabilities.33 The petitioner in its complaint alleged that "by virtue of the Deed of Assignment dated
August 20, 1981 executed by and between First Countryside Credit Corporation and Union Bank of the
Philippines…"34 However, the documentary evidence35 clearly reflects that the parties in the deed of
assignment with assumption of liabilities were the FCCC, and the Union Savings and Mortgage Bank,
with the conformity of Bancom Philippine Holdings, Inc. Nowhere can the petitioner’s participation
therein as a party be found. Furthermore, no documentary or testimonial evidence was presented
during trial to show that Union Savings and Mortgage Bank is now, in fact, petitioner Union Bank of the
Philippines. As the trial court declared in its decision:

… [T]he court also finds merit to the contention of defendant that plaintiff failed to prove or did not
present evidence to prove that Union Savings and Mortgage Bank is now the Union Bank of the
Philippines. Judicial notice does not apply here. "The power to take judicial notice is to [be] exercised
by the courts with caution; care must be taken that the requisite notoriety exists; and every reasonable
doubt upon the subject should be promptly resolved in the negative." (Republic vs. Court of Appeals,
107 SCRA 504).36

This being the case, the petitioner’s personality to file the complaint is wanting. Consequently, it failed
to establish its cause of action. Thus, the trial court did not err in dismissing the complaint, and the CA
in affirming the same.

IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED. The assailed Court of Appeals
Decision is AFFIRMED. No costs.

SO ORDERED.
EN BANC
[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; 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.
x x x                    x x x                    x x x
Waiver. — It is hereby agreed upon by and between the undersigned that any question which may
arise between them by reason of this document and which has to be submitted for decision to Courts of
Justice shall be brought before the Court of competent jurisdiction in the City of Manila, waiving for this
purpose any other venue. Our right to be notified of the acceptance and approval of this indemnity
agreement is hereby likewise waived.
x x x                    x x x                    x x x
Our Liability Hereunder. — It shall not be necessary for the COMPANY to bring suit against the
principal upon his default, or to exhaust the property of the principal, but the liability hereunder of the
undersigned indemnitor shall be jointly and severally, a primary one, the same as that of the principal,
and shall be exigible immediately upon the occurrence of such default.” (Rec. App. pp. 98- 102.)
The Luzon Surety Co., prayed for allowance, as a contingent claim, of the value of the twenty bonds it
had executed in consideration of the counterbonds, and further asked for judgment for the unpaid
premiums and documentary stamps affixed to the bonds, with 12 per cent interest thereon.
Before answer was filed, and upon motion of the administratrix of Hemady’s estate, the lower court, by
order of September 23, 1953, dismissed the claims of Luzon Surety Co., on two grounds: (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; (2) that “whatever losses may occur after Hemady’s
death, are not chargeable to his estate, because upon his death he ceased to be guarantor.”
Taking up the latter point first, since it is the one more far reaching in effects, the reasoning of the court
below ran as follows:
“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).
x x x                    x x x                    x x x
“The principle on which these decisions rest is not affected by the provisions of the new Code of Civil
Procedure, and, in accordance with that principle, the heirs of a deceased person cannot be held to be
“third persons” in relation to any contracts touching the real estate of their decedent which comes in to
their hands by right of inheritance; 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; to the Luzon
Surety Co., it was indifferent that the reimbursement should be made by Hemady himself or by some
one else in his behalf, so long as the money was paid to it.
The second exception of Article 1311, p. 1, is intransmissibility by stipulation of the parties. Being
exceptional and contrary to the general rule, this intransmissibility should not be easily implied, but
must be expressly established, or at the very least, clearly inferable from the provisions of the contract
itself, and the text of the agreements sued upon nowhere indicate that they are non-transferable.
“(b)  Intransmisibilidad por pacto. — Lo general es la transmisibilidad de darechos y obligaciones; chan
roblesvirtualawlibraryle excepcion, la intransmisibilidad. Mientras nada se diga en contrario impera el
principio de la transmision, como elemento natural a toda relacion juridica, salvo las personalisimas.
Asi, para la no transmision, es menester el pacto expreso, porque si no, lo convenido entre partes
trasciende a sus herederos.
Siendo estos los continuadores de la personalidad del causante, sobre ellos recaen los efectos de los
vinculos juridicos creados por sus antecesores, y para evitarlo, si asi se quiere, es indespensable
convension terminante en tal sentido.
Por su esencia, el derecho y la obligacion tienden a ir más allá de las personas que les dieron vida, y a
ejercer presion sobre los sucesores de esa persona; 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;  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
“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; 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, 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-4963             January 29, 1953

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

Priscilo Evangelista for appellee.

Brigido G. Estrada for appellant.

BAUTISTA ANGELO, J.:

This is an action for recovery of the ownership and possession of five (5) parcels of land situated in the
Municipality of Labrador, Province of Pangasinan, filed by Maria Uson against Maria del Rosario and
her four children named Concepcion, Conrado, Dominador, and Faustino, surnamed Nebreda, who are
all of minor age, before the Court of First Instance of Pangasinan.

Maria Uson was the lawful wife of Faustino Nebreda who upon his death in 1945 left the lands involved
in this litigation. Faustino Nebreda left no other heir except his widow Maria Uson. However, plaintiff
claims that when Faustino Nebreda died in 1945, his common-law wife Maria del Rosario took
possession illegally of said lands thus depriving her of their possession and enjoyment.

Defendants in their answer set up as special defense that on February 21, 1931, Maria Uson and her
husband, the late Faustino Nebreda, executed a public document whereby they agreed to separate as
husband and wife and, in consideration of their separation, Maria Uson was given a parcel of land by
way of alimony and in return she renounced her right to inherit any other property that may be left by
her husband upon his death (Exhibit 1).

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

There is no dispute that Maria Uson, plaintiff-appellee, is the lawful wife of Faustino Nebreda, former
owner of the five parcels of lands litigated in the present case. There is likewise no dispute that Maria
del Rosario, one of the defendants-appellants, was merely a common-law wife of the late Faustino
Nebreda with whom she had four illegitimate children, her now co-defendants. It likewise appears that
Faustino Nebreda died in 1945 much prior to the effectivity of the new Civil Code. With this background,
it is evident that when Faustino Nebreda died in 1945 the five parcels of land he was seized of at the
time passed from the moment of his death to his only heir, his widow Maria Uson (Article 657, old Civil
Code).As this Court aptly said, "The property belongs to the heirs at the moment of the death of the
ancestor as completely as if the ancestor had executed and delivered to them a deed for the same
before his death" (Ilustre vs. Alaras Frondosa, 17 Phil., 321). From that moment, therefore, the rights of
inheritance of Maria Uson over the lands in question became vested.

The claim of the defendants that Maria Uson had relinquished her right over the lands in question
because she expressly renounced to inherit any future property that her husband may acquire and
leave upon his death in the deed of separation they had entered into on February 21, 1931, cannot be
entertained for the simple reason that future inheritance cannot be the subject of a contract nor can it
be renounced (1 Manresa, 123, sixth edition; Tolentino on Civil Code, p. 12; Osorio vs. Osorio and
Ynchausti Steamship Co., 41 Phil., 531).

But defendants contend that, while it is true that the four minor defendants are illegitimate children of
the late Faustino Nebreda and under the old Civil Code are not entitled to any successional rights,
however, under the new Civil Code which became in force in June, 1950, they are given the status and
rights of natural children and are entitled to the successional rights which the law accords to the latter
(article 2264 and article 287, new Civil Code), and because these successional rights were declared for
the first time in the new code, they shall be given retroactive effect even though the event which gave
rise to them may have occurred under the prior legislation (Article 2253, new Civil Code).

There is no merit in this claim. Article 2253 above referred to provides indeed that rights which are
declared for the first time shall have retroactive effect even though the event which gave rise to them
may have occurred under the former legislation, but this is so only when the new rights do not prejudice
any vested or acquired right of the same origin. Thus, said article provides that "if a right should be
declared for the first time in this Code, it shall be effective at once, even though the act or event which
gives rise thereto may have been done or may have occurred under the prior legislation, provided said
new right does not prejudice or impair any vested or acquired right, of the same origin." As already
stated in the early part of this decision, the right of ownership of Maria Uson over the lands in question
became vested in 1945 upon the death of her late husband and this is so because of the imperative
provision of the law which commands that the rights to succession are transmitted from the moment of
death (Article 657, old Civil Code). The new right recognized by the new Civil Code in favor of the
illegitimate children of the deceased cannot, therefore, be asserted to the impairment of the vested right
of Maria Uson over the lands in dispute.

As regards the claim that Maria Uson, while her deceased husband was lying in state, in a gesture of
pity or compassion, agreed to assign the lands in question to the minor children for the reason that they
were acquired while the deceased was living with their mother and Maria Uson wanted to assuage
somewhat the wrong she has done to them, this much can be said; apart from the fact that this claim is
disputed, we are of the opinion that said assignment, if any, partakes of the nature of a donation of real
property, inasmuch as it involves no material consideration, and in order that it may be valid it shall be
made in a public document and must be accepted either in the same document or in a separate one
(Article 633, old Civil Code). Inasmuch as this essential formality has not been followed, it results that
the alleged assignment or donation has no valid effect.

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

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.
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 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. 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:

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 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 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 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-7188             August 9, 1954

In re: Will and Testament of the deceased REVEREND SANCHO ABADIA.

SEVERINA A. VDA. DE ENRIQUEZ, ET AL., petitioners-appellees,
vs.
MIGUEL ABADIA, ET AL., oppositors-appellants.

Manuel A. Zosa, Luis B. Ladonga, Mariano A. Zosa and B. G. Advincula for appellants.
C. de la Victoria for appellees.

MONTEMAYOR, J.:

On September 6, 1923, Father Sancho Abadia, parish priest of Talisay, Cebu, executed a document
purporting to be his Last Will and Testament now marked Exhibit "A". Resident of the City of Cebu, he
died on January 14, 1943, in the municipality of Aloguinsan, Cebu, where he was an evacuee. He left
properties estimated at P8,000 in value. On October 2, 1946, one Andres Enriquez, one of the legatees
in Exhibit "A", filed a petition for its probate in the Court of First Instance of Cebu. Some cousins and
nephews who would inherit the estate of the deceased if he left no will, filed opposition.

During the hearing one of the attesting witnesses, the other two being dead, testified without
contradiction that in his presence and in the presence of his co-witnesses, Father Sancho wrote out in
longhand Exhibit "A" in Spanish which the testator spoke and understood; that he (testator) signed on
he left hand margin of the front page of each of the three folios or sheets of which the document is
composed, and numbered the same with Arabic numerals, and finally signed his name at the end of his
writing at the last page, all this, in the presence of the three attesting witnesses after telling that it was
his last will and that the said three witnesses signed their names on the last page after the attestation
clause in his presence and in the presence of each other. The oppositors did not submit any evidence.

The learned trial court found and declared Exhibit "A" to be a holographic will; that it was in the
handwriting of the testator and that although at the time it was executed and at the time of the testator's
death, holographic wills were not permitted by law still, because at the time of the hearing and when the
case was to be decided the new Civil Code was already in force, which Code permitted the execution of
holographic wills, under a liberal view, and to carry out the intention of the testator which according to
the trial court is the controlling factor and may override any defect in form, said trial court by order dated
January 24, 1952, admitted to probate Exhibit "A", as the Last Will and Testament of Father Sancho
Abadia. The oppositors are appealing from that decision; and because only questions of law are
involved in the appeal, the case was certified to us by the Court of Appeals.

The new Civil Code (Republic Act No. 386) under article 810 thereof provides that a person may
execute a holographic will which must be entirely written, dated and signed by the testator himself and
need not be witnessed. It is a fact, however, that at the time that Exhibit "A" was executed in 1923 and
at the time that Father Abadia died in 1943, holographic wills were not permitted, and the law at the
time imposed certain requirements for the execution of wills, such as numbering correlatively each
page (not folio or sheet) in letters and signing on the left hand margin by the testator and by the three
attesting witnesses, requirements which were not complied with in Exhibit "A" because the back pages
of the first two folios of the will were not signed by any one, not even by the testator and were not
numbered, and as to the three front pages, they were signed only by the testator.
Interpreting and applying this requirement this Court in the case of In re Estate of Saguinsin, 41 Phil.,
875, 879, referring to the failure of the testator and his witnesses to sign on the left hand margin of
every page, said:

. . . . This defect is radical and totally vitiates the testament. It is not enough that the signatures
guaranteeing authenticity should appear upon two folios or leaves; three pages having been
written on, the authenticity of all three of them should be guaranteed by the signature of the
alleged testatrix and her witnesses.

And in the case of Aspe vs. Prieto, 46 Phil., 700, referring to the same requirement, this Court declared:

From an examination of the document in question, it appears that the left margins of the six
pages of the document are signed only by Ventura Prieto. The noncompliance with section 2 of
Act No. 2645 by the attesting witnesses who omitted to sign with the testator at the left margin
of each of the five pages of the document alleged to be the will of Ventura Prieto, is a fatal
defect that constitutes an obstacle to its probate.

What is the law to apply to the probate of Exh. "A"? May we apply the provisions of the new Civil Code
which not allows holographic wills, like Exhibit "A" which provisions were invoked by the appellee-
petitioner and applied by the lower court? But article 795 of this same new Civil Code expressly
provides: "The validity of a will as to its form depends upon the observance of the law in force at the
time it is made." The above provision is but an expression or statement of the weight of authority to the
affect that the validity of a will is to be judged not by the law enforce at the time of the testator's death
or at the time the supposed will is presented in court for probate or when the petition is decided by the
court but at the time the instrument was executed. One reason in support of the rule is that although the
will operates upon and after the death of the testator, the wishes of the testator about the disposition of
his estate among his heirs and among the legatees is given solemn expression at the time the will is
executed, and in reality, the legacy or bequest then becomes a completed act. This ruling has been laid
down by this court in the case of In re Will of Riosa, 39 Phil., 23. It is a wholesome doctrine and should
be followed.

Of course, there is the view that the intention of the testator should be the ruling and controlling factor
and that all adequate remedies and interpretations should be resorted to in order to carry out said
intention, and that when statutes passed after the execution of the will and after the death of the
testator lessen the formalities required by law for the execution of wills, said subsequent statutes
should be applied so as to validate wills defectively executed according to the law in force at the time of
execution. However, we should not forget that from the day of the death of the testator, if he leaves a
will, the title of the legatees and devisees under it becomes a vested right, protected under the due
process clause of the constitution against a subsequent change in the statute adding new legal
requirements of execution of wills which would invalidate such a will. By parity of reasoning, when one
executes a will which is invalid for failure to observe and follow the legal requirements at the time of its
execution then upon his death he should be regarded and declared as having died intestate, and his
heirs will then inherit by intestate succession, and no subsequent law with more liberal requirements or
which dispenses with such requirements as to execution should be allowed to validate a defective will
and thereby divest the heirs of their vested rights in the estate by intestate succession. The general rule
is that the Legislature can not validate void wills (57 Am. Jur., Wills, Sec. 231, pp. 192-193).

In view of the foregoing, the order appealed from is reversed, and Exhibit "A" is denied probate. With
costs.
G.R. No. L-16544             March 30, 1921

LEONARDO OSORIO, plaintiff-appellee,
vs.
TOMASA OSORIO, administratrix of the estate of Petrona Reyes, and THE YNCHAUSTI
STEAMSHIP CO., defendants-appellants.

Fernandez and Ansaldo for appellants.

Carlos Ledesma for appellee.

VILLAMOR, J.:

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

D. Antonio Osorio had formed with Ynchausti & Co., a joint account association for the exploitation of
the shipping business, he being the owner of the one-third of the company's capital. This capital
amounted to P500,000, of which P166,666.66, that is, one-third belonged to D. Antonio Osorio. Upon
his death, his heirs agreed to authorize the defendant Da. Tomasa Osorio, then administratrix of the
estate of the deceased, to present a project of partition, and said administratix inserted in the project
with the consent of all the heirs, among the properties which belonged to the widow Da. Petrona Reyes,
the sum of P94,000 as her part in the "share of the estate in the shipping business of Ynchausti & Co.,"
that is, a little over P166,666.66, which was the share in said business of the deceased Osorio during
his lifetime. The project of partition was approved on May 10, 1915, with the consent of the heirs, by the
Court of First Instance of Cavite, which had cognizance of the testamentary and administration
proceedings of the state of the deceased Osorio.

On February 28, 1914, the widow of D. Antonio Osorio, Da. Petrona Reyes, now also deceased,
executed before the notary D. Florencio Gonzales Diez a document of gift in favor of her son D.
Leonardo Osorio, the plaintiff, giving to him one-half of her share in the one-third part which belonged to
her husband in the shipping business of Ynchausti & Co., a donation which was duly accepted by the
donee D. Leonardo Osorio, who signed said document with the plaintiff. On that date, February 28,
1914, the estate of D. Antonio Osorio was not yet distributed among his heirs, and the donor Da.
Petrona Reyes in order to correct the error in said document, wherein it was stated that said half was
adjudicated to her as part of her conjugal property, when the partition was yet being effected, executed
another document dated July 3, 1915, maintaining said donation in effect in the sense that she ceded
and donated to her son D. Leonardo Osorio, for the same reasons stated in the document of February
28, 1914, al interest or participation in said shipping business of Ynchausti & Co., which was
adjudicated to her in the division of the estate of D. Antonio Osorio, which division was approved by the
Court of First Instance of Cavite on May 10, 1915.

After the death of D. Antonio Osorio and before the distribution of the estate, Ynchausti & Co.
purchased the steamer Governor Forbes and recognized the heirs of D. Antonio Osorio as having an
interest to the extent of one-third in the ownership and business of said steamer. It was agreed upon by
all the interested parties that the share of Da. Petrona Reyes, widow of Osorio, in the vessel Governor
Forbes, at the time of the incorporation of "The Ynchausti Steamship Co." was P61,000, equivalent to
610 shares of stock of said corporation. Said sum was deposited with the Steamship Co. until the final
settlement of the question that had arisen between the heirs of Da. Petrona Reyes as to the ownership
thereof for, while the plaintiff alleges that, by virtue of the donation made in his favor by Da. Petrona
Reyes, he is the owner of said shares and of their value which is P61,000; the defendant on the other
hand contends that said shares are not included in the donation in question and belong to the heirs of
Da. Petrona Reyes. Such as the facts which gave rise to this litigation.

The trial court rendered judgment in the case, declaring that the 610 shares of stock in dispute and their
dividends belong to the plaintiff, and ordered the defendant Da. Tomasa Osorio, administratrix of the
estate of Da. Petrona Reyes, to exclude them from the inventory and her accounts, and the other
defendant "The Ynchausti Steamship Co." to inscribe them in the name of the plaintiff D. Leonardo
Osorio, delivering to him the dividends corresponding thereto, and denied the counterclaim for the sum
of P45,000, on the ground that said sum represents the dividends corresponding to the P94,000
adjudicated to Da. Petrona Reyes, in the partition of the estate of D. Antonio Osorio, and donated by
her to the defendant in the counterclaim.

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

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

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

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

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

1. That my husband, the deceased D. Antonio Osorio, was a shareholder to the extent of one-
third in the joint account association "Ynchausti & Co." of this place, which is engaged in the
business of buying vessels and in the exploitation of six steam vessels acquired from the
Compañia Maritima, the article of association of said joint account association having been
executed in the city of Manila on July 3, 1906, before the notary public D. Florencio Gonzales
Diez.

2. That upon the death of my husband D. Antonio Osorio and upon the partition of his estate,
there was adjudicated to me as conjugal property, one-half of said one-third part in the business
referred to, the other half thereof going to our four surviving children, such being the present
condition of our interest in said company.

3. That in consideration of the continuous services and attention received by me from my son D.
Leonardo Osorio, of age, married and a resident of Cavite also, and because of the affection he
has always shown and still shows me, as well as because of the number of children that he has,
I make a free and expressed donation to my said son D. Leonardo Osorio of all my interest and
participation in said company "Ynchausti and Co." which is neither transferred nor burdened in
any manner whatever.

4. I also declare that the present donation does not in any way prejudice the right which may
accrue to my other children with respect to inheriting my property and that therefore I can effect
 this donation, with all liberty, as I reserve for myself what is sufficient for me to live on in the
manner which corresponds to my social position and needs.

5. In turn, I, Leonardo Osorio, of age, married and a resident of the Province of Cavite, state my
conformity and acceptance of said donation which my dear mother makes to me, for which I am
greatly thankful to her.

In witness whereof we sign the present document in triplicate at Manila, Philippine Islands, this
twenty-eighth day of February, nineteen hundred and fourteen.

(Sgd.) PETRONA REYES.

LEONARDO OSORIO.

Signed in the presence of:

(Sgd.) EUSEBIO ALBA.

SALVADOR BARRIOS.

Acknowledged before the notary public D. Florencio Gonzales Diez on February 28, 1914.

The document rectifying the ratifying the preceding is literally as follows:

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

1. That on February 28, 1914, before the notary public of Manila, D. Florencio Gonzales Diez, I
executed a document of donation in favor of my son D. Leonardo Osorio, of one-half of the one-
third part which my deceased husband had in certain shipping business of the association
"Ynchausti & Co."

2. That in said document I stated, through error, that said half of one-third part of the business
referred to was adjudicated to me as my part of the conjugal property in the partition of the
properties left by my deceased husband, when the truth was that said partition had not yet been
put in proper form or finished.

3. That in order to correct said error, I so state, declaring however in any event that I make said
donation subsisting in the sense that I cede and donate to my side son D. Leonardo Osorio, in
consideration of the same causes mentioned in said document of February 28, 1914, all interest
or share in said shipping business of Ynchausti & Co. which was adjudicated to me in the
partition of the estate of my deceased husband, and approved by the Court of First Instance of
Cavite, on May 10, 1915.

In witness whereof I sign the present document in triplicate of Cavite on July 3, 1915.

(Sgd. by):

PETRONA REYES.
 Signed in the presence of:

(Sgd.) CARLOS LEDESMA.

ISAURO GABALDON.

In support of the first proposition, the appellant invokes as the legal provision violated, article 635 of the
Civil Code, which says:

A donation can not include future property.

By future property is understood that of which the donor can not dispose at the time of making
the donation.

Commenting on article 635 of the Civil Code, Manresa says, among other things:

To close these fundamental ideas which the spirit of articles 634 and 635 develops we must fix
our attention to the definition which the Code gives of future properties. They are those of which
the donor cannot dispose at the time of making the donation. This definition in reality includes all
properties which belong to others at the time of the donation, although they may or may not later
belong to the donor, thus connecting two ideas which, although lacking apparently in relation,
are merged in reality in the subject which we examine and which gives assurance to their
application. Article 635 refers to the properties of third persons but it may be said that id does so
in relation to a time to come; there can be properties which may latter belong to the donor; but
these properties cannot be donated, because they are not at present his properties, because he
cannot dispose of them at the moment of making the donation. The usufructuary for life or for a
determined number of years of a vineyard may donate said usufruct to the whole extent that it
belongs to him but never the property itself. The bare owner of said vineyard may donate his
right of course; but he may also donate the usufruct which corresponds to the time that it will go
back to him, because the case refers to a vested right of which he may dispose at the time of
the donation.

It is alleged that the donation made by Da. Petrona Reyes is void because she donated on February
28, 1914, a future property, such as the share in the business of the deceased Osorio, which was
adjudicated to her on May 10, 1915, and because in 1914 she did not have the right to all or part of the
share which her deceased husband had in the shipping business of Ynchausti & Co.

Carefully examining said article 635 of the Civil Code, in relation to the worthy opinion of the
commentator Manresa, we believe that the future properties, the donation of which is prohibited by said
article, are those belonging to other, which, as such, cannot be the object of the disposal by the donor;
but the properties of an existing inheritance as those of the case at bar, cannot be considered as
another's property with relation to the heirs who through a fiction of law continue the personality of the
owner. Nor do they have the character of future property because the died before 1912, his heirs
acquired a right to succeed him from the moment of his death, because of the principle announced in
article 657 and applied by article 661 of the Civil Code, according to which the heirs succeed the
deceased by the mere fact of his death. More of less time may elapse before the heirs enter into the
possession of the hereditary property, but this is not an obstacle, for the acquisition of said property
retroacts in any event to the moment of death, according to article 989 of the Civil Code. The right is
acquired although subject to the adjudication of the corresponding hereditary portion.
Furthermore the Civil Code does not prohibit absolutely that future inheritance should be the object of
agreement, for there are certain cases (arts. 177, 827, 831, and 1331) in which agreements may be
made as to them, beside that indicated in article 1271, and it may be deduced that an inheritance
already existing, which is no longer future from the moment of death of the predecessor, may legally be
the object of contract. A donation being of a contractual nature, inasmuch as for its efficacy the
concurrence of two wills is required, that of the donor and the donee, we believe that which may be the
object of contract may also be the object of a donation. Ubi eadem est ratio, ibi est eadem legis
dispositio. We conclude that the donor Da. Petrona Reyes, on February 28, 1912, and could legally
dispose of her right through an act of liberality, as she had done.

With respect to the point that Da. Petrona Reyes did not have in 1914 any right to all or part of the
share of her deceased husband in the shipping business of Ynchausti and Co., it must be observed that
in the project of partition of the property of D. Antonio Osorio the following appears:

The widow of the testator, Maria Petrona Reyes, her children Feliza, Tomasa, and Leonardo
and her granddaugther Soledad Encarnacion Osorio y San Agustin are at present all living and
are the only heirs of the deceased.

The testator declares that all property left by him was acquired during his marriage with Petrona
Reyes.

The testator institutes as his only and universal heirs his said children and granddaugther,
designates the parts which each of them must receive as legitime, betterment, and legacy,
leaves to the disposition of his widow and amount equivalent to that set aside by him in payment
of one-half part of the conjugal property and orders that the remainder should be equally
distributed among his heirs.

We do not have before us the will of D. Antonio Osorio but supposing that he had left no property but
the share which he had in the shipping business of Ynchausti & Co., can it be denied that the donor by
law had the right to half of said share as her part of the conjugal property? Clearly not. The defendant in
her answer says:

That Da. Maria Petrona Reyes did not donate to the plaintiff more that her share in the shipping
business of the firm Ynchausti & Co. which was adjudicated to her in the partition of the property
of D. Antonio Osorio and that said share amounts to P94,000.

This admission of the defendant is conclusive, and makes it unnecessary for us to enter into another
discussion in order to deduce that Da. Petrona Reyes had in 1914 a right to a certain part of the interest
of the deceased Osorio in the shipping business of the firm Ynchausti & Co., and could donate it, as
she did, to her son D. Leonardo Osorio.

The allegation that the document of July 3, 1915, is void, because it does not show the acceptance of
the donee, is of no importance, because of the conclusion we have reached in discussing the document
of donation of February 28, 1914. In the second document, the donor only tried to correct what she
believed to be an error in the first, wherein it is stated that in the partition of the property of her husband
there was adjudicated to her the part of the interest in the shipping business of Ynchausti & Co. which
she donated to her son Leonardo, when in fact said partition was yet pending. After its approval by the
Court of First Instance of Cavite, the donor executed the document of 1915, ratifying and correcting the
document of donation. She did not make a new donation. She executed a personal act which did not
require the concurrence of the donee. It is the duty of the donee, in order that the donation may
produce legal effect, to accept to the donation and notify the donor thereof. The acceptance is
necessary because nobody is obliged to receive a benefit against his will. And all this was complied
with in the document of 1914. The wills of the donor and of the donee having concurred, the donation,
as a mode of transferring ownership, becomes perfect, according to article 623 of the Civil Code.

We will not pass to the second proposition of the appellant, that is, that the 610 shares, which are the
subject matter of the suit, cannot be considered as included in the donation made by Da. Petrona
Reyes in favor of the plaintiff, supposing that said donation was valied. The reasons alleged by the
appellant are: (1) That the steam vessel Governor Forbes was purchased after the death of D. Antonio
Osorio, with money borrowed and furnished by the heirs individually and not by the estate, and (2) that
the plaintiff appellee has recognized that the capital used in the steamer Forbes is distinct from the
money used in the purchase of other vessels in which the deceased Osorio had an interest.

The question whether the streamer Governor Forbes was or was not purchased with money furnished
by Ynchausti and the heirs of Osorio, indepedently of that former partnership in which the deceased
Osorio had an interest, is one of the fact and must be resolved in view of the evidence adduced at the
trial.

D. Julio Gonzales, secretary and accountant of the firm Ynchausti, witness for the defendant, states
that the Forbes was purchased with money which the shipping business of Unchaisti & Co. had. The
appellant herself admits that his vessel took part in the general shipping business of Ynchausti & Co.
for no new partnership was constituted for the purchase thereof, and, after its acquisition the Ynchausti
firm accounted to the estate of D. Antonio Osorio for the profits obtained and the dividends to be
distributed and no separate account was made of the earnings of the vessel, but only a general
account, including the profits obtained in the shipping business, in which the Governor Forbes was but
one of several vessels. D. Joaquin Elizalde, manager of the firm Ynchausti & Co., by agreement of the
parties and with the approval of the court, made a deposition before the notary public D. Florencio
Gonzales Diez, stating that when the steamer Forbes was acquired in 1912, the Ynchausti firm did not
bring in any new capital, but obtained money for its purchase by mortgaging the vessel itself and other
vesseles of the company; and that the heirs of D. Antonio Osorio did not bring in any new capital for the
purchase of the vessel, but signed jointly with Ynchausti & Co. with the others, except Da. Soledad
Osorio, the guaranty which the bank required.

In our opinion the evidence shows conclusively that the vessel Governor Forbes forms part of the
shipping business of Ynchausti & Co. in which D. Antonio Osorio and his estate had an interest. It is no
argument against this conclusion that the heirs of Osorio signed with Ynchausti & Co. the guaranty
required by the bank where the money used in the purchase of the Forbes was taken: (1) Because the
guaranty is for the purpose only for securing the payment of the amount indebted and not for excluding
the estate of Osorio from the result of that banking operation; (2) because, besides said guaranty, the
other vessels of the joint account association of Osorio and Ynchausti & Co. were mortgage; (3)
because no new partnership was formed between Ynchausti & Co. and the heirs of Osorio for the
purchase of the vessel Forbes; and (4) because, when Unchausti & Co. agreed with the heirs of Osorio
in that his share in the steamer Forbes was P108,333.33, this sum was distributed among said heirs,
including Da. Soledad Osorio who did not sign the guaranty, the accruing to each P11, 833.33 and to
the widow Da. Petrona Reyes P61,000, which is the object of this suit.

All of the above shows that the estate of Osorio had a one-third part of the steamer Forbes represented
by the capital which was distributed among the heirs, there accruing to the widow, by agreement of the
interested parties, the sum of P61,000. And this sum being part of the one-half of one-third of the
shipping business of Ynchausti & Co., which one-half part accrued to the widow in the distribution of the
properties of Osorio; and the widow Da. Petrona Reyes having disposed of this half, donating it to her
son D. Leonardo Osorio, it clearly results, in our opinion, that the sum of 61,000, or the corresponding
shares of the new corporation "The Ynchausti Steamship Co." are included in said donation, and
therefore belong to the plaintiff-appellee.

The other reason alleged by the appellant in support of her contention is that the plaintiff has
recognized in his letter addressed to the defendant corporation, and inserted in the answer presented
by the latter that the Forbes was acquired with money different from that of the joint account
association theretofore mentioned. We have carefully read the letter in question and what appears is
that said plaintiff agreed that the P61,000 should be deposited with Ynchausti & Co., as trustee, to be
distributed with its accumulated dividends, when the question between the heirs of Da. Petrona Reyes
had already been terminated, that is to say, according to the result of the present suit. There is nothing
in said letter which indicates how the Governor Forbes was acquired.

With respect to the counterclaim of P45,609,91, we are of the opinion that the evidence justifies the
conclusion of the trial court that they are the profits or dividends accruing to the P94,000, which were
adjudicated to the widow Da. Petrona Reyes in the distribution of the estate of the deceased Osorio
and which were donated by her to the plaintiff, and as such profits they belong to the latter, upon the
principle of law that ownership of property gives right by accession to all that it produces, or is united or
incorporated thereto, naturally or artificially. (Art. 353 of the Civil Code.)

In view of what has been said, the judgment appealed from should be, as it is hereby, affirmed, with
costs against the appellant. So ordered.
G.R. No. L-21993             June 21, 1966

ANGELA RODRIGUEZ, MARIA RODRIGUEZ, ET AL., petitioners,

vs.
HON. JUAN DE BORJA, as Judge of the Court of First Instance of Bulacan, Branch III,
ANATOLIA PANGILINAN and ADELAIDA JACALAN, respondents.

Lorenzo Somulong for petitioners.

Torres and Torres for respondents.

REYES, J.B.L., J.:

Petitioners Angela, Maria, Abelardo and Antonio, surnamed Rodriguez, petition this Court for a writ
of certiorari and prohibition to the Court of First Instance of Bulacan, for its refusal to grant their motion
to dismiss its Special Proceeding No. 1331, which said Court is alleged to have taken cognizance of
without jurisdiction.

The facts and issues are succinctly narrated in the order of the respondent court, dated June 13, 1963
(Petition, Annex 0), in this wise:

It is alleged in the motion to dismiss filed by Angela, Maria, Abelardo and Antonio Rodriguez,
through counsel, that this Court "has no jurisdiction to try the above-entitled case in view of the
pendency of another action for the settlement of the estate of the deceased Rev. Fr. Celestino
Rodriguez in the Court of First Instance of Rizal, namely, Sp. Proceedings No. 3907 entitled 'In
the matter of the Intestate Estate of the deceased Rev. Fr. Celestino Rodriguez which was filed
ahead of the instant case".

The records show that Fr. Celestino Rodriguez died on February 12, 1963 in the City of Manila;
that on March 4, 1963, Apolonia Pangilinan and Adelaida Jacalan delivered to the Clerk of Court
of Bulacan a purported last will and testament of Fr. Rodriguez; that on March 8, 1963, Maria
Rodriguez and Angela Rodriguez, through counsel filed a petition for leave of court to allow
them to examine the alleged will; that on March 11, 1963 before the Court could act on the
petition, the same was withdrawn; that on March 12, 1963, aforementioned petitioners filed
before the Court of First Instance of Rizal a petition for the settlement of the intestate estate of
Fr. Rodriguez alleging, among other things, that Fr. Rodriguez was a resident of Parañaque,
Rizal, and died without leaving a will and praying that Maria Rodriguez be appointed as Special
Administratrix of the estate; and that on March 12, 1963 Apolonia Pangilinan and Adelaida
Jacalan filed a petition in this Court for the probation of the will delivered by them on March 4,
1963. It was stipulated by the parties that Fr. Rodriguez was born in Parañaque, Rizal; that he
was Parish priest of the Catholic Church of Hagonoy, Bulacan, from the year 1930 up to the
time of his death in 1963; that he was buried in Parañaque, and that he left real properties in
Rizal, Cavite, Quezon City and Bulacan.

The movants contend that since the intestate proceedings in the Court of First Instance of Rizal
was filed at 8:00 A.M. on March 12, 1963 while the petition for probate was filed in the Court of
First Instance of Bulacan at 11:00 A.M. on the same date, the latter Court has no jurisdiction to
entertain the petition for probate, citing as authority in support thereof the case of Ongsingco
Vda. de Borja vs. Tan and De Borja, G.R. No. 7792, July 27, 1955.
 The petitioners Pangilinan and Jacalan, on the other hand, take the stand that the Court of First
Instance of Bulacan acquired jurisdiction over the case upon delivery by them of the will to the
Clerk of Court on March 4, 1963, and that the case in this Court therefore has precedence over
the case filed in Rizal on March 12, 1963.

The Court of First Instance, as previously stated denied the motion to dismiss on the ground that a
difference of a few hours did not entitle one proceeding to preference over the other; that, as early as
March 7, movants were aware of the existence of the purported will of Father Rodriguez, deposited in
the Court of Bulacan, since they filed a petition to examine the same, and that movants clearly filed the
intestate proceedings in Rizal "for no other purpose than to prevent this Court (of Bulacan) from
exercising jurisdiction over the probate proceedings". Reconsideration having been denied, movants,
now petitioners, came to this Court, relying principally on Rule 73, section 1 of the Rules of Court, and
invoking our ruling in Ongsingco vs. Tan and De Borja, L-7792, July 27, 1955.

SECTION 1. Where estate of deceased persons settled. — If the decedent is an inhabitant of

the Philippines at the time of his death, whether a citizen or an alien, his will shall be proved, or
letters of administration granted, and his estate settled, in the Court of First Instance in the
province in which he resides at the time of his death, and if he is an inhabitant of a foreign
country, the Court of First Instance of any province which he had estate. The court first taking
cognizance of the settlement of the estate of a decedent, shall exercise jurisdiction to the
exclusion of all other courts. The jurisdiction assumed by a court, as far as it depends on the
place of residence of the decedent, or of the location of his estate, shall not be contested in a
suit or proceeding, except in an appeal from that court, in the original case, or when the want of
jurisdiction appears on the record.

We find this recourse to be untenable. The jurisdiction of the Court of First Instance of Bulacan became
vested upon the delivery thereto of the will of the late Father Rodriguez on March 4, 1963, even if no
petition for its allowance was filed until later, because upon the will being deposited the court
could, motu proprio, have taken steps to fix the time and place for proving the will, and issued the
corresponding notices conformably to what is prescribed by section 3, Rule 76, of the Revised Rules of
Court (Section 3, Rule 77, of the old Rules):

SEC. 3. Court to appoint time for proving will. Notice thereof to be published. — When a will is
delivered to, or a petition for the allowance of a will is filed in, the Court having jurisdiction, such
Court shall fix a time and place for proving the will when all concerned may appear to contest
the allowance thereof, and shall cause notice of such time and place to be published three (3)
weeks successively, previous to the time appointed, in a newspaper of general circulation in the
province.

But no newspaper publication shall be made where the petition for probate has been filed by the
testator himself.

The use of the disjunctive in the words "when a will is delivered to OR a petition for the allowance of a
will is filed" plainly indicates that the court may act upon the mere deposit therein of a decedent's
testament, even if no petition for its allowance is as yet filed. Where the petition for probate is made
after the deposit of the will, the petition is deemed to relate back to the time when the will was
delivered. Since the testament of Fr. Rodriguez was submitted and delivered to the Court of Bulacan on
March 4, while petitioners initiated intestate proceedings in the Court of First Instance of Rizal only on
March 12, eight days later, the precedence and exclusive jurisdiction of the Bulacan court is
incontestable.1äwphï1.ñët
But, petitioners object, section 3 of revised Rule 76 (old Rule 77) speaks of a will being delivered to "the
Court having jurisdiction," and in the case at bar the Bulacan court did not have it because the
decedent was domiciled in Rizal province. We can not disregard Fr. Rodriguez's 33 years of residence
as parish priest in Hagonoy, Bulacan (1930-1963); but even if we do so, and consider that he retained
throughout some animus revertendi to the place of his birth in Parañaque, Rizal, that detail would not
imply that the Bulacan court lacked jurisdiction. As ruled in previous decisions, the power to settle
decedents' estates is conferred by law upon all courts of first instance, and the domicile of the testator
only affects the venue but not the jurisdiction of the Court (In re Kaw Singco, 74 Phil. 239; Reyes vs.
Diaz, 73 Phil. 484; Bernabe vs. Vergara, 73 Phil. 676). Neither party denies that the late Fr. Rodriguez
is deceased, or that he left personal property in Hagonoy, province of Bulacan (t.s.n. p. 46, hearing of
June 11, 1963, Annex "H", Petition, Rec., p. 48). That is sufficient in the case before us.

In the Kaw Singco case (ante) this Court ruled that:

"... If we consider such question of residence as one affecting the jurisdiction of the trial court
over the subject-matter, the effect shall be that the whole proceedings including all decisions on
the different incidents which have arisen in court will have to be annulled and the same case will
have to be commenced anew before another court of the same rank in another province. That
this is of mischievous effect in the prompt administration of justice is too obvious to require
comment. (Cf. Tanunchuan vs. Dy Buncio & Co., G.R. No. 48206, December 31, 1942).
Furthermore, section 600 of Act No. 190, providing that the estate of a deceased person shall
be settled in the province where he had last resided, could not have been intended as defining
the jurisdiction of the probate court over the subject matter, because such legal provision is
contained in a law of procedure dealing merely with procedural matters, and, as we have said
time and again, procedure is one thing and jurisdiction over the subject matter is another.
(Attorney General vs. Manila Railroad Company, 20 Phil. 523.) The law of jurisdiction — Act No.
136, Section 56, No. 5 — confers upon Courts of First Instance jurisdiction over all probate
cases independently of the place of residence of the deceased.1 Since, however, there are
many Courts of First Instance in the Philippines, the Law of Procedure, Act No. 190, section
600, fixes the venue or the place where each case shall be brought. Thus, the place of
residence of the deceased is not an element of jurisdiction over the subject matter but merely of
venue. And it is upon this ground that in the new Rules of Court the province where the estate of
a deceased person shall be settled is properly called "venue" (Rule 75, section 1.) Motion for
reconsideration is denied.

The estate proceedings having been initiated in the Bulacan Court of First Instance ahead of any other,
that court is entitled to assume jurisdiction to the exclusion of all other courts, even if it were a case of
wrong venue by express provisions of Rule 73 (old Rule 75) of the Rules of Court, since the same
enjoins that:

The Court first taking cognizance of the settlement of the estate of a decedent shall exercise
jurisdiction to the exclusion of all other courts. (Sec. 1)

This disposition presupposes that two or more courts have been asked to take cognizance of the
settlement of the estate. Of them only one could be of proper venue, yet the rule grants precedence to
that Court whose jurisdiction is first invoked, without taking venue into account.

There are two other reasons that militate against the success of petitioners. One is that their
commencing intestate proceedings in Rizal, after they learned of the delivery of the decedent's will to
the Court of Bulacan, was in bad faith, patently done with a view to divesting the latter court of the
precedence awarded it by the Rules. Certainly the order of priority established in Rule 73 (old Rule 75)
was not designed to convert the settlement of decedent's estates into a race between applicants, with
the administration of the properties as the price for the fleetest.

The other reason is that, in our system of civil law, intestate succession is only subsidiary or
subordinate to the testate, since intestacy only takes place in the absence of a valid operative will. Says
Article 960 of the Civil Code of the Philippines:

ART. 960. Legal or intestate succession takes place:

(1) If a person dies without a will, or with a void will, or one which has subsequently lost its
validity;

(2) When the will does not institute an heir to, or dispose of all the property belonging to the
testator. In such case, legal succession shall take place only with respect to the property in
which the testator has not disposed;

(3) If the suspensive condition attached to the institution of heir does not happen or is not
fulfilled, or if the heir dies before the testator, or repudiates the inheritance, there being no
substitution, and no right of accretion takes place;

(4) When the heir instituted is incapable of succeeding, except in cases provided in this Code.

Therefore, as ruled in Castro, et al. vs. Martinez, 10 Phil. 307, "only after final decision as to the nullity
of testate succession could an intestate succession be instituted in the form of pre-established action".
The institution of intestacy proceedings in Rizal may not thus proceed while the probate of the
purported will of Father Rodriguez is pending.

We rule that the Bulacan Court of First Instance was entitled to priority in the settlement of the estate in
question, and that in refusing to dismiss the probate. proceedings, said court did not commit any abuse
of discretion. It is the proceedings in the Rizal Court that should be discontinued.

Wherefore, the writ of certiorari applied for is denied. Costs against petitioners Rodriguez.
G.R. No. 172804               January 24, 2011

GONZALO VILLANUEVA, represented by his heirs, Petitioner,

vs.
SPOUSES FROILAN and LEONILA BRANOCO, Respondents.

DECISION

CARPIO, J.:

The Case

This resolves the petition for review1 of the ruling2 of the Court of Appeals dismissing a suit to recover a
realty.

The Facts

Petitioner Gonzalo Villanueva (petitioner), here represented by his heirs,3 sued respondents, spouses
Froilan and Leonila Branoco (respondents), in the Regional Trial Court of Naval, Biliran (trial court) to
recover a 3,492 square-meter parcel of land in Amambajag, Culaba, Leyte (Property) and collect
damages. Petitioner claimed ownership over the Property through purchase in July 1971 from Casimiro
Vere (Vere), who, in turn, bought the Property from Alvegia Rodrigo (Rodrigo) in August 1970.
Petitioner declared the Property in his name for tax purposes soon after acquiring it.

In their Answer, respondents similarly claimed ownership over the Property through purchase in July
1983 from Eufracia Rodriguez (Rodriguez) to whom Rodrigo donated the Property in May 1965. The
two-page deed of donation (Deed), signed at the bottom by the parties and two witnesses, reads in full:

KNOW ALL MEN BY THESE PRESENTS:

That I, ALVEGIA RODRIGO, Filipino, of legal age, widow of the late Juan Arcillas, a resident of Barrio
Bool, municipality of Culaba, subprovince of Biliran, Leyte del Norte, Philippines, hereby depose and
say:

That as we live[d] together as husband and wife with Juan Arcillas, we begot children, namely: LUCIO,
VICENTA, SEGUNDINA, and ADELAIDA, all surnamed ARCILLAS, and by reason of poverty which I
suffered while our children were still young; and because my husband Juan Arcillas aware as he was
with our destitution separated us [sic] and left for Cebu; and from then on never cared what happened
to his family; and because of that one EUFRACIA RODRIGUEZ, one of my nieces who also suffered
with our poverty, obedient as she was to all the works in our house, and because of the love and
affection which I feel [for] her, I have one parcel of land located at Sitio Amambajag, Culaba, Leyte
bearing Tax Decl. No. 1878 declared in the name of Alvegia Rodrigo, I give (devise) said land in favor
of EUFRACIA RODRIGUEZ, her heirs, successors, and assigns together with all the improvements
existing thereon, which parcel of land is more or less described and bounded as follows:

1. Bounded North by Amambajag River; East, Benito Picao; South, Teofilo Uyvico; and West, by Public
land; 2. It has an area of 3,492 square meters more or less; 3. It is planted to coconuts now bearing
fruits; 4. Having an assessed value of ₱240.00; 5. It is now in the possession of EUFRACIA
RODRIGUEZ since May 21, 1962 in the concept of an owner, but the Deed of Donation or that
ownership be vested on her upon my demise.

That I FURTHER DECLARE, and I reiterate that the land above described, I already devise in favor of
EUFRACIA RODRIGUEZ since May 21, 1962, her heirs, assigns, and that if the herein Donee
predeceases me, the same land will not be reverted to the Donor, but will be inherited by the heirs of
EUFRACIA RODRIGUEZ;

That I EUFRACIA RODRIGUEZ, hereby accept the land above described from Inay Alvegia Rodrigo
and I am much grateful to her and praying further for a longer life; however, I will give one half (1/2) of
the produce of the land to Apoy Alve during her lifetime.4

Respondents entered the Property in 1983 and paid taxes afterwards.

The Ruling of the Trial Court

The trial court ruled for petitioner, declared him owner of the Property, and ordered respondents to
surrender possession to petitioner, and to pay damages, the value of the Property’s produce since
1982 until petitioner’s repossession and the costs.5 The trial court rejected respondents’ claim of
ownership after treating the Deed as a donation mortis causa which Rodrigo effectively cancelled by
selling the Property to Vere in 1970.6 Thus, by the time Rodriguez sold the Property to respondents in
1983, she had no title to transfer.

Respondents appealed to the Court of Appeals (CA), imputing error in the trial court’s interpretation of
the Deed as a testamentary disposition instead of an inter vivos donation, passing title to Rodriguez
upon its execution.

Ruling of the Court of Appeals

The CA granted respondents’ appeal and set aside the trial court’s ruling. While conceding that the
"language of the [Deed is] x x x confusing and which could admit of possible different
interpretations,"7 the CA found the following factors pivotal to its reading of the Deed as donation inter
vivos: (1) Rodriguez had been in possession of the Property as owner since 21 May 1962, subject to
the delivery of part of the produce to Apoy Alve; (2) the Deed’s consideration was not Rodrigo’s death
but her "love and affection" for Rodriguez, considering the services the latter rendered; (3) Rodrigo
waived dominion over the Property in case Rodriguez predeceases her, implying its inclusion in
Rodriguez’s estate; and (4) Rodriguez accepted the donation in the Deed itself, an act necessary to
effectuate donations inter vivos, not devises.8 Accordingly, the CA upheld the sale between Rodriguez
and respondents, and, conversely found the sale between Rodrigo and petitioner’s predecessor-in-
interest, Vere, void for Rodrigo’s lack of title.

In this petition, petitioner seeks the reinstatement of the trial court’s ruling. Alternatively, petitioner
claims ownership over the Property through acquisitive prescription, having allegedly occupied it for
more than 10 years.9

Respondents see no reversible error in the CA’s ruling and pray for its affirmance.

The Issue
The threshold question is whether petitioner’s title over the Property is superior to respondents’. The
resolution of this issue rests, in turn, on whether the contract between the parties’ predecessors-in-
interest, Rodrigo and Rodriguez, was a donation or a devise. If the former, respondents hold superior
title, having bought the Property from Rodriguez. If the latter, petitioner prevails, having obtained title
from Rodrigo under a deed of sale the execution of which impliedly revoked the earlier devise to
Rodriguez.

The Ruling of the Court

We find respondents’ title superior, and thus, affirm the CA.

Naked Title Passed from Rodrigo to Rodriguez Under a Perfected Donation

We examine the juridical nature of the Deed – whether it passed title to Rodriguez upon its execution or
is effective only upon Rodrigo’s death – using principles distilled from relevant jurisprudence. Post-
mortem dispositions typically –

(1) Convey no title or ownership to the transferee before the death of the transferor; or, what
amounts to the same thing, that the transferor should retain the ownership (full or naked) and
control of the property while alive;

(2) That before the [donor’s] death, the transfer should be revocable by the transferor at will, ad
nutum; but revocability may be provided for indirectly by means of a reserved power in the
donor to dispose of the properties conveyed;

(3) That the transfer should be void if the transferor should survive the transferee.10

Further –

[4] [T]he specification in a deed of the causes whereby the act may be revoked by the donor
indicates that the donation is inter vivos, rather than a disposition mortis causa[;]

[5] That the designation of the donation as mortis causa, or a provision in the deed to the effect
that the donation is "to take effect at the death of the donor" are not controlling criteria; such
statements are to be construed together with the rest of the instrument, in order to give effect to
the real intent of the transferor[;] [and]

(6) That in case of doubt, the conveyance should be deemed donation inter vivos rather
than mortis causa, in order to avoid uncertainty as to the ownership of the property subject of
the deed.11

It is immediately apparent that Rodrigo passed naked title to Rodriguez under a perfected
donation inter vivos. First. Rodrigo stipulated that "if the herein Donee predeceases me, the [Property]
will not be reverted to the Donor, but will be inherited by the heirs of x x x Rodriguez," signaling the
irrevocability of the passage of title to Rodriguez’s estate, waiving Rodrigo’s right to reclaim title. This
transfer of title was perfected the moment Rodrigo learned of Rodriguez’s acceptance of the
disposition12 which, being reflected in the Deed, took place on the day of its execution on 3 May 1965.
Rodrigo’s acceptance of the transfer underscores its essence as a gift in presenti, not in futuro, as only
donations inter vivos need acceptance by the recipient.13 Indeed, had Rodrigo wished to retain full title
over the Property, she could have easily stipulated, as the testator did in another case, that "the donor,
may transfer, sell, or encumber to any person or entity the properties here donated x x x"14 or used
words to that effect. Instead, Rodrigo expressly waived title over the Property in case Rodriguez
predeceases her.

In a bid to diffuse the non-reversion stipulation’s damning effect on his case, petitioner tries to profit
from it, contending it is a fideicommissary substitution clause.15 Petitioner assumes the fact he is
laboring to prove. The question of the Deed’s juridical nature, whether it is a will or a donation, is the
crux of the present controversy. By treating the clause in question as mandating fideicommissary
substitution, a mode of testamentary disposition by which the first heir instituted is entrusted with the
obligation to preserve and to transmit to a second heir the whole or part of the inheritance, 16 petitioner
assumes that the Deed is a will. Neither the Deed’s text nor the import of the contested clause supports
petitioner’s theory.

Second. What Rodrigo reserved for herself was only the beneficial title to the Property, evident from
Rodriguez’s undertaking to "give one [half] x x x of the produce of the land to Apoy Alve during her
lifetime."17 Thus, the Deed’s stipulation that "the ownership shall be vested on [Rodriguez] upon my
demise," taking into account the non-reversion clause, could only refer to Rodrigo’s beneficial title. We
arrived at the same conclusion in Balaqui v. Dongso18 where, as here, the donor, while "b[inding]
herself to answer to the [donor] and her heirs x x x that none shall question or disturb [the donee’s]
right," also stipulated that the donation "does not pass title to [the donee] during my lifetime; but when I
die, [the donee] shall be the true owner" of the donated parcels of land. In finding the disposition as a
gift inter vivos, the Court reasoned:

Taking the deed x x x as a whole, x x x x it is noted that in the same deed [the donor] guaranteed to
[the donee] and her heirs and successors, the right to said property thus conferred. From the moment
[the donor] guaranteed the right granted by her to [the donee] to the two parcels of land by virtue of the
deed of gift, she surrendered such right; otherwise there would be no need to guarantee said right.
Therefore, when [the donor] used the words upon which the appellants base their contention that the
gift in question is a donation mortis causa [that the gift "does not pass title during my lifetime; but when
I die, she shall be the true owner of the two aforementioned parcels"] the donor meant nothing else
than that she reserved of herself the possession and usufruct of said two parcels of land until
her death, at which time the donee would be able to dispose of them freely.19 (Emphasis supplied)

Indeed, if Rodrigo still retained full ownership over the Property, it was unnecessary for her to reserve
partial usufructuary right over it.20

Third. The existence of consideration other than the donor’s death, such as the donor’s love and
affection to the donee and the services the latter rendered, while also true of devises, nevertheless
"corroborates the express irrevocability of x x x [inter vivos] transfers."21 Thus, the CA committed no
error in giving weight to Rodrigo’s statement of "love and affection" for Rodriguez, her niece, as
consideration for the gift, to underscore its finding.

It will not do, therefore, for petitioner to cherry-pick stipulations from the Deed tending to serve his
cause (e.g. "the ownership shall be vested on [Rodriguez] upon my demise" and "devise"). Dispositions
bearing contradictory stipulations are interpreted wholistically, to give effect to the donor’s intent. In no
less than seven cases featuring deeds of donations styled as "mortis causa" dispositions, the Court,
after going over the deeds, eventually considered the transfers inter vivos,22 consistent with the
principle that "the designation of the donation as mortis causa, or a provision in the deed to the effect
that the donation is ‘to take effect at the death of the donor’ are not controlling criteria [but] x x x are to
be construed together with the rest of the instrument, in order to give effect to the real intent of the
transferor."23 Indeed, doubts on the nature of dispositions are resolved to favor inter vivos transfers "to
avoid uncertainty as to the ownership of the property subject of the deed."24

Nor can petitioner capitalize on Rodrigo’s post-donation transfer of the Property to Vere as proof of her
retention of ownership. If such were the barometer in interpreting deeds of donation, not only will great
legal uncertainty be visited on gratuitous dispositions, this will give license to rogue property owners to
set at naught perfected transfers of titles, which, while founded on liberality, is a valid mode of passing
ownership. The interest of settled property dispositions counsels against licensing such practice.25

Accordingly, having irrevocably transferred naked title over the Property to Rodriguez in 1965, Rodrigo
"cannot afterwards revoke the donation nor dispose of the said property in favor of another." 26 Thus,
Rodrigo’s post-donation sale of the Property vested no title to Vere. As Vere’s successor-in-interest,
petitioner acquired no better right than him. On the other hand, respondents bought the Property from
Rodriguez, thus acquiring the latter’s title which they may invoke against all adverse claimants,
including petitioner.

Petitioner Acquired No Title Over the Property

Alternatively, petitioner grounds his claim of ownership over the Property through his and Vere’s
combined possession of the Property for more than ten years, counted from Vere’s purchase of the
Property from Rodrigo in 1970 until petitioner initiated his suit in the trial court in February
1986.27 Petitioner anchors his contention on an unfounded legal assumption. The ten year ordinary
prescriptive period to acquire title through possession of real property in the concept of an owner
requires uninterrupted possession coupled with just title and good faith.28 There is just title when the
adverse claimant came into possession of the property through one of the modes recognized by law for
the acquisition of ownership or other real rights, but the grantor was not the owner or could not transmit
any right.29 Good faith, on the other hand, consists in the reasonable belief that the person from whom
the possessor received the thing was the owner thereof, and could transmit his ownership.30

Although Vere and petitioner arguably had just title having successively acquired the Property through
sale, neither was a good faith possessor. As Rodrigo herself disclosed in the Deed, Rodriguez already
occupied and possessed the Property "in the concept of an owner" ("como tag-iya"31) since 21 May
1962, nearly three years before Rodrigo’s donation in 3 May 1965 and seven years before Vere bought
the Property from Rodrigo. This admission against interest binds Rodrigo and all those tracing title to
the Property through her, including Vere and petitioner. Indeed, petitioner’s insistent claim that
Rodriguez occupied the Property only in 1982, when she started paying taxes, finds no basis in the
records. In short, when Vere bought the Property from Rodrigo in 1970, Rodriguez was in possession
of the Property, a fact that prevented Vere from being a buyer in good faith.

Lacking good faith possession, petitioner’s only other recourse to maintain his claim of ownership by
prescription is to show open, continuous and adverse possession of the Property for 30
years.32 Undeniably, petitioner is unable to meet this requirement.1avvphil

Ancillary Matters Petitioner Raises Irrelevant

Petitioner brings to the Court’s attention facts which, according to him, support his theory that Rodrigo
never passed ownership over the Property to Rodriguez, namely, that Rodriguez registered the Deed
and paid taxes on the Property only in 1982 and Rodriguez obtained from Vere in 1981 a waiver of the
latter’s "right of ownership" over the Property. None of these facts detract from our conclusion that
under the text of the Deed and based on the contemporaneous acts of Rodrigo and Rodriguez, the
latter, already in possession of the Property since 1962 as Rodrigo admitted, obtained naked title over it
upon the Deed’s execution in 1965. Neither registration nor tax payment is required to perfect
donations. On the relevance of the waiver agreement, suffice it to say that Vere had nothing to waive to
Rodriguez, having obtained no title from Rodrigo. Irrespective of Rodriguez’s motivation in obtaining the
waiver, that document, legally a scrap of paper, added nothing to the title Rodriguez obtained from
Rodrigo under the Deed.

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 6 June 2005 and the Resolution
dated 5 May 2006 of the Court of Appeals.

SO ORDERED.