1. G.R. No.

165554 July 26, 2010

LAZARO PASCO and LAURO PASCO, Petitioners, vs. HEIRS OF FILOMENA DE GUZMAN, represented by CRESENCIA DE GUZMANPRINCIPE, Respondents. DECISION DEL CASTILLO, J.: No court should shield a party from compliance with valid obligations based on wholly unsubstantiated claims of mistake or fraud. Having refused to abide by a compromise agreement, the aggrieved party may either enforce it or regard it as rescinded and insist upon the original demand. This Petition for Review on Certiorari1 assails the May 13, 2004 Decision2 of the Court of Appeals (CA) and its October 5, 2004 Resolution3 in CA-G.R. SP No. 81464 which dismissed petitioners appeal and affirmed the validity of the parties Compromise Agreement. Factual Antecedents The present petition began with a Complaint for Sum of Money and Damages4 filed on December 13, 2000 by respondents, the heirs of Filomena de Guzman (Filomena), represented by Cresencia de Guzman-Principe (Cresencia), against petitioners Lauro Pasco (Lauro) and Lazaro Pasco (Lazaro). The case was filed before the Municipal Trial Court (MTC) of Bocaue, Bulacan, and docketed as Civil Case No. MM-3191.5 In their Complaint,6 herein respondents alleged that on February 7, 1997, petitioners obtained a loan in the amount of P140,000.00 from Filomena (now deceased). To secure the petitioners loan, Lauro executed a chattel mortgage on his Isuzu Jeep in favor of Filomena. Upon her death, her heirs sought to collect from the petitioners, to no avail. Despite numerous demands, petitioners refused to either pay the balance of the loan or surrender the Isuzu Jeep to the respondents. Thus, respondents were constrained to file the collection case to compel the petitioners to pay the principal amount of P140,000.00 plus damages in the amount of 5% monthly interest from February 7, 1997, 25% attorneys fees, exemplary damages, and expenses of litigation. Filomenas heirs, consisting of Avelina de Guzman-Cumplido, Cecilia de Guzman, Rosita de Guzman, Natividad de Guzman, and Cresencia de Guzman-Principe, authorized Cresencia to act as their attorney-in-fact through a Special Power of Attorney7 (SPA) dated April 6, 1999. The SPA authorized Cresencia to do the following on behalf of the co-heirs: 1) To represent us on all matters concerning the intestate estate of our deceased sister, Filomena de Guzman; 2) To file cases for collection of all accounts due said Filomena de Guzman or her estate, including the power to file petition for foreclosure of mortgaged properties;

3) To do and perform all other acts necessary to carry out the powers hereinabove conferred. During the pre-trial of the case on February 15, 2002, the parties verbally agreed to settle the case. On February 21, 2002, the parties jointly filed a Compromise Agreement8 that was signed by the parties and their respective counsel. Said Compromise Agreement, approved by the MTC in an Order9 dated April 4, 2002, contained the following salient provisions: 1. That [petitioners] admit their principal loan and obligation to the [respondents] in the sum of One Hundred Forty Thousand Pesos (P140,000.00) Philippine currency; in addition to the incidental and other miscellaneous expenses that they have incurred in the pursuit of this case, in the further sum ofP18,700.00; 2. That, [petitioners] undertake to pay to the [respondents] their aforementioned obligations, together with attorneys fees equivalent to ten percentum (10%) of the total sum thereof, directly at the BULACAN OFFICE of the [respondents] counsel, located at No. 24 Hornbill Street, St. Francis Subdivision, Bo. Pandayan, Meycauayan, Bulacan, WITHOUT NEED OF FURTHER DEMAND in the following specific manner, to wit: P60,000.00 to be paid on or before May 15, 2002 P10,000.00 monthly payments thereafter, starting June 15, 2002 up to and until the aforementioned obligations shall have been fully paid; 3. That, provided that [petitioners] shall truely [sic] comply with the foregoing specifically agreed manner of payments, [respondents] shall forego and waive all the interests charges of 5% monthly from February 7, 1998 and the 25% attorneys fees provided for in Annex "AA" of the Complaint; 4. In the event of failure on the part of the [petitioners] to comply with any of the specific provisions of this Compromise Agreement, the [respondents] shall be entitled to the issuance of a "Writ of Execution" to enforce the satisfaction of [petitioners] obligations, as mentioned in paragraph 1, together with the 5% monthly interests charges and attorneys fees mentioned in paragraph 3 thereof.10 Ruling of the Municipal Trial Court Unfortunately, this was not the end of litigation. On May 2, 2002, petitioners filed a verified Motion to Set Aside Decision11 alleging that the Agreement was written in a language not understood by them, and the terms and conditions thereof were not fully explained to them. Petitioners further questioned the MTCs jurisdiction, arguing that the total amount allegedly covered by the Compromise Agreement amounted to P588,500.00, which exceeded the MTCs P200,000.00 jurisdictional limit. In an Order12 dated June 28, 2002, the MTC denied the motion; it also granted Cresencias prayer for the issuance of a writ of execution. The writ of execution13 was subsequently issued on July 3, 2002. Petitioners Motion for Reconsideration and to Quash Writ/Order of Execution14 dated August 1, 2002 was denied by the MTC in an Order15 dated September 5, 2002. Undeterred, on October 10, 2002, petitioners filed a Petition for Certiorari and Prohibition with Application for Temporary Restraining Order/Preliminary Injunction16 before the Regional Trial Court (RTC) of Bocaue. The case was raffled to Branch 82,17 and docketed as Civil Case No. 764-M-2002. In their petition, petitioners argued that the MTC gravely abused its discretion in approving the Compromise Agreement because (1) the amount involved was beyond the jurisdiction of the MTC;

(2) the MTC failed to ascertain that the parties fully understood the contents of the Agreement; (3) Crescencia had no authority to represent her co-heirs because Filomenas estate had a personality of its own; and (4) the Compromise Agreement was void for failure of the judge and Cresencia to explain the terms and conditions to the petitioners. In their Comment18 dated October 29, 2002, respondents argued that (1) the principal claim of P140,000.00 was within the MTCs jurisdiction; and (2) the records reveal that it was the petitioners themselves, assisted by their counsel, who proposed the terms of the settlement, which offer of compromise was accepted in open court by the respondents. Thus, the Compromise Agreement merely reduced the parties agreement into writing. Ruling of the Regional Trial Court The RTC initially granted petitioners prayer for the issuance of a Temporary Restraining Order (TRO)19 on November 18, 2002, and later issued a preliminary injunction in an Order20 dated December 10, 2002, primarily on the ground that the SPA did not specifically authorize Cresencia to settle the case. However, Presiding Judge Herminia V. Pasamba later inhibited herself,21 so the case was re-raffled to Branch 6, presided over by Judge Manuel D.J. Siayngo.22 The grant of the preliminary injunction was thus reconsidered and set aside in an Order23dated May 15, 2003. In the same Order, the RTC dismissed the petition and held that (1) the MTC had jurisdiction over the subject matter; (2) Cresencia was authorized to institute the action and enter into a Compromise Agreement on behalf of her co-heirs; and (3) the MTCs approval of the Compromise Agreement was not done in a capricious, whimsical, or arbitrary manner; thus, petitioners resort to certiorari under Rule 65 was improper. Petitioners Motion for Reconsideration24 was denied,25 hence they sought recourse before the CA. Ruling of the Court of Appeals In its Decision26 dated May 13, 2004 and Resolution27 dated October 5, 2004, the CA dismissed petitioners appeal, and held that: 1) the MTC had jurisdiction, since the principal amount of the loan only amounted to P140,000.00; 2) Cresencia was duly authorized by her co-heirs to enter into the Compromise Agreement; 3) Petitioners improperly sought recourse before the RTC through a Petition for Certiorari under Rule 65, when the proper remedy was a Petition for Relief from Judgment under Rule 38. Issues Before us, petitioners claim that, first, they correctly resorted to the remedy of certiorari under Rule 65; second, the RTC gravely erred in dismissing their Petition for Certiorari and Prohibition, when the matter under consideration was merely the propriety of the grant of the preliminary injunction; and third, that the SPA did not validly authorize Cresencia to enter into the Compromise Agreement on behalf of her co-heirs. Our Ruling

We deny the petition. The MTC had jurisdiction over the case. It bears stressing that the question of the MTCs jurisdiction has not been raised before this Court; hence, petitioners appear to have admitted that the MTC had jurisdiction to approve the Compromise Agreement. In any event, it is beyond dispute that the Judiciary Reorganization Act of 1980, or Batas Pambansa (BP) Blg. 129,28 as amended by Republic Act No. 7691,29 fixes the MTCs jurisdiction over cases where "the demand does not exceed Two hundred thousand pesos (P200,000.00) exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses, and costs."30 Thus, respondents initiatory complaint, covering the principal amount ofP140,000.00, falls squarely within the MTCs jurisdiction. Petitioners properly resorted to the special civil action of certiorari. On the first question, the CA held that the proper remedy from the MTCs Order approving the Compromise Agreement was a Petition for Relief from Judgment under Rule 38 and not a Petition for Certiorari under Rule 65. We recall that petitioners filed a verified Motion to Set Aside Decision on May 2, 2002,31 which was denied by the MTC on June 28, 2002. This Order of denial was properly the subject of a petition for certiorari, pursuant to Rule 41, Section 1, of the Rules of Court: Section 1. Subject of Appeal An appeal may be taken from a judgment or final order that completely disposes of the case, or of a particular matter therein when declared by these Rules to be appealable. No appeal may be taken from: xxxx (e) an order denying a motion to set aside a judgment by consent, confession or compromise on the ground of fraud, mistake or duress, or any other ground vitiating consent. xxxx In all the above instances where the judgment or final order is not appealable, the aggrieved party may file an appropriate special civil action under Rule 65. From the express language of Rule 41, therefore, the MTCs denial of petitioners Motion to Set Aside Decision could not have been appealed. Indeed, a decision based on a compromise agreement is immediately final and executory and cannot be the subject of appeal,32 for when parties enter into a compromise agreement and request a court to render a decision on the basis of their agreement, it is presumed that such action constitutes a waiver of the right to appeal said decision.33 While there may have been other remedies available to assail the decision,34 petitioners were well within their rights to institute a special civil action under Rule 65. The Regional Trial Court rightly dismissed the petition for certiorari. On the second issue, petitioners argue that the RTC, in reconsidering the order granting the application for writ of preliminary injunction, should not have gone so far as dismissing the main case filed by the petitioners. They claim that the issue in their application for writ of preliminary injunction was different from the issues in the main case forcertiorari, and that the dissolution of the preliminary

injunction should have been without prejudice to the conduct of further proceedings in the main case. They also claim that the RTC did not have the power to dismiss the case without requiring the parties to file memoranda. These assertions are belied, however, by petitioners own submissions. Their arguments were exactly the same, whether relating to the preliminary or permanent injunction. Identical matters were at issue the MTCs jurisdiction, petitioners alleged vitiated consent, and the propriety of enforcing the Compromise Agreement. The reliefs sought, too, were the same, that is, the grant of an injunction against the enforcement of the compromise:35 WHEREFORE, it is most respectfully prayed that: 1) A Temporary Restraining Order and/or Preliminary Injunction issue ex parte directing the respondents to cease and desist from enforcing, executing, or implementing in any manner the Decision dated April 4, 2002 and acting in Civil Case No. MM-3191 until further orders from this Honorable Court. 2) After hearing, the temporary restraining order/ex parte injunction be replaced by a writ of preliminary injunction. 3) After hearing on the merits, judgment be rendered: a. Making the injunction permanent. Since the RTC found at the preliminary injunction phase that petitioners were not entitled to an injunction (whether preliminary or permanent), that petitioners arguments were insufficient to support the relief sought, and that the MTCs approval of the Compromise Agreement was not done in a capricious, whimsical, or arbitary manner, the RTC was not required to engage in unnecessary duplication of proceedings. As such, it rightly dismissed the petition. In addition, nothing in the Rules of Court commands the RTC to require the parties to file Memoranda. Indeed, Rule 65, Sec. 8 is explicit in that the court "may dismiss the petition if it finds the same to be patently without merit, prosecuted manifestly for delay, or that the questions raised therein are too unsubstantial to require consideration."36 Cresencia was authorized to enter into the Compromise Agreement. As regards the third issue, petitioners maintain that the SPA was fatally defective because Cresencia was not specifically authorized to enter into a compromise agreement. Here, we fully concur with the findings of the CA that: x x x It is undisputed that Cresencias co-heirs executed a Special Power of Attorney, dated 6 April 1999, designating the former as their attorney-in-fact and empowering her to file cases for collection of all the accounts due to Filomena or her estate. Consequently, Cresencia entered into the subject Compromise Agreement in order to collect the overdue loan obtained by Pasco from Filomena. In so doing, Cresencia was merely performing her duty as attorney-in-fact of her co-heirs pursuant to the Special Power of Attorney given to her.37
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Our ruling in Trinidad v. Court of Appeals38 is illuminating. In Trinidad, the heirs of Vicente Trinidad executed a SPA in favor of Nenita Trinidad (Nenita) to be their representative in litigation involving

the sale of real property covered by the decedents estate. As here, there was no specific authority to enter into a Compromise Agreement. When a compromise agreement was finally reached, the heirs later sought to invalidate it, claiming that Nenita was not specifically authorized to enter into the compromise agreement. We held then, as we do now, that the SPA necessarily included the power of the attorney-in-fact to compromise the case, and that Nenitas co-heirs could not belatedly disavow their original authorization.39 This ruling is even more significant here, where the co-heirs have not taken any action to invalidate the Compromise Agreement or assail their SPA. Moreover, we note that petitioners never assailed the validity of the SPA during the pre-trial stage prior to entering the Compromise Agreement. This matter was never even raised as a ground in petitioners Motion to Set Aside the compromise, or in the initial Petition before the RTC. It was only months later, in December 2002, that petitioners rather self-servingly claimed that the SPA was insufficient. The stated interest rate should be reduced. Although the petition is unmeritorious, we find the 5% monthly interest rate stipulated in Clause 4 of the Compromise Agreement to be iniquitous and unconscionable. Accordingly, the legal interest of 12% per annum must be imposed in lieu of the excessive interest stipulated in the agreement. As we held in Castro v. Tan:40 In several cases, we have ruled that stipulations authorizing iniquitous or unconscionable interests are contrary to morals, if not against the law. In Medel v. Court of Appeals, we annulled a stipulated 5.5% per month or 66% per annum interest on a P500,000.00 loan and a 6% per month or 72% per annum interest on a P60,000.00 loan, respectively, for being excessive, iniquitous, unconscionable and exorbitant. In Ruiz v. Court of Appeals, we declared a 3% monthly interest imposed on four separate loans to be excessive. In both cases, the interest rates were reduced to 12% per annum. In this case, the 5% monthly interest rate, or 60% per annum, compounded monthly, stipulated in the Kasulatan is even higher than the 3% monthly interest rate imposed in the Ruiz case. Thus, we similarly hold the 5% monthly interest to be excessive, iniquitous, unconscionable and exorbitant, contrary to morals, and the law. It is therefore void ab initio for being violative of Article 1306 of the Civil Code. x x x (citations omitted) The proceeds of the loan should be released to Filomenas heirs only upon settlement of her estate. Finally, it is true that Filomenas estate has a different juridical personality than that of the heirs. Nonetheless, her heirs certainly have an interest in the preservation of the estate and the recovery of its properties,41 for at the moment of Filomenas death, the heirs start to own the property, subject to the decedent's liabilities. In this connection, Article 777 of the Civil Code states that "[t]he rights to the succession are transmitted from the moment of the death of the decedent."42 Unfortunately, the records before us do not show the status of the proceedings for the settlement of the estate of Filomena, if any. But to allow the release of the funds directly to the heirs would amount to a distribution of the estate; which distribution and delivery should be made only after, not before, the payment of all debts, charges, expenses, and taxes of the estate have been paid.43 We thus decree that respondent Cresencia should deposit the amounts received from the petitioners with the MTC of Bocaue, Bulacan and in turn, the MTC of Bocaue, Bulacan should hold in abeyance the release of the amounts to Filomenas heirs until after a showing that the proper procedure for the settlement of Filomenas estate has been followed.

WHEREFORE, the petition is DENIED. The May 13, 2004 Decision of the Court of Appeals and its October 5, 2004 Resolution are AFFIRMED with MODIFICATIONS that the interest rate of 5% per month (60% per annum) is ordered reduced to 12 % per annum. Respondent Cresencia De Guzman-Principe is DIRECTED to deposit with the Municipal Trial Court of Bocaue, Bulacan the amounts received from the petitioners. The Municipal Trial Court of Bocaue, Bulacan is likewise DIRECTED to hold in abeyance the release of any amounts recovered from the petitioners until after a showing that the procedure for settlement of estates of Filomena de Guzmans estate has been followed, and after all charges on the estate have been fully satisfied. SO ORDERED. MARIANO C. DEL CASTILLO Associate Justice

2.

G.R. No. 168970

January 15, 2010

CELESTINO BALUS, Petitioner, vs. SATURNINO BALUS and LEONARDA BALUS VDA. DE CALUNOD, Respondents. DECISION PERALTA, J.: Assailed in the present petition for review on certiorari under Rule 45 of the Rules of Court is the Decision1 of the Court of Appeals (CA) dated May 31, 2005 in CA-G.R. CV No. 58041 which set aside the February 7, 1997 Decision of the Regional Trial Court (RTC) of Lanao del Norte, Branch 4 in Civil Case No. 3263. The facts of the case are as follows: Herein petitioner and respondents are the children of the spouses Rufo and Sebastiana Balus. Sebastiana died on September 6, 1978, while Rufo died on July 6, 1984. On January 3, 1979, Rufo mortgaged a parcel of land, which he owns, as security for a loan he obtained from the Rural Bank of Maigo, Lanao del Norte (Bank). The said property was originally covered by Original Certificate of Title No. P-439(788) and more particularly described as follows: A parcel of land with all the improvements thereon, containing an area of 3.0740 hectares, more or less, situated in the Barrio of Lagundang, Bunawan, Iligan City, and bounded as follows: Bounded on the NE., along line 1-2, by Lot 5122, Csd-292; along line 2-12, by Dodiongan River; along line 1213 by Lot 4649, Csd-292; and along line 12-1, by Lot 4661, Csd-292. x x x 2 Rufo failed to pay his loan. As a result, the mortgaged property was foreclosed and was subsequently sold to the Bank as the sole bidder at a public auction held for that purpose. On November 20, 1981, a Certificate of Sale3was executed by the sheriff in favor of the Bank. The property was not redeemed within the period allowed by law. More than two years after the auction, or on January 25, 1984, the sheriff executed a Definite Deed of Sale4 in the Bank's favor. Thereafter, a new title was issued in the name of the Bank. On October 10, 1989, herein petitioner and respondents executed an Extrajudicial Settlement of Estate5adjudicating to each of them a specific one-third portion of the subject property consisting of 10,246 square meters. The Extrajudicial Settlement also contained provisions wherein the parties admitted knowledge of the fact that their father mortgaged the subject property to the Bank and that they intended to redeem the same at the soonest possible time. Three years after the execution of the Extrajudicial Settlement, herein respondents bought the subject property from the Bank. On October 12, 1992, a Deed of Sale of Registered Land6 was executed by the Bank in favor of respondents. Subsequently, Transfer Certificate of Title (TCT) No. T-39,484(a.f.)7 was issued in the name of respondents. Meanwhile, petitioner continued possession of the subject lot.

On June 27, 1995, respondents filed a Complaint8 for Recovery of Possession and Damages against petitioner, contending that they had already informed petitioner of the fact that they were the new owners of the disputed property, but the petitioner still refused to surrender possession of the same to them. Respondents claimed that they had exhausted all remedies for the amicable settlement of the case, but to no avail. On February 7, 1997, the RTC rendered a Decision9 disposing as follows: WHEREFORE, judgment is hereby rendered, ordering the plaintiffs to execute a Deed of Sale in favor of the defendant, the one-third share of the property in question, presently possessed by him, and described in the deed of partition, as follows: A one-third portion of Transfer Certificate of Title No. T-39,484 (a.f.), formerly Original Certificate of Title No. P-788, now in the name of Saturnino Balus and Leonarda B. Vda. de Calunod, situated at Lagundang, Bunawan, Iligan City, bounded on the North by Lot 5122; East by shares of Saturnino Balus and Leonarda Balus-Calunod; South by Lot 4649, Dodiongan River; West by Lot 4661, consisting of 10,246 square meters, including improvements thereon. and dismissing all other claims of the parties. The amount of P6,733.33 consigned by the defendant with the Clerk of Court is hereby ordered delivered to the plaintiffs, as purchase price of the one-third portion of the land in question. Plaintiffs are ordered to pay the costs. SO ORDERED.10 The RTC held that the right of petitioner to purchase from the respondents his share in the disputed property was recognized by the provisions of the Extrajudicial Settlement of Estate, which the parties had executed before the respondents bought the subject lot from the Bank. Aggrieved by the Decision of the RTC, herein respondents filed an appeal with the CA. On May 31, 2005, the CA promulgated the presently assailed Decision, reversing and setting aside the Decision of the RTC and ordering petitioner to immediately surrender possession of the subject property to the respondents. The CA ruled that when petitioner and respondents did not redeem the subject property within the redemption period and allowed the consolidation of ownership and the issuance of a new title in the name of the Bank, their co-ownership was extinguished. Hence, the instant petition raising a sole issue, to wit: WHETHER OR NOT CO-OWNERSHIP AMONG THE PETITIONER AND THE RESPONDENTS OVER THE PROPERTY PERSISTED/CONTINUED TO EXIST (EVEN AFTER THE TRANSFER OF TITLE TO THE BANK) BY VIRTUE OF THE PARTIES' AGREEMENT PRIOR TO THE REPURCHASE THEREOF BY THE RESPONDENTS; THUS, WARRANTING THE PETITIONER'S ACT OF ENFORCING THE AGREEMENT BY REIMBURSING THE RESPONDENTS OF HIS (PETITIONER'S) JUST SHARE OF THE REPURCHASE PRICE.11 The main issue raised by petitioner is whether co-ownership by him and respondents over the subject property persisted even after the lot was purchased by the Bank and title thereto transferred to its name, and even after it was eventually bought back by the respondents from the Bank.

Petitioner insists that despite respondents' full knowledge of the fact that the title over the disputed property was already in the name of the Bank, they still proceeded to execute the subject Extrajudicial Settlement, having in mind the intention of purchasing back the property together with petitioner and of continuing their co-ownership thereof. Petitioner posits that the subject Extrajudicial Settlement is, in and by itself, a contract between him and respondents, because it contains a provision whereby the parties agreed to continue their coownership of the subject property by "redeeming" or "repurchasing" the same from the Bank. This agreement, petitioner contends, is the law between the parties and, as such, binds the respondents. As a result, petitioner asserts that respondents' act of buying the disputed property from the Bank without notifying him inures to his benefit as to give him the right to claim his rightful portion of the property, comprising 1/3 thereof, by reimbursing respondents the equivalent 1/3 of the sum they paid to the Bank. The Court is not persuaded. Petitioner and respondents are arguing on the wrong premise that, at the time of the execution of the Extrajudicial Settlement, the subject property formed part of the estate of their deceased father to which they may lay claim as his heirs. At the outset, it bears to emphasize that there is no dispute with respect to the fact that the subject property was exclusively owned by petitioner and respondents' father, Rufo, at the time that it was mortgaged in 1979. This was stipulated by the parties during the hearing conducted by the trial court on October 28, 1996.12 Evidence shows that a Definite Deed of Sale13 was issued in favor of the Bank on January 25, 1984, after the period of redemption expired. There is neither any dispute that a new title was issued in the Bank's name before Rufo died on July 6, 1984. Hence, there is no question that the Bank acquired exclusive ownership of the contested lot during the lifetime of Rufo. The rights to a person's succession are transmitted from the moment of his death.14 In addition, the inheritance of a person consists of the property and transmissible rights and obligations existing at the time of his death, as well as those which have accrued thereto since the opening of the succession.15 In the present case, since Rufo lost ownership of the subject property during his lifetime, it only follows that at the time of his death, the disputed parcel of land no longer formed part of his estate to which his heirs may lay claim. Stated differently, petitioner and respondents never inherited the subject lot from their father. Petitioner and respondents, therefore, were wrong in assuming that they became co-owners of the subject lot. Thus, any issue arising from the supposed right of petitioner as co-owner of the contested parcel of land is negated by the fact that, in the eyes of the law, the disputed lot did not pass into the hands of petitioner and respondents as compulsory heirs of Rufo at any given point in time. The foregoing notwithstanding, the Court finds a necessity for a complete determination of the issues raised in the instant case to look into petitioner's argument that the Extrajudicial Settlement is an independent contract which gives him the right to enforce his right to claim a portion of the disputed lot bought by respondents.
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It is true that under Article 1315 of the Civil Code of the Philippines, contracts are perfected by mere consent; and from that moment, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law.

Article 1306 of the same Code also provides that the contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided these are not contrary to law, morals, good customs, public order or public policy. In the present case, however, there is nothing in the subject Extrajudicial Settlement to indicate any express stipulation for petitioner and respondents to continue with their supposed co-ownership of the contested lot. On the contrary, a plain reading of the provisions of the Extrajudicial Settlement would not, in any way, support petitioner's contention that it was his and his sibling's intention to buy the subject property from the Bank and continue what they believed to be co-ownership thereof. It is a cardinal rule in the interpretation of contracts that the intention of the parties shall be accorded primordial consideration.16 It is the duty of the courts to place a practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and the purpose which it is intended to serve.17 Such intention is determined from the express terms of their agreement, as well as their contemporaneous and subsequent acts.18 Absurd and illogical interpretations should also be avoided.19 For petitioner to claim that the Extrajudicial Settlement is an agreement between him and his siblings to continue what they thought was their ownership of the subject property, even after the same had been bought by the Bank, is stretching the interpretation of the said Extrajudicial Settlement too far. In the first place, as earlier discussed, there is no co-ownership to talk about and no property to partition, as the disputed lot never formed part of the estate of their deceased father. Moreover, petitioner's asseveration of his and respondents' intention of continuing with their supposed co-ownership is negated by no less than his assertions in the present petition that on several occasions he had the chance to purchase the subject property back, but he refused to do so. In fact, he claims that after the Bank acquired the disputed lot, it offered to re-sell the same to him but he ignored such offer. How then can petitioner now claim that it was also his intention to purchase the subject property from the Bank, when he admitted that he refused the Bank's offer to re-sell the subject property to him? In addition, it appears from the recitals in the Extrajudicial Settlement that, at the time of the execution thereof, the parties were not yet aware that the subject property was already exclusively owned by the Bank. Nonetheless, the lack of knowledge on the part of petitioner and respondents that the mortgage was already foreclosed and title to the property was already transferred to the Bank does not give them the right or the authority to unilaterally declare themselves as co-owners of the disputed property; otherwise, the disposition of the case would be made to depend on the belief and conviction of the party-litigants and not on the evidence adduced and the law and jurisprudence applicable thereto. Furthermore, petitioner's contention that he and his siblings intended to continue their supposed coownership of the subject property contradicts the provisions of the subject Extrajudicial Settlement where they clearly manifested their intention of having the subject property divided or partitioned by assigning to each of the petitioner and respondents a specific 1/3 portion of the same. Partition calls for the segregation and conveyance of a determinate portion of the property owned in common. It seeks a severance of the individual interests of each co-owner, vesting in each of them a sole estate in a specific property and giving each one a right to enjoy his estate without supervision or interference from the other.20 In other words, the purpose of partition is to put an end to coownership,21 an objective which negates petitioner's claims in the present case.

WHEREFORE, the instant petition is DENIED. The assailed Decision of the Court of Appeals, dated May 31, 2005 in CA-G.R. CV No. 58041, is AFFIRMED. SO ORDERED DIOSDADO M. PERALTA Associate Justice

3.

G.R. No. 126707 February 25, 1999 BLANQUITA E. DELA MERCED, LUISITO E. DELA MERCED, BLANQUTIA M. MACATANGAY, MA. OLIVIA M. PAREDES, TERESITA P. RUPISAN, RUBEN M. ADRIANO, HERMINIO M. ADRIANO, JOSELITO M. ADRIANO, ROGELIO M. ADRIANO, WILFREDO M. ADRIANO, VICTOR M. ADRIANO, CORAZON A. ONGOCO, JASMIN A. MENDOZA and CONSTANTINO M. ADRIANO, petitioners, vs. JOSELITO P. DELA MERCED, respondent.

PURISIMA, J.: This is a Petition for Review on Certiorari of the Decision of the Court of Appeals, dated October 17, 1996, in CA-G.R. CV No. 41283, which reversed the decision, dated June 10, 1992, of the Regional Trial Court, Branch 67, Pasig City, in Civil Case No. 59705. The facts of the case are, as follows: On March 23, 1987, Evarista M. dela Merced died intestate, without issue. She left five (5) parcels of land situated in Orambo, Pasig City. At the time of her death, Evarista was survived by three sets of heirs, viz: (1) Francisco M. dela Merced, her legitimate brother; (2) Teresita P. Rupisan, her niece who is the only daughter of Rosa dela Merced-Platon (a sister who died in 1943); and (3) the legitimate children of Eugenia dela Merced-Adriano (another sister of Evarista who died in 1965), namely: Herminio, Ruben, Joselito, Rogelio, Wilfredo, Victor and Constantino, all surnamed Adriano, Corazon Adriano-Ongoco and Jasmin Adriano-Mendoza. Almost a year later or on March 19, 1988, to be precise, Francisco (Evarista's brother) died. He was survived by his wife Blanquita Errea dela Merced and their three legitimate children, namely, Luisito E. dela Merced, Blanquita M. Macatangay and Ma. Olivia M. Paredes. On April 20, 1989, the three sets of heirs of the decedent, Evarista M. dela Merced, referring to (1) the abovenamed heirs of Francisco; (2) Teresita P. Rupisan and (3) the nine [9] legitimate children of Eugenia, executed an extrajudicial settlement, entitled "Extrajudicial Settlement of the Estate of the Deceased Evarista M. dela Merced" adjudicating the properties of Evarista to them, each set with a share of one-third (1/3) pro-indiviso. On July 26, 1990, private respondent Joselito P. Dela Merced, illegitimate son of the late Francisco de la Merced, filed a "Petition for Annulment of the Extrajudicial Settlement of the Estate of the Deceased Evarista M. Dela Merced with Prayer for a Temporary Restraining Order", alleging that he was fraudulently omitted from the said settlement made by petitioners, who were fully aware of his relation to the late Francisco. Claiming successional rights, private respondent Joselito prayed that he be included as one of the beneficiaries, to share in the one-third (1/3) pro-indiviso share in the estate of the deceased Evarista, corresponding to the heirs of Francisco.

On August 3, 1990, the trial court issued the temporary restraining order prayed for by private respondent Joselito, enjoining the sale of any of the real properties of the deceased Evarista. After trial, however, or on June 10, 1992, to be definite, the trial court dismissed the petition, lifted the temporary restraining order earlier issued, and cancelled the notice of lis pendens on the certificates of title covering the real properties of the deceased Evarista. In dismissing the petition, the trial court stated: The factual setting of the instant motion after considering the circumstances of the entire case and the other evidentiary facts and documents presented by the herein parties points only to one issue which goes into the very skeleton of the controversy, to wit: "Whether or not the plaintiff may participate in the intestate estate of the late Evarista M. Dela Merced in his capacity as representative of his alleged father, Francisdo Dela Merced, brother of the deceased, whose succession is under consideration. xxx xxx xxx It is to be noted that Francisco Dela Merced, alleged father of the herein plaintiff, is a legitimate child, not an illegitimate. Plaintiff, on the other hand, is admittedly an illegitimate child of the late Francisco Dela Merced. Hence, as such, he cannot represent his alleged father in the succession of the latter in the intestate estate of the late Evarista Dela Merced, because of the barrier in Art. 992 of the New Civil Code which states that: An illegitimate child has no right to inherit ab intestato from the legitimate children and relatives of his father or mother, nor shall such children or relatives inherit in the same manner from the illegitimate child. The application of Art. 992 cannot be ignored in the instant case, it is clearly worded in such a way that there can be no room for any doubts and ambiguities. This provision of the law imposes a barrier between the illegitimate and the legitimate family. . . . (Rollo, p. 87-88) Not satisfied with the dismissal of his petition, the private respondent appealed to the Court of Appeals. In its Decision of October 17, 1996, the Court of Appeals reversed the decision of the trial court of origin and ordered the petitioners to execute an amendatory agreement which shall form part of the original settlement, so as to include private respondent Joselito as a co-heir to the estate of Francisco, which estate includes one-third (1/3) pro indiviso of the latter's inheritance from the deceased Evarista. The relevant and dispositive part of the Decision of the Court of Appeals, reads: xxx xxx xxx It is a basic principle embodied in Article 777, New Civil Code that the rights to the succession are transmitted from the moment of the death of the decedent, so that Francisco dela Merced inherited 1/3 of his sister's estate at the moment of the latter's

death. Said 1/3 of Evarista's estate formed part of Francisco's estate which was subsequently transmitted upon his death on March 23, 1987 to his legal heirs, among whom is appellant as his illegitimate child. Appellant became entitled to his share in Francisco's estate from the time of the latter's death in 1987. The extrajudicial settlement therefore is void insofar as it deprives plaintiff-appellant of his share in the estate of Francisco M. dela Merced. As a consequence, the cancellation of the notice of lis pendens is not in order because the property is directly affected. Appellant has the right to demand a partition of his father's estate which includes 1/3 of the property inherited from Evarista dela Merced. WHEREFORE, premises considered, the appealed decision is hereby REVERSED and SET ASIDE. Defendants-appellees are hereby ordered to execute an amendatory agreement/settlement to include herein plaintiff-appellant Joselito dela Merced as co-heir to the estate of Francisco dela Merced which includes 1/3 of the estate subject of the questioned Deed of Extrajudicial Settlement of the Estate of Evarista M. dela Merced dated April 20, 1989. The amendatory agreement/settlement shall form part of the original Extrajudicial Settlement. With costs against defendants-appellees. SO ORDERED. (Rollo, p. 41) In the Petition under consideration, petitioners insist that being an illegitimate child, private respondent Joselito isbarred from inheriting from Evarista because of the provision of Article 992 of the New Civil Code, which lays down an impassable barrier between the legitimate and illegitimate families. The Petition is devoid of merit. Article 992 of the New Civil Code is not applicable because involved here is not a situation where an illegitimate child would inherit ab intestato from a legitimate sister of his father, which is prohibited by the aforesaid provision of law. Rather, it is a scenario where an illegitimate child inherits from his father, the latter's share in or portion of, what the latter already inherited from the deceased sister, Evarista. As opined by the Court of Appeals, the law in point in the present case is Article 777 of the New Civil Code which provides that the rights to succession are transmitted from the moment of death of the decedent. Since Evarista died ahead of her brother Francisco, the latter inherited a portion of the estate of the former as one of her heirs. Subsequently, when Francisco died, his heirs, namely: his spouse, legitimate children, and the private respondent, Joselito, an illegitimate child, inherited his (Francisco's) share in the estate of Evarista. It bears stressing that Joselito does not claim to be an heir of Evarista by right of representation but participates in his own right, as an heir of the late Francisco, in the latter's share (or portion thereof) in the estate of Evarista. Petitioners argue that if Joselito desires to assert successional rights to the intestate estate of his father, the proper forum should be in the settlement of his own father's intestate estate, as this Court held in the case ofGutierrez vs. Macandog (150 SCRA 422 [1987]) Petitioners' reliance on the case of Gutierrez vs. Macandog (supra) is misplaced. The said case involved a claim for support filed by one Elpedia Gutierrez against the estate of the decedent, Agustin Gutierrez, Sr., when she was not even an heir to the estate in question, at the time, and the

decedent had no obligation whatsoever to give her support. Thus, this Court ruled that Elpedia should have asked for support pendente lite before the Juvenile and Domestic Relations Court in which court her husband (one of the legal heirs of the decedent) had instituted a case for legal separation against her on the ground of an attempt against his life. When Mauricio (her husband) died, she should have commenced an action for the settlement of the estate of her husband, in which case she could receive whatever allowance the intestate court would grant her. The present case, however, relates to the rightful and undisputed right of an heir to the share of his late father in the estate of the decedent Evarista, ownership of which had been transmitted to his father upon the death of Evarista. There is no legal obstacle for private respondent Joselito, admittedly the son of the late Francisco, to inherit in his own right as an heir to his father's estate, which estate includes a one-third (1/3) undivided share in the estate of Evarista. WHEREFORE, for lack of merit, the Petition is hereby DENIED and the Appealed Decision of the Court of Appeals AFFIRMED in toto. SO ORDERED. Romero, Panganiban and Gonzaga-Reyes, JJ., concur. Vitug, J., abroad on official business.

4. G.R. No. 125835 July 30, 1998 NATALIA CARPENA OPULENCIA, petitioner, vs. COURT OF APPEALS, ALADIN SIMUNDAC and MIGUEL OLIVAN, respondents.

PANGANIBAN, J.: Is a contract to sell a real property involved in restate proceedings valid and binding without the approval of the probate court? Statement of the Case This is the main question raised in this petition for review before us, assailing the Decision 1 of the Court of Appeals 2 in CA-GR CV No. 41994 promulgated on February 6, 1996 and its Resolution 3 dated July 19, 1996. The challenged Decision disposed as follows: WHEREFORE, premises considered, the order of the lower court dismissing the complaint is SET ASIDE and judgment is hereby rendered declaring the CONTRACT TO SELL executed by appellee in favor of appellants as valid and binding, subject to the result of the administration proceedings of the testate Estate of Demetrio Carpena.
SO ORDERED. 4

Petitioner's Motion for Reconsideration was denied in the challenged Resolution. 5 The Facts The antecedent facts, as succinctly narrated by Respondent Court of Appeals, are: In a complaint for specific performance filed with the court a quo [herein private respondents] Aladin Simundac and Miguel Oliven alleged that [herein petitioner] Natalia Carpena Opulencia executed in their favor a "CONTRACT TO SELL" Lot 2125 of the Sta. Rosa Estate, consisting of 23,766 square meters located in Sta. Rosa, Laguna at P150.00 per square meter; that plaintiffs paid a downpayment of P300,000.00 but defendant, despite demands, failed to comply with her obligations under the contract. [Private respondents] therefore prayed that [petitioner] be ordered to perform her contractual obligations and to further pay damages, attorney's fee and litigation expenses. In her traverse, [petitioner] admitted the execution of the contract in favor of plaintiffs and receipt of P300,000.00 as downpayment. However, she put forward the following affirmative defenses: that the property subject of the contract formed part of the Estate of Demetrio Carpena (petitioner's father), in respect of which a petition for

probate was filed with the Regional Trial Court, Branch 24, Bian, Laguna; that at the time the contract was executed, the parties were aware of the pendency of the probate proceeding; that the contract to sell was not approved by the probate court; that realizing the nullity of the contract [petitioner] had offered to return the downpayment received from [private respondents], but the latter refused to accept it; that [private respondents] further failed to provide funds for the tenant who demanded P150,00.00 in payment of his tenancy rights on the land; that [petitioner] had chosen to rescind the contract. At the pre-trial conference the parties stipulated on [sic] the following facts: 1. That on February 3, 1989, [private respondents] and [petitioner] entered into a contract to sell involving a parcel of land situated in Sta. Rosa, Laguna, otherwise known as Lot No. 2125 of the Sta. Rosa Estate. 2. That the price or consideration of the said sell [sic] is P150.00 per square meters; 3. That the amount of P300,000.00 had already been received by [petitioner]; 4. That the parties have knowledge that the property subject of the contract to sell is subject of the probate proceedings; 5. That [as] of this time, the probate Court has not yet issued an order either approving or denying the said sale. (p. 3, appealed Order of September 15, 1992, pp. 109-112, record). [Private respondents] submitted their evidence in support of the material allegations of the complaint. In addition to testimonies of witnesses, [private respondents] presented the following documentary evidences: (1) Contract to Sell (Exh A); (2) machine copy of the last will and testament of Demetrio Carpena (defendant's father) to show that the property sold by defendant was one of those devised to her in said will (Exh B); (3) receipts signed by defendant for the downpayment in the total amount of P300,000.00 (Exhs C, D & E); and (4) demand letters sent to defendant (Exhs F & G). It appears that [petitioner], instead of submitting her evidence, filed a Demurrer to Evidence. In essence, defendant maintained that the contract to sell was null and void for want of approval by the probate court. She further argued that the contract was subject to a suspensive condition, which was the probate of the will of defendant's father Demetrio Carpena. An Opposition was filed by [private respondents]. It appears further that in an Order dated December 15, 1992 the court a quo granted the demurrer to evidence and dismissed the complaint. It justified its action in dismissing the complaint in the following manner: It is noteworthy that when the contract to sell was consummated, no petition was filed in the Court with notice to the heirs of the time and place of hearing, to show that the sale is necessary and beneficial. A sale of properties of an estate as beneficial to the interested parties must comply with the requisites provided by law, (Sec. 7, Rule 89, Rules of Court) which are mandatory, and without them, the authority to sell, the sale

itself, and the order approving it, would be null and void ab initio. (Arcilla vs. David, 77 Phil. 718, Gabriel, et al., vs. Encarnacion, et al., L-6736, May 4, 1954; Bonaga vs. Soler, 2 Phil. 755) Besides, it is axiomatic that where the estate of a deceased person is already the subject of a testate or intestate proceeding, the administrator cannot enter into any transaction involving it without prior approval of the probate Court. (Estate of Obave, vs. Reyes, 123 SCRA 767).
As held by the Supreme Court, a decedent's representative (administrator) is not estopped from questioning the validity of his own void deed purporting to convey land. (Bona vs. Soler, 2 Phil, 755). In the case at bar, the [petitioner,] realizing the illegality of the transaction[,] has interposed the nullity of the contract as her defense, there being no approval from the probate Court, and, in good faith offers to return the money she received from the [private respondents]. Certainly, the administratrix is not estop[ped] from doing so and the action to declare the inexistence of contracts do not prescribe. This is what precipitated the filing of [petitioner's] demurrer to evidence. 6

The trial court's order of dismissal was elevated to the Court of Appeals by private respondents who alleged: 1. The lower court erred in concluding that the contract to sell is null and void, there being no approval of the probate court. 2. The lower court erred in concluding that [petitioner] in good faith offers to return the money to [private respondents]. 3. The lower court erred in concluding that [petitioner] is not under estoppel to question the validity of the contract to sell.
4. The lower court erred in not ruling on the consideration of the contract to sell which is tantamount to plain unjust enrichment of [petitioner] at the expense of [private respondents]. 7

Public Respondent's Ruling Declaring the Contract to Sell valid, subject to the outcome of the testate proceedings on Demetrio Carpena's estate, the appellate court set aside the trial court's dismissal of the complaint and correctly ruled as follows: It is apparent from the appealed order that the lower court treated the contract to sell executed by appellee as one made by the administratrix of the Estate of Demetrio Carpena for the benefit of the estate. Hence, its main reason for voiding the contract in question was the absence of the probate court's approval. Presumably, what the lower court had in mind was the sale of the estate or part thereof made by the administrator for the benefit of the estate, as authorized under Rule 89 of the Revised Rules of Court, which requires the approval of the probate court upon application therefor with notice to the heirs, devisees and legatees. However, as adverted to by appellants in their brief, the contract to sell in question is not covered by Rule 89 of the Revised Rules of Court since it was made by appellee in her capacity as an heir, of a property that was devised to her under the will sought to be probated. Thus, while the document inadvertently stated that appellee executed the contract in her capacity as "executrix and administratrix" of the estate, a cursory

reading of the entire text of the contract would unerringly show that what she undertook to sell to appellants was one of the "other properties given to her by her late father," and more importantly, it was not made for the benefit of the estate but for her own needs. To illustrate this point, it is apropos to refer to the preambular or preliminary portion of the document, which reads: WHEREAS, the SELLER is the lawful owner of a certain parcel of land, which is more particularly described as follows: xxx xxx xxx xxx xxx xxx xxx xxx xxx WHEREAS, the SELLER suffers difficulties in her living and has forced to offer the sale of the above-described property, "which property was only one among the other properties given to her by her late father," to anyone who can wait for complete clearance of the court on the Last Will Testament of her father. WHEREAS, the SELLER in order to meet her need of cash, has offered for sale the said property at ONE HUNDRED FIFTY PESOS (150.00) Philippine Currency, per square meter unto the BUYERS, and with this offer, the latter has accepted to buy and/or purchase the same, less the area for the road and other easements indicated at the back of Transfer Certificate of Title No. 2125 duly confirmed after the survey to be conducted by the BUYER's Licensed Geodetic Engineer, and whatever area [is] left. (Emphasis added). To emphasize, it is evident from the foregoing clauses of the contract that appellee sold Lot 2125 not in her capacity as executrix of the will or administratrix of the estate of her father, but as an heir and more importantly as owner of said lot which, along with other properties, was devised to her under the will sought to be probated. That being so, the requisites stipulated in Rule 89 of the Revised Rules of Court which refer to a sale made by the administrator for the benefit of the estate do not apply. xxx xxx xxx It is noteworthy that in a Manifestation filed with this court by appellants, which is not controverted by appellee, it is mentioned that the last will and testament of Demetrio Carpena was approved in a final judgment rendered in Special Proceeding No. B979 by the Regional Trial Court, Branch 24 Bian, Laguna. But of course such approval does not terminate the proceeding[s] since the settlement of the estate will ensue. Such proceedings will consist, among others, in the issuance by the court of a notice to creditors (Rule 86), hearing of money claims and payment of taxes and estate debts (Rule 88) and distribution of the residue to the heirs or persons entitled thereto (Rule 90). In effect, the final execution of the deed of sale itself upon appellants' payment of the balance of the purchase price will have to wait for the settlement or termination of the administration proceedings of the Estate of Demetrio Carpena. Under the foregoing premises, what the trial court should have done with the complaint was not to dismiss it but to simply put on hold further proceedings until

such time that the estate or its residue will be distributed in accordance with the approved will. The rule is that when a demurrer to the evidence is granted by the trial court but reversed on appeal, defendant loses the right to adduce his evidence. In such a case, the appellate court will decide the controversy on the basis of plaintiff's evidence. In the case at bench, while we find the contract to sell valid and binding between the parties, we cannot as yet order appellee to perform her obligations under the contract because the result of the administration proceedings of the testate Estate of Demetrio Carpena has to be awaited. Hence, we shall confine our adjudication to merely declaring the validity of the questioned Contract to Sell. Hence, this appeal. 8 The Issue Petitioner raises only one issue: Whether or not the Contract to Sell dated 03 February 1989 executed by the [p]etitioner and [p]rivate [r]espondent[s] without the requisite probate court approval is valid. The Court's Ruling The petition has no merit. Contract to Sell Valid In a nutshell, petitioner contends that "where the estate of the deceased person is already the subject of a testate or intestate proceeding, the administrator cannot enter into any transaction involving it without prior approval of the Probate Court." 9 She maintains that the Contract to Sell is void because it was not approved by the probate court, as required by Section 7, Rule 89 of the Rules of Court: Sec. 7. Regulations for granting authority to sell, mortgage, or otherwise encumber estate. The court having jurisdiction of the estate of the deceased may authorize the executor or administrator to sell, mortgage, or otherwise encumber real estate, in cases provided by these rules and when it appears necessary or beneficial, under the following regulations: xxx xxx xxx Insisting that the above rule should apply to this case, petitioner argues that the stipulations in the Contract to Sell require her to act in her capacity as an executrix or administratrix. She avers that her obligation to eject tenants pertains to the administratrix or executrix, the estate being the landlord of the said tenants. 10 Likewise demonstrating that she entered into the contract in her capacity as executor is the stipulation that she must effect the conversion of subject land from irrigated rice land to residential land and secure the necessary clearances from government offices. Petitioner alleges that these obligations can be undertaken only by an executor or administrator of an estate, and not by an heir. 11

The Court is not persuaded. As correctly ruled by the Court of Appeals, Section 7 of Rule 89 of the Rules of Court is not applicable, because petitioner entered into the Contract to Sell in her capacity as an heiress, not as an executrix or administratrix of the estate. In the contract, she represented herself as the "lawful owner" and seller of the subject parcel of land. 12 She also explained the reason for the sale to be "difficulties in her living" conditions and consequent "need of cash." 13 These representations clearly evince that she was not acting on behalf of the estate under probate when she entered into the Contract to Sell. Accordingly, the jurisprudence cited by petitioners has no application to the instant case. We emphasize that hereditary rights are vested in the heir or heirs from the moment of the decedent's death. 14Petitioner, therefore, became the owner of her hereditary share the moment her father died. Thus, the lack of judicial approval does not invalidate the Contract to Sell, because the petitioner has the substantive right to sell the whole or a part of her share in the estate of her late father. 15 Thus, in Jakosalem vs. Rafols, 16 the Court resolved an identical issue under the old Civil Code and held: Art. 440 of the Civil Code provides that "the possession of hereditary property is deemed to be transmitted to the heir without interruption from the instant of the death of the decedent, in case the inheritance be accepted." And Manresa with reason states that upon the death of a person, each of his heirs "becomes the undivided owner of the whole estate left with respect to the part or portion which might be adjudicated to him, a community of ownership being thus formed among the coowners of the estate while it remains undivided." . . . And according to article 399 of the Civil Code, every part owner may assign or mortgage his part in the common property, and the effect of such assignment or mortgage shall be limited to the portion which may be allotted him in the partition upon the dissolution of the community. Hence, where some of the heirs, without the concurrence of the others, sold a property left by their deceased father, this Court, speaking thru its then Chief Justice Cayetano Arellano, said that the sale was valid, but that the effect thereof was limited to the share which may be allotted to the vendors upon the partition of the estate. Administration of the Estate Not Prejudiced by the Contract to Sell Petitioner further contends that "[t]o sanction the sale at this stage would bring about a partial distribution of the decedent's estate pending the final termination of the testate proceedings." 17 This becomes all the more significant in the light of the trial court's finding, as stated in its Order dated August 20, 1997, that "the legitimate of one of the heirs has been impaired." 18 Petitioner's contention is not convincing. The Contract to Sell stipulates that petitioner's offer to sell is contingent on the "complete clearance of the court on the Last Will Testament of her father." 19 Consequently, although the Contract to Sell was perfected between the petitioner and private respondents during the pendency of the probate proceedings, the consummation of the sale or the transfer of ownership over the parcel of land to the private respondents is subject to the full payment of the purchase price and to the termination and outcome of the testate proceedings. Therefore, there is no basis for petitioner's apprehension that the Contract to Sell may result in a premature partition and distribution of the properties of the estate. Indeed, it is settled that "the sale made by an heir of his share in an inheritance, subject to the pending administration, in no wise stands in the way of such administration." 20

Estoppel Finally, petitioner is estopped from backing out of her representations in her valid Contract to Sell with private respondents, from whom she had already received P300,000 as initial payment of the purchase price. Petitioner may not renege on her own acts and representations, to the prejudice of the private respondents who have relied on them. 21 Jurisprudence teaches us that neither the law nor the courts will extricate a party from an unwise or undesirable contract he or she entered into with all the required formalities and with full awareness of its consequences. 22 WHEREFORE, the petition is hereby DENIED and the assailed Decision of the Court of Appeals AFFIRMED. Costs against petitioner. SO ORDERED.

5. G.R. No. 103577 October 7, 1996 ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A. CORONEL, ANNABELLE C. GONZALES (for herself and on behalf of Florida C. Tupper, as attorney-in-fact), CIELITO A. CORONEL, FLORAIDA A. ALMONTE, and CATALINA BALAIS MABANAG, petitioners, vs. THE COURT OF APPEALS, CONCEPCION D. ALCARAZ, and RAMONA PATRICIA ALCARAZ, assisted by GLORIA F. NOEL as attorney-in-fact, respondents.

MELO, J.:p The petition before us has its roots in a complaint for specific performance to compel herein petitioners (except the last named, Catalina Balais Mabanag) to consummate the sale of a parcel of land with its improvements located along Roosevelt Avenue in Quezon City entered into by the parties sometime in January 1985 for the price of P1,240,000.00. The undisputed facts of the case were summarized by respondent court in this wise: On January 19, 1985, defendants-appellants Romulo Coronel, et al. (hereinafter referred to as Coronels) executed a document entitled "Receipt of Down Payment" (Exh. "A") in favor of plaintiff Ramona Patricia Alcaraz (hereinafter referred to as Ramona) which is reproduced hereunder: RECEIPT OF DOWN PAYMENT P1,240,000.00 Total amount 50,000 Down payment P1,190,000.00 Balance Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of Fifty Thousand Pesos purchase price of our inherited house and lot, covered by TCT No. 119627 of the Registry of Deeds of Quezon City, in the total amount of P1,240,000.00. We bind ourselves to effect the transfer in our names from our deceased father, Constancio P. Coronel, the transfer certificate of title immediately upon receipt of the down payment above-stated. On our presentation of the TCT already in or name, We will immediately execute the deed of absolute sale of said property and Miss Ramona Patricia Alcaraz shall immediately pay the balance of the P1,190,000.00. Clearly, the conditions appurtenant to the sale are the following:

1. Ramona will make a down payment of Fifty Thousand (P50,000.00) Pesos upon execution of the document aforestated; 2. The Coronels will cause the transfer in their names of the title of the property registered in the name of their deceased father upon receipt of the Fifty Thousand (P50,000.00) Pesos down payment; 3. Upon the transfer in their names of the subject property, the Coronels will execute the deed of absolute sale in favor of Ramona and the latter will pay the former the whole balance of One Million One Hundred Ninety Thousand (P1,190,000.00) Pesos. On the same date (January 15, 1985), plaintiff-appellee Concepcion D. Alcaraz (hereinafter referred to as Concepcion), mother of Ramona, paid the down payment of Fifty Thousand (P50,000.00) Pesos (Exh. "B", Exh. "2"). On February 6, 1985, the property originally registered in the name of the Coronels' father was transferred in their names under TCT No. 327043 (Exh. "D"; Exh. "4") On February 18, 1985, the Coronels sold the property covered by TCT No. 327043 to intervenor-appellant Catalina B. Mabanag (hereinafter referred to as Catalina) for One Million Five Hundred Eighty Thousand (P1,580,000.00) Pesos after the latter has paid Three Hundred Thousand (P300,000.00) Pesos (Exhs. "F-3"; Exh. "6-C") For this reason, Coronels canceled and rescinded the contract (Exh. "A") with Ramona by depositing the down payment paid by Concepcion in the bank in trust for Ramona Patricia Alcaraz. On February 22, 1985, Concepcion, et al., filed a complaint for specific performance against the Coronels and caused the annotation of a notice of lis pendens at the back of TCT No. 327403 (Exh. "E"; Exh. "5"). On April 2, 1985, Catalina caused the annotation of a notice of adverse claim covering the same property with the Registry of Deeds of Quezon City (Exh. "F"; Exh. "6"). On April 25, 1985, the Coronels executed a Deed of Absolute Sale over the subject property in favor of Catalina (Exh. "G"; Exh. "7"). On June 5, 1985, a new title over the subject property was issued in the name of Catalina under TCT No. 351582 (Exh. "H"; Exh. "8"). (Rollo, pp. 134-136) In the course of the proceedings before the trial court (Branch 83, RTC, Quezon City) the parties agreed to submit the case for decision solely on the basis of documentary exhibits. Thus, plaintiffs therein (now private respondents) proffered their documentary evidence accordingly marked as Exhibits "A" through "J", inclusive of their corresponding submarkings. Adopting these same exhibits as their own, then defendants (now petitioners) accordingly offered and marked them as Exhibits "1" through "10", likewise inclusive of their corresponding submarkings. Upon motion of the parties, the trial court gave them thirty (30) days within which to simultaneously submit their respective

memoranda, and an additional 15 days within which to submit their corresponding comment or reply thereof, after which, the case would be deemed submitted for resolution. On April 14, 1988, the case was submitted for resolution before Judge Reynaldo Roura, who was then temporarily detailed to preside over Branch 82 of the RTC of Quezon City. On March 1, 1989, judgment was handed down by Judge Roura from his regular bench at Macabebe, Pampanga for the Quezon City branch, disposing as follows: WHEREFORE, judgment for specific performance is hereby rendered ordering defendant to execute in favor of plaintiffs a deed of absolute sale covering that parcel of land embraced in and covered by Transfer Certificate of Title No. 327403 (now TCT No. 331582) of the Registry of Deeds for Quezon City, together with all the improvements existing thereon free from all liens and encumbrances, and once accomplished, to immediately deliver the said document of sale to plaintiffs and upon receipt thereof, the said document of sale to plaintiffs and upon receipt thereof, the plaintiffs are ordered to pay defendants the whole balance of the purchase price amounting to P1,190,000.00 in cash. Transfer Certificate of Title No. 331582 of the Registry of Deeds for Quezon City in the name of intervenor is hereby canceled and declared to be without force and effect. Defendants and intervenor and all other persons claiming under them are hereby ordered to vacate the subject property and deliver possession thereof to plaintiffs. Plaintiffs' claim for damages and attorney's fees, as well as the counterclaims of defendants and intervenors are hereby dismissed. No pronouncement as to costs. So Ordered. Macabebe, Pampanga for Quezon City, March 1, 1989. (Rollo, p. 106) A motion for reconsideration was filed by petitioner before the new presiding judge of the Quezon City RTC but the same was denied by Judge Estrella T. Estrada, thusly: The prayer contained in the instant motion, i.e., to annul the decision and to render anew decision by the undersigned Presiding Judge should be denied for the following reasons: (1) The instant case became submitted for decision as of April 14, 1988 when the parties terminated the presentation of their respective documentary evidence and when the Presiding Judge at that time was Judge Reynaldo Roura. The fact that they were allowed to file memoranda at some future date did not change the fact that the hearing of the case was terminated before Judge Roura and therefore the same should be submitted to him for decision; (2) When the defendants and intervenor did not object to the authority of Judge Reynaldo Roura to decide the case prior to the rendition of the decision, when they met for the first time before the undersigned Presiding Judge at the hearing of a pending incident in Civil Case No. Q-46145 on November 11, 1988, they were deemed to have acquiesced thereto and they are now estopped from questioning said authority of Judge Roura after they received the decision in question which happens to be adverse to them; (3) While it is true that Judge Reynaldo Roura was merely a Judge-on-detail at this Branch of the Court, he was in all respects the Presiding Judge with full authority to act on any pending incident submitted before this Court during his incumbency. When he

returned to his Official Station at Macabebe, Pampanga, he did not lose his authority to decide or resolve such cases submitted to him for decision or resolution because he continued as Judge of the Regional Trial Court and is of co-equal rank with the undersigned Presiding Judge. The standing rule and supported by jurisprudence is that a Judge to whom a case is submitted for decision has the authority to decide the case notwithstanding his transfer to another branch or region of the same court (Sec. 9, Rule 135, Rule of Court). Coming now to the twin prayer for reconsideration of the Decision dated March 1, 1989 rendered in the instant case, resolution of which now pertains to the undersigned Presiding Judge, after a meticulous examination of the documentary evidence presented by the parties, she is convinced that the Decision of March 1, 1989 is supported by evidence and, therefore, should not be disturbed. IN VIEW OF THE FOREGOING, the "Motion for Reconsideration and/or to Annul Decision and Render Anew Decision by the Incumbent Presiding Judge" dated March 20, 1989 is hereby DENIED. SO ORDERED. Quezon City, Philippines, July 12, 1989. (Rollo, pp. 108-109) Petitioners thereupon interposed an appeal, but on December 16, 1991, the Court of Appeals (Buena, Gonzaga-Reyes, Abad Santos (P), JJ.) rendered its decision fully agreeing with the trial court. Hence, the instant petition which was filed on March 5, 1992. The last pleading, private respondents' Reply Memorandum, was filed on September 15, 1993. The case was, however, re-raffled to undersigned ponente only on August 28, 1996, due to the voluntary inhibition of the Justice to whom the case was last assigned. While we deem it necessary to introduce certain refinements in the disquisition of respondent court in the affirmance of the trial court's decision, we definitely find the instant petition bereft of merit. The heart of the controversy which is the ultimate key in the resolution of the other issues in the case at bar is the precise determination of the legal significance of the document entitled "Receipt of Down Payment" which was offered in evidence by both parties. There is no dispute as to the fact that said document embodied the binding contract between Ramona Patricia Alcaraz on the one hand, and the heirs of Constancio P. Coronel on the other, pertaining to a particular house and lot covered by TCT No. 119627, as defined in Article 1305 of the Civil Code of the Philippines which reads as follows: Art. 1305. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. While, it is the position of private respondents that the "Receipt of Down Payment" embodied a perfected contract of sale, which perforce, they seek to enforce by means of an action for specific performance, petitioners on their part insist that what the document signified was a mere executory contract to sell, subject to certain suspensive conditions, and because of the absence of Ramona P.

Alcaraz, who left for the United States of America, said contract could not possibly ripen into a contract absolute sale. Plainly, such variance in the contending parties' contentions is brought about by the way each interprets the terms and/or conditions set forth in said private instrument. Withal, based on whatever relevant and admissible evidence may be available on record, this, Court, as were the courts below, is now called upon to adjudge what the real intent of the parties was at the time the said document was executed. The Civil Code defines a contract of sale, thus: Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. Sale, by its very nature, is a consensual contract because it is perfected by mere consent. The essential elements of a contract of sale are the following: a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; b) Determinate subject matter; and c) Price certain in money or its equivalent. Under this definition, a Contract to Sell may not be considered as a Contract of Sale because the first essential element is lacking. In a contract to sell, the prospective seller explicity reserves the transfer of title to the prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer ownership of the property subject of the contract to sell until the happening of an event, which for present purposes we shall take as the full payment of the purchase price. What the seller agrees or obliges himself to do is to fulfill is promise to sell the subject property when the entire amount of the purchase price is delivered to him. In other words the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and thus, ownership is retained by the prospective seller without further remedies by the prospective buyer. In Roque vs. Lapuz (96 SCRA 741 [1980]), this Court had occasion to rule: Hence, We hold that the contract between the petitioner and the respondent was a contract to sell where the ownership or title is retained by the seller and is not to pass until the full payment of the price, such payment being a positive suspensive condition and failure of which is not a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force. Stated positively, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, the prospective seller's obligation to sell the subject property by entering into a contract of sale with the prospective buyer becomes demandable as provided in Article 1479 of the Civil Code which states: Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.

An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. A contract to sell may thus be defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price. A contract to sell as defined hereinabove, may not even be considered as a conditional contract of sale where the seller may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not occur. If the suspensive condition is not fulfilled, the perfection of the contract of sale is completely abated (cf. Homesite and housing Corp. vs. Court of Appeals, 133 SCRA 777 [1984]). However, if the suspensive condition is fulfilled, the contract of sale is thereby perfected, such that if there had already been previous delivery of the property subject of the sale to the buyer, ownership thereto automatically transfers to the buyer by operation of law without any further act having to be performed by the seller. In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, ownership will not automatically transfer to the buyer although the property may have been previously delivered to him. The prospective seller still has to convey title to the prospective buyer by entering into a contract of absolute sale. It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases where the subject property is sold by the owner not to the party the seller contracted with, but to a third person, as in the case at bench. In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property. There is no double sale in such case. Title to the property will transfer to the buyer after registration because there is no defect in the owner-seller's title per se, but the latter, of course, may be used for damages by the intending buyer. In a conditional contract of sale, however, upon the fulfillment of the suspensive condition, the sale becomes absolute and this will definitely affect the seller's title thereto. In fact, if there had been previous delivery of the subject property, the seller's ownership or title to the property is automatically transferred to the buyer such that, the seller will no longer have any title to transfer to any third person. Applying Article 1544 of the Civil Code, such second buyer of the property who may have had actual or constructive knowledge of such defect in the seller's title, or at least was charged with the obligation to discover such defect, cannot be a registrant in good faith. Such second buyer cannot defeat the first buyer's title. In case a title is issued to the second buyer, the first buyer may seek reconveyance of the property subject of the sale. With the above postulates as guidelines, we now proceed to the task of deciphering the real nature of the contract entered into by petitioners and private respondents. It is a canon in the interpretation of contracts that the words used therein should be given their natural and ordinary meaning unless a technical meaning was intended (Tan vs. Court of Appeals, 212 SCRA 586 [1992]). Thus, when petitioners declared in the said "Receipt of Down Payment" that they

Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of Fifty Thousand Pesos purchase price of our inherited house and lot, covered by TCT No. 1199627 of the Registry of Deeds of Quezon City, in the total amount of P1,240,000.00. without any reservation of title until full payment of the entire purchase price, the natural and ordinary idea conveyed is that they sold their property. When the "Receipt of Down Payment" is considered in its entirety, it becomes more manifest that there was a clear intent on the part of petitioners to transfer title to the buyer, but since the transfer certificate of title was still in the name of petitioner's father, they could not fully effect such transfer although the buyer was then willing and able to immediately pay the purchase price. Therefore, petitioners-sellers undertook upon receipt of the down payment from private respondent Ramona P. Alcaraz, to cause the issuance of a new certificate of title in their names from that of their father, after which, they promised to present said title, now in their names, to the latter and to execute the deed of absolute sale whereupon, the latter shall, in turn, pay the entire balance of the purchase price. The agreement could not have been a contract to sell because the sellers herein made no express reservation of ownership or title to the subject parcel of land. Furthermore, the circumstance which prevented the parties from entering into an absolute contract of sale pertained to the sellers themselves (the certificate of title was not in their names) and not the full payment of the purchase price. Under the established facts and circumstances of the case, the Court may safely presume that, had the certificate of title been in the names of petitioners-sellers at that time, there would have been no reason why an absolute contract of sale could not have been executed and consummated right there and then. Moreover, unlike in a contract to sell, petitioners in the case at bar did not merely promise to sell the properly to private respondent upon the fulfillment of the suspensive condition. On the contrary, having already agreed to sell the subject property, they undertook to have the certificate of title changed to their names and immediately thereafter, to execute the written deed of absolute sale. Thus, the parties did not merely enter into a contract to sell where the sellers, after compliance by the buyer with certain terms and conditions, promised to sell the property to the latter. What may be perceived from the respective undertakings of the parties to the contract is that petitioners had already agreed to sell the house and lot they inherited from their father, completely willing to transfer full ownership of the subject house and lot to the buyer if the documents were then in order. It just happened, however, that the transfer certificate of title was then still in the name of their father. It was more expedient to first effect the change in the certificate of title so as to bear their names. That is why they undertook to cause the issuance of a new transfer of the certificate of title in their names upon receipt of the down payment in the amount of P50,000.00. As soon as the new certificate of title is issued in their names, petitioners were committed to immediately execute the deed of absolute sale. Only then will the obligation of the buyer to pay the remainder of the purchase price arise. There is no doubt that unlike in a contract to sell which is most commonly entered into so as to protect the seller against a buyer who intends to buy the property in installment by withholding ownership over the property until the buyer effects full payment therefor, in the contract entered into in the case at bar, the sellers were the one who were unable to enter into a contract of absolute sale by reason of the fact that the certificate of title to the property was still in the name of their father. It was the sellers in this case who, as it were, had the impediment which prevented, so to speak, the execution of an contract of absolute sale.

What is clearly established by the plain language of the subject document is that when the said "Receipt of Down Payment" was prepared and signed by petitioners Romeo A. Coronel, et al., the parties had agreed to a conditional contract of sale, consummation of which is subject only to the successful transfer of the certificate of title from the name of petitioners' father, Constancio P. Coronel, to their names. The Court significantly notes this suspensive condition was, in fact, fulfilled on February 6, 1985 (Exh. "D"; Exh. "4"). Thus, on said date, the conditional contract of sale between petitioners and private respondent Ramona P. Alcaraz became obligatory, the only act required for the consummation thereof being the delivery of the property by means of the execution of the deed of absolute sale in a public instrument, which petitioners unequivocally committed themselves to do as evidenced by the "Receipt of Down Payment." Article 1475, in correlation with Article 1181, both of the Civil Code, plainly applies to the case at bench. Thus, Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From the moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts. Art. 1181. In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition. Since the condition contemplated by the parties which is the issuance of a certificate of title in petitioners' names was fulfilled on February 6, 1985, the respective obligations of the parties under the contract of sale became mutually demandable, that is, petitioners, as sellers, were obliged to present the transfer certificate of title already in their names to private respondent Ramona P. Alcaraz, the buyer, and to immediately execute the deed of absolute sale, while the buyer on her part, was obliged to forthwith pay the balance of the purchase price amounting to P1,190,000.00. It is also significant to note that in the first paragraph in page 9 of their petition, petitioners conclusively admitted that: 3. The petitioners-sellers Coronel bound themselves "to effect the transfer in our names from our deceased father Constancio P. Coronel, the transfer certificate of title immediately upon receipt of the downpayment above-stated". The sale was still subject to this suspensive condition. (Emphasis supplied.) (Rollo, p. 16) Petitioners themselves recognized that they entered into a contract of sale subject to a suspensive condition. Only, they contend, continuing in the same paragraph, that: . . . Had petitioners-sellers not complied with this condition of first transferring the title to the property under their names, there could be no perfected contract of sale. (Emphasis supplied.) (Ibid.)

not aware that they set their own trap for themselves, for Article 1186 of the Civil Code expressly provides that: Art. 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment. Besides, it should be stressed and emphasized that what is more controlling than these mere hypothetical arguments is the fact that the condition herein referred to was actually and indisputably fulfilled on February 6, 1985, when a new title was issued in the names of petitioners as evidenced by TCT No. 327403 (Exh. "D"; Exh. "4"). The inevitable conclusion is that on January 19, 1985, as evidenced by the document denominated as "Receipt of Down Payment" (Exh. "A"; Exh. "1"), the parties entered into a contract of sale subject only to the suspensive condition that the sellers shall effect the issuance of new certificate title from that of their father's name to their names and that, on February 6, 1985, this condition was fulfilled (Exh. "D"; Exh. "4"). We, therefore, hold that, in accordance with Article 1187 which pertinently provides Art. 1187. The effects of conditional obligation to give, once the condition has been fulfilled, shall retroact to the day of the constitution of the obligation . . . In obligation to do or not to do, the courts shall determine, in each case, the retroactive effect of the condition that has been complied with. the rights and obligations of the parties with respect to the perfected contract of sale became mutually due and demandable as of the time of fulfillment or occurrence of the suspensive condition on February 6, 1985. As of that point in time, reciprocal obligations of both seller and buyer arose. Petitioners also argue there could been no perfected contract on January 19, 1985 because they were then not yet the absolute owners of the inherited property. We cannot sustain this argument. Article 774 of the Civil Code defines Succession as a mode of transferring ownership as follows: Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to be extent and value of the inheritance of a person are transmitted through his death to another or others by his will or by operation of law. Petitioners-sellers in the case at bar being the sons and daughters of the decedent Constancio P. Coronel are compulsory heirs who were called to succession by operation of law. Thus, at the point their father drew his last breath, petitioners stepped into his shoes insofar as the subject property is concerned, such that any rights or obligations pertaining thereto became binding and enforceable upon them. It is expressly provided that rights to the succession are transmitted from the moment of death of the decedent (Article 777, Civil Code; Cuison vs. Villanueva, 90 Phil. 850 [1952]).

Be it also noted that petitioners' claim that succession may not be declared unless the creditors have been paid is rendered moot by the fact that they were able to effect the transfer of the title to the property from the decedent's name to their names on February 6, 1985. Aside from this, petitioners are precluded from raising their supposed lack of capacity to enter into an agreement at that time and they cannot be allowed to now take a posture contrary to that which they took when they entered into the agreement with private respondent Ramona P. Alcaraz. The Civil Code expressly states that: Art. 1431. Through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon. Having represented themselves as the true owners of the subject property at the time of sale, petitioners cannot claim now that they were not yet the absolute owners thereof at that time. Petitioners also contend that although there was in fact a perfected contract of sale between them and Ramona P. Alcaraz, the latter breached her reciprocal obligation when she rendered impossible the consummation thereof by going to the United States of America, without leaving her address, telephone number, and Special Power of Attorney (Paragraphs 14 and 15, Answer with Compulsory Counterclaim to the Amended Complaint, p. 2; Rollo, p. 43), for which reason, so petitioners conclude, they were correct in unilaterally rescinding rescinding the contract of sale. We do not agree with petitioners that there was a valid rescission of the contract of sale in the instant case. We note that these supposed grounds for petitioners' rescission, are mere allegations found only in their responsive pleadings, which by express provision of the rules, are deemed controverted even if no reply is filed by the plaintiffs (Sec. 11, Rule 6, Revised Rules of Court). The records are absolutely bereft of any supporting evidence to substantiate petitioners' allegations. We have stressed time and again that allegations must be proven by sufficient evidence (Ng Cho Cio vs. Ng Diong, 110 Phil. 882 [1961]; Recaro vs. Embisan, 2 SCRA 598 [1961]. Mere allegation is not an evidence (Lagasca vs. De Vera, 79 Phil. 376 [1947]). Even assuming arguendo that Ramona P. Alcaraz was in the United States of America on February 6, 1985, we cannot justify petitioner-sellers' act of unilaterally and extradicially rescinding the contract of sale, there being no express stipulation authorizing the sellers to extarjudicially rescind the contract of sale. (cf. Dignos vs. CA, 158 SCRA 375 [1988]; Taguba vs. Vda. de Leon, 132 SCRA 722 [1984]) Moreover, petitioners are estopped from raising the alleged absence of Ramona P. Alcaraz because although the evidence on record shows that the sale was in the name of Ramona P. Alcaraz as the buyer, the sellers had been dealing with Concepcion D. Alcaraz, Ramona's mother, who had acted for and in behalf of her daughter, if not also in her own behalf. Indeed, the down payment was made by Concepcion D. Alcaraz with her own personal check (Exh. "B"; Exh. "2") for and in behalf of Ramona P. Alcaraz. There is no evidence showing that petitioners ever questioned Concepcion's authority to represent Ramona P. Alcaraz when they accepted her personal check. Neither did they raise any objection as regards payment being effected by a third person. Accordingly, as far as petitioners are concerned, the physical absence of Ramona P. Alcaraz is not a ground to rescind the contract of sale. Corollarily, Ramona P. Alcaraz cannot even be deemed to be in default, insofar as her obligation to pay the full purchase price is concerned. Petitioners who are precluded from setting up the defense

of the physical absence of Ramona P. Alcaraz as above-explained offered no proof whatsoever to show that they actually presented the new transfer certificate of title in their names and signified their willingness and readiness to execute the deed of absolute sale in accordance with their agreement. Ramona's corresponding obligation to pay the balance of the purchase price in the amount of P1,190,000.00 (as buyer) never became due and demandable and, therefore, she cannot be deemed to have been in default. Article 1169 of the Civil Code defines when a party in a contract involving reciprocal obligations may be considered in default, to wit: Art. 1169. Those obliged to deliver or to do something, incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation. xxx xxx xxx In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfill his obligation, delay by the other begins. (Emphasis supplied.) There is thus neither factual nor legal basis to rescind the contract of sale between petitioners and respondents. With the foregoing conclusions, the sale to the other petitioner, Catalina B. Mabanag, gave rise to a case of double sale where Article 1544 of the Civil Code will apply, to wit: Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should if be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof to the person who presents the oldest title, provided there is good faith. The record of the case shows that the Deed of Absolute Sale dated April 25, 1985 as proof of the second contract of sale was registered with the Registry of Deeds of Quezon City giving rise to the issuance of a new certificate of title in the name of Catalina B. Mabanag on June 5, 1985. Thus, the second paragraph of Article 1544 shall apply. The above-cited provision on double sale presumes title or ownership to pass to the first buyer, the exceptions being: (a) when the second buyer, in good faith, registers the sale ahead of the first buyer, and (b) should there be no inscription by either of the two buyers, when the second buyer, in good faith, acquires possession of the property ahead of the first buyer. Unless, the second buyer satisfies these requirements, title or ownership will not transfer to him to the prejudice of the first buyer.

In his commentaries on the Civil Code, an accepted authority on the subject, now a distinguished member of the Court, Justice Jose C. Vitug, explains: The governing principle is prius tempore, potior jure (first in time, stronger in right). Knowledge by the first buyer of the second sale cannot defeat the first buyer's rights except when the second buyer first registers in good faith the second sale (Olivares vs. Gonzales, 159 SCRA 33). Conversely, knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register, since knowledge taints his registration with bad faith (see also Astorga vs. Court of Appeals, G.R. No. 58530, 26 December 1984). In Cruz vs. Cabana (G.R. No. 56232, 22 June 1984, 129 SCRA 656), it has held that it is essential, to merit the protection of Art. 1544, second paragraph, that the second realty buyer must act in good faith in registering his deed of sale (citing Carbonell vs. Court of Appeals, 69 SCRA 99, Crisostomo vs. CA, G.R. No. 95843, 02 September 1992). (J. Vitug Compendium of Civil Law and Jurisprudence, 1993 Edition, p. 604). Petitioner point out that the notice of lis pendens in the case at bar was annoted on the title of the subject property only on February 22, 1985, whereas, the second sale between petitioners Coronels and petitioner Mabanag was supposedly perfected prior thereto or on February 18, 1985. The idea conveyed is that at the time petitioner Mabanag, the second buyer, bought the property under a clean title, she was unaware of any adverse claim or previous sale, for which reason she is buyer in good faith. We are not persuaded by such argument. In a case of double sale, what finds relevance and materiality is not whether or not the second buyer was a buyer in good faith but whether or not said second buyer registers such second sale in good faith, that is, without knowledge of any defect in the title of the property sold. As clearly borne out by the evidence in this case, petitioner Mabanag could not have in good faith, registered the sale entered into on February 18, 1985 because as early as February 22, 1985, a notice of lis pendens had been annotated on the transfer certificate of title in the names of petitioners, whereas petitioner Mabanag registered the said sale sometime in April, 1985. At the time of registration, therefore, petitioner Mabanag knew that the same property had already been previously sold to private respondents, or, at least, she was charged with knowledge that a previous buyer is claiming title to the same property. Petitioner Mabanag cannot close her eyes to the defect in petitioners' title to the property at the time of the registration of the property. This Court had occasions to rule that: If a vendee in a double sale registers that sale after he has acquired knowledge that there was a previous sale of the same property to a third party or that another person claims said property in a pervious sale, the registration will constitute a registration in bad faith and will not confer upon him any right. (Salvoro vs. Tanega, 87 SCRA 349 [1978]; citing Palarca vs. Director of Land, 43 Phil. 146; Cagaoan vs. Cagaoan, 43 Phil. 554; Fernandez vs. Mercader, 43 Phil. 581.) Thus, the sale of the subject parcel of land between petitioners and Ramona P. Alcaraz, perfected on February 6, 1985, prior to that between petitioners and Catalina B. Mabanag on February 18, 1985, was correctly upheld by both the courts below.

Although there may be ample indications that there was in fact an agency between Ramona as principal and Concepcion, her mother, as agent insofar as the subject contract of sale is concerned, the issue of whether or not Concepcion was also acting in her own behalf as a co-buyer is not squarely raised in the instant petition, nor in such assumption disputed between mother and daughter. Thus, We will not touch this issue and no longer disturb the lower courts' ruling on this point. WHEREFORE, premises considered, the instant petition is hereby DISMISSED and the appealed judgment AFFIRMED. SO ORDERED.

6. G.R. No. 61584 November 25, 1992 DONATO S. PAULMITAN, JULIANA P. FANESA and RODOLFO FANESA, petitioners, vs. COURT OF APPEALS, ALICIO PAULMITAN, ELENA PAULMITAN, ABELINO PAULMITAN, ANITA PAULMITAN, BAKING PAULMITAN, ADELINA PAULMITAN and ANITO PAULMITAN, respondents.

ROMERO, J.: This is a petition for review on certiorari seeking the reversal of the decision 1 of the Court of Appeals, dated July 14, 1982 in CA-G.R. No. 62255-R entitled "Alicio Paulmitan, et al. v. Donato Sagario Paulmitan, et al." which affirmed the decision 2 of the then Court of First Instance (now RTC) of Negros Occidental, 12th Judicial District, Branch IV, Bacolod City, in Civil Case No. 11770. The antecedent facts are as follows: Agatona Sagario Paulmitan, who died sometime in 1953, 3 left the two following parcels of land located in the Province of Negros Occidental: (1) Lot No. 757 with an area of 1,946 square meters covered by Original Certificate of Title (OCT) No. RO-8376; and (2) Lot No. 1091 with an area of 69,080 square meters and covered by OCT No. RO-11653. From her marriage with Ciriaco Paulmitan, who is also now deceased, Agatona begot two legitimate children, namely: Pascual Paulmitan, who also died in 1953, 4 apparently shortly after his mother passed away, and Donato Paulmitan, who is one of the petitioners. Petitioner Juliana P. Fanesa is Donato's daughter while the third petitioner, Rodolfo Fanes, is Juliana's husband. Pascual Paulmitan, the other son of Agatona Sagario, is survived by the respondents, who are his children, name: Alicio, Elena, Abelino, Adelina, Anita, Baking and Anito, all surnamed Paulmitan. Until 1963, the estate of Agatona Sagario Paulmitan remained unsettled and the titles to the two lots mentioned above remained in the name of Agatona. However, on August 11, 1963, petitioner Donato Paulmitan executed an Affidavit of Declaration of Heirship, extrajudicially adjudicating unto himself Lot No. 757 based on the claim that he is the only surviving heir of Agatona Sagario. The affidavit was filed with the Register of Deeds of Negros Occidental on August 20, 1963, cancelled OCT No. RO-8376 in the name of Agatona Sagario and issued Transfer Certificate of Title (TCT) No. 35979 in Donato's name. As regards Lot No. 1091, Donato executed on May 28, 1974 a Deed of Sale over the same in favor of petitioner Juliana P. Fanesa, his daughter. 5 In the meantime, sometime in 1952, for non-payment of taxes, Lot No. 1091 was forfeited and sold at a public auction, with the Provincial Government of Negros Occidental being the buyer. A Certificate of Sale over the land was executed by the Provincial Treasurer in favor of the Provincial Board of Negros Occidental. 6 On May 29, 1974, Juliana P. Fanesa redeemed the property from the Provincial Government of Negros Occidental for the amount of P2,959.09. 7

On learning of these transactions, respondents children of the late Pascual Paulmitan filed on January 18, 1975 with the Court of First Instance of Negros Occidental a Complaint against petitioners to partition the properties plus damages. Petitioners set up the defense of prescription with respect to Lot No. 757 as an affirmative defense, contending that the Complaint was filed more than eleven years after the issuance of a transfer certificate of title to Donato Paulmitan over the land as consequence of the registration with the Register of Deeds, of Donato's affidavit extrajudicially adjudicating unto himself Lot No. 757. As regards Lot No. 1091, petitioner Juliana P. Fanesa claimed in her Answer to the Complaint that she acquired exclusive ownership thereof not only by means of a deed of sale executed in her favor by her father, petitioner Donato Paulmitan, but also by way of redemption from the Provincial Government of Negros Occidental. Acting on the petitioners' affirmative defense of prescription with respect to Lot No. 757, the trial court issued an order dated April 22, 1976 dismissing the complaint as to the said property upon finding merit in petitioners' affirmative defense. This order, which is not the object of the present petition, has become final after respondents' failure to appeal therefrom. Trial proceeded with respect to Lot No. 1091. In a decision dated May 20, 1977, the trial court decided in favor of respondents as to Lot No. 1091. According to the trial court, the respondents, as descendants of Agatona Sagario Paulmitan were entitled to one-half (1/2) of Lot No. 1091, pro indiviso. The sale by petitioner Donato Paulmitan to his daughter, petitioner Juliana P. Fanesa, did not prejudice their rights. And the repurchase by Juliana P. Fanesa of the land from the Provincial Government of Negros Occidental did not vest in Juliana exclusive ownership over the entire land but only gave her the right to be reimbursed for the amount paid to redeem the property. The trial court ordered the partition of the land and directed petitioners Donato Paulmitan and Juliana P. Fanesa to pay private respondents certain amounts representing the latter's share in the fruits of the land. On the other hand, respondents were directed to pay P1,479.55 to Juliana P. Fanesa as their share in the redemption price paid by Fanesa to the Provincial Government of Negros Occidental. The dispositive portion of the trial court's decision reads: WHEREFORE, judgment is hereby rendered on the second cause of action pleaded in the complain as follows: 1. The deed of sale (Exh. "F") dated May 28, 1974 is valid insofar as the one-half undivided portion of Lot 1091 is concerned as to vest ownership over said half portion in favor of defendant Juliana Fanesa and her husband Rodolfo Fanesa, while the remaining half shall belong to plaintiffs, pro-indiviso; 2. Lot 1091, Cadastral Survey of Pontevedra, Province of Negros Occidental, now covered by TCT No. RO-11653 (N.A.), is ordered partitioned. The parties must proceed to an actual partition by property instrument of partition, submitting the corresponding subdivision within sixty (60) days from finality of this decision, and should they fail to agree, commissioners of partition may be appointed by the Court; 3. Pending the physical partition, the Register of Deeds of Negros Occidental is ordered to cancel Original Certificate of Title No. RO-11653 (N.A.) covering Lot 1091, Pontevedra Cadastre, and to issue in lieu thereof a new certificate of title in the name of plaintiffs and defendants, one-half portion each, pro-indiviso, as indicated in paragraph 1 above;

4. Plaintiffs are ordered to pay, jointly and severally, defendant Juliana Fanesa the amount of P1,479.55 with interest at the legal rate from May 28, 1974 until paid; 5 Defendants Donato Sagario Paulmitan and Juliana Paulmitan Fanesa are ordered to account to plaintiffs and to pay them, jointly and severally, the value of the produce from Lot 1091 representing plaintiffs' share in the amount of P5,000.00 per year from 1966 up to the time of actual partition of the property, and to pay them the sum of P2,000.00 as attorney's fees as well as the costs of the suit. xxx xxx xxx On appeal, the Court of Appeals affirmed the trial court's decision. Hence this petition. To determine the rights and obligations of the parties to the land in question, it is well to review, initially, the relatives who survived the decedent Agatona Sagario Paulmitan. When Agatona died in 1953, she was survived by two (2) sons, Donato and Pascual. A few months later in the same year, Pascual died, leaving seven children, the private respondents. On the other had, Donato's sole offspring was petitioner Juliana P. Fanesa. At the time of the relevant transactions over the properties of decedent Agatona Sagario Paulmitan, her son Pascual had died, survived by respondents, his children. It is, thus, tempting to apply the principles pertaining to the right of representation as regards respondents. It must, however, be borne in mind that Pascual did no predecease his mother, 8 thus precluding the operation of the provisions in the Civil Code on the right of representation 9 with respect to his children, the respondents. When Agatona Sagario Paulmitan died intestate in 1952, her two (2) sons Donato and Pascual were still alive. Since it is well-settled by virtue of Article 777 of the Civil Code that "[t]he rights to the succession are transmitted from the moment of the death of the decedent," 10the right of ownership, not only of Donato but also of Pascual, over their respective shares in the inheritance was automatically and by operation of law vested in them in 1953 when their mother died intestate. At that stage, the children of Donato and Pascual did not yet have any right over the inheritance since "[i]n every inheritance, the relative nearest in degree excludes the more distant ones." 11 Donato and Pascual excluded their children as to the right to inherit from Agatona Sagario Paulmitan, their mother. From the time of the death of Agatona Sagario Paulmitan to the subsequent passing away of her son Pascual in 1953, the estate remained unpartitioned. Article 1078 of the Civil Code provides: "Where there are two or more heirs, the whole estate of the decedent is, before its partition, owned in common by such heirs, subject to the payment of debts of the deceased." 12 Donato and Pascual Paulmitan were, therefore, co-owners of the estate left by their mother as no partition was ever made. When Pascual Paulmitan died intestate in 1953, his children, the respondents, succeeded him in the co-ownership of the disputed property. Pascual Paulmitan's right of ownership over an undivided portion of the property passed on to his children, who, from the time of Pascual's death, became coowners with their uncle Donato over the disputed decedent estate. Petitioner Juliana P. Fanesa claims ownership over Lot No. 1091 by virtue of two transactions, namely: (a) the sale made in her favor by her father Donato Paulmitan; and (b) her redemption of the land from the Provincial of Negros Occidental after it was forfeited for non-payment of taxes. When Donato Paulmitan sold on May 28, 1974 Lot No. 1091 to his daughter Juliana P. Fanesa, he was only a co-owner with respondents and as such, he could only sell that portion which may be

allotted to him upon termination of the co-ownership. 13 The sale did not prejudice the rights of respondents to one half (1/2) undivided share of the land which they inherited from their father. It did not vest ownership in the entire land with the buyer but transferred only the seller's proindiviso share in the property 14 and consequently made the buyer a co-owner of the land until it is partitioned. In Bailon-Casilao v. Court of Appeals, 15 the Court, through Justice Irene R. Cortes, outlined the effects of a sale by one co-owner without the consent of all the co-owners, thus: The rights of a co-owner of a certain property are clearly specified in Article 493 of the Civil Code, Thus: Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it and even substitute another person its enjoyment, except when personal rights are involved. But the effect of the alienation or mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. [Emphasis supplied.] As early as 1923, this Court has ruled that even if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the other coowners who did not consent to the sale [Punsalan v. Boon Liat, 44 Phil. 320 (1923)]. This is because under the aforementioned codal provision, the sale or other disposition affects only his undivided share and the transferee gets only what would correspond to his grantor in the partition of the thing owned in common [Ramirez v. Bautista, 14 Phil. 528 (1909)]. Consequently, by virtue of the sales made by Rosalia and Gaudencio Bailon which are valid with respect to their proportionate shares, and the subsequent transfers which culminated in the sale to private respondent Celestino Afable, the said Afable thereby became a co-owner of the disputed parcel of land as correctly held by the lower court since the sales produced the effect of substituting the buyers in the enjoyment thereof [Mainit v. Bandoy, 14 Phil. 730 (1910)]. From the foregoing, it may be deduced that since a co-owner is entitled to sell his undivided share, a sale of the entire property by one co-owner without the consent of the other co-owners is not null and void. However, only the rights of the co-ownerseller are transferred, thereby making the buyer a co-owner of the property. Applying this principle to the case at bar, the sale by petitioner Donato Paulmitan of the land to his daughter, petitioner Juliana P. Fanesa, did not give to the latter ownership over the entire land but merely transferred to her the one half (1/2) undivided share of her father, thus making her the coowner of the land in question with the respondents, her first cousins. Petitioner Juliana P. Fanesa also claims ownership of the entire property by virtue of the fact that when the Provincial Government of Negros Occidental bought the land after it was forfeited for nonpayment of taxes, she redeemed it. The contention is without merit. The redemption of the land made by Fanesa did not terminate the co-ownership nor give her title to the entire land subject of the co-ownership. Speaking on the same issue raised by petitioners, the Court, in Adille v. Court of Appeals, 16 resolved the same with the following pronouncements:

The petition raises a purely legal issue: May a co-owner acquire exclusive ownership over the property held in common? Essentially, it is the petitioners' contention that the property subject of dispute devolved upon him upon the failure of his co-heirs to join him in its redemption within the period required by law. He relies on the provisions of Article 1515 of the old Civil Code, Article 1613 of the present Code, giving the vendee a retro the right to demand redemption of the entire property. There is no merit in this petition. The right of repurchase may be exercised by co-owner with respect to his share alone (CIVIL CODE, art. 1612, CIVIL CODE (1889), art. (1514.). While the records show that petitioner redeemed the property in its entirety, shouldering the expenses therefor, that did not make him the owner of all of it. In other words, it did not put to end the existing state of co-ownership (Supra, Art. 489). There is no doubt that redemption of property entails a necessary expense. Under the Civil Code: Art. 488. Each co-owner shall have a right to compel the other co-owners to contribute to the expenses of preservation of the thing or right owned in common and to the taxes. Any one of the latter may exempt himself from this obligation by renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes. No such waiver shall be made if it is prejudicial to the coownership. The result is that the property remains to be in a condition of co-ownership. While a vendee a retro, under Article 1613 of the Code, "may not be compelled to consent to a partial redemption," the redemption by one co-heir or co-owner of the property in its totality does not vest in him ownership over it. Failure on the part of all the co-owners to redeem it entitles the vendee a retro to retain the property and consolidate title thereto in his name (Supra, art. 1607). But the provision does not give to the redeeming co-owner the right to the entire property. It does not provide for a mode of terminating a co-ownership. Although petitioner Fanesa did not acquire ownership over the entire lot by virtue of the redemption she made, nevertheless, she did acquire the right to reimbursed for half of the redemption price she paid to the Provincial Government of Negros Occidental on behalf of her co-owners. Until reimbursed, Fanesa hold a lien upon the subject property for the amount due her. 17 Finally, petitioners dispute the order of the trial court, which the Court of Appeals affirmed, for them to pay private respondents P5,000.00 per year from 1966 until the partition of the estate which represents the share of private respondents in the fruits of the land. According to petitioners, the land is being leased for P2,000.00 per year only. This assigned error, however raises a factual question. The settled rule is that only questions of law may be raised in a petition for review. As a general rule, findings of fact made by the trial court and the Court of Appeals are final and conclusive and cannot be reviewed on appeal. 18 WHEREFORE, the petition is DENIED and the decision of the Court of Appeals AFFIRMED. SO ORDERED.

7. G.R. No. 129008 January 13, 2004

TEODORA A. RIOFERIO, VERONICA O. EVANGELISTA assisted by her husband ZALDY EVANGELISTA, ALBERTO ORFINADA, and ROWENA O. UNGOS, assisted by her husband BEDA UNGOS, petitioners, vs. COURT OF APPEALS, ESPERANZA P. ORFINADA, LOURDES P. ORFINADA, ALFONSO ORFINADA, NANCY P. ORFINADA, ALFONSO JAMES P. ORFINADA, CHRISTOPHER P. ORFINADA and ANGELO P. ORFINADA,respondents. DECISION TINGA, J.: Whether the heirs may bring suit to recover property of the estate pending the appointment of an administrator is the issue in this case. This Petition for Review on Certiorari, under Rule 45 of the Rules of Court, seeks to set aside the Decision1 of the Court of Appeals in CA-G.R. SP No. 42053 dated January 31, 1997, as well as its Resolution2 dated March 26, 1997, denying petitioners motion for reconsideration. On May 13, 1995, Alfonso P. Orfinada, Jr. died without a will in Angeles City leaving several personal and real properties located in Angeles City, Dagupan City and Kalookan City.3 He also left a widow, respondent Esperanza P. Orfinada, whom he married on July 11, 1960 and with whom he had seven children who are the herein respondents, namely: Lourdes P. Orfinada, Alfonso "Clyde" P. Orfinada, Nancy P. Orfinada-Happenden, Alfonso James P. Orfinada, Christopher P. Orfinada, Alfonso Mike P. Orfinada (deceased) and Angelo P. Orfinada.4 Apart from the respondents, the demise of the decedent left in mourning his paramour and their children. They are petitioner Teodora Riofero, who became a part of his life when he entered into an extra-marital relationship with her during the subsistence of his marriage to Esperanza sometime in 1965, and co-petitioners Veronica5, Alberto and Rowena.6 On November 14, 1995, respondents Alfonso James and Lourdes Orfinada discovered that on June 29, 1995, petitioner Teodora Rioferio and her children executed an Extrajudicial Settlement of Estate of a Deceased Person with Quitclaim involving the properties of the estate of the decedent located in Dagupan City and that accordingly, the Registry of Deeds in Dagupan issued Certificates of Titles Nos. 63983, 63984 and 63985 in favor of petitioners Teodora Rioferio, Veronica OrfinadaEvangelista, Alberto Orfinada and Rowena Orfinada-Ungos. Respondents also found out that petitioners were able to obtain a loan of P700,000.00 from the Rural Bank of Mangaldan Inc. by executing a Real Estate Mortgage over the properties subject of the extra-judicial settlement.7 On December 1, 1995, respondent Alfonso "Clyde" P. Orfinada III filed a Petition for Letters of Administrationdocketed as S.P. Case No. 5118 before the Regional Trial Court of Angeles City, praying that letters of administration encompassing the estate of Alfonso P. Orfinada, Jr. be issued to him.8 On December 4, 1995, respondents filed a Complaint for the Annulment/Rescission of Extra Judicial Settlement of Estate of a Deceased Person with Quitclaim, Real Estate Mortgage and Cancellation

of Transfer Certificate of Titles with Nos. 63983, 63985 and 63984 and Other Related Documents with Damages against petitioners, the Rural Bank of Mangaldan, Inc. and the Register of Deeds of Dagupan City before the Regional Trial Court, Branch 42, Dagupan City.9 On February 5, 1996, petitioners filed their Answer to the aforesaid complaint interposing the defense that the property subject of the contested deed of extra-judicial settlement pertained to the properties originally belonging to the parents of Teodora Riofero10 and that the titles thereof were delivered to her as an advance inheritance but the decedent had managed to register them in his name.11 Petitioners also raised the affirmative defense that respondents are not the real parties-ininterest but rather the Estate of Alfonso O. Orfinada, Jr. in view of the pendency of the administration proceedings.12 On April 29, 1996, petitioners filed a Motion to Set Affirmative Defenses for Hearing13 on the aforesaid ground. The lower court denied the motion in its Order14 dated June 27, 1996, on the ground that respondents, as heirs, are the real parties-in-interest especially in the absence of an administrator who is yet to be appointed in S.P. Case No. 5118. Petitioners moved for its reconsideration15 but the motion was likewise denied.16 This prompted petitioners to file before the Court of Appeals their Petition for Certiorari under Rule 65 of the Rules of Court docketed as CA G.R. S.P. No. 42053.17 Petitioners averred that the RTC committed grave abuse of discretion in issuing the assailed order which denied the dismissal of the case on the ground that the proper party to file the complaint for the annulment of the extrajudicial settlement of the estate of the deceased is the estate of the decedent and not the respondents.18 The Court of Appeals rendered the assailed Decision19 dated January 31, 1997, stating that it discerned no grave abuse of discretion amounting to lack or excess of jurisdiction by the public respondent judge when he denied petitioners motion to set affirmative defenses for hearing in view of its discretionary nature. A Motion for Reconsideration was filed by petitioners but it was denied.20 Hence, the petition before this Court. The issue presented by the petitioners before this Court is whether the heirs have legal standing to prosecute the rights belonging to the deceased subsequent to the commencement of the administration proceedings.21 Petitioners vehemently fault the lower court for denying their motion to set the case for preliminary hearing on their affirmative defense that the proper party to bring the action is the estate of the decedent and not the respondents. It must be stressed that the holding of a preliminary hearing on an affirmative defense lies in the discretion of the court. This is clear from the Rules of Court, thus: SEC. 5. Pleadings grounds as affirmative defenses.- Any of the grounds for dismissal provided for in this rule, except improper venue, may be pleaded as an affirmative defense, and a preliminary hearing may be had thereon as if a motion to dismiss had been filed.22 (Emphasis supplied.) Certainly, the incorporation of the word "may" in the provision is clearly indicative of the optional character of the preliminary hearing. The word denotes discretion and cannot be construed as having a mandatory effect.23Subsequently, the electivity of the proceeding was firmed up beyond cavil by the 1997 Rules of Civil Procedure with the inclusion of the phrase "in the discretion of the Court", apart from the retention of the word "may" in Section 6,24 in Rule 16 thereof.

Just as no blame of abuse of discretion can be laid on the lower courts doorstep for not hearing petitioners affirmative defense, it cannot likewise be faulted for recognizing the legal standing of the respondents as heirs to bring the suit. Pending the filing of administration proceedings, the heirs without doubt have legal personality to bring suit in behalf of the estate of the decedent in accordance with the provision of Article 777 of the New Civil Code "that (t)he rights to succession are transmitted from the moment of the death of the decedent." The provision in turn is the foundation of the principle that the property, rights and obligations to the extent and value of the inheritance of a person are transmitted through his death to another or others by his will or by operation of law.25 Even if administration proceedings have already been commenced, the heirs may still bring the suit if an administrator has not yet been appointed. This is the proper modality despite the total lack of advertence to the heirs in the rules on party representation, namely Section 3, Rule 326 and Section 2, Rule 8727 of the Rules of Court. In fact, in the case of Gochan v. Young,28 this Court recognized the legal standing of the heirs to represent the rights and properties of the decedent under administration pending the appointment of an administrator. Thus: The above-quoted rules,29 while permitting an executor or administrator to represent or to bring suits on behalf of the deceased, do not prohibit the heirs from representing the deceased. These rules are easily applicable to cases in which an administrator has already been appointed. But no rule categorically addresses the situation in which special proceedings for the settlement of an estate have already been instituted, yet no administrator has been appointed. In such instances, the heirs cannot be expected to wait for the appointment of an administrator; then wait further to see if the administrator appointed would care enough to file a suit to protect the rights and the interests of the deceased; and in the meantime do nothing while the rights and the properties of the decedent are violated or dissipated. Even if there is an appointed administrator, jurisprudence recognizes two exceptions, viz: (1) if the executor or administrator is unwilling or refuses to bring suit;30 and (2) when the administrator is alleged to have participated in the act complained of31 and he is made a party defendant.32 Evidently, the necessity for the heirs to seek judicial relief to recover property of the estate is as compelling when there is no appointed administrator, if not more, as where there is an appointed administrator but he is either disinclined to bring suit or is one of the guilty parties himself. All told, therefore, the rule that the heirs have no legal standing to sue for the recovery of property of the estate during the pendency of administration proceedings has three exceptions, the third being when there is no appointed administrator such as in this case. As the appellate court did not commit an error of law in upholding the order of the lower court, recourse to this Court is not warranted. WHEREFORE, the petition for review is DENIED. The assailed decision and resolution of the Court of Appeals are hereby AFFIRMED. No costs. SO ORDERED.

8. G.R. No. 126334 November 23, 2001

EMILIO EMNACE, petitioner, vs. COURT OF APPEALS, ESTATE OF VICENTE TABANAO, SHERWIN TABANAO, VICENTE WILLIAM TABANAO, JANETTE TABANAO DEPOSOY, VICENTA MAY TABANAO VARELA, ROSELA TABANAO and VINCENT TABANAO, respondents. YNARES-SANTIAGO, J.: Petitioner Emilio Emnace, Vicente Tabanao and Jacinto Divinagracia were partners in a business concern known as Ma. Nelma Fishing Industry. Sometime in January of 1986, they decided to dissolve their partnership and executed an agreement of partition and distribution of the partnership properties among them, consequent to Jacinto Divinagracia's withdrawal from the partnership.1 Among the assets to be distributed were five (5) fishing boats, six (6) vehicles, two (2) parcels of land located at Sto. Nio and Talisay, Negros Occidental, and cash deposits in the local branches of the Bank of the Philippine Islands and Prudential Bank. Throughout the existence of the partnership, and even after Vicente Tabanao's untimely demise in 1994, petitioner failed to submit to Tabanao's heirs any statement of assets and liabilities of the partnership, and to render an accounting of the partnership's finances. Petitioner also reneged on his promise to turn over to Tabanao's heirs the deceased's 1/3 share in the total assets of the partnership, amounting to P30,000,000.00, or the sum of P10,000,000.00, despite formal demand for payment thereof.2 Consequently, Tabanao' s heirs, respondents herein, filed against petitioner an action for accounting, payment of shares, division of assets and damages.3 In their complaint, respondents prayed as follows: 1. Defendant be ordered to render the proper accounting of all the assets and liabilities of the partnership at bar; and 2. After due notice and hearing defendant be ordered to pay/remit/deliver/surrender/yield to the plaintiffs the following: A. No less than One Third (1/3) of the assets, properties, dividends, cash, land(s), fishing vessels, trucks, motor vehicles, and other forms and substance of treasures which belong and/or should belong, had accrued and/or must accrue to the partnership; B. No less than Two Hundred Thousand Pesos (P200,000.00) as moral damages; C. Attorney's fees equivalent to Thirty Percent (30%) of the entire share/amount/award which the Honorable Court may resolve the plaintiffs as entitled to plus P1,000.00 for every appearance in court.4 Petitioner filed a motion to dismiss the complaint on the grounds of improper venue, lack of jurisdiction over the nature of the action or suit, and lack of capacity of the estate of Tabanao to sue.5 On August 30, 1994, the trial court denied the motion to dismiss. It held that venue was

properly laid because, while realties were involved, the action was directed against a particular person on the basis of his personal liability; hence, the action is not only a personal action but also an action in personam. As regards petitioner's argument of lack of jurisdiction over the action because the prescribed docket fee was not paid considering the huge amount involved in the claim, the trial court noted that a request for accounting was made in order that the exact value of the partnership may be ascertained and, thus, the correct docket fee may be paid. Finally, the trial court held that the heirs of Tabanao had aright to sue in their own names, in view of the provision of Article 777 of the Civil Code, which states that the rights to the succession are transmitted from the moment of the death of the decedent.6 The following day, respondents filed an amended complaint,7 incorporating the additional prayer that petitioner be ordered to "sell all (the partnership's) assets and thereafter pay/remit/deliver/surrender/yield to the plaintiffs" their corresponding share in the proceeds thereof. In due time, petitioner filed a manifestation and motion to dismiss,8arguing that the trial court did not acquire jurisdiction over the case due to the plaintiffs' failure to pay the proper docket fees. Further, in a supplement to his motion to dismiss,9 petitioner also raised prescription as an additional ground warranting the outright dismissal of the complaint. On June 15, 1995, the trial court issued an Order,10 denying the motion to dismiss inasmuch as the grounds raised therein were basically the same as the earlier motion to dismiss which has been denied. Anent the issue of prescription, the trial court ruled that prescription begins to run only upon the dissolution of the partnership when the final accounting is done. Hence, prescription has not set in the absence of a final accounting. Moreover, an action based on a written contract prescribes in ten years from the time the right of action accrues. Petitioner filed a petition for certiorari before the Court of Appeals,11 raising the following issues: I. Whether or not respondent Judge acted without jurisdiction or with grave abuse of discretion in taking cognizance of a case despite the failure to pay the required docket fee; II. Whether or not respondent Judge acted without jurisdiction or with grave abuse of discretion in insisting to try the case which involve (sic) a parcel of land situated outside of its territorial jurisdiction; III. Whether or not respondent Judge acted without jurisdiction or with grave abuse of discretion in allowing the estate of the deceased to appear as party plaintiff, when there is no intestate case and filed by one who was never appointed by the court as administratrix of the estates; and IV. Whether or not respondent Judge acted without jurisdiction or with grave abuse of discretion in not dismissing the case on the ground of prescription. On August 8, 1996, the Court of Appeals rendered the assailed decision,12 dismissing the petition for certiorari, upon a finding that no grave abuse of discretion amounting to lack or excess of jurisdiction was committed by the trial court in issuing the questioned orders denying petitioner's motions to dismiss. Not satisfied, petitioner filed the instant petition for review, raising the same issues resolved by the Court of Appeals, namely: I. Failure to pay the proper docket fee;

II. Parcel of land subject of the case pending before the trial court is outside the said court's territorial jurisdiction; III. IV. Lack of capacity to sue on the part of plaintiff heirs of Vicente Tabanao; and Prescription of the plaintiff heirs' cause of action.

It can be readily seen that respondents' primary and ultimate objective in instituting the action below was to recover the decedent's 1/3 share in the partnership' s assets. While they ask for an accounting of the partnership' s assets and finances, what they are actually asking is for the trial court to compel petitioner to pay and turn over their share, or the equivalent value thereof, from the proceeds of the sale of the partnership assets. They also assert that until and unless a proper accounting is done, the exact value of the partnership' s assets, as well as their corresponding share therein, cannot be ascertained. Consequently, they feel justified in not having paid the commensurate docket fee as required by the Rules of Court.
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We do not agree. The trial court does not have to employ guesswork in ascertaining the estimated value of the partnership's assets, for respondents themselves voluntarily pegged the worth thereof at Thirty Million Pesos (P30,000,000.00). Hence, this case is one which is really not beyond pecuniary estimation, but rather partakes of the nature of a simple collection case where the value of the subject assets or amount demanded is pecuniarily determinable.13 While it is true that the exact value of the partnership's total assets cannot be shown with certainty at the time of filing, respondents can and must ascertain, through informed and practical estimation, the amount they expect to collect from the partnership, particularly from petitioner, in order to determine the proper amount of docket and other fees.14 It is thus imperative for respondents to pay the corresponding docket fees in order that the trial court may acquire jurisdiction over the action.15 Nevertheless, unlike in the case of Manchester Development Corp. v. Court of Appeals,16 where there was clearly an effort to defraud the government in avoiding to pay the correct docket fees, we see no attempt to cheat the courts on the part of respondents. In fact, the lower courts have noted their expressed desire to remit to the court "any payable balance or lien on whatever award which the Honorable Court may grant them in this case should there be any deficiency in the payment of the docket fees to be computed by the Clerk of Court."17 There is evident willingness to pay, and the fact that the docket fee paid so far is inadequate is not an indication that they are trying to avoid paying the required amount, but may simply be due to an inability to pay at the time of filing. This consideration may have moved the trial court and the Court of Appeals to declare that the unpaid docket fees shall be considered a lien on the judgment award. Petitioner, however, argues that the trial court and the Court of Appeals erred in condoning the nonpayment of the proper legal fees and in allowing the same to become a lien on the monetary or property judgment that may be rendered in favor of respondents. There is merit in petitioner's assertion. The third paragraph of Section 16, Rule 141 of the Rules of Court states that: The legal fees shall be a lien on the monetary or property judgment in favor of the pauperlitigant. Respondents cannot invoke the above provision in their favor because it specifically applies to pauper-litigants. Nowhere in the records does it appear that respondents are litigating as paupers, and as such are exempted from the payment of court fees.18 The rule applicable to the case at bar is Section 5(a) of Rule 141 of the Rules of Court, which defines the two kinds of claims as: (1) those which are immediately ascertainable; and (2) those

which cannot be immediately ascertained as to the exact amount. This second class of claims, where the exact amount still has to be finally determined by the courts based on evidence presented, falls squarely under the third paragraph of said Section 5(a), which provides: In case the value of the property or estate or the sum claimed is less or more in accordance with the appraisal of the court, the difference of fee shall be refunded or paid as the case may be. (Underscoring ours) In Pilipinas Shell Petroleum Corporation v. Court of Appeals,19 this Court pronounced that the abovequoted provision "clearly contemplates an Initial payment of the filing fees corresponding to the estimated amount of the claim subject to adjustment as to what later may be proved."20 Moreover, we reiterated therein the principle that the payment of filing fees cannot be made contingent or dependent on the result of the case. Thus, an initial payment of the docket fees based on an estimated amount must be paid simultaneous with the filing of the complaint. Otherwise, the court would stand to lose the filing fees should the judgment later turn out to be adverse to any claim of the respondent heirs. The matter of payment of docket fees is not a mere triviality. These fees are necessary to defray court expenses in the handling of cases. Consequently, in order to avoid tremendous losses to the judiciary, and to the government as well, the payment of docket fees cannot be made dependent on the outcome of the case, except when the claimant is a pauper-litigant. Applied to the instant case, respondents have a specific claim - 1/3 of the value of all the partnership assets - but they did not allege a specific amount. They did, however, estimate the partnership's total assets to be worth Thirty Million Pesos (P30,000,000.00), in a letter21 addressed to petitioner. Respondents cannot now say that they are unable to make an estimate, for the said letter and the admissions therein form part of the records of this case. They cannot avoid paying the initial docket fees by conveniently omitting the said amount in their amended complaint. This estimate can be made the basis for the initial docket fees that respondents should pay. Even if it were later established that the amount proved was less or more than the amount alleged or estimated, Rule 141, Section 5(a) of the Rules of Court specifically provides that the court may refund the 'excess or exact additional fees should the initial payment be insufficient. It is clear that it is only the difference between the amount finally awarded and the fees paid upon filing of this complaint that is subject to adjustment and which may be subjected to alien. In the oft-quoted case of Sun Insurance Office, Ltd. v. Hon. Maximiano Asuncion,22 this Court held that when the specific claim "has been left for the determination by the court, the additional filing fee therefor shall constitute a lien on the judgment and it shall be the responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the additional fee." Clearly, the rules and jurisprudence contemplate the initial payment of filing and docket fees based on the estimated claims of the plaintiff, and it is only when there is a deficiency that a lien may be constituted on the judgment award until such additional fee is collected. Based on the foregoing, the trial court erred in not dismissing the complaint outright despite their failure to pay the proper docket fees. Nevertheless, as in other procedural rules, it may be liberally construed in certain cases if only to secure a just and speedy disposition of an action. While the rule is that the payment of the docket fee in the proper amount should be adhered to, there are certain exceptions which must be strictly construed.23 In recent rulings, this Court has relaxed the strict adherence to the Manchester doctrine, allowing the plaintiff to pay the proper docket fees within a reasonable time before the expiration of the applicable prescriptive or reglementary period.24

In the recent case of National Steel Corp. v. Court of Appeals,25 this Court held that: The court acquires jurisdiction over the action if the filing of the initiatory pleading is accompanied by the payment of the requisite fees, or, if the fees are not paid at the time of the filing of the pleading, as of the time of full payment of the fees within such reasonable time as the court may grant, unless, of course, prescription has set in the meantime. It does not follow, however, that the trial court should have dismissed the complaint for failure of private respondent to pay the correct amount of docket fees. Although the payment of the proper docket fees is a jurisdictional requirement, the trial court may allow the plaintiff in an action to pay the same within a reasonable time before the expiration of the applicable prescriptive or reglementary period. If the plaintiff fails to comply within this requirement, the defendant should timely raise the issue of jurisdiction or else he would be considered in estoppel. In the latter case, the balance between the appropriate docket fees and the amount actually paid by the plaintiff will be considered a lien or any award he may obtain in his favor. (Underscoring ours) Accordingly, the trial court in the case at bar should determine the proper docket fee based on the estimated amount that respondents seek to collect from petitioner, and direct them to pay the same within a reasonable time, provided the applicable prescriptive or reglementary period has not yet expired, Failure to comply therewith, and upon motion by petitioner, the immediate dismissal of the complaint shall issue on jurisdictional grounds. On the matter of improper venue, we find no error on the part of the trial court and the Court of Appeals in holding that the case below is a personal action which, under the Rules, may be commenced and tried where the defendant resides or may be found, or where the plaintiffs reside, at the election of the latter.26 Petitioner, however, insists that venue was improperly laid since the action is a real action involving a parcel of land that is located outside the territorial jurisdiction of the court a quo. This contention is not well-taken. The records indubitably show that respondents are asking that the assets of the partnership be accounted for, sold and distributed according to the agreement of the partners. The fact that two of the assets of the partnership are parcels of land does not materially change the nature of the action. It is an action in personam because it is an action against a person, namely, petitioner, on the basis of his personal liability. It is not an action in rem where the action is against the thing itself instead of against the person.27 Furthermore, there is no showing that the parcels of land involved in this case are being disputed. In fact, it is only incidental that part of the assets of the partnership under liquidation happen to be parcels of land. The time-tested case of Claridades v. Mercader, et al.,28 settled this issue thus: The fact that plaintiff prays for the sale of the assets of the partnership, including the fishpond in question, did not change the nature or character of the action, such sale being merely a necessary incident of the liquidation of the partnership, which should precede and/or is part of its process of dissolution. The action filed by respondents not only seeks redress against petitioner. It also seeks the enforcement of, and petitioner's compliance with, the contract that the partners executed to formalize the partnership's dissolution, as well as to implement the liquidation and partition of the partnership's assets. Clearly, it is a personal action that, in effect, claims a debt from petitioner and seeks the performance of a personal duty on his part.29 In fine, respondents' complaint seeking the liquidation and partition of the assets of the partnership with damages is a personal action which may be filed in

the proper court where any of the parties reside.30 Besides, venue has nothing to do with jurisdiction for venue touches more upon the substance or merits of the case.31 As it is, venue in this case was properly laid and the trial court correctly ruled so. On the third issue, petitioner asserts that the surviving spouse of Vicente Tabanao has no legal capacity to sue since she was never appointed as administratrix or executrix of his estate. Petitioner's objection in this regard is misplaced. The surviving spouse does not need to be appointed as executrix or administratrix of the estate before she can file the action. She and her children are complainants in their own right as successors of Vicente Tabanao. From the very moment of Vicente Tabanao' s death, his rights insofar as the partnership was concerned were transmitted to his heirs, for rights to the succession are transmitted from the moment of death of the decedent.32 Whatever claims and rights Vicente Tabanao had against the partnership and petitioner were transmitted to respondents by operation of law, more particularly by succession, which is a mode of acquisition by virtue of which the property, rights and obligations to the extent of the value of the inheritance of a person are transmitted.33Moreover, respondents became owners of their respective hereditary shares from the moment Vicente Tabanao died.34 A prior settlement of the estate, or even the appointment of Salvacion Tabanao as executrix or administratrix, is not necessary for any of the heirs to acquire legal capacity to sue. As successors who stepped into the shoes of their decedent upon his death, they can commence any action originally pertaining to the decedent.35 From the moment of his death, his rights as a partner and to demand fulfillment of petitioner's obligations as outlined in their dissolution agreement were transmitted to respondents. They, therefore, had the capacity to sue and seek the court's intervention to compel petitioner to fulfill his obligations. Finally, petitioner contends that the trial court should have dismissed the complaint on the ground of prescription, arguing that respondents' action prescribed four (4) years after it accrued in 1986. The trial court and the Court of Appeals gave scant consideration to petitioner's hollow arguments, and rightly so. The three (3) final stages of a partnership are: (1) dissolution; (2) winding-up; and (3) termination.36 The partnership, although dissolved, continues to exist and its legal personality is retained, at which time it completes the winding up of its affairs, including the partitioning and distribution of the net partnership assets to the partners.37 For as long as the partnership exists, any of the partners may demand an accounting of the partnership's business. Prescription of the said right starts to run only upon the dissolution of the partnership when the final accounting is done.38 Contrary to petitioner's protestations that respondents' right to inquire into the business affairs of the partnership accrued in 1986, prescribing four (4) years thereafter, prescription had not even begun to run in the absence of a final accounting. Article 1842 of the Civil Code provides: The right to an account of his interest shall accrue to any partner, or his legal representative as against the winding up partners or the surviving partners or the person or partnership continuing the business, at the date of dissolution, in the absence of any agreement to the contrary. Applied in relation to Articles 1807 and 1809, which also deal with the duty to account, the abovecited provision states that the right to demand an accounting accrues at the date of dissolution in the absence of any agreement to the contrary. When a final accounting is made, it is only then that prescription begins to run. In the case at bar, no final accounting has been made, and that is

precisely what respondents are seeking in their action before the trial court, since petitioner has failed or refused to render an accounting of the partnership's business and assets. Hence, the said action is not barred by prescription. In fine, the trial court neither erred nor abused its discretion when it denied petitioner's motions to dismiss. Likewise, the Court of Appeals did not commit reversible error in upholding the trial court's orders. Precious time has been lost just to settle this preliminary issue, with petitioner resurrecting the very same arguments from the trial court all the way up to the Supreme Court. The litigation of the merits and substantial issues of this controversy is now long overdue and must proceed without further delay. WHEREFORE, in view of all the foregoing, the instant petition is DENIED for lack of merit, and the case isREMANDED to the Regional Trial Court of Cadiz City, Branch 60, which is ORDERED to determine the proper docket fee based on the estimated amount that plaintiffs therein seek to collect, and direct said plaintiffs to pay the same within a reasonable time, provided the applicable prescriptive or reglementary period has not yet expired. Thereafter, the trial court is ORDERED to conduct the appropriate proceedings in Civil Case No. 416-C. Costs against petitioner. SO ORDERED
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