Page 1 of 30

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. L-68053 May 7, 1990
LAURA ALVAREZ, FLORA ALVAREZ and RAYMUNDO
ALVAREZ, petitioners,
vs.
THE HONORABLE INTERMEDIATE APELLATE COURT and JESUS YANES,
ESTELITA YANES, ANTONIO YANES, ROSARIO YANES, and ILUMINADO
YANES, respondents.
Francisco G. Banzon for petitioner.
Renecio R. Espiritu for private respondents.

FERNAN, C.J.:
This is a petition for review on certiorari seeking the reversal of: (a) the
decision of the Fourth Civil Cases Division of the Intermediate Appellate
Court dated August 31, 1983 in AC-G.R. CV No. 56626 entitled "Jesus
Yanes et al. v. Dr. Rodolfo Siason et al." affirming the decision dated
July 8, 1974 of the Court of First Instance of Negros Occidental insofar
as it ordered the petitioners to pay jointly and severally the private
respondents the sum of P20,000.00 representing the actual value of
Lots Nos. 773-A and 773-B of the cadastral survey of Murcia, Negros
Occidental and reversing the subject decision insofar as it awarded the
sums of P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral
damages and attorney's fees, respectively and (b) the resolution of said
appellate court dated May 30, 1984, denying the motion for
reconsideration of its decision.
The real properties involved are two parcels of land identified as Lot
773-A and Lot 773-B which were originally known as Lot 773 of the
cadastral survey of Murcia, Negros Occidental. Lot 773, with an area of
156,549 square meters, was registered in the name of the heirs of
Aniceto Yanes under Original Certificate of Title No. RO-4858 (8804)
issued on October 9, 1917 by the Register of Deeds of Occidental
Negros (Exh. A).
Aniceto Yanes was survived by his children, Rufino, Felipe and Teodora.
Herein private respondents, Estelita, Iluminado and Jesus, are the
children of Rufino who died in 1962 while the other private
respondents, Antonio and Rosario Yanes, are children of Felipe.
Teodora was survived by her child, Jovita (Jovito) Alib.
1
It is not clear
why the latter is not included as a party in this case.
Aniceto left his children Lots 773 and 823. Teodora cultivated only three
hectares of Lot 823 as she could not attend to the other portions of the
two lots which had a total area of around twenty-four hectares. The
record does not show whether the children of Felipe also cultivated
some portions of the lots but it is established that Rufino and his
children left the province to settle in other places as a result of the
outbreak of World War II. According to Estelita, from the "Japanese
time up to peace time", they did not visit the parcels of land in question
but "after liberation", when her brother went there to get their share of
the sugar produced therein, he was informed that Fortunato Santiago,
Fuentebella (Puentevella) and Alvarez were in possession of Lot 773.
2

It is on record that on May 19, 1938, Fortunato D. Santiago was issued
Transfer Certificate of Title No. RF 2694 (29797) covering Lot 773-A with
an area of 37,818 square meters.
3
TCT No. RF 2694 describes Lot 773-A
as a portion of Lot 773 of the cadastral survey of Murcia and as
originally registered under OCT No. 8804.
The bigger portion of Lot 773 with an area of 118,831 square meters
was also registered in the name of Fortunato D. Santiago on September
6, 1938 Under TCT No. RT-2695 (28192 ).
4
Said transfer certificate of
title also contains a certification to the effect that Lot 773-B was
originally registered under OCT No. 8804.
On May 30, 1955, Santiago sold Lots 773-A and 773-B to Monico B.
Fuentebella, Jr. in consideration of the sum of
P7,000.00.
5
Consequently, on February 20, 1956, TCT Nos. T-19291 and
T-19292 were issued in Fuentebella's name.
6

After Fuentebella's death and during the settlement of his estate, the
administratrix thereof (Arsenia R. Vda. de Fuentebella, his wife) filed in
Special Proceedings No. 4373 in the Court of First Instance of Negros
Occidental, a motion requesting authority to sell Lots 773-A and 773-
B.
7
By virtue of a court order granting said motion,
8
on March 24,
1958, Arsenia Vda. de Fuentebella sold said lots for P6,000.00 to
Rosendo Alvarez.
9
Hence, on April 1, 1958 TCT Nos. T-23165 and T-
23166 covering Lots 773-A and 773-B were respectively issued to
Rosendo Alvarez.
10

Two years later or on May 26, 1960, Teodora Yanes and the children of
her brother Rufino, namely, Estelita, Iluminado and Jesus, filed in the
Court of First Instance of Negros Occidental a complaint against
Fortunato Santiago, Arsenia Vda. de Fuentebella, Alvarez and the
Register of Deeds of Negros Occidental for the "return" of the
ownership and possession of Lots 773 and 823. They also prayed that
an accounting of the produce of the land from 1944 up to the filing of
the complaint be made by the defendants, that after court approval of
said accounting, the share or money equivalent due the plaintiffs be
delivered to them, and that defendants be ordered to pay plaintiffs
P500.00 as damages in the form of attorney's fees.
11

During the pendency in court of said case or on November 13, 1961,
Alvarez sold Lots 773-A, 773-B and another lot for P25,000.00 to Dr.
Rodolfo Siason.
12
Accordingly, TCT Nos. 30919 and 30920 were issued
to Siason,
13
who thereafter, declared the two lots in his name for
assessment purposes.
14

Meanwhile, on November 6, 1962, Jesus Yanes, in his own behalf and in
behalf of the other plaintiffs, and assisted by their counsel, filed a
manifestation in Civil Case No. 5022 stating that the therein plaintiffs
"renounce, forfeit and quitclaims (sic) any claim, monetary or
otherwise, against the defendant Arsenia Vda. de Fuentebella in
connection with the above-entitled case."
15

On October 11, 1963, a decision was rendered by the Court of First
Instance of Negros Occidental in Civil Case No. 5022, the dispositive
portion of which reads:
WHEREFORE, judgment is rendered, ordering the
defendant Rosendo Alvarez to reconvey to the
plaintiffs lots Nos. 773 and 823 of the Cadastral
Survey of Murcia, Negros Occidental, now covered
by Transfer Certificates of Title Nos. T-23165 and T-
23166 in the name of said defendant, and
thereafter to deliver the possession of said lots to
the plaintiffs. No special pronouncement as to costs.
SO ORDERED.
16

It will be noted that the above-mentioned manifestation of Jesus Yanes
was not mentioned in the aforesaid decision.
Page 2 of 30

However, execution of said decision proved unsuccessful with respect
to Lot 773. In his return of service dated October 20, 1965, the sheriff
stated that he discovered that Lot 773 had been subdivided into Lots
773-A and 773-B; that they were "in the name" of Rodolfo Siason who
had purchased them from Alvarez, and that Lot 773 could not be
delivered to the plaintiffs as Siason was "not a party per writ of
execution."
17

The execution of the decision in Civil Case No. 5022 having met a
hindrance, herein private respondents (the Yaneses) filed on July 31,
1965, in the Court of First Instance of Negros Occidental a petition for
the issuance of a new certificate of title and for a declaration of nullity
of TCT Nos. T-23165 and T-23166 issued to Rosendo
Alvarez.
18
Thereafter, the court required Rodolfo Siason to produce the
certificates of title covering Lots 773 and 823.
Expectedly, Siason filed a manifestation stating that he purchased Lots
773-A, 773-B and 658, not Lots 773 and 823, "in good faith and for a
valuable consideration without any knowledge of any lien or
encumbrances against said properties"; that the decision in the
cadastral proceeding
19
could not be enforced against him as he was not
a party thereto; and that the decision in Civil Case No. 5022 could
neither be enforced against him not only because he was not a party-
litigant therein but also because it had long become final and
executory.
20
Finding said manifestation to be well-founded, the
cadastral court, in its order of September 4, 1965, nullified its previous
order requiring Siason to surrender the certificates of title mentioned
therein.
21

In 1968, the Yaneses filed an ex-parte motion for the issuance of an
alias writ of execution in Civil Case No. 5022. Siason opposed it.
22
In its
order of September 28, 1968 in Civil Case No. 5022, the lower court,
noting that the Yaneses had instituted another action for the recovery
of the land in question, ruled that at the judgment therein could not be
enforced against Siason as he was not a party in the case.
23

The action filed by the Yaneses on February 21, 1968 was for recovery
of real property with damages.
24
Named defendants therein were Dr.
Rodolfo Siason, Laura Alvarez, Flora Alvarez, Raymundo Alvarez and the
Register of Deeds of Negros Occidental. The Yaneses prayed for the
cancellation of TCT Nos. T-19291 and 19292 issued to Siason (sic) for
being null and void; the issuance of a new certificate of title in the name
of the Yaneses "in accordance with the sheriffs return of service dated
October 20, 1965;" Siason's delivery of possession of Lot 773 to the
Yaneses; and if, delivery thereof could not be effected, or, if the
issuance of a new title could not be made, that the Alvarez and Siason
jointly and severally pay the Yaneses the sum of P45,000.00. They also
prayed that Siason render an accounting of the fruits of Lot 773 from
November 13, 1961 until the filing of the complaint; and that the
defendants jointly and severally pay the Yaneses moral damages of
P20,000.00 and exemplary damages of P10,000.00 plus attorney's fees
of P4, 000.00.
25

In his answer to the complaint, Siason alleged that the validity of his
titles to Lots 773-A and 773-B, having been passed upon by the court in
its order of September 4, 1965, had become res judicata and the
Yaneses were estopped from questioning said order.
26
On their part,
the Alvarez stated in their answer that the Yaneses' cause of action had
been "barred by res judicata, statute of limitation and estoppel."
27

In its decision of July 8, 1974, the lower court found that Rodolfo
Siason, who purchased the properties in question thru an agent as he
was then in Mexico pursuing further medical studies, was a buyer in
good faith for a valuable consideration. Although the Yaneses were
negligent in their failure to place a notice of lis pendens "before the
Register of Deeds of Negros Occidental in order to protect their rights
over the property in question" in Civil Case No. 5022, equity demanded
that they recover the actual value of the land because the sale thereof
executed between Alvarez and Siason was without court
approval.
28
The dispositive portion of the decision states:
IN VIEW OF THE FOREGOING CONSIDERATION,
judgment is hereby rendered in the following
manner:
A. The case against the defendant Dr. Rodolfo
Siason and the Register of Deeds are (sic) hereby
dismmissed,
B. The defendants, Laura, Flora and Raymundo, all
surnamed Alvarez being the legitimate children of
the deceased Rosendo Alvarez are hereby ordered
to pay jointly and severally the plaintiffs the sum of
P20,000.00 representing the actual value of Lots
Nos. 773-A and 773-B of Murcia Cadastre, Negros
Occidental; the sum of P2,000.00 as actual damages
suffered by the plaintiff; the sum of P5,000.00
representing moral damages and the sum of P2.000
as attorney's fees, all with legal rate of interest from
date of the filing of this complaint up to final
payment.
C. The cross-claim filed by the defendant Dr.
Rodolfo Siason against the defendants, Laura, Flora
and Raymundo, all surnamed Alvarez is hereby
dismissed.
D. Defendants, Laura, Flora and Raymundo, all
surnamed Alvarez are hereby ordered to pay the
costs of this suit.
SO ORDERED.
29

The Alvarez appealed to the then Intermediate Appellate Court which in
its decision of August 31, 1983
30
affirmed the lower court's decision
"insofar as it ordered defendants-appellants to pay jointly and severally
the plaintiffs-appellees the sum of P20,000.00 representing the actual
value of Lots Nos. 773-A and 773-B of the cadastral survey of Murcia,
Negros Occidental, and is reversed insofar as it awarded the sums of
P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral damages
and attorney's fees, respectively."
31
The dispositive portion of said
decision reads:
WHEREFORE, the decision appealed from is
affirmed insofar as it ordered defendants-appellants
to pay jointly and severally the plaintiffs- appellees
the sum of P20,000.00 representing the actual value
of Lots Nos. 773-A and 773-B of the cadastral survey
of Murcia, Negros Occidental, and is reversed
insofar as it awarded the sums of P2,000.00,
P5,000.00 and P2,000.00 as actual damages, moral
damages and attorney's fees, respectively. No costs.
SO ORDERED.
32

Finding no cogent reason to grant appellants motion for
reconsideration, said appellate court denied the same.
Hence, the instant petition. ln their memorandum petitioners raised the
following issues:
1. Whethere or not the defense of prescription and
estoppel had been timely and properly invoked and
raised by the petitioners in the lower court.
2. Whether or not the cause and/or causes of action
of the private respondents, if ever there are any, as
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alleged in their complaint dated February 21, 1968
which has been docketed in the trial court as Civil
Case No. 8474 supra, are forever barred by statute
of limitation and/or prescription of action and
estoppel.
3. Whether or not the late Rosendo Alvarez, a
defendant in Civil Case No. 5022, supra and father
of the petitioners become a privy and/or party to
the waiver (Exhibit 4-defendant Siason) in Civil Case
No. 8474, supra where the private respondents had
unqualifiedly and absolutely waived, renounced and
quitclaimed all their alleged rights and interests, if
ever there is any, on Lots Nos. 773-A and 773-B of
Murcia Cadastre as appearing in their written
manifestation dated November 6, 1962 (Exhibits "4"
Siason) which had not been controverted or even
impliedly or indirectly denied by them.
4. Whether or not the liability or liabilities of
Rosendo Alvarez arising from the sale of Lots Nos.
773-A and 773-B of Murcia Cadastre to Dr. Rodolfo
Siason, if ever there is any, could be legally passed
or transmitted by operations (sic) of law to the
petitioners without violation of law and due process
.
33

The petition is devoid of merit.
As correctly ruled by the Court of Appeals, it is powerless and for that
matter so is the Supreme Court, to review the decision in Civil Case No.
5022 ordering Alvarez to reconvey the lots in dispute to herein private
respondents. Said decision had long become final and executory and
with the possible exception of Dr. Siason, who was not a party to said
case, the decision in Civil Case No. 5022 is the law of the case between
the parties thereto. It ended when Alvarez or his heirs failed to appeal
the decision against them.
34

Thus, it is axiomatic that when a right or fact has been judicially tried
and determined by a court of competent jurisdiction, so long as it
remains unreversed, it should be conclusive upon the parties and those
in privity with them in law or estate.
35
As consistently ruled by this
Court, every litigation must come to an end. Access to the court is
guaranteed. But there must be a limit to it. Once a litigant's right has
been adjudicated in a valid final judgment of a competent court, he
should not be granted an unbridled license to return for another try.
The prevailing party should not be harassed by subsequent suits. For, if
endless litigation were to be allowed, unscrupulous litigations will
multiply in number to the detriment of the administration of justice.
36

There is no dispute that the rights of the Yaneses to the properties in
question have been finally adjudicated in Civil Case No. 5022. As found
by the lower court, from the uncontroverted evidence presented, the
Yaneses have been illegally deprived of ownership and possession of
the lots in question.
37
In fact, Civil Case No. 8474 now under review,
arose from the failure to execute Civil Case No. 5022, as subject lots can
no longer be reconveyed to private respondents Yaneses, the same
having been sold during the pendency of the case by the petitioners'
father to Dr. Siason who did not know about the controversy, there
being no lis pendens annotated on the titles. Hence, it was also settled
beyond question that Dr. Siason is a purchaser in good faith.
Under the circumstances, the trial court did not annul the sale executed
by Alvarez in favor of Dr. Siason on November 11, 1961 but in fact
sustained it. The trial court ordered the heirs of Rosendo Alvarez who
lost in Civil Case No. 5022 to pay the plaintiffs (private respondents
herein) the amount of P20,000.00 representing the actual value of the
subdivided lots in dispute. It did not order defendant Siason to pay said
amount.
38

As to the propriety of the present case, it has long been established that
the sole remedy of the landowner whose property has been wrongfully
or erroneously registered in another's name is to bring an ordinary
action in the ordinary court of justice for reconveyance or, if the
property has passed into the hands of an innocent purchaser for value,
for damages.
39
"It is one thing to protect an innocent third party; it is
entirely a different matter and one devoid of justification if deceit
would be rewarded by allowing the perpetrator to enjoy the fruits of his
nefarious decided As clearly revealed by the undeviating line of
decisions coming from this Court, such an undesirable eventuality is
precisely sought to be guarded against."
40

The issue on the right to the properties in litigation having been finally
adjudicated in Civil Case No. 5022 in favor of private respondents, it
cannot now be reopened in the instant case on the pretext that the
defenses of prescription and estoppel have not been properly
considered by the lower court. Petitioners could have appealed in the
former case but they did not. They have therefore foreclosed their
rights, if any, and they cannot now be heard to complain in another
case in order to defeat the enforcement of a judgment which has
longing become final and executory.
Petitioners further contend that the liability arising from the sale of Lots
No. 773-A and 773-B made by Rosendo Alvarez to Dr. Rodolfo Siason
should be the sole liability of the late Rosendo Alvarez or of his estate,
after his death.
Such contention is untenable for it overlooks the doctrine obtaining in
this jurisdiction on the general transmissibility of the rights and
obligations of the deceased to his legitimate children and heirs. Thus,
the pertinent provisions of the Civil Code state:
Art. 774. Succession is a mode of acquisition by
virtue of which the property, rights and obligations
to the extent of the value of the inheritance, of a
person are transmitted through his death to
another or others either by his will or by operation
of law.
Art. 776. The inheritance includes all the property,
rights and obligations of a person which are not
extinguished by his death.
Art. 1311. Contract stake effect only between the
parties, their assigns and heirs except in case where
the rights and obligations arising from the contract
are not transmissible by their nature, or by
stipulation or by provision of law. The heir is not
liable beyond the value of the property received
from the decedent.
As explained by this Court through Associate Justice J.B.L. Reyes in the
case of Estate of Hemady vs. Luzon Surety Co., Inc.
41

The binding effect of contracts upon the heirs of the
deceased party is not altered by the provision of our
Rules of Court that money debts of a deceased must
be liquidated and paid from his estate before the
residue is distributed among said heirs (Rule 89).
The reason is that whatever payment is thus made
from the state is ultimately a payment by the heirs
or distributees, since the amount of the paid claim
in fact diminishes or reduces the shares that the
heirs would have been entitled to receive.
Under our law, therefore. the general rule is that a
party's contractual rights and obligations are
transmissible to the successors.
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The rule is a consequence of the progressive
"depersonalization" of patrimonial rights and duties
that, as observed by Victorio Polacco has
characterized the history of these institutions. From
the Roman concept of a relation from person to
person, the obligation has evolved into a relation
from patrimony to patrimony with the persons
occupying only a representative position, barring
those rare cases where the obligation is strictly
personal, i.e., is contracted intuitu personae, in
consideration of its performance by a specific
person and by no other.
xxx xxx xxx
Petitioners being the heirs of the late Rosendo Alvarez, they cannot
escape the legal consequences of their father's transaction, which gave
rise to the present claim for damages. That petitioners did not inherit
the property involved herein is of no moment because by legal fiction,
the monetary equivalent thereof devolved into the mass of their
father's hereditary estate, and we have ruled that the hereditary assets
are always liable in their totality for the payment of the debts of the
estate.
42

It must, however, be made clear that petitioners are liable only to the
extent of the value of their inheritance. With this clarification and
considering petitioners' admission that there are other properties left
by the deceased which are sufficient to cover the amount adjudged in
favor of private respondents, we see no cogent reason to disturb the
findings and conclusions of the Court of Appeals.
WHEREFORE, subject to the clarification herein above stated, the
assailed decision of the Court of Appeals is hereby AFFIRMED. Costs
against petitioners.
SO ORDERED.
Gutierrez, Jr., Feliciano and Cortes, JJ., concur.
Bidin J., took no part.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 77029 August 30, 1990
BIENVENIDO, ESTELITA, MACARIO, LUIS, ADELAIDE, ENRIQUITA and
CLAUDIO, all surnamed, GEVERO,petitioners,
vs.
INTERMEDIATE APPELLATE COURT and DEL MONTE DEVELOPMENT
CORPORATION, respondents.
Carlito B. Somido for petitioners.
Benjamin N. Tabios for private respondent.

PARAS, J.:
This is a petition for review on certiorari of the March 20, 1988
decision
1
of the then Intermediate Appellate Court (now Court of
Appeals) in AC-GR CV No. 69264, entitled Del Monte Development
Corporation vs. Enrique Ababa, et al., etc. affirming the decision
2
of the
then Court of First Instance (now Regional Trial Court) of Misamis
Oriental declaring the plaintiff corporation as the true and absolute
owner of that portion of Lot 476 of the Cagayan Cadastre, particularly
Lot No. 2476-D of the subdivision plan (LRC) Psd-80450, containing an
area of Seven Thousand Eight Hundred Seventy Eight (7,878) square
meters more or less.
As found by the Appellate Court, the facts are as follows:
The parcel of land under litigation is Lot No. 2476 of
the Subdivision Plan Psd-37365 containing an area
of 20,119 square meters and situated at Gusa,
Cagayan de Oro City. Said lot was acquired by
purchase from the late Luis Lancero on September
15, 1964 as per Deed of Absolute Sale executed in
favor of plaintiff and by virtue of which Transfer
Certificate of Title No. 4320 was issued to plaintiff
(DELCOR for brevity). Luis Lancero, in turn acquired
the same parcel from Ricardo Gevero on February 5,
1952 per deed of sale executed by Ricardo Gevero
which was duly annotated as entry No. 1128 at the
back of Original Certificate of Title No. 7610
covering the mother lot identified as Lot No. 2476 in
the names of Teodorica Babangha 1/2 share and
her children: Maria; Restituto, Elena, Ricardo,
Eustaquio and Ursula, all surnamed surnamed
Gevero, 1/2 undivided share of the whole area
containing 48,122 square meters.
Teodorica Babangha died long before World War II
and was survived by her six children
aforementioned. The heirs of Teodorica Babangha
on October 17,1966 executed an Extra-Judicial
Settlement and Partition of the estate of Teodorica
Babangha, consisting of two lots, among them was
lot 2476. By virtue of the extra-judicial settlement
and partition executed by the said heirs of
Teodorica Babangha, Lot 2476-A to Lot 2476-I,
inclusive, under subdivision plan (LRC) Psd-80450
duly approved by the Land Registration
Commission, Lot 2476-D, among others, was
adjudicated to Ricardo Gevero who was then alive
at the time of extra-judicial settlement and partition
in 1966. Plaintiff (private respondent herein) filed
an action with the CFI (now RTC) of Misamis
Oriental to quiet title and/or annul the partition
made by the heirs of Teodorica Babangha insofar as
the same prejudices the land which it acquired a
portion of lot 2476.
Plaintiff now seeks to quiet title and/or annul the
partition made by the heirs of Teodorica Babangha
insofar as the same prejudices the land which it
acquired, a portion of Lot 2476. Plaintiff proved that
before purchasing Lot 2476-A it first investigated
and checked the title of Luis Lancero and found the
same to be intact in the office of the Register of
Deeds of Cagayan de Oro City. The same with the
subdivision plan (Exh. "B"), the corresponding
technical description (Exh. "P") and the Deed of Sale
executed by Ricardo Gevero all of which were
found to be unquestionable. By reason of all these,
plaintiff claims to have bought the land in good faith
and for value, occupying the land since the sale and
taking over from Lancero's possession until May
1969, when the defendants Abadas forcibly entered
the property. (Rollo, p. 23)
After trial the court a quo on July 18, 1977 rendered judgment, the
dispositive portion of which reads as follows:
Page 5 of 30

WHEREFORE, premises considered, judgment is
hereby rendered declaring the plaintiff corporation
as the true and absolute owner of that portion of
Lot No. 2476 of the Cagayan Cadastre, particularly
Lot No. 2476-D of the subdivision plan (LRC) Psd-
80450, containing an area of SEVEN THOUSAND
EIGHT HUNDRED SEVENTY EIGHT (7,878) square
meters, more or less. The other portions of Lot No.
2476 are hereby adjudicated as follows:
Lot No. 2476 B to the heirs of Elena Gevero;
Lot No. 2476 C to the heirs of Restituto Gevero;
Lot No. 2476 E to the defendant spouses Enrique
C. Torres and Francisca Aquino;
Lot No. 2476 F to the defendant spouses Eduard
Rumohr and Emilia Merida Rumohf ;
Lot Nos. 2476-H, 2476-I and 2476 G to
defendant spouses Enrique Abada and Lilia Alvarez
Abada.
No adjudication can be made with respect to Lot
No. 2476-A considering that the said lot is the
subject of a civil case between the Heirs of Maria
Gevero on one hand and the spouses Daniel
Borkingkito and Ursula Gevero on the other hand,
which case is now pending appeal before the Court
of Appeals. No pronouncement as to costs,
SO ORDERED. (Decision, Record on Appeal, p.
203; Rollo, pp. 21-22)
From said decision, defendant heirs of Ricardo Gevero (petitioners
herein) appealed to the IAC (now Court of Appeals) which subsequently,
on March 20, 1986, affirmed the decision appealed from.
Petitioners, on March 31, 1986, filed a motion for reconsideration
(Rollo, p. 28) but was denied on April 21, 1986.
Hence, the present petition.
This petition is devoid of merit.
Basically, the issues to be resolved in the instant case are: 1)
whether or not the deed of sale executed by Ricardo Gevero
to Luis Lancero is valid; 2) in the affirmative, whether or not
the 1/2 share of interest of Teodorica Babangha in one of the
litigated lots, lot no. 2476 under OCT No. 7610 is included in
the deed of sale; and 3) whether or not the private
respondents' action is barred by laches.
Petitioners maintain that the deed of sale is entirely
invalid citing alleged flaws thereto, such as that: 1) the signature of
Ricardo was forged without his knowledge of such fact; 2) Lancero had
recognized the fatal defect of the 1952 deed of sale when he signed the
document in 1968 entitled "Settlement to Avoid the Litigation"; 3)
Ricardo's children remained in the property notwithstanding the sale to
Lancero; 4) the designated Lot No. is 2470 instead of the correct
number being Lot No. 2476; 5) the deed of sale included the share of
Eustaquio Gevero without his authority; 6) T.C.T. No. 1183 of Lancero
segregated the area of 20,119 square meters from the bigger area (OCT
No. 7616) without the consent of the other co-owners; 7) Lancero
caused the 1952 Subdivision survey without the consent of the Geveros'
to bring about the segregation of the 20,119 square meters lot from the
mother lot 2476 which brought about the issuance of his title T-1183
and to DELCOR's title T4320, both of which were illegally issued; and 8)
the area sold as per document is 20,649 square meters whereas the
segregated area covered by TCT No. T-1183 of Lancero turned out to be
20,119 square meters (Petitioners Memorandum, pp. 62-78).
As to petitioners' claim that the signature of Ricardo in the 1952 deed
of sale in favor of Lancero was forged without Ricardo's knowledge of
such fact (Rollo, p. 71) it will be observed that the deed of sale in
question was executed with all the legal formalities of a public
document. The 1952 deed was duly acknowledged by both parties
before the notary public, yet petitioners did not bother to rebut the
legal presumption of the regularity of the notarized document (Dy v.
Sacay, 165 SCRA 473 [1988]); Nuguid v. C.A., G.R. No. 77423, March 13,
1989). In fact it has long been settled that a public document executed
and attested through the intervention of the notary public is evidence
of the facts in clear, unequivocal manner therein expressed. It has the
presumption of regularity and to contradict all these, evidence must be
clear, convincing and more than merely preponderant (Rebuleda v.
I.A.C., 155 SCRA 520-521 [1987]). Forgery cannot be presumed, it must
be proven (Siasat v. IAC, No. 67889, October 10, 1985). Likewise,
petitioners allegation of absence of consideration of the deed was not
substantiated. Under Art. 1354 of the Civil Code, consideration is
presumed unless the contrary is proven.
As to petitioners' contention that Lancero had recognized the fatal
defect of the 1952 deed when he signed the document in 1968 entitled
"Settlement to Avoid Litigation" (Rollo, p. 71), it is a basic rule of
evidence that the right of a party cannot be prejudiced by an act,
declaration, or omission of another (Sec. 28. Rule 130, Rules of Court).
This particular rule is embodied in the maxim "res inter alios acta alteri
nocere non debet." Under Section 31, Rule 130, Rules of Court "where
one derives title to property from another, the act, declaration, or
omission of the latter, while holding the title, in relation to the property
is evidence against the former." It is however stressed that the
admission of the former owner of a property must have been made
while he was the owner thereof in order that such admission may be
binding upon the present owner (City of Manila v. del Rosario, 5 Phil.
227 [1905]; Medel v. Avecilla, 15 Phil. 465 [1910]). Hence, Lanceros'
declaration or acts of executing the 1968 document have no binding
effect on DELCOR, the ownership of the land having passed to DELCOR
in 1964.
Petitioners' claim that they remained in the property, notwithstanding
the alleged sale by Ricardo to Lancero (Rollo, p. 71) involves a question
of fact already raised and passed upon by both the trial and appellate
courts. Said the Court of Appeals:
Contrary to the allegations of the appellants, the
trial court found that Luis Lancero had taken
possession of the land upon proper investigation by
plaintiff the latter learned that it was indeed Luis
Lancero who was the owner and possessor of Lot
2476 D. . . . (Decision, C.A., p. 6).
As a finding of fact, it is binding upon this Court (De Gola-Sison v.
Manalo, 8 SCRA 595 [1963]; Gaduco vs. C.A., 14 SCRA 282 [1965];
Ramos v. Pepsi-Cola, 19 SCRA 289 [1967]; Tan v. C.A., 20 SCRA 54
[1967]; Ramirez Tel. Co. v. Bank of America, 33 SCRA 737 [1970]; Lucero
v. Loot, 25 SCRA 687 [1968]; Guerrero v. C.A., 142 SCRA 130 [1986]).
Suffice it to say that the other flaws claimed by the petitioners which
allegedly invalidated the 1952 deed of sale have not been raised before
the trial court nor before the appellate court. It is settled jurisprudence
that an issue which was neither averred in the complaint nor raised
during the trial in the court below cannot be raised for the first time on
appeal as it would be offensive to the basic rules of fair play, justice and
due process. (Matienzo v. Servidad, 107 SCRA 276 [1981]; Dela Santa v.
C.A., 140 SCRA 44 [1985]; Dihiansan v. C.A., 157 SCRA 434 [1987];
Anchuelo v. IAC, 147 SCRA 434 [1987]; Dulos Realty and Development
Page 6 of 30

Corporation v. C.A., 157 SCRA [1988]; Kamos v. IAC, G.R. No. 78282, July
5, 1989).
Petitioners aver that the 1/2 share of interest of Teodorica (mother of
Ricardo) in Lot 2476 under OCT No. 7610 was not included in the deed
of sale as it was intended to limit solely to Ricardos' proportionate
share out of the undivided 1/2 of the area pertaining to the six (6)
brothers and sisters listed in the Title and that the Deed did not include
the share of Ricardo, as inheritance from Teodorica, because the Deed
did not recite that she was deceased at the time it was executed (Rollo,
pp. 67-68).
The hereditary share in a decedents' estate is transmitted or vested
immediately from the moment of the death of the "causante" or
predecessor in interest (Civil Code of the Philippines, Art. 777), and
there is no legal bar to a successor (with requisite contracting capacity)
disposing of his hereditary share immediately after such death, even if
the actual extent of such share is not determined until the subsequent
liquidation of the estate (De Borja v. Vda. de Borja, 46 SCRA 577
[1972]).
Teodorica Babangha died long before World War II, hence, the rights to
the succession were transmitted from the moment of her death. It is
therefore incorrect to state that it was only in 1966, the date of
extrajudicial partition, when Ricardo received his share in the lot as
inheritance from his mother Teodorica. Thus, when Ricardo sold his
share over lot 2476 that share which he inherited from Teodorica was
also included unless expressly excluded in the deed of sale.
Petitioners contend that Ricardo's share from Teodorica was excluded
in the sale considering that a paragraph of the aforementioned deed
refers merely to the shares of Ricardo and Eustaquio (Rollo, p. 67-68).
It is well settled that laws and contracts shall be so construed as to
harmonize and give effect to the different provisions thereof
(Reparations Commission v. Northern Lines, Inc., 34 SCRA 203 [1970]),
to ascertain the meaning of the provisions of a contract, its entirety
must be taken into account (Ruiz v. Sheriff of Manila, 34 SCRA 83
[1970]). The interpretation insisted upon by the petitioners,
by citing only one paragraph of the deed of sale, would not only create
contradictions but also, render meaningless and set at naught the
entire provisions thereof.
Petitioners claim that DELCOR's action is barred by laches considering
that the petitioners have remained in the actual, open, uninterrupted
and adverse possession thereof until at present (Rollo, p. 17).
An instrument notarized by a notary public as in the case at bar is a
public instrument (Eacnio v. Baens, 5 Phil. 742). The execution of a
public instrument is equivalent to the delivery of the thing (Art. 1498,
1st Par., Civil Code) and is deemed legal delivery. Hence, its execution
was considered a sufficient delivery of the property (Buencamino v.
Viceo, 13 Phil. 97; [1906]; Puato v. Mendoza, 64 Phil. 457 [1937]; Vda.
de Sarmiento v. Lesaca, 108 Phil. 900 [1960]; Phil. Suburban
Development Corp. v. Auditor Gen., 63 SCRA 397 (1975]).
Besides, the property sold is a registered land. It is the act of
registration that transfers the ownership of the land sold. (GSIS v. C.A.,
G.R. No. 42278, January 20, 1989). If the property is a registered land,
the purchaser in good, faith has a right to rely on the certificate of title
and is under no duty to go behind it to look for flaws (Mallorca v. De
Ocampo, No. L-26852, March 25, 1970; Unchuan v. C.A., 161 SCRA 710
[1988]; Nuguid v. CA-G.R. No. 77427, March 13, 1989).
Under the established principles of land registration law, the person
dealing with registered land may generally rely on the correctness of its
certificate of title and the law will in no way oblige him to go behind the
certificate to determine the condition of the property (Tiongco v. de la
Merced, L-2446, July 25, 1974; Lopez vs. CA., G.R. No. 49739, January
20, 1989; Davao Grains Inc. vs. IAC, 171 SCRA 612 [1989]). This
notwithstanding, DELCOR did more than that. It did not only rely on the
certificate of title. The Court of Appeals found that it had first
investigated and checked the title (T.C.T. No. T-1183) in the name of
Luis Lancero. It likewise inquired into the Subdivision Plan, the
corresponding technical description and the deed of sale executed by
Ricardo Gevero in favor of Luis Lancero and found everything in order.
It even went to the premises and found Luis Lancero to be in possession
of the land to the exclusion of any other person. DELCOR had therefore
acted in good faith in purchasing the land in question.
Consequently, DELCOR's action is not barred by laches.
The main issues having been disposed of, discussion of the other issues
appear unnecessary.
PREMISES CONSIDERED, the instant petition is hereby DISMISSED and
the decision of the Court of Appeals is hereby AFFIRMED.
SO ORDERED.
Melencio-Herrera (Chairman), Padilla and Regalado, JJ., concur.
Sarmiento, J., is on leave.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 89783 February 19, 1992
MARIANO B. LOCSIN, JULIAN J. LOCSIN, JOSE B. LOCSIN, AUREA B.
LOCSIN, MATILDE L. CORDERO, SALVADOR B. LOCSIN and MANUEL V.
DEL ROSARIO, petitioners,
vs.
THE HON. COURT OF APPEALS, JOSE JAUCIAN, FLORENTINO JAUCIAN,
MERCEDES JAUCIAN ARBOLEDA, HEIRS OF JOSEFINA J. BORJA, HEIRS
OF EDUARDO JAUCIAN and HEIRS OF VICENTE JAUCIAN,respondents.
Aytona Law Office and Siquia Law Offices for petitioners.
Mabella, Sangil & Associates for private respondents.

NARVASA, C.J.:
Reversal of the decision of the Court of Appeals in CA-G.R. No. CV-
11186 affirming with modification the judgment of the Regional Trial
Court of Albay in favor of the plaintiffs in Civil Case No. 7152 entitled
"Jose Jaucian, et al. v. Mariano B. Locsin, et al.," an action for recovery
of real property with damages is sought. in these proceedings
initiated by petition for review on certiorari in accordance with Rule 45
of the Rules of Court.
The petition was initially denied due course and dismissed by this Court.
It was however reinstated upon a second motion for reconsideration
filed by the petitioners, and the respondents were required to
comment thereon. The petition was thereafter given due course and
the parties were directed to submit their memorandums. These,
together with the evidence, having been carefully considered, the Court
now decides the case.
Page 7 of 30

First, the facts as the Court sees them in light of the evidence on record:
The late Getulio Locsin had three children named Mariano, Julian and
Magdalena, all surnamed Locsin. He owned extensive residential and
agricultural properties in the provinces of Albay and Sorsogon. After his
death, his estate was divided among his three (3) children as follows:
(a) the coconut lands of some 700 hectares in Bual, Pilar, Sorsogon,
were adjudicated to his daughter, Magdalena Locsin;
(b) 106 hectares of coconut lands were given to Julian Locsin, father of
the petitioners Julian, Mariano, Jose, Salvador, Matilde, and Aurea, all
surnamed Locsin;
(c) more than forty (40) hectares of coconut lands in Bogtong, eighteen
(18) hectares of riceland in Daraga, and the residential lots in Daraga,
Albay and in Legazpi City went to his son Mariano, which Mariano
brought into his marriage to Catalina Jaucian in 1908. Catalina, for her
part, brought into the marriage untitled properties which she had
inherited from her parents, Balbino Jaucian and Simona Anson. These
were augmented by other properties acquired by the spouses in the
course of their union,
1
which however was not blessed with children.
Eventually, the properties of Mariano and Catalina were brought under
the Torrens System. Those that Mariano inherited from his father,
Getulio Locsin, were surveyed cadastrally and registered in the name of
"Mariano Locsin, married to Catalina Jaucian.''
2

Mariano Locsin executed a Last Will and Testament instituting his wife,
Catalina, as the sole and universal heir of all his properties.
3
The will
was drawn up by his wife's nephew and trusted legal adviser, Attorney
Salvador Lorayes. Attorney Lorayes disclosed that the spouses being
childless, they had agreed that their properties, after both of them shall
have died should revert to their respective sides of the
family, i.e., Mariano's properties would go to his "Locsin relatives"
(i.e.,brothers and sisters or nephews and nieces), and those of Catalina
to her "Jaucian relatives."
4

Don Mariano Locsin died of cancer on September 14, 1948 after a
lingering illness. In due time, his will was probated in Special
Proceedings No. 138, CFI of Albay without any opposition from both
sides of the family. As directed in his will, Doa Catalina was appointed
executrix of his estate. Her lawyer in the probate proceeding was
Attorney Lorayes. In the inventory of her husband's estate
5
which she
submitted to the probate court for approval,
6
Catalina declared that "all
items mentioned from Nos. 1 to 33 are the private properties of the
deceased and form part of his capital at the time of the marriage with
the surviving spouse, while items Nos. 34 to 42 are conjugal."
7

Among her own and Don Mariano's relatives, Doa Catalina was closest
to her nephew, Attorney Salvador Lorayes, her nieces, Elena Jaucian,
Maria Lorayes-Cornelio and Maria Olbes-Velasco, and the husbands of
the last two: Hostilio Cornelio and Fernando Velasco. 8 Her trust in
Hostilio Cornelio was such that she made him custodian of all the titles
of her properties; and before she disposed of any of them, she
unfailingly consulted her lawyer-nephew, Attorney Salvador Lorayes. It
was Atty. Lorayes who prepared the legal documents and, more often
than not, the witnesses to the transactions were her niece Elena
Jaucian, Maria Lorayes-Cornelio, Maria Olbes-Velasco, or their
husbands. Her niece, Elena Jaucian, was her life-long companion in her
house.
Don Mariano relied on Doa Catalina to carry out the terms of their
compact, hence, nine (9) years after his death, as if in obedience to his
voice from the grave, and fully cognizant that she was also advancing in
years, Doa Catalina began transferring, by sale, donation or
assignment, Don Mariano's as well as her own, properties to their
respective nephews and nieces. She made the following sales and
donation of properties which she had received from her husband's
estate, to his Locsin nephews and nieces:
EXHIBIT DATE PARTICULARS AREA/SQ.M. PRICE WITNESSES
23 Jan. 26, 1957 Deed of Absolute Sale in 962 P 481
favor of Mariano Locsin
1-JRL Apr. 7, 1966 Deed of Sale in favor of 430,203 P 20,000
Jose R. Locsin
1-JJL Mar. 22, 1967 Deed of Sale in favor of 5,000 P 1,000 Hostilio
Cornello
Julian Locsin (Lot 2020) Helen M. Jaucian
1 Nov. 29, 1974 Deed of Donation in 26,509
favor Aurea Locsin,
Matilde L. Cordero
and Salvador Locsin
2 Feb. 4, 1975 Deed of Donation in 34,045
favor Aurea Locsin,
Matilde L. Cordero
and Salvador Locsin
3 Sept. 9, 1975 Deed of Donation in (Lot 2059)
favor Aurea Locsin,
Matilde L. Cordero
and Salvador Locsin
4 July 15, 1974 Deed of Absolute Sale in 1,424 Hostilio Cornelio
favor of Aurea B. Locsin Fernando Velasco
5 July 15, 1974 Deed of Absolute Sale in 1,456 P 5,750 Hostilio Cornelio
favor of Aurea B. Locsin Elena Jaucian
6 July 15, 1974 Deed of Absolute Sale in 1,237 P 5,720 - ditto -
favor of Aurea B. Locsin
7 July 15, 1974 Deed of Absolute Sale in 1,404 P 4,050 - ditto -
favor of Aurea B. Locsin
15 Nov. 26, 1975 Deed of Sale in favor of 261 P 4,930 - ditto -
Aurea Locsin
16 Oct. 17, 1975 Deed of Sale in favor of 533 P 2,000 Delfina Anson
Aurea Locsin M. Acabado
17 Nov. 26, 1975 Deed of Sale in favor of 373 P 1,000 Leonor Satuito
Aurea Locsin Mariano B. Locsin
19 Sept. 1, 1975 Conditional Donation in 1,130 P 3,000 - ditto -
favor of Mariano Locsin
1-MVRJ Dec. 29, 1972 Deed of Reconveyance 1,5110.66 P 1,000 Delfina
Anson
in favor of Manuel V. del (Lot 2155) Antonio Illegible
Rosario whose maternal
grandfather was Getulio
Locsin
2-MVRJ June 30, 1973 Deed of Reconveyance 319.34 P 500 Antonio
Illegible
in favor of Manuel V. del (Lot 2155) Salvador Nical
Rosario but the rentals
from bigger portion of
Page 8 of 30

Lot 2155 leased to Filoil
Refinery were assigned to
Maria Jaucian Lorayes
Cornelio
Of her own properties, Doa Catalina conveyed the following to her
own nephews and nieces and others:
EXHIBIT DATE PARTICULARS AREA/SQ.M. PRICE
2-JJL July 16, 1964 Deed of Sale in favor 5,000 P 1,000
Vicente Jaucian (lot 2020)
(6,825 sqm. when
resurveyed)
24 Feb. 12, 1973 Deed of Absolute Sale 100 P 1,000
in favor of Francisco M.
Maquiniana
26 July 15, 1973 Deed of Absolute Sale in 130 P 1,300
favor of Francisco
Maquiniana
27 May 3, 1973 Deed of Absolute Sale in 100 P 1,000
favor of Ireneo Mamia
28 May 3, 1973 Deed of Absolute Sale in 75 P 750
favor of Zenaida Buiza
29 May 3, 1973 Deed of Absolute Sale in 150 P 1,500
favor of Felisa Morjella
30 Apr. 3, 1973 Deed of Absolute Sale in 31 P 1,000
favor of Inocentes Motocinos
31 Feb. 12, 1973 Deed of Absolute Sale in 150 P 1,500
favor of Casimiro Mondevil
32 Mar. 1, 1973 Deed of Absolute Sale in 112 P 1,200
favor of Juan Saballa
25 Dec. 28, 1973 Deed of Absolute Sale in 250 P 2,500
of Rogelio Marticio
Doa Catalina died on July 6, 1977.
Four years before her death, she had made a will on October 22, 1973
affirming and ratifying the transfers she had made during her lifetime in
favor of her husband's, and her own, relatives. After the reading of her
will, all the relatives agreed that there was no need to submit it to the
court for probate because the properties devised to them under the will
had already been conveyed to them by the deceased when she was still
alive, except some legacies which the executor of her will or estate,
Attorney Salvador Lorayes, proceeded to distribute.
In 1989, or six (6) years after Doa Catalina's demise, some of her
Jaucian nephews and nieces who had already received their legacies
and hereditary shares from her estate, filed action in the Regional Trial
Court of Legaspi City (Branch VIII, Civil Case No. 7152) to recover the
properties which she had conveyed to the Locsins during her lifetime,
alleging that the conveyances were inofficious, without consideration,
and intended solely to circumvent the laws on succession. Those who
were closest to Doa Catalina did not join the action.
After the trial, judgment was rendered on July 8, l985 in favor of the
plaintiffs (Jaucian), and against the Locsin defendants, the dispositive
part of which reads:
WHEREFORE, this Court renders judgment for the
plaintiffs and against the defendants:
(1) declaring the, plaintiffs, except the heirs of
Josefina J. Borja and Eduardo Jaucian, who
withdrew, the rightful heirs and entitled to the
entire estate, in equal portions, of Catalina Jaucian
Vda. de Locsin, being the nearest collateral heirs by
right of representation of Juan and Gregorio, both
surnamed Jaucian, and full-blood brothers of
Catalina;
(2) declaring the deeds of sale, donations,
reconveyance and exchange and all other
instruments conveying any part of the estate of
Catalina J. Vda. de Locsin including, but not limited
to those in the inventory of known properties
(Annex B of the complaint) as null and void ab-initio;
(3) ordering the Register of Deeds of Albay and/or
Legazpi City to cancel all certificates of title and
other transfers of the real properties, subject of this
case, in the name of defendants, and derivatives
therefrom, and issue new ones to the plaintiffs;
(4) ordering the defendants, jointly and severally, to
reconvey ownership and possession of all such
properties to the plaintiffs, together with all
muniments of title properly endorsed and delivered,
and all the fruits and incomes received by the
defendants from the estate of Catalina, with legal
interest from the filing of this action; and where
reconveyance and delivery cannot be effected for
reasons that might have intervened and prevent the
same, defendants shall pay for the value of such
properties, fruits and incomes received by them,
also with legal interest from the filing, of this case
(5) ordering each of the defendants to pay the
plaintiffs the amount of P30,000.00 as exemplary
damages; and the further sum of P20,000.00 each
as moral damages; and
(6) ordering the defendants to pay the plaintiffs
attorney's fees and litigation expenses, in the
amount of P30,000.00 without prejudice to any
contract between plaintiffs and counsel.
Costs against the defendants.
9

The Locsins appealed to the Court of Appeals (CA-G.R. No. CV-11186)
which rendered its now appealed judgment on March 14, 1989,
affirming the trial court's decision.
The petition has merit and should be granted.
The trial court and the Court of Appeals erred in declaring the private
respondents, nephews and nieces of Doa Catalina J. Vda. de Locsin,
entitled to inherit the properties which she had already disposed of
more than ten (10) years before her death. For those properties did not
form part of her hereditary estate, i.e., "the property and transmissible
rights and obligations existing at the time of (the decedent's) death and
those which have accrued thereto since the opening of the
succession."
10
The rights to a person's succession are transmitted from
the moment of his death, and do not vest in his heirs until such
time.
11
Property which Doa Catalina had transferred or conveyed to
other persons during her lifetime no longer formed part of her estate at
the time of her death to which her heirs may lay claim. Had she died
Page 9 of 30

intestate, only the property that remained in her estate at the time of
her death devolved to her legal heirs; and even if those transfers were,
one and all, treated as donations, the right arising under certain
circumstances to impugn and compel the reduction or revocation of a
decedent's gifts inter vivos does not inure to the respondents since
neither they nor the donees are compulsory (or forced) heirs.
12

There is thus no basis for assuming an intention on the part of Doa
Catalina, in transferring the properties she had received from her late
husband to his nephews and nieces, an intent to circumvent the law in
violation of the private respondents' rights to her succession. Said
respondents are not her compulsory heirs, and it is not pretended that
she had any such, hence there were no legitimes that could conceivably
be impaired by any transfer of her property during her lifetime. All that
the respondents had was an expectancy that in nowise restricted her
freedom to dispose of even her entire estate subject only to the
limitation set forth in Art. 750, Civil Code which, even if it were
breached, the respondents may not invoke:
Art. 750. The donation may comprehend all the
present property of the donor or part thereof,
provided he reserves, in full ownership or in
usufruct, sufficient means for the support of
himself, and of all relatives who, at the time of the
acceptance of the donation, are by law entitled to
be supported by the donor. Without such
reservation, the donation shall be reduced on
petition of any person affected. (634a)
The lower court capitalized on the fact that Doa Catalina was already
90 years old when she died on July 6, 1977. It insinuated that because
of her advanced years she may have been imposed upon, or unduly
influenced and morally pressured by her husband's nephews and nieces
(the petitioners) to transfer to them the properties which she had
inherited from Don Mariano's estate. The records do not support that
conjecture.
For as early as 1957, or twenty-eight (28) years before her death, Doa
Catalina had already begun transferring to her Locsin nephews and
nieces the properties which she received from Don Mariano. She sold a
962-sq.m. lot on January 26, 1957 to his nephew and namesake
Mariano Locsin II.
13
On April 7, 1966, or 19 years before she passed
away, she also sold a 43 hectare land to another Locsin nephew, Jose R.
Locsin.
14
The next year, or on March 22, 1967, she sold a 5,000-sq.m.
portion of Lot 2020 to Julian Locsin.
15

On March 27, 1967, Lot 2020
16
was partitioned by and among Doa
Catalina, Julian Locsin, Vicente Jaucian and Agapito Lorete.
17
At least
Vicente Jaucian, among the other respondents in this case, is estopped
from assailing the genuineness and due execution of the sale of
portions of Lot 2020 to himself, Julian Locsin, and Agapito Lorete, and
the partition agreement that he (Vicente) concluded with the other co-
owners of Lot 2020.
Among Doa, Catalina's last transactions before she died in 1977 were
the sales of property which she made in favor of Aurea Locsin and
Mariano Locsin in 1975.
18

There is not the slightest suggestion in the record that Doa Catalina
was mentally incompetent when she made those dispositions. Indeed,
how can any such suggestion be made in light of the fact that even as
she was transferring properties to the Locsins, she was also
contemporaneously disposing of her other properties in favor of the
Jaucians? She sold to her nephew, Vicente Jaucian, on July 16, 1964 (21
years before her death) one-half (or 5,000 sq.m.) of Lot 2020. Three
years later, or on March 22, 1967, she sold another 5000 sq.m. of the
same lot to Julian Locsin.
19

From 1972 to 1973 she made several other transfers of her properties
to her relatives and other persons, namely: Francisco Maquiniana,
Ireneo Mamia, Zenaida Buiza, Feliza Morjella, Inocentes Motocinos,
Casimiro Mondevil, Juan Saballa and Rogelio Marticio.
20
None of those
transactions was impugned by the private respondents.
In 1975, or two years before her death, Doa Catalina sold some lots
not only to Don Mariano's niece, Aurea Locsin, and his nephew,
Mariano Locsin
II,
21
but also to her niece, Mercedes Jaucian Arboleda.
22
If she was
competent to make that conveyance to Mercedes, how can there be
any doubt that she was equally competent to transfer her other pieces
of property to Aurea and Mariano II?
The trial court's belief that Don Mariano Locsin bequeathed his entire
estate to his wife, from a "consciousness of its real origin" which carries
the implication that said estate consisted of properties which his wife
had inherited from her parents, flies in the teeth of Doa Catalina's
admission in her inventory of that estate, that "items 1 to 33 are the
private properties of the deceased (Don Mariano) and forms (sic) part
of his capital at the time of the marriage with the surviving spouse,
while items 34 to 42 are conjugal properties, acquired during the
marriage." She would have known better than anyone else whether the
listing included any of her paraphernal property so it is safe to assume
that none was in fact included. The inventory was signed by her under
oath, and was approved by the probate court in Special Proceeding No.
138 of the Court of First Instance of Albay. It was prepared with the
assistance of her own nephew and counsel, Atty. Salvador Lorayes, who
surely would not have prepared a false inventory that would have been
prejudicial to his aunt's interest and to his own, since he stood to
inherit from her eventually.
This Court finds no reason to disbelieve Attorney Lorayes' testimony
that before Don Mariano died, he and his wife (Doa Catalina), being
childless, had agreed that their respective properties should eventually
revert to their respective lineal relatives. As the trusted legal adviser of
the spouses and a full-blood nephew of Doa Catalina, he would not
have spun a tale out of thin air that would also prejudice his own
interest.
Little significance, it seems, has been attached to the fact that among
Doa Catalina's nephews and nieces, those closest to her: (a) her
lawyer-nephew Attorney Salvador Lorayes; (b) her niece and
companion Elena Jaucian: (c) her nieces Maria Olbes-Velasco and Maria
Lorayes-Cornelio and their respective husbands, Fernando Velasco and
Hostilio Cornelio, did not join the suit to annul and undo the dispositions
of property which she made in favor of the Locsins, although it would
have been to their advantage to do so. Their desistance persuasively
demonstrates that Doa Catalina acted as a completely free agent
when she made the conveyances in favor of the petitioners. In fact,
considering their closeness to Doa Catalina it would have been well-
nigh impossible for the petitioners to employ "fraud, undue pressure,
and subtle manipulations" on her to make her sell or donate her
properties to them. Doa Catalina's niece, Elena Jaucian, daughter of
her brother, Eduardo Jaucian, lived with her in her house. Her nephew-
in-law, Hostilio Cornelio, was the custodian of the titles of her
properties. The sales and donations which she signed in favor of the
petitioners were prepared by her trusted legal adviser and nephew,
Attorney Salvador Lorayes. The (1) deed of donation dated November
19,
1974
23
in favor of Aurea Locsin, (2) another deed of donation dated
February 4, 1975
24
in favor of Matilde Cordero, and (3) still another
deed dated September 9, 1975
25
in favor of Salvador Lorayes, were all
witnessed by Hostilio Cornelio (who is married to Doa Catalina's niece,
Maria Lorayes) and Fernando Velasco who is married to another niece,
Maria Olbes.
26
The sales which she made in favor of Aurea Locsin on
July 15, 1974
27
were witnessed by Hostilio Cornelio and Elena Jaucian.
Given those circumstances, said transactions could not have been
anything but free and voluntary acts on her part.
Page 10 of 30

Apart from the foregoing considerations, the trial court and the Court of
Appeals erred in not dismissing this action for annulment and
reconveyance on the ground of prescription. Commenced decades after
the transactions had been consummated, and six (6) years after Doa
Catalina's death, it prescribed four (4) years after the subject
transactions were recorded in the Registry of Property,
28
whether
considered an action based on fraud, or one to redress an injury to the
rights of the plaintiffs. The private respondents may not feign ignorance
of said transactions because the registration of the deeds was
constructive notice thereof to them and the whole world.
29

WHEREFORE, the petition for review is granted. The decision dated
March 14, 1989 of the Court of Appeals in CA-G.R. CV No. 11186 is
REVERSED and SET ASIDE. The private respondents' complaint for
annulment of contracts and reconveyance of properties in Civil Case No.
7152 of the Regional Trial Court, Branch VIII of Legazpi City, is
DISMISSED, with costs against the private respondents, plaintiffs
therein.
SO ORDERED.
Cruz, Grio-Aquino and Medialdea, JJ., concur.

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

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;
Page 11 of 30

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
Page 12 of 30

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.
B-979 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,
Page 13 of 30

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.
14
Petitioner, therefore, became
the owner of her hereditary share the moment her father died. Thus,
the lack of judicial approval does not invalidate the Contract to Sell,
because the petitioner has the substantive right to sell the whole or a
part of her share in the estate of her late father.
15
Thus, in Jakosalem
vs. Rafols,
16
the Court resolved an identical issue under the old Civil
Code and held:
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.
Davide, Jr., Bellosillo, Vitug and Quisumbing, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
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:
Page 14 of 30

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,
8
arguing that the trial court did not
acquire jurisdiction over the case due to the plaintiffs' failure to pay the
proper docket fees. Further, in a supplement to his motion to
dismiss,
9
petitioner also raised prescription as an additional ground
warranting the outright dismissal of the complaint.
On June 15, 1995, the trial court issued an Order,
10
denying the motion
to dismiss inasmuch as the grounds raised therein were basically the
same as the earlier motion to dismiss which has been denied. Anent the
issue of prescription, the trial court ruled that prescription begins to run
only upon the dissolution of the partnership when the final accounting
is done. Hence, prescription has not set in the absence of a final
accounting. Moreover, an action based on a written contract prescribes
in ten years from the time the right of action accrues.
Petitioner filed a petition for certiorari before the Court of
Appeals,
11
raising the following issues:
I. Whether or not respondent Judge acted without
jurisdiction or with grave abuse of discretion in taking
cognizance of a case despite the failure to pay the required
docket fee;
II. Whether or not respondent Judge acted without
jurisdiction or with grave abuse of discretion in insisting to try
the case which involve (sic) a parcel of land situated outside
of its territorial jurisdiction;
III. Whether or not respondent Judge acted without
jurisdiction or with grave abuse of discretion in allowing the
estate of the deceased to appear as party plaintiff, when
there is no intestate case and filed by one who was never
appointed by the court as administratrix of the estates; and
IV. Whether or not respondent Judge acted without
jurisdiction or with grave abuse of discretion in not dismissing
the case on the ground of prescription.
On August 8, 1996, the Court of Appeals rendered the assailed
decision,
12
dismissing the petition for certiorari, upon a finding that no
grave abuse of discretion amounting to lack or excess of jurisdiction
was committed by the trial court in issuing the questioned orders
denying petitioner's motions to dismiss.
Not satisfied, petitioner filed the instant petition for review, raising the
same issues resolved by the Court of Appeals, namely:
I. Failure to pay the proper docket fee;
II. Parcel of land subject of the case pending before the
trial court is outside the said court's territorial jurisdiction;
III. Lack of capacity to sue on the part of plaintiff heirs of
Vicente Tabanao; and
IV. Prescription of the plaintiff heirs' cause of action.
It can be readily seen that respondents' primary and ultimate objective
in instituting the action below was to recover the decedent's 1/3 share
in the partnership' s assets. While they ask for an accounting of the
partnership' s assets and finances, what they are actually asking is for
the trial court to compel petitioner to pay and turn over their share, or
the equivalent value thereof, from the proceeds of the sale of the
partnership assets. They also assert that until and unless a proper
accounting is done, the exact value of the partnership' s assets, as well
as their corresponding share therein, cannot be ascertained.
Consequently, they feel justified in not having paid the commensurate
docket fee as required by the Rules of Court.1wphi1.nt
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.
Page 15 of 30

Petitioner, however, argues that the trial court and the Court of Appeals
erred in condoning the non-payment of the proper legal fees and in
allowing the same to become a lien on the monetary or property
judgment that may be rendered in favor of respondents. There is merit
in petitioner's assertion. The third paragraph of Section 16, Rule 141 of
the Rules of Court states that:
The legal fees shall be a lien on the monetary or property
judgment in favor of the pauper-litigant.
Respondents cannot invoke the above provision in their favor because
it specifically applies to pauper-litigants. Nowhere in the records does it
appear that respondents are litigating as paupers, and as such are
exempted from the payment of court fees.
18

The rule applicable to the case at bar is Section 5(a) of Rule 141 of the
Rules of Court, which defines the two kinds of claims as: (1) those which
are immediately ascertainable; and (2) those which cannot be
immediately ascertained as to the exact amount. This second class of
claims, where the exact amount still has to be finally determined by the
courts based on evidence presented, falls squarely under the third
paragraph of said Section 5(a), which provides:
In case the value of the property or estate or the sum claimed
is less or more in accordance with the appraisal of the court,
the difference of fee shall be refunded or paid as the case
may be. (Underscoring ours)
In Pilipinas Shell Petroleum Corporation v. Court of Appeals,
19
this Court
pronounced that the above-quoted provision "clearly contemplates an
Initial payment of the filing fees corresponding to the estimated
amount of the claim subject to adjustment as to what later may be
proved."
20
Moreover, we reiterated therein the principle that the
payment of filing fees cannot be made contingent or dependent on the
result of the case. Thus, an initial payment of the docket fees based on
an estimated amount must be paid simultaneous with the filing of the
complaint. Otherwise, the court would stand to lose the filing fees
should the judgment later turn out to be adverse to any claim of the
respondent heirs.
The matter of payment of docket fees is not a mere triviality. These fees
are necessary to defray court expenses in the handling of cases.
Consequently, in order to avoid tremendous losses to the judiciary, and
to the government as well, the payment of docket fees cannot be made
dependent on the outcome of the case, except when the claimant is a
pauper-litigant.
Applied to the instant case, respondents have a specific claim - 1/3 of
the value of all the partnership assets - but they did not allege a specific
amount. They did, however, estimate the partnership's total assets to
be worth Thirty Million Pesos (P30,000,000.00), in a letter
21
addressed
to petitioner. Respondents cannot now say that they are unable to
make an estimate, for the said letter and the admissions therein form
part of the records of this case. They cannot avoid paying the initial
docket fees by conveniently omitting the said amount in their amended
complaint. This estimate can be made the basis for the initial docket
fees that respondents should pay. Even if it were later established that
the amount proved was less or more than the amount alleged or
estimated, Rule 141, Section 5(a) of the Rules of Court specifically
provides that the court may refund the 'excess or exact additional fees
should the initial payment be insufficient. It is clear that it is only the
difference between the amount finally awarded and the fees paid upon
filing of this complaint that is subject to adjustment and which may be
subjected to 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
Page 16 of 30

that the parcels of land involved in this case are being disputed. In fact,
it is only incidental that part of the assets of the partnership under
liquidation happen to be parcels of land.
The time-tested case of Claridades v. Mercader, et al.,
28
settled this
issue thus:
The fact that plaintiff prays for the sale of the assets of the
partnership, including the fishpond in question, did not
change the nature or character of the action, such sale being
merely a necessary incident of the liquidation of the
partnership, which should precede and/or is part of its
process of dissolution.
The action filed by respondents not only seeks redress against
petitioner. It also seeks the enforcement of, and petitioner's
compliance with, the contract that the partners executed to formalize
the partnership's dissolution, as well as to implement the liquidation
and partition of the partnership's assets. Clearly, it is a personal action
that, in effect, claims a debt from petitioner and seeks the performance
of a personal duty on his part.
29
In fine, respondents' complaint seeking
the liquidation and partition of the assets of the partnership with
damages is a personal action which may be filed in the proper court
where any of the parties reside.
30
Besides, venue has nothing to do with
jurisdiction for venue touches more upon the substance or merits of the
case.
31
As it is, venue in this case was properly laid and the trial court
correctly ruled so.
On the third issue, petitioner asserts that the surviving spouse of
Vicente Tabanao has no legal capacity to sue since she was never
appointed as administratrix or executrix of his estate. Petitioner's
objection in this regard is misplaced. The surviving spouse does not
need to be appointed as executrix or administratrix of the estate before
she can file the action. She and her children are complainants in their
own right as successors of Vicente Tabanao. From the very moment of
Vicente Tabanao' s death, his rights insofar as the partnership was
concerned were transmitted to his heirs, for rights to the succession are
transmitted from the moment of death of the decedent.32
Whatever claims and rights Vicente Tabanao had against the
partnership and petitioner were transmitted to respondents by
operation of law, more particularly by succession, which is a mode of
acquisition by virtue of which the property, rights and obligations to the
extent of the value of the inheritance of a person are
transmitted.
33
Moreover, respondents became owners of their
respective hereditary shares from the moment Vicente Tabanao died.
34

A prior settlement of the estate, or even the appointment of Salvacion
Tabanao as executrix or administratrix, is not necessary for any of the
heirs to acquire legal capacity to sue. As successors who stepped into
the shoes of their decedent upon his death, they can commence any
action originally pertaining to the decedent.
35
From the moment of his
death, his rights as a partner and to demand fulfillment of petitioner's
obligations as outlined in their dissolution agreement were transmitted
to respondents. They, therefore, had the capacity to sue and seek the
court's intervention to compel petitioner to fulfill his obligations.
Finally, petitioner contends that the trial court should have dismissed
the complaint on the ground of prescription, arguing that respondents'
action prescribed four (4) years after it accrued in 1986. The trial court
and the Court of Appeals gave scant consideration to petitioner's
hollow arguments, and rightly so.
The three (3) final stages of a partnership are: (1) dissolution; (2)
winding-up; and (3) termination.
36
The partnership, although dissolved,
continues to exist and its legal personality is retained, at which time it
completes the winding up of its affairs, including the partitioning and
distribution of the net partnership assets to the partners.
37
For as long
as the partnership exists, any of the partners may demand an
accounting of the partnership's business. Prescription of the said right
starts to run only upon the dissolution of the partnership when the final
accounting is done.
38

Contrary to petitioner's protestations that respondents' right to inquire
into the business affairs of the partnership accrued in 1986, prescribing
four (4) years thereafter, prescription had not even begun to run in the
absence of a final accounting. Article 1842 of the Civil Code provides:
The right to an account of his interest shall accrue to any
partner, or his legal representative as against the winding up
partners or the surviving partners or the person or
partnership continuing the business, at the date of
dissolution, in the absence of any agreement to the contrary.
Applied in relation to Articles 1807 and 1809, which also deal with the
duty to account, the above-cited provision states that the right to
demand an accounting accrues at the date of dissolution in the absence
of any agreement to the contrary. When a final accounting is made, it is
only then that prescription begins to run. In the case at bar, no final
accounting has been made, and that is precisely what respondents are
seeking in their action before the trial court, since petitioner has failed
or refused to render an accounting of the partnership's business and
assets. Hence, the said action is not barred by prescription.
In fine, the trial court neither erred nor abused its discretion when it
denied petitioner's motions to dismiss. Likewise, the Court of Appeals
did not commit reversible error in upholding the trial court's orders.
Precious time has been lost just to settle this preliminary issue, with
petitioner resurrecting the very same arguments from the trial court all
the way up to the Supreme Court. The litigation of the merits and
substantial issues of this controversy is now long overdue and must
proceed without further delay.
WHEREFORE, in view of all the foregoing, the instant petition
is DENIED for lack of merit, and the case isREMANDED to the Regional
Trial Court of Cadiz City, Branch 60, which is ORDERED to determine the
proper docket fee based on the estimated amount that plaintiffs
therein seek to collect, and direct said plaintiffs to pay the same within
a reasonable time, provided the applicable prescriptive or reglementary
period has not yet expired. Thereafter, the trial court is ORDERED to
conduct the appropriate proceedings in Civil Case No. 416-C.
Costs against petitioner.1wphi1.nt
SO ORDERED.
Davide, Jr., C.J., Puno, Kapunan, Pardo, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 113725 June 29, 2000
JOHNNY S. RABADILLA,
1
petitioner,
vs.
COURT OF APPEALS AND MARIA MARLENA
2
COSCOLUELLA Y BELLEZA
VILLACARLOS, respondents.
D E C I S I O N
PURISIMA, J.:
This is a petition for review of the decision of the Court of
Appeals,
3
dated December 23, 1993, in CA-G.R. No. CV-35555, which set
aside the decision of Branch 52 of the Regional Trial Court in Bacolod
Page 17 of 30

City, and ordered the defendants-appellees (including herein
petitioner), as heirs of Dr. Jorge Rabadilla, to reconvey title over Lot No.
1392, together with its fruits and interests, to the estate of Aleja
Belleza.
The antecedent facts are as follows:
In a Codicil appended to the Last Will and Testament of testatrix Aleja
Belleza, Dr. Jorge Rabadilla, predecessor-in-interest of the herein
petitioner, Johnny S. Rabadilla, was instituted as a devisee of 511, 855
square meters of that parcel of land surveyed as Lot No. 1392 of the
Bacolod Cadastre. The said Codicil, which was duly probated and
admitted in Special Proceedings No. 4046 before the then Court of First
Instance of Negros Occidental, contained the following provisions:
"FIRST
I give, leave and bequeath the following property owned by me to Dr.
Jorge Rabadilla resident of 141 P. Villanueva, Pasay City:
(a) Lot No. 1392 of the Bacolod Cadastre, covered by Transfer
Certificate of Title No. RT-4002 (10942), which is registered in
my name according to the records of the Register of Deeds of
Negros Occidental.
(b) That should Jorge Rabadilla die ahead of me, the
aforementioned property and the rights which I shall set forth
hereinbelow, shall be inherited and acknowledged by the
children and spouse of Jorge Rabadilla.
xxx
FOURTH
(a)....It is also my command, in this my addition (Codicil), that should I
die and Jorge Rabadilla shall have already received the ownership of the
said Lot No. 1392 of the Bacolod Cadastre, covered by Transfer
Certificate of Title No. RT-4002 (10942), and also at the time that the
lease of Balbinito G. Guanzon of the said lot shall expire, Jorge Rabadilla
shall have the obligation until he dies, every year to give to Maria
Marlina Coscolluela y Belleza, Seventy (75) (sic) piculs of Export sugar
and Twenty Five (25) piculs of Domestic sugar, until the said Maria
Marlina Coscolluela y Belleza dies.
FIFTH
(a) Should Jorge Rabadilla die, his heir to whom he shall give Lot No.
1392 of the Bacolod Cadastre, covered by Transfer Certificate of Title
No. RT-4002 (10492), shall have the obligation to still give yearly, the
sugar as specified in the Fourth paragraph of his testament, to Maria
Marlina Coscolluela y Belleza on the month of December of each year.
SIXTH
I command, in this my addition (Codicil) that the Lot No. 1392, in the
event that the one to whom I have left and bequeathed, and his heir
shall later sell, lease, mortgage this said Lot, the buyer, lessee,
mortgagee, shall have also the obligation to respect and deliver yearly
ONE HUNDRED (100) piculs of sugar to Maria Marlina Coscolluela y
Belleza, on each month of December, SEVENTY FIVE (75) piculs of
Export and TWENTY FIVE (25) piculs of Domestic, until Maria Marlina
shall die, lastly should the buyer, lessee or the mortgagee of this lot, not
have respected my command in this my addition (Codicil), Maria
Marlina Coscolluela y Belleza, shall immediately seize this Lot No. 1392
from my heir and the latter's heirs, and shall turn it over to my near
desendants, (sic) and the latter shall then have the obligation to give
the ONE HUNDRED (100) piculs of sugar until Maria Marlina shall die. I
further command in this my addition (Codicil) that my heir and his heirs
of this Lot No. 1392, that they will obey and follow that should they
decide to sell, lease, mortgage, they cannot negotiate with others than
my near descendants and my sister."
4

Pursuant to the same Codicil, Lot No. 1392 was transferred to the
deceased, Dr. Jorge Rabadilla, and Transfer Certificate of Title No.
44498 thereto issued in his name.
Dr. Jorge Rabadilla died in 1983 and was survived by his wife Rufina and
children Johnny (petitioner), Aurora, Ofelia and Zenaida, all surnamed
Rabadilla.
On August 21, 1989, Maria Marlena Coscolluela y Belleza Villacarlos
brought a complaint, docketed as Civil Case No. 5588, before Branch 52
of the Regional Trial Court in Bacolod City, against the above-mentioned
heirs of Dr. Jorge Rabadilla, to enforce the provisions of subject Codicil.
The Complaint alleged that the defendant-heirs violated the conditions
of the Codicil, in that:
1. Lot No. 1392 was mortgaged to the Philippine National
Bank and the Republic Planters Bank in disregard of the
testatrix's specific instruction to sell, lease, or mortgage only
to the near descendants and sister of the testatrix.
2. Defendant-heirs failed to comply with their obligation to
deliver one hundred (100) piculs of sugar (75 piculs export
sugar and 25 piculs domestic sugar) to plaintiff Maria Marlena
Coscolluela y Belleza from sugar crop years 1985 up to the
filing of the complaint as mandated by the Codicil, despite
repeated demands for compliance.
3. The banks failed to comply with the 6th paragraph of the
Codicil which provided that in case of the sale, lease, or
mortgage of the property, the buyer, lessee, or mortgagee
shall likewise have the obligation to deliver 100 piculs of sugar
per crop year to herein private respondent.
The plaintiff then prayed that judgment be rendered ordering
defendant-heirs to reconvey/return-Lot No. 1392 to the surviving heirs
of the late Aleja Belleza, the cancellation of TCT No. 44498 in the name
of the deceased, Dr. Jorge Rabadilla, and the issuance of a new
certificate of title in the names of the surviving heirs of the late Aleja
Belleza.
On February 26, 1990, the defendant-heirs were declared in default but
on March 28, 1990 the Order of Default was lifted, with respect to
defendant Johnny S. Rabadilla, who filed his Answer, accordingly.
During the pre-trial, the parties admitted that:
On November 15, 1998, the plaintiff (private respondent) and a certain
Alan Azurin, son-in-law of the herein petitioner who was lessee of the
property and acting as attorney-in-fact of defendant-heirs, arrived at an
amicable settlement and entered into a Memorandum of Agreement on
the obligation to deliver one hundred piculs of sugar, to the following
effect:
"That for crop year 1988-89, the annuity mentioned in Entry No. 49074
of TCT No. 44489 will be delivered not later than January of 1989, more
specifically, to wit:
75 piculs of 'A' sugar, and 25 piculs of 'B' sugar, or then existing in any
of our names, Mary Rose Rabadilla y Azurin or Alan Azurin, during
December of each sugar crop year, in Azucar Sugar Central; and, this is
considered compliance of the annuity as mentioned, and in the same
manner will compliance of the annuity be in the next succeeding crop
years.
Page 18 of 30

That the annuity above stated for crop year 1985-86, 1986-87, and
1987-88, will be complied in cash equivalent of the number of piculs as
mentioned therein and which is as herein agreed upon, taking into
consideration the composite price of sugar during each sugar crop year,
which is in the total amount of ONE HUNDRED FIVE THOUSAND PESOS
(P105,000.00).
That the above-mentioned amount will be paid or delivered on a
staggered cash installment, payable on or before the end of December
of every sugar crop year, to wit:
For 1985-86, TWENTY SIX THOUSAND TWO HUNDRED FIFTY
(P26,250.00) Pesos, payable on or before December of crop year 1988-
89;
For 1986-87, TWENTY SIX THOUSAND TWO HUNDRED FIFTY
(P26,250.00) Pesos, payable on or before December of crop year 1989-
90;
For 1987-88, TWENTY SIX THOUSAND TWO HUNDRED FIFTY
(P26,250.00) Pesos, payable on or before December of crop year 1990-
91; and
For 1988-89, TWENTY SIX THOUSAND TWO HUNDRED FIFTY
(P26,250.00) Pesos, payable on or before December of crop year 1991-
92."
5

However, there was no compliance with the aforesaid Memorandum of
Agreement except for a partial delivery of 50.80 piculs of sugar
corresponding to sugar crop year 1988 -1989.
On July 22, 1991, the Regional Trial Court came out with a decision,
dismissing the complaint and disposing as follows:
"WHEREFORE, in the light of the aforegoing findings, the Court finds
that the action is prematurely filed as no cause of action against the
defendants has as yet arose in favor of plaintiff. While there maybe the
non-performance of the command as mandated exaction from them
simply because they are the children of Jorge Rabadilla, the title
holder/owner of the lot in question, does not warrant the filing of the
present complaint. The remedy at bar must fall. Incidentally, being in
the category as creditor of the left estate, it is opined that plaintiff may
initiate the intestate proceedings, if only to establish the heirs of Jorge
Rabadilla and in order to give full meaning and semblance to her claim
under the Codicil.
In the light of the aforegoing findings, the Complaint being prematurely
filed is DISMISSED without prejudice.
SO ORDERED."
6

On appeal by plaintiff, the First Division of the Court of Appeals
reversed the decision of the trial court; ratiocinating and ordering thus:
"Therefore, the evidence on record having established plaintiff-
appellant's right to receive 100 piculs of sugar annually out of the
produce of Lot No. 1392; defendants-appellee's obligation under Aleja
Belleza's codicil, as heirs of the modal heir, Jorge Rabadilla, to deliver
such amount of sugar to plaintiff-appellant; defendants-appellee's
admitted non-compliance with said obligation since 1985; and, the
punitive consequences enjoined by both the codicil and the Civil Code,
of seizure of Lot No. 1392 and its reversion to the estate of Aleja Belleza
in case of such non-compliance, this Court deems it proper to order the
reconveyance of title over Lot No. 1392 from the estates of Jorge
Rabadilla to the estate of Aleja Belleza. However, plaintiff-appellant
must institute separate proceedings to re-open Aleja Belleza's estate,
secure the appointment of an administrator, and distribute Lot No.
1392 to Aleja Belleza's legal heirs in order to enforce her right, reserved
to her by the codicil, to receive her legacy of 100 piculs of sugar per
year out of the produce of Lot No. 1392 until she dies.
Accordingly, the decision appealed from is SET ASIDE and another one
entered ordering defendants-appellees, as heirs of Jorge Rabadilla, to
reconvey title over Lot No. 1392, together with its fruits and interests,
to the estate of Aleja Belleza.
SO ORDERED."
7

Dissatisfied with the aforesaid disposition by the Court of Appeals,
petitioner found his way to this Court via the present petition,
contending that the Court of Appeals erred in ordering the reversion of
Lot 1392 to the estate of the testatrix Aleja Belleza on the basis of
paragraph 6 of the Codicil, and in ruling that the testamentary
institution of Dr. Jorge Rabadilla is a modal institution within the
purview of Article 882 of the New Civil Code.
The petition is not impressed with merit.
Petitioner contends that the Court of Appeals erred in resolving the
appeal in accordance with Article 882 of the New Civil Code on modal
institutions and in deviating from the sole issue raised which is the
absence or prematurity of the cause of action. Petitioner maintains that
Article 882 does not find application as there was no modal institution
and the testatrix intended a mere simple substitution - i.e. the
instituted heir, Dr. Jorge Rabadilla, was to be substituted by the
testatrix's "near descendants" should the obligation to deliver the fruits
to herein private respondent be not complied with. And since the
testatrix died single and without issue, there can be no valid
substitution and such testamentary provision cannot be given any
effect.
The petitioner theorizes further that there can be no valid substitution
for the reason that the substituted heirs are not definite, as the
substituted heirs are merely referred to as "near descendants" without
a definite identity or reference as to who are the "near descendants"
and therefore, under Articles 843
8
and 845
9
of the New Civil Code, the
substitution should be deemed as not written.
The contentions of petitioner are untenable. Contrary to his supposition
that the Court of Appeals deviated from the issue posed before it,
which was the propriety of the dismissal of the complaint on the ground
of prematurity of cause of action, there was no such deviation. The
Court of Appeals found that the private respondent had a cause of
action against the petitioner. The disquisition made on modal
institution was, precisely, to stress that the private respondent had a
legally demandable right against the petitioner pursuant to subject
Codicil; on which issue the Court of Appeals ruled in accordance with
law.
It is a general rule under the law on succession that successional rights
are transmitted from the moment of death of the decedent
10
and
compulsory heirs are called to succeed by operation of law. The
legitimate children and descendants, in relation to their legitimate
parents, and the widow or widower, are compulsory heirs.
11
Thus, the
petitioner, his mother and sisters, as compulsory heirs of the instituted
heir, Dr. Jorge Rabadilla, succeeded the latter by operation of law,
without need of further proceedings, and the successional rights were
transmitted to them from the moment of death of the decedent, Dr.
Jorge Rabadilla.
Under Article 776 of the New Civil Code, inheritance includes all the
property, rights and obligations of a person, not extinguished by his
death. Conformably, whatever rights Dr. Jorge Rabadilla had by virtue
of subject Codicil were transmitted to his forced heirs, at the time of his
death. And since obligations not extinguished by death also form part of
the estate of the decedent; corollarily, the obligations imposed by the
Page 19 of 30

Codicil on the deceased Dr. Jorge Rabadilla, were likewise transmitted
to his compulsory heirs upon his death.
In the said Codicil, testatrix Aleja Belleza devised Lot No. 1392 to Dr.
Jorge Rabadilla, subject to the condition that the usufruct thereof
would be delivered to the herein private respondent every year. Upon
the death of Dr. Jorge Rabadilla, his compulsory heirs succeeded to his
rights and title over the said property, and they also assumed his
(decedent's) obligation to deliver the fruits of the lot involved to herein
private respondent. Such obligation of the instituted heir reciprocally
corresponds to the right of private respondent over the usufruct, the
fulfillment or performance of which is now being demanded by the
latter through the institution of the case at bar. Therefore, private
respondent has a cause of action against petitioner and the trial court
erred in dismissing the complaint below.
Petitioner also theorizes that Article 882 of the New Civil Code on
modal institutions is not applicable because what the testatrix intended
was a substitution - Dr. Jorge Rabadilla was to be substituted by the
testatrix's near descendants should there be noncompliance with the
obligation to deliver the piculs of sugar to private respondent.
Again, the contention is without merit.
Substitution is the designation by the testator of a person or persons to
take the place of the heir or heirs first instituted. Under substitutions in
general, the testator may either (1) provide for the designation of
another heir to whom the property shall pass in case the original heir
should die before him/her, renounce the inheritance or be
incapacitated to inherit, as in a simple substitution,
12
or (2) leave
his/her property to one person with the express charge that it be
transmitted subsequently to another or others, as in a fideicommissary
substitution.
13
The Codicil sued upon contemplates neither of the two.
In simple substitutions, the second heir takes the inheritance in default
of the first heir by reason of incapacity, predecease or renunciation.
14
In
the case under consideration, the provisions of subject Codicil do not
provide that should Dr. Jorge Rabadilla default due to predecease,
incapacity or renunciation, the testatrix's near descendants would
substitute him. What the Codicil provides is that, should Dr. Jorge
Rabadilla or his heirs not fulfill the conditions imposed in the Codicil,
the property referred to shall be seized and turned over to the
testatrix's near descendants.
Neither is there a fideicommissary substitution here and on this point,
petitioner is correct. In a fideicommissary substitution, the first heir is
strictly mandated to preserve the property and to transmit the same
later to the second heir.
15
In the case under consideration, the
instituted heir is in fact allowed under the Codicil to alienate the
property provided the negotiation is with the near descendants or the
sister of the testatrix. Thus, a very important element of a
fideicommissary substitution is lacking; the obligation clearly imposing
upon the first heir the preservation of the property and its transmission
to the second heir. "Without this obligation to preserve clearly imposed
by the testator in his will, there is no fideicommissary
substitution."
16
Also, the near descendants' right to inherit from the
testatrix is not definite. The property will only pass to them should Dr.
Jorge Rabadilla or his heirs not fulfill the obligation to deliver part of the
usufruct to private respondent.
Another important element of a fideicommissary substitution is also
missing here. Under Article 863, the second heir or the fideicommissary
to whom the property is transmitted must not be beyond one degree
from the first heir or the fiduciary. A fideicommissary substitution is
therefore, void if the first heir is not related by first degree to the
second heir.
17
In the case under scrutiny, the near descendants are not
at all related to the instituted heir, Dr. Jorge Rabadilla.
The Court of Appeals erred not in ruling that the institution of Dr. Jorge
Rabadilla under subject Codicil is in the nature of a modal institution
and therefore, Article 882 of the New Civil Code is the provision of law
in point. Articles 882 and 883 of the New Civil Code provide:
Art. 882. The statement of the object of the institution or the
application of the property left by the testator, or the charge imposed
on him, shall not be considered as a condition unless it appears that
such was his intention.
That which has been left in this manner may be claimed at once
provided that the instituted heir or his heirs give security for
compliance with the wishes of the testator and for the return of
anything he or they may receive, together with its fruits and interests, if
he or they should disregard this obligation.
Art. 883. When without the fault of the heir, an institution referred to in
the preceding article cannot take effect in the exact manner stated by
the testator, it shall be complied with in a manner most analogous to
and in conformity with his wishes.
The institution of an heir in the manner prescribed in Article 882 is what
is known in the law of succession as aninstitucion sub modo or a modal
institution. In a modal institution, the testator states (1) the object of
the institution, (2) the purpose or application of the property left by the
testator, or (3) the charge imposed by the testator upon the heir.
18
A
"mode" imposes an obligation upon the heir or legatee but it does not
affect the efficacy of his rights to the succession.
19
On the other hand,
in a conditional testamentary disposition, the condition must happen or
be fulfilled in order for the heir to be entitled to succeed the testator.
The condition suspends but does not obligate; and the mode obligates
but does not suspend.
20
To some extent, it is similar to a resolutory
condition.
21

From the provisions of the Codicil litigated upon, it can be gleaned
unerringly that the testatrix intended that subject property be inherited
by Dr. Jorge Rabadilla. It is likewise clearly worded that the testatrix
imposed an obligation on the said instituted heir and his successors-in-
interest to deliver one hundred piculs of sugar to the herein private
respondent, Marlena Coscolluela Belleza, during the lifetime of the
latter. However, the testatrix did not make Dr. Jorge Rabadilla's
inheritance and the effectivity of his institution as a devisee, dependent
on the performance of the said obligation. It is clear, though, that
should the obligation be not complied with, the property shall be
turned over to the testatrix's near descendants. The manner of
institution of Dr. Jorge Rabadilla under subject Codicil is evidently
modal in nature because it imposes a charge upon the instituted heir
without, however, affecting the efficacy of such institution.
Then too, since testamentary dispositions are generally acts of
liberality, an obligation imposed upon the heir should not be considered
a condition unless it clearly appears from the Will itself that such was
the intention of the testator. In case of doubt, the institution should be
considered as modal and not conditional.
22

Neither is there tenability in the other contention of petitioner that the
private respondent has only a right of usufruct but not the right to seize
the property itself from the instituted heir because the right to seize
was expressly limited to violations by the buyer, lessee or mortgagee.
In the interpretation of Wills, when an uncertainty arises on the face of
the Will, as to the application of any of its provisions, the testator's
intention is to be ascertained from the words of the Will, taking into
consideration the circumstances under which it was made.
23
Such
construction as will sustain and uphold the Will in all its parts must be
adopted.
24

Subject Codicil provides that the instituted heir is under obligation to
deliver One Hundred (100) piculs of sugar yearly to Marlena Belleza
Coscuella. Such obligation is imposed on the instituted heir, Dr. Jorge
Page 20 of 30

Rabadilla, his heirs, and their buyer, lessee, or mortgagee should they
sell, lease, mortgage or otherwise negotiate the property involved. The
Codicil further provides that in the event that the obligation to deliver
the sugar is not respected, Marlena Belleza Coscuella shall seize the
property and turn it over to the testatrix's near descendants. The non-
performance of the said obligation is thus with the sanction of seizure
of the property and reversion thereof to the testatrix's near
descendants. Since the said obligation is clearly imposed by the
testatrix, not only on the instituted heir but also on his successors-in-
interest, the sanction imposed by the testatrix in case of non-fulfillment
of said obligation should equally apply to the instituted heir and his
successors-in-interest.
Similarly unsustainable is petitioner's submission that by virtue of the
amicable settlement, the said obligation imposed by the Codicil has
been assumed by the lessee, and whatever obligation petitioner had
become the obligation of the lessee; that petitioner is deemed to have
made a substantial and constructive compliance of his obligation
through the consummated settlement between the lessee and the
private respondent, and having consummated a settlement with the
petitioner, the recourse of the private respondent is the fulfillment of
the obligation under the amicable settlement and not the seizure of
subject property.
Suffice it to state that a Will is a personal, solemn, revocable and free
act by which a person disposes of his property, to take effect after his
death.
25
Since the Will expresses the manner in which a person intends
how his properties be disposed, the wishes and desires of the testator
must be strictly followed. Thus, a Will cannot be the subject of a
compromise agreement which would thereby defeat the very purpose
of making a Will.
WHEREFORE, the petition is hereby DISMISSED and the decision of the
Court of Appeals, dated December 23, 1993, in CA-G.R. No. CV-35555
AFFIRMED. No pronouncement as to costs
SO ORDERED.
Melo, J., (Chairman), concur in the separate opinion of Justice Vitug.
Vitug, J., see separate opinion.
Panganiban, J., join the separate opinion of Justice Vitug.
Gonzaga-Reyes, J., no part.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 104482 January 22, 1996
BELINDA TAEDO, for herself and in representation of her brothers
and sisters, and TEOFILA CORPUZ TAEDO, representing her minor
daughter VERNA TAEDO, petitioners,
vs.
THE COURT OF APPEALS, SPOUSES RICARDO M. TAEDO AND
TERESITA BARERA TAEDO, respondents.
D E C I S I O N
PANGANIBAN, J.:
Is a sale of future inheritance valid? In multiple sales of the same real
property, who has preference in ownership? What is the probative
value of the lower court's finding of good faith in registration of such
sales in the registry of property? These are the main questions raised in
this Petition for review on certiorari under Rule 45 of the Rules of Court
to set aside and reverse the Decision
1
of the Court of Appeals
2
in CA-
G.R. CV NO. 24987 promulgated on September 26, 1991 affirming the
decision of the Regional Trial Court, Branch 63, Third Judicial Region,
Tarlac, Tarlac in Civil Case No. 6328, and its Resolution denying
reconsideration thereof, promulgated on May 27, 1992.
By the Court's Resolution on October 25, 1995, this case (along with
several others) was transferred from the First to the Third Division and
after due deliberation, the Court assigned it to the
undersigned ponente for the writing of this Decision.
The Facts
On October 20, 1962, Lazardo Taedo executed a notarized deed of
absolute sale in favor of his eldest brother, Ricardo Taedo, and the
latter's wife, Teresita Barera, private respondents herein, whereby he
conveyed to the latter in consideration of P1,500.00, "one hectare of
whatever share I shall have over Lot No. 191 of the cadastral survey of
Gerona, Province of Tarlac and covered by Title T-13829 of the Register
of Deeds of Tarlac", the said property being his "future inheritance"
from his parents (Exh. 1). Upon the death of his father Matias, Lazaro
executed an "Affidavit of Conformity" dated February 28, 1980 (Exh. 3)
to "re-affirm, respect, acknowledge and validate the sale I made in
1962." On January 13, 1981, Lazaro executed another notarized deed of
sale in favor of private respondents covering his "undivided ONE
TWELVE (1/12) of a parcel of land known as Lot 191 . . . " (Exh. 4). He
acknowledged therein his receipt of P10,000.00 as consideration
therefor. In February 1981, Ricardo learned that Lazaro sold the same
property to his children, petitioners herein, through a deed of sale
dated December 29, 1980 (Exh. E). On June 7, 1982, private
respondents recorded the Deed of Sale (Exh. 4) in their favor in the
Registry of Deeds and the corresponding entry was made in Transfer
Certificate of Title No. 166451 (Exh. 5).
Petitioners on July 16, 1982 filed a complaint for rescission (plus
damages) of the deeds of sale executed by Lazaro in favor of private
respondents covering the property inherited by Lazaro from his father.
Petitioners claimed that their father, Lazaro, executed an "Absolute
Deed of Sale" dated December 29, 1980 (Exit. E). Conveying to his ten
children his allotted portion tinder the extrajudicial partition executed
by the heirs of Matias, which deed included the land in litigation (Lot
191).
Petitioners also presented in evidence: (1) a private writing purportedly
prepared and signed by Matias dated December 28, 1978, stating that it
was his desire that whatever inheritance Lazaro would receive from him
should be given to his (Lazaro's) children (Exh. A); (2) a typewritten
document dated March 10, 1979 signed by Lazaro in the presence of
two witnesses, wherein he confirmed that he would voluntarily abide
by the wishes of his father, Matias, to give to his (Lazaro's) children all
the property he would inherit from the latter (Exh. B); and (3) a letter
dated January 1, 1980 of Lazaro to his daughter, Carmela, stating that
his share in the extrajudicial settlement of the estate of his father was
intended for his children, petitioners herein (Exh. C).
Private respondents, however presented in evidence a "Deed of
Revocation of a Deed of Sale" dated March 12, 1981 (Exh. 6), wherein
Lazaro revoked the sale in favor of petitioners for the reason that it was
"simulated or fictitious without any consideration whatsoever".
Shortly after the case a quo was filed, Lazaro executed a sworn
statement (Exh. G) which virtually repudiated the contents of the Deed
of Revocation of a Deed of Sale (Exh. 6) and the Deed of Sale (Exh. 4) in
favor of private respondents. However, Lazaro testified that he sold the
property to Ricardo, and that it was a lawyer who induced him to
execute a deed of sale in favor of his children after giving him five pesos
(P5.00) to buy a "drink" (TSN September 18, 1985, pp. 204-205).
The trial court decided in favor of private respondents, holding that
petitioners failed "to adduce a proponderance of evidence to support
Page 21 of 30

(their) claim." On appeal, the Court of Appeals affirmed the decision of
the trial court, ruling that the Deed of Sale dated January 13, 1981 (Exh.
9) was valid and that its registration in good faith vested title in said
respondents.
The Issues
Petitioners raised the following "errors" in the respondent Court, which
they also now allege in the instant Petition:
I. The trial court erred in concluding that the Contract of Sale
of October 20, 1962 (Exhibit 7, Answer) is merely voidable or
annulable and not void ab initio pursuant to paragraph 2 of
Article 1347 of the New Civil Code involving as it does a
"future inheritance".
II. The trial court erred in holding that defendants-appellees
acted in good faith in registering the deed of sale of January
13, 1981 (Exhibit 9) with the Register of Deeds of Tarlac and
therefore ownership of the land in question passed on to
defendants-appellees.
III. The trial court erred in ignoring and failing to consider the
testimonial and documentary evidence of plaintiffs-appellants
which clearly established by preponderance of evidence that
they are indeed the legitimate and lawful owners of the
property in question.
IV. The decision is contrary to law and the facts of the case
and the conclusions drawn from the established facts are
illogical and off-tangent.
From the foregoing, the issues may be restated as follows:
1. Is the sale of a future inheritance valid?
2. Was the subsequent execution on January 13, 1981 (and
registration with the Registry of Property) of a deed of sale
covering the same property to the same buyers valid?
3. May this Court review the findings of the respondent Court
(a) holding that the buyers acted in good faith in registering
the said subsequent deed of sale and (b) in "failing to consider
petitioners' evidence"? Are the conclusions of the respondent
Court "illogical and off-tangent"?
The Court's Ruling
At the outset, let it be clear that the "errors" which are reviewable by
this Court in this petition for review oncertiorari are only those
allegedly committed by the respondent Court of Appeals and not
directly those of the trial court, which is not a party here. The
"assignment of errors" in the petition quoted above are therefore
totally misplaced, and for that reason, the petition should be dismissed.
But in order to give the parties substantial justice we have decided to
delve into the issues as above re-stated. The errors attributed by
petitioners to the latter (trial) court will be discussed only insofar as
they are relevant to the appellate court's assailed Decision and
Resolution.
The sale made in 1962 involving future inheritance is not really at issue
here. In context, the assailed Decision conceded "it may be legally
correct that a contract of sale of anticipated future inheritance is null
and void."
3

But to remove all doubts, we hereby categorically rule that, pursuant to
Article 1347 of the Civil Code, "(n)o contract may be entered into upon
a future inheritance except in cases expressly authorized by law."
Consequently, said contract made in 1962 is not valid and cannot be the
source of any right nor the creator of any obligation between the
parties.
Hence, the "affidavit of conformity" dated February 28, 1980, insofar as
it sought to validate or ratify the 1962 sale, is also useless and, in the
words of the respondent Court, "suffers from the same infirmity." Even
private respondents in their memorandum
4
concede this.
However, the documents that are critical to the resolution of this case
are: (a) the deed of sale of January 13, 1981 in favor of private
respondents covering Lazaro's undivided inheritance of one-twelfth
(1/12) share in Lot No. 191, which was subsequently registered on June
7, 1982; and (b) the deed of sale dated December 29, 1980 in favor of
petitioners covering the same property. These two documents were
executed after the death of Matias (and his spouse) and after a deed of
extra-judicial settlement of his (Matias') estate was executed, thus
vesting in Lazaro actual title over said property. In other words, these
dispositions, though conflicting, were no longer infected with the
infirmities of the 1962 sale.
Petitioners contend that what was sold on January 13, 1981 was only
one-half hectare out of Lot No. 191, citing as authority the trial court's
decision. As earlier pointed out, what is on review in these proceedings
by this Court is the Court of Appeals' decision which correctly
identified the subject matter of the January 13, 1981 sale to be the
entire undivided 1/12 share of Lazaro in Lot No. 191 and which is the
same property disposed of on December 29, 1980 in favor of
petitioners.
Critical in determining which of these two deeds should be given effect
is the registration of the sale in favor of private respondents with the
register of deeds on June 7, 1982.
Article 1544 of the Civil Code governs the preferential rights of vendees
in cases of multiple sales, as follows:
Art. 1544. If the same thing should have been sold to different
vendees, the ownership shall be transferred to the person
who may have first taken possession thereof in good faith, if it
should be movable property.
Should it be immovable property, the ownership shall belong
to the person acquiring it who in good faith first recorded it in
the Registry of Property.
Should there be no inscription, the ownership shall pertain to
the person who in good faith was first in the possession; and,
in the absence thereof, to the person who presents the oldest
title, provided there is good faith.
The property in question is land, an immovable, and following the
above-quoted law, ownership shall belong to the buyer who in good
faith registers it first in the registry of property. Thus, although the deed
of sale in favor of private respondents was later than the one in favor of
petitioners, ownership would vest in the former because of the
undisputed fact of registration. On the other hand, petitioners have not
registered the sale to them at all.
Petitioners contend that they were in possession of the property and
that private respondents never took possession thereof. As between
two purchasers, the one who registered the sale in his favor has a
preferred right over the other who has not registered his title, even if
the latter is in actual possession of the immovable property.
5

As to third issue, while petitioners conceded the fact of registration,
they nevertheless contended that it was done in bad faith. On this
issue, the respondent Court ruled;
Page 22 of 30

Under the second assignment of error, plaintiffs-appellants
contend that defendants-appellees acted in bad faith when
they registered the Deed of Sale in their favor as appellee
Ricardo already knew of the execution of the deed of sale in
favor of the plaintiffs; appellants cite the testimony of plaintiff
Belinda Taedo to the effect that defendant Ricardo Taedo
called her up on January 4 or 5, 1981 to tell her that he was
already the owner of the land in question "but the contract of
sale between our father and us were (sic) already
consumated" (pp. 9-10, tsn, January 6, 1984). This testimony
is obviously self-serving, and because it was a telephone
conversation, the deed of sale dated December 29, 1980 was
not shown; Belinda merely told her uncle that there was
already a document showing that plaintiffs are the owners (p.
80). Ricardo Taedo controverted this and testified that he
learned for the first time of the deed of sale executed by
Lazaro in favor of his children "about a month or sometime in
February 1981" (p. 111, tsn, Nov. 28, 1984). . . .
6

The respondent Court, reviewing the trial court's findings, refused to
overturn the latter's assessment of the testimonial evidence, as follows;
We are not prepared to set aside the finding of the lower
court upholding Ricardo Taedo's testimony, as it involves a
matter of credibility of witnesses which the trial judge, who
presided at the hearing, was in a better position to resolve.
(Court of Appeals' Decision, p. 6.)
In this connection, we note the tenacious allegations made by
petitioners, both in their basic petition and in their memorandum, as
follows:
1. The respondent Court allegedly ignored the claimed fact
that respondent Ricardo "by fraud and deceit and with
foreknowledge" that the property in question had already
been sold to petitioners, made Lazaro execute the deed of
January 13, 1981;
2. There is allegedly adequate evidence to show that only 1/2
of the purchase price of P10,000.00 was paid at the time of
the execution of the deed of sale, contrary to the written
acknowledgment, thus showing bad faith;
3. There is allegedly sufficient evidence showing that the deed
of revocation of the sale in favor of petitioners "was tainted
with fraud or deceit."
4. There is allegedly enough evidence to show that private
respondents "took undue advantage over the weakness and
unschooled and pitiful situation of Lazaro Taedo . . ." and
that respondent Ricardo Taedo "exercised moral ascendancy
over his younger brother he being the eldest brother and who
reached fourth year college of law and at one time a former
Vice-Governor of Tarlac, while his younger brother only
attained first year high school . . . ;
5. The respondent Court erred in not giving credence to
petitioners' evidence, especially Lazaro Taedo'sSinumpaang
Salaysay dated July 27, 1982 stating that Ricardo Taedo
deceived the former in executing the deed of sale in favor of
private respondents.
To be sure, there are indeed many conflicting documents and
testimonies as well as arguments over their probative value and
significance. Suffice it to say, however, that all the above contentions
involve questions of fact, appreciation of evidence and credibility of
witnesses, which are not proper in this review. It is well-settled that the
Supreme Court is not a trier of facts. In petitions for review under Rule
45 of the Revised Rules of Court, only questions of law may be raised
and passed upon. Absent any whimsical or capricious exercise of
judgment, and unless the lack of any basis for the conclusions made by
the lower courts be amply demonstrated, the Supreme Court will not
disturb their findings. At most, it appears that petitioners have shown
that their evidence was not believed by both the trial and the appellate
courts, and that the said courts tended to give more credence to the
evidence presented by private respondents. But this in itself is not a
reason for setting aside such findings. We are far from convinced that
both courts gravely abused their respective authorities and judicial
prerogatives.
As held in the recent case of Chua Tiong Tay vs. Court of Appeals and
Goldrock Construction and Development Corp.
7

The Court has consistently held that the factual findings of the trial
court, as well as the Court of Appeals, are final and conclusive and may
not be reviewed on appeal. Among the exceptional circumstances
where a reassessment of facts found by the lower courts is allowed are
when the conclusion is a finding grounded entirely on speculation,
surmises or conjectures; when the inference made is manifestly absurd,
mistaken or impossible; when there is grave abuse of discretion in the
appreciation of facts; when the judgment is premised on a
misapprehension of facts; when the findings went beyond the issues of
the case and the same are contrary to the admissions of both appellant
and appellee. After a careful study of the case at bench, we find none of
the above grounds present to justify the re-evaluation of the findings of
fact made by the courts below.
In the same vein, the ruling in the recent case of South Sea Surety and
Insurance Company, Inc. vs. Hon. Court of Appeals, et al.
8
is equally
applicable to the present case:
We see no valid reason to discard the factual conclusions of
the appellate court. . . . (I)t is not the function of this Court to
assess and evaluate all over again the evidence, testimonial
and documentary, adduced by the parties, particularly where,
such as here, the findings of both the trial court and the
appellate court on the matter coincide. (emphasis supplied)
WHEREFORE, the petition is DENIED and the assailed Decision of the
Court of Appeals is AFFIRMED. No Costs.
SO ORDERED.
Narvasa, C.J., Davide, Jr., Melo and Francisco, JJ., concur.

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 169129 March 28, 2007
SPS. VIRGILIO F. SANTOS & ESPERANZA LATI SANTOS, SPS.VICTORINO
F. SANTOS, & LAGRIMAS SANTOS, ERNESTO F. SANTOS, and TADEO F.
SANTOS, Petitioners,
vs.
SPS. JOSE LUMBAO and PROSERFINA LUMBAO, Respondents.
D E C I S I O N
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of
the 1997 Revised Rules of Civil Procedure seeking to annul and set aside
Page 23 of 30

the Decision
1
and Resolution
2
of the Court of Appeals in CA-G.R. CV No.
60450 entitled, Spouses Jose Lumbao and Proserfina Lumbao v. Spouses
Virgilio F. Santos and Esperanza Lati, Spouses Victorino F. Santos and
Lagrimas F. Santos, Ernesto F. Santos and Tadeo F. Santos, dated 8 June
2005 and 29 July 2005, respectively, which granted the appeal filed by
herein respondents Spouses Jose Lumbao and Proserfina Lumbao
(Spouses Lumbao) and ordered herein petitioners Spouses Virgilio F.
Santos and Esperanza Lati, Spouses Victorino F. Santos and Lagrimas F.
Santos, Ernesto F. Santos and Tadeo F. Santos to reconvey to
respondents Spouses Lumbao the subject property and to pay the latter
attorneys fees and litigation expenses, thus, reversing the Decision
3
of
the Regional Trial Court (RTC) of Pasig City, dated 17 June 1998 which
dismissed the Complaint for Reconveyance with Damages filed by
respondents Spouses Lumbao for lack of merit.
Herein petitioners Virgilio, Victorino, Ernesto and Tadeo, all surnamed
Santos, are the legitimate and surviving heirs of the late Rita Catoc
Santos (Rita), who died on 20 October 1985. The other petitioners
Esperanza Lati and Lagrimas Santos are the daughters-in-law of Rita.
Herein respondents Spouses Jose Lumbao and Proserfina Lumbao are
the alleged owners of the 107-square meter lot (subject property),
which they purportedly bought from Rita during her lifetime.
The facts of the present case are as follows:
On two separate occasions during her lifetime, Rita sold to respondents
Spouses Lumbao the subject property which is a part of her share in the
estate of her deceased mother, Maria Catoc (Maria), who died intestate
on 19 September 1978. On the first occasion, Rita sold 100 square
meters of her inchoate share in her mothers estate through a
document denominated as "Bilihan ng Lupa," dated 17 August
1979.
4
Respondents Spouses Lumbao claimed the execution of the
aforesaid document was witnessed by petitioners Virgilio and Tadeo, as
shown by their signatures affixed therein. On the second occasion, an
additional seven square meters was added to the land as evidenced by
a document also denominated as "Bilihan ng Lupa," dated 9 January
1981.
5

After acquiring the subject property, respondents Spouses Lumbao took
actual possession thereof and erected thereon a house which they have
been occupying as exclusive owners up to the present. As the exclusive
owners of the subject property, respondents Spouses Lumbao made
several verbal demands upon Rita, during her lifetime, and thereafter
upon herein petitioners, for them to execute the necessary documents
to effect the issuance of a separate title in favor of respondents
Spouses Lumbao insofar as the subject property is concerned.
Respondents Spouses Lumbao alleged that prior to her death, Rita
informed respondent Proserfina Lumbao she could not deliver the title
to the subject property because the entire property inherited by her
and her co-heirs from Maria had not yet been partitioned.
On 2 May 1986, the Spouses Lumbao claimed that petitioners, acting
fraudulently and in conspiracy with one another, executed a Deed of
Extrajudicial Settlement,
6
adjudicating and partitioning among
themselves and the other heirs, the estate left by Maria, which included
the subject property already sold to respondents Spouses Lumbao and
now covered by TCT No. 81729
7
of the Registry of Deeds of Pasig City.
On 15 June 1992, respondents Spouses Lumbao, through counsel, sent
a formal demand letter
8
to petitioners but despite receipt of such
demand letter, petitioners still failed and refused to reconvey the
subject property to the respondents Spouses Lumbao. Consequently,
the latter filed a Complaint for Reconveyance with Damages
9
before the
RTC of Pasig City.
Petitioners filed their Answer denying the allegations that the subject
property had been sold to the respondents Spouses Lumbao. They
likewise denied that the Deed of Extrajudicial Settlement had been
fraudulently executed because the same was duly published as required
by law. On the contrary, they prayed for the dismissal of the Complaint
for lack of cause of action because respondents Spouses Lumbao failed
to comply with the Revised Katarungang Pambarangay Law under
Republic Act No. 7160, otherwise known as the Local Government Code
of 1991, which repealed Presidential Decree No. 1508
10
requiring first
resort to barangay conciliation.
Respondents Spouses Lumbao, with leave of court, amended their
Complaint because they discovered that on 16 February 1990, without
their knowledge, petitioners executed a Deed of Real Estate Mortgage
in favor of Julieta S. Esplana for the sum of P30,000.00. The said Deed of
Real Estate Mortgage was annotated at the back of TCT No. PT-81729
on 26 April 1991. Also, in answer to the allegation of the petitioners
that they failed to comply with the mandate of the Revised
Katarungang Pambarangay Law, respondents Spouses Lumbao said that
the Complaint was filed directly in court in order that prescription or
the Statute of Limitations may not set in.
During the trial, respondents Spouses Lumbao presented Proserfina
Lumbao and Carolina Morales as their witnesses, while the petitioners
presented only the testimony of petitioner Virgilio.
The trial court rendered a Decision on 17 June 1998, the dispositive
portion of which reads as follows:
Premises considered, the instant complaint is hereby denied for lack of
merit.
Considering that [petitioners] have incurred expenses in order to
protect their interest, [respondents spouses Lumbao] are hereby
directed to pay [petitioners], to wit: 1) the amount of P30,000.00 as
attorneys fees and litigation expenses, and 2) costs of the suit.
11

Aggrieved, respondents Spouses Lumbao appealed to the Court of
Appeals. On 8 June 2005, the appellate court rendered a Decision, thus:
WHEREFORE, premises considered, the present appeal is hereby
GRANTED. The appealed Decision dated June 17, 1998 of the Regional
Trial Court of Pasig City, Branch 69 in Civil Case No. 62175 is hereby
REVERSED and SET ASIDE. A new judgment is hereby entered ordering
[petitioners] to reconvey 107 square meters of the subject [property]
covered by TCT No. PT-81729 of the Registry of Deeds of Pasig City,
Metro Manila, and to pay to [respondents spouses Lumbao] the sum
of P30,000.00 for attorneys fees and litigation expenses.
No pronouncement as to costs.
12

Dissatisfied, petitioners filed a Motion for Reconsideration of the
aforesaid Decision but it was denied in the Resolution of the appellate
court dated 29 July 2005 for lack of merit.
Hence, this Petition.
The grounds relied upon by the petitioners are the following:
I. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN
REVERSING THE DECISION OF THE TRIAL COURT, THEREBY CREATING A
VARIANCE ON THE FINDINGS OF FACTS OF TWO COURTS.
II. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN
ORDERING THE PETITIONERS TO RECONVEY THE SUBJECT [PROPERTY]
TO THE RESPONDENTS [SPOUSES LUMBAO] AND IN NOT RULING THAT
THEY ARE GUILTY OF LACHES, HENCE THEY CANNOT RECOVER THE LOT
ALLEGEDLY SOLD TO THEM.
Page 24 of 30

III. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT
FINDING HEREIN PETITIONER[S] TO BE IN GOOD FAITH IN EXECUTING
THE "DEED OF EXTRAJUDICIAL SETTLEMENT" DATED [2 MAY 1986].
IV. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT
FINDING THAT PETITIONERS ARE NOT LEGALLY BOUND TO COMPLY
WITH THE SUPPOSED BILIHAN NG LUPA DATED [17 AUGUST 1979] AND
[9 JANUARY 1981] THAT WERE SUPPOSEDLY EXECUTED BY THE LATE
RITA CATOC.
V. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT
FINDING THAT RESPONDENTS [SPOUSES LUMBAOS] ACTION FOR
RECONVEYANCE WITH DAMAGES CANNOT BE SUPPORTED WITH AN
UNENFORCEABLE DOCUMENTS, SUCH AS THE BILIHAN NG LUPA DATED
[17 AUGUST 1979] AND [9 JANUARY 1981].
VI. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT
FINDING THAT RESPONDENTS [SPOUSES LUMBAOS] COMPLAINT FOR
RECONVEYANCE IS DISMISSABLE (SIC) FOR NON COMPLIANCE OF THE
MANDATE OF [P.D. NO.] 1508, AS AMENDED BY Republic Act No. 7160.
VII. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT
FINDING THAT RESPONDENTS [SPOUSES LUMBAO] SHOULD BE HELD
LIABLE FOR PETITIONERS CLAIM FOR DAMAGES AND ATTORNEY[]S
FEES.
Petitioners ask this Court to scrutinize the evidence presented in this
case, because they claim that the factual findings of the trial court and
the appellate court are conflicting. They allege that the findings of fact
by the trial court revealed that petitioners Virgilio and Tadeo did not
witness the execution of the documents known as "Bilihan ng Lupa";
hence, this finding runs counter to the conclusion made by the
appellate court. And even assuming that they were witnesses to the
aforesaid documents, still, respondents Spouses Lumbao were not
entitled to the reconveyance of the subject property because they were
guilty of laches for their failure to assert their rights for an
unreasonable length of time. Since respondents Spouses Lumbao had
slept on their rights for a period of more than 12 years reckoned from
the date of execution of the second "Bilihan ng Lupa," it would be
unjust and unfair to the petitioners if the respondents will be allowed
to recover the subject property.
Petitioners allege they are in good faith in executing the Deed of
Extrajudicial Settlement because even respondents Spouses Lumbaos
witness, Carolina Morales, testified that neither petitioner Virgilio nor
petitioner Tadeo was present during the execution of the "Bilihan ng
Lupa," dated 17 August 1979 and 9 January 1981. Petitioners affirm
that the Deed of Extrajudicial Settlement was published in a newspaper
of general circulation to give notice to all creditors of the estate subject
of partition to contest the same within the period prescribed by law.
Since no claimant appeared to interpose a claim within the period
allowed by law, a title to the subject property was then issued in favor
of the petitioners; hence, they are considered as holders in good faith
and therefore cannot be barred from entering into any subsequent
transactions involving the subject property.
Petitioners also contend that they are not bound by the documents
denominated as "Bilihan ng Lupa" because the same were null and void
for the following reasons: 1) for being falsified documents because one
of those documents made it appear that petitioners Virgilio and Tadeo
were witnesses to its execution and that they appeared personally
before the notary public, when in truth and in fact they did not; 2) the
identities of the properties in the "Bilihan ng Lupa," dated 17 August
1979 and 9 January 1981 in relation to the subject property in litigation
were not established by the evidence presented by the respondents
Spouses Lumbao; 3) the right of the respondents Spouses Lumbao to lay
their claim over the subject property had already been barred through
estoppel by laches; and 4) the respondents Spouses Lumbaos claim
over the subject property had already prescribed.
Finally, petitioners claim that the Complaint for Reconveyance with
Damages filed by respondents Spouses Lumbao was dismissible
because they failed to comply with the mandate of Presidential Decree
No. 1508, as amended by Republic Act No. 7160, particularly Section
412 of Republic Act No. 7160.
Given the foregoing, the issues presented by the petitioners may be
restated as follows:
I. Whether or not the Complaint for Reconveyance with
Damages filed by respondents spouses Lumbao is dismissible
for their failure to comply with the mandate of the Revised
Katarungang Pambarangay Law under R.A. No. 7160.
II. Whether or not the documents known as "Bilihan ng Lupa"
are valid and enforceable, thus, they can be the bases of the
respondents spouses Lumbaos action for reconveyance with
damages.
III. Whether or not herein petitioners are legally bound to
comply with the "Bilihan ng Lupa" dated 17 August 1979 and
9 January 1981 and consequently, reconvey the subject
property to herein respondents spouses Lumbao.
It is well-settled that in the exercise of the Supreme Courts power of
review, the court is not a trier of facts and does not normally undertake
the re-examination of the evidence presented by the contending parties
during the trial of the case considering that the findings of fact of the
Court of Appeals are conclusive and binding on the Court.
13
But, the
rule is not without exceptions. There are several recognized
exceptions
14
in which factual issues may be resolved by this Court. One
of these exceptions is when the findings of the appellate court are
contrary to those of the trial court. This exception is present in the case
at bar.
Going to the first issue presented in this case, it is the argument of the
petitioners that the Complaint for Reconveyance with Damages filed by
respondents Spouses Lumbao should be dismissed for failure to comply
with the barangay conciliation proceedings as mandated by the Revised
Katarungang Pambarangay Law under Republic Act No. 7160. This
argument cannot be sustained.
Section 408 of the aforesaid law and Administrative Circular No. 14-
93
15
provide that all disputes between parties actually residing in the
same city or municipality are subject to barangay conciliation. A prior
recourse thereto is a pre-condition before filing a complaint in court or
any government offices. Non-compliance with the said condition
precedent could affect the sufficiency of the plaintiffs cause of action
and make his complaint vulnerable to dismissal on ground of lack of
cause of action or prematurity; but the same would not prevent a court
of competent jurisdiction from exercising its power of adjudication over
the case before it, where the defendants failed to object to such
exercise of jurisdiction.
16

While it is true that the present case should first be referred to the
Barangay Lupon for conciliation because the parties involved herein
actually reside in the same city (Pasig City) and the dispute between
them involves a real property, hence, the said dispute should have been
brought in the city in which the real property, subject matter of the
controversy, is located, which happens to be the same city where the
contending parties reside. In the event that respondents Spouses
Lumbao failed to comply with the said condition precedent, their
Complaint for Reconveyance with Damages can be dismissed. In this
case, however, respondents Spouses Lumbaos non-compliance with
the aforesaid condition precedent cannot be considered fatal. Although
petitioners alleged in their answer that the Complaint for Reconveyance
with Damages filed by respondents spouses Lumbao should be
Page 25 of 30

dismissed for their failure to comply with the condition precedent,
which in effect, made the complaint prematurely instituted and the trial
court acquired no jurisdiction to hear the case, yet, they did not file a
Motion to Dismiss the said complaint.
Emphasis must be given to the fact that the petitioners could have
prevented the trial court from exercising jurisdiction over the case had
they filed a Motion to Dismiss. However, instead of doing so, they
invoked the very same jurisdiction by filing an answer seeking an
affirmative relief from it. Worse, petitioners actively participated in the
trial of the case by presenting their own witness and by cross-examining
the witnesses presented by the respondents Spouses Lumbao. It is
elementary that the active participation of a party in a case pending
against him before a court is tantamount to recognition of that courts
jurisdiction and a willingness to abide by the resolution of the case
which will bar said party from later on impugning the courts
jurisdiction.
17
It is also well-settled that the non-referral of a case for
barangay conciliation when so required under the law is not
jurisdictional in nature and may therefore be deemed waived if not
raised seasonably in a motion to dismiss.
18
Hence, herein petitioners
can no longer raise the defense of non-compliance with the barangay
conciliation proceedings to seek the dismissal of the complaint filed by
the respondents Spouses Lumbao, because they already waived the
said defense when they failed to file a Motion to Dismiss.
As regards the second issue, petitioners maintain that the "Bilihan ng
Lupa," dated 17 August 1979 and 9 January 1981 are null and void for
being falsified documents as it is made to appear that petitioners
Virgilio and Tadeo were present in the execution of the said documents
and that the identities of the properties in those documents in relation
to the subject property has not been established by the evidence of the
respondents Spouses Lumbao. Petitioners also claim that the
enforceability of those documents is barred by prescription of action
and laches.
It is the petitioners incessant barking that the "Bilihan ng Lupa"
documents dated 17 August 1979 and 9 January 1981 were falsified
because it was made to appear that petitioners Virgilio and Tadeo were
present in the executions thereof, and their allegation that even
respondents Spouses Lumbaos witness Carolina Morales proved that
said petitioners were not present during the execution of the
aforementioned documents. This is specious.
Upon examination of the aforesaid documents, this Court finds that in
the "Bilihan ng Lupa," dated 17 August 1979, the signatures of
petitioners Virgilio and Tadeo appeared thereon. Moreover, in
petitioners Answer and Amended Answer to the Complaint for
Reconveyance with Damages, both petitioners Virgilio and Tadeo made
an admission that indeed they acted as witnesses in the execution of
the "Bilihan ng Lupa," dated 17 August 1979.
19
However, in order to
avoid their obligations in the said "Bilihan ng Lupa," petitioner Virgilio,
in his cross-examination, denied having knowledge of the sale
transaction and claimed that he could not remember the same as well
as his appearance before the notary public due to the length of time
that had passed. Noticeably, petitioner Virgilio did not categorically
deny having signed the "Bilihan ng Lupa," dated 17 August 1979 and in
support thereof, his testimony in the cross-examination propounded by
the counsel of the respondents Spouses Lumbao is quoted hereunder:
ATTY. CHIU:
Q. Now, you said, Mr. WitnessVirgilio Santos, that you dont know
about this document which was marked as Exhibit "A" for the
[respondents spouses Lumbao]?
ATTY. BUGARING:
The question is misleading, your Honor. Counsel premised the question
that he does not have any knowledge but not that he does not know.
ATTY. CHIU:
Q. Being you are one of the witnesses of this document? [I]s it not?
WITNESS:
A. No, sir.
Q. I am showing to you this document, there is a signature at the left
hand margin of this document Virgilio Santos, will you please go over
the same and tell the court whose signature is this?
A. I dont remember, sir, because of the length of time that had passed.
Q. But that is your signature?
A. I dont have eyeglasses My signature is different.
Q. You never appeared before this notary public Apolinario Mangahas?
A. I dont remember.
20

As a general rule, facts alleged in a partys pleading are deemed
admissions of that party and are binding upon him, but this is not an
absolute and inflexible rule. An answer is a mere statement of fact
which the party filing it expects to prove, but it is not evidence.
21
And in
spite of the presence of judicial admissions in a partys pleading, the
trial court is still given leeway to consider other evidence
presented.
22
However, in the case at bar, as the Court of Appeals
mentioned in its Decision, "[herein petitioners] had not adduced any
other evidence to override the admission made in their [A]nswer that
[petitioners Virgilio and Tadeo] actually signed the [Bilihan ng Lupa
dated 17 August 1979] except that they were just misled as to the
purpose of the document, x x x."
23
Virgilios answers were unsure and
quibbled. Hence, the general rule that the admissions made by a party
in a pleading are binding and conclusive upon him applies in this case.
On the testimony of respondents Spouses Lumbaos witness Carolina
Morales, this Court adopts the findings made by the appellate court.
Thus -
[T]he trial court gave singular focus on her reply to a question during
cross-examination if the [petitioners Virgilio and Tadeo] were not with
her and the vendor [Rita] during the transaction. It must be pointed out
that earlier in the direct examination of said witness, she confirmed
that [respondents spouses Lumbao] actually bought the lot from [Rita]
("nagkabilihan"). Said witness positively identified and confirmed the
two (2) documents evidencing the sale in favor of [respondents spouse
Lumbao]. Thus, her subsequent statement that the [petitioners Virgilio
and Tadeo] were not with them during the transaction does not
automatically imply that [petitioners Virgilio and Tadeo] did not at any
time sign as witnesses as to the deed of sale attesting to their mothers
voluntary act of selling a portion of her share in her deceased mothers
property. The rule is that testimony of a witness must be considered
and calibrated in its entirety and not by truncated portions thereof or
isolated passages therein.
24

Furthermore, both "Bilihan ng Lupa" documents dated 17 August 1979
and 9 January 1981 were duly notarized before a notary public. It is
well-settled that a document acknowledged before a notary public is a
public document
25
that enjoys the presumption of regularity. It is a
prima facie evidence of the truth of the facts stated therein and a
conclusive presumption of its existence and due execution.
26
To
overcome this presumption, there must be presented evidence that is
clear and convincing. Absent such evidence, the presumption must be
upheld.
27
In addition, one who denies the due execution of a deed
Page 26 of 30

where ones signature appears has the burden of proving that contrary
to the recital in the jurat, one never appeared before the notary public
and acknowledged the deed to be a voluntary act. Nonetheless, in the
present case petitioners denials without clear and convincing evidence
to support their claim of fraud and falsity were not sufficient to
overthrow the above-mentioned presumption; hence, the authenticity,
due execution and the truth of the facts stated in the aforesaid "Bilihan
ng Lupa" are upheld.
The defense of petitioners that the identities of the properties
described in the "Bilihan ng Lupa," dated 17 August 1979 and 9 January
1981 in relation to the subject property were not established by
respondents Spouses Lumbaos evidence is likewise not acceptable.
It is noteworthy that at the time of the execution of the documents
denominated as "Bilihan ng Lupa," the entire property owned by Maria,
the mother of Rita, was not yet divided among her and her co-heirs and
so the description of the entire estate is the only description that can be
placed in the "Bilihan ng Lupa, dated 17 August 1979 and 9 January
1981" because the exact metes and bounds of the subject property sold
to respondents Spouses Lumbao could not be possibly determined at
that time. Nevertheless, that does not make the contract of sale
between Rita and respondents Spouses Lumbao invalid because both
the law and jurisprudence have categorically held that even while an
estate remains undivided, co-owners have each full ownership of their
respective aliquots or undivided shares and may therefore alienate,
assign or mortgage them.
28
The co-owner, however, has no right to sell
or alienate a specific or determinate part of the thing owned in
common, because such right over the thing is represented by an aliquot
or ideal portion without any physical division. In any case, the mere fact
that the deed purports to transfer a concrete portion does not per se
render the sale void. The sale is valid, but only with respect to the
aliquot share of the selling co-owner. Furthermore, the sale is subject to
the results of the partition upon the termination of the co-ownership.
29

In the case at bar, when the estate left by Maria had been partitioned
on 2 May 1986 by virtue of a Deed of Extrajudicial Settlement, the 107-
square meter lot sold by the mother of the petitioners to respondents
Spouses Lumbao should be deducted from the total lot, inherited by
them in representation of their deceased mother, which in this case
measures 467 square meters. The 107-square meter lot already sold to
respondents Spouses Lumbao can no longer be inherited by the
petitioners because the same was no longer part of their inheritance as
it was already sold during the lifetime of their mother.
Likewise, the fact that the property mentioned in the two "Bilihan ng
Lupa" documents was described as "a portion of a parcel of land
covered in Tax Declarations No. A-018-01674," while the subject matter
of the Deed of Extrajudicial Settlement was the property described in
Transfer Certificate of Title (TCT) No. 3216 of the Registry of Deeds of
the Province of Rizal in the name of Maria is of no moment because in
the "Bilihan ng Lupa," dated 17 August 1979 and 9 January 1981, it is
clear that there was only one estate left by Maria upon her death. And
this fact was not refuted by the petitioners. Besides, the property
described in Tax Declaration No. A-018-01674 and the property
mentioned in TCT No. 3216 are both located in Barrio Rosario,
Municipality of Pasig, Province of Rizal, and almost have the same
boundaries. It is, thus, safe to state that the property mentioned in Tax
Declaration No. A-018-01674 and in TCT No. 3216 are one and the
same.
The defense of prescription of action and laches is likewise unjustifiable.
In an action for reconveyance, the decree of registration is respected as
incontrovertible. What is sought instead is the transfer of the property
or its title which has been wrongfully or erroneously registered in
another persons name to its rightful or legal owner, or to the one with
a better right. It is, indeed, true that the right to seek reconveyance of
registered property is not absolute because it is subject to extinctive
prescription. However, when the plaintiff is in possession of the land to
be reconveyed, prescription cannot set in. Such an exception is based
on the theory that registration proceedings could not be used as a
shield for fraud or for enriching a person at the expense of another.
30

In the case at bar, the right of the respondents Spouses Lumbao to seek
reconveyance does not prescribe because the latter have been and are
still in actual possession and occupation as owners of the property
sought to be reconveyed, which fact has not been refuted nor denied
by the petitioners. Furthermore, respondents Spouses Lumbao cannot
be held guilty of laches because from the very start that they bought
the 107-square meter lot from the mother of the petitioners, they have
constantly asked for the transfer of the certificate of title into their
names but Rita, during her lifetime, and the petitioners, after the death
of Rita, failed to do so on the flimsy excuse that the lot had not been
partitioned yet. Inexplicably, after the partition of the entire estate of
Maria, petitioners still included the 107-square meter lot in their
inheritance which they divided among themselves despite their
knowledge of the contracts of sale between their mother and the
respondents Spouses Lumbao.
Under the above premises, this Court holds that the "Bilihan ng Lupa"
documents dated 17 August 1979 and 9 January 1981 are valid and
enforceable and can be made the basis of the respondents Spouses
Lumbaos action for reconveyance. The failure of respondents Spouses
Lumbao to have the said documents registered does not affect its
validity and enforceability. It must be remembered that registration is
not a requirement for validity of the contract as between the parties,
for the effect of registration serves chiefly to bind third persons. The
principal purpose of registration is merely to notify other persons not
parties to a contract that a transaction involving the property had been
entered into. Where the party has knowledge of a prior existing interest
which is unregistered at the time he acquired a right to the same land,
his knowledge of that prior unregistered interest has the effect of
registration as to him.
31
Hence, the "Bilihan ng Lupa" documents dated
17 August 1979 and 9 January 1981, being valid and enforceable, herein
petitioners are bound to comply with their provisions. In short, such
documents are absolutely valid between and among the parties
thereto.
Finally, the general rule that heirs are bound by contracts entered into
by their predecessors-in-interest applies in the present case. Article
1311
32
of the NCC is the basis of this rule. It is clear from the said
provision that whatever rights and obligations the decedent have over
the property were transmitted to the heirs by way of succession, a
mode of acquiring the property, rights and obligations of the decedent
to the extent of the value of the inheritance of the heirs.
33
Thus, the
heirs cannot escape the legal consequence of a transaction entered into
by their predecessor-in-interest because they have inherited the
property subject to the liability affecting their common ancestor. Being
heirs, there is privity of interest between them and their deceased
mother. They only succeed to what rights their mother had and what is
valid and binding against her is also valid and binding as against them.
The death of a party does not excuse nonperformance of a contract
which involves a property right and the rights and obligations
thereunder pass to the personal representatives of the deceased.
Similarly, nonperformance is not excused by the death of the party
when the other party has a property interest in the subject matter of
the contract.
34

In the end, despite the death of the petitioners mother, they are still
bound to comply with the provisions of the "Bilihan ng Lupa," dated 17
August 1979 and 9 January 1981. Consequently, they must reconvey to
herein respondents Spouses Lumbao the 107-square meter lot which
they bought from Rita, petitioners mother. And as correctly ruled by
the appellate court, petitioners must pay respondents Spouses Lumbao
attorneys fees and litigation expenses for having been compelled to
litigate and incur expenses to protect their interest.
35
On this matter,
we do not find reasons to reverse the said findings.
Page 27 of 30

WHEREFORE, premises considered, the instant Petition is hereby
DENIED. The Decision and Resolution of the Court of Appeals dated 8
June 2005 and 29 July 2005, respectively, are hereby AFFIRMED. Herein
petitioners are ordered to reconvey to respondents Spouses Lumbao
the subject property and to pay the latter attorneys fees and litigation
expenses. Costs against petitioners.
SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice
WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

MA. ALICIA AUSTRIA
MARTINEZ
Associate Justice
On leave
ROMEO J. CALLEJO, SR.
Asscociate Justice
ANTONIO EDUARDO B. NACHURA
Associate Justice
A T T E S T A T I O N
I attest that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion
of the Courts Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons attestation, it is hereby certified that the conclusions in
the above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.
REYNATO S. PUNO
Chief Justice
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 162784 June 22, 2007
NATIONAL HOUSING AUTHORITY, petitioner,
vs.
SEGUNDA ALMEIDA, COURT OF APPEALS, and RTC of SAN PEDRO,
LAGUNA, BR. 31, respondents.
D E C I S I O N
PUNO, C.J.:
This is a Petition for Review on Certiorari under Rule 45 filed by the
National Housing Authority (NHA) against the Court of Appeals, the
Regional Trial Court of San Pedro Laguna, Branch 31, and private
respondent Segunda Almeida.
On June 28, 1959, the Land Tenure Administration (LTA) awarded to
Margarita Herrera several portions of land which are part of the
Tunasan Estate in San Pedro, Laguna. The award is evidenced by an
Agreement to Sell No. 3787.
1
By virtue of Republic Act No. 3488, the
LTA was succeeded by the Department of Agrarian Reform (DAR). On
July 31, 1975, the DAR was succeeded by the NHA by virtue of
Presidential Decree No. 757.
2
NHA as the successor agency of LTA is the
petitioner in this case.
The records show that Margarita Herrera had two children: Beatriz
Herrera-Mercado (the mother of private respondent) and Francisca
Herrera. Beatriz Herrera-Mercado predeceased her mother and left
heirs.
Margarita Herrera passed away on October 27, 1971.
3

On August 22, 1974, Francisca Herrera, the remaining child of the late
Margarita Herrera executed a Deed of Self-Adjudication claiming that
she is the only remaining relative, being the sole surviving daughter of
the deceased. She also claimed to be the exclusive legal heir of the late
Margarita Herrera.
The Deed of Self-Adjudication was based on a Sinumpaang Salaysay
dated October 7, 1960, allegedly executed by Margarita Herrera. The
pertinent portions of which are as follows:
SINUMPAANG SALAYSAY
SA SINO MAN KINAUUKULAN;
Akong si MARGARITA HERRERA, Filipina, may 83 taong gulang,
balo, kasalukuyang naninirahan at tumatanggap ng sulat sa
Nayon ng San Vicente, San Pedro Laguna, sa ilalim ng
panunumpa ay malaya at kusang loob kong isinasaysay at
pinagtitibay itong mga sumusunod:
1. Na ako ay may tinatangkilik na isang lagay na lupang tirikan
(SOLAR), tumatayo sa Nayon ng San Vicente, San Pedro,
Laguna, mayroong PITONG DAAN AT PITUMPU'T ISANG (771)
METRONG PARISUKAT ang laki, humigit kumulang, at
makikilala sa tawag na Lote 17, Bloke 55, at pag-aari ng Land
Tenure Administration;
2. Na ang nasabing lote ay aking binibile, sa pamamagitan ng
paghuhulog sa Land Tenure Administration, at noong ika 30
ng Julio, 1959, ang Kasunduang sa Pagbibile (AGREEMENT TO
SELL No. 3787) ay ginawa at pinagtibay sa Lungsod ng
Maynila, sa harap ng Notario Publico na si G. Jose C. Tolosa, at
lumalabas sa kaniyang Libro Notarial bilang Documento No.
13, Pagina No. 4; Libro No. IV, Serie ng 1959;
3. Na dahilan sa ako'y matanda na at walang ano mang hanap
buhay, ako ay nakatira at pinagsisilbihan nang aking anak na si
Francisca Herrera, at ang tinitirikan o solar na nasasabi sa
unahan ay binabayaran ng kaniyang sariling cuarta sa Land
Tenure Administration;
4. Na alang-alang sa nasasaysay sa unahan nito, sakaling ako'y
bawian na ng Dios ng aking buhay, ang lupang nasasabi sa
unahan ay aking ipinagkakaloob sa nasabi kong anak na
FRANCISCA HERRERA, Filipina, nasa katamtamang gulang,
kasal kay Macario Berroya, kasalukuyang naninirahan at
tumatanggap ng sulat sa Nayong ng San Vicente, San Pedro
Laguna, o sa kaniyang mga tagapagmana at;
Page 28 of 30

5. Na HINIHILING KO sa sino man kinauukulan, na sakaling ako
nga ay bawian na ng Dios ng aking buhay ay KILALANIN,
IGALANG at PAGTIBAYIN ang nilalaman sa pangalan ng aking
anak na si Francisca Herrera ang loteng nasasabi sa unahan.
SA KATUNAYAN NG LAHAT, ako ay nag-didiit ng hinlalaki ng
kanan kong kamay sa ibaba nito at sa kaliwang gilid ng unang
dahon, dito sa Lungsod ng Maynila, ngayong ika 7 ng Octubre,
1960.
4

The said document was signed by two witnesses and notarized. The
witnesses signed at the left-hand side of both pages of the document
with the said document having 2 pages in total. Margarita Herrera
placed her thumbmark
5
above her name in the second page and at the
left-hand margin of the first page of the document.
The surviving heirs of Beatriz Herrera-Mercado filed a case for
annulment of the Deed of Self-Adjudication before the then Court of
First Instance of Laguna, Branch 1 in Binan, Laguna (now, Regional Trial
Court Branch 25). The case for annulment was docketed as Civil Case
No. B-1263.
6

On December 29, 1980, a Decision in Civil Case No. B-1263 (questioning
the Deed of Self-Adjudication) was rendered and the deed was declared
null and void.
7

During trial on the merits of the case assailing the Deed of Self-
Adjudication, Francisca Herrera filed an application with the NHA to
purchase the same lots submitting therewith a copy of the
"Sinumpaang Salaysay" executed by her mother. Private respondent
Almeida, as heir of Beatriz Herrera-Mercado, protested the application.
In a Resolution
8
dated February 5, 1986, the NHA granted the
application made by Francisca Herrera, holding that:
From the evidence of the parties and the records of the lots in
question, we gathered the following facts: the lots in question
are portions of the lot awarded and sold to the late Margarita
Herrera on July 28, 1959 by the defunct Land Tenure
Administration; protestant is the daughter of the late Beatriz
Herrera Mercado who was the sister of the protestee;
protestee and Beatriz are children of the late Margarita
Herrera; Beatriz was the transferee from Margarita of Lot
Nos. 45, 46, 47, 48 and 49, Block 50; one of the lots
transferred to Beatriz, e.g. Lot 47, with an area of 148 square
meters is in the name of the protestant; protestant occupied
the lots in question with the permission of the protestee;
protestee is a resident of the Tunasan Homesite since birth;
protestee was born on the lots in question; protestee left the
place only after marriage but resided in a lot situated in the
same Tunasan Homesite; her (protestee) son Roberto Herrera
has been occupying the lots in question; he has been there
even before the death of the late Margarita Herrera; on
October 7, 1960, Margarita Herrera executed a
"Sinumpaang Salaysay" whereby she waived or transferred
all her rights and interest over the lots in question in favor of
the protestee; and protestee had paid the lots in question in
full on March 8, 1966 with the defunct Land Tenure
Administration.
This Office finds that protestee has a better preferential right to
purchase the lots in question.
9

Private respondent Almeida appealed to the Office of the
President.
10
The NHA Resolution was affirmed by the Office of the
President in a Decision dated January 23, 1987.
11

On February 1, 1987, Francisca Herrera died. Her heirs executed an
extrajudicial settlement of her estate which they submitted to the NHA.
Said transfer of rights was approved by the NHA.
12
The NHA executed
several deeds of sale in favor of the heirs of Francisca Herrera and titles
were issued in their favor.
13
Thereafter, the heirs of Francisca Herrera
directed Segunda Mercado-Almeida to leave the premises that she was
occupying.
Feeling aggrieved by the decision of the Office of the President and the
resolution of the NHA, private respondent Segunda Mercado-Almeida
sought the cancellation of the titles issued in favor of the heirs of
Francisca. She filed a Complaint on February 8, 1988, for "Nullification
of Government Lot's Award," with the Regional Trial Court of San
Pedro, Laguna, Branch 31.
In her complaint, private respondent Almeida invoked her forty-year
occupation of the disputed properties, and re-raised the fact that
Francisca Herrera's declaration of self-adjudication has been adjudged
as a nullity because the other heirs were disregarded. The defendant
heirs of Francisca Herrera alleged that the complaint was barred by
laches and that the decision of the Office of the President was already
final and executory.
14
They also contended that the transfer of purchase
of the subject lots is perfectly valid as the same was supported by a
consideration and that Francisca Herrera paid for the property with the
use of her own money.
15
Further, they argued that plaintiff's occupation
of the property was by mere tolerance and that they had been paying
taxes thereon.
16

The Regional Trial Court issued an Order dated June 14, 1988 dismissing
the case for lack of jurisdiction.
17
The Court of Appeals in a Decision
dated June 26, 1989 reversed and held that the Regional Trial Court had
jurisdiction to hear and decide the case involving "title and possession
to real property within its jurisdiction."
18
The case was then remanded
for further proceedings on the merits.
A pre-trial was set after which trial ensued.
On March 9, 1998, the Regional Trial Court rendered a Decision setting
aside the resolution of the NHA and the decision of the Office of the
President awarding the subject lots in favor of Francisca Herrera. It
declared the deeds of sale executed by NHA in favor of Herrera's heirs
null and void. The Register of Deeds of Laguna, Calamba Branch was
ordered to cancel the Transfer Certificate of Title issued. Attorney's fees
were also awarded to private respondent.
The Regional Trial Court ruled that the "Sinumpaang Salaysay" was not
an assignment of rights but a disposition of property which shall take
effect upon death. It then held that the said document must first be
submitted to probate before it can transfer property.
Both the NHA and the heirs of Francisca Herrera filed their respective
motions for reconsideration which were both denied on July 21, 1998
for lack of merit. They both appealed to the Court of Appeals. The brief
for the heirs of Francisca Herrera was denied admission by the
appellate court in a Resolution dated June 14, 2002 for being a "carbon
copy" of the brief submitted by the NHA and for being filed seventy-
nine (79) days late.
On August 28, 2003, the Court of Appeals affirmed the decision of the
Regional Trial Court, viz:
There is no dispute that the right to repurchase the subject
lots was awarded to Margarita Herrera in 1959. There is also
no dispute that Margarita executed a "Sinumpaang Salaysay"
on October 7, 1960. Defendant NHA claims that the
"Sinumpaang Salaysay" is, in effect, a waiver or transfer of
rights and interest over the subject lots in favor of Francisca
Herrera. This Court is disposed to believe otherwise. After a
perusal of the "Sinumpaang Salaysay" of Margarita Herrera, it
can be ascertained from its wordings taken in their ordinary
and grammatical sense that the document is a simple
Page 29 of 30

disposition of her estate to take effect after her death. Clearly
the Court finds that the "Sinumpaang Salaysay" is a will of
Margarita Herrera. Evidently, if the intention of Margarita
Herrera was to merely assign her right over the lots to her
daughter Francisca Herrera, she should have given her
"Sinumpaang Salaysay" to the defendant NHA or to Francisca
Herrera for submission to the defendant NHA after the full
payment of the purchase price of the lots or even prior
thereto but she did not. Hence it is apparent that she
intended the "Sinumpaang Salaysay" to be her last will and
not an assignment of rights as what the NHA in its resolution
would want to make it appear. The intention of Margarita
Herrera was shared no less by Francisca Herrera who after the
former's demise executed on August 22, 1974 a Deed of Self-
Adjudication claiming that she is her sole and legal heir. It was
only when said deed was questioned in court by the surviving
heirs of Margarita Herrera's other daughter, Beatriz Mercado,
that Francisca Herrera filed an application to purchase the
subject lots and presented the "Sinumpaang Salaysay" stating
that it is a deed of assignment of rights.
19

The Court of Appeals ruled that the NHA acted arbitrarily in awarding
the lots to the heirs of Francisca Herrera. It upheld the trial court ruling
that the "Sinumpaang Salaysay" was not an assignment of rights but
one that involved disposition of property which shall take effect upon
death. The issue of whether it was a valid will must first be determined
by probate.
Petitioner NHA elevated the case to this Court.
Petitioner NHA raised the following issues:
A. WHETHER OR NOT THE RESOLUTION OF THE NHA AND THE
DECISION OF THE OFFICE OF THE PRESIDENT HAVE ATTAINED
FINALITY, AND IF SO, WHETHER OR NOT THE PRINCIPLE OF
ADMINISTRATIVE RES JUDICATA BARS THE COURT FROM
FURTHER DETERMINING WHO BETWEEN THE PARTIES HAS
PREFERENTIAL RIGHTS FOR AWARD OVER THE SUBJECT LOTS;
B. WHETHER OR NOT THE COURT HAS JURISDICTION TO
MAKE THE AWARD ON THE SUBJECT LOTS; AND
C. WHETHER OR NOT THE AWARD OF THE SUBJECT LOTS BY
THE NHA IS ARBITRARY.
We rule for the respondents.
Res judicata is a concept applied in review of lower court decisions in
accordance with the hierarchy of courts. But jurisprudence has also
recognized the rule of administrative res judicata: "the rule which
forbids the reopening of a matter once judicially determined by
competent authority applies as well to the judicial and quasi-judicial
facts of public, executive or administrative officers and boards acting
within their jurisdiction as to the judgments of courts having general
judicial powers . . . It has been declared that whenever final
adjudication of persons invested with power to decide on the property
and rights of the citizen is examinable by the Supreme Court, upon a
writ of error or a certiorari, such final adjudication may be pleaded
as res judicata."
20
To be sure, early jurisprudence were already mindful
that the doctrine of res judicata cannot be said to apply exclusively to
decisions rendered by what are usually understood as courts without
unreasonably circumscribing the scope thereof and that the more
equitable attitude is to allow extension of the defense to decisions of
bodies upon whom judicial powers have been conferred.
In Ipekdjian Merchandising Co., Inc. v. Court of Tax Appeals,
21
the
Court held that the rule prescribing that "administrative orders cannot
be enforced in the courts in the absence of an express statutory
provision for that purpose" was relaxed in favor of quasi-judicial
agencies.
In fine, it should be remembered that quasi-judicial powers will always
be subject to true judicial powerthat which is held by the courts.
Quasi-judicial power is defined as that power of adjudication of an
administrative agency for the "formulation of a final order."
22
This
function applies to the actions, discretion and similar acts of public
administrative officers or bodies who are required to investigate facts,
or ascertain the existence of facts, hold hearings, and draw conclusions
from them, as a basis for their official action and to exercise discretion
of a judicial nature.
23
However, administrative agencies are not
considered courts, in their strict sense. The doctrine of separation of
powers reposes the three great powers into its three (3) branchesthe
legislative, the executive, and the judiciary. Each department is co-equal
and coordinate, and supreme in its own sphere. Accordingly, the
executive department may not, by its own fiat, impose the judgment of
one of its agencies, upon the judiciary. Indeed, under the expanded
jurisdiction of the Supreme Court, it is empowered to "determine
whether or not there has been grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government."
24
Courts have an expanded role
under the 1987 Constitution in the resolution of societal conflicts under
the grave abuse clause of Article VIII which includes that duty to check
whether the other branches of government committed an act that falls
under the category of grave abuse of discretion amounting to lack or
excess of jurisdiction.
25

Next, petitioner cites Batas Pambansa Blg. 129 or the Judiciary
Reorganization Act of 1980
26
where it is therein provided that the
Intermediate Appellate Court (now, Court of Appeals) shall exercise the
"exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards, of the Regional Trial Courts and Quasi-
Judicial agencies, instrumentalities, boards or commissions, except
those falling within the jurisdiction of the Supreme Court in accordance
with the Constitution"
27
and contends that the Regional Trial Court
has no jurisdiction to rule over awards made by the NHA.
Well-within its jurisdiction, the Court of Appeals, in its decision of
August 28, 2003, already ruled that the issue of the trial court's
authority to hear and decide the instant case has already been settled
in the decision of the Court of Appeals dated June 26, 1989 (which has
become final and executory on August 20, 1989 as per entry of
judgment dated October 10, 1989).
28
We find no reason to disturb this
ruling. Courts are duty-bound to put an end to controversies. The
system of judicial review should not be misused and abused to evade
the operation of a final and executory judgment.
29
The appellate court's
decision becomes the law of the case which must be adhered to by the
parties by reason of policy.
30

Next, petitioner NHA contends that its resolution was grounded on
meritorious grounds when it considered the application for the
purchase of lots. Petitioner argues that it was the daughter Francisca
Herrera who filed her application on the subject lot; that it considered
the respective application and inquired whether she had all the
qualifications and none of the disqualifications of a possible awardee. It
is the position of the petitioner that private respondent possessed all
the qualifications and none of the disqualifications for lot award and
hence the award was not done arbitrarily.
The petitioner further argues that assuming that the "Sinumpaang
Salaysay" was a will, it could not bind the NHA.
31
That, "insofar as [the]
NHA is concerned, it is an evidence that the subject lots were indeed
transferred by Margarita Herrera, the original awardee, to Francisca
Herrera was then applying to purchase the same before it."
32

We are not impressed. When the petitioner received the "Sinumpaang
Salaysay," it should have noted that the effectivity of the said document
commences at the time of death of the author of the instrument; in her
words "sakaling ako'y bawian na ng Dios ng aking buhay" Hence, in
such period, all the interests of the person should cease to be hers and
Page 30 of 30

shall be in the possession of her estate until they are transferred to her
heirs by virtue of Article 774 of the Civil Code which provides that:
Art. 774. Succession is a mode of acquisition by virtue of
which the property, rights and obligations to the extent of
the value of the inheritance, of a person are transmitted
through his death to another or others either by his will or
by operation of law.
33

By considering the document, petitioner NHA should have noted that
the original applicant has already passed away. Margarita Herrera
passed away on October 27, 1971.
34
The NHA issued its resolution
35
on
February 5, 1986. The NHA gave due course to the application made by
Francisca Herrera without considering that the initial applicant's death
would transfer all her property, rights and obligations to the estate
including whatever interest she has or may have had over the disputed
properties. To the extent of the interest that the original owner had
over the property, the same should go to her estate. Margarita Herrera
had an interest in the property and that interest should go to her estate
upon her demise so as to be able to properly distribute them later to
her heirsin accordance with a will or by operation of law.
The death of Margarita Herrera does not extinguish her interest over
the property. Margarita Herrera had an existing Contract to Sell
36
with
NHA as the seller. Upon Margarita Herrera's demise, this Contract to
Sell was neither nullified nor revoked. This Contract to Sell was an
obligation on both partiesMargarita Herrera and NHA. Obligations are
transmissible.
37
Margarita Herrera's obligation to pay became
transmissible at the time of her death either by will or by operation of
law.
If we sustain the position of the NHA that this document is not a will,
then the interests of the decedent should transfer by virtue of an
operation of law and not by virtue of a resolution by the NHA. For as it
stands, NHA cannot make another contract to sell to other parties of a
property already initially paid for by the decedent. Such would be an act
contrary to the law on succession and the law on sales and
obligations.
38

When the original buyer died, the NHA should have considered the
estate of the decedent as the next "person"
39
likely to stand in to fulfill
the obligation to pay the rest of the purchase price. The opposition of
other heirs to the repurchase by Francisca Herrera should have put the
NHA on guard as to the award of the lots. Further, the Decision in the
said Civil Case No. B-1263 (questioning the Deed of Self-Adjudication)
which rendered the deed therein null and void
40
should have alerted
the NHA that there are other heirs to the interests and properties of the
decedent who may claim the property after a testate or intestate
proceeding is concluded. The NHA therefore acted arbitrarily in the
award of the lots.
We need not delve into the validity of the will. The issue is for the
probate court to determine. We affirm the Court of Appeals and the
Regional Trial Court which noted that it has an element of testamentary
disposition where (1) it devolved and transferred property; (2) the
effect of which shall transpire upon the death of the instrument
maker.
41

IN VIEW WHEREOF, the petition of the National Housing Authority is
DENIED. The decision of the Court of Appeals in CA-G.R. No. 68370
dated August 28, 2003, affirming the decision of the Regional Trial
Court of San Pedro, Laguna in Civil Case No. B-2780 dated March 9,
1998, is hereby AFFIRMED.
No cost.
SO ORDERED.
Sandoval-Gutierrez, Corona, Azcuna, Garcia, JJ., concur.