Cases 1-18

Ryan T.
Rapacon>>>Succession | 1

G.R. No. 189776 December 15, 2010
AMELIA P. ARELLANO, represented by her duly appointed guardians,
AGNES P. ARELLANO and NONA P. ARELLANO, Petitioner,
vs.
FRANCISCO PASCUAL and MIGUEL PASCUAL, Respondents.
D E C I S I O N
CARPIO MORALES, J .:
Angel N. Pascual Jr. died intestate on January 2, 1999 leaving as heirs his siblings,
namely: petitioner Amelia P. Arellano who is represented by her daughters
1
Agnes P.
Arellano (Agnes) and Nona P. Arellano, and respondents Francisco Pascual and
Miguel N. Pascual.
2

In a petition for "Judicial Settlement of Intestate Estate and Issuance of Letters of
Administration," docketed as Special Proceeding Case No. M-5034, filed by
respondents on April 28, 2000 before the Regional Trial Court (RTC) of Makati,
respondents alleged, inter alia, that a parcel of land (the donated property) located in
Teresa Village, Makati, which was, by Deed of Donation, transferred by the
decedent to petitioner the validity of which donation respondents assailed, "may be
considered as an advance legitime" of petitioner.
Respondents nephew Victor was, as they prayed for, appointed as Administrator of
the estate by Branch 135 of the Makati RTC.
3

Respecting the donated property, now covered in the name of petitioner by Transfer
Certificate of Title No. 181889 of the Register of Deeds of Makati, which
respondents assailed but which they, in any event, posited that it "may be considered
as an advance legitime" to petitioner, the trial court, acting as probate court, held that
it was precluded from determining the validity of the donation.
Provisionally passing, however, upon the question of title to the donated
property only for the purpose of determining whether it formed part of the decedents
estate,
4
the probate court found the Deed of Donation valid in light of the
presumption of validity of notarized documents. It thus went on to hold that it is
subject to collation following Article 1061 of the New Civil Code which reads:
5

Every compulsory heir, who succeeds with other compulsory heirs, must bring into
the mass of the estate any property or right which he may have received from the
decedent, during the lifetime of the latter, by way of donation, or any other gratuitous
title in order that it may be computed in the determination of the legitime of each
heir, and in the account of the partition.
The probate court thereafter partitioned the properties of the intestate estate. Thus it
disposed:
WHEREFORE, premises considered, judgment is hereby rendered declaring that:
1. The property covered by TCT No. 181889 of the Register of Deeds of Makati as
part of the estate of Angel N. Pascual;
2. The property covered by TCT No. 181889 to be subject to collation;
3. 1/3 of the rental receivables due on the property at the mezzanine and the 3rd floor
of Unit 1110 Tanay St., Makati City form part of the estate of Angel N. Pascual;
4. The following properties form part of the estate of Angel N. Pascual:
a. 1/3 share in the House and Lot at 1110 Tanay St., Rizal Village Makati TCT No.
348341 and 1/3 share in the rental income thereon;
b. 1/3 share in the Vacant Lot with an area of 271 square meters located at Tanay St.,
Rizal Village, Makati City, TCT No. 119063;
c. Agricultural land with an area of 3.8 hectares located at Puerta Galera Mindoro
covered by OCT No. P-2159;
d. Shares of stocks in San Miguel Corporation covered by the following Certificate
Numbers: A0011036, A006144, A082906, A006087, A065796, A11979, A049521,
C86950, C63096, C55316, C54824, C120328, A011026, C12865, A10439,
A021401, A007218, A0371, S29239, S40128, S58308, S69309;
e. Shares of stocks in Paper Industries Corp. covered by the following Certificate
Numbers: S29239, S40128, S58308, S69309, A006708, 07680, A020786, S18539,
S14649;
f. share in Eduardo Pascuals shares in Baguio Gold Mining Co.;
g. Cash in Banco De Oro Savings Account No. 2 014 12292 4 in the name of Nona
Arellano;
i. Property previously covered by TCT No. 119053 now covered by TCT No.
181889, Register of Deeds of Makati City;
j. Rental receivables from Raul Arellano per Order issued by Branch 64 of the Court
on November 17, 1995.
5. AND the properties are partitioned as follows:
a. To heir Amelia P. Arellano-the property covered by TCT No. 181889;
b. To heirs Francisco N. Pascual and Miguel N. Pascual-the real properties covered
by TCT Nos. 348341 and 119063 of the Register of Deeds of Makati City and the
property covered by OCT No. 2159, to be divided equally between them up to the
extent that each of their share have been equalized with the actual value of the
property in 5(a) at the time of donation, the value of which shall be determined by an
independent appraiser to be designated by Amelia P. Arellano, Miguel N. Pascual
and Francisco N. Pascual. If the real properties are not sufficient to equalize the
shares, then Franciscos and Miguels shares may be satisfied from either in cash
property or shares of stocks, at the rate of quotation. The remaining properties shall
be divided equally among Francisco, Miguel and Amelia. (emphasis and
underscoring supplied)
Before the Court of Appeals, petitioner faulted the trial court in holding that
I
. . . THE PROPERTY DONATED TO APPELLANT AMELIA PASCUAL
ARELLANO IS PART OF THE ESTATE OF ANGEL PASCUAL, JR.
II
. . . THE PROPERTY DONATED TO APPELLANT IS SUBJECT TO
COLLATION UNDER ARTICLE 1061 OF THE NEW CIVIL CODE.
III
. . . APPELLEES WHO ARE MERELY COLLATERAL RELATIVES OF
DECEASED ANGEL N. PASCUAL JR. AS HIS COMPULSORY
HEIRS ENTITLED TO LEGITIMES.
x x x x
and
V
Ryan T. Rapacon>>>Succession | 2

. . . IN NOT PARTITIONING THE ESTATE OF ANGEL N. PASCUAL
JR. EQUALLY AMONG HIS LEGAL OR INTESTATE HEIRS.
6
(underscoring
supplied)
By Decision
7
of July 20, 2009, the Court of Appeals found petitioners appeal "partly
meritorious." It sustained the probate courts ruling that the property donated to
petitioner is subject to collation in this wise:
Bearing in mind that in intestate succession, what governs is the rule on equality of
division, We hold that theproperty subject of donation inter vivos in favor of Amelia
is subject to collation. Amelia cannot be considered a creditor of the decedent and we
believe that under the circumstances, the value of such immovable though not strictly
in the concept of advance legitime, should be deducted from her share in the net
hereditary estate. The trial court therefore committed no reversible error when it
included the said property as forming part of the estate of Angel N.
Pascual.
8
(citation omitted; emphasis and underscoring supplied)1avvph!1
The appellate court, however, held that, contrary to the ruling of the probate court,
herein petitioner "was able to submit prima facie evidence of shares of stocks owned
by the [decedent] which have not been included in the inventory submitted by the
administrator."
Thus, the appellate court disposed, quoted verbatim:
WHEREFORE, premises considered, the present appeal is hereby PARTLY
GRANTED. The Decision dated January 29, 2008 of the Regional Trial Court of
Makati City, Branch 135 in Special Proceeding Case No. M-5034 is
hereby REVERSED and SET ASIDE insofar as the order of inclusion of
properties of the Intestate Estate of Angel N. Pascual, Jr. as well as the partition and
distribution of the same to the co-heirs are concerned.
The case is hereby REMANDED to the said court for further proceedings in
accordance with the disquisitions herein.
9
(underscoring supplied)
Petitioners Partial Motion for Reconsideration
10
having been denied by the appellate
court by Resolution
11
of October 7, 2009, the present petition for review on certiorari
was filed, ascribing as errors of the appellate court its ruling
I
. . . THAT THE PROPERTY DONATED BY ANGEL N. PASCUAL, JR. TO
PETITIONER AMELIA PASCUAL ARELLANO IS PART OF HIS ESTATE AT
THE TIME OF HIS DEATH.
II
. . . THAT THE PROPERTY DONATED TO PETITIONER IS SUBJECT TO
COLLATION UNDER ARTICLE 1061 OF THE NEW CIVIL CODE.
III
. . . THAT RESPONDENTS ARE COMPULSORY HEIRS OF THEIR DECEASED
BROTHER ANGEL N. PASCUAL JR. AND ARE ENTITLED TO LEGITIMES.
IV
. . . IN NOT PARTITIONING THE ESTATE OF ANGEL N. PASCUAL,
JR. EQUALLY AMONG PETITIONER AND RESPONDENTS, AS HIS LEGAL
OR INTESTATE HEIRS.
12
(underscoring supplied)
Petitioners thus raise the issues of whether the property donated to petitioner is
subject to collation; and whether the property of the estate should have been ordered
equally distributed among the parties.
On the first issue:
The term collation has two distinct concepts: first, it is a mere mathematical
operation by the addition of the value of donations made by the testator to the value
of the hereditary estate; and second, it is the return to the hereditary estate of
property disposed of by lucrative title by the testator during his lifetime.
13

The purposes of collation are to secure equality among the compulsory heirs in so far
as is possible, and to determine the free portion, after finding the legitime, so that
inofficious donations may be reduced.
14

Collation takes place when there are compulsory heirs, one of its purposes being to
determine the legitime and the free portion. If there is no compulsory heir, there is no
legitime to be safeguarded.
15

The records do not show that the decedent left any primary, secondary, or concurring
compulsory heirs. He was only survived by his siblings, who are his collateral
relatives and, therefore, are not entitled to any legitime that part of the testators
property which he cannot dispose of because the law has reserved it for compulsory
heirs.
16

The compulsory heirs may be classified into (1) primary, (2) secondary, and (3)
concurring. The primary compulsory heirs are those who have precedence over and
exclude other compulsory heirs; legitimate children and descendants are primary
compulsory heirs. The secondary compulsory heirs are those who succeed only in the
absence of the primary heirs; the legitimate parents and ascendants are secondary
compulsory heirs. The concurring compulsory heirs are those who succeed together
with the primary or the secondary compulsory heirs; the illegitimate children, and the
surviving spouse are concurring compulsory heirs.
17

The decedent not having left any compulsory heir who is entitled to any legitime, he
was at liberty to donate all his properties, even if nothing was left for his siblings-
collateral relatives to inherit. His donation to petitioner, assuming that it was
valid,
18
is deemed as donation made to a "stranger," chargeable against the free
portion of the estate.
19
There being no compulsory heir, however, the donated
property is not subject to collation.
On the second issue:
The decedents remaining estate should thus be partitioned equally among his heirs-
siblings-collateral relatives, herein petitioner and respondents, pursuant to the
provisions of the Civil Code, viz:
Art. 1003. If there are no descendants, ascendants, illegitimate children, or a
surviving spouse, the collateral relatives shall succeed to the entire estate of the
deceased in accordance with the following articles. (underscoring supplied)
Art. 1004. Should the only survivors be brothers and sisters of the full blood, they
shall inherit in equal shares. (emphasis and underscoring supplied)
WHEREFORE, the petition is GRANTED. The Court of Appeals Decision ordering
the collation of the property donated to petitioner, Amelia N. Arellano, to the estate
of the deceased Angel N. Pascual, Jr. is set aside.

Let the records of the case be REMANDED to the court of origin, Branch 135 of the
Makati Regional Trial Court, which is ordered to conduct further proceedings in the
case for the purpose of determining what finally forms part of the estate, and
thereafter to divide whatever remains of it equally among the parties.



G.R. No. 187056 September 20, 2010
JARABINI G. DEL ROSARIO, Petitioner,
vs.
ASUNCION G. FERRER, substituted by her heirs, VICENTE, PILAR,
ANGELITO, FELIXBERTO, JR., all surnamed G. FERRER, and MIGUELA
FERRER ALTEZA, Respondents.
D E C I S I O N
ABAD, J .:
This case pertains to a gift, otherwise denominated as a donation mortis causa, which
in reality is a donation inter vivos made effective upon its execution by the donors
and acceptance thereof by the donees, and immediately transmitting ownership of the
donated property to the latter, thus precluding a subsequent assignment thereof by
one of the donors.
The Facts and the Case
On August 27, 1968 the spouses Leopoldo and Guadalupe Gonzales executed a
document entitled "DonationMortis Causa"
1
in favor of their two children, Asuncion
and Emiliano, and their granddaughter, Jarabini (daughter of their predeceased son,
Zoilo) covering the spouses 126-square meter lot and the house on it in Pandacan,
Manila
2
in equal shares. The deed of donation reads:
It is our will that this Donation Mortis Causa shall be irrevocable and shall be
respected by the surviving spouse.
It is our will that Jarabini Gonzales-del Rosario and Emiliano Gonzales will continue
to occupy the portions now occupied by them.
It is further our will that this DONATION MORTIS CAUSA shall not in any way
affect any other distribution of other properties belonging to any of us donors
whether testate or intestate and where ever situated.
It is our further will that any one surviving spouse reserves the right, ownership,
possession and administration of this property herein donated and accepted and this
Disposition and Donation shall be operative and effective upon the death of the
DONORS.
3

Although denominated as a donation mortis causa, which in law is the equivalent of
a will, the deed had no attestation clause and was witnessed by only two persons.
The named donees, however, signified their acceptance of the donation on the face of
the document.
Guadalupe, the donor wife, died in September 1968. A few months later or on
December 19, 1968, Leopoldo, the donor husband, executed a deed of assignment of
his rights and interests in subject property to their daughter Asuncion. Leopoldo died
in June 1972.
In 1998 Jarabini filed a "petition for the probate of the August 27, 1968 deed of
donation mortis causa" before the Regional Trial Court (RTC) of Manila in Sp. Proc.
98-90589.
4
Asuncion opposed the petition, invoking his father Leopoldos
assignment of his rights and interests in the property to her.
After trial, the RTC rendered a decision dated June 20, 2003,
5
finding that the
donation was in fact one made inter vivos, the donors intention being to transfer title
over the property to the donees during the donors lifetime, given its irrevocability.
Consequently, said the RTC, Leopoldos subsequent assignment of his rights and
interest in the property was void since he had nothing to assign. The RTC thus
directed the registration of the property in the name of the donees in equal shares.
6

On Asuncions appeal to the Court of Appeals (CA), the latter rendered a decision on
December 23, 2008,
7
reversing that of the RTC. The CA held that Jarabini cannot,
through her petition for the probate of the deed of donation mortis causa, collaterally
attack Leopoldos deed of assignment in Asuncions favor. The CA further held that,
since no proceeding exists for the allowance of what Jarabini claimed was actually a
donation inter vivos, the RTC erred in deciding the case the way it did. Finally, the
CA held that the donation, being one given mortis causa, did not comply with the
requirements of a notarial will,
8
rendering the same void. Following the CAs denial
of Jarabinis motion for reconsideration,
9
she filed the present petition with this
Court.
Issue Presented
The key issue in this case is whether or not the spouses Leopoldo and Guadalupes
donation to Asuncion, Emiliano, and Jarabini was a donation mortis causa, as it was
denominated, or in fact a donation inter vivos.
The Courts Ruling
That the document in question in this case was captioned "Donation Mortis Causa" is
not controlling. This Court has held that, if a donation by its terms is inter vivos, this
character is not altered by the fact that the donor styles itmortis causa.
10

In Austria-Magat v. Court of Appeals,
11
the Court held that "irrevocability" is a
quality absolutely incompatible with the idea of conveyances mortis causa, where
"revocability" is precisely the essence of the act. A donation mortis causa has the
following characteristics:
1. It conveys no title or ownership to the transferee before the death of the
transferor; or, what amounts to the same thing, that the transferor should
retain the ownership (full or naked) and control of the property while alive;
2. That before his death, the transfer should be revocable by the transferor at
will, ad nutum; but revocability may be provided for indirectly by means of
a reserved power in the donor to dispose of the properties conveyed; and
3. That the transfer should be void if the transferor should survive the
transferee.
12
(Underscoring supplied)
The Court thus said in Austria-Magat that the express "irrevocability" of the donation
is the "distinctive standard that identifies the document as a donation inter vivos."
Here, the donors plainly said that it is "our will that this Donation Mortis Causa shall
be irrevocable and shall be respected by the surviving spouse." The intent to make
the donation irrevocable becomes even clearer by the proviso that a surviving donor
shall respect the irrevocability of the donation. Consequently, the donation was in
reality a donation inter vivos.
The donors in this case of course reserved the "right, ownership, possession, and
administration of the property" and made the donation operative upon their death.
But this Court has consistently held that such reservation (reddendum) in the context
of an irrevocable donation simply means that the donors parted with their naked title,
maintaining only beneficial ownership of the donated property while they lived.
13

Notably, the three donees signed their acceptance of the donation, which acceptance
the deed required.
14
This Court has held that an acceptance clause indicates that the

donation is inter vivos, since acceptance is a requirement only for such kind of
donations.1awphi1 Donations mortis causa, being in the form of a will, need not be
accepted by the donee during the donors lifetime.
15

Finally, as Justice J. B. L. Reyes said in Puig v. Peaflorida,
16
in case of doubt, the
conveyance should be deemed a donation inter vivos rather than mortis causa, in
order to avoid uncertainty as to the ownership of the property subject of the deed.
Since the donation in this case was one made inter vivos, it was immediately
operative and final. The reason is that such kind of donation is deemed perfected
from the moment the donor learned of the donees acceptance of the donation. The
acceptance makes the donee the absolute owner of the property donated.
17

Given that the donation in this case was irrevocable or one given inter vivos,
Leopoldos subsequent assignment of his rights and interests in the property to
Asuncion should be regarded as void for, by then, he had no more rights to assign.
He could not give what he no longer had. Nemo dat quod non habet.
18

The trial court cannot be faulted for passing upon, in a petition for probate of what
was initially supposed to be a donation mortis causa, the validity of the document as
a donation inter vivos and the nullity of one of the donors subsequent assignment of
his rights and interests in the property. The Court has held before that the rule on
probate is not inflexible and absolute.
19
Moreover, in opposing the petition for
probate and in putting the validity of the deed of assignment squarely in issue,
Asuncion or those who substituted her may not now claim that the trial court
improperly allowed a collateral attack on such assignment.
WHEREFORE, the Court GRANTS the petition, SETS ASIDE the assailed
December 23, 2008 Decision and March 6, 2009 Resolution of the Court of Appeals
in CA-G.R. CV 80549, and REINSTATES in toto the June 20, 2003 Decision of the
Regional Trial Court of Manila, Branch 19, in Sp. Proc. 98-90589.


G.R. No. 131953 June 5, 2002
MA. ESTELA MAGLASANG, NICOLAS CABATINGAN and MERLY S.
CABATINGAN, petitioners,
vs.
THE HEIRS OF CORAZON CABATINGAN, namely, LUZ M. BOQUIA,
PERLA M. ABELLA, ESTRELLA M. CAETE, LOURDES M. YUSON, and
JULIA L. MAYOL, HEIRS OF GENOVIVA C. NATIVIDAD namely, OSCAR
C. NATIVIDAD, OLGA NATIVIDAD, ODETTE NATIVIDAD, OPHELIA
NATIVIDAD, RICHARD NATIVIDAD, RAYMUND NATIVIDAD, RICHIE
NATIVIDAD, SONIA NATIVIDAD and ENCARNACION CABATINGAN
VDA. DE TRINIDAD, ALFREDO CABATINGAN and JESUSA C.
NAVADA, respondents.
AUSTRIA-MARTINEZ, J .:
Posed for resolution before the Court in this petition for review on certiorari filed
under Rule 45 of the Rules of Court is the sole issue of whether the donations made
by the late Conchita Cabatingan are donations inter vivos ormortis causa.
The facts of the case are as follows:
On February 17, 1992, Conchita Cabatingan executed in favor of her brother,
petitioner Nicolas Cabatingan, a "Deed of Conditional of Donation (sic) Inter Vivos
for House and Lot" covering one-half () portion of the former's house and lot
located at Cot-cot, Liloan, Cebu.
1
Four (4) other deeds of donation were
subsequently executed by Conchita Cabatingan on January 14, 1995, bestowing
upon: (a) petitioner Estela C. Maglasang, two (2) parcels of land - one located in
Cogon, Cebu (307 sq. m.) and the other, a portion of a parcel of land in Masbate
(50,232 sq. m.); (b) petitioner Nicolas Cabatingan, a portion of a parcel of land
located in Masbate (80,000 sq. m.); and (c) petitioner Merly S. Cabatingan, a portion
of the Masbate property (80,000 sq. m.).
2
These deeds of donation contain similar
provisions, to wit:
"That for and in consideration of the love and affection of the DONOR for
the DONEE, x x x the DONOR does hereby, by these presents, transfer,
convey, by way of donation, unto the DONEE the above-described
property, together with the buildings and all improvements existing
thereon, to become effective upon the death of the
DONOR; PROVIDED, HOWEVER, that in the event that the DONEE
should die before the DONOR, the present donation shall be deemed
automatically rescinded and of no further force and effect; x x
x"
3
(Emphasis Ours)
On May 9, 1995, Conchita Cabatingan died.
Upon learning of the existence of the foregoing donations, respondents filed with the
Regional Trial Court of Mandaue, Branch 55, an action for Annulment And/Or
Declaration of Nullity of Deeds of Donations and Accounting, docketed as Civil
Case No. MAN-2599, seeking the annulment of said four (4) deeds of donation
executed on January 14, 1995. Respondents allege, inter alia, that petitioners,
through their sinister machinations and strategies and taking advantage of Conchita
Cabatingan's fragile condition, caused the execution of the deeds of donation, and,
that the documents are void for failing to comply with the provisions of the Civil
Code regarding formalities of wills and testaments, considering that these are
donations mortis causa.
4
Respondents prayed that a receiver be appointed in order to
preserve the disputed properties, and, that they be declared as co-owners of the
properties in equal shares, together with petitioner Nicolas Cabatingan.
5

Petitioners in their Amended Answer, deny respondents' allegations contending that
Conchita Cabatingan freely, knowingly and voluntarily caused the preparation of the
instruments.
6

On respondents' motion, the court a quo rendered a partial judgment on the pleadings
on December 2, 1997 in favor of respondents, with the following dispositive portion:
"WHEREREFORE, and in consideration of all the foregoing, judgment is
hereby rendered in favor of the plaintiffs and against the defendant and
unwilling co-plaintiff with regards (sic) to the four Deeds of Donation
Annexes "A", "A-1", "B" and Annex "C" which is the subject of this partial
decision by:
Declaring the four Deeds of Donation as null and void ab initio for
being a donation Mortis Causa and for failure to comply with
formal and solemn requisite under Art. 806 of the New Civil Code;
b) To declare the plaintiffs and defendants as well as unwilling co-
plaintiff as the heirs of the deceased Conchita Cabatingan and
therefore hereditary co-owners of the properties subject of this
partial decision, as mandated under Art. 777 of the New Civil
Code;
SO ORDERED."
7

The court a quo ruled that the donations are donations mortis causa and therefore the
four (4) deeds in question executed on January 14, 1995 are null and void for failure
to comply with the requisites of Article 806 of the Civil Code on solemnities of wills
and testaments.
8

Raising questions of law, petitioners elevated the court a quo's decision to this
Court,
9
alleging that:
"THE LOWER COURT PALPABLY DISREGARDED THE LONG-AND-
WELL-ESTABLISHED RULINGS OF THIS HONORABLE SUPREME
COURT ON THE CHARACTERIZATION OF DONATIONS AS INTER
VIVOSOR MORTIS CAUSA AND, INSTEAD, PROCEEDED TO
INTERPRET THE DONATIONS IN QUESTION IN A MANNER
CONTRARY THERETO."
10

Petitioners insist that the donations are inter vivos donations as these were made by
the late Conchita Cabatingan "in consideration of the love and affection of the
donor" for the donee, and there is nothing in the deeds which indicate that the
donations were made in consideration of Cabatingan's death.
11
In addition,
petitioners contend that the stipulation on rescission in case petitioners die ahead of
Cabatingan is a resolutory condition that confirms the nature of the donation as inter
vivos.
Petitioners' arguments are bereft of merit.
In a donation mortis causa, "the right of disposition is not transferred to the donee
while the donor is still alive."
12
In determining whether a donation is one of mortis
causa, the following characteristics must be taken into account:

(1) It conveys no title or ownership to the transferee before the death of the
transferor; or what amounts to the same thing, that the transferor should
(2) That before his death, the transfer should be revocable by the transferor
at will, ad nutum; but revocability may be provided for indirectly by means
of a reserved power in the donor to dispose of the properties conveyed;
and
(3) That the transfer should be void if the transferor should survive the
transferee.
13

In the present case, the nature of the donations as mortis causa is confirmed by the
fact that the donations do not contain any clear provision that intends to pass
proprietary rights to petitioners prior to Cabatingan's death.
14
The phrase "to become
effective upon the death of the DONOR" admits of no other interpretation but that
Cabatingan did not intend to transfer the ownership of the properties to petitioners
during her lifetime. Petitioners themselves expressly confirmed the donations
as mortis causa in the following Acceptance and Attestation clauses, uniformly
found in the subject deeds of donation, to wit:
"That the DONEE does hereby accept the foregoing donation mortis causa
under the terms and conditions set forth therein, and avail herself of this
occasion to express her profound gratitude for the kindness and generosity
of the DONOR."
x x x
"SIGNED by the above-named DONOR and DONEE at the foot of this
Deed of Donation mortis causa, which consists of two (2) pages x x x."
15

That the donations were made "in consideration of the love and affection of the
donor" does not qualify the donations as inter vivos because transfers mortis
causa may also be made for the same reason.
16

Well in point is National Treasurer of the Phils. v. Vda. de Meimban.
17
In said
case, the questioned donation contained the provision:
"That for and in consideration of the love and affection which the DONOR
has for the DONEE, the said Donor by these presents does hereby give,
transfer, and convey unto the DONEE, her heirs and assigns a portion of
ONE HUNDRED THOUSAND (100,000) SQUARE METERS, on the
southeastern part Pro-indiviso of the above described property. (The portion
herein donated is within Lot 2-B of the proposed amendment Plan
Subdivision of Lots Nos. 1 and 2, Psu-109393), with all the buildings and
improvements thereon, to become effective upon the death of the DONOR.
(italics supplied.)"
18

Notably, the foregoing provision is similar to that contained in the donation executed
by Cabatingan. We held in Meimban case that the donation is a mortis
causa donation, and that the above quoted provision establishes the donor's intention
to transfer the ownership and possession of the donated property to the donee only
after the former's death. Further:
"As the donation is in the nature of a mortis causa disposition, the
formalities of a will should have been complied with under Article 728 of
the Civil Code, otherwise, the donation is void and would produce no effect.
As we have held in Alejandro v. Geraldez (78 SCRA 245,253), "If the
donation is made in contemplation of the donor's death, meaning that the
full or naked ownership of the donated properties will pass to the donee
because of the donor's death, then it is at that time that the donation takes
effect, and it is a donation mortis causa which should be embodied in a last
will and testament. (Citing Bonsato v. Court of Appeals, 95 Phil. 481)."
19

We apply the above rulings to the present case. The herein subject deeds expressly
provide that the donation shall be rescinded in case petitioners predecease Conchita
Cabatingan. As stated in Reyes v. Mosqueda,
20
one of the decisive characteristics of
a donation mortis causa is that the transfer should be considered void if the donor
should survive the donee. This is exactly what Cabatingan provided for in her
donations. If she really intended that the donation should take effect during her
lifetime and that the ownership of the properties donated be transferred to the donee
or independently of, and not by reason of her death, she would have not expressed
such proviso in the subject deeds.1wphi1.nt
Considering that the disputed donations are donations mortis causa, the same partake
of the nature of testamentary provisions
21
and as such, said deeds must be executed
in accordance with the requisites on solemnities of wills and testaments under
Articles 805 and 806 of the Civil Code, to wit:
"ART. 805. Every will, other than a holographic will, must be subscribed at
the end thereof by the testator himself or by the testator's name written by
some other person in his presence, and by his express direction, and attested
and subscribed by three or more credible witnesses in the presence of the
testator and of one another.
The testator or the person requested by him to write his name and the
instrumental witnesses of the will, shall also sign, as aforesaid, each and
every page thereof, except the last, on the left margin, and all the pages
shall be numbered correlatively in letters placed on the upper part of each
page.
The attestation shall state the number of pages used upon which the will is
written , and the fact that the testator signed the will and every page thereof,
or caused some other person to write his name, under his express direction,
in the presence of the instrumental witnesses, and that the latter witnessed
and signed the will and all the pages thereof in the presence of the testator
and of one another.
If the attestation clause is in a language not known to the witnesses, it shall
be interpreted to them. (n)
ART. 806. Every will must be acknowledged before a notary public by the
testator and the witnesses. The notary public shall not be required to retain a
copy of the will, or file another with the office of the Clerk of Court. (n)"
The deeds in question although acknowledged before a notary public of the donor
and the donee, the documents were not executed in the manner provided for under
the above-quoted provisions of law.
Thus, the trial court did not commit any reversible error in declaring the subject
deeds of donation null and void.
WHEREFORE, the petition is hereby DENI ED for lack of merit.

G.R. No. 106755 February 1, 2002
APOLINARIA AUSTRIA-MAGAT, petitioner,
vs.
HON. COURT OF APPEALS and FLORENTINO LUMUBOS, DOMINGO
COMIA, TEODORA CARAMPOT, ERNESTO APOLO, SEGUNDA
SUMPELO, MAMERTO SUMPELO and RICARDO SUMPELO, respondents.
D E C I S I O N
DE LEON, JR., J .:
Before us is a petition for review of the Decision
1
of the Court of Appeals,
2
dated
June 30, 1989 reversing the Decision,
3
dated August 15, 1986 of the Regional Trial
Court (RTC) of Cavite, Branch 17. The Decision of the RTC dismissed Civil Case
No. 4426 which is an action for annulment of title, reconveyance and damages.
The facts of the case are as follows:
Basilisa Comerciante is a mother of five (5) children, namely, Rosario Austria,
Consolacion Austria, herein petitioner Apolinaria Austria-Magat, Leonardo, and one
of herein respondents, Florentino Lumubos. Leonardo died in a Japanese
concentration camp at Tarlac during World War II.
In 1953, Basilisa bought a parcel of residential land together with the improvement
thereon covered and described in Transfer Certificate of Title No. RT-4036 (T-3268)
and known as Lot 1, Block 1, Cavite Beach Subdivision, with an area of 150 square
meters, located in Bagong Pook, San Antonio, Cavite City.
On December 17, 1975, Basilisa executed a document designated as "Kasulatan sa
Kaloobpala (Donation)". The said document which was notarized by Atty. Carlos
Viniegra, reads as follows:
KASULATANG SA KALOOBPALA
(DONATION)
TALASTASIN NG LAHAT AT SINUMAN:
Na ako, si BASELISA COMERCIANTE, may sapat na gulang, Filipina, balo, at
naninirahan sa blg. 809 L. Javier Bagong Pook, San Antonio, Lungsod ng Kabite,
Filipinas, sa pamamagitan ng kasulatang itoy
NAGSASALAYSAY
Na alang-alang sa mabuting paglilingkod at pagtingin na iniukol sa akin ng apat
kong mga tunay na anak na sila:
ROSARIO AUSTRIA, Filipina, may sapat na gulang, balo, naninirahan sa 809 L.
Javier, Bagong Pook, San Antonio, Lungsod ng Kabite;
CONSOLACION AUSTRIA, Filipina, may sapat na gulang, balo naninirahan sa 809
L. Javier, Bagong Pook, San Antonio, Lungsod ng Kabite;
APOLINARIA AUSTRIA, Filipina, may sapat na gulang, may asawa, naninirahan
sa Pasong Kawayan, Hen. Trias, Kabite;
FLORENTINO LUMUBOS, Filipino, may sapat na gulang, asawa ni Encarnacion
Magsino, at naninirahan din sa 809 L. Javier, Bagong Pook, San Antonio, Lungsod
ng Kabite; ay
Kusang loob na ibinibigay ko at ipinagkakaloob ng ganap at hindi na mababawi sa
naulit ng apat na anak ko at sa kanilang mga tagamagmana (sic), ang aking isang
lupang residential o tirahan sampu ng aking bahay nahan ng nakatirik doon na nasa
Bagong Pook din, San Antonio, Lungsod ng Kabite, at nakikilala bilang Lote no. 7,
Block no.1, of Subdivision Plan Psd-12247; known as Cavite Beach Subdivision,
being a portion of Lot No. 1055, of the Cadastral survey of Cavite, GLRO Cadastral
Rec. no. 9539; may sukat na 150 metros cuadrados, at nakatala sa pangalan ko sa
Titulo Torrens bilang TCT-T-3268 (RT-4036) ng Lungsod ng Kabite;
Na ang Kaloob palang ito ay magkakabisa lamang simula sa araw na akoy pumanaw
sa mundo, at sa ilalim ng kondision na:
Magbubuhat o babawasin sa halaga ng nasabing lupa at bahay ang anumang
magugul o gastos sa aking libing at nicho at ang anumang matitira ay hahatiin ng
APAT na parte, parepareho isang parte sa bawat anak kong nasasabi sa itaas nito
upang maliwanang (sic) at walang makakalamang sinoman sa kanila;
At kaming apat na anak na nakalagda o nakadiit sa kasulatang ito ay
TINATANGGAP NAMIN ang kaloob-palang ito ng aming magulang na si Basilisa
Comerciante, at tuloy pinasasalamatan namin siya ng taos sa (sic) puso dahil sa
kagandahan look (sic) niyang ito sa amin.
SA KATUNAYAN, ay nilagdaan o diniitan namin ito sa Nobeleta, Kabite, ngayong
ika-17 ng Disyembre taong 1975.
HER MARK
BASELISA COMERCIANTE
Tagakaloobpala
HER MARK
ROSARIO AUSTRIA
(Sgd.) APOLINARIA AUSTRIA
Tagatanggap-pala
HER MARK
CONSOLACION AUSTRIA
(Sgd.)FLORENTINO LUMUBOS
Tagatanggap-pala
(Acknowledgment signed by Notary Public C.T. Viniegra is omitted).
4

Basilisa and her said children likewise executed another notarized document
denominated as "Kasulatan" which is attached to the deed of donation. The said
document states that:
KASULATAN
TALASTASIN NG MADLA:
Na kaming mga nakalagda o nakadiit sa labak nito sila Basilisa Comerciante at ang
kanyang mga anak na sila:
Rosario Austria, Consolacion Austria, Apolonio Austria, at Florentino Lumubos,
pawang may mga sapat na gulang, na lumagda o dumiit sa kasulatang kaloob pala,
na sinangayunan namin sa harap ng Notario Publico, Carlos T. Viniegra, ay
nagpapahayag ng sumusunod:
Na ang titulo numero TCT-T-2260 (RT-4036) ng Lungsod ng Kabite, bahay sa
loteng tirahan ng Bagong Pook na nababanggit sa nasabing kasulatan, ay mananatili
sa poder o possession ng Ina, na si Basilisa Comerciante habang siya ay nabubuhay
at
Gayon din ang nasabing Titulo ay hindi mapapasangla o maipagbibili ang lupa
habang maybuhay ang nasabing Basilisa Comerciante.

Sa katunayan ang nagsilagda kaming lahat sa labak nito sa harap ng abogado Carlos
T. Viniegra at dalawang saksi.
Nobeleta, Kabite. Ika-17 ng Disyembre, 1975.
5

On February 6, 1979, Basilisa executed a Deed of Absolute Sale of the subject house
and lot in favor of herein petitioner Apolinaria Austria-Magat for Five Thousand
Pesos (P5,000.00). As the result of the registration of that sale, Transfer Certificate
of Title (TCT for brevity) No. RT-4036 in the name of the donor was cancelled and
in lieu thereof TCT No. T-10434 was issued by the Register of Deeds of Cavite City
in favor of petitioner Apolinaria Austria-Magat on February 8, 1979.
On September 21, 1983, herein respondents Teodora Carampot, Domingo Comia,
and Ernesto Apolo (representing their deceased mother Consolacion Austria),
Ricardo, Mamerto and Segunda, all surnamed Sumpelo (representing their deceased
mother Rosario Austria) and Florentino Lumubos filed before the Regional Trial
Court of Cavite an action, docketed as Civil Case No. 4426 against the petitioner for
annulment of TCT No. T-10434 and other relevant documents, and for reconveyance
and damages.
On August 15,1986, the trial court dismissed Civil Case No. 4426 per its Decision,
the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, this Court hereby renders judgment for
defendant dismissing this case and ordering plaintiffs to pay the amount of P3,000.00
as attorneys fees and the costs of suit.
SO ORDERED.
6

According to the trial court, the donation is a donation mortis causa pursuant to
Article 728 of the New Civil Code inasmuch as the same expressly provides that it
would take effect upon the death of the donor; that the provision stating that the
donor reserved the right to revoke the donation is a feature of a donation mortis
causa which must comply with the formalities of a will; and that inasmuch as the
donation did not follow the formalities pertaining to wills, the same is void and
produced no effect whatsoever. Hence, the sale by the donor of the said property was
valid since she remained to be the absolute owner thereof during the time of the said
transaction.
On appeal, the decision of the trial court was reversed by the Court of Appeals in its
subject decision, the dispositive portion of which reads, to wit:
WHEREFORE, in view of the foregoing, the appealed decision is hereby SET
ASIDE and a new one rendered:
1. declaring null and void the Deed of Sale of Registered Land (Annex B)
and Transfer Certificate of Title No. T-10434 of the Registry of Deeds of
Cavite City (Annex E) and ordering the cancellation thereof; and
2. declaring appellants and appellee co-owners of the house and lot in
question in accordance with the deed of donation executed by Basilisa
Comerciante on December 17, 1975.
No pronouncement as to costs.
SO ORDERED.
7

The appellate court declared in its decision that:
In the case at bar, the decisive proof that the deed is a donation inter vivos is in the
provision that :
Ibinibigay ko at ipinagkakaloob ng ganap at hindi mababawi sa naulit na apat na
anak ko at sa kanilang mga tagapagmana, ang aking lupang residential o tirahan
sampu ng aking bahay nakatirik doon xxx. (emphasis supplied)
This is a clear expression of the irrevocability of the conveyance. The irrevocability
of the donation is a characteristic of a donation inter vivos. By the words "hindi
mababawi", the donor expressly renounced the right to freely dispose of the house
and lot in question. The right to dispose of a property is a right essential to full
ownership. Hence, ownership of the house and lot was already with the donees even
during the donors lifetime. xxx
x x x x x x x x x
In the attached document to the deed of donation, the donor and her children
stipulated that:
Gayon din ang nasabing titulo ay hindi mapapasangla o maipagbibili ang lupa
habang may buhay ang nasabing Basilisa Comerciante."
The stipulation is a reiteration of the irrevocability of the dispossession on the part of
the donor. On the other hand, the prohibition to encumber, alienate or sell the
property during the lifetime of the donor is a recognition of the ownership over the
house and lot in issue of the donees for only in the concept of an owner can one
encumber or dispose a property.
8

Hence this appeal grounded on the following assignment of errors:
I
THE RESPONDENT COURT OF APPEALS, WITH DUE RESPECT, IGNORED
THE RULES OF INTERPRETATION OF CONTRACTS WHEN IT
CONSIDERED THE DONATION IN QUESTION ASINTER VIVOS.
II
THE RESPONDENT COURT OF APPEALS, AGAIN WITH DUE RESPECT,
ERRED IN NOT HOLDING THAT THE PRESENT ACTION HAS PRESCRIBED
UNDER THE STATUTE OF LIMITATIONS.
9

Anent the first assignment of error, the petitioner argues that the Court of Appeals
erred in ruling that the donation was a donation inter vivos. She claims that in
interpreting a document, the other relevant provisions therein must be read in
conjunction with the rest. While the document indeed stated that the donation was
irrevocable, that must be interpreted in the light of the provisions providing that the
donation cannot be encumbered, alienated or sold by anyone, that the property
donated shall remain in the possession of the donor while she is alive, and that the
donation shall take effect only when she dies. Also, the petitioner claims that the
donation is mortis causa for the reason that the contemporaneous and subsequent
acts of the donor, Basilisa Comerciante, showed such intention. Petitioner cites the
testimony of Atty. Viniegra, who notarized the deed of donation, that it was the
intent of the donor to maintain control over the property while she was alive; that
such intent was shown when she actually sold the lot to herein petitioner.
We affirm the appellate courts decision.
The provisions in the subject deed of donation that are crucial for the determination
of the class to which the donation belongs are, as follows:
x x x x x x x x x

xxx(I)binibigay ko at ipinagkakaloob ng ganap at hindi mababawi sa naulit na apat
na anak ko at sa kanilang mga tagapagmana, ang aking lupang residential o tirahan
sampu ng aking bahay nakatirik doon na nasa Bagong Pook din, San Antonio,
Lungsod ng Kabite
x x x x x x x x x
Na ang Kaloob palang ito ay magkakabisa lamang simula sa araw na akoy pumanaw
sa mundo, xxx.
x x x x x x x x x
Na ang titulo numero TCT-T-2260 (RT-4036) ng Lungsod ng Kabite, bahay sa
loteng tirahan ng Bagong Pook na nababanggit sa nasabing kasulatan, ay mananatili
sa poder o possesion ng Ina, na si Basilisa Comerciante habang siya ay nabubuhay at
Gayon din ang nasabing Titulo ay hindi mapapasangla o maipagbibili ang lupa
habang maybuhay ang nasabing Basilisa Comerciante xxx.
It has been held that whether the donation is inter vivos or mortis causa depends on
whether the donor intended to transfer ownership over the properties upon the
execution of the deed.
10
In Bonsato v. Court of Appeals,
11
this Court enumerated the
characteristics of a donation mortis causa, to wit:
(1) It conveys no title or ownership to the transferee before the death of the
transferor; or, what amounts to the same thing, that the transferor should
(2) That before his death, the transfer should be revocable by the transferor
at will, ad nutum; but revocability may be provided for indirectly by means
of a reserved power in the donor to dispose of the properties conveyed;
(3) That the transfer should be void if the transferor should survive the
transferee.
Significant to the resolution of this issue is the irrevocable character of the donation
in the case at bar. In Cuevas v. Cuevas,
12
we ruled that when the deed of donation
provides that the donor will not dispose or take away the property donated (thus
making the donation irrevocable), he in effect is making a donation inter vivos. He
parts away with his naked title but maintains beneficial ownership while he lives. It
remains to be a donation inter vivosdespite an express provision that the donor
continues to be in possession and enjoyment of the donated property while he is
alive. In the Bonsato case, we held that:
(W)hat is most significant [in determining the type of donation] is the absence of
stipulation that the donor could revoke the donations; on the contrary, the deeds
expressly declare them to be "irrevocable", a quality absolutely incompatible with
the idea of conveyances mortis causa where revocability is of the essence of the act,
to the extent that a testator can not lawfully waive or restrict his right of revocation
(Old Civil Code, Art.737; New Civil Code, Art. 828).
13

Construing together the provisions of the deed of donation, we find and so hold that
in the case at bar the donation is inter vivos. The express irrevocability of the same
("hindi na mababawi") is the distinctive standard that identifies that document as a
donation inter vivos. The other provisions therein which seemingly make the
donationmortis causa do not go against the irrevocable character of the subject
donation. According to the petitioner, the provisions which state that the same will
only take effect upon the death of the donor and that there is a prohibition to alienate,
encumber, dispose, or sell the same, are proofs that the donation is mortis causa. We
disagree. The said provisions should be harmonized with its express irrevocability.
In Bonsato where the donation per the deed of donation would also take effect upon
the death of the donor with reservation for the donor to enjoy the fruits of the land,
the Court held that the said statements only mean that "after the donors death, the
donation will take effect so as to make the donees the absolute owners of the donated
property, free from all liens and encumbrances; for it must be remembered that the
donor reserved for himself a share of the fruits of the land donated."
14

In Gestopa v. Court of Appeals,
15
this Court held that the prohibition to alienate does
not necessarily defeat theinter vivos character of the donation. It even highlights the
fact that what remains with the donor is the right of usufruct and not anymore the
naked title of ownership over the property donated. In the case at bar, the provision
in the deed of donation that the donated property will remain in the possession of the
donor just goes to show that the donor has given up his naked title of ownership
thereto and has maintained only the right to use (jus utendi) and possess (jus
possidendi) the subject donated property.
Thus, we arrive at no other conclusion in that the petitioners cited provisions are
only necessary assurances that during the donors lifetime, the latter would still enjoy
the right of possession over the property; but, his naked title of ownership has been
passed on to the donees; and that upon the donors death, the donees would get all
the rights of ownership over the same including the right to use and possess the
same.
Furthermore, it also appeared that the provision in the deed of donation regarding the
prohibition to alienate the subject property is couched in general terms such that even
the donor is deemed included in the said prohibition ("Gayon din ang nasabing
Titulo ay hindi mapapasangla o maipagbibili ang lupa habang maybuhay ang
nasabing Basilisa Comerciante"). Both the donor and the donees were prohibited
from alienating and encumbering the property during the lifetime of the donor. If the
donor intended to maintain full ownership over the said property until her death, she
could have expressly stated therein a reservation of her right to dispose of the same.
The prohibition on the donor to alienate the said property during her lifetime is proof
that naked ownership over the property has been transferred to the donees. It also
supports the irrevocable nature of the donation considering that the donor has already
divested herself of the right to dispose of the donated property. On the other hand,
the prohibition on the donees only meant that they may not mortgage or dispose the
donated property while the donor enjoys and possesses the property during her
lifetime. However, it is clear that the donees were already the owners of the subject
property due to the irrevocable character of the donation.
The petitioner argues that the subsequent and contemporaneous acts of the donor
would show that her intention was to maintain control over her properties while she
was still living. We disagree. Respondent Domingo Comia testified that sometime in
1977 or prior to the sale of the subject house and lot, his grandmother, the donor in
the case at bar, delivered the title of the said property to him; and that the act of the
donor was a manifestation that she was acknowledging the ownership of the donees
over the property donated.
16
Moreover, Atty. Viniegra testified that when the donor
sold the lot to the petitioner herein, she was not doing so in accordance with the

agreement and intent of the parties in the deed of donation; that she
was disregarding the provision in the deed of donation prohibiting the alienation of
the subject property; and that she knew that the prohibition covers her as well as the
donees.
17

Another indication in the deed of donation that the donation is inter vivos is the
acceptance clause therein of the donees. We have ruled that an acceptance clause is a
mark that the donation is inter vivos. Acceptance is a requirement for donations inter
vivos. On the other hand, donations mortis causa, being in the form of a will, are not
required to be accepted by the donees during the donors lifetime.
18

We now rule on whether the donor validly revoked the donation when one of her
daughters and donees, Consolacion Austria, violated the prohibition to encumber the
property. When Consolacion Austria mortgaged the subject property to a certain
Baby Santos, the donor, Basilisa Comerciante, asked one of the respondents herein,
Domingo Comia, to redeem the property, which the latter did. After the petitioner in
turn redeemed the property from respondent Domingo, the donor, Basilisa, sold the
property to the petitioner who is one of the donees.
The act of selling the subject property to the petitioner herein cannot be considered
as a valid act of revocation of the deed of donation for the reason that a formal case
to revoke the donation must be filed pursuant to Article 764 of the Civil
Code
19
which speaks of an action that has a prescriptive period of four (4) years from
non-compliance with the condition stated in the deed of donation. The rule that there
can be automatic revocation without benefit of a court action does not apply to the
case at bar for the reason that the subject deed of donation is devoid of any provision
providing for automatic revocation in event of non-compliance with the any of the
conditions set forth therein. Thus, a court action is necessary to be filed within four
(4) years from the non-compliance of the condition violated. As regards the ground
of estoppel, the donor, Basilisa, cannot invoke the violation of the provision on the
prohibition to encumber the subject property as a basis to revoke the donation thereof
inasmuch as she acknowledged the validity of the mortgage executed by the donee,
Consolacion Austria, when the said donor asked respondent Domingo Comia to
redeem the same. Thereafter, the donor, Basilisa likewise asked respondent
Florentino Lumubos and the petitioner herein to redeem the same.
20
Those acts
implied that the donees have the right of control and naked title of ownership over
the property considering that the donor, Basilisa condoned and acknowledged the
validity of the mortgage executed by one of the donees, Consolacion Austria.
Anent the second issue, the petitioner asserts that the action, against the petitioner,
for annulment of TCT No. T-10434 and other relevant documents, for reconveyance
and damages, filed by the respondents on September 21, 1983 on the ground of fraud
and/or implied trust has already prescribed. The sale happened on February 6, 1979
and its registration was made on February 8, 1979 when TCT No. RT-4036 in the
name of the donor was cancelled and in lieu thereof TCT No. T-10434 in the name
of the petitioner was issued.1wphi1 Thus, more than four (4) years have passed
since the sale of the subject real estate property was registered and the said new title
thereto was issued to the petitioner. The petitioner contends that an action for
reconveyance of property on the ground of alleged fraud must be filed within four
(4) years from the discovery of fraud which is from the date of registration of the
deed of sale on February 8, 1979; and that the same prescriptive period also applies
to a suit predicated on a trust relationship that is rooted on fraud of breach of trust.
When ones property is registered in anothers name without the formers consent, an
implied trust is created by law in favor of the true owner. Article 1144 of the New
Civil Code provides:
Art. 1144. The following actions must be brought within ten years from the time the
right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment. (n)
Thus, an action for reconveyance of the title to the rightful owner prescribes in ten
(10) years from the issuance of the title.
21
It is only when fraud has been committed
that the action will be barred after four (4) years.
22

However, the four-year prescriptive period is not applicable to the case at bar for the
reason that there is no fraud in this case. The findings of fact of the appellate court
which are entitled to great respect, are devoid of any finding of fraud. The records do
not show that the donor, Basilisa, and the petitioner ever intended to defraud the
respondents herein with respect to the sale and ownership of the said property. On
the other hand, the sale was grounded upon their honest but erroneous interpretation
of the deed of donation that it is mortis causa, not inter vivos; and that the donor still
had the rights to sell or dispose of the donated property and to revoke the donation.
There being no fraud in the trust relationship between the donor and the donees
including the herein petitioner, the action for reconveyance prescribes in ten (10)
years. Considering that TCT No. T-10434 in the name of the petitioner and covering
the subject property was issued only on February 8, 1979, the filing of the complaint
in the case at bar in 1983 was well within the ten-year prescriptive period.
The Court of Appeals, therefore, committed no reversible error in its appealed
Decision.1wphi1
WHEREFORE, the appealed Decision dated June 30, 1989 of the Court of Appeals
is hereby AFFIRMED. No pronouncement as to costs.


G.R. No. L-6600 July 30, 1954
HEIRS OF JUAN BONSATO and FELIPE BONSATO, petitioners,
vs.
COURT OF APPEALS and JOSEFA UTEA, ET AL., respondents.
Benedict C. Balderrama for petitioners.
Inocencio Rosete for respondents.
REYES, J.B.L., J .:
This is a petition for review of a decision of the Court of Appeals holding two deeds
of donation executed on the first day of December, 1939 by the late Domingo
Bonsato in favor of his brother Juan Bonsato and of his nephew Felipe Bonsato, to
be void for being donations mortis causa accomplished without the formalities
required by law for testamentary dispositions.
The case was initiated in the Court of First Instance of Pangasinan (Case No. 8892)
on June 27, 1945, by respondents Josefa Utea and other heirs of Domingo Bonsato
and his wife Andrea Nacario, both deceased. Their complaint (for annulment and
damages) charged that on the first day of December, 1949, Domingo Bonsato, then
already a widower, had been induced and deceived into signing two notarial deeds of
donations (Exhibits 1 and 2) in favor of his brother Juan Bonsato and of his nephew
Felipe Bonsato, respectively, transferring to them several parcels of land covered by
Tax Declaration Nos. 5652, 12049, and 12052, situated in the municipalities of
Mabini and Burgos, Province of Pangasinan, both donations having been duly
accepted in the same act and documents. Plaintiffs likewise charged that the
donations were mortis causa and void for lack of the requisite formalities. The
defendants, Juan Bonsato and Felipe Bonsato, answered averring that the donations
made in their favor were voluntarily executed in consideration of past services
rendered by them to the late Domingo Bonsato; that the same were executed freely
without the use of force and violence, misrepresentation or intimidation; and prayed
for the dismissal of the case and for damages in the sum of P2,000.
After trial, the Court of First Instance rendered its decision on November 13, 1949,
finding that the deeds of donation were executed by the donor while the latter was of
sound mind, without pressure or intimidation; that the deeds were of donation inter
vivos without any condition making their validity or efficacy dependent upon the
death of the donor; but as the properties donated were presumptively conjugal,
having been acquired during the coverture of Domingo Bonsato and his wife Andrea
Nacario, the donations were only valid as to an undivided one-half share in the three
parcels of land described therein.
Thereupon the plaintiffs duly appealed to the Court of Appeals, assigning as primary
error the holding of the court below that the donations are inter vivos; appellants
contending that they were mortis causa donations, and invalid because they had not
been executed with the formalities required for testamentary disposition.
A division of five of the Court of Appeals took the case under consideration, and on
January 12, 1953, the majority rendered judgment holding the aforesaid donations to
be null and void, because they were donations mortis causaand were executed
without the testamentary formalities prescribed by law, and ordered the defendants-
appellees Bonsato to surrender the possession of the properties in litigation to the
plaintiffs-appellants. Two Justices dissented, claiming that the said donations should
be considered as donations inter vivos and voted for the affirmance of the decision of
the Court of First Instance. The donees then sought a review by this Court.
The sole issue submitted to this Court, therefore, is the juridical nature of the
donations in question. Both deeds (Exhs. 1 and 2) are couched in identical terms,
with the exception of the names of the donees and the number and description of the
properties donated. The principal provisions are the following.
ESCRITURA DE DONATION
Yo, Domingo Bonsato, viudo de Andrea Nacario, mayor de edad, vencino y
residente del municipio de Agno, Pangasinan, I.F., por la presente declaro
lo siguiente:
Que mi osbrino Felipe Bonsato, casado, tambien mayor de edad, vecino de
Agno, Pangasinan, I.F., en consideracion de su largo servicio a Domingo
Bonsato, por la presente hagor y otorgo una donacion perfecta e irrevocable
consumada a favor del citado Felipe Bonsato de dos parcelas de terreno
palayero como se describe mas abajo.
(Description omitted)
Que durante su menor de edad de mi citado sobrino Felipe Bonsato hasta en
estos dias, siempre me ha apreciado y estimado como uno de mis hijos y
siempre ha cumplido todas mis ordenes, y por esta razon bajo su pobriza sea
movido mi sentimiento para dar una recompensa de sus trabajos y aprecios
a mi favor.
Que en este de 1939 el donante Domingo Bonsato ha entregado a Felipe
Bonsato dichos terrenos donados y arriba citados pero de los productos
mientras vive el donante tomara la parte que corresponde como dueo y la
parte como inquilino tomara Felipe Bonsato.
Que en vista de la vejez del donante, el donatorio Felipe Bonsato tomara
posesion inmediatamente de dichos terrenos a su favor.
Que despues de la muerte del donante entrara en vigor dicha donancion y el
donatario Felipe Bonsato tendra todos los derechos de dichos terrenos en
concepto de dueo absoluto de la propiedad libre de toda responsibilidad y
gravamen y pueda ejercitar su derecho que crea conveniente.
En Testimonio de todo lo Cual, signo la presente en Agno, Pangasinan, I.F.,
hoy dia 1.0 de Diciembre, 1939.
Domingo (His thumbmark) Bonsato
Yo, Felipe Bonsato, mayor de edad, casado, Vecino de Mabini, Pangasinan,
I.F., declaro por la presente que acepto la donacion anterior otorgado por
Domingo Bonsato a mi favor.
(Sgd.) Felipe Bonsato
SIGNADO Y FIRMADO EN PRESENCIA DE:
(Sgd.) Illegible (Sgd.) Illegible
The majority of the special divisions of five of the Court of Appeals that took
cognizance of this case relied primarily on the last paragraph, stressing the passage:
Que despues de la muerte del donante entrara en vigor dicha donacion . . .

while the minority opinion lay emphasis on the second paragraph, wherein the donor
states that he makes "perfect, irrevocable, and consummated donation" of the
properties to the respective donees, petitioners herein.
Strictly speaking, the issue is whether the documents in question embody valid
donations, or else legacies void for failure to observe the formalities of wills
(testaments). Despite the widespread use of the term "donations mortis causa," it is
well-established at present that the Civil Code of 1889, in its Art. 620, broke away
from the Roman Law tradition, and followed the French doctrine that no one may
both donate and retain ("donner at retenir ne vaut"), by merging the erstwhile
donations mortis causa with the testamentary dispositions, thus suppressing said
donations as an independent legal concept.
ART. 620. Donations which are to become effective upon the death of the
donor partake of the nature of disposals of property by will and shall be
governed by the rules established for testamentary successions.
Commenting on this article, Mucius Scaevola (Codigo Civl, Vol. XI, 2 parte, pp.
573, 575 says:
No ha mucho formulabamos esta pregunta: Subsisten las donaciones mortis
causa como institucion independiente, con propia autonomia y propio
compo jurisdiccional? La respuesta debe ser negativa.
x x x x x x x x x
Las donaciones mortis causa se consevan en el Codigo como se conserva
un cuerpo fosil en las vitrinas de un Museo. La asimilacion entre las
donaciones por causa de muerte y las transmissiones por testamento es
perfecta.
Manresa, in his Commentaries (5th ed.), Vol. V. p. 83, expresses the same opinion:
"La disposicion del articulo 620 significa, por lo tanto: 1..o, que han
desaparecido las llamas antes donaciones mortis causapor lo que el Codigo
no se ocupa de ellas en absoluto; 2.o, que toda disposicion de bienes para
despues de la muerte sigue las reglas establecidas para la sucesion
testamentaria.
And Castan, in his Derecho Civil, Vol. IV (7th Ed., 1953), p. 176, reiterates:
(b) Subsisten hoy en nuestro derecho las donaciones mortis causa? De lo
que acabamos de decir se desprende que las donaciones mortis causa han
perdido en el Codigo Civil su caracter distintivo y su naturaleza y hay que
considerarlos hoy como una institucion suprimida, refundida en el legado ...
. Las tesis de la desaparcion de las donaciones mortis causa en nuestro
Codigo Civil, acusada ya precedentemente por el pryecto de 1851 puede
decirse que constituye una communis opinion entre nuestros expositores,
incluso los mas recientes.
We have insisted on this phase of the legal theory in order to emphasize that the term
"donations mortis causa" as commonly employed is merely a convenient name to
designate those dispositions of property that are void when made in the form of
donations.
Did the late Domingo Bonsato make donations inter vivos or dispositions post
mortem in favor of the petitioners herein? If the latter, then the documents should
reveal any or all of the following characteristics:
(1) Convey no title or ownership to the transferee before the death of the transferor;
or, what amounts to the same thing, that the transferor should retain the ownership
(full or naked) and control of the property while alive (Vidalvs. Posadas, 58 Phil.,
108; Guzman vs. Ibea, 67 Phil., 633);
(2) That before his death, the transfer should be revocable by the transferor at
will, ad nutum; but revocability may be provided for indirectly by means of a
reserved power in the donor to dispose of the properties conveyed (Bautista vs.
Sabiniano, G. R.
L-4326, November 18, 1952);
(3) That the transfer should be void if the transferor should survive the transferee.
None of these characteristics is discernible in the deeds of donation, Exhibits 1 and
2, executed by the late Domingo Bonsato. The donor only reserved for himself,
during his lifetime, the owner's share of the fruits or produce ("de los productos
mientras viva el donante tomara la parte que corresponde como dueo"), a
reservation that would be unnecessary if the ownership of the donated property
remained with the donor. Most significant is the absence of stipulation that the donor
could revoke the donations; on the contrary, the deeds expressly declare them to be
"irrevocable", a quality absolutely incompatible with the idea of conveyances mortis
causa where revocability is of the essence of the act, to the extent that a testator can
not lawfully waive or restrict his right of revocation (Old Civil Code, Art. 737; New
Civil Code, Art. 828).
It is true that the last paragraph in each donation contains the phrase "that after the
death of the donor the aforesaid donation shall become effective" (que despues de la
muerte del donante entrara en vigor dicha donacion"). However, said expression
must be construed together with the rest of the paragraph, and thus taken, its
meaning clearly appears to be that after the donor's death, the donation will take
effect so as to make the donees the absolute owners of the donated property, free
from all liens and encumbrances; for it must be remembered that the donor reserved
for himself a share of the fruits of the land donated. Such reservation constituted a
charge or encumbrance that would disappear upon the donor's death, when full title
would become vested in the donees.
Que despues de la muerte del donante entrara en vigor dicha donacion y el
donatario Felipe Bonsato tendra todos derechos de dichos terrenos en
concepto de dueo absoluto de la propiedad libre de toda responsibilidad y
gravamen y puede ejercitar su derecho que crea conveniente.
Any other interpretation of this paragraph would cause it to conflict with the
irrevocability of the donation and its consummated character, as expressed in the first
part of the deeds of donation, a conflict that should be avoided (Civ. Code of 1889,
Art. 1285; New Civil Code, Art. 1374; Rule 123, sec. 59, Rules of Court).
Que mi sobrino FILIPINO BONSATO, casado, tambien mayor de edad, vecino de
Agno, Pangasinan, I. F., en consideracion de su largo servicio a Domingo Bonsato,
por la presente hago y otorgo una donacion perfecta e irrevocable consumada a favor
del citado Felipe Bonsato de dos parcelas de terreno palayero como se describe mas
abajo.
In the cases held by this Court to be transfers mortis causa and declared invalid for
not having been executed with the formalities of testaments, the circumstances

clearly indicated the transferor's intention to defer the passing of title until after his
death. Thus, in Cario vs. Abaya, 70 Phil., 182, not only were the properties not to
be given until thirty days after the death of the last of the donors, but the deed also
referred to the donees as "those who had been mentioned to inherit from us", the
verb "to inherit" clearly implying the acquisition of property only from and after the
death of the alleged donors. In Bautista vs. Sabiniano, 49 Off. Gaz., 549; 92 Phil.,
244, the alleged donor expressly reserved the right to dispose of the properties
conveyed at any time before his death, and limited the donation "to whatever
property or properties left undisposed by me during my lifetime", thus clearly
retaining their ownership until his death. While in David vs. Sison, 42 Off. Gaz.
(Dec, 1946) 3155, the donor not only reserved for herself all the fruits of the property
allegedly conveyed, but what is even more important, specially provided that
"without the knowledge and consent of the donor, the donated properties could not
be disposed of in any way", thereby denying to the transferees the most essential
attribute of ownership, the power to dispose of the properties. No similar restrictions
are found in the deeds of donation involved in this appeal.
That the conveyance was due to the affection of the donor for the donees and the
services rendered by the latter, is of no particular significance in determining
whether the deeds Exhibits 1 and 2 constitute transfers inter vivos or not, because a
legacy may have identical motivation. Nevertheless, the existence of such
consideration corroborates the express irrevocability of the transfers and the absence
of any reservation by the donor of title to, or control over, the properties donated,
and reinforces the conclusion that the act was inter vivos. Hence, it was error for the
Court of Appeals to declare that Exhibits 1 and 2 were invalid because the
formalities of testaments were not observed. Being donations inter vivos, the
solemnities required for them were those prescribed by Article 633 of the Civil Code
of 1889 (reproduced in Art. 749 of the new Code, and it is undisputed that these were
duly complied with. As the properties involved were conjugal, the Court of First
Instance correctly decided that the donations could not affect the half interest
inherited by the respondents Josefa Utea, et al. from the predeceased wife of the
donor.
The decision of the Court of Appeals is reversed, and that of the Court of First
Instance is revived and given effect. Costs against respondents.



G.R. No. L-45262 July 23, 1990
RUPERTO REYES and REYNALDO C. SAN JUAN, in his capacity as Special
Administrator, petitioners,
vs.
HON. LORENZO R. MOSQUEDA, Judge of CFI, Pampanga (Branch VII),
and URSULA D. PASCUAL,respondents.
G.R. No. L-45394 July 23, 1990

PEDRO DALUSONG, petitioner,
vs
HON. LORENZO R. MOSQUEDA, JUDGE, BRANCH VII, COURT OF
FIRST INSTANCE OF PAMPANGA, and URSULA D.
PASCUAL, respondents.
G.R. Nos. 73241-42 July 23, 1990
OFELIA D. PARUNGAO and ROSARIO DUNCIL, petitioners,
vs.
THE HON. INTERMEDIATE APPELLATE COURT, (Third Civil Cases
Division), BENJAMIN P. REYES and OSCAR REYES, respondents.

GUTIERREZ, J R., J .:
The instant petitions have been consolidated as they arose from the same facts and
involve similar issues. Dr. Emilio Pascual died intestate and without issue on
November 18,1972. He was survived by his sister, Ursula Pascual and the children of
his late sisters as follows: (1) Maria Pascual Reyes- Ruperto Reyes and Jose Reyes;
(2) Ines Pascual Reyes-Jose P. Reyes, Benito Reyes, and Manna Reyes Manalastas;
(3) Josefa Pascual Reyes-Augusto Reyes and Benjamin Reyes; and (4) Escolastica
Pascual Dalusong (half- blood Pedro Dalusong.
On December 3, 1973, the heirs of Dr. Pascual filed Special Proceedings No. 73-30-
M in the then Court of First Instance of Pampanga for the administration of his
estate. Atty. Marcela Macapagal, Clerk of Court of Branch VII was appointed special
administratrix. Macapagal was, however, replaced by Reynaldo San Juan.
On February 12, 1976, Ursula Pascual filed a motion to exclude some properties
from the inventory of Pascual's estate and to deliver the titles thereto to her. Ursula
alleged that Dr. Pascual during his lifetime or on November 2, 1966 executed a
"Donation Mortis Causa" in her favor covering properties which are included in the
estate of Dr. Pascual (subject of Special Proceedings No. 73-30-M) and therefore
should be excluded from the inventory.
On August 1, 1976; the trial court issued an order excluding from the inventory of
the estate the properties donated to Ursula, to wit:
WHEREFORE, in view of all the foregoing discussion, let the
properties listed in paragraph 2 of the motion of February 12, 1976
filed by Ursula D. Pascual thru counsel be, as it is hereby ordered,
excluded from the inventory of the estate of the deceased Dr.
Emilio D. Pascual, without prejudice to its final determination in a
separate action. Special Administrator Reynaldo San Juan is
hereby ordered to return to Court the custody of the corresponding
certificates of titles of these properties, until the issue of ownership
is finally determined in a separate action. (G.R. No. 45262, pp. 23-
24)
The Order is now the subject of G.R. Nos. 45262 and 45394. On January 5, 1977, we
issued a temporary restraining order enjoining the trial court from enforcing the
August 1, 1976 Order.
Among the properties included in the "donation mortis causa" in favor of Ursula was
Lot 24, Block No. 15 of the subdivision plan Psd-3231, located at 1109-1111 R.
Papa St., Tondo, Manila as evidenced by Transfer Certificate of Title No. 17854.
The records show that on May 15, 1969, Emilio Pascual executed a deed of donation
of real property inter vivos over the abovementioned lot in Manila in favor of Ofelia
D. Parungao, petitioner in G.R. Nos. 73241-42 a minor with her mother, Rosario
Duncil, accepting the gift and donation for and in her behalf. When Parungao
reached the age of majority or on December 20, 1976, she tried to have the donation
registered. However, she found out that the certificate of title was missing from
where it was supposed to be kept, prompting her to file a petition for reconstitution
of title with the Court of First Instance of Manila. The petition was granted in
October 1977. Parungao registered the deed of donation with the Register of Deeds
of Manila who cancelled Transfer Certificate of Title No. 17854 and issued in lieu
thereof Transfer Certificate of Title No. 129092 in the name of Ofelia Parungao. She
then filed a motion for exclusion in Special Proceedings No. 73-30-M.
In the meantime, on September 23, 1976, Ursula Pascual executed a deed of absolute
sale over the Tondo property in favor of Benjamin, Oscar, Jose and Emmanuel, all
surnamed Reyes.
On May 2, 1978, Benjamin Reyes, private respondent in G.R. Nos. 73241-42 filed a
complaint for declaration of nullity of Transfer Certificate of Title No. 129092,
Register of Deeds of Manila and/or reconveyance of deed of title against Ofelia
Parungao and Rosario Duncil, with the then Court of First Instance of Manila. The
case was docketed as Civil Case No. 115164.
In their answer with compulsory counterclaim Parungao and Duncil, denied Reyes'
assertion of ownership over the Tondo property. On November 6, 1978, Ofelia
Parungao filed a complaint for recovery of possession over the Tondo property
against Benjamin Reyes and his nephew Oscar Reyes with the Court of First Instance
of Manila. The case was docketed as Civil Case No. 119359. In her complaint,
Parungao also alleged that as early as 1973, the defendants occupied two (2) doors of
the apartment situated at the Tondo property by mere tolerance of the previous
owner, Dr. Emilio Pascual, and later by her until April 8, 1978 when she formally
demanded that the defendants vacate the premises. Parungao prayed that the
defendants be evicted from the premises.
The two cases were consolidated. On June 3, 1982, the then Court of First Instance,
Branch 8 rendered a joint decision, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered: In Civil Case No.
115164
1) Declaring TCT No. 129092 in the name of Ofelia Parungao null
and void; and ordering the Register of Deeds of Manila to cancel

said title and to restore, in lieu thereof, TCT No. 17854 in the name
of Emilio D. Pascual;
2) Ordering Ofelia D. Parungao to pay plaintiff Benjamin P. Reyes
the sum of Two Thousand (P2,000.00) Pesos, as and for attorney's
fees; and to pay the costs of suit including all fees which the
Register of Deeds may prescribe for the full implementation of this
decision. For lack of merit, the counterclaim is dismissed.
In Civil Case No. 119359
1) Dismissing the complaint for want of merit; and
2) On the counterclaim, ordering Ofelia Parungao to pay defendant
defendants the sum of Two Thousand (P2,000.00) Pesos as and for
attorney's fees.'
Parungao appealed the decision to the then Intermediate Appellate Court. The
decision was, however, affirmed, with costs against the appellant.
The Intermediate Appellate Court decision is now the subject matter in G.R. Nos.
73241-42.
On January 29, 1986, we issued a minute resolution denying the above petition for
lack of merit. The resolution became final and executory on March 10, 1986 and on
this same day the entry of judgment was effected. The entry of judgment was
however set aside in the resolution dated January 19, 1987 on the ground that the
January 29, 1986 resolution was not received by the petitioners' counsel of record.
The petitioner was granted leave to file a motion for reconsideration of the January
29, 1986 resolution.
The motion for reconsideration is now before us for resolution petition.
The issues raised in these petitions are two-fold: (1) In G.R. No. L-45394, petitioner
Pedro Dalusong questions the jurisdiction of the probate court to exclude the
properties donated to Ursula Pascual in its Order dated August 1, 1976, and (2) In
G.R. No. L-45262 and G.R. Nos. 73241-42 Ruperto Reyes, Reynaldo C. San Juan, in
his capacity as special administrator of the estate of Emilio Pascual (petitioner in
G.R. No.
L- 45262), Ofelia Parungao and Rosario Duncil (petitioners in G.R. Nos. 7324142)
question the appellate court's finding that the "Donation Mortis Causa" executed by
Emilio Pascual in favor of his sister Ursula Pascual was actually a Donation Inter
Vivos.
We first discuss the issue on jurisdiction. The questioned August 1, 1976 order of the
then Court of First Instance of Pampanga in S.P. Proc. No. 73-30-M categorically
stated that the exclusion from the inventory of the estate of the deceased Dr. Emilio
D. Pascual was "without prejudice to its final determination in a separate action."
The provisional character of the exclusion of the contested properties in the
inventory as stressed in the order is within the jurisdiction of the probate court. This
was stressed in the case of Cuizon v. Ramolete (129 SCRA 495 [1984]) which we
cited in the case of Morales v. Court of First Instance of Cavite, Branch V (146
SCRA 373 [1986]):
It is well-settled rule that a probate court or one in charge of
proceedings whether testate or intestate cannot adjudicate or
determine title to properties claimed to be a part of the estate and
which are equally claimed to belong to outside parties. All that the
said court could do as regards said properties is to determine
whether they should or should not be included in the inventory or
list of properties to be administered by the administrator. If there is
no dispute, well and good; but if there is, then the parties, the
administrator, and the opposing parties have to resort to an
ordinary action for a final determination of the conflicting claims
of title because the probate court cannot do so (Mallari v. Mallari,
92 Phil. 694; Baquial v. Amihan, 92 Phil. 501).itc-asl
Similarly, in Valero Vda. de Rodriguez v. Court of Appeals, (91
SCRA 540) we held that for the purpose of determining whether a
certain property should or should not be included in the inventory,
the probate court may pass upon the title thereto but such
determination is not conclusive and is subject to the final decision
in a separate action regarding ownership which may be instituted
by the parties (3 Moran's Comments on the Rules of Court, 1970
Edition, pages 448449 and 473; Lachenal v. Salas,
L-42257, June 14, 1976, 71 SCRA 262, 266).
On the second issue, it may be noted that the Court of Appeals did not pass upon the
authenticity of the 1969 donation to Parungao because of its finding that the 1966
donation to Pascual was inter vivos. The petitioners do not press the authenticity of
the 1969 donation as their challenge centers on whether or not the 1966 donation was
inter vivos. However, the trial court has a lengthy discussion reflecting adversely on
the authenticity of the 1969 donation to Parungao.
The petitioners assert that the 1966 donation was null and void since it was not
executed with the formalities of a will. Therefore, the petitioners in G.R. No. L-
45262 insist that the donated properties should revert to the estate of Emilio Pascual
while the petitioners in G.R. Nos. 73241-42 insist that the donation of real property
inter vivos in favor of Ofelia Parungao be given effect.
The subject deed of donation titled "DONATION MORTIS CAUSA" duly notarized
by a certain Cornelio M. Sigua states:
That Dr. Emilio D. Pascual, Filipino, single, of age and resident of
Apalit, Pampanga, hereinafter called the DONOR and Ursula D.
Pascual, Filipino, single, also of age, resident of and with postal
address at Apalit, Pampanga, hereinafter called the DONEE, have
agreed, as they do hereby agree, to the following, to wit:
That the said DONOR, Dr. Emilio D. Pascual, for and in
consideration of the love and affection which he has and bears unto
the said DONEE, as also for the personal services rendered by the
said DONEE to the said DONOR, does hereby by these presents
voluntarily GIVE, GRANT, and DONATE MORTIS CAUSA unto
the said DONEE URSULA D. PASCUAL, her heirs and assigns,
all of my rights, title and interest, in and to the following parcels of
land with all the improvements thereon, situated in the
Municipality of Apalit, Pampanga, and more particularly described
and Identified as follows:

xxx xxx xxx
(Enumerated herein are 41 parcels of land)
Also included in this DONATION MORTIS CAUSA are all
personal properties of the DONOR in the form of cash money or
bank deposits and insurance in his favor, and his real properties
situated in other towns of Pampanga, such as San Simon, and in
the province of Rizal, San Francisco del Monte and in the City of
Manila.
That the said donor has reserved for himself sufficient property to
maintain him for life; and that the said DONEE does hereby
ACCEPT and RECEIVE this DONATION MORTIS CAUSA and
further does express his appreciation and gratefulness for the
generosity of said DONOR; (Rollo of G.R. No. L-45262, pp. 12-
16)
xxx xxx xxx
Considering the provisions of the DONATION MORTIS CAUSA the appellate court
ruled that the deed of donation was actually a donation inter vivos although
denominated as DONATION MORTIS CAUSA.
It is, now a settled rule that the title given to a deed of donation is not the
determinative factor which makes the donation "inter vivos" or "mortis causa" As
early as the case of Laureta v. Manta, et al., (44 Phil. 668 [1928]) this Court ruled
that the dispositions in a deed of donation-whether "inter vivos" or "mortis causa" do
not depend on the title or term used in the deed of donation but on the provisions
stated in such deed. This Court explained inConcepcion v. Concepcion (91 Phil. 823
[1952])
...But, it is a rule consistently followed by the courts that it is the
body of the document of donation and the statements contained
therein, and not the title that should be considered in ascertaining
the intention of the donor. Here, the donation is entitled and called
donacion onerosa mortis causa. From the body, however, we find
that the donation was of a nature remunerative rather than onerous.
It was for past services rendered, services which may not be
considered as a debt to be paid by the donee but services rendered
to her freely and in goodwill. The donation instead of being
onerous or for a valuable consideration, as in payment of a legal
obligation, was more of remuneratory or compensatory nature,
besides being partly motivated by affection.
We should not give too much importance or significance to or be
guided by the use of the phrase 'mortis causa in a donation and
thereby to conclude that the donation is not one of inter vivos. In
the case of De Guzman et al. v. Ibea et al. (67 Phil. 633), this Court
through Mr. Chief Justice Avancena said that if a donation by its
terms is inter vivos, this character is not altered by the fact that the
donor styles it mortis causa.
In the case of Laureta v. Mata, et al. (44 Phil. 668), the court held
that the donation involved was inter vivos. There, the donor Severa
Magno y Laureta gave the properties involved as
... a reward for the services which he is rendering me, and as a
token of my affection toward him and of the fact that he stands
high in my estimation, I hereby donate 'mortis causa to said youth
all the properties described as follows:
xxx xxx xxx
I also declare that it is the condition of this donation that the donee
cannot take possession of the properties donated before the death
of the donor, and in the event of her death the said donee shall be
under obligation to cause a mass to be held annually as a suffrage
in behalf of my sold, and also to defray the expenses of my burial
and funerals.'
It will be observed that the present case and that of Laureta above
cited are similar in that in both cases the donation was being made
as a reward for services rendered and being rendered, and as a
token of affection for the donee; the phrase 'mortis causa was used;
the donee to take possession of the property donated only after the
death of the donor; the donee was under obligation to defray the
expenses incident to the celebration of the anniversary of the
donor's death, including church fees. The donation in both cases
were duly accepted. In said case of Laureta this Court held that the
donation was in praesenti and not a gift in futuro.
In the later case of Bonsato et al. v. Court of appeals, et al. (95 Phil. 481 [1954]) this
Court, distinguished the characteristics of a donation inter vivos and "mortis causa"
in this wise:
Did the late Domingo Bonsato, make donations inter vivos or
dispositions post mortem in favor of the petitioners herein? If the
latter, then the documents should reveal any or all of the following
characteristics:
(1) Convey no title or ownership to the transferee before the death
of the transferor; or, what amounts to the same thing, that the
transferor should retain the ownership (fun or naked) and control
of the property while alive (Vidal v. Posadas, 58 Phil., 108;
Guzman v. Ibea 67 Phil., 633);
(2) That before his death, the transfer should be revocable by the
transferor at will, ad nutum; but revocability may be provided for
indirectly by means of a reserved power in the donor to dispose of
the properties conveyed (Bautista v. Sabiniano, G.R. No. L- 4326,
November 18, 1952);
(3) That the transfer should be void if the transferor should survive
the transferee.
These principles were repeated in the case of Castro v. Court of Appeals (27 SCRA
1076 [1969]), to wit:

Whether a donation is inter vivos or mortis causa depends upon the
nature of the disposition made. 'Did the donor intend to transfer the
ownership of the property donated upon the execution of the
donation? If this is so, as reflected from the provisions contained in
the donation, then it is inter vivos; otherwise, it is merely mortis
causa, or made to take effect after death.' (Howard v. Padilla and
Court of Appeals, G.R. No. L-7064 and L-7098, April 22, 1955.
Applying the above principles to the instant petitions, there is no doubt that the so-
called DONATION MORTIS CAUSA is really a donation inter vivos. The donation
was executed by Dr. Pascual in favor of his sister Ursula Pascual out of love and
affection as well as a recognition of the personal services rendered by the donee to
the donor. The transfer of ownership over the properties donated to the donee was
immediate and independent of the death of the donor. The provision as regards the
reservation of properties for the donor's subsistence in relation to the other provisions
of the deed of donation confirms the intention of the donor to give naked ownership
of the properties to the donee immediately after the execution of the deed of
donation.
With these findings we find no need to discuss the other arguments raised by the
petitioners.
WHEREFORE, this Court hereby renders judgment as follows:
1) In G.R. Nos. 45262 and 45394 the petitions are DENIED. The Temporary
Restraining Order issued on January 5, 1977 is hereby LIFTED; and
2) In G.R. Nos. 73241-42, the motion for reconsideration is DENIED. This DENIAL
is FINAL.
SO ORDERED.


G.R. No. 162784 June 22, 2007
NATIONAL HOUSING AUTHORITY, petitioner,
vs.
SEGUNDA ALMEIDA, COURT OF APPEALS, and RTC of SAN PEDRO,
LAGUNA, BR. 31, respondents.
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;
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
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 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.


G.R. No. 145736 March 4, 2009
ESTATE OF ORLANDO LLENADO and WENIFREDA T. LLENADO, in her
capacity as (a) Administratrix of the Estate of Orlando A. Llenado and (b)
Judicial Guardian of the Minor children of Orlando A. Llenado, and (c) in her
Own behalf as the Surviving Spouse and Legal Heir of Orlando A.
Llenado, Petitioners,
vs.
EDUARDO LLENADO, JORGE LLENADO, FELIZA GALLARDO VDA. DE
LLENADO and REGISTER OF DEEDS of Valenzuela City, Metro
Manila, Respondents.
D E C I S I O N
YNARES-SANTIAGO, J .:
This petition for review on certiorari assails the May 30, 2000 Decision
1
of the Court
of Appeals in CA-G.R. CV No. 58911 which reversed the May 5, 1997 Decision
2
of
the Regional Trial Court of Valenzuela City, Branch 75 in Civil Case No. 4248-V-
93, and the October 6, 2000 Resolution
3
which denied the motion for
reconsideration. The appellate court dismissed for lack of merit the complaint for
annulment of deed of conveyance, title and damages filed by petitioner against
herein respondents.
The subject of this controversy is a parcel of land denominated as Lot 249-D-1
(subject lot) consisting of 1,554 square meters located in Barrio Malinta, Valenzuela,
Metro Manila and registered in the names of Eduardo Llenado (Eduardo) and Jorge
Llenado (Jorge) under Transfer of Certificate of Title (TCT) No. V-1689.
4
The
subject lot once formed part of Lot 249-D owned by and registered in the name of
their father, Cornelio Llenado (Cornelio), under TCT No. T-16810.
On December 2, 1975, Cornelio leased Lot 249-D-1 to his nephew, Romeo Llenado
(Romeo), for a period of five years, renewable for another five years at the option of
Cornelio. On March 31, 1978, Cornelio, Romeo and the latters cousin Orlando
Llenado (Orlando) executed an Agreement
5
whereby Romeo assigned all his rights
to Orlando over the unexpired portion of the aforesaid lease contract. The parties
further agreed that Orlando shall have the option to renew the lease contract for
another three years commencing from December 3, 1980, up to December 2, 1983,
renewable for another four years or up to December 2, 1987, and that "during the
period that [this agreement] is enforced, the x x x property cannot be sold,
transferred, alienated or conveyed in whatever manner to any third party."
Shortly thereafter or on June 24, 1978, Cornelio and Orlando entered into a
Supplementary Agreement
6
amending the March 31, 1978 Agreement. Under the
Supplementary Agreement, Orlando was given an additional option to renew the
lease contract for an aggregate period of 10 years at five-year intervals, that is, from
December 3, 1987 to December 2, 1992 and from December 3, 1992 to December 2,
1997. The said provision was inserted in order to comply with the requirements of
Mobil Philippines, Inc. for the operation of a gasoline station which was
subsequently built on the subject lot.
Upon the death of Orlando on November 7, 1983, his wife, Wenifreda Llenado
(Wenifreda), took over the operation of the gasoline station. Meanwhile, on January
29, 1987, Cornelio sold Lot 249-D to his children, namely, Eduardo, Jorge, Virginia
and Cornelio, Jr., through a deed of sale, denominated as "Kasulatan sa Ganap Na
Bilihan,"
7
for the sum of P160,000.00. As stated earlier, the subject lot, which forms
part of Lot 249-D, was sold to Eduardo and Jorge, and titled in their names under
TCT No. V-1689. Several months thereafter or on September 7, 1987, Cornelio
passed away.
Sometime in 1993, Eduardo informed Wenifreda of his desire to take over the
subject lot. However, the latter refused to vacate the premises despite repeated
demands. Thus, on September 24, 1993, Eduardo filed a complaint for unlawful
detainer before the Metropolitan Trial Court of Valenzuela, Metro Manila against
Wenifreda, which was docketed as Civil Civil Case No. 6074.
On July 22, 1996, the Metropolitan Trial Court rendered its Decision in favor of
Eduardo and ordered Wenifreda to: (1) vacate the leased premises; (2) pay Eduardo
reasonable compensation for the use and occupation of the premises plus attorneys
fees, and (3) pay the costs of the suit.
Wenifreda appealed to the Regional Trial Court of Valenzuela, Metro Manila, which
reversed the decision of the court a quo. Thus, Eduardo appealed to the Court of
Appeals which rendered a Decision
8
on March 31, 1998 reversing the decision of the
Regional Trial Court and reinstating the decision of the Metropolitan Trial Court. It
also increased the amount of reasonable compensation awarded to Eduardo for the
use of the leased premises. Wenifredas appeal to this Court, docketed as G.R. No.
135001, was dismissed in a Resolution
9
dated December 2, 1998. Accordingly, an
Entry of Judgment
10
was made in due course on July 8, 1999.
Previously, after Eduardo instituted the aforesaid unlawful detainer case on
September 24, 1993, herein petitioner Wenifreda, in her capacity as administratrix of
the estate of Orlando Llenado, judicial guardian of their minor children, and
surviving spouse and legal heir of Orlando, commenced the subject
Complaint,
11
later amended, on November 10, 1993 for annulment of deed of
conveyance, title and damages against herein respondents Eduardo, Jorge, Feliza
Llenado (mother of the Llenado brothers), and the Register of Deeds of Valenzuela,
Metro Manila. The case was docketed as Civil Case No. 4248-V-93 and raffled to
Branch 75 of the Regional Trial Court of Valenzuela, Metro Manila.
Petitioner alleged that the transfer and conveyance of the subject lot by Cornelio in
favor of respondents Eduardo and Jorge, was fraudulent and in bad faith considering
that the March 31, 1978 Agreement provided that while the lease is in force, the
subject lot cannot be sold, transferred or conveyed to any third party; that the period
of the lease was until December 3, 1987 with the option to renew granted to Orlando;
that the subject lot was transferred and conveyed to respondents Eduardo and Jorge
on January 29, 1987 when the lease was in full force and effect making the sale null
and void; that Cornelio verbally promised Orlando that in case he (Cornelio) decides
to sell the subject lot, Orlando or his heirs shall have first priority or option to buy
the subject lot so as not to prejudice Orlandos business and because Orlando is the
owner of the property adjacent to the subject lot; and that this promise was wantonly
disregarded when Cornelio sold the said lot to respondents Jorge and Eduardo.
In their Answer,
12
respondents Eduardo and Jorge claimed that they bought the
subject lot from their father, Cornelio, for value and in good faith; that the lease
agreement and its supplement were not annotated at the back of the mother title of

the subject lot and do not bind them; that said agreements are personal only to
Cornelio and Orlando; that the lease expired upon the death of Orlando on November
7, 1983; that they were not aware of any verbal promise to sell the subject lot granted
by Cornelio to Orlando and, even if there was, said option to buy is unenforceable
under the statute of frauds.
After the parties presented their respective evidence, the Regional Trial Court
rendered judgment on May 5, 1997 in favor of petitioner, viz:
WHEREFORE, PREMISES CONSIDERED, this Court finds the [petitioners] civil
action duly established by preponderance of evidence, renders judgment
(adjudicates) in favor of the [petitioner], Estate of Orlando Llenado represented by
Wenifreda Llenado, and against [respondents] e.g. Jorge, Eduardo, Felisa Gallardo,
all surnamed Llenado, and the Register of Deeds of Valenzuela, Metro Manila, as
follows:
1) It hereby judicially declare as non-existence (sic) and null and void, the following:
a) The Kasulatan Sa Ganap na Kasunduan or Deed of Sale;
b) TCT- Transfer Certificate of Title No. V-9440, in the name of [respondent]
Eduardo Llenado, TCT- Transfer Certificate of Title No. V-1689, in the name of
Jorge Llenado, and Eduardo Llenado, and all deeds, documents or proceedings
leading to the issuance of said title, and all subsequent title issued therefrom and
likewise whatever deeds, documents or proceedings leading to the issuance of said
subsequent titles;
2) It hereby orders the reconveyance of the said properties embraced in the said
TCTs-Transfer Certificate of Title Nos. V-9440 and V-1689 to the [petitioner] for
the same consideration, or purchase price, paid by [respondents] Eduardo Llenado
and Jorge Llenado for the same properties;
3) It hereby orders [respondent], Register of Deeds of Valenzuela, Metro Manila, to
cause the issuance of new transfer certificates of title over the said property in the
name of the [petitioner];
4) And, because this Court is not only a court of law, but of equity, it hereby
rendered the following damages to be paid by the [respondents], as the [respondents]
litigated under bonafide assertions that they have meritorious defense, viz:
a) P400,000.00 as moral damages;
b) 10,000.00 as nominal damages;
c) 10,000.00 as temperate damages;
d) 10,000.00 as exemplary damages;
e) 10,000.00 attorneys fees on the basis of quantum merit; and
f) costs of suit.
SO ORDERED.
13

The Regional Trial Court found that upon the death of Orlando on November 7,
1983, his rights under the lease contract were transmitted to his heirs; that since the
lease was in full force and effect at the time the subject lot was sold by Cornelio to
his sons, the sale violated the prohibitory clause in the said lease contract. Further,
Cornelios promise to sell the subject lot to Orlando may be established by parole
evidence since an option to buy is not covered by the statute of frauds. Hence, the
same is binding on Cornelio and his heirs.
Respondents appealed before the Court of Appeals which rendered the assailed May
30, 2000 Decision reversing the judgment of the Regional Trial Court and dismissing
the Complaint. The appellate court held that the death of Orlando did not extinguish
the lease agreement and had the effect of transmitting his lease rights to his heirs.
However, the breach of the non-alienation clause of the said agreement did not
nullify the sale between Cornelio and his sons because the heirs of Orlando are mere
lessees on the subject lot and can never claim a superior right of ownership over said
lot as against the registered owners thereof. It further ruled that petitioner failed to
establish by a preponderance of evidence that Cornelio made a verbal promise to
Orlando granting the latter the right of first refusal if and when the subject lot was
sold.
Upon the denial of its motion for reconsideration, petitioner is now before this Court
on the following assignment of errors:
[T]he Court of Appeals erred:
1.- In finding and concluding that there is no legal basis to annul the deed of
conveyance involved in the case and in not applying R.A. No. 3516, further
amending R.A. No. 1162; and
2.- In not finding and holding as null and void the subject deed of conveyance, the
same having been executed in direct violation of an expressed covenant in said deed
and in total disregard of the pre-emptive, or preferential rights of the herein
petitioners to buy the property subject of their lease contract under said R.A. No.
3516, further amending R.A. No. 1162.
14

The petition lacks merit.
Petitioner contends that the heirs of Orlando are entitled to the rights of a tenant
under Republic Act (R.A.) No. 1162,
15
as amended by R.A. No. 3516.
16
The right of
first refusal or preferential right to buy the leased premises is invoked pursuant to
Section 5
17
of said law and this Courts ruling in Mataas Na Lupa Tenants
Association, Inc. v. Dimayuga.
18

This issue is being raised for the first time on appeal. True, in Mataas Na Lupa
Tenants Association, Inc., the Court explained that Section 1 of R.A. No. 1162, as
amended by R.A. No. 3516, authorizes the expropriation of any piece of land in the
City of Manila, Quezon City and suburbs which have been and are actually being
leased to tenants for at least 10 years, provided said lands have at least 40 families of
tenants thereon.
19
Prior to and pending the expropriation, the tenant shall have a right
of first refusal or preferential right to buy the leased premises should the landowner
sell the same. However, compliance with the conditions for the application of the
aforesaid law as well as the qualifications of the heirs of Orlando to be beneficiaries
thereunder were never raised before the trial court, or even the Court of Appeals,
because petitioner solely anchored its claim of ownership over the subject lot on the
alleged violation of the prohibitory clause in the lease contract between Cornelio and
Orlando, and the alleged non-performance of the right of first refusal given by
Cornelio to Orlando. The rule is settled, impelled by basic requirements of due
process, that points of law, theories, issues and arguments not adequately brought to
the attention of the lower court will not be ordinarily considered by a reviewing court
as they cannot be raised for the first time on appeal.
20
As the issue of the

applicability of R.A. No. 1162, as amended, was neither averred in the pleadings nor
raised during the trial below, the same cannot be raised for the first time on appeal.
At any rate, the allegations in the Complaint and the evidence presented during the
trial below do not establish that Orlando or his heirs are covered by R.A. No. 1162,
as amended. It was not alleged nor shown that the subject lot is part of the landed
estate or haciendas in the City of Manila which were authorized to be expropriated
under said law; that the Solicitor General has instituted the requisite expropriation
proceedings pursuant to Section 2
21
thereof; that the subject lot has been actually
leased for a period of at least ten (10) years; and that the subject lot has at least forty
(40) families of tenants thereon. Instead, what was merely established during the trial
is that the subject lot was leased by Cornelio to Orlando for the operation of a
gasoline station, thus, negating petitioners claim that the subject lot is covered by
the aforesaid law. In Mataas Na Lupa Tenants Association, Inc., the Court further
explained that R.A. No. 1162, as amended, has been superseded by Presidential
Decree (P.D.) No. 1517
22
entitled "Proclaiming Urban Land Reform in the
Philippines and Providing for the Implementing Machinery Thereof."
23
However, as
held in Tagbilaran Integrated Settlers Association Incorporated v. Court of
Appeals,
24
P.D. No. 1517 is applicable only in specific areas declared, through
presidential proclamation,
25
to be located within the so-called urban zones.
26
Further,
only legitimate tenants who have resided on the land for ten years or more who have
built their homes on the land and residents who have legally occupied the lands by
contract, continuously for the last ten years, are given the right of first refusal to
purchase the land within a reasonable time.
27
Consequently, those lease contracts
entered into for commercial use are not covered by said law.
28
Thus, considering that
petitioner failed to prove that a proclamation has been issued by the President
declaring the subject lot as within the urban land reform zone and considering further
that the subject lot was leased for the commercial purpose of operating a gasoline
station, P.D. No. 1517 cannot be applied to this case.
In fine, the only issue for our determination is whether the sale of the subject lot by
Cornelio to his sons, respondents Eduardo and Jorge, is invalid for (1) violating the
prohibitory clause in the lease agreement between Cornelio, as lessor-owner, and
Orlando, as lessee; and (2) contravening the right of first refusal of Orlando over the
subject lot.
It is not disputed that the lease agreement contained an option to renew and a
prohibition on the sale of the subject lot in favor of third persons while the lease is in
force. Petitioner claims that when Cornelio sold the subject lot to respondents
Eduardo and Jorge the lease was in full force and effect, thus, the sale violated the
prohibitory clause rendering it invalid. In resolving this issue, it is necessary to
determine whether the lease agreement was in force at the time of the subject sale
and, if it was in force, whether the violation of the prohibitory clause invalidated the
sale.
Under Article 1311 of the Civil Code, the heirs are bound by the contracts entered
into by their predecessors-in-interest except when the rights and obligations therein
are not transmissible by their nature, by stipulation or by provision of law. A contract
of lease is, therefore, generally transmissible to the heirs of the lessor or lessee. It
involves a property right and, as such, the death of a party does not excuse non-
performance of the contract.
29
The rights and obligations pass to the heirs of the
deceased and the heir of the deceased lessor is bound to respect the period of the
lease.
30
The same principle applies to the option to renew the lease. As a general rule,
covenants to renew a lease are not personal but will run with the
land.
31
Consequently, the successors-in-interest of the lessee are entitled to the
benefits, while that of the lessor are burdened with the duties and obligations, which
said covenants conferred and imposed on the original parties.
The foregoing principles apply with greater force in this case because the parties
expressly stipulated in the March 31, 1978 Agreement that Romeo, as lessee, shall
transfer all his rights and interests under the lease contract with option to renew "in
favor of the party of the Third Part (Orlando), the latters heirs, successors and
assigns"
32
indicating the clear intent to allow the transmissibility of all the rights and
interests of Orlando under the lease contract unto his heirs, successors or assigns.
Accordingly, the rights and obligations under the lease contract with option to renew
were transmitted from Orlando to his heirs upon his death on November 7, 1983.
It does not follow, however, that the lease subsisted at the time of the sale of the
subject lot on January 29, 1987. When Orlando died on November 7, 1983, the lease
contract was set to expire 26 days later or on December 3, 1983, unless renewed by
Orlandos heirs for another four years. While the option to renew is an enforceable
right, it must necessarily be first exercised to be given effect.
33
As the Court
explained in Dioquino v. Intermediate Appellate Court:
34

A clause found in an agreement relative to the renewal of the lease agreement at the
option of the lessee gives the latter an enforceable right to renew the contract in
which the clause is found for such time as provided for. The agreement is understood
as being in favor of the lessee, and the latter is authorized to renew the contract and
to continue to occupy the leased property after notifying the lessor to that effect. A
lessors covenant or agreement to renew gives a privilege to the tenant, but is
nevertheless an executory contract, and until the tenant has exercised the privilege by
way of some affirmative act, he cannot be held for the additional term. In the absence
of a stipulation in the lease requiring notice of the exercise of an option or an
election to renew to be given within a certain time before the expiration of the lease,
which of course, the lessee must comply with, the general rule is that a lessee must
exercise an option or election to renew his lease and notify the lessor thereof before,
or at least at the time of the expiration of his original term, unless there is a waiver
or special circumstances warranting equitable relief.1avvphi1.zw+
There is no dispute that in the instant case, the lessees (private respondents) were
granted the option to renew the lease for another five (5) years after the termination
of the original period of fifteen years. Yet, there was never any positive act on the
part of private respondents before or after the termination of the original period to
show their exercise of such option. The silence of the lessees after the termination of
the original period cannot be taken to mean that they opted to renew the contract by
virtue of the promise by the lessor, as stated in the original contract of lease, to allow
them to renew. Neither can the exercise of the option to renew be inferred from their
persistence to remain in the premises despite petitioners demand for them to vacate.
x x x.
35


Similarly, the election of the option to renew the lease in this case cannot be inferred
from petitioner Wenifredas continued possession of the subject lot and operation of
the gasoline station even after the death of Orlando on November 7, 1983 and the
expiration of the lease contract on December 3, 1983. In the unlawful detainer case
against petitioner Wenifreda and in the subject complaint for annulment of
conveyance, respondents consistently maintained that after the death of Orlando, the
lease was terminated and that they permitted petitioner Wenifreda and her children to
remain in possession of the subject property out of tolerance and respect for the close
blood relationship between Cornelio and Orlando. It was incumbent, therefore, upon
petitioner as the plaintiff with the burden of proof during the trial below to establish
by some positive act that Orlando or his heirs exercised the option to renew the lease.
After going over the records of this case, we find no evidence, testimonial or
documentary, of such nature was presented before the trial court to prove that
Orlando or his heirs exercised the option to renew prior to or at the time of the
expiration of the lease on December 3, 1983. In particular, the testimony of
petitioner Wenifreda is wanting in detail as to the events surrounding the
implementation of the subject lease agreement after the death of Orlando and any
overt acts to establish the renewal of said lease.
Given the foregoing, it becomes unnecessary to resolve the issue on whether the
violation of the prohibitory clause invalidated the sale and conferred ownership over
the subject lot to Orlandos heirs, who are mere lessees, considering that at the time
of said sale on January 29, 1987 the lease agreement had long been terminated for
failure of Orlando or his heirs to validly renew the same. As a result, there was no
obstacle to the sale of the subject lot by Cornelio to respondents Eduardo and Jorge
as the prohibitory clause under the lease contract was no longer in force.
Petitioner also anchors its claim over the subject lot on the alleged verbal promise of
Cornelio to Orlando that should he (Cornelio) sell the same, Orlando would be given
the first opportunity to purchase said property. According to petitioner, this
amounted to a right of first refusal in favor of Orlando which may be proved by
parole evidence because it is not one of the contracts covered by the statute of frauds.
Considering that Cornelio sold the subject lot to respondents Eduardo and Jorge
without first offering the same to Orlandos heirs, petitioner argues that the sale is in
violation of the latters right of first refusal and is, thus, rescissible.
The question as to whether a right of first refusal may be proved by parole evidence
has been answered in the affirmative by this Court in Rosencor Development
Corporation v. Inquing:
36

We have previously held that not all agreements "affecting land" must be put into
writing to attain enforceability. Thus, we have held that the setting up of boundaries,
the oral partition of real property, and an agreement creating a right of way are not
covered by the provisions of the statute of frauds. The reason simply is that these
agreements are not among those enumerated in Article 1403 of the New Civil Code.
A right of first refusal is not among those listed as unenforceable under the statute of
frauds. Furthermore, the application of Article 1403, par. 2(e) of the New Civil Code
presupposes the existence of a perfected, albeit unwritten, contract of sale. A right of
first refusal, such as the one involved in the instant case, is not by any means a
perfected contract of sale of real property. At best, it is a contractual grant, not of the
sale of the real property involved, but of the right of first refusal over the property
sought to be sold.
It is thus evident that the statute of frauds does not contemplate cases involving a
right of first refusal. As such, a right of first refusal need not be written to be
enforceable and may be proven by oral evidence.
37

In the instant case, the Regional Trial Court ruled that the right of first refusal was
proved by oral evidence while the Court of Appeals disagreed by ruling that
petitioner merely relied on the allegations in its Complaint to establish said right. We
have reviewed the records and find that no testimonial evidence was presented to
prove the existence of said right. The testimony of petitioner Wenifreda made no
mention of the alleged verbal promise given by Cornelio to Orlando. The two
remaining witnesses for the plaintiff, Michael Goco and Renato Malindog, were
representatives from the Register of Deeds of Caloocan City who naturally were not
privy to this alleged promise. Neither was it established that respondents Eduardo
and Jorge were aware of said promise prior to or at the time of the sale of the subject
lot. On the contrary, in their answer to the Complaint, respondents denied the
existence of said promise for lack of knowledge thereof.
38
Within these parameters,
petitioners allegations in its Complaint cannot substitute for competent proof on
such a crucial factual issue. Necessarily, petitioners claims based on this alleged
right of first refusal cannot be sustained for its existence has not been duly
established.
WHEREFORE, the petition is DENIED. The May 30, 2000 Decision of the Court of
Appeals in CA-G.R. CV No. 58911 dismissing the complaint for annulment of deed
of conveyance, title and damages, and the October 6, 2000 Resolution denying the
motion for reconsideration, are AFFIRMED.


G.R. No. 118248 April 5, 2000
DKC HOLDINGS CORPORATION,petitioner,
vs.
COURT OF APPEALS, VICTOR U. BARTOLOME and REGISTER OF
DEEDS FOR METRO MANILA, DISTRICT III, respondents.
YNARES-SANTIAGO, J .:
This is a petition for review on certiorari seeking the reversal of the December 5,
1994 Decision of the Court of Appeals in CA-G.R. CV No. 40849 entitled "DKC
Holdings Corporation vs. Victor U. Bartolome, et al.",
1
affirming in toto the January
4, 1993 Decision of the Regional Trial Court of Valenzuela, Branch 172,
2
which
dismissed Civil Case No. 3337-V-90 and ordered petitioner to pay P30,000.00 as
attorney's fees.
The subject of the controversy is a 14,021 square meter parcel of land located in
Malinta, Valenzuela, Metro Manila which was originally owned by private
respondent Victor U. Bartolome's deceased mother, Encarnacion Bartolome, under
Transfer Certificate of Title No. B-37615 of the Register of Deeds of Metro Manila,
District III. This lot was in front of one of the textile plants of petitioner and, as such,
was seen by the latter as a potential warehouse site.
On March 16, 1988, petitioner entered into a Contract of Lease with Option to Buy
with Encarnacion Bartolome, whereby petitioner was given the option to lease or
lease with purchase the subject land, which option must be exercised within a period
of two years counted from the signing of the Contract. In turn, petitioner undertook
to pay P3,000.00 a month as consideration for the reservation of its option. Within
the two-year period, petitioner shall serve formal written notice upon the lessor
Encarnacion Bartolome of its desire to exercise its option. The contract also provided
that in case petitioner chose to lease the property, it may take actual possession of the
premises. In such an event, the lease shall be for a period of six years, renewable for
another six years, and the monthly rental fee shall be P15,000.00 for the first six
years and P18,000.00 for the next six years, in case of renewal.
Petitioner regularly paid the monthly P3,000.00 provided for by the Contract to
Encarnacion until her death in January 1990. Thereafter, petitioner coursed its
payment to private respondent Victor Bartolome, being the sole heir of Encarnacion.
Victor, however, refused to accept these payments.
Meanwhile, on January 10, 1990, Victor executed an Affidavit of Self-Adjudication
over all the properties of Encarnacion, including the subject lot. Accordingly,
respondent Register of Deeds cancelled Transfer Certificate of Title No. B-37615
and issued Transfer Certificate of Title No. V-14249 in the name of Victor
Bartolome.
On March 14, 1990, petitioner served upon Victor, via registered mail, notice that it
was exercising its option to lease the property, tendering the amount of P15,000.00
as rent for the month of March. Again, Victor refused to accept the tendered rental
fee and to surrender possession of the property to petitioner.
Petitioner thus opened Savings Account No. 1-04-02558-I-1 with the China Banking
Corporation, Cubao Branch, in the name of Victor Bartolome and deposited therein
the P15,000.00 rental fee for March as well as P6,000.00 reservation fees for the
months of February and March.
Petitioner also tried to register and annotate the Contract on the title of Victor to the
property. Although respondent Register of Deeds accepted the required fees, he
nevertheless refused to register or annotate the same or even enter it in the day book
or primary register.1wphi1.nt
Thus, on April 23, 1990, petitioner filed a complaint for specific performance and
damages against Victor and the Register of Deeds,
3
docketed as Civil Case No.
3337-V-90 which was raffled off to Branch 171 of the Regional Trial Court of
Valenzuela. Petitioner prayed for the surrender and delivery of possession of the
subject land in accordance with the Contract terms; the surrender of title for
registration and annotation thereon of the Contract; and the payment of P500,000.00
as actual damages, P500,000.00 as moral damages, P500,000.00 as exemplary
damages and P300,000.00 as attorney's fees.
Meanwhile, on May 8, 1990, a Motion for Intervention with Motion to Dismiss
4
was
filed by one Andres Lanozo, who claimed that he was and has been a tenant-tiller of
the subject property, which was agricultural riceland, for forty-five years. He
questioned the jurisdiction of the lower court over the property and invoked the
Comprehensive Agrarian Reform Law to protect his rights that would be affected by
the dispute between the original parties to the case.
On May 18, 1990, the lower court issued an Order
5
referring the case to the
Department of Agrarian Reform for preliminary determination and certification as to
whether it was proper for trial by said court.
On July 4, 1990, the lower court issued another Order
6
referring the case to Branch
172 of the RTC of Valenzuela which was designated to hear cases involving agrarian
land, after the Department of Agrarian Reform issued a letter-certification stating
that referral to it for preliminary determination is no longer required.
On July 16, 1990, the lower court issued an Order denying the Motion to
Intervene,
7
holding that Lanozo's rights may well be ventilated in another proceeding
in due time.
After trial on the merits, the RTC of Valenzuela, Branch 172 rendered its Decision
on January 4, 1993, dismissing the Complaint and ordering petitioner to pay Victor
P30,000.00 as attorney's fees. On appeal to the CA, the Decision was affirmed in
toto.
Hence, the instant Petition assigning the following errors:
(A)
FIRST ASSIGNMENT OF ERROR
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE
PROVISION ON THE NOTICE TO EXERCISE OPTION WAS NOT
TRANSMISSIBLE.
(B)
SECOND ASSIGNMENT OF ERROR
NOTICE OF OPTION MUST BE SERVED BY DKC UPON ENCARNACION
BARTOLOME PERSONALLY.
(C)
THIRD ASSIGNMENT OF ERROR

CONTRACT WAS ONE-SIDED AND ONEROUS IN FAVOR OF DKC.
(D)
FOURTH ASSIGNMENT OF ERROR
EXISTENCE OF A REGISTERED TENANCY WAS FATAL TO THE VALIDITY
OF THE CONTRACT.
(E)
FIFTH ASSIGNMENT OF ERROR
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT
PLAINTIFF-APPELLANT WAS LIABLE TO DEFENDANT-APPELLEE FOR
ATTORNEY'S FEES.
8

The issue to be resolved in this case is whether or not the Contract of Lease with
Option to Buy entered into by the late Encarnacion Bartolome with petitioner was
terminated upon her death or whether it binds her sole heir, Victor, even after her
demise.
Both the lower court and the Court of Appeals held that the said contract was
terminated upon the death of Encarnacion Bartolome and did not bind Victor
because he was not a party thereto.
Art. 1311 of the Civil Code provides, as follows
Art. 1311. Contracts take effect only between the parties, their assigns and heirs,
except in case where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of law. The heir is not
liable beyond the value of the property he received from the decedent.
x x x x x x x x x
The general rule, therefore, is that heirs are bound by contracts entered into by their
predecessors-in-interest except when the rights and obligations arising therefrom are
not transmissible by (1) their nature, (2) stipulation or (3) provision of law.
In the case at bar, there is neither contractual stipulation nor legal provision making
the rights and obligations under the contract intransmissible. More importantly, the
nature of the rights and obligations therein are, by their nature, transmissible.
The nature of intransmissible rights as explained by Arturo Tolentino, an eminent
civilist, is as follows:
Among contracts which are intransmissible are those which are purely personal,
either by provision of law, such as in cases of partnerships and agency, or by the
very nature of the obligations arising therefrom, such as those requiring special
personal qualifications of the obligor. It may also be stated that contracts for the
payment of money debts are not transmitted to the heirs of a party, but constitute a
charge against his estate. Thus, where the client in a contract for professional
services of a lawyer died, leaving minor heirs, and the lawyer, instead of presenting
his claim for professional services under the contract to the probate court, substituted
the minors as parties for his client, it was held that the contract could not be enforced
against the minors; the lawyer was limited to a recovery on the basis of quantum
meruit.
9

In American jurisprudence, "(W)here acts stipulated in a contract require the exercise
of special knowledge, genius, skill, taste, ability, experience, judgment, discretion,
integrity, or other personal qualification of one or both parties, the agreement is of a
personal nature, and terminates on the death of the party who is required to render
such service."
10

It has also been held that a good measure for determining whether a contract
terminates upon the death of one of the parties is whether it is of such a character that
it may be performed by the promissor's personal representative. Contracts to perform
personal acts which cannot be as well performed by others are discharged by the
death of the promissor. Conversely, where the service or act is of such a character
that it may as well be performed by another, or where the contract, by its terms,
shows that performance by others was contemplated, death does not terminate the
contract or excuse nonperformance.
11

In the case at bar, there is no personal act required from the late Encarnacion
Bartolome. Rather, the obligation of Encarnacion in the contract to deliver
possession of the subject property to petitioner upon the exercise by the latter of its
option to lease the same may very well be performed by her heir Victor.
As early as 1903, it was held that "(H)e who contracts does so for himself and his
heirs."
12
In 1952, it was ruled that if the predecessor was duty-bound to reconvey
land to another, and at his death the reconveyance had not been made, the heirs can
be compelled to execute the proper deed for reconveyance. This was grounded upon
the principle that heirs cannot escape the legal consequence of a transaction entered
into by their predecessor-in-interest because they have inherited the property subject
to the liability affecting their common ancestor.
13

It is futile for Victor to insist that he is not a party to the contract because of the clear
provision of Article 1311 of the Civil Code. Indeed, being an heir of Encarnacion,
there is privity of interest between him and his deceased mother. He only succeeds to
what rights his mother had and what is valid and binding against her is also valid and
binding as against him.
14
This is clear from Paraaque Kings Enterprises vs. Court
of Appeals,
15
where this Court rejected a similar defense
With respect to the contention of respondent Raymundo that he is not privy to the
lease contract, not being the lessor nor the lessee referred to therein, he could thus
not have violated its provisions, but he is nevertheless a proper party. Clearly, he
stepped into the shoes of the owner-lessor of the land as, by virtue of his purchase,
he assumed all the obligations of the lessor under the lease contract. Moreover, he
received benefits in the form of rental payments. Furthermore, the complaint, as well
as the petition, prayed for the annulment of the sale of the properties to him. Both
pleadings also alleged collusion between him and respondent Santos which defeated
the exercise by petitioner of its right of first refusal.
In order then to accord complete relief to petitioner, respondent Raymundo was a
necessary, if not indispensable, party to the case. A favorable judgment for the
petitioner will necessarily affect the rights of respondent Raymundo as the buyer of
the property over which petitioner would like to assert its right of first option to buy.
In the case at bar, the subject matter of the contract is likewise a lease, which is a
property right. The death of a party does not excuse nonperformance of a contract
which involves a property right, and the rights and obligations thereunder pass to the
personal representatives of the deceased. Similarly, nonperformance is not excused

by the death of the party when the other party has a property interest in the subject
matter of the contract.
16

Under both Article 1311 of the Civil Code and jurisprudence, therefore, Victor is
bound by the subject Contract of Lease with Option to Buy.
That being resolved, we now rule on the issue of whether petitioner had complied
with its obligations under the contract and with the requisites to exercise its option.
The payment by petitioner of the reservation fees during the two-year period within
which it had the option to lease or purchase the property is not disputed. In fact, the
payment of such reservation fees, except those for February and March, 1990 were
admitted by Victor.
17
This is clear from the transcripts, to wit
ATTY. MOJADO:
One request, Your Honor. The last payment which was allegedly made in January
1990 just indicate in that stipulation that it was issued November of 1989 and
postdated January 1990 and then we will admit all.
COURT:
All reservation fee?
ATTY. MOJADO:
Yes, Your Honor.
COURT:
All as part of the lease?
ATTY. MOJADO:
Reservation fee, Your Honor. There was no payment with respect to payment of
rentals.
18

Petitioner also paid the P15,000.00 monthly rental fee on the subject property by
depositing the same in China Bank Savings Account No. 1-04-02558-I-1, in the
name of Victor as the sole heir of Encarnacion Bartolome,
19
for the months of
March to July 30, 1990, or a total of five (5) months, despite the refusal of Victor to
turn over the subject property.
20

Likewise, petitioner complied with its duty to inform the other party of its intention
to exercise its option to lease through its letter dated Match 12, 1990,
21
well within
the two-year period for it to exercise its option. Considering that at that time
Encarnacion Bartolome had already passed away, it was legitimate for petitioner to
have addressed its letter to her heir.1wphi1
It appears, therefore, that the exercise by petitioner of its option to lease the subject
property was made in accordance with the contractual provisions. Concomitantly,
private respondent Victor Bartolome has the obligation to surrender possession of
and lease the premises to petitioner for a period of six (6) years, pursuant to the
Contract of Lease with Option to Buy.
Coming now to the issue of tenancy, we find that this is not for this Court to pass
upon in the present petition. We note that the Motion to Intervene and to Dismiss of
the alleged tenant, Andres Lanozo, was denied by the lower court and that such
denial was never made the subject of an appeal. As the lower court stated in its
Order, the alleged right of the tenant may well be ventilated in another proceeding in
due time.
WHEREFORE, in view of the foregoing, the instant Petition for Review is
GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 40849 and
that of the Regional Trial Court of Valenzuela in Civil Case No. 3337-V-90 are both
SET ASIDE and a new one rendered ordering private respondent Victor Bartolome
to:
(a) surrender and deliver possession of that parcel of land covered by Transfer
Certificate of Title No. V-14249 by way of lease to petitioner and to perform all
obligations of his predecessor-in-interest, Encarnacion Bartolome, under the subject
Contract of Lease with Option to Buy;
(b) surrender and deliver his copy of Transfer Certificate of Title No. V-14249 to
respondent Register of Deeds for registration and annotation thereon of the subject
Contract of Lease with Option to Buy;
(c) pay costs of suit.
Respondent Register of Deeds is, accordingly, ordered to register and annotate the
subject Contract of Lease with Option to Buy at the back of Transfer Certificate of
Title No. V-14249 upon submission by petitioner of a copy thereof to his office.


G.R. No. 121940 December 4, 2001
JESUS SAN AGUSTIN, petitioner,
vs.
HON. COURT OF APPEALS and MAXIMO MENEZ, JR., respondents.
QUISUMBING, J .:
This petition for review on certiorari seeks the reversal of the decision 1 of the Court
of Appeals dated May 19, 1995, affirming that of the Regional Trial Court in LRC
Case No. R-4659.
The relevant facts, as summarized by the CA, are as follows:
On February 11, 1974, the Government Service Insurance System (GSIS) sold to a
certain Macaria Vda. de Caiquep, a parcel of residential land with an area of 168
square meters located in Rosario, Pasig City and denominated as Lot 13, Block 7,
Pcs-5816 of the Government Service and Insurance System Low Cost Housing
Project (GSIS-LCHP). The sale is evidenced by a Deed of Absolute Sale. 2 On
February 19, 1974, the Register of Deeds of Rizal issued in the name of Macaria
Vda. de Caiquep. Transfer Certificate of Title (TCT) No. 436465 with the following
encumbrance annotated at the back of the title:
This Deed of Absolute Sale is subject to the conditions enumerated below which
shall be permanent encumbrances on the property, the violation of any of which shall
entitle the vendor to cancel x x x. this Deed of Absolute Sale and reenter the
property;
The purpose of the sale be to aid the vendee in acquiring a lot for himself/themselves
and not to provide him/them with a means for speculation or profit by a future
assignment of his/their right herein acquired or the resale of the lot through rent,
lease or subletting to others of the lot and subject of this deed, and therefore, the
vendee shall not sell, convey, lease or sublease, or otherwise encumber the property
in favor of any other party within five (5) years from the dates final and absolute
ownership thereof becomes vested in the vendee, except in cases of hereditary
succession or resale in favor of the vendor:
x x x (emphasis supplied).
3

A day after We issuance of TCT No. 436465, or on February 20, 1974, Macaria Vda.
de Caiquep sold the subject lot to private respondent, Maximo Menez, Jr., as
evidenced by a Deed of Absolute Sale (Exhibit "D").
4
This deed was notarized but
was not registered immediately upon its execution in 1974 because GSIS prohibited
him from registering the same in view of the five-year prohibition to sell during the
period ending in 1979.
Sometime in 1979, for being suspected as a subversive, an Arrest, Search and
Seizure Order (ASSO) was issued against private respondent. Military men
ransacked his house in Cainta, Rizal. Upon learning that he was wanted by the
military, he voluntarily surrendered and was detained for two (2) years. When
released, another order for his re-arrest was issued so he hid in Mindanao for another
four (4) years or until March 1984. In December of 1990, he discovered that the
subject TCT was missing. He consulted a lawyer but the latter did not act
immediately on the matter. Upon consulting a new counsel, an Affidavit of
Loss
5
was filed with the Register of Deeds of Pasig and a certified copy
6
of TCT No.
436465 was issued. Private respondent also declared the property for tax purposes
and obtained a certification thereof from the Assessor's Office.
7

Private respondent sent notices to the registered owner at her address appearing in
the title and in the Deed of Sale. And, with his counsel, he searched for the
,registered owner in Metro Manila and Rizal and as far as Samar, Leyte, Calbayog
City, Tacloban City, and in Eastern and Northern Samar. However, their search
proved futile.
On July 8, 1992 private respondent filed a petition docketed as LRC Case No. R-
4659 with the RTC, Branch 154, Pasig, Metro Manila for the issuance of owner's
duplicate copy of TCT No. 436465 to replace the lost one. To show he was the
owner of the contested lot, he showed the Deed of Absolute Sale, Exhibit "D". The
petition was set for hearing and the court's order dated July 10, 1992 was published
once in Malaya, a nationally circulated newspaper in the Philippines.
8

During the hearing on September 3, 1992, only Menez and his counsel appeared. The
Register of Deeds who was not served notice, and the Office of the Solicitor General
and the Provincial Prosecutor who were notified did not attend.
On September 18, 1992, there being no opposition, Menez presented his evidence ex-
parte. The trial court granted his petition in its decision
9
dated September 30, 1992,
the dispositive portion of which reads:
WHEREFORE, the petition is hereby GRANTED and the Registry of Deeds of
Pasig, Metro Manila, is hereby directed to issue a new Owner's Duplicate Copy of
Transfer Certificate of Title No. 436465 based on the original thereon filed in his
office which shall contain the memorandum of encumbrance and an additional
memorandum of the fact that it was issued in place of the lost duplicate and which
shall, in all respect, be entitled to like faith and credit as the original duplicate, for all
legal intents and purposes.
Issuance of new owner's duplicate copy shall be made only after this decision shall
have become final and executory. The said lost owner's duplicate is hereby declared
null and void.
Petitioner shall pay all legal fees in connection with the issuance of the new owner's
copy.
Let copies of this Order be furnished the petitioner, the registered owner of his given
address in the title, in the deed of sale, and in the tax declaration; the Registry of
Deeds of Pasig, the Office of the Solicitor General; and the Provincial Fiscal of
Pasig, Metro Manila.
SO ORDERED.
10

On October 13, 1992, herein petitioner, Jesus San Agustin, received a copy of the
abovecited decision. He-claimed this was the first time he became aware of the case
of her aunt, Macaria Vda. de Caiquep who, according to him, died sometime in 1974.
Claiming that he was the present occupant of the property and the heir of Macaria, he
filed his "Motion to Reopen Reconstitution Proceedings''
11
on October 27, 1992. On
December 3, 1992, RTC issued an order denying said motion.
12

Petitioner filed an appeal with the Court of Appeals, which, as earlier stated, was
denied in its decision of May 19, 1995. Petitioner moved for a reconsideration, but it
was denied in a resolution dated September 11, 1995.
13

Thus, the present petition, attributing the following errors to the court a quo:

A.
THE RESPONDENT COURT GRAVELY ERRED IN HOLDING THAT LRC
CASE NO. R-4659 BEING ONLY A PETITION FOR THE ISSUANCE OF A
NEW OWNER'S DUPLICATE OF TITLE, THERE IS NO NEED OF PERSONAL
NOTICE TO THE PETITIONER, THE ACTUAL POSSESSOR [WHO HAS] AND
ACTUALLY BEEN PAYING THE REAL ESTATE TAX, DESPITE PRIVATE
RESPONDENT'S KNOWLEDGE OF ACTUAL POSSESSION OF AND
INTEREST OVER THE PROPERTY COVERED BY TCT NO. 436465.
14

B.
RESPONDENT COURT GRAVELY ERRED IN HOLDING THAT THE SALE
BETWEEN THE PRIVATE RESPONDENT AND MACARIA VDA. DE
CAIQUEP IS NOT NULL AND VOID AND UNDER ARTICLE 1409 OF THE
CIVIL CODE SPECIFICALLY PARAGRAPH (7) THEREOF WHICH REFERS
TO CONTRACTS EXPRESSLY PROHIBITED OR DECLARED VOID BY
LAW.
15

Considering the above assignment of errors, let us resolve the corresponding issues
raised by petitioner.
The first issue involves private respondent's alleged failure to send notice to
petitioner who is the actual possessor of the disputed lot. Stated briefly, is petitioner
entitled to notice? Our finding is in the negative.
Presidential Decree No. 1529, otherwise known as the "Property Registration
Decree" is decisive. It provides:
Sec. 109. Notice and replacement of lost duplicate certificate. In case of loss or
theft of an owner's duplicate certificate of title, due notice under oath shall be sent by
the owner or by someone in his behalf to the Register of Deeds of the province or
city where the land lies as soon as the loss or theft is discovered. If a duplicate
certificate is lost or destroyed, or cannot be produced by a person applying for the
entry of a new certificate to him or for :the registration of any instrument, a sworn
statement of the fact of such loss or destruction may be filed by the registered owner
or other person it interest and registered.
Upon the petition of the registered owner or other person in interest, the court may,
after notice and due hearing, direct the issuance of a new duplicate certificate, which
shall contain a memorandum of the fact that it is issued in place of the lost duplicate
certificate, but shall in all respects be entitled to like faith and credit as the original
duplicate, and shall thereafter be regarded as such for all purposes of this decree.
In Office of Court Administrator vs. Matas, A.M. No. RTJ-92-836, 247 SCRA 9, 16-
17 (1995), we held:
In the case at bar, the respective certificate of title of the properties in question on
file with the Register of Deeds are existing, and it is the owner's copy of the
certificate of title that was alleged to have been lost or destroyed. Thus, it is Section
109 of P.D. 1529 which was approved on June 11, 1978 that becomes effective and
is applicable, a reading of which shows that it is practically the same as Section 109
of Act No. 496, governing reconstitution of a duplicate certificate of title lost or
destroyed. Consequently, it is sufficient that the notice under Section 109 is sent to
the Register of Deeds and to those persons who are known to have, or appear to
have, an interest in the property as shown in the Memorandum of encumbrances at
the back of the original or transfer certificate of title on file in the office of the
Register of Deeds. From a legal standpoint, there are no other interested parties who
should be notified, except those abovementioned since they are the only ones who
may be deemed to have a claim to the property involved. A person dealing with
registered is not charged with notice of encumbrances not annotated on the back of
the title. (Emphasis supplied.)
Here, petitioner does not appear to have an interest in the property based on the
memorandum of encumbrances annotated at the back of the title. His claim, that he is
an heir (nephew) of the original owner of the lot covered by the disputed lot and the
present occupant thereof is not annotated in the said memorandum of encumbrances.
Neither was his claim entered on the Certificate of Titles in the name of their
original/former owners on file with the Register of Deeds at the time of the filing or
pendency of LRC Case No. R-4659. Clearly, petitioner is not entitled to notice.
Noteworthy is the fact that there was compliance by private respondent of the RTC's
order of publication of the petition in a newspaper of general circulation. This is
sufficient notice of the petition to the public at large.
Petitioner contends that as possessor or actual occupant of the lot in controversy, he
is entitled under the law to be notified. He relies on Alabang Development
Corporation vs. Valenzuela, G.R. No. L-54094, 116 SCRA 261, 277 (1982)) which
held that in reconstitution proceedings, courts must make sure that indispensable
parties, i.e.. the actual owners and possessors of the lands involved, are duly served
with actual and personal notice of the petition. As pointed out by the appellate court,
his reliance on Alabang is misplaced because the cause of action in that case is based
on Republic Act i No. 26, entitled "An Act Providing A Special Procedure for the
Reconstitution of Torrens Certificate of Title Lost or Destroyed," while the present
case is based on Section 109 of P.D. 1529 as above explained.
Under Republic Act No. 26, reconstitution is validly made only in case
the original copy of the certificate of title with the Register of Deeds is lost or
destroyed. And if no notice of the date of hearing of a reconstitution case is served
on a possessor or one having interest in the property involved, he is deprived of his
day in court and the order of reconstitution is null and void.
16
The case at bar is not
for reconstitution, but merely for replacement of lost duplicate certificate.
On the second assigned error, petitioner contends that Exhibit "D" is null and void
under Article 1409 of the Civil Code, specifically paragraph (7),
17
because the deed
of sale was executed within the five-year prohibitory period under Commonwealth
Act No. 141, as amended, otherwise known as "The Public Land Act."
18

We find petitioner's contention less than meritorious. We agree with respondent
court that the proscription under Com. Act No. 141 on sale within the 5-year
restrictive period refers to homestead lands only. Here the lot in dispute is not a
homestead land, as found by the trial and appellate courts. Said lot is owned by
GSIS, under TCT No. 10028 in its proprietary capacity.
Moreover, as far as the violation of the 5-year restrictive condition imposed by GSIS
in its contract with petitioner's predecessor-in-interest is concerned, it is the GSIS
and not petitioner who had a cause of action against private respondent. Vide the
instructive case of Sarmiento vs. Salud:

The condition that the appellees Sarmiento spouses could not resell the property
except to the People's Homesite and Housing Corporation (PHHC for short) within
the next 25 years after appellees' purchasing the lot is manifestly a condition in favor
of the PHHC, and not one in favor of the Sarmiento spouses. The condition
conferred no actionable right on appellees herein, since it operated as a restriction
upon their jus disponendi of the property they bought, and thus limited their right of
ownership. It follows that on the assumption that the mortgage to appellee Salud and
the foreclosure sale violated the condition in the Sarmiento contract, only the PHHC
was entitled to invoke the condition aforementioned, and not the Sarmientos. The
validity or invalidity of the sheriff's foreclosure sale to appellant Salud thus violative
of its right of exclusive reacquisition; but it (PHHC) also could waive the condition
and treat the sale as good, in which event, the sale can not be assailed for breach of
the condition aforestated.
19

In this case, the GSIS has not filed any action for the annulment of Exhibit "D", nor
for the forfeiture of the lot in question. In our view, the contract of sale remains valid
between the parties, unless and until annulled in the proper suit filed by the rightful
party, the GSIS. For now, the said contract of sale is binding upon the heirs of
Macaria Vda. de Caiquep, including petitioner who alleges to be one of her heirs, in
line with the rule that heirs are bound by contracts entered into by their predecessors-
in-interest.
20

We are not unmindful of the social justice policy of R.A. 8291 otherwise known as
"Government Service Insurance Act of 1997" in granting housing assistance to the
less-privileged GSIS members and their dependents payable at an affordable
payment scheme.
21
This is the same policy which the 5-year restrictive clause in the
contract seeks to implement by stating in the encumbrance itself annotated at the
back of TCT No. 436465 that, "The purpose of the sale is to aid the vendee in
acquiring a lot for himself/themselves and not to provide him/them with a means for
speculation or profit by a future assignment of his/their right herein acquired or the
resale of the lot through rent, lease or subletting to others of the lot and subject of
this deed, . . . within five (5) years from the date final and absolute ownership thereof
becomes vested in the vendee, except in cases of hereditary succession or resale in
favor of the vendor."
22
However, absent the proper action taken by the GSIS as the
original vendor referred to, the contract between petitioner's predecessor-in-interest
and private respondent deserves to be upheld. For as pointed out by said private
respondent, it is protected by the Constitution under Section 10, Article III, of the
Bill of Rights stating that, "No law impairing the obligation of contracts shall be
passed." Much as we would like to see a salutary policy triumph, that provision of
the Constitution duly calls for compliance.
More in point, however, is the fact that, following Sarmiento v. Salud,
23
"Even if the
transaction between the original awardee and herein petitioner were wrongful, still,
as between themselves, the purchaser and the seller were both in pari delicto,
being participes criminis as it were." As in Sarmiento, in this case both were aware
of the existence of the stipulated condition in favor of the original seller, GSIS, yet
both entered into an agreement violating said condition and nullifying its effects.
Similarly, as Acting Chief Justice JBL Reyes concluded inSarmiento, "Both parties
being equally guilty, neither is entitled to complain against the other. Having entered
into the transaction with open eyes, and having benefited from it, said parties should
be held in estoppel to assail and annul their own deliberate acts."
WHEREFORE, the appeal is DENIED, and the decision of the respondent court is
AFFIRMED.


G.R. No. 146006 February 23, 2004
JOSE C. LEE AND ALMA AGGABAO, in their capacities as President and
Corporate Secretary, respectively, of Philippines International Life Insurance
Company, and FILIPINO LOAN ASSISTANCE GROUP, petitioners
vs.
REGIONAL TRIAL COURT OF QUEZON CITY BRANCH 85 presided by
JUDGE PEDRO M. AREOLA, BRANCH CLERK OF COURT JANICE Y.
ANTERO, DEPUTY SHERIFFS ADENAUER G. RIVERA and PEDRO L.
BORJA, all of the Regional Trial Court of Quezon City Branch 85, MA.
DIVINA ENDERES claiming to be Special Administratrix, and other persons/
public officers acting for and in their behalf, respondents.
D E C I S I O N
CORONA, J .:
This is a petition for review under Rule 45 of the Rules of Court seeking to reverse
and set aside the decision
1
of the Court of Appeals, First Division, dated July 26,
2000, in CA G.R. 59736, which dismissed the petition for certiorari filed by
petitioners Jose C. Lee and Alma Aggabao (in their capacities as president and
secretary, respectively, of Philippine International Life Insurance Company) and
Filipino Loan Assistance Group.
The antecedent facts follow.
Dr. Juvencio P. Ortaez incorporated the Philippine International Life Insurance
Company, Inc. on July 6, 1956. At the time of the companys incorporation, Dr.
Ortaez owned ninety percent (90%) of the subscribed capital stock.
On July 21, 1980, Dr. Ortaez died. He left behind a wife (Juliana Salgado Ortaez),
three legitimate children (Rafael, Jose and Antonio Ortaez) and five illegitimate
children by Ligaya Novicio (herein private respondent Ma. Divina Ortaez-Enderes
and her siblings Jose, Romeo, Enrico Manuel and Cesar, all surnamed Ortaez).
2

On September 24, 1980, Rafael Ortaez filed before the Court of First Instance of
Rizal, Quezon City Branch (now Regional Trial Court of Quezon City) a petition for
letters of administration of the intestate estate of Dr. Ortaez, docketed as SP Proc.
Q-30884 (which petition to date remains pending at Branch 85 thereof).
Private respondent Ma. Divina Ortaez-Enderes and her siblings filed an opposition
to the petition for letters of administration and, in a subsequent urgent motion,
prayed that the intestate court appoint a special administrator.
On March 10, 1982, Judge Ernani Cruz Pao, then presiding judge of Branch 85,
appointed Rafael and Jose Ortaez joint special administrators of their fathers
estate. Hearings continued for the appointment of a regular administrator (up to now
no regular administrator has been appointed).
As ordered by the intestate court, special administrators Rafael and Jose Ortaez
submitted an inventory of the estate of their father which included, among other
properties, 2,029
3
shares of stock in Philippine International Life Insurance
Company (hereafter Philinterlife), representing 50.725% of the companys
outstanding capital stock.
On April 15, 1989, the decedents wife, Juliana S. Ortaez, claiming that she owned
1,014
4
Philinterlife shares of stock as her conjugal share in the estate, sold said
shares with right to repurchase in favor of herein petitioner Filipino Loan Assistance
Group (FLAG), represented by its president, herein petitioner Jose C. Lee. Juliana
Ortaez failed to repurchase the shares of stock within the stipulated period, thus
ownership thereof was consolidated by petitioner FLAG in its name.
On October 30, 1991, Special Administrator Jose Ortaez, acting in his personal
capacity and claiming that he owned the remaining 1,011
5
Philinterlife shares of
stocks as his inheritance share in the estate, sold said shares with right to repurchase
also in favor of herein petitioner FLAG, represented by its president, herein
petitioner Jose C. Lee. After one year, petitioner FLAG consolidated in its name the
ownership of the Philinterlife shares of stock when Jose Ortaez failed to repurchase
the same.
It appears that several years before (but already during the pendency of the intestate
proceedings at the Regional Trial Court of Quezon City, Branch 85), Juliana Ortaez
and her two children, Special Administrators Rafael and Jose Ortaez, entered into a
memorandum of agreement dated March 4, 1982 for the extrajudicial settlement of
the estate of Dr. Juvencio Ortaez, partitioning the estate (including the Philinterlife
shares of stock) among themselves. This was the basis of the number of shares
separately sold by Juliana Ortaez on April 15, 1989 (1,014 shares) and by Jose
Ortaez on October 30, 1991 (1,011 shares) in favor of herein petitioner FLAG.
On July 12, 1995, herein private respondent Ma. Divina OrtaezEnderes and her
siblings (hereafter referred to as private respondents Enderes et al.) filed a motion for
appointment of special administrator of Philinterlife shares of stock. This move was
opposed by Special Administrator Jose Ortaez.
On November 8, 1995, the intestate court granted the motion of private respondents
Enderes et al. and appointed private respondent Enderes special administratrix of the
Philinterlife shares of stock.
On December 20, 1995, Special Administratrix Enderes filed an urgent motion to
declare void ab initio the memorandum of agreement dated March 4, 1982. On
January 9, 1996, she filed a motion to declare the partial nullity of the extrajudicial
settlement of the decedents estate. These motions were opposed by Special
Administrator Jose Ortaez.
On March 22, 1996, Special Administratrix Enderes filed an urgent motion to
declare void ab initio the deeds of sale of Philinterlife shares of stock, which move
was again opposed by Special Administrator Jose Ortaez.
On February 4, 1997, Jose Ortaez filed an omnibus motion for (1) the approval of
the deeds of sale of the Philinterlife shares of stock and (2) the release of Ma. Divina
Ortaez-Enderes as special administratrix of the Philinterlife shares of stock on the
ground that there were no longer any shares of stock for her to administer.
On August 11, 1997, the intestate court denied the omnibus motion of Special
Administrator Jose Ortaez for the approval of the deeds of sale for the reason that:
Under the Godoy case, supra, it was held in substance that a sale of a property of the
estate without an Order of the probate court is void and passes no title to the
purchaser. Since the sales in question were entered into by Juliana S. Ortaez and
Jose S. Ortaez in their personal capacity without prior approval of the Court, the
same is not binding upon the Estate.

WHEREFORE, the OMNIBUS MOTION for the approval of the sale of Philinterlife
shares of stock and release of Ma. Divina Ortaez-Enderes as Special Administratrix
is hereby denied.
6

On August 29, 1997, the intestate court issued another order granting the motion of
Special Administratrix Enderes for the annulment of the March 4, 1982
memorandum of agreement or extrajudicial partition of estate. The court reasoned
that:
In consonance with the Order of this Court dated August 11, 1997 DENYING the
approval of the sale of Philinterlife shares of stocks and release of Ma. Divina
Ortaez-Enderes as Special Administratrix, the "Urgent Motion to Declare Void Ab
Initio Memorandum of Agreement" dated December 19, 1995. . . is hereby impliedly
partially resolved insofar as the transfer/waiver/renunciation of the Philinterlife
shares of stock are concerned, in particular, No. 5, 9(c), 10(b) and 11(d)(ii) of the
Memorandum of Agreement.
WHEREFORE, this Court hereby declares the Memorandum of Agreement dated
March 4, 1982 executed by Juliana S. Ortaez, Rafael S. Ortaez and Jose S. Ortaez
as partially void ab initio insofar as the transfer/waiver/renunciation of the
Philinterlife shares of stocks are concerned.
7

Aggrieved by the above-stated orders of the intestate court, Jose Ortaez filed, on
December 22, 1997, a petition for certiorari in the Court of Appeals. The appellate
court denied his petition, however, ruling that there was no legal justification
whatsoever for the extrajudicial partition of the estate by Jose Ortaez, his brother
Rafael Ortaez and mother Juliana Ortaez during the pendency of the settlement of
the estate of Dr. Ortaez, without the requisite approval of the intestate court, when it
was clear that there were other heirs to the estate who stood to be prejudiced thereby.
Consequently, the sale made by Jose Ortaez and his mother Juliana Ortaez to
FLAG of the shares of stock they invalidly appropriated for themselves, without
approval of the intestate court, was void.
8

Special Administrator Jose Ortaez filed a motion for reconsideration of the Court of
Appeals decision but it was denied. He elevated the case to the Supreme Court via
petition for review under Rule 45 which the Supreme Court dismissed on October 5,
1998, on a technicality. His motion for reconsideration was denied with finality on
January 13, 1999. On February 23, 1999, the resolution of the Supreme Court
dismissing the petition of Special Administrator Jose Ortaez became final and was
subsequently recorded in the book of entries of judgments.
Meanwhile, herein petitioners Jose Lee and Alma Aggabao, with the rest of the
FLAG-controlled board of directors, increased the authorized capital stock of
Philinterlife, diluting in the process the 50.725% controlling interest of the decedent,
Dr. Juvencio Ortaez, in the insurance company.
9
This became the subject of a
separate action at the Securities and Exchange Commission filed by private
respondent-Special Administratrix Enderes against petitioner Jose Lee and other
members of the FLAG-controlled board of Philinterlife on November 7, 1994.
Thereafter, various cases were filed by Jose Lee as president of Philinterlife and
Juliana Ortaez and her sons against private respondent-Special Administratrix
Enderes in the SEC and civil courts.
10
Somehow, all these cases were connected to
the core dispute on the legality of the sale of decedent Dr. Ortaezs Philinterlife
shares of stock to petitioner FLAG, represented by its president, herein petitioner
Jose Lee who later became the president of Philinterlife after the controversial sale.
On May 2, 2000, private respondent-Special Administratrix Enderes and her siblings
filed a motion for execution of the Orders of the intestate court dated August 11 and
August 29, 1997 because the orders of the intestate court nullifying the sale (upheld
by the Court of Appeals and the Supreme Court) had long became final. Respondent-
Special Administratrix Enderes served a copy of the motion to petitioners Jose Lee
and Alma Aggabao as president and secretary, respectively, of Philinterlife,
11
but
petitioners ignored the same.
On July 6, 2000, the intestate court granted the motion for execution, the dispositive
portion of which read:
WHEREFORE, premises considered, let a writ of execution issue as follows:
1. Confirming the nullity of the sale of the 2,029 Philinterlife shares in the name of
the Estate of Dr. Juvencio Ortaez to Filipino Loan Assistance Group (FLAG);
2. Commanding the President and the Corporate Secretary of Philinterlife to reinstate
in the stock and transfer book of Philinterlife the 2,029 Philinterlife shares of stock in
the name of the Estate of Dr. Juvencio P. Ortaez as the owner thereof without
prejudice to other claims for violation of pre-emptive rights pertaining to the said
2,029 Philinterlife shares;
3. Directing the President and the Corporate Secretary of Philinterlife to issue stock
certificates of Philinterlife for 2,029 shares in the name of the Estate of Dr. Juvencio
P. Ortaez as the owner thereof without prejudice to other claims for violations of
pre-emptive rights pertaining to the said 2,029 Philinterlife shares and,
4. Confirming that only the Special Administratrix, Ma. Divina Ortaez-Enderes, has
the power to exercise all the rights appurtenant to the said shares, including the right
to vote and to receive dividends.
5. Directing Philinterlife and/or any other person or persons claiming to represent it
or otherwise, to acknowledge and allow the said Special Administratrix to exercise
all the aforesaid rights on the said shares and to refrain from resorting to any action
which may tend directly or indirectly to impede, obstruct or bar the free exercise
thereof under pain of contempt.
6. The President, Corporate Secretary, any responsible officer/s of Philinterlife, or
any other person or persons claiming to represent it or otherwise, are hereby directed
to comply with this order within three (3) days from receipt hereof under pain of
contempt.
7. The Deputy Sheriffs Adenauer Rivera and Pedro Borja are hereby directed to
implement the writ of execution with dispatch to forestall any and/or further damage
to the Estate.
SO ORDERED.
12

In the several occasions that the sheriff went to the office of petitioners to execute
the writ of execution, he was barred by the security guard upon petitioners
instructions. Thus, private respondent-Special Administratrix Enderes filed a motion
to cite herein petitioners Jose Lee and Alma Aggabao (president and secretary,
respectively, of Philinterlife) in contempt.
13

Petitioners Lee and Aggabao subsequently filed before the Court of Appeals a
petition for certiorari, docketed as CA G.R. SP No. 59736. Petitioners alleged that

the intestate court gravely abused its discretion in (1) declaring that the ownership of
FLAG over the Philinterlife shares of stock was null and void; (2) ordering the
execution of its order declaring such nullity and (3) depriving the petitioners of their
right to due process.
On July 26, 2000, the Court of Appeals dismissed the petition outright:
We are constrained to DISMISS OUTRIGHT the present petition for certiorari and
prohibition with prayer for a temporary restraining order and/or writ of preliminary
injunction in the light of the following considerations:
1. The assailed Order dated August 11, 1997 of the respondent judge had long
become final and executory;
2. The certification on non-forum shopping is signed by only one (1) of the three (3)
petitioners in violation of the Rules; and
3. Except for the assailed orders and writ of execution, deed of sale with right to
repurchase, deed of sale of shares of stocks and omnibus motion, the petition is not
accompanied by such pleadings, documents and other material portions of the record
as would support the allegations therein in violation of the second paragraph, Rule
65 of the 1997 Rules of Civil Procedure, as amended.
Petition is DISMISSED.
SO ORDERED.
14

The motion for reconsideration filed by petitioners Lee and Aggabao of the above
decision was denied by the Court of Appeals on October 30, 2000:
This resolves the "urgent motion for reconsideration" filed by the petitioners of our
resolution of July 26, 2000 dismissing outrightly the above-entitled petition for the
reason, among others, that the assailed Order dated August 11, 1997 of the
respondent Judge had long become final and executory.
Dura lex, sed lex.
WHEREFORE, the urgent motion for reconsideration is hereby DENIED, for lack of
merit.
SO ORDERED.
15

On December 4, 2000, petitioners elevated the case to the Supreme Court through a
petition for review under Rule 45 but on December 13, 2000, we denied the petition
because there was no showing that the Court of Appeals in CA G.R. SP No. 59736
committed any reversible error to warrant the exercise by the Supreme Court of its
discretionary appellate jurisdiction.
16

However, upon motion for reconsideration filed by petitioners Lee and Aggabao, the
Supreme Court granted the motion and reinstated their petition on September 5,
2001. The parties were then required to submit their respective memoranda.
Meanwhile, private respondent-Special Administratrix Enderes, on July 19, 2000,
filed a motion to direct the branch clerk of court in lieu of herein petitioners Lee and
Aggabao to reinstate the name of Dr. Ortaez in the stock and transfer book of
Philinterlife and issue the corresponding stock certificate pursuant to Section 10,
Rule 39 of the Rules of Court which provides that "the court may direct the act to be
done at the cost of the disobedient party by some other person appointed by the court
and the act when so done shall have the effect as if done by the party." Petitioners
Lee and Aggabao opposed the motion on the ground that the intestate court should
refrain from acting on the motion because the issues raised therein were directly
related to the issues raised by them in their petition for certiorari at the Court of
Appeals docketed as CA-G.R. SP No. 59736. On October 30, 2000, the intestate
court granted the motion, ruling that there was no prohibition for the intestate court
to execute its orders inasmuch as the appellate court did not issue any TRO or writ of
preliminary injunction.
On December 3, 2000, petitioners Lee and Aggabao filed a petition for certiorari in
the Court of Appeals, docketed as CA-G.R. SP No. 62461, questioning this time the
October 30, 2000 order of the intestate court directing the branch clerk of court to
issue the stock certificates. They also questioned in the Court of Appeals the order of
the intestate court nullifying the sale made in their favor by Juliana Ortaez and Jose
Ortaez. On November 20, 2002, the Court of Appeals denied their petition and
upheld the power of the intestate court to execute its order. Petitioners Lee and
Aggabao then filed motion for reconsideration which at present is still pending
resolution by the Court of Appeals.
Petitioners Jose Lee and Alma Aggabao (president and secretary, respectively, of
Philinterlife) and FLAG now raise the following errors for our consideration:
The Court of Appeals committed grave reversible ERROR:
A. In failing to reconsider its previous resolution denying the petition despite the fact
that the appellate courts mistake in apprehending the facts had become patent and
evident from the motion for reconsideration and the comment of respondent Enderes
which had admitted the factual allegations of petitioners in the petition as well as in
the motion for reconsideration. Moreover, the resolution of the appellate court
denying the motion for reconsideration was contained in only one page without even
touching on the substantive merits of the exhaustive discussion of facts and
supporting law in the motion for reconsideration in violation of the Rule on
administrative due process;
B. in failing to set aside the void orders of the intestate court on the erroneous ground
that the orders were final and executory with regard to petitioners even as the latter
were never notified of the proceedings or order canceling its ownership;
C. in not finding that the intestate court committed grave abuse of discretion
amounting to excess of jurisdiction (1) when it issued the Omnibus Order nullifying
the ownership of petitioner FLAG over shares of stock which were alleged to be part
of the estate and (2) when it issued a void writ of execution against petitioner FLAG
as present owner to implement merely provisional orders, thereby violating FLAGs
constitutional right against deprivation of property without due process;
D. In failing to declare null and void the orders of the intestate court which nullified
the sale of shares of stock between the legitimate heir Jose S. Ortaez and petitioner
FLAG because of settled law and jurisprudence, i.e., that an heir has the right to
dispose of the decedents property even if the same is under administration pursuant
to Civil Code provision that possession of hereditary property is transmitted to the
heir the moment of death of the decedent (Acedebo vs. Abesamis, 217 SCRA 194);
E. In disregarding the final decision of the Supreme Court in G.R. No. 128525 dated
December 17, 1999 involving substantially the same parties, to wit, petitioners Jose
C. Lee and Alma Aggabao were respondents in that case while respondent Ma.
Divina Enderes was the petitioner therein. That decision, which can be considered
law of the case, ruled that petitioners cannot be enjoined by respondent Enderes from

exercising their power as directors and officers of Philinterlife and that the intestate
court in charge of the intestate proceedings cannot adjudicate title to properties
claimed to be part of the estate and which are equally CLAIMED BY petitioner
FLAG.
17

The petition has no merit.
Petitioners Jose Lee and Alma Aggabao, representing Philinterlife and FLAG, assail
before us not only the validity of the writ of execution issued by the intestate court
dated July 7, 2000 but also the validity of the August 11, 1997 order of the intestate
court nullifying the sale of the 2,029 Philinterlife shares of stock made by Juliana
Ortaez and Jose Ortaez, in their personal capacities and without court approval, in
favor of petitioner FLAG.
We cannot allow petitioners to reopen the issue of nullity of the sale of the
Philinterlife shares of stock in their favor because this was already settled a long time
ago by the Court of Appeals in its decision dated June 23, 1998 in CA-G.R. SP No.
46342. This decision was effectively upheld by us in our resolution dated October 9,
1998 in G.R. No. 135177 dismissing the petition for review on a technicality and
thereafter denying the motion for reconsideration on January 13, 1999 on the ground
that there was no compelling reason to reconsider said denial.
18
Our decision became
final on February 23, 1999 and was accordingly entered in the book of entry of
judgments. For all intents and purposes therefore, the nullity of the sale of the
Philinterlife shares of stock made by Juliana Ortaez and Jose Ortaez in favor of
petitioner FLAG is already a closed case. To reopen said issue would set a bad
precedent, opening the door wide open for dissatisfied parties to relitigate
unfavorable decisions no end. This is completely inimical to the orderly and efficient
administration of justice.
The said decision of the Court of Appeals in CA-G.R. SP No. 46342 affirming the
nullity of the sale made by Jose Ortaez and his mother Juliana Ortaez of the
Philinterlife shares of stock read:
Petitioners asseverations relative to said [memorandum] agreement were scuttled
during the hearing before this Court thus:
JUSTICE AQUINO:
Counsel for petitioner, when the Memorandum of Agreement was executed, did the
children of Juliana Salgado know already that there was a claim for share in the
inheritance of the children of Novicio?
ATTY. CALIMAG:
Your Honor please, at that time, Your Honor, it is already known to them.
JUSTICE AQUINO:
What can be your legal justification for extrajudicial settlement of a property subject
of intestate proceedings when there is an adverse claim of another set of heirs,
alleged heirs? What would be the legal justification for extra-judicially settling a
property under administration without the approval of the intestate court?
ATTY. CALIMAG:
Well, Your Honor please, in that extra-judicial settlement there is an approval of the
honorable court as to the propertys partition x x x. There were as mentioned by the
respondents counsel, Your Honor.
ATTY. BUYCO:
No
JUSTICE AQUINO:
The point is, there can be no adjudication of a property under intestate proceedings
without the approval of the court. That is basic unless you can present justification
on that. In fact, there are two steps: first, you ask leave and then execute the
document and then ask for approval of the document executed. Now, is there any
legal justification to exclude this particular transaction from those steps?
ATTY. CALIMAG:
None, Your Honor.
ATTY. BUYCO:
With that admission that there is no legal justification, Your Honor, we rest the case
for the private respondent. How can the lower court be accused of abusing its
discretion? (pages 33-35, TSN of January 29, 1998).
Thus, We find merit in the following postulation by private respondent:
What we have here is a situation where some of the heirs of the decedent without
securing court approval have appropriated as their own personal property the
properties of [the] Estate, to the exclusion and the extreme prejudice of the other
claimant/heirs. In other words, these heirs, without court approval, have distributed
the asset of the estate among themselves and proceeded to dispose the same to third
parties even in the absence of an order of distribution by the Estate Court. As
admitted by petitioners counsel, there was absolutely no legal justification for this
action by the heirs. There being no legal justification, petitioner has no basis for
demanding that public respondent [the intestate court] approve the sale of the
Philinterlife shares of the Estate by Juliana and Jose Ortaez in favor of the Filipino
Loan Assistance Group.
It is an undisputed fact that the parties to the Memorandum of Agreement dated
March 4, 1982 (see Annex 7 of the Comment). . . are not the only heirs claiming an
interest in the estate left by Dr. Juvencio P. Ortaez. The records of this case. . .
clearly show that as early as March 3, 1981 an Opposition to the Application for
Issuance of Letters of Administration was filed by the acknowledged natural children
of Dr. Juvencio P. Ortaez with Ligaya Novicio. . . This claim by the acknowledged
natural children of Dr. Juvencio P. Ortaez is admittedly known to the parties to the
Memorandum of Agreement before they executed the same. This much was admitted
by petitioners counsel during the oral argument. xxx
Given the foregoing facts, and the applicable jurisprudence, public respondent can
never be faulted for not approving. . . the subsequent sale by the petitioner [Jose
Ortaez] and his mother [Juliana Ortaez] of the Philinterlife shares belonging to the
Estate of Dr. Juvencio P. Ortaez." (pages 3-4 of Private Respondents
Memorandum; pages 243-244 of the Rollo)
Amidst the foregoing, We found no grave abuse of discretion amounting to excess or
want of jurisdiction committed by respondent judge.
19

From the above decision, it is clear that Juliana Ortaez, and her three sons, Jose,
Rafael and Antonio, all surnamed Ortaez, invalidly entered into a memorandum of
agreement extrajudicially partitioning the intestate estate among themselves, despite
their knowledge that there were other heirs or claimants to the estate and before final
settlement of the estate by the intestate court. Since the appropriation of the estate

properties by Juliana Ortaez and her children (Jose, Rafael and Antonio Ortaez)
was invalid, the subsequent sale thereof by Juliana and Jose to a third party (FLAG),
without court approval, was likewise void.
An heir can sell his right, interest, or participation in the property under
administration under Art. 533 of the Civil Code which provides that possession of
hereditary property is deemed transmitted to the heir without interruption from the
moment of death of the decedent.
20
However, an heir can only alienate such portion
of the estate that may be allotted to him in the division of the estate by the probate or
intestate court after final adjudication, that is, after all debtors shall have been paid or
the devisees or legatees shall have been given their shares.
21
This means that an heir
may only sell his ideal or undivided share in the estate, not any specific property
therein. In the present case, Juliana Ortaez and Jose Ortaez sold specific properties
of the estate (1,014 and 1,011 shares of stock in Philinterlife) in favor of petitioner
FLAG. This they could not lawfully do pending the final adjudication of the estate
by the intestate court because of the undue prejudice it would cause the other
claimants to the estate, as what happened in the present case.
Juliana Ortaez and Jose Ortaez sold specific properties of the estate, without court
approval. It is well-settled that court approval is necessary for the validity of any
disposition of the decedents estate. In the early case ofGodoy vs. Orellano,
22
we laid
down the rule that the sale of the property of the estate by an administrator without
the order of the probate court is void and passes no title to the purchaser. And in the
case of Dillena vs. Court of Appeals,
23
we ruled that:
[I]t must be emphasized that the questioned properties (fishpond) were included in
the inventory of properties of the estate submitted by then Administratrix Fausta
Carreon Herrera on November 14, 1974. Private respondent was appointed as
administratrix of the estate on March 3, 1976 in lieu of Fausta Carreon Herrera. On
November 1, 1978, the questioned deed of sale of the fishponds was executed
between petitioner and private respondent without notice and approval of the probate
court. Even after the sale, administratrix Aurora Carreon still included the three
fishponds as among the real properties of the estate in her inventory submitted on
August 13, 1981. In fact, as stated by the Court of Appeals, petitioner, at the time of
the sale of the fishponds in question, knew that the same were part of the estate under
administration.
x x x x x x x x x
The subject properties therefore are under the jurisdiction of the probate court which
according to our settled jurisprudence has the authority to approve any disposition
regarding properties under administration. . . More emphatic is the declaration We
made in Estate of Olave vs. Reyes (123 SCRA 767) where We stated that when 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.
Only recently, in Manotok Realty, Inc. vs. Court of Appeals (149 SCRA 174), We
held that the sale of an immovable property belonging to the estate of a decedent, in
a special proceedings, needs court approval. . . This pronouncement finds support in
the previous case of Dolores Vda. De Gil vs. Agustin Cancio (14 SCRA 797)
wherein We emphasized that it is within the jurisdiction of a probate court to
approve the sale of properties of a deceased person by his prospective heirs before
final adjudication. x x x
It being settled that property under administration needs the approval of the probate
court before it can be disposed of, any unauthorized disposition does not bind the
estate and is null and void. As early as 1921 in the case of Godoy vs. Orellano (42
Phil 347), We laid down the rule that a sale by an administrator of property of the
deceased, which is not authorized by the probate court is null and void and title does
not pass to the purchaser.
There is hardly any doubt that the probate court can declare null and void the
disposition of the property under administration, made by private respondent, the
same having been effected without authority from said court. It is the probate court
that has the power to authorize and/or approve the sale (Section 4 and 7, Rule 89),
hence, a fortiori, it is said court that can declare it null and void for as long as the
proceedings had not been closed or terminated. To uphold petitioners contention
that the probate court cannot annul the unauthorized sale, would render meaningless
the power pertaining to the said court. (Bonga vs. Soler, 2 SCRA 755). (emphasis
ours)
Our jurisprudence is therefore clear that (1) any disposition of estate property by an
administrator or prospective heir pending final adjudication requires court approval
and (2) any unauthorized disposition of estate property can be annulled by the
probate court, there being no need for a separate action to annul the unauthorized
disposition.
The question now is: can the intestate or probate court execute its order nullifying
the invalid sale?
We see no reason why it cannot. The intestate court has the power to execute its
order with regard to the nullity of an unauthorized sale of estate property, otherwise
its power to annul the unauthorized or fraudulent disposition of estate property
would be meaningless. In other words, enforcement is a necessary adjunct of the
intestate or probate courts power to annul unauthorized or fraudulent transactions to
prevent the dissipation of estate property before final adjudication.
Moreover, in this case, the order of the intestate court nullifying the sale was
affirmed by the appellate courts (the Court of Appeals in CA-G.R. SP No. 46342
dated June 23, 1998 and subsequently by the Supreme Court in G.R. No. 135177
dated October 9, 1998). The finality of the decision of the Supreme Court was
entered in the book of entry of judgments on February 23, 1999. Considering the
finality of the order of the intestate court nullifying the sale, as affirmed by the
appellate courts, it was correct for private respondent-Special Administratrix Enderes
to thereafter move for a writ of execution and for the intestate court to grant it.
Petitioners Jose Lee, Alma Aggabao and FLAG, however, contend that the probate
court could not issue a writ of execution with regard to its order nullifying the sale
because said order was merely provisional:
The only authority given by law is for respondent judge to determine provisionally
whether said shares are included or excluded in the inventory In ordering the
execution of the orders, respondent judge acted in excess of his jurisdiction and
grossly violated settled law and jurisprudence, i.e., that the determination by a
probate or intestate court of whether a property is included or excluded in the

inventory of the estate being provisional in nature, cannot be the subject of
execution.
24
(emphasis ours)
Petitioners argument is misplaced. There is no question, based on the facts of this
case, that the Philinterlife shares of stock were part of the estate of Dr. Juvencio
Ortaez from the very start as in fact these shares were included in the inventory of
the properties of the estate submitted by Rafael Ortaez after he and his brother, Jose
Ortaez, were appointed special administrators by the intestate court.
25

The controversy here actually started when, during the pendency of the settlement of
the estate of Dr. Ortaez, his wife Juliana Ortaez sold the 1,014 Philinterlife shares
of stock in favor petitioner FLAG without the approval of the intestate court. Her son
Jose Ortaez later sold the remaining 1,011 Philinterlife shares also in favor of
FLAG without the approval of the intestate court.
We are not dealing here with the issue of inclusion or exclusion of properties in the
inventory of the estate because there is no question that, from the very start, the
Philinterlife shares of stock were owned by the decedent, Dr. Juvencio
Ortaez. Rather, we are concerned here with the effect of the sale made by the
decedents heirs, Juliana Ortaez and Jose Ortaez, without the required
approval of the intestate court. This being so, the contention of petitioners that the
determination of the intestate court was merely provisional and should have been
threshed out in a separate proceeding is incorrect.
The petitioners Jose Lee and Alma Aggabao next contend that the writ of execution
should not be executed against them because they were not notified, nor they were
aware, of the proceedings nullifying the sale of the shares of stock.
We are not persuaded. The title of the purchaser like herein petitioner FLAG can be
struck down by the intestate court after a clear showing of the nullity of the
alienation. This is the logical consequence of our ruling in Godoyand in several
subsequent cases.
26
The sale of any property of the estate by an administrator or
prospective heir without order of the probate or intestate court is void and
passes no title to the purchaser. Thus, in Juan Lao et al. vs. Hon. Melencio Geneto,
G.R. No. 56451, June 19, 1985, we ordered the probate court to cancel the transfer
certificate of title issued to the vendees at the instance of the administrator after
finding that the sale of real property under probate proceedings was made without
the prior approval of the court. The dispositive portion of our decision read:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the assailed Order dated
February 18, 1981 of the respondent Judge approving the questioned Amicable
Settlement is declared NULL and VOID and hereby SET ASIDE. Consequently, the
sale in favor of Sotero Dioniosio III and by the latter to William Go is likewise
declared NULL and VOID. The Transfer Certificate of Title issued to the latter is
hereby ordered cancelled.
It goes without saying that the increase in Philinterlifes authorized capital stock,
approved on the vote of petitioners non-existent shareholdings and obviously
calculated to make it difficult for Dr. Ortaezs estate to reassume its controlling
interest in Philinterlife, was likewise void ab initio.
Petitioners next argue that they were denied due process.
We do not think so.
The facts show that petitioners, for reasons known only to them, did not appeal the
decision of the intestate court nullifying the sale of shares of stock in their favor.
Only the vendor, Jose Ortaez, appealed the case. A careful review of the records
shows that petitioners had actual knowledge of the estate settlement proceedings and
that they knew private respondent Enderes was questioning therein the sale to them
of the Philinterlife shares of stock.
It must be noted that private respondent-Special Administratrix Enderes filed before
the intestate court (RTC of Quezon City, Branch 85) a "Motion to Declare Void Ab
Initio Deeds of Sale of Philinterlife Shares of Stock" on March 22, 1996. But as early
as 1994, petitioners already knew of the pending settlement proceedings and that the
shares they bought were under the administration by the intestate court because
private respondent Ma. Divina Ortaez-Enderes and her mother Ligaya Novicio had
filed a case against them at the Securities and Exchange Commission on November
7, 1994, docketed as SEC No. 11-94-4909, for annulment of transfer of shares of
stock, annulment of sale of corporate properties, annulment of subscriptions on
increased capital stocks, accounting, inspection of corporate books and records and
damages with prayer for a writ of preliminary injunction and/or temporary
restraining order.
27
In said case, Enderes and her mother questioned the sale of the
aforesaid shares of stock to petitioners. The SEC hearing officer in fact, in his
resolution dated March 24, 1995, deferred to the jurisdiction of the intestate court to
rule on the validity of the sale of shares of stock sold to petitioners by Jose Ortaez
and Juliana Ortaez:
Petitioners also averred that. . . the Philinterlife shares of Dr. Juvencio Ortaez who
died, in 1980, are part of his estate which is presently the subject matter of an
intestate proceeding of the RTC of Quezon City, Branch 85. Although, private
respondents [Jose Lee et al.] presented the documents of partition whereby the
foregoing share of stocks were allegedly partitioned and conveyed to Jose S. Ortaez
who allegedly assigned the same to the other private respondents, approval of the
Court was not presented. Thus, the assignments to the private respondents [Jose Lee
et al.] of the subject shares of stocks are void.
x x x x x x x x x
With respect to the alleged extrajudicial partition of the shares of stock owned by the
late Dr. Juvencio Ortaez, we rule that the matter properly belongs to the jurisdiction
of the regular court where the intestate proceedings are currently pending.
28

With this resolution of the SEC hearing officer dated as early as March 24, 1995
recognizing the jurisdiction of the intestate court to determine the validity of the
extrajudicial partition of the estate of Dr. Ortaez and the subsequent sale by the
heirs of the decedent of the Philinterlife shares of stock to petitioners, how can
petitioners claim that they were not aware of the intestate proceedings?
Furthermore, when the resolution of the SEC hearing officer reached the Supreme
Court in 1996 (docketed as G.R. 128525), herein petitioners who were respondents
therein filed their answer which contained statements showing that they knew of the
pending intestate proceedings:
[T]he subject matter of the complaint is not within the jurisdiction of the SEC but
with the Regional Trial Court; Ligaya Novicio and children represented themselves
to be the common law wife and illegitimate children of the late Ortaez; that on

March 4, 1982, the surviving spouse Juliana Ortaez, on her behalf and for her minor
son Antonio, executed a Memorandum of Agreement with her other sons Rafael and
Jose, both surnamed Ortaez, dividing the estate of the deceased composed of his
one-half (1/2) share in the conjugal properties; that in the said Memorandum of
Agreement, Jose S. Ortaez acquired as his share of the estate the 1,329 shares of
stock in Philinterlife; that on March 4, 1982, Juliana and Rafael assigned their
respective shares of stock in Philinterlife to Jose; that contrary to the contentions of
petitioners, private respondents Jose Lee, Carlos Lee, Benjamin Lee and Alma
Aggabao became stockholders of Philinterlife on March 23, 1983 when Jose S.
Ortaez, the principal stockholder at that time, executed a deed of sale of his shares
of stock to private respondents; and that the right of petitioners to question the
Memorandum of Agreement and the acquisition of shares of stock of private
respondent is barred by prescription.
29

Also, private respondent-Special Administratrix Enderes offered additional proof of
actual knowledge of the settlement proceedings by petitioners which petitioners
never denied: (1) that petitioners were represented by Atty. Ricardo Calimag
previously hired by the mother of private respondent Enderes to initiate cases against
petitioners Jose Lee and Alma Aggabao for the nullification of the sale of the shares
of stock but said counsel made a conflicting turn-around and appeared instead as
counsel of petitioners, and (2) that the deeds of sale executed between petitioners and
the heirs of the decedent (vendors Juliana Ortaez and Jose Ortaez) were
acknowledged before Atty. Ramon Carpio who, during the pendency of the
settlement proceedings, filed a motion for the approval of the sale of Philinterlife
shares of stock to the Knights of Columbus Fraternal Association, Inc. (which
motion was, however, later abandoned).
30
All this sufficiently proves that petitioners,
through their counsels, knew of the pending settlement proceedings.
Finally, petitioners filed several criminal cases such as libel (Criminal Case No. 97-
7179-81), grave coercion (Criminal Case No. 84624) and robbery (Criminal Case
No. Q-96-67919) against private respondents mother Ligaya Novicio who was a
director of Philinterlife,
31
all of which criminal cases were related to the questionable
sale to petitioners of the Philinterlife shares of stock.
Considering these circumstances, we cannot accept petitioners claim of denial of
due process. The essence of due process is the reasonable opportunity to be heard.
Where the opportunity to be heard has been accorded, there is no denial of due
process.
32
In this case, petitioners knew of the pending instestate proceedings for the
settlement of Dr. Juvencio Ortaezs estate but for reasons they alone knew, they
never intervened. When the court declared the nullity of the sale, they did not bother
to appeal. And when they were notified of the motion for execution of the Orders of
the intestate court, they ignored the same. Clearly, petitioners alone should bear the
blame.
Petitioners next contend that we are bound by our ruling in G.R. No. 128525
entitled Ma. Divina Ortaez-Enderes vs. Court of Appeals, dated December 17,
1999, where we allegedly ruled that the intestate court "may not pass upon the title to
a certain property for the purpose of determining whether the same should or should
not be included in the inventory but such determination is not conclusive and is
subject to final decision in a separate action regarding ownership which may be
constituted by the parties."
We are not unaware of our decision in G.R. No. 128525. The issue therein was
whether the Court of Appeals erred in affirming the resolution of the SEC that
Enderes et al. were not entitled to the issuance of the writ of preliminary injunction.
We ruled that the Court of Appeals was correct in affirming the resolution of the
SEC denying the issuance of the writ of preliminary injunction because injunction is
not designed to protect contingent rights. Said case did not rule on the issue of the
validity of the sale of shares of stock belonging to the decedents estate without court
approval nor of the validity of the writ of execution issued by the intestate court.
G.R. No. 128525 clearly involved a different issue and it does not therefore apply to
the present case.
Petitioners and all parties claiming rights under them are hereby warned not to
further delay the execution of the Orders of the intestate court dated August 11 and
August 29, 1997.
WHEREFORE, the petition is hereby DENIED. The decision of the Court of
Appeals in CA-G.R. S.P. No. 59736 dated July 26, 2000, dismissing petitioners
petition for certiorari and affirming the July 6, 2000 order of the trial court which
ordered the execution of its (trial courts) August 11 and 29, 1997 orders, is hereby
AFFIRMED.


G.R. No. 129008 January 13, 2004
TEODORA A. RIOFERIO, VERONICA O. EVANGELISTA assisted by her
husband ZALDY EVANGELISTA, ALBERTO ORFINADA, and ROWENA
O. UNGOS, assisted by her husband BEDA UNGOS, petitioners,
vs.
COURT OF APPEALS, ESPERANZA P. ORFINADA, LOURDES P.
ORFINADA, ALFONSO ORFINADA, NANCY P. ORFINADA, ALFONSO
JAMES P. ORFINADA, CHRISTOPHER P. ORFINADA and ANGELO P.
ORFINADA,respondents.
D E C I S I O N
TINGA, J .:
Whether the heirs may bring suit to recover property of the estate pending the
appointment of an administrator is the issue in this case.
This Petition for Review on Certiorari, under Rule 45 of the Rules of Court, seeks to
set aside the Decision
1
of the Court of Appeals in CA-G.R. SP No. 42053 dated
January 31, 1997, as well as its Resolution
2
dated March 26, 1997, denying
petitioners motion for reconsideration.
On May 13, 1995, Alfonso P. Orfinada, Jr. died without a will in Angeles City
leaving several personal and real properties located in Angeles City, Dagupan City
and Kalookan City.
3
He also left a widow, respondent Esperanza P. Orfinada, whom
he married on July 11, 1960 and with whom he had seven children who are the
herein respondents, namely: Lourdes P. Orfinada, Alfonso "Clyde" P. Orfinada,
Nancy P. Orfinada-Happenden, Alfonso James P. Orfinada, Christopher P. Orfinada,
Alfonso Mike P. Orfinada (deceased) and Angelo P. Orfinada.
4

Apart from the respondents, the demise of the decedent left in mourning his
paramour and their children. They are petitioner Teodora Riofero, who became a part
of his life when he entered into an extra-marital relationship with her during the
subsistence of his marriage to Esperanza sometime in 1965, and co-petitioners
Veronica
5
, Alberto and Rowena.
6

On November 14, 1995, respondents Alfonso James and Lourdes Orfinada
discovered that on June 29, 1995, petitioner Teodora Rioferio and her children
executed an Extrajudicial Settlement of Estate of a Deceased Person with
Quitclaim involving the properties of the estate of the decedent located in Dagupan
City and that accordingly, the Registry of Deeds in Dagupan issued Certificates of
Titles Nos. 63983, 63984 and 63985 in favor of petitioners Teodora Rioferio,
Veronica Orfinada-Evangelista, Alberto Orfinada and Rowena Orfinada-Ungos.
Respondents also found out that petitioners were able to obtain a loan
of P700,000.00 from the Rural Bank of Mangaldan Inc. by executing a Real Estate
Mortgage over the properties subject of the extra-judicial settlement.
7

On December 1, 1995, respondent Alfonso "Clyde" P. Orfinada III filed a Petition
for Letters of Administrationdocketed as S.P. Case No. 5118 before the Regional
Trial Court of Angeles City, praying that letters of administration encompassing the
estate of Alfonso P. Orfinada, Jr. be issued to him.
8

On December 4, 1995, respondents filed a Complaint for the Annulment/Rescission
of Extra Judicial Settlement of Estate of a Deceased Person with Quitclaim, Real
Estate Mortgage and Cancellation of Transfer Certificate of Titles with Nos. 63983,
63985 and 63984 and Other Related Documents with Damages against petitioners,
the Rural Bank of Mangaldan, Inc. and the Register of Deeds of Dagupan City
before the Regional Trial Court, Branch 42, Dagupan City.
9

On February 5, 1996, petitioners filed their Answer to the aforesaid complaint
interposing the defense that the property subject of the contested deed of extra-
judicial settlement pertained to the properties originally belonging to the parents of
Teodora Riofero
10
and that the titles thereof were delivered to her as an advance
inheritance but the decedent had managed to register them in his name.
11
Petitioners
also raised the affirmative defense that respondents are not the real parties-in-interest
but rather the Estate of Alfonso O. Orfinada, Jr. in view of the pendency of the
administration proceedings.
12
On April 29, 1996, petitioners filed a Motion to Set
Affirmative Defenses for Hearing
13
on the aforesaid ground.
The lower court denied the motion in its Order
14
dated June 27, 1996, on the ground
that respondents, as heirs, are the real parties-in-interest especially in the absence of
an administrator who is yet to be appointed in S.P. Case No. 5118. Petitioners moved
for its reconsideration
15
but the motion was likewise denied.
16

This prompted petitioners to file before the Court of Appeals their Petition for
Certiorari under Rule 65 of the Rules of Court docketed as CA G.R. S.P. No.
42053.
17
Petitioners averred that the RTC committed grave abuse of discretion in
issuing the assailed order which denied the dismissal of the case on the ground that
the proper party to file the complaint for the annulment of the extrajudicial
settlement of the estate of the deceased is the estate of the decedent and not the
respondents.
18

The Court of Appeals rendered the assailed Decision
19
dated January 31, 1997,
stating that it discerned no grave abuse of discretion amounting to lack or excess of
jurisdiction by the public respondent judge when he denied petitioners motion to set
affirmative defenses for hearing in view of its discretionary nature.
A Motion for Reconsideration was filed by petitioners but it was denied.
20
Hence, the
petition before this Court.
The issue presented by the petitioners before this Court is whether the heirs have
legal standing to prosecute the rights belonging to the deceased subsequent to the
commencement of the administration proceedings.
21

Petitioners vehemently fault the lower court for denying their motion to set the case
for preliminary hearing on their affirmative defense that the proper party to bring the
action is the estate of the decedent and not the respondents. It must be stressed that
the holding of a preliminary hearing on an affirmative defense lies in the discretion
of the court. This is clear from the Rules of Court, thus:
SEC. 5. Pleadings grounds as affirmative defenses.- Any of the grounds for dismissal
provided for in this rule, except improper venue, may be pleaded as an affirmative
defense, and a preliminary hearing may be had thereon as if a motion to dismiss had
been filed.
22
(Emphasis supplied.)
Certainly, the incorporation of the word "may" in the provision is clearly indicative
of the optional character of the preliminary hearing. The word denotes discretion and
cannot be construed as having a mandatory effect.
23
Subsequently, the electivity of
the proceeding was firmed up beyond cavil by the 1997 Rules of Civil Procedure

with the inclusion of the phrase "in the discretion of the Court", apart from the
retention of the word "may" in Section 6,
24
in Rule 16 thereof.
Just as no blame of abuse of discretion can be laid on the lower courts doorstep for
not hearing petitioners affirmative defense, it cannot likewise be faulted for
recognizing the legal standing of the respondents as heirs to bring the suit.
Pending the filing of administration proceedings, the heirs without doubt have legal
personality to bring suit in behalf of the estate of the decedent in accordance with the
provision of Article 777 of the New Civil Code "that (t)he rights to succession are
transmitted from the moment of the death of the decedent." The provision in turn is
the foundation of the principle that the property, rights and obligations to the extent
and value of the inheritance of a person are transmitted through his death to another
or others by his will or by operation of law.
25

Even if administration proceedings have already been commenced, the heirs may
still bring the suit if an administrator has not yet been appointed. This is the proper
modality despite the total lack of advertence to the heirs in the rules on party
representation, namely Section 3, Rule 3
26
and Section 2, Rule 87
27
of the Rules of
Court. In fact, in the case of Gochan v. Young,
28
this Court recognized the legal
standing of the heirs to represent the rights and properties of the decedent under
administration pending the appointment of an administrator. Thus:
The above-quoted rules,
29
while permitting an executor or administrator to represent
or to bring suits on behalf of the deceased, do not prohibit the heirs from
representing the deceased. These rules are easily applicable to cases in which an
administrator has already been appointed. But no rule categorically addresses
the situation in which special proceedings for the settlement of an estate have
already been instituted, yet no administrator has been appointed. In such
instances, the heirs cannot be expected to wait for the appointment of an
administrator; then wait further to see if the administrator appointed would care
enough to file a suit to protect the rights and the interests of the deceased; and in the
meantime do nothing while the rights and the properties of the decedent are violated
or dissipated.
Even if there is an appointed administrator, jurisprudence recognizes two
exceptions, viz: (1) if the executor or administrator is unwilling or refuses to bring
suit;
30
and (2) when the administrator is alleged to have participated in the act
complained of
31
and he is made a party defendant.
32
Evidently, the necessity for the
heirs to seek judicial relief to recover property of the estate is as compelling when
there is no appointed administrator, if not more, as where there is an appointed
administrator but he is either disinclined to bring suit or is one of the guilty parties
himself.
All told, therefore, the rule that the heirs have no legal standing to sue for the
recovery of property of the estate during the pendency of administration proceedings
has three exceptions, the third being when there is no appointed administrator such
as in this case.
As the appellate court did not commit an error of law in upholding the order of the
lower court, recourse to this Court is not warranted.
WHEREFORE, the petition for review is DENIED. The assailed decision and
resolution of the Court of Appeals are hereby AFFIRMED. No costs.

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