1

G.R. No. L-68053 May 7, 1990 the heirs of Aniceto Yanes under Original Certificate of Title No. RO-4858 (8804) issued on
October 9, 1917 by the Register of Deeds of Occidental Negros (Exh. A).

LAURA ALVAREZ, FLORA ALVAREZ and RAYMUNDO ALVAREZ, petitioners,

Aniceto Yanes was survived by his children, Rufino, Felipe and Teodora. Herein private
vs. respondents, Estelita, Iluminado and Jesus, are the children of Rufino who died in 1962
THE HONORABLE INTERMEDIATE APELLATE COURT and JESUS YANES, while the other private respondents, Antonio and Rosario Yanes, are children of Felipe.
ESTELITA YANES, ANTONIO YANES, ROSARIO YANES, and ILUMINADO YANES, Teodora was survived by her child, Jovita (Jovito) Alib. 1 It is not clear why the latter is not
respondents. included as a party in this case.

Francisco G. Banzon for petitioner. Aniceto left his children Lots 773 and 823. Teodora cultivated only three hectares of Lot 823
as she could not attend to the other portions of the two lots which had a total area of around
twenty-four hectares. The record does not show whether the children of Felipe also
cultivated some portions of the lots but it is established that Rufino and his children left the
Renecio R. Espiritu for private respondents.
province to settle in other places as a result of the outbreak of World War II. According to
Estelita, from the "Japanese time up to peace time", they did not visit the parcels of land in
question but "after liberation", when her brother went there to get their share of the sugar
produced therein, he was informed that Fortunato Santiago, Fuentebella (Puentevella) and
Alvarez were in possession of Lot 773. 2
FERNAN, C.J.:

It is on record that on May 19, 1938, Fortunato D. Santiago was issued Transfer Certificate
This is a petition for review on certiorari seeking the reversal of: (a) the decision of the
of Title No. RF 2694 (29797) covering Lot 773-A with an area of 37,818 square meters. 3
Fourth Civil Cases Division of the Intermediate Appellate Court dated August 31, 1983 in
TCT No. RF 2694 describes Lot 773-A as a portion of Lot 773 of the cadastral survey of
AC-G.R. CV No. 56626 entitled "Jesus Yanes et al. v. Dr. Rodolfo Siason et al." affirming
Murcia and as originally registered under OCT No. 8804.
the decision dated July 8, 1974 of the Court of First Instance of Negros Occidental insofar as
it ordered the petitioners to pay jointly and severally the private respondents the sum of
P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B of the cadastral
survey of Murcia, Negros Occidental and reversing the subject decision insofar as it awarded The bigger portion of Lot 773 with an area of 118,831 square meters was also registered in
the sums of P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral damages and the name of Fortunato D. Santiago on September 6, 1938 Under TCT No. RT-2695 (28192 ).
attorney's fees, respectively and (b) the resolution of said appellate court dated May 30, 1984, 4 Said transfer certificate of title also contains a certification to the effect that Lot 773-B was
denying the motion for reconsideration of its decision. originally registered under OCT No. 8804.

The real properties involved are two parcels of land identified as Lot 773-A and Lot 773-B On May 30, 1955, Santiago sold Lots 773-A and 773-B to Monico B. Fuentebella, Jr. in
which were originally known as Lot 773 of the cadastral survey of Murcia, Negros consideration of the sum of P7,000.00. 5 Consequently, on February 20, 1956, TCT Nos.
Occidental. Lot 773, with an area of 156,549 square meters, was registered in the name of T-19291 and T-19292 were issued in Fuentebella's name. 6
 2

After Fuentebella's death and during the settlement of his estate, the administratrix thereof now covered by Transfer Certificates of Title Nos. T-23165 and T-23166 in the name of said
(Arsenia R. Vda. de Fuentebella, his wife) filed in Special Proceedings No. 4373 in the Court defendant, and thereafter to deliver the possession of said lots to the plaintiffs. No special
of First Instance of Negros Occidental, a motion requesting authority to sell Lots 773-A and pronouncement as to costs.
773-B. 7 By virtue of a court order granting said motion, 8 on March 24, 1958, Arsenia Vda.
de Fuentebella sold said lots for P6,000.00 to Rosendo Alvarez. 9 Hence, on April 1, 1958
TCT Nos. T-23165 and T-23166 covering Lots 773-A and 773-B were respectively issued to SO ORDERED. 16
Rosendo Alvarez. 10

It will be noted that the above-mentioned manifestation of Jesus Yanes was not mentioned in
Two years later or on May 26, 1960, Teodora Yanes and the children of her brother Rufino, the aforesaid decision.
namely, Estelita, Iluminado and Jesus, filed in the Court of First Instance of Negros
Occidental a complaint against Fortunato Santiago, Arsenia Vda. de Fuentebella, Alvarez
and the Register of Deeds of Negros Occidental for the "return" of the ownership and
However, execution of said decision proved unsuccessful with respect to Lot 773. In his
possession of Lots 773 and 823. They also prayed that an accounting of the produce of the
return of service dated October 20, 1965, the sheriff stated that he discovered that Lot 773
land from 1944 up to the filing of the complaint be made by the defendants, that after court
had been subdivided into Lots 773-A and 773-B; that they were "in the name" of Rodolfo
approval of said accounting, the share or money equivalent due the plaintiffs be delivered to
Siason who had purchased them from Alvarez, and that Lot 773 could not be delivered to the
them, and that defendants be ordered to pay plaintiffs P500.00 as damages in the form of
plaintiffs as Siason was "not a party per writ of execution." 17
attorney's fees. 11

The execution of the decision in Civil Case No. 5022 having met a hindrance, herein private
During the pendency in court of said case or on November 13, 1961, Alvarez sold Lots
respondents (the Yaneses) filed on July 31, 1965, in the Court of First Instance of Negros
773-A, 773-B and another lot for P25,000.00 to Dr. Rodolfo Siason. 12 Accordingly, TCT
Occidental a petition for the issuance of a new certificate of title and for a declaration of
Nos. 30919 and 30920 were issued to Siason, 13 who thereafter, declared the two lots in his
nullity of TCT Nos. T-23165 and T-23166 issued to Rosendo Alvarez. 18 Thereafter, the
name for assessment purposes. 14
court required Rodolfo Siason to produce the certificates of title covering Lots 773 and 823.

Meanwhile, on November 6, 1962, Jesus Yanes, in his own behalf and in behalf of the other
plaintiffs, and assisted by their counsel, filed a manifestation in Civil Case No. 5022 stating
that the therein plaintiffs "renounce, forfeit and quitclaims (sic) any claim, monetary or
otherwise, against the defendant Arsenia Vda. de Fuentebella in connection with the
above-entitled case." 15
On October 11, 1963, a decision was rendered by the Court of First Instance of Negros
Occidental in Civil Case No. 5022, the dispositive portion of which reads:
Expectedly, Siason filed a manifestation stating that he purchased Lots 773-A, 773-B and
658, not Lots 773 and 823, "in good faith and for a valuable consideration without any
knowledge of any lien or encumbrances against said properties"; that the decision in the
cadastral proceeding 19 could not be enforced against him as he was not a party thereto; and
that the decision in Civil Case No. 5022 could neither be enforced against him not only
because he was not a party-litigant therein but also because it had long become final and
executory. 20 Finding said manifestation to be well-founded, the cadastral court, in its order
of September 4, 1965, nullified its previous order requiring Siason to surrender the
certificates of title mentioned therein. 21

WHEREFORE, judgment is rendered, ordering the defendant Rosendo Alvarez to reconvey

to the plaintiffs lots Nos. 773 and 823 of the Cadastral Survey of Murcia, Negros Occidental,

In 1968, the Yaneses filed an ex-parte motion for the issuance of an alias writ of execution in
Civil Case No. 5022. Siason opposed it. 22 In its order of September 28, 1968 in Civil Case
No. 5022, the lower court, noting that the Yaneses had instituted another action for the
recovery of the land in question, ruled that at the judgment therein could not be enforced
against Siason as he was not a party in the case. 23
The action filed by the Yaneses on February 21, 1968 was for recovery of real property with
damages. 24 Named defendants therein were Dr. Rodolfo Siason, Laura Alvarez, Flora
Alvarez, Raymundo Alvarez and the Register of Deeds of Negros Occidental. The Yaneses
prayed for the cancellation of TCT Nos. T-19291 and 19292 issued to Siason (sic) for being
null and void; the issuance of a new certificate of title in the name of the Yaneses "in
accordance with the sheriffs return of service dated October 20, 1965;" Siason's delivery of
possession of Lot 773 to the Yaneses; and if, delivery thereof could not be effected, or, if the
issuance of a new title could not be made, that the Alvarez and Siason jointly and severally
pay the Yaneses the sum of P45,000.00. They also prayed that Siason render an accounting
of the fruits of Lot 773 from November 13, 1961 until the filing of the complaint; and that
the defendants jointly and severally pay the Yaneses moral damages of P20,000.00 and
exemplary damages of P10,000.00 plus attorney's fees of P4, 000.00. 25
In his answer to the complaint, Siason alleged that the validity of his titles to Lots 773-A and
773-B, having been passed upon by the court in its order of September 4, 1965, had become
res judicata and the Yaneses were estopped from questioning said order. 26 On their part, the
Alvarez stated in their answer that the Yaneses' cause of action had been "barred by res
judicata, statute of limitation and estoppel." 27
In its decision of July 8, 1974, the lower court found that Rodolfo Siason, who purchased the
properties in question thru an agent as he was then in Mexico pursuing further medical
studies, was a buyer in good faith for a valuable consideration. Although the Yaneses were
negligent in their failure to place a notice of lis pendens "before the Register of Deeds of
Negros Occidental in order to protect their rights over the property in question" in Civil Case
No. 5022, equity demanded that they recover the actual value of the land because the sale
thereof executed between Alvarez and Siason was without court approval. 28 The dispositive
portion of the decision states:
3
IN VIEW OF THE FOREGOING CONSIDERATION, judgment is hereby rendered in the
following manner:
A. The case against the defendant Dr. Rodolfo Siason and the Register of Deeds are (sic)
hereby dismmissed,
B. The defendants, Laura, Flora and Raymundo, all surnamed Alvarez being the legitimate
children of the deceased Rosendo Alvarez are hereby ordered to pay jointly and severally the
plaintiffs the sum of P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B
of Murcia Cadastre, Negros Occidental; the sum of P2,000.00 as actual damages suffered by
the plaintiff; the sum of P5,000.00 representing moral damages and the sum of P2.000 as
attorney's fees, all with legal rate of interest from date of the filing of this complaint up to
final payment.
C. The cross-claim filed by the defendant Dr. Rodolfo Siason against the defendants,
Laura, Flora and Raymundo, all surnamed Alvarez is hereby dismissed.
D. Defendants, Laura, Flora and Raymundo, all surnamed Alvarez are hereby ordered to
pay the costs of this suit.
SO ORDERED. 29
The Alvarez appealed to the then Intermediate Appellate Court which in its decision of
August 31, 1983 30 affirmed the lower court's decision "insofar as it ordered
defendants-appellants to pay jointly and severally the plaintiffs-appellees the sum of
P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B of the cadastral
survey of Murcia, Negros Occidental, and is reversed insofar as it awarded the sums of
P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral damages and attorney's fees,
respectively." 31 The dispositive portion of said decision reads:

WHEREFORE, the decision appealed from is affirmed insofar as it ordered
defendants-appellants to pay jointly and severally the plaintiffs- appellees the sum of
P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B of the cadastral
survey of Murcia, Negros Occidental, and is reversed insofar as it awarded the sums of
P2,000.00, P5,000.00 and P2,000.00 as actual damages, moral damages and attorney's fees,
respectively. No costs.
SO ORDERED. 32
Finding no cogent reason to grant appellants motion for reconsideration, said appellate court
denied the same.
Hence, the instant petition. ln their memorandum petitioners raised the following issues:
1. Whethere or not the defense of prescription and estoppel had been timely and properly
invoked and raised by the petitioners in the lower court.
2. Whether or not the cause and/or causes of action of the private respondents, if ever
there are any, as alleged in their complaint dated February 21, 1968 which has been docketed
in the trial court as Civil Case No. 8474 supra, are forever barred by statute of limitation
and/or prescription of action and estoppel.
3. Whether or not the late Rosendo Alvarez, a defendant in Civil Case No. 5022, supra and
father of the petitioners become a privy and/or party to the waiver (Exhibit 4-defendant
Siason) in Civil Case No. 8474, supra where the private respondents had unqualifiedly and
absolutely waived, renounced and quitclaimed all their alleged rights and interests, if ever
there is any, on Lots Nos. 773-A and 773-B of Murcia Cadastre as appearing in their written
manifestation dated November 6, 1962 (Exhibits "4" Siason) which had not been
controverted or even impliedly or indirectly denied by them.
4
4. Whether or not the liability or liabilities of Rosendo Alvarez arising from the sale of
Lots Nos. 773-A and 773-B of Murcia Cadastre to Dr. Rodolfo Siason, if ever there is any,
could be legally passed or transmitted by operations (sic) of law to the petitioners without
violation of law and due process . 33
The petition is devoid of merit.
As correctly ruled by the Court of Appeals, it is powerless and for that matter so is the
Supreme Court, to review the decision in Civil Case No. 5022 ordering Alvarez to reconvey
the lots in dispute to herein private respondents. Said decision had long become final and
executory and with the possible exception of Dr. Siason, who was not a party to said case,
the decision in Civil Case No. 5022 is the law of the case between the parties thereto. It
ended when Alvarez or his heirs failed to appeal the decision against them. 34
Thus, it is axiomatic that when a right or fact has been judicially tried and determined by a
court of competent jurisdiction, so long as it remains unreversed, it should be conclusive
upon the parties and those in privity with them in law or estate. 35 As consistently ruled by
this Court, every litigation must come to an end. Access to the court is guaranteed. But there
must be a limit to it. Once a litigant's right has been adjudicated in a valid final judgment of a
competent court, he should not be granted an unbridled license to return for another try. The
prevailing party should not be harassed by subsequent suits. For, if endless litigation were to
be allowed, unscrupulous litigations will multiply in number to the detriment of the
administration of justice. 36
There is no dispute that the rights of the Yaneses to the properties in question have been
finally adjudicated in Civil Case No. 5022. As found by the lower court, from the
uncontroverted evidence presented, the Yaneses have been illegally deprived of ownership
and possession of the lots in question. 37 In fact, Civil Case No. 8474 now under review,
arose from the failure to execute Civil Case No. 5022, as subject lots can no longer be
reconveyed to private respondents Yaneses, the same having been sold during the pendency
of the case by the petitioners' father to Dr. Siason who did not know about the controversy,
there being no lis pendens annotated on the titles. Hence, it was also settled beyond question
that Dr. Siason is a purchaser in good faith.

Under the circumstances, the trial court did not annul the sale executed by Alvarez in favor
of Dr. Siason on November 11, 1961 but in fact sustained it. The trial court ordered the heirs
of Rosendo Alvarez who lost in Civil Case No. 5022 to pay the plaintiffs (private
respondents herein) the amount of P20,000.00 representing the actual value of the subdivided
lots in dispute. It did not order defendant Siason to pay said amount. 38
As to the propriety of the present case, it has long been established that the sole remedy of
the landowner whose property has been wrongfully or erroneously registered in another's
name is to bring an ordinary action in the ordinary court of justice for reconveyance or, if the
property has passed into the hands of an innocent purchaser for value, for damages. 39 "It is
one thing to protect an innocent third party; it is entirely a different matter and one devoid of
justification if deceit would be rewarded by allowing the perpetrator to enjoy the fruits of his
nefarious decided As clearly revealed by the undeviating line of decisions coming from this
Court, such an undesirable eventuality is precisely sought to be guarded against." 40
The issue on the right to the properties in litigation having been finally adjudicated in Civil
Case No. 5022 in favor of private respondents, it cannot now be reopened in the instant case
on the pretext that the defenses of prescription and estoppel have not been properly
considered by the lower court. Petitioners could have appealed in the former case but they
did not. They have therefore foreclosed their rights, if any, and they cannot now be heard to
complain in another case in order to defeat the enforcement of a judgment which has longing
become final and executory.
Petitioners further contend that the liability arising from the sale of Lots No. 773-A and
773-B made by Rosendo Alvarez to Dr. Rodolfo Siason should be the sole liability of the late
Rosendo Alvarez or of his estate, after his death.
Such contention is untenable for it overlooks the doctrine obtaining in this jurisdiction on the
general transmissibility of the rights and obligations of the deceased to his legitimate
children and heirs. Thus, the pertinent provisions of the Civil Code state:
Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and
obligations to the extent of the value of the inheritance, of a person are transmitted through
his death to another or others either by his will or by operation of law.
5
Art. 776. The inheritance includes all the property, rights and obligations of a person which
are not extinguished by his death.
Art. 1311. Contract stake effect only between the parties, their assigns and heirs except in
case where the rights and obligations arising from the contract are not transmissible by their
nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the
property received from the decedent.
As explained by this Court through Associate Justice J.B.L. Reyes in the case of Estate of
Hemady vs. Luzon Surety Co., Inc. 41
The binding effect of contracts upon the heirs of the deceased party is not altered by the
provision of our Rules of Court that money debts of a deceased must be liquidated and paid
from his estate before the residue is distributed among said heirs (Rule 89). The reason is that
whatever payment is thus made from the state is ultimately a payment by the heirs or
distributees, since the amount of the paid claim in fact diminishes or reduces the shares that
the heirs would have been entitled to receive.
Under our law, therefore. the general rule is that a party's contractual rights and obligations
are transmissible to the successors.
The rule is a consequence of the progressive "depersonalization" of patrimonial rights and
duties that, as observed by Victorio Polacco has characterized the history of these institutions.
From the Roman concept of a relation from person to person, the obligation has evolved into
a relation from patrimony to patrimony with the persons occupying only a representative
position, barring those rare cases where the obligation is strictly personal, i.e., is contracted
intuitu personae, in consideration of its performance by a specific person and by no other.
xxx xxx xxx

Petitioners being the heirs of the late Rosendo Alvarez, they cannot escape the legal
consequences of their father's transaction, which gave rise to the present claim for damages.
That petitioners did not inherit the property involved herein is of no moment because by
legal fiction, the monetary equivalent thereof devolved into the mass of their father's
hereditary estate, and we have ruled that the hereditary assets are always liable in their
totality for the payment of the debts of the estate. 42
It must, however, be made clear that petitioners are liable only to the extent of the value of
their inheritance. With this clarification and considering petitioners' admission that there are
other properties left by the deceased which are sufficient to cover the amount adjudged in
favor of private respondents, we see no cogent reason to disturb the findings and conclusions
of the Court of Appeals.
WHEREFORE, subject to the clarification herein above stated, the assailed decision of the
Court of Appeals is hereby AFFIRMED. Costs against petitioners.
SO ORDERED.
G.R. No. L-4963 January 29, 1953
MARIA USON, plaintiff-appellee,
vs.
MARIA DEL ROSARIO, CONCEPCION NEBREDA, CONRADO NEBREDA,
DOMINADOR NEBREDA, AND FAUSTINO NEBREDA, Jr., defendants-appellants.
Priscilo Evangelista for appellee.
Brigido G. Estrada for appellant.
BAUTISTA ANGELO, J.:
6
This is an action for recovery of the ownership and possession of five (5) parcels of land
situated in the Municipality of Labrador, Province of Pangasinan, filed by Maria Uson
against Maria del Rosario and her four children named Concepcion, Conrado, Dominador,
and Faustino, surnamed Nebreda, who are all of minor age, before the Court of First Instance
of Pangasinan.
Maria Uson was the lawful wife of Faustino Nebreda who upon his death in 1945 left the
lands involved in this litigation. Faustino Nebreda left no other heir except his widow Maria
Uson. However, plaintiff claims that when Faustino Nebreda died in 1945, his common-law
wife Maria del Rosario took possession illegally of said lands thus depriving her of their
possession and enjoyment.
Defendants in their answer set up as special defense that on February 21, 1931, Maria Uson
and her husband, the late Faustino Nebreda, executed a public document whereby they
agreed to separate as husband and wife and, in consideration of their separation, Maria Uson
was given a parcel of land by way of alimony and in return she renounced her right to inherit
any other property that may be left by her husband upon his death (Exhibit 1).
After trial, at which both parties presented their respective evidence, the court rendered
decision ordering the defendants to restore to the plaintiff the ownership and possession of
the lands in dispute without special pronouncement as to costs. Defendants interposed the
present appeal.
There is no dispute that Maria Uson, plaintiff-appellee, is the lawful wife of Faustino
Nebreda, former owner of the five parcels of lands litigated in the present case. There is
likewise no dispute that Maria del Rosario, one of the defendants-appellants, was merely a
common-law wife of the late Faustino Nebreda with whom she had four illegitimate children,
her now co-defendants. It likewise appears that Faustino Nebreda died in 1945 much prior to
the effectivity of the new Civil Code. With this background, it is evident that when Faustino
Nebreda died in 1945 the five parcels of land he was seized of at the time passed from the
moment of his death to his only heir, his widow Maria Uson (Article 657, old Civil Code).As
this Court aptly said, "The property belongs to the heirs at the moment of the death of the
ancestor as completely as if the ancestor had executed and delivered to them a deed for the

same before his death" (Ilustre vs. Alaras Frondosa, 17 Phil., 321). From that moment,
therefore, the rights of inheritance of Maria Uson over the lands in question became vested.
The claim of the defendants that Maria Uson had relinquished her right over the lands in
question because she expressly renounced to inherit any future property that her husband
may acquire and leave upon his death in the deed of separation they had entered into on
February 21, 1931, cannot be entertained for the simple reason that future inheritance cannot
be the subject of a contract nor can it be renounced (1 Manresa, 123, sixth edition; Tolentino
on Civil Code, p. 12; Osorio vs. Osorio and Ynchausti Steamship Co., 41 Phil., 531).
But defendants contend that, while it is true that the four minor defendants are illegitimate
children of the late Faustino Nebreda and under the old Civil Code are not entitled to any
successional rights, however, under the new Civil Code which became in force in June, 1950,
they are given the status and rights of natural children and are entitled to the successional
rights which the law accords to the latter (article 2264 and article 287, new Civil Code), and
because these successional rights were declared for the first time in the new code, they shall
be given retroactive effect even though the event which gave rise to them may have occurred
under the prior legislation (Article 2253, new Civil Code).
There is no merit in this claim. Article 2253 above referred to provides indeed that rights
which are declared for the first time shall have retroactive effect even though the event which
gave rise to them may have occurred under the former legislation, but this is so only when
the new rights do not prejudice any vested or acquired right of the same origin. Thus, said
article provides that "if a right should be declared for the first time in this Code, it shall be
effective at once, even though the act or event which gives rise thereto may have been done
or may have occurred under the prior legislation, provided said new right does not prejudice
or impair any vested or acquired right, of the same origin." As already stated in the early part
of this decision, the right of ownership of Maria Uson over the lands in question became
vested in 1945 upon the death of her late husband and this is so because of the imperative
provision of the law which commands that the rights to succession are transmitted from the
moment of death (Article 657, old Civil Code). The new right recognized by the new Civil
Code in favor of the illegitimate children of the deceased cannot, therefore, be asserted to the
impairment of the vested right of Maria Uson over the lands in dispute.
7
As regards the claim that Maria Uson, while her deceased husband was lying in state, in a
gesture of pity or compassion, agreed to assign the lands in question to the minor children for
the reason that they were acquired while the deceased was living with their mother and Maria
Uson wanted to assuage somewhat the wrong she has done to them, this much can be said;
apart from the fact that this claim is disputed, we are of the opinion that said assignment, if
any, partakes of the nature of a donation of real property, inasmuch as it involves no material
consideration, and in order that it may be valid it shall be made in a public document and
must be accepted either in the same document or in a separate one (Article 633, old Civil
Code). Inasmuch as this essential formality has not been followed, it results that the alleged
assignment or donation has no valid effect.
WHEREFORE, the decision appealed from is affirmed, without costs.
G.R. No. L-28040 August 18, 1972
TESTATE ESTATE OF JOSEFA TANGCO, JOSE DE BORJA, administrator-appellee;
JOSE DE BORJA, as administrator, CAYETANO DE BORJA, MATILDE DE BORJA and
CRISANTO DE BORJA (deceased) as Children of Josefa Tangco, appellees,
vs.
TASIANA VDA. DE DE BORJA, Special Administratrix of the Testate Estate of Francisco
de Borja, appellant. .
G.R. No L-28568 August 18, 1972
TESTATE ESTATE OF THE LATE FRANCISCO DE BORJA, TASIANA O. VDA. DE
DE BORJA, special Administratrix appellee,
vs.
JOSE DE BORJA, oppositor-appellant.
G.R. No. L-28611 August 18, 1972
 8

Sevilla & Aquino for plaintiff-appellee.

TASIANA 0. VDA. DE BORJA, as Administratrix of the Testate Estate of the late Francisco
de Borja, plaintiff-appellee,
Pelaez, Jalandoni & Jamir and David Gueverra for defendant-appellant.
vs.

JOSE DE BORJA, as Administrator of the Testate Estate of the late Josefa Tangco,
defendant-appellant.
REYES, J.B.L., J.:p

L-28040
Pelaez, Jalandoni & Jamir for administrator-appellee.
Quiogue & Quiogue for appellee Matilde de Borja.
Of these cases, the first, numbered L-28040 is an appeal by Tasiana Ongsingco Vda. de de
Borja, special administratrix of the testate estate of Francisco de Borja,1 from the approval of
a compromise agreement by the Court of First Instance of Rizal, Branch I, in its Special
Proceeding No. R-7866, entitled, "Testate Estate of Josefa Tangco, Jose de Borja,
Administrator".

Case No. L-28568 is an appeal by administrator Jose Borja from the disapproval of the same
Andres Matias for appellee Cayetano de Borja. compromise agreement by the Court of First Instance of Nueva Ecija, Branch II, in its
Special Proceeding No. 832, entitled, "Testate Estate of Francisco de Borja, Tasiana O. Vda.
de de Borja, Special Administratrix".
Sevilla & Aquino for appellant.

And Case No. L-28611 is an appeal by administrator Jose de Borja from the decision of the
Court of First Instance of Rizal, Branch X, in its Civil Case No. 7452, declaring the
L-28568
Hacienda Jalajala Poblacion, which is the main object of the aforesaid compromise
agreement, as the separate and exclusive property of the late Francisco de Borja and not a
conjugal asset of the community with his first wife, Josefa Tangco, and that said hacienda
Sevilla & Aquino for special administratrix-appellee. pertains exclusively to his testate estate, which is under administrator in Special Proceeding
No. 832 of the Court of First Instance of Nueva Ecija, Branch II.

Pelaez, Jalandoni & Jamir for oppositor-appellant.

It is uncontested that Francisco de Borja, upon the death of his wife Josefa Tangco on 6
October 1940, filed a petition for the probate of her will which was docketed as Special
L-28611 Proceeding No. R-7866 of the Court of First Instance of Rizal, Branch I. The will was
probated on 2 April 1941. In 1946, Francisco de Borja was appointed executor and
administrator: in 1952, their son, Jose de Borja, was appointed co-administrator. When
Francisco died, on 14 April 1954, Jose became the sole administrator of the testate estate of

his mother, Josefa Tangco. While a widower Francisco de Borja allegedly took unto himself
a second wife, Tasiana Ongsingco. Upon Francisco's death, Tasiana instituted testate
proceedings in the Court of First Instance of Nueva Ecija, where, in 1955, she was appointed
special administratrix. The validity of Tasiana's marriage to Francisco was questioned in said
proceeding.
The relationship between the children of the first marriage and Tasiana Ongsingco has been
plagued with several court suits and counter-suits; including the three cases at bar, some
eighteen (18) cases remain pending determination in the courts. The testate estate of Josefa
Tangco alone has been unsettled for more than a quarter of a century. In order to put an end
to all these litigations, a compromise agreement was entered into on 12 October 1963,2 by
and between "[T]he heir and son of Francisco de Borja by his first marriage, namely, Jose de
Borja personally and as administrator of the Testate Estate of Josefa Tangco," and "[T]he
heir and surviving spouse of Francisco de Borja by his second marriage, Tasiana Ongsingco
Vda. de Borja, assisted by her lawyer, Atty. Luis Panaguiton Jr." The terms and conditions of
the compromise agreement are as follows:
AGREEMENT
THIS AGREEMENT made and entered into by and between
The heir and son of Francisco de Borja by his first marriage, namely, Jose de Borja
personally and as administrator of the Testate Estate of Josefa Tangco,
AND
The heir and surviving spouse of Francisco de Borja by his second marriage, Tasiana
Ongsingco Vda. de Borja, assisted by her lawyer, Atty. Luis Panaguiton Jr.
WITNESSETH
9
THAT it is the mutual desire of all the parties herein terminate and settle, with finality, the
various court litigations, controversies, claims, counterclaims, etc., between them in
connection with the administration, settlement, partition, adjudication and distribution of the
assets as well as liabilities of the estates of Francisco de Borja and Josefa Tangco, first
spouse of Francisco de Borja.
THAT with this end in view, the parties herein have agreed voluntarily and without any
reservations to enter into and execute this agreement under the following terms and
conditions:
1. That the parties agree to sell the Poblacion portion of the Jalajala properties situated in
Jalajala, Rizal, presently under administration in the Testate Estate of Josefa Tangco (Sp.
Proc. No. 7866, Rizal), more specifically described as follows:
Linda al Norte con el Rio Puwang que la separa de la jurisdiccion del Municipio de Pililla de
la Provincia de Rizal, y con el pico del Monte Zambrano; al Oeste con Laguna de Bay; por el
Sur con los herederos de Marcelo de Borja; y por el Este con los terrenos de la Familia
Maronilla
with a segregated area of approximately 1,313 hectares at the amount of P0.30 per square
meter.
2. That Jose de Borja agrees and obligates himself to pay Tasiana Ongsingco Vda. de de
Borja the total amount of Eight Hundred Thousand Pesos (P800,000) Philippine Currency, in
cash, which represent P200,000 as his share in the payment and P600,000 as pro-rata shares
of the heirs Crisanto, Cayetano and Matilde, all surnamed de Borja and this shall be
considered as full and complete payment and settlement of her hereditary share in the estate
of the late Francisco de Borja as well as the estate of Josefa Tangco, Sp. Proc. No.
832-Nueva Ecija and Sp. Proc. No. 7866-Rizal, respectively, and to any properties
bequeathed or devised in her favor by the late Francisco de Borja by Last Will and
Testament or by Donation Inter Vivos or Mortis Causa or purportedly conveyed to her for

consideration or otherwise. The funds for this payment shall be taken from and shall depend
upon the receipt of full payment of the proceeds of the sale of Jalajala, "Poblacion."
3. That Tasiana Ongsingco Vda. de de Borja hereby assumes payment of that particular
obligation incurred by the late Francisco de Borja in favor of the Rehabilitation Finance
Corporation, now Development Bank of the Philippines, amounting to approximately
P30,000.00 and also assumes payment of her 1/5 share of the Estate and Inheritance taxes on
the Estate of the late Francisco de Borja or the sum of P3,500.00, more or less, which shall
be deducted by the buyer of Jalajala, "Poblacion" from the payment to be made to Tasiana
Ongsingco Vda. de Borja under paragraph 2 of this Agreement and paid directly to the
Development Bank of the Philippines and the heirs-children of Francisco de Borja.
4. Thereafter, the buyer of Jalajala "Poblacion" is hereby authorized to pay directly to
Tasiana Ongsingco Vda. de de Borja the balance of the payment due her under paragraph 2
of this Agreement (approximately P766,500.00) and issue in the name of Tasiana Ongsingco
Vda. de de Borja, corresponding certified checks/treasury warrants, who, in turn, will issue
the corresponding receipt to Jose de Borja.
5. In consideration of above payment to Tasiana Ongsingco Vda. de de Borja, Jose de
Borja personally and as administrator of the Testate Estate of Josefa Tangco, and Tasiana
Ongsingco Vda. de de Borja, for themselves and for their heirs, successors, executors,
administrators, and assigns, hereby forever mutually renounce, withdraw, waive, remise,
release and discharge any and all manner of action or actions, cause or causes of action, suits,
debts, sum or sums of money, accounts, damages, claims and demands whatsoever, in law or
in equity, which they ever had, or now have or may have against each other, more
specifically Sp. Proceedings Nos. 7866 and 1955, CFI-Rizal, and Sp. Proc. No. 832-Nueva
Ecija, Civil Case No. 3033, CFI Nueva Ecija and Civil Case No. 7452-CFI, Rizal, as well as
the case filed against Manuel Quijal for perjury with the Provincial Fiscal of Rizal, the
intention being to completely, absolutely and finally release each other, their heirs,
successors, and assigns, from any and all liability, arising wholly or partially, directly or
indirectly, from the administration, settlement, and distribution of the assets as well as
liabilities of the estates of Francisco de Borja and Josefa Tangco, first spouse of Francisco de
Borja, and lastly, Tasiana Ongsingco Vda. de de Borja expressly and specifically renounce
absolutely her rights as heir over any hereditary share in the estate of Francisco de Borja.
10
6. That Tasiana Ongsingco Vda. de de Borja, upon receipt of the payment under paragraph
4 hereof, shall deliver to the heir Jose de Borja all the papers, titles and documents belonging
to Francisco de Borja which are in her possession and said heir Jose de Borja shall issue in
turn the corresponding receive thereof.
7. That this agreement shall take effect only upon the fulfillment of the sale of the
properties mentioned under paragraph 1 of this agreement and upon receipt of the total and
full payment of the proceeds of the sale of the Jalajala property "Poblacion", otherwise, the
non-fulfillment of the said sale will render this instrument NULL AND VOID AND
WITHOUT EFFECT THEREAFTER.
IN WITNESS WHEREOF, the parties hereto have her unto set their hands in the City of
Manila, Philippines, the 12th of October, 1963.
On 16 May 1966, Jose de Borja submitted for Court approval the agreement of 12 October
1963 to the Court of First Instance of Rizal, in Special Proceeding No. R-7866; and again, on
8 August 1966, to the Court of First Instance of Nueva Ecija, in Special Proceeding No. 832.
Tasiana Ongsingco Vda. de de Borja opposed in both instances. The Rizal court approved
the compromise agreement, but the Nueva Ecija court declared it void and unenforceable.
Special administratrix Tasiana Ongsingco Vda. de de Borja appealed the Rizal Court's order
of approval (now Supreme Court G.R. case No. L-28040), while administrator Jose de Borja
appealed the order of disapproval (G.R. case No. L-28568) by the Court of First Instance of
Nueva Ecija.
The genuineness and due execution of the compromised agreement of 12 October 1963 is not
disputed, but its validity is, nevertheless, attacked by Tasiana Ongsingco on the ground that:
(1) the heirs cannot enter into such kind of agreement without first probating the will of
Francisco de Borja; (2) that the same involves a compromise on the validity of the marriage
between Francisco de Borja and Tasiana Ongsingco; and (3) that even if it were valid, it has
ceased to have force and effect.
In assailing the validity of the agreement of 12 October 1963, Tasiana Ongsingco and the
Probate Court of Nueva Ecija rely on this Court's decision in Guevara vs. Guevara. 74 Phil.
479, wherein the Court's majority held the view that the presentation of a will for probate is

mandatory and that the settlement and distribution of an estate on the basis of intestacy when
the decedent left a will, is against the law and public policy. It is likewise pointed out by
appellant Tasiana Ongsingco that Section 1 of Rule 74 of the Revised Rules explicitly
conditions the validity of an extrajudicial settlement of a decedent's estate by agreement
between heirs, upon the facts that "(if) the decedent left no will and no debts, and the heirs
are all of age, or the minors are represented by their judicial and legal representatives ..." The
will of Francisco de Borja having been submitted to the Nueva Ecija Court and still pending
probate when the 1963 agreement was made, those circumstances, it is argued, bar the
validity of the agreement.
Upon the other hand, in claiming the validity of the compromise agreement, Jose de Borja
stresses that at the time it was entered into, on 12 October 1963, the governing provision was
Section 1, Rule 74 of the original Rules of Court of 1940, which allowed the extrajudicial
settlement of the estate of a deceased person regardless of whether he left a will or not. He
also relies on the dissenting opinion of Justice Moran, in Guevara vs. Guevara, 74 Phil. 479,
wherein was expressed the view that if the parties have already divided the estate in
accordance with a decedent's will, the probate of the will is a useless ceremony; and if they
have divided the estate in a different manner, the probate of the will is worse than useless.
The doctrine of Guevara vs. Guevara, ante, is not applicable to the case at bar. This is
apparent from an examination of the terms of the agreement between Jose de Borja and
Tasiana Ongsingco. Paragraph 2 of said agreement specifically stipulates that the sum of
P800,000 payable to Tasiana Ongsingco —
shall be considered as full — complete payment — settlement of her hereditary share in the
estate of the late Francisco de Borja as well as the estate of Josefa Tangco, ... and to any
properties bequeathed or devised in her favor by the late Francisco de Borja by Last Will and
Testament or by Donation Inter Vivos or Mortis Causa or purportedly conveyed to her for
consideration or otherwise.
This provision evidences beyond doubt that the ruling in the Guevara case is not applicable
to the cases at bar. There was here no attempt to settle or distribute the estate of Francisco de
Borja among the heirs thereto before the probate of his will. The clear object of the contract
was merely the conveyance by Tasiana Ongsingco of any and all her individual share and
interest, actual or eventual in the estate of Francisco de Borja and Josefa Tangco. There is no
11
stipulation as to any other claimant, creditor or legatee. And as a hereditary share in a
decedent's estate is transmitted or vested immediately from the moment of the death of such
causante or predecessor in interest (Civil Code of the Philippines, Art. 777)3 there is no legal
bar to a successor (with requisite contracting capacity) disposing of her or his hereditary
share immediately after such death, even if the actual extent of such share is not determined
until the subsequent liquidation of the estate.4 Of course, the effect of such alienation is to be
deemed limited to what is ultimately adjudicated to the vendor heir. However, the aleatory
character of the contract does not affect the validity of the transaction; neither does the
coetaneous agreement that the numerous litigations between the parties (the approving order
of the Rizal Court enumerates fourteen of them, Rec. App. pp. 79-82) are to be considered
settled and should be dismissed, although such stipulation, as noted by the Rizal Court, gives
the contract the character of a compromise that the law favors, for obvious reasons, if only
because it serves to avoid a multiplicity of suits.
It is likewise worthy of note in this connection that as the surviving spouse of Francisco de
Borja, Tasiana Ongsingco was his compulsory heir under article 995 et seq. of the present
Civil Code. Wherefore, barring unworthiness or valid disinheritance, her successional
interest existed independent of Francisco de Borja's last will and testament and would exist
even if such will were not probated at all. Thus, the prerequisite of a previous probate of the
will, as established in the Guevara and analogous cases, can not apply to the case of Tasiana
Ongsingco Vda. de de Borja.
Since the compromise contract Annex A was entered into by and between "Jose de Borja
personally and as administrator of the Testate Estate of Josefa Tangco" on the one hand, and
on the other, "the heir and surviving spouse of Francisco de Borja by his second marriage,
Tasiana Ongsingco Vda. de de Borja", it is clear that the transaction was binding on both in
their individual capacities, upon the perfection of the contract, even without previous
authority of the Court to enter into the same. The only difference between an extrajudicial
compromise and one that is submitted and approved by the Court, is that the latter can be
enforced by execution proceedings. Art. 2037 of the Civil Code is explicit on the point:
8. Art. 2037. A compromise has upon the parties the effect and authority of res judicata;
but there shall be no execution except in compliance with a judicial compromise.

It is argued by Tasiana Ongsingco that while the agreement Annex A expressed no definite
period for its performance, the same was intended to have a resolutory period of 60 days for
its effectiveness. In support of such contention, it is averred that such a limit was expressly
stipulated in an agreement in similar terms entered into by said Ongsingco with the brothers
and sister of Jose de Borja, to wit, Crisanto, Matilde and Cayetano, all surnamed de Borja,
except that the consideration was fixed at P600,000 (Opposition, Annex/Rec. of Appeal,
L-28040, pp. 39- 46) and which contained the following clause:
III. That this agreement shall take effect only upon the consummation of the sale of the
property mentioned herein and upon receipt of the total and full payment of the proceeds of
the sale by the herein owner heirs-children of Francisco de Borja, namely, Crisanto,
Cayetano and Matilde, all surnamed de Borja; Provided that if no sale of the said property
mentioned herein is consummated, or the non-receipt of the purchase price thereof by the
said owners within the period of sixty (60) days from the date hereof, this agreement will
become null and void and of no further effect.
Ongsingco's argument loses validity when it is considered that Jose de Borja was not a party
to this particular contract (Annex 1), and that the same appears not to have been finalized,
since it bears no date, the day being left blank "this — day of October 1963"; and while
signed by the parties, it was not notarized, although plainly intended to be so done, since it
carries a proposed notarial ratification clause. Furthermore, the compromise contract with
Jose de Borja (Annex A), provides in its par. 2 heretofore transcribed that of the total
consideration of P800, 000 to be paid to Ongsingco, P600,000 represent the "prorata share of
the heirs Crisanto, Cayetano and Matilde all surnamed de Borja" which corresponds to the
consideration of P600,000 recited in Annex 1, and that circumstance is proof that the duly
notarized contract entered into wit Jose de Borja under date 12 October 1963 (Annex A), was
designed to absorb and supersede the separate unformalize agreement with the other three
Borja heirs. Hence, the 60 days resolutory term in the contract with the latter (Annex 1) not
being repeated in Annex A, can not apply to the formal compromise with Jose de Borja. It is
moreover manifest that the stipulation that the sale of the Hacienda de Jalajala was to be
made within sixty days from the date of the agreement with Jose de Borja's co-heirs (Annex
1) was plainly omitted in Annex A as improper and ineffective, since the Hacienda de
Jalajala (Poblacion) that was to be sold to raise the P800,000 to be paid to Ongsingco for her
share formed part of the estate of Francisco de Borja and could not be sold until authorized
by the Probate Court. The Court of First Instance of Rizal so understood it, and in approving
the compromise it fixed a term of 120 days counted from the finality of the order now under
appeal, for the carrying out by the parties for the terms of the contract.
12
This brings us to the plea that the Court of First Instance of Rizal had no jurisdiction to
approve the compromise with Jose de Borja (Annex A) because Tasiana Ongsingco was not
an heir in the estate of Josefa Tangco pending settlement in the Rizal Court, but she was an
heir of Francisco de Borja, whose estate was the object of Special Proceeding No. 832 of the
Court of First Instance of Nueva Ecija. This circumstance is irrelevant, since what was sold
by Tasiana Ongsingco was only her eventual share in the estate of her late husband, not the
estate itself; and as already shown, that eventual share she owned from the time of
Francisco's death and the Court of Nueva Ecija could not bar her selling it. As owner of her
undivided hereditary share, Tasiana could dispose of it in favor of whomsoever she chose.
Such alienation is expressly recognized and provided for by article 1088 of the present Civil
Code:
Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before the partition,
any or all of the co-heirs may be subrogated to the rights of the purchaser by reimbursing
him for the price of the sale, provided they do so within the period of one month from the
time they were notified in writing of the sale of the vendor.
If a sale of a hereditary right can be made to a stranger, then a fortiori sale thereof to a coheir
could not be forbidden.
Tasiana Ongsingco further argues that her contract with Jose de Borja (Annex "A") is void
because it amounts to a compromise as to her status and marriage with the late Francisco de
Borja. The point is without merit, for the very opening paragraph of the agreement with Jose
de Borja (Annex "A") describes her as "the heir and surviving spouse of Francisco de Borja
by his second marriage, Tasiana Ongsingco Vda. de de Borja", which is in itself definite
admission of her civil status. There is nothing in the text of the agreement that would show
that this recognition of Ongsingco's status as the surviving spouse of Francisco de Borja was
only made in consideration of the cession of her hereditary rights.
It is finally charged by appellant Ongsingco, as well as by the Court of First Instance of
Nueva Ecija in its order of 21 September 1964, in Special Proceedings No. 832 (Amended
Record on Appeal in L-28568, page 157), that the compromise agreement of 13 October
1963 (Annex "A") had been abandoned, as shown by the fact that, after its execution, the

Court of First Instance of Nueva Ecija, in its order of 21 September 1964, had declared that
"no amicable settlement had been arrived at by the parties", and that Jose de Borja himself, in
a motion of 17 June 1964, had stated that the proposed amicable settlement "had failed to
materialize".
It is difficult to believe, however, that the amicable settlement referred to in the order and
motion above-mentioned was the compromise agreement of 13 October 1963, which already
had been formally signed and executed by the parties and duly notarized. What the record
discloses is that some time after its formalization, Ongsingco had unilaterally attempted to
back out from the compromise agreement, pleading various reasons restated in the opposition
to the Court's approval of Annex "A" (Record on Appeal, L-20840, page 23): that the same
was invalid because of the lapse of the allegedly intended resolutory period of 60 days and
because the contract was not preceded by the probate of Francisco de Borja's will, as
required by this Court's Guevarra vs. Guevara ruling; that Annex "A" involved a compromise
affecting Ongsingco's status as wife and widow of Francisco de Borja, etc., all of which
objections have been already discussed. It was natural that in view of the widow's attitude,
Jose de Borja should attempt to reach a new settlement or novatory agreement before seeking
judicial sanction and enforcement of Annex "A", since the latter step might ultimately entail
a longer delay in attaining final remedy. That the attempt to reach another settlement failed is
apparent from the letter of Ongsingco's counsel to Jose de Borja quoted in pages 35-36 of the
brief for appellant Ongsingco in G.R. No. 28040; and it is more than probable that the order
of 21 September 1964 and the motion of 17 June 1964 referred to the failure of the parties'
quest for a more satisfactory compromise. But the inability to reach a novatory accord can
not invalidate the original compromise (Annex "A") and justifies the act of Jose de Borja in
finally seeking a court order for its approval and enforcement from the Court of First
Instance of Rizal, which, as heretofore described, decreed that the agreement be ultimately
performed within 120 days from the finality of the order, now under appeal.
We conclude that in so doing, the Rizal court acted in accordance with law, and, therefore,
its order should be upheld, while the contrary resolution of the Court of First Instance of
Nueva Ecija should be, and is, reversed.
In her brief, Tasiana Ongsingco also pleads that the time elapsed in the appeal has affected
her unfavorably, in that while the purchasing power of the agreed price of P800,000 has
diminished, the value of the Jalajala property has increased. But the fact is that her delay in
receiving the payment of the agreed price for her hereditary interest was primarily due to her
13
attempts to nullify the agreement (Annex "A") she had formally entered into with the advice
of her counsel, Attorney Panaguiton. And as to the devaluation de facto of our currency,
what We said in Dizon Rivera vs. Dizon, L-24561, 30 June 1970, 33 SCRA 554, that "estates
would never be settled if there were to be a revaluation with every subsequent fluctuation in
the values of currency and properties of the estate", is particularly opposite in the present
case.
Coming now to Case G.R. No. L-28611, the issue is whether the Hacienda de Jalajala
(Poblacion), concededly acquired by Francisco de Borja during his marriage to his first wife,
Josefa Tangco, is the husband's private property (as contended by his second spouse, Tasiana
Ongsingco), or whether it forms part of the conjugal (ganancial) partnership with Josefa
Tangco. The Court of First Instance of Rizal (Judge Herminio Mariano, presiding) declared
that there was adequate evidence to overcome the presumption in favor of its conjugal
character established by Article 160 of the Civil Code.
We are of the opinion that this question as between Tasiana Ongsingco and Jose de Borja has
become moot and academic, in view of the conclusion reached by this Court in the two
preceding cases (G.R. No. L-28568), upholding as valid the cession of Tasiana Ongsingco's
eventual share in the estate of her late husband, Francisco de Borja, for the sum of P800,000
with the accompanying reciprocal quit-claims between the parties. But as the question may
affect the rights of possible creditors and legatees, its resolution is still imperative.
It is undisputed that the Hacienda Jalajala, of around 4,363 hectares, had been originally
acquired jointly by Francisco de Borja, Bernardo de Borja and Marcelo de Borja and their
title thereto was duly registered in their names as co-owners in Land Registration Case No.
528 of the province of Rizal, G.L.R.O. Rec. No. 26403 (De Barjo vs. Jugo, 54 Phil. 465).
Subsequently, in 1931, the Hacienda was partitioned among the co-owners: the Punta section
went to Marcelo de Borja; the Bagombong section to Bernardo de Borja, and the part in
Jalajala proper (Poblacion) corresponded to Francisco de Borja (V. De Borja vs. De Borja
101 Phil. 911, 932).
The lot allotted to Francisco was described as —

Una Parcela de terreno en Poblacion, Jalajala: N. Puang River; E. Hermogena Romero; S.
Heirs of Marcelo de Borja O. Laguna de Bay; containing an area of 13,488,870 sq. m. more
or less, assessed at P297,410. (Record on Appeal, pages 7 and 105)
On 20 November 1962, Tasiana O. Vda. de Borja, as Administratrix of the Testate Estate of
Francisco de Borja, instituted a complaint in the Court of First Instance of Rizal (Civil Case
No. 7452) against Jose de Borja, in his capacity as Administrator of Josefa Tangco
(Francisco de Borja's first wife), seeking to have the Hacienda above described declared
exclusive private property of Francisco, while in his answer defendant (now appellant) Jose
de Borja claimed that it was conjugal property of his parents (Francisco de Borja and Josefa
Tangco), conformably to the presumption established by Article 160 of the Philippine Civil
Code (reproducing Article 1407 of the Civil Code of 1889), to the effect that:
Art. 160. All property of the marriage is presumed to belong to the conjugal partnership,
unless it be proved that it pertains exclusively to the husband or to the wife.
Defendant Jose de Borja further counterclaimed for damages, compensatory, moral and
exemplary, as well as for attorney's fees.
After trial, the Court of First Instance of Rizal, per Judge Herminio Mariano, held that the
plaintiff had adduced sufficient evidence to rebut the presumption, and declared the
Hacienda de Jalajala (Poblacion) to be the exclusive private property of the late Francisco de
Borja, and his Administratrix, Tasiana Ongsingco Vda. de Borja, to be entitled to its
possession. Defendant Jose de Borja then appealed to this Court.
The evidence reveals, and the appealed order admits, that the character of the Hacienda in
question as owned by the conjugal partnership De Borja-Tangco was solemnly admitted by
the late Francisco de Borja no less than two times: first, in the Reamended Inventory that, as
executor of the estate of his deceased wife Josefa Tangco, he filed in the Special Proceedings
No. 7866 of the Court of First Instance of Rizal on 23 July 1953 (Exhibit "2"); and again, in
the Reamended Accounting of the same date, also filed in the proceedings aforesaid (Exhibit
"7"). Similarly, the plaintiff Tasiana O. Vda. de Borja, herself, as oppositor in the Estate of
Josefa Tangco, submitted therein an inventory dated 7 September 1954 (Exhibit "3") listing
the Jalajala property among the "Conjugal Properties of the Spouses Francisco de Borja and
14
Josefa Tangco". And once more, Tasiana Ongsingco, as administratrix of the Estate of
Francisco de Borja, in Special Proceedings No. 832 of the Court of First Instance of Nueva
Ecija, submitted therein in December, 1955, an inventory wherein she listed the Jalajala
Hacienda under the heading "Conjugal Property of the Deceased Spouses Francisco de Borja
and Josefa Tangco, which are in the possession of the Administrator of the Testate Estate of
the Deceased Josefa Tangco in Special Proceedings No. 7866 of the Court of First Instance
of Rizal" (Exhibit "4").
Notwithstanding the four statements aforesaid, and the fact that they are plain admissions
against interest made by both Francisco de Borja and the Administratrix of his estate, in the
course of judicial proceedings in the Rizal and Nueva Ecija Courts, supporting the legal
presumption in favor of the conjugal community, the Court below declared that the Hacienda
de Jalajala (Poblacion) was not conjugal property, but the private exclusive property of the
late Francisco de Borja. It did so on the strength of the following evidences: (a) the sworn
statement by Francis de Borja on 6 August 1951 (Exhibit "F") that —
He tomado possession del pedazo de terreno ya delimitado (equivalente a 1/4 parte, 337
hectareas) adjunto a mi terreno personal y exclusivo (Poblacion de Jalajala, Rizal).
and (b) the testimony of Gregorio de Borja, son of Bernardo de Borja, that the entire
Hacienda had been bought at a foreclosure sale for P40,100.00, of which amount P25,100
was contributed by Bernardo de Borja and P15,000. by Marcelo de Borja; that upon receipt
of a subsequent demand from the provincial treasurer for realty taxes the sum of P17,000,
Marcelo told his brother Bernardo that Francisco (son of Marcelo) wanted also to be a
co-owner, and upon Bernardo's assent to the proposal, Marcelo issue a check for P17,000.00
to pay the back taxes and said that the amount would represent Francisco's contribution in the
purchase of the Hacienda. The witness further testified that —
Marcelo de Borja said that that money was entrusted to him by Francisco de Borja when he
was still a bachelor and which he derived from his business transactions. (Hearing, 2
February 1965, t.s.n., pages 13-15) (Emphasis supplied)
The Court below, reasoning that not only Francisco's sworn statement overweighed the
admissions in the inventories relied upon by defendant-appellant Jose de Borja since probate

courts can not finally determine questions of ownership of inventoried property, but that the
testimony of Gregorio de Borja showed that Francisco de Borja acquired his share of the
original Hacienda with his private funds, for which reason that share can not be regarded as
conjugal partnership property, but as exclusive property of the buyer, pursuant to Article
1396(4) of Civil Code of 1889 and Article 148(4) of the Civil Code of the Philippines.
The following shall be the exclusive property of each spouse:
xxx xxx xxx
(4) That which is purchased with exclusive money of the wife or of the husband.
We find the conclusions of the lower court to be untenable. In the first place, witness
Gregorio de Borja's testimony as to the source of the money paid by Francisco for his share
was plain hearsay, hence inadmissible and of no probative value, since he was merely
repeating what Marcelo de Borja had told him (Gregorio). There is no way of ascertaining
the truth of the statement, since both Marcelo and Francisco de Borja were already dead
when Gregorio testified. In addition, the statement itself is improbable, since there was no
need or occasion for Marcelo de Borja to explain to Gregorio how and when Francisco de
Borja had earned the P17,000.00 entrusted to Marcelo. A ring of artificiality is clearly
discernible in this portion of Gregorio's testimony.
As to Francisco de Borja's affidavit, Exhibit "F", the quoted portion thereof (ante, page 14)
does not clearly demonstrate that the "mi terreno personal y exclusivo (Poblacion de Jalajala,
Rizal) " refers precisely to the Hacienda in question. The inventories (Exhibits 3 and 4)
disclose that there were two real properties in Jalajala owned by Francisco de Borja, one of
72.038 sq. m., assessed at P44,600, and a much bigger one of 1,357.260.70 sq. m., which is
evidently the Hacienda de Jalajala (Poblacion). To which of these lands did the affidavit of
Francisco de Borja (Exhibit "F") refer to? In addition, Francisco's characterization of the land
as "mi terreno personal y exclusivo" is plainly self-serving, and not admissible in the absence
of cross examination.
15
It may be true that the inventories relied upon by defendant-appellant (Exhibits "2", "3", "4"
and "7") are not conclusive on the conjugal character of the property in question; but as
already noted, they are clear admissions against the pecuniary interest of the declarants,
Francisco de Borja and his executor-widow, Tasiana Ongsingco, and as such of much greater
probative weight than the self-serving statement of Francisco (Exhibit "F"). Plainly, the legal
presumption in favor of the conjugal character of the Hacienda de Jalajala (Poblacion) now
in dispute has not been rebutted but actually confirmed by proof. Hence, the appealed order
should be reversed and the Hacienda de Jalajala (Poblacion) declared property of the
conjugal partnership of Francisco de Borja and Josefa Tangco.
No error having been assigned against the ruling of the lower court that claims for damages
should be ventilated in the corresponding special proceedings for the settlement of the estates
of the deceased, the same requires no pro announcement from this Court.
IN VIEW OF THE FOREGOING, the appealed order of the Court of First Instance of Rizal
in Case No. L-28040 is hereby affirmed; while those involved in Cases Nos. L-28568 and
L-28611 are reversed and set aside. Costs against the appellant Tasiana Ongsingco Vda. de
Borja in all three (3) cases.
G.R. No. L-41715 June 18, 1976
ROSALIO BONILLA (a minor) SALVACION BONILLA (a minor) and PONCIANO
BONILLA (their father) who represents the minors, petitioners,
vs.
LEON BARCENA, MAXIMA ARIAS BALLENA, ESPERANZA BARCENA, MANUEL
BARCENA, AGUSTINA NERI, widow of JULIAN TAMAYO and HON. LEOPOLDO
GIRONELLA of the Court of First Instance of Abra, respondents.
Federico Paredes for petitioners.
Demetrio V. Pre for private respondents.

MARTIN, J:
This is a petition for review 1 of the Order of the Court of First Instance of Abra in Civil
Case No. 856, entitled Fortunata Barcena vs. Leon Barcena, et al., denying the motions for
reconsideration of its order dismissing the complaint in the aforementioned case.
On March 31, 1975 Fortunata Barcena, mother of minors Rosalio Bonilla and Salvacion
Bonilla and wife of Ponciano Bonilla, instituted a civil action in the Court of First Instance of
Abra, to quiet title over certain parcels of land located in Abra.
On May 9, 1975, defendants filed a written motion to dismiss the complaint, but before the
hearing of the motion to dismiss, the counsel for the plaintiff moved to amend the complaint
in order to include certain allegations therein. The motion to amend the complaint was
granted and on July 17, 1975, plaintiffs filed their amended complaint.
On August 4, 1975, the defendants filed another motion to dismiss the complaint on the
ground that Fortunata Barcena is dead and, therefore, has no legal capacity to sue. Said
motion to dismiss was heard on August 14, 1975. In said hearing, counsel for the plaintiff
confirmed the death of Fortunata Barcena, and asked for substitution by her minor children
and her husband, the petitioners herein; but the court after the hearing immediately dismissed
the case on the ground that a dead person cannot be a real party in interest and has no legal
personality to sue.
On August 19, 1975, counsel for the plaintiff received a copy of the order dismissing the
complaint and on August 23, 1975, he moved to set aside the order of the dismissal pursuant
to Sections 16 and 17 of Rule 3 of the Rules of Court. 2
On August 28, 1975, the court denied the motion for reconsideration filed by counsel for the
plaintiff for lack of merit. On September 1, 1975, counsel for deceased plaintiff filed a
16
written manifestation praying that the minors Rosalio Bonilla and Salvacion Bonilla be
allowed to substitute their deceased mother, but the court denied the counsel's prayer for lack
of merit. From the order, counsel for the deceased plaintiff filed a second motion for
reconsideration of the order dismissing the complaint claiming that the same is in violation
of Sections 16 and 17 of Rule 3 of the Rules of Court but the same was denied.
Hence, this petition for review.
The Court reverses the respondent Court and sets aside its order dismissing the complaint in
Civil Case No. 856 and its orders denying the motion for reconsideration of said order of
dismissal. While it is true that a person who is dead cannot sue in court, yet he can be
substituted by his heirs in pursuing the case up to its completion. The records of this case
show that the death of Fortunata Barcena took place on July 9, 1975 while the complaint was
filed on March 31, 1975. This means that when the complaint was filed on March 31, 1975,
Fortunata Barcena was still alive, and therefore, the court had acquired jurisdiction over her
person. If thereafter she died, the Rules of Court prescribes the procedure whereby a party
who died during the pendency of the proceeding can be substituted. Under Section 16, Rule 3
of the Rules of Court "whenever a party to a pending case dies ... it shall be the duty of his
attorney to inform the court promptly of such death ... and to give the name and residence of
his executor, administrator, guardian or other legal representatives." This duty was complied
with by the counsel for the deceased plaintiff when he manifested before the respondent
Court that Fortunata Barcena died on July 9, 1975 and asked for the proper substitution of
parties in the case. The respondent Court, however, instead of allowing the substitution,
dismissed the complaint on the ground that a dead person has no legal personality to sue.
This is a grave error. Article 777 of the Civil Code provides "that the rights to the succession
are transmitted from the moment of the death of the decedent." From the moment of the
death of the decedent, the heirs become the absolute owners of his property, subject to the
rights and obligations of the decedent, and they cannot be deprived of their rights thereto
except by the methods provided for by law. 3 The moment of death is the determining factor
when the heirs acquire a definite right to the inheritance whether such right be pure or
contingent. 4 The right of the heirs to the property of the deceased vests in them even before
judicial declaration of their being heirs in the testate or intestate proceedings. 5 When
Fortunata Barcena, therefore, died her claim or right to the parcels of land in litigation in
Civil Case No. 856, was not extinguished by her death but was transmitted to her heirs upon
her death. Her heirs have thus acquired interest in the properties in litigation and became
parties in interest in the case. There is, therefore, no reason for the respondent Court not to
allow their substitution as parties in interest for the deceased plaintiff.

Under Section 17, Rule 3 of the Rules of Court "after a party dies and the claim is not
thereby extinguished, the court shall order, upon proper notice, the legal representative of the
deceased to appear and be substituted for the deceased, within such time as may be
granted ... ." The question as to whether an action survives or not depends on the nature of
the action and the damage sued for. 6 In the causes of action which survive the wrong
complained affects primarily and principally property and property rights, the injuries to the
person being merely incidental, while in the causes of action which do not survive the injury
complained of is to the person, the property and rights of property affected being incidental.
7 Following the foregoing criterion the claim of the deceased plaintiff which is an action to
quiet title over the parcels of land in litigation affects primarily and principally property and
property rights and therefore is one that survives even after her death. It is, therefore, the
duty of the respondent Court to order the legal representative of the deceased plaintiff to
appear and to be substituted for her. But what the respondent Court did, upon being informed
by the counsel for the deceased plaintiff that the latter was dead, was to dismiss the
complaint. This should not have been done for under the same Section 17, Rule 3 of the
Rules of Court, it is even the duty of the court, if the legal representative fails to appear, to
order the opposing party to procure the appointment of a legal representative of the deceased.
In the instant case the respondent Court did not have to bother ordering the opposing party to
procure the appointment of a legal representative of the deceased because her counsel has not
only asked that the minor children be substituted for her but also suggested that their uncle
be appointed as guardian ad litem for them because their father is busy in Manila earning a
living for the family. But the respondent Court refused the request for substitution on the
ground that the children were still minors and cannot sue in court. This is another grave error
because the respondent Court ought to have known that under the same Section 17, Rule 3 of
the Rules of Court, the court is directed to appoint a guardian ad litem for the minor heirs.
Precisely in the instant case, the counsel for the deceased plaintiff has suggested to the
respondent Court that the uncle of the minors be appointed to act as guardian ad litem for
them. Unquestionably, the respondent Court has gravely abused its discretion in not
complying with the clear provision of the Rules of Court in dismissing the complaint of the
plaintiff in Civil Case No. 856 and refusing the substitution of parties in the case.
IN VIEW OF THE FOREGOING, the order of the respondent Court dismissing the
complaint in Civil Case No. 856 of the Court of First Instance of Abra and the motions for
reconsideration of the order of dismissal of said complaint are set aside and the respondent
Court is hereby directed to allow the substitution of the minor children, who are the
petitioners therein for the deceased plaintiff and to appoint a qualified person as guardian ad
litem for them. Without pronouncement as to costs.
17
SO ORDERED.
G.R. No. L-50911 March 12, 1986
MIGUEL PEREZ RUBIO, petitioner,
vs.
COURT OF APPEALS, ROBERT O. PHILLIPS & SONS, INC., MAGDALENA YSMAEL
PHILLIPS, MANUFACTURERS BANK & TRUST COMPANY, INC., HACIENDA
BENITO, INC., VICTORIA VALLEY DEVELOPMENT CORPORATION and ROBERT
O. PHILLIPS, respondents.
GUTIERREZ, JR., J.:
This is a petition to review the decision of the Court of Appeals, now the Intermediate
Appellate Court, in CA-G.R. No. 60896-R, which affirmed the trial court's decision ordering
Robert O. Phillips & Sons, Inc., and the plaintiff-spouses to pay Miguel Perez Rubio the sum
of P4,250,000.00 but ordered Perez Rubio to pay Robert O. Phillips & Sons, Inc. and the
other plaintiffs damages in the amount of P4,404,510.76. The appellate court, however,
modified the lower court's order to pay P4,250,000.00 by removing the eight (8%) percent
per annum interests on that amount, dispensing with the ten (10%) percent attomey's fees and
limiting the liability to Robert O. Phillips and Sons, Inc., only. Also affirmed was the order
directing Perez Rubio, as third party plaintiff, to pay Hacienda Benito, Inc. the sum of
P7,051,496.23 as actual damages and P150,000.00 attorney's fees and to pay Manufacturer's
Bank and Trust Co. P895,085.16 actual damages, plus ten (10%) percent of that amount as
attorney's fees.
The decision of the trial court in Civil Case No. 8632 has actually been the subject matter of
two earlier petitions for certiorari filed by the petitioner against the same respondents. These
are G.R. No. L-24581 entitled Miguel Perez Rubio v. The Honorable Samuel Reyes Roberto
 18

O. Phillips and Magdalena Ysmael Phillips, Manufacturer's Bank and Trust Company,
Victoria Valley Development Corporation and Hacienda Benito, Inc. and G.R. No. L-30404
entitled Miguel Perez Rubio v. Honorable Judge Herminio Mariano in his capacity as
Presiding Judge of Branch X of the Court of First Instance of Rizal Robert O. Phillips and
Sons, Inc. Robert O. Phillips, Magdalena Ysmael Phillips, Victoria Valley Development
Corporation Manufacturers Bank and Trust Company and Hacienda Benito, Inc.
c) Declaring that the defendant has no vendors' lien over the shares of stock of Hacienda
Benito, Inc., sold by them to the plaintiff corporation;
d) Restraining the defendant from enforcing any collection action against the plaintiff until
the obligation, if any, mature;

This petition arose from the same facts and events which triggered off the filing of the earlier e) Making the writ of preliminary injunction permanent;
petitions. These facts and events are cited in our Resolution dated January 31, 1966 issued in
G.R. No, L-24581, as follows:
f) Sentencing the defendant to pay the plaintiffs;

Upon the facts alleged in the complaint filed in Civil Case No, 8632 of the Court of First
Instance of Rizal by Robert O. Phillips and Sons, Inc., et al. v. Miguel Perez Rubio, said
(1) P 2,500,000.00, more or less, as actual damages;
plaintiffs prayed for judgment as follows:

(2) Moral damages which this Honorable Court may deem just and reasonable;
1. That a Temporary restraining order and/or exparte writ of preliminary injunction be
issued against the defendant to prevent and restrain them from further unlawfull and willful
interference with the transaction between the plaintiff corporation with Alfonso T.
Yuchengco on the sale of the shares of stock of Hacienda Benito, Inc., and from enforcing (3) Exemplary damages, which this Honorable Court may deem just and reasonable;
whatever amount he may claim to be due to them from the plaintiffs under the Agreements
(Annexes "A", "A-1" and "A- 2"), after the approval of the injunction bond;
(4) P50,000.00, as attorney's fees; and

2. That, after the hearing, judgment be rendered in favor of the plaintiffs against the
defendant: (5) Costs of suit; and

a) Restraining him from willfully and unlawfully interfering with the transaction of the 3. That the plaintiffs be granted such further and other reliefs to which they may be
plaintiffs with Alfonso T. Yuchengco on the sale of the shares of stock of Hacienda Benito, entitled in law and in equity'
Inc.;

Upon an ex-parte petition filed by the plaintiffs, the respondent judge issued on April 1, 1965
b) Declaring that the defendant has no right to rescind the Agreements as referred to in a writ of preliminary injunction to be mentioned again later. Subsequently, the respondent
Annexes "A", "A.1" and "A.2"; judge also denied Perez Rubio's motion to dissolve the preliminary injunction.

It appears that the Perez Rubio spouses owned shares of stock in Hacienda Benito, Inc.
registered in their names and in the names of Joaquin Ramirez and Joaquin Ramirez, Jr. On
August 13, 1963 the Perez Rubios, with the conformity of the Ramirezes, sold said shares to
Robert O. Phillips and Sons, Inc. for P5,500,000.00 payable in installments and other
conditions agreed upon as follows:
xxx xxx xxx
3. That for and in consideration of the mutual agreements and promises, MIGUEL and
MARIA LUISA hereby sell to PHILLIPS all the shares of stock of Hacienda Benito, Inc.
registered in their names and in the names of Joaquin Ramirez and Joaquin, Jr. for the total
price of FIVE MILLION FIVE HUNDRED THOUSAND PESOS (P5,500,000.00),
Philippine Currency, payable as follows:
a FIFTY THOUSAND PESOS (P50,000.00) upon execution of this agreement,
b. ONE MILLION TWO HUNDRED THOUSAND PESOS (P l,200,000.00) within sixty
(60) days from this date.
c ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS (P1,250,000.00)
on April 30, 1964 less than the amount of P 96,830.56 due the Hacienda Benito, Inc. from
MARIA LUISA and the amount of P127,096.09 from MIGUEL; hereby authorized
PHILLIPS to deduct said amounts and to pay the same to Hacienda Benito, Inc.
d ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS (P1,250,000.00)
on or before April 30, 1965.
e ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS (P1,250,000.00)
on or before April 30, 1965.
19
f FIVE HUNDRED THOUSAND PESOS (P500,000.00) on or before April 30, 1967.
4. That should PHILLIPS fail to pay the amount of ONE MILLION TWO HUNDRED
THOUSAND PESOS (P1,200,000.00) due sixty days from this date and to execute the letter
of credit and/or bond or both to secure the payment of the remaining installments, as agreed
upon, then the Seller shall have the right, at their own discretion, either to rescind this
agreement or to enforce the same, provided that any number of days used by the Sellers to
consider the acceptability of the bank or bonding company proposed by PHILLIPS shall be
added to the period of sixty (60) days herein mentioned;
5. That in case of default, PHILLIPS shall pay interest at the rate of eight percent (8%) per
annum on all amounts in arrears until paid in full either by the guaranteeing bank, bonding
company or PHILLIPS;
6. That all the installments due during the years 1964, 1965, 1966, and 1967 with all the
conditions above mentioned, shall be jointly and severally guaranteed by means of
Irrevocable Standby letter of Credit from a bank in favor of MIGUEL and MARIA LUISA,
in the proportion they may agree, which shall be communicated to the bank and to
PHILLIPS before final contract is entered into with the bank, or by a bond from a bonding
company duly approved by MIGUEL and MARIA LUISA;
7. That the stock certificates corresponding to the shares sold, including those in the
names of Joaquin Ramirez and Joaquin Ramirez, Jr. shall not be transferred to PHILLIPS
until the installments due within sixty (60) days from this date is paid in full.'
On June 23, 1964 Robert O. Phillips and Sons, Inc., and Robert O. Phillips himself and his
wife, entered into an agreement with the Perez Rubios deferring payment of the April 31,
1964 under the following conditions;
(a) The deferred installment would bear an interest of eight (8%) percent per annum from
April 30, 1964 although partial payment, on the principal and on the interest due may be paid

during the period granted, in such amounts and at such times as funds are available to Robert
O. Phillips & Sons, Inc.;
(b) Should Robert O. Phillips & Sons, lnc. fail to pay the particular installment now due on
August 31, 1964 or any of the subsequent installments on the exact date due, the whole
obligation would become immediately demandable without notice;
(c) In consideration of this extension granted to Robert O. Phillips & Sons, Inc., Robert O.
Phillips himself and his wife, Magdalena Ysmael Phillips, jointly and severally guaranteed
all the installments and other obligations of Robert O. Phillips & Sons, Inc. under the
original contract of sale dated April 13, 1963.'
In the meantime, Robert O. Phillips, in his behalf and in that of his wife and Robert O.
Phillips and Sons, Inc., entered into negotiations for the sale of their shares of stock in
Hacienda Benito, Inc. to Alfonso Yuchengco. Upon being informed of this, the Perez Rubios,
through their attorney-in-fact, Joaquin Ramirez, reminded the Phillips spouses and the
Phillips corporation in writing of their obligations under the contract of sale of April 13,
1963 and reminded them in particular that the shares subject matter thereof were still subject
to the payment of the unpaid balance of the sale price. They gave a similar notice to Alfonso
Yuchengco, but expressed no objection to the sale provided the obligations in their favor
were satisfied.
On March 26, 1965, the Phillips (individuals and corporation), through their attorney, Juan T.
David, sent a letter to the Perez Rubios telling them, in substance, that the only obstacle to
the consummation of the Phillips-Yuchengco sale of the shares of stock of Hacienda Benito,
Inc. was their letter of November 24, 1964 and warned that unless the same was withdrawn
by March 29, they would seek redress elsewhere. On March 27, 1965, the Perez Rubios, for
their part, wrote the Phillips that due to the latter's inability to comply with the former's
conditions, the negotiations going on between them were cancelled, and should the full
amount due to them remained unpaid by noon of March 31, 1965, they would file action in
court in the afternoon thereof. However, on March 30, 1965, stealing a march on the Perez
Rubios, the Phillips individuals and corporations filed Civil Case No. 8632 mentioned
heretofore where they obtained, ex-parte, a preliminary injunction to this effect:
20
IT IS HEREBY ORDERED by the undersigned Judge of the Court of First Instance that,
until further orders, you, all your attorneys, representatives, agents, and any other person
assisting you, REFRAIN from interfering with the transaction between the
plaintiff-corporation with Alfonso T. Yuchengco on the sale of the shares of stock of
Hacienda Benito, Inc., and from enforcing whatever amount he may claim to be due to them
from the plaintiffs under the Agreements (Annexes 'A', 'A-l', and 'A.2') mentioned in the
complaint.'
On April 8, 1965 the Perez Rubios filed a motion to dissolve the above reproduced writ of
preliminary injunction, which the respondent judge denied on May 6, 1964. But even before
the motion aforesaid could be acted upon, they also filed their answer to the combatting
plaint with a counterclaim of P4,500,000.00 representing the unpaid balance of the sale price
of their shares. Because of this the Perez Rubios were charged with contempt. " (16 SCRA
168, 172).
xxx xxx xxx
Because of the above incidents and orders, Perez Rubio filed a petition for certiorari against
Robert O. Phillips in G.R. No. L- 24581 alleging that in taking cognizance of Civil Case No.
8632 and in issuing the writ of preliminary injunction ex parte, the respondent court
committed a grave abuse of discretion The petitioner prayed that the respondent court be
restrained from in any way proceeding with the case, and that, respondent Phillips be
enjoined from proceeding with the sale of the shares of stock of Hacienda Benito, Inc. or any
of its assets to Alfonso Yuchengco or to any other person, or from performing any act which
would diminish the value of said shares of stock or deplete the assets of the company.
Upon the filing of the original Perez Rubio petition, we issued on July 26, 1965 a writ of
preliminary injunction restraining all the respondents named in the original petition (l) from
taking further proceedings in Civil Case No. 8632; (2) from proceeding with the sale of
shares of stock of Hacienda Benito, Inc. or any of its assets to Alfonso T. Yuchengco or to
any other person, and (3) from performing any act which would either diminish the value of
said shares of stock or deplete the assets of the Hacienda subject matter of Civil Case No.
8632.

On June 10, 1965, the Manufacturers Bank and Trust Company filed a complaint against
Phillips and Sons and Hacienda Benito, Inc. as well as the other corporations controlled by
Robert O. Phillips for the foreclosure of a real estate mortgage constituted on the properties
of the Hacienda. The case was filed in another branch of the Court of First Instance of Rizal
and was docketed as Civil Case No. 8766. On the premise that the foreclosure by the bank of
the mortgage constituted on the properties of Hacienda Benito, Inc., was intended simply to
remove properties and the assets of the Hacienda pertaining to the Phillips spouses beyond
Perez Rubios' reach and thus make it impossible for him to collect the sum of P4,250,000.00,
Perez Rubio filed a motion for the admission of a supplemental petition, to include
Manufacturer's Bank and Victoria Valley Development Corporation as additional
respondents. Victoria Valley was a newly formed corporation which Perez Rubio alleged had
been hurriedly organized and to which Manufacturer's Bank would transfer all the foreclosed
properties thus making it difficult for him to enforce his vendor's lien. Before the first
amended supplemental petition could be acted upon, Perez Rubio filed a second amended
supplemental petition to implead Hacienda Benito, Inc. as additional party respondent with a
specific plea that pending the issuance of a writ of preliminary injunction, Hacienda Benito
be restrained from disposing of its properties or assets in any way save in the ordinary course
of its business of selling lots of the subdivision. Both supplemental amended petitions were
admitted.
After all the respondents had filed their answers to the amended petition and after the
petitioner filed an answer to the counterclaim interposed by respondents Phillips and Sons,
Inc. and the Hacienda, this Court promulgated a decision dated May 27, 1968 wherein,
among others, we ruled:
(1) In connection with the writ of preliminary injunction issued by the respondent judge in
Civil Case 8632 on April 1, 1965 mentioned heretofore, the same is hereby declared null and
void and is, consequently, set aside with the result that the writ of preliminary injunction
issued by Us in this case enjoining its enforcement is hereby made final. The order of the
respondent judge of May 6, 1965 denying petitioner's motion to set aside the aforesaid writ
of preliminary injunction of April 1 of the same year is hereby reversed;
(2) The writ of certiorari prayed for by petitioner is hereby denied insofar as it seeks to
annul the judicial proceedings had in Civil Case 8766 of the Court of First Instance of Rizal,
instituted by the Bank against Hacienda and other parties for the foreclosure of the mortgage
constituted in its favor upon the properties of Hacienda; without prejudice, however, to the
21
right of petitioner to seek such relief and any other relief that he might be lawfully entitled to
against the herein respondents, singly or collectively, in the aforesaid Civil Case 8766 of the
Court of First Instance of Rizal or in a separate action. In this connection, it is our judgment
that the writ of preliminary injunction issued in this case shall remain subsisting and binding
for a period of thirty days from the date of finality of this decision, upon the expiration of
which period the same shall be deemed automatically lifted or dissolved, irrespective of
whether petitioner had or had not taken steps required for the enforcement and protection of
his rights as already indicated; (23 SCRA 773, 789 & 790)
In the belief that the forum for the "separate action" referred to in our decision meant Civil
Case No. 8632, petitioner Perez Rubio filed in the said case on July 9, 1968 an "Urgent
Motion to Admit Amended and Supplemental Answer and Third-Party complaint," the
third-party complaint being directed against Manufacturer's Bank, Victoria Valley and
hacienda Benito.
The motion was denied by the lower court. Hence, the petitioner filed another petition for
certiorari to review and set aside the lower court's order dated September 13, 1968 with the
additional prayer that pending determination of the issues raised in the petition, the
respondent court be restrained from proceeding with the hearing of the case below and the
other respondents from transferring or proceeding with the agreement to transfer any of the
assets of Hacienda Benito, Inc. to any third person except in the ordinary course of selling
subdivision lots. The case was docketed as G.R. No. 30904. On April 16, 1969, we issued a
prayed for temporary restraining order. The petition was later granted. In our decision dated
January 31, 1973, we ruled:
WHEREFORE, the orders complained of are set aside and respondent Judge or whosoever is
assigned to try the case below is instructed to admit the amended and supplemental answer
and third-party complaint filed by Miguel Perez Rubio. Thereafter, these cases shall proceed
accordingly. The restraining order hereinbefore issued by this Court is hereby lifted insofar
as it restrains respondent Judge from proceeding with the hearing of Civil Case No. 8632 of
the Court of First Instance of Rizal Branch X (Pasig, Rizal), and maintained insofar as it
restrains (the other respondents) 'from proceeding with the transfer of the shares and/or of the
assets of Hacienda Benito, Inc. to each other or to any other person, except in the ordinary
course of selling subdivision lots without prejudice to the judgment that may be rendered by
the court a quo in the case. Costs against the respondents. (49 SCRA 319, 337).

The third-party complaint sought to secure the return by Manufacturer's Bank and/or Victoria
Valley of the properties it and/or they bought as a consequence of the judicial foreclosure of
mortgage case, Civil Case No. 8766, with a further plea that in the event the Phillips spouses
are ordered to pay Miguel Perez Rubio the judgment on his counterclaim said properties and
funds foreclosed by the defendant Bank be held to answer for such judgment or any part
thereof unpaid by the Phillips spouses together with damages.
The third-party defendants, respondents herein, filed their separate answers. In addition to
their answer, Manufacturer's Bank and Hacienda Benito filed separate counterclaims for
actual damages for malicious prosecution plus attorney's fees.
After trial on the merits, the lower court rendered a decision the dispositive portion of which
reads:
WHEREFORE, judgment is hereby rendered:
(1) Sentencing the plaintiffs to pay jointly and severally the amount of P4,250,000 to
defendant Miguel Perez-Rubio, with interest of 8% per annum from April 30, 1964 and
attorney's fees equivalent to 10% of the said amount. The plaintiffs however, may offset the
foregoing amount by the damages which Perez-Rubio should pay to them for having
unlawfully interferred in the transaction with Alfonso Yuchengco which is merely assess at
P4,404,510.76.
(2) Sentencing the defendant Perez-Rubio to pay to HBI the sum of P 7,051,496.23;
attorney's fees of P150,000.00, and to MBTC the sum of P 895,085.16 as actual damages and
the sum of 10% thereof as attorney's fees.
(3) Dismissing all other causes of action of the parties in this case without pronouncement
as to costs.
22
Plaintiffs Phillips and Sons and the Phillips spouses as well as defendant and third-party
plaintiff Perez Rubio appealed the decision to the Court of Appeals.
As earlier stated, the appealed decision was amended by the appellate court in so far as it
related ' to the liability of the plaintiffs on their P4,250,000.00 debt. The appellate court ruled
that only plaintiff Phillips and Sons was liable to pay the amount of P4,250,000.00 to
defendant Perez Rubio without interest and without attorney's fees. The rest of the trial
court's decision was affirmed in full.
A motion for reconsideration filed by Perez Rubio was denied by the appellate court. Hence
the instant petition was filed.
Petitioner Perez Rubio raises the following assignments of errors:
I
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT YOUR
PETITIONER UNLAWFULLY AND INOFFICIOUSLY INTERFERRED IN THE
TRANSACTION BETWEEN RESPONDENTS ROBERT O. PHILLIPS & SONS, INC.,
ROBERT O. PHILLIPS & SONS AND HIS WIFE MAGDALENA WHEN THE
SUPREME COURT ITSELF DESCRIBED THE ACTS TAKEN BY YOUR PETITIONER
AS A VALID ENFORCEMENT OF ONE'S RIGHT AS A CREDITOR.
II
THE COURT OF APPEALS GRAVELY ERRED IN AWARDING DAMAGES TO
RESPONDENTS ROBERT 0. PHILLIPS, HIS WIFE, AND ROBERT O. PHILLIPS &
SONS, INC., ON THE ALLEGED GROUND OF UNLAWFUL INTERFERENCE
WITHOUT BASIS IN FACT AS TO WHAT THE DAMAGE CONSISTED OF NOR OF
THE MEASURE FOR SAID DAMAGES.

III
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT YOUR
PETITIONER WAS LIABLE FOR DAMAGES TO THE MANUFACTURERS BANK
AND TRUST COMPANY, INC. BY REASON OF THE TWO INJUNCTIONS ISSUED
BY THIS HONORABLE COURT IN L-24581 (MIGUEL PEREZ RUBIO, ET AL.) AND
L-30404 (MIGUEL PEREZ RUBIO VERSUS THE HON. HERMINIO MARIANO, ET
AL.), DESPITE THE FACT THAT THERE WAS ACTUALLY ONE RESTRAINING
ORDER ISSUED BY THIS HONORABLE COURT INSOFAR AS RESPONDENT MBTC
IS CONCERNED AND DESPITE THE FACT THAT NO VALID PROOF OF DAMAGES
WAS PRESENTED.
IV
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THAT YOUR
PETITIONER PEREZ RUBIO WAS LIABLE TO HACIENDA BENITO, INC., WITHOUT
MAKING SO MUCH AS A COMMENT OF FINDING THEREOF, BUT BY THE MERE
EXPEDIENT OF AFFIRMING THE DECISION OF THE TRIAL COURT.
V COURT HAD ALREADY RULED THAT THE IMPLEADING OF OTHER PARTIES
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE DECISION OF
THE TRIAL COURT IN FINDING YOUR PETITIONER LIABLE TO RESPONDENT
HACIENDA BENITO, INC. FOR THE ALLEGED DAMAGES IT SUFFERED BY
REASON OF THE INJUNCTION ALLEGEDLY ISSUED BY THE SUPREME COURT
AGAINST HACIENDA BENITO, DESPITE THE FACT THAT THE SUPREME COURT
AFFIRMED THE PROPRIETY OF THE INJUNCTION ISSUED BY IT.
VI
23
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE AWARD OF
DAMAGES IN FAVOR OF RESPONDENT HACIENDA BENITO, INC. DESPITE THE
FACT THAT THERE WAS NO BASIS IN THE EVIDENCE FOR THE AWARD.
VII
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DISCHARGING THE
RESPONDENT SPOUSES PHILLIPS FROM THEIR JOINT AND SEVERAL
GUARANTEE OF YOUR PETITIONERS' CREDIT AND IN DISALLOWING INTEREST
TO RUN THEREON WITHOUT ANY BASIS OR REASON DESPITE THE FACT THEY
WERE EXPRESSLY PROVIDED IN THE AGREEMENTS ENTERED INTO BETWEEN
YOUR PETITIONER, THE RESPONDENTS ROBERT O. PHILLIPS HIS WIFE
MAGDALENA AND ROBERT . PHILLIPS & SONS, INC.
VIII
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DISALLOWING
ATTORNEY'S FEES AND MORAL AS WELL AS EXEMPLARY DAMAGES IN
FAVOR OF YOUR PETITIONER PEREZ RUBIO DESPITE THE FACT THAT THIS
HONORABLE COURT HAD CLEARLY SHOWN THAT YOUR PETITIONER HAD
BEEN IMPROPERLY SUED AND DESPITE THE FACT THAT THIS HONORABLE
WAS PROPER AND NECESSARY FOR THE PROTECTION OF HIS RIGHTS.
IX
THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DISCHARGING
RESPONDENTS MANUFACTURERS BANK AND TRUST CO., INC., (MBTC) AND
VICTORIA VALLEY DEVELOPMENT CORPORATION FROM ANY LIABILITY TO
YOUR PETITIONER DESPITE THEIR VERY ACTIVE PARTICIPATION IN
ATTEMPTING TO AND IN ACTUALLY COMMENCING TO REMOVE ALL OF THE

ASSETS OF HACIENDA BENITO, INC., AND TRANSFERRING THEM TO
RESPONDENT VVDC.
The first two assigned errors are in relation to the original complaint in Civil Case No. 8632
filed by Phillips and Sons, Inc., and the Phillips spouses against petitioner Perez Rubio for
alleged unlawful interference in the transaction between the respondents on one hand and
Alfonso Yuchengco on the other hand.
As earlier stated, because of the issuance of a preliminary injunction ex parte which
restrained petitioner Perez Rubio from interfering with the Yuchengco transaction and the
denial of a motion to dissolve the injunction in Civil Case No. 8632, petitioner Perez Rubio
was constrained to file a petition for certiorari with this Court in G.R. No. 24581 alleging
that the lower court committed a grave abuse of discretion in issuing the preliminary
injunction.
Resolving the matter on the propriety of the preliminary injunction, we ruled:
It is obvious that what the plaintiffs in Civil Case No. 8632 considered as interference, on the
part of the therein defendant (petitioner herein) with the negotiations or transaction at that
time being carried on between said plaintiffs, on one hand, and Alfonso T. Yuchengco, on
the other, regarding the sale of the shares of stock of Hacienda was said defendant's intention
to enforce his right to collect from Robert O. Phillips and Sons, Inc. and its guarantors, the
Phillips spouses, the unpaid balance- P4,250,000.00-due to him from the latter of the
purchase price of their shares in Hacienda mentioned at the beginning hereof. As a matter of
fact, when said defendant filed his answer in Civil Case No. 8632 interposing therein a
counterclaim for the collection of said unpaid balance, the plaintiffs therein charged him with
having violated the terms of the writ of preliminary injunction issued by the respondent
judge. Proceedings in connection with this charge, however, were held in abeyance by reason
of the writ of preliminary injunction ion We issued in the present case.
After a careful consideration of the material facts and the law applicable to them, We are of
the opinion and so hold, that the writ of preliminary injunction issued ex parte by the
respondent judge was unjust and improvident. Without hearing the party concerned, and
without any legal justification, it restrained a creditor (Perez Rubio) from enforcing his
24
undenied right to collect from his debtor and the latter's guarantors the sum of P4,250,000.00
representing the unpaid balance of the purchase price of his shares in Hacienda. It is a fact
that the debtor Corporation (Robert O. Phillips and Sons, Inc.) and its guarantors, the Phillips
spouses, do not deny the indebtedness, and yet, notwithstanding its extraordinary amount,
they attempted to sell all the shares of stock of Hacienda without making any reasonable
provision for the payment thereof. For them to prevent their creditor from enforcing his right
to collect, and for the Court to enjoin said creditor from enforcing that right in any lawful
manner is, in any language, rank injustice. (23 SCRA 773, 780).
The petitioner assumes that the foregoing pronouncement categorically ruled that he did not
unlawfully and inofficiously interfere in the transaction between respondents Phillips and
Sons and the Phillips spouses on one hand and Alfonso Yuchengco on the other hand and
that his acts were a valid enforcement of his rights as a creditor.
This assumption is incorrect. It is very clear from the decision that we ruled on the
impropriety of the manner in which the preliminary injunction was issued. We stated that
without hearing the party concerned and without any legal justification, the trial court
restrained creditor Perez Rubio from enforcing his undenied right. We could not have
possibly ruled as suggested because the case before us was a petition for certiorari alleging
that the trial court committed a grave abuse of discretion in issuing the preliminary
injunction ex parte. The issue to be resolved was a pure question of law based on the
circumstances surrounding the issuance of the questioned preliminary injunction ex parte.
Whether or not the petitioner unlawfully and inofficiously interfered with the aforementioned
transaction was a question of fact and any grave abuse of discretion could not, at that time,
be resolved by this Court. A trial on the merits was necessary, Our decision in the second
petition for certiorari, filed by the petitioner in connection with Civil Case No. 8632 lifted
the temporary restraining order in so far as it restrained the trial court from proceeding with
the hearing and ordered the cases including the third party complaint to proceed accordingly.
Trial on the merits accordingly proceeded after which the trial court concluded that the
petitioner unlawfully and inofficiously interfered with the subject transaction as a result of
which Phillips and Sons and the Phillips spouses suffered damages. This conclusion was
upheld by the Court of Appeals. The appellate court justified its ruling as follows:
 25

It is a fact, which defendant Perez Rubio does not and can not deny. that he had informed rescind the contract as regards his sale of stock of the Hacienda. A copy of the letter was sent
Alfonso Yuchengco of his vendor's lien over the unpaid shares of stock in the Hacienda to Alfonso Yuchengeo, the prospective buyer of the shares of stock of Hacienda Benito, but
Benito, Inc., and that he still had the right to rescind the sale of his stocks to ROPSI (t.s.n., even after receipt of the letter, the negotiations on the sale of the shares of stock of Hacienda
August 7, 1974, pp. 31-35; Exhibit D-1-A-Plaintiffs, I Folder of Exhibits, p. 2). As stated Benito to Alfonso Yuchengco continued. This is shown by the following events:
before, Alfonso Yuchengco cooled off, as it were, and withdrew from the transaction (t.s.n.,
October 30, 1974, pp. 94-95) to which he had previously given his conformity (Exhibits 18-,
21 -Rubio-II Folder of Exhibits, pp. 37, 43) because of Perez Rubio's refusal to withdraw his 1. In a letter dated December 17, 1964, Hacienda Benito through Robert O. Phillips as
letter to Yuchengco containing his threat to rescind the sale of his stocks to ROPSI. If this president, Phillips and Sons, through Robert Phillips as president and Robert Phillips in his
Court has said it before it is repeated here for emphasis that Alfonso Yuchengco had no own behalf offered to Alfonso Yuchengco an option to buy 100% of the shares of stock of
intention to holding an empty bag, and for defendant Perez Rubio to block the plaintiffs from Hacienda Benito. It is to be noted that the first option contained in the letter of November 17,
consummating a transaction the terms of which have already been approved in principle 1964 offered to Alfonso Yuchengco was the sale of 80% of the shares of stock of Hacienda
providing for the payment of Perez Rubio's credit is unlawful and inofficious interference. Benito. In reply Alfonso Yuchengco in his letter to the Phillips spouses and Phillips and Sons
dated January 6, 1965 accepted the option but with modifications as to the terms of the sale,
Included in the terms of the sale were provisions for the payment of the seller's debts.
It should be noted that defendant Perez Rubio had already delivered completely the shares of
stock of hacienda Benito, Inc. which he had sold to plaintiff ROPSI and that these shares
were transferred in the books of the Hacienda in the name of ROPSI (t.s.n., August 5, 1974, 2. In a letter dated February 12, 1965 from the law firm of Ramirez and Ortigas, counsel
pp. 129-130, 131-132, 133-134; August 7, 1974, p. 62; May 14, 1975, p. 32). The plaintiffs of the petitioner to Phillips and Sons and the Phillips spouses in relation to the ongoing
therefore had all the right to dispose of the shares of stock. Defendant Perez Rubio also negotiations for the settlement of the P3,800,000.00, it was stated that the petitioner was not
admitted that there was no agreement or document prohibiting plaintiff ROPSI from selling willing to extend the manner of payment of the credit further than April 30, 1967. Contained
the said shares of stock to any person (t.s.n., August 3, 1974, pp. 12-13) nor any agreement in the same letter of the law firm was an offer of a compromise as to the manner of payment.
or document requiring his prior permission before ROPSI could sell or otherwise dispose of
the said shares of stock (lbid., p. 14). There was also no vendor's lien annotated in the books
of Hacienda Benito, Inc. over the said shares of stock (t.s.n., August 7, 1974, pp. 14-16, 63,
3. In reply to the aforementioned letter, Phillips and Sons and the Phillips spouses wrote a
66-67), What is more, the plaintiffs have made reasonable provisions for the payment of the
letter dated February 16, 1965 stating their final proposal as to the manner of payment. ln
unpaid balance due the defendant in their transaction with Alfonso Yuchengco (Exhibit
accordance with the final proposal, the last payment of the debt would be on April 30, 1968.
18-Rubio, paragraph 19, II Folder of Exhibits, pp. 36-37, Exhibit 20-Rubio, paragraphs 8 and
On the basis of the terms and conditions of the final proposal, Phillips and Sons and the
12, lbid., pp. 41-42, Exhibit 22-Rubio, paragraph 5, lbid., p. 46; t.s.n., May 14, 1975, pp. 46,
Phillips spouses requested a "waiver for the consummation of the proposed sale to Mr.
119-120). Clearly, there appears no valid reason why defendant Perez Rubio had to block the
Alfonso Yuchengco" (Exhibit 22-Perez Rubio, Exhibits 11, p. 46).
plaintiffs' transaction with Alfonso Yuchengco, except 'to destroy' and 'ruin' the plaintiffs
(t.s.n., May 14, 1975, pp. 129- 130), which defendant Perez Rubio himself vowed he would
do (t.s.n., May 14, 1975, p. 136).
4. In a letter dated February, 22, 1965, the law firm of Ramirez and Ortigas informed
Phillips and Sons that their client, the petitioner, rejected the plan to modify in any way the
original agreements for payment and that the letter was a formal notice that the complaint for
A thorough examination of the record reveals that the factual findings of the appellate court
the enforcement of the original contracts would be filed on March 8, 1965 unless the case is
are incomplete and do not reflect the actual events that transpired concerning the sale of
settled in a satisfactory manner. (Exhibit 23-Perez Rubio, Exhibit 11, p. 80).
shares of stock of Hacienda Benito to Alfonso Yuchengco. The important point left out by
the appellate court refers to the controversial November 24, 1964 letter of the petitioner to
Phillips and Sons and to the Phillips spouses wherein the petition stated that he has a
vendor's lien over the shares of stock of Hacienda Benito and that he still has the option to

As a consequence of the February 22, 1965 letter of the petitioner, Juan T. David, counsel for
Phillips and Sons wrote the petitioner himself. In this letter dated March 12, 1965, Atty.
David requested that the petitioner withdraw his controversial November 24, 1964 letter.
According to David the said letter was the "only obstacle to the conclusion of the transaction
between my client, Robert O. Phillips and Sons, Inc. and Mr. Yuchengco involving the
shares of stock of Hacienda Benito, Inc." A copy of the letter was attached to a letter sent to
Yuchengco also dated March 12, 1965 informing him about the failure to obtain the desired
waiver and expressing the view that "waiver is unnecessary."
In another letter dated March 26, 1965 addressed to the petitioner, Atty. David gave the
petitioner until March 29, 1965 to withdraw unconditionally the controversial letter. The
petitioner was informed that Yuchengco had given an ultimatum that if waiver was not
obtained by March 31, 1965, the transaction would have to be cancelled.
In reply to the March 26, 1965 letter, the petitioner sent a letter addressed to Phillips and
Sons and the Phillips spouses informing them that the letter served as notice that all
negotiations had been cancelled. Perez Rubio gave them until March 31, 1965 to pay the
balance of the payment for his shares of stock plus interests and attorney's fees.
The letter served as the last communications between the petitioner and Phillips and Sons
and the Phillips spouses before March 31, 1965 when Civil Case No. 8632 was filed.
Taking into consideration, all the details of the negotiations in the sale of the shares of stock
of Hacienda Benito, Inc. from Phillips and Sons to Mr. Yuchengco, there is no factual or
legal basis for the appellate court's conclusion that the petitioner unlawfully and inofficiously
interfered with the negotiations.
We fail to see any reason why the petitioner should be accused of unlawful interference in
maintaining his stand regarding the sale of shares of stock of Hacienda Benito, Inc. that he
still had the option to rescind the contract between him and Phillips and Sons and stating the
existence of his vendor's hen over said shares of stock.
26
The petitioner never pretended that he still had full control of the shares of stock which he
sold to Phillips and Sons. He in fact admitted that the shares of stock were already
transferred to the corporation and that he did not have a recorded lien therein. He merely
made of record his right to rescind under the original contract of sale. The details pertaining
to the earlier transaction governing the sale of the shares of stock between the petitioner and
Phillips and Sons were in fact, all known to Yuchengco. And, more important, it is obvious
from the records that the petitioner's interest was only in the payment of the P4,250,000.00
balance due him from Phillips and Sons. Thus, in a meeting called by Yuchengco where the
negotiations for the sale of the shares of stock of Hacienda Benito were discussed, the
petitioner made it clear that he was amenable to his waiving or withdrawing the controversial
November 24, 1964 letter provided his interests would be taken care of and protected.
(Testimony of Perez Rubio, TSN., August 5, 1970, pp. 44-50). Obviously, the petitioner felt
that the payment of his P4,250,000.00 was not secured under the terms of payment proposed
by Yuchengco. He had the right to refuse to withdraw the November 24, 1964 letter. We see
nothing illegal or inofficious about the letter or the refusal to withdraw it.
Whether or not Yuchengco, the prospective buyer, believed that Perez Rubio had a good
ground to rescind and whether or not the buyer's interest would be prejudiced were matters of
decision-making dependent solely on hint In fact the March 12, 1965 letter of Atty. Juan T.
David to the petitioner is quite revealing. Phillips and Sons admitted that under the
circumstances, the petitioner's waiver of the controversial November 24, 1964 letter was
unnecessary. The letter disclosed the fact that the waiver issue was extensively discussed by
the parties including their counsel's maintaining the view that waiver was unnecessary. Thus:
March 12, 1965
MR. MIGUEL PEREZ RUBIO
c/o Ramirez and Ortigas Law Office
1515 Roxas Boulevard
 27

Manila Very truly yours,

Sir: (SGD.)

xxx xxx xxx JUAN T. DAVID

Taking advantage of the permission given to us by Mr. Yuchengco, to take up the Counsel
aforementioned legal aspect of the 'waiver', with his counsel, Atty. Alberto M. Meer, we
conferred with the latter and expressed our understanding of a 'waiver', and the conclusion
that it has no place in the present case, considering the fact that a 'waiver' is only appropriate for ROBERTO. PHILLIPS
where the person from whom it is sought has a direct recorded lien on the subject thereof,
particularly when the subject is a negotiable instrument; that, at best, a withdrawal of your
aforementioned letter should be sufficient to allay the fear of Mr. Yuchengco on the
& SONS, INC.
possibility of a suit which might involve him after the sale, if the 'waiver' is not obtained
from you.

We also called the attention of Mr. Yuchengco that the shares of stock subject of the
transaction are clean and un-encumbered, therefore, there is nothing to waive on the part of
any person; that the negotiability of the said shares of stock is not impaired by the fact that
the owner thereof is indebted to another, especially considering the fact that, instead of
securing your credit against my client with the encumbrance of its shares of stock, you
preferred the personal guaranty of Mr. and Mrs. Robert O. Phillips, as recorded in the
corresponding instruments.
Atty. Meer told us that, if we could obtain from you the letter of withdrawal and the
phraseology thereof is adequate, the only obstacle to the consummation of the transaction
will have been removed and he is disposed to advise his client, Mr. Yuchengco, to go
through with the purchase of the shares of stocks of the Hacienda Benito, Inc., therefore, we
reiterate our request for the withdrawal of your aforementioned letter.
xxx xxx xxx
A carbon copy of a March 12, 1965 letter from Atty. David to Mr. Alfonso Yuchengco was
attached to the letter addressed to Mr. Perez Rubio. In the letter to Mr. Yuchengco, the
counsel for Phillips and Sons stressed the View that the waiver or withdrawal of the Perez
Rubio letter was unnecessary.
The conclusion to be drawn from these facts is that the petitioner is not liable for any form of
damages in favor of Phillips and Sons and the Phillips spouses. Consequently, we come to
the issue of whether or not the Phillips spouses are solidarily liable for the debt of Phillips
and Sons. This is the issue raised in the seventh assignment of error.
It should be remembered that on June 23, 1964, Philipps and Sons and the Phillips spouses
entered into an agreement wherein, in consideration of the extension granted to Phillips and
Sons in the payment of the latter's outstanding debt to the petitioner, the Phillips spouses ". . .
jointly and severally guaranteed all the installments and other obligations of Robert O.
Phillips & Sons, Inc. under the signed contract of sale dated April 13, 1963. " Phillips and
Sons was not able to pay the petitioner as covenanted in the agreement.

The agreement was not assailed in any of the cases involving the petitioner Phillips and Sons
and the Phillips spouses. Both parties admit the veracity of the agreement. The agreement
serves as the law between the parties. The full enforcement of the agreement's provisions
necessarily is in order. We rule that per agreement, the Phillips spouses are jointly and
severally liable to the petitioner for the outstanding debt of Phillips and Sons with interest
therein from April 30, 1964 until fully paid.
The third, fourth, fifth and sixth assignments of errors refer to the actual damages awarded to
Manufacturers Bank and Hacienda Benito by the appellate court.
Both awards were premised on the appellate court's finding that Manufacturers Bank and
Hacienda Benito were wrongfully impleaded as parties by the petitioner in his two petitions
earlier filed wherein two injunctions were issued by this Court. As a result, the parties
allegedly suffered damages. The appellate court premises its findings on the following
justifications:
(a) Even before the aborted transaction between ROPSI and Alfonso Yuchengco, Hacienda
Benito, Inc. was already indebted to the Manufacturers Bank the year before. Appellant
ROPSI had also executed real estate mortgages on 78 hectares out of the 135-hectare holding
of Hacienda Benito, Inc. in favor of the Manufacturers Bank. Subsequently, the Hacienda
executed a Memorandum Agreement on June 5, 1965 with Victoria Valley Development
Corporation, with the conformity of the Manufacturers Bank as mortgage creditor, where the
financial obligations of the Hacienda and its other affiliate corporations were restructured
thus freeing them from their financial obligations to the Manufacturers Bank in exchange for
78 hectares of land which were then mortgaged with the Manufacturers Bank, let alone the
payment of a huge amount of interest on the principal. As of May 21, 1965, the Hacienda
and its affiliates have not paid the Manufacturers Bank P 7,459,042.98 which was already
due and demandable forcing the Manufacturers Bank to file Civil Case No. 8766 against the
Hacienda for the foreclosure of the mortgages which resulted in a compromise agreement
between the parties, which the court below approved. (Defendant's Record on Appeal, pp.
498-499).
(b) As early as October 8, 1965, Miguel Perez Rubio knew that no assets have been
transferred under the Memorandum Agreement of June 5, 1965 and that Victoria Valley
28
Development Corporation has considered said Agreement without force and effect making it
moot and academic for purposes of rescission (Ibid, p. 501),
(c) There is nothing in the promissory notes and the real estate mortgages forming part of
the records of Civil Case No. 8766 to show that they have been executed in bad faith or to
defeat the credit of Miguel Perez Rubio against ROPSI since they were executed in 1963
over 78 hectares out of the 135- hectare holding of Hacienda Benito, Inc. in the Victoria
Valley Subdivision so that prior to the default of ROPSI in the payment of the third
installment on August 31, 1964 in favor of Perez Rubio, there were already prior and existing
mortgages over the 78 hectares owned by the Hacienda in favor of the Manufacturers Bank
(Ibid., pp. 501- 502).
(d) The existence of sufficient assets for the payment of the credit of Perez Rubio failed to
contradict the evidence showing the existence of unencumbered properties of Hacienda
Benito, Inc. which were more than sufficient to meet his credit against ROPSI in the amount
of P4,250,000.00 as well as the evidence showing the good financial position of the
Hacienda as shown by Exhibit II -Benito, also marked as Exhibit 9-MBTC, III Folder of
Exhibits, p. 129 (Ibid., pp. 502- 503).
(e) The admission of Perez Rubio that he did not investigate with the corresponding
registers of deeds and other entities the status of the unencumbered properties of Hacienda
Benito, Inc., ROPSI, Robert O. Phillips and his wife, and the other corporations owned by
the Phillips spouses before filing the third-party complaints against the Manufacturers Bank
& Trust Company, Hacienda Benito, Inc. and Victoria Valley Development Corporation
(t.s.n., August 21, 1974, pp. 133- 138). . . .
xxx xxx xxx
These findings do not justify the appellate court's conclusion that Manufacturers Bank and
Hacienda Benito were wrongfully impleaded and that Perez Rubio owes them millions of
pesos in damages as a result.
 29

In the welter of cases filed by the contending parties over the same properties and the
confusion spawned by the many incidents which gave rise to separate petitions, one basic
fact tends to be forgotten. It is this. The Perez Rubio spouses sold Hacienda Benito, Inc. to
Phillips and Sons for P5,500,000.00 in 1963 or more than 22 years ago. P50,000.00 was paid
immediately; P1,2000,000.00 was due in 60 days; in another 6 months, a third payment of
P1,250,000.00 was to be paid. The full amount should have been paid by April 30, 1967. Up
to now, P4.25 million of the basic indebtedness has not been paid.
The Perez Rubio spouses were not paid as agreed in the contract. When the buyers could not
comply with their commitments, the Perez Rubios graciously acceded to a deferment of
overdue accounts under a new agreement. Still the payments could not be effected under the
extension.
Benito. As we ruled in the case of R & B Surety and Insurance Company Inc, v. Intermediate
Appellate Court (129 SCRA 736):
xxx xxx xxx
While petitioner might have been negligent in not verifying the authenticity of the signatures
in the indemnity agreement, still the same does not amount to bad faith as to justify the
award of damages and the conclusion that the act of filing the complaint against respondent
Uson amounts to malicious prosecution. In filing the action, the petitioner was only
protecting its business interests by trying to recover the amount it had already paid to the
Philippine National Bank.

All the transactions which led to the litigations by, against, or among Manufacturers Bank, In a long line of cases, we have consistently ruled that in the absence of a wrongful act or
Hacienda Benito, Phillips and Sons, and the Phillips spouses were entered into at the time ommission or of fraud or bad faith, moral damages cannot be awarded and that the adverse
when payments on the petitioner's shares of stock were overdue, A person who has not been result of an action does not per se make the action wrongful and subject the actor to the
paid a balance of P4,250,000.00 on a sale of P5,500,000.00 will naturally be extremely payment of damages, for the law could not have meant to impose a penalty on the right to
disturbed to see the buyers and other parties dealing with the properties in a manner which litigate. . . .
could be reasonably construed as calculated to bring them beyond his reach and making full
payment of the debt extremely difficult, if not impossible. It was a normal reaction and to be
expected for the original owner to inform third persons trying to buy the still unpaid
The actual damages awarded to both the Manufacturers Bank and Hacienda Benito apart
properties about that fact of non- payment and to emphasize to them his right and options
from having no legal basis were also not duly proven. In fact, the appellate court made no
under the original contract of sale. It was also normal to include the third party
findings of fact on how it arrived at the total amount of P895,085.14 awarded to
would-be-buyers who had taken sides with the defaulting original buyer in the litigations
Manufacturers Bank much less did the court discuss the damages awarded to Hacienda
brought against Perez Rubio, the man seeking to protect his endangered interests.
Benito. The damages awarded to Hacienda Benito were only impliedly affirmed by the
dispositive portion of the decision wherein it declared that the decision of the lower court
was affirmed in toto.
The inclusion of Manufacturers Bank and Hacienda Benito was part and parcel of the efforts
to protect Perez Rubio's interests. It should be noted that petitions wherein they were
impleaded had for their subject matter the same unpaid obligation of P4,250,000.00 from
This can not be done. As we ruled in Perfecto v. Gonzales (128 SCRA 635):
Phillips and Sons. The properties to be foreclosed by the Bank represented properties of
Perez Rubio for which he had not yet been paid.

xxx xxx xxx

There is nothing in the records to show that, far from protecting his P4.25 million, Perez
Rubio filed the third party complaint to vex and humiliate Manufacturers Bank and Hacienda
 30

. . . [A]ctual or compensatory damages are those recoverable because of pecuniary loss in FIFTY THOUSAND PESOS (P4,250,000.00) with interest at the rate of eight (8%) percent
business, trade, property, profession, job, or occupation, and the same must be proved; per annum from April 30, 1964 until fully paid as provided for in the parties' agreement
otherwise, if the proof is flimsy and non- substantial, no damages will be given. In the case dated August 13, 1963. Costs against the respondents.
of Malonzo v. Galang, log Phil. 16, the Court, speaking through Justice J.B.L. Reyes, held
that with respect to compensatory damages assuming that they are recoverable under the
theory that petitioner had filed a clearly unfounded suit against respondent, the same SO ORDERED.
constitutes a tort against the latter that makes the former liable for all damages which are the
natural and probable consequences of the act or omissions complained of. These damages,
cannot, however, be presumed and must be duly proved (Article 2199, New Civil Code).
G.R. No. L-46364 April 6, 1990
Well settled is the rule that even if the complaint filed by one against the other is clearly
unfounded this does not necessarily mean, in the absence of specific facts proving damages,
that said defendant reany suffered actual damage over and above attorney's fees and costs.
The Court cannot rely on its relations as to the fact and amount of damages. It must depend SULPICIA JIMENEZ and TORIBIO MATIAS, petitioners,
on actual proof of the damages alleged to have been suffered.
vs.

VICENTE FERNANDEZ alias HOSPICIO FERNANDEZ and TEODORA GRADO,

Considering these conclusions, the final question to be resolved is whether or not the respondents.
petitioner is entitled to moral and exemplary damages? This is the subject matter of the
eighth and ninth assigned errors.
Antonio E. Bengzon III for petitioners.

Agustin U. Cruz for private respondents.

We have stated that the petitioner had valid reasons to implead Manufacturers Bank and
Hacienda Benito in his cases against Phillips and Sons and the Phillips spouses. An
assessment of the evidence in record shows that the filing of the complaint may likewise be
characterized as a sincere attempt on the part of Phillips and Sons and the Phillips spouses to
find means or to buy time to pay their debt to the petitioner. In the case of Manufacturers
PARAS, J.:
Bank, the record shows that its active participation in the transaction involving the properties
of Hacienda was legitimate. While no damages are due the Bank, neither is it liable for
damages. As far as Victoria Valley is concerned, we find no reason to conclude that it was
really organized or actively participated to prejudice the interests of the petitioner. The Before Us is a petition for review on certiorari of the following Decision 1 and Resolution 2
record shows that Victoria Valley withdrew from the transaction involving the properties of of the Honorable Court of Appeals: (1) Decision, dated March 1, 1977 in C.A.-G.R. No.
Hacienda Benito even before the filing of the third party complaint. The eighth and ninth 49178-R entitled "Sulpicia Jimenez, et al., v. Vicente Fernandez, et al." affirming in toto the
assignments of errors under consideration are, therefore, without merit. judgment of the Court of First Instance of Pangasinan, Third Judicial District in Civil Case
No. 14802-I between the same parties and (2) Resolution dated June 3, 1977 denying
plaintiffs-appellants' motion for reconsideration.
WHEREFORE, the petition is GRANTED. The decision of the former Court of Appeals is
hereby REVERSED and SET ASIDE. The respondents Robert O. Phillips and Sons and the
Phillips spouses are declared to be jointly and severally liable to the petitioner for the As gathered from the records, the factual background of this case is as follows:
outstanding debt of Phillips and Sons in the amount of FOUR MILLION, TWO HUNDRED
 31

The land in question is the Eastern portion with an area of Four Hundred Thirty Six (436) After trial on the merits, the lower court rendered judgment, the dispositive portion of which
square meters of that parcel of residential land situated in Barrio Dulig (now Magsaysay), reads:
Municipality of Labrador, Pangasinan actually covered by Transfer Certificate of Title No.
82275 (Exhibit A) issued in the name of Sulpicia Jimenez.
WHEREFORE, decision is hereby rendered dismissing the complaint and holding the
defendant, Teodora Grado, the absolute owner of the land in question; ordering the plaintiffs
The entire parcel of land with an area of 2,932 square meters, formerly belonged to Fermin to pay to the defendant the amount of P500.00 as damages, as attorney's fees, and to pay the
Jimenez. Fermin Jimenez has two (2) sons named Fortunato and Carlos Jimenez. This costs of suit.
Fortunato Jimenez who predeceased his father has only one child, the petitioner Sulpicia
Jimenez. After the death of Fermin Jimenez, the entire parcel of land was registered under
Act 496 in the name of Carlos Jimenez and Sulpicia Jimenez (uncle and niece) in equal SO ORDERED. (Rollo, p. 20)
shares pro-indiviso. As a result of the registration case Original Certificate of Title No.
50933 (Exhibit 8) was issued on February 28, 1933, in the names of Carlos Jimenez and
Sulpicia Jimenez, in equal shares pro-indiviso.
Petitioner appealed the above judgment to the respondent Court of Appeals and on March 1,
1977, respondent Court of Appeals rendered a decision affirming the same in toto. Said
decision was rendered by a special division of five (5) justices, with the Hon. Lourdes San
Carlos Jimenez died on July 9, 1936 and his illegitimate daughter, Melecia Cayabyab, also Diego, dissenting.
known as Melecia Jimenez, took possession of the eastern portion of the property consisting
of 436 square meters.
Petitioners within the reglementary period granted by the Honorable Court of Appeals, filed
therewith a motion for reconsideration. But said motion for reconsideration was denied by
On January 20, 1944, Melecia Jimenez sold said 436 square meter-portion of the property to the Court of Appeals in its resolution dated June 3, 1977.
Edilberto Cagampan and defendant Teodora Grado executed a contract entitled "Exchange of
Real Properties" whereby the former transferred said 436 square meter-portion to the latter,
who has been in occupation since.
In their appeal to the respondent Court of Appeals from the aforequoted decision of the trial
court, herein petitioner raised the following assignments of error to wit:

On August 29, 1969, plaintiff Sulpicia Jimenez executed an affidavit adjudicating unto
herself the other half of the property appertaining to Carlos Jimenez, upon manifestation that
ASSIGNMENTS OF ERROR
she is the only heir of her deceased uncle. Consequently Transfer Certificate of Title No.
82275 was issued on October 1, 1969 in petitioner's name alone over the entire 2,932 square
meter property.
I

On April 1, 1970, Sulpicia Jimenez, joined by her husband, instituted the present action for
the recovery of the eastern portion of the property consisting of 436 square meters occupied THE LOWER COURT ERRED IN NOT DECLARING THAT MELECIA CAYABYAB,
by defendant Teodora Grado and her son. ALSO KNOWN AS MELECIA JIMENEZ, IS NOT THE DAUGHTER OF CARLOS
JIMENEZ.

II
THE LOWER COURT ERRED IN NOT DECLARING THAT MELECIA CAYABYAB,
ALSO KNOWN AS MELECIA JIMENEZ, HAS NO RIGHT TO SELL THE LAND IN
QUESTION TO EDILBERTO CAGAMPAN.
III
THE LOWER COURT ERRED IN NOT DECLARING THAT EDILBERTO CAGAMPAN
DID NOT BECOME THE OWNER OF THE LAND IN QUESTION BY VIRTUE OF THE
DEED OF SALE (EXH. "1") EXECUTED BY MELECIA CAYABYAB, ALIAS
MELECIA JIMENEZ, IN HIS FAVOR.
IV
THE LOWER COURT ERRED IN NOT DECLARING THAT TEODORA GRADO DID
NOT BECOME THE OWNER OF THE LAND IN QUESTION BY VIRTUE OF THE
DEED OF EXCHANGE (EXH. "7") EXECUTED BY HER AND EDILBERTO
CAGAMPAN.
V the sake of argument that Melecia Cayabyab was the illegitimate daughter of Carlos Jimenez
THE LOWER COURT ERRED IN NOT DECLARING THAT THE TITLE OF
APPELLANT SULPICIA JIMENEZ OVER THE LAND IN QUESTION CAN NOT BE
DEFEATED BY THE ADVERSE OPEN AND NOTORIOUS POSSESSION OF
APPELLEE TEODORA GRADO.
VI
32
THE LOWER COURT ERRED IN DECLARING THAT THE APPELLEE TEODORA
GRADO IS THE ABSOLUTE OWNER OF THE LAND IN QUESTION IN THE LIGHT
OF THE DECISION OF THE SUPREME COURT IN THE CASE OF LOURDES
ARCUINO, ET AL., V. RUFINA APARIS AND CASIANO PURAY, G.R. NO. L-23424,
PROMULGATED JANUARY 31, 1968, WHICH CASE IS NOT APPLICABLE TO THE
CASE AT BAR.
VII
THE LOWER COURT ERRED IN DISMISSING THE COMPLAINT AND ORDERING
THE APPELLANTS TO PAY THE APPELLEES THE SUM OF P500.00 AS
ATTORNEYS FEES PLUS THE COSTS.
From the foregoing, this petition for review was filed.
We find merit in the petition.
From the start the respondent court erred in not declaring that Melecia Jimenez Cayabyab
also known as Melecia Jimenez, is not the daughter of Carlos Jimenez and therefore, had no
right over the property in question. Respondents failed to present concrete evidence to prove
that Melecia Cayabyab was really the daughter of Carlos Jimenez. Nonetheless, assuming for
there can be no question that Melecia Cayabyab had no right to succeed to the estate of
Carlos Jimenez and could not have validly acquired, nor legally transferred to Edilberto
Cagampan that portion of the property subject of this petition.
It is well-settled in this jurisdiction that the rights to the succession are transmitted from the
moment of the death of the decedent (Art. 777, Civil Code). Moreover, Art. 2263 of the Civil
Code provides as follows:

Rights to the inheritance of a person who died with or without a will, before the effectivity of
this Code, shall be governed by the Civil Code of 1889, by other previous laws, and by the
Rules of Court . . . (Rollo, p. 17)
Thus, since Carlos Jimenez, owner of one-half pro-indiviso portion of that parcel of land
then covered by Original Certificate of title No. 50933, died on July 9, 1936 (Exhibit "F")
way before the effectivity of the Civil Code of the Philippines, the successional rights
pertaining to his estate must be determined in accordance with the Civil Code of 1889.
Citing the case of Cid v. Burnaman (24 SCRA 434) wherein this Court categorically held
that:
To be an heir under the rules of Civil Code of 1889 (which was the law in force when Carlos
Jimenez died and which should be the governing law in so far as the right to inherit from his
estate was concerned), a child must be either a child legitimate, legitimated, or adopted, or
else an acknowledged natural child — for illegitimate not natural are disqualified to inherit.
(Civil Code of 1889, Art. 807, 935)
Even assuming that Melecia Cayabyab was born out of the common-law-relationship
between her mother (Maria Cayabyab) and Carlos Jimenez, she could not even be considered
an acknowledged natural child because Carlos Jimenez was then legally married to Susana
Abalos and therefore not qualified to marry Maria Cayabyab and consequently Melecia
Cayabyab was an illegitimate spurious child and not entitled to any successional rights in so
far as the estate of Carlos Jimenez was concerned.
Melecia Cayabyab in the absence of any voluntary conveyance to her by Carlos Jimenez or
Sulpicia Jimenez of the litigated portion of the land could not even legally transfer the parcel
of land to Edilberto Cagampan who accordingly, could not also legally transfer the same to
herein private respondents.
Analyzing the case before Us in this manner, We can immediately discern another error in
the decision of the respondent court, which is that the said court sustained and made
33
applicable to the case at bar the ruling in the case of Arcuino, et al., v. Aparis and Puray, No.
L-23424, January 31, 1968, 22 SCRA 407, wherein We held that:
. . . it is true that the lands registered under the Torrens System may not be acquired by
prescription but plaintiffs herein are not the registered owners. They merely claim to have
acquired by succession, their alleged title or interest in lot No. 355. At any rate plaintiffs
herein are guilty of laches.
The respondent court relying on the Arcuino case, concluded that respondents had acquired
the property under litigation by prescription. We cannot agree with such conclusion, because
there is one very marked and important difference between the case at bar and that of the
Arcuino case, and that is, that since 1933 petitioner Sulpicia Jimenez was a title holder, the
property then being registered in her and her uncle Carlos Jimenez' name. In the Arcuino
case, this Supreme Court held. "(I)t is true that lands registered under the Torrens System
may not be acquired by prescription but plaintiffs herein are not the registered owners."
(Rollo, p. 38) Even in the said cited case the principle of imprescriptibility of Torrens Titles
was respected.
Melecia Cayabyab's possession or of her predecessors-in-interest would be unavailing
against the petitioner Sulpicia Jimenez who was the holder pro-indiviso with Carlos Jimenez
of the Torrens Certificate of Title covering a tract of land which includes the portion now in
question, from February 28, 1933, when the Original Certificate of Title No. 50933 (Exhibit
8) was issued.
No possession by any person of any portion of the land covered by said original certificate of
titles, could defeat the title of the registered owner of the land covered by the certificate of
title. (Benin v. Tuason, L-26127, June 28, 1974, 57 SCRA 531)
Sulpicia's title over her one-half undivided property remained good and continued to be good
when she segregated it into a new title (T.C.T No. 82275, Exhibit "A") in 1969. Sulpicia's
ownership over her one-half of the land and which is the land in dispute was always covered
by a Torrens title, and therefore, no amount of possession thereof by the respondents, could
ever defeat her proprietary rights thereon. It is apparent, that the right of plaintiff (now
petitioner) to institute this action to recover possession of the portion of the land in question
 34

based on the Torrens Title of Sulpicia Jimenez, T.C.T. No. 82275 (Exhibit "A") is
imprescriptible and not barred under the doctrine of laches. (J.M. Tuason & Co. v.
Macalindong, L-15398, December 29, 1962, Francisco v. Cruz, et al., 43 O.G. 5105) Rollo, p.
39)
WHEREFORE, the Petition for Review is hereby GRANTED. The Decision and Resolution
dated March 1, 1977 and June 3, 1977 in CA G.R. No. L-49178-R are SET ASIDE.
SO ORDERED.

The respondent Court of Appeals declared the petitioner Sulpicia Jimenez guilty of laches
and citing the ruling in the case of Heirs of Lacamen v. Heirs of Laruan (65 SCRA 605), held G.R. No. 77029 August 30, 1990
that, since petitioner Sulpicia Jimenez executed her Affidavit of Self-Adjudication only in
1969, she lost the right to recover possession of the parcel of land subject of the litigation.
BIENVENIDO, ESTELITA, MACARIO, LUIS, ADELAIDE, ENRIQUITA and CLAUDIO,
all surnamed, GEVERO, petitioners,
In this instance, again We rule for the petitioner. There is no absolute rule as to what
constitutes laches or staleness of demand; each case is to be determined according to its vs.
particular circumstances. The question of laches is addressed to the sound discretion of the
INTERMEDIATE APPELLATE COURT and DEL MONTE DEVELOPMENT
court and since laches is an equitable doctrine, its application is controlled by equitable
CORPORATION, respondents.
considerations. It cannot be worked to defeat justice or to perpetrate fraud and injustice. It
would be rank injustice and patently inequitous to deprive the lawful heirs of their rightful
inheritance.
Carlito B. Somido for petitioners.

Petitioner Sulpicia Jimenez is entitled to the relief prayed for, declaring her to be the sole and
absolute owner of the land in question with right to its possession and enjoyment. Since her Benjamin N. Tabios for private respondent.
uncle Carlos Jimenez died in 1936, his pro-indiviso share in the properties then owned in
co-ownership with his niece Sulpicia descended by intestacy to Sulpicia Jimenez alone
because Carlos died without any issue or other heirs.

After all, the professed objective of Act No. 496, otherwise known as the Land Registration
Act or the law which established the Torrens System of Land Registration in the Philippines
is that the stability of the landholding system in the Philippines depends on the confidence of
the people in the titles covering the properties. And to this end, this Court has invariably
upheld the indefeasibility of the Torrens Title and in, among others, J.M. Tuason and Co.,
Inc. v. Macalindong (6 SCRA 938), held that "the right of the appellee to file an action to
recover possession based on its Torrens Title is imprescriptible and not barred under the
doctrine of laches.
PARAS, J.:
This is a petition for review on certiorari of the March 20, 1988 decision 1 of the then
Intermediate Appellate Court (now Court of Appeals) in AC-GR CV No. 69264, entitled Del
Monte Development Corporation vs. Enrique Ababa, et al., etc. affirming the decision 2 of
the then Court of First Instance (now Regional Trial Court) of Misamis Oriental declaring
the plaintiff corporation as the true and absolute owner of that portion of Lot 476 of the
Cagayan Cadastre, particularly Lot No. 2476-D of the subdivision plan (LRC) Psd-80450,
containing an area of Seven Thousand Eight Hundred Seventy Eight (7,878) square meters
more or less.
 35

As found by the Appellate Court, the facts are as follows:

The parcel of land under litigation is Lot No. 2476 of the Subdivision Plan Psd-37365
containing an area of 20,119 square meters and situated at Gusa, Cagayan de Oro City. Said
lot was acquired by purchase from the late Luis Lancero on September 15, 1964 as per Deed
of Absolute Sale executed in favor of plaintiff and by virtue of which Transfer Certificate of
Title No. 4320 was issued to plaintiff (DELCOR for brevity). Luis Lancero, in turn acquired
the same parcel from Ricardo Gevero on February 5, 1952 per deed of sale executed by
Ricardo Gevero which was duly annotated as entry No. 1128 at the back of Original
Certificate of Title No. 7610 covering the mother lot identified as Lot No. 2476 in the names
of Teodorica Babangha — 1/2 share and her children: Maria; Restituto, Elena, Ricardo,
Eustaquio and Ursula, all surnamed surnamed Gevero, 1/2 undivided share of the whole area
containing 48,122 square meters.
After trial the court a quo on July 18, 1977 rendered judgment, the dispositive portion of
which reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered declaring the plaintiff
corporation as the true and absolute owner of that portion of Lot No. 2476 of the Cagayan
Cadastre, particularly Lot No. 2476-D of the subdivision plan (LRC) Psd-80450, containing
an area of SEVEN THOUSAND EIGHT HUNDRED SEVENTY EIGHT (7,878) square
meters, more or less. The other portions of Lot No. 2476 are hereby adjudicated as follows:
Lot No. 2476 – B – to the heirs of Elena Gevero;

Teodorica Babangha died long before World War II and was survived by her six children Lot No. 2476 – C – to the heirs of Restituto Gevero;
aforementioned. The heirs of Teodorica Babangha on October 17,1966 executed an
Extra-Judicial Settlement and Partition of the estate of Teodorica Babangha, consisting of
two lots, among them was lot 2476. By virtue of the extra-judicial settlement and partition Lot No. 2476 – E – to the defendant spouses Enrique C. Torres and Francisca Aquino;
executed by the said heirs of Teodorica Babangha, Lot 2476-A to Lot 2476-I, inclusive,
under subdivision plan (LRC) Psd-80450 duly approved by the Land Registration
Commission, Lot 2476-D, among others, was adjudicated to Ricardo Gevero who was then
Lot No. 2476 – F – to the defendant spouses Eduard Rumohr and Emilia Merida Rumohf ;
alive at the time of extra-judicial settlement and partition in 1966. Plaintiff (private
respondent herein) filed an action with the CFI (now RTC) of Misamis Oriental to quiet title
and/or annul the partition made by the heirs of Teodorica Babangha insofar as the same
prejudices the land which it acquired a portion of lot 2476. Lot Nos. 2476-H, 2476-I and 2476 — G — to defendant spouses Enrique Abada and Lilia
Alvarez Abada.

Plaintiff now seeks to quiet title and/or annul the partition made by the heirs of Teodorica
Babangha insofar as the same prejudices the land which it acquired, a portion of Lot 2476. No adjudication can be made with respect to Lot No. 2476-A considering that the said lot is
Plaintiff proved that before purchasing Lot 2476-A it first investigated and checked the title the subject of a civil case between the Heirs of Maria Gevero on one hand and the spouses
of Luis Lancero and found the same to be intact in the office of the Register of Deeds of Daniel Borkingkito and Ursula Gevero on the other hand, which case is now pending appeal
Cagayan de Oro City. The same with the subdivision plan (Exh. "B"), the corresponding before the Court of Appeals. No pronouncement as to costs,
technical description (Exh. "P") and the Deed of Sale executed by Ricardo Gevero — all of
which were found to be unquestionable. By reason of all these, plaintiff claims to have
bought the land in good faith and for value, occupying the land since the sale and taking over SO ORDERED. (Decision, Record on Appeal, p. 203; Rollo, pp. 21-22)
from Lancero's possession until May 1969, when the defendants Abadas forcibly entered the
property. (Rollo, p. 23)

From said decision, defendant heirs of Ricardo Gevero (petitioners herein) appealed to the
IAC (now Court of Appeals) which subsequently, on March 20, 1986, affirmed the decision
appealed from.
Petitioners, on March 31, 1986, filed a motion for reconsideration (Rollo, p. 28) but was
denied on April 21, 1986.
Hence, the present petition.
This petition is devoid of merit.
Basically, the issues to be resolved in the instant case are: 1) whether or not the deed of sale
executed by Ricardo Gevero to Luis Lancero is valid; 2) in the affirmative, whether or not
the 1/2 share of interest of Teodorica Babangha in one of the litigated lots, lot no. 2476 under
OCT No. 7610 is included in the deed of sale; and 3) whether or not the private respondents'
action is barred by laches.
Petitioners maintain that the deed of sale is entirely invalid citing alleged flaws thereto, such
as that: 1) the signature of Ricardo was forged without his knowledge of such fact; 2)
Lancero had recognized the fatal defect of the 1952 deed of sale when he signed the
document in 1968 entitled "Settlement to Avoid the Litigation"; 3) Ricardo's children
remained in the property notwithstanding the sale to Lancero; 4) the designated Lot No. is
2470 instead of the correct number being Lot No. 2476; 5) the deed of sale included the
share of Eustaquio Gevero without his authority; 6) T.C.T. No. 1183 of Lancero segregated
the area of 20,119 square meters from the bigger area (OCT No. 7616) without the consent
of the other co-owners; 7) Lancero caused the 1952 Subdivision survey without the consent
of the Geveros' to bring about the segregation of the 20,119 square meters lot from the
mother lot 2476 which brought about the issuance of his title T-1183 and to DELCOR's title
T4320, both of which were illegally issued; and 8) the area sold as per document is 20,649
square meters whereas the segregated area covered by TCT No. T-1183 of Lancero turned
out to be 20,119 square meters (Petitioners Memorandum, pp. 62-78).
36
As to petitioners' claim that the signature of Ricardo in the 1952 deed of sale in favor of
Lancero was forged without Ricardo's knowledge of such fact (Rollo, p. 71) it will be
observed that the deed of sale in question was executed with all the legal formalities of a
public document. The 1952 deed was duly acknowledged by both parties before the notary
public, yet petitioners did not bother to rebut the legal presumption of the regularity of the
notarized document (Dy v. Sacay, 165 SCRA 473 [1988]); Nuguid v. C.A., G.R. No. 77423,
March 13, 1989). In fact it has long been settled that a public document executed and attested
through the intervention of the notary public is evidence of the facts in clear, unequivocal
manner therein expressed. It has the presumption of regularity and to contradict all these,
evidence must be clear, convincing and more than merely preponderant (Rebuleda v. I.A.C.,
155 SCRA 520-521 [1987]). Forgery cannot be presumed, it must be proven (Siasat v. IAC,
No. 67889, October 10, 1985). Likewise, petitioners allegation of absence of consideration of
the deed was not substantiated. Under Art. 1354 of the Civil Code, consideration is presumed
unless the contrary is proven.
As to petitioners' contention that Lancero had recognized the fatal defect of the 1952 deed
when he signed the document in 1968 entitled "Settlement to Avoid Litigation" (Rollo, p. 71),
it is a basic rule of evidence that the right of a party cannot be prejudiced by an act,
declaration, or omission of another (Sec. 28. Rule 130, Rules of Court). This particular rule
is embodied in the maxim "res inter alios acta alteri nocere non debet." Under Section 31,
Rule 130, Rules of Court "where one derives title to property from another, the act,
declaration, or omission of the latter, while holding the title, in relation to the property is
evidence against the former." It is however stressed that the admission of the former owner
of a property must have been made while he was the owner thereof in order that such
admission may be binding upon the present owner (City of Manila v. del Rosario, 5 Phil. 227
[1905]; Medel v. Avecilla, 15 Phil. 465 [1910]). Hence, Lanceros' declaration or acts of
executing the 1968 document have no binding effect on DELCOR, the ownership of the land
having passed to DELCOR in 1964.
Petitioners' claim that they remained in the property, notwithstanding the alleged sale by
Ricardo to Lancero (Rollo, p. 71) involves a question of fact already raised and passed upon
by both the trial and appellate courts. Said the Court of Appeals:
Contrary to the allegations of the appellants, the trial court found that Luis Lancero had taken
possession of the land upon proper investigation by plaintiff the latter learned that it was

indeed Luis Lancero who was the owner and possessor of Lot 2476 D. . . . (Decision, C.A., p.
6).
As a finding of fact, it is binding upon this Court (De Gola-Sison v. Manalo, 8 SCRA 595
[1963]; Gaduco vs. C.A., 14 SCRA 282 [1965]; Ramos v. Pepsi-Cola, 19 SCRA 289 [1967];
Tan v. C.A., 20 SCRA 54 [1967]; Ramirez Tel. Co. v. Bank of America, 33 SCRA 737
[1970]; Lucero v. Loot, 25 SCRA 687 [1968]; Guerrero v. C.A., 142 SCRA 130 [1986]).
Suffice it to say that the other flaws claimed by the petitioners which allegedly invalidated
the 1952 deed of sale have not been raised before the trial court nor before the appellate court.
It is settled jurisprudence that an issue which was neither averred in the complaint nor raised
during the trial in the court below cannot be raised for the first time on appeal as it would be
offensive to the basic rules of fair play, justice and due process. (Matienzo v. Servidad, 107
SCRA 276 [1981]; Dela Santa v. C.A., 140 SCRA 44 [1985]; Dihiansan v. C.A., 157 SCRA
434 [1987]; Anchuelo v. IAC, 147 SCRA 434 [1987]; Dulos Realty and Development
Corporation v. C.A., 157 SCRA [1988]; Kamos v. IAC, G.R. No. 78282, July 5, 1989).
Petitioners aver that the 1/2 share of interest of Teodorica (mother of Ricardo) in Lot 2476
under OCT No. 7610 was not included in the deed of sale as it was intended to limit solely to
Ricardos' proportionate share out of the undivided 1/2 of the area pertaining to the six (6)
brothers and sisters listed in the Title and that the Deed did not include the share of Ricardo,
as inheritance from Teodorica, because the Deed did not recite that she was deceased at the
time it was executed (Rollo, pp. 67-68).
The hereditary share in a decedents' estate is transmitted or vested immediately from the
moment of the death of the "causante" or predecessor in interest (Civil Code of the
Philippines, Art. 777), and there is no legal bar to a successor (with requisite contracting
capacity) disposing of his hereditary share immediately after such death, even if the actual
extent of such share is not determined until the subsequent liquidation of the estate (De Borja
v. Vda. de Borja, 46 SCRA 577 [1972]).
Teodorica Babangha died long before World War II, hence, the rights to the succession were
transmitted from the moment of her death. It is therefore incorrect to state that it was only in
1966, the date of extrajudicial partition, when Ricardo received his share in the lot as
37
inheritance from his mother Teodorica. Thus, when Ricardo sold his share over lot 2476 that
share which he inherited from Teodorica was also included unless expressly excluded in the
deed of sale.
Petitioners contend that Ricardo's share from Teodorica was excluded in the sale considering
that a paragraph of the aforementioned deed refers merely to the shares of Ricardo and
Eustaquio (Rollo, p. 67-68).
It is well settled that laws and contracts shall be so construed as to harmonize and give effect
to the different provisions thereof (Reparations Commission v. Northern Lines, Inc., 34
SCRA 203 [1970]), to ascertain the meaning of the provisions of a contract, its entirety must
be taken into account (Ruiz v. Sheriff of Manila, 34 SCRA 83 [1970]). The interpretation
insisted upon by the petitioners, by citing only one paragraph of the deed of sale, would not
only create contradictions but also, render meaningless and set at naught the entire provisions
thereof.
Petitioners claim that DELCOR's action is barred by laches considering that the petitioners
have remained in the actual, open, uninterrupted and adverse possession thereof until at
present (Rollo, p. 17).
An instrument notarized by a notary public as in the case at bar is a public instrument
(Eacnio v. Baens, 5 Phil. 742). The execution of a public instrument is equivalent to the
delivery of the thing (Art. 1498, 1st Par., Civil Code) and is deemed legal delivery. Hence,
its execution was considered a sufficient delivery of the property (Buencamino v. Viceo, 13
Phil. 97; [1906]; Puato v. Mendoza, 64 Phil. 457 [1937]; Vda. de Sarmiento v. Lesaca, 108
Phil. 900 [1960]; Phil. Suburban Development Corp. v. Auditor Gen., 63 SCRA 397 (1975]).
Besides, the property sold is a registered land. It is the act of registration that transfers the
ownership of the land sold. (GSIS v. C.A., G.R. No. 42278, January 20, 1989). If the
property is a registered land, the purchaser in good, faith has a right to rely on the certificate
of title and is under no duty to go behind it to look for flaws (Mallorca v. De Ocampo, No.
L-26852, March 25, 1970; Unchuan v. C.A., 161 SCRA 710 [1988]; Nuguid v. CA-G.R. No.
77427, March 13, 1989).
 38

COURT OF APPEALS, ALADIN SIMUNDAC and MIGUEL OLIVAN, respondents.

Under the established principles of land registration law, the person dealing with registered
land may generally rely on the correctness of its certificate of title and the law will in no way
oblige him to go behind the certificate to determine the condition of the property (Tiongco v.
de la Merced, L-2446, July 25, 1974; Lopez vs. CA., G.R. No. 49739, January 20, 1989; PANGANIBAN, J.:
Davao Grains Inc. vs. IAC, 171 SCRA 612 [1989]). This notwithstanding, DELCOR did
more than that. It did not only rely on the certificate of title. The Court of Appeals found that
it had first investigated and checked the title (T.C.T. No. T-1183) in the name of Luis
Is a contract to sell a real property involved in restate proceedings valid and binding without
Lancero. It likewise inquired into the Subdivision Plan, the corresponding technical
the approval of the probate court?
description and the deed of sale executed by Ricardo Gevero in favor of Luis Lancero and
found everything in order. It even went to the premises and found Luis Lancero to be in
possession of the land to the exclusion of any other person. DELCOR had therefore acted in
good faith in purchasing the land in question. Statement of the Case

Consequently, DELCOR's action is not barred by laches. This is the main question raised in this petition for review before us, assailing the Decision 1
of the Court of Appeals 2 in CA-GR CV No. 41994 promulgated on February 6, 1996 and its
Resolution 3 dated July 19, 1996. The challenged Decision disposed as follows:
The main issues having been disposed of, discussion of the other issues appear unnecessary.

WHEREFORE, premises considered, the order of the lower court dismissing the complaint is
SET ASIDE and judgment is hereby rendered declaring the CONTRACT TO SELL
PREMISES CONSIDERED, the instant petition is hereby DISMISSED and the decision of
executed by appellee in favor of appellants as valid and binding, subject to the result of the
the Court of Appeals is hereby AFFIRMED.
administration proceedings of the testate Estate of Demetrio Carpena.

SO ORDERED.
SO ORDERED. 4

G.R. No. 125835 July 30, 1998

Petitioner's Motion for Reconsideration was denied in the challenged Resolution. 5

NATALIA CARPENA OPULENCIA, petitioner,

The Facts

vs.
The antecedent facts, as succinctly narrated by Respondent Court of Appeals, are:

In a complaint for specific performance filed with the court a quo [herein private respondents]
Aladin Simundac and Miguel Oliven alleged that [herein petitioner] Natalia Carpena
Opulencia executed in their favor a "CONTRACT TO SELL" Lot 2125 of the Sta. Rosa
Estate, consisting of 23,766 square meters located in Sta. Rosa, Laguna at P150.00 per
square meter; that plaintiffs paid a downpayment of P300,000.00 but defendant, despite
demands, failed to comply with her obligations under the contract. [Private respondents]
therefore prayed that [petitioner] be ordered to perform her contractual obligations and to
further pay damages, attorney's fee and litigation expenses.
In her traverse, [petitioner] admitted the execution of the contract in favor of plaintiffs and
receipt of P300,000.00 as downpayment. However, she put forward the following affirmative
defenses: that the property subject of the contract formed part of the Estate of Demetrio
Carpena (petitioner's father), in respect of which a petition for probate was filed with the
Regional Trial Court, Branch 24, Biñan, Laguna; that at the time the contract was executed,
the parties were aware of the pendency of the probate proceeding; that the contract to sell
was not approved by the probate court; that realizing the nullity of the contract [petitioner]
had offered to return the downpayment received from [private respondents], but the latter
refused to accept it; that [private respondents] further failed to provide funds for the tenant
who demanded P150,00.00 in payment of his tenancy rights on the land; that [petitioner] had
chosen to rescind the contract.
At the pre-trial conference the parties stipulated on [sic] the following facts:
1. That on February 3, 1989, [private respondents] and [petitioner] entered into a contract
to sell involving a parcel of land situated in Sta. Rosa, Laguna, otherwise known as Lot No.
2125 of the Sta. Rosa Estate.
2. That the price or consideration of the said sell [sic] is P150.00 per square meters;
3. That the amount of P300,000.00 had already been received by [petitioner];
39
4. That the parties have knowledge that the property subject of the contract to sell is
subject of the probate proceedings;
5. That [as] of this time, the probate Court has not yet issued an order either approving or
denying the said sale. (p. 3, appealed Order of September 15, 1992, pp. 109-112, record).
[Private respondents] submitted their evidence in support of the material allegations of the
complaint. In addition to testimonies of witnesses, [private respondents] presented the
following documentary evidences: (1) Contract to Sell (Exh A); (2) machine copy of the last
will and testament of Demetrio Carpena (defendant's father) to show that the property sold
by defendant was one of those devised to her in said will (Exh B); (3) receipts signed by
defendant for the downpayment in the total amount of P300,000.00 (Exhs C, D & E); and (4)
demand letters sent to defendant (Exhs F & G).
It appears that [petitioner], instead of submitting her evidence, filed a Demurrer to Evidence.
In essence, defendant maintained that the contract to sell was null and void for want of
approval by the probate court. She further argued that the contract was subject to a
suspensive condition, which was the probate of the will of defendant's father Demetrio
Carpena. An Opposition was filed by [private respondents]. It appears further that in an
Order dated December 15, 1992 the court a quo granted the demurrer to evidence and
dismissed the complaint. It justified its action in dismissing the complaint in the following
manner:
It is noteworthy that when the contract to sell was consummated, no petition was filed in the
Court with notice to the heirs of the time and place of hearing, to show that the sale is
necessary and beneficial. A sale of properties of an estate as beneficial to the interested
parties must comply with the requisites provided by law, (Sec. 7, Rule 89, Rules of Court)
which are mandatory, and without them, the authority to sell, the sale itself, and the order
approving it, would be null and void ab initio. (Arcilla vs. David, 77 Phil. 718, Gabriel, et al.,
vs. Encarnacion, et al., L-6736, May 4, 1954; Bonaga vs. Soler, 2 Phil. 755) Besides, it is
axiomatic that where the estate of a deceased person is already the subject of a testate or
intestate proceeding, the administrator cannot enter into any transaction involving it without
prior approval of the probate Court. (Estate of Obave, vs. Reyes, 123 SCRA 767).

As held by the Supreme Court, a decedent's representative (administrator) is not estopped
from questioning the validity of his own void deed purporting to convey land. (Bona vs.
Soler, 2 Phil, 755). In the case at bar, the [petitioner,] realizing the illegality of the
transaction[,] has interposed the nullity of the contract as her defense, there being no
approval from the probate Court, and, in good faith offers to return the money she received
from the [private respondents]. Certainly, the administratrix is not estop[ped] from doing so
and the action to declare the inexistence of contracts do not prescribe. This is what
precipitated the filing of [petitioner's] demurrer to evidence. 6
The trial court's order of dismissal was elevated to the Court of Appeals by private
respondents who alleged:
1. The lower court erred in concluding that the contract to sell is null and void, there being
no approval of the probate court.
2. The lower court erred in concluding that [petitioner] in good faith offers to return the
money to [private respondents].
3. The lower court erred in concluding that [petitioner] is not under estoppel to question
the validity of the contract to sell.
4. The lower court erred in not ruling on the consideration of the contract to sell which is
tantamount to plain unjust enrichment of [petitioner] at the expense of [private respondents].
7
Public Respondent's Ruling
Declaring the Contract to Sell valid, subject to the outcome of the testate proceedings on
Demetrio Carpena's estate, the appellate court set aside the trial court's dismissal of the
complaint and correctly ruled as follows:
40
It is apparent from the appealed order that the lower court treated the contract to sell
executed by appellee as one made by the administratrix of the Estate of Demetrio Carpena
for the benefit of the estate. Hence, its main reason for voiding the contract in question was
the absence of the probate court's approval. Presumably, what the lower court had in mind
was the sale of the estate or part thereof made by the administrator for the benefit of the
estate, as authorized under Rule 89 of the Revised Rules of Court, which requires the
approval of the probate court upon application therefor with notice to the heirs, devisees and
legatees.
However, as adverted to by appellants in their brief, the contract to sell in question is not
covered by Rule 89 of the Revised Rules of Court since it was made by appellee in her
capacity as an heir, of a property that was devised to her under the will sought to be probated.
Thus, while the document inadvertently stated that appellee executed the contract in her
capacity as "executrix and administratrix" of the estate, a cursory reading of the entire text of
the contract would unerringly show that what she undertook to sell to appellants was one of
the "other properties given to her by her late father," and more importantly, it was not made
for the benefit of the estate but for her own needs. To illustrate this point, it is apropos to
refer to the preambular or preliminary portion of the document, which reads:
WHEREAS, the SELLER is the lawful owner of a certain parcel of land, which is more
particularly described as follows:
xxx xxx xxx
xxx xxx xxx
xxx xxx xxx
WHEREAS, the SELLER suffers difficulties in her living and has forced to offer the sale of
the above-described property, "which property was only one among the other properties

given to her by her late father," to anyone who can wait for complete clearance of the court
on the Last Will Testament of her father.
WHEREAS, the SELLER in order to meet her need of cash, has offered for sale the said
property at ONE HUNDRED FIFTY PESOS (150.00) Philippine Currency, per square meter
unto the BUYERS, and with this offer, the latter has accepted to buy and/or purchase the
same, less the area for the road and other easements indicated at the back of Transfer
Certificate of Title No. 2125 duly confirmed after the survey to be conducted by the
BUYER's Licensed Geodetic Engineer, and whatever area [is] left. (Emphasis added).
To emphasize, it is evident from the foregoing clauses of the contract that appellee sold Lot
2125 not in her capacity as executrix of the will or administratrix of the estate of her father,
but as an heir and more importantly as owner of said lot which, along with other properties,
was devised to her under the will sought to be probated. That being so, the requisites
stipulated in Rule 89 of the Revised Rules of Court which refer to a sale made by the
administrator for the benefit of the estate do not apply.
xxx xxx xxx
It is noteworthy that in a Manifestation filed with this court by appellants, which is not
controverted by appellee, it is mentioned that the last will and testament of Demetrio
Carpena was approved in a final judgment rendered in Special Proceeding No. B-979 by the
Regional Trial Court, Branch 24 Biñan, Laguna. But of course such approval does not
terminate the proceeding[s] since the settlement of the estate will ensue. Such proceedings
will consist, among others, in the issuance by the court of a notice to creditors (Rule 86),
hearing of money claims and payment of taxes and estate debts (Rule 88) and distribution of
the residue to the heirs or persons entitled thereto (Rule 90). In effect, the final execution of
the deed of sale itself upon appellants' payment of the balance of the purchase price will have
to wait for the settlement or termination of the administration proceedings of the Estate of
Demetrio Carpena. Under the foregoing premises, what the trial court should have done with
the complaint was not to dismiss it but to simply put on hold further proceedings until such
time that the estate or its residue will be distributed in accordance with the approved will.
41
The rule is that when a demurrer to the evidence is granted by the trial court but reversed on
appeal, defendant loses the right to adduce his evidence. In such a case, the appellate court
will decide the controversy on the basis of plaintiff's evidence. In the case at bench, while we
find the contract to sell valid and binding between the parties, we cannot as yet order
appellee to perform her obligations under the contract because the result of the
administration proceedings of the testate Estate of Demetrio Carpena has to be awaited.
Hence, we shall confine our adjudication to merely declaring the validity of the questioned
Contract to Sell.
Hence, this appeal. 8
The Issue
Petitioner raises only one issue:
Whether or not the Contract to Sell dated 03 February 1989 executed by the [p]etitioner and
[p]rivate [r]espondent[s] without the requisite probate court approval is valid.
The Court's Ruling
The petition has no merit.
Contract to Sell Valid
In a nutshell, petitioner contends that "where the estate of the deceased person is already the
subject of a testate or intestate proceeding, the administrator cannot enter into any transaction
involving it without prior approval of the Probate Court." 9 She maintains that the Contract
to Sell is void because it was not approved by the probate court, as required by Section 7,
Rule 89 of the Rules of Court:

Sec. 7. Regulations for granting authority to sell, mortgage, or otherwise encumber estate.
— The court having jurisdiction of the estate of the deceased may authorize the executor or
administrator to sell, mortgage, or otherwise encumber real estate, in cases provided by these
rules and when it appears necessary or beneficial, under the following regulations:
xxx xxx xxx
Insisting that the above rule should apply to this case, petitioner argues that the stipulations
in the Contract to Sell require her to act in her capacity as an executrix or administratrix. She
avers that her obligation to eject tenants pertains to the administratrix or executrix, the estate
being the landlord of the said tenants. 10 Likewise demonstrating that she entered into the
contract in her capacity as executor is the stipulation that she must effect the conversion of
subject land from irrigated rice land to residential land and secure the necessary clearances
from government offices. Petitioner alleges that these obligations can be undertaken only by
an executor or administrator of an estate, and not by an heir. 11
The Court is not persuaded. As correctly ruled by the Court of Appeals, Section 7 of Rule 89
of the Rules of Court is not applicable, because petitioner entered into the Contract to Sell in
her capacity as an heiress, not as an executrix or administratrix of the estate. In the contract,
she represented herself as the "lawful owner" and seller of the subject parcel of land. 12 She
also explained the reason for the sale to be "difficulties in her living" conditions and
consequent "need of cash." 13 These representations clearly evince that she was not acting
on behalf of the estate under probate when she entered into the Contract to Sell. Accordingly,
the jurisprudence cited by petitioners has no application to the instant case.
We emphasize that hereditary rights are vested in the heir or heirs from the moment of the
decedent's death. 14 Petitioner, therefore, became the owner of her hereditary share the
moment her father died. Thus, the lack of judicial approval does not invalidate the Contract
to Sell, because the petitioner has the substantive right to sell the whole or a part of her share
in the estate of her late father. 15 Thus, in Jakosalem vs. Rafols, 16 the Court resolved an
identical issue under the old Civil Code and held:
42
Art. 440 of the Civil Code provides that "the possession of hereditary property is deemed to
be transmitted to the heir without interruption from the instant of the death of the decedent,
in case the inheritance be accepted." And Manresa with reason states that upon the death of a
person, each of his heirs "becomes the undivided owner of the whole estate left with respect
to the part or portion which might be adjudicated to him, a community of ownership being
thus formed among the coowners of the estate while it remains undivided." . . . And
according to article 399 of the Civil Code, every part owner may assign or mortgage his part
in the common property, and the effect of such assignment or mortgage shall be limited to
the portion which may be allotted him in the partition upon the dissolution of the community.
Hence, where some of the heirs, without the concurrence of the others, sold a property left by
their deceased father, this Court, speaking thru its then Chief Justice Cayetano Arellano, said
that the sale was valid, but that the effect thereof was limited to the share which may be
allotted to the vendors upon the partition of the estate.
Administration of the Estate Not
Prejudiced by the Contract to Sell
Petitioner further contends that "[t]o sanction the sale at this stage would bring about a partial
distribution of the decedent's estate pending the final termination of the testate proceedings."
17 This becomes all the more significant in the light of the trial court's finding, as stated in its
Order dated August 20, 1997, that "the legitimate of one of the heirs has been impaired." 18
Petitioner's contention is not convincing. The Contract to Sell stipulates that petitioner's offer
to sell is contingent on the "complete clearance of the court on the Last Will Testament of
her father." 19 Consequently, although the Contract to Sell was perfected between the
petitioner and private respondents during the pendency of the probate proceedings, the
consummation of the sale or the transfer of ownership over the parcel of land to the private
respondents is subject to the full payment of the purchase price and to the termination and
outcome of the testate proceedings. Therefore, there is no basis for petitioner's apprehension
that the Contract to Sell may result in a premature partition and distribution of the properties
of the estate. Indeed, it is settled that "the sale made by an heir of his share in an inheritance,
subject to the pending administration, in no wise stands in the way of such administration."
20
 43

Estoppel

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

WHEREFORE, the petition is hereby DENIED and the assailed Decision of the Court of
Appeals AFFIRMED. Costs against petitioner.

SO ORDERED.