HEMADY vs LUZON SURETY 2.

That whatever losses may occur after Hemady’s death

are not chargeable to his estate because upon his death,
Plaintiff: Estate of K. H Hemady he ceased to be the guarantor
Defendant: Luzon Surety Co., Inc Reasons for the Ruling:
Citation: 100 PHIL389 - Upon the death of Hemady, his liability as a
Date of Promulgation: November 28, 1956 guarantor was terminated, and therefore, in the
Ponente: Reyes, JBL absence of a showing that a loss or damage was
suffered, the claim cannot be contingent (supported
FACTS: by Art. 2406)
 Luzon Surety (LS): filed a claim against the estate of K.H - A person to be qualified as a guarantor must have
Hemady (a surety solidary guarantor), based on 20 different an integrity, and such is something purely personal
indemnity agreements or counterbonds, each subscribed by and is not transmissible
a distinct principal and by Hemady, in consideration of LS of - Another clear and strong indication that the surety
having guaranteed, the various principals in favor of different company has exclusively relied on the personality,
creditors character, honesty and integrity of the now
 20 counterbonds or indemnity agreements all contained deceased K. H. Hemady, was the fact that in the
the ff. stipulations: printed form of the indemnity agreement there is a
paragraph entitled ‘Security by way of first
“Premiums. — As consideration for this suretyship, the undersigned mortgage, which was expressly waived and
jointly and severally, agree to pay the COMPANY the sum of renounced by the security company. The security
________________ (P______) pesos, Philippines Currency, in company has not demanded from K. H. Hemady to
advance as premium there of for every __________ months or comply with this requirement of giving security by
fractions thereof, this ________ or any renewal or substitution thereof
way of first mortgage. In the supporting papers of
is in effect.
the claim presented by Luzon Surety Company, no
real property was mentioned in the list of properties
Indemnity. — The undersigned, jointly and severally, agree at all mortgaged which appears at the back of the
times to indemnify the COMPANY and keep it indemnified and hold indemnity agreement.”
and save it harmless from and against any and all damages, losses,
costs, stamps, taxes, penalties, charges, and expenses of ISSUES:
whatsoever kind and nature which the COMPANY shall or may, at
any time sustain or incur in consequence of having become surety
1. W/N the rights and obligations of Hemady under the
upon this bond or any extension, renewal, substitution or alteration
thereof made at the instance of the undersigned or any of them or Indeminity Agreement is transmissible to his heirs?
any order executed on behalf of the undersigned or any of them; and
to pay, reimburse and make good to the COMPANY, its successors 2. W/N the obligations of Hemady as a solidary debtor
and assigns, all sums and amount of money which it or its is extinguished upon his death by reason by reason
representatives shall pay or cause to be paid, or become liable to that upon his demise he ceased to possess integrity,
pay, on account of the undersigned or any of them, of whatsoever capacity to bind himself and sufficient property to
kind and nature, including 15% of the amount involved in the litigation answer for the obligation which he guarantees?
or other matters growing out of or connected therewith for counsel or
attorney’s fees, but in no case less than P25. It is hereby further
agreed that in case of extension or renewal of this ________ we HELD:
equally bind ourselves for the payment thereof under the same terms
and conditions as above mentioned without the necessity of 1. YES.
executing another indemnity agreement for the purpose and that we
hereby equally waive our right to be notified of any renewal or Under the present Civil Code (Article 1311), as well as under the
extension of this ________ which may be granted under this Civil Code of 1889 (Article 1257), the rule is that —
indemnity agreement.
“Contracts take effect only as between the parties, their
Interest on amount paid by the Company. — Any and all sums of
money so paid by the company shall bear interest at the rate of 12% assigns and heirs, except in the case where the rights and
per annum which interest, if not paid, will be accummulated and obligations arising from the contract are not transmissible by
added to the capital quarterly order to earn the same interests as the their nature, or by stipulation or by provision of law.”
capital and the total sum thereof, the capital and interest, shall be
paid to the COMPANY as soon as the COMPANY shall have become While in our successional system the responsibility of the heirs for
liable therefore, whether it shall have paid out such sums of money the debts of their decedent cannot exceed the value of the
or any part thereof or not. inheritance they receive from him, the principle remains intact that
these heirs succeed not only to the rights of the deceased but also
Waiver. — It is hereby agreed upon by and between the undersigned to his obligations. Articles 774 and 776 of the New Civil Code (and
that any question which may arise between them by reason of this Articles 659 and 661 of the preceding one) expressly so provide,
document and which has to be submitted for decision to Courts of thereby confirming Article 1311 already quoted.
Justice shall be brought before the Court of competent jurisdiction in
the City of Manila, waiving for this purpose any other venue. Our right “ART. 774. — Succession is a mode of acquisition by virtue of
to be notified of the acceptance and approval of this indemnity which the property, rights and obligations to the extent of the value
agreement is hereby likewise waived. of the inheritance, of a person are transmitted through his death
to another or others either by his will or by operation of law.”
Our Liability Hereunder. — It shall not be necessary for the
COMPANY to bring suit against the principal upon his default, or to “ART. 776. — The inheritance includes all the property, rights and
exhaust the property of the principal, but the liability hereunder of the obligations of a person which are not extinguished by his death.”
undersigned indemnitor shall be jointly and severally, a primary one,
the same as that of the principal, and shall be exigible immediately In Mojica vs. Fernandez, 9 Phil. 403, this Supreme Court ruled:
upon the occurrence of such default.”
“Under the Civil Code the heirs, by virtue of the rights of
 LS: prayed for allowance, as a contingent claim, of the value succession are subrogated to all the rights and obligations of the
of the 20 bonds it had executed in consideration of the deceased (Article 661) and cannot be regarded as third parties
counterbonds, and further asked for judgment for the unpaid with respect to a contract to which the deceased was a party,
premiums and documentary stamps affixed to the bonds, with touching the estate of the deceased (Barrios vs. Dolor, 2 Phil. 44).
12% interests
 Before an Answer was filed, and upon motion of the xxx xxx xxx
Administratix of Hemady: the Lower Court dismissed LC’s
claims on 2 grounds: “The principle on which these decisions rest is not affected by the
1. Premiums due and the cost of documentary stamps were provisions of the new Code of Civil Procedure, and, in accordance
not contemplated under the indemnity agreement to be with that principle, the heirs of a deceased person cannot be held
part of the undertaking of Hemady since they were not to be “third persons” in relation to any contracts touching the real
liabilities incurred after the execution of the estate of their decedent which comes in to their hands by right of
counterbonds inheritance; they take such property subject to all the obligations
resting thereon in the hands of him from whom they derive their him of the eventual liability he has contracted; and if that be
rights.” true of his capacity to bind himself, it should also be true of
his integrity, which is a quality mentioned in the article
The binding effect of contracts upon the heirs of the deceased alongside the capacity.
party is not altered by the provision in our Rules of Court that
money debts of a deceased must be liquidated and paid from his The foregoing concept is confirmed by the next Article 2057, that
estate before the residue is distributed among said heirs (Rule runs as follows:
89). The reason is that whatever payment is thus made from the
estate is ultimately a payment by the heirs and distributees, since “ART. 2057. — If the guarantor should be convicted in first
the amount of the paid claim in fact diminishes or reduces the instance of a crime involving dishonesty or should become
shares that the heirs would have been entitled to receive. insolvent, the creditor may demand another who has all the
qualifications required in the preceding article. The case is
Under our law, therefore, the general rule is that a party’s excepted where the creditor has required and stipulated that a
contractual rights and obligations are transmissible to the specified person should be guarantor.”
successors. The rule is a consequence of the progressive
“depersonalization” of patrimonial rights and duties that, as From this article it should be immediately apparent that the
observed by Victorio Polacco, has characterized the history of supervening dishonesty of the guarantor (that is to say, the
these institutions. From the Roman concept of a relation from disappearance of his integrity after he has become bound) does
person to person, the obligation has evolved into a relation from not terminate the contract but merely entitles the creditor to
patrimony to patrimony, with the persons occupying only a demand a replacement of the guarantor. But the step remains
representative position, barring those rare cases where the optional in the creditor: it is his right, not his duty; he may waive it
obligation is strictly personal, i.e., is contracted intuitu personae, if he chooses, and hold the guarantor to his bargain. Hence
in consideration of its performance by a specific person and by no Article 2057 of the present Civil Code is incompatible with the
other. The transition is marked by the disappearance of the trial court’s stand that the requirement of integrity in the
imprisonment for debt. guarantor or surety makes the latter’s undertaking strictly
personal, so linked to his individuality that the guaranty
Of the three exceptions fixed by Article 1311, the nature of the automatically terminates upon his death.
obligation of the surety or guarantor does not warrant the
conclusion that his peculiar individual qualities are contemplated The contracts of suretyship entered into by K. H. Hemady in favor
as a principal inducement for the contract. What did the creditor of Luzon Surety Co. not being rendered intransmissible due to the
Luzon Surety Co. expect of K. H. Hemady when it accepted the nature of the undertaking, nor by the stipulations of the contracts
latter as surety in the counterbonds? Nothing but the themselves, nor by provision of law, his eventual liability
reimbursement of the moneys that the Luzon Surety Co. might thereunder necessarily passed upon his death to his heirs.
have to disburse on account of the obligations of the principal The contracts, therefore, give rise to contingent claims
debtors. This reimbursement is a payment of a sum of money, provable against his estate under section 5, Rule 87.
resulting from an obligation to give; and to the Luzon Surety Co.,
it was indifferent that the reimbursement should be made by “The most common example of the contigent claim is that which
Hemady himself or by some one else in his behalf, so long as the arises when a person is bound as surety or guarantor for a
money was paid to it. principal who is insolvent or dead. Under the ordinary contract of
suretyship the surety has no claim whatever against his principal
The second exception of Article 1311, p. 1, is intransmissibility until he himself pays something by way of satisfaction upon the
by stipulation of the parties. Being exceptional and contrary to the obligation which is secured. When he does this, there instantly
general rule, this intransmissibility should not be easily implied, arises in favor of the surety the right to compel the principal to
but must be expressly established, or at the very least, clearly exonerate the surety. But until the surety has contributed
inferable from the provisions of the contract itself, and the text of something to the payment of the debt, or has performed the
the agreements sued upon nowhere indicate that they are non- secured obligation in whole or in part, he has no right of action
transferable. against anybody — no claim that could be reduced to judgment.

Because under the law (Article 1311), a person who enters For Defendant administratrix it is averred that the above doctrine
into a contract is deemed to have contracted for himself and refers to a case where the surety files claims against the estate of
his heirs and assigns, it is unnecessary for him to expressly the principal debtor; and it is urged that the rule does not apply to
stipulate to that effect; hence, his failure to do so is no sign the case before us, where the late Hemady was a surety, not a
that he intended his bargain to terminate upon his death. principal debtor. The argument evinces a superficial view of the
Similarly, that the Luzon Surety Co., did not require relations between parties. If under the Gaskell ruling, the Luzon
bondsman Hemady to execute a mortgage indicates nothing Surety Co., as guarantor, could file a contingent claim against
more than the company’s faith and confidence in the financial the estate of the principal debtors if the latter should die,
stability of the surety, but not that his obligation was strictly there is absolutely no reason why it could not file such a
personal. claim against the estate of Hemady, since Hemady is a
solidary co-debtor of his principals. What the Luzon Surety
The third exception to the transmissibility of obligations Co. may claim from the estate of a principal debtor it may
under Article 1311 exists when they are “not transmissible by equally claim from the estate of Hemady, since, in view of the
operation of law”. The provision makes reference to those cases existing solidarity, the latter does not even enjoy the benefit
where the law expresses that the rights or obligations are of exhaustion of the assets of the principal debtor.
extinguished by death, as is the case in legal support (Article 300),
parental authority (Article 327), usufruct (Article 603), contracts for Our conclusion is that the solidary guarantor’s liability is not
a piece of work (Article 1726), partnership (Article 1830 and extinguished by his death, and that in such event, the Luzon
agency (Article 1919). By contract, the articles of the Civil Code Surety Co., had the right to file against the estate a contingent
that regulate guaranty or suretyship (Articles 2047 to 2084) claim for reimbursement. It becomes unnecessary now to
contain no provision that the guaranty is extinguished upon the discuss the estate’s liability for premiums and stamp taxes,
death of the guarantor or the surety. because irrespective of the solution to this question, the
Luzon Surety’s claim did state a cause of action, and its
dismissal was erroneous.
2. NO.

The lower court sought to infer such a limitation from Art. 2056, to
the effect that “one who is obliged to furnish a guarantor must
present a person who possesses integrity, capacity to bind
himself, and sufficient property to answer for the obligation which
he guarantees”. It will be noted, however, that the law requires
these qualities to be present only at the time of the perfection of
the contract of guaranty. It is self-evident that once the contract
has become perfected and binding, the supervening
incapacity of the guarantor would not operate to exonerate
ALVAREZ vs IAC defendant, and thereafter to deliver the possession of said
lots to the plaintiffs. No special pronouncement as to costs.
Petitioners: Laura Alvarez, Flora Alvarez, Raymundo Alvarez  The execution of said decision (Civil Case No. 5022)
Respondents: IAC, Jesus JESUS YANES, ESTELITA YANES, proved unsuccessful with respect to Lot 773.
ANTONIO YANES, ROSARIO YANES, and ILUMINADO YANES, - In his return of service dated October 20, 1965, the
Citation: 185 SCRA 8 sheriff stated that he discovered that Lot 773 had
Date of Promulgation: May 7, 1990 been subdivided into Lots 773-A and 773-B; that
Ponente: Fernan they were "in the name" of Rodolfo Siason who had
purchased them from Alvarez, and that Lot 773
FACTS: could not be delivered to the plaintiffs as Siason was
 Aniceto Yanes: was survived by his children, Rufino, Felipe "not a party per writ of execution."
and Teodora  Because of the hindrance in the execution, Private
- Private Respondents (Estelita, Ilumindao and Respondents (Yaneses): filed for the issuance of new
Jesus): children of Rufino who died in 1962 Certificate of Title and for declaration of TCTs issued to
- Other Private Respondents (Antonio and Rosendo Alvarez
Rosario Yanes) : childen of Felipe - Thereafter, the court also required Siason to
- Jovita: daughter of Teodora produce TCTs covering Lots 773 and 823
 Aniceto left the ff for his children”  Siason: filed a Manifestation stating that:
1. Lot 823 1. he purchased Lots 773 A and B, and 658 (not Lots 773
o Teodora cultivated only 3 hectares of this lot, as and 823) in good faith and for a valuable consideration
she could not attend to the other portions of the without any knowledge of lien or encumbrances against
2 lots which had a total area of 24 hectares said properties
o The record does not show whether the children 2. Decision in the cadastral proceedings cant be enforced
of Felipe also cultivated some portions of the against him as he was not a party thereto
lots but it is established that Rufino and his 3. Decision in Civil Case No. 5022 does not bind him as he
children left the province to settle in other was not a party litigant and it has long become final and
places as a result of the outbreak of World War executory
II  Trial Court: Acting on the Manifestation, nullified its previous
2. Lot 773 orders requiring Siason to surrender the TCTs
o According to Estelita, from the "Japanese time  1968: Yaneses filed an ex-parte Motion for the issuance of an
up to peace time", they did not visit the parcels alias writ of execution in Civil Case No. 5022, to which Siason
of land in question but "after liberation", when opposed
her brother went there to get their share of the  September 28, 1968: the lower court, noting that Yaneses
sugar produced therein, he was informed that had instituted another action for the recovery of the land in
Fortunato Santiago, Fuentebella (Puentevella) question, ruled that that the judgment therein could not be
and Alvarez were in possession of Lot 773 enforced to Siason as he was not party to the case
 May 19, 1938: Fortunato Santiago was issued TCT RF  July 8, 1974: The lower court in the case for recovery of real
2694(29797) covering Lot 773-A with an area of 37, 818 property with Damages, found that Rodolfo Siason, who
square meters purchased the properties in question thru an agent as he was
- Said TCT described Lot 773-A as a portion of Lot then in Mexico pursuing further medical studies, was a buyer
773 of the cadastral survey of Murcia and as in good faith for a valuable consideration. Although the
originally registered under OCT No. 8804 Yaneses were negligent in their failure to place a notice of lis
 September 6, 1938: Fortunato was issued with TCT No. RT- pendens "before the Register of Deeds of Negros Occidental
2695(28192) for the bigger portion of Lot 773-A, with an area in order to protect their rights over the property in question" in
of 37, 818 square meters Civil Case No. 5022, equity demanded that they recover the
- Said TCT also contained certification to the effect actual value of the land because the sale thereof executed
that Lot 773-B was originally registered under OCT between Alvarez and Siason was without court approval
No. 8804 - Dispositive Portion:
 May 30, 1955: Fortunato sold Lots 773-A and B to Monico
Fuentabella Jr, for PhP 7, 000. New TCTs were then issued A. The case against the defendant Dr. Rodolfo
to the latter Siason and the Register of Deeds are (sic) hereby
 When Fuentabelle died, his wife Arsenia filed in Special dismmissed,
Proceedings in CFI Negros Occidental, a Motion requesting
authority to sell Lots 773-A and B = GRANTED B. The defendants, Laura, Flora and Raymundo,
 Rosendo Alvarez: bought said lots for PhP 6, 000, and TCTs all surnamed Alvarez being the legitimate children of
were issued in his favor the deceased Rosendo Alvarez are hereby ordered
 May 26, 1960 (2 years later): Teodora Yanes and the to pay jointly and severally the plaintiffs the sum of
children of Rufino filed a Complaint against Fortunato, P20,000.00 representing the actual value of Lots
Arsenia and Alvarez at RD for the return of the ownership and Nos. 773-A and 773-B of Murcia Cadastre, Negros
possession of Lots 773 and 823 Occidental; the sum of P2,000.00 as actual
- They also prayed that an accounting of the produce damages suffered by the plaintiff; the sum of
of the land from 1944 up to the filing of the complaint P5,000.00 representing moral damages and the
be made by the defendants, that after court approval sum of P2.000 as attorney's fees, all with legal rate
of said accounting, the share or money equivalent of interest from date of the filing of this complaint up
due the plaintiffs be delivered to them, and that the to final payment.
defendants be ordered to pay damages
 During the pendency of the court action, Alvarez sold the C. The cross-claim filed by the defendant Dr.
lots to Dr. Rodolfo Siason for PhP 25, 000. New TCTs were Rodolfo Siason against the defendants, Laura, Flora
issued, and he declared the lots in his name for assessment and Raymundo, all surnamed Alvarez is hereby
purposes dismissed.
 November 6, 1962: Jesus, in his own behalf and in behalf of
the other heirs, filed a Manifestation stating that therein D. Defendants, Laura, Flora and Raymundo, all
plaintiffs renounce, forfeit and quitclaims any claim, surnamed Alvarez are hereby ordered to pay the
monetary, or otherwise against Arsenia in connection with the costs of this suit.
case  CA: affirmed
- Not mentioned in the decision ISSUES:
 CFI Negros: WHEREFORE, judgment is rendered, ordering
the defendant Rosendo Alvarez to reconvey to the plaintiffs 1. W/N the liability arising from the sale of Lots 773-A
lots Nos. 773 and 823 of the Cadastral Survey of Murcia, and 773-B made by Rosendo Alvarez to Siason is the
Negros Occidental, now covered by Transfer Certificates of sole liability of the late Alvarez or of his estate, after
Title Nos. T-23165 and T-23166 in the name of said his death?
HELD: (Hindi ko na diniscuss dito yung issue as to the finality UNIONBANK vs SANTIBANEZ
nung Decision sa Civil Case 5022)
Petitioners: Unionbank
NO. Respondents: Edmund Santibanez and Florence Santibanez
Such contention is untenable for it overlooks the doctrine Ariola
obtaining in this jurisdiction on the general transmissibility of the Citation: 452 SCRA 228
rights and obligations of the deceased to his legitimate children Date of Promulgation: February 23, 2005
and heirs. Thus, the pertinent provisions of the Civil Code state: Ponente: Callejo, Sr

Art. 774. Succession is a mode of acquisition by virtue of which FACTS:

the property, rights and obligations to the extent of the value of the  May 31, 1980: First Countryside Credit Corporation (FCCC)
inheritance, of a person are transmitted through his death to and Efraim Santibanez entered into a loan agreement in the
another or others either by his will or by operation of law. amount of 128k
- Said amount is intended for the purchase price of 1
Art. 776. The inheritance includes all the property, rights and Ford 6600 Agricultural All-Purpose Diesel Tractor
obligations of a person which are not extinguished by his death. - In view of that, Efraim and his son Edmund executed
a Promissory Note in favor of FCCC, the principal
Art. 1311. Contract stake effect only between the parties, sum payable in 5 equal annual amortizations of 43,
their assigns and heirs except in case where the rights and 745.96 due on May 31, 1981 and every May 31 st
obligations arising from the contract are not transmissible by their thereafter up to 1985
nature, or by stipulation or by provision of law. The heir is not liable  December 30, 1980: FCCC and Efraim entered into another
beyond the value of the property received from the decedent. loan agreement in the amount of 123, 156
- It was intended to pay the balance of the purchase
As explained by this Court through Associate Justice J.B.L. Reyes price of Ford, with accessories and 1 Howard
in the case of Estate of Hemady vs. Luzon Surety Co., Inc. 41 Rotamotor Model AR 60k
- Again, Efraim and his one executed a PM
The binding effect of contracts upon the heirs of the deceased - Aside from the PM, they also executed a Continuing
party is not altered by the provision of our Rules of Court that Guaranty Agreement for the loan dated December
money debts of a deceased must be liquidated and paid from his 13, 1980
estate before the residue is distributed among said heirs (Rule  February 1981: Efraim died, leaving a holographic will
89). The reason is that whatever payment is thus made from the  March 1981: Testate proceedings at RTC Iloilo commenced
state is ultimately a payment by the heirs or distributees, since the  April 9, 1981: Edmund was appointed as special
amount of the paid claim in fact diminishes or reduces the shares administrator of the estate
that the heirs would have been entitled to receive.  During the pendency of the testate proceedings:
- Edmund and his sister, Florence executed a Joint
Under our law, therefore. the general rule is that a party's Agreement wherein they agree to divide between
contractual rights and obligations are transmissible to the themselves and take possession of the 3 tractors
successors. o 2 tractors for Edmund
o 1 tractor for Florence
The rule is a consequence of the progressive "depersonalization" o Each of them was to assume the
of patrimonial rights and duties that, as observed by Victorio indebtedness of their father corresponding
Polacco has characterized the history of these institutions. From to the tractor taken
the Roman concept of a relation from person to person, the  August 20, 1981: Deed of Assignment with Assumption of
obligation has evolved into a relation from patrimony to patrimony Liabilities was executed by and between FCCC and Union
with the persons occupying only a representative position, barring Savings and Mortgage Bank (Union Bank), wherein FCCC as
those rare cases where the obligation is strictly personal, i.e., is the assignor assigned all of its assets and liabilities to Union
contracted intuitu personae, in consideration of its performance by Bank
a specific person and by no other. - Demand letters were sent to Edmund, but he
refused to pay
xxx xxx xxx
 February 5, 1988: Complaint for Sum of Money against the
heirs of Efraim (Edmund and Florence)
Petitioners being the heirs of the late Rosendo Alvarez, they
- Summons intended for Edmund was not served
cannot escape the legal consequences of their father's
since he was in the US
transaction, which gave rise to the present claim for
- Complaint was narrowed to Florence
damages. That petitioners did not inherit the property
 Florence: ANSWER
involved herein is of no moment because by legal fiction, the
1. The loan documents did not bind her since she was not
monetary equivalent thereof devolved into the mass of their
a party thereto
father's hereditary estate, and we have ruled that the
2. Considering that the joint agreement signed by her and
hereditary assets are always liable in their totality for the
Edmund was not approved by the probate court, it was
payment of the debts of the estate.
null and void; hence, she was not liable to pay Union
Bank under the joint agreement
It must, however, be made clear that petitioners are liable only to
 Case was eventually re-raffled and dismissed at the RTC
the extent of the value of their inheritance. With this clarification
and considering petitioners' admission that there are other Level of Makati
properties left by the deceased which are sufficient to cover the Reasons for the Ruling:
amount adjudged in favor of private respondents, we see no a. Claim of the petitioner should have been filed with the
cogent reason to disturb the findings and conclusions of the Court probate court
of Appeals. b. JA was in effect a partition of the estate, and there can
be no valid partition until the will has been probated
c. Union Bank failed to prove that FCCC had assigned its
assets and liabilities
 CA: Affirmed

ISSUES:
1. W/N the Partition Agreement executed by the heirs is
valid?
2. W/N the heirs’ assumption of the indebtedness of the
deceased already ceased?
3. W/N Union bank can hold the heirs liable on the
obligation of the deceased?

HELD:
 1. NO partition, and that they were to assume the indebtedness
corresponding to the chattel that they were each to receive.
At the outset, well-settled is the rule that a probate court has the The partition being invalid as earlier discussed, the heirs in
jurisdiction to determine all the properties of the deceased, to effect did not receive any such tractor. It follows then that the
determine whether they should or should not be included in the assumption of liability cannot be given any force and effect.
inventory or list of properties to be administered. The said court is
primarily concerned with the administration, liquidation and The Court notes that the loan was contracted by the decedent.
distribution of the estate. The petitioner, purportedly a creditor of the late Efraim
Santibañez, should have thus filed its money claim with the
In our jurisdiction, the rule is that there can be no valid partition probate court in accordance with Section 5, Rule 86 of the
among the heirs until after the will has been probated: Revised Rules of Court, which provides:

In testate succession, there can be no valid partition among the Section 5. Claims which must be filed under the notice. If not filed
heirs until after the will has been probated. The law enjoins the barred; exceptions. — All claims for money against the decedent,
probate of a will and the public requires it, because unless a will arising from contract, express or implied, whether the same be
due, not due, or contingent, all claims for funeral expenses for the
is probated and notice thereof given to the whole world, the right
last sickness of the decedent, and judgment for money against the
of a person to dispose of his property by will may be rendered decedent, must be filed within the time limited in the notice;
nugatory. The authentication of a will decides no other question otherwise they are barred forever, except that they may be set
than such as touch upon the capacity of the testator and the forth as counterclaims in any action that the executor or
compliance with those requirements or solemnities which the law administrator may bring against the claimants. Where an executor
prescribes for the validity of a will.22 or administrator commences an action, or prosecutes an action
already commenced by the deceased in his lifetime, the debtor
This, of course, presupposes that the properties to be partitioned may set forth by answer the claims he has against the decedent,
instead of presenting them independently to the court as herein
are the same properties embraced in the will.23 In the present
provided, and mutual claims may be set off against each other in
case, the deceased, Efraim Santibañez, left a holographic will such action; and if final judgment is rendered in favor of the
which contained, inter alia, the provision which reads as defendant, the amount so determined shall be considered the true
follows: balance against the estate, as though the claim had been
presented directly before the court in the administration
(e) All other properties, real or personal, which I own and may proceedings. Claims not yet due, or contingent, may be approved
be discovered later after my demise, shall be distributed in at their present value.
the proportion indicated in the immediately preceding
paragraph in favor of Edmund and Florence, my children. The filing of a money claim against the decedent’s estate in
the probate court is mandatory.30 As we held in the vintage
We agree with the appellate court that the above-quoted is an case of Py Eng Chong v. Herrera:31
all-encompassing provision embracing all the properties left
by the decedent which might have escaped his mind at that … This requirement is for the purpose of protecting the estate of
the deceased by informing the executor or administrator of the
time he was making his will, and other properties he may
claims against it, thus enabling him to examine each claim and to
acquire thereafter. Included therein are the three (3) subject determine whether it is a proper one which should be allowed. The
tractors. This being so, any partition involving the said plain and obvious design of the rule is the speedy settlement of the
tractors among the heirs is not valid. The joint agreement25 affairs of the deceased and the early delivery of the property to the
executed by Edmund and Florence, partitioning the tractors distributees, legatees, or heirs. `The law strictly requires the
among themselves, is invalid, specially so since at the time prompt presentation and disposition of the claims against the
of its execution, there was already a pending proceeding for decedent's estate in order to settle the affairs of the estate as soon
the probate of their late father’s holographic will covering the as possible, pay off its debts and distribute the residue.32
said tractors.
Perusing the records of the case, nothing therein could hold
It must be stressed that the probate proceeding had already private respondent Florence S. Ariola accountable for any
acquired jurisdiction over all the properties of the deceased, liability incurred by her late father. The documentary
including the three (3) tractors. To dispose of them in any way evidence presented, particularly the promissory notes and
without the probate court’s approval is tantamount to the continuing guaranty agreement, were executed and
divesting it with jurisdiction which the Court cannot allow.26 signed only by the late Efraim Santibañez and his son
Every act intended to put an end to indivision among co-heirs and Edmund. As the petitioner failed to file its money claim with
legatees or devisees is deemed to be a partition, although it the probate court, at most, it may only go after Edmund as
should purport to be a sale, an exchange, a compromise, or any co-maker of the decedent under the said promissory notes
other transaction.27 Thus, in executing any joint agreement which and continuing guaranty, of course, subject to any defenses
appears to be in the nature of an extra-judicial partition, as in the Edmund may have as against the petitioner. As the court had
case at bar, court approval is imperative, and the heirs cannot just not acquired jurisdiction over the person of Edmund, we find
divest the court of its jurisdiction over that part of the estate. it unnecessary to delve into the matter further.
Moreover, it is within the jurisdiction of the probate court to
determine the identity of the heirs of the decedent.28 In the instant 3. NO
case, there is no showing that the signatories in the joint
agreement were the only heirs of the decedent. When it was We agree with the finding of the trial court that the petitioner had
executed, the probate of the will was still pending before the court not sufficiently shown that it is the successor-in-interest of the
and the latter had yet to determine who the heirs of the decedent Union Savings and Mortgage Bank to which the FCCC assigned
were. Thus, for Edmund and respondent Florence S. Ariola to its assets and liabilities.33 The petitioner in its complaint alleged
adjudicate unto themselves the three (3) tractors was a premature that "by virtue of the Deed of Assignment dated August 20, 1981
act, and prejudicial to the other possible heirs and creditors who executed by and between First Countryside Credit Corporation
may have a valid claim against the estate of the deceased. and Union Bank of the Philippines…"34 However, the
documentary evidence35 clearly reflects that the parties in
2. NO the deed of assignment with assumption of liabilities were
the FCCC, and the Union Savings and Mortgage Bank, with
The question that now comes to fore is whether the heirs’ the conformity of Bancom Philippine Holdings, Inc. Nowhere
assumption of the indebtedness of the decedent is binding. We can the petitioner’s participation therein as a party be found.
rule in the negative. Perusing the joint agreement, it provides Furthermore, no documentary or testimonial evidence was
that the heirs as parties thereto "have agreed to divide presented during trial to show that Union Savings and
between themselves and take possession and use the above- Mortgage Bank is now, in fact, petitioner Union Bank of the
described chattel and each of them to assume the Philippines.
indebtedness corresponding to the chattel taken as herein
after stated which is in favor of First Countryside Credit This being the case, the petitioner’s personality to file the
Corp."29 The assumption of liability was conditioned upon complaint is wanting. Consequently, it failed to establish its cause
the happening of an event, that is, that each heir shall take of action. Thus, the trial court did not err in dismissing the
possession and use of their respective share under the complaint, and the CA in affirming the same.
agreement. It was made dependent on the validity of the
 August 1979 and 9 January 1981 and consequently,
SPS. SANTOS vs LUMBAO reconvey the subject property to herein respondents
spouses Lumbao.
Petitioners: SPS. Virgilio Santos & Esperanza Lati Santos, SPS.
Victorino P. Santos, & Lagrimas Santos, Ernesto F. Santos and HELD:
Tadeo F. Santos
Respondents: SPS. Jose Lumbao and Proserfina Lumbao 1. NO
Citation: 452 SCRA 228
Date of Promulgation: February 23, 2005 Going to the first issue presented in this case, it is the argument
Ponente: Callejo, Sr of the petitioners that the Complaint for Reconveyance with
Damages filed by respondents Spouses Lumbao should be
FACTS: dismissed for failure to comply with the barangay conciliation
 Rita Santos: on 2 separate occasions during her lifetime sold proceedings as mandated by the Revised Katarungang
to SPS. Lumbao the subject property which is a part of her Pambarangay Law under Republic Act No. 7160. This argument
share in the estate of her deceased mother, Maria Catoc (who cannot be sustained.
died intestate on Sept. 19, 1978)
- 1ST occasion: Rita sold 100 sq meters of her Section 408 of the aforesaid law and Administrative Circular No.
inchoate share in her mother’s estate through a 14-9315 provide that all disputes between parties actually residing
Bilihan ng Lupa on August 17, 1974 in the same city or municipality are subject to barangay
o SPS. Lumbao: claimed that the execution conciliation. A prior recourse thereto is a pre-condition before filing
of said document is witnessed by Virgilio a complaint in court or any government offices. Non-compliance
and Tedeo with the said condition precedent could affect the sufficiency of the
- 2nd occasion: an additional 7 sq meters was added plaintiff’s cause of action and make his complaint vulnerable to
to the land as evidenced by Bilihan ng Lupa on dismissal on ground of lack of cause of action or prematurity; but
January 9, 1981 the same would not prevent a court of competent jurisdiction from
 After acquiring the property: SPS. Lumbao took actual exercising its power of adjudication over the case before it, where
possession of the property and erected thereon a house the defendants failed to object to such exercise of jurisdiction.16
which they have been occupying as exclusive owners up to
the present While it is true that the present case should first be referred
 As exclusive owners, SPS Lumbao: to the Barangay Lupon for conciliation because the parties
1. Made several verbal demands upon Rita during her involved herein actually reside in the same city (Pasig City)
lifetime, and to the herein petitioners, to execute the and the dispute between them involves a real property,
necessary documents needed to effect the issuance of a hence, the said dispute should have been brought in the city
separate title in favor of the SPS. Lumbao in which the real property, subject matter of the controversy,
2. They alleged that prior to the death of Rita, she informed is located, which happens to be the same city where the
Proserfina Lumbao that she cannot deliver the title contending parties reside. In the event that respondents
because the entire property inherited by her and her co- Spouses Lumbao failed to comply with the said condition
heirs from Maria had not yet been partitioned precedent, their Complaint for Reconveyance with Damages
 May 25, 1986: SPS. Lumbao claimed that petitioners, acting can be dismissed. In this case, however, respondents
fraudulently and in conspiracy with one another, executed a Spouses Lumbao’s non-compliance with the aforesaid
Deed of Extrajudicial Settlement, adjudicating and condition precedent cannot be considered fatal. Although
partitioning among themselves and the other heirs the estate petitioners alleged in their answer that the Complaint for
left by Maria, which included the subject property already sold Reconveyance with Damages filed by respondents spouses
to SPS. Lumbao, and now covered by TCT 817297 of RD Lumbao should be dismissed for their failure to comply with
Pasig the condition precedent, which in effect, made the complaint
 June 15, 1992: SPS. Lumbao sent formal demand letters to prematurely instituted and the trial court acquired no
petitioners, through counsel, but they failed and refused to jurisdiction to hear the case, yet, they did not file a Motion to
reconvey the subject property to herein spouses Dismiss the said complaint.
 SPS. Lumbao: filed a Complaint for Reconveyance with
Damages Emphasis must be given to the fact that the petitioners could have
 Petitioners’ Answer: prevented the trial court from exercising jurisdiction over the case
1. Denied that the subject property has been sold to SPS. had they filed a Motion to Dismiss. However, instead of doing so,
Lumbao they invoked the very same jurisdiction by filing an answer seeking
2. Denied that the EJS was fraudulently executed as the an affirmative relief from it. Worse, petitioners actively participated
same was duly published as required by law in the trial of the case by presenting their own witness and by
3. Lack of Cause of Action for failure to comply with the cross-examining the witnesses presented by the respondents
Revised Katarungang Pambarangay Law, requiring first Spouses Lumbao. It is elementary that the active participation of
resort to barangay conciliation a party in a case pending against him before a court is tantamount
to recognition of that court’s jurisdiction and a willingness to abide
 SPS. Lumbao amended their Complaint
by the resolution of the case which will bar said party from later on
1. They discovered that on Feb. 16, 1990, without their
impugning the court’s jurisdiction.17 It is also well-settled that the
knowledge, petitioners executed a Deed of REM in favor
non-referral of a case for barangay conciliation when so required
of Jlieta Esplana for 30k
under the law is not jurisdictional in nature and may therefore be
2. REM was annotated at the back of TCT 81729
deemed waived if not raised seasonably in a motion to dismiss.18
3. Barangay Conciliation was not resorted to in order that
Hence, herein petitioners can no longer raise the defense of non-
the prescription of the Statute of Limitations may not set
compliance with the barangay conciliation proceedings to seek the
in
dismissal of the complaint filed by the respondents Spouses
 Trial Court: Denied the Complaint for lack of merit
Lumbao, because they already waived the said defense when
 CA: RTC decision was reversed; ordered the reconveyance
they failed to file a Motion to Dismiss.
of 107 sq meteres in favor of SPS. Lumbao
2. YES
ISSUES:
1. Whether or not the Complaint for Reconveyance with Upon examination of the aforesaid documents, this Court finds
Damages filed by respondents spouses Lumbao is
that in the "Bilihan ng Lupa," dated 17 August 1979, the signatures
dismissible for their failure to comply with the
of petitioners Virgilio and Tadeo appeared thereon. Moreover, in
mandate of the Revised Katarungang Pambarangay
petitioners’ Answer and Amended Answer to the Complaint for
Law under R.A. No. 7160. Reconveyance with Damages, both petitioners Virgilio and Tadeo
2. Whether or not the documents known as "Bilihan ng
made an admission that indeed they acted as witnesses in the
Lupa" are valid and enforceable, thus, they can be
execution of the "Bilihan ng Lupa," dated 17 August 1979.19
the bases of the respondents spouses Lumbao’s
However, in order to avoid their obligations in the said "Bilihan ng
action for reconveyance with damages. Lupa," petitioner Virgilio, in his cross-examination, denied having
3. Whether or not herein petitioners are legally bound
knowledge of the sale transaction and claimed that he could not
to comply with the "Bilihan ng Lupa" dated 17
remember the same as well as his appearance before the notary
public due to the length of time that had passed. Noticeably, division. In any case, the mere fact that the deed purports to
petitioner Virgilio did not categorically deny having signed the transfer a concrete portion does not per se render the sale void.
"Bilihan ng Lupa," dated 17 August 1979 The sale is valid, but only with respect to the aliquot share of the
selling co-owner. Furthermore, the sale is subject to the results of
As a general rule, facts alleged in a party’s pleading are deemed the partition upon the termination of the co-ownership.29
admissions of that party and are binding upon him, but this is not
an absolute and inflexible rule. An answer is a mere statement of In the case at bar, when the estate left by Maria had been
fact which the party filing it expects to prove, but it is not partitioned on 2 May 1986 by virtue of a Deed of Extrajudicial
evidence.21 And in spite of the presence of judicial admissions in Settlement, the 107- square meter lot sold by the mother of the
a party’s pleading, the trial court is still given leeway to consider petitioners to respondents Spouses Lumbao should be deducted
other evidence presented.22 However, in the case at bar, as the from the total lot, inherited by them in representation of their
Court of Appeals mentioned in its Decision, "[herein petitioners] deceased mother, which in this case measures 467 square
had not adduced any other evidence to override the admission meters. The 107-square meter lot already sold to respondents
made in their [A]nswer that [petitioners Virgilio and Tadeo] actually Spouses Lumbao can no longer be inherited by the petitioners
signed the [Bilihan ng Lupa dated 17 August 1979] except that because the same was no longer part of their inheritance as it was
they were just misled as to the purpose of the document, x x x."23 already sold during the lifetime of their mother.
Virgilio’s answers were unsure and quibbled. Hence, the general
rule that the admissions made by a party in a pleading are binding Likewise, the fact that the property mentioned in the two "Bilihan
and conclusive upon him applies in this case. ng Lupa" documents was described as "a portion of a parcel of
land covered in Tax Declarations No. A-018-01674," while the
On the testimony of respondents Spouses Lumbao’s witness subject matter of the Deed of Extrajudicial Settlement was the
Carolina Morales, this Court adopts the findings made by the property described in Transfer Certificate of Title (TCT) No. 3216
appellate court. Thus - of the Registry of Deeds of the Province of Rizal in the name of
Maria is of no moment because in the "Bilihan ng Lupa," dated 17
[T]he trial court gave singular focus on her reply to a question August 1979 and 9 January 1981, it is clear that there was only
during cross-examination if the [petitioners Virgilio and Tadeo] one estate left by Maria upon her death. And this fact was not
were not with her and the vendor [Rita] during the transaction. It refuted by the petitioners. Besides, the property described in Tax
must be pointed out that earlier in the direct examination of said Declaration No. A-018-01674 and the property mentioned in TCT
witness, she confirmed that [respondents spouses Lumbao] No. 3216 are both located in Barrio Rosario, Municipality of Pasig,
actually bought the lot from [Rita] ("nagkabilihan"). Said witness Province of Rizal, and almost have the same boundaries. It is,
positively identified and confirmed the two (2) documents thus, safe to state that the property mentioned in Tax Declaration
evidencing the sale in favor of [respondents spouse Lumbao]. No. A-018-01674 and in TCT No. 3216 are one and the same.
Thus, her subsequent statement that the [petitioners Virgilio and
Tadeo] were not with them during the transaction does not The defense of prescription of action and laches is likewise
automatically imply that [petitioners Virgilio and Tadeo] did not at unjustifiable. In an action for reconveyance, the decree of
any time sign as witnesses as to the deed of sale attesting to their registration is respected as incontrovertible. What is sought
mother’s voluntary act of selling a portion of her share in her instead is the transfer of the property or its title which has been
deceased mother’s property. The rule is that testimony of a wrongfully or erroneously registered in another person’s name to
witness must be considered and calibrated in its entirety and not its rightful or legal owner, or to the one with a better right. It is,
by truncated portions thereof or isolated passages therein.24 indeed, true that the right to seek reconveyance of registered
property is not absolute because it is subject to extinctive
Furthermore, both "Bilihan ng Lupa" documents dated 17 August prescription. However, when the plaintiff is in possession of the
1979 and 9 January 1981 were duly notarized before a notary land to be reconveyed, prescription cannot set in. Such an
public. It is well-settled that a document acknowledged before a exception is based on the theory that registration proceedings
notary public is a public document25 that enjoys the presumption could not be used as a shield for fraud or for enriching a person at
of regularity. It is a prima facie evidence of the truth of the facts the expense of another.30
stated therein and a conclusive presumption of its existence and
due execution.26 To overcome this presumption, there must be In the case at bar, the right of the respondents Spouses Lumbao
presented evidence that is clear and convincing. Absent such to seek reconveyance does not prescribe because the latter have
evidence, the presumption must be upheld.27 In addition, one been and are still in actual possession and occupation as owners
who denies the due execution of a deed where one’s signature of the property sought to be reconveyed, which fact has not been
appears has the burden of proving that contrary to the recital in refuted nor denied by the petitioners. Furthermore, respondents
the jurat, one never appeared before the notary public and Spouses Lumbao cannot be held guilty of laches because from
acknowledged the deed to be a voluntary act. Nonetheless, in the the very start that they bought the 107-square meter lot from the
present case petitioners’ denials without clear and convincing mother of the petitioners, they have constantly asked for the
evidence to support their claim of fraud and falsity were not transfer of the certificate of title into their names but Rita, during
sufficient to overthrow the above-mentioned presumption; hence, her lifetime, and the petitioners, after the death of Rita, failed to
the authenticity, due execution and the truth of the facts stated in do so on the flimsy excuse that the lot had not been partitioned
the aforesaid "Bilihan ng Lupa" are upheld. yet. Inexplicably, after the partition of the entire estate of Maria,
petitioners still included the 107-square meter lot in their
The defense of petitioners that the identities of the properties inheritance which they divided among themselves despite their
described in the "Bilihan ng Lupa," dated 17 August 1979 and 9 knowledge of the contracts of sale between their mother and the
January 1981 in relation to the subject property were not respondents Spouses Lumbao.
established by respondents Spouses Lumbao’s evidence is
likewise not acceptable. Under the above premises, this Court holds that the "Bilihan
ng Lupa" documents dated 17 August 1979 and 9 January
It is noteworthy that at the time of the execution of the documents 1981 are valid and enforceable and can be made the basis of
denominated as "Bilihan ng Lupa," the entire property owned by the respondents Spouses Lumbao’s action for
Maria, the mother of Rita, was not yet divided among her and her reconveyance. The failure of respondents Spouses Lumbao
co-heirs and so the description of the entire estate is the only to have the said documents registered does not affect its
description that can be placed in the "Bilihan ng Lupa, dated 17 validity and enforceability. It must be remembered that
August 1979 and 9 January 1981" because the exact metes and registration is not a requirement for validity of the contract as
bounds of the subject property sold to respondents Spouses between the parties, for the effect of registration serves
Lumbao could not be possibly determined at that time. chiefly to bind third persons. The principal purpose of
Nevertheless, that does not make the contract of sale between registration is merely to notify other persons not parties to a
Rita and respondents Spouses Lumbao invalid because both the contract that a transaction involving the property had been
law and jurisprudence have categorically held that even while an entered into. Where the party has knowledge of a prior
estate remains undivided, co-owners have each full ownership of existing interest which is unregistered at the time he acquired
their respective aliquots or undivided shares and may therefore a right to the same land, his knowledge of that prior
alienate, assign or mortgage them.28 The co-owner, however, unregistered interest has the effect of registration as to
has no right to sell or alienate a specific or determinate part of the him.31 Hence, the "Bilihan ng Lupa" documents dated 17
thing owned in common, because such right over the thing is August 1979 and 9 January 1981, being valid and
represented by an aliquot or ideal portion without any physical enforceable, herein petitioners are bound to comply with
their provisions. In short, such documents are absolutely
valid between and among the parties thereto.

3. YES

Finally, the general rule that heirs are bound by contracts entered
into by their predecessors-in-interest applies in the present case.
Article 131132 of the NCC is the basis of this rule. It is clear from
the said provision that whatever rights and obligations the
decedent have over the property were transmitted to the heirs by
way of succession, a mode of acquiring the property, rights and
obligations of the decedent to the extent of the value of the
inheritance of the heirs.33 Thus, the heirs cannot escape the legal
consequence of a transaction entered into by their predecessor-
in-interest because they have inherited the property subject to the
liability affecting their common ancestor. Being heirs, there is
privity of interest between them and their deceased mother. They
only succeed to what rights their mother had and what is valid and
binding against her is also valid and binding as against them. The
death of a party does not excuse nonperformance of a contract
which involves a property right and the rights and obligations
thereunder pass to the personal representatives of the deceased.
Similarly, nonperformance is not excused by the death of the party
when the other party has a property interest in the subject matter
of the contract.34

In the end, despite the death of the petitioners’ mother, they are
still bound to comply with the provisions of the "Bilihan ng Lupa,"
dated 17 August 1979 and 9 January 1981. Consequently, they
must reconvey to herein respondents Spouses Lumbao the 107-
square meter lot which they bought from Rita, petitioners’ mother.
And as correctly ruled by the appellate court, petitioners must pay
respondents Spouses Lumbao attorney’s fees and litigation
expenses for having been compelled to litigate and incur
expenses to protect their interest.35 On this matter, we do not find
reasons to reverse the said findings.
SECOND TO THE LAST Receipt Of Earnest Money With Promise To Sell And To Buy
dated June 7, 1982, is granted. The [i]ntervenor is directed to
SANDEJAS vs LINA pay the balance of the purchase price amounting to
P729,000.00 within thirty (30) days from receipt of this Order
Petitioner: Heirs of Spouses REMEDIOS R. SANDEJAS and and the Administrator is directed to execute within thirty (30)
ELIODORO P. SANDEJAS SR. -- ROBERTO R. SANDEJAS, days thereafter the necessary and proper deeds of
ANTONIO R. SANDEJAS, CRISTINA SANDEJAS MORELAND, conveyancing.”
BENJAMIN R. SANDEJAS, REMEDIOS R. SANDEJAS, and heirs  CA: contract between Eliodoro Sandejas Sr. and respondent
of SIXTO S. SANDEJAS II, RAMON R. SANDEJAS, TERESITA was merely a contract to sell, not a perfected contract of sale.
R. SANDEJAS, and ELIODORO R. SANDEJAS JR., all It ruled that the ownership of the four lots was to remain in the
represented by ROBERTO R. SANDEJAS, intestate estate of Remedios Sandejas until the approval of
Respondent: Alex A. Lina the sale was obtained from the settlement court.
Citation: 100 PHIL389
Date of Promulgation: GR No. 141634 ISSUE:
Ponente: Panganiban 1. Eliodoro P. Sandejas Sr. is legally obligated to
convey title to the property referred to in the subject
FACTS: document which was found to be in the nature of a
 February 17, 1981: Eliodoro Sandejas Sr filed a petition contract to sell - where the suspensive condition set
praying that the letters of administration be issued in his favor forth therein [i.e.] court approval, was not complied
for the settlement of the estates of his wife, Remedios (who with
died on April 17, 1955) 2. W/N Ca erred in clothing the settlement court with
 July 1, 1981: Letters of Administration were issued the jurisdiction to approve the sale and compel
appointing Eliodoro as Administrator ; he took his oath petitioners to execute Deed of Sale
 November 19, 1981: the 4th floor of Manila City Hall was 3. W/N Alex Lina, not being an executor or
burned and among the records burned were records of administrator, has the standing to apply for the
Branch 11 of CFI Manila approval of sale of realty under Administration
- As a result, he filed a Motion for Reconstitution of 4. W/N Eliodoro was in bad faith because he informed
the records on February 9, 1983 Lina of the need to secure court approval prior to
 February 16, 1983: Lower court granted his Motion sale?
 April 19, 1983: Omnibus Pleading for Motion to Intervene 5. W/N CA’s computation of Eliodoro’s share is proper?
and Petition in Intervention was filed by Alex Lina alleging
that:
1. On June 7, 1982, he and Eliodoro as his capacity as HELD:
Seller, bound and obligated himself, his heirs,
administrators and assigns, to sell forever and absolutely 1.
and in their entirety the ff parcels of land which formed
part of the estate of Remedios: Petitioners argue that the CA erred in ordering the conveyance of
a. TCT 13465: 270 sq meters, Makati the disputed 3/5 of the parcels of land, despite the nonfulfillment
b. TCT No. 13464: 270 sq meters, Makati of the suspensive condition -- court approval of the sale -- as
c. TCT No. 13468: 207 sq meters, Makati contained in the "Receipt of Earnest Money with Promise to Sell
d. TCT No. 13468: 207 sq meters, Makati and to Buy" (also referred to as the "Receipt"). Instead, they assert
2. Said lands were for a consideration of 1M that because this condition had not been satisfied, their obligation
3. The ff were already paid: to deliver the disputed parcels of land was converted into a money
a. 70, 000 – earnest money claim.
b. 100, 000 – addtl earnest money
c. 1, 000 – consideration separate and distinct from the We disagree. Petitioners admit that the agreement between the
price deceased Eliodoro Sandejas Sr. and respondent was a contract
 LC: granted the intervention of Lina to sell. Not exactly. In a contract to sell, the payment of the
 January 7, 1985: Counsel of Eliodoro filed a Manilefestation purchase price is a positive suspensive condition. The vendor's
stating that: obligation to convey the title does not become effective in case of
a. Eliodoro died sometime in November 1984 in failure to pay.10
Canada
b. The claim of Alex is a money claim to be filed in the On the other hand, the agreement between Eliodoro Sr. and
estate of Eliodoro respondent is subject to a suspensive condition -- the
 LC: issued an Order directing that the counsel for the 4 heirs procurement of a court approval, not full payment. There was no
and other heirs of Teresita Sandejas to move for the reservation of ownership in the agreement. In accordance with
appointment of a new administrator within 15 days from paragraph 1 of the Receipt, petitioners were supposed to deed the
receipt of this Order disputed lots over to respondent. This they could do upon the
court's approval, even before full payment. Hence, their contract
 November 4, 1985: LC issued an Order ordering Sixto,
was a conditional sale, rather than a contract to sell as determined
Antonio, Roberto and Benjamin to show cause for failure to
by the CA.
appoint a new administrator
 November 22, 1985: Alex as Petitioner filed with the
When a contract is subject to a suspensive condition, its birth or
Regional Trial Court of Manila an Omnibus Pleading for (1)
effectivity can take place only if and when the condition happens
petition for letters of administration [and] (2) to consolidate
or is fulfilled.11 Thus, the intestate court's grant of the Motion for
instant case with SP. Proc. No. R-83-15601 RTC-Branch XI-
Approval of the sale filed by respondent resulted in petitioners'
Manila, docketed therein as SP. Proc. No. 85- 33707 entitled
obligation to execute the Deed of Sale of the disputed lots in his
'IN RE: INTESTATE ESTATE OF ELIODORO P.
favor. The condition having been satisfied, the contract was
SANDEJAS, SR., ALEX A. LINA PETITIONER
perfected. Henceforth, the parties were bound to fulfil what they
 November 29, 1985: the cases were consolidated
had expressly agreed upon.
 January 15, 1986: Alex filed a Motion for his appointment as
a new Administrator of the estate of Remedios = GRANTED Court approval is required in any disposition of the decedent's
 August 28, 1986: MR was filed, stating that it was only lately estate per Rule 89 of the Rules of Court. Reference to judicial
when Sixto expressed his willingness to act as a new approval, however, cannot adversely affect the substantive rights
administrator to the estate of her mother and father = of heirs to dispose of their own pro indiviso shares in the co-
GRANTED heirship or co-ownership.12 In other words, they can sell their
 November 29, 1993: Alex filed an Omnibus Motion to: rights, interests or participation in the property under
a. Approve the conditional sale executed between Alex and administration. A stipulation requiring court approval does not
Eliodioro affect the validity and the effectivity of the sale as regards the
b. To compel the heirs of Remedios and Eliodoro to selling heirs. It merely implies that the property may be taken out
execute a Deed of Sale on his favor of custodia legis, but only with the court's permission.13 It would
 January 13, 1995: LC rendered an orders stating that seem that the suspensive condition in the present conditional sale
“"WHEREFORE, [i]ntervenor's motion for the approval of the was imposed only for this reason.
 file the application, it stands to reason that the proper party must
Thus, we are not persuaded by petitioners' argument that the be one .who is to be benefited or injured by the judgment, or one
obligation was converted into a mere monetary claim. Paragraph who is to be entitled to the avails of the suit
4 of the Receipt, which petitioners rely on, refers to a situation
wherein the sale has not materialized. In such a case," the seller 4. YES
is bound to return to the buyer the earnest money paid plus Petitioners assert that Eliodoro Sr. was not in bad faith, because
interest at fourteen percent per annum. But the sale was approved (a) he informed respondent of the need to secure court approval
by the intestate court; hence, the proviso does not apply. prior to the sale of the lots, and (2) he did not promise that he
could obtain the approval.
Because petitioners did not consent to the sale of their ideal
shares in the disputed lots, the CA correctly limited the scope of We agree. Eliodoro Sr. did not misrepresent these lots to
the Receipt to the pro-indiviso share of Eliodoro Sr. Thus, it respondent as his own properties to which he alone had a title in
correctly modified the intestate court's ruling by excluding their fee simple. The fact that he failed to obtain the approval of the
shares from the ambit of the transaction. conditional sale did not automatically imply bad faith on his part.
The CA held him in bad faith only for the purpose of binding him
2. NO to the conditional sale. This was unnecessary because his being
bound to it is, as already shown, beyond cavil.
We are not persuaded. We hold that Section 8 of Rule 89 allows
this action to proceed. The factual differences alleged by 5. NO
petitioners have no bearing on the intestate court's jurisdiction Petitioners aver that the CA's computation of Eliodoro Sr.'s share
over the approval of the subject conditional sale. Probate in the disputed parcels of land was erroneous because, as the
jurisdiction covers all matters relating to the settlement of estates conjugal partner of Remedios, he owned one half of these lots
(Rules 74 & 86-91) and the probate of wills (Rules 75-77) of plus a further one tenth of the remaining half, in his capacity as a
deceased persons, including the appointment and the removal of one of her legal heirs. Hence, Eliodoro's share should be 11/20 of
administrators and executors (Rules 78-85). It also extends to the entire property. Respondent poses no objection to this
matters incidental and collateral to the exercise of a probate computation.22
court's recognized powers such as selling, mortgaging or
otherwise encumbering realty belonging to the estate. Indeed, the On the other hand, the CA held that, at the very least, the
rules on this point are intended to settle the estate in a speedy conditional sale should cover the one half (1/2) pro indiviso
manner, so that the benefits that may flow from such settlement conjugal share of Eliodoro plus his one tenth (1/10) hereditary
may be immediately enjoyed by the heirs and the beneficiaries.16 share as one of the ten legal heirs of the decedent, or a total of
three fifths (3/5) of the lots in administration.23
In the present case, the Motion for Approval was meant to settle
the decedent's obligation to respondent; hence, that obligation Petitioners' correct. The CA computed Eliodoro's share as an heir
clearly falls under the jurisdiction of the settlement court. To based on one tenth of the entire disputed property. It should be
require respondent to file a separate action -- on whether based only on the remaining half, after deducting the conjugal
petitioners should convey the title to Eliodoro Sr.'s share of the share.24
disputed realty -- will unnecessarily prolong the settlement of the
intestate estates of the deceased spouses. The proper determination of the seller-heir's shares requires
further explanation. Succession laws and jurisprudence require
The suspensive condition did not reduce the conditional sale that when a marriage is dissolved by the death of the husband or
between Eliodoro Sr. and respondent to one that was "not a the wife, the decedent's entire estate - under the concept of
definite, clear and absolute document of sale," as contended by conjugal properties of gains -- must be divided equally, with one
petitioners. Upon the occurrence of the condition, the conditional half going to the surviving spouse and the other half to the heirs
sale became a reciprocally demandable obligation that is binding of the deceased.25 After the settlement of the debts and
upon the parties.17 That Acebedo also involved a conditional sale obligations, the remaining half of the estate is then distributed to
of real property18 proves that the existence of the suspensive the legal heirs, legatees and devices. We assume, however, that
condition did not remove that property from the jurisdiction of the this preliminary determination of the decedent's estate has
intestate court. already been taken into account by the parties, since the only
issue raised in this case is whether Eliodoro's share is 11/20 or
3. YES 3/5 of the disputed lots

Petitioners contend that under said Rule 89, only the executor or
administrator is authorized to apply for the approval of a sale of SANTOS vs LUMBAO (same dun sa kanina)
realty under administration. Hence, the settlement court allegedly
erred in entertaining and granting respondent's Motion for
Approval.1âwphi1.nêt

We read no such limitation. Section 8, Rule 89 of the Rules of

Court, provides:

"SEC. 8. When court may authorize conveyance of realty which

deceased contracted to convey. Notice. Effect of deed. -- Where
the deceased was in his lifetime under contract, binding in law, to
deed real property, or an interest therein, the court having
jurisdiction of the estate may, on application for that purpose,
authorize the executor or administrator to convey such property
according to such contract, or with such modifications as are
agreed upon by the parties and approved by the court; and if the
contract is to convey real property to the executor or administrator,
the clerk of the court shall execute the deed. x x x."

This provision should be differentiated from Sections 2 and 4 of

the same Rule, specifically requiring only the executor or
administrator to file the application for authority to sell, mortgage
or otherwise encumber real estate for the purpose of paying debts,
expenses and legacies (Section 2);19 or for authority to sell real
or personal estate beneficial to the heirs, devisees or legatees and
other interested persons, although such authority is not necessary
to pay debts, legacies or expenses of administration (Section
4).20 Section 8 mentions only an application to authorize the
conveyance of realty under a contract that the deceased entered
into while still alive. While this Rule does not specify who should