Module1 Cases

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FIRST DIVISION

[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 First Instance of Abra, respondents.

Federico Paredes for petitioners.

Demetrio V. Pre for private respondents.

SYNOPSIS

On March 31, 1975, Fortunata Barcena instituted a civil action to quiet title over certain parcels of land.

About three months later, Fortunata Barcena died and defendants moved to dismiss the complaint.

Counsels for plaintiff asked for substitution by her minor children and her husband, but the court

dismissed the case and refused to reconsider. Hence this petition for review.

The Supreme Court reversed the respondent court, set aside the order of dismissal and the orders

denying the motion for reconsideration, and directed the respondent court to allow the substitution of

the minor children and to appoint a qualified person as guardian ad litem for them.

SYLLABUS

1. CIVIL PROCEDURES; DEATH OF A PARTY; SUBSTITUTION OF PARTIES. While it is true that a 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. Where plaintiff was still alive when the complaint was filed, the Court acquires

jurisdiction over the person. If thereafter she dies, Section 16, Rule 3 of the Rules of Court, prescribes

the procedures whereby a party who dies during the pendency of the proceedings can be substituted;

and where proper substitution of parties had been asked for, it is grave error for the court to dismiss the

complaint on the ground that a dead person has no legal personality to sue.

2. CIVIL LAW; SUCCESSION; RIGHTS TO SUCCESSION TRANSMITTED FROM THE MOMENT OF

DEATH OF 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 right thereto except by the methods provided for by law. The moment of death is the

determining factor where the heirs acquire a definite right to the inheritance whether such right to bepure or contingent. 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.

3. ID.; ID.; ID.; HEIRS BECOME PARTIES IN INTEREST. The death of the plaintiff during the

pendency of an action to quiet title of a parcel of land did not extinguish her claim or right to the parcels

of land in litigation but was transmitted to her heirs upon her death. Her heirs have thus acquired


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interest in the properties in litigation and became parties in interest in the case. There is therefore, no

reason for the Court not to follow their substitution as parties in interest for the deceased plaintiff.

4. CIVIL PROCEDURE; ACTIONS; SURVIVAL OF ACTIONS. The question as to whether an action

survives or not defends on the nature of the action and the damaged sued for. In causes of action which

survive the wrong complained, of affects primarily and principally property and property rights, theinjuries 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.

5. ID.; ID.; ID.; ACTION TO QUIET TITLE. An action to quiet title over a parcel of land affects

primarily and principally property and property rights and therefore, is one that survives even after

plaintiff's death. It is therefore, the duty of the trial. Court to order the legal representative of the

deceased plaintiff to appear and to be substituted for said deceased, pursuant to Section 17, Rule 3 of

the Rules of Court.

6. ID.; ID.; ID.; REFUSAL OF COURT TO ALLOW SUBSTITUTION ON THE GROUND THAT THE HEIRS

WERE STILL MINORS IS A GRAVE ERROR. Where, upon the death of the plaintiff in an action to quiet

title, counsel has not only asked that the minor children be substituted for her but also suggested that

the uncle be appointed as guardian ad litem for them because their father is busy earning a living for the

family; it is grave error for the respondent court to refuse the request for substitution on the ground

that the children were still minors and cannot sue, because it ought to know that Section 17, Rule 3 of

the Rules of Court, directs the Court to appoint a guardian ad litem for the minor.

D E C I S I O N

MARTIN, J p:

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. cdll

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


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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. LLjur

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 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 CaseNo. 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 forthe 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 to allow their substitution as parties in interest for the deceased plaintiff.


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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 dismissing the complaint of the plaintiff in Civil Case No. 856

and refusing the substitution of parties in the case. prLL

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.

SO ORDERED."

Teehankee (Chairman), Makasiar, Esguerra and Muoz Palma, JJ., concur.


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and heirs, respectively, there is no sound and cogent reason for denying the application of the same

fiction to his citizenship, and for not considering it as likewise extended for the purposes of the aforesaid

unfinished proceeding before the Public Service Commission. The outcome of said proceeding, if

successful, would in the end inure to the benefit of the same creditors, and the heirs. Even in that event

petitioner could not allege any prejudice in the legal sense, any more than he could have done if F. had

lived longer and obtained the desired certificate. The fiction of such extension of his citizenship is

grounded upon the same principle, and motivated by the same reason, as the fiction of the extension of

his personality. The fiction is made necessary to avoid the injustice of subjecting his estate, creditors and

heirs, solely by reason of his death, to the loss of the investment amounting to P35,000, which he

already made in the ice plant, not counting the other expenses occasioned by the instant proceeding,

from the Public Service Commission to this court.

D E C I S I O N

HILADO, J p:

Under date of May 21, 1946, the Public Service Commission, through Deputy Commissioner Fidel Ibaez,

rendered its decision in case No. 4572 of Pedro O. Fragante, as applicant for a certificate of public

convenience to install, maintain and operate an ice plant in San Juan, Rizal, whereby said commission

held that the evidence therein showed that the public interest and convenience will be promoted in a

proper and suitable manner "by authorizing the operation and maintenance of another ice plant of two

and one-half (2-1/2) tons in the municipality of San Juan; that the original applicant Pedro 0. Fragante

was a Filipino citizen at the time of his death; and that his intestate estate is financially capable of

maintaining the proposed service". The commission, therefore, overruled the opposition filed in the

case and ordered "that under the provisions of section 15 of Commonwealth Act No. 146, as amended, a

certificate of public convenience be issued to the Intestate Estate of the deceased Pedro Fragante,

authorizing said Intestate Estate through its Special or Judicial Administrator, appointed by the proper

court of competent jurisdiction, to maintain and operate an ice plant with a daily productive capacity of

two and one half tons (2-1/2) in the Municipality of San Juan and to sell the ice produced from said plant

in the said Municipality of San Juan and in the Municipality of Mandaluyong, Rizal, and in Quezon City",

subject to the conditions therein set forth in detail (petitioner's brief, pp. 33-34).

Petitioner makes four assignments of error in his brief as follows:

"1. The decision of the Public Service Commission is not in accordance with law.

"2. The decision of the Public Service Commission is not reasonably supported by evidence.

"3. The Public Service Commission erred in not giving petitioner and the Ice and Cold Storage

Industries of the Philippines, Inc., as existing operators, a reasonable opportunity to meet the increased

demand.

"4. The decision of the Public Service Commission is an unwarranted departure from its announced

policy with respect to the establishment and operation of ice plant." (Pp. 1-2, petitioner's brief.)


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In his argument petitioner contends that it was error on the part of the commission to allow the

substitution of the legal representative of the estate of Pedro O. Fragante for the latter as party

applicant in the case then pending before the commission, and in subsequently granting to said estate

the certificate applied for, which is said to be in contravention of law.

If Pedro O. Fragante had not died, there can be no question that he would have had the right toprosecute his application before the commission to its final conclusion. No one would have denied him

that right. As declared by the commission in its decision, he had invested in the ice plant in question

P35,000, and from what the commission said regarding his other properties and business, he would

certainly have been financially able to maintain and operate said plant had he not died. His

transportation business alone was netting him about P1,440 monthly. He was a Filipino citizen and

continued to be such till his demise. The commission declared in its decision, in view of the evidence

before it, that his estate was financially able to maintain and operate the ice plant. The aforesaid right of

Pedro O. Fragante to prosecute said application to its final conclusion was one which by its nature did

not lapse through his death. Hence, it constitutes a part of the assets of his estate, for such a right was

property despite the possibility that in the end the commission might have denied the application,although under the facts of the case, the commission granted the application in view of the financial

ability of the estate to maintain and operate the ice plant. Petitioner, in his memorandum of March 19,

1947, admits (page 3) that a certificate of public convenience once granted "as a rule, should descend to

his estate as an asset". Such certificate would certainly be property, and the right to acquire such a

certificate, by complying with the requisites of the law, belonged to the decedent in his lifetime, and

survived to his estate and judicial administrator after his death.

If Pedro O. Fragante had in his lifetime secured an option to buy a piece of land and during the life of the

option he died, if the option had been given him in the ordinary course of business and not out of

special consideration for his person, there would be no doubt that said option and the right to exerciseit would have survived to his estate and legal representatives. In such a case there would also be the

possibility of failure to acquire the property should he or his estate or legal representative fail to comply

with the conditions of the option. In the case at bar Pedro O. Fragante's undoubted right to apply for

and acquire the desired certificate of public convenience the evidence established that the public

needed the ice plant was under the law conditioned only upon the requisite citizenship and economic

ability to maintain and operate the service. Of course, such right to acquire or obtain such certificate of

public convenience was subject to failure to secure its objective through nonfulfillment of the legal

conditions, but the situation here is no different from the legal standpoint from that of the option in the

illustration just given.

Rule 88, section 2, provides that the executor or administrator may bring or defend actions, among

other cases, for the protection of the property or rights of the deceased which survive, and it says that

such actions may be brought or defended "in the right of the deceased".

Rule 82, section 1, paragraph (a), mentions among the duties of the executor or administrator, the

making of an inventory of all goods, chattels, rights, credits, and estate of the deceased which shall

come to his possession or knowledge, or to the possession of any other person for him.


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In his commentaries on the Rules of Court (Volume II, 2nd ed., pages 366, 367), the present Chief Justice

of this Court draws the following conclusion from the decisions cited by him:

"Therefore, unless otherwise expressly provided by law, any action affecting the property or rights

(underscoring supplied) of a deceased person which may be brought by or against him if he were alive,

may likewise be instituted and prosecuted by or against the administrator, unless the action is forrecovery of money, debt or interest thereon, or unless, by its very nature, it cannot survive, because

death extinguishes the right . . .".

It is true that a proceeding upon an application for a certificate of public convenience before the Public

Service Commission is not an "action". But the foregoing provisions and citations go to prove that the

decedent's rights which by their nature are not extinguished by death go to make up a part and parcel of

the assets of his estate which, being placed under the control and management of the executor or

administrator, can not be exercised but by him in representation of the estate for the benefit of the

creditors, devisees, or legatees, if any, and the heirs of the decedent. And if the right involved happens

to consist in the prosecution of an unfinished proceeding upon an application for a certificate of public

convenience of the deceased before the Public Service Commission, it is but logical that the legal

representative be empowered and entitled in behalf of the estate to make the right effective in that

proceeding.

Manresa (Vol. III, 6th ed., p. 11) says that No. 10 of article 334 and article 336 of the Civil Code,

respectively, consider as immovable and movable things rights which are not material. The same

eminent commentator says in the cited volume (p. 45) that article 336 of the Civil Code has been

deficiently drafted in that it is not sufficiently expressive of all incorporeal rights which are also property

for juridical purposes.

Corpus Juris (Vol. 50, p. 737) states that in the broad sense of the term, property includes, among otherthings, "an option", and "the certificate of the railroad commission permitting the operation of a bus

line," and on page 748 of the same volume we read:

"However, these terms (real property, as estate or interest) have also been declared to include every

species of title, inchoate or complete, and embrace rights which lie in contract, whether executory or

executed." (Italics supplied.)

Another important question raised by petitioner is whether the estate of Pedro O. Fragante is a

"person" within the meaning of the Public Service Act.

Words and Phrases, First Series, (Vol. 6, p. 5325), states the following doctrine in the jurisdiction of theState of Indiana:

"As the estate of a decedent is in law regarded as a person, a forgery committed after the death of the

man whose name purports to be signed to the instrument may be prosecuted as with the intent to

defraud the estate. Billings vs. State, 107 Ind., 54, 55, 6 N. E. 914, 7 N. E. 763, 57 Am. Rep. 77."


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The Supreme Court of Indiana in the decision cited above had before it a case of forgery committed

after the death of one Morgan for the purpose of defrauding his estate. The objection was urged that

the information did not aver that the forgery was committed with the intent to defraud any person. The

Court, per Elliott, J., disposed of this objection as follows:

". . . The reason advanced in support of this proposition is that the law does not regard the estate of adecedent as a person. This intention (contention) cannot prevail. The estate of a decedent is a person in

legal contemplation. 'The word "person", says Mr. Abbot, 'in its legal signification, is a generic term, and

includes artificial as well as natural persons,' 2 Abb. Dict. 271; Douglas vs. Pacific, etc., Co., 4 Cal. 304;

Planters', etc., Bank vs. Andrews, 8 Port (Ala.) 404. It is said in another work that 'persons are of two

kinds: natural and artificial. A natural person is a human being. Artificial persons include (1) a collection

or succession of natural persons forming a corporation; (2) a collection of property to which the law

attributes the capacity of having rights and duties. The latter class of artificial persons is recognized only

to a limited extent in our law. Examples are the estate of a bankrupt or deceased person.' 2 Rapalje & L.

Law Dict. 954. Our own cases inferentially recognize the correctness of the definition given by the

authors from whom we have quoted, for they declare that it is sufficient, in pleading a claim against adecedent's estate, to designate the defendant as the estate of the deceased person, naming him. Ginn

vs. Collins, 43 Ind. 271. Unless we accept this definition as correct, there would be a failure of justice in

cases where, as here, the forgery is committed after the death of the person whose name is forged; and

this is a result to be avoided if it can be done consistent with principle. We perceive no difficulty in

avoiding such a result; for, to our minds, it seems reasonable that the estate of a decedent should be

regarded as an artificial person. It is the creation of law for the purpose of enabling a disposition of the

assets to be properly made, and, although natural persons as heirs, devisees, or creditors, have an

interest in the property, the artificial creature is a distinct legal entity. The interest which natural

persons have in it is not complete until there has been a due administration; and one who forges the

name of the decedent to an instrument purporting to be a promissory note must be regarded as havingintended to defraud the estate of the decedent, and not the natural persons having diverse interests in

it, since he cannot be presumed to have known who those persons were, or what was the nature of

their respective interests. The fraudulent intent is against the artificial person,the estate, and not

the natural persons who have direct or contingent interests in it." (107 Ind. 54, 55, 6 N. E. 914-915.)

In the instant case there would also be a failure of justice unless the estate of Pedro O. Fragante is

considered a "person", for the quashing of the proceedings for no other reason than his death would

entail prejudicial results to his investment amounting to P35,000.00 as found by the commission, not

counting the expenses and disbursements which the proceeding can be presumed to have occasioned

him during his lifetime, let alone those defrayed by the estate thereafter. In this jurisdiction there areample precedents to show that the estate of a deceased person is also considered as having legal

personality independent of the heirs. Among the most recent cases may be mentioned that of "Estate of

Mota vs. Concepcion, 56 Phil., 712, 717, wherein the principal plaintiff was the estate of the deceased

Lazaro Mota, and this Court gave judgment in favor of said estate along with the other plaintiffs in these

words:


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". . . the judgment appealed from must be affirmed so far as it holds that defendants Concepcion and

Whitaker are indebted to the plaintiffs in the amount of P245,804.69 . . .."

Under the regime of the Civil Code and before the enactment of the Code of Civil Procedure, the heirs of

a deceased person were considered in contemplation of law as the continuation of his personality by

virtue of the provision of article 661 of the first Code that the heirs succeed to all the rights andobligations of the decedent by the mere fact of his death. It was so held by this Court in Barrios vs.

Dolor, 2 Phil., 44, 46. However, after the enactment of the Code of Civil Procedure, article 661 of the

Civil Code was abrogated, as held in Suiliong & Co. vs. Chio-Taysan, 12 Phil., 13 22. In that case, as well

as in many others decided by this Court after the innovations introduced by the Code of Civil Procedure

in the matter of estates of deceased persons, it has been the constant doctrine that it is the estate or

the mass of property, rights and assets left by the decedent, instead of the heirs directly, that becomes

vested and charged with his rights and obligations which survive after his demise.

The heirs were formerly considered as the continuation of the decedent's personality simply by legal

fiction, for they might not be even of his flesh and blood the reason was one in the nature of a legal

exigency derived from the principle that the heirs succeeded to the rights and obligations of the

decedent. Under the present legal system, such rights and obligations as survive after death have to be

exercised and fulfilled only by the estate of the deceased. And if the same legal fiction were not

indulged, there would be no juridical basis for the estate, represented by the executor or administrator,

to exercise those rights and to fulfill those obligations of the deceased. The reason and purpose for

indulging the fiction is identical and the same in both cases. This is why according to the Supreme Court

of Indiana in Billings vs. State, supra, citing 2 Rapalje & L. Dictionary, 954, among the artificial persons

recognized by law figures "a collection of property to which the law attributes the capacity of having

rights and duties", as for instance, the estate of a bankrupt or deceased person.

Petitioner raises the decisive question of whether or not the estate of Pedro O. Fragante can be

considered a "citizen of the Philippines" within the meaning of section 16 of the Public Service Act, as

amended, particularly the proviso thereof expressly and categorically limiting the power of the

commission to issue certificates of public convenience or certificates of public convenience and

necessity "only to citizens of the Philippines or of the United States or to corporations, co-partnerships,

associations, or joint-stock companies constituted and organized under the laws of the Philippines", and

the further proviso that sixty per centum of the stock or paid-up capital of such entities must belong

entirely to citizens of the Philippines or of the United States.

Within the philosophy of the present legal system, the underlying reason for the legal fiction by which,

for certain purposes, the estate of a deceased person is considered a "person" is the avoidance of

injustice or prejudice resulting from the impossibility of exercising such legal rights and fulfilling such

legal obligations of the decedent as survived after his death unless the fiction is indulged. Substantially

the same reason is assigned to support the same rule in the jurisdiction of the State of Indiana, as

announced in Billings vs. State, supra, when the Supreme Court of said State said:


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". . . It seems reasonable that the estate of a decedent should be regarded as an artificial person. It is the

creation of law for the purpose of enabling a disposition of the assets to be properly made . . .."

Within the framework and principles of the constitution itself, to cite just one example, under the bill of

rights it seems clear that while the civil rights guaranteed therein in the majority of cases relate to

natural persons, the term "person" used in section 1 (1) and (2) must be deemed to include artificial orjuridical persons, for otherwise these latter would be without the constitutional guarantee against being

deprived of property without due process of law, or the immunity from unreasonable searches and

seizures. We take it that it was the intendment of the framers to include artificial or juridical, no less

than natural, persons in these constitutional immunities and in others of similar nature. Among these

artificial or juridical persons figure estates of deceased persons. Hence, we hold that within the

framework of the constitution, the estate of Pedro O. Fragante should be considered an artificial or

juridical person for the purposes of the settlement and distribution of his estate which, of course,

include the exercise during the judicial administration thereof of those rights and the fulfillment of those

obligations of his which survived after his death. One of those rights was the one involved in his pending

application before the Public Service Commission in the instant case, consisting in the prosecution ofsaid application to its final conclusion. As stated above, an injustice would ensue from the opposite

course.

How about the point of citizenship? If by legal fiction his personality is considered extended so that any

debts or obligations left by, and surviving, him may be paid, and any surviving rights may be exercised

for the benefit of his creditors and heirs, respectively, we find no sound and cogent reason for denying

the application of the same fiction to his citizenship, and for not considering it as likewise extended for

the purposes of the aforesaid unfinished proceeding before the Public Service Commission. The

outcome of said proceeding, if successful, would in the end inure to the benefit of the same creditors

and the heirs. Even in that event petitioner could not allege any prejudice in the legal sense, any morethan he could have done if Fragante had lived longer and obtained the desired certificate. The fiction of

such extension of his citizenship is grounded upon the same principle, and motivated by the same

reason, as the fiction of the extension of his personality. The fiction is made necessary to avoid the

injustice of subjecting his estate, creditors and heirs, solely by reason of his death, to the loss of the

investment amounting to P35,000, which he had already made in the ice plant, not counting the other

expenses occasioned by the instant proceeding, from the Public Service Commission to this Court.

We can perceive no valid reason for holding that within the intent of the Constitution (Article IV), its

provisions on Philippine citizenship exclude the legal principle of extension above adverted to. If for

reasons already stated our law indulges the fiction of extension of personality, if for such reasons the

estate of Pedro O. Fragante should be considered an artificial or juridical person herein, we can find no

justification for refusing to declare a like fiction as to the extension of his citizenship for the purposes of

this proceeding.

Pedro O. Fragante was a Filipino citizen, and as such, if he had lived, in view of the evidence of record,

he would have obtained from the commission the certificate for which he was applying. The situation

has suffered but one change, and that is, his death. His estate was that of a Filipino citizen. And its


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economic ability to appropriately and adequately operate and maintain the service of an ice plant was

the same that it received from the decedent himself. In the absence of a contrary showing, which does

not exist here, his heirs may be assumed to be also Filipino citizens; and if they are not, there is the

simple expedient of revoking the certificate or enjoining them from inheriting it.

Upon the whole, we are of opinion that for the purposes of the prosecution of said case No. 4572 of thePublic Service Commission to its final conclusion, both the personality and citizenship of Pedro O.

Fragante must be deemed extended, within the meaning and intent of the Public Service Act, as

amended, in harmony with the constitution: it is so adjudged and decreed.

Decision affirmed, without costs. So ordered.

Moran, C. J., Paras, Pablo, Bengzon, Briones, Padilla and Tuason, JJ., concur.

Paras, J., I hereby certify that Mr. Justice Feria voted with the majority.

Separate Opinions

PERFECTO, J., dissenting:

Commonwealth Act No. 146 reserves to Filipino citizens the right to obtain a certificate of public

convenience to operate an ice plant in San Juan, Rizal. The limitation is in accordance with section 8 of

Article XIV of the Constitution which provides.

"No franchise, certificate, or any other form of authorization for the operation of a public utility shall be

granted except to citizens of the Philippines or to corporations or other entities organized under the

laws of the Philippines, sixty per centum of the capital of which is owned by citizens of the Philippines,

nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than

fifty years. No franchise or right shall be granted to any individual, firm, or corporation, except under the

condition that it shall be subject to amendment, alteration, or repeal by the Congress when the public

interest so requires."

The main question in this case is whether the estate of Pedro O. Fragante fulfills the citizenship

requirement. To our mind, the question can be restated by asking whether the heirs of Pedro O.

Fragante fulfill the citizenship requirement of the law.

The estate is an abstract entity. As such, its legal value depends on what it represents. It is a device by

which the law gives a kind of personality and unity to undetermined tangible persons, the heirs. They

inherit and replace the deceased at the very moment of his death. As there are procedural requisites fortheir identification and determination that need time for their compliance, a legal fiction has been

devised to represent them. That legal fiction is the estate, a liquid condition in process of solidification.

The estate, therefore, has only a representative value. What the law calls estate is, as a matter of fact,

intended to designate the heirs of the deceased. The question, therefore, in this case, boils down to the

citizenship of the heirs of Fragante.


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There is nothing in the record to show conclusively the citizenship of the heirs of Fragante. If they are

Filipino citizens, the action taken by the Public Service Commission should be affirmed. If they are not, it

should be reversed.

Petitioner alleges that the estate is just a front or dummy for aliens to go around the citizenship

constitutional provision. It is alleged that Gaw Suy, the special administrator of the estate, is an alien.

We are of opinion that the citizenship of the heirs of Fragante should be determined by the Commission

upon evidence that the party should present. It should also determine the dummy question raised by

petitioner.

We are of opinion and so vote that the decision of the Public Service Commission of May 21, 1946, be

set aside and that the Commission be instructed to receive evidence on the above factual questions and

render a new decision accordingly.

FIRST DIVISION

[G.R. No. 137548. September 3, 2007.]

HEIRS OF THE LATE DOMINGO N. NICOLAS, petitioners, vs. METROPOLITAN BANK & TRUST COMPANY,

respondent.

D E C I S I O N

SANDOVAL-GUTIERREZ, J p:

For our resolution is the instant Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil

Procedure, as amended, seeking to reverse the Decision 1 of the Court of Appeals (Sixteenth Division)

dated January 14, 1999 in CA-G.R. SP No. 49926. DASCIc

The facts of the case are not in dispute, thus: aSIAHC

Spouses Domingo and Josefa Nicolas are the registered owners of two (2) parcels of land located at

Sanville Subdivision, Quezon City as evidenced by Transfer Certificates of Title (TCT) Nos. 156339 and

156341 of the Registry of Deeds, same city. On these lots is the residential house of spouses Nicolas and

their two children, herein petitioners. These properties are conjugal. SaICcT

On May 19, 1986, Domingo Nicolas passed away. DIcTEC


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On June 11, 1988, a fire gutted the office of the Register of Deeds of Quezon City. Among the records

destroyed were the original copies of TCTs Nos. 156339 and 156341. HESCcA

Sometime in 1988, Josefa Nicolas, the surviving spouse of Domingo, filed with the Land Registration

Administration (LRA) an application for reconstitution of the two (2) land titles. EHSTDA

In 1991, the LRA approved the application and ordered the reconstitution of the destroyed TCTs but only

in the name of applicant Josefa Nicolas. EcSCAD

In 1998, petitioners learned that their mother mortgaged the lots with the Metropolitan Bank & Trust

Co., herein respondent; that the mortgage had been foreclosed; that respondent had the land titles

consolidated in its name; and that respondent filed with the Regional Trial Court (RTC), Branch 77,

Quezon City a petition for the issuance of a writ of possession (LRC Case No. Q-8019[96]) which was

granted on January 15, 1998. HCATEa

Petitioners then filed with the RTC, Branch 22, Quezon City Civil Case No. Q-98-34312 for Annulment of

Reconstituted Titles, Mortgage and Sale at Public Auction. This case is still pending trial. aEcHCD

Petitioners also filed with the RTC, Branch 77, Quezon City a motion to quash the writ of possession, but

it was denied on September 10, 1998. Thereupon, they filed with the Court of Appeals a petition for

certiorari, docketed as CA-G.R. SP No. 49926. However, the appellate court dismissed the petition. It

held that the trial court, in issuing the writ of possession in favor of the respondent, did not commit

grave abuse of discretion amounting to lack or excess of jurisdiction considering that the trial court has

the ministerial task to issue such writ. DTISaH

Petitioners seasonably filed a motion for reconsideration, but this was denied by the Court of Appeals in

its Resolution of February 24, 1999. AcDaEH

Hence, the instant petition. EcIDaA

Petitioners contend that the Court of Appeals erred in dismissing their petition for certiorari, invoking

our ruling in Rivero de Ortega v. Natividad 2 which reads: caSDCA

The general rule is that after a sale has been made under a decree in a foreclosure suit, the court has the

power to give possession to the purchaser, and the latter will not be driven to an action in law to obtain

possession. The power of the court to issue a process and place the purchaser in possession, is said to

rest upon the ground that it has power to enforce its own decrees and thus avoid circuitous actions and

vexatious litigation. But where a party in possession was not a party to the foreclosure, and did not

acquire his possession from a person who was bound by the decree, but who is a mere stranger and

who entered into possession before the suit was begun, the court has no power to deprive him of

possession by enforcing the decree. Thus, it was held that only parties to the suit, persons who came in

under them pendente lite, and trespassers or intruders without title, can be evicted by a writ of

possession. The reason for this limitation is that the writ does not issue in case of doubt, nor will a

question of legal title be tried or decided in proceedings looking to the exercise of the power of the

court to put a purchaser in possession. A very serious question may arise upon full proofs as to where


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the legal title to the property rests, and should not be disposed of in a summary way. The petitioner, it is

held, should be required to establish his title in a proceeding directed to that end. prcd

Here, petitioners as children and, therefore, compulsory heirs of spouses Nicolas, acquired ownership of

portions of the lots as their legitime upon the death of their father or prior to the foreclosure of

mortgage and the filing by the respondent of its petition for the issuance of a writ of possession.Consequently, petitioners are strangers or third parties therein whose rights cannot be determined as

they were not impleaded by respondent. Verily, they should not be deprived of their legitime by the

enforcement of the writ of possession. Clearly, therefore, the writ of possession should not include parts

of the two lots pertaining to petitioners. HIaSDc

Records indicate that the estate of Domingo Nicolas has not been judicially or extra-judicially settled.

TEHDIA

It is basic that after consolidation of title in the buyer's name for failure of the mortgagor to redeem, the

writ of possession becomes a matter of right 3 and its issuance to a purchaser in an extra-judicial

foreclosure is merely a ministerial function. 4 However, considering the circumstances obtaining in this

case and following our ruling in Rivero de Ortega, earlier cited, we hold that such writ of possession

should apply only to the share of Josefa as may be determined in Civil Case No. Q-98-34312 or in any

other proceeding that may be instituted by petitioners for the purpose of settling the undivided estate

of Domingo Nicolas. cDCSET

WHEREFORE, we GRANT the petition. The assailed Decision of the Court of Appeals in CA-G.R. SP No.

49926 is MODIFIED in the sense that the writ of possession issued by the RTC, Branch 77, Quezon City in

LRC Case No. Q-8019(96) shall apply only to such portion of the lots pertaining to Josefa Nicolas as may

be determined in Civil Case No. Q-98-34312 or in any other proper proceeding which petitioners may

file. HTaIAC

SO ORDERED.

Puno, C.J., Corona, Azcuna and Garcia, JJ., concur.

FIRST DIVISION

[G.R. No. L-23079. February 27, 1970.]

RUBEN AUSTRIA, CONSUELO AUSTRIA-BENTA and LAURO AUSTRIA MOZO, petitioners, vs. HON. ANDRES

REYES, Judge, Court of First Instance of Rizal, PERFECTO CRUZ, BENITA CRUZ-MENEZ ISAGANI CRUZ,

ALBERTO CRUZ and LUZ CRUZ-SALONGA respondents.


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Salonga, Ordoez, Yap, Sicat & Associates for petitioners.

Ruben Austria for himself and co-petitioners.

De los Santos, De los Santos & De los Santos for respondent Perfecto Cruz.

Villareal, Almacen, Navarra & Amores for other respondents.

SYLLABUS

1. CIVIL LAW; TESTATE SUCCESSION; REQUISITES TO ANNUL INSTITUTION OF HEIRS. Before the

institution of heirs may be annulled under article 850 of the Civil Code, the following requisites must

concur: First, the cause for the institution of heirs must be stated in the will; second, the cause must be

shown to be false; and third, it must appear from the face of the will that the testator would not have

made such institution if he had known the falsity of the cause.

2. ID.; ID.; CAUSE FOR ANNULMENT OF INSTITUTION OF HEIRS MUST BE CLEAR; CASE AT BAR. If

the impelling reason or cause for the institution of the respondents as her heirs was the testatrix's belief

that under the law she could not do otherwise, she did not make it known in her will. Surely if she was

aware that succession to the legitime takes place by operation of law, independent of her own wishes,

she would not have found it convenient to name her supposed compulsory heirs to their legitimes. Her

express adoption of the rules on legitimes should very well indicate her complete agreement with that

statutory scheme. But even this, like the petitioners' own proposition, is highly speculative of what was

in the mind of the testatrix when she executed her will. One fact prevails, however, and it is the

decedent's will does not state in a specific or unequivocal manner the cause for such institution of heirs.

We cannot annul the same on the basis of guesswork or uncertain implications.

3. ID.; ID.; TESTACY FAVORED AND WISHES OF TESTATOR MUST PREVAIL. Testacy is favored anddoubts are resolved on its side, especially where the will evinces an intention on the part of the testator

to dispose of practically his whole estate, as was done in this case. Moreover, so compelling is the

principle that intestacy should be avoided and the wishes of the testator allowed to prevail, that we

could even vary the language of the will for the purpose of giving it effect. As in one case where the

probate court has found, by final judgment, that the testator was possessed of testamentary capacity

and her last will executed free from falsification, fraud, trickery or undue influence this Court held, it is

its duty to give full expression to her will.

4. ID.; ID.; LEGALITY OF ADOPTION APART FROM CASE OF TESTATE SUCCESSION, ADOPTION NOT

SUBJECT TO COLLATERAL ATTACK. The legality of the adoption of the respondents by the testatrix canbe assailed only in a separate action brought for that purpose, and cannot be the subject of a collateral

attack.

5. REMEDIAL LAW; COURTS; INHERENT POWER OF COURT. Every court has the inherent power

to amend and control its processes and orders so as to make them conformable to law and justice. That

the court a quo has limited the extent of the petitioners' intervention is also within its powers as

articulated by the Rules of Court.


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D E C I S I O N

CASTRO, J p:

On July 7, 1956 Basilia Austria vda. de Cruz filed with the Court of First Instance of Rizal (Special

Proceedings 2457) a petition for probate, ante mortem, of her last will and testament. The probate was

opposed by the present petitioners Ruben Austria, Consuelo Austria-Benta and Lauro Austria Mozo, and

still others who, like the petitioner, are nephews and nieces of Basilia. This opposition was, however,

dismissed and the probate of the will allowed after due hearing.

The bulk of the estate of Basilia, admittedly, was destined under the will to pass on to the respondents

Perfecto Cruz, Benita Cruz-Meez, Isagani Cruz, Alberto Cruz, and Luz Cruz-Salonga, all of whom had

been assumed and declared by Basilia as her own legally adopted children.

On April 23, 1969, more than two years after her will was allowed to probate, Basilia died. The

respondent Perfecto Cruz was appointed executor without bond by the same court in accordance with

the provisions of the decedent's will, notwithstanding the blocking attempt pursued by the petitionerRuben Austria.

Finally, on November 5, 1959, the present petitioners filed in the same proceedings a petition in

intervention for partition alleging in substance that they are the nearest of kin of Basilia, and that the

five respondents Perfecto Cruz, et al., had not in fact been adopted by the decedent in accordance with

law, in effect rendering these respondents mere strangers to the decedent and without any right to

succeed as heirs.

Notwithstanding opposition by the respondent Perfecto Cruz, as executor of the estate, the court a quo

allowed the petitioners' intervention by its order of December 22, 1959, couched in broad terms, as

follows: "The Petition in Intervention for Partition filed by the above-named oppositors [Ruben Austria,

et al.,] dated November 5, 1969 is hereby granted."

In the meantime, the contending sides debated the matter of authenticity or lack of it of the several

adoption papers produced and presented by the respondents. On motion of the petitioners Ruben

Austria, et al., these documents were referred to the National Bureau of Investigation for examination

and advice. N.B.I. report seems to bear out the genuineness of the documents, but the petitioners,

evidently dissatisfied with the results, managed to obtain a preliminary opinion from a Constabulary

questioned-document examiner whose views undermine the authenticity of the said documents. The

petitioners Ruben Austria, et al., thus moved the lower court to refer the adoption papers to the

Philippine Constabulary for further study. The petitioners likewise located former personnel of the courtwhich appeared to have granted the questioned adoption, and obtained written depositions from two

of them denying any knowledge of the pertinent adoption proceedings.

On February 6, 1963, more than three years after they were allowed to intervene, the petitioners Ruben

Austria, et al., moved the lower court to set for hearing the matter of the genuineness of the adoption

of the respondents Perfecto Cruz, et al., by the late Basilia. Before the date set by the court for hearing


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arrived, however, the respondent Benita Cruz-Meez, who entered an appearance separately from that

of her brother Perfecto Cruz, filed on February 28, 1963 a motion asking the lower court, by way of

alternative relief, to confine the petitioners' intervention, should it be permitted, to properties not

disposed of in the will of the decedent.

On March 4, 1963, the lower court heard the respondent Benita's motion. Both sides subsequentlysubmitted their respective memoranda, and finally, the lower court issued an order on June 4, 1963,

delimiting the petitioners' intervention to the properties of the deceased which were not disposed of in

the will.

The petitioners moved the lower court to reconsider this latest order, eliciting thereby an opposition

from the respondents. On October 25, 1963 the same court denied the petitioners' motion for

reconsideration.

A second motion for reconsideration which set off a long exchange of memoranda from both sides, was

summarily denied on April 21, 1964.

Hence this petition for certiorari, praying this Court to annul the orders of June 4 and October 25, 1963

and the order of April 21, 1964, all restricting petitioners' intervention to properties that were not

included in the decedent's testamentary dispositions.

The uncontested premises are clear. Two interests are locked in dispute over the bulk of the estate of

the deceased. Arrayed on one side are the petitioners Ruben Austria, Consuelo Austria-Benta and Lauro

Austria Mozo, three of a number of nephews and nieces who are concededly the nearest surviving blood

relatives of the decedent. On the other side are the respondents brothers and sisters, Perfecto Cruz,

Benita Cruz-Meez, Isagani Cruz, Alberto Cruz and Luz Cruz-Salonga, all of whom heirs in the will of the

deceased Basilia, and all of whom claim kinship with the decedent by virtue of legal adoption. At theheart of the controversy is Basilia's last will immaculate in its extrinsic validity since it bears the

imprimatur of duly conducted probate proceedings.

The complaint in intervention filed in the lower court assails the legality of the tie which the respondent

Perfecto Cruz and his brothers and sisters claim to have with the decedent. The lower court had,

however, assumed, by its orders in question, that the validity or invalidity of the adoption is not material

nor decisive on the efficacy of the institution of heirs; for, even if the adoption in question were

spurious, the respondents Perfecto Cruz, et al., will nevertheless succeed not as compulsory heirs but as

testamentary heirs instituted in Basilia's will. This ruling apparently finds support in article 842 of the

Civil Code which reads:

"One who has no compulsory heirs may dispose of by will all his estate or any part of it in favor of any

person having capacity to succeed.

"One who has compulsory heirs may dispose of his estate provided he does not contravene the

provisions of this Code with regard to the legitime of said heirs."


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The lower court must have assumed that since the petitioners nephews and niece are not compulsory

heirs, they do not possess that interest which can be prejudiced by a free-wheeling testamentary

disposition. The petitioners' interest is confined to properties, if any, that have not been disposed of in

the will, for to that extent intestate succession can take place and the question of the veracity of the

adoption acquires relevance.

The petitioners nephews and niece, upon the other hand, insist that the entire estate should descend to

them by intestacy by reason of the intrinsic nullity of the institution of heirs embodied in the decedent's

will. They have thus raised squarely the issue of whether or not such institution of heirs would retain

efficacy in the event there exists proof that the adoption of the same heirs by the decedent is false.

The petitioners cite, as the controlling rule, article 850 of the Civil Code which reads:

"The statement of a false cause for the institution of an heir shall be considered as not written, unless it

appears from the will that the testator would not have made such institution if he had known the falsity

of such cause."

Coming closer to the center of the controversy, the petitioners have called the attention of the lower

court and this Court to the following pertinent portions of the will of the deceased which recite:

"III

"Ang aking mga sapilitang tagapagmana (herederos forzosos) ay ang aking itinuturing na mga anak na

tunay (Hijos legalmente adoptados) na sina Perfecto, Alberto, Luz, Benita at Isagani, na pawang may

apelyidong Cruz.

xxx xxx xxx

"V

"Kung ako ay bawian ng Dios ng buhay, ay aking ipinamamana ang aking mga ari-ariang maiiwan, sa

kaparaanang sumusunod:

"A. Aking ipinamamana sa aking nabanggit na limang anak na sina Perfecto, Alberto, Luz, Benita at

Isagani, na pawang may apelyidong Cruz, na parepareho ang kaparti ng bawa't isa at walang lamangan

(en partes iguales), bilang kanilang sapilitang mana (legiti[ma]), ang kalahati (1/2) ng aking kaparti sa

lahat ng aming ari-ariang gananciales ng aking yumaong asawang Pedro Cruz na napapaloob sa

Actuacion Especial No. 640 ng Hukumang Unang Dulugan ng Rizal at itinutukoy sa No. 1 ng parafo IV ng

testamentong ito, ang kalahati (1/2) ng mga lagay na lupa at palaisdaan na nasa Obando at Polo,Bulacan, na namana ko sa aking yumaong ama na si Calixto Austria, at ang kalahati (1/2) ng ilang lagay

na lupa na nasa Tenejeros, Malabon, Rizal, na aking namana sa yumao kong kapatid na si Fausto

Austria."

The tenor of the language used, the petitioners argue, gives rise to the inference that the late Basilia

was deceived into believing that she was legally bound to bequeath one-half of her entire estate to the


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respondents Perfecto Cruz, et al. as the latter's legitime. The petitioners further contend that had the

deceased known the adoption to be spurious, she would not have instituted the respondents at all

the basis of the institution being solely her belief that they were compulsory heirs. Proof therefore of

the falsity of the adoption would cause a nullity of the institution of heirs and the opening of the estate

wide to intestacy. Did the lower court then abuse its discretion or act in violation of the rights of the

parties in barring the petitioners nephews and niece from registering their claim even to properties

adjudicated by the decedent in her will?

Before the institution of heirs may be annulled under article 850 of the Civil Code, the following

requisites must concur: First, the cause for the institution of heirs must be stated in the will; second, the

cause must be shown to be false; and third, it must appear from the face of the will that the testator

would not have made such institution if he had known the falsity of the cause.

The petitioners would have us imply, from the use of the terms, "sapilitang tagapagmana" (compulsory

heirs) and "sapilitang mana" (legitime), that the impelling reason or cause for the institution of the

respondents was the testatrix's belief that under the law she could not do otherwise. If this were indeed

what prompted the testatrix in instituting the respondents, she did not make it known in her will. Surely

if she was aware that succession to the legitime takes place by operation of law, independent of her

own wishes, she would not have found it convenient to name her supposed compulsory heirs to their

legitimes. Her express adoption of the rules on legitimes should very well indicate her complete

agreement with that statutory scheme. But even this, like the petitioners' own proposition, is highly

speculative of what was in the mind of the testatrix when she executed her will. One fact prevails,

however, and it is that the decedent's will does not state in a specific or unequivocal manner the cause

for such institution of heirs. We cannot annul the same on the basis of guesswork or uncertain

implications.

And even if we should accept the petitioners' theory that the decedent instituted the respondents

perfecto Cruz, et al. solely because she believed that the law commanded her to do so, on the false

assumption that her adoption of these respondents was valid, still such institution must stand.

Article 850 of the Civil Code, quoted above, is a positive injunction to ignore whatever false cause the

testator may have written in his will for the institution of heirs. Such institution may be annulled only

when one is satisfied, after an examination of the will, that the testator clearly would not have made the

institution if he had known the cause for it to be false. Now, would the late Basilia have caused the

revocation of the institution of heirs if she had known that she was mistaken in treating these heirs as

her legally adopted children? Or would she have instituted them nonetheless?

The decedent's will, which alone should provide the answer, is mute on this point or at best is vague and

uncertain. The phrases, "mga sapilitang tagapagmana" and "sapilitang mana," were borrowed from the

language of the law on succession and were used, respectively, to de scribe the class of heirs instituted

and the abstract object of the inheritance. They offer no absolute indication that the decedent would

have willed her estate other than the way she did if she had known that she was not bound by law to

make allowance for legitimes. Her disposition of the free portion of her estate (libre disposicion) which


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largely favored the respondent Perfecto Cruz, the latter's children, and the children of the respondent

Benita Cruz, shows a perceptible inclination on her part to give to the respondents more than what she

thought the law enjoined her to give to them. Compare this with the relatively small devise of land

which the decedent had left for her blood relatives, including the petitioners Consuelo Austria-Benta

and Lauro Mozo and the children of the petitioner Ruben Austria. Were we to exclude the respondents

Perfecto Cruz, et al, from the inheritance, then the petitioners and the other nephews and nieces would

succeed to the bulk of the estate by intestacy a result which would subvert the clear wishes of the

decedent.

Whatever doubts one entertains in his mind should be swept away by these explicit injunctions in the

Civil Code: "The words of a will are to receive an interpretation which will give to every expression some

effect, rather than one which will render any of the expressions inoperative; and of two modes of

interpreting a will, that is to be preferred which will prevent intestacy." 1

Testacy is favored and doubts are resolved on its side, especially where the will evinces an intention on

the part of the testator to dispose of practically his whole estate, 2 as was done in this case. Moreover,

so compelling is the principle that intestacy should be avoided and the wishes of the testator allowed to

prevail, that we could even vary the language of the will for the purpose of giving it effect. 3 A probate

court has found, by final judgment, that the late Basilia Austria Vda. de Cruz was possessed of

testamentary capacity and her last will executed free from falsification, fraud, trickery or undue

influence. In this situation, it becomes our duty to give full expression to her will. 4

At all events, the legality of the adoption of the respondents by the testatrix can be assailed only in a

separate action brought for that purpose, and cannot be the subject of a collateral attack. 5

To the petitioners' charge that the lower court had no power to reverse its order of December 22, 1969,

suffice it to state that, as borne by the records, the subsequent orders complained of served merely toclarify the first an act which the court could legally do. Every court has the inherent power to amend

and control its processes and orders so as to make them conformable to law and justice. 6 That the

court a quo has limited the extent of the petitioners' intervention is also within its powers as articulated

by the Rules of Court. 7

ACCORDINGLY, the present petition is denied, at petitioners cost.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Fernando, Teehankee, Barredo and Villamor,

JJ., concur.

FIRST DIVISION

[G.R. No. 118248. April 5, 2000.]


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DKC HOLDINGS CORPORATION, petitioner, vs. COURT OF APPEALS, VICTOR U. BARTOLOME and

REGISTER OF DEEDS FOR METRO MANILA, DISTRICT III, respondents.

De Borja Medialdea Bello Guevarra Separio & Gerodias for petitioner.

Jesus E. Mendoza and Oscar I. Mercado for private respondent.

SYNOPSIS

On March 16, 1988, petitioner entered into a Contract of Lease with Option to Buy with Encarnacion

Bartolome, which option must be exercised within a period of two years from the signing thereof.

Petitioner undertook to pay P3,000.00 a month as consideration for the reservation of its option. The

contract also provided that in case petitioner chose to lease the property, it may take actual possession

of the premises. In such an event, the lease shall be for a period of six years, renewable for another six

years. Petitioner regularly paid the reservation fee to Encarnacion until her death in January 1990.

Thereafter, petitioner paid the reservation fees to private respondent, being the sole heir of

Encarnacion. Private respondent, however, refused to accept these payments. On March 14, 1990,petitioner served upon private respondent a notice that it was exercising its option to lease the

property, and tendered the rental fee for the month of March. Again, Victor refused to accept the

tendered rental fee and to surrender possession of the property to petitioner. Petitioner thus opened a

savings account with the China Banking Corporation in the name of private respondent and deposited

therein the rental and reservation fees. When petitioner tried to register and annotate the contract on

the title of the subject property, the respondent Register of Deeds refused to register or annotate the

same. Hence, petitioner filed a complaint for specific performance and damages against private

respondent and the Register of Deeds, before the Regional Trial Court of Valenzuela. After trial on the

merits, the trial court dismissed the complaint. On appeal, the Court of Appeals affirmed in toto the

decision of the trial court. Hence, this petition.

Where the service or act is of such a character that it may as well be performed by another, or where

the contract by its terms, shows that the performance by others was contemplated, death does not

terminate the contract or excuse non-performance. In the case at bar, there was no personal act

required from the late Encarnacion Bartolome. Rather, the obligation of Encarnacion in the contract to

deliver possession of the subject property to petitioner upon the exercise by the latter of its option to

lease the same may very well be performed by her heir Victor.

It is futile for private respondent to insist that he is not a party to the contract because of the clear

provision of Article 1311 of the Civil Code. Being an heir of Encarnacion, there is privity of interest

between him and his deceased mother. He only succeeds to what rights his mother had and what are

valid and binding against her is also valid and binding as against him. Moreover, the subject matter of

the contract is a lease, which is a property right. cACDaH

SYLLABUS


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1. CIVIL LAW; CONTRACTS; HEIRS ARE BOUND BY CONTRACTS ENTERED INTO BY THEIR

PREDECESSOR-IN-INTEREST; EXCEPTIONS. The general rule is that heirs are bound by contracts

entered into by their predecessors-in-interest except when the rights and obligations arising therefrom

are not transmissible by (1) their nature, (2) stipulation or (3) provision of law. In the case at bar, there is

neither contractual stipulation nor legal provision making the rights and obligations under the contract

intransmissible. More importantly, the nature of the rights and obligations therein are, by their nature,

transmissible.

2. ID.; ID.; ID.; INTRANSMISSIBLE RIGHTS; EXPLAINED. The nature of intransmissible rights as

explained by Arturo Tolentino, an eminent civilist, is as follows: "Among contracts which are

intransmissible are those which are purely personal, either by provision of law, such as in cases of

partnerships and agency, or by the very nature of the obligations arising therefrom, such as those

requiring special personal qualifications of the obligor. It may also be stated that contracts for the

payment of money debts are not transmitted to the heirs of a party, but constitute a charge against his

estate. Thus, where the client in a contract for professional services of a lawyer died, leaving minor

heirs, and the lawyer, instead of presenting his claim for professional services under the contract to theprobate court, substituted the minors as parties for his client, it was held that the contact could not be

enforced against the minors; the lawyer was limited to a recovery on the basis of quantum meruit." In

American jurisprudence, "(W)here acts stipulated in a contract require the exercise of special

knowledge, genius, skill, taste, ability, experience, judgment, discretion, integrity, or other personal

qualification of one or both parties, the agreement is of a personal nature, and terminates on the death

of the party who is required to render such service."

3. ID.; ID.; DEATH DOES NOT TERMINATE A CONTRACT OR EXCUSE NON-PERFORMANCE THEREOF

WHERE THE CONTRACT, BY ITS TERMS, SHOWS THAT PERFORMANCE BY OTHERS WAS CONTEMPLATED.

It has been held that a good measure for determining whether a contract terminates upon the deathof one of the parties is whether it is of such a character that it may be performed by the promissor's

personal representative. Contracts to perform personal acts which cannot be as well performed by

others are discharged by the death of the promissor. Conversely, where the service or act is of such a

character that it may as well be performed by another, or where the contract, by its terms, shows that

performance by others was contemplated, death does not terminate the contract or excuse

nonperformance. In the case at bar, there is no personal act required from the late Encarnacion

Bartolome. Rather, the obligation of Encarnacion in the contract to deliver possession of the subject

property to petitioner upon the exercise by the latter of its option to lease the same may very well be

performed by her heir Victor.

4. ID.; ID.; HEIR SUCCEEDS TO WHAT RIGHTS HIS PREDECESSOR-IN-INTEREST HAD AND WHAT IS

VALID AND BINDING AGAINST THE LATTER IS ALSO VALID AND BINDING AGAINST HIM. As early as

1903, it was held that "(H)e who contracts does so for himself and his heirs." In 1952, it was ruled that if

the predecessor was duty-bound to reconvey land to another, and at his death the reconveyance had

not been made, the heirs can be compelled to execute the proper deed for reconveyance. This was

grounded upon the principle that heirs cannot escape the legal consequence of a transaction entered

into by their predecessor-in-interest because they have inherited the property subject to the liability


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affecting their common ancestor. It is futile for Victor to insist that he is not a party to the contract

because of the clear provision of Article 1311 of the Civil Code. Indeed, being an heir of Encarnacion,

there is privity of interest between him and his deceased mother. He only succeeds to what rights his

mother had and what is valid and binding against her is also valid and binding as against him. This is

clear from Paraaque Kings Enterprises vs. Court of Appeals, where the Court rejected a similar defense

. . . .

5. ID.; ID.; NON-PERFORMANCE OF A CONTRACT IS NOT EXCUSED BY DEATH OF PARTY WHEN

OTHER PARTY HAS PROPERTY INTEREST IN SUBJECT MATTER THEREOF. In the case at bar, the subject

matter of the contract is a lease, which is a property right. The death of a party does not excuse

nonperformance of a contract which involves a property right, and the rights and obligations thereunder

pass to the personal representatives of the deceased. Similarly, nonperformance is not excused by the

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

Under both Article 1311 of the Civil Code and jurisprudence, therefore, Victor is bound by the subject

Contract of Lease with Option to Buy. EDCcaS

6. ID.; ID.; CONTRACT OF LEASE WITH OPTION TO BUY; PRIVATE RESPONDENT HAS OBLIGATION TO

SURRENDER POSSESSION OF LAND AND LEASE THE PREMISES TO PETITIONER. The payment by

petitioner of the reservation fees during the two-year period within which it had the option to lease or

purchase the property is not disputed. In fact, the payment of such reservation fees, except those for

February and March, 1990 were admitted by Victor. Petitioner also paid the P15,000.00 monthly rental

fee on the subject property by depositing the same in China Bank Savings Account No. 1-04-02558-I-1, in

the name of Victor as the sole heir of Encarnacion Bartolome, for the months of March to July 30, 1990,

or a total of five (5) months, despite the refusal of Victor to turn over the subject property. Likewise,

petitioner complied with its duty to inform the other party of its intention to exercise its option to lease

through its letter dated March 12, 1990, well within the two-year period for it to exercise its option.Considering that at the time Encarnacion Bartolome had already passed away, it was legitimate for

petitioner to have addressed its letter to her heir. It appears, therefore, that the exercise by petitioner

of its option to lease the subject property was made in accordance with the contractual provisions.

Concomitantly, private respondent Victor Bartolome has the obligation to surrender possession of and

lease the premises to petitioner for a period of six (6) years, pursuant to the Contract of Lease with

Option to Buy.

7. LABOR AND SOCIAL LEGISLATION; TENANCY ISSUE; NOT FOR SUPREME COURT TO PASS UPON

IN PRESENT PETITION. Coming now to the issue of tenancy, we find that this is not for this Court to

pass upon in the present petition. We note that the Motion to Intervene and to Dismiss of the alleged

tenant, Andres Lanozo, was denied by the lower court and that such denial was never made the subject

of an appeal. As the lower court stated in its Order, the alleged right of the tenant may well be

ventilated in another proceeding in due time.

D E C I S I O N

YNARES-SANTIAGO, J p:


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This is a petition for review on certiorari seeking the reversal of the December 5, 1994 Decision of the

Court of Appeals in CA-G.R. CV No. 40849 entitled "DKC Holdings Corporation vs. Victor U. Bartolome, et

al.", 1 affirming in toto the January 4, 1993 Decision of the Regional Trial Court of Valenzuela, Branch

172, 2 which dismissed Civil Case No. 3337-V-90 and ordered petitioner to pay P30,000.00 as attorneys

fees. cdrep

The subject of the controversy is a 14,021 square meter parcel of land located in Malinta, Valenzuela,

Metro Manila which was originally owned by private respondent Victor U. Bartolomes deceased

mother, Encarnacion Bartolome, under Transfer Certificate of Title No. B-37615 of the Register of Deeds

of Metro Manila, District III. This lot was in front of one of the textile plants of petitioner and, as such,

was seen by the latter as a potential warehouse site.

On March 16, 1988, petitioner entered into a Contract of Lease with Option to Buy with Encarnacion

Bartolome, whereby petitioner was given the option to lease or lease with purchase the subject land,

which option must be exercised within a period of two years counted from the signing of the Contract.

In turn, petitioner undertook to pay P3,000.00 a month as consideration for the reservation of its

option. Within the two-year period, petitioner shall serve formal written notice upon the lessor

Encarnacion Bartolome of its desire to exercise its option. The contract also provided that in case

petitioner chose to lease the property, it may take actual possession of the premises. In such an event,

the lease shall be for a period of six years, renewable for another six years, and the monthly rental fee

shall be P15,000.00 for the first six years and P18,000.00 for the next six years, in case of renewal.

Petitioner regularly paid the monthly P3,000.00 provided for by the Contract to Encarnacion until her

death in January 1990. Thereafter, petitioner coursed its payment to private respondent Victor

Bartolome, being the sole heir of Encarnacion. Victor, however, refused to accept these payments.

Meanwhile, on January 10, 1990, Victor executed an Affidavit of Self-Adjudication over all the propertiesof Encarnacion, including the subject lot. Accordingly, respondent Register of Deeds cancelled Transfer

Certificate of Title No. B-37615 and issued Transfer Certificate of Title No. V-14249 in the name of Victor

Bartolome.

On March 14, 1990, petitioner served upon Victor, via registered mail, notice that it was exercising its

option to lease the property, tendering the amount of P15,000.00 as rent for the month of March.

Again, Victor refused to accept the tendered rental fee and to surrender possession of the property to

petitioner.

Petitioner thus opened Savings Account No. 1-04-02558-I-1 with the China Banking Corporation, Cubao

Branch, in the name of Victor Bartolome and deposited therein the P15,000.00 rental fee for March as

well as P6,000.00 reservation fees for the months of February and March.

Petitioner also tried to register and annotate the Contract on the title of Victor to the property.

Although respondent Register of Deeds accepted the required fees, he nevertheless refused to register

or annotate the same or even enter it in the day book or primary register.


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Thus, on April 23, 1990, petitioner filed a Complaint for specific performance and damages against

Victor and the Register of Deeds, 3 docketed as Civil Case No. 3337-V-90 which was raffled off to Branch

171 of the Regional Trial Court of Valenzuela. Petitioner prayed for the surrender and delivery of

possession of the subject land in accordance with the Contract terms; the surrender of title for

registration and annotation thereon of the Contract; and the payment of P500,000.00 as actual

damages, P500,000.00 as moral damages, P500,000.00 as exemplary damages and P300,000.00 as

attorneys fees.

Meanwhile, on May 8, 1990, a Motion for Intervention with Motion to Dismiss 4 was filed by one Andres

Lanozo, who claimed that he was and has been a tenant-tiller of the subject property, which was

agricultural riceland, for forty-five years. He questioned the jurisdiction of the lower court over the

property and invoked the Comprehensive Agrarian Reform Law to protect his rights that would be

affected by the dispute between the original parties to the case.

On May 18, 1990, the lower court issued an Order 5 referring the case to the Department of Agrarian

Reform for preliminary determination and certification as to whether it was proper for trial by said

court.

On July 4, 1990, the lower court issued another Order 6 referring the case to Branch 172 of the RTC of

Valenzuela which was designated to hear cases involving agrarian land, after the Department of

Agrarian Reform issued a letter-certification stating that referral to it for preliminary determination is no

longer required.

On July 16, 1990, the lower court issued an Order denying the Motion to Intervene, 7 holding that

Lanozos rights may well be ventilated in another proceeding in due time.

After trial on the merits, the RTC of Valenzuela, branch 172 rendered its Decision on January 4, 1993,dismissing the Complaint and ordering petitioner to pay Victor P30,000.00 as attorneys fees. On appeal

to the CA, the Decision was affirmed in toto.

Hence, the instant Petition assigning the following errors:

(A)

FIRST ASSIGNMENT OF ERROR

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE PROVISION ON THE NOTICE TO

EXERCISE OPTION WAS NOT TRANSMISSIBLE.

(B)

SECOND ASSIGNMENT OF ERROR

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE NOTICE OF OPTION MUST BE SERVED

BY DKC UPON ENCARNACION BARTOLOME PERSONALLY.


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(C)

THIRD ASSIGNMENT OF ERROR

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE CONTRACT WAS ONE-SIDED AND

ONEROUS IN FAVOR OF DKC.

(D)

FOURTH ASSIGNMENT OF ERROR

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE EXISTENCE OF A REGISTERED

TENANCY WAS FATAL TO THE VALIDITY OF THE CONTRACT.

(E)

FIFTH ASSIGNMENT OF ERROR

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PLAINTIFF-APPELLANT WAS LIABLE TO

DEFENDANT-APPELLEE FOR ATTORNEYS FEES. 8

The issue to be resolved in this case is whether or not the Contract of Lease with Option to Buy entered

into by the late Encarnacion Bartolome with petitioner was terminated upon her death or whether it

binds her sole heir, Victor, even after her demise.

Both the lower court and the Court of Appeals held that the said contract was terminated upon the

death of Encarnacion Bartolome and did not bind Victor because he was not a party thereto.

Article 1311 of the Civil Code provides, as follows-

"ARTICLE 1311. Contracts take effect only between the parties, their assigns and heirs, except in case

where the rights and obligations arising from the contract are not transmissible by their nature, or by

stipulation or by provision of law. The heir is not liable beyond the value of the property he received

from the decedent.

xxx xxx xxx."

The general rule, therefore, is that heirs are bound by contracts entered into by their predecessors-in-

interest except when the rights and obligations arising therefrom are not transmissible by (1) their

nature, (2) stipulation or (3) provision of law.

In the case at bar, there is neither contractual stipulation nor legal provision making the rights and

obligations under the contract intransmissible. More importantly, the nature of the rights and

obligations therein are, by their nature, transmissible.


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The nature of intransmissible rights as explained by Arturo Tolentino, an eminent civilist, is as follows:

cdrep

"Among contracts which are intransmissible are those which are purely personal, either by provision of

law, such as in cases of partnerships and agency, or by the very nature of the obligations arising

therefrom, such as those requiring special personal qualifications of the obligor. It may also be statedthat contracts for the payment of money debts are not transmitted to the heirs of a party, but constitute

a charge against his estate. Thus, where the client in a contract for professional services of a lawyer

died, leaving minor heirs, and the lawyer, instead of presenting his claim for professional services under

the contract to the probate court, substituted the minors as parties for his client, it was held that the

contract could not be enforced against the minors; the lawyer was limited to a recovery on the basis of

quantum meruit." 9

In American jurisprudence, "(W)here acts stipulated in a contract require the exercise of special

knowledge, genius, skill, taste, ability, experience, judgment, discretion, integrity, or other personal

qualification of one or both parties, the agreement is of a personal nature, and terminates on the death

of the party who is required to render such service." 10

It has also been held that a good measure for determining whether a contract terminates upon the

death of one of the parties is whether it is of such a character that it may be performed by the

promissors personal representative. Contracts to perform personal acts which cannot be as well

performed by others are discharged by the death of the promissor. Conversely, where the service or act

is of such a character that it may as well be performed by another, or where the contract, by its terms,

shows that performance by others was contemplated, death does not terminate the

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