Estate of Hemady v.

Luzon Surety guaranty or suretyship contain no provision that the guaranty is

extinguished upon the death of the guarantor or the surety.
Luzon Surety filed a claim against the estate of K.H. Hemady based
on indemnity agreements (counterbonds) subscribed by distinct The contracts of suretyship in favor of Luzon Surety Co. not being
principals and by the deceased K.H. Hemady as surety (solidary rendered intransmissible due to the nature of the undertaking, nor by
guarantor). As a contingent claim, Luzon Surety prayed for the stipulations of the contracts themselves, nor by provision of law, his
allowance of the value of the indemnity agreements it had executed. eventual liability therefrom necessarily passed upon his death to his
The lower court dismissed the claim of Luzon Surety on the ground heirs. The contracts, therefore, give rise to contingent claims provable
that “whatever losses may occur after Hemady’s death, are not against his estate. A contingent liability of a deceased person is part
chargeable to his estate, because upon his death he ceased to be a and parcel of the mass of obligations that must be paid if and when
guarantor.” the contingent liability is converted into a real liability. Therefore, the
settlement or final liquidation of the estate must be deferred until such
ISSUES: What obligations are transmissible upon the death of the
time as the bonded indebtedness is paid.
decedent? Are contingent claims chargeable against the estate?
ALVAREZ vs. IAC
HELD: Under the present Civil Code (Article 1311), the rule is that
“Contracts take effect only as between the parties, their assigns and FACTS:
heirs, except in case where the rights and obligations arising from the
Aniceto Yanes owned 2 parcels of land Lot 773-A and Lot 773-
contract are not transmissible by their nature, or by stipulation or by
B. Aniceto Yanes was survived by his children, Rufino, Felipe and
provision of law.” While in our successional system the responsibility
Teodora. Herein private respondents, Estelita, Iluminado and Jesus,
of the heirs for the debts of their decedent cannot exceed the value of
are the children of Rufino who died in 1962 while the other private
the inheritance they receive from him, the principle remains intact that
respondents, Antonio and Rosario Yanes, are children of Felipe.
these heirs succeed not only to the rights of the deceased but also to
Teodora was survived by her child, Jovita (Jovito) Albib. It is
his obligations. Articles 774 and 776 of the New Civil Code expressly
established that Rufino and his children left the province to settle in
so provide, thereby confirming Article 1311.
other places as a result of the outbreak of World War II. According to
In Mojica v. Fernandez, the Supreme Court ruled — “Under the Civil Estelita, from the "Japanese time up to peace time", they did not visit
Code the heirs, by virtue of the rights of succession are subrogated to the parcels of land in question but "after liberation", when her brother
all the rights and obligations of the deceased (Article 661) and can went there to get their share of the sugar produced therein, he was
not be regarded as third parties with respect to a contract to which the informed that Fortunato Santiago, Fuentebella (Puentevella) and
deceased was a party, touching the estate of the deceased x x x Alvarez were in possession of Lot 773. After Fuentebella's death,
which comes in to their hands by right of inheritance; they take such Arsenia Vda. de Fuentebella sold said lots for P6,000.00 to Rosendo
property subject to all the obligations resting thereon in the hands of Alvarez.
him from whom they derive their rights.” The third exception to the
On May 26, 1960, Teodora Yanes and the children of her brother
transmissibility of obligations under Article 1311 exists when they are
Rufino filed a complaint against Fortunato Santiago, Arsenia Vda. de
‘not transmissible by operation of law.’ The provision makes reference
Fuentebella, Alvarez and the Register of Deeds of Negros Occidental
to those cases where the law expresses that the rights or obligations
for the "return" of the ownership and possession of Lots 773 and 823.
are extinguished by death, as is the case in legal support,
During the pendency of said case, Alvarez sold the Lots for
parental authority, usufruct, contracts for a piece of work, partnership
P25,000.00 to Dr. Rodolfo Siason. CFI rendered judgment ordering
and agency. By contrast, the articles of the Civil Code that regulate
defendant Rosendo Alvarez to reconvey to plaintiffs the lots.
 Antonio Valderrama. The donated property consisted of a parcel of
land located at Brgy. Pawa, Panay Capiz covered by Transfer
Certificate of Title No. T-16105 in the name of Montinola. The deed
ISSUE: was presented for recording in the Property Registry, and the Register
of Deeds cancelled TCT No. T-16105 and, in its place, issued TCT
WON the liability of Rosendo Alvarez arising from the sale of Lots No. T-16622 in the names of the donees. Montinola, however,
Nos. 773-A and 773-B could be legally passed or transmitted by retained the owner's duplicate copy of the new title, as well as the
operation of law to the petitioners without violation of law and due property itself, until she transferred the same to herein petitioners, the
process. spouses Ernesto and Evelyn Sicad ten (10) years later, on July 10,
RULING: 1990. On March 12, 1987, Aurora Montinola drew up a deed of
revocation of the donation. She filed a petition with the Regional Trial
The doctrine obtaining in this jurisdiction is on the general Court in Roxas City for the cancellation of TCT No. T-16622 and the
transmissibility of the rights and obligations of the deceased to his reinstatement of TCT No. T-16105. Montinola's petition was founded
legitimate children and heirs. The binding effect of contracts upon the on the theory that donation to her (three) 3 grandchildren was one
heirs of the deceased party is not altered by the provision of our Rules mortis causa which thus had to comply with the formalities of a will;
of Court that money debts of a deceased must be liquidated and paid and since it had not, the donation was void. The donees opposed the
from his estate before the residue is distributed among said heirs petition. They averred that the donation in their favor was one inter
(Rule 89). The reason is that whatever payment is thus made from the vivos which having fully complied with the requirements therefor set
estate is ultimately a payment by the heirs or distributees, since the out in Article 729 of the Civil Code, was perfectly valid and efficacious.
amount of the paid claim in fact diminishes or reduces the shares that The trial court rendered judgment holding that the donation was
the heirs would have been entitled to receive. indeed one inter vivos and dismissing Montinola's petition for lack of
merit. Montinola elevated the case to the Court of Appeals. She,
"Under our law, therefore, the general rule is that a party's contractual
however, died pending the appeal. The appellate court, upon motion,
rights and obligations are transmissible to the successors. The rule is
ordered the substitution of Ofelia de Leon, Estela M. Jaen, and
a consequence of the progressive 'depersonalization' of patrimonial
Teresita M. Valderrama as plaintiffs-appellants in place of the
rights and duties. From the Roman concept of a relation from person
late Aurora Montinola, as well as the joinder of the spouses Ernesto
to person, the obligation has evolved into a relation from patrimony to
and Evelyn Sicad as additional appellants. The appellate court
patrimony, with the persons occupying only a representative position,
affirmed the judgment of the Regional Trial Court. The issue raised in
barring those rare cases where the obligation is strictly personal, in
this appeal centers on the character of the deed of donation executed
consideration of its performance by a specific person and by no other.
by Montinola, whether inter vivos or mortis causa. SCaDAE The
. . ."Petitioners being the heirs of the late Rosendo Alvarez, they
Supreme Court ruled that the donation in question, though
cannot escape the legal consequences of their father's transaction,
denominated inter vivos, is in truth one mortis causa; it is void
which gave rise to the present claim for damages.
because the essential requisites for its validity have not been
Spouses Sicad v. CA complied with. A donation which purports to be one inter vivos but
withholds from the donee the right to dispose of the donated property
The late Aurora Virto Vda. de Montinola executed a deed entitled during the donor's lifetime is in truth one mortis causa. In the case at
"DEED OF DONATION INTER VIVOS" on December 11, 1979. It bar, nothing of any consequence was transferred by the deed of
named as donees her grandchildren, herein private respondents, donation in question to Montinola's grandchildren, the ostensible
namely; Catalino Valderrama, Judy Cristina Valderrama and Jesus donees. They did not get possession of the property donated. They
did not acquire the right to the fruits thereof, or any other right of
dominion over the property. More importantly, they did not acquire the
LORENZO vs. POSADAS JR.
right to dispose of the property. They were simply "paper owners" of
the donated property. FACTS: Thomas Hanley died, leaving a will and a considerable
Limjuco v. Frajante amount of real and personal properties. Proceedings for the probate
of his will and the settlement and distribution of his estate were begun
FACTS: in the CFI of Zamboanga. The will was admitted to probate.
Pedro Fragante, a Filipino citizen at the time of his death, applied for a The CFI considered it proper for the best interests of the estate to
certificate of public convenience to install and maintain an ice plant in appoint a trustee to administer the real properties which, under the
San Juan Rizal. His intestate estate is financially capable of will, were to pass to nephew Matthew ten years after the two
maintaining the proposed service. The Public Service Commission executors named in the will was appointed trustee. Moore acted as
issued a certificate of public convenience to Intestate Estate of the trustee until he resigned and the plaintiff Lorenzo herein was
deceased, authorizing said Intestate Estate through its special or appointed in his stead.
Judicial Administrator, appointed by the proper court of competent
During the incumbency of the plaintiff as trustee, the defendant
jurisdiction, to maintain and operate the said plant. Petitioner claims
Collector of Internal Revenue (Posadas) assessed against the estate
that the granting of certificate applied to the estate is a contravention
an inheritance tax, together with the penalties for deliquency in
of law.
payment. Lorenzo paid said amount under protest, notifying Posadas
ISSUE: Whether or not the estate of Fragante may be extended an at the same time that unless the amount was promptly refunded suit
artificial judicial personality. would be brought for its recovery. Posadas overruled Lorenzo’s
protest and refused to refund the said amount. Plaintiff went to court.
HELD:
The CFI dismissed Lorenzo’s complaint and Posadas’ counterclaim.
The estate of Fragante could be extended an artificial judicial Both parties appealed to this court.
personality because under the Civil Code, “estate of a dead person
ISSUE:
could be considered as artificial juridical person for the purpose of the
settlement and distribution of his properties”. It should be noted that (e) Has there been delinquency in the payment of the inheritance tax?
the exercise of juridical administration includes those rights and
HELD: The judgment of the lower court is accordingly modified, with
fulfillment of obligation of Fragante which survived after his
costs against the plaintiff in both instances
death. One of those surviving rights involved the pending application
for public convenience before the Public Service Commission. YES
The defendant maintains that it was the duty of the executor to pay
the inheritance tax before the delivery of the decedent’s property to
Supreme Court is of the opinion that “for the purposes of the
the trustee. Stated otherwise, the defendant contends that delivery to
prosecution of said case No. 4572 of the Public Service Commission
the trustee was delivery to the cestui que trust, the beneficiary in this
to its final conclusion, both the personality and citizenship of Pedro O.
case, within the meaning of the first paragraph of subsection (b) of
Fragrante must be deemed extended, within the meaning and intent
section 1544 of the Revised Administrative Code. This contention is
of the Public Service Act, as amended, in harmony with the
well taken and is sustained. A trustee is but an instrument or agent for
constitution: it is so adjudged and decreed”.
the cestui que trust
The appointment of Moore as trustee was made by the trial court in words”, said Arellano, C. J., “. . . the heirs succeed immediately to all
conformity with the wishes of the testator as expressed in his will. It is of the property of the deceased ancestor. The property belongs to the
true that the word “trust” is not mentioned or used in the will but the heirs at the moment of the death of the ancestor as completely as if
intention to create one is clear. No particular or technical words are the ancestor had executed and delivered to them a deed for the same
required to create a testamentary trust. The words “trust” and before his death.”
“trustee”, though apt for the purpose, are not necessary. In fact, the
Whatever may be the time when actual transmission of the
use of these two words is not conclusive on the question that a trust is
inheritance takes place, succession takes place in any event at the
created. ” To constitute a valid testamentary trust there must be a
moment of the decedent’s death. The time when the heirs legally
concurrence of three circumstances:
succeed to the inheritance may differ from the time when the heirs
actually receive such inheritance. ” Thomas Hanley having died on
May 27, 1922, the inheritance tax accrued as of the date.
(1) Sufficient words to raise a trust;
From the fact, however, that Thomas Hanley died on May 27, 1922, it
(2) a definite subject;
does not follow that the obligation to pay the tax arose as of the date.
(3) a certain or ascertain object; statutes in some jurisdictions The time for the payment on inheritance tax is clearly fixed by section
expressly or in effect so providing.” 1544 of the Revised Administrative Code as amended by Act No.
3031, in relation to section 1543 of the same Code. The two sections
There is no doubt that the testator intended to create a trust. He follow:
ordered in his will that certain of his properties be kept together
undisposed during a fixed period, for a stated purpose. The probate SEC. 1543. Exemption of certain acquisitions and transmissions. —
court certainly exercised sound judgment in appointmening a trustee The following shall not be taxed:
to carry into effect the provisions of the will
(a) The merger of the usufruct in the owner of the naked title.
As the existence of the trust was already proven, it results that the
(b) The transmission or delivery of the inheritance or legacy by the
estate which plaintiff represents has been delinquent in the payment
fiduciary heir or legatee to the trustees.
of inheritance tax and, therefore, liable for the payment of interest and
surcharge provided by law in such cases. (c) The transmission from the first heir, legatee, or donee in favor of
another beneficiary, in accordance with the desire of the predecessor.
The delinquency in payment occurred on March 10, 1924, the date
xx
when Moore became trustee. On that date trust estate vested in him.
The interest due should be computed from that date. SEC. 1544. When tax to be paid. — The tax fixed in this article shall
be paid:
NOTES: Other issues:
(a) In the second and third cases of the next preceding section, before
(a) When does the inheritance tax accrue and when must it be
entrance into possession of the property.
satisfied?
(b) In other cases, within the six months subsequent to the death of
The accrual of the inheritance tax is distinct from the obligation to pay
the predecessor; but if judicial testamentary or intestate proceedings
the same.
shall be instituted prior to the expiration of said period, the payment
Acording to article 657 of the Civil Code, “the rights to the succession shall be made by the executor or administrator before delivering to
of a person are transmitted from the moment of his death.” “In other each beneficiary his share.
The instant case does[not] fall under subsection (a), but under Uson v. Del Rosario
subsection (b), of section 1544 above-quoted, as there is here no 92 P 530
fiduciary heirs, first heirs, legatee or donee. Under the subsection, the
FACTS:
tax should have been paid before the delivery of the properties in
question to Moore as trustee. This is an action for recovery of the ownership and possession of five
(5) parcels of land in Pangasinan, filed by Maria Uson against Maria
(b) Should the inheritance tax be computed on the basis of the value
del Rosario and her four illegit children. Maria Uson was the lawful
of the estate at the time of the testator’s death, or on its value ten
wife of Faustino Nebreda who upon his death in 1945 left
years later?
the lands involved in this litigation. Faustino Nebreda left no other heir
If death is the generating source from which the power of the estate to except his widow Maria Uson. However, plaintiff claims that when
impose inheritance taxes takes its being and if, upon the death of the Faustino Nebreda died in 1945, his common-law wife Maria del
decedent, succession takes place and the right of the estate to tax Rosario took possession illegally of said lands thus depriving her of
vests instantly, the tax should be measured by the value of the estate their possession and enjoyment. Defendants in their answer set up as
as it stood at the time of the decedent’s death, regardless of any special defense that Uson and her husband, executed a
subsequent contingency value of any subsequent increase or public document whereby they agreed to separate as husband and
decrease in value wifeand, in consideration of which Uson was given a parcel of land
and in return she renounced her right to inherit any other property that
(c) In determining the net value of the estate subject to tax, is it proper
may be left by her husband upon his death. CFI found for
to deduct the compensation due to trustees?
Uson. Defendants appealed.
A trustee, no doubt, is entitled to receive a fair compensation for his
ISSUE:
services. But from this it does not follow that the compensation due
him may lawfully be deducted in arriving at the net value of the estate W/N Uson has a right over the lands from the moment of death of her
subject to tax. There is no statute in the Philippines which requires husband.
trustees’ commissions to be deducted in determining the net value of
W/N the illegit children of deceased and his common-law wife have
the estate subject to inheritance tax
successional rights.
(d) What law governs the case at bar? Should the provisions of Act
HELD:
No. 3606 favorable to the tax-payer be given retroactive effect?
Yes. There is no dispute that Maria Uson, is the lawful wife of
A statute should be considered as prospective in its operation,
Faustino Nebreda, former owner of the five parcels of lands litigated in
whether it enacts, amends, or repeals an inheritance tax, unless the
the present case. There is likewise no dispute that Maria del Rosario,
language of the statute clearly demands or expresses that it shall
was merely a common-law wife with whom she had four illegitimate
have a retroactive effect, . . . .” Act No. 3606 itself contains no
children with the deceased. It likewise appears that Faustino Nebreda
provisions indicating legislative intent to give it retroactive effect. No
died in 1945 much prior to the effectivity of the new Civil Code. With
such effect can be given the statute by this court.
this background, it is evident that when Faustino Nebreda died in
1945 the five parcels of land he was seized of at the time passed from
the moment of his death to his only heir, his widow Maria Uson (Art
777 NCC).As this Court aptly said, “The property belongs to the heirs
at the moment of the death of the ancestor as completely as if the
ancestor had executed and delivered to them a deed for the same Francisco de Borja and JosefaTangco. The transaction was binding
before his death”. From that moment, therefore, the rights on both in their individual capacities, upon the perfection of the
of inheritance of Maria Uson over the lands in question became contract, even without previous authority of the Court to enter into the
vested. same.
The claim of the defendants that Maria Uson had relinquished her BONILLA V. BARCENA
right over the lands in question because she expressly renounced
FACTS
to inherit any future property that her husband may acquire and leave
upon his death in the deed of separation, cannot be entertained for Barcena instituted a civil action to quiet title over certain parcels of
the simple reason that future inheritance cannot be the subject of a land. About 3 months later, Barcena died and defendants moved to
contract nor can it be renounced. dismiss the complaint. Counsels for plaintiff asked for substitution by
her minor children and her husband, but the court dismissed the case
No. The provisions of the NCC shall be given retroactive effect even
and refused to reconsider. Hence this petition for review. The
though the event which gave rise to them may have occurred under
Supreme Court reversed the respondent court, set aside the order of
the prior legislation
dismissal and the orders denying the motion for reconsideration, and
TESTATE ESTATE OF TANGCO v. DE BORJA directed the respondent court to allow the substitution of the minor
children and to appoint a qualified person as guardian ad litem for
FACTS
them.
The testate estate of Josefa Tangco alone has been unsettled for
ISSUE
more than a quarter of a century. In order to put an end to all these
litigations, a compromise agreement was entered into. Tasiana Whether or not substitution of parties are allowed? Yes
assailed the validity of agreement applying the doctrine in Guevarra v.
HELD
Guevarra. Jose de Borja pointed out that the Rules of Court allows the
extrajudicial settlement of the estate of a deceased person regardless CIVIL LAW; SUCCESSION; RIGHTS TO SUCCESSION
of whether he left a will or not. TRANSMITTED FROM THE MOMENT OF DEATH OF DECEDENT.
— From the moment of the death of the decedent, the heirs become
ISSUE
the absolute owners of his property, subject to the rights and
Whether or not the heirs may enter into compromise agreement to obligations of the decedent, and they cannot be deprived of right
convey their share of the inheritance even before the probate of the thereto except by the methods provided for by law. The moment of
will. death is the determining factor where the heirs acquire a definite right
to the inheritance whether such right to be pure or contingent. The
RULING
right of the heirs to the property of the deceased vests in them even
YES. The ruling in Guevarra v. Guevara, relied by the appellant, before judicial declaration of their being heirs in the testate or intestate
which declared invalid a compromise agreement which disposes of proceedings.
the estate before probate of the will is not applicable here.
Successional rights are transmitted from the moment of the death of
the decedent (Art. 777). In this case, the clear object of the contract
was merely the conveyance by Tasiana Ongsingco of any and all her
individual share and interest, actual or eventual in the estate of
JULIATA ONG v. CA respect to her conjugal share and to her hereditary rights. The fact
that what had been mortgaged was in custodia legis is immaterial,
Facts:
insofar as her conjugal share and hereditary share in the property is
2 parcels of land are covered by TCT. Alfredo Ong Bio Hong married concerned for after all, she was the ABSOLUTE OWNER thereof.
Petitioner Juliata Ong. Alfredo died and Petitioner was appointed This ownership by hers is not disputed, nor is there any claim that the
administratix of her husband’s estate. Thereafter, Petitioner sold Lot rights of the government (with reference to taxes) nor the rights of any
No 12 to a Lim Che Boon and TCT 188 was partially cancelled. heir or anybody else have been prejudiced for impaired.

Petitioner mortgaged Lot No.1 to allied bank corporation to secure a ANGELA M. BUTTE, plaintiff-appellant,
loan obtained by JK Exports. vs.
MANUEL UY and SONS, INC., defendant-appellee.
On the loan, there was an amount due and Allied Banking tried to
collect it from the petitioner, but to no avail. Hence, the complaint FACTS
alleging nullity of the contract for lack of judicial approval which the
bank allegedly promised to secure from the court. Jose V. Ramirez was a co-owner of a house and lot located at Sta Cruz,
Manila. Upon the death of Jose V. Ramirez, all his property including
In response, the bank averred that it was petitioner who promised to the 1/6 undivided share was bequeathed to his children and
secure the court’s approval, adding that petitioner informed the grandchildren and 1/3 of the free portion to Mrs. Angela M. Butte.
defendant that she was promised the sum of 300k by the JK Exports,
which will also take charge of the interest of the loan. Mrs. Marie Garnier Vda de Ramirez sold the property to Manuel Uy and
Sons, Inc. including the undivided 1/6 share property in Sta Cruz,
The trial court held that the mortgage constituted upon the party is Manila. On the same day, a copy of letter regarding the above-
valid even without the judicial approval. mentioned sell was sent to Bank of the Philippine Islands, as
administrator of the property of Jose V. Ramirez.
Petitioner appealed to CA, which affirmed the decision of the trial
court Mrs. Angela M. Butte filed a case against Manuel Uy and Sons, Inc for
legal redemption when the latter refused Mrs. Butte to redeem the said
Hence this petition.
sold property.
Issue:
ISSUE
WHETHER OR NOT THE MORTGAGE CONSTITUTED OVER THE
PARCEL OF LAND UNDER PETITIONER'S ADMINISTRATION IS Whether or not Mrs. Angela M. Butte has the right of succession to
NULL AND VOID FOR WANT OF JUDICIAL APPROVAL. exercise legal redemption over the share sold by Mrs. Marie Garnier
Vda de Ramirez.
Held:
Yes. mortgage was constituted in her personal capacity and not in her
HELD
capacity as administratrix of the estate of her husband.
Consequently, in the case at bar, the trial court and the Court of Yes, Mrs. Angela M. Butte has the right of succession to exercise legal
Appeals cannot be faulted in ruling that the questioned mortgage redemption over the share sold by Mrs. Marie Garnier Vda de Ramirez
constituted on the property under administration, by authority of the for being one of the co-owners of the heirs of the 1/6 undivided property
of Jose V. Ramirez.
petitioner, is valid, notwithstanding the lack of judicial approval, with
According to Article 1620 of the Civil Code of the Philippines, a co-
owner of a thing may exercise the right of redemption in case the shares
of all the other co-owners or of any of them, are sold to a third person.
If the price of the alienation is gross expensive, the redemptioner shall
pay only a reasonable one.

Should two or more co-owners desire to exercise the right to

redemption, they may only do so in proportion to the share that may
respectively have in the thing owned in common.