ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A. CORONEL, 3.
3. Upon the transfer in their names of the subject property, the Coronels will execute
ANNABELLE C. GONZALES (for herself and on behalf of Florida C. Tupper, as
attorney-in-fact), CIELITO A. CORONEL, FLORAIDA A. ALMONTE, and
CATALINA BALAIS MABANAG, petitioners, vs. THE COURT OF APPEALS,
CONCEPCION D. ALCARAZ, and RAMONA PATRICIA ALCARAZ, assisted by
GLORIA F. NOEL as attorney-in-fact, respondents. G.R. No. 103577 October 7,
1996
FACTS:
On January 19, 1985, defendants-appellants Romulo Coronel, et al. (hereinafter
referred to as Coronels) executed a document entitled "Receipt of Down Payment"
(Exh. "A") in favor of plaintiff Ramona Patricia Alcaraz (hereinafter referred to as
Ramona) which is reproduced hereunder:
RECEIPT OF DOWN PAYMENT
P1,240,000.00 — Total amount
50,000 — Down payment
———————————
P1,190,000.00 — Balance
Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of
Fifty Thousand Pesos purchase price of our inherited house and lot, covered by TCT
No. 119627 of the Registry of Deeds of Quezon City, in the total amount of
P1,240,000.00.
We bind ourselves to effect the transfer in our names from our deceased father,
Constancio P. Coronel, the transfer certificate of title immediately upon receipt of the
down payment above-stated.
On our presentation of the TCT already in or name, We will immediately execute the
deed of absolute sale of said property and Miss Ramona Patricia Alcaraz shall
immediately pay the balance of the P1,190,000.00.
Clearly, the conditions appurtenant to the sale are the following:
1. Ramona will make a down payment of Fifty Thousand (P50,000.00) Pesos upon
execution of the document aforestated;
2. The Coronels will cause the transfer in their names of the title of the property
registered in the name of their deceased father upon receipt of the Fifty Thousand
(P50,000.00) Pesos down payment;
the deed of absolute sale in favor of Ramona and the latter will pay the former the whole
balance of One Million One Hundred Ninety Thousand (P1,190,000.00) Pesos.
On the same date (January 15, 1985), plaintiff-appellee Concepcion D. Alcaraz
(hereinafter referred to as Concepcion), mother of Ramona, paid the down payment of
Fifty Thousand (P50,000.00) Pesos (Exh. "B", Exh. "2").
On February 6, 1985, the property originally registered in the name of the Coronels'
father was transferred in their names under TCT
No. 327043 (Exh. "D"; Exh. "4")
On February 18, 1985, the Coronels sold the property covered by TCT No. 327043 to
intervenor-appellant Catalina B. Mabanag (hereinafter referred to as Catalina) for One
Million Five Hundred Eighty Thousand (P1,580,000.00) Pesos after the latter has paid
Three Hundred Thousand (P300,000.00) Pesos (Exhs. "F-3"; Exh. "6-C")
For this reason, Coronels canceled and rescinded the contract (Exh. "A") with Ramona
by depositing the down payment paid by Concepcion in the bank in trust for Ramona
Patricia Alcaraz.
On February 22, 1985, Concepcion, et al., filed a complaint for specific performance
against the Coronels and caused the annotation of a notice of lis pendens at the back
of TCT No. 327403 (Exh. "E"; Exh. "5").
On April 2, 1985, Catalina caused the annotation of a notice of adverse claim covering
the same property with the Registry of Deeds of Quezon City (Exh. "F"; Exh. "6").
On April 25, 1985, the Coronels executed a Deed of Absolute Sale over the subject
property in favor of Catalina (Exh. "G"; Exh. "7").
On June 5, 1985, a new title over the subject property was issued in the name of
Catalina under TCT No. 351582 (Exh. "H"; Exh. "8").
RTC: ordering defendant to execute in favor of plaintiffs a deed of absolute sale
covering that parcel of land embraced in and covered by Transfer Certificate of Title
No. 327403 (now TCT No. 331582) of the Registry of Deeds for Quezon City, together
with all the improvements existing thereon free from all liens and encumbrances, and
once accomplished, to immediately deliver the said document of sale to plaintiffs and
upon receipt thereof, the said document of sale to plaintiffs and upon receipt thereof,
the plaintiffs are ordered to pay defendants the whole balance of the purchase price
amounting to P1,190,000.00 in cash.
CA: Affirmed the RTC decision
ISSUE: Whether or not the “Receipt of Down Payment” embodied a perfected contract
of sale or just a mere contract to sell?
RULING: It is a perfected contract of sale.
The Civil Code defines a contract of sale, thus:
Art. 1458. By the contract of sale one of the contracting parties
obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefor a price certain in
money or its equivalent.
Sale, by its very nature, is a consensual contract because it is perfected by mere
consent. The essential elements of a contract of sale are the following:
a) Consent or meeting of the minds, that is, consent to transfer
ownership in exchange for the price;
b) Determinate subject matter; and
c) Price certain in money or its equivalent.
Under this definition, a Contract to Sell may not be considered as a Contract of Sale
because the first essential element is lacking. In a contract to sell, the prospective seller
explicity reserves the transfer of title to the prospective buyer, meaning, the prospective
seller does not as yet agree or consent to transfer ownership of the property subject of
the contract to sell until the happening of an event, which for present purposes we shall
take as the full payment of the purchase price. What the seller agrees or obliges himself
to do is to fulfill is promise to sell the subject property when the entire amount of the
purchase price is delivered to him. In other words the full payment of the purchase price
partakes of a suspensive condition, the non-fulfillment of which prevents the obligation
to sell from arising and thus, ownership is retained by the prospective seller without
further remedies by the prospective buyer.
Stated positively, upon the fulfillment of the suspensive condition which is the full
payment of the purchase price, the prospective seller's obligation to sell the subject
property by entering into a contract of sale with the prospective buyer becomes
demandable as provided in Article 1479 of the Civil Code which states:
Art. 1479. A promise to buy and sell a determinate thing for a price
certain is reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing
for a price certain is binding upon the promissor if the promise is
supported by a consideration distinct from the price.
A contract to sell may thus be defined as a bilateral contract whereby the prospective
seller, while expressly reserving the ownership of the subject property despite delivery
thereof to the prospective buyer, binds himself to sell the said property exclusively to
the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment
of the purchase price.
A contract to sell as defined hereinabove, may not even be considered as a conditional
contract of sale where the seller may likewise reserve title to the property subject of the
sale until the fulfillment of a suspensive condition, because in a conditional contract of
sale, the first element of consent is present, although it is conditioned upon the
happening of a contingent event which may or may not occur. If the suspensive
condition is not fulfilled, the perfection of the contract of sale is completely abated
(cf. Homesite and housing Corp. vs. Court of Appeals, 133 SCRA 777 [1984]).
However, if the suspensive condition is fulfilled, the contract of sale is thereby
perfected, such that if there had already been previous delivery of the property subject
of the sale to the buyer, ownership thereto automatically transfers to the buyer by
operation of law without any further act having to be performed by the seller.
In a contract to sell, upon the fulfillment of the suspensive condition which is the full
payment of the purchase price, ownership will not automatically transfer to the buyer
although the property may have been previously delivered to him. The prospective
seller still has to convey title to the prospective buyer by entering into a contract of
absolute sale.
When the "Receipt of Down Payment" is considered in its entirety, it becomes more
manifest that there was a clear intent on the part of petitioners to transfer title to the
buyer, but since the transfer certificate of title was still in the name of petitioner's father,
they could not fully effect such transfer although the buyer was then willing and able to
immediately pay the purchase price. Therefore, petitioners-sellers undertook upon
receipt of the down payment from private respondent Ramona P. Alcaraz, to cause the
issuance of a new certificate of title in their names from that of their father, after which,
they promised to present said title, now in their names, to the latter and to execute the
deed of absolute sale whereupon, the latter shall, in turn, pay the entire balance of the
purchase price.
The agreement could not have been a contract to sell because the sellers herein
made no express reservation of ownership or title to the subject parcel of land.
Furthermore, the circumstance which prevented the parties from entering into an
absolute contract of sale pertained to the sellers themselves (the certificate of title was
not in their names) and not the full payment of the purchase price. Under the
established facts and circumstances of the case, the Court may safely presume that,
had the certificate of title been in the names of petitioners-sellers at that time, there
would have been no reason why an absolute contract of sale could not have been
executed and consummated right there and then.
Moreover, unlike in a contract to sell, petitioners in the case at bar did not merely
promise to sell the properly to private respondent upon the fulfillment of the suspensive
condition. On the contrary, having already agreed to sell the subject property, they
undertook to have the certificate of title changed to their names and immediately
thereafter, to execute the written deed of absolute sale.
Thus, the parties did not merely enter into a contract to sell where the sellers, after
compliance by the buyer with certain terms and conditions, promised to sell the property
to the latter. What may be perceived from the respective undertakings of the parties to
the contract is that petitioners had already agreed to sell the house and lot they
inherited from their father, completely willing to transfer full ownership of the subject
house and lot to the buyer if the documents were then in order. It just happened,
however, that the transfer certificate of title was then still in the name of their father. It
was more expedient to first effect the change in the certificate of title so as to bear their
names. That is why they undertook to cause the issuance of a new transfer of the
certificate of title in their names upon receipt of the down payment in the amount of
P50,000.00. As soon as the new certificate of title is issued in their names, petitioners
were committed to immediately execute the deed of absolute sale. Only then will the
obligation of the buyer to pay the remainder of the purchase price arise.
There is no doubt that unlike in a contract to sell which is most commonly entered into
so as to protect the seller against a buyer who intends to buy the property in installment
by withholding ownership over the property until the buyer effects full payment therefor,
in the contract entered into in the case at bar, the sellers were the one who were unable
to enter into a contract of absolute sale by reason of the fact that the certificate of title
to the property was still in the name of their father. It was the sellers in this case who,
as it were, had the impediment which prevented, so to speak, the execution of an
contract of absolute sale.
What is clearly established by the plain language of the subject document is that when
the said "Receipt of Down Payment" was prepared and signed by petitioners Romeo
A. Coronel, et al., the parties had agreed to a conditional contract of sale,
consummation of which is subject only to the successful transfer of the certificate of
title from the name of petitioners' father, Constancio P. Coronel, to their names.
t is also significant to note that in the first paragraph in page 9 of their petition,
petitioners conclusively admitted that:
3. The petitioners-sellers Coronel bound themselves "to effect the
transfer in our names from our deceased father Constancio P.
Coronel, the transfer certificate of title immediately upon receipt of
the downpayment above-stated". The sale was still subject to this
suspensive condition. (Emphasis supplied.)
(Rollo, p. 16)
Petitioners themselves recognized that they entered into a contract of sale subject to a
suspensive condition. Only, they contend, continuing in the same paragraph, that:
. . . Had petitioners-sellers not complied with this condition of first
transferring the title to the property under their names, there could be
no perfected contract of sale. (Emphasis supplied.)
(Ibid.)
not aware that they set their own trap for themselves, for Article 1186 of the
Civil Code expressly provides that:
Art. 1186. The condition shall be deemed fulfilled when the obligor
voluntarily prevents its fulfillment.
Petitioners also argue there could been no perfected contract on January 19, 1985
because they were then not yet the absolute owners of the inherited property.
We cannot sustain this argument.
Article 774 of the Civil Code defines Succession as a mode of transferring
ownership as follows:
Art. 774. Succession is a mode of acquisition by virtue of which
the property, rights and obligations to be extent and value of the
inheritance of a person are transmitted through his death to
another or others by his will or by operation of law.
Petitioners-sellers in the case at bar being the sons and daughters of the
decedent Constancio P. Coronel are compulsory heirs who were called
to succession by operation of law. Thus, at the point their father drew
his last breath, petitioners stepped into his shoes insofar as the subject
property is concerned, such that any rights or obligations pertaining
thereto became binding and enforceable upon them. It is expressly
provided that rights to the succession are transmitted from the moment
of death of the decedent (Article 777, Civil Code; Cuison vs. Villanueva,
90 Phil. 850 [1952]).
Be it also noted that petitioners' claim that succession may not be declared
unless the creditors have been paid is rendered moot by the fact that they were
able to effect the transfer of the title to the property from the decedent's name to
their names on February 6, 1985.
Aside from this, petitioners are precluded from raising their supposed lack of capacity
to enter into an agreement at that time and they cannot be allowed to now take a
posture contrary to that which they took when they entered into the agreement with
private respondent Ramona P. Alcaraz. The Civil Code expressly states that:
Art. 1431. Through estoppel an admission or representation is
rendered conclusive upon the person making it, and cannot be
denied or disproved as against the person relying thereon.
Having represented themselves as the true owners of the subject property at
the time of sale, petitioners cannot claim now that they were not yet the
absolute owners thereof at that time.
Petitioners also contend that although there was in fact a perfected contract of sale
between them and Ramona P. Alcaraz, the latter breached her reciprocal obligation
when she rendered impossible the consummation thereof by going to the United States
of America, without leaving her address, telephone number, and Special Power of
Attorney (Paragraphs 14 and 15, Answer with Compulsory Counterclaim to the
Amended Complaint, p. 2; Rollo, p. 43), for which reason, so petitioners conclude, they
were correct in unilaterally rescinding rescinding the contract of sale.

We do not agree with petitioners that there was a valid rescission of the contract of sale
in the instant case. We note that these supposed grounds for petitioners' rescission,
are mere allegations found only in their responsive pleadings, which by express
provision of the rules, are deemed controverted even if no reply is filed by the plaintiffs
(Sec. 11, Rule 6, Revised Rules of Court). The records are absolutely bereft of any
supporting evidence to substantiate petitioners' allegations. We have stressed time and
again that allegations must be proven by sufficient evidence (Ng Cho Cio vs. Ng Diong,
110 Phil. 882 [1961]; Recaro vs. Embisan, 2 SCRA 598 [1961]. Mere allegation is not
an evidence (Lagasca vs. De Vera, 79 Phil. 376 [1947]).

WHEREFORE, premises considered, the instant petition is hereby DISMISSED and

the appealed judgment AFFIRMED.
BLANQUITA E. DELA MERCED, LUISITO E. DELA MERCED, BLANQUTIA M.
MACATANGAY, MA. OLIVIA M. PAREDES, TERESITA P. RUPISAN, RUBEN M.
ADRIANO, HERMINIO M. ADRIANO, JOSELITO M. ADRIANO, ROGELIO M.
ADRIANO, WILFREDO M. ADRIANO, VICTOR M. ADRIANO, CORAZON A.
ONGOCO, JASMIN A. MENDOZA and CONSTANTINO M. ADRIANO, petitioners, vs.
JOSELITO P. DELA MERCED, respondent. G.R. No. 126707 February 25, 1999
FACTS:
On March 23, 1987, Evarista M. dela Merced died intestate, without issue. She left five
(5) parcels of land situated in Orambo, Pasig City.
At the time of her death, Evarista was survived by three sets of heirs, viz: (1) Francisco
M. dela Merced, her legitimate brother; (2) Teresita P. Rupisan, her niece who is the
only daughter of Rosa dela Merced-Platon (a sister who died in 1943); and (3) the
legitimate children of Eugenia dela Merced-Adriano (another sister of Evarista who died
in 1965), namely: Herminio, Ruben, Joselito, Rogelio, Wilfredo, Victor and Constantino,
all surnamed Adriano, Corazon Adriano-Ongoco and Jasmin Adriano-Mendoza.
Almost a year later or on March 19, 1988, to be precise, Francisco (Evarista's brother)
died. He was survived by his wife Blanquita Errea dela Merced and their three legitimate
children, namely, Luisito E. dela Merced, Blanquita M. Macatangay and Ma. Olivia M.
Paredes.
On April 20, 1989, the three sets of heirs of the decedent, Evarista M. dela Merced,
referring to (1) the abovenamed heirs of Francisco; (2) Teresita P. Rupisan and (3) the
nine [9] legitimate children of Eugenia, executed an extrajudicial settlement, entitled
"Extrajudicial Settlement of the Estate of the Deceased Evarista M. dela Merced"
adjudicating the properties of Evarista to them, each set with a share of one-third (1/3)
pro-indiviso.
On July 26, 1990, private respondent Joselito P. Dela Merced, illegitimate son of the
late Francisco de la Merced, filed a "Petition for Annulment of the Extrajudicial
Settlement of the Estate of the Deceased Evarista M. Dela Merced with Prayer for a
Temporary Restraining Order", alleging that he was fraudulently omitted from the said
settlement made by petitioners, who were fully aware of his relation to the late
Francisco. Claiming successional rights, private respondent Joselito prayed that he be
included as one of the beneficiaries, to share in the one-third (1/3) pro-indiviso share in
the estate of the deceased Evarista, corresponding to the heirs of Francisco.
RTC: issued the temporary restraining order prayed for by private respondent Joselito,
enjoining the sale of any of the real properties of the deceased Evarista. It then
dismissed the petition, lifted the temporary restraining order earlier issued, and
cancelled the notice of lis pendens on the certificates of title covering the real properties
of the deceased Evarista. It ruled that an illegitimate child has no right to inherit ab
intestato from the legitimate children and relatives of his father or mother, nor shall such
children or relatives inherit in the same manner from the illegitimate child.
CA: reversed the decision of the trial court of origin and ordered the petitioners to
execute an amendatory agreement which shall form part of the original settlement, so
as to include private respondent Joselito as a co-heir to the estate of Francisco, which
estate includes one-third (1/3) pro indiviso of the latter's inheritance from the deceased
Evarista.
In the Petition under consideration, petitioners insist that being an illegitimate child,
private respondent Joselito is barred from inheriting from Evarista because of the
provision of Article 992 of the New Civil Code, which lays down an impassable barrier
between the legitimate and illegitimate families.
ISSUE: Whether or not Joselito is barred from inheriting from Evarista?
RULING: NO.
Article 992 of the New Civil Code is not applicable because involved here is not a
situation where an illegitimate child would inherit ab intestato from a legitimate sister of
his father, which is prohibited by the aforesaid provision of law. Rather, it is a scenario
where an illegitimate child inherits from his father, the latter's share in or portion of,
what the latter already inherited from the deceased sister, Evarista.
As opined by the Court of Appeals, the law in point in the present case is Article 777 of
the New Civil Code which provides that the rights to succession are transmitted from
the moment of death of the decedent.
Since Evarista died ahead of her brother Francisco, the latter inherited a portion of the
estate of the former as one of her heirs. Subsequently, when Francisco died, his heirs,
namely: his spouse, legitimate children, and the private respondent, Joselito, an
illegitimate child, inherited his (Francisco's) share in the estate of Evarista. It bears
stressing that Joselito does not claim to be an heir of Evarista by right of representation
but participates in his own right, as an heir of the late Francisco, in the latter's share (or
portion thereof) in the estate of Evarista.
Petitioners argue that if Joselito desires to assert successional rights to the intestate
estate of his father, the proper forum should be in the settlement of his own father's
intestate estate, as this Court held in the case of Gutierrez vs. Macandog (150 SCRA
422 [1987])
Petitioners' reliance on the case of Gutierrez vs. Macandog (supra) is misplaced. The
said case involved a claim for support filed by one Elpedia Gutierrez against the estate
of the decedent, Agustin Gutierrez, Sr., when she was not even an heir to the estate in
question, at the time, and the decedent had no obligation whatsoever to give her
support. Thus, this Court ruled that Elpedia should have asked for support pendente
lite before the Juvenile and Domestic Relations Court in which court her husband (one
of the legal heirs of the decedent) had instituted a case for legal separation against her
on the ground of an attempt against his life. When Mauricio (her husband) died, she
should have commenced an action for the settlement of the estate of her husband, in
which case she could receive whatever allowance the intestate court would grant her.
The present case, however, relates to the rightful and undisputed right of an heir to the
share of his late father in the estate of the decedent Evarista, ownership of which had
been transmitted to his father upon the death of Evarista. There is no legal obstacle for
private respondent Joselito, admittedly the son of the late Francisco, to inherit in his
own right as an heir to his father's estate, which estate includes a one-third (1/3)
undivided share in the estate of Evarista.

WHEREFORE, for lack of merit, the Petition is hereby DENIED and the Appealed
Decision of the Court of Appeals AFFIRMED in toto.
DKC HOLDINGS CORPORATION, petitioner, vs. COURT OF APPEALS, VICTOR U.
BARTOLOME and REGISTER OF DEEDS FOR METRO MANILA, DISTRICT
III, respondents. G.R. No. 118248 April 5, 2000
FACTS:
The subject of the controversy is a 14,021 square meter parcel of land located in
Malinta, Valenzuela, Metro Manila which was originally owned by private respondent
Victor U. Bartolome's deceased mother, Encarnacion Bartolome, under Transfer
Certificate of Title No. B-37615 of the Register of Deeds of Metro Manila, District III.
This lot was in front of one of the textile plants of petitioner and, as such, was seen by
the latter as a potential warehouse site.
On March 16, 1988, petitioner entered into a Contract of Lease with Option to Buy with
Encarnacion Bartolome, whereby petitioner was given the option to lease or lease with
purchase the subject land, which option must be exercised within a period of two years
counted from the signing of the Contract. In turn, petitioner undertook to pay P3,000.00
a month as consideration for the reservation of its option. Within the two-year period,
petitioner shall serve formal written notice upon the lessor Encarnacion Bartolome of
its desire to exercise its option. The contract also provided that in case petitioner chose
to lease the property, it may take actual possession of the premises. In such an event,
the lease shall be for a period of six years, renewable for another six years, and the
monthly rental fee shall be P15,000.00 for the first six years and P18,000.00 for the
next six years, in case of renewal.
Petitioner regularly paid the monthly P3,000.00 provided for by the Contract to
Encarnacion until her death in January 1990. Thereafter, petitioner coursed its payment
to private respondent Victor Bartolome, being the sole heir of Encarnacion. Victor,
however, refused to accept these payments.
Meanwhile, on January 10, 1990, Victor executed an Affidavit of Self-Adjudication over
all the properties of Encarnacion, including the subject lot. Accordingly, respondent
Register of Deeds cancelled Transfer Certificate of Title No. B-37615 and issued
Transfer Certificate of Title No. V-14249 in the name of Victor Bartolome.
On March 14, 1990, petitioner served upon Victor, via registered mail, notice that it was
exercising its option to lease the property, tendering the amount of P15,000.00 as rent
for the month of March. Again, Victor refused to accept the tendered rental fee and to
surrender possession of the property to petitioner.
Petitioner thus opened Savings Account No. 1-04-02558-I-1 with the China Banking
Corporation, Cubao Branch, in the name of Victor Bartolome and deposited therein the
P15,000.00 rental fee for March as well as P6,000.00 reservation fees for the months
of February and March.
Petitioner also tried to register and annotate the Contract on the title of Victor to the
property. Although respondent Register of Deeds accepted the required fees, he
nevertheless refused to register or annotate the same or even enter it in the day book
or primary register.
Thus, on April 23, 1990, petitioner filed a complaint for specific performance and
damages against Victor and the Register of Deeds.
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.
RTC: dismissing the Complaint and ordering petitioner to pay Victor P30,000.00 as
attorney's fees
CA: affirmed in toto.
ISSUE: 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.
RULING: No. The said contract is not terminated and Victor is bound by the contract.
Art. 1311 of the Civil Code provides, as follows —
Art. 1311. Contracts take effect only between the parties, their assigns and
heirs, except in case where the rights and obligations arising from the contract
are not transmissible by their nature, or by stipulation or by provision of law.
The heir is not liable beyond the value of the property he received from the
decedent.
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.
The nature of intransmissible rights as explained by Arturo Tolentino, an eminent
civilist, is as follows:
Among contracts which are intransmissible are those which are purely
personal, either by provision of law, such as in cases of partnerships and
agency, or by the very nature of the obligations arising therefrom, such as
those requiring special personal qualifications of the obligor. It may also be
stated that contracts for the payment of money debts are not transmitted to
 the heirs of a party, but constitute a charge against his estate. Thus, where
the client in a contract for professional services of a lawyer died, leaving minor
heirs, and the lawyer, instead of presenting his claim for professional services
under the contract to the probate court, substituted the minors as parties for
his client, it was held that the contract could not be enforced against the
minors; the lawyer was limited to a recovery on the basis of quantum meruit.9
It has also been held that a good measure for determining whether a contract
terminates upon the death of one of the parties is whether it is of such a character that
it may be performed by the promissor's personal representative. Contracts to perform
personal acts which cannot be as well performed by others are discharged by the death
of the promissor. Conversely, where the service or act is of such a character that it may
as well be performed by another, or where the contract, by its terms, shows that
performance by others was contemplated, death does not terminate the contract or
excuse nonperformance. 11
In the case at bar, there is no personal act required from the late Encarnacion
Bartolome. Rather, the obligation of Encarnacion in the contract to deliver possession
of the subject property to petitioner upon the exercise by the latter of its option to lease
the same may very well be performed by her heir Victor.
As early as 1903, it was held that "(H)e who contracts does so for himself and his
heirs." 12 In 1952, it was ruled that if the predecessor was duty-bound to reconvey land
to another, and at his death the reconveyance had not been made, the heirs can be
compelled to execute the proper deed for reconveyance. This was grounded upon the
principle that heirs cannot escape the legal consequence of a transaction entered into
by their predecessor-in-interest because they have inherited the property subject to the
liability affecting their common ancestor. 13
It is futile for Victor to insist that he is not a party to the contract because of the clear
provision of Article 1311 of the Civil Code. Indeed, being an heir of Encarnacion, there
is privity of interest between him and his deceased mother. He only succeeds to what
rights his mother had and what is valid and binding against her is also valid and binding
as against him. 14 This is clear from Parañaque Kings Enterprises vs. Court of
Appeals, 15 where this Court rejected a similar defense —
With respect to the contention of respondent Raymundo that he is not privy to
the lease contract, not being the lessor nor the lessee referred to therein, he
could thus not have violated its provisions, but he is nevertheless a proper
party. Clearly, he stepped into the shoes of the owner-lessor of the land as,
by virtue of his purchase, he assumed all the obligations of the lessor under
the lease contract. Moreover, he received benefits in the form of rental
payments. Furthermore, the complaint, as well as the petition, prayed for the
annulment of the sale of the properties to him. Both pleadings also alleged
collusion between him and respondent Santos which defeated the exercise by
petitioner of its right of first refusal.
In order then to accord complete relief to petitioner, respondent Raymundo
was a necessary, if not indispensable, party to the case. A favorable judgment
for the petitioner will necessarily affect the rights of respondent Raymundo as
the buyer of the property over which petitioner would like to assert its right of
first option to buy.
In the case at bar, the subject matter of the contract is likewise a lease, which is a
property right. The death of a party does not excuse nonperformance of a contract
which involves a property right, and the rights and obligations thereunder pass to the
personal representatives of the deceased. Similarly, nonperformance is not excused
by the death of the party when the other party has a property interest in the subject
matter of the contract. 16
Under both Article 1311 of the Civil Code and jurisprudence, therefore, Victor is bound
by the subject Contract of Lease with Option to Buy.
That being resolved, we now rule on the issue of whether petitioner had complied with
its obligations under the contract and with the requisites to exercise its option. The
payment by petitioner of the reservation fees during the two-year period within which it
had the option to lease or purchase the property is not disputed. In fact, the payment
of such reservation fees, except those for February and March, 1990 were admitted by
Victor.
Petitioner also paid the P15,000.00 monthly rental fee on the subject property by
depositing the same in China Bank Savings Account No. 1-04-02558-I-1, in the name
of Victor as the sole heir of Encarnacion Bartolome, 19 for the months of March to July
30, 1990, or a total of five (5) months, despite the refusal of Victor to turn over the
subject property. 20
Likewise, petitioner complied with its duty to inform the other party of its intention to
exercise its option to lease through its letter dated Match 12, 1990, 21 well within the
two-year period for it to exercise its option. Considering that at that time Encarnacion
Bartolome had already passed away, it was legitimate for petitioner to have addressed
its letter to her heir.
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.
WHEREFORE, in view of the foregoing, the instant Petition for Review is GRANTED.
The Decision of the Court of Appeals in CA-G.R. CV No. 40849 and that of the Regional
Trial Court of Valenzuela in Civil Case No. 3337-V-90 are both SET ASIDE.
JOSE E. ARUEGO, JR., SIMEONA SAN JUAN ARUEGO, MA. IMMACULADA T.
ALANON, ROBERTO A. TORRES, CRISTINA A. TORRES, JUSTO JOSE TORRES
and AGUSTIN TORRES, petitioners, vs. THE HON. COURT OF APPEALS,
THIRTEENTH DIVISION and ANTONIA ARUEGO, respondents. G.R. No. 112193
March 13, 1996
FACTS:
On March 7, 1983, a Complaint1 for Compulsory Recognition and Enforcement of
Successional Rights was filed before Branch 30 of the Regional Trial Court of Manila
by the minors, private respondent Antonia F. Aruego and her alleged sister Evelyn F.
Aruego, represented by their mother and natural guardian, Luz M. Fabian. Named
defendants therein were Jose E. Aruego, Jr. and the five (5) minor children of the
deceased Gloria A. Torres, represented by their father and natural guardian, Justo P.
Torres, Jr., now the petitioners herein.
In essence, the complaint avers that the late Jose M. Aruego, Sr., a married man, had
an amorous relationship with Luz M. Fabian sometime in 1959 until his death on March
30, 1982. Out of this relationship were born Antonia F. Aruego and Evelyn F. Aruego
on October 5, 1962 and September 3, 1963, respectively. The complaint prayed for an
Order praying that herein private respondent and Evelyn be declared the illegitimate
children of the deceased Jose M. Aruego, Sr.; that herein petitioners be compelled to
recognize and acknowledge them as the compulsory heirs of the deceased Jose M.
Aruego; that their share and participation in the estate of their deceased father be
determined and ordered delivered to them.
The main basis of the action for compulsory recognition is their alleged "open and
continuous possession of the status of illegitimate children" as stated in paragraphs 6
and 7 of the Complaint, to wit:
6. The plaintiffs' father, Jose M. Aruego, acknowledged and
recognized the herein plaintiffs as his children verbally among
plaintiffs' and their mother's family friends, as well as by myriad
different paternal ways, including but not limited to the following:
(a) Regular support and educational expenses;
(b) Allowance to use his surname;
(c) Payment of maternal bills;
(d) Payment of baptismal expenses and attendance therein;
(e) Taking them to restaurants and department stores on occasions
of family rejoicing;
(f) Attendance to school problems of plaintiffs;
(g) Calling and allowing plaintiffs to his office every now and then;
(h) Introducing them as such children to family friends.
7. The plaintiffs are thus, in continuous possession of the status
of (illegitimate) children of the deceased Jose M. Aruego who
showered them, with the continuous and clear manifestations of
paternal care and affection as above outlined.2
Petitioners denied all these allegations.
RTC: rendered judgment:
1. Declaring Antonia Aruego as illegitimate daughter of Jose Aruego and Luz Fabian;
2. Evelyn Fabian is not an illegitimate daughter of Jose Aruego with Luz Fabian;
3. Declaring that the estate of deceased Jose Aruego are the following:
xxx xxx xxx
4. Antonia Aruego is entitled to a share equal to 1/2 portion of share of the legitimate
children of Jose Aruego;
5. Defendants are hereby ordered to recognize Antonia Aruego as the illegitimate
daughter of Jose Aruego with Luz Fabian;
6. Defendants are hereby ordered to deliver to Antonia Aruego (her) share in the estate
of Jose Aruego, Sr.;
7. Defendants to play (sic) plaintiffs (Antonia Aruego) counsel the sum of P10,000.00
as atty's fee;
8. Cost against the defendants.3
Herein petitioners filed a Motion for Partial Reconsideration of the decision alleging loss
of jurisdiction on the part of the trial court over the complaint by virtue of the passage
of Executive Order No. 209 (as amended by Executive Order No. 227), otherwise
known as the Family Code of the Philippines which took effect on August 3, 1988. This
motion was denied by the lower court in the Order, dated January 14, 1993.
CA: Dismissed the petition
Private respondent's action for compulsory recognition as an illegitimate child was
brought under Book I, Title VIII of the Civil Code on PERSONS, specifically Article 285
thereof, which state the manner by which illegitimate children may prove their filiation,
to wit:
Art. 285. The action for the recognition of natural children may be
brought only during the lifetime of the presumed parents, except in
the following cases:
(1) If the father or mother died during the minority of the child, in
which case the latter may file the action before the expiration of four
years from the attainment of his majority; . . . .
 Petitioners, on the other hand, submit that with the advent of the New Family
Code on August 3, 1988, the trial court lost jurisdiction over the complaint of
private respondent on the ground of prescription, considering that under
Article 175, paragraph 2, in relation to Article 172 of the New Family Code, it
is provided that an action for compulsory recognition of illegitimate filiation, if
based on the "open and continuous possession of the status of an illegitimate
child," must be brought during the lifetime of the alleged parent without any
exception, otherwise the action will be barred by prescription.
The law cited reads:
Art. 172. The filiation of legitimate children is established by any of
the following:
(1) The record of birth appearing in the civil register or a final
judgment; or
(2) An admission of legitimate filiation in a public document or a
private handwritten instrument and signed by the parent concerned.
In the absence of the foregoing evidence, the legitimate filiation shall
be proved by:
(1) The open and continuous possession of the status of a legitimate
child; or
(2) Any other means allowed by the Rules of Court and special laws.
Art. 175. Illegitimate children may establish their illegitimate filiation
in the same way and on the same evidence as legitimate children.
The action must be brought within the same period specified in Article
173 [during the lifetime of the child], except when the action is based
on the second paragraph of Article 172, in which case the action may
be brought during the lifetime of the alleged parent.
In the case at bench, petitioners point out that, since the complaint of private
respondent and her alleged sister was filed on March 7, 1983, or almost one (1) year
after the death of their presumed father on March 30, 1982, the action has clearly
prescribed under the new rule as provided in the Family Code. Petitioners, further,
maintain that even if the action was filed prior to the effectivity of the Family Code, this
new law must be applied to the instant case pursuant to Article 256 of the Family Code
which provides for the retroactive effect insofar as it does not prejudice or impair vested
of acquired rights in accordance with the Civil Code or other laws.
ISSUE: Should the provisions of the Family Code be applied in the instant case? Will
the application of the Family Code in this case prejudice or impair any vested right of
the private respondent such that it should not be given retroactive effect in this particular
case?
RULING: NO. The Family Code should not be applied as it would impair the vested
right of the private respondent.
The phrase "vested or acquired rights" under Article 256, is not defined by the Family
Code. "The Committee did not define what is meant by a 'vested or acquired right,' thus
leaving it to the courts to determine what it means as each particular issue is submitted
to them. It is difficult to provide the answer for each and every question that may arise
in the future."5
In Tayag vs. Court of Appeals,6 a case which involves a similar complaint denominated
as "Claim for Inheritance" but treated by this court as one to compel recognition as an
illegitimate child brought prior to the effectivity of the Family Code by the mother of the
minor child, and based also on the "open and continuous possession of the status of
an illegitimate child," we had occasion to rule that:
Under the circumstances obtaining in the case at bar, we hold that
the right of action of the minor child has been vested by the filing of
the complaint in court under the regime of the Civil Code and prior to
the effectivity of the Family Code. We herein adopt our ruling in the
recent case of Republic of the Philippines vs. Court of
Appeals, et. al. 7 where we held that the fact of filing of the petition
already vested in the petitioner her right to file it and to have the same
proceed to final adjudication in accordance with the law in force at
the time, and such right can no longer be prejudiced or impaired by
the enactment of a new law.
xxx xxx xxx
Accordingly, Article 175 of the Family Code finds no proper
application to the instant case since it will ineluctably affect adversely
a right of private respondent and, consequentially, of the minor child
she represents, both of which have been vested with the filing of the
complaint in court. The trial court is, therefore, correct in applying the
provisions of Article 285 of the Civil Code and in holding that private
respondent's cause of action has not yet prescribed.
Tayag applies four-square with the case at bench. The action brought by private
respondent Antonia Aruego for compulsory recognition and enforcement of
successional rights which was filed prior to the advent of the Family Code, must be
governed by Article 285 of the Civil Code and not by Article 175, paragraph 2 of the
Family Code. The present law cannot be given retroactive effect insofar as the instant
case is concerned, as its application will prejudice the vested right of private respondent
to have her case decided under Article 285 of the Civil Code. The right was vested to
her by the fact that she filed her action under the regime of the Civil Code. Prescinding
from this, the conclusion then ought to be that the action was not yet barred,
notwithstanding the fact that it was brought when the putative father was already
deceased, since private respondent was then still a minor when it was filed, an
exception to the general rule provided under Article 285 of the Civil Code. Hence, the
trial court, which acquired jurisdiction over the case by the filing of the complaint, never
lost jurisdiction over the same despite the passage of E.O. No. 209, also known as the
Family Code of the Philippines.

Our ruling herein reinforces the principle that the jurisdiction of a court, whether in
criminal or civil cases, once attached cannot be ousted by subsequent happenings or
events, although of a character which would have prevented jurisdiction from attaching
in the first instance, and it retains jurisdiction until it finally disposes of the case. 8

WHEREFORE, the petition is DENIED and the decision of the Court of Appeals dated
August 31, 1993 and its Resolution dated October 13, 1993 are hereby AFFIRMED.

SO ORDERED.
PABLO LORENZO, as trustee of the estate of Thomas Hanley, deceased, plaintiff-
appellant, vs. JUAN POSADAS, JR., Collector of Internal Revenue, defendant-
appellant. G.R. No. L-43082 June 18, 1937
FACTS:
On October 4, 1932, the plaintiff Pablo Lorenzo, in his capacity as trustee of the estate
of Thomas Hanley, deceased, brought this action in the Court of First Instance of
Zamboanga against the defendant, Juan Posadas, Jr., then the Collector of Internal
Revenue, for the refund of the amount of P2,052.74, paid by the plaintiff as inheritance
tax on the estate of the deceased, and for the collection of interest thereon at the rate
of 6 per cent per annum, computed from September 15, 1932, the date when the
aforesaid tax was [paid under protest. The defendant set up a counterclaim for
P1,191.27 alleged to be interest due on the tax in question and which was not included
in the original assessment. From the decision of the Court of First Instance of
Zamboanga dismissing both the plaintiff's complaint and the defendant's counterclaim,
both parties appealed to this court.
It appears that on May 27, 1922, one Thomas Hanley died in Zamboanga, Zamboanga,
leaving a will and considerable amount of real and personal properties. The will was
admitted to probate. Said will provides, among other things, as follows:
5. I direct that all real estate owned by me at the time of my death be not sold
or otherwise disposed of for a period of ten (10) years after my death, and that
the same be handled and managed by the executors, and proceeds thereof
to be given to my nephew, Matthew Hanley, at Castlemore, Ballaghaderine,
County of Rosecommon, Ireland, and that he be directed that the same be
used only for the education of my brother's children and their descendants.
6. I direct that ten (10) years after my death my property be given to the above
mentioned Matthew Hanley to be disposed of in the way he thinks most
advantageous.
xxx xxx xxx
8. I state at this time I have one brother living, named Malachi Hanley, and
that my nephew, Matthew Hanley, is a son of my said brother, Malachi Hanley.
The Court of First Instance of Zamboanga considered it proper for the best interests of
the estate to appoint a trustee to administer the real properties which, under the will,
were to pass to Matthew Hanley ten years after the two executors named in the will,
was, on March 8, 1924, appointed trustee. Moore took his oath of office and gave bond
on March 10, 1924. He acted as trustee until February 29, 1932, when he resigned and
the plaintiff herein was appointed in his stead.
During the incumbency of the plaintiff as trustee, the defendant Collector of Internal
Revenue, alleging that the estate left by the deceased at the time of his death consisted
of realty valued at P27,920 and personalty valued at P1,465, and allowing a deduction
of P480.81, assessed against the estate an inheritance tax in the amount of P1,434.24
which, together with the penalties for deliquency in payment consisting of a 1 per cent
monthly interest from July 1, 1931 to the date of payment and a surcharge of 25 per
cent on the tax, amounted to P2,052.74. On March 15, 1932, the defendant filed a
motion in the testamentary proceedings pending before the Court of First Instance of
Zamboanga (Special proceedings No. 302) praying that the trustee, plaintiff herein, be
ordered to pay to the Government the said sum of P2,052.74. The motion was granted.
On September 15, 1932, the plaintiff paid said amount under protest, notifying the
defendant at the same time that unless the amount was promptly refunded suit would
be brought for its recovery. The defendant overruled the plaintiff's protest and refused
to refund the said amount hausted, plaintiff went to court with the result herein above
indicated.
Plaintiff contends that
I. In holding that the real property of Thomas Hanley, deceased, passed to his
instituted heir, Matthew Hanley, from the moment of the death of the former,
and that from the time, the latter became the owner thereof.
II. In holding, in effect, that there was deliquency in the payment of inheritance
tax due on the estate of said deceased.
III. In holding that the inheritance tax in question be based upon the value of
the estate upon the death of the testator, and not, as it should have been held,
upon the value thereof at the expiration of the period of ten years after which,
according to the testator's will, the property could be and was to be delivered
to the instituted heir.
IV. In not allowing as lawful deductions, in the determination of the net amount
of the estate subject to said tax, the amounts allowed by the court as
compensation to the "trustees" and paid to them from the decedent's estate.
V. In not rendering judgment in favor of the plaintiff and in denying his motion
for new trial.
The defendant-appellant contradicts the theories of the plaintiff and assigns the
following error besides:
The lower court erred in not ordering the plaintiff to pay to the defendant the
sum of P1,191.27, representing part of the interest at the rate of 1 per cent per
month from April 10, 1924, to June 30, 1931, which the plaintiff had failed to
pay on the inheritance tax assessed by the defendant against the estate of
Thomas Hanley.
ISSUES:
(a) When does the inheritance tax accrue and when must it be satisfied?
(b) Should the inheritance tax be computed on the basis of the value of the estate at such property as passes to him. Subsequent appreciation or depreciation is
the time of the testator's death, or on its value ten years later? immaterial." (Ross, Inheritance Taxation, p. 72.)

RULING:
(a) The accrual of the inheritance tax is distinct from the obligation to pay the same.
Section 1536 as amended, of the Administrative Code, imposes the tax upon "every
transmission by virtue of inheritance, devise, bequest, gift mortis causa, or advance in
anticipation of inheritance,devise, or bequest." The tax therefore is upon
transmission or the transfer or devolution of property of a decedent, made
effective by his death. It is in reality an excise or privilege tax imposed on the right to
succeed to, receive, or take property by or under a will or the intestacy law, or deed,
grant, or gift to become operative at or after death. Acording to article 657 of the Civil
Code, "the rights to the succession of a person are transmitted from the moment of his
death." "In other words", said Arellano, C. J., ". . . the heirs succeed immediately to all
of the property of the deceased ancestor. The property belongs to the heirs at the
moment of the death of the ancestor as completely as if the ancestor had executed and
delivered to them a deed for the same before his death."
Our attention is directed to the statement of the rule in Cyclopedia of Law of and
Procedure (vol. 37, pp. 1574, 1575) that, in the case of contingent remainders, taxation
is postponed until the estate vests in possession or the contingency is settled. This rule
was formerly followed in New York and has been adopted in Illinois, Minnesota,
Massachusetts, Ohio, Pennsylvania and Wisconsin. This rule, horever, is by no means
entirely satisfactory either to the estate or to those interested in the property (26 R. C.
L., p. 231.). Realizing, perhaps, the defects of its anterior system, we find upon
examination of cases and authorities that New York has varied and now requires the
immediate appraisal of the postponed estate at its clear market value and the payment
forthwith of the tax on its out of the corpus of the estate transferred. (In re Vanderbilt,
172 N. Y., 69; 69 N. E., 782; In re Huber, 86 N. Y. App. Div., 458; 83 N. Y. Supp., 769;
Estate of Tracy, 179 N. Y., 501; 72 N. Y., 519; Estate of Brez, 172 N. Y., 609; 64 N. E.,
958; Estate of Post, 85 App. Div., 611; 82 N. Y. Supp., 1079. Vide also, Saltoun vs.
Lord Advocate, 1 Peter. Sc. App., 970; 3 Macq. H. L., 659; 23 Eng. Rul. Cas., 888.)
California adheres to this new rule (Stats. 1905, sec. 5, p. 343).

Plaintiff, however, asserts that while article 657 of the Civil Code is applicable to testate But whatever may be the rule in other jurisdictions, we hold that a transmission
as well as intestate succession, it operates only in so far as forced heirs are concerned. by inheritance is taxable at the time of the predecessor's death, notwithstanding
But the language of article 657 of the Civil Code is broad and makes no distinction the postponement of the actual possession or enjoyment of the estate by the
between different classes of heirs. That article does not speak of forced heirs; it does beneficiary, and the tax measured by the value of the property transmitted at that
not even use the word "heir". It speaks of the rights of succession and the transmission time regardless of its appreciation or depreciation.
thereof from the moment of death. The provision of section 625 of the Code of Civil
Procedure regarding the authentication and probate of a will as a necessary condition The judgment of the lower court is accordingly modified, with costs against the plaintiff
to effect transmission of property does not affect the general rule laid down in article in both instances. So ordered.
657 of the Civil Code. The authentication of a will implies its due execution but once
probated and allowed the transmission is effective as of the death of the testator in
accordance with article 657 of the Civil Code. Whatever may be the time when actual
transmission of the inheritance takes place, succession takes place in any event at the
moment of the decedent's death.

(b) The plaintiff contends that the estate of Thomas Hanley, in so far as the real
properties are concerned, did not and could not legally pass to the instituted heir,
Matthew Hanley, until after the expiration of ten years from the death of the testator on
May 27, 1922 and, that the inheritance tax should be based on the value of the estate
in 1932, or ten years after the testator's death. The plaintiff introduced evidence tending
to show that in 1932 the real properties in question had a reasonable value of only
P5,787. This amount added to the value of the personal property left by the deceased,
which the plaintiff admits is P1,465, would generate an inheritance tax which, excluding
deductions, interest and surcharge, would amount only to about P169.52.

If death is the generating source from which the power of the estate to impose
inheritance taxes takes its being and if, upon the death of the decedent, succession
takes place and the right of the estate to tax vests instantly, the tax should be measured
by the vap8 of the estate as it stood at the time of the decedent's death, regardless of
any subsequent contingency value of any subsequent increase or decrease in value.
"The right of the state to an inheritance tax accrues at the moment of death, and
hence is ordinarily measured as to any beneficiary by the value at that time of