Succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent
of the value of the inheritance, of a person are transmitted through his death to another or others either
by his will or by operation of law.
Decedent –one who transmitted a property thru succession whether with or qithout will
If left a will, called a testator
Inheritance includes all property, rights and obligations not extinguished by death of decedent
Rights to succession are transmitted from the moment of the death of the decedent
777. Succession may be testamentary, legal or intestate, or mixed
Testamentary succession results from designation of an heir made in a will
Mixed-partly by wil and partly by operation of law
Devisees and Legatees – persons to whom gifts or real and personal proptertues are given by virtue of a
will
WILLS In GENERAL
A will is an act whereby a person is permitted, with the formalities prescribed by law, to control to a
certain degree the disposition of his estate, to take effect after his death
The making of a will is a strictly personal act; it cannot be left in whole or in part to the discretion of a
third person, or accomplished through the instrumentality of an agent or attorney.
Estate of KH Hematy vs Luzon Surety Co
CFI of Rizal
20 different indemnity agreements or counter bonds
Lower court dismissed the claim on two grounds (1 ) that the premiums due and cost of documentary
stamps were not contemplated under the indemnity agreements to be a part of the
undertaking of the guarantor (Hemady), since they were not liabilities incurred after the
execution of the counterbonds; and (2) that "whatever losses may occur after
Hemady's death, are not chargeable to his estate, because upon his death he ceased to
be guarantor."
2. G.R. No. L-8437. November 28, 1956.
ESTATE OF K. H. HEMADY, deceased,
vs.
LUZON SURETY CO., INC., claimant-Appellant.
Preliminaries:
Before the Court is an appeal by Luzon Surety Co., Inc., from an order of the Court of First Instance of
Rizal, dismissing
its claim against the Estate of K. H. Hemady.
Facts:
K. H. Hemady before his demise entered a suretyship agreement with Luzon Surety Co. Inc., herein
claimaint-appellant,
as solidary guarantor on twenty different indemnity agreements, or counter bonds, each subscribed by a
distinct
principal, in consideration of the Luzon Surety Co.’s of having guaranteed, the various principals in favor
of different
creditors.
Stipulated in the suretyship agreement, among others, is that the undersigned, jointly and severally,
agree at all times
to indemnify the COMPANY and keep it indemnified and hold and save it harmless from and against any
and all
damages, losses, and expenses of whatsoever kind and nature which the COMPANY shall or may, at any
time sustain or
incur. It stipulated that, It shall not be necessary for the COMPANY to bring suit against the principal
upon his default,
or to exhaust the property of the principal, but the liability hereunder of the undersigned indemnitor
shall be jointly
and severally, a primary one, the same as that of the principal, and shall be exigible immediately upon
the occurrence
of such default.
Upon the death of Hemady the court assigned an administratrix of his estate thereafter the Luzon Surety
Co. had filed a
claim against the Estate based on twenty different indemnity agreements.
The administratrix contends that upon the death of Hemady, his liability as a guarantor terminated, and
therefore, in
the absence of a showing that a loss or damage was suffered, the claim cannot be considered
contingent. The Trial
Court believes that there is merit in this contention and finds support in Article 2046 of the new Civil
Code. It should be
noted that a new requirement has been added for a person to qualify as a guarantor, that is integrity. As
correctly
pointed out by the Administratrix, integrity is something purely personal and is not transmissible. Upon
the death of
Hemady, his integrity was not transmitted to his estate or successors. Whatever loss therefore, may
occur after
Hemady’s death, are not chargeable to his estate because upon his death he ceased to be a guarantor.
Thus, the lower
court dismissed the claims of Luzon Surety Co. stating that “whatever losses may occur after Hemady’s
death, are not
chargeable to his estate, because upon his death he ceased to be guarantor.”
Issue:
Whether or not the obligation left by the guarantor upon his death is not chargeable to his estate based
on the
extinguishment of his qualification?
Held:
The Court held that the reasoning presented by the lower court and the administratrix is untenable. The
Court said
under the Civil Code, “Contracts take effect only as between the parties, their assigns and heirs, except
in the 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 Court further stressed that, while in our successional system the responsibility of the heirs for the
debts of their
decedent cannot exceed the value of the inheritance they receive from him, the principle remains intact
that these
heirs succeed not only to the rights of the deceased but also to his obligations. Articles 774 and 776 of
the New Civil
Code (and Articles 659 and 661 of the preceding one) expressly so provide.
“ART. 774. — Succession is a mode of acquisition by virtue of which the property, rights and obligations
to the
extent of the value of the inheritance, of a person are transmitted through his death to another or
others either by
his will or by operation of law.”
“ART. 776. — The inheritance includes all the property, rights and obligations of a person which are not
extinguished by his death.”
Under our law, therefore, the general rule is that a party’s contractual rights and obligations are
transmissible to the
successors.
The Court also stressed that, of the three exceptions fixed by Article 1311, the nature of the obligation
of the surety or
guarantor does not warrant the conclusion that his peculiar individual qualities are contemplated as a
principal
inducement for the contract.
The Court further explains the three exceptions to intransmissibility of obligations of the decedent to his
heirs or
assigns as according to Art. 1311 of the Civil Code.
First is the “Nature of the Undertaking”. In the case at bar the nature of the obligation of the surety or
guarantor does
not warrant the conclusion that his peculiar individual qualities are contemplated as a principal
inducement for the
contract. In the instant case what is expected is that the debt or reimbursement be made by the
guarantor or surety
himself or by someone else in his behalf, so long as the money was paid to it.
The second exception is by “The Stipulations of the Contracts”. Being exceptional and contrary to the
general rule, this
intransmissibility should not be easily implied, but must be expressly established, or at the very least,
clearly inferable
from the provisions of the contract.
The third exception is by “Provision of Law”. The third exception to the transmissibility of obligations
under Article
1311 exists when they are “not transmissible by operation of law”. The provision makes reference to
those cases where
the law expresses that the rights or obligations are extinguished by death, as is the case in legal support
(Article 300),
parental authority (Article 327), usufruct (Article 603), contracts for a piece of work (Article 1726),
partnership (Article
1830) and agency (Article 1919). By contract, the articles of the Civil Code that regulate guaranty or
suretyship (Articles
2047 to 2084) contain no provision that the guaranty is extinguished upon the death of the guarantor or
the surety.
The contracts of suretyship entered into by K. H. Hemady in favor of Luzon Surety Co. not being
rendered
intransmissible due to the nature of the undertaking, nor by the stipulations of the contracts
themselves, nor by
provision of law, his eventual liability thereunder necessarily passed upon his death to his heirs. The
contracts,
therefore, give rise to contingent claims provable against his estate.
The Court’s conclusion is that the solidary guarantor’s liability is not extinguished by his death, and that
in such event,
the Luzon Surety Co., had the right to file against the estate a contingent claim for reimbursement.
The order appealed from was reversed.
Case Digest:Union Bank v. Santibanez
452 SCRA 228
FACTS:
On May 31, 1980, the First Countryside Credit Corporation (FCCC) and Efraim
Santibañez entered into a loan agreement in the amount of P128,000.00. The amount
was intended for the payment of one (1) unit Ford 6600 Agricultural Tractor. In view
thereof, Efraim and his son, Edmund, executed a promissory note in favor of the FCCC,
the principal sum payable in five equal annual amortizations. On Dec. 1980, FCCC and
Efraim entered into another loan agreement for the payment of another unit
of Ford 6600 and one unit of a Rotamotor. Again, Efraim and Edmund executed a
promissory note and a Continuing Guaranty Agreement for the later loan. In 1981,
Efraim died, leaving a holographic will. Testate proceedings commenced before the RTC
of Iloilo City. Edmund was appointed as the special administrator of the estate. During
the pendency of the testate proceedings, the surviving heirs, Edmund and his
sister Florence, executed a Joint Agreement, wherein they agreed to divide between
themselves and take possession of the three (3) tractors: (2) tractors for Edmund and (1)
for Florence. Each of them was to assume the indebtedness of their late father to FCCC,
corresponding to the tractor respectively taken by them. In the meantime, a Deed of
Assignment with Assumption of Liabilities was executed by and between FCCC and
Union Bank, wherein the FCCC assigned all its assets and liabilities to Union Bank.
Demand letters were sent by Union Bank to Edmund, but the latter refused to pay.
Thus, on February 5, 1988, Union Bank filed a Complaint for sum of money against
the heirs of Efraim Santibañez, Edmund and Florence, before the RTC of Makati City.
Summonses were issued against both, but the one intended for Edmund was not served
since he was in the United States and there was no information on his address or the
date of his return to the Philippines. Florence filed her Answer and alleged that the loan
documents did not bind her since she was not a party thereto. Considering that the joint
agreement signed by her and her brother Edmund was not approved by the probate
court, it was null and void; hence, she was not liable to Union Bank under the joint
agreement.
Union Bank asserts that the obligation of the deceased had passed to his
legitimate heirs (Edmund and Florence) as provided in Article 774 of the Civil Code; and
that the unconditional signing of the joint agreement estopped Florence, and that she
cannot deny her liability under the said document.
In her comment to the petition, Florence maintains that Union Bank is trying to recover
a sum of money from the deceased Efraim Santibañez; thus the claim should have been
filed with the probate court. She points out that at the time of the execution of the joint
agreement there was already an existing probate proceedings. She asserts that even if
the agreement was voluntarily executed by her and her brother Edmund, it should still
have been subjected to the approval of the court as it may prejudice the estate,
the heirs or third parties.
ISSUE:
W/N the claim of Union Bank should have been filed with the probate court before
which the testate estate of the late Efraim Santibañez was pending. W/N the agreement
between Edmund and Florence (which was in effect, a partition of hte estate) was void
considering that it had not been approved by the probate court. W/N there can be a
valid partition among the heirs before the will is probated.
HELD:
Well-settled is the rule that a probate court has the jurisdiction to determine all the
properties of the deceased, to determine whether they should or should not be included
in the inventory or list of properties to be administered. The said court is primarily
concerned with the administration, liquidation and distribution of the estate.
In our jurisdiction, the rule is that there can be no valid partition among the heirs until
after the will has been probated. In the present case, Efraim left a holographic will which
contained the provision which reads as follows:
o (e) All other properties, real or personal, which I own and may be
discovered later after my demise, shall be distributed in the proportion indicated in the
immediately preceding paragraph in favor of Edmund and Florence, my children.
The above-quoted is an all-encompassing provision embracing all the properties left by
the decedent which might have escaped his mind at that time he was making his will,
and other properties he may acquire thereafter. Included therein are the three (3)
subject tractors. This being so, any partition involving the said tractors among
the heirs is not valid. The joint agreement executed by Edmund and Florence,
partitioning the tractors among themselves, is invalid, specially so since at the time of its
execution, there was already a pending proceeding for the probate of their late father’s
holographic will covering the said tractors.
The Court notes that the loan was contracted by the decedent. The bank, purportedly a
creditor of the late Efraim Santibañez, should have thus filed its money claim with the
probate court in accordance with Section 5, Rule 86 of the Revised Rules of Court.
The filing of a money claim against the decedent’s estate in the probate court is
mandatory. This requirement is for the purpose of protecting the estate of the deceased
by informing the executor or administrator of the claims against it, thus enabling him to
examine each claim and to determine whether it is a proper one which should be
allowed. The plain and obvious design of the rule is the speedy settlement of the affairs
of the deceased and the early delivery of the property to the distributees, legatees,
or heirs.
Perusing the records of the case, nothing therein could hold Florence accountable for
any liability incurred by her late father. The documentary evidence presented,
particularly the promissory notes and the continuing guaranty agreement, were
executed and signed only by the late Efraim Santibañez and his son Edmund. As the
petitioner failed to file its money claim with the probate court, at most, it may only go
after Edmund as co-maker of the decedent under the said promissory notes and
continuing guaranty.
Borja v. Borja
46 SCRA 577
FACTS:
Francisco de Borja filed a petition for probate of the will of his wife who died, Josefa
Tangco, with the CFI of Rizal. He was appointed executor and administrator, until he
died; his son Jose became the sole administrator. Francisco had taken a 2nd wife
Tasiana before he died; she instituted testate proceedings with the CFI of Nueva Ecija
upon his death and was appointed special administatrix. Jose and Tasiana entered upon
a compromise agreement, but Tasiana opposed the approval of the compromise
agreement. She argues that it was no valid, because the heirs cannot enter into such
kind of agreement without first probating the will of Francisco, and at the time the
agreement was made, the will was still being probated with the CFI of Nueva Ecija.
ISSUE:
W/N the compromise agreement is valid, even if the will of Francisco has not yet been
probated.
HELD:
YES, the compromise agreement is valid.
The agreement stipulated that Tasiana will receive P800,000 as full payment for
her hereditary share in the estate of Francisco and Josefa.
There was here no attempt to settle or distribute the estate of Francisco de Borja among
the heirs thereto before the probate of his will. The clear object of the contract was
merely the conveyance by Tasiana Ongsingco of any and all her individual share and
interest, actual or eventual, in the estate of Francisco de Borja and Josefa Tangco. There
is no stipulation as to any other claimant, creditor or legatee.
And as a hereditary share in a decedent’s estate is transmitted or vested immediately
from the moment of the death of such causante or predecessor in interest (Civil Code of
the Philippines, Art. 777) there is no legal bar to a successor (with requisite contracting
capacity) disposing of her or his hereditary share immediately after such death, even if
the actual extent of such share is not determined until the subsequent liquidation of the
estate.
ALVAREZ v IAC
185 SCRA 8 May 7, 1990
Aniceto Yanes was survived by his children, Rufino, Felipe and Teodora. Herein private
respondents, Estelita, Iluminado and Jesus, are the children of Rufino who died in 1962
while the other private respondents, Antonio and Rosario Yanes, are children of Felipe.
Teodora was survivedby her child, Jovita (Jovito) Alib. There are two parcels of land
which are involved in this case. Said lots were registered in the names of the heirs of
Aniceto Yanes. Fortunato D. Santiago was issued a Transfer Certificate of Title. Santiago
then sold the lots to Monico B. Fuentebella, Jr. The lots were sold thereafter Rosendo
Alvarez. The Yaneses filed a complaint against Santiago, Arsenia Vda. de Fuentebella,
Alvarez and the Register of Deeds of Negros Occidental for the “return” of the ownership
and possession of the lots, and prayed for an accounting of the produce of the land from
1944 up to the filing of the complaint, and that the share or money equivalent due
the heirs be delivered to them, and damages. During the pendency of the case, Alvarez
sold the lots to Dr. Rodolfo Siason.
ISSUE: Whether the liability arising from the sale of the lots made by Rosendo Alvarez
to Dr.Rodolfo Siason should be the sole liability of the late Rosendo Alvarez or of his
estate, after his death.
As a general rule is that a party’s contractual rights and obligations are transmissible to
the successors. However, in this case Petitioners being the heirs of the late Rosendo
Alvarez, cannot escape the legal consequences of their father’s transaction, which gave
rise to the present claim for damages. That petitioners did not inherit the property
involved herein is of no moment because by legal fiction, the monetary equivalent
thereof devolved into the mass of their father’s hereditary estate, and we have ruled that
the hereditary assets are always liable in their totality for the payment of the debts of the
estate.
It must, however, be made clear that petitioners are liable only to the extent of the value
of their inheritance.
