De Borja vs. Vda. de Borja

An heir may validly sell or compromise their undivided hereditary share in a decedent's estate even before the probate of the will, as successional rights are transmitted and vested from the moment of the decedent's death pursuant to Article 777 of the Civil Code.

Francisco de Borja was first married to Josefa Tangco, who died in 1940. Following her death, Francisco married Tasiana Ongsingco. When Francisco died in 1954, a bitter conflict arose between his son from the first marriage, Jose, and his widow, Tasiana, leading to eighteen pending court cases. The dispute primarily concerned the administration and distribution of the estates of both Josefa and Francisco, as well as the ownership of the Hacienda Jalajala.

• Jose de Borja and Tasiana Ongsingco executed a compromise agreement on October 12, 1963, wherein Jose agreed to pay Tasiana P800,000 as full settlement of her hereditary share in the estates of Josefa Tangco and Francisco de Borja.
• The agreement stipulated that the funds would come from the sale of the "Poblacion" portion of Hacienda Jalajala, and Tasiana would renounce all other claims against the estates.
• Tasiana later opposed the approval of this agreement in the probate courts, claiming it was void because Francisco's will had not yet been probated and the agreement lacked a definite period for performance.
• A separate civil case (L-28611) was filed to determine whether Hacienda Jalajala was the exclusive property of Francisco or conjugal property of his first marriage with Josefa.
• In the Jalajala dispute, the trial court relied on a sworn statement by Francisco and hearsay testimony from a relative to conclude the property was Francisco's exclusive asset, despite multiple prior judicial inventories filed by both Francisco and Tasiana listing it as conjugal.
• The CFI of Rizal approved the compromise agreement, while the CFI of Nueva Ecija disapproved it, leading to the current consolidated appeals.

• Tasiana argued that the compromise agreement was void because heirs cannot settle an estate by agreement before the probate of the decedent's will, relying on the doctrine in Guevara vs. Guevara.
• She contended that the agreement was invalid because it involved a compromise on her marital status and the validity of her marriage to Francisco.
• She claimed the agreement had ceased to have force and effect because it was intended to have a 60-day resolutory period for the sale of the property, which had already lapsed.
• Regarding Hacienda Jalajala, she argued it was Francisco's exclusive property because he allegedly purchased it with his own funds while he was still a bachelor.

• Jose de Borja argued that the agreement was a valid contract of sale of hereditary rights, which is permissible under the Civil Code because such rights vest immediately upon the death of the decedent.
• He maintained that the probate of the will is not a prerequisite for an heir to sell or alienate their own interest in the estate to another person.
• He asserted that Hacienda Jalajala was conjugal property of the first marriage, as it was acquired during the marriage and the legal presumption of its conjugal nature was never successfully rebutted.

• Procedural Issues:
  • Whether the Court of First Instance of Rizal had jurisdiction to approve a compromise agreement that affected an estate under administration in the Court of First Instance of Nueva Ecija.
• Substantive Issues:
  • Whether an heir can validly enter into a compromise agreement or sale regarding their hereditary share prior to the probate of the decedent's will.
  • Whether Hacienda Jalajala (Poblacion) is the exclusive property of Francisco de Borja or the conjugal property of his first marriage with Josefa Tangco.

• Procedural:
  • The Court ruled that the CFI of Rizal acted within its authority because the compromise agreement was a contract between the parties in their individual capacities regarding their own shares, and its approval by the court merely made it enforceable by execution rather than a separate suit.
• Substantive:
  • The Court held the compromise agreement valid, ruling that the Guevara vs. Guevara doctrine (requiring probate) applies to the formal settlement and distribution of the estate's assets by the court, but does not prohibit an individual heir from disposing of their own interest in the inheritance.
  • Under Article 777 of the Civil Code, successional rights are transmitted from the moment of death; therefore, Tasiana became the owner of her share upon Francisco's death and could validly sell that interest to Jose regardless of the pending probate.
  • The Court reversed the ruling on Hacienda Jalajala, declaring it conjugal property of the first marriage because the presumption under Article 160 was not rebutted by the hearsay testimony provided, especially since both Francisco and Tasiana had previously filed judicial inventories admitting the property was conjugal.

• Article 777 of the Civil Code — This doctrine establishes that the rights to the succession are transmitted from the moment of the death of the decedent; the Court used this to justify that an heir has a vested right to dispose of their share immediately upon the death of the predecessor.
• Article 1088 of the Civil Code — This provision allows an heir to sell their hereditary rights to a stranger; the Court reasoned that if a sale to a stranger is permitted, a sale to a co-heir (like Jose) is even more acceptable.
• Article 160 of the Civil Code — This creates a presumption that all property of the marriage belongs to the conjugal partnership unless it be proved that it pertains exclusively to one spouse; the Court applied this to Hacienda Jalajala, finding the evidence to the contrary insufficient.
• Article 2037 of the Civil Code — This states that a compromise has the effect and authority of res judicata upon the parties; the Court used this to explain the binding nature of the agreement and the effect of judicial approval.

• "The rights to the succession are transmitted from the moment of the death of the decedent."
• "As a hereditary share in a decedent's estate is transmitted or vested immediately from the moment of the death of such causante... there is no legal bar to a successor... disposing of her or his hereditary share immediately after such death."
• "Estates would never be settled if there were to be a revaluation with every subsequent fluctuation in the values of currency and properties of the estate."

• Guevara vs. Guevara, 74 Phil. 479 — Distinguished; the Court clarified that while this case makes probate mandatory for the settlement of an estate, it does not prevent an heir from alienating their individual interest in the inheritance.
• Dizon Rivera vs. Dizon, 33 SCRA 554 — Followed; cited to reject the argument that the agreement should be invalidated due to the subsequent devaluation of currency or increase in property value.
• De Borja vs. Jugo, 54 Phil. 465 — Referenced; used to establish the history of the acquisition and co-ownership of the Hacienda Jalajala.

• Article 777, Civil Code — Cited to prove that successional rights are transmitted at the moment of death.
• Article 160, Civil Code — Cited regarding the presumption of conjugal property.
• Article 1088, Civil Code — Cited regarding the right of an heir to sell hereditary rights.
• Article 2037, Civil Code — Cited regarding the res judicata effect of a compromise.
• Rule 74, Section 1, Rules of Court — Cited regarding the conditions for extrajudicial settlement of estates.