Heirs Bound by Contracts: Understanding Obligations in Property Transfers

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The key takeaway is that heirs inherit not only assets but also the legal obligations tied to those assets. A contract entered into by a deceased parent regarding property is binding on their heirs, who must honor the agreement. TLDR; Heirs inherit obligations along with assets. Contracts made by deceased parents regarding property are binding on the heirs, who must honor them.

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G.R. NO. 169129, March 28, 2007

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Introduction

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Imagine purchasing a piece of land from someone, building your home on it, and living there for years, only to have the seller’s heirs later dispute your ownership. This scenario highlights the importance of understanding the legal responsibilities that heirs inherit when it comes to property transactions made by their deceased parents. This case explores the extent to which heirs are bound by the contracts of their predecessors, particularly in real estate transactions.

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This case involves a dispute over a 107-square meter lot in Pasig City. Spouses Jose and Proserfina Lumbao (respondents) claimed they purchased the lot from Rita Catoc Santos (deceased), the predecessor-in-interest of Virgilio, Victorino, Ernesto, and Tadeo Santos (petitioners). After Rita’s death, the heirs executed a deed of extrajudicial settlement that included the disputed property. The central legal question is whether the heirs are obligated to honor the sale made by their deceased mother and transfer the property to the respondents.

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Legal Context: Obligations of Heirs and Contractual Validity

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Philippine law dictates that heirs inherit not only the assets but also the liabilities of the deceased. Article 1311 of the New Civil Code is central to this principle:

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“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.”

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This means that contracts entered into by a deceased person are generally binding on their heirs, provided the obligations are transmissible and the heirs’ liability does not exceed the value of the inherited property. It’s important to note that this principle ensures that contractual obligations are not easily evaded upon death, providing stability and predictability in legal transactions.

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In property law, a