Liggayu, Mc Anthony G.R. No. 189121, July 31, 2013 AMELIA GARCIA-QUIAZON, JENNETH QUIAZON AND MARIA JENNIFER QUIAZON, Petitioners, v. MA. LOURDES BELEN, FOR AND IN BEHALF OF MARIA LOURDES ELISE QUIAZON, Respondent. PEREZ, J.: Case Doctrine/s: Section 1, Rule 73 of the Rules of Court: Where estate of deceased persons settled. – If the decedent is an inhabitant of the Philippines at the time of his death, whether a citizen or an alien, his will shall be proved, or letters of administration granted, and his estate settled, in the Court of First Instance [now Regional Trial
Case digests on special proceedings. Rules on special proceedings Rules of Court Philippines Civil Procedure Rules 72 to 90 Rules of Court Cases
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Liggayu, Mc Anthony
G.R. No. 189121, July 31, 2013
AMELIA GARCIA-QUIAZON, JENNETH QUIAZON AND MARIA JENNIFER
QUIAZON, Petitioners,
v.
MA. LOURDES BELEN, FOR AND IN BEHALF OF MARIA LOURDES ELISE
QUIAZON, Respondent.
PEREZ, J.:
Case Doctrine/s:
Section 1, Rule 73 of the Rules of Court:
Where estate of deceased persons settled. – If the decedent is an inhabitant of the
Philippines at the time of his death, whether a citizen or an alien, his will shall be proved,
or letters of administration granted, and his estate settled, in the Court of First
Instance [now Regional Trial Court] in the province in which he resides at the time of his
death, and if he is an inhabitant of a foreign country, the Court of First Instance [now
Regional Trial Court] of any province in which he had estate. The court first taking
cognizance of the settlement of the estate of a decedent, shall exercise jurisdiction to the
exclusion of all other courts. The jurisdiction assumed by a court, so far as it depends on
the place of residence of the decedent, or of the location of his estate, shall not be
contested in a suit or proceeding, except in an appeal from that court, in the original case,
or when the want of jurisdiction appears on the record.
The term “resides” connotes ex vi termini “actual residence” as distinguished from “legal
residence or domicile.” This term “resides,” like the terms “residing” and “residence,” is
elastic and should be interpreted in the light of the object or purpose of the statute or
rule in which it is employed. In the application of venue statutes and rules – Section 1,
Rule 73 of the Revised Rules of Court is of such nature – residence rather than domicile
is the significant factor. Even where the statute uses the word “domicile” still it is
construed as meaning residence and not domicile in the technical sense.
Facts:
Eliseo Quiazon (Eliseo) died intestate on 12 December 1992.
On 12 September 1994, Maria Lourdes Elise Quiazon (Elise), represented by her mother, Ma.
Lourdes Belen (Lourdes) Eliseo’s common-law wife filed a Petition for Letters of
Administration before the Regional Trial Court (RTC) of Las Piñas City claiming that she is the
natural child of Eliseo having been conceived and born at the time when her parents were both
capacitated to marry each other. Claiming that the venue of the petition was improperly laid,
Amelia Garcia-Quaizon (Amelia) to whom Eliseo was married, together with her children,
Jenneth and Jennifer, opposed the issuance of the letters of administration by filing an
Opposition/Motion to Dismiss asserting that as shown by his Death Certificate, Eliseo was a
resident of Capas, Tarlac and not of Las Piñas City, at the time of his death. Pursuant to Section
1, Rule 73 of the Revised Rules of Court, the petition for settlement of decedent’s estate should
have been filed in Capas, Tarlac and not in Las Piñas City. In addition to their claim of improper
venue, the petitioners averred that there are no factual and legal bases for Elise to be
appointed administratix of Eliseo’s estate.
In a Decision dated 11 March 2005, the RTC directed the issuance of Letters of Administration
to Elise upon posting the necessary bond. The lower court ruled that the venue of the petition
was properly laid in Las Piñas City, thereby discrediting the position taken by the petitioners that
Eliseo’s last residence was in Capas, Tarlac, as hearsay. On appeal, the decision of the trial court
was affirmed in toto in the 28 November 2008 Decision rendered by the Court of Appeals in CA-
G.R. CV No. 88589.
Issue:
WHETHER THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THAT
ELISEO QUIAZON WAS A RESIDENT OF LAS PIÑAS AND THEREFORE, THE
PETITION FOR LETTERS OF ADMINISTRATION WAS PROPERLY FILED WITH THE
[RTC] OF LAS PIÑAS.
Ruling:
The court declred the petition bereft of merit. Under Section 1, Rule 73 of the Rules of Court, the
petition for letters of administration of the estate of a decedent should be filed in the RTC of the
province where the decedent resides at the time of his death: Sec. 1. Where estate of deceased
persons settled. – If the decedent is an inhabitant of the Philippines at the time of his death,
whether a citizen or an alien, his will shall be proved, or letters of administration granted, and his
estate settled, in the Court of First Instance [now Regional Trial Court] in the province in which
he resides at the time of his death, and if he is an inhabitant of a foreign country, the Court of
First Instance [now Regional Trial Court] of any province in which he had estate. The court first
taking cognizance of the settlement of the estate of a decedent, shall exercise jurisdiction to the
exclusion of all other courts. The jurisdiction assumed by a court, so far as it depends on the
place of residence of the decedent, or of the location of his estate, shall not be contested in a suit
or proceeding, except in an appeal from that court, in the original case, or when the want of
jurisdiction appears on the record. (Emphasis supplied).
The term “resides” connotes ex vi termini “actual residence” as distinguished from “legal
residence or domicile.” This term “resides,” like the terms “residing” and “residence,” is elastic
and should be interpreted in the light of the object or purpose of the statute or rule in which it is
employed. In the application of venue statutes and rules – Section 1, Rule 73 of the Revised
Rules of Court is of such nature – residence rather than domicile is the significant factor. Even
where the statute uses the word “domicile” still it is construed as meaning residence and not
domicile in the technical sense. Some cases make a distinction between the terms “residence”
and “domicile” but as generally used in statutes fixing venue, the terms are synonymous, and
convey the same meaning as the term “inhabitant.”15 In other words, “resides” should be
viewed or understood in its popular sense, meaning, the personal, actual or physical habitation of
a person, actual residence or place of abode.16 It signifies physical presence in a place and
actual stay thereat.Venue for ordinary civil actions and that for special proceedings have one and
the same meaning. As thus defined, “residence,” in the context of venue provisions, means
nothing more than a person’s actual residence or place of abode, provided he resides therein with
continuity and consistency. Viewed in light of the foregoing principles, the Court of Appeals
cannot be faulted for affirming the ruling of the RTC that the venue for the settlement of the
estate of Eliseo was properly laid in Las Piñas City. It is evident from the records that during his
lifetime, Eliseo resided at No. 26 Everlasting Road, Phase 5, Pilar Village, Las Piñas City. For
this reason, the venue for the settlement of his estate may be laid in the said city.
In opposing the issuance of letters of administration, the petitioners harp on the entry in Eliseo’s
Death Certificate that he is a resident of Capas, Tarlac where they insist his estate should be
settled. While the recitals in death certificates can be considered proofs of a decedent’s
residence at the time of his death, the contents thereof, however, is not binding on the courts.
Both the RTC and the Court of Appeals found that Eliseo had been living with Lourdes,
deporting themselves as husband and wife, from 1972 up to the time of his death in 1995. This
finding is consistent with the fact that in 1985, Eliseo filed an action for judicial partition of
properties against Amelia before the RTC of Quezon City, Branch 106, on the ground that their
marriage is void for being bigamous. That Eliseo went to the extent of taking his marital feud
with Amelia before the courts of law renders untenable petitioners’ position that Eliseo spent the
final days of his life in Tarlac with Amelia and her children. It disproves rather than supports
petitioners’ submission that the lower courts’ findings arose from an erroneous appreciation of
the evidence on record. Factual findings of the trial court, when affirmed by the appellate court,
must be held to be conclusive and binding upon this Court.
CASE FULL TEXT:
G.R. No. 189121, July 31, 2013
AMELIA GARCIA-QUIAZON, JENNETH QUIAZON AND MARIA JENNIFER QUIAZON, Petitioners,v. MA. LOURDES BELEN, FOR AND IN BEHALF OF MARIA LOURDES ELISE QUIAZON,Respondent.
D E C I S I O N
PEREZ, J.:
This is a Petition for Review on Certiorari filed pursuant to Rule 45 of the Revised Rules of Court, primarily assailing the 28 November 2008 Decision rendered by the Ninth Division of the Court of Appeals in CA-G.R. CV No. 88589,1 the decretal portion of which states:cralawlibrary
WHEREFORE, premises considered, the appeal is hereby DENIED. The assailed Decision dated March 11, 2005, and the Order dated March 24, 2006 of the Regional Trial Court, Branch 275, Las Piñas City are AFFIRMED in toto.2
The Facts
This case started as a Petition for Letters of Administration of the Estate of Eliseo Quiazon (Eliseo), filed by herein respondents who are Eliseo’s common-law wife and daughter. The petition was opposed by herein petitioners Amelia Garcia-Quaizon (Amelia) to whom Eliseo was married. Amelia was joined by her children, Jenneth Quiazon (Jenneth) and Maria Jennifer Quiazon (Jennifer).
Eliseo died intestate on 12 December 1992.
On 12 September 1994, Maria Lourdes Elise Quiazon (Elise), represented by her mother, Ma.
Lourdes Belen (Lourdes), filed a Petition for Letters of Administration before the Regional Trial Court (RTC) of Las Piñas City.3 In her Petition docketed as SP Proc. No. M-3957, Elise claims that she is the natural child of Eliseo having been conceived and born at the time when her parents were both capacitated to marry each other. Insisting on the legal capacity of Eliseo and Lourdes to marry, Elise impugned the validity of Eliseo’s marriage to Amelia by claiming that it was bigamous for having been contracted during the subsistence of the latter’s marriage with one Filipito Sandico (Filipito). To prove her filiation to the decedent, Elise, among others, attached to the Petition for Letters of Administration her Certificate of Live Birth4 signed by Eliseo as her father. In the same petition, it was alleged that Eliseo left real properties worth P2,040,000.00 and personal properties worth P2,100,000.00. In order to preserve the estate of Eliseo and to prevent the dissipation of its value, Elise sought her appointment as administratrix of her late father’s estate.
Claiming that the venue of the petition was improperly laid, Amelia, together with her children, Jenneth and Jennifer, opposed the issuance of the letters of administration by filing an Opposition/Motion to Dismiss.5 The petitioners asserted that as shown by his Death Certificate,6Eliseo was a resident of Capas, Tarlac and not of Las Piñas City, at the time of his death. Pursuant to Section 1, Rule 73 of the Revised Rules of Court,7 the petition for settlement of decedent’s estate should have been filed in Capas, Tarlac and not in Las Piñas City. In addition to their claim of improper venue, the petitioners averred that there are no factual and legal bases for Elise to be appointed administratix of Eliseo’s estate.
In a Decision8 dated 11 March 2005, the RTC directed the issuance of Letters of Administration to Elise upon posting the necessary bond. The lower court ruled that the venue of the petition was properly laid in Las Piñas City, thereby discrediting the position taken by the petitioners that Eliseo’s last residence was in Capas, Tarlac, as hearsay. The dispositive of the RTC decision reads:cralawlibrary
Having attained legal age at this time and there being no showing of any disqualification or incompetence to serve as administrator, let letters of administration over the estate of the decedent Eliseo Quiazon, therefore, be issued to petitioner, Ma. Lourdes Elise Quiazon, after the approval by this Court of a bond in the amount of P100,000.00 to be posted by her.9cralaw virtualaw library
On appeal, the decision of the trial court was affirmed in toto in the 28 November 2008 Decision10rendered by the Court of Appeals in CA-G.R. CV No. 88589. In validating the findings of the RTC, the Court of Appeals held that Elise was able to prove that Eliseo and Lourdes lived together as husband and wife by establishing a common residence at No. 26 Everlasting Road, Phase 5, Pilar Village, Las Piñas City, from 1975 up to the time of Eliseo’s death in 1992. For purposes of fixing the venue of the settlement of Eliseo’s estate, the Court of Appeals upheld the conclusion reached by the RTC that the decedent was a resident of Las Piñas City. The petitioners’ Motion for Reconsideration was denied by the Court of Appeals in its Resolution11 dated 7 August 2009.
The Issues
The petitioners now urge Us to reverse the assailed Court of Appeals Decision and Resolution on the following grounds:cralawlibrary
I. THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THAT ELISEO QUIAZON WAS A RESIDENT OF LAS PIÑAS AND THEREFORE[,] THE PETITION FOR LETTERS OF ADMINISTRATION WAS PROPERLY FILED WITH THE [RTC] OF LAS PIÑAS[;]
II. THE COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT AMELIA GARCIA-QUIAZON WAS NOT LEGALLY MARRIED TO ELISEO QUIAZON DUE TO PRE-EXISTING MARRIAGE[;] [AND]
III. THE COURT OF APPEALS OVERLOOKED THE FACT THAT ELISE QUIAZON HAS NOT SHOWN ANY INTEREST IN THE PETITION FOR LETTERS OF ADMINISTRATION[.]12
The Court’s Ruling
We find the petition bereft of merit.
Under Section 1, Rule 73 of the Rules of Court, the petition for letters of administration of the estate of a decedent should be filed in the RTC of the province where the decedent resides at the time of his death:cralawlibrary
Sec. 1. Where estate of deceased persons settled. – If the decedent is an inhabitant of the Philippines at the time of his death, whether a citizen or an alien, his will shall be proved, or letters of administration granted, and his estate settled, in the Court of First Instance [now Regional Trial Court] in the province in which he resides at the time of his death, and if he is an inhabitant of a foreign country, the Court of First Instance [now Regional Trial Court] of any province in which he had estate. The court first taking cognizance of the settlement of the estate of a decedent, shall exercise jurisdiction to the exclusion of all other courts. The jurisdiction assumed by a court, so far as it depends on the place of residence of the decedent, or of the location of his estate, shall not be contested in a suit or proceeding, except in an appeal from that court, in the original case, or when the want of jurisdiction appears on the record. (Emphasis supplied).
The term “resides” connotes ex vi termini “actual residence” as distinguished from “legal residence or domicile.” This term “resides,” like the terms “residing” and “residence,” is elastic and should be interpreted in the light of the object or purpose of the statute or rule in which it is employed. In the application of venue statutes and rules – Section 1, Rule 73 of the Revised Rules of Court is of such nature – residence rather than domicile is the significant factor.13 Even where the statute uses the word “domicile” still it is construed as meaning residence and not domicile in the technical sense.14 Some cases make a distinction between the terms “residence” and “domicile” but as generally used in statutes fixing venue, the terms are synonymous, and convey the same meaning as the term “inhabitant.”15 In other words,
“resides” should be viewed or understood in its popular sense, meaning, the personal, actual or physical habitation of a person, actual residence or place of abode.16 It signifies physical presence in a place and actual stay thereat.17 Venue for ordinary civil actions and that for special proceedings have one and the same meaning.18 As thus defined, “residence,” in the context of venue provisions, means nothing more than a person’s actual residence or place of abode, provided he resides therein with continuity and consistency.19cralaw virtualaw library
Viewed in light of the foregoing principles, the Court of Appeals cannot be faulted for affirming the ruling of the RTC that the venue for the settlement of the estate of Eliseo was properly laid in Las Piñas City. It is evident from the records that during his lifetime, Eliseo resided at No. 26 Everlasting Road, Phase 5, Pilar Village, Las Piñas City. For this reason, the venue for the settlement of his estate may be laid in the said city.
In opposing the issuance of letters of administration, the petitioners harp on the entry in Eliseo’s Death Certificate that he is a resident of Capas, Tarlac where they insist his estate should be settled. While the recitals in death certificates can be considered proofs of a decedent’s residence at the time of his death, the contents thereof, however, is not binding on the courts. Both the RTC and the Court of Appeals found that Eliseo had been living with Lourdes, deporting themselves as husband and wife, from 1972 up to the time of his death in 1995. This finding is consistent with the fact that in 1985, Eliseo filed an action for judicial partition of properties against Amelia before the RTC of Quezon City, Branch 106, on the ground that their marriage is void for being bigamous.20 That Eliseo went to the extent of taking his marital feud with Amelia before the courts of law renders untenable petitioners’ position that Eliseo spent the final days of his life in Tarlac with Amelia and her children. It disproves rather than supports petitioners’ submission that the lower courts’ findings arose from an erroneous appreciation of the evidence on record. Factual findings of the trial court, when affirmed by the appellate court, must be held to be conclusive and binding upon this Court.21cralaw virtualaw library
Likewise unmeritorious is petitioners’ contention that the Court of Appeals erred in declaring Amelia’s marriage to Eliseo as void ab initio. In a void marriage, it was though no marriage has taken place, thus, it cannot be the source of rights. Any interested party may attack the marriage directly or collaterally. A void marriage can be questioned even beyond the lifetime of the parties to the marriage.22 It must be pointed out that at the time of the celebration of the marriage of Eliseo and Amelia, the law in effect was the Civil Code, and not the Family Code, making the ruling in Niñal v. Bayadog23 applicable four-square to the case at hand. In Niñal, the Court, in no uncertain terms, allowed therein petitioners to file a petition for the declaration of nullity of their father’s marriage to therein respondent after the death of their father, by contradistinguishing void from voidable marriages, to wit:cralawlibrary
[C]onsequently, void marriages can be questioned even after the death of either party but voidable marriages can be assailed only during the lifetime of the parties and not after death of either, in which case the parties and their offspring will be left as if the marriage had been perfectly valid. That is why the action or defense for nullity is imprescriptible, unlike voidable marriages where the action prescribes. Only the parties to a voidable marriage can assail it but any proper interested party may attack a void marriage.24
It was emphasized in Niñal that in a void marriage, no marriage has taken place and it cannot be the source of rights, such that any interested party may attack the marriage directly or collaterally without prescription, which may be filed even beyond the lifetime of the parties to the marriage.25cralaw virtualaw library
Relevant to the foregoing, there is no doubt that Elise, whose successional rights would be prejudiced by her father’s marriage to Amelia, may impugn the existence of such marriage even after the death of her father. The said marriage may be questioned directly by filing an action attacking the validity thereof, or collaterally by raising it as an issue in a proceeding for the settlement of the estate of the deceased spouse, such as in the case at bar. Ineluctably, Elise, as a compulsory heir,26 has a cause of action for the declaration of the absolute nullity of the void marriage of Eliseo and Amelia, and the death of either party to the said marriage does not extinguish such cause of action.
Having established the right of Elise to impugn Eliseo’s marriage to Amelia, we now proceed to determine whether or not the decedent’s marriage to Amelia is void for being bigamous.
Contrary to the position taken by the petitioners, the existence of a previous marriage between Amelia and Filipito was sufficiently established by no less than the Certificate of Marriage issued by the Diocese of Tarlac and signed by the officiating priest of the Parish of San Nicolas de Tolentino in Capas, Tarlac. The said marriage certificate is a competent evidence of marriage and the certification from the National Archive that no information relative to the said marriage exists does not diminish the probative value of the entries therein. We take judicial notice of the fact that the first marriage was celebrated more than 50 years ago, thus, the possibility that a record of marriage can no longer be found in the National Archive, given the interval of time, is not completely remote. Consequently, in the absence of any showing that such marriage had been dissolved at the time Amelia and Eliseo’s marriage was solemnized, the inescapable conclusion is that the latter marriage is bigamous and, therefore, void ab initio.27cralaw virtualaw library
Neither are we inclined to lend credence to the petitioners’ contention that Elise has not shown any interest in the Petition for Letters of Administration.
Section 6, Rule 78 of the Revised Rules of Court lays down the preferred persons who are entitled to the issuance of letters of administration, thus:cralawlibrary
Sec. 6. When and to whom letters of administration granted. — If no executor is named in the will, or the executor or executors are incompetent, refuse the trust, or fail to give bond, or a person dies intestate, administration shall be granted:cralawlibrary
(a) To the surviving husband or wife, as the case may be, or next of kin, or both, in the discretion of the court, or to such person as such surviving husband or wife, or next of kin, requests to have appointed, if competent and willing to serve;chanr0blesvirtualawlibrary
(b) If such surviving husband or wife, as the case may be, or next of kin, or the person selected by them, be incompetent or unwilling, or if the husband or widow, or next of kin,
neglects for thirty (30) days after the death of the person to apply for administration or to request that administration be granted to some other person, it may be granted to one or more of the principal creditors, if competent and willing to serve;chanr0blesvirtualawlibrary
(c) If there is no such creditor competent and willing to serve, it may be granted to such other person as the court may select.
Upon the other hand, Section 2 of Rule 79 provides that a petition for Letters of Administration must be filed by an interested person, thus:cralawlibrary
Sec. 2. Contents of petition for letters of administration. — A petition for letters of administration must be filed by an interested person and must show, so far as known to the petitioner:cralawlibrary
(a) The jurisdictional facts;chanr0blesvirtualawlibrary
(b) The names, ages, and residences of the heirs, and the names and residences of the creditors, of the decedent;chanr0blesvirtualawlibrary
(c) The probable value and character of the property of the estate;chanr0blesvirtualawlibrary
(d) The name of the person for whom letters of administration are prayed.
But no defect in the petition shall render void the issuance of letters of administration.
An “interested party,” in estate proceedings, is one who would be benefited in the estate, such as an heir, or one who has a claim against the estate, such as a creditor. Also, in estate proceedings, the phrase “next of kin” refers to those whose relationship with the decedent is such that they are entitled to share in the estate as distributees.28cralaw virtualaw library
In the instant case, Elise, as a compulsory heir who stands to be benefited by the distribution of Eliseo’s estate, is deemed to be an interested party. With the overwhelming evidence on record produced by Elise to prove her filiation to Eliseo, the petitioners’ pounding on her lack of interest in the administration of the decedent’s estate, is just a desperate attempt to sway this Court to reverse the findings of the Court of Appeals. Certainly, the right of Elise to be appointed administratix of the estate of Eliseo is on good grounds. It is founded on her right as a compulsory heir, who, under the law, is entitled to her legitime after the debts of the estate are satisfied.29 Having a vested right in the distribution of Eliseo’s estate as one of his natural children, Elise can rightfully be considered as an interested party within the purview of the law.
WHEREFORE, premises considered, the petition is DENIED for lack of merit. Accordingly, the Court of Appeals assailed 28 November 2008 Decision and 7 August 2009 Resolution, areAFFIRMED in toto.
SO ORDERED.
Carpio, (Chairperson), Brion, Del Castillo, and Perlas-Bernabe, JJ., concur.
Endnotes:
1 Penned by Associate Justice Ramon R. Garcia with Associate Justices Josefina Guevara–Salonga and Magdangal M. De Leon, concurring. CA rollo, pp. 94-106.
2 Id. at 105.
3 Special Proceeding No. M-3957. Records, Vol. I, pp. 1-9.
4 Id. at 10.
5 Id. at 40-44.
6 Id. at 11.
7 Sec. 1. Where estate of deceased persons settled. – If the decedent is an inhabitant of the Philippines at the time of his death, whether a citizen or an alien, his will shall be proved, or letters of administration granted, and his estate settled, in the Court of First Instance [now Regional Trial Court] in the province in which he resides at the time of his death, and if he is an inhabitant of a foreign country, the Court of First Instance [now Regional Trial Court] of any province in which he had estate. The court first taking cognizance of the settlement of the estate of a decedent, shall exercise jurisdiction to the exclusion of all other courts. The jurisdiction assumed by a court, so far as it depends on the place of residence of the decedent, or of the location of his estate, shall not be contested in a suit or proceeding, except in an appeal from that court, in the original case, or when the want of jurisdiction appears on the record.
8 Penned by Judge Bonifacio Sanz Maceda. CA rollo, pp. 33-38.nadcralawlibrary
9 Id. at 38.redcralaw
10 Id. at 94-106.
11 Id. at 118-119.
12Rollo, pp. 32-33.
13 Garcia Fule v. Court of Appeals, G.R. Nos. L-40502 and L-42670, 29 November 1976, 74 SCRA 189, 199.
14 Id.
15 Id.
16 Id.
17 Id.
18Jao v. Court of Appeals, 432 Phil. 160, 170 (2002).
19 Id.
20Quiazon v. Garcia, Civil Case No. Q-43712. Records, Vol. II, pp. 234-240.
21Golden (Iloilo) Delta Sales Corporation v. Pre-Stress International Corporation, G.R. No. 176768, 12 January 2009, 576 SCRA 23, 35; Seaoil Petroleum Corporation v. Autocorp Group, G.R. No. 164326, 17 October 2008, 569 SCRA 387, 394; Ejercito v. M.R. Vargas Construction, G.R. No. 172595, 10 April 2008, 551 SCRA 97, 106.
22Juliano-Llave v. Republic, G.R. No. 169766, 30 March 2011, 646 SCRA 637, 656-657 citing Niñal v. Bayadog, 384 Phil. 661, 673 (2000).
23 Id.
24 Id. at 673.red cralawlibrary
25 Id.
26 New Civil Code. Art. 961. In default of the testamentary heirs, the law vests the inheritance, in accordance with the rules hereinafter set forth, in the legitimate and illegitimate relatives of the deceased, in the surviving spouse, and in the State.
New Civil Code. Art. 988. In the absence of legitimate descendants or ascendants, the illegitimate children shall succeed to the entire estate of the deceased.
27 Old Civil Code. Art. 83. Any marriage subsequently contracted by any person during the lifetime of the first spouse of such person with any person other than such first spouse shall be illegal and void from its performance, unless:cralawlibrary
(1) The first marriage was annulled or dissolved; or
(2) The first spouse had been absent for seven consecutive years at the time of the second marriage without the spouse present having news of the absentee being alive, or if the absentee, though he has been absent for less than seven years, is generally considered as dead and believed to be so by the spouse present at the time of contracting such subsequent marriage, or if the absentee is presumed dead according to Articles 390 and 391. The marriage so contracted shall be valid in any of the three cases until declared null and void by a competent court.
28Solinap v. Locsin, Jr., 423 Phil. 192, 199 (2001).
29 New Civil Code. Art. 961. In default of the testamentary heirs, the law vests the inheritance, in accordance with the rules hereinafter set forth, in the legitimate and illegitimate relatives of the deceased, in the surviving spouse, and in the State.
New Civil Code. Art. 988. In the absence of legitimate descendants or ascendants, the illegitimate children shall succeed to the entire estate of the deceased.
G.R. No. 204029, June 04, 2014
AVELINA ABARIENTOS REBUSQUILLO [SUBSTITUTED BY HER HEIRS, EXCEPT
EMELINDA R. GUALVEZ] AND SALVADOR A. OROSCO, Petitioners,
v.
SPS. DOMINGO AND EMELINDA REBUSQUILLO GUALVEZ, Respondent.
Case Doctrine/s:
Section 1, Rule 74 of the Rules of Court :
Section 1. Extrajudicial settlement by agreement between heirs.––x x x If there is
only one heir, he may adjudicate to himself the entire estate by means of an affidavit
filed in the office of the register of deeds. x x x
Facts:
On October 26, 2004, petitioners Avelina Abarientos Rebusquillo (Avelina) and Salvador
Orosco (Salvador) filed a Complaint for annulment and revocation of an Affidavit of Self-
Adjudication dated December 4, 2001 and a Deed of Absolute Sale dated February 6, 2002
before the court a quo. In it, petitioners alleged that Avelina was one of the children of Eulalio
Abarientos (Eulalio) and Victoria Villareal (Victoria). Eulalio died intestate on July 3, 1964,
survived by his wife Victoria, six legitimate children, and one illegitimate child, namely: (1)
Avelina Abarientos-Rebusquillo, petitioner in this case; (2) Fortunata Abarientos-Orosco, the
mother of petitioner Salvador; (3) Rosalino Abarientos; (4) Juan Abarientos; (5) Feliciano
Abarientos; (6) Abraham Abarientos; and (7) Carlos Abarientos. His wife Victoria eventually
died intestate on June 30, 1983.On his death, Eulalio left behind an untitled parcel of land in
Legazpi City consisting of two thousand eight hundred sixty-nine (2,869) square meters, more or
less, which was covered by Tax Declaration ARP No. (TD) 0141.In 2001, Avelina was
supposedly made to sign two (2) documents by her daughter Emelinda Rebusquillo-Gualvez
(Emelinda) and her son-in-law Domingo Gualvez (Domingo), respondents in this case, on the
pretext that the documents were needed to facilitate the titling of the lot. It was only in 2003, so
petitioners claim that Avelina realized that what she signed was an Affidavit of Self-
Adjudication and a Deed of Absolute Sale in favor of respondents.
As confirmed by the RTC in its Decision, respondents have stipulated and have thereby admitted
in court that they knew for a fact that petitioner Avelina was not the sole heir of Eulalio and that
petitioner Salvador was one of the other living heirs with rights over the subject land.
Issue:
WHETHER THE AFFIDAVIT OF SELF-ADJUDICATION OF THE ESTATE OF THE
DECEASED IS PROPER.
Ruling:
The Court declared that the Affidavit of Self-Adjudication of Estate of the Deceased is not
proper. In light of the admission of respondents spouses Gualvez, it is with more reason that a
resort to special proceeding will be but an unnecessary superfluity. Accordingly, the court a
quo had properly rendered judgment on the validity of the Affidavit of Self-Adjudication
executed by Avelina. As pointed out by the trial court, an Affidavit of Self-Adjudication is only
proper when the affiant is the sole heir of the decedent. The second sentence of Section 1, Rule
74 of the Rules of Court is patently clear that self-adjudication is only warranted when there is
only one heir:
Section 1. Extrajudicial settlement by agreement between heirs.––x x x If there is only one
heir, he may adjudicate to himself the entire estate by means of an affidavit filed in the
office of the register of deeds. x x x (emphasis supplied)
As admitted by respondents, Avelina was not the sole heir of Eulalio. In fact, as admitted by
respondents, petitioner Salvador is one of the co-heirs by right of representation of his mother.
Without a doubt, Avelina had perjured herself when she declared in the affidavit that she is “the
only daughter and sole heir of spouses EULALIO ABARIENTOS AND VICTORIA
VILLAREAL.” The falsity of this claim renders her act of adjudicating to herself the inheritance
left by her father invalid. The RTC did not, therefore, err in granting Avelina’s prayer to declare
the affidavit null and void and so correct the wrong she has committed.
In like manner, the Deed of Absolute Sale executed by Avelina in favor of respondents was
correctly nullified and voided by the RTC Avelina was not in the right position to sell and
transfer the absolute ownership of the subject property to respondents. As she was not the sole
heir of Eulalio and her Affidavit of Self-Adjudication is void, the subject property is still subject
to partition. Avelina, in fine, did not have the absolute ownership of the subject property but only
an aliquot portion. What she could have transferred to respondents was only the ownership of
such aliquot portion. It is apparent from the admissions of respondents and the records of this
case that Avelina had no intention to transfer the ownership, of whatever extent, over the
property to respondents. Hence, the Deed of Absolute Sale is nothing more than a simulated
contract.
CASE FULL TEXT:
G.R. No. 204029, June 04, 2014
AVELINA ABARIENTOS REBUSQUILLO [SUBSTITUTED BY HER HEIRS, EXCEPT EMELINDA R. GUALVEZ] AND SALVADOR A. OROSCO, Petitioners, v. SPS. DOMINGO AND EMELINDA REBUSQUILLO GUALVEZ, Respondent.
D E C I S I O N
Before Us is a Petition for Review on Certiorari under Rule 45 assailing the Decision1 and Resolution2dated March 30, 2012 and September 25, 2012, respectively, of the Court of Appeals (CA) in CA-G.R. CV No. 93035, which reversed and set aside the Decision dated January 20, 2009 of the Regional Trial Court (RTC), Branch 4 in Legazpi City, in Civil Case No. 10407.
The antecedent facts may be summarized as follows:chanroblesvirtuallawlibrary
On October 26, 2004, petitioners Avelina Abarientos Rebusquillo (Avelina) and Salvador Orosco (Salvador) filed a Complaint for annulment and revocation of an Affidavit of Self-Adjudication dated December 4, 2001 and a Deed of Absolute Sale dated February 6, 2002 before the court a quo. In it, petitioners alleged that Avelina was one of the children of Eulalio Abarientos (Eulalio) and Victoria Villareal (Victoria). Eulalio died intestate on July 3, 1964, survived by his wife Victoria, six legitimate children,and one illegitimate child, namely: (1) Avelina Abarientos-Rebusquillo, petitioner in this case; (2) Fortunata Abarientos-Orosco, the mother of petitioner Salvador; (3) Rosalino Abarientos; (4) Juan Abarientos; (5) Feliciano Abarientos; (6) Abraham Abarientos; and (7) Carlos Abarientos. His wife Victoria eventually died intestate on June 30, 1983.
On his death, Eulalio left behind an untitled parcel of land in Legazpi City consisting of two
thousand eight hundred sixty-nine (2,869) square meters, more or less, which was covered by Tax Declaration ARP No. (TD) 0141.
In 2001, Avelina was supposedly made to sign two (2) documents by her daughter Emelinda Rebusquillo-Gualvez (Emelinda) and her son-in-law Domingo Gualvez (Domingo), respondents in this case, on the pretext that the documents were needed to facilitate the titling of the lot. It was only in 2003, so petitioners claim, that Avelina realized that what she signed was an Affidavit of Self-Adjudication and a Deed of Absolute Sale in favor of respondents.
As respondents purportedly ignored her when she tried to talk to them, Avelina sought the intervention of the RTC to declare null and void the two (2) documents in order to reinstate TD 0141 and so correct the injustice done to the other heirs of Eulalio.
In their answer, respondents admitted that the execution of the Affidavit of Self-Adjudication and the Deed of Sale was intended to facilitate the titling of the subject property. Paragraph 9 of their Answer reads:chanroblesvirtuallawlibrary
Sometime in the year 2001, [petitioner] Avelina together with the other heirs of Eulalio Abarientos brought out the idea to [respondent] Emelinda Rebusquillo-Gualvez to have the property described in paragraph 8 of the complaint registered under the Torrens System of Registration. To facilitate the titling of the property, so that the same could be attractive to prospective buyers, it was agreed that the property’s tax declaration could be transferred to [respondents] Spouses [Emelinda] R. Gualvez and Domingo Gualvez who will spend all the cost of titling subject to reimbursement by all other heirs in case the property is sold; That it was agreed that all the heirs will be given their corresponding shares on the property; That pursuant to said purpose Avelina Abarientos-Rebusquillo with the knowledge and consent of the other heirs signed and executed an Affidavit of Self-Adjudication and a Deed of Absolute Sale in favor of [respondents] Gualvez. In fact, [petitioner] Avelina Rebusquillo was given an advance sum of FIFTY THOUSAND PESOS (P50,000.00) by [respondent] spouses and all the delinquent taxes paid by [respondents].3cralawlawlibrary
After trial, the RTC rendered its Decision dated January 20, 2009 annulling the Affidavit of Self-Adjudication and the Deed of Absolute Sale executed by Avelina on the grounds that (1) with regard to the Affidavit of Self-Adjudication, she was not the sole heir of her parents and was not therefore solely entitled to their estate; and (2) in the case of the Deed of Absolute Sale, Avelina did not really intend to sell her share in the property as it was only executed to facilitate the titling of such property. The dispositive portion of the RTC Decision reads:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, judgment is hereby rendered, as follows:chanRoblesvirtualLawlibrary
1. The subject Affidavit of Self-Adjudication of the Estate of the Deceased Spouses Eulalio Abarientos and Victoria Villareal, dated December 4, 2001 as well as the subject Deed of Absolute Sale, notarized on February 6, 2002, covering the property described in par. 8 of the Amended Complaint are hereby ordered ANNULLED;
2. That defendant City Assessor’s Officer of Legazpi City is hereby ordered to CANCEL the Tax Declaration in the name of private [respondents] spouses Gualvez under ARP No. 4143 and to REINSTATE the Tax Declaration under ARP No. 0141 in the name of Eulalio Abarientos;
3. By way of restitution, [petitioner] Avelina Abarientos Rebusquillo is hereby ordered to return or refund to [respondents] spouses Domingo Gualvez and Emelinda Gualvez, the P50,000.00 given by the latter spouses to the former.4
chanrobleslaw
Assailing the trial court’s decision, respondents interposed an appeal with the CA arguing that the Deed of Sale cannot be annulled being a public document that has for its object the creation and transmission of real rights over the immovable subject property. The fact that Avelina’s testimony was not offered in evidence, so respondents argued, the signature on the adverted deed remains as concrete proof of her agreement to its terms. Lastly, respondents contended that the Complaint filed by petitioners Avelina and Salvador before the RTC is not the proper remedy provided by law for those compulsory heirs unlawfully deprived of their inheritance.
Pending the resolution of respondents’ appeal, Avelina died intestate on September 1, 2009 leaving behind several living heirs5 including respondent Emelinda.
In its Decision dated March 30, 2012, the appellate court granted the appeal and reversed and set aside the Decision of the RTC. The CA held that the RTC erred in annulling the Affidavit of Self-Adjudication simply on petitioners’ allegation of the existence of the heirs of Eulalio, considering that issues on heirship must be made in administration or intestate proceedings, not in an ordinary civil action. Further, the appellate court observed that the Deed of Absolute Sale cannot be nullified as it is a notarized document that has in its favor the presumption of regularity and is entitled to full faith and credit upon its face.
Aggrieved by the CA’s Decision, petitioner Avelina, as substituted by her heirs except respondent Emelinda, and petitioner Salvador are now before this Court ascribing reversible error on the part of the appellate court.
We find merit in the instant petition.
It has indeed been ruled that the declaration of heirship must be made in a special proceeding, not in an independent civil action. However, this Court had likewise held that recourse to administration proceedings to determine who heirs are is sanctioned only if there is a good and compelling reason for such recourse.6Hence, the Court had allowed exceptions to the rule requiring administration proceedings as when the parties in the civil case already presented their evidence regarding the issue of heirship, and the RTC had consequently rendered judgment upon the issues it defined during the pre-trial.7In Portugal v. Portugal-Beltran,8 this Court held:chanroblesvirtuallawlibrary
In the case at bar, respondent, believing rightly or wrongly that she was the sole heir to Portugal’s estate, executed on February 15, 1988 the questioned Affidavit of Adjudication under
the second sentence of Rule 74, Section 1 of the Revised Rules of Court. Said rule is an exception to the general rule that when a person dies leaving a property, it should be judicially administered and the competent court should appoint a qualified administrator, in the order established in Sec. 6, Rule 78 in case the deceased left no will, or in case he did, he failed to name an executor therein.
Petitioners claim, however, to be the exclusive heirs of Portugal. A probate or intestate court, no doubt, has jurisdiction to declare who are the heirs of a deceased.
It appearing, however, that in the present case the only property of the intestate estate of Portugal is the Caloocan parcel of land to still subject it, under the circumstances of the case, to a special proceeding which could be long, hence, not expeditious, just to establish the status of petitioners as heirs is not only impractical; it is burdensome to the estate with the costs and expenses of an administration proceeding. And it is superfluous in light of the fact that the parties to the civil case - subject of the present case, could and had already in fact presented evidence before the trial court which assumed jurisdiction over the case upon the issues it defined during pre-trial.
In fine, under the circumstances of the present case, there being no compelling reason to still subject Portugal’s estate to administration proceedings since a determination of petitioners’ status as heirs could be achieved in the civil case filed by petitioners, the trial court should proceed to evaluate the evidence presented by the parties during the trial and render a decision thereon upon the issues it defined during pre-trial x xx. (emphasis supplied)ChanRoblesVirtualawlibrary
Similar to Portugal, in the present case, there appears to be only one parcel of land being claimed by the contending parties as the inheritance from Eulalio. It would be more practical, as Portugalteaches, to dispense with a separate special proceeding for the determination of the status of petitioner Avelina as sole heir of Eulalio, especially in light of the fact that respondents spouses Gualvez admitted in court that they knew for a fact that petitioner Avelina was not the sole heir of Eulalio and that petitioner Salvador was one of the other living heirs with rights over the subject land. As confirmed by the RTC in its Decision,respondents have stipulated and have thereby admitted the veracity of the following facts during the pre-trial:chanroblesvirtuallawlibrary
IV – UNCONTROVERTED FACTS: (Based on the stipulation of facts in the Pre-Trial Order)
A. x x x
B. [Petitioners] and private [respondents] spouses Gualvez admitted the following facts:chanroblesvirtuallawlibrary
1. Identity of the parties;
2. Capacity of the [petitioners] and private [respondents] to sue and be sued;
3. [Petitioner] Avelina Abarientos-Rebusquilllo is not the only surviving heir of deceased spouses Eulalio and Victoria Abarientos;
4. Petitioner Salvador Orosco is a co-owner/possessor of a portion of the subject property;
5. Fortunata Abarientos-Orosco is the sister of Avelina Abarientos;
6. [Respondent] Emelinda Rebusquillo-Gualves is a daughter of [petitioner] Avelina A. Rebusquillo;
7. [Petitioner] Avelina Rebusquillo was born on Nov. 10, 1923;
8. The existence of Affidavit of Self-Adjudication of Estate of the Deceased and Deed of Absolute Sale executed by [petitioner] Avelina A. Rebusquillo on the subject property.9(emphasis supplied)
In light of the admission of respondents spouses Gualvez, it is with more reason that a resort to special proceeding will be but an unnecessary superfluity. Accordingly, the court a quo had properly rendered judgment on the validity of the Affidavit of Self-Adjudication executed by Avelina. As pointed out by the trial court, an Affidavit of Self-Adjudication is only proper when the affiant is the sole heir of the decedent. The second sentence of Section 1, Rule 74 of the Rules of Court is patently clear that self-adjudication is only warranted when there is only one heir:chanroblesvirtuallawlibrary
Section 1. Extrajudicial settlement by agreement between heirs.––x x x If there is only one heir, he may adjudicate to himself the entire estate by means of an affidavit filed in the office of the register of deeds. x x x (emphasis supplied)ChanRoblesVirtualawlibrary
As admitted by respondents, Avelina was not the sole heir of Eulalio. In fact, as admitted by respondents, petitioner Salvador is one of the co-heirs by right of representation of his mother. Without a doubt, Avelina had perjured herself when she declared in the affidavit that she is “the only daughter and sole heir of spouses EULALIO ABARIENTOS AND VICTORIA VILLAREAL.”10 The falsity of this claim renders her act of adjudicating to herself the inheritance left by her father invalid. The RTC did not, therefore, err in granting Avelina’s prayer to declare the affidavit null and void and so correct the wrong she has committed.
In like manner, the Deed of Absolute Sale executed by Avelina in favor of respondents was correctly nullified and voided by the RTC Avelina was not in the right position to sell and transfer the absolute ownership of the subject property to respondents. As she was not the sole heir of Eulalio and her Affidavit of Self-Adjudication is void, the subject property is still subject to partition. Avelina, in fine, did not have the absolute ownership of the subject property but only an aliquot portion. What she could have transferred to respondents was only the ownership of such aliquot portion. It is apparent from the admissions of respondents and the records of this case that Avelina had no intention to transfer the ownership, of whatever extent, over the property to respondents. Hence, the Deed of Absolute Sale is nothing more than a simulated contract.
The Civil Code provides:chanroblesvirtuallawlibrary
Art. 1345. Simulation of a contract may be absolute or relative. The former takes place when the parties do not intend to be bound at all; the latter, when the parties conceal their true agreement. (emphasis supplied)
Art. 1346. An absolutely simulated or fictitious contract is void. A relative simulation, when it does not prejudice a third person and is not intended for any purpose contrary to law, morals, good customs, public order or public policy binds the parties to their real agreement.
In Heirs of Policronio Ureta Sr. v. Heirs of Liberato Ureta,11this Court explained the concept of the simulation of contracts:chanroblesvirtuallawlibrary
In absolute simulation, there is a colorable contract but it has no substance as the parties have no intention to be bound by it. The main characteristic of an absolute simulation is that the apparent contract is not really desired or intended to produce legal effect or in any way alter the juridical situation of the parties. As a result, an absolutely simulated or fictitious contract is void, and the parties may recover from each other what they may have given under the contract. However, if the parties state a false cause in the contract to conceal their real agreement, the contract is relatively simulated and the parties are still bound by their real agreement. Hence, where the essential requisites of a contract are present and the simulation refers only to the content or terms of the contract, the agreement is absolutely binding and enforceable between the parties and their successors in interest. (emphasis supplied)ChanRoblesVirtualawlibrary
In the present case, the true intention of the parties in the execution of the Deed of Absolute Sale is immediately apparent from respondents’ very own Answer to petitioners’ Complaint. As respondents themselves acknowledge, the purpose of the Deed of Absolute Sale was simply to “facilitate the titling of the [subject] property,” not to transfer the ownership of the lot to them. Furthermore, respondents concede that petitioner Salvador remains in possession of the property and that there is no indication that respondents ever took possession of the subject property after its supposed purchase. Such failure to take exclusive possession of the subject property or, in the alternative, to collect rentals from its possessor, is contrary to the principle of ownership and is a clear badge of simulation that renders the whole transaction void.12
Contrary to the appellate court’s opinion, the fact that the questioned Deed of Absolute Sale was reduced to writing and notarized does not accord it the quality of incontrovertibility otherwise provided by the parole evidence rule. The form of a contract does not make an otherwise simulated and invalid act valid. The rule on parole evidence is not, as it were, ironclad. Sec. 9, Rule 130 of the Rules of Court provides the exceptions:chanroblesvirtuallawlibrary
Section 9. Evidence of written agreements.– x x x
However, a party may present evidence to modify, explain or add to the terms of written agreement if he puts in issue in his pleading:chanroblesvirtuallawlibrary
(a) An intrinsic ambiguity, mistake or imperfection in the written agreement;
(b) The failure of the written agreement to express the true intent and agreement of the
parties thereto;
(c) The validity of the written agreement; or
(d) The existence of other terms agreed to by the parties or their successors in interest after the execution of the written agreement.
The term “agreement” includes wills.(emphasis supplied)ChanRoblesVirtualawlibrary
The failure of the Deed of Absolute Sale to express the true intent and agreement of the contracting parties was clearly put in issue in the present case. Again, respondents themselves admit in their Answer that the Affidavit of Self-Adjudication and the Deed of Absolute Sale were only executed to facilitate the titling of the property. The RTC is, therefore, justified to apply the exceptions provided in the second paragraph of Sec. 9, Rule 130 to ascertain the true intent of the parties, which shall prevail over the letter of the document. That said, considering that the Deed of Absolute Sale has been shown to be void for being absolutely simulated, petitioners are not precluded from presenting evidence to modify, explain or add to the terms of the written agreement.13
WHEREFORE, the instant petition is GRANTED. The Decision dated March 30, 2012 and the Resolution dated September 25, 2012 of the Court of Appeals in CA-G.R. CV No. 93035 are herebyREVERSED and SET ASIDE. The Decision dated January 20, 2009 in Civil Case No. 10407 of the Regional Trial Court (RTC), Branch 4 in Legazpi City is REINSTATED.
SO ORDERED.
Peralta, Villarama, Jr.,* Mendoza, and Leonen, JJ., concur.cralawred
Endnotes:
* Acting member per Special Order No. 1691 dated May 22, 2014.
1Rollo, pp. 24-39.Penned by Associate Justice Franchito N. Diamante and concurred in by Associate Justices Mariflor P. Punzalan Castillo and Myra V. Garcia-Fernandez.
2 Id. at 67-68.
3 Records, Folder 1, pp. 24-25.
4 CA rollo, pp. 77-78.
5Rollo, pp. 65-66. The following, including herein respondent Emelinda Rebusquillo Gualvez, are the only living heirs of petitioner Avelina Abarientos Gualvez Rebusquillo:chanroblesvirtuallawlibrary
Children:chanRoblesvirtualLawlibrary1. Consuelo R. Espedido – Tagdon, Barcelona, Sorsogon;2. Teresita A. Rebusquillo – Oas, Albay;
3. Shirley R. Reduta – Salitran 3, Blk 23, Cardinal Village, Dasmariñas, Cavite;
4. Susan A. Rebusquillo, Oas, Albay;
5. Alicia A. Rebusquillo, 350 Dr. Fernandez St., Mauway, Mandalauyong City;
6. Josefina R. Raro who died intestate on July 24, 2005, is represented by: Maria Joyce R. Birrey, Romero Raro, Jr., Johncarlo R. Raro, Celso R. Raro III, Jayrome R. Raro;
7. Abdon A. Rebusquillo, who died intestate on May 30, 2004, is represented by Shiela R. Rebancos, Ryan B. Rebusquillo, Arjay B. Rebusquillo, Cyrene B. Rebusquillo, Donna B. Rebusquillo, and Cyril B. Rebusquillo.
6Pereira v. Court of Appeals, G.R. No. 81147, June 20, 1989, 174 SCRA 154; Intestate Estate of Mercado v. Magtibay, 96 Phil. 383 (1953).
7Heirs of MagdalenoYpon v. Gaudioso Ponteras Ricaforte, G.R. No. 198680, July 8, 2013, 700 SCRA 778; Republic v. Mangotara, G. R. No. 170375, July 7, 2010, 624 SCRA 360; Heirs of Teofilo Gabatan v. Court of Appeals, G.R. No. 150206, March 13, 2009, 581 SCRA 70, 80-81; Fidel v. Court of Appeals, G.R. No. 168263, July 21, 2008, 559 SCRA 186, 194.
10 Paragraph 1, Affidavit of Self-Adjudication, Annex “3” of the Complaint, records, p. 17.
11 G.R. Nos. 165748&165930, September 14, 2011, 657 SCRA 555, 575; citing Valerio v. Refresca, G.R. No. 163687, March 28, 2006, 485 SCRA 494, 500-501.
12 Id.
13 See Heirs of Policronio Ureta Sr. v. Heirs of Liberato Ureta, id.
G.R. No. 173548, October 15, 2014
ONOFRE ANDRES, SUBSTITUTED BY HIS HEIRS, NAMELY: FERDINAND, ROSALINA, ERIBERTO, FROILAN, MA. CLEOFE, NELSON, GERMAN, GLORIA, ALEXANDER, MAY, ABRAHAM, AND AFRICA, ALL SURNAMED ANDRES, Petitioners,
v.
PHILIPPINE NATIONAL BANK, Respondents.
LEONEN, J.:
Case Doctrine/s:
Rule 74, Section 4 of the Rules of Court provides:
SEC 4. Liability of distributees and estate. – If it shall appear at any time within two (2)
years after the settlement and distribution of an estate in accordance with the provisions
of either of the first two sections of this rule, that an heir or other person has been unduly
deprived of his lawful participation in the estate, such heir or such other person may
compel the settlement of the estate in the courts in the manner hereinafter provided for
the purpose of satisfying such lawful participation. And if within the same time of two
(2) years, it shall appear that there are debts outstanding against the estate which have not
been paid, or that an heir or other person has been unduly deprived of his lawful
participation payable in money, the court having jurisdiction of the estate may, by order
for that purpose, after hearing, settle the amount of such debts or lawful participation and
order how much and in what manner each distributee shall contribute in the payment
thereof, and may issue execution, if circumstances require, against the bond provided in
the preceding section or against the real estate belonging to the deceased, or both. Such
bond and such real estate shall remain charged with a liability to creditors, heirs, or other
persons for the full period of two (2) years after such distribution, notwithstanding any
transfers of real estate that may have been made. (Emphasis supplied)
In any event, Rule 74, Section 4 does not apply to Onofre Andres who never alleged
being an excluded heir or unpaid creditor of his brother Roman Andres and Roman’s
wife.
Facts:
A 4,634-square-meter parcel of land in Nueva Ecija mortgaged to respondent Philippine National
Bank (PNB) was later foreclosed the property and consolidated title in its name. Petitioner
Onofre Andres, the uncle of mortgagors Reynaldo Andres and his wife, Janette de Leon, filed a
complaint for cancellation of title and reconveyance of the property alleging that title in
mortgagor's name was based on a falsified document denominated as “Self-Adjudication of Sole
Heir.” The Spouses Victor and Filomena Andres acquired during their marriage a 4,634-square-
meter parcel of land in Sto. Domingo, Nueva Ecija, covered by TCT No. NT-7267.They had nine
children and mong them were Onofre Andres and Roman Andres who is the father of Reynaldo
Andres. After Victor’s death, or on July 1, 1965, his widow, Filomena, and six of their children
— Onofre, Roman, Juana, Guillermo, Felisa, and Maxima — agreed in an extrajudicial partition
with sale to adjudicate one half of the land covered by TCT No. NT-7267 to each of them pro
indiviso. This document also provides that for P1,000.00, they all sold, transferred, and conveyed
to Roman Andres their respective rights and participation to the one-half portion of the property.
A new title was issued on August 20, 1965 in the name of Roman Andres and his wife, Lydia
Echaus-Andres, under TCT No. NT-57731. Upon the death Spouses Roman and Lydia Andres,
ownership was transferred to their only living heir, Reynaldo Andres.
On September 4, 1995, the Spouses Reynaldo Andres and Janette de Leon used this title and
mortgaged the property to PNB for a P1.2 million loan. This was without the consent of Onofre
Andres.
Onofre Andres, claiming ownership over the property, filed on November 13, 1996 a complaint
for cancellation of title, reconveyance of property and damages, with prayer for the issuance of a
preliminary injunction against his nephew Reynaldo Andres and Reynaldo’s wife, Janette de
Leon, PNB, Lydia Echaus-Andres, and the Register of Deeds of Nueva Ecija.
The complaint alleged that on November 8, 1994, Onofre Andres’ nephew Reynaldo Andres was
in collusion with his mother, Lydia Echaus-Andres, in executing a falsified document
denominated as “Self-Adjudication of Sole Heir.” This stated that Reynaldo Andres was the sole
heir of his father, Roman Andres, who died on October 12, 1968, and his mother who died on
December 15, 1969.However, his mother was then still alive and his father, Roman Andres, died
only on May 29, 1990.
For their part, the Spouses Reynaldo Andres and Janette de Leon claimed that from the time title
was issued in the name of Reynaldo Andres’ parents, until title transferred to them on December
27, 1994, his father, Roman Andres, had exercised acts of ownership over the property until they
succeeded in its possession. Onofre Andres’ possession was merely “tolerated [because] of their
close relationship.” The Spouses Reynaldo Andres and Janette de Leon also raised prescription
and estoppel.
Issue:
WHETHER OR NOT ONOFRE ANDRES HAS A VALID CLAIM UNDER RULE 74,
SECTION 4 OF THE RULES OF COURT.
Ruling:
The two-year period under Rule 74, Section 4 of the Rules of Court had lapsed and petitioner
heirs did not allege if any heir or creditor of Roman Andres and his wife had invoked their right
under this provision. Rule 74, Section 4 of the Rules of Court provides:
SEC 4. Liability of distributees and estate. – If it shall appear at any time within two (2)
years after the settlement and distribution of an estate in accordance with the provisions of
either of the first two sections of this rule, that an heir or other person has been unduly
deprived of his lawful participation in the estate, such heir or such other person may
compel the settlement of the estate in the courts in the manner hereinafter provided for the
purpose of satisfying such lawful participation. And if within the same time of two (2)
years, it shall appear that there are debts outstanding against the estate which have not
been paid, or that an heir or other person has been unduly deprived of his lawful
participation payable in money, the court having jurisdiction of the estate may, by order
for that purpose, after hearing, settle the amount of such debts or lawful participation and
order how much and in what manner each distributee shall contribute in the payment
thereof, and may issue execution, if circumstances require, against the bond provided in the
preceding section or against the real estate belonging to the deceased, or both. Such bond
and such real estate shall remain charged with a liability to creditors, heirs, or other
persons for the full period of two (2) years after such distribution, notwithstanding any
transfers of real estate that may have been made. (Emphasis supplied)
In any event, Rule 74, Section 4 does not apply to Onofre Andres who never alleged being an
excluded heir or unpaid creditor of his brother Roman Andres and Roman’s wife.
CASE FULL TEXT:
G.R. No. 173548, October 15, 2014
ONOFRE ANDRES, SUBSTITUTED BY HIS HEIRS, NAMELY: FERDINAND, ROSALINA, ERIBERTO, FROILAN, MA. CLEOFE, NELSON, GERMAN, GLORIA, ALEXANDER, MAY, ABRAHAM, AND AFRICA, ALL SURNAMED ANDRES, Petitioners, v. PHILIPPINE NATIONAL BANK,Respondents.
D E C I S I O N
LEONEN, J.:
A bank that accepts a mortgage based upon a title which appears valid on its face and after exercising the requisite care, prudence, and diligence appropriate to the public interest character of its business can be deemed a mortgagee in good faith. The subsequent consolidation of title in its name after a valid foreclosure shall be respected notwithstanding later proof showing that the title was based upon a void transaction.
This case involves a 4,634-square-meter parcel of land in Nueva Ecija mortgaged to respondent Philippine National Bank (PNB). PNB later foreclosed the property and consolidated title in its name.1 Petitioner Onofre Andres, the uncle of mortgagors Reynaldo Andres and his wife, Janette de Leon, filed a complaint for cancellation of title and reconveyance of the property alleging that title in mortgagor's name was based on a falsified document denominated as “Self-Adjudication
of Sole Heir.”
The trial court ruled in favor of Onofre Andres by voiding all derivative titles from TCT No. NT-7267. The Court of Appeals modified this decision by declaring as valid and existing TCT No. N-24660 in PNB’s name. Onofre Andres filed the instant petition2 assailing the Court of Appeals’ decision and resolution.
The Spouses Victor and Filomena Andres acquired during their marriage a 4,634-square-meter parcel of land in Sto. Domingo, Nueva Ecija, covered by TCT No. NT-7267.3chanRoblesvirtualLawlibrary
They had nine children.4 Among them were Onofre Andres and Roman Andres who is the father of Reynaldo Andres.5 Victor passed away on June 15, 1955, while his wife, Filomena, died on April 23, 1973.6chanRoblesvirtualLawlibrary
After Victor’s death, or on July 1, 1965,7 his widow, Filomena, and six of their children — Onofre, Roman, Juana, Guillermo, Felisa,8 and Maxima — agreed in an extrajudicial partition with sale to adjudicate one half of the land covered by TCT No. NT-7267 to each of them pro indiviso.9 This document also provides that for P1,000.00, they all sold, transferred, and conveyed to Roman Andres their respective rights and participation to the one-half portion of the property.10 This was annotated on the title.11chanRoblesvirtualLawlibrary
Consequently, TCT No. NT-7267 was cancelled, and a new title was issued on August 20, 1965 in the name of Roman Andres and his wife, Lydia Echaus-Andres, under TCT No. NT-57731.12chanRoblesvirtualLawlibrary
PNB alleged that on October 22, 1968, the Spouses Roman and Lydia Andres mortgaged the property to PNB for P3,000.00.13 According to PNB, no objection was made, even after the mortgage had been cancelled on July 20, 1972.14chanRoblesvirtualLawlibrary
PNB also alleged that on October 14, 1992, the Nueva Ecija Regional Trial Court15 cancelled the guardianship issued in favor of the Security Bank and Trust Company and transferred ownership of the properties of the deceased, Spouses Roman and Lydia Andres, to their only living heir, Reynaldo Andres.16chanRoblesvirtualLawlibrary
TCT No. NT-57731 was consequently cancelled, and title was transferred to the Spouses Reynaldo Andres and Janette de Leon, under TCT No. (NT-239548) NT-7725 on December 27, 1994.17chanRoblesvirtualLawlibrary
On September 4, 1995, the Spouses Reynaldo Andres and Janette de Leon used this title and mortgaged the property to PNB for a P1.2 million loan.18 This was without the consent of Onofre Andres.19chanRoblesvirtualLawlibrary
Onofre Andres, claiming ownership over the property, filed on November 13, 1996 a complaint for cancellation of title, reconveyance of property and damages, with prayer for the issuance of a preliminary injunction against his nephew Reynaldo Andres and Reynaldo’s wife, Janette de
Leon, PNB, Lydia Echaus-Andres, and the Register of Deeds of Nueva Ecija.20chanRoblesvirtualLawlibrary
The complaint alleged that on November 8, 1994, Onofre Andres’ nephew Reynaldo Andres was in collusion with his mother, Lydia Echaus-Andres, in executing a falsified document denominated as “Self-Adjudication of Sole Heir.” This stated that Reynaldo Andres was the sole heir of his father, Roman Andres, who died on October 12, 1968, and his mother who died on December 15, 1969.21 However, his mother was then still alive and his father, Roman Andres, died only on May 29, 1990.22chanRoblesvirtualLawlibrary
PNB denied the material allegations in the complaint. It argued that it conducted an investigation on the property.23 The title presented to PNB by Reynaldo Andres and his wife was clear and free from adverse claims.24chanRoblesvirtualLawlibrary
For their part, the Spouses Reynaldo Andres and Janette de Leon claimed that from the time title was issued in the name of Reynaldo Andres’ parents, until title transferred to them on December 27, 1994, his father, Roman Andres, had exercised acts of ownership over the property until they succeeded in its possession.25 Onofre Andres’ possession was merely “tolerated [because] of their close relationship.”26 The Spouses Reynaldo Andres and Janette de Leon also raised prescription and estoppel.27chanRoblesvirtualLawlibrary
In his reply, Onofre Andres countered that the extrajudicial partition with sale executed on July 1, 1965 was fictitious, thus, void.28chanRoblesvirtualLawlibrary
Onofre Andres argued that (1) this was not published in a newspaper of general circulation; (2) it was executed only to accommodate the request of Roman Andres and his wife who wanted to mortgage the property; (3) three of the legitimate heirs of the late Victor and Filomena Andres, who were then still living, namely, Sixto, Ofelia, and Araceli, did not participate in its execution; and (4) there was no consideration for the alleged sale.29chanRoblesvirtualLawlibrary
Even assuming that the document was valid, only a one-half undivided portion of the land was sold since the other half was the conjugal share of Filomena Andres who was then still living.30 The residential building did not exist yet at the time of the questioned partition so this could not have been sold to Roman Andres.31chanRoblesvirtualLawlibrary
Onofre Andres also denied that his continuous possession of the property was by mere tolerance.32chanRoblesvirtualLawlibrary
This case was filed as early as November 13, 1996, but the entire Nueva Ecija Regional Trial Court was razed by fire.33 The records of this case were among those destroyed that needed reconstitution. 34chanRoblesvirtualLawlibrary
The parties submitted documents and pleadings forming part of the reconstituted records, and the case was set for the retaking of testimonies and presentation of evidence.35 Unfortunately, Onofre Andres’ testimony could not be retaken since he was already bedridden at that time.36chanRoblesvirtualLawlibrary
It appears that PNB was considered to have waived further presentation of evidence when its counsel failed to appear at the hearing despite notice.37 The trial court denied PNB’s motion for reconsideration to be allowed to present evidence.38chanRoblesvirtualLawlibrary
Onofre Andres died on March 20, 2001 when the case was in the presentation of evidence stage. He was substituted by his surviving heirs.39chanRoblesvirtualLawlibrary
The Regional Trial Court40 rendered its decision41 on November 7, 2003 in favor of Onofre Andres:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, judgment is hereby rendered as follows:ChanRoblesVirtualawlibrary
1. Declaring null and void all derivative titles from TCT No. NT-7267 specifically TCT No. NT-57731, TCT No. NT-239548 and TCT No. NT-24660, and ordering the concerned Register of Deeds to reinstate said TCT NT-7267 in the names of its original owners, Victor Andres and Filomena Ramos.
2. Ordering defendant spouses Reynaldo Andres and Janette de Leon, jointly and severally, to pay plaintiff or his substitutes the sum of P100,000.00 by way of moral damages.
3. Ordering defendant spouses Reynaldo Andres and Janette de Leon, jointly and severally, to pay plaintiff or his substitutes the sum of P50,000.00 by way of exemplary damages;
4. Ordering defendant spouses Reynaldo Andres and Janette de Leon, jointly and severally, to pay plaintiff or his substitutes attorney's fees in the sum of P30,000.00, and to pay the costs of suit.
SO ORDERED.42
The Court of Appeals43 rendered its decision44 on December 13, 2005, modifying the trial court’s decision in that TCT No. N-24660 in the name of PNB was declared valid and existing. The rest of the decision stands.45 It also denied reconsideration46 on July 5, 2006, prompting Onofre Andres to file the instant petition.47chanRoblesvirtualLawlibrary
Petitioner heirs of Onofre Andres argue that (1) there is no legal basis to uphold the validity of PNB's title as it was derived from a void title;48 (2) Cabuhat v. Court of Appeals49 on innocent mortgagees for value is not applicable;50 (3) PNB is “not a mortgagee in good faith”;51 (4) there was no valid mortgage, thus, no valid foreclosure and auction sale;52 and (5) “trial courts are in [a] better position to determine questions involving [the] credibility of witnesses.”53chanRoblesvirtualLawlibrary
Petitioner heirs pray that the assailed Court of Appeals’ decision and resolution be set aside, and the trial court’s November 7, 2003 decision be reinstated.54chanRoblesvirtualLawlibrary
In its comment, PNB countered that “a defective title may be a source of a completely legal and
valid title in the hands of an innocent purchaser for value.”55 Cruz v. Bancom Finance Corporation56 cited by petitioner heirs is off-tangent and inapplicable.57 On the other hand, Cabuhat v. Court of Appealson innocent mortgagees in good faith involved similar facts and the same legal issue.58chanRoblesvirtualLawlibrary
PNB adds that the issue of whether it is a mortgagee in good faith involves a factual issue not within this court’s power of review.59 The issue on the validity of the foreclosure proceedings and sale was not raised in the complaint, thus, cannot be raised for the first time on appeal.60chanRoblesvirtualLawlibrary
Lastly, PNB contends that the factual findings of the Court of Appeals are deemed final and conclusive by this court.61chanRoblesvirtualLawlibrary
Petitioner heirs filed a reply reiterating their arguments and submitting certified true copies of the property’s tax declarations to support their contentions.62chanRoblesvirtualLawlibrary
Thus, the issues before this court for resolution are:chanroblesvirtuallawlibrary
I. Whether a valid title can be derived from a void title; and
II. Whether PNB is an innocent mortgagee for value and in good faith, thus, its right on the property is protected even if the mortgagor obtained title through fraud.
A petition for review on certiorari shall raise only questions of law.63 The core of the issues presented requires a determination of whether PNB was in good faith and exercised due diligence in accepting the property mortgaged by Spouses Reynaldo Andres and Janette de Leon. These are questions of fact64 that fall outside the ambit of this court’s power of review.
This court is not a trier of facts that routinely re-examines evidence presented. Factual findings by the Court of Appeals are, thus, generally considered binding and conclusive upon this court.65chanRoblesvirtualLawlibrary
The rule against entertaining factual questions admits of exceptions,66 but none are present in this case. This court finds no reason to overturn the findings of the Court of Appeals.
Petitioner heirs submit that the trial court “did not rule categorically on the issue of good faith interposed by the respondent bank[; however], it ruled that since the mortgage was without object and cause, it was parenthetically void such that the defense of and protestation of good faith is thus rendered of no consequence.”67 In support of their contention that PNB’s title was derived from a void title, petitioner heirs cited at length the trial court decision:chanroblesvirtuallawlibrary
A close examination of the said deed of partition will show that not all the children of the spouses Victor Andres and Filomena Ramos were parties nor signatories thereto. Specifically, only six of the nine children of said spouses executed the supposed extra-judicial partition which, in effect, preterited three others, namely: Sixto, Ofelia and Araceli.
The extra-judicial partition is thus vitiated by what appeared to have been a deliberate omission therein of the said three children. The obvious explanation to that is what is claimed by the plaintiff: that the deed was simulated to afford financial accommodation to their brother Roman.
More significantly, the deed very clearly provided that only one half of the subject property was covered by partition since the other half was recognized as the conjugal share of Victor Andres’ spouses [sic], Filomena Ramos.
Even assuming the validity of the partition as executed, only one-half of the subject property should have been transferred, by virtue thereof, to Roman Andres.
Insofar, therefore, as the Extra-Judicial Partition with Sale was made the basis for the transfer of TCT No. NT-7267 to TCT No. NT-57731, the same may not be characterized other than as absolutely simulated or fictitious contract or document. As such, the transfer effected through it was void ab initio and, in legal contemplation, never existed.
By the same token, any subsequent transfer from the void TCT No. NT-57731, could not have had any valid and binding effect so as to constitute the transferee thereof as the legal owner of the property embraced and described therein.
Interestingly, even the manner defendant Andres effected the transfer of TCT No. NT-57731 to himself was legally flawed.
To be sure, the issuance of TCT No. NT-239548 in the name of defendant Reynaldo Andres was by way of a document styled as Self Adjudication of Sole Heir (Exh. “D”) executed by defendant Reynaldo Andres himself. In this document, he declared that Roman Andres died on October 12, 1968, and his mother died Lydia Echaus, on December 15, 1969; that they died with the subject property as their only property, that he is the only child and heir of the decedents and for that reason he declared the estate to be his inheritance and adjudicated the same unto himself extra-judicially pursuant to Section 1, Rule 74 of the Rules of Court.
It appears, however, that at the time the Self-Adjudication of Sole Heir was executed by defendant Reynaldo Andres, it is not true that his mother, Lydia Echaus, was already dead. In fact, up to the present she [is] still alive. Not only that, defendant Reynaldo Andres is not really the sole child of spouses Roman Andres and Lydia Echaus because they have other children, namely: Cynthia and Vienna who are both in the United States of America.68 (Emphasis supplied)
On the other hand, the Court of Appeals ascertained good faith on the part of PNB.
Preliminarily, the Court of Appeals mentioned that it is “in quandary as to whether or not the appellant PNB indeed was able to present evidence for and on its own behalf [but a] close scrutiny of the records of this case would disclose that Gerardo Pestaño was presented as a witness for the defendant-PNB and his testimony was adopted by the defendants-spouses.”69chanRoblesvirtualLawlibrary
It then found that PNB followed the standard practice of banks before approving a loan by sending representatives to inspect the property offered as collateral.70 PNB even investigated on “where and from whom the title . . . originated.”71chanRoblesvirtualLawlibrary
According to the Court of Appeals, evidence disclosed that Spouses Reynaldo Andres and Janette de Leon submitted TCT No. (NT-239548) N-7725 as proof of their ownership. PNB’s property appraiser, Gerardo Pestaño, conducted an investigation and verified the status of the property with the Register of Deeds and Assessor's Office.72chanRoblesvirtualLawlibrary
On August 8, 1995, Gerardo Pestaño went to the property and personally met with the borrowers, Spouses Reynaldo Andres and Janette de Leon, who told him they were living in the property. He appraised the residential building then being constructed. Upon Gerardo Pestaño’s request, Reynaldo Andres submitted the property’s tax declaration.73chanRoblesvirtualLawlibrary
Gerardo Pestaño also went to the Municipal Trial Court to check on any pending cases, particularly on estafa, filed against Spouses Reynaldo Andres and Janette de Leon. Upon verification from the Register of Deeds, he learned that all previous annotations on the titles have been cancelled.74chanRoblesvirtualLawlibrary
The Court of Appeals found that there was nothing on the face of the titles that would excite any suspicion of an irregular issuance.75 Reynaldo Andres’ parents had even previously mortgaged the property to a bank in 1965, and the property was accepted.76chanRoblesvirtualLawlibrary
We affirm the decision of the Court of Appeals.
The Court of Appeals quoted Cabuhat v. Court of Appeals in holding that “when a mortgagee relies upon what appears on the face of a Torrens title and loans money in all good faith on the basis of the title in the name of the mortgagor, only thereafter to learn that the latter’s title was defective, being thus an innocent mortgagee for value, his or her right or lien upon the land mortgaged must be respected and protected, even if the mortgagor obtained her title thereto through fraud.”77chanRoblesvirtualLawlibrary
Petitioner heirs argued the inapplicability of Cabuhat to the instant case. They explained howCabuhat involved a private individual mortgagee while respondent was a universal bank. They added that unlike in Cabuhat, good faith was not duly proven by PNB.78chanRoblesvirtualLawlibrary
Petitioner heirs then cited Cruz v. Bancom Finance Corporation for its holding that “[the bank] should not have simply relied on the face of the Certificate of Title to the property, as its ancillary function of investing funds required a greater degree of diligence. . . .”79chanRoblesvirtualLawlibrary
The Civil Code is clear that only the absolute owner of a property can mortgage such property.80 The law also provides that absolutely simulated or fictitious contracts are void and inexistent.81 Consequently, these fictitious contracts convey no rights.
The trial court has declared as void all titles that originated from the contracts it found to be void, such as the extrajudicial partition with sale in favor of Roman Andres, and the “Self-Adjudication of Sole Heir” in favor of Reynaldo Andres. This was affirmed by the Court of Appeals.
The issue now is whether a valid title in favor of PNB can be derived from these void titles.
This court reiterated the good faith doctrine that applies to innocent mortgagees for value in the 2012 case of Philippine Banking Corporation v. Dy:82chanRoblesvirtualLawlibrary
While it is settled that a simulated deed of sale is null and void and therefore, does not convey any right that could ripen into a valid title, it has been equally ruled that, for reasons of public policy, the subsequent nullification of title to a property is not a ground to annul the contractual right which may have been derived by a purchaser, mortgagee or other transferee who acted in good faith.83 (Emphasis supplied, citations omitted)
The doctrine protecting mortgagees and innocent purchasers in good faith emanates from the social interest embedded in the legal concept granting indefeasibility of titles. The burden of discovery of invalid transactions relating to the property covered by a title appearing regular on its face is shifted from the third party relying on the title to the co-owners or the predecessors of the title holder. Between the third party and the co-owners, it will be the latter that will be more intimately knowledgeable about the status of the property and its history. The costs of discovery of the basis of invalidity, thus, are better borne by them because it would naturally be lower. A reverse presumption will only increase costs for the economy, delay transactions, and, thus, achieve a less optimal welfare level for the entire society.84chanRoblesvirtualLawlibrary
The general rule allows every person dealing with registered land to rely on the face of the title when determining its absolute owner.85 Thus, cases like Cabuhat have held that “a mortgagee has a right to rely in good faith on the certificate of title of the mortgagor of the property given as security and in the absence of any sign that might arouse suspicion, has no obligation to undertake further investigation.”86 The protection of innocent mortgagees for value finds support in the Land Registration Act:chanroblesvirtuallawlibrary
Then in Penullar v. PNB, this Court resolved a similar issue ruling that Section 38 of the Land Registration Act places an innocent mortgagee for value under the mantle of protection accorded to innocent purchasers for value.
Furthermore, Section 39 of Act No. 496 provides that every person receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser (or mortgagee) of registered land who takes a certificate of title for value in good faith, shall hold the same free of all encumbrance except those noted on said certificate. . . 87 (Citations omitted)
Section 38 of Act No. 496 in what is now Section 32 of Presidential Decree No. 1529 reads:chanroblesvirtuallawlibrary
SEC. 32. Review of decree of registration; Innocent purchaser for value. — The decree of registration shall not be reopened or revised by reason of absence, minority, or other disability of any person adversely affected thereby, nor by any proceeding in any court for reversing judgments, subject, however, to the right of any person, including the government and the branches thereof, deprived of land or of any estate or interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in the proper Court of First Instance a petition for reopening and review of the decree of registration not later than one year from and after the date of the entry of such decree of registration, but in no case shall such petition be entertained by the court where an innocent purchaser for value has acquired the land or an interest therein, whose rights may be prejudiced. Whenever the phrase "innocent purchaser for value" or an equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee, or other encumbrancer for value.
Upon the expiration of said period of one year, the decree of registration and the certificate of title issued shall become incontrovertible. Any person aggrieved by such decree of registration in any case may pursue his remedy by action for damages against the applicant or any other persons responsible for the fraud.
However, the banking industry belongs to a different category than private individuals. Banks are considered businesses impressed with public interest, requiring “high standards of integrity and performance.”88 Consequently, banks must exercise greater care, prudence, and due diligence in their property dealings. The standard operating practice for banks when acting on a loan application is “to conduct an ocular inspection of the property offered for mortgage and to verify the genuineness of the title to determine the real owner(s) thereof.”89chanRoblesvirtualLawlibrary
Unlike in Cruz v. Bancom Finance Corporation cited by petitioners,90 PNB complied with this standard operating practice.
The petition even attached certified true copies of the transcript of bank appraiser Gerardo Pestaño’s testimony, offered “to prove that defendant spouses Reynaldo and Jannette [sic] Andres mortgaged the property subject matter of the litigation covered by Transfer Certificate of Title No. NT-239548 to secure their loan to PNB approved in 1995 and at that time the defendant Andres [spouses] were the owner[s] of the mortgaged property; that there was no claim filed by the plaintiff Onofre Andres. . . .”91chanRoblesvirtualLawlibrary
Petitioner heirs disagree with the Court of Appeals’ findings of due diligence by PNB. They submit that Gerardo Pestaño failed to conduct a thorough investigation; otherwise, he would have discovered that Reynaldo Andres did not own the residential building then being constructed on the property.92 Petitioner heirs add that the approval of a collateral in 1965 does not mean the same property is good collateral 30 years later.93 Lastly, PNB was negligent when it failed to take into account the two-year period under Rule 74, Section 4 of the Rules of Court.94chanRoblesvirtualLawlibrary
These arguments fail to convince.
First, it is undisputed that PNB sent its appraiser and credit investigator Gerardo Pestaño to conduct an ocular inspection of the property.95 He also went to the relevant government offices to verify the ownership status of the property.96 There was an on-going construction of a residential building during his inspection, so he appraised this building as well, in case the land proved insufficient to cover the applied loan.97 These acts complied with the standard operating practice expected of banks when dealing with real property.
Second, the two-year period under Rule 74, Section 4 of the Rules of Court had lapsed and petitioner heirs did not allege if any heir or creditor of Roman Andres and his wife had invoked their right under this provision. Rule 74, Section 4 of the Rules of Court provides:chanroblesvirtuallawlibrary
SEC 4. Liability of distributees and estate. – If it shall appear at any time within two (2) years after the settlement and distribution of an estate in accordance with the provisions of either of the first two sections of this rule, that an heir or other person has been unduly deprived of his lawful participation in the estate, such heir or such other person may compel the settlement of the estate in the courts in the manner hereinafter provided for the purpose of satisfying such lawful participation. And if within the same time of two (2) years, it shall appear that there are debts outstanding against the estate which have not been paid, or that an heir or other person has been unduly deprived of his lawful participation payable in money, the court having jurisdiction of the estate may, by order for that purpose, after hearing, settle the amount of such debts or lawful participation and order how much and in what manner each distributee shall contribute in the payment thereof, and may issue execution, if circumstances require, against the bond provided in the preceding section or against the real estate belonging to the deceased, or both. Such bond and such real estate shall remain charged with a liability to creditors, heirs, or other persons for the full period of two (2) years after such distribution, notwithstanding any transfers of real estate that may have been made. (Emphasis supplied)
This provision was no longer annotated on the title at the time the title was submitted to PNB as collateral for the loan:chanroblesvirtuallawlibrary
Q: You mentioned that you did went [sic] to the Register of Deeds and in the Register of Deeds you found the document concerning an order in Civil Case involving the property, do you remember having said that?
A: Yes, sir.Q: What was that Civil Case all about?A: I go to the Register of Deeds to verify the previous title because there is a Sec. 4 Rule 74 of
the title and I found out at the back of the title that there is an order in favor of Reynaldo Andres commissioned by virtue of an order of RTC 3rd Judicial Region, Branch 37, Sto. Domingo, Nueva Ecija issued by Hon. Senen Saguyod issued by Security Bank and Trust Company and the transfer of ownership of the properties of the deceased spouses Roman Andres and Lydia Echauz to Reynaldo Andres and the date is October 14, 1992, sir.
Atty. Lasam:Q: Having read that at the Register of Deeds of Nueva Ecija you proceeded to Branch 37, Baloc,
Sto. Domingo, Nueva Ecija to verify whether there are still pending cases regarding the lot?A: A[t] the time they submit the title there is no annotation at the back of the title and the title is
clean, sir.Q: You mean to say that when they applied for a loan that annotation which you read earlier was
not present?A: There is no more annotation, sir.98 (Emphasis supplied)
In any event, Rule 74, Section 4 does not apply to Onofre Andres who never alleged being an excluded heir or unpaid creditor of his brother Roman Andres and Roman’s wife.
Petitioner heirs also insist that Gerardo Pestaño did not interview or inquire from residents in the surrounding area regarding the ownership of the residential building then being constructed on the land.99 They submit that this amounts to lack of due diligence by PNB considering Reynaldo Andres’ admission that Onofre Andres possessed the property, but by mere tolerance.100chanRoblesvirtualLawlibrary
On the contrary, Gerardo Pestaño testified that he interviewed the laborers working on the residential building in the property, and he asked the Spouses Reynaldo Andres and Janette de Leon to obtain the tax declaration from the Assessor’s Office:chanroblesvirtuallawlibrary
ATTY LASAM:
Mr. witness, the time you conducted the credit investigation who was in possession of the property?
A. I was asked by Reynaldo Andres to see the property and we went to the place and there is on going construction of a building and it was 50% finish. I told them to go to the Municipal Assessor’s Office for Tax Declaration.
Q. So it is cle[unreadable] that Reynaldo and Jannette was in possession of the subject property?
A. Yes, sir.Q. And at the time you conducted the credit investigation was there any claim of that
property. . regarding this claim of Onofre Andres?A. I went to the Municipal Hall of Sto. Domingo and I don’t have any knowledge of
that.. . . .Q. When you investigated you solely relied to the title being offered?A. No, sir. I went to the Assessor’s Office of Sto. Domingo, to see the tax payments
and to the Register of Deeds.Q. You did talk to the laborers working in the building?A. Yes, sir.Q. Mr. witness, you mentioned that you required Reynaldo Andres to submit the tax
declaration of the building?A. Yes, sir.Q. Did he submit to you the tax declaration?A. Yes.101 (Emphasis supplied)
Gerardo Pestaño did not have a copy of the tax declaration of the residential building at the time of his testimony, but he testified that the Spouses Reynaldo Andres and Janette de Leon presented Tax Declaration No. 449459, and he inspected this document.102 He does not appear to
have been questioned on the contents of Tax Declaration No. 449459.
Nevertheless, even Onofre Andres’ possession appears doubtful since Gerardo Pestaño testified that the residential building was still under construction during his inspection on August 8, 1995:103chanRoblesvirtualLawlibrary
Q: Did you actually inspect the 4,634 square meters of the property?A: Yes, sir.Q: At the time of your inspection of the property, who was actually living in the
property?A: At the time of my inspection on August 8, 1995 the house is under construction?
sir.Q: There were no occupants?A: The spouses borrower Reynaldo Andres and his wife, sir.Atty. Lasam:Q: You mean to say that while the building is under construction they were at the
same time living there?A: They were not living there but they were in possession of the property, sir.Q: You only presumed that they are the once [sic] in possession of the property?A: Because they accompanied me there, sir.104 (Emphasis supplied)
In their reply, petitioner heirs attached tax declarations over the land and the residential building, asking this court to allow the submission of such documentary evidence in the interest of substantial justice.105 Again, this court is not a trier of facts. A petition for review on certiorari “shall raise only questions of law.”106 This court cannot accept and consider documentary evidence only raised and submitted now on review.
In any event, the tax declarations attached to the reply fail to convince. Reynaldo Andres attached two tax declarations to show that he owned the residential building standing on the property, thus, Gerardo Pestaño did not conduct an exhaustive investigation.107chanRoblesvirtualLawlibrary
The first tax declaration in Reynaldo Andres’ name was for year 1994. The spaces allotted for the boundaries of the land where the house stands read “erected on the lot of Roman Andres,” but the name Roman Andres was written on top of a white out erasure, and such correction was not countersigned.108 Reynaldo Andres did not explain such erasure in his reply. A person presenting an altered document must account for the alteration; otherwise, this affects its admissibility.109chanRoblesvirtualLawlibrary
The second tax declaration was for year 2006, long after Gerardo Pestaño inspected the property in 1995.110chanRoblesvirtualLawlibrary
In sum, this court reiterates the rule that banks, as businesses impressed with public interest, must exercise greater care, prudence, and due diligence in all their property dealings. This court upholds the Court of Appeals’ findings that PNB complied with the standard operating practice
of banks, which met the requisite level of diligence, when it sent Gerardo Pestaño to conduct an ocular inspection of the property and verify the status of its ownership and title. Consequently, PNB is a mortgagee in good faith. The title resulting from the foreclosure sale, therefore, is to be protected. The bank is an innocent purchaser for value.chanrobleslaw
WHEREFORE, the petition is DENIED. The assailed Court of Appeals decision and resolution areAFFIRMED.
SO ORDERED.cralawlawlibrary
Carpio, (Chairperson), Peralta,* Del Castillo, and Reyes,** JJ., concur.
Endnotes:
* Designated additional member per raffle dated October 13, 2014.
** Designated acting member per Special Order No. 1844 dated October 14, 2014.
1Rollo, p. 59. “As buyer in the auction sale of the subject property, defendant bank consolidated title over it and was issued the same (TCT No. N-24660) on May 27, 2002.”
2 The petition was filed pursuant to Rule 45 of the Rules of Court.
3Rollo, pp. 34–35 and 58.
4 The nine children were Onofre, Guillermo, Sixto, Roman, Juana, Melissa, Maxima, Ofelia, and Araceli, all surnamed Andres.
5Rollo, p. 36.
6 Id. at 34 and 58.
7 Id. at 36.
8 The decision of the trial court used the name, “Felisa,” instead of “Melissa.”
9 Id. at 58.
10 Id. at 37–38, 55–56, and 59.
11 Id. at 55.
12 Id. at 36, 38, 56, and 59.
13 Id. at 36 and 55. The Court of Appeals reported this date as October 22, 1965.
14 Id. The Court of Appeals reported this date as July 20, 1973.
15 Branch 37 of Regional Trial Court of Baloc, Sto. Domingo, Nueva Ecija.
16Rollo, pp. 36–37 and 55.
17 Id. at 35, 37, 55, and 59.
18 Id. at 59.
19 Id. at 36 and 55.
20 Id. at 35 and 54.
21 Id at 59.
22 Id.
23 Id.
24 Id. at 37 and 55.
25 Id. at 38 and 56.
26 Id.
27 Id.
28 Id.
29 Id. at 38–39 and 56.
30 Id. at 39 and 56.
31 Id.
32 Id.
33 Id. at 39–40.
34 Id. at 40.
35 Id.
36 Id. at 41.
37 Id. at 40.
38 Id. at 65.
39 Id. at 40–41.
40 The decision was penned by Judge Lauro G. Sandoval of Branch 37 of the Regional Trial Court of Nueva Ecija.
41Rollo, pp. 54–62.
42 Id. at 61–62.
43 The decision was penned by Associate Justice Jose L. Sabio, Jr., and concurred in by Associate Justices Jose C. Mendoza and Arturo G. Tayag, Court of Appeals, Sixteenth Division.
44Rollo, pp. 33–47.
45 Id. at 47.
46 Id. at 49–53.
47 Id. at 8–28.
48 Id. at 16.
49 418 Phil. 451 (2001) [Per J. Ynares-Santiago, First Division].
50Rollo, pp. 20 and 156.
51 Id. at 20.
52 Id. at 26.
53 Id.
54 Id. at 27.
55 Id. at 132.
56 429 Phil. 225 (2002) [Per J. Panganiban, Third Division].
57Rollo, pp. 134–135.
58 Id. at 137.
59 Id.
60 Id. at 138.
61 Id. at 139.
62 Id. at 159.
63 RULES OF CIVIL PROCEDURE, Rule 45, sec.1.
SEC. 1. Filing of petition with Supreme Court. — A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth. (Emphasis supplied)
64 Philippine Banking Corporation v. Dy, G.R. No. 183774, November 14, 2012, 685 SCRA 567, 574 [Per J. Perlas-Bernabe, Second Division].
65Republic of the Philippines v. Heirs of Ramos, G.R. No. 169481, February 22, 2010, 613 SCRA 315, 324 [Per J. Del Castillo, Second Division].
66 The exceptions are: “(1) when the inference made is manifestly mistaken, absurd or impossible; (2) when there is grave abuse of discretion; (3) when the finding is grounded entirely on speculations, surmises, or conjectures; (4) when the judgment of the CA is based on misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the CA, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both parties; (7) when the findings of the CA are contrary to those of the trial court; (8) when the findings of fact are conclusions without citation of specific evidence on which they are based; (9) when the CA manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion; and (10) when the findings of fact of the CA are premised on the absence of evidence and are contradicted by the evidence on record.” Republic of the Philippines v. Heirs of Ramos, G.R. No. 169481, February 22, 2010, 613 SCRA 315, 324–325 [Per J. Del Castillo, Second Division].
67 Rollo, pp. 26–27.
68 Id. at 16–17 and 59–60.
69 Id. at 43.
70 Id. at 44.
71 Id.
72 Id.
73 Id. at 44–45.
74 Id. at 45.
75 Id.
76 Id. at 45–46.
77Cabuhat v. Court of Appeals, 418 Phil. 451, 458–459 (2001) [Per J. Ynares-Santiago, First Division].
78Rollo, pp. 20–21.
79Cruz v. Bancom Finance Corporation, 429 Phil. 225, 241 (2002) [Per J. Panganiban, Third Division], citing Government Service Insurance System v. Court of Appeals, 350 Phil. 654, 662 (1998) [Per J. Romero, Third Division].
80 Civil Code, art. 2085(2).
81 Civil Code, art. 1409(2).
82 G.R. No. 183774, November 14, 2012, 685 SCRA 567 [Per J. Perlas-Bernabe, Second Division].
83 Id. at 574.
84See O. E. Williamson, Transaction-Cost Economics: The Governance of Contractual Relations, 22 JOURNAL OF LAW AND ECONOMICS 233, 239–242 (1979). See also R. H. Coase, The Problem of Social Cost, 3 JOURNAL OF LAW AND ECONOMICS 1–44 (1960).
85 See Cruz v. Bancom Finance Corporation, 429 Phil. 225, 237 (2002) [Per J. Panganiban, Third Division].
86Cabuhat v. Court of Appeals, 418 Phil. 451, 460 (2001) [Per J. Ynares-Santiago, First Division].
87 Id. at 458.
88 Rep. Act No. 8791 (2000), sec. 2, otherwise known as The General Banking Law of 2000.
89Philippine Banking Corporation v. Dy, G.R. No. 183774, November 14, 2012, 685 SCRA 567, 575 [Per J. Perlas-Bernabe, Second Division], citing Alano v. Planter’s Development Bank, G.R. No. 171628, June 13, 2011, 651 SCRA 766, 774–775 [Per J. Del Castillo, First Division]. See also Dela Peña v. Avila, G.R. No. 187490, February 8, 2012, 665 SCRA 553, 570 [Per J. Perez,
Second Division].
90 In Bancom, the bank, among other things, failed to conduct an ocular inspection of the property at the time it was mortgaged to the bank. See Cruz v. Bancom Finance Corporation, 429 Phil. 225, 240 (2002) [Per J. Panganiban, Third Division].
91Rollo, p. 91.
92 Id. at 23 and 157–158.
93 Id. at 25.
94 Id. at 25–26.
95 Id. at 157.
96 Id.
97 Id. at 45.
98 Id. at 108–109.
99 Id. at 23–24.
100 Id. at 24.
101 Id. at 97–99.
102 Id. at 99 and 114–115.
103 Id. at 106.
104 Id. at 105–106.
105 Id. at 159.
106 RULES OF COURT, Rule 45, sec. 1.
107 Id. at 160.
108 Id. at 169.
109 RULES OF COURT, Rule 132, sec. 31. See Cabotaje v. Spouses Pudunan, 480 Phil. 65, 77 (2004) [Per J. Callejo, Sr., Second Division].
110Rollo, p. 170.
Maria Susana R. Ape
Spec. Pro Summer Class 2015
Dean Gemylito Festin
List of Cases
1. G.R. No. 171206 September 23, 2013
HEIRS OF THE LATE SPOUSES FLA VIANO MAGLASANG and SALUD ADAZA-
MAGLASANG vs. MANILA BANKING CORPORATION, now substituted by FIRST
SOVEREIGN ASSET MANAGEMENT SPV-AMC, INC. FSAMI,
2. G.R. No. 170498 January 9, 2013
METROPOLITAN BANK & TRUST COMPANY vs. ABSOLUTE MANAGEMENT
CORPORATION
I. I. finding that the extra-judicial foreclosure subject of this case was properly conducted in
accordance with the formalities of Act No. 3135,the Court upholds the same as a valid exercise
of respondent's third option under Section 7, Rule 86. To reiterate, respondent cannot, however,
file any suit to recover any deficiency amount since it effectively waived its right thereto when it
chose to avail of extra-judicial foreclosure as jurisprudence instructs.
I.II G.R. No. 171206 September 23, 2013
HEIRS OF THE LATE SPOUSES FLA VIANO MAGLASANG and SALUD ADAZA-
MAGLASANG vs. MANILA BANKING CORPORATION
PERLAS-BERNABE, J.:
The Facts
Spouses Flaviano and Salud Maglasang (Sps.Maglasang) obtained a credit line from respondent
in the amount of P350,000.00 which was secured by a real estate mortgage6 executed over seven
of their properties7 located in Province of Leyte. After Flaviano Maglasang (Flaviano) died
intestate, his widow Salud Maglasang (Salud) and their surviving children, appointed their
brother petitioner Edgar Maglasang (Edgar) as their attorney-in-fact and administrator. The
probate court terminated the proceedings with the surviving heirs executing an extra-judicial
partition of the properties of Flaviano’s estate. Respondent extra-judicially foreclose the
mortgage covering the Sps. Maglasang’s properties, still remained a deficiency on Sps.
Boston Equity Resources vs. Court of Appeals and Lolita ToledoG. R. No. 173946
July 19, 2013
Section 6, Rule 86
PART 1
Case Doctrine
It is crystal clear that Article 1216 of the New Civil Code is the applicable provision in
this matter. Said provision gives the creditor the right to "proceed against anyone of the solidary
debtors or some or all of them simultaneously." The choice is undoubtedly left to the solidary
creditor to determine against whom he will enforce collection. In case of the death of one of the
solidary debtors, he (the creditor) may, if he so chooses, proceed against the surviving solidary
debtors without necessity of filing a claim in the estate of the deceased debtors. It is not
mandatory for him to have the case dismissed as against the surviving debtors and file its claim
against the estate of the deceased solidary debtor, x x x. For to require the creditor to proceed
against the estate, making it a condition precedent for any collection action against the surviving
debtors to prosper, would deprive him of his substantive rights provided by Article 1216 of the
As correctly argued by petitioner, if Section 6, Rule 86 of the Revised Rules of Court were
applied literally, Article 1216 of the New Civil Code would, in effect, be repealed since under
the Rules of Court, petitioner has no choice but to proceed against the estate of [the deceased
debtor] only. Obviously, this provision diminishes the [creditor’s] right under the New Civil
Code to proceed against any one, some or all of the solidary debtors. Such a construction is not
sanctioned by principle, which is too well settled to require citation, that a substantive law cannot
be amended by a procedural rule. Otherwise stated, Section 6, Rule 86 of the Revised Rules of
Court cannot be made to prevail over Article 1216 of the New Civil Code, the former being
merely procedural, while the latter, substantive.
Part II
Case Digest
Facts:
Petitioner filed a complaint for sum of money against the spouses Manuel (deceased) and
Lolita Toledo. Respondent instead filed a motion to dismiss the complaint on the ground that the
case should be filed against the estate of Manuel in accordance with Section 5 and 6 of Rule 86.
Issue: Whether or not the estate of Manuel Toledo is an indispensable party
Ruling: No. Applying the foregoing pronouncements to the case at bar, it is clear that the estate
of Manuel is not an indispensable party to the collection case, for the simple reason that the
obligation of Manuel and his wife, respondent herein, is solidary.
In other words, the collection case can proceed and the demands of petitioner can be satisfied by
respondent only, even without impleading the estate of Manuel. Consequently, the estate of
Manuel is not an indispensable party to petitioner’s complaint for sum of money.
However, the Court of Appeals, agreeing with the contention of respondent, held that the claim
of petitioner should have been filed against the estate of Manuel in accordance with Sections 5
and 6 of Rule 86 of the Rules of Court. The aforementioned provisions
provide:cralavvonlinelawlibrary
SEC. 5. Claims which must be filed under the notice. If not filed, barred; exceptions. All claims for money against the decedent, arising from contract, express or implied, whether the same be due, not due, or contingent, all claims for funeral expenses and judgment for money against the decedent, must be filed within the time limited in the notice; otherwise, they are barred forever, except that they may be set forth as counterclaims in any action that the executor or administrator may bring against the claimants. x x x.
SEC. 6. Solidary obligation of decedent. Where the obligation of the decedent is solidary with another debtor, the claim shall be filed against the decedent as if he were the only debtor, without prejudice to the right of the estate to recover contribution from the other debtor. x x x.
The Court of Appeals erred in its interpretation of the above-quoted provisions.
In construing Section 6, Rule 87 of the old Rules of Court, the precursor of Section 6, Rule 86 of the Revised Rules of Court, which latter provision has been retained in the present Rules of Court without any revisions, the Supreme Court, in the case of Manila Surety & Fidelity Co., Inc. v. Villarama, et. al.,49 held:50
Construing Section 698 of the Code of Civil Procedure from whence [Section 6, Rule 87] was
taken, this Court held that where two persons are bound in solidum for the same debt and one of
them dies, the whole indebtedness can be proved against the estate of the latter, the decedent’s
liability being absolute and primary; x x x. It is evident from the foregoing that Section 6 of
Rule 87 provides the procedure should the creditor desire to go against the deceased debtor, but
there is certainly nothing in the said provision making compliance with such procedure a
condition precedent before an ordinary action against the surviving solidary debtors, should the
creditor choose to demand payment from the latter, could be entertained to the extent that failure
to observe the same would deprive the court jurisdiction to take cognizance of the action against
the surviving debtors. Upon the other hand, the Civil Code expressly allows the creditor to
proceed against any one of the solidary debtors or some or all of them simultaneously. There is,
therefore, nothing improper in the creditor’s filing of an action against the surviving solidary
debtors alone, instead of instituting a proceeding for the settlement of the estate of the deceased
debtor wherein his claim could be filed.
The foregoing ruling was reiterated and expounded in the later case of Philippine National Bank
v. Asuncion51 where the Supreme Court pronounced:cralavvonlinelawlibrary
A cursory perusal of Section 6, Rule 86 of the Revised Rules of Court reveals that nothing
therein prevents a creditor from proceeding against the surviving solidary debtors. Said provision
merely sets up the procedure in enforcing collection in case a creditor chooses to pursue his
claim against the estate of the deceased solidary debtor. The rule has been set forth that a creditor
(in a solidary obligation) has the option whether to file or not to file a claim against the estate of
the solidary debtor. x x x
Part III
Full Case
SECOND DIVISION
G.R. No. 173946, June 19, 2013
BOSTON EQUITY RESOURCES, INC., Petitioner, v. COURT OF APPEALS AND LOLITA G. TOLEDO,Respondents.
D E C I S I O N
PEREZ, J.:
Before the Court is a Petition for Review on Certiorari seeking to reverse and set aside: (1) the Decision,1 dated 28 February 2006 and (2) the Resolution,2 dated 1 August 2006 of the Court of
Appeals in CA-G.R. SP No. 88586. The challenged decision granted herein respondent’s petition forcertiorari upon a finding that the trial court committed grave abuse of discretion in denying respondent’s motion to dismiss the complaint against her.3 Based on this finding, the Court of Appeals reversed and set aside the Orders, dated 8 November 20044 and 22 December 2004,5respectively, of the Regional Trial Court (RTC) of Manila, Branch 24.
The Facts
On 24 December 1997, petitioner filed a complaint for sum of money with a prayer for the issuance of a writ of preliminary attachment against the spouses Manuel and Lolita Toledo.6 Herein respondent filed an Answer dated 19 March 1998 but on 7 May 1998, she filed a Motion for Leave to Admit Amended Answer7 in which she alleged, among others, that her husband and co-defendant, Manuel Toledo (Manuel), is already dead.8 The death certificate9 of Manuel states "13 July 1995" as the date of death. As a result, petitioner filed a motion, dated 5 August 1999, to require respondent to disclose the heirs of Manuel.10 In compliance with the verbal order of the court during the 11 October 1999 hearing of the case, respondent submitted the required names and addresses of the heirs.11Petitioner then filed a Motion for Substitution,12 dated 18 January 2000, praying that Manuel be substituted by his children as party-defendants. It appears that this motion was granted by the trial court in an Order dated 9 October 2000.13
Pre-trial thereafter ensued and on 18 July 2001, the trial court issued its pre-trial order containing, among others, the dates of hearing of the case.14
The trial of the case then proceeded. Herein petitioner, as plaintiff, presented its evidence and its exhibits were thereafter admitted.
On 26 May 2004, the reception of evidence for herein respondent was cancelled upon agreement of the parties. On 24 September 2004, counsel for herein respondent was given a period of fifteen days within which to file a demurrer to evidence.15 However, on 7 October 2004, respondent instead filed a motion to dismiss the complaint, citing the following as grounds: (1) that the complaint failed to implead an indispensable party or a real party in interest; hence, the case must be dismissed for failure to state a cause of action; (2) that the trial court did not acquire jurisdiction over the person of Manuel pursuant to Section 5, Rule 86 of the Revised Rules of Court; (3) that the trial court erred in ordering the substitution of the deceased Manuel by his heirs; and (4) that the court must also dismiss the case against Lolita Toledo in accordance with Section 6, Rule 86 of the Rules of Court.16
The trial court, in an Order dated 8 November 2004, denied the motion to dismiss for having been filed out of time, citing Section 1, Rule 16 of the 1997 Rules of Court which states that: "[W]ithin the time for but before filing the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made x x x."17 Respondent’s motion for reconsideration of the order of denial was likewise denied on the ground that "defendants’ attack on the jurisdiction of this Court is now barred by estoppel by laches" since respondent failed to raise the issue despite several chances to do so.18
Aggrieved, respondent filed a petition for certiorari with the Court of Appeals alleging that the
trial court seriously erred and gravely abused its discretion in denying her motion to dismiss despite discovery, during the trial of the case, of evidence that would constitute a ground for dismissal of the case.19
The Court of Appeals granted the petition based on the following grounds:cralavvonlinelawlibrary
It is elementary that courts acquire jurisdiction over the person of the defendant x x x only when the latter voluntarily appeared or submitted to the court or by coercive process issued by the court to him, x x x. In this case, it is undisputed that when [petitioner] Boston filed the complaint on December 24, 1997, defendant Manuel S. Toledo was already dead, x x x. Such being the case, the court a quo could not have acquired jurisdiction over the person of defendant Manuel S. Toledo.
x x x the court a quo’s denial of [respondent’s] motion to dismiss was based on its finding that [respondent’s] attack on the jurisdiction of the court was already barred bylaches as [respondent] failed to raise the said ground in its [sic] amended answer and during the pre-trial, despite her active participation in the proceedings.
However, x x x it is well-settled that issue on jurisdiction may be raised at any stage of the proceeding, even for the first time on appeal. By timely raising the issue on jurisdiction in her motion to dismiss x x x [respondent] is not estopped [from] raising the question on jurisdiction. Moreover, when issue on jurisdiction was raised by [respondent], the court a quo had not yet decided the case, hence, there is no basis for the court a quo to invoke estoppel to justify its denial of the motion for reconsideration;chanroblesvirtualawlibrary
It should be stressed that when the complaint was filed, defendant Manuel S. Toledo was already dead. The complaint should have impleaded the estate of Manuel S. Toledo as defendant, not only the wife, considering that the estate of Manuel S. Toledo is an indispensable party, which stands to be benefited or be injured in the outcome of the case. x x x
x x x x
[Respondent’s] motion to dismiss the complaint should have been granted by public respondent judge as the same was in order. Considering that the obligation of Manuel S. Toledo is solidary with another debtor, x x x, the claim x x x should be filed against the estate of Manuel S. Toledo, in conformity with the provision of Section 6, Rule 86 of the Rules of Court, x x x.20
The Court of Appeals denied petitioner’s motion for reconsideration. Hence, this petition.
The Issues
Petitioner claims that the Court of Appeals erred in not holding that:cralavvonlinelawlibrary
1. Respondent is already estopped from questioning the trial court’s jurisdiction;chanroblesvirtualawlibrary
2. Petitioner never failed to implead an indispensable party as the estate of Manuel is not an indispensable party;chanroblesvirtualawlibrary
3. The inclusion of Manuel as party-defendant is a mere misjoinder of party not warranting the dismissal of the case before the lower court; and
4. Since the estate of Manuel is not an indispensable party, it is not necessary that petitioner file its claim against the estate of Manuel.
In essence, what is at issue here is the correctness of the trial court’s orders denying respondent’s motion to dismiss.
The Ruling of the Court
We find merit in the petition.
Motion to dismiss filed out of time
To begin with, the Court of Appeals erred in granting the writ of certiorari in favor of respondent. Well settled is the rule that the special civil action for certiorari is not the proper remedy to assail the denial by the trial court of a motion to dismiss. The order of the trial court denying a motion to dismiss is merely interlocutory, as it neither terminates nor finally disposes of a case and still leaves something to be done by the court before a case is finally decided on the merits.21 Therefore, "the proper remedy in such a case is to appeal after a decision has been rendered."22
As the Supreme Court held in Indiana Aerospace University v. Comm. on Higher Education:23
A writ of certiorari is not intended to correct every controversial interlocutory ruling; it is resorted only to correct a grave abuse of discretion or a whimsical exercise of judgment equivalent to lack of jurisdiction. Its function is limited to keeping an inferior court within its jurisdiction and to relieve persons from arbitrary acts – acts which courts or judges have no power or authority in law to perform. It is not designed to correct erroneous findings and conclusions made by the courts. (Emphasis supplied)
Even assuming that certiorari is the proper remedy, the trial court did not commit grave abuse of discretion in denying respondent’s motion to dismiss. It, in fact, acted correctly when it issued the questioned orders as respondent’s motion to dismiss was filed SIX YEARS AND FIVE MONTHS AFTER SHE FILED HER AMENDED ANSWER. This circumstance alone already warranted the outright dismissal of the motion for having been filed in clear contravention of the express mandate of Section 1, Rule 16, of the Revised Rules of Court. Under this provision, a motion to dismiss shall be filed within the time for but before the filing of an answer to the complaint or pleading asserting a claim.24
More importantly, respondent’s motion to dismiss was filed after petitioner has completed the presentation of its evidence in the trial court,25 giving credence to petitioner’s and the trial court’s conclusion that the filing of the motion to dismiss was a mere ploy on the part of respondent to delay the prompt resolution of the case against her.
Also worth mentioning is the fact that respondent’s motion to dismiss under consideration herein is not the first motion to dismiss she filed in the trial court. It appears that she had filed an earlier motion to dismiss26 on the sole ground of the unenforceability of petitioner’s claim under the Statute of Frauds, which motion was denied by the trial court. More telling is the following narration of the trial court in its Order denying respondent’s motion for reconsideration of the denial of her motion to dismiss:cralavvonlinelawlibrary
As can be gleaned from the records, with the admission of plaintiff’s exhibits, reception of defendants’ evidence was set on March 31, and April 23, 2004 x x x . On motion of the defendant[s], the hearing on March 31, 2004 was cancelled.
On April 14, 2004, defendants sought the issuance of subpoena ad testificandum and duces tecum to one Gina M. Madulid, to appear and testify for the defendants on April 23, 2004. Reception of defendants’ evidence was again deferred to May 26, June 2 and June 30, 2004, x x x.
On May 13, 2004, defendants sought again the issuance of a subpoena duces tecum and ad testificandum to the said Gina Madulid. On May 26, 2004, reception of defendants [sic] evidence was cancelled upon the agreement of the parties. On July 28, 2004, in the absence of defendants’ witness, hearing was reset to September 24 and October 8, 2004 x x x.
On September 24, 2004, counsel for defendants was given a period of fifteen (15) days to file a demurrer to evidence. On October 7, 2004, defendants filed instead a Motion to Dismiss x x x.27nadcralavvonlinelawlibrary
Respondent’s act of filing multiple motions, such as the first and earlier motion to dismiss and then the motion to dismiss at issue here, as well as several motions for postponement, lends credibility to the position taken by petitioner, which is shared by the trial court, that respondent is deliberately impeding the early disposition of this case. The filing of the second motion to dismiss was, therefore, "not only improper but also dilatory."28 Thus, the trial court, "far from deviating or straying off course from established jurisprudence on [the] matter, x x x had in fact faithfully observed the law and legal precedents in this case."29 The Court of Appeals, therefore, erred not only in entertaining respondent’s petition for certiorari, it likewise erred in ruling that the trial court committed grave abuse of discretion when it denied respondent’s motion to dismiss.
On whether or not respondent is estopped fromquestioning the jurisdiction of the trial court
At the outset, it must be here stated that, as the succeeding discussions will demonstrate, jurisdiction over the person of Manuel should not be an issue in this case. A protracted discourse
on jurisdiction is, nevertheless, demanded by the fact that jurisdiction has been raised as an issue from the lower court, to the Court of Appeals and, finally, before this Court. For the sake of clarity, and in order to finally settle the controversy and fully dispose of all the issues in this case, it was deemed imperative to resolve the issue of jurisdiction.
1. Aspects of Jurisdiction
Petitioner calls attention to the fact that respondent’s motion to dismiss questioning the trial court’s jurisdiction was filed more than six years after her amended answer was filed. According to petitioner, respondent had several opportunities, at various stages of the proceedings, to assail the trial court’s jurisdiction but never did so for six straight years. Citing the doctrine laid down in the case of Tijam, et al. v. Sibonghanoy, et al.30 petitioner claimed that respondent’s failure to raise the question of jurisdiction at an earlier stage bars her from later questioning it, especially since she actively participated in the proceedings conducted by the trial court.
Petitioner’s argument is misplaced, in that, it failed to consider that the concept of jurisdiction has several aspects, namely: (1) jurisdiction over the subject matter; (2) jurisdiction over the parties; (3) jurisdiction over the issues of the case; and (4) in cases involving property, jurisdiction over the res or the thing which is the subject of the litigation.31
The aspect of jurisdiction which may be barred from being assailed as a result of estoppel by laches is jurisdiction over the subject matter. Thus, in Tijam, the case relied upon by petitioner, the issue involved was the authority of the then Court of First Instance to hear a case for the collection of a sum of money in the amount of P1,908.00 which amount was, at that time, within the exclusive original jurisdiction of the municipal courts.
In subsequent cases citing the ruling of the Court in Tijam, what was likewise at issue was the jurisdiction of the trial court over the subject matter of the case. Accordingly, in Spouses Gonzaga v. Court of Appeals,32 the issue for consideration was the authority of the regional trial court to hear and decide an action for reformation of contract and damages involving a subdivision lot, it being argued therein that jurisdiction is vested in the Housing and Land Use Regulatory Board pursuant to PD 957 (The Subdivision and Condominium Buyers Protective Decree). In Lee v. Presiding Judge, MTC, Legaspi City,33 petitioners argued that the respondent municipal trial court had no jurisdiction over the complaint for ejectment because the issue of ownership was raised in the pleadings. Finally, in People v. Casuga,34 accused-appellant claimed that the crime of grave slander, of which she was charged, falls within the concurrent jurisdiction of municipal courts or city courts and the then courts of first instance, and that the judgment of the court of first instance, to which she had appealed the municipal court's conviction, should be deemed null and void for want of jurisdiction as her appeal should have been filed with the Court of Appeals or the Supreme Court.
In all of these cases, the Supreme Court barred the attack on the jurisdiction of the respective courts concerned over the subject matter of the case based on estoppel by laches, declaring that parties cannot be allowed to belatedly adopt an inconsistent posture by attacking the jurisdiction of a court to which they submitted their cause voluntarily.35
Here, what respondent was questioning in her motion to dismiss before the trial court was that court’s jurisdiction over the person of defendant Manuel. Thus, the principle of estoppel by laches finds no application in this case. Instead, the principles relating to jurisdiction over the person of the parties are pertinent herein.
The Rules of Court provide:cralavvonlinelawlibrary
RULE 9EFFECT OF FAILURE TO PLEAD
Section 1. Defenses and objections not pleaded. — Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim.
RULE 15MOTIONS
Sec. 8. Omnibus motion. — Subject to the provisions of Section 1 of Rule 9, a motion attacking a pleading, order, judgment, or proceeding shall include all objections then available, and all objections not so included shall be deemed waived.
Based on the foregoing provisions, the "objection on jurisdictional grounds which is not waived even if not alleged in a motion to dismiss or the answer is lack of jurisdiction over the subject matter. x x x Lack of jurisdiction over the subject matter can always be raised anytime, even for the first time on appeal, since jurisdictional issues cannot be waived x x x subject, however, to the principle of estoppel by laches."36
Since the defense of lack of jurisdiction over the person of a party to a case is not one of those defenses which are not deemed waived under Section 1 of Rule 9, such defense must be invoked when an answer or a motion to dismiss is filed in order to prevent a waiver of the defense.37 If the objection is not raised either in a motion to dismiss or in the answer, the objection to the jurisdiction over the person of the plaintiff or the defendant is deemed waived by virtue of the first sentence of the above-quoted Section 1 of Rule 9 of the Rules of Court.38
The Court of Appeals, therefore, erred when it made a sweeping pronouncement in its questioned decision, stating that "issue on jurisdiction may be raised at any stage of the proceeding, even for the first time on appeal" and that, therefore, respondent timely raised the issue in her motion to dismiss and is, consequently, not estopped from raising the question of jurisdiction. As the question of jurisdiction involved here is that over the person of the defendant Manuel, the same is deemed waived if not raised in the answer or a motion to dismiss. In any case, respondent cannot claim the defense since "lack of jurisdiction over the person, being subject to waiver, is a personal defense which can only be asserted by the party who can thereby waive it by silence."39
2. Jurisdiction over the person of a defendant is acquired through a valid service of summons; trial court did not acquire jurisdiction over the person of Manuel Toledo
In the first place, jurisdiction over the person of Manuel was never acquired by the trial court. A defendant is informed of a case against him when he receives summons. "Summons is a writ by which the defendant is notified of the action brought against him. Service of such writ is the means by which the court acquires jurisdiction over his person."40
In the case at bar, the trial court did not acquire jurisdiction over the person of Manuel since there was no valid service of summons upon him, precisely because he was already dead even before the complaint against him and his wife was filed in the trial court. The issues presented in this case are similar to those in the case of Sarsaba v. Vda. de Te.41
In Sarsaba, the NLRC rendered a decision declaring that Patricio Sereno was illegally dismissed from employment and ordering the payment of his monetary claims. To satisfy the claim, a truck in the possession of Sereno’s employer was levied upon by a sheriff of the NLRC, accompanied by Sereno and his lawyer, Rogelio Sarsaba, the petitioner in that case. A complaint for recovery of motor vehicle and damages, with prayer for the delivery of the truck pendente lite was eventually filed against Sarsaba, Sereno, the NLRC sheriff and the NLRC by the registered owner of the truck. After his motion to dismiss was denied by the trial court, petitioner Sarsaba filed his answer. Later on, however, he filed an omnibus motion to dismiss citing, as one of the grounds, lack of jurisdiction over one of the principal defendants, in view of the fact that Sereno was already dead when the complaint for recovery of possession was filed.
Although the factual milieu of the present case is not exactly similar to that of Sarsaba, one of the issues submitted for resolution in both cases is similar: whether or not a case, where one of the named defendants was already dead at the time of its filing, should be dismissed so that the claim may be pursued instead in the proceedings for the settlement of the estate of the deceased defendant. The petitioner in the Sarsaba Case claimed, as did respondent herein, that since one of the defendants died before summons was served on him, the trial court should have dismissed the complaint against all the defendants and the claim should be filed against the estate of the deceased defendant. The petitioner in Sarsaba, therefore, prayed that the complaint be dismissed, not only against Sereno, but as to all the defendants, considering that the RTC did not acquire jurisdiction over the person of Sereno.42 This is exactly the same prayer made by respondent herein in her motion to dismiss.
The Court, in the Sarsaba Case, resolved the issue in this wise:cralavvonlinelawlibrary
x x x We cannot countenance petitioner’s argument that the complaint against the other defendants should have been dismissed, considering that the RTC never acquired jurisdiction over the person of Sereno. The court’s failure to acquire jurisdiction over one’s person is a defense which is personal to the person claiming it.Obviously, it is now impossible for Sereno to invoke the same in view of his death.Neither can petitioner invoke such ground, on behalf of Sereno, so as to reap the benefit of having the case dismissed against all of the defendants. Failure to serve summons on Sereno’s person will not be a cause for the dismissal of the complaint against the other defendants, considering that they have been served with copies of the summons and complaints and have long submitted their respective responsive pleadings. In fact, the other defendants in the complaint were given the chance to raise all possible defenses
and objections personal to them in their respective motions to dismiss and their subsequent answers.43 (Emphasis supplied.)
Hence, the Supreme Court affirmed the dismissal by the trial court of the complaint against Sereno only.
Based on the foregoing pronouncements, there is no basis for dismissing the complaint against respondent herein. Thus, as already emphasized above, the trial court correctly denied her motion to dismiss.
On whether or not the estate of ManuelToledo is an indispensable party
Rule 3, Section 7 of the 1997 Rules of Court states:cralavvonlinelawlibrary
SEC. 7. Compulsory joinder of indispensable parties. — Parties-in-interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants.
An indispensable party is one who has such an interest in the controversy or subject matter of a case that a final adjudication cannot be made in his or her absence, without injuring or affecting that interest. He or she is a party who has not only an interest in the subject matter of the controversy, but "an interest of such nature that a final decree cannot be made without affecting [that] interest or leaving the controversy in such a condition that its final determination may be wholly inconsistent with equity and good conscience. It has also been considered that an indispensable party is a person in whose absence there cannot be a determination between the parties already before the court which is effective, complete or equitable." Further, an indispensable party is one who must be included in an action before it may properly proceed.44
On the other hand, a "person is not an indispensable party if his interest in the controversy or subject matter is separable from the interest of the other parties, so that it will not necessarily be directly or injuriously affected by a decree which does complete justice between them. Also, a person is not an indispensable party if his presence would merely permit complete relief between him or her and those already parties to the action, or if he or she has no interest in the subject matter of the action." It is not a sufficient reason to declare a person to be an indispensable party simply because his or her presence will avoid multiple litigations.45
Applying the foregoing pronouncements to the case at bar, it is clear that the estate of Manuel is not an indispensable party to the collection case, for the simple reason that the obligation of Manuel and his wife, respondent herein, is solidary.
The contract between petitioner, on the one hand and respondent and respondent’s husband, on the other, states:cralavvonlinelawlibrary
FOR VALUE RECEIVED, I/We jointly and severally46 (in solemn) promise to pay BOSTON EQUITY RESOURCES, INC. x x x the sum of PESOS: [ONE MILLION FOUR HUNDRED (P1,400,000.00)] x x x.47
The provisions and stipulations of the contract were then followed by the respective signatures of respondent as "MAKER" and her husband as "CO-MAKER."48 Thus, pursuant to Article 1216 of the Civil Code, petitioner may collect the entire amount of the obligation from respondent only. The aforementioned provision states: "The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. The demand made against one of them shall not be an obstacle to those which may subsequently be directed against the others, so long as the debt has not been fully collected."
In other words, the collection case can proceed and the demands of petitioner can be satisfied by respondent only, even without impleading the estate of Manuel. Consequently, the estate of Manuel is not an indispensable party to petitioner’s complaint for sum of money.
However, the Court of Appeals, agreeing with the contention of respondent, held that the claim of petitioner should have been filed against the estate of Manuel in accordance with Sections 5 and 6 of Rule 86 of the Rules of Court. The aforementioned provisions provide:cralavvonlinelawlibrary
SEC. 5. Claims which must be filed under the notice. If not filed, barred; exceptions. All claims for money against the decedent, arising from contract, express or implied, whether the same be due, not due, or contingent, all claims for funeral expenses and judgment for money against the decedent, must be filed within the time limited in the notice; otherwise, they are barred forever, except that they may be set forth as counterclaims in any action that the executor or administrator may bring against the claimants. x x x.
SEC. 6. Solidary obligation of decedent. Where the obligation of the decedent is solidary with another debtor, the claim shall be filed against the decedent as if he were the only debtor, without prejudice to the right of the estate to recover contribution from the other debtor. x x x.
The Court of Appeals erred in its interpretation of the above-quoted provisions.
In construing Section 6, Rule 87 of the old Rules of Court, the precursor of Section 6, Rule 86 of the Revised Rules of Court, which latter provision has been retained in the present Rules of Court without any revisions, the Supreme Court, in the case of Manila Surety & Fidelity Co., Inc. v. Villarama, et. al.,49 held:50
Construing Section 698 of the Code of Civil Procedure from whence [Section 6, Rule 87] was taken, this Court held that where two persons are bound in solidum for the same debt and one of them dies, the whole indebtedness can be proved against the estate of the latter, the decedent’s liability being absolute and primary; x x x. It is evident from the foregoing that Section 6 of Rule 87 provides the procedure should the creditor desire to go against the deceased debtor, but there is certainly nothing in the said provision making compliance with such procedure a condition precedent before an ordinary action against the surviving solidary debtors, should the creditor choose to demand payment from the latter, could be entertained to the extent that failure to observe the same would deprive the court jurisdiction to take cognizance of the action against the surviving debtors. Upon the other hand, the Civil Code expressly allows the creditor to proceed against any one of the solidary debtors or some or all of them simultaneously. There is,
therefore, nothing improper in the creditor’s filing of an action against the surviving solidary debtors alone, instead of instituting a proceeding for the settlement of the estate of the deceased debtor wherein his claim could be filed.
The foregoing ruling was reiterated and expounded in the later case of Philippine National Bank v. Asuncion51 where the Supreme Court pronounced:cralavvonlinelawlibrary
A cursory perusal of Section 6, Rule 86 of the Revised Rules of Court reveals that nothing therein prevents a creditor from proceeding against the surviving solidary debtors. Said provision merely sets up the procedure in enforcing collection in case a creditor chooses to pursue his claim against the estate of the deceased solidary debtor. The rule has been set forth that a creditor (in a solidary obligation) has the option whether to file or not to file a claim against the estate of the solidary debtor. x x x
x x x x
It is crystal clear that Article 1216 of the New Civil Code is the applicable provision in this matter. Said provision gives the creditor the right to "proceed against anyone of the solidary debtors or some or all of them simultaneously." The choice is undoubtedly left to the solidary creditor to determine against whom he will enforce collection. In case of the death of one of the solidary debtors, he (the creditor) may, if he so chooses, proceed against the surviving solidary debtors without necessity of filing a claim in the estate of the deceased debtors. It is not mandatory for him to have the case dismissed as against the surviving debtors and file its claim against the estate of the deceased solidary debtor, x x x. For to require the creditor to proceed against the estate, making it a condition precedent for any collection action against the surviving debtors to prosper, would deprive him of his substantive rights provided by Article 1216 of the New Civil Code. (Emphasis supplied.)
As correctly argued by petitioner, if Section 6, Rule 86 of the Revised Rules of Court were applied literally, Article 1216 of the New Civil Code would, in effect, be repealed since under the Rules of Court, petitioner has no choice but to proceed against the estate of [the deceased debtor] only. Obviously, this provision diminishes the [creditor’s] right under the New Civil Code to proceed against any one, some or all of the solidary debtors. Such a construction is not sanctioned by principle, which is too well settled to require citation, that a substantive law cannot be amended by a procedural rule. Otherwise stated, Section 6, Rule 86 of the Revised Rules of Court cannot be made to prevail over Article 1216 of the New Civil Code, the former being merely procedural, while the latter, substantive.
Based on the foregoing, the estate of Manuel is not an indispensable party and the case can proceed as against respondent only. That petitioner opted to collect from respondent and not from the estate of Manuel is evidenced by its opposition to respondent’s motion to dismiss asserting that the case, as against her, should be dismissed so that petitioner can proceed against the estate of Manuel.
On whether or not the inclusion of Manuel asparty defendant is a misjoinder of party
Section 11 of Rule 3 of the Rules of Court states that "[n]either misjoinder nor non-joinder of parties is ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or on its own initiative at any stage of the action and on such terms as are just. Any claim against a misjoined party may be severed and proceeded with separately."
Based on the last sentence of the afore-quoted provision of law, a misjoined party must have the capacity to sue or be sued in the event that the claim by or against the misjoined party is pursued in a separate case. In this case, therefore, the inclusion of Manuel in the complaint cannot be considered a misjoinder, as in fact, the action would have proceeded against him had he been alive at the time the collection case was filed by petitioner. This being the case, the remedy provided by Section 11 of Rule 3 does not obtain here. The name of Manuel as party-defendant cannot simply be dropped from the case. Instead, the procedure taken by the Court in Sarsaba v. Vda. de Te,52 whose facts, as mentioned earlier, resemble those of this case, should be followed herein. There, the Supreme Court agreed with the trial court when it resolved the issue of jurisdiction over the person of the deceased Sereno in this wise:cralavvonlinelawlibrary
As correctly pointed by defendants, the Honorable Court has not acquired jurisdiction over the person of Patricio Sereno since there was indeed no valid service of summons insofar as Patricio Sereno is concerned. Patricio Sereno died before the summons, together with a copy of the complaint and its annexes, could be served upon him.
However, the failure to effect service of summons unto Patricio Sereno, one of the defendants herein, does not render the action DISMISSIBLE, considering that the three (3) other defendants, x x x, were validly served with summons and the case with respect to the answering defendants may still proceed independently. Be it recalled that the three (3) answering defendants have previously filed a Motion to Dismiss the Complaint which was denied by the Court.
Hence, only the case against Patricio Sereno will be DISMISSED and the same may be filed as a claim against the estate of Patricio Sereno, but the case with respect to the three (3) other accused [sic] will proceed. (Emphasis supplied.)53
As a result, the case, as against Manuel, must be dismissed.
In addition, the dismissal of the case against Manuel is further warranted by Section 1 of Rule 3 of the Rules of Court, which states that: [o]nly natural or juridical persons, or entities authorized by law may be parties in a civil action." Applying this provision of law, the Court, in the case of Ventura v. Militante,54 held:cralavvonlinelawlibrary
Parties may be either plaintiffs or defendants. x x x. In order to maintain an action in a court of justice, the plaintiff must have an actual legal existence, that is, he, she or it must be a person in law and possessed of a legal entity as either a natural or an artificial person, and no suit can be lawfully prosecuted save in the name of such a person.
The rule is no different as regards party defendants. It is incumbent upon a plaintiff, when he institutes a judicial proceeding, to name the proper party defendant to his cause of action. In a suit or proceeding in personam of an adversary character, the court can acquire no jurisdiction for the purpose of trial or judgment until a party defendant who actually or legally exists and is
legally capable of being sued, is brought before it. It has even been held that the question of the legal personality of a party defendant is a question of substance going to the jurisdiction of the court and not one of procedure.
The original complaint of petitioner named the "estate of Carlos Ngo as represented by surviving spouse Ms. Sulpicia Ventura" as the defendant. Petitioner moved to dismiss the same on the ground that the defendant as named in the complaint had no legal personality. We agree.
x x x. Considering that capacity to be sued is a correlative of the capacity to sue, to the same extent, a decedent does not have the capacity to be sued and may not be named a party defendant in a court action. (Emphases supplied.)
Indeed, where the defendant is neither a natural nor a juridical person or an entity authorized by law, the complaint may be dismissed on the ground that the pleading asserting the claim states no cause of action or for failure to state a cause of action pursuant to Section 1(g) of Rule 16 of the Rules of Court, because a complaint cannot possibly state a cause of action against one who cannot be a party to a civil action.55
Since the proper course of action against the wrongful inclusion of Manuel as party-defendant is the dismissal of the case as against him, thus did the trial court err when it ordered the substitution of Manuel by his heirs. Substitution is proper only where the party to be substituted died during the pendency of the case, as expressly provided for by Section 16, Rule 3 of the Rules of Court, which states:cralavvonlinelawlibrary
Death of party;duty of counsel. — Whenever a party to a pending action dies, and the claim is not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after such death of the fact thereof, and to give the name and address of his legal representative or representatives. x x x
The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator x x x.
The court shall forthwith order said legal representative or representatives to appear and be substituted within a period of thirty (30) days from notice. (Emphasis supplied.)
Here, since Manuel was already dead at the time of the filing of the complaint, the court never acquired jurisdiction over his person and, in effect, there was no party to be substituted.
WHEREFORE, the petition is GRANTED. The Decision dated 28 February 2006 and the Resolution dated 1 August 2006 of the Court of Appeals in CA-G.R. SP No. 88586 are REVERSED and SET ASIDE. The Orders of the Regional Trial Court dated 8 November 2004 and 22 December 2004, respectively, in Civil Case No. 97-86672, are REINSTATED. The Regional Trial Court, Branch 24, Manila is hereby DIRECTED to proceed with the trial of Civil Case No. 97-86672 against respondent Lolita G. Toledo only, in accordance with the above pronouncements of the Court, and to decide the case with dispatch.
SO ORDERED.
Carpio, (Chairperson), Brion, Del Castillo, and Villarama, Jr.,* JJ., concur.
(88) GAVINO ALDAMIZ v. THE JUDGE OF THE COURT OF FIRST INSTANCE OF
MINDORO, et. al
Doctrine:
A writ of execution is not the proper procedure to satisfy debts.
Facts:
Santiago Rementeria y Aldamizcogeascoa died in Spain in 1937, and a probate proceeding was
instituted in the same year in the Court of First Instance of Mindoro by Gavino Aldamiz
represented by Atty. Juan L. Luna. Gavino Aldamiz was appointed administrator and as such
was represented by respondent Atty. Juan Luna up to January 21, 1947, when the order
complained for was issued. Juan L. Luna, submitted his accounts for the years 1944, 1945 and
1946 and also a project of partition with a view to closing the proceedings. On said date, the
court approved the accounts by refused to approve the project of partition unless all debts
including attorney's fees be first paid. The Court ordered payment of these amounts within thirty
days. After several demands made upon him by respondent attorney, the Gavino on April 17,
1948, filed an ex-parte motion for execution which was granted by the respondent Court on April
19,1948.
Issue:
Whether or not a writ of execution is the proper procedure to satisfy debts.
Ruling:
No. A writ of execution is not the proper procedure to satisfy debts.
We also hold that the order of execution issued on April 19,1948, is null and void, not only
because it was intended to implement the order of January 21, 1947, which in itself was null and
void, but because a writ of execution is not the proper procedure allowed by the Rules of the
Court for the payment of debts and expenses of administration. The proper procedure is for the
court to order the sale of personal estate or the sale of mortgaged of real property of the deceased
and all debts or expenses of administration should be paid out of the proceeds of the sale or
mortgage. The order for the sale or mortgage should be issued upon motion of the administrator
and with the written notice to all the heirs, legatees and devisees residing in the Philippines,
according to Rule 89, section 3, and Rule 90, section 2. And when sale or mortgage of real estate
is to be made, the regulations contained in Rule 90, section 7, should be complied with.
G.R. No. L-2360 December 29, 1949
GAVINO ALDAMIZ, as administrator of the estate of the deceased Santiago Rementeria y
Aldamizcogeascoa, petitioner,
vs.
THE JUDGE OF THE COURT OF FIRST INSTANCE OF MINDORO, THE
PROVINCIAL SHERIFF OF MINDORO and JUAN L. LUNA, respondents.
Jose W. Diokno and Daniel Romualdez for petitioner.
Laurel, Sabido, Almario and Laurel and Juan L. Luna for respondents.
MORAN, C.J.:
This is a petition for certiorari filed by Gavino Aldamiz, administrator of the testate of the
deceased Santiago Rementeria y Aldamizcogeascoa, to set aside the order of the Court of First
Instance of Mindoro issued in the said testate estate proceedings, fixing the amount of fees for
respondent Juan L. Luna, as attorney for said administrator.
The facts material to the issues raised in the petition are as follows:
Santiago Rementeria y Aldamizcogeascoa, the decedent was a Spaniard and member of the
commercial partnership "Aldamiz y Rementeria." The other members were the brothers, Gavino
and Jose, surnamed Aldamiz. Santiago Rementeria died in Spain in 1937, and probate
proceeding No. 705 was instituted in the same year in the Court of First Instance of Mindoro by
Gavino Aldamiz represented by Atty. Juan L. Luna. Gavino Aldamiz was appointed
administrator and as such was represented by respondent Atty. Juan Luna up to January 21,
1947, when the order complained for was issued. In that order it is said that "said attorney is the
one who instituted this testate proceeding ten years ago and has from its incipiency to the present
stage of the proceedings actively intervened in the same."lawphi1.net
On January 15, 1947, After ten years from the date of his appointment, Gavino Aldamiz, as
administrator, through his attorney, Juan L. Luna, submitted his accounts for the years 1944,
1945 and 1946 and also a project of partition with a view to closing the proceedings. On said
date, the court approved the accounts by refused to approve the project of partition unless all
debts including attorney's fees be first paid. In the project of partition, it was expressly stated that
attorney's fees, debts and incidental expenses would be proportionately paid by the beneficiaries
after the closure of the testate proceedings, but the court refused to sanction this clause of the
project. It is for this reason that right then and there, Attorney Luna, to comply with the wishes
of the court, without previously preparing and filing a written petition to have his professional
fees fixed, and without previous notice to all the interested parties, submitted evidence of his
services and professional standing so that the court might fix the amount of his compensation
and the administrator may make payment thereof. This failure to file a written claim and to
notify the interested parties thereof was not due to bad faith or fraudulent purpose but to an
honest belief on the part of the respondent attorney that such requirements were not necessary
under the circumstance.
In this connection, it must be stated, in justice to Attorney Luna, that during the ten years he
served as attorney for the administrator and during the 25 years as legal consultants to Santiago
Rementeria, Gavino Aldamiz and Jose Aldamiz individually and as commercial partnership
under the firm name "Aldamiz y Rementeria," he never took the trouble of charging them for his
professional services, thus showing disinterested and extreme liberality on his part due to
friendship and other personal considerations toward his clients. And it is to be observed further
that even after ten years of active work in the testate proceedings, when he wanted to close the
same and it was then time for him to demand payment for his services, he showed no interest in
demanding preferring to leave the matter to the future negotiation or understanding with the
interested parties. And when the amount of his fees was fixed by the court and Gavino Aldamiz
asked him for a substantial reduction, he answered that it was not he who had fixed the amount
but the court, and advised his client to file a motion for reconsideration, with the assurance that
he would offer no objection to any reduction in amount and to any extension of the time for
paying what might be granted by the court. And again, when Gavino Aldamiz paid him P5,000
on account, respondent attorney told him that he would be satisfied with any additional amount
that Gavino might later desire to pay him. Only subsequent occurrences which proved distasteful
to the parties, led them to take steps which culminated in the filing of the instant civil action.
At the time respondent's evidence was submitted to the court, the interested parties who were
residing in the Philippines were Gavino Aldamiz and his brother Jose Aldamiz. The others were
then residing in Spain. No written claim had ever been filed for respondent's fees, and the
interested parties had not been notified thereof nor of the hearing, not even Gavino Aldamiz who
did not know when he was called to testify that he would testify in connection with respondent's
fees. The Court, after considering the whole evidence presented, issued its order of January 21,
1947, awarding respondent Attorney Luna, in payment of his professional services, an aggregate
sum of P28,000 in the following manner:
1. For the institution, preparation of the pleadings in the voluminous probate case,
allowance of the will, project of partition and the final closing of this proceeding, —
P15,000;
2. For the registration of a parcel of land of seventy-eight hectares in favor of the testate,
— P5,000;
3. For three naturalization cases at the rate of P1,000 each, — P3,000; and
4. For services rendered in the deduction of inheritance tax from P28,000 to P433.40 —
P5,000.
The Court ordered payment of these amounts within thirty days. Petitioner Gavino Aldamiz
received copy of this order on February 21,1948. Out of the total amount of P28,000, petitioner
was able to pay P5,000 only, and upon his failure to pay the balance of P23,000 after several
demands made upon him by respondent attorney, the latter on April 17, 1948, filed an ex-parte
motion for execution which was granted by the respondent Court on April 19,1948. Pursuant to
the order of execution on two parcels of land belonging, not to the testate estate of Santiago
Rementeria y Aldamizcogeascoa, but to the commercial partnership "Aldamiz y Rementeria"
with a total area of three hundred fifty seven(357) hectares, more or less, assessed at one hundred
eighty-two thousand, three hundred and sixty pesos (P182,360), which was sold at a public
auction on July 20,1948, in favor of respondent attorney for only twenty thousand
pesos(P20,000). This sale was made after preliminary injunction had been issued by this court in
the instant case.
We believe and so hold that the order of the respondent court issued on January 21,1948, fixing
the amount of respondent attorney's fees is null and void. The correct procedure for the collection
of attorney's fees, is for the counsel to request the administrator to make payment and file an
actin against him in his personal capacity and not as an administrator should he fail to pay
(Palileo vs. Mendoza, G.R. No. 47106, 40 Off. Gaz. [8th Supp.], 132.)1 If the judgment is
rendered against the administrator and he pays, he may include the fees so paid in his account to
the court. (Uy Tioco vs. Imperial, 53 Phil., 802.) The attorney also may, instead of bringing such
an action, file a [petition in the testate or intestate proceeding "asking that the court, after notice
to all persons interested, allow his claim and direct the administrator to pay it as an expense of
administration." (Emphasis ours.) (Escueta vs. Sy Juilliong, 5 Phil., 405.)
In the instance case, as above stated, no written petition for the payment of attorney's fees has
ever been filed by the respondent attorney and the interested parties had not been previously
notified thereof nor of the hearing held by the court. Consequently, the order issued by the
respondent court on January 21, 1947, and all subsequent orders implementing it, are null and
void, as having been issued an excess of jurisdiction.
We also hold that the order of execution issued on April 19,1948, is null and void, not only
because it was intended to implement the order of January 21, 1947, which in itself was null and
void, but because a writ of execution is not the proper procedure allowed by the Rules of the
Court for the payment of debts and expenses of administration. The proper procedure is for the
court to order the sale of personal estate or the sale of mortgaged of real property of the deceased
and all debts or expenses of administration should be paid out of the proceeds of the sale or
mortgage. The order for the sale or mortgage should be issued upon motion of the administrator
and with the written notice to all the heirs, legatees and devisees residing in the Philippines,
according to Rule 89, section 3, and Rule 90, section 2. And when sale or mortgage of real estate
is to be made, the regulations contained in Rule 90, section 7, should be complied with.
Execution may issue only where the devisees, legatees or heirs have entered into possession of
their respective portions in the estate prior to settlement and payment of the debts and expenses
of administration and it is later ascertained that there are such debts and expenses to be paid, in
which case "the court having jurisdiction of the estate may, by order for that purpose, after
hearing, settle the amount of their several liabilities, and order how much and in what manner
each person shall contribute, and may issue execution if circumstances require" (Rule 89, section
6; see also Rule 74, section 4; Emphasis ours). And this is not the instant case.
It is alleged by respondent that petitioner is guilty of laches. True that petitioner failed to appeal
from the order of January 21, 1947, within the time provided by the Rules and the instant petition
for certiorari was filed one (1) year, four (4) months and fourteen (14) days after petitioner had
received a copy of said order. And we have held in Prifeta vs. David, 40 Off. Gaz., 14th Supp., p.
152, 2 that orders issued without previous notice to parties will be deemed cured if said parties
fail to appeal within time provided by the rules and their appeal is lost due to their own
negligence. But here, aside from petitioner, there are interested parties who have never been
notified of the order complained of, and as to them, said order has not become final and
executory . And with respect to petitioner, he has not lost his appeal through his own negligence.
When he received the notice of the order of the Court fixing respondent's fees in the amount of
P28,000, he immediately wrote his lawyer a letter asking for a substantial reduction and
extension of time to pay. The lawyer answered advising him to file his motion for
reconsideration within thirty days, but he received his lawyer's letter after said period had
expired. And petitioner had no other attorney to advice him except respondent who was his
adversary on the matter now in dispute. After receiving said letter, he again sought equitable
compromise with respondent attorney and later paid him P5,000, and respondent then told him
that he would be satisfied with whatever additional amount petitioner might desire to pay him.
And petitioner would perhaps have taken no action were it not because without previous notice
to him, the respondent attorney asked authority from the court to sell two parcels of land totalling
13 hectares, for the payment of said professional fees and later, on July 26, 1947, respondent
attorney, again without previous notice to petitioner, filed a motion for execution for the same
purpose. Both motions were, however, abandoned. But a second motion for execution was filed
by respondent without petitioner's knowledge, which was granted by the Court on April 19,
1948. Respondent Sheriff levied on two parcels of land belonging to the partnership "Aldamiz y
Rementeria" with a total area of 357 hectares and assessed at P182,360 and the sale was
announced by the sheriff for July 20, 1948. Two motions for consideration were filed by
petitioner, one on June 16,1948, and the other on June 28, 1948, asking that the order of January
21, 1947, and the order of execution of April 19,1948 be set aside, but both motions were denied
and the last order of denial is dated July 1,1948. The petition in the instant case was filed on July
17, 1948. We hold that under the circumstances, particularly the fiduciary relation between
petitioner and respondent attorney, the former is not guilty of laches.
Respondents maintain that the case for the petitioner is one of pure technicality, premised upon a
supposed failure of the respondent attorney to follow a supposed procedure. It is said that the
amount of P28,000 fixed and allowed by the respondent court as professional fees of the
respondent attorney is not unconscionable or unreasonable because the entire estate was worth
P315,112 and now it is worth about half a million pesos because of many improvements existing
thereon. It appears, however, that due to lack of notice upon the interested parties mistakes have
been committed by but the court which could have been avoided. For instance, the court awarded
fees for services rendered not to the estate but to the other persons, such as the supposed services
in connection with the petitions for naturalization filed in behalf of Gavino Aldamiz and Jose
Aldamiz and the application for registration of a parcel of land of 78 hectares filed not in favor of
the testate estate but of the partnership "Aldamiz y Rementeria." These services evidently could
not be charged against the estate of Santiago Rementeria. And furthermore, due to lack of
preparation on the part of respondent attorney, it appears that while he was testifying to his
professional services he was apparently not sure of being able to recite them all for at the end of
his testimony he said: "Son los servicios que me acuerdo ahora. . . ." Had he been afforded ample
time to recollect the nature and details of his long and continuos services, considering his high
professional standing as recited by the respondent court in its disputed order and the increased
value of the estate then, perhaps, a more reasonable compensation would have been fixed, or at
least, the court could have rendered a decision with full knowledge of all the facts and with
justice to all the parties concerned.
For all the foregoing, the order of the respondent court of January 21,1947, and all the
subsequent orders implementing it, particularly the order of execution issued by the court on
April 19, 1948, and the sale made by the sheriff on July 20,1948, in favor of respondent attorney,
are null and void and are hereby set aside, with costs against respondents. It is so ordered.
Ozaeta, Pablo, Bengzon, Padilla, Tuason, Reyes and Torres, JJ., concur.
ROSITA SANTIAGO DE BAUTISTA, et. al v. VICTORIA DE GUZMAN, et. al
Doctrine:
It has been ruled that the only instance wherein a creditor can file an action, against a distributee
of the debtor’s assets is under Rule 88, Sec. 5. The contingent claims must first have been
established and allowed in the probate court before the creditors can file an action against the
distributes.
Facts:
On May 10, 1952, Numeriano Bautista, husband and father of the plaintiffs-appellees was a
passenger of jeepney owned and operated by Rosendo de Guzman, deceased husband and father
of defendants-appellants, respectively, as one of the jeepneys used in his transportation business.
Eugenio Medrano y Torres was employed by said Rosendo de Guzman as the driver of said
jeepney, the latter drove and managed said jeepney at that time along Taft Avenue, Pasay City,
in a negligent and reckless manner and, as a result, the jeepney turned turtle and, consequently,
passenger Numeriano Bautista sustained physical injuries which caused his death. Eugenio
Medrano, the driver, was accused and convicted of homicide through reckless imprudence by the
trial court. On May 12, 1952, Rosendo de Guzman died.
Because of their failure to collect the said sum of P3,000.00 from the driver, Eugenio Medrano,
plaintiffs-appellees filed a complaint dated October 7, 1952, with the Court of First Instance of
Rizal, Pasay City Branch, against defendants-appellants alleging, among other things besides the
above-mentioned incidents, that they demanded from Rosendo de Guzman and from the
defendants-appellants the payment but Rosendo de Guzman and later the herein defendants-
appellants refused to pay the same. Defendants-appellants through counsel filed a motion to
dismiss, in support of said motion, they maintained that the suit was for a money claim against
the supposed debtor who was already dead and as such it should be filed in testate or intestate
proceedings or, in the absence of such proceedings, after the lapse of thirty (30) days, the
creditors should initiate such proceedings, that the heirs could not be held liable therefor since
there was no allegation that they assumed the alleged obligation.
Issue:
Whether or not the creditor may file an action against a distribute?
Ruling:
The only instance wherein a creditor can file an action against a distributee of the debtor's asset
is under Section 5, Rule 88 of the Rules of Court which provides: têñ.£îhqwâ£
If such contingent claim becomes absolute and is presented to the court, or to the executor or
administrator, within two (2) years from the time limited for other creditors to present their
claims, it may be allowed by the court if not disputed by the executor or administrator, and, if
disputed, it may be proved and allowed or disallowed by the court as the facts may warrant. If
the contingent claim is allowed, the creditor shall receive payment to the same extent as the other
creditors if the estate retained by the executor or administrator is sufficient. But if the claim is
not so presented, after having become absolute, within said two (2) years, and allowed, the assets
retained in the hands of the executor or administrator, not exhausted in the payment of claims,
shall be distributed by the order of the court to the persons entitled to the same; but the assets so
distributed may still be applied to the payment of the claim when established, and the creditor
may maintain an action against the distributees to recover the debt, and such distributees and
their estates shall be liable for the debt in proportion to the estate they have respectively received
from the property of the deceased.
Even under the above rule, the contingent claims must first have been established and allowed in
the probate court before the creditors can file an action directly, against the distributees. Such is
not the situation, however, in the case at bar. The complaint herein was filed after the intestate
proceedings had terminated and the estate finally distributed to the heirs. If we are to allow the
complaint to prosper and the trial court to take cognizance of the same, then the rules providing
for the claims against the estate in a testate or intestate proceedings within a specific period
would be rendered nugatory as a subsequent action for money against the distributees may be
filed independently of such proceedings. This precisely is what the rule seeks to prevent so as to
avoid further delays in the settlement of the estate of the deceased and in the distribution of his
property to the heirs, legatees or devisees.
G.R. No. L-28298 November 25, 1983
ROSITA SANTIAGO DE BAUTISTA, ET AL., plaintiffs-appellees,
vs.
VICTORIA DE GUZMAN, ET AL., defendants-appellants.
Jose D. Villena for plaintiffs-appellees.
Antonio Gonzales for defendants-appellants.
GUTIERREZ, JR., J.:
This is an appeal from the decision of the Court of First Instance of Rizal, Pasay City branch, in
Civil Case No. 3530, ordering the defendants-appellants to pay the plaintiffs-appellees damages
and attorney's fees and dismissing the former's counterclaim. As no questions of facts were
raised by the appellants in their brief, the Court of Appeals certified this case to us for decision.
The facts, as stated in the resolution of the appellate court, are as follows: têñ.£îhqwâ£
On May 10, 1952, Numeriano Bautista, husband and father of the plaintiffs-
appellees, respectively, was a passenger of jeepney bearing Plate No. TPU-4013,
owned and operated by Rosendo de Guzman, deceased husband and father of
defendants-appellants, respectively, as one of the jeepneys used in his
transportation business. Eugenio Medrano y Torres was employed by said
Rosendo de Guzman as the driver of said jeepney. Said driver drove and managed
said jeepney at that time along Taft Avenue, Pasay City, in a negligent and
reckless manner and, as a result, the jeepney turned turtle and, consequently,
passenger Numeriano Bautista sustained physical injuries which caused his death.
Eugenio Medrano, the driver, was accused and convicted of homicide through
reckless imprudence by the trial court in a decision promulgated on May 27, 1952
and sentenced to a penalty of imprisonment of four (4) months and one (1) day
of arresto mayor and to indemnify the heirs of Numeriano Bautista, plaintiffs-
appellees herein, in the sum of P3,000.00. A writ of execution was issued against
said driver, Eugenio Medrano for the said sum of P3,000.00 but the same was
returned to the Court unsatisfied.
On May 12, 1952, Rosendo de Guzman died.
Because of their failure to collect the said sum of P3,000.00 from the driver,
Eugenio Medrano, plaintiffs-appellees filed a complaint (Civil Case No. 2050)
dated October 7, 1952, with the Court of First Instance of Rizal, Pasay City
Branch, against defendants-appellants alleging, among other things besides the
above-mentioned incidents, that they demanded from Rosendo de Guzman and
from the defendants-appellants the payment of the sums of P3,000.00 as
subsidiary liability; P10,000.00 as actual exemplary and moral damages and
Pl,000.00 as attorney's fees for the suit by reason of the death of Numeriano
Bautista as related above, but Rosendo de Guzman and later the herein
defendants-appellants refused to pay the same. Plaintiffs-appellees therefore
prayed that the defendants-appellants be ordered to pay the said sums as well as
the costs of suit.
Defendants-appellants through counsel filed a motion to dismiss predicated on
two grounds, namely, that the lower court had no jurisdiction over the subject
matter of the litigation and that the complaint stated no cause of action. In support
of said motion, they maintained that the suit was for a money claim against the
supposed debtor who was already dead and as such it should be filed in testate or
intestate proceedings or, in the absence of such proceedings, after the lapse of
thirty (30) days, the creditors should initiate such proceedings, that the heirs could
not be held liable therefor since there was no allegation that they assumed the
alleged obligation.
The lower court sustained the motion to dismiss in an order dated May 11, 1953,
stating, among other things, that: têñ.£îhqwâ£
The procedure thus opened for a money claimant against a
deceased person, as in the instant case, is for said claimant to file
proceedings for the opening of the judicial administration of the
estate of said deceased person and to present his claim in said
proceedings. The claimant may only proceed to sue the heirs of the
deceased directly where such heirs have entered into an extra-
judicial partition of such estate and have distributed the latter
among themselves, in which case, the heirs become liable to the
claimant in proportion to the share which they have received as
inheritance. Plaintiffs' complaint does not state that the defendants
have received any such inheritance from their said deceased father,
Rosendo de Guzman, and hence, there is no cause of action against
aforesaid defendants.
This order became final.
Then on December 14, 1954, plaintiffs-appellees filed with the same trial court
Civil Case No. 3530 (subject of this appeal) against the same defendants in the
former case, the complaint containing analogous allegations as those embodied in
the first complaint but in this second complaint they further allege that on June
12, 1952, Rosendo de Guzman died intestate and that intestate proceedings were
filed in the same court and docketed therein as Special Proceedings No. 1303-P,
wherein on April 20, 1953, a project of partition was presented in and approved
by said Court with the five heirs receiving their shares valued at P2,294.05 each,
and on May 14, 1953, said intestate proceedings were closed. They also alleged
that Numeriano Bautista during his lifetime was the only one supporting them and
his death caused them shock, sufferings and anxiety and therefore defendants-
appellants should pay to them, aside from the P3,000.00, an additional amount of
P15,000.00 as moral, exemplary and compensatory damages, plus the sum of
P2,000.00 as attorney's fees for the prosecution of this case, besides the costs of
suit.
Defendants-appellants again filed a motion to dismiss on May 5, 1955, alleging
the same grounds as those interposed in the first complaint but adding the further
ground of res judicata in view of the dismissal of the first case which became final
as no appeal or any other action was taken thereon by the appellees. On August
22, 1955, the lower court denied the motion to dismiss for lack of sufficient merit.
xxx xxx xxx
Then on July 11, 1961, the parties through their respective counsel submitted a
partial stipulation of facts found on pages 63 to 67 of the amended record on
appeal which stipulation of facts, was made the basis of the decision of the lower
court which was rendered on August 26, 1961 (should be August 14, 1961), aside
from the testimony of the widow of Numeriano Bautista, appellee Rosita Bautista,
who testified on the same incidents already recited herein and on the sufferings
and shock she and her children, all appellees in this case, suffered. From said
decision, the present appeal has been interposed ...
Defendants-appellants assign the following errors:
Itêñ.£îhqwâ£
THE COURT BELOW ERRED IN NOT SUSTAINING THE MOTION TO
DISMISS MOCION DE SOBRESIMIENTO) FILED BY THE DEFENDANTS-
APPELLANTS ON OR ABOUT MAY, 1955, APPEARING ON PAGE 10 ET
SEQ. OF THE AMENDED RECORD ON APPEAL.
IItêñ.£îhqwâ£
THE COURT BELOW ERRED IN NOT DECLARING THAT THE CLAIM OF
THE PLAINTIFFS-APPELLEES IS ALREADY BARRED FOR FAILURE ON
THEIR PART TO FILE THEIR CLAIM IN THE INTESTATE PROCEEDINGS
OF THE DECEASED ROSENDO DE GUZMAN (SPECIAL PROCEEDINGS
NO. 1303-P) OF THE COURT OF FIRST INSTANCE OF RIZAL.
IIItêñ.£îhqwâ£
THE COURT ERRED IN NOT SUSTAINING THE DEFENSE OF RES
JUDICATA INTERPOSED BY DEFENDANTS-APPELLANTS BY VIRTUE
OF THE FINAL ORDER RENDERED OR ISSUED BY THE COURT OF
FIRST INSTANCE OF RIZAL IN CIVIL CASE NO. 2050, DATED MAY 11,
1953, COPY OF SAID ORDER IS ATTACHED AS EXHIBIT "F" AND MADE
AN INTEGRAL PART OF THE PARTIAL STIPULATION OF FACTS.
IVtêñ.£îhqwâ£
THE COURT BELOW ERRED IN RENDERING A DECISION ORDERING
THE HEREIN DEFENDANTS-APPELLANTS TO JOINTLY AND
SEVERALLY PAY THE PLAINTIFFS-APPELLEES THE SUM OF THREE
THOUSAND PESOS (p3,000.00), WITH INTERESTS AND COSTS.
V têñ.£îhqwâ£
HE COURT BELOW ERRED IN DISMISSING DEFENDANTS-
APPELLANTS' COUNTER-CLAIM AND IN NOT RENDERING A DECISION
IN ACCORDANCE THEREWITH.
The only question presented in the assigned errors is whether or not the trial court erred in giving
due course to the complaint on the grounds stated above. We sympathize with the plight of the
plaintiffs-appellees but they have lost their right to recover because of negligence and a failure to
observe mandatory provisions of the law and the Rules. They overlooked the fact that they were
no longer suing Rosendo de Guzman who died shortly after the accident but his heirs.
Section 5, Rule 86 of the Rules of Court provides: têñ.£îhqwâ£
All claims for money against the decedent arising from contract, express or
implied, whether the same be due, not due, or contingent, all claims for funeral
expenses and expenses for the last sickness of the decedents, and judgment for
money against the decedent, must be filed within the time in the notice; otherwise
they are barred forever; except that they may be set forth as counterclaims in any
action that the executor or administrator may bring against the claimants ...
Claims not yet due, or contingent, may be approved at their present value.
The above-quoted rule is mandatory. The requirement therein is for the purpose of protecting the
estate of the deceased. The executor or administrator is informed 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. Therefore, upon the dismiss of the first complaint of herein plaintiffs-appellees in Civil
Case No. 2050, they should have presented their claims before the intestate proceedings filed in
the same court and docketed as Special Proceedings No. 1303-P. Instead of doing so, however.
the plaintiffs-appellees slept on their right. They allowed said proceedings to terminate and the
properties to be distributed to the heirs pursuant to a project of partition before instituting this
separate action. Such do not sanctioned by the above rule for it strictly requires the prompt
presentation and disposition of claims against the decedent's estate in order to settle the affairs of
the estate as soon as possible, pay off its debts and distribute the residue. (See Py Eng Chong v.
Herrera, 70 SCRA 130). With the exception provided for in the above rule, the failure of herein
plaintiffs-appellees to present their claims before the intestate proceedings of the estate of
Rosendo de Guzman within the prescribed period constituted a bar to a subsequent claim against
the estate or a similar action of the same import.
Therefore, it was an error on the part of the trial court to hold that the plaintiffs-appellees had a
cause of action against the defendants-appellants who are the heirs of the deceased against whom
the liability is sought to be enforced, much less take cognizance of the complaint. As in the first
complaint, said court could not have assumed jurisdiction over the second case for the simple
reason that it was no longer acting as a probate court which was the proper forum to file such
complaint. The termination of the intestate proceedings and the distribution of the estate to the
heirs did not alter the fact that plaintiffs-appellees' claim was a money claim which should have
been presented before the probate court. The liability of the late Rosendo de Guzman arose from
the breach of his obligations under the contract of carriage between him and the unfortunate
passenger. The obligations are spelled out by law but the liability arose from a breach of
contractual obligations. The resulting claim is a money claim.
The only instance wherein a creditor can file an action against a distributee of the debtor's asset
is under Section 5, Rule 88 of the Rules of Court which provides: têñ.£îhqwâ£
If such contingent claim becomes absolute and is presented to the court, or to the
executor or administrator, within two (2) years from the time limited for other
creditors to present their claims, it may be allowed by the court if not disputed by
the executor or administrator, and, if disputed, it may be proved and allowed or
disallowed by the court as the facts may warrant. If the contingent claim is
allowed, the creditor shall receive payment to the same extent as the other
creditors if the estate retained by the executor or administrator is sufficient. But if
the claim is not so presented, after having become absolute, within said two (2)
years, and allowed, the assets retained in the hands of the executor or
administrator, not exhausted in the payment of claims, shall be distributed by the
order of the court to the persons entitled to the same; but the assets so distributed
may still be applied to the payment of the claim when established, and the creditor
may maintain an action against the distributees to recover the debt, and such
distributees and their estates shall be liable for the debt in proportion to the estate
they have respectively received from the property of the deceased.
Even under the above rule, the contingent claims must first have been established and allowed in
the probate court before the creditors can file an action directly, against the distributees. Such is
not the situation, however, in the case at bar. The complaint herein was filed after the intestate
proceedings had terminated and the estate finally distributed to the heirs. If we are to allow the
complaint to prosper and the trial court to take cognizance of the same, then the rules providing
for the claims against the estate in a testate or intestate proceedings within a specific period
would be rendered nugatory as a subsequent action for money against the distributees may be
filed independently of such proceedings. This precisely is what the rule seeks to prevent so as to
avoid further delays in the settlement of the estate of the deceased and in the distribution of his
property to the heirs, legatees or devisees.
Furthermore, even assuming that the plaintiffs-appellees had no knowledge of the intestate
proceedings which is not established, the law presumes that they had such knowledge because
the settlement of estate is a proceeding in remark and therefore the failure to file their claims
before such proceedings barred them from subsequently filing the same claims outside said
proceedings.
WHEREFORE, the decision of the Court of First Instance appealed from is hereby reversed and
set aside and another one entered dismissing the complaint and the counterclaim. No costs.
SO ORDERED.1äwphï1.ñët
Plana and Relova, JJ., concur.
Teehankee (Chairman), J., concur in the result.
Separate Opinions
MELENCIO-HERRERA, J., concurring in the result:
I concur in the result.
In this case, the deceased Numeriano Bautista was a passenger in a public utility jeepney owned
by the deceased Rosendo de Guzman and whose driver was Eugenio Medrano. It was a vehicular
accident involving the jeep which caused the death of Numeriano.
The driver was prosecuted for criminal negligence resulting in death, and he was sentenced, inter
alia, to pay a civil liability of P3,000.00 to the heirs of Numeriano. Since the driver could not
pay that civil liability adjudged in the criminal case, Rosendo, or his estate, became subsidiary
liable for the amount.
In the case at bar, after the estate of Rosendo de Guzman had been judicially settled and closed,
plaintiff heirs of Numeriano had sued defendant heirs of Rosendo de Guzman in a separate
action, before the then Court of First Instance in Pasay City (a) for settlement of the subsidiary
liability of P3,000.00, (b) as well as for damages resulting from the death of Numeriano. The
Trial Court gave judgment to the plaintiffs for the P3,000.00. but did not grant the claim for
damages for the death of Numeriano pursuant to the provisions of Section 5, Rule 86. The heirs
of the deceased passenger accepted the judgment of the trial Court, but the heirs of Rosendo de
Guzman appealed to the Intermediate Appellate Court which subsequently endorsed the case to
us as only a question of law was involved.
The civil liability adjudged in the criminal case, and for which Rosendo de Guzman or his estate
became subsidiary liable, is plainly a money claim. On the other hand, any direct liability of
Rosendo de Guzman or his estate, for damages for the death of the passenger Numeriano, is not a
claim for damages for injury to person, which should be filed under Section 1, Rule 87. Rosendo
de Guzman was not personally responsible for the death of Numeriano. The claim of the heirs of
Numeriano is one arising from the contract of transportation (Vda. de Medina, et al. v. Cresencia,
et al., 99 Phil. 506). In the case of Gutierrez vs. Barreto Datu (115 Phil. 741), it was held that a
claim for damages arising from breach of contract is within the purview of Section 5, Rule 86.
The claim of plaintiff heirs of Numeriano should have been presented in the judicial proceedings
for the settlement of the estate of Rosendo de Guzman and, not having been so presented, has
already been barred. It was clear error on the part of the Trial Court not to have summarily
dismissed the complaint for lack of cause of action.
Separate Opinions
MELENCIO-HERRERA, J., concurring:
I concur in the result.
In this case, the deceased Numeriano Bautista was a passenger in a public utility jeepney owned
by the deceased Rosendo de Guzman and whose driver was Eugenio Medrano. It was a vehicular
accident involving the jeep which caused the death of Numeriano.
The driver was prosecuted for criminal negligence resulting in death, and he was sentenced, inter
alia, to pay a civil liability of P3,000.00 to the heirs of Numeriano. Since the driver could not
pay that civil liability adjudged in the criminal case, Rosendo, or his estate, became subsidiary
liable for the amount.
In the case at bar, after the estate of Rosendo de Guzman had been judicially settled and closed,
plaintiff heirs of Numeriano had sued defendant heirs of Rosendo de Guzman in a separate
action, before the then Court of First Instance in Pasay City (a) for settlement of the subsidiary
liability of P3,000.00, (b) as well as for damages resulting from the death of Numeriano. The
Trial Court gave judgment to the plaintiffs for the P3,000.00. but did not grant the claim for
damages for the death of Numeriano pursuant to the provisions of Section 5, Rule 86. The heirs
of the deceased passenger accepted the judgment of the trial Court, but the heirs of Rosendo de
Guzman appealed to the Intermediate Appellate Court which subsequently endorsed the case to
us as only a question of law was involved.
The civil liability adjudged in the criminal case, and for which Rosendo de Guzman or his estate
became subsidiary liable, is plainly a money claim. On the other hand, any direct liability of
Rosendo de Guzman or his estate, for damages for the death of the passenger Numeriano, is not a
claim for damages for injury to person, which should be filed under Section 1, Rule 87. Rosendo
de Guzman was not personally responsible for the death of Numeriano. The claim of the heirs of
Numeriano is one arising from the contract of transportation (Vda. de Medina, et al. v. Cresencia,
et al., 99 Phil. 506). In the case of Gutierrez vs. Barreto Datu (115 Phil. 741), it was held that a
claim for damages arising from breach of contract is within the purview of Section 5, Rule 86.
The claim of plaintiff heirs of Numeriano should have been presented in the judicial proceedings
for the settlement of the estate of Rosendo de Guzman and, not having been so presented, has
already been barred. It was clear error on the part of the Trial Court not to have summarily
dismissed the complaint for lack of cause of action.
JOSEPHINE PAHAMOTANG and ELEANOR PAHAMOTANG-BASA, v. THE PHILIPPINE
NATIONAL BANK (PNB) and the HEIRS OF ARTURO ARGUNA
Doctrine:
The requirements of Rule 89 of the Rules of Court are mandatory and failure to give notice to the
heirs would invalidate the authority granted by the intestate/probate court to mortgage or sell
estate assets.
Facts:
On July 1, 1972, Melitona Pahamotang died. She was survived by her husband Agustin
Pahamotang, and their eight (8) children.
On September 15, 1972, Agustin filed with the then Court of First Instance of Davao City a
petition for issuance of letters administration over the estate of his deceased wife.
On December 7, 1972, the intestate court issued an order granting Agustin’s petition.
On July 6, 1973, respondent Philippine National Bank (PNB) and Agustin executed
an Amendment of Real and Chattel Mortgages with Assumption of Obligation, the intestate court
approved the mortgage to PNB of certain assets of the estate to secure an obligation in the
amount of P570,000.00.
Issue:
Whether or not Rule 89 of the Rules of Court is mandatory.
Ruling:
Settled is the rule in this jurisdiction that when an order authorizing the sale or encumbrance
of real property was issued by the testate or intestate court without previous notice to the heirs,
devisees and legatees as required by the Rules, it is not only the contract itself which is null and
void but also the order of the court authorizing the same.[11]
Thus, in Maneclang vs. Baun,[12] the previous administrator of the estate filed a petition with
the intestate court seeking authority to sell portion of the estate, which the court granted despite
lack of notice of hearing to the heirs of the decedent. The new administrator of the estate filed
with the Regional Trial Court an action for the annulment of the sales made by the previous
administrator. After trial, the trial court held that the order of the intestate court granting
authority to sell, as well as the deed of sale, were void. On appeal directly to this Court, We held
that without compliance with Sections 2, 4 and 7 of Rule 89 of the Rules of Court, the authority
to sell, the sale itself and the order approving it would be null and void ab initio.