Group 1 Rules 72 To 90

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) Eliseos common-law wife filed a Petition for Letters of Administration
before the Regional Trial Court (RTC) of Las Pias 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 GarciaQuaizon (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 Pias City, at the time of his death. Pursuant to Section 1, Rule 73 of the Revised Rules of
Court, the petition for settlement of decedents estate should have been filed in Capas, Tarlac and
not in Las Pias 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 Eliseos 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 Pias City, thereby discrediting the position taken by the petitioners that
Eliseos 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 CAG.R. CV No. 88589.
Issue:
WHETHER THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THAT ELISEO
QUIAZON WAS A RESIDENT OF LAS PIAS AND THEREFORE, THE PETITION FOR
LETTERS OF ADMINISTRATION WAS PROPERLY FILED WITH THE [RTC] OF LAS
PIAS.
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).
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 persons 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 Pias City. It is evident from the records that during his
lifetime, Eliseo resided at No. 26 Everlasting Road, Phase 5, Pilar Village, Las Pias 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 Eliseos
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 decedents 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.
DECISION
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 Pias 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 Eliseos 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 Pias 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 Eliseos marriage to Amelia by claiming that it
was bigamous for having been contracted during the subsistence of the latters 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
fathers 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 Pias 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 decedents estate should have been filed in Capas, Tarlac and not in Las Pias 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 Eliseos 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 Pias City, thereby discrediting the position taken by the petitioners that
Eliseos 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 Pias City, from 1975 up to the time of Eliseos
death in 1992. For purposes of fixing the venue of the settlement of Eliseos estate, the Court of
Appeals upheld the conclusion reached by the RTC that the decedent was a resident of Las Pias
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 PIAS AND THEREFORE[,] THE PETITION
FOR LETTERS OF ADMINISTRATION WAS PROPERLY FILED WITH THE [RTC]
OF LAS PIAS[;]
II.
III.
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]
THE COURT OF APPEALS OVERLOOKED THE FACT THAT ELISE QUIAZON
HAS NOT SHOWN ANY INTEREST IN THE PETITION FOR LETTERS OF
ADMINISTRATION[.]12
The Courts 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).
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 persons 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 Pias City. It is evident from the records that during his lifetime, Eliseo resided at No. 26
Everlasting Road, Phase 5, Pilar Village, Las Pias 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 Eliseos
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 decedents 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
Amelias 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 Nial v. Bayadog23 applicable four-square to the case at hand. In Nial, the Court, in no
uncertain terms, allowed therein petitioners to file a petition for the declaration of nullity of their
fathers 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 Nial 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 fathers 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 Eliseos marriage to Amelia, we now proceed
to determine whether or not the decedents 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 Eliseos 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 Eliseos 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 decedents 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 Eliseos 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.
Id. at 105.
Special Proceeding No. M-3957. Records, Vol. I, pp. 1-9.
Id. at 10.
Id. at 40-44.
Id. at 11.
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
Id. at 38.redcralaw
10
Id. at 94-106.
11
Id. at 118-119.
12
Rollo, 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.
18
Jao v. Court of Appeals, 432 Phil. 160, 170 (2002).
19
Id.
20
Quiazon v. Garcia, Civil Case No. Q-43712. Records, Vol. II, pp. 234-240.
21
Golden (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.
22
Juliano-Llave v. Republic, G.R. No. 169766, 30 March 2011, 646 SCRA 637, 656-657
citing Nial 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.
28
Solinap 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 Avelinas 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.
DECISION
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 AbarientosRebusquillo, 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 propertys 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 SelfAdjudication 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,
follows:chanRoblesvirtualLawlibrary
1.
judgment
is
hereby
rendered,
as
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 Assessors 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 courts 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 Avelinas 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 SelfAdjudication 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 CAs 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
Portugals 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 Portugals 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 pretrial: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 Avelinas 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 courts 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.
Rollo, 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.
Records, Folder 1, pp. 24-25.
CA rollo, pp. 77-78.
Rollo, pp. 65-66. The following, including herein respondent Emelinda Rebusquillo Gualvez,
are the only living heirs of petitioner Avelina Abarientos Gualvez
Rebusquillo:chanroblesvirtuallawlibrary
Children:chanRoblesvirtualLawlibrary
1. Consuelo R. Espedido Tagdon, Barcelona, Sorsogon;
2. Teresita A. Rebusquillo Oas, Albay;
3. Shirley R. Reduta Salitran 3, Blk 23, Cardinal Village, Dasmarias, 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.
6
Pereira v. Court of Appeals, G.R. No. 81147, June 20, 1989, 174 SCRA 154; Intestate Estate of
Mercado v. Magtibay, 96 Phil. 383 (1953).
7
Heirs 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, 8081; Fidel v. Court of Appeals, G.R. No. 168263, July 21, 2008, 559 SCRA 186, 194.
8
G.R. No. 155555, August 16, 2005, 467 SCRA 184, 199.
CA rollo, pp. 71-72.
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 Romans
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-squaremeter 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 Victors 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 Reynaldos 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 Romans 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.
DECISION
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. NT7267. The Court of Appeals modified this decision by declaring as valid and existing TCT No.
N-24660 in PNBs 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. NT7267.3chanRoblesvirtualLawlibrary
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 Victors 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. NT57731.12chanRoblesvirtualLawlibrary
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 Reynaldos 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 PNBs 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,
follows:ChanRoblesVirtualawlibrary
judgment
is
hereby
rendered
as
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.
to pay plaintiff or his substitutes the sum of P50,000.00 by way of exemplary damages;
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 courts
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 courts 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 courts 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
propertys tax declarations to support their contentions.62chanRoblesvirtualLawlibrary
Thus, the issues before this court for resolution are:chanroblesvirtuallawlibrary
I.
II.
Whether a valid title can be derived from a void title; and

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 courts 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 PNBs 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 extrajudicially
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 Pestao was presented as a
witness for the defendant-PNB and his testimony was adopted by the defendantsspouses.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. PNBs property
appraiser, Gerardo Pestao, 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 Pestao 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 Pestaos request,
Reynaldo Andres submitted the propertys tax declaration. 73chanRoblesvirtualLawlibrary
Gerardo Pestao 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 latters 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
79
diligence.
.
.
. chanRoblesvirtualLawlibrary
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 SelfAdjudication 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
Pestaos 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 Pestao 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 Pestao 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 Romans wife.
Petitioner heirs also insist that Gerardo Pestao 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 Pestao 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 Assessors Office:chanroblesvirtuallawlibrary
ATTY
LASAM:
A.
Q.
A.
Q.
A.
....
Q.
A.
Q.
A.
Q.
A.
Q.
A.
Mr. witness, the time you conducted the credit investigation who was in
possession of the property?
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 Assessors Office for Tax Declaration.
So it is cle[unreadable] that Reynaldo and Jannette was in possession of the
subject property?
Yes, sir.
And at the time you conducted the credit investigation was there any claim of that
property. . regarding this claim of Onofre Andres?
I went to the Municipal Hall of Sto. Domingo and I dont have any knowledge of
that.
When you investigated you solely relied to the title being offered?
No, sir. I went to the Assessors Office of Sto. Domingo, to see the tax payments
and to the Register of Deeds.
You did talk to the laborers working in the building?
Yes, sir.
Mr. witness, you mentioned that you required Reynaldo Andres to submit the tax
declaration of the building?
Yes, sir.
Did he submit to you the tax declaration?
Yes.101 (Emphasis supplied)
Gerardo Pestao 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 Pestao testified
that the residential building was still under construction during his inspection on August 8,
1995:103chanRoblesvirtualLawlibrary
Q:
A:
Q:
A:
Did you actually inspect the 4,634 square meters of the property?
Yes, sir.
At the time of your inspection of the property, who was actually living in the
property?
At the time of my inspection on August 8, 1995 the house is under construction?
sir.
There were no occupants?
The spouses borrower Reynaldo Andres and his wife, sir.
Q:
A:
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 Pestao 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 Pestao 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 Pestao 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.
Rollo, 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.
Rollo, pp. 3435 and 58.
The nine children were Onofre, Guillermo, Sixto, Roman, Juana, Melissa, Maxima, Ofelia, and
Araceli, all surnamed Andres.
5
Rollo, p. 36.
Id. at 34 and 58.
Id. at 36.
The decision of the trial court used the name, Felisa, instead of Melissa.
Id. at 58.
10
Id. at 3738, 5556, 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.
16
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 3839 and 56.
30
Id. at 39 and 56.
31
Id.
32
Id.
33
Id. at 3940.
34
Id. at 40.
35
Id.
36
Id. at 41.
37
Id. at 40.
38
Id. at 65.
39
Id. at 4041.
40
The decision was penned by Judge Lauro G. Sandoval of Branch 37 of the Regional Trial
Court of Nueva Ecija.
41
Rollo, pp. 5462.
42
Id. at 6162.
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.
44
Rollo, pp. 3347.
45
Id. at 47.
46
Id. at 4953.
47
Id. at 828.
48
Id. at 16.
49
418 Phil. 451 (2001) [Per J. Ynares-Santiago, First Division].
50
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].
57
Rollo, pp. 134135.
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].
65
Republic 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, 324325 [Per J. Del Castillo, Second Division].
67
Rollo, pp. 2627.
68
Id. at 1617 and 5960.
69
Id. at 43.
70
Id. at 44.
71
Id.
72
Id.
73
Id. at 4445.
74
Id. at 45.
75
Id.
76
Id. at 4546.
77
Cabuhat v. Court of Appeals, 418 Phil. 451, 458459 (2001) [Per J. Ynares-Santiago, First
Division].
78
Rollo, pp. 2021.
79
Cruz 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.
84
See O. E. Williamson, Transaction-Cost Economics: The Governance of Contractual Relations,

22 JOURNAL OF LAW AND ECONOMICS 233, 239242 (1979). See also R. H. Coase, The
Problem of Social Cost, 3 JOURNAL OF LAW AND ECONOMICS 144 (1960).
85
See Cruz v. Bancom Finance Corporation, 429 Phil. 225, 237 (2002) [Per J. Panganiban, Third
Division].
86
Cabuhat 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.
89
Philippine Banking Corporation v. Dy, G.R. No. 183774, November 14, 2012, 685 SCRA 567,
575 [Per J. Perlas-Bernabe, Second Division], citing Alano v. Planters Development Bank, G.R.
No. 171628, June 13, 2011, 651 SCRA 766, 774775 [Per J. Del Castillo, First Division]. See
also Dela Pea 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].
91
Rollo, p. 91.
92
Id. at 23 and 157158.
93
Id. at 25.
94
Id. at 2526.
95
Id. at 157.
96
Id.
97
Id. at 45.
98
Id. at 108109.
99
Id. at 2324.
100
Id. at 24.
101
Id. at 9799.
102
Id. at 99 and 114115.
103
Id. at 106.
104
Id. at 105106.
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].
110
Rollo, 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 ADAZAMAGLASANG 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 ADAZAMAGLASANG 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 Flavianos estate. Respondent extra-judicially foreclose the
mortgage covering the Sps. Maglasangs properties, still remained a deficiency on Sps.
Maglasangs obligation to respondent., filed a suit to recover the deficiency against the estate of
Flaviano, his widow Salud and petitioners.
ISSUE: whether or not the exercise of the third option of extra-judicial foreclosure under Section
7, Rule 86 of respondent precluded them from filing a suit to recover any deficiency?
HELD: YES
The Courts Ruling
The petition is partly meritorious.
Claims against deceased persons should be filed during the settlement proceedings of their
estate.41 Such proceedings are primarily governed by special rules found under Rules 73 to 90 of
the Rules, although rules governing ordinary actions may, as far as practicable, apply
suppletorily.42 Among these special rules, Section 7, Rule 86 of the Rules (Section 7, Rule86)
provides the rule in dealing with secured claims against the estate:
SEC. 7. Mortgage debt due from estate. A creditor holding a claim against the deceased
secured by a mortgage or other collateral security, may abandon the security and prosecute his
claim in the manner provided in this rule, and share in the general distribution of the assets of the
estate; or he may foreclose his mortgage or realize upon his security, by action in court, making
the executor or administrator a party defendant, and if there is a judgment for a deficiency, after
the sale of the mortgaged premises, or the property pledged, in the foreclosure or other
proceeding to realize upon the security, he may claim his deficiency judgment in the manner
provided in the preceding section; or he may rely upon his mortgage or other security alone, and
foreclose the same at any time within the period of the statute of limitations, and in that event he
shall not be admitted as a creditor, and shall receive no share in the distribution of the other
assets of the estate; but nothing herein contained shall prohibit the executor or administrator from
redeeming the property mortgaged or pledged, by paying the debt for which it is held as security,
under the direction of the court, if the court shall adjudged it to be for the best interest of the
estate that such redemption shall be made. (Emphasis and underscoring supplied)
As the foregoing generally speaks of "a creditor holding a claim against the deceased secured by
a mortgage or other collateral security" as above-highlighted, it may be reasonably concluded
that the aforementioned section covers all secured claims, whether by mortgage or any other
form of collateral, which a creditor may enforce against the estate of the deceased debtor. On the
contrary, nowhere from its language can it be fairly deducible that the said section would as the
CA interpreted narrowly apply only to mortgages made by the administrator over any property
belonging to the estate of the decedent. To note, mortgages of estate property executed by the
administrator, are also governed by Rule 89 of the Rules, captioned as "Sales, Mortgages, and
Other Encumbrances of Property of Decedent."
In this accord, it bears to stress that the CAs reliance on Philippine National Bank v. CA43 (PNB)
was misplaced as the said case did not, in any manner, limit the scope of Section 7, Rule 86. It
only stated that the aforesaid section equally applies to cases where the administrator mortgages
the property of the estate to secure the loan he obtained. 44 Clearly, the pronouncement was a
ruling of inclusion and not one which created a distinction. It cannot, therefore, be doubted that it
is Section 7, Rule 86which remains applicable in dealing with a creditors claim against the
mortgaged property of the deceased debtor, as in this case, as well as mortgages made by the
administrator, as that in the PNB case.
Jurisprudence breaks down the rule under Section 7, Rule 86 and explains that the secured
creditor has three remedies/options that he may alternatively adopt for the satisfaction of his
indebtedness. In particular, he may choose to: (a) waive the mortgage and claim the entire debt
from the estate of the mortgagor as an ordinary claim; (b) foreclose the mortgage judicially and
prove the deficiency as an ordinary claim; and (c) rely on the mortgage exclusively, or other
security and foreclose the same before it is barred by prescription, without the right to file a
claim for any deficiency.45 It must, however, be emphasized that these remedies are distinct,
independent and mutually exclusive from each other; thus, the election of one effectively bars the
exercise of the others. With respect to real properties, the Court in Bank of America v. American
Realty Corporation46 pronounced:
In our jurisdiction, the remedies available to the mortgage creditor are deemed alternative and
not cumulative. Notably, an election of one remedy operates as a waiver of the other. For this
purpose, a remedy is deemed chosen upon the filing of the suit for collection or upon the filing of
the complaint in an action for foreclosure of mortgage, pursuant to the provision of Rule 68 of
the 1997 Rules of Civil Procedure. As to extrajudicial foreclosure, such remedy is deemed
elected by the mortgage creditor upon filing of the petition not with any court of justice but with
the Office of the Sheriff of the province where the sale is to be made, in accordance with the
provisions of Act No. 3135, as amended by Act No.4118.47 (Emphasis supplied)
Anent the third remedy, it must be mentioned that the same includes the option of extra-judicially
foreclosing the mortgage under Act No. 3135,as availed of by respondent in this case. However,
the plain result of adopting the last mode of foreclosure is that the creditor waives his right to
recover any deficiency from the estate.48 These precepts were discussed in the PNB case, citing
Perez v. Philippine National Bank49 which overturned the earlier Pasno v. Ravina ruling:50
Case law now holds that this rule grants to the mortgagee three distinct, independent and
mutually exclusive remedies that can be alternatively pursued by the mortgage creditor for the
satisfaction of his credit in case the mortgagor dies, among them:
(1) to waive the mortgage and claim the entire debt from the estate of the mortgagor as an
ordinary claim;
(2) to foreclose the mortgage judicially and prove any deficiency as an ordinary claim;
and
(3) to rely on the mortgage exclusively, foreclosing the same at anytime before it is
barred by prescription without right to file a claim for any deficiency
In Perez v. Philippine National Bank, reversing Pasno vs. Ravina, we held:
The ruling in Pasno v. Ravina not having been reiterated in any other case, we have carefully
reexamined the same, and after mature deliberation have reached the conclusion that the
dissenting opinion is more in conformity with reason and law. Of the three alternative courses
that section 7, Rule 87 (now Rule 86), offers the mortgage creditor, to wit, (1) to waive the
mortgage and claim the entire debt from the estate of the mortgagor as an ordinary claim; (2)
foreclose the mortgage judicially and prove any deficiency as an ordinary claim; and (3) to rely
on the mortgage exclusively, foreclosing the same at any time before it is barred by prescription,
without right to file a claim for any deficiency, the majority opinion in Pasno v. Ravina, in
requiring a judicial foreclosure, virtually wipes out the third alternative conceded by the Rules to
the mortgage creditor, and which would precisely include extra-judicial foreclosures by contrast
with the second alternative.
The plain result of adopting the last mode of foreclosure is that the creditor waives his right to
recover any deficiency from the estate. Following the Perez ruling that the third mode includes
extrajudicial foreclosure sales, the result of extrajudicial foreclosure is that the creditor waives
any further deficiency claim. x x x.51 (Emphases and underscoring supplied; italics in the
original)
To obviate any confusion, the Court observes that the operation of Act No. 3135 does not entirely
discount the application of Section 7, Rule 86, or vice-versa. Rather, the two complement each
other within their respective spheres of operation. On the one hand, Section 7, Rule 86 lays down
the options for the secured creditor to claim against the estate and, according to jurisprudence,
the availment of the third option bars him from claiming any deficiency amount. On the other
hand, after the third option is chosen, the procedure governing the manner in which the extrajudicial foreclosure should proceed would still be governed by the provisions of Act No.
3135.Simply put, Section 7, Rule 86 governs the parameters and the extent to which a claim may
be advanced against the estate, whereas Act No. 3135sets out the specific procedure to be
followed when the creditor subsequently chooses the third option specifically, that of extrajudicially foreclosing real property belonging to the estate. The application of the procedure
under Act No. 3135 must be concordant with Section 7, Rule 86 as the latter is a special rule
applicable to claims against the estate, and at the same time, since Section 7, Rule 86 does not
detail the procedure for extra-judicial foreclosures, the formalities governing the manner of
availing of the third option such as the place where the application for extra-judicial
foreclosure is filed, the requirements of publication and posting and the place of sale must be
governed by Act No. 3135.
In this case, respondent sought to extra-judicially foreclose the mortgage of the properties
previously belonging to Sps. Maglasang (and now, their estates) and, therefore, availed of the
third option. Lest it be misunderstood, it did not exercise the first option of directly filing a claim
against the estate, as petitioners assert, since it merely notified 52 the probate court of the
outstanding amount of its claim against the estate of Flaviano and that it was currently
restructuring the account.53 Thus, having unequivocally opted to exercise the third option of
extra-judicial foreclosure under Section 7, Rule 86, respondent is now precluded from filing a
suit to recover any deficiency amount as earlier discussed.
As a final point, petitioners maintain that the extra-judicial foreclosure of the subject properties
was null and void since the same was conducted in violation of the stipulation in the real estate
mortgage contract stating that the auction sale should be held in the capital of the province where
the properties are located, i.e., the Province of Leyte.
The Court disagrees.
As may be gleaned from the records, the stipulation under the real estate mortgage 54 executed by
Sps. Maglasang which fixed the place of the foreclosure sale at Tacloban City lacks words of
exclusivity which would bar any other acceptable for a wherein the said sale may be conducted,
to wit:
It is hereby agreed that in case of foreclosure of this mortgage under Act 3135, the auction sale
shall be held at the capital of the province if the property is within the territorial jurisdiction of
the province concerned, or shall be held in the city if the property is within the territorial
jurisdiction of the city concerned; x x x.55
Case law states that absent such qualifying or restrictive words to indicate the exclusivity of the
agreed forum, the stipulated place should only be as an additional, not a limiting venue. 56 As a
consequence, the stipulated venue and that provided under Act No. 3135 can be applied
alternatively.
In particular, Section 2 of Act No. 3135 allows the foreclosure sale to be done within the
province where the property to be sold is situated, viz.:
SEC. 2. Said sale cannot be made legally outside of the province which the property sold is
situated; and in case the place within said province in which the sale is to be made is subject to
stipulation, such sale shall be made in said place or in the municipal building of the municipality
in which the property or part thereof is situated. (Italics supplied) ..
In this regard, since the auction sale was conducted in Ormoc City, which is within the territorial
jurisdiction of the Province of Leyte, then the Court finds sufficient compliance with the abovecited requirement.
All told, finding that the extra-judicial foreclosure subject of this case was properly conducted in
WHEREFORE, the petition is PARTLY GRANTED. The complaint for the recovery of the
deficiency amount after extra-judicial foreclosure filed by respondent Manila Banking
Corporation is hereby DISMISSED. The extra-judicial foreclosure of the mortgaged properties,
however, stands.
SO ORDERED.
I.III
G.R. No. 171206
September 23, 2013
HEIRS OF THE LATE SPOUSES FLA VIANO MAGLASANG and SALUD ADAZAMAGLASANG, namely, OSCAR A. MAGLASANG, EDGAR A. MAGLASANG,
CONCEPCION CHONA A. MAGLASANG, GLENDA A. MAGLASANG-ARNAIZ,
LERMA A. MAGLASANG, FELMA A. MAGLASANG, FE DORIS A. MAGLASANG,
LEOLINO A. MAGLASANG, MARGIE LEILA A. MAGLASANG,MA. MILALIE A.
MAGLASANG, SALUD A. MAGLASANG, and MA. FLASALIE A. MAGLASANG,
REPRESENTING
THE
ESTATES
OF
THEIR
AFORE-NAMEDDECEASED
PARENTS, Petitioners,
vs.
MANILA BANKING CORPORATION, now substituted by FIRST SOVEREIGN ASSET
MANAGEMENT SPV-AMC, INC. FSAMI, Respondent.
DECISION
PERLAS-BERNABE, J.:
The Facts
On June 16, 1975, spouses Flaviano and Salud Maglasang (Sps.Maglasang) obtained a credit line
from respondent5 in the amount of P350,000.00 which was secured by a real estate
mortgage6 executed over seven of their properties7 located in Ormoc City and the Municipality of
Kananga, Province of Leyte. 8 They availed of their credit line by securing loans in the amounts
of P209,790.50 and P139,805.83 on October 24, 1975and March 15, 1976, respectively, 9 both of
which becoming due and demandable within a period of one year. Further, the parties agreed that
the said loans would earn interest at 12% per annum (p.a.) and an additional 4% penalty would
be charged upon default.10
After Flaviano Maglasang (Flaviano) died intestate on February 14,1977, his widow Salud
Maglasang (Salud) and their surviving children, herein petitioners Oscar (Oscar), Concepcion
Chona, Lerma, Felma, FeDoris, Leolino, Margie Leila, Ma. Milalie, Salud and Ma. Flasalie, all
surnamed Maglasang, and Glenda Maglasang-Arnaiz, appointed 11 their brother petitioner Edgar
Maglasang (Edgar) as their attorney-in-fact.12 Thus, on March 30, 1977, Edgar filed a verified
petition for letters of administration of the intestate estate of Flaviano before the then Court of
First Instance of Leyte, Ormoc City, Branch 5 (probate court), docketed as Sp. Proc. No. 16040.13 On August 9, 1977, the probate court issued an Order 14 granting the petition, thereby
appointing Edgar as the administrator15 of Flavianos estate.
In view of the issuance of letters of administration, the probate court, on August 30, 1977, issued
a Notice to Creditors16 for the filing of money claims against Flavianos estate. Accordingly, as
one of the creditors of Flaviano, respondent notified17 the probate court of its claim in the amount
of P382,753.19 as of October 11, 1978, exclusive of interests and charges.
During the pendency of the intestate proceedings, Edgar and Oscar were able to obtain several
loans from respondent, secured by promissory notes18 which they signed.
In an Order19 dated December 14, 1978 (December 14, 1978 Order),the probate court terminated
the proceedings with the surviving heirs executing an extra-judicial partition of the properties of
Flavianos estate. The loan obligations owed by the estate to respondent, however, remained
unsatisfied due to respondents certification that Flavianos account was undergoing a
restructuring. Nonetheless, the probate court expressly recognized the rights of respondent under
the mortgage and promissory notes executed by the Sps. Maglasang, specifically, its "right to
foreclose the same within the statutory period."20
In this light, respondent proceeded to extra-judicially foreclose the mortgage covering the Sps.
Maglasangs properties and emerged as the highest bidder at the public auction for the amount
of P350,000.00.21 There, however, remained a deficiency on Sps. Maglasangs obligation to
respondent. Thus, on June 24, 1981, respondent filed a suit to recover the deficiency amount
of P250,601.05 as of May 31, 1981 against the estate of Flaviano, his widow Salud and
petitioners, docketed as Civil Case No. 1998-0.22
The RTC Ruling and Subsequent Proceedings
After trial on the merits, the RTC (formerly, the probate court)23 rendered a Decision24 on April 6,
1987 directing the petitioners to pay respondent, jointly and severally, the amount
of P434,742.36 with interest at the rate of 12% p.a., plus a 4% penalty charge, reckoned from
September 5,1984 until fully paid.25 The RTC found that it was shown, by a preponderance of
evidence, that petitioners, after the extra-judicial foreclosure of all the properties mortgaged, still
have an outstanding obligation in the amount and as of the date as above-stated. The RTC also
found in order the payment of interests and penalty charges as above-mentioned as well as
attorneys fees equivalent to 10% of the outstanding obligation.26
Dissatisfied, petitioners elevated the case to the CA on appeal, contending, 27 inter alia, that the
remedies available to respondent under Section 7, Rule 86 of the Rules of Court (Rules) are
alternative and exclusive, such that the election of one operates as a waiver or abandonment of
the others. Thus, when respondent filed its claim against the estate of Flaviano in the proceedings
before the probate court, it effectively abandoned its right to foreclose on the mortgage.
Moreover, even on the assumption that it has not so waived its right to foreclose, it is nonetheless
barred from filing any claim for any deficiency amount.
During the pendency of the appeal, Flavianos widow, Salud, passed away on July 25, 1997.28
The CA Ruling
In a Decision29 dated July 20, 2005, the CA denied the petitioners appeal and affirmed the RTCs
Decision. At the outset, it pointed out that the probate court erred when it, through the December
14, 1978 Order, closed and terminated the proceedings in Sp. Proc. No. 1604-0 without first
satisfying the claims of the creditors of the estate in particular, respondent in violation of
Section 1, Rule 90 of the Rules.30 As a consequence, respondent was not able to collect from the
petitioners and thereby was left with the option of foreclosing the real estate mortgage. 31 Further,
the CA held that Section 7, Rule 86 of the Rules does not apply to the present case since the
same does not involve a mortgage made by the administrator over any property belonging to the
estate of the decedent.32 According to the CA, what should apply is Act No. 3135 33 which entitles
respondent to claim the deficiency amount after the extra-judicial foreclosure of the real estate
mortgage of Sps. Maglasangs properties.34
Petitioners motion for reconsideration was subsequently denied in a Resolution 35 dated January
4, 2006. Hence, the present recourse.
The Issue Before the Court
The essential issue in this case is whether or not the CA erred in affirming the RTCs award of
the deficiency amount in favor of respondent.
Petitioners assert36 that it is not Act No. 3135 but Section 7, Rule 86of the Rules which applies in
this case. The latter provision provides alternative and exclusive remedies for the satisfaction of
respondents claim against the estate of Flaviano. 37 Corollarily, having filed its claim against the
estate during the intestate proceedings, petitioners argue that respondent had effectively waived
the remedy of foreclosure and, even assuming that it still had the right to do so, it was precluded
from filing a suit for the recovery of the deficiency obligation.38
Likewise, petitioners maintain that the extra-judicial foreclosure of the subject properties was
null and void, not having been conducted in the capital of the Province of Leyte in violation of
the stipulations in the real estate mortgage contract.39 They likewise deny any personal liability
for the loans taken by their deceased parents.40
The Courts Ruling
The petition is partly meritorious.
Claims against deceased persons should be filed during the settlement proceedings of their
estate.41 Such proceedings are primarily governed by special rules found under Rules 73 to 90 of
the Rules, although rules governing ordinary actions may, as far as practicable, apply
suppletorily.42 Among these special rules, Section 7, Rule 86 of the Rules (Section 7, Rule86)
provides the rule in dealing with secured claims against the estate:
SEC. 7. Mortgage debt due from estate. A creditor holding a claim against the deceased
secured by a mortgage or other collateral security, may abandon the security and prosecute his
claim in the manner provided in this rule, and share in the general distribution of the assets of the
estate; or he may foreclose his mortgage or realize upon his security, by action in court, making
the executor or administrator a party defendant, and if there is a judgment for a deficiency, after
the sale of the mortgaged premises, or the property pledged, in the foreclosure or other
proceeding to realize upon the security, he may claim his deficiency judgment in the manner
provided in the preceding section; or he may rely upon his mortgage or other security alone, and
foreclose the same at any time within the period of the statute of limitations, and in that event he
shall not be admitted as a creditor, and shall receive no share in the distribution of the other
assets of the estate; but nothing herein contained shall prohibit the executor or administrator from
redeeming the property mortgaged or pledged, by paying the debt for which it is held as security,
under the direction of the court, if the court shall adjudged it to be for the best interest of the
estate that such redemption shall be made. (Emphasis and underscoring supplied)
As the foregoing generally speaks of "a creditor holding a claim against the deceased secured by
a mortgage or other collateral security" as above-highlighted, it may be reasonably concluded
that the aforementioned section covers all secured claims, whether by mortgage or any other
form of collateral, which a creditor may enforce against the estate of the deceased debtor. On the
contrary, nowhere from its language can it be fairly deducible that the said section would as the
CA interpreted narrowly apply only to mortgages made by the administrator over any property
belonging to the estate of the decedent. To note, mortgages of estate property executed by the
administrator, are also governed by Rule 89 of the Rules, captioned as "Sales, Mortgages, and
Other Encumbrances of Property of Decedent."
In this accord, it bears to stress that the CAs reliance on Philippine National Bank v. CA43 (PNB)
was misplaced as the said case did not, in any manner, limit the scope of Section 7, Rule 86. It
only stated that the aforesaid section equally applies to cases where the administrator mortgages
the property of the estate to secure the loan he obtained. 44 Clearly, the pronouncement was a
ruling of inclusion and not one which created a distinction. It cannot, therefore, be doubted that it
is Section 7, Rule 86which remains applicable in dealing with a creditors claim against the
mortgaged property of the deceased debtor, as in this case, as well as mortgages made by the
administrator, as that in the PNB case.
Jurisprudence breaks down the rule under Section 7, Rule 86 and explains that the secured
creditor has three remedies/options that he may alternatively adopt for the satisfaction of his
indebtedness. In particular, he may choose to: (a) waive the mortgage and claim the entire debt
from the estate of the mortgagor as an ordinary claim; (b) foreclose the mortgage judicially and
prove the deficiency as an ordinary claim; and (c) rely on the mortgage exclusively, or other
security and foreclose the same before it is barred by prescription, without the right to file a
claim for any deficiency.45 It must, however, be emphasized that these remedies are distinct,
independent and mutually exclusive from each other; thus, the election of one effectively bars the
exercise of the others. With respect to real properties, the Court in Bank of America v. American
Realty Corporation46 pronounced:
In our jurisdiction, the remedies available to the mortgage creditor are deemed alternative and
not cumulative. Notably, an election of one remedy operates as a waiver of the other. For this
purpose, a remedy is deemed chosen upon the filing of the suit for collection or upon the filing of
the complaint in an action for foreclosure of mortgage, pursuant to the provision of Rule 68 of
the 1997 Rules of Civil Procedure. As to extrajudicial foreclosure, such remedy is deemed
elected by the mortgage creditor upon filing of the petition not with any court of justice but with
the Office of the Sheriff of the province where the sale is to be made, in accordance with the
provisions of Act No. 3135, as amended by Act No.4118.47 (Emphasis supplied)
Anent the third remedy, it must be mentioned that the same includes the option of extra-judicially
foreclosing the mortgage under Act No. 3135,as availed of by respondent in this case. However,
the plain result of adopting the last mode of foreclosure is that the creditor waives his right to
recover any deficiency from the estate.48 These precepts were discussed in the PNB case, citing
Perez v. Philippine National Bank49 which overturned the earlier Pasno v. Ravina ruling:50
Case law now holds that this rule grants to the mortgagee three distinct, independent and
mutually exclusive remedies that can be alternatively pursued by the mortgage creditor for the
satisfaction of his credit in case the mortgagor dies, among them:
(1) to waive the mortgage and claim the entire debt from the estate of the mortgagor as an
ordinary claim;
(2) to foreclose the mortgage judicially and prove any deficiency as an ordinary claim;
and
(3) to rely on the mortgage exclusively, foreclosing the same at anytime before it is
barred by prescription without right to file a claim for any deficiency
In Perez v. Philippine National Bank, reversing Pasno vs. Ravina, we held:
The ruling in Pasno v. Ravina not having been reiterated in any other case, we have carefully
reexamined the same, and after mature deliberation have reached the conclusion that the
dissenting opinion is more in conformity with reason and law. Of the three alternative courses
that section 7, Rule 87 (now Rule 86), offers the mortgage creditor, to wit, (1) to waive the
mortgage and claim the entire debt from the estate of the mortgagor as an ordinary claim; (2)
foreclose the mortgage judicially and prove any deficiency as an ordinary claim; and (3) to rely
on the mortgage exclusively, foreclosing the same at any time before it is barred by prescription,
without right to file a claim for any deficiency, the majority opinion in Pasno v. Ravina, in
requiring a judicial foreclosure, virtually wipes out the third alternative conceded by the Rules to
the mortgage creditor, and which would precisely include extra-judicial foreclosures by contrast
with the second alternative.
The plain result of adopting the last mode of foreclosure is that the creditor waives his right to
recover any deficiency from the estate. Following the Perez ruling that the third mode includes
extrajudicial foreclosure sales, the result of extrajudicial foreclosure is that the creditor waives
any further deficiency claim. x x x.51 (Emphases and underscoring supplied; italics in the
original)
To obviate any confusion, the Court observes that the operation of Act No. 3135 does not entirely
discount the application of Section 7, Rule 86, or vice-versa. Rather, the two complement each
other within their respective spheres of operation. On the one hand, Section 7, Rule 86 lays down
the options for the secured creditor to claim against the estate and, according to jurisprudence,
the availment of the third option bars him from claiming any deficiency amount. On the other
hand, after the third option is chosen, the procedure governing the manner in which the extrajudicial foreclosure should proceed would still be governed by the provisions of Act No.
3135.Simply put, Section 7, Rule 86 governs the parameters and the extent to which a claim may
be advanced against the estate, whereas Act No. 3135sets out the specific procedure to be
followed when the creditor subsequently chooses the third option specifically, that of extrajudicially foreclosing real property belonging to the estate. The application of the procedure
under Act No. 3135 must be concordant with Section 7, Rule 86 as the latter is a special rule
applicable to claims against the estate, and at the same time, since Section 7, Rule 86 does not
detail the procedure for extra-judicial foreclosures, the formalities governing the manner of
availing of the third option such as the place where the application for extra-judicial
foreclosure is filed, the requirements of publication and posting and the place of sale must be
governed by Act No. 3135.
In this case, respondent sought to extra-judicially foreclose the mortgage of the properties
previously belonging to Sps. Maglasang (and now, their estates) and, therefore, availed of the
third option. Lest it be misunderstood, it did not exercise the first option of directly filing a claim
against the estate, as petitioners assert, since it merely notified 52 the probate court of the
outstanding amount of its claim against the estate of Flaviano and that it was currently
restructuring the account.53 Thus, having unequivocally opted to exercise the third option of
extra-judicial foreclosure under Section 7, Rule 86, respondent is now precluded from filing a
suit to recover any deficiency amount as earlier discussed.
As a final point, petitioners maintain that the extra-judicial foreclosure of the subject properties
was null and void since the same was conducted in violation of the stipulation in the real estate
mortgage contract stating that the auction sale should be held in the capital of the province where
the properties are located, i.e., the Province of Leyte.
The Court disagrees.
As may be gleaned from the records, the stipulation under the real estate mortgage 54 executed by
Sps. Maglasang which fixed the place of the foreclosure sale at Tacloban City lacks words of
exclusivity which would bar any other acceptable for a wherein the said sale may be conducted,
to wit:
It is hereby agreed that in case of foreclosure of this mortgage under Act 3135, the auction sale
shall be held at the capital of the province if the property is within the territorial jurisdiction of
the province concerned, or shall be held in the city if the property is within the territorial
jurisdiction of the city concerned; x x x.55
Case law states that absent such qualifying or restrictive words to indicate the exclusivity of the
agreed forum, the stipulated place should only be as an additional, not a limiting venue. 56 As a
consequence, the stipulated venue and that provided under Act No. 3135 can be applied
alternatively.
In particular, Section 2 of Act No. 3135 allows the foreclosure sale to be done within the
province where the property to be sold is situated, viz.:
SEC. 2. Said sale cannot be made legally outside of the province which the property sold is
situated; and in case the place within said province in which the sale is to be made is subject to
stipulation, such sale shall be made in said place or in the municipal building of the municipality
in which the property or part thereof is situated. (Italics supplied) ..
In this regard, since the auction sale was conducted in Ormoc City, which is within the territorial
jurisdiction of the Province of Leyte, then the Court finds sufficient compliance with the abovecited requirement.
All told, finding that the extra-judicial foreclosure subject of this case was properly conducted in
WHEREFORE, the petition is PARTLY GRANTED. The complaint for the recovery of the
deficiency amount after extra-judicial foreclosure filed by respondent Manila Banking
Corporation is hereby DISMISSED. The extra-judicial foreclosure of the mortgaged properties,

however, stands.
SO ORDERED.
II.I
Quasi-contracts
are
included
in
claims
that
should
be
filed
under
Rule
86, Section 5 of the Rules of Court. Liabilities of the deceased arising from quasi-contracts
should be filed as claims in the settlement of his estate, as provided in Section 5, Rule 86 of the
Rules of Court.
II.II
G.R. No. 170498
METROPOLITAN
January 9, 2013
BANK
&
TRUST
COMPANY, Petitioner,
vs. ABSOLUTE MANAGEMENT CORPORATION, Respondent.

BRION, J.:
Facts:
Sherwood Holdings Corporation, Inc. (SHCI) filed a complaint for sum of money against
Absolute Management Corporation (AMC). SHCI complaint that it made advance payments to
AMC for the purchase of 27,000 pieces of plywood and 16,500 plyboards in the sum
of P12,277,500.00, covered by Metrobank Checks. These checks were all crossed, and were all
made payable to Chua, AMCs General Manager, in 1998. Chua died in 1999, and a special
proceeding for the settlement of his estate was commenced before the RTC of Pasay City. SHCI
made
demands
on
AMC,
after
Chuas
death,
for
allegedly
undelivered
items
worth P8,331,700.00. Upon investigation, AMC discovered that in 1998, Chua received from
SHCI 18 Metrobank checks worth P31,807,500.00. These were all payable to AMC and were
crossed or "for payees account only. Subsequently, Metrobank filed fourth-party complaint
against Chuas estate. It alleged that Chuas estate should reimburse Metrobank in case it would
be held liable in the third-party complaint filed against it by AMC.
ISSUES:
1. whether or not quasi-contracts are included in claims that should be filed pursuant to Rule 86,
Section 5 of the Rules of Court?
2. Whether or not Metrobanks claim against the Estate of Jose Chua based on a quasi-contract?
3. Whether Metrobanks fourth-party complaint against Chuas estate should be allowed?
HELD:
1. yes
2. yes
3. yes
The Courts Ruling

The Present Petition Complies With Section 4, Rule 45 of the Rules of Court
AMC posits that Metrobanks failure to append relevant AMC pleadings submitted to the RTC
and to the CA violated Section 4, Rule 45 of the Rules of Court, and is a sufficient ground to
dismiss the petition under Section 5, Rule 45 of the Rules of Court.
We disagree with AMCs position.
In F.A.T. Kee Computer Systems, Inc. v. Online Networks International, Inc., Online Networks
International, Inc. similarly assailed F.A.T. Kee Computer Systems, Inc.s failure to attach the
transcript of stenographic notes (TSN) of the RTC proceedings, and claimed this omission to be a
violation of Section 4, Rule 45 of the Rules of Court that warranted the petitions dismissal. The
Court held that the defect was not fatal, as the TSN of the proceedings before the RTC forms part
of the records of the case. Thus, there was no incurable omission that warranted the outright
dismissal of the petition.
The Court significantly pointed out in F.A.T. Kee that the requirement in Section 4, Rule 45 of
the Rules of Court is not meant to be an absolute rule whose violation would automatically lead
to the petitions dismissal. The Rules of Court has not been intended to be totally rigid. In fact,
the Rules of Court provides that the Supreme Court "may require or allow the filing of such
pleadings, briefs, memoranda or documents as it may deem necessary within such periods and
under such conditions as it may consider appropriate"; and "[i]f the petition is given due course,
the Supreme Court may require the elevation of the complete record of the case or specified parts
thereof within fifteen (15) days from notice." These provisions are in keeping with the overriding
standard that procedural rules should be liberally construed to promote their objective and to
assist the parties in obtaining a just, speedy and inexpensive determination of every action or
proceeding.
Under this guiding principle, we do not see Metrobanks omission to be a fatal one that should
warrant the petitions outright dismissal. To be sure, the omission to submit the adverse partys
pleadings in a petition before the Court is not a commendable practice as it may lead to an
unduly biased narration of facts and arguments that masks the real issues before the Court. Such
skewed presentation could lead to the waste of the Courts time in sifting through the maze of the
parties narrations of facts and arguments and is a danger the Rules of Court seeks to avoid.
Our examination of Metrobanks petition shows that it contains AMCs opposition to its motion
to admit fourth-party complaint among its annexes. The rest of the pleadings have been
subsequently submitted as attachments in Metrobanks Reply. A reading of these pleadings
shows that their arguments are the same as those stated in the orders of the trial court and the
Court of Appeals. Thus, even if Metrobanks petition did not contain some of AMCs pleadings,
the Court still had the benefit of a clear narration of facts and arguments according to both
parties perspectives. In this broader view, the mischief that the Rules of Court seeks to avoid has
not really been present. If at all, the omission is not a grievous one that the spirit of liberality
cannot address.
The Merits of the Main Issue
The main issue poses to us two essential points that must be addressed. First, are quasi-contracts
included in claims that should be filed pursuant to Rule 86, Section 5 of the Rules of Court?
Second, if so, is Metrobanks claim against the Estate of Jose Chua based on a quasi-contract?
Quasi-contracts
claims
are
that
should
included
be
filed
in
under
Rule
86, Section 5 of the Rules of Court

In Maclan v. Garcia, Gabriel Maclan filed a civil case to recover from Ruben Garcia the
necessary expenses he spent as possessor of a piece of land. Garcia acquired the land as an heir
of its previous owner. He set up the defense that this claim should have been filed in the special
proceedings to settle the estate of his predecessor. Maclan, on the other hand, contended that his
claim arises from law and not from contract, express or implied. Thus, it need not be filed in the
settlement of the estate of Garcias predecessor, as mandated by Section 5, Rule 87 of the Rules
of Court (now Section 5, Rule 86).
The Court held under these facts that a claim for necessary expenses spent as previous possessor
of the land is a kind of quasi-contract. Citing Leung Ben v. OBrien, it explained that the term
"implied contracts," as used in our remedial law, originated from the common law where
obligations derived from quasi-contracts and from law are both considered as implied contracts.
Thus, the term quasi-contract is included in the concept "implied contracts" as used in the Rules
of Court. Accordingly, liabilities of the deceased arising from quasi-contracts should be filed as
claims in the settlement of his estate, as provided in Section 5, Rule 86 of the Rules of Court.
Metrobanks
fourth-party
complaint
is
based on quasi-contract
Both the RTC and the CA described Metrobanks claim against Chuas estate as one based on
quasi-contract. A quasi-contract involves a juridical relation that the law creates on the basis of
certain voluntary, unilateral and lawful acts of a person, to avoid unjust enrichment. The Civil
Code provides an enumeration of quasi-contracts, but the list is not exhaustive and merely
provides examples.
According to the CA, Metrobanks fourth-party complaint falls under the quasi-contracts
enunciated in Article 2154 of the Civil Code. Article 2154 embodies the concept "solutio
indebiti" which arises when something is delivered through mistake to a person who has no right
to demand it. It obligates the latter to return what has been received through mistake.
Solutio indebiti, as defined in Article 2154 of the Civil Code, has two indispensable requisites:
first, that something has been unduly delivered through mistake; and second, that something was
received when there was no right to demand it.
In its fourth-party complaint, Metrobank claims that Chuas estate should reimburse it if it
becomes liable on the checks that it deposited to Ayala Lumber and Hardwares account upon
Chuas instructions.
This fulfills the requisites of solutio indebiti. First, Metrobank acted in a manner akin to a
mistake when it deposited the AMC checks to Ayala Lumber and Hardwares account; because of
Chuas control over AMCs operations, Metrobank assumed that the checks payable to AMC
could be deposited to Ayala Lumber and Hardwares account. Second, Ayala Lumber and
Hardware had no right to demand and receive the checks that were deposited to its account;
despite Chuas control over AMC and Ayala Lumber and Hardware, the two entities are distinct,
and checks exclusively and expressly payable to one cannot be deposited in the account of the
other. This disjunct created an obligation on the part of Ayala Lumber and Hardware, through its
sole proprietor, Chua, to return the amount of these checks to Metrobank.
The Court notes, however, that its description of Metrobanks fourth-party complaint as a
claimclosely analogous to solutio indebiti is only to determine the validity of the lower courts
orders denying it. It is not an adjudication determining the liability of Chuas estate against
Metrobank. The appropriate trial court should still determine whether Metrobank has a lawful
claim against Chuas estate based on quasi-contract
Metrobanks
as
fourth-party
a
contingent
claims
Section
that
5,
claim,
falls
should
Rule
complaint,
86
within
be
of
filed
the
the
under
Rules
of
Court
A distinctive character of Metrobanks fourth-party complaint is its contingent nature the claim
depends on the possibility that Metrobank would be adjudged liable to AMC, a future event that
may or may not happen. This characteristic unmistakably marks the complaint as a contingent
one that must be included in the claims falling under the terms of Section 5, Rule 86 of the Rules
of Court:
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 expenses for the last sickness of
the decedent, and judgment for money against the decedent, must be filed within the time limited
in the notice. [italics ours]
Specific
86
provisions
of
general
the
provisions
of
Rules
Section
of
of
Court
Section
5,
Rule
prevail
over
11,
Rule
6 of the Rules of Court

Metrobank argues that Section 11, Rule 6 of the Rules of Court should apply because it
impleaded Chuas estate for reimbursement in the same transaction upon which it has been sued
by AMC. On this point, the Court supports the conclusion of the CA, to wit:
Notably, a comparison of the respective provisions of Section 11, Rule 6 and Section 5, Rule 86
of the Rules of Court readily shows that Section 11, Rule 6 applies to ordinary civil actions while
Section 5, Rule 86 specifically applies to money claims against the estate. The specific
provisions of Section 5, Rule 86 x x x must therefore prevail over the general provisions of
Section 11, Rule 6.
We read with approval the CAs use of the statutory construction principle of lex specialis
derogat generali, leading to the conclusion that the specific provisions of Section 5, Rule 86 of
the Rules of Court should prevail over the general provisions of Section 11, Rule 6 of the Rules
of Court; the settlement of the estate of deceased persons (where claims against the deceased
should be filed) is primarily governed by the rules on special proceedings, while the rules
provided for ordinary claims, including Section 11, Rule 6 ofthe Rules of Court, merely apply
suppletorily.
In sum, on all counts in the considerations material to the issues posed, the resolution points to
the affirmation of the assailed CA decision and resolution. Metrobank's claim in its fourth-party
complaint against Chua's estate is based on quasi-contract. It is also a contingent claim that
depends on another event. Both belong to the category of claims against a deceased person that
should be filed under Section 5, Rule 86 of the Rules of Comi and, as such, should have been so
filed in Special Proceedings No. 99-0023.
WHEREFORE, premises considered, we hereby DENY the petition for lack of merit. The
decision of the Court of Appeals dated August 25, 2005, holding that the Regional Trial Court of
Quezon City, Branch 80, did not commit grave abuse of discretion in denying Metropolitan Bank
& Trust Company's motion for leave to admit fourth-party complaint Is
AFFIRMED. Costs against Metropolitan Bank & Trust Company.
II.III
G.R. No. 170498
METROPOLITAN
January 9, 2013
BANK
&
TRUST
COMPANY, Petitioner,
vs. ABSOLUTE MANAGEMENT CORPORATION, Respondent.

DECISION
BRION, J.:
We resolve petitioner Metropolitan Bank & Trust Company's (Metro bank's) petition for review
on certiorari1seeking the reversal of the decision2 dated August 25, 2005 and the resolution3 dated
November 17, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 86336. The assailed
decision affirmed the order4 dated May 7, 2004 of the Regional Trial Court (RTC) of Quezon
City, Branch 80. The RTC had denied the admission of Metrobank's Fourth-Party
Complaint5 against the Estate of Jose L. Chua for being a money claim that falls under Section 5,
Rule 86 of the Rules of Court; the claim should have been filed in the pending judicial settlement
of Chuas estate before the RTC of Pasay City. The CA affirmed the RTCs order based on the
same ground.
Factual Antecedents
On October 5, 2000, Sherwood Holdings Corporation, Inc. (SHCI) filed a complaint for sum of
money against Absolute Management Corporation (AMC). The complaint was docketed as Civil
Case No. Q-00-42105 and was assigned to the RTC of Quezon City, Branch 80.6
SHCI alleged in its complaint that it made advance payments to AMC for the purchase of 27,000
pieces of plywood and 16,500 plyboards in the sum of P12,277,500.00, covered by Metrobank
Check Nos. 1407668502, 140768507, 140768530, 140768531, 140768532, 140768533 and
140768534. These checks were all crossed, and were all made payable to AMC. They were given
to Chua, AMCs General Manager, in 1998.7
Chua died in 1999, 8 and a special proceeding for the settlement of his estate was commenced
before the RTC of Pasay City. This proceeding was pending at the time AMC filed its answer
with counterclaims and third-party complaint.9
SHCI made demands on AMC, after Chuas death, for allegedly undelivered items
worth P8,331,700.00. According to AMC, these transactions could not be found in its records.
Upon investigation, AMC discovered that in 1998, Chua received from SHCI 18 Metrobank
checks worth P31,807,500.00. These were all payable to AMC and were crossed or "for payees
account only."10
In its answer with counterclaims and third-party complaint, 11 AMC averred that it had no
knowledge of Chuas transactions with SHCI and it did not receive any money from the latter.
AMC also asked the RTC to hold Metrobank liable for the subject checks in case it is adjudged
liable to SHCI.
Metrobank filed a motion for bill of particulars,12 seeking to clarify certain ambiguous statements
in AMCs answer. The RTC granted the motion but AMC failed to submit the required bill of
particulars. Hence, Metrobank filed a motion to strike out the third-party complaint.13
In the meantime, Metrobank filed a motion to dismiss14 against AMC on the ground that the latter
engaged in prohibited forum shopping. According to Metrobank, AMCs claim against it is the
same claim that it raised against Chuas estate in Special Proceedings No. 99-0023 before the
RTC of Pasay City, Branch 112. The RTC subsequently denied this motion.15
The RTC of Quezon City opted to defer consideration 16 of Metrobanks motion to strike out
third-party complaint17and it instead granted AMCs motion for leave to serve written
interrogatories on the third-party defendant.18While Metrobank filed its answer to the written
interrogatories, AMC was again directed by the RTC, in an order19dated August 13, 2003, to
submit its bill of particulars. Instead, AMC filed a motion for reconsideration 20 which was denied
in an order21 dated October 28, 2003. AMC still did not file its bill of particulars. The RTC, on
the other hand, did not act on Metrobanks motion to strike out AMCs third-party complaint.22
In its answer23 dated December 1, 2003, Metrobank admitted that it deposited the checks in
question to the account of Ayala Lumber and Hardware, a sole proprietorship Chua owned and
managed. The deposit was allegedly done with the knowledge and consent of AMC. According
to
Metrobank, Chua then gave the assurance that the arrangement for the handling of the checks
carried AMCs consent. Chua also submitted documents showing his position and interest in
AMC. These documents, as well as AMCs admission in its answer that it allowed Chua to
manage AMC with a relative free hand, show that it knew of Chuas arrangement with
Metrobank. Further, Chuas records show that the proceeds of the checks were remitted to AMC
which cannot therefore now claim that it did not receive these proceeds.
Metrobank also raised the defense of estoppel. According to Metrobank, AMC had knowledge of
its arrangements with Chua for several years. Despite this arrangement, AMC did not object to
nor did it call the attention of Metrobank about Chuas alleged lack of authority to deposit the
checks in Ayala Lumber and Hardwares account. At this point, AMC is already estopped from
questioning Chuas authority to deposit these checks in Ayala Lumber and Hardwares account.
Lastly, Metrobank asserted that AMC gave Chua unbridled control in managing AMCs affairs.
This measure of control amounted to gross negligence that was the proximate cause of the loss
that AMC must now bear.
Subsequently, Metrobank filed a motion for leave to admit fourth-party complaint 24 against
Chuas estate. It alleged that Chuas estate should reimburse Metrobank in case it would be held
liable in the third-party complaint filed against it by AMC.
The RTCs Ruling

In an order25 dated May 7, 2004, the RTC denied Metrobanks motion. It likewise denied
Metrobanks motion for reconsideration in an order26 dated July 7, 2004.
The RTC categorized Metrobanks allegation in the fourth-party complaint as a "cobro de lo
indebido"27 a kind of quasi-contract that mandates recovery of what has been improperly paid.
Quasi-contracts fall within the concept of implied contracts that must be included in the claims
required to be filed with the judicial settlement of the deceaseds estate under Section 5, Rule 86
of the Rules of Court. As such claim, it should have been filed in Special Proceedings No. 990023, not before the RTC as a fourth-party complaint. The RTC, acting in the exercise of its
general jurisdiction, does not have the authority to adjudicate the fourth-party complaint. As a
trial court hearing an ordinary action, it cannot resolve matters pertaining to special proceedings
because the latter is subject to specific rules.
Metrobank responded to the RTC ruling by filing a petition for certiorari 28 under Rule 65 before
the CA.
The CAs Ruling
The CA affirmed the RTCs ruling that Metrobanks fourth-party complaint should have been
filed in Special Proceedings No. 99-0023.29 According to the CA, the relief that Metrobank
prayed for was based on a quasi-contract and was a money claim categorized as an implied
contract that should be filed under Section 5, Rule 86 of the Rules of Court.
Based on the statutory construction principle of lex specialis derogat generali, the CA held that
Section 5, Rule 86 of the Rules of Court is a special provision that should prevail over the
general provisions of Section 11, Rule 6 of the Rules of Court. The latter applies to money
claims in ordinary actions while a money claim against a person already deceased falls under the
settlement of his estate that is governed by the rules on special proceedings. If at all, rules for
ordinary actions only apply suppletorily to special proceedings.
The Present Petition
In its present petition for review on certiorari, 30 Metrobank asserts that it should be allowed to
file a fourth-party complaint against Chuas estate in the proceedings before the RTC; its fourthparty complaint was filed merely to enforce its right to be reimbursed by Chuas estate in case
Metrobank is held liable to AMC. Hence, Section 11, Rule 6 of the Rules of Court should apply.
AMC, in its comment, 31 maintains the line that the CA and the RTC rulings should be followed,
i.e., that Metrobanks claim is a quasi-contract that should be filed as a claim under Section 5,
Rule 86 of the Rules of Court.
AMC also challenges the form of Metrobanks petition for failure to comply with Section 4, Rule
45 of the Rules of Court. This provision requires petitions filed before the Supreme Court to be
accompanied by "such material portions of the record as would support the petition."
According to AMC, the petitions annexes are mostly Metrobanks pleadings and court issuances.
It did not append all relevant AMC pleadings before the RTC and the CA. For this reason, the
petition should have been dismissed outright.
Issues
The parties arguments, properly joined, present to us the following issues:
1) Whether the petition for review on certiorari filed by Metrobank before the Supreme
Court complies with Section 4, Rule 45 of the Rules of Court; and
2) Whether Metrobanks fourth-party complaint against Chuas estate should be allowed.
The Courts Ruling
The Present Petition Complies With Section 4, Rule 45 of the Rules of Court
AMC posits that Metrobanks failure to append relevant AMC pleadings submitted to the RTC
and to the CA violated Section 4, Rule 45 of the Rules of Court, 32 and is a sufficient ground to
dismiss the petition under Section 5, Rule 45 of the Rules of Court.33
We disagree with AMCs position.
In F.A.T. Kee Computer Systems, Inc. v. Online Networks International, Inc., 34 Online Networks
International, Inc. similarly assailed F.A.T. Kee Computer Systems, Inc.s failure to attach the
transcript of stenographic notes (TSN) of the RTC proceedings, and claimed this omission to be a
violation of Section 4, Rule 45 of the Rules of Court that warranted the petitions dismissal. The
Court held that the defect was not fatal, as the TSN of the proceedings before the RTC forms part
of the records of the case. Thus, there was no incurable omission that warranted the outright
dismissal of the petition.
The Court significantly pointed out in F.A.T. Kee that the requirement in Section 4, Rule 45 of
the Rules of Court is not meant to be an absolute rule whose violation would automatically lead
to the petitions dismissal.35 The Rules of Court has not been intended to be totally rigid. In fact,
the Rules of Court provides that the Supreme Court "may require or allow the filing of such
pleadings, briefs, memoranda or documents as it may deem necessary within such periods and
under such conditions as it may consider appropriate";36 and "[i]f the petition is given due course,
the Supreme Court may require the elevation of the complete record of the case or specified parts
thereof within fifteen (15) days from notice."37 These provisions are in keeping with the
overriding standard that procedural rules should be liberally construed to promote their objective
and to assist the parties in obtaining a just, speedy and inexpensive determination of every action
or proceeding.38
Under this guiding principle, we do not see Metrobanks omission to be a fatal one that should
warrant the petitions outright dismissal. To be sure, the omission to submit the adverse partys
pleadings in a petition before the Court is not a commendable practice as it may lead to an
unduly biased narration of facts and arguments that masks the real issues before the Court. Such
skewed presentation could lead to the waste of the Courts time in sifting through the maze of the
parties narrations of facts and arguments and is a danger the Rules of Court seeks to avoid.
Our examination of Metrobanks petition shows that it contains AMCs opposition to its motion
to admit fourth-party complaint among its annexes. The rest of the pleadings have been
subsequently submitted as attachments in Metrobanks Reply. A reading of these pleadings
shows that their arguments are the same as those stated in the orders of the trial court and the
Court of Appeals. Thus, even if Metrobanks petition did not contain some of AMCs pleadings,
the Court still had the benefit of a clear narration of facts and arguments according to both
parties perspectives. In this broader view, the mischief that the Rules of Court seeks to avoid has
not really been present. If at all, the omission is not a grievous one that the spirit of liberality
cannot address.
The Merits of the Main Issue
The main issue poses to us two essential points that must be addressed. First, are quasi-contracts
included in claims that should be filed pursuant to Rule 86, Section 5 of the Rules of Court?
Second, if so, is Metrobanks claim against the Estate of Jose Chua based on a quasi-contract?
Quasi-contracts
claims
are
that
should
included
be
filed
in
under
Rule
86, Section 5 of the Rules of Court

In Maclan v. Garcia,39 Gabriel Maclan filed a civil case to recover from Ruben Garcia the
necessary expenses he spent as possessor of a piece of land. Garcia acquired the land as an heir
of its previous owner. He set up the defense that this claim should have been filed in the special
proceedings to settle the estate of his predecessor. Maclan, on the other hand, contended that his
claim arises from law and not from contract, express or implied. Thus, it need not be filed in the
settlement of the estate of Garcias predecessor, as mandated by Section 5, Rule 87 of the Rules
of Court (now Section 5, Rule 86).
The Court held under these facts that a claim for necessary expenses spent as previous possessor
of the land is a kind of quasi-contract. Citing Leung Ben v. OBrien, 40 it explained that the term
"implied contracts," as used in our remedial law, originated from the common law where
obligations derived from quasi-contracts and from law are both considered as implied contracts.
Thus, the term quasi-contract is included in the concept "implied contracts" as used in the Rules
of Court. Accordingly, liabilities of the deceased arising from quasi-contracts should be filed as
claims in the settlement of his estate, as provided in Section 5, Rule 86 of the Rules of Court.41
Metrobanks
fourth-party
complaint
is
based on quasi-contract
Both the RTC and the CA described Metrobanks claim against Chuas estate as one based on
quasi-contract. A quasi-contract involves a juridical relation that the law creates on the basis of
certain voluntary, unilateral and lawful acts of a person, to avoid unjust enrichment. 42 The Civil
Code provides an enumeration of quasi-contracts,43 but the list is not exhaustive and merely
provides examples.44
According to the CA, Metrobanks fourth-party complaint falls under the quasi-contracts
enunciated in Article 2154 of the Civil Code.45 Article 2154 embodies the concept "solutio
indebiti" which arises when something is delivered through mistake to a person who has no right
to demand it. It obligates the latter to return what has been received through mistake.46
Solutio indebiti, as defined in Article 2154 of the Civil Code, has two indispensable requisites:
first, that something has been unduly delivered through mistake; and second, that something was
received when there was no right to demand it.47
In its fourth-party complaint, Metrobank claims that Chuas estate should reimburse it if it
becomes liable on the checks that it deposited to Ayala Lumber and Hardwares account upon
Chuas instructions.
This fulfills the requisites of solutio indebiti. First, Metrobank acted in a manner akin to a
mistake when it deposited the AMC checks to Ayala Lumber and Hardwares account; because of
Chuas control over AMCs operations, Metrobank assumed that the checks payable to AMC
could be deposited to Ayala Lumber and Hardwares account. Second, Ayala Lumber and
Hardware had no right to demand and receive the checks that were deposited to its account;
despite Chuas control over AMC and Ayala Lumber and Hardware, the two entities are distinct,
and checks exclusively and expressly payable to one cannot be deposited in the account of the
other. This disjunct created an obligation on the part of Ayala Lumber and Hardware, through its
sole proprietor, Chua, to return the amount of these checks to Metrobank.
The Court notes, however, that its description of Metrobanks fourth-party complaint as a
claimclosely analogous to solutio indebiti is only to determine the validity of the lower courts
orders denying it. It is not an adjudication determining the liability of Chuas estate against
Metrobank. The appropriate trial court should still determine whether Metrobank has a lawful
claim against Chuas estate based on quasi-contract.1wphi1
Metrobanks
as
fourth-party
a
contingent
claims
Section
that
5,
claim,
falls
should
Rule
complaint,
86
within
be
of
filed
the
the
under
Rules
of
Court
A distinctive character of Metrobanks fourth-party complaint is its contingent nature the claim
depends on the possibility that Metrobank would be adjudged liable to AMC, a future event that
may or may not happen. This characteristic unmistakably marks the complaint as a contingent
one that must be included in the claims falling under the terms of Section 5, Rule 86 of the Rules
of Court:
Sec. 5. Claims which must be filed under the notice. If not filed, barred; exceptions. All claims
due, not due, or contingent, all claims for funeral expenses and expenses for the last sickness of
the decedent, and judgment for money against the decedent, must be filed within the time limited
in the notice. [italics ours]
Specific
86
general
provisions
of
the
provisions
of
Rules
Section
of
of
Court
Section
5,
Rule
prevail
over
11,
Rule
6 of the Rules of Court

Metrobank argues that Section 11, Rule 6 of the Rules of Court should apply because it
impleaded Chuas estate for reimbursement in the same transaction upon which it has been sued
by AMC. On this point, the Court supports the conclusion of the CA, to wit:
Notably, a comparison of the respective provisions of Section 11, Rule 6 and Section 5, Rule 86
of the Rules of Court readily shows that Section 11, Rule 6 applies to ordinary civil actions while
Section 5, Rule 86 specifically applies to money claims against the estate. The specific
provisions of Section 5, Rule 86 x x x must therefore prevail over the general provisions of
Section 11, Rule 6.48
We read with approval the CAs use of the statutory construction principle of lex specialis
derogat generali, leading to the conclusion that the specific provisions of Section 5, Rule 86 of
the Rules of Court should prevail over the general provisions of Section 11, Rule 6 of the Rules
of Court; the settlement of the estate of deceased persons (where claims against the deceased
should be filed) is primarily governed by the rules on special proceedings, while the rules
provided for ordinary claims, including Section 11, Rule 6 ofthe Rules of Court, merely apply
suppletorily.49
In sum, on all counts in the considerations material to the issues posed, the resolution points to
the affirmation of the assailed CA decision and resolution. Metrobank's claim in its fourth-party
complaint against Chua's estate is based on quasi-contract. It is also a contingent claim that
depends on another event. Both belong to the category of claims against a deceased person that
should be filed under Section 5, Rule 86 of the Rules of Comi and, as such, should have been so
filed in Special Proceedings No. 99-0023.
WHEREFORE, premises considered, we hereby DENY the petition for lack of merit. The
decision of the Court of Appeals dated August 25, 2005, holding that the Regional Trial Court of
Quezon City, Branch 80, did not commit grave abuse of discretion in denying Metropolitan Bank
& Trust Company's motion for leave to admit fourth-party complaint Is
AFFIRMED. Costs against Metropolitan Bank & Trust Company.
Marianne Grace C. De Vera
Boston Equity Resources vs. Court of Appeals and Lolita Toledo

G. 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 [creditors] 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 petitioners 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
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
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 decedents
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 creditors 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.
DECISION
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 respondents petition
forcertiorari upon a finding that the trial court committed grave abuse of discretion in denying
respondents 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 Respondents 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 quos denial of [respondents] motion to dismiss was based on its finding that
[respondents] 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
xxxx
[Respondents] 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 petitioners 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 courts

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 courts orders denying respondents
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 respondents motion to dismiss. It, in fact, acted correctly when it issued
the questioned orders as respondents 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, respondents motion to dismiss was filed after petitioner has completed the
presentation of its evidence in the trial court,25 giving credence to petitioners and the trial courts
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 respondents 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 petitioners 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 respondents motion for reconsideration of the
denial of her motion to dismiss:cralavvonlinelawlibrary
As can be gleaned from the records, with the admission of plaintiffs 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
Respondents 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 respondents petition for certiorari, it likewise erred in ruling that
the trial court committed grave abuse of discretion when it denied respondents motion to
dismiss.
On whether or not respondent is estopped from
questioning 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 respondents motion to dismiss questioning the trial
courts 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 courts 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 respondents 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.
Petitioners 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
courts 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 9
EFFECT 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 15
MOTIONS
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 Serenos 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 petitioners 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 courts failure to acquire jurisdiction over ones 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 Serenos 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 Manuel
Toledo 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 respondents 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 petitioners 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
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 decedents
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 creditors 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
xxxx
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 [creditors] 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 respondents 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 as
party 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 debtors 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 defendantsappellants 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: t.hqw
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: t.hqw
On May 10, 1952, Numeriano Bautista, husband and father of the plaintiffsappellees, 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, plaintiffsappellees 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: t.hqw
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 extrajudicial 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 defendantsappellants 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:
It.hqw
THE COURT BELOW ERRED IN NOT SUSTAINING THE MOTION TO
DISMISS MOCION DE SOBRESIMIENTO) FILED BY THE DEFENDANTSAPPELLANTS ON OR ABOUT MAY, 1955, APPEARING ON PAGE 10 ET
SEQ. OF THE AMENDED RECORD ON APPEAL.
IIt.hqw
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.
IIIt.hqw
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.
IVt.hqw
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 t.hqw
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: t.hqw
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: t.hqw
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.1wph1.t
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 Agustins 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.
JOSEPHINE PAHAMOTANG and ELEANOR PAHAMOTANG-BASA, petitioners, vs.

THE PHILIPPINE NATIONAL BANK (PNB) and the HEIRS OF ARTURO
ARGUNA, respondents.
DECISION
GARCIA, J.:
Assailed and sought to be set aside in this appeal by way of a petition for review
on certiorari under Rule 45 of the Rules of Court are the following issuances of the Court of
Appeals inCA-G.R. CV No. 65290, to wit:
1. Decision dated March 20, 2002,[1] granting the appeal and reversing the appealed
August 7, 1998 decision of the Regional Trial Court at Davao City; and
2. Resolution dated November 20, 2002, denying herein petitioners' motion for
reconsideration.[2]
The factual background:
On July 1, 1972, Melitona Pahamotang died. She was survived by her husband Agustin
Pahamotang, and their eight (8) children, namely: Ana, Genoveva, Isabelita, Corazon, Susana,
Concepcion and herein petitioners Josephine and Eleonor, all surnamed Pahamotang.
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. The petition,
docketed as Special Case No. 1792, was raffled to Branch VI of said court, hereinafter referred
to as the intestate court.
In his petition, Agustin identified petitioners Josephine and Eleonor as among the heirs of
his deceased spouse. It appears that Agustin was appointed petitioners' judicial guardian in an
earlier case - Special Civil Case No. 1785 also of the CFI of Davao City, Branch VI.
On December 7, 1972, the intestate court issued an order granting Agustins petition.
On July 6, 1973, respondent Philippine National Bank (PNB) and Agustin executed
an Amendment of Real and Chattel Mortgages with Assumption of Obligation. It appears
that earlier, or on December 14, 1972, 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. Agustin signed
the document in behalf of (1) the estate of Melitona; (2) daughters Ana and Corazon; and (3) a
logging company named Pahamotang Logging Enterprises, Inc. (PLEI) which appeared to have
an interest in the properties of the estate. Offered as securities are twelve (12) parcels of
registered land, ten (10) of which are covered by transfer certificates of title (TCT) No. 2431,
7443, 8035, 11465, 21132, 4038, 24327, 24326, 31226 and 37786, all of the Registry of Deeds of
Davao City, while the remaining two (2) parcels by TCTs No. (3918) 1081 and (T-2947) 562 of
the Registry of Deeds of Davao del Norte and Davao del Sur, respectively.
On July 16, 1973, Agustin filed with the intestate court a Petition for Authority To
Increase Mortgage on the above mentioned properties of the estate.
In an Order dated July 18, 1973, the intestate court granted said petition.
On October 5, 1974, Agustin again filed with the intestate court another petition, Petition
for Declaration of Heirs And For Authority To Increase Indebtedness, whereunder he alleged
the necessity for an additional loan from PNB to capitalize the business of the estate, the
additional loan to be secured by additional collateral in the form of a parcel of land covered by
Original Certificate of Title (OCT) No. P-7131 registered in the name of Heirs of Melitona
Pahamotang. In the same petition, Agustin prayed the intestate court to declare him and Ana,
Genoveva, Isabelita, Corazon, Susana, Concepcion and herein petitioners Josephine and Eleonor
as the only heirs of Melitona.
In an Order of October 19, 1974, the intestate court granted Agustin authority to seek
additional loan from PNB in an amount not exceeding P5,000,000.00 to be secured by the land
covered by OCT No. P-7131 of the Registry of Deeds of Davao Oriental, but denied Agustins
prayer for declaration of heirs for being premature.
On October 22, 1974, a real estate mortgage contract for P4,500,000.00 was executed by
PNB and Agustin in his several capacities as: (1) administrator of the estate of his late wife; (2)
general manager of PLEI; (3) attorney-in-fact of spouses Isabelita Pahamotang and Orlando
Ruiz, and spouses Susana Pahamotang and Octavio Zamora; and (4) guardian of daughters
Concepcion and Genoveva and petitioners Josephine and Eleonor. Offered as securities for the
additional loan are three (3) parcels of registered land covered by TCTs No. T-21132, 37786 and
43264.
On February 19, 1980, Agustin filed with the intestate court a Petition (Request for
Judicial Authority To Sell Certain Properties of the Estate), therein praying for authority to
sell to Arturo Arguna the properties of the estate covered by TCTs No. 7443, 8035, 11465,
24326 and 31226 of the Registry of Deeds of Davao City, and also TCT No. (T-3918) T-1081 of
the Registry of Deeds of Davao del Norte.
On February 27, 1980, Agustin yet filed with the intestate court another petition, this time
a Petition To Sell the Properties of the Estate, more specifically referring to the property
covered by OCT No. P-7131, in favor of PLEI.
In separate Orders both dated February 25, 1980, the intestate court granted Agustin
authority to sell estate properties, in which orders the court also required all the heirs of Melitona
to give their express conformity to the disposal of the subject properties of the estate and to sign
the deed of sale to be submitted to the same court. Strangely, the two (2) orders were dated two
(2) days earlier than February 27, 1980, the day Agustin supposedly filed his petition.
In a motion for reconsideration, Agustin prayed the intestate court for the amendment of one
of its February 25, 1980 Orders by canceling the requirement of express conformity of the heirs
as a condition for the disposal of the aforesaid properties.
In its Order of January 7, 1981, the intestate court granted Agustins prayer.
Hence, on March 4, 1981, estate properties covered by TCTs No. 7443,11465, 24326,
31226, 8035, (T-2947) 662 and (T-3918) T-1081, were sold to respondent Arturo Arguna, while
the property covered by OCT No. P-7131 was sold to PLEI. Consequent to such sales, vendees
Arguna and PLEI filed witt the intestate court a motion for the approval of the corresponding
deeds of sale in their favor. And, in an Order dated March 9, 1981, the intestate court granted the
motion.
Thereafter, three (3) daughters of Agustin, namely, Ana, Isabelita and Corazon petitioned the
intestate court for the payment of their respective shares from the sales of estate properties,
which was granted by the intestate court.
Meanwhile, the obligation secured by mortgages on the subject properties of the estate was
never satisfied. Hence, on the basis of the real estate mortgage contracts dated July 6,
1973 and October 22, 1974, mortgagor PNB filed a petition for the extrajudicial foreclosure of
the mortgage.
Petitioner Josephine filed a motion with the intestate court for the issuance of an order
restraining PNB from extrajudicially foreclosing the mortgage. In its Order dated August 19,
1983, the intestate court denied Josephines motion. Hence, PNB was able to foreclose the
mortgage in its favor.
Petitioners Josephine and Eleanor, together with their sister Susana Pahamatong-Zamora,
filed motions with the intestate court to set aside its Orders of December 14, 1972 [Note: the
order dated July 18, 1973 contained reference to an order dated December 14, 1972 approving
the mortgage to PNB of certain properties of the estate], July 18, 1973, October 19,
1974 and February 25, 1980.
In an Order dated September 5, 1983, the intestate court denied the motions, explaining:
"Carefully analyzing the aforesaid motions and the grounds relied upon, as well as the opposition
thereto, the Court holds that the supposed defects and/or irregularities complained of are mainly
formal or procedural and not substantial, for which reason, the Court is not persuaded to still
disturb all the orders, especially that interests of the parties to the various contracts already
authorized or approved by the Orders sought to be set aside will be adversely affected.[3]
Such was the state of things when, on March 20, 1984, in the Regional Trial Court at Davao
City, petitioners Josephine and Eleanor, together with their sister Susana, filed their complaint
for Nullification of Mortgage Contracts and Foreclosure Proceedings and Damages against
Agustin, PNB, Arturo Arguna, PLEI, the Provincial Sheriff of Mati, Davao Oriental, the
Provincial Sheriff of Tagum, Davao del Norte and the City Sheriff of Davao City. In their
complaint, docketed as Civil Case No. 16,802 which was raffled to Branch 12 of the court, the
sisters Josephine, Eleanor and Susana prayed for the following reliefs:
"1.) The real estate mortgage contracts of July 6, 1973 and that of October 2, 1974, executed
by and between defendants PNB AND PLEI be declared null and void ab initio;
2.) Declaring the foreclosure proceedings conducted by defendants-sheriffs, insofar as they
pertain to the assets of the estate of Melitona L. Pahamotang, including the auction
sales thereto, and any and all proceedings taken thereunder, as null and void ab initio;
3.) Declaring the Deed of Absolute Sale, Doc. No. 473; Page No.96; Book No.VIII, Series
of 1981 of the Notarial Registry of Paquito G. Balasabas of Davao City evidencing the
sale/transfer of the real properties described therein to defendant Arturo S. Arguna, as
null and void ab initio;
4.) Declaring the Deed of Absolute Sale, Doc. No. 474; Page No. 96, Book No. VIII, series
of 1981 of the Notarial Registry of Paquito G. Balasabas of Davao City, evidencing the
sale/transfer of real properties to PLEI as null and void ab initio;
5.) For defendants to pay plaintiffs moral damages in such sums as may be found to be just
and equitable under the premises;
6.) For defendants to pay plaintiffs, jointly and severally, the expenses incurred in
connection with this litigation;
7.) For defendants to pay plaintiffs, jointly and severally attorney's fees in an amount to be
proven during the trial;
8.) For defendants to pay the costs of the suit.[4]
PNB moved to dismiss the complaint, which the trial court granted in its Order of January
11, 1985.
However, upon motion of the plaintiffs, the trial court reversed itself and ordered defendant
PNB to file its answer.
Defendant PNB did file its answer with counterclaim, accompanied by a cross-claim against
co-defendants Agustin and PLEI.
During the ensuing pre-trial conference, the parties submitted the following issues for the
resolution of the trial court, to wit:
"1. Whether or not the Real Estate Mortgage contracts executed on July 6, 1973 and October
2, 1974 (sic) by and between defendants Pahamotang Logging Enterprises, Inc. and the
Philippine National Bank are null and void?
2. Whether or not the foreclosure proceedings conducted by defendants-Sheriffs, insofar as
they affect the assets of the Estate of Melitona Pahamotang, including the public
auction sales thereof, are null and void?
3. Whether or not the Deed of Absolute Sale in favor of defendant Arturo Arguna entered as
Doc. No. 473; Page No. 96; Book No. VIII, series of 1981 of the Notarial Register of
Notary Public Paquito Balasabas is null and void?
4. Whether or not the Deed of Absolute Sale in favor of defendant Pahamotang Logging
Enterprises, Inc. entered as Doc. No. 474; Page No. 96; Book No. VIII, series of 1981
of the Notarial Register of Notary Public Paquito Balasabas is null and void?
5. On defendant PNB's cross-claim, in the event the mortgage contracts and the foreclosure
proceedings are declared null and void, whether or not defendant Pahamotang Logging
Enterprises, Inc. is liable to the PNB?
6. Whether or not the defendants are liable to the plaintiffs for damages?
7. Whether or not the plaintiffs are liable to the defendants for damages?[5]
With defendant Arturo Argunas death on October 31, 1990, the trial court ordered his
substitution by his heirs: Heirs of Arturo Alguna.
In a Decision dated August 7, 1998, the trial court in effect rendered judgment for the
plaintiffs. We quote the decisions dispositive portion:
"WHEREFORE, in view of all the foregoing, judgment is hereby rendered as follows:
1. Declaring the Mortgage Contracts of July 6, 1973 and October 22, 1974, as well as the
foreclosure proceedings, void insofar as it affects the share, interests and property rights of the
plaintiffs in the assets of the estate of Melitona Pahamotang, but valid with respect to the other
parties;
2. Declaring the deeds of sale in favor of defendants Pahamotang Logging Enterprises, Inc. and
Arturo Arguna as void insofar as it affects the shares, interests and property rights of herein
plaintiffs in the assets of the estate of Melitona Pahamotang but valid with respect to the other
parties to the said deeds of sale.
3. Denying all the other claims of the parties for lack of strong, convincing and competent
evidence.
No pronouncement as to costs.
SO ORDERED.[6]
From the aforementioned decision of the trial court, PNB, PLEI and the Heirs of Arturo
Arguna went on appeal to the Court of Appeals in CA-G.R. CV No. 65290. While the appeal
was pending, the CA granted the motion of Susana Pahamatong-Zamora to withdraw from the
case.
As stated at the threshold hereof, the Court of Appeals, in its Decision dated March 20,
2002,[7] reversed the appealed decision of the trial court and dismissed the petitioners complaint
in Civil Case No. 16,802, thus:
WHEREFORE, the appeal is hereby GRANTED. The assailed August 07, 1998 Decision
rendered by the Regional Trial Court of Davao City, Branch 12, is hereby REVERSED and SET
ASIDE and a new one is entered DISMISSING the complaint filed in Civil Case No. 16,802.
SO ORDERED.
The appellate court ruled that petitioners, while ostensibly questioning the validity of the
contracts of mortgage and sale entered into by their father Agustin, were essentially attacking
collaterally the validity of the four (4) orders of the intestate court in Special Case No. 1792,
namely:
1. Order dated July 18, 1973, granting Agustins Petition for Authority to Increase
Mortgage;
2. Order dated October 19, 1974, denying Agustins petition for declaration of heirs but
giving him authority to seek additional loan from PNB;
3. Order dated February 25, 1980, giving Agustin permission to sell properties of the
estate to Arturo Arguna and PLEI; and
4. Order dated January 7, 1981, canceling the requirement of express conformity by the
heirs as a condition for the disposal of estate properties.
To the appellate court, petitioners committed a fatal error of mounting a collateral attack on the
foregoing orders instead of initiating a direct action to annul them. Explains the Court of
Appeals:
"A null and void judgment is susceptible to direct as well as collateral attack. A direct attack
against a judgment is made through an action or proceeding the main object of which is to annul,
set aside, or enjoin the enforcement of such judgment, if not carried into effect; or if the property
has been disposed of, the aggrieved party may sue for recovery. A collateral attack is made when,
in another action to obtain a different relief, an attack on the judgment is made as an incident in
said action. This is proper only when the judgment, on its fact, is null and void, as where it is
patent that the court which rendered such judgment has no jurisdiction. A judgment void on its
face may also be attacked directly.
xxx xxx xxx
Perusing the above arguments and comparing them with the settled ruling, the plaintiffsappellees [now petitioners], we believe had availed themselves of the wrong remedy before the
trial court. It is clear that they are collaterally attacking the various orders of the intestate court in
an action for the nullification of the subject mortgages, and foreclosure proceedings in favor of
PNB, and the deeds of sale in favor of Arguna. Most of their arguments stemmed from their
allegations that the various orders of the intestate court were issued without a notification given
to them. An examination, however, of the July 18, 1973 order shows that the heirs of Melitona
have knowledge of the petition to increase mortgage filed by Agustin, thus:
`The petitioner testified that all his children including those who are of age have no objection to
this petition and, as matter of fact, Ana Pahamotang, one of the heirs of Melitona Pahamotang,
who is the vice-president of the logging corporation, is the one at present negotiating for the
increase of mortgage with the Philippine National Bank.'
The presumption arising from those statements of the intestate court is that the heirs were
notified of the petition for the increase of mortgage.
The same can be seen in the October 19, 1974 order:
`The records show that all the known heirs, namely Ana, Isabelita, Corazon, Susana, including
the incompetent Genoveva, and the minors Josephine, Eleanor and Concepcion all surnamed
were notified of the hearing of the petition.'
On the other hand, the February 25, 1980 order required Agustin to obtain first express
conformity from the heirs before the subject property be sold to Arguna. The fact that this was
reconsidered by the intestate court in its January 07, 1981 is of no moment. The questioned
orders are valid having been issued in accordance with law and procedure. The problem with the
plaintiffs-appellees is that, in trying to nullify the subject mortgages and the foreclosure
proceedings in favor of PNB and the deeds of sale in favor of Arguna, they are assailing the
aforesaid orders of the intestate court and in attacking the said orders, they attached documents
that they believe would warrant the conclusion that the assailed orders are null and void. This is a
clear collateral attack of the orders of the intestate court which is not void on its face and which
cannot be allowed in the present action. The defects alleged by the plaintiff-appellees are not
apparent on the face of the assailed orders. Their recourse is to ask for the declaration of nullity
of the said orders, not in a collateral manner, but a direct action to annul the same.[8]
The same court added that petitioners failure to assail said orders at the most opportune time
constitutes laches:
"In their complaint below, plaintiffs, appellees are assailing in their present action, four orders of
the intestate court namely: July 18, 1973, October 19, 1974, February 25, 1980 and January 07,
1981 orders which were then issued by Judge Martinez. It should be recalled that except for the
January 07, 1981 order, Judge Jacinto, upon taking over Sp. No. 1792, denied the motion of the
plaintiffs-appellees to set aside the aforesaid orders. Aside from their motion before Judge
Jacinto, nothing on the records would show that the plaintiffs-appellees availed of other remedies
to set aside the questioned orders. Further, the records would not show that the plaintiffsappellees appealed the order of Judge Jacinto. If an interval of two years, seven months and
ninety nine days were barred by laches, with more reason should the same doctrine apply to the
present case, considering that the plaintiffs-appellees did not avail of the remedies provided by
law in impugning the various orders of the intestate court. Thus, the questioned orders of the
intestate court, by operation of law became final. It is a fundamental principle of public policy in
every jural system that at the risk of occasional errors, judgments of courts should become final
at some definite time fixed by law (interest rei publicae ut finis sit litum). The very object of
which the courts were constituted was to put an end to controversies. Once a judgment or an
order of a court has become final, the issues raised therein should be laid to rest. To date, except
as to the present action which we will later discuss as improper, the plaintiff-appellees have not
availed themselves of other avenues to have the orders issued by Judge Martinez and Judge
Jacinto annulled and set aside. In the present case, when Judge Jacinto denied the motion of the
plaintiffs-appellees, the latter had remedies provided by the rules to assail such order. The ruling
by Judge Jacinto denying plaintiffs-appellees motion to set aside the questioned orders of Judge
Martinez has long acquired finality. It is well embedded in our jurisprudence, that judgment
properly rendered by a court vested with jurisdiction, like the RTC, and which has acquired
finality becomes immutable and unalterable, hence, may no longer be modified in any respect
except only to correct clerical errors or mistakes. Litigation must have and always has an end. If
not, judicial function will lose its relevance.
In time, petitioners moved for a reconsideration but their motion was denied by the appellate
court in its Resolution of November 20, 2002.
Hence, petitioners present recourse, basically praying for the reversal of the CA decision and
the reinstatement of that of the trial court.
We find merit in the petition.
It is petitioners posture that the mortgage contracts dated July 6, 1973 and October 22,
1974 entered into by Agustin with respondent PNB, as well as his subsequent sale of estate
properties to PLEI and Arguna on March 4, 1981, are void because they [petitioners] never
consented thereto. They assert that as heirs of their mother Melitona, they are entitled to notice of
Agustin's several petitions in the intestate court seeking authority to mortgage and sell estate
properties. Without such notice, so they maintain, the four orders of the intestate court datedJuly
18, 1973, October 19, 1974, February 25, 1980 and January 7, 1981, which allowed Agustin
to mortgage and sell estate properties, are void on account of Agustins non-compliance with the
mandatory requirements of Rule 89 of the Rules of Court.
Prescinding from their premise that said orders are completely void and hence, could not
attain finality, petitioners maintain that the same could be attacked directly or collaterally,
anytime and anywhere.
For its part, respondent PNB asserts that petitioners cannot raise as issue in this proceedings
the validity of the subject orders in their desire to invalidate the contracts of mortgage entered
into by Agustin. To PNB, the validity of the subject orders of the intestate court can only be
challenged in a direct action for such purpose and not in an action to annul contracts, as the
petitioners have done. This respondent adds that the mortgage on the subject properties is valid
because the same was made with the approval of the intestate court and with the knowledge of
the heirs of Melitona, petitioners included.[9]
Upon the other hand, respondent Heirs of Arturo Arguna likewise claim that petitioners
knew of the filing with the intestate court by Agustin of petitions to mortgage and sell the estate
properties. They reecho the CAs ruling that petitioners are barred by laches in filing Civil Case
No. 16,802.[10]
As we see it, the determinative question is whether or not petitioners can obtain relief from
the effects of contracts of sale and mortgage entered into by Agustin without first initiating a
direct action against the orders of the intestate court authorizing the challenged contracts.
We answer the question in the affirmative.
It bears emphasizing that the action filed by the petitioners before the trial court in Civil
Case No. 16,802 is for the annulment of several contracts entered into by Agustin for and in
behalf of the estate of Melitona, namely: (a) contract of mortgage in favor of respondent PNB,
(b) contract of sale in favor of Arguna involving seven (7) parcels of land; and (c) contract of
sale of a parcel of land in favor of PLEI.
The trial court acquired jurisdiction over the subject matter of the case upon the allegations
in the complaint that said contracts were entered into despite lack of notices to the heirs of the
petition for the approval of those contracts by the intestate court.
Contrary to the view of the Court of Appeals, the action which petitioners lodged with the
trial court in Civil Case No. 16,802 is not an action to annul the orders of the intestate court,
which, according to CA, cannot be done collaterally. It is the validity of the contracts of
mortgage and sale which is directly attacked in the action.
And, in the exercise of its jurisdiction, the trial court made a factual finding in its decision of
August 7, 1998 that petitioners were, in fact, not notified by their father Agustin of the filing of
his petitions for permission to mortgage/sell the estate properties. The trial court made the correct
conclusion of law that the challenged orders of the intestate court granting Agustins petitions
were null and void for lack of compliance with the mandatory requirements of Rule 89 of the
Rules of Court, particularly Sections 2, 4, 7 thereof, which respectively read:
Sec. 2. When court may authorize sale, mortgage, or other encumbrance of realty to pay debts
and legacies through personalty not exhausted. - When the personal estate of the deceased is not
sufficient to pay the debts, expenses of administration, and legacies, or where the sale of such
personal estate may injure the business or other interests of those interested in the estate, and
where a testator has not otherwise made sufficient provision for the payment of such debts,
expenses, and legacies, the court, on the application of the executor or administrator and
on written notice to the heirs, devisees, and legatees residing in the Philippines, may authorize
the executor or administrator to sell, mortgage, or otherwise encumber so much as may be
necessary of the real estate, in lieu of personal estate, for the purpose of paying such debts,
expenses, and legacies, if it clearly appears that such sale, mortgage, or encumbrance would be
beneficial to the persons interested; and if a part cannot be sold, mortgaged, or otherwise
encumbered without injury to those interested in the remainder, the authority may be for the sale,
mortgage, or other encumbrance of the whole of such real estate, or so much thereof as is
necessary or beneficial under the circumstances.
Sec. 4. When court may authorize sale of estate as beneficial to interested persons. Disposal of
proceeds. - When it appears that the sale of the whole or a part of the real or personal estate, will
be beneficial to the heirs, devisees, legatees, and other interested persons, the court may, upon
application of the executor or administrator and on written notice to the heirs, devisees and
legatees who are interested in the estate to be sold, authorize the executor or administrator to sell
the whole or a part of said estate, although not necessary to pay debts, legacies, or expenses of
administration; but such authority shall not be granted if inconsistent with the provisions of a
will. In case of such sale, the proceeds shall be assigned to the persons entitled to the estate in the
proper proportions.
Sec. 7. Regulations for granting authority to sell, mortgage, or otherwise encumber estate. - The
court having jurisdiction of the estate of the deceased may authorize the executor or
administrator to sell personal estate, or to sell, mortgage, or otherwise encumber real estate; in
cases provided by these rules and when it appears necessary or beneficial, under the following
regulations:
(a) The executor or administrator shall file a written petition setting forth the debts due
from the deceased, the expenses of administration, the legacies, the value of the
personal estate, the situation of the estate to be sold, mortgaged, or otherwise
encumbered, and such other facts as show that the sale, mortgage, or other
encumbrance is necessary or beneficial;
(b) The court shall thereupon fix a time and place for hearing such petition,
and cause notice stating the nature of the petition, the reason for the same, and the
time and place of hearing, to be given personally or by mail to the persons
interested, and may cause such further notice to be given, by publication or
otherwise, as it shall deem proper; (Emphasis supplied).
xxx xxx xxx
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.
In Liu vs. Loy, Jr.,[13] while the decedent was still living, his son and attorney-in-fact sold in
behalf of the alleged decedent certain parcels of land to Frank Liu. After the decedent died, the
son sold the same properties to two persons. Upon an ex parte motion filed by the 2nd set of
buyers of estate properties, the probate court approved the sale to them of said properties.
Consequently, certificates of title covering the estate properties were cancelled and new titles
issued to the 2nd set of buyers. Frank Liu filed a complaint for reconveyance/ annulment of title
with the Regional Trial Court. The trial court dismissed the complaint and the Court of Appeals
affirmed the dismissal. When the case was appealed to us, we set aside the decision of the
appellate court and declared the probate court's approval of the sale as completely void due to the
failure of the 2nd set of buyers to notify the heir-administratrix of the motion and hearing for the
sale of estate property.
Clearly, 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.
Here, it appears that petitioners were never notified of the several petitions filed by Agustin
with the intestate court to mortgage and sell the estate properties of his wife.
According
to
the
trial
court,
the [P]etition
for
Authority
to
Increase
Mortgage and [P]etition for Declaration of Heirs and for Authority to Increase Indebtedness,
filed by Agustin on July 16, 1973 and October 5, 1974, respectively, do not contain information
that petitioners were furnished with copies of said petitions. Also, notices of hearings of those
petitions were not sent to the petitioners. [14] The trial court also found in Civil Case No. 16,802
that Agustin did not notify petitioners of the filing of his petitions for judicial authority to sell
estate properties to Arturo Arguna and PLEI.[15]
As it were, the appellate court offered little explanation on why it did not believe the trial
court in its finding that petitioners were ignorant of Agustins scheme to mortgage and sell the
estate properties.
Aside from merely quoting the orders of July 18, 1973 and October 19, 1974 of the
intestate court, the Court of Appeals leaves us in the dark on its reason for disbelieving the trial
court. The appellate court did not publicize its appraisal of the evidence presented by the parties
before the trial court in the matter regarding the knowledge, or absence thereof, by the petitioners
of Agustins petitions. The appellate court cannot casually set aside the findings of the trial court
without stating clearly the reasons therefor. Findings of the trial court are entitled to great weight,
and absent any indication to believe otherwise, we simply cannot adopt the conclusion reached
by the Court of Appeals.
Laches is negligence or omission to assert a right within a reasonable time, warranting the
presumption that the party entitled to assert it has either abandoned or declined the right. [16]The
essential elements of laches are: (1) conduct on the part of the defendant, or of one under whom
he claims, giving rise to the situation of which complaint is made and for which the complaint
seeks a remedy; (2) delay in asserting the complainant's rights, the complainant having had
knowledge or notice of the defendant's conduct and having been afforded an opportunity to
institute a suit; (3) lack of knowledge or notice on the part of the defendant that the complainant
would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in
the event relief is accorded to the complainant, or the suit is not held barred.[17]
In the present case, the appellate court erred in appreciating laches against petitioners. The
element of delay in questioning the subject orders of the intestate court is sorely lacking.
Petitioners were totally unaware of the plan of Agustin to mortgage and sell the estate properties.
There is no indication that mortgagor PNB and vendee Arguna had notified petitioners of the
contracts they had executed with Agustin. Although petitioners finally obtained knowledge of the
subject petitions filed by their father, and eventually challenged the July 18, 1973, October 19,
1974, February 25, 1980 and January 7, 1981 orders of the intestate court, it is not clear from the
challenged decision of the appellate court when they (petitioners) actually learned of the
existence of said orders of the intestate court. Absent any indication of the point in time when
petitioners acquired knowledge of those orders, their alleged delay in impugning the validity
thereof certainly cannot be established. And the Court of Appeals cannot simply impute laches
against them.
WHEREFORE, the assailed issuances of the Court of Appeals are hereby REVERSED and
SET ASIDE and the decision dated August 7, 1998 of the trial court in its Civil Case No. 16,802
REINSTATED.
SO ORDERED.
Panganiban, (Chairman), Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.
(90)JUANA PIMENTEL v. ENGRACIO PALANCA, 5 Phil. 436

Doctrine:
When a will has been proved, an administrator appointed, and the estate is in process of
settlement in the Court of First Instance in a special proceeding, as provided in Part II of the
Code of Civil Procedure, and no final decree has been entered therein, no ordinary action
between the parties can be maintained for the purpose of determining who are the heirs of the
deceased.
Facts:
Margarita Jose, a native and citizen of the Philippine Islands, died in the city of Amoy, China, on
the 4th of February, 1902. Her last will was duly proved and allowed in the Court of First
Instance of Manila on the 15th day of April, 1902, and on the same day Engracio Palanca was
duly
appointed
administrator
of
the
state
of
the
deceased.
Jose left all her property to her two children, Vicente Barreto, alias Tan-Teng, and Benito Carlos,
alias Doon. On the 8th day of July, 1902, Juana Pimentel and the mother of said Margarita Jose,
commenced this, an ordinary action, in the Court of First Instance of Manila, alleging that the
two children of Margarita Jose were illegitimate, and that she was the heir at law and entitled to
the whole state. The prayer of the original complaint was that the plaintiff be declared the lawful
heir
and
entitled
to
all
the
property
of
her
daughter,
Margarita
Jose.
Issue:
Whether or not an order of distribution is at the same time a declaration of heirs.
Ruling:
Yes. The order of distribution must also be at the same time a declaration of heirs since a
separate action for the declaration of heirship is not proper.
An examination of the prayer of the amended complaint above quoted will show that to grant it
would be to prevent the settlement of the estate of a deceased person in one proceeding in the
Court of First Instance. It would require, in the first place, the revocation of the judgment
probating the will. This relief can not be obtained in an ordinary action. The plaintiff not having
appealed from the order admitting the will to probate, as she had a right to do, that order is final
and conclusive. It does not, however, as the court below held, determine that the plaintiff is not
entitled to any part of the estate. The effect of such a decree was stated in the case of Castaeda
v. Alemany 1 (2 Off. Gaz., 366). The statements there made need not be repeated here. The
plaintiff in her amended complaint asks also that the appointment of Engracio Palanca be
annulled. This relief can not be granted in an ordinary action. The plaintiff had a right to appeal
from the order of the court appointing the administrator in this case, and not having exercised
that right such order is final and conclusive against her. The plaintiff also asks that the
administrator be required to render an account to her of his administration, and deposit in court
the money which he has in his possession. To grant this relief in an ordinary action between
parties would be to take away from the court having in charge the settlement of the estate the
express powers conferred upon it by law. To grant that part of the prayer of the amended
complaint which asks that the plaintiff be declared to be entitled to three fourths of the property
of the estate, would be to take away from the court administering the estate the power expressly
given to it by section 753 to determine that question in the proceeding relating to the estate.
G.R. No. L-2108 December 18, 1905

JUANA
PIMENTEL, plaintiff-appellant,
vs.
ENGRACIO PALANCA, as administrator of the estate of Margarita Jose, deceased, ET AL.,
defendants-appellees.
Del-Pan, Ortigas and Fisher for appellant.
M. Caringal and R. del Rosario for appellees.
WILLARD, J.:
Margarita Jose, a native and citizen of the Philippine Islands, died in the city of Amoy, China, on
the 4th of February, 1902. Her last will was duly proved and allowed in the Court of First
Instance of Manila on the 15th day of April, 1902, and on the same day Engracio Palanca was
duly appointed administrator of the estate of the deceased. He entered upon the discharge of his
duties as such administrator, and is still engaged therein. As far as appears from the bill of
exceptions the estate still remains unsettled, and no final decree has ever been entered therein.
By her said will Margarita Jose left all her property, amounting to over 50,000 pesos, to her two
children, Vicente Barreto, alias Tan-Keng, and Benito Carlos, alias Doon. On the 8th day of July,
1902, Juana Pimentel, the mother of said Margarita Jose, commenced this, an ordinary action, in
the Court of First Instance of Manila, alleging that the two children of Margarita Jose were
illegitimate, and that she was the heir at law and entitled to the whole estate. The prayer of the
original complaint was that the plaintiff be declared the lawful heir and entitled to all the
property of her daughter, Margarita Jose.
The defendant named in this original complaint was the "Estate of Doa Margarita Jose." The
summons in the action was served upon the administrator, Engracio Palanca. He appeared and
demurred, on the ground, among others, that there was a defect of parties, and that the two sons
should have been made defendants. This demurrer was overruled. He took an exception to the
overruling of the demurrer, and answered, denying generally the facts state in the complaint. A
trial was had in the Court of First Instance, and judgment was entered in favor of the defendant
on the 28th of July, 1903, the court holding that Vicente Barreto was the legitimate son of
Margarita Jose. Plaintiff made a motion for a new trial, which was granted on the 15th day of
September, 1903. On the 22nd day of January, 1904, the plaintiff presented an amended
complaint, naming as defendants Engracio Palanca, as administrator of the estate of margarita
Jose, and Benito Carlos and Vicente Barreto. The prayer of that complaint is as follows:
Por todo lo expuesto la demandante pide al Juzgado:
(a) Que la legalizacion de dicho testamento sea revocada y anulada;
(b) Que la institucion de los demandados Vicente barreto alias Tan-Keng y Benito
Carlos alias Doon como herederos en dicho testamento sea declarada nula por razon de la
pretericion de un heredero forzoso.
(c) Que la demandante sea declarada heredera de tres cuartas partes de los bienes de los
cuales era duea la citada Margarita Jose al tiempo de su fallecimiento.
(d) Que el nombramiento de administrador conferido por virtud del auto del Juzgado a
favor del demandado Engracio Palanca sea anulado;
(e) Que el demandado Engracio Palanca como tal administrador sea requerido a rendir
cuentas de su administracion y a depositar en el Juzgado todo el dinero que tenga en su
poder perteneciente a los herederos de la citada difunta;
(f) Que el Juzgado conceda a la demandante cualquier otro remedio adecuado y
equitativo.
The defendants all answered the amended complaint. A trial was had in the court below, and on
the 7th of April, 1904, judgement was entered in favor of the defendants. The court held that
Vicente Barreto was the legitimate son of Margarita Jose; that Benito Carlos was an illegitimate
son, and that Margarita Jose had a right to bequeath her property to these sons to the exclusion of
the plaintiff. He held also that the plaintiff, not having appealed from the probate of the will,
could not maintain this action.
We think that judgment should be entered for the defendants, but not upon the ground stated in
the decision of the court below.
The will of Margarita Jose was made and she died after the present Code of Civil Procedure went
into effect in these Islands. Her will was duly proved and allowed under the provisions of that
code. An administrator was duly appointed and he is now engaged in settling the affairs of the
estate. The important question in this case is, Can an ordinary action at law be maintained under
these circumstances by a person claiming to be an heir of the deceased against other persons,
also claiming to be such heirs, for the purpose of having their rights in the estate determined? We
think that such an action is inconsistent with the provisions of the new code, and that it can not
be maintained. Section 600 of the present Code of Civil Procedure provides that the will of an
inhabitant of the Philippine Islands shall be proved and his estate settled in the Court of First
Instance in which he resided at the time of his death. By section 641 when a will is proved it is
obligatory upon the court to appoint an executor or administrator. By virtue of other provisions
of the code this executor or administrator has, under the direction of the court, the full
administration and control of the deceased's property, real and personal, until a final decree is
made in accordance with section 753. During the period of administration the heirs, devisees,
and legatees have no right to interfere with the administrator or executor in the discharge of his
duties. They have no right, without his consent, to the possession of any part of the estate, real or
personal. The theory of the present system is that the property is all in the hands of the court, and
must stay there until the affairs of the deceased are adjusted and liquidated, and then the net
balance is turned over to the persons by law entitled to it. For the purpose of such administration
and distribution there is only one proceeding in the Court of First Instance. That proceeding is
not an action of law, but fall under Part II of the Code of Civil Procedure, and is a special
proceeding. After the estate is fully settled, and all the debts and expenses of administration are
paid, the law contemplates that there shall be a hearing or trial in this proceeding in the Court of
First Instance for the purpose of determining who the parties are that are entitled to the estate in
the hands of the executor or administrator for distribution, and after such hearing or trial it is
made the duty of the court to enter a decree or final judgment, in which decree, according to
section 753, the court "shall assign the residue of the estate to the persons entitled to the same,
and in its order the court shall name the persons and proportions or parts to which each is
entitled." (See also sec. 782 of the Code of Civil Procedure.) By section 704 it is expressly
provided that no action shall be maintained by an heir or devisee against an executor or
administrator for the recovery of the possession or ownership of lands until there is a decree of
the court assigning such lands to such heir or devisee, or until the time allowed for paying debts
has expired.
It seems clear from these provisions of the law that while the estate is being settled in the Court
of First Instance in a special proceeding, no ordinary action can be maintained in that court, or in
any other court, by a person claiming to be the heir, against the executor or against other persons
claiming to be heirs, for the purpose of having the rights of the plaintiff in the estate determined.
The very purpose of the trial or hearing provided for in section 753 is to settle and determine
those questions, and until they are settled and determined in that proceeding and under that
section no action such as the present one can be maintained.
An examination of the prayer of the amended complaint above quoted will show that to grant it
would be to prevent the settlement of the estate of a deceased person in one proceeding in the
Court of First Instance. It would require, in the first place, the revocation of the judgment
probating the will. This relief can not be obtained in an ordinary action. The plaintiff not having
appealed from the order admitting the will to probate, as she had a right to do, that order is final
and conclusive. It does not, however, as the court below held, determine that the plaintiff is not
entitled to any part of the estate. The effect of such a decree was stated in the case of
Castaedavs. Alemany 1 (2 Off. Gaz., 366). The statements there made need not be repeated
here. The plaintiff in her amended complaint asks also that the appointment of Engracio Palanca
be annulled. This relief can not be granted in an ordinary action. The plaintiff had a right to
appeal from the order of the court appointing the administrator in this case, and not having
exercised that right such order is final and conclusive against her. The plaintiff also asks that the
administrator be required to render an account to her of his administration, and deposit in court
the money which he has in his possession. To grant this relief in an ordinary action between
parties would be to take away from the court having in charge the settlement of the estate the
express powers conferred upon it by law. To grant that part of the prayer of the amended
complaint which asks that the plaintiff be declared to be entitled to three-fourths of the property
of the estate, would be to take away from the court administering the estate the power expressly
given to it by section 753 to determine that question in the proceeding relating to the estate.
The judgment of the court below is reversed, and after the expiration of twenty days judgment
should be entered in accordance herewith and the case remanded to the court below, with
instructions to dismiss the same, with costs, but without prejudice to the right of the plaintiff to
present her claims in the special proceeding relating to the administration of the estate, when the
final decree is made therein under section 753. No costs will be allowed in this court. So ordered.
Johnson and Carson, JJ., concur.
Separate Opinions
ARELLANO, C.J., and MAPA, J., concurring:

In view of sections 753 and 782, we agree with the preceding opinion on the ground therein set
forth:
While the estate is being settled in the Court of First Instance in a special proceeding, no
ordinary action can be maintained in that court, or in any other court, by a person
claiming to be the heir, against the executor or against other persons claiming to be heirs,
for the purpose of having the rights of the plaintiff in the estate determined.
The purpose of this concurring opinion is to reserve the question as to any other action in
connection with the settlement of such estates not instituted during the period of administration
but independently and which may relate to rights to any part thereof, especially the action for
distribution which differs from the action of partition.
JUANITA
LOPEZ
GUILAS, petitioner,
vs.
JUDGE OF THE COURT OF FIRST INSTANCE OF PAMPANGA AND ALEJANDRO
LOPEZ respondents .
Doctrine:
The probate court loses jurisdiction over the settlement proceedings only upon payment of all
debts and expenses of the obligor and delivery of the entire estate to all the heirs and/or persons
entitled thereto.
Facts:
It appears from the records that Jacinta Limson de Lopez, of Guagua, Pampanga was married to
Alejandro Lopez y Siongco and they had no children.
On April 28, 1936, Jacinta executed a will instituting her husband Alejandro as her sole heir and
executor (pp. 20-21, rec.).
In an order dated April 23, 1960, the lower court approved a project of partition and directed that
the records of the case be sent to the archives, upon payment of the estate and inheritance taxes.
Issue:
Whether or not the probate court has jurisdiction over the issue.
Ruling:
The probate court loses jurisdiction of an estate under administration only after the payment of
all the debts and the remaining estate delivered to the heirs entitled to receive the same. The
finality of the approval of the project of partition by itself alone does not terminate the probate
proceeding (Timbol vs. Cano, 1 SCRA 1271, 1276, L-15445, April 29, 1961; Siguiong vs.
Tecson, 89 Phil., pp. 28-30). As long as the order of the distribution of the estate has not been
complied with, the probate proceedings cannot be deemed closed and terminated Siguiong vs.
Tecson, supra.); because a judicial partition is not final and conclusive and does not prevent the
heir from bringing an action to obtain his share, provided the prescriptive period therefor has not
elapsed (Mari vs. Bonilla, 83 Phil., 137). The better practice, however, for the heir who has not
received his share, is to demand his share through a proper motion in the same probate or
administration proceedings, or for re-opening of the probate or administrative proceedings if it
had already been closed, and not through an independent action, which would be tried by another
court or Judge which may thus reverse a decision or order of the probate on intestate court
already final and executed and re-shuffle properties long ago distributed and disposed of (Ramos
vs. Ortuzar, 89 Phil., 730, 741-742; Timbol vs. Cano, supra.; Jingco vs. Daluz, L-5107, April 24,
1953, 92 Phil. 1082; Roman Catholic vs. Agustines, L-14710, March 29, 1960, 107 Phil., 455,
460-461).
Section 1 of Rule 90 of the Revised Rules of Court of 1964 as worded, which secures for the
heirs or legatees the right to "demand and recover their respective shares from the executor or
administrator, or any other person having the same in his possession", re-states the aforecited
doctrines.
G.R. No. L-26695 January 31, 1972
JUANITA
LOPEZ
GUILAS, petitioner,
vs.
JUDGE OF THE COURT OF FIRST INSTANCE OF PAMPANGA AND ALEJANDRO
LOPEZ respondents .
Filemon Cajator for petitioner.
Eligio G. Lagman for respondent Alejandro Lopez.
MAKASIAR, J.:p
It appears from the records that Jacinta Limson de Lopez, of Guagua, Pampanga was married to
Alejandro Lopez y Siongco. They had no children.
On April 28, 1936, Jacinta executed a will instituting her husband Alejandro as her sole heir and
executor (pp. 20-21, rec.).
In a Resolution dated October 26, 1953 in Sp. Proc. No. 894 entitled "En el Asunto de la
Adopcion de la Menor Juanita Lopez y Limson" (pp. 92-94, 103, rec.), herein petitioner Juanita
Lopez, then single and now married to Federico Guilas, was declared legally adopted daughter
and legal heir of the spouses Jacinta and Alejandro. After adopting legally herein petitioner
Juanita Lopez, the testatrix Doa Jacinta did not execute another will or codicil so as to include
Juanita Lopez as one of her heirs.
In an order dated March 5, 1959 in Testate Proceedings No. 1426, the aforementioned will was
admitted to probate and the surviving husband, Alejandro Lopez y Siongco, was appointed
executor without bond by the Court of First Instance of Pampanga (Annexes "A" and "B", pp.
18-23, rec.). Accordingly, Alejandro took his oath of office as executor (Annex "C", p. 24, rec.).
Nevertheless, in a project of partition dated March 19, 1960 executed by both Alejandro Lopez
and Juanita Lopez Guilas, the right of Juanita Lopez to inherit from Jacinta was recognized and
Lots Nos. 3368 and 3441 (Jacinta's paraphernal property), described and embraced in Original
Certificate of Title No. 13092, both situated in Bacolor Pampanga Lot 3368 with an area of
68,141 square meters and Lot 3441 with an area of 163,231 square meters, then assessed
respectively at P3,070.00 and P5,800.00 (Annex "D", pp. 27-36, rec.) were adjudicated to
Juanita Lopez-Guilas as her share free from all liens, encumbrances and charges, with the
executor Alejandro Lopez, binding himself to free the said two parcels from such liens,
encumbrances and charges. The rest of the estate of the deceased consisting of 28 other parcels
of lands with a total assessed valuation of P69,020.00 and a combined area of 743,924.67 square
meters, as well as personal properties including a 1953 Buick car valued at P2,500.00 were
allotted to Don Alejandro who assumed all the mortgage liens on the estate (Annex "D", pp. 2537, rec.).
In an order dated April 23, 1960, the lower court approved the said project of partition and
directed that the records of the case be sent to the archives, upon payment of the estate and
inheritance taxes (Annex "E", p. 38, rec.). Upon ex-parte petition of the adjudicatees Alejandro
Lopez and Juanita Lopez-Guilas dated August 25, 1961 (Annex "F", pp. 39-40, rec.), the lower
court in an order dated August 28, 1961, approved the correction of clerical errors appearing in
the project of partition (Annex "G", p. 41, rec.).
On April 10, 1964, herein petitioner Juanita Lopez-Guilas filed a separate ordinary action to set
aside and annul the project of partition, which case was docketed as Civil Case 2539 entitled
"Juanita Lopez-Guilas vs. Alejandro Lopez" in the Court of First Instance of Pampanga, on the
ground of lesion, perpetration and fraud, and pray further that Alejandro Lopez be ordered to
submit a statement of accounts of all the crops and to deliver immediately to Juanita lots nos.
3368 and 3441 of the Bacolor Cadastre, which were allocated to her under the project of partition
(p. 132, rec.).
Meanwhile, in Testate Proceedings No. 1426, Juanita filed a petition dated July 20, 1964 praying
that Alejandro Lopez be directed to deliver to her the actual possession of said lots nos. 3368 and
3441 as well as the 1,216 caverns of palay that he collected from the ten (10) tenants or lessees
of the said two lots (Annex "H", pp. 42-44, rec.).
In his opposition dated August 5, 1964 to the said petition, Alejandro Lopez claims that, by
virtue of the order dated April 23, 1960 which approved the project of partition submitted by
both Alejandro and Juanita and directed that the records of the case be archived upon payment of
the estate and inheritance taxes, and the order of December 15, 1960 which "ordered closed and
terminated the present case", the testate proceedings had already been closed and terminated; and
that he ceased as a consequence to be the executor of the estate of the deceased; and that Juanita
Lopez is guilty of laches and negligence in filing the petition of the delivery of her share 4 years
after such closure of the estate, when she could have filed a petition for relief of judgment within
sixty (60) days from December 15, 1960 under Rule 38 of the old Rules of Court (Annex "I")
citing A. Austria vs. Heirs of Antonio Ventenilla, L-100808, Sept. 18, 1956 (pp. 45-48, rec.).
In her reply dated November 17, 1965 to said opposition, Juanita contends that the actual
delivery and distribution of the hereditary shares to the heirs, and not the order of the court
declaring as closed and terminated the proceedings, determines the termination of the probate
proceedings (citing Intestate estate of the deceased Mercedes Cano, Timbol vs. Cano, 59 O.G.
No. 30, pp. 46-73, April 29, 1961, where it was ruled that "the probate court loses jurisdiction of
an estate under administration only after the payment of all the taxes, and after the remaining
estate is delivered to the heirs entitled to receive the same"); that the executor Alejandro is
estopped from opposing her petition because he was the one who prepared, filed and secured
court approval of, the aforesaid project of partition, which she seeks to be implemented; that she
is not guilty of laches, because when she filed on July 20, 1964, her petition for he delivery of
her share allocated to her under the project of partition, less than 3 years had elapsed from
August 28, 1961 when the amended project of partition was approved, which is within the 5-year
period for the execution of judgment by motion (Annex "J", pp. 49-52, rec.).
In its order dated October 2, 1964, the lower court after a "pre-trial" stated that because the civil
action for the annulment of the project of partition was filed on April 13, 1964, before the filing
on July 2, 1964 of the petition for delivery of the shares of Juanita Lopez, "the parties have
agreed to suspend action or resolution upon the said petition for the delivery of shares until; after
the civil action aforementioned has been finally settled and decided", and forthwith set the civil
action for annulment for trial on November 25, and December 2, 1964 (Annex "K", pp. 53-54,
rec.).
On June 11, 1965, Juanita filed an amended complaint in Civil Case 2539 (pp. 78-110, rec.),
where she acknowledges the partial legality and validity of the project of partition insofar as the
allocation in her favor of the Lots Nos. 3368 and 3441, the delivery of which she is seeking (pp.
106-107, rec.).
In her motion dated November 17, 1965, Juanita sought the setting aside of the order dated
October 2, 1964 on the ground that while the said order considered her action for annulment of
the project of partition as a prejudicial question, her filing an amended complaint on June 11,
1965 in civil case No. 2539 wherein she admitted the partial legality and validity of the project of
partition with respect to the adjudication to her of the two lots as her share, rendered said civil
case No. 2539 no longer a prejudicial question to her petition of July 20, 1964 for the delivery of
her share (Annex "L", pp. 55-59, rec.).
Alejandro filed his opposition dated December 1, 1965 to the aforesaid motion of Juanita to set
aside the order dated October 2, 1964 (Annex "M", pp. 60-61, rec.), to which Juanita filed her
rejoinder dated December 6, 1965 wherein she stated among others that pursuant to the project of
partition, executor Alejandro secured the cancellation of OCT. No. 13093 covering the two
parcels of land adjudicated to her under the project of partition and the issuance in his exclusive
name on August 4, 1961 TCT No. 26638-R covering the said Lots Nos. 3368 and 3441 of the
Bacolor Cadastre (Annex "N", pp. 62-71, rec.).
In an order dated April 27, 1966, the lower court denied Juanita's motion to set aside the order of
October 2, 1964 on the ground that the parties themselves agreed to suspend resolution of her
petition for the delivery of her shares until after the civil action for annulment of the project of
partition has been finally settled and decided (Annex "O", p. 72, rec.).
Juanita filed a motion dated May 9, 1966 for the reconsideration of the order dated April 27,
1966 (Annex "P" pp. 73-77, rec.), to which Alejandro filed an opposition dated June 8, 1966
(Annex "Q", pp. 112-113, rec.).
Subsequently, Alejandro filed a motion dated July 25, 1966 praying that the palay deposited with
Fericsons and Ideal Rice Mill by the ten (10) tenants of the two parcels in question be delivered
to him (Annex "R", pp. 114-116, rec.),to which Juanita filed an opposition dated July 26, 1966
(Annex "S", pp. 117-121, rec.). In an order dated September 8, 1966, the lower court denied the
motion for reconsideration of the order dated April 27, 1966, and directed Fericsons Inc. and the
Ideal Rice Mills to deliver to Alejandro or his representative the 229 cavans and 46 kilos and 325
and 1/2 cavans and 23 kilos of palay respectively deposited with the said rice mills upon the
filing by Alejandro of a bond in the amount of P12,000.00 duly approved by the court (Annex
"T", pp. 122-127, rec.). Hence, this petition for certiorari and mandamus.
The position of petitioner Juanita Lopez-Guilas should be sustained and the writs prayed for
granted.
The probate court loses jurisdiction of an estate under administration only after the payment of
all the debts and the remaining estate delivered to the heirs entitled to receive the same. The
finality of the approval of the project of partition by itself alone does not terminate the probate
proceeding (Timbol vs. Cano, 1 SCRA 1271, 1276, L-15445, April 29, 1961; Siguiong vs.
Tecson, 89 Phil., pp. 28-30). As long as the order of the distribution of the estate has not been
complied with, the probate proceedings cannot be deemed closed and terminated Siguiong vs.
Tecson, supra.); because a judicial partition is not final and conclusive and does not prevent the
heir from bringing an action to obtain his share, provided the prescriptive period therefor has not
elapsed (Mari vs. Bonilla, 83 Phil., 137). The better practice, however, for the heir who has not
received his share, is to demand his share through a proper motion in the same probate or
administration proceedings, or for re-opening of the probate or administrative proceedings if it
had already been closed, and not through an independent action, which would be tried by another
court or Judge which may thus reverse a decision or order of the probate on intestate court
already final and executed and re-shuffle properties long ago distributed and disposed of (Ramos
vs. Ortuzar, 89 Phil., 730, 741-742; Timbol vs. Cano, supra.; Jingco vs. Daluz, L-5107, April 24,
1953, 92 Phil. 1082; Roman Catholic vs. Agustines, L-14710, March 29, 1960, 107 Phil., 455,
460-461).
Section 1 of Rule 90 of the Revised Rules of Court of 1964 as worded, which secures for the
heirs or legatees the right to "demand and recover their respective shares from the executor or
administrator, or any other person having the same in his possession", re-states the aforecited
doctrines.
The case of Austria vs. Heirs of Ventenilla (99 Phil. 1068) does not control the present
controversy; because the motion filed therein for the removal of the administratrix and the
appointment of a new administrator in her place was rejected by the court on the ground of
laches as it was filed after the lapse of about 38 years from October 5, 1910 when the court
issued an order settling and deciding the issues raised by the motion (L-10018, September 19,
1956, 99 Phil., 1069-1070). In the case at bar, the motion filed by petitioner for the delivery of
her share was filed on July 20, 1964, which is just more than 3 years from August 28, 1961 when
the amended project of partition was approve and within 5 years from April 23, 1960 when the
original project of partition was approved. Clearly, her right to claim the two lots allocated to her
under the project of partition had not yet expired. And in the light of Section 1 of Rule 90 of the
Revised Rules of Court of 1964 and the jurisprudence above cited, the order dated December 15,
1960 of the probate court closing and terminating the probate case did not legally terminate the
testate proceedings, for her share under the project of partition has not been delivered to her.
While it is true that the order dated October 2, 1964 by agreement of the parties suspended
resolution of her petition for the delivery of her shares until after the decision in the civil action
for the annulment of the project of partition (Civil Case 2539) she filed on April 10, 1964; the
said order lost its validity and efficacy when the herein petitioner filed on June 11, 1965 an
amended complaint in said Civil Case 2539 wherein she recognized the partial legality and
validity of the said project of partition insofar as the allocation in her favor of lots Nos. 3368 and
3441 in the delivery of which she has been insisting all along (pp. 106-107, rec.).
WHEREFORE, judgment is hereby rendered:
1. Granting the writs prayed for;
2. Setting aside the orders of the respondent court dated October 2, 1964 and April 27, 1966, as
null and void; and, without prejudice to the continuance of Civil Case No. 2539, which, by
reason of this decision, involves no longer Lots 3368 and 3441 of the Bacolor Cadastre, .
3. Directing.
(a) the Register of Deeds of Pampanga to cancel TCT No. 26638-R covering the
aforesaid lots Nos. 3368 and 3441 of the Bacolor Cadastre and to issue anew
Transfer Certificate of Title covering the said two lots in the name of herein
petitioner Juanita Lopez Guilas; and
(b) the respondent Alejandro Lopez
(1) to deliver to herein petitioner Juanita Lopez Guilas the possession of lots Nos.
3368 and 3441;
(2) to deliver and/or pay to herein, petitioner all the rents, crops or income
collected by him from said lots Nos. 3368 and 3441 from April 23, 1960 until the
possession of the two aforementioned lots is actually delivered to her, or their
value based on the current market price; and
(3) to pay the costs.
So ordered.
Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Castro, Fernando, Teehankee, Barredo
and Villamor, JJ., concur.

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Liggayu, Mc Anthony

G.R. No. 189121, July 31, 2013

Section 1, Rule 73 of the Rules of Court:

opposed the issuance of the letters of administration by filing an Opposition/Motion to Dismiss

CASE FULL TEXT:

THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THAT ELISEO

THE COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT AMELIA

The Courts Ruling

Sec. 2. Contents of petition for letters of administration. A petition for letters of

The jurisdictional facts;chanr0blesvirtualawlibrary

Special Proceeding No. M-3957. Records, Vol. I, pp. 1-9.

Penned by Judge Bonifacio Sanz Maceda. CA rollo, pp. 33-38.nadcralawlibrary

Rollo, pp. 32-33.

Jao v. Court of Appeals, 432 Phil. 160, 170 (2002).

Id. at 673.red cralawlibrary

Solinap v. Locsin, Jr., 423 Phil. 192, 199 (2001).

G.R. No. 204029, June 04, 2014

Section 1, Rule 74 of the Rules of Court :

CASE FULL TEXT:

By way of restitution, [petitioner] Avelina Abarientos Rebusquillo is hereby ordered to

4. Petitioner Salvador Orosco is a co-owner/possessor of a portion of the subject

Rollo, pp. 24-39.Penned by Associate Justice Franchito N. Diamante and concurred in by

Records, Folder 1, pp. 24-25.

CA rollo, pp. 77-78.

CA rollo, pp. 71-72.

Paragraph 1, Affidavit of Self-Adjudication, Annex 3 of the Complaint, records, p. 17.

See Heirs of Policronio Ureta Sr. v. Heirs of Liberato Ureta, id.

G.R. No. 173548, October 15, 2014

Rule 74, Section 4 of the Rules of Court provides:

A 4,634-square-meter parcel of land in Nueva Ecija mortgaged to respondent Philippine National

CASE FULL TEXT:

G.R. No. 173548, October 15, 2014

in collusion with his mother, Lydia Echaus-Andres, in executing a falsified document

Whether a valid title can be derived from a void title; and

Designated additional member per raffle dated October 13, 2014.

The petition was filed pursuant to Rule 45 of the Rules of Court.

Rollo, pp. 3435 and 58.

Id. at 34 and 58.

Id. at 3738, 5556, and 59.

Id. at 36, 38, 56, and 59.

Branch 37 of Regional Trial Court of Baloc, Sto. Domingo, Nueva Ecija.

Rollo, pp. 3637 and 55.

Id. at 35, 37, 55, and 59.

Id. at 36 and 55.

Id. at 35 and 54.

Id. at 37 and 55.

Id. at 38 and 56.

Id. at 3839 and 56.

Id. at 39 and 56.

Rollo, pp. 5462.

Rollo, pp. 3347.

418 Phil. 451 (2001) [Per J. Ynares-Santiago, First Division].

Rollo, pp. 20 and 156.

429 Phil. 225 (2002) [Per J. Panganiban, Third Division].

Rollo, pp. 134135.

RULES OF CIVIL PROCEDURE, Rule 45, sec.1.

Rollo, pp. 2627.

Id. at 1617 and 5960.

Rollo, pp. 2021.

Civil Code, art. 2085(2).

Civil Code, art. 1409(2).

See O. E. Williamson, Transaction-Cost Economics: The Governance of Contractual Relations,

Id. at 23 and 157158.