Spec Pro 1 of 53

G.R. No. 73864

May 7, 1992

TEODORO PALMES HERNAEZ, JR., represented by his mother

and natural guardian, EVELYN PALMES, petitioner,
vs.
HON. INTERMEDIATE APPELLATE COURT, TEODORO
HERNAEZ, SR., ESTRELLA G. HERNAEZ, FERDINAND R.
HERNAEZ, DOUGLAS F. HERNAEZ, ARLENE F. HERNAEZ,
WINSTON F. HERNAEZ, NIEL F. HERNAEZ, and MA. ESTRELLITA
F. HERNAEZ, respondents.
NOCON, J.:
This petition seeks the review of the decision dated November 6,
1985 of the Intermediate Appellate Court (now Court of Appeals) 1 in
AC-G.R. No. SP-05928, Teodoro G. Hernaez, et al. vs. Hon. Regina
G. Ordoez Benitez, et. al., which held as void the decision of the
Regional Trial Court of Manila, Branch XLVII, in Civil Case No. E02786 declaring petitioner Teodoro Palmes Hernaez, Jr. as the
recognized natural child of private respondent Teodoro G. Hernaez
and entitled to a P400.00 monthly support.
It appears from the records that on September 2, 1980, petitioner
represented by his mother and natural guardian, Evelyn Palmes,
filed a complaint with the then Juvenile and Domestic Court (now
Regional Trial Court) against Teodoro Hernaez for acknowledgment
and support with support pendente lite. A decision dated March 23,
1984 was rendered by said court, the dispositive portion of which
reads:
WHEREFORE, judgment is hereby rendered:
1.
Declaring plaintiff, Teodoro Palmes Hernaez, Jr., the
recognized natural child of defendant, Teodoro G. Hernaez;
2.
Ordering said defendant to give a monthly support of
P400.00 to the minor until he reaches the age of majority or
completes his education or training commencing February 10, 1979.
The total amount in arrears shall be paid in two equal installments,
the first, one (1) month after this Decision shall have become final
and executory; and the second, two (2) months after the first
installment. The monthly support for June, 1984 shall be paid within
the first five (5) days of July, 1984. Thereafter, the monthly support
shall be paid within the first five (5) days of the succeeding months,
which shall be deposited with the Cashier of the Regional Trial
Courts of Manila at City Hall, Manila, from whom plaintiff's mother or
her duly authorized representative may withdraw the same; and
3.
Ordering the defendant to give plaintiff the amount of
P2,000.00 for attorney's fees. 2
On June 29, 1984, Teodoro Hernaez filed a notice of appeal of said
decision which he received on May 31,1984.
As the appeal was filed beyond the reglementary period of 15 days
as mandated by Section 39 of Batas Pambansa 129, petitioner
moved to dismiss the appeal as the decision of the trial court has
become final and executory.
Realizing the defect in his notice of appeal, Teodoro Hernaez filed a
Motion to Give Due Course to Appeal or Petition for Relief on August
8, 1984 which was denied in the Order of September 12, 1984 on
the ground that the motion was filed out of time and the petition did
not comply with Section 3 of Rule 38 of the Revised Rules of Court.
3
On September 19, 1984, Teodoro Hernaez thru his new counsel,
filed another Petition for Relief from Judgment alleging that he was
not aware of the decision of the lower court. On the same date,
private respondent's wife, Estrella Hernaez, together with their six
children likewise filed a Petition for Relief from Judgment with Motion
to Intervene because they were not included as parties in the instant
case, which petitions and motion were denied in the order of
December 21, 1984 4 for lack of merit and on the ground that the
decision had already become final and executory.
From said order, private respondents appealed which was granted in
an order dated January 25, 1985.
Petitioner, on the other hand, filed a motion for reconsideration of the
order of January 25, 1985 which was also granted by the trial court
on February 20, 1985.

Private respondents then filed a motion for clarification inquiring as

to whether their appeal which was granted on January 25, 1986 was
subsequently denied because of the order of February 20, 1985. The
trial court issued an order declaring that there is no need for a
clarification.
On March 20, 1985, petitioner filed a motion to require private
respondent Teodoro Hernaez to deposit support in arrears or to be
cited for contempt.
During the hearing of the motion for contempt, private respondents'
counsel requested for 10 days within which to comply with the
questioned decision. However, on April 10, 1986, private
respondents, instead of complying with said decision, filed a petition
for certiorari, prohibition or mandamus or alternatively, an action for
the annulment of judgment with preliminary injunction with the
Intermediate Appellate Court, 5 which declared the decision of the
trial court null and void for lack of summons by publication being an
action in rem. 6
Their motion for reconsideration having been denied on February 21,
1986, petitioner instituted this Petition for Review.
It is petitioner's contention that the requirement of publication is not
necessary in an action for compulsory acknowledgment and support
of an illegitimate child since said action is not one of the instances
enumerated in Section 1 of Rule 72 of the Revised Rules of Court
requiring publication of the petition before jurisdiction can be
acquired by the Court. Under the "expressio unius est exclussio
alterius" principle on statutory construction, this action should be
considered a proceeding in personam.
We find merit in the petition.
An action for compulsory recognition of minor natural children is not
among cases of special proceedings mentioned in Section 1, Rule
72 of the Rules of Court. Consequently, such an action should be
governed by the rules on ordinary civil actions.
The case at bar does not fall under Rule 105 of the Rules of Court
since the same applies only to cases falling under Article 281 of the
Civil Code where there has been a voluntary recognition of the minor
natural child, i.e., prior recognition of the minor natural child in a
document other than a record of birth or a will, which is absent in the
instant case.
Private respondents' claim that notice of an action for compulsory
recognition should also be given to the wife and legitimate children
of the putative parent, Teodoro Hernaez, Sr., is unmeritorious. First
of all, in a case for compulsory recognition, the party in the best
position to oppose the same is the putative parent himself.
Secondly, implicit in both Articles 283 7 and 285 8 of the Civil Code
is the general rule that an action for compulsory recognition should
the brought against the putative father, 9 the exceptions being the
instances when either the putative parent died during the minority of
the child, or when after the death of the parent a document should
appear of which nothing had been heard and in which either or both
of the parents recognize the child, in which cases the action is
brought against the putative parent's heirs.
In fine, an action for compulsory recognition is an ordinary civil
action. Thus, service of summons on the putative parent shall be as
provided for under Rule 14. Said action shall be brought against the
putative parent only; his heirs may be made party defendants only
under the circumstances mentioned in Article 285.
WHEREFORE, the decision of the Court of Appeals is hereby
REVERSED and SET ASIDE, and the decision dated March 23,
1984 of the Regional Trial Court of Manila, Branch XLVII in Civil
Case No. E-02786 is hereby REINSTATED and AFFIRMED. Costs
against private respondents. SO ORDERED.

Spec Pro 2 of 53
G.R. No. 177703

January 28, 2008

VILMA G. ARRIOLA and ANTHONY RONALD G. ARRIOLA,

petitioners,
vs.
JOHN NABOR C. ARRIOLA, respondent.
DECISION
AUSTRIA-MARTINEZ, J.:

In the absence of any other declaration, obvious or otherwise, only

the land should be partitioned in accordance to[sic] the
aforementioned Decision as the house can not be said to have been
necessarily adjudicated therein. Thus, plaintiff can not be declared
as a co-owner of the same house without evidence thereof and due
hearing thereon.
The Decision of the Court having attained its finality, as correctly
pointed out, judgment must stand even at the risk that it might be
erroneous.

Before this Court is a Petition for Review on Certiorari under Rule 45

of the Rules of Court, assailing the November 30, 2006 Decision1
and April 30, 2007 Resolution2 of the Court of Appeals in CA-G.R.
SP No. 93570.

WHEREFORE, the Urgent Manifestation and Motion for Contempt of

Court filed by plaintiff is hereby DENIED for lack of merit.

The relevant facts are culled from the records.

The RTC, in its Order dated January 3, 2006, denied respondent's

Motion for Reconsideration.11

John Nabor C. Arriola (respondent) filed Special Civil Action No. 030010 with the Regional Trial Court, Branch 254, Las Pias City
(RTC) against Vilma G. Arriola and Anthony Ronald G. Arriola
(petitioners) for judicial partition of the properties of decedent Fidel
Arriola (the decedent Fidel). Respondent is the son of decedent
Fidel with his first wife Victoria C. Calabia, while petitioner Anthony is
the son of decedent Fidel with his second wife, petitioner Vilma.
On February 16, 2004, the RTC rendered a Decision, the dispositive
portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered:
1. Ordering the partition of the parcel of land covered by Transfer
Certificate of Title No. 383714 (84191) left by the decedent Fidel S.
Arriola by and among his heirs John Nabor C. Arriola, Vilma G.
Arriola and Anthony Ronald G. Arriola in equal shares of one-third
(1/3) each without prejudice to the rights of creditors or mortgagees
thereon, if any;
2. Attorney's fees in the amount of TEN THOUSAND (P10,000.00)
PESOS is hereby awarded to be reimbursed by the defendants to
the plaintiff;

SO ORDERED.10

Respondent filed with the CA a Petition for Certiorari12 where he

sought to have the RTC Orders set aside, and prayed that he be
allowed to proceed with the auction of the subject land including the
subject house.
In its November 30, 2006 Decision, the CA granted the Petition for
Certiorari, to wit:
WHEREFORE, the petition is GRANTED. The assailed orders dated
August 30, 2005 and January 3, 2006 issued by the RTC, in Civil
Case No. SCA 03-0010, are REVERSED and SET ASIDE, and the
sheriff is ordered to proceed with the public auction sale of the
subject lot covered by TCT No. 383714, including the house
constructed thereon.
SO ORDERED.13 (Emphasis supplied.)
Petitioners filed a motion for reconsideration but the CA denied the
same in its Resolution14 of April 30, 2007.
Hence, the present petition on the sole ground that the CA erred in
holding that the RTC committed grave abuse of discretion in denying
the motion for contempt of court.

3. Costs against the defendants.

SO ORDERED.3
The decision became final on March 15, 2004.4
As the parties failed to agree on how to partition among them the
land covered by TCT No. 383714 (subject land), respondent sought
its sale through public auction, and petitioners acceded to it.5
Accordingly, the RTC ordered the public auction of the subject land.6
The public auction sale was scheduled on May 31, 2003 but it had to
be reset when petitioners refused to include in the auction the house
(subject house) standing on the subject land.7 This prompted
respondent to file with the RTC an Urgent Manifestation and Motion
for Contempt of Court,8 praying that petitioners be declared in
contempt.
The RTC denied the motion in an Order9 dated August 30, 2005, for
the reason that petitioners were justified in refusing to have the
subject house included in the auction, thus:
The defendants [petitioners] are correct in holding that the house or
improvement erected on the property should not be included in the
auction sale.
A cursory reading of the aforementioned Decision and of the
evidence adduced during the ex-parte hearing clearly show that
nothing was mentioned about the house existing on the land subject
matter of the case. In fact, even plaintiff's [respondent's] initiatory
Complaint likewise did not mention anything about the house.
Undoubtedly therefore, the Court did not include the house in its
adjudication of the subject land because it was plaintiff himself who
failed to allege the same. It is a well-settled rule that the court can
not give a relief to that which is not alleged and prayed for in the
complaint.
To hold, as plaintiff argued, that the house is considered accessory
to the land on which it is built is in effect to add to plaintiff's [a] right
which has never been considered or passed upon during the trial on
the merits.

The assailed CA Decision and Resolution must be modified for

reasons other than those advanced by petitioners.
The contempt proceeding initiated by respondent was one for
indirect contempt. Section 4, Rule 71 of the Rules of Court
prescribes the procedure for the institution of proceedings for indirect
contempt, viz:
Sec. 4. How proceedings commenced. Proceedings for indirect
contempt may be initiated motu proprio by the court against which
the contempt was committed by an order or any other formal charge
requiring the respondent to show cause why he should not be
punished for contempt.
In all other cases, charges for indirect contempt shall be commenced
by a verified petition with supporting particulars and certified true
copies of documents or papers involved therein, and upon full
compliance with the requirements for filing initiatory pleadings for
civil actions in the court concerned. If the contempt charges arose
out of or are related to a principal action pending in the court, the
petition for contempt shall allege that fact but said petition shall be
docketed, heard and decided separately, unless the court in its
discretion orders the consolidation of the contempt charge and the
principal action for joint hearing and decision. (Emphases supplied.)
Under the aforecited second paragraph of the Rules, the
requirements for initiating an indirect contempt proceeding are a)
that it be initiated by way of a verified petition and b) that it should
fully comply with the requirements for filing initiatory pleadings for
civil actions. In Regalado v. Go,15 we held:
As explained by Justice Florenz Regalado, the filing of a verified
petition that has complied with the requirements for the filing of
initiatory pleading, is mandatory x x x:
This new provision clarifies with a regularity norm the proper
procedure for commencing contempt proceedings. While such
proceeding has been classified as special civil action under the
former Rules, the heterogenous practice tolerated by the courts, has
been for any party to file a motion without paying any docket or

Spec Pro 3 of 53
lawful fees therefore and without complying with the requirements for
initiatory pleadings, which is now required in the second paragraph
of this amended section.
xxxx

Thank you very much for accommodating us even if we are only

poor and simple people. We are very much pleased with the
decision of Presiding Judge Manuel B. Fernandez, Jr., RTC Br. 254,
Las Pias, on the sharing of one-third (1/3) each of a land covered
by Transfer Certificate of Title No. 383714 (84191) in Las Pias City.

Henceforth, except for indirect contempt proceedings initiated motu

propio by order of or a formal charge by the offended court, all
charges shall be commenced by a verified petition with full
compliance with the requirements therefore and shall be disposed in
accordance with the second paragraph of this section.

However, to preserve the sanctity of our house which is our

residence for more than twenty (20) years, we wish to request that
the 1/3 share of John Nabor C. Arriola be paid by the defendants
depending on the choice of the plaintiff between item (1) or item (2),
detailed as follows:

xxxx

(1) Swap with a 500-square meters [sic] lot located at Baras Rizal x
x x.

Even if the contempt proceedings stemmed from the main case over
which the court already acquired jurisdiction, the rules direct that the
petition for contempt be treated independently of the principal action.
Consequently, the necessary prerequisites for the filing of initiatory
pleadings, such as the filing of a verified petition, attachment of a
certification on non-forum shopping, and the payment of the
necessary docket fees, must be faithfully observed.
xxxx
The provisions of the Rules are worded in very clear and categorical
language. In case where the indirect contempt charge is not initiated
by the courts, the filing of a verified petition which fulfills the
requirements on initiatory pleadings is a prerequisite. Beyond
question now is the mandatory requirement of a verified petition in
initiating an indirect contempt proceeding. Truly, prior to the
amendment of the 1997 Rules of Civil Procedure, mere motion
without complying with the requirements for initiatory pleadings was
tolerated by the courts. At the onset of the 1997 Revised Rules of
Civil Procedure, however, such practice can no longer be
countenanced.16 (Emphasis ours.)
The RTC erred in taking jurisdiction over the indirect contempt
proceeding initiated by respondent. The latter did not comply with
any of the mandatory requirements of Section 4, Rule 71. He filed a
mere Urgent Manifestation and Motion for Contempt of Court, and
not a verified petition. He likewise did not conform with the
requirements for the filing of initiatory pleadings such as the
submission of a certification against forum shopping and the
payment of docket fees. Thus, his unverified motion should have
been dismissed outright by the RTC.
It is noted though that, while at first the RTC overlooked the
infirmities in respondent's unverified motion for contempt, in the end,
it dismissed the motion, albeit on substantive grounds. The trouble is
that, in the CA decision assailed herein, the appellate court
committed the same oversight by delving into the merits of
respondent's unverified motion and granting the relief sought therein.
Thus, strictly speaking, the proper disposition of the present petition
ought to be the reversal of the CA decision and the dismissal of
respondent's unverified motion for contempt filed in the RTC for
being in contravention of Section 4, Rule 71.
However, such simplistic disposition will not put an end to the
dispute between the parties. A seed of litigation has already been
sown that will likely sprout into another case between them at a later
time. We refer to the question of whether the subject house should
be included in the public auction of the subject land. Until this
question is finally resolved, there will be no end to litigation between
the parties. We must therefore deal with it squarely, here and now.
The RTC and the CA differed in their views on whether the public
auction should include the subject house. The RTC excluded the
subject house because respondent never alleged its existence in his
complaint for partition or established his co-ownership thereof.17 On
the other hand, citing Articles 440,18 44519 and 44620 of the Civil
Code, the CA held that as the deceased owned the subject land, he
also owned the subject house which is a mere accessory to the land.
Both properties form part of the estate of the deceased and are held
in co-ownership by his heirs, the parties herein. Hence, the CA
concludes that any decision in the action for partition of said estate
should cover not just the subject land but also the subject house.21
The CA further pointed out that petitioners themselves implicitly
recognized the inclusion of the subject house in the partition of the
subject land when they proposed in their letter of August 5, 2004, the
following swapping-arrangement:
Sir:

(2) Cash of P205,700.00 x x x.

x x x x.22
We agree that the subject house is covered by the judgment of
partition for reasons postulated by the CA. We qualify, however, that
this ruling does not necessarily countenance the immediate and
actual partition of the subject house by way of public auction in view
of the suspensive proscription imposed under Article 159 of The
Family Code which will be discussed forthwith.
It is true that the existence of the subject house was not specifically
alleged in the complaint for partition. Such omission notwithstanding,
the subject house is deemed part of the judgment of partition for two
compelling reasons.
First, as correctly held by the CA, under the provisions of the Civil
Code, the subject house is deemed part of the subject land. The
Court quotes with approval the ruling of the CA, to wit:
The RTC, in the assailed Order dated August 30, 2005 ratiocinated
that since the house constructed on the subject lot was not alleged
in the complaint and its ownership was not passed upon during the
trial on the merits, the court cannot include the house in its
adjudication of the subject lot. The court further stated that it cannot
give a relief to[sic] which is not alleged and prayed for in the
complaint.
We are not persuaded.
To follow the foregoing reasoning of the RTC will in effect render
meaningless the pertinent rule on accession. In general, the right to
accession is automatic (ipso jure), requiring no prior act on the part
of the owner or the principal. So that even if the improvements
including the house were not alleged in the complaint for partition,
they are deemed included in the lot on which they stand, following
the principle of accession. Consequently, the lot subject of judicial
partition in this case includes the house which is permanently
attached thereto, otherwise, it would be absurd to divide the
principal, i.e., the lot, without dividing the house which is
permanently attached thereto.23 (Emphasis supplied)
Second, respondent has repeatedly claimed that the subject house
was built by the deceased.24 Petitioners never controverted such
claim. There is then no dispute that the subject house is part of the
estate of the deceased; as such, it is owned in common by the
latter's heirs, the parties herein,25 any one of whom, under Article
49426 of the Civil Code, may, at any time, demand the partition of
the subject house.27 Therefore, respondent's recourse to the
partition of the subject house cannot be hindered, least of all by the
mere technical omission of said common property from the
complaint for partition.
That said notwithstanding, we must emphasize that, while we treat
the subject house as part of the co-ownership of the parties, we stop
short of authorizing its actual partition by public auction at this time.
It bears emphasis that an action for partition involves two phases:
first, the declaration of the existence of a state of co-ownership; and
second, the actual termination of that state of co-ownership through
the segregation of the common property.28 What is settled thus far
is only the fact that the subject house is under the co-ownership of
the parties, and therefore susceptible of partition among them.
Whether the subject house should be sold at public auction as
ordered by the RTC is an entirely different matter, depending on the
exact nature of the subject house.

Spec Pro 4 of 53
Respondent claims that the subject house was built by decedent
Fidel on his exclusive property.29 Petitioners add that said house
has been their residence for 20 years.30 Taken together, these
averments on record establish that the subject house is a family
home within the contemplation of the provisions of The Family Code,
particularly:
Article 152. The family home, constituted jointly by the husband and
the wife or by an unmarried head of a family, is the dwelling house
where they and their family reside, and the land on which it is
situated.
Article 153. The family home is deemed constituted on a house and
lot from the time it is occupied as a family residence. From the time
of its constitution and so long as any of its beneficiaries actually
resides therein, the family home continues to be such and is exempt
from execution, forced sale or attachment except as hereinafter
provided and to the extent of the value allowed by law. (Emphasis
supplied.)
One significant innovation introduced by The Family Code is the
automatic constitution of the family home from the time of its
occupation as a family residence, without need anymore for the
judicial or extrajudicial processes provided under the defunct Articles
224 to 251 of the Civil Code and Rule 106 of the Rules of Court.
Furthermore, Articles 152 and 153 specifically extend the scope of
the family home not just to the dwelling structure in which the family
resides but also to the lot on which it stands. Thus, applying these
concepts, the subject house as well as the specific portion of the
subject land on which it stands are deemed constituted as a family
home by the deceased and petitioner Vilma from the moment they
began occupying the same as a family residence 20 years back.31
It being settled that the subject house (and the subject lot on which it
stands) is the family home of the deceased and his heirs, the same
is shielded from immediate partition under Article 159 of The Family
Code, viz:
Article 159. The family home shall continue despite the death of one
or both spouses or of the unmarried head of the family for a period of
ten years or for as long as there is a minor beneficiary, and the heirs
cannot partition the same unless the court finds compelling reasons
therefor. This rule shall apply regardless of whoever owns the
property or constituted the family home. (Emphasis supplied.)
The purpose of Article 159 is to avert the disintegration of the family
unit following the death of its head. To this end, it preserves the
family home as the physical symbol of family love, security and unity
by imposing the following restrictions on its partition: first, that the
heirs cannot extra-judicially partition it for a period of 10 years from
the death of one or both spouses or of the unmarried head of the
family, or for a longer period, if there is still a minor beneficiary
residing therein; and second, that the heirs cannot judicially partition
it during the aforesaid periods unless the court finds compelling
reasons therefor. No compelling reason has been alleged by the
parties; nor has the RTC found any compelling reason to order the
partition of the family home, either by physical segregation or
assignment to any of the heirs or through auction sale as suggested
by the parties.
More importantly, Article 159 imposes the proscription against the
immediate partition of the family home regardless of its ownership.
This signifies that even if the family home has passed by succession
to the co-ownership of the heirs, or has been willed to any one of
them, this fact alone cannot transform the family home into an
ordinary property, much less dispel the protection cast upon it by the
law. The rights of the individual co-owner or owner of the family
home cannot subjugate the rights granted under Article 159 to the
beneficiaries of the family home.
Set against the foregoing rules, the family home -- consisting of the
subject house and lot on which it stands -- cannot be partitioned at
this time, even if it has passed to the co-ownership of his heirs, the
parties herein. Decedent Fidel died on March 10, 2003.32 Thus, for
10 years from said date or until March 10, 2013, or for a longer
period, if there is still a minor beneficiary residing therein, the family
home he constituted cannot be partitioned, much less when no
compelling reason exists for the court to otherwise set aside the
restriction and order the partition of the property.
The Court ruled in Honrado v. Court of Appeals33 that a claim for
exception from execution or forced sale under Article 153 should be
set up and proved to the Sheriff before the sale of the property at

public auction. Herein petitioners timely objected to the inclusion of

the subject house although for a different reason.
To recapitulate, the evidence of record sustain the CA ruling that the
subject house is part of the judgment of co-ownership and partition.
The same evidence also establishes that the subject house and the
portion of the subject land on which it is standing have been
constituted as the family home of decedent Fidel and his heirs.
Consequently, its actual and immediate partition cannot be
sanctioned until the lapse of a period of 10 years from the death of
Fidel Arriola, or until March 10, 2013.
It bears emphasis, however, that in the meantime, there is no
obstacle to the immediate public auction of the portion of the subject
land covered by TCT No. 383714, which falls outside the specific
area of the family home.
WHEREFORE, the petition is PARTLY GRANTED and the
November 30, 2006 Decision and April 30, 2007 Resolution of the
Court of Appeals are MODIFIED in that the house standing on the
land covered by Transfer Certificate of Title No. 383714 is
DECLARED part of the co-ownership of the parties John Nabor C.
Arriola, Vilma G. Arriola and Anthony Ronald G. Arriola but
EXEMPTED from partition by public auction within the period
provided for in Article 159 of the Family Code.
No costs.
SO ORDERED.

Spec Pro 5 of 53
G.R. No. 172263

July 9, 2008

SPOUSES AUTHER G. KELLEY, JR. and DORIS A. KELLEY,

Complainants,
vs.
PLANTERS PRODUCTS, INC. and JORGE A. RAGUTANA,1
Respondents.

(3) For debts secured by a mortgage on the premises before or after

such constitution; and
(4) For debts due to laborers, mechanics, architects, builders,
materialmen and others who have rendered service or furnished
material for the construction of the building.

RESOLUTION

xxx

CORONA, J.:

Article 160. When a creditor whose claim is not among those

mentioned in Article 155 obtains a judgment in his favor, and he has
reasonable grounds to believe that the family home is actually worth
more than the maximum amount fixed in Article 157, he may apply to
the court which rendered the judgment for an order directing the sale
of the property under execution. The court shall so order if it finds
that the actual value of the family home exceeds the maximum
amount allowed by law as of the time of its constitution. If the
increased actual value exceeds the maximum amount allowed by
law in Article 157 and results from subsequent voluntary
improvements introduced by the person or persons constituting the
family home, by the owner or owners of the property, or by any of the
beneficiaries, the same rule and procedure shall apply.

Petitioner Auther G. Kelley, Jr. (Auther) acquired agricultural

chemical products on consignment from respondent Planters
Products, Inc. (PPI) in 1989. Due to Authers failure to pay despite
demand, PPI filed an action for sum of money against him in the
Regional Trial Court of Makati City, Branch 57 (RTC Makati City).
This was docketed as Civil Case No. 91-904.
After trial on the merits, the RTC Makati City decided in favor of PPI
and issued a writ of execution. Pursuant thereto, respondent sheriff
Jorge A. Ragutana sold on execution real property covered by TCT
No. 15079 located in Naga City. A certificate of sale was issued in
favor of PPI as the highest bidder.

xxx
After being belatedly informed of the said sale, petitioners Auther
and his wife Doris A. Kelley (Doris) filed a motion to dissolve or set
aside the notice of levy in the RTC Makati City on the ground that
the subject property was their family home which was exempt from
execution. Petitioners motion was denied for failure to comply with
the three-day notice requirement.
Subsequently, petitioners filed a complaint for declaration of nullity of
levy and sale of the alleged family home with damages against
Ragutana and PPI in the Regional Trial Court of Naga City, Branch
19 (RTC Naga City). This was docketed as Civil Case No. 20000188. The case was, however, dismissed for lack of jurisdiction and
lack of cause of action. The dismissal was upheld by the CA.
Petitioners now come to us in this petition for review on certiorari
contending that the CA erred in upholding the dismissal of Civil Case
No. 2000-0188 by the RTC Naga City. They claim that Doris was a
stranger2 to Civil Case No. 91-904 (in the RTC Makati City) who
could not be forced to litigate therein.
Petitioners anchor their action in Civil Case No. 2000-0188 on their
contention that TCT No. 15079 is the Kelley family home. No doubt,
a family home is generally exempt from execution3 provided it was
duly constituted as such. There must be proof that the alleged family
home was constituted jointly by the husband and wife or by an
unmarried head of a family.4 It must be the house where they and
their family actually reside and the lot on which it is situated.5 The
family home must be part of the properties of the absolute
community or the conjugal partnership, or of the exclusive properties
of either spouse with the latters consent, or on the property of the
unmarried head of the family.6 The actual value of the family home
shall not exceed, at the time of its constitution, the amount of
P300,000 in urban areas and P200,000 in rural areas.7

xxx

xxx

The exemption is effective from the time of the constitution of the

family home as such and lasts as long as any of its beneficiaries
actually resides therein.9 Moreover, the debts for which the family
home is made answerable must have been incurred after August 3,
1988. Otherwise (that is, if it was incurred prior to August 3, 1988),
the alleged family home must be shown to have been constituted
either judicially or extrajudicially pursuant to the Civil Code.
The rule, however, is not absolute. The Family Code, in fact,
expressly provides for the following exceptions:
Article 155. The family home shall be exempt from execution, forced
sale or attachment except:
(1) For non-payment of taxes;
(2) For debts incurred prior to the constitution of the family home;

xxx

We grant the petition only to the extent of allowing petitioners to

adduce evidence in the trial court that TCT No. 15079 is in fact their
family home as constituted in accordance with the requirements of
law. This is in consonance with our ruling in Gomez v. Sta. Ines10
where we held:
[The husband and children] were not parties to the Pasig RTC case
and are third-party claimants who became such only after trial in the
previous case had been terminated and the judgment therein had
become final and executory. Neither were they indispensable nor
necessary parties in the Pasig RTC case, and they could not
therefore intervene in said case. As strangers to the original case,
respondents cannot be compelled to present their claim with the
Pasig RTC which issued the writ of execution.xxx
In said case, the alleged family home was sold on execution by the
sheriff of the Pasig RTC.1avvphi1 The husband and children of the
judgment debtor filed a complaint for annulment of sale of the levied
property in Bayombong, Nueva Vizcaya where the alleged family
home was situated. As they were considered strangers to the action
filed in the Pasig RTC, we ruled that the Nueva Vizcaya RTC had
jurisdiction over the complaint and that they could vindicate their
alleged claim to the levied property there.11
WHEREFORE, Civil Case No. 2000-0188 captioned Spouses Auther
G. Kelley, Jr. and Doris A. Kelley v. Planters Products, Inc. and Jorge
A. Ragutana is hereby REINSTATED and this case is hereby
REMANDED to the Regional Trial Court of Naga City, Branch 19 for
determination whether or not the property covered by TCT No.
15079 is a duly constituted family home and therefore exempt from
execution.
SO ORDERED.

Under the Family Code, there is no need to constitute the family

home judicially or extrajudicially. All family homes constructed after
the effectivity of the Family Code (August 3, 1988) are constituted as
such by operation of law. All existing family residences as of August
3, 1988 are considered family homes and are prospectively entitled
to the benefits accorded to a family home under the Family Code.8

xxx

Spec Pro 6 of 53
G.R. No. 185920

July 20, 2010

JUANITA TRINIDAD RAMOS, ALMA RAMOS WORAK, MANUEL T.

RAMOS, JOSEFINA R. ROTHMAN, SONIA R. POST, ELVIRA P.
MUNAR, and OFELIA R. LIM, Petitioners,
vs.
DANILO PANGILINAN, RODOLFO SUMANG, LUCRECIO
BAUTISTA and ROLANDO ANTENOR, Respondents.
DECISION
CARPIO MORALES, J.:
Respondents filed in 2003 a complaint1 for illegal dismissal against
E.M. Ramos Electric, Inc., a company owned by Ernesto M. Ramos
(Ramos), the patriarch of herein petitioners. By Decision2 of April 15,
2005, the Labor Arbiter ruled in favor of respondents and ordered
Ramos and the company to pay the aggregate amount of
P1,661,490.30 representing their backwages, separation pay, 13th
month pay & service incentive leave pay.
The Decision having become final and executory and no settlement
having been forged by the parties, the Labor Arbiter issued on
September 8, 2005 a writ of execution3 which the Deputy Sheriff of
the National Labor Relations Commission (NLRC) implemented by
levying a property in Ramos name covered by TCT No. 38978,
situated in Pandacan, Manila (Pandacan property).
Alleging that the Pandacan property was the family home, hence,
exempt from execution to satisfy the judgment award, Ramos and
the company moved to quash the writ of execution.4 Respondents,
however, averred that the Pandacan property is not the Ramos
family home, as it has another in Antipolo, and the Pandacan
property in fact served as the companys business address as borne
by the companys letterhead. Respondents added that, assuming
that the Pandacan property was indeed the family home, only the
value equivalent to P300,000 was exempt from execution.
By Order5 of August 2, 2006, the Labor Arbiter denied the motion to
quash, hence, Ramos and the company appealed to the NLRC
which affirmed the Labor Arbiters Order.
Ramos and the company appealed to the Court of Appeals during
the pendency of which Ramos died and was substituted by herein
petitioners. Petitioners also filed before the NLRC, as third-party
claimants, a Manifestation questioning the Notice to Vacate issued
by the Sheriff, alleging that assuming that the Pandacan property
may be levied upon, the family home straddled two (2) lots, including
the lot covered by TCT No. 38978, hence, they cannot be asked to
vacate the house. The Labor Arbiter was later to deny, by Decision of
May 7, 2009, the third-party claim, holding
that Ramos death and petitioners substitution as his compulsory
heirs would not nullify the sale at auction of the Pandacan property.
And the NLRC6 would later affirm the Labor Arbiters ruling, noting
that petitioners failed to exercise their right to redeem the Pandacan
property within the one 1 year period or until January 16, 2009. The
NLRC brushed aside petitioners contention that they should have
been given a fresh period of 1 year from the time of Ramos death on
July 29, 2008 or until July 30, 2009 to redeem the property, holding
that to do so would give petitioners, as mere heirs, a better right than
the Ramos.
As to petitioners claim that the property was covered by the regime
of conjugal partnership of gains and as such only Ramos share can
be levied upon, the NLRC ruled that petitioners failed to substantiate
such claim and that the phrase in the TCT indicating the registered
owner as "Ernesto Ramos, married to Juanita Trinidad, Filipinos," did
not mean that both owned the property, the phrase having merely
described Ramos civil status.
Before the appellate court, petitioners alleged that the NLRC erred in
ruling that the market value of the property was P2,177,000 as
assessed by the City Assessor of Manila and appearing in the
documents submitted before the Labor Arbiter, claiming that at the
time the Pandacan property was constituted as the family home in
1944, its value was way below P300,000; and that Art. 153 of the
Family Code was applicable, hence, they no longer had to resort to
judicial or extrajudicial constitution.
In the assailed Decision7 of September 24, 2008, the appellate
court, in denying petitioners appeal, held that the Pandacan property
was not exempted from execution, for while "Article 1538 of the

Family Code provides that the family home is deemed constituted on

a house and lot from the time it is occupied as a family residence, [it]
did not mean that the article has a retroactive effect such that all
existing family residences are deemed to have been constituted as
family homes at the time of their occupation prior to the effectivity of
the Family Code."
The appellate court went on to hold that what was applicable law
were Articles 224 to 251 of the Civil Code, hence, there was still a
need to either judicially or extrajudicially constitute the Pandacan
property as petitioners family home before it can be exempted; and
as petitioners failed to comply therewith, there was no error in
denying the motion to quash the writ of execution.
The only question raised in the present petition for review on
certiorari is the propriety of the Court of Appeals Decision holding
that the levy upon the Pandacan property was valid.
The petition is devoid of merit.
Indeed, the general rule is that the family home is a real right which
is gratuitous, inalienable and free from attachment, constituted over
the dwelling place and the land on which it is situated, which confers
upon a particular family the right to enjoy such properties, which
must remain with the person constituting it and his heirs. It cannot be
seized by creditors except in certain special cases.9
Kelley, Jr. v. Planters Products, Inc.10 lays down the rules relative to
the levy on execution over the family home, viz:
No doubt, a family home is generally exempt from execution
provided it was duly constituted as such. There must be proof that
the alleged family home was constituted jointly by the husband and
wife or by an unmarried head of a family. It must be the house where
they and their family actually reside and the lot on which it is
situated. The family home must be part of the properties of the
absolute community or the conjugal partnership, or of the exclusive
properties of either spouse with the latters consent, or on the
property of the unmarried head of the family. The actual value of the
family home shall not exceed, at the time of its constitution, the
amount of P300,000 in urban areas and P200,000 in rural areas.
Under the Family Code, there is no need to constitute the family
home judicially or extrajudicially. All family homes constructed after
the effectivity of the Family Code (August 3, 1988) are constituted as
such by operation of law. All existing family residences as of August
3, 1988 are considered family homes and are prospectively entitled
to the benefits accorded to a family home under the Family Code.
The exemption is effective from the time of the constitution of the
family home as such and lasts as long as any of its beneficiaries
actually resides therein. Moreover, the debts for which the family
home is made answerable must have been incurred after August 3,
1988. Otherwise (that is, if it was incurred prior to August 3, 1988),
the alleged family home must be shown to have been constituted
either judicially or extrajudicially pursuant to the Civil Code.
(emphasis supplied)
For the family home to be exempt from execution, distinction must
be made as to what law applies based on when it was constituted
and what requirements must be complied with by the judgment
debtor or his successors claiming such privilege. Hence, two sets of
rules are applicable.
If the family home was constructed before the effectivity of the
Family Code or before August 3, 1988, then it must have been
constituted either judicially or extra-judicially as provided under
Articles 225, 229-231 and 233 of the Civil Code.11 Judicial
constitution of the family home requires the filing of a verified petition
before the courts and the registration of the courts order with the
Registry of Deeds of the area where the property is located.
Meanwhile, extrajudicial constitution is governed by Articles 240 to
24212 of the Civil Code and involves the execution of a public
instrument which must also be registered with the Registry of
Property. Failure to comply with either one of these two modes of
constitution will bar a judgment debtor from availing of the privilege.
On the other hand, for family homes constructed after the effectivity
of the Family Code on August 3, 1988, there is no need to constitute
extrajudicially or judicially, and the exemption is effective from the
time it was constituted and lasts as long as any of its beneficiaries
under Art. 15413 actually resides therein. Moreover, the family home
should belong to the absolute community or conjugal partnership, or

Spec Pro 7 of 53
if exclusively by one spouse, its constitution must have been with
consent of the other, and its value must not exceed certain amounts
depending upon the area where it is
located. Further, the debts incurred for which the exemption does not
apply as provided under Art. 15514 for which the family home is
made answerable must have been incurred after August 3,
1988.1avvphi1
And in both cases, whether under the Civil Code or the Family Code,
it is not sufficient that the person claiming exemption merely alleges
that such property is a family home. This claim for exemption must
be set up and proved.15
In the present case, since petitioners claim that the family home was
constituted prior to August 3, 1988, or as early as 1944, they must
comply with the procedure mandated by the Civil Code. There being
absolutely no proof that the Pandacan property was judicially or
extrajudicially constituted as the Ramos family home, the laws
protective mantle cannot be availed of by petitioners. Parenthetically,
the records show that the sheriff exhausted all means to execute the
judgment but failed because Ramos bank accounts16 were already
closed while other properties in his or the companys name had
already been transferred,17 and the only property left was the
Pandacan property.
WHEREFORE, the petition is DENIED.
SO ORDERED.

G.R. No. 109373

March 20, 1995

PACIFIC BANKING CORPORATION EMPLOYEES

ORGANIZATION, PAULA S. PAUG, and its officers and members,
petitioners,
vs.
THE HONORABLE COURT OF APPEALS and VITALIANO N.
NAAGAS II, as Liquidator of Pacific Banking Corporation,
respondents.
G.R. No. 112991

March 20, 1995

THE PRESIDENT OF THE PHILIPPINE DEPOSIT INSURANCE

CORPORATION, as Liquidator of the Pacific Banking Corporation ,
petitioner,
vs.
COURT OF APPEALS, HON. JUDGE REGINO T. VERIDIANO II,
DEPUTY SHERIFF RAMON ENRIQUEZ and ANG ENG JOO, ANG
KEONG LAN and E.J ANG INT'L. LTD., represented by their
Attorney-in-fact, GONZALO C. SY, respondents.

MENDOZA, J.:
These cases have been consolidated because the principal question
involved is the same: whether a petition for liquidation under 29 of
Rep. Act No. 265, otherwise known as the Central Bank Act, is a
special proceeding or an ordinary civil action. The Fifth and the
Fourteenth Divisions of the Court of Appeals reached opposite
results on this question and consequently applied different periods
for appealing.
The facts are as follows:
I.
Proceedings in the CB and the RTC
On July 5, 1985, the Pacific Banking Corporation (PaBC) was placed
under receivership by the Central Bank of the Philippines pursuant to
Resolution No. 699 of its Monetary Board. A few months later, it was
placed under liquidation 1 and a Liquidator was appointed. 2
On April 7, 1986, the Central Bank filed with the Regional Trial Court
of Manila Branch 31, a petition entitled "Petition for Assistance in the
Liquidation of Pacific Banking Corporation." 3 The petition was
approved, after which creditors filed their claims with the court.
On May 17, 1991, a new Liquidator, Vitaliano N. Naagas, 4
President of the Philippine Deposit Insurance Corporation (PDIC),
was appointed by the Central Bank.
On March 13, 1989 the Pacific Banking Corporation Employees
Organization (Union for short), petitioner in G.R. No. 109373, filed a
complaint-in-intervention seeking payment of holiday pay, 13th
month pay differential, salary increase differential, Christmas bonus,
and cash equivalent of Sick Leave Benefit due its members as
employees of PaBC. In its order dated September 13, 1991, the trial
court ordered payment of the principal claims of the Union. 5
The Liquidator received a copy of the order on September 16, 1991.
On October 16, 1991, he filed a Motion for Reconsideration and
Clarification of the order. In his order of December 6, 1991, the judge
modified his September 13, 1991 6 but in effect denied the
Liquidator's motion for reconsideration. This order was received by
the Liquidator on December 9, 1991. The following day, December
10, 1991, he filed a Notice of Appeal and a Motion for Additional
Time to Submit Record on Appeal. On December 23, 1991, another
Notice of Appeal was filed by the Office of the Solicitor General in
behalf of Naagas.
In his order of February 10, 1992, respondent judge disallowed the
Liquidator's Notice of Appeal on the ground that it was late, i.e.,
more than 15 days after receipt of the decision. The judge declared
his September 13, 1991 order and subsequent orders to be final and
executory and denied reconsideration. On March 27, 1992, he
granted the Union's Motion for issuance of a writ of Execution.
Ang Keong Lan and E.J. Ang Int'l., private respondents in G.R. No.
112991, likewise filed claims for the payment of investment in the
PaBC allegedly in the form of shares of stocks amounting to

Spec Pro 8 of 53
US$2,531,632.18. The shares of stocks, consisting of 154,462
common shares, constituted 11% of the total subscribed capital
stock of the PaBC. They alleged that their claim constituted foreign
exchange capital investment entitled to preference in payment under
the Foreign Investments Law.
In his order dated September 11, 1992, respondent judge of the RTC
directed the Liquidator to pay private respondents the total amount
of their claim as preferred creditors. 7
The Liquidator received the order on September 16, 1992. On
September 30, 1992 he moved for reconsideration, but his motion
was denied by the court on October 2, 1992. He received the order
denying his Motion for Reconsideration on October 5, 1992. On
October 14, 1992 he filed a Notice of Appeal from the orders of
September 16, 1992 and October 2, 1992. As in the case of the
Union, however, the judge ordered the Notice of Appeal stricken off
the record on the ground that it had been filed without authority of
the Central Bank and beyond 15 days. In his order of October 28,
1992, the judge directed the execution of his September 11, 1992
order granting the Stockholders/ Investors' claim.

1.
The Petition for Assistance in the Liquidation of the Pacific
Banking Corporation s a Special Proceeding case and/or one which
allows multiple appeals, in which case the period of appeal is 30
days and not 15 days from receipt of the order/judgment appealed
from.
2.
Private respondents are not creditors of PaBC but are
plain stockholders whose right to receive payment as such would
accrue only after all the creditors of the insolvent bank have been
paid.
3.
The claim of private respondents in the amount of
US$22,531,632.18 is not in the nature of foreign investment as it is
understood in law.
4.
The claim of private respondents has not been clearly
established and proved.
5.
The issuance of a writ of execution against the assets of
PaBC was made with grave abuse of discretion.

II.

The petitions in these cases must be dismissed.

Proceedings in the Court of Appeals

First. As stated in the beginning, the principal question in these

cases is whether a petition for liquidation under 29 of Rep. Act No.
265 is in the nature of a special proceeding. If it is, then the period of
appeal is 30 days and the party appealing must, in addition to a
notice of appeal, file with the trial court a record on appeal in order to
perfect his appeal. Otherwise, if a liquidation proceeding is an
ordinary action, the period of appeal is 15 days from notice of the
decision or final order appealed from.

The Liquidator filed separate Petitions for Certiorari, Prohibition and

Mandamus in the Court of Appeals to set aside the orders of the trial
court denying his appeal from the orders granting the claims of
Union and of the Stockholders/Investors. The two Divisions of the
Court of Appeals, to which the cases were separately raffled,
rendered conflicting rulings.
In its decision of November 17, 1992 in CA-G.R. SP No. 27751 (now
G.R. No. 09373) the Fifth Division 8 held in the case of the Union
that the proceeding before the trial court was a special proceeding
and, therefore, the period for appealing from any decision or final
order rendered therein is 30 days. Since the notice of appeal of the
Liquidator was filed on the 30th day of his receipt of the decision
granting the Union's claims, the appeal was brought on time. The
Fifth Division, therefore, set aside the orders of the lower court and
directed the latter to give due course to the appeal of the Liquidator
and set the Record on Appeal he had filed for hearing.
On the other hand, on December 16, 1993, the Fourteenth Division 9
ruled in CA-G.R. SP No. 29351 (now G.R. No. 112991) in the case
of the Stockholders/Investors that a liquidation proceeding is an
ordinary action. Therefore, the period for appealing from any
decision or final order rendered therein is 15 days and that since the
Liquidator's appeal notice was filed on the 23rd day of his receipt of
the order appealed from, deducting the period during which his
motion for reconsideration was pending, the notice of appeal was
filed late. Accordingly, the Fourteenth Division dismissed the
Liquidator's petition.

BP Blg. 129 provides:

39.
Appeals. The period for appeal from final orders,
resolutions, awards, judgments, or decisions of any court in all cases
shall be fifteen (15) days counted from the notice of the final order,
resolution, award, judgment or decision appealed from: Provided,
however, that in habeas corpus cases the period for appeal shall be
forty-eight (48) hours from the notice of the judgment appealed from.
No record on appeal shall be required to take an appeal. In lieu
thereof, the entire record shall be transmitted with all the pages
prominently numbered consecutively, together with an index of the
contents thereof.
This section shall not apply in appeals in special proceedings and in
other cases wherein multiple appeals are allowed under applicable
provisions of the Rules of Court.
The Interim Rules and Guidelines to implement BP Blg. 129
provides:
19.

Period of Appeals.

III.
Present Proceedings
The Union and the Liquidator then separately filed petitions before
this Court.
In G.R. No. 109373 the Union contends that:
1.
The Court of Appeals acted without jurisdiction over the
subject matter or nature of the suit.
2.
The Court of Appeals gravely erred in taking cognizance of
the petition for certiorari filed by Naagas who was without any legal
authority to file it.
3.
The Court of Appeals erred in concluding that the case is a
special proceeding governed by Rules 72 to 109 of the Revised
Rules of Court.
4.
The Court of Appeals erred seriously in concluding that the
notice of appeal filed by Naagas was filed on time.
5.
The Court of Appeals erred seriously in declaring that the
second notice of appeal filed on December 23, 1991 by the Solicitor
General is a superfluity.
On the other hand, in G.R. No. 112991 the Liquidator contends that:

(a)
All appeals, except in habeas corpus cases and in the
cases referred to in paragraph (b) hereof, must be taken within
fifteen (15) days from notice of the judgment, order, resolution or
award appealed from.
(b)
In appeals in special proceedings in accordance with Rule
109 of the Rules of Court and other cases wherein multiple appeals
are allowed, the period of appeals shall be thirty (30) days, a record
on appeal being required.
The Fourteenth Division of the Court of Appeals held that the
proceeding is an ordinary action similar to an action for interpleader
under Rule 63. 10 The Fourteenth Division stated:
The petition filed is akin to an interpleader under Rule 63 of the
Rules of Court where there are conflicting claimants or several
claims upon the same subject matter, a person who claims no
interest thereon may file an action for interpleader to compel the
claimants to "interplead" and litigate their several claims among
themselves. (Section I Rule 63).
An interpleader is in the category of a special civil action under Rule
62 which, like an ordinary action, may be appealed only within fifteen
(15) days from notice of the judgment or order appealed from. Under
Rule 62, the preceding rules covering ordinary civil actions which are
not inconsistent with or may serve to supplement the provisions of
the rule relating to such civil actions are applicable to special civil

Spec Pro 9 of 53
actions. This embraces Rule 41 covering appeals from the regional
trial court to the Court of Appeals.
xxx

xxx

xxx

Thus, under Section 1 Rule 2 of the Rules of Court, an action is

defined as "an ordinary suit in a court of justice by which one party
prosecutes another for the enforcement or protection of a right or the
prevention or redress of a wrong." On the other hand, Section 2 of
the same Rule states that "every other remedy including one to
establish the status or right of a party or a particular fact shall be by
special proceeding."
To our mind, from the aforequoted definitions of an action and a
special proceeding, the petition for assistance of the court in the
liquidation of an asset of a bank is not "one to establish the status or
right of a party or a particular fact." Contrary to the submission of the
petitioner, the petition is not intended to establish the fact of
insolvency of the bank. The insolvency of the bank had already been
previously determined by the Central Bank in accordance with
Section 9 of the CB Act before the petition was filed. All that needs to
be done is to liquidate the assets of the bank and thus the
assistance of the respondent court is sought for that purpose.
It should be pointed out that this petition filed is not among the cases
categorized as a special proceeding under Section 1, Rule 72 of the
Rules of Court, nor among the special proceedings that may be
appealed under Section 1, Rule 109 of the Rules.
We disagree with the foregoing view of the Fourteenth Division. Rule
2 of the Rules of Court provide:
1.
Action defined. Action means an ordinary suit in a court
of justice, by which the party prosecutes another for the enforcement
or protection of a right, or the prevention or redress of a wrong.
2.
Special Proceeding Distinguished. Every other remedy,
including one to establish the status or right of a party or a particular
fact, shall be by special proceeding.
Elucidating the crucial distinction between an ordinary action and a
special proceeding, Chief Justice Moran states:" 11
Action is the act by which one sues another in a court of justice for
the enforcement or protection of a right, or the prevention or redress
of a wrong while special proceeding is the act by which one seeks to
establish the status or right of a party, or a particular fact. Hence,
action is distinguished from special proceeding in that the former is a
formal demand of a right by one against another, while the latter is
but a petition for a declaration of a status, right or fact. Where a party
litigant seeks to recover property from another, his remedy is to file
an action. Where his purpose is to seek the appointment of a
guardian for an insane, his remedy is a special proceeding to
establish the fact or status of insanity calling for an appointment of
guardianship.
Considering this distinction, a petition for liquidation of an insolvent
corporation should be classified a special proceeding and not an
ordinary action. Such petition does not seek the enforcement or
protection of a right nor the prevention or redress of a wrong against
a party. It does not pray for affirmative relief for injury arising from a
party's wrongful act or omission nor state a cause of action that can
be enforced against any person.
What it seeks is merely a declaration by the trial court of the
corporation's insolvency so that its creditors may be able to file their
claims in the settlement of the corporation's debts and obligations.
Put in another way, the petition only seeks a declaration of the
corporation's debts and obligations. Put in another way, the petition
only seeks a declaration of the corporation's state of insolvency and
the concomitant right of creditors and the order of payment of their
claims in the disposition of the corporation's assets.
Contrary to the rulings of the Fourteenth Division, liquidation
proceedings do not resemble petitions for interpleader. For one, an
action for interpleader involves claims on a subject matter against a
person who has no interest therein. 12 This is not the case in a
liquidation proceeding where the Liquidator, as representative of the
corporation, takes charge of its assets and liabilities for the benefit of
the creditors. 13 He is thus charged with insuring that the assets of
the corporation are paid only to rightful claimants and in the order of
payment provided by law.

Rather, a liquidation proceeding resembles the proceeding for the

settlement of state of deceased persons under Rules 73 to 91 of the
Rules of Court. The two have a common purpose: the determination
of all the assets and the payment of all the debts and liabilities of the
insolvent corporation or the estate. The Liquidator and the
administrator or executor are both charged with the assets for the
benefit of the claimants. In both instances, the liability of the
corporation and the estate is not disputed. The court's concern is
with the declaration of creditors and their rights and the
determination of their order of payment.
Furthermore, as in the settlement of estates, multiple appeals are
allowed in proceedings for liquidation of an insolvent corporation. As
the Fifth Division of the Court of Appeals, quoting the Liquidator,
correctly noted:
A liquidation proceeding is a single proceeding which consists of a
number of cases properly classified as "claims." It is basically a twophased proceeding. The first phase is concerned with the approval
and disapproval of claims. Upon the approval of the petition seeking
the assistance of the proper court in the liquidation of a close entity,
all money claims against the bank are required to be filed with the
liquidation court. This phase may end with the declaration by the
liquidation court that the claim is not proper or without basis. On the
other hand, it may also end with the liquidation court allowing the
claim. In the latter case, the claim shall be classified whether it is
ordinary or preferred, and thereafter included Liquidator. In either
case, the order allowing or disallowing a particular claim is final
order, and may be appealed by the party aggrieved thereby.
The second phase involves the approval by the Court of the
distribution plan prepared by the duly appointed liquidator. The
distribution plan specifies in detail the total amount available for
distribution to creditors whose claim were earlier allowed. The Order
finally disposes of the issue of how much property is available for
disposal. Moreover, it ushers in the final phase of the liquidation
proceeding payment of all allowed claims in accordance with the
order of legal priority and the approved distribution plan.
Verily, the import of the final character of an Order of allowance or
disallowance of a particular claim cannot be overemphasized. It is
the operative fact that constitutes a liquidation proceeding a "case
where multiple appeals are allowed by law." The issuance of an
Order which, by its nature, affects only the particular claims involved,
and which may assume finality if no appeal is made therefrom, ipso
facto creates a situation where multiple appeals are allowed.
A liquidation proceeding is commenced by the filing of a single
petition by the Solicitor General with a court of competent jurisdiction
entitled, "Petition for Assistance in the Liquidation of e.g., Pacific
Banking Corporation. All claims against the insolvent are required to
be filed with the liquidation court. Although the claims are litigated in
the same proceeding, the treatment is individual. Each claim is
heard separately. And the Order issued relative to a particular claim
applies only to said claim, leaving the other claims unaffected, as
each claim is considered separate and distinct from the others.
Obviously, in the event that an appeal from an Order allowing or
disallowing a particular claim is made, only said claim is affected,
leaving the others to proceed with their ordinary course. In such
case, the original records of the proceeding are not elevated to the
appellate court. They remain with the liquidation court. In lieu of the
original record, a record of appeal is instead required to be prepared
and transmitted to the appellate court.
Inevitably, multiple appeals are allowed in liquidation proceedings.
Consequently, a record on appeal is necessary in each and every
appeal made. Hence, the period to appeal therefrom should be thirty
(30) days, a record on appeal being required. (Record pp. 162-164).
In G.R. No. 112991 (the case of the Stockholders/Investors), the
Liquidator's notice of appeal was filed on time, having been filed on
the 23rd day of receipt of the order granting the claims of the
Stockholders/Investors. However, the Liquidator did not file a record
on appeal with the result that he failed to perfect his appeal. As
already stated a record on appeal is required under the Interim
Rules and Guidelines in special proceedings and for cases where
multiple appeals are allowed. The reason for this is that the several
claims are actually separate ones and a decision or final order with
respect to any claim can be appealed. Necessarily the original
record on appeal must remain in the trial court where other claims
may still be pending.

Spec Pro 10 of 53
Because of the Liquidator's failure to perfect his appeal, the order
granting the claims of the Stockholders/Investors became final.
Consequently. the Fourteenth Division's decision dismissing the
Liquidator's Petition for Certiorari, Prohibition and Mandamus must
be affirmed albeit for a different reason.
On the other hand, in G.R. No. 109373 (case of the Labor Union),
we find that the Fifth Division correctly granted the Liquidator's
Petition for Certiorari. Prohibition and Mandamus. As already noted,
the Liquidator filed a notice of appeal and a motion for extension to
file a record on appeal on December 10, 1991, i.e., within 30 days of
his receipt of the order granting the Union's claim. Without waiting for
the resolution of his motion for extension, he filed on December 20,
1991 within the extension sought a record on appeal. Respondent
judge thus erred in disallowing the notice on appeal and denying the
Liquidator's motion for extension to file a record on appeal.
The Fifth Division of the Court of Appeals correctly granted the
Liquidator's Petition for Certiorari, Prohibition and Mandamus and its
decision should, therefore, be affirmed.

G.R. No. 163707

September 15, 2006

MICHAEL C. GUY, petitioner,

vs.
HON. COURT OF APPEALS, HON. SIXTO MARELLA, JR.,
Presiding Judge, RTC, Branch 138, Makati City and minors, KAREN
DANES WEI and KAMILLE DANES WEI, represented by their
mother, REMEDIOS OANES, respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari assails the January 22, 2004
Decision1 of the Court of Appeals in CA-G.R. SP No. 79742, which
affirmed the Orders dated July 21, 20002 and July 17, 20033 of the
Regional Trial Court of Makati City, Branch 138 in SP Proc. Case No.
4549 denying petitioner's motion to dismiss; and its May 25, 2004
Resolution4 denying petitioner's motion for reconsideration.
The facts are as follows:

Second. In G.R. No. 109373, The Union claims that under 29 of

Rep. Act No. 265, the court merely assists in adjudicating the claims
of creditors, preserves the assets of the institution, and implements
the liquidation plan approved by the Monetary Board and that,
therefore, as representative of the Monetary Board, the Liquidator
cannot question the order of the court or appeal from it. It contends
that since the Monetary Board had previously admitted PaBC's
liability to the laborers by in fact setting aside the amount of
P112,234,292.44 for the payment of their claims, there was nothing
else for the Liquidator to do except to comply with the order of the
court.

On June 13, 1997, private respondent-minors Karen Oanes Wei and

Kamille Oanes Wei, represented by their mother Remedios Oanes
(Remedios), filed a petition for letters of administration5 before the
Regional Trial Court of Makati City, Branch 138. The case was
docketed as Sp. Proc. No. 4549 and entitled Intestate Estate of Sima
Wei (a.k.a. Rufino Guy Susim).

The Union's contention is untenable. In liquidation proceedings, the

function of the trial court is not limited to assisting in the
implementation of the orders of the Monetary Board. Under the
same section (29) of the law invoked by the Union, the court has
authority to set aside the decision of the Monetary Board "if there is
a convincing proof that the action is plainly arbitrary and made in bad
faith." 14 As this Court held in Rural Bank of Buhi, Inc. v. Court of
Appeals: 15

Private respondents alleged that they are the duly acknowledged

illegitimate children of Sima Wei, who died intestate in Makati City on
October 29, 1992, leaving an estate valued at P10,000,000.00
consisting of real and personal properties. His known heirs are his
surviving spouse Shirley Guy and children, Emy, Jeanne, Cristina,
George and Michael, all surnamed Guy. Private respondents prayed
for the appointment of a regular administrator for the orderly
settlement of Sima Wei's estate. They likewise prayed that, in the
meantime, petitioner Michael C. Guy, son of the decedent, be
appointed as Special Administrator of the estate. Attached to private
respondents' petition was a Certification Against Forum Shopping6
signed by their counsel, Atty. Sedfrey A. Ordoez.

There is no question, that the action of the monetary Board in this

regard may be subject to judicial review. Thus, it has been held that
the Court's may interfere with the Central Bank's exercise of
discretion in determining whether or not a distressed bank shall be
supported or liquidated. Discretion has its limits and has never been
held to include arbitrariness, discrimination or bad faith (Ramos v.
Central Bank of the Philippines, 41 SCRA 567 [1971]).

In his Comment/Opposition,7 petitioner prayed for the dismissal of

the petition. He asserted that his deceased father left no debts and
that his estate can be settled without securing letters of
administration pursuant to Section 1, Rule 74 of the Rules of Court.
He further argued that private respondents should have established
their status as illegitimate children during the lifetime of Sima Wei
pursuant to Article 175 of the Family Code.

In truth, the Liquidator is the representative not only of the Central

Bank but also of the insolvent bank. Under 28A-29 of Rep. Act No.
265 he acts in behalf of the bank "personally or through counsel as
he may retain, in all actions or proceedings or against the
corporation" and he has authority "to do whatever may be necessary
for these purposes." This authority includes the power to appeal from
the decisions or final orders of the court which he believes to be
contrary to the interest of the bank.

The other heirs of Sima Wei filed a Joint Motion to Dismiss8 on the
ground that the certification against forum shopping should have
been signed by private respondents and not their counsel. They
contended that Remedios should have executed the certification on
behalf of her minor daughters as mandated by Section 5, Rule 7 of
the Rules of Court.

Finally the Union contends that the notice of appeal and motion for
extension of time to file the record on appeal filed in behalf of the
Central Bank was not filed by the office of the Solicitor General as
counsel for the Central Bank. This contention has no merit. On
October 22, 1992, as Assistant Solicitor General Cecilio O. Estoesta
informed the trial court in March 27, 1992, the OSG had previously
authorized lawyers of the PDIC to prepare and sign pleadings in the
case. 16 Conformably thereto the Notice of Appeal and the Motion
for Additional Time to submit Record on Appeal filed were jointly
signed by Solicitor Reynaldo I. Saludares in behalf of the OSG and
by lawyers of the PDIC. 17
WHEREFORE, in G.R. No. 109373 and G.R. No 112991, the
decisions appealed from are AFFIRMED.
SO ORDERED.

In a Manifestation/Motion as Supplement to the Joint Motion to

Dismiss,9 petitioner and his co-heirs alleged that private
respondents' claim had been paid, waived, abandoned or otherwise
extinguished by reason of Remedios' June 7, 1993 Release and
Waiver of Claim stating that in exchange for the financial and
educational assistance received from petitioner, Remedios and her
minor children discharge the estate of Sima Wei from any and all
liabilities.
The Regional Trial Court denied the Joint Motion to Dismiss as well
as the Supplemental Motion to Dismiss. It ruled that while the
Release and Waiver of Claim was signed by Remedios, it had not
been established that she was the duly constituted guardian of her
minor daughters. Thus, no renunciation of right occurred. Applying a
liberal application of the rules, the trial court also rejected petitioner's
objections on the certification against forum shopping.
Petitioner moved for reconsideration but was denied. He filed a
petition for certiorari before the Court of Appeals which affirmed the
orders of the Regional Trial Court in its assailed Decision dated
January 22, 2004, the dispositive portion of which states:
WHEREFORE, premises considered, the present petition is hereby
DENIED DUE COURSE and accordingly DISMISSED, for lack of
merit. Consequently, the assailed Orders dated July 21, 2000 and
July 17, 2003 are hereby both AFFIRMED. Respondent Judge is

Spec Pro 11 of 53
hereby DIRECTED to resolve the controversy over the illegitimate
filiation of the private respondents (sic) minors [-] Karen Oanes Wei
and Kamille Oanes Wei who are claiming successional rights in the
intestate estate of the deceased Sima Wei, a.k.a. Rufino Guy Susim.
SO ORDERED.10
The Court of Appeals denied petitioner's motion for reconsideration,
hence, this petition.
Petitioner argues that the Court of Appeals disregarded existing
rules on certification against forum shopping; that the Release and
Waiver of Claim executed by Remedios released and discharged the
Guy family and the estate of Sima Wei from any claims or liabilities;
and that private respondents do not have the legal personality to
institute the petition for letters of administration as they failed to
prove their filiation during the lifetime of Sima Wei in accordance
with Article 175 of the Family Code.
Private respondents contend that their counsel's certification can be
considered substantial compliance with the rules on certification of
non-forum shopping, and that the petition raises no new issues to
warrant the reversal of the decisions of the Regional Trial Court and
the Court of Appeals.
The issues for resolution are: 1) whether private respondents'
petition should be dismissed for failure to comply with the rules on
certification of non-forum shopping; 2) whether the Release and
Waiver of Claim precludes private respondents from claiming their
successional rights; and 3) whether private respondents are barred
by prescription from proving their filiation.
The petition lacks merit.
Rule 7, Section 5 of the Rules of Court provides that the certification
of non-forum shopping should be executed by the plaintiff or the
principal party. Failure to comply with the requirement shall be cause
for dismissal of the case. However, a liberal application of the rules
is proper where the higher interest of justice would be served. In Sy
Chin v. Court of Appeals,11 we ruled that while a petition may have
been flawed where the certificate of non-forum shopping was signed
only by counsel and not by the party, this procedural lapse may be
overlooked in the interest of substantial justice.12 So it is in the
present controversy where the merits13 of the case and the absence
of an intention to violate the rules with impunity should be
considered as compelling reasons to temper the strict application of
the rules.
As regards Remedios' Release and Waiver of Claim, the same does
not bar private respondents from claiming successional rights. To be
valid and effective, a waiver must be couched in clear and
unequivocal terms which leave no doubt as to the intention of a party
to give up a right or benefit which legally pertains to him. A waiver
may not be attributed to a person when its terms do not explicitly and
clearly evince an intent to abandon a right.14
In this case, we find that there was no waiver of hereditary rights.
The Release and Waiver of Claim does not state with clarity the
purpose of its execution. It merely states that Remedios received
P300,000.00 and an educational plan for her minor daughters "by
way of financial assistance and in full settlement of any and all
claims of whatsoever nature and kind x x x against the estate of the
late Rufino Guy Susim."15 Considering that the document did not
specifically mention private respondents' hereditary share in the
estate of Sima Wei, it cannot be construed as a waiver of
successional rights.
Moreover, even assuming that Remedios truly waived the hereditary
rights of private respondents, such waiver will not bar the latter's
claim. Article 1044 of the Civil Code, provides:
ART. 1044. Any person having the free disposal of his property may
accept or repudiate an inheritance.
Any inheritance left to minors or incapacitated persons may be
accepted by their parents or guardians. Parents or guardians may
repudiate the inheritance left to their wards only by judicial
authorization.
The right to accept an inheritance left to the poor shall belong to the
persons designated by the testator to determine the beneficiaries
and distribute the property, or in their default, to those mentioned in
Article 1030. (Emphasis supplied)

Parents and guardians may not therefore repudiate the inheritance

of their wards without judicial approval. This is because repudiation
amounts to an alienation of property16 which must pass the court's
scrutiny in order to protect the interest of the ward. Not having been
judicially authorized, the Release and Waiver of Claim in the instant
case is void and will not bar private respondents from asserting their
rights as heirs of the deceased.
Furthermore, it must be emphasized that waiver is the intentional
relinquishment of a known right. Where one lacks knowledge of a
right, there is no basis upon which waiver of it can rest. Ignorance of
a material fact negates waiver, and waiver cannot be established by
a consent given under a mistake or misapprehension of fact.17
In the present case, private respondents could not have possibly
waived their successional rights because they are yet to prove their
status as acknowledged illegitimate children of the deceased.
Petitioner himself has consistently denied that private respondents
are his co-heirs. It would thus be inconsistent to rule that they
waived their hereditary rights when petitioner claims that they do not
have such right. Hence, petitioner's invocation of waiver on the part
of private respondents must fail.
Anent the issue on private respondents' filiation, we agree with the
Court of Appeals that a ruling on the same would be premature
considering that private respondents have yet to present evidence.
Before the Family Code took effect, the governing law on actions for
recognition of illegitimate children was Article 285 of the Civil Code,
to wit:
ART. 285. The action for the recognition of natural children may be
brought only during the lifetime of the presumed parents, except in
the following cases:
(1) If the father or mother died during the minority of the child, in
which case the latter may file the action before the expiration of four
years from the attainment of his majority;
(2) If after the death of the father or of the mother a document should
appear of which nothing had been heard and in which either or both
parents recognize the child.
In this case, the action must be commenced within four years from
the finding of the document. (Emphasis supplied)
We ruled in Bernabe v. Alejo18 that illegitimate children who were
still minors at the time the Family Code took effect and whose
putative parent died during their minority are given the right to seek
recognition for a period of up to four years from attaining majority
age. This vested right was not impaired or taken away by the
passage of the Family Code.19
On the other hand, Articles 172, 173 and 175 of the Family Code,
which superseded Article 285 of the Civil Code, provide:
ART. 172. The filiation of legitimate children is established by any of
the following:
(1) The record of birth appearing in the civil register or a final
judgment; or
(2) An admission of legitimate filiation in a public document or a
private handwritten instrument and signed by the parent concerned.
In the absence of the foregoing evidence, the legitimate filiation shall
be proved by:
(1) The open and continuous possession of the status of a legitimate
child; or
(2) Any other means allowed by the Rules of Court and special laws.
ART. 173. The action to claim legitimacy may be brought by the child
during his or her lifetime and shall be transmitted to the heirs should
the child die during minority or in a state of insanity. In these cases,
the heirs shall have a period of five years within which to institute the
action.
The action already commenced by the child shall survive
notwithstanding the death of either or both of the parties.

Spec Pro 12 of 53
ART. 175. Illegitimate children may establish their illegitimate filiation
in the same way and on the same, evidence as legitimate children.
The action must be brought within the same period specified in
Article 173, except when the action is based on the second
paragraph of Article 172, in which case the action may be brought
during the lifetime of the alleged parent.
Under the Family Code, when filiation of an illegitimate child is
established by a record of birth appearing in the civil register or a
final judgment, or an admission of filiation in a public document or a
private handwritten instrument signed by the parent concerned, the
action for recognition may be brought by the child during his or her
lifetime. However, if the action is based upon open and continuous
possession of the status of an illegitimate child, or any other means
allowed by the rules or special laws, it may only be brought during
the lifetime of the alleged parent.
It is clear therefore that the resolution of the issue of prescription
depends on the type of evidence to be adduced by private
respondents in proving their filiation. However, it would be
impossible to determine the same in this case as there has been no
reception of evidence yet. This Court is not a trier of facts. Such
matters may be resolved only by the Regional Trial Court after a fullblown trial.
While the original action filed by private respondents was a petition
for letters of administration, the trial court is not precluded from
receiving evidence on private respondents' filiation. Its jurisdiction
extends to matters incidental and collateral to the exercise of its
recognized powers in handling the settlement of the estate, including
the determination of the status of each heir.20 That the two causes
of action, one to compel recognition and the other to claim
inheritance, may be joined in one complaint is not new in our
jurisprudence.21 As held in Briz v. Briz:22
The question whether a person in the position of the present plaintiff
can in any event maintain a complex action to compel recognition as
a natural child and at the same time to obtain ulterior relief in the
character of heir, is one which in the opinion of this court must be
answered in the affirmative, provided always that the conditions
justifying the joinder of the two distinct causes of action are present
in the particular case. In other words, there is no absolute necessity
requiring that the action to compel acknowledgment should have
been instituted and prosecuted to a successful conclusion prior to
the action in which that same plaintiff seeks additional relief in the
character of heir. Certainly, there is nothing so peculiar to the action
to compel acknowledgment as to require that a rule should be here
applied different from that generally applicable in other cases. x x x
The conclusion above stated, though not heretofore explicitly
formulated by this court, is undoubtedly to some extent supported by
our prior decisions. Thus, we have held in numerous cases, and the
doctrine must be considered well settled, that a natural child having
a right to compel acknowledgment, but who has not been in fact
acknowledged, may maintain partition proceedings for the division of
the inheritance against his coheirs (Siguiong vs. Siguiong, 8 Phil., 5;
Tiamson vs. Tiamson, 32 Phil., 62); and the same person may
intervene in proceedings for the distribution of the estate of his
deceased natural father, or mother (Capistrano vs. Fabella, 8 Phil.,
135; Conde vs. Abaya, 13 Phil., 249; Ramirez vs. Gmur, 42 Phil.,
855). In neither of these situations has it been thought necessary for
the plaintiff to show a prior decree compelling acknowledgment. The
obvious reason is that in partition suits and distribution proceedings
the other persons who might take by inheritance are before the
court; and the declaration of heirship is appropriate to such
proceedings.
WHEREFORE, the instant petition is DENIED. The Decision dated
January 22, 2004 of the Court of Appeals in CA-G.R. SP No. 79742
affirming the denial of petitioner's motion to dismiss; and its
Resolution dated May 25, 2004 denying petitioner's motion for
reconsideration, are AFFIRMED. Let the records be REMANDED to
the Regional Trial Court of Makati City, Branch 138 for further
proceedings.
SO ORDERED.

G.R. No. 173614

September 28, 2007

LOLITA D. ENRICO, Petitioner,

vs.
HEIRS OF SPS. EULOGIO B. MEDINACELI AND TRINIDAD CATLIMEDINACELI, REPRESENTED BY VILMA M. ARTICULO,
Respondents.
DECISION
CHICO-NAZARIO, J.:
The instant Petition for Certiorari filed under Rule 65 of the 1997
Rules of Civil Procedure assails the Order,1 dated 3 May 2006 of the
Regional Trial Court (RTC) of Aparri, Cagayan, Branch 6, in Civil
Case No. II-4057, granting reconsideration of its Order,2 dated 11
October 2005, and reinstating respondents Complaint for
Declaration of Nullity of Marriage.
On 17 March 2005, respondents, heirs of Spouses Eulogio B.
Medinaceli (Eulogio) and Trinidad Catli-Medinaceli (Trinidad) filed
with the RTC, an action for declaration of nullity of marriage of
Eulogio and petitioner Lolita D. Enrico. Substantially, the complaint
alleged, inter alia, that Eulogio and Trinidad were married on 14
June 1962, in Lal-lo, Cagayan.3 They begot seven children, herein
respondents, namely: Eduardo, Evelyn, Vilma, Mary Jane, Haizel,
Michelle and Joseph Lloyd.4 On 1 May 2004, Trinidad died.5 On 26
August 2004, Eulogio married petitioner before the Municipal Mayor
of Lal-lo, Cagayan.6 Six months later, or on 10 February 2005,
Eulogio passed away.7
In impugning petitioners marriage to Eulogio, respondents averred
that the same was entered into without the requisite marriage
license. They argued that Article 348 of the Family Code, which
exempts a man and a woman who have been living together for at
least five years without any legal impediment from securing a
marriage license, was not applicable to petitioner and Eulogio
because they could not have lived together under the circumstances
required by said provision. Respondents posited that the marriage of
Eulogio to Trinidad was dissolved only upon the latters death, or on
1 May 2004, which was barely three months from the date of
marriage of Eulogio to petitioner. Therefore, petitioner and Eulogio
could not have lived together as husband and wife for at least five
years. To further their cause, respondents raised the additional
ground of lack of marriage ceremony due to Eulogios serious illness
which made its performance impossible.
In her Answer, petitioner maintained that she and Eulogio lived
together as husband and wife under one roof for 21 years openly
and publicly; hence, they were exempted from the requirement of a
marriage license. From their union were born Elvin Enrico and Marco
Enrico, all surnamed Medinaceli, on 28 October 1988 and 30
October 1991, respectively. She further contended that the marriage
ceremony was performed in the Municipal Hall of Lal-lo, Cagayan,
and solemnized by the Municipal Mayor. As an affirmative defense,
she sought the dismissal of the action on the ground that it is only
the contracting parties while living who can file an action for
declaration of nullity of marriage.
On 11 October 2005, the RTC issued an Order,9 granting the
dismissal of the Complaint for lack of cause of action. It cited A.M.
No. 02-11-10-SC,10 dated 7 March 2003, promulgated by the
Supreme Court En Banc as basis. The RTC elucidated on its
position in the following manner:
The Complaint should be dismissed.
1) Administrative Matter No. 02-11-10-SC promulgated by the
Supreme Court which took effect on March 15, 2003 provides in
Section 2, par. (a)11 that a petition for Declaration of Absolute Nullity
of a Void Marriage may be filed solely by the husband or the wife.
The language of this rule is plain and simple which states that such a
petition may be filed solely by the husband or the wife. The rule is
clear and unequivocal that only the husband or the wife may file the
petition for Declaration of Absolute Nullity of a Void Marriage. The
reading of this Court is that the right to bring such petition is
exclusive and this right solely belongs to them. Consequently, the
heirs of the deceased spouse cannot substitute their late father in
bringing the action to declare the marriage null and void.12
(Emphasis supplied.)
The dispositive portion of the Order, thus, reads:

Spec Pro 13 of 53
WHEREFORE, [the] Motion to Dismiss raised as an affirmative
defense in the answer is hereby GRANTED. Accordingly, the
Complaint filed by the [respondents] is hereby DISMISSED with
costs de officio. 13
Respondents filed a Motion for Reconsideration thereof. Following
the filing by petitioner of her Comment to the said motion, the RTC
rendered an Order14 dated 3 May 2006, reversing its Order of 11
October 2005. Hence, the RTC reinstated the complaint on the
ratiocination that the assailed Order ignored the ruling in Nial v.
Bayadog,15 which was on the authority for holding that the heirs of a
deceased spouse have the standing to assail a void marriage even
after the death of the latter. It held that Section 2(a) of A.M. No. 0211-20-SC, which provides that a petition for declaration of absolute
nullity of void marriage may be filed solely by the husband or the
wife, applies only where both parties to a void marriage are still
living.16 Where one or both parties are deceased, the RTC held that
the heirs may file a petition to declare the marriage void. The RTC
expounded on its stance, thus:
The questioned Order disregarded the case of Nial vs. Bayadog,
328 SCRA 122 (March 14, 2000) in which the Supreme Court, First
Division, held that the heirs of a deceased person may file a petition
for the declaration of his marriage after his death. The Order subject
of this motion for reconsideration held that the case of Nial vs.
Bayadog is now superseded by the new Rule on Declaration of
Absolute Nullity of Marriages (hereinafter referred to as the Rule)
because the Supreme Court has rejected the case of Nial vs.
Bayadog by approving the Rule on Nullity of Void Marriages. The
Order further held that it is only the husband or the wife who is (sic)
the only parties allowed to file an action for declaration of nullity of
their marriage and such right is purely personal and is not
transmissible upon the death of the parties.

At the outset, we note that petitioner took an abbreviated route to

this Court, countenancing the hierarchy of courts.
We have earlier emphasized that while the Supreme Court has the
concurrent jurisdiction with the Court of Appeals and the RTCs (for
writs enforceable within their respective regions), to issue writs of
mandamus, prohibition or certiorari, the litigants are well advised
against taking a direct recourse to this Court.20 Instead, they should
initially seek the proper relief from the lower courts. As a court of last
resort, this Court should not be burdened with the task of dealing
with causes in the first instance. Where the issuance of an
extraordinary writ is concurrently within the competence of the Court
of Appeals or the RTC, litigants must observe the principle of
hierarchy of courts.21 However, it cannot be gainsaid that this Court
has the discretionary power to brush aside procedural lapses if
compelling reasons, or the nature and importance of the issues
raised, warrant the immediate exercise of its jurisdiction.22
Moreover, notwithstanding the dismissibility of the instant Petition for
its failure to observe the doctrine on the hierarchy of courts, this
Court will proceed to entertain the case grounded as it is on a pure
question of law.
Petitioner maintains that A.M. No. 02-11-10-SC governs the instant
case. A contrario, respondents posit that it is Nial which is
applicable, whereby the heirs of the deceased person were granted
the right to file a petition for the declaration of nullity of his marriage
after his death.
We grant the Petition.
In reinstating respondents Complaint for Declaration of Nullity of
Marriage, the RTC acted with grave abuse of discretion.

It is admitted that there seems to be a conflict between the case of

Nial vs. Bayadog and Section 2(a) of the Rule. In view of this, the
Court shall try to reconcile the case of Nial vs. Bayadog and the
Rule. To reconcile, the Court will have to determine [the] basic rights
of the parties. The rights of the legitimate heirs of a person who
entered into a void marriage will be prejudiced particularly with
respect to their successional rights. During the lifetime of the
parent[,] the heirs have only an inchoate right over the property of
the said parents. Hence, during the lifetime of the parent, it would be
proper that it should solely be the parent who should be allowed to
file a petition to declare his marriage void. However, upon the death
of the parent his heirs have already a vested right over whatever
property left by the parent. Such vested right should not be frustrated
by any rules of procedure such as the Rule. Rules of Procedure
cannot repeal rights granted by substantive law. The heirs, then,
have a legal standing in Court.

While it is true that Nial 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,
we cannot, however, apply its ruling for the reason that the
impugned marriage therein was solemnized prior to the effectivity of
the Family Code. The Court in Nial recognized that the applicable
law to determine the validity of the two marriages involved therein is
the Civil Code, which was the law in effect at the time of their
celebration.23 What we have before us belongs to a different milieu,
i.e., the marriage sought to be declared void was entered into during
the effectivity of the Family Code. As can be gleaned from the facts,
petitioners marriage to Eulogio was celebrated in 2004.1wphi1

If the heirs are prohibited from questioning the void marriage entered
by their parent, especially when the marriage is illegal and
feloniously entered into, it will give premium to such union because
the guilty parties will seldom, if ever at all, ask for the annulment of
the marriage. Such void marriage will be given a semblance of
validity if the heirs will not be allowed to file the petition after the
death of the parent.

Section 1. Scope. This Rule shall govern petitions for declaration

of absolute nullity of void marriages and annulment of voidable
marriages under the Family Code of the Philippines.

For these reasons, this Court believes that Sec. 2(a) of the Rules on
Declaration of Absolute Nullity of Marriage is applicable only when
both parties to a (sic) void marriage are still living. Upon the death of
anyone of the guilty party to the void marriage, his heirs may file a
petition to declare the the (sic) marriage void, but the Rule is not
applicable as it was not filed b the husband or the wife. It shall be the
ordinary rule of civil procedure which shall be applicable.17
Perforce, the decretal portion of the RTC Order of 3 May 2006
states:
In view of the foregoing, the Court grants the motion for
reconsideration dated October 31, 2005 and reinstate this case.18
Aggrieved, petitioner filed a Motion for Reconsideration of the
foregoing Order; however, on 1 June 2006, the RTC denied the said
motion on the ground that no new matter was raised therein.19
Hence, the instant Petition under Rule 65 of the 1997 Rules of Civil
Procedure on the sole question of whether the case law as
embodied in Nial, or the Rule on Declaration of Absolute Nullity of
Void Marriages and Annulment of Voidable Marriages, as specified in
A.M. No. 02-11-10-SC of the Supreme Court applies to the case at
bar.

The Rule on Declaration of Absolute Nullity of Void Marriages and

Annulment of Voidable Marriages as contained in A.M. No. 02-11-10SC is explicit in its scope, to wit:

The Rules of Court shall apply suppletorily. (Emphasis supplied.)

The categorical language of A.M. No. 02-11-10-SC leaves no room
for doubt. The coverage extends only to those marriages entered
into during the effectivity of the Family Code which took effect on 3
August 1988.24
Moreover, A.M. No. 02-11-10-SC took effect on 15 March 2003,
following its publication in a newspaper of general circulation. Thus,
contrary to the opinion of the RTC, there is no need to reconcile the
provisions of A.M. No. 02-11-10-SC with the ruling in Nial, because
they vary in scope and application. As has been emphasized, A.M.
No. 02-11-10-SC covers marriages under the Family Code of the
Philippines, and is prospective in its application. The marriage of
petitioner to Eulogio was celebrated on 26 August 2004, and it
squarely falls within the ambit of A.M. No. 02-11-10-SC.
Hence, in resolving the issue before us, we resort to Section 2(a) of
A.M. No. 02-11-10-SC, which provides:
Section 2. Petition for declaration of absolute nullity of void
marriages.
(a) Who may file. A petition for declaration of absolute nullity of
void marriage may be filed solely by the husband or the wife. (n)
(Emphasis supplied.)

Spec Pro 14 of 53
There is no ambiguity in the Rule. Absolute sententil expositore non
indiget. When the language of the law is clear, no explanation of it is
required. Section 2(a) of A.M. No. 02-11-10-SC, makes it the sole
right of the husband or the wife to file a petition for declaration of
absolute nullity of void marriage.
The Rationale of the Rules on Annulment of Voidable Marriages and
Declaration of Absolute Nullity of Void Marriages, Legal Separation
and Provisional Orders explicates on Section 2(a) in the following
manner, viz:

G.R. No. 189121

July 31, 2013

AMELIA GARCIA-QUIAZON, JENNETH QUIAZON and MARIA

JENNIFER QUIAZON, Petitioners,
vs.
MA. LOURDES BELEN, for and in behalf of MARIA LOURDES
ELISE QUIAZON, Respondent.
DECISION
PEREZ, J.:

1. Only an aggrieved or injured spouse may file petitions for

annulment of voidable marriages and declaration of absolute nullity
of void marriages. Such petitions cannot be filed by the compulsory
or intestate heirs of the spouses or by the State. [Section 2; Section
3, paragraph a]
Only an aggrieved or injured spouse may file a petition for
annulment of voidable marriages or declaration of absolute nullity of
void marriages. Such petition cannot be filed by compulsory or
intestate heirs of the spouses or by the State. The Committee is of
the belief that they do not have a legal right to file the petition.
Compulsory or intestate heirs have only inchoate rights prior to the
death of their predecessor, and hence can only question the validity
of the marriage of the spouses upon the death of a spouse in a
proceeding for the settlement of the estate of the deceased spouse
filed in the regular courts. On the other hand, the concern of the
State is to preserve marriage and not to seek its dissolution.25
(Emphasis supplied.)
Respondents clearly have no cause of action before the court a quo.
Nonetheless, all is not lost for respondents. While A.M. No. 02-1110-SC declares that a petition for declaration of absolute nullity of
void marriage may be filed solely by the husband or the wife, it does
not mean that the compulsory or intestate heirs are already without
any recourse under the law. They can still protect their successional
right, for, as stated in the Rationale of the Rules on Annulment of
Voidable Marriages and Declaration of Absolute Nullity of Void
Marriages, Legal Separation and Provisional Orders, compulsory or
intestate heirs can still question the validity of the marriage of the
spouses, not in a proceeding for declaration of nullity, but upon the
death of a spouse in a proceeding for the settlement of the estate of
the deceased spouse filed in the regular courts.
WHEREFORE, the Petition is GRANTED. Civil Case No. II-4057
filed before the Regional Trial Court of Aparri, Cagayan, Branch 6, is
ORDERED DISMISSED without prejudice to challenging the validity
of the marriage of Lolita D. Enrico to Eulogio B. Medinaceli in a
proceeding for the settlement of the estate of the latter. No costs.
SO ORDERED.

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:
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, 6 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,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:
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.9
On appeal, the decision of the trial court was affirmed in toto in the
28 November 2008 Decision10 rendered 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

Spec Pro 15 of 53
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:
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. THE COURT OF APPEALS GRAVELY ERRED IN DECLARING
THAT AMELIA GARCIA-QUIAZON WAS NOT LEGALLY MARRIED
TO ELISEO QUIAZON DUE TO PREEXISTING MARRIAGE; AND
III. THE COURT OF APPEALS OVERLOOKED THE FACT THAT
ELISE QUIAZON HAS NOT SHOWN ANY INTEREST IN THE
PETITION FOR LETTERS OF ADMINISTRATION.12
The 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:
Sec. 1. Where estate of deceased persons settled. If the decedent
is an inhabitant of the Philippines at the time of his death, whether a
citizen or an alien, his will shall be proved, or letters of administration
granted, and his estate settled, in the Court of First Instance now
Regional Trial Court in the province in which he resides at the time of
his death, and if he is an inhabitant of a foreign country, the Court of
First Instance now Regional Trial Court of any province in which he
had estate. The court first taking cognizance of the settlement of the
estate of a decedent, shall exercise jurisdiction to the exclusion of all
other courts. The jurisdiction assumed by a court, so far as it
depends on the place of residence of the decedent, or of the location
of his estate, shall not be contested in a suit or proceeding, except in
an appeal from that court, in the original case, or when the want of
jurisdiction appears on the record. (Emphasis supplied).
The term "resides" connotes ex vi termini "actual residence" as
distinguished from "legal residence or domicile." This term "resides,"
like the terms "residing" and "residence," is elastic and should be
interpreted in the light of the object or purpose of the statute or rule
in which it is employed. In the application of venue statutes and rules
Section 1, Rule 73 of the Revised Rules of Court is of such nature
residence rather than domicile is the significant factor.13 Even
where the statute uses 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.19
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.21
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:
Consequently, 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.25
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.27

Spec Pro 16 of 53
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:
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:

G.R. No. L-770

April 27, 1948

ANGEL T. LIMJOCO, petitioner,

vs.
INTESTATE ESTATE OF PEDRO O. FRAGRANTE, deceased,
respondent.
Angel Limjoco, Jr. and Delfin L. Gonzales for petitioner.
Bienvenido A. Tan for respondent.
HILADO, J.:

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:

Under date of May 21, 1946, the Public Service Commission,

through Deputy Commissioner Fidel Ibaez, rendered its decision in
case No. 4572 of Pedro O. Fragante, as applicant for a certificate of
public convenience to install, maintain and operate an ice plant in
San Juan, Rizal, whereby said commission held that the evidence
therein showed that the public interest and convenience will be
promoted in a proper and suitable manner "by authorizing the
operation and maintenance of another ice plant of two and one-half
(2-) tons in the municipality of San Juan; that the original applicant
Pedro O. Fragante was a Filipino Citizen at the time of his death;
and that his intestate estate is financially capable of maintaining the
proposed service". The commission, therefore, overruled the
opposition filed in the case and ordered "that under the provisions of
section 15 of Commonwealth Act No. 146, as amended a certificate
of public convenience be issued to the Intestate Estate of the
deceased Pedro Fragante, authorizing said Intestate Estate through
its Special or Judicial Administrator, appointed by the proper court of
competent jurisdiction, to maintain and operate an ice plant with a
daily productive capacity of two and one-half (2-1/2) tons in the
Municipality of San Juan and to sell the ice produced from said plant
in the said Municipality of San Juan and in the Municipality of
Mandaluyong, Rizal, and in Quezon City", subject to the conditions
therein set forth in detail (petitioner's brief, pp. 33-34).

(a) The jurisdictional facts;

Petitioner makes four assignments of error in his brief as follows:

(b) The names, ages, and residences of the heirs, and the names
and residences of the creditors, of the decedent;

1. The decision of the Public Service Commission is not in

accordance with law.

(c) The probable value and character of the property of the estate;

2. The decision of the Public Service Commission is not reasonably

supported by evidence.

(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;
(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;
(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:

(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.28
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 legitimate 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, arc AFFIRMED in
toto.
SO ORDERED.

3. The Public Service Commission erred in not giving petitioner and

the Ice and Cold Storage Industries of the Philippines, Inc., as
existing operators, a reasonable opportunity to meet the increased
demand.
4. The decision of the Public Service Commission is an unwarranted
departure from its announced policy with respect to the
establishment and operation of ice plant. (Pp. 1-2, petitioner's brief.)
In his argument petitioner contends that it was error on the part of
the commission to allow the substitution of the legal representative
of the estate of Pedro O. Fragante for the latter as party applicant in
the case then pending before the commission, and in subsequently
granting to said estate the certificate applied for, which is said to be
in contravention of law.
If Pedro O. Fragante had not died, there can be no question that he
would have had the right to prosecute his application before the
commission to its final conclusion. No one would have denied him
that right. As declared by the commission in its decision, he had
invested in the ice plant in question P 35,000, and from what the
commission said regarding his other properties and business, he
would certainly have been financially able to maintain and operate
said plant had he not died. His transportation business alone was
netting him about P1,440 a month. He was a Filipino citizen and
continued to be such till his demise. The commission declared in its
decision, in view of the evidence before it, that his estate was
financially able to maintain and operate the ice plant. The aforesaid
right of Pedro O. Fragante to prosecute said application to its
conclusion was one which by its nature did not lapse through his
death. Hence, it constitutes a part of the assets of his estate, for
which a right was property despite the possibility that in the end the
commission might have denied application, although under the facts
of the case, the commission granted the application in view of the
financial ability of the estate to maintain and operate the ice plant.
Petitioner, in his memorandum of March 19, 1947, admits (page 3)
that the certificate of public convenience once granted "as a rule,
should descend to his estate as an asset". Such certificate would
certainly be property, and the right to acquire such a certificate, by

Spec Pro 17 of 53
complying with the requisites of the law, belonged to the decedent in
his lifetime, and survived to his estate and judicial administrator after
his death.
If Pedro O. Fragrante had in his lifetime secured an option to buy a
piece of land and during the life of the option he died, if the option
had been given him in the ordinary course of business and not out of
special consideration for his person, there would be no doubt that
said option and the right to exercise it would have survived to his
estate and legal representatives. In such a case there would also be
the possibility of failure to acquire the property should he or his
estate or legal representative fail to comply with the conditions of the
option. In the case at bar Pedro O. Fragrante's undoubted right to
apply for and acquire the desired certificate of public convenience
the evidence established that the public needed the ice plant was
under the law conditioned only upon the requisite citizenship and
economic ability to maintain and operate the service. Of course,
such right to acquire or obtain such certificate of public convenience
was subject to failure to secure its objective through nonfulfillment of
the legal conditions, but the situation here is no different from the
legal standpoint from that of the option in the illustration just given.
Rule 88, section 2, provides that the executor or administrator may
bring or defend actions, among other cases, for the protection of the
property or rights of the deceased which survive, and it says that
such actions may be brought or defended "in the right of the
deceased".
Rule 82, section 1, paragraph (a), mentions among the duties of the
executor or administrator, the making of an inventory of all goods,
chattels, rights, credits, and estate of the deceased which shall come
to his possession or knowledge, or to the possession of any other
person for him.
In his commentaries on the Rules of Court (Volume II, 2nd ed.,
pages 366, 367) the present chief Justice of this Court draws the
following conclusion from the decisions cited by him:
Therefore, unless otherwise expressly provided by law, any action
affecting the property or rights (emphasis supplied) of a deceased
person which may be brought by or against him if he were alive, may
likewise be instituted and prosecuted by or against the administrator,
unless the action is for recovery of money, debt or interest thereon,
or unless, by its very nature, it cannot survive, because death
extinguishes the right . . . .
It is true that a proceeding upon the application for a certificate of
public convenience before the Public Service Commission is not an
"action". But the foregoing provisions and citations go to prove that
the decedent's rights which by their nature are not extinguished by
death go to make up a part and parcel of the assets of his estate
which, being placed under the control and management of the
executor or administrator, can not be exercised but by him in
representation of the estate for the benefit of the creditors, devisees
or legatees, if any, and the heirs of the decedent. And if the right
involved happens to consist in the prosecution of an unfinished
proceeding upon an application for a certificate of public
convenience of the deceased before the Public Service Commission,
it is but logical that the legal representative be empowered and
entitled in behalf of the estate to make the right effective in that
proceeding.
Manresa (Vol. III, 6th ed., p. 11) says that No. 10 of article 334 and
article 336 of the Civil Code, respectively, consider as immovable
and movable things rights which are not material. The same eminent
commentator says in the cited volume (p. 45) that article 336 of the
Civil Code has been deficiently drafted in that it is not sufficiently
expressive of all incorporeal rights which are also property for
juridical purposes.
Corpus Juris (Vol. 50, p. 737) states that in the broad sense of the
term, property includes, among other things, "an option", and "the
certificate of the railroad commission permitting the operation of a
bus line", and on page 748 of the same volume we read:
However, these terms (real property, as estate or interest) have also
been declared to include every species of title, inchoate or complete,
and embrace rights which lie in contract, whether executory or
executed. (Emphasis supplied.)
Another important question raised by petitioner is whether the estate
of Pedro O. Fragrante is a "person" within the meaning of the Public
Service Act.

Words and Phrases, First Series, (Vol. 6, p, 5325), states the

following doctrine in the jurisdiction of the State of Indiana:
As the estate of the decedent is in law regarded as a person, a
forgery committed after the death of the man whose name purports
to be signed to the instrument may be prosecuted as with the intent
to defraud the estate. Billings vs. State, 107 Ind., 54, 55, 6 N. E. 914,
7 N. E. 763, 57 Am. Rep. 77.
The Supreme Court of Indiana in the decision cited above had
before it a case of forgery committed after the death of one Morgan
for the purpose of defrauding his estate. The objection was urged
that the information did not aver that the forgery was committed with
the intent to defraud any person. The Court, per Elliott, J., disposed
of this objection as follows:
. . . The reason advanced in support of this proposition is that the
law does not regard the estate of a decedent as a person. This
intention (contention) cannot prevail. The estate of the decedent is a
person in legal contemplation. "The word "person" says Mr. Abbot,
"in its legal signification, is a generic term, and includes artificial as
well as natural persons," 2 Abb. Dict. 271; Douglas vs. Pacific, etc.
Co., 4 Cal. 304; Planters', etc., Bank vs. Andrews, 8 Port. (Ala.) 404.
It said in another work that 'persons are of two kinds: natural and
artificial. A natural person is a human being. Artificial persons include
(1) a collection or succession of natural persons forming a
corporation; (2) a collection of property to which the law attributes
the capacity of having rights and duties. The latter class of artificial
persons is recognized only to a limited extent in our law. "Examples
are the estate of a bankrupt or deceased person." 2 Rapalje & L.
Law Dict. 954. Our own cases inferentially recognize the correctness
of the definition given by the authors from whom we have quoted, for
they declare that it is sufficient, in pleading a claim against a
decedent's estate, to designate the defendant as the estate of the
deceased person, naming him. Ginn vs. Collins, 43 Ind. 271. Unless
we accept this definition as correct, there would be a failure of justice
in cases where, as here, the forgery is committed after the death of a
person whose name is forged; and this is a result to be avoided if it
can be done consistent with principle. We perceive no difficulty in
avoiding such a result; for, to our minds, it seems reasonable that
the estate of a decedent should be regarded as an artificial person. It
is the creation of law for the purpose of enabling a disposition of the
assets to be properly made, and, although natural persons as heirs,
devises, or creditors, have an interest in the property, the artificial
creature is a distinct legal entity. The interest which natural persons
have in it is not complete until there has been a due administration;
and one who forges the name of the decedent to an instrument
purporting to be a promissory note must be regarded as having
intended to defraud the estate of the decedent, and not the natural
persons having diverse interests in it, since ha cannot be presumed
to have known who those persons were, or what was the nature of
their respective interest. The fraudulent intent is against the artificial
person, the estate and not the natural persons who have direct
or contingent interest in it. (107 Ind. 54, 55, 6 N.E. 914-915.)
In the instant case there would also be a failure of justice unless the
estate of Pedro O. Fragrante is considered a "person", for quashing
of the proceedings for no other reason than his death would entail
prejudicial results to his investment amounting to P35,000.00 as
found by the commission, not counting the expenses and
disbursements which the proceeding can be presumed to have
occasioned him during his lifetime, let alone those defrayed by the
estate thereafter. In this jurisdiction there are ample precedents to
show that the estate of a deceased person is also considered as
having legal personality independent of their heirs. Among the most
recent cases may be mentioned that of "Estate of Mota vs.
Concepcion, 56 Phil., 712, 717, wherein the principal plaintiff was
the estate of the deceased Lazaro Mota, and this Court gave
judgment in favor of said estate along with the other plaintiffs in
these words:
. . . the judgment appealed from must be affirmed so far as it holds
that defendants Concepcion and Whitaker are indebted to he
plaintiffs in the amount of P245,804.69 . . . .
Under the regime of the Civil Code and before the enactment of the
Code of Civil Procedure, the heirs of a deceased person were
considered in contemplation of law as the continuation of his
personality by virtue of the provision of article 661 of the first Code
that the heirs succeed to all the rights and obligations of the
decedent by the mere fact of his death. It was so held by this Court
in Barrios vs. Dolor, 2 Phil., 44, 46. However, after the enactment of

Spec Pro 18 of 53
the Code of Civil Procedure, article 661 of the Civil Code was
abrogated, as held in Suiliong & Co. vs. Chio-Taysan, 12 Phil., 13,
22. In that case, as well as in many others decided by this Court
after the innovations introduced by the Code of Civil Procedure in
the matter of estates of deceased persons, it has been the constant
doctrine that it is the estate or the mass of property, rights and
assets left by the decedent, instead of the heirs directly, that
becomes vested and charged with his rights and obligations which
survive after his demise.
The heirs were formerly considered as the continuation of the
decedent's personality simply by legal fiction, for they might not have
been flesh and blood the reason was one in the nature of a legal
exigency derived from the principle that the heirs succeeded to the
rights and obligations of the decedent. Under the present legal
system, such rights and obligations as survive after death have to be
exercised and fulfilled only by the estate of the deceased. And if the
same legal fiction were not indulged, there would be no juridical
basis for the estate, represented by the executor or administrator, to
exercise those rights and to fulfill those obligations of the deceased.
The reason and purpose for indulging the fiction is identical and the
same in both cases. This is why according to the Supreme Court of
Indiana in Billings vs. State, supra, citing 2 Rapalje & L. Dictionary,
954, among the artificial persons recognized by law figures "a
collection of property to which the law attributes the capacity of
having rights and duties", as for instance, the estate of a bankrupt or
deceased person.
Petitioner raises the decisive question of whether or not the estate of
Pedro O. Fragrante can be considered a "citizen of the Philippines"
within the meaning of section 16 of the Public Service Act, as
amended, particularly the proviso thereof expressly and categorically
limiting the power of the commission to issue certificates of public
convenience or certificates of public convenience and necessity
"only to citizens of the Philippines or of the United States or to
corporations, copartnerships, associations, or joint-stock companies
constituted and organized under the laws of the Philippines", and the
further proviso that sixty per centum of the stock or paid-up capital of
such entities must belong entirely to citizens of the Philippines or of
the United States.
Within the Philosophy of the present legal system, the underlying
reason for the legal fiction by which, for certain purposes, the estate
of the deceased person is considered a "person" is the avoidance of
injustice or prejudice resulting from the impossibility of exercising
such legal rights and fulfilling such legal obligations of the decedent
as survived after his death unless the fiction is indulged.
Substantially the same reason is assigned to support the same rule
in the jurisdiction of the State of Indiana, as announced in Billings vs.
State, supra, when the Supreme Court of said State said:
. . . It seems reasonable that the estate of a decedent should be
regarded as an artificial person. it is the creation of law for the
purpose of enabling a disposition of the assets to be properly made .
...
Within the framework and principles of the constitution itself, to cite
just one example, under the bill of rights it seems clear that while the
civil rights guaranteed therein in the majority of cases relate to
natural persons, the term "person" used in section 1 (1) and (2) must
be deemed to include artificial or juridical persons, for otherwise
these latter would be without the constitutional guarantee against
being deprived of property without due process of law, or the
immunity from unreasonable searches and seizures. We take it that
it was the intendment of the framers to include artificial or juridical,
no less than natural, persons in these constitutional immunities and
in others of similar nature. Among these artificial or juridical persons
figure estates of deceased persons. Hence, we hold that within the
framework of the Constitution, the estate of Pedro O. Fragrante
should be considered an artificial or juridical person for the purposes
of the settlement and distribution of his estate which, of course,
include the exercise during the judicial administration thereof of
those rights and the fulfillment of those obligations of his which
survived after his death. One of those rights was the one involved in
his pending application before the Public Service Commission in the
instant case, consisting in the prosecution of said application to its
final conclusion. As stated above, an injustice would ensue from the
opposite course.
How about the point of citizenship? If by legal fiction his personality
is considered extended so that any debts or obligations left by, and
surviving, him may be paid, and any surviving rights may be
exercised for the benefit of his creditors and heirs, respectively, we

find no sound and cogent reason for denying the application of the
same fiction to his citizenship, and for not considering it as likewise
extended for the purposes of the aforesaid unfinished proceeding
before the Public Service Commission. The outcome of said
proceeding, if successful, would in the end inure to the benefit of the
same creditors and the heirs. Even in that event petitioner could not
allege any prejudice in the legal sense, any more than he could have
done if Fragrante had lived longer and obtained the desired
certificate. The fiction of such extension of his citizenship is
grounded upon the same principle, and motivated by the same
reason, as the fiction of the extension of personality. The fiction is
made necessary to avoid the injustice of subjecting his estate,
creditors and heirs, solely by reason of his death to the loss of the
investment amounting to P35,000, which he has already made in the
ice plant, not counting the other expenses occasioned by the instant
proceeding, from the Public Service Commission of this Court.
We can perceive no valid reason for holding that within the intent of
the constitution (Article IV), its provisions on Philippine citizenship
exclude the legal principle of extension above adverted to. If for
reasons already stated our law indulges the fiction of extension of
personality, if for such reasons the estate of Pedro O. Fragrante
should be considered an artificial or juridical person herein, we can
find no justification for refusing to declare a like fiction as to the
extension of his citizenship for the purposes of this proceeding.
Pedro O. Fragrante was a Filipino citizen, and as such, if he had
lived, in view of the evidence of record, he would have obtained from
the commission the certificate for which he was applying. The
situation has suffered but one change, and that is, his death. His
estate was that of a Filipino citizen. And its economic ability to
appropriately and adequately operate and maintain the service of an
ice plant was the same that it received from the decedent himself. In
the absence of a contrary showing, which does not exist here, his
heirs may be assumed to be also Filipino citizens; and if they are
not, there is the simple expedient of revoking the certificate or
enjoining them from inheriting it.
Upon the whole, we are of the opinion that for the purposes of the
prosecution of said case No. 4572 of the Public Service Commission
to its final conclusion, both the personality and citizenship of Pedro
O. Fragrante must be deemed extended, within the meaning and
intent of the Public Service Act, as amended, in harmony with the
constitution: it is so adjudged and decreed.
Decision affirmed, without costs. So ordered.

Spec Pro 19 of 53
G.R. No. 124715

January 24, 2000

RUFINA LUY LIM, petitioner,

vs.
COURT OF APPEALS, AUTO TRUCK TBA CORPORATION,
SPEED DISTRIBUTING, INC., ACTIVE DISTRIBUTORS, ALLIANCE
MARKETING CORPORATION, ACTION COMPANY, INC.
respondents.
BUENA, J.:
May a corporation, in its universality, be the proper subject of and be
included in the inventory of the estate of a deceased person?
Petitioner disputes before us through the instant petition for review
on certiorari, the decision1 of the Court of Appeals promulgated on
18 April 1996, in CA-GR SP No. 38617, which nullified and set aside
the orders dated 04 July 19952, 12 September 19953 and 15
September 19954 of the Regional Trial Court of Quezon City, Branch
93, sitting as a probate court.
Petitioner Rufina Luy Lim is the surviving spouse of late Pastor Y.
Lim whose estate is the subject of probate proceedings in Special
Proceedings Q-95-23334, entitled, "In Re: Intestate Estate of Pastor
Y. Lim Rufina Luy Lim, represented by George Luy,
Petitioner".1wphi1.nt

Hence the alleged stockholders and officers appearing in the

respective articles of incorporation of the above business entities
were mere dummies of Pastor Y. Lim, and they were listed therein
only for purposes of registration with the Securities and Exchange
Commission.
4. Pastor Lim, likewise, had Time, Savings and Current Deposits
with the following banks: (a) Metrobank, Grace Park, Caloocan City
and Quezon Avenue, Quezon City Branches and (b) First Intestate
Bank (formerly Producers Bank), Rizal Commercial Banking
Corporation and in other banks whose identities are yet to be
determined.
5. That the following real properties, although registered in the name
of the above entities, were actually acquired by Pastor Y. Lim during
his marriage with petitioner, to wit:
Corporation
Title
Location
xxx
xxx
xxx
k. Auto Truck
TCT No. 617726
Sto. Domingo TBA
Corporation Cainta, Rizal
q. Alliance Marketing
TCT No. 27896
Prance, Metro
Manila
Copies of the above-mentioned Transfer Certificate of Title and/or
Tax Declarations are hereto attached as Annexes "C" to "W".
xxx

Private respondents Auto Truck Corporation, Alliance Marketing

Corporation, Speed Distributing, Inc., Active Distributing, Inc. and
Action Company are corporations formed, organized and existing
under Philippine laws and which owned real properties covered
under the Torrens system.
On 11 June 1994, Pastor Y. Lim died intestate. Herein petitioner, as
surviving spouse and duly represented by her nephew George Luy,
fried on 17 March 1995, a joint petition5 for the administration of the
estate of Pastor Y. Lim before the Regional Trial Court of Quezon
City.
Private respondent corporations, whose properties were included in
the inventory of the estate of Pastor Y. Lim, then filed a motion6 for
the lifting of lis pendens and motion7 for exclusion of certain
properties from the estate of the decedent.
In an order8 dated 08 June 1995, the Regional Trial Court of Quezon
City, Branch 93, sitting as a probate court, granted the private
respondents' twin motions, in this wise:
Wherefore, the Register of Deeds of Quezon City is hereby ordered
to lift, expunge or delete the annotation of lis pendens on Transfer
Certificates of Title Nos. 116716, 116717, 116718, 116719 and 5182
and it is hereby further ordered that the properties covered by the
same titles as well as those properties by (sic) Transfer Certificate of
Title Nos. 613494, 363123, 236236 and 263236 are excluded from
these proceedings.

xxx

xxx

7. The aforementioned properties and/or real interests left by the late

Pastor Y. Lim, are all conjugal in nature, having been acquired by
him during the existence of his marriage with petitioner.
8. There are other real and personal properties owned by Pastor Y.
Lim which petitioner could not as yet identify. Petitioner, however will
submit to this Honorable Court the identities thereof and the
necessary documents covering the same as soon as possible.
On 04 July 1995, the Regional Trial Court acting on petitioner's
motion issued an order10, thus:
Wherefore, the order dated 08 June 1995 is hereby set aside and
the Registry of Deeds of Quezon City is hereby directed to reinstate
the annotation of lis pendens in case said annotation had already
been deleted and/or cancelled said TCT Nos. 116716, 116717,
116718, 116719 and 51282.
Further more (sic), said properties covered by TCT Nos. 613494,
365123, 236256 and 236237 by virtue of the petitioner are included
in the instant petition.
SO ORDERED.
On 04 September 1995, the probate court appointed Rufina Lim as
special administrator11 and Miguel Lim and Lawyer Donald Lee, as
co-special administrators of the estate of Pastor Y. Lim, after which
letters of administration were accordingly issued.

SO ORDERED.
Subsequently, Rufina Luy Lim filed a verified amended petition9
which contained the following averments:
3. The late Pastor Y. Lim personally owned during his lifetime the
following business entities, to wit:
Business Entity
Address:
xxx
xxx
xxx
Alliance Marketing, Inc.
Block 3, Lot 6, Dacca BF
Homes, Paraaque, Metro Manila.
xxx
xxx
xxx
Speed Distributing Inc.
910 Barrio Niog, Aguinaldo
Highway, Bacoor, Cavite.
xxx
xxx
xxx
Auto Truck TBA Corp.
2251 Roosevelt Avenue,
Quezon City.
xxx
xxx
xxx
Active Distributors, Inc.
Block 3, Lot 6, Dacca BF
Homes, Paraaque, Metro Manila.
xxx
xxx
xxx
Action Company
100 20th Avenue Murphy, Quezon
City or 92-D Mc-Arthur Highway Valenzuela Bulacan.
3.1 Although the above business entities dealt and engaged in
business with the public as corporations, all their capital, assets and
equity were however, personally owned by the late Pastor Y Lim.

In an order12 dated 12 September 1995, the probate court denied

anew private respondents' motion for exclusion, in this wise:
The issue precisely raised by the petitioner in her petition is whether
the corporations are the mere alter egos or instrumentalities of
Pastor Lim, Otherwise (sic) stated, the issue involves the piercing of
the corporate veil, a matter that is clearly within the jurisdiction of this
Honorable Court and not the Securities and Exchange Commission.
Thus, in the case of Cease vs. Court of Appeals, 93 SCRA 483, the
crucial issue decided by the regular court was whether the
corporation involved therein was the mere extension of the
decedent. After finding in the affirmative, the Court ruled that the
assets of the corporation are also assets of the estate.
A reading of P.D. 902, the law relied upon by oppositors, shows that
the SEC's exclusive (sic) applies only to intra-corporate controversy.
It is simply a suit to settle the intestate estate of a deceased person
who, during his lifetime, acquired several properties and put up
corporations as his instrumentalities.
SO ORDERED.
On 15 September 1995, the probate court acting on an ex parte
motion filed by petitioner, issued an order13 the dispositive portion of
which reads:

Spec Pro 20 of 53
Wherefore, the parties and the following banks concerned herein
under enumerated are hereby ordered to comply strictly with this
order and to produce and submit to the special administrators,
through this Honorable Court within (5) five days from receipt of this
order their respective records of the savings/current accounts/time
deposits and other deposits in the names of Pastor Lim and/or
corporations above-mentioned, showing all the transactions made or
done concerning savings/current accounts from January 1994 up to
their receipt of this court order.
xxx

xxx

xxx

SO ORDERED.
Private respondent filed a special civil action for certiorari14, with an
urgent prayer for a restraining order or writ of preliminary injunction,
before the Court of Appeals questioning the orders of the Regional
Trial Court, sitting as a probate court.

1. Exclusive original jurisdiction over civil actions and probate

proceedings, testate and intestate, including the grant of provisional
remedies in proper cases, where the value of the personal property,
estate or amount of the demand does not exceed One Hundred
Thousand Pesos (P100,000) or, in Metro Manila where such
personal property, estate or amount of the demand does not exceed
Two Hundred Thousand Pesos (P200,000), exclusive of interest,
damages of whatever kind, attorney's fees, litigation expenses and
costs, the amount of which must be specifically alleged, Provided,
that interest, damages of whatever kind, attorney's, litigation
expenses and costs shall be included in the determination of the
filing fees, Provided further, that where there are several claims or
causes of actions between the same or different parties, embodied
in the same complaint, the amount of the demand shall be the
totality of the claims in all the causes of action, irrespective of
whether the causes of action arose out of the same or different
transactions;
xxx

On 18 April 1996, the Court of Appeals, finding in favor of herein

private respondents, rendered the assailed decision15, the decretal
portion of which declares:
Wherefore, premises considered, the instant special civil action for
certiorari is hereby granted, The impugned orders issued by
respondent court on July 4, 1995 and September 12, 1995 are
hereby nullified and set aside. The impugned order issued by
respondent on September 15, 1995 is nullified insofar as petitioner
corporations" bank accounts and records are concerned.
SO ORDERED.
Through the expediency of Rule 45 of the Rules of Court, herein
petitioner Rufina Luy Lim now comes before us with a lone
assignment of
error16:
The respondent Court of Appeals erred in reversing the orders of the
lower court which merely allowed the preliminary or provisional
inclusion of the private respondents as part of the estate of the late
deceased (sic) Pastor Y. Lim with the respondent Court of Appeals
arrogating unto itself the power to repeal, to disobey or to ignore the
clear and explicit provisions of Rules 81,83,84 and 87 of the Rules of
Court and thereby preventing the petitioner, from performing her duty
as special administrator of the estate as expressly provided in the
said Rules.
Petitioner's contentions tread on perilous grounds.
In the instant petition for review, petitioner prays that we affirm the
orders issued by the probate court which were subsequently set
aside by the Court of Appeals.
Yet, before we delve into the merits of the case, a review of the rules
on jurisdiction over probate proceedings is indeed in order.
The provisions of Republic Act 769117, which introduced
amendments to Batas Pambansa Blg. 129, are pertinent:
Sec. 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as
the "Judiciary Reorganization Act of 1980", is hereby amended to
read as follows:
Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall
exercise exclusive jurisdiction:
xxx

xxx

xxx

(4) In all matters of probate, both testate and intestate, where the
gross value of the estate exceeds One Hundred Thousand Pesos
(P100,000) or, in probate matters in Metro Manila, where such gross
value exceeds Two Hundred Thousand Pesos (P200,000);
xxx

xxx

xxx

Sec. 3. Section 33 of the same law is hereby amended to read as

follows:
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts in Civil Cases.
Metropolitan Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts shall exercise:

xxx

xxx

Simply put, the determination of which court exercises jurisdiction

over matters of probate depends upon the gross value of the estate
of the decedent.
As to the power and authority of the probate court, petitioner relies
heavily on the principle that a probate court may pass upon title to
certain properties, albeit provisionally, for the purpose of determining
whether a certain property should or should not be included in the
inventory.
In a litany of cases, We defined the parameters by which the court
may extend its probing arms in the determination of the question of
title in probate proceedings.
This Court, in PASTOR, JR. vs. COURT OF APPEALS,18 held:
. . . As a rule, the question of ownership is an extraneous matter
which the probate court cannot resolve with finality. Thus, for the
purpose of determining whether a certain property should or should
not be included in the inventory of estate properties, the Probate
Court may pass upon the title thereto, but such determination is
provisional, not conclusive, and is subject to the final decision in a
separate action to resolve title.
We reiterated the rule in PEREIRA vs. COURT OF APPEALS19:
. . . The function of resolving whether or not a certain property
should be included in the inventory or list of properties to be
administered by the administrator is one clearly within the
competence of the probate court. However, the court's determination
is only provisional in character, not conclusive, and is subject to the
final decision in a separate action which may be instituted by the
parties.
Further, in MORALES vs. CFI OF CAVITE20 citing CUIZON vs.
RAMOLETE21, We made an exposition on the probate court's
limited jurisdiction:
It is a well-settled rule that a probate court or one in charge of
proceedings whether testate or intestate cannot adjudicate or
determine title to properties claimed to be a part of the estate and
which are equally claimed to belong to outside parties. All that the
said court could do as regards said properties is to determine
whether they should or should not be included in the inventory or list
of properties to be administered by the administrator. If there is no
dispute, well and good; but if there is, then the parties, the
administrator and the opposing parties have to resort to an ordinary
action for a final determination of the conflicting claims of title
because the probate court cannot do so.
Again, in VALERA vs. INSERTO22, We had occasion to elucidate,
through Mr. Justice Andres Narvasa23:
Settled is the rule that a Court of First Instance (now Regional Trial
Court), acting as a probate court, exercises but limited jurisdiction,
and thus has no power to take cognizance of and determine the
issue of title to property claimed by a third person adversely to the
decedent, unless the claimant and all other parties having legal
interest in the property consent, expressly or impliedly, to the
submission of the question to the probate court for adjudgment, or
the interests of third persons are not thereby prejudiced, the reason
for the exception being that the question of whether or not a
particular matter should be resolved by the court in the exercise of

Spec Pro 21 of 53
its general jurisdiction or of its limited jurisdiction as a special court
(e.g. probate, land registration, etc.), is in reality not a jurisdictional
but in essence of procedural one, involving a mode of practice which
may be waived. . . .

the question of title over properties, it is no less true that such

authority conferred upon by law and reinforced by jurisprudence,
should be exercised judiciously, with due regard and caution to the
peculiar circumstances of each individual case.

. . . . These considerations assume greater cogency where, as here,

the Torrens title is not in the decedent's name but in others, a
situation on which this Court has already had occasion to rule . . . .
(emphasis Ours)

Notwithstanding that the real properties were duly registered under

the Torrens system in the name of private respondents, and as such
were to be afforded the presumptive conclusiveness of title, the
probate court obviously opted to shut its eyes to this gleamy fact and
still proceeded to issue the impugned orders.

Petitioner, in the present case, argues that the parcels of land

covered under the Torrens system and registered in the name of
private respondent corporations should be included in the inventory
of the estate of the decedent Pastor Y. Lim, alleging that after all the
determination by the probate court of whether these properties
should be included or not is merely provisional in nature, thus, not
conclusive and subject to a final determination in a separate action
brought for the purpose of adjudging once and for all the issue of
title.
Yet, under the peculiar circumstances, where the parcels of land are
registered in the name of private respondent corporations, the
jurisprudence pronounced in BOLISAY vs., ALCID 24 is of great
essence and finds applicability, thus:
It does not matter that respondent-administratrix has evidence
purporting to support her claim of ownership, for, on the other hand,
petitioners have a Torrens title in their favor, which under the law is
endowed with incontestability until after it has been set aside in the
manner indicated in the law itself, which of course, does not include,
bringing up the matter as a mere incident in special proceedings for
the settlement of the estate of deceased persons. . . .
. . . . In regard to such incident of inclusion or exclusion, We hold
that if a property covered by Torrens title is involved, the presumptive
conclusiveness of such title should be given due weight, and in the
absence of strong compelling evidence to the contrary, the holder
thereof should be considered as the owner of the property in
controversy until his title is nullified or modified in an appropriate
ordinary action, particularly, when as in the case at bar, possession
of the property itself is in the persons named in the title. . . .
A perusal of the records would reveal that no strong compelling
evidence was ever presented by petitioner to bolster her bare
assertions as to the title of the deceased Pastor Y. Lim over the
properties. Even so, P.D. 1529, otherwise known as, "The Property
Registration Decree", proscribes collateral attack on Torrens Title,
hence:
xxx

xxx

xxx

Sec. 48. Certificate not subject to collateral attack. A certificate of

title shall not be subject to collateral attack. It cannot be altered,
modified or cancelled except in a direct proceeding in accordance
with law.
In CUIZON vs. RAMOLETE, where similarly as in the case at bar,
the property subject of the controversy was duly registered under the
Torrens system, We categorically stated:
. . . Having been apprised of the fact that the property in question
was in the possession of third parties and more important, covered
by a transfer certificate of title issued in the name of such third
parties, the respondent court should have denied the motion of the
respondent administrator and excluded the property in question from
the inventory of the property of the estate. It had no authority to
deprive such third persons of their possession and ownership of the
property. . . .
Inasmuch as the real properties included in the inventory of the
estate of the Late Pastor Y. Lim are in the possession of and are
registered in the name of private respondent corporations, which
under the law possess a personality separate and distinct from their
stockholders, and in the absence of any cogency to shred the veil of
corporate fiction, the presumption of conclusiveness of said titles in
favor of private respondents should stand undisturbed.
Accordingly, the probate court was remiss in denying private
respondents' motion for exclusion. While it may be true that the
Regional Trial Court, acting in a restricted capacity and exercising
limited jurisdiction as a probate court, is competent to issue orders
involving inclusion or exclusion of certain properties in the inventory
of the estate of the decedent, and to adjudge, albeit, provisionally

By its denial of the motion for exclusion, the probate court in effect
acted in utter disregard of the presumption of conclusiveness of title
in favor of private respondents. Certainly, the probate court through
such brazen act transgressed the clear provisions of law and
infringed settled jurisprudence on this matter.
Moreover, petitioner urges that not only the properties of private
respondent corporations are properly part of the decedent's estate
but also the private respondent corporations themselves. To rivet
such flimsy contention, petitioner cited that the late Pastor Y. Lim
during his lifetime, organized and wholly-owned the five
corporations, which are the private respondents in the instant
case.25 Petitioner thus attached as Annexes "F"26 and "G"27 of the
petition for review affidavits executed by Teresa Lim and Lani
Wenceslao which among others, contained averments that the
incorporators of Uniwide Distributing, Inc. included on the list had no
actual and participation in the organization and incorporation of the
said corporation. The affiants added that the persons whose names
appeared on the articles of incorporation of Uniwide Distributing,
Inc., as incorporators thereof, are mere dummies since they have
not actually contributed any amount to the capital stock of the
corporation and have been merely asked by the late Pastor Y. Lim to
affix their respective signatures thereon.
It is settled that a corporation is clothed with personality separate
and distinct from that of the persons composing it. It may not
generally be held liable for that of the persons composing it. It may
not be held liable for the personal indebtedness of its stockholders or
those of the entities connected with it.28
Rudimentary is the rule that a corporation is invested by law with a
personality distinct and separate from its stockholders or members.
In the same vein, a corporation by legal fiction and convenience is
an entity shielded by a protective mantle and imbued by law with a
character alien to the persons comprising it.
Nonetheless, the shield is not at all times invincible. Thus, in FIRST
PHILIPPINE INTERNATIONAL BANK vs. COURT OF APPEALS29,
We enunciated:
. . . When the fiction is urged as a means of perpetrating a fraud or
an illegal act or as a vehicle for the evasion of an existing obligation,
the circumvention of statutes, the achievement or perfection of a
monopoly or generally the perpetration of knavery or crime, the veil
with which the law covers and isolates the corporation from the
members or stockholders who compose it will be lifted to allow for its
consideration merely as an aggregation of individuals. . . .
Piercing the veil of corporate entity requires the court to see through
the protective shroud which exempts its stockholders from liabilities
that ordinarily, they could be subject to, or distinguishes one
corporation from a seemingly separate one, were it not for the
existing corporate fiction.30
The corporate mask may be lifted and the corporate veil may be
pierced when a corporation is just but the alter ego of a person or of
another corporation. Where badges of fraud exist, where public
convenience is defeated; where a wrong is sought to be justified
thereby, the corporate fiction or the notion of legal entity should
come to naught.31
Further, the test in determining the applicability of the doctrine of
piercing the veil of corporate fiction is as follows: 1) Control, not
mere majority or complete stock control, but complete domination,
not only of finances but of policy and business practice in respect to
the transaction attacked so that the corporate entity as to this
transaction had at the time no separate mind, will or existence of its
own; (2) Such control must have been used by the defendant to
commit fraud or wrong, to perpetuate the violation of a statutory or
other positive legal duty, or dishonest and unjust act in contravention
of plaintiffs legal right; and (3) The aforesaid control and breach of
duty must proximately cause the injury or unjust loss complained of.

Spec Pro 22 of 53
The absence of any of these elements prevent "piercing the
corporate veil".32

G.R. No. 112625

March 7, 2002

Mere ownership by a single stockholder or by another corporation of

all or nearly all of the capital stock of a corporation is not of itself a
sufficient reason for disregarding the fiction of separate corporate
personalities.33

CMH AGRICULTURAL CORPORATION, CARLOS M. HOJILLA,

CESAR M. HOJILLA, CLAUDIO M. HOJILLA, CORA M. HOJILLA
AND CORNELIO M. HOJILLA, petitioners,
vs.
HON. COURT OF APPEALS AND CRISTOBAL M. HOJILLA,
respondents.

Moreover, to disregard the separate juridical personality of a

corporation, the wrong-doing must be clearly and convincingly
established. It cannot be presumed.34

DE LEON, JR., J.:

Granting arguendo that the Regional Trial Court in this case was not
merely acting in a limited capacity as a probate court, petitioner
nonetheless failed to adduce competent evidence that would have
justified the court to impale the veil of corporate fiction. Truly, the
reliance reposed by petitioner on the affidavits executed by Teresa
Lim and Lani Wenceslao is unavailing considering that the
aforementioned documents possess no weighty probative value
pursuant to the hearsay rule. Besides it is imperative for us to stress
that such affidavits are inadmissible in evidence inasmuch as the
affiants were not at all presented during the course of the
proceedings in the lower court. To put it differently, for this Court to
uphold the admissibility of said documents would be to relegate from
Our duty to apply such basic rule of evidence in a manner consistent
with the law and jurisprudence.
Our pronouncement in PEOPLE BANK AND TRUST COMPANY vs.
LEONIDAS35 finds pertinence:
Affidavits are classified as hearsay evidence since they are not
generally prepared by the affiant but by another who uses his own
language in writing the affiant's statements, which may thus be either
omitted or misunderstood by the one writing them. Moreover, the
adverse party is deprived of the opportunity to cross-examine the
affiants. For this reason, affidavits are generally rejected for being
hearsay, unless the affiant themselves are placed on the witness
stand to testify thereon.
As to the order36 of the lower court, dated 15 September 1995, the
Court of Appeals correctly observed that the Regional Trial Court,
Branch 93 acted without jurisdiction in issuing said order; The
probate court had no authority to demand the production of bank
accounts in the name of the private respondent corporations.
WHEREFORE, in view of the foregoing disquisitions, the instant
petition is hereby DISMISSED for lack of merit and the decision of
the Court of Appeals which nullified and set aside the orders issued
by the Regional Trial Court, Branch 93, acting as a probate court,
dated 04 July 1995 and 12 September 1995 is AFFIRMED. SO
ORDERED.

This is a petition for review on certiorari under Rule 45 of the Rules

of Court which seeks to review and set aside the Decision1 of the
Court of Appeals in CA-G.R. SP No. 28893 promulgated on October
25, 1993 holding that the Regional Trial Court (RTC) of Bacolod City,
Branch 45, did not commit grave abuse of discretion in reconsidering
its Order dated November 22, 1991 dismissing Civil Case No. 6256
for lack of jurisdiction.2
The antecedent facts show that the private respondent, Cristobal M.
Hojilla, filed a complaint for "Disregarding and Piercing the Veil of
Corporate Fiction, Formal Declaration or Recognition of
Successional Rights and Recovery of Title with Damages"3 with the
RTC of Bacolod City, Branch 45, docketed as Civil Case No. 6256
against his siblings namely: Carlos M. Hojilla, Cesar M.
Hojilla,Cornelio M. Hojilla, Claudio M. Hojilla and Corazon M. Hojilla
(with the latter two (2) impleaded as unwilling co-plaintiffs), and CMH
Agricultural Corporation (CMH for brevity). Cristobal alleged in his
complaint that CMH was a dummy corporation created to be the
alter-ego of their mother, the late Concepcion Montelibano-Hojilla,
who purposely organized the same in 1975 to shield her paraphernal
properties from taxes by fictitiously assigning them to CMH, with her
children acting as dummy stockholders. Immediately upon its
incorporation, the following properties of his mother were assigned
to CMH: Hacienda Manayosayao, Hacienda Nangka and a house
and lots on 23rd Street, Bacolod City, consisting of Lot Nos. 240,
241, 242, 246, 247 and 248. After their mother's death, Cristobal and
his siblings extrajudicially partitioned the properties with Carlos,
Cesar and Cornelio taking Hacienda Nangka and the commercial
lots of their late father, Mattias J. Hojilla, situated in Silay City, while
Corazon, Claudio and Cristobal were apportioned Hacienda
Manayaosayao, the house and lots on 23rd Street, Bacolod City, and
some lots which were not assigned to CMH. Thereafter, with the
promise that the title over the property would be delivered to them,
Corazon, Claudio and Cristobal took possession of the subject
house and lots. However, Cristobal claimed that the title over the
said property had not been turned over to them and on several
occasions Carlos, Cesar and Cornelio had, without his and his coowners' knowledge, mortgaged the said lots comprising the 23rd
Street property in Bacolod City to several banking institutions and
even leased the same to Pilipinas Shell Petroleum Corporation,
which, however, was only curtailed by court action. Thus, Cristobal
prayed that the veil of corporate fiction be pierced as CMH was
being used to deprive and defraud him of his successional rights
over the house and lots on 23rd Street, Bacolod City.
Carlos, Cesar, Cornelio, Claudio and Corazon, as defendants
therein, countered, by way of special and affirmative defenses:4 first,
regular courts had no jurisdiction over the subject matter of the
complaint since it involved an intra-corporate controversy - the
complaint being instituted by Cristobal who is a stockholder and
incorporator of CMH against his siblings, who are likewise
stockholders of the same corporation, and as such within the
exclusive and original jurisdiction of the Securities and Exchange
Commission (SEC for brevity); second, the creation of CMH as an
alleged dummy corporation was a device or scheme amounting to
fraud, thus falling under the original and exclusive jurisdiction of the
SEC; third, the claim of ownership over the house and lots by
Cristobal which was ventilated in the ejectment case filed by the said
defendants against Cristobal in the Municipal Trial Court in Cities
(MTCC) of Bacolod City, Branch III and docketed therein as Civil
Case No. 17698, was resolved in favor of CMH; fourth, Cristobal
committed forum-shopping since he had previously filed a case
against CMH, its incorporators and stockholders before the SEC,
docketed as SEC Case No. 03559; fifth, Cristobal had no cause of
action since the power to sue and be sued was vested alone in the
board of directors of the corporation, CMH in particular, and not on a
mere stockholder.
Finding the arguments meritorious, the trial court issued on
November 22, 1991, an order5 dismissing the complaint in Civil
Case No. 6256. However, upon filing by Cristobal of a motion for
reconsideration6 dated December 6, 1991, the court a quo in its

Spec Pro 23 of 53
order7 dated April 20, 1992 reversed itself and set aside its previous
order dismissing the complaint. Thereafter, the defendant filed a
motion for reconsideration8 but it was denied in the order9 dated
August 17, 1992 of the trial court.
Carlos, Cesar, Cornelio, Claudio and Corazon elevated the case to
the Court of Appeals through a petition for certiorari10 alleging that
the trial court committed grave abuse of discretion amounting to lack
of jurisdiction in taking cognizance of Cristobal's motion for
reconsideration despite the absence of notice of time and place of
hearing in violation of procedural rules and in reconsidering its
extensive and exhaustive order dated November 22, 1991 with a
minute resolution denying their motion to dismiss.1wphi1.nt
Finding no abuse of discretion on the part of the court a quo, the
appellate court resolved on October 25, 1993 that the filing of the
opposition to Cristobal's motion for reconsideration cured the defect
of lack of notice and hearing; and that the complaint in Civil Case
No. 6256 did not involve an intra-corporate controversy but
Cristobal's successional rights which is within the jurisdiction of the
court.11
Hence, the instant petition which is anchored on the following
grounds:
I
THE HON. COURT OF APPEALS HAS DECIDED A QUESTION OF
SUBSTANCE IN OBVIOUS DEFIANCE OF THE DECISION OF THE
SUPREME COURT, IN NOT DISMISSING A CASE WHICH IS
PURELY AN INTRA-CORPORATE CONTROVERSY AND
THEREFORE, FALLS UNDER THE EXCLUSIVE JURISDICTION
OF THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO P.D. 902-A;
II
THE HON. COURT OF APPEALS HAS AGAIN DECIDED A
QUESTION OF SUBSTANCE, CONTRARY TO THE DECISIONS
OF THE SUPREME COURT, IN NOT DISMISSING THE CASE
FILED BY THE PRIVATE RESPONDENT WHO PURSUED
SIMULTANEOUS REMEDIES IN TWO (2) DIFFERENT FORA, AND
IS THEREFORE GUILTY OF FORUM SHOPPING;
III
THE HON. COURT OF APPEALS HAS DECIDED THE CASE NOT
IN ACCORD WITH THE APPLICABLE DECISIONS OF THE
SUPREME COURT, IN NOT DISMISSING THE COMPLAINT FILED
BY THE PRIVATE RESPONDENT ON THE GROUND OF
PENDENCY OF ANOTHER ACTION;
IV
THE HON. COURT OF APPEALS HAS DECIDED THE CASE NOT
IN ACCORD WITH THE APPLICABLE DECISIONS OF THE
SUPREME COURT, IN NOT DISMISSING THE COMPLAINT OF A
MERE STOCKHOLDER, WITHOUT BEING AUTHORIZED BY THE
BOARD OF DIRECTORS;

of corporate fiction falls within the category of a device or scheme

employed by corporate officers cognizable by the SEC alone.
The relationship of the parties to a suit has formerly been the lone
indicia for its classification either as an intra-corporate controversy
within the jurisdiction of the SEC or a civil dispute within the
jurisdiction of the regular courts. Thus, a dispute arising between a
stockholder and the corporation, without distinction, qualification or
exemption, was previously considered an intra-corporate
controversy within the jurisdiction of the SEC and not of the regular
courts. Recent jurisprudence, however, has established that in
determining which body has jurisdiction over a case, the better policy
would be to consider not only the status or relationship of the parties
but also the nature of the question that is the subject of the
controversy.12
A reading of the complaint filed by private respondent shows that its
primary objective is to protect his successional rights as an heir of
his late mother, Concepcion M. Hojilla, whose paraphernal
properties he claimed were fictitiously assigned to CMH to evade
payment of taxes. He alleged therein that the properties had already
been the subject of extra-judicial partition between the heirs with the
house and lots on 23rd Street, Bacolod City, being bestowed upon
him and his co-heirs Corazon and Claudia. He claimed that the
failure of his other siblings, Carlos, Cesar and Cornelio, to turn over
the title to him and his co-heirs allowed CMH to continue claiming
the house and lots as its own and even attempted to lease a few of
the lots to other persons without the knowledge of private
respondent and his co-heirs. Thus, private respondent filed the
complaint to consolidate his claim over the subject properties and
forestall any further intrusive act from the CMH which would place
his and his co-heirs/co-owners' rights over the properties in constant
peril. Private respondent's position as a stockholder of CMH and his
relationship to the other stockholders, became incidental only to the
issue of ownership over the subject properties and did not convert
the action into an intra-corporate controversy within the exclusive
jurisdiction of the SEC but remained a civil action cognizable by the
regular courts.
Neither does the allegation about CMH's formation as an alleged
dummy corporation designed to be the alter-ego of the late
Concepcion M. Hojilla and the prayer for piercing the corporate veil
convert the action into an intra-corporate controversy as the former
is merely cited as the ground relied upon by private respondent to
prove his claim of ownership over the said house and lots whereas
through the said prayer, he in effect exhorts the court to confirm his
allegations and thus, protect his successional rights.
Thus, in Cease v. CA13 this Court took cognizance of the civil case
filed by respondents against their siblings (petitioners therein) and
the Tiaong Milling and Plantation Company, Inc. praying that the
corporation be declared identical to their deceased father, Forrest L.
Cease, and that its properties be divided among his children as his
intestate heirs. The Court treated the case as an action for partition
and, applying the doctrine of piercing the corporate veil, disregarded
the separate personality of the corporation from that of its
stockholders reasoning that if the legal fiction of separate corporate
personality were sustained, then it would be used to delay and
ultimately deprive and defraud respondents of their successional
rights over the estate of their deceased father.

V
THE HON. COURT OF APPEALS HAS DECIDED THE CASE NOT
IN ACCORD WITH THE APPLICABLE DECISIONS OF THE
SUPREME COURT, IN TAKING COGNIZANCE OF A "MERE
SCRAP OF PAPER", A MOTION FOR RECONSIDERATION,
WHICH DOES NOT CONTAIN THE NOTICE OF TIME AND PLACE
OF HEARING, IN VIOLATION OF THE MANDATORY
REQUIREMENTS OF THE RULES OF COURT.
At the outset, we note that the alleged errors attributed on the part of
the Court of Appeals by the petitioners are mere reiteration of those
already raised in the court below but which we will nonetheless
consider to put an end to this dispute.
First, petitioners argue that the trial court has no jurisdiction over the
complaint in Civil Case No. 6256 as it involves a suit filed by a
stockholder against other stockholders and the corporation itself;
thus, it is an intra-corporate controversy within the jurisdiction of the
SEC and not of the regular courts. Likewise, petitioners argue that
the allegation of fictitious creation of CMH as an alter-ego of the late
Concepcion M. Hojilla and the concomitant prayer to pierce the veil

Second, petitioners argue that the appellate court erred in

entertaining the complaint in Civil Case No. 6256 despite the
existence of a similar complaint filed by Cristobal before the SEC,
docketed as SEC Case No. 0355914 involving the same parties and
the same issues raised in Civil Case No. 6256.
We do not agree. As properly resolved by the appellate court, the
filing of SEC Case No. 03559 does not bar the subsequent filing of
Civil Case No. 6256 because they refer to different causes of action
with distinct reliefs prayed for. The private respondent in the SEC
case prayed for the appointment of a receiver, dissolution and
liquidation of CMH, and to enjoin petitioners from leasing the house
and lots at 23rd Street, Bacolod City. However, in Civil Case No.
6256, he sought to preserve his successional rights as heir of his
deceased mother by piercing the veil of corporate fiction to recover
the title of the house and lots on 23rd Street, Bacolod City, and claim
payment of damages for the injury he has suffered.
Neither does the resolution of SEC Case No. 03559 dismissing the
petition of private respondent during the pendency of Civil Case No.
6256 constitute res judicata on the matter since the cause of action
and issues raised and resolved in the former are different from those

Spec Pro 24 of 53
cited in the latter. The requirements of res judicata are: (a) the
former judgment must be final; (b) the court which rendered it had
jurisdiction over the subject matter and the parties; (c) it must be a
judgment on the merits; and (d) there must be, between the first and
second actions, identity of parties, subject matter, and causes of
action.15 Notably, in the SEC case, the private respondent averred
that petitioner stockholders and CMH committed acts to defraud the
public such as the lack of accounting, lack of records, lack of proper
notice of meetings, and prayed for the dissolution of the corporation;
whereas, in Civil Case No. 6256, the private respondent contended
that CMH was a mere dummy corporation and an alter-ego of his
deceased mother and thus, sought the delivery of the title over the
house and lots in question as his share of inheritance from his
deceased mother.
Third, petitioners argue that the MTCC's adverse decision in the
ejectment case, Civil Case No. 17698, which they had filed against
private respondent Cristobal M. Hojilla, is already final and
conclusive with regard to latter's claim of ownership over the house
and lots in question. Hence, petitioners contend that Civil Case No.
6256 of the RTC should have been dismissed as it allegedly involves
the same subject matter and the same issue.
The record shows that the MTCC rendered a decision in the
ejectment case, Civil Case No. 17698, ordering private respondent
to vacate the premises; and that decision was affirmed by the Court
of Appeals. However, under Sec. 7, Rule 70 of the Rules of Court,
the judgment rendered by a municipal or metropolitan trial court in
an action for forcible entry or detainer shall be effective with respect
to possession only and in no wise shall affect or bind the title of
ownership of the land or building. Such judgment shall not bar an
action between the same parties respecting the title to the land or
building nor shall the facts found therein be held conclusive in
another case between the same parties upon a different cause of
action not involving possession.16 Thus, the filing of Civil Case No.
6256 in the RTC was not barred by the adverse decision of the
MTCC in the ejectment case, Civil Case No. 17698, inasmuch as the
issue raised in the former was one regarding ownership while the
issue resolved in the ejectment case was priority of possession
alone.17
Fourth, petitioners contend that the complaint should have been
dismissed as it was filed by a mere stockholder in behalf of the
corporation without being authorized by its board of directors.
On the contrary, authorization from the board of directors of the CMH
in the case at bar was not necessary inasmuch as private
respondent was not acting on behalf of the corporation but in his
own personal capacity; and precisely he was suing the corporation
itself (CMH) to preserve his successional rights.
Finally, petitioners point out that the lower court erred in granting the
motion for reconsideration of herein private respondent despite the
lack of notice of time and place of hearing in violation of the
mandatory provision of the Rules of Court. However, as correctly
ruled by the appellate court, the requirement of notice of time and
hearing in a party's pleading is necessary only to appraise the other
party of the actions of the former. Inasmuch as petitioners have
timely filed their Opposition18 on January 7, 1992 to private
respondent's motion for reconsideration, any defect regarding such
notice had been cured.1wphi1.nt
In view of the foregoing, the Court of Appeals did not commit any
reversible error in its challenged decision.
WHEREFORE, the assailed Decision dated October 25, 1993 of the
Court of Appeals in CA-G.R. SP No. 28893 holding that the RTC of
Bacolod City, Branch 45, did not commit grave abuse of discretion in
reconsidering its Order, dated November 22, 1991, in Civil Case No.
6256 is AFFIRMED. The Regional Trial Court of Bacolod City,
Branch 45, is hereby ordered to resume forthwith the trial of Civil
Case No. 6256 and to resolve the same with utmost dispatch.
SO ORDERED.

G.R. No. 154322 August 22, 2006

EMILIA FIGURACION-GERILLA, Petitioner,
vs.
CAROLINA VDA. DE FIGURACION,* ELENA FIGURACIONANCHETA,* HILARIA A. FIGURACION, FELIPA FIGURACIONMANUEL, QUINTIN FIGURACION and MARY FIGURACIONGINEZ, Respondents.
DECISION
CORONA, J.:
In this petition for review on certiorari,1 petitioner Emilia FiguracionGerilla challenges the decision2 and resolution3 of the Court of
Appeals (CA) affirming the decision of the Regional Trial Court
(RTC) of Urdaneta City, Pangasinan, Branch 49, which dismissed
her complaint for partition. The properties involved are two parcels of
land which belonged to her late father, Leandro Figuracion.
The facts of the case follow.4
Spouses Leandro and respondent Carolina Figuracion (now both
deceased) had six children: petitioner and respondents Elena
Figuracion-Ancheta (now deceased), Hilaria Figuracion, Felipa
Figuracion-Manuel, Quintin Figuracion and Mary Figuracion-Ginez.
On August 23, 1955, Leandro executed a deed of quitclaim over his
real properties in favor of his six children. When he died in 1958, he
left behind two parcels of land: (1) Lot 2299 of the Cadastral Survey
of Urdaneta consisting of 7,547 square meters with Transfer
Certificate of Title (TCT) No. 4221-P in the name of "Leandro
Figuracion, married to Carolina Adviento" and (2) Lot 705 of the
Cadastral Survey of Urdaneta with an area of 2,900 sq. m. with TCT
No. 4220-P also in the name of "Leandro Figuracion, married to
Carolina Adviento." Leandro had inherited both lots from his
deceased parents,5 as evidenced by Original Certificate of Title
(OCT) Nos. 16731 and 16610, respectively, issued by the Register
of Deeds of the Province of Pangasinan.
Leandro sold a portion of Lot 2299 to Lazaro Adviento, as a result of
which TCT No. 4221-P was cancelled and TCT No. 101331 was
issued to "Lazaro Adviento, married to Rosenda Sagueped" as
owner of the 162 sq. m. and "Leandro Figuracion, married to
Carolina Adviento" as owner of 7,385 sq. m. This lot continued to be
in the name of Leandro in Tax Declaration No. 616 for the year 1985.
What gave rise to the complaint for partition, however, was a dispute
between petitioner and her sister, respondent Mary, over the eastern
half of Lot 707 of the Cadastral Survey of Urdaneta with an area of
3,164 sq. m.
Lot 707 belonged to Eulalio Adviento, as evidenced by OCT No.
15867 issued on February 9, 1916. When Adviento died, his two
daughters, Agripina Adviento (his daughter by his first wife) and
respondent Carolina (his daughter by his second wife), succeeded
him to it. On November 28, 1961, Agripina executed a quitclaim in
favor of petitioner over the one-half eastern portion of Lot 707.
Agripina died on July 28, 1963, single and without any issue. Before
her half-sisters death, however, respondent Carolina adjudicated
unto herself, via affidavit under Rule 74 of the Rules of Court, the
entire Lot 707 which she later sold to respondents Felipa and Hilaria.
The latter two immediately had OCT No. 15867 cancelled, on
December 11, 1962. A new title, TCT No. 42244, was then issued in
the names of Felipa and Hilaria for Lot 707.
In February 1971, petitioner and her family went to the United States
where they stayed for ten years. Returning in 1981,6 she built a
house made of strong materials on the eastern half-portion of Lot
707. She continued paying her share of the realty taxes thereon.
It was sometime later that this dispute erupted. Petitioner sought the
extrajudicial partition of all properties held in common by her and
respondents. On May 23, 1994, petitioner filed a complaint in the
RTC of Urdaneta City, Branch 49, for partition, annulment of
documents, reconveyance, quieting of title and damages against
respondents, praying, among others, for: (1) the partition of Lots
2299 and 705; (2) the nullification of the affidavit of self-adjudication
executed by respondent Carolina over Lot 707, the deed of absolute
sale in favor of respondents Felipa and Hilaria, and TCT No. 42244;
(3) a declaration that petitioner was the owner of one-half of Lot 707
and (4) damages. The case was docketed as Civil Case No. U-5826.

Spec Pro 25 of 53
On the other hand, respondents took the position that Leandros
estate should first undergo settlement proceedings before partition
among the heirs could take place. And they claimed that an
accounting of expenses chargeable to the estate was necessary for
such settlement.
On June 26, 1997,7 the RTC8 rendered judgment nullifying
Carolinas affidavit of self-adjudication and deed of absolute sale of
Lot 707. It also declared Lots 2299 and 705 as exclusive properties
of Leandro Figuracion and therefore part of his estate. The RTC,
however, dismissed the complaint for partition, reconveyance and
damages on the ground that it could not grant the reliefs prayed for
by petitioner without any (prior) settlement proceedings wherein the
transfer of title of the properties should first be effected.
On appeal, the CA upheld the dismissal of petitioners action for
partition for being premature. The CA reversed the decision,
however, with respect to the nullification of the self-adjudication and
the deed of sale. Upholding the validity of the affidavit of selfadjudication and deed of sale as to Carolinas one-half pro-indiviso
share, it instead partitioned Lot 707. Dissatisfied, respondents
elevated the CA decision to this Court in G.R. No. 151334, entitled
Carolina vda. de Figuracion, et al. v. Emilia Figuracion-Gerilla.9

related to her fathers final illness and burial have not been properly
settled.14 Thus, the heirs (petitioner and respondents) have to
submit their fathers estate to settlement because the determination
of these expenses cannot be done in an action for partition.
In estate settlement proceedings, there is a proper procedure for the
accounting of all expenses for which the estate must answer. If it is
any consolation at all to petitioner, the heirs or distributees of the
properties may take possession thereof even before the settlement
of accounts, as long as they first file a bond conditioned on the
payment of the estates obligations.15
WHEREFORE, the petition is hereby DENIED. The Court of Appeals
decision and resolution in CA-G.R. CV No. 58290 are AFFIRMED in
so far as the issue of the partition of Lots 2299 and 705 is
concerned.
But with respect to Lot 707, we make no ruling on the validity of
Carolina vda. de Figuracions affidavit of self-adjudication and deed
of sale in favor of Felipa and Hilaria Figuracion in view of the fact
that Carolina vda. de Figuracion, et al. v. Emilia Figuracion-Gerilla
(G.R. No. 151334) is still pending in this Division.
Costs against petitioner.

The issue for our consideration is whether or not there needs to be a

prior settlement of Leandros intestate estate (that is, an accounting
of the income of Lots 2299 and 705, the payment of expenses,
liabilities and taxes, plus compliance with other legal requirements,
etc.) before the properties can be partitioned or distributed.
Respondents claim that: (1) the properties constituting Leandros
estate cannot be partitioned before his estate is settled and (2) there
should be an accounting before anything else, considering that they
(respondents) had to spend for the maintenance of the deceased
Leandro Figuracion and his wife in their final years, which support
was supposed to come from the income of the properties. Among
other things, respondents apparently wanted petitioner to share in
the expenses incurred for the care of their parents during the ten
years she stayed in the United States, before she could get her part
of the estate while petitioner apparently wanted her gross share,
without first contributing to the expenses.
In any event, there appears to be a complication with respect to the
partition of Lot 705. The records refer to a case entitled Figuracion,
et al. v. Alejo currently pending in the CA. The records, however, give
no clue or information regarding what exactly this case is all about.
Whatever the issues may be, suffice it to say that partition is
premature when ownership of the lot is still in dispute.10
Petitioner faces a different problem with respect to Lot 2299. Section
1, Rule 69 of the Rules of Court provides:
SECTION 1. Complaint in action for partition of real estate. A
person having the right to compel the partition of real estate may do
so as provided in this Rule, setting forth in his complaint the nature
and extent of his title and an adequate description of the real estate
of which partition is demanded and joining as defendants all other
persons interested in the property.
The right to an inheritance is transmitted immediately to the heirs by
operation of law, at the moment of death of the decedent. There is
no doubt that, as one of the heirs of Leandro Figuracion, petitioner
has a legal interest in Lot 2299. But can she compel partition at this
stage?
There are two ways by which partition can take place under Rule 69:
by agreement under Section 211 and through commissioners when
such agreement cannot be reached, under Sections 3 to 6.12
Neither method specifies a procedure for determining expenses
chargeable to the decedents estate. While Section 8 of Rule 69
provides that there shall be an accounting of the real propertys
income (rentals and profits) in the course of an action for partition,13
there is no provision for the accounting of expenses for which
property belonging to the decedents estate may be answerable,
such as funeral expenses, inheritance taxes and similar expenses
enumerated under Section 1, Rule 90 of the Rules of Court.
In a situation where there remains an issue as to the expenses
chargeable to the estate, partition is inappropriate. While petitioner
points out that the estate is allegedly without any debt and she and
respondents are Leandro Figuracions only legal heirs, she does not
dispute the finding of the CA that "certain expenses" including those

SO ORDERED.

Spec Pro 26 of 53
G.R. No. L-81147

June 20, 1989

VICTORIA BRINGAS PEREIRA, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and RITA PEREIRA
NAGAC, respondents.
Benjamin J. Quitoriano for petitioner.
Linzag-Arcilla & Associates Law Offices for private respondent.

GANCAYCO, J.:
Is a judicial administration proceeding necessary when the decedent
dies intestate without leaving any debts? May the probate court
appoint the surviving sister of the deceased as the administratrix of
the estate of the deceased instead of the surviving spouse? These
are the main questions which need to be resolved in this case.
Andres de Guzman Pereira, an employee of the Philippine Air Lines,
passed away on January 3, 1983 at Bacoor, Cavite without a will. He
was survived by his legitimate spouse of ten months, the herein
petitioner Victoria Bringas Pereira, and his sister Rita Pereira Nagac,
the herein private respondent.
On March 1, 1983, private respondent instituted before Branch 19 of
the Regional Trial Court of Bacoor, Cavite, Special Proceeding No.
RTC-BSP-83-4 for the issuance of letters of administration in her
favor pertaining to the estate of the deceased Andres de Guzman
Pereira. 1 In her verified petition, private respondent alleged the
following: that she and Victoria Bringas Pereira are the only surviving
heirs of the deceased; that the deceased left no will; that there are
no creditors of the deceased; that the deceased left several
properties, namely: death benefits from the Philippine Air Lines
(PAL), the PAL Employees Association (PALEA), the PAL Employees
Savings and Loan Association, Inc. (PESALA) and the Social
Security System (SSS), as well as savings deposits with the
Philippine National Bank (PNB) and the Philippine Commercial and
Industrial Bank (PCIB), and a 300 square meter lot located at
Barangay Pamplona, Las Pinas, Rizal and finally, that the spouse of
the deceased (herein petitioner) had been working in London as an
auxiliary nurse and as such one-half of her salary forms part of the
estate of the deceased.
On March 23,1983, petitioner filed her opposition and motion to
dismiss the petition of private respondent 2 alleging that there exists
no estate of the deceased for purposes of administration and praying
in the alternative, that if an estate does exist, the letters of
administration relating to the said estate be issued in her favor as
the surviving spouse.
In its resolution dated March 28, 1985, the Regional Trial Court,
appointed private respondent Rita Pereira Nagac administratrix of
the intestate estate of Andres de Guzman Pereira upon a bond
posted by her in the amount of Pl,000.00. The trial court ordered her
to take custody of all the real and personal properties of the
deceased and to file an inventory thereof within three months after
receipt of the order. 3
Not satisfied with the resolution of the lower court, petitioner brought
the case to the Court of Appeals. The appellate court affirmed the
appointment of private respondent as administratrix in its decision
dated December 15, 1987. 4
Hence, this petition for review on certiorari where petitioner raises
the following issues: (1) Whether or not there exists an estate of the
deceased Andres de Guzman Pereira for purposes of administration;
(2) Whether or not a judicial administration proceeding is necessary
where there are no debts left by the decedent; and, (3) Who has the
better right to be appointed as administratrix of the estate of the
deceased, the surviving spouse Victoria Bringas Pereira or the
surviving sister Rita Pereira Nagac?
Anent the first issue, petitioner contends that there exists no estate
of the deceased for purposes of administration for the following
reasons: firstly, the death benefits from PAL, PALEA, PESALA and
the SSS belong exclusively to her, being the sole beneficiary and in
support of this claim she submitted letter-replies from these
institutions showing that she is the exclusive beneficiary of said
death benefits; secondly, the savings deposits in the name of her

deceased husband with the PNB and the PCIB had been used to
defray the funeral expenses as supported by several receipts; and,
finally, the only real property of the deceased has been
extrajudicially settled between the petitioner and the private
respondent as the only surviving heirs of the deceased.
Private respondent, on the other hand, argues that it is not for
petitioner to decide what properties form part of the estate of the
deceased and to appropriate them for herself. She points out that
this function is vested in the court in charge of the intestate
proceedings.
Petitioner asks this Court to declare that the properties specified do
not belong to the estate of the deceased on the basis of her bare
allegations as aforestated and a handful of documents. Inasmuch as
this Court is not a trier of facts, We cannot order an unqualified and
final exclusion or non-exclusion of the property involved from the
estate of the deceased. 5
The resolution of this issue is better left to the probate court before
which the administration proceedings are pending. The trial court is
in the best position to receive evidence on the discordant
contentions of the parties as to the assets of the decedent's estate,
the valuations thereof and the rights of the transferees of some of
the assets, if any. 6 The function of resolving whether or not a certain
property should be included in the inventory or list of properties to be
administered by the administrator is one clearly within the
competence of the probate court. However, the court's determination
is only provisional in character, not conclusive, and is subject to the
final decision in a separate action which may be instituted by the
parties. 7
Assuming, however, that there exist assets of the deceased Andres
de Guzman Pereira for purposes of administration, We nonetheless
find the administration proceedings instituted by private respondent
to be unnecessary as contended by petitioner for the reasons herein
below discussed.
The general rule is that when a person dies leaving property, the
same should be judicially administered and the competent court
should appoint a qualified administrator, in the order established in
Section 6, Rule 78, in case the deceased left no will, or in case he
had left one, should he fail to name an executor therein. 8 An
exception to this rule is established in Section 1 of Rule 74. 9 Under
this exception, when all the heirs are of lawful age and there are no
debts due from the estate, they may agree in writing to partition the
property without instituting the judicial administration or applying for
the appointment of an administrator.
Section 1, Rule 74 of the Revised Rules of Court, however, does not
preclude the heirs from instituting administration proceedings, even if
the estate has no debts or obligations, if they do not desire to resort
for good reasons to an ordinary action for partition. While Section 1
allows the heirs to divide the estate among themselves as they may
see fit, or to resort to an ordinary action for partition, the said
provision does not compel them to do so if they have good reasons
to take a different course of action. 10 It should be noted that
recourse to an administration proceeding even if the estate has no
debts is sanctioned only if the heirs have good reasons for not
resorting to an action for partition. Where partition is possible, either
in or out of court, the estate should not be burdened with an
administration proceeding without good and compelling reasons. 11
Thus, it has been repeatedly held that when a person dies without
leaving pending obligations to be paid, his heirs, whether of age or
not, are not bound to submit the property to a judicial administration,
which is always long and costly, or to apply for the appointment of an
administrator by the Court. It has been uniformly held that in such
case the judicial administration and the appointment of an
administrator are superfluous and unnecessary proceedings . 12
Now, what constitutes "good reason" to warrant a judicial
administration of the estate of a deceased when the heirs are all of
legal age and there are no creditors will depend on the
circumstances of each case.
In one case, 13 We said:
Again the petitioner argues that only when the heirs do not have any
dispute as to the bulk of the hereditary estate but only in the manner
of partition does section 1, Rule 74 of the Rules of Court apply and
that in this case the parties are at loggerheads as to the corpus of
the hereditary estate because respondents succeeded in

Spec Pro 27 of 53
sequestering some assets of the intestate. The argument is
unconvincing, because, as the respondent judge has indicated,
questions as to what property belonged to the deceased (and
therefore to the heirs) may properly be ventilated in the partition
proceedings, especially where such property is in the hands of one
heir.
In another case, We held that if the reason for seeking an
appointment as administrator is merely to avoid a multiplicity of suits
since the heir seeking such appointment wants to ask for the
annulment of certain transfers of property, that same objective could
be achieved in an action for partition and the trial court is not justified
in issuing letters of administration. 14 In still another case, We did
not find so powerful a reason the argument that the appointment of
the husband, a usufructuary forced heir of his deceased wife, as
judicial administrator is necessary in order for him to have legal
capacity to appear in the intestate proceedings of his wife's
deceased mother, since he may just adduce proof of his being a
forced heir in the intestate proceedings of the latter. 15
We see no reason not to apply this doctrine to the case at bar. There
are only two surviving heirs, a wife of ten months and a sister, both
of age. The parties admit that there are no debts of the deceased to
be paid. What is at once apparent is that these two heirs are not in
good terms. The only conceivable reason why private respondent
seeks appointment as administratrix is for her to obtain possession
of the alleged properties of the deceased for her own purposes,
since these properties are presently in the hands of petitioner who
supposedly disposed of them fraudulently. We are of the opinion that
this is not a compelling reason which will necessitate a judicial
administration of the estate of the deceased. To subject the estate of
Andres de Guzman Pereira, which does not appear to be substantial
especially since the only real property left has been extrajudicially
settled, to an administration proceeding for no useful purpose would
only unnecessarily expose it to the risk of being wasted or
squandered. In most instances of a similar nature, 16 the claims of
both parties as to the properties left by the deceased may be
properly ventilated in simple partition proceedings where the
creditors, should there be any, are protected in any event.
We, therefore, hold that the court below before which the
administration proceedings are pending was not justified in issuing
letters of administration, there being no good reason for burdening
the estate of the deceased Andres de Guzman Pereira with the costs
and expenses of an administration proceeding.
With the foregoing ruling, it is unnecessary for us to delve into the
issue of who, as between the surviving spouse Victoria Bringas
Pereira and the sister Rita Pereira Nagac, should be preferred to be
appointed as administratrix.

G.R. No. 115181

March 31, 2000

MARIA SOCORRO AVELINO, petitioner,

vs.
COURT OF APPEALS, ANGELINA AVELINO, SHARON AVELINO,
ANTONIO AVELINO, JR., TRACY AVELINO, PATRICK MICHAEL
AVELINO and MARK ANTHONY AVELINO, respondents.
RESOLUTION
QUISUMBING, J.:
Before us is a petition for review on certiorari of the Decision of the
Court of Appeals dated February 16, 1994 in CA-G.R. SP No. 31574
as well as its Resolution dated April 28, 1994 denying petitioner's
Motion for Reconsideration. The assailed Decision affirmed the
Order of the Regional Trial Court of Quezon City, Branch 78, in Sp.
Proc. No. Q-91-10441 converting petitioner's petition for the
issuance of letters of administration to an action for judicial partition.
Petitioner Maria Socorro Avelino is a daughter and compulsory heir
of the late Antonio Avelino, Sr., and his first wife private respondent
Angelina Avelino.
The other private respondents, Sharon, Antonio Jr., Tracy, Patrick
and Mark Anthony all surnamed Avelino are likewise compulsory
heirs of Avelino, Sr. Sharon, an American, is the second wife of
Avelino Sr. The other private respondents are siblings of petitioner
Ma. Socorro.
The records reveal that on October 24, 1991, Ma. Socorro filed
before the Regional Trial Court of Quezon City, Branch 78, docketed
as SP Proc. No. Q-91-10441, a petition for the issuance of letters of
administration of the estate of Antonio Avelino, Sr., who died
intestate on April 10, 1989. She asked that she be appointed the
administrator of the estate.
On December 3, 1992, Angelina, and the siblings filed their
opposition by filing a motion to convert the said judicial proceedings
to an action for judicial partition which petitioner duly opposed.
On February 16, 1993, public respondent judge issued the assailed
Order which reads:
Acting on the "Motion to Convert Proceedings to Action for Judicial
Partition", considering that the petitioner is the only heir not
amenable to a simple partition, and all the other compulsory heirs
manifested their desire for an expeditious settlement of the estate of
the deceased Antonio Avelino, Sr., the same is granted.

WHEREFORE, the letters of administration issued by the Regional

Trial Court of Bacoor to Rita Pereira Nagac are hereby revoked and
the administration proceeding dismissed without prejudice to the
right of private respondent to commence a new action for partition of
the property left by Andres de Guzman Pereira. No costs.

WHEREFORE, the petition is converted into judicial partition of the

estate of deceased Antonio Avelino, Sr. The parties are directed to
submit a complete inventory of all the real and personal properties
left by the deceased. Set the hearing of the judicial partition on
APRIL 13, 1993, at 8:30 o'clock in the morning. Notify all the parties
and their counsel of this assignment.

SO ORDERED.

SO ORDERED.1
On March 17, 1993, petitioner filed a motion for reconsideration
which was denied in an Order dated June 16, 1993.
On July 23, 1993, Ma. Socorro filed before the Court of Appeals, a
petition for certiorari, prohibition, and mandamus alleging grave
abuse of discretion amounting to lack or excess of jurisdiction on the
part of the trial court, in granting private respondents' motion to
convert the judicial proceeding for the issuance of letters of
administration to an action for judicial partition. Her petition was
docketed as CA-G.R. SP No. 31574.
On February 18, 1994, the respondent appellate court rendered the
assailed decision, stating that the "petition is DENIED DUE
COURSE" and accordingly dismissed. 2
On March 1, 1994, petitioner duly moved for reconsideration, but it
was denied on April 28, 1994.
Hence, this petition. Petitioner assigns the following errors:
THE COURT OF APPEALS ERRED IN UPHOLDING THE LOWER
COURT'S FINDING THAT PARTITION IS PROPER UNDER THE
PREMISES.

Spec Pro 28 of 53
ADMINISTRATION SHOULD BE THE PROPER REMEDY
PENDING THE DETERMINATION OF THE CHARACTER AND
EXTENT OF THE DECEDENT'S ESTATE.3
For resolution, we find that given the circumstances in this case, the
sole issue here is whether respondent appellate court committed an
error of law and gravely abused its discretion in upholding the trial
court's finding that a partition is proper.
Petitioner submits that: First, no partition of the estate is possible in
the instant case as no determination has yet been made of the
character and extent of the decedent's estate. She points to the
Court's ruling in Arcilles v. Montejo, 26 SCRA 197 (1969), where we
held that when the existence of other properties of the decedent is a
matter still to be reckoned with, administration proceedings are the
proper mode of resolving the same.4 In addition, petitioner contends
that the estate is in danger of being depleted for want of an
administrator to manage and attend to it.
Second, petitioner insists that the Rules of Court does not provide
for conversion of a motion for the issuance of letters of
administration to an action for judicial partition. The conversion of the
motion was, thus, procedurally inappropriate and should be struck
down for lack of legal basis.
When a person dies intestate, or, if testate, failed to name an
executor in his will or the executor so named is incompetent, or
refuses the trust, or fails to furnish the bond required by the Rules of
Court, then the decedent's estate shall be judicially administered and
the competent court shall appoint a qualified administrator in the
order established in Section 6 of Rule 78.5 The exceptions to this
rule are found in Sections 1 and 2 of Rule 746 which provide:
Sec. 1. Extrajudicial settlement by agreement between heirs. If
the decedent left no will and no debts and the heirs are all of age or
the minors are represented by their judicial or legal representatives
duly authorized for the purpose, the parties may, without securing
letters of administration, divide the estate among themselves as they
see fit by means of a public instrument filed in the office of the
register of deeds, and should they disagree, they may do so in an
ordinary action of partition. . .
Sec. 2. Summary settlement of estates of small value. Whenever
the gross value of the estate of a deceased person, whether he died
testate or intestate, does not exceed ten thousand pesos, and that
fact if made to appear to the Regional Trial Court having jurisdiction
of the estate by the petition of an interested person and upon
hearing, which shall be held not less than one (1) month nor more
than three (3) months from the date of the last publication of a notice
which shall be published once a week for three (3) consecutive
weeks in a newspaper of general circulation in the province, and
after such other notice to interested persons as the court may direct,
the court may proceed summarily, without the appointment of an
executor or administrator, and without delay, to grant, if proper,
allowance of the will, if any there be, to determine who are the
persons legally entitled to participate in the estate and to apportion
and divide it among them after the payment of such debts of the
estate as the court shall then find to be due; and such persons, in
their own right, if they are lawful age and legal capacity, or by their
guardians or trustees legally appointed and qualified, if otherwise,
shall thereupon be entitled to receive and enter into the possession
of the portions of the estate so awarded to them respectively. The
court shall make such order as may be just respecting the costs of
the proceedings, and all orders and judgments made or rendered in
the course thereof shall be recorded in the office of the clerk, and the
order of partition or award, if it involves real estate, shall be recorded
in the proper register's office.1awp++i1
The heirs succeed immediately to all of the rights and properties of
the deceased at the moment of the latter's death.7 Section 1, Rule
74 of the Rules of Court, allows heirs to divide the estate among
themselves without need of delay and risks of being dissipated.
When a person dies without leaving pending obligations, his heirs,
are not required to submit the property for judicial administration, nor
apply for the appointment of an administrator by the court.8
We note that the Court of Appeals found that in this case "the
decedent left no debts and the heirs and legatees are all of age."9
With this finding, it is our view that Section 1, Rule 74 of the Rules of
Court should apply.
In a last-ditch effort to justify the need for an administrator, petitioner
insists that there is nothing to partition yet, as the nature and

character of the estate have yet to be determined. We find, however,

that a complete inventory of the estate may be done during the
partition proceedings, especially since the estate has no debts.
Hence, the Court of Appeals committed no reversible error when it
ruled that the lower court did not err in converting petitioner's action
for letters of administration into an action for judicial partition.
Nor can we sustain petitioner's argument that the order of the trial
court converting an action for letters of administration to one for
judicial partition has no basis in the Rules of Court, hence
procedurally infirm. The basis for the trial court's order is Section 1,
Rule 74 of the Rules of Court. It provides that in cases where the
heirs disagree as to the partition of the estate and no extrajudicial
settlement is possible, then an ordinary action for partition may be
resorted to, as in this case. We have held that where the more
expeditious remedy of partition is available to the heirs, then the
heirs or the majority of them may not be compelled to submit to
administration proceedings. 10 The trial court appropriately
converted petitioner's action for letters of administration into a suit for
judicial partition, upon motion of the private respondents. No
reversible error may be attributed to the Court of Appeals when it
found the trial court's action procedurally in order.
WHEREFORE, the petition is DENIED for lack of merit, and the
assailed decision and resolution of the Court of Appeals in CA-G.R.
SP No. 31574 are AFFIRMED. Costs against petitioner.
SO ORDERED.1wphi1.nt

Spec Pro 29 of 53
G.R. No. 109963

October 13, 1999

HEIRS OF JOAQUIN TEVES: RICARDO TEVES, ARCADIA TEVES,

TOMAS ZAMORA, FELICIA TEVES, HELEN TEVES, ALFREDO
OSMEA, ROBERTO TEVES, JOAQUIN TEVES, III, PETER
TEVES, MILDRED TEVES, WILSON MABILOG, LEONILO
PATIGAYON, EDUARDO PATIGAYON, ALEXANDER PATIGAYON,
ALDRIN PATIGAYON, NOEL PATIGAYON, VICTOR PATIGAYON,
MA. TEVES PATERNO OCHOTORENA, EXEQUILA TEVES,
EMILIO JO, EMILIANA TEVES, MILAGROS TEVES, EDSEL PINILI,
VICENTE TEVES, EMILIANA ISO, ALBERTO TEVES, ERLINDA
TEVES, DIOSDADO TEVES, VICTORIA TEVES AND VIVENCIO
NARCISO, petitioners,
vs.
COURT OF APPEALS, HEIRS OF ASUNCION IT-IT NAMELY:
ELISA IT-IT, SUSANA IT-IT, NORBERTO IT-IT, ISA-AC IT-IT, JR.,
JAIME IT-IT, FELICITAS IT-IT, TERESITA IT-IT, ANTONIO NODADO,
CORAZON IT-IT, JIMMY LERO, DANILO IT-IT, EDITA GAMORA,
PACITA VAILOCES, CRIS VAILOCES, CECILIA CIMAFRANCA and
CECILIA FLOR CIMAFRANCA, respondents.
GONZAGA-REYES, J.:
Before us is a petition for review on certiorari assailing the decision 1
of the Court of Appeals which was promulgated on August 18, 1992
affirming the July 11, 1991 decision 2 of Branch 38 of the Regional
Trial Court of Negros Oriental in favor of defendants-appellees.
The facts, as culled from the pleadings of the parties herein and the
decision of the lower courts, are as follows:
Marcelina Cimafranca and Joaquin Teves had nine children, namely
Teotimo, Felicia, Pedro, Andres, Asuncion, Gorgonio, Cresenciano,
Arcadia and Maria. Andres, however, predeceased both his parents
and died without issue. After Marcelina Cimafranca and Joaquin
Teves died, intestate and without debts, in 1943 and 1953,
respectively, their children executed extrajudicial settlements
purporting to adjudicate unto themselves the ownership over two
parcels of land belonging to their deceased parents and to alienate
their shares thereto in favor of their sister Asuncion Teves. The
validity of these settlements executed pursuant to section 1 of Rule
74 of the Rules of Court is the primary issue in the present
case.1wphi1.nt
On May 9, 1984, plaintiffs-appellants Ricardo and Arcadia Teves filed
a complaint with the Regional Trial Court of Negros Oriental for the
partition and reconveyance of two parcels of land located in
Dumaguete, designated as Lots 769-A and 6409, against the heirs of
Asuncion Teves. The complaint was subsequently amended to
include Maria Teves and the heirs of Teotimo, Felicia, Pedro, and
Gorgonio Teves as plaintiffs and the spouses Lucresio Baylosis and
Pacita Nocete, and Cecilia Cimafranca-Gamos and Cecilia Flor
Cimafranca as defendants. 3 Plaintiffs-appellants alleged that
defendants-appellees, without any justifiable reason, refused to
partition the said parcels of land and to convey to plaintiffs their
rightful shares. 4
Lot 769, covered by Original Certificate of Title (OCT) No. 4682-A, 5
is registered in the names of Urbana Cimafranca, one-fourth (1/4)
share, Marcelina Cimafranca, the wife of Joaquin Teves, one-fourth
(1/4) share, Domingo Villahermosa, one-eighth (1/8) share, Antero
Villahermosa, one-eighth (1/8) share, Cecilia Cimafranca, one-eighth
(1/8) share and Julio Cimafranca, one-eighth (1/8) share. The
present controversy involves only Marcelina Cimafranca's one-fourth
(1/4) share in the land, designated as Lot 769-A.
On June 13, 1956, Teotimo, Felicia, Pedro, Asuncion, Gorgonio and
Arcadia Teves executed a document entitled "Settlement of Estate
and Sale," 6 adjudicating unto themselves, in equal shares, Lot 769A and conveying their shares, interests and participations over the
same in favor of Asuncion Teves for the consideration of P425.00. A
similar deed denominated "Extrajudicial Settlement and Sale" 7 was
signed by Maria Teves on April 21, 1959. Under such deed, Maria
conveys her own share over Lot 769-A in favor of Asuncion Teves for
the consideration of P80.00. The two settlements were denounced
by the plaintiffs as spurious. The trial court summarized the claims of
the plaintiffs, viz
. . . Maria Teves Ochotorena herself, denied having executed this
Extrajudicial Settlement and Sale over her share or interest in Lot
769 claiming that her signature in said document is a forgery. She
disowns her signature declaring that as a married woman she
always signs a document in her husband's family name. Further, she

declared that on the date she purportedly signed said document in

Dumaguete City before the notary public, she was in her home in
Katipunan, Zamboanga del Norte.
On Exhibit "G" which is likewise offered as Exhibit "3" for the
defendants, plaintiffs hold that said document is spurious claiming
that the signatures of Pedro Teves, Felicia Teves and Gorgonio
Teves are all forgeries. To support this allegation, Helen T. Osmena,
daughter of Felicia Teves and Erlinda Teves, daughter of Gorgonio
Teves were presented as witnesses. Being allegedly familiar with the
style and character of the handwriting of their parents these
witnesses declared unequivocally that the signatures of their parents
appearing on the document are forgeries.
In sum, plaintiffs argue that these fraudulent documents which
defendants rely in claiming ownership to the disputed properties are
all nullities and have no force in law and could not be used as basis
for any legal title. Consequently, in their view, they are entitled to the
reliefs demanded particularly, to their respective shares of the
disputed properties. 8
The other property in dispute is Lot 6409 which was originally
covered by OCT No. 9091 9 and was registered in the name of
Joaquin Teves and his two sisters, Matea and Candida Teves.
However, Matea and Candida died without issue, causing the entire
property to pass to Joaquin Teves. On December 14, 1971, Lot 6409
was adjudicated and divided in equal shares in a "Deed of
Extrajudicial Settlement & Sale" 10 executed by Joaquin Teves'
children Asuncion, Teotimo, Felisia, Gorgonio, Arcadia and Maria
Teves. In the same deed, the shares of these same heirs in Lot 6409
were sold to Asuncion Teves for P100.00. Asuncion Teves took
possession of the land and acquired title 11 over the same on March
22, 1972. After her death in 1981, her children, defendants-appellees
It-it herein, extrajudicially settled Asuncion Teves' property,
adjudicating unto themselves Lot 6409. 12 On July 20, 1983 a new
transfer certificate of title 13 was issued in the names of Asuncion
Teves' children, namely Elisa, Susana, Norberto, Isaac, Jaime,
Felicitas, Teresita, Corazon, and Danilo, all surnamed It-it. On July 2,
1984, the It-its sold Lot 6409 to defendants-appellees Lucrecio
Baylosis, Sr. and Pacita Nocete-Baylosis for P20,000.00 14 and a
transfer certificate of title 15 was issued in the name of the Baylosis
couple.
Plaintiffs-appellants claim that the Deed of Extrajudicial Settlement &
Sale covering Lot 6409 is also spurious. Their arguments were
discussed in the trial court's decision as follows
Presented as Exhibit "D" and "1" for both the plaintiffs and
defendants respectively, is a document denominated as
"Extrajudicial Settlement and Sale" executed on December 4, 1971
by and among the heirs of Joaquin Teves and Marcelina Cimafranca.
This document which gave birth to TCT No. 5761 over Lot 6409
registered in the name of Asuncion Teves It-it is questioned by the
plaintiffs as spurious for the following reasons:
1.
Erasure of the word "quitclaim" is superimposed with the
word "sale" in handwriting.
2.
The consideration of "One peso" stated in document is
intercalated with the word "hundred" in handwriting.
3.
The signature of Maria Teves Ochotorena, Pedro Teves
and Felicia Teves are forgeries.
4.
The thumbmark imposed on the name of Gorgonio Teves
does not actually belong to Gorgonio Teves who was an educated
man and skilled in writing according to his daughter.
Aside from these defects which would make said document null and
void, Arcadia Teves who is one of the living sisters of the mother of
the principal defendants although confirming the authenticity of her
signature averred that in reality no consideration was ever given to
her and that her impression of the said document was that she was
only giving her consent to sell her share of the land.
Plaintiffs likewise contend that as regards the share of Ricardo
Teves, son of Crescenciano Teves who predeceased Joaquin and
Marcelina, it was not at all affected in that extrajudicial settlement
and sale since neither Crescenciano Teves nor his son Ricardo
Teves participated in its execution.
xxx

xxx

xxx

Spec Pro 30 of 53
Likewise, plaintiffs offered TCT No. 5761 for Lot 6409 registered in
the name of Asuncion Teves It-it as Exhibit "B" as proof that said
property was later titled in trust for all the heirs of Joaquin Teves and
which was used later as basis in effecting a deed of sale in favor of
co-defendant Lucresio Baylosis. In this light, the plaintiffs argue that
the sale of said property is a nullity for it was not only attended with
bad faith on the part of both the vendor and the vendee but primarily
the vendor had no right at all to part with said property which is
legally owned by others. 16
In answer to plaintiffs-appellants' charges of fraud, defendantsappellees maintained that the assailed documents were executed
with all the formalities required by law and are therefore binding and
legally effective as bases for acquiring ownership or legal title over
the lots in question. Furthermore, it is contended that plaintiffsappellants have slept on their rights and should now be deemed to
have abandoned such rights. 17
The trial court ruled in favor of defendants-appellees and rendered
judgment dismissing the complaint with costs against plaintiffsappellants. As regards Lot 6409, the court declared that the
Extrajudicial Settlement and Sale executed by the heirs of Joaquin
Teves and Marcelina Cimafranca was duly executed with all the
formalities required by law, thus, validly conveying Lot 6409 in favor
of Asuncion Teves. Moreover, it stated that, even granting the truth of
the imputed infirmities in the deed, the right of plaintiffs-appellants to
bring an action for partition and reconveyance was already barred by
prescription. An action for the annulment of a partition must be
brought within four years from the discovery of the fraud, while an
action for the reconveyance of land based upon an implied or
constructive trust prescribes after ten years from the registration of
the deed or from the issuance of the title. The complaint in this case
was filed on May 9, 1984, exactly 12 years, 1 month and 17 days
after the issuance of the transfer certificate of title in the name of
Asuncion Teves on March 22, 1972. Thus, ownership over Lot 6409
rightfully belonged to defendants-appellees It-it.
Moreover, the trial court held that the extrajudicial settlements over
both Lots 6409 and 769, having been prepared and acknowledged
before a notary public, are public documents, vested with public
interest, the sanctity of which deserves to be upheld unless
overwhelmed by clear and convincing evidence. The evidence
presented by the plaintiffs to support their charges of forgery was
considered by the court insufficient to rebut the legal presumption of
validity accorded to such documents. 18
The Court of Appeals upheld the trial court's decision affirming the
validity of the extrajudicial statements, with a slight modification. It
disposed of the case, thus
WHEREFORE, premises considered, the decision appealed from is
AFFIRMED with the modification in that herein defendant-appellees
are hereby ORDERED to partition Lot 769-A and deliver to plaintiffappellant Ricardo Teves one-eight (sic) (1/8) portion thereof
corresponding to the share of his deceased father Cresenciano
Teves. No costs.

"Agreement" executed on September 13, 1955 wherein he was

represented by his mother, authorized the heirs of Joaquin Teves to
sell his share in Lot 6409. 19
Plaintiffs-appellants assailed the appellate court's decision upon the
following grounds
I.
IN CONSIDERING RICARDO TEVES AS BOUND BY
THE SIGNATURE OF HIS MOTHER, INSPITE OF DEATH OF
CRESENCIANO TEVES IN 1944; AND UNDER THE OLD CIVIL
CODE THE SPOUSE CANNOT INHERIT EXCEPT THE
USUFRUCT;
II.
IN UPHOLDING SWEEPINGLY THE PRESUMPTION OF
REGULARITY OF NOTARIZED DEED, DESPITE CLEAR,
CONVINCING, SUBSTANTIAL AND SUFFICIENT EVIDENCE THAT
MARIA OCHOTORENA WAS IN MINDANAO; THE NOTARY PULIC
DID NOT KNOW MARIA OCHOTORENA AND THE SIGNATURES
OF THE OTHER HEIRS IN THE QUESTIONED DOCUMENT ARE
BELIED BY COMPARISON WITH THE GENUINE SIGNATURE IN
EXH. "E";
III.
IN VALIDATING THE ONE PESO CONSIDERATION,
INSPITE OF NO OTHER VALUABLE CONSIDERATION, THE
SUPERIMPOSED P100 WAS UNILATERALLY INSERTED,
SHOWING FICTITIOUS AND SIMULATED CONSIDERATION; AND
IV.
PRESCRIPTION DOES NOT START FROM A VOID
CONTRACT. 20
We affirm that the extrajudicial settlements executed by the heirs of
Joaquin Teves and Marcelina Cimafranca are legally valid and
binding.
The extrajudicial settlement of a decedent's estate is authorized by
section 1 of Rule 74 of the Rules of Court, which provides in
pertinent part
that
If the decedent left no will and no debts and the heirs are all of age,
or the minors are represented by their judicial or legal
representatives duly authorized for the purpose, the parties may,
without securing letters of administration, divide the estate among
themselves as they see fit by means of a public instrument filed in
the office of the register of deeds, . . .
xxx

xxx

xxx

Thus, for a partition pursuant to section 1 of Rule 74 to be valid, the

following conditions must concur: (1) the decedent left no will; (2) the
decedent left no debts, or if there were debts left, all had been paid;
(3) the heirs are all of age, or if they are minors, the latter are
represented by their judicial guardian or legal representatives; (4)
the partition was made by means of a public instrument or affidavit
duly filed with the Register of Deeds. 21

The appellate court noted that the conveyance of Lot 769-A in favor
of Asuncion Teves did not affect the share of Cresenciano Teves as
he was not a signatory to the settlements. It also found that Ricardo
Teves, Cresenciano's heir, is in possession of a portion of Lot 769-A
and that defendants-appellees do no not claim ownership over such
portion. Thus, the defendants-appellees It-it were ordered to partition
and convey to Ricardo Teves his one-eighth share over Lot 769A.1wphi1.nt

We uphold, finding no cogent reason to reverse, the trial and

appellate courts' factual finding that the evidence presented by
plaintiffs-appellants is insufficient to overcome the evidentiary value
of the extrajudicial settlements. The deeds are public documents and
it has been held by this Court that a public document executed with
all the legal formalities is entitled to a presumption of truth as to the
recitals contained therein. 22 In order to overthrow a certificate of a
notary public to the effect that the grantor executed a certain
document and acknowledged the fact of its execution before him,
mere preponderance of evidence will not suffice. Rather, the
evidence must be so clear, strong and convincing as to exclude all
reasonable dispute as to the falsity of the certificate. When the
evidence is conflicting, the certificate will be upheld. 23 The
appellate court's ruling that the evidence presented by plaintiffsappellants does not constitute the clear, strong, and convincing
evidence necessary to overcome the positive value of the
extrajudicial settlements executed by the parties, all of which are
public documents, being essentially a finding of fact, is entitled to
great respect by the appellate court and should not be disturbed on
appeal. 24

As regards the extrajudicial settlement involving Lot 6409, although it

was found by the appellate court that Cresenciano Teves was also
not a signatory thereto, it held that it could not order the
reconveyance of the latter's share in such land in favor of his heir
Ricardo Teves because Cresenciano had predeceased Joaqin
Teves. Moreover, Ricardo Teves, by a deed simply denominated as

It is noted that the Deed of Extrajudicial Settlement & Sale covering

Lot 6409 purports to divide Joaquin Teves' estate among only six of
his heirs, namely Asuncion, Teotimo, Felisia, Gorgonio, Arcadia and
Maria Teves. 25 It does not mention nor bear the signatures of either
Pedro or Cresenciano Teves although they are both intestate heirs of
Joaquin Teves and as such, are entitled to a proportionate share of

The appellate court said that plaintiffs-appellants' biased and

interested testimonial evidence consisting of mere denials of their
signatures in the disputed instruments is insufficient to prove the
alleged forgery and to overcome the evidentiary force of the notarial
documents. It also ruled that the plaintiffs-appellants' claim over Lot
6409 was barred by prescription after the lapse of ten years from the
issuance of title in favor of Asuncion Teves, while their claim over Lot
769-A is barred by laches since more than 25 years has intervened
between the sale to Asuncion Teves and the filing of the present
case in 1984.

Spec Pro 31 of 53
the decedent's estate. Contrary to the ruling of the appellate court,
the fact that Cresenciano predeceased Joaquin Teves does not
mean that he or, more accurately, his heirs, lose the right to share in
the partition of the property for this is a proper case for
representation, wherein the representative is raised to the place and
degree of the person represented and acquires the rights which the
latter would have if he were living. 26
However, notwithstanding their non-inclusion in the settlement, the
action which Pedro and Cresenciano might have brought for the
reconveyance of their shares in the property has already prescribed.
An action for reconveyance based upon an implied trust pursuant to
article 1456 of the Civil Code prescribes in ten years from the
registration of the deed or from the issuance of the title. 27 Asuncion
Teves acquired title over Lot 6409 in 1972, but the present case was
only filed by plaintiffs-appellants in 1984, which is more than 10
years from the issuance of title. 28
The division of Lot 769-A, on the other hand, was embodied in two
deeds. The first extrajudicial settlement was entered into by Teotimo,
Felicia, Pedro, Gorgonio, Arcadia and Asuncion Teves in 1956 29,
while the second deed was executed in 1959 by Maria Teves. 30
Cresenciano was not a signatory to either settlement. However, in
contrast to the extrajudicial settlement covering Lot 6409, the two
extrajudicial settlements involving Lot 769-A do not purport to
exclude Cresenciano from his participation in Lot 769-A or to cede
his share therein in favor of Asuncion. The settlement clearly
adjudicated the property in equal shares in favor of the eight heirs of
Marcelina Cimafranca. Moreover, the deeds were intended to
convey to Asuncion Teves only the shares of those heirs who affixed
their signatures in the two documents. The pertinent portions of the
extrajudicial settlement executed in 1956, of which substantively
identical provisions are included in the 1959 deed, provide
xxx

xxx

THAT FOR AND IN CONSIDERATION of the sum of FOUR

HUNDRED TWENTY-FIVE (P425.00) PESOS, Philippine Currency
which we have received from ASUNCION TEVES; WE, Teotimo,
Felicia, Pedro, Gorgonio and Arcadia, all surnamed Teves, do
hereby sell, transfer and convey unto Asuncion Teves, married to
Isaac Itit, Filipino, of legal age and resident of and with postal
address in the City of Dumaguete, all our shares, interests and
participations over Lot 769-A of the subdivision plan, Psd, being a
portion of Lot No. 769 of the Cadastral Survey of Dumaguete, her
heirs, successors and assigns, together with all the improvements
thereon.
xxx

[t]he requirement that a partition be put in a public document and

registered has for its purpose the protection of creditors and at the
same time the protection of the heirs themselves against tardy
claims. The object of registration is to serve as constructive notice to
others. It follows then that the intrinsic validity of partition not
executed with the prescribed formalities does not come into play
when there are no creditors or the rights of creditors are not affected.
Where no such rights are involved, it is competent for the heirs of an
estate to enter into an agreement for distribution in a manner and
upon a plan different from those provided by law.
Thus, despite its non-registration, the extrajudicial settlements
involving Lot 769-A are legally effective and binding among the heirs
of Marcelina Cimafranca since their mother had no creditors at the
time of her death.
Except for the portion of Lot 769-A occupied by Ricardo Teves, both
parcels of land have been and continue to be in the possession of
Asuncion Teves and her successors-in-interest. 36 Despite this, no
explanation was offered by plaintiffs-appellants as to why they
instituted the present action questioning the extrajudicial settlements
only in 1984, which is more than 25 years after the assailed
conveyance of Lot 769-A and more than 10 years after the issuance
of a transfer certificate of title over Lot 6409, both in favor of
Asuncion Teves. Such tardiness indubitably constitutes laches,
which is the negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to
assert it either has abandoned it or declined to assert
it. 37 Thus, even assuming that plaintiffs-appellants had a defensible
cause of action, they are barred from pursuing the same by reason
of their long and inexcusable inaction.

xxx

5.
That by virtue of the right of succession the eight heirs
above mentioned inherit and adjudicate unto themselves in equal
shares Lot No. 769-A and our title thereto is evidenced by the O.C.
of Title No. 4682-A of the Land Records of Negros Oriental.

xxx

and declared that the non-registration of an extrajudicial settlement

does not affect its intrinsic validity. It was held in this case that

xxx

It has even been admitted by both parties that Ricardo Teves is in

possession of an undetermined portion of Lot 769-A and defendantsappellees It-it do not claim ownership over his share in the land. 31
Thus, contrary to the appellate court's ruling, there is no basis for an
action for reconveyance of Ricardo Teves' share since, in the first
place, there has been no conveyance. Ricardo Teves is entitled to
the ownership and possession of one-eighth of Lot 769-A.
Neither does Ricardo Teves have a right to demand partition of Lot
769-A because the two extajudicial settlements have already
effectively partitioned such property. Every act which is intended to
put an end to indivision among co-heirs and legatees or devisees is
deemed to be a partition, although it should purport to be a sale, an
exchange, a compromise, or any other transaction. 32 The
extrajudicial settlements executed in 1956 and 1959 adjudicated Lot
769-A in equal shares unto the eight heirs of Marcelina Cimafranca.
Such a partition, which was legally made, confers upon each heir the
exclusive ownership of the property adjudicated to him. 33 Although
Cresenciano, Ricardo's predecessor-in-interest, was not a signatory
to the extrajudicial settlements, the partition of Lot 769-A among the
heirs was made in accordance with their intestate shares under the
law. 34
With regards to the requisite of registration of extrajudicial
settlements, it is noted that the extrajudicial settlements covering Lot
769-A were never registered. However, in the case of Vda. de Reyes
vs. CA, 35 the Court, interpreting section 1 of Rule 74 of the Rules of
Court, upheld the validity of an oral partition of the decedent's estate

An extrajudicial settlement is a contract and it is a well-entrenched

doctrine that the law does not relieve a party from the effects of a
contract, entered into with all the required formalities and with full
awareness of what he was doing, simply because the contract
turned out to be a foolish or unwise investment. 38 Therefore,
although plaintiffs-appellants may regret having alienated their
hereditary shares in favor of their sister Asuncion, they must now be
considered bound by their own contractual acts.1wphi1.nt
WHEREFORE, the August 18, 1992 decision of the Court of Appeals
is hereby AFFIRMED. No pronouncements as to costs.
SO ORDERED.

Spec Pro 32 of 53
G.R. No. L-273

March 29, 1947

CRESENCIA HERNANDEZ, plaintiff-appellee,

vs.
ZACARIAS ANDAL, defendant-appellant.
QUIRINO DIMASACAT, MARIA HERNANDEZ and AQUILINA
HERNANDEZ, intervenors-appellants.
Pedro Paganiban y Tolentino for appellants.
Vicente Reyes Villavicencio for appellee.

way home from Candelaria. He said that Cresencia Hernandez upon

being shown the document merely exclaimed, "Oh, so you already
have a document." When asked whether the land "described in the
complaint of the herein plaintiff has been the object of partition
among the co-owners Pedro, Basilia, Cresencia, Maria and Aquilina
surnamed Hernandez," counsel for the plaintiff objected on the
ground that the best evidence was the document of partition, and the
objection was sustained. The same objection and the same ruling
were made on the same ground when the witness was queried how
it was that the land he had bought from Maria and Aquilina
Hernandez had been specified in the deed of sale, Exhibit A.

TUASON, J.:
The plaintiff, Cresencia Hernandez, the intervenors, Maria and
Aquilina Hernandez, and Pedro and Basilia Hernandez who are not
parties here, are brother and sisters. They acquired in common by
descent from their father a parcel of land of which he died seized
and known as lot No. 120073 of the Batangas cadastral survey.
On January 23, 1944, the intervenors sold 1800 square meters of
this parcel, a portion which is particularly described in the deed of
conveyance Exhibit A, to Zacarias Andal, the defendant, and Andal's
wife in consideration of P860. This portion purports to be the
combined shares of the intervenors in the larger parcel, allotted to
them in a verbal partition alleged to have been made (time not
stated) among the five brother and sisters.
After the sale, on a date as to which the evidence is in disagreement
but which is not now important, the plaintiff attempted to repurchase
the land sold to Andal. According to her original complaint, dated
February 3, 1944, she offered the purchasers P150 as price of
repurchase, this being, according to that complaint, the amount
Andal had paid for Maria Hernandez's and Aquilina Hernandez's
shares, but Andal, it is alleged, refused to part with the property.
On April 8, the plaintiff filed a supplemental complaint. She alleged
that when the cause was called for trial on March 8, she announced
in open court that she was willing to repurchase her sister's share
from Andal for P860 and reimburse Andal for his expense; that Andal
asked for continuance until the 29th stating that he had made other
expenses; that on 29th she brought P860 to repurchase the land in
question but the case was again postponed because the plaintiff's
sisters had intervened; and that meanwhile, on the 26th, Andal
resold the land fictitiously to the vendors for P970.
It results that on the date last mentioned Andal executed a deed of
sale for P970 in favor of the intervenors, an amount which included
Andal's expenses as well as the normal sale price. The document of
repurchase gave as reason for the transaction the fact that it had
been agreed that in the event trouble should arise the sellers should
return to the buyer what they had received and pay the latter his
expenses.
On February 14, 1944, the defendant filed his answer alleging that
Maria and Aquilina Hernandez had sold him their respective portions
of the inherited land for P860 and that he had no objection to
disposing of those portions in favor of the plaintiff for P860 plus the
expenses he had incurred in the execution of the deed of sale
amounting to P50, but that he was unwilling to accept P150, which
was all the plaintiff offered him besides his expenses.
On April 4, 1944, Maria and Aquilina Hernandez's answer in
intervention was filed. The intervenors alleged that there had been a
partition among them and their brother and sisters "with the share of
each delineated and marked, and after partition and delineation
everyone took exclusive, separate and independent possession of
his portion in the partition." They charged the plaintiff with bad faith
in that "it was upon her request for chance that the sale to the
defendant, about to take place last November, was delayed till
January of this year when she finally informed the intervenors that
they could sell to the defendant, or she could pay only P150 and
could not raise the amount of P860 offered by the defendant."
Cresencia Hernandez, the plaintiff, was the only witness to testify on
her own behalf. Substantially she reiterated the allegations in her
two complaints. Zacarias Andal, the defendant, also testified. He
said that he was in possession of the land in question until he
returned it to the intervenors. He declared that the plaintiff offered to
repurchase the land from him long after he had bought it, that is,
when she was about to file her action. He stated that after he came
from Candelaria, Tayabas, with the document of sale he showed it to
the plaintiff: that was on the 23rd of January. He was able to do this
because he lived near Cresencia and passed by her house on his

In consequence of this ruling, counsel for the defendant and

intervenors did not call any more witnesses but only announced that
he had witnesses ready to prove that a parol partition among the five
brother and sisters had been made, mentioning the names of six
such witnesses. Counsel for the plaintiff again objected asserting
that "under the Rules of Court agreement affecting real estate may
not be proved except by means of writing subscribed by the person
against whom the proof is offered. "Upon this objection, the court
ruled that under Rules 74 and 123 of the Rules of Court (Statute of
Frauds) as well as under article 1248 of the Civil Code, parol
evidence of partition was inadmissible, adding that to decide the
case it had enough with the testimony and evidence offered by the
parties.
Thereafter the court handed down its decision declaring that the
resale of the land by Zacarias Andal in favor of Maria and Aquilina
Hernandez was illegal and in bad faith. It, however, did not seem to
have found as a fact the allegation that the resale was simulated.
The court then made this judgment:
(a) declarando y sin valor alguno el documento de reventaotorgado
por el demandado Zacarias Andal en 26 de marzo de 1944, a favor
de Maria y Aquilina Hernandez sobre el terrenocuestionado que se
presento como Exhibito 2 de dichodemandado, y consiguientemente
se anulan tambien todas lastransacciones posteriores que las
mencionadas Maria y Aquilina Hernandez hayan hecho sobre el
terreno cuestionado despuesdel 26 de marzo de 1944, asi como
tambien cualquiera anotacionen la Oficiana del Registrador de
Titulos de Batangas que hayaanotado dicha reventa por el
demandado Zacarias Andal a favorde las terceristas Maria y Aquilina
Hernandez en el citado dia 26 de marzo de 1944; y
(b) se ordena al aqui demandado Zacarias Andal, que otorgue
unaescritura de reventa a favor de la aqui demandante Cresencia
Hernandez, de las participaciones de las terceristas en el
terrenodescrito en la demanda suplementaria previo pago de P860
mas lacantidad de P50 como gastos de documentacion. Se
absuelve al demandado de los daos y perjuicios que reclama la
demandante. Se absuelve tambien a la demandante de la contrademanda de lasterceristas.
Sin especial pronunciamento en cuanto a las costas.
The defendant and the intervenors are appealing from the foregoing
decision and in their joint brief made one assignment of error:
The lower court erred in refusing to admit oral evidence for proving a
contract of partition among the heirs on the ground that it was not
admissible.
Before proceeding with a discussion of the questions raised we are
tempted to point up some seeming incongruities in the above-quoted
judgment. Although Zacarias Andal is no longer interested in the
case, as far as the land is concerned, and even though the
intervenors have become again the absolute owners and are now in
full possession of the property, while Andal has already gotten his
money back, the judgment would have Andal execute a deed of
resale in favor of the plaintiff and received from her the price of
repurchase. The judgment is silent as to the intervenors with
reference to the execution of the deed of sale or the receipt of the
sale price. And the lower court made no finding and expressed no
opinion as to whether the offer of P150 instead of P860, not to
mention Andal's expenses, by the plaintiff as price of repurchase
was sufficient compliance with article 1067 of the Civil Code on
which the court rested the plaintiff's cause of action.
However, in this decision we are concerned mainly with the
application of section 21 of Rule 123 and section 1 of Rule 74 both
of the Rules of Court. Article 1248 of the Civil Code has no bearing
on the case.

Spec Pro 33 of 53
There is a conflict of authority as to whether an agreement of
partition is such a contract as is required to be in writing under the
statute of frauds. One line of authorities holds the affirmative view;
other authorities say no. The reason for the rule that excludes
partition from the operation of the statute of frauds is that partition is
not a conveyance but simply a separation and designation of that
part of the land which belongs to each tenant in common. (27 C.J.,
206.) The differences in the conclusions reached are "due perhaps
to varied phraseology of the statutes" in the several states. (40 Amer.
Jur., 15.) However the case may be, as enacted in the Philippines,
first in section 335 of the former Code of Civil Procedure, and now in
Rule 123, section 21, of the Rules of Court, the law has been
uniformly interpreted in a long line of cases to be applicable to
executory and not to completed or executed contracts. (27 C.J.,
206.) In this jurisdiction performance of the contract takes it out of
the operation of the statute. (Gomez vs. Salcedo, 26 Phil., 485;
Almirol and Cario vs. Monserrat, 48 Phil., 67.) The statute of frauds
does not declare the contracts therein enumerated void and of no
legal effect, but only makes ineffective the action for specific
performance. (Almirol and Cario vs. Monserrat, supra.) In the
United States, even in those states where the affirmative view of the
question has been followed, "the weight of authority upholds the rule
that an oral partition is effective when several possession is taken
under it by the respective parties to the agreement." (27 C.J., 206.)
On general principle, independent and in spite of the statute of
frauds, courts of equity have enforced oral partition when it has been
completely or partly performed.
Regardless of whether a parol partition or agreement to partition is
valid and enforceable at law, equity will in proper cases, where the
parol partition has actually been consummated by the taking of
possession in severalty and the exercise of ownership by the parties
of the respective portions set off to each, recognize and enforce
such parol partition and the rights of the parties thereunder. Thus, it
has been held or stated in a number of cases involving an oral
partition under which the parties went into possession, exercised
acts of ownership, or otherwise partly performed the partition
agreement, that equity will confirm such partition and in a proper
case decree title in accordance with the possession in severalty.
In numerous cases it has been held or stated that parol partitions
may be sustained on the ground of estoppel of the parties to assert
the rights of a tenant in common as to parts of the land divided by
parol partition as to which possession in severalty was taken and
acts of individual ownership were exercised. And a court of equity
will recognize the agreement and decree it to be valid and effectual
for the purpose of concluding the right of the parties as between
each other to hold their respective parts in severalty.
A parol partition may also be sustained on the ground that the
parties thereto have acquiesced in and ratified the partition by taking
possession in severalty, exercising acts of ownership with respect
thereto, or otherwise recognizing the existence of the partition.
A number of cases have specifically applied the doctrine of part
performance, or have stated that a part performance is necessary, to
take a parol partition out of the operation of the statute of frauds. It
has been held that where there was a partition in fact between
tenants in common, and a part performance, a court of equity would
have regard to and enforce such partition agreed to by the parties.
(40 Amer. Jur., 15-18.)
It is on the effects of Rule 74, section 1, of the Rules of Court on a
parol partition that there are sharp divergences of opinion among the
members of this Court. This section reads:
If the decedent left no debts and the heirs and legatees are all of
age, or the minors are represented by their judicial guardians, the
parties may, without securing letters of administration, divide the
estate among themselves as they see fit by means of a public
instrument file in the office of the register of deeds, and should they
disagree, they may do so in an ordinary action of partition. If there is
only one heir or one legatee, he may adjudicate to himself the entire
estate by means of an affidavit filed in the office of the register of
deeds. It shall be presumed that the decedent left no debts if no
creditor files a petition for letters of administration within two years
after the death of the decedent.
It is contended that under this rule a verbal partition is entirely void
and cannot be validated by any acts of the parties short of the
execution of a public document and its registration.

As a general proposition, transactions, so far as they affect the

parties, are required to be reduced to writing either as a condition of
jural validity or as a means of providing evidence to prove the
transactions. Written form exacted by the statute of frauds, for
example, "is for evidential purposes only." (Domalagan vs. Bolifer, 33
Phil., 471.) The decisions of this Court which we have noticed were
predicated on this assumption. The Civil Code, too, requires the
accomplishment of acts or contracts in a public instrument, not in
order to validate the act or contract but only to insure its efficacy so
that after the existence of the acts or contracts has been admitted,
the party bound may be compelled to execute the document.
(Hawaiian Philippine Co. vs .Hernaez, 45 Phil., 746.)
Is section 1 of Rule 74 constitutive and not merely evidential of
partition? In other words, is writing the act that confers legal validity
upon the agreement? There are no indications in the phraseology of
this rule which justify an affirmative answer to these questions. It
must be noted that where the law intends a writing or other formality
to be the essential requisite to the validity of the transactions it says
so in clear and unequivocal terms. Thus, the statute of frauds as
originally enacted in England and as enacted in some of the states,
uses the words "utterly void" with statute transactions required to be
in writing are absolutely void and not merely voidable if not made in
the manner indicated. Again article 633 of the Civil Code says that
donation may be valid only when made in a public document. Article
146 of the Mortgage Law makes known its intention to have the
execution of a public instrument and its registration in the registry
indispensable to the validity of the contract by using this phrase: "in
order that voluntary mortgages may be legally created in a valid
manner." Article 1765 of the Civil Code also employs for the same
purpose similar expression with reference to the execution of a
public document: "in order that mortgage may be validly constituted."
And with respect to the formalities of last wills and testaments,
section 618 of Act No. 190 makes this emphatic statement: "No will
shall be valid to pass upon any estate real or personal nor change or
affect the same, unless it be written etc." Other examples might be
mentioned.
Section 1 of Rule 74 contains no such express or clear declaration
that the required public instruments is to be constitutive of a contract
of partition or an inherent element of its effectiveness as between
the parties. And this Court had no apparent reason, in adopting this
rule, to make the efficacy of a partition as between the parties
dependent on the execution of a public instrument and its
registration. On the other hand, the opposite theory is not without
reasonable support. We can think of possible factors against the
proposition that a public document and its registration were
contemplated as necessary ingredients to give life to a contract of
partition so that without them no oral partition can bind the parties.
1. In the first place, the Rules of Court of which the rule under
consideration forms a part were promulgated by the Judicial
Department under authority to deal with matters of procedure
exclusively. For this court to prescribe what is to be a binding
agreement between co-heirs in the settlement of their private affairs
which in no way affect the rights of third parties would be to
transcends its rule-making power. We bring out this limitation upon
the authority of this court to make rules, as an aid to interpretation,
as a method of arriving at the conclusion that section 1 of Rule 74
was meant to be remedial and not a rule of substantive law of farreaching importance and serious juridical and practical implications.
It is to be presumed that the framers of the Rules of Court realized
the bounds of this court's functions and did not intend to trespass on
purely substantive rights of the parties to the partition. To the extent
the execution and registration of a notarized instrument are made
essential elements to validity to protect innocent third parties, the
rule is legitimate and necessary; legitimate because decedent's
estate are placed under the jurisdiction of the courts to administer
and distribute. The interests of third parties eliminated, the rule loses
its character as one of procedure and practice and invades the realm
of substantive law.
Section 596 of Act No. 190, which is the precursor of section 1 Rule
74, is enlightening and instructive. The former after stating that heirs
may apportion and divide the estate among themselves as they may
see fit by agreement duly executed in writing by all of them, adds the
words "and not otherwise." These words, in our opinion, were
expressive of an intention to make the written formality inherent
element of the validity of a parol partition. But what is far more to the
point is that by logical process of deduction the elimination from the
new rule of the words "and not otherwise" imports the casting away
from the prescribed public document of its jural character which the
document enjoyed in the former code. At the same time, the

Spec Pro 34 of 53
inclusion of the aforesaid words in the old provision serves to
emphasize the necessity of a positive and clear language if a given
contractual formality is to be the exclusive basis of the contract's
binding effect on the parties. It is of course unnecessary to say that
the attaching of jural character to the prescribed public instrument in
section 596 of Act No. 190 is no argument for contending that such
document must be clothed with the same raiment in the new Rules.
Act No. 190 was a mixture of procedural and substantive provisions,
having been enacted by the legislative body itself which, unlike this
court, was unhampered and untrammelled, except by the
fundamental law, in the choice of its subjects of legislation.
2. The civil law looks upon the role of public instruments in acts and
contracts with greater liberality with a view to better adaptation to
human frailties and idiosyncracies. In their blind faith in friends and
relatives, in their lack of experience and foresight, and their
ignorance, men, in spite of laws, will make and continue to make
verbal contracts. The advantages of an air-tight policy concerning
such contracts fall far short of compensating for the resulting
damage, injustice, inconveniences and confusion. So even though
articles 1278, 1279 and 1280 of the Civil Code have made
provisions for public instrument for all transactions and contracts
whose object is the creation, modification or extinction of real rights
in immovables, it has been recognized and held that verbal contracts
may be effective between the parties. A leading case on this subject
is Thunga Chui vs. Que Bentec (2 Phil., 561), Mr. Justice Williard
writing the decision. It was said in that case that when the essential
requisites for the existence of a contract are present, the contract is
binding upon the parties, and, although required to be in writing by
article 1280 of the Civil Code, the plaintiff can maintain an action
under article 1279 to compel the execution of a written instrument. It
says that "article 1279 does not impose an obligation, but confers a
privilege upon both contracting parties, and the fact that the plaintiff
has not made use of same does not bar his action." It further says
that article 1279, far from making the enforceability of the contract
dependent upon any special intrinsic form, recognizes its
enforceability by the mere act of granting the contracting parties an
adequate remedy whereby to compel the execution of public writing
or any other special form whenever such form is necessary in order
that contract may produce the effect which is desired according to
whatever its object. This doctrine was iterated and reiterated in a
series of decisions perhaps longer than that on any other legal topic.
And it has been extended even to verbal contracts involving land
registered under the Torrens Act. Do the Rules of Court adhere to
this salutary principle? We can perceive no sufficient ground for the
new Rules to depart from it. No considerations of public policy enter
into a partition of hereditary estate among co-heirs greater than
those involved in a contract between strangers which operates to
create, transmit, modify or extinguish property rights in land. If as
between strangers the creation, transmission, modification or
extinction of real rights may be lawfully effected by parol agreement
notwithstanding the requirement that it be put in writing, the new rule
could not be more intransigent when the transaction is between coheirs and there is no change of ownership but simply designation
and segregation of that part which belongs to each heir.
The requirement that a partition be put in a public document and
registered has, in our opinion, for its purpose the protection of
creditors and at the same time the protection of the heirs themselves
against tardy claims. Note that the last sentence of the section
speaks of debts and creditors. The object of registration is to serve
as constructive notice, and this means notice to others. It must follow
that the intrinsic validity of partition not executed with the prescribed
formalities does not come into play when, as in this case, there are
no creditors or the rights of creditors are not affected. No rights of
creditors being involved, it is competent for the heirs of an estate to
enter into an agreement for distribution in a manner and upon a plan
different from those provided by law.
It is said that the findings, conclusions and judgment in the appealed
decision are not assigned as errors and that for this reason the
appeal should be dismissed. We do not think that the premise of this
objection is exactly correct. The evidence on parol partition tendered
by the defendant and intervenors was ruled out and they specifically
complain of this exclusion as error. In this manner the assignment of
error squarely meets and attacks the opinion and judgment of the
trial court. A superficial analysis of the case will show that on the
validity of the alleged partition hangs the result of the entire litigation,
and on that validity depends in turn the competence of the excluded
evidence. These two interrelated points are the core of the whole
case. All other points are incidental to and revolve around them. If a
completed oral partition may be enforced, as the defendant and the
intervenors contend and as we opine, their evidence should be

allowed, and if allowed and it establishes their allegation, the

plaintiff's cause of action vanishes.
If the appellant's assignment of error be not considered a direct
challenge to the decision of the court below, we still believe that the
objection takes a narrow view of practice and procedure contrary to
the liberal spirit which pervades the Rules of Court. The first
injunction of the new Rules (Rule 1, section 2) is that they "shall be
liberally construed in order to promote their object and to assist the
parties in obtaining just, speedy, and inexpensive determination of
every action and proceeding." In line with the modern trends of
procedure, we are told that, "while an assignment of error which is
required by law or rule of court has been held essential to appellate
review, and only those assigned will be considered, there are a
number of cases which appear to accord to the appellate court a
broad discretionary power to waive the lack of proper assignment of
errors and consider errors not assigned. And an unassigned error
closely related to an error properly assigned, or upon which the
determination of the question raised by the error properly assigned is
dependent, will be considered by the appellate court notwithstanding
the failure to assign it as error." (4 C.J.S., 1734; 3 C.J., 1341,
footnote 77.) At the least, the assignment of error, viewed in this
light, authorizes us to examine and pass upon the decision of the
court below.
The judgment is reversed and the case is remanded to the court of
origin for further proceeding and a new decision not incompatible
with this decision, with costs of this appeal against the appellee.
Moran, C.J., Pablo, Hilado, Bengzon, Briones, Hontiveros, and
Padilla, JJ., concur.
FERIA, J.:
I reserve the right to express my view and write a dissenting opinion
later.
Separate Opinions
PARAS, J., with whom concurs PERFECTO, J., dissenting:
Is oral evidence admissible to prove partition of land? The answer of
the appellants is in the affirmative. Thus their only assignment of
error is as follows: "The lower court erred in refusing to admit oral
evidence for proving a contract of partition of the land among the
heirs on the ground that it was not admissible." Since no other
question, either of fact or of law, is raised by the appellants, I deem it
unnecessary, under the circumstances of this case, to pass upon
said assignment.
A small parcel of land containing some 5,568 square meters was
inherited by four sisters and a brother. It was surveyed and is still
assessed as a single lot, not in the name of the co-owners, but in
that of an uncle. It appears that on January 23, 1944, two of the
sisters sold a portion of the lot to defendant Andal who was neither a
relative nor an adjoining owner. The vendors stated:
Este terreno es parte del terreno referido en la declaracion Tax No.
53379 en nombre de nuestro tio Juan Dimasacat y estaamillarado
todo el terreno en P290. El referido terreno yase vio en el Juzgado
de Primera Instancia de Batangas en 29 de Septiembre de 1941, at
nagcaro-on ng decreto noong ika-6 ng Noviembre, 1941, na doon ay
ipinasiya ang pagbibigay ng Titulo sa aming magcacapatid. (Exhibit
A.)
Upon learning of the sale one week thereafter, a third sister
expressed her desire to repurchase said portion of land and, upon
refusal of the buyer, she filed a complaint for the purpose of being
subrogated to the rights acquired by Andal. The latter, in his answer,
is agreeable to the prayer provided that he be reimbursed in the total
sum of P910 which he had actually paid. In the meantime, the other
two sisters (vendors) intervened in the case, alleging that, before the
sale was made to Andal, the plaintiff had been given the option to
acquire the lot in question. By way of counterclaim, it was alleged
that they had repurchased the lot from Andal at a higher price.
After hearing, the lower court held that inasmuch as the plaintiff is
willing to buy, and Andal to sell, the lot at the price fixed by the latter,
there is no reason why the former's complaint should not prosper,
and Andal was accordingly ordered to convey the property to the
plaintiff upon payment by the latter of the total sum of P910. As

Spec Pro 35 of 53
regards the contention of the intervenors, the court held that their
alleged repurchase was fraudulent and, therefore, null and void.

subordinate role, subordinate to the asserted right of the plaintiff

under the provisions of the Civil Code referred to.

As these pronouncements, necessarily based on findings of fact,

have not been assailed, they should be considered final. Hence, it is
absolutely futile to decide the question of law raised in appellant's
assignment of error, the same having become academic.

The sole assignment of error in appellant's brief thus inevitably

comprehends that part of the appealed decision and judgment which
relates to the defendant's expression of willingness to sell land to the
plaintiff. A review of the error specifically assigned necessarily
carries with it the consideration of all matters related to and
dependent upon that error. Specifically, if there was a lawful partition
and the partition bars the plaintiff's right to repurchase the land under
the articles relied upon, the proposition formulated in the
assignment of error then Andal's previous willingness to sell loses
its raison d'etre as estoppel; it disappears with the right which it was
intended to uphold and with which it was inextricably bound up.

Even so, the point whether the sale to Andal took place after a
partition is immaterial, in view of his willingness to resell to the
plaintiff, not to mention the fact that the latter's right to redeem, as an
adjoining owner, maybe based on article 1523 of the Civil Code
which provides: "The owners of the adjacent lands shall also have
the right of redemption in case of the sale of a rural estate whose
area does not exceed one hectare."
The judgment appealed from should be affirmed.
RESOLUTION ON MOTION FOR RECONSIDERATION
July 30, 1947
TUASON, J.:
Plaintiff and appellee has filed a motion for reconsideration. She
maintains that she is entitled to judgment because the defendant has
no objection to reselling her the land and she is, on the other hand,
ready to reimburse him the purchase price. She argues that the
buyer having led her to believe that he would make the resale in her
favor is estopped from going against his own acts.
Superficially, the decision is obscure as to the relation which Andal's
signification in his answer, that he was willing to sell the land to the
plaintiff, bears to the dispositive part or judgment. But read in its
entirety, analyzed closely, the decision reveals in no uncertain
manner that it is anchored on articles 1067 and 1522 of the Civil
Code and that all other matters discussed therein revolve around
this basic conclusion. With particular reference to Andal's
signification abovementioned, the court does not appear to have
made or intended to make it an affirmative, separate basis of the
judgment. Roughly, the judgment was evolved along this process of
reasoning: the plaintiff's right to repurchase the land under the
above-cited provisions of the Civil Code was evident, in the court's
opinion. But, the court said in the same breath, a complication
emerged. The confusion was brought about by the resale of the
property by Andal to the original owners. The court seemed puzzled.
Then it saw a way out of the perplexity; the resale was illegal and
mala fide and hence ineffective. It was illegal, mala fide and
ineffective because the defendant had stated in his answer that he
had no objection in allowing the plaintiff to buy the land, and
because the resale to the intervenors had been consummated
during the pendency of the action. Andal's signification in his answer
estopped him from alienating the land in favor of others.
It was estoppel that the court invoked Andal's expression of his
willingness to sell the land, citing section 68 (a), Rule 123, Rules of
Court. The court looked upon this expression not as a cause of
action standing on its own feet but merely as an equitable aid to
keep the defendant and intervenors from making a mockery of the
plaintiff's right under the aforecited articles of the Civil Code. The
Court found that the transaction between the defendant and the
intervenors had been entered into "con el proposito de desorientar al
Juzgado y frustrar en cierto modo la administracion de justicia." The
appellee both in her brief and motion for reconsideration treats
Andal's willingness to sell in the same light.
To put it differently, the central principle of the case, as the court saw
it, was that the evidence on the oral partition was inadmissible and
so the plaintiff's right to repurchase the land under articles 1067 and
1522 of the Civil Code was in order. Andal's expression of
willingness to sell the land to the plaintiff came into play not as a
generator of a new obligation in favor of the plaintiff, separate and
distinct from the right of co-heirs to repurchase shares in property
inherited in common and sold to strangers by other heirs, but simply
as a factor to prevent the defendant's and intervenor's attempt to
nullify that right.
Estoppel, in the sense in which the court regarded Andal's
manifestation that he was willing to sell the land to the plaintiff,
partakes of the nature of the rule of evidence. Certainly, it belongs to
the adjective branch of the law, and the court regarded it under this
criterion. The court's reference in its decision to Andal's signification
cannot have a meaning other than that the court assigned thereto a

It should be made clear that we are only construing the decision of

the lower court. We have explained the ratio decidendi as it
appeared to the court, not the theory of the parties in their pleadings.
If the supplemental complaint was intended to present Andal's offer
to sell the land to the plaintiff as constituting a new and separate
cause of action a point which cannot be determined with a fair
degree of certainty from a reading of that complaint the court did
not see or consider it in that light. And, it should be remembered, it is
what the court decided or how the court decided a case that we have
to look as a test for judging whether the questions for review have
been formulated in the right manner.
If Andal's statement in his answer was alleged by the plaintiff to
serve as an independent cause of action, that is all the more reason,
for his own benefit, why the cases should be remanded for further
proceeding. The new trial as ordered in our decision leaves the door
open for the admission of evidence on the allegations in the
supplementary complaint as well as on the alleged parol partition. As
matters now stand, the plaintiff could ask for judgment on the
supplementary complaint only on the untenable hypothesis that no
assignment of error has been made relative to this feature of the
case. Without the benefit of this technicality, the plaintiff has not
made out a case on the supplementary complaint. The evidence is
very meager to the point of nullity; many of the allegations have
been left untouched, and there are essential points that badly need
amplication or clarification. It would be extremely improper, for
obvious reasons, to go into these defects and deficiencies in detail in
this resolution in anticipation of the new trial.
The motion is denied.
Moran, C.J., Pablo, Hilado, Bengzon, Briones, Hontiveros, and
Padilla, JJ., concur.
Feria, J., reserves his vote.
PERFECTO, J., dissenting:
We are of opinion that, as suggested by plaintiff-appellee in her
motion for reconsideration, dated April 5, 1947, there is no need for
ordering a new trial of the case, and that rather the appealed
decision should be affirmed.
This litigation is about a parcel of land very much less than two
hectares in area located in a barrio, and assessed for taxation
purposes at P290 only, and the amount for redemption of said land
is much less than P1,000 of worthless Japanese paper money. The
litigation started on February 3, 1944, more than three years ago. It
is high time that we put an end to such a litigation, to fight which the
parties might have spent more money than the value of the thing in
litigation.
Plaintiff and appellee Cresencia Hernandez filed the complaint to
compel defendant Zacarias Andal to sell the property to her. In his
answer of February 14, 1944, Zacarias Andal stated that he was
willing to sell the property to plaintiff, provided the latter would pay
him P800 plus expenses amounting to P50. The appealed decision
ordered Zacarias Andal to sell the property to plaintiff who was
ordered to pay P860, plus P50 for expenses, which is P60 more than
the amount demanded by Andal in his answer of February 14, 1944.
Plaintiff did not appeal, thus showing her willingness to pay the
amount.
Under the circumstances, we do not see any reason why
ununderstandable legal technicalities should block the ending of a
litigation which, in substance ceased to exist since plaintiff and
appellee manifested her willingness to pay to defendant Andal even
more than the amount he demanded.

Spec Pro 36 of 53
G.R. No. 156536
The legal discussion entered into the majority opinion to support the
further delay in finishing the suit might be highly interesting in a law
academy, but it will never satisfy the simple sense of justice of the
common man.

October 31, 2006

We vote to grant the motion for reconsideration.

JOSEPH CUA, petitioner,

vs.
GLORIA A. VARGAS, AURORA VARGAS, RAMON VARGAS,
MARITES VARGAS, EDELINA VARGAS AND GEMMA VARGAS,
respondents.

PARAS, J.:

DECISION

I concur in the foregoing dissenting opinion.

AZCUNA, J.:
This is a petition for review under Rule 45 of the Rules of Court
seeking the reversal of the decision1 dated March 26, 2002, and the
resolution2 dated December 17, 2002, of the Court of Appeals in
CA-G.R. SP No. 59869 entitled "Gloria A. Vargas, Aurora Vargas,
Ramon Vargas, Marites Vargas, Edelina Vargas and Gemma Vargas
v. Joseph Cua."
The facts are as follows:
A parcel of residential land with an area of 99 square meters located
in San Juan, Virac, Catanduanes was left behind by the late Paulina
Vargas. On February 4, 1994, a notarized Extra Judicial Settlement
Among Heirs was executed by and among Paulina Vargas' heirs,
namely Ester Vargas, Visitacion Vargas, Juan Vargas, Zenaida V.
Matienzo, Rosario V. Forteza, Andres Vargas, Gloria Vargas,
Antonina Vargas and Florentino Vargas, partitioning and adjudicating
unto themselves the lot in question, each one of them getting a
share of 11 square meters. Florentino, Andres, Antonina and Gloria,
however, did not sign the document. Only Ester, Visitacion, Juan,
Zenaida and Rosario signed it. The Extra Judicial Settlement Among
Heirs was published in the Catanduanes Tribune for three
consecutive weeks.3
On November 15, 1994, an Extra Judicial Settlement Among Heirs
with Sale4 was again executed by and among the same heirs over
the same property and also with the same sharings. Once more,
only Ester, Visitacion, Juan, Zenaida and Rosario signed the
document and their respective shares totaling 55 square meters
were sold to Joseph Cua, petitioner herein.
According to Gloria Vargas, the widow of Santiago Vargas and one
of respondents herein, she came to know of the Extra Judicial
Settlement Among Heirs with Sale dated November 16, 1994 only
when the original house built on the lot was being demolished
sometime in May 1995.5 She likewise claimed she was unaware that
an earlier Extra Judicial Settlement Among Heirs dated February 4,
1994 involving the same property had been published in the
Catanduanes Tribune.6
After knowing of the sale of the 55 square meters to petitioner, Gloria
Vargas tried to redeem the property, with the following letter7 sent to
petitioner on her behalf:
29th June 1995
Mr. Joseph Cua
Capilihan, Virac, Catanduanes
Sir:
This is in behalf of my client, Ms. Aurora Vargas,8 (c/o Atty. Prospero
V. Tablizo) one of the lawful heirs of the late Paulina Vargas, original
owner of Lot No. 214 of Virac, Poblacion covered by ARP No. 0310031 in her name.
I understand that a document "Extra Judicial Settlement Among
Heirs with Sale" was executed by some of my client's co-heirs and
alleged representatives of other co-heirs, by virtue of which
document you acquired by purchase from the signatories to the said
document, five (5) shares with a total area of fifty-five square meters
of the above-described land.
This is to serve you notice that my client shall exercise her right of
legal redemption of said five (5) shares as well as other shares
which you may likewise have acquired by purchase. And you are
hereby given an option to agree to legal redemption within a period
of fifteen (15) days from your receipt hereof.

Spec Pro 37 of 53
Should you fail to convey to me your agreement within said 15-dayperiod, proper legal action shall be taken by my client to redeem said
shares.
Thank you.

Article 1088 of the Civil Code17 can be dispensed with when such
co-heirs have actual knowledge of the sale such that the 30-day
period within which a co-heir can exercise the right to be subrogated
to the rights of a purchaser shall commence from the date of actual
knowledge of the sale.

Very truly yours,

Petitioner argues, as follows:

(Sgd.)
JUAN G. ATENCIA

Firstly, the acquisition by petitioner of the subject property

subsequent to the extrajudicial partition was valid because the
partition was duly published. The publication of the same constitutes
due notice to respondents and signifies their implied acquiescence
thereon. Respondents are therefore estopped from denying the
validity of the partition and sale at this late stage. Considering that
the partition was valid, respondents no longer have the right to
redeem the property.

When the offer to redeem was refused and after having failed to
reach an amicable settlement at the barangay level,9 Gloria Vargas
filed a case for annulment of Extra Judicial Settlement and Legal
Redemption of the lot with the Municipal Trial Court (MTC) of Virac,
Catanduanes against petitioner and consigned the amount of
P100,000 which is the amount of the purchase with the Clerk of
Court on May 20, 1996.10 Joining her in the action were her children
with Santiago, namely, Aurora, Ramon, Marites, Edelina and
Gemma, all surnamed Vargas.
Subsequently, Carlos Gianan, Jr. and Gloria Arcilla, heirs of the
alleged primitive owner of the lot in question, Pedro Lakandula,
intervened in the case.11
Respondents claimed that as co-owners of the property, they may be
subrogated to the rights of the purchaser by reimbursing him the
price of the sale. They likewise alleged that the 30-day period
following a written notice by the vendors to their co-owners for them
to exercise the right of redemption of the property had not yet set in
as no written notice was sent to them. In effect, they claimed that the
Extra Judicial Settlement Among Heirs and the Extra Judicial
Settlement Among Heirs with Sale were null and void and had no
legal and binding effect on them.12

Secondly, petitioner is a possessor and builder in good faith.

Thirdly, the MTC had no jurisdiction over the complaint because its
subject matter was incapable of pecuniary estimation. The complaint
should have been filed with the RTC.
Fourthly, there was a non-joinder of indispensable parties, the coheirs who sold their interest in the subject property not having been
impleaded by respondents.
Fifthly, the appeal to the CA should have been dismissed as it was
not properly verified by respondents. Gloria Vargas failed to indicate
that she was authorized to represent the other respondents
(petitioners therein) to initiate the petition. Moreover, the verification
was inadequate because it did not state the basis of the alleged truth
and/or correctness of the material allegations in the petition.
The petition lacks merit.

After trial on the merits, the MTC rendered a decision13 in favor of

petitioner, dismissing the complaint as well as the complaint-inintervention for lack of merit, and declaring the Deed of Extra
Judicial Settlement Among Heirs with Sale valid and binding. The
MTC upheld the sale to petitioner because the transaction
purportedly occurred after the partition of the property among the coowner heirs. The MTC opined that the other heirs could validly
dispose of their respective shares. Moreover, the MTC found that
although there was a failure to strictly comply with the requirements
under Article 1088 of the Civil Code14 for a written notice of sale to
be served upon respondents by the vendors prior to the exercise of
the former's right of redemption, this deficiency was cured by
respondents' actual knowledge of the sale, which was more than 30
days before the filing of their complaint, and their consignation of the
purchase price with the Clerk of Court, so that the latter action came
too late. Finally, the MTC ruled that respondents failed to establish
by competent proof petitioner's bad faith in purchasing the portion of
the property owned by respondents' co-heirs.15
On appeal, the Regional Trial Court (RTC), Branch 42, of Virac,
Catanduanes affirmed the MTC decision in a judgment dated
November 25, 1999. The matter was thereafter raised to the Court of
Appeals (CA).
The CA reversed the ruling of both lower courts in the assailed
decision dated March 26, 2002, declaring that the Extra Judicial
Settlement Among Heirs and the Extra Judicial Settlement Among
Heirs with Sale, dated February 4, 1994 and November 15, 1994,
respectively, were void and without any legal effect. The CA held
that, pursuant to Section 1, Rule 74 of the Rules of Court, 16 the
extrajudicial settlement made by the other co-heirs is not binding
upon respondents considering the latter never participated in it nor
did they ever signify their consent to the same.
His motion for reconsideration having been denied, petitioner filed
the present petition for review.
The issues are:

The procedure outlined in Section 1 of Rule 74 is an ex parte

proceeding. The rule plainly states, however, that persons who do
not participate or had no notice of an extrajudicial settlement will not
be bound thereby.18 It contemplates a notice that has been sent out
or issued before any deed of settlement and/or partition is agreed
upon (i.e., a notice calling all interested parties to participate in the
said deed of extrajudicial settlement and partition), and not after
such an agreement has already been executed19 as what happened
in the instant case with the publication of the first deed of
extrajudicial settlement among heirs.
The publication of the settlement does not constitute constructive
notice to the heirs who had no knowledge or did not take part in it
because the same was notice after the fact of execution. The
requirement of publication is geared for the protection of creditors
and was never intended to deprive heirs of their lawful participation
in the decedent's estate. In this connection, the records of the
present case confirm that respondents never signed either of the
settlement documents, having discovered their existence only shortly
before the filing of the present complaint. Following Rule 74, these
extrajudicial settlements do not bind respondents, and the partition
made without their knowledge and consent is invalid insofar as they
are concerned.
This is not to say, though, that respondents' co-heirs cannot validly
sell their hereditary rights to third persons even before the partition
of the estate. The heirs who actually participated in the execution of
the extrajudicial settlements, which included the sale to petitioner of
their pro indiviso shares in the subject property, are bound by the
same. Nevertheless, respondents are given the right to redeem
these shares pursuant to Article 1088 of the Civil Code. The right to
redeem was never lost because respondents were never notified in
writing of the actual sale by their co-heirs. Based on the provision,
there is a need for written notice to start the period of redemption,
thus:

Whether heirs are deemed constructively notified and bound,

regardless of their failure to participate therein, by an extrajudicial
settlement and partition of estate when the extrajudicial settlement
and partition has been duly published; and,

Should any of the heirs sell his hereditary rights to a stranger before
the partition, any or all of the co-heirs may be subrogated to the
rights of the purchaser by reimbursing him for the price of the sale,
provided they do so within the period of one month from the time
they were notified in writing of the sale by the vendor. (Emphasis
supplied.)

Assuming a published extrajudicial settlement and partition does not

bind persons who did not participate therein, whether the written
notice required to be served by an heir to his co-heirs in connection
with the sale of hereditary rights to a stranger before partition under

It bears emphasis that the period of one month shall be reckoned

from the time that a co-heir is notified in writing by the vendor of the
actual sale. Written notice is indispensable and mandatory,20 actual
knowledge of the sale acquired in some other manner by the

Spec Pro 38 of 53
redemptioner notwithstanding. It cannot be counted from the time
advance notice is given of an impending or contemplated sale. The
law gives the co-heir thirty days from the time written notice of the
actual sale within which to make up his or her mind and decide to
repurchase or effect the redemption.21
Though the Code does not prescribe any particular form of written
notice nor any distinctive method for written notification of
redemption, the method of notification remains exclusive, there
being no alternative provided by law.22 This proceeds from the very
purpose of Article 1088, which is to keep strangers to the family out
of a joint ownership, if, as is often the case, the presence of
outsiders be undesirable and the other heir or heirs be willing and in
a position to repurchase the share sold.23
It should be kept in mind that the obligation to serve written notice
devolves upon the vendor co-heirs because the latter are in the best
position to know the other co-owners who, under the law, must be
notified of the sale.24 This will remove all uncertainty as to the fact
of the sale, its terms and its perfection and validity, and quiet any
doubt that the alienation is not definitive.25 As a result, the party
notified need not entertain doubt that the seller may still contest the
alienation. 26
Considering, therefore, that respondents' co-heirs failed to comply
with this requirement, there is no legal impediment to allowing
respondents to redeem the shares sold to petitioner given the
former's obvious willingness and capacity to do so.
Likewise untenable is petitioner's contention that he is a builder in
good faith. Good faith consists in the belief of the builder that the
land the latter is building on is one's own without knowledge of any
defect or flaw in one's title.27 Petitioner derived his title from the
Extra Judicial Settlement Among Heirs With Sale dated November
15, 1994. He was very much aware that not all of the heirs
participated therein as it was evident on the face of the document
itself. Because the property had not yet been partitioned in
accordance with the Rules of Court, no particular portion of the
property could have been identified as yet and delineated as the
object of the sale. This is because the alienation made by
respondents' co-heirs was limited to the portion which may be
allotted to them in the division upon the termination of the coownership. Despite this glaring fact, and over the protests of
respondents, petitioner still constructed improvements on the
property. For this reason, his claim of good faith lacks credence.
As to the issue of lack of jurisdiction, petitioner is estopped from
raising the same for the first time on appeal. Petitioner actively
participated in the proceedings below and sought affirmative ruling
from the lower courts to uphold the validity of the sale to him of a
portion of the subject property embodied in the extrajudicial
settlement among heirs. Having failed to seasonably raise this
defense, he cannot, under the peculiar circumstances of this case,
be permitted to challenge the jurisdiction of the lower court at this
late stage. While it is a rule that a jurisdictional question may be
raised at any time, an exception arises where estoppel has already
supervened.
Estoppel sets in when a party participates in all stages of a case
before challenging the jurisdiction of the lower court. One cannot
belatedly reject or repudiate its decision after voluntarily submitting
to its jurisdiction, just to secure affirmative relief against one's
opponent or after failing to obtain such relief. The Court has, time
and again, frowned upon the undesirable practice of a party
submitting a case for decision and then accepting the judgment, only
if favorable, and attacking it for lack of jurisdiction when adverse.28
Petitioner's fourth argument, that there is a non-joinder of
indispensable parties, similarly lacks merit. An indispensable party is
a party-in-interest without whom there can be no final determination
of an action and who is required to be joined as either plaintiff or
defendant.29 The party's interest in the subject matter of the suit and
in the relief sought is so inextricably intertwined with the other parties
that the former's legal presence as a party to the proceeding is an
absolute necessity. Hence, an indispensable party is one whose
interest will be directly affected by the court's action in the litigation.
In the absence of such indispensable party, there cannot be a
resolution of the controversy before the court which is effective,
complete, or equitable.30
In relation to this, it must be kept in mind that the complaint filed by
respondents ultimately prayed that they be allowed to redeem the
shares in the property sold by their co-heirs. Significantly, the right of

the other heirs to sell their undivided share in the property to

petitioner is not in dispute. Respondents concede that the other heirs
acted within their hereditary rights in doing so to the effect that the
latter completely and effectively relinquished their interests in the
property in favor of petitioner. Petitioner thus stepped into the shoes
of the other heirs to become a co-owner of the property with
respondents. As a result, only petitioner's presence is absolutely
required for a complete and final determination of the controversy
because what respondents seek is to be subrogated to his rights as
a purchaser.
Finally, petitioner contends that the petition filed by respondents with
the CA should have been dismissed because the verification and
certificate of non-forum shopping appended to it were defective,
citing specifically the failure of respondent Gloria Vargas to: (1)
indicate that she was authorized to represent her co-respondents in
the petition, and (2) state the basis of the alleged truth of the
allegations.
The general rule is that the certificate of non-forum shopping must
be signed by all the plaintiffs or petitioners in a case and the
signature of only one of them is insufficient.31 Nevertheless, the
rules on forum shopping, which were designed to promote and
facilitate the orderly administration of justice, should not be
interpreted with such absolute literalness as to subvert their own
ultimate and legitimate objective. Strict compliance with the
provisions regarding the certificate of non-forum shopping merely
underscores its mandatory nature in that the certification cannot be
altogether dispensed with or its requirements completely
disregarded.32 Under justifiable circumstances, the Court has
relaxed the rule requiring the submission of such certification
considering that although it is obligatory, it is not jurisdictional.33
Thus, when all the petitioners share a common interest and invoke a
common cause of action or defense, the signature of only one of
them in the certification against forum shopping substantially
complies with the rules.34 The co-respondents of respondent Gloria
Vargas in this case were her children. In order not to defeat the ends
of justice, the Court deems it sufficient that she signed the petition
on their behalf and as their representative.
WHEREFORE, the petition is DENIED for lack of merit. Costs
against petitioner.
SO ORDERED.

Spec Pro 39 of 53
G.R. No. L-10474

February 28, 1958

BENNY SAMPILO and HONORATO SALACUP, petitioners,

vs.
THE COURT OF APPEALS and FELISA SINOPERA respondent.
Clodualdo P. Surio for petitioners.
Moises B. Ramos for respondents.
LABRADOR, J.:
Certiorari against decision of the Court of Appeals, Third Division,
affirming with slight modification a judgment of the Court of First
Instance of Pangasinan, declaring plaintiffs owners of one-half
portion of four parcels of land described in the complaint, with costs.
The judgment was rendered in an action instituted by Felisa
Sinopera, administrative of the estate of Teodoro Tolete, to recover
from defendants one-half share of the aforesaid parcels of land,
which, it is alleged belong to the deceased Teodoro Tolete.
According, to the facts found by the Court of Appeals, Teodoro Tolete
died intestate in January, 1945. He left for parcels of land, lots Nos.
12006, 119967, 14352 and 12176 of the cadastral survey of San
Manuel, Pangasinan He left as heirs his widow, Leoncia de Leon,
and several nephews and nieces, children of deceased brothers and
sisters. On July 25, 1946, without any judicial proceedings, his
widow executed an affidavit stating that "the deceased Teodoro
Tolete left no children or respondent neither ascendants or
acknowledged natural children neither brother, sisters, nephews or
nieces, but the, widow Leoncia de Leon, the legitimate wife of the
deceased, the one and only person to inherit the above properties"
(Record on Appeal, p. 9). This affidavit was registered in the Office of
the Register of Deeds of Pangasinan. On the same day, she
executed a deed of sale of all the above parcels of land in favor of
Benny Sampilo for the sum of P10,000. This sale was also
registered in the Office of the Register of Deeds of Pangasinan. On
June 17, 1950, Benny Sampilo, in turn, sold the said parcels of land
to Honorato Salacup for P50,000 and this sale was also registered in
the Office of the Register of Deeds of Pangasinan (See Annexes "A",
"B", "C", attached to the complaint).
In March, 1950, Felisa Sinopera instituted proceedings for the
administration of the estate of Teodoro Tolete (Special Proceeding
No. 3694, Pangasinan), and having secured her appointment as
administratrix, brought the present action on June 20, 1950. Notice
of lis pendens was filed in the Office of the Register of Deeds and
said notice was recorded on certificates of title covering the said
properties on June 26, 1950. This notice, however, was subsequent
to the registration of the deed of sale, in favor of Honorato Salacup,
which took place on June 17, 1950.
The complaint alleges that the widow Leoncia de Leon, had no right
to execute the affidavit of adjudication and that Honorato Salacup
acquired no rights to the lands sold to him, and that neither had
Benny Sampilo acquired any right to the said properties. Sampilo
and Salacup filed an amended answer alleging that the complaint
states no cause of action; that if such a cause exists the same is
barred by the statute of limitations; that defendants are innocent
purchasers for value; and that the complaint is malicious, frivolous
and spurious, intended to harass and inconvenience the defendants.
After trial the Court of First Instance rendered judgment for the
plaintiff, Felisa Sinopera, declaring that the affidavit of adjudication
Exhibit "A", the deed of sale Exhibit "B", and the deed of sale Exhibit
"C", are all null and void; declaring plaintiff owner of one-half portion
of the four parcels of land in question, and finally declaring that the
usufructuary rights of Leoncia de Leon to said properties are
terminated. The case was appealed to the Court of Appeals. This
court held that the annulment of the affidavit of adjudication, Exhibit
"A", by the trial court was correct but that the annulment of the deeds
Exhibits "B" and "C", insofar as one-half of the properties, conveyed
is concerned, and in adjudicating one-half of the same to the heirs of
the deceased, is premature. Hence, it modified the judgment,
declaring that Exhibits "B" and "C" are null and void only insofar as
the properties thereby conveyed exceed the portion that the
responds to Leoncia de Leon. Therefore, it ordered the defendants
to deliver to the plaintiff, in her capacity as administratrix of the
estate of Teodoro Tolete, for disposition according to the law, onehalf of the lands described in the complaint, but reserved to
Honorato Salacup the right to claim and secure adjudication in his
favor of whatever portion of said properties may correspond to
Leoncia de Leon and also his right to bring an action for the

damages that he may have suffered against Leoncia de Leon and

Benny Sampilo.
Benny Sampilo and Honorato Salacup have appealed to this Court
by certiorari and have assigned the following errors in their brief:
I
The Court of Appeals erred in affirming that respondent Felisa
Sinopera's right of action to recover her and her co-heirs'
participation to the lands in question had not prescribed at the time
the action to recover was filed.
II
The Court of Appeals erred in not finding that the petitioners are
innocent purchasers for value.
III
The Court of Appeals erred in aiming the lower court's denial of
petitioner's motion for new trial.
In support of the first assignment of error, it is argued that as the
action was instituted almost four years after the affidavit of
adjudication, Exhibit "A", was registered in the Office of the Register
of Deeds Of Pangasinan, the right of action of the administratrix has
prescribed and lapsed because the same was not brought within the
period of two years as Prescribed in Section 4 of Rule 74 of the
Rules of Court, and as decided in the cases of McMicking vs. Sy
Conbieng, 21 Phil., 211 and Ramirez vs. Gmur, 42 Phil., 855 869.
Section 4 of Rule 74 provides, in part, as follows:
SEC. 4. Liability of distributees and estate. If it shall appear at any
time within two 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 has been unduly deprived
of his lawful participation of the such heir or such other person may
compel the settlement estate in the courts in the manner hereinafter
provided for the purpose of satisfying such lawful participation. . . .
Section 1, which is mentioned in Section 4, reads as follows:
SEC. 1. Extrajudcial settlement by agreement between the heirs.
If the decedent left no debts and the heirs and legatees are all of
age, or the minors are represented by their judicial guardians, the
parties may, without securing letters of administration, divide the
estate among themselves as they see fit by means of a public
instrument filed in the office of the register of deeds, and should they
disagree, they may do so in an ordinary action of partition. If there is
only one heir or one legatee, he may adjudicate to himself the entire
estate by means of an affidavit filed in the office of the register of
deeds. It shall be presumed that the decedent left no debts if no
creditor files a petition for letters of administration within two years
after the death of the decedent.
It will be noted that the provision next above-quoted contains two
parts, the first referring to a case in which there are two or more
heirs interested in the estate of a deceased person, and the second
in which there is only one heir. The section was taken from Section
596 of the old Code of Civil Procedure (Act No. 190, as amended by
Act No. 2331). Said Section 596 as amended, was as follows:
SEC. 596. Settlement of Certain Intestates Without Legal
Proceedings. Whenever all the heirs of a person who died
intestate are of lawful age and legal capacity and there are no debts
due from the estate, or all the debts have been paid the heirs may,
by agreement duly executed in writing by all of them, and not
otherwise, apportion and divide the estate among themselves, as
they may see fit, without proceedings in court.
We notice two significant provisions in Sections 1 and 4 of Rule 74.
In Section 1, it is required that if there are two or more heirs, both or
all of them should take part in the extrajudicial settlement. This
requirement is made more imperative in the old law (Section 596,
Act No. 190) by the addition of the clause "and not otherwise." By
the title of Section 4, the "distributees and estate" are indicates the
persons to answer for rights violated by the extrajudicial settlement.
On the other hand, it is also significant that no mention is made
expressly of the effect of the extrajudicial settlement on persons who
did not take part therein or had no notice or knowledge thereof.
There cannot be any doubt that those who took part or had

Spec Pro 40 of 53
knowledge of the extrajudicial settlement are bound thereby. As to
them the law is clear that if they claim to have been in any manner
deprived of their lawful right or share in the estate by the extrajudicial
settlement, they may demand their rights or interest within the period
of two years, and both the distributes and estate would be liable to
them for such rights or interest. Evidently, they are the persons in
accordance with the provision, may seek to remedy, the prejudice to
their rights within the two-year period. But as to those who did not
take part in the settlement or had no notice of the death of the
decedent or of the settlement, there is no direct or express provision
is unreasonable and unjust that they also be required to assert their
claims within the period of two years. To extend the effects of the
settlement to them, to those who did not take part or had no
knowledge thereof, without any express legal provision to that effect,
would be violative of the fundamental right to due process of law. In
the case of Ramirez vs. Gmur, supra, cited by the appellants in this
case, we held:
It will be noted that while the law (see. 754) provides that the order
of distribution may be had upon the application of the executor or
administrator, or of a person interested in the estate, no provision is
made for notice, by publication or otherwise, of such application. The
proceeding, therefore, is to all intents and purposes ex parte. As will
be seen our law is very vague and incomplete; and certainly it
cannot be held that a purely ex parte proceeding, had without notice
by personal service or by publication, by which the court undertakes
to distribute the property of deceased persons, can be conclusive
upon minor heirs who are not represented therein.
The procedure outlined in Section 1 of Rule 74 of extrajudicial
settlement, or by affidavit, is an ex parte proceeding. It cannot by
any reason or logic be contended that such settlement or distribution
would affect third persons who had no knowledge either of the death
of the decedent or of the extrajudicial settlement or affidavit,
especially as no mention of such effect is made, either directly or by
implication. We have examined the two cases cited by appellants
and there is no similarity at all between the circumstances on which
the ruling therein had been predicated and those of the case at bar.
Following the above-quoted decision of this Court in the case of
Ramirez vs. Gmur, supra, we are of the opinion and so hold that the
provisions of Section 4 of Rule 74, barring distributees or heirs from
objecting to an extrajudicial partition after the expiration of two years
from such extrajudicial partition, is applicable only (1) to persons
who have participated or taken part or had notice of the extrajudicial
partition, and, in addition, (2) when the provisions of Section 1 of
Rule 74 have been strictly complied with, i.e., that all the persons or
heirs of the decedent have taken part in the extrajudicial settlement
or are represented by themselves or through guardians. The case at
bar fails to comply with both requirements because not all the heirs
interested have participated in the extrajudicial settlement, the Court
of Appeals having found that the decedent left aside from his widow,
nephews and nieces living at the time of his death.
The next contention of appellants is that plaintiff's action is barred by
the statute of limitations. The origin of the Provision (Section 4, Rule
74), upon which this contention is predicated, which is Section 596
of Act No. 190, fails to support the contention. In the first Place, there
is nothing therein, or in its source which shows clearly a statute of
limitations and a bar of action against third person's. It is only a bar
against the parties who had taken part in the extrajudicial
proceedings but not against third persons not Parties thereto. In the
second place, the statute of limitations is contained in a different
chapter of Act No. 190, Chapter XL, and if Section 596 of the Act had
been meant to be a statute of limitations, it would naturally have
been included in the chapter which defines the statute.
But even if Section 4 of Rule 74 is a statute of limitations, it is still
unavailing to the defendants. The action is one based on fraud, as
the widow of the deceased owner of the lands had declared in her
affidavit of partition that the deceased left no nephews or niece, or
other heirs except herself. Plaintiff's right which is based on fraud
and which has a period of four years (Section 43, par. 3, Act no. 190;
Article 1146, Civil Code), does not appear to have lapsed the action
was instituted. Judicial proceedings where instituted in March, 1950
and these proceedings must have been instituted soon after the
discovery of fraud. In any case, the defendants have the burden of
proof as to their claim of the statute of limitations, which is their
defense, and they have not proved that when the action was
instituted, four years had already elapsed from the date that the
interested parties had actual knowledge of the fraud.

The second assignment of error, i.e., that the defendants-appellants

are innocent purchasers for value was rejected as unfounded by the
court of Appeals. Said court said.
The claim that defendants-appellants did not have sufficient
knowledge or notice of the claim of the heirs of Teodoro Tolete,
deceased, over the land in question does not find support in the
evidence of record. As regards defendant Benny Sampilo, it is an
admitted fact that he is a nephew of Leoncia de Leon and he had
been living with the latter. Both Benny Sampilo and the heirs of the
deceased who are claiming the property are residents of San
Manuel, Pangasinan. It is hard, therefore, to believe that Benny
Sampilo did not know the existence of said heirs, and that he was
not aware that they were nephews and nieces, children of the
deceased brothers, of the deceased Teodoro Tolete. The fact
furthermore that Benny Sampilo accompanied his aunt Leoncia de
Leon to Sison, Pangasinan, when the later saw Notary Public
Ladislao Villamil, who was the former's uncle, to have him prepare
the affidavit of adjudication Exhibit "A", and the deed of conveyance
Exhibit "B" by which on the same date she conveyed to Sampilo all
the property which she had adjudicated to herself, both of which she
acknowledged before said notary public, coupled with the fact that
there is no sufficient showing that the consideration for the
conveyance of P10,000 had in fact been paid, strengthens our belief
that said Benny Sampilo knew that the deceased Teodoro Tolete had
other heirs who may claim the property, and that the immediate
conveyance thereof to him was a strategem concocted to defeat the
former's rights. And as regards Honorato Salacup, while the claim
that no notice of lis pendens appeared annotated in the certificates
of title issued to Benny Sampilo when he acquired the property might
be true, for he purchased the property on June 17, 1950, and the
notice of lis pendens was noted on said certificates of title on June
26, 1950, nevertheless, he cannot claim that he was a purchaser in
good faith for value of the property. It is well-settled rule in this
jurisdiction that a purchaser of registered lands who has knowledge
of facts which should put him upon inquiry and investigate as to the
possible defects of the title of the vendor and fails to make such
inquiry and investigation cannot claim that he as a purchaser in good
faith for value and he had acquired a valid title thereto. Leung Yee
vs. Strong Machinery Co., 37 Phil., 644; Dayao vs. Diaz, G.R. L4106, May 29, 1952.
Finding no error in the decision of the Court of Appeals, we hereby
affirm it in toto, with costs against the petitioners. So ordered.

Spec Pro 41 of 53
G.R. No. L-6463

August 12, 1911

DAMASA ALCALA, plaintiff-appellee,

vs.
MODESTA PABALAN, PROCOPIO PABALAN, BASILIO SALGADO
and JUAN BANAY-BANAY, defendants-appellants.
Pedro Guevara for appellants.
No appearance for appellee.
JOHNSON, J.:
On the 11th day of June, 1910, the plaintiff and appellee presented a
petition in the Court of First Instance of the Province of La Laguna,
praying that she be appointed administratrix of the property
described in paragraph 4 of her petition.
After hearing the respective parties, the lower court appointed the
plaintiff as administratrix of said property. From that decision the
defendants appealed to this court and made several assignments of
error.
The undisputed facts, as presented by the record brought to this
court, seem to be as follows:
That on the 23rd day of April, 1897, Juan Banatin died, leaving a
widow (Damasa Alcala), the plaintiff herein, and seventeen nieces
and nephews, whose names are set out in the petition; that on the
13th day of June, 1897, the said widow and all of the seventeen
nieces and nephews, except Tranquilina Banatin, entered into a
voluntary agreement among themselves for the division "entre ellos,"
of all of the property left by the said Juan Banatin, deceased, except
the house described in paragraph 4 of the petition; that by the terms
of said agreement, the said house was to remain undivided; that the
widow (the plaintiff herein) should receive the one-half of the
usufruct of said house during her lifetime; that the other one-half of
the usufruct should be distributed equally among the other
seventeen heirs; that Francisco Salgado, one of the nephews,
should administer the said house, collecting the rents of the same
and deliver one-half to the widow (Damasa Alcala) and the other
one-half to the nieces and nephews; that Francisco Salgado, having
failed to pay to Damasa Alcala her share of the usufruct of said
property, was sued by her and a judgment was finally rendered
against him for the same. (Alcala vs. Salgado, 7 Phil. Rep., 151.) An
execution was issued upon said judgment and one-half of the
undivided property in question was sold some time in the year 1907,
to one Macario Decena. On the 22nd and 24th days of October,
1908 (see Exhibits 2 and 3), the said one-half of the property in
question was repurchased by the heirs of Francisco Salgado. The
money used in repurchasing the property by the heirs of Francisco
Salgado was the money of four of the heirs of Juan Banatin, to wit:
Modesta Pabalan, Procopio Pabalan, Basilio Salgado, and Juan
Banay-banay (see Exhibit 4 of the defendants herein), and not the
money of the heirs of Francisco Salgado. On the 25th day of
November, 1908, thirteen of the nieces and nephews or heirs of
Juan Banatin, by means of a public document, recognized the right
of the said Modesta Pabalan, Procopio Pabalan, Basilio Salgado,
and Juan Banay-banay as the owners of the one-half of the
undivided property in question. (See Exhibit 5.) On the 25th day of
November, 1908, sixteen of the heirs of the said Juan Banatin, by a
public document, unanimously appointed the said Modesta Pabalan
as "administradora" of all of the house in question, in substitution of
the said Francisco Salgado deceased. (See Exhibit 6.) Since the
25th day of November, 1908, until the commencement of the present
action, Modesta Pabalan had administered the property in question,
collected the rents of the same and had paid the one-half of said
rents to the plaintiff herein as the usufructuary of the one-half of said
property.
The first assignment of error made by the plaintiff is that "El juzgado
erro al estimar que la testamentaria del finado Juan Banatin no ha
finalizada."
With reference to this assignment of error, the heirs of Juan Banatin
were at perfect liberty to divide the estate among themselves,
assuming the responsibility of any debts which might exist. There is
no proof that any debts existed. After the actual division of the estate
among themselves they became the absolute owners of their
respective allotments and were tenants in common of that portion of
the property which remained pro indiviso. After the mutual
agreement among themselves for the division of the estate, either
actually distributing their respective shares or leaving the same
undivided, the property in question was no longer the property of the

estate of Juan Banatin, but the undivided property of the heirs. They
were tenant in common of that portion of the property which
remained undivided. As such tenants in common the majority of
them had a right to agree upon the appointment of an administrator
of their property. (Art. 398, Civil Code.) The property belonged to
them. They had a right to administer it.
The lower court in appointing the plaintiff and appellee as
administratrix of the property in question, evidently did so upon the
theory that the said property was still the property of the estate of
Juan Banatin. In this theory the lower court was mistaken. There
was nothing left of the estate of Juan Banatin to be administered.
The heirs by mutual agreement had divided the property among
themselves. There was no occasion and no reason for the
appointment of an administrator by the probate court, and, therefore,
the judgment of the lower court appointing Damasa Alcala as
administratrix of the estate of Juan Banatin for the purpose of
administering the property mentioned in paragraph 4 of the petition,
is hereby revoked.
We deem it unnecessary in the present case to discuss the right of a
usufructuary to manage or assist in managing or to administer the
property in usufruct which belongs to tenants in common. That
question is not presented in the present cause.
Without any finding as to costs, it is hereby directed that a judgment
be entered reversing the judgment of the lower court appointing
Damasa Alcala as administratrix of the property in question. It is so
ordered.

Spec Pro 42 of 53
G.R. No. L-10474

February 28, 1958

BENNY SAMPILO and HONORATO SALACUP, petitioners,

vs.
THE COURT OF APPEALS and FELISA SINOPERA respondent.
Clodualdo P. Surio for petitioners.
Moises B. Ramos for respondents.
LABRADOR, J.:
Certiorari against decision of the Court of Appeals, Third Division,
affirming with slight modification a judgment of the Court of First
Instance of Pangasinan, declaring plaintiffs owners of one-half
portion of four parcels of land described in the complaint, with costs.
The judgment was rendered in an action instituted by Felisa
Sinopera, administrative of the estate of Teodoro Tolete, to recover
from defendants one-half share of the aforesaid parcels of land,
which, it is alleged belong to the deceased Teodoro Tolete.
According, to the facts found by the Court of Appeals, Teodoro Tolete
died intestate in January, 1945. He left for parcels of land, lots Nos.
12006, 119967, 14352 and 12176 of the cadastral survey of San
Manuel, Pangasinan He left as heirs his widow, Leoncia de Leon,
and several nephews and nieces, children of deceased brothers and
sisters. On July 25, 1946, without any judicial proceedings, his
widow executed an affidavit stating that "the deceased Teodoro
Tolete left no children or respondent neither ascendants or
acknowledged natural children neither brother, sisters, nephews or
nieces, but the, widow Leoncia de Leon, the legitimate wife of the
deceased, the one and only person to inherit the above properties"
(Record on Appeal, p. 9). This affidavit was registered in the Office of
the Register of Deeds of Pangasinan. On the same day, she
executed a deed of sale of all the above parcels of land in favor of
Benny Sampilo for the sum of P10,000. This sale was also
registered in the Office of the Register of Deeds of Pangasinan. On
June 17, 1950, Benny Sampilo, in turn, sold the said parcels of land
to Honorato Salacup for P50,000 and this sale was also registered in
the Office of the Register of Deeds of Pangasinan (See Annexes "A",
"B", "C", attached to the complaint).
In March, 1950, Felisa Sinopera instituted proceedings for the
administration of the estate of Teodoro Tolete (Special Proceeding
No. 3694, Pangasinan), and having secured her appointment as
administratrix, brought the present action on June 20, 1950. Notice
of lis pendens was filed in the Office of the Register of Deeds and
said notice was recorded on certificates of title covering the said
properties on June 26, 1950. This notice, however, was subsequent
to the registration of the deed of sale, in favor of Honorato Salacup,
which took place on June 17, 1950.
The complaint alleges that the widow Leoncia de Leon, had no right
to execute the affidavit of adjudication and that Honorato Salacup
acquired no rights to the lands sold to him, and that neither had
Benny Sampilo acquired any right to the said properties. Sampilo
and Salacup filed an amended answer alleging that the complaint
states no cause of action; that if such a cause exists the same is
barred by the statute of limitations; that defendants are innocent
purchasers for value; and that the complaint is malicious, frivolous
and spurious, intended to harass and inconvenience the defendants.
After trial the Court of First Instance rendered judgment for the
plaintiff, Felisa Sinopera, declaring that the affidavit of adjudication
Exhibit "A", the deed of sale Exhibit "B", and the deed of sale Exhibit
"C", are all null and void; declaring plaintiff owner of one-half portion
of the four parcels of land in question, and finally declaring that the
usufructuary rights of Leoncia de Leon to said properties are
terminated. The case was appealed to the Court of Appeals. This
court held that the annulment of the affidavit of adjudication, Exhibit
"A", by the trial court was correct but that the annulment of the deeds
Exhibits "B" and "C", insofar as one-half of the properties, conveyed
is concerned, and in adjudicating one-half of the same to the heirs of
the deceased, is premature. Hence, it modified the judgment,
declaring that Exhibits "B" and "C" are null and void only insofar as
the properties thereby conveyed exceed the portion that the
responds to Leoncia de Leon. Therefore, it ordered the defendants
to deliver to the plaintiff, in her capacity as administratrix of the
estate of Teodoro Tolete, for disposition according to the law, onehalf of the lands described in the complaint, but reserved to
Honorato Salacup the right to claim and secure adjudication in his
favor of whatever portion of said properties may correspond to
Leoncia de Leon and also his right to bring an action for the

damages that he may have suffered against Leoncia de Leon and

Benny Sampilo.
Benny Sampilo and Honorato Salacup have appealed to this Court
by certiorari and have assigned the following errors in their brief:
I
The Court of Appeals erred in affirming that respondent Felisa
Sinopera's right of action to recover her and her co-heirs'
participation to the lands in question had not prescribed at the time
the action to recover was filed.
II
The Court of Appeals erred in not finding that the petitioners are
innocent purchasers for value.
III
The Court of Appeals erred in aiming the lower court's denial of
petitioner's motion for new trial.
In support of the first assignment of error, it is argued that as the
action was instituted almost four years after the affidavit of
adjudication, Exhibit "A", was registered in the Office of the Register
of Deeds Of Pangasinan, the right of action of the administratrix has
prescribed and lapsed because the same was not brought within the
period of two years as Prescribed in Section 4 of Rule 74 of the
Rules of Court, and as decided in the cases of McMicking vs. Sy
Conbieng, 21 Phil., 211 and Ramirez vs. Gmur, 42 Phil., 855 869.
Section 4 of Rule 74 provides, in part, as follows:
SEC. 4. Liability of distributees and estate. If it shall appear at any
time within two 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 has been unduly deprived
of his lawful participation of the such heir or such other person may
compel the settlement estate in the courts in the manner hereinafter
provided for the purpose of satisfying such lawful participation. . . .
Section 1, which is mentioned in Section 4, reads as follows:
SEC. 1. Extrajudcial settlement by agreement between the heirs.
If the decedent left no debts and the heirs and legatees are all of
age, or the minors are represented by their judicial guardians, the
parties may, without securing letters of administration, divide the
estate among themselves as they see fit by means of a public
instrument filed in the office of the register of deeds, and should they
disagree, they may do so in an ordinary action of partition. If there is
only one heir or one legatee, he may adjudicate to himself the entire
estate by means of an affidavit filed in the office of the register of
deeds. It shall be presumed that the decedent left no debts if no
creditor files a petition for letters of administration within two years
after the death of the decedent.
It will be noted that the provision next above-quoted contains two
parts, the first referring to a case in which there are two or more
heirs interested in the estate of a deceased person, and the second
in which there is only one heir. The section was taken from Section
596 of the old Code of Civil Procedure (Act No. 190, as amended by
Act No. 2331). Said Section 596 as amended, was as follows:
SEC. 596. Settlement of Certain Intestates Without Legal
Proceedings. Whenever all the heirs of a person who died
intestate are of lawful age and legal capacity and there are no debts
due from the estate, or all the debts have been paid the heirs may,
by agreement duly executed in writing by all of them, and not
otherwise, apportion and divide the estate among themselves, as
they may see fit, without proceedings in court.
We notice two significant provisions in Sections 1 and 4 of Rule 74.
In Section 1, it is required that if there are two or more heirs, both or
all of them should take part in the extrajudicial settlement. This
requirement is made more imperative in the old law (Section 596,
Act No. 190) by the addition of the clause "and not otherwise." By
the title of Section 4, the "distributees and estate" are indicates the
persons to answer for rights violated by the extrajudicial settlement.
On the other hand, it is also significant that no mention is made
expressly of the effect of the extrajudicial settlement on persons who
did not take part therein or had no notice or knowledge thereof.
There cannot be any doubt that those who took part or had

Spec Pro 43 of 53
knowledge of the extrajudicial settlement are bound thereby. As to
them the law is clear that if they claim to have been in any manner
deprived of their lawful right or share in the estate by the extrajudicial
settlement, they may demand their rights or interest within the period
of two years, and both the distributes and estate would be liable to
them for such rights or interest. Evidently, they are the persons in
accordance with the provision, may seek to remedy, the prejudice to
their rights within the two-year period. But as to those who did not
take part in the settlement or had no notice of the death of the
decedent or of the settlement, there is no direct or express provision
is unreasonable and unjust that they also be required to assert their
claims within the period of two years. To extend the effects of the
settlement to them, to those who did not take part or had no
knowledge thereof, without any express legal provision to that effect,
would be violative of the fundamental right to due process of law. In
the case of Ramirez vs. Gmur, supra, cited by the appellants in this
case, we held:
It will be noted that while the law (see. 754) provides that the order
of distribution may be had upon the application of the executor or
administrator, or of a person interested in the estate, no provision is
made for notice, by publication or otherwise, of such application. The
proceeding, therefore, is to all intents and purposes ex parte. As will
be seen our law is very vague and incomplete; and certainly it
cannot be held that a purely ex parte proceeding, had without notice
by personal service or by publication, by which the court undertakes
to distribute the property of deceased persons, can be conclusive
upon minor heirs who are not represented therein.
The procedure outlined in Section 1 of Rule 74 of extrajudicial
settlement, or by affidavit, is an ex parte proceeding. It cannot by
any reason or logic be contended that such settlement or distribution
would affect third persons who had no knowledge either of the death
of the decedent or of the extrajudicial settlement or affidavit,
especially as no mention of such effect is made, either directly or by
implication. We have examined the two cases cited by appellants
and there is no similarity at all between the circumstances on which
the ruling therein had been predicated and those of the case at bar.
Following the above-quoted decision of this Court in the case of
Ramirez vs. Gmur, supra, we are of the opinion and so hold that the
provisions of Section 4 of Rule 74, barring distributees or heirs from
objecting to an extrajudicial partition after the expiration of two years
from such extrajudicial partition, is applicable only (1) to persons
who have participated or taken part or had notice of the extrajudicial
partition, and, in addition, (2) when the provisions of Section 1 of
Rule 74 have been strictly complied with, i.e., that all the persons or
heirs of the decedent have taken part in the extrajudicial settlement
or are represented by themselves or through guardians. The case at
bar fails to comply with both requirements because not all the heirs
interested have participated in the extrajudicial settlement, the Court
of Appeals having found that the decedent left aside from his widow,
nephews and nieces living at the time of his death.
The next contention of appellants is that plaintiff's action is barred by
the statute of limitations. The origin of the Provision (Section 4, Rule
74), upon which this contention is predicated, which is Section 596
of Act No. 190, fails to support the contention. In the first Place, there
is nothing therein, or in its source which shows clearly a statute of
limitations and a bar of action against third person's. It is only a bar
against the parties who had taken part in the extrajudicial
proceedings but not against third persons not Parties thereto. In the
second place, the statute of limitations is contained in a different
chapter of Act No. 190, Chapter XL, and if Section 596 of the Act had
been meant to be a statute of limitations, it would naturally have
been included in the chapter which defines the statute.
But even if Section 4 of Rule 74 is a statute of limitations, it is still
unavailing to the defendants. The action is one based on fraud, as
the widow of the deceased owner of the lands had declared in her
affidavit of partition that the deceased left no nephews or niece, or
other heirs except herself. Plaintiff's right which is based on fraud
and which has a period of four years (Section 43, par. 3, Act no. 190;
Article 1146, Civil Code), does not appear to have lapsed the action
was instituted. Judicial proceedings where instituted in March, 1950
and these proceedings must have been instituted soon after the
discovery of fraud. In any case, the defendants have the burden of
proof as to their claim of the statute of limitations, which is their
defense, and they have not proved that when the action was
instituted, four years had already elapsed from the date that the
interested parties had actual knowledge of the fraud.

The second assignment of error, i.e., that the defendants-appellants

are innocent purchasers for value was rejected as unfounded by the
court of Appeals. Said court said.
The claim that defendants-appellants did not have sufficient
knowledge or notice of the claim of the heirs of Teodoro Tolete,
deceased, over the land in question does not find support in the
evidence of record. As regards defendant Benny Sampilo, it is an
admitted fact that he is a nephew of Leoncia de Leon and he had
been living with the latter. Both Benny Sampilo and the heirs of the
deceased who are claiming the property are residents of San
Manuel, Pangasinan. It is hard, therefore, to believe that Benny
Sampilo did not know the existence of said heirs, and that he was
not aware that they were nephews and nieces, children of the
deceased brothers, of the deceased Teodoro Tolete. The fact
furthermore that Benny Sampilo accompanied his aunt Leoncia de
Leon to Sison, Pangasinan, when the later saw Notary Public
Ladislao Villamil, who was the former's uncle, to have him prepare
the affidavit of adjudication Exhibit "A", and the deed of conveyance
Exhibit "B" by which on the same date she conveyed to Sampilo all
the property which she had adjudicated to herself, both of which she
acknowledged before said notary public, coupled with the fact that
there is no sufficient showing that the consideration for the
conveyance of P10,000 had in fact been paid, strengthens our belief
that said Benny Sampilo knew that the deceased Teodoro Tolete had
other heirs who may claim the property, and that the immediate
conveyance thereof to him was a strategem concocted to defeat the
former's rights. And as regards Honorato Salacup, while the claim
that no notice of lis pendens appeared annotated in the certificates
of title issued to Benny Sampilo when he acquired the property might
be true, for he purchased the property on June 17, 1950, and the
notice of lis pendens was noted on said certificates of title on June
26, 1950, nevertheless, he cannot claim that he was a purchaser in
good faith for value of the property. It is well-settled rule in this
jurisdiction that a purchaser of registered lands who has knowledge
of facts which should put him upon inquiry and investigate as to the
possible defects of the title of the vendor and fails to make such
inquiry and investigation cannot claim that he as a purchaser in good
faith for value and he had acquired a valid title thereto. Leung Yee
vs. Strong Machinery Co., 37 Phil., 644; Dayao vs. Diaz, G.R. L4106, May 29, 1952.
Finding no error in the decision of the Court of Appeals, we hereby
affirm it in toto, with costs against the petitioners. So ordered.

Spec Pro 44 of 53
G.R. No. L-12588

August 25, 1959

ELIGIO LLANERA, plaintiff-appellant,

vs.
ANA LOPOS, ET AL., defendants-appellants.
Juan A. Baes for appellant.
Toribio P. Perez for appellees.
BAUTISTA ANGELO, J.:
Gorgonio Llanera died single and intestate on October 13, 1942. He
left an estate consisting of the proceeds of an insurance policy
amounting to $5,150.00. Upon the request of Remedios Ayque
Altavano who claimed to be a relative of the deceased, a petition for
settlement of his estate was filed in the Court of First Instance of
Albayon January 22, 1948, wherein one Elias Ayque was appointed
administrator of the estate. After hearing, the Court found that the
deceased died without parents, brothers, sisters, nephews or nieces,
but left the following relatives: Ana, Eustaquio, Julia and Maximina,
surnamed Lopos, brothers and sisters of Aniceta Lopos, who was
the mother of Gorgonio Llanera, and Casiana, Teodoro, Petronilo,
Cenen, Felix, Sotero and Ambrosia, all surnamed Lopos, first degree
cousin of the deceased, being the children of a brother and sister of
Aniceta Lopos. After all the expenses of administration had been
paid, the Court ordered the balance of the estate to be distributed
among said heirs thereby corresponding to the first group the sum of
P1,188.00 each, and to the second the sum of P1,188.00 each per
stirpes. And on May 28, 1949, the Court ordered the closure and
termination of the proceedings.
It developed later the however that the deceased had a brother by
the name of Zacarias who died on June 19,1935 leaving a son,
Eligio, who was born in Sta. Rosa, Laguna on July 17, 1925. And
when in 1953 Eligio came to know that his uncle Gorgonio died
leaving an insurance policy the proceeds of which were distributed in
the intestate proceedings instituted in the Court of First Instance of
Albay and were adjudicated to those who were not entitled thereto,
Eligio on September 30, 1954 filed a motion in said proceedings in
order to assert his claim over the property as the sole heir of the
deceased, which motion however he later withdrew because he
intended to file a separate civil action for the vindication of his right in
the proper court. And so on February 21, 1955, Eligio commenced
this action in the Court of First Instance of Laguna to recover the
proceeds of the insurance policy left by his uncle against those to
whom they were illegally adjudicated alleging that the latter
misrepresented that they were the only heirs of the deceased when
in fact they knew well that he left a nephew who was alive and was
the only one entitled to inherit his property.
Notwithstanding the fact that the defendants were duly served with
summons, except one, only Elias Ayque answered the complaint,
and so upon plaintiff's motion, they were declared in default. And
then the case was called for trial where not even Elias appeared, the
Court alloted the plaintiff to present his evidence. However, on
February 18, 1957, the Court rendered decision dismissing the
complaint on the ground that the venue was improperly laid and
plaintiff's cause of action had already prescribed. This appeal was
taken to this Court on purely questions of law.
In holding that the Court of First Instance of Laguna has no
jurisdiction to take cognizance of this case, the trial court said, "Rule
75 of the Rules of Court expressly provides that the Court of First
Instance of the province in which the decedent resided at the time of
his death should take cognizance of the proceedings for the
settlement of his estate to the exclusion of all other courts.
Considering that Gorgonio Llanera, at the time of his death was a
resident of Daraga, Albay, it follows that the Court of First Instance of
that province should have exclusive jurisdiction to settle his estate.
Any question, therefore, as to who are the persons who should be
presented to and decided by the Court of First Instance of Albay.".
The flaw we find in this reasoning is that is presuposes that the
instant action is for the settlement of the estate of the deceased
Gorgonio Llanera. Such is not the case for his estate has already
been settled by the Court of First Instance of Albay so much so that
the proceedings were declared closed and terminated on May 28,
1949. The present action is to recover the property illegally
adjudicated to the defendants on the ground of fraud and being an
action in personam the same can be filed either at the residence of
any of the defendants or at the residence of the plaintiff, at the
election of the latter(sec. 1, Rule 5). Plaintiff chose to institute the
action in the Court of First Instance of Laguna, where he is a

resident, and so it is incorrect to say that the venue of the present

case has been improperly laid.
In holding that the present action has already prescribed, the trial
court also said: "The claim of the plaintiff, in the opinion of the Court,
was filed out of time. In summary settlement of the estate of a
deceased person, any heir deprived of his lawful participation therein
should file the corresponding petition in the court having jurisdiction
of the estate within two years after the settlement and distribution
thereof (sec. 4, Rule 74, Rules of Court).While the Rules of the Court
do not prescribed any time limit during which an heir deprived of his
lawful participation in the state of a person which was settled in a
regular testate or intestate proceeding, Article 1100 of the Civil Code,
however, provides that action for rescission on account of "lesion"
shall prescribe after four years from the time the partition was made.
Considering that judicial partition of the estate of Gorgonio Llanera
was made on May 17, 1949, hence plaintiff's action was commenced
beyond the prescriptive period provided by law.".
Again, we find this reasoning incorrect, for it overlooks the fact that
the present action is not for rescission of a contract based on
"lesion" but an action to recover property based on fraud which
under our law may be filed within a period of four years from the
discovery of the fraud. (sec. 43 par. 3, Act 190). Since, as alleged in
the complaint, fraud was discovered only in 1953 and the action was
brought in 1955, it is clear that plaintiff's action has not yet
prescribed. It is therefore an error to dismiss the complaint based on
prescription.
Wherefore, the decision appealed from is reversed. The case is
remanded to the lower court for further proceedings, with costs
against appellees.

Spec Pro 45 of 53
G.R. No. L-14676

January 31, 1963

CANDIDA VILLALUZ, ET AL., plaintiffs-appellants,

vs.
JUAN NEME and FELICISIMA VILLAFRANCA, defendantsappellees.
Jose L. Lapak for plaintiffs-appellants.
Rosario B. Zono-Sunga for defendants-appellees.
PAREDES, J.:
This case was elevated to this Court "on purely questions of law."
The record discloses that Maria Rocabo died intestate on February
17, 1937, leaving a parcel of land granted her under Homestead
Patent No. 185321, issued on May 20, 1930, and covered by
Original Certificate of Title No. 217 (Exh. A), of the Register of Deeds
of Camarines Norte. She left three (3) daughters, named Sinforosa,
Patricia and Maria, surnamed Villaluz and grandchildren, Candida,
Emilia, Clemencia, Roberto and Isidra Villaluz, legitimate children of
her deceased son Pedro Villaluz; Isabelo and Teodoro Napoles,
legitimate sons of a deceased daughter; Severina Villaluz and
Sinforosa and Leonor Napoles, legitimate daughters of another
deceased daughter, Gregoria Villaluz.
After the approval of her application, but before granting of the
patent, on March 6, 1926, Maria Rocabo donated the southern
portion of the land to Maria, and the northern portion to Patricia, in
two notarial deeds donation (Exhibits 1 and 7), giving them the right
to present their deeds of donations to the Bureau of Lands. The said
donees accepted the donations and took actual possession of their
respective portions, but only Maria Villaluz remained on the entire
land because Patricia left. Maria cultivated and improved the land
from 1927 to 1938, inclusive. Maria and Patricia, however, forgot and
cared not to present the deeds of donation to the Bureau of Lands.
On March 27, 1930, the patent was granted and O.C.T. No. 217 was
issued in the name of Maria Rocabo. Realizing that the deeds of
donation were not in accordance with the formalities required by law,
and because Sinforosa Villaluz, who had the custody of the title
would not surrender it to the donees, unless given a share, upon the
advise of a Notary Public, Carlos de Jesus, Maria, Patricia and
Sinforosa, on September 1, 1939, executed a deed of extrajudicial
partition (Exh. 2) among themselves, to the exclusion and without
the knowledge and consent of their nephews and nieces, the herein
plaintiffs-appellants, and in virtue thereof, O.C.T. No. 217 was
cancelled and Transfer Certificate of Title No. 269 was issued in their
names (Exh. 5) after having made representations that they were the
only heirs of their mother, Maria Rocabo. On September 2, 1939, the
3 sisters declared the land for taxation purposes (Exh. 4). On
September 11, 1939, they sold the land to Ramona Pajarillo, wife of
Adriano Mago and Angela Pajarillo, wife of defendant Juan Neme
(Exh. 3). Ramona and Angela declared land for taxation purposes in
their names (Exh. 6). On August 3, 1953, the heirs of Adriano and
Ramona sold the undivided interest of the latter to Juan Neme (Exh.
8), who, on August 8, 1953, sold the southern half portion of the
property in favor of defendant Felicisima Villafranca (Exh. 13).
Thereafter, the plaintiffs-appellants came to know that the land which
was in the administration of their aunts, Sinforosa, Patricia and
Maria, was already in the possession of the defendants. After
attempts of amicable settlement had failed, the plaintiffs on June 3,
1954, filed a complaint for partition of said land and recovery of their
respective shares on the property and accounting of the fruits
thereof.
It also appears that the deeds of sale of the land in question
executed in favor of the defendants, had not been registered in favor
of the defendants and had not been recorded in accordance with
Public Land Act No. 141 and the Land Registration Law, Act No. 496;
that the vendees failed to have their deed of sale (Exh. 3), annotated
on said T.C.T. No. 269, or have the title thereof transferred in their
names.
Wherefore, the parties respectfully pray that the foregoing stipulation
of facts be admitted and approved by this Honorable Court, without
prejudice to the parties adducing other evidence to prove their case
not covered by this stipulation of facts. 1wph1.t
After due trial, the lower court rendered judgment, dismissing the
complaint, with costs against the plaintiffs, and declaring the
defendants the owners of the land described in the complaint and in
the T.C.T. No. 269. Plaintiffs in their appeal, claim that the lower
court erred: (1) In not finding that the extrajudicial partition (Exh. 2),
only affected the partition of Sinforosa, Patricia and Maria, surnamed

Villaluz, on the land in question and not the participation of the

plaintiffs-appellants, as compulsory heirs of Maria Rocabo; (2) In
finding that plaintiffs-appellants are already barred from claiming
their participation thereon; and (3) In finding that defendantsappellees are owners, with right of possession, of the said land.
The contention of the plaintiffs-appellants is meritorious. The
decision found to be an incontrovertible fact that the land in question
should be divided among the heirs of the decedent Sinforosa,
Patricia and Maria Villaluz and her grandchildren. Thus, the trial
Court said:
... The settlement of the estate of Maria Rocabo was summarily
effected by the extrajudicial partition executed September 1, 1939,
by the three surviving children to the exclusion of the plaintiffs who
were entitled to inherit by representation. By virtue of the
extrajudicial partition, Exhibit 1, the Original Certificate of Title No.
217 in the name of Maria Rocabo was cancelled and Transfer
Certificate of Title No. 269 was issued in lieu thereof in favor of
Sinforosa Villaluz, Patricia Villaluz and Maria Villaluz on September
6, 1939, to the prejudice of the plaintiffs. . . .
Furthermore, Maria having left no testament or last will, her heirs
succeeded to the possession and ownership of the land in question
from the time of her death (Art. 440, Old Civil Code, Art. 533, New
Civil Code; Lubrico v. Arbado, 12 Phil. 391). The deed of extrajudicial
partition (Exh. 2), was fraudulent and vicious, the same having been
executed among the 3 sisters, without including their co-heirs, who
had no knowledge of and consent to the same. The partition,
therefore, did not and could not prejudice the interest and
participation of the herein plaintiffs-appellants, and the sale of the
land to the defendants did not and could not also prejudice and
effect plaintiffs-appellants' interest and participation thereon. The
cancellation of O.C.T. No. 217 and the issuance of T.C.T. No. 269,
did not likewise prejudice the interest and the participation of the
plaintiffs-appellants. The three sisters could not have sold what did
not belong to them. Nemo dat quod non habet.
The trial court held that under Sec. 4, Rule 73 of the Rules, the
plaintiffs' cause of action had already prescribed. This section,
however, refers only to the settlement and distribution of the estate
of the deceased by the heirs who make such partition among
themselves in good faith, believing that they are the only heirs with
the right succeed. In the case at bar, however, the surviving sisters
could not have ignored that they had co-heirs, the children of the 3
brothers who predeceased their mother. Considering that Maria
Rocabo died during the regime of the Spanish Civil Code, the
distribution of her properties should be governed by said Code,
wherein it is provided that between co-heirs, the act to demand the
partition of the inheritance does not prescribe. (Art 1965 [Old Civ.
Code]; Baysa, et al. v. Baysa, 53 Off. Gaz., 7282). Verily the 3 living
sisters were possessing the property as administratrices or trustees
for and in behalf of the other co-heirs, plaintiffs-appellants herein,
who have the right to vindicate their inheritance, regardless of the
lapse of time (Sevilla v. De los Angeles, L-7745; 51 Off. Gaz., 5590,
and case cited therein).
Moreover, the acquisition of the land in question is governed by the
Public Land Act No. 141 and the Land Registration Law Act No. 496.
And considering that the deed of sale had not been registered in
accordance with the said laws, the same did not constitute a
conveyance which would bind or affect the land, because the
registration of a voluntary sale of land is the operative act that
transmits or transfers title (Tuason v. Raymundo, 28 Phil.635).
Defendants-appellees further argue that the extrajudicial partition
should not be taken independently of the deeds of donation as in
fact, according to them, the crux of the case lies mainly in the two
deeds of donation, which enabled the donees to possess the land
and cut any and all rights of the plaintiffs-appellants to claim
participation therein. In other words, it is pretended that after the
alleged donations, the land in question was no longer a part of the
intestate estate of Maria Rocabo, and the plaintiffs-appellants could
no longer participate thereon. But the deeds of donation, according
to the trial court, were defective and inoperative, because they were
not executed in accordance with law. The trial court itself began to
count the period of prescription "after the execution of the
extrajudicial partition and the issuance of Transfer Certificate of Title
No. 269". The donees themselves know that the donations were
defective and inoperative, otherwise they would not have
subsequently decided to execute the deed of extrajudicial partition,
which also goes to show that the rights of the three sisters and the
vendees, stemmed from the said extrajudicial partition. The

Spec Pro 46 of 53
defendants-appellees, finally argue that, this notwithstanding, the
subsequent registration of the land in the names of the two donees
and Sinforosa Villaluz pursuant to the extrajudicial partition on
September 1, 1939, and the subsequent sale thereof by the
registered owners to the defendants-appellees, on September 11,
1939, followed by the actual, adverse and continuous possession by
the vendees and successors for more than 10 years, before the
present complaint was filed, had barred the right of appellants to
recover title of the property and claim participation therein. Having
held that the three sisters were mere trustees of the property for the
benefit of the appellants, and it appearing that they had not
repudiated the trust, defendants-appellees' pretension in this respect
is without merit. The finding in the appealed decision that "there is no
evidence that the said defendants are not innocent purchasers and
for value" (good faith), is of no moment in the case at bar. As
heretofore adverted to, there was no effective sale at all, which
would affect the rights of the plaintiffs-appellants. Moreover, the lack
of good faith on the part of the defendants-appellees can reasonably
be inferred from thier conduct in not presenting for registration the
supposed deed of sale in their favor; in failing to annotate the sale
on the T.C.T. of the alleged donees, and in not asking that a transfer
certificate of title be issued in their (vendees') names. It may also be
reasonably concluded that if they did not present the deed of sale for
registration, it was because they knew that their vendors were not
the sole and only heirs so as to entitle them to the ownership of the
land in question.
IN VIEW HEREOF, the decision appealed from is hereby set aside,
and the case is remanded to the court of origin, for further and
appropriate proceedings..

G.R. No. 112260

June 30, 1997

JOVITA YAP ANCOG, and GREGORIO YAP, JR., petitioners,

vs.
COURT OF APPEALS, ROSARIO DIEZ, and CARIDAD YAP,
respondents.

MENDOZA, J.:
This is a petition for review of the decision 1 of the Court of Appeals
in CA-CR. No. CV-19650, affirming the dismissal by the Regional
Trial Court 2 of Bohol of an action for partition of a parcel of land
which petitioners had filed.
The land, with improvements thereon, was formerly the conjugal
property of the spouses Gregorio Yap and Rosario Diez. In 1946,
Gregorio Yap died, leaving his wife, private respondent Rosario Diez,
and children, petitioners Jovita Yap Ancog and Gregorio Yap, Jr., and
private respondent Caridad Yap as his heirs.
In 1954 and again 1958, Rosario Diez obtained loans from the Bank
of Calape, secured by a mortgage on the disputed land, which was
annotated on its Original Certificate of Title No. 622. When Rosario
Diez applied again for a loan to the bank, offering the land in
question as security, the bank's lawyer, Atty. Narciso de la Serna,
suggested that she submit an extrajudicial settlement covering the
disputed land as a means of facilitating the approval of her
application. The suggestion was accepted and on April 4, 1961, Atty.
de la Serna prepared an extrajudicial settlement, which the heirs,
with the exception of petitioner Gregorio Yap, Jr., then only 15 years
old, signed. The document was notarized by Atty. de la Serna on
April 12, 1961. As a result, OCT No. 622 was cancelled and Transfer
Certificate of Title No. 3447 (T-2411) was issued on April 13, 1961.
On April 14, 1961, upon the execution of a real estate mortgage on
the land, the loan was approved by the bank.
Rosario Diez exercised rights of ownership over the land. In 1985,
she brought an ejectment suit against petitioner Jovita Yap Ancog's
husband and son to evict them from the ground floor of the house
built on the land for failure to pay rent. Shortly thereafter, petitioner
Jovita Ancog learned that private respondent Rosario Diez had
offered the land for sale.
Petitioner Ancog immediately informed her younger brother,
petitioner Gregorio Yap, Jr., who was living in Davao, of their
mother's plan to sell the land. On June 6, 1985, they filed this action
for partition in the Regional Trial Court of Bohol where it was
docketed as Civil Case No. 3094. As private respondent Caridad Yap
was unwilling to join in the action against their mother, Caridad was
impleaded as a defendant.
Petitioners alleged that the extrajudicial instrument was simulated
and therefore void. They claimed that in signing the instrument they
did not really intend to convey their interests in the property to their
mother, but only to enable her to obtain a loan on the security of the
land to cover expenses for Caridad's school fees and for household
repairs.
At the pre-trial conference, the parties stipulated:
1.
That the parcel of land in question originally belonged to
the conjugal partnership of spouses Gregorio Yap and Rosario Diez
Yap;
2.
That Gregorio Yap, Jr. is the legitimate child of spouses
Gregorio Yap and Rosario Diez Yap;
3.
That Gregorio Yap is not a party in the execution of the
Extra Judicial Settlement of the Estate dated April 4, 1961;
4.
That all the encumbrances found in TCT No. (3447) T2411 which is now marked as Exh. C for the plaintiffs and Exh. 2 for
the defendants as Entry No. 6719, 6720, 11561 and 11562 are
admitted by the plaintiffs subject to the condition that the Extra
Judicial Settlement of Estate dated April 4, 1961, was made by the
parties that the same was only for the purpose of securing a loan
with the Philippine National Bank. 3

Spec Pro 47 of 53
The trial court rendered judgment dismissing petitioners' action. It
dismissed petitioners' claim that the extrajudicial settlement was
simulated and held it was voluntarily signed by the parties.
Observing that even without the need of having title in her name
Rosario Diez was able to obtain a loan using the land in question as
collateral, the court held that the extrajudicial settlement could not
have been simulated for the purpose of enabling her to obtain
another loan. Petitioners failed to overcome the presumptive validity
of the extrajudicial settlement as a public instrument.
The court instead found that petitioner Ancog had waived her right to
the land, as shown by the fact that on February 28, 1975, 4
petitioner's husband, Ildefonso Ancog, leased the property from
private respondent Diez. Furthermore, when the spouses Ancog
applied for a loan to the Development Bank of the Philippines using
the land in question as collateral, they accepted an appointment
from Rosario Diez as the latter's attorney-in-fact. 5
The court also found that the action for partition had already
prescribed. The registration of the land under private respondent
Rosario Diez's name amounted to a repudiation of the co-ownership.
Therefore, petitioners had ten (10) years from April 13, 1961 within
which to bring an action to recover their share in the property. While
it is true that petitioner Gregorio Yap, Jr. was a minor at the time the
extrajudicial settlement was executed, his claim, according to the
court, was barred by laches.
On appeal, the Court of Appeals upheld the validity of the
extrajudicial settlement and sustained the trial court's dismissal of
the case. The appellate court emphasized that the extrajudicial
settlement could not have been simulated in order to obtain a loan,
as the new loan was merely "in addition to" a previous one which
private respondent Diez had been able to obtain even without an
extrajudicial settlement. Neither did petitioners adduce evidence to
prove that an extrajudicial settlement was indeed required in order to
obtain the additional loan. The appellate court held that considering
petitioner Jovita Yap Ancog's educational attainment (Master of Arts
and Bachelor of Laws), it was improbable that she would sign the
settlement if she did not mean it to be such. Hence, this petition.
Petitioners contend that the Court of Appeals erred:
I.
IN SUSTAINING THE TRIAL COURT RULING THAT THE
CONTESTED EXTRAJUDICIAL SETTLEMENT (EXHIBIT "B") IS
NOT A SIMULATED ONE;
II.
IN BLOATING THE EDUCATIONAL BACKGROUND OF
PETITIONER JOVITA YAP ANCOG AND USING THE SAME AS
ARGUMENT AGAINST HER CLAIM THAT SAID EXHIBIT "B" WAS
INDEED A SIMULATED DOCUMENT;
III.
IN SUSTAINING THE TRIAL COURT'S RULING THAT
PETITIONERS' ACTION FOR PARTITION HAS PRESCRIBED;
IV.
IN RULING THAT PETITIONER GREGORIO YAP, JR.,
ONE OF THE CO-OWNERS OF THE LITIGATED PROPERTY, HAD
LOST HIS RIGHTS TO THE PROPERTY THROUGH
PRESCRIPTION OR LACHES.
We hold that both the trial court and the Court of Appeals correctly
acted in upholding the extrajudicial settlement but erred in ruling that
petitioner Gregorio Yap, Jr. was barred by laches from recovering his
share in the property in question.
To begin with, it is settled that the findings of facts of the Court of
Appeals are conclusive upon the parties and are not reviewable by
this Court when they are an affirmation of the findings of the trial
court. 6 In this case, the trial court and the Court of Appeals found no
evidence to show that the extrajudicial settlement was required to
enable private respondent Rosario Diez to obtain a loan from the
Bank of Calape. Petitioners merely claimed that the extrajudicial
settlement was demanded by the bank.
To the contrary, that the heirs (Jovita Yap Ancog and Caridad Yap)
meant the extrajudicial settlement to be fully effective is shown by
the fact that Rosario Diez performed acts of dominion over the entire
Land, beginning with its registration, without any objection from
them. Instead, petitioner Jovita Ancog agreed to lease the land from
her mother, private respondent Rosario Diez, and accepted from her
a special power of attorney to use the land in question as collateral
for a loan she was applying from the DBP. Indeed it was private
respondent Diez who paid the loan of the Ancogs in order to secure
the release of the property from mortgage.

Petitioner Jovita Yap Ancog contends that she could not have waived
her share in the land because she is landless. For that matter,
private respondent Caridad Yap is also landless, but she signed the
agreement. 7 She testified that she did so out of filial devotion to her
mother.
Thus, what the record of this case reveals is the intention of Jovita
Ancog and Caridad Yap to cede their interest in the land to their
mother Rosario Diez. It is immaterial that they had been initially
motivated by a desire to acquire a loan. Under Art. 1082 of the Civil
Code, 8 every act which is intended to put an end to indivision
among co-heirs is deemed to be a partition even though it should
purport to be a sale, an exchange, or any other transaction.
We hold, however, that the Court of Appeals erred in ruling that the
claim of petitioner Gregorio Yap, Jr. was barred by laches. In
accordance with Rule 74, 1 9 of the Rules of Court, as he did not
take part in the partition, he is not bound by the settlement. 10 It is
uncontroverted that, at the time the extrajudicial settlement was
executed, Gregorio Yap, Jr. was a minor. For this reason, he was not
included or even informed of the partition.
Instead, the registration of the land in Rosario Diez's name created
an implied trust in his favor by analogy to Art. 1451 of the Civil Code,
which provides:
When land passes by succession to any person and he causes the
legal title to be put in the name of another, a trust is established by
implication of law for the benefit of the true owner.
In the case of O'Laco v. Co Cho Chit, 11 Art. 1451 was held as
creating a resulting trust, which is founded on the presumed
intention of the parties. As a general rule, it arises where such may
be reasonably presumed to be the intention of the parties, as
determined from the facts and circumstances existing at the time of
the transaction out of which it is sought to be established. 12 In this
case, the records disclose that the intention of the parties to the
extrajudicial settlement was to establish a trust in favor of petitioner
Yap, Jr. to the extent of his share. Rosario Diez testified that she did
not claim the entire property, 13 while Atty. de la Serna added that
the partition only involved the shares of the three participants. 14
A cestui que trust may make a claim under a resulting trust within 10
years from the time the trust is repudiated. 15 Although the
registration of the land in private respondent Diez's name operated
as a constructive notice of her claim of ownership, it cannot be taken
as an act of repudiation adverse to petitioner Gregorio Yap, Jr.'s
claim, whose share in the property was precisely not included by the
parties in the partition. Indeed, it has not been shown whether he
had been informed of her exclusive claim over the entire property
before 1985 when he was notified by petitioner Jovita Yap Ancog of
their mother's plan to sell the property. 16
This Court has ruled that for prescription to run in favor of the
trustee, the trust must be repudiated by unequivocal acts made
known to the cestui que trust and proved by clear and conclusive
evidence. Furthermore, the rule that the prescriptive period should
be counted from the date of issuance of the Torrens certificate of title
applies only to the remedy of reconveyance under the Property
Registration Decree. 17 Since the action brought by petitioner Yap to
claim his share was brought shortly after he was informed by Jovita
Ancog of their mother's effort to sell the property, Gregorio Yap, Jr.'s
claim cannot be considered barred either by prescription or by
laches.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED
with the MODIFICATION that this case is REMANDED to the
Regional Trial Court for the determination of the claim of petitioner
Gregorio Yap, Jr.
SO ORDERED.

Spec Pro 48 of 53
G.R. No. 147468

April 9, 2003

SPOUSES EDUARDO ARENAS DOMINGO & JOSEFINA CHAVEZ

DOMINGO, petitioners,
vs.
LILIA MONTINOLA ROCES, CESAR ROBERTO M. ROCES, ANA
INES MAGDALENA ROCES TOLENTINO, LUIS MIGUEL M.
ROCES, JOSE ANTONIO M. ROCES and MARIA VIDA
PRESENTACION ROCES, respondents.
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari of the decision of the Court
of Appeals dated November 22, 2000 in CA-G.R. CV No. 62473,1 as
well as the resolution dated March 15, 2001, denying petitioners'
Motion for Reconsideration.2
The facts are not in dispute.

adjudication was fraudulent because Montinola was not an heir of

the Roces spouses and it was not true that Lilia Roces was dead.
Therefore, the affidavit of self-adjudication, as well as the deed of
absolute sale, TCT No. 7299, and TCT No. 7673, all covering the
subject property, were null and void.15
In their answer, petitioners alleged that they were buyers in good
faith and that their action was barred by estoppel and laches.16
After trial, the court a quo rendered judgment in favor of
respondents, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs
against the defendant Reynaldo L. Montinola who is hereby ordered
to pay to the plaintiffs the following sums:
a) P1,200,000.00 as actual damages, with interest thereon at the
legal rate of six (6) per centum per annum until fully paid;

The spouses Cesar and Lilia Roces were the owners of two
contiguous parcels of land located on Arayat Street, Mandaluyong,
covered by Transfer Certificates of Title Nos. 57217 and 57218.3 On
November 13, 1962, the Government Service Insurance System
(GSIS) caused the annotation of an affidavit of adverse claim on the
titles alleging that the spouses have mortgaged the same to it.4

b) Moral damages in the sum of P100,000.00;

Subsequently, GSIS wrote a letter to Cesar Roces demanding the

surrender of the owner's duplicates of titles. When Roces failed to
comply, GSIS filed a petition with the then Court of First Instance of
Rizal, docketed as Civil Case No. R-1359, praying that the owner's
duplicates in Roces' possession be declared null and void and that
the Register of Deeds of Pasig be directed to issue new owner's
duplicates to GSIS.5 On September 5, 1977, the Court of First
Instance issued an order granting the petition.6 The order became
final and executory, and TCT Nos. 57217 (11663) and 57218 (11664)
were issued in the name of GSIS.7

The counterclaim of defendant spouses Eduardo and Josefina

Domingo is dismissed and the complaint against the Register of
Deeds is likewise dismissed without costs.

Cesar Roces died intestate on January 26, 1980.8 He was survived

by his widow, Lilia Roces, and their children: Cesar Roberto Roces,
Ana Ines Magdalena Roces Tolentino, Luis Miguel M. Roces, Jose
Antonio Roces and Maria Vida Presentacion Roces, all of whom are
the respondents in this case.

IN THE LIGHT OF ALL THE FOREGOING, the appeal is GRANTED.

The Decision of the Court a quo appealed from is SET ASIDE AND
REVERSED. Another Decision is hereby rendered in favor of the
Appellants as follows:

On July 22, 1992, Reynaldo L. Montinola, a nephew of Lilia Roces,

executed an affidavit of self-adjudication over the Arayat properties.
He alleged that the properties were owned by the spouses Cesar
and Lilia Roces, both of whom died intestate, on September 13,
1987 and June 27, 1989, respectively; that the properties were
acquired during the existence of their marriage; that the spouses left
no heirs except the brother of Lilia Roces, who was his father; that
neither of the spouses left any will nor any debts; and that he was
the sole heir of the Roces spouses.9
On January 5, 1993, Montinola filed a petition against GSIS with the
Regional Trial Court of Pasig, docketed as Civil Case No. R-4743,
praying for the cancellation of TCT Nos. 57217 (11663) and 57218
(11664).10 During the trial, GSIS failed to produce any document
evidencing the alleged real estate mortgage by Roces of the
properties. Hence, the trial court rendered judgment in favor of
Montinola, declaring the owner's duplicates of TCT No. 57217
(11663) and 57218 (11664) as null and void and ordering the
Registry of Deeds of Mandaluyong to issue new owner's duplicates
of the said titles.11
GSIS did not appeal the aforesaid judgment; thus, the same became
final and executory. Accordingly, the Registry of Deeds of
Mandaluyong issued TCT No. 7299 in the name of Montinola in lieu
of TCT No. 57218 (11664).12
Sometime in July 1993, Montinola executed a deed of absolute sale
of the property covered by TCT No. 7299 in favor of petitioner
spouses Eduardo and Josefina Domingo.13 Thereafter, TCT No.
7673 was issued in the names of petitioners.

c) Exemplary damages in the sum of P50,000.00;

d) Attorney's fees in the reasonable amount of P30,000.00; and
costs.

SO ORDERED.17
Respondents appealed to the Court of Appeals, reiterating the reliefs
prayed for in their complaint below.18 On November 22, 2000, the
Court of Appeals rendered the assailed Decision, the decretal
portion of which reads:

1. The "Affidavit of Self-Adjudication" (Exhibit "G"), Transfer

Certificate of Title No. 7299 (Exhibits "N" and "22", Domingo), the
"Deed of Absolute Sale" (Exhibit "20") and Transfer Certificate of
Title No. 7673 (Exhibit "21") are hereby declared null and void.
2. Transfer Certificate of Title No. 57218 (11664), under the names
of Cesar P. Roces and Lilia Montinola, is hereby reinstated.
3. The Appellees are hereby ordered to pay, jointly and severally, to
the Appellants the amount of P50,000.00 as and by way of attorney's
fees.
4. Appellants' claims for actual, moral and exemplary damages are
dismissed.
5. The Appellee Reynaldo Montinola is hereby ordered to pay to the
Appellees Spouses Domingo the amount of P1,800,000.00, with
interest thereon at the rate of 12% per annum from the date of the
Decision of this Court until the said amount is paid in full by the said
Appellee, the other cross-claims of the Appellees, inter se, are
dismissed.
SO ORDERED.19
Petitioners filed a Motion for Reconsideration,20 which was denied
in a Resolution dated March 15, 2000.21 Hence this petition, raising
the following errors:
1. THE COURT OF APPEALS ERRED IN HOLDING THAT THE
ANNOTATION IN THE TITLE REGARDING SEC. 4, RULE 74 IS AN
ENCUMBRANCE WHICH DISQUALIFIES PETITIONERS FROM
BEING INNOCENT PURCHASERS FOR VALUE;

Both TCT Nos. 7299 and 7673 contained the following annotation:
Subject to the provision of Section 4, Rule 74 of the Rules of Court
with respect to the inheritance left by the deceased SPS. CESAR
ROCES & LILIA MONTINOLA.14
When respondents learned of the sale of the property to petitioners,
they filed a complaint against Montinola and petitioners with the
Regional Trial Court of Pasig. They argued that the affidavit of self-

2. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT IT

WAS RESPONDENTS WHO MADE IT POSSIBLE FOR
REYNALDO MONTINOLA TO PERPETUATE THE FRAUD AND,
THEREFORE, THEY SHOULD BE THE ONE TO BEAR
RESULTING DAMAGE;
3. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT
RESPONDENTS HAVE NO EXISTING INTEREST IN THE

Spec Pro 49 of 53
PROPERTY SINCE IT WAS PREVIOUSLY MORTGAGED AND
FORECLOSED BY THE G.S.I.S.; AND
4. THE COURT OF APPEALS ERRED IN HOLDING PETITIONERS
LIABLE TO RESPONDENTS FOR ATTORNEY'S FEES, THEREBY
ADDING MORE INJURY TO THEIR MISFORTUNE.22
The petition lacks merit.
It is true that one who deals with property registered under the
Torrens system need not go beyond the same, but only has to rely
on the title. He is charged with notice only of such burdens and
claims as are annotated on the title. However, this principle does not
apply when the party has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make
such inquiry or when the purchaser has knowledge of a defect or the
lack of title in his vendor or of sufficient facts to induce a reasonably
prudent man to inquire into the status of the title of the property in
litigation. One who falls within the exception can neither be
denominated an innocent purchaser for value nor a purchaser in
good faith.23

On the other hand, estoppel by laches arises from the negligence or

omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned
it or declined to assert it.29
In the case at bar, only four months elapsed from the time
respondents discovered Montinola's fraudulent acts, sometime in
May 1993, to the time they filed their complaint on September 6,
1993. This relatively short span of time can hardly be called
unreasonable, especially considering that respondents used this
period of time to investigate the transfers of the property.30 Delay is
an indispensable requisite for a finding of estoppel by laches, but to
be barred from bringing suit on grounds of estoppel and laches, the
delay must be lengthy and unreasonable.31 No unreasonable delay
can be attributed to respondents in this case.
WHEREFORE, in view of the foregoing, the instant petition for
review is DENIED. The decision and resolution of the Court of
Appeals in CA-G.R. No. CV No. 62473 are AFFIRMED in toto.
SO ORDERED.

As stated above, the titles, namely, TCT Nos. 7299 and 7673,
contained annotations which made reference to the provisions of
Rule 74, Section 4 of the Rules of Court, viz:
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.24
The foregoing rule clearly covers transfers of real property to any
person, as long as the deprived heir or creditor vindicates his rights
within two years from the date of the settlement and distribution of
estate. Contrary to petitioners' contention, the effects of this
provision are not limited to the heirs or original distributees of the
estate properties, but shall affect any transferee of the properties.
In David v. Malay,25 it was held that the buyer of real property the
title of which contain an annotation pursuant to Rule 74, Section 4 of
the Rules of Court cannot be considered innocent purchasers for
value. In the same vein, the annotation at the back of TCT No. 7299
in this case referring to Rule 74, Section 4 of the Rules of Court was
sufficient notice to petitioners of the limitation on Montinola's right to
dispose of the property. The presence of an irregularity which excites
or arouses suspicion should prompt the vendee to look beyond the
certificate and investigate the title of the vendor appearing on the
face thereof.26 Purchasers of registered land are bound by the
annotations found at the back of the certificate of title.27
Hence, petitioners cannot be considered buyers in good faith and
cannot now avoid the consequences brought about by the
application of Rule 74, Section 4 of the Rules of Court.
Petitioner's claim that respondents were guilty of laches and
estoppel is likewise untenable. Laches is the failure or neglect, for an
unreasonable and unexplained length of time, to do that which, by
exercising due diligence, could or should have been done earlier.
The essential elements of laches are: (1) conduct on the part of
defendant or one under whom he claims, giving rise to the situation
complained of; (2) delay in asserting complainant's right after he had
knowledge of the defendant's conduct and after he has an
opportunity to sue; (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.28

Spec Pro 50 of 53
G.R. No. 153820

October 16, 2009

DELFIN TAN, Petitioner,

vs.
ERLINDA C. BENOLIRAO, ANDREW C. BENOLIRAO, ROMANO C.
BENOLIRAO, DION C. BENOLIRAO, SPS. REYNALDO TANINGCO
and NORMA D. BENOLIRAO, EVELYN T. MONREAL, and ANN
KARINA TANINGCO, Respondents.
DECISION
Is an annotation made pursuant to Section 4, Rule 74 of the Rules of
Court (Rules) on a certificate of title covering real property
considered an encumbrance on the property? We resolve this
question in the petition for review on certiorari1 filed by Delfin Tan
(Tan) to assail the decision of the Court of Appeals (CA) in CA-G.R.
CV No. 520332 and the decision of the Regional Trial Court (RTC)3
that commonly declared the forfeiture of his P200,000.00 down
payment as proper, pursuant to the terms of his contract with the
respondents.
THE ANTECEDENTS
The facts are not disputed. Spouses Lamberto and Erlinda Benolirao
and the Spouses Reynaldo and Norma Taningco were the coowners of a 689-square meter parcel of land (property) located in
Tagaytay City and covered by Transfer Certificate of Title (TCT) No.
26423. On October 6, 1992, the co-owners executed a Deed of
Conditional Sale over the property in favor of Tan for the price of
P1,378,000.00. The deed stated:
a) An initial down-payment of TWO HUNDRED (P200,000.00)
THOUSAND PESOS, Philippine Currency, upon signing of this
contract; then the remaining balance of ONE MILLION ONE
HUNDRED SEVENTY EIGHT THOUSAND (P1,178,000.00)
PESOS, shall be payable within a period of one hundred fifty (150)
days from date hereof without interest;
b) That for any reason, BUYER fails to pay the remaining balance
within above mentioned period, the BUYER shall have a grace
period of sixty (60) days within which to make the payment, provided
that there shall be an interest of 15% per annum on the balance
amount due from the SELLERS;
c) That should in case (sic) the BUYER fails to comply with the terms
and conditions within the above stated grace period, then the
SELLERS shall have the right to forfeit the down payment, and to
rescind this conditional sale without need of judicial action;
d) That in case, BUYER have complied with the terms and
conditions of this contract, then the SELLERS shall execute and
deliver to the BUYER the appropriate Deed of Absolute Sale;
Pursuant to the Deed of Conditional Sale, Tan issued and delivered
to the co-owners/vendors Metrobank Check No. 904407 for
P200,000.00 as down payment for the property, for which the
vendors issued a corresponding receipt.

rescission of the conditional sale and the forfeiture of his down

payment based on the terms of the contract.
Tan refused to comply with the vendors demand and instead wrote
them a letter (dated May 28, 1993) claiming that the annotation on
the title, made pursuant to Section 4, Rule 74 of the Rules,
constituted an encumbrance on the property that would prevent the
vendors from delivering a clean title to him. Thus, he alleged that he
could no longer be required to pay the balance of the purchase price
and demanded the return of his down payment.
When the vendors refused to refund the down payment, Tan,
through counsel, sent another demand letter to the vendors on June
18, 1993. The vendors still refused to heed Tans demand, prompting
Tan to file on June 19, 1993 a complaint with the RTC of Pasay City
for specific performance against the vendors, including Andrew
Benolirao, Romano Benolirao, Dion Benolirao as heirs of Lamberto
Benolirao, together with Evelyn Monreal and Ann Karina Taningco
(collectively, the respondents). In his complaint, Tan alleged that
there was a novation of the Deed of Conditional Sale done without
his consent since the annotation on the title created an
encumbrance over the property. Tan prayed for the refund of the
down payment and the rescission of the contract.
On August 9, 1993, Tan amended his Complaint, contending that if
the respondents insist on forfeiting the down payment, he would be
willing to pay the balance of the purchase price provided there is
reformation of the Deed of Conditional Sale. In the meantime, Tan
caused the annotation on the title of a notice of lis pendens.
On August 21, 1993, the respondents executed a Deed of Absolute
Sale over the property in favor of Hector de Guzman (de Guzman)
for the price of P689,000.00.
Thereafter, the respondents moved for the cancellation of the notice
of lis pendens on the ground that it was inappropriate since the case
that Tan filed was a personal action which did not involve either title
to, or possession of, real property. The RTC issued an order dated
October 22, 1993 granting the respondents motion to cancel the lis
pendens annotation on the title.
Meanwhile, based on the Deed of Absolute Sale in his favor, de
Guzman registered the property and TCT No. 28104 was issued in
his name. Tan then filed a motion to carry over the lis pendens
annotation to TCT No. 28104 registered in de Guzmans name, but
the RTC denied the motion.
On September 8, 1995, after due proceedings, the RTC rendered
judgment ruling that the respondents forfeiture of Tans down
payment was proper in accordance with the terms and conditions of
the contract between the parties.4 The RTC ordered Tan to pay the
respondents the amount of P30,000.00, plus P1,000.00 per court
appearance, as attorneys fees, and to pay the cost of suit.
On appeal, the CA dismissed the petition and affirmed the ruling of
the trial court in toto. Hence, the present petition.
THE ISSUES

On November 6, 1992, Lamberto Benolirao died intestate. Erlinda

Benolirao (his widow and one of the vendors of the property) and her
children, as heirs of the deceased, executed an extrajudicial
settlement of Lambertos estate on January 20, 1993. On the basis
of the extrajudicial settlement, a new certificate of title over the
property, TCT No. 27335, was issued on March 26, 1993 in the
names of the Spouses Reynaldo and Norma Taningco and Erlinda
Benolirao and her children. Pursuant to Section 4, Rule 74 of the
Rules, the following annotation was made on TCT No. 27335:
x x x any liability to credirots (sic), excluded heirs and other persons
having right to the property, for a period of two (2) years, with
respect only to the share of Erlinda, Andrew, Romano and Dion, all
surnamed Benolirao
As stated in the Deed of Conditional Sale, Tan had until March 15,
1993 to pay the balance of the purchase price. By agreement of the
parties, this period was extended by two months, so Tan had until
May 15, 1993 to pay the balance. Tan failed to pay and asked for
another extension, which the vendors again granted.
Notwithstanding this second extension, Tan still failed to pay the
remaining balance due on May 21, 1993. The vendors thus wrote
him a letter demanding payment of the balance of the purchase price
within five (5) days from notice; otherwise, they would declare the

Tan argues that the CA erred in affirming the RTCs ruling to cancel
the lis pendens annotation on TCT No. 27335. Due to the
unauthorized novation of the agreement, Tan presented before the
trial court two alternative remedies in his complaint either the
rescission of the contract and the return of the down payment, or the
reformation of the contract to adjust the payment period, so that Tan
will pay the remaining balance of the purchase price only after the
lapse of the required two-year encumbrance on the title. Tan posits
that the CA erroneously disregarded the alternative remedy of
reformation of contract when it affirmed the removal of the lis
pendens annotation on the title.
Tan further contends that the CA erred when it recognized the
validity of the forfeiture of the down payment in favor of the vendors.
While admitting that the Deed of Conditional Sale contained a
forfeiture clause, he insists that this clause applies only if the failure
to pay the balance of the purchase price was through his own fault
or negligence. In the present case, Tan claims that he was justified in
refusing to pay the balance price since the vendors would not have
been able to comply with their obligation to deliver a "clean" title
covering the property.
Lastly, Tan maintains that the CA erred in ordering him to pay the
respondents P30,000.00, plus P1,000.00 per court appearance as

Spec Pro 51 of 53
attorneys fees, since he filed the foregoing action in good faith,
believing that he is in the right.
The respondents, on the other hand, assert that the petition should
be dismissed for raising pure questions of fact, in contravention of
the provisions of Rule 45 of the Rules which provides that only
questions of law can be raised in petitions for review on certiorari.
THE COURTS RULING
The petition is granted.
No new issues can be raised in the Memorandum
At the onset, we note that Tan raised the following additional
assignment of errors in his Memorandum: (a) the CA erred in holding
that the petitioner could seek reformation of the Deed of Conditional
Sale only if he paid the balance of the purchase price and if the
vendors refused to execute the deed of absolute sale; and (b) the
CA erred in holding that the petitioner was estopped from asking for
the reformation of the contract or for specific performance.
The Courts September 27, 2004 Resolution expressly stated that
"No new issues may be raised by a party in his/its Memorandum."
Explaining the reason for this rule, we said that:
The raising of additional issues in a memorandum before the
Supreme Court is irregular, because said memorandum is supposed
to be in support merely of the position taken by the party concerned
in his petition, and the raising of new issues amounts to the filing of a
petition beyond the reglementary period. The purpose of this rule is
to provide all parties to a case a fair opportunity to be heard. No new
points of law, theories, issues or arguments may be raised by a party
in the Memorandum for the reason that to permit these would be
offensive to the basic rules of fair play, justice and due process.5
Tan contravened the Courts explicit instructions by raising these
additional errors. Hence, we disregard them and focus instead on
the issues previously raised in the petition and properly included in
the Memorandum.
Petition raises a question of law
Contrary to the respondents claim, the issue raised in the present
petition defined in the opening paragraph of this Decision is a
pure question of law. Hence, the petition and the issue it presents
are properly cognizable by this Court.
Lis pendens annotation not proper in personal actions
Section 14, Rule 13 of the Rules enumerates the instances when a
notice of lis pendens can be validly annotated on the title to real
property:
Sec. 14. Notice of lis pendens.
In an action affecting the title or the right of possession of real
property, the plaintiff and the defendant, when affirmative relief is
claimed in his answer, may record in the office of the registry of
deeds of the province in which the property is situated a notice of the
pendency of the action. Said notice shall contain the names of the
parties and the object of the action or defense, and a description of
the property in that province affected thereby. Only from the time of
filing such notice for record shall a purchaser, or encumbrancer of
the property affected thereby, be deemed to have constructive notice
of the pendency of the action, and only of its pendency against the
parties designated by their real names.
The notice of lis pendens hereinabove mentioned may be cancelled
only upon order of the court, after proper showing that the notice is
for the purpose of molesting the adverse party, or that it is not
necessary to protect the rights of the party who caused it to be
recorded.
The litigation subject of the notice of lis pendens must directly
involve a specific property which is necessarily affected by the
judgment.6
Tans complaint prayed for either the rescission or the reformation of
the Deed of Conditional Sale. While the Deed does have real
property for its object, we find that Tans complaint is an in personam
action, as Tan asked the court to compel the respondents to do
something either to rescind the contract and return the down

payment, or to reform the contract by extending the period given to

pay the remaining balance of the purchase price. Either way, Tan
wants to enforce his personal rights against the respondents, not
against the property subject of the Deed. As we explained in
Domagas v. Jensen:7
The settled rule is that the aim and object of an action determine its
character. Whether a proceeding is in rem, or in personam, or quasi
in rem for that matter, is determined by its nature and purpose, and
by these only. A proceeding in personam is a proceeding to enforce
personal rights and obligations brought against the person and is
based on the jurisdiction of the person, although it may involve his
right to, or the exercise of ownership of, specific property, or seek to
compel him to control or dispose of it in accordance with the
mandate of the court. The purpose of a proceeding in personam is to
impose, through the judgment of a court, some responsibility or
liability directly upon the person of the defendant. Of this character
are suits to compel a defendant to specifically perform some act or
actions to fasten a pecuniary liability on him.
Furthermore, as will be explained in detail below, the contract
between the parties was merely a contract to sell where the vendors
retained title and ownership to the property until Tan had fully paid
the purchase price. Since Tan had no claim of ownership or title to
the property yet, he obviously had no right to ask for the annotation
of a lis pendens notice on the title of the property.
Contract is a mere contract to sell
A contract is what the law defines it to be, taking into consideration
its essential elements, and not what the contracting parties call it.8
Article 1485 of the Civil Code defines a contract of sale as follows:
Art. 1458. By the contract of sale one of the contracting parties
obligates himself to transfer the ownership and to deliver a
determinate thing, and the other to pay therefor a price certain in
money or its equivalent.
A contract of sale may be absolute or conditional.
The very essence of a contract of sale is the transfer of ownership in
exchange for a price paid or promised.9
In contrast, a contract to sell is defined as a bilateral contract
whereby the prospective seller, while expressly reserving the
ownership of the property despite delivery thereof to the prospective
buyer, binds himself to sell the property exclusively to the
prospective buyer upon fulfillment of the condition agreed, i.e., full
payment of the purchase price.10 A contract to sell may not even be
considered as a conditional contract of sale where the seller may
likewise reserve title to the property subject of the sale until the
fulfillment of a suspensive condition, because in a conditional
contract of sale, the first element of consent is present, although it is
conditioned upon the happening of a contingent event which may or
may not occur.11
In the present case, the true nature of the contract is revealed by
paragraph D thereof, which states:
xxx
d) That in case, BUYER has complied with the terms and conditions
of this contract, then the SELLERS shall execute and deliver to the
BUYER the appropriate Deed of Absolute Sale;
xxx
Jurisprudence has established that where the seller promises to
execute a deed of absolute sale upon the completion by the buyer of
the payment of the price, the contract is only a contract to sell.12
Thus, while the contract is denominated as a Deed of Conditional
Sale, the presence of the above-quoted provision identifies the
contract as being a mere contract to sell.
A Section 4, Rule 74 annotation is an encumbrance on the property
While Tan admits that he refused to pay the balance of the purchase
price, he claims that he had valid reason to do so the sudden
appearance of an annotation on the title pursuant to Section 4, Rule
74 of the Rules, which Tan considered an encumbrance on the
property.
We find Tans argument meritorious.

Spec Pro 52 of 53
The annotation placed on TCT No. 27335, the new title issued to
reflect the extrajudicial partition of Lamberto Benoliraos estate
among his heirs, states:
x x x any liability to credirots (sic), excluded heirs and other persons
having right to the property, for a period of two (2) years, with
respect only to the share of Erlinda, Andrew, Romano and Dion, all
surnamed Benolirao [Emphasis supplied.]
This annotation was placed on the title pursuant to Section 4, Rule
74 of the Rules, which reads:
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.]

the authority to direct cancellation of such alienation in the same

estate proceedings, whenever it becomes necessary to do so. To
require the institution of a separate action for such annulment would
run counter to the letter of the above rule and the spirit of these
summary settlements. [Emphasis supplied.]
Similarly, in Sps. Domingo v. Roces,16 we said:
The foregoing rule clearly covers transfers of real property to any
person, as long as the deprived heir or creditor vindicates his rights
within two years from the date of the settlement and distribution of
estate. Contrary to petitioners contention, the effects of this
provision are not limited to the heirs or original distributees of the
estate properties, but shall affect any transferee of the properties.
[Emphasis supplied.]
Indeed, in David v. Malay,17 although the title of the property had
already been registered in the name of the third party buyers, we
cancelled the sale and ordered the reconveyance of the property to
the estate of the deceased for proper disposal among his rightful
heirs.
By the time Tans obligation to pay the balance of the purchase price
arose on May 21, 1993 (on account of the extensions granted by the
respondents), a new certificate of title covering the property had
already been issued on March 26, 1993, which contained the
encumbrance on the property; the encumbrance would remain so
attached until the expiration of the two-year period. Clearly, at this
time, the vendors could no longer compel Tan to pay the balance of
the purchase since considering they themselves could not fulfill their
obligation to transfer a clean title over the property to Tan.
Contract to sell is not rescinded but terminated
What then happens to the contract?

Senator Vicente Francisco discusses this provision in his book The

Revised Rules of Court in the Philippines,13 where he states:
The provision of Section 4, Rule 74 prescribes the procedure to be
followed if within two years after an extrajudicial partition or summary
distribution is made, an heir or other person appears to have been
deprived of his lawful participation in the estate, or some outstanding
debts which have not been paid are discovered. When the lawful
participation of the heir is not payable in money, because, for
instance, he is entitled to a part of the real property that has been
partitioned, there can be no other procedure than to cancel the
partition so made and make a new division, unless, of course, the
heir agrees to be paid the value of his participation with interest. But
in case the lawful participation of the heir consists in his share in
personal property of money left by the decedent, or in case unpaid
debts are discovered within the said period of two years, the
procedure is not to cancel the partition, nor to appoint an
administrator to re-assemble the assets, as was allowed under the
old Code, but the court, after hearing, shall fix the amount of such
debts or lawful participation in proportion to or to the extent of the
assets they have respectively received and, if circumstances require,
it may issue execution against the real estate belonging to the
decedent, or both. The present procedure is more expedient and
less expensive in that it dispenses with the appointment of an
administrator and does not disturb the possession enjoyed by the
distributees.14 [Emphasis supplied.]
An annotation is placed on new certificates of title issued pursuant to
the distribution and partition of a decedents real properties to warn
third persons on the possible interests of excluded heirs or unpaid
creditors in these properties. The annotation, therefore, creates a
legal encumbrance or lien on the real property in favor of the
excluded heirs or creditors. Where a buyer purchases the real
property despite the annotation, he must be ready for the possibility
that the title could be subject to the rights of excluded parties. The
cancellation of the sale would be the logical consequence where: (a)
the annotation clearly appears on the title, warning all would-be
buyers; (b) the sale unlawfully interferes with the rights of heirs; and
(c) the rightful heirs bring an action to question the transfer within the
two-year period provided by law.

We have held in numerous cases18 that the remedy of rescission

under Article 1191 cannot apply to mere contracts to sell. We
explained the reason for this in Santos v. Court of Appeals,19 where
we said:
[I]n a contract to sell, title remains with the vendor and does not pass
on to the vendee until the purchase price is paid in full. Thus, in a
contract to sell, the payment of the purchase price is a positive
suspensive condition. Failure to pay the price agreed upon is not a
mere breach, casual or serious, but a situation that prevents the
obligation of the vendor to convey title from acquiring an obligatory
force. This is entirely different from the situation in a contract of sale,
where non-payment of the price is a negative resolutory condition.
The effects in law are not identical. In a contract of sale, the vendor
has lost ownership of the thing sold and cannot recover it, unless the
contract of sale is rescinded and set aside. In a contract to sell,
however, the vendor remains the owner for as long as the vendee
has not complied fully with the condition of paying the purchase
price. If the vendor should eject the vendee for failure to meet the
condition precedent, he is enforcing the contract and not rescinding
it. x x x Article 1592 speaks of non-payment of the purchase price as
a resolutory condition. It does not apply to a contract to sell. As to
Article 1191, it is subordinated to the provisions of Article 1592 when
applied to sales of immovable property. Neither provision is
applicable [to a contract to sell]. [Emphasis supplied.]
We, therefore, hold that the contract to sell was terminated when the
vendors could no longer legally compel Tan to pay the balance of the
purchase price as a result of the legal encumbrance which attached
to the title of the property. Since Tans refusal to pay was due to the
supervening event of a legal encumbrance on the property and not
through his own fault or negligence, we find and so hold that the
forfeiture of Tans down payment was clearly unwarranted.
Award of Attorneys fees
As evident from our previous discussion, Tan had a valid reason for
refusing to pay the balance of the purchase price for the property.
Consequently, there is no basis for the award of attorneys fees in
favor of the respondents.

As we held in Vda. de Francisco v. Carreon:15

And Section 4, Rule 74 xxx expressly authorizes the court to give to
every heir his lawful participation in the real estate "notwithstanding
any transfers of such real estate" and to "issue execution" thereon.
All this implies that, when within the amendatory period the realty
has been alienated, the court in re-dividing it among the heirs has

On the other hand, we award attorneys fees in favor of Tan, since he

was compelled to litigate due to the respondents refusal to return his
down payment despite the fact that they could no longer comply with
their obligation under the contract to sell, i.e., to convey a clean title.
Given the facts of this case, we find the award of P50,000.00 as
attorneys fees proper.

Spec Pro 53 of 53
Monetary award is subject to legal interest
Undoubtedly, Tan made a clear and unequivocal demand on the
vendors to return his down payment as early as May 28, 1993.
Pursuant to our definitive ruling in Eastern Shipping Lines, Inc. v.
Court of Appeals,20 we hold that the vendors should return the
P200,000.00 down payment to Tan, subject to the legal interest of
6% per annum computed from May 28, 1993, the date of the first
demand letter.1avvphi1
Furthermore, after a judgment has become final and executory, the
rate of legal interest, whether the obligation was in the form of a loan
or forbearance of money or otherwise, shall be 12% per annum from
such finality until its satisfaction. Accordingly, the principal obligation
of P200,000.00 shall bear 6% interest from the date of first demand
or from May 28, 1993. From the date the liability for the principal
obligation and attorneys fees has become final and executory, an
annual interest of 12% shall be imposed on these obligations until

their final satisfaction, this interim period being deemed to be by then

an equivalent to a forbearance of credit.
WHEREFORE, premises considered, we hereby GRANT the petition
and, accordingly, ANNUL and SET ASIDE the May 30, 2002 decision
of the Court of Appeals in CA-G.R. CV No. 52033. Another judgment
is rendered declaring the Deed of Conditional Sale terminated and
ordering the respondents to return the P200,000.00 down payment
to petitioner Delfin Tan, subject to legal interest of 6% per annum,
computed from May 28, 1993. The respondents are also ordered to
pay, jointly and severally, petitioner Delfin Tan the amount of
P50,000.00 as and by way of attorneys fees. Once this decision
becomes final and executory, respondents are ordered to pay
interest at 12% per annum on the principal obligation as well as the
attorneys fees, until full payment of these amounts. Costs against
the respondents.
SO ORDERED.