SECOND DIVISION

[G.R. No. 129242. January 16, 2001]

PILAR S. VDA. DE MANALO, ANTONIO S. MANALO, ORLANDO S. MANALO, and ISABELITA MANALO, petitioners, vs. HON. COURT OF APPEALS, HON. REGIONAL TRIAL COURT OF MANILA (BRANCH 35), PURITA S. JAYME, MILAGROS M. TERRE, BELEN M. ORILLANO, ROSALINA M. ACUIN, ROMEO S. MANALO, ROBERTO S. MANALO, AMALIA MANALO and IMELDA MANALO, respondents.

D E C I S I O N

DE LEON, JR., J.:

This is a petition for review on certiorari filed by petitioners Pilar S. Vda. De Manalo, et. al., seeking to annul the Resolutioni[1] of the Court of Appealsii[2] affirming the Ordersiii[3] of the Regional Trial Court and the Resolutioniv[4]which denied petitioner’s motion for reconsideration.

The antecedent factsv[5] are as follows:

Troadio Manalo, a resident of 1966 Maria Clara Street, Sampaloc, Manila died intestate on February 14, 1992. He was survived by his wife, Pilar S. Manalo, and his eleven (11) children, namely: Purita M. Jayme, Antonio Manalo, Milagros M. Terre, Belen M. Orillano, Isabelita Manalo, Rosalina M. Acuin, Romeo Manalo, Roberto Manalo, Amalia Manalo, Orlando Manalo, and Imelda Manalo, who are all of legal age.

At the time of his death on February 14, 1992, Troadio Manalo left several real properties located in Manila and in the province of Tarlac including a business under the name and style Manalo’s Machine Shop with offices at No. 19 Calavite Street, La Loma, Quezon City and at No. 45 Gen. Tinio Street, Arty Subdivision, Valenzuela, Metro Manila.

On November 26, 1992, herein respondents, who are eight (8) of the surviving children of the late Troadio Manalo, namely: Purita, Milagros, Belen, Rosalina, Romeo, Roberto, Amalia, and Imelda filed a petitionvi[6] with the respondent Regional Trial Court of Manilavii[7] for the judicial settlement of the estate of their late father, Troadio Manalo, and for the appointment of their brother, Romeo Manalo, as administrator thereof.

On December 15, 1992, the trial court issued an order setting the said petition for hearing on February 11, 1993 and directing the publication of the order for three (3) consecutive weeks in a newspaper of general circulation in Metro Manila, and further directing service by registered mail of the said order upon the heirs named in the petition at their respective addresses mentioned therein.

On February 11, 1993, the date set for hearing of the petition, the trial court issued an order “declaring the whole world in default, except the government,” and set the reception

of evidence of the petitioners therein on March 16, 1993. However, this order of general default was set aside by the trial court upon motion of herein petitioners (oppositors therein) namely: Pilar S. Manalo vs CA

Manalo vs CA

GR No. 129242, January 16, 2001

FACTS:

Troadic Manalo who died on February 1992, was survived by his Pilar and his 11 children. The deceased left several real properties in Manila and a business in Tarlac. In November 1992, herein respondents, 8 of the surviving children, filed a petition with RTC Manila for the judicial settlement of the estate of their late father and for appointment of their brother Romeo Manalo as administrator thereof. Hearing was set on February 11, 1993 and the herein petitioners were granted 10 days within which to file their opposition to the petition.

ISSUE: WON the case at bar is covered under Article 151 where earnest efforts toward compromise should first be made prior the filing of the petition.

HELD:

It is a fundamental rule that in the determination of the nature of an action or proceeding, the averments and the character of the relief were sought in the complaint or petition, shall be controlling. The careful scrutiny of the petition for the issuance of letters of administration, settlement and distribution of the estate belies herein petitioners’ claim that the same is in the nature of an ordinary civil action. The provision of Article 151 is applicable only to ordinary civil actions. It is clear from the term “suit” that it refers to an action by one person or persons against another or other in a court of justice in which the plaintiff pursues the remedy which the law affords him for the redress of an injury or enforcement of a right. It is also the intention of the Code Commission as revealed in the Report of the Code Commission to make the provision be applicable only to civil actions. The petition for issuance of letters of administration, settlement, and distribution of estate is a special proceeding and as such a remedy whereby the petitioners therein seek to establish a status, a right, or a particular fact. Hence, it must be emphasized that herein petitioners are not being sued in such case for any cause of action as in fact no defendant was pronounced therein.

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Vda. De Manalo, Antonio, Isabelita and Orlando who were granted ten (10) days within which to file their opposition to the petition.

Several pleadings were subsequently filed by herein petitioners, through counsel, culminating in the filing of an Omnibus Motionviii[8] on July 23, 1993 seeking: (1) to set aside and reconsider the Order of the trial court dated July 9, 1993 which denied the motion for additional extension of time to file opposition; (2) to set for preliminary hearing their affirmative defenses as grounds for dismissal of the case; (3) to declare that the trial court did not acquire jurisdiction over the persons of the oppositors; and (4) for the immediate inhibition of the presiding judge.

On July 30, 1993, the trial court issued an orderix[9] which resolved, thus:

A. To admit the so-called Opposition filed by counsel for the oppositors on July 20, 1993, only for the purpose of considering the merits thereof;

B. To deny the prayer of the oppositors for a preliminary hearing of their affirmative defenses as ground for the dismissal of this proceeding, said affirmative defenses being irrelevant and immaterial to the purpose and issue of the present proceeding;

C. To declare that this court has acquired jurisdiction over the persons of the oppositors;

D. To deny the motion of the oppositors for the inhibition of this Presiding Judge;

E. To set the application of Romeo Manalo for appointment as regular administrator in the intestate estate of the deceased Troadio Manalo for hearing on September 9, 1993 at 2:00 o’clock in the afternoon.

Herein petitioners filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of Appeals, docketed as CA-G.R. SP. No. 39851, after their motion for reconsideration of the Order dated July 30, 1993 was denied by the trial court in its Orderx[10] dated September 15, 1993. In their petition for certiorari with the appellate court, they contend that: (1) the venue was improperly laid in SP. PROC. No. 92-63626; (2) the trial court did not acquire jurisdiction over their persons; (3) the share of the surviving spouse was included in the intestate proceedings; (4) there was absence of earnest efforts toward compromise among members of the same family; and (5) no certification of non-forum shopping was attached to the petition.

Finding the contentions untenable, the Court of Appeals dismissed the petition for certiorari in its Resolutionxi[11] promulgated on September 30, 1996. On May 6, 1997 the motion for reconsideration of the said resolution was likewise dismissed.xii[12]

The only issue raised by herein petitioners in the instant petition for review is whether or not the respondent Court of Appeals erred in upholding the questioned orders of the respondent trial court which denied their motion for the outright dismissal of the petition for judicial settlement of estate despite the failure of the petitioners therein to aver that earnest efforts toward a compromise involving members of the same family have been made prior to the filing of the petition but that the same have failed.

Herein petitioners claim that the petition in SP. PROC No. 92-63626 is actually an ordinary civil action involving members of the same family. They point out that it contains certain averments which, according to them, are indicative of its adversarial nature, to wit:

x x x

Par. 7. One of the surviving sons, ANTONIO MANALO, since the death of his father, TROADIO MANALO, had not made any settlement, judicial or extra-judicial of the properties of the deceased father, TROADIO MANALO.

Par. 8. xxx the said surviving son continued to manage and control the properties aforementioned, without proper accounting, to his own benefit and advantage xxx.

x x x

Par. 12. That said ANTONIO MANALO is managing and controlling the estate of the deceased TROADIO MANALO to his own advantage and to the damage and prejudice of the herein petitioners and their co-heirs xxx.

x x x

Par. 14. For the protection of their rights and interests, petitioners were compelled to bring this suit and were forced to litigate and incur expenses and will continue to incur expenses of not less than, P250,000.00 and engaged the services of herein counsel committing to pay P200,000.00 as and for attorney’s fees plus honorarium of P2,500.00 per appearance in court xxx.xiii[13]

Consequently, according to herein petitioners, the same should be dismissed under Rule 16, Section 1(j) of the Revised Rules of Court which provides that a motion to dismiss a complaint may be filed on the ground that a condition precedent for filing the claim has not been complied with, that is, that the petitioners therein failed to aver in the petition in SP. PROC. No. 92-63626, that earnest efforts toward a compromise have been made involving members of the same family prior to the filing of the petition pursuant to Article 222xiv[14] of the Civil Code of the Philippines.

The instant petition is not impressed with merit.

It is a fundamental rule that, in the determination of the nature of an action or proceeding, the avermentsxv[15] and the character of the relief soughtxvi[16] in the complaint, or petition, as in the case at bar, shall be controlling. A careful scrutiny of the Petition for Issuance of Letters of Administration, Settlement and Distribution of Estate in SP. PROC. No. 92-63626 belies herein petitioners’ claim that the same is in the nature of an ordinary civil action. The said petition contains sufficient jurisdictional facts required in a petition for the settlement of estate of a deceased person such as the fact of death of the late Troadio Manalo on February 14, 1992, as well as his residence in the City of Manila at the time of his said death. The fact of death of the decedent and of his residence within the country are foundation facts upon which all the subsequent proceedings in the administration of the estate rest.xvii[17] The petition in SP. PROC. No. 92-63626 also contains an enumeration of the names of his legal heirs including a tentative list of the properties left by the deceased which are sought to be settled in the probate proceedings. In addition, the reliefs prayed for in the said petition leave no room for doubt as regard the intention of the petitioners therein (private respondents herein) to seek judicial settlement of the estate of their deceased father, Troadio Manalo, to wit:

PRAYER

WHEREFORE, premises considered, it is respectfully prayed for of this Honorable Court:

(a) That after due hearing, letters of administration be issued to petitioner ROMEO MANALO for the administration of the estate of the deceased TORADIO MANALO upon the giving of a bond in such reasonable sum that this Honorable Court may fix.

(b) That after all the properties of the deceased TROADIO MANALO have been inventoried and expenses and just debts, if any, have been paid and the legal heirs of the deceased fully determined, that the said estate of TROADIO MANALO be settled and distributed among the legal heirs all in accordance with law.

c) That the litigation expenses o these proceedings in the amount of P250,000.00 and attorney’s fees in the amount of P300,000.00 plus honorarium of P2,500.00 per appearance in court in the hearing and trial of this case and costs of suit be taxed solely against ANTONIO MANALO.xviii[18]

Concededly, the petition in SP. PROC. No. 92-63626 contains certain averments which may be typical of an ordinary civil action. Herein petitioners, as oppositors therein, took advantage of the said defect in the petition and filed their so-called Opposition thereto which, as observed by the trial court, is actually an Answer containing admissions and denials, special and affirmative defenses and compulsory counterclaims for actual, moral and exemplary damages, plus attorney's fees and costsxix[19] in an apparent effort to make out a case of an ordinary civil action an ultimately seek its dismissal under Rule 16, Section 1(j) of the Rules of Court vis-à-vis, Article 222 of the Civil Code.

It is our view that herein petitioners may not be allowed to defeat the purpose of the essentially valid petition for the settlement of the estate of the late Troadio Manalo by raising matters that are irrelevant and immaterial to the said petition. It must be emphasized that the trial court, sitting, as a probate court, has limited and special jurisdictionxx[20] and cannot hear and dispose of collateral matters and issues which may be properly threshed out only in an ordinary civil action. In addition, the rule has always been to the effect that the jurisdiction of a court, as well as the concomitant nature of an action, is determined by the averments in the complaint and not by the defenses contained in the answer. If it were otherwise, it would not be too difficult to have a case either thrown out of court or its proceedings unduly delayed by simple strategem.xxi

[21] So it should be in the instant petition for settlement of estate.

Herein petitioners argue that even if the petition in SP. PROC. No. 92-63626 were to be considered as a special proceeding for the settlement of estate of a deceased person, Rule 16, Section 1(j) of the Rules of Court vis-a-vis Article 222 of the Civil Code of the Philippines would nevertheless apply as a ground for the dismissal of the same by virtue of Rule 1, Section 2 of the Rules of Court which provides that the “rules 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.” Petitioners contend that the term “proceeding” is so broad that it must necessarily include special proceedings.

The argument is misplaced. Herein petitioners may not validly take refuge under the provisions of Rule 1, Section 2, of the Rules of Court to justify the invocation of Article 222 of the Civil Code of the Philippines for the dismissal of the petition for settlement of the estate of the deceased Troadio Manalo inasmuch as the latter provision is clear enough, to wit:

Art. 222. No suit shall be filed or maintained between members of the same family unless it should appear that earnest efforts toward a compromise have been made, but that the same have failed, subject to the limitations in Article 2035 (underscoring supplied).xxii[22]

The above-quoted provision of the law is applicable only to ordinary civil actions. This is clear from the term “suit” that it refers to an action by one person or persons against another or others in a court of justice in which the plaintiff pursues the remedy which the law affords him for the redress of an injury or the enforcement of a right, whether at law or in equity.xxiii[23] A civil action is thus an action filed in a court of justice, whereby a party sues another for the enforcement of a right, or the prevention or redress of a wrong.xxiv[24] Besides, an excerpt from the Report of the Code Commission unmistakably reveals the intention of the Code Commission to make that legal provision applicable only to civil actions which are essentially adversarial and involve members of the same family, thus:

It is difficult to imagine a sadder and more tragic spectacle than a litigation between members of the same family. It is necessary that every effort should be made toward a compromise before a litigation is allowed to breed hate and passion in the family. It is known that lawsuit between close relatives generates deeper bitterness than strangers.xxv[25]

It must be emphasized that the oppositors (herein petitioners) are not being sued in SP. PROC. No. 92-63626 for any cause of action as in fact no defendant was impleaded therein. The Petition for Issuance of Letters of Administration, Settlement and Distribution of Estate in SP. PROC. No. 92-63626 is a special proceeding and, as such, it is a remedy whereby the petitioners therein seek to establish a status, a right, or a particular fact.xxvi[26] The petitioners therein (private respondents herein) merely seek to establish the fact of death of their father and subsequently to be duly recognized as among the heirs of the said deceased so that they can validly exercise their right to participate in the settlement and liquidation of the estate of the decedent consistent with the limited and special jurisdiction of the probate court.

WHEREFORE, the petition in the above-entitled case, is DENIED for lack of merit. Costs against petitioners.

SO ORDERED.

Bellosillo, (Chairman), Mendoza, Quisumbing, and Buena, JJ., concur.

i[1] In CA-G.R. SP. No. 39851 promulgated on September 30, 1996, Petition, Annex “G”, Rollo, pp. 52-59.

ii[2] Galvez, J., ponente, Martinez and Aquino, JJ., concurring; Rollo, pp. 52-59.

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xviiiRepublic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 133000           October 2, 2001

PATRICIA NATCHER, petitioner, vs.HON. COURT OFAPPEALS AND THE HEIR OF GRACIANO DEL ROSARIO – LETICIA DEL ROSARIO, EMILIA DEL RESORIO – MANANGAN, ROSALINDA FUENTES LLANA, RODOLFO FUENTES, ALBERTO FUENTES, EVELYN DEL ROSARIO, and EDUARDO DEL ROSARIO, respondent..

BUENA, J.:

May a Regional Trial Court, acting as a court of general jurisdiction in an action for reconveyance annulment of title with damages, adjudicate matters relating to the settlement of the estate of a deceased person particularly on questions as to advancement of property made by the decedent to any of the heirs?

Sought to be reversed in this petition for review on certiorari under Rule 45 is the decision1 of public respondent Court of Appeals, the decretal portion of which declares:

"Wherefore in view of the foregoing considerations, judgment appealed from is reversed and set aside and another one entered annulling the Deed of Sale executed by Graciano Del Rosario in favor of defendant-appellee Patricia Natcher, and ordering the Register of Deeds to Cancel TCT No. 186059 and reinstate TCT No. 107443 without prejudice to the filing of a special proceeding for the settlement of the estate of Graciano Del Rosario in a proper court. No costs.

"So ordered."

Spouses Graciano del Rosario and Graciana Esguerra were registered owners of a parcel of land with an area of 9,322 square meters located in Manila and covered by Transfer Certificate of Title No. 11889. Upon the death of Graciana in 1951, Graciano, together with his six children, namely: Bayani, Ricardo, Rafael, Leticia, Emiliana and Nieves, entered into an extrajudicial settlement of Graciana's estate on 09 February 1954 adjudicating and dividing among themselves the real property subject of TCT No. 11889. Under the agreement, Graciano received 8/14 share while each of the six children received 1/14 share of the said property. Accordingly, TCT No. 11889 was cancelled, and in lieu thereof, TCT No. 35980 was issued in the name of Graciano and the Six children.1âwphi1.nêt

Further, on 09 February 1954, said heirs executed and forged an "Agreement of Consolidation-Subdivision of Real Property with Waiver of Rights" where they subdivided among themselves the parcel of land covered by TCT No. 35980 into several lots. Graciano then donated to his children, share and share alike, a portion of his interest in the land amounting to 4,849.38 square meters leaving only 447.60 square meters registered under Graciano's name, as covered by TCT No. 35988. Subsequently, the land subject of TCT No. 35988 was further subdivided into two separate lots where the first lot with a land area of 80.90 square meter was registered under TCT No. 107442 and the second lot with a land area of 396.70 square meters was registered under TCT No. 107443. Eventually, Graciano sold the first lot2 to a third person but retained ownership over the second lot.3

On 20 March 1980, Graciano married herein petitioner Patricia Natcher. During their marriage, Graciano sold the land covered by TCT No. 107443 to his wife Patricia as a result of which TCT No. 1860594 was issued in the latter's name. On 07 October 1985,Graciano died leaving his second wife Patricia and his six children by his first marriage, as heirs.

In a complaint5 filed in Civil Case No. 71075 before the Regional Trial Court of Manila, Branch 55, herein private respondents alleged that upon Graciano's death, petitioner Natcher, through the employment of fraud, misrepresentation and forgery, acquired TCT No. 107443, by making it appear that Graciano executed a Deed of Sale dated 25 June 19876 in favor herein petitioner resulting in the cancellation of TCT No. 107443 and the issuance of TCT no. 186059 in the name of Patricia Natcher. Similarly, herein private respondents alleged in said complaint that as a consequence of such fraudulent

sale, their legitimes have been impaired.

In her answer7 dated 19 August 1994, herein petitioner Natcher averred that she was legally married to Graciano in 20 March 1980 and thus, under the law, she was likewise considered a compulsory heir of the latter. Petitioner further alleged that during Graciano's lifetime, Graciano already distributed, in advance, properties to his children, hence, herein private respondents may not anymore claim against Graciano's estate or against herein petitioner's property.

After trial, the Regional Trial Court of Manila, Branch 55, rendered a decision dated 26 January 1996 holding:8

"1) The deed of sale executed by the late Graciano del Rosario in favor of Patricia Natcher is prohibited by law and thus a complete nullity. There being no evidence that a separation of property was agreed upon in the marriage settlements or that there has been decreed a judicial separation of property between them, the spouses are prohibited from entering (into) a contract of sale;

"2) The deed as sale cannot be likewise regarded as a valid donation as it was equally prohibited by law under Article 133 of the New Civil Code;

"3) Although the deed of sale cannot be regarded as such or as a donation, it may however be regarded as an extension of advance inheritance of Patricia Natcher being a compulsory heir of the deceased."

On appeal, the Court of Appeals reversed and set aside the lower court's decision ratiocinating, inter alia:

"It is the probate court that has exclusive jurisdiction to make a just and legal distribution of the estate. The court a quo, trying an ordinary action for reconveyance / annulment of title, went beyond its jurisdiction when it performed the acts proper only in a special proceeding for the settlement of estate of a deceased person. XXX

"X X X Thus the court a quo erred in regarding the subject property as advance inheritance. What the court should have done was merely to rule on the validity of (the) sale and leave the issue on advancement to be resolved in a separate proceeding instituted for that purpose. XXX"

Aggrieved, herein petitioner seeks refuge under our protective mantle through the expediency of Rule 45 of the Rules of Court and assails the appellate court's decision "for being contrary to law and the facts of the case."

We concur with the Court of Appeals and find no merit in the instant petition.

Section 3, Rule 1 of the 1997 Rules of Civil Procedure defines civil action and special proceedings, in this wise:

"XXX a) A civil action is one by which a party sues another for the enforcement or protection of a right, or the prevention or redress of a wrong.

"A civil action may either be ordinary or special. Both are government by the rules for ordinary civil actions, subject to specific rules prescribed for a special civil action.

"XXX

"c) A special proceeding is a remedy by which a party seeks to establish a status, a right or a particular fact."

As could be gleaned from the foregoing, there lies a marked distinction between an action and a special proceeding. An action is a formal demand of one's right in a court of justice in the manner prescribed by the court or by the law. It is the method of applying legal remedies according to definite established rules. The term "special proceeding" may be defined as an application or proceeding to establish the status or right of a party, or a particular fact. Usually, in special proceedings, no formal pleadings are required unless the statute expressly so provides. In special proceedings, the remedy is granted generally upon an application or motion."9

Citing American Jurisprudence, a noted authority in Remedial Law expounds further:

"It may accordingly be stated generally that actions include those proceedings which are instituted and prosecuted according to the ordinary rules and provisions relating to actions at law or suits in equity, and that special proceedings include those proceedings which are not ordinary in this sense, but is instituted and prosecuted according to some special mode as in the case of proceedings commenced without summons and prosecuted without regular pleadings, which are characteristics of ordinary actions. XXX A special proceeding must therefore be in the nature of a distinct and independent proceeding for particular relief, such as may be instituted independently of a pending action, by petition or motion upon notice."10

Applying these principles, an action for reconveyance and annulment of title with damages is a civil action, whereas matters relating to settlement of the estate of a deceased person such as advancement of property made by the decedent, partake of the nature of a special proceeding, which concomitantly requires the application of specific rules as provided for in the Rules of Court.

Clearly, matters which involve settlement and distribution of the estate of the decedent fall within the exclusive province of the probate court in the exercise of its limited jurisdiction.

Thus, under Section 2, Rule 90 of the Rules of Court, questions as to advancement made or alleged to have been made by the deceased to any heir may be heard and determined by the court having jurisdiction of the estate proceedings; and the final order of the court thereon shall be binding on the person raising the questions and on the heir.

While it may be true that the Rules used the word "may", it is nevertheless clear that the same provision11 contemplates a probate court when it speaks of the "court having jurisdiction of the estate proceedings".

Corollarily, the Regional Trial Court in the instant case, acting in its general jurisdiction, is devoid of authority to render an adjudication and resolve the issue of advancement of the real property in favor of herein petitioner Natcher, inasmuch as Civil Case No. 471075 for reconveyance and annulment of title with damages is not, to our mind, the proper vehicle to thresh out said question. Moreover, under the

present circumstances, the RTC of Manila, Branch 55 was not properly constituted as a probate court so as to validly pass upon the question of advancement made by the decedent Graciano Del Rosario to his wife, herein petitioner Natcher.

At this point, the appellate court's disquisition is elucidating:

"Before a court can make a partition and distribution of the estate of a deceased, it must first settle the estate in a special proceeding instituted for the purpose. In the case at hand, the court a quo determined the respective legitimes of the plaintiffs-appellants and assigned the subject property owned by the estate of the deceased to defendant-appellee without observing the proper proceedings provided (for) by the Rules of Court. From the aforecited discussions, it is clear that trial courts trying an ordinary action cannot resolve to perform acts pertaining to a special proceeding because it is subject to specific prescribed rules. Thus, the court a quo erred in regarding the subject property as an advance inheritance."12

In resolving the case at bench, this Court is not unaware of our pronouncement in Coca vs. Borromeo13 and Mendoza vs. Teh14 that whether a particular matter should be resolved by the Regional Trial Court (then Court of First Instance) in the exercise of its general jurisdiction or its limited probate jurisdiction is not a jurisdictional issue but a mere question of procedure. In essence, it is procedural question involving a mode of practice "which may be waived".15

Notwithstanding, we do not see any waiver on the part of herein private respondents inasmuch as the six children of the decedent even assailed the authority of the trail court, acting in its general jurisdiction, to rule on this specific issue of advancement made by the decedent to petitioner.

Analogously, in a train of decisions, this Court has consistently enunciated the long standing principle that although generally, a probate court may not decide a question of title or ownership, yet if the interested parties are all heirs, or the question is one of collation or advancement, or the parties consent to the assumption of jurisdiction by the probate court and the rights of third parties are not impaired, then the probate court is competent to decide the question of ownership.16

Similarly in Mendoza vs. Teh, we had occasion to hold:

"In the present suit, no settlement of estate is involved, but merely an allegation seeking appointment as estate administratrix which does not necessarily involve settlement of estate that would have invited the exercise of the limited jurisdiction of a probate court.17 (emphasis supplied)

Of equal importance is that before any conclusion about the legal share due to a compulsory heir may be reached, it is necessary that certain steps be taken first.18 The net estate of the decedent must be ascertained, by deducting all payable obligations and charges from the value of the property owned by the deceased at the time of his death; then, all donations subject to collation would be added to it. With the partible estate thus determined, the legitime of the compulsory heir or heirs can be established; and only thereafter can it be ascertained whether or not a donation had prejudiced the legitimes.19

A perusal of the records, specifically the antecedents and proceedings in the present case, reveals that the trial court failed to observe established rules of procedure governing the settlement of the estate of Graciano Del Rosario. This Court sees no cogent reason to sanction the non-observance of these well-

entrenched rules and hereby holds that under the prevailing circumstances, a probate court, in the exercise of its limited jurisdiction, is indeed the best forum to ventilate and adjudge the issue of advancement as well as other related matters involving the settlement of Graciano Del Rosario's estate.1âwphi1.nêt

WHEREFORE, premises considered, the assailed decision of the Court of Appeals is hereby AFFIRMED and the instant petition is DISMISSED for lack of merit.

SO ORDERED.

Bellosillo, Mendoza, Quisumbing, De Leon, Jr., Davide, Jr., JJ., concur.

Footnote

1 C.A. Decision in C.A. GR No.CV No. 51390, promulgated on 09 December 1997, penned by Justice Quirino D. Abad Santos, Jr. and concurred in by JJ. Ruben T. Reyes and Hilarion L. Aquino; Rollo, pp. 23-31.

2 TCT No.107442.

3 TCT No.107443.

4 Annex "C"; Records, p. 5.

5 Records, pp.1-7.

6 Exhibit E; Decision in Civil Case No. 94-71075; p. 205.

7 Records, pp. 20-23.

8 Rollo, p. 25.

9 Hagans vs. Wislizenus, 42 Phil. 880 [1920].

10 Francisco, V.J., Revised Rules of Court in the Philippines, Vol. V-A, 1970 ed., p. 596 citing 1 CJS 1094-1095.

11 Section 2, Rule 90.

12 Rollo, p.30; CA Decision, p.8.

13 81 SCRA 278 [1978].

14 269 SCRA 764 [1997].

15 Cunanan vs. Amparo, 80 Phil. 227 [1948].

16 Coca vs. Borromeo, supra; Pascual vs. Pascual, 73 Phil. 561 [1942]; Alvarez vs. Espiritu, L-1883, August 14, 1965, 14 SCRA 892 [1965]; Cunanan vs. Amparo, 80 Phil 227 [1948]; 3 Moran's Comments on the Rules of Court, 1970 ed., p. 473.

17 269 SCRA 764, 769 [1997].

18 Pagkatipunan vs. Intermediate Appellate Court, 198 SCRA 718 [1991].

19 Mateo vs. Laguna, 29 SCRA 864 [1969].

The Lawphil Project - Arellano Law Foundation

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THIRD DIVISION

[G.R. No. 163604.  May 6, 2005]

REPUBLIC OF THE PHILIPPINES, petitioner, vs. THE HON. COURT OF APPEALS (Twentieth Division), HON. PRESIDING JUDGE FORTUNITO L. MADRONA, RTC-BR. 35 and APOLINARIA MALINAO JOMOC, respondents.

D E C I S I O N

CARPIO-MORALES, J.:

In “In the Matter of Declaration of Presumptive Death of Absentee Spouse Clemente P. Jomoc, Apolinaria Malinao Jomoc, petitioner,” the Ormoc City, Regional Trial Court, Branch 35, by Order of September 29, 1999,[1] granted the petition on the basis of the Commissioner’s Report[2] and accordingly declared the absentee spouse, who had left his petitioner-wife nine years earlier, presumptively dead.

In granting the petition, the trial judge, Judge Fortunito L. Madrona, cited Article 41, par. 2 of the Family Code.  Said article provides that for the purpose of contracting a valid subsequent marriage during the subsistence of a previous marriage where the prior spouse had been absent for four consecutive years, the spouse present must institute summary proceedings for the declaration of presumptive death of the absentee spouse, without prejudice to the effect of the reappearance of the absent spouse.

The Republic, through the Office of the Solicitor General, sought to appeal the trial court’s order by filing a Notice of Appeal.[3]

By Order of November 22, 1999s,[4] the trial court, noting that no record of appeal was filed and served “as required by and pursuant to Sec. 2(a), Rule 41 of the 1997 Rules of Civil Procedure, the present case being a special proceeding,” disapproved the Notice of Appeal.

The Republic’s Motion for Reconsideration of the trial court’s order of disapproval having been denied by Order of January 13, 2000,[5] it filed a Petition for Certiorari[6] before the Court of Appeals, it contending that the declaration of presumptive death of a person under Article 41 of the Family Code is

not a special proceeding or a case of multiple or separate appeals requiring a record on appeal.

By Decision of May 5, 2004,[7] the Court of Appeals denied the Republic’s petition on procedural and substantive grounds in this wise:

At the outset, it must be stressed that the petition is not sufficient in form.  It failed to attach to its petition a certified true copy of the assailed Order dated January 13, 2000 [denying its Motion for Reconsideration of the November 22, 1999 Order disapproving its Notice of Appeal]. Moreover, the petition questioned the [trial court’s] Order dated August 15, 1999, which declared Clemente Jomoc presumptively dead, likewise for having been issued with grave abuse of discretion amounting to lack of jurisdiction, yet, not even a copy could be found in the records.  On this score alone, the petition should have been dismissed outright in accordance with Sec. 3, Rule 46 of the Rules of Court.

However, despite the procedural lapses, the Court resolves to delve deeper into the substantive issue of the validity/nullity of the assailed order.

The principal issue in this case is whether a petition for declaration of the presumptive death of a person is in the nature of a special proceeding.  If it is, the period to 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 to perfect its appeal.  Otherwise, if the petition is an ordinary action, the period to appeal is 15 days from notice or decision or final order appealed from and the appeal is perfected by filing a notice of appeal (Section 3, Rule 41, Rules of Court).

As defined in Section 3(a), Rule 1 of the Rules of Court, “a civil action is one by which a party sues another for the enforcement or protection of a right, or the prevention of redress of a wrong” while a special proceeding under Section 3(c) of the same rule is defined as “a remedy by which a party seeks to establish a status, a right or a particular fact (Heirs of Yaptinchay, et al. v. Del Rosario, et al., G.R. No. 124320, March 2, 1999).

Considering the aforementioned distinction, this Court finds that the instant petition is in the nature of a special proceeding and not an ordinary action.  The petition merely seeks for a declaration by the trial court of the presumptive death of absentee spouse Clemente Jomoc.  It does not seek the enforcement or protection of a right or the prevention or redress of a wrong.  Neither does it involve a demand of right or a cause of action that can be enforced against any person.

On the basis of the foregoing discussion, the subject Order dated January 13, 2000 denying OSG’s Motion for Reconsideration of the Order dated November 22, 1999 disapproving its Notice of Appeal was correctly issued.  The instant petition, being in the nature of a special proceeding, OSG should have filed, in addition to its Notice of Appeal, a record on appeal in accordance with Section 19 of the Interim Rules and Guidelines to Implement BP Blg. 129 and Section 2(a), Rule 41 of the Rules of Court . . . (Emphasis and underscoring supplied)

The Republic (petitioner) insists that the declaration of presumptive death under Article 41 of the Family Code is not a special proceeding involving multiple or separate appeals where a record on appeal shall be filed and served in like manner.

Petitioner cites Rule 109 of the Revised Rules of Court which enumerates the cases wherein multiple appeals are allowed and a record on appeal is required for an appeal to be perfected.  The petition for

the declaration of presumptive death of an absent spouse not being included in the enumeration, petitioner contends that a mere notice of appeal suffices.

By Resolution of December 15, 2004,[8] this Court, noting that copy of the September 27, 2004 Resolution[9] requiring respondent to file her comment on the petition was returned unserved with postmaster’s notation “Party refused,” Resolved to consider that copy deemed served upon her.

The pertinent provisions on the General Provisions on Special Proceedings, Part II of the Revised Rules of Court entitled SPECIAL PROCEEDINGS, read:

RULE 72SUBJECT MATTER AND APPLICABILITY

OF GENERAL RULES

Section 1.  Subject matter of special proceedings.  – Rules of special proceedings are provided for in the following:

(a)     Settlement of estate of deceased persons;(b)     Escheat;(c)     Guardianship and custody of children;(d)     Trustees;(e)     Adoption;(f)      Rescission and revocation of adoption;(g)     Hospitalization of insane persons;(h)     Habeas corpus;(i)      Change of name;(j)      Voluntary dissolution of corporations;

(k)     Judicial approval of voluntary recognition of minor natural children;(l)      Constitution of family home;(m)    Declaration of absence and death;

(n)     Cancellation or correction of entries in the civil registry.

Sec. 2.  Applicability of rules of civil actions.  – In the absence of special provisions, the rules provided for in ordinary actions shall be, as far as practicable, applicable in special proceedings.  (Underscoring supplied)

The pertinent provision of the Civil Code on presumption of death provides:

Art. 390.  After an absence of seven years, it being unknown whether or not the absentee still lives, he shall be presumed dead for all purposes, except for those of succession.

x x x (Emphasis and underscoring supplied)

Upon the other hand, Article 41 of the Family Code, upon which the trial court anchored its grant of the petition for the declaration of presumptive death of the absent spouse, provides:

Art. 41.  A marriage contracted by any person during the subsistence of a previous marriage shall be null and void, unless before the celebration of the subsequent marriage, the prior spouses had been

absent for four consecutive years and the spouse present had a well-founded belief that the absent spouses was already dead.  In case of disappearance where there is danger of death under the circumstances set forth in the provisions of Article 391 of the Civil Code, an absence of only two years shall be sufficient.

For the purpose pf contracting the subsequent marriage under the preceding paragraph, the spouses present must institute a summary proceeding as provided in this Code for the declaration of presumptive death of the absentee, without prejudice to the effect of a reappearance of the absent spouse.  (Emphasis and underscoring supplied)

Rule 41, Section 2 of the Revised Rules of Court, on Modes of Appeal, invoked by the trial court in disapproving petitioner’s Notice of Appeal, provides:

Sec. 2.  Modes of appeal.  -

(a) Ordinary appeal. - The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the court which rendered the judgment or final order appealed from and serving a copy thereof upon the adverse party.  No record on appeal shall be required except in special proceedings and other cases of multiple or separate appeals where the law or these Rules so require.  In such cases, the record on appeal shall be filed and served in like manner.  (Emphasis and underscoring supplied)

x x x

By the trial court’s citation of Article 41 of the Family Code, it is gathered that the petition of Apolinaria Jomoc to have her absent spouse declared presumptively dead had for its purpose her desire to contract a valid subsequent marriage.  Ergo, the petition for that purpose is a “summary proceeding,” following above-quoted Art. 41, paragraph 2 of the Family Code.

Since Title XI of the Family Code, entitled SUMMARY JUDICIAL PROCEEDING IN THE FAMILY LAW, contains the following provision, inter alia:

x x x

Art. 238.  Unless modified by the Supreme Court, the procedural rules in this Title shall apply in all cases provided for in this Codes requiring summary court proceedings .  Such cases shall be decided in an expeditious manner without regard to technical rules. (Emphasis and underscoring supplied)

x x x,

there is no doubt that the petition of Apolinaria Jomoc required, and is, therefore, a summary proceeding under the Family Code, not a special proceeding under the Revised Rules of Court appeal for which calls for the filing of a Record on Appeal.  It being a summary ordinary proceeding, the filing of a Notice of Appeal from the trial court’s order sufficed.

That the Family Code provision on repeal, Art. 254, provides as follows:

Art. 254.  Titles III, IV, V, VI, VII, VIII, IX, XI and XV of Book I of Republic Act No. 386, otherwise known as the Civil Code of the Philippines, as amended, and Articles 17, 18, 19, 27, 28, 29, 30, 31, 39, 40, 41 and 42 of Presidential Decree No. 603, otherwise known as the Child and Youth Welfare Code, as amended, and all laws , decrees, executive orders, proclamations rules and regulations, or parts thereof, inconsistent therewith are hereby repealed ,   (Emphasis and underscoring supplied),

seals the case in petitioner’s favor.

Finally, on the alleged procedural flaw in petitioner’s petition before the appellate court.  Petitioner’s failure to attach to his petition before the appellate court a copy of the trial court’s order denying its motion for reconsideration of the disapproval of its Notice of Appeal is not necessarily fatal, for the rules of procedure are not to be applied in a technical sense.  Given the issue raised before it by petitioner, what the appellate court should have done was to direct petitioner to comply with the rule.

As for petitioner’s failure to submit copy of the trial court’s order granting the petition for declaration of presumptive death, contrary to the appellate court’s observation that petitioner was also assailing it, petitioner’s 8-page petition[10] filed in said court does not so reflect, it merely having assailed the order disapproving the Notice of Appeal.

WHEREFORE, the assailed May 5, 2004 Decision of the Court of Appeals is hereby REVERSED and SET ASIDE.  Let the case be REMANDED to it for appropriate action in light of the foregoing discussion.

SO ORDERED.

Panganiban, (Chairman), Sandoval-Gutierrez, Corona, and Garcia, JJ., concur.

[1] Annex “F” to Petition, Rollo at 47-50.

[2] Annex “E” to Petition, Id. at 44-45.

[3] Annex “A” to Petition for Certiorari, CA Rollo at 11.

[4] Annex “B” to Petition, Rollo at 41.

[5] Annex “C” to Petition, Id. at 42.

[6] CA Rollo at 1-8.

[7] Id. at 51-54.

[8] Rollo at 100.

[9] Id. at 97.

[10] Vide note 6.

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 154973               June 21, 2005

THE PRESIDENT OF PHILIPPINE DEPOSIT INSURANCE CORPORATION AS LIQUIDATOR OF PACIFIC BANKING CORPORATION, petitioner, vs.HON. WILFREDO D. REYES, Pairing Judge, RTC Manila, Branch 31; ANG ENG JOO; ANG KEONG LAN; and E.J. ANG INTERNATIONAL, LTD., represented by FORNIER & FORNIER LAW, respondents.

D E C I S I O N

DAVIDE, JR., C.J.:

May an investment in a corporation, whose existence has been terminated, be entitled to an interest in the concept of actual and compensatory damages from the time such investment was made until the closure of the corporation? This is the pivotal issue in this petition for certiorari filed by the President of the Philippine Deposit Insurance Corporation (PDIC), in his capacity as the Liquidator of the Pacific Banking Corporation (PaBC).

The antecedent facts are as follows:

On 5 July 1985, pursuant to Resolution No. 699 of the Monetary Board of the Central Bank of the Philippines, the PaBC was placed under receivership on the ground of insolvency. Subsequently, it was placed under liquidation, and a liquidator was designated.

On 7 April 1986, the Central Bank of the Philippines, through the Office of the Solicitor General, filed with the Regional Trial Court (RTC) of Manila, Branch 31, a petition for assistance in the liquidation of PaBC.

On 17 May 1991, Vitaliano N. Nañagas, President of the PDIC, was appointed by the Central Bank as Liquidator.

On 26 June 1992, private respondents Ang Eng Joo, Ang Keong Lan, and E.J. Ang International Ltd. (hereafter Singaporeans), then represented by their attorney-in-fact Gonzalo C. Sy, filed their claim before the liquidating court. Citing Republic Act No. 5186, otherwise known as the Investment Incentives Act, they claimed to be preferred creditors and prayed for the return of their equity investment in the amount of US$2,531,632.18 with interest until the closure of the PaBC.

After due hearing or on 11 September 1992, the liquidation court, through Presiding Judge Regino Veridiano II, issued an order that reads as follows:

At this stage of the liquidation proceedings, the claimants who are foreign investors should already be paid. If there is any doubt as to whether claimants who are foreign investors should be treated as preferred claimants, the doubt should be resolved in favor of claimants since it is of judicial notice that government adopted the policy to entice foreign investors to help boost the economy. Claimants who are foreign investors should be treated with liberality such that they should be categorized among preferred creditors. Claimants were invited to invest at PaBC in 1981 and after a short period of less than four (4) years the bank was closed in 1985 due to mismanagement.1

…

WHEREFORE, premises considered, the Liquidator of PaBC is ordered to pay claimants through their Attorney-in-Fact Gonzalo C. Sy, their total investment of US$2,531,632.18 as preferred creditors. Dividends and/or interest that accrued in favor of claimants is hereby deferred pending study by the Liquidator who is hereby ordered to submit his report and recommendation within thirty (30) days from receipt of this Order.2

His motion for reconsideration having been denied, the Liquidator filed a notice of appeal. In an Order dated 28 October 1992, the liquidation court struck off the record the notice of appeal for having been filed beyond the 15-day period to appeal, and directed the execution of the Order of 11 September 1992.

The Liquidator thus filed a petition for certiorari before the Court of Appeals, which was, however, dismissed on the ground that the notice of appeal was correctly dismissed by the liquidation court for having been filed out of time. In our decision3 of 20 March 1995 in G.R. Nos. 109373 and 112991, we sustained the Court of Appeals, but on a different ground. We held that while the Liquidator filed the notice of appeal within the reglementary 30-day period provided in special proceedings, he failed to file the requisite record on appeal, and thus the appeal was not perfected on time, causing the 11 September 1992 Order to become final and executory.

Consequently, the liquidation court, through the pairing judge Hon. Wilfredo D. Reyes, issued an Order dated 13 April 1998 implementing the execution order of 28 October 1992 by directing the President of the Land Bank of the Philippines (LBP) to release to the Sheriff the garnished amount of US$2,531,632.18 or its peso equivalent computed at the current exchange rate, to be paid to the Singaporeans.

The Bureau of Internal Revenue (BIR) and the Bangko Sentral ng Pilipinas promptly filed before the liquidation court separate motions to hold in abeyance the liquidation court’s orders of 28 October 1992 and 13 April 1998.4 The Liquidator also filed an urgent motion to prohibit the Singaporeans from withdrawing the money from their account with the LBP.5 It was accompanied by an application for a temporary restraining order and/or preliminary injunction praying that Gonzalo C. Sy be prohibited from withdrawing the amount of P82,658,671.43 from his account with the LBP and be directed to return any funds that might already have been withdrawn by him.

On 12 May 1998, Judge Reyes issued an Order6 denying the motions and ordered the payment of accrued legal interest on the Singaporeans’ equity investment of US$2,531,632.18 at the rate of 12% per annum computed from 15 October 1981, the date the outward remittance and the investment were actually made, until its full payment, at the exchange rate prevailing at the time of payment.

Finally, on 15 May 1998, Judge Reyes issued another Order7 directing the President of the Philippine National Bank (PNB) to release the garnished amount sufficient to cover the additional sum of P172,374,220.64.

Aggrieved by these orders, the BIR, PDIC, and the Liquidator filed before the Court of Appeals a petition for certiorari, mandamus, and prohibition with a prayer for a temporary restraining order8 assailing Judge Reyes’ Orders of 13 April 1998, 12 May 1998, and 15 May 1998.

In its decision9 of 31 January 2002, the Court of Appeals affirmed the Orders of 13 April 1998 and 15 May 1998, but modified the Order of 12 May 1998 as follows:

(1) [P]ayment of accrued legal interest in the sum of P56,034,877.04 still left uncollected shall be made to private respondents, Singaporeans, directly or through their new attorney-in-fact and legal counsel, the law firm of Fornier & Fornier;

(2) [E]njoining respondent Gonzalo C. Sy from withdrawing the garnished amount from his savings/current account with the Land Bank of the Philippines or any other bank in which funds released from the garnished accounts of PaBC, LBP and PNB have been deposited; and

(3) [A]n amount equivalent to 15% of the remaining garnished amount or the balance of accrued legal interest of Pesos 56,034,877.04 shall be withheld and remitted to petitioner Bureau of Internal Revenue, without prejudice to the right of said petitioner to make other assessments for taxes in the future.

Consequently, the writ of preliminary injunction issued on September 14, 1998 is hereby DISSOLVED. By virtue hereof, the garnished amount from the savings/current account with the Land Bank of the Philippines or any other bank in which funds released from the garnished accounts of PaBC, LBP and PNB have been deposited may now be released only to private respondents, Singaporeans, directly or through their new attorney-in-fact and legal counsel, the law firm of Fornier & Fornier.10

After an unsuccessful motion for reconsideration,11 the Liquidator came before us assigning the following errors:

4.1

THE RESPONDENT APPELLATE COURT COMMITTED A FUNDAMENTAL ERROR OF FACT AND LAW WHEN IT DECLARED THE SINGAPOREANS’ EQUITY INVESTMENT WITH CLOSED PACIFIC BANKING CORPORATION ENTITLED TO PAYMENT OF INTEREST.

4.2

THE RESPONDENT APPELLATE COURT COMMITTED A FUNDAMENTAL ERROR OF FACT AND LAW WHEN IT APPLIED THE LANDMARK CASE OF EASTERN SHIPPING LINES, INC. V. CA (G.R. NO. 97412, JULY 12, 1994) IN FIXING THE RATES OF INTEREST AND/OR DIVIDENDS THAT ALLEGEDLY ACCRUED ON THE EQUITY INVESTMENT OF THE SINGAPOREANS ON PABC.

4.3

ASSUMING FOR THE SAKE OF ARGUMENT THAT PABC IS LIABLE FOR COMPENSATORY DAMAGES TO THE SINGAPOREAN EQUITY HOLDERS, ACCRUAL OF THE 6% INTEREST RATE SHOULD COMMENCE FROM DEMAND.

4.4

ASSUMING FOR THE SAKE OF ARGUMENT THE CORRECTNESS OF THE RESPONDENT APPELLATE COURT’S IMPOSITION OF THE 6% AND 12% INTEREST RATE ON THE EQUITY INVESTMENTS OF THE SINGAPOREAN EQUITY HOLDERS, THE LATTER SHOULD ONLY BE ENTITLED TO A TOTAL AMOUNT OF P73,246,702.21 BY WAY OF THE ALLEGED ACCRUED DIVIDENDS AND/OR INTERESTS.

4.5

FOLLOWING THE JANUARY 31, 2002 DECISION OF THE RESPONDENT APPELLATE COURT WHICH DIRECTED THE PAYMENT OF ALLEGED ACCRUED DIVIDENDS AND/OR INTEREST COMMENCING ON OCTOBER 15, 1981 WHERE THE PREVAILING EXCHANGE RATE WAS P8.067 TO A DOLLAR, THE OVERPAYMENT TO THE SINGAPOREAN EQUITY HOLDERS SHALL AMOUNT TO P182,893,303.55. 12

Anent the first issue, the Liquidator interprets the affirmation by the Court of Appeals of the 12 May 1998 Order of Judge Reyes as amounting to an unlawful grant of undeclared dividends. He argues that the only fruits that can arise from an equity investment are dividends declared from unrestricted retained earnings by the Board of Directors in accordance with the Corporation Code. Absent a declaration in this case, the interest awarded has no legal basis.

As for the second and third issues, the Liquidator argues that no actual damages can arise from the closure of the bank. The ruling in Eastern Shipping Lines, Inc. v. Court of Appeals13 is not applicable because that case clearly refers to an award of interest in the concept of actual and compensatory damages in case of breach of an obligation. The failure of PaBC to return the Singaporeans’ equity investment because of its closure is not a breach of an obligation – the closure being akin to a force majeure. If indeed PaBC is liable to the Singaporeans for actual and compensatory damages, accrual thereof should be reckoned from the date of demand pursuant to Article 1169 of the Civil Code. Instead of running from 15 October 1981 when the Singaporeans bought their shares in PaBC, the 6% interest rate should be reckoned from 26 June 1992, the date the Singaporeans filed their claim in the liquidation court.

The Liquidator likewise asserts that there is already an overpayment of accrued dividends or interests. The liquidation court’s Order of 12 May 1998 awarded an interest of 12% per annum to be computed from 15 October 1981 (the date of actual remittance of the investment) until full payment. Pursuant to that Order, the PNB released P116,339,343.60. On appeal, however, the Court of Appeals modified the decision and awarded an interest of 6% per annum from 15 October 1981 up to PaBC’s closure, as well as an interest of 12% per annum from 11 October 1992, when the 11 September 1992 Order became final and executory, until 17 April 1998, when the equity investment of US$2,531,632.18 was fully paid. With the prevailing exchange rate of P8.067 to a dollar on 15 October 1981, the total peso equivalent of the Singaporeans’ claim is only P30,230,338.29 – P20,422,676.80 of which represents the principal equity investment of US$2,531,632.18 and P9,807,661.49, as alleged accrued interest. As of 18 May 1998, the total releases to the Singaporeans from the garnished funds of the PaBC amounted to P213,123,641.84. There is therefore an overpayment of P182,893,303.55. Thus, the order of the Court of Appeals to further release P56,034,877.04 from the garnished funds would result to unjust enrichment in favor of the Singaporeans.

For their part, the Singaporeans assert that the Court of Appeals committed no error in affirming their entitlement to accrued interests in the amount of P56,034,877.04 and in ordering its payment less 15% in taxes as agreed upon by the BIR. The Order of 11 September 1992 included the payment of the principal due the Singaporeans as preferred creditors, but it deferred the payment of interest on the principal for study by the Liquidator. Unfortunately, no study and recommendation was done since September 1992; thus, the liquidation court took it upon itself to arithmetically compute and fix the amount of interest at the legal rate of 12% per annum as reflected in the Order of 12 May 1998. Likewise, the award of 12% interest has become the law of the case with respect to the Liquidator and

the Singaporeans.

The Singaporeans also argue that the petition should be dismissed because it assails errors of judgment, not errors of jurisdiction. They submit that the filing of a special civil action for certiorari rather than an appeal is wrong, improper, and fatal to the case. Moreover, the issue of overpayment is a question of fact that could not be threshed out in a special civil action for certiorari.

We shall first tackle the procedural issue of the propriety of the petition filed by the Liquidator.

A petition for certiorari is the proper remedy when a tribunal, board, or officer exercising judicial or quasi-judicial functions has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction and there is no appeal nor any plain, speedy, and adequate remedy at law.14 Grave abuse of discretion is defined as the capricious, whimsical exercise of judgment as is equivalent to lack of jurisdiction. An error of judgment committed in the exercise of its legitimate jurisdiction is not the same as grave abuse of discretion. Thus, the special writ of certiorari is not the remedy for errors of judgment that can be corrected by appeal.15

Although denominated as a petition for certiorari under Rule 65 of the Rules of Civil Procedure, the petition assigns errors of judgment of the Court of Appeals. It does not allege grave abuse of discretion committed by the Court of Appeals. However, in the interest of justice, this Court shall treat the petition as an appeal under Rule 45 of the Rules of Civil Procedure especially since it was filed within the reglementary period for filing an appeal. Sections 1 and 2 of Rule 45 of the 1997 Rules of Civil Procedure provide:

SECTION 1. Filing of petition with Supreme Court. – A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth.

SEC. 2. Time for filing; extension. – The petition shall be filed within fifteen (15) days from notice of the judgment or final order or resolution appealed from, or of the denial of the petitioner’s motion for new trial or reconsideration filed in due time after notice of the judgment. On motion duly filed and served, with full payment of the docket and other lawful fees and the deposit for costs before the expiration of the reglementary period, the Supreme Court may for justifiable reasons grant an extension of thirty (30) days only within which to file the petition.

The records show that the Liquidator received on 30 August 2002 a copy of the resolution of the Court of Appeals denying his motion for reconsideration. He had fifteen days, or until 14 September 2002, to file a petition for review on certiorari. Since 14 September 2002 fell on a Saturday, he could file his petition on the next working day, which was 16 September 2002.16 Indeed, the Liquidator filed the instant petition and paid the necessary docket and legal fees on 16 September 2002.

Before delving into the merits of the case, it bears stressing that we are constrained to make our judgment according to the confines set by the 11 September 1992 Order of the liquidation court.

According to the principle of the law of the case, "whatever is once irrevocably established as the controlling legal rule or decision between the same parties in the same case continues to be the law of

the case."17 To this the Court must adhere, whether the legal principles laid down were "correct on general principles or not," or "whether the question is right or wrong."18

As a result, upon the finality of the 11 September 1992 Order, the following issues were laid to rest: (1) the Singaporeans are deemed preferred creditors; and (2) they are entitled to the payment of their total investment amounting to US$2,531,632.18.

The determination of interests or dividends was, however, deferred pending a report to be submitted by the Liquidator. It was only in the 12 May 1998 Order of the liquidation court that an interest was awarded, giving rise to a new question of law. Therefore, the award of interest is not a controlling legal rule or decision that had been previously established as between the parties, since the parties did not have the chance to argue on that issue.

A perusal of the 12 May 1998 Order shows that the liquidation court awarded interest not as a form of accrued dividends or return of investment, but as actual and compensatory damages. Categorically, the order states:

The December 16, 1993 decision of the Court of Appeals ruled that the remittance of earnings of this type of foreign investment is guaranteed (CA decision, p. 15, emphasis supplied). Legal interests are earnings and they are provided for by law arising from the withholding of funds due to a party. They are not computed on the amount of earnings of a business.19

We take note of the fact that when the trial court, in its Order of 11 September 1992, declared the Singaporeans to have the status of preferred creditors, it did so only for the purpose of giving them priority in the order of payment upon the liquidation of the PaBC. Relying only on the Investment Incentive Act, the trial court did not decide whether the Singaporeans’ investment was a loan or equity. Since the Singaporeans were declared preferred creditors for a limited purpose, it does not follow that the court likewise implied that the original remittance of the Singaporeans was in the nature of a loan or forbearance of money, goods, or credit.

The Court of Appeals found that the equity investment of US$2,531,632.18 was not a loan or forbearance of money; hence, Central Bank Circular No. 416, prescribing 12% interest per annum on loans or forbearance of money, goods, or credit is inapplicable. It applied Article 2209 of the Civil Code, which provides for the legal interest of 6% per annum in the absence of a stipulation to the contrary. Thus, the Court of Appeals modified the Order of 12 May 1998 and reduced the rate of interest on the investment of US$2,531,632.18 from 12% to 6% to run from 15 October 1981 – when the outward remittance and equity investment was actually made – up to the closure of PaBC. Also, following Eastern Shipping Lines, Inc. v. Court of Appeals it upheld the grant of 12% interest on the monetary award of US$2,531,632.18 to run from the date of the finality of the 11 September 1992 Order until its satisfaction.

In Eastern Shipping Lines, Inc. v. Court of Appeals, we laid down the following guidelines:

I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under Title XVIII on "Damages" of the Civil Code govern in determining the measure of recoverable damages.

II. With regard particularly to an award of interest, in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.20

It is undisputed that the amount of US$2,531,632.58 remitted by the Singaporeans represented the 154,462 PaBC common shares previously issued to, and owned by, Mandarin Development Corporation bought by the Singaporeans at the price of US$16.39 per share. The investment was approved by the Central Bank under Monetary Board Resolution No. 323 dated 19 February 1982 and constituted about 11% of the total subscribed capital stock of PaBC. Clearly, the amount remitted to PaBC by the Singaporeans was an investment.

An "investment" is an expenditure to acquire property or other assets in order to produce revenue. It is the placing of capital or laying out of money in a way intended to secure income or profit from its employment. "To invest" is to purchase securities of a more or less permanent nature, or to place money or property in business ventures or real estate, or otherwise lay it out, so that it may produce a revenue or income.21

Thus, unlike a deposit of money or a loan that earns interest, the investment of the Singaporeans cannot be assured of a dividend or an interest on the amount invested. For, interests or dividends are granted only after profits or gains are generated.

We therefore agree with the Court of Appeals in holding that the amount of US$2,531,632.18 remitted by the Singaporeans to PaBC was not a loan or forbearance of money in favor of PaBC. Hence No. II-1 of the above-quoted guidelines in Eastern Shipping Lines does not come into play. Neither can we apply Central Bank Circular No. 416, which imposes the rate of 12% per annum on loans and

forbearance of money. Nor can No. II-2 of the above-quoted guidelines be invoked because, as correctly pointed out by the Liquidator, the closure of the PaBC did not constitute a breach of obligation. Article 2209 of the Civil Code, which was relied upon by the Court of Appeals, does not find application either. That Article, which provides for 6% interest per annum, governs when there is a delay in the payment of a sum of money. Such is not the case here.

Thus, the Court of Appeals’ award of 6% interest on the Singaporeans’ equity investment as actual or compensatory damages from the date of its remittance until the closure of PaBC has no leg to stand on and must, therefore, be deleted.

The interest that may be awarded as actual or compensatory damages in this case is that provided in No. II-3 of the afore-quoted guidelines. Upon the finality of the Order of 11 September 1992, the award of US$2,531,632.18 representing the Singaporeans’ equity investment became a judgment debt. As such, it shall bear an interest of 12% per annum from the finality of the Order until its full satisfaction.

However, the grant of the said interest does not bar the Singaporeans from claiming liquidating dividends which may have accrued from their equity investment after being determined by the Liquidator. In the liquidation of a corporation, after the payment of all corporate debts and liabilities, the remaining assets, if any, must be distributed to the stockholders in proportion to their interests in the corporation. The share of each stockholder in the assets upon liquidation is what is known as liquidating dividend.22 Verily, the Singaporeans are entitled to 11% of the total liquidating dividend, this being in proportion to their 11% interest of the total subscribed capital stock of PaBC.

Anent the fourth issue, the Court is unable to determine the veracity of the alleged overpayments in the absence of verified records on the total payments made in favor of the Singaporeans. The award of the Court of Appeals of P56,034,877.04 representing uncollected interest is likewise unsubstantiated because it was not shown how the amount was derived.

To resolve this question of fact, the case is hereby remanded to the trial court to recompute the payments vis-à-vis the total amount due the Singaporeans, also considering the undisputed award of 12% interest per annum on the judgment debt of US$2,531,632.18 to be reckoned from 22 October 1992,23 when the 11 September 1992 Order became final, until its full satisfaction.

WHEREFORE, the decision of the Court of Appeals of 31 January 2002 in CA-G.R. SP No. 47878 is hereby AFFIRMED insofar as the respondents ANG ENG JOO, ANG KEONG LAN, and E.J. ANG INTERNATIONAL, LTD., are entitled to the payment of 12% interest per annum in the form of actual or compensatory damages on the judgment award of US$2,531,632.18 to run from 22 October 1992, when the 11 September 1992 Order of the Regional Trial Court of Manila, Branch 31, became final and executory, until the amount is fully paid. The said decision is, however, MODIFIED as follows:

1. The award of interest at the rate of 6% per annum as actual or compensatory damages from 15 October 1981 until the closure of PaBC is hereby deleted for lack of basis without prejudice, however, to liquidating dividends or interests as may be determined by the Liquidator.

2. The Regional Trial Court of Manila, Branch 31, is hereby directed to make a recomputation of all the total amounts paid by the petitioner Liquidator in favor of the private respondent Singaporeans taking into account the exact amount due them, and to issue the proper orders for payment, if warranted. The amount due shall include the 12% rate of legal interests on the

judgment debt of US$2,531,632.18.

SO ORDERED.

Quisumbing, Ynares-Santiago, Carpio, and Azcuna, JJ., concur.

Footnotes

1 Rollo, 463.

2 Pacific Banking Corporation Employees Organization v. Court of Appeals, G.R. Nos. 109373 and 112991, 20 March 1995, 242 SCRA 492, 498.

3 Id.

4 Rollo, 94, 104.

5 Id., 104.

6 Id., 126-138.

7 Id., 139.

8 Id., 140-171.

9 Id., 55-56. Per Associate Justice Bienvenido L. Reyes, with Presiding Justice Ma. Alicia Austria-Martinez

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

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.

D E C I S I O N

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:

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).

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. Ordoñez.

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.

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.

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 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.

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 full-blown 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.

Panganiban, C.J., Chairperson, Austria-Martinez, Callejo, Sr., Chico-Nazario, J.J., concur.

Footnotes

1 Rollo, pp. 19-26. Penned by Associate Justice Martin S. Villarama, Jr. and concurred in by Associate Justices Mario L. Guariña III and Jose C. Reyes, Jr.

2 Id. at 48-49. Penned by Judge Sixto Marella, Jr.

3 Id. at 53.

4 Id. at 28.

5 Id. at 29-31.

6 Id. at 31.

7 Id. at 35-36.

8 Id. at 37-41.

9 Id. at 42-44.

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 167405             February 16, 2006

ANA JOYCE S. REYES, Petitioner, vs.HON. CESAR M. SOTERO, Presiding Judge, RTC of Paniqui, Tarlac, Branch 67, ATTY. PAULINO SAGUYOD, the Clerk of Court of Branch 67 of the RTC at Paniqui, Tarlac in his capacity as Special Administrator, CORAZON CHICHIOCO, ANGELITO LISING, ERLINDA ESPACIO, GONZALO ZALZOS and ERNESTO LISING, Respondents.

D E C I S I O N

YNARES-SANTIAGO, J.:

This petition for review seeks to modify the Decision of the Court of Appeals dated May 14, 2004 in CA-G.R. SP No. 74047 as well as the Resolution dated May 14, 2005 denying the motion for reconsideration. In the assailed judgment, the Court of Appeals annulled and set aside the September 18, 2002 and November 12, 2002 Resolutions of the Regional Trial Court (RTC) of Paniqui, Tarlac, Branch 67 in Spec. Proc. No. 204 but refrained from dismissing the petition for letters of administration and settlement of estate on the ground that petitioner must first prove that she was legally adopted by the decedent, Elena Lising.

On September 15, 1998, respondent Corazon L. Chichioco filed a petition for the issuance of letters of administration and settlement of estate of the late Elena Lising before the RTC of Paniqui, Tarlac, where it was docketed as Spec. Proc. No. 204 and raffled to Branch 67. Chichioco claimed that she was the niece and heir of Lising who died intestate on July 31, 1998. Named as co-heirs of Chichioco were Rosario L. Zalzos, Florante Zalzos, Erlinda Lising, Manuel Lising, Evelyn Lising, Josephine Lising, Alfredo Lising and respondents Ernesto Lising and Erlinda Espacio.

According to Chichioco, the deceased left real properties located in the municipalities of Ramos and Paniqui, Tarlac, as well as assorted pieces of jewelry and money which were allegedly in the possession of petitioner Ana Joyce S. Reyes, a grandniece of the deceased. Chichioco prayed that she be appointed administrator of the estate, upon payment of a bond, pending settlement and distribution of Lising’s properties to the legal heirs.1

On November 6, 1998, petitioner Reyes filed an Opposition2 to the petition, claiming that she was an adopted child of Lising and the latter’s husband, Serafin Delos Santos, who died on November 30, 1970. She asserted that the petition should be dismissed and that the appointment of an administrator was unnecessary, since she was the only heir of Lising who passed away without leaving any debts. She further asserted that Chichioco is unfit to serve as administrator of Lising’s estate because of her "antagonistic interests" against the decedent. Chichioco and her alleged co-heirs have questioned the

decedent’s title to a piece of real property which forms a large part of the estate.

On November 11, 1998, petitioner filed a Supplement to the Opposition3 attaching thereto the Certification4 issued by the Municipal Civil Registrar of Paniqui, Tarlac stating that on page 76, Book No. 01 of the Register of Court Decrees, Reyes was adopted by Elena Lising and Serafin Delos Santos pursuant to a decision rendered in Spec. Proc. No. 1410 by Judge Julian Lustre of the Court of First Instance (CFI) of Tarlac, Branch 3, promulgated on December 21, 1968 and duly registered with the Office of the Civil Registrar on January 29, 1969.

Petitioner also submitted a Certification5 issued by the Clerk of Court of the RTC-Tarlac City, stating that a judgment was rendered in Spec. Proc. No. 1410 on December 21, 1968 decreeing petitioner’s adoption by Elena Lising and Serafin Delos Santos. She also presented a copy of Judicial Form No. 436

indicating that the adoption decree was on file in the General Docket of the RTC-Tarlac City, wherein the dispositive portion of the adoption decree was recorded as follows:

In view of the foregoing, the court finds this petition a proper case for adoption and therefore grants the same. Consequently, the Court declares that henceforth, the child Ana Joyce C. Zalzos is freed from all legal obligations of obedience and maintenance with respect to her natural parents Orlando Zalzos and May C. Castro, and is to all legal intents and purposes the child of the petitioners Serafin delos Santos and Elena Lising.7

Petitioner likewise submitted a Decree of Final Distribution8 issued by the Philippine Veterans Affairs Office (PVAO) showing that, upon the death of Serafin Delos Santos, death benefits were paid to his widow, Elena Lising, and his "daughter", Ana Joyce Delos Santos, in accordance with pertinent provisions of law.

On April 5, 1999, the RTC ordered respondents to submit documentary evidence to prove the jurisdictional facts of the case and to comment on petitioner’s opposition.9 Only Rosario L. Zalsos appears to have filed a Comment/Reply to Oppositor’s Opposition,10 after which the RTC ordered the parties to submit memoranda thereon.11 On July 22, 1999, the case was deemed submitted for resolution.12

Meanwhile, on June 30, 1999, Chichioco and her alleged co-heirs filed before the Court of Appeals a petition for annulment of the adoption decree docketed as SP No. 53457.13 They claimed that no proceedings for the adoption of petitioner took place in 1968 since the Provincial Prosecutor of Tarlac and the Office of the Solicitor General (OSG) had no records of the adoption case. Petitioner’s natural mother supposedly connived with the court personnel to make it appear that petitioner was adopted by the Delos Santos spouses and that the CFI’s order for initial hearing was published in a weekly newspaper which was not authorized to publish court orders in special proceedings.

Upon motion of Chichioco, the RTC ordered on October 4, 1999, the suspension of hearings in Spec. Proc. No. 204 pending the outcome of SP No. 53457.14 Subsequently, however, the Court of Appeals dismissed15 SP No. 53457 for failure to comply with the third paragraph of Section 4, Rule 47 of the Rules of Court.16 The said dismissal became final and executory on March 8, 2000.17

Thereafter, on August 22, 2000, petitioner filed a motion before the RTC praying that the opposition to Spec. Proc. No. 204 be finally resolved and that the petition be dismissed.18 This was followed by an Urgent Ex Parte Motion19 filed by petitioner on October 17, 2000 praying for the immediate resolution

of her opposition.

On November 16, 2000, respondents filed a Comment20 to the opposition stating that reasonable doubts have been cast on petitioner’s claim that she was legally adopted due allegedly to certain "badges of fraud." Respondents also informed the RTC that they have filed a criminal complaint against petitioner before the Office of the Provincial Prosecutor, Tarlac City, for alleged falsification of the adoption decree and Judicial Form No. 43, docketed as I.S. No. 00-1016.

Subsequently, the RTC issued a Resolution21 dated December 12, 2000 deferring resolution of petitioner’s opposition to Spec. Proc. No. 204, pending the outcome of the criminal case filed against the latter. In the meantime, the parties were enjoined from dissipating or disposing any or all of the properties included in the estate of Elena Lising without order from this Court.

On December 13, 2000, Chichioco filed an Urgent Motion to Appoint Special Administrator22 before the RTC on the ground that there was yet no true determination and appraisal of the decedent’s universal estate. It was prayed therein that the Branch Clerk of Court, Atty. Paulino Saguyod, be appointed special administrator as he was "an experienced and able person in the management of properties" and is "honest, impartial, competent and acceptable to the majority of the interested parties."

In the meantime, the Provincial Prosecutor found probable cause to charge petitioner with falsification of public documents per resolution dated January 5, 2001.23 Petitioner thus appealed the said finding to the Office of the Regional State Prosecutor.

On August 8, 2001, the RTC granted respondents’ motion for the appointment of a special administrator and appointed its branch clerk of court, Atty. Saguyod.24 Petitioner moved for reconsideration on the grounds that the branch clerk of court was disqualified from taking on the task of special administrator, and that Atty. Saguyod was appointed without being required to file a bond. Petitioner also reiterated that the petition should be dismissed because she is the sole heir of the decedent.25 However, the RTC denied petitioner’s motion for reconsideration on November 5, 2001.26

On January 14, 2002, the Office of the Regional State Prosecutor reversed the findings of the Provincial Prosecutor and dismissed the criminal complaint against petitioner.27 Undaunted, Chichioco filed a petition for review before the Department of Justice (DOJ).

Simultaneously, Chichioco and the other alleged co-heirs filed a motion before the RTC to enjoin petitioner from conducting business in a property belonging to the estate. Respondent Chichioco alleged that petitioner converted the basement of Lising’s residence into a billiard hall without authority of the special administrator.28

Acting on said motion, the RTC issued a resolution on September 18, 2002, the dispositive part of which reads:

WHEREFORE, the Oppositor Ana Joyce Reyes is hereby enjoined from conducting business activity in any of the properties left by the decedent. The Special Administrator is also empowered to take control and possession of the listed personal and real properties of the decedent and those that may be found to be owned or registered in the name of the same.

SO ORDERED.29

Petitioner filed a motion for reconsideration of the above resolution which was denied by the RTC on November 12, 2002. On even date, the DOJ also issued a resolution dismissing respondent Chichioco’s petition for review in the criminal case.30

Subsequently, petitioner filed a special civil action for certiorari before the Court of Appeals, docketed as CA-G.R. SP No. 74047,31 assailing the September 18, 2002 and November 12, 2002 resolutions of the RTC. Petitioner alleged that said resolutions were issued with grave abuse of discretion amounting to lack or in excess of jurisdiction since as sole heir, she had the right to possess and use the decedent’s property, title over which automatically passed on to her upon the latter’s death. Moreover, the special administrator, Atty. Saguyod, had yet to file a bond and submit an inventory of the decedent’s estate.

Additionally, petitioner insisted that Spec. Proc. No. 204 should be dismissed since the dismissal by the Court of Appeals of SP No. 53457 constituted res judicata as to the former. There was likewise no valid challenge to her adoption and she consequently remains to be the sole heir of the decedent. Thus, she stressed that there was no need for the appointment of an administrator or for the settlement proceedings.

In due course, the Court of Appeals rendered judgment32 nullifying the resolutions of the trial court. It held that the presiding judge, Judge Cesar M. Sotero, gravely abused his discretion in appointing his branch clerk of court as special administrator. Citing Balanay, Jr. v. Martinez,33 the appellate court reasoned that such act could engender a suspicion that Judge Sotero and his clerk are in cahoots in milking the decedent’s estate. Moreover, Atty. Saguyod failed to comply with the requirements of a bond and inventory and could not therefore take control and possession of any of the decedent’s properties.

However, the appellate court refused to dismiss Spec. Proc. No. 204 since the dismissal of SP No. 53457 was not a judgment on the merits and did not operate as res judicata to the former. It was also incumbent upon petitioner to prove before the trial court that she was indeed adopted by the Delos Santos spouses since, according to the appellate court, "imputations of irregularities permeating the adoption decree render its authenticity under a cloud of doubt."

Petitioner’s motion for reconsideration having been denied on March 15, 2005,34 hence this petition on the following assigned errors:

A. THE HONORABLE COURT ERRED IN HOLDING THAT PETITIONER HAD TO PROVE THE VALIDITY OF HER ADOPTION DUE TO IMPUTATIONS OF IRREGULARITIES IN VIEW OF SECTION 47 OF RULE 39.35

B. THE HONORABLE COURT ERRED IN HOLDING THAT THE DISMISSAL IN SP NO. 53457 WAS NOT A DISMISSAL ON THE MERITS.36

The petition is meritorious.

On the first assigned error, we agree with petitioner that she need not prove her legal adoption by any evidence other than those which she had already presented before the trial court. To recall, petitioner submitted a certification from the local civil registrar’s office that the adoption decree was registered

therein and also a copy of Judicial Form No. 43 and a certification issued by the clerk of court that the decree was on file in the General Docket of the RTC-Tarlac City. Both certifications were issued under the seal of the issuing offices and were signed by the proper officers. These are thus presumed to have been regularly issued as part of the official duties that said public officers perform.37

It should be borne in mind that an adoption decree is a public document38 required by law to be entered into the public records, the official repository of which, as well as all other judicial pronouncements affecting the status of individuals, is the local civil registrar’s office as well as the court which rendered the judgment.

Documents consisting of entries in public records made in the performance of a duty by a public officer are prima facie evidence of the facts therein stated.39 As such, the certifications issued by the local civil registrar and the clerk of court regarding details of petitioner’s adoption which are entered in the records kept under their official custody, are prima facie evidence of the facts contained therein. These certifications suffice as proof of the fact of petitioner’s adoption by the Delos Santos spouses until contradicted or overcome by sufficient evidence. Mere "imputations of irregularities" will not cast a "cloud of doubt" on the adoption decree since the certifications and its contents are presumed valid until proof to the contrary is offered.

In this regard, it must be pointed out that such contrary proof can be presented only in a separate action brought principally for the purpose of nullifying the adoption decree. The latter cannot be assailed collaterally in a proceeding for the settlement of a decedent’s estate, as categorically held in Santos v. Aranzanso.40 Accordingly, respondents cannot assail in these proceedings the validity of the adoption decree in order to defeat petitioner’s claim that she is the sole heir of the decedent. Absent a categorical pronouncement in an appropriate proceeding that the decree of adoption is void, the certifications regarding the matter, as well as the facts stated therein, should be deemed legitimate, genuine and real. Petitioner’s status as an adopted child of the decedent remains unrebutted and no serious challenge has been brought against her standing as such. Therefore, for as long as petitioner’s adoption is considered valid, respondents cannot claim any interest in the decedent’s estate. For this reason, we agree with petitioner that Spec. Proc. No. 204 should be dismissed.

As succinctly held in Santos v. Aranzanso:41

From all the foregoing it follows that respondents - x x x and those who, like them x x x, claim an interest in the estate x x x as alleged first cousins, cannot intervene, as such, in the settlement proceedings, in view of the fact that in the order of intestate succession adopted children exclude first cousins (Articles 979 and 1003, New Civil Code). The same holds true as long as the adoption must be - as in the instant case - considered valid. (Emphasis added)

Petitioner, whose adoption is presumed to be valid, would necessarily exclude respondents from inheriting from the decedent since they are mere collateral relatives of the latter. To allow the proceedings below to continue would serve no salutary purpose but to delay the resolution of the instant case. After all, the dismissal of Spec. Proc. No. 204 is the logical consequence of our pronouncement relative to the presumed validity of petitioner’s adoption.

Moreover, it must be stressed that all the evidence pertinent to the resolution of the petitioner’s opposition, which is actually a motion to dismiss the petition for letters of administration and settlement of the estate, is a matter of record in the instant case. The same has in fact been submitted

for resolution before the RTC more than six years ago and is so far the only pending incident before the RTC. The parties have likewise amply ventilated their positions on the matter through their respective pleadings filed before the lower courts. No useful purpose will thus be served if we let the RTC resolve the matter, only for its ruling to be elevated again to the Court of Appeals and subsequently to this Court. The remand of the case to the lower court for further reception of evidence is not necessary where the Court is in a position to resolve the dispute based on the evidence before it.42 This is in keeping with the avowed purpose of the rules of procedure which is to secure for the parties a just, speedy and inexpensive determination of every action or proceeding.43 Hence, since the grounds for the dismissal of Spec. Proc. No. 204 are extant in the records and there is no cogent reason to remand the case to the RTC, Spec. Proc. No. 204 should be dismissed.

Based on the foregoing, the Court sees no need to discuss petitioner’s second assigned error.

WHEREFORE, the instant petition is GRANTED. Special Proceedings No. 204 pending before the Regional Trial Court of Tarlac City, Branch 67 is DISMISSED.

SO ORDERED.

CONSUELO YNARES-SANTIAGOAssociate Justice

WE CONCUR:

ARTEMIO V. PANGANIBANChief JusticeChairperson

MA. ALICIA AUSTRIA-MARTINEZAssociate Justice

ROMEO J. CALLEJO, SR.Asscociate Justice

MINITA V. CHICO-NAZARIOAssociate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

ARTEMIO V. PANGANIBANChief Justice

Footnotes

1 Rollo, pp. 69-74.

2 Id. at 75-79.

3 Id. at 81-84.

4 Id. at 85.

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 168156             December 6, 2006

HEIRS OF ROSENDO LASAM, Represented by Rogelio Lasam and Atty. Edward P. Llonillo, petitioners, vs.VICENTA UMENGAN, respondent.

D E C I S I O N

CALLEJO, SR., J.:

Before the Court is the petition for review on certiorari filed by the Heirs of Rosendo Lasam, represented by Rogelio M. Lasam and Atty. Edward P. Llonillo, seeking the reversal of the Decision1 dated February 16, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 80032. The assailed decision reversed and set aside the decision of the Regional Trial Court (RTC) of Tuguegarao City, Cagayan and dismissed, for lack of merit, the complaint for unlawful detainer file by the said heirs against respondent Vicenta Umengan.

The RTC decision affirmed that of the Municipal Trial Court in Cities (MTCC) of the same city, Branch III, which had rendered judgment in favor of the heirs of Rosendo Lasam and directed the ejectment of respondent Vicenta Umengan from the lot subject of litigation.

The present petition likewise seeks the reversal of the CA Resolution dated May 17, 2005 denying the motion for reconsideration filed by the heirs of Rosendo Lasam.

As culled from the records, the backdrop of the present case is as follows –

The lot subject of the unlawful detainer case is situated in Tuguegarao City, Cagayan. It is the eastern half portion of Lot No. 5427 and Lot No. 990. The first lot, Lot No. 5427 containing an area of 1,037 square meters, is covered by Original Certificate of Title (OCT) No. 196. The second lot, Lot No. 990 containing an area of 118 sq m, is covered by OCT No. 1032. These lots are registered in the names of

the original owners, spouses Pedro Cuntapay and Leona Bunagan.

In an instrument denominated as Deed of Confirmation and acknowledged before a notary public on June 14, 1979, the heirs of the said spouses conveyed the ownership of Lots Nos. 990 and 5427 in favor of their two children, Irene Cuntapay and Isabel Cuntapay. In another instrument entitled Partition Agreement and acknowledged before a notary public on December 28, 1979, it was agreed that the eastern half portion (subject lot) of Lots Nos. 990 and 5427 shall belong to the heirs of Isabel Cuntapay. On the other hand, the remaining portion thereof (the west portion) shall belong to the heirs of Irene Cuntapay. The subject lot (eastern half portion) has an area of 554 sq m.

Isabel Cuntapay had four children by her first husband, Domingo Turingan, namely: Abdon, Sado (deceased), Rufo and Maria. When Domingo Turingan passed away, Isabel Cuntapay remarried Mariano Lasam. She had two other children by him, namely: Trinidad and Rosendo.

Sometime in January 2001, the heirs of Rosendo Lasam (son of Isabel Cuntapay by her second husband) filed with the MTCC a complaint for unlawful detainer against Vicenta Umengan, who was then occupying the subject lot. Vicenta Umengan is the daughter of Abdon Turingan (son of Isabel Cuntapay by her first husband).

In their complaint, the heirs of Rosendo Lasam alleged that they are the owners of the subject lot, having inherited it from their father. Rosendo Lasam was allegedly the sole heir of the deceased Pedro Cuntapay through Isabel Cuntapay. During his lifetime, Rosendo Lasam allegedly temporarily allowed Vicenta Umengan to occupy the subject lot sometime in 1955. The latter and her husband allegedly promised that they would vacate the subject lot upon demand. However, despite written notice and demand by the heirs of Rosendo Lasam, Vicenta Umengan allegedly unlawfully refused to vacate the subject lot and continued to possess the same. Accordingly, the heirs of Rosendo Lasam were constrained to institute the action for ejectment.

In her Answer with Counterclaim, Vicenta Umengan specifically denied the material allegations in the complaint. She countered that when Isabel Cuntapay passed away, the subject lot was inherited by her six children by her first and second marriages through intestate succession. Each of the six children allegedly had a pro indiviso share of 1/6 of the subject lot.

It was further alleged by Vicenta Umengan that her father, Abdon Turingan, purchased the respective 1/6 shares in the subject lot of his siblings Maria and Sado. These conveyances were allegedly evidenced by the Deed of Sale dated March 3, 1975, appearing as Doc. No. 88, Page No. 36, Book No. XIV, series of 1975 of the notarial book of Atty. Pedro Lagui.

Prior thereto, Rufo already sold his 1/6 share in the subject lot to Vicenta Umengan and her husband as evidenced by the Deed of Sale dated June 14, 1961, appearing as Doc. No. 539, Page No. 41, Book No. V, series of 1961 of the notarial book of Atty. Pedro Lagui. Also on June 14, 1961, Abdon donated his 1/6 share in the subject lot to her daughter Vicenta Umengan as evidenced by the Deed of Donation appearing as Doc. No. 538, Page No. 41, Book No. V, series of 1961 of the notarial book of the same notary public.

According to Vicenta Umengan, the children of Isabel Cuntapay by her second husband (Rosendo and Trinidad Lasam) own only 2/6 portion of the subject lot. She thus prayed that the complaint for ejectment be dismissed and that the heirs of Rosendo Lasam be ordered to pay her damages.

The MTCC rendered judgment in favor of the heirs of Rosendo Lasam and directed the ejectment of Vicenta Umengan. In so ruling, the MTCC gave credence to the newly discovered last will and testament (entitled Testamento Abierto) purportedly executed by Isabel Cuntapay where she bequeathed the subject lot to her son, Rosendo Lasam, thus:

x x x my share 1/5th (one-fifth) of the Cuntapay heirs, bordered on the North by Sr. Elia Canapi; to the South, by Calle Aguinaldo; to the East, by Calle P. Burgos and the West, by the late Don Luis Alonso; on the property which is my share stands a house of light materials where I presently reside; this 1/5th (one-fifth) share of my inheritance from the Cuntapays I leave to my son Rosendo Lasam and also the aforementioned house of light material x x x2

The MTCC reasoned that the heirs of Rosendo Lasam anchored their claim over the subject lot on the last will and testament of Isabel Cuntapay while Vicenta Umengan hinged hers on intestate succession and legal conveyances. Citing jurisprudence3 and Article 10804 of the Civil Code, the MTCC opined that testacy was favored and that intestacy should be avoided and the wishes of the testator should prevail. It observed that the last will and testament of Isabel Cuntapay was not yet probated as required by law; nonetheless, the institution of a probate proceeding was not barred by prescription.

With the finding that the subject lot was already bequeathed by Isabel Cuntapay to Rosendo Lasam, the MTCC held that the siblings Abdon, Sado, Rufo and Maria Turingan no longer had any share therein. Consequently, they could not convey to Vicenta Umengan what they did not own. On the issue then of who was entitled to possession of the subject lot, the MTCC ruled in favor of the heirs of Rosendo Lasam as it found that Vicenta Umengan’s possession thereof was by mere tolerance. The dispositive portion of the MTCC decision reads:

WHEREFORE, in the light of the foregoing considerations, this Court Resolve[d] to order the EJECTMENT of VICENTA T. UMENGAN and in her place INSTITUTE THE HEIRS OF ROSENDO LASAM.

It is further ordered the defendant shall pay the Heirs of Rosendo Lasam the sum of P500.00 pesos representing the monthly rental of the land from August 2000 to the time this case shall have been terminated.

Ordering the defendant to pay the plaintiffs the amount of P20,000.00 attorney’s fees plus cost of this litigation.

So Ordered.5

On appeal, the RTC affirmed in toto the decision of the MTCC. The RTC echoed the reasoning of the MTCC that the testamentary disposition of the property of Isabel Cuntapay should be respected, and that the heirs of Rosendo Lasam have a better right to possess the subject lot.

Undaunted, Vicenta Umengan filed an appeal with the CA. She argued that the MTCC had no jurisdiction over the case as it involved the recovery of ownership of the subject lot, not merely recovery of possession or unlawful detainer. She also assailed the RTC’s and the MTCC’s holding that the purported Testamento Abierto of Isabel Cuntapay prevails over Vicenta Umengan’s muniments of title and, consequently, the heirs of Rosendo Lasam have a better right to the subject lot than Vicenta Umengan.

In the assailed Decision dated February 16, 2005, the CA reversed and set aside the decision of the RTC. The appellate court preliminarily upheld the jurisdiction of the MTCC over the subject matter as it found that the allegations in the complaint made out a case for unlawful detainer. The heirs of Rosendo Lasam in their complaint, according to the CA, only sought for Vicenta Umengan to vacate and surrender possession of the subject lot. The CA also rejected the contention of the heirs of Rosendo Lasam that the issue of ownership of the subject lot had already been settled in another case, Civil Case No. 4917, before RTC (Branch 3) of Tuguegarao City. The CA stated that the trial court’s order dismissing the said case was not a "judgment on the merits" as to constitute res judicata.

However, the CA declared that the RTC, as well as the MTCC, erred in ruling that, by virtue of the purported last will and testament of Isabel Cuntapay, the heirs of Rosendo Lasam have a better right to the subject lot over Vicenta Umengan. The CA explained that the said last will and testament did not comply with the formal requirements of the law on wills.6

Specifically, the CA found that the pages of the purported last will and testament were not numbered in accordance with the law. Neither did it contain the requisite attestation clause. Isabel Cuntapay as testator and the witnesses to the will did not affix their respective signatures on the second page thereof. The said instrument was likewise not acknowledged before a notary public by the testator and the witnesses. The CA even raised doubts as to its authenticity, noting that while Isabel Cuntapay died in 1947 and the heirs of Rosendo Lasam claimed that they discovered the same only in 1997, a date – May 19, 1956 – appears on the last page of the purported will. The CA opined that if this was the date of execution, then the will was obviously spurious. On the other hand, if this was the date of its discovery, then the CA expressed bafflement as to why the heirs of Rosendo Lasam, through their mother, declared in the Partition Agreement dated December 28, 1979 that Isabel Cuntapay died intestate.

It was observed by the CA that as against these infirmities in the claim of the heirs of Rosendo Lasam, Vicenta Umengan presented a Deed of Sale and a Deed of Donation to justify her possession of the subject lot. The CA noted that she has also possessed the subject property since 1955. Such prior possession, the CA held, gave Vicente Umengan the right to remain in the subject lot until a person with a better right lawfully ejects her. The heirs of Rosendo Lasam do not have such a better right. The CA stressed that the ruling on the issue of physical possession does not affect the title to the subject lot nor constitute a binding and conclusive adjudication on the merits on the issue of ownership. The parties are not precluded from filing the appropriate action to directly contest the ownership of or the title to the subject lot.

The decretal portion of the assailed decision of the CA reads:

WHEREFORE, premises considered, the appeal is GRANTED. The August 29, 2003 decision of the RTC, Branch 1, Tuguegarao City, Cagayan in Civil Case No. 5924 is hereby REVERSED and SET ASIDE. Private respondents’ complaint for unlawful detainer against petitioner is dismissed for lack of merit.

SO ORDERED.7

The heirs of Rosendo Lasam sought the reconsideration thereof but their motion was denied by the CA in its Resolution dated May 17, 2005.

The heirs of Rosendo Lasam (petitioners) now come to the Court alleging that the CA committed reversible error in setting aside the decision of the RTC, which had affirmed that of the MTCC, and dismissing their complaint for unlawful detainer against respondent Vicenta Umengan.

Petitioners argue that the CA erred when it held, on one hand, that the MTCC had jurisdiction over the subject matter of the complaint as the allegations therein make out a case for unlawful detainer but, on the other hand, proceeded to discuss the validity of the last will and testament of Isabel Cuntapay.

Petitioners insist that respondent is holding the subject lot by mere tolerance and that they, as the heirs of Rosendo Lasam who was the rightful owner of the subject lot, have a better right thereto. It was allegedly error for the CA to declare the last will and testament of Isabel Cuntapay as null and void for its non-compliance with the formal requisites of the law on wills. The said matter cannot be resolved in an unlawful detainer case, which only involves the issue of material or physical possession of the disputed property. In any case, they maintain that the said will complied with the formal requirements of the law.

It was allegedly also erroneous for the CA to consider in respondent’s favor the deed of sale and deed of donation covering portions of the subject lot, when these documents had already been passed upon by the RTC (Branch 3) of Tuguegarao City in Civil Case No. 4917 when it dismissed the respondent’s complaint for partition of the subject lot. The said order allegedly constituted res judicata and may no longer be reviewed by the CA.

Petitioners emphasize that in an unlawful detainer case, the only issue to be resolved is who among the parties is entitled to

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 139868             June 8, 2006

ALONZO Q. ANCHETA, Petitioner, vs.CANDELARIA GUERSEY-DALAYGON, Respondent.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Spouses Audrey O’Neill (Audrey) and W. Richard Guersey (Richard) were American citizens who have resided in the Philippines for 30 years. They have an adopted daughter, Kyle Guersey Hill (Kyle). On July 29, 1979, Audrey died, leaving a will. In it, she bequeathed her entire estate to Richard, who was also designated as executor.1 The will was admitted to probate before the Orphan’s Court of Baltimore, Maryland, U.S.A, which named James N. Phillips as executor due to Richard’s renunciation of his appointment.2 The court also named Atty. Alonzo Q. Ancheta (petitioner) of the Quasha Asperilla Ancheta Pena & Nolasco Law Offices as ancillary administrator.3

In 1981, Richard married Candelaria Guersey-Dalaygon (respondent) with whom he has two children, namely, Kimberly and Kevin.

On October 12, 1982, Audrey’s will was also admitted to probate by the then Court of First Instance of Rizal, Branch 25, Seventh Judicial District, Pasig, in Special Proceeding No. 9625.4 As administrator of Audrey’s estate in the Philippines, petitioner filed an inventory and appraisal of the following properties: (1) Audrey’s conjugal share in real estate with improvements located at 28 Pili Avenue, Forbes Park, Makati, Metro Manila, valued at P764,865.00 (Makati property); (2) a current account in Audrey’s name with a cash balance of P12,417.97; and (3) 64,444 shares of stock in A/G Interiors, Inc. worth P64,444.00.5

On July 20, 1984, Richard died, leaving a will, wherein he bequeathed his entire estate to respondent, save for his rights and interests over the A/G Interiors, Inc. shares, which he left to Kyle.6 The will was also admitted to probate by the Orphan’s Court of Ann Arundel, Maryland, U.S.A, and James N. Phillips was likewise appointed as executor, who in turn, designated Atty. William Quasha or any member of the Quasha Asperilla Ancheta Pena & Nolasco Law Offices, as ancillary administrator.

Richard’s will was then submitted for probate before the Regional Trial Court of Makati, Branch 138, docketed as Special Proceeding No. M-888.7 Atty. Quasha was appointed as ancillary administrator on July 24, 1986.8

On October 19, 1987, petitioner filed in Special Proceeding No. 9625, a motion to declare Richard and Kyle as heirs of Audrey.9 Petitioner also filed on October 23, 1987, a project of partition of Audrey’s estate, with Richard being apportioned the ¾ undivided interest in the Makati property, 48.333 shares in A/G Interiors, Inc., and P9,313.48 from the Citibank current account; and Kyle, the ¼ undivided interest in the Makati property, 16,111 shares in A/G Interiors, Inc., and P3,104.49 in cash.10

The motion and project of partition was granted and approved by the trial court in its Order dated February 12, 1988.11 The trial court also issued an Order on April 7, 1988, directing the Register of Deeds of Makati to cancel TCT No. 69792 in the name of Richard and to issue a new title in the joint names of the Estate of W. Richard Guersey (¾ undivided interest) and Kyle (¼ undivided interest); directing the Secretary of A/G Interiors, Inc. to transfer 48.333 shares to the Estate of W. Richard Guersey and 16.111 shares to Kyle; and directing the Citibank to release the amount of P12,417.97 to the ancillary administrator for distribution to the heirs.12

Consequently, the Register of Deeds of Makati issued on June 23, 1988, TCT No. 155823 in the names of the Estate of W. Richard Guersey and Kyle.13

Meanwhile, the ancillary administrator in Special Proceeding No. M-888 also filed a project of partition wherein 2/5 of Richard’s ¾ undivided interest in the Makati property was allocated to respondent, while 3/5 thereof were allocated to Richard’s three children. This was opposed by respondent on the ground that under the law of the State of Maryland, "a legacy passes to the legatee the entire interest of the testator in the property subject of the legacy."14 Since Richard left his entire estate to respondent, except for his rights and interests over the A/G Interiors, Inc, shares, then his entire ¾ undivided interest in the Makati property should be given to respondent.

The trial court found merit in respondent’s opposition, and in its Order dated December 6, 1991, disapproved the project of partition insofar as it affects the Makati property. The trial court also

adjudicated Richard’s entire ¾ undivided interest in the Makati property to respondent.15

On October 20, 1993, respondent filed with the Court of Appeals (CA) an amended complaint for the annulment of the trial court’s Orders dated February 12, 1988 and April 7, 1988, issued in Special Proceeding No. 9625.16 Respondent contended that petitioner willfully breached his fiduciary duty when he disregarded the laws of the State of Maryland on the distribution of Audrey’s estate in accordance with her will. Respondent argued that since Audrey devised her entire estate to Richard, then the Makati property should be wholly adjudicated to him, and not merely ¾ thereof, and since Richard left his entire estate, except for his rights and interests over the A/G Interiors, Inc., to respondent, then the entire Makati property should now pertain to respondent.

Petitioner filed his Answer denying respondent’s allegations. Petitioner contended that he acted in good faith in submitting the project of partition before the trial court in Special Proceeding No. 9625, as he had no knowledge of the State of Maryland’s laws on testate and intestate succession. Petitioner alleged that he believed that it is to the "best interests of the surviving children that Philippine law be applied as they would receive their just shares." Petitioner also alleged that the orders sought to be annulled are already final and executory, and cannot be set aside.

On March 18, 1999, the CA rendered the assailed Decision annulling the trial court’s Orders dated February 12, 1988 and April 7, 1988, in Special Proceeding No. 9625.17 The dispositive portion of the assailed Decision provides:

WHEREFORE, the assailed Orders of February 12, 1998 and April 7, 1988 are hereby ANNULLED and, in lieu thereof, a new one is entered ordering:

(a) The adjudication of the entire estate of Audrey O’Neill Guersey in favor of the estate of W. Richard Guersey; and

(b) The cancellation of Transfer Certificate of Title No. 15583 of the Makati City Registry and the issuance of a new title in the name of the estate of W. Richard Guersey.

SO ORDERED.18

Petitioner filed a motion for reconsideration, but this was denied by the CA per Resolution dated August 27, 1999.19

Hence, the herein petition for review on certiorari under Rule 45 of the Rules of Court alleging that the CA gravely erred in not holding that:

A) THE ORDERS OF 12 FEBRUARY 1988 AND 07 APRIL 1988 IN SPECIAL PROCEEDINGS NO. 9625 "IN THE MATTER OF THE PETITION FOR PROBATE OF THE WILL OF THE DECEASED AUDREY GUERSEY, ALONZO Q. ANCHETA, ANCILLARY ADMINISTRATOR", ARE VALID AND BINDING AND HAVE LONG BECOME FINAL AND HAVE BEEN FULLY IMPLEMENTED AND EXECUTED AND CAN NO LONGER BE ANNULLED.

B) THE ANCILLARY ADMINISTRATOR HAVING ACTED IN GOOD FAITH, DID NOT COMMIT FRAUD, EITHER EXTRINSIC OR INTRINSIC, IN THE PERFORMANCE OF

HIS DUTIES AS ANCILLARY ADMINISTRATOR OF AUDREY O’NEIL GUERSEY’S ESTATE IN THE PHILIPPINES, AND THAT NO FRAUD, EITHER EXTRINSIC OR INTRINSIC, WAS EMPLOYED BY [HIM] IN PROCURING SAID ORDERS.20

Petitioner reiterates his arguments before the CA that the Orders dated February 12, 1988 and April 7, 1988 can no longer be annulled because it is a final judgment, which is "conclusive upon the administration as to all matters involved in such judgment or order, and will determine for all time and in all courts, as far as the parties to the proceedings are concerned, all matters therein determined," and the same has already been executed.21

Petitioner also contends that that he acted in good faith in performing his duties as an ancillary administrator. He maintains that at the time of the filing of the project of partition, he was not aware of the relevant laws of the State of Maryland, such that the partition was made in accordance with Philippine laws. Petitioner also imputes knowledge on the part of respondent with regard to the terms of Aubrey’s will, stating that as early as 1984, he already apprised respondent of the contents of the will and how the estate will be divided.22

Respondent argues that petitioner’s breach of his fiduciary duty as ancillary administrator of Aubrey’s estate amounted to extrinsic fraud. According to respondent, petitioner was duty-bound to follow the express terms of Aubrey’s will, and his denial of knowledge of the laws of Maryland cannot stand because petitioner is a senior partner in a prestigious law firm and it was his duty to know the relevant laws.

Respondent also states that she was not able to file any opposition to the project of partition because she was not a party thereto and she learned of the provision of Aubrey’s will bequeathing entirely her estate to Richard only after Atty. Ancheta filed a project of partition in Special Proceeding No. M-888 for the settlement of Richard’s estate.

A decree of distribution of the estate of a deceased person vests the title to the land of the estate in the distributees, which, if erroneous may be corrected by a timely appeal. Once it becomes final, its binding effect is like any other judgment in rem.23 However, in exceptional cases, a final decree of distribution of the estate may be set aside for lack of jurisdiction or fraud.24 Further, in Ramon v. Ortuzar,25 the Court ruled that a party interested in a probate proceeding may have a final liquidation set aside when he is left out by reason of circumstances beyond his control or through mistake or inadvertence not imputable to negligence.26

The petition for annulment was filed before the CA on October 20, 1993, before the issuance of the 1997 Rules of Civil Procedure; hence, the applicable law is Batas Pambansa Blg. 129 (B.P. 129) or the Judiciary Reorganization Act of 1980. An annulment of judgment filed under B.P. 129 may be based on the ground that a judgment is void for want of jurisdiction or that the judgment was obtained by extrinsic fraud.27 For fraud to become a basis for annulment of judgment, it has to be extrinsic or actual,28 and must be brought within four years from the discovery of the fraud.29

In the present case, respondent alleged extrinsic fraud as basis for the annulment of the RTC Orders dated February 12, 1988 and April 7, 1988. The CA found merit in respondent’s cause and found that petitioner’s failure to follow the terms of Audrey’s will, despite the latter’s declaration of good faith, amounted to extrinsic fraud. The CA ruled that under Article 16 of the Civil Code, it is the national law of the decedent that is applicable, hence, petitioner should have distributed Aubrey’s estate in

accordance with the terms of her will. The CA also found that petitioner was prompted to distribute Audrey’s estate in accordance with Philippine laws in order to equally benefit Audrey and Richard Guersey’s adopted daughter, Kyle Guersey Hill.

Petitioner contends that respondent’s cause of action had already prescribed because as early as 1984, respondent was already well aware of the terms of Audrey’s will,30 and the complaint was filed only in 1993. Respondent, on the other hand, justified her lack of immediate action by saying that she had no opportunity to question petitioner’s acts since she was not a party to Special Proceeding No. 9625, and it was only after Atty. Ancheta filed the project of partition in Special Proceeding No. M-888, reducing her inheritance in the estate of Richard that she was prompted to seek another counsel to protect her interest.31

It should be pointed out that the prescriptive period for annulment of judgment based on extrinsic fraud commences to run from the discovery of the fraud or fraudulent act/s. Respondent’s knowledge of the terms of Audrey’s will is immaterial in this case since it is not the fraud complained of. Rather, it is petitioner’s failure to introduce in evidence the pertinent law of the State of Maryland that is the fraudulent act, or in this case, omission, alleged to have been committed against respondent, and therefore, the four-year period should be counted from the time of respondent’s discovery thereof.

Records bear the fact that the filing of the project of partition of Richard’s estate, the opposition thereto, and the order of the trial court disallowing the project of partition in Special Proceeding No. M-888 were all done in 1991.32 Respondent cannot be faulted for letting the assailed orders to lapse into finality since it was only through Special Proceeding No. M-888 that she came to comprehend the ramifications of petitioner’s acts. Obviously, respondent had no other recourse under the circumstances but to file the annulment case. Since the action for annulment was filed in 1993, clearly, the same has not yet prescribed.

Fraud takes on different shapes and faces. In Cosmic Lumber Corporation v. Court of Appeals,33 the Court stated that "man in his ingenuity and fertile imagination will always contrive new schemes to fool the unwary."

There is extrinsic fraud within the meaning of Sec. 9 par. (2), of B.P. Blg. 129, where it is one the effect of which prevents a party from hearing a trial, or real contest, or from presenting all of his case to the court, or where it operates upon matters, not pertaining to the judgment itself, but to the manner in which it was procured so that there is not a fair submission of the controversy. In other words, extrinsic fraud refers to any fraudulent act of the prevailing party in the litigation which is committed outside of the trial of the case, whereby the defeated party has been prevented from exhibiting fully his side of the case by fraud or deception practiced on him by his opponent. Fraud is extrinsic where the unsuccessful party has been prevented from exhibiting fully his case, by fraud or deception practiced on him by his opponent, as by keeping him away from court, a false promise of a compromise; or where the defendant never had any knowledge of the suit, being kept in ignorance by the acts of the plaintiff; or where an attorney fraudulently or without authority connives at his defeat; these and similar cases which show that there has never been a real contest in the trial or hearing of the case are reasons for which a new suit may be sustained to set aside and annul the former judgment and open the case for a new and fair hearing.34

The overriding consideration when extrinsic fraud is alleged is that the fraudulent scheme of the prevailing litigant prevented a party from having his day in court.35

Petitioner is the ancillary administrator of Audrey’s estate. As such, he occupies a position of the highest trust and confidence, and he is required to exercise reasonable diligence and act in entire good faith in the performance of that trust. Although he is not a guarantor or insurer of the safety of the estate nor is he expected to be infallible, yet the same degree of prudence, care and judgment which a person of a fair average capacity and ability exercises in similar transactions of his own, serves as the standard by which his conduct is to be judged.36

Petitioner’s failure to proficiently manage the distribution of Audrey’s estate according to the terms of her will and as dictated by the applicable law amounted to extrinsic fraud. Hence the CA Decision annulling the RTC Orders dated February 12, 1988 and April 7, 1988, must be upheld.

It is undisputed that Audrey Guersey was an American citizen domiciled in Maryland, U.S.A. During the reprobate of her will in Special Proceeding No. 9625, it was shown, among others, that at the time of Audrey’s death, she was residing in the Philippines but is domiciled in Maryland, U.S.A.; her Last Will and Testament dated August 18, 1972 was executed and probated before the Orphan’s Court in Baltimore, Maryland, U.S.A., which was duly authenticated and certified by the Register of Wills of Baltimore City and attested by the Chief Judge of said court; the will was admitted by the Orphan’s Court of Baltimore City on September 7, 1979; and the will was authenticated by the Secretary of State of Maryland and the Vice Consul of the Philippine Embassy.

Being a foreign national, the intrinsic validity of Audrey’s will, especially with regard as to who are her heirs, is governed by her national law, i.e., the law of the State of Maryland, as provided in Article 16 of the Civil Code, to wit:

Art. 16. Real property as well as personal property is subject to the law of the country where it is situated.

However, intestate and testamentary succession, both with respect to the order of succession and to the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession is under consideration, whatever may be the nature of the property and regardless of the country wherein said property may be found. (Emphasis supplied)

Article 1039 of the Civil Code further provides that "capacity to succeed is governed by the law of the nation of the decedent."

As a corollary rule, Section 4, Rule 77 of the Rules of Court on Allowance of Will Proved Outside the Philippines and Administration of Estate Thereunder, states:

SEC. 4. Estate, how administered.—When a will is thus allowed, the court shall grant letters testamentary, or letters of administration with the will annexed, and such letters testamentary or of administration, shall extend to all the estate of the testator in the Philippines. Such estate, after the payment of just debts and expenses of administration, shall be disposed of according to such will, so far as such will may operate upon it; and the residue, if any, shall be disposed of as is provided by law in cases of estates in the Philippines belonging to persons who are inhabitants of another state or country. (Emphasis supplied)

While foreign laws do not prove themselves in our jurisdiction and our courts are not authorized to take judicial notice of them;37 however, petitioner, as ancillary administrator of Audrey’s estate, was duty-bound to introduce in evidence the pertinent law of the State of Maryland.38

Petitioner admitted that he failed to introduce in evidence the law of the State of Maryland on Estates and Trusts, and merely relied on the presumption that such law is the same as the Philippine law on wills and succession. Thus, the trial court peremptorily applied Philippine laws and totally disregarded the terms of Audrey’s will. The obvious result was that there was no fair submission of the case before the trial court or a judicious appreciation of the evidence presented.

Petitioner insists that his application of Philippine laws was made in good faith. The Court cannot accept petitioner’s protestation. How can petitioner honestly presume that Philippine laws apply when as early as the reprobate of Audrey’s will before the trial court in 1982, it was already brought to fore that Audrey was a U.S. citizen, domiciled in the State of Maryland. As asserted by respondent, petitioner is a senior partner in a prestigious law firm, with a "big legal staff and a large library."39 He had all the legal resources to determine the applicable law. It was incumbent upon him to exercise his functions as ancillary administrator with reasonable diligence, and to discharge the trust reposed on him faithfully. Unfortunately, petitioner failed to perform his fiduciary duties.

Moreover, whether his omission was intentional or not, the fact remains that the trial court failed to consider said law when it issued the assailed RTC Orders dated February 12, 1988 and April 7, 1988, declaring Richard and Kyle as Audrey’s heirs, and distributing Audrey’s estate according to the project of partition submitted by petitioner. This eventually prejudiced respondent and deprived her of her full successional right to the Makati property.

In GSIS v. Bengson Commercial Bldgs., Inc.,40 the Court held that when the rule that the negligence or mistake of counsel binds the client deserts its proper office as an aid to justice and becomes a great hindrance and chief enemy, its rigors must be relaxed to admit exceptions thereto and to prevent a miscarriage of justice, and the court has the power to except a particular case from the operation of the rule whenever the purposes of justice require it.

The CA aptly noted that petitioner was remiss in his responsibilities as ancillary administrator of Audrey’s estate. The CA likewise observed that the distribution made by petitioner was prompted by his concern over Kyle, whom petitioner believed should equally benefit from the Makati property. The CA correctly stated, which the Court adopts, thus:

In claiming good faith in the performance of his duties and responsibilities, defendant Alonzo H. Ancheta invokes the principle which presumes the law of the forum to be the same as the foreign law (Beam vs. Yatco, 82 Phil. 30, 38) in the absence of evidence adduced to prove the latter law (Slade Perkins vs. Perkins, 57 Phil. 205, 210). In defending his actions in the light of the foregoing principle, however, it appears that the defendant lost sight of the fact that his primary responsibility as ancillary administrator was to distribute the subject estate in accordance with the will of Audrey O’Neill Guersey. Considering the principle established under Article 16 of the Civil Code of the Philippines, as well as the citizenship and the avowed domicile of the decedent, it goes without saying that the defendant was also duty-bound to prove the pertinent laws of Maryland on the matter.

The record reveals, however, that no clear effort was made to prove the national law of Audrey O’Neill Guersey during the proceedings before the court a quo. While there is claim of good faith in

distributing the subject estate in accordance with the Philippine laws, the defendant appears to put his actuations in a different light as indicated in a portion of his direct examination, to wit:

x x x

It would seem, therefore, that the eventual distribution of the estate of Audrey O’Neill Guersey was prompted by defendant Alonzo H. Ancheta’s concern that the subject realty equally benefit the plaintiff’s adopted daughter Kyle Guersey.

Well-intentioned though it may be, defendant Alonzo H. Ancheta’s action appears to have breached his duties and responsibilities as ancillary administrator of the subject estate. While such breach of duty admittedly cannot be considered extrinsic fraud under ordinary circumstances, the fiduciary nature of the said defendant’s position, as well as the resultant frustration of the decedent’s last will, combine to create a circumstance that is tantamount to extrinsic fraud. Defendant Alonzo H. Ancheta’s omission to prove the national laws of the decedent and to follow the latter’s last will, in sum, resulted in the procurement of the subject orders without a fair submission of the real issues involved in the case.41 (Emphasis supplied)

This is not a simple case of error of judgment or grave abuse of discretion, but a total disregard of the law as a result of petitioner’s abject failure to discharge his fiduciary duties. It does not rest upon petitioner’s pleasure as to which law should be made applicable under the circumstances. His onus is clear. Respondent was thus excluded from enjoying full rights to the Makati property through no fault or negligence of her own, as petitioner’s omission was beyond her control. She was in no position to analyze the legal implications of petitioner’s omission and it was belatedly that she realized the adverse consequence of the same. The end result was a miscarriage of justice. In cases like this, the courts have the legal and moral duty to provide judicial aid to parties who are deprived of their rights.42

The trial court in its Order dated December 6, 1991 in Special Proceeding No. M-888 noted the law of the State of Maryland on Estates and Trusts, as follows:

Under Section 1-301, Title 3, Sub-Title 3 of the Annotated Code of the Public General Laws of Maryland on Estates and Trusts, "all property of a decedent shall be subject to the estate of decedents law, and upon his death shall pass directly to the personal representative, who shall hold the legal title for administration and distribution," while Section 4-408 expressly provides that "unless a contrary intent is expressly indicated in the will, a legacy passes to the legatee the entire interest of the testator in the property which is the subject of the legacy". Section 7-101, Title 7, Sub-Title 1, on the other hand, declares that "a personal representative is a fiduciary" and as such he is "under the general duty to settle and distribute the estate of the decedent in accordance with the terms of the will and the estate of decedents law as expeditiously and with as little sacrifice of value as is reasonable under the circumstances".43

In her will, Audrey devised to Richard her entire estate, consisting of the following: (1) Audrey’s conjugal share in the Makati property; (2) the cash amount of P12,417.97; and (3) 64,444 shares of stock in A/G Interiors, Inc. worth P64,444.00. All these properties passed on to Richard upon Audrey’s death. Meanwhile, Richard, in his will, bequeathed his entire estate to respondent, except for his rights and interests over the A/G Interiors, Inc. shares, which he left to Kyle. When Richard subsequently died, the entire Makati property should have then passed on to respondent. This, of course, assumes the proposition that the law of the State of Maryland which allows "a legacy to pass to the legatee the

entire estate of the testator in the property which is the subject of the legacy," was sufficiently proven in Special Proceeding No. 9625. Nevertheless, the Court may take judicial notice thereof in view of the ruling in Bohanan v. Bohanan.44 Therein, the Court took judicial notice of the law of Nevada despite failure to prove the same. The Court held, viz.:

We have, however, consulted the records of the case in the court below and we have found that during the hearing on October 4, 1954 of the motion of Magdalena C. Bohanan for withdrawal of P20,000 as her share, the foreign law, especially Section 9905, Compiled Nevada Laws, was introduced in evidence by appellants' (herein) counsel as Exhibit "2" (See pp. 77-79, Vol. II, and t.s.n. pp. 24-44, Records, Court of First Instance). Again said law was presented by the counsel for the executor and admitted by the Court as Exhibit "B" during the hearing of the case on January 23, 1950 before Judge Rafael Amparo (see Records, Court of First Instance, Vol. 1).

In addition, the other appellants, children of the testator, do not dispute the above-quoted provision of the laws of the State of Nevada. Under all the above circumstances, we are constrained to hold that the pertinent law of Nevada, especially Section 9905 of the Compiled Nevada Laws of 1925, can be taken judicial notice of by us, without proof of such law having been offered at the hearing of the project of partition.

In this case, given that the pertinent law of the State of Maryland has been brought to record before the CA, and the trial court in Special Proceeding No. M-888 appropriately took note of the same in disapproving the proposed project of partition of Richard’s estate, not to mention that petitioner or any other interested person for that matter, does not dispute the existence or validity of said law, then Audrey’s and Richard’s estate should be distributed according to their respective wills, and not according to the project of partition submitted by petitioner. Consequently, the entire Makati property belongs to respondent.

Decades ago, Justice Moreland, in his dissenting opinion in Santos v. Manarang,45 wrote:

A will is the testator speaking after death. Its provisions have substantially the same force and effect in the probate court as if the testator stood before the court in full life making the declarations by word of mouth as they appear in the will. That was the special purpose of the law in the creation of the instrument known as the last will and testament. Men wished to speak after they were dead and the law, by the creation of that instrument, permitted them to do so x x x All doubts must be resolved in favor of the testator's having meant just what he said.

Honorable as it seems, petitioner’s motive in equitably distributing Audrey’s estate cannot prevail over Audrey’s and Richard’s wishes. As stated in Bellis v. Bellis:46

x x x whatever public policy or good customs may be involved in our system of legitimes, Congress has not intended to extend the same to the succession of foreign nationals. For it has specifically chosen to leave, inter alia, the amount of successional rights, to the decedent's national Law. Specific provisions must prevail over general ones.47

Before concluding, the Court notes the fact that Audrey and Richard Guersey were American citizens who owned real property in the Philippines, although records do not show when and how the Guerseys acquired the Makati property.

Under Article XIII, Sections 1 and 4 of the 1935 Constitution, the privilege to acquire and exploit lands of the public domain, and other natural resources of the Philippines, and to operate public utilities, were reserved to Filipinos and entities owned or controlled by them. In Republic v. Quasha,48 the Court clarified that the Parity Rights Amendment of 1946, which re-opened to American citizens and business enterprises the right in the acquisition of lands of the public domain, the disposition, exploitation, development and utilization of natural resources of the Philippines, does not include the acquisition or exploitation of private agricultural lands. The prohibition against acquisition of private lands by aliens was carried on to the 1973 Constitution under Article XIV, Section 14, with the exception of private lands acquired by hereditary succession and when the transfer was made to a former natural-born citizen, as provided in Section 15, Article XIV. As it now stands, Article XII, Sections 7 and 8 of the 1986 Constitution explicitly prohibits non-Filipinos from acquiring or holding title to private lands or to lands of the public domain, except only by way of legal succession or if the acquisition was made by a former natural-born citizen.

In any case, the Court has also ruled that if land is invalidly transferred to an alien who subsequently becomes a citizen or transfers it to a citizen, the flaw in the original transaction is considered cured and the title of the transferee is rendered valid.49 In this case, since the Makati property had already passed on to respondent who is a Filipino, then whatever flaw, if any, that attended the acquisition by the Guerseys of the Makati property is now inconsequential, as the objective of the constitutional provision to keep our lands in Filipino hands has been achieved.

WHEREFORE, the petition is denied. The Decision dated March 18, 1999 and the Resolution dated August 27, 1999 of the Court of Appeals are AFFIRMED.

Petitioner is ADMONISHED to be more circumspect in the performance of his duties as an official of the court.

No pronouncement as to costs.

SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZAssociate Justice

WE CONCUR:

ARTEMIO V. PANGANIBANChief JusticeChairperson

(On leave)CONSUELO YNARES-SANTIAGO

Associate JusticeROMEO J. CALLEJO, SR.

Asscociate Justice

MINITA V. CHICO-NAZARIOAssociate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

ARTEMIO V. PANGANIBANChief Justice

Footnotes

1 CA rollo, pp. 84-88.

2 Id. at 89-91.

3 Id. at 92.

4 Supra, note 2.

5 CA rollo, pp. 93-94.

6 Id. at 95-98.

7 Id. at 99-100.

8 Id. at 101.

  Domingo’s Motion for Reconsideration having been denied by the appellate court, the present petition was lodged,faulting the appellate court:I. . . x x x x WHEN IT LIMITED CONSIDERATION OF THE MATTERS ESTABLISHED IN THE APPLICATION TO SECTION 48 (B) OFTHE PUBLIC LAND ACT AND SECTION 14 (1) OF PD 1529.II. . . x x x WHEN IT HELD THAT PETITIONER IS NOT ENTITLED FOR REGISTRATION OF TITLE OVER THE SUBJECT LAND,NOTWITHSTANDING THE FACT THAT THE EVIDENCE ON RECORD CLEARLY ESTABLISHED HIS ENTITLEMENT [TO]REGISTRATION OF TITLE OVER THE LAND UNDER SECTION 14 (1) AND (4) OF PD 1529.20 (Underscoring supplied)Domingo’s present counsel argues that assuming that Domingo failed to establish his possession from June 12, 1945 orearlier in accordance with Section 14(1) of P.D. No. 1529, he is still entitled to registration of title under Article 111321 inrelation to Article 113722 of the Civil Code.23 In their Comment

24 to the present petition, respondents pray for its denial for being substantially defective, Domingo’sdeathnot having been alleged, albeit the Verification and Certification against Forum Shopping was signed by Domingo’salleged "Surviving Spouse and Heirs."25 To respondents’ Comment, Domingo’s counsel filed a Reply26 stating that there is no clearer manifestation of the deathof Domingo than the statement under oath of his surviving spouse and heirs "in substitution of deceased CRISOLOGO C.DOMINGO" contained in the Verification and Certification against Forum Shopping which forms part of the presentpetition.27 Nonetheless, the counsel presented a certified true copy of Domingo’s death certificate28 showing that hedied on March 9, 1996 (during the pendency of his application before the RTC as earlier stated).The petition is bereft of merit.Section 14 (1) of P.D. No. 1529 provides:Sec. 14. Who may apply. –The following persons may file in the proper Court of First Instance an application forregistration of title to land, whether personally or through their duly authorized representatives:(1) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive andnotorious possession and occupation of alienable and disposable lands of the public domain under abona fideclaim of ownership since June 12, 1945, or earlier.29 (Underscoring supplied)To thus be entitled to registration of a land, the applicant must prove that (a) the land applied for forms part of thedisposable and alienable agricultural lands of the public domain; and (b) he has been in open, continuous, exclusive, andnotorious possession and occupation of the same under a bona fide claim of ownership either since time immemorial orsince June 12, 1945.30 All lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State, and unlessit has been shown that they have been reclassified by the State as alienable or disposable to a private person, theyremain part of the inalienable public domain.31 To prove that a land is alienable, an applicant must conclusively establish the existence of a positive act of thegovernment, such as a presidential proclamation or an executive order, or administrative action, investigation reports of the Bureau of Lands investigator or a legislative act or statute.32

While petitioner presented a document denominated as "2nd Indorsement"33 issued by Land Management InspectorAmadeo Mediran that the lots are "within the alienable and disposable zone under Project No. 3 LSC-3113 issued onApril 5, 1978 as certified by the Director of the Forest Development," the genuineness of the document cannot beascertained, it being a mere photocopy. Besides, the truth of its contents cannot be ascertained, Mediran having failedto take the witness stand to identify and testify thereon.In fine, Domingo failed to adduce incontrovertible evidence34 showing that the lots have been declared alienable. Theyare thus presumed to belong to the public domain, beyond the commerce of man, and are not susceptible of privateappropriation and acquisitive prescription.But even assuming arguendo that the lots are alienable, Domingo failed to comply with the requirement on the periodof possession. While he alleged in his petition that he bought the lots from Genoveva in 1948, he failed, as the appellatecourt correctly noted, to adduce the deed of sale executed for the purpose, or to explain the reason behind the failureand to present sufficient evidence to prove the fact of sale.Again, even assuming arguendo that the lots were indeed sold to him by Genoveva, Domingo failed to adduce proof thatGenoveva, from whom he seeks to tack his possession, acquired registrable title over them on June 12, 1945 or earlier.Under the same assumption, Domingo’s claim that he has been in actual, continuous, adverse and open possession of the lots in the concept of an owner since 1948 is a conclusion of law which must be substantiated with proof of specificacts of ownership and factual evidence of possession.35 An examination of the tax receipts36 presented by Domingo shows that they are of recent vintage, the earliest beingdated January 8, 1993.Tax Declaration Nos. 0298, GR-019-0884, and GR-019-0885,37 which appear to have been issued in 1947 [sic], 1964, and1968, respectively, contain the declaration "Filed under Presidential Decree No. 464" below the title "Declaration of RealProperty." P.D. No. 464, "The Real

Property Tax Code," took effect, however, only on June 1, 1974. Specifically withrespect to the first tax declaration, it even shows that Domingo subscribed and swore to it on August 1, 1947 at whichtime he had not bought the lot yet, in 1948 by his claim.A note on Domingo’s death during the pendency of his application at the RTC. Indeed, the records do not show that hisdeath on March 9, 1996 was brought to the RTC’s attention, which is not in accordance with Sections 16 and 17, Rule 3of the 1994 Rules of Court,viz: SEC. 16. Duty of attorney upon death, incapacity, or incompetency of party.—Whenever a party to a pending case dies,becomes incapacitated or incompetent, it shall be the duty of his attorney to inform the court promptly of such death,incapacity or incompetency, and to give the name and residence of his executor, administrator, guardian or other legalrepresentative. (Italics in the original; underscoring supplied)SEC. 17. Death of party.—After a party dies and the claim is not thereby extinguished, the court shall order, uponproper notice, the legal representative of the deceased to appear and to be substituted for the deceased, within aperiod of thirty (30) days, or within such time as may be granted. If the legal representative fails to appear within saidtime, the court may order the opposing party to procure the appointment of a legal representative of the deceasedwithin a time to be specified by the court, and the representative shall immediately appear for and on behalf of theinterest of the deceased. The court charges involved in procuring such appointment, if defrayed by the opposing party,may be recovered as costs. The heirs of the deceased may be allowed to be substituted for the deceased, withoutrequiring the appointment of an executor or administrator and the court may appoint guardian ad litem for the minorheirs. (Italics in the original; underscoring supplied)

When a party dies in an action that survives and no order is issued by the court for the appearance of the legalrepresentative or of the heirs of the deceased in substitution of the deceased, and as a matter of fact no substitution hasever been effected, the proceedings held by the court without such legal representatives or heirs and the judgmentrendered after such trial are null and void because the court acquired no jurisdiction over the person of the legalrepresentative or of the heirs upon whom the trial and judgment would be binding.38 Unlike, however, jurisdiction over the subject matter which is conferred by law, jurisdiction over the person of theparties to the case may, however, be waived either expressly or impliedly.39 In the case at bar, the surviving heirsvoluntarily submitted themselves to the jurisdiction of this Court, albeit belatedly, by participating in the presentpetition.Under the now amended Section 16, Rule 3 of the 1997 Rules

of Court, failure of a counsel to comply with the provisionthereof is a ground for disciplinary action,viz: SEC. 16. Death of party; duty of counsel.—Whenever a party to a pending action dies, and the claim is not therebyextinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after such death of the factthereof, and to give the name and address of his legal representative or representatives. Failure of counsel to complywith this duty shall be a ground for disciplinary action.The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of anexecutor or administrator and the court may appoint a guardian ad litem for the minor heirs.1avvphi1 The court shall forthwith order said legal representative or representatives to appear and be substituted within a periodof thirty (30) days from notice.If no legal representative is named by the counsel for the deceased party, or if the one so named shall fail to appearwithin the specified period, the court may order the opposing party, within a specified time, to procure the appointmentof an executor or administrator for the estate of the deceased and the latter shall immediately appear for and on behalf of the deceased. The court charges in procuring such appointment, if defrayed by the opposing party, may be recoveredas costs. (Italics in the original; underscoring supplied)The failure of Domingo’s former counsel, Atty. IrineoA. Anarna of No. 4 Madlansacay St., Poblacion Lilang 4118 Cavite,to comply with the immediately quoted provisions of the Rules, is compounded by his misrepresentation, before the CA,that Domingo was well and alive when he stated in his Motion to Withdraw Appearance as Counsel40 dated July 8, 2004that the "motion for withdrawal [was] conformed to by Mrs. Rosemarie Manlapit Zamora, representative of theapplicant as shown by her signature . . . and that Mrs. Rosemarie Zamora also undertakes to personally seek theconformity of the Applicant" (Underscoring supplied); and by his retaining of the name of Domingo in the title of hispleadings before the appellate court.Canon 10 of the Code of Professional Responsibility provides that "a lawyer owes candor, fairness and good faith to thecourt." Rule 10.01 likewise provides that "a lawyer shall do no falsehood, nor consent to the doing of any in court; norshall he mislead, or allow the court to be mislead by any artifice." And Rule 10.03 provides that "a lawyer shall observethe rules of procedure and shall not misuse them to defeat the ends of justice."This Court thus takes this occasion to warn Atty. Anarna that a repetition of a similar violation of the Rules of Court andthe Code of Professional Responsibility will be dealt with strictly.WHEREFORE, the petition is, in light of the foregoing discussion, DENIED.Let a copy of this Decision be furnished Atty. Irineo A. Anarna of No. 4 Madlansacay St., Poblacion Lilang, 4118 Cavite.

SO ORDERED.CONCHITA CARPIO MORALES Associate JusticeWE CONCUR:LEONARDO A. QUISUMBING Associate JusticeChairpersonANTONIO T. CARPIO Associate JusticeDANTE O. TINGA Associate JusticePRESBITERO J. VELASCO, JR. Associate JusticeA T T E S T A T I O NI attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to thewriter of the opinion of the Court’s Division. LEONARDO A. QUISUMBING Associate JusticeChairpersonC E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I certify that theconclusions in the above Decision were reached in consultation before the case was assigned to the writer of theopinion of the Court’s Division. REYNATO S. PUNO Chief JusticeFootnotes 1 Records, pp. 1-10.2 Id. at 11.3 Id. at 7.4 Id. at 11.5 Id. at 12-16.6 Id. at 22.7 Id. at 17-21.