RULE 74: SUMMARY SETTLEMENT OF ESTATE Section 1: Extrajudicial settlement by agreement between heirs.

Affidavit of Self-Adjudication

G.R. No. 187524, August 05, 2015

SPOUSES MARIA BUTIONG AND FRANCISCO VILLAFRIA, SUBSTITUTED BY DR. RUEL B. VILLAFRIA, Petitioners,

v. MA. GRACIA RIÑOZA PLAZO AND MA. FE RIÑOZA ALARAS, Respondents.

PERALTA, J.: Before the-Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside the Decision and Resolution, dated March 13, 2009 and April 23, 2009, respectively, of the Court Appeals (CA) in CA-G.R. SP No. 107347, which affirmed the Judgment dated October 1, 2001 of the Regional Trial Court (RTC) of Nasugbu, Batangas, Branch 14, in Civil Case No. 217.

The antecedent facts are as follows:

On November 16, 1989, Pedro L. Riñoza died intestate, leaving several heirs, including his children with his first wife, respondents Ma. Gracia R. Plazo and Ma. Fe Alaras, as well as several properties including a resort covered by Transfer Certificates of Title (TCT) No. 51354 and No. 51355, each with an area of 351 square meters, and a family home, the land on which it stands is covered by TCT Nos. 40807 and 40808, both located in Nasugbu, Batangas.

In their Amended Complaint for Judicial Partition with Annulment of Title and Recovery of Possession dated September 15, 1993, respondents alleged that sometime in March 1991, they discovered that their co-heirs, Pedro's second wife, Benita Tenorio and other children, had sold the subject properties to petitioners, spouses Francisco Villafria and Maria Butiong, who are now deceased and substituted by their son, Dr. Ruel B. Villafria, without their knowledge and consent. When confronted about the sale, Benita acknowledged the same, showing respondents a document she believed evidenced receipt of her share in the sale, which, however, did not refer to any sort of sale but to a previous loan obtained by Pedro and Benita from a bank. The document actually evidenced receipt from Banco Silangan of the amount of P87,352.62 releasing her and her late husband's indebtedness therefrom. Upon inquiry, the Register of Deeds of Nasugbu informed respondents that he has no record of any transaction involving the subject properties, giving them certified true copies of the titles to the same. When respondents went to the subject properties, they discovered that 4 out of the 8 cottages in the resort had been demolished. They were not, however, able to enter as the premises were padlocked.

Subsequently, respondents learned that on July 18, 1991, a notice of an extra-judicial settlement of estate of their late father was published in a tabloid called Balita. Because of this, they caused the annotation of their adverse claims over the subject properties before the Register of Deeds of Nasugbu and filed their complaint praying, among others, for the annulment of all documents conveying the subject properties to the petitioners and certificates of title issued pursuant thereto.

In their Answer, petitioners denied the allegations of the complaint on the ground of lack of personal knowledge and good faith in acquiring the subject properties. In the course of his testimony during trial, petitioner Francisco further contended that what they purchased was only the resort. He also presented an Extra-Judicial Settlement with Renunciation, Repudiations and Waiver of Rights and Sale which provides, among others, that respondents' co-heirs sold the family home to the spouses Rolando and Ma. Cecilia Bondoc for P1 million as well as a Deed of Sale whereby Benita sold the resort to petitioners for P650,000.00.

On October 1, 2001, the trial court nullified the transfer of the subject properties to petitioners and spouses Bondoc due to irregularities in the documents of conveyance offered by petitioners.as well as the circumstances surrounding the execution of the same. Specifically, the Extra-Judicial Settlement was notarized by a notary public who was not duly commissioned as such on the date it was executed. The Deed of Sale was undated, the date of the acknowledgment therein was left blank, and the typewritten name "Pedro Riñoza, Husband" on the left side of the document was not signed. The trial court also observed that both documents were never presented to the Office of the Register of Deeds for registration and that the titles to the subject properties were still in the names of Pedro and his second wife Benita. In addition, the supposed notaries and buyers of the subject properties were not even presented as witnesses who supposedly witnessed the signing and execution of the documents of conveyance. On the basis thereof, the trial court ruled in favor of respondents, in its Judgment, the pertinent portions of its fallo provide:

WHEREFORE, foregoing premises considered, judgment is hereby rendered as follows:

x x x x

4. a) Declaring as a nullity the Extra-Judicial Settlement with Renunciation, Repudiation and Waiver of Rights and Sale" (Exh. "1", Villafria) notarized on December 23, 1991 by Notary Public Antonio G. Malonzo of Manila, Doc. No. 190, Page No. 20, Book No. IXII, Series of 1991.

b) Declaring as a nullity the Deed of Absolute Sale (Exh. "2", Villafria), purportedly executed by Benita T. Riñoza in favor of spouses Francisco Villafria and Maria Butiong, purportedly notarized by one Alfredo de Guzman, marked Doc. No. 1136, Page No. 141, Book No. XXX, Series of 1991.

c) Ordering the forfeiture of any and all improvements introduced by defendants Francisco Villafria dnd Maria Butiong in the properties covered by TCT No. 40807, 40808, 51354 and 51355 of the Register of Deeds for Nasugbu, Batangas.

5. Ordering defendant Francisco Villafria and all persons, whose occupancy within the premises of the four (4) parcels of land described in par. 4-c above is derived from the rights and interest of defendant Villafria, to vacate its premises and to deliver possession thereof, and all improvements existing thereon to plaintiffs, for and in behalf of the estate of decedent Pedro L. Riñoza.

6. Declaring the plaintiffs and the defendants-heirs in the Amended Complaint to be the legitimate heirs of decedent Pedro L. RifSoza, each in the capacity and degree established, as well as their direct successors-in-interest, and ordering the defendant Registrar of Deeds to issue the corresponding titles in their names in the proportion established by law, pro indiviso, in TCT Nos. 40807, 40808, 51354, 51355 and 40353 (after restoration) within ten (10) days from finality of this Decision, upon payment of lawful fees, except TCT No. 40353, which shall be exempt from all expenses for its restoration.

With no costs.

SO ORDERED.

On appeal, the CA affirmed the trial court's Judgment in its Decision16 dated October 31, 2006 in the following wise:

The person before whom the resort deed was acknowledged, Alfredo de Guzman, was not commissioned as a notary public from 1989 to July 3, 1991, the date the certification was issued. Such being the case, the resort deed is not a public document and the presumption of- regularity accorded to public documents will not apply to the same. As laid down in Tigno, el al. v. Aquino, et al.:

The validity of a notarial certification necessarily derives from the authority of the notarial officer. If the notary public does net have the capacity to notarize a document, but does so anyway, then the document should be treated as unnotarized. The rule may strike as rather harsh, and perhaps may prove to be prejudicial to parties in good faith relying on the proferred authority of the notary public or the person pretending to be one. Still, to admit otherwise would render merely officious the elaborate process devised by this Court in order that a lawyer may receive a notarial commission. Without such a rule, the notarization of a document by a duly-appointed notary public will have the same legal effect as one accomplished by a non-lawyer engaged in pretense.

The notarization of a document carries considerable legal effect. Notarization of a private document converts such document into a public one, and renders it admissible in court without further proof of its authenticity. Thus, notarization is not an empty routine; to the contrary, it engages public interest in a substantial degree and the protection of that interest requires preventing those who are not qualified or

authorized to act as notaries public from imposing upon the public and the courts and administrative offices generally.Parenthetically, the settlement/family home deed cannot be considered a public document. This is because the following cast doubt on the document's authenticity, to wit:1.) The date of its execution was not indicated;2.) The amount of consideration was superimposed;3.) It was not presented to the Registry of Deeds of Nasugbu, Batangas for annotation; and4.) Not even the supposed notary public," Alfredo de Guzman, or the purported buyer, the Spouses Rolando and Ma. Cecilia Bondoc, were presented as witnesses.

Concededly, the absence of notarization in the resort deed and/or the lacking details in the settlement/family home deed did not necessarily invalidate the transactions evidenced by the said documents. However, since the said deeds are private documents, perforce, their due execution and authenticity becomes subject to the requirement of proof under the Rules on Evidence, Section 20, Rule 132 of which provides:

Sec. 20. Proof of private document. - Before any private document offered as authentic is received in evidence, its due execution aijd .authenticity must be proved either:

(a) By anyone who saw the document executed or written; or (b) By evidence of the genuineness of the signature or handwriting of the maker.The Complaining Heirs insist that the settlement/family home and the resort deed are void as their signatures thereon are forgeries as opposed to the Villafrias who profess the deeds' enforceability. After the Complaining Heirs presented proofs in support of their claim that their signatures were forged, the burden then fell upon the Villafrias to disprove the same, or conversely, to prove the authenticity and due execution of the said deeds. The Villafrias failed in this regard.

As aforestated, the Villafrias did not present as witnesses (a) the notary public who purportedly notarized the questioned instrument, (b) the witnesses who appeared] in the instruments as eyewitnesses to the signing, or (c) an expert to prove the authenticity and genuineness of all the signatures appearing o,n the said instruments. Verily, the rule that, proper foundation must be laid for the admission of documentary evidence; that is, the identity and authenticity of the document must be reasonably established as a prerequisite to its admission, was prudently observed by the lower court when it refused to admit the settlement/family home and the resort deeds as their veracity are doubtful.

Aggrieved, petitioners, substituted by their son Ruel Villafria, filed a Motion for Reconsideration dated November 24, 2006 raising the trial court's lack of jurisdiction. It was alleged that when the Complaint for Judicial Partition with Annulment of Title and Recovery of Possession was filed, there was yet no settlement of Pedro's estate, determination as to the nature thereof, nor was there

an identification of the number of legitimate heirs. As such, the trial court ruled on the settlement of the intestate estate of Pedro in its ordinary jurisdiction when the action filed was for Judicial Partition. Considering that the instant action is really one for settlement of intestate estate, the trial court, sitting merely in its probate jurisdiction, exceeded its jurisdiction when it ruled upon the issues of forgery and ownership. Thus, petitioner argued that said ruling is void and has no effect for having been rendered without jurisdiction. The Motion for Reconsideration was, however, denied by the appellate court on February 26, 2007.

On appeal, this Court denied on June 20, 2007, petitioner's Petition for Review on Certiorari for submitting a verification of the petition, a certificate of non-forum shopping and an affidavit of service that failed to comply with the 2004 Rules on Notarial Practice regarding competent evidence of affiant's identities.18 In its Resolution19 dated September 26, 2007, this Court also denied petitioner's Motion for Reconsideration in the absence of any compelling reason to warrant a modification of the previous denial. Thus, the June 20, 2007 Resolution became final and executory on October 31, 2007 as certified by the Entry of Judgment issued by the Court.

On January 16, 2008, the Court further denied petitioner's motion for leave to admit a second motion for reconsideration of its September 26, 2007 Resolution, considering that the same is a prohibited pleading under Section 2, Rule 52, in relation to Section 4, Rule 56 of the 1997 Rules of Civil Procedure, as amended. Furthermore, petitioner's letter dated December 18, 2007 pleading the Court to take a second, look at his petition for review on certiorari and that a decision thereon be rendered based purely on its merits was noted without action.

Unsatisfied, petitioner wrote a letter dated March 24, 2008 addressed to then Chief Justice Reynato S. Puno praying that a decision on the case be rendered based on the .merits and not on formal requirements "as he stands to lose everything his parents had left him just because the verification against non-forum shopping is formally defective." However, in view of the Entry of Judgment having been made on October 31, 2007, the Court likewise noted said letter without action.22redarclaw

On November 27, 2008, the RTC issued an Order, issuing a Partial Writ of Execution of its October 1, 2001 Decision with respect to the portions disposing of petitioner's claims as affirmed by the CA.

The foregoing notwithstanding, petitioner filed, on February 11, 2009, a Petition for Annulment of Judgment and Order before the CA assailing the October 1, 2001 Decision as well as the November 27, 2008 Order of the RTC on the grounds of extrinsic fraud and lack of jurisdiction. In its Decision dated March 13, 2009, however, the CA dismissed the petition and affirmed the rulings of the trial court in the following wise:

Although the assailed Decision of the Court a quo has already become final and executory and in fact entry of judgment was issued on 31 October 2007, supra, nevertheless, to put the issues to rest, We deem it apropos to tackle the same.

The Petitioner argues that the assailed Decision and Order of the Court a quo, supra, should be annulled and set aside on the grounds of extrinsic fraud and lack of jurisdiction.

We are not persuaded,

x x x x

Section 2 of the Rules as stated above provides that the annulment of a judgment may "be based only on grounds of extrinsic fraud and lack of jurisdiction." In RP v. The Heirs of Sancho Magdato, the High Tribunal stressed that:LawlibraryofCRAlaw There is extrinsic fraud when "the unsuccessful party had been prevented from exhibiting fully his case, by fraud or deception practiced on him by his opponent, as by keeping him away from court, ... or where the defendant never had knowledge of the suit, being kept in ignorance by the acts of the plaintiff; ..."Otherwise put, extrinsic or collateral fraud pertains to such fraud which prevents the aggrieved party from having a trial or presenting his case to the court, or is used to procure the judgment without fair submission of the controversy. This refers to acts intended to keep the unsuccessful party away from the courts as when there is a false promise of compromise or when one is kept in ignorance of the suit.

The pivotal issues before Us are: (1) whether there was a time during the proceedings below that the Petitioners ever prevented from exhibiting fully their case, by fraud or deception, practiced on them by Respondents, and (2) whether the Petitioners were kept away from the court or kept in ignorance by the acts of the Respondent?We find nothing of that sort. Instead, what We deduced as We carefully delved into the evidentiary facts surrounding the instant case as well as the proceedings below as shown in the 36-page Decision of the Court a quo, is that the Petitioners were given ample time to rebut the allegations of the Respondents and had in fact addressed every detail of Respondent's cause of action against them. Thus, Petitioners' allegation of the Court a quo's lack of jurisdiction is misplaced.

Our pronouncement on the matter finds support in the explicit ruling of the Supreme Court in Sps. Santos, et al. v. Sps. Lumbao, thus:

It is elementary that the active participation of a party in a case pending against him before a court is tantamount to recognition of that court's jurisdiction and willingness to abide by the resolution of the case which will bar said party from later on impugning the court's jurisdiction.In fine, under the circumstances obtaining in this case the Petitioners are stopped from assailing the Court a quo's lack of jurisdiction.

Too, We do not find merit in the Petitioners' second issue, supra.

As mentioned earlier, entry of judgment had already been made on the assailed Decision and Order as early as 31 October 2007.

x x x x

It maybe that the doctrine of finality of judgments permits certain equitable remedies such as a petition for annulment. But the rules are clear. The annulment by the Court of Appeals of judgments or final orders and resolutions in civil actions of the Regional Trial Courts is resorted to only where the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of the petitioner, supra.If Petitioners lost their chance to avail themselves of the appropriate remedies or appeal before the Supreme Court, that is their own look out. The High Tribunal has emphatically pointed out in Mercado, et al. v. Security Bank Corporation, thus:

A principle almost repeated to satiety is that "an action for annulment of judgment cannot and is not a substitute for the lost remedy of-appeal." A party must have first availed of appeal, a motion for new trial or a petition for relief before an action for annulment can prosper. Its obvious rationale is to prevent the party from benefiting from his inaction or negligence. Also, the action for annulment of judgment must be based either on (a) extrinsic fraud or (b) lack of jurisdiction or denial of due process. Having failed to avail of the remedies and there being a clear showing that neither of the grounds was present, the petition must be dismissed. Only a disgruntled litigant would find such legal disposition unacceptable.23When the appellate court denied Petitioner's Motion for Reconsideration in its Resolution dated April 23, 2009, petitioner filed the instant Petition for Review on Certiorari on June 10, 2009, invoking the following ground:

I.

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT RULING THAT THE REGIONAL TRIAL COURT, BRANCH 14, NASUGBU, BATANGAS, ACTED WITHOUT JURISDICTION IN ENTERTAINING THE SPECIAL PROCEEDING FOR THE SETTLEMENT OF ESTATE OF PEDRO RIÑOZA AND THE CIVIL ACTION FOR ANNULMENT OF TITLE OF THE HEIRS AND THIRD PERSONS IN ONE PROCEEDING.

Petitioner asserts that while the complaint filed by respondents was captioned as "Judicial Partition with Annulment of Title and Recovery of Possession," the allegations therein show that the cause of action is actually one for settlement of estate of decedent Pedro. Considering that settlement of estate is a special proceeding cognizable by a probate court of limited jurisdiction while judicial partition with annulment of title and recovery of possession are ordinary civil actions cognizable by a court of general jurisdiction, the trial court exceeded its jurisdiction in entertaining the latter while it was sitting merely in its probate jurisdiction. This is

in view of the prohibition found in the Rules on the joinder of special civil actions and ordinary civil actions.25 Thus, petitioner argued that the ruling of the trial court is void and has no effect for having been rendered in without jurisdiction.

Petitioner also reiterates the arguments raised before the appellate court that since the finding of forgery relates only to the signature of respondents and not to their co-heirs who assented to the conveyance, the transaction should be considered valid as to them. Petitioner also denies the findings of the courts below that his parents are builders in bad faith for they only took possession of the subject properties after the execution of the transfer documents and after they paid the consideration on the sale.

The petition is bereft of merit.

Petitioner maintains that since respondents' complaint alleged the following causes of action, the same is actually one for settlement of estate and not of judicial partition:LawlibraryofCRAlaw

FIRST CAUSE OF ACTION

1. That Pedro L. Riñoza, Filipino and resident of Nasugbu, Batangas at the time of his death, died intestate on November 16, 1989. Copy of his death certificate is hereto attached as Annex "A";

2. That Plaintiffs together with the Defendants enumerated from paragraph 2-A to 2-J are the only known heirs of the above-mentioned decedent. The plaintiffs and the Defendants Rolando, Rafael, Antonio, Angelito, Lorna all surnamed Riñoza, and Myrna R. Limon or Myrna R. Rogador, Epifanio Belo and Ma. Theresa R. Demafelix are the decedent's legitimate children with his first wife, while Benita Tenorio Rifioza, is the decedent's widow and Bernadette Riñoza, the decedent's daughter with said widow. As such, said parties are co-owners by virtue of an intestate inheritance from the decedent, of the properties enumerated in the succeeding paragraph;

3. That the decedent left the following real properties all located in Nasugbu, Batangas:

x x x x

16. That the estate of decedent Pedro L. Riñoza has no known legal indebtedness;

17. That said estate remains undivided up to this date and it will be to the best interest of all heirs that same be partitioned judicially.

Petitioner is mistaken. It is true that some of respondents' causes of action pertaining to the properties left behind by the decedent Pedro, his known heirs, and the nature and extent of their interests thereon, may fall under an action for settlement of estate. However, a complete reading of the complaint would readily

show that, based on the nature of the suit, the allegations therein, and the reliefs prayed for, the action is clearly one for judicial partition with annulment of title and recovery of possession.

Section 1, Rule 74 of the Rules of Court provides:

RULE 74 Summary Settlement of Estate

Section 1. Extrajudicial settlement by agreement between heirs. — If the decedent left no will and no debts and the heirs are all of age, or the minors are represented by their judicial or legal representatives duly authorized for the purpose, the parties may without securing letters of administration, divide the estate among themselves as they see fit by means of a public instrument filed in the office of the register of deeds, and should they disagree, they may do so in an ordinary action of partition. If there is only one heir, he may adjudicate to himself the entire estate by means of an affidavit filled in the office of the register of deeds. The parties to an extrajudicial settlement, whether by public instrument or by stipulation in a pending action for partition, or the sole heir who adjudicates the entire estate to himself by means of an affidavit shall file, simultaneously with and as a condition precedent to the filing of the public instrument, or stipulation in the action for partition, or of the affidavit in the office of the register of deeds, a bond with the said register of deeds, in an amount equivalent to the value of the personal property involved as certified to under oath by the parties concerned and conditioned upon the payment of any just claim that may be filed under section 4 of this rule. It shall be presumed that the decedent left no debts if no creditor files a petition for letters of administration within two (2) years after the death of the decedent.

The fact of the extrajudicial settlement or administration shall be published in a newspaper of general circulation in the manner provided in the next succeeding section; but no extrajudicial settlement shall be binding upon any person who has not participated therein or had no notice thereof.27

In this relation, Section 1, Rule 69 of the Rules of Court provides:

Section 1. Complaint in action for partition of real estate. — A person having the right to compel the partition of real estate may do so as provided in this Rule, setting forth in his complaint the nature and extent of his title and an adequate description of the real estate of which partition is demanded and joining as defendants all other persons interested in the property.

As can be gleaned from the foregoing provisions, the allegations of respondents in their complaint are but customary, in fact, mandatory, to a complaint for partition of real estate. Particularly, the complaint alleged: (1) that Pedro died intestate; (2) that respondents, together with their co-heirs, are all of legal age, with the exception of one who is represented by a judicial representative duly authorized for the purpose; (3) that the heirs enumerated are the only known heirs of Pedro; (4) that there is an account and description of all real properties left by Pedro; (5) that Pedro's estate

has no known indebtedness; and (6) that respondents, as rightful heirs to the decedent's estate, pray for the partition of the same in accordance with the laws of intestacy. It is clear, therefore, that based on the allegations of the complaint, the case is one for judicial partition. That the complaint alleged causes of action identifying the heirs of the decedent, properties of the estate, and their rights thereto, does not perforce make it an action for settlement of estate.

It must be recalled that the general rule is that when a person dies intestate, or, if testate, failed to name an executor in his will or the executor so named is incompetent, or refuses the trust, or. fails to furnish the bond required by the Rules of Court, then the decedent's estate shall be judicially administered and the competent court shall appoint a qualified administrator in the order established in Section 6 of Rule 78 of the Rules of Court.29 An exception to this rule, however, is found in the aforequoted Section 1 of Rule 74 wherein the heirs of a decedent, who left no will and no debts due from his estate, may divide the estate either extrajudicially or in an ordinary action for partition without submitting the same for judicial administration nor applying for the appointment of an administrator by the court.30 The reason is that where the deceased dies without pending obligations, there is no necessity for the appointment of an administrator to administer the estate for them and to deprive the real owners of their possession to which they are immediately entitled.

In this case, it was expressly alleged in the complaint, and was not disputed, that Pedro died without a will, leaving his estate without any pending obligations. Thus, contrary to petitioner'.s contention, respondents were under no legal obligation to submit me subject properties of the estate to a special proceeding for settlement of intestate estate, and are, in fact, encouraged to have the same partitioned, judicially or extrajudicially, by Pereira v. Court of Appeals:

Section 1, Rule 74 of the Revised Rules of Court, however, does not preclude the heirs from instituting administration proceedings, even if the estate has no" debts or obligations, if they do not desire to resort for good reasons to an ordinary action for partition. While Section 1 allows the heirs to divide the estate among themselves as they may see fit, or to resort to an ordinary action for partition, the said provision does not compel them to do so if they have good reasons to take a different course of action. It should be noted that recourse to an administration proceeding even if the estate has no debts is sanctioned only if the heirs have good reasons for not resorting to an action for partition. Where' partition is possible, either in or out of court, the estate should not be burdened with an administration proceeding without good and compelling reasons.

Thus, it has been repeatedly held that when a person dies without leaving pending obligations to be paid, his heirs, whether of age or not, are not bound to submit the property to a judicial administration, which is always long and costly, or to apply for the appointment of an administrator by the Court. It has been uniformly held that in such case the judicial administration and the appointment of an administrator are superfluous and unnecessary proceedings.

Thus, respondents committed no error in filing an action for judicial partition instead of a special proceeding for the settlement of estate as the same is expressly permitted by law. That the complaint contained allegations inherent in an action for settlement of estate does not mean that there was a prohibited joinder of causes of action for questions as to the estate's properties as well as a determination of the heirs, their status as such, and the nature and extent of their titles to the estate, may also be properly ventilated in partition proceedings alone. In fact, a complete inventory of the estate may likewise be done during the partition proceedings, especially since the estate has no debts. Indeed, where the more expeditious remedy of partition is available to the heirs, then they may not be compelled to submit to administration proceedings, dispensing of the risks of delay and of the properties being dissipated.

Moreover, the fact that respondents' complaint also prayed for the annulment of title and recovery of possession does not strip the trial court off of its jurisdiction to hear and decide the case. Asking for the annulment of certain transfers of property could very well be achieved in an action for partition, as can be seen in cases where courts determine the parties' rights arising from complaints asking not only for the partition of estates but also for the annulment of titles and recovery of ownership and possession of property. In fact, in Bagayas v. Bagayas, wherein a complaint for annulment of sale and partition was dismissed by the trial court due to the impropriety of an action for annulment as it constituted a collateral attack on the certificates of title of the respondents therein, this Court found the dismissal to be improper in the following manner:

In Lacbayan v. Samoy, Jr. (Lacbayan) which is an action for partition premised on the existence or non-existence of co-ownership between the parties, the Court categorically pronounced that a resolution on the issue of ownership does not subject the Torrens title issued over the disputed realties to a collateral attack. It must be borne in mind that what cannot be collaterally attacked is the certificate of title and not the title itself. As pronounced in Lacbayan:

There is no dispute that a Torrens certificate of title cannot be collaterally attacked, but that rule is not material to the case at bar. What cannot be collaterally attacked is the certificate of title and not the title itself. The certificate referred to is that document issued by the Register of Deeds known as the TCT. In contrast, the title referred to by law means ownership which is, more often than not, represented by that document. Petitioner apparently confuses title with the certificate of title. Title as a concept of ownership should not be confused with the certificate of title as evidence of such ownership although both are interchangeably used. (Emphases supplied)

Thus, the RTC erroneously dismissed petitioner's petition for annulment of sale on the ground that it constituted a collateral attack since she was actually assailing Rogelio and Orlando's title to the subject lands and not any Torrens certificate of title over the same.

Indeed, an action for partition does not preclude the settlement of the issue of ownership. In fact, the determination as to the existence of the same is necessary in the resolution of an action for partition, as held in Municipality of Biñan v. Garcia:

The first phase of a partition and/or accounting suit is taken up with the determination of whether or not a co-ownership in fact exists, and a partition is proper (i.e., not otherwise legally proscribed) and may be made by voluntary agreement of all the parties interested in the property. This phase may end with a declaration that plaintiff is not entitled to have a partition either because a co-ownership does not exist, or partition is legally prohibited. It may end, on the other hand, with an adjudgment that a co-ownership does in truth exist, partition is proper in the premises and an accounting of rents and profits received by the defendant from the real estate in question is in order, x x x

The second phase commences when it appears that "the parties are unable to agree upon the partition" directed by the court. In that event[,] partition shall be done for the parties by the [c]ourt with the assistance of not more than three (3) commissioners. This second stage may well also deal with the rendition of the accounting itself and its approval by the [court after the parties have been accorded opportunity to be heard thereon, and an award for the recovery by the party or parties thereto entitled of their just share in the rents and profits of the real estate in question, x x x.

An action for partition, therefore, is premised on the existence or non-existence of co-ownership between the parties. Unless and until the issue of co-ownership is definitively resolved, it would be premature to effect a partition of an estate.

In view of the foregoing, petitioner's argument that the trial court acted without jurisdiction in entertaining - the action of settlement of estate and annulment of title in a single proceeding is clearly erroneous for the instant complaint is precisely one for judicial partition with annulment of title and recovery of possession, filed within the confines of applicable law and jurisprudence. Under Section 144 of Republic Act No. 7691 (RA 7691), amending Batas Pambansa Big. 129, the RTC shall exercise exclusive original jurisdiction over all civil actions in which the subject of the litigation is incapable of pecuniary estimation. Since the action herein was not merely for partition and recovery of ownership but also for annulment of title and documents, the action is incapable of pecuniary estimation and thus cognizable by the RTC. Hence, considering that the trial court clearly had jurisdiction in rendering its decision, the instant petition for annulment of judgment must necessarily fail.

Note that even if the instant action was one for annulment of title alone, without the prayer for judicial partition, the requirement of instituting a separate special proceeding for the determination of the status and rights of the respondents as putative heirs may be dispensed with, in light of the fact that the parties had voluntarily submitted the issue to the trial court and had already presented evidence regarding the issue of heirship. In Portugal v. Portugal-Beltran, the Court explained:

In the case at bar, respondent, believing rightly or wrongly that she was the sole heir to Portugal's estate, executed on February 15, 1988 the questioned Affidavit of Adjudication under the second sentence of Rule 74, Section 1 of the Revised Rules of Court. Said rule is an exception to the general rule that when a person dies leaving a property, it should be judicially administered and the competent court should appoint a qualified administrator, in the order established in Sec. 6, Rule 78 in case the deceased left no will, or in case he did, he failed to name an executor therein.

x x x x

It appearing, however, that in the present case the only property of the intestate estate of Portugal is the Caloocan parcel of land, to still subject it, under the circumstances of the case, to a special proceeding which could be long, hence, not expeditious, just to establish the status of petitioners as heirs is not only impractical; it is burdensome to the estate with the costs and expenses of an administration proceeding. And it is superfluous in light of the fact that the parties to the civil case - subject of the present case, could and had already in fact presented evidence before the trial court which assumed jurisdiction over the case upon the issues it defined during pre-trial.

In fine, under the circumstances of the present case, there being no compelling reason to still subject Portugal's estate to administration proceedings since a determination of petitioners' status as heirs could be achieved in the civil case filed by petitioners, the trial court should proceed to evaluate the evidence presented by the parties during the trial and render a decision thereon upon the issues it defined during pre-trial, x x x.

Thus, in view of the clarity of respondents' complaint and the causes of action alleged therein, as well as the fact that the trial court, in arriving at its decision, gave petitioner more than ample opportunity to advance his claims, petitioner cannot now be permitted to allege lack of jurisdiction just because the judgment rendered was adverse to them. To repeat, the action filed herein is one for judicial partition and not for settlement of intestate estate. Consequently, that respondents also prayed for the annulment of title and recovery of possession in the same proceeding does not strip the court off of its jurisdiction for asking for the annulment of certain transfers of property could very well be achieved in an action for partition.

As for petitioner's contention that the sale must be considered valid as to the heirs who assented to the conveyance as well as their allegation of good faith, this Court does not find any Compelling reason to deviate from the ruling of the appellate court. As sufficiently found by both courts below, the authenticity and due execution of the documents on which petitioner's claims are based were inadequately proven. They were undated, forged, and acknowledged before a notary public who was not commissioned as such on the date they were executed. They were never presented to the Register of Deeds for registration. Neither were the supposed notaries and buyers of the subject properties presented as witnesses.

While it may be argued that Benita, one of the co-heirs to the estate, actually acknowledged the sale of the resort, the circumstances surrounding the same militate against the fact of its occurrence. Not only was the Deed of Sale supposedly executed by Benita undated and unsigned by Pedro, but the document she presented purportedly evidencing her receipt of her share in the sale, did not refer to any sort of sale but to a previous loan obtained by Pedro and Benita from a bank.

Moreover, credence must be given on the appellate court's observations as to petitioners' actuations insofar as the transactions alleged herein are concerned. First, they were seemingly uncertain as to the number and/or identity of the properties bought by them.49 In their Answer, they gave the impression that" they bought both the resort and the family home and yet, during trial, Francisco Villafria claimed they only bought the resort. In fact, it was only then that they presented the subject Extra-Judicial Settlement and Deed of Sale.50Second, they never presented any other document which would evidence their actual payment of consideration to the selling heirs.51Third, in spite of the blatant legal infirmities of the subject documents of conveyance, petitioners still took possession of the properties, demolished several cottages, and introduced permanent improvements thereon.

In all, the Court agrees with the appellate court that petitioners failed to adequately substantiate, with convincing, credible and independently verifiable proof, their claim that they had, in fact, purchased the subject properties. The circumstances surrounding the purported transfers cast doubt on whether they actually took place. In substantiating their claim, petitioners relied solely on the Extra-Judicial Settlement and Deed of Sale, who utterly failed to prove their authenticity and due execution. They cannot, therefore, be permitted to claim absolute ownership of the subject lands based on the same.

Neither can they be considered as innocent purchasers for value and builders in good faith. Good faith consists in the belief of the builder that the land the latter is building on is one's own without knowledge of any defect or flaw in one's title.52 However, in view of the manifest defects in the instruments conveying their titles, petitioners should have been placed on guard. Yet, they still demolished several cottages and constructed improvement on the properties. Thus, their claim of good faith cannot be given credence.

Indeed, a judgment which has acquired finality becomes immutable and unalterable, hence, may no longer be modified in any respect except to correct clerical errors or mistakes, all the issues between the parties being deemed resolved and. laid to rest. It is a fundamental principle in our judicial system and essential to an effective and efficient administration of justice that, once a judgment has become final, the winning party be, not through a mere subterfuge, deprived of the fruits of the verdict. Exceptions to the immutability of final judgment are allowed only under the most extraordinary of circumstances.55 Yet, when petitioner is given more than ample opportunity to be heard, unbridled access to the appellate courts, as well as unbiased judgments rendered after a consideration of evidence

presented by the parties, as in the case at hand, the Court shall refrain from reversing the rulings of the courts below in the absence of any showing that the same were rendered with fraud or lack of jurisdiction.

WHEREFORE, premises considered, the instant petition is DENIED. The Decision and Resolution, dated March 13, 2009 and April 23, 2009, respectively, of the Court Appeals in CA-G.R. SP No. 107347, which affirmed the Judgment dated October 1, 2001 of the Regional Trial Court of Nasugbu, Batangas, Branch 14, in Civil Case No. 217, insofar as it concerns the resort covered by Transfer Certificates of Title No. 51354 and No. 51355, and family home covered by TCT No. 40807 and 40808, are AFFIRMED.

SO ORDERED.

G.R. No. 204029 June 4, 2014

AVELINA ABARIENTOS REBUSQUILLO [substituted by her heirs, except Emelinda R. Gualvez] and SALVADOR A. OROSCO, Petitioners,

vs. SPS. DOMINGO and EMELINDA REBUSQUILLO GUALVEZ and the CITY

ASSESSOR OF LEGAZPI CITY, Respondents.

VELASCO, JR., J.: Before Us is a Petition for Review on Certiorari under Rule 45 assailing the Decision1 and Resolution2 dated March 30, 2012 and September 25, 2012, respectively, of the Court of Appeals (CA) in CA-G.R. CV No. 93035, which reversed and set aside the Decision dated January 20, 2009 of the Regional Trial Court (RTC), Branch 4 in Legazpi City, in Civil Case No. 10407.

The antecedent facts may be summarized as follows:

On October 26, 2004, petitioners Avelina Abarientos Rebusquillo (Avelina) and Salvador Orosco (Salvador) filed a Complaint for annulment and revocation of an Affidavit of Self-Adjudication dated December 4, 2001 and a Deed of Absolute Sale dated February 6, 2002 before the court a quo. In it, petitioners alleged that Avelina was one of the children of Eulalio Abarientos (Eulalio) and Victoria Villareal (Victoria). Eulalio died intestate on July 3, 1964, survived by his wife Victoria, six legitimate children, and one illegitimate child, namely: (1) Avelina Abarientos-Rebusquillo, petitioner in this case; (2) Fortunata Abarientos-Orosco, the mother of petitioner Salvador; (3) Rosalino Abarientos; (4) Juan Abarientos; (5) Feliciano Abarientos; (6) Abraham Abarientos; and (7) Carlos Abarientos. His wife Victoria eventually died intestate on June 30, 1983.

On his death, Eulalio left behind an untitled parcel of land in Legazpi City consisting of two thousand eight hundred sixty-nine(2,869) square meters, more or less, which was covered by Tax Declaration ARP No. (TD) 0141.

In 2001, Avelina was supposedly made to sign two (2) documents by her daughter Emelinda Rebusquillo-Gualvez (Emelinda) and her son-in-law Domingo Gualvez (Domingo), respondents in this case, on the pretext that the documents were needed to facilitate the titling of the lot. It was only in 2003, so petitioners claim, that Avelina realized that what she signed was an Affidavit of Self-Adjudication and a Deed of Absolute Sale in favor of respondents.

As respondents purportedly ignored her when she tried to talk to them, Avelina sought the intervention of the RTC to declare null and void the two (2) documents in order to reinstate TD0141 and so correct the injustice done to the other heirs of Eulalio.

In their answer, respondents admitted that the execution of the Affidavit of Self-Adjudication and the Deed of Sale was intended to facilitate the titling of the subject property. Paragraph 9 of their Answer reads:

Sometime in the year 2001, [petitioner] Avelina together with the other heirs of Eulalio Abarientos brought out the idea to [respondent] Emelinda Rebusquillo-Gualvez to have the property described in paragraph 8 of the complaint registered under the Torrens System of Registration. To facilitate the titling of the property, so that the same could be attractive to prospective buyers, it was agreed that the property’s tax declaration could be transferred to [respondents] Spouses [Emelinda] R. Gualvez and Domingo Gualvez who will spend all the cost of titling subject to reimbursement by all other heirs in case the property is sold; That it was agreed that all the heirs will be given their corresponding shares on the property; That pursuant to said purpose Avelina Abarientos-Rebusquillo with the knowledge and consent of the other heirs signed and executed an Affidavit of Self-Adjudication and a Deed of Absolute Sale in favor of [respondents] Gualvez. In fact, [petitioner] Avelina Rebusquillo was given an advance sum of FIFTY THOUSAND PESOS (P50,000.00) by [respondent] spouses and all the delinquent taxes paid by [respondents].

After trial, the RTC rendered its Decision dated January 20, 2009 annulling the Affidavit of Self-Adjudication and the Deed of Absolute Sale executed by Avelina on the grounds that (1) with regard to the Affidavit of Self-Adjudication, she was not the sole heir of her parents and was not therefore solely entitled to their estate; and (2) in the case of the Deed of Absolute Sale, Avelina did not really intend to sell her share in the property as it was only executed to facilitate the titling of such property. The dispositive portion of the RTC Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered, as follows: 1. The subject Affidavit of Self-Adjudication of the Estate of the Deceased

Spouses Eulalio Abarientos and Victoria Villareal, dated December 4, 2001 as well as the subject Deed of Absolute Sale, notarized on February 6, 2002, covering the property described in par. 8 of the Amended Complaint are hereby ordered ANNULLED;

2. That defendant City Assessor’s Officer of Legazpi City is hereby ordered to CANCEL the Tax Declaration in the name of private [respondents] spouses Gualvez under ARP No. 4143 and to REINSTATE the Tax Declaration under ARP No. 0141 in the name of Eulalio Abarientos;

3. By way of restitution, [petitioner] Avelina Abarientos Rebusquillo is hereby ordered to return or refund to [respondents] spouses Domingo Gualvez and Emelinda Gualvez, the P50,000.00 given by the latter spouses to the former.

Assailing the trial court’s decision, respondents interposed an appeal with the CA arguing that the Deed of Sale cannot be annulled being a public document that has for its object the creation and transmission of real rights over the immovable subject property. The fact that Avelina’s testimony was not offered in evidence, so respondents argued, the signature on the adverted deed remains as concrete proof of her agreement to its terms. Lastly, respondents contended that the Complaint filed by petitioners Avelina and Salvador before the RTC is not the proper remedy provided by law for those compulsory heirs unlawfully deprived of their inheritance. Pending the resolution of respondents’ appeal, Avelina died intestate on September 1, 2009 leaving behind several living heirs5 including respondent Emelinda.

In its Decision dated March 30, 2012, the appellate court granted the appeal and reversed and set aside the Decision of the RTC. The CA held that the RTC erred in annulling the Affidavit of Self-Adjudication simply on petitioners’ allegation of the existence of the heirs of Eulalio, considering that issues on heirship must be made in administration or intestate proceedings, not in an ordinary civil action. Further, the appellate court observed that the Deed of Absolute Sale cannot be nullified as it is a notarized document that has in its favor the presumption of regularity and is entitled to full faith and credit upon its face.

Aggrieved by the CA’s Decision, petitioner Avelina, as substituted by her heirs except respondent Emelinda, and petitioner Salvador are now before this Court ascribing reversible error on the part of the appellate court.

We find merit in the instant petition.

It has indeed been ruled that the declaration of heirship must be made in a special proceeding, not in an independent civil action. However, this Court had likewise held that recourse to administration proceedings to determine who heirs are is sanctioned only if there is a good and compelling reason for such recourse. Hence, the Court had allowed exceptions to the rule requiring administration proceedings as when the parties in the civil case already presented their evidence regarding the issue of heirship, and the RTC had consequently rendered judgment upon the issues it defined during the pre-trial.

In Portugal v. Portugal-Beltran, this Court held:

In the case at bar, respondent, believing rightly or wrongly that she was the sole heir to Portugal’s estate, executed on February 15, 1988 the questioned Affidavit of Adjudication under the second sentence of Rule 74, Section 1 of the Revised Rules of Court. Said rule is an exception to the general rule that when a person dies leaving a property, it should be judicially administered and the competent court should appoint a qualified administrator, in the order established in Sec. 6, Rule 78 in case the deceased left no will, or in case he did, he failed to name an executor therein.

Petitioners claim, however, to be the exclusive heirs of Portugal. A probate or intestate court, no doubt, has jurisdiction to declare who are the heirs of a deceased.

It appearing, however, that in the present case the only property of the intestate estate of Portugal is the Caloocan parcel of land to still subject it, under the circumstances of the case, to a special proceeding which could be long, hence, not expeditious, just to establish the status of petitioners as heirs is not only impractical; it is burdensome to the estate with the costs and expenses of an administration proceeding. And it is superfluous in light of the fact that the parties to the civil case - subject of the present case, could and had already in fact presented evidence before the trial court which assumed jurisdiction over the case upon the issues it defined during pre-trial.

In fine, under the circumstances of the present case, there being no compelling reason to still subject Portugal’s estate to administration proceedings since a determination of petitioners’ status as heirs could be achieved in the civil case filed by petitioners, the trial court should proceed to evaluate the evidence presented by the parties during the trial and render a decision thereon upon the issues it defined during pre-trial x x x. (emphasis supplied)

Similar to Portugal, in the present case, there appears to be only one parcel of land being claimed by the contending parties as the inheritance from Eulalio. It would be more practical, as Portugal teaches, to dispense with a separate special proceeding for the determination of the status of petitioner Avelina as sole heir of Eulalio, especially in light of the fact that respondents spouses Gualvez admitted in court that they knew for a fact that petitioner Avelina was not the sole heir of Eulalio and that petitioner Salvador was one of the other living heirs with rights over the subject land. As confirmed by the RTC in its Decision, respondents have stipulated and have thereby admitted the veracity of the following facts during the pre-trial:

IV – UNCONTROVERTED FACTS: (Based on the stipulation of facts in the Pre-Trial Order)

A. x x x

B. [Petitioners] and private [respondents] spouses Gualvez admitted the following facts:

1. Identity of the parties; 2. Capacity of the [petitioners] and private [respondents] to sue and be sued; 3. [Petitioner] Avelina Abarientos-Rebusquilllo is not the only surviving heir of deceased spouses Eulalio and Victoria Abarientos; 4. Petitioner Salvador Orosco is a co-owner/possessor of a portion of the subject property; 5. Fortunata Abarientos-Orosco is the sister of Avelina Abarientos; 6. [Respondent] Emelinda Rebusquillo-Gualves is a daughter of [petitioner] Avelina A. Rebusquillo; 7. [Petitioner] Avelina Rebusquillo was born on Nov. 10, 1923; 8. The existence of Affidavit of Self-Adjudication of Estate of the Deceased and Deed of Absolute Sale executed by [petitioner] Avelina A. Rebusquillo on the subject property. (emphasis supplied)

In light of the admission of respondents spouses Gualvez, it is with more reason that a resort to special proceeding will be but an unnecessary superfluity. Accordingly, the court a quo had properly rendered judgment on the validity of the Affidavit of Self-Adjudication executed by Avelina. As pointed out by the trial court, an Affidavit of Self-Adjudication is only proper when the affiant is the sole heir of the decedent. The second sentence of Section 1, Rule 74 of the Rules of Court is patently clear that self-adjudication is only warranted when there is only one heir:

Section 1. Extrajudicial settlement by agreement between heirs. –– x x x If there is only one heir, he may adjudicate to himself the entire estate by means of an affidavit filed in the office of the register of deeds. x x x (emphasis supplied)

As admitted by respondents, Avelina was not the sole heir of Eulalio. In fact, as admitted by respondents, petitioner Salvador is one of the co-heirs by right of representation of his mother. Without a doubt, Avelina had perjured herself when she declared in the affidavit that she is "the only daughter and sole heir of spouses EULALIO ABARIENTOS AND VICTORIA VILLAREAL." The falsity of this claim renders her act of adjudicating to herself the inheritance left by her father invalid. The RTC did not, therefore, err in granting Avelina’s prayer to declare the affidavit null and void and so correct the wrong she has committed.

In like manner, the Deed of Absolute Sale executed by Avelina in favor of respondents was correctly nullified and voided by the RTC. Avelina was not in the right position to sell and transfer the absolute ownership of the subject property to respondents. As she was not the sole heir of Eulalio and her Affidavit of Self-Adjudication is void, the subject property is still subject to partition. Avelina, in fine, did not have the absolute ownership of the subject property but only an aliquot portion. What she could have transferred to respondents was only the ownership of such aliquot portion. It is apparent from the admissions of respondents and the records of this case that Avelina had no intention to transfer the ownership, of whatever extent, over the property to respondents. Hence, the Deed of Absolute Sale is nothing more than a simulated contract.

The Civil Code provides: Art. 1345. Simulation of a contract may be absolute or relative. The former takes place when the parties do not intend to be bound at all; the latter, when the parties conceal their true agreement. (emphasis supplied)

Art. 1346. An absolutely simulated or fictitious contract is void. A relative simulation, when it does not prejudice a third person and is not intended for any purpose contrary to law, morals, good customs, public order or public policy binds the parties to their real agreement.

In Heirs of Policronio Ureta Sr. v. Heirs of Liberato Ureta, this Court explained the concept of the simulation of contracts:

In absolute simulation, there is a colorable contract but it has no substance as the parties have no intention to be bound by it. The main characteristic of an absolute simulation is that the apparent contract is not really desired or intended to produce legal effect or in any way alter the juridical situation of the parties. As a result, an absolutely simulated or fictitious contract is void, and the parties may recover from each other what they may have given under the contract. However, if the parties state a false cause in the contract to conceal their real agreement, the contract is relatively simulated and the parties are still bound by their real agreement. Hence, where the essential requisites of a contract are present and the simulation refers only to the content or terms of the contract, the agreement is absolutely binding and

enforceable between the parties and their successors in interest. (emphasis supplied)

In the present case, the true intention of the parties in the execution of the Deed of Absolute Sale is immediately apparent from respondents’ very own Answer to petitioners’ Complaint. As respondents themselves acknowledge, the purpose of the Deed of Absolute Sale was simply to "facilitate the titling of the [subject] property," not to transfer the ownership of the lot to them. Furthermore, respondents concede that petitioner Salvador remains in possession of the property and that there is no indication that respondents ever took possession of the subject property after its supposed purchase. Such failure to take exclusive possession of the subject property or, in the alternative, to collect rentals from its possessor, is contrary to the principle of ownership and is a clear badge of simulation that renders the whole transaction void.

Contrary to the appellate court’s opinion, the fact that the questioned Deed of Absolute Sale was reduced to writing and notarized does not accord it the quality of incontrovertibility otherwise provided by the parole evidence rule. The form of a contract does not make an otherwise simulated and invalid act valid. The rule on parole evidence is not, as it were, ironclad. Sec. 9, Rule 130 of the Rules of Court provides the exceptions:

Section 9. Evidence of written agreements. – x x x

However, a party may present evidence to modify, explain or add to the terms of written agreement if he puts in issue in his pleading: (a) An intrinsic ambiguity, mistake or imperfection in the written agreement; (b) The failure of the written agreement to express the true intent and agreement of the parties thereto; (c) The validity of the written agreement; or (d) The existence of other terms agreed to by the parties or their successors in interest after the execution of the written agreement.

The term "agreement" includes wills. (emphasis supplied)

The failure of the Deed of Absolute Sale to express the true intent and agreement of the contracting parties was clearly put in issue in the present case. Again, respondents themselves admit in their Answer that the Affidavit of Self-Adjudication and the Deed of Absolute Sale were only executed to facilitate the titling of the property. The RTC is, therefore, justified to apply the exceptions provided in the second paragraph of Sec. 9, Rule 130 to ascertain the true intent of the parties, which shall prevail over the letter of the document. That said, considering that the Deed of Absolute Sale has been shown to be void for being absolutely simulated, petitioners are not precluded from presenting evidence to modify, explain or add to the terms of the written agreement.

WHEREFORE, the instant petition is GRANTED. The Decision dated March 30, 2012 and the Resolution dated September 25, 2012 of the Court of Appeals in CA-

G.R. CV No. 93035 are hereby REVERSED and SET ASIDE. The Decision dated January 20, 2009 in Civil Case No. 10407 of the Regional Trial Court (RTC),Branch 4 in Legazpi City is REINSTATED.

SO ORDERED.

G.R. No. 194366 October 10, 2012

NAPOLEON D. NERI, ALICIA D. NERI-MONDEJAR, VISMINDA D. NERI-CHAMBERS, ROSA D. NERI-MILLAN, DOUGLAS D. NERI, EUTROPIA D.

ILLUT-COCKINOS AND VICTORIA D. ILLUT-PIALA, Petitioners, vs.

HEIRS OF HADJI YUSOP UY AND JULPHA* IBRAHIM UY, Respondents.

PERLAS-BERNABE, J.:

In this Petition for Review on Certiorari1 under Rule 45 of the Rules of Court, petitioners Napoleon D. Neri (Napoleon), Alicia D. Neri-Mondejar (Alicia), Visminda D. Neri-Chambers (Visminda), Rosa D. Neri-Millan (Rosa), Douglas D. Neri (Douglas), Eutropia D. Illut-Cockinos (Eutropia), and Victoria D. Illut-Piala (Victoria) seek to reverse and set aside the April 27, 2010 Decision2 and October 18, 2010 Resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 01031-MIN which annulled the October 25, 2004 Decision4 of the Regional Trial Court (RTC) of Panabo City, Davao del Norte and instead, entered a new one dismissing petitioners’ complaint for annulment of sale, damages and attorney’s feesagainst herein respondents heirs of spouses Hadji Yusop Uy and Julpha Ibrahim Uy (heirs of Uy).

The Facts

During her lifetime, Anunciacion Neri (Anunciacion) had seven children, two (2) from her first marriage with Gonzalo Illut (Gonzalo), namely: Eutropia and Victoria, and five (5) from her second marriage with Enrique Neri (Enrique), namely: Napoleon, Alicia, Visminda, Douglas and Rosa. Throughout the marriage of spouses Enrique and Anunciacion, they acquired several homestead properties with a total area of 296,555 square meters located in Samal, Davao del Norte, embraced by Original Certificate of Title (OCT) Nos. (P-7998) P-21285, (P-14608) P-51536 and P-20551 (P-8348)7issued on February 15, 1957, August 27, 1962 and July 7, 1967, respectively.

On September 21, 1977, Anunciacion died intestate. Her husband, Enrique, in his personal capacity and as natural guardian of his minor children Rosa and Douglas, together with Napoleon, Alicia, and Vismindaexecuted an Extra-Judicial Settlement of the Estate with Absolute Deed of Sale8 on July 7, 1979, adjudicating among themselves the said homestead properties, and thereafter, conveying themto the late spouses Hadji Yusop Uy and Julpha Ibrahim Uy (spouses Uy)for a consideration of P 80,000.00.

On June 11, 1996, the children of Enrique filed a complaint for annulment of saleof the said homestead properties against spouses Uy (later substituted by their heirs)before the RTC, docketed as Civil Case No.96-28, assailing the validity of the sale for having been sold within the prohibited period. Thecomplaint was later amended to include Eutropia and Victoriaas additional plaintiffs for having been

excluded and deprived of their legitimes as childrenof Anunciacion from her first marriage.

In their amended answer with counterclaim, the heirs of Uy countered that the sale took place beyond the 5-year prohibitory period from the issuance of the homestead patents. They also denied knowledge of Eutropia and Victoria’s exclusionfrom the extrajudicial settlement and sale of the subject properties, and interposed further the defenses of prescription and laches.

The RTC Ruling

On October 25, 2004, the RTC rendered a decision ordering, among others, the annulment of the Extra-Judicial Settlement of the Estate with Absolute Deed of Sale. It ruled that while the sale occurred beyond the 5-year prohibitory period, the sale is still void because Eutropia and Victoria were deprived of their hereditary rights and that Enrique had no judicial authority to sell the shares of his minor children, Rosa and Douglas.

Consequently, it rejected the defenses of laches and prescription raised by spouses Uy, who claimed possession of the subject properties for 17 years, holding that co-ownership rights are imprescriptible.

The CA Ruling

On appeal, the CAreversed and set aside the ruling of the RTC in its April 27, 2010 Decision and dismissed the complaint of the petitioners. It held that, while Eutropia and Victoria had no knowledge of the extrajudicial settlement and sale of the subject properties and as such, were not bound by it, the CA found it unconscionable to permit the annulment of the sale considering spouses Uy’s possession thereof for 17 years, and thatEutropia and Victoriabelatedlyfiled their actionin 1997, ormore than two years fromknowledge of their exclusion as heirs in 1994 when their stepfather died. It, however, did not preclude the excluded heirs from recovering their legitimes from their co-heirs.

Similarly, the CA declared the extrajudicial settlement and the subsequent saleas valid and binding with respect to Enrique and hischildren, holding that as co-owners, they have the right to dispose of their respective shares as they consider necessary or fit.While recognizing Rosa and Douglas to be minors at that time, they were deemed to have ratified the sale whenthey failed to question it upon reaching the age of majority.Italso found laches to have set in because of their inaction for a long period of time.

The Issues

In this petition, petitioners imputeto the CA the following errors:

I. WHEN IT UPHELDTHE VALIDITY OF THE "EXTRA JUDICIAL SETTLEMENT OF THE ESTATE WITH ABSOLUTE DEED OF SALE" AS FAR AS THE

SHARES OF EUTROPIA AND VICTORIA WERE CONCERNED, THEREBY DEPRIVING THEM OF THEIR INHERITANCE;

II. WHEN IT DID NOT NULLIFY OR ANNUL THE "EXTRA JUDICIAL SETTLEMENT OF THE ESTATE WITH ABSOLUTE DEED OF SALE" WITH RESPECT TO THE SHARESOF ROSA AND DOUGLAS, THEREBY DEPRIVING THEM OF THEIR INHERITANCE; and

III. WHEN IT FOUND THAT LACHES OR PRESCRIPTION HAS SET IN.

The Ruling of the Court

The petitionis meritorious.

It bears to stress that all the petitioners herein are indisputably legitimate children of Anunciacion from her first and second marriages with Gonzalo and Enrique, respectively, and consequently, are entitled to inherit from her in equal shares, pursuant to Articles 979 and 980 of the Civil Code which read:

ART. 979. Legitimate children and their descendants succeed the parents and other ascendants, without distinction as to sex or age, and even if they should come from different marriages.

xxx ART. 980. The children of the deceased shall always inherit from him in their own right, dividing the inheritance in equal shares.

As such, upon the death of Anunciacion on September 21, 1977, her children and Enrique acquired their respective inheritances,9 entitling them to their pro indiviso shares in her whole estate, as follows:

Enrique 9/16 (1/2 of the conjugal assets + 1/16) Eutropia 1/16 Victoria 1/16 Napoleon 1/16 Alicia 1/16 Visminda 1/16 Rosa 1/16 Douglas 1/16

Hence, in the execution of the Extra-Judicial Settlement of the Estate with Absolute Deed of Sale in favor of spouses Uy, all the heirs of Anunciacionshould have participated. Considering that Eutropia and Victoria were admittedly excluded and that then minors Rosa and Douglas were not properly represented therein, the settlement was not valid and binding uponthem and consequently, a total nullity.

Section 1, Rule 74 of the Rules of Court provides:

SECTION 1. Extrajudicial settlement by agreement between heirs. – x x x

The fact of the extrajudicial settlement or administration shall be published in a newspaper of general circulation in the manner provided in the next succeeding section; but no extrajudicial settlement shall be binding upon any person who has not participated therein or had no notice thereof. (Underscoring added)

The effect of excluding the heirs in the settlement of estate was further elucidated in Segura v. Segura, thus:

It is clear that Section 1 of Rule 74 does not apply to the partition in question which was null and void as far as the plaintiffs were concerned. The rule covers only valid partitions. The partition in the present case was invalid because it excluded six of the nine heirs who were entitled to equal shares in the partitioned property. Under the rule "no extrajudicial settlement shall be binding upon any person who has not participated therein or had no notice thereof." As the partition was a total nullity and did not affect the excluded heirs, it was not correct for the trial court to hold that their right to challenge the partition had prescribed after two years from its execution…

However, while the settlement of the estate is null and void, the subsequent sale of the subject propertiesmade by Enrique and his children, Napoleon, Alicia and Visminda, in favor of the respondents isvalid but only with respect to their proportionate shares therein.It cannot be denied that these heirs have acquired their respective shares in the properties of Anunciacion from the moment of her death and that, as owners thereof, they can very well sell their undivided share in the estate.

With respect to Rosa and Douglas who were minors at the time of the execution of the settlement and sale, their natural guardian and father, Enrique, represented them in the transaction. However, on the basis of the laws prevailing at that time, Enrique was merely clothed with powers of administration and bereft of any authority to dispose of their 2/16 shares in the estate of their mother, Anunciacion.

Articles 320 and 326 of the Civil Code, the laws in force at the time of the execution of the settlement and sale, provide:

ART. 320. The father, or in his absence the mother, is the legal administrator of the property pertaining to the child under parental authority. If the property is worth more than two thousand pesos, the father or mother shall give a bond subject to the approval of the Court of First Instance.

ART. 326. When the property of the child is worth more than two thousand pesos, the father or mother shall be considered a guardian of the child’s property, subject to the duties and obligations of guardians under the Rules of Court.

Corollarily, Section 7, Rule 93 of the Rules of Court also provides:

SEC. 7. Parents as Guardians. – When the property of the child under parental authority is worth two thousand pesos or less, the father or the mother, without the

necessity of court appointment, shall be his legal guardian. When the property of the child is worth more than two thousand pesos, the father or the mother shall be considered guardian of the child’s property, with the duties and obligations of guardians under these Rules, and shall file the petition required by Section 2 hereof. For good reasons, the court may, however, appoint another suitable persons.

Administration includes all acts for the preservation of the property and the receipt of fruits according to the natural purpose of the thing. Any act of disposition or alienation, or any reduction in the substance of the patrimony of child, exceeds the limits of administration. Thus, a father or mother, as the natural guardian of the minor under parental authority, does not have the power to dispose or encumber the property of the latter. Such power is granted by law only to a judicial guardian of the ward’s property and even then only with courts’ prior approval secured in accordance with the proceedings set forth by the Rules of Court.

Consequently, the disputed sale entered into by Enrique in behalf of his minor children without the proper judicial authority, unless ratified by them upon reaching the age of majority, is unenforceable in accordance with Articles 1317 and 1403(1) of the Civil Code which provide:

ART. 1317. No one may contract in the name of another without being authorized by the latter or unless he has by law a right to represent him.

A contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party.

ART. 1403. The following contracts are unenforceable, unless they are ratified: (1) Those entered into the name of another person by one who has been given no

authority or legal representation, or who has acted beyond his powers;

xxx

Ratification means that one under no disability voluntarily adopts and gives sanction to some unauthorized act or defective proceeding, which without his sanction would not be binding on him. It is this voluntary choice, knowingly made, which amounts to a ratification of what was theretofore unauthorized, and becomes the authorized act of the party so making the ratification. Once ratified, expressly or impliedly such as when the person knowingly received benefits from it, the contract is cleansed from all its defects from the moment it was constituted, as it has a retroactive effect.

Records, however, show that Rosa had ratified the extrajudicial settlement of the estate with absolute deed of sale. In Napoleon and Rosa’s Manifestation18 before the RTC dated July 11, 1997, they stated:

"Concerning the sale of our parcel of land executed by our father, Enrique Neri concurred in and conformed to by us and our other two sisters and brother (the other plaintiffs), in favor of Hadji Yusop Uy and his spouse Hadja Julpa Uy on July 7, 1979, we both confirmed that the same was voluntary and freely made by all of us and therefore the sale was absolutely valid and enforceable as far as we all plaintiffs in this case are concerned;" (Underscoring supplied)

In their June 30, 1997 Joint-Affidavit, Napoleon and Rosa also alleged:

"That we are surprised that our names are included in this case since we do not have any intention to file a case against Hadji Yusop Uy and Julpha Ibrahim Uy and their family and we respect and acknowledge the validity of the Extra-Judicial Settlement of the Estate with Absolute Deed of Sale dated July 7, 1979;" (Underscoring supplied)

Clearly, the foregoing statements constitutedratification of the settlement of the estate and the subsequent sale, thus, purging all the defects existing at the time of its execution and legitimizing the conveyance of Rosa’s 1/16 share in the estate of Anunciacion to spouses Uy. The same, however, is not true with respect to Douglas for lack of evidence showing ratification.

Considering, thus, that the extrajudicial settlement with sale is invalid and therefore, not binding on Eutropia, Victoria and Douglas, only the shares ofEnrique, Napoleon, Alicia, Visminda and Rosa in the homestead properties have effectivelybeen disposed in favor of spouses Uy. "A person can only sell what he owns, or is authorized to sell and the buyer can as a consequence acquire no more than what the sellercan legally transfer." On this score, Article 493 of the Civil Codeis relevant, which provides:

Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership.

Consequently, spouses Uy or their substituted heirs became pro indiviso co-owners of the homestead properties with Eutropia, Victoria and Douglas, who retained title to their respective 1/16 shares. They were deemed to be holding the 3/16 shares of Eutropia, Victoria and Douglas under an implied constructive trust for the latter’s benefit, conformably with Article 1456 of the Civil Code which states:"if property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes." As such, it is only fair, just and equitable that the amount paid for their shares equivalent to P 5,000.0021 each or a total of P 15,000.00 be returned to spouses Uy with legal interest.

On the issue of prescription, the Court agrees with petitioners that the present action has not prescribed in so far as it seeks to annul the extrajudicial settlement of the estate. Contrary to the ruling of the CA, the prescriptive period of 2 years provided in Section 1 Rule 74 of the Rules of Court reckoned from the execution of the extrajudicial settlement finds no application to petitioners Eutropia, Victoria and Douglas, who were deprived of their lawful participation in the subject estate. Besides, an "action or defense for the declaration of the inexistence of a contract does not prescribe" in accordance with Article 1410 of the Civil Code.

However, the action to recover property held in trust prescribes after 10 years from the time the cause of action accrues,22 which is from the time of actual notice in case of unregistered deed.23 In this case, Eutropia, Victoria and Douglas claimed to have knowledge of the extrajudicial settlement with sale after the death of their father, Enrique, in 1994 which spouses Uy failed to refute. Hence, the complaint filed in 1997 was well within the prescriptive period of 10 years.

WHEREFORE, the instant petition is GRANTED. The April 27, 2010 Decision and October 18, 2010 Resolution of the Court of Appeals are REVERSED and SET ASIDE and a new judgment is entered:

1. Declaring the Extra-Judicial Settlement of the Estate of Anunciacion Neri NULL and VOID; 2. Declaring the Absolute Deed of Sale in favor of the late spouses Hadji Yusop Uy and Julpha Ibrahim Uy as regards the 13/16 total shares of the late Enrique Neri, Napoleon Neri, Alicia D. Neri-Mondejar, Visminda D. Neri-Chambers and Rosa D. Neri-Millan VALID; 3. Declaring Eutropia D. Illut-Cockinos, Victoria D. Illut-Piala and Douglas D. Neri as the LAWFUL OWNERS of the 3/16 portions of the subject homestead properties, covered by Original Certificate of Title Nos. (P-7998) P-2128, (P-14608) P-5153 and P-20551 (P-8348); and 4. Ordering the estate of the late Enrique Neri, as well as Napoleon Neri, Alicia D. Neri-Mondejar, Visminda D. Neri-Chambers and Rosa D. Neri-Millan to return to the respondents jointly and solidarily the amount paid corresponding to the 3/16 shares of Eutropia, Victoria and Douglas in the total amount of P 15,000.00, with legal interest at 6% per annum computed from the time of payment until finality of this decision and 12% per annum thereafter until fully paid.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 156536 October 31, 2006

JOSEPH CUA, petitioner, vs.

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

D E C I S I O N

AZCUNA, J.: This is a petition for review under Rule 45 of the Rules of Court seeking the reversal of the decision dated March 26, 2002, and the resolution dated December 17, 2002, of the Court of Appeals in CA-G.R. SP No. 59869 entitled "Gloria A. Vargas, Aurora Vargas, Ramon Vargas, Marites Vargas, Edelina Vargas and Gemma Vargas v. Joseph Cua.”

The facts are as follows:

A parcel of residential land with an area of 99 square meters located in San Juan, Virac, Catanduanes was left behind by the late Paulina Vargas. On February 4, 1994, a notarized Extra Judicial Settlement Among Heirs was executed by and among Paulina Vargas' heirs, namely Ester Vargas, Visitacion Vargas, Juan Vargas, Zenaida V. Matienzo, Rosario V. Forteza, Andres Vargas, Gloria Vargas, Antonina Vargas and Florentino Vargas, partitioning and adjudicating unto themselves the lot in question, each one of them getting a share of 11 square meters. Florentino, Andres, Antonina and Gloria, however, did not sign the document. Only Ester, Visitacion, Juan, Zenaida and Rosario signed it. The Extra Judicial Settlement Among Heirs was published in the Catanduanes Tribune for three consecutive weeks.

On November 15, 1994, an Extra Judicial Settlement Among Heirs with Sale4 was again executed by and among the same heirs over the same property and also with the same sharings. Once more, only Ester, Visitacion, Juan, Zenaida and Rosario signed the document and their respective shares totaling 55 square meters were sold to Joseph Cua, petitioner herein.

According to Gloria Vargas, the widow of Santiago Vargas and one of respondents herein, she came to know of the Extra Judicial Settlement Among Heirs with Sale dated November 16, 1994 only when the original house built on the lot was being demolished sometime in May 1995. She likewise claimed she was unaware that an earlier Extra Judicial Settlement Among Heirs dated February 4, 1994 involving the same property had been published in the Catanduanes Tribune.

After knowing of the sale of the 55 square meters to petitioner, Gloria Vargas tried to redeem the property, with the following letter7 sent to petitioner on her behalf:

29th June 1995 Mr. Joseph Cua Capilihan, Virac, Catanduanes

Sir:

This is in behalf of my client, Ms. Aurora Vargas,8 (c/o Atty. Prospero V. Tablizo) one of the lawful heirs of the late Paulina Vargas, original owner of Lot No. 214 of Virac, Poblacion covered by ARP No. 031-0031 in her name.

I understand that a document "Extra Judicial Settlement Among Heirs with Sale" was executed by some of my client's co-heirs and alleged representatives of other co-heirs, by virtue of which document you acquired by purchase from the signatories to the said document, five (5) shares with a total area of fifty-five square meters of the above-described land.

This is to serve you notice that my client shall exercise her right of legal redemption of said five (5) shares as well as other shares which you may likewise have acquired by purchase. And you are hereby given an option to agree to legal redemption within a period of fifteen (15) days from your receipt hereof.

Should you fail to convey to me your agreement within said 15-day-period, proper legal action shall be taken by my client to redeem said shares.

Thank you. Very truly yours, (Sgd.) JUAN G. ATENCIA

When the offer to redeem was refused and after having failed to reach an amicable settlement at the barangay level,9 Gloria Vargas filed a case for annulment of Extra Judicial Settlement and Legal Redemption of the lot with the Municipal Trial Court (MTC) of Virac, Catanduanes against petitioner and consigned the amount of P100,000 which is the amount of the purchase with the Clerk of Court on May 20, 1996. Joining her in the action were her children with Santiago, namely, Aurora, Ramon, Marites, Edelina and Gemma, all surnamed Vargas.

Subsequently, Carlos Gianan, Jr. and Gloria Arcilla, heirs of the alleged primitive owner of the lot in question, Pedro Lakandula, intervened in the case.

Respondents claimed that as co-owners of the property, they may be subrogated to the rights of the purchaser by reimbursing him the price of the sale. They likewise alleged that the 30-day period following a written notice by the vendors to their co-owners for them to exercise the right of redemption of the property had not yet set in as no written notice was sent to them. In effect, they claimed that the Extra Judicial Settlement Among Heirs and the Extra Judicial Settlement Among Heirs with Sale were null and void and had no legal and binding effect on them.

After trial on the merits, the MTC rendered a decision in favor of petitioner, dismissing the complaint as well as the complaint-in-intervention for lack of merit, and declaring the Deed of Extra Judicial Settlement Among Heirs with Sale valid and binding. The MTC upheld the sale to petitioner because the transaction purportedly occurred after the partition of the property among the co-owner heirs. The MTC opined that the other heirs could validly dispose of their respective shares. Moreover, the MTC found that although there was a failure to strictly comply with the requirements under Article 1088 of the Civil Code for a written notice of sale to be served upon respondents by the vendors prior to the exercise of the former's right of redemption, this deficiency was cured by respondents' actual knowledge of the sale, which was more than 30 days before the filing of their complaint, and their consignation of the purchase price with the Clerk of Court, so that the latter action came too late. Finally, the MTC ruled that respondents failed to establish by competent proof petitioner's bad faith in purchasing the portion of the property owned by respondents' co-heirs.

On appeal, the Regional Trial Court (RTC), Branch 42, of Virac, Catanduanes affirmed the MTC decision in a judgment dated November 25, 1999. The matter was thereafter raised to the Court of Appeals (CA).

The CA reversed the ruling of both lower courts in the assailed decision dated March 26, 2002, declaring that the Extra Judicial Settlement Among Heirs and the Extra Judicial Settlement Among Heirs with Sale, dated February 4, 1994 and November 15, 1994, respectively, were void and without any legal effect. The CA held that, pursuant to Section 1, Rule 74 of the Rules of Court, the extrajudicial settlement made by the other co-heirs is not binding upon respondents considering the latter never participated in it nor did they ever signify their consent to the same. His motion for reconsideration having been denied, petitioner filed the present petition for review.

The issues are:

Whether heirs are deemed constructively notified and bound, regardless of their failure to participate therein, by an extrajudicial settlement and partition of estate when the extrajudicial settlement and partition has been duly published; and, Assuming a published extrajudicial settlement and partition does not bind persons who did not participate therein, whether the written notice required to be served by an heir to his co-heirs in connection with the sale of hereditary rights to a stranger before partition under Article 1088 of the Civil Code can be dispensed with when such co-heirs have actual knowledge of the sale such that the 30-day period within which a co-heir can exercise the right to be subrogated to the rights of a purchaser shall commence from the date of actual knowledge of the sale.

Petitioner argues, as follows:

Firstly, the acquisition by petitioner of the subject property subsequent to the extrajudicial partition was valid because the partition was duly published. The publication of the same constitutes due notice to respondents and signifies their

implied acquiescence thereon. Respondents are therefore estopped from denying the validity of the partition and sale at this late stage. Considering that the partition was valid, respondents no longer have the right to redeem the property.

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

Thirdly, the MTC had no jurisdiction over the complaint because its subject matter was incapable of pecuniary estimation. The complaint should have been filed with the RTC.

Fourthly, there was a non-joinder of indispensable parties, the co-heirs who sold their interest in the subject property not having been impleaded by respondents.

Fifthly, the appeal to the CA should have been dismissed as it was not properly verified by respondents. Gloria Vargas failed to indicate that she was authorized to represent the other respondents (petitioners therein) to initiate the petition. Moreover, the verification was inadequate because it did not state the basis of the alleged truth and/or correctness of the material allegations in the petition.

The petition lacks merit.

The procedure outlined in Section 1 of Rule 74 is an ex parte proceeding. The rule plainly states, however, that persons who do not participate or had no notice of an extrajudicial settlement will not be bound thereby. It contemplates a notice that has been sent out or issued before any deed of settlement and/or partition is agreed upon (i.e., a notice calling all interested parties to participate in the said deed of extrajudicial settlement and partition), and not after such an agreement has already been executed as what happened in the instant case with the publication of the first deed of extrajudicial settlement among heirs.

The publication of the settlement does not constitute constructive notice to the heirs who had no knowledge or did not take part in it because the same was notice after the fact of execution. The requirement of publication is geared for the protection of creditors and was never intended to deprive heirs of their lawful participation in the decedent's estate. In this connection, the records of the present case confirm that respondents never signed either of the settlement documents, having discovered their existence only shortly before the filing of the present complaint. Following Rule 74, these extrajudicial settlements do not bind respondents, and the partition made without their knowledge and consent is invalid insofar as they are concerned.

This is not to say, though, that respondents' co-heirs cannot validly sell their hereditary rights to third persons even before the partition of the estate. The heirs who actually participated in the execution of the extrajudicial settlements, which included the sale to petitioner of their pro indiviso shares in the subject property, are bound by the same. Nevertheless, respondents are given the right to redeem these shares pursuant to Article 1088 of the Civil Code. The right to redeem was never lost because respondents were never notified in writing of the actual sale by their

co-heirs. Based on the provision, there is a need for written notice to start the period of redemption, thus:

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

It bears emphasis that the period of one month shall be reckoned from the time that a co-heir is notified in writing by the vendor of the actual sale. Written notice is indispensable and mandatory, actual knowledge of the sale acquired in some other manner by the redemptioner notwithstanding. It cannot be counted from the time advance notice is given of an impending or contemplated sale. The law gives the co-heir thirty days from the time written notice of the actual sale within which to make up his or her mind and decide to repurchase or effect the redemption.

Though the Code does not prescribe any particular form of written notice nor any distinctive method for written notification of redemption, the method of notification remains exclusive, there being no alternative provided by law. This proceeds from the very purpose of Article 1088, which is to keep strangers to the family out of a joint ownership, if, as is often the case, the presence of outsiders be undesirable and the other heir or heirs be willing and in a position to repurchase the share sold.

It should be kept in mind that the obligation to serve written notice devolves upon the vendor co-heirs because the latter are in the best position to know the other co-owners who, under the law, must be notified of the sale. This will remove all uncertainty as to the fact of the sale, its terms and its perfection and validity, and quiet any doubt that the alienation is not definitive. As a result, the party notified need not entertain doubt that the seller may still contest the alienation.

Considering, therefore, that respondents' co-heirs failed to comply with this requirement, there is no legal impediment to allowing respondents to redeem the shares sold to petitioner given the former's obvious willingness and capacity to do so.

Likewise untenable is petitioner's contention that he is a builder in good faith. Good faith consists in the belief of the builder that the land the latter is building on is one's own without knowledge of any defect or flaw in one's title. Petitioner derived his title from the Extra Judicial Settlement Among Heirs With Sale dated November 15, 1994. He was very much aware that not all of the heirs participated therein as it was evident on the face of the document itself. Because the property had not yet been partitioned in accordance with the Rules of Court, no particular portion of the property could have been identified as yet and delineated as the object of the sale. This is because the alienation made by respondents' co-heirs was limited to the portion which may be allotted to them in the division upon the termination of the co-ownership. Despite this glaring fact, and over the protests of respondents, petitioner

still constructed improvements on the property. For this reason, his claim of good faith lacks credence.

As to the issue of lack of jurisdiction, petitioner is estopped from raising the same for the first time on appeal. Petitioner actively participated in the proceedings below and sought affirmative ruling from the lower courts to uphold the validity of the sale to him of a portion of the subject property embodied in the extrajudicial settlement among heirs. Having failed to seasonably raise this defense, he cannot, under the peculiar circumstances of this case, be permitted to challenge the jurisdiction of the lower court at this late stage. While it is a rule that a jurisdictional question may be raised at any time, an exception arises where estoppel has already supervened.

Estoppel sets in when a party participates in all stages of a case before challenging the jurisdiction of the lower court. One cannot belatedly reject or repudiate its decision after voluntarily submitting to its jurisdiction, just to secure affirmative relief against one's opponent or after failing to obtain such relief. The Court has, time and again, frowned upon the undesirable practice of a party submitting a case for decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction when adverse.

Petitioner's fourth argument, that there is a non-joinder of indispensable parties, similarly lacks merit. An indispensable party is a party-in-interest without whom there can be no final determination of an action and who is required to be joined as either plaintiff or defendant. The party's interest in the subject matter of the suit and in the relief sought is so inextricably intertwined with the other parties that the former's legal presence as a party to the proceeding is an absolute necessity. Hence, an indispensable party is one whose interest will be directly affected by the court's action in the litigation. In the absence of such indispensable party, there cannot be a resolution of the controversy before the court which is effective, complete, or equitable.

In relation to this, it must be kept in mind that the complaint filed by respondents ultimately prayed that they be allowed to redeem the shares in the property sold by their co-heirs. Significantly, the right of the other heirs to sell their undivided share in the property to petitioner is not in dispute. Respondents concede that the other heirs acted within their hereditary rights in doing so to the effect that the latter completely and effectively relinquished their interests in the property in favor of petitioner. Petitioner thus stepped into the shoes of the other heirs to become a co-owner of the property with respondents. As a result, only petitioner's presence is absolutely required for a complete and final determination of the controversy because what respondents seek is to be subrogated to his rights as a purchaser.

Finally, petitioner contends that the petition filed by respondents with the CA should have been dismissed because the verification and certificate of non-forum shopping appended to it were defective, citing specifically the failure of respondent Gloria Vargas to: (1) indicate that she was authorized to represent her co-respondents in the petition, and (2) state the basis of the alleged truth of the allegations.

The general rule is that the certificate of non-forum shopping must be signed by all the plaintiffs or petitioners in a case and the signature of only one of them is insufficient. Nevertheless, the rules on forum shopping, which were designed to promote and facilitate the orderly administration of justice, should not be interpreted with such absolute literalness as to subvert their own ultimate and legitimate objective. Strict compliance with the provisions regarding the certificate of non-forum shopping merely underscores its mandatory nature in that the certification cannot be altogether dispensed with or its requirements completely disregarded. Under justifiable circumstances, the Court has relaxed the rule requiring the submission of such certification considering that although it is obligatory, it is not jurisdictional.

Thus, when all the petitioners share a common interest and invoke a common cause of action or defense, the signature of only one of them in the certification against forum shopping substantially complies with the rules.34 The co-respondents of respondent Gloria Vargas in this case were her children. In order not to defeat the ends of justice, the Court deems it sufficient that she signed the petition on their behalf and as their representative.

WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioner. SO ORDERED.

G.R. No. 155555. August 16, 2005

ISABEL P. PORTUGAL and JOSE DOUGLAS PORTUGAL JR., Petitioners, vs.

LEONILA PORTUGAL-BELTRAN, Respondent.

CARPIO MORALES, J.:

Petitioners Isabel P. Portugal and her son, Jose Douglas Portugal Jr., assail the September 24, 20021 Decision of the Court of Appeals affirming that of the Regional Trial Court (RTC) of Caloocan City, Branch 1242 which dismissed, after trial, their complaint for annulment of title for failure to state a cause of action and lack of jurisdiction.

From the records of the case are gathered the following material allegations claims of the parties which they sought to prove by testimonial and documentary evidence during the trial of the case:

On November 25, 1942, Jose Q. Portugal (Portugal) married Paz Lazo.

On May 22, 1948, Portugal married petitioner Isabel de la Puerta.

On September 13, 1949, petitioner Isabel gave birth to a boy whom she named Jose Douglas Portugal Jr., her herein co-petitioner.

On April 11, 1950, Paz gave birth to a girl, Aleli, later baptized as Leonila Perpetua Aleli Portugal, herein respondent.

On May 16, 1968, Portugal and his four (4) siblings executed a Deed of Extra-Judicial Partition and Waiver of Rights8 over the estate of their father, Mariano Portugal, who died intestate on November 2, 1964.9 In the deed, Portugal’s siblings waived their rights, interests, and participation over a 155 sq. m. parcel of land located in Caloocan in his favor.

On January 2, 1970, the Registry of Deeds for Caloocan City issued Transfer Certificate of Title (TCT) No. 34292 covering the Caloocan parcel of land in the name of "Jose Q. Portugal, married to Paz C. Lazo.”

On February 18, 1984, Paz died.

On April 21, 1985, Portugal died intestate.

On February 15, 1988, respondent executed an "Affidavit of Adjudication by Sole Heir of Estate of Deceased Person" adjudicating to herself the Caloocan parcel of land. TCT No. 34292/T-172 in Portugal’s name was subsequently cancelled and in its stead TCT No. 159813 was issued by the Registry of Deeds for Caloocan City on March 9, 1988 in the name of respondent, "Leonila Portugal-Beltran, married to Merardo M. Beltran, Jr."

Later getting wind of the death in 1985 of Portugal and still later of the 1988 transfer by respondent of the title to the Caloocan property in her name, petitioners filed before the RTC of Caloocan City on July 23, 1996 a complaint against respondent for annulment of the Affidavit of Adjudication executed by her and the transfer certificate of title issued in her name.

In their complaint, petitioners alleged that respondent is not related whatsoever to the deceased Portugal, hence, not entitled to inherit the Caloocan parcel of land and that she perjured herself when she made false representations in her Affidavit of Adjudication.

Petitioners accordingly prayed that respondent’s Affidavit of Adjudication and the TCT in her name be declared void and that the Registry of Deeds for Caloocan be ordered to cancel the TCT in respondent’s name and to issue in its stead a new one in their (petitioners’) name, and that actual, moral and exemplary damages and attorney’s fees and litigation expenses be awarded to them.

Following respondent’s filing of her answer, the trial court issued a Pre-Trial Order chronicling, among other things, the issues as follows:

a. Which of the two (2) marriages contracted by the deceased Jose Q. Portugal Sr., is valid?

b. Which of the plaintiff . . . Jose Portugal Jr. and defendant Leonila P. Beltran is the legal heir of the deceased Jose Q. Portugal Sr.?

c. Whether or not TCT No. 159813 was issued in due course and can still be contested by plaintiffs.

d. Whether or not plaintiffs are entitled to their claims under the complaint.16 (Underscoring supplied)

After trial, the trial court, by Decision of January 18, 2001, after giving an account of the testimonies of the parties and their witnesses and of their documentary evidence, without resolving the issues defined during pre-trial, dismissed the case for lack of cause of action on the ground that petitioners’ status and right as putative heirs had not been established before a probate (sic) court, and lack of jurisdiction over the case, citing Heirs of Guido and Isabel Yaptinchay v. Del Rosario.

In relying on Heirs of Guido and Isabel Yaptinchay, the trial court held:

The Heirs of Yaptinchay case arose from facts not dissimilar to the case at bar. x x x In the instant case, plaintiffs presented a Marriage Contract, a Certificate of Live Birth, pictures (sic) and testimonial evidence to establish their right as heirs of the decedent. Thus, the preliminary act of having a status and right to the estate of the decedent, was sought to be determined herein. However, the establishment of a status, a right, or a particular fact is remedied through a special proceeding (Sec. 3(c), Rule 1, 1997 Rules of Court), not an ordinary civil action whereby a party sues another for the enforcement or protection of a right, or the protection or redress of a wrong (ibid, a). The operative term in the former is "to establish", while in the latter,

it is "to enforce", a right. Their status and right as putative heirs of the decedent not having been established, as yet, the Complaint failed to state a cause of action.

The court, not being a probate (sic) court, is without jurisdiction to rule on plaintiffs’ cause to establish their status and right herein. Plaintiffs do not have the personality to sue (Secs. 1 and 2, Rule 3, in relation to Secs. 1 and 2, Rule 2, supra). (Italics in the original; emphasis and underscoring supplied).

Petitioners thereupon appealed to the Court of Appeals, questioning the trial court’s ratio decedendi in dismissing the case as diametrically opposed to this Court’s following ruling in Cariño v. Cariño, viz:

Under Article 40 of the Family Code, the absolute nullity of a previous marriage may be invoked for purposes of remarriage on the basis solely of a final judgment declaring such previous marriage void. Meaning, where the absolute nullity of a previous marriage is sought to be invoked for purposes of contracting a second marriage, the sole basis acceptable in law, for said projected marriage to be free from legal infirmity, is a final judgment declaring the previous void. (Domingo v. Court of Appeals, 226 SCRA 572, 579 [1993]) However, for purposes other than remarriage, no judicial action is necessary to declare a marriage an absolute nullity. For other purposes, such as but not limited to the determination of heirship, legitimacy or illegitimacy of a child, settlement of estate, dissolution of property regime, or a criminal case for that matter, the court may pass upon the validity of marriage even after the death of the parties thereto, and even in a suit not directly instituted to question the validity of said marriage, so long as it is essential to the determination of the case. (Niñal, et al. v. Bayadog, GR No. 13378, March 14, 2000). In such cases, evidence must be adduced, testimonial or documentary, to prove the existence of grounds rendering such a previous marriage an absolute nullity. These need not be limited solely to an earlier final judgment of a court declaring such previous marriage void. (Domingo v. Court of Appeals, supra) (Emphasis and underscoring supplied).

Conceding that the ruling in Cariño was promulgated (in 2001) subsequent to that of Heirs of Guido and Isabel Yaptinchay (in 1999), the appellate court found Cariño to be inapplicable, however, to the case in this wise:

To be borne in mind is the fact that the main issue in the Cariño case was the validity of the two marriages contracted by the deceased SPO4 Santiago Cariño, whose death benefits was the bone of contention between the two women both named Susan (viz., Susan Nicdao Cariño and Susan Yee Cariño) both of whom he married. It is not disputed in said case that SPO4 S. Cariño contracted two marriages with said two women during his lifetime, and the only question was: which of these two marriages was validly celebrated? The award of the death benefits of the deceased Cariño was thus, merely an incident to the question of which of the two marriages was valid. Upon the other hand, the case at bench is of a different milieu. The main issue here is the annulment of title to property. The only undisputed fact in this case is that the deceased Jose Portugal, during his lifetime, owned a parcel of land covered by Transfer Certificate of Title (TCT) No. T-34292.

However, here come two contending parties, — herein plaintiffs-appellants and defendant-appellee, — both now insisting to be the legal heir(s) of the decedent. x x x. The status and rights of the parties herein have not, therefore, been definitively established, as yet. x x x. Necessarily and naturally, such questions as to such status or right must be properly ventilated in an appropriate special proceeding, not in an ordinary civil action, whereunder a party sues another for the enforcement or protection of a right, or the protection or redress of a wrong. The institution of an ordinary civil suit for that purpose in the present case is thus impermissible. For it is axiomatic that what the law prohibits or forbids directly, it cannot permit or allow indirectly. To permit, or allow, a declaration of heirship, or the establishment of the legitimacy or illegitimacy of a child to be determined in an ordinary civil action, not in an appropriate special proceeding brought for that purpose, is thus to impinge upon this axiom. x x x21 (Emphasis in the original, underscoring supplied).

The appellate court, by Decision of September 24, 2002, thus affirmed the trial court’s dismissal of the case.

Hence, the present Petition for Review on Certiorari, faulting the appellate court to have erred when

I. . . . it affirmed the RTC decision dismissing the initiatory complaint as it failed to state a cause of action. II. . . . (i) it applied the ruling in Heirs of Guido [and Isabel] Yaptingchay despite the existence of a later and contrary ruling in Cariño, and (ii) when the Honorable CA and the lower court failed to render judgment based on the evidence presented relative to the issues raised during pre-trial, . . . (Emphasis and underscoring supplied).

Petitioners thus prayed as follows:

WHEREFORE, it is respectfully prayed of this Honorable Supreme Court that the questioned CA decision be reversed, and a new one entered in accordance with the prayers set forth in the instant complaint based on the above disquisition and evidence adduced by petitioners in the court a quo.

IN THE ALTERNATIVE, should the Honorable Supreme Court find that the pronouncements in Cariño apply, a decision be entered remanding to the court a quo the determination of the issues of which of the two marriages is valid, and the determination of "heirship" and legitimacy of Jose Jr. and Leonila preparatory to the determination of the annulment of title issued in the name of Leonila.

Other relief and remedy just and equitable in the premises are likewise prayed for. (Underscoring supplied).

Petitioners, in the main, argue that the appellate court misapplied Heirs of Guido and Isabel Yaptinchay and in effect encouraged multiplicity of suits which is

discouraged by this Court as a reading of Cariño shows; that Cariño allows courts to pass on the determination of heirship and the legitimacy or illegitimacy of a child so long as it is necessary to the determination of the case; and that contrary to the appellate court’s ruling, they had established their status as compulsory heirs.

In the main, the issue in the present petition is whether petitioners have to institute a special proceeding to determine their status as heirs before they can pursue the case for annulment of respondent’s Affidavit of Adjudication and of the TCT issued in her name.

In the above-cited case of Heirs of Guido and Isabel Yaptinchay, the therein petitioners executed on March 17, 1994 an extrajudicial settlement of the estate of the deceased Guido and Isabel Yaptinchay, "owners-claimants" of the two lots mentioned therein. They later discovered on August 26, 1994 that a portion, if not all, of the two lots had been titled in the name of the therein respondent Golden Bay Realty and Development Corporation which in turn sold portions thereof to the therein individual respondents. The therein petitioners Heirs thus filed a complaint for annulment of titles. The therein respondents moved to dismiss the case for failure of the therein petitioners to, inter alia, state a cause of action and prove their status as heirs. The trial court granted the motion to dismiss in this wise:

But the plaintiffs who claimed to be the legal heirs of the said Guido and Isabel Yaptinchay have not shown any proof or even a semblance of it—except the allegations that they are the legal heirs of the aforementioned Yaptinchays—that they have been declared the legal heirs of the deceased couple. Now, the determination of who are the legal heirs of the deceased couple must be made in the proper special proceedings in court, and not in an ordinary suit for reconveyance of property. This must take precedence over the action for reconveyance . . . (Italics in the original; underscoring supplied).

On petition for certiorari by the Heirs, this Court, albeit holding that the petition was an improper recourse, found that the trial court did not commit grave abuse of discretion in dismissing the case. Citing Litam et al. v. Rivera28 and Solivio v. Court of Appeals, this Court held that "the declaration of heirship can be made only in a special proceeding inasmuch as the petitioners here are seeking the establishment of a status or right.”

In the above-cited case of Litam,30 Gregorio Dy Tam instituted a special proceeding for issuance of letters of administration before the then Court of First Instance (CFI) of Rizal, alleging in his petition that he is the son of Rafael Litam who died in Manila on January 10, 1951 and is survived by him and his therein named seven (7) siblings who are children of the decedent by his marriage to Sia Khin celebrated in China in 1911; that the decedent contracted in 1922 in the Philippines another marriage with Marcosa Rivera; and that the decedent left neither a will nor debt. Dy Tam thus prayed for the issuance of letters of administration to Marcosa Rivera, "the surviving spouse of the decedent." The CFI granted the petition and issued letters of administration to, on Marcosa’s request, her nephew Arminio Rivera.

While the special proceeding was pending, Dy Tam and his purported siblings filed a civil case before the same court, against the estate of Rafael Litam administrator Arminio Rivera and Remedios R. Espiritu, duly appointed guardian of Marcosa. In their complaint, Dy Tam and his purported siblings substantially reproduced the allegations made in his petition in the special proceeding, with the addition of a list of properties allegedly acquired during the marriage of the decedent and Marcosa.

Finding the issue raised in the civil case to be identical to some unresolved incidents in the special proceeding, both were jointly heard by the trial court, following which it rendered a decision in the civil case dismissing it, declaring, inter alia, that the plaintiffs Dy Tam et al. are not the children of the decedent whose only surviving heir is Marcosa.

On appeal to this Court by Dy Tam et al., one of the two issues raised for determination was whether they are the legitimate children of Rafael Litam.

This Court, holding that the issue hinged on whether Rafael Litam and Sia Khin were married in 1911, and whether Rafael Litam is the father of appellants Dy Tam et al., found "substantially correct" the trial court’s findings of fact and its conclusion that, among other things, the birth certificates of Dy Tam et al. "do not establish the identity of the deceased Rafael Litam and the persons named therein as father [and] it does not appear in the said certificates of birth that Rafael Litam had in any manner intervened in the preparation and filing thereof"; and that "[t]he other documentary evidence presented by [them] [is] entirely immaterial and highly insufficient to prove the alleged marriage between the deceased Rafael Litam and Sia Khin and [their] alleged status . . . as children of said decedent.”

This Court went on to opine in Litam, however, that "the lower court should not have declared, in the decision appealed from, that Marcosa is the only heir of the decedent, for such declaration is improper in the [civil case], it being within the exclusive competence of the court in [the] [s]pecial [p]roceeding.”

In Solivio, also cited in Heirs of Guido and Isabel Yaptinchay, there was a special proceeding for the settlement of the estate of the deceased, who was a soltero, filed before the RTC of Iloilo. In the special proceeding, Branch 23 of said court declared as sole heir Celedonia Solivio, the decedent’s maternal aunt-half sister of his mother. Concordia Javellana-Villanueva, the decedent‘s paternal aunt-sister of his father, moved to reconsider the court’s order declaring Celedonia Solivio as sole heir of the decedent, she claiming that she too was an heir. The court denied the motion on the ground of tardiness. Instead of appealing the denial of her motion, Concordia filed a civil case against Celedonia before the same RTC, for partition, recovery of possession, ownership and damages. The civil case was raffled to Branch 26 of the RTC, which rendered judgment in favor of Concordia. On appeal by Celedonia, the appellate court affirmed the said judgment.

On petition for review filed before this Court by Celedonia who posed, among other issues, "whether Branch 26 of the RTC of Iloilo had jurisdiction to entertain [the civil

action] for partition and recovery of Concordia Villanueva’s share of the estate of [the deceased] while the [estate] proceedings . . . were still pending . . . in Branch 23 of the same court," this Court held that "[i]n the interest of orderly procedure and to avoid confusing and conflicting dispositions of a decedent’s estate, a court should not interfere with [estate] proceedings pending in a co-equal court," citing Guilas v. CFI Judge of Pampanga.

This Court, however, in Solivio, upon "[c]onsidering that the estate proceedings are still pending, but nonetheless [therein private respondent-Concordia Villanueva] had lost her right to have herself declared as co-heir in said proceedings, opted to proceed to discuss the merits of her claim in the interest of justice," and declared her an heir of the decedent.

In Guilas cited in Solivio, a project of partition between an adopted daughter, the therein petitioner Juanita Lopez Guilas (Juanita), and her adoptive father was approved in the proceedings for the settlement of the testate estate of the decedent-adoptive mother, following which the probate court directed that the records of the case be archived.

Juanita subsequently filed a civil action against her adoptive father to annul the project of partition on the ground of lesion, preterition and fraud, and prayed that her adoptive father immediately deliver to her the two lots allocated to her in the project of partition. She subsequently filed a motion in the testate estate proceedings for her adoptive father to deliver to her, among other things, the same two lots allotted to her.

After conducting pre-trial in the civil case, the trial court, noting the parties’ agreement to suspend action or resolution on Juanita’s motion in the testate estate proceedings for the delivery to her of the two lots alloted to her until after her complaint in the civil case had been decided, set said case for trial.

Juanita later filed in the civil case a motion to set aside the order setting it for trial on the ground that in the amended complaint she, in the meantime, filed, she acknowledged the partial legality and validity of the project of partition insofar as she was allotted the two lots, the delivery of which she was seeking. She thus posited in her motion to set aside the April 27, 1966 order setting the civil case for hearing that there was no longer a prejudicial question to her motion in the testate estate proceedings for the delivery to her of the actual possession of the two lots. The trial court, by order of April 27, 1966, denied the motion.

Juanita thereupon assailed the April 27, 1966 order before this Court.

The probate court’s approval of the project of partition and directive that the records of the case be sent to the archives notwithstanding, this Court held that the testate estate proceedings had not been "legally terminated" as Juanita’s share under the project of partition had not been delivered to her. Explained this Court:

As long as the order of the distribution of the estate has not been complied with, the probate proceedings cannot be deemed closed and terminated (Siguiong vs. Tecson, supra.); because a judicial partition is not final and conclusive and does not prevent the heir from bringing an action to obtain his share, provided the prescriptive period therefor has not elapse (Mari vs. Bonilla, 83 Phil., 137). The better practice, however, for the heir who has not received his share, is to demand his share through a proper motion in the same probate or administration proceedings, or for re-opening of the probate or administrative proceedings if it had already been closed, and not through an independent action, which would be tried by another court or Judge which may thus reverse a decision or order of the probate o[r] intestate court already final and executed and re-shuffle properties long ago distributed and disposed of (Ramos vs. Ortuzar, 89 Phil. 730, 741-742; Timbol vs. Cano, supra,; Jingco vs. Daluz, L-5107, April 24, 1953, 92 Phil. 1082; Roman Catholic vs. Agustines, L-14710, March 29, 1960, 107 Phil., 455, 460-461).34 (Emphasis and underscoring supplied).

This Court thus set aside the assailed April 27, 1966 order of the trial court setting the civil case for hearing, but allowed the civil case to continue because it "involves no longer" the two lots adjudicated to Juanita.

The common doctrine in Litam, Solivio and Guilas in which the adverse parties are putative heirs to the estate of a decedent or parties to the special proceedings for its settlement is that if the special proceedings are pending, or if there are no special proceedings filed but there is, under the circumstances of the case, a need to file one, then the determination of, among other issues, heirship should be raised and settled in said special proceedings. Where special proceedings had been instituted but had been finally closed and terminated, however, or if a putative heir has lost the right to have himself declared in the special proceedings as co-heir and he can no longer ask for its re-opening, then an ordinary civil action can be filed for his declaration as heir in order to bring about the annulment of the partition or distribution or adjudication of a property or properties belonging to the estate of the deceased.

In the case at bar, respondent, believing rightly or wrongly that she was the sole heir to Portugal’s estate, executed on February 15, 1988 the questioned Affidavit of Adjudication under the second sentence of Rule 74, Section 1 of the Revised Rules of Court. Said rule is an exception to the general rule that when a person dies leaving a property, it should be judicially administered and the competent court should appoint a qualified administrator, in the order established in Sec. 6, Rule 78 in case the deceased left no will, or in case he did, he failed to name an executor therein.

Petitioners claim, however, to be the exclusive heirs of Portugal. A probate or intestate court, no doubt, has jurisdiction to declare who are the heirs of a deceased.

It appearing, however, that in the present case the only property of the intestate estate of Portugal is the Caloocan parcel of land, to still subject it, under the

circumstances of the case, to a special proceeding which could be long, hence, not expeditious, just to establish the status of petitioners as heirs is not only impractical; it is burdensome to the estate with the costs and expenses of an administration proceeding. And it is superfluous in light of the fact that the parties to the civil case – subject of the present case, could and had already in fact presented evidence before the trial court which assumed jurisdiction over the case upon the issues it defined during pre-trial.

In fine, under the circumstances of the present case, there being no compelling reason to still subject Portugal’s estate to administration proceedings since a determination of petitioners’ status as heirs could be achieved in the civil case filed by petitioners,39 the trial court should proceed to evaluate the evidence presented by the parties during the trial and render a decision thereon upon the issues it defined during pre-trial, which bear repeating, to wit:

1. Which of the two (2) marriages contracted by the deceased Jose Q. Portugal, is valid;

2. Which of the plaintiff, Jose Portugal Jr. and defendant Leonila P. Beltran is the legal heir of the deceased Jose Q. Portugal (Sr.);

3. Whether or not TCT No. 159813 was issued in due course and can still be contested by plaintiffs;

4. Whether or not plaintiffs are entitled to their claim under the complaint.

WHEREFORE, the petition is hereby GRANTED. The assailed September 24, 2002 Decision of the Court of Appeals is hereby SET ASIDE.

Let the records of the case be REMANDED to the trial court, Branch 124 of the Regional Trial Court of Caloocan City, for it to evaluate the evidence presented by the parties and render a decision on the above-enumerated issues defined during the pre-trial.

No costs. SO ORDERED.

Section 2. Summary settlement of estates of small value.

G.R. No. L-23419 June 27, 1975

INTESTATE ESTATE OF THE DECEASED GELACIO SEBIAL. BENJAMINA SEBIAL, petitioner-appellee,

vs. ROBERTA SEBIAL, JULIANO SEBIAL and HEIRS OF BALBINA SEBIAL,

oppositors-appellants. AQUINO, J.: Gelacio Sebial died intestate in 1943 in Pinamungajan Cebu. According to the appellants, Gelacio Sebial, by his first wife Leoncia Manikis, who allegedly died in 1919, begot three children named Roberta, Balbina and Juliano. By his second wife, Dolores Enad, whom he allegedly married in 1927, he supposedly begot six children named Benjamina, Valentina, Ciriaco, Gregoria, Esperanza and Luciano. On June 17, 1960 Benjamina Sebial filed in the Court of First Instance of Cebu a verified petition for the settlement of Gelacio Sebial's estate. She prayed that she be appointed administratrix thereof (Spec. Proc. No. 2049-R). Roberta Sebial opposed the petition on the ground that the estate of Gelacio Sebial had already been partitioned among his children and that, if an administration proceeding was necessary, she, Roberta Sebial, a resident of Guimbawian, a remote mountain barrio of Pinamungajan, where the decedent's estate was supposedly located, should be the one appointed administratrix and not Benjamina Sebial, a housemaid working at Talisay, Cebu which is about seventy kilometers away from Pinamungajan. In a supplemental opposition the children of the first marriage contended that the remedy of Benjamina Sebial was an action to rescind the partition.

After hearing, the lower court in its order of January 16, 1961 appointed Benjamina Sebial as administratrix. It found that the decedent left an estate consisting of lands with an area of twenty-one hectares, valued at more than six thousand pesos, and that the alleged partition of the decedent's estate was invalid and ineffective.

Letters of administration were issued to Benjamina Sebial on January 19, 1961. On the same date, a notice to creditors was issued. The oppositors moved for the reconsideration of the order appointing Benjamina Sebial as administratrix. They insisted that the decedent's estate had been partitioned on August 29, 1945, as shown in Exhibits 5, 6, 7 and I, and that the action to rescind the partition had already prescribed. The lower court denied the motion in its order of February 11, 1961.

The oppositors filed on March 16, 1961 a motion to terminate the administration proceeding on the grounds that the decedent's estate was valued at less than six thousand pesos and that it had already been partitioned and, therefore, there was no necessity for the administration proceeding.

On April 27, 1961 Benjamina Sebial filed an inventory and appraisal of the decedent's estate allegedly consisting of seven unregistered parcels of land, covered by Tax Declarations Nos. 04477, 04478, 04490, 04491, 04492, 04493 and 04500, with a total value of nine thousand pesos, all located at Barrio Guimbawian, Pinamungajan. The oppositors registered their opposition to the inventory on the ground that the seven parcels of land enumerated in the inventory no longer formed part of the decedent's estate.

On May 6, 1961, the administratrix filed a motion to require Lorenzo Rematado, Demetrio Camillo and the spouses Roberta Sebial and Lazaro Recuelo to deliver to her the parcels of land covered by Tax Declarations Nos. 04478, 04490,04491 and 04493.

On June 24, 1961 the probate court issued an order suspending action on the pending incidents in view of the possibility of an amicable settlement. It ordered the parties to prepare a complete list of the properties belonging to the decedent, with a segregation of the properties belonging to each marriage. Orders of the same tenor were issued by the lower court on July 8 and October 28, 1961.

On November 11, 1961 the oppositors, Roberta Sebial, Juliano Sebial and the heirs of Balbina Sebial, submitted their own inventory of the conjugal assets of Gelacio Sebial and Leoncia Manikis, consisting of two parcels of land acquired in 1912 and 1915. They alleged that the conjugal estate of Gelacio Sebial and Dolores Enad consisted of only one parcel of land, containing an area of seven hectares, allegedly purchased with money coming from the conjugal assets of Gelacio Sebial and Leoncia Manikis. They further alleged that the said seven- hectare land was sold by the children of the second marriage to Eduardo Cortado (Tax Declaration No. 2591).

The oppositors claimed that the aforementioned two parcels of land acquired during the first marriage were partitioned in 1945 among (1) Roberta Sebial, (2) Juliano Sebial, (3) Francisco Sebial as the representative of the estate of Balbina Sebial and (4) Valentina Sebial as the representative of the six children of the second marriage, some of whom were minors. They clarified that under that partition the three children of the first marriage received a three-fourths share while the six children of second marriage received a one-fourth share (Tax Declaration No. 06500). They also alleged that Eduardo Cortado, Emilio Sialongo, Lorenzo Rematado and Lazaro Recuelo were the third persons involved in the transfer of the lands pertaining to the estate of Gelacio Sebial (Tax Declarations Nos. 04493, 06571 and 04471). To the inventory submitted by the oppositors, the administratrix filed an opposition dated November 18, 1961.

In an order dated November 11, 1961 the lower court inexplicably required the administratrix to submit another inventory. In compliance with that order she submitted an inventory dated November 17, 1961, wherein she reproduced her inventory dated April 17, 1961 and added two other items, namely, two houses allegedly valued at P8,000 and the fruits of the properties amounting to P5,000

allegedly received by the children of the first marriage. The oppositor interposed an opposition to the said inventory.

On November 24, 1961 the oppositors filed a "motion for revision of partition" which was based on their own inventory dated November 7, 1961.

The lower court in its order of December 11, 1961 approved the second inventory dated November, 7, 1961 because there was allegedly a "prima facie evidence to show that" the seven parcels of land and two houses listed therein belonged to the decedent's estate. In another order also dated December 11, 1961 the lower court granted the motion of the administratrix dated May 4, 1961 for the delivery to her of certain parcels of land and it directed that the heirs of Gelacio Sebial, who are in possession of the parcels of land covered by Tax Declarations Nos. 04493, 04491, 04490 and 04478, should deliver those properties to the administratrix and should not disturb her in her possession and administration of the same. The lower court denied the oppositors' motion dated November 20, 1961 for "revision of partition”.

On December 29, 1961 Roberta Sebial moved for the reconsideration of the two orders on the grounds (1) that the court had no jurisdiction to approve an inventory filed beyond the three-month period fixed in section 1, Rule 84 of the Rules of Court; (2) that the said inventory is not supported by any documentary evidence because there is no tax declaration at all in Gelacio Sebial's name; (3) that the two houses mentioned in the inventory were nonexistent because they were demolished by the Japanese soldiers in 1943 and the materials thereof were appropriated by the administratrix and her brothers and sisters; (4) that the valuation of P17,000 indicated in the inventory was fake, fictitious and fantastic since the total value of the seven parcels of land amounted only to P3,080; (5) that Gelacio Sebial's estate should be settled summarily because of its small value as provided in section 2, Rule 74 of the Rules of Court and (6) that an ordinary action is necessary to recover the lands in the possession of third persons.

The oppositors without awaiting the resolution of their motion for reconsideration filed a notice of appeal from the two orders both dated December 11, 1961. The notice of appeal was filed "without prejudice to the motion for reconsideration". Benjamina Sebial opposed the motion for reconsideration. The lower court in its order of January 18, 1962 denied oppositors' motion for reconsideration. It approved Roberta Sebial's amended record on appeal. The case was elevated to the Court of Appeals.

The Court of Appeals in its resolution of July 31, 1964 in CA-G.R. No. 31978.-R certified the case to this Court because in its opinion the appeal involves only the legal issues of (1) the construction to be given to section 2, Rule 74 and section 1, Rule 84 (now Rule 83) of the Rules of Court and (2) whether an ordinary civil action for recovery of property and not an administration proceeding is the proper remedy, considering oppositors' allegation that the estate of Gelacio Sebial was partitioned in 1945 and that some of his heirs had already sold their respective shares (Per Angeles, Gatmaitan and Concepcion Jr., JJ.)

The Clerk of Court of the lower court in his letter of January 15, 1963, transmitting the amended record on appeal, said "there was no presentation of evidence by either parties concerning the two orders appealed from”.

This case involves the conflicting claims of some humble folks from a remote rural area in Cebu regarding some unregistered farm lands. Because of her poverty Roberta Sebial wanted to appeal in forma pauperis. Her husband Lazaro Recuelo and her nephew, Candelario Carrillo, in order to justify the filing of a mimeographed brief, swore that their families subsisted on root crops because they could not afford to buy corn grit or rice.

Oppositors' contention in their motion for reconsideration (not in their brief) that the probate court had no jurisdiction to approve the inventory dated November 17, 1961 because the administratrix filed it after three months from the date of her appointment is not well-taken. The three-month period prescribed in section 1, Rule 83 (formerly Rule 84) of the Rules of Court is not mandatory. After the filing of a petition for the issuance of letters of administration and the publication of the notice of hearing, the proper Court of First Instance acquires jurisdiction over a decedent's estate and retains that jurisdiction until the proceeding is closed. The fact that an inventory was filed after the three-month period would not deprive the probate court of jurisdiction to approve it. However, an administrator's unexplained delay in filing the inventory may be a ground for his removal (Sec. 2, Rule 82, Rules of Court).

The other contention of the oppositors that inasmuch as the value of the decedent's estate is less than five thousand pesos and he had no debts, the estate could be settled summarily under section 2, Rule 74 of the Rules of Court or that an administration proceeding was not necessary (the limit of six thousand pesos was increased to ten thousand pesos in section 2, Rule 74 effective on January 1, 1964) rests on a controversial basis. While in the verified petition for the issuance of letters of administration, it was alleged that the gross value of the decedent's estate was "not more than five thousand pesos", in the amended inventory the valuation was P17,000. Indeed, one of the lower court's omissions was its failure to ascertain by preponderance of evidence the actual value of the estate, if there was still an estate to be administered. The approval of the amended inventory was not such a determination.

Anyway, in the present posture of the proceeding, no useful purpose would be served by dismissing the petition herein and ordering that a new petition for summary settlement be filed. Inasmuch as a regular administrator had been appointed and a notice to creditors had been issued and no claims were filed, the probate court could still proceed summarily and expeditiously to terminate the proceeding. With the cooperation of the lawyers of the parties, it should strive to effect an amicable settlement of the case (See arts. 222 and 2029, Civil Code). If the efforts to arrive at an amicable settlement prove fruitless, then the probate court should ascertain what assets constituted the estate of Gelacio Sebial, what happened to those assets and whether the children of the second marriage (the petitioner was a child of the second marriage and the principal oppositor was a

child of first marriage) could still have a share, howsoever small, in the decedent's estate.

The lower court's order of December 11, 1961, approving the amended inventory of November 11, 1961, is not a conclusive determination of what assets constituted the decedent's estate and of the valuations thereof. Such a determination is only provisional in character and is without prejudice to a judgment in a separate action on the issue of title or ownership (3 Moran's Comments on the Rules of Court, 1970 Ed., 448-449).

The other order dated December 11, 1961 requires the delivery to the administratrix of (1) two parcels of land covered by Tax Declarations Nos. 04491 and 04493 in the possession of the spouses Lazaro Recuelo and Roberta Sebial, an oppositor-appellant; (2) the parcel of land covered by Tax Declaration No. 04490 in the possession of Lorenzo Rematado and (3) the parcel of land described under Tax Declaration No. 04478 in the possession of Demetrio Camillo (Canillo), a child of the deceased Balbina Sebial, one of the three children of the first marriage.

We hold that the said order is erroneous and should be set aside because the probate court failed to receive evidence as to the ownership of the said parcels of land. The general rule is that questions of title to property cannot be passed upon in a testate or intestate proceeding. However, when the parties are all heirs of the decedent, it is optional upon them to submit to the probate court the question of title to property and, when so submitted, the probate court may definitely pass judgment thereon (3 Moran's Comment's on the Rules of Court, 1970 Ed., pp. 448, 473; Alvarez vs. Espiritu, L-18833, August 14, 1965, 14 SCRA 892).

Lorenzo Rematado and Lazaro Recuelo are not heirs of the decedent. They are third persons. The rule is that matters affecting property under administration may be taken cognizance of by the probate court in the course of the intestate proceedings provided that the interests of third persons are not prejudiced (Cunanan vs. Amparo, 80 Phil. 227; Ibid, 3 Moran 473).

However, third persons to whom the decedent's assets had been fraudulently conveyed may be cited to appear in court and be examined under oath as to how they came into the possession of the decedent's assets (Sec. 6, Rule 87, Rules of Court) but a separate action would be necessary to recover the said assets (Chanco vs. Madrilejos, 12 Phil. 543; Guanco vs. Philippine National Bank, 54 Phil. 244).

The probate court should receive evidence on the discordant contentions of the parties as to the assets of decedent's estate, the valuations thereof and the rights of the transferees of some of the assets. The issue of prescription should also be considered (see p. 84, Record on Appeal). Generally prescription does not run in favor of a coheir as long as he expressly or impliedly recognizes the coownership (Art. 494, Civil Code).1äwphï1.ñët But from the moment that a coheir claims absolute and exclusive ownership of the hereditary properties and denies the

others any share therein, the question involved is no longer one of partition but that of ownership (Bargayo vs. Camumot, 40 Phil. 857).

At the hearing of the petition for letters of administration some evidence was already introduced on the assets constituting the estate of Gelacio Sebial. The petitioner testified and presented Exhibits A to J and X to Y-3. The oppositor also testified and presented Exhibits 2 to 10-A. The stenographic notes for the said hearing should be transcribed. In addition to that evidence. The probate court should require the parties to present further proofs on the ownership of the seven parcels of land and the materials of the two houses enumerated in the amended inventory of November 17, 1961, on the alleged partition effected in 1945 and on the allegations in oppositors' inventory dated November 7, 1961.

After receiving evidence, the probate court should decide once and for all whether there are still any assets of the estate that can be partitioned and, if so, to effect the requisite partition and distribution. If the estate has no more assets and if a partition had really been made or the action to recover the lands transferred to third person had prescribed, it should dismiss the intestate proceeding.

WHEREFORE, (a) the probate court's order of December 11, 1961, granting the administratrix's motion of May 4, 1961 for the delivery to her of certain properties is set aside; (b) its other order of December 11, 1961 approving the amended inventory should not be considered as a final adjudication on the ownership of the properties listed in the inventory and (c) this case is remanded to the lower court for further proceedings in accordance with the guidelines laid down in this decision. No costs.

SO ORDERED.

Section 4. Liability of distributees and estate.

G.R. No. 153820 October 16, 2009

DELFIN TAN, Petitioner, vs.

ERLINDA C. BENOLIRAO, ANDREW C. BENOLIRAO, ROMANO C. BENOLIRAO, DION C. BENOLIRAO, SPS. REYNALDO TANINGCO and NORMA

D. BENOLIRAO, EVELYN T. MONREAL, and ANN KARINA TANINGCO, Respondents.

D E C I S I O N

Is an annotation made pursuant to Section 4, Rule 74 of the Rules of Court (Rules) on a certificate of title covering real property considered an encumbrance on the property? We resolve this question in the petition for review on certiorari1 filed by Delfin Tan (Tan) to assail the decision of the Court of Appeals (CA) in CA-G.R. CV No. 520332 and the decision of the Regional Trial Court (RTC)3 that commonly declared the forfeiture of his P200,000.00 down payment as proper, pursuant to the terms of his contract with the respondents.

THE ANTECEDENTS

The facts are not disputed. Spouses Lamberto and Erlinda Benolirao and the Spouses Reynaldo and Norma Taningco were the co-owners of a 689-square meter parcel of land (property) located in Tagaytay City and covered by Transfer Certificate of Title (TCT) No. 26423. On October 6, 1992, the co-owners executed a Deed of Conditional Sale over the property in favor of Tan for the price of P1,378,000.00. The deed stated:

a) An initial down-payment of TWO HUNDRED (P200,000.00) THOUSAND PESOS, Philippine Currency, upon signing of this contract; then the remaining balance of ONE MILLION ONE HUNDRED SEVENTY EIGHT THOUSAND (P1,178,000.00) PESOS, shall be payable within a period of one hundred fifty (150) days from date hereof without interest;

b) That for any reason, BUYER fails to pay the remaining balance within above mentioned period, the BUYER shall have a grace period of sixty (60) days within which to make the payment, provided that there shall be an interest of 15% per annum on the balance amount due from the SELLERS;

c) That should in case (sic) the BUYER fails to comply with the terms and conditions within the above stated grace period, then the SELLERS shall have the right to forfeit the down payment, and to rescind this conditional sale without need of judicial action;

d) That in case, BUYER have complied with the terms and conditions of this contract, then the SELLERS shall execute and deliver to the BUYER the appropriate Deed of Absolute Sale;

Pursuant to the Deed of Conditional Sale, Tan issued and delivered to the co-owners/vendors Metrobank Check No. 904407 for P200,000.00 as down payment for the property, for which the vendors issued a corresponding receipt.

On November 6, 1992, Lamberto Benolirao died intestate. Erlinda Benolirao (his widow and one of the vendors of the property) and her children, as heirs of the deceased, executed an extrajudicial settlement of Lamberto’s estate on January 20, 1993. On the basis of the extrajudicial settlement, a new certificate of title over the property, TCT No. 27335, was issued on March 26, 1993 in the names of the Spouses Reynaldo and Norma Taningco and Erlinda Benolirao and her children. Pursuant to Section 4, Rule 74 of the Rules, the following annotation was made on TCT No. 27335:

x x x any liability to credirots (sic), excluded heirs and other persons having right to the property, for a period of two (2) years, with respect only to the share of Erlinda, Andrew, Romano and Dion, all surnamed Benolirao.

As stated in the Deed of Conditional Sale, Tan had until March 15, 1993 to pay the balance of the purchase price. By agreement of the parties, this period was extended by two months, so Tan had until May 15, 1993 to pay the balance. Tan failed to pay and asked for another extension, which the vendors again granted. Notwithstanding this second extension, Tan still failed to pay the remaining balance due on May 21, 1993. The vendors thus wrote him a letter demanding payment of the balance of the purchase price within five (5) days from notice; otherwise, they would declare the rescission of the conditional sale and the forfeiture of his down payment based on the terms of the contract.

Tan refused to comply with the vendors’ demand and instead wrote them a letter (dated May 28, 1993) claiming that the annotation on the title, made pursuant to Section 4, Rule 74 of the Rules, constituted an encumbrance on the property that would prevent the vendors from delivering a clean title to him. Thus, he alleged that he could no longer be required to pay the balance of the purchase price and demanded the return of his down payment.

When the vendors refused to refund the down payment, Tan, through counsel, sent another demand letter to the vendors on June 18, 1993. The vendors still refused to heed Tan’s demand, prompting Tan to file on June 19, 1993 a complaint with the RTC of Pasay City for specific performance against the vendors, including Andrew Benolirao, Romano Benolirao, Dion Benolirao as heirs of Lamberto Benolirao, together with Evelyn Monreal and Ann Karina Taningco (collectively, the respondents). In his complaint, Tan alleged that there was a novation of the Deed of Conditional Sale done without his consent since the annotation on the title created an encumbrance over the property. Tan prayed for the refund of the down payment and the rescission of the contract.

On August 9, 1993, Tan amended his Complaint, contending that if the respondents insist on forfeiting the down payment, he would be willing to pay the balance of the

purchase price provided there is reformation of the Deed of Conditional Sale. In the meantime, Tan caused the annotation on the title of a notice of lis pendens.

On August 21, 1993, the respondents executed a Deed of Absolute Sale over the property in favor of Hector de Guzman (de Guzman) for the price of P689,000.00. Thereafter, the respondents moved for the cancellation of the notice of lis pendens on the ground that it was inappropriate since the case that Tan filed was a personal action which did not involve either title to, or possession of, real property. The RTC issued an order dated October 22, 1993 granting the respondents’ motion to cancel the lis pendens annotation on the title.

Meanwhile, based on the Deed of Absolute Sale in his favor, de Guzman registered the property and TCT No. 28104 was issued in his name. Tan then filed a motion to carry over the lis pendens annotation to TCT No. 28104 registered in de Guzman’s name, but the RTC denied the motion.

On September 8, 1995, after due proceedings, the RTC rendered judgment ruling that the respondents’ forfeiture of Tan’s down payment was proper in accordance with the terms and conditions of the contract between the parties.4 The RTC ordered Tan to pay the respondents the amount of P30,000.00, plus P1,000.00 per court appearance, as attorney’s fees, and to pay the cost of suit.

On appeal, the CA dismissed the petition and affirmed the ruling of the trial court in toto. Hence, the present petition.

THE ISSUES

Tan argues that the CA erred in affirming the RTC’s ruling to cancel the lis pendens annotation on TCT No. 27335. Due to the unauthorized novation of the agreement, Tan presented before the trial court two alternative remedies in his complaint – either the rescission of the contract and the return of the down payment, or the reformation of the contract to adjust the payment period, so that Tan will pay the remaining balance of the purchase price only after the lapse of the required two-year encumbrance on the title. Tan posits that the CA erroneously disregarded the alternative remedy of reformation of contract when it affirmed the removal of the lis pendens annotation on the title.

Tan further contends that the CA erred when it recognized the validity of the forfeiture of the down payment in favor of the vendors. While admitting that the Deed of Conditional Sale contained a forfeiture clause, he insists that this clause applies only if the failure to pay the balance of the purchase price was through his own fault or negligence. In the present case, Tan claims that he was justified in refusing to pay the balance price since the vendors would not have been able to comply with their obligation to deliver a "clean" title covering the property.

Lastly, Tan maintains that the CA erred in ordering him to pay the respondents P30,000.00, plus P1,000.00 per court appearance as attorney’s fees, since he filed the foregoing action in good faith, believing that he is in the right.

The respondents, on the other hand, assert that the petition should be dismissed for raising pure questions of fact, in contravention of the provisions of Rule 45 of the Rules which provides that only questions of law can be raised in petitions for review on certiorari.

THE COURT’S RULING

The petition is granted.

No new issues can be raised in the Memorandum.

At the onset, we note that Tan raised the following additional assignment of errors in his Memorandum: (a) the CA erred in holding that the petitioner could seek reformation of the Deed of Conditional Sale only if he paid the balance of the purchase price and if the vendors refused to execute the deed of absolute sale; and (b) the CA erred in holding that the petitioner was estopped from asking for the reformation of the contract or for specific performance.

The Court’s September 27, 2004 Resolution expressly stated that "No new issues may be raised by a party in his/its Memorandum." Explaining the reason for this rule, we said that:

The raising of additional issues in a memorandum before the Supreme Court is irregular, because said memorandum is supposed to be in support merely of the position taken by the party concerned in his petition, and the raising of new issues amounts to the filing of a petition beyond the reglementary period. The purpose of this rule is to provide all parties to a case a fair opportunity to be heard. No new points of law, theories, issues or arguments may be raised by a party in the Memorandum for the reason that to permit these would be offensive to the basic rules of fair play, justice and due process.

Tan contravened the Court’s explicit instructions by raising these additional errors. Hence, we disregard them and focus instead on the issues previously raised in the petition and properly included in the Memorandum.

Petition raises a question of law

Contrary to the respondents’ claim, the issue raised in the present petition – defined in the opening paragraph of this Decision – is a pure question of law. Hence, the petition and the issue it presents are properly cognizable by this Court.

Lis pendens annotation not proper in personal actions

Section 14, Rule 13 of the Rules enumerates the instances when a notice of lis pendens can be validly annotated on the title to real property:

Sec. 14. Notice of lis pendens. In an action affecting the title or the right of possession of real property, the plaintiff and the defendant, when affirmative relief is claimed in his answer, may record in the office of the registry of deeds of the province in which the property is situated a notice of the pendency of the action. Said notice shall contain the names of the parties and the object of the action or defense, and a description of the property in that province affected thereby. Only from the time of filing such notice for record shall a purchaser, or encumbrancer of the property affected thereby, be deemed to have constructive notice of the pendency of the action, and only of its pendency against the parties designated by their real names.

The notice of lis pendens hereinabove mentioned may be cancelled only upon order of the court, after proper showing that the notice is for the purpose of molesting the adverse party, or that it is not necessary to protect the rights of the party who caused it to be recorded.

The litigation subject of the notice of lis pendens must directly involve a specific property which is necessarily affected by the judgment.

Tan’s complaint prayed for either the rescission or the reformation of the Deed of Conditional Sale. While the Deed does have real property for its object, we find that Tan’s complaint is an in personam action, as Tan asked the court to compel the respondents to do something – either to rescind the contract and return the down payment, or to reform the contract by extending the period given to pay the remaining balance of the purchase price. Either way, Tan wants to enforce his personal rights against the respondents, not against the property subject of the Deed. As we explained in Domagas v. Jensen:

The settled rule is that the aim and object of an action determine its character. Whether a proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its nature and purpose, and by these only. A proceeding in personam is a proceeding to enforce personal rights and obligations brought against the person and is based on the jurisdiction of the person, although it may involve his right to, or the exercise of ownership of, specific property, or seek to compel him to control or dispose of it in accordance with the mandate of the court. The purpose of a proceeding in personam is to impose, through the judgment of a court, some responsibility or liability directly upon the person of the defendant. Of this character are suits to compel a defendant to specifically perform some act or actions to fasten a pecuniary liability on him.

Furthermore, as will be explained in detail below, the contract between the parties was merely a contract to sell where the vendors retained title and ownership to the property until Tan had fully paid the purchase price. Since Tan had no claim of ownership or title to the property yet, he obviously had no right to ask for the annotation of a lis pendens notice on the title of the property.

Contract is a mere contract to sell

A contract is what the law defines it to be, taking into consideration its essential elements, and not what the contracting parties call it. Article 1485 of the Civil Code defines a contract of sale as follows:

Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.

A contract of sale may be absolute or conditional.

The very essence of a contract of sale is the transfer of ownership in exchange for a price paid or promised.

In contrast, a contract to sell is defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the property despite delivery thereof to the prospective buyer, binds himself to sell the property exclusively to the prospective buyer upon fulfillment of the condition agreed, i.e., full payment of the purchase price. A contract to sell may not even be considered as a conditional contract of sale where the seller may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not occur.

In the present case, the true nature of the contract is revealed by paragraph D thereof, which states:

x x x

d) That in case, BUYER has complied with the terms and conditions of this contract, then the SELLERS shall execute and deliver to the BUYER the appropriate Deed of Absolute Sale;

x x x Jurisprudence has established that where the seller promises to execute a deed of absolute sale upon the completion by the buyer of the payment of the price, the contract is only a contract to sell. Thus, while the contract is denominated as a Deed of Conditional Sale, the presence of the above-quoted provision identifies the contract as being a mere contract to sell.

A Section 4, Rule 74 annotation is an encumbrance on the property

While Tan admits that he refused to pay the balance of the purchase price, he claims that he had valid reason to do so – the sudden appearance of an annotation on the title pursuant to Section 4, Rule 74 of the Rules, which Tan considered an encumbrance on the property.

We find Tan’s argument meritorious.

The annotation placed on TCT No. 27335, the new title issued to reflect the extrajudicial partition of Lamberto Benolirao’s estate among his heirs, states:

x x x any liability to credirots (sic), excluded heirs and other persons having right to the property, for a period of two (2) years, with respect only to the share of Erlinda, Andrew, Romano and Dion, all surnamed Benolirao [Emphasis supplied.]

This annotation was placed on the title pursuant to Section 4, Rule 74 of the Rules, which reads:

Sec. 4. Liability of distributees and estate. - If it shall appear at any time within two (2) years after the settlement and distribution of an estate in accordance with the provisions of either of the first two sections of this rule, that an heir or other person has been unduly deprived of his lawful participation in the estate, such heir or such other person may compel the settlement of the estate in the courts in the manner hereinafter provided for the purpose of satisfying such lawful participation. And if within the same time of two (2) years, it shall appear that there are debts outstanding against the estate which have not been paid, or that an heir or other person has been unduly deprived of his lawful participation payable in money, the court having jurisdiction of the estate may, by order for that purpose, after hearing, settle the amount of such debts or lawful participation and order how much and in what manner each distributee shall contribute in the payment thereof, and may issue execution, if circumstances require, against the bond provided in the preceding section or against the real estate belonging to the deceased, or both. Such bond and such real estate shall remain charged with a liability to creditors, heirs, or other persons for the full period of two (2) years after such distribution, notwithstanding any transfers of real estate that may have been made. [Emphasis supplied.]

Senator Vicente Francisco discusses this provision in his book The Revised Rules of Court in the Philippines,13 where he states:

The provision of Section 4, Rule 74 prescribes the procedure to be followed if within two years after an extrajudicial partition or summary distribution is made, an heir or other person appears to have been deprived of his lawful participation in the estate, or some outstanding debts which have not been paid are discovered. When the lawful participation of the heir is not payable in money, because, for instance, he is entitled to a part of the real property that has been partitioned, there can be no other procedure than to cancel the partition so made and make a new division, unless, of course, the heir agrees to be paid the value of his participation with interest. But in case the lawful participation of the heir consists in his share in personal property of money left by the decedent, or in case unpaid debts are discovered within the said period of two years, the procedure is not to cancel the partition, nor to appoint an administrator to re-assemble the assets, as was allowed under the old Code, but the court, after hearing, shall fix the amount of such debts or lawful participation in proportion to or to the extent of the assets they have

respectively received and, if circumstances require, it may issue execution against the real estate belonging to the decedent, or both. The present procedure is more expedient and less expensive in that it dispenses with the appointment of an administrator and does not disturb the possession enjoyed by the distributees.14 [Emphasis supplied.]

An annotation is placed on new certificates of title issued pursuant to the distribution and partition of a decedent’s real properties to warn third persons on the possible interests of excluded heirs or unpaid creditors in these properties. The annotation, therefore, creates a legal encumbrance or lien on the real property in favor of the excluded heirs or creditors. Where a buyer purchases the real property despite the annotation, he must be ready for the possibility that the title could be subject to the rights of excluded parties. The cancellation of the sale would be the logical consequence where: (a) the annotation clearly appears on the title, warning all would-be buyers; (b) the sale unlawfully interferes with the rights of heirs; and (c) the rightful heirs bring an action to question the transfer within the two-year period provided by law.

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

And Section 4, Rule 74 xxx expressly authorizes the court to give to every heir his lawful participation in the real estate "notwithstanding any transfers of such real estate" and to "issue execution" thereon. All this implies that, when within the amendatory period the realty has been alienated, the court in re-dividing it among the heirs has the authority to direct cancellation of such alienation in the same estate proceedings, whenever it becomes necessary to do so. To require the institution of a separate action for such annulment would run counter to the letter of the above rule and the spirit of these summary settlements. [Emphasis supplied.] Similarly, in Sps. Domingo v. Roces, we said:

The foregoing rule clearly covers transfers of real property to any person, as long as the deprived heir or creditor vindicates his rights within two years from the date of the settlement and distribution of estate. Contrary to petitioners’ contention, the effects of this provision are not limited to the heirs or original distributees of the estate properties, but shall affect any transferee of the properties. [Emphasis supplied.]

Indeed, in David v. Malay, although the title of the property had already been registered in the name of the third party buyers, we cancelled the sale and ordered the reconveyance of the property to the estate of the deceased for proper disposal among his rightful heirs.

By the time Tan’s obligation to pay the balance of the purchase price arose on May 21, 1993 (on account of the extensions granted by the respondents), a new certificate of title covering the property had already been issued on March 26, 1993, which contained the encumbrance on the property; the encumbrance would remain so attached until the expiration of the two-year period. Clearly, at this time, the vendors could no longer compel Tan to pay the balance of the purchase since

considering they themselves could not fulfill their obligation to transfer a clean title over the property to Tan.

Contract to sell is not rescinded but terminated

What then happens to the contract?

We have held in numerous cases that the remedy of rescission under Article 1191 cannot apply to mere contracts to sell. We explained the reason for this in Santos v. Court of Appeals, where we said:

[I]n a contract to sell, title remains with the vendor and does not pass on to the vendee until the purchase price is paid in full. Thus, in a contract to sell, the payment of the purchase price is a positive suspensive condition. Failure to pay the price agreed upon is not a mere breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. This is entirely different from the situation in a contract of sale, where non-payment of the price is a negative resolutory condition. The effects in law are not identical. In a contract of sale, the vendor has lost ownership of the thing sold and cannot recover it, unless the contract of sale is rescinded and set aside. In a contract to sell, however, the vendor remains the owner for as long as the vendee has not complied fully with the condition of paying the purchase price. If the vendor should eject the vendee for failure to meet the condition precedent, he is enforcing the contract and not rescinding it. x x x Article 1592 speaks of non-payment of the purchase price as a resolutory condition. It does not apply to a contract to sell. As to Article 1191, it is subordinated to the provisions of Article 1592 when applied to sales of immovable property. Neither provision is applicable [to a contract to sell]. [Emphasis supplied.]

We, therefore, hold that the contract to sell was terminated when the vendors could no longer legally compel Tan to pay the balance of the purchase price as a result of the legal encumbrance which attached to the title of the property. Since Tan’s refusal to pay was due to the supervening event of a legal encumbrance on the property and not through his own fault or negligence, we find and so hold that the forfeiture of Tan’s down payment was clearly unwarranted.

Award of Attorney’s fees As evident from our previous discussion, Tan had a valid reason for refusing to pay the balance of the purchase price for the property. Consequently, there is no basis for the award of attorney’s fees in favor of the respondents.

On the other hand, we award attorney’s fees in favor of Tan, since he was compelled to litigate due to the respondents’ refusal to return his down payment despite the fact that they could no longer comply with their obligation under the contract to sell, i.e., to convey a clean title. Given the facts of this case, we find the award of P50,000.00 as attorney’s fees proper.

Monetary award is subject to legal interest

Undoubtedly, Tan made a clear and unequivocal demand on the vendors to return his down payment as early as May 28, 1993. Pursuant to our definitive ruling in Eastern Shipping Lines, Inc. v. Court of Appeals, we hold that the vendors should return the P200,000.00 down payment to Tan, subject to the legal interest of 6% per annum computed from May 28, 1993, the date of the first demand letter.

Furthermore, after a judgment has become final and executory, the rate of legal interest, whether the obligation was in the form of a loan or forbearance of money or otherwise, shall be 12% per annum from such finality until its satisfaction. Accordingly, the principal obligation of P200,000.00 shall bear 6% interest from the date of first demand or from May 28, 1993. From the date the liability for the principal obligation and attorney’s fees has become final and executory, an annual interest of 12% shall be imposed on these obligations until their final satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.

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

SO ORDERED.

G.R. No. 147468 April 9, 2003

SPOUSES EDUARDO ARENAS DOMINGO & JOSEFINA CHAVEZ DOMINGO, petitioners,

vs. LILIA MONTINOLA ROCES, CESAR ROBERTO M. ROCES, ANA INES

MAGDALENA ROCES TOLENTINO, LUIS MIGUEL M. ROCES, JOSE ANTONIO M. ROCES and MARIA VIDA PRESENTACION ROCES, respondents.

YNARES-SANTIAGO, J.:

This is a petition for review on certiorari of the decision of the Court of Appeals dated November 22, 2000 in CA-G.R. CV No. 62473, as well as the resolution dated March 15, 2001, denying petitioners' Motion for Reconsideration.

The facts are not in dispute.

The spouses Cesar and Lilia Roces were the owners of two contiguous parcels of land located on Arayat Street, Mandaluyong, covered by Transfer Certificates of Title Nos. 57217 and 57218. On November 13, 1962, the Government Service Insurance System (GSIS) caused the annotation of an affidavit of adverse claim on the titles alleging that the spouses have mortgaged the same to it.

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

Cesar Roces died intestate on January 26, 1980. He was survived by his widow, Lilia Roces, and their children: Cesar Roberto Roces, Ana Ines Magdalena Roces Tolentino, Luis Miguel M. Roces, Jose Antonio Roces and Maria Vida Presentacion Roces, all of whom are the respondents in this case.

On July 22, 1992, Reynaldo L. Montinola, a nephew of Lilia Roces, executed an affidavit of self-adjudication over the Arayat properties. He alleged that the properties were owned by the spouses Cesar and Lilia Roces, both of whom died intestate, on September 13, 1987 and June 27, 1989, respectively; that the properties were acquired during the existence of their marriage; that the spouses left no heirs except the brother of Lilia Roces, who was his father; that neither of the spouses left any will nor any debts; and that he was the sole heir of the Roces spouses.

On January 5, 1993, Montinola filed a petition against GSIS with the Regional Trial Court of Pasig, docketed as Civil Case No. R-4743, praying for the cancellation of

TCT Nos. 57217 (11663) and 57218 (11664).10 During the trial, GSIS failed to produce any document evidencing the alleged real estate mortgage by Roces of the properties. Hence, the trial court rendered judgment in favor of Montinola, declaring the owner's duplicates of TCT No. 57217 (11663) and 57218 (11664) as null and void and ordering the Registry of Deeds of Mandaluyong to issue new owner's duplicates of the said titles.

GSIS did not appeal the aforesaid judgment; thus, the same became final and executory. Accordingly, the Registry of Deeds of Mandaluyong issued TCT No. 7299 in the name of Montinola in lieu of TCT No. 57218 (11664).

Sometime in July 1993, Montinola executed a deed of absolute sale of the property covered by TCT No. 7299 in favor of petitioner spouses Eduardo and Josefina Domingo.13 Thereafter, TCT No. 7673 was issued in the names of petitioners.

Both TCT Nos. 7299 and 7673 contained the following annotation:

Subject to the provision of Section 4, Rule 74 of the Rules of Court with respect to the inheritance left by the deceased SPS. CESAR ROCES & LILIA MONTINOLA.14 When respondents learned of the sale of the property to petitioners, they filed a complaint against Montinola and petitioners with the Regional Trial Court of Pasig. They argued that the affidavit of self-adjudication was fraudulent because Montinola was not an heir of the Roces spouses and it was not true that Lilia Roces was dead. Therefore, the affidavit of self-adjudication, as well as the deed of absolute sale, TCT No. 7299, and TCT No. 7673, all covering the subject property, were null and void.

In their answer, petitioners alleged that they were buyers in good faith and that their action was barred by estoppel and laches.

After trial, the court a quo rendered judgment in favor of respondents, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs against the defendant Reynaldo L. Montinola who is hereby ordered to pay to the plaintiffs the following sums:

a) P1,200,000.00 as actual damages, with interest thereon at the legal rate of six (6) per centum per annum until fully paid; b) Moral damages in the sum of P100,000.00; c) Exemplary damages in the sum of P50,000.00; d) Attorney's fees in the reasonable amount of P30,000.00; and costs. The counterclaim of defendant spouses Eduardo and Josefina Domingo is dismissed and the complaint against the Register of Deeds is likewise dismissed without costs.

SO ORDERED.

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

IN THE LIGHT OF ALL THE FOREGOING, the appeal is GRANTED. The Decision of the Court a quo appealed from is SET ASIDE AND REVERSED. Another Decision is hereby rendered in favor of the Appellants as follows:

1. The "Affidavit of Self-Adjudication" (Exhibit "G"), Transfer Certificate of Title No. 7299 (Exhibits "N" and "22", Domingo), the "Deed of Absolute Sale" (Exhibit "20") and Transfer Certificate of Title No. 7673 (Exhibit "21") are hereby declared null and void. 2. Transfer Certificate of Title No. 57218 (11664), under the names of Cesar P. Roces and Lilia Montinola, is hereby reinstated. 3. The Appellees are hereby ordered to pay, jointly and severally, to the Appellants the amount of P50,000.00 as and by way of attorney's fees. 4. Appellants' claims for actual, moral and exemplary damages are dismissed. 5. The Appellee Reynaldo Montinola is hereby ordered to pay to the Appellees Spouses Domingo the amount of P1,800,000.00, with interest thereon at the rate of 12% per annum from the date of the Decision of this Court until the said amount is paid in full by the said Appellee, the other cross-claims of the Appellees, inter se, are dismissed.

SO ORDERED.

Petitioners filed a Motion for Reconsideration, which was denied in a Resolution dated March 15, 2000.21 Hence this petition, raising the following errors:

1. THE COURT OF APPEALS ERRED IN HOLDING THAT THE ANNOTATION IN THE TITLE REGARDING SEC. 4, RULE 74 IS AN ENCUMBRANCE WHICH DISQUALIFIES PETITIONERS FROM BEING INNOCENT PURCHASERS FOR VALUE; 2. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT IT WAS RESPONDENTS WHO MADE IT POSSIBLE FOR REYNALDO MONTINOLA TO PERPETUATE THE FRAUD AND, THEREFORE, THEY SHOULD BE THE ONE TO BEAR RESULTING DAMAGE; 3. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT RESPONDENTS HAVE NO EXISTING INTEREST IN THE PROPERTY SINCE IT WAS PREVIOUSLY MORTGAGED AND FORECLOSED BY THE G.S.I.S.; AND 4. THE COURT OF APPEALS ERRED IN HOLDING PETITIONERS LIABLE TO RESPONDENTS FOR ATTORNEY'S FEES, THEREBY ADDING MORE INJURY TO THEIR MISFORTUNE.

The petition lacks merit.

It is true that one who deals with property registered under the Torrens system need not go beyond the same, but only has to rely on the title. He is charged with notice only of such burdens and claims as are annotated on the title. However, this

principle does not apply when the party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry or when the purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the property in litigation. One who falls within the exception can neither be denominated an innocent purchaser for value nor a purchaser in good faith.

As stated above, the titles, namely, TCT Nos. 7299 and 7673, contained annotations which made reference to the provisions of Rule 74, Section 4 of the Rules of Court, viz:

SEC. 4. Liability of distributees and estate. — If it shall appear at any time within two (2) years after the settlement and distribution of an estate in accordance with the provisions of either of the first two sections of this rule, that an heir or other person has been unduly deprived of his lawful participation in the estate, such heir or such other person may compel the settlement of the estate in the courts in the manner hereinafter provided for the purpose of satisfying such lawful participation. And if within the same time of two (2) years, it shall appear that there are debts outstanding against the estate which have not been paid, or that an heir or other person has been unduly deprived of his lawful participation payable in money, the court having jurisdiction of the estate may, by order for that purpose, after hearing, settle the amount of such debts or lawful participation and order how much and in what manner each distributee shall contribute in the payment thereof, and may issue execution, if circumstances require, against the bond provided in the preceding section or against the real estate belonging to the deceased, or both. Such bond and such real estate shall remain charged with a liability to creditors, heirs, or other persons for the full period of two (2) years after such distribution, notwithstanding any transfers of real estate that may have been made.

The foregoing rule clearly covers transfers of real property to any person, as long as the deprived heir or creditor vindicates his rights within two years from the date of the settlement and distribution of estate. Contrary to petitioners' contention, the effects of this provision are not limited to the heirs or original distributees of the estate properties, but shall affect any transferee of the properties.

In David v. Malay, it was held that the buyer of real property the title of which contain an annotation pursuant to Rule 74, Section 4 of the Rules of Court cannot be considered innocent purchasers for value. In the same vein, the annotation at the back of TCT No. 7299 in this case referring to Rule 74, Section 4 of the Rules of Court was sufficient notice to petitioners of the limitation on Montinola's right to dispose of the property. The presence of an irregularity which excites or arouses suspicion should prompt the vendee to look beyond the certificate and investigate the title of the vendor appearing on the face thereof. Purchasers of registered land are bound by the annotations found at the back of the certificate of title.

Hence, petitioners cannot be considered buyers in good faith and cannot now avoid the consequences brought about by the application of Rule 74, Section 4 of the Rules of Court.

Petitioner's claim that respondents were guilty of laches and estoppel is likewise untenable. Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or should have been done earlier. The essential elements of laches are: (1) conduct on the part of defendant or one under whom he claims, giving rise to the situation complained of; (2) delay in asserting complainant's right after he had knowledge of the defendant's conduct and after he has an opportunity to sue; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant.

On the other hand, estoppel by laches arises from the negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it.

In the case at bar, only four months elapsed from the time respondents discovered Montinola's fraudulent acts, sometime in May 1993, to the time they filed their complaint on September 6, 1993. This relatively short span of time can hardly be called unreasonable, especially considering that respondents used this period of time to investigate the transfers of the property. Delay is an indispensable requisite for a finding of estoppel by laches, but to be barred from bringing suit on grounds of estoppel and laches, the delay must be lengthy and unreasonable. No unreasonable delay can be attributed to respondents in this case.

WHEREFORE, in view of the foregoing, the instant petition for review is DENIED. The decision and resolution of the Court of Appeals in CA-G.R. No. CV No. 62473 are AFFIRMED in toto.

SO ORDERED.

G.R. No. 138971 June 6, 2001

PHILIPPINE ECONOMIC ZONE AUTHORITY (PEZA), petitioner, vs.

HON. RUMOLDO R. FERNANDEZ, Regional Trial Court of Lapu-Lapu City (Branch 54); and the Heirs of the Deceased Spouses JUAN CUIZON and

FLORENTINA RAPAYA, respondents.

PANGANIBAN, J.:

An action for reconveyance of land, an equitable remedy recognized under our land registration laws, is subject to the applicable rules on prescription. Moreover, the right to pursue such reivindicatory action may be defeated when the property sought to be recovered has been conveyed to an innocent purchaser for value.

The Case

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to set aside the June 8, 1999 Decision1 of the Court of Appeals (CA) in CA-GR SP No. 47575. In the said Decision, the CA sustained the January 12, 19982 and the March 31, 19983 Orders of the Regional Trial Court of Lapu-Lapu City (Branch 54) in Civil Case No. 4534-L, which denied petitioner’s Motion to Dismiss and Motion for Reconsideration, respectively. The dispositive portion of the CA Decision reads as follows:

"WHEREFORE, [there being] no abuse of discretion committed by respondent court, the instant petition is hereby DISMISSED.”

The Facts

The subject of the present controversy is Lot No. 4673 of the Opon Cadastre situated in Lapu-Lapu City, covered by Original Certificate of Title (OCT) No. RO-2537 (May 19, 1982) and registered in the names of Florentina Rapaya, Victorino Cuizon, Isidro Cuizon, Ursula Cuizon, Benito Lozano, Isabel Lozano, Pelagia Lozano, Augusto Lozano, Valeriano Ybañez, Jesus Ybañez, Numeriano Ybañez, Martino Ybañez, Eutiquio Patalinghug, Celedonio Patalinghug, Santiago Patalinghug and Silvino Patalinghug. The lot has an area of 11,345 square meters, more or less.

On May 15, 1982, Jorgea Igot-Soroño, Frisca Booc and Felix Cuizon executed an Extrajudicial Partition, in which they declared themselves as the only surviving heirs of the registered owners of the aforesaid lot. Consequently, they were issued TCT No. 12467 on July 8, 1982.

Considering that the said lot was among the objects of expropriation proceedings docketed as Civil Case No 510-L and pending before it, Branch XVI of the Regional Trial Court (RTC) of Lapu-Lapu City rendered a partial Decision on August 11, 1982. In that Decision, the RTC approved the Compromise Agreement entered into

between the Export Processing Zone Authority (EPZA) and the new registered owners of Lot No. 4673; namely, Jorgea Igot-Soroño, Frisca Booc and Felix Cuizon. In accordance with the approved Compromise Agreement, EPZA would pay P68,070 as just compensation for the expropriation of the subject property, which was to be used for an export processing zone to be established in Lapu-Lapu City.

As a consequence of the RTC Decision, petitioner acquired title over Lot No. 4673 and the corresponding Transfer Certificate of Title (TCT) No. 12788 issued by the Register of Deeds of Lapu-Lapu City on October 13, 1982.

On July 29, 1996, private respondents filed with the RTC of Lapu-Lapu City a Complaint for Nullity of Documents, Redemption and Damages against petitioner and Jorgea-Igot Soroño et al. Docketed as Civil Case No. 4534-L, the Complaint alleged that herein private respondents had been excluded from the extrajudicial settlement of the estate. It likewise sought the nullification of several documents, including TCT No. 12788 dated October 13, 1992, issued in the name of herein petitioner.

On February 17, 1997, petitioner filed a Motion to Dismiss the Complaint on the ground of prescription. This Motion was denied by respondent judge in the Order dated January 12, 1998. A Motion for Reconsideration thereof was likewise denied in the Order dated March 31, 1998.

On April 30, 1998, petitioner elevated the matter to the Court of Appeals through a Petition for Certiorari. As earlier noted, the CA dismissed the Petition.

Hence, this recourse.

The CA Ruling

In denying the Petition, the CA ratiocinated as follows:

"Civil Case No. 4534-L although instituted in the guise of a complaint for Nullity of Documents, Redemption and Damages is in effect an action for reconveyance of the property to plaintiffs of a portion which rightfully belong to them. It would be against good reason and conscience not to hold that defendants, Francisca ‘Frisca’ Booc, heirs of deceased Jorg[e]a Igot-Soronio and heirs of Felix Cuizon committed a breach of trust which enabled them to execute a Deed of Extrajudicial Partition[,] Special Power of Attorney and Deed of Absolute Sale in favor of EPZA to the prejudice of the plaintiffs as their co-heirs. Therefore, in an action like this case, the private respondents may be ordered to make reconveyance of the property to the person rightfully entitled to it.

"It is undeniable that defendants defrauded plaintiffs by falsely representing that they were the only heirs of deceased Juan Cuizon and Florentina Rapaya, succeeded in having the original title cancelled and enabling them to appropriate the land in favor of EPZA and a new one issued in the name of the latter (EPZA). This way of acquiring title create[s] what is called ‘constructive trust’ in favor of the

defrauded party and grants the latter the right to vindicate [itself] x x x regardless of the lapse of time. Thus, it has been held that if a person obtain(s) a legal title to the property by fraud or concealment, courts of equity will impress upon the title a so called ‘trust’ in favor of the defrauded party. In fact, it has long been held that a co-heir who through fraud, succeeds in obtaining a certificate of title in his name to the prejudice of his co-heirs, is deemed to hold the land in trust for the latter. The excluded heir’s action is imprescriptible.

"And if the action involve(s) the declaration of the nullity or inexistence of a void or inexistent contract which became the basis for the fraudulent registration of the subject property, then the action is imprescriptible. This finds codal support in Article 1410 of the Civil Code, which declares that the action or defense for the declaration of the inexistence of a void contract does not prescribe.

"As to the constructive notice rule alleged by the petitioner, (the) Supreme Court in the case of Juan vs. Zuniga, citing Sevilla vs. Angeles, has this to say:

'While this ruling is correct as applied to ordinary actions by recovery of real property which is covered by a torrens title upon the theory that its registration under our registration system has the effect of constructive notice to the whole world, the same cannot be applied x x x when the purpose of the action is to compel a trustee to convey the property registered in his name for the benefit of the cestui que trust. In other words, the defense of prescription cannot be set up in an action whose purpose is to recover property held by a person for the benefit of another.’

The Issues

Petitioner interposes the following issues for the consideration of this Court:

"I Whether or not the appellate court erred in not holding that private respondents’ claim against expropriated property had prescribed.

"II Whether or not the appellate court erred in not holding that reconveyance does not lie against the expropriated property.”

The Court’s Ruling

The Petition is meritorious.

First Issue: Prescription

Petitioner avers that private respondents’ claim against the subject property has already prescribed, because the two-year period within which an unduly excluded heir may seek a new settlement of the estate had already lapsed by the time private respondents filed their action with the trial court. Petitioner further argues that

private respondents received constructive notice in view of the registration of the extrajudicial partition with the Registry of Deeds. According to petitioner, the two-year period commenced from July 8, 1982, the date of inscription of the extrajudicial settlement on OCT No. 2537.

The pertinent provisions of Section 4, Rule 74 of the Rules of Court, are reproduced for easy reference, as follows:

"Section 4. Liability of distributees and estate. - If it shall appear at any time within two (2) years after the settlement and distribution of an estate in accordance with the provisions of either of the first two sections of this rule, that an heir or other person has been unduly deprived of his lawful participation in the estate, such heir or such other person may compel the settlement of the estate in the courts in the manner hereinafter provided for the purpose of satisfying such lawful participation. And if within the same time of two (2) years, it shall appear that there are debts outstanding against the estate which have not been paid, or that an heir or other person has been unduly deprived of his lawful participation payable in money, the court having jurisdiction of the estate may, by order for that purpose, after hearing, settle the amount of such debts or lawful participation and order how much and in what manner each distributee shall contribute in the payment thereof, and may issue execution, if circumstances require, against the bond provided in the preceding section or against the real estate belonging to the deceased, or both. Such bond and such real estate shall remain charged with a liability to creditors, heirs, or other persons for the full period of two (2) years after such distribution, notwithstanding any transfers of real estate that may have been made." (Emphasis supplied)

A perusal of the foregoing provision will show that persons unduly deprived of their lawful participation in a settlement may assert their claim only within the two-year period after the settlement and distribution of the estate. This prescription period does not apply, however, to those who had no part in or had no notice of the settlement. Section 4, Rule 74 of the Rules of Court, is not meant to be a statute of limitations. Moreover, by no reason or logic can one contend that an extrajudicial partition, being merely an ex parte proceeding, would affect third persons who had no knowledge thereof. Be that as it may, it cannot be denied, either, that by its registration in the manner provided by law, a transaction may be known actually or constructively.

In the present case, private respondents are deemed to have been constructively notified of the extrajudicial settlement by reason of its registration and annotation in the certificate of title over the subject lot. From the time of registration, private respondents had two (2) years or until July 8, 1984, within which to file their objections or to demand the appropriate settlement of the estate.

On the matter of constructive notice vis-à-vis prescription of an action to contest an extrajudicial partition, a leading authority on land registration elucidates as follows: "While it may be true that an extrajudicial partition is an ex parte proceeding, yet after its registration under the Torrens system and the annotation on the new

certificate of title of the contingent liability of the estate for a period of two years as prescribed in Rule 74, Section 4, of the Rules of Court, by operation of law a constructive notice is deemed made to all the world, so that upon the expiration of said period all third persons should be barred [from going] after the particular property, except where title thereto still remains in the names of the alleged heirs who executed the partition tainted with fraud, or their transferees who may not qualify as ‘innocent purchasers for value’. If the liability of the registered property should extend indefinitely beyond that period, then such constructive notice which binds the whole world by virtue of registration would be meaningless and illusory. x x x."7 (Emphasis supplied)

The only exception to the above-mentioned prescription is when the title remains in the hands of the heirs who have fraudulently caused the partition of the subject property or in those of their transferees who cannot be considered innocent purchasers for value.

In this regard, title to the property in the present case was no longer in the name of the allegedly fraudulent heirs, but already in that of an innocent purchaser for value – the government. Moreover, the government is presumed to have acted in good faith in the acquisition of the lot, considering that title thereto was obtained through a Compromise Agreement judicially approved in proper expropriation proceedings.

Even assuming that there was in fact fraud on the part of the other heirs, private respondents may proceed only against the defrauding heirs, not against petitioner which had no participation in or knowledge of the alleged fraud. The fact that the co-heirs’ title to the property was fraudulently secured cannot prejudice the rights of petitioner which, absent any showing that it had knowledge or participation in the irregularity, is considered a purchaser in good faith and for value.

The remedy of an owner alleged to have been prejudiced or fraudulently deprived of property that was subsequently sold to an innocent purchaser for value is an action for damages against the person or persons who perpetrated the fraud.

Second Issue: Limitations on Reconveyance

The law recognizes the right of a person, who, by adjudication or confirmation of title obtained by actual fraud, is deprived of an estate or an interest therein. Although a review of the decree of registration is no longer possible after the one-year period from its entry expires, still available is an equitable remedy to compel the reconveyance of property to those who may have been wrongfully deprived of it. This equitable remedy afforded by law is not without limitations, however.

An action for reconveyance resulting from fraud prescribes four years from the discovery of the fraud; such discovery is deemed to have taken place upon the issuance of the certificate of title over the property. Registration of real property is considered a constructive notice to all persons and, thus, the four-year period shall be counted therefrom. Clearly then, private respondents’ action for reconveyance based on fraud has already prescribed, considering that title to said property had

been issued way back on August 11, 1982, while the reivindicatory suit was instituted only on July 29, 1996.

Even an action for reconveyance based on an implied or a constructive trust would have already prescribed just the same, because such action prescribes ten (10) years from the alleged fraudulent registration or date of issuance of the certificate of title over the property.13 The imprescriptibility of an action for reconveyance based on implied or constructive trust applies only when the plaintiff or the person enforcing the trust is in possession of the property. In effect, the action for reconveyance is an action to quiet the property title, which does not prescribe.14 Undisputedly, private respondents are not in possession of the disputed property. In fact, they do not even claim to be in possession of it, even if to do so would enable them to justify the imprecriptibility of their action.

Accordingly, the CA Decision’s reliance on Juan v. Zuñiga, as regards the imprescriptibility of an action for reconveyance based on implied or constructive trust, is utterly misplaced in the light of the foregoing rulings of the Court declaring a ten-year period of prescription for such action. Moreover, the principle enunciated therein has no application to the instant case, considering that the supposed "trustee" herein has effectively repudiated the so-called "trust" by directly performing an act of ownership; that is, by conveying the property to the government through expropriation. An action to compel, for the benefit of the cestui que trust, the conveyance of property registered in the trustee’s name does not prescribe unless the trustee repudiates the trust. Thus, private respondents cannot invoke the imprescriptibility of their action for reconveyance, irrespective of their basis for it.

Finally, it must be remembered that reconveyance is a remedy of those whose property has been wrongfully or erroneously registered in the name of another. Such recourse, however, cannot be availed of once the property has passed to an innocent purchaser for value. For an action for reconveyance to prosper, the property should not have passed into the hands of an innocent purchaser for value.

Indubitably, we find that the property has already been conveyed to the government in appropriate expropriation proceedings, the regularity or validity of which has not been questioned. Petitioner should, therefore, enjoy the security afforded to innocent third persons under our registration laws. Equally important, its title to the property must be rightfully preserved.

Hence, private respondents’ action to recover the subject property from the government cannot be maintained, not only because of the prescription of the action, but on account of the protection given to innocent purchasers for value granted under our land registration laws. Indeed, the inevitable consequences of the Torrens system of land registration must be upheld in order to give stability to it and provide finality to land disputes.

This ruling notwithstanding, private respondents are not without recourse. They may sue for damages their co-heirs who have allegedly perpetrated fraud in Civil

Case No. 4534-L pending before the RTC. The right and the extent of damages to be awarded to private respondents shall be determined by the trial court, subject to the evidence duly established during the proceedings.

WHEREFORE, the Petition is hereby GRANTED and the assailed Decision of the Court of Appeals REVERSED. The Orders of the Regional Trial Court of Lapu-Lapu City (Branch 54) in Civil Case No. 4534-L, dated January 12, 1998 and March 31, 1998, are SET ASIDE and the said Civil Case, as against petitioner, is DISMISSED. No costs.

SO ORDERED.

G.R. No. 118680 March 5, 2001

MARIA ELENA RODRIGUEZ PEDROSA, petitioner, vs.

THE HON. COURT OF APPEALS, JOSE, CARMEN, MERCEDES & RAMON, all surnamed RODRIGUEZ, ROSALINA RODRIGUEZ, CHAN LUNG FAI, MATEO

TAN TE, TE ENG SUY, LORETA TE, VICTORIO S. DETALIA, JEROME DEIPARINE, PETRONILO S. DETALIA, HUBERT CHIU YULO, PATERIO N. LAO, LORENSITA M. PADILLA, IMMACULATE CONCEPCION COLLEGE AND LILIAN

EXPRESS, INC. and TIO TUAN, respondents.

QUISUMBING, J.:

This petition assails the decision of the Court of Appeals dated May 23, 1994 which affirmed the judgment of the Regional Trial Court, Branch 15, of Ozamiz City in Civil Case No. OZ-1397.

The facts of this case are as follows:

On April 8, 1946, the spouses Miguel Rodriguez and Rosalina J. de Rodriguez initiated proceedings before the CFI of Ozamiz City for the legal adoption of herein petitioner, Maria Elena Rodriguez Pedrosa. On August 1, 1946, the CFI granted the petition and declared petitioner Pedrosa the adopted child of Miguel and Rosalina. On April 29, 1972, Miguel died intestate. Thereafter, petitioner and Rosalina entered into an extrajudicial settlement of Miguel's estate, adjudicating between themselves in equal proportion the estate of Miguel.

On November 21, 1972, private respondents filed an action to annul the adoption of petitioner before the CFI of Ozamiz City, with petitioner and herein respondent Rosalina as defendants docketed as OZ 349.

On August 28, 1974, the CFI denied the petition and upheld the validity of the adoption. Thereafter, the private respondents appealed said decision to the Court of Appeals.

On March 11, 1983, while said appeal was pending, the Rodriguezes entered into an extrajudicial settlement with respondent Rosalina for the partition of the estate of Miguel and of another sister, Pilar. Rosalina acted as the representative of the heirs of Miguel Rodriguez. Pilar had no heirs except his brothers and sisters.

The Deed of Extrajudicial Settlement and Partition covered fourteen parcels of land covering a total area of 224,883 square meters. These properties were divided among Jose, Carmen, Mercedes, Ramon and the heirs of Miguel, represented solely by Rosalina. The heirs of Miguel were given 226 square meters of parcel 2, and 9,567 square meters and 24,457 square meters of parcels 7 and 9, respectively. The total land area allocated to the heirs of Miguel was 34,250 square meters.

Armed with the Deed of Extrajudicial Settlement and Partition, respondents Rodriguezes were able to secure new Transfer Certificates of Title (TCTs) and were able to transfer some parcels to the other respondents herein.

Lots 504-A-6, 504-B-3 and 504-C-4, portions of Parcel 3, designated as Lot 504, were transferred to respondents Chuan Lung Fai, but not included in the Deed of Settlement and Partition, were transferred to respondent Lilian Express, Inc. and are now registered under TCT No. T-11337. Parcel 6, Lot 560, was subdivided among Ramon, Jose, Carmen and Mercedes and was designated as Lots 560-A, 560-B, 560-C, 560-D and 560-E. Lot 560-A covering 500 square meters was transferred to respondent Victorino Detall4 and was subsequently transferred to Jerome Deiparine who registered it under his name under TCT No. T-10706. Lot 560-B with 500 square meters was transferred to respondent Petronilo Detalla and was later transferred to respondent Hubert Chiu Yulo who registered it under his name under TCT No. T-11305. Lot 560-C was transferred and registered under the name of respondent Paterio Lao with TCT No. T-10206. Lot 560-D was sold to and subsequently registered in the name of Lorensita M. Padilla under TCT No. T-10207. The remaining portion, Lot 560-E consisting of 43,608 square meters was bought by respondent Immaculate Concepcion College and was registered in its name under TCT No. T-10208.

On June 19, 1986, the parties in the appeal which sought to annul the adoption of petitioner Pedrosa filed a joint Motion to Dismiss. On June 25, 1986, the Court of Appeals dismissed the appeal but upheld the validity of the adoption of petitioner.

Thereafter, petitioner sent her daughter, Loreto Jocelyn, to claim their share of the properties from the Rodriguezes. The latter refused saying that Maria Elena and Loreto were not heirs since they were not their blood relatives.

Petitioner, then, filed a complaint to annul the 1983 partition. The said complaint was filed on January 28, 1987. Said complaint was later amended on March 25, 1987 to include the allegation "that earnest efforts toward a compromise were made between the plaintiffs and the defendants, but the same failed.”

The Regional Trial Court dismissed the complaint.

Petitioner appealed to the Court of Appeals. The appellate court affirmed the decision of the trial court. Its ruling was premised on the following grounds:

1) that the participation of Rosalina has already estopped her from questioning the validity of the partition, and since she is already estopped, it naturally follows that Maria Elena, her successor-in-interest, is likewise estopped, applying Article 1439 of the Civil Code;

2) that the appeal of Maria Elena and her claim that the partition is null and void is weakened by her inconsistent claim that the partition would have been alright had she been given a more equitable share;

3) the action is essentially an action for rescission and had been filed late considering that it was filed beyond the 4 year period provided for in Article 1100 of the Civil Code;

4) that fraud and/or bad faith was never established.

Petitioner filed a Motion for Reconsideration, which was denied by the Court of Appeals in a Resolution dated December 20, 1994.

Hence, this petition wherein the petitioner asserts that the following errors were allegedly committed by the Court of Appeals in -

I. ……FINDING THAT THE EXTRAJUDICIAL SETTLEMENT AND PARTITION ENTERED INTO BY DEFENDANT JUREDINI AND DEFENDANTS-APPELLANTS RODRIGUEZES WAS VALID AND BINDING UPON THE PLAINTIFF-APPELLANT WHO DID NOT PARTICIPATE IN SAID TRANSACTION

II. ……CONCLUDING THAT THE CLAIM OF PLAINTIFF-APPELLANT HAVE ALREADY PRESCRIBED TWO (2) YEARS AFTER PUBLICATION OF THE EXTRAJUDICIAL SETTLEMENT AND PARTITION IN THE NEWSPAPER OF GENERAL CIRCULATION

III. ...…CONCLUDING THAT THE CLAIM OF PLAINTIFF-APPELLANT IS BARRED OR ESTOPPED IN FILING THIS CASE (sic) IN VIEW OF THE DISMISSAL OF THE APPEAL IN CIVIL CASE NO. OZ 349 INTERPOSED BY HEREIN DEFENDANTS-APPELLEES WHO WERE THEN PLAINTIFFS-APPELLANTS IN AC [C]-G.R. NO. SP-00208

IV. ……SUSTAINING THE DEFENDANT-APPELLEES' CLAIM THAT AS THEY HAVE NOT AS YET RECOGNIZED PLAINTIFF-APPELLANT AS AN ADOPTED DAUGHTER OF MIGUEL RODRIGUEZ IT WAS NOT NECESSARY FOR THEM TO HAVE HER PARTICIPATE IN THE EXTRAJUDICIAL SETTLEMENT, EXHIBITS "S" AND “I"

V. ……CONCLUDING THAT THE PLAINTIFF-APPELLANT HAD NOT CONCLUSIVELY SHOWN THAT MIGUEL RODRIGUEZ WAS A CO-OWNER OF THE LANDS SOLD AND HENCE IT FOLLOWS THAT SHE HAS NO RIGHT OF REDEMPTION OF THOSE LANDS

VI. ……FINDING THAT PORTION OF LOTS NOS. 504 AND 560 SOLD TO THE OTHER DEFENDANTS–APPELLEES WERE CLEAN AND FREE FROM ENCUMBRANCES OR ANY FLAWS HENCE WERE VALID

VII. ……FINDING THAT THE PLANTIFF–APPELLANT NEVER APPEARED IN COURT TO TESTIFY OR REBUT THE ASSERTIONS OF THE DEFENDANTS–APPELLANTS THAT THERE WAS A VALID PARTITION

VIII.……AWARDING PLAINTIFF–APPELLANT DAMAGES FOR THE INCOME OF HER SHARE IN THE PROPERTIES IN QUESTION

In sum, the issues to be resolved in our view are (1) whether or not the complaint for annulment of the "Deed of Extrajudicial Settlement and Partition" had already prescribed; (2) whether or not said deed is valid; and (3) whether or not the petitioner is entitled to recover the lots which had already been transferred to the respondent buyers.

Petitioner argues that the complaint for annulment of the extrajudicial partition has not yet prescribed since the prescriptive period which should be applied is four years following the case of Beltran vs. Ayson, 4 SCRA 69 (1962). She also avers that Sec. 4, Rule 74 which provides for a two-year prescriptive period needs two requirements. One, the party assailing the partition must have been given notice, and two, the party assailing the partition must have participated therein. Petitioner insists these requirements are not present in her case, since she did not participate in the "Deed of Extrajudicial Settlement and Partition." She cites Villaluz vs. Neme, 7 SCRA 27, 30 (1963), where we held that a deed of extrajudicial partition executed without including some of the heirs, who had no knowledge and consent to the same, is fraudulent. She asserts that she is an adoptive daughter and thus an heir of Miguel.

Petitioner also contends that the respondent buyers were buyers in bad faith since they failed to exercise the necessary due diligence required before purchasing the lots in question. In the alternative, petitioner wants to redeem the said lots as a co-owner of respondent Rodriguezes under the provisions of Article 1620 of the New Civil Code.

Lastly, petitioner asserts that she will suffer lesion if the partition would be allowed. She asks for the rescission of the said partitioning under Articles 165-175 of the Civil Code.

Respondents, in response, claim that the action of petitioner had already prescribed. In addition, they argue that petitioner, Maria Elena, and Rosalina already have their shares in the estate of Miguel Rodriguez reflected in the compromise agreement they entered into with the respondent Rodriguezes in AC- G.R. SP 00208. Finally, respondents aver that the non-participation of Maria Elena in the extrajudicial partition was understandable since her status as an adopted child was then under litigation. In any case, they assert that the shares of Miguel's heirs were adequately protected in the said partition.

Section 4, Rule 7418 provides for a two year prescriptive period (1) to persons who have participated or taken part or had notice of the extrajudicial partition, and in addition (2) when the provisions of Section 119 of Rule 74 have been strictly complied with, i.e., that all the persons or heirs of the decedent have taken part in the extrajudicial settlement or are represented by themselves or through guardians.

Petitioner, as the records confirm, did not participate in the extrajudicial partition. Patently then, the two-year prescriptive period is not applicable in her case.

The applicable prescriptive period here is four (4) years as provided in Gerona vs. De Guzman, 11 SCRA 153 (1964), which held that:

[The action to annul] a deed of "extrajudicial settlement" upon the ground of fraud...may be filed within four years from the discovery of the fraud. Such discovery is deemed to have taken place when said instrument was filed with the

Register of Deeds and new certificates of title were issued in the name of respondents exclusively.

Considering that the complaint of the petitioner was filed on January 28, 1987, or three years and ten months after the questioned extrajudicial settlement dated March 11, 1983, was executed, we hold that her action against the respondents on the basis of fraud has not yet prescribed.

Section 1 of Rule 74 of the Rules of Court is the applicable rule on publication of extrajudicial settlement. It states:

The fact of the extrajudicial settlement or administration shall be published in a newspaper of general circulation in the manner provided in the next succeeding section; but no extrajudicial settlement shall be binding upon any person who has not participated therein or had no notice thereof.

Under said provision, without the participation of all persons involved in the proceedings, the extrajudicial settlement cannot be binding on said persons. The rule contemplates a notice which must be sent out or issued before the Deed of Settlement and/or Partition is agreed upon, i.e., a notice calling all interested parties to participate in the said deed of extrajudicial settlement and partition, not after, which was when publication was done in the instant case. Following Rule 74 and the ruling in Beltran vs. Ayson, since Maria Elena did not participate in the said partition, the settlement is not binding on her.

The provision of Section 4, Rule 74 will also not apply when the deed of extrajudicial partition is sought to be annulled on the ground of fraud. A deed of extrajudicial partition executed without including some of the heirs, who had no knowledge of and consent to the same, is fraudulent and vicious.23 Maria Elena is an heir of Miguel together with her adopting mother, Rosalina. Being the lone descendant of Miguel, she excludes the collateral relatives of Miguel from participating in his estate, following the provisions of Article 1003 of the Civil Code.24 The private respondent Rodriguezes cannot claim that they were not aware of Maria Elena's adoption since they even filed an action to annul the decree of adoption. Neither can they claim that their actions were valid since the adoption of Maria Elena was still being questioned at the time they executed the deed of partition. The complaint seeking to annul the adoption was filed only twenty six (26) years after the decree of adoption, patently a much delayed response to prevent Maria Elena from inheriting from her adoptive parents. The decree of adoption was valid and existing. With this factual setting, it is patent that private respondents executed the deed of partition in bad faith with intent to defraud Maria Elena.

In the case of Segura vs. Segura, the Court held:

This section [referring to section 4, Rule 74] provides in gist that a person who has been deprived of his lawful participation in the estate of the decedent, whether as heir or as creditor, must assert his claim within two years after the extrajudicial or summary settlement of such estate under Sections 1 and 2 respectively of the

same Rule 74. Thereafter, he will be precluded from doing so as the right will have prescribed.

It is clear that Section 1 of Rule 74 does not apply to the partition in question which was null and void as far as the plaintiffs were concerned. The rule covers only valid partitions. The partition in the present case was invalid because it excluded six of the nine heirs who were entitled to equal shares in the partitioned property. Under the rule, "no extrajudicial settlement shall be binding upon any person who has not participated therein or had no notice thereof." As the partition was a total nullity and did not affect the excluded heirs, it was not correct for the trial court to hold that their right to challenge the partition had prescribed after two years from its execution in 1941.

To say that Maria Elena was represented by Rosalina in the partitioning is imprecise. Maria Elena, the adopted child, was no longer a minor at the time Miguel died. Rosalina, only represented her own interests and not those of Maria Elena. Since Miguel predeceased Pilar, a sister, his estate automatically vested to his child and widow, in equal shares. Respondent Rodriguezes' interests did not include Miguel's estate but only Pilar's estate.

Could petitioner still redeem the properties from buyers? Given the circumstances in this case, we are constrained to hold that this is not the proper forum to decide this issue. The properties sought to be recovered by the petitioner are now all registered under the name of third parties. Well settled is the doctrine that a Torrens Title cannot be collaterally attacked. The validity of the title can only be raised in an action expressly instituted for such purpose.

Petitioner asks for the award of damages. No receipts, agreements or any other documentary evidence was presented to justify such claim for damages. Actual damages, to be recoverable, must be proved with a reasonable degree of certainty. Courts cannot simply rely on speculation, conjecture or guesswork in determining the fact and amount of damages. The same is true for moral damages. These cannot be awarded in the absence of any factual basis. The unsubstantiated testimony of Loreto Jocelyn Pedrosa is hearsay and has no probative value. It is settled in jurisprudence that damages may not be awarded on the basis of hearsay evidence. Nonetheless, the failure of the petitioner to substantiate her claims for damages does not mean that she will be totally deprived of any damages. Under the law, nominal damages are awarded, so that a plaintiff's right, which has been invaded or violated by defendants may be vindicated and recognized.

Considering that (1) technically, petitioner sustained injury but which, unfortunately, was not adequately and properly proved, (2) petitioner was unlawfully deprived of her legal participation in the partition of the estate of Miguel, her adoptive father, (3) respondents had transferred portions of the properties involved to third parties, and (4) this case has dragged on for more than a decade, we find it reasonable to grant in petitioner's favor nominal damages in recognition of the existence of a technical injury. The amount to be awarded as such damages should at least commensurate to the injury sustained by the petitioner considering the concept and purpose of said

damages. Such award is given in view of the peculiar circumstances cited and the special reasons extant in this case. Thus, the grant of ONE HUNDRED THOUSAND (P100,000.00) PESOS to petitioner as damages is proper in view of the technical injury she has suffered.

WHEREFORE, the petition is GRANTED. The assailed decision of the Court of Appeals is hereby REVERSED and SET ASIDE. The "Deed of Extrajudicial Settlement and Partition" executed by private respondents on March 11, 1983 is declared invalid. The amount of P100,000.00 is hereby awarded to petitioner as damages to be paid by private respondents, who are also ordered to pay the costs. SO ORDERED.

Section 5. Period for claim of minor or incapacitated.

G.R. No. 118680 March 5, 2001

MARIA ELENA RODRIGUEZ PEDROSA, petitioner, vs.

THE HON. COURT OF APPEALS, JOSE, CARMEN, MERCEDES & RAMON, all surnamed RODRIGUEZ, ROSALINA RODRIGUEZ, CHAN LUNG FAI, MATEO

TAN TE, TE ENG SUY, LORETA TE, VICTORIO S. DETALIA, JEROME DEIPARINE, PETRONILO S. DETALIA, HUBERT CHIU YULO, PATERIO N. LAO, LORENSITA M. PADILLA, IMMACULATE CONCEPCION COLLEGE AND LILIAN

EXPRESS, INC. and TIO TUAN, respondents.

QUISUMBING, J.:

This petition assails the decision of the Court of Appeals dated May 23, 1994 which affirmed the judgment of the Regional Trial Court, Branch 15, of Ozamiz City in Civil Case No. OZ-1397.

The facts of this case are as follows:

On April 8, 1946, the spouses Miguel Rodriguez and Rosalina J. de Rodriguez initiated proceedings before the CFI of Ozamiz City for the legal adoption of herein petitioner, Maria Elena Rodriguez Pedrosa. On August 1, 1946, the CFI granted the petition and declared petitioner Pedrosa the adopted child of Miguel and Rosalina.

On April 29, 1972, Miguel died intestate. Thereafter, petitioner and Rosalina entered into an extrajudicial settlement of Miguel's estate, adjudicating between themselves in equal proportion the estate of Miguel.

On November 21, 1972, private respondents filed an action to annul the adoption of petitioner before the CFI of Ozamiz City, with petitioner and herein respondent Rosalina as defendants docketed as OZ 349.

On August 28, 1974, the CFI denied the petition and upheld the validity of the adoption. Thereafter, the private respondents appealed said decision to the Court of Appeals.

On March 11, 1983, while said appeal was pending, the Rodriguezes entered into an extrajudicial settlement with respondent Rosalina for the partition of the estate of Miguel and of another sister, Pilar. Rosalina acted as the representative of the heirs of Miguel Rodriguez. Pilar had no heirs except his brothers and sisters.

The Deed of Extrajudicial Settlement and Partition covered fourteen parcels of land covering a total area of 224,883 square meters. These properties were divided among Jose, Carmen, Mercedes, Ramon and the heirs of Miguel, represented solely by Rosalina. The heirs of Miguel were given 226 square meters of parcel 2, and 9,567 square meters and 24,457 square meters of parcels 7 and 9,

respectively. The total land area allocated to the heirs of Miguel was 34,250 square meters.

Armed with the Deed of Extrajudicial Settlement and Partition, respondents Rodriguezes were able to secure new Transfer Certificates of Title (TCTs) and were able to transfer some parcels to the other respondents herein.

Lots 504-A-6, 504-B-3 and 504-C-4, portions of Parcel 3, designated as Lot 504, were transferred to respondents Chuan Lung Fai, but not included in the Deed of Settlement and Partition, were transferred to respondent Lilian Express, Inc. and are now registered under TCT No. T-11337. Parcel 6, Lot 560, was subdivided among Ramon, Jose, Carmen and Mercedes and was designated as Lots 560-A, 560-B, 560-C, 560-D and 560-E. Lot 560-A covering 500 square meters was transferred to respondent Victorino Detall and was subsequently transferred to Jerome Deiparine who registered it under his name under TCT No. T-10706. Lot 560-B with 500 square meters was transferred to respondent Petronilo Detalla and was later transferred to respondent Hubert Chiu Yulo who registered it under his name under TCT No. T-11305. Lot 560-C was transferred and registered under the name of respondent Paterio Lao with TCT No. T-10206. Lot 560-D was sold to and subsequently registered in the name of Lorensita M. Padilla under TCT No. T-10207. The remaining portion, Lot 560-E consisting of 43,608 square meters was bought by respondent Immaculate Concepcion College and was registered in its name under TCT No. T-10208.

On June 19, 1986, the parties in the appeal which sought to annul the adoption of petitioner Pedrosa filed a joint Motion to Dismiss. On June 25, 1986, the Court of Appeals dismissed the appeal but upheld the validity of the adoption of petitioner.

Thereafter, petitioner sent her daughter, Loreto Jocelyn, to claim their share of the properties from the Rodriguezes. The latter refused saying that Maria Elena and Loreto were not heirs since they were not their blood relatives.

Petitioner, then, filed a complaint to annul the 1983 partition. The said complaint was filed on January 28, 1987. Said complaint was later amended on March 25, 1987 to include the allegation "that earnest efforts toward a compromise were made between the plaintiffs and the defendants, but the same failed.”

The Regional Trial Court dismissed the complaint.

Petitioner appealed to the Court of Appeals. The appellate court affirmed the decision of the trial court. Its ruling was premised on the following grounds:

1) that the participation of Rosalina has already estopped her from questioning the validity of the partition, and since she is already estopped, it naturally follows that Maria Elena, her successor-in-interest, is likewise estopped, applying Article 1439 of the Civil Code;

2) that the appeal of Maria Elena and her claim that the partition is null and void is weakened by her inconsistent claim that the partition would have been alright had she been given a more equitable share; 3) the action is essentially an action for rescission and had been filed late considering that it was filed beyond the 4 year period provided for in Article 1100 of the Civil Code; 4) that fraud and/or bad faith was never established.

Petitioner filed a Motion for Reconsideration, which was denied by the Court of Appeals in a Resolution dated December 20, 1994.

Hence, this petition wherein the petitioner asserts that the following errors were allegedly committed by the Court of Appeals in -

I. ……FINDING THAT THE EXTRAJUDICIAL SETTLEMENT AND PARTITION ENTERED INTO BY DEFENDANT JUREDINI AND DEFENDANTS-APPELLANTS RODRIGUEZES WAS VALID AND BINDING UPON THE PLAINTIFF-APPELLANT WHO DID NOT PARTICIPATE IN SAID TRANSACTION

II. ……CONCLUDING THAT THE CLAIM OF PLAINTIFF-APPELLANT HAVE ALREADY PRESCRIBED TWO (2) YEARS AFTER PUBLICATION OF THE EXTRAJUDICIAL SETTLEMENT AND PARTITION IN THE NEWSPAPER OF GENERAL CIRCULATION

III. ...…CONCLUDING THAT THE CLAIM OF PLAINTIFF-APPELLANT IS BARRED OR ESTOPPED IN FILING THIS CASE (sic) IN VIEW OF THE DISMISSAL OF THE APPEAL IN CIVIL CASE NO. OZ 349 INTERPOSED BY HEREIN DEFENDANTS-APPELLEES WHO WERE THEN PLAINTIFFS-APPELLANTS IN AC [C]-G.R. NO. SP-00208

IV. ……SUSTAINING THE DEFENDANT-APPELLEES' CLAIM THAT AS THEY HAVE NOT AS YET RECOGNIZED PLAINTIFF-APPELLANT AS AN ADOPTED DAUGHTER OF MIGUEL RODRIGUEZ IT WAS NOT NECESSARY FOR THEM TO HAVE HER PARTICIPATE IN THE EXTRAJUDICIAL SETTLEMENT, EXHIBITS "S" AND “I"

V. ……CONCLUDING THAT THE PLAINTIFF-APPELLANT HAD NOT CONCLUSIVELY SHOWN THAT MIGUEL RODRIGUEZ WAS A CO-OWNER OF THE LANDS SOLD AND HENCE IT FOLLOWS THAT SHE HAS NO RIGHT OF REDEMPTION OF THOSE LANDS

VI. ……FINDING THAT PORTION OF LOTS NOS. 504 AND 560 SOLD TO THE OTHER DEFENDANTS–APPELLEES WERE CLEAN AND FREE FROM ENCUMBRANCES OR ANY FLAWS HENCE WERE VALID

VII.……FINDING THAT THE PLANTIFF–APPELLANT NEVER APPEARED IN COURT TO TESTIFY OR REBUT THE ASSERTIONS OF THE DEFENDANTS–APPELLANTS THAT THERE WAS A VALID PARTITION

VIII.……AWARDING PLAINTIFF–APPELLANT DAMAGES FOR THE INCOME OF HER SHARE IN THE PROPERTIES IN QUESTION

In sum, the issues to be resolved in our view are (1) whether or not the complaint for annulment of the "Deed of Extrajudicial Settlement and Partition" had already

prescribed; (2) whether or not said deed is valid; and (3) whether or not the petitioner is entitled to recover the lots which had already been transferred to the respondent buyers.

Petitioner argues that the complaint for annulment of the extrajudicial partition has not yet prescribed since the prescriptive period which should be applied is four years following the case of Beltran vs. Ayson, 4 SCRA 69 (1962). She also avers that Sec. 4, Rule 74 which provides for a two-year prescriptive period needs two requirements. One, the party assailing the partition must have been given notice, and two, the party assailing the partition must have participated therein. Petitioner insists these requirements are not present in her case, since she did not participate in the "Deed of Extrajudicial Settlement and Partition." She cites Villaluz vs. Neme, 7 SCRA 27, 30 (1963), where we held that a deed of extrajudicial partition executed without including some of the heirs, who had no knowledge and consent to the same, is fraudulent. She asserts that she is an adoptive daughter and thus an heir of Miguel.

Petitioner also contends that the respondent buyers were buyers in bad faith since they failed to exercise the necessary due diligence required before purchasing the lots in question. In the alternative, petitioner wants to redeem the said lots as a co-owner of respondent Rodriguezes under the provisions of Article 1620 of the New Civil Code.

Lastly, petitioner asserts that she will suffer lesion if the partition would be allowed. She asks for the rescission of the said partitioning under Articles 165-175 of the Civil Code.

Respondents, in response, claim that the action of petitioner had already prescribed. In addition, they argue that petitioner, Maria Elena, and Rosalina already have their shares in the estate of Miguel Rodriguez reflected in the compromise agreement they entered into with the respondent Rodriguezes in AC- G.R. SP 00208. Finally, respondents aver that the non-participation of Maria Elena in the extrajudicial partition was understandable since her status as an adopted child was then under litigation. In any case, they assert that the shares of Miguel's heirs were adequately protected in the said partition.

Section 4, Rule 74 provides for a two year prescriptive period (1) to persons who have participated or taken part or had notice of the extrajudicial partition, and in addition (2) when the provisions of Section 1 of Rule 74 have been strictly complied with, i.e., that all the persons or heirs of the decedent have taken part in the extrajudicial settlement or are represented by themselves or through guardians.

Petitioner, as the records confirm, did not participate in the extrajudicial partition. Patently then, the two-year prescriptive period is not applicable in her case.

The applicable prescriptive period here is four (4) years as provided in Gerona vs. De Guzman, 11 SCRA 153 (1964), which held that:

[The action to annul] a deed of "extrajudicial settlement" upon the ground of fraud...may be filed within four years from the discovery of the fraud. Such discovery is deemed to have taken place when said instrument was filed with the Register of Deeds and new certificates of title were issued in the name of respondents exclusively.

Considering that the complaint of the petitioner was filed on January 28, 1987, or three years and ten months after the questioned extrajudicial settlement dated March 11, 1983, was executed, we hold that her action against the respondents on the basis of fraud has not yet prescribed.

Section 1 of Rule 74 of the Rules of Court is the applicable rule on publication of extrajudicial settlement. It states:

The fact of the extrajudicial settlement or administration shall be published in a newspaper of general circulation in the manner provided in the next succeeding section; but no extrajudicial settlement shall be binding upon any person who has not participated therein or had no notice thereof.

Under said provision, without the participation of all persons involved in the proceedings, the extrajudicial settlement cannot be binding on said persons. The rule contemplates a notice which must be sent out or issued before the Deed of Settlement and/or Partition is agreed upon, i.e., a notice calling all interested parties to participate in the said deed of extrajudicial settlement and partition, not after, which was when publication was done in the instant case. Following Rule 74 and the ruling in Beltran vs. Ayson, since Maria Elena did not participate in the said partition, the settlement is not binding on her.

The provision of Section 4, Rule 74 will also not apply when the deed of extrajudicial partition is sought to be annulled on the ground of fraud. A deed of extrajudicial partition executed without including some of the heirs, who had no knowledge of and consent to the same, is fraudulent and vicious. Maria Elena is an heir of Miguel together with her adopting mother, Rosalina. Being the lone descendant of Miguel, she excludes the collateral relatives of Miguel from participating in his estate, following the provisions of Article 1003 of the Civil Code. The private respondent Rodriguezes cannot claim that they were not aware of Maria Elena's adoption since they even filed an action to annul the decree of adoption. Neither can they claim that their actions were valid since the adoption of Maria Elena was still being questioned at the time they executed the deed of partition. The complaint seeking to annul the adoption was filed only twenty six (26) years after the decree of adoption, patently a much delayed response to prevent Maria Elena from inheriting from her adoptive parents. The decree of adoption was valid and existing. With this factual setting, it is patent that private respondents executed the deed of partition in bad faith with intent to defraud Maria Elena.

In the case of Segura vs. Segura, the Court held:

This section [referring to section 4, Rule 74] provides in gist that a person who has been deprived of his lawful participation in the estate of the decedent, whether as heir or as creditor, must assert his claim within two years after the extrajudicial or summary settlement of such estate under Sections 1 and 2 respectively of the same Rule 74. Thereafter, he will be precluded from doing so as the right will have prescribed.

It is clear that Section 1 of Rule 74 does not apply to the partition in question which was null and void as far as the plaintiffs were concerned. The rule covers only valid partitions. The partition in the present case was invalid because it excluded six of the nine heirs who were entitled to equal shares in the partitioned property. Under the rule, "no extrajudicial settlement shall be binding upon any person who has not participated therein or had no notice thereof." As the partition was a total nullity and did not affect the excluded heirs, it was not correct for the trial court to hold that their right to challenge the partition had prescribed after two years from its execution in 1941.

To say that Maria Elena was represented by Rosalina in the partitioning is imprecise. Maria Elena, the adopted child, was no longer a minor at the time Miguel died. Rosalina, only represented her own interests and not those of Maria Elena. Since Miguel predeceased Pilar, a sister, his estate automatically vested to his child and widow, in equal shares. Respondent Rodriguezes' interests did not include Miguel's estate but only Pilar's estate.

Could petitioner still redeem the properties from buyers? Given the circumstances in this case, we are constrained to hold that this is not the proper forum to decide this issue. The properties sought to be recovered by the petitioner are now all registered under the name of third parties. Well settled is the doctrine that a Torrens Title cannot be collaterally attacked. The validity of the title can only be raised in an action expressly instituted for such purpose.

Petitioner asks for the award of damages. No receipts, agreements or any other documentary evidence was presented to justify such claim for damages. Actual damages, to be recoverable, must be proved with a reasonable degree of certainty. Courts cannot simply rely on speculation, conjecture or guesswork in determining the fact and amount of damages. The same is true for moral damages. These cannot be awarded in the absence of any factual basis. The unsubstantiated testimony of Loreto Jocelyn Pedrosa is hearsay and has no probative value. It is settled in jurisprudence that damages may not be awarded on the basis of hearsay evidence. Nonetheless, the failure of the petitioner to substantiate her claims for damages does not mean that she will be totally deprived of any damages. Under the law, nominal damages are awarded, so that a plaintiff's right, which has been invaded or violated by defendants may be vindicated and recognized.

Considering that (1) technically, petitioner sustained injury but which, unfortunately, was not adequately and properly proved, (2) petitioner was unlawfully deprived of her legal participation in the partition of the estate of Miguel, her adoptive father, (3) respondents had transferred portions of the properties involved to third parties, and

(4) this case has dragged on for more than a decade, we find it reasonable to grant in petitioner's favor nominal damages in recognition of the existence of a technical injury.31 The amount to be awarded as such damages should at least commensurate to the injury sustained by the petitioner considering the concept and purpose of said damages.32 Such award is given in view of the peculiar circumstances cited and the special reasons extant in this case.33 Thus, the grant of ONE HUNDRED THOUSAND (P100,000.00) PESOS to petitioner as damages is proper in view of the technical injury she has suffered.

WHEREFORE, the petition is GRANTED. The assailed decision of the Court of Appeals is hereby REVERSED and SET ASIDE. The "Deed of Extrajudicial Settlement and Partition" executed by private respondents on March 11, 1983 is declared invalid. The amount of P100,000.00 is hereby awarded to petitioner as damages to be paid by private respondents, who are also ordered to pay the costs.

SO ORDERED.

RULE 75: PRODUCTION OF WILL, ALLOWANCE OF WILL

Section 1. Allowance necessary. Conclusive as to execution.

G.R. No. L-56340 June 24, 1983 SPOUSES ALVARO PASTOR, JR. and MA. ELENA ACHAVAL DE PASTOR,

petitioners, vs.

THE COURT OF APPEALS, JUAN Y. REYES, JUDGE OF BRANCH I, COURT OF FIRST INSTANCE OF CEBU and LEWELLYN BARLITO QUEMADA,

respondents. PLANA, J.:

FACTS:

This is a case of hereditary succession.

Alvaro Pastor, Sr. (PASTOR, SR.), a Spanish subject, died in Cebu City on June 5, 1966, survived by his Spanish wife Sofia Bossio (who also died on October 21, 1966), their two legitimate children Alvaro Pastor, Jr. (PASTOR, JR.) and Sofia Pastor de Midgely (SOFIA), and an illegitimate child, not natural, by the name of Lewellyn Barlito Quemada QUEMADA PASTOR, JR. is a Philippine citizen, having been naturalized in 1936. SOFIA is a Spanish subject. QUEMADA is a Filipino by his mother's citizenship.

On November 13, 1970, QUEMADA filed a petition for the probate and allowance of an alleged holographic will of PASTOR, SR. with the Court of First Instance of Cebu, Branch I (PROBATE COURT), docketed as SP No. 3128-R. The will contained only one testamentary disposition: a legacy in favor of QUEMADA consisting of 30% of PASTOR, SR.'s 42% share in the operation by Atlas Consolidated Mining and Development Corporation (ATLAS) of some mining claims in Pina-Barot, Cebu.

On November 21, 1970, the PROBATE COURT, upon motion of QUEMADA and after an ex parte hearing, appointed him special administrator of the entire estate of PASTOR, SR., whether or not covered or affected by the holographic will. He assumed office as such on December 4, 1970 after filing a bond of P 5,000.00.

On December 7, 1970, QUEMADA as special administrator, instituted against PASTOR, JR. and his wife an action for reconveyance of alleged properties of the estate, which included the properties subject of the legacy and which were in the names of the spouses PASTOR, JR. and his wife, Maria Elena Achaval de Pastor, who claimed to be the owners thereof in their own rights, and not by inheritance. The action, docketed as Civil Case No. 274-R, was filed with the Court of First Instance of Cebu, Branch IX.

On February 2, 1971, PASTOR, JR. and his sister SOFIA filed their opposition to the petition for probate and the order appointing QUEMADA as special administrator.

On December 5, 1972, the PROBATE COURT issued an order allowing the will to probate. Appealed to the Court of Appeals in CA-G.R. No. 52961- R, the order was affirmed in a decision dated May 9, 1977. On petition for review, the Supreme Court in G.R. No. L-46645 dismissed the petition in a minute resolution dated November 1, 1977 and remanded the same to the PROBATE COURT after denying reconsideration on January 11, 1978.

For two years after remand of the case to the PROBATE COURT, QUEMADA filed pleading after pleading asking for payment of his legacy and seizure of the properties subject of said legacy. PASTOR, JR. and SOFIA opposed these pleadings on the ground of pendency of the reconveyance suit with another branch of the Cebu Court of First Instance. All pleadings remained unacted upon by the PROBATE COURT.

On March 5, 1980, the PROBATE COURT set the hearing on the intrinsic validity of the will for March 25, 1980, but upon objection of PASTOR, JR. and SOFIA on the e ground of pendency of the reconveyance suit, no hearing was held on March 25. Instead, the PROBATE COURT required the parties to submit their respective position papers as to how much inheritance QUEMADA was entitled to receive under the wig. Pursuant thereto, PASTOR. JR. and SOFIA submitted their Memorandum of authorities dated April 10, which in effect showed that determination of how much QUEMADA should receive was still premature. QUEMADA submitted his Position paper dated April 20, 1980. ATLAS, upon order of the Court, submitted a sworn statement of royalties paid to the Pastor Group of tsn from June 1966 (when Pastor, Sr. died) to February 1980. The statement revealed that of the mining claims being operated by ATLAS, 60% pertained to the Pastor Group distributed as follows:

1. A. Pastor, Jr. ...................................40.5% 2. E. Pelaez, Sr. ...................................15.0% 3. B. Quemada …………………………………4.5%

On August 20, 1980, while the reconveyance suit was still being litigated in Branch IX of the Court of First Instance of Cebu, the PROBATE COURT issued the now assailed Order of Execution and Garnishment, resolving the question of ownership of the royalties payable by ATLAS and ruling in effect that the legacy to QUEMADA was not inofficious. [There was absolutely no statement or claim in the Order that the Probate Order of December 5, 1972 had previously resolved the issue of ownership of the mining rights of royalties thereon, nor the intrinsic validity of the holographic will.]

The order of August 20, 1980 found that as per the holographic will and a written acknowledgment of PASTOR, JR. dated June 17, 1962, of the above 60% interest in the mining claims belonging to the Pastor Group, 42% belonged to PASTOR, SR.

and only 33% belonged to PASTOR, JR. The remaining 25% belonged to E. Pelaez, also of the Pastor Group. The PROBATE COURT thus directed ATLAS to remit directly to QUEMADA the 42% royalties due decedent's estate, of which QUEMADA was authorized to retain 75% for himself as legatee and to deposit 25% with a reputable banking institution for payment of the estate taxes and other obligations of the estate. The 33% share of PASTOR, JR. and/or his assignees was ordered garnished to answer for the accumulated legacy of QUEMADA from the time of PASTOR, SR.'s death, which amounted to over two million pesos.

The order being "immediately executory", QUEMADA succeeded in obtaining a Writ of Execution and Garnishment on September 4, 1980, and in serving the same on ATLAS on the same day. Notified of the Order on September 6, 1980, the oppositors sought reconsideration thereof on the same date primarily on the ground that the PROBATE COURT gravely abused its discretion when it resolved the question of ownership of the royalties and ordered the payment of QUEMADA's legacy after prematurely passing upon the intrinsic validity of the will. In the meantime, the PROBATE COURT ordered suspension of payment of all royalties due PASTOR, JR. and/or his assignees until after resolution of oppositors' motion for reconsideration.

Before the Motion for Reconsideration could be resolved, however, PASTOR, JR., this time joined by his wife Ma. ELENA ACHAVAL DE PASTOR, filed with the Court of Appeals a Petition for certiorari and Prohibition with a prayer for writ of preliminary injunction (CA-G.R. No. SP- 11373-R). They assailed the Order dated August 20, 1980 and the writ of execution and garnishment issued pursuant thereto. The petition was denied on November 18, 1980 on the grounds (1) that its filing was premature because the Motion for Reconsideration of the questioned Order was still pending determination by the PROBATE COURT; and (2) that although "the rule that a motion for reconsideration is prerequisite for an action for certiorari is never an absolute rule," the Order assailed is "legally valid. “

On December 9, 1980, PASTOR, JR. and his wife moved for reconsideration of the Court of Appeal's decision of November 18, 1980, calling the attention of the appellate court to another order of the Probate Court dated November 11, 1980 (i.e., while their petition for certiorari was pending decision in the appellate court), by which the oppositors' motion for reconsideration of the Probate Court's Order of August 20, 1980 was denied. [The November 11 Order declared that the questions of intrinsic validity of the will and of ownership over the mining claims (not the royalties alone) had been finally adjudicated by the final and executory Order of December 5, 1972, as affirmed by the Court of Appeals and the Supreme Court, thereby rendering moot and academic the suit for reconveyance then pending in the Court of First Instance of Cebu, Branch IX. It clarified that only the 33% share of PASTOR, JR. in the royalties (less than 7.5% share which he had assigned to QUEMADA before PASTOR, SR. died) was to be garnished and that as regards PASTOR, SR.'s 42% share, what was ordered was just the transfer of its possession to the custody of the PROBATE COURT through the special administrator. Further, the Order granted QUEMADA 6% interest on his unpaid

legacy from August 1980 until fully paid.] Nonetheless, the Court of Appeals denied reconsideration.

Hence, this Petition for Review by certiorari with prayer for a writ of pre y injunction, assailing the decision of the Court of Appeals dated November 18, 1980 as well as the orders of the Probate Court dated August 20, 1980, November 11, 1980 and December 17, 1980, Med by petitioners on March 26, 1981, followed by a Supplemental Petition with Urgent Prayer for Restraining Order.

In April 1981, the Court (First Division) issued a writ of preliminary injunction, the lifting of which was denied in the Resolution of the same Division dated October 18, 1982, although the bond of petitioners was increased from P50,000.00 to P100,000.00.

Between December 21, 1981 and October 12, 1982, private respondent filed seven successive motions for early resolution. Five of these motions expressly prayed for the resolution of the question as to whether or not the petition should be given due course.

On October 18, 1982, the Court (First Division) adopted a resolution stating that "the petition in fact and in effect was given due course when this case was heard on the merits on September 7, (should be October 21, 1981) and concise memoranda in amplification of their oral arguments on the merits of the case were filed by the parties pursuant to the resolution of October 21, 1981 . . . " and denied in a resolution dated December 13, 1982, private respondent's "Omnibus motion to set aside resolution dated October 18, 1982 and to submit the matter of due course to the present membership of the Division; and to reassign the case to another ponente.”

Upon Motion for Reconsideration of the October 18, 1982 and December 13, 1982 Resolutions, the Court en banc resolved to CONFIRM the questioned resolutions insofar as hey resolved that the petition in fact and in effect had been given due course.

ISSUES: Assailed by the petitioners in these proceedings is the validity of the Order of execution and garnishment dated August 20, 1980 as well as the Orders subsequently issued allegedly to implement the Probate Order of December 5, 1972, to wit: the Order of November 11, 1980 declaring that the Probate Order of 1972 indeed resolved the issues of ownership and intrinsic validity of the will, and reiterating the Order of Execution dated August 20, 1980; and the Order of December 17, 1980 reducing to P2,251,516.74 the amount payable to QUEMADA representing the royalties he should have received from the death of PASTOR, SR. in 1966 up to February 1980.

The Probate Order itself, insofar as it merely allowed the holographic will in probate, is not questioned. But petitioners denounce the Probate Court for having acted beyond its jurisdiction or with grave abuse of discretion when it issued the

assailed Orders. Their argument runs this way: Before the provisions of the holographic win can be implemented, the questions of ownership of the mining properties and the intrinsic validity of the holographic will must first be resolved with finality. Now, contrary to the position taken by the Probate Court in 1980 — i.e., almost eight years after the probate of the will in 1972 — the Probate Order did not resolve the two said issues. Therefore, the Probate Order could not have resolved and actually did not decide QUEMADA's entitlement to the legacy. This being so, the Orders for the payment of the legacy in alleged implementation of the Probate Order of 1972 are unwarranted for lack of basis.

Closely related to the foregoing is the issue raised by QUEMADA The Probate Order of 1972 having become final and executory, how can its implementation (payment of legacy) be restrained? Of course, the question assumes that QUEMADA's entitlement to the legacy was finally adjudged in the Probate Order.

On the merits, therefore, the basic issue is whether the Probate Order of December 5, 1972 resolved with finality the questions of ownership and intrinsic validity. A negative finding will necessarily render moot and academic the other issues raised by the parties, such as the jurisdiction of the Probate Court to conclusively resolve title to property, and the constitutionality and repercussions of a ruling that the mining properties in dispute, although in the name of PASTOR, JR. and his wife, really belonged to the decedent despite the latter's constitutional disqualification as an alien.

On the procedural aspect, placed in issue is the propriety of certiorari as a means to assail the validity of the order of execution and the implementing writ.

DISCUSSION:

1. Issue of Ownership —

(a) In a special proceeding for the probate of a will, the issue by and large is restricted to the extrinsic validity of the will, i.e., whether the testator, being of sound mind, freely executed the will in accordance with the formalities prescribed by law. (Rules of Court, Rule 75, Section 1; Rule 76, Section 9.) As a rule, the question of ownership is an extraneous matter which the Probate Court cannot resolve with finality. Thus, for the purpose of determining whether a certain property should or should not be included in the inventory of estate properties, the Probate Court may pass upon the title thereto, but such determination is provisional, not conclusive, and is subject to the final decision in a separate action to resolve title. [3 Moran, Comments on the Rules of Court (1980 ed.), p. 458; Valero Vda. de Rodriguez vs. Court of Appeals, 91 SCRA 540.]

(b) The rule is that execution of a judgment must conform to that decreed in the dispositive part of the decision. (Philippine-American Insurance Co. vs. Honorable Flores, 97 SCRA 811.) However, in case of ambiguity or uncertainty, the body of the decision may be scanned for guidance in construing the

judgment. (Heirs of Presto vs. Galang, 78 SCRA 534; Fabular vs. Court of Appeals, 119 SCRA 329; Robles vs. Timario. 107 Phil. 809.)

The Order sought to be executed by the assailed Order of execution is the Probate Order of December 5, 1972 which allegedly resolved the question of ownership of the disputed mining properties. The said Probate Order enumerated the issues before the Probate Court, thus:

Unmistakably, there are three aspects in these proceedings: (1) the probate of the holographic will (2) the intestate estate aspect; and (3) the administration proceedings for the purported estate of the decedent in the Philippines.

In its broad and total perspective the whole proceedings are being impugned by the oppositors on jurisdictional grounds, i.e., that the fact of the decedent's residence and existence of properties in the Philippines have not been established.

Specifically placed in issue with respect to the probate proceedings are: (a) whether or not the holographic will (Exhibit "J") has lost its efficacy as the last will and testament upon the death of Alvaro Pastor, Sr. on June 5, 1966, in Cebu City, Philippines; (b) Whether or not the said will has been executed with all the formalities required by law; and (c) Did the late presentation of the holographic will affect the validity of the same?

Issues In the Administration Proceedings are as follows: (1) Was the ex- parte appointment of the petitioner as special administrator valid and proper? (2) Is there any indispensable necessity for the estate of the decedent to be placed under administration? (3) Whether or not petition is qualified to be a special administrator of the estate; and (4) Whether or not the properties listed in the inventory (submitted by the special administrator but not approved by the Probate Court) are to be excluded.

Then came what purports to be the dispositive portion:

Upon the foregoing premises, this Court rules on and resolves some of the problems and issues presented in these proceedings, as follows:

(a) The Court has acquired jurisdiction over the probate proceedings as it hereby allows and approves the so-called holographic will of testator Alvaro Pastor, Sr., executed on July 31, 1961 with respect to its extrinsic validity, the same having been duly authenticated pursuant to the requisites or solemnities prescribed by law. Let, therefore, a certificate of its allowance be prepared by the Branch Clerk of this Court to be signed by this Presiding Judge, and attested by the seal of the Court, and thereafter attached to the will, and the will and certificate filed and recorded by the clerk. Let attested copies of the will and of the certificate of allowance thereof be sent to Atlas Consolidated Mining & Development Corporation, Goodrich Bldg., Cebu City, and the Register of Deeds of Cebu or of Toledo City, as the case may be, for recording.

(b) There was a delay in the granting of the letters testamentary or of administration for as a matter of fact, no regular executor and/or administrator has been appointed up to this time and - the appointment of a special administrator was, and still is, justified under the circumstances to take possession and charge of the estate of the deceased in the Philippines (particularly in Cebu) until the problems causing the delay are decided and the regular executor and/or administrator appointed.

(c) There is a necessity and propriety of a special administrator and later on an executor and/or administrator in these proceedings, in spite of this Court's declaration that the oppositors are the forced heirs and the petitioner is merely vested with the character of a voluntary heir to the extent of the bounty given to him (under) the will insofar as the same will not prejudice the legitimes of the oppositor for the following reasons:

1. To submit a complete inventory of the estate of the decedent-testator Alvaro Pastor, Sr.

2. To administer and to continue to put to prolific utilization of the properties of the decedent;

3. To keep and maintain the houses and other structures and belonging to the estate, since the forced heirs are residing in Spain, and prepare them for delivery to the heirs in good order after partition and when directed by the Court, but only after the payment of estate and inheritance taxes;

(d) Subject to the outcome of the suit for reconveyance of ownership and possession of real and personal properties in Civil Case No. 274-T before Branch IX of the Court of First Instance of Cebu, the intestate estate administration aspect must proceed, unless, however, it is duly proven by the oppositors that debts of the decedent have already been paid, that there had been an extrajudicial partition or summary one between the forced heirs, that the legacy to be given and delivered to the petitioner does not exceed the free portion of the estate of the testator, that the respective shares of the forced heirs have been fairly apportioned, distributed and delivered to the two forced heirs of Alvaro Pastor, Sr., after deducting the property willed to the petitioner, and the estate and inheritance taxes have already been paid to the Government thru the Bureau of Internal Revenue.

The suitability and propriety of allowing petitioner to remain as special administrator or administrator of the other properties of the estate of the decedent, which properties are not directly or indirectly affected by the provisions of the holographic will (such as bank deposits, land in Mactan etc.), will be resolved in another order as separate incident, considering that this order should have been properly issued solely as a resolution on the issue of whether or not to allow and approve the aforestated will. (Emphasis supplied.)

Nowhere in the dispositive portion is there a declaration of ownership of specific properties. On the contrary, it is manifest therein that ownership was not resolved. For it confined itself to the question of extrinsic validity of the

win, and the need for and propriety of appointing a special administrator. Thus it allowed and approved the holographic win "with respect to its extrinsic validity, the same having been duly authenticated pursuant to the requisites or solemnities prescribed by law." It declared that the intestate estate administration aspect must proceed " subject to the outcome of the suit for reconveyance of ownership and possession of real and personal properties in Civil Case 274-T before Branch IX of the CFI of Cebu." [Parenthetically, although the statement refers only to the "intestate" aspect, it defies understanding how ownership by the estate of some properties could be deemed finally resolved for purposes of testate administration, but not so for intestate purposes. Can the estate be the owner of a property for testate but not for intestate purposes?] Then again, the Probate Order (while indeed it does not direct the implementation of the legacy) conditionally stated that the intestate administration aspect must proceed "unless . . . it is proven . . . that the legacy to be given and delivered to the petitioner does not exceed the free portion of the estate of the testator," which clearly implies that the issue of impairment of legitime (an aspect of intrinsic validity) was in fact not resolved. Finally, the Probate Order did not rule on the propriety of allowing QUEMADA to remain as special administrator of estate properties not covered by the holographic will, "considering that this (Probate) Order should have been properly issued solely as a resolution on the issue of whether or not to allow and approve the aforestated will. “

(c) That the Probate Order did not resolve the question of ownership of the properties listed in the estate inventory was appropriate, considering that the issue of ownership was the very subject of controversy in the reconveyance suit that was still pending in Branch IX of the Court of First Instance of Cebu.

(d) What, therefore, the Court of Appeals and, in effect, the Supreme Court affirmed en toto when they reviewed the Probable Order were only the matters properly adjudged in the said Order.

(e) In an attempt to justify the issuance of the Order of execution dated August 20, 1980, the Probate Court in its Order of November 11, 1980 explained that the basis for its conclusion that the question of ownership had been formally resolved by the Probate Order of 1972 are the findings in the latter Order that (1) during the lifetime of the decedent, he was receiving royalties from ATLAS; (2) he had resided in the Philippines since pre-war days and was engaged in the mine prospecting business since 1937 particularly in the City of Toledo; and (3) PASTOR, JR. was only acting as dummy for his father because the latter was a Spaniard.

Based on the premises laid, the conclusion is obviously far-fetched.

(f) It was, therefore, error for the assailed implementing Orders to conclude that the Probate Order adjudged with finality the question of ownership of the mining properties and royalties, and that, premised on this conclusion, the dispositive

portion of the said Probate Order directed the special administrator to pay the legacy in dispute.

2. Issue of Intrinsic Validity of the Holographic Will -

(a) When PASTOR, SR. died in 1966, he was survived by his wife, aside from his two legitimate children and one illegitimate son. There is therefore a need to liquidate the conjugal partnership and set apart the share of PASTOR, SR.'s wife in the conjugal partnership preparatory to the administration and liquidation of the estate of PASTOR, SR. which will include, among others, the determination of the extent of the statutory usufructuary right of his wife until her death. * When the disputed Probate order was issued on December 5, 1972, there had been no liquidation of the community properties of PASTOR, SR. and his wife.

(b) So, also, as of the same date, there had been no prior definitive determination of the assets of the estate of PASTOR, SR. There was an inventory of his properties presumably prepared by the special administrator, but it does not appear that it was ever the subject of a hearing or that it was judicially approved. The reconveyance or recovery of properties allegedly owned but not in the name of PASTOR, SR. was still being litigated in another court.

(c) There was no appropriate determination, much less payment, of the debts of the decedent and his estate. Indeed, it was only in the Probate Order of December 5, 1972 where the Probate Court ordered that-... a notice be issued and published pursuant to the provisions of Rule 86 of the Rules of Court, requiring all persons having money claims against the decedent to file them in the office of the Branch Clerk of this Court.”

(d) Nor had the estate tax been determined and paid, or at least provided for, as of December 5, 1972.

(e) The net assets of the estate not having been determined, the legitime of the forced heirs in concrete figures could not be ascertained.

(f) All the foregoing deficiencies considered, it was not possible to determine whether the legacy of QUEMADA - a fixed share in a specific property rather than an aliquot part of the entire net estate of the deceased - would produce an impairment of the legitime of the compulsory heirs.

(g) Finally, there actually was no determination of the intrinsic validity of the will in other respects. It was obviously for this reason that as late as March 5, 1980 - more than 7 years after the Probate Order was issued the Probate Court scheduled on March 25, 1980 a hearing on the intrinsic validity of the will.

3. Propriety of certiorari — Private respondent challenges the propriety of certiorari as a means to assail the validity of the disputed Order of execution. He contends that the error, if any, is one of judgment, not jurisdiction, and properly correctible only by appeal, not certiorari.

Under the circumstances of the case at bar, the challenge must be rejected. Grave abuse of discretion amounting to lack of jurisdiction is much too evident in the actuations of the probate court to be overlooked or condoned.

(a) Without a final, authoritative adjudication of the issue as to what properties compose the estate of PASTOR, SR. in the face of conflicting claims made by heirs and a non-heir (MA. ELENA ACHAVAL DE PASTOR) involving properties not in the name of the decedent, and in the absence of a resolution on the intrinsic validity of the will here in question, there was no basis for the Probate Court to hold in its Probate Order of 1972, which it did not, that private respondent is entitled to the payment of the questioned legacy. Therefore, the Order of Execution of August 20, 1980 and the subsequent implementing orders for the payment of QUEMADA's legacy, in alleged implementation of the dispositive part of the Probate Order of December 5, 1972, must fall for lack of basis.

(b) The ordered payment of legacy would be violative of the rule requiring prior liquidation of the estate of the deceased, i.e., the determination of the assets of the estate and payment of all debts and expenses, before apportionment and distribution of the residue among the heirs and legatees. (Bernardo vs. Court of Appeals, 7 SCRA 367.)

(c) Neither has the estate tax been paid on the estate of PASTOR, SR. Payment therefore of the legacy to QUEMADA would collide with the provision of the National Internal Revenue Code requiring payment of estate tax before delivery to any beneficiary of his distributive share of the estate (Section 107 [c])

(d) The assailed order of execution was unauthorized, having been issued purportedly under Rule 88, Section 6 of the Rules of Court which reads:

Sec. 6. Court to fix contributive shares where devisees, legatees, or heirs have been in possession. — Where devisees, legatees, or heirs have entered into possession of portions of the estate before the debts and expenses have been settled and paid and have become liable to contribute for the payment of such debts and expenses, the court having jurisdiction of the estate may, by order for that purpose, after hearing, settle the amount of their several liabilities, and order how much and in what manner each person shall contribute, and may issue execution as circumstances require.

The above provision clearly authorizes execution to enforce payment of debts of estate. A legacy is not a debt of the estate; indeed, legatees are among those against whom execution is authorized to be issued.

... there is merit in the petitioners' contention that the probate court generally cannot issue a writ of execution. It is not supposed to issue a writ of execution because its orders usually refer to the adjudication of claims against the estate which the executor or administrator may satisfy without the necessity of resorting to a writ of execution. The probate court, as such, does not render any judgment enforceable by execution.

The circumstances that the Rules of Court expressly specifies that the probate court may issue execution (a) to satisfy (debts of the estate out of) the contributive shares of devisees, legatees and heirs in possession of the decedent's assets (Sec. 6. Rule 88), (b) to enforce payment of the expenses of partition (Sec. 3, Rule 90), and (c) to satisfy the costs when a person is cited for examination in probate

proceedings (Sec. 13, Rule 142) may mean, under the rule of inclusion unius est exclusion alterius, that those are the only instances when it can issue a writ of execution. (Vda. de Valera vs. Ofilada, 59 SCRA 96, 108.)

(d) It is within a court's competence to order the execution of a final judgment; but to order the execution of a final order (which is not even meant to be executed) by reading into it terms that are not there and in utter disregard of existing rules and law, is manifest grave abuse of discretion tantamount to lack of jurisdiction. Consequently, the rule that certiorari may not be invoked to defeat the right of a prevailing party to the execution of a valid and final judgment, is inapplicable. For when an order of execution is issued with grave abuse of discretion or is at variance with the judgment sought to be enforced (PVTA vs. Honorable Gonzales, 92 SCRA 172), certiorari will lie to abate the order of execution.

(e) Aside from the propriety of resorting to certiorari to assail an order of execution which varies the terms of the judgment sought to be executed or does not find support in the dispositive part of the latter, there are circumstances in the instant case which justify the remedy applied for.

Petitioner MA. ELENA ACHAVAL DE PASTOR, wife of PASTOR, JR., is the holder in her own right of three mining claims which are one of the objects of conflicting claims of ownership. She is not an heir of PASTOR, SR. and was not a party to the probate proceedings. Therefore, she could not appeal from the Order of execution issued by the Probate Court. On the other hand, after the issuance of the execution order, the urgency of the relief she and her co-petitioner husband seek in the petition for certiorari states against requiring her to go through the cumbersome procedure of asking for leave to intervene in the probate proceedings to enable her, if leave is granted, to appeal from the challenged order of execution which has ordered the immediate transfer and/or garnishment of the royalties derived from mineral properties of which she is the duly registered owner and/or grantee together with her husband. She could not have intervened before the issuance of the assailed orders because she had no valid ground to intervene. The matter of ownership over the properties subject of the execution was then still being litigated in another court in a reconveyance suit filed by the special administrator of the estate of PASTOR, SR.

Likewise, at the time petitioner PASTOR, JR. Med the petition for certiorari with the Court of Appeals, appeal was not available to him since his motion for reconsideration of the execution order was still pending resolution by the Probate Court. But in the face of actual garnishment of their major source of income, petitioners could no longer wait for the resolution of their motion for reconsideration. They needed prompt relief from the injurious effects of the execution order. Under the circumstances, recourse to certiorari was the feasible remedy.

WHEREFORE, the decision of the Court of Appeals in CA G.R. No. SP-11373-R is reversed. The Order of execution issued by the probate Court dated August 20, 1980, as well as all the Orders issued subsequent thereto in alleged implementation of the Probate Order dated December 5, 1972, particularly the

Orders dated November 11, 1980 and December 17, 1980, are hereby set aside; and this case is remanded to the appropriate Regional Trial Court for proper proceedings, subject to the judgment to be rendered in Civil Case No. 274-R. SO ORDERED.

G.R. No. 174489 April 11, 2012

ANTONIO B. BALTAZAR, SEBASTIAN M. BALTAZAR, ANTONIO L. MANGALINDAN, ROSIE M. MATEO, NENITA A. PACHECO, VIRGILIO REGALA,

JR., and RAFAEL TITCO, Petitioners, vs.

LORENZO LAXA, Respondent. D E C I S I O N

DEL CASTILLO, J.: It is incumbent upon those who oppose the probate of a will to clearly establish that the decedent was not of sound and disposing mind at the time of the execution of said will. Otherwise, the state is duty-bound to give full effect to the wishes of the testator to distribute his estate in the manner provided in his will so long as it is legally tenable.

Before us is a Petition for Review on Certiorari of the June 15, 2006 Decision3 of the Court of Appeals (CA) in CA-G.R. CV No. 80979 which reversed the September 30, 2003 Decision of the Regional Trial Court (RTC), Branch 5, Guagua, Pampanga in Special Proceedings No. G-1186. The assailed CA Decision granted the petition for probate of the notarial will of Paciencia Regala (Paciencia), to wit:

WHEREFORE, premises considered, finding the appeal to be impressed with merit, the decision in SP. PROC. NO. G-1186 dated 30 September 2003, is hereby SET ASIDE and a new one entered GRANTING the petition for the probate of the will of PACIENCIA REGALA.

SO ORDERED.

Also assailed herein is the August 31, 2006 CA Resolution6 which denied the Motion for Reconsideration thereto.

Petitioners call us to reverse the CA’s assailed Decision and instead affirm the Decision of the RTC which disallowed the notarial will of Paciencia.

Factual Antecedents

Paciencia was a 78 year old spinster when she made her last will and testament entitled "Tauli Nang Bilin o Testamento Miss Paciencia Regala" (Will) in the Pampango dialect on September 13, 1981. The Will, executed in the house of retired Judge Ernestino G. Limpin (Judge Limpin), was read to Paciencia twice. After which, Paciencia expressed in the presence of the instrumental witnesses that the document is her last will and testament. She thereafter affixed her signature at the end of the said document on page 3 and then on the left margin of pages 1, 2 and 4 thereof.

The witnesses to the Will were Dra. Maria Lioba A. Limpin (Dra. Limpin), Francisco Garcia (Francisco) and Faustino R. Mercado (Faustino). The three attested to the

Will’s due execution by affixing their signatures below its attestation clause10 and on the left margin of pages 1, 2 and 4 thereof, in the presence of Paciencia and of one another and of Judge Limpin who acted as notary public.

Childless and without any brothers or sisters, Paciencia bequeathed all her properties to respondent Lorenzo R. Laxa (Lorenzo) and his wife Corazon F. Laxa and their children Luna Lorella Laxa and Katherine Ross Laxa, thus:

x x x x Fourth - In consideration of their valuable services to me since then up to the present by the spouses LORENZO LAXA and CORAZON F. LAXA, I hereby BEQUEATH, CONVEY and GIVE all my properties enumerated in parcels 1 to 5 unto the spouses LORENZO R. LAXA and CORAZON F. LAXA and their children, LUNA LORELLA LAXA and KATHERINE LAXA, and the spouses Lorenzo R. Laxa and Corazon F. Laxa both of legal age, Filipinos, presently residing at Barrio Sta. Monica, [Sasmuan], Pampanga and their children, LUNA LORELLA and KATHERINE ROSS LAXA, who are still not of legal age and living with their parents who would decide to bequeath since they are the children of the spouses;

x x x x [Sixth] - Should other properties of mine may be discovered aside from the properties mentioned in this last will and testament, I am also bequeathing and giving the same to the spouses Lorenzo R. Laxa and Corazon F. Laxa and their two children and I also command them to offer masses yearly for the repose of my soul and that of D[ñ]a Nicomeda Regala, Epifania Regala and their spouses and with respect to the fishpond situated at San Antonio, I likewise command to fulfill the wishes of D[ñ]a Nicomeda Regala in accordance with her testament as stated in my testament. x x x

The filial relationship of Lorenzo with Paciencia remains undisputed. Lorenzo is Paciencia’s nephew whom she treated as her own son. Conversely, Lorenzo came to know and treated Paciencia as his own mother. Paciencia lived with Lorenzo’s family in Sasmuan, Pampanga and it was she who raised and cared for Lorenzo since his birth. Six days after the execution of the Will or on September 19, 1981, Paciencia left for the United States of America (USA). There, she resided with Lorenzo and his family until her death on January 4, 1996.

In the interim, the Will remained in the custody of Judge Limpin.

More than four years after the death of Paciencia or on April 27, 2000, Lorenzo filed a petition14 with the RTC of Guagua, Pampanga for the probate of the Will of Paciencia and for the issuance of Letters of Administration in his favor, docketed as Special Proceedings No. G-1186.

There being no opposition to the petition after its due publication, the RTC issued an Order on June 13, 200015 allowing Lorenzo to present evidence on June 22, 2000. On said date, Dra. Limpin testified that she was one of the instrumental witnesses in the execution of the last will and testament of Paciencia on September

13, 1981. The Will was executed in her father’s (Judge Limpin) home office, in her presence and of two other witnesses, Francisco and Faustino. Dra. Limpin positively identified the Will and her signatures on all its four pages She likewise positively identified the signature of her father appearing thereon. Questioned by the prosecutor regarding Judge Limpin’s present mental fitness, Dra. Limpin testified that her father had a stroke in 1991 and had to undergo brain surgery. The judge can walk but can no longer talk and remember her name. Because of this, Dra. Limpin stated that her father can no longer testify in court.

The following day or on June 23, 2000, petitioner Antonio Baltazar (Antonio) filed an opposition22 to Lorenzo’s petition. Antonio averred that the properties subject of Paciencia’s Will belong to Nicomeda Regala Mangalindan, his predecessor-in-interest; hence, Paciencia had no right to bequeath them to Lorenzo.

Barely a month after or on July 20, 2000, Antonio, now joined by petitioners Sebastian M. Baltazar, Virgilio Regala, Jr., Nenita A. Pacheco, Felix B. Flores, Rafael Titco, Rosie M. Mateo (Rosie) and Antonio L. Mangalindan filed a Supplemental Opposition contending that Paciencia’s Will was null and void because ownership of the properties had not been transferred and/or titled to Paciencia before her death pursuant to Article 1049, paragraph 3 of the Civil Code. Petitioners also opposed the issuance of Letters of Administration in Lorenzo’s favor arguing that Lorenzo was disqualified to be appointed as such, he being a citizen and resident of the USA. Petitioners prayed that Letters of Administration be instead issued in favor of Antonio.

Later still on September 26, 2000, petitioners filed an Amended Opposition asking the RTC to deny the probate of Paciencia’s Will on the following grounds: the Will was not executed and attested to in accordance with the requirements of the law; that Paciencia was mentally incapable to make a Will at the time of its execution; that she was forced to execute the Will under duress or influence of fear or threats; that the execution of the Will had been procured by undue and improper pressure and influence by Lorenzo or by some other persons for his benefit; that the signature of Paciencia on the Will was forged; that assuming the signature to be genuine, it was obtained through fraud or trickery; and, that Paciencia did not intend the document to be her Will. Simultaneously, petitioners filed an Opposition and Recommendation reiterating their opposition to the appointment of Lorenzo as administrator of the properties and requesting for the appointment of Antonio in his stead.

On January 29, 2001, the RTC issued an Order denying the requests of both Lorenzo and Antonio to be appointed administrator since the former is a citizen and resident of the USA while the latter’s claim as a co-owner of the properties subject of the Will has not yet been established.

Meanwhile, proceedings on the petition for the probate of the Will continued. Dra. Limpin was recalled for cross-examination by the petitioners. She testified as to the age of her father at the time the latter notarized the Will of Paciencia; the living

arrangements of Paciencia at the time of the execution of the Will; and the lack of photographs when the event took place.

Aside from Dra. Limpin, Lorenzo and Monico Mercado (Monico) also took the witness stand. Monico, son of Faustino, testified on his father’s condition. According to him his father can no longer talk and express himself due to brain damage. A medical certificate was presented to the court to support this allegation.

For his part, Lorenzo testified that: from 1944 until his departure for the USA in April 1980, he lived in Sasmuan, Pampanga with his family and his aunt, Paciencia; in 1981 Paciencia went to the USA and lived with him and his family until her death in January 1996; the relationship between him and Paciencia was like that of a mother and child since Paciencia took care of him since birth and took him in as an adopted son; Paciencia was a spinster without children, and without brothers and sisters; at the time of Paciencia’s death, she did not suffer from any mental disorder and was of sound mind, was not blind, deaf or mute; the Will was in the custody of Judge Limpin and was only given to him after Paciencia’s death through Faustino; and he was already residing in the USA when the Will was executed. Lorenzo positively identified the signature of Paciencia in three different documents and in the Will itself and stated that he was familiar with Paciencia’s signature because he accompanied her in her transactions. Further, Lorenzo belied and denied having used force, intimidation, violence, coercion or trickery upon Paciencia to execute the Will as he was not in the Philippines when the same was executed.35 On cross-examination, Lorenzo clarified that Paciencia informed him about the Will shortly after her arrival in the USA but that he saw a copy of the Will only after her death.36 As to Francisco, he could no longer be presented in court as he already died on May 21, 2000.

For petitioners, Rosie testified that her mother and Paciencia were first cousins.She claimed to have helped in the household chores in the house of Paciencia thereby allowing her to stay therein from morning until evening and that during the period of her service in the said household, Lorenzo’s wife and his children were staying in the same house. She served in the said household from 1980 until Paciencia’s departure for the USA on September 19, 1981.

On September 13, 1981, Rosie claimed that she saw Faustino bring "something" for Paciencia to sign at the latter’s house. Rosie admitted, though, that she did not see what that "something" was as same was placed inside an envelope. However, she remembered Paciencia instructing Faustino to first look for money before she signs them. A few days after or on September 16, 1981, Paciencia went to the house of Antonio’s mother and brought with her the said envelope. Upon going home, however, the envelope was no longer with Paciencia. Rosie further testified that Paciencia was referred to as "magulyan" or "forgetful" because she would sometimes leave her wallet in the kitchen then start looking for it moments later.On cross examination, it was established that Rosie was neither a doctor nor a psychiatrist, that her conclusion that Paciencia was "magulyan" was based on her personal assessment, and that it was Antonio who requested her to testify in court.

In his direct examination, Antonio stated that Paciencia was his aunt. He identified the Will and testified that he had seen the said document before because Paciencia brought the same to his mother’s house and showed it to him along with another document on September 16, 1981. Antonio alleged that when the documents were shown to him, the same were still unsigned. According to him, Paciencia thought that the documents pertained to a lease of one of her rice lands, and it was he who explained that the documents were actually a special power of attorney to lease and sell her fishpond and other properties upon her departure for the USA, and a Will which would transfer her properties to Lorenzo and his family upon her death. Upon hearing this, Paciencia allegedly uttered the following words: "Why will I never [return], why will I sell all my properties?" Who is Lorenzo? Is he the only [son] of God? I have other relatives [who should] benefit from my properties. Why should I die already?" Thereafter, Antonio advised Paciencia not to sign the documents if she does not want to, to which the latter purportedly replied, "I know nothing about those, throw them away or it is up to you. The more I will not sign them.” After which, Paciencia left the documents with Antonio. Antonio kept the unsigned documents.

and eventually turned them over to Faustino on September 18, 1981.

Ruling of the Regional Trial Court

On September 30, 2003, the RTC rendered its Decision denying the petition thus:

WHEREFORE, this court hereby (a) denies the petition dated April 24, 2000; and (b) disallows the notarized will dated September 13, 1981 of Paciencia Regala.

SO ORDERED.

The trial court gave considerable weight to the testimony of Rosie and concluded that at the time Paciencia signed the Will, she was no longer possessed of sufficient reason or strength of mind to have testamentary capacity.

Ruling of the Court of Appeals On appeal, the CA reversed the RTC Decision and granted the probate of the Will of Paciencia. The appellate court did not agree with the RTC’s conclusion that Paciencia was of unsound mind when she executed the Will. It ratiocinated that "the state of being ‘magulyan’ does not make a person mentally unsound so [as] to render [Paciencia] unfit for executing a Will." Moreover, the oppositors in the probate proceedings were not able to overcome the presumption that every person is of sound mind. Further, no concrete circumstances or events were given to prove the allegation that Paciencia was tricked or forced into signing the Will.

Petitioners moved for reconsideration but the motion was denied by the CA in its Resolution dated August 31, 2006.

Hence, this petition.

Issues Petitioners come before this Court by way of Petition for Review on Certiorari ascribing upon the CA the following errors:

I. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT ALLOWED THE PROBATE OF PACIENCIA’S WILL DESPITE RESPONDENT’S UTTER FAILURE TO COMPLY WITH SECTION 11, RULE 76 OF THE RULES OF COURT;

II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN MAKING CONCLUSIONS NOT IN ACCORDANCE WITH THE EVIDENCE ON RECORD;

III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT PETITIONERS FAILED TO PROVE THAT PACIENCIA WAS NOT OF SOUND MIND AT THE TIME THE WILL WAS ALLEGEDLY EXECUTED

The pivotal issue is whether the authenticity and due execution of the notarial Will was sufficiently established to warrant its allowance for probate.

Our Ruling

We deny the petition.

Faithful compliance with the formalities laid down by law is apparent from the face of the Will.

Courts are tasked to determine nothing more than the extrinsic validity of a Will in probate proceedings. This is expressly provided for in Rule 75, Section 1 of the Rules of Court, which states:

Rule 75 Production of Will. Allowance of Will Necessary. Section 1. Allowance necessary. Conclusive as to execution. – No will shall pass either real or personal estate unless it is proved and allowed in the proper court. Subject to the right of appeal, such allowance of the will shall be conclusive as to its due execution.

Due execution of the will or its extrinsic validity pertains to whether the testator, being of sound mind, freely executed the will in accordance with the formalities prescribed by law. These formalities are enshrined in Articles 805 and 806 of the New Civil Code, to wit:

Art. 805. Every will, other than a holographic will, must be subscribed at the end thereof by the testator himself or by the testator's name written by some other person in his presence, and by his express direction, and attested and subscribed

by three or more credible witnesses in the presence of the testator and of one another.

The testator or the person requested by him to write his name and the instrumental witnesses of the will, shall also sign, as aforesaid, each and every page thereof, except the last, on the left margin, and all the pages shall be numbered correlatively in letters placed on the upper part of each page.

The attestation shall state the number of pages used upon which the will is written, and the fact that the testator signed the will and every page thereof, or caused some other person to write his name, under his express direction, in the presence of the instrumental witnesses, and that the latter witnessed and signed the will and all the pages thereof in the presence of the testator and of one another.

If the attestation clause is in a language not known to the witnesses, it shall be interpreted to them.

Art. 806. Every will must be acknowledged before a notary public by the testator and the witnesses. The notary public shall not be required to retain a copy of the will, or file another with the Office of the Clerk of Court.

Here, a careful examination of the face of the Will shows faithful compliance with the formalities laid down by law. The signatures of the testatrix, Paciencia, her instrumental witnesses and the notary public, are all present and evident on the Will. Further, the attestation clause explicitly states the critical requirement that the testatrix and her instrumental witnesses signed the Will in the presence of one another and that the witnesses attested and subscribed to the Will in the presence of the testator and of one another. In fact, even the petitioners acceded that the signature of Paciencia in the Will may be authentic although they question her state of mind when she signed the same as well as the voluntary nature of said act.

The burden to prove that Paciencia was of unsound mind at the time of the execution of the will lies on the shoulders of the petitioners.

Petitioners, through their witness Rosie, claim that Paciencia was "magulyan" or forgetful so much so that it effectively stripped her of testamentary capacity. They likewise claimed in their Motion for Reconsideration filed with the CA that Paciencia was not only "magulyan" but was actually suffering from paranoia.

We are not convinced.

We agree with the position of the CA that the state of being forgetful does not necessarily make a person mentally unsound so as to render him unfit to execute a Will.68 Forgetfulness is not equivalent to being of unsound mind. Besides, Article 799 of the New Civil Code states:

Art. 799. To be of sound mind, it is not necessary that the testator be in full possession of all his reasoning faculties, or that his mind be wholly unbroken, unimpaired, or unshattered by disease, injury or other cause.

It shall be sufficient if the testator was able at the time of making the will to know the nature of the estate to be disposed of, the proper objects of his bounty, and the character of the testamentary act.

In this case, apart from the testimony of Rosie pertaining to Paciencia’s forgetfulness, there is no substantial evidence, medical or otherwise, that would show that Paciencia was of unsound mind at the time of the execution of the Will. On the other hand, we find more worthy of credence Dra. Limpin’s testimony as to the soundness of mind of Paciencia when the latter went to Judge Limpin’s house and voluntarily executed the Will. "The testimony of subscribing witnesses to a Will concerning the testator’s mental condition is entitled to great weight where they are truthful and intelligent."69 More importantly, a testator is presumed to be of sound mind at the time of the execution of the Will and the burden to prove otherwise lies on the oppositor. Article 800 of the New Civil Code states:

Art. 800. The law presumes that every person is of sound mind, in the absence of proof to the contrary.

The burden of proof that the testator was not of sound mind at the time of making his dispositions is on the person who opposes the probate of the will; but if the testator, one month, or less, before making his will was publicly known to be insane, the person who maintains the validity of the will must prove that the testator made it during a lucid interval.

Here, there was no showing that Paciencia was publicly known to be insane one month or less before the making of the Will. Clearly, thus, the burden to prove that Paciencia was of unsound mind lies upon the shoulders of petitioners. However and as earlier mentioned, no substantial evidence was presented by them to prove the same, thereby warranting the CA’s finding that petitioners failed to discharge such burden.

Furthermore, we are convinced that Paciencia was aware of the nature of her estate to be disposed of, the proper objects of her bounty and the character of the testamentary act. As aptly pointed out by the CA:

A scrutiny of the Will discloses that [Paciencia] was aware of the nature of the document she executed. She specially requested that the customs of her faith be observed upon her death. She was well aware of how she acquired the properties from her parents and the properties she is bequeathing to LORENZO, to his wife CORAZON and to his two (2) children. A third child was born after the execution of the will and was not included therein as devisee.

Bare allegations of duress or influence of fear or threats, undue and improper influence and pressure, fraud and trickery cannot be used as basis to deny the probate of a will.

An essential element of the validity of the Will is the willingness of the testator or testatrix to execute the document that will distribute his/her earthly possessions upon his/her death. Petitioners claim that Paciencia was forced to execute the Will under duress or influence of fear or threats; that the execution of the Will had been procured by undue and improper pressure and influence by Lorenzo or by some other persons for his benefit; and that assuming Paciencia’s signature to be genuine, it was obtained through fraud or trickery. These are grounded on the alleged conversation between Paciencia and Antonio on September 16, 1981 wherein the former purportedly repudiated the Will and left it unsigned.

We are not persuaded.

We take into consideration the unrebutted fact that Paciencia loved and treated Lorenzo as her own son and that love even extended to Lorenzo’s wife and children. This kind of relationship is not unusual. It is in fact not unheard of in our culture for old maids or spinsters to care for and raise their nephews and nieces and treat them as their own children. Such is a prevalent and accepted cultural practice that has resulted in many family discords between those favored by the testamentary disposition of a testator and those who stand to benefit in case of intestacy.

In this case, evidence shows the acknowledged fact that Paciencia’s relationship with Lorenzo and his family is different from her relationship with petitioners. The very fact that she cared for and raised Lorenzo and lived with him both here and abroad, even if the latter was already married and already has children, highlights the special bond between them. This unquestioned relationship between Paciencia and the devisees tends to support the authenticity of the said document as against petitioners’ allegations of duress, influence of fear or threats, undue and improper influence, pressure, fraud, and trickery which, aside from being factual in nature, are not supported by concrete, substantial and credible evidence on record. It is worth stressing that bare arguments, no matter how forceful, if not based on concrete and substantial evidence cannot suffice to move the Court to uphold said allegations. Furthermore, "a purported will is not [to be] denied legalization on dubious grounds. Otherwise, the very institution of testamentary succession will be shaken to its foundation, for even if a will has been duly executed in fact, whether x x x it will be probated would have to depend largely on the attitude of those interested in [the estate of the deceased].”

Court should be convinced by the evidence presented before it that the Will was duly executed.

Petitioners dispute the authenticity of Paciencia’s Will on the ground that Section 11 of Rule 76 of the Rules of Court was not complied with. It provides:

RULE 76 Allowance or Disallowance of Will Section 11. Subscribing witnesses produced or accounted for where will contested. – If the will is contested, all the subscribing witnesses, and the notary in the case of wills executed under the Civil Code of the Philippines, if present in the Philippines and not insane, must be produced and examined, and the death, absence, or insanity of any of them must be satisfactorily shown to the court. If all or some of such witnesses are present in the Philippines but outside the province where the will has been filed, their deposition must be taken. If any or all of them testify against the due execution of the will, or do not remember having attested to it, or are otherwise of doubtful credibility, the will may nevertheless, be allowed if the court is satisfied from the testimony of other witnesses and from all the evidence presented that the will was executed and attested in the manner required by law. If a holographic will is contested, the same shall be allowed if at least three (3) witnesses who know the handwriting of the testator explicitly declare that the will and the signature are in the handwriting of the testator; in the absence of any competent witnesses, and if the court deem it necessary, expert testimony may be resorted to. (Emphasis supplied.)

They insist that all subscribing witnesses and the notary public should have been presented in court since all but one witness, Francisco, are still living.

We cannot agree with petitioners.

We note that the inability of Faustino and Judge Limpin to appear and testify before the court was satisfactorily explained during the probate proceedings. As testified to by his son, Faustino had a heart attack, was already bedridden and could no longer talk and express himself due to brain damage. To prove this, said witness presented the corresponding medical certificate. For her part, Dra. Limpin testified that her father, Judge Limpin, suffered a stroke in 1991 and had to undergo brain surgery. At that time, Judge Limpin could no longer talk and could not even remember his daughter’s name so that Dra. Limpin stated that given such condition, her father could no longer testify. It is well to note that at that point, despite ample opportunity, petitioners neither interposed any objections to the testimonies of said witnesses nor challenged the same on cross examination. We thus hold that for all intents and purposes, Lorenzo was able to satisfactorily account for the incapacity and failure of the said subscribing witness and of the notary public to testify in court. Because of this the probate of Paciencia’s Will may be allowed on the basis of Dra. Limpin’s testimony proving her sanity and the due execution of the Will, as well as on the proof of her handwriting. It is an established rule that "[a] testament may not be disallowed just because the attesting witnesses declare against its due execution; neither does it have to be necessarily allowed just because all the attesting witnesses declare in favor of its legalization; what is decisive is that the court is convinced by evidence before it, not necessarily from the attesting witnesses, although they must testify, that the will was or was not duly executed in the manner required by law.

Moreover, it bears stressing that "[i]rrespective x x x of the posture of any of the parties as regards the authenticity and due execution of the will x x x in question, it is the mandate of the law that it is the evidence before the court and/or [evidence that] ought to be before it that is controlling.” "The very existence of [the Will] is in itself prima facie proof that the supposed [testatrix] has willed that [her] estate be distributed in the manner therein provided, and it is incumbent upon the state that, if legally tenable, such desire be given full effect independent of the attitude of the parties affected thereby.” This, coupled with Lorenzo’s established relationship with Paciencia, the evidence and the testimonies of disinterested witnesses, as opposed to the total lack of evidence presented by petitioners apart from their self-serving testimonies, constrain us to tilt the balance in favor of the authenticity of the Will and its allowance for probate.

WHEREFORE, the petition is DENIED. The Decision dated June 15, 2006 and the Resolution dated August 31, 2006 of the Court of Appeals in CA-G.R. CV No. 80979 are AFFIRMED.

SO ORDERED.

G.R. No. 120880 June 5, 1997

FERDINAND R. MARCOS II, petitioner, vs.

COURT OF APPEALS, THE COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE and HERMINIA D. DE GUZMAN, respondents.

TORRES, JR., J.: In this Petition for Review on Certiorari, Government action is once again assailed as precipitate and unfair, suffering the basic and oftly implored requisites of due process of law. Specifically, the petition assails the Decision 1 of the Court of Appeals dated November 29, 1994 in CA-G.R. SP No. 31363, where the said court held:

In view of all the foregoing, we rule that the deficiency income tax assessments and estate tax assessment, are already final and (u)nappealable-and-the subsequent levy of real properties is a tax remedy resorted to by the government, sanctioned by Section 213 and 218 of the National Internal Revenue Code. This summary tax remedy is distinct and separate from the other tax remedies (such as Judicial Civil actions and Criminal actions), and is not affected or precluded by the pendency of any other tax remedies instituted by the government.

WHEREFORE, premises considered, judgment is hereby rendered DISMISSING the petition for certiorari with prayer for Restraining Order and Injunction. No pronouncements as to costs.

SO ORDERED.

More than seven years since the demise of the late Ferdinand E. Marcos, the former President of the Republic of the Philippines, the matter of the settlement of his estate, and its dues to the government in estate taxes, are still unresolved, the latter issue being now before this Court for resolution. Specifically, petitioner Ferdinand R. Marcos II, the eldest son of the decedent, questions the actuations of the respondent Commissioner of Internal Revenue in assessing, and collecting through the summary remedy of Levy on Real Properties, estate and income tax delinquencies upon the estate and properties of his father, despite the pendency of the proceedings on probate of the will of the late president, which is docketed as Sp. Proc. No. 10279 in the Regional Trial Court of Pasig, Branch 156.

Petitioner had filed with the respondent Court of Appeals a Petition for Certiorari and Prohibition with an application for writ of preliminary injunction and/or temporary restraining order on June 28, 1993, seeking to —

I. Annul and set aside the Notices of Levy on real property dated February 22, 1993 and May 20, 1993, issued by respondent Commissioner of Internal Revenue;

II. Annul and set aside the Notices of Sale dated May 26, 1993;

III. Enjoin the Head Revenue Executive Assistant Director II (Collection Service), from proceeding with the Auction of the real properties covered by Notices of Sale.

After the parties had pleaded their case, the Court of Appeals rendered its Decision 2 on November 29, 1994, ruling that the deficiency assessments for estate and income tax made upon the petitioner and the estate of the deceased President Marcos have already become final and unappealable, and may thus be enforced by the summary remedy of levying upon the properties of the late President, as was done by the respondent Commissioner of Internal Revenue.

WHEREFORE, premises considered judgment is hereby rendered DISMISSING the petition for Certiorari with prayer for Restraining Order and Injunction. No pronouncements as to cost.

SO ORDERED.

Unperturbed, petitioner is now before us assailing the validity of the appellate court's decision, assigning the following as errors:

A. RESPONDENT COURT MANIFESTLY ERRED IN RULING THAT THE SUMMARY TAX REMEDIES RESORTED TO BY THE GOVERNMENT ARE NOT AFFECTED AND PRECLUDED BY THE PENDENCY OF THE SPECIAL PROCEEDING FOR THE ALLOWANCE OF THE LATE PRESIDENT'S ALLEGED WILL. TO THE CONTRARY, THIS PROBATE PROCEEDING PRECISELY PLACED ALL PROPERTIES WHICH FORM PART OF THE LATE PRESIDENT'S ESTATE IN CUSTODIA LEGIS OF THE PROBATE COURT TO THE EXCLUSION OF ALL OTHER COURTS AND ADMINISTRATIVE AGENCIES.

B. RESPONDENT COURT ARBITRARILY ERRED IN SWEEPINGLY DECIDING THAT SINCE THE TAX ASSESSMENTS OF PETITIONER AND HIS PARENTS HAD ALREADY BECOME FINAL AND UNAPPEALABLE, THERE WAS NO NEED TO GO INTO THE MERITS OF THE GROUNDS CITED IN THE PETITION. INDEPENDENT OF WHETHER THE TAX ASSESSMENTS HAD ALREADY BECOME FINAL, HOWEVER, PETITIONER HAS THE RIGHT TO QUESTION THE UNLAWFUL MANNER AND METHOD IN WHICH TAX COLLECTION IS SOUGHT TO BE ENFORCED BY RESPONDENTS COMMISSIONER AND DE GUZMAN. THUS, RESPONDENT COURT SHOULD HAVE FAVORABLY CONSIDERED THE MERITS OF THE FOLLOWING GROUNDS IN THE PETITION:

(1) The Notices of Levy on Real Property were issued beyond the period provided in the Revenue Memorandum Circular No. 38-68.

(2) [a] The numerous pending court cases questioning the late President's ownership or interests in several properties (both personal and real) make the total value of his estate, and the consequent estate tax due, incapable of exact pecuniary determination at this time. Thus, respondents' assessment of the estate tax and their issuance of the Notices of Levy and Sale are premature,

confiscatory and oppressive. [b] Petitioner, as one of the late President's compulsory heirs, was never notified, much less served with copies of the Notices of Levy, contrary to the mandate of Section 213 of the NIRC. As such, petitioner was never given an opportunity to contest the Notices in violation of his right to due process of law.

C. ON ACCOUNT OF THE CLEAR MERIT OF THE PETITION, RESPONDENT COURT MANIFESTLY ERRED IN RULING THAT IT HAD NO POWER TO GRANT INJUNCTIVE RELIEF TO PETITIONER. SECTION 219 OF THE NIRC NOTWITHSTANDING, COURTS POSSESS THE POWER TO ISSUE A WRIT OF PRELIMINARY INJUNCTION TO RESTRAIN RESPONDENTS COMMISSIONER'S AND DE GUZMAN'S ARBITRARY METHOD OF COLLECTING THE ALLEGED DEFICIENCY ESTATE AND INCOME TAXES BY MEANS OF LEVY.

The facts as found by the appellate court are undisputed, and are hereby adopted: On September 29, 1989, former President Ferdinand Marcos died in Honolulu, Hawaii, USA.

On June 27, 1990, a Special Tax Audit Team was created to conduct investigations and examinations of the tax liabilities and obligations of the late president, as well as that of his family, associates and "cronies". Said audit team concluded its investigation with a Memorandum dated July 26, 1991. The investigation disclosed that the Marcoses failed to file a written notice of the death of the decedent, an estate tax returns [sic], as well as several income tax returns covering the years 1982 to 1986, — all in violation of the National Internal Revenue Code (NIRC).

Subsequently, criminal charges were filed against Mrs. Imelda R. Marcos before the Regional Trial of Quezon City for violations of Sections 82, 83 and 84 (has penalized under Sections 253 and 254 in relation to Section 252 — a & b) of the National Internal Revenue Code (NIRC).

The Commissioner of Internal Revenue thereby caused the preparation and filing of the Estate Tax Return for the estate of the late president, the Income Tax Returns of the Spouses Marcos for the years 1985 to 1986, and the Income Tax Returns of petitioner Ferdinand "Bongbong" Marcos II for the years 1982 to 1985. On July 26, 1991, the BIR issued the following: (1) Deficiency estate tax assessment no. FAC-2-89-91-002464 (against the estate of the late president Ferdinand Marcos in the amount of P23,293,607,638.00 Pesos); (2) Deficiency income tax assessment no. FAC-1-85-91-002452 and Deficiency income tax assessment no. FAC-1-86-91-002451 (against the Spouses Ferdinand and Imelda Marcos in the amounts of P149,551.70 and P184,009,737.40 representing deficiency income tax for the years 1985 and 1986); (3) Deficiency income tax assessment nos. FAC-1-82-91-002460 to FAC-1-85-91-002463 (against petitioner Ferdinand "Bongbong" Marcos II in the amounts of P258.70 pesos; P9,386.40 Pesos; P4,388.30 Pesos; and P6,376.60 Pesos representing his deficiency income taxes for the years 1982 to 1985).

The Commissioner of Internal Revenue avers that copies of the deficiency estate and income tax assessments were all personally and constructively served on August 26, 1991 and September 12, 1991 upon Mrs. Imelda Marcos (through her caretaker Mr. Martinez) at her last known address at No. 204 Ortega St., San Juan, M.M. (Annexes "D" and "E" of the Petition). Likewise, copies of the deficiency tax assessments issued against petitioner Ferdinand "Bongbong" Marcos II were also personally and constructively served upon him (through his caretaker) on September 12, 1991, at his last known address at Don Mariano Marcos St. corner P. Guevarra St., San Juan, M.M. (Annexes "J" and "J-1" of the Petition). Thereafter, Formal Assessment notices were served on October 20, 1992, upon Mrs. Marcos c/o petitioner, at his office, House of Representatives, Batasan Pambansa, Quezon City. Moreover, a notice to Taxpayer inviting Mrs. Marcos (or her duly authorized representative or counsel), to a conference, was furnished the counsel of Mrs. Marcos, Dean Antonio Coronel — but to no avail.

The deficiency tax assessments were not protested administratively, by Mrs. Marcos and the other heirs of the late president, within 30 days from service of said assessments.

On February 22, 1993, the BIR Commissioner issued twenty-two notices of levy on real property against certain parcels of land owned by the Marcoses — to satisfy the alleged estate tax and deficiency income taxes of Spouses Marcos.

On May 20, 1993, four more Notices of Levy on real property were issued for the purpose of satisfying the deficiency income taxes.

On May 26, 1993, additional four (4) notices of Levy on real property were again issued. The foregoing tax remedies were resorted to pursuant to Sections 205 and 213 of the National Internal Revenue Code (NIRC).

In response to a letter dated March 12, 1993 sent by Atty. Loreto Ata (counsel of herein petitioner) calling the attention of the BIR and requesting that they be duly notified of any action taken by the BIR affecting the interest of their client Ferdinand "Bongbong" Marcos II, as well as the interest of the late president — copies of the aforesaid notices were, served on April 7, 1993 and on June 10, 1993, upon Mrs. Imelda Marcos, the petitioner, and their counsel of record, "De Borja, Medialdea, Ata, Bello, Guevarra and Serapio Law Office”.

Notices of sale at public auction were posted on May 26, 1993, at the lobby of the City Hall of Tacloban City. The public auction for the sale of the eleven (11) parcels of land took place on July 5, 1993. There being no bidder, the lots were declared forfeited in favor of the government.

On June 25, 1993, petitioner Ferdinand "Bongbong" Marcos II filed the instant petition for certiorari and prohibition under Rule 65 of the Rules of Court, with prayer for temporary restraining order and/or writ of preliminary injunction.

It has been repeatedly observed, and not without merit, that the enforcement of tax laws and the collection of taxes, is of paramount importance for the sustenance of government. Taxes are the lifeblood of the government and should be collected without unnecessary hindrance. However, such collection should be made in accordance with law as any arbitrariness will negate the very reason for government itself. It is therefore necessary to reconcile the apparently conflicting interests of the authorities and the taxpayers so that the real purpose of taxation, which is the promotion of the common good, may be achieved.

Whether or not the proper avenues of assessment and collection of the said tax obligations were taken by the respondent Bureau is now the subject of the Court's inquiry.

Petitioner posits that notices of levy, notices of sale, and subsequent sale of properties of the late President Marcos effected by the BIR are null and void for disregarding the established procedure for the enforcement of taxes due upon the estate of the deceased. The case of Domingo vs. Garlitos 4 is specifically cited to bolster the argument that "the ordinary procedure by which to settle claims of indebtedness against the estate of a deceased, person, as in an inheritance (estate) tax, is for the claimant to present a claim before the probate court so that said court may order the administrator to pay the amount therefor." This remedy is allegedly, exclusive, and cannot be effected through any other means.

Petitioner goes further, submitting that the probate court is not precluded from denying a request by the government for the immediate payment of taxes, and should order the payment of the same only within the period fixed by the probate court for the payment of all the debts of the decedent. In this regard, petitioner cites the case of Collector of Internal Revenue vs. The Administratrix of the Estate of Echarri (67 Phil 502), where it was held that:

The case of Pineda vs. Court of First Instance of Tayabas and Collector of Internal Revenue (52 Phil 803), relied upon by the petitioner-appellant is good authority on the proposition that the court having control over the administration proceedings has jurisdiction to entertain the claim presented by the government for taxes due and to order the administrator to pay the tax should it find that the assessment was proper, and that the tax was legal, due and collectible. And the rule laid down in that case must be understood in relation to the case of Collector of Customs vs. Haygood, supra., as to the procedure to be followed in a given case by the government to effectuate the collection of the tax. Categorically stated, where during the pendency of judicial administration over the estate of a deceased person a claim for taxes is presented by the government, the court has the authority to order payment by the administrator; but, in the same way that it has authority to order payment or satisfaction, it also has the negative authority to deny the same. While there are cases where courts are required to perform certain duties mandatory and ministerial in character, the function of the court in a case of the present character is not one of them; and here, the court cannot be an organism endowed with latitude of judgment in one direction, and converted into a mere mechanical contrivance in another direction.

On the other hand, it is argued by the BIR, that the state's authority to collect internal revenue taxes is paramount. Thus, the pendency of probate proceedings over the estate of the deceased does not preclude the assessment and collection, through summary remedies, of estate taxes over the same. According to the respondent, claims for payment of estate and income taxes due and assessed after the death of the decedent need not be presented in the form of a claim against the estate. These can and should be paid immediately. The probate court is not the government agency to decide whether an estate is liable for payment of estate of income taxes. Well-settled is the rule that the probate court is a court with special and limited jurisdiction.

Concededly, the authority of the Regional Trial Court, sitting, albeit with limited jurisdiction, as a probate court over estate of deceased individual, is not a trifling thing. The court's jurisdiction, once invoked, and made effective, cannot be treated with indifference nor should it be ignored with impunity by the very parties invoking its authority.

In testament to this, it has been held that it is within the jurisdiction of the probate court to approve the sale of properties of a deceased person by his prospective heirs before final adjudication; to determine who are the heirs of the decedent; 6the recognition of a natural child; the status of a woman claiming to be the legal wife of the decedent; the legality of disinheritance of an heir by the testator; and to pass upon the validity of a waiver of hereditary rights.

The pivotal question the court is tasked to resolve refers to the authority of the Bureau of Internal Revenue to collect by the summary remedy of levying upon, and sale of real properties of the decedent, estate tax deficiencies, without the cognition and authority of the court sitting in probate over the supposed will of the deceased. The nature of the process of estate tax collection has been described as follows:

Strictly speaking, the assessment of an inheritance tax does not directly involve the administration of a decedent's estate, although it may be viewed as an incident to the complete settlement of an estate, and, under some statutes, it is made the duty of the probate court to make the amount of the inheritance tax a part of the final decree of distribution of the estate. It is not against the property of decedent, nor is it a claim against the estate as such, but it is against the interest or property right which the heir, legatee, devisee, etc., has in the property formerly held by decedent. Further, under some statutes, it has been held that it is not a suit or controversy between the parties, nor is it an adversary proceeding between the state and the person who owes the tax on the inheritance. However, under other statutes it has been held that the hearing and determination of the cash value of the assets and the determination of the tax are adversary proceedings. The proceeding has been held to be necessarily a proceeding in rem.

In the Philippine experience, the enforcement and collection of estate tax, is executive in character, as the legislature has seen it fit to ascribe this task to the Bureau of Internal Revenue. Section 3 of the National Internal Revenue Code attests to this:

Sec. 3. Powers and duties of the Bureau. — The powers and duties of the Bureau of Internal Revenue shall comprehend the assessment and collection of all national internal revenue taxes, fees, and charges, and the enforcement of all forfeitures, penalties, and fines connected therewith, including the execution of judgments in all cases decided in its favor by the Court of Tax Appeals and the ordinary courts. Said Bureau shall also give effect to and administer the supervisory and police power conferred to it by this Code or other laws.

Thus, it was in Vera vs. Fernandez that the court recognized the liberal treatment of claims for taxes charged against the estate of the decedent. Such taxes, we said, were exempted from the application of the statute of non-claims, and this is justified by the necessity of government funding, immortalized in the maxim that taxes are the lifeblood of the government. Vectigalia nervi sunt rei publicae — taxes are the sinews of the state.

Taxes assessed against the estate of a deceased person, after administration is opened, need not be submitted to the committee on claims in the ordinary course of administration. In the exercise of its control over the administrator, the court may direct the payment of such taxes upon motion showing that the taxes have been assessed against the estate.

Such liberal treatment of internal revenue taxes in the probate proceedings extends so far, even to allowing the enforcement of tax obligations against the heirs of the decedent, even after distribution of the estate's properties.

Claims for taxes, whether assessed before or after the death of the deceased, can be collected from the heirs even after the distribution of the properties of the decedent. They are exempted from the application of the statute of non-claims. The heirs shall be liable therefor, in proportion to their share in the inheritance.

Thus, the Government has two ways of collecting the taxes in question. One, by going after all the heirs and collecting from each one of them the amount of the tax proportionate to the inheritance received. Another remedy, pursuant to the lien created by Section 315 of the Tax Code upon all property and rights to property belong to the taxpayer for unpaid income tax, is by subjecting said property of the estate which is in the hands of an heir or transferee to the payment of the tax due the estate. (Commissioner of Internal Revenue vs. Pineda, 21 SCRA 105, September 15, 1967.)

From the foregoing, it is discernible that the approval of the court, sitting in probate, or as a settlement tribunal over the deceased is not a mandatory requirement in the collection of estate taxes. It cannot therefore be argued that the Tax Bureau erred in proceeding with the levying and sale of the properties allegedly owned by the late President, on the ground that it was required to seek first the probate court's sanction. There is nothing in the Tax Code, and in the pertinent remedial laws that implies the necessity of the probate or estate settlement court's approval of the state's claim for estate taxes, before the same can be enforced and collected.

On the contrary, under Section 87 of the NIRC, it is the probate or settlement court which is bidden not to authorize the executor or judicial administrator of the decedent's estate to deliver any distributive share to any party interested in the estate, unless it is shown a Certification by the Commissioner of Internal Revenue that the estate taxes have been paid. This provision disproves the petitioner's contention that it is the probate court which approves the assessment and collection of the estate tax.

If there is any issue as to the validity of the BIR's decision to assess the estate taxes, this should have been pursued through the proper administrative and judicial avenues provided for by law.

Section 229 of the NIRC tells us how:

Sec. 229. Protesting of assessment. — When the Commissioner of Internal Revenue or his duly authorized representative finds that proper taxes should be assessed, he shall first notify the taxpayer of his findings. Within a period to be prescribed by implementing regulations, the taxpayer shall be required to respond to said notice. If the taxpayer fails to respond, the Commissioner shall issue an assessment based on his findings.

Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation in such form and manner as may be prescribed by implementing regulations within (30) days from receipt of the assessment; otherwise, the assessment shall become final and unappealable.

If the protest is denied in whole or in part, the individual, association or corporation adversely affected by the decision on the protest may appeal to the Court of Tax Appeals within thirty (30) days from receipt of said decision; otherwise, the decision shall become final, executory and demandable. (As inserted by P.D. 1773)

Apart from failing to file the required estate tax return within the time required for the filing of the same, petitioner, and the other heirs never questioned the assessments served upon them, allowing the same to lapse into finality, and prompting the BIR to collect the said taxes by levying upon the properties left by President Marcos.

Petitioner submits, however, that "while the assessment of taxes may have been validly undertaken by the Government, collection thereof may have been done in violation of the law. Thus, the manner and method in which the latter is enforced may be questioned separately, and irrespective of the finality of the former, because the Government does not have the unbridled discretion to enforce collection without regard to the clear provision of law."

Petitioner specifically points out that applying Memorandum Circular No. 38-68, implementing Sections 318 and 324 of the old tax code (Republic Act 5203), the BIR's Notices of Levy on the Marcos properties, were issued beyond the allowed period, and are therefore null and void:

. . . the Notices of Levy on Real Property (Annexes O to NN of Annex C of this Petition) in satisfaction of said assessments were still issued by respondents well beyond the period mandated in Revenue Memorandum Circular No. 38-68. These Notices of Levy were issued only on 22 February 1993 and 20 May 1993 when at least seventeen (17) months had already lapsed from the last service of tax assessment on 12 September 1991. As no notices of distraint of personal property were first issued by respondents, the latter should have complied with Revenue Memorandum Circular No. 38-68 and issued these Notices of Levy not earlier than three (3) months nor later than six (6) months from 12 September 1991. In accordance with the Circular, respondents only had until 12 March 1992 (the last day of the sixth month) within which to issue these Notices of Levy. The Notices of Levy, having been issued beyond the period allowed by law, are thus void and of no effect.

We hold otherwise. The Notices of Levy upon real property were issued within the prescriptive period and in accordance with the provisions of the present Tax Code. The deficiency tax assessment, having already become final, executory, and demandable, the same can now be collected through the summary remedy of distraint or levy pursuant to Section 205 of the NIRC.

The applicable provision in regard to the prescriptive period for the assessment and collection of tax deficiency in this instance is Article 223 of the NIRC, which pertinently provides:

Sec. 223. Exceptions as to a period of limitation of assessment and collection of taxes. — (a) In the case of a false or fraudulent return with intent to evade tax or of a failure to file a return, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time within ten (10) years after the discovery of the falsity, fraud, or omission: Provided, That, in a fraud assessment which has become final and executory, the fact of fraud shall be judicially taken cognizance of in the civil or criminal action for the collection thereof. xxx xxx xxx

(c) Any internal revenue tax which has been assessed within the period of limitation above prescribed, may be collected by distraint or levy or by a proceeding in court within three years following the assessment of the tax. xxx xxx xxx

The omission to file an estate tax return, and the subsequent failure to contest or appeal the assessment made by the BIR is fatal to the petitioner's cause, as under the above-cited provision, in case of failure to file a return, the tax may be assessed at any time within ten years after the omission, and any tax so assessed may be collected by levy upon real property within three years following the assessment of the tax. Since the estate tax assessment had become final and unappealable by the petitioner's default as regards protesting the validity of the said assessment, there is now no reason why the BIR cannot continue with the collection of the said tax. Any objection against the assessment should have been pursued following the

avenue paved in Section 229 of the NIRC on protests on assessments of internal revenue taxes.

Petitioner further argues that "the numerous pending court cases questioning the late president's ownership or interests in several properties (both real and personal) make the total value of his estate, and the consequent estate tax due, incapable of exact pecuniary determination at this time. Thus, respondents' assessment of the estate tax and their issuance of the Notices of Levy and sale are premature and oppressive." He points out the pendency of Sandiganbayan Civil Case Nos. 0001-0034 and 0141, which were filed by the government to question the ownership and interests of the late President in real and personal properties located within and outside the Philippines. Petitioner, however, omits to allege whether the properties levied upon by the BIR in the collection of estate taxes upon the decedent's estate were among those involved in the said cases pending in the Sandiganbayan. Indeed, the court is at a loss as to how these cases are relevant to the matter at issue. The mere fact that the decedent has pending cases involving ill-gotten wealth does not affect the enforcement of tax assessments over the properties indubitably included in his estate.

Petitioner also expresses his reservation as to the propriety of the BIR's total assessment of P23,292,607,638.00, stating that this amount deviates from the findings of the Department of Justice's Panel of Prosecutors as per its resolution of 20 September 1991. Allegedly, this is clear evidence of the uncertainty on the part of the Government as to the total value of the estate of the late President.

This is, to our mind, the petitioner's last ditch effort to assail the assessment of estate tax which had already become final and unappealable.

It is not the Department of Justice which is the government agency tasked to determine the amount of taxes due upon the subject estate, but the Bureau of Internal Revenue, whose determinations and assessments are presumed correct and made in good faith. The taxpayer has the duty of proving otherwise. In the absence of proof of any irregularities in the performance of official duties, an assessment will not be disturbed. Even an assessment based on estimates is prima facie valid and lawful where it does not appear to have been arrived at arbitrarily or capriciously. The burden of proof is upon the complaining party to show clearly that the assessment is erroneous. Failure to present proof of error in the assessment will justify the judicial affirmance of said assessment. In this instance, petitioner has not pointed out one single provision in the Memorandum of the Special Audit Team which gave rise to the questioned assessment, which bears a trace of falsity. Indeed, the petitioner's attack on the assessment bears mainly on the alleged improbable and unconscionable amount of the taxes charged. But mere rhetoric cannot supply the basis for the charge of impropriety of the assessments made.

Moreover, these objections to the assessments should have been raised, considering the ample remedies afforded the taxpayer by the Tax Code, with the Bureau of Internal Revenue and the Court of Tax Appeals, as described earlier, and cannot be raised now via Petition for Certiorari, under the pretext of grave abuse of

discretion. The course of action taken by the petitioner reflects his disregard or even repugnance of the established institutions for governance in the scheme of a well-ordered society. The subject tax assessments having become final, executory and enforceable, the same can no longer be contested by means of a disguised protest. In the main, Certiorari may not be used as a substitute for a lost appeal or remedy. This judicial policy becomes more pronounced in view of the absence of sufficient attack against the actuations of government.

On the matter of sufficiency of service of Notices of Assessment to the petitioner, we find the respondent appellate court's pronouncements sound and resilient to petitioner's attacks.

Anent grounds 3(b) and (B) — both alleging/claiming lack of notice — We find, after considering the facts and circumstances, as well as evidences, that there was sufficient, constructive and/or actual notice of assessments, levy and sale, sent to herein petitioner Ferdinand "Bongbong" Marcos as well as to his mother Mrs. Imelda Marcos.

Even if we are to rule out the notices of assessments personally given to the caretaker of Mrs. Marcos at the latter's last known address, on August 26, 1991 and September 12, 1991, as well as the notices of assessment personally given to the caretaker of petitioner also at his last known address on September 12, 1991 — the subsequent notices given thereafter could no longer be ignored as they were sent at a time when petitioner was already here in the Philippines, and at a place where said notices would surely be called to petitioner's attention, and received by responsible persons of sufficient age and discretion.

Thus, on October 20, 1992, formal assessment notices were served upon Mrs. Marcos c/o the petitioner, at his office, House of Representatives, Batasan Pambansa, Q.C. (Annexes "A", "A-1", "A-2", "A-3"; pp. 207-210, Comment/Memorandum of OSG). Moreover, a notice to taxpayer dated October 8, 1992 inviting Mrs. Marcos to a conference relative to her tax liabilities, was furnished the counsel of Mrs. Marcos — Dean Antonio Coronel (Annex "B", p. 211, ibid). Thereafter, copies of Notices were also served upon Mrs. Imelda Marcos, the petitioner and their counsel "De Borja, Medialdea, Ata, Bello, Guevarra and Serapio Law Office", on April 7, 1993 and June 10, 1993. Despite all of these Notices, petitioner never lifted a finger to protest the assessments, (upon which the Levy and sale of properties were based), nor appealed the same to the Court of Tax Appeals.

There being sufficient service of Notices to herein petitioner (and his mother) and it appearing that petitioner continuously ignored said Notices despite several opportunities given him to file a protest and to thereafter appeal to the Court of Tax Appeals, — the tax assessments subject of this case, upon which the levy and sale of properties were based, could no longer be contested (directly or indirectly) via this instant petition for certiorari.

Petitioner argues that all the questioned Notices of Levy, however, must be nullified for having been issued without validly serving copies thereof to the petitioner. As a mandatory heir of the decedent, petitioner avers that he has an interest in the subject estate, and notices of levy upon its properties should have been served upon him.

We do not agree. In the case of notices of levy issued to satisfy the delinquent estate tax, the delinquent taxpayer is the Estate of the decedent, and not necessarily, and exclusively, the petitioner as heir of the deceased. In the same vein, in the matter of income tax delinquency of the late president and his spouse, petitioner is not the taxpayer liable. Thus, it follows that service of notices of levy in satisfaction of these tax delinquencies upon the petitioner is not required by law, as under Section 213 of the NIRC, which pertinently states: xxx xxx xxx . . . Levy shall be effected by writing upon said certificate a description of the property upon which levy is made. At the same time, written notice of the levy shall be mailed to or served upon the Register of Deeds of the province or city where the property is located and upon the delinquent taxpayer, or if he be absent from the Philippines, to his agent or the manager of the business in respect to which the liability arose, or if there be none, to the occupant of the property in question. xxx xxx xxx The foregoing notwithstanding, the record shows that notices of warrants of distraint and levy of sale were furnished the counsel of petitioner on April 7, 1993, and June 10, 1993, and the petitioner himself on April 12, 1993 at his office at the Batasang Pambansa. 21 We cannot therefore, countenance petitioner's insistence that he was denied due process. Where there was an opportunity to raise objections to government action, and such opportunity was disregarded, for no justifiable reason, the party claiming oppression then becomes the oppressor of the orderly functions of government. He who comes to court must come with clean hands. Otherwise, he not only taints his name, but ridicules the very structure of established authority.

IN VIEW WHEREOF, the Court RESOLVED to DENY the present petition. The Decision of the Court of Appeals dated November 29, 1994 is hereby AFFIRMED in all respects.

SO ORDERED.

Section 2. Custodian of will to deliver.

Uy Kiao Eng vs. Lee GR No. 176831

January 15, 2010

NACHURA, J.: Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the August 23, 2006 Amended Decision of the Court of Appeals (CA) in CA-G.R. SP No. 91725 and the February 23, 2007 Resolution, denying the motion for reconsideration thereof. The relevant facts and proceedings follow. Alleging that his father passed away on June 22, 1992 in Manila and left a holographic will, which is now in the custody of petitioner Uy Kiao Eng, his mother, respondent Nixon Lee filed, on May 28, 2001, a petition for mandamus with damages, docketed as Civil Case No. 01100939, before the Regional Trial Court (RTC) of Manila, to compel petitioner to produce the will so that probate proceedings for the allowance thereof could be instituted. Allegedly, respondent had already requested his mother to settle and liquidate the patriarchs estate and to deliver to the legal heirs their respective inheritance, but petitioner refused to do so without any justifiable reason. In her answer with counterclaim, petitioner traversed the allegations in the complaint and posited that the same be dismissed for failure to state a cause of action, for lack of cause of action, and for non-compliance with a condition precedent for the filing thereof. Petitioner denied that she was in custody of the original holographic will and that she knew of its whereabouts. She, moreover, asserted that photocopies of the will were given to respondent and to his siblings. As a matter of fact, respondent was able to introduce, as an exhibit, a copy of the will in Civil Case No. 224-V-00 before the RTC of Valenzuela City. Petitioner further contended that respondent should have first exerted earnest efforts to amicably settle the controversy with her before he filed the suit. The RTC heard the case. After the presentation and formal offer of respondents evidence, petitioner demurred, contending that her son failed to prove that she had in her custody the original holographic will. Importantly, she asserted that the pieces of documentary evidence presented, aside from being hearsay, were all immaterial and irrelevant to the issue involved in the petitionthey did not prove or disprove that she unlawfully neglected the performance of an act which the law specifically enjoined as a duty resulting from an office, trust or station, for the court to issue the writ of mandamus. The RTC, at first, denied the demurrer to evidence. In its February 4, 2005 Order, however, it granted the same on petitioners motion for reconsideration.

Respondents motion for reconsideration of this latter order was denied on September 20, 2005. Hence, the petition was dismissed. Aggrieved, respondent sought review from the appellate court. On April 26, 2006, the CA initially denied the appeal for lack of merit. It ruled that the writ of mandamus would issue only in instances when no other remedy would be available and sufficient to afford redress. Under Rule 76, in an action for the settlement of the estate of his deceased father, respondent could ask for the presentation or production and for the approval or probate of the holographic will. The CA further ruled that respondent, in the proceedings before the trial court, failed to present sufficient evidence to prove that his mother had in her custody the original copy of the will. Respondent moved for reconsideration. The appellate court, in the assailed August 23, 2006 Amended Decision, granted the motion, set aside its earlier ruling, issued the writ, and ordered the production of the will and the payment of attorneys fees. It ruled this time that respondent was able to show by testimonial evidence that his mother had in her possession the holographic will. Dissatisfied with this turn of events, petitioner filed a motion for reconsideration. The appellate court denied this motion in the further assailed February 23, 2007 Resolution. Left with no other recourse, petitioner brought the matter before this Court, contending in the main that the petition for mandamus is not the proper remedy and that the testimonial evidence used by the appellate court as basis for its ruling is inadmissible. The Court cannot sustain the CAs issuance of the writ. The first paragraph of Section 3 of Rule 65 of the Rules of Court pertinently provides that SEC. 3. Petition for mandamus.When any tribunal, corporation, board, officer or person unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from the use and enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent, immediately or at some other time to be specified by the court, to do the act required to be done to protect the rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the respondent. Mandamus is a command issuing from a court of law of competent jurisdiction, in the name of the state or the sovereign, directed to some inferior court, tribunal, or board, or to some corporation or person requiring the performance of a particular

duty therein specified, which duty results from the official station of the party to whom the writ is directed or from operation of law. This definition recognizes the public character of the remedy, and clearly excludes the idea that it may be resorted to for the purpose of enforcing the performance of duties in which the public has no interest. The writ is a proper recourse for citizens who seek to enforce a public right and to compel the performance of a public duty, most especially when the public right involved is mandated by the Constitution. As the quoted provision instructs, mandamus will lie if the tribunal, corporation, board, officer, or person unlawfully neglects the performance of an act which the law enjoins as a duty resulting from an office, trust or station. The writ of mandamus, however, will not issue to compel an official to do anything which is not his duty to do or which it is his duty not to do, or to give to the applicant anything to which he is not entitled by law. Nor will mandamus issue to enforce a right which is in substantial dispute or as to which a substantial doubt exists, although objection raising a mere technical question will be disregarded if the right is clear and the case is meritorious. As a rule, mandamus will not lie in the absence of any of the following grounds: [a] that the court, officer, board, or person against whom the action is taken unlawfully neglected the performance of an act which the law specifically enjoins as a duty resulting from office, trust, or station; or [b] that such court, officer, board, or person has unlawfully excluded petitioner/relator from the use and enjoyment of a right or office to which he is entitled. On the part of the relator, it is essential to the issuance of a writ of mandamus that he should have a clear legal right to the thing demanded and it must be the imperative duty of respondent to perform the act required. Recognized further in this jurisdiction is the principle that mandamus cannot be used to enforce contractual obligations. Generally, mandamus will not lie to enforce purely private contract rights, and will not lie against an individual unless some obligation in the nature of a public or quasi-public duty is imposed. The writ is not appropriate to enforce a private right against an individual. The writ of mandamus lies to enforce the execution of an act, when, otherwise, justice would be obstructed; and, regularly, issues only in cases relating to the public and to the government; hence, it is called a prerogative writ. To preserve its prerogative character, mandamus is not used for the redress of private wrongs, but only in matters relating to the public. Moreover, an important principle followed in the issuance of the writ is that there should be no plain, speedy and adequate remedy in the ordinary course of law other than the remedy of mandamus being invoked. In other words, mandamus can be issued only in cases where the usual modes of procedure and forms of remedy are powerless to afford relief. Although classified as a legal remedy, mandamus is equitable in its nature and its issuance is generally controlled by equitable principles. Indeed, the grant of the writ of mandamus lies in the sound discretion of the court. In the instant case, the Court, without unnecessarily ascertaining whether the obligation involved herethe production of the original holographic willis in the nature

of a public or a private duty, rules that the remedy of mandamus cannot be availed of by respondent Lee because there lies another plain, speedy and adequate remedy in the ordinary course of law. Let it be noted that respondent has a photocopy of the will and that he seeks the production of the original for purposes of probate. The Rules of Court, however, does not prevent him from instituting probate proceedings for the allowance of the will whether the same is in his possession or not. Rule 76, Section 1 relevantly provides: Section 1. Who may petition for the allowance of will.Any executor, devisee, or legatee named in a will, or any other person interested in the estate, may, at any time, after the death of the testator, petition the court having jurisdiction to have the will allowed, whether the same be in his possession or not, or is lost or destroyed. An adequate remedy is further provided by Rule 75, Sections 2 to 5, for the production of the original holographic will. Thus SEC. 2. Custodian of will to deliver.The person who has custody of a will shall, within twenty (20) days after he knows of the death of the testator, deliver the will to the court having jurisdiction, or to the executor named in the will. SEC. 3. Executor to present will and accept or refuse trust.A person named as executor in a will shall within twenty (20) days after he knows of the death of the testator, or within twenty (20) days after he knows that he is named executor if he obtained such knowledge after the death of the testator, present such will to the court having jurisdiction, unless the will has reached the court in any other manner, and shall, within such period, signify to the court in writing his acceptance of the trust or his refusal to accept it. SEC. 4. Custodian and executor subject to fine for neglect.A person who neglects any of the duties required in the two last preceding sections without excuse satisfactory to the court shall be fined not exceeding two thousand pesos. SEC. 5. Person retaining will may be committed.A person having custody of a will after the death of the testator who neglects without reasonable cause to deliver the same, when ordered so to do, to the court having jurisdiction, may be committed to prison and there kept until he delivers the will.[if !supportFootnotes][30][endif] There being a plain, speedy and adequate remedy in the ordinary course of law for the production of the subject will, the remedy of mandamus cannot be availed of. Suffice it to state that respondent Lee lacks a cause of action in his petition. Thus, the Court grants the demurrer. WHEREFORE, premises considered, the petition for review on certiorari is GRANTED. The August 23, 2006 Amended Decision and the February 23, 2007 Resolution of the Court of Appeals in CA-G.R. SP No. 91725 are REVERSED and SET ASIDE. Civil Case No. 01100939 before the Regional Trial Court of Manila is DISMISSED. SO ORDERED.

Section 4. Custodian and executor subject to fine for neglect.

G.R. No. L-27200 July 9, 1973

TESTATE ESTATE OF GLICERIA A. DEL ROSARIO, deceased. CONSUELO S. GONZALES VDA. DE PRECILLA, petitioner-administratrix,

vs. SEVERINA NARCISO, ROSA NARCISO, JOSEFA NARCISO, VICENTE

MAURICIO, DELFIN MAURICIO, REMEDIOS NARCISO, ENCARNACION NARCISO, MARIA NARCISO, EDUARDO NARCISO, FR. LUCIO V. GARCIA, ANTONIO JESUS DE PRAGA, MARIA NATIVIDAD DE JESUS, DR. JAIME

ROSARIO, ET AL.; NATIVIDAD DEL ROSARIO-SARMIENTO, and PASCUALA NARCISO-MANAHAN, oppositors-appellants.

BARREDO, J.: Motion for reconsideration, this time of the oppositors-appellants, of the resolution of August 18, 1972, setting aside the decision of April 30, 1972 and ordering the remand of this case to the trial court for the reception of further evidence on the question of whether or not the deceased Doña Gliceria del Rosario was able to actually read the proposed will, Exhibit D.

Main ground of movants is that there is no need for the remand ordered in the August 18, 1972 resolution because, after all, there is enough proof in the record, independent of the testimony of Dr. Tamesis regarding the alleged inability of the deceased to read the will in question, of such incapacity. We have carefully read the motion, but We cannot find therein sufficient support of movant's contention. The evidence alluded to by the movants consist merely of the appearance and contents of the purported testament before Us and the testimonies regarding the active participation of Alfonso Precilla, who together with his wife, Consuelo, the proponent in this case, thereunder, in the preparation thereof, to the extent that he might have prepared it himself. At best, therefore, on the particular issue of fact which has somehow pivotal as to whether or not the deceased did read the impugned instrument before she signed the same, movants' supposed evidence are purely inferential and circumstantial, not by any means inevitably indicative of the conclusion they purport to prove, for even if it were assumed that Alfonso Precilla did prepare said will and arrange for its execution, these circumstances do not preclude that the same contains the genuine and free desire of the testatrix and that she read and understood the same. As a matter of fact, there is positive evidence presented by the proponent through the statutorily required three attesting witnesses, that she read and signed the will in their presence. These witnesses were believed by His Honor, the trial judge who saw and heard them testify. What is more, that the signature thereon is that of Doña Gliceria is not the least disputed, and nothing has been said against the positive finding in the very decision which movants are relying upon that "The records — fully establish the fact that the testatrix, Gliceria A. del Rosario, during her lifetime executed two wills: one on June 9, 1956 — and another, dated 29 December 1960, consisting of one page and written in Tagalog, witnessed by Messrs. Vicente Rosales, Francisco Decena and Francisco Lopez and acknowledged before notary public Remigio M. Trinidad." In

other words, everything in the record considered, except the direct evidence as to the eyesight of the testatrix on December 29, 1960, it is not quite accurate to say that the inescapable conclusion to be derived as to the due execution of the will in question is favorable to the movants. Quite on the contrary, it appears to be more reasonable to say that if no further evidence were to be received clarifying or making more definite the technical evidence relative to the testimony of Dr. Tamesis, the direct and positive declaration of the three attesting witnesses, not being belied by anything substantial indicating the probability of its falsity, should be accorded due consideration. The purpose, therefore, of the remand is not to give the proponent opportunity to complete her evidence, as movants seem to insinuate, but rather to give oppositors all the chances to concretize, if they can, their technical evidence by which alone the weight of the testimonies of the attesting witnesses may perhaps be successfully overthrown.

Incidentally, it may be mentioned that even if oppositors succeed to prove their factual point, the Court would still have to resolve the legal point as to how to apply Article 808 to the facts as they may turn out to be.

WHEREFORE, the subject motion for reconsideration of oppositors-appellants is denied for lack of merit.

Note: (Repeat of Uy Kiao Eng case)