Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=83218:57203&catid=1585&Itemid=566
Timestamp: 2019-04-19 10:28:13+00:00

Document:
G.R. No. 188944, July 09, 2014 - SPOUSES RODOLFO BEROT AND LILIA BEROT, Peitioners, v. FELIPE C. SIAPNO, Respondent.
SPOUSES RODOLFO BEROT AND LILIA BEROT, Peitioners, v. FELIPE C. SIAPNO, Respondent.
Before us is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules on Civil Procedure assailing the Court of Appeals (CA) Decision dated 29 January 2009 in CA-G.R. CV No. 87995.1 The assailed CA Decision affirmed with modification the Decision2 in Civil Case No. 2004-0246-D issued by the Regional Trial Court (RTC), First Judicial Region of Dagupan City, Branch 42. The RTC Decision allowed the foreclosure of a mortgaged property despite the objections of petitioners claiming, among others, that its registered owner was impleaded in the suit despite being deceased.
On May 23, 2002, Macaria Berot (or “Macaria”) and spouses Rodolfo A. Berot (or “appellant”) and Lilia P. Berot (or “Lilia”) obtained a loan from Felipe C. Siapno (or “appellee”) in the sum of P250,000.00, payable within one year together with interest thereon at the rate of 2% per annum from that date until fully paid.
As security for the loan, Macaria, appellant and Lilia (or “mortgagors”, when collectively) mortgaged to appellee a portion, consisting of 147 square meters (or “contested property”), of that parcel of land with an area of 718 square meters, situated in Banaoang, Calasiao, Pangasinan and covered by Tax Declaration No. 1123 in the names of Macaria and her husband Pedro Berot (or “Pedro”), deceased. On June 23, 2003, Macaria died.
Because of the mortgagors’ default, appellee filed an action against them for foreclosure of mortgage and damages on July 15, 2004 in the Regional Trial Court of Dagupan City (Branch 42). The action was anchored on the averment that the mortgagors failed and refused to pay the abovementioned sum of P250,000.00 plus the stipulated interest of 2% per month despite lapse of one year from May 23, 2002.
In answer, appellant and Lilia (or “Berot spouses”, when collectively [referred to]) alleged that the contested property was the inheritance of the former from his deceased father, Pedro; that on said property is their family home; that the mortgage is void as it was constituted over the family home without the consent of their children, who are the beneficiaries thereof; that their obligation is only joint; and that the lower court has no jurisdiction over Macaria for the reason that no summons was served on her as she was already dead.
With leave of court, the complaint was amended by substituting the estate of Macaria in her stead. Thus, the defendants named in the amended complaint are now the “ESTATE OF MACARIA BEROT, represented by Rodolfo A. Berot, RODOLFO A. BEROT and LILIA P. BEROT”.
WHEREFORE, the Court hereby renders judgment allowing the foreclosure of the subject mortgage. Accordingly, the defendants are hereby ordered to pay to the plaintiff within ninety (90) days from notice of this Decision the amount of P250,000.00 representing the principal loan, with interest at two (2%) percent monthly from February, 2004 the month when they stopped paying the agreed interest up to satisfaction of the claim and 30% of the amount to be collected as and for attorney’s fees. Defendants are also assessed to pay the sum of P20,000.00 as litigation expenses and another sum of P10,000.00 as exemplary damages for their refusal to pay their aforestated loan obligation. If within the aforestated 90-day period the defendants fail to pay plaintiff the above-mentioned amounts, the sale of the property subject of the mortgage shall be made and the proceeds of the sale to be delivered to the plaintiff to cover the debt and charges mentioned above, and after such payments the excess, if any shall be delivered to the defendants.
6. IMPOSING EXEMPLARY DAMAGES AND LITIGATION EXPENSES.
WHEREFORE, the appealed decision is AFFIRMED with MODIFICATION in that the award of exemplary damages, attorney’s fees and expenses of litigation is DELETED.
Petitioners moved for the reconsideration of the CA Decision, but their motion was denied through a Resolution dated 9 July 2009.11 Aggrieved by the denial of their Motion for Reconsideration, they now come to us through a Petition for Review on Certiorari under Rule 45, proffering purely questions of law.
A deceased person does not have such legal entity as is necessary to bring action so much so that a motion to substitute cannot lie and should be denied by the court. An action begun by a decedent’s estate cannot be said to have been begun by a legal person, since an estate is not a legal entity; such an action is a nullity and a motion to amend the party plaintiff will not, likewise, lie, there being nothing before the court to amend. Considering that capacity to be sued is a correlative of the capacity to sue, to the same extent, a decedent does not have the capacity to be sued and may not be named a party defendant in a court action.
When respondent filed the foreclosure case on 15 June 2004 and impleaded Macaria Berot as respondent, the latter had already passed away the previous year, on 23 June 2003. In their Answer14 to the Complaint, petitioners countered among others, that the trial court did not have jurisdiction over Macaria, because no summons was served on her, precisely for the reason that she had already died. Respondent then amended his Complaint with leave of court and substituted the deceased Macaria by impleading her intestate estate and identified Rodolfo Berot as the estate’s representative. Thereafter, the case proceeded on the merits at the trial, where this case originated and where the Decision was promulgated.
In an Order20 dated 14 April 2005, the RTC noted that petitioners received the summons and the copy of the amended Complaint on 3 February 2005 and yet they did not file an Answer. During the trial on the merits that followed, petitioners failed to interpose any objection to the trial court’s exercise of jurisdiction over the estate of Macaria Berot. Clearly, their full participation in the proceedings of the case can only be construed as a waiver of any objection to or defense of the trial court’s supposed lack of jurisdiction over the estate.
In this regard, petitioners should be reminded of the provision in the Rules of Court that a defendant’s voluntary appearance in an action shall be equivalent to service of summons. Further, the lack of jurisdiction over the person of the defendant may be waived either expressly or impliedly. When a defendant voluntarily appears, he is deemed to have submitted himself to the jurisdiction of the court. If he does not wish to waive this defense, he must do so seasonably by motion, and object thereto.
It should be noted that Rodolfo Berot is the son of the deceased Macaria22 and as such, he is a compulsory heir of his mother. His substitution is mandated by Section 16, Rule 3 of the Revised Rules of Court. Notably, there is no indication in the records of the case that he had other siblings who would have been his co-heirs. The lower and appellate courts veered from the real issue whether the proper parties have been impleaded. They instead focused on the issue whether there was need for a formal substitution when the deceased Macaria, and later its estate, was impleaded. As the compulsory heir of the estate of Macaria, Rodolfo is the real party in interest in accordance with Section 2, Rule 3 of the Revised Rules of Court. At the time of the filing of the complaint for foreclosure, as well as the time it was amended to implead the estate of Macaria, it is Rodolfo – as heir – who is the real party in interest. He stands to be benefitted or injured by the judgment in the suit.
Rodolfo is also Macaria’s co-defendant in the foreclosure proceedings in his own capacity as co-borrower of the loan. He participated in the proceedings of the case, from the initial hearing of the case, and most particularly when respondent filed his amended complaint impleading the estate of Macaria. When respondent amended his complaint, Rodolfo did not file an amended Answer nor raise any objection, even if he was also identified therein as the representative of the estate of the deceased Macaria. The lower court noted this omission by Rodolfo in its Order dated 8 September 2006 ruling on his Motion for Reconsideration to the said court’s Decision dated 30 June 2006. Thus, his continued participation in the proceedings clearly shows that the lower court acquired jurisdiction over the heir of Macaria.
SECTION 1. Parties in Interest. Every agrarian case must be initiated and defended in the name of the real party in interest. x x x.
A real party in interest is defined as “the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of a suit.” The real parties in interest, at the time the complaint was filed, were no longer the decedents Avelino and Pedro, but rather their respective heirs who are entitled to succeed to their rights (whether as agricultural lessees or as farmers-beneficiaries) under our agrarian laws. They are the ones who, as heirs of the decedents and actual tillers, stand to be removed from the landholding and made to pay back rentals to respondents if the complaint is sustained.
Since respondents failed to correct their error (they did not amend the erroneous caption of their complaint to include the real parties-in-interest), they cannot be insulated from the confusion which it engendered in the proceedings below. But at any rate, notwithstanding the erroneous caption and the absence of a formal substitution of parties, jurisdiction was acquired over the heirs of Avelino and Pedro who voluntarily participated in the proceedings below. This Court has ruled that formal substitution of parties is not necessary when the heirs themselves voluntarily appeared, participated, and presented evidence during the proceedings.
As such, formal substitution of the parties in this case is not necessary.
5. The case cited by the herein petitioner (Ferreria et al. vs. Manuela Ibarra vda. de Gonzales, et al.) cannot be availed of to support the said petitioner's contention relative to non-acquisition of jurisdiction by the court. In that case, Manolita Gonzales was not served notice and, more importantly, she never appeared in court, unlike herein petitioner who appeared and even testified regarding the death of her husband.
In this case, Rodolfo’s continued appearance and participation in the proceedings of the case dispensed with the formal substitution of the heirs in place of the deceased Macaria. The failure of petitioners to timely object to the trial court’s exercise of jurisdiction over the estate of Macaria Berot amounted to a waiver on their part. Consequently, it would be too late for them at this point to raise that defense to merit the reversal of the assailed decision of the trial court. We are left with no option other than to sustain the CA’s affirmation of the trial court’s Decision on this matter.
On the second issue of whether the nature of the loan obligation contracted by petitioners is joint or solidary, we rule that it is joint.
Art. 1207. The concurrence of two or more creditors or of two or more debtors in one and the same obligation does not imply that each one of the former has a right to demand, or that each one of the latter is bound to render, entire compliance with the prestations. There is a solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity.
We do not agree with this finding by the trial court.
On the Real Estate Mortgage, you and your mother obtained a loan from Mr. Siapno in the amount of P250,000.00, now as between you and your mother whose loan is that?
The CA properly upheld respondent’s course of action as an availment of the second remedy provided under Section 7, Rule 86 of the 1997 Revised Rules of Court.32 Under the said provision for claims against an estate, a mortgagee has the legal option to institute a foreclosure suit and to recover upon the security, which is the mortgaged property.
During her lifetime, Macaria was the registered owner of the mortgaged property, subject of the assailed foreclosure. Considering that she had validly mortgaged the property to secure a loan obligation, and given our ruling in this case that the obligation is joint, her intestate estate is liable to a third of the loan contracted during her lifetime. Thus, the foreclosure of the property may proceed, but would be answerable only to the extent of the liability of Macaria to respondent.
WHEREFORE, the CA Decision in CA-G.R. CV No. 87995 sustaining the RTC Decision in Civil Case No. 2004-0246-D is hereby AFFIRMED with the MODIFICATION that the obligation of petitioners and the estate of Macaria Berot is declared as joint in nature.
1Rollo, pp. 21-28, CA Decision in CA-G.R. CV No. 87995 dated 29 January 2009, penned by Associate Justice Edgardo P. Cruz and concurred in by Associate Justices Magdangal M. de Leon and Ramon R. Garcia.
2 Id. at 51-53, the RTC Decision dated 30 June 2006 in Civil Case No. 2004-0246-D was penned by Judge Rolando G. Mislang.
11Id. at 31-32, CA Resolution in CA-G.R. CV No. 87995 dated 09 July 2009, penned by Associate Justice Ramon R. Garcia and concurred in by Associate Justices Magdangal M. de Leon and Arturo G. Tayag.
13 G.R. No. 63145, 374 Phil. 562 (1999).
14 RTC records, pp. 27-29.
16Villareal v. Court of Appeals, 356 Phil. 825 (1998), citing Flores v. Zurbito, 37 Phil. 746, La Naval Drug Corp. v. Court of Appeals, G.R. No. 103200, August 31, 1994, 236 SCRA 78, and Boticano v. Chu, Jr., G.R. No. L-58036, 16 March 1987, 148 SCRA 541.
17 RTC records, p. 65.
21 G.R. No. 150859, 494 Phil.105 (2005).
23 Regional Agrarian Reform Adjudication Board v. Court of Appeals, G.R. No. 165155, 13 April 2010, 618 SCRA 181.
24 332 Phil. 373, 377-380 (1995).
25 G.R. No. 109648, 421 Phil. 821 (2001).
27 RTC records, p. 110.
29 RTC records, pp. 130-131.
30 TSN dated 09 March 2006, p. 3.
31 Escano v. Ortigas, Jr., G. R. No. 151953, 29 June 2007, 526 SCRA 26.
32 Rule 86, SEC. 7. Mortgage debt due from estate. — A creditor holding a claim against the deceased secured by mortgage or other collateral security, may abandon the security and prosecute his claim in the manner provided in this rule, and share in the general distribution of the assets of the estate; or he may foreclose his mortgage or realize upon his security, by action in court, making the executor or administrator a party defendant, and if there is a judgment for a deficiency, after the sale of the mortgaged premises, or the property pledged, in the foreclosure or other proceedings to realize upon the security, he may claim his deficiency judgment in the manner provided in the preceding section; or he may rely upon his mortgage or other security alone, and foreclose the same at any time within the period of the statute of limitations, and in that event he shall not be admitted as a creditor, and shall receive no share in the distribution of the other assets of the estate; but nothing herein contained shall prohibit the executor or administrator from redeeming the property mortgaged or pledged, by paying the debt for which it is held as security, under the direction of the court, if the court shall adjudge it to be for the best interest of the estate that such redemption shall be made.

References: v. 
 v. 

Art. 1207
 v. 
 v. 
 v. 
 v. 
 v. 
 v.