738 Phil. 673; 111 OG No. 9, 1237 (March 2, 2015)
SERENO, C.J.:
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”.
After trial, the lower court rendered a decision dated June 30, 2006, the decretal portion of which reads: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.Appellant filed a motion for reconsideration of the decision but it was denied per order dated September 8, 2006. Hence, this appeal interposed by appellant imputing errors to the lower court in -
SO ORDERED.1. SUBSTITUTING AS DEFENDANT THE ESTATE OF MACARIA BEROT WHICH HAS NO PERSONALITY TO SUE AND TO BE SUED;
2. APPOINTING RODOLFO BEROT AS A REPRESENTATIVE OF THE ESTATE OF THE DECEASED MACARIA BEROT TO THE PREJUDICE OF THE OTHER HEIRS, GRANTING FOR THE SAKE OF ARGUMENT THAT THE ESTATE OF MACARIA BEROT HAS A PERSONALITY TO SUE AND BE SUED;
3. NOT FINDING THE MORTGAGE NULL AND VOID, WHICH WAS ENTERED INTO WITHOUT THE WRITTEN CONSENT OF THE BENEFICIARIES OF THE FAMILY HOME WHO WERE OF LEGAL AGE;
4. MAKING DEFENDANTS LIABLE FOR THE ENTIRE OBLIGATION OF PH250,000.00, WHEN THE OBLIGATION IS ONLY JOINT;
5. IMPOSING ATTORNEY’S FEE(S) IN THE DISPOSITIVE PORTION WITHOUT MAKING A FINDING OF THE BASIS THEREOF IN THE BODY; AND
6. IMPOSING EXEMPLARY DAMAGES AND LITIGATION EXPENSES.
Appellant contends that the substitution of the estate of Macaria for her is improper as the estate has no legal personality to be sued.[3]
As aptly observed by the trial court:
It may be recalled that when the plaintiff filed his Amended Complaint substituting the estate of Macaria Berot in place of Macaria Berot as party defendant, defendants made no objection thereto. Not even an amended answer was filed by the defendants questioning the substitution of the estate of Macaria Berot. For these reasons, the defendants are deemed to have waived any objection on the personality of the estate of Macaria Berot. Section 1, Rule 9 of the Rules of Court provides that, ‘Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. (Order dated September 8, 2006) [5] [Underscoring supplied]
WHEREFORE, the appealed decision is AFFIRMED with MODIFICATION in that the award of exemplary damages, attorney’s fees and expenses of litigation is DELETED.
SO ORDERED.[10]
The Court of Appeals erred in:
- Holding that the intestate estate of Macaria Berot could be a proper party by waiver expressly or impliedly by voluntary appearance;
- In not holding that the obligation is joint[12]
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.
It may be recalled that when the plaintiff filed his Amended Complaint substituting the estate of Macaria Berot in place of Macaria Berot as party defendant, defendants made no objections thereto. Not even an amended answer was filed by the defendants questioning the substitution of the estate of Macaria Berot. For these reasons, the defendants are deemed to have waived any objection on the personality of the estate of Macaria Berot. Section 1, Rule 9 of the Rules of Court provides that, “Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. x x x. (Underscoring ours)[15]
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.
[W]e have to point out that the confusion in this case was brought about by respondents themselves when they included in their complaint two defendants who were already dead. Instead of impleading the decedent’s heirs and current occupants of the landholding, respondents filed their complaint against the decedents, contrary to the following provision of the 1994 DARAB Rules of Procedure: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.RULE V
PARTIES, CAPTION AND SERVICE OF PLEADINGS
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.
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.
We are not unaware of several cases where we have ruled that a party having died in an action that survives, the trial held by the court without appearance of the deceased's legal representative or substitution of heirs and the judgment rendered after such trial, are null and void because the court acquired no jurisdiction over the persons of the legal representatives or of the heirs upon whom the trial and the judgment would be binding. This general rule notwithstanding, in denying petitioner's motion for reconsideration, the Court of Appeals correctly ruled that formal substitution of heirs is not necessary when the heirs themselves voluntarily appeared, participated in the case and presented evidence in defense of deceased defendant. Attending the case at bench, after all, are these particular circumstances which negate petitioner's belated and seemingly ostensible claim of violation of her rights to due process. We should not lose sight of the principle underlying the general rule that formal substitution of heirs must be effectuated for them to be bound by a subsequent judgment. Such had been the general rule established not because the rule on substitution of heirs and that on appointment of a legal representative are jurisdictional requirements per se but because non-compliance therewith results in the undeniable violation of the right to due process of those who, though not duly notified of the proceedings, are substantially affected by the decision rendered therein. Viewing the rule on substitution of heirs in this light, the Court of Appeals, in the resolution denying petitioner's motion for reconsideration, thus expounded:Although the jurisprudential rule is that failure to make the substitution is a jurisdictional defect, it should be noted that the purpose of this procedural rule is to comply with due process requirements. The original party having died, he could not continue, to defend himself in court despite the fact that the action survived him. For the case to continue, the real party in interest must be substituted for the deceased. The real party in interest is the one who would be affected by the judgment. It could be the administrator or executor or the heirs. In the instant case, the heirs are the proper substitutes. Substitution gives them the opportunity to continue the defense for the deceased. Substitution is important because such opportunity to defend is a requirement to comply with due process. Such substitution consists of making the proper changes in the caption of the case which may be called the formal aspect of it. Such substitution also includes the process of letting the substitutes know that they shall be bound by any judgment in the case and that they should therefore actively participate in the defense of the deceased. This part may be called the substantive aspect. This is the heart of the procedural rule because this substantive aspect is the one that truly embodies and gives effect to the purpose of the rule. It is this court's view that compliance with the substantive aspect of the rule despite failure to comply with the formal aspect may he considered substantial compliance. Such is the situation in the case at bench because the only inference that could be deduced from the following facts was that there was active participation of the heirs in the defense of the deceased after his death:
1. The original lawyer did not stop representing the deceased. It would be absurd to think that the lawyer would continue to represent somebody if nobody is paying him his fees. The lawyer continued to represent him in the litigation before the trial court which lasted for about two more years. A dead party cannot pay him any fee. With or without payment of fees, the fact remains that the said counsel was allowed by the petitioner who was well aware of the instant litigation to continue appearing as counsel until August 23, 1993 when the challenged decision was rendered;
2. After the death of the defendant, his wife, who is the petitioner in the instant case, even testified in the court and declared that her husband is already deceased. She knew therefore that there was a litigation against her husband and that somehow her interest and those of her children were involved;
3. This petition for annulment of judgment was filed only after the appeal was decided against the defendant on April 3, 1995, more than one and a half year (sic) after the decision was rendered (even if we were to give credence to petitioner's manifestation that she was not aware that an appeal had been made);
4. The Supreme Court has already established that there is such a thing as jurisdiction by estoppel. This principle was established even in cases where jurisdiction over the subject matter was being questioned. In the instant case, only jurisdiction over the person of the heirs is in issue. Jurisdiction over the person may be acquired by the court more easily than jurisdiction over the subject matter. Jurisdiction over the person may be acquired by the simple appearance of the person in court as did herein petitioner appear;
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.
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.
A solidary obligation is one in which each of the debtors is liable for the entire obligation, and each of the creditors is entitled to demand the satisfaction of the whole obligation from any or all of the debtors. On the other hand, a joint obligation is one in which each debtors is liable only for a proportionate part of the debt, and the creditor is entitled to demand only a proportionate part of the credit from each debtor. The well-entrenched rule is that solidary obligations cannot be inferred lightly. They must be positively and clearly expressed. A liability is solidary “only when the obligation expressly so states, when the law so provides or when the nature of the obligation so requires.”
It is noteworthy that the appealed decision makes no pronouncement that the obligation of the mortgagors is solidary; and that said decision has not been modified by the trial court. Hence, it is unnecessary for US to make a declaration on the nature of the obligation of the mortgagors.[28]
Defendants [sic] obligation with plaintiff is solidary. A careful scrutiny of the Real Estate Mortgage (Exh. “A”) will show that all the defendants, for a single loan, bind themselves to cede, transfer, and convey by way of real estate mortgage all their rights, interest and participation in the subject parcel of land including the improvements thereon in favor of the plaintiff, and warrant the same to be free from liens and encumbrances, and that should they fail to perform their obligation the mortgage will be foreclosed. From this it can be gleaned that each of the defendants obligated himself/herself to perform the said solidary obligation with the plaintiff.[29]
Q: 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? A: It is the loan of my mother and myself, sir.[30]