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PEOPLE’S HOMESITE AND HOUSING CORP v.

JEREMIAS ISSUE: WON CAPITAL (surety) has standing to appeal the order
Muñoz-Palma, J. (1976) for a writ of execution on the performance bond even when it
 Sps. Corazon and Geronimo JEREMIAS were the occupants of was not initially a party in the ejectment case 1
a lot located at East Ave, QC owned by People’s Homesite and
Housing Corp (PHHC) HELD: YES, they have standing to appeal. However, on the
 JEREMIAS had previously offered to buy said lot from PHHC merits, the performance bond is not exempt for execution on
but the final award was given to Sps. Tiongco instead. the ground of expiration
Claiming to have preferential right over the lot, JEREMIAS
protested PHHC’s award of the lot to the Tiongcos and RATIO:
continued occupying said lot  A party is one who is to be benefited or injured by a
 Their protest notwithstanding, an action for forcible entry judgment or order of a court, and includes any person who
and illegal detainer was instituted by PHHC against JEREMIAS is a "party to the record."
before the Municipal Court (later City Court) of QC sometime  While it is a fact that the initial parties in the complaint for
in 1960 forcible entry and detainer were PHHC and the spouses
 Oct 1961, judgment was rendered in favor of PHHC and the JEREMIAS, however, when the latter filed a performance
lower court ordered JEREMIAS to vacate the premises and bond to insure the execution of the judgment in said case and
pay PHHC rentals in the amount of P36 per month with 6% PHHC moved to execute that bond, the surety company
interest thereon from Feb 1960 until they vacated the CAPITAL became necessarily a party in the case when notice
premises and restored possession of the same to PHHC was served on it of the motion, and the inferior court granted
 JEREMIAS did not appeal said judgment/order “on the a writ of execution against its performance bond. The order
ejectment case,” hence, on June 1962, a writ of execution of execution was a final order insofar as the surety-appellant
was issued. However, the same was not implemented was concerned, hence, appealable
prompting the court to require JEREMIAS to file a  In spite of CAPITAL’s standing to appeal the writ of execution
performance bond in the amount of P1,100 to secure the against its performance bond, the same must however be
performance of their obligation to PHHC in accordance with dismissed on the ground that CAPITAL’s contention that the
the above orders/judgment performance bond has already expired is devoid of merit
 JEREMIAS complied and filed a surety bond issued by the  The pertinent provision of the performance bond duly filed in
Capital Insurance and Surety Co., Inc. (CAPITAL) in the the ejectment case states: “Liability of surety on this bond will
amount of P1,100 expire upon final termination of the ejectment case and said
 Oct 1963, the PHHC finally resolved JEREMIAS’s protest and bond will be cancelled 15 days after its expiration, unless
sustained the award of the lot to the Tiongcos. This caused renewed.”
the lower court to issue an alias writ of execution of its Oct  CAPITAL argues that the final termination of the ejectment
1961 judgment; however, JEREMIAS refused to comply. Upon case (subject of its suretyship) came on Sept 1965, the date
motion and after due hearing, thus, the lower court issued a of SC Minute Resolution. And there having been no demand
special order of demolition against JEREMIAS’s property in within 15 days after that date, the bond had effectively
the lot in question expired  this contention is UNTENABLE!
 To forestall the demolition, JEREMIAS appealed the lower  Firstly, it is erroneous for CAPITAL to claim that the decision
court’s demolition order to the CFI, which was dismissed. “on the ejectment case” became final on Sept 1965. What
They went up to the CA but there they failed, too. Then, to obtained finality on that date of final entry of judgment was
the SC, and guess what, they failed there again the order of dismissal by the CFI of JEREMIAS’s appeal “on the
 Final entry of judgment “on the demolition order” was made demotion order”
after the SC issued said dismissal of JEREMIAS’s appeal via  Recall that when CAPITAL's surety bond was filed, the lower
Minute Resolution on Sept 1965 court’s decision “on the ejectment case” had already become
 On the basis of the SC’s decision above, on Feb 1968, PHHC final since JEREMIAS did not appeal the same. Hence, the
sought from the now City Court of QC a writ of execution on phrase "upon final termination of ejectment case” appearing
the performance bond filed by JEREMIAS and issued by the in the bond could not have referred to the date of finality of
surety CAPITAL. Notice of PHHC’s motion was duly sent to the decision “on the demotion order”
CAPITAL  IN ANY CASE, a civil case is deemed terminated not upon the
 CAPITAL opposed said prayer for a writ of execution against rendition of the final judgment but UPON EXECUTION and
the performance bond and disclaimed liability thereon on the satisfaction of said final judgment
ground that its performance bond had already expired  An execution is the fruit and end of the suit, and is very aptly
 City Court granted PHHC’s prayer and issued writ of execution called the life of the law. The suit does not terminate with the
on CAPITAL’s performance bond. CAPITAL appealed lower judgment and all proceedings on the execution, are
court’s decision to the CFI but the same was dismissed. proceedings in the suit
Hence, CAPITAL brought this instant action
1It seems that only this procedural issue was elevated to the SC for decision.
The case did not mention whether the issue on the merits of CAPITAL’s
appeal was indeed alleged. But the SC nevertheless ruled on that part to
prevent further delays in this case.
 Execution is the process of the court for carrying its decree
into effect, and except so far as regulated by statute, is still
within the court's control. The suit is not ended by the
judgment; it is still pending.
 The case of Naric vs. Rivera invoked by CAPITAL is not in point
because in that Naric case, the bond executed by the surety
contained specific date for its expiration . On the other hand,
in the bond filed by CAPITAL, there was no specific date
provided for the bond's expiration
MR HOLDINGS, LTD v. BAJAR, ET AL. Assignment" in its favor. RTC Manila, however, denied MR
Sandoval-Gutierrez, J. (2002) HOLDINGS’s "Affidavit of Third–Party Claim"
 On Nov 4, 1992, the Asian Development Bank (ADB) extended  This prompted MR HOLDINGS to file with the RTC Boac,
to Marcopper Mining Corporation (MARCOPPER) a loan in the Marinduque a complaint for reivindication of properties with
aggregate amount of US$ 40M to finance the latter’s mining prayer for preliminary injunction and temporary restraining
project at Sta. Cruz, Marinduque order against respondents SOLIDBANK, MARCOPPER, and
 The loan had 2 components: the principal, in the amount of sheriffs BAJAR and JANDUSAY
US$ 15M, sourced from ADB funds; and the complementary,  RTC Boac denied MR HOLDINGS’s application for a writ of
in the amount of US$ 25M, sourced from the Bank of Nova preliminary injunction on the following grounds: a) MR
Scotia, a participating finance institution to the ADB HOLDINGS has no legal capacity to sue, it being a foreign
 On even date, ADB and Placer Dome, Inc. (PLACER), a foreign corporation doing business in the Philippines without license
corporation which owns 40% of MARCOPPER, executed a contrary to the provisions of the Corporation Code; b) an
"Support and Standby Credit Agreement" whereby PLACER injunction will amount "to staying the execution of a final
agreed to provide MARCOPPER with cash flow support for the judgment by a court of co-equal and concurrent jurisdiction;"
payment of its obligations to ADB and c) the validity of the "Assignment Agreement" and the
 To secure the loan, MARCOPPER executed in favor of ADB a "Deed of Assignment" has been "put into serious question by
"Deed of Real Estate and Chattel Mortgage" covering the timing of their execution and registration"
substantially all of MARCOPPER’s properties and assets in  MR HOLDINGS then elevated the matter to the CA via
Marinduque.2 It was registered with the Register of Deeds Petition for Certiorari, Prohibition and Mandamus. The CA
 When MARCOPPER defaulted, PLACER, in fulfillment of its affirmed the RTC decision and agreed with the RTC’s ratio on
undertaking under the "Support and Standby Credit all points
Agreement," and presumably to preserve its international  As an addition, the CA held that the MR HOLDINGS’s claim of
credit standing, agreed to have its subsidiary corporation, ownership over the subject properties is dubious as it relies
petitioner MR HOLDINGS, LTD., assume MARCOPPER’s heavily on the deeds of assignment in its favor which cannot
obligation to ADB. Simply put, MR HOLDINGS paid be binding on the judgment creditor, private respondent
MARCOPPER’s debt to the ADB SOLIDBANK, under the general legal principle that contracts
 Consequently, an "Assignment Agreement" was executed by can only bind the parties who had entered into it, and it
ADB in favor of MR HOLDINGS where ADB assigned to MR cannot favor or prejudice a third person
HOLDINGS all its rights, interests and obligations under the  The CA further held that the Deed of Assignment executed by
principal and complementary loan agreements, and to the MARCOPPER in favor of MR HOLDINGS was clearly made in
"Deed of Real Estate and Chattel Mortgage," etc bad faith and in fraud of creditors as this assignment contract
 MARCOPPER likewise executed a "Deed of Assignment" in was executed during the pendency of the collection case filed
favor of MR HOLDINGS. Under its provisions, MARCOPPER by its creditor SOLIDBANK in violation of Article 1387, CC –
assigns, transfers, cedes and conveys to MR HOLDINGS all of hence, the present petition for Review on Certiorari by MR
its properties, mining equipment and facilities HOLDINGS
 Meanwhile, Solidbank Corporation (SOLIDBANK) obtained a
Partial Judgment against MARCOPPER from the RTC Manila ISSUES:
which ordered the latter to pay SOLIDBANK the sum of 1) Does MR HOLDINGS have the legal capacity to sue?3
P52.9M plus interest and charges until fully paid 2) Was the Deed of Assignment between MARCOPPER and MR
 Upon SOLIDBANK’s motion, RTC Manila issued a writ of HOLDINGS executed in fraud of creditors?
execution pending appeal directing Carlos BAJAR, respondent 3) Are MR HOLDINGS, PLACER, and MARCOPPER one and the
sheriff, to require MARCOPPER "to pay the sums of money to same entity?
satisfy the Partial Judgment." Thereafter, respondent BAJAR 4) Is MR HOLDINGS guilty of forum shopping?
issued two notices of levy on MARCOPPER’s personal and real
properties, and over all its stocks of scrap iron and HELD: The petition is impressed with merit. MR HOLDINGS
unserviceable mining equipment wins! CA decision is REVERSED and SET ASIDE.
 Together with sheriff Ferdinand JANDUSAY of the RTC Boac,
Marinduque (also a respondent), BAJAR issued two notices RATIO:
setting the public auction sale of the levied properties 1) MR HOLDINGS has capacity to sue
 Having learned of the scheduled auction sale, petitioner MR  To rule on MR HOLDINGS’s standing to sue, it is important do
HOLDINGS served an "Affidavit of Third-Party Claim" upon determine whether it is “doing business in the Philippines”
respondent sheriffs with the RTC Manila, asserting its pursuant to the long established principles governing a
ownership over all MARCOPPER’s mining properties, foreign corporation’s right to sue in local courts settled in the
equipment and facilities by virtue of the "Deeds of Corporation Code of our jurisdiction
 These principles are: 1) if a foreign corporation does
business in the Philippines without a license, it cannot
2 MARCOPPER mortgaged its land & mining rights, buildings and other
structures, machinery/equipment, warehouse inventory, and all its
furniture/fixtures – as in lahat!!
3 This is the only relevant issue for our purposes
sue before the Philippine courts; 2) if a foreign corporation  The cited case of Far East International v. Nankai Kogyo
is not doing business in the Philippines, it needs no license to where it was held that a single act (like participating in an
sue before Philippine courts on an isolated transaction or on assignment contract) can still be considered as “doing
a cause of action entirely independent of any business business” if it is not merely incidental or casual, but is of such
transaction; and 3) if a foreign corporation does business in character as distinctly to indicate a purpose on the part of the
the Philippines with the required license, it can sue before foreign corporation to do other business in the country is
Philippine courts on any transaction. Apparently, it is not the NOT applicable here because in that case, there was an
absence of the prescribed license but the "doing (of) express admission of desire/intent on the part of the foreign
business" in the Philippines without such license which bars corporation to continue business in the Philippines while the
the foreign corporation from access to our courts same is not obtaining in the case at bar
 BP 68, otherwise known as "The Corporation Code of the  Admittedly, the CA is not totally misplaced in theorizing that
Philippines," is silent as to what constitutes doing" or ultimately, MR HOLDINGS might decide to
"transacting" business in the Philippines. Fortunately, operate/resuscitate MARCOPPER. Unfortunately, at this
jurisprudence has supplied the deficiency and has held that stage, that remains to be a mere speculation. It has not been
the term "implies a continuity of commercial dealings and proven that MR HOLDINGS cannot choose another way to
arrangements, and contemplates, to that extent, the recover its huge financial investment which it poured to
performance of acts or works or the exercise of some of the MARCOPPER aside from simply continuing its business5
functions normally incident to, and in progressive prosecution  To see through the present facts an intention on the part of
of, the purpose and object for which the corporation was petitioner to start a series of business transaction is to rest
organized." on assumptions or probabilities falling short of actual proof.
 Mentholatum Co. Inc., vs. Mangaliman laid down the test to Courts should never base its judgments on a state of facts so
determine whether a foreign company is "doing business," inadequately developed that it cannot be determined where
thus: The true test, however, seems to be whether the inference ends and conjecture begins. Absent overt acts of
foreign corporation is continuing the body or substance of foreign companies from which we may directly infer its
the business or enterprise for which it was organized or intention to continue business in the Philippines, it cannot be
whether it has substantially retired from it and turned it held to be “doing business” here.
over to another  The CA therefor committed reversible error in ruling that MR
 These definition and test settled in jurisprudence eventually HOLDINGS is “doing business” as it is based on mere
found statutory legitimation in succeeding pieces of assumptions and speculation.
legislation, e.g. the Foreign Investment Act of 1991 4 and  Moreover, it is a settled doctrine that the mere ownership by
other laws defining the term “doing business” in the same a foreign corporation of a property in a certain
tenor, and as may be observed, the common denominator state, unaccompanied by its active use in furtherance of the
among them is the concept of “continuity” business for which it was formed, is insufficient in itself to
 IN THE CASE AT BAR, the CA characterized MR HOLDINGS’s constitute doing business. On the same vein, petitioner, a
participation in the assignment contracts as “doing business” foreign corporation, which became the assignee of mining
 this in UNTENABLE! properties, facilities and equipment cannot be automatically
 The expression "doing business" should not be given such a considered as doing business, nor presumed to have the
strict and literal construction as to make it apply to any intention of engaging in mining business
corporate dealing whatever. At this early stage and with MR  Also, the pouring by MR HOLDINGS of huge amounts of
HOLDINGS’s transactions limited to merely assignment money in favor of MARCOPPER cannot be construed as
contracts, it cannot be said that it had performed acts “investments” for the simple reason that it shelled out money
intended to continue the business for which it was on account of an obligation it had pursuant to the “Support
organized. It may not be amiss to point out that the purpose and Standby Credit Agreement” executed between ADB and
or business for which petitioner was organized is not PLACER (MR HOLDING’s mother company). MR HOLDINGS
discernible in the records. No effort was exerted by the CA was merely fulfilling its obligation as a guarantor/surety of
to establish the nexus between petitioner’s business and sorts. That MR HOLDINGS stepped into the shoes of ADB and
the acts supposed to constitute "doing business." Thus, became MARCOPPER’s creditor was a mere legal
whether the assignment contracts were incidental to consequence of that agreement, further casting doubt as to
petitioner’s business or were continuation thereof is beyond whether MR HOLDINGS really intended to continue or take
determination. over MARCOPPER’s business
 More to the point, the “Support and Standby Credit
Agreement” was executed 4 years prior to MARCOPPER’s
4 The phrase ‘doing business’ shall include soliciting orders, service
insolvency. Hence, theorizing MR HOLDINGS’s supposed
contracts, opening offices, whether called ‘liaison’ offices or branches; intention to pursue MARCOPPER’s business could not have
appointing representatives or distributors domiciled in the Philippines
xxx and any other act or acts that imply a continuity of commercial
dealings or arrangements, and contemplate to that extent the 5As the J. Sandoval-Gutierrez pointed out, other sound business options like
performance of acts or works; or the exercise of some of the functions selling out the assigned properties is always an open option for MR
normally incident to, and in progressive prosecution of, commercial HOLDINGS to recover its huge investment in MARCOPPER. It is, at this point,
gain or of the purpose and object of the business organization; xxx not constrained to continue/operate MARCOPPER’s business
had any basis at that time since MARCOPPER’s fate surely assumed MARCOPPER’s debt to ADB, it follows that
could not have yet been determined then SOLIDBANK’s right as judgment creditor over the subject
 In the final analysis, MR HOLDINGS was engaged only in properties must give way to that of the former
isolated acts or transactions. Single or isolated acts, contracts,
or transactions of foreign corporations are not regarded as a 3) MR HOLDINGS, PLACER and MARCOPPER are not one entity
doing or carrying on of business. The statutory bar to sue in  The records are bereft of any indication that these companies
our local courts hence does not apply to MR HOLDINGS are one and the same hiding under the cloak of the corporate
veil
2) The deeds of assignments were not executed to defraud  While admittedly, petitioner is a wholly-owned subsidiary of
MARCOPPER’s creditors Placer Dome, which in turn, was then a minority stockholder
 Art 13876 prohibits conveyances by a debtor of his properties of Marcopper, however, the mere fact that a corporation
in fraud of his creditors. And this article presumes the owns all of the stocks of another corporation, taken alone is
existence of fraud made by a debtor. Thus, in the absence of not sufficient to justify their being treated as one entity. If
satisfactory evidence to the contrary, an alienation of a used to perform legitimate functions, a subsidiary’s separate
property will be held fraudulent if it is made after a judgment existence shall be respected, and the liability of the parent
has been rendered against the debtor making the corporation as well as the subsidiary will be confined to those
alienation. This presumption of fraud, however, is not arising in their respective business.7
conclusive and may be rebutted by satisfactory and  PLACER and MARCOPPER, on the same vein, cannot be
convincing evidence. All that is necessary is to establish considered as one entity. PLACER has its own set of
affirmatively that the conveyance is made in good faith and shareholders, most of whom are Canadian while MARCOPPER
for a sufficient and valuable consideration also has its own, majority of whom are Filipinos
 IN THE CASE AT BAR, the questioned deeds of assignment
were executed not only for valuable consideration but the 4) No violation of the Rule against Forum Shopping
facts of the case also show that these assignment contracts  MR HOLDINGS should be guilty of Forum Shopping had it
were execute in good faith. Recall that the assignments were been the case that it is one and the same entity as
mere incidents of a contract (Support and Standby Credit MARCOPPER
Agreement) executed long before SOLIDBANK’s collection  But since MR HOLDINGS has a separate personality, it has the
case was filed. Hence, the reason for the assignments could right to pursue its third-party claim by filing the independent
not have been to defraud SOLIDBANK and defeat its claims as reivindicatory action with the RTC of Boac, Marinduque,
the obligations from which the deeds of assignment were pursuant to Rule 39, Section 16 of the 1997 Rules of Civil
spewed out as a legal consequence was already executed Procedures. This remedy has been recognized in a long line of
years before cases decided by this Court
 Also, it is highly inconceivable that ADB, a reputable  It has long been settled in this jurisdiction that the claim of
international financial organization, will connive with ownership of a third party over properties levied for
MARCOPPER to feign or simulate a contract in 1992 just to execution of a judgment presents no issue for determination
defraud SOLIDBANK for its claim four years thereafter. It also by the court issuing the writ of execution. Thus, when a
doesn’t make sense for MARCOPPER to pay a huge sum of property levied upon by the sheriff pursuant to a writ of
US$ 18M to ADB only for the purpose of defrauding execution is claimed by third person in a sworn statement of
SOLIDBANK of the sum of P52.9M ownership thereof, an entirely different matter calling for a
 The test as to whether or not a conveyance is fraudulent is -- new adjudication arises. And dealing as it does with the all
does it prejudice the rights of creditors?  IN THE CASE AT important question of title, it is reasonable to require the
BAR, SOLIDBANK’s right could not have been prejudiced by filing of proper pleadings and the holding of a trial on the
the assignment contracts considering that substantially all of matter in view of the requirements of due process
MARCOPPER’s properties were already mortgaged in favor of  IN THE CASE AT BAR, the "reivindicatory action" filed by MR
ADB as early as Nov 1992. As such, SOLIDBANK cannot assert HOLDINGS has for its object the recovery of ownership or
a better right than ADB, the latter being a preferred creditor possession of the property seized by the sheriff, despite the
 It is basic that mortgaged properties answer primarily for third party claim, as well as damages resulting therefrom, and
the mortgaged credit, not for the judgment credit of the it may be brought against the sheriff and such other parties
mortgagor’s unsecured creditor. Considering that petitioner as may be alleged to have connived with him in the
supposedly wrongful execution proceedings, such as the
6 Art. 1387. All contracts by virtue of which the debtor alienates property judgment creditor himself. Such action is an entirely
by gratuitous title are presumed to have been entered into in fraud of separate and distinct action from that in which execution
creditors, when the donor did not reserve sufficient property to pay all
debts contracted before the donation.
has been issued. Thus, there being no identity of parties and
Alienations by onerous title are also presumed fraudulent when made cause of action between “reivindicatory action” filed by MR
by persons against whom some judgment has been rendered in any
instance or some writ of attachment has been issued. The decision or
attachment need not refer to the property alienated, and need not have 7A cited case PNB v. Ritratto Group, Inc outlines the circumstances that are
been obtained by the party seeking rescission. useful to determine whether a subsidiary is but a mere instrumentality of
In addition to these presumptions, the design to defraud creditors may be the parent company. I will not put it here anymore kasi hindi naman
proved in any other manner recognized by law and of evidence. relevant.
HOLDINGS in RTC Boac and those cases filed by MARCOPPER
and SOLIDBANK in RTC, Manila as to give rise to res
judicata or litis pendentia, the allegation of forum-shopping
cannot prosper

 ALL CONSIDERED, MR HOLDINGS is entitled to the issuance of


a writ of preliminary injunction pursuant to Sec 3, Rule 58 of
the 1997 Rules of Civil Procedure
 Petitioner’s right to stop the further execution of the
properties covered by the assignment contracts is clear under
the facts so far established. An execution can be issued only
against a party and not against one who did not have his day
in court. The duty of the sheriff is to levy the property of the
judgment debtor not that of a third person. For, as the saying
goes, one man’s goods shall not be sold for another man's
debts.
 To allow the execution of petitioner’s properties would surely
work injustice to it and render the judgment on the
reivindicatory action, should it be favorable, ineffectual. It has
been held that an injunction is a proper remedy to prevent a
sheriff from selling the property of one person for the
purpose of paying the debts of another; and that while the
general rule is that no court has authority to interfere by
injunction with the judgments or decrees of another court of
equal or concurrent or coordinate jurisdiction, however, it is
not so when a third-party claimant is involved
CARLOS v. SANDOVAL  After the Office of the City Prosecutor submitted to the trial
Reyes, RT, J. (2008) court its report and manifestation that no collusion between
 Sps. Felix and Felipa Carlos died intestate. They left 6 parcels the parties is extant, the RTC handed down a judgment in
of land located at Muntinlupa and Manila to their 2 sons favor of JUAN, declaring TEOFILO and FELICIDAD’s marriage a
TEOFILO and JUAN (latter is herein petitioner) nullity, TEOFILO not being natural or adopted father of
 During the lifetime of Felix Carlos, he agreed to transfer his TEOFILO II, etc.
estate to TEOFILO. The agreement was made in order to  Respondents appealed the RTC decision with the CA. In the
avoid the payment of inheritance taxes. TEOFILO, in turn, appeal, FELICIDAD and TEOFILO II asserted that the RTC acted
undertook to deliver and turn over the share of the other without or in excess of jurisdiction in rendering a summary
legal heir, petitioner JUAN judgment on the case that involved the declaration of nullity
 3 parcels were eventually registered to TEOFILO and the 4th to of a marriage and the status of a child
JUAN. May 1992, TEOFILO died intestate. He was survived by  The CA reversed the RTC. It opined that the RTC acted
respondents FELICIDAD Sandoval and their son, Teofilo Carlos contrary to law and public policy when it rendered the
II (TEOFILO II). Upon TEOFILO's death, Parcels 5 and 6 were assailed judgment summarily instead of setting the same for
registered in the name of respondents trial on the merits. Plainly, the CA held that the Rule on
 1994, JUAN instituted a suit against respondents FELICIDAD Summary Judgment does not apply to an action to annul a
and TEOFILO II but the same never got to trial. The parties marriage. Also, Arts 88 and 101 of the Civil Code expressly
instead executed a compromise agreement which was prohibit the rendition of a decree annulling a marriage upon a
approved by the court. In said compromise, the parties stipulation of facts or a confession of judgment. Rather that
mutually agreed to share the proceeds of the sale of the 1st the summary nature by which RTC resolved the issues in the
parcel of land and then agreed to partition between them the case, the rule is to the effect that the material facts alleged in
remaining unsold portions the complaint for annulment of marriage should always be
 When a portion of parcel 2 was sold, the compromise proved pursuant to Section 1, Rule 19 of the Revised Rules of
agreement was again amended and the parties once more Court should have been observed – hence, this petition
agreed to share the proceeds and partition the remaining lodged by JUAN for review on certiorari under Rule 45
unsold portions. The compromise was amended 2 more times
with respect to parcels 3 and 4 where the parties seem to be ISSUES: WON a marriage may be declared void ab initio through
amicably settling their conflicts a judgment on the pleadings or a summary judgment and
 HOWEVER, on August 1995, JUAN commenced the instant without the benefit of a trial; and WON one who is not a spouse
action before the RTC Muntinlupa against FELICIDAD and has the capacity of bringing the action for nullity of some other
TEOFILO II with the following causes of action: (a) declaration couple’s marriage
of nullity of marriage; (b) status of a child; (c) recovery of
property; (d) reconveyance; and (e) sum of money and HELD: NO. NO. Only a spouse can initiate an action to sever the
damages marital bond for marriages solemnized during the effectivity of
 Complainant JUAN asserted that the marriage between his the Family Code, except cases commenced prior to March 15,
late brother TEOFILO and respondent FELICIDAD was a nullity 2003. The nullity and annulment of a marriage cannot be
in view of the absence of the required marriage license. He declared in a judgment on the pleadings, summary judgment, or
likewise maintained that his deceased brother was neither confession of judgment. Case remanded to the RTC for further
the natural nor the adoptive father of respondent TEOFILO II. proceedings
Consequently, JUAN argues that the contracts (compromise
agreements) he entered into with respondents should be RATIO:
voided and that the subject properties be reconveyed to him 1) The grounds for declaration of absolute nullity of marriage
+ damages and costs must be proved. Neither judgment on the pleadings nor
 In their answer, respondents denied the allegations of JUAN summary judgment is allowed. So is confession of judgment
and on the grounds of lack of jurisdiction and cause of action, disallowed
filed their motion to dismiss + counterclaim for damages  JUAN faults the CA for applying the provisions under Sec 1,
 BUT before the case could begin with pre-trial, respondents Rule 19 (Rule on Judgment on Pleadings) instead of applying
moved for summary judgment on the strength of the affidavit Rule 35 (Rule on Summary Judgment)  this contention of
of the justice of peace who solemnized TEOFILO’s and JUAN is misplaced because the CA did not limit its reversal of
FELICIDAD’s marriage and TEOFILO II’s birth certificate where the RTC summary judgment based on the rule on judgment
TEOFILO and FELICIDAD were designated as his parents on pleadings but also considered the provisions on the rule
 JUAN opposed respondents’ motion for summary judgment on summary judgments
and instead filed his own motion for summary judgment on  But whether it is based on judgment on the pleadings or
the strength of a certification from the civil registrar of summary judgment, the CA was correct in reversing the
Calumpit, Bulacan attesting that there is no record of birth of summary judgment rendered by the trial court. Both the
TEOFILO II and the irregularity of his deceased brother’s and rules on judgment on the pleadings and summary
FELCIDAD’s marriage contracts (marriage license number was judgments have no place in cases of declaration of absolute
not indicated) nullity of marriage and even in annulment of marriage
 Through A.M. No. 02-11-10-SC (which took effect March 15, Family Code which took effect on August 3, 1988  The
2003), otherwise known as "Rule on Declaration of Absolute advent of the Rule on Declaration of Absolute Nullity of Void
Nullity of Void Marriages and Annulment of Voidable Marriages marks the end of the right of the heirs of the
Marriages," the question on the application of summary deceased spouse to bring a nullity of marriage case against
judgments or even judgment on the pleadings in cases of the surviving spouse
nullity or annulment of marriage has been stamped with  But the Rule never intended to deprive the compulsory or
clarity  under par. 2, Sec 17 thereof, “the grounds for intestate heirs of their successional rights. While A.M. No.
declaration of absolute nullity or annulment of marriage must 02-11-10-SC declares that a petition for declaration of
be proved. No judgment on the pleadings, summary absolute nullity of marriage may be filed solely by the
judgment, or confession of judgment shall be allowed.” husband or the wife, it does not mean that the compulsory or
 The vice of RTC’s summary judgment not only affects the intestate heirs are without any recourse under the law 
parties’ rights and status. It also deprived the State of its they can still protect their successional right. Compulsory or
lawful right and duty to intervene in the case as mandated by intestate heirs can still question the validity of the marriage
both the Civil Code and the Family Code. The participation of of the spouses, not in a proceeding for declaration of nullity
the State is not terminated by the declaration of the public but upon the death of a spouse in a proceeding for the
prosecutor that no collusion exists between the parties. The settlement of the estate of the deceased spouse filed in the
State should have been given the opportunity to present regular courts
controverting evidence before the judgment was rendered.  It is emphasized, however, that the Rule does not apply to
The State, through the prosecutor, must be able to clearly cases already commenced before March 15, 2003 even when
established that no evidence is being suppressed or that the the marriage involved is within the coverage of the Family
evidence presented are not fabricated. Obviously, these tasks Code. This is so, as the new Rule became effective only on
can only carried out if evidence is produced and presented March 15, 2003 and must be prospective in its application
ON TRIAL!  IN THE CASE AT BAR, JUAN commenced the nullity of
marriage case against respondent FELICIDAD in 1995. The
2) A petition for declaration of absolute nullity of void marriage marriage in controversy was celebrated on May 14, 1962
may be filed solely by the husband or wife  The marriage having been solemnized prior to the effectivity
 Exceptions: (a) Nullity of marriage cases commenced before of the Family Code, the applicable law is the Civil Code. But
the effectivity of A.M. No. 02-11-10-SC; and (b) Marriages the Civil Code is silent as to who may bring an action to
celebrated during the effectivity of the Civil Code declare the marriage void. Does this mean that any person
 Under Sec 2(a) of the Rule on Declaration of Absolute Nullity can bring an action for the declaration of nullity of
of Void Marriages and Annulment of Voidable Marriages, marriage?  NO.
the petition for declaration of absolute nullity of marriage  The absence of a provision in the Civil Code cannot be
may not be filed by any party outside of the marriage. The construed as a license for any person to institute a nullity of
Rule made it exclusively a right of the spouses marriage case. Such person must appear to be the party who
 The rationale for the Rule is that only an aggrieved or injured stands to be benefited or injured by the judgment in the suit,
spouse may file a petition for annulment of voidable or the party entitled to the avails of the suit. The plaintiff
marriages or declaration of absolute nullity of void marriages. must be the real party-in-interest. For it is basic in procedural
Such petition cannot be filed by compulsory or intestate heirs law that every action must be prosecuted and defended in
of the spouses or by the State. Aside from the spouses, others the name of the real party-in-interest.
do not have a legal right to file the petition. Compulsory or  Interest within the meaning of the rule means material
intestate heirs have only inchoate rights prior to the death of interest or an interest in issue to be affected by the decree
their predecessor, and, hence, can only question the validity or judgment of the case, as distinguished from mere
of the marriage of the spouses upon the death of a spouse in curiosity about the question involved or a mere incidental
a proceeding for the settlement of the estate of the deceased interest. One having no material interest to protect cannot
spouse filed in the regular courts. On the other hand, the invoke the jurisdiction of the court as plaintiff in an action.
concern of the State is to preserve marriage and not to seek When plaintiff is not the real party-in-interest, the case is
its dissolution dismissible on the ground of LACK OF CAUSE OF ACTION
 Quoteable Quote: “The new Rule recognizes that the  A petition to declare the nullity of marriage, like any
husband and the wife are the sole architects of a healthy, other actions, must be prosecuted or defended in the name of
loving, peaceful marriage. They are the only ones who can the real party-in-interest and must be based on a cause of
decide when and how to build the foundations of marriage. action.
The spouses alone are the engineers of their marital life. They
are simultaneously the directors and actors of their 3) The case must be remanded to determine whether or not
matrimonial true-to-life play. Hence, they alone can and JUAN is a real-party-in-interest to seek the declaration of
should decide when to take a cut, but only in accordance with nullity of the marriage in controversy
the grounds allowed by law.”  When TEOFILO died intestate in 1992, his only surviving
 The innovation incorporated in A.M. No. 02-11-10-SC extends compulsory heirs are respondent FELICIDAD and their son,
only to marriages entered into during the effectivity of the TEOFILO II. Under the law on succession, successional rights
are transmitted from the moment of death of the decedent dismiss the nullity of marriage case for lack of cause of
and the compulsory heirs are called to succeed by operation action if it is proven by evidence that TEOFILO II is a
of law  all his property, rights and obligations to the extent legitimate, illegitimate, or legally adopted son TEOFILO, the
of the value of the inheritance are transmitted to his deceased brother of petitioner  in other words, if TEOFILO
compulsory heirs II is found to be TEOFILO’s son, JUAN loses personality to
 Who are to be considered “compulsory heirs” are outlined in assail FELICIDAD’s marriage with his brother. But if TEOFILO II
Art 887, CC and a brother is not among those considered as is found NOT TO BE TEOFILO’s son, then JUAN may bring
compulsory heirs. But although a collateral relative, such as a action to declare FELCIDAD and TEOFILO’s marriage. In both
brother does not fall within the ambit of a compulsory heir, cases though, a trial on the merits is necessary, hence the
he still has a right to succeed to the estate remand
 Under Art 1001 and 1003,8 if there are no descendants,  The disposition of the RTC as to the avoidance of the
ascendants, illegitimate children, or a surviving spouse, the compromise agreements, awards of damages and
collateral relatives shall succeed to the ENTIRE estate of the reconveyance of properties must be VACATED. Trial and
decedent. If the decedent has a surviving spouse, the proceedings on the merits must be heard before these may
collateral relatives get HALF of the decedent’s estate so long be finally decided
as he has no descendants, ascendants or illegitimate children.
Indeed, only the presence of descendants, ascendants or
illegitimate children excludes collateral relatives from
succeeding to the estate of the decedent.
 IN THE CASE AT BAR, if respondent TEOFILO II is declared and
finally proven NOT to be the legitimate, illegitimate, or
adopted son of TEOFILO, JUAN would then have a personality
to seek the nullity of marriage of his deceased brother with
FELICIDAD. This is so, considering that collateral relatives
acquire successional right over the estate if the decedent dies
without issue and without ascendants in the direct line
 Since TEOFILO does not have any other siblings save for
JUAN, if Teofilo II is finally found and proven to be NOT a
legitimate, illegitimate, or adopted son of TEOFILO, JUAN
succeeds to the other half of the estate of his brother, the
first half being allotted to the widow FELICIDAD pursuant to
Article 1001  this makes JUAN a real-party-interest to seek
the declaration of absolute nullity of marriage of his deceased
brother with FELICIDAD. If the subject marriage is found to be
void ab initio, JUAN succeeds to the ENTIRE estate!
 It bears stressing, however, that the legal personality of
petitioner to bring the nullity of marriage case is contingent
upon the final declaration that TEOFILO II is not a legitimate,
adopted, or illegitimate son of TEOFILO.
 If TEOFILO II is proven to be a legitimate, illegitimate, or
legally adopted son, then JUAN has no legal personality to ask
for the nullity of marriage of his deceased brother  this is
based on the ground that he has no successional right to be
protected, hence, does not have proper interest. For
although the marriage in controversy may be found to be
void from the beginning, still, JUAN would not inherit. This is
because the presence of descendant, illegitimate, or even an
adopted child excludes the collateral relatives from inheriting
from the decedent
 Thus, the Court finds that a remand of the case for trial on
the merits to determine the validity or nullity of the subject
marriage is called for. But the RTC is strictly instructed to

8 ART. 1001. Should brothers and sisters or their children survive with the
widow or widower, the latter shall be entitled to one-half of the
inheritance and the brothers and sisters or their children to the other half.
ART. 1003. If there are no descendants, ascendants, illegitimate children,
or a surviving spouse, the collateral relatives shall succeed to the entire
estate of the deceased in accordance with the following articles.