G.R. No. 191079 - Cardenas vs. Heirs of Spouses Aguilar

On November 8, 2000, Elinaida L. Alcantara obtained a loan of P3,000,000.00 from the Spouses Maximo and Simplicia Aguilar with fixed interest amounting to P720,000.00.
To secure the said obligation, Alcantara executed an agreement called “Venta con Pacto de Retro” (Sale with Right to Repurchase) over a 410-square meter parcel of land, registered under Transfer Certificate of Title No. T-37319 in her name.
The parties agreed that the term of the loan was one year from the date of execution, with an additional grace period of six months for the right to repurchase.

Alcantara failed to repurchase the property within the stipulated period, prompting her to request an extension.
The extension was granted via a letter dated June 6, 2002, from Melba A. Clavo de Comer, daughter of the Spouses Domingo.
In December 2002, Joel A. Cardenas, son of Alcantara, attempted to redeem the property on behalf of his mother by offering to pay the full amount of the loan plus the interest; however, the offer was rejected by the Spouses Aguilar.

Following the refusal to accept the redemption offer, Alcantara filed Civil Case No. LP-02-0300 seeking both the reformation of the instrument and specific performance against the Spouses Aguilar, their daughter Melba A. Clavo de Comer and her husband Dan Clavo de Comer, as well as the Register of Deeds for Las Piñas City.
In the complaint, the plaintiff sought a declaration that the instrument be treated as an equitable mortgage rather than a sale with a right to repurchase, and to compel the defendants to accept her payment and release the mortgage on the property.
After Alcantara’s death, her heir, Joel A. Cardenas, substituted her in the case by filing an Amended Complaint.

Prior to the filing of the Amended Complaint, the counsel for the Spouses Aguilar informed the court that Maximo V. Aguilar had died, submitting a Notice of Death.
It was stated that Maximo V. Aguilar was survived by his spouse, Simplicia P. Aguilar, and daughter, Melba A. Clavo de Comer, who were already impleaded as defendants.
The defendants maintained that their transaction was effectively a sale with a right to repurchase, asserting that Alcantara’s failure to repurchase within the agreed period justified consolidating the title in their names, or alternatively, directing the plaintiff to repurchase the property.

On February 27, 2009, the RTC rendered a Decision declaring that the contract was an equitable mortgage, not a sale with a right to repurchase, and directed the defendants to release the mortgage upon payment of the principal.
Despite the lapse of the appeal period, neither party filed a motion for reconsideration or an appeal of the decision.
On July 27, 2009, the defendants filed a Motion for Execution of the RTC Decision.
The plaintiff opposed the execution motion, arguing that since the original judgment obligees (the Spouses Aguilar) were deceased and no proper substitution or appointment of an executor/administrator had been effected as required by Section 16, Rule 3 of the Revised Rules of Civil Procedure, the motion was procedurally flawed.
The RTC, notwithstanding the objection, issued a Writ of Execution on October 13, 2009, and later denied the plaintiff’s Motion for Reconsideration on January 18, 2010.

On petition, the case was elevated to the Supreme Court via a Petition for Review on Certiorari under Rule 45, raising key issues related to due process and the propriety of the execution proceedings in light of the death of a party and the formal substitution deficiencies.
The petitioner contended that the issuance of the Writ of Execution was invalid since proper procedural substitution of the deceased had not been effected.

Whether a motion for execution can be validly filed by counsel when the judgment obligees are deceased and no executor, administrator, or proper heir substitution has been effected.

Is counsel authorized to file such a motion on behalf of a deceased party without formal substitution?
Does the absence of a formally substituted legal representative or appointed executor detract from the validity of the execution proceedings?

Whether the court had jurisdiction to issue a Writ of Execution under these circumstances, despite the apparent lapse in following procedural rules regarding the substitution of deceased parties.

Does the failure to notify the court promptly of a party’s death and to formally substitute the heir render the proceedings void?
Can the active participation of the heirs satisfy the due process requirements regarding substitution?