Title
Heirs of Punongbayan vs. St. Peter's College, Inc.
Case
G.R. No. 238762
Decision Date
Jun 27, 2022
Dispute over P66M funds between Escolastica Paguio's estate and St. Peter's College; RTC froze funds, CA nullified, SC upheld CA, citing RTC's jurisdictional overreach.

Case Summary (A.M. No. 07-6-14-CA)

Factual Background

Sotero, co-administrator of the intestate estate of Escolastica Paguio, filed a manifestation/motion seeking to levy and attach an amount initially alleged as P40,000,000 deposited at Security Bank in the name of St. Peter’s College, claiming the deposits were rental payments due the Estate for use of Estate property. Investigation showed the Security Bank account was in St. Peter’s name, with certain individuals as administrators and signatories. St. Peter’s contended it had not been properly served with the motion and that no lease contract existed. By RTC Order dated May 23, 2001, the Security Bank account was frozen as prima facie evidence suggested the funds belonged to the Estate. St. Peter’s sought to intervene, but the RTC denied intervention on September 27, 2001. On February 4, 2004, the RTC directed the then-approximately P68,000,000 to be transferred to the court in trust, with P66,000,000 to be held under joint accounts with BPI and Land Bank pending proper determination of ownership. After St. Peter’s motions to lift the attachment, the RTC in its July 3, 2013 Omnibus Order declared that St. Peter’s “has no personality to seek redress” and that the money deposited with BPI and Land Bank belonged to the Estate. St. Peter’s then filed a petition for certiorari with the Court of Appeals, which in August 2017 nullified the RTC orders as rendered in excess of jurisdiction and ordered the banks to restore the P66,000,000 plus interest to St. Peter’s. Petitioners’ motion for reconsideration at the CA was denied; they then sought review before the Supreme Court.

Issues Presented to the Supreme Court

The principal issues taken up by the Supreme Court were: (1) whether the Court of Appeals erred in not dismissing St. Peter’s petition for certiorari as defective in form and substance; (2) whether St. Peter’s College had legal personality to file the petition for certiorari before the Court of Appeals; (3) whether the RTC had jurisdiction to issue the May 23, 2001; February 4, 2004; and July 3, 2013 orders; and (4) whether St. Peter’s is guilty of estoppel by laches for failing to assert its rights earlier.

Procedural Compliance and Standing under Rule 65 and Rule 46

The Rules of Court require that a petition for certiorari be accompanied by certified true copies of the assailed orders and relevant pleadings (Rule 65 §1; Rule 46 §3). The CA determined that St. Peter’s petition was compliant: the annexed documents bore the “Certified True/Machine Copy” stamp signed by the RTC Clerk of Court, satisfying the certification requirement discussed in Quintano. The Supreme Court agreed with the CA that the petition complied with the documentary requirements. On the question of legal personality or “person aggrieved” under Rule 65, the Supreme Court applied Tang and related authorities but recognized exceptions reflected in later cases (e.g., Siguion Reyna Montecillo & Ongsiako). Because the funds were originally deposited in St. Peter’s own name and account and because the RTC’s orders directly affected St. Peter’s proprietary interest, St. Peter’s had a direct interest sufficient to confer standing to seek certiorari as an aggrieved party. The record also showed documents authorizing the Management Committee to act on behalf of St. Peter’s, which the petition appended and which petitioners did not successfully refute.

Jurisdictional Scope of an Intestate (Probate) Court

The Court reiterated the controlling principle that an intestate or probate court’s jurisdiction is special and limited: it generally cannot adjudicate title to properties claimed by third parties by title adverse to the decedent or estate. The probate court’s permissible action as to such property is to determine provisionally whether the property should be included in the estate inventory; any conclusive disposition of adverse title claims must be made in a separate action before a court of general jurisdiction. Recognized exceptions allow the probate court limited ownership rulings when expedient (e.g., provisional inclusion in inventory, where all interested parties are heirs, collation/advancement issues, or where parties consent and third-party rights are not impaired), but the rule that the probate court may not conclusively determine adverse third-party title remains firm.

Application: RTC Orders Exceeded Jurisdiction and Violated Due Process

  • Nature of RTC rulings: The Court analyzed the RTC orders sequentially. The May 23, 2001 Order froze the Security Bank account on a finding of prima facie evidence that the funds belonged to the Estate—this was provisional in nature. The February 4, 2004 Order acknowledged that ownership must be determined in a proper proceeding and ordered the funds deposited in trust pending such determination, reinforcing the provisional character. However, the July 3, 2013 Omnibus Order went further: it declared that the monies deposited with BPI and Land Bank belonged to the Estate and ruled that St. Peter’s lacked legal personality to seek redress because its motion to intervene had been denied in 2001 and because those orders had allegedly attained finality. The Supreme Court concluded that by ultimately passing upon and conclusively declaring ownership of the funds, the RTC exceeded its jurisdiction as an intestate court. Such ultimate adjudication of title belonging to a third party exceeded the limited functions of probate proceedings.
  • Due process violation: Separate and apart from jurisdictional overreach, the Court found that the RTC acted in violation of procedural rules governing motions that affect the rights of adverse parties. Under the pre-amendment Rules of Court, written motions affecting rights must be set for hearing and served upon adverse parties with proof of service (Rule 15 §4 and §6). The record established that St. Peter’s was not served a copy of the manifestation/motion and was not given opportunity to be heard before the RTC froze and later transferred its funds. The Supreme Court agreed with the CA that this amounted to deprivation of property without due process in violation of constitutional protections: the College’s property was effectively taken from it without hearing or procedural safeguards.
  • Proper remedy for rent claims: The Court reiterated precedent (In re: Fallon v. Camon; Paula v. Escay) that an administrator seeking collection of rents or similar debts from a third-party nonparticipant in probate cannot obtain such recovery by mere motion in probate proceedings; an independent action in a court of general jurisdiction is the appropriate remedy because the rights to such sums are in a fluid state and subject to defenses.

Laches and Estoppel Analysis

The Court reviewed the equitable doctrine of laches—failure to assert a right for an unreasonable or unexplained length of time—which is discretionary and context-dependent. The Court held that permitting St. Peter’s to challenge the RTC orders would not produce inequity. The May 23, 2001 and February 4, 2004 Orders were interlocutory/provisional in nature and thus not final and unassailable; the circumstances and the ongoing efforts by St. Peter’s to recover the funds (including multiple mo

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