G.R. No. 162788 - Spouses De la Cruz vs. Joaquin

Case Summary (G.R. No. 162788)

Key Dates

Loan and deed-related dates: loan allegedly obtained June 29, 1974, repayable June 29, 1979. Earlier suit filed June 25, 1979 (Civil Case No. SD-742). Subject suit filed July 7, 1981 (Civil Case No. SD-838). Trial court decision rendered April 23, 1990. Court of Appeals decision rendered August 26, 2003; CA resolution denying reconsideration and ordering substitution issued March 9, 2004. Supreme Court decision on the petition rendered July 28, 2005. Respondent Pedro Joaquin died December 24, 1988. Motion for substitution of party plaintiff filed February 15, 2002 in the Court of Appeals.

Applicable Law and Constitutional Basis

Governing procedural authorities cited in the decision include the 1987 Rules of Court (notably Rule 45 for petitions for review, Section 16 of Rule 3 on death of a party and duty of counsel, and Rule 87 on actions that survive against a decedent’s representatives) and Rule 131 on the burden of proof. Because the case decision date is 2005, the analysis uses the 1987 Constitution as the constitutional framework underpinning due process protections invoked in the opinion.

Summary of Facts

Respondent alleged he obtained a P9,000 loan from petitioners on June 29, 1974 and executed a Deed of Absolute Sale and a separate document titled “Kasunduan” that, according to respondent, actually evidenced an equitable mortgage or a sale with a right of repurchase exercisable until June 29, 1979. Petitioners maintained the documents reflected only an accommodation to allow repurchase, a right respondent failed to exercise. Respondent filed a Complaint for recovery of possession and ownership, cancellation of title, and damages in the RTC, which ultimately declared the transaction a sale with right of repurchase and found that respondent had validly tendered payment on two occasions, warranting reconveyance and recovery of possession and damages.

Trial Court Judgment and Reliefs

The RTC declared the Deed of Absolute Sale and the Kasunduan to be a sale with a right of repurchase, ordered the plaintiff (respondent) to pay P9,000 to repurchase the land, ordered reconveyance and surrender of possession after payment, and awarded actual, compensatory, exemplary damages, litigation expenses, and attorneys’ fees in specified amounts.

Court of Appeals Disposition

The CA affirmed the trial court in toto, concluding the parties had agreed to a repurchase right expressed in the Kasunduan and that respondent validly exercised that right. The CA denied reconsideration and, recognizing respondent’s death, ordered substitution by legal representatives in a March 9, 2004 resolution.

Issues Presented to the Supreme Court

The petitioners raised two principal contentions: (1) that the RTC lost jurisdiction because respondent died during the pendency of the case and no substitution by heirs had been made, and (2) that respondent was guilty of forum shopping because of an earlier related case (Civil Case No. SD-742) allegedly dismissed for lack of interest to prosecute.

Rule on Substitution and Due Process Framework

Section 16, Rule 3 of the Rules of Court requires counsel to inform the court within 30 days after the death of a party and provide the name and address of legal representatives; heirs may be substituted without appointment of an executor or administrator; the court shall order substitution within 30 days of notice. The rule exists to protect due process by ensuring the estate or heirs are properly represented so that no adjudication is made against successors without their opportunity to be heard.

Jurisdictional Analysis—When Failure to Substitute Voids Proceedings

The Court reviewed precedents holding that proceedings conducted and judgments rendered without appearance of legal representatives may be nullified when the right to a day in court is denied and the estate was not represented. The opinion distinguishes cases where the heirs did not wish to continue the litigation (e.g., Chittick) and where substitution would have merged interests to extinguish the claim; in such situations lack of substitution can be fatal. However, where heirs voluntarily appear and actively participate, such conduct cures any formal omission and satisfies due process.

Application to the Present Case—Substitution Deemed Proper

The record contains a Motion for Substitution of Party Plaintiff filed February 15, 2002 in the Court of Appeals naming the heirs and their representative (daughter Lourdes dela Cruz) and identifying counsel and address. The CA had also ordered the legal representatives to appear and substitute. The Supreme Court found that the heirs voluntarily appeared and participated in the case, and that substitution—ordered by the appellate court and effectively carried out by the heirs’ appearance—satisfied due process. Consequently, the lack of earlier formal substitution did not strip the RTC of jurisdiction nor warrant nullification of the trial court decision.

Forum Shopping and Res Judicata Framework

Forum shopping is defined as instituting multiple actions involving the same parties and cause of actio

Case Syllabus (G.R. No. 162788)

Nature of the Proceeding

Petition for Review under Rule 45 of the Rules of Court, assailing the August 26, 2003 Decision and the March 9, 2004 Resolution of the Court of Appeals in CA-G.R. CV No. 34702. [Rollo references cited in source]
The Court of Appeals' challenged Decision disposed: "WHEREFORE, the foregoing considered, the appeal is DISMISSED and the assailed decision accordingly AFFIRMED in toto. No costs." [CA Decision; rollo, p. 26]
The trial court’s (Regional Trial Court, Baloc, Sto. Domingo, Nueva Ecija) judgment (affirmed by the CA) contained declaratory relief, orders of reconveyance and surrender of possession, and awards of damages, exemplary damages, litigation expenses and attorney’s fees. [Assailed Decision; rollo, pp. 19-20]
The Petition was deemed submitted for decision on December 10, 2004, upon receipt of the respective memoranda of petitioners and respondent. Petitioners' Memorandum signed by Atty. George Erwin M. Garcia; respondent’s Memorandum signed by Attys. Nicolas P. Lapeña Jr. and Gilbert F. Ordoña. [Source: rollo]

Case Facts (as pleaded and as found below)

Respondent Pedro Joaquin filed a Complaint for recovery of possession and ownership, cancellation of title, and damages against petitioners Spouses Julita and Felipe De la Cruz in the RTC of Baloc, Sto. Domingo, Nueva Ecija. [Assailed Decision; rollo, p. 20]
Allegation: respondent obtained a loan of P9,000 from petitioners on June 29, 1974, payable after five (5) years on June 29, 1979, and to secure the obligation he allegedly executed a Deed of Sale in favor of petitioners covering a parcel in Pinagpanaan, Talavera, Nueva Ecija, covered by TCT No. T-111802. [Assailed Decision; rollo, p. 20]
The parties also executed a document entitled "Kasunduan." [Assailed Decision; rollo, p. 20]
Respondent’s position: the Kasunduan showed that the Deed of Sale was actually an equitable mortgage and that he validly exercised the right to repurchase. [Assailed Decision; rollo, pp. 20-21]
Petitioners’ position: the document was merely an accommodation to allow repurchase until June 29, 1979, a right which respondent failed to exercise. [Assailed Decision; rollo, p. 20]
The RTC, in a decision dated April 23, 1990, declared the transaction a sale with a right of repurchase and found that respondent had validly tendered payment on two separate occasions to exercise his right of repurchase; accordingly, petitioners were required to reconvey the property upon his payment. [Assailed Decision; rollo, pp. 20-25]

Trial Court Judgment — Reliefs Ordered

The trial court rendered judgment:
- (a) Declaring the Deed of Absolute Sale (Exh. "D") and "Kasunduan" (Exhibit B) to be a sale with right of repurchase;
- (b) Ordering the plaintiff (respondent) to pay the defendants the sum of P9,000.00 by way of repurchasing the land in question;
- (c) Ordering the defendants to execute a deed of reconveyance of said land in favor of the plaintiff after payment of P9,000.00;
- (d) Ordering the defendants to yield possession of the subject land to the plaintiff after the latter had paid P9,000.00 to repurchase the property;
- (e) Ordering the defendants to pay the plaintiff the amount of P10,000.00 as actual and compensatory damages; P5,000.00 as exemplary damages; P5,000.00 as expenses of litigation; and P5,000.00 by way of attorney's fees. [Assailed Decision; rollo, pp. 19-20, 25]

Course on Appeal — Court of Appeals Ruling and Resolution

The Court of Appeals (Twelfth Division) sustained the trial court’s findings and conclusions:
- The CA noted that petitioners gave respondent the right to repurchase within five (5) years from the date of sale (until June 29, 1979) and that the parties executed the Kasunduan to express their actual agreement. [CA Decision; rollo, p. 25]
- The CA found no reason to overturn the trial court’s finding that respondent had validly exercised his right to repurchase. [CA Decision; rollo, p. 25]
The CA denied reconsideration in a March 9, 2004 Resolution and ordered substitution by legal representatives in view of respondent’s death on December 24, 1988. [Assailed Resolution; rollo, p. 29]

Issues Presented to the Supreme Court

Petitioners’ assigned errors (paraphrased from their pleadings):
- I. That the Court of Appeals erred in dismissing the appeal and affirming in toto the trial court’s Decision in Civil Case No. SD-838.
- II. That the Court of Appeals erred in denying petitioners’ Motion for Reconsideration given the facts and the law presented. [Petition; rollo, pp. 8-9]
Succinctly stated by the Court: (1) whether the trial court lost jurisdiction over the case upon the death of Pedro Joaquin; and (2) whether respondent was guilty of forum shopping/res judicata. [Court’s framing; rollo, p. 7]

Procedural and Jurisdictional Rule on Death of a Party and Substitution (Rule Statement)

When a party to a pending action dies and the claim is not extinguished, the Rules of Court require substitution of the deceased. This rule is specifically governed by Section 16 of Rule 3, which the source reproduces in full:
- "Section 16. Death of a party; duty of counsel. -Whenever a party to a pending action dies, and the claim is not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after such death of the fact thereof, and to give the name and address of his legal representative or representatives. Failure of counsel to comply with this duty shall be a ground for disciplinary action.
- The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator and the court may appoint a guardian ad litem for the minor heirs.
- The court shall forthwith order said legal representative or representatives to appear and be substituted within a period of thirty (30) days from notice.
- If no legal representative is named by the counsel for the deceased party, or if the one so named shall fail to appear within the specified period, the court may order the opposing party, within a specified time, to procure the appointment of an executor or administrator for the estate of the deceased, and the latter shall immediately appear for and on behalf of the deceased. The court charges in procuring such appointment, if defrayed by the op