FILEMON RAMIREZ, MONICA RAMIREZ, AND JOSE EGUARAS, PLAINTIFFS-APPELLANTS, VS. ARTEMIO BALTAZAR, ET AL., DEFENDANTS-APPELLEES.

On appeal from an order dismissing the com­plaint,
on a motion to dismiss, in Civil Case No. SC-319 of
the Court of First Instance of Laguna.

It appears that on 6
January 1959, Victoriana Eguaras, single,
made and executed a real estate mort­gage over a parcel of land, owned by her
in fee simple, as security for a loan of P2,170.00 in
favor of the spouses Artemio Baltazar
and Susana Flores.

Upon the demise of the mortgagor, the mortga­gees, as creditors
of the deceased, on 16 September 1960, filed a petition for the intestate
proceedings of her estate, in the Court of First Instance of Laguna,
docketed as Civil Case No. SC-99 wherein said mortgagees, as petitioners, alleged that Filemon Ramirez and Monica Ramirez are the heirs of the
deceased.  Filemon Ramirez
was appointed administrator of the
estate; however, having failed to qualify, on 16 Jan­uary 1961, the court
appointed Artemio Diawan, then
a deputy clerk of court, administrator
of the estate who, in due time, qualified for the office.

On 19 April
1961, the
mortgagees, Artemio Balta­zar and Susana Flores, filed a complaint for
foreclosure of the aforesaid mortgage, against Artemio
Diawan, in his capacity as administrator
of the estate, docketed as Civil Case No. SC-292 of the Court
of First Instance of Laguna.  The defendant-administrator was duly served with summons but
he failed to answer, whereupon, on pe­tition of the
plaintiffs said defendant was declared in default.  The case was referred to a
commissioner to receive the evidence
for the plaintiffs, and defendant-administrator, as deputy clerk of
court, acted as such hearing commissioner.

On 16
August 1961,
decision was rendered decreeing
the foreclosure of the mortgaged
property and the sale thereof, if, within ninety days from finality of the decision,
the obligation was not fully paid.  The
judgment not having been satisfied, a writ of execution was issued for the sale
of the mortgaged-property, and after compliance with the requirements of the
law regarding the sending, posting and publication of the notice of sale, the
Sheriff sold the property at pub­lic auction to the highest bidder, who happened
to be the plaintiffs themselves, for
the sum of P2,888.50 covering the amount of the
judgment, plus the expenses of the
sale and the Sheriff’s
fees.  On petition of the plaintiffs, the
sale was confirmed by the court on 26 January 1962.

On 6 February 1962, Filemon Ramirez, Monica Ra­mirez and Jose Eguaras, the first two being
the heirs named in the petition for intestate proceedings, filed a complaint designated
“For the Annulment of all Proceedings in said Civil Case No. SC-292 for the Fore­closure of the Mortgage”, against the
spouses Artemio Baltazar
and Susana Flores, and Artemio Diawan,
in his capacity as administrator of the estate of Victoriana Eguaras, deceased, and Silverio Talabis, in his capa­city as deputy provincial sheriff of
Laguna, docketed as Civil Case No. SC-319 of the Court
of First Instance of Laguna.

The facts hereinabove narrated are, succinctly, contained in the
complaint in said Civil Case No. SC-319, with the additional averments that the
defendant Diawan, the deputy clerk of court appointed
as adminis­trator of the intestate estate of the deceased, acted in collusion
with the other defendants Artemio Baltazar
and Susana Flores, deliberately and in fraud of the plaintiffs:  (a) in allowing the reglementary
period within which to file an answer
to lapse without notifying and/or informing the said plaintiffs of the
com­plaint for foreclosure, as a result of which he was de­clared in default to
the prejudice of the estate which he represents; (b) that had the plaintiffs
(Monica and Filemon) been notified of the pendency of the case, the defendant-administrator could
have interposed a counter­claim because payment in the sum of P1,548.52 had
been made and received by the mortgagees on account of the debt; (c) in
presiding as hearing officer in the ex­–parte hearing in Civil Case No. 292, to
receive evidence for plaintiffs therein, notwithstanding the fact that there
was another deputy clerk of court available who could have acted in his stead,
as a result of which an anomalous situation was created whereby he was a defend­ant
and at the same time a commissioner receiving evidence against himself as
administrator; (d) in allowing judgment to become final without notifying the
plaintiffs; (e) in deliberately allowing the 90-day period within which to make
payment to expire without notifying the heirs, as a result of which the said
heirs were not afforded an opportunity to make payments ordered by the Court in
its decision; and (f) in refusing to help the heirs seek postponement of the
auction sale.  It is also alleged that it
was only when the property foreclosed was published for sale at public auction
that the heirs came to know about the foreclosure proceedings.

The defendants spouses, Artemio Baltazar and Susana
Flores, filed a motion to
dismiss the complaint on the ground that the plaintiffs have no legal capacity
to sue; defendant Diawan likewise moved to dismiss on
two grounds:  that plaintiffs have no
legal capacity to sue and that the complaint states no cause of action.

Despite vigorous opposition interposed by the plaintiffs against
the aforesaid motions to dismiss, the court, on 13 March 1962, dismissed the
complaint with costs against the plaintiffs, reasoning thus:  that “upon considering of the evidence, said defendant could not have offered any
evidence to avoid the foreclosure of the
mortgage which the Court found to be in order.  Un­der the circumstances and with the
apparent disinterestedness of Filemon and Rolando to
qualify as administrator when appointed, there could not have been any
connivance and/or collusion between plaintiffs in this case and Artemio Diawan as administrator”;
and that plaintiffs have no legal
capacity to sue since their status as legal heirs of the deceased has yet to be
determined precisely in Special Proceedings No. SC-99, and until such status is so fixed by the Court, they have no cause of action
against defendants.

In that order of 13 March 1962, the court also denied
plaintiffs’ petition for the issuance of a writ of preliminary injunction to
enjoin defendants from entering and taking physical possession of the land in
question on the ground “that possession thereof was effected and delivered
by the Provincial Sheriff to Artemio Baltazar and Susana Flores on February, 1962.”

Reconsideration of the aforesaid order having been denied, the
plaintiffs took the present appeal where they assigned the following
errors:  (1) in holding that
plaintiffs-appellants have no legal capacity to sue until their status as legal
heirs of the deceased is determined in Special Proceeding No. SC-99; (2) in
ruling that there was no collusion or connivance among the defendants-appellees, despite the fact that the issue in the motion to
dismiss is purely legal, not factual; and
(3) in denying the petition for a writ of preliminary injunction.

At the outset, let it be remembered that the defendants-appellees, in availing themselves of the de­fense that the plaintiffs-appellants had not
been de­clared to be the heirs of
the deceased Victoriana Eguaras, have overlooked the
fact that they (defendants-appellees) themselves in
their petition for intestate proceedings (Case SC-99) have alleged that Filemon Ra­mirez and Monica Ramirez, two of herein plaintiffs-appellants, are the
heirs of the deceased.  Insofar as
defendants-appellees are concerned, it is our opinion
that they are estopped from questioning the heirship of these two named persons to the estate of the
deceased.

There is no question that the rights to success­ion are
automatically transmitted to the heirs from the moment of the death of the
decedent.^[1]
While, as a rule, the formal declaration or recognition to such successional rights
needs judicial confirmation, this Court has, under special circumstances,
protected these rights from encroachments made or attempted before the judicial
declaration.^[2] In Pascual
vs. Pascual,^[3] it was ruled hat although heirs have
no legal standing in court upon the commencement of testate or intestate
proceedings, this rule admits of an exception as “when the administrator fails or refuses
to act, in which event the heirs may act in his place.”

A similar situation
obtains in the case at bar.  The
administrator is being charged to have been in col­lusion and connivance with
the mortgagees of a property of the deceased, allowing its foreclosure without
notifying the heirs, to the prejudice of the latter.  Since the ground for the present action to
annul the aforesaid foreclosure proceedings is the fraud resulting from such
insidious machinations and collusion in which the admi­nistrator has allegedly
participated, it would be farfetched to expect the said administrator
himself to file the action in behalf of the estate.  And who else but the heirs, who have an
interest to assert and to pro­tect, would bring the action?  Inevitably, this case should fall under the
exception, rather than the general rule that pending proceedings for the
settlement of the estate, the heirs have no right to commence an action arising
out of the rights belonging to the deceased.

On the second point
raised, We fully agree with the plaintiffs-appellants
that the lower court had gone too far in practically adjudicating the case on
the merits when it made the observation that “there could not have been any connivance and/or collusion between plaintiffs in
this case and Artemio Diawan
as administrator.” A thorough scrutiny of the allegations in the motions
to dismiss filed by defendants-appellees does not
indicate that that question was ever put at issue therein.  On the other hand, the controversy – on the
existence or inexistence of
collusion between the parties as a result of which judgment was rendered against the estate – is the very core of the complaint that was
dismissed.  Undoubtedly, the cause of action is based on Section 30, Rule 132 of the Rules of Court.

We are not, however, in
accord with the third assigned error – the denial of the motion for the issuance of preliminary injunction –
for it puts at issue the factual
finding made by the lower court that the defendants had
already been placed in possession of
the property.  At this stage of the
proceeding, and considering the nature
of the case before Us, such a question is, at this time, beyond the
competence of the Court.

PREMISES CONSIDERED, the order appealed from is hereby set aside insofar as it dismissed the complaint in Civil Case No. SC-319,
and the records be remanded to the lower court for further proceedings.  Costs against defendants-appellees.

The Clerk of Court is directed to furnish a copy of this decision to the Department of
Justice for its information.

Concepcion, C.J., Reyes, Dizon, Makalintal, Zaldivar, Sanchez, Castro, and
Fernando, JJ., concur.

^[1]
Art. 777, New Civil Code.

^[2]
Morales et al. vs. Yañes, 98 Phil. 677, citing Coronel
vs. Ona, 33 Phil. 456; Nable
Jose vs. Nable Jose, 41 Phil. 713; Velasco vs. Vizmanos, 45 Phil. 675. 
See also Cabuyao vs. Caagbay, et al., 95 Phil. 614.

^[3]
73 Phil. 561.