G.R. No.

L-25952

June 30, 1967

MARGARITA SALVADOR, in her own behalf and as Attorney-in-fact of CANDIDA SALVADOR,

ET AL.,petitioners,
vs.
THE HON. JUDGE ANDRES STA. MARIA, DOMINADOR CARDENAS, REMEDIOS CABRERA,
ALBERTO M. K. JAMIR and SIMEON ENRIQUEZ, respondents.
Celestino Salvador owned seven parcels of land. He executed a deed of sale in favor of the spouses
Alfonso Salvador and Anatolia Halili. For lack of consideration, received from the spouses on such
sale, he filed a suit for reconveyance of said parcels of land.
Celestino Salvador died, testate, his heirs, twenty-one persons, substituted as plaintiffs in the action
for reconveyance. Dominador Cardenas was appointed as special administrator of Celestino
Salvador's testate estate.
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The administrator filed a case for an inventory of properties of the estate, covering the same parcels
of land subject matter of the reconveyance action. Celestino Salvador's will was admitted to probate
and Dominador Cardenas was appointed executor of said will.
Twenty-three (23) persons were instituted heirs in the will. Of these, nine (9) were not among the
twenty-one (21) alleged relatives substituted in the reconveyance case; and of the twenty-one (21)
substituted alleged heirs seven (7) were not instituted in the will. 2
In the suit for reconveyance, the Court (CFI of Bulacan, Br. I) rendered judgment, ordering the
defendants therein (the spouses Alfonso and Anatolia), to reconvey the parcels of land to the estate
of Celestino Salvador. Appeal therefrom to the Court of Appeals was interposed by said
defendants.
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The Court of Appeals affirmed the reconveyance judgment, with the correction that reconveyance
be in favor of the twenty-one (21) heirs substituted as plaintiffs therein.
About three years later, one of the parcels of land involved, Lot 6, was sold so that with its proceeds
debtors who filed claims may be paid.
Thereafter, defendants in the suit for reconveyance executed a deed of reconveyance over the
subject parcels of land, in favor of Celestino Salvador's estate. A new deed of reconveyance was
made, in favor of said twenty-one (21) persons as heirs of Celestino in accordance with the order of
the court.
Philippine National Bank was ordered to release the proceeds of the sale of Lot 6, to the twenty-one
(21) plaintiffs in the reconveyance case. No release was made, as the Philippine National Bank
awaited order of the court.

Issues:
(1) Are the parcels of land and the proceeds of the sale of one of them, properties of the estate or
not? (2) Does final judgment in the reconveyance suit in favor of the twenty-one so-called heirs who
substituted Celestino Salvador, bar the disposition of the reconveyed properties by the settlement
court?
Ruling:
It is a settled point of law that the right of heirs to specific, distributive shares of inheritance does not
become finally determinable until all the debts of the estate are paid. Until then, in the face of said
claims, their rights cannot be enforced, are inchoate, and subject to the existence of a residue after
payment of the debts (Castellvi de Raquiza v. Castellvi, L-17630, October 31, 1963; Jimoga-on v.
Belmonte, 84 Phil. 545; Sec. 1, Rule 90, Rules of Court).

Petitioners rely for their rights on their alleged character as heirs of Celestino; as such, they were
substituted in the reconveyance case; the reconveyance to them was reconveyance to them as
heirs of Celestino Salvador. It follows that the properties they claim are, even by their own
reasoning, part of Celestino's estate. The right thereto as allegedly his heirs would arise only if said
parcels of land are part of the estate of Celestino, not otherwise. Their having received the same,
therefore, in the reconveyance action, was perforce in trust for the estate, subject to its obligations.
They cannot distribute said properties among themselves as substituted heirs without the debts of
the estate being first satisfied.

G.R. No. L-25049

August 30, 1968

FILEMON RAMIREZ, MONICA RAMIREZ, and JOSE EGUARAS, plaintiffs-appellants,

vs.
ARTEMIO BALTAZAR, ET AL., defendants-appellees.
Facts:
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 in favor of the spouses Artemio Baltazar and Susana
Flores.
Upon the demise of the mortgagor, the mortgagees, as creditors of the deceased, filed a petition for
the intestate proceedings of her estate, wherein said mortgages, 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, the court appointed Artemio Diawan,
then a deputy clerk of court, administrator of the estate who, in due time, qualified for the office.
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. 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.
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The property was foreclosed and was sold in public auction.

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
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.
The plaintiffs averred that the clerk of court Diawan acted in collusion with the defendants, as a
result of which the property was foreclosed. 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.
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The court dismissed the complaint with costs against the plaintiffs, reasoning thus: that "upon
consideration 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.
Issue: WON the heirs have the legal personality to sue.

Ruling: Yes.
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 that 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.
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.