G.R. No. L-50526 December 4, 1991

CASIMIRO V. ARKONCEL, JR., in his capacity as the Administrator of the ESTATE OF CASIMIRO F.
ARKONCEL, petitioners,
vs.
HON. ALFREDO J. LAGAMON, Presiding Judge of the CFI of Davao City, Branch I and INVESTORS'
FINANCE CORPORATION (FNCB), respondents.

BIDIN, J.:

This is a petition for certiorari with preliminary injunction seeking that the orders of respondent judge
dated December 13, 1978 and January 12, 1979 in Special Case No. 2079, Court of First Instance of
Davao City, be declared null and void and set aside, with costs against the respondent Investors'
Finance Corporation (FNCB Finance).

The order dated December 13, 1978 reads:

The Compromise Agreement forged between the Intestate of Casimiro F. Arkoncel, Sr., represented by its
administrator, Casimiro V. Arkoncel, Jr., and the FNCB Finance Corporation, having become final and
executory, the motion for execution filed by the plaintiff thru counsel should be, as it is hereby, granted.

WHEREFORE, let a writ of execution issue forthwith.

The order of January 12, 1979 denied the Motion for Reconsideration filed by petitioner for lack of merit.

The antecedents of the case are as follows:

The late Casimiro F. Arkoncel died intestate on July 20, 1976 at Davao City (his residence at the time of
his death), leaving behind an estate with a probable value of about P241,020.00. On November 24, 1976,
a petition for letters of administration seeking, among others, for the appointment of the widow Maria V.
Vda. de Arkoncel as administrator over the intestate estate of the deceased, was filed by one of the
heirs, Nenita C. Valdez, and docketed as Special Case No. 2079 in the Court of First Instance of Davao
City, Branch I. All the other heirs manifested their conformity to the appointment of the surviving spouse,
Maria V. Vda. de Arkoncel.

In the order dated April 1, 1977, the intestate Court * identified the heirs of the deceased Casimiro F.
Arkoncel as Maria V. Vda. de Arkoncel, widow; Casimiro V. Arkoncel, Jr., son; Florencio V. Arkoncel, son;
Maria V. Arkoncel, daughter; and Nenita Carpio Valdez, daughter, but appointed Casimiro V. Arkoncel, Jr.,
the eldest son, as the judicial administrator without bond instead of Maria V. Vda. de Arkoncel, the
widow and ordered the issuance to him of letters of administration. In the same order, the Court of First
Instance allowed him one year within which to dispose of the estate and to pay the debts of the
deceased. The letters of administration issued on April 11, 1977 gives Casimiro V. Arkoncel, Jr.,
petitioner herein, full authority as Administrator of the estate of Casimiro F. Arkoncel, to take possession
of all the property of said deceased and to perform all other acts necessary for the preservation of said
property.

On July 5, 1977, the intestate court issued an order giving notice to all persons having money claims
against the decedent Casimiro F. Arkoncel, "arising from contract, express or implied, whether the same
be due, not due or contingent, all claims for funeral expenses and expenses of the last sickness of the
said decedent, and judgment for money against him to file them in the Office of the Clerk of Court within
six (6) months after the date of the first publication of the notice" in the Mindanao Mail, a newspaper of
general circulation in the City and Province of Davao, wherein the notice wis to be published once a
week for three consecutive weeks.

In compliance with the order of the intestate court, FNCB Finance, respondent herein, filed on October
7, 1977 with the court a quo its claim against the estate for the payment of certain debts incurred by the
decedent during his lifetime, in the following amounts:

Principal sum ..........................P44,438.00

Interests .....................................(to be

computed later at 14% p.a.)

Attorney's fees ..........................11,109.50

Liquidated damages ...................4,443.38

On January 9, 1978, petitioner herein, in his capacity as administrator of the estate of Casimiro F.
Arkoncel and the claimant FNCB Finance, assisted by their respective counsels, entered into an
amicable settlement, under the following terms and conditions:

1. That the Judicial Administrator admits the claim of herein claimant against the estate, as follows:

a) P44,438.00 — representing the outstanding principal balance of the Torana car purchased for the use
and benefit of the decedent Casimiro F. Arkoncel and financed by herein claimant;

b) Interest on the outstanding principal balance from the date of default in the payment of the latter on
April 12, 1977 until fully paid at the rate of 14% per annum;

c) Pll,109.50 or 25% of the outstanding principal balance as and for attomey's fees;

d) Costs of and expenses in this suit in the amount of P200.00;

2 That the claimant, with the conformity of its counsel, is willing to reduce, as it hereby reduces, its
claims for attorney's fees to 15% of the principal balance or to P6,665.70. (Rollo, p. 35)

The intestate Court approved the amicable settlement in an order dated May 17, 1978, directing the
parties to strictly comply with the terms thereof and the Judicial Administrator, "to pay the amounts
agreed upon out of the estate finds and/or properties within 30 days from receipt" of the said order
(Rollo, p. 37).

It appears that the Judicial Administrator, petitioner herein, was served thru counsel a copy of the
aforementioned order on September 17, 1978 but the claim of private respondent had remained unpaid
thirty (30) days after. Thus, on November 26, 1978 private respondent filed with the intestate court a
motion for execution praying for the issuance of a writ of execution to satisfy its claims (Rollo, p. 39)
which was opposed by petitioner (Rollo, p. 42).

Acting on the motion, respondent judge issued the questioned order of December 13, 1978 granting the
motion for execution and the issuance of a writ of execution. The motion for reconsideration filed by
petitioner on December 28, 1978 was denied by respondent judge for lack of merit in an order dated
January 12, 1979 holding that "the order of this Court dated May 17, 1979 approving the amicable
settlement voluntarily entered into by the parties ... is a perfectly valid order which was a decision in itself
based on the compromise agreement" (Rollo, p. 57). Hence, this petition filed with the Court by
petitioner on May 15, 1979.

On July 9, 1979, the Court resolved to give due course to the petition.

After the parties had submitted their respective memoranda, the Court declared the case submitted for
decision on September 28, 1979.

On March 7, 1988, the Court resolved to require the parties to move in the premises within 30 days from
notice; otherwise the case shall be considered terminated and closed. In compliance with the same
Resolution, petitioner, on May 13, 1988, manifested that there exists no supervening events (that have
taken place in the interim) that may have rendered the case moot and academic (Rollo, p. 96). Private
respondent manifested that as matters stand, as between the petitioner and the private respondent, the
instant case is now ripe for disposition. It also brought to the attention of the Court the fact that the issue
in the instant case is one of the errors assigned by the petitioner in his appeal from the decision in Civil
Case No. 2079 to the Court of Appeals, which was docketed and considered by the latter Court under
AC-G.R. CV No. 04426, the two other issues being (a) that the trial court erred in not finding that the
Officer-inCharge of the Office of the Clerk of Court of the Court a quo (formerly Davao Court of First
Instance, Branch I) is not authorized by law to cause to be issued the controversial ahas writ of
execution; and (b) that the trial court erred in not finding that when a subject matter is pending before the
Supreme Court, such as the present petition for certiorari, the court a quo should refrain from issuing
implementing orders on the questioned subject-matter (Rollo, p. 99).

The Third Division of the Court to which the case was transferred on May 30, 1988 (Rollo, p. 109)
resolved to note the manifestations of both parties in its Resolution of June 22, 1988.

The sole issue of the case is:

WHETHER OR NOT RESPONDENT JUDGE ACTED WITHOUT OR IN EXCESS OF HIS JURISDICTION

IN ORDERING THE ISSUANCE OF A WRIT OF EXECUTION FOR THE PAYMENT OF A DEBT IN AN
ADMINISTRATION PROCEEDINGS. (Rollo, p. 76).

What transpired after the case was elevated to the Court in this instant certiorari case is described by
the appellate Court in its decision in AC-G.R. No, 04426, as follows:

... Motion for Reconsideration having been denied, the administrator elevated the issue as G.R. No.
50526, Casimiro V. Arkoncel, Jr. etc. v. Hon. Judge Alfredo G. Lagamon, etc. et al., on certiorari with
preliminary injunction to the Supreme Court which initially required comments. Prior to the elevation,
appellee filed motion for alias writ of execution. The Supreme Court required comments, thereafter, the
intestate court granted the motion for alias writ which was issued over the signature of the Officer-in-
Charge of the Office of the Davao of First Instance Clerk of Court.

Pursuant to the alias writ, the Davao Provincial Sheriff caused levy to be made on a piece of property
with an area of 1,136 square meters under TCT No. 2436 (T-1 339) which forms part of the estate.

The Supreme Court gave due course but did not issue an injunction.

The Provincial Sheriff thereafter sold the property at public auction at which the appellee was the highest
bidder.

Before expiry of the redemption, the administrator filed this case for the declaration of nullity of certain
proceedings, damages and preliminary injunction ...

The aforementioned supervening events form the bases of the appeal made to the appellate court but
the third assigned error which is "that the trial court erred in not finding that a writ of execution is not the
property remedy/procedure to satisfy money claims or for the payment of debts before an intestate court
in an administration proceedings" (Rollo, p. 104), is the same issue brought before the Court in this
instant case. The appellate court, however, aware of the pending issue before the Court, made no ruling
on this issue. It simply declared:

The issue in this error (sic) is squarely raised in G.R. No. 50526, supra, where decision still pends.
Carefully mindful of the fact that the Supreme Court is the final arbiter of dispute, we refrain from passing
judgment upon the issue brought up by this assigrunent. As a matter of practice, it is more advisable in a
situation like this one to defer to the Supreme Court. It is not inconceivable that our appreciation may run
counter to the Supreme Court decision in which event it will be for naught anyway. And, in any case,
whatever may be the ruling from this Court on the issue will provide no comfort to either the appellant or
the appellees both of whom must await the Supreme Court decision on the matter. (Rollo, p. 106).

There is indeed a need for the Court to rule squarely on the issue.

The Judicial Administrator voluntarily entered into an amicable settlement with the claimant FNCB
Finance. He was not only assisted by counsel but the agreement itself was confirmed by the other heirs,
the widow Maria V. Vda. de Arkoncel, Florencio V. Arkoncel and Maria V. Arkoncel (Mesias). The other
heir, Nenita C. Valdez, was represented by her Attorneyin-Fact David O. Montano who is at the same
time counsel for the other heirs and the judicial administrator. The agreement was submitted to the
intestate court for approval and it was duly approved by the court a quo in an order dated May l7, 1978
which incorporated the conditions therein. The court approves a compromise agreement when not
contrary to law, morals or public policy and renders judgment in accordance therewith (Jose v. Cham
Samco and Sons, Inc., 125 SCRA 142 [1983]; Alejandro v. Philippine Airlines, 127 SCRA 660 [1984]). In
the instant case, judgment was rendered in consonance with the compromise agreement and the parties
were enjoined to comply with and abide by its terms and conditions (Gravador v. Elbiuias, 126 SCRA 205
[1983]; G & S Corporation v. Court of Appeals, 126 SCRA 212 [1983]; National Housing Authority v.
Abaya, 129 SCRA 412 [19841).

There is no merit to the petition.

The rule is that a judgment rendered in accordance with a compromise agreement is immediately
executory unless a motion is filed to set aside the agreement on the ground of fraud, mistake or duress
in which case an appeal may be taken against the order denying the motion (De Guzman v. Court of
Appeals, 137 SCRA 730 [1985]; Zagata v. Jimenez, 152 SCRA 148 [1987]). It then becomes ministerial
for the lower court to order the execution of its final executory judgment. (Service Specialists
Incorporated v. Sheriff of Manila, 145 SCRA 139 [1986]; Landicho v. Tensuan, 151 SCRA 410 [1987])

Even more than a contract which may be enforced by ordinary action for specific performance, the
compromise agreement is part and parcel of the judgment, and may therefore be enforced as such by a
writ of execution (Tria v, Lirag, 1 SC 1207 [1961]; Osmena v. Court of Agrarian Relations, 17 SC 828
[1966]; Paredes v. Court of Appeals, 132 SCRA 501 [1984])

Finally, when the terms of an amicable settlement are violated, as in the case at bar, the remedy of the
aggrieved party is to move for its execution (Valdez v. Octaviano, 1 SCRA 74 [961]; Parede s v. Court of
Appeals, 132 SCRA 501 [1984]).

Petitioners claim that properties in custodia legis may not be the proper subject of a writ of execution to
satisfy a claim; that what private respondent could have done was to ask the Court a quo for an order
requiring the administrator to pay the debt and only if there are no sufficient funds on hand to pay the
debt may the court order the sale of the properties and out of the proceeds, to pay the debt. This
argument is untenable inasmuch as the dispositive portion of the very order approving the amicable
settlement directs the judicial administrator to pay the claim of FNCB Finance out of the funds and/or
properties of the estate, to wit:

Conformably, the Judicial Administrator is hereby directed to pay out of the estate funds and/or
properties the amounts agreed upon within 30 days from receipt hereof.

Nevertheless, petitioner Judicial Administrator chose not to comply with said order. Inasmuch as the
compromise agreement is part and parcel of the judgment and may, therefore, be enforced as such by a
writ of execution, the respondent judge committed no reversible error in issuing the questioned writ of
execution.

WHEREFORE, the instant petition is Dismissed for lack of merit.

SO ORDERED.

G.R. No. L-8235            March 19, 1914

ISIDRO SANTOS, plaintiff-appellant,
vs.
LEANDRA MANARANG, administratrix, defendant-appellee.
W. A. Kincaid and Thomas L. Hartigan for appellant.

Ramon Salinas for appellee.
TRENT, J.:

Don Lucas de Ocampo died on November 18, 1906, possessed of certain real and personal property
which, by his last will and testament dated July 26, 1906, he left to his three children. The fourth clause
of this will reads as follows:

I also declare that I have contracted the debts detailed below, and it is my desire that they may be
religiously paid by my wife and executors in the form and at the time agreed upon with my creditors.

Among the debts mentioned in the list referred to are two in favor of the plaintiff, Isidro Santos; one due
on April 14, 1907, for P5,000, and various other described as falling due at different dates (the dates are
not given) amounting to the sum of P2,454. The will was duly probated and a committee was regularly
appointed to hear and determine such claims against the estate as might be presented. This committee
submitted its report to the court on June 27, 1908. On July 14, 1908, the plaintiff, Isidro Santos,
presented a petition to the court asking that the committee be required to reconvene and pass upon his
claims against the estate which were recognized in the will of testator. This petition was denied by the
court, and on November 21, 1910, the plaintiff instituted the present proceedings against the
administratrix of the estate to recover the sums mentioned in the will as due him. Relief was denied in
the court below, and now appeals to this court.

In his first assignment of error, the appellant takes exception to the action of the court in denying his
petition asking that the committee be reconvened to consider his claim. In support of this alleged error
counsel say that it does not appear in the committee's report that the publications required by section
687 of the Code of Civil Procedure had been duly made. With reference to this point the record
affirmatively shows that the committee did make the publications required by law. It is further alleged
that at the time the appellant presented his petition the court had not approved the report of the
committee. If this were necessary we might say that, although the record does not contain a formal
approval of the committee's report, such approval must undoubtedly have been made, as will appear
from an inspection of the various orders of the court approving the annual accounts of the administratrix,
in which claims allowed against the estate by the committee were written off in accordance with its
report. This is shown very clearly from the court's order of August 1, 1912, in which the account of the
administratrix was approved after reducing final payments of some of the claims against the estate to
agree with the amounts allowed by the committee. It is further alleged that at the time this petition was
presented the administration proceedings had not been terminated. This is correct.

In his petition of July 14, 1909, asking that the committee be reconvened to consider his claims, plaintiff
states that his failure to present the said claims to the committee was due to his belief that it was
unnecessary to do so because of the fact that the testator, in his will, expressly recognized them and
directed that they should be paid. The inference is that had plaintiff's claims not been mentioned in the
will he would have presented to the committee as a matter of course; that plaintiff was held to believe by
this express mention of his claims in the will that it would be unnecessary to present them to the
committee; and that he did not become aware of the necessity of presenting them to the committee until
after the committee had made its final report.

Under these facts and circumstances, did the court err in refusing to reconvene the committee for the
purpose of considering plaintiff's claim? The first step towards the solution of this question is to
determine whether plaintiff's claims were such as a committee appointed to hear claims against an
estate is, by law, authorized to pass upon. Unless it was such a claim plaintiff's argument has no
foundation. Section 686 empowers the committee to try and decide claims which survive against the
executors and administrators, even though they be demandable at a future day "except claims for the
possession of or title to real estate." Section 700 provides that all actions commenced against the
deceased person for the recovery of money, debt, or damages, pending at the time the committee is
appointed, shall be discontinued, and the claims embraced within such actions presented to the
committee. Section 703 provides that actions to recover title or possession of real property, actions to
recover damages for injury to person or property, real and personal, and actions to recover the
possession of specified articles of personal property, shall survive, and may be commenced and
prosecuted against the executor or administrator; "but all other actions commenced against the
deceased before his death shall be discontinued and the claims therein involved presented before the
committee as herein provided." Section 708 provides that a claim secured by a mortgage or other
collateral security may be abandoned and the claim prosecuted before the committee, or the mortgage
may be foreclosed or the security be relied upon, and in the event of a deficiency judgment, the creditor
may, after the sale of mortgage or upon the insufficiency of the security, prove such deficiency before the
committee on claims. There are also certain provisions in section 746 et seq., with reference to the
presentation of contingent claims to the committee after the expiration of the time allowed for the
presentation of claims not contingent. Do plaintiff's claims fall within any of these sections? They are
described in the will as debts. There is nothing in the will to indicate that any or all of them are
contingent claims, claims for the possession of or title to real property, damages for injury to person or
property, real or personal, or for the possession of specified articles of personal property. Nor is it
asserted by the plaintiff that they do. The conclusion is that they were claims proper to be considered by
the committee.

This being true, the next point to determine is, when and under what circumstances may the committee
be recalled to consider belated claims? Section 689 provides:

That court shall allow such time as the circumstances of the case require for the creditors to present
their claims the committee for examination and allowance; but not, in the first instance, more than twelve
months, or less than six months; and the time allowed shall be stated in the commission. The court may
extend the time as circumstances require, but not so that the whole time shall exceed eighteen months.

It cannot be questioned that thus section supersedes the ordinary limitation of actions provided for in
chapter 3 of the Code. It is strictly confined, in its application, to claims against the estate of deceased
persons, and has been almost universally adopted as part of the probate law of the United States. It is
commonly termed the statute of nonclaims, and its purpose is to settle the affairs of the estate with
dispatch, so that residue may be delivered to the persons entitled thereto without their being afterwards
called upon to respond in actions for claims, which, under the ordinary statute of limitations, have not yet
prescribed.

The object of the law in fixing a definite period within which claims must be presented is to insure the
speedy settling of the affairs of a deceased person and the early delivery of the property of the estate in
the hands of the persons entitled to receive it. (Estate of De Dios, 24 Phil. Rep., 573.)

Due possibly to the comparative shortness of the period of limitation applying to such claims as
compared with the ordinary statute of limitations, the statute of nonclaims has not the finality of the
ordinary statute of limitations. It may be safely said that a saving provision, more or less liberal, is
annexed to the statute of nonclaims in every jurisdiction where is found. In this country its saving clause
is found in section 690, which reads as follows:

On application of a creditor who has failed to present his claim, if made within six months after the time
previously limited, or, if a committee fails to give the notice required by this chapter, and such application
is made before the final settlement of the estate, the court may, for cause shown, and on such terms as
are equitable, renew the commission and allow further time, not exceeding one month, for the committee
to examine such claim, in which case it shall personally notify the parties of the time and place of
hearing, and as soon as may be make the return of their doings to the court.

If the committee fails to give the notice required, that is a sufficient cause for reconvening it for further
consideration of claims which may not have been presented before its final report was submitted to the
court. But, as stated above, this is not the case made by the plaintiff, as the committee did give the
notice required by law. Where the proper notice has been given the right to have the committee recalled
for the consideration of a belated claim appears to rest first upon the condition that it is presented within
six months after the time previously limited for the presentation of claims. In the present case the time
previously limited was six months from July 23, 1907. This allowed the plaintiff until January 23, 1908, to
present his claims to the committee. An extension of this time under section 690 rested in the discretion
of the court. (Estate of De Dios, supra.) In other words, the court could extend this time and recall the
committee for a consideration of the plaintiff's claims against the estate of justice required it, at any time
within the six months after January 23, 1908, or until July 23, 1908. Plaintiff's petition was not presented
until July 14, 1909. The bar of the statute of nonclaims is an conclusive under these circumstances as
the bar of the ordinary statute of limitations would be. It is generally held that claims are not barred as to
property not included in the inventory. (Waughop vs. Bartlett, 165 III., 124; Estate of Reyes, 17 Phil. Rep.,
188.) So also, as indicated by this court in the case last cited, fraud would undoubtedly have the same
effect. These exceptions to the operation of the statute are, of course, founded upon the highest
principles of equity. But what is the plea of the plaintiff in this case? Simply this: That he was laboring
under a mistake of law — a mistake which could easily have been corrected had he sought to inform
himself; a lack of information as to the law governing the allowance of claims against estate of the
deceased persons which, by proper diligence, could have been remedied in ample to present the claims
to the committee. Plaintiff finally discovered his mistake and now seeks to assert his right when they
have been lost through his own negligence. Ignorantia legis neminem excusat. We conclude that the
learned trial court made no error in refusing to reconvene the committee for the purpose of considering
plaintiff's claims against the estate.

In his second assignment of error the appellant insists that the court erred in dismissing his petition filed
on November 21, 1910, wherein he asks that the administratrix be compelled to pay over to him the
amounts mentioned in the will as debts due him. We concede all that is implied in the maxim, dicat
testor et erit lex. But the law imposes certain restrictions upon the testator, not only as to the disposition
of his estate, but also as to the manner in which he may make such disposition. As stated in Rood on
Wills, sec. 412: "Some general rules have been irrevocably established by the policy of the law, which
cannot be exceeded or transgressed by any intention of the testator, be it ever so clearly expressed."

It may be safely asserted that no respectable authority can be found which holds that the will of the
testator may override positive provisions of law and imperative requirements of public policy. (Page on
Wills, sec. 461.)

Impossible conditions and those contrary to law and good morals shall be considered as not
imposed, . . . (Art. 792, Civil Code.)

Conceding for the moment that it was the testator's desire in the present case that the debts listed by
him in his will should be paid without referring them to a committee appointed by the court, can such a
provision be enforced? May the provisions of the Code of Civil Procedure relating to the settlement of
claims against an estate by a committee appointed by the court be superseded by the contents of a
will?

It is evident from the brief outline of the sections referred to above that the Code of Civil Procedure has
established a system for the allowance of claims against the estates of decedents. Those are at least
two restrictions imposed by law upon the power of the testator to dispose of his property, and which pro
tanto restrict the maxim that "the will of the testator law: (1) His estate is liable for all legal obligations
incurred by him; and (2) he can not dispose of or encumber the legal portion due his heirs by force of
law. The former take precedence over the latter. (Sec. 640, Code Civ, Proc.) In case his estate is
sufficient they must be paid. (Sec, 734, id.) In case the estate is insolvent they must be paid in the order
named in section 735. It is hardly necessary to say that a provision in an insolvent's will that a certain
debt be paid would not entitle it to preference over other debts. But, if the express mention of a debt in
the will requires the administrator to pay it without reference to the committee, what assurance is there,
in the case of an insolvent estate, that it will not take precedence over preferred debts?

If it is unnecessary to present such claim to the committee, the source of nonclaims is not applicable. It
is not barred until from four to ten years, according to its classification in chapter 3 of the Code of Civil
Procedure, establishing questions upon actions. Under such circumstances, when then the legal portion
is determined? If, in the meantime the estate has been distributed, what security have the differences
against the interruption of their possession? Is the administrator required to pay the amount stipulated in
the will regardless of its correctness? And, if not, what authority has he to vise the claim? Section 706 of
the Code of Civil Procedure provides that an executor may, with the approval of the court, compound
with a debtor of deceased for a debt due the estate, But he is nowhere permitted or directed to deal with
a creditor of the estate. On the contrary, he is the advocate of the estate before an impartial committee
with quasi-judicial power to determine the amount of the claims against the estate, and, in certain cases,
to equitably adjust the amounts due. The administrator, representing the debtor estate, and the creditor
appear before this body as parties litigant and, if either is dissatisfied with its decision, an appeal to the
court is their remedy. To allow the administrator to examine and approve a claim against the estate
would put him in the dual role of a claimant and a judge. The law in this jurisdiction has been so framed
that this may not occur. The most important restriction, in this jurisdiction, on the disposition of property
by will are those provisions of the Civil Code providing for the preservation of the legal portions due to
heirs by force of law, and expressly recognized and continued in force by sections 614, 684, and 753 of
the Code of Civil Procedure. But if a debt is expressly recognized in the will must be paid without its
being verified, there is nothing to prevent a partial or total alienation of the legal portion by means of a
bequest under a guise of a debt, since all of the latter must be paid before the amount of the legal
portion can be determined.

We are aware that in some jurisdictions executors and administrators are, by law, obligated to perform
the duties which, in this jurisdiction, are assign to the committee on claims; that in some other
jurisdictions it is the probate court itself that performs these duties; that in some jurisdictions the
limitation upon the presentment of claims for allowance is longer and, possibly, in some shorter; and that
there is a great divergence in the classification of actions which survive and actions which do not survive
the death of the testator. It must be further remembered that there are but few of the United States which
provide for heirs by force of law. These differences render useless as authorities in this jurisdiction many
of the cases coming from the United States. The restriction imposed upon the testator's power to
dispose of his property when they are heirs by force of law is especially important. The rights of these
heirs by force law pass immediately upon the death of the testator. (Art. 657, Civil Code.) The state
intervenes and guarantees their rights by many stringent provisions of law to the extent mentioned in
article 818 of the Civil Code. Having undertaken the responsibility to deliver the legal portion of the net
assets of the estate to the heirs by force of law, it is idle to talk of substituting for the procedure provided
by law for determining the legal portion, some other procedure provided in the will of the testator. The
state cannot afford to allow the performance of its obligations to be directed by the will of an individual.
There is but one instance in which the settlement of the estate according to the probate procedure
provided in the Code of Civil Procedure may be dispense with, and it applies only to intestate estates.
(Sec. 596, Code Civ. Proc.) A partial exemption from the lawful procedure is also contained in section
644, when the executor or administrator is the sole residuary legatee. Even in such case, and although
the testator directs that no bond be given, the executor is required to give a bond for the payment of the
debts of the testator. The facts of the present case do not bring it within either of this sections. We
conclude that the claims against the estate in the case at bar were enforceable only when the prescribed
legal procedure was followed.

But we are not disposed to rest our conclusion upon this phase of the case entirely upon legal grounds.
On the contrary we are strongly of the opinion that the application of the maxim, "The will of the testator
is the law of the case," but strengthens our position so far as the present case is concerned.

It will ordinarily be presumed in construing a will that the testator is acquainted with the rules of law, and
that he intended to comply with them accordingly. If two constructions of a will or a part thereof are
possible, and one of these constructions is consistent with the law, and the other is inconsistent, the
presumption that the testator intended to comply with the law will compel that construction which is
consistent with the law to be adopted. (Page on Wills, sec. 465.)

Aside from this legal presumption, which we believe should apply in the present case as against any
construction of the will tending to show an intention of the testator that the ordinary legal method of
probating claims should be dispensed with, it must be remembered that the testator knows that the
execution of his will in no way affects his control over his property. The dates of his will and of his death
may be separated by a period of time more or less appreciable. In the meantime, as the testator well
knows, he may acquire or dispose of property, pay or assume additional debts, etc. In the absence of
anything to the contrary, it is only proper to presume that the testator, in his will, is treating of his estate
at the time and in the condition it is in at his death. Especially is this true of his debts. Debts may accrue
and be paid in whole or in part between the time the will is made and the death of the testator. To allow a
debt mentioned in the will in the amount expressed therein on the ground that such was the desire of the
testator, when, in fact, the debt had been wholly or partly paid, would be not only unjust to the residuary
heirs, but a reflection upon the good sense of the testator himself. Take the present case for example. It
would be absurd to say that the testator knew what the amount of his just debt would be at a future and
uncertain date. A mere comparison of the list of the creditors of the testator and the amounts due them
as described in his will, with the same list and amounts allowed by the committee on claims, shows that
the testator had creditors at the time of his death not mention in the will at all. In other instances the
amounts due this creditors were either greater or less than the amounts mentioned as due them in the
will. In fact, of those debts listed in the will, not a single one was allowed by the committee in the
amount named in the will. This show that the testator either failed to list in his will all his creditors and
that, as to those he did include, he set down an erroneous amount opposite their names; or else, which
is the only reasonable view of the matter, he overlooked some debts or contracted new ones after the
will was made and that as to others he did include he made a partial payments on some and incurred
additional indebtedness as to others.

While the testator expresses the desire that his debts be paid, he also expressly leaves the residue of his
estate, in equal parts, to his children. Is it to be presumed that he desired to overpay some of his
creditors notwithstanding his express instructions that his own children should enjoy the net assets of
his estate after the debts were paid? Again, is the net statement of the amount due some of his creditors
and the omission all together of some of his creditors compatible with his honorable and commendable
desire, so clearly expressed in his will, that all his debts be punctually paid? We cannot conceive that
such conflicting ideas were present in the testator's mind when he made his will.

Again, suppose the testator erroneously charged himself with a debt which he was under no legal or
even moral obligation to pay. The present case suggests, if it does not actually present, such a state of
affairs. Among the assets of the estate mentioned in the will is a parcel of land valued at P6,500; while in
the inventory of the administratrix the right to repurchase this land from one Isidro Santos is listed as an
asset. Counsel for the administratrix alleges that he is prepared to prove that this is the identical plaintiff
in the case at bar; that the testator erroneously claimed the fee of this land in his last will and stated
Santos' rights in the same as a mere debt due him of P5,000; that in reality, the only asset of the testator
regard to this land was the value of the right to repurchase, while the ownership of the land, subject only
to that right of redemption, belonged to Santos; that the right to repurchase this land expired in 1907,
after the testator's death. Assuming, without in the least asserting, that such are the underlying facts of
this case, the unjust consequences of holding that a debt expressly mentioned in the will may be
recovered without being presented to the committee on claims, is at once apparent. In this supposed
case, plaintiff needed only wait until the time for redemption of the land had expired, when he would
acquired an absolute title to the land, and could also have exacted the redemption price. Upon such a
state of facts, the one item of P5,000 would be a mere fictitious debt, and as the total net value of the
estate was less than P15,000, the legal portion of the testator's children would be consumed in part in
the payment of this item. Such a case cannot occur if the prescribed procedure is followed of requiring
of such claims be viseed by the committee on claims.

The direction in the will for the executor to pay all just debts does not mean that he shall pay them
without probate. There is nothing in the will to indicate that the testator in tended that his estate should
be administered in any other than the regular way under the statute, which requires "all demands against
the estates of the deceased persons," "all such demands as may be exhibited," etc. The statute
provides the very means for ascertaining whether the claims against the estate or just debts. (Kaufman
vs. Redwine, 97 Ark., 546.)

See also Collamore vs. Wilder (19 Kan., 67); O'Neil vs. Freeman (45 N. J. L., 208).

The petition of the plaintiff filed on November 21, 1910, wherein he asks that the administratrix be
compelled to pay over to him the amounts mentioned in the will as debts due him appears to be nothing
more nor less than a complaint instituting an action against the administratrix for the recovery of the sum
of money. Obviously, the plaintiff is not seeking possession of or title to real property or specific articles
of personal property.

When a committee is appointed as herein provided, no action or suit shall be commenced or prosecute
against the executor or administrator upon a claim against the estate to recover a debt due from the
state; but actions to recover the seizing and possession of real estate and personal chattels claimed by
the estate may be commenced against him. (Sec. 699, Code Civ. Proc.)

The sum of money prayed for in the complaint must be due the plaintiff either as a debt of a legacy. If it
is a debt, the action was erroneously instituted against the administratrix. Is it a legacy?

Plaintiff's argument at this point becomes obviously inconsistent. Under his first assignment of error he
alleges that the committee on claims should have been reconvened to pass upon his claim against the
estate. It is clear that this committee has nothing to do with legacies. It is true that a debt may be left as
a legacy, either to the debtor (in which case it virtually amounts to a release), or to a third person. But
this case can only arise when the debt is an asset of the estate. It would be absurd to speak of a
testator's leaving a bare legacy of his own debt. (Arts. 866, 878, Civil Code.) The creation of a legacy
depends upon the will of the testator, is an act of pure beneficence, has no binding force until his death,
and may be avoided in whole or in part by the mere with whim of the testator, prior to that time. A debt
arises from an obligation recognized by law (art. 1089, Civil Code) and once established, can only be
extinguished in a lawful manner. (Art. 1156, id.) Debts are demandable and must be paid in legal tender.
Legacies may, and often do, consist of specific articles of personal property and must be satisfied
accordingly. In order to collect as legacy the sum mentioned in the will as due him, the plaintiff must
show that it is in fact a legacy and not a debt. As he has already attempted to show that this sum
represents a debt, it is an anomaly to urge now it is a legacy.

Was it the intention of the testator to leave the plaintiff a legacy of P7,454? We have already touched
upon this question. Plaintiff's claim is described by the testator as a debt. It must be presumed that he
used this expression in its ordinary and common acceptation; that is, a legal liability existing in favor of
the plaintiff at the time the will was made, and demandable and payable in legal tender. Had the testator
desired to leave a legacy to the plaintiff, he would have done so in appropriate language instead of
including it in a statement of what he owed the plaintiff. The decedent's purpose in listing his debts in his
will is set forth in the fourth clause of the will, quoted above. There is nothing contained in that clause
which indicates, even remotely, a desire to pay his creditors more than was legally due them.

A construction leading to a legal, just and sensible result is presumed to be correct, as against one
leading to an illegal, unnatural, or absurd effect. (Rood on Wills, sec. 426.)

The testator, in so many words, left the total net assets of his estate, without reservation of any kind, to
his children per capita. There is no indication that he desired to leave anything by way of legacy to any
other person. These considerations clearly refute the suggestion that the testator intended to leave
plaintiff any thing by way of legacy. His claim against the estate having been a simple debt, the present
action was improperly instituted against the administratrix. (Sec. 699, Code Civ. Proc.)

But it is said that the plaintiff's claims should be considered as partaking of the nature of a legacy and
disposed of accordingly. If this be perfect then the plaintiff would receive nothing until after all debts had
been paid and the heirs by force of law had received their shares. From any point of view the inevitable
result is that there must be a hearing sometime before some tribunal to determine the correctness of the
debts recognized in the wills of deceased persons. This hearing, in the first instance, can not be had
before the court because the law does not authorize it. Such debtors must present their claims to the
committee, otherwise their claims will be forever barred.

For the foregoing reasons the orders appealed from are affirmed, with costs against the appellant.

Torres, Carson and Araullo, JJ., concur.

G.R. No. 177711               September 5, 2012

SUICO INDUSTRIAL CORP., and SPOUSES ESMERALDO and ELIZABETH SUICO, Petitioners,
vs.
HON. MARILYN LAGURA-YAP, Presiding Judge of Regional Trial Court of Mandaue City, Branch
28; PRIVATE DEVELOPMENT CORP. OF THE PHILIS. (PDCP now First E-Bank); and ANTONIO
AGRO DEVELOPMENT CORPORATION, Respondents.
DECISION
REYES, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court, which assails the
Decision1 dated January 16, 2006 and Resolution2 dated April 11, 2007 of the Court of Appeals (CA) in
CA-G.R. SP No. 78676 entitled Suico Industrial Corporation and Spouses Esmeralda and Elizabeth
Suico v. Hon. Marilyn Lagura-Yap, Presiding Judge of

Mandaue City Regional Trial Court, Branch 28; Private Development Corporation of the Phils. (PDCP
Bank); and Antonio Agro Development Corporation.

The Factual Antecedents

In 1993, respondent Private Development Corporation of the Philippines (PDCP Bank), later renamed as
First E-Bank and now Prime Media Holdings, Inc., foreclosed the mortgage constituted on two real
estate properties in Mandaue City then owned by petitioners and mortgagor-spouses Esmeraldo and
Elizabeth Suico, following petitioner Suico Industrial Corporation’s failure to pay the balance of two
secured loans it obtained from the bank in 1987 and 1991. PDCP Bank emerged as the highest bidder in
the foreclosure sale of the properties, as evidenced by a Certificate of Sale dated February 29, 1993
issued by the Sheriff of Mandaue City.

The mortgagors’ failure to redeem the foreclosed properties within the period allowed by law resulted in
the consolidation of ownership in favor of PDCP Bank and the issuance of Transfer Certificate of Title
Nos. 34987 and 34988 in the bank’s name. The enforcement of a writ of possession obtained by PDCP
Bank from the Regional Trial Court (RTC), Mandaue City, Branch

28, was however enjoined by an injunctive writ obtained by the petitioners on January 17, 1995 from the
RTC, Mandaue City, Branch 56, where they filed on December 9, 1994 an action for specific
performance, injunction and damages to prevent PDCP Bank from selling and taking possession of the
foreclosed properties. Petitioners alleged in said action for specific performance that they had an
agreement with PDCP Bank to intentionally default in their payments so that the mortgaged properties
could be foreclosed and purchased during public auction by the bank. After consolidation of title in the
bank’s name, PDCP Bank, allegedly, was to allow the petitioners to purchase the properties for ₱
5,000,000.00 through a recommended buyer. Petitioners then claimed that PDCP Bank increased the
properties’ selling price, thereby preventing their recommended buyers from purchasing them.

When PDCP Bank questioned before the CA the issuance of the injunctive writ by the RTC Branch 56,
the appellate court declared the trial court to have exceeded its jurisdiction in issuing the assailed writ,
as it interfered with the proceedings of a court of concurrent jurisdiction, the RTC Branch 28. Said CA
decision was affirmed in 1999 by this Court in G.R. No. 123050, entitled Suico Industrial Corporation v.
CA,3 wherein we declared:

When petitioners failed to pay the balance of the loan and thereafter failed to redeem the properties, title
to the property had already been transferred to respondent PDCP Bank. Respondent PDCP Bank’s right
to possess the property is clear and is based on its right of ownership as a purchaser of the properties in
the foreclosure sale to whom title has been conveyed. Under Section 7 of Act No. 3135 and Section 35
of Rule

39, the purchaser in a foreclosure sale is entitled to possession of the property. Respondent PDCP Bank
has a better right to possess the subject property because of its title over the same.

Furthermore, petitioners undertook a procedural misstep when it filed a suit for specific performance,
injunction and damages before the RTC Branch 56 instead of a petition to set aside the sale and
cancellation of the writ of possession as provided under Section 8 of Act 3135 x x x.4 (Citations omitted
and emphasis ours)

Notwithstanding the afore-quoted portions in this Court’s Suico decision, the proceedings in Civil Case
No. MAN-2321 for specific performance, injunction and damages before RTC Branch 56 continued.
Herein respondent Antonio Agro Development Corporation (AADC), which in the meantime had
purchased the foreclosed properties from PDCP Bank, filed with the trial court a motion to intervene and
an answer-in-intervention.

RTC Branch 56’s Presiding Judge Augustine Vestil later voluntarily inhibited himself from further hearing
the case, resulting in the re-raffle of the case to RTC Branch 55. When PDCP Bank failed to file its
answer within the period allowed by the rules, the petitioners moved that the bank be declared in default
and the answer-in-intervention of AADC be stricken off the records. In an Order5 dated August 3, 2001,
Judge Ulric R. Cañete (Judge Cañete) of RTC Branch 55 still gave therein defendants the time to file their
written oppositions on the motions after noting the following antecedents:

Record shows that this case was filed in 1994 yet and until this point in time there is no answer by the
defendant. Likewise, the Motion for Intervention, filed by Antonio Agro Development Corporation was
denied per record by the Court. However, in spite of the denial, an answer in intervention was filed.
Hence, plaintiff now, per their motion and manifestation are praying for a default order against PDCP
Bank, and for the striking off from the records of Intervenor’s Answer in Intervention.

In today’s hearing of the incidents, Atty. Cavada entered his appearance and manifested that he will [sic]
just filed a notice of appearance as counsel for the defendant, Private Development Corporation of the
Philippines. Atty. Go appeared for the Intervenor. Both counsels pray for a period of ten (10) days from
today to file their written opposition in these incidents subject for today’s hearing.

Plaintiff failed to appear for the hearing of this incident.6

On October 23, 2001, the RTC issued an order denying the petitioners’ motion to declare PDCP Bank in
default. PDCP Bank’s answer filed on August 24, 2001 and AADC’s answer-in-intervention were also
admitted. When Judge Cañete also inhibited from further hearing the case, the case was transferred to
Judge Marilyn Lagura-Yap (Judge Yap) of RTC Branch 28.

During the case’s scheduled pre-trial conference on September 6, 2002, the petitioners’ counsel asked
for a resetting to allow him more time to prepare the required pre-trial brief. This was opposed by PDCP
Bank and AADC, which filed a motion for the case’s dismissal later granted by Judge Yap in its order
that reads in part:

Although the Court notes that plaintiff Elizabeth Suico is in court, the fact that there is no pre-trial brief
submitted by plaintiffs militates against their cause this morning. Under Section 6 of Rule 18 of the
Revised Rules of Court, in the penultimate paragraph thereof, it is quite expressly provided that failure to
file pre-trial brief has the same effect as failure to appear in the pre-trial.

FINDING the joint motion of defendant PDCP, now 1st e-Bank, and defendant-intervenor Antonio Agro
Development Corporation to be meritorious, the Court hereby orders the DISMISSAL of this case.

IT IS SO ORDERED.7

Petitioners’ motion for reconsideration, with pre-trial brief attached, was denied by the trial court in its
Order8 dated February 21, 2003, the dispositive portion of which reads:

Applying these rulings to the environmental circumstances in this case, the Court finds no basis to
reconsider its Order dated September 6, 2002.

The Motion for Reconsideration is hereby DENIED.

IT IS SO ORDERED.9

A copy of the order was received by the petitioners’ counsel on March 21, 2003.

Unsatisfied with the trial court’s rulings, the petitioners filed on April 4, 2003 their notice of appeal. The
RTC, however, refused to give due course to the appeal via its Order10 dated May 15, 2003 given the
following findings:

A review of the records of the case shows that the Order dismissing the Complaint was received by
plaintiffs through counsel on September 17, 2002. On that date, the 15-day prescriptive period within
which to file an appeal began to run. Plaintiffs filed their Motion for Reconsideration on October 1, 2002,
and their filing of the motion interrupted the reglementary period to appeal. By that time however, 14
days had already elapsed; thus, from their receipt of the order denying the Motion for Reconsideration,
they had only one (1) day left within which to file a notice of appeal. On March 21, 2003, plaintiff received
the Order denying their Motion for Reconsideration. Accordingly, they had only one (1) day left, or until
March 22, 2003 to file a notice of appeal. However, they were able to do so only on April 4, 2003, or
thirteen (13) days late.11 (Emphasis ours)

Petitioners deemed it useless to still file a motion for reconsideration of the Order dated May 15, 2003,
and thus went straight to the CA to question the RTC’s orders via a petition for certiorari.

The Ruling of the CA

On January 16, 2006, the CA rendered its Decision12 dismissing the petition for lack of merit, taking note
of the following circumstances:

The September 6, 2002 order dismissing the case pointed out that as early as July 29, 2002, the court
had already issued the notice of pre-trial conference and the return of the notice showed that plaintiffs’
counsel was furnished a copy on August 21, 2002 but despite the notice, Atty. Manuel Ong, plaintiffs’
counsel, did not file the appropriate motion to the [sic] have the conference reset. The order further ruled
that in the notice of pre-trial, it was expressly stated that failure to file pre-trial brief may be given the
same effect as failure to appear in the pre-trial conference.13

(Citation omitted)

As regards to the petitioners’ late filing of their notice of appeal, the CA cited the provisions of Section
13, Rule 41 of the Rules of Court, which provides that the court may dismiss an appeal filed out of time,
motu proprio or on motion, prior to the transmittal of the original records or the record on appeal to the
appellate court.14

Feeling aggrieved, the petitioners filed a motion for reconsideration, which was however denied by the
CA in its Resolution15 dated April 11, 2007. Hence, the present petition for review on certiorari.

The Present Petition

Petitioners cite the following grounds to support their petition:

I.

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR IN NOT RULING
THAT RESPONDENT JUDGE OF THE REGIONAL TRIAL COURT, BRANCH 28 OF MANDAUE CITY
COMMITTED GRAVE ABUSE OF DISCRETION IN DECLARING THE PETITIONER[S] NON-SUITED AND
DISMISSING THE CASE ON THE GROUND OF FAILURE TO FILE A PRE-TRIAL BRIEF.

II.

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR IN RULING THAT
PETITIONERS’ NOTICE OF APPEAL FILED ON THE 14TH DAY AFTER RECEIPT OF THE ORDER
DENYING THEIR MOTION FOR RECONSIDERATION WAS FILED OUT OF TIME.16

In their prayer, the petitioners specifically ask this Court to, among other things, reverse the CA’s rulings
and annul and set aside the RTC’s Order17 dated September 6, 2002 which dismissed their action for
specific performance, injunction and damages, and the Order dated February 21, 2003 which denied
their motion for reconsideration.

The petitioners were represented in this petition by the same counsel who assisted them during the pre-
trial and filing of the notice of appeal before the RTC. A new counsel entered his appearance for the
petitioners only upon the filing of a reply.

This Court’s Ruling

This Court finds the petition dismissible.

Given the antecedents that led to the filing of this petition, and the fact that the timeliness of an appeal
from the RTC’s dismissal of the action for specific performance is a crucial issue that will determine
whether or not the other issues resolved by the RTC can still be validly questioned at this time, we find it
proper to first resolve the question on the RTC’s ruling that the petitioners’ notice of appeal was filed out
of time.

A party is given a "fresh period" of

fifteen (15) days from receipt of the

court’s resolution on a motion for

reconsideration within which to file

a notice of appeal.

Section 3, Rule 41 of the Rules of Court prescribes the period to appeal from judgments or final orders
of RTCs, as follows:

Sec. 3. Period of ordinary appeal. – The appeal shall be taken within fifteen (15) days from notice of the
judgment or final order appealed from. Where a record on appeal is required, the appellant shall file a
notice of appeal and a record on appeal within thirty (30) days from notice of the judgment or final order.
x x x.

The period of appeal shall be interrupted by a timely motion for new trial or reconsideration. No motion
for extension of time to file a motion for new trial or reconsideration shall be allowed.

In Neypes v. Court of Appeals18 decided by this Court on September 14, 2005, we ruled that to
standardize the appeal periods provided in the Rules of Court and to afford litigants a fair opportunity to
appeal their cases, the Court deems it practical to allow a fresh period of fifteen (15) days within which to
file the notice of appeal in the RTC, counted from receipt of the order dismissing a motion for new trial or
motion for reconsideration. Said "fresh period rule" also aims to regiment or make the appeal period
uniform.19 It eradicates the confusion as to when the fifteen (15)-day appeal period should be counted –
from receipt of notice of judgment or from receipt of notice of final order appealed from.20

Thus, in similar cases decided by this Court after Neypes, the fresh period rule was applied, thereby
allowing appellants who had filed with the trial court a motion for reconsideration the full fifteen (15)-day
period from receipt of the resolution resolving the motion within which to file a notice of appeal. Among
these cases is Sumiran v. Damaso,21 wherein we reiterated our ruling in Makati Insurance Co., Inc. v.
Reyes22 and De Los Santos v. Vda. de Mangubat23 to explain that the rule can be applied to actions
pending upon its effectivity:

As early as 2005, the Court categorically declared in Neypes v. Court of Appeals that by virtue of the
power of the Supreme Court to amend, repeal and create new procedural rules in all courts, the Court is
allowing a fresh period of 15 days within which to file a notice of appeal in the RTC, counted from receipt
of the order dismissing or denying a motion for new trial or motion for reconsideration. This would
standardize the appeal periods provided in the Rules and do away with the confusion as to when the 15-
day appeal period should be counted. x x x

x x x x

The foregoing ruling of the Court was reiterated in Makati Insurance Co., Inc. v. Reyes, to wit:

"Propitious to petitioner is Neypes v. Court of Appeals, promulgated on 14 September 2005 while the
present Petition was already before us. x x x

x x x x

With the advent of the "fresh period rule," parties who availed themselves of the remedy of motion for
reconsideration are now allowed to file a notice of appeal within fifteen days from the denial of that
motion.

x x x x

In De los Santos v. Vda. de Mangubat, we applied the same principle of "fresh period rule",
expostulating that procedural law refers to the adjective law which prescribes rules and forms of
procedure in order that courts may be able to administer justice. Procedural laws do not come within the
legal conception of a retroactive law, or the general rule against the retroactive application of statutes.
The "fresh period rule" is irrefragably procedural, prescribing the manner in which the appropriate period
for appeal is to be computed or determined and, therefore, can be made applicable to actions pending
upon its effectivity, such as the present case, without danger of violating anyone else’s rights."24
(Citations omitted)

The retroactivity of the Neypes ruling was further explained in our Resolution dated June 25, 2008 in Fil-
Estate Properties, Inc. v. Homena-Valencia,25 wherein we held:

The determinative issue is whether the "fresh period" rule announced in Neypes could retroactively apply
in cases where the period for appeal had lapsed prior to 14 September 2005 when Neypes was
promulgated. That question may be answered with the guidance of the general rule that procedural laws
may be given retroactive effect to actions pending and undetermined at the time of their passage, there
being no vested rights in the rules of procedure. Amendments to procedural rules are procedural or
remedial in character as they do not create new or remove vested rights, but only operate in furtherance
of the remedy or confirmation of rights already existing.

Sps. De los Santos reaffirms these principles and categorically warrants that Neypes bears the quested
retroactive effect, x x x.26 (Citations omitted)

Given the foregoing rules, the petitioners’ notice of appeal was timely filed on April 4, 2003, since it was
filed within the fifteen (15)-day period from their receipt on March 21, 2003 of the RTC’s order denying
their motion for reconsideration of the case’s dismissal.

In any case, instead of remanding the case to the trial court with the order to take due course on the
appeal made by the petitioners, this Court finds it more proper and appropriate to already resolve the
issue on the legality of the court’s dismissal of the main action filed before it on the basis of the counsel
for the petitioners’ failure to file a pre-trial brief. This, considering that the issue has already been
extensively argued by the parties in their pleadings. The prayer in this petition even specifically seeks the
annulment of the RTC’s Order of dismissal dated September 6, 2002, and the order denying the motion
for reconsideration thereof. The CA decision being appealed from and the RTC orders subject thereof
have likewise decided on the issue, with in-depth discussion of the facts pertaining to the issue and the
rationale for the courts’ rulings.

Failure to file a pre-trial brief within the time prescribed by the Rules of Court constitutes sufficient
ground for dismissal of an action.

Section 4, Rule 18 of the Rules of Court provides that it is the duty of the parties and their counsel to
appear at the pre-trial. The effect of their failure to do so is provided in Section 5 of Rule 18, particularly:

Sec. 5. Effect of failure to appear. – The failure of the plaintiff to appear when so required pursuant to the
next preceding section shall be cause for dismissal of the action. The dismissal shall be with prejudice,
unless otherwise ordered by the court. A similar failure on the part of the defendant shall be cause to
allow the plaintiff to present his evidence ex parte and the court to render judgment on the basis thereof.
(Emphasis ours)

Under Section 6, Rule 18, the failure to file a pre-trial brief when required by law produces the same
effect as failure to attend the pre-trial, to wit:

Sec. 6. Pre-trial brief. – The parties shall file with the court and serve on the adverse party, in such
manner as shall ensure their receipt thereof at least three (3) days before the date of the pre-trial, their
respective pre-trial briefs which shall contain, among others:

x x x x

Failure to file the pre-trial brief shall have the same effect as failure to appear at the pre-trial. (Emphasis
ours)

On the basis of the foregoing, the trial court clearly had a valid basis when it ordered the dismissal of the
petitioners’ action. Still, petitioners assail the trial court’s dismissal of their case, invoking a liberal
interpretation of the rules.

Instructive on this point are the guidelines we applied in Bank of the Philippine Islands v. Dando,27
wherein we cited the reasons that may provide a justification for a court to suspend a strict adherence to
procedural rules, namely: (a) matters of life, liberty, honor or property; (b) the existence of special or
compelling circumstances; (c) the merits of the case; (d) a cause not entirely attributable to the fault or
negligence of the party favored by the suspension of the rules; (e) a lack of any showing that the review
sought is merely frivolous and dilatory; and (f) the fact that the other party will not be unjustly prejudiced
thereby.28 Upon review, we have determined that these grounds do not concur in this action.

A review of the factual antecedents indicate that the dismissal of the action for specific performance has
not caused any injustice to the petitioners, barring any special or compelling circumstances that would
warrant a relaxation of the rules. The alleged agreement between PDCP Bank and the petitioners on the
purchase by the latter’s recommended buyers of the foreclosed properties at a specified amount
deserves scant consideration for being unsupported by sufficient proof especially since said supposed
agreement was vehemently denied by the bank. What the records merely adequately establish is the
petitioners’ failure to satisfy their obligation to the bank, leading to the foreclosure of the mortgage
constituted to secure it, the sale of the foreclosed properties and the failure of the petitioners to make a
timely redemption thereof. In the 1999 case of Suico which also involves herein parties, we have thus
declared that when the petitioners failed to pay the balance of the secured loan and thereafter failed to
redeem the mortgaged properties, title to the property had already been transferred to PDCP Bank,
which had the right to possess the property based on its right of ownership as purchaser of the
properties in the foreclosure sale. These even led us to declare that the petitioners undertook a
procedural misstep when they filed a suit for specific performance, injunction and damages instead of a
petition to set aside the sale and cancellation of the writ of possession as provided under Section 8 of
Act No. 3135.

The petitioners’ allegations on their desire and efforts to negotiate during the pre-trial conference, and
the argument that the case should have just been suspended instead of dismissed for said reason by the
trial court, were only first raised by the petitioners through their new counsel in their reply, and merit no
consideration at this point. Furthermore, nowhere in the records is it indicated or supported that such
antecedents transpired or were made known by the parties to the courts below.

In affirming the dismissal of petitioners’ case for their disregard of the rules on pre-trial, we emphasize
this Court’s ruling in Durban Apartments Corporation v. Pioneer Insurance and Surety Corporation29 on
the importance and the nature of a pre-trial, to wit:

Everyone knows that a pre-trial in civil actions is mandatory, and has been so since January 1,
1964.1âwphi1 Yet to this day its place in the scheme of things is not fully appreciated, and it receives but
perfunctory treatment in many courts. Some courts consider it a mere technicality, serving no useful
purpose save perhaps, occasionally to furnish ground for non-suiting the plaintiff, or declaring a
defendant in default, or, wistfully, to bring about a compromise. The pre-trial is not thus put to full use.
Hence, it has failed in the main to accomplish the chief objective for it: the simplification, abbreviation
and expedition of the trial, if not indeed its dispensation. This is a great pity, because the objective is
attainable, and with not much difficulty, if the device were more intelligently and extensively handled.

x x x x

Consistently with the mandatory character of the pre-trial, the Rules oblige not only the lawyers but the
parties as well to appear for this purpose before the Court, and when a party "fails to appear at a pre-
trial conference, (he) may be non-suited or considered as in default." The obligation "to appear" denotes
not simply the personal appearance, or the mere physical presentation by a party of one’s self, but
connotes as importantly, preparedness to go into the different subjects assigned by law to a pre-trial x x
x.30 (Emphasis ours)

In addition to the foregoing, this Court finds no cogent reason to liberally apply the rules considering that
the petitioners and their counsel had not offered sufficient justification for their failure to file the required
pre-trial brief. As held by this Court in Lapid v. Judge Laurea,31 concomitant to a liberal application of the
rules of procedure should be an effort on the part of the party invoking liberality to at least explain its
failure to comply with the rules.32 Members of the bar are reminded that their first duty is to comply with
the rules of procedure, rather than seek exceptions as loopholes. Technical rules of procedure are not
designed to frustrate the ends of justice. These are provided to effect the prompt, proper and orderly
disposition of cases and thus effectively prevent the clogging of court dockets. Utter disregard of these
rules cannot justly be rationalized by harking on the policy of liberal construction.33

The failure to file the pre-trial brief is then attributable to the fault or negligence of petitioners’ counsel.
The settled rule is that the negligence of a counsel binds his clients. Neither counsel nor his clients can
now evade the effects thereof by invoking that the failure amounts to an inexcusable negligence which,
by jurisprudence, should not bind the parties. It is absurd for a counsel to emphasize on the gravity of
his own inaction and then invoke the same misfeasance to evade the consequences of his act.
Furthermore, the claim of petitioners’ counsel that his failure to file a pre-trial brief may be regarded as
an inexcusable negligence is inconsistent with his plea for the court to consider the fact that he attended
the scheduled pre-trial conference but only needed more time to file the pre-trial brief. As in the case of
Air Phils. Corp. v. Int’l. Business Aviation Services Phils., Inc.,34 there was in this case a simple, not
gross, negligence. There was only a plain "disregard of some duty imposed by law," a slight want of care
that "circumstances reasonably impose," and a mere failure to exercise that degree of care that an
ordinarily prudent person would take under the circumstances. There was neither a total abandonment
or disregard of the petitioners’ case nor a showing of conscious indifference to or utter disregard of
consequences. Again, axiomatic is the rule that negligence of counsel binds the client.

Petitioners attempt to confuse the issues by citing the respondents’ own prior delay in the filing of
pleadings and the leniency accorded to them by the trial court in still later admitting their pleadings.
Significantly, however, such matter on the court’s admission of the respondents’ pleadings, though
belatedly filed, depended on the sound discretion of the court, the circumstances then attending the
case and the particular consequences provided by law for the non-filing of the pleadings. Petitioners
could not expect the trial court to rule similarly in all incidents, Cj considering that factual circumstances
and results of the parties' actions vary in each issue. In addition, if the petitioners believed that the trial
court gravely abused its discretion in admitting the respondents' pleadings, then they should have
availed of the remedies available to them to question the trial court's orders, rather than wrongfully
including the said matters at the first instance in the appeal from the case's dismissal.

WHEREFORE, premises considered, the instant petition is hereby DENIED. The Decision dated January
16, 2006 and Resolution dated April 11, 2007 of the Court of Appeals in CA-G.R. SP No. 78676
upholding the Regional Trial Court, Mandaue City, Branch 28's dismissal of petitioners' action for
specific performance, injunction and damages are hereby

AFFIRMED.

SO ORDERED.