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G.R. No. 194272. February 15, 2017.*

SPOUSES AMADO O. IBAÑEZ and ESTHER R. IBAÑEZ,

petitioners, vs. JAMES HARPER as Representative of the Heirs of
FRANCISCO MUÑOZ, SR., the REGISTER OF DEEDS OF
MANILA and the SHERIFF OF MANILA, respondents.

Interest; Words and Phrases; “Interest,” within the meaning of the

rule, means material interest, an interest in issue and to be affected by the
decree, as distinguished from mere interest in the question involved, or a
mere incidental interest.—“Interest,” within the meaning of the rule, means
material interest, an interest in issue and to be affected by the decree, as
distinguished from mere interest in the question involved, or a mere
incidental interest.
Remedial Law; Civil Procedure; Substitution of Parties; The rationale
behind the rule on substitution is to apprise the heir or the substitute that he
is being brought to the jurisdiction of the court in lieu of the deceased party
by operation of law.—The rationale behind the rule on substitution is to
apprise the heir or the substitute that he is being brought to the jurisdiction
of the court in lieu of the deceased party by operation of law. It serves to
protect the right of every party to due process. It is to ensure that the
deceased party would continue to be properly represented in the suit through
the duly appointed legal representative of his estate. Noncompliance with
the rule on substitution would render the proceedings and the judgment of
the trial court infirm because the court acquires no jurisdiction over the
persons of the legal representatives or of the heirs on whom the trial and the
judgment would be binding. Nevertheless, there are instances when formal
substitution may be dispensed with. In Vda. de Salazar v. Court of Appeals,
250 SCRA 305 (1995), we ruled that the defendant’s failure to effect a
formal substitution of heirs before the rendition of judgment does not
invalidate the court’s judgment where the heirs themselves appeared before
the trial court, participated in the proceedings, and presented evidence in
defense of the deceased defendant. The court there found it unde-

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* THIRD DIVISION.

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niably evident that the heirs themselves sought their day in court and
exercised their right to due process.
Same; Same; Same; In Berot v. Siapno, 729 SCRA 475 (2014), the
Supreme Court (SC) ruled that the continued appearance and participation
of Rodolfo, the estate’s representative, in the proceedings of the case
dispensed with the formal substitution of the heirs in place of the deceased.
—Similarly, in Berot v. Siapno, 729 SCRA 475 (2014), we ruled that the
continued appearance and participation of Rodolfo, the estate’s
representative, in the proceedings of the case dispensed with the formal
substitution of the heirs in place of the deceased. Here, while there may
have been a failure to strictly observe the provisions of the rules and there
was no formal substitution of heirs, the heirs of Francisco, represented by
James, voluntarily appeared and actively participated in the case,
particularly in the enforcement of the Hatol. As the records show, they have
filed multiple pleadings and moved several times to implement the Hatol to
protect Francisco’s interest. Following our rulings in Vda. de Salazar and
Berot, a formal substitution of parties is no longer required under the
circumstances. The trial court therefore committed grave abuse of discretion
when it declared that Harper cannot be made a party in the case because of
the lack of a valid substitution. Its refusal to recognize Francisco’s heirs
deprived them of the opportunity to exact compliance with whatever rights
they may have under the terms of the Amended Compromise Agreement.
Civil Law; Contracts; Compromise Agreements; Words and Phrases; A
compromise agreement is a contract whereby the parties, make reciprocal
concessions to avoid a litigation or put an end to one already commenced.
—A compromise agreement is a contract whereby the parties, make
reciprocal concessions to avoid a litigation or put an end to one already
commenced. In a compromise, the parties adjust their difficulties in the
manner they have agreed upon, disregarding the possible gain in litigation
and keeping in mind that such gain is balanced by the danger of losing. It
encompasses the objects stated, although it may include other objects by
necessary implication. It is binding on the contractual parties, being
expressly acknowledged as a juridical agreement between them, and has the
effect and authority of res judicata.

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Same; Obligations; Joint Obligations; As defined in Article 1208, a

joint obligation is one where there is a concurrence of several creditors, or
of several debtors, or of several creditors and debtors, by virtue of which
each of the creditors has a right to demand, and each of the debtors is
bound to render compliance with his proportionate part of the prestation
which constitutes the object of the obligation.—As defined in Article 1208,
a joint obligation is one where there is a concurrence of several creditors, or
of several debtors, or of several creditors and debtors, by virtue of which
each of the creditors has a right to demand, and each of the debtors is
bound to render compliance with his proportionate part of the
prestation which constitutes the object of the obligation. Each debtor
answers only for a part of the whole liability and to each obligee belongs
only a part of the correlative rights as it is only in solidary obligations
that payment made to any one of the solidary creditors extinguishes the
entire obligation. This means that Francisco, Ma. Consuelo and Consuelo
are each entitled to equal shares in the P3,000,000 agreed upon in the
Amended Compromise Agreement and that payment to Consuelo and Ma.
Consuelo will not have the effect of discharging the obligation with respect
to Francisco.

AMENDED PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Zerrudo Law Office for petitioners.
Roberto Bermejo for respondents.

JARDELEZA, J.:

This is an Amended Petition for Review on Certiorari1 under

Rule 45 of the Revised Rules of Court assailing the Decision2 dated
October 29, 2009 (assailed Decision) and Resolu-

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1 Rollo, pp. 146-178.

2 Id., at pp. 10-24, penned by Associate Justice Vicente S.E. Veloso, with
Associate Justices Andres B. Reyes, Jr. and Marlene Gonzales-Sison, concurring.

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tion3 dated September 29, 2010 (assailed Resolution) of the Court of

Appeals (CA) in C.A.-G.R. S.P. No. 98623. The CA set aside the
Orders dated August 11, 20064 and February 20, 20075 and
reinstated the Order dated March 24, 20066 of the Regional Trial
Court (RTC) of Manila, Branch 40, in Civil Case No. 97-86454.

Sometime in October 1996, spouses Amado and Esther Ibañez

(spouses Ibañez) borrowed from Francisco E. Muñoz, Sr.
(Francisco), Consuelo Estrada (Consuelo) and Ma. Consuelo E.
Muñoz (Ma. Consuelo) the amount of P1,300,000, payable in three
months, with interest at the rate of 3% a month.7
On October 14, 1996, the spouses Ibañez issued a Promissory
Note8 binding themselves jointly and severally to pay Ma. Consuelo
and Consuelo the loan amount with interest, to wit:

FOR VALUE RECEIVED, I jointly and severally, promise to pay to

MA. CONSUELO E. MUÑOZ & CONSUELO C. ESTRADA, at their
office at x x x, the principal sum of ONE MILLION THREE HUNDRED
THOUSAND PESOS ONLY (P1,300,000.00), Philippine Currency, with
interest thereon at the rate of three percent (3%) per month, subject to one
(1%) percent penalty if not paid on monthly due date. Interest not paid when
due shall be added to and become part of the principal and shall likewise
bear interest at the same rate compounded monthly. Payable within a period
of three (3) months from the date hereof, beginning Nov. 14, 1996 and every

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3 Id., at pp. 37-39.

4 Id., at pp. 125-126.
5 Id., at pp. 127-128.
6 Id., at pp. 208-209.
7 Records Vol. I, p. 5.
8 Id., at pp. 18-19.

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month thereafter, until the whole sum of principal and interest shall have
been fully paid.
Upon default of three (3) monthly installments when due, all the other
installments shall become due and payable. Interest not paid when due shall
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be added to, and become part of the principal and shall likewise bear interest
at the same rate, compounded monthly.9

As security, on October 17, 1996, the spouses Ibañez executed a

Deed of Real Estate Mortgage10 in favor of Ma. Consuelo and
Consuelo over a parcel of land and its improvements covered by
Transfer of Certificate Title (TCT) No. 202978. The mortgage
contained the same terms as the promissory note. It further
stipulated that Ma. Consuelo and Consuelo shall have the right to
immediately foreclose the mortgage upon the happening of the
following events: (1) filing by the mortgagor of any petition for
insolvency or suspension of payment; and/or (2) failure of the
mortgagor to perform or comply with any covenant, agreement, term
or condition of the mortgage.11
On September 23, 1997, alleging that the conditions of the
mortgage have been violated since November 17, 1996 and that all
check payments were dishonored by the drawee, Ma. Consuelo and
Consuelo applied for foreclosure of the real estate mortgage.12
On December 8, 1997, the spouses Ibañez filed in the RTC of
Manila a Complaint13 for injunction and damages with prayers for
writ of preliminary injunction and temporary restraining order
against Francisco, Ma. Consuelo, Consuelo, the Clerk of Court and
Ex-Officio Sheriff, Sheriff-in-Charge and Register of Deeds of the
City of Manila. Docketed as Civil

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9 Id., at p. 18.
10 Id., at pp. 20-23.
11 Id., at p. 21.
12 Id., at pp. 24-25.
13 Id., at pp. 3-14.

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Case No. 97-86454, the Complaint alleged that there is no reason to

proceed with the foreclosure because the real estate mortgage was
novated.14 They prayed that the public auction of the property be
enjoined and that Francisco, Ma. Consuelo and Consuelo be held
liable for actual and compensatory, moral and exemplary damages,
as well as attorney’s fees and costs of suit.15

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On December 12, 1997, the spouses Ibañez filed an Amended

Complaint.16 They alleged that the public auction was conducted,
with Francisco, Ma. Consuelo and Consuelo as the highest bidders17
and prayed that the Ex-Officio Sheriff and the Sheriff-in-Charge be
enjoined from executing the certificate of sale in favor of Francisco,
Ma. Consuelo and Consuelo. In the event the certificate of sale is
already issued, they alternatively prayed for that the Register of
Deeds of Manila be enjoined from registering the certificate of
sale.18
On December 16, 1997, the RTC issued a status quo order.19
On June 11, 2002, the parties filed a Joint Motion for Approval
of Amended Compromise Agreement.20 The Amended Compromise
Agreement,21 signed by the spouses Ibañez and Francisco, for
himself and on behalf of Ma. Consuelo and Consuelo, reads:

AMENDED COMPROMISE AGREEMENT

PARTIES PLAINTIFFS and DEFENDANTS, assisted by their

respective counsels, unto this Honorable Court, most respectfully submit
this AMENDED COMPROMISE AGREEMENT, to wit:

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14 Id., at p. 7.
15 Id., at pp. 11-12.
16 Id., at pp. 31-43.
17 Id., at p. 39.
18 Id., at pp. 39-40.
19 Id., at p. 60.
20 Id., at pp. 309-310.
21 Id., at pp. 311-314.

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I- STIPULATIONS OF THE PARTIES:

1.1. On October 16, 1996, plaintiffs obtained a loan from the
defendants, in the principal amount of P1,300,000.00, with interest
thereon, payable within three (3) months therefrom;
1.2. The loan has been secured by a Real Estate Mortgage,
constituted on a parcel of land, situated in the District of Singalong,
Malate, Manila, containing an area of 135.70 Square Meters,
registered in the name of Amado O. Iba[ñ]ez, married to Esther R.

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Iba[ñ]ez, embraced under Transfer Certificate of Title No.

[202978], of the Registry of Deeds for the City of Manila;
1.3. Thereafter, the mortgage was extrajudicially foreclosed by
the defendants, for failure to pay the loan obligation, plus interests
due thereon, within the agreed period;
1.4. The property in question was not redeemed within the
period prescribed by law. Hence, on December 10, 1997, after
Notice, the Office of the Clerk of Court and Ex-Officio Sheriff of
Manila, sold the same property at public auction where defendant
Francisco E. Muñoz, Sr. was the highest bidder;
1.5. However, the Certificate of Sale, was not issued in view of
the institution by plaintiffs of the present case.
II- TERMS AND CONDITIONS:
2.1. The plaintiffs shall pay unto the defendants, the total sum of
THREE MILLION PESOS (P3,000,000.00), Philippine Currency,
portion of which shall be paid through the proceeds of a real estate
loan, being secured from the Government Service In-

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surance System (GSIS), and the remaining balance, from such other
sources determined by the plaintiffs, subject to the conformity of the
defendants;
2.2. The defendants accept, as initial payment, the amount of
PESOS: TWO MILLION (P2,000,000.00) Philippine Currency,
from the proceeds of the said real estate loan to be released by the
Government Service Insurance System (GSIS), which amount is
hereby unconditionally committed by the plaintiffs to be paid in full
to the defendants, immediately upon release thereof, or within a
period of three (3) months from date of this agreement;
2.3. The amount to be released by the Government Service
Insurance System (GSIS), representing proceeds of the above stated
loan shall be assigned by the plaintiffs, in favor of the defendants,
upon execution of this agreement;
2.4. The remaining balance of the total obligation stated in
paragraph 2.1 above, amounting to One Million (P1,000,000.00),
shall be payable within one (1) year from date hereof, with
interest at the rate of two (2%) per month, and to be secured by a
real estate mortgage, to be constituted on a property registered in
the names of the plaintiffs, situated at Puerto Azul, Brgy. Zapang,
Ternate, Cavite, identified as Lot 1-J of the subdivision plan Psd-
04-133674, portion of Lot 1, (LRC) Psd-88692, L.R.C. Record

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No. N-33296, containing an area of Twenty (20) hectares, more or

less;
2.5. In the event, that the above mentioned GSIS loan
application will not materialize, parties hereby agree to immediately

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cause the lifting or recall of the Order issued by this

Honorable Court, on December 16, 1997. Thereafter, the defendants shall
immediately cause the issuance of the Certificate of Sale over the subject
property in their favor, and the plaintiffs agree not to further delay the same,
with any Court action or otherwise;
2.6. Parties hereby agree to WAIVE such other claims by one party
against the other, relative to or connected with the instant case;
2.7. In the event of failure of the plaintiffs to comply with any of the
terms and conditions of this agreement, the defendants shall be entitled to a
Writ of Execution, to implement this agreement of the parties.
IN WITNESS WHEREOF, parties have hereunto signed this
Compromise Agreement, this x x x, in the City of Manila.

(Signed)
(Signed) AMADO O.
FRANCISCO E. MUÑOZ, SR. Defendant For himself
IBAÑEZ Plaintiff
and on behalf of his Codefendants
(Signed) ESTHER R.
IBAÑEZ Plaintiff

ASSISTED BY:

(Signed)
(Signed) ATTY. PROSPERO A. ANAVE
ATTY. CESAR G. VIOLA
Counsel for the Defendants
Counsel for the Plaintiffs

x x x22 (Emphasis and underscoring in the original)

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22 Id.

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On June 17, 2002, the RTC approved the Amended Compromise

Agreement and adopted it as its Hatol.23
On September 24, 2002, the spouses Ibañez manifested that: (1)
there will be a slight delay in their compliance due to new loan
requirements of the Government Service Insurance System
(GSIS);24 and (2) they have executed a Real Estate Mortgage25 dated
August 10, 2002 in favor of Ma. Consuelo and Consuelo over a
property covered by TCT No. T-77676, as per the parties’ Amended
Compromise Agreement.
On February 28, 2006, Atty. Roberto C. Bermejo (Atty.
Bermejo), representing himself as collaborating counsel for
Francisco, Ma. Consuelo and Consuelo, filed an Omnibus Motion
for Execution and Lifting of the Status Quo Order of December 16,
1997 and for the Issuance of Writ of Possession.26 Atty. Bermejo
alleged that the spouses Ibañez failed to comply with their obligation
under the Amended Compromise Agreement. Consequently, and
following the terms of the Amended Compromise Agreement, the
RTC’s status quo order must be lifted and a certificate of sale over
the subject property be immediately issued.27
On March 24, 2006, the RTC granted Atty. Bermejo’s motion. It
found that the spouses Ibañez have yet to pay the amount due, in
violation of the terms of the Amended Compromise Agreement.28
The Order dated March 24, 2006 reads:

WHEREFORE, in view of the foregoing, Order is issued: (1) lifting the

status quo order of December 16, 1997; (2) directing the issuance of a writ
of possession directing the private defendant[s] be placed in possession of
the subject property; and (3) directing the Office of the

_______________

23 Id., at pp. 315-318.

24 Id., at pp. 319-320.
25 Id., at pp. 321-322.
26 Id., at pp. 1-3.
27 Id., at pp. 1-2.
28 Id., at pp. 6-7.

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Sheriff of Manila to issue a certificate of sale in favor of the private

defendant[s].29 (Emphasis omitted)

The spouses Ibañez moved to reconsider30 this order on the

following grounds: (1) Francisco died in June 2004; (2) Atty.
Prospero A. Anave (Atty. Anave), counsel on record of Francisco,
Ma. Consuelo and Consuelo, failed to inform the court of such fact;
thus, there was no valid substitution of parties; and (3) Atty.
Bermejo had no authority to file the omnibus motion as it is without
knowledge, approval and consent of Atty. Anave.31
On June 15, 2006, the RTC granted the spouses Ibañez’ Motion
for Reconsideration.32 It held that: (1) Atty. Anave’s failure to report
Francisco’s death to the court for purposes of substitution rendered
the proceedings thereat null and void; (2) Atty. Anave’s subsequent
conformity to Atty. Bermejo’s actions did not cure the initial defect
in the filing of the Omnibus Motion; neither did it mean the
withdrawal, dismissal or substitution of Atty. Anave by Atty.
Bermejo; and (3) a formal entry of appearance with Atty. Anave’s
conformity is necessary before Atty. Bermejo can legally act as
collaborating counsel.
On June 29, 2006, the spouses Ibañez filed a Motion for the
Implementation of the Amended Compromise Agreement.33 They
argued that since there was no proper substitution of the heirs of
Francisco, the proper parties to substitute him are Ma. Consuelo and
Consuelo. They also argued that the Amended Compromise
Agreement had already been partially complied with: (1) they have
already executed a Deed of Assignment assigning to Ma. Consuelo
and Consuelo the proceeds of the GSIS loan pursuant to paragraph
2.3; and (2) on

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29 Id., at p. 7.
30 Id., at pp. 10-18.
31 Id., at p. 10.
32 Id., at pp. 104-105.
33 Id., at pp. 108-111.

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May 19, 2006, they have already executed the Real Estate Mortgage
provided under paragraph 2.4.34 They further allege that the delay in
the implementation of the assignment was due to the assignees’
failure to deliver to the GSIS the owner’s copy of TCT No. 202978
(the same lot which served as security for the Promissory Note
executed by the spouses Ibañez on October 14, 1996) and the
discharge of the corresponding Real Estate Mortgage executed by
the spouses Ibañez on October 17, 1996.
The spouses Ibañez thus prayed that the Amended Compromise
Agreement be considered initially implemented and that Ma.
Consuelo and Consuelo be ordered to surrender the owner’s copy of
TCT No. 202978 or to consider the title lost should the same not be
surrendered.35
On July 5, 2006, citing irreconcilable differences, Atty. Anave
filed his Notice of Withdrawal of Appearance36 as counsel for
Francisco, Ma. Consuelo and Consuelo.
On even date, Atty. Bermejo filed a Notice of Death37 of
Francisco and named James Harper (James) as Francisco’s legal
representative. Atty. Bermejo also filed his Entry of Appearance38 as
counsel for James, Ma. Consuelo and Consuelo.
On July 31, 2006, the spouses Ibañez filed a Motion to
Adopt/Consider the Judicial Compromise Agreement dated June 17,
2002 designated as “Hatol” as the Final and Executory Decision.39
The motion prayed that since all the stipulations in the Amended
Compromise Agreement have been complied with to the entire
satisfaction of all the contending parties, the Compromise
Agreement should be considered and

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34 Id., at pp. 110-111.

35 Id., at p. 111.
36 Id., at p. 121.
37 Id., at pp. 119-120.
38 Id., at p. 122.
39 Id., at pp. 125-130.

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adopted as the trial court’s decision on the merits.40 The motion was
signed by Amado Ibañez with the conformity of Consuelo, signing
for herself and Ma. Consuelo.41 Atty. Anave and the Branch Clerk of

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Court were notified of the hearing. Only Atty. Anave, Ma. Consuela
and Consuela were, however, furnished copies of the motion.42
In an Order dated August 11, 2006,43 the RTC granted the
spouses Ibañez’ motion, thus:

x x x It appearing that all the stipulations in the “Hatol,” dated June 10,
2002, have been complied with accordingly to the entire satisfaction of each
one of the contending parties and the terms and conditions set forth therein
were duly performed and satisfied. As prayed for, the said “Hatol,” dated
June 10, 2002, is considered, regarded and adopted as this Court’s decision
on the merits with finality which was approved by this Court on June 17,
2002.
SO ORDERED.44

On same date, the RTC issued an Order45 noting Atty. Anave’s

withdrawal as counsel and Atty. Bermejo’s entry of appearance.
On August 18, 2006, Ma. Consuela and Consuela filed a
Manifestation46 disclaiming Atty. Bermejo as their counsel and
naming Atty. Marigold Ana C. Barcelona (Atty. Barcelona) as their
counsel. Attached to the Manifestation is Atty. Barcelona’s Entry of
Appearance.47

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40 Id., at p. 129.
41 Id.
42 Id., at p. 130.
43 Id., at pp. 134-135.
44 Id.
45 Id., at p. 132.
46 Id., at pp. 138-139.
47 Id., at p. 140.

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On August 24, 2006, James, as Francisco’s legal representative,

and through Atty. Bermejo, sought reconsideration48 of the RTC’s
August 11, 2006 Order. He argued that the trial court erred in
holding that all the stipulations in the Hatol have been complied
with to the satisfaction of all the parties. According to James, the
spouses Ibañez made it appear that only Ma. Consuela and Consuela
remained as parties after Francisco’s death. Since James, as
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Francisco’s representative, was excluded from the Deed of

Assignment, the Amended Compromise Agreement could not have
been completely complied with.
On February 20, 2007, the RTC denied49 James’ motion for
reconsideration of the trial court’s August 11, 2006 Order, to wit:

A judicial compromise, once stamped with judicial approval becomes

more than a contract binding upon the parties and having the sanction of the
Court and entered as its determination of the controversy, it has the force
and effect and (sic) any other judgment. It has also the effect of res judicata
and it is immediately executory and not appeallable (sic).
In this case, the judicial compromise agreement entered into by the
parties was already approved by this Court in its HATOL, dated June 17,
2002 and considered it as its decision on the merits with finality. Therefore,
the same has become immediately final and executory and could no longer
be reconsidered and set aside.
Moreover, there is no reason to disturb this Court’s finding that all the
stipulations in the HATOL have already been complied with according to the
entire satisfaction of each one of the contending parties. James Harper
cannot be made a party thereto, there being no valid substitution of parties
made.

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48 Id., at pp. 143-146.

49 Id., at pp. 177-178.

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WHEREFORE, James Harper, through counsel’s motion for

reconsideration is DENIED for lack of merit.50 (Emphasis in the original,
citations omitted)

Aggrieved, the heirs of Francisco, identified as Maria C. Muñoz,

Angelina M. Crocker and Maria Elena M. Webster and represented
by James Harper, filed before the CA a Petition for Certiorari51
under Rule 65 of the Revised Rules of Court. They assailed the
Orders dated August 11, 2006 and February 20, 2007 of the trial
court and clarified that contrary to the findings of the trial court,
they are pushing for the execution of the Amended Compromise
Agreement. The heirs emphasized that under the terms of the
Compromise Agreement, the obligations of the spouses Ibañez are
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as follows: (1) To pay P2,000,000 to be sourced from the proceeds

of a GSIS loan and released three months from the date of the
agreement; and (2) to pay P1,000,000 within one year from the date
of the agreement and secured by a real estate mortgage on the
spouses Ibañez’ property in Puerto Azul. The heirs are of the view
that since the spouses Ibañez have not complied with any of the
foregoing stipulations, the December 16, 1997 status quo order of
the trial court should already be lifted. They likewise argue that the
trial court gravely and seriously erred when it disregarded Francisco
and his heirs by holding that there was no proper substitution of
parties.52
Meanwhile, on April 17, 2007, the spouses Ibañez filed a Motion
for Execution53 and prayed that Ma. Consuelo and Consuelo be
ordered to surrender to them the owner’s copy of TCT No. 202978.
In case of failure to surrender, they alternately prayed that the
Register of Deeds of Manila be ordered

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50 Id., at p. 178.
51 Id., at pp. 193-203.
52 Id., at pp. 197-202.
53 Id., at pp. 183-186.

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to declare the owner’s copy lost for purposes of subsequent

reconstitution.54
On May 18, 2007, James filed his Opposition55 to the Motion for
Execution and moved to suspend further proceedings in the trial
court due to the pendency of his petition for certiorari in the CA.
On May 31, 2007, the trial court issued its Order56 granting the
Motion for Execution and denying James’ motion to suspend.
According to the trial court, there was no valid substitution; thus, it
did not acquire jurisdiction over James. On June 26, 2007, the trial
court issued a Writ of Execution.57
On September 20, 2007, Sheriff Gavin P. Reyala (Sheriff Reyala)
filed his Return58 indicating that Consuelo failed to surrender the
owner’s copy of TCT No. 202978 as it was allegedly in James’
possession. Thus, the Registry of Deeds of Manila, in compliance
with the Writ of Execution, issued a new owner’s copy of TCT No.
202978 which Sheriff Reyala delivered to the spouses Ibañez.

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On October 29, 2009, the CA resolved James’ petition for

certiorari, the dispositive portion of which states:

WHEREFORE, the instant petition is GRANTED. Setting aside the

assailed Orders dated August 11, 2006 and February 20, 2007, the RTC’s
March 24, 2006 Order granting the February 28, 2006 Omnibus Motion for
Execution and the Lifting of the RTC’s December 16, 1997 Status Quo
Order is hereby Reinstated.
SO ORDERED.59 (Emphasis in the original)

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54 Id., at pp. 184-185.

55 Id., at pp. 205-207.
56 Id., at pp. 234-235.
57 Id., at pp. 241-242.
58 Id., at p. 275.
59 Rollo, p. 23.

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The CA ruled that the Amended Complaint and the Hatol

identified Francisco, Ma. Consuelo and Consuelo as the creditors
and the parties who were supposed to receive the proceeds of the
Amended Compromise Agreement. Since the Deed of Assignment
was executed only in favor of Ma. Consuelo and Consuelo, the loan
obligation of the spouses Ibañez to Francisco remained unsettled.
The heirs of Francisco thus retain the right to invoke paragraph 2.5
of the Compromise Agreement which provides for the lifting of the
trial court’s status quo order.60 The CA disagreed that there was no
valid substitution of parties and noted from the records that the RTC
was notified of Francisco’s death on June 29, 2006. The late filing of
the notice of death did not divest the RTC of jurisdiction to
favorably act on the heirs’ motion to lift the status quo order and
issue the writ of execution. Based on Section 16, Rule 3 of the
Revised Rules of Court, it is the counsel, not the heirs of the
deceased, who will be penalized for the failure to comply with the
duty to notify the court of the client’s death.61
The CA denied the spouses Ibañez’ Urgent Motion for
Reconsideration62 via its assailed Resolution.
Hence, this petition. The issues presented are:
1. Whether Francisco was a real party-in-interest;

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2. Whether there was valid substitution of parties; and

3. Whether all the provisions of the Amended Compromise
Agreement have been complied with.

II

In their Amended Petition for Review on Certiorari,63 the

spouses Ibañez claim that neither James nor Francisco, the

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60 Id., at pp. 21-22.

61 Id., at pp. 22-23.
62 Id., at pp. 25-30.
63 Id., at pp. 146-178.

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Ibañez vs. Harper

person he seeks to substitute, are parties-in-interest in Civil Case No.

97-86454. As such, James has no personality to file the petition for
certiorari in the CA and the issue of whether Francisco was validly
substituted is moot and academic.64 Alternatively, the spouses
Ibañez argue that the CA erred in ruling that James has validly
substituted Francisco as the notice of death and substitution was
made beyond the mandatory 30-day period.65
Section 2, Rule 3 of the Revised Rules of Court provides:

Sec. 2. Parties-in-interest.—A real party-in-interest is the party who

stands to be benefited or injured by the judgment in the suit, or the party
entitled to the avails of the suit. Unless otherwise authorized by law or these
Rules, every action must be prosecuted or defended in the name of the real
party-in-interest.

“Interest,” within the meaning of the rule, means material

interest, an interest in issue and to be affected by the decree, as
distinguished from mere interest in the question involved, or a mere
incidental interest.66
In their Complaint and Amended Complaint, the spouses Ibañez
impleaded Francisco as a defendant and described him as the
capitalist. They also alleged that they took a loan from Francisco,
Ma. Consuelo and Consuelo.67 They also narrated that a public
auction over the mortgaged property was conducted where
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Francisco, Ma. Consuelo and Consuelo emerged as the highest

bidders.68
Further, attachments to the Complaint and Amended Complaint
show that Amado Ibañez and Francisco communicated

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64 Id., at pp. 170, 172-173.

65 Id., at pp. 170-172.
66 Republic v. Coalbrine International Philippines, Inc., G.R. No. 161838, April
7, 2010, 617 SCRA 491, 497.
67 Records Vol. I, pp. 3-5, 31-33.
68 Id., at p. 38.

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with each other regarding the payment of the loan.69 The Amended
Compromise Agreement, approved by the trial court and which
served as the basis for the Hatol, referred to the spouses Ibañez as
the plaintiffs while the defendants they covenanted to pay are
Francisco, Consuelo and Ma. Consuelo. It was signed by the spouses
Ibañez and Francisco, for himself and on behalf of Ma. Consuelo
and Consuelo.70 These facts indicate that Francisco has a material
interest in the case as it is in his interest to be paid the money he lent
the spouses Ibañez. Any judgment which will be rendered will either
benefit or injure Francisco; thus, he is a real party-in-interest.
We now resolve whether Francisco’s heirs have validly
substituted him as parties in the case.
Section 16, Rule 3 of the Revised Rules of Court provides:

Sec. 16. Death of party; duty of counsel.—Whenever a party to a

pending action dies, and the claim is not thereby extinguished, it shall be the
duty of his counsel to inform the court within thirty (30) days after such
death of the fact thereof, and to give the name and address of his legal
representative or representatives. Failure of counsel to comply with this duty
shall be a ground for disciplinary action.
The heirs of the deceased may be allowed to be substituted for the
deceased, without requiring the appointment of an executor or administrator
and the court may appoint a guardian ad litem for the minor heirs.
The court shall forthwith order said legal representative or
representatives to appear and be substituted within a period of thirty (30)
days from notice.

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If no legal representative is named by the counsel for the deceased party,

or if the one so named shall fail to appear within the specified period, the
court may order the opposing party, within a specified time, to procure

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69 Id., at pp. 27-28, 57-58.

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