Llanera vs. Lopos

An action to recover property illegally adjudicated in a closed intestate proceeding, grounded on fraud by the defendants in misrepresenting themselves as the sole heirs, is an action in personam that may be filed at the residence of the plaintiff or any defendant, and prescribes in four years from discovery of the fraud — not as an estate-settlement proceeding subject to the venue rules of Rule 75, nor as an action for rescission based on lesion under Article 1100 of the Civil Code.

Gorgonio Llanera died single and intestate on October 13, 1942, leaving insurance proceeds amounting to $5,150.00. At the request of Remedios Ayque Altavano, who claimed kinship with the deceased, intestate proceedings were instituted in the Court of First Instance of Albay on January 22, 1948, with Elias Ayque appointed as administrator. The proceedings concluded with a distribution of the estate balance among maternal relatives of the deceased and were declared closed and terminated on May 28, 1949. Unknown to those proceedings, the deceased had a brother, Zacarias Llanera, who had predeceased him on June 19, 1935, leaving a son, Eligio, born on July 17, 1925 in Sta. Rosa, Laguna.

Gorgonio Llanera died single and intestate on October 13, 1942, leaving an estate consisting of the proceeds of an insurance policy amounting to $5,150.00. Upon the request of Remedios Ayque Altavano, who claimed to be a relative of the deceased, a petition for settlement of his estate was filed in the Court of First Instance of Albay on January 22, 1948, and Elias Ayque was appointed administrator. After hearing, the court found that the deceased died without parents, brothers, sisters, nephews, or nieces, but left two groups of maternal relatives: Ana, Eustaquio, Julia, and Maximina, all surnamed Lopos, who were brothers and sisters of Aniceta Lopos (the mother of Gorgonio), and Casiana, Teodoro, Petronilo, Cenen, Felix, Sotero, and Ambrosia, all surnamed Lopos, who were first-degree cousins of the deceased, being children of a brother and sister of Aniceta Lopos. After all expenses of administration were paid, the court ordered the balance distributed among these heirs — the first group receiving ₱1,188.00 each, and the second group receiving ₱1,188.00 each per stirpes. On May 28, 1949, the court ordered the closure and termination of the proceedings.

It later developed that the deceased had a brother named Zacarias who had died on June 19, 1935, leaving a son, Eligio Llanera, born in Sta. Rosa, Laguna on July 17, 1925. In 1953, Eligio learned that his uncle Gorgonio had died leaving an insurance policy whose proceeds had been distributed in the intestate proceedings in Albay and adjudicated to persons not entitled thereto. On September 30, 1954, Eligio filed a motion in those proceedings to assert his claim as the sole heir, but later withdrew it, intending to file a separate civil action for the vindication of his right in the proper court.

On February 21, 1955, Eligio commenced the present action in the Court of First Instance of Laguna to recover the proceeds of the insurance policy against those to whom they had been adjudicated, alleging that the defendants misrepresented themselves as the only heirs of the deceased when they knew that a nephew was alive and solely entitled to inherit. Although the defendants were duly served with summons, except one, only Elias Ayque answered the complaint; the rest were declared in default upon plaintiff's motion. The case was called for trial, but not even Elias appeared, and the court allowed the plaintiff to present his evidence. On February 18, 1957, however, the court rendered a decision dismissing the complaint on the ground that venue was improperly laid and that the cause of action had already prescribed.

• Venue: Whether the Court of First Instance of Laguna was the proper venue for an action to recover property illegally adjudicated in intestate proceedings that had already been closed and terminated in the Court of First Instance of Albay.
• Prescription: Whether the plaintiff's action to recover property based on fraud had already prescribed when it was filed on February 21, 1955.

• Venue: Yes. The action was in personam, not a continuation of estate-settlement proceedings, and could be filed at the residence of the plaintiff or any of the defendants at the election of the plaintiff pursuant to Section 1, Rule 5 of the Rules of Court.
• Prescription: No. The action was one to recover property based on fraud, prescribing in four years from discovery of the fraud under Section 43, paragraph 3 of Act 190; since the fraud was discovered in 1953 and the action was filed in 1955, the prescriptive period had not yet lapsed.

• Venue: The trial court's reasoning was flawed because it presupposed that the instant action was for the settlement of the estate of Gorgonio Llanera. The estate had already been settled by the CFI of Albay, and the proceedings had been declared closed and terminated on May 28, 1949. The present action was instead to recover property illegally adjudicated to the defendants on the ground of fraud. Being an action in personam, it could be filed either at the residence of any of the defendants or at the residence of the plaintiff, at the election of the latter, under Section 1, Rule 5 of the Rules of Court. The plaintiff chose to institute the action in the CFI of Laguna, where he resided, making venue properly laid. The exclusive-jurisdiction rule of Rule 75 over estate-settlement proceedings did not apply because the estate proceedings were already closed.

• Prescription: The trial court erroneously applied Article 1100 of the Civil Code, which provides that actions for rescission on account of "lesion" prescribe after four years from the time the partition was made. The present action was not for rescission of a contract based on lesion but an action to recover property based on fraud. Under Section 43, paragraph 3 of Act 190, an action based on fraud prescribes in four years from the discovery of the fraud. As alleged in the complaint, the fraud was discovered only in 1953, and the action was brought in 1955, well within the prescriptive period. The dismissal on the ground of prescription was therefore erroneous.

• Nature of action determines venue and prescription — The character of an action as in personam or in rem, and as one for fraud or for rescission based on lesion, determines both the proper venue and the applicable prescriptive period. An action to recover property illegally adjudicated in closed intestate proceedings, grounded on the defendants' fraudulent misrepresentation that they were the sole heirs, is an action in personam for recovery based on fraud — not a continuation of estate-settlement proceedings subject to Rule 75's venue rules, nor an action for rescission based on lesion under Article 1100 of the Civil Code. As an action in personam, venue lies at the residence of the plaintiff or any defendant at the plaintiff's election (Section 1, Rule 5, Rules of Court). As an action based on fraud, it prescribes in four years from discovery of the fraud (Section 43, paragraph 3, Act 190).

• "The flaw we find in this reasoning is that is presuposes that the instant action is for the settlement of the estate of the deceased Gorgonio Llanera. Such is not the case for his estate has already been settled by the Court of First Instance of Albay so much so that the proceedings were declared closed and terminated on May 28, 1949." — This passage articulates the ratio decidendi on the venue issue, distinguishing a recovery action from estate-settlement proceedings and establishing that the closure of the latter removes the exclusive-jurisdiction bar.

• "Again, we find this reasoning incorrect, for it overlooks the fact that the present action is not for rescission of a contract based on 'lesion' but an action to recover property based on fraud which under our law may be filed within a period of four years from the discovery of the fraud." — This passage defines the controlling distinction between an action for rescission based on lesion and an action for recovery based on fraud, fixing the applicable prescriptive period at four years from discovery.

• Section 1, Rule 5, Rules of Court — Provides that an action in personam may be filed at the residence of the plaintiff or any of the defendants, at the election of the plaintiff. Applied to hold that venue was properly laid in the CFI of Laguna, where the plaintiff resided, because the action was in personam and not an estate-settlement proceeding.
• Rule 75, Rules of Court — Provides that the CFI of the province where the decedent resided at the time of death has exclusive jurisdiction over estate-settlement proceedings. Distinguished and held inapplicable because the estate had already been settled and the proceedings closed.
• Section 4, Rule 74, Rules of Court — Provides that an heir deprived of lawful participation in summary settlement of an estate should file a petition within two years after settlement and distribution. Referenced by the trial court but found inapplicable to the present action, which was not a petition within summary-settlement proceedings but a separate civil action for recovery based on fraud.
• Article 1100, Civil Code — Provides that actions for rescission on account of "lesion" prescribe after four years from the time the partition was made. Erroneously applied by the trial court; held inapplicable because the action was not for rescission based on lesion but for recovery of property based on fraud.
• Section 43, paragraph 3, Act 190 — Provides that actions based on fraud prescribe in four years from the discovery of the fraud. Applied as the correct prescriptive provision; since the fraud was discovered in 1953 and the action was filed in 1955, the prescriptive period had not yet lapsed.

Paras, C.J., Bengzon, Padilla, Montemayor, Labrador, Concepcion, Endencia, and Barrera, JJ., concurred.