Mutilan vs. Mutilan

When all interested parties are heirs and no third-party rights are impaired, the Shari'a District Court acting as a probate court may decide questions of title or ownership over properties for purposes of inclusion in or exclusion from the estate inventory; its decision is final, subject only to constitutional jurisdictional exceptions. Heirs of a decedent who were not parties to a sale and whose claimed interest is merely contingent are not real parties in interest to annul the deed, and failure to implead indispensable parties is a jurisdictional defect.

Cadidia Imam Samporna and Mahid Mira-ato Mutilan were married under Muslim law, with Mahid having a prior marriage to an Egyptian national that produced Mohammad M. Mutilan; Cadidia later consented to Mahid's marriages to Saphia Mutilan and Sauda Mutilan under Muslim law. The Code of Muslim Personal Laws vests in the Shari'a District Court exclusive original jurisdiction over the settlement of estates of deceased Muslims and makes its decisions final except when the original and appellate jurisdiction of the Supreme Court is affected. The properties at issue were registered in Cadidia's name, and the dispute concerns their treatment in the settlement of Mahid's estate.

Cadidia Imam Samporna married Mahid Mira-ato Mutilan under Muslim law in 1979. Prior to this marriage, Mahid had a previous marriage to an Egyptian national, with whom he begot a son, Mohammad M. Mutilan. In 1993, Cadidia allowed Mahid to marry Saphia Mutilan under Muslim law, and in 2003, Mahid, with Cadidia's consent, contracted another marriage with Sauda Mutilan under Muslim law. On December 6, 2007, while on his way to the Cagayan de Oro City airport, Mahid got into a vehicular crash and died.

On December 12, 1999, Cadidia bought two parcels of land and executed two Deeds of Absolute Sale with Rodolfo "Boy" Yu Diator, on behalf of his mother Alice Yu Diator. The first Deed involved a 1,111-square meter lot in Banggolo, Poblacion, Marawi City, covered by Transfer Certificate of Title No. T-406, worth P26,500,000.00. The second Deed involved a 739-square meter lot in Batoali, Poblacion, Marawi City, covered by Transfer Certificate of Title No. T-782, worth P6,800,000.00. The Deeds were notarized. On December 26, 1999, Cadidia executed two notarized Affidavits stating that the consideration for the two parcels exclusively came from her separate funds.

After Mahid's death, on April 8, 2008, Saphia filed a Petition for Judicial Settlement of the Estate of Mahid before the Shari'a District Court, Fourth Shari'a Judicial Court of Marawi City. On the same date, the Office of the Register of Deeds of Marawi City issued Transfer Certificate of Title No. T-4627 in Cadidia's name for the 1,111-square meter lot, and on April 28, 2008, Transfer Certificate of Title No. T-4631 was issued to Cadidia for the 739-square meter lot. On June 23, 2008, the Shari'a District Court appointed Cadidia as administratix of Mahid's entire estate. On October 15, 2008, it approved the inventory of Mahid's estate, excluding the two parcels in Cadidia's name. On January 30, 2009, the Shari'a District Court quashed the Writ of Possession over the two parcels, noting that both properties were titled in Cadidia's name.

On March 19, 2009, Saphia, Sauda, and Mohammad filed a Complaint before the Regional Trial Court of Marawi City seeking annulment of the Deeds of Absolute Sale and Certificates of Title issued in Cadidia's name, alleging they were spurious and illegally issued and that it was Mahid who bought the two parcels during his lifetime. Cadidia filed an Answer on April 14, 2009, raising special affirmative defenses and praying for dismissal. On January 25, 2010, Asliah Mutilan filed a Motion to Intervene and to Admit Attached Complaint-in-Intervention.

The Regional Trial Court found that the documentary evidence submitted by petitioners—an Acknowledgment Receipt issued by the seller to Mahid indicating P2 million as partial payment for the properties, the loan obtained by Mahid from one Engr. Cosain Dalidig, and various official receipts of a store in Wao—were immaterial and did not show any link to the two Deeds of Absolute Sale between respondent and the seller. It also found that the Deed of Absolute Sale was contracted as early as 1997 and possession was exercised by Cadidia without anybody assailing her ownership, including Mahid during his lifetime. Both the Regional Trial Court and the Court of Appeals did not give merit to petitioners' allegation of falsity of the Deeds of Absolute Sale.

• Provisional Nature of Probate Findings: Petitioners argued that the probate court's findings excluding the properties from the estate inventory are only provisional as to the issue of title and ownership.
• Real Party in Interest: Petitioners contended that because their rights as Mahid's heirs would be prejudiced, they have a right to institute the action to annul the Deeds of Absolute Sale.
• Non-Joinder of Indispensable Parties: Petitioners insisted that the non-joinder of indispensable parties is not a ground for the dismissal of their action.

• Probate Court's Competence: Respondent alleged that the probate court is competent to decide the question of ownership because the interested parties are all heirs.
• Real Party in Interest: Respondent argued that Mahid, from whom petitioners derived their rights, was not a party to the Deeds of Absolute Sale, and even if the Deeds were annulled, the real party in interest would be Mahid's estate; thus, the Petition should be dismissed because petitioners are not real parties in interest.
• Other Procedural Defects: Respondent claimed that the court cannot grant the relief prayed for, there was insufficient payment of docket fees, and the Complaint did not allege the assessed value of the real properties.

• Binding Effect of Shari'a District Court's Exclusion: Whether the Shari'a District Court's findings, which excluded the properties in respondent Cadidia Imam Samporna's name from the deceased's estate, are binding upon the deceased's other heirs such that they can no longer file a separate civil action to determine the ownership of the properties.
• Real Party in Interest: Whether petitioners Saphia, Sauda, and Mohammad Mutilan, who are heirs only of the deceased husband—not being party to the Deeds of Absolute Sale entered into by respondent wife—are real parties in interest in a Complaint seeking to annul the Deeds.
• Indispensable Parties: Whether petitioners' failure to implead the indispensable parties renders the case dismissible.

• Binding Effect of Shari'a District Court's Exclusion: Yes. Because all interested parties were heirs and no third-party rights were impaired, the Shari'a District Court, acting as probate court, could decide title for inclusion or exclusion; its decision was final, and petitioners' failure to contest the exclusion before it amounted to acquiescence.
• Real Party in Interest: No. Petitioners, not being parties or privies to the Deeds of Absolute Sale, are not real parties in interest; their claimed interest as heirs of Mahid is not a present substantial interest because Mahid was not shown to own the parcels titled in respondent's name.
• Indispensable Parties: Yes. Failure to implead indispensable parties—Diator, the seller, and Mahid's estate—is a jurisdictional defect; all lower court actions are void, and dismissal was proper because the case was already dismissed for lack of jurisdiction.

• Binding Effect of Shari'a District Court's Exclusion: The Code of Muslim Personal Laws, Article 143(b), grants the Shari'a District Court exclusive original jurisdiction over settlement of estates of deceased Muslims, and Article 145 makes its decisions final except when they affect the Supreme Court's original and appellate jurisdiction. While the general rule is that title should be determined in a separate action, exceptions allow the probate court to provisionally pass upon inclusion or exclusion from inventory and to decide ownership when all interested parties are heirs, or the question is collation or advancement, or the parties consent, and third-party rights are not impaired. Here, the Shari'a District Court, acting as probate court, approved an inventory excluding the two parcels and quashed the writ of possession over them because they were titled in Cadidia's name. All interested parties were heirs and no third-party rights were impaired, so the exception applied. Under Romero vs. Court of Appeals, the rule that probate determinations are provisional applies only between estate representatives and strangers; since petitioners and respondent were all heirs and parties in the settlement proceeding, petitioners should have contested the exclusion before the Shari'a District Court. Their failure to do so amounted to acquiescence, following Pacioles, Jr. vs. Chuatoco-Ching. Heirs of Reyes vs. Reyes was distinguished because there the properties remained titled in the names of the deceased and spouse, whereas here the parcels were titled in respondent's name alone. Torrens titles are conclusive, and the notarized Deeds of Absolute Sale are presumed valid, regular, and authentic; petitioners failed to prove falsity with clear, strong, and conclusive evidence. The genuineness of a deed is a question of fact not proper under Rule 45, and the trial court's factual findings, affirmed by the Court of Appeals, are conclusive.
• Real Party in Interest: Under Civil Code Article 1397, an action for annulment may be instituted by all who are obliged principally or subsidiarily, and under Article 1311 contracts take effect only between the parties, their assigns, and heirs. Petitioners do not claim to be heirs of any party to the Deeds of Absolute Sale; they claim as heirs of Mahid, but respondent, not Mahid, was the party to the sale. Thus, they are not privies to the Deeds and cannot question their validity. Rule 3, Section 2 requires every action to be prosecuted or defended in the name of the real party in interest, defined as the party who stands to be benefited or injured by the judgment or is entitled to the avails. A real party in interest must have a present substantial interest, not a mere expectancy or future, contingent, subordinate, or consequential interest. Stronghold Insurance Company, Inc. vs. Cuenca explained that the requirement prevents actions by persons without right or interest, ensures the actual party entitled to relief sues, avoids multiplicity of suits, and protects defendants from further suits. Petitioners were not vested with direct and substantial interest; they were not present real owners of the right sought to be enforced and claimed only as heirs of Mahid, who was not proven to have any right or interest in the parcels titled in respondent's name. The Regional Trial Court found that the Deed of Absolute Sale was contracted as early as 1997 and possession was exercised by respondent without anybody assailing her ownership, including Mahid during his lifetime; what Mahid did not assail during his lifetime cannot be assailed by his heirs upon his death. Persons having no material interest cannot invoke the court's jurisdiction, and a court does not acquire jurisdiction where the real party in interest is not present or impleaded.
• Indispensable Parties: Rule 3, Section 7 requires indispensable parties—parties in interest without whom no final determination can be had—to be joined as plaintiffs or defendants. Under Florete, Jr. vs. Florete, failure to implead indispensable parties has two consequences: all subsequent actions of the lower courts are null and void for lack of jurisdiction, and the case should be remanded to the trial court for inclusion of indispensable parties; dismissal is proper only upon the plaintiff's refusal to comply with an order to join indispensable parties. Here, both the Regional Trial Court and the Court of Appeals found that Diator, the seller in the Deeds of Absolute Sale, and Mahid's estate were indispensable parties without whom no final determination could be had. Because the case was dismissed for lack of jurisdiction by the trial court, the second consequence—remand—was not an option.

• Probate Court's Power to Decide Ownership (Exceptions to the General Rule) — As a general rule, questions of title to properties should not be passed upon in testate or intestate proceedings but should be ventilated in a separate action. Exceptions: (1) the probate court may provisionally pass upon inclusion in or exclusion from the inventory without prejudice to final determination in a separate action; and (2) the probate court is competent to decide ownership if the interested parties are all heirs, or the question is one of collation or advancement, or the parties consent, and the rights of third parties are not impaired. The Shari'a District Court, acting as probate court, properly applied the second exception because all interested parties were heirs and no third-party rights were impaired; it could exclude the parcels titled in Cadidia's name from Mahid's estate inventory.
• Finality of Shari'a District Court Decisions — Under the Code of Muslim Personal Laws, Article 145, decisions of the Shari'a District Court are final except when they affect the original and appellate jurisdiction of the Supreme Court as provided in the Constitution. Because petitioners did not raise any issue affecting the Supreme Court's constitutional jurisdiction, the Shari'a District Court's exclusion of the properties from the inventory was final, and petitioners' failure to contest it before that court amounted to acquiescence.
• Real Party in Interest — Every action must be prosecuted or defended in the name of the real party in interest, defined as the party who stands to be benefited or injured by the judgment or is entitled to the avails of the suit. The interest must be present and substantial, not a mere expectancy or a future, contingent, subordinate, or consequential interest. Petitioners, as heirs only of Mahid and not privies to the Deeds of Absolute Sale, had no present substantial interest in the parcels titled in Cadidia's name and could not invoke the court's jurisdiction.
• Relativity or Privity of Contracts — Contracts take effect only between the parties, their assigns, and heirs. An action for annulment of contracts may be instituted by all who are obliged principally or subsidiarily. Since petitioners were not parties to the Deeds of Absolute Sale and did not claim as heirs of any party to those Deeds, they were not obliged under the contracts and could not sue to annul them.
• Indispensable Parties — Indispensable parties are parties in interest without whom no final determination can be had of an action, and they shall be joined as plaintiffs or defendants. Failure to implead them is a jurisdictional defect: all subsequent actions of the lower courts are void, and the case should be remanded for their inclusion, with dismissal proper only upon refusal to comply with an order to join them. Diator and Mahid's estate were indispensable parties; their non-joinder was fatal, and because the case was already dismissed for lack of jurisdiction, remand was not an option.
• Torrens Title and Notarized Deeds — A certificate of title is the best evidence of ownership, and a Torrens title is conclusive upon the parties absent strong compelling evidence to the contrary. Notarized deeds of absolute sale enjoy a presumption of regularity and authenticity absent strong, complete, and conclusive proof of falsity. The parcels were titled in Cadidia's name, and the notarized Deeds of Absolute Sale were presumed valid; petitioners failed to prove falsity with the required evidence.

• "The probate court can decide the question of title or ownership over properties when the interested parties are all heirs and the rights of third parties are not impaired. When, however, a separate civil action is still filed to decide the question of ownership, it is mandatory that it be instituted by the real parties in interest, and the indispensable parties be impleaded. These are jurisdictional requirements, which, when failed to be satisfied, prove fatal to the civil action." — This passage states the ratio decidendi: probate courts may decide title when all interested parties are heirs and third-party rights are unimpaired, but a separate civil action must be brought by real parties in interest and with indispensable parties impleaded, failing which the action is fatally defective.
• "Since petitioners and respondent are all heirs and parties in the settlement proceeding of Mahid's estate, petitioners should have contested the exclusion of the properties before the Shari'a District Court, then acting as a probate court. However, they did not lift a finger to ask the probate court to include the properties in the inventory." — This passage explains why petitioners' failure to contest the exclusion before the Shari'a District Court amounted to acquiescence to Cadidia's ownership.
• "Petitioners here are not vested with direct and substantial interest in the subject parcels of land. They are not the present real owners of the right sought to be enforced. They claim their interests only as heirs of Mahid, who was not proven to have any right or interest in the parcels of land titled in respondent's name." — This passage defines why petitioners were not real parties in interest: their claim as heirs of Mahid was not a present substantial interest because Mahid was not shown to own the parcels titled in respondent's name.
• "All subsequent actions of lower courts are void as to both the absent and present parties. To reiterate, the inclusion of an indispensable party is a jurisdictional requirement[.]" — This passage states the jurisdictional consequence of failing to implead indispensable parties and supports dismissal.

• Bernardo vs. Court of Appeals, 117 Phil. 385 (1963) — Held that the probate court has jurisdiction over controversies between heirs regarding ownership of properties alleged to belong to the estate because liquidation requires determination of all assets, and all heirs are before the court so long as no third-party interests are affected; followed and applied to support the Shari'a District Court's competence.
• Pascual vs. Pascual, 73 Phil. 561 (1942) — Held that when the parties interested are all heirs of the deceased claiming title under him, the question of whether a transfer by the deceased to an heir is fictitious may be raised in testate or intestate proceedings; followed.
• Coca vs. Pizzaras, 171 Phil. 246 (1978) — Applied the exception where the probate court had received evidence on ownership in a motion for exclusion from inventory and the only interested parties were heirs who appeared in the intestate proceeding; followed.
• Natcher vs. Court of Appeals, 418 Phil. 669 (2001) — Held that the probate court was the best forum to adjudge the issue of advancement made by the decedent to his wife and other estate settlement matters; followed.
• Agtarap vs. Agtarap, 666 Phil. 452 (2011) — Applied the exception where the parties were all heirs, the ownership resolution would not impair third-party rights, and determining whether properties were conjugal was incidental to estate settlement; followed.
• Romero vs. Court of Appeals, 686 Phil. 203 (2012) — Held that the rule that probate determinations of ownership are provisional applies only as between representatives of the estate and strangers; because petitioners and respondent were all heirs, petitioners should have contested the exclusion in the probate court; followed.
• Pacioles, Jr. vs. Chuatoco-Ching, 503 Phil. 707 (2005) — Held that a party who could have opposed an inventory but instead adopted it acquiesced in the inventory; followed to find petitioners acquiesced in the exclusion.
• Heirs of Reyes vs. Reyes, 399 Phil. 282 (2000) — Affirmed provisional inclusion of properties in the estate because they remained titled in the names of the deceased and his spouse; distinguished because the parcels here were already titled in respondent's name alone.
• Stronghold Insurance Company, Inc. vs. Cuenca, 705 Phil. 441 (2013) — Explained the rationale for the real-party-in-interest requirement and defined it as requiring a present substantial interest, not a mere expectancy or contingent interest; followed.
• Florete, Jr. vs. Florete, 778 Phil. 614 (2016) — Stated the consequences of failure to implead indispensable parties: lower court actions are void for lack of jurisdiction, and the case should be remanded for inclusion, with dismissal only upon refusal to comply; followed.
• Ignacio vs. Reyes, 813 Phil. 717 (2017) — Cited for the presumptive conclusiveness of a Torrens title and the rule that the holder is considered owner until the title is nullified or modified in an appropriate ordinary action; applied.
• Malabanan vs. Malabanan, Jr., G.R. No. 187225, March 6, 2019 — Cited for the rule that a certificate of title is the best evidence of ownership; applied.
• Almeda vs. Heirs of Almeda, 818 Phil. 239 (2017) — Cited for the rule that notarized deeds enjoy a presumption of regularity and authenticity and that genuineness of a deed is a question of fact; applied.

• Article 143(b), Code of Muslim Personal Laws — Grants the Shari'a District Court exclusive original jurisdiction over all cases involving disposition, distribution, and settlement of the estate of deceased Muslims, probate of wills, and issuance of letters of administration or appointment of administrators or executors regardless of the nature or aggregate value of the property. Applied: the Shari'a District Court had jurisdiction over Mahid's estate settlement and could rule on the exclusion of the parcels from the inventory.
• Article 145, Code of Muslim Personal Laws — Provides that Shari'a District Court decisions are final except when they affect the original and appellate jurisdiction of the Supreme Court as provided in the Constitution. Applied: the exclusion of the parcels was final because petitioners raised no constitutional jurisdictional issue.
• Article 38, Code of Muslim Personal Laws — Provides that property relations between spouses, absent stipulation to the contrary, are governed by complete separation of property under the Code and suppletorily by Islamic law and the Civil Code. Applied: the Shari'a District Court acted pursuant to this regime when it ruled on properties titled in Cadidia's name.
• Article 1397, Civil Code — Provides that an action for annulment of contracts may be instituted by all who are obliged principally or subsidiarily. Applied: petitioners, not being obliged under the Deeds of Absolute Sale, could not institute the annulment action.
• Article 1311, Civil Code — Provides that contracts take effect only between the parties, their assigns, and heirs. Applied: petitioners were not parties or heirs of parties to the Deeds, so they were not privies and could not question the Deeds' validity.
• Rule 3, Section 2, Rules of Court — Requires every action to be prosecuted or defended in the name of the real party in interest, defined as the party who stands to be benefited or injured by the judgment or is entitled to the avails of the suit. Applied: petitioners were not real parties in interest.
• Rule 3, Section 7, Rules of Court — Requires indispensable parties—parties in interest without whom no final determination can be had—to be joined as plaintiffs or defendants. Applied: Diator and Mahid's estate were indispensable parties, and their non-joinder was fatal.
• Rule 45, Section 1, Rules of Court — Limits a petition for review on certiorari to questions of law. Applied: the genuineness of the Deeds of Absolute Sale is a question of fact and was not proper for review.

Gesmundo, Carandang, Zalameda, and Gaerlan, JJ., concur.