Republic of the Philippines

SUPREME COURT
Manila
EN BANC
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 anasset 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.


Separate Opinions
MORELAND, J ., dissenting:
The decision of the court in this case produces, in my humble opinion, a serious miscarriage of
justice. It causes the appellant to lose more than P7,000, a debt against the respondent estate,
which debt, but a few months before his death, was specifically recognized by the testator in his will
as a debt due and owing to petitioner and which he, in said will, ordered and directed his executor to
pay "religiously."
If I could find justification for such a decision either in the proceedings as they are unfolded by the
record or in the law as laid down in the Code of Civil Procedure, I would, of course, acquiesce. Far
from finding such justification, I am met so far as my judgment can discern, with facts of record
which demonstrate conclusively that the decision is erroneous in fact.
The opinion seeks to demonstrate that a creditor, whose claim is recognized by the highest possible
authority, the debtor himself, in the most solemn instrument known to the law, his last will and
testament, as legal, just and valid, must lose that claim because the validity thereof has not been
established by the committee. And this inspite of the fact that, upon the record of the case, no one
interested in the estate disputes the claim or challengers its validity. Take this proposition in
connection with the fact that the committee to hear claims had not been discharged, that the estate
has not been finally closed but is still pending settlement, and that, therefore, there exist not a single
reason, in equity or justice, why the claimant should not be permitted to present his claim, if that is
necessary, and we have before us a situation which indicates how far the decision has gone.
It should be carefully observed that the petitioner Isidro Santos, was defeated in this litigation upon
the ground,and the sole ground, that he did not present his claim to the committee, in pursuance of a
notice to creditors published under an order dated July 23, 1907, and that he, therefore, lost the right
to enforce the claim; that the notice having been published from July 25, 1907, to August 16, 1907,
petitioner's application on July 14, 1909, for the extension of time for the presentation of claims to
the old committee or the appointment of a new committee for that purpose, was too late and was
properly denied, and that his motion made November 21, 1909, praying that the executor be
compelled to carry out the wishes of the testator and pay the claim, was also properly denied.
In my judgment the decision is erroneous from whatever point viewed:
1. Even if it be assumed that the notice to creditors should have been published in accordance with
the order of July 23, 1907, the record is entirely lacking in legal evidence to establish the publication
which the law requires under that order. That being so the claim is not barred.
2. I contend, and the record shows, that the notice should not have been published in accordance
with the order of July 23, 1907, but in pursuance of an order of January 8, 1908, which was an order
for a new publication, and, being later order, necessarily vacated and annulled the order of July 23,
1907, and all proceedings thereunder relative to the matters included in said order of January 8,
1908; that publication was concededly never made under and in pursuance of that order and that, for
that reason, the petitioner's claim is not barred.
3. The claim was not one that must be submitted to a committee, being recognized as a legal and
valid debt by the will and the testator having ordered his executor to pay it. The motion made to
require the executor to pay the claim should have been heard by the court.
The facts of this case, as shown by the record, are:
Don Lucas de Ocampo made a will July 26, 1906. He died November 18, 1906. The will specifically
named Isidoro Santos, the petitioner, a creditor of the testator, set out the specific amount due him,
named an executor, and directed him to pay the claim "religiously."
The will was probated July 15, 1907, and Leandra Manarang, the widow, appointed temporary
administratrix. Her administration was terminated on July 23, 1907, and Cosme Naval, the person
named in the will as executor, was, on that date, duly appointed executor. On the same day Pedro
Abad Santos and Marcos Tancuaco were named the committee of appraisal and to her claims
presented against the estate, the court making the following order:
There having been heard the petition presented by Seor Cosme Naval, praying that he be
appointed executor of the above named estate as provided in the will of the deceased Lucas
de Ocampo; and also praying the appointment of a committee of appraisal consisting of
Seores Pedro Abad Santos and Marcos Tancuaco:
It is ordered that the said Cosme Naval may be and he hereby is appointed executor of the
will of Lucas de Ocampo, deceased, the clerk being authorized to issue in favor of said
Cosme Naval letters testamentary, the petitioner being first required to take the oath
prescribed by law and to file a bond in the sum of P500 Philippine currency, with two sureties
satisfactory to the court.
It is also ordered that the special letters of administration issued temporarily in favor of the
widow of the deceased, Leandra Manarang, remain without effect from this day.
It is further ordered that Seores Pedro Abad Santos and Marcos Tancuaco be and they
hereby appointed the committee of appraisal and claims of this estate.
On the 28th of September, 1907, Naval was removed from office and Leandra Manarang named in
his place. On December 3, same year, Pedro Abad Santos resigned from the committee to become
the attorney for the estate and Donato Iturralde was appointed in his stead.
Following these changes both in the office of executor and in that of the committee, on January 8,
1908, the court made an order which, in itself, is, in my judgment, a complete refutation of the
decision in this case and demonstrates that a contrary judgment should have been rendered. That
order, dated, as I have said, on January 8, 1908, and promulgated on that day, reads as follows:
Whereas, the Hon. Julio Llorente, in decree dated December 3, 1907, appointed Seor
Donato Iturralde, a resident of this city, to the office of committee of appraisal in the above-
entitled proceeding:
Therefore, and in compliance with the above-mentioned decree, Seor Donato Iturralde, a
resident of this city, is appointed a member of the committee of appraisal and to hear the
claims that may be presented against the property of this estate, which committee within
thirty days from the date of said decree shall deliver a copy of the inventory to this court and
another to the administratrix Seora Leandra Manarang, and within sixty days shall post a
notice at the main door of this courthouse and in three public places in the municipality
where the property of the said deceased is located, in which shall be stated the dates and
places when and where the meetings of the committee will be held and notifying that
creditors that they should present their claims within six months counting from the date of
said notice; said notice, furthermore, to be published during three consecutive weeks in the
newspaper "El Imparcial," having general circulation in this province.
Given to-day, the 8th of January, 1908, by order of the Hon. Julio Llorente, Judge of the
Fourth Judicial District and of this Province of Pampanga.
On July 14, 1908, the committee filed a report, the only report in the record, in which appears the
following statement:
The undersigned, committee of appraisal and claims against the above estate, presents a to
the court the following list of all claims presented against the said estate since the 25th day
of July, 1907, in which date the first publication to creditors was made.
The publication under which committee was reporting was begun under the order of July 23, 1907,
which was vacated and annulled by the order of January 8, 1908, which, by reason of the changes in
the offices of executor and committee, ordered a new and different notice to the creditors.
On July 14, 1909, petitioner herein made an application to the court to reopen the sessions of the
committee and permit him to present the claim mentioned in the will. This was denied November 27,
1909, the court simply saying:
This cause having been heard and the parties having presented their arguments, the motion
is denied by reason of the lapse of time.
On November 21, 1910, the petitioner moved the court that, the testator having recognized and
legalized the debt in his will and having ordered his executor to pay the same to the petitioner, said
executor be ordered and directed to pay said claim to the petitioner pursuant to the testator's
directions. This motion was denied April 26, 1911,upon the same ground as the other motion.
The appeal is from both of these orders and brings up so much of the record as is pertinent to these
questions.
The court has held on this appeal:
1. That the motion last mentioned is an action. The opinion says: "The petition of the plaintiff filed on
November 21, 1910, . . . appears to be nothing more or less than a complaint instituting an action
against the administratrix for the recovery of the sum of money." After discussing this phase of the
case the court concludes: "His claim against the estate having been a simple debt, the present
action was improperly instituted against the administratrix (sec. 699, Code of Civ. Proc.)." This is one
of the grounds of the decision.
2. That the recognition of the debt in the will and the direction of the testator to pay the same have
no significance in the law.
3. That, notwithstanding this recognition and direction, the claim should have been presented to the
committee appointed to hear and determine claims against the estate.
4. That the claim was not presented to the committee.
5. That all of the formalities required by law relative to the notice to the creditors t present their
claims were fully observed, the court saying that "the record affirmatively shows that the committee
did make the publications required by law."
6. That the court below did not err in denying the motion to extend the time of the old committee or
appoint a new one to the end that the claim in question might be presented.
7. That the court did not err in denying the motion to compel the executor to pay the claim in
pursuance of the direction contained in the will.
Laying aside for a moment those holdings of the court which declare that the claim is one which
must be presented to and passed upon by a committee. I am compelled to differ from every other
propositions and statement of fact appearing in the decision pertinent to the issue involved, except
the single one that the claim was not presented to a committee. That it was not presented is
conceded; indeed, that fact that it was not is the whole cause of this proceeding.
I am compelled to believe that the statement of the decision that "the record affirmatively shows that
the committee did make the publications required by law," is not quite in accordance with the record
as I read it.
The opinion does not refer me to any evidence of record which supports its statement. Where is this
evidence, where is this record which "affirmatively shows?" I have been unable to find it. Here is all
the evidence, if it may be called evidence, which I am able to find it in the record relative to the
publication of the notices to the creditors:
(a) An affidavit of the publisher of "El Imparcial" setting out that the notice to creditors attached to the
affidavit and signed by Pedro Abad Santos (who before the completion of the publication, resigned)
and Marcos Tancuaco, dated July 23, 1907, was published "three weeks from the 25th of July to the
16th of August, 1907."
The notice referred to is as follows:
The undersigned committee of appraisal hereby notifies the creditors of Lucas de Ocampo,
deceased, and all other persons who have claims against the estate of said deceased, to
present the same with vouchers within six months from the date of this notice to the
committee, every Monday, between 4 and 5 o'clock p. m., at the dwelling house of Pedro A.
Santos, Sagasta Street, San Fernando, Pampanga. Dated San Fernando, Pampanga, P. I.,
July 23, 1907. Signed: Pedro Abad Santos, committee. Marcos Tancuaco, committee.
The defectiveness of the affidavit is apparent. It does not show whether the newspaper was daily,
weekly, biweekly or monthly, or the day of the week or month on which published. It does not show
that the notice was published three weeks successively, that is, once each week for three
successive weeks, as required by law and the order of the court. So ambiguous is it that is might
mean that the notice was published once, namely, three weeks from July 25. Passing, however,
these defects, I note that the notice to creditors requires them to present their claims at thedwelling
house of Pedro Abad Santos. It should be noted, as before stated, that this commissioner resigned
before the expiration of the six months, thus making it necessary for creditors to present their
claims and their proofs thereof to one who was not a member of the committee and to a man who,
immediately on his resignation, became the attorney of the estate. This will become important when
we later discuss the significance of the fact that the court, as already seen, on January 8, 1908,
made a new order requiring that a new notice be given to creditors, to be published thereafter,
thereby revoking the order of July 23, 1907, and annulling the notice to creditors above set out and
then in course of publication.
(b) The remaining item of evidence which it is claimed tends to show that the notice to creditors was
duly published is the reference made by the commissioners in their report to the court, above
quoted, in which they say, referring to July 25, 19076, "on which date the first publication to creditors
was made."
This reference cannot be called evidence of publication, although the court accepts it as such. At
most it refers and is limited, in terms, to the first publication. It has not the slightest reference to the
other publications, if any.
This, (a) and (b), is all evidence in the whole record relative to the publication of the notice to
creditors. Admitting it all to be true and giving it all weight possible, does it establish "affirmatively
that the committee did make the publications required by law?" I am of the opinion not The law
requires, in addition to the publication in the newspapers, that "the committee . . . shall post a notice
in four public places in province stating the times and places of their meetings, and the time limited
for creditors to present their claims . . . and give such other notice as the court directs.
Where is there in the record evidence showing that this was done? Nowhere. As I read the record,
there is not a syllable of such evidence in all the case.
I, therefore, am forced to the conclusion that the declaration of the court that "the record affirmatively
shows that the committee did make the publications required by law" is without sufficient evidence to
support it.
After a thorough reading of the record, I am reluctantly forced to a further conclusion, namely, that
instead of there being evidence in the case showing the publication required by law. there is
evidence showing the precise contrary.
Let us remember that the first order of the court directing the committee to publish notice to creditors
was issuedJuly 23, 1907. It conceded that publication in a newspaper of some sort was started
under that order. But, the court, evidently becoming satisfied that, under all the circumstances, the
publication under that order would not be sufficient to give creditors fair notice, on January 8, 1908,
and before the publication under the first order, if there was ever started in reality a publication under
that order, was completed, made a second order of publication. The reason for this order was
evidently that, during the six months succeeding the date of the notice which it is claimed was
published under the first order, three persons held the office of executor, the complexion of the
committee itself was changed, and the member of the committee at whose house the notice required
the claims and vouchers to be presented resigned from the committee and became the attorney for
the estate. Pedro Abad Santos having ceased to be a member of the committee and having become
the attorney for the estate, and the notice to the creditors requiring that claims with their vouchers to
be presented at his house, there was no longer a proper place designated where creditors could
present their claims. Furthermore, the continual change in the executorship already noted may have
resulted in grave prejudice to the estate if the estate were to be held responsible for all claims
presented during the time those changes were taking place, it being the duty of the executor, under
the law, to be present at the hearing on claims and defend the estate against those which deemed
unjust, and the frequent change in the office, thereby bringing the persons unfamiliar with what had
gone before, certainly not tending to efficiency.
All these facts, taken in connection with the defectiveness of the affidavit of the publication of the
notice, and the fact that there was no posting of the notices as required by law, that the notice itself
was defective in that it required the claims to be presented within six months from the date of the
notice instead of the date of the last publication thereof, as the law, properly interpreted, requires, all
these facts, I say, undoubtedly led the court to believe that the previous proceedings relative to
claims should be annulled and that a new order of publication should be made. Accordingly, on
January 8, 1908, as aforesaid, an order was made and entered as above set forth, requiring a new
publication by a new committee. This order had the effect, of course, of vacating and annulling the
previous order covering the same subject matter.
It is undisputed that no publication has ever been made or even attempted under this order of
January 8, 1908. The only publication referred to in the record or in the opinion in this case is that
under the order of July 23, 1907. No one contends that any other publication has ever been made or
attempted.
That this order of January 8, 1908, was considered the governing order in the case and that it was
an annullment of all prior proceedings and orders relative to the same subject matter, is clear. If
notice had been given as provided by the order, the six months' term, according to the order, would
have expired some time in July, 1908. This, of course, was clearly understood by the court, and we
find the court, ever anxious to have the estate settled as quickly as possible under the law, making
the following order on the 2d day of April, 1908:
It is hereby ordered that the administratrix present her inventory before the 1st day of May
and the committee its report within the time provided by law, and that the administratrix
present her account before the 1st day of August, 1908.
This order demonstrates conclusively that the court believed that the committee was giving the
notice to creditors as provided by order of January 8, 1908, and not that of July 23, 1907; for, if the
notice was to be given under the latter and the publication began July 25, 1907, then the time within
which the committee was to report expired in January, 1908 (see opinion), long before the order of
April 2, 1908, was issued (Code Civ. Proc., sec. 693) and the requirement therein that the committee
report "within the time provided by law" was idle. The court evidently believed that the notice was
being published under the order of January 8, 1908, that the six months' period would expire in July,
that the committee could therefore report to the administratrix the number and amounts of the claims
presented and allowed, and that she could, therefore render her account before the 1st day of
August, as in the order of April 2 required. This order is strictly inconsistent from every point of view
with the idea that the order of July 23, 1907, was in force and that publication of the notice to
creditors was proceeding thereunder.
I, therefore, say that the record demonstrates not only that the declaration of the court that "the
record affirmatively shows that the committee did make the publications required by law" is without
sufficient foundation in fact, but also that the contrary is true, namely, that no publication was ever
made under the only order under which it could be legally made.
I contend, furthermore, that this proceeding is not an action against an executor to recover a debt
against the estate of his testator. The decision of the court that it is an action and not being one of
those which, under the Code, can be brought against an executor and must be dismissed for that
reason is, in my judgment, erroneous. I do not understand how a motion to compel an executor to
comply with the directions in a will can be called an action to recover a debt in a sense that such
motion is prohibited by law.
Dealing with the second branch of the case, wherein the court holds that the debt should have been
presented to a committee:
The proposition that a debt which is recognized by the highest possible authority, the debtor himself,
in then most solemn instrument known to the law and the one whose provisions are the most
sacredly carried out by the courts, his last will and testament, which debt the testator, in his will,
expressly ordered his executor to pay to the creditor by name, must be presented to the committee
for them to determine whether it is a valid claim and whether it ought to be paid, is a proposition
which appeals neither to my reason nor my sense of justice. There is no statute expressly requiring
such presentation. There is none which by necessary implication requires it. To bring such a debt
within the law requiring presentation to the committee, interpretation and construction must be
invoked to such an extent as to shock if not violate the ordinary canons applicable thereto. This is
particularly true when such interpretation and construction are resorted to deprive a creditor of a
claim, the validity and justice of which is not only undisputed but unquestioned.
There is no provision of the Code of Civil Procedure expressly requiring the presentation
of any claim to a committee. Provision is made for the appointment of a committee which is
authorized to hear certain classes of claims but nowhere is there an express provision requiring a
creditor to present his claim. There is, to be sure, a section which provides (sec. 695) that if the
creditor fails to present his claim, if it is a certain kind of claim, within the time provided in the law, it
will be barred. It is therefore, gathered by implication that every creditor having a certain kind of
claim must present it; but there is no provision expressly requiring it. Moreover, it must be carefully
noted that only certain claims need to be presented to the committee and that only certain claims are
barred provided they are not exhibited. Section 686 confers upon the committee whatever
jurisdiction it may have with respect to the hearing of claims, apart from those which actions were
begun against decedent in his lifetime. It provides that "they may try and decide upon claims, which
by law survive against executors or administrators, except claims for the possession of or title to real
state;" and under section 695 only those claims are barred which are " proper to be allowed by the
committee."
We see then that the committee is authorized to take jurisdiction over those claims only which
survive against an executor or administrator. The code does not define or declare "what claims
survive against executor or administrators." It refers to certain actions which, having been
commenced by the deceased in his lifetime, may be continued after his death by his executor or
administrator. It nowhere tells us "what claims survive against executors or administrators, " or what
claims are " proper to be allowed by the committee." We are unable to say, therefore, from the
context of the Code itself what the authors thereof meant by the use of the phrases "claims which
survive against executors or administrators" and which are "proper to be allowed by the committee."
All that is clear is that it was the intention of the law to restrict the jurisdiction of the committee and
keep it within certain limitations, and to that end used these limited expressions. It should be noted,
however, that these limitations refer to claims and have no reference to actions begun against the
deceased before his death. The distinction made in the Code between claims and actions begun
against the decedent during his lifetime, and the respective provisions referring to those two
subjects, is entirely lost sight of in the decision of the court. This being so, the following reasoning
found in the decision, based upon the failure to distinguish between claims and actions begun
against the deceased in his lifetime, involves a conclusion in no sense related to the premises from
which it is deduced:
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.
That there is no necessary relation between those two subjects is apparent. That an action for
"money, debt, or damages" begun against the decedent in his lifetime must, under section 710, be
discontinued upon his death "and the claim embraced in such action may be presented to the
committee, who shall allow the party prevailing the cost of such action to the time of its
discontinuance," does not necessarily mean that such claim, if no action had been begun upon it, is
one which must be exhibited to the committee. Whether an action begun against the decedent in his
lifetime survives or does not survive, has no necessary relation with the necessity of presenting a
claim to the committee. Would it be logical to argue that because an action begun against the
deceased did not survive, the claim upon which it is based cannot, therefore, be presented to the
committee, or that because in action begun against the deceased in his lifetime did survive, that,
therefore, the claim upon which it was based could and must be presented to the committee?
Assuredly not.
No general requirement that all claims must be presented to the committee appearing in the Code,
and it affirmatively appearing that there was an intention to restrict the power of the committee in the
hearing of claims, it necessarily follows that the conclusion reached by the court that all claims must
be exhibited to the committee is pure inference and one but at all warranted by the provisions of the
Code or by the rules of interpretation and construction, To me it is a conclusion absolutely necessary
from the language of sections 686 and 695 that not all claims need to be exhibited. By express
language these sections restrict the committee to the hearing of such claims as survive against
executors or administrators and only those are barred which are proper to be presented to the
committee.
The answer to the question, does not claim at bar survive against executors or administrators, brings
us to an exposition of the various fundamental error made by the court in holding that the debt in
question is one which must be presented to the committee. One of them is involved in the
declaration that the debt in question is a claim within the meaning of the law. In cases such as this it
is proper and necessary to make a distinction between a claim and a debt. A debt is a claim which
has been favorably passed upon by the highest authority to which in can in law be submitted and
has been declared to be a debt. A claim, on the other hand, is a debt in embryo. It is a mere
evidence of a debt and must pass through the process prescribed by law before it develops into
what is properly called a debt. The debt in the case at bar never was a claim. By the act of the
testator himself, it was raised to the dignity of a debt and it remains such and must be acted upon as
such by the courts as well as by all other. It was by the testator selected from the mass of his
obligations, which are correctly called claims, and treated to a process which developed it into a
thing called a "debt" over which no committee has jurisdiction and with the due course of which it has
no authority to interfere.
The second fundamental error, following naturally from the first, is found in the declaration of the
court that the debt in question is a claim which survives against the executors or administrator and
must, therefore, be exhibit to the committee. This error involves, in my humble opinion, a
misunderstanding of the nature of a will imposes upon all persons executing it. A will is the testator
speaking after death. Its provisions have substantially the same force and effect in the probate court
as if the testator stood before the court in full life making the declarations by word of mouth as they
appear in the will. That was the special purpose of the law in the creation of the instrument known as
the last will and testament. Men wished to speak after they were dead and the law, by the creation of
that instrument, permitted them to do so. It is a upon this theory and around this purpose that there
has grown that body of the law which uniformly and universally declares that the words of the
testator spoken in his will shall be sacredly attended by his executor and enforced by the court. It
has been declared a fundamental maxim, the first greatest rule, the sovereign guide, the polestar, in
giving effect to the will, that the intention of the testator as expressed in the will shall be fully and
punctually observed. If by the use of clear and certain, his will explains itself, and all that the court
can do is to give it effect. All doubts must be resolved in favor of the testator's having meant just
what he said. His purpose may seem unjust, unnatural or absurd to us; yet, to refuse to execute it is
to destroy it. As Chief Justice Marshall said: "That intent of the testator is the cardinal rule in the
construction of wills; and if that intent can be clearly perceived, and is not contrary to some positive
rule of law, it must prevail." (3 Peters, 346.)
The intention of the testator is said in the recent Virginia case to be "the life and soul of a will" and if
this intention is clear it must be govern with absolute sway. A will is not like a promissory note or a
judgment or any other instrument which acknowledges or incorporates an obligation. Those
instruments are mere evidences of a debt. A will is not, primarily, evidence of anything; it is the thing
itself. It is not so much the evidence of what the testator did or intended to do; it is then testator
himself. The court has failed in this case to distinguish between a will and a promissory note, or a
mortgage, so far as their legal effects are concerned, and the statement which I made early in this
opinion, that the court has given no legal significance whatever to the fact that the instrument in
which this debt was acknowledged and in which it was ordered paid was a last will and testament, is
literally true. It has given the testamentary directions of the testator no more force, effect or
significance than it gives to the words of a promissory note or a mortgage.
The third fundamental error which the decision has fallen is that it is misconceives the duties of an
executor and of a court relative to the provisions of the will. It is, of course, axiomatic that is the duty
of the executor, under the direction of the court, to carry out punctually and with the utmost care
every provision of the will. That is why he is named "executor." He is an "executor" of a will because
he "executes" the will. When he refuses or neglects to perform that function he ceases to be an
executor and becomes a perverter or destroyer. Section 640 provides that the estate of the decedent
shall be disposed of according to his will and the bond to be given by an executor, prescribed in
section 643, must contain a clause in which the executor agrees, and his bondsmen assure, that he
will administer "according to the will of the testator" the estate which comes into his hands.
Under the provisions of this will it is as much the duty of the executor to pay the debt here in litigation
as it is to pay a legacy bequeathed by the will or to carry out a devise found therein. Of course, as
we shall see later, if it appear to the executor that the debt in suit was paid, in whole or in part, as the
case may be. In such case his refusal to pay will not be a refusal to carry out the will, but will be
grounded in fact that the testator himself executed it prior to his demise. The proposition remains
that the will must be executed; and the only excuse the executor can give for a refusal to execute it
is that it has already been executed.
It is nowhere claimed in this case, and it cannot be, for no proceeding has reached far enough to
involve the fact, that this debt has been paid, and nowhere in the record has its validity or binding
force upon the estate been challenged or even disputed. That being the case, upon the facts, as
they stand before us, there is no excuse which the executor of the court can now offer why the debt
in suit has not been paid.
The fourth fundamental error into which the court has fallen in its decision is that it submits to the
jurisdiction of a committee to hear claims the question of whether or not the provisions of the will are
to be executed. This, although, it seems to me, is strange upon its face, is precisely what the court
has, in effect, done in its decision; for, if a debt expressly acknowledged in the will and specifically
ordered paid therein, must be submitted to a committee, it means that they may, in the excercise of
their judgment, refuse its payment. This, in turn, means that the provision of the will in relation
thereto is annulled. By this process the committee may, therefore, annul an express and mandatory
provision of a will which is as binding as a provision giving legacy or making a devise. It is to the
probate court, and to it alone, that the law confides the power to annul and set aside provisions in
wills. The executor himself may not do so. And the court itself may do so only after the very clearest
demonstration that the provision violates a positive provision of law or is against the public policy of
the state. In spite of this, it is the decision of this court that a committee of two or more persons,
none of whom is a lawyer, none of whom may be even a business man, all of whom may be ignorant
and inexperienced, may sit in an informal way, and with all the imperfections inherent in such a
tribunal and the practice which governs its deliberations, may revoke a mandatory provision in the
most solemn instrument known to law. The bare statement of such a proposition is, it seems to me,
its clearest refutation.
The fifth fundamental error into which the court has fallen follows naturally. As we have said, the
decision give no significance to the fact that the debt at bar appears acknowledged and legalized in
a last will and testament and that the testator therein solemnly ordered and directed his executor to
pay it. Instead, the decision remands the creditor to the committee in exactly the same condition as
any other creditor. He goes there with the burden of proof on him, with the necessity of establishing
affirmatively and by a fair preponderance of the evidence the existence of the claim, the
consideration therefore, and the fact that it has not been paid. There are laid upon him the
restrictions and limitations imposed by section 383 of the Code of Civil Procedure, which stop his
mouth as a witness under certain conditions. He is there with every burden, with every restriction
upon him under which another creditors labors who has not a scrap of written evidence to support
his claim. It is no adequate reply to say that he can put the will in evidence. He could do that with
any other evidence that he might have. Moreover, that reply is a full admission of all that I have
maintained, that the will is given no significance or value, as such, but is reduced to the mere
function of being evidence to be passed upon by the committee. Furthermore, it is incumbent upon
him to prove that the claim has not been paid and this is the very point which may be the thing most
difficult to establish; and it is in relation to this that the restrictions and limitations imposed by the
section referred to produce their greatest effect. This certainly cannot be law. It cannot be that the
creditor whose debt is recognized as is the one at bar occupies a position no different from that of a
creditor whose debt is not recognized. To contend the contrary, it seems to me, flies in the face not
only of law and justice, but of common sense as well.
The fact that a debt is mentioned in the will as one not satisfied has, at least, the effect of changing
the burden of proof from the creditor to the estate. Instead of the creditor being required to establish
the validity of the claim and the fact of nonpayment, it is incumbent upon the estate to show payment
affirmatively. At the very least, recognition by the testator in his will should be given that much
significance. The court does not even concede this. The provision before us, while not a provision for
a legacy, has nevertheless the same force and effect; and as a legatee is not bound to show
affirmatively his right to the legacy and as it is the duty of the executor to seek out the legatee and
pay him the legacy, so it is not the duty of the creditor in this case to show affirmatively his right to
the payment of the debt, but it is the duty of the executor, knowing nothing to the contrary, to seek
out the creditor and pay him as the testator has ordered him to do. If he knows anything to the
contrary the burden is on him to demonstrate it.
These considerations naturally lead us to the point so strongly urged in the decision, and which I
regard, for the purpose urged, without force, that the debt may have been paid between the time of
the making of the will and the death of the testator; and that, therefore, it ought not to be paid by the
executor until the question of payment is properly determined. No one is disputing that proposition.
But its admission does not all mean that, to determine whether the claim has been paid or not, it
must be presented to the committee. If it is the duty of the court, through the executor, to see if the
will is conscientiously executed, what more natural, if not absolutely necessary, than to submit to the
court whether the provision recognizing a debt ordering its payment should be carried out. What
argument can be adduced, which does not fly squarely in the face of reason, to establish the
proposition that a court has no business to determine whether a particular provision of a will shall be
carried out or not, when its supreme duty is to require the punctual and precise execution of the
whole will? How can it be maintained that, whether or not a particular provision in a will shall be
carried out must be submitted not to the court, which has exclusive jurisdiction of the whole will, but
to a committee of two or more ignorant and inexperienced persons? If it is the duty of the court to
see that the will is executed as a whole, then there must go with that duty the power to determine
whether a particular provision ordering the payment of a specific debt shall be executed or not. But
the determination of this question is the determination of the question of payment. Why take from the
court, which is the whole body that has the power to determine whether provisions in wills shall be
carried out, the determination of whether a debt recognized in a particular provision has or has not
been paid and turn it over to a committee such as I have described?
It is thus seen that the proposition given so great weight in the decision, namely, that the debt should
be submitted to the committee in order to determine whether it has bee paid, is without point or
force. The court should make that determination far better than a committee. The practice leading to
the determination by a court as to whether or not a given provision in a will shall be carried out is
very simple, much simpler than is the proceeding before a committee. The executor finding that the
will orders him to pay a certain debt and having no knowledge of his own that such debt has already
been paid, presents his final account to the court, in which he asserts that he is going to pay the debt
in accordance with the provision of the will. Notice is given to all parties interested in the estate.
They appear. If they or any of them know of any reason why the provision of the will should not be
carried out, they may manifest it. Upon that manifestation a hearing will be had and the court will
determine whether or not the provision of the will has already been executed, in the whole or in part,
and upon that determination he will rest a judgment in which he will order the executor to carry out
the provision of the will by the payment of the debt or he will declare that the provision has already
been carried out by payment. What simpler than this and what more conducive to justice? Who can
say that the submission of the same question to a committee is better than the submission to a
court? It might as well be urged that the legalization of the will, itself were better left to a committee
than to a court; for, if whether or not the provisions of a will are to be carried out must be left to a
committee, then whether it is a will at all or not may as well be left to the same authority.
The attempt of the court to meet the proposition that the will of the testator is the law of the case
does not satisfy my judgment. It is claimed that the will of the testator is not the law of the case
where it is in direct violation of a provision of law; and that the Court of Civil Procedure requiring
that all claims shall be presented to the committee, the testator has no right to except a particular
debt or any debt from the operation of the Code.
In the first place, the Code of Civil Procedure does not require that all claims shall be presented to
the committee. It expressly limits the claims which must be exhibited. In the second place, the claim
that there is anything contradictory between the will of the testator in this particular case and the
provision of the Code of Civil Procedure is, in my judgment, rather fanciful than real. What is the
purpose of requiring the exhibition of a claim to a committee? Simply to save the estate from being
defrauded. There is absolutely no other reason which is behind the law requiring such a
presentation. Is it claimed that a debtor may not pay a claim during his lifetime? If not, and the will is
but a testator speaking after death, may he not pay a debt in that manner? If the man who is the
estate solemnly acknowledges a debt and offers to pay it, who shall say that the estate is defrauded
if the debt be paid? And if the estate is not defrauded, neither the spirit nor the letter of the law which
has for its object the protection of the estate has been violated or evaded, but has, on the contrary,
been fully observed.
I do not discuss or express an opinion relative to the proposition that the statute of nonclaims runs
against a provision of a will, or suggests the results which may follow such doctrine.
The judgment should be reversed and the probate court ordered to hear petitioner's motion of the
21st of November and decide it upon the merits.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-22737 November 28, 1924
Estate of the deceased Antonio Tanpoco. VICENTE GOTAMCO, administrator,
vs.
CHAN SENG, guardian of Tan Kim Choo, opponent-appellee;
JOSE RAZON, guardian ad litem of the minor Tan Kim Hong, appellant.
Eiguren and Razon for appellant.
Gibbs & McDonough for appellee.
STATEMENT
Antonio Tanpoco died in the year 1920 and left a will dividing his estate of over P300,000
among four sons, one-half of which he bequeathed to Tan Kim Hong, the claimant, whom he
described in his will as his legitimate son, and the other half he left in equal shares to his three
adopted sons, Tan Kimco. Tan Kimbio and Tan Kim Choo, and appointed Go Siu San, a resident of
Manila, as executor of his will, which provided that no bond should be required.
November 22, 1920, two Chinese named Tan Kim Lay and Te Sue, one of Tarlac and the
other of Manila, were appointed and qualified as commissioners, and later they published the usual
notice to creditors to present their claims within six months at the office of Attorney M. G. Goyena, of
Manila.
June 29, 1921, the commissioners presented their report to the court in which, among others,
they reported the allowance of the claim here in question.
At the time all of the heirs, including Tan Kim Hong, were minors and had lived in China since
the death of Antonio Tanpoco, as also had the widow of the deceased.
On June 29, 1921, the date the commissioners' report was filed, the executed filed a motion
asking for the appointment of an attorney of his own choice as curador ad litem for the minor heirs
which, among other things, recites as follows:
2. That the heirs who are interested in the estate of the above entitled action are all
minors, to wit: Tan Kimco, age 20; Tan Kim Hong, age 12; Tan Kimbio, age 11; and Tan Kim
Choo, age 4; and that all the above heirs are now in China, and the day of their return to the
Islands is unknown to the administrator of the estate.
The court ignored request of the executor, and on July 2, 1921, upon its own motion,
appointed Mr. Felipe Canillas, who treated his appointed as a formality and did not make any
investigation of the facts, and hence the report of the commissioners was approved on July 14,
1922.
During all of this time the minor heirs were still in China. In September, 1922, they arrived in
Manila and employed counsel to represent and protect their interest, and it was then that Chan Seng
learned for the first time of the allowance of the claim in favor of Tan Kim Hong. Upon her motion, on
November 27, 1922, Judge Harvey ordered an investigation of the administration of Go Siu San as
executor, which was made by Mr. Felipe Canillas, who still held the position of curador ad litem of all
the minor heirs, including the claimant, who made a written report to the court, the material portion of
which is as follows:
In the salary ledger of 1920 there appears to have been credited, without expressing
their origin, in favor of Tan Kim Hong the following sums:
January 25
.........................................
P20,000.00
February 7
.........................................
10,000.00
February 13
........................................
10,000.00
Total ..............................................

40,000.00
and in the salary ledger of 1921 this amount was reduced to the sum of P38,766.69
(P33,766.69) which is exactly the amount of the claim which is said to have been presented
and admitted against the estate (see the report of the commissioners). Now, who is this Tan
Kim Hong? He is just one of the children of the deceased, a minor who is now 13 years old
and who has been made the heir to one-half of all the property mentioned in clause "A" of
the will of the deceased. Insofar as the basis of this claim is concerned and insofar as the
person who pretends to have represented the minor in the presentation of the claim is
concerned nothing is explained in the record nor in the books of the administrator. Therefore,
this claim should be discarded by reason of its illegality and nullity and the administrator
required to explain its presentation and admission. If, as the administration pretends, this
sum was credited in the books by the deceased himself in favor of his boy Tan Kim Hong
and reason of his being a favorite son, and if the latter legally accepted the donation, such an
act could only amount to a donation "inter vivos" and the authority to determine the rights of
the donee are not within the attributes of commissioners on valuation and claims.
The report concluded with a recommendation for the removal of the executor for gross
misconduct and fraud, and the annulment of the claim of Tan Kim Hong.
After the report was filed, a hearing was had and testimony was taken, and Judge Harvey
removed Go Siu San as executor, and in his order of removal, among other things, said:
The commissioners Te Sue and that he had not received any claim; that the claims which
appears in the report were taken from the books of the business of the deceased, Antonio Tanpoco
(p. 16, s. n.); nevertheless, the claim of Tan Peng Sue does not appear in the report of these
commissioners on claims although it appears in the books and was afterwards accepted by the
commissioners last appointed. In the report of the first commissioners on valuation and claims there
appears a claim of Tan Kim Ho (Tan Kim Hong) for the sum of P38,766.69 without any voucher (pp.
11-12, s. n.). This claimant is a minor and was not represented by any guardian or curador. The
commissioner Te Sue testified that he had gone to Tarlac but once and in the year 1922 to attend
the claims, but the report of the commissioners bears date previous to that time which demonstrates
evidently that the administrator Go Siu San was the person who furnished the data upon which the
supposed claims which appear in the report of the commissioners were based notwithstanding the
fact that they received no claims."
After such proceedings, nothing was further done until November 14, 1923, when the present
administrator applied to the court for authority, among other things, to pay the claim in question, to
which the appellee appeared and objected. The court denied the application of the present guardian
to the claimant to require the administrator to pay the claim in question upon the ground that it was
void and fictitious, from which Tan Kim Hong appeals, contending that the lower court erred in
hearing and sustaining the objections to the allowance of the claim, and in denying the motion of the
administrator for authority to pay the claim.

JOHNS, J .:
The appellant cites and relies upon section 773, 774 and 775 of the Code of Civil Procedure
as follows:
SEC. 773. An appeal from allowance or disallowance of claim. Any executor or
administrator may appeal to the Court of First Instance from the allowance of any claim
against the estate by the committee appointed for the purpose of allowing claims against the
estate of deceased persons, or from the disallowance, in whole or in part, of any offset
presented by the executor or administrator to such claim; any creditor may appeal to the
Court of First Instance from the disallowance of the whole or any part of his claim by such
committee, or the allowance of the whole or a part of any claim in offset to his claim against
the estate by such committee.
SEC. 774. If administrator does not appeal, heir or creditor may. If the executor or
administrator does not appeal from the allowance of any claim against the estate by the
committee, or the disallowance in whole or in part by it of any offset in behalf of the estate
against such claim, any heir or creditor may appeal to the Court of First Instance from such
allowance or disallowance, and prosecute the appeal in the name of the executor or
administrator, upon filing in court a bond to the administrator or executor, to be approved by
the court, conditioned that he will prosecute the appeal to effect, and indemnify the
administrator of executor against all costs and expenses, by reason of the appeal, and will
likewise pay to the claimant such costs as may be ultimately awarded to him by reason of
such appeal. The bond shall be available for such claimant as well as for the executor or
administrator.
SEC. 775. Perfecting appeal. The appeal provided in the two preceding section
shall be perfected by filing with the clerk of the Court of First Instance that has jurisdiction of
the estate, within twenty-five days after the committee's reports is filed therein, a statement
that the person so appealing is dissatisfied with the action of the committee in respect to the
item or items complained of, and appeals therefrom to the court.
He points out that the report of the committee allowing the claim was made and filed on June
29, 1921, and contends that it became automatically final on July 14, 1921; that the opponent should
have made her opposition within the time specified in the Code, and that her failure to take the
statutory appeal is a bar to all defenses, citing and relying upon the case of De los Santos vs.
Reyes (37 Phil. 104), the syllabus of which is as follows:
1. DESCENT AND DISTRIBUTION; CLAIMS AGAINST ESTATES OF DECEASED
PERSONS. It is not sufficient to plead on the part of an objector, to the allowance by the
committee of appraisal of a credit against a testate or intestate succession, that he had a
good defense, but he must plead it in due time and set forth the facts and grounds on which
he intends to rest it, especially when the credit allowed appears to have been proven at trial
by means of documents which were neither contradicted nor assailed as false, criminally or
civilly.
2. ID.; ID. Any error, fraud, credit, defect, or vice, or a substantial nature and
productive of annulment, found in the committee's report, may serve as a ground for appeal,
be pleaded in the trial had in the Court of First Instance, and be a subject-matter of the final
judgment rendered in the proceedings, provided that the person who believed himself to
have been prejudiced shall have appealed from the report of the commissioners and from
the order approving it, for, if he does not do so, after the lapse of the period fixed by law, all
claims made for reasons of the annulment of the proceedings had, will be valid."
On page 113 of the opinion in that case, the court says:
From the careful examination made of the record in this case it appears that the
proceedings had by the trial court, as well as those by the committee of appraisal and claims,
were in accordance with law, as the preinserted provisions and other of the Code of Civil
Procedure were substantially complied with, and it cannot be affirmed on good grounds that
the irregularities complained of by counsel for the minor Alfredo Ocampo were essentially
such or that they in any manner prejudiced his rights and interests, for both he and his
mother Gervasia de los Santos, as well as their attorneys, knew positively and certainly that
two commissioners of appraisal had been appointed, had commenced to discharge their
duties, had published notices, by means of edicts posted in public places; including the
pueblo of Bian, and by publications in the newspaper La Vanguardia, calling the creditors of
the estate of the decedent Ramon Ocampo. If the mother of the minor Ocampo had actually
had justifiable grounds whereupon to oppose by a just and good defense the claim
presented by the administrator of the estate of the deceased wife of the decedent Ocampo,
in behalf of the rights and interests of her minor son, she would have filed her objections
opportunely during the period of the six months fixed by the commissioners and on the day
and hour set by them. . . . (37 Phil., 113.)
In other words, the court found as a fact that in the De los Santos vs. Reyes case, supra, there
was a substantial compliance with all of the statutory requirements, and the decision in that case
was based upon that fact. But there is a marked distinction between the facts there and those in the
instant case. Here, all of the parties in interest were minors. The evidence is conclusive that at the
time the alleged claim was allowed, Tan Kim Hong was only twelve years of age, and that all of the
other parties were minors. There is no claim or pretense that Tan Kim Hong had a guardian or that
anyone had the legal authority to appear for and present his claim or to represent him, or that his
claim was ever presented. There is no claim or pretense that any of the parties in interest had any
knowledge of the fact that the claim was presented and allowed before they came to Manila from
China in September, 1922. As a matter of fact, there is no evidence that the claim in question in any
manner, shape or form was ever presented to the commissioners by anyone. For aught that appears
in the record, the claim was allowed by the commissioners on their own motion and of their own
volition. It also appears that the entries which were made in the books of the deceased were made
by his bookkeeper, and there is nothing to show that they were made by the authority of the
deceased. It is very significant that the will of the deceased was made sometime after the entries
were made, and that no reference whatever is made in the will to the claim in question.
The authorities cited by the appellant upon the question of res judicata are good law, but are
not in point. Here, there was no claim presented to the commissioners. Hence, there was nothing for
them to adjudicate. Neither the claimant nor anyone on his behalf made or presented a claim.
Hence, it must follow that the commissioners did not have any authority to allow or reject the claim,
and that they were without jurisdiction to act in the premises. Neither is the evidence in the record
sufficient to sustain the claim. Outside of the fact that the above entries were made in the books of
the deceased by the his bookkeeper, there is nothing in the record upon which to base the claim,
and it does not even appear that such entries were authorized by the deceased.
Giving full force and effect to the provisions of the Code of Civil Procedure above quoted, all of
the prerequisites and essential elements of a judgment are wanting.
Ruling Case Law, volume 15, page 569, says:1awphil. net
A judgment is the law's last word in a judicial controversy. It may therefore be defined
as the final consideration and determination of a court of competent jurisdiction upon the
matters submitted to it in an action or proceeding. A more precise definition is that a
judgment is the conclusion of the law upon the matters contained in the record, or the
application of the law to the pleadings and to the facts, as found by the court or admitted by
the parties, or deemed to exist upon their default in a course of judicial proceedings. It should
be noted that only is a judgment which is pronounced between the parties to an action upon
the matters submitted to the court for decision. . . .
In the instant case there was not claim made, filed or presented by anyone. Legally speaking,
the allowance of the claim would be like rendering a judgment without the filing of a complaint, or
even the making or presentment of a claim.
Upon the facts shown, to legalize the allowance of the claim with all of the formalities and
requisites of a final judgment, would be a travesty upon justice. It appears from the record before us
that the commissioners did not have any jurisdiction to allow the claim; that as to the claim in
question their proceedings were null and void ab initio, and hence they were not res judicata, and in
addition to that, it clearly appears that the allowance of the claim was a fraud upon the appellee.
The judgment of the lower court is affirmed, with costs. So ordered.
Street, Malcolm, Avancea, Villamor, Ostrand and Romualdez, JJ., concur.

Republic of the Philippines
Supreme Court
Manila


THIRD DIVISION


ALAN JOSEPH A. SHEKER, G.R. No. 157912
Petitioner,
Present:

YNARES-SANTIAGO, J.,
- versus - Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
ESTATE OF ALICE O. SHEKER, REYES, JJ.
VICTORIA S. MEDINA-
Administratrix, Promulgated:
Respondent. December 13, 2007
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x



D E C I S I O N



AUSTRIA-MARTINEZ, J .:


This resolves the Petition for Review on Certiorari seeking the reversal of
the Order
[1]
of the Regional Trial Court of Iligan City, Branch 6 (RTC)
dated January 15, 2003 and its Omnibus Order dated April 9, 2003.

The undisputed facts are as follows.

The RTC admitted to probate the holographic will of Alice O. Sheker and
thereafter issued an order for all the creditors to file their respective claims against
the estate. In compliance therewith, petitioner filed on October 7, 2002 a
contingent claim for agent's commission due him amounting to
approximately P206,250.00 in the event of the sale of certain parcels of land
belonging to the estate, and the amount of P275,000.00, as reimbursement for
expenses incurred and/or to be incurred by petitioner in the course of negotiating
the sale of said realties.

The executrix of the Estate of Alice O. Sheker (respondent) moved for the
dismissal of said money claim against the estate on the grounds that (1) the
requisite docket fee, as prescribed in Section 7(a), Rule 141 of the Rules of Court,
had not been paid; (2) petitioner failed to attach a certification against non-forum
shopping; and (3) petitioner failed to attach a written explanation why the money
claim was not filed and served personally.

On January 15, 2003, the RTC issued the assailed Order dismissing without
prejudice the money claim based on the grounds advanced by
respondent. Petitioner's motion for reconsideration was denied per Omnibus Order
dated April 9, 2003.

Petitioner then filed the present petition for review on certiorari, raising the
following questions:

(a) must a contingent claim filed in the probate proceeding contain a
certification against non-forum shopping, failing which such claim
should be dismissed?

(b) must a contingent claim filed against an estate in a probate
proceeding be dismissed for failing to pay the docket fees at the time of
its filing thereat?

(c) must a contingent claim filed in a probate proceeding be dismissed
because of its failure to contain a written explanation on the service and
filing by registered mail?
[2]


Petitioner maintains that the RTC erred in strictly applying to a
probate proceeding the rules requiring a certification of non-forum shopping, a
written explanation for non-personal filing, and the payment of docket fees upon
filing of the claim. He insists that Section 2, Rule 72 of the Rules of Court
provides that rules in ordinary actions are applicable to special proceedings only in
a suppletory manner.

The Court gave due course to the petition for review on certiorari although
directly filed with this Court, pursuant to Section 2(c), Rule 41 of the Rules of
Court.
[3]


The petition is imbued with merit.

However, it must be emphasized that petitioner's contention that rules in
ordinary actions are only supplementary to rules in special proceedings is not
entirely correct.

Section 2, Rule 72, Part II of the same Rules of Court provides:

Sec. 2. Applicability of rules of Civil Actions. - In the absence of
special provisions, the rules provided for in ordinary actions shall be, as
far as practicable, applicable in special proceedings.

Stated differently, special provisions under Part II of the Rules of Court
govern special proceedings; but in the absence of special provisions, the rules
provided for in Part I of the Rules governing ordinary civil actions shall be
applicable to special proceedings, as far as practicable.

The word practicable is defined as: possible to practice or perform;
capable of being put into practice, done or accomplished.
[4]
This means that in the
absence of special provisions, rules in ordinary actions may be applied in special
proceedings as much as possible and where doing so would not pose an obstacle to
said proceedings. Nowhere in the Rules of Court does it categorically say that
rules in ordinary actions are inapplicable or merely suppletory to special
proceedings. Provisions of the Rules of Court requiring a certification of non-
forum shopping for complaints and initiatory pleadings, a written explanation
for non-personal service and filing, and the payment of filing fees for money
claims against an estate would not in any way obstruct probate proceedings, thus,
they are applicable to special proceedings such as the settlement of the estate of a
deceased person as in the present case.

Thus, the principal question in the present case is: did the RTC err in
dismissing petitioner's contingent money claim against respondent estate for failure
of petitioner to attach to his motion a certification against non-forum shopping?

The Court rules in the affirmative.

The certification of non-forum shopping is required only for complaints
and other initiatory pleadings. The RTC erred in ruling that a contingent money
claim against the estate of a decedent is an initiatory pleading. In the present
case, the whole probate proceeding was initiated upon the filing of the petition
for allowance of the decedent's will. Under Sections 1 and 5, Rule 86 of the
Rules of Court, after granting letters of testamentary or of administration, all
persons having money claims against the decedent are mandated to file or notify
the court and the estate administrator of their respective money claims; otherwise,
they would be barred, subject to certain exceptions.
[5]


Such being the case, a money claim against an estate is more akin to a motion
for creditors' claims to be recognized and taken into consideration in the proper
disposition of the properties of the estate. In Arquiza v. Court of Appeals,
[6]
the
Court explained thus:

x x x The office of a motion is not to initiate new litigation,
but to bring a material but incidental matter arising in the progress
of the case in which the motion is filed. A motion is not an
independent right or remedy, but is confined to incidental matters in
the progress of a cause. It relates to some question that is collateral to
the main object of the action and is connected with and dependent
upon the principal remedy.
[7]
(Emphasis supplied)

A money claim is only an incidental matter in the main action for the settlement of
the decedent's estate; more so if the claim is contingent since the claimant cannot
even institute a separate action for a mere contingent claim. Hence, herein
petitioner's contingent money claim, not being an initiatory pleading, does not
require a certification against non-forum shopping.

On the issue of filing fees, the Court ruled in Pascual v. Court of
Appeals,
[8]
that the trial court has jurisdiction to act on a money claim (attorney's
fees) against an estate for services rendered by a lawyer to the administratrix to
assist her in fulfilling her duties to the estate even without payment of separate
docket fees because the filing fees shall constitute a lien on the judgment pursuant
to Section 2, Rule 141 of the Rules of Court, or the trial court may order the
payment of such filing fees within a reasonable time.
[9]
After all, the trial court had
already assumed jurisdiction over the action for settlement of the estate. Clearly,
therefore, non-payment of filing fees for a money claim against the estate is not
one of the grounds for dismissing a money claim against the estate.

With regard to the requirement of a written explanation, Maceda v. De
Guzman Vda. de Macatangay
[10]
is squarely in point. Therein, the Court held thus:

In Solar Team Entertainment, Inc. v. Ricafort, this Court, passing
upon Section 11 of Rule 13 of the Rules of Court, held that a court has
the discretion to consider a pleading or paper as not filed if said rule is
not complied with.

Personal service and filing are preferred for obvious reasons. Plainly, such
should expedite action or resolution on a pleading, motion or other paper; and conversely,
minimize, if not eliminate, delays likely to be incurred if service or filing is done by mail,
considering the inefficiency of the postal service. Likewise, personal service will do
away with the practice of some lawyers who, wanting to appear clever, resort to the
following less than ethical practices: (1) serving or filing pleadings by mail to catch
opposing counsel off-guard, thus leaving the latter with little or no time to prepare, for
instance, responsive pleadings or an opposition; or (2) upon receiving notice from the
post office that the registered mail containing the pleading of or other paper from the
adverse party may be claimed, unduly procrastinating before claiming the parcel, or,
worse, not claiming it at all, thereby causing undue delay in the disposition of such
pleading or other papers.

If only to underscore the mandatory nature of this innovation to our set of
adjective rules requiring personal service whenever practicable, Section 11 of Rule 13
then gives the court the discretion to consider a pleading or paper as not filed if the
other modes of service or filing were not resorted to and no written explanation was
made as to why personal service was not done in the first place. The exercise of
discretion must, necessarily consider the practicability of personal service, for Section
11 itself begins with the clause whenever practicable.

We thus take this opportunity to clarify that under Section 11, Rule 13 of the 1997
Rules of Civil Procedure, personal service and filing is the general rule, and resort to
other modes of service and filing, the exception. Henceforth, whenever personal service
or filing is practicable, in the light of the circumstances of time, place and person,
personal service or filing is mandatory. Only when personal service or filing is not
practicable may resort to other modes be had, which must then be accompanied by a
written explanation as to why personal service or filing was not practicable to begin
with. In adjudging the plausibility of an explanation, a court shall likewise consider the
importance of the subject matter of the case or the issues involved therein, and the prima
facie merit of the pleading sought to be expunged for violation of Section 11. (Emphasis
and italics supplied)

In Musa v. Amor, this Court, on noting the impracticality of
personal service, exercised its discretion and liberally applied Section 11
of Rule 13:

As [Section 11, Rule 13 of the Rules of Court] requires, service and
filing of pleadings must be done personally whenever practicable. The
court notes that in the present case, personal service would not be
practicable. Considering the distance between the Court of Appeals
and Donsol, Sorsogon where the petition was posted, clearly, service
by registered mail [sic] would have entailed considerable time, effort
and expense. A written explanation why service was not done
personally might have been superfluous. In any case, as the rule is so
worded with the use of may, signifying permissiveness, a violation
thereof gives the court discretion whether or not to consider the
paper as not filed. While it is true that procedural rules are
necessary to secure an orderly and speedy administration of
justice, rigid application of Section 11, Rule 13 may be relaxed in this
case in the interest of substantial justice. (Emphasis and italics supplied)

In the case at bar, the address of respondents counsel is
Lopez, Quezon, while petitioner
Sonias counsels is Lucena City. Lopez, Quezon is 83 kilometers away
from Lucena City. Such distance makes personal service
impracticable. As in Musa v. Amor, a written explanation why service
was not done personally might have been superfluous.

As this Court held in Tan v. Court of Appeals, liberal
construction of a rule of procedure has been allowed where, among other
cases, the injustice to the adverse party is not commensurate with the
degree of his thoughtlessness in not complying with the procedure
prescribed.
[11]
(Emphasis supplied)

In the present case, petitioner holds office in Salcedo Village, Makati City,
while counsel for respondent and the RTC which rendered the assailed orders are
both in IliganCity. The lower court should have taken judicial notice of the great
distance between said cities and realized that it is indeed not practicable to serve
and file the money claim personally. Thus, following Medina v. Court of
Appeals,
[12]
the failure of petitioner to submit a written explanation why service has
not been done personally, may be considered as superfluous and the RTC should
have exercised its discretion under Section 11, Rule 13, not to dismiss the money
claim of petitioner, in the interest of substantial justice.

The ruling spirit of the probate law is the speedy settlement of estates of
deceased persons for the benefit of creditors and those entitled to residue by way of
inheritance or legacy after the debts and expenses of administration have been
paid.
[13]
The ultimate purpose for the rule on money claims was further explained
in Union Bank of the Phil. v.Santibaez,
[14]
thus:

The filing of a money claim against the decedents estate in the
probate court is mandatory. As we held in the vintage case
of Py Eng Chong v. Herrera:

x x x This requirement is for the purpose of protecting the estate of the
deceased by informing the executor or administrator of the claims against it, thus
enabling him to examine each claim and to determine whether it is a proper one which
should be allowed. The plain and obvious design of the rule is the speedy settlement of
the affairs of the deceased and the early delivery of the property to thedistributees,
legatees, or heirs. The law strictly requires the prompt presentation and disposition
of the claims against the decedent's estate in order to settle the affairs of the estate
as soon as possible, pay off its debts and distribute the residue.
[15]
(Emphasis
supplied)

The RTC should have relaxed and liberally construed the procedural rule on the
requirement of a written explanation for non-personal service, again in the interest
of substantial justice.

WHEREFORE, the petition is GRANTED. The Orders of the Regional
Trial Court of Iligan City, Branch 6 dated January 15, 2003 and April 9, 2003,
respectively,
areREVERSED and SET ASIDE. The Regional Trial Court of Iligan City,
Branch 6, is hereby DIRECTED to give due course and take appropriate action on
petitioner's money claim in accordance with Rule 82 of the Rules of Court.
No pronouncement as to costs.

SO ORDERED.

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 49022 May 31, 1946
Intestate estate of the deceased Consuelo Syyap. FRANCISCO QUISUMBING, administrator
and appellant,
vs.
MARIANO GUISON, claimant and appellee.
Ramon Diokno for appellant.
Paulino J. Sevilla for appellee.
FERIA, J .:
This case is here on appeal from the Court of First Instance of Manila.
The deceased, Consuelo Syyap, during her life time executed a promissory note dated November 9,
1940 for P3,000 in favor of Leonardo Guison payable sixty (60) days from the date thereof, with
interest at the rate of 12 per cent per annum.
The debtor Consuelo Syyap died on November 30, 1940. On December 5 of the same year,
intestate proceedings were instituted and notice given to creditors to file their claim within six (6)
months, which period for filing claims expired on August 31, 1941.
In the inventory filed on April 30, 1941, by the administrator of the estate of the deceased, the said
obligation of P3,000 was acknowledged as one of the liabilities of the decedent.
The creditor Leonardo Guison died on December 31, 1941, and his son Mariano Guison, who was
appointed as administrator of the intestate estate of his deceased father, filed the claim of P3,000
against the estate on March 9, 1943.
The attorney for the claimant, in his reply to the answer of the attorney for the administrator of the
estate of Consuelo Syyap, stated that the claimant believed in good faith that he was relieved of the
obligation to file a claim with the court, because said administrator had assured him that he should
not worry about it, since the debt was in the inventory and he would pay it as soon as he was
authorized by the court to do so, and that the same administrator had been paying the interest due
on the note up to January, 1943.
The lower court taking into consideration that the appellant administrator did not deny in his answer
to the claim the existence if the debt, that the latter was admitted in the inventory submitted by said
administrator to the court, and that the appellant had been paying interest on the debt up to January,
1943, allowed the appellees claim and ordered the appellant to pay the claimant the sum of P3,000
with interest at the rate of 12 per cent per annum from February 1, 1943.
The appellant contends that the court a quo erred or abused its discretion in allowing the appellees
claim under section 2, Rule 87, of the Rules of Court, eighteen months after the expiration of the
time previously limited for the filing of claims, and without a previous application for extension of time
having been filed by the claimant.
While it is true that under section 5 of Rule 87, "all claims for money against the decedent, arising
from contract, express or implied, whether the same be due, not due, or contingent, ... must be filed
within the time limited in the notice," it is also true that, under section 2 of the same Rule, "at any
time before an order of distribution is entered, on application of a creditor, who has failed to file his
claim within the time previously limited, the court may, for cause shown and on such terms as are
equitable, allow such claim to be filed within a time not exceeding one month.".
There is no question that the claim was filed before the court ordered the distribution of the estate of
the decedent Consuelo Syyap. The only questions to be determined are (1) whether the claim filed
by the claimant may be allowed by the court after hearing both parties, without necessity on the part
of the claimant to file a previous application for, and on the part of the court to grant, an extension of
time not exceeding one month within which the claim may be filed; and (2) whether cause was
shown by the claimant why he did not file the claim within the time previously limited..
(1) After a careful consideration of this case, we hold that the claim filed by the appellee may be
considered as implying an application for time within which to file said claim, and the order of the
lower court allowing such claim impliedly granted said appellee an extension of time within which to
file said claim. It would have been a waste of time on the part of the court and the parties in this
case, if the court had dismissed the claim and required the appellee to file, first, an application for a
period not exceeding one month within which to file his claim, and then to file his claim within the
time granted by the court, when the latter would allow the claim after all. Strict compliance with the
said requirement of section 2 of Rule 87 would be necessary if a claim had to be presented to and
passed upon by the committee on claims according to the old law; but now as it is to be filed with
and passed upon by the court itself, no harm would be caused to the adverse party by such a
procedure as was followed in the present case.
Moreover, the appellant, in his answer to the claim filed by the appellee, did not object to it on the
ground that the former had not previously applied for an extension of time not exceeding one month
within which to present his claim. It is to be presumed that both the attorneys for the appellant as
well as for the appellee knew that the claim was being filed under the provisions of section 2, Rule
87, of the Rules of Court, because the time previously limited had then already expired, and had
appellant objected to the claim on the above-mentioned ground and the court considered it
necessary for the appellee to do so, the latter would have complied literally with the law.
Section 2, Rule 87, of the Rules of Court contains a more liberal provision regarding the time for the
filing of a claim by a creditor who has failed to file his claim within the time previously limited, than
section 690 of the old Code of Civil Procedure on which the rulings in the cases quoted by the
appellant are based.
Under said section 690, the court may, on application of a creditor who has failed to present his
claim, renew the commission and allow further time not exceeding one month for the committee to
examine such claim if the application is filed within six months after the time previously limited had
expired, or if the committee has failed to give the notice required by law, provided that such
application be presented before the final settlement of the estate. So, although the estate has not yet
been finally settled, if such application is filed after six months from the expiration of the time
previously limited, or if the committee has not failed to give the notice required by law, the court has
no power to renew the commission and allow further time not exceeding one month for the filing and
examination by the committee of such claim, whatever might be the cause for such failure to file the
claim in time.
While, under section 2 of Rule 87, there is no limitation as to the time within which a creditor who
has failed to file his claim within the time previously limited, may file an application for extension of
time within which to file his claim, and the court may for cause shown grant such application fixing a
period not exceeding one month for that purpose, provided that the application is presented before
an order of distribution has been entered..
(2) The last sentence of section 2, Rule 87, provides that the court may, for cause shown and on
such terms as are equitable, allow such claim to be filed within a time not exceeding one month. As
it does not state what cause shall be considered sufficient for the purpose, it is clear that it is left to
the discretion of the court to determine the sufficiency thereof; and when the court allows a claim to
be filed for cause or causes which it considers as sufficient, on appeal this court can not reverse or
set aside the action of the court below unless the latter has abused its discretion, which has not
been shown by the appellant in this case. As was held in In re Estate of Tiangco quoted also by the
appellant:
. . . .Whether the period fixed by law for the presentation of claims may be extended is within
the sound discretion of the court, and the decision of the trial judge in this regard should not
be disturbed until it is clearly shown that he abused such discretion. (39 Phil., 967, 968.)
That nothing is more equitable than what was done by the lower court in this case, is evident.
Appellant does not only acknowledge in the inventory the existence of the debt, but does not deny it
in his answer to the claim filed by the appellee in the court below, and had been paying interest due
thereon up to January, 1943, that is, two months before the filing of the claim. Attorney for appellant,
in opposing the claim and appealing to this court from the decision of the court below, relies only on
the technicality that no previous application for extension of time has been filed by the claimant-
appellee.
Appellant's contention that the admission by the testator in his will of a debt in the case of Santos vs.
Manarang(27 Phil.. 209), quoted by the appellant, is a stronger reason for allowing a claim than the
admission of the decedent's obligation in the inventory filed by the administrator in the present case,
and yet this court denied the claim in said case, is without foundation; because, as this court said in
that case, "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." Besides, it is plain that the ruling in said case is not applicable to
the case at the bar. In that case of Santos vs. Manarang, the claim was not presented at all to the
committee on claims which had to pass upon it according to the old law, and this court held that the
admission of the debt in the testator's will was not a sufficient reason for the court to allow the
creditor's claim which had not been presented to said committee. While, in the present case, the
admission of the existence of the debt in the inventory filed by the administrator was considered by
the court, not as sufficient cause for not filing the appellees claim at all, but as one of the reasonable
causes or reasons for his failure to file it within the time previously limited.
In view of the foregoing, the decision appealed from is affirmed, with costs against the appellant. So
ordered.
Moran, C. J., Paras, Jaranilla, Pablo, and Briones, JJ., concur.
G.R. No. L-18403 September 30, 1961
IN RE ADMINISTRATION OF THE ESTATE OF PASCUAL VILLANUEVA. MAURICIA G. DE
VILLANUEVA, Petitioner, vs. PHILIPPINE NATIONAL BANK, Defendant-Appellant.

PAREDES, J.:chanrobles virtual law library
A case certified by the Court of Appeals on the ground that the issues involved are purely of
law.chanroblesvirtualawl ibrary chanrobles vi rtual law library
For the administration of the estate of her deceased husband, Pascual Villanueva, the widow
Mauricia G. Villanueva, on December 19, 1949, petitioned the Court of First Instance of Agusan, for
letters of Administration (Sp. Proc. No. 67). The petition was set for hearing and Notice thereof was
published on February 25, March 4, and 11, 1950, in the Manila Daily Bulletin. At the hearing, other
heirs while agreeing to the placing of estate under administration, opposed the appointment the
widow. The name of Atty. Teodulo R. Ricaforte, suggested and all the parties agreed. After the taking
the required oath, Atty. Ricaforte entered upon the performance of his duties. Under date of
November 9, 1950 the Clerk of the Agusan CFI, issued the following Notice to Creditors:
Letters of administration having been issued in the above entitled case in favor of Teodulo R.
Ricaforte for the settle of the intestate of Pascual Villanueva, deceased; chanrobles virtual law library
Notice is hereby given to all persons having claims for money against the decedent, the said
Pascual Villanueva, arising from contract, express or implied, whether the same be due, not due or
contingent, for funeral expenses and expenses of last sickness of the deceased, and Judgment for
money against him, requiring them to file their claims with the clerk of court within six but not beyond
twelve months after date of the first publication of this notice, serving copies of such claims upon
administrator, the said Teodulo R. Ricaforte.
The above notice contained the usual order for publication thereof (once a week for three
consecutive weeks) which was effected, thru the Morning Times of City, a newspaper of general
circulation, on Nov. 16, 23 and 30, 1950, which expired on November 16, 1951.chanroblesvi rtualawlibrary chanrobles virtual law l ibrary
On July 20, 1953, the defendant-appellant Philippine National Bank filed in the administration
proceedings, Creditor's Claim of the following tenor -
The Philippine National Bank, Creditor of Pascual Villanueva, deceased, respectfully presents its
claim against the estate of the said deceased for Approval as follows:
Original amount thru Agusan Agency on Dec. 20, 1939 ........................................................
P600.00
To int. at 10%: on P600.00 fr. 12-20-39 to 6-5-53 ......................................................................
747.45
Total due as of June 5, 1953 (Daily int. of P0.1644 after June 5, 1953) .......................... P1,347.45
That the said obligation has been due demandable since Dec. 20, 1940; that the same is true
and just claim and that it is still unpaid without any set-off.
On October 12, 1954, the Philippine National Bank filed a Motion for Admission of claim, stating
-
1. That the Philippine National Bank filed its claim dated July 20, 1953; chanrobles vi rtual law li brary
2. That the last action taken on the claim was an ordered this Honorable Court issued on March 20,
1954, transferring the hearing of the claim until the next calendar of the court, without objection of
the administrator; chanrobles virtual law l ibrary
3. That the administrator has not answered the claim nor denied the same.chanroblesvirtualawli brary chanrobles vi rtual law library
WHEREFORE, it is respectfully prayed that an order be issued admitting and approving the
claim and ordering the administrator to pay the Bank the amount of the claim.
The administrator, on November 5, 1954, opposed the alleging that he had no knowledge or
information sufficient to form a belief as to the truth of the allegations therein. As special defenses, he
interposed -
That the same indebtedness, if it existed, has already been paid; chanrobles vi rtual law library
That the caused action for the recovery of the aforesaid amount of P1,847.45 is barred by the
statute of limitations, for more than ten (10) Years have elapsed since the cause of action accrued up
to present time; chanrobles vi rtual law library
That the said claim is barred forever on the ground that notice to creditors having been
published in the MORNING TIMES of Cebu City, a newspaper of general circulation in on November 16,
23 and 30, 1950, ... the Philippine National Bank failed to file its claim within the time limited in the
notice, ....
The appellant PNB, on November 14, 1958, more than four (4) Years after the opposition of the
claim presented by the administrator, filed a pleading captioned "Petition for an Extension of time
within which to File the Claim of Philippine National Bank", alleging, among others, that Sec. 2, Rule
87 of the Rules, allows the filing of claims even if the period stated in the notice to creditors elapsed,
upon cause shown and on such terms as equitable; that its failure to present the claiming with the
period stated in the notice, was its lack of knowledge of administration proceedings, for while said
maintains a branch office in Agusan, the employees did not come to know of the proceedings, the
notice has been published in the Morning Times, a newspaper very limited circulation.chanroblesvi rtualawl ibrary chanrobles vi rtual law li brary
On January 16, 1959, the CFI issued the following Order -
It appearing that the claim of the Philippine National Bank against the estate of the deceased
Pascual Villanueva already barred by the statute of limitations because the claim was due and
demandable since December 20, 1940, but filed on July 20, 1953, after the expiration of ten years,
considering that said filing was furthermore not present court within the period fixed by Sec. 2, Rule
87 of the Rules of Court, and no reason having been shown to justify the tension of time for its filing,
the Court resolves to deny it as it hereby denies the petition for an extension of time for filing of the
claim by the Philippine National Bank. The failure of the Bank to present on time the claim was due its
own fault and can hardly be considered excusable negligence.
Appellant Bank moved to reconsider the above Order, arguing that the statute of limitations
had been suspended by the Moratorium Law, and that the courts can extend the period limited in the
notice, under special circumstances, and on grounds of equity (Velasquez v. Teod 46 Phil. 757). The
PNB listed five incidents, which considered special circumstances to warrant the of the extension to
present the claim, among which the lack of knowledge of the pendency of the administration
proceedings; the legitimacy of the loan secured the deceased; that when it filed the claim, it did know
that the period stated in the notice had already expired.chanroblesvi rtualawlibrary chanrobles virtual law l ibrary
In disposing the motion for reconsideration, the lower court, on March 3,1959, said -
The Court believes that the filing of money claim on July 20, 1953 in the Office of the Clerk of
Court did not suspend running of the period of prescription because said claim was filed out of time
and therefore invalid for all legal purposes. A careful revision of the record shows that the Philippine
National Bank, contrary to the pretension of its counsel, had knowledge of the present administration
proceedings long before July 20, 1953, because the second payment of the claim due to the deceased
Pascual Villanueva from the Philippine War Damage Commission in the amount of P6,441.30, was
deposited in the Agusan Agency of the Bank in June, 1951. And in the inventory filed by the new
administrator Francisco S. Conde, on February 27, 1957, the following item appears:
Money belonging to the said deceased which came into the hands of the administrator on
December 1, 1951, appearing in the Bank A-1114, Agusan Agency deposited by the late administrator
Teodulo R. Ricaforte. - P6,897.52.
WHEREFORE, the motion for reconsideration is denied for lack of merits.
The order of January 16, 1959 was the subject of the appeal to the Court of Appeals which, as
stated at the threshold of this opinion, certified the same to this Court.chanroblesvi rtualawlibrary chanrobles virtual law l ibrary
The important issue presented is whether or not the in question is already barred. Admittedly,
the claim was filed outside of the period provided for in the Order of the lower court, within which to
present claims against the estate. The period fixed in the notice lapsed on November 16, 1951 and the
claim was filed on July 20, 1953 or about 1 year and 8 months late. This notwithstanding, appellant
contends that it did not know of such administration proceedings, not even its employees in the
Branch Office in Butuan City, Agusan. It is to be noted that the petition for Letters of Administration
and the Notice to Creditors were duly published in the Manila Daily Bulletin and in the Morning Times,
respectively, which was a full compliance with the requirements of the Rules. Moreover, the supposed
lack of knowledge of the proceedings on the part of appellant and its employees had been belied by
uncontested and eloquent evidence, consisting of a deposit of an amount of money by the
administrator Of the estate in said Bank (Agusan Agency). The deposit was made on December 1,
1951, inspite of which the appellant Bank only filed its claim on July 20, 1953. It is quite true that the
Courts can extend the period within Which to present claims against the estate, even after the period
limited has elapsed; but such extension should be granted under special circumstances. The lower did
not find any justifiable reason to give the extension and for one thing, there was no period to extend,
the same had elapsed.chanroblesvi rtualawlibrary chanrobles virtual law library
Having reached the above conclusions, We deem it necessary to determine the question as to
whether or not the Moratorium Law had suspended the prescriptive period for filing of the claim under
consideration.chanroblesvi rtualawlibrary chanrobles virtual law li brary
WHEREFORE, the order subject of the appeal is hereby affirmed, with costs against appellant
Philippine National Bank, in both instances.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-4777 November 11, 1908
SUILIONG & CO., as liquidators of The Yek Tong Lim Fire, Marine, and Insurance Co.,
Ltd., plaintiffs-appellees,
vs.
SILVINA CHIO-TAYSAN, defendant-FRANCISCA JOSE, intervener-appellant.
Leodegario Azarraga, for appellant.
Carlos Ledesma, and Ramon Fernandez, for appellees.

CARSON, J .:
Avelina Caballero, deceased, owned during her lifetime a certain tract of land, which was duly
inscribed in her name in the land registry of the city of Manila. On March 27, 1903, she borrowed
from Francisca Jose, the intervener and appellant in this action, 1,000 pesos, Mexican currency, and
turned over her title deeds to this tract of land to the lender as security for the loan, but no entry
touching the transaction was noted in the land registry.
Avelina Caballero died on the 5th day of June, 1903, and thereafter Silvina Chio-Taysan, the
defendant in this action, instituted in the Court of First Instance of Manila an action, known, under
the system of civil procedure in existence prior to the adoption of the present code, as an "action for
the declaration of heirship" and on the 5th day of August, 1903, the following order declaring her to
be the only and exclusive heir of Avelina Caballero, deceased, was issued in that proceeding:
[United States of America, Philippine Islands. In the Court of First Instance of Manila. Part
III.]
It having been proven by both documental and oral evidence introduced in the above-cited
case, that the petitioner Silvina Chio-Taysan y Caballero is the daughter of Jose Chio-
Taysan and Avelina Caballero, who died on the 29th of April, 1895, and on the 5th of June,
1903, respectively, without leaving any other descendant or having executed any will; and
there being no objection whatever to the claim of the petitioner, it is hereby declared that the
said Silvina Chio-Taysan y Caballero is the legal heir abintestato of her deceased parents,
the said Jose Chio-Taysan and Avelina Caballero, in conformity with the provisions of the
Civil Code now in force. Let a certificate of this decision be issued to the interested party and
those who may hereafter apply for the same. So ordered.
A.S. CROSSFIELD, Judge.
On March 9, 1904, the registrar of deeds of the city of Manila by virtue of this order entered the
following inscription in the land registry whereby the said Silvina Chio-Taysan is made to appear as
the owner of the land in question:
Ninth inscription. Urban property. A parcel of land and a house of a strong materials,
tile roofed, built thereon, marked number eight, situated in Calle Lavezares of the district of
Binondo, this city, the remaining description of which appears in the first inscription of this
number. It has no encumbrances. Doa Avelina Caballero y Bugnot, of age, widow, of
this vicinity, is the owner of this property under a title of repurchase, according to the
proceeding inscription. Said lady and her husband, Don Jose Chio-Taysan, died on June 5,
1903, and April 29, 1895, respectively, and neither of them having executed a will, the
corresponding intestate proceedings were instituted, in which an order was issued on August
5, 1903, by A.S. Crossfield, judge of the third sala of the Court of First Instance of this city,
declaring their daughter, Silvina Chio-Taysan y Caballero, their intestate heir. By virtue
thereof, I inscribe, in favor of the said Silvina Chio-Taysan y Caballero, the right she was
acquired over the property of this number, under title by intestate inheritance. All the above
appears from the previous records and from the copy of the above judicial order, issued by
Don Salvador Chofre, assistant clerk of the Court of First Instance of this city, on August 5,
1903, which document was presented to this registry at 8:50 a. m. on the 25th day of
February last, as per record No. 452, page 266, of the 7th volume of the Diario. And all the
above being in accordance with the document above referred to, I sign these presents in
Manila, on March 9, 1904 Fees: $7.50, No. 7, Tariff of Fees. Alberto Barretto.
On the 26th day of May, 1904, the said Silvina Chio-Taysan borrowed the sum of P2,500 from the
Fire and Marine Insurance and Loan Co., of which the plaintiff is the lawfully appointed liquidator,
and mortgaged the land in question as security for the repayment of the loan.
Thereafter the husband of Silvina Chio-Taysan instituted special proceedings under the provisions of
the present Code of Civil Procedure, for the administration of the estate of Avelina Caballero,
deceased, and on the 16th day of October, 1905, he was, in accordance with his petition, appointed
administrator; and thereupon, submitted as such administrator, an inventory of the property of the
estate, in which was included the land in question; and on the 28th of November, 1905, Francisca
Jose, the intervener in this action, submitted her claim to the commissioner appointed in these
proceedings, for the sum of 1,000 pesos, Mexican currency, loaned the deceased, as above set out,
on the 28th day of March, 1904, which claim was duly approved on the 31st of August, 1906.
On the 10th day of October, 1906, the plaintiff in this action filed its complaint against the defendant,
Silvina Chio-Taysan, praying for judgment for the amount loaned her as above set out, and the
foreclosure of its mortgage upon the land. To this complaint the defendant, Silvina Chio-Taysan, filed
her answer, admitting the facts alleged in the complaint and declining to interpose any objection to
the prayer of the complaint; but on the 30th of October, 1907, Francisca Jose was permitted to
intervene and file her separate "complaint in intervention" wherein she set out the facts touching the
loan made by her to Avelina Caballero, deceased, and prayed that the court declare the mortgage
executed by Silvina Chio-Taysan rescinded and of no effect; and further that it annul the inscription
in the land registry of the title of Silvina Chio-Taysan to the land in question; and declare this land
subject to her claim against the estate of Avelina Caballero, deceased. lawphil. net
The trial court entered judgment in favor of the plaintiff and against both the defendant and the
intervener in conformity with the prayer of the complaint, and the intervener brings that judgment
before this court for review upon her bill of exceptions duly signed and certified.
We do not think that the judgment of the trial court can be sustained in so far as it wholly denies
relief to the intervener, Francisca Jose. The trial judge denied the relief prayed for by the intervener,
on the ground that her intervention in this action was for the purpose of the written title deeds on the
land, and that, since she admitted that she had admitted her claim against the estate of Avelina
Caballero, deceased, to the committee appointed in the administration proceedings, she must be
taken to have abandoned, whatever lien she may have held as security therefor, in accordance with
the provisions of section 708 of the Code of Civil Procedure.
The prayer of her complaint in intervention, however, is merely for the rescission and annulment of
the mortgage contract between the loan company and the defendant and of the inscription in the
land registry of the title of the defendant, and a declaration that as a creditor of the estate she has a
superior right to that of the plaintiff company in the proceeds of any sale of the land in question. She
does not seek to enforce her claim and recover her debt in this proceeding, but merely to prevent the
plaintiff from securing a judgment in this action which would take out of the estate property which
she believes to be subject to her claim set up in the administration proceedings. If her contentions
are well founded, and if the estate of the deceased is subject to the payment of the debts of the
deceased in such form that the heirs of the deceased could not alienate this land free of the claims
of the creditors of the deceased against the land, for the payment of their claims against the
deceased, the intervener is clearly entitled to at least so much of the relief she seeks in this action as
will have the effect of preventing the sale of this land under the plaintiff's foreclosure proceedings,
free of the claims of creditors of the deceased, because, if the plaintiffs in this action were permitted
to foreclosure their mortgage and to recover their debt from the sale of the land in question, it might
well be that there would not be sufficient property in the estate to pay the amount of the claim of the
intervener against the estate.
Had the transactions above set out in taken place under the system of law in force in these Islands
immediately prior to the 1st day of October, 1901, when the new Code of Civil Procedure went into
effect, there would be no difficulty in determining the respective rights of the various parties to this
action. Article 657 of the Civil Code provides that Los derechos a la succession de una persona se
transmiten desde el momento de su muerte. (The rights to the succession of another are transmitted
from the moment of his death); and article 661 provides thatLos herederos suceden al difunto por el
hecho solo de su muerte en todos sus derechos y obligaciones. (Heirs succeed the deceased by the
mere fact of his death, in all rights and obligations). Under these, and co-related provisions of the
Civil Code, a sole and exclusive heir (as defined in article 660 of the Civil Code) became the owner
of the property and was charged with the obligations of the deceased at the moment of his death,
upon precisely the same terms and conditions as the property was held and as the obligations had
been incurred by the deceased prior to his death, save only that when he accepted the inheritance,
"with benefit of an inventory" he was not held liable for the debts and obligations of the deceased
beyond the value of the property which came into his hands.
The property of the deceased, both real and personal, became the property of the heir by the mere
fact of death of his prodecessor in interest, and he could deal with it in precisely the same way in
which the deceased could have dealt with it, subject only to the limitations which by law or by
contract were imposed upon the deceased himself. He could alienate or mortgage it with the same
freedom as could the deceased in his lifetime; the unsecured debts and other personal obligations of
the deceased becoming the unsecured debts and personal obligations of the heir for which he was
held personally responsible in precisely the same manner as the deceased, save only, as has been
said before, where he availed himself of the privilege of taking the estate "with the benefit of an
inventory," in which case the extent of his liability was limited to the value of the estate which came
into his hands, though in other respects its character as a personal liability remained unchanged.
Thus death created no new lien in favor of creditors upon the property of the deceased, which was
not in existence at the time of his death; personal debts and obligations of the deceased becoming
the personal debts and obligations of the heir, to whom the creditor was compelled to look for
payment, with no new right in or to the property of the decease, in the hands of the heir, which he did
not have in or to such property in the hands of the deceased. (Title 3, Book of the Civil Code.)
Spanish procedural law provided an action known as an action for the declaration of heirship
(declaracion de herederos) whereby one claiming the status of heir could have his right thereto
judicially declared, and this judicial declaration of heirship unless and until set aside or modified in a
proper judicial proceeding, was evidence of the fact of heirship which the officials charged with the
keeping of the public records, including the land registry, were bound to accept as a sufficient basis
for the formal entry, in the name of the heir, of ownership of the property of the deceased.
It is evident therefore that, unless the provisions of Spanish procedural and substantive law, in force
when the new Code of Civil Procedure went into effect, have been repealed or modified thereby, the
defendant in this action, Silvina Chio-Taysan, who was judicially declared to be the sole and
universal heir of Avelina Caballero, deceased, became, by the mere fact of the death of Caballero,
the absolute owner of the tract of land in question, subject only to such liens thereon as may have
existed prior thereto, the personal obligations of the deceased also passing to her at the same time;
that, upon proof of such judicial declaration of heirship, the register of deeds of the city of Manila
properly entered Chio-Taysan in the land registry as the owner of this land by right of inheritance;
and that the Loan Company, of which the plaintiffs are the duly appointed liquidators, was entitled to
rely on the properly noted entries in the land registry and that the company's mortgage deed from
Chio-Taysan, in whose name the land is registered, could not be affected by the unrecorded claim of
the indebtedness of the intervener, who must look to the heirs for the recovery of her debt.
But both the substantive and procedural law touching rights of succession and their enforcement,
which were in force in these Islands when the new Code of Civil Procedure went into effect, have, to
a greater or less degree, been repealed or modified by its enactment; and we are of opinion that,
under the provisions of the new code, the heir is not a such personally responsible for the debts of
the deceased, in whole or in part; and on the other hand, the property of the deceased comes to him
charged with the debts of the deceased, so that he can not alienate or charge it free of such
debts, until and unless they are extinguished either by payment, prescription, or satisfaction in one
or other of the modes recognized by law.
It must be admitted that we can not point out the specific section of the new Code of Civil Procedure
which in express terms repeals the old law and formally enacts the new doctrine of succession just
laid down; but we think that an examination of the various provisions of that code touching the
administration of the estates of deceased person leaves no room for doubt that they do so by
necessary implication.
The legislators who enacted this code were more especially acquainted with the American and
English systems of legislation, and in most of its provisions closely adhered to American precedent.
It substantially repeals in toto the proceedings prescribed under the old law for the administration of
estates of deceased persons, and substitutes therefor a system similar to that generally adopted in
the United States; most of its provisions having been borrowed word for word from the codes of one
or other of the various States. The substantive law in force in these Islands being in many respects,
and especially in regard to rights of inheritance, wholly different from that in force in the various
States from which the new system of administration of the estates of deceased persons was
adopted, many irreconcilable conflicts are to be found between the provisions of the new and the old
law, so that it becomes necessary either to declare a great part of the provisions of the new Code of
Procedure void and no effect, as wholly inapplicable, or to hold that in such cases the provisions of
substantive as well as procedural law in conflict or inconsistent with the provisions of the new Code
of Procedure are repealed, or amended by the substitution of such other provisions as are clearly
necessary as a basis upon which the new provisions of procedural law are predicated.
An examination more especially of sections 597, 644, 695, 727, 729, 731, 733, and 749 of the Code
of Civil Procedure, read together with the remaining provisions for the administration of the estates
of deceased persons, clearly indicates that the provisions of articles 660 and 661 of the Civil Code
have been abrogated.
These provisions of the new code clearly demonstrate that the terms heredero and legatario, as
defined in the Civil Code (art. 660), are not synonymous with the words "heir" and "legatee," as used
in the new code; the word "heir" in the new code being technically and applicable only to a relative
taking property of an intestate by virtue of the laws of descent, devisee and legatee being reserved
for all persons whether relatives or not, taking respectively real or personal property by virtue of a
will; while heredero in the Civil Code was applicable not only to one who would be called an "heir,"
under the provisions of the new code, but also to one, whether relative or not, who took what might
be called "a residuary estate under a will" (el que sucede a titulo universal).
It appears also from an examination of these provisions that the legislature has provided no
machinery whereby an absolute right on the part of the heir to succeed by the mere fact of death
to all the rights and property of the deceased may be enforced, without previous payment or
provision of the payment of the debts; and on the other hand, it has provided machinery for the
enforcement of the debts and other obligations of the deceased, not as debts or obligations of the
heir, but as debt or obligations of the deceased, to the payment of which the property of the
deceased may be subjected wherever it be found. Thus section 597 expressly provides that, in those
cases where settlement of an intestate estate may be made without legal proceedings, either by a
family council, as known under the Spanish law, or by an agreement in writing executed by all the
heirs, the real estate of the deceased remains charged with liability to creditors of the deceased for
two years after the settlement, "notwithstanding any transfers thereof that may have been made;"
and we think the inference is clear that the legislator in this section recognizes and affirms the
doctrine that, prior to the date of such settlement, the real estate at least was charged in like manner
with the debts of the deceased. So it will be found that, where the legal proceedings are had looking
to the settlement of testate or intestate estates, provision is made for the recovery of claims against
the deceased, not by proceedings directed against the heir, but by proceedings looking directly to
the subjection of the property of the deceased to the payment of such claims; the property both real
and personal being, in express terms, made chargeable with the payment of these debts, the
executor or administrator having the right to the possession of the real as well as the personal
property, to the exclusion of the heirs, so long as may be necessary for that purpose (secs. 727 and
729).
For practical purposes it may well be said that in the eye of the law, where there is no remedy to
enforce an alleged right when it is invaded, the existence of the right may safely be denied; and
where the law furnishes a remedy whereby one may enforce a claim, that claim is a right recognized
and established by the law. The new Code of Procedure furnishing no remedy whereby the
provisions of article 661 of the of the Civil Code may be enforced, in so far as they impose upon
the heredero (heir) the duty of assuming as a personal obligation all the debts of the deceased, at
least to the extent of the value of the property received from the estate; or in so far as they give to
the heredero the reciprocal right to receive the property of the deceased, without such property
being specifically subjected to the payment of the debts to the deceased by the very fact of his
deceased, these provisions of article 661 may properly be held to have been abrogated; and the
new code having provided a remedy whereby the property of the deceased may always be
subjected to the payment of his debts in whatever hands it may be found, the right of a creditor to a
lien upon the property of the deceased, for the payment of the debts of the deceased, created by the
mere fact of his death, may be said to be recognized and created by the provisions of the new code.
(Pavia vs. De la Rosa, 8 Phil. Rep., 70).
It is evident, therefore, that a judgement in an action for the declaration of heirship in favor of one or
more heirs could not entitle such persons to be recognized as the owner or owners of the property of
the deceased on the same terms as such property was held by the deceased, for it passes to the
heir, under the new code, burdened with all the debts of the deceased, his death having created a
lien thereon for the benefit of creditor; and indeed an examination of the proceedings prescribed in
the new Code of Civil Procedure for the administration and distribution of the estates of deceased
persons leaves no room for doubt that those proceedings are exclusive of all other judicial
proceedings looking to that end, and supersede the judicial proceeding for the declaration of
heirship, as recognized in the old procedure, at least so far as that proceeding served as a remedy
whereby the right of specific persons to succeed to the rights and obligations of the deceased as his
heirs might be judicially determined and enforced.
Examining the facts in the case at bar, in the light of the doctrine as to the law of succession as thus
modified and amended by the new Code of Civil Procedure, which went into effect prior to the death
of Avelina Caballero, it is evident that her death created a lien upon her property in favor of the
intervener Francisca Jose, for the payment of the debt contracted by her during her lifetime, and that
this lien ought to have and has priority to any lien created upon this property by the heir of the
deceased; that the judicial declaration of heirship in favor of Silvina Chio-Taysan, could not and did
not furnish a basis for an entry in the land registry of the name of Silvina Chio-Taysan as the
absolute owner of the property of Avelina Caballero; that such entry, improperly made, could not and
did not prejudice the lien of the intervener, Francisca Jose, for the debt due her by the deceased
(Mortgage Law, art. 33); and that the mortgage of the property of the deceased by her heir, Silvina
Chio-Taysan, was subject to the prior lien of the intervener, Francisca Jose, for the payment of her
debt.
It is not necessary for us to consider the action of the court below in ordering the foreclosure of the
mortgage, in so far as it affects the defendant Silvina Chio-Taysan who did not appeal; but we think
that the intervener, who is seeking to subject the property of the deceased to the payment of her
debt in the administration proceedings now pending, is clearly entitled to so much of the relief prayed
for as will have the effect of preventing the application of the proceeds of the sale of this land under
foreclosure proceedings to the payment of debts contracted by the heir until and unless it shall
appear that the residue of the estate of the deceased is sufficient to satisfy her claim. Such provision
for the protection of her rights having been made, the other relief prayed for by her may properly be
denied, since a provision subjecting the land in question to the payment of her claim against the
estate of Avelina Caballero, deceased, fully and sufficiently protects her rights in the premises, and
her rights having been secured, she has no proper interest in the rescission of the mortgage contract
between plaintiff and defendant, or the cancellation of the inscription of the defendant's title as heir in
the land registry.
The judgment of the trial court should, therefore, be modified in accordance with the foregoing
principles, and the record will be returned to the trial court where judgment will be entered modifying
the judgment, by providing that the proceeds of the sale of the land under the foreclosure
proceedings will be deposited with the clerk of the court, where it will be retained until the amount of
the debt due the intervener and unpaid in the course of the administration of the estate of Avelina
Caballero shall have been ascertained, whereupon the said funds shall be applied: first, to
extinguish the unpaid residue, if any, of the claim of the intervener; second, to pay the debt due the
plaintiff in this action; and finally, the residue, if any, to be paid to the estate of the deceased; the
intervener to have her costs in this action in both instances. So ordered.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 13910 September 17, 1919
SOCIEDAD DE LIZARRAGA HERMANOS, plaintiffs-appellants,
vs.
FELICISIMA ABADA, ET AL., defendants-appellants.
Charles C. Cohn for plaintiff and appellant.
Crossfield and O'Brien for defendants and appellants.
MOIR, J .:
This case is before the court on appeal by plaintiffs from a judgment of the Court of First Instance of
Occidental Negros, Honorable Norberto Romualdez, judge.
For a better understanding of the facts the history of the case is given.
Francisco Caponong died in October, 1906, owing the plaintiffs a sum of money which was then less
than the amount allowed by the commissioners.
His widow, Felicisima Abada, was appointed administratrix of the estate, commissioners to appraise
the estate and to pass on the claims against the estate were duly appointed, and plaintiffs presented
their claim which was allowed by the commissioners in the sum of P12,783.74. The commissioner's
report was dated in February, 1909.
The administratrix leased the hacienda [farm] known as "Coronacion" to Hilario Zayco for a term of
years, but afterwards she married Vicente Alvarez, one of the defendants, and the lease was
transferred to Alvarez by Zayco, October 2, 1908.
On the 11th of April, 1913, nearly seven years after the death of Caponong, the plaintiffs herein filed
a suit in the Court of First Instance of Occidental Negros against Felicisima Abada personally and as
administratrix of the estate of Francisco Caponong, alleging that Francisco Caponong owed plaintiffs
P12,783.74, and that Felicisima Abada in her own name and as administratrix, had been receiving
from the plaintiffs money and effects from 1908 to 1912 which money and effects were used by the
defendant in "the expense of cultivation and the exploitation of the Hacienda 'Coronacion,' "and that
defendant had delivered to plaintiffs the sugar produced until the last crop which she refused to
deliver to them. And that due to "los contratiempos agricolas y a la poca produccion de la
hacienda [drought and poor crops of the farm],' and after deducting for the sugar delivered, the
account of the defendant showed a balance in favor of plaintiffs on the 27th of August, 1912, of
P62,437.15; that of this amount they were informed the defendant recognized as due from the estate
only "about P14,000" which however had not been paid; that it had been agreed by Francisco
Caponong that the "amounts" taken should draw interest at the rate of 12 per cent from the date of
each, and that in case it was necessary to bring suit P1,500 would be paid by defendant to plaintiffs
for their expenses and attorney's fees, and they asked for judgment for P62,437.15 with interest at
12 per cent and P1,500 for attorney's fee.
A copy of the account of the administratrix, dated August 27, 1912, showing the same balance due
plaintiffs, seems to have been filed with that suit.
The defendant's answer in that case (No. 969, Neg. Occi.) admits she owed P8,555.78 as
administratrix, and alleges that the balance was due by her personally.
The guardian of the minor children of Francisco Caponong asked permission of the court to
intervene in that suit, and this being granted, he denied the claim under oath, and alleged that the
estate of Francisco Caponong did not owe plaintiffs anything.
On the 25th of August, 1914, the parties, including the guardian of the minors, presented a motion in
court stating that they had made an amicable settlement of the litigation, and prayed the court to
dismiss the action, which was done.
The record shows that the plaintiffs in that suit had a motion pending in the intestate proceedings of
Francisco Caponong, petitioning the court to the same effect as the complaint in suit No. 969.
The settlement agreed upon was, briefly, that the defendants, including the guardian of the minor
children, "recognized that the deceased Francisco Caponong's estate was indebted to the plaintiffs,
according to a liquidation of the accounts on the 30th of June, 1913, in the sum of P68,611.01, which
was to be paid with 10 per cent interest in seven equal annual installments;" and to secure this debt,
the defendants agreed to give plaintiffs a first mortgage on all the property of Francisco Caponong,
except the growing sugar cane, and on all the property belonging exclusively to Felicisima Abada,
and the defendants agreed to secure judicial approval of the settlement. The defendants also agreed
to mortgage the carabaos then on the hacienda to plaintiffs.
The contract is dated the 27th of April, 1914.
The mortgage of the hacienda was duly executed by Felicisima Abada for herself and as
administratrix, and the guardian of the children and Vicente Alvarez, the husband of Felicisima
Abada, signed the mortgage which is also dated the 27th of April, 1914. The carabaos were not
mortgaged.
The compromise was approved by the court as well as the mortgage.
The mortgage given was not recorded in the registry of property up to time of the institution of this
suit, June 24, 1916.
Coming now to the present action, the plaintiffs allege in the complaint in this suit, the former suit
and its settlement with judicial approval; the amount due thereunder; i. e., P68,611.01; that
defendants had let two installments go by without paying anything; that the amount due them with
accrued interest was P90,383.49; that besides the property mortgaged, as per Exhibit B, another
parcel of land was mortgaged, and that defendants promised to mortgage the carabaos on the
hacienda 'Coronacion," and that this promise was one of the motives and considerations including
the plaintiffs to accept the compromise agreement, but that defendants refused to sign the
agreement mortgaging the carabaos with the object and intent of reducing the security of plaintiffs;
that defendants were about to transfer their property not mortgaged, and they prayed for an
attachment on property of defendants not to exceed P20,000 in value, and for judgment for P90,
383.49 with interest, and that if this amount should not be paid that the mortgaged property be sold,
and if not sufficient to pay the debts, that the property levied on under the attachment be sold.
The court granted the attachment order the 24th of July, 1916, and the provincial sheriff attached
one parcel of land, the growing crops, certain products of the soil, and various animals.
On the 16th of February, 1917, the plaintiffs filed a motion in court alleging that the property
mortgaged to secure their debt was not sufficient to secure the debt; that defendants, with the
intention of prejudicing the interest of the plaintiffs, were negligent in the conservation and care of
the property, and they asked the court to appoint a receiver for the property that
was mortgaged. The court granted this motion on the 20th of February, 1917, as to all the
property attached, and on the 26th of February, extended the receivership to all
the mortgaged property.
The receiver took charge of the property and the defendants were ousted from the house they had
beenoccupying on the premises.
The defendants, Felicisima Abada, administratrix, and Januario Granada, the guardian, filed an
amended answer in which they allege their representative capacity; that the claim of the plaintiffs
against the intestate proceedings of Francisco Caponong had been allowed in the sum of
P12,783.74 by the commissioners; that the property belonged to the children of the deceased; that
the only interest of Felicisima Abada personally was her usufructuary interest in one-sixth of the
property; that all the property was in custodia legis, and could not lawfully be attached; that the
administratrix had not contracted any other obligation, and that, if any existed, it was the personal
debt of her present husband, Vicente Alvarez; that Exhibits A and B, (the compromise agreement
and the mortgage executed in conformity therewith) made a part of the complaint, were obtained
through fraud and false representation; that the approval of the court was obtained through fraud
and deceit, and was illegal and of no value; that defendants have never attempted to sell or conceal
their property, and prayed the court to declare Exhibits A and B null and void; and that the
attachment was malicious and illegal, and they presented a counterclaim based on the wrongful
issuance, on false affidavits of the attachment, laying their damages in the sum of P89,960 for which
they asked judgment. And a second counterclaim was presented based on the unwarranted
appointment of a receiver for property already in custody of the court, through the administratrix and
they alleged their damages in this count in the sum of P28,120.
The Honorable Norberto Romualdez, judge, in his decision largely sustained defendants' claim, and
declared that plaintiffs should pay as damages
For improperly causing the appointment of a receiver P 500.00
For the attachment of carabaos, etc 500.00
For damages to the sugar because of the attachment and the
appointment of a receiver
4,462.50
For damages to land by reason of being left to grow up in
bushes
5,000.00
For damages to palay crop 2,800.00

13,262.50
A further sum of P1,000 damages was awarded to Felicisima Abada for having been put out of her
house when the receiver was appointed.
The attachment was dissolved and the receiver discharged, and he was ordered to return the
property to defendants.
Judgment was given for the plaintiffs to recover from defendant administratrix the sum of P8,555.78
with interest which, added to the principal, brought the amount to P11,392.99 with 10 per cent
interest on that sum till paid.
A personal judgment was also given plaintiffs against the defendants Abada and Alvarez for
P79,970.21.
The plaintiffs' claim against the guardian of the children was dismissed.
From this judgment Felicisima Abada appealed personally and as administratrix alleging that the trial
court should have granted greater damages. The questions presented by her appeal will be
sufficiently treated in the appeal of plaintiffs.
The plaintiffs allege nineteen different errors of the trial court. It seems that all the questions are
involved in errors Nos. 1, 2, 4, 5, 10, 12, 13 and 18, which are as follows:
1. The court erred in holding that the obligation set forth in Exhibits A and B should be
understood as limited to the sum of P8,555.78, instead of the sum of P68, 611.01 therein
stated.
2. The court erred in reducing the amount of the mortgage, Exhibit B, from P68,611.01 to
P8,555,78.
4. The court erred in finding that just and sufficient grounds did not exist for the attachment of
the properties which are the subject-matter of this action.
5. The court erred in finding that just and sufficient grounds did not exist for the appointment
of a receiver for the properties which are the subject-matter of this action.
10. The court erred in finding that the defendants, or either or any of them, were damaged in
the sum of P5,000 by reason of injury to the sugar lands which are the subject-matter of this
action.
12. The court erred in declining and refusing to foreclose the mortgages which are the
subject-matter of the present action.
13. The court erred in reducing the indebtedness of the Estate of Francisco Caponong from
P90,383.49 to P11,392.99.
18. The court erred in absolving from the complaint herein the defendant Januario Granada
as guardian of the minors, Juan Buenaventura, Jose, Nicanor and Carlos Caponong y
Abada.
As to the first error. Exhibit A was the compromise agreement made in action No. 969, Lizarraga
Hermanos against Felicisima Abada personally and as administratrix, in which the guardian of the
minor children intervened, as defendant, by permission of the court. Exhibit B was the mortgage
given to secure the amount agreed upon in that settlement.
The claim of the plaintiffs herein against the estate of Francisco Caponong had been fixed by the
commissioners. The amount so determined was all the estate owed plaintiffs. The court says in its
decision that in approving the settlement of action No. 969, its approval was meant to include only
the amount actually due by the estate, and that the balance of the claim was intended to be
approved as against Felicisima Abada personally.
It is argued that "this is sheer and unequivocal repudiation of a solemn and formal act" of the court.
The record in case No. 969 is presented as Exhibit C by plaintiffs. In their complaint in that action
(which suit should never have been filed as all the property was in the custody of the court), plaintiffs
allege that their original claim against the estate of Francisco Caponong was only P12,783.74, and
that the balance of the claim was due from Felicisima Abada as administratrix and personally without
stating how much was owed by her personally and how much was owed by her as administratrix.
Whether the court in approving the compromise intended to hold the defendant estate liable only for
the original debt, and defendant Abada for the balance, is not material. The language used by the
court is very clear and seems to be an outright approval of the "transaccion" (compromise), and
would, so far as the language goes, leave no room for doubt of the court's approval of the agreement
in full and as written.
But could the court approve such an agreement? Could the court authorize a mortgage of the state?
The law declares that commissioners shall pass upon all claims against the estate. They had done
so in this case. The law fixed the limit of the estate's liability. The court could not charge it with debts
that were never owed by it. The administratrix could only charge the estate with the reasonable and
proper expenses of administration.
The estate owed plaintiffs less than P13,000 when the commissioners passed on their claim. Part of
this has been paid, and there was a balance due plaintiffs of P8,555.78 at the time of the trial, plus
interest. The plaintiffs, after their claim had been presented and allowed by the commissioners,
made advances to the administratrix till their claim was more than P68,000.
It is urged that the major part of this debt of P68,000 is administration expenses, and as such is
chargeable against the assets of the estate. No reason is given why the expense of administration
should be so great, and the evidence fails to sustain this position.
The administration expense would be the necessary expenses of handling the property, of protecting
it against destruction or deterioration, and possibly producing a crop, but if plaintiffs, holding a claim
originally for less than P13,000 against the estate, let the administratrix have money and effects till
their claim grow to P68,000 they can not be permitted to charge this amount as expense of
administration. They might be allowed to charge it against the current revenue from the hacienda or
the net proceeds of the "exploitation of the hacienda" for which it was obtained and used, as
plaintiffs allege, but it cannot relate back to the presenting of their claim to the commissioners, and
be a charge against the inheritance of the heirs, or even a claim to prorate with other creditors'
claims allowed by the commissioners. By expense of administration we understand to be the
reasonable and necessary expense of caring for the property and managing it till the debts are paid,
as provided by law, and of dividing it, if necessary, so as to partition it and deliver to the heirs.
The court could not approve a settlement saddling upon the estate debts it never owed, and if it did,
its approval would be a nullity.
To give effect to the compromise as written would result in great wrong, and destroy every chance
the minor children had to participate in the inheritance of their father.
The contract was clearly a dead letter, and the approval of the court could not breathe the breath of
life into it.
That the mortgage given at the same time and as a result of the agreement was without legal
warrant is equally clear. No mortgage can be placed by an administrator on the estate of a
descendant, unless it is specifically authorized by statute.
There is no statute in the Philippine Islands authorizing it.
It may be stated as a general proposition, that neither executors, unless specially authorized
by will, nor administrators, have the power to bind the estate of the deceased by borrowing
money. (The American Law of Administration, Woerner, Vol. 2, sec. 345.)
In the case of Johnson vs. Davidson, the Supreme Court of Illinois (Vol. 162, at page 235) said:
The argument on behalf of appellants seems to proceed upon the supposition that an
administrator may bind the heirs by his mortgage of real estate for the purpose of raising
money with which to pay the debts of the ancestors, and that a court of equity will sustain the
mortgage, or a title derived under it, if it be shown that the borrowed money was honestly
applied to the payment of debts. No authority is cited in support of this position, and none,
we believe, can be found. (See also Smith vs. Hutchinson, 108 Ill., at p. 668.)
In the case of Black vs. Dressel's Heirs, the Supreme Court of Kansas (Vol. 20, at page 154) said:
. . . That the statute grants no power to an administrator to borrow money upon a mortgage
of the real estate of the decedent, is not controverted. Indeed, such an act is foreign to the
policy and purpose of administration, which aims to close up, not to continue an estate. . . .
In 151 N. Y. Reports, Duryea vs. Mackey, it is said at p. 207:
The mortgage executed by the temporary administrator in this case which purported to bind
the whole estate, was therefore ineffectual to charge the interest of the devises in remainder,
unless the order of the surrogate authorizing the mortgage was a lawful exercise of his
jurisdiction or unless they have estopped themselves from questioning its validity. It is very
clear that the order of the surrogate was without jurisdiction.
The learned counsels for appellants in their brief do not cite a single authority for the placing of a
mortgage on an estate in administration, and none has been found. It must be held that the
mortgage was void.
The court should have closed up the estate.
So many courts seem to violate the law on this point that it may serve a useful purpose to call
attention to our statutes on the subject of estates.
Section 743 of the Code of Civil Procedure declares:
The court, at the time of granting letters testamentary or of administration, shall allow to the
executor or administrator a time for disposing of the estate and paying the debts and
legacies of the deceased person, which time shall not, in the first instance, exceed one year;
but the court may, on application of the executor or administrator, from time to time, as the
circumstances of the estate require, extend the time not exceeding six months at a time, nor
so that the whole time allowed to the original executor or administrator shall exceedthree
years.
Section 745 provides that if the executor or administrator dies, the new administrator appointed shall
give the same notice for an extension of time which shall not exceed six months beyond the time
which might have been allowed the first administrator.
While these sections may be considered as only directory, all Courts of First Instance should exert
themselves to close up estates within twelve months from the time they are presented, and they may
refuse to allow any compensation to executors and administrators who do not actively labor to that
end, and they may even adopt harsher measures.
The second assignment of error is that the court should not have reduced the amount of the
mortgage (Exhibit B) from P68,611.01 to P8,555.78. The court did err, but its error consisted in not
declaring the mortgage void.
The court was without jurisdiction to approve the mortgage in the first place, and its approval was a
nullity. Plaintiff's claim against the estate was P8,555.78 with interest as added by the court. This
claim should be paid pro rata with any other unpaid claims against the estate.
The other errors of appellant need only brief consideration.
That an attachment should not have been levied on the carabaos in administration is too plain to
need discussion. If they were in the name and possession of the administratrix, they were
in custodia legis, and could not be lawfully attached. The plaintiffs as creditors of the estate could
have petitioned the court to compel the administratrix to take any steps necessary and proper to
protect the interest of all concerned.
The appointment of a receiver was equally unjustified and improper. The property being under the
court's control, the court should have removed the administratrix, if necessary, and it could have
taken other means to protect the creditors and wind up the estate.
The plaintiffs assign as error No. 10 that the court should not have allowed the sum of P5,000
damages for injury to the sugar lands.
The evidence as to this damage is not considered as clear and satisfactory as it should be.
It seems this claim should have been wholly denied by the trial court, and we think the judgment in
favor of the administratrix and against the plaintiffs should be reduced from P13,262.50 to P8,262.50
with interest as provided therein. The other damages allowed by the trial court are so fully sustained
by the evidence, it is not necessary to discuss them.
With the above modification and with a declaration that the mortgage, exhibit B, was absolutely void,
the judgment appealed from is affirmed, with costs against the appellants. So ordered.
SECOND DIVISION
[G.R. No. 149926. February 23, 2005]
UNION BANK OF THE PHILIPPINES, petitioner, vs. EDMUND SANTIBAEZ and FLORENCE SANTIBAEZ
ARIOLA, respondents.
D E C I S I O N
CALLEJO, SR., J.:
Before us is a petition for review on certiorari under Rule 45 of the Revised Rules of Court which seeks
the reversal of the Decision[1] of the Court of Appeals dated May 30, 2001 in CA-G.R. CV No. 48831
affirming the dismissal*2+ of the petitioners complaint in Civil Case No. 18909 by the Regional Trial
Court (RTC) of Makati City, Branch 63.
The antecedent facts are as follows:
On May 31, 1980, the First Countryside Credit Corporation (FCCC) and Efraim M. Santibaez entered into
a loan agreement[3] in the amount of P128,000.00. The amount was intended for the payment of the
purchase price of one (1) unit Ford 6600 Agricultural All-Purpose Diesel Tractor. In view thereof, Efraim
and his son, Edmund, executed a promissory note in favor of the FCCC, the principal sum payable in five
equal annual amortizations of P43,745.96 due on May 31, 1981 and every May 31
st
thereafter up to May
31, 1985.
On December 13, 1980, the FCCC and Efraim entered into another loan agreement,[4] this time in the
amount ofP123,156.00. It was intended to pay the balance of the purchase price of another unit of Ford
6600 Agricultural All-Purpose Diesel Tractor, with accessories, and one (1) unit Howard Rotamotor
Model AR 60K. Again, Efraim and his son, Edmund, executed a promissory note for the said amount in
favor of the FCCC. Aside from such promissory note, they also signed a Continuing Guaranty
Agreement[5] for the loan dated December 13, 1980.
Sometime in February 1981, Efraim died, leaving a holographic will.[6] Subsequently in March 1981,
testate proceedings commenced before the RTC of Iloilo City, Branch 7, docketed as Special Proceedings
No. 2706. On April 9, 1981, Edmund, as one of the heirs, was appointed as the special administrator of
the estate of the decedent.[7] During the pendency of the testate proceedings, the surviving heirs,
Edmund and his sister Florence Santibaez Ariola, executed a Joint Agreement[8] dated July 22, 1981,
wherein they agreed to divide between themselves and take possession of the three (3) tractors; that is,
two (2) tractors for Edmund and one (1) tractor for Florence. Each of them was to assume the
indebtedness of their late father to FCCC, corresponding to the tractor respectively taken by them.
On August 20, 1981, a Deed of Assignment with Assumption of Liabilities[9] was executed by and
between FCCC and Union Savings and Mortgage Bank, wherein the FCCC as the assignor, among others,
assigned all its assets and liabilities to Union Savings and Mortgage Bank.
Demand letters[10] for the settlement of his account were sent by petitioner Union Bank of the
Philippines (UBP) to Edmund, but the latter failed to heed the same and refused to pay. Thus, on
February 5, 1988, the petitioner filed a Complaint[11] for sum of money against the heirs of Efraim
Santibaez, Edmund and Florence, before the RTC of Makati City, Branch 150, docketed as Civil Case No.
18909. Summonses were issued against both, but the one intended for Edmund was not served since he
was in the United States and there was no information on his address or the date of his return to the
Philippines.[12] Accordingly, the complaint was narrowed down to respondent Florence S. Ariola.
On December 7, 1988, respondent Florence S. Ariola filed her Answer[13] and alleged that the loan
documents did not bind her since she was not a party thereto. Considering that the joint agreement
signed by her and her brother Edmund was not approved by the probate court, it was null and void;
hence, she was not liable to the petitioner under the joint agreement.
On January 29, 1990, the case was unloaded and re-raffled to the RTC of Makati City, Branch
63.[14] Consequently, trial on the merits ensued and a decision was subsequently rendered by the court
dismissing the complaint for lack of merit. The decretal portion of the RTC decision reads:
WHEREFORE, judgment is hereby rendered DISMISSING the complaint for lack of merit.[15]
The trial court found that the claim of the petitioner should have been filed with the probate court
before which the testate estate of the late Efraim Santibaez was pending, as the sum of money being
claimed was an obligation incurred by the said decedent. The trial court also found that the Joint
Agreement apparently executed by his heirs, Edmund and Florence, on July 22, 1981, was, in effect, a
partition of the estate of the decedent. However, the said agreement was void, considering that it had
not been approved by the probate court, and that there can be no valid partition until after the will has
been probated. The trial court further declared that petitioner failed to prove that it was the now
defunct Union Savings and Mortgage Bank to which the FCCC had assigned its assets and liabilities. The
court also agreed to the contention of respondent Florence S. Ariola that the list of assets and liabilities
of the FCCC assigned to Union Savings and Mortgage Bank did not clearly refer to the decedents
account. Ruling that the joint agreement executed by the heirs was null and void, the trial court held
that the petitioners cause of action against respondent Florence S. Ariola must necessarily fail.
The petitioner appealed from the RTC decision and elevated its case to the Court of Appeals (CA),
assigning the following as errors of the trial court:
1. THE COURT A QUO ERRED IN FINDING THAT THE JOINT AGREEMENT (EXHIBIT A) SHOULD BE
APPROVED BY THE PROBATE COURT.
2. THE COURT A QUO ERRED IN FINDING THAT THERE CAN BE NO VALID PARTITION AMONG THE HEIRS
UNTIL AFTER THE WILL HAS BEEN PROBATED.
3. THE COURT A QUO ERRED IN NOT FINDING THAT THE DEFENDANT HAD WAIVED HER RIGHT TO HAVE
THE CLAIM RE-LITIGATED IN THE ESTATE PROCEEDING.[16]
The petitioner asserted before the CA that the obligation of the deceased had passed to his legitimate
children and heirs, in this case, Edmund and Florence; the unconditional signing of the joint agreement
marked as Exhibit A estopped respondent Florence S. Ariola, and that she cannot deny her liability
under the said document; as the agreement had been signed by both heirs in their personal capacity, it
was no longer necessary to present the same before the probate court for approval; the property
partitioned in the agreement was not one of those enumerated in the holographic will made by the
deceased; and the active participation of the heirs, particularly respondent Florence S. Ariola, in the
present ordinary civil action was tantamount to a waiver to re-litigate the claim in the estate
proceedings.
On the other hand, respondent Florence S. Ariola maintained that the money claim of the petitioner
should have been presented before the probate court.[17]
The appellate court found that the appeal was not meritorious and held that the petitioner should have
filed its claim with the probate court as provided under Sections 1 and 5, Rule 86 of the Rules of Court. It
further held that the partition made in the agreement was null and void, since no valid partition may be
had until after the will has been probated. According to the CA, page 2, paragraph (e) of the holographic
will covered the subject properties (tractors) in generic terms when the deceased referred to them as
all other properties. Moreover, the active participation of respondent Florence S. Ariola in the case did
not amount to a waiver. Thus, the CA affirmed the RTC decision, viz.:
WHEREFORE, premises considered, the appealed Decision of the Regional Trial Court of Makati City,
Branch 63, is hereby AFFIRMED in toto.
SO ORDERED.[18]
In the present recourse, the petitioner ascribes the following errors to the CA:
I.
THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THE JOINT AGREEMENT SHOULD BE
APPROVED BY THE PROBATE COURT.
II.
THE COURT OF APPEALS ERRED IN FINDING THAT THERE CAN BE NO VALID PARTITION AMONG THE
HEIRS OF THE LATE EFRAIM SANTIBAEZ UNTIL AFTER THE WILL HAS BEEN PROBATED.
III.
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE RESPONDENT HAD WAIVED HER RIGHT TO
HAVE THE CLAIM RE-LITIGATED IN THE ESTATE PROCEEDING.
IV.
RESPONDENTS CAN, IN FACT, BE HELD JOINTLY AND SEVERALLY LIABLE WITH THE PRINCIPAL DEBTOR
THE LATE EFRAIM SANTIBAEZ ON THE STRENGTH OF THE CONTINUING GUARANTY AGREEMENT
EXECUTED IN FAVOR OF PETITIONER-APPELLANT UNION BANK.
V.
THE PROMISSORY NOTES DATED MAY 31, 1980 IN THE SUM OF P128,000.00 AND DECEMBER 13, 1980
IN THE AMOUNT OF P123,000.00 CATEGORICALLY ESTABLISHED THE FACT THAT THE RESPONDENTS
BOUND THEMSELVES JOINTLY AND SEVERALLY LIABLE WITH THE LATE DEBTOR EFRAIM SANTIBAEZ IN
FAVOR OF PETITIONER UNION BANK.[19]
The petitioner claims that the obligations of the deceased were transmitted to the heirs as provided in
Article 774 of the Civil Code; there was thus no need for the probate court to approve the joint
agreement where the heirs partitioned the tractors owned by the deceased and assumed the
obligations related thereto. Since respondent Florence S. Ariola signed the joint agreement without any
condition, she is now estopped from asserting any position contrary thereto. The petitioner also points
out that the holographic will of the deceased did not include nor mention any of the tractors subject of
the complaint, and, as such was beyond the ambit of the said will. The active participation and
resistance of respondent Florence S. Ariola in the ordinary civil action against the petitioners claim
amounts to a waiver of the right to have the claim presented in the probate proceedings, and to allow
any one of the heirs who executed the joint agreement to escape liability to pay the value of the tractors
under consideration would be equivalent to allowing the said heirs to enrich themselves to the damage
and prejudice of the petitioner.
The petitioner, likewise, avers that the decisions of both the trial and appellate courts failed to consider
the fact that respondent Florence S. Ariola and her brother Edmund executed loan documents, all
establishing the vinculum jurisor the legal bond between the late Efraim Santibaez and his heirs to be in
the nature of a solidary obligation. Furthermore, the Promissory Notes dated May 31, 1980 and
December 13, 1980 executed by the late Efraim Santibaez, together with his heirs, Edmund and
respondent Florence, made the obligation solidary as far as the said heirs are concerned. The petitioner
also proffers that, considering the express provisions of the continuing guaranty agreement and the
promissory notes executed by the named respondents, the latter must be held liable jointly and
severally liable thereon. Thus, there was no need for the petitioner to file its money claim before the
probate court. Finally, the petitioner stresses that both surviving heirs are being sued in their respective
personal capacities, not as heirs of the deceased.
In her comment to the petition, respondent Florence S. Ariola maintains that the petitioner is trying to
recover a sum of money from the deceased Efraim Santibaez; thus the claim should have been filed
with the probate court. She points out that at the time of the execution of the joint agreement there
was already an existing probate proceedings of which the petitioner knew about. However, to avoid a
claim in the probate court which might delay payment of the obligation, the petitioner opted to require
them to execute the said agreement.
According to the respondent, the trial court and the CA did not err in declaring that the agreement was
null and void. She asserts that even if the agreement was voluntarily executed by her and her brother
Edmund, it should still have been subjected to the approval of the court as it may prejudice the estate,
the heirs or third parties. Furthermore, she had not waived any rights, as she even stated in her answer
in the court a quo that the claim should be filed with the probate court. Thus, the petitioner could not
invoke or claim that she is in estoppel.
Respondent Florence S. Ariola further asserts that she had not signed any continuing guaranty
agreement, nor was there any document presented as evidence to show that she had caused herself to
be bound by the obligation of her late father.
The petition is bereft of merit.
The Court is posed to resolve the following issues: a) whether or not the partition in the Agreement
executed by the heirs is valid; b) whether or not the heirs assumption of the indebtedness of the
deceased is valid; and c) whether the petitioner can hold the heirs liable on the obligation of the
deceased.
At the outset, well-settled is the rule that a probate court has the jurisdiction to determine all the
properties of the deceased, to determine whether they should or should not be included in the
inventory or list of properties to be administered.[20] The said court is primarily concerned with the
administration, liquidation and distribution of the estate.[21]
In our jurisdiction, the rule is that there can be no valid partition among the heirs until after the will has
been probated:
In testate succession, there can be no valid partition among the heirs until after the will has been
probated. The law enjoins the probate of a will and the public requires it, because unless a will is
probated and notice thereof given to the whole world, the right of a person to dispose of his property by
will may be rendered nugatory. The authentication of a will decides no other question than such as
touch upon the capacity of the testator and the compliance with those requirements or solemnities
which the law prescribes for the validity of a will.[22]
This, of course, presupposes that the properties to be partitioned are the same properties embraced in
the will.[23] In the present case, the deceased, Efraim Santibaez, left a holographic will[24] which
contained, inter alia, the provision which reads as follows:
(e) All other properties, real or personal, which I own and may be discovered later after my demise,
shall be distributed in the proportion indicated in the immediately preceding paragraph in favor of
Edmund and Florence, my children.
We agree with the appellate court that the above-quoted is an all-encompassing provision embracing all
the properties left by the decedent which might have escaped his mind at that time he was making his
will, and other properties he may acquire thereafter. Included therein are the three (3) subject tractors.
This being so, any partition involving the said tractors among the heirs is not valid. The joint
agreement[25] executed by Edmund and Florence, partitioning the tractors among themselves, is
invalid, specially so since at the time of its execution, there was already a pending proceeding for the
probate of their late fathers holographic will covering the said tractors.
It must be stressed that the probate proceeding had already acquired jurisdiction over all the properties
of the deceased, including the three (3) tractors. To dispose of them in any way without the probate
courts approval is tantamount to divesting it with jurisdiction which the Court cannot allow.[26] Every
act intended to put an end to indivision among co-heirs and legatees or devisees is deemed to be a
partition, although it should purport to be a sale, an exchange, a compromise, or any other
transaction.[27] Thus, in executing any joint agreement which appears to be in the nature of an extra-
judicial partition, as in the case at bar, court approval is imperative, and the heirs cannot just divest the
court of its jurisdiction over that part of the estate. Moreover, it is within the jurisdiction of the probate
court to determine the identity of the heirs of the decedent.[28] In the instant case, there is no showing
that the signatories in the joint agreement were the only heirs of the decedent. When it was executed,
the probate of the will was still pending before the court and the latter had yet to determine who the
heirs of the decedent were. Thus, for Edmund and respondent Florence S. Ariola to adjudicate unto
themselves the three (3) tractors was a premature act, and prejudicial to the other possible heirs and
creditors who may have a valid claim against the estate of the deceased.
The question that now comes to fore is whether the heirs assumption of the indebtedness of the
decedent is binding. We rule in the negative. Perusing the joint agreement, it provides that the heirs as
parties thereto have agreed to divide between themselves and take possession and use the above-
described chattel and each of them to assume the indebtedness corresponding to the chattel taken as
herein after stated which is in favor of First Countryside Credit Corp.*29+ The assumption of liability was
conditioned upon the happening of an event, that is, that each heir shall take possession and use of
their respective share under the agreement. It was made dependent on the validity of the partition, and
that they were to assume the indebtedness corresponding to the chattel that they were each to receive.
The partition being invalid as earlier discussed, the heirs in effect did not receive any such tractor. It
follows then that the assumption of liability cannot be given any force and effect.
The Court notes that the loan was contracted by the decedent. The petitioner, purportedly a creditor of
the late Efraim Santibaez, should have thus filed its money claim with the probate court in accordance
with Section 5, Rule 86 of the Revised Rules of Court, which provides:
Section 5. Claims which must be filed under the notice. If not filed barred; exceptions. All claims for
money against the decedent, arising from contract, express or implied, whether the same be due, not
due, or contingent, all claims for funeral expenses for the last sickness of the decedent, and judgment
for money against the decedent, must be filed within the time limited in the notice; otherwise they are
barred forever, except that they may be set forth as counterclaims in any action that the executor or
administrator may bring against the claimants. Where an executor or administrator commences an
action, or prosecutes an action already commenced by the deceased in his lifetime, the debtor may set
forth by answer the claims he has against the decedent, instead of presenting them independently to
the court as herein provided, and mutual claims may be set off against each other in such action; and if
final judgment is rendered in favor of the defendant, the amount so determined shall be considered the
true balance against the estate, as though the claim had been presented directly before the court in the
administration proceedings. Claims not yet due, or contingent, may be approved at their present value.
The filing of a money claim against the decedents estate in the probate court is mandatory.*30+ As we
held in the vintage case of Py Eng Chong v. Herrera:[31]
This requirement is for the purpose of protecting the estate of the deceased by informing the
executor or administrator of the claims against it, thus enabling him to examine each claim and to
determine whether it is a proper one which should be allowed. The plain and obvious design of the rule
is the speedy settlement of the affairs of the deceased and the early delivery of the property to the
distributees, legatees, or heirs. `The law strictly requires the prompt presentation and disposition of the
claims against the decedent's estate in order to settle the affairs of the estate as soon as possible, pay
off its debts and distribute the residue.[32]
Perusing the records of the case, nothing therein could hold private respondent Florence S. Ariola
accountable for any liability incurred by her late father. The documentary evidence presented,
particularly the promissory notes and the continuing guaranty agreement, were executed and signed
only by the late Efraim Santibaez and his son Edmund. As the petitioner failed to file its money claim
with the probate court, at most, it may only go after Edmund as co-maker of the decedent under the
said promissory notes and continuing guaranty, of course, subject to any defenses Edmund may have as
against the petitioner. As the court had not acquired jurisdiction over the person of Edmund, we find it
unnecessary to delve into the matter further.
We agree with the finding of the trial court that the petitioner had not sufficiently shown that it is the
successor-in-interest of the Union Savings and Mortgage Bank to which the FCCC assigned its assets and
liabilities.*33+ The petitioner in its complaint alleged that by virtue of the Deed of Assignment dated
August 20, 1981 executed by and between First Countryside Credit Corporation and Union Bank of the
Philippines*34+*35+ clearly reflects that the parties in the deed of assignment with assumption of
liabilities were the FCCC, and the Union Savings and Mortgage Bank, with the conformity of Bancom
Philippine Holdings, Inc. Nowhere can the petitioners participation therein as a party be found.
Furthermore, no documentary or testimonial evidence was presented during trial to show that Union
Savings and Mortgage Bank is now, in fact, petitioner Union Bank of the Philippines. As the trial court
declared in its decision: However, the documentary evidence
*T+he court also finds merit to the contention of defendant that plaintiff failed to prove or did not
present evidence to prove that Union Savings and Mortgage Bank is now the Union Bank of the
Philippines. Judicial notice does not apply here. The power to take judicial notice is to *be+ exercised by
the courts with caution; care must be taken that the requisite notoriety exists; and every reasonable
doubt upon the subject should be promptly resolved in the negative. (Republic vs. Court of Appeals,
107 SCRA 504).[36]
This being the case, the petitioners personality to file the complaint is wanting. Consequently, it failed
to establish its cause of action. Thus, the trial court did not err in dismissing the complaint, and the CA in
affirming the same.
IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED. The assailed Court of Appeals
Decision is AFFIRMED. No costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-18805 August 14, 1967
THE BOARD OF LIQUIDATORS
1
representing THE GOVERNMENT OF THE REPUBLIC OF THE
PHILIPPINES,plaintiff-appellant,
vs.
HEIRS OF MAXIMO M. KALAW,
2
JUAN BOCAR, ESTATE OF THE DECEASED CASIMIRO
GARCIA,
3
and LEONOR MOLL, defendants-appellees.
Simeon M. Gopengco and Solicitor General for plaintiff-appellant.
L. H. Hernandez, Emma Quisumbing, Fernando and Quisumbing, Jr.; Ponce Enrile, Siguion Reyna,
Montecillo and Belo for defendants-appellees.
SANCHEZ, J .:
The National Coconut Corporation (NACOCO, for short) was chartered as a non-profit governmental
organization on May 7, 1940 by Commonwealth Act 518 avowedly for the protection, preservation
and development of the coconut industry in the Philippines. On August 1, 1946, NACOCO's charter
was amended [Republic Act 5] to grant that corporation the express power "to buy, sell, barter,
export, and in any other manner deal in, coconut, copra, and dessicated coconut, as well as their by-
products, and to act as agent, broker or commission merchant of the producers, dealers or
merchants" thereof. The charter amendment was enacted to stabilize copra prices, to serve coconut
producers by securing advantageous prices for them, to cut down to a minimum, if not altogether
eliminate, the margin of middlemen, mostly aliens.
4

General manager and board chairman was Maximo M. Kalaw; defendants Juan Bocar and Casimiro
Garcia were members of the Board; defendant Leonor Moll became director only on December 22,
1947.
NACOCO, after the passage of Republic Act 5, embarked on copra trading activities. Amongst the
scores of contracts executed by general manager Kalaw are the disputed contracts, for the delivery
of copra, viz:
(a) July 30, 1947: Alexander Adamson & Co., for 2,000 long tons, $167.00: per ton, f. o. b.,
delivery: August and September, 1947. This contract was later assigned to Louis Dreyfus &
Co. (Overseas) Ltd.
(b) August 14, 1947: Alexander Adamson & Co., for 2,000 long tons $145.00 per long ton,
f.o.b., Philippine ports, to be shipped: September-October, 1947. This contract was also
assigned to Louis Dreyfus & Co. (Overseas) Ltd.
(c) August 22, 1947: Pacific Vegetable Co., for 3,000 tons, $137.50 per ton, delivery:
September, 1947.
(d) September 5, 1947: Spencer Kellog & Sons, for 1,000 long tons, $160.00 per ton, c.i.f.,
Los Angeles, California, delivery: November, 1947.
(e) September 9, 1947: Franklin Baker Division of General Foods Corporation, for 1,500 long
tons, $164,00 per ton, c.i.f., New York, to be shipped in November, 1947.
(f) September 12, 1947: Louis Dreyfus & Co. (Overseas) Ltd., for 3,000 long tons, $154.00
per ton, f.o.b., 3 Philippine ports, delivery: November, 1947.
(g) September 13, 1947: Juan Cojuangco, for 2,000 tons, $175.00 per ton, delivery:
November and December, 1947. This contract was assigned to Pacific Vegetable Co.
(h) October 27, 1947: Fairwood & Co., for 1,000 tons, $210.00 per short ton, c.i.f., Pacific
ports, delivery: December, 1947 and January, 1948. This contract was assigned to Pacific
Vegetable Co.
(i) October 28, 1947: Fairwood & Co., for 1,000 tons, $210.00 per short ton, c.i.f., Pacific
ports, delivery: January, 1948. This contract was assigned to Pacific Vegetable Co.
An unhappy chain of events conspired to deter NACOCO from fulfilling these contracts. Nature
supervened. Four devastating typhoons visited the Philippines: the first in October, the second and
third in November, and the fourth in December, 1947. Coconut trees throughout the country suffered
extensive damage. Copra production decreased. Prices spiralled. Warehouses were destroyed.
Cash requirements doubled. Deprivation of export facilities increased the time necessary to
accumulate shiploads of copra. Quick turnovers became impossible, financing a problem.
When it became clear that the contracts would be unprofitable, Kalaw submitted them to the board
for approval. It was not until December 22, 1947 when the membership was completed. Defendant
Moll took her oath on that date. A meeting was then held. Kalaw made a full disclosure of the
situation, apprised the board of the impending heavy losses. No action was taken on the contracts.
Neither did the board vote thereon at the meeting of January 7, 1948 following. Then, on January 11,
1948, President Roxas made a statement that the NACOCO head did his best to avert the losses,
emphasized that government concerns faced the same risks that confronted private companies, that
NACOCO was recouping its losses, and that Kalaw was to remain in his post. Not long thereafter,
that is, on January 30, 1948, the board met again with Kalaw, Bocar, Garcia and Moll in attendance.
They unanimously approved the contracts hereinbefore enumerated.
As was to be expected, NACOCO but partially performed the contracts, as follows:
Buyers Tons Delivered Undelivered
Pacific Vegetable Oil 2,386.45 4,613.55
Spencer Kellog None 1,000
Franklin Baker 1,000 500
Louis Dreyfus 800 2,200
Louis Dreyfus (Adamson contract of July 30, 1947) 1,150 850
Louis Dreyfus (Adamson Contract of August 14, 1947) 1,755 245
T O T A L S

7,091.45

9,408.55
The buyers threatened damage suits. Some of the claims were settled, viz: Pacific Vegetable Oil
Co., in copra delivered by NACOCO, P539,000.00; Franklin Baker Corporation, P78,210.00;
Spencer Kellog & Sons, P159,040.00.
But one buyer, Louis Dreyfus & Go. (Overseas) Ltd., did in fact sue before the Court of First Instance
of Manila, upon claims as follows: For the undelivered copra under the July 30 contract (Civil Case
4459); P287,028.00; for the balance on the August 14 contract (Civil Case 4398), P75,098.63; for
that per the September 12 contract reduced to judgment (Civil Case 4322, appealed to this Court in
L-2829), P447,908.40. These cases culminated in an out-of-court amicable settlement when the
Kalaw management was already out. The corporation thereunder paid Dreyfus P567,024.52
representing 70% of the total claims. With particular reference to the Dreyfus claims, NACOCO put
up the defenses that: (1) the contracts were void because Louis Dreyfus & Co. (Overseas) Ltd. did
not have license to do business here; and (2) failure to deliver was due to force majeure, the
typhoons. To project the utter unreasonableness of this compromise, we reproduce in haec
verba this finding below:
x x x However, in similar cases brought by the same claimant [Louis Dreyfus & Co.
(Overseas) Ltd.] against Santiago Syjuco for non-delivery of copra also involving a claim of
P345,654.68 wherein defendant set upsame defenses as above, plaintiff accepted
a promise of P5,000.00 only (Exhs. 31 & 32 Heirs.) Following the same proportion, the claim
of Dreyfus against NACOCO should have been compromised for only P10,000.00, if at all.
Now, why should defendants be held liable for the large sum paid as compromise by the
Board of Liquidators? This is just a sample to show how unjust it would be to hold
defendants liable for the readiness with which the Board of Liquidators disposed of the
NACOCO funds, although there was much possibility of successfully resisting the claims, or
at least settlement for nominal sums like what happened in the Syjuco case.
5

All the settlements sum up to P1,343,274.52.
In this suit started in February, 1949, NACOCO seeks to recover the above sum of P1,343,274.52
from general manager and board chairman Maximo M. Kalaw, and directors Juan Bocar, Casimiro
Garcia and Leonor Moll. It charges Kalaw with negligence under Article 1902 of the old Civil Code
(now Article 2176, new Civil Code); and defendant board members, including Kalaw, with bad faith
and/or breach of trust for having approved the contracts. The fifth amended complaint, on which this
case was tried, was filed on July 2, 1959. Defendants resisted the action upon defenses hereinafter
in this opinion to be discussed.
The lower court came out with a judgment dismissing the complaint without costs as well as
defendants' counterclaims, except that plaintiff was ordered to pay the heirs of Maximo Kalaw the
sum of P2,601.94 for unpaid salaries and cash deposit due the deceased Kalaw from NACOCO.
Plaintiff appealed direct to this Court.
Plaintiff's brief did not, question the judgment on Kalaw's counterclaim for the sum of P2,601.94.
Right at the outset, two preliminary questions raised before, but adversely decided by, the court
below, arrest our attention. On appeal, defendants renew their bid. And this, upon established
jurisprudence that an appellate court may base its decision of affirmance of the judgment below on a
point or points ignored by the trial court or in which said court was in error.
6

1. First of the threshold questions is that advanced by defendants that plaintiff Board of Liquidators
has lost its legal personality to continue with this suit.
Accepted in this jurisdiction are three methods by which a corporation may wind up its affairs: (1)
under Section 3, Rule 104, of the Rules of Court [which superseded Section 66 of the Corporation
Law]
7
whereby, upon voluntary dissolution of a corporation, the court may direct "such disposition of
its assets as justice requires, and may appoint a receiver to collect such assets and pay the debts of
the corporation;" (2) under Section 77 of the Corporation Law, whereby a corporation whose
corporate existence is terminated, "shall nevertheless be continued as a body corporate for three
years after the time when it would have been so dissolved, for the purpose of prosecuting and
defending suits by or against it and of enabling it gradually to settle and close its affairs, to dispose
of and convey its property and to divide its capital stock, but not for the purpose of continuing the
business for which it was established;" and (3) under Section 78 of the Corporation Law, by virtue of
which the corporation, within the three year period just mentioned, "is authorized and empowered to
convey all of its property to trustees for the benefit of members, stockholders, creditors, and others
interested."
8

It is defendants' pose that their case comes within the coverage of the second method. They reason
out that suit was commenced in February, 1949; that by Executive Order 372, dated November 24,
1950, NACOCO, together with other government-owned corporations, was abolished, and the Board
of Liquidators was entrusted with the function of settling and closing its affairs; and that, since the
three year period has elapsed, the Board of Liquidators may not now continue with, and prosecute,
the present case to its conclusion, because Executive Order 372 provides in Section 1 thereof that

Sec.1. The National Abaca and Other Fibers Corporation, the National Coconut Corporation,
the National Tobacco Corporation, the National Food Producer Corporation and the former
enemy-owned or controlled corporations or associations, . . . are hereby abolished. The said
corporations shall be liquidated in accordance with law, the provisions of this Order, and/or in
such manner as the President of the Philippines may direct; Provided, however, That each of
the said corporations shall nevertheless be continued as a body corporate for a period of
three (3) years from the effective date of this Executive Order for the purpose of prosecuting
and defending suits by or against it and of enabling the Board of Liquidators gradually to
settle and close its affairs, to dispose of and, convey its property in the manner hereinafter
provided.
Citing Mr. Justice Fisher, defendants proceed to argue that even where it may be found impossible
within the 3 year period to reduce disputed claims to judgment, nonetheless, "suits by or against a
corporation abate when it ceases to be an entity capable of suing or being sued" (Fisher, The
Philippine Law of Stock Corporations, pp. 390-391). Corpus Juris Secundum likewise is authority for
the statement that "[t]he dissolution of a corporation ends its existence so that there must be
statutory authority for prolongation of its life even for purposes of pending litigation"
9
and that suit
"cannot be continued or revived; nor can a valid judgment be rendered therein, and a judgment, if
rendered, is not only erroneous, but void and subject to collateral attack."
10
So it is, that abatement
of pending actions follows as a matter of course upon the expiration of the legal period for
liquidation,
11
unless the statute merely requires a commencement of suit within the added
time.
12
For, the court cannot extend the time alloted by statute.
13

We, however, express the view that the executive order abolishing NACOCO and creating the Board
of Liquidators should be examined in context. The proviso in Section 1 of Executive Order 372,
whereby the corporate existence of NACOCO was continued for a period of three years from the
effectivity of the order for "the purpose of prosecuting and defending suits by or against it and of
enabling the Board of Liquidators gradually to settle and close its affairs, to dispose of and convey its
property in the manner hereinafter provided", is to be read not as an isolated provision but in
conjunction with the whole. So reading, it will be readily observed that no time limit has been tacked
to the existence of the Board of Liquidators and its function of closing the affairs of the various
government owned corporations, including NACOCO.
By Section 2 of the executive order, while the boards of directors of the various corporations were
abolished, their powers and functions and duties under existing laws were to be assumed and
exercised by the Board of Liquidators. The President thought it best to do away with the boards of
directors of the defunct corporations; at the same time, however, the President had chosen to see to
it that the Board of Liquidators step into the vacuum. And nowhere in the executive order was there
any mention of the lifespan of the Board of Liquidators. A glance at the other provisions of the
executive order buttresses our conclusion. Thus, liquidation by the Board of Liquidators may, under
section 1, proceed in accordance with law, the provisions of the executive order, "and/or in such
manner as the President of the Philippines may direct." By Section 4, when any property, fund, or
project is transferred to any governmental instrumentality "for administration or continuance of any
project," the necessary funds therefor shall be taken from the corresponding special fund created in
Section 5. Section 5, in turn, talks of special funds established from the "net proceeds of the
liquidation" of the various corporations abolished. And by Section, 7, fifty per centum of the fees
collected from the copra standardization and inspection service shall accrue "to the special fund
created in section 5 hereof for the rehabilitation and development of the coconut industry." Implicit in
all these, is that the term of life of the Board of Liquidators is without time limit. Contemporary history
gives us the fact that the Board of Liquidators still exists as an office with officials and numerous
employees continuing the job of liquidation and prosecution of several court actions.
Not that our views on the power of the Board of Liquidators to proceed to the final determination of
the present case is without jurisprudential support. The first judicial test before this Court is National
Abaca and Other Fibers Corporation vs. Pore, L-16779, August 16, 1961. In that case, the
corporation, already dissolved, commenced suit within the three-year extended period for liquidation.
That suit was for recovery of money advanced to defendant for the purchase of hemp in behalf of the
corporation. She failed to account for that money. Defendant moved to dismiss, questioned the
corporation's capacity to sue. The lower court ordered plaintiff to include as co-party plaintiff, The
Board of Liquidators, to which the corporation's liquidation was entrusted by Executive Order 372.
Plaintiff failed to effect inclusion. The lower court dismissed the suit. Plaintiff moved to reconsider.
Ground: excusable negligence, in that its counsel prepared the amended complaint, as directed, and
instructed the board's incoming and outgoing correspondence clerk, Mrs. Receda Vda. de Ocampo,
to mail the original thereof to the court and a copy of the same to defendant's counsel. She mailed
the copy to the latter but failed to send the original to the court. This motion was rejected below.
Plaintiff came to this Court on appeal. We there said that "the rule appears to be well settled that, in
the absence of statutory provision to the contrary, pending actions by or against a corporation are
abated upon expiration of the period allowed by law for the liquidation of its affairs." We there said
that "[o]ur Corporation Law contains no provision authorizing a corporation, after three (3) years from
the expiration of its lifetime, to continue in its corporate name actions instituted by it within said
period of three (3) years."
14
However, these precepts notwithstanding, we, in effect, held in that case
that the Board of Liquidators escapes from the operation thereof for the reason that "[o]bviously, the
complete loss of plaintiff's corporate existence after the expiration of the period of three (3) years for
the settlement of its affairs is what impelled the President to create a Board of Liquidators, to
continue the management of such matters as may then be pending."
15
We accordingly directed the
record of said case to be returned to the lower court, with instructions to admit plaintiff's amended
complaint to include, as party plaintiff, the Board of Liquidators.
Defendants' position is vulnerable to attack from another direction.
By Executive Order 372, the government, the sole stockholder, abolished NACOCO, and placed its
assets in the hands of the Board of Liquidators. The Board of Liquidators thus became the trustee on
behalf of the government. It was an express trust. The legal interest became vested in the trustee
the Board of Liquidators. The beneficial interest remained with the sole stockholder the
government. At no time had the government withdrawn the property, or the authority to continue the
present suit, from the Board of Liquidators. If for this reason alone, we cannot stay the hand of the
Board of Liquidators from prosecuting this case to its final conclusion.
16
The provisions of Section 78
of the Corporation Law the third method of winding up corporate affairs find application.
We, accordingly, rule that the Board of Liquidators has personality to proceed as: party-plaintiff in
this case.
2. Defendants' second poser is that the action is unenforceable against the heirs of Kalaw.
Appellee heirs of Kalaw raised in their motion to dismiss,
17
which was overruled, and in their
nineteenth special defense, that plaintiff's action is personal to the deceased Maximo M. Kalaw, and
may not be deemed to have survived after his death.
18
They say that the controlling statute is
Section 5, Rule 87, of the 1940 Rules of Court.
19
which provides that "[a]ll claims for money against
the decedent, arising from contract, express or implied", must be filed in the estate proceedings of
the deceased. We disagree.
The suit here revolves around the alleged negligent acts of Kalaw for having entered into the
questioned contracts without prior approval of the board of directors, to the damage and prejudice of
plaintiff; and is against Kalaw and the other directors for having subsequently approved the said
contracts in bad faith and/or breach of trust." Clearly then, the present case is not a mere action for
the recovery of money nor a claim for money arising from contract. The suit involves alleged tortious
acts. And the action is embraced in suits filed "to recover damages for an injury to person or
property, real or personal", which survive.
20

The leading expositor of the law on this point is Aguas vs. Llemos, L-18107, August 30, 1962. There,
plaintiffs sought to recover damages from defendant Llemos. The complaint averred that Llemos had
served plaintiff by registered mail with a copy of a petition for a writ of possession in Civil Case 4824
of the Court of First Instance at Catbalogan, Samar, with notice that the same would be submitted to
the Samar court on February 23, 1960 at 8:00 a.m.; that in view of the copy and notice served,
plaintiffs proceeded to the said court of Samar from their residence in Manila accompanied by their
lawyers, only to discover that no such petition had been filed; and that defendant Llemos maliciously
failed to appear in court, so that plaintiffs' expenditure and trouble turned out to be in vain, causing
them mental anguish and undue embarrassment. Defendant died before he could answer the
complaint. Upon leave of court, plaintiffs amended their complaint to include the heirs of the
deceased. The heirs moved to dismiss. The court dismissed the complaint on the ground that the
legal representative, and not the heirs, should have been made the party defendant; and that,
anyway, the action being for recovery of money, testate or intestate proceedings should be initiated
and the claim filed therein. This Court, thru Mr. Justice Jose B. L. Reyes, there declared:
Plaintiffs argue with considerable cogency that contrasting the correlated provisions of the
Rules of Court, those concerning claims that are barred if not filed in the estate settlement
proceedings (Rule 87, sec. 5) and those defining actions that survive and may be prosecuted
against the executor or administrator (Rule 88, sec. 1), it is apparent that actions for
damages caused by tortious conduct of a defendant (as in the case at bar) survive the death
of the latter. Under Rule 87, section 5, the actions that are abated by death are: (1) claims for
funeral expenses and those for the last sickness of the decedent; (2) judgments for money;
and (3) "all claims for money against the decedent, arising from contract express or implied."
None of these includes that of the plaintiffs-appellants; for it is not enough that the claim
against the deceased party be for money, but it must arise from "contract express or
implied", and these words (also used by the Rules in connection with attachments and
derived from the common law) were construed in Leung Ben vs. O'Brien, 38 Phil. 182, 189-
194,
"to include all purely personal obligations other than those which have their source
in delict or tort."
Upon the other hand, Rule 88, section 1, enumerates actions that survive against a
decedent's executors or administrators, and they are: (1) actions to recover real and
personal property from the estate; (2) actions to enforce a lien thereon; and (3) actions to
recover damages for an injury to person or property. The present suit is one for damages
under the last class, it having been held that "injury to property" is not limited to injuries to
specific property, but extends to other wrongs by which personal estate is injured or
diminished (Baker vs. Crandall, 47 Am. Rep. 126; also 171 A.L.R., 1395). To maliciously
cause a party to incur unnecessary expenses, as charged in this case, is certainly injury to
that party's property (Javier vs. Araneta, L-4369, Aug. 31, 1953).
The ruling in the preceding case was hammered out of facts comparable to those of the present. No
cogent reason exists why we should break away from the views just expressed. And, the conclusion
remains: Action against the Kalaw heirs and, for the matter, against the Estate of Casimiro Garcia
survives.
The preliminaries out of the way, we now go to the core of the controversy.
3. Plaintiff levelled a major attack on the lower court's holding that Kalaw justifiedly entered into the
controverted contracts without the prior approval of the corporation's directorate. Plaintiff leans
heavily on NACOCO's corporate by-laws. Article IV (b), Chapter III thereof, recites, as amongst the
duties of the general manager, the obligation: "(b) To perform or execute on behalf of the
Corporation upon prior approval of the Board, all contracts necessary and essential to the proper
accomplishment for which the Corporation was organized."
Not of de minimis importance in a proper approach to the problem at hand, is the nature of a general
manager's position in the corporate structure. A rule that has gained acceptance through the years is
that a corporate officer "intrusted with the general management and control of its business, has
implied authority to make any contract or do any other act which is necessary or appropriate to the
conduct of the ordinary business of the corporation.
21
As such officer, "he may, without any special
authority from the Board of Directors perform all acts of an ordinary nature, which by usage or
necessity are incident to his office, and may bind the corporation by contracts in matters arising in
the usual course of business.
22

The problem, therefore, is whether the case at bar is to be taken out of the general concept of the
powers of a general manager, given the cited provision of the NACOCO by-laws requiring prior
directorate approval of NACOCO contracts.
The peculiar nature of copra trading, at this point, deserves express articulation. Ordinary in this
enterprise are copra sales for future delivery. The movement of the market requires that sales
agreements be entered into, even though the goods are not yet in the hands of the seller. Known in
business parlance as forward sales, it is concededly the practice of the trade. A certain amount of
speculation is inherent in the undertaking. NACOCO was much more conservative than the
exporters with big capital. This short-selling was inevitable at the time in the light of other factors
such as availability of vessels, the quantity required before being accepted for loading, the labor
needed to prepare and sack the copra for market. To NACOCO, forward sales were a necessity.
Copra could not stay long in its hands; it would lose weight, its value decrease. Above all,
NACOCO's limited funds necessitated a quick turnover. Copra contracts then had to be executed on
short notice at times within twenty-four hours. To be appreciated then is the difficulty of calling a
formal meeting of the board.
Such were the environmental circumstances when Kalaw went into copra trading.
Long before the disputed contracts came into being, Kalaw contracted by himself alone as
general manager for forward sales of copra. For the fiscal year ending June 30, 1947, Kalaw
signed some 60 such contracts for the sale of copra to divers parties. During that period, from those
copra sales, NACOCO reaped a gross profit of P3,631,181.48. So pleased was NACOCO's board of
directors that, on December 5, 1946, in Kalaw's absence, it voted to grant him a special bonus "in
recognition of the signal achievement rendered by him in putting the Corporation's business on a
self-sufficient basis within a few months after assuming office, despite numerous handicaps and
difficulties."
These previous contract it should be stressed, were signed by Kalaw without prior authority from the
board. Said contracts were known all along to the board members. Nothing was said by them. The
aforesaid contracts stand to prove one thing: Obviously, NACOCO board met the difficulties
attendant to forward sales by leaving the adoption of means to end, to the sound discretion of
NACOCO's general manager Maximo M. Kalaw.
Liberally spread on the record are instances of contracts executed by NACOCO's general manager
and submitted to the board after their consummation, not before. These agreements were not
Kalaw's alone. One at least was executed by a predecessor way back in 1940, soon after NACOCO
was chartered. It was a contract of lease executed on November 16, 1940 by the then general
manager and board chairman, Maximo Rodriguez, and A. Soriano y Cia., for the lease of a space in
Soriano Building On November 14, 1946, NACOCO, thru its general manager Kalaw, sold 3,000
tons of copra to the Food Ministry, London, thru Sebastian Palanca. On December 22, 1947, when
the controversy over the present contract cropped up, the board voted to approve a lease contract
previously executed between Kalaw and Fidel Isberto and Ulpiana Isberto covering a warehouse of
the latter. On the same date, the board gave its nod to a contract for renewal of the services of Dr.
Manuel L. Roxas. In fact, also on that date, the board requested Kalaw to report for action all copra
contracts signed by him "at the meeting immediately following the signing of the contracts." This
practice was observed in a later instance when, on January 7, 1948, the board approved two
previous contracts for the sale of 1,000 tons of copra each to a certain "SCAP" and a certain
"GNAPO".
And more. On December 19, 1946, the board resolved to ratify the brokerage commission of 2% of
Smith, Bell and Co., Ltd., in the sale of 4,300 long tons of copra to the French Government. Such
ratification was necessary because, as stated by Kalaw in that same meeting, "under an existing
resolution he is authorized to give a brokerage fee of only 1% on sales of copra made through
brokers." On January 15, 1947, the brokerage fee agreements of 1-1/2% on three export contracts,
and 2% on three others, for the sale of copra were approved by the board with a proviso authorizing
the general manager to pay a commission up to the amount of 1-1/2% "without further action by the
Board." On February 5, 1947, the brokerage fee of 2% of J. Cojuangco & Co. on the sale of 2,000
tons of copra was favorably acted upon by the board. On March 19, 1947, a 2% brokerage
commission was similarly approved by the board for Pacific Trading Corporation on the sale of 2,000
tons of copra.
It is to be noted in the foregoing cases that only the brokerage fee agreements were passed upon by
the board,not the sales contracts themselves. And even those fee agreements were
submitted only when the commission exceeded the ceiling fixed by the board.
Knowledge by the board is also discernible from other recorded instances.1wph1.t
When the board met on May 10, 1947, the directors discussed the copra situation: There was a slow
downward trend but belief was entertained that the nadir might have already been reached and an
improvement in prices was expected. In view thereof, Kalaw informed the board that "he intends to
wait until he has signed contracts to sell before starting to buy copra."
23

In the board meeting of July 29, 1947, Kalaw reported on the copra price conditions then current:
The copra market appeared to have become fairly steady; it was not expected that copra prices
would again rise very high as in the unprecedented boom during January-April, 1947; the prices
seemed to oscillate between $140 to $150 per ton; a radical rise or decrease was not indicated by
the trends. Kalaw continued to say that "the Corporation has been closing contracts for the sale of
copra generally with a margin of P5.00 to P7.00 per hundred kilos."
24

We now lift the following excerpts from the minutes of that same board meeting of July 29, 1947:
521. In connection with the buying and selling of copra the Board inquired whether it is the
practice of the management to close contracts of sale first before buying. The General
Manager replied that this practice is generally followed but that it is not always possible to do
so for two reasons:
(1) The role of the Nacoco to stabilize the prices of copra requires that it should not cease
buying even when it does not have actual contracts of sale since the suspension of buying
by the Nacoco will result in middlemen taking advantage of the temporary inactivity of the
Corporation to lower the prices to the detriment of the producers.
(2) The movement of the market is such that it may not be practical always to wait for the
consummation of contracts of sale before beginning to buy copra.
The General Manager explained that in this connection a certain amount of speculation is
unavoidable. However, he said that the Nacoco is much more conservative than the other
big exporters in this respect.
25

Settled jurisprudence has it that where similar acts have been approved by the directors as a matter
of general practice, custom, and policy, the general manager may bind the company without formal
authorization of the board of directors.
26
In varying language, existence of such authority is
established, by proof of the course of business, the usage and practices of the company and by
the knowledge which the board of directors has, or must bepresumed to have, of acts and doings of
its subordinates in and about the affairs of the corporation.
27
So also,
x x x authority to act for and bind a corporation may be presumed from acts of recognition in
other instances where the power was in fact exercised.
28

x x x Thus, when, in the usual course of business of a corporation, an officer has been
allowed in his official capacity to manage its affairs, his authority to represent the corporation
may be implied from the manner in which he has been permitted by the directors to manage
its business.
29

In the case at bar, the practice of the corporation has been to allow its general manager to negotiate
and execute contracts in its copra trading activities for and in NACOCO's behalf without prior board
approval. If the by-laws were to be literally followed, the board should give its stamp of prior approval
on all corporate contracts. But that board itself, by its acts and through acquiescence, practically laid
aside the by-law requirement of prior approval.
Under the given circumstances, the Kalaw contracts are valid corporate acts.
4. But if more were required, we need but turn to the board's ratification of the contracts in dispute on
January 30, 1948, though it is our (and the lower court's) belief that ratification here is nothing more
than a mere formality.
Authorities, great in number, are one in the idea that "ratification by a corporation of an unauthorized
act or contract by its officers or others relates back to the time of the act or contract ratified, and is
equivalent to original authority;" and that " [t]he corporation and the other party to the transaction are
in precisely the same position as if the act or contract had been authorized at the time."
30
The
language of one case is expressive: "The adoption or ratification of a contract by a corporation is
nothing more or less than the making of an original contract. The theory of corporate ratification
is predicated on the right of a corporation to contract, and any ratification or adoption is equivalent to
a grant of prior authority."
31

Indeed, our law pronounces that "[r]atification cleanses the contract from all its defects from the
moment it was constituted."
32
By corporate confirmation, the contracts executed by Kalaw are thus
purged of whatever vice or defect they may have.
33

In sum, a case is here presented whereunder, even in the face of an express by-law requirement of
prior approval, the law on corporations is not to be held so rigid and inflexible as to fail to recognize
equitable considerations. And, the conclusion inevitably is that the embattled contracts remain valid.
5. It would be difficult, even with hostile eyes, to read the record in terms of "bad faith and/or breach
of trust" in the board's ratification of the contracts without prior approval of the board. For, in reality,
all that we have on the government's side of the scale is that the board knew that the contracts so
confirmed would cause heavy losses.
As we have earlier expressed, Kalaw had authority to execute the contracts without need of prior
approval. Everybody, including Kalaw himself, thought so, and for a long time. Doubts were first
thrown on the way only when the contracts turned out to be unprofitable for NACOCO.
Rightfully had it been said that bad faith does not simply connote bad judgment or negligence; it
imports a dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach
of a known duty thru some motive or interest or ill will; it partakes of the nature of fraud.
34
Applying
this precept to the given facts herein, we find that there was no "dishonest purpose," or "some moral
obliquity," or "conscious doing of wrong," or "breach of a known duty," or "Some motive or interest or
ill will" that "partakes of the nature of fraud."
Nor was it even intimated here that the NACOCO directors acted for personal reasons, or to serve
their own private interests, or to pocket money at the expense of the corporation.
35
We have had
occasion to affirm that bad faith contemplates a "state of mind affirmatively operating with furtive
design or with some motive of self-interest or ill will or for ulterior purposes."
36
Briggs vs. Spaulding,
141 U.S. 132, 148-149, 35 L. ed. 662, 669, quotes with approval from Judge Sharswood (in
Spering's App., 71 Pa. 11), the following: "Upon a close examination of all the reported cases,
although there are many dicta not easily reconcilable, yet I have found no judgment or decree which
has held directors to account, except when they have themselves been personally guilty of some
fraud on the corporation, or have known and connived at some fraud in others, or where such fraud
might have been prevented had they given ordinary attention to their duties. . . ." Plaintiff did not
even dare charge its defendant-directors with any of these malevolent acts.
Obviously, the board thought that to jettison Kalaw's contracts would contravene basic dictates of
fairness. They did not think of raising their voice in protest against past contracts which brought in
enormous profits to the corporation. By the same token, fair dealing disagrees with the idea that
similar contracts, when unprofitable, should not merit the same treatment. Profit or loss resulting
from business ventures is no justification for turning one's back on contracts entered into. The truth,
then, of the matter is that in the words of the trial court the ratification of the contracts was "an
act of simple justice and fairness to the general manager and the best interest of the corporation
whose prestige would have been seriously impaired by a rejection by the board of those contracts
which proved disadvantageous."
37

The directors are not liable."
38

6. To what then may we trace the damage suffered by NACOCO.
The facts yield the answer. Four typhoons wreaked havoc then on our copra-producing regions.
Result: Copra production was impaired, prices spiralled, warehouses destroyed. Quick turnovers
could not be expected. NACOCO was not alone in this misfortune. The record discloses that private
traders, old, experienced, with bigger facilities, were not spared; also suffered tremendous losses.
Roughly estimated, eleven principal trading concerns did run losses to about P10,300,000.00.
Plaintiff's witness Sisenando Barretto, head of the copra marketing department of NACOCO,
observed that from late 1947 to early 1948 "there were many who lost money in the
trade."
39
NACOCO was not immune from such usual business risk.
The typhoons were known to plaintiff. In fact, NACOCO resisted the suits filed by Louis Dreyfus &
Co. by pleading in its answers force majeure as an affirmative defense and there vehemently
asserted that "as a result of the said typhoons, extensive damage was caused to the coconut trees
in the copra producing regions of the Philippines and according to estimates of competent
authorities, it will take about one year until the coconut producing regions will be able to produce
their normal coconut yield and it will take some time until the price of copra will reach normal levels;"
and that "it had never been the intention of the contracting parties in entering into the contract in
question that, in the event of a sharp rise in the price of copra in the Philippine market produce
by force majeureor by caused beyond defendant's control, the defendant should buy the copra
contracted for at exorbitant prices far beyond the buying price of the plaintiff under the contract."
40

A high regard for formal judicial admissions made in court pleadings would suffice to deter us from
permitting plaintiff to stray away therefrom, to charge now that the damage suffered was because of
Kalaw's negligence, or for that matter, by reason of the board's ratification of the contracts.
41

Indeed, were it not for the typhoons,
42
NACOCO could have, with ease, met its contractual
obligations. Stock accessibility was no problem. NACOCO had 90 buying agencies spread
throughout the islands. It could purchase 2,000 tons of copra a day. The various contracts involved
delivery of but 16,500 tons over a five-month period. Despite the typhoons, NACOCO was still able
to deliver a little short of 50% of the tonnage required under the contracts.
As the trial court correctly observed, this is a case of damnum absque injuria. Conjunction of
damage and wrong is here absent. There cannot be an actionable wrong if either one or the other is
wanting.
43

7. On top of all these, is that no assertion is made and no proof is presented which would link
Kalaw's acts ratified by the board to a matrix for defraudation of the government. Kalaw is clear
of the stigma of bad faith. Plaintiff's corporate counsel
44
concedes that Kalaw all along thought that
he had authority to enter into the contracts, that he did so in the best interests of the corporation; that
he entered into the contracts in pursuance of an overall policy to stabilize prices, to free the
producers from the clutches of the middlemen. The prices for which NACOCO contracted in the
disputed agreements, were at a level calculated to produce profits and higher than those prevailing
in the local market. Plaintiff's witness, Barretto, categorically stated that "it would be foolish to think
that one would sign (a) contract when you are going to lose money" and that no contract was
executed "at a price unsafe for the Nacoco."
45
Really, on the basis of prices then prevailing,
NACOCO envisioned a profit of around P752,440.00.
46

Kalaw's acts were not the result of haphazard decisions either. Kalaw invariably consulted with
NACOCO's Chief Buyer, Sisenando Barretto, or the Assistant General Manager. The dailies and
quotations from abroad were guideposts to him.
Of course, Kalaw could not have been an insurer of profits. He could not be expected to predict the
coming of unpredictable typhoons. And even as typhoons supervened Kalaw was not remissed in
his duty. He exerted efforts to stave off losses. He asked the Philippine National Bank to implement
its commitment to extend a P400,000.00 loan. The bank did not release the loan, not even the sum
of P200,000.00, which, in October, 1947, was approved by the bank's board of directors. In
frustration, on December 12, 1947, Kalaw turned to the President, complained about the bank's
short-sighted policy. In the end, nothing came out of the negotiations with the bank. NACOCO
eventually faltered in its contractual obligations.
That Kalaw cannot be tagged with crassa negligentia or as much as simple negligence, would seem
to be supported by the fact that even as the contracts were being questioned in Congress and in the
NACOCO board itself, President Roxas defended the actuations of Kalaw. On December 27, 1947,
President Roxas expressed his desire "that the Board of Directors should reelect Hon. Maximo M.
Kalaw as General Manager of the National Coconut Corporation."
47
And, on January 7, 1948, at a
time when the contracts had already been openly disputed, the board, at its regular meeting,
appointed Maximo M. Kalaw as acting general manager of the corporation.
Well may we profit from the following passage from Montelibano vs. Bacolod-Murcia Milling Co., Inc.,
L-15092, May 18, 1962:
"They (the directors) hold such office charged with the duty to act for the corporation according to
their best judgment, and in so doing they cannot be controlled in the reasonable exercise and
performance of such duty. Whether the business of a corporation should be operated at a loss
during a business depression, or closed down at a smaller loss, is a purely business and economic
problem to be determined by the directors of the corporation, and not by the court. It is a well known
rule of law that questions of policy of management are left solely to the honest decision of officers
and directors of a corporation, and the court is without authority to substitute its judgment for the
judgment of the board of directors; the board is the business manager of the corporation, and solong
as it acts in good faith its orders are not reviewable by the courts." (Fletcher on Corporations, Vol. 2,
p. 390.)
48

Kalaw's good faith, and that of the other directors, clinch the case for defendants.
49

Viewed in the light of the entire record, the judgment under review must be, as it is hereby, affirmed.
Without costs. So ordered.
Reyes, J.B.L., Makalintal, Bengzon, J.P., Zaldivar, Castro and Angeles, JJ., concur.
Fernando, J., took no part.
Concepcion, C.J. and Dizon, J., are on leave.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-24098 November 18, 1967
BUENAVENTURA BELAMALA, petitioner-appellee,
vs.
MARCELINO POLINAR, administrator, oppositor-appellant.
Juvenal D. Osorio for petitioner-appellee.
Anastacio A. Mumar for administrator, oppositor-appellant.
REYES, J.B.L., J .:
Appeal from judgment of the Court of First Instance of Bohol (Sp. Proc. No. 369) allowing a money
claim of appellee Belamala against the estate of the deceased Mauricio Polinar, for damages
caused to the claimant. Originally taken to the Court of Appeals, the case was certified to this Court
as involving only questions of law.
Issue in the case is whether the civil liability of an accused of physical injuries who dies before final
judgment, is extinguished by his demise, to the extent of barring any claim therefor against his
estate.
There is no dispute as to the facts, which were stipulated, in the court of origin, to be as follows
(Rec. of Appeal, pp. 41-43):
STIPULATED AGREEMENT OF FACTS
xxx xxx xxx
1. That the claimant Buenaventura Belamala is the same offended party in Criminal Case
No. 1922 filed before the COURT OF FIRST INSTANCE OF BOHOL, against the same
Mauricio Polinar above mentioned and against other accused, for Frustrated Murder;
2. That the administrator Marcelino Polinar is one of the legitimate children of the above
mentioned Mauricio Polinar now deceased;
3. That on May 24, 1954, the complaint for Frustrated Murder was filed in the Justice of the
Peace of Clarin, Bohol against said Mauricio Polinar, et al, and when said case was
remanded to the Court of First Instance of Bohol, the Information on said Criminal Case No.
1922 was filed on March 12, 1955;
4. That on May 28, 1966, the COURT OF FIRST INSTANCE OF BOHOL rendered a
decision thereof, convicting the said Mauricio Polinar of the crime of serious physical injuries
and sentenced him to pay to the offended party Buenaventura Belamala, now claimant
herein, the amount of P990.00, plus the amount of P35.80 as indemnity the amount of
P1,000.00 as moral damages;
5. That on June 18, 1956, the accused (the late Mauricio Polinar) appealed to the Court of
Appeals from the decision of the Court of First Instance of Bohol;
6. That on July 27, 1956, while the appeal of said Mauricio Polinar was pending before the
Court of Appeals, he died; and that there was no Notice or Notification of his death has ever
been filed in the said Court of Appeals;
7. That the decision of the Court of Appeals in said Criminal Case No. 1922, has affirmed the
decision of the Court of First Instance of Bohol, in toto, and said decision of the Court of
Appeals was promulgated on March 27, 1958; but said Mauricio Polinar has already died on
July 27, 1956;
8. That the late Mauricio Polinar is survived by his wife, Balbina Bongato and his children,
namely:
1. Narcisa Polinar, Davao
2. Geronimo Polinar, Pagadian
3. Mariano Polinar, Clarin, Bohol
4. Ireneo Polinar, Clarin, Bohol
5. Marcelino Polinar, Clarin, Bohol
6. Mauro Polinar, Clarin, Bohol
7. Demetrio Polinar, Clarin, Bohol
9. That the parties have reserved to present in Court evidence on facts not agreed to herein
by the parties.
It is to be observed that the reservation of additional evidence was waived by the parties at the trial
(see Decision of trial court, Rec. App. p. 54).
The Court a quo, overruling the contention of the Administrator-appellant that the death of the
accused prior to final judgment extinguished all criminal and civil liabilities resulting from the offense,
in view of Article 89, paragraph 1 of the Revised Penal Code, admitted the claim against the estate
in the amount of P2,025.80 with legal interest from the date claim was filed (30 July 1959) until paid.
No payment was ordered pending final determination of the sum total of claims admitted against the
estate.
Not satisfied with the ruling, the Administrator has appealed, insisting on his theory in the Court
below.
We see no merit in the plea that the civil liability has been extinguished, in view of the provisions of
the Civil Code of the Philippines of 1950 (Rep. Act No. 386) that became operative eighteen years
after the Revised Penal Code. As pointed out by the Court below, Article 33 of the Civil Code
establishes a civil action for damages on account of physical injuries, entirely separate and distinct
from the criminal action.
Art. 33. In cases of defamation, fraud, and physical injuries, a civil action for damages,
entirely separate and distinct from the criminal action, may be brought by the injured party.
Such civil action shall proceed independently of the criminal prosecution, and shall require
only a preponderance of evidence.
Assuming that for lack of express reservation, Belamala's civil action for damages was to be
considered instituted together with the criminal action, still, since both proceedings were terminated
without final adjudication, the civil action of the offended party under Article 33 may yet be enforced
separately. Such claim in no way contradicts Article 108, of the Penal Code, that imposes the
obligation to indemnify upon the deceased offender's heirs, because the latter acquired their
decedents obligations only to the extent of the value of the inheritance (Civil Code, Art. 774). Hence,
the obligation of the offender's heirs under Article 108 ultimately becomes an obligation of the
offender's estate.
The appellant, however, is correct in the contention that the claim should have been prosecuted by
separate action against the administrator, as permitted by sections 1 and 2 of Revised Rule 87,
since the claim is patently one "to recover damages for an injury to person or property" (Rule 87,
sec. 1). Belamala's action can not be enforced by filing a claim against the estate under Rule 86,
because section 5 of that rule explicitly limits the claims to those for funeral expenses, expenses for
last sickness, judgments for money and "claims against the decedent, arising from contract, express
or implied;" and this last category (the other three being inapposite) includes only "all purely personal
obligations other than those which have their source in delict or tort" (Leung Ben vs. O'Brien, 38 Phil.
182, 189-194) and Belamala's damages manifestly have a tortious origin. To this effect was our
ruling inAguas vs. Llemos, L-18107, Aug. 30, 1962.
Furthermore, it does not appear that the award of the trial Court was based on evidence submitted to
it; apparently it relied merely on the findings in the criminal case, as embodied in decisions that
never became final because the accused died during the pendency of said case.
WHEREFORE, the decision under appeal is hereby reversed and set aside, but without prejudice to
the action of appellee Belamala against the Administrator of the Estate of Mauricio Polinar. No costs.
So ordered.
Concepcion, C.J., Dizon, Makalintal, Bengzon, JP., Zaldivar, Sanchez, Castro, Angeles and
Fernando, JJ.,concur.
Republic of the Philippines
SUPREME COURT
Baguio City
SECOND DIVISION

G.R. No. 82562 April 11, 1997
LYDIA VILLEGAS, MA TERESITA VILLEGAS, ANTONIO VILLEGAS, JR., and ANTONIETTE
VILLEGAS,petitioners,
vs.
THE COURT OF APPEALS, PEOPLE OF THE PHILIPPINES and ANTONIO V.
RAQUIZA, respondents.
G.R. No. 82592 April 11, 1997
ANTONIO V. RAQUIZA, petitioner,
vs.
COURT OF APPEALS, LYDIA A. VILLEGAS, ANTONIO VILLEGAS, JR., MA. ANTONETTE
VILLEGAS, MA. LYDIA VILLEGAS and ESTATE OF ANTONIO J. VILLEGAS, respondents.

ROMERO, J .:
This case originated from a libel suit filed by then Assemblyman Antonio V. Raquiza against then
Manila Mayor Antonio J. Villegas, who allegedly publicly imputed to him acts constituting violations
of the Anti-Graft and Corrupt Practices Act. He did this on several occasions in August 1968 through
(a) a speech before the Lion's Club of Malasiqui, Pangasinan on August 10; (b) public statements in
Manila on August 13 and in Davao on August 17, which was coupled with a radio-TV interview; and
(c) a public statement shortly prior to his appearance before the Senate Committee on Public Works
(the Committee) on August 20 to formally submit a letter-complaint implicating Raquiza, among other
government officials.
The Committee, however, observed that all the allegations in the complaint were based mainly on
the uncorroborated testimony of a certain Pedro U. Fernandez, whose credibility turned out to be
highly questionable. Villegas also failed to submit the original copies of his documentary evidence.
Thus, after thorough investigation, Raquiza was cleared of all charges by the Committee.
1
All these
acts of political grandstanding received extensive media coverage.
On July 25, 1969, an information for libel was filed by the Office of the City Fiscal of Manila with the
then Court of First Instance of Manila against Villegas who denied the charge. After losing in the
1971 elections, Villegas left for the United States where he stayed until his death on November 16,
1984. Nevertheless, trial proceeded onabsentia by the time of his death the in 1984, the prosecution
had already rested its case Two months after notice of his death, the court issued an order
dismissing the crimal aspect of the case but reserving the right to resolve its civil aspect. No
memorandum was ever filed in his behalf.
Judge Marcelo R. Obien
2
rendered judgment on March 7, 1985, the dispositive portion of which was
amended on March 26 to read as follows:
WHEREFORE, and in view of the foregoing considerations, judgment is hereby
rendered as follows:
1. The dismissal of the criminal case against Antonio J. Vlllegas, on account of his
death on November 16, 1984. is hereby reiterated.
2. Ordenng the estate of Antonio J. Villegas, represented herein by his legal heirs,
namely: Lydia A Villegas, Ma. Teresita Villegas, Antonio Villegas, Jr., Ma.
Anton(i)ette Villegas, and Ma. Lydia Villegas (sic), to pay plaintiff Antonio V. Raquiza
Two Hundred Million Pesos (P200,000,000.00), itemized as follows:
a) One Hundred Fifty Million Pesos (P150.000.000.00) as moral damages:
b) Two Hundred Thousand Pesos (P200.000.00) as actual damages:
c) Forty-nine Million Eight Hundred Thousand Pesos (P49,800,000.00) as exemplary
damages; and
d) The cost of suit.
SO ORDERED.
3
(Amendments underscored)
The heirs of Villegas (the Heirs), through their father's counsel, Atty. Norberto, Quisumbing appealed
the decision on these three main grounds:
1. Whether the trial court, three months after notice of the death of the accused and
before his counsel could file a memorandum in his behalf, could velidly render
judgment in the case?
2. Whether in the absence of formal substitution of parties, the trial court could validly
render judgment against the heirs and estate of a deceased accused?
3 Whether, under the facts of the instant case, deceased Villegas was liable for libel,
and assuming he was, whether the damages awarded by the trial court were just and
reasonable?
On March 15, 1988, the Court of Appeals rendered a decision affirming the trial court's judgment
modified only with respect to the award of damages which was reduced to P2 million representing
P1.5 million, P300,000.00, and P200,000.00 in moral exemplary and actual damages, respectively.
Both parties elevated said decision to this Court for review
In their petition (G.R. No. 82562), the Heirs once again raise the very same issues brought before
the Court of Appeals, albeit reworded. On the other hand, petitioner Requiza (G.R. No. 82592)
questions the extensions of time to file appellant's brief granted by the appellate court to the Heirs,
as well as the drastic reduction in the award of damages.
It is immediately apparent that the focal issue in these petitions is the effect of the death of Villegas
before the case was decided by the trial court. Stated otherwise, did the death of the accused before
final judgment extinguish his civil liability?
Fortunately, this Court has already settled this issue with the promulgation of the case of People
v. Bayotas (G.R. No. 102007) on September 2, 1994,
4
viz.:
It is thus evident that as jurisprudence evolved from Castillo
5
to Torrijos,
6
the rule
established was that the survival of the civil liability depends on whether the same can be
predicated on sources of obligations other than delict. Stated differently, the claim for civil
liability is also extinguished together with the criminal action if it were solely based
thereon, i.e., civil liability ex delicto.
xxx xxx xxx
(I)n recovering damages for injury to persons thru an independent civil action based on
Article 33 of the Civil Code, the same must be filed against the executor or administrator
of the estate of deceased accused (undet Sec. 1, Rule 87, infra.) and not against the
estate under Sec. 5, Rule 86 because this rule explicitly limits the claim to those for
funeral expenses, expenses for the last sickness of the decedent, judgment for money
and claims arising from contract, express or implied.
7

xxx xxx xxx
From this lengthy dlsquisition, we summarize our ruling herein:
1 Death of the accused pending appeal of his conviction extinguishes his criminal
liability as well as the civil liability based solely thereon As opined by Justice
Regalado, in this regard, "the death of the accused prior to final judgment terminates
his criminal liability and only the civil liability directly arising from and based solely on
the offense committed, i.e., civil liability ex delicto in senso strictiore."
2 Corollarily the claim for civil liability survives notwithstanding the death of (the)
accused, if the same may also be predicated on a source of obligation other than
delict. Article 1157 of the Civil Code enumerates these other sources of obligation
from which the civil liability may arise as a result of the same act or omission:
a) Law
b) Contracts
c) Quasi-contracts
d) x x x x x x x x x
e) Quasi-delicts
3. Where the civil liability survives, as explained in Number 2 above, an action for
recovery therefor may be pursued but only by way of filing a separate civil action and
subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as
amended.
8
This separate civil action may be enforced either against the
executor/administrator o(f) the estate of the accused, depending on the source of
obligation upon which the same is based as explained above.
4. Finally, the private offended party need not fear a forfeiture of his right to file this
separate civil action by prescription, in cases where during the prosecution of the
criminal action and prior to its extinction, the private offended party instituted together
therewith the civil action. In such case, the statute of limitations on the civil liability is
deemed interrupted during the pendency of the criminal case, conformably with (the)
provisions of Article 1155 of the Civil Code, that should thereby avoid any
apprehension on a possible privation of right by prescription. (Emphasis supplied).
The source of Villegas' civil liability in the present case is the felonious act of libel he allegedly
committed. Yet, this act could also be deemed a quasi-delict within the purview of Article 33
9
in
relation to Article 1157 of the Civil Code. If the Court ruled in Bayotas that the death of an accused
during the pendency of his appeal extinguishes not only his criminal but also his civil liability unless
the latter can be predicated on a source of obligation other than the act or omission complained of,
with more reason should it apply to the case at bar where the accused died shortly after the
prosecution had rested its case and before he was able to submit his memorandum and all this
before any decision could even be reached by the trial court.
The Bayotas ruling, however, makes the enforcement of a deceased accused's civil liability
dependent on two factors, namely, that it be pursued by filing a separate civil action and that it be
made subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure, as amended.
Obviously, in the case at bar, the civil action was deemed instituted with the criminal. There was no
waiver of the civil action and no reservation of the right to institute the same, nor was it instituted
prior to the criminal action. What then is the recourse of the private offended party in a criminal case
such as this which must be dismissed in accordance with the Bayotas doctrine, where the civil action
was impliedly instituted with it?
The answer is likewise provided in Bayatas, thus:
Assuming that for lack of express reservation, Belamala's civil civil for damages was to
be considered instituted together with the crinimal action still, since both proceedings
were terminated without finals adjudication the civil action of the offended party under
Article 33 may yet be enforced separately
10
(Emphasis supplied)
Hence, logically, the court a quo should have dismissed both actions against Vilegas which
dismissal will not, however, bar Raquiza as the private offended party from pursuing his claim for
damages against the executor or administrator of the former's estate, notwitnstanding the fact that
he did not reserve the right to institute a civil separate civil action based on Article 33 of the Civil
Code.
It cannot be argued either that to follow Bayotas would result in further delay in this protracted
litigation. This is because the resolution of the civil aspect of the case after the dismissal of the main
criminal action by the trial court was technically defective There was no proper substitution of
parties, as correctly pointed out by the Heirs and repeatedly put in issue by Atty. Quisumbing. What
should have been followed by the court a quo was the procedure laid down in the Rules of Court,
specifically, Section 17, Rule 3, in connection with Section 1, Rule 87. The pertinent provisions state
as follws:
Rule 3
Sec.17. Death of party. After a party dies and the claim is not there
extinguished, the court shall order upon proper notice the legal representative of the
deceased to appear and to be substituted for the deceased, within a period of thirty
(30) days, or within such time as may begranted. . . . The heirs of the deceased may
be allowed to be for the deceased, without requiring the appointment of an executor
or administrator and the court may appoint guardian ad litem for the minor heirs.
Rule 87
Sec. 1. Actions which may and which may not be brought against or executor or
administrator. No action upon a claim for the recovery of money or debt or interest
thereon shall be commencedagainst the executor or administrator; but actions to
recover real or personal property, or an interest therein, from the estate, or to enforce
a lien thereon, and actions to recover damages for an injury to person or property,
real or personal may be commenced against him.
Accordingly, the Court sees no more necessity in resolving the other issues used by both parties in
these petitions.
WHEREFORE, the petition in G.R. No. 82562 is GRANTED and the petition in G.R. No. 82592 is
DENIED. The decisions of the Court of Appeals in CA-G.R. CR No. 82186 dated March 15, 1988,
and of the Manila Regional Trial Court, Branch 44, dated March 7, 1985, as amended, are hereby
REVERSED and SET ASIDE, without prejudice to the right of the private offended party Antonio
V. Raquiza, to file the appropriate civil action for damages against the executor or administrator of
the estate or the heirs of the late Antonto J. Villegas in accordance with the foregoing procedure.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 18405 September 23, 1922
E. GASKELL & CO., INC., plaintiff-appellant,
vs.
TAN SIT, administratrix of the estate of Dy Poco, deceased, defendant-appellee.
Williams & Ferrier for appellant.
Crossfield & O'Brien for appellee.
STREET, J .:
On June 23, 1919, a Chinese merchant of the city of Manila, Dy Poco by name, was declared
bankrupt in a proceeding instituted by some of his creditors in the Court of First Instance of Manila,
and short thereafter the same Dy Poco died. Nevertheless, the insolvency proceedings continued
their course and in the end an order was made discharging the debtor or his estate from all
liability upon provable claims, as contemplated in section 69 of the Insolvency Law (Act No. 1956).
Meanwhile, however, Tan Sit, the widow of Dy Poco, had qualified as his administratrix, for the
purpose chiefly, no doubt, of realizing upon a policy of insurance of P25,000 in force upon the life of
Dy Poco at the time of his death. In this she was successful, as may be seen by referring to an
opinion in Sun Life Assurance Co. of Canada vs. Ingersoll and Tan Sit (42 Phil., 331). As a result of
the facts above indicated, two distinct parallel proceedings with reference to the estate of Dy Poco
were contemporaneously conducted in the Court of First Instance of the city of Manila, that is to say,
the proceedings over the estate in insolvency and the proceedings over the estate in insolvency and
the proceedings over the estate in administration.
Prior to the institution of the bankruptcy proceeding above alluded to, Gaskell & Co., the plaintiff
herein, as customs broker for Dy Poco, joined wit the latter in a written application to the Philippine
Guaranty Co., requesting said company to become surety on a bond which the Insular Collector of
Customs had required Dy Poco to give inorder to secure the delivery of certain merchandise arriving
from abroad for which Dy Poco was at that time unable to produce the proper bill of lading. Pursuant
to said application the Philippine Guaranty Company executed a bond in the sum of P19,800, and
merchandise having a value of P18,338.48 was thereupon delivered to Dy Poco by the Collector of
Customs.
At a later date Dy Poco defaulted in his undertaking to produce the bill of lading corresponding to the
merchandise which had been delivered to him, and said document was afterwards produced by the
Hongkong & Shanghai Banking Corporation, an innocent holder thereof for value; and demand was
made by this bank upon the Insular Collector of Customs for the delivery of the same merchandise
that had previously been delivered to Dy Poco. When this occurred, the Collector at once made
demand upon the Philippine Guaranty Company for payment of the value of the goods (P18,338.48)
for the benefit of the aforesaid bank.
In response to this demand, the Guaranty Company paid the amount required, and in turn
demanded reimbursement from the present plaintiff, Gaskell & Co., in reliance upon the obligation
assumed by the latter in the written application submitted to the Guaranty Company when the latter
assumed responsibility as surety for Dy Poco. Up to the time when this action was brought, Gaskell
& co. had not complied with this demand of the Guaranty Company, but no question is made as to
Gaskell & Company's ultimate liability.
Upon the preceding statement it is evident that the Philippine Guaranty Company, having paid out a
sum of money in the character of surety for Dy Poco, had a right to be exonerated by the latter; and
accordingly said company duly proved this claim in the insolvency proceeding that had been
instituted against Dy Poco.
It will also be noted that Dy Poco was also contingently liable to exonerate Gaskell & Co. in the even
that the latter should be compelled to pay out anything to the Philippine Guaranty Company; for it is
undisputed that, as between Gaskell & Co. and Dy Poco, the latter was primarily responsible. No
steps were taken, however, towards proving this contingent claim on the part of Gaskell & Co.
against Dy Poco in the insolvency proceedigns. At a later date, however, Gaskell & Co. caused said
claim to be presented to the commissioners appointed to pass on claims against the estate of Dy
Poco in administration; and the same having been rejected by the commissioners, the matter was
brought before the Court of First Instance upon appeal, where the claim was again disallowed. Upon
this Gaskell & Co. appealed to the Supreme Court.
The errors assigned all have relation to the right of the appellant to have this claim allowed against
the estate of Dy Poco in administration; and the first point upon which the attorneys for the appellant
lay stress is that this claim against Dy Poco is a contingent claim, from which it is supposed to follow
that it should have been reported by the commissioners to the court having charge of the
administration proceedings as contemplated in section 746 of the Code of Civil Procedure,
whereupon it would have become the duty of the court to order the administratrix to retain funds to
satisfy the claim upon its becoming absolute (sec. 747).
There can be no question that the claim of Gaskell & Co against Dy Poco is properly designated as
a contingent claim, which may be defined as a claim in which liability depends on some future event
that may or may not happen, and which makes it uncertain whether there will ever be any liability.
The expression is used in contradistinction to the absolute claim, which is subject to no contingency
and may be proved an allowed as a debt by the committee or claims. The absolute claim is such a
claim as, if contested between living persons, would be proper subject of immediate legal action and
would supply a basis of a judgment for a sum certain. It will be noted that the term "contingent" has
reference to the uncertainty of the liability and not to the uncertainty in which the realization or
collection of the claim may be involved. The word "contingent," as used in the original English, in the
Code of Civil Procedure, conveys the idea of ultimate uncertainty as to the happening of the event
upon which liability will arise; and it is not the prices equivalent of the Spanish word "eventual" by
which it is commonly translated. The idea involved in the word "eventual" may be satisfied with the
idea of that which is uncertain only in respect to the element of time. A thing that is certain to happen
at some time or other will eventually come to pass although the exact time may be uncertain; to be
contingent its happening must be wholly uncertain until the event which fixes liability occurs.
The most common example of the contingent claim is that which arises when a person is bound as
surety or guarantor for a principal who is insolvent or dead. Under the ordinary contract of suretyship
the surety has no claim whatever against his principal until he himself pays something by way of
satisfaction upon the obligation which is secured. When he does this, there instantly arises in favor
of the surety the right to compel the principal to exonerate the surety. But until the surety has
contributed something to the payment of the debt, or has performed the secured obligation in whole
or in part, he has no right of action against anybody no claim that could be reduced to judgment.
(May vs. Vann. 15 Fla., 553; Gibson vs. Mitchell, 16 Fla., 519; Maxey vs. Carter, 10 Yerg. {Tenn.],
521; Reeves vs. Pulliam, 7 Bat. [Tenn.], 119; Ernst vs. Nau, 63 Wis., 134.)
But, although it is thus evident that this claim in favor of Gaskell & Co. against Dy Poco is a
contingent claim, it by no means follows that said claim can now be allowed against Dy Poco's
estate in administration; for a contingent claim is effected by a discharge in bankruptcy the same as
an absolute claim, and that this claim has in fact been so barred is easily demonstrable, by reference
to section 56 of the insolvency Law, which reads in part as follows:
Any person liable as bail, surety, or guarantor, or otherwise, for the debtor, who . . . has not
paid the whole of said debt, but is still liable for the same, or any party thereof, may, if the
creditor shall fail or omit to prove such debt, prove the same in the name of the creditor. (Act
No. 1956, sec. 56.)
From this it will be seen that the claim in question could have been proved by Gaskel & Co. in the
bankruptcy proceedings in the name of the creditor (the Philippine Guaranty Company), if the latter
had failed to present the credit. But, as already stated, the creditor in fact proved in the insolvency
proceeding for the very claim for which the present plaintiff is contingently liable; with the result that
the present plaintiff will be exonerated to the extent of any amount which the creditor may recover
from the insolvent.
It necessarily follows that, the claim in question having been discharged in bankruptcy, it cannot
serve as the basis of recovery against the estate of Dy Poco in administration. When it happens, as
here, that both bankruptcy proceedings and administration proceedings are simultaneously
conducted over the estate of a deceased bankrupt, no claim can be proved against the administrator
which is provable in bankruptcy; and it was partly with a view for making this point clear that we were
at pains to say at the conclusion of our opinion in Sun Life Assurance Co. of Canada vs. Ingersoll
and Tan Sit, supra, that the proceeds of the policy of insurance there awarded to the administratrix
were not liable for any of the debts provable against Dy Poco in the bankruptcy proceedings then
pending.
From what has been said it follows that there was no error on the part of the trial it follows that there
was no error on the part of the trial court in disallowing the claim of Gaskell & Co. against the
administratrix of Dy Poco. Said judgment will therefore be affirmed; and it is so ordered, with costs
against the appellant.
EN BANC
G.R. No. L-7593 December 24, 1957
Intestate Estate of the late Florencio P. Buan and Rizalina Paras Buan, deceased.
BIENVENIDO P. BUAN and A. NATIVIDAD PARAS,Co-Administrators-appellees, vs. SYLVINA C.
LAYA, ET AL., petitioners-appellants.

LABRADOR, J.:chanrobles virtual law l ibrary
Appeal from a decision of the Court of First Instance of Tarlac dated January 7, 1954, setting aside the
previous Order dated December 16, 1953, which had admitted a contingent claim filed by petitioners-
appellants but denied a petition to set aside an amount to answer the contingent claim.chanroblesvi rtualawl ibrary chanrobles vi rtual law li brary
The record discloses that on December 15, 1953, petitioners herein filed a contingent claim for more
than P500,000 against the intestate estate of the deceased spouses Florencio P. Buan and Rizalina
Paras Buan. The contingent claim was based on the fact that on August 3, 1952, a Philippine Rabbit
Bus, owned and operated by the deceased spouses Buan, collided with a car in which Juan C. Laya,
Rodolfo Escosa, Jose S. Palma, and Juan de Leon, were riding; that the collision was caused by the
fact that the driver of the bus managed and drove the vehicle in a negligent manner; that as a
consequence of the collision Juan C. Laya was killed and his companions suffered physical injuries. The
driver of the bus was Ernesto Triguero, and he was charged with homicide and serious physical
injuries through reckless imprudence and was sentenced therefor. The heirs of Juan C. Laya,
petitioners herein, reserved the civil action for damages, and on October 12, 1953, they filed an
independent civil action in the Court of First Instance of Manila against the administrator of the
deceased spouses Buan. The petition for the admission of a contingent claim was accompanied with a
copy of the complaint filed in the civil case above-mentioned (No. 20867, CFI Manila) and a sentence
in the criminal case filed against Ernesto Triguero, driver of the Philippine Rabbit Bus.chanroblesvirtualawli brary chanrobles vi rtual law library
When the administrators learned of the filing of the contingent claim in the Court of First Instance of
Tarlac, they filed an opposition thereto on the ground that the same was not filed before the death of
the spouses Florencio Buan and Rizalina Paras Buan, which took place on January 3, 1953, and that it
was also not filed within the period prescribed by Rule 89, Section 4 of the Rules of Court. The Court
of First Instance of Tarlac admitted the claim in an order dated December 16, 1953, but denied the
prayer that a portion of the estate be set aside to respond for the amount of the contingent. Counsel
for the administrators then moved to set aside the order. In an order dated November 25, 1953,
Judge Agustin P. Montesa, sitting as Judge for the Court of First Instance of Manila, held that the civil
action filed in Manila by the heirs of Laya, petitioners herein, Civil Case No. 20867, was premature
because the sentence of conviction of the driver of the bus had not become final. The court also
ordered the plaintiffs to amend their complaint within 10 days. Thereupon, the plaintiffs in said civil
case (C.F.I. Manila, No. 20867) filed an amended complaint, dated December 18, 1953.chanroblesvirtualawli brary chanrobles vi rtual law library
In the meantime and on January 7, 1954, the Court of First Instance of Tarlac, on a motion for
reconsideration filed by the administrators dated January 2, 1954, set aside its previous order of
December 16, 1953, admitting the contingent claim of petitioners. The reason for the admission of the
claim, according to the court, had ceased to exist and even the plaintiffs had filed the amended
complaint in the Court of First Instance of Manila, the same has not yet been acted upon by the said
court. A motion to reconsider this order of the Court of First Instance of Tarlac having been denied,
petitioners have prosecuted this appeal to Us.chanroblesvirtualawli brary chanrobles vi rtual law library
A consideration of the facts and the proceedings set forth above will readily show that the order of the
Court of First Instance of Tarlac dismissing the contingent claim is based on incorrect and erroneous
conception of a contingent claim. A contingent claim is one which, by its nature, is necessarily
dependent upon an uncertain event for its existence or validity. It may or may not develop into a valid
and enforceable claim, and its validity and enforceability depending upon an uncertain event. (E.
Gaskell & Co. vs. Tan Sit, 43 Phil. 810, 813; 2 Moran, Comments on the Rules of Court, 1957 edition,
pp. 425-426.).
A 'contingent claim' against an estate within the statute providing for the settlement hereof, as one
where the absolute liability depends on some future event which may never happen, and which
therefore renders such liability uncertain and indeterminable. . . It is where the liability depends on
some future event after the debtor's death which may or may not happen, and therefore makes Words
and Phrases, p. 113.).chanroblesvi rtualawlibrary chanrobles virtual law library
A 'contingent claim' against an estate is one in which liability depends on some future event which
may or may not occur, so that duty to pay may never become absolute. (In Re Flewell, 276 N. W.
732, 733; 9 Words and Phrases, p. 114.).
Whether or not the heirs of the deceased, Juan C. Laya, would succeed in the action brought in Manila
against the administrators of the estate of the deceased spouses Florencio Buan and Rizalina P. Buan,
is the uncertain event or contingency upon which the validity of the claim presented in the
administration proceedings depends. While the said action has not yet been finally decided or
determined to the effect that the petitioners herein, heirs of the deceased Juan C. Laya, have no right
of action against the estate of the deceased spouses Florencio P. Buan and Rizalina P. Buan, the
contingent claim that petitioners have filed in the Court of First Instance of Tarlac in the proceedings
for the administration of the deceased spouses Florencio P. Buan and Rizalina P. Buan, may not be
dismissed. The order of the court dismissing the claim and declaring that the same may again be
entertained if another valid complaint by the petitioners herein is filed in the Court of First Instance of
Manila, is inconsistent with the nature and character of a contingent claim. A contingent claim does
not follow the temporary orders of dismissal of an action upon which it is based; it awaits the final
outcome thereof and only said final result can cause its termination. The rules provide that a
contingent claim is to be presented in the administration proceedings in the same manner as any
ordinary claim, and that when the contingency arises which converts the contingent claim into a valid
claim, the court should then be informed that the claim had already matured. (Secs. 5. 9, Rule 87.)
The order of the court subject of the appeal should, therefore, be set aside.chanroblesvi rtualawlibrary chanrobles vi rtual law library
The first order of the court admitted the claim but denied the petition for the setting aside of a certain
amount from the estate to respond therefor. The validity of the contingent claim is apparent; as the
driver of the bus belonging to the deceased spouses, Florencio P. Buan and Rizalina P. Buan, was
found guilty of negligence, as a result of which Juan C. Laya died, the said deceased spouses-the
employers of the driver-can be made responsible, as masters of a servant, for damages for the death
of the petitioner's father. A portion of the estate should therefore, be set aside to respond for such
damages as petitioners herein may subsequently recover in the action they have brought in the Court
of First Instance of Manila. This amount should be fixed in the court below.chanroblesvi rtualawl ibrary chanrobles vi rtual l aw library
For the foregoing considerations, the order of the court dismissing the contingent claim filed by
petitioners is hereby set aside. It is hereby ordered that the claim be allowed to continue, and it is
further ordered that the court fix an amount that may be set aside to respond for the damages that
the petitioners herein may ultimately recover. Costs against the respondents.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-14234 February 28, 1962
THE FIRST NATIONAL CITY BANK OF NEW YORK, plaintiff-appellant,
vs.
SILVIO CHENG TAN alias SILVIO CHENG PAN, defendant-appellee.
Ross, Selph, Carrascoso and Janda for plaintiff-appellant.
Sycip, Quisumbing, Salazar and Associates for defendant-appellee.
DIZON, J .:
On July 2, 1947 the Court of First Instance of Manila rendered judgment in Civil Case No. 59502 which
was an action to foreclose a real estate mortgage ordering the defendants therein, Silvio Cheng Tan
alias Silvio Cheng Pan amongst them to pay, jointly and severally, The First National City Bank of New
York the sum of P142,000.56, with the stipulated interest on the sum of P129,361.13, plus costs, and
providing that in case of default of payment within the period of time therein given, the properties
mortgaged by said defendants be sold at Public auction to satisfy the judgment. After the sale of the
mortgaged properties a deficiency judgment was rendered on March 25, 1950 for P98,256.13 (Rec. on
App. p. 4-5). After the issuance of the corresponding writ of execution and the sale of two parcels of land
located in San Miguel, Bulacan, there remained unsatisfied the sum of P38,090.06, with the 7% stipulated
interest thereon from October 3, 1941, until paid.
As the other defendants in the case had died or could nowhere be found, and the five-year period for the
enforcement of the deficiency judgment by mere motion had elapsed without the same having been
satisfied, on June 26, 1957 The First National City Bank of New York instituted the present action against
Silvio Cheng Tan in the Court of First Instance of Manila to revive the judgment aforesaid.
During the pendency of the case Cheng Tan died and was substituted by his legal representative, Serafin
Cheng, who filed a motion to dismiss the action on the ground that under Section 21, Rule 3 and Section
5, Rule 87 of the Rules of Court, plaintiff should file its claim in the intestate estate proceedings for the
settlement of the estate of said deceased pending in the Court of First Instance of Rizal since February
27, 1958, an administrator having been appointed by said court on April 7, 1958.
Opposing the motion to dismiss, plaintiff contended that the judgment rendered in Civil Case No. 59502
having ceased to be executory, demandable and operative, the same had been reduced to a mere right
of action; that the present action to revive said judgment is not one for the recovery of money; that it was
for this reason that a contingent claim had been filed by it against defendant's estate.
In its order of July 1, 1958 the lower court granted defendant's motion to dismiss. Hence, this appeal.1wph 1. t
We have heretofore held in Bank of the Philippine Islands vs. Concepcion e Hijos, 53 Phil. 806,
and Government, etc. vs. Concuya et al., G.R. No. L-45994, promulgated on January 20, 1944, that
deficiency judgment is a contingent claim and must be filed with the probate court where the settlement of
the estate of the deceased mortgagor is pending, within the period of time fixed for the filing of claims. On
the other hand, Section, 5 Rule 87 of the Rules of Court, provides that, among others, judgments for
money against the decedent whose estate is in the process of judicial settlement must be filed with the
private court within the time limited in the notice given for that purpose, otherwise they will be deemed
barred forever, except that they may be set forth as counterclaim in any action that the executor or
administrator may bring against the judgment creditor.
It is true that a judgment rendered in a civil action remaining unsatisfied after 5 years from its date of
entry, is reduced to the condition of a mere right of action (Cia. General de Tabacos, etc. vs. Martinez, et
al., 29 Phil. 515), but this, in our opinion, does not argue against the proposition that it should be filed with
the probate court for corresponding action. To the contrary, reduced, as it has been, to the condition of a
mere right of action, it can well be likened to a promissory note. Like the latter, therefore, it should be
submitted as a claim to the probate court where the settlement of the estate of the deceased debtor is
pending.
Even reasons of expediency militate in favor of our conclusion. Were the present preceedings allowed to
continue, they could end with nothing more than a judgment reviving the one subject matter of the action.
Thus revived said judgment could not be enforced except through the probate court (Piliin vs. Jocson, 41
Phil. 26; Espino vs. Rovira, 50 Phil. 152; Asia Banking, etc. vs. Elser, 54 Phil. 994) because the judgment
debtor died before execution could be actually levied upon any of his properties (Section 7, Rule 39,
Rules of Court). There is, therefore, no need to prosecute the present action the herein plaintiff-appellee
having the right to go directly to the probate court to file his claim based on the deficiency judgment
mentioned heretofore.
WHEREFORE, the appealed order is affirmed, without special pronouncement as to costs.
SECOND DIVISION

ALFREDO HILADO, LOPEZ G.R. No. 164108
SUGAR CORPORATION, FIRST
FARMERS HOLDING Present:
CORPORATION,
Petitioners, CARPIO MORALES, J.,
*

Acting Chairperson,
TINGA,
VELASCO, JR.,
- versus - LEONARDO-DE CASTRO,
**
and
BRION, JJ.


THE HONORABLE COURT OF
APPEALS, THE HONORABLE Promulgated:
AMOR A. REYES, Presiding Judge,
Regional Trial Court of Manila, May 8, 2009
Branch 21 and ADMINISTRATRIX
JULITA CAMPOS BENEDICTO,
Respondents.
x----------------------------------------------------------------------------x


D E C I S I O N

TINGA, J.:

The well-known sugar magnate Roberto S. Benedicto died intestate on 15
May 2000. He was survived by his wife, private respondent Julita Campos
Benedicto (administratrix Benedicto), and his only daughter, Francisca Benedicto-
Paulino.
[1]
At the time of his death, there were two pending civil cases against
Benedicto involving the petitioners. The first, Civil Case No. 95-9137, was then
pending with the Regional Trial Court (RTC) of Bacolod City, Branch 44, with
petitioner Alfredo Hilado as one of the plaintiffs therein. The second, Civil Case
No. 11178, was then pending with the RTC of Bacolod City, Branch 44, with
petitioners Lopez Sugar Corporation and First Farmers Holding Corporation as one
of the plaintiffs therein.
[2]


On 25 May 2000, private respondent Julita Campos Benedicto filed with the
RTC of Manila a petition for the issuance of letters of administration in her favor,
pursuant to Section 6, Rule 78 of the Revised Rules of Court. The petition was
raffled to Branch 21, presided by respondent Judge Amor A. Reyes. Said petition
acknowledged the value of the assets of the decedent to be P5 Million, net of
liabilities.
[3]
On 2 August 2000, the Manila RTC issued an order appointing private
respondent as administrator of the estate of her deceased husband, and issuing
letters of administration in her favor.
[4]
In January 2001, private respondent
submitted an Inventory of the Estate, Lists of Personal and Real Properties, and
Liabilities of the Estate of her deceased husband.
[5]
In the List of Liabilities
attached to the inventory, private respondent included as among the liabilities,
the above-mentioned two pending claims then being litigated before
the Bacolod City courts.
[6]
Private respondent stated that the amounts of liability
corresponding to the two cases asP136,045,772.50 for Civil Case No. 95-9137
and P35,198,697.40 for Civil Case No. 11178.
[7]
Thereafter, the Manila RTC
required private respondent to submit a complete and updated inventory and
appraisal report pertaining to the estate.
[8]


On 24 September 2001, petitioners filed with the Manila RTC a
Manifestation/Motion Ex Abundanti Cautela,
[9]
praying that they be furnished
with copies of all processes and orders pertaining to the intestate proceedings.
Private respondent opposed the manifestation/motion, disputing the personality
of petitioners to intervene in the intestate proceedings of her husband. Even
before the Manila RTC acted on the manifestation/motion, petitioners filed an
omnibus motion praying that the Manila RTC set a deadline for the submission by
private respondent of the required inventory of the decedents
estate.
[10]
Petitioners also filed other pleadings or motions with the Manila RTC,
alleging lapses on the part of private respondent in her administration of the
estate, and assailing the inventory that had been submitted thus far as unverified,
incomplete and inaccurate.




On 2 January 2002, the Manila RTC issued an order denying the
manifestation/motion, on the ground that petitioners are not interested parties
within the contemplation of the Rules of Court to intervene in the intestate
proceedings.
[11]
After the Manila RTC had denied petitioners motion for
reconsideration, a petition for certiorari was filed with the Court of Appeals. The
petition argued in general that petitioners had the right to intervene in the
intestate proceedings of Roberto Benedicto, the latter being the defendant in the
civil cases they lodged with the Bacolod RTC.

On 27 February 2004, the Court of Appeals promulgated a
decision
[12]
dismissing the petition and declaring that the Manila RTC did not
abuse its discretion in refusing to allow petitioners to intervene in the intestate
proceedings. The allowance or disallowance of a motion to intervene, according
to the appellate court, is addressed to the sound discretion of the court. The
Court of Appeals cited the fact that the claims of petitioners against the decedent
were in fact contingent or expectant, as these were still pending litigation in
separate proceedings before other courts.

Hence, the present petition. In essence, petitioners argue that the lower
courts erred in denying them the right to intervene in the intestate proceedings of
the estate of Roberto Benedicto. Interestingly, the rules of procedure they cite in
support of their argument is not the rule on intervention, but rather various other
provisions of the Rules on Special Proceedings.
[13]


To recall, petitioners had sought three specific reliefs that were denied by
the courts a quo. First, they prayed that they be henceforth furnished copies of
all processes and orders issued by the intestate court as well as the pleadings
filed by administratrix Benedicto with the said court.
[14]
Second, they prayed that
the intestate court set a deadline for the submission by administratrix Benedicto
to submit a verified and complete inventory of the estate, and upon submission
thereof, order the inheritance tax appraisers of the Bureau of Internal Revenue to
assist in the appraisal of the fair market value of the same.
[15]
Third, petitioners
moved that the intestate court set a deadline for the submission by the
administrator of her verified annual account, and, upon submission thereof, set
the date for her examination under oath with respect thereto, with due notice to
them and other parties interested in the collation, preservation and disposition of
the estate.
[16]


The Court of Appeals chose to view the matter from a perspective solely
informed by the rule on intervention. We can readily agree with the Court of
Appeals on that point. Section 1 of Rule 19 of the 1997 Rules of Civil Procedure
requires that an intervenor has a legal interest in the matter in litigation, or in
the success of either of the parties, or an interest against both, or is so situated as
to be adversely affected by a distribution or other disposition of property in the
custody of the court x x x While the language of Section 1, Rule 19 does not
literally preclude petitioners from intervening in the intestate proceedings, case
law has consistently held that the legal interest required of an intervenor must
be actual and material, direct and immediate, and not simply contingent and
expectant.
[17]


Nonetheless, it is not immediately evident that intervention under the Rules
of Civil Procedure necessarily comes into operation in special proceedings. The
settlement of estates of deceased persons fall within the rules of special
proceedings under the Rules of Court,
[18]
not the Rules on Civil Procedure. Section
2, Rule 72 further provides that *i+n the absence of special provisions, the rules
provided for in ordinary actions shall be, as far as practicable, applicable to special
proceedings.

We can readily conclude that notwithstanding Section 2 of Rule 72,
intervention as set forth under Rule 19 does not extend to creditors of a decedent
whose credit is based on a contingent claim. The definition of intervention
under Rule 19 simply does not accommodate contingent claims.




Yet, even as petitioners now contend before us that they have the right to
intervene in the intestate proceedings of Roberto Benedicto, the reliefs they had
sought then before the RTC, and also now before us, do not square with their
recognition as intervenors. In short, even if it were declared that petitioners have
no right to intervene in accordance with Rule 19, it would not necessarily mean
the disallowance of the reliefs they had sought before the RTC since the right to
intervene is not one of those reliefs.

To better put across what the ultimate disposition of this petition should be,
let us now turn our focus to the Rules on Special Proceedings.

In several instances, the Rules on Special Proceedings entitle any interested
persons or any persons interested in the estate to participate in varying
capacities in the testate or intestate proceedings. Petitioners cite these provisions
before us, namely: (1) Section 1, Rule 79, which recognizes the right of any
person interested to oppose the issuance of letters testamentary and to file a
petition for administration; (2) Section 3, Rule 79, which mandates the giving of
notice of hearing on the petition for letters of administration to the known heirs,
creditors, and to any other persons believed to have interest in the estate; (3)
Section 1, Rule 76, which allows a person interested in the estate to petition for
the allowance of a will; (4) Section 6 of Rule 87, which allows an individual
interested in the estate of the deceased to complain to the court of the
concealment, embezzlement, or conveyance of any asset of the decedent, or of
evidence of the decedents title or interest therein; (5) Section 10 of Rule 85,
which requires notice of the time and place of the examination and allowance of
the Administrators account to persons interested; (6) Section 7(b) of Rule 89,
which requires the court to give notice to the persons interested before it may
hear and grant a petition seeking the disposition or encumbrance of the
properties of the estate; and (7) Section 1, Rule 90, which allows any person
interested in the estate to petition for an order for the distribution of the residue
of the estate of the decedent, after all obligations are either satisfied or provided
for.

Had the claims of petitioners against Benedicto been based on contract,
whether express or implied, then they should have filed their claim, even if
contingent, under the aegis of the notice to creditors to be issued by the court
immediately after granting letters of administration and published by the
administrator immediately after the issuance of such notice.
[19]
However, it
appears that the claims against Benedicto were based on tort, as they arose from
his actions in connection with Philsucom, Nasutra and Traders Royal Bank. Civil
actions for tort or quasi-delict do not fall within the class of claims to be filed
under the notice to creditors required under Rule 86.
[20]
These actions, being as
they are civil, survive the death of the decedent and may be commenced against
the administrator pursuant to Section 1, Rule 87. Indeed, the records indicate that
the intestate estate of Benedicto, as represented by its administrator, was
successfully impleaded in Civil Case No. 11178, whereas the other civil case
[21]
was
already pending review before this Court at the time of Benedictos death.

Evidently, the merits of petitioners claims against Benedicto are to be
settled in the civil cases where they were raised, and not in the intestate
proceedings. In the event the claims for damages of petitioners are granted, they
would have the right to enforce the judgment against the estate. Yet until such
time, to what extent may they be allowed to participate in the intestate
proceedings?

Petitioners place heavy reliance on our ruling in Dinglasan v. Ang
Chia,
[22]
and it does provide us with guidance on how to proceed. A brief narration
of the facts therein is in order. Dinglasan had filed an action for reconveyance and
damages against respondents, and during a hearing of the case, learned that the
same trial court was hearing the intestate proceedings of Lee Liong to whom
Dinglasan had sold the property years earlier. Dinglasan thus amended his
complaint to implead Ang Chia, administrator of the estate of her late husband.
He likewise filed a verified claim-in-intervention, manifesting the pendency of the
civil case, praying that a co-administrator be appointed, the bond of the
administrator be increased, and that the intestate proceedings not be closed until
the civil case had been terminated. When the trial court ordered the increase of
the bond and took cognizance of the pending civil case, the administrator moved
to close the intestate proceedings, on the ground that the heirs had already
entered into an extrajudicial partition of the estate. The trial court refused to
close the intestate proceedings pending the termination of the civil case, and the
Court affirmed such action.

If the appellants filed a claim in intervention in the intestate
proceedings it was only pursuant to their desire to protect their
interests it appearing that the property in litigation is involved in said
proceedings and in fact is the only property of the estate left subject
of administration and distribution; and the court is justified in taking
cognizance of said civil case because of the unavoidable fact that
whatever is determined in said civil case will necessarily reflect and
have a far reaching consequence in the determination and distribution
of the estate.In so taking cognizance of civil case No. V-331 the court
does not assume general jurisdiction over the case but merely makes of
record its existence because of the close interrelation of the two cases
and cannot therefore be branded as having acted in excess of its
jurisdiction.

Appellants' claim that the lower court erred in holding in
abeyance the closing of the intestate proceedings pending
determination of the separate civil action for the reason that there is no
rule or authority justifying the extension of administration proceedings
until after the separate action pertaining to its general jurisdiction has
been terminated, cannot be entertained. Section 1, Rule 88, of the
Rules of Court, expressly provides that "action to recover real or
personal property from the estate or to enforce a lien thereon, and
actions to recover damages for an injury to person or property, real or
personal, may be commenced against the executor or administrator."
What practical value would this provision have if the action against the
administrator cannot be prosecuted to its termination simply because
the heirs desire to close the intestate proceedings without first taking
any step to settle the ordinary civil case? This rule is but a corollary to
the ruling which declares that questions concerning ownership of
property alleged to be part of the estate but claimed by another person
should be determined in a separate action and should be submitted to
the court in the exercise of its general jurisdiction. These rules would be
rendered nugatory if we are to hold that an intestate proceedings can
be closed by any time at the whim and caprice of the heirs x x
x
[23]
(Emphasis supplied) [Citations omitted]




It is not clear whether the claim-in-intervention filed by Dinglasan
conformed to an action-in-intervention under the Rules of Civil Procedure, but we
can partake of the spirit behind such pronouncement. Indeed, a few years later,
the Court, citing Dinglasan, stated: *t+he rulings of this court have always been to
the effect that in the special proceeding for the settlement of the estate of a
deceased person, persons not heirs, intervening therein to protect their interests
are allowed to do so to protect the same, but not for a decision on their
action.
[24]


Petitioners interests in the estate of Benedicto may be inchoate interests,
but they are viable interests nonetheless. We are mindful that the Rules of Special
Proceedings allows not just creditors, but also any person interested or
persons interested in the estate various specified capacities to protect their
respective interests in the estate. Anybody with a contingent claim based on a
pending action for quasi-delict against a decedent may be reasonably concerned
that by the time judgment is rendered in their favor, the estate of the decedent
would have already been distributed, or diminished to the extent that the
judgment could no longer be enforced against it.

In the same manner that the Rules on Special Proceedings do not provide a
creditor or any person interested in the estate, the right to participate in every
aspect of the testate or intestate proceedings, but instead provides for specific
instances when such persons may accordingly act in those proceedings, we deem
that while there is no general right to intervene on the part of the petitioners,
they may be allowed to seek certain prayers or reliefs from the intestate court not
explicitly provided for under the Rules, if the prayer or relief sought is necessary
to protect their interest in the estate, and there is no other modality under the
Rules by which such interests can be protected. It is under this standard that we
assess the three prayers sought by petitioners.

The first is that petitioners be furnished with copies of all processes and
orders issued in connection with the intestate proceedings, as well as the
pleadings filed by the administrator of the estate. There is no questioning as to
the utility of such relief for the petitioners. They would be duly alerted of the
developments in the intestate proceedings, including the status of the assets of
the estate. Such a running account would allow them to pursue the appropriate
remedies should their interests be compromised, such as the right, under Section
6, Rule 87, to complain to the intestate court if property of the estate concealed,
embezzled, or fraudulently conveyed.

At the same time, the fact that petitioners interests remain inchoate and
contingent counterbalances their ability to participate in the intestate
proceedings. We are mindful of respondents submission that if the Court were to
entitle petitioners with service of all processes and pleadings of the intestate
court, then anybody claiming to be a creditor, whether contingent or otherwise,
would have the right to be furnished such pleadings, no matter how wanting of
merit the claim may be. Indeed, to impose a precedent that would mandate the
service of all court processes and pleadings to anybody posing a claim to the
estate, much less contingent claims, would unduly complicate and burden the
intestate proceedings, and would ultimately offend the guiding principle of
speedy and orderly disposition of cases.

Fortunately, there is a median that not only exists, but also has been
recognized by this Court, with respect to the petitioners herein, that addresses
the core concern of petitioners to be apprised of developments in the intestate
proceedings. In Hilado v. Judge Reyes,
[25]
the Court heard a petition for mandamus
filed by the same petitioners herein against the RTC judge, praying that they be
allowed access to the records of the intestate proceedings, which the respondent
judge had denied from them. Section 2 of Rule 135 came to fore, the provision
stating that the records of every court of justice shall be public records and shall
be available for the inspection of any interested person x x x. The Court ruled
that petitioners were interested persons entitled to access the court records in
the intestate proceedings. We said:
Petitioners' stated main purpose for accessing the records to
monitor prompt compliance with the Rules governing the preservation
and proper disposition of the assets of the estate, e.g., the completion and
appraisal of the Inventory and the submission by the Administratrix of
an annual accounting

appears legitimate, for, as the plaintiffs in the

complaints for sum of money against Roberto Benedicto, et al., they
have an interest over the outcome of the settlement of his estate. They
are in fact "interested persons" under Rule 135, Sec. 2 of the Rules of
Court x x x
[26]




Allowing creditors, contingent or otherwise, access to the records of the
intestate proceedings is an eminently preferable precedent than mandating the
service of court processes and pleadings upon them. In either case, the interest of
the creditor in seeing to it that the assets are being preserved and disposed of in
accordance with the rules will be duly satisfied. Acknowledging their right to
access the records, rather than entitling them to the service of every court order
or pleading no matter how relevant to their individual claim, will be less
cumbersome on the intestate court, the administrator and the heirs of the
decedent, while providing a viable means by which the interests of the creditors
in the estate are preserved.

Nonetheless, in the instances that the Rules on Special Proceedings do
require notice to any or all interested parties the petitioners as interested
parties will be entitled to such notice. The instances when notice has to be given
to interested parties are provided in: (1) Sec. 10, Rule 85 in reference to the time
and place of examining and allowing the account of the executor or administrator;
(2) Sec. 7(b) of Rule 89 concerning the petition to authorize the executor or
administrator to sell personal estate, or to sell, mortgage or otherwise encumber
real estates; and; (3) Sec. 1, Rule 90 regarding the hearing for the application for
an order for distribution of the estate residue. After all, even the administratrix
has acknowledged in her submitted inventory, the existence of the pending cases
filed by the petitioners.




We now turn to the remaining reliefs sought by petitioners; that a deadline
be set for the submission by administratrix Benedicto to submit a verified and
complete inventory of the estate, and upon submission thereof: the inheritance
tax appraisers of the Bureau of Internal Revenue be required to assist in the
appraisal of the fair market value of the same; and that the intestate court set a
deadline for the submission by the administratrix of her verified annual account,
and, upon submission thereof, set the date for her examination under oath with
respect thereto, with due notice to them and other parties interested in the
collation, preservation and disposition of the estate. We cannot grant said reliefs.

Section 1 of Rule 83 requires the administrator to return to the court a true
inventory and appraisal of all the real and personal estate of the deceased within
three (3) months from appointment, while Section 8 of Rule 85 requires the
administrator to render an account of his administration within one (1) year from
receipt of the letters testamentary or of administration. We do not doubt that
there are reliefs available to compel an administrator to perform either duty, but
a person whose claim against the estate is still contingent is not the party entitled
to do so. Still, even if the administrator did delay in the performance of these
duties in the context of dissipating the assets of the estate, there are protections
enforced and available under Rule 88 to protect the interests of those with
contingent claims against the estate.





Concerning complaints against the general competence of the
administrator, the proper remedy is to seek the removal of the administrator in
accordance with Section 2, Rule 82. While the provision is silent as to who may
seek with the court the removal of the administrator, we do not doubt that a
creditor, even a contingent one, would have the personality to seek such relief.
After all, the interest of the creditor in the estate relates to the preservation of
sufficient assets to answer for the debt, and the general competence or good
faith of the administrator is necessary to fulfill such purpose.

All told, the ultimate disposition of the RTC and the Court of Appeals is
correct. Nonetheless, as we have explained, petitioners should not be deprived of
their prerogatives under the Rules on Special Proceedings as enunciated in this
decision.

WHEREFORE, the petition is DENIED, subject to the qualification that
petitioners, as persons interested in the intestate estate of Roberto Benedicto,
are entitled to such notices and rights as provided for such interested persons in
the Rules on Settlement of Estates of Deceased Persons under the Rules on
Special Proceedings. No pronouncements as to costs.

SO ORDERED.
SECOND DIVISION
[G.R. No. 121597. June 29, 2001]
PHILIPPINE NATIONAL BANK, petitioner, vs. HON. COURT OF
APPEALS, ALLAN M. CHUA as Special Administrator of the Intestate
Estate of the late ANTONIO M. CHUA and Mrs. ASUNCION M.
CHUA, respondents.
D E C I S I O N
QUISUMBING, J .:
This petition assails the decision
[1]
of the Court of Appeals dated July 25, 1995 in
CA-G.R. CV No. 36546, affirming the decision dated September 4, 1991 of the
Regional Trial Court of Balayan, Batangas, Branch 10 in Civil Case No. 1988.
The facts, as found by the trial court and by the Court of Appeals, are not
disputed.
The spouses Antonio M. Chua and Asuncion M. Chua were the owners of a parcel
of land covered by Transfer Certificate of Title No. P-142 and registered in their
names. Upon Antonios death, the probate court appointed his son, private respondent
Allan M. Chua, special administrator of Antonios intestate estate. The court also
authorized Allan to obtain a loan accommodation of five hundred fifty thousand
(P550,000.00) pesos from petitioner Philippine National Bank to be secured by a real
estate mortgage over the above-mentioned parcel of land.
On June 29, 1989, Allan obtained a loan of P450,000.00 from petitioner PNB
evidenced by a promissory note, payable on June 29, 1990, with interest at 18.8
percent per annum. To secure the loan, Allan executed a deed of real estate mortgage
on the aforesaid parcel of land.
On December 27, 1990, for failure to pay the loan in full, the bank extrajudicially
foreclosed the real estate mortgage, through the Ex-Officio Sheriff, who conducted a
public auction of the mortgaged property pursuant to the authority provided for in the
deed of real estate mortgage. During the auction, PNB was the highest bidder with a
bid price P306,360.00. Since PNBs total claim as of the date of the auction sale was
P679,185.63, the loan had a payable balance of P372,825.63. To claim this
deficiency, PNB instituted an action with the RTC, Balayan, Batangas, Branch 10,
docketed as Civil Case No. 1988, against both Mrs. Asuncion M. Chua and Allan
Chua in his capacity as special administrator of his fathers intestate estate.
Despite summons duly served, private respondents did not answer the complaint.
The trial court declared them in default and received evidence ex parte.
On September 4, 1991, the RTC rendered its decision, ordering the dismissal of
PNBs complaint.
[2]

On appeal, the Court of Appeals affirmed the RTC decision by dismissing PNBs
appeal for lack of merit.
[3]

Hence, the present petition for review on certiorari under Rule 45 of the Rules of
Court. Petitioner cites two grounds:
I
THE CA ERRED IN HOLDING THAT PNB CAN NO LONGER PURSUE ITS
DEFICIENCY CLAIM AGAINST THE ESTATE OF DECEASED ANTONIO
M. CHUA, HAVING ELECTED ONE OF ITS ALTERNATIVE RIGHT
PURSUANT TO SECTION 7 RULE 86 OF THE RULES OF COURT DESPITE
A SPECIAL ENACTMENT (ACT. NO. 3135) COVERING EXTRAJUDICIAL
FORECLOSURE SALE ALLOWING RECOURSE FOR A DEFICIENCY
CLAIM AS SUPPORTED BY CONTEMPORARY JURISPRUDENCE.
II
THE CA ERRED IN HOLDING THAT ALLAN M. CHUA, AS SPECIAL
ADMINISTRATOR OF THE INTESTATE ESTATE OF HIS DECEASED
FATHER ANTONIO M. CHUA ON ONE HAND, AND HIM AND HIS
MOTHER ASUNCION CHUA AS HEIRS ON THE OTHER HAND ARE NO
LONGER LIABLE FOR THE DEBTS OF THE ESTATE.
[4]

The primary issue posed before us is whether or not it was error for the Court of
Appeals to rule that petitioner may no longer pursue by civil action the recovery of the
balance of indebtedness after having foreclosed the property securing the same. A
resolution of this issue will also resolve the secondary issue concerning any further
liability of respondents and of the decedents estate.
Petitioner contends that under prevailing jurisprudence, when the proceeds of the
sale are insufficient to pay the debt, the mortgagee has the right to recover the
deficiency from the debtor.
[5]
It also contends that Act 3135, otherwise known as An
Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to
Real Estate Mortgages, is the law applicable to this case of foreclosure sale and not
Section 7 of Rule 86 of the Revised Rules of Court
[6]
as held by the Court of
Appeals.
[7]

Private respondents argue that having chosen the remedy of extrajudicial
foreclosure of the mortgaged property of the deceased, petitioner is precluded from
pursuing its deficiency claim against the estate of Antonio M. Chua. This they say is
pursuant to Section 7, Rule 86 of the Rules of Court, which states that:
Sec. 7. Rule 86. Mortgage debt due from estate. A creditor holding a claim against
the deceased secured by mortgage or other collateral security, may abandon the
security and prosecute his claim in the manner provided in this rule, and share in the
general distribution of the assets of the estate; or he may foreclose his mortgage or
realize upon his security, by action in court, making the executor or administrator a
party defendant, and if there is a judgment for a deficiency, after the sale of the
mortgaged premises, or the property pledged, in the foreclosure or other proceeding to
realize upon the security, he may claim his deficiency judgment in the manner
provided in the preceding section; or he may rely upon his mortgage or other security
alone and foreclose the same at any time within the period of the statute of limitations,
and in that event he shall not be admitted as a creditor, and shall receive no share in
the distribution of the other assets of the estate; but nothing herein contained shall
prohibit the executor or administrator from redeeming the property mortgaged or
pledged by paying the debt for which it is hold as security, under the direction of the
court if the court shall adjudge it to be for the interest of the estate that such
redemption shall be made.
Pertinent to the issue at bar, according to petitioner, are our decisions he
cited.
[8]
Prudential Bank v. Martinez, 189 SCRA 612, 615 (1990), is particularly cited
by petitioner as precedent for holding that in extrajudicial foreclosure of mortgage,
when the proceeds of the sale are insufficient to pay the debt, the mortgagee has the
right to recover the deficiency from the mortgagor.
However, it must be pointed out that petitioners cited cases involve ordinary
debts secured by a mortgage. The case at bar, we must stress, involves a foreclosure of
mortgage arising out of a settlement of estate, wherein the administrator mortgaged a
property belonging to the estate of the decedent, pursuant to an authority given by the
probate court. As the Court of Appeals correctly stated, the Rules of Court on Special
Proceedings comes into play decisively.
To begin with, it is clear from the text of Section 7, Rule 89, that once the deed of
real estate mortgage is recorded in the proper Registry of Deeds, together with the
corresponding court order authorizing the administrator to mortgage the property, said
deed shall be valid as if it has been executed by the deceased himself. Section 7
provides in part:
Sec. 7. Rule 89. Regulations for granting authority to sell, mortgage, or otherwise
encumber estate The court having jurisdiction of the estate of the deceased may
authorize the executor or administrator to sell personal estate, or to sell, mortgage, or
otherwise encumber real estate, in cases provided by these rules when it appears
necessary or beneficial under the following regulations:
x x x
(f) There shall be recorded in the registry of deeds of the province in which the real
estate thus sold, mortgaged, or otherwise encumbered is situated, a certified copy of
the order of the court, together with the deed of the executor or administrator for such
real estate, which shall be valid as if the deed had been executed by the deceased in
his lifetime.
In the present case, it is undisputed that the conditions under the aforecited rule
have been complied with. It follows that we must consider Sec. 7 of Rule 86,
appropriately applicable to the controversy at hand.
Case law now holds that this rule grants to the mortgagee three distinct,
independent and mutually exclusive remedies that can be alternatively pursued by the
mortgage creditor for the satisfaction of his credit in case the mortgagor dies, among
them:
(1) to waive the mortgage and claim the entire debt from the estate of the mortgagor as an
ordinary claim;
(2) to foreclose the mortgage judicially and prove any deficiency as an ordinary claim; and
(3) to rely on the mortgage exclusively, foreclosing the same at any time before it is barred by
prescription without right to file a claim for any deficiency.
[9]

In Perez v. Philippine National Bank,
[10]
reversing Pasno vs. Ravina,
[11]
we held:
The ruling in Pasno vs. Ravina not having been reiterated in any other case, we have
carefully reexamined the same, and after mature deliberation have reached the
conclusion that the dissenting opinion is more in conformity with reason and law. Of
the three alternative courses that section 7, Rule 87 (now Rule 86), offers the
mortgage creditor, to wit, (1) to waive the mortgage and claim the entire debt from the
estate of the mortgagor as an ordinary claim; (2) foreclose the mortgage judicially and
prove any deficiency as an ordinary claim; and (3) to rely on the mortgage
exclusively, foreclosing the same at any time before it is barred by
prescription, without right to file a claim for any deficiency, the majority opinion
in Pasno vs. Ravina, in requiring a judicial foreclosure, virtually wipes out the third
alternative conceded by the Rules to the mortgage creditor, and which would precisely
include extra-judicial foreclosures by contrast with the second alternative.
The plain result of adopting the last mode of foreclosure is that the creditor waives
his right to recover any deficiency from the estate.
[12]
Following the Perez ruling that
the third mode includes extrajudicial foreclosure sales, the result of extrajudicial
foreclosure is that the creditor waives any further deficiency claim. The dissent
in Pasno, as adopted in Perez, supports this conclusion, thus:
When account is further taken of the fact that a creditor who elects to foreclose by
extrajudicial sale waives all right to recover against the estate of the deceased debtor
for any deficiency remaining unpaid after the sale it will be readily seen that the
decision in this case (referring to the majority opinion) will impose a burden upon the
estates of deceased persons who have mortgaged real property for the security of
debts, without any compensatory advantage.
Clearly, in our view, petitioner herein has chosen the mortgage-creditors option
of extrajudicially foreclosing the mortgaged property of the Chuas. This choice now
bars any subsequent deficiency claim against the estate of the deceased, Antonio M.
Chua. Petitioner may no longer avail of the complaint for the recovery of the balance
of indebtedness against said estate, after petitioner foreclosed the property securing
the mortgage in its favor. It follows that in this case no further liability remains on the
part of respondents and the late Antonio M. Chuas estate.
WHEREFORE, finding no reversible error committed by respondent Court of
Appeals, the instant petition is hereby DENIED. The assailed decision of the Court of
Appeals in CA-G.R. CV No. 36546 is AFFIRMED. Costs against petitioner.
SO ORDERED.

FIRST DIVISION
[G.R. No. 63145. October 5, 1999]
SULPICIA VENTURA, petitioner, vs. HON. FRANCIS J. MILITANTE, in
His Capacity as Presiding Judge, Regional Trial Court, 7th Judicial
District, Branch XII, Cebu City; and JOHN UY, respondents.
D E C I S I O N
PUNO, J .:
This is a Petition for Certiorari assailing the Order
[1]
of public respondent directing her to
file an Answer to the Complaint for a Sum of Money with Damages filed by private respondent
after denying her Motion to Dismiss.
[2]

There is no dispute as to the following relevant facts:
Private respondent filed a Complaint for a Sum of Money and Damages against petitioner
which reads:
REPUBLIC OF THE PHILIPPINES
COURT OF FIRST INSTANCE OF CEBU
14th Judicial District
BRANCH ____
MR. JOHN UY, Proprietor of Cebu
Textar Auto Supply,
Plaintiff,
- versus - CIVIL CASE NO. R-21968
For: SUM OF MONEY AND DAMAGES
ESTATE OF CARLOS NGO as
represented by surviving
spouse Ms. SULPICIA VENTURA,
Defendant.
Oo - - - - - - - - - - - - - - - - - - - - - - - -///
COMPLAINT
PLAINTIFF, thru counsel, unto this Honorable Court, most respectfully states that:
1. He is of legal age, Filipino and proprietor of Cebu Textar Auto Supply whose
postal address is at 177 Leon Kilat St., Cebu City, while the defendant is an estate of
Carlos Ngo as represented by surviving spouse Ms. Sulpicia Ventura with residence
and postal address at-Back [sic] of Chong Hua Hospital, Cebu City where summons
and other processes of the Court could be effected;
2. During the lifetime of Carlos Ngo he was indebted with the plaintiff in the
amount of P48,889.70 as evidenced by the hereto attached statement marked as
Annexes A and A-1 which account was obtained by him for the benefit of his family;
3. Said obligation is already due and demandable and the defendant thru Ms.
Ventura who is ostensibly taking care of the properties/estate of deceased Carlos Ngo,
refused, failed and neglected and still continues to refuse, fail and neglect to pay
despite repeated demands;
4. As a consequence of the refusal to pay the plaintiff was compelled to retain the
services of counsel with whom he contracted to pay P10,000.00 as attorney's
fees. Upon institution of this complaint, he has further incurred initial litigation
expenditures in the sum of P4,000.00.
WHEREFORE, this Honorable Court is most respectfully prayed to render judgment
for the plaintiff by-
1. Ordering the defendant to pay the plaintiff the sum of P48,889.70 plus interest
until the obligation is fully paid;
2. Ordering the defendant to pay the plaintiff the amount of P10,000.00 as attorney's
fees plus P4,000.00 as reimbursement of the initial litigation expenditures.
FURTHER plaintiff prays for such other relief or remedy in accordance with law,
justice and equity.
Cebu City, Philippines, March 29, 1982.
x x x
[3]

Petitioner moved to dismiss the foregoing complaint on the ground that the estate of Carlos
Ngo has no legal personality, the same being neither a natural nor legal person in
contemplation of law
[4]

In his Opposition to Motion to Dismiss,
[5]
petitioner insisted that since the money claim
subject of this case actually represents the costs of automotive spare parts/replacements
contracted by deceased Carlos Ngo during his lifetime for the benefit/business of the family x x x
the conjugal partnership x x x shall be accountable for the payment thereof.
[6]
Subsequently,
private respondent's counsel manifested that he is poised to amend the complaint in order to
state the correct party defendant that he intends to sue in this case
[7]
. The public respondent
gave private respondent fifteen (15) days to make the amendment.
Petitioner filed a Motion for Reconsideration
[8]
of the order of public respondent permitting
private respondent to amend his complaint. First, she argued that the action instituted by the
private respondent to recover P48,889.70, representing the unpaid price of the automotive spare
parts purchased by her deceased husband during his lifetime, is a money claim which, under
Section 21, Rule 3 of the Revised Rules of Court, does not survive, the same having been filed
after Carlos Ngo had already died. Second, she claimed that the public respondent never
acquired jurisdiction over the subject matter of the case which, being an action to recover a sum
of money from a deceased person, may only be heard by a probate court.
Private respondent opposed the foregoing motion.
[9]
He insisted that petitioner, being the
wife of the deceased Carlos Ngo, is liable to pay the obligation which benefited their family.
Public respondent issued an Order giving private respondent twenty four (24) hours to file
his amended complaint so that the Court can determine for itself whether there is really a cause
of action against the defendant who would be substituted to the Estate of Carlos Ngo,
considering that it would seem from the arguments of counsel for plaintiff x x x that the debt
incurred by the deceased Carlong [sic] Ngo was in behalf of the conjugal partnership so that the
wife of Carlos Ngo might be liable to pay the obligation.
[10]

Private respondent then filed his Amended Complaint
[11]
with the new allegations
underscored therein as follows:
REPUBLIC OF THE PHILIPPINES
COURT OF FIRST INSTANCE OF CEBU
14th Judicial District
BRANCH XII
MR. JOHN UY, Proprietor of Cebu
Textar Auto Supply,
Plaintiff,
- versus - CIVIL CASE NO. R-21968
For: SUM OF MONEY AND
MS. SULPICIA VENTURA, DAMAGES
Defendant.
Oo - - - - - - - - - - - - - - - - - - - - - - -x
AMENDED COMPLAINT
PLAINTIFF thru counsel, unto this Honorable Court most respectfully states that:
1. x x x
2. During the lifetime of Carlos Ngo he and his wife, the defendant herein are
indebted with the plaintiff in the amount of P48,889.70 as evidenced by the hereto
attached statement marked as Annexes A and A-1 which account was obtained for the
benefit of their family and is being confirmed by their son Roy Ngo per his signature
marked as Annex A-2;
3. x x x
4. For several times, the defendant had concealed herself in her house when the
plaintiff's representative went to her residence to collect payment of the said account;
5. x x x
x x x.
[12]

Petitioner filed a Comment to Plaintiff's Amended Complaint.
[13]
She reiterated that whether
the unsecured debt was contracted by her husband alone or as a charge against the conjugal
partnership of gains, it cannot be denied that her husband was now deceased, the said debt does
not survive him, the conjugal partnership of gains is terminated upon the death of one of the
spouses, and the debts and charges against the conjugal partnership of gains may only be paid
after an inventory is made in the appropriate testate or intestate proceeding.
Private respondent filed a Rejoinder to Defendant's Comment.
[14]
He countered that the
defendant in his amended complaint was now petitioner and that she was not deceased, hence the
inapplicability of the legal rules on the abatement of money claims in case the defendant dies
pending their prosecution.
Public respondent issued the herein assailed order which reads as follows:
ORDER
This case is called today to deal on the motion for reconsideration of the order of this
Court dated November 16, 1982 denying the motion of the defendant to dismiss the
complaint.
In its order of November 16, 1982, the Court in the interest of justice advised the
plaintiff to make the proper amendment so that the proper party defendant may be
impleaded considering that the motion to dismiss then was anchored on the ground
that the estate of Carlos Ngo was not a natural nor juridical person, hence it could not
be sued. On December 23, 1982, the plaintiff amended its complaint and this time the
defendant is already Sulpicia Ventura. The defendant now argues that even the
amended complaint would show that this is really a collection of a debt of the
conjugal partnership of deceased Carlong [sic] Ngo and his wife.
Perusing the amended complaint, the Court finds that in Paragraph 2 the allegation
states: During the lifetime of Carlos Ngo, he and his wife, the defendant, are
indebted with the plaintiff in the amount of P48,689.70, (sic) etc., so that the
indebtedness was incurred by Carlos Ngo and defendant Sulpicia Ventura and since
Carlos Ngo is now dead that will not preclude the plaintiff from filing a case against
the living defendant, Sulpicia Ventura.
WHEREFORE, the motion for reconsideration is hereby DENIED and the defendant
may file her answer within fifteen (15) days from today.
IT IS SO ORDERED.
[15]

Petitioner scurried to this Court praying that the foregoing order of the public respondent be
set aside and the amended complaint of private respondent, ordered dismissed.
[16]

We grant the petition.
First. Sec. 1, Rule 3 of the Revised Rules of Court provided that only natural or judicial
persons, or entities authorized by law may be parties in a civil action. This was the rule in 1982
at the time that private respondent filed his complaint against petitioner. In 1997, the rules on
civil procedure were revised, but Sec. 1, Rule 3 remained largely unaltered, except for the
change of the word, judicial to juridical.
Parties may be either plaintiffs or defendants. The plaintiff in an action is the party
complaining, and a proper party plaintiff is essential to confer jurisdiction on the court.
[17]
In
order to maintain an action in a court of justice, the plaintiff must have an actual legal existence,
that is, he, she or it must be a person in law and possessed of a legal entity as either a natural or
an artificial person, and no suit can be lawfully prosecuted save in the name of such a person.
[18]

The rule is no different as regards party defendants. It is incumbent upon a plaintiff, when
he institutes a judicial proceeding, to name the proper party defendant to his cause of action.
[19]
In
a suit or proceeding in personam of an adversary character, the court can acquire no jurisdiction
for the purpose of trial or judgment until a party defendant who actually or legally exists and is
legally capable of being sued, is brought before it.
[20]
It has even been held that the question of
the legal personality of a party defendant is a question of substance going to the jurisdiction of
the court and not one of procedure.
[21]

The original complaint of petitioner named the estate of Carlos Ngo as represented by
surviving spouse Ms. Sulpicia Ventura as the defendant. Petitioner moved to dismiss the same
on the ground that the defendant as named in the complaint had no legal personality. We agree.
Neither a dead person nor his estate may be a party plaintiff in a court action. A deceased
person does not have such legal entity as is necessary to bring action so much so that a motion to
substitute cannot lie and should be denied by the court.
[22]
An action begun by a decedent's estate
cannot be said to have been begun by a legal person, since an estate is not a legal entity; such an
action is a nullity and a motion to amend the party plaintiff will not likewise lie, there being
nothing before the court to amend.
[23]
Considering that capacity to be sued is a correlative of the
capacity to sue, to the same extent, a decedent does not have the capacity to be sued and may not
be named a party defendant in a court action.
[24]

Second. It is clear that the original complaint of private respondent against the estate of
Carlos Ngo was a suit against Carlos Ngo himself who was already dead at the time of the filing
of said complaint. At that time, and this, private respondent admitted, no special proceeding to
settle his estate had been filed in court. As such, the trial court did not acquire jurisdiction over
either the deceased Carlos Ngo or his estate.
To cure this fatal defect, private respondent amended his original complaint. In his amended
complaint, private respondent deleted the estate of Carlos Ngo and named petitioner as the
defendant. When petitioner, in her comment to the amended complaint, reasoned that the
conjugal partnership of gains between her and Carlos Ngo was terminated upon the latter's death
and that the debt which he contracted, assuming it was a charge against the conjugal property,
could only be paid after an inventory is made in the appropriate testate or intestate proceeding,
private respondent simply reiterated his demand that petitioner pay her husband's debt which, he
insisted, redounded to the benefit of everyone in her family.
It is true that amendments to pleadings are liberally allowed in furtherance of justice, in
order that every case may so far as possible be determined on its real facts, and in order to speed
the trial of causes or prevent the circuitry of action and unnecessary expense.
[25]
But amendments
cannot be allowed so as to confer jurisdiction upon a court that never acquired it in the first
place.
[26]
When it is evident that the court has no jurisdiction over the person and the subject
matter and that the pleading is so fatally defective as not to be susceptible of amendment, or that
to permit such amendment would radically alter the theory and the nature of the action, then the
court should refuse the amendment of the defective pleading and order the dismissal of the
case.
[27]

Moreover, as correctly argued by petitioner, the conjugal partnership terminates upon the
death of either spouse.
[28]
After the death of one of the spouses, in case it is necessary to sell any
portion of the conjugal property in order to pay outstanding obligations of the partnership, such
sale must be made in the manner and with the formalities established by the Rules of Court for
the sale of the property of deceased persons.
[29]
Where a complaint is brought against the
surviving spouse for the recovery of an indebtedness chargeable against said conjugal property,
any judgment obtained thereby is void.
[30]
The proper action should be in the form of a claim to
be filed in the testate or intestate proceedings of the deceased spouse.
[31]

In many cases as in the instant one, even after the death of one of the spouses, there is no
liquidation of the conjugal partnership. This does not mean, however, that the conjugal
partnership continues.
[32]
And private respondent cannot be said to have no remedy. Under Sec.
6, Rule 78 of the Revised Rules of Court, he may apply in court for letters of administration in
his capacity as a principal creditor of the deceased Carlos Ngo if after thirty (30) days from his
death, petitioner failed to apply for administration or request that administration be granted to
some other person.
WHEREFORE, the instant petition for certiorari is GRANTED. The Amended Complaint
filed by private respondent is HEREBY DISMISSED.
SO ORDERED.
FIRST DIVISION


GENEROSO SALIGUMBA, G.R. No. 143365
ERNESTO SALIGUMBA, and
HEIRS OF SPOUSES VALERIA Present:
SALIGUMBA AND ELISEO
SALIGUMBA, SR., PUNO, C.J., Chairperson,
Petitioners, CARPIO,
CORONA,
AZCUNA, and
TINGA,
*
JJ.
- versus -



MONICA PALANOG, Promulgated:
Respondent. December 4, 2008
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x



D E C I S I O N


CARPIO, J .:


The Case


This is a petition for review of the Decision dated 24 May 2000 of the
Regional Trial Court, Branch 5, Kalibo, Aklan (RTC-Branch 5) in Civil Case No.
5288 for Revival of Judgment. The case is an offshoot of the action for Quieting of
Title with Damages in Civil Case No. 2570.



The Facts

Monica Palanog, assisted by her
husband Avelino Palanog (spouses Palanogs), filed a complaint dated 28 February
1977 for Quieting of Title with Damages against defendants, spouses
Valeria Saligumba and Eliseo Saligumba, Sr. (spouses Saligumbas), before the
Regional Trial Court, Branch 3, Kalibo, Aklan (RTC-Branch 3). The case was
docketed as Civil Case No. 2570. In the complaint, spouses Palanogs alleged that
they have been in actual, open, adverse and continuous possession as owners for
more than 50 years of a parcel of land located in Solido, Nabas, Aklan. The
spouses Saligumbas allegedly prevented them from entering and residing on the
subject premises and had destroyed the barbed wires enclosing the land.
Spouses Palanogs prayed that they be declared the true and rightful owners of the
land in question.

When the case was called for pre-trial on 22 September 1977,
Atty. Edilberto Miralles (Atty. Miralles), counsel for spouses Saligumbas, verbally
moved for the appointment of a commissioner to delimit the land in
question. Rizalino Go, Deputy Sheriff of Aklan, was appointed commissioner and
was directed to submit his report and sketch within 30 days.
[1]
Present during the
delimitation were spouses Palanogs, spouses Saligumbas, and Ernesto Saligumba,
son of spouses Saligumbas.
[2]


After submission of the Commissioners Report, spouses Palanogs, upon
motion, were granted 10 days to amend their complaint to conform with the items
mentioned in the report.
[3]


Thereafter, trial on the merits ensued. At the hearing on 1 June 1984, only
the counsel for spouses Palanogs appeared. The trial court issued an order resetting
the hearing to15 August 1984 and likewise directed spouses Saligumbas to secure
the services of another counsel who should be ready on that date.
[4]
The order sent
to Eliseo Saligumba, Sr. was returned to the court unserved with the notation
PartyDeceased while the order sent to defendant Valeria Saligumba was
returned with the notation Party in Manila.
[5]


At the hearing on 15 August 1984, spouses Palanogs direct examination was
suspended and the continuation of the hearing was set on 25 October 1984. The
trial court stated that Atty. Miralles, who had not withdrawn as counsel for
spouses Saligumbas despite his appointment as Municipal Circuit Trial Court
judge, would be held responsible for the case of spouses Saligumbas until he
formally withdrew as counsel. The trial court reminded Atty. Miralles to secure the
consent of spouses Saligumbas for his withdrawal.
[6]
A copy of this order was sent
to Valeria Saligumba but the same was returned unserved with the notation Party
in Manila.
[7]


The hearing set on 25 October 1984 was reset to 25 January 1985 and the
trial court directed that a copy of this order be sent to Eliseo Saligumba, Jr.
at COA, PNB,Manila.
[8]


The presentation of evidence for spouses Palanogs resumed on 25 January
1985 despite the motion of Atty. Miralles for postponement on the ground that his
client was sick. The exhibits were admitted and plaintiffs spouses Palanogs rested
their case. Reception of evidence for the defendants spouses Saligumbas was
scheduled on 3, 4, and 5 June 1985.
[9]


On 3 June 1985, only spouses Palanogs and counsel appeared. Upon motion
of the spouses Palanogs, spouses Saligumbas were deemed to have waived the
presentation of their evidence.

On 3 August 1987, after a lapse of more than two years, the trial court
considered the case submitted for decision.

On 7 August 1987, RTC-Branch 3 rendered a judgment in Civil Case No.
2570 declaring spouses Palanogs the lawful owners of the subject land and
ordering spousesSaligumbas, their agents, representatives and all persons acting
in privity with them to vacate the premises and restore possession to
spouses Palanogs.

The trial court, in a separate Order dated 7 August 1987, directed that a copy
of the courts decision be furnished plaintiff Monica Palanog and defendant
Valeria Saligumba.

Thereafter, a motion for the issuance of a writ of execution of the said
decision was filed but the trial court, in its Order dated 8 May 1997, ruled that
since more than five years had elapsed after the date of its finality, the decision
could no longer be executed by mere motion.

Thus, on 9 May 1997, Monica Palanog (respondent), now a widow, filed a
Complaint seeking to revive and enforce the Decision dated 7 August 1987 in Civil
Case No. 2570 which she claimed has not been barred by the statute of limitations.
She impleaded petitioners Generoso Saligumba and Ernesto Saligumba, the heirs
and children of the spousesSaligumbas, as defendants. The case was docketed as
Civil Case No. 5288 before the RTC-Branch 5.

Petitioner Generoso Saligumba, for himself and in representation of his
brother Ernesto who was out of the country working as a seaman, engaged the
services of the Public Attorneys Office, Kalibo, Aklan which filed a motion for
time to allow them to file a responsive
pleading. Petitioner Generoso Saligumba filed his Answer
[10]
alleging
that: (1) respondent had no cause of action; (2) the
spouses Saligumbas died while Civil Case No. 2570 was pending and no order of
substitution was issued and hence, the trial was null and void; and (3) the court did
not acquire jurisdiction over the heirs of the spouses Saligumbas and therefore, the
judgment was not binding on them.

Meanwhile, on 19 December 1997, the trial court granted respondents
motion to implead additional defendants namely, Eliseo Saligumba, Jr. and
Eduardo Saligumba, who are also the heirs and children of
spouses Saligumbas.
[11]
They were, however, declared in default on 1 October
1999 for failure to file any responsive pleading.
[12]


The Trial Courts Ruling

On 24 May 2000, the RTC-Branch 5 rendered a decision in favor
of respondent ordering the revival of judgment in Civil Case No. 2570. The trial
court ruled that the non-substitution of the deceased spouses did not have any legal
significance. The land subject of Civil Case No. 2570 was the exclusive property
of defendant Valeria Saligumba who inherited the same from her deceased parents.
The death of her husband, Eliseo Saligumba, Sr., did not change the complexion of
the ownership of the property that would require his substitution. The
spouses Saligumbas children, who are the petitioners in this case, had no right to
the property while Valeria Saligumba was still alive. The trial court further found
that when defendant Valeria Saligumba died, her lawyer, Atty. Miralles, did not
inform the court of the death of his client. The trial court thus ruled that the non-
substitution of the deceased defendant was solely due to the negligence of counsel.
Moreover, petitioner Ernesto Saligumba could not feign ignorance of Civil
Case No. 2570 as he was present during the delimitation of the subject land.
The trial court likewise held that the decision in Civil Case No. 2570 could not be
the subject of a collateral attack. There must be a direct action for the annulment of
the said decision.

Petitioners elevated the matter directly to this Court. Hence, the present
petition.

The Courts Ruling

The instant case is an action for revival of judgment and the judgment
sought to be revived in this case is the decision in the action for quieting of title
with damages in Civil Case No. 2570. This is not one for annulment of judgment.

An action for revival of judgment is no more than a procedural means of
securing the execution of a previous judgment which has become dormant after the
passage of five years without it being executed upon motion of the prevailing
party. It is not intended to re-open any issue affecting the merits of the judgment
debtors case nor the propriety or correctness of the first judgment.
[13]
An action
for revival of judgment is a new and independent action, different and distinct from
either the recovery of property case or the reconstitution case, wherein the cause of
action is the decision itself and not the merits of the action upon which the
judgment sought to be enforced is rendered.
[14]
Revival of judgment is premised
on the assumption that the decision to be revived, either by motion or by
independent action, is already final and executory.
[15]


The RTC-Branch 3 Decision dated 7 August 1987 in Civil Case No. 2570
had been rendered final and executory by the lapse of time with no motion for
reconsideration nor appeal having been filed. While it may be true that the
judgment in Civil Case No. 2570 may be revived and its execution may be had, the
issue now before us is whether or not execution of judgment can be issued against
petitioners who claim that they are not bound by the RTC-Branch 3 Decision
dated 7 August 1987 in Civil Case No. 2570.

Petitioners contend that the RTC-Branch 3 Decision of 7 August 1987 in
Civil Case No. 2570 is null and void since there was no proper substitution of the
deceased spouses Saligumbas despite the trial courts knowledge that the deceased
spouses Saligumbas were no longer represented by counsel. They argue that they
were deprived of due process and justice was not duly served on them.

Petitioners argue that the trial court even acknowledged the fact of death of
spouses Saligumbas but justified the validity of the decision rendered in that case
despite lack of substitution because of the negligence or fault of their counsel.
Petitioners contend that the duty of counsel for the deceased spouses Saligumbas to
inform the court of the death of his clients and to furnish the name and address of
the executor, administrator, heir or legal representative of the decedent under
Rule 3 presupposes adequate or active representation by counsel. However, the
relation of attorney and client was already terminated by the appointment of
counsel on record, Atty. Miralles, as Municipal Circuit Trial Court judge even
before the deaths of the spouses Saligumbas were known. Petitioners invoke the
Order of 1 June 1984 directing the spouses Saligumbas to secure the services of
another lawyer to replace Atty. Miralles. The registered mail containing that order
was returned to the trial court with the notation that Eliseo Saligumba, Sr. was
deceased. Petitioners thus question the decision in Civil Case No. 2570 as
being void and of no legal effect because their parents were not duly represented
by counsel of record. Petitioners further argue that they have never taken part in
the proceedings in Civil Case No. 2570 nor did they voluntarily appear or
participate in the case. It is unfair to bind them in a decision rendered against their
deceased parents. Therefore, being a void judgment, it has no legal nor binding
effect on petitioners.

Civil Case No. 2570 is an action for quieting of title with damages which is
an action involving real property. It is an action that survives pursuant to Section 1,
Rule 87
[16]
as the claim is not extinguished by the death of a party. And when
a party dies in an action that survives, Section 17 of Rule 3 of the Revised Rules
of Court
[17]
provides for the procedure, thus:
Section 17. Death of Party. - After a party dies and the claim is
not thereby extinguished, the court shall order, upon proper notice, the
legal representative of the deceased to appear and to be substituted for
the deceased, within a period of thirty (30) days, or within such time as
may be granted. If the legal representative fails to appear within said
time, the court may order the opposing party to procure the appointment
of a legal representative of the deceased within a time to be specified by
the court, and the representative shall immediately appear for and on
behalf of the interest of the deceased. The court charges involved in
procuring such appointment, if defrayed by the opposing party, may be
recovered as costs. 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
guardian ad litem for the minor heirs. (Emphasis supplied)

Under the express terms of Section 17, in case of death of a party, and upon
proper notice, it is the duty of the court to order the legal representative or heir of
the deceased to appear for the deceased. In the instant case, it is true that the trial
court, after receiving an informal notice of death by the mere notation in the
envelopes, failed to order the appearance of the legal representative or heir of the
deceased. There was no court order for deceaseds legal representative or heir to
appear, nor did any such legal representative ever appear in court to be substituted
for the deceased. Neither did the respondent ever procure the appointment of such
legal representative, nor did the heirs ever ask to be substituted.

It appears that Eliseo Saligumba, Sr. died on 18 February 1984 while
Valeria Saligumba died on 2 February 1985. No motion for the substitution of the
spouses was filed nor an order issued for the substitution of the deceased
spouses Saligumbas in Civil Case No. 2570. Atty. Miralles and
petitioner Eliseo Saligumba, Jr., despite notices sent to them to appear, never
confirmed the death of Eliseo Saligumba, Sr. and Valeria Saligumba. The record is
bereft of any evidence proving the death of the spouses, except the mere notations
in the envelopes enclosing the trial courts orders which were returned unserved.

Section 17 is explicit that the duty of the court to order the legal
representative or heir to appear arises only upon proper notice. The notation
Party-Deceased on theunserved notices could not be the proper notice
contemplated by the rule. As the trial court could not be expected to know or take
judicial notice of the death of a party without the proper manifestation from
counsel, the trial court was well within its jurisdiction to proceed as it did with the
case. Moreover, there is no showing that the courts proceedings were tainted with
irregularities.
[18]


Likewise, the plaintiff or his attorney or representative could not be expected
to know of the death of the defendant if the attorney for the deceased defendant did
not notify the plaintiff or his attorney of such death as required by the rules.
[19]
The
judge cannot be blamed for sending copies of the orders and notices to defendants
spouses in the absence of proof of death or manifestation to that effect from
counsel.
[20]


Section 16, Rule 3 of the Revised Rules of Court likewise expressly provides:

SEC. 16. Duty of attorney upon death, incapacity
or incompetency of party. - Whenever a party to a pending case dies,
becomes incapacitated or incompetent, it shall be the duty of his attorney
to inform the court promptly of such death, incapacity or incompetency,
and to give the name and residence of his executor, administrator,
guardian or other legal representative.

It is the duty of counsel for the deceased to inform the court of the death of his
client. The failure of counsel to comply with his duty under Section 16 to
inform the court of the death of his client and the non-substitution of such party
will not invalidate the proceedings and the judgment thereon if the action survives
the death of such party. The decision rendered shall bind the partys successor-in-
interest.
[21]


The rules operate on the presumption that the attorney for the deceased party
is in a better position than the attorney for the adverse party to know about the
death of his client and to inform the court of the name and address of his legal
representative.
[22]


Atty. Miralles continued to represent the deceased spouses even after the
latters demise. Acting on their behalf, Atty. Miralles even asked for postponement
of the hearings and did not even confirm the death of his clients nor his
appointment as Municipal Circuit Trial Court judge. These clearly negate
petitioners contention that Atty. Miralles ceased to be spouses Saligumbas
counsel.

Atty. Miralles still remained the counsel of the spouses Saligumbas despite
the alleged appointment as judge. Records show that when Civil Case No. 2570
was called for trial on 25 October 1984, Atty. Miralles appeared and moved for a
postponement. The 25 October 1984 Order reads:

O R D E R

Upon petition of Judge Miralles who is still the counsel on record
of this case and who is held responsible for anything that will happen in
this case, postpone the hearing of this case to JANUARY 25, 1985 AT
8:30 in the morning. x x x
[23]



The trial court issued an Order dated 1 June 1984 directing the defendants to
secure the services of another counsel. This order was sent to Eliseo Saligumba, Sr.
by registered mail but the same was returned with the notation Party-
Deceased while the notice to Valeria Saligumba was returned with the notation
Party in Manila.
[24]
Eliseo Saligumba, Sr. died on 18 February 1984. When
Atty. Miralles appeared in court on 25 October 1984, he did not affirm nor inform
the court of the death of his client. There was no formal substitution. The trial court
issued an order resetting the hearing to 25 January 1985 and directed that a copy of
the order be furnished petitioner Eliseo Saligumba, Jr. at COA, PNB, Manila by
registered mail.
[25]
When the case was called on 25 January 1985,
Atty. Miralles sought for another postponement on the ground that his client was
sick and under medical treatment in Manila.
[26]
Again, there was no manifestation
from counsel about the death of Eliseo Saligumba, Sr. The trial court issued an
Order dated 25 January 1985 setting the reception of evidence for the defendants
on 3, 4, and 5 June 1985. A copy of this order was sent to Eliseo Saligumba, Jr. by
registered mail. Nonetheless, as the trial court in Civil Case No. 5288 declared, the
non-substitution of Eliseo Saligumba, Sr. did not have any legal significance as the
land subject of Civil Case No. 2570 was the exclusive property of
Valeria Saligumba who inherited it from her deceased parents.

This notwithstanding, when Valeria Saligumba died on 2 February 1985,
Atty. Miralles again did not inform the trial court of the death of
Valeria Saligumba. There was no formal substitution nor submission of proof of
death of Valeria Saligumba. Atty. Miralles was remiss in his duty under
Section 16, Rule 3 of the Revised Rules of Court. The counsel of record is
obligated to protect his clients interest until he is released from his professional
relationship with his client. For its part, the court could recognize no other
representation on behalf of the client except such counsel of record until a formal
substitution of attorney is effected.
[27]

An attorney must make an application to the court to withdraw as counsel, for
the relation does not terminate formally until there is a withdrawal of record; at
least, so far as the opposite party is concerned, the relation otherwise continues
until the end of the litigation.
[28]
Unless properly relieved, the counsel is
responsible for the conduct of the case.
[29]
Until his withdrawal shall have been
approved, the lawyer remains counsel of record who is expected by his client as
well as by the court to do what the interests of his client require. He must still
appear on the date of hearing for the attorney-client relation does not terminate
formally until there is a withdrawal of record.
[30]


Petitioners should have questioned immediately the validity of the
proceedings absent any formal substitution. Yet, despite the courts alleged lack of
jurisdiction over the persons of petitioners, petitioners never bothered to challenge
the same, and in fact allowed the proceedings to go on until the trial court rendered
its decision. There was no motion for reconsideration, appeal or even an action to
annul the judgment in Civil Case No. 2570. Petitioners themselves could not feign
ignorance of the case since during thependency of Civil Case No. 2570, petitioner
Ernesto Saligumba, son of the deceased spouses, was among the persons present
during the delimitation of the land in question before the Commissioner held on 5
November 1977.
[31]
Petitioner Eliseo Saligumba, Jr. was likewise furnished a copy
of the trial courts orders and notices. It was only the Answer filed by
petitioner Generoso Saligumba in Civil Case No. 5288 that confirmed the dates
when the spouses Saligumbas died and named the latters children. Consequently,
Atty.Miralles was responsible for the conduct of the case since he had not been
properly relieved as counsel of record. His acts bind his clients and the latters
successors-in-interest.
In the present case for revival of judgment, the other petitioners have not
shown much interest in the case. Petitioners Eliseo Saligumba, Jr. and
Eduardo Saligumba were declared in default for failure to file their answer.
Petitioner Ernesto Saligumba was out of the country working as a seaman. Only
petitioner Generoso Saligumba filed an Answer to the complaint. The petition filed
in this Court was signed only by petitioner Generoso Saligumba as someone signed
on behalf of petitioner Ernesto Saligumba without the latters authority to do so.

WHEREFORE, we DENY the petition. We AFFIRM the Decision
dated 24 May 2000 of the Regional Trial Court, Branch 5, Kalibo, Aklan in Civil
Case No. 5288. Costs against petitioners.

SO ORDERED.

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

G.R. No. L-68935 January 22, 1990
JOSE PENEYRA and MILAGROS CALDERON, petitioners,
vs.
HON. INTERMEDIATE APPELLATE COURT and HONORABLE GODOFREDO
RILLORAZA, respondents.
Emilio O. Gacad, Jr. for petitioners.
Hector B. Almeyda for private respondent.

FERNAN, C.J .:
We modify the decision
1
rendered on September 28, 1984 by the then Intermediate Appellate Court
(IAC) now Court of Appeals, in AC-G.R. S.P. No. 03509 entitled, "Jose Peneyra, et al. vs. Hon Godofredo
G. Rilloraza, et al."
The antecedent facts are undisputed:
On May 7, 1976, the Board of Trustees of the Corregidor College Inc. awarded the management and
operation of its canteen at a monthly rental of P80.00 to petitioners herein who are stockholders of the
said College. Subsequently, upon instructions of Eulogio Dizon, Chairman of the Board of Trustees of
Corregidor College, Inc., the rental payments of petitioners were refused, and on August 6, 1980, partial
demolition of the canteen was effected. Consequently, on September 9, 1980, petitioners filed in the then
Court of First Instance of Nueva Ecija an action against Eulogio R. Dizon for damages with preliminary
mandatory injunction.
2

After Dizon filed his answer and counterclaim, pre-trial took place. On February 20, 1981, petitioners
presented their evidence and rested their case. The judge to whom the case was assigned having
inhibited himself, the case was re-assigned to herein respondent judge, the Hon. Godofredo Rilloraza.
3

On September 2, 1983, petitioners filed a motion for leave to amend the complaint so as to include
Corregidor College, Inc. as additional defendant. Dizon opposed the motion since petitioners had already
presented their evidence.
4

In its order of September 15, 1983, the trial court denied petitioners' motion, ruling that the proposed
amendment would substantially alter petitioners' cause of action; that defendant Dizon would be required
to answer new issues wholly different from those which were stated in the original complaint; and that
petitioners having rested their case, the amendment was too late.
5

Thereafter, petitioners asked for an extension of time to file a motion for reconsideration of the aforesaid
order but the same was denied by the trial court in its order dated October 18, 1983.
6
Petitioners filed a
motion for reconsideration which the trial court granted in its order dated November 9, 1983. It gave
petitioners an extension of ten (10) days from notice within which to file the amended
complaint.
7
However, realizing that its order dated November 9, 1983 was erroneous, the trial court
reversed itself by setting aside said order. Instead, on December 6, 1983, the trial court required
petitioners to file within ten (10) days from notice a motion for reconsideration of the Order of October 18,
1983.
8

On December 23, 1983, petitioners filed their motion for reconsideration of the order denying the
admission of their amended complaint. Two days later or on December 25, 1983, Eulogio Dizon died.
Thereafter, his counsel moved to dismiss the complaint by reason thereof.
9

In its order dated March 27, 1984, the trial court dismissed petitioners' complaint on the ground that the
action for damages did not survive the death of Eulogio Dizon.
10
Petitioners moved to reconsider but
were unsuccessful.
Arguing that the trial court gravely abused its discretion in denying admission of their amended
complaint and in subsequently dismissing their case, petitioners filed a special civil action
of certiorari and mandamus against respondent judge before the IAC.
On September 28, 1984, the Appellate Court dismissed the petition holding that the Securities and
Exchange Commission (SEC) has jurisdiction over the case, the same being an intracorporate dispute,
that the amendment to include Corregidor College, Inc. cannot be allowed and that the action for
damages against Eulogio Dizon was extinguished by his death.
11

Hence, this recourse.
The three issues before us are: does jurisdiction over Civil Case No. 774-G pertain to the Securities
and Exchange Commission? did the court a quo correctly deny petitioners' motion for leave to
amend complaint to include Corregidor College, Inc. as additional defendant? and did the action for
damages against Euologio Dizon survive his death?
One of the reasons given by the appellate court in affirming the dismissal of Civil Case No. 774-G is
that the same is within the jurisdiction of the SEC. This is erroneous.
While it is true that petitioners herein are stockholders of Corregidor College, Inc., the. complaint in Civil
Case No. 774-G did not stem directly from such relationship, but rather from the award to petitioners of
the management and operation of its canteen at a monthly rental of P80.00. The management of a
canteen, even if awarded to a stockholder, is outside or merely incidental to the central operations of an
educational institution. Petitioners thus convincingly argue that "the controversy is not one where
petitioners are bringing the action as stockholders but rather as operators of the canteen under an
agreement with said Board. In short, the cause of action here is for damages arising from a violation of a
contract of management operation of the College canteen by defendant Dizon.
12
Certainly, the present
controversy cannot qualify as an intra-controversy, its root being a contractual breach separate and
distinct from the corporate relationship between petitioners and Corregidor College, Inc., which, it must be
noted, was not even named as a defendant in the original complaint. It was therefore patent error for the
Court of Appeals to immediately rule that the present case belongs to the SEC just because petitioners
alleged that they are stockholders of Corregidor College, Inc.
Under Section 3 of Presidential Decree 902-A, the jurisdiction of the SEC is limited to matters intrinsically
connected with the regulation of corporations, partnerships and associations and those dealing with the
internal affairs of such entities. P.D. 902-A does not confer in the SEC absolute jurisdiction and control
over all matters affecting corporations. To uphold the appellate court's ruling would remove without legal
imprimatur from the regular courts all controversies over matters involving or affecting corporations
regardless of the nature of the transactions which give rise to such disputes.
13

On the second issue posed by herein petitioners, We rule that the amendment to include Corregidor
College Inc. as additional defendant cannot be permitted inasmuch as the motion to amend was
made only after petitioners had already rested their case on February 20, 1981. We note the fact
that it was only after a lapse of two (2) years and seven (7) months or on September 2, 1983 that
petitioners filed their motion to amend their complaint. To permit such amendment would obviously
delay the proceedings of the trial court. Needless to say, at that point in the proceedings, substantial
issues have already been joined.
The rule is that amendments should be liberally allowed
14
but this liberality at the outset of the action
decreases as the case moves to its termination.
15
Besides, an application for leave to amend is ordinarily
addressed to the sound discretion of the trial court and as a rule this discretion will not be disturbed on
appeal except in case of an evident abuse thereof.
16

Moreover, the inclusion of Corregidor College as additional party is a substantial amendment which
can be permitted only by leave of court. Section 3, of Rule 10 of the Rules of Court states that,
"(A)fter the case is set for hearing, substantial amendments may be made only upon leave of court.
But such leave may be refused if it appears to the court that the motion was made with intent to
delay the action or that the cause of action or defense is substantially altered." The proposed
inclusion of Corregidor College would necessarily alter petitioners' cause of action in that while
petitioners alleged in their complaint:
9. That, the demolition being undertaken by the defendant is without any authority
from the Board of Trustees nor from the proper government office concerned, in
violation of the law, the only purpose of which is to harass the plaintiffs;
10. That, due to the unlawful acts of the defendants, not only in violation of the Board
Resolution and of the law governing that matter, the herein plaintiffs were so humiliated
before the eyes of the people and their rights and interest were prejudiced causing them
irreparable damage for which they have to be compensated for loss of income and moral
damages in an amount of not less than P 50,000.00;
17

thus ascribing to defendant Dizon personal responsibility for the alleged damages suffered
by them, the inclusion of Corregidor College would have the effect of transforming said
personal responsibility into a corporate and collective liability. Correspondingly, the
amendment would substantially affect the defense of defendant Dizon in his capacity as
College president.
As argued convincingly by petitioners, an action for the recovery of damages for injury to personal
property is not extinguished by the death of the defendant. This is because such action may still be
brought against the executor or administrator of the estate of the defendant. Since the demolition of
petitioners' canteen is a ground for the recovery of damages arising from injury to personal property,
then, as provided in Section 1 of Rule 87 of the Rules of Court, the deceased defendant should now
be substituted by the executor, administrator or legal representative of his estate as party-defendant.
WHEREFORE, the dismissal of Civil Case No. 774-G of the then Court of First Instance of Nueva
Ecija, Branch XXXI, Guimba, is hereby set aside. The successor Regional Trial Court is ordered to
reinstate Civil Case No. 774-G, to cause the deceased defendant Eulogio Dizon to be substituted by
the executor, administrator or legal representative of his estate as party-defendant and thereafter to
proceed with the trial of the case with dispatch. The denial of petitioners' motion to amend the
complaint is affirmed. No costs.
SO ORDERED.
Gutierrez, Jr., Feliciano, Bidin and Corts, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 129008 January 13, 2004
TEODORA A. RIOFERIO, VERONICA O. EVANGELISTA assisted by her husband ZALDY
EVANGELISTA, ALBERTO ORFINADA, and ROWENA O. UNGOS, assisted by her husband BEDA
UNGOS, petitioners,
vs.
COURT OF APPEALS, ESPERANZA P. ORFINADA, LOURDES P. ORFINADA, ALFONSO
ORFINADA, NANCY P. ORFINADA, ALFONSO JAMES P. ORFINADA, CHRISTOPHER P. ORFINADA
and ANGELO P. ORFINADA,respondents.
D E C I S I O N
TINGA, J .:
Whether the heirs may bring suit to recover property of the estate pending the appointment of an
administrator is the issue in this case.
This Petition for Review on Certiorari, under Rule 45 of the Rules of Court, seeks to set aside
the Decision
1
of the Court of Appeals in CA-G.R. SP No. 42053 dated January 31, 1997, as well as
its Resolution
2
dated March 26, 1997, denying petitioners motion for reconsideration.
On May 13, 1995, Alfonso P. Orfinada, Jr. died without a will in Angeles City leaving several personal and
real properties located in Angeles City, Dagupan City and Kalookan City.
3
He also left a widow,
respondent Esperanza P. Orfinada, whom he married on July 11, 1960 and with whom he had seven
children who are the herein respondents, namely: Lourdes P. Orfinada, Alfonso "Clyde" P. Orfinada,
Nancy P. Orfinada-Happenden, Alfonso James P. Orfinada, Christopher P. Orfinada, Alfonso Mike P.
Orfinada (deceased) and Angelo P. Orfinada.
4

Apart from the respondents, the demise of the decedent left in mourning his paramour and their children.
They are petitioner Teodora Riofero, who became a part of his life when he entered into an extra-marital
relationship with her during the subsistence of his marriage to Esperanza sometime in 1965, and co-
petitioners Veronica
5
, Alberto and Rowena.
6

On November 14, 1995, respondents Alfonso James and Lourdes Orfinada discovered that on June 29,
1995, petitioner Teodora Rioferio and her children executed an Extrajudicial Settlement of Estate of a
Deceased Person with Quitclaiminvolving the properties of the estate of the decedent located in Dagupan
City and that accordingly, the Registry of Deeds in Dagupan issued Certificates of Titles Nos. 63983,
63984 and 63985 in favor of petitioners Teodora Rioferio, Veronica Orfinada-Evangelista, Alberto
Orfinada and Rowena Orfinada-Ungos. Respondents also found out that petitioners were able to obtain a
loan of P700,000.00 from the Rural Bank of Mangaldan Inc. by executing a Real Estate Mortgage over
the properties subject of the extra-judicial settlement.
7

On December 1, 1995, respondent Alfonso "Clyde" P. Orfinada III filed a Petition for Letters of
Administration docketed as S.P. Case No. 5118 before the Regional Trial Court of Angeles City, praying
that letters of administration encompassing the estate of Alfonso P. Orfinada, Jr. be issued to him.
8

On December 4, 1995, respondents filed a Complaint for the Annulment/Rescission of Extra Judicial
Settlement of Estate of a Deceased Person with Quitclaim, Real Estate Mortgage and Cancellation of
Transfer Certificate of Titles with Nos. 63983, 63985 and 63984 and Other Related Documents with
Damages against petitioners, the Rural Bank of Mangaldan, Inc. and the Register of Deeds of Dagupan
City before the Regional Trial Court, Branch 42, Dagupan City.
9

On February 5, 1996, petitioners filed their Answer to the aforesaid complaint interposing the defense that
the property subject of the contested deed of extra-judicial settlement pertained to the properties originally
belonging to the parents of Teodora Riofero
10
and that the titles thereof were delivered to her as an
advance inheritance but the decedent had managed to register them in his name.
11
Petitioners also raised
the affirmative defense that respondents are not the real parties-in-interest but rather the Estate of
Alfonso O. Orfinada, Jr. in view of the pendency of the administration proceedings.
12
On April 29, 1996,
petitioners filed a Motion to Set Affirmative Defenses for Hearing
13
on the aforesaid ground.
The lower court denied the motion in its Order
14
dated June 27, 1996, on the ground that respondents, as
heirs, are the real parties-in-interest especially in the absence of an administrator who is yet to be
appointed in S.P. Case No. 5118. Petitioners moved for its reconsideration
15
but the motion was likewise
denied.
16

This prompted petitioners to file before the Court of Appeals their Petition for Certiorari under Rule 65 of
the Rules of Court docketed as CA G.R. S.P. No. 42053.
17
Petitioners averred that the RTC committed
grave abuse of discretion in issuing the assailed order which denied the dismissal of the case on the
ground that the proper party to file the complaint for the annulment of the extrajudicial settlement of the
estate of the deceased is the estate of the decedent and not the respondents.
18

The Court of Appeals rendered the assailed Decision
19
dated January 31, 1997, stating that it discerned
no grave abuse of discretion amounting to lack or excess of jurisdiction by the public respondent judge
when he denied petitioners motion to set affirmative defenses for hearing in view of its discretionary
nature.
A Motion for Reconsideration was filed by petitioners but it was denied.
20
Hence, the petition before this
Court.
The issue presented by the petitioners before this Court is whether the heirs have legal standing to
prosecute the rights belonging to the deceased subsequent to the commencement of the administration
proceedings.
21

Petitioners vehemently fault the lower court for denying their motion to set the case for preliminary
hearing on their affirmative defense that the proper party to bring the action is the estate of the decedent
and not the respondents. It must be stressed that the holding of a preliminary hearing on an affirmative
defense lies in the discretion of the court. This is clear from the Rules of Court, thus:
SEC. 5. Pleadings grounds as affirmative defenses.- Any of the grounds for dismissal
provided for in this rule, except improper venue, may be pleaded as an affirmative defense,
and a preliminary hearing may be had thereon as if a motion to dismiss had been
filed.
22
(Emphasis supplied.)
Certainly, the incorporation of the word "may" in the provision is clearly indicative of the optional character
of the preliminary hearing. The word denotes discretion and cannot be construed as having a mandatory
effect.
23
Subsequently, the electivity of the proceeding was firmed up beyond cavil by the 1997 Rules of
Civil Procedure with the inclusion of the phrase "in the discretion of the Court", apart from the retention of
the word "may" in Section 6,
24
in Rule 16 thereof.
Just as no blame of abuse of discretion can be laid on the lower courts doorstep for not hearing
petitioners affirmative defense, it cannot likewise be faulted for recognizing the legal standing of the
respondents as heirs to bring the suit.
Pending the filing of administration proceedings, the heirs without doubt have legal personality to bring
suit in behalf of the estate of the decedent in accordance with the provision of Article 777 of the New Civil
Code "that (t)he rights to succession are transmitted from the moment of the death of the decedent." The
provision in turn is the foundation of the principle that the property, rights and obligations to the extent and
value of the inheritance of a person are transmitted through his death to another or others by his will or by
operation of law.
25

Even if administration proceedings have already been commenced, the heirs may still bring the suit if an
administrator has not yet been appointed. This is the proper modality despite the total lack of advertence
to the heirs in the rules on party representation, namely Section 3, Rule 3
26
and Section 2, Rule 87
27
of
the Rules of Court. In fact, in the case of Gochan v. Young,
28
this Court recognized the legal standing of
the heirs to represent the rights and properties of the decedent under administration pending the
appointment of an administrator. Thus:
The above-quoted rules,
29
while permitting an executor or administrator to represent or to
bring suits on behalf of the deceased, do not prohibit the heirs from representing the
deceased. These rules are easily applicable to cases in which an administrator has
already been appointed. But no rule categorically addresses the situation in which
special proceedings for the settlement of an estate have already been instituted, yet
no administrator has been appointed. In such instances, the heirs cannot be expected to
wait for the appointment of an administrator; then wait further to see if the administrator
appointed would care enough to file a suit to protect the rights and the interests of the
deceased; and in the meantime do nothing while the rights and the properties of the
decedent are violated or dissipated.
Even if there is an appointed administrator, jurisprudence recognizes two exceptions, viz: (1) if the
executor or administrator is unwilling or refuses to bring suit;
30
and (2) when the administrator is alleged to
have participated in the act complained of
31
and he is made a party defendant.
32
Evidently, the necessity
for the heirs to seek judicial relief to recover property of the estate is as compelling when there is no
appointed administrator, if not more, as where there is an appointed administrator but he is either
disinclined to bring suit or is one of the guilty parties himself.
All told, therefore, the rule that the heirs have no legal standing to sue for the recovery of property of the
estate during the pendency of administration proceedings has three exceptions, the third being when
there is no appointed administrator such as in this case.
As the appellate court did not commit an error of law in upholding the order of the lower court, recourse to
this Court is not warranted.
WHEREFORE, the petition for review is DENIED. The assailed decision and resolution of the Court of
Appeals are hereby AFFIRMED. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-35098 March 16, 1987
GIACOMINA MARINI-GONZALES, petitioner,
vs.
HON. GUARDSON R. LOOD, Presiding Judge, Court of First Instance of Rizal, Sixth Branch
Pasig, Rizal; CELIA ANGELES-PASCUA; ELISEO ZARI, Assistant Clerk of Court of above-
mentioned branch, as appointed legal representative of deceased defendant RAFAEL J.
GONZALES; ESTEBAN S. ANGELES; SPOUSES ROGELIO ANGELES and SINFORESA
SALVADOR ANGELES; SPOUSES REMEDIOS ANGELES-FERRAER and FLORENCIO
FERRAER; JAIME ANGELES; SPOUSES BENJAMIN ANGELES and MERLINA TORRES-
ACABE and her husband surnamed ACABE (first name unknown to petitioner), respondents.
Norberto J. Quisumbing for petitioner.
Laso Beltran & Domondon for respondents.

PADILLA, J .:
This is a petition for certiorari to annul and set aside the orders issued by the respondent Judge in
Civil Case No. 12296 of the then Court of First Instance of Rizal, Pasig Branch VI, on (1) 12
February 1972, which denied petitioner's Omnibus Motion; (2) 25 March 1972, appointing the
respondent Eliseo Zari, assistant clerk of court of respondent court, as the legal representative of the
deceased defendant Rafael J. Gonzales; (3) 14 April 1972, which denied petitioner's motion for
reconsideration of the Order dated 12 February 1972; and (4) 17 May 1972, which denied
petitioner's motion for reconsideration of the Order dated 25 March 1972.
The records show that on 19 September 1969, the herein petitioner, Giacomina Marini-Gonzales, now-
deceased and represented by the special administrator of her estate, Atty. Norberto J. Quisumbing, 1 filed
a complaint against her husband Rafael J. Gonzales and Celia Angeles-Pascua, Esteban S. Angeles,
Rogelio S. Angeles, Sinforesa Salvador- Angeles, Remedios Angeles-Ferraer, Florencio Ferraer, Jaime
Angeles, Benjamin Angeles, Merlina Torres-Angeles, and Lourdes Angeles-Acabe and her husband
whose first name is unknown to the plaintiff, in the then Court of First Instance of Rizal, docketed as Civil
Case no. 12296, for the annulment of allegedly fraudulent disposition if various properties, both real and
personal, therein listed, made by the said Rafael J. Gonzales in favor of his co- defendants, allegedly in
fraud of plaintiff and in impairment of her interest in the conjugal partnership properties, and without her
knowledge and consent. The complaint also asked for damages.
2

In answer, the defendant Rafael J. Gonzales claimed that all the conjugal assets which are in his
possession were not used in any way for or transferred to the other defendants; and that the properties
owned by his co-defendants were not derived from the conjugal properties owned by him and the
plaintiff.
3

His co-defendants, for their part, alleged that the properties listed in the complaint were bought or
acquired, not with funds from the conjugal partnership of plaintiff and defendant Rafael J. Gonzales, but
with funds of the owners thereof.
4

Pre-trial conferences were held, and thereafter, the deposition of the defendant Rafael J. Gonzales
was taken in view of his deteriorating health. The taking of his deposition, however, was not
completed because he died on 5 September 1970.
On 25 September 1970, the herein petitioner, in a pleading entitled "Notice of Death of Party and
Omnibus Motion" notified the court of the death of the defendant Rafael J. Gonzales and of her
appointment by the then Court of First Instance of Rizal (Quezon City branch) in Special Proceeding No.
Q-14838 as special administratrix of his testate estate, and prayed that she be substituted in place of the
deceased; that the pleadings, motions and papers, including the Answer with Counterclaim filed by the
decedent, be withdrawn and stricken out; and that she be granted leave to amend her own complaint so
as to allege therein her two capacities and rights one, as wife and two, as special administratrix of the
testate estate of the late Rafael J. Gonzales.
5
Later, the probate court appointed said plaintiff (herein
petitioner) as executrix in the testate estate of the late Rafael J. Gonzales.
6
She is also the sole heir
under his will.
7

Considering the Omnibus Motion, respondent Judge ordered the parties "to submit their amended
pleading in accordance with the Rules of Court within a period or as soon as possible."
8

Pursuant thereto, the petitioner filed a "Compliance and Motion" reiterating her prayer for the immediate
grant of her Omnibus Motion filed earlier. A copy of an Amended Complaint was appended to her
motion.
9

The respondent Judge, however, in an Order dated 12 February 1972, denied the Omnibus Motion for
lack of merit. 10Counsel for the petitioner received a copy of the Order on 26 February 1972, and on 25
March 1972, he filed a motion for reconsideration of said Order. 11
On that same day, 25 March 1972, the respondent Judge, upon motion of the herein private respondents,
issued an Order appointing Atty. Eliseo Zari, the assistant clerk of court, the legal representative of the
defendant Rafael J. Gonzales in the case. 12 Upon receipt of a copy of this Order, counsel for the
petitioner also filed a motion for its reconsideration, and when both motions for reconsideration were
denied on 14 April 1972 13 and 17 May 1972, 14 respectively, he filed the instant petition for certiorari with
this Court.
The petition was given due course 15 and on 20 March 1973, this court, upon application of the petitioner,
issued a temporary restraining order restraining the respondent Judge from proceeding with the initial
reception of evidence in Civil Case No. 12297 of the Court of First Instance of Rizal, Branch VI, Pasig. 16
The first issue raised by the petitioner is whether or not the respondent Judge acted with grave
abuse of discretion in denying the proposed amendment to the petitioner's complaint to the end that
she, as special administratrix, later, executrix of the testate estate of her late husband Rafael J.
Gonzales, be allowed to withdraw the Answer with Counterclaim filed by said deceased during his
lifetime and then join cause with her, as plaintiff.
The law applicable is Section 1, Rule 10 of the Rules of Court which provides as follows:
Sec. 3. Amendments by leave of Court. After the case is set for hearing,
substantial amendments may be made only upon leave of court. But such leave may
be refused if it appears to the court that the motion was made with intent to delay the
action or that the cause of action or defense is substantially altered. Orders of the
court upon the matters provided in this section shall be made upon motion filed in
court, And after notice to the adverse party, and an opportunity to be heard.
Likewise applicable is the law on estoppel to the effect that
A party who has, with knowledge of the facts, assumed a particular position in judicial
proceedings, and has succeeded in maintaining that position, is estopped to assume a
position inconsistent therewith to the prejudice of the adverse party. It is essential also
that the party, claiming the estoppel should have acted in reliance thereon, and that his
rights would be injuriously affected if his opponent were permitted to change his position.
When no wrong is done a change in position should and will be allowed. The rule has no
application where the knowledge or means of knowledge of both parties is equal nor in
case of mistake. Also the rule has no application to change a position with respect to
matters of law. 17
There is no doubt that the proposed amendments to the petitioner's complaint would alter the position of
Rafael J. Gonzales, from that of defendant to that of plaintiff. But, while the aforequoted provisions of the
Rules of Court authorize the courts to disallow amendment of pleadings when it appears that the same is
made to delay an action or that the cause of action or defense is substantially altered thereby the rule is
not absolute. Courts are not precluded from allowing amendments of pleadings even if the same will
substantially change the cause of action or defense provided that such amendments do not result in a
substantial injury to the adverse party. This is due to the permissive character of said rule. In fact, this
Court has ruled that amendments to pleadings are favored and should be liberally allowed in the
furtherance of justice. 18
The same is true with the principle of estoppel, just mentioned. It is essential that the rights of the
adverse party would be seriously affected in order to disallow a change in position, but, when no
wrong is done, a change in position may be allowed.
We have examined the records of this case and we find no reason, nor have the private respondents
shown any, which would serve as a basis for a finding that they (private respondents) would suffer
substantial injury if the proposed amendments were allowed. The mere change in the position of the
deceased Rafael J. Gonzales, from defendant to plaintiff, will not, by itself, lend credence to the
allegation of the petitioner in her complaint that the properties listed in the complaint belonged to the
conjugal partnership of the petitioner and Rafael J. Gonzales and that they were fraudulently
transferred to the private respondents, nor will it diminish the private respondents' claim that the said
properties were bought or acquired by them with their own funds. The parties, in fact, have yet to
prove their respective allegations.
On the other hand, to disallow the amendments proposed by the petitioner would result in some
absurdity. As wife and then as executrix and sole heir of the late Rafael J. Gonzales, the petitioner
would be 'giving with one hand and also receiving with the other in the event that judgment were to
be rendered for or against the deceased defendant.
The other issue raised is whether or not the respondent Judge abused his discretion in ordering the
respondent Eliseo Zari to represent the deceased Rafael J. Gonzales as party defendant in this case. The
petitioner contends that the appointment of another legal representative for the late Rafael J. Gonzales is
nun and void in view of her appointment as the special administratrix, later, executrix of the testate estate
of Rafael J. Gonzales, not to mention that she is the sole heir under his will. 19
We agree with petitioner's contention. Under the provisions of Section 2, Rule 87 of the Rules of Court, it
is the executor or administrator of the estate of the decedent who may bring or defend actions in the
name of the deceased, and tills Court has ruled that the choice of an executor is the sole prerogative of
the testator and is not address to the discretion of the court. In the case of Ozaeta vs. Pecson,
20
this
Court said:
The choice of his executor is a precious prerogative of a testator, a necessary
concomitant of his right to dispose of his property in the manner he wishes. It is
natural that the testator should desire to appoint one of his confidence, one who can
be trusted to carry out his wishes in the disposal of his estate. The curtailment of this
right may be considered as a curtailment of the rights to dispose. And as the rights
granted by him will take effect from the time of his death (Article 777, Civil Code of
the Philippines), the management of his estate by the administrator of his choice
should be made as soon as practicable, when no reasonable objection to his
assumption of the trust can be interposed any longer. It has been held that when a
will has been admitted to probate, it is the duty of this court to issue letters
testamentary to the person named as executor upon his application (23 C.J. 1023). It
is the testator that appoints his executor, as the question as to his peculiar fitness for
such position or his want of ability to manage the estate cannot be addressed to the
discretion of the county judge. (Holbrook vs. Head, 6 S.W. 592, 593, 9 Ky 755).
Furthermore, the joinder of the deceased Rafael J. Gonzales as party defendant is no longer
necessary and may be dispensed with, since no cross-claim has been filed against him by his co-
defendants (private respondents herein); and the petitioner's right under Article 173 of the Civil Code
may be enforced against third persons even without joining her husband as party defendant.
We find from an the foregoing, and so rule, that the respondent Judge gravely abused his discretion
in denying the petitioner's Omnibus Motion. Courts should be liberal in allowing amendments to
pleadings, especially where such amendments will serve the ends of justice and avoid multiplity of
suits.
WHEREFORE, the petition is GRANTED and a writ issued, annulling and setting aside the Orders
issued by the respondent Judge in Civil Case no. 12296 of the then Court of First Instance of Rizal
Branch VI, Pasig, on 12 February 1972, 25 March 1972, 14 April 1972, and 17 May 1972. The
temporary restraining order, earlier issued by this Court, is hereby made permanent. Costs against
private respondents.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-62376 October 27, 1983
MARIA VELASQUEZ, MARY GEORGE, NELLIE GEORGE, NOBLE GEORGE, and MAYBELLE
GEORGE, plaintiffs-appellants,
vs.
WILLIAM GEORGE, ROBERT GEORGE, ANDRES MUOZ, ISAGANI BRIAS and CIRILO
ASPERILLA defendants-appellees, ERLINDA VILLANUEVA, mortgagee-defendant-appellee.
Moises B. Ramos for plaintiffs-appellants.
Teresita G. Oledan for defendants-appellees W. George, R. George and Andres Munoz
Isagani Brias and Rogel Atienza for defendant-appellee Brias
Eladio B. Samson for mortgagee-defendant-appellee Erlinda Villanueva.

GUTIERREZ, JR., J :
Plaintiffs-appellants Maria Velasquez Vda. de George and her children, Mary, Nellie, Noble and
Maybelle, all surnamed George, appealed from the decision of the Court of First Instance of
Bulacan, which dismissed their complaint for lack of jurisdiction. According to the trial court, the case
falls within the original and exclusive jurisdiction of the Securities and Exchange Commission. The
appeal was certified to us by the Court of Appeals as one involving a pure question of law.
The plaintiffs-appellants are the widow and legitimate children of the late Benjamin B. George whose
estate is under intestate proceedings. The case is docketed as Special Proceedings Nos. 18820
before the then Court of First Instance of Rizal at Quezon City, Branch XVIII.
In their complaint, the plaintiffs-appellants alleged that the five defendants- mortgagors are officers
of the Island Associates Inc. Andres Muoz, aside from being the treasurer-director of said
corporation, was also appointed and qualified as administrator of the estate of Benjamin George in
the above special proceedings. In life, the latter owned 64.8 percent or 636 shares out of the
outstanding 980 shares of stock in the corporation. Without the proper approval from the probate
court and without notice to the heirs and their counsel, the defendants-mortgagors executed a Deed
of First Real Estate Mortgage in favor of the defendant-mortgagee Erlinda Villanueva, covering three
parcels of land owned by Island Associates. In said Deed, the defendants-mortgagors also expressly
waived their right to redeem the said parcels. Subsequently, a power of attorney was executed by
the defendants-mortgagors in favor of Villanueva whereby the latter was given the full power and
authority to cede, transfer, and convey the parcels of land within the reglementary period provided
by law for redemption.
A certificate of sale was executed in favor of Villanueva by the Provincial Sheriff of Bulacan after she
submitted the highest bids at the public auction. This led to the execution of a Deed of Sale and
Affidavit of Consolidation of Ownership by virtue of which Transfer Certificates of Titles Nos. T-
16717 and T-39162, covering the three parcels of land, were cancelled and in lieu thereof, Transfer
Certificates of Titles Nos. T239675 and T-239674 were issued in favor of Villanueva. The plaintiffs-
appellants, therefore, filed the complaint for the annulment of the 1.) Deed of First Real Estate
Mortgage; 2.) Power of Attorney; 3.) Certificate of Sale; 4.) Amended Certificate of Sale; 5.) Affidavit
of Consolidation of Ownership; and 6.) Transfer Certificates of Title Nos. T-239674 and T-239675.
A motion to dismiss was filed by William George, Robert George, and administrator Andres Muoz
on the ground that the trial court had no jurisdiction over the case. The movants contended that the
subject matter of the complaint referred to the corporate acts of the Board of Directors of Island
Associates, and, therefore, falls within the exclusive jurisdiction of the Securities and Exchange
Commission. The trial court agreed with the movants and dismissed the complaint. The plaintiffs-
appellants contend that the resolution of the validity of a mortgage contract is within the original and
exclusive jurisdiction of civil courts, and certainly not within the jurisdiction of the Securities and
Exchange Commission and that once jurisdiction of the civil court whether in a civil or a criminal
case, has properly attached, the same cannot be ousted, divested or removed. The appellants state
that the questioned composition of the board of directors, is merely incidental to the determination of
the main issue and is insufficient cause for the trial court to divest itself of its original and exclusive
jurisdiction that has already been acquired.
The defendants-appellees, on the other hand maintain that since the complaint questions the validity
of a corporate contract which the appellants contend to have been entered into as a fraudulent and
surreptitious scheme and devise to defraud them, this issue places the entire case outside the
jurisdiction of the civil courts. According to them, Presidential Decree No. 902-A gives the SEC
exclusive jurisdiction over such a controversy. The relevant provision reads:
Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and
Exchange Commission over corporations, partnerships and other forms of
associations registered with it as expressly granted under existing laws and decrees,
it shall have original and exclusive jurisdiction to hear and decide cases involving:
a) Devices or schemes employed by any acts of the board of
directors, business associations, its officers or partners amounting to
fraud and misrepresentation which may be detrimental to the interest
of the public and/or of the stockholder, partner, members of
associations or organizations registered with the Commission ...
Villanueva further contends that the plaintiffs-appellants have no capacity to file the complaint
because the general rule laid down in Rule 87, Section 3 of the Rules of Court states that only the
administrator or executor of the estate may bring actions of such nature as the one in the case at
bar. The only exception is when the executor or administrator is unwilling or fails or refuses to act,
which exception according to the mortgagee-appellee does not apply in the present case.
We agree with the plaintiffs-appellants. What the complaint sought to annul were documents of title
which vested ownership over the three parcels of land in question to defendant-mortgagee
Villanueva, who is neither an officer, a stockholder nor a director of the corporation, but a third party.
Clearly, the lower court had jurisdiction over the controversy. The fact that the plaintiffs-appellants
subsequently questioned the legality of the constitution of the board of directors of the corporation
did not divest the court of its jurisdiction to take cognizance of the case. What determines jurisdiction
of the court are the allegations in the complaint. If from the same, the court has already acquired
jurisdiction over the subject-matter, jurisdiction is retained up to the end of the litigation. (See Lat v.
Phil. Long Distance Co., 67 SCRA 425).
Whether or not the mortgage contract, with an unusual provision whereby the mortgagors waived
their right to redeem the mortgaged property, could be executed without proper approval of the
probate court and without notice to the widow and legitimate children of the deceased is a matter
clearly within the authority of a trial court to decide. If in the course of trial, the court believes that the
validity of the composition of the board of directors is absolutely necessary for resolution of the
issues before it, the remedy is, at most, to require that one issue to be threshed out before the
Securities and Exchange Commission and to hold in abeyance, the trial on the merits of the principal
issues in the meantime. Certainly, the solution is not for the lower court to surrender its judicial
questions to an administrative agency for resolution.
We also find without merit the defendant-mortgagee's contention that the proper party to file the
complaint is the administrator of the estate of Benjamin George. The administrator, Andres Muoz,
is the same person charged by the plaintiffs-appellants to have voted in the board of directors
without securing the proper authority from the probate court to which he is accountable as
administrator. In Ramirez v. Baltazar (24 SCRA 918), we ruled that "since the ground for the present
action to annul the aforesaid foreclosure proceedings is the fraud resulting from such insidious
machinations and collusion in which the administrator has allegedly participated, it would be far
fetched to expect the said administrator himself to file the action in behalf of the estate. And who
else but the heirs, who have an interest to assert and to protect, would bring the action? Inevitably,
this case should fall under the exception, rather than the general rule that pending proceedings for
the settlement of the estate, the heirs have no right to commence an action arising out of the rights
belonging to the deceased." The case at bar falls under such an exception.
WHEREFORE, the order of the Court of First Instance of Bulacan, dated June 16, 1980, dismissing
the complaint and the order dated December 1, 1980 denying the motion for reconsideration are
SET ASIDE. The said court is hereby ordered to set the case for trial on the merits as above
indicated.
SO ORDERED.
Teehankee (Chairman), Melencio-Herrera, Plana and Relova JJ., concur.
THIRD DIVISION
[G.R. No. 134854. January 18, 2000]
FELIZARDO S. OBANDO and the ESTATES of JOSE FIGUERAS and DOA
ALEGRIA STREBEL VDA. DE FIGUERAS, petitioners, vs. EDUARDO F.
FIGUERAS andAMIGO REALTY CORPORATION as represented by
ANTONIO A. KAW, respondents.
D E C I S I O N
PANGANIBAN, J .:
In resolving this appeal, the Court invokes the following principles: (1) a lawyers
standing in a case remains, until a substitute takes over pursuant to Section 26, Rule
138 of the Rules of Court; (2) a trial court may act upon a motion to dismiss at any
time a ground therefor becomes available, even after a responsive pleading to the
complaint has already been filed; (3) a civil case initiated by an estate administrator
may be dismissed upon a showing that the said administrators appointment as such
has been revoked by the probate court; and (4) the dismissal of an action may be made
after the ground therefor becomes known, even if the trial court has refused to do so
earlier when that ground was not yet available.
The Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, seeking to
annul the July 30, 1998 Decision of the Court of Appeals
[1]
in CA-GR SP No. 47594,
which affirmed the dismissal, without prejudice, of Petitioner Felizardo Obandos
action for annulment of contract and reconveyance earlier ordered by the Regional
Trial Court (RTC) of Quezon City,
[2]
Branch 218.4U14AA
The Facts
In 1964, Alegria Strebel Figueras, together with her stepsons, Eduardo and Francisco,
filed a Petition for settlement of the intestate estate of her deceased husband Jose
Figueras.
[3]
While settlement of the estate was pending, she died and Eduardo assumed
administration of the joint estates of Don Jose and Doa Alegria. Hardly had the
proceedings in both intestacies begun when Eduardo was served a Petition for Probate
of what purported to be Doa Alegrias Last Will and Testament, filed by Felizardo S.
Obando (herein petitioner), a nephew of Doa Alegria.
[4]

The alleged Will bequeathed to Petitioner Obando and several other members of the
Obando clan properties left by the Figueras couple, including two parcels of land in
Gilmore Avenue, New Manila, Quezon City, covered by TCT Nos. 13741 and
17679.
[5]
When the probate case was consolidated with the intestate proceedings,
Petitioner Obando was appointed as Eduardos co-administrator of the joint estates.
[6]

As Eduardo insisted that the alleged Will was a forgery, the document was submitted
to the National Bureau of Investigation (NBI) for examination and comparison of
Doa Alegrias alleged signature therein with samples which both parties accepted as
authentic. The NBI found that the questioned and the standard signatures were not
made by the same person.
[7]
This led to the indictment and the conviction of Petitioner
Obando in Criminal Case 90-85819
[8]
for estafa through falsification of a public
document.
On February 20, 1990, the probate court denied Eduardos Motion for authority to sell
the aforementioned two parcels of land in New Manila.
[9]
Despite such denial, Eduardo
sold the lots to Amigo Realty Corporation on the strength of an Order issued by the
probate court on May 15, 1991. New titles were issued for these lots in the name of
Amigo Realty.
[10]

On June 4, 1992, Petitioner Obando, in his capacity as co-administrator and universal
heir of Doa Alegria, filed a Complaint against Eduardo and Amigo Realty
(collectively referred to as the respondents) for the nullification of the sale. The
proceedings were docketed as Civil Case No. Q-92-12384 and raffled to the Regional
Trial Court of Quezon City, Branch 79.
However, in Special Proceeding Nos. 61567 and 123948, the probate court, in its
Order dated December 17, 1997, removed Petitioner Obando from his office as co-
administrator of the joint estate of the Figueras spouses.
[11]
Consequently, in the civil
case, respondents filed a Joint Motion to Dismiss dated January 27, 1998, after
Obando had rested his case. The respondents built their evidence around the loss of
his legal standing to pursue the case.
[12]
In its Order dated February 11, 1993, the trial
court granted the Motion and dismissed the civil case without prejudice.
[13]
4114AA
Petitioner Obando filed a Motion for Reconsideration to no avail. As earlier stated, the
Court of Appeals likewise dismissed his Petition for Certiorari and Mandamus and
affirmed the dismissal Order of the RTC.
[14]

Ruling of the Court of Appeals
The Court of Appeals rejected the contention of Obando that he did not lose his legal
personality to prosecute the civil case since there was no categorical statement that the
purported will was a forgery and its probate was still pending.
The CA affirmed the dismissal of the action for reconveyance because the probate
courts Order dated February 5, 1998 "alluded" to the fact that the alleged Will was a
forgery. That the probate of the alleged Will had not yet been decided on the merits
did not change the fact that the probate court had removed Petitioner Obando as co-
administrator. The dismissal of the civil case was without prejudice, because the trial
judge anticipated that Obando could regain co-administration of the estates on appeal.
Hence, this Petition.
[15]

Assignment of Errors
In their Memorandum, petitioners raise the following issues:
[16]

"A........WHETHER OR NOT THE COURT OF APPEALS GRAVELY
ERRED IN SANCTIONING THE TRIAL COURTS ALLOWANCE
OF RESPONDENTS JOINT MOTION TO DISMISS, DESPITE THE
FACT THAT ONE OF THE LAWYER-MOVANTS THEREIN WAS
NO LONGER THE COUNSEL OF RECORD FOR RESPONDENT
FIGUERAS AT THE TIME THE MOTION WAS FILED.
"B........WHETHER OR NOT THE COURT OF APPEALS GRAVELY
ERRED IN SANCTIONING THE TRIAL COURTS RADICAL
DEPARTURE FROM THE LAW WHEN IT GRANTED A MOTION
TO DISMISS ON LACK OF CAPACITY TO SUE/LEGAL
STANDING AT THE TIME WHEN THE [PETITIONERS] HAVE
ALREADY RESTED THEIR CASE AND THE [RESPONDENTS]
HAVE BEGUN PRESENTATION OF THEIR EVIDENCE.
"C........WHETHER OR NOT THE COURT OF APPEALS GRAVELY
ERRED WHEN IT SANCTIONED THE TRIAL COURTS
DISMISSAL OF THE CASE BASED ON ORDERS OF OTHER
COURTS THAT HAVE NOT YET ATTAINED
FINALITY.4AA4*1
"D........WHETHER OR NOT THE COURT OF APPEALS GRAVELY
ERRED WHEN IT UPHELD THE TRIAL COURTS WHIMSICAL
AND CAPRICIOUS DEPARTURE FROM ITS PREVIOUS RULINGS
DENYING RESPONDENTS MOTION TO DISMISS AND MOTION
TO SUSPEND PROCEEDINGS.
"E........WHETHER OR NOT THE COURT OF APPEALS GRAVELY
ERRED WHEN IT RENDERED ITS 30 JULY 1998 DECISION IN
CA-G.R. 47594 UPHOLDING THE TRIAL COURTS ORDERS
DATED 11 FEBRUARY 1998 AND 12 MARCH 1998."
Simply stated, the following issues are raised by the petitioners: (1) whether the trial
court could act on a motion filed by a lawyer who was allegedly no longer Eduardos
counsel of record; (2) whether a motion to dismiss filed after the responsive pleadings
were already made can still be granted; (3) whether the conviction of Petitioner
Obando for estafa through falsification and the revocation of his appointment as
administrator, both of which are on appeal, constitute sufficient grounds to dismiss the
civil case; and (4) whether there was a conflict between the Order dismissing the civil
case and the previous actions of the trial court.
The Courts Ruling
The Petition is devoid of merit.
First Issue:
Counsel of Record
Petitioners claim that when Atty. Joaquin Yuseco filed the Motion to Dismiss, he no
longer represented the respondents, as shown by Eduardos Manifestation and Motion
dated January 8, 1998, dispensing with said counsels services in the proceedings in
view of a Compromise Agreement with Petitioner Obando.
[17]

We disagree. Representation continues until the court dispenses with the services of
counsel in accordance with Section 26, Rule 138 of the Rules of Court.
[18]
Counsel may
be validly substituted only if the following requisites are complied with: (1) new
counsel files a written application for substitution; (2) the clients written consent is
obtained; and (3) the written consent of the lawyer to be substituted is secured, if it
can still be; if the written consent can no longer be obtained, then the application for
substitution must carry proof that notice of the motion has been served on the attorney
to be substituted in the manner required by the Rules.
[19]
4U11
In this case, we are convinced that Eduardo did not dismiss Attorney Yuseco. In fact,
the former manifested that he had been tricked by Petitioner Obando into signing the
aforesaid Manifestation and Motion and Compromise Agreement. Besides, the filing
of the Motion to Dismiss was not prejudicial but beneficial to the said respondent;
hence, he had no reason to complain. At the discretion of the court, an attorney who
has already been dismissed by the client is allowed to intervene in a case in order to
protect the clients rights. In the present case, had there been any irregularity, it should
have been raised by the respondents, not the petitioners.
Second Issue:
Timeliness of the Motion to Dismiss
The Rules provide that a motion to dismiss may be submitted only before the filing of
a responsive pleading.
[20]
Thus, petitioners complain that it was already too late for
Respondent Eduardo Figueras to file a Motion to Dismiss after Obando had finished
presenting his evidence.
This is not so. The period to file a motion to dismiss depends upon the circumstances
of the case. Section 1 of Rule 16 of the Rules of Court requires that, in general, a
motion to dismiss should be filed within the reglementary period for filing a
responsive pleading. Thus, a motion to dismiss alleging improper venue cannot be
entertained unless made within that period.
[21]
4L41=
However, even after an answer has been filed, the Court has allowed a defendant to
file a motion to dismiss on the following grounds: (1) lack of jurisdiction,
[22]
(2) litis
pendentia,
[23]
(3) lack of cause of action,
[24]
and (4) discovery during trial of evidence
that would constitute a ground for dismissal.
[25]
Except for lack of cause of action or
lack of jurisdiction, the grounds under Section 1 of Rule 16 may be waived. If a
particular ground for dismissal is not raised or if no motion to dismiss is filed at all
within the reglementary period, it is generally considered waived under Section 1,
Rule 9 of the Rules.
[26]
4U=14L
Applying this principle to the case at bar, the respondents did not waive their right to
move for the dismissal of the civil case based on Petitioner Obandos lack of legal
capacity. It must be pointed out that it was only after he had been convicted of estafa
through falsification that the probate court divested him of his representation of the
Figueras estates. It was only then that this ground became available to the
respondents. Hence, it could not be said that they waived it by raising it in a Motion to
Dismiss filed after their Answer was submitted. Verily, if the plaintiff loses his
capacity to sue during the pendency of the case, as in the present controversy, the
defendant should be allowed to file a motion to dismiss, even after the lapse of the
reglementary period for filing a responsive pleading.
Third Issue:
Removal from Administration
Petitioners aver that it was premature for the trial court to dismiss the civil case
because Obandos conviction for estafa through falsification was still on appeal.
We disagree. This argument has no bearing at all on the dismissal of the civil case.
Petitioner Obando derived his power to represent the estate of the deceased couple
from his appointment as co-administrator.
[27]
When the probate court removed him
from office, he lost that authority. Since he lacked the legal capacity to sue on behalf
of the Figueras estates, he could not continue prosecuting the civil case.
[28]
Thus the
trial court properly granted the Motion to Dismiss on this ground.
[29]
Whether a final
conviction for a crime involving moral turpitude is necessary to remove him from his
administration is not a proper issue in this Petition. He should raise the matter in his
appeal of the Decision removing him from administration of the Figueras
estates.4U=1
The fact that the conviction of Obando and his removal from administration are on
appeal only means that his legal standing could be restored; thus, the civil case was
correctly dismissed without prejudice. If his conviction is reversed and his
appointment restored by the probate court, the case may continue without being
barred by res judicata. The lower courts Decision showed that it was careful in its
action. On the other hand, Obando has yet to show that he has regained administration
of the Figueras estates. Noteworthy also is the fact that his removal from office was
predicated not only on his conviction for a crime, but also on his failure to render an
accounting of the rentals of a property leased to the Community of Learners.
Fourth Issue:
No Conflicting Rulings
Respondent Eduardo Figueras earlier Motion to Dismiss was denied in the trial
courts March 4, 1993 Order which reads:
"x x x [I]t is pertinent to note that the criminal case of Estafa through
Falsification of Public Document filed against [petitioner] and the
Petition to Remove him as co-administrator are still pending
determination. Thus, suffice it to state that while herein [petitioner]
remains as the co-administrator of the estates of the deceased Figueras
the Court will continue to recognize his right to institute the instant case
in his capacity as judicial administrator, unless he be removed as such by
the probate Court pursuant to Rule 82 of the Revised Rules of Court."
[30]

Thus, petitioners allege that the trial court whimsically and capriciously departed from
its previous rulings when, in its Resolution dated February 11, 1993, it granted
Eduardos later Motion to Dismiss.
[31]

We cannot see any conflict between these trial court rulings. Obviously, they were
based on different grounds. The first Motion to Dismiss was denied because, at the
time, Petitioner Obando still had legal capacity to sue as co-administrator of the
Figueras estates. On the other hand, the second Motion was granted because the
probate court had already removed him from his office as co-administrator. The
change in his legal capacity accounts for the difference in the adjudication of the trial
court. We see no reversible error in the appellate courts affirmance of the trial court.
WHEREFORE, the Petition is hereby DENIED and the assailed
Resolution AFFIRMED. Costs against petitioners.
SO ORDERED.2/29/00 10:57 AM
Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-5480 March 21, 1910
RICARDO LOPEZ, ET AL., plaintiffs-appellants,
vs.
ADOLFO OLBES, executor of the estate of Martina Lopez, defendant-appellee.
C. M. Villareal, for appellants.
Manly & McMahon, for appellees.
TORRES, J .:
On October 13, 1908, Ricardo Lopez, in his own behalf Josefina Lopez y Jaucian and her husband,
Ceferino M. Villareal, and Encarnacion, Jose, and Amparo Lopez y Jaucian brought suit against Adolfo
Olbes, the testamentary executor of the deceased Martina Lopez, alleging in their complaint that the
latter, on the 14th of May, 1907, executed a public instrument before the notary Felix Samson whereby
she donated to the plaintiffs a parcel of hemp land situated at the place called Ali, in the pueblo of
Guinobatan, Albay, containing an area of 162 hectares, 2 areas, and 50 centares, the boundaries of
which are expressed in the said instrument; that this property was inscribed in the registry of property of
Albay in the name of the deceased Antonio Lopez, the predecessor in interest of the said Martina Lopez,
also deceased; that, by virtue of the said donation, Ricardo Lopez was entitled to the usufruct of the real
property concerned, and that the other plaintiffs, Josefina, Encarnacion, Jose, and Amparo, all surnamed
Lopez y Jaucian, were the equal owners thereof in fee simple; that on the same date, May 14, 1907, the
said donation was accepted by Ricardo Lopez on his own behalf and in representation of the minor
children above designated, and the donor, Martina Lopez, on the same date, was duly notified of the said
acceptance; that the said Martina Lopez was the legitimate mother of the plaintiff Ricardo Lopez, and the
other plaintiffs, Josefina, Encarnacion, Jose, and Amparo, the legitimate children of Ricardo Lopez, were
her ligitimate grandchildren; that Adolfo Olbes was the testamentary executor duly appointed by order
issued by the Court of First Instance, on April 22, 1908, in proceedings No. 918, entitled: In the matter of
the estate of the deceased Martina Lopez; that the said Olbes, as executor, claimed to have rights of
ownership and possession to the aforementioned land adverse to those then held by the plaintiffs,
inasmuch as the said estate still continued to belong to the deceased Martina Lopez and was then in
charge of a trustee by virtue of an agreement had between the attorneys of the executor and the plaintiff
Ricardo Lopez, on April 18, and of the order issued by the court on the same date in the aforesaid
probate proceedings; and the complaint concluded by asking that a guardian ad litem be appointed, who
should be the plaintiffs; that judgment be rendered in the latter's favor and against the defendant for the
ownership and possession of the said land, and that the trusteeship over the same be declared dissolved
and the trustee be ordered to render an accounting, and that the amounts or products which he might
have in his possession be adjudicated to the plaintiffs, with the costs against the defendant.
The defendant, having been summoned, filed a demurrer in writing, on November 23, 1908, alleging that
the facts set forth in the complaint did not constitute a right of action, inasmuch as the plaintiffs, as the
heirs or donees, could not maintain any suit against the testamentary executor to recover the title or
possession of the land so long as the court had not adjudicated the estate to them or until the time
allowed for paying the debts should have expired, unless they be give possession of the said land by the
executor.
Counsel for the plaintiffs, in answer to the demurrer, set forth that the terms of section 704 of the Code of
Civil Procedure do not comprise donees, but merely heirs or devisees, because, although in the first part
of the said section the worddonatario (donee) appears, the subsequent paragraphs contain only the
words heredero o' legatario (heir or devisee), it appearing to be evident that the Spanish translation of the
said section is not correct; the English text thereof is given wherein the word "donee" does not appear,
only the words "heir" and "devisee," which mean heredero and legatario; this is apparently confirmed by
the precedents of existing legislation, quoted by counsel, and therefore the prohibition contained in the
aforesaid section of the Code of Civil Procedure only refers to the heir or devisee, and in nowise to the
donee, whose title is derived from a donation inter vivos, the legal effects of which are those of a real
contract which is binding on the donor from the moment of its acceptance; that the donations which are to
become effective inter vivos are governed by the provisions concerning contracts and obligations (art.
621, Civil Code), and that the rule that the plaintiffs' right cannot be enforced in an ordinary action, but in
probate proceedings only, solely refers to the questions involving the status of heirs and their share in the
inheritance and not to that class of actions provided for in section 699 of the Code of Civil Procedure,
counsel citing decisions rendered in suits against testamentary executors or administrators, as the case
of Hijos de I. de la Rama vs. The Estate of Benedicto (5 Phil. Rep., 512), and that of Sunico vs.
Chuidian (9 Phil. Rep., 625); and for all the foregoing reasons the plaintiffs requested that the demurrer
interposed by the defendant be dismissed and that he be ordered to answer the complaint within the
period allowed by law.
The demurrer having been heard, the judge, on February 26, 1909, issued an order sustaining the said
demurrer and directing that the same, as an incidental proceeding, be attached to the record of the
probate proceedings of the deceased Martina Lopez.
By virtue of the petition presented by the plaintiffs asking for final judgment and the appointment of
Ricardo Lopez as guardian ad litem of the other plaintiff minors, the judge issued an order on March 6,
1909, amending the preceding one by admitting the demurrer authorizing the plaintiff to amend his
complaint, with the understanding that should be not file an amended complaint within the time allowed by
law the case would be dismissed, with the costs against the plaintiff; this order was attached to the record
of the said probate proceedings, and he appointed Ricardo Lopez guardian ad litem to represent the
minor plaintiffs in the litigation.
On March 9, 1909, the plaintiffs filed a written amended complaint, a reproduction of the previous one,
although this was done by Ricardo Lopez on his own behalf and in representation of his minor children,
also plaintiffs, as their guardian ad litem, and by Ceferino M. Villareal as the husband of the plaintiff
Josefina Lopez.
The defendant, being informed of the foregoing amended complaint, again demurred to the same on the
grounds that the facts therein alleged did not constitute a right of action, inasmuch as in the amended
complaint, which is a reproduction of the previous one, no new allegation was made that might supply the
deficiency of right of action on the part of the plaintiffs in their endeavor to obtain a reversal of the
judgment rendered, without employing legal remedies against the order of March 6; wherefore the
defendant prated the court to allow this new demurrer, to dismiss the amended complaint, and to adjudge
the plaintiffs to pay the costs.
The hearing on this demurrer having been had, the judge, by order of March 24, 1909, sustained the
same and dismissed the case with the costs against the plaintiffs, and provided that this question should
be determined in the hearing on the said probate proceedings.
In another document of the date of March 26, 1909, counsel for the plaintiffs stated to the court that the
latter desired to appeal from the said ruling to the Supreme Court, and prayed that final judgment be
rendered in the case in conformity with section 101 of the Code of Civil Procedure and the doctrine
established in the case of Serrano vs. Serrano (Phil. Rep., 142), in order that he might perfect and duly
submit his appeal; but court, by an order of the 27th of the same month, ruled that the case having been
dismissed, with the costs against the plaintiffs, in the ruling on the last demurrer of March 24, this decision
was final and appealable. From this ruling counsel for the plaintiffs appeal and stated in writing that the
latter also appealed from the rulings of February 26 and March 24, 1909, and announced their intention to
file the requisite bill of exceptions.
The court, by order of May 8, 1909, on the grounds therein set fourth and in view of plaintiffs' written
petition of March 26, rendered judgment against the plaintiffs and in favor of the defendant, and, finding
that the allegations made in the complaint were not sufficient to constitute an action, dismissed the
complaint with the costs against the plaintiffs, and ordered, moreover, that after the parties had been
notified of this judgment a copy thereof, as an integral part of the bill of exceptions submitted, be
forwarded to the Supreme Court.
This is question of maintaining the rights acquired by the plaintiffs by virtue of a donation of land situated
at the place called Ali, in the pueblo of Guinobatan, Albay, the boundaries of which are expressed in the
complaint, against the claims of the testamentary administrator of the property left by the late Martina
Lopez, who was the donor of the said land.
Although in paragraph No. 5 of the amended complaint the donees affirm that they took possession of the
land in question, it is certain that the executor, who claims to have rights as such to the possession of the
said land, succeeded in having the same placed in trust, inasmuch as one of the petitions of the plaintiffs
is to request that the trusteeship over the property be declared dissolved. The Civil Code provides as
follows:
ART. 618 A gift is an act of liberality by which a person disposes gratuitously of a thing in
favor of another, who accepts it.
ART. 624 All persons who can contract and dispose of their property may bestow gifts.
ART. 625 All persons who are not especially disqualified by law therefor may accept gifts.
ART. 620 Gifts which are to become effective upon the death of the donor partake of the
nature of provisions by last will and shall be governed by the laws established for
testamentary succession.
(These gifts are denominated in law mortis causa.)
ART. 621 Gifts which are to produce their effects inter vivos shall be governed by the general
provisions of contracts and obligations in all that is not determined in this title.
ART. 623 A gift is consummated upon the donor having knowledge of its acceptance by the
donee.
ART. 633 In order that a gift of real property may be valid it shall be made in a public
instrument, stating therein in detail the property bestowed as a gift and the amount of the
charges, which the donee must satisfy.
The acceptance may be made in the same instrument bestowing the gift or in a different one;
but it shall produce no effect if not made during the life of the donor.
If made in a different instrument the acceptance shall be communicated to the donor in an
authentic manner, and this proceeding shall be recorded in both instruments.
The action exercised by Ricardo Lopez in his own behalf and as guardian of his minor children, and by
Josefina Lopez, assisted by her husband Ceferino M. Villareal, in their character of donees, is based on
the rights which as such donees they had acquired by virtue of the donation inter vivos made by Martina
Lopez during her lifetime in favor of the plaintiffs by an instrument executed by the donor before a notary
on May 14, 1907, a donation expressly accepted on the same date by the donees and of which
acceptance the donor was also informed on the same date; wherefore, these requirements of the law
having been complied with, it is unquestionable that the dominion over the land donated was property
transmitted to the donees who in fact and by operation of the law acquired the ownership of the property,
as customarily occurs in all contracts of transfer of dominion.
The said action with its motive and grounds may be impugned for any reason based on the nullity or on
the irregular nature of the donation, tending to make it inefficacious or to reduce it; but these exceptions,
as well as those founded on some defect or vice, which affect the essential nature and formalities of the
act or contract or the main questions relative thereto, must be heard and argued in an ordinary action,
and must be decided in accordance with law by a final judgment, and not by a ruling on a demurrer which
ordinarily occurs in connection with an incidental motion concerning mere formalities of procedure and not
in a full trial or due process of law wherein the rights of the contestant have been examined, argued, and
proved.
Property of the testate estate of the deceased Martina Lopez is not here concerned. During her lifetime
she gave away the land mentioned, in the exercise of a right that pertained to her as owner thereof. By
virtue of the said donation the sole and true owners of the land donated are the plaintiffs, so long as the
said donation is not proven to be null, inefficacious, or irregular. All the questions which by reason of the
same are raised by the interested parties must be heard in a regular trial and decided by a final judgmet
absolutely independent of the probate proceedings concerning the estate of the deceased, who was the
previous owner of the land concerned; and therefore the complaint of the donees should not have been
dismissed, but the trial should have been proceeded with to final judgment. The prima facie donation inter
vivos and its acceptance by the donees having been proved by means of a public instrument, and the
donor having been duly notified of said acceptance, the contract is perfect and obligatory and its perfectly
in order to demand its fulfillment, unless an exception is proved which is based on some legal reason
opportunely alleged by the donor or her heirs.
So long as the donation in question has not been judicially proved and declared to be null, inefficacious,
or irregular, the land donated is of the absolute ownership of the donees and, consequently, does not
form a part of the property of the estate of the deceased Martina Lopez; wherefore the action instituted
demanding compliance with the contract, the delivery by the deforciant of the land donated, or that it be
prohibited to disturb the right of the donees, should not be considered as incidental to the probate
proceedings aforementioned.
The question as to whether the provisions of articles 634, 636, and 643 of the Civil Code were observed
or violated should be tried and decided in an ordinary action.
With respect to whether the donees inter vivos are or are not comprised within the provisions of section
704 of the Code of Civil Procedure, the English text of the said section, which, in case of disagreement
with the Spanish, is the one that must prevail and be observed, in accordance with Act. No. 63 of the
Philippine Commission, conclusively proves that an important mistake was made in the draft of the
Spanish text, by using the word donatario (donee), which is not expressed in the English text, the exact
translation of which into Spanish could not comprise the donee among the heirs and devisees, as was
improperly done; wherefore the demurrer should have been overruled, as it is based on an error so
notably unmaintainable under the general principles of law, and in particular taking into account the legal
provisions relative to the respective character, condition, and juridical conception of heir, devisee, and
donee.
For the foregoing reasons, we hold that the orders of February 26, March 6, 24, and 27, together with the
additional order of May 8, 1909, should be and are hereby revoked, and the case shall be returned to the
Court of First Instance in order that the defendant may answer the amended complaint within the regular
legal period and the trial may them be had in all its proceedings and in accordance with law. So ordered.
FIRST DIVISION
[G.R. No. 144881. October 16, 2003]
BETTY T. CHUA, JENNIFER T. CHUA-LOCSIN, BENISON T. CHUA, and
BALDWIN T. CHUA, petitioners, vs. ABSOLUTE MANAGEMENT
CORPORATION and COURT OF APPEALS, respondents.
D E C I S I O N
CARPIO, J .:
The Case
This is a petition for review on certiorari
[1]
to annul the Decision
[2]
dated 9
May 2000 of the Court of Appeals in CA-G.R. SP No. 57421, as well as the
Resolution dated 5 September 2000 denying the motion for
reconsideration. The Court of Appeals set aside the Order
[3]
dated 7 February
2000 issued by Branch 112 of the Regional Trial Court of Pasay City which
denied the petitioners Motion for the Examination of the Administratrix and
Others (Motion).
Antecedent Facts
The facts are not in dispute. As found by the Court of Appeals, the
essential antecedents are as follows:
Sometime in 1999, upon a petition for letters of administration filed by [herein
petitioners] Jennifer T. Chua-Locsin, Benison T. Chua, and Baldwin T. Chua with the
Regional Trial Court, Branch 112, Pasay City, presided by [Judge Manuel P.
Dumatol], xxx Betty T. Chua was appointed as administratrix of the intestate estate of
the deceased Jose L. Chua. Thereafter, she submitted to the trial court an inventory of
all the real and personal properties of the deceased.
One of the creditors of the deceased, [herein respondent] Absolute Management
Corporation, filed a claim on [sic] the estate in the amount of P63,699,437.74. As
administratrix, Betty T. Chua tentatively accepted said amount as correct, with a
statement that it shall be reduced or adjusted as additional evidences [sic] may
warrant.
In the interim, Absolute Management Corporation noticed that the deceaseds shares
of stocks with Ayala Sales Corporation and Ayala Construction Supply, Inc. were not
included in the inventory of assets. As a consequence, it filed a motion to require
Betty T. Chua to explain why she did not report these shares of stocks in the
inventory. Through a reply, Betty T. Chua alleged that these shares had already been
assigned and transferred to other parties prior to the death of her husband, Jose L.
Chua. She attached to her reply the deeds of assignment which allegedly constituted
proofs of transfer. Judge Dumatol accepted the explanation as meritorious.
Absolute Management Corporation, suspecting that the documents attached to Betty
T. Chuas reply were spurious and simulated, filed a motion for the examination of the
supposed transferees. xxx It premised its motion on Section 6, Rule 87, Revised Rules
of Court, infra, which states that when a person is suspected of having concealed,
embezzled, or conveyed away any of the properties of the deceased, a creditor may
file a complaint with the trial court and the trial court may cite the suspected person to
appear before it and be examined under oath on the matter of such complaint. Private
respondents opposed the motion on the ground that this provision bears no application
to the case. On February 7, 2000, Judge Dumatol issued the assailed order.
[4]

The Ruling of the Trial Court
The trial courts order denying Absolute Management Corporations
(Absolute) Motion reads:
This resolves the undated Motion for the Examination of the Administratrix and
Others, filed on January 11, 2000 by claimant Absolute Management Corporation, to
which petitioners, through counsel filed their opposition, and claimant Absolute
Management Corporation in turn filed its reply.
Finding no merit in the motion filed by claimant Absolute Management Corporation,
as it in effect seeks to engage in a fishing expedition for evidence to be used against
the administratrix and others whom it seeks to examine, it being the consensus of the
Court that the Rules of Procedure does [sic] not allow the fishing of evidence to use
[sic] against the adverse party, claimant Absolute Management Corporations motion
is hereby DENIED.
SO ORDERED.
[5]

Aggrieved, Absolute filed a petition for certiorari and mandamus with the
Court of Appeals.
The Ruling of the Court of Appeals
In its petition for certiorari and mandamus before the Court of Appeals,
Absolute claimed that the trial court committed grave abuse of discretion in
denying its Motion and in failing to act on its claim. Absolute alleged that the
trial court deprived it of the right to show that the documents presented by
petitioners were fictitious to the prejudice of Absolute.
During the hearing
[6]
conducted on 9 August 2000 before the members of
the Special Sixth Division of the Court of Appeals, counsel for Absolute
presented the following evidence to support its assertion that the transfers of
the shares were spurious:
1. Exhibit A
[7]
- Certification from the Office of the Clerk of Court of the
Regional Trial Court of Pasay City that Atty. Hilarion A.D. Maagad (the
notary public who notarized the questioned Secretarys Certificate
[8]
and
Deeds of Assignment of Shares of Stock
[9]
) is not listed in the Roll of
Notaries Public for the City of Pasay particularly for the period of 1993-
1994, 1994-1995, 1998-1999 and 1999-2000.
2. Exhibit B
[10]
Certification from the Clerk of Court of the Regional Trial
Court of Makati City that the questioned Secretarys Certificate
[11]
was not
included in the Notarial Report of Atty. Lope M. Velasco for the years
1998-1999.
3. Exhibits B-1, B-2, and B-3
[12]
Certification from the Clerk of Court
of the Regional Trial Court of Makati City that the questioned Deeds of
Assignment of Shares of Stock
[13]
were not included in the Notarial
Report of Atty. Lope M. Velasco for the years 1998-1999.
In setting aside the trial courts order, the Court of Appeals pointed out that
the presentation of the deeds of assignment executed by the decedent in
petitioners favor does not automatically negate the existence of
concealment. The appellate court stated that it is a common occurrence in
estate proceedings for heirs to execute simulated deeds of transfer which
conceal and place properties of the decedent beyond the reach of creditors.
The dispositive portion of the decision of the Court of Appeals reads:
WHEREFORE, the petition is GRANTED. The order dated February 7, 2000 of
respondent Judge Manuel P. Dumatol is hereby SET ASIDE. He is hereby
ORDERED to give due course to petitioners Motion for the Examination of the
Administratrix and Others and thereafter, to dispose of the claim accordingly.
SO ORDERED.
[14]

Hence, this petition.
Issue
Petitioners would like this Court to rule whether Section 6, Rule 87 of the
Rules of Court, which is the principal basis of Absolutes Motion, is mandatory
or merely directory on the trial court. This perspective misses the point. The
issue in this case is whether the Court of Appeals correctly ordered the trial
court to give due course to the Motion for Examination.
Petitioners also point out that the Court of Appeals should have dismissed
Absolutes petition because of these procedural infirmities:
1. Counsel for Absolute, not the proper officers of Absolute, filed the
Certification against Forum Shopping;
2. Absolute attached only a duplicate original copy of the challenged
order of the trial court to the petition submitted to the Court of Appeals;
and
3. No proper proof of service accompanied the petition submitted to the
Court of Appeals.
[15]

The Ruling of the Court
The petition has no merit.
Whether the Court of Appeals correctly ordered the Trial Court
to give due course to Absolutes Motion for Examination
Section 6, Rule 87 of the Rules of Court provides:
SEC. 6. Proceedings when property concealed, embezzled, or fraudulently conveyed.
If an executor or administrator, heir, legatee, creditor, or other individual
interested in the estate of the deceased, complains to the court having jurisdiction of
the estate that a person is suspected of having concealed, embezzled, or conveyed
away any of the money, goods, or chattels of the deceased, or that such person has in
his possession or has knowledge of any deed, conveyance, bond, contract, or other
writing which contains evidence of or tends to disclose the right, title, interest, or
claim of the deceased, the court may cite such suspected person to appear before it
and may examine him on oath on the matter of such complaint; and if the person so
cited refuses to appear, or to answer on such examination or such interrogatories as
are put to him, the court may punish him for contempt, and may commit him to prison
until he submits to the order of the court. The interrogatories put to any such person,
and his answers thereto, shall be in writing and shall be filed in the clerks office.
Section 6 of Rule 87 seeks to secure evidence from persons suspected of
having possession or knowledge of the properties left by a deceased person,
or of having concealed, embezzled or conveyed any of the properties of the
deceased.
[16]

The court which acquires jurisdiction over the properties of a deceased
person through the filing of the corresponding proceedings has supervision
and control over these properties. The trial court has the inherent duty to see
to it that the inventory of the administrator lists all the properties, rights and
credits which the law requires the administrator to include in his inventory. In
compliance with this duty, the court also has the inherent power to determine
what properties, rights and credits of the deceased the administrator should
include or exclude in the inventory. An heir or person interested in the
properties of a deceased may call the courts attention that certain properties,
rights or credits are left out from the inventory. In such a case, it is likewise the
courts duty to hear the observations of such party. The court has the power
to determine if such observations deserve attention and if such properties
belong prima facie to the estate.
[17]

However, in such proceedings the trial court has no authority to decide
whether the properties, real or personal, belong to the estate or to the persons
examined. If after such examination there is good reason to believe that the
person examined is keeping properties belonging to the estate, then the
administrator should file an ordinary action in court to recover the
same.
[18]
Inclusion of certain shares of stock by the administrator in the
inventory does not automatically deprive the assignees of their shares. They
have a right to be heard on the question of ownership, when that property is
properly presented to the court.
[19]

In the present case, some of the transferees of the shares of stock do not
appear to be heirs of the decedent. Neither do they appear to be parties to
the intestate proceedings.
[20]
Third persons to whom the decedents assets had
been conveyed may be cited to appear in court and examined under oath as
to how they came into possession of the decedents assets. In case of
fraudulent conveyances, a separate action is necessary to recover these
assets.
[21]

Taken in this light, there is no reason why the trial court should disallow
the examination of the alleged transferees of the shares of stocks. This is
only for purposes of eliciting information or securing evidence from persons
suspected of concealing or conveying some of the decedents properties to
the prejudice of creditors. Petitioners admission that these persons are the
decedents assignees does not automatically negate concealment of the
decedents assets on their part. The assignment might be simulated so as to
place the shares beyond the reach of creditors. In case the shares are
eventually included in the estate, this inventory is merely provisional and is not
determinative of the issue of ownership. A separate action is necessary for
determination of ownership and recovery of possession.
[22]

Whether the Petition submitted to the Court of Appeals suffered
from procedural infirmities which merit its dismissal
The petition filed before the Court of Appeals contained a certificate of
non-forum shopping executed by counsel and not by the authorized officer of
Absolute. However, the subsequent filing of an affidavit of non-forum shopping
signed by the corporate director cured this defect. In Maricalum Mining
Corp. v. National Labor Relations Commission,
[23]
the Court held that a
slight delay in the filing of an affidavit of non-forum shopping should not defeat
the action. A liberal interpretation of the rules is more in keeping with the
objective to secure a just, speedy and inexpensive disposition of every action
and proceeding. As held in Loyola v. Court of Appeals,
[24]
substantial
compliance is sufficient. While submission of the certificate of non-forum
shopping is mandatory, nonetheless we must not interpret the requirement too
literally to defeat the objective of preventing the undesirable practice of forum
shopping.
[25]
Technical rules of procedure should be used to promote, not
frustrate, justice. While the swift unclogging of court dockets is a laudable
objective, the granting of substantial justice is an even more urgent ideal.
[26]

Petitioners claim that the attachment of a mere duplicate original copy of
the assailed order violates the express mandate of Section 1, Rule 65, of the
1997 Rules of Civil Procedure. This rule states that the petition shall be
accompanied by a certified true copy of the judgment, order, or resolution
subject thereof. However, under Section 3, Rule 46 of the 1997 Rules of Civil
Procedure, as amended by Circular No. 39-98, either a certified true copy or
a duplicate original copy may be attached to the petition.
The affidavit of service executed by petitioners counsel stating that he
served a copy of the petition by registered mail to respondents with the
corresponding registry receipts constitutes sufficient proof of service.
[27]
This
complies with Section 13, Rule 13 of the 1997 Rules of Civil Procedure.
Lastly, petitioners quote Arcega and Miranda v. Pecson and Arcega
[28]
to
question the propriety of filing a petition for certiorari before the Court of
Appeals:
Without deciding whether the proceeding thus conducted complies with the provision
of Section 6 of Rule 88 [Section 6, Rule 87 under the 1997 Rules of Civil Procedure],
which says that the court may cite such suspected person to appear before it and may
examine him on oath on the matter of such complaint, and without deciding whether
the duty of the judge to make the examination is or not mandatory, we are satisfied
thatcertiorari is not an appropriate remedy under the aforecited rule. (Emphasis
supplied)
The facts in Arcega are not on all fours with the facts in the instant
case. In Arcega, the judge granted the examination but only with respect to
three of the several lots involved. In the present case, there was an absolute
refusal by the trial court to conduct an examination on the ground that it would
constitute a fishing expedition of evidence that could be used against the
administratrix. In Arcega, the trial court issued an order in favor of the person
suspected of having concealed properties of the estate and against the
special administratrix and the judicial receiver. The special administratrix had
the remedy of filing another case to recover such properties in the name of
thee state.
[29]

In the present case, Absolute as a creditor of the decedent filed the
petition after the trial court denied its Motion for examination. Absolute
questioned the ruling in favor of the administratrix and heirs of the
decedent. Although as a creditor, Absolute does have the remedy of filing
another case to recover such properties,
[30]
its Motion for examination was
intended merely to investigate and take testimony in preparation for an
independent action.
[31]
Aside from the administratrix and the heirs of the
decedent, Absolute also sought to examine the supposed assignees of the
decedents shares, who are third persons with respect to the probate
proceedings. The Motion was a preparatory move sanctioned by the Rules of
Court. The denial of Absolutes Motion was an interlocutory order not subject
to appeal. The order of denial may, however, be challenged before a superior
court through a petition for certiorari under Rule 65.
WHEREFORE, we DENY the petition for lack of merit. The Decision of
the Court of Appeals in CA-G.R. SP No. 57421 dated 9 May 2000 as well as
the Resolution dated 5 September 2000 denying the motion for
reconsideration is AFFIRMED.
SO ORDERED.
Davide, Jr., C.J. (Chairman), Vitug, and Azcuna, JJ., concur.
Ynares-Santiago, J., on leave.

SECOND DIVISION
[G. R. No. 156842. December 10, 2004]
SOTERO A. PUNONGBAYAN, petitioner, vs. DANILO G.
PUNONGBAYAN, respondent.
D E C I S I O N
PUNO, J .:
Assailed in this petition for review is the Decision dated August 9, 2002
[1]
of
the Court of Appeals (CA) in CA-G.R. SP No. 63002
[2]
which granted the
special civil action for certiorari andmandamus filed by herein respondent, as
well as its Resolution dated January 14, 2003
[3]
which denied petitioners
motion for reconsideration.
The antecedent facts are as follows:
On July 31, 1969, Escolastica Punongbayan-Paguio died intestate leaving
behind considerable properties in Misamis Oriental, Iligan City, and Bulacan.
She was survived by her husband, Miguel Paguio; brothers Nicolas (now
deceased) and SOTERO (herein petitioner), sisters Leonila and Leonora (both
now deceased), all surnamed Punongbayan; nephews DANILO (herein
respondent), Restituto, Perfecto, and Alfredo, and nieces Brigida, Lilia,
Marilou, Adeluisa, and Grace, who were the children of Escolasticas brother,
Perfecto Punongbayan, Sr., who predeceased her. Proceedings for the
settlement of her estate were initiated in the then Court of First Instance of
Misamis Oriental, docketed as Special Proceedings No. 1053.
[4]
Miguel Paguio
was appointed administrator and later, DANILO, as co-administrator to
represent the interests of the Punongbayan family.
On September 30, 1974, the above-mentioned heirs executed a
compromise agreement distributing among themselves the estate of the
decedent consisting of forty-one (41) parcels of land in Misamis Oriental,
Iligan City, and Bulacan. They likewise authorized the administrator to sell five
(5) parcels of land to pay the liabilities of the estate. The intestate court
approved the agreement on June 7, 1976. Intestate proceedings, however,
were left dormant from 1976 to 1993. On August 4, 1994, SOTERO, Leonila
and Leonora (both now deceased) moved for the immediate distribution of the
estate in accordance with the Compromise Agreement of 1974. They asked
that DANILO be ordered to deposit the proceeds from the sales of estate
properties with the Clerk of Court and to render an accounting of his
administration for the past twenty (20) years.
[5]

The intestate court granted the motion in an Order dated February 1, 1995
and directed DANILO to
1. Effect the immediate distribution of the Estate in accordance with the
Compromise Agreement dated September 30, 1974 approved by this Honorable Court
in its Order of June 7, 1976;
2. Deposit with the Clerk of Court the proceeds of the sale of whatever properties
[were] already sold; and
3. Render an accounting of his administration of the estate for the last twenty (20)
years or from the time he assumed as administrator up to the present, within sixty (60)
days from receipt of this Order.
DANILO assailed
[6]
the order in a special civil action for certiorari with the
CA
[7]
which, however, dismissed the same. We affirmed the dismissal in G. R.
No. 128928,
[8]
there being no reversible error on the part of the CA.
[9]
After the
decision became final and executory, the corresponding writ of execution was
issued by the intestate court on March 30, 1998. The writ was served upon
DANILOs wife but not upon DANILO himself as he was always absent from
his residence and place of work whenever the sheriff came to serve the writ. A
warrant of arrest was issued against him. DANILO filed an urgent motion to
recall the warrant which was denied. Consequently, he assailed the order in a
petition for certiorari before the CA, docketed as CA-G.R. SP No.
57754.
[10]
During the pendency of the petition, DANILO was arrested but was
later on released from custody by the CA upon his manifestation that he will
comply with the intestate courts writ of execution, copy of which was served
upon him in open court, and that he will attend the next hearing to submit the
certificates of placement of the proceeds from the sales of a substantial
portion of the estate under his administration. Respondent did not appear
during said hearing which prompted the CA to recall his release order and to
direct the National Bureau of Investigation to arrest him. On October 19, 2000,
the CA dismissed the petition for utter lack of merit, ruling that DANILOs clear
and contumacious refusal to obey the intestate courts writ of execution for
several years should no longer be countenanced.
[11]

Meanwhile, SOTERO moved for his appointment as co-administrator of
the estate in June 2000 on the grounds that DANILO failed to discharge his
duties as administrator, to render an accounting of his administration, and to
turn over P25,000,000.00 in proceeds from the sales of a substantial portion
of the estate, as required in the Order dated February 1, 1995. The motion
was granted and SOTERO took his oath as co-administrator of the estate on
August 30, 2000.
On September 1, 2000, DANILO filed a Motion to Order Sotero
Punongbayan to Render an Accounting
[12]
alleging that SOTERO appropriated
five (5) lots of the estate to the exclusion of the other heirs; that two (2) of the
five lots were illegally sold to third persons while two (2) others were illegally
transferred in his own name; and, that the fifth lot was leased to a third person
without turning over lease rentals to the estate. DANILO alleged that he
encountered difficulties in rendering an accounting of estate income and
properties because of the illegal sales and lease made by SOTERO. Hence,
DANILO alleged that SOTERO should be made to account first for the income
derived from such illegal transfers and lease before he (DANILO) could render
the full accounting required by the intestate court.
The motion was denied in an Order dated September 15, 2000
[13]
as well as
a subsequent motion for reconsideration thereof.
[14]
DANILO again filed a
special civil action for certiorari andmandamus with the CA to assail the
order.
[15]

On August 9, 2002, the CA rendered its decision, the dispositive portion of
which reads
WHEREFORE, there being grave abuse of discretion in the issuance of the Orders
dated September 15, 2000 and November 10, 2000, this petition is GRANTED and
said Orders are hereby NULLIFIED and SET ASIDE and in lieu thereof, an Order is
hereby issued ordering private respondent Sotero Punongbayan to render an
accounting of all the properties and monies belonging to the estate that came into his
possession and to deposit with the probate (sic) court the proceeds of the sale of the
estate properties.
SO ORDERED.
[16]

SOTEROs motion for reconsideration was denied.
[17]
Hence, this petition for
review.
Respondent raised certain procedural infirmities in his comment which
allegedly warrant the outright dismissal of the petition.
[18]
We find no merit in
them,
[19]
hence, proceed to resolve this petition on the merits.
Two substantial issues confront us: First, whether the intestate courts
Order dated September 15, 2000 was a final order which should have been
appealed by respondent, or an interlocutory one which was properly assailed
in a petition for certiorari with the CA on the ground of grave abuse of
discretion. Second, whether the CA erred in granting the writ of certiorari.
A court order is final in character if it puts an end to the particular matter
resolved, or settles definitely the matter therein disposed of, such that no
further questions can come before the court except the execution of the
order.
[20]
On the other hand, a court order is merely interlocutory if it is
provisional and leaves substantial proceeding to be had in connection with its
subject.
[21]

In the instant case, the Order dated September 15, 2000, which denied
respondents motion for petitioner to render an accounting was an
interlocutory order. The motion was filed under Section 8, Rule 85 of the
Rules of Court, which provides
Every executor or administrator shall render an account of his administration within
one (1) year from the time of receiving letters testamentary or of administration,
unless the court otherwise directs because of extensions of time for presenting claims
against, or paying the debts of, the estate, or of disposing of the estate; and he shall
render such further accounts as the court may require until the estate is wholly settled.
and Sec. 7, Rule 87, of the same Rules, which provides
The court, on complaint of an executor or administrator, may cite a person entrusted
by an executor or administrator with any part of the estate of the deceased to appear
before it, and may require such person to render a full account, on oath, of the money,
goods, chattels, bonds, accounts, or other papers belonging to such estate as came to
his possession in trust for such executor or administrator, and of his proceedings
thereon; and if a person so cited refuses to appear to render such account, the court
may punish him for contempt as having disobeyed a lawful order of the court.
Applying Sec. 8, Rule 85, the intestate court denied the motion on the
ground that it was premature considering that petitioner has been co-
administrator for only one (1) day at the time it was filed. With the denial,
petitioners accountability as co-administrator was in no way settled as it did
not preclude or forestall future accountings by him which, under said Sec. 8,
he is obliged to render within one (1) year from receiving letters of
administration, or as required by the court until the estate is settled. Neither
an accounting or an examination of petitioner under Section 7, Rule 87,
definitely settle the issue of his alleged illegal transfers and lease since a
proceeding under this section, like that under Sec. 6
[22]
of the same Rule, is
merely in the nature of fact-finding inquiries.
[23]
It is intended to elicit information
or evidence relative to estate properties. The Regional Trial Court (RTC) of
Cagayan de Oro City which has jurisdiction over the administration and
settlement of the estate has limited jurisdiction and is without authority to
resolve issues of ownership with finality especially when third persons are
involved.
[24]
Separate actions should be instituted by the administrator for the
purpose.
[25]
In fine, denial of respondents motion for petitioner to render an
accounting is an interlocutory order not subject to appeal but may be
challenged before a superior court through a petition for certiorari under Rule
65.
[26]

Be that as it may, we rule that the CA erred in granting the writ
of certiorari.
Certiorari under Rule 65 will lie only where a grave abuse of discretion or
an act without or in excess of jurisdiction is clearly shown.
[27]
The abuse of
discretion must be so patent and gross as to amount to an evasion of a
positive duty or a virtual refusal to perform a duty enjoined by law, or to act at
all in contemplation of law as where the power is exercised in an arbitrary and
despotic manner by reason of passion and hostility.
[28]

The intestate court correctly denied respondents motion for accounting. It
is obvious that the motion was just another ploy of the respondent to delay his
compliance with the courts Order dated February 1, 1995 directing him to
render an accounting of his administration of the estate and to turn over the
certificates of placement of the proceeds from the sales of estate properties
amounting to millions of pesos, which has long become final and executory
with its affirmance by the CA in CA-G.R. SP No. 41156
[29]
and finally by this
Court, in G.R. No. 128928.
[30]
Indeed, the ground resurrected by respondent in
the motion, that petitioner should be made to account first for the alleged
illegal transfers of estate properties made by him before he (respondent)
could render his own accounting, was already passed upon and rejected by
the CA in aforesaid CA-G.R. SP No. 41156, viz:
x x x [P]etitioners argument that the intestate court should first declare illegal sales of
estate properties made by Sotero Punongbayan and other heirs, is incorrect for two
reasons: (1) the petitioner has already initiated cases for the annulment of the said
sales x x x hence, the intestate court will be barred from entertaining and resolving the
same controversies by the principle of lis pendens, and (2) questions of title to
real property cannot be determined in testate or intestate proceedings.
[31]

The issue of petitioners alleged illegal transfers are, in fact, pending
before the RTC of Malolos, Bulacan where cases
[32]
for their annulment have
been filed by respondent. Respondent admits that they involve the very same
properties in respect to which the motion for accounting was filed.
[33]
Thus,
there is no more reason for respondent to further delay the accounting of his
administration of the estate for even the petition for certiorari which he filed to
question the warrant of arrest that had to be issued for his non-compliance
was dismissed by the CA in CA-G.R. SP No. 57754
[34]
wherein his clear and
contumacious refusal to obey court processes was condemned.
Clearly, respondent was not entitled to the writ of certiorari erroneously
issued by the CA. Certiorari, being an equitable remedy, will not issue where
the petitioner is in bad faith.
[35]

IN VIEW WHEREOF, the petition is GRANTED. The assailed Decision
dated August 9, 2002 of the Court of Appeals in CA-G.R. SP No. 63002, as
well as its Resolution dated January 14, 2003, are REVERSED and SET
ASIDE. The Order dated September 15, 2000 of the Regional Trial Court of
Cagayan de Oro City, Branch 19, in Special Proceedings No. 1053 is
REINSTATED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-2360 December 29, 1949
GAVINO ALDAMIZ, as administrator of the estate of the deceased Santiago Rementeria y
Aldamizcogeascoa,petitioner,
vs.
THE JUDGE OF THE COURT OF FIRST INSTANCE OF MINDORO, THE PROVINCIAL SHERIFF OF
MINDORO and JUAN L. LUNA, respondents.
Jose W. Diokno and Daniel Romualdez for petitioner.
Laurel, Sabido, Almario and Laurel and Juan L. Luna for respondents.

MORAN, C.J .:
This is a petition for certiorari filed by Gavino Aldamiz, administrator of the testate of the deceased
Santiago Rementeria y Aldamizcogeascoa, to set aside the order of the Court of First Instance of Mindoro
issued in the said testate estate proceedings, fixing the amount of fees for respondent Juan L. Luna, as
attorney for said administrator.
The facts material to the issues raised in the petition are as follows:
Santiago Rementeria y Aldamizcogeascoa, the decedent was a Spaniard and member of the commercial
partnership "Aldamiz y Rementeria." The other members were the brothers, Gavino and Jose, surnamed
Aldamiz. Santiago Rementeria died in Spain in 1937, and probate proceeding No. 705 was instituted in
the same year in the Court of First Instance of Mindoro by Gavino Aldamiz represented by Atty. Juan L.
Luna. Gavino Aldamiz was appointed administrator and as such was represented by respondent Atty.
Juan Luna up to January 21, 1947, when the order complained for was issued. In that order it is said that
"said attorney is the one who instituted this testate proceeding ten years ago and has from its incipiency
to the present stage of the proceedings actively intervened in the same."lawphi1.net
On January 15, 1947, After ten years from the date of his appointment, Gavino Aldamiz, as administrator,
through his attorney, Juan L. Luna, submitted his accounts for the years 1944, 1945 and 1946 and also a
project of partition with a view to closing the proceedings. On said date, the court approved the accounts
by refused to approve the project of partition unless all debts including attorney's fees be first paid. In the
project of partition, it was expressly stated that attorney's fees, debts and incidental expenses would be
proportionately paid by the beneficiaries after the closure of the testate proceedings, but the court refused
to sanction this clause of the project. It is for this reason that right then and there, Attorney Luna, to
comply with the wishes of the court, without previously preparing and filing a written petition to have his
professional fees fixed, and without previous notice to all the interested parties, submitted evidence of his
services and professional standing so that the court might fix the amount of his compensation and the
administrator may make payment thereof. This failure to file a written claim and to notify the interested
parties thereof was not due to bad faith or fraudulent purpose but to an honest belief on the part of the
respondent attorney that such requirements were not necessary under the circumstance.
In this connection, it must be stated, in justice to Attorney Luna, that during the ten years he served as
attorney for the administrator and during the 25 years as legal consultants to Santiago Rementeria,
Gavino Aldamiz and Jose Aldamiz individually and as commercial partnership under the firm name
"Aldamiz y Rementeria," he never took the trouble of charging them for his professional services, thus
showing disinterested and extreme liberality on his part due to friendship and other personal
considerations toward his clients. And it is to be observed further that even after ten years of active work
in the testate proceedings, when he wanted to close the same and it was then time for him to demand
payment for his services, he showed no interest in demanding preferring to leave the matter to the future
negotiation or understanding with the interested parties. And when the amount of his fees was fixed by
the court and Gavino Aldamiz asked him for a substantial reduction, he answered that it was not he who
had fixed the amount but the court, and advised his client to file a motion for reconsideration, with the
assurance that he would offer no objection to any reduction in amount and to any extension of the time for
paying what might be granted by the court. And again, when Gavino Aldamiz paid him P5,000 on
account, respondent attorney told him that he would be satisfied with any additional amount that Gavino
might later desire to pay him. Only subsequent occurrences which proved distasteful to the parties, led
them to take steps which culminated in the filing of the instant civil action.
At the time respondent's evidence was submitted to the court, the interested parties who were residing in
the Philippines were Gavino Aldamiz and his brother Jose Aldamiz. The others were then residing in
Spain. No written claim had ever been filed for respondent's fees, and the interested parties had not been
notified thereof nor of the hearing, not even Gavino Aldamiz who did not know when he was called to
testify that he would testify in connection with respondent's fees. The Court, after considering the whole
evidence presented, issued its order of January 21, 1947, awarding respondent Attorney Luna, in
payment of his professional services, an aggregate sum of P28,000 in the following manner:
1. For the institution, preparation of the pleadings in the voluminous probate case, allowance
of the will, project of partition and the final closing of this proceeding, P15,000;
2. For the registration of a parcel of land of seventy-eight hectares in favor of the testate,
P5,000;
3. For three naturalization cases at the rate of P1,000 each, P3,000; and
4. For services rendered in the deduction of inheritance tax from P28,000 to P433.40
P5,000.
The Court ordered payment of these amounts within thirty days. Petitioner Gavino Aldamiz received copy
of this order on February 21,1948. Out of the total amount of P28,000, petitioner was able to pay P5,000
only, and upon his failure to pay the balance of P23,000 after several demands made upon him by
respondent attorney, the latter on April 17, 1948, filed an ex-parte motion for execution which was granted
by the respondent Court on April 19,1948. Pursuant to the order of execution on two parcels of land
belonging, not to the testate estate of Santiago Rementeria y Aldamizcogeascoa, but to the commercial
partnership "Aldamiz y Rementeria" with a total area of three hundred fifty seven(357) hectares, more or
less, assessed at one hundred eighty-two thousand, three hundred and sixty pesos (P182,360), which
was sold at a public auction on July 20,1948, in favor of respondent attorney for only twenty thousand
pesos(P20,000). This sale was made after preliminary injunction had been issued by this court in the
instant case.
We believe and so hold that the order of the respondent court issued on January 21,1948, fixing the
amount of respondent attorney's fees is null and void. The correct procedure for the collection of
attorney's fees, is for the counsel to request the administrator to make payment and file an actin against
him in his personal capacity and not as an administrator should he fail to pay (Palileo vs. Mendoza, G.R.
No. 47106, 40 Off. Gaz. [8th Supp.], 132.)
1
If the judgment is rendered against the administrator and he
pays, he may include the fees so paid in his account to the court. (Uy Tioco vs. Imperial, 53 Phil., 802.)
The attorney also may, instead of bringing such an action, file a [petition in the testate or intestate
proceeding "asking that the court, after notice to all persons interested, allow his claim and direct the
administrator to pay it as an expense of administration." (Emphasis ours.) (Escueta vs. Sy Juilliong, 5
Phil., 405.)
In the instance case, as above stated, no written petition for the payment of attorney's fees has ever been
filed by the respondent attorney and the interested parties had not been previously notified thereof nor of
the hearing held by the court. Consequently, the order issued by the respondent court on January 21,
1947, and all subsequent orders implementing it, are null and void, as having been issued an excess of
jurisdiction.
We also hold that the order of execution issued on April 19,1948, is null and void, not only because it was
intended to implement the order of January 21, 1947, which in itself was null and void, but because a writ
of execution is not the proper procedure allowed by the Rules of the Court for the payment of debts and
expenses of administration. The proper procedure is for the court to order the sale of personal estate or
the sale of mortgaged of real property of the deceased and all debts or expenses of administration should
be paid out of the proceeds of the sale or mortgage. The order for the sale or mortgage should be issued
upon motion of the administrator and with the written notice to all the heirs, legatees and devisees
residing in the Philippines, according to Rule 89, section 3, and Rule 90, section 2. And when sale or
mortgage of real estate is to be made, the regulations contained in Rule 90, section 7, should be
complied with.
Execution may issue only where the devisees, legatees or heirs have entered into possession of their
respective portions in the estate prior to settlement and payment of the debts and expenses of
administration and it is later ascertained that there are such debts and expenses to be paid, in which case
"the court having jurisdiction of the estate may, by order for that purpose, after hearing, settle the amount
of their several liabilities, and order how much and in what manner each person shall contribute, and
may issue execution if circumstances require" (Rule 89, section 6; see also Rule 74, section 4; Emphasis
ours). And this is not the instant case.
It is alleged by respondent that petitioner is guilty of laches. True that petitioner failed to appeal from the
order of January 21, 1947, within the time provided by the Rules and the instant petition for certiorari was
filed one (1) year, four (4) months and fourteen (14) days after petitioner had received a copy of said
order. And we have held in Prifeta vs. David, 40 Off. Gaz., 14th Supp., p. 152,
2
that orders issued without
previous notice to parties will be deemed cured if said parties fail to appeal within time provided by the
rules and their appeal is lost due to their own negligence. But here, aside from petitioner, there are
interested parties who have never been notified of the order complained of, and as to them, said order
has not become final and executory . And with respect to petitioner, he has not lost his appeal through his
own negligence. When he received the notice of the order of the Court fixing respondent's fees in the
amount of P28,000, he immediately wrote his lawyer a letter asking for a substantial reduction and
extension of time to pay. The lawyer answered advising him to file his motion for reconsideration within
thirty days, but he received his lawyer's letter after said period had expired. And petitioner had no other
attorney to advice him except respondent who was his adversary on the matter now in dispute. After
receiving said letter, he again sought equitable compromise with respondent attorney and later paid him
P5,000, and respondent then told him that he would be satisfied with whatever additional amount
petitioner might desire to pay him. And petitioner would perhaps have taken no action were it not because
without previous notice to him, the respondent attorney asked authority from the court to sell two parcels
of land totalling 13 hectares, for the payment of said professional fees and later, on July 26, 1947,
respondent attorney, again without previous notice to petitioner, filed a motion for execution for the same
purpose. Both motions were, however, abandoned. But a second motion for execution was filed by
respondent without petitioner's knowledge, which was granted by the Court on April 19, 1948.
Respondent Sheriff levied on two parcels of land belonging to the partnership "Aldamiz y Rementeria"
with a total area of 357 hectares and assessed at P182,360 and the sale was announced by the sheriff
for July 20, 1948. Two motions for consideration were filed by petitioner, one on June 16,1948, and the
other on June 28, 1948, asking that the order of January 21, 1947, and the order of execution of April
19,1948 be set aside, but both motions were denied and the last order of denial is dated July 1,1948. The
petition in the instant case was filed on July 17, 1948. We hold that under the circumstances, particularly
the fiduciary relation between petitioner and respondent attorney, the former is not guilty of laches.
Respondents maintain that the case for the petitioner is one of pure technicality, premised upon a
supposed failure of the respondent attorney to follow a supposed procedure. It is said that the amount of
P28,000 fixed and allowed by the respondent court as professional fees of the respondent attorney is not
unconscionable or unreasonable because the entire estate was worth P315,112 and now it is worth about
half a million pesos because of many improvements existing thereon. It appears, however, that due to
lack of notice upon the interested parties mistakes have been committed by but the court which could
have been avoided. For instance, the court awarded fees for services rendered not to the estate but to
the other persons, such as the supposed services in connection with the petitions for naturalization filed in
behalf of Gavino Aldamiz and Jose Aldamiz and the application for registration of a parcel of land of 78
hectares filed not in favor of the testate estate but of the partnership "Aldamiz y Rementeria." These
services evidently could not be charged against the estate of Santiago Rementeria. And furthermore, due
to lack of preparation on the part of respondent attorney, it appears that while he was testifying to his
professional services he was apparently not sure of being able to recite them all for at the end of his
testimony he said: "Son los servicios que me acuerdo ahora. . . ." Had he been afforded ample time to
recollect the nature and details of his long and continuos services, considering his high professional
standing as recited by the respondent court in its disputed order and the increased value of the estate
then, perhaps, a more reasonable compensation would have been fixed, or at least, the court could have
rendered a decision with full knowledge of all the facts and with justice to all the parties concerned.
For all the foregoing, the order of the respondent court of January 21,1947, and all the subsequent orders
implementing it, particularly the order of execution issued by the court on April 19, 1948, and the sale
made by the sheriff on July 20,1948, in favor of respondent attorney, are null and void and are hereby set
aside, with costs against respondents. It is so ordered.
EN BANC
[Adm. Case No. RTJ-01-1624. March 26, 2001]
REQUEST FOR ASSISTANCE RELATIVE TO SPECIAL PROCEEDINGS
NO. 28 PENDING AT REGIONAL TRIAL COURT OF
HIMAMAYLAN, NEGROS OCCIDENTAL, BRANCH 55, PRESIDED
BY JUDGE JOSE Y. AGUIRRE, JR.
D E C I S I O N
VITUG, J .:
In a verified letter-complaint, dated 09 May 1996, complainant Constancia Amar requested
assistance relative to Special Proceedings No. 28, entitled "Intestate Estate of Spouses Dioscoro
& Emperatriz Rubin," assigned to Judge Jose Y. Aguirre of the Regional Trial Court, Branch 55,
of Himamaylan, Negros Occidental.
Complainant states that she obtained a favorable decision for wage differentials in a labor
case (Case No. A-593-81, "Constancia Amar vs. Hda. Fanny and Dioscoro Rubin") before the
National Labor Relations Commission ("NLRC"). A writ of execution was issued by the NLRC
against the Estate of Spouses Rubin. In relation thereto, in Special Proceedings No. 28,
respondent judge issued an order, dated 16 November 1993, directing the judicial administrator
of the Estate of Spouses Rubin to settle Amar's claim.
On 27 April 1994, complainant filed a motion for the issuance of an order of contempt
against the judicial administrator, Feliciano Rubin, for not heeding the court order. Respondent
judge failed to resolve the motion for more than three years. Suspecting a possible collusion
between respondent judge and the judicial administrator, complainant sought the assistance of
the Office of the Court Administrator.
On 28 June 1996, a verified complaint was ultimately filed by Atty. Napoleon Corral,
counsel for complainant Amar in Special Proceedings No. 28, against respondent judge. In the
complaint, Atty. Corral, after reiterating the foregoing settings, added that he likewise filed a
motion to order the sheriff to sell personal property or sell or mortgage real property of the estate
in order to allow the settlement of Amar's claim but the motion also remained unresolved by
respondent judge. Atty. Corral claimed that the available property of the Estate of Spouses
Rubin could well satisfy Amar's claim.
In his comment, respondent judge admitted having issued his order of 16 November 1993
directing the judicial administrator to pay the judgment award of Constancia Amar. Explaining
that the estate had no immediate funds to pay Amar's claims, respondent judge said that he
authorized the judicial administrator to sell or mortgage real property of the estate in order to pay
its creditors but no third party was willing to transact with the judicial administrator as there
were three groups of heirs claiming ownership of the estate property. He denied any collusion
between him and the judicial administrator.
The case was referred to the Office of the Court Administrator ("OCA") for evaluation,
report and recommendation.
The Office of Deputy Court Administrator Zenaida Elepao, to whom the case was
assigned, required respondent judge to submit a status report on the motion to cite the judicial
administrator for contempt and the motion to order the sheriff to sell or mortgage so much of the
property of the estate to satisfy the claim of Constancia Amar. Respondent judge, in his letter of
13 April 1998, explained that the court could not direct the sheriff to sell the property of the
estate for being inconsistent with Section 3, Rule 88, of the Rules of Court. He failed to give an
account on the status of the motion for contempt. In a letter, dated 15 September 2000,
addressed to the Office of DCA Elepao, respondent judge reported that Special Proceedings No.
28 was still pending hearing due to repeated change of counsel made by both parties. As regards
his directive to the judicial administrator to pay the claim of Constancia Amar, he attached a
copy of his order of 23 August 1999 that read:
"This court has reached the limit of its patience over the gross disobedience of the
judicial administrator to the several lawful orders of this court directing him to pay the
claim of Constancia Amar, et al. in the amount of P205,125.00.
"In view of the utter disregard by the judicial administrator of the several orders of
this court commanding him to pay Constancia Amar, et al., the court hereby sets the
case for hearing on September 6, 1999 at 8:30 a.m. to receive evidence from the
judicial administrator why he should not be replaced as judicial administrator. Failure
on his part to appear will constrain this court to immediately replace him with a
person of suitable qualifications and competence.
"SO ORDERED."
Upon further inquiry, respondent judge admitted that as of 03 October 2000, he was still
unable to resolve the two motions subject of the instant complaint.
[1]

Then, in a letter dated 15 December 2000, respondent judge informed the OCA that
complainant Amar's claim for wage differentials against the estate had finally been satisfied; he
prayed that the instant administrative complaint be considered as having become moot and
academic.
The OCA, in its memorandum of 29 January 2001, came out with its evaluation, report and
recommendation; it said:
"It has repeatedly been held that delay in resolving motions and incidents pending
before a judge within the reglementary period of ninety (90) days fixed by the
Constitution and law is not excusable and constitutes gross inefficiency. The judge is
likewise guilty of violation of Rule 3.05, Canon 3 of the Code of Judicial Conduct
which mandates that a magistrate shall dispose of the court's business promptly and
decide cases within the required periods (Bonifacio I. Buintu vs. Judge Aunario L.
Lucero, 261 SCRA 1).
"Obviously, Judge Jose Y. Aguirre has been remiss in the performance of his duties
when he failed to act on Amar's Motion for Issuance of the Order of Contempt to the
Judicial Administrator despite the lapse of six (6) years and Motion to Order the Sale
of Personal Property or Sale or Mortgage of Real Property through the Sheriff for five
(5) years.
"The excuse proffered by Judge Aguirre that he didn't want to cite the judicial
administrator in contempt because the latter is sickly and he didn't want to be the
cause of the administrator's death is flimsy. Judge Aguirre is mandated by law to
resolve the motion within ninety (90) days and he must resolve it regardless of
consequences, real or imagined.
"Nonetheless, Judge Aguirre is correct when he said that Amar's motion to order the
sheriff to sell in public auction or to mortgage the properties of the estate is contrary
to law. The motion contravenes Section 3, Rule 88 of the Revised Rules of Court
which specifically provides that it is only the executor or administrator of the estate
whom the court may authorize to dispose of the properties of the estate so that the
proceeds of the sale or mortgage may be applied to its obligations. However, Judge
Aguirre still has the duty to resolve the motion within the 90-day reglementary
period. What he should have done was simply to deny the motion on the ground that
it is contrary to law.
"The non-compliance of the 90-day period for resolving motions renders the
respondent judge subject to administrative liability. The 90-day period is intended to
prevent delay in the administration of justice and non-compliance thereof constitutes a
serious violation of the constitutional right of the parties to speedy disposition of their
cases."
The OCA recommended that the case be formally docketed as an administrative case, and that
respondent be FINED in the amount of P2,000.00 for failure to resolve the two motions filed by
Constancia Amar within the reglementary period required therefor, with a WARNING that a
repetition of the same or similar act shall be dealt with more severely.
The Court basically agrees with, and thereby adopts, the recommendation of the OCA.
Canon 3, Rule 3.05, of the Code of Judicial Conduct requires that a judge shall dispose of
the court's business promptly and decide cases within the periods prescribed therefor. The Court
has consistently reminded judges to be conscious of that duty and to handle the cases before
them with dispatch. Procrastination not only can cause great injustice but also can invite
suspicion of ulterior motives on the part of the judge. When circumstances do arise that could
render them incapable of seasonably acting, all that a judge should do is to request from the
Court, and justify to it, an extension of time to resolve or decide the pending matter. The Court,
cognizant of the caseload of judges and mindful of the difficulty encountered by them in the
timely disposition of cases, would almost always grant the request.
[2]

The motion to cite the judicial administrator for contempt, filed on 4 May 1994, was never
resolved by respondent judge. The explanation that he could not grant the motion because the
judicial administrator was sickly certainly is no excuse. The motion to require the sheriff to sell
or mortgage the real properties of the estate was also not resolved by respondent judge, stating
that to grant the motion would be contrary to Section 3, Rule 88, of the Revised Rules of
Court. If respondent judge indeed felt so, then he should have forthwith issued an order denying
the motion instead of allowing the motion to remain unresolved.
The Court has consistently impressed upon members of the judiciary the need to resolve and
decide cases promptly and expeditiously under the time-honored precept that justice delayed is
justice denied. Every judge should act with dispatch and should be careful, punctual, and
observant in the performance of his office. Failure to decide a case within the reglementary
period constitutes a violation of this mandate warranting the imposition of administrative
sanction on the defaulting judge.
[3]

The fine of P2,000.00 recommended by OCA, lower than the usual amount imposed in cases
of this nature, appears to be appropriate considering that respondent judge appears to have
exerted efforts to have the claim of complainant Amar settled. Although late in coming, the
claim, nevertheless, was eventually satisfied.
WHEREFORE, for his failure to timely resolve the two pending incidents in Special
Proceedings No. 28, Judge Jose Y. Aguirre of the Regional Trial Court of Himamaylan, Negros
Occidental, Branch 55, is meted a FINE of P2,000.00 with stern warning that a repetition of the
same or similar act will be dealt with severely.
SO ORDERED.
Davide, Jr., C.J., Melo, Puno, Kapunan, Mendoza, Panganiban, Pardo, Buena, Gonzaga-
Reyes, Ynares-Santiago, De leon, Jr., and Sandoval-Gutierrez, JJ., concur.
Bellosillo J., no part due to closeness to one of parties.
Quisumbing J., on leave.

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 82135 August 20, 1990
BANCO FILIPINO SAVINGS AND MORTGAGE BANK (Represented by its liquidator, MS.
CARLOTA P. VALENZUELA), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, Labor Arbiter EVANGELINE LUBATON and
FORTUNATO DIZON, JR., respondents.
Sycip Salazar Hernandez & Gamaitan for petitioner.
Atienza, Tabora, Del Rosario & Castillo for private respondent.

MEDIALDEA, J .:
After BANCO FILIPINO SAVINGS AND MORTGAGE BANK was placed under receivership, and
later ordered liquidated by the Monetary Board of the Central Bank, FORTUNATO M. DIZON. Jr.,
who was then holding the position of Executive Vice President and Chief Operating Officer of the
bank, received a letter from the Central Bank appointed liquidator, MS. CARLOTA P. VALENZUELA,
informing him that all management authority in the bank had been assumed by the Central Bank
appointed liquidators and that his employment is being terminated.
Mr. Dizon filed with the liquidator a request for the payment to him of the cash equivalent of his
vacation and sick leave credits and unexpended/unused reimbursable allowance. His claims were
not paid by the liquidator upon counsel's advice that Dizon's claim should be treated as a claim of a
creditor and should therefore be processed pursuant to the liquidation plan as approved by the
Monetary Board. Subsequent demands for payment having been denied, Dizon filed on March 31,
1986 a complaint with the labor arbiter against the bank for recovery of unpaid salary, the cash
equivalent of his accumulated vacation and sick leaves, termination pay under Article 283 of the
Labor Code and moral damages and attorney's fees.
Representing the bank, the liquidator moved for the dismissal of the complaint refuting the legal and
factual bases thereof as well as the jurisdiction of the labor arbiter to entertain Dizon's money claims
because such pertains to the Regional Trial Court of Makati, Branch 146, acting as the liquidation
court.
On November 14, 1986, the labor arbiter upheld her jurisdiction and promulgated a decision in favor
of Dizon but withheld his demand for payment of moral damages and attorney's fees. Both parties
appealed to the National Labor Relations Commission which increased the award due Dizon and
further ordered payment of actual and moral damages and attorney's fees. The award of moral
damages was later deleted in the resolution of February 24, 1988 of the Commission.
In this petition, the liquidator assails the foregoing decisions and resolution and prays that they be
declared null and void on the following grounds: Firstly, she maintains that "[a]ll disputed claims
against banks under liquidation pertain to the exclusive jurisdiction of the liquidation court (pursuant
to section 29 of the Central Bank Act) and may not be adjudicated by the Labor Arbiters and the
NLRC under Article 217 of the Labor Code," and cites the case of Hernandez v. Rural Bank of
Lucena, Inc., No. L-29791, January 10, 1978, 81 SCRA 75. She argues that "[t]he general
provisions of Article 217 conferring upon respondents Labor Arbiter and the NLRC jurisdiction over
claims arising from an employment relationship cannot prevail over the explicit provisions of Section
29 of the Central Bank Act, which is a special law specifically vesting upon the liquidation court
jurisdiction over all claims against liquidated banks." Secondly, the liquidator points out that "[t]he
assailed decisions directing the payment of the claims outside of the liquidation process amount to
an undue preference in favor of a particular creditor." She submits that "the statutory status of
employees as preferred creditors with respect to 'wages due them for services rendered during the
period prior to the bankruptcy or liquidation' does not in itself entitle them to advance
payment outside of the liquidation proceedings and while said proceedings are in progress. The
provision [Art. 110, Labor Code] entitles them only to preferential treatment over other creditors in
the same liquidation proceedings to the proceeds of the assets of the employer after the distributable
assets shall have been determined therein," and cites the case of Republic v. Peralta, No. 56568,
May 20, 1987, 150 SCRA 37. She further argues that an action could not be maintained against an
insolvent bank after it had been ordered liquidated citing Central Bank v. Morfe No. L-38427, March
12, 1975, 63 SCRA 114 and Central Bank, v. Court of Appeals, No. L-37859, July 26, 1988,163
SCRA 482.
It is common knowledge that the taking over of the management and assets of Banco Filipino by the
Monetary Board of the Central Bank is being contested by some stockholders of the bank who insist
that the bank is solvent and in sound financial condition and that its closure was illegal. The
controversy has generated quite a number of cases in this Court and in one of them, G.R. No.
70054, entitled Banco Filipino Savings and Mortgage Bank v. The Monetary Board, et al., We
adopted a resolution, dated August 29, 1985, enjoining the Monetary Board, its officers, and the
Central Bank appointed receivers "from executing further acts of liquidation of a bank "save"acts
such as receiving collectibles and receivables or paying off creditors claims and other transactions
pertaining to normal operations of a bank," and later, further ordered that a hearing be conducted by
the Regional Trial Court of Makati, Branch 146 to afford the former management/stockholders of the
bank an opportunity to prove that the bank's closure was illegal. The temporary restraining order still
stands and it appears that a report and recommendation on the hearing has yet to be filed. For the
moment, therefore, the bank is not being liquidated and the possibility lurks that it might not be at all.
Respondent Dizon, cognizant of these, argues that it is the labor arbiter and the NLRC which has
jurisdiction over his money claims since there is no liquidation court to speak of.
We are of the opinion that it is the NLRC which has jurisdiction over Dizon's money claims. Section
29 of the Central Bank Act (Republic Act No. 265) before its amendment by Executive Order No. 289
(September, 1987,) reads, to wit:
Sec. 29. Proceedings upon insolvency. ... If the Monetary Board shall determine
and confirm within the said period that the bank or non-bank financial intermediary
performing quasi-banking functions is insolvent or cannot resume business with
safety to its depositors, creditors and the general public, it shall, if the public interest
requires, order its liquidation, indicate the manner of its liquidation and approve a
liquidation plan. The Central Bank shall, by the Solicitor General, file a petition in the
Court of First Instance reciting the proceedings which have been taken and praying
the assistance of the court in the liquidation of such institution. The court shall have
jurisdiction in the same proceedings to adjudicate disputed claims against the bank
or non-bank financial intermediary performing quasibanking function and enforce
individual liabilities of the stockholders. and do all that is necessary to preserve the
assets of such institution and to implement the liquidation plan approved by the
Monetary Board. ... The liquidator shall with all convenient speed, convert the assets
of the banking institution or non-bank financial intermediary performing quasi-banking
functions to money or sell, assign or otherwise dispose of the same to creditors and
other parties for the purpose of paying the debts of such institution and he may, in
the name of the bank or non-bank financial intermediary performing quasi-banking
functions, institute such actions as may be necessary in the appropriate court to
collect and recover accounts and assets of such institution. [Emphasis supplied]
There is nothing in Section 29 which suggests that the jurisdiction of the liquidation court to
adjudicate claims against the insolvent bank is exclusive. On the other hand, Article 217 of the Labor
Code explicitly provides that labor arbiters have original and exclusive jurisdiction, over money
claims of an employee against his employer, thus:
ART. 217. Jurisdiction of the Labor Arbiter and the Commission. (a) The Labor
Arbiter shall have the original and exclusive jurisdiction to hear and decide ... the
following cases involving all workers,...:
xxx xxx xxx
3. All money claims of workers, including those based on non-payment or
underpayment of wages, overtime compensation, separation pay and other benefits
provided by law or appropriate agreement, except claims for employee's
compensation, social security, medicare and maternity benefits. [Emphasis supplied]
We do not think that this jurisdiction would be lost simply because a former employer had been
placed under liquidation. The legislature deemed it wise to confer jurisdiction over labor disputes to a
body exclusively of others and We are not prepared to divest such authority from the labor arbiter
and the NLRC absent any clear provision of law to that effect.
The liquidator cites the case of Hernandez v. Rural Bank of Lucena, supra, where this Court,
commenting on the original section 29 as embodied in R.A. No. 265, held that:
The fact that the insolvent bank is forbidden to do business, that its assets are turned
over to the Superintendent of Banks, as a receiver, for conversion into cash, and that
its liquidation is undertaken with judicial intervention means that, as far as lawful and
practicable, all claims against the insolvent bank should be filed in the liquidation
proceeding.
The judicial liquidation is intended to prevent multiplicity of actions against the
insolvent bank. The lawmaking body contemplated that for convenience only one
court, if possible, should pass upon the claims against the insolvent bank and that
the liquidation court should assist the Superintendent or Banks and control his
operations.
In the course of the liquidation, contentious cases might arise wherein a full-dress
hearing would be required and legal issues would have to be resolved. Hence, it
would be necessary in justice to all concerned that a Court of First Instance should
assist and supervise the liquidation and should act as umpire and arbitrator in the
allowance and disallowance of claims.
The judicial liquidation is a pragmatic arrangement designed to establish due process
and orderliness in the liquidation of the bank to obviate the proliferation of litigations
and to avoid injustice and arbitrariness. (Hernandez v. Rural Bank of Lucena,
Inc. supra, pp. 87-88) [Emphasis supplied]
But it will be noted that even in the quoted opinion, consideration was given of the possibility or
practicality of certain claims being adjudicated by other tribunals besides the liquidation court. Thus,
in the later case of Carandang v. Court of Appeals, No. L-44932, April 15, 1988, 160 SCRA 266, We
upheld the jurisdiction of the then Court of First Instance of Laguna over that of the liquidation court,
the Court of First Instance of Manila, considering that the cause of action of therein plaintiff was
already fully litigated in the former court and to re-litigate would "mean more inconvenience to the
parties, entailing waste of money and precious time." In other words, it is not a legal aberration
that certain claims against an insolvent bank be litigated in another court where to do so would be
more practical; and more so in this case where it is not legally possible to litigate Dizon's claims
other than with the Labor Arbiter and the NLRC because of the express provision of the Labor Code.
Neither do We subscribe to the interpretation given by the bank in the case of Central Bank v. Morfe
supra, which purportedly prohibits the filing of cases against a bank after it has been declared
insolvent. That case simply ruled that judgments from suits filed after a bank has been declared
insolvent "cannot be considered preferred and that Article 2244 (14) (b) [of the Civil Code] does not
apply to judgments for the payment of the deposits in an insolvent savings bank which were
obtained after the declaration of insolvency." Moreover, as in the other cited case of Central Bank v.
Court of Appeals, supra, the case involves recovery of deposits.
Under normal circumstances the decision of the NLRC is immediately executory (See Article 223,
Labor Code). The bank's liquidator, however, resists immediate payment to Dizon of his adjudicated
money claims on the ground that it would amount to undue preference of credit. Dizon countered
that under Article 110 of the Labor Code unpaid wages of laborers are indeed preferred. Moreover,
Dizon reminded, this Court had temporarily enjoined the liquidation of the bank and, therefore, there
is no liquidation proceeding where his claims may be paid.
Article 110 of the Labor Code before its amendment by Republic Act No. 6715 (March 2, 1989)
reads as follows:
ART. 110. Worker Preference in case of Bankruptcy In the event of bankruptcy or
liquidation of an employer's business, his workers shall enjoy first preference as
regards wages due them for services rendered during the period prior to the
bankruptcy or liquidation, any provision of law to the contrary notwithstanding.
Unpaid wages shall be paid in full before other creditors may establish any claim to a
share in the assets of the employer.
In Republic v. Peralta, supra the majority of this Court was of the opinion that the above quoted
provision did not upgrade the worker's claim as absolutely preferred credit. There We explained that
the provision did not alter Articles 2241 and 2242 of the Civil Code so much so that creditors with
liens over a certain property are still given special preference over the proceeds of that property. And
it is only after these specially preferred credits are satisfied may the ordinary preferred credits
enumerated in Article 2244 of the Civil Code be paid according to their order of priority. The
significance of Article 110 in the scheme of concurrence and preference of credit is to raise the
worker's money claim into first priority under Article 2244. (See also Development Bank of the
Philippines v. NLRC, G.R. Nos. 82763-64, March 19, 1990).
Not being an absolutely preferred credit, as taxes are under Articles 2241 (1) and 2242 (1), Dizon's
claims cannot be paid ahead of other credits and outside of the liquidation proceeding because the
"free property" or the property left after the creditors mentioned in Articles 2241 and 2242 are paid
has not yet been determined (See Barreto v. Villanueva, No. L-14938, December 29, 1962, 6 SCRA
928). In the words of Lipana v. Development Bank of Rizal, No. '73884, September 24, 1987, 154
SCRA 257, 261, "to execute the judgment would unduly deplete the assets of respondent bank to
the obvious prejudice of other [depositors and] creditors."
Thus, Dizon's adjudicated claims should be submitted to the liquidators for processing. If, of course,
it is later determined that Banco Filipino's liquidation is improper then the NLRC'S decision may be
executed under normal procedure. If the contrary is proven, however, and the bank's liquidation
should proceed, Dizon's established claims should be treated as an ordinary preferred credit
enjoying first preference under Art. 2244 of the Civil Code.
In its petition, the bank did not raise any argument against the merit of Dizon's money claims. Thus,
the comments of the public and private respondents thereto were directed on what was so far
discussed. It would seem unfair, therefore, that the bank would subsequently assail the merits of the
award in its memorandum leaving the respondents off-guard. In any event, We do not find the bank's
foray on Dizon's money claims meritorious.
The bank argues that Dizon is not entitled to separation pay citing Article 283 of the Labor Code
which reads to wit:
... In case of retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business loses or
financial reverses, the separation pay shall be equivalent to one (1) month pay or at
least one-half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1) whole year.
It is the banks interpretation of the law that when an institution is closed due to serious business
losses or financial reverses its workers are not entitled to separation pay. We disagree. We instead
quote with approval the opinion of respondent Labor Arbiter, thus:
Article 283 (Art. 282) of the Labor Code enumerated the just causes for an employer
to terminate an employee. If an employee is dismissed for just cause, he is not
entitled to termination pay. However, in Article 284 (Art. 283), in case of closure of
establishment, the employee is always given termination pay. The reason for the
closure is taken into consideration only to determine whether to give one month or
one-half month pay for every year of service. This provision is based on social justice
and equity... (p. 41, Rollo)
Such was Our ruling in International Hardware, Inc. v. NLRC, G.R. No. 80770, August 10, 1989. As
regards the commutation to cash of Dizon's accumulated vacation and sick leaves, both the Labor Arbiter
and the NLRC found that this was authorized by the Collective Bargaining Agreement then existing before
the bank's closure and which CBA the liquidators manifested to honor. This is a factual issue which We
are not inclined to disturb. Also, since Dizon was forced to litigate, he is entitled to attorney's fees.
ACCORDINGLY, the decision under review is AFFIRMED save that the money due the private
respondent should be presented to the liquidators for processing.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-16584 November 17, 1921
EUSEBIO A. GODOY, plaintiff-appellee,
vs.
GUILLERMO ORELLANO, ET AL., defendants.
FELISA PAGILINAN, PAZ ORELLANO assisted by her husband FRANCISCO MARTINEZ, JOSE
ORELLANO, and DEMETRIO ORELLANO, defendants-appellants.
Francisco Sevilla for appellant Pagilinan.
No appearance for the other appellants.
Teofilo Mendoza for appellee.

VILLAMOR, J .:
On January 13, 1919, in consideration of the amount of P1,000 received by the appellant, Felisa
Pagilinan, a document was executed by her giving the appellee, Eusebio A. Godoy, an option to buy a
dredge for the sum of P10,000. It appears from that document that the dredge is the common property of
the vendor and of the brothers Demetrio, Jose, Guillermo, Alfredo, and Paz, all surnamed Orellano; that
the condition was that Godoy was to pay the whole price of the dredge within twenty days; and that said
option was granted in accordance with the power of attorney executed by her coowners who reserved the
right to ratify whatever sale might be made, or option granted by Pagilinan, their attorney-in-fact. The
latter's coowners did not ratify the option contract. Before the expiration of twenty days, the appelle was
ready to make complete payment of the price, but the appellant failed to deliver the dredge. Then the
appellee brought suit in the Court of First Instance against Feliza Pagilinan, Paz Orellano, Jose
Orellano, Demetrio Orellano, Guillermo Orellano, and Alfredo Orellano, praying that they be ordered to
deliver the dredge, upon payment by him of the sum of P9,000; to pay him the sum of P10,000 as
damages, and to return to the plaintiff the sum of P1,000 should the carrying out of the sale become
impossible.
The defendants Orellano set up in their answer a general denial of the facts alleged in the
complaint and, as a special defense, alleged that the dredge in question was the property of the intestate
estate of Julio Orellano, pending in the Court of First Instance of Manila, and under the administration of
Felisa Pangilinan; that the plaintiff perfectly knows that said dredge is under judicial control and could not
be disposed of without judicial authority, and that the court has never authorized the sale mentioned in
the complaint filed herein; and that the defendants Jose, Guillermo, and Alfredo surnamed Orellano are at
present under age, and the defendant Paz Orellano is a married woman who had not obtained the
consent of her husband before executing the power of attorney in favor of the administratrix.
The defendant Felisa Pagilinan filed a separate answer, and a defense alleges: (a) That the
dredge which was the subject-matter of the option is property of the intestate estate of Julio Orellano, of
which she is the administratrix; (b) that the plaintiff, as well as the defendants, and the notary who
prepared the aforesaid option sale, were all aware of these facts, and they led her to believe that she had
the authority to dispose of the dredge in her name and by themselves; (c) that believing herself to be
under obligation to comply with the aforesaid option deed, she applied to the court of probate for
permission to sell the dredge in the sum of P10,000; (d) that on the day of the hearing of the motion, her
codefendants who had themselves authorized her by means of a power of attorney, opposed the motion
through their attorneys, Francisco and Lualhati, on the ground that there were higher bidders and the best
thing to do was to sell it at public auction; (e) that in view of this opposition, the administratrix asked the
court that it be sold at public auction, and the court authorized said defendant to sell it at public auction,
advertising the sale in newspapers of general circulation, and the aforesaid dredge was sold for P10,000,
accordingly; ( f ) that the defendant did not at any time refuse to make delivery of the dredge to the
plaintiff, but that it was the court that would not give her the authority to do so; and (g) that she is all times
ready to return the P1,000 received from the plaintiff and that she has tendered it several times, but that
the plaintiff refused to accept it.
The judge a quo rendered judgment, ordering the defendants to pay Eusebio A. Godoy the sum of
P2,000 with legal interest thereon from February 13, 1919, and the cost and dismissing the complaint as
against the defendants Guillermo Orellano and Alfredo Orellano.
From this judgment the defendants have appealed to this court by bill of exceptions.
By a resolution of this court of September 14, 1920, the appeal of the defendants Paz Orellano,
Jose Orellano and Demetrio Orellano was declared abandoned for failure to file their brief within the
period prescribed by the rules of the court. Wherefore, this decision concerns only the appeal taken by
Felisa Pagilinan.lawphil.net
It appears from the evidence that the dredge in question belongs to the intestate estate of Julio
Orellano, father of the defendants, which was pending in the Court of First Instance of Manila, of which
the judicial administratrix is the defendant herein, Felisa Pagilinan; that when this defendant contracted
with the plaintiff Godoy the sale of the aforesaid dredge, she had no authority of the court; and that the
plaintiff knew that the dredge, which was the subject-matter of that contract, belonged to the intestate
estate of Julio Orellano, under the control of the court.
In the sale of the property of an intestate estate for the benefit of the heirs, it is necessary to comply
with the provisions of sections 717, 718, and 722 of the Code of Civil Procedure. The said sections
prescribed the proceedings to be had before an administrator of an intestate or testate estate may sell
personal or real property and also the conditions under which the personal or real property pertaining to
an estate may be sold or disposed of by the administrator. Unless compliance is had with the provisions
of these sections, the sale of the aforesaid dredge by the administratrix, or her promise to sell it is null
and void.
A sale and conveyance by executors without an order of the probate court, under a will
devising property to them in trust, but not authorizing any sale of the realty, otherwise than
by a direction to pay the debts of the testator, is void, and passes no title to the purchase.
(Huse vs. Den, 85 Cal., 390.)
A sale by an administrator of the personal property of the estate, without the authority
of an order of court, or of a will, or under an order of court which is void for want of
jurisdiction, does not confer on the purchaser a title which is available against a succeeding
administrator. (Wyatt's Adm'r vs. Rambo, 29 Ala., 510.)
Under the law, the court has exclusive jurisdiction to authorize the sale of properties like the one
under consideration and the power of attorney executed by the heirs of Orellano in favor of the
administratrix, without authority of court, has no legal effect, and this is the more so, since two of the said
heirs are under age, and the others did not ratify the option contract, as provided in the aforesaid power
of attorney.
It is not necessary to dwell longer upon this point, as the appellee himself admits in his brief "that
the dredge in question being a part of the intestate estate of Julio Orellano, it cannot be disposed of by
any person without the proper authority of the court, in accordance with the existing laws."l awphil. net
In view of the foregoing, we are of the opinion, and so hold, that the appellant was not, in her
capacity as judicial administratrix of the intestate estate of Julio Orellano, legally authorized to sell, or
contract to sell, any property belonging to said estate without the authority of the court, and the contract
entered into by her with the plaintiff, without this authority, is null and void.
The judgment appealed from is reversed and the complaint against the appellant Felisa Pagilinan
is hereby dismissed, without special finding as to costs. So ordered.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 18034 September 2, 1922
SINFORO BUENAVENTURA, as administrator of the estate of Juan Buenaventura, deceased and
TIMOTEO DEL ROSARIO, petitioners-appellees,
vs.
TOMAS B. RAMOS, ET AL., defendants-appellants.
Vicente Platon for appellants.
Francisco, Lualhati and Del Rosario and Victoriano Yamzon for appellees.
JOHNSON, J .:
It appears from the record that on the 4th day of January, 1921 the said Sinforoso Buenaventura,
administrator, presented a petition in the Court of First Instance of the Province of Bulacan, asking
permission to sell a certain fishery belonging to the estate of Juan Buenaventura, deceased. The petition
for permission to sell said fishery alleged that it was in bad condition; that the estate was unable to make
the necessary repairs; that he heir of the estate were poor and without adequate and necessary funds;
that the heirs were numerous and that in order to make the necessary repairs in said fishery, it was
necessary to sell and to divide the proceeds among the heirs.
On the 5th day of February, 1921, the heirs of the estate of Juan Buenaventura presented an opposition
to the said motion of the administrator. On the 7th day, February, 1921, the court denied said petition for
the reason following: First, that the commissioners appointed to make an inventory of the estate of Juan
Buenaventura had not rendered a report; second, because there was then pending an action favor of the
estate and against the tenant of said fishery by the name of Santos Chua Hong; third, that without an
inventory showing the value of the estate, the court was unable to fix the value of said fishery; and fourth,
that if the action against said Santos Chua Hong resulted favorably to the estate, its administrator might
find sufficient funds to make the necessary repairs in said fishery. On the 21st day of February, 1921, the
administrator renewed his petition for authority to sell said fishery. On the 24th day of February, 1921, the
heirs again presented further opposition to granting said petition.
Notwithstanding the strong opposition presented by the heirs to the said petition of the administrator the
Honorable Bartolome Revilla, judge, granted said petition on the 2d day March, 1921, and authorized said
administrator to offer the fishery in question for sale, with the understanding that the sale should not be
consummated until the report of the offers received by him should be made to, and confirmed by the
court. On the 14th day of March, 1921, the defendants excepted to the order, authorizing the sale of the
fishery, upon the ground that said order was illegal and contrary to the provisions of section 714, 716,
717, and 718 of Act No. 190, and for the further reason that all of the heirs of the estate of Juan
Buenaventura were opposed to said sale, except the administrator, and for the further reason that the
reason given for the sale of the fishery were not sufficient in law to justify the said order of the court.
On the 15 of March, 1921, the administrator reported to the court that he had received two offers to buy
said fishery; the first for the sum of P10,500 and the second for the sum of P11,000. The first was
received from Dr. Juan Nolasco and the second from the said Timoteo del Rosario. The administrator
recommended that the offer to purchase said fishery of the said Timoteo del Rosario be accepted. On the
21st day of March, 1921, the defendants presented their opposition to the confirmation of the sale as
requested by the administrator, presenting many reasons in support of their opposition.
Notwithstanding the strong opposition presented by the heirs and defendants, the Honorable Batolome
Revilla on the 30th of March, 1921, authorized the sale and directed that the same be sold to the said
Timoteo del Rosario. To that order of the court an exception was duly made and a motion for
reconsideration was presented, which was denied by the lower court on the 8th day of April, 1921. An
appeal was duly taken.
The record was received in the Supreme Court on the 12th day of September, 1921. On the 15th day of
November 1921, the appellees presented a motion for asking that the appeal be dismissed for the reason
that if had not been perfected in accordance with the provision of the law. That motion was denied on the
8th day of December, 1921. Thereafter, and after several motion for an extension of time within which to
present their briefs, which were granted, the appellees again on 22d day of May, 1922, presented another
motion to dismiss the appeal. Said motion was based upon the ground that the appellants had not
presented their appeal bond until after fifteen days from the date on which the judge had fixed the amount
of the same, whereas the law and rules provide that the bond should have been presented within five
days from the date the amount was fixed by the trial court. The fact that the bond was not presented
within fifteen days from the date the judge fixed the amount of the same, is a fact which existed at the
time the appellees presented their first motion to dismiss in this court. The date of the order fixing the
amount of the bond, and the time of the presentation of the bond were matters of records in the lower
court. Had the fact, the bond was not presented on time, been called to the attention of the court in the
first motion having been presented at that time while the facts upon which it is based did exist at the time
the first motion was presented, it must now be denied, for the reason that we have decided in cases
without number that a second motion to dismiss the appeal upon grounds existing at the time the first
motion was presented should never be granted, unless at the time of the denying of the first motion,
permission was obtained to present a second. Appellants should not be annoyed nor delayed by
subsequent motions based upon grounds existing at the time of previous motion, made for the same
purpose. (Lucido and Lucido vs. Vita, 20 Phil., 449; King vs. Pony Gold Mining Co., 24 Montana, 470;
Hellings vs. Duvall, 131 Cal., 618; Bingham vs. Brumback, 24 Ill. App., 332; Ferguson vs. Bruckman, 164
N.Y., 481; Pettit vs. Hamlyn, 42 Wis., 434.)
The ground upon which the second motion is based necessarily existed at the time of the presentation of
the first motion to dismiss the appeal in the present case. That being true, the same is hereby denied.
Passing, to a consideration of the errors assigned by the appellants, it will be noted that in their first
assignment of error they allege that he lower court committed an error in authorizing the sale of the
fishery in question, in opposition to the wishes of the heirs, and that said order of sale was illegal and
unjustified. In support of that assignment of error the appellants cite the facts of the petition for authority
to sell and section 714 to 722 of Act No. 190. By reference to the petition for authority to sell the fishery in
question, it will be noted that the only reasons given are: First, that the fishery is in bad condition, second,
that the estate is without funds to make the necessary repairs; third, that in order to make the neccessay
repairs it will require a considerable sum of money; fourth, that the heirs are poor people and without
adequate funds to maintain their respective families; fifth, that the heirs are numerous; sixth, that the sale
was necessary in order to make a partition of interests of the estate among the heirs; and seventh, that
the partition is necessary for the convenience of the heirs. It will be noted that the petition contains no
allegation that there were any unpaid debts existing against he estate of Juan Buenaventura. The
defendants allege, and the fact is not denied, that an action was Santos Chua Hong for a considerable
sum of money, which sum, when recovered, might be sufficient to make the necessary repairs in the said
fishery.
Section 714 to 722 of Act No. 190 provide when an executor or administrator of the estate of a deceased
person may sell the property of the estate, both real and personal. Section 714, provides, among other
things, that when the personal estate of the deceased is not sufficient to pay the debts and charges of
administration without injuring the business of those interested, and when the testator has not otherwise
made sufficient provision for the payment of debts and charges against the estate, the court, on
application of the executor or administrator, with the consent and approbation, in writing, of the heirs,
devisees, and legatees, residing in the Philippine Islands, may grant a license to sell, for that purpose, in
lieu of personal estate, if it clearly appears that such sale of real estate would be beneficial to the person
interested, and will not defeat any devise of land, in which case the assent of the devisee shall be
required.
Section 715 provides that when an application is made for license to sell real estate for payment of debts
or charges of administration in accordance with the provisions of section 714, and it appears that a part
cannot be sold without injury to those interested, the court may grant license to sell the whole of said
estate, or such part as is necessary or beneficial to those concerned.
Section 716 provides no license to sell real estate shall be granted, if any of the person interested in the
estate give a bond in conformity with an order of the court, conditioned to pay the debts and expenses of
administration, within such time as the court may direct.
Section 718 provides that when it appears to the court that it will beneficial to the heirs and those
interested in the estate of deceased person, by reason of their residing out of the Island or otherwise, that
a part of the whole of the personal estate, or a part or the whole of the real estate or both, should be sold,
the court may, upon the application of the administrator or executor, with the consent and approbation, in
writing, of the heirs who are interested in the estate to be sold, grant license to sell the whole or a part of
the estate, although not necessary to pay debts, etc. There are other provision of section 718 which do
not relate to the question presented here. Section 722 contains the regulations for license to sell real and
personal estate of deceased persons.
It will be noted, from the sections above quoted, that there are but two cases, speaking generally, under
which an administrator may sell real and personal estate of a deceased person. The conditions are (a)
when it is necessary to pay the debts and charges against the estate, and (b) when it is made to appear
to the court that it will be beneficial to the heirs and those interested in the estate.
It will be further noted from the provisions of the sections above quoted: (a) That when it becomes
necessary or advisable to sell real estate in order to pay debts and charges, the court may order the
same sold when the consent and approbation, in writing, of the heirs, are given, and not then even,
unless it clearly appears that the sale of the real estate would be beneficial to the person interested and
will not defeat any devise of land; and (b) that the court may grant a license to sell the real estate of a
deceased person when it is made to appear that the sale will be beneficial to the heirs, etc., and those
interested in the estate. But, even in that case, the sale or order for sale must be made
with consent andapprobating, in writing, of the heirs, etc., who are interested in the estate to be sold.
Personal property, however, may be sold on the application of the executor or administrator, if it appears
necessary for the purpose of paying debts, legacies, or expenses of administration, or for the
preservation of the property. In the sale of personal property, for the purposes indicated, the consent of
the heirs is not necessary. (Section 717 of Act No. 190.)
Paragraph 2 of section 722 provides that, in the cases where the consent of heirs, devisees, and legatees
is required for the sale of real estate, the executor or administrator shall produce to the court their assent
in writing, signed by such heirs, etc.
In the present case there was no allegation or showing, nor any attempt to make it appear, that there
were any debts or charges against the estate of Juan Buenaventura, which make it necessary to sell the
real estate of that estate. While there was an attempt made to show that the sale of the real estate would
be beneficial to the heirs, the petition was not made "with the consent and approbation, in writing, of the
heirs," etc. Not only did the administrator fail to show "the consent and approbation, in writing of the heir,"
etc., but the record clearly shows that the heirs opposed, in writing, to the sale of the fishery in question.
The Legislature in adopting the sections to which reference is made above, preventing the sale of the real
estate of the deceased without the written consent of the heirs, evidently had in mind the provision of
article 657-661 of the Civil Code, which provide that the heirs of a deceased person succeed, from the
moment of his death, to all the rights and obligations of the deceased by the mere fact of his death. The
heirs become the owners of the property immediately upon the death of the ancestor, and they can not be
deprived of the same except in the manner provided for by law. Being the owners of the property
immediately, by succession upon the death of the ancestor, they can only be deprived of their right by the
procedure established by law. (Inocencio vs. Gat-Pandan, 321; Malahacan vs. Ignacio, 19 Phil., 434;
Fernandez vs. Tria, 22 Phil., 603, 618-620; Bondad vs. Bondad, 34 Phil., 232, 235; Rocha vs. Tuason
and Rocha de Despujols, 39 Phil., 976, 983, 984.)
Of course, that succession may be defeated or modified provide the deceased, the former owner, left a
will. And it may be added, further, that the heir acquired the rights of the ancestor subject to any and all of
the obligations of the ancestor against the estate and subject to certain exceptions for the Civil Code
relating to the acceptance of the heir, inventory, etc. (Arts. 1010-1034, Civil Code.) In other words, if the
heir accepts without reservation an estate, he accepts it with all the obligations existing against it at the
time of the death of the ancestor. If the heir accepts an estate under inventory, then his responsibility to
satisfy the existing obligations is limited to the value fixed in the inventory.
Under the provision of the Civil Code (art. 657-661), the rights to the succession of a person are
transmitted from the moment of his death; in other words, the heirs succeed immediately to all of the
property of the deceased ancestor. The property belongs to the heirs at the moment of the death of the
ancestor as completely as if the ancestor had executed and delivered to them a deed for the same before
his death. In the absence of debts or obligations existing against the estate, the heir may enter upon the
administration of said property immediately. The property belonging absolutely to the heirs, in the
absence of existing debts against the estate, the administrator has no right to intervene in any way
whatever in the division of the estate among the heirs. (Ilustre vs. Alaras Frondosa, supra; Malahacan vs.
Ignacio, supra; Fernandez vs. Tria, supra.)
The only ground upon which an administrator can demand of the heirs at law the possession of real
property of which his intestate was seized at the time of his death, is, that such property will be required
to be sold to pay the debts of the deceased. (Ilustre vs. Alaras Frondosa, supra; Malahacan vs.
Ignacio, supra.)
Of course, if the heir refuses to give his consent to the sale of the property to satisfy obligations existing
against the estate at the time of the death of the ancestor, then such obligations or debts may be
recovered in an ordinary action, because when he accepts the property, as an heir, he accepted it with
the obligations which existed against the ancestor. By pure and simple acceptance, or without benefit of
inventory, the heir becomes liable for all the debts and obligations of the estate, not only with the property
of the same, but also with his own. (Arts. 998, 999, 1003, 1023, Civil Code; Hinlo vs. De Leon, 18 Phil.,
221, 227; Aramburu vs. Ortiz, 14 Phil., 691.)
The holder of the debt or obligation against the estate of a deceased person, when the heirs have
accepted the same in accordance with the provisions of articles 998 and 999 of the Civil Code, has the
right to select from among the heirs one or more, whom he may prefer, or from whom he believes he can
best recover, and for the reason that if the debt is single the obligation of the debtors in favor of the
creditor of the deceased person is also one and indivisible, the creditor is entitled to claim the entire
amount of his credit from any one of the heirs who accepted the inheritance without benefit of inventory
,and also from any of the others who received the same with benefit, to the extent of their hereditary
portion. (Art. 988, 998, 1003, 1110, 1023, Civil Code; Aramburu vs. Ortiz, supra; Hinlo vs. Leon, supra.)
The heirs having become the absolute owners of the property of the ancestor, and there being no debts
or obligations against the same which existed at the time of the death of the ancestor, it is a matter of no
importance to the administrator or to any other person, that the property is in a state of bad repair. The
repair or improvement of the property is for the heirs after having become the absolute owners of the
same, and is a question solely for their consideration. In absence of debts or obligations against the
estate at the time of the death of the ancestor, the heirs, as absolute owners, may manage and control
the same without interference on the part of the administrator.
The plaintiffs in the present case not having shown the existence of any of the facts or conditions under
which the property in question might be sold under the above quoted provisions of Act No. 190, the lower
court committed an error in granting the petition for permission to sell, and also committed an error in
authorizing the sale and in confirming the sale after it was made. Therefore, the judgment of the lower
court is hereby revoked, and it is hereby ordered and decreed that a judgment be entered, revoking the
judgment appealed from and absolving the defendants from all liability under the complaint. And without
any finding as to costs, it is so ordered.
DIVISION
[G.R. No. 156403. March 31, 2005]
JOSEPHINE PAHAMOTANG and ELEANOR PAHAMOTANG-
BASA, petitioners, vs. THE PHILIPPINE NATIONAL BANK (PNB)
and the HEIRS OF ARTURO ARGUNA,respondents.
D E C I S I O N
GARCIA, J .:
Assailed and sought to be set aside in this appeal by way of a petition for
review on certiorari under Rule 45 of the Rules of Court are the following
issuances of the Court of Appeals in CA-G.R. CV No. 65290, to wit:
1. Decision dated March 20, 2002,
[1]
granting the appeal and reversing the appealed
August 7, 1998 decision of the Regional Trial Court at Davao City; and
2. Resolution dated November 20, 2002, denying herein petitioners' motion for
reconsideration.
[2]

The factual background:
On July 1, 1972, Melitona Pahamotang died. She was survived by her
husband Agustin Pahamotang, and their eight (8) children, namely: Ana,
Genoveva, Isabelita, Corazon, Susana, Concepcion and herein
petitioners Josephine and Eleonor, all surnamed Pahamotang.
On September 15, 1972, Agustin filed with the then Court of First Instance
of Davao City a petition for issuance of letters administration over the estate of
his deceased wife. The petition, docketed as Special Case No. 1792, was
raffled to Branch VI of said court, hereinafter referred to as the intestate
court.
In his petition, Agustin identified petitioners Josephine and Eleonor as
among the heirs of his deceased spouse. It appears that Agustin was
appointed petitioners' judicial guardian in an earlier case - Special Civil Case
No. 1785 also of the CFI of Davao City, Branch VI.
On December 7, 1972, the intestate court issued an order granting
Agustins petition.
On July 6, 1973, respondent Philippine National Bank (PNB) and Agustin
executed an Amendment of Real and Chattel Mortgages with Assumption
of Obligation. It appears that earlier, or on December 14, 1972, the intestate
court approved the mortgage to PNB of certain assets of the estate to secure
an obligation in the amount of P570,000.00. Agustin signed the document in
behalf of (1) the estate of Melitona; (2) daughters Ana and Corazon; and (3) a
logging company named Pahamotang Logging Enterprises, Inc. (PLEI) which
appeared to have an interest in the properties of the estate. Offered as
securities are twelve (12) parcels of registered land, ten (10) of which are
covered by transfer certificates of title (TCT) No. 2431, 7443, 8035, 11465,
21132, 4038, 24327, 24326, 31226 and 37786, all of the Registry of Deeds of
Davao City, while the remaining two (2) parcels by TCTs No. (3918) 1081
and (T-2947) 562 of the Registry of Deeds of Davao del Norte and Davao del
Sur, respectively.
On July 16, 1973, Agustin filed with the intestate court a Petition for
Authority To Increase Mortgage on the above mentioned properties of the
estate.
In an Order dated July 18, 1973, the intestate court granted said petition.
On October 5, 1974, Agustin again filed with the intestate court another
petition, Petition for Declaration of Heirs And For Authority To Increase
Indebtedness, whereunder he alleged the necessity for an additional loan
from PNB to capitalize the business of the estate, the additional loan to be
secured by additional collateral in the form of a parcel of land covered by
Original Certificate of Title (OCT) No. P-7131 registered in the name of Heirs
of Melitona Pahamotang. In the same petition, Agustin prayed the intestate
court to declare him and Ana, Genoveva, Isabelita, Corazon, Susana,
Concepcion and herein petitioners Josephine and Eleonor as the only heirs of
Melitona.
In an Order of October 19, 1974, the intestate court granted Agustin
authority to seek additional loan from PNB in an amount not
exceeding P5,000,000.00 to be secured by the land covered by OCT No. P-
7131 of the Registry of Deeds of Davao Oriental, but denied Agustins prayer
for declaration of heirs for being premature.
On October 22, 1974, a real estate mortgage contract for P4,500,000.00
was executed by PNB and Agustin in his several capacities as: (1)
administrator of the estate of his late wife; (2) general manager of PLEI; (3)
attorney-in-fact of spouses Isabelita Pahamotang and Orlando Ruiz, and
spouses Susana Pahamotang and Octavio Zamora; and (4) guardian of
daughters Concepcion and Genoveva and petitioners Josephine and
Eleonor. Offered as securities for the additional loan are three (3) parcels of
registered land covered by TCTs No. T-21132, 37786 and 43264.
On February 19, 1980, Agustin filed with the intestate court a Petition
(Request for Judicial Authority To Sell Certain Properties of the
Estate), therein praying for authority to sell to Arturo Argunathe properties
of the estate covered by TCTs No. 7443, 8035, 11465, 24326 and 31226 of
the Registry of Deeds of Davao City, and also TCT No. (T-3918) T-1081 of the
Registry of Deeds of Davao del Norte.
On February 27, 1980, Agustin yet filed with the intestate court another
petition, this time a Petition To Sell the Properties of the Estate, more
specifically referring to the property covered by OCT No. P-7131, in favor
of PLEI.
In separate Orders both dated February 25, 1980, the intestate court
granted Agustin authority to sell estate properties, in which orders the court
also required all the heirs of Melitona to give their express conformity to the
disposal of the subject properties of the estate and to sign the deed of sale to
be submitted to the same court. Strangely, the two (2) orders were dated two
(2) days earlier than February 27, 1980, the day Agustin supposedly filed his
petition.
In a motion for reconsideration, Agustin prayed the intestate court for the
amendment of one of its February 25, 1980 Orders by canceling the
requirement of express conformity of the heirs as a condition for the disposal
of the aforesaid properties.
In its Order of January 7, 1981, the intestate court granted Agustins
prayer.
Hence, on March 4, 1981, estate properties covered by TCTs No.
7443,11465, 24326, 31226, 8035, (T-2947) 662 and (T-3918) T-1081, were
sold to respondent Arturo Arguna, while the property covered by OCT No. P-
7131 was sold to PLEI. Consequent to such sales, vendees Arguna
and PLEI filed witt the intestate court a motion for the approval of the
corresponding deeds of sale in their favor. And, in an Order dated March 9,
1981, the intestate court granted the motion.
Thereafter, three (3) daughters of Agustin, namely, Ana, Isabelita and
Corazon petitioned the intestate court for the payment of their respective
shares from the sales of estate properties, which was granted by the intestate
court.
Meanwhile, the obligation secured by mortgages on the subject properties
of the estate was never satisfied. Hence, on the basis of the real estate
mortgage contracts dated July 6, 1973 and October 22, 1974, mortgagor
PNB filed a petition for the extrajudicial foreclosure of the mortgage.
Petitioner Josephine filed a motion with the intestate court for the issuance
of an order restraining PNB from extrajudicially foreclosing the mortgage. In its
Order dated August 19, 1983, the intestate court denied Josephines motion.
Hence, PNB was able to foreclose the mortgage in its favor.
Petitioners Josephine and Eleanor, together with their sister Susana
Pahamatong-Zamora, filed motions with the intestate court to set aside
its Orders of December 14, 1972 [Note: the order dated July 18, 1973
contained reference to an order dated December 14, 1972 approving the
mortgage to PNB of certain properties of the estate], July 18, 1973, October
19, 1974 and February 25, 1980.
In an Order dated September 5, 1983, the intestate court denied the
motions, explaining:
"Carefully analyzing the aforesaid motions and the grounds relied upon, as well as the
opposition thereto, the Court holds that the supposed defects and/or irregularities
complained of are mainly formal or procedural and not substantial, for which reason,
the Court is not persuaded to still disturb all the orders, especially that interests of the
parties to the various contracts already authorized or approved by the Orders sought to
be set aside will be adversely affected.
[3]

Such was the state of things when, on March 20, 1984, in the Regional
Trial Court at Davao City, petitioners Josephine and Eleanor, together with
their sister Susana, filed their complaint for Nullification of Mortgage
Contracts and Foreclosure Proceedings and Damages against Agustin,
PNB, Arturo Arguna, PLEI, the Provincial Sheriff of Mati, Davao Oriental, the
Provincial Sheriff of Tagum, Davao del Norte and the City Sheriff of Davao
City. In their complaint, docketed as Civil Case No. 16,802 which was raffled
to Branch 12 of the court, the sisters Josephine, Eleanor and Susana prayed
for the following reliefs:
"1.) The real estate mortgage contracts of July 6, 1973 and that of October 2,
1974, executed by and between defendants PNB AND PLEI be declared null
and void ab initio;
2.) Declaring the foreclosure proceedings conducted by defendants-sheriffs,
insofar as they pertain to the assets of the estate of Melitona L. Pahamotang,
including the auction sales thereto, and any and all proceedings taken
thereunder, as null and void ab initio;
3.) Declaring the Deed of Absolute Sale, Doc. No. 473; Page No.96; Book
No.VIII, Series of 1981 of the Notarial Registry of Paquito G. Balasabas of
Davao City evidencing the sale/transfer of the real properties described
therein to defendant Arturo S. Arguna, as null and void ab initio;
4.) Declaring the Deed of Absolute Sale, Doc. No. 474; Page No. 96, Book No.
VIII, series of 1981 of the Notarial Registry of Paquito G. Balasabas of
Davao City, evidencing the sale/transfer of real properties to PLEI as null
and void ab initio;
5.) For defendants to pay plaintiffs moral damages in such sums as may be
found to be just and equitable under the premises;
6.) For defendants to pay plaintiffs, jointly and severally, the expenses incurred
in connection with this litigation;
7.) For defendants to pay plaintiffs, jointly and severally attorney's fees in an
amount to be proven during the trial;
8.) For defendants to pay the costs of the suit.
[4]

PNB moved to dismiss the complaint, which the trial court granted in its
Order of January 11, 1985.
However, upon motion of the plaintiffs, the trial court reversed itself and
ordered defendant PNB to file its answer.
Defendant PNB did file its answer with counterclaim, accompanied by a
cross-claim against co-defendants Agustin and PLEI.
During the ensuing pre-trial conference, the parties submitted the following
issues for the resolution of the trial court, to wit:
"1. Whether or not the Real Estate Mortgage contracts executed on July 6, 1973
and October 2, 1974 (sic) by and between defendants Pahamotang Logging
Enterprises, Inc. and the Philippine National Bank are null and void?
2. Whether or not the foreclosure proceedings conducted by defendants-
Sheriffs, insofar as they affect the assets of the Estate of Melitona
Pahamotang, including the public auction sales thereof, are null and void?
3. Whether or not the Deed of Absolute Sale in favor of defendant Arturo
Arguna entered as Doc. No. 473; Page No. 96; Book No. VIII, series of 1981
of the Notarial Register of Notary Public Paquito Balasabas is null and void?
4. Whether or not the Deed of Absolute Sale in favor of defendant Pahamotang
Logging Enterprises, Inc. entered as Doc. No. 474; Page No. 96; Book No.
VIII, series of 1981 of the Notarial Register of Notary Public Paquito
Balasabas is null and void?
5. On defendant PNB's cross-claim, in the event the mortgage contracts and the
foreclosure proceedings are declared null and void, whether or not defendant
Pahamotang Logging Enterprises, Inc. is liable to the PNB?
6. Whether or not the defendants are liable to the plaintiffs for damages?
7. Whether or not the plaintiffs are liable to the defendants for damages?
[5]

With defendant Arturo Argunas death on October 31, 1990, the trial court
ordered his substitution by his heirs: Heirs of Arturo Alguna.
In a Decision dated August 7, 1998, the trial court in effect rendered
judgment for the plaintiffs. We quote the decisions dispositive portion:
"WHEREFORE, in view of all the foregoing, judgment is hereby rendered as follows:
1. Declaring the Mortgage Contracts of July 6, 1973 and October 22, 1974, as well
as the foreclosure proceedings, void insofar as it affects the share, interests and
property rights of the plaintiffs in the assets of the estate of Melitona Pahamotang, but
valid with respect to the other parties;
2. Declaring the deeds of sale in favor of defendants Pahamotang Logging
Enterprises, Inc. and Arturo Arguna as void insofar as it affects the shares, interests
and property rights of herein plaintiffs in the assets of the estate of Melitona
Pahamotang but valid with respect to the other parties to the said deeds of sale.
3. Denying all the other claims of the parties for lack of strong, convincing and
competent evidence.
No pronouncement as to costs.
SO ORDERED.
[6]

From the aforementioned decision of the trial court, PNB, PLEI and the
Heirs of Arturo Arguna went on appeal to the Court of Appeals in CA-G.R. CV
No. 65290. While the appeal was pending, the CA granted the motion of
Susana Pahamatong-Zamora to withdraw from the case.
As stated at the threshold hereof, the Court of Appeals, in its Decision
dated March 20, 2002,
[7]
reversed the appealed decision of the trial court and
dismissed the petitioners complaint in Civil Case No. 16,802, thus:
WHEREFORE, the appeal is hereby GRANTED. The assailed August 07, 1998
Decision rendered by the Regional Trial Court of Davao City, Branch 12, is
hereby REVERSED and SET ASIDE and a new one is entered DISMISSING the
complaint filed in Civil Case No. 16,802.
SO ORDERED.
The appellate court ruled that petitioners, while ostensibly questioning the
validity of the contracts of mortgage and sale entered into by their father
Agustin, were essentially attacking collaterally the validity of the four (4)
orders of the intestate court in Special Case No. 1792, namely:
1. Order dated July 18, 1973, granting Agustins Petition for Authority to
Increase Mortgage;
2. Order dated October 19, 1974, denying Agustins petition for declaration of
heirs but giving him authority to seek additional loan from PNB;
3. Order dated February 25, 1980, giving Agustin permission to sell properties
of the estate to Arturo Arguna and PLEI; and
4. Order dated January 7, 1981, canceling the requirement of express
conformity by the heirs as a condition for the disposal of estate properties.
To the appellate court, petitioners committed a fatal error of mounting a
collateral attack on the foregoing orders instead of initiating a direct action to
annul them. Explains the Court of Appeals:
"A null and void judgment is susceptible to direct as well as collateral attack. A direct
attack against a judgment is made through an action or proceeding the main object of
which is to annul, set aside, or enjoin the enforcement of such judgment, if not carried
into effect; or if the property has been disposed of, the aggrieved party may sue for
recovery. A collateral attack is made when, in another action to obtain a different
relief, an attack on the judgment is made as an incident in said action. This is proper
only when the judgment, on its fact, is null and void, as where it is patent that the
court which rendered such judgment has no jurisdiction. A judgment void on its face
may also be attacked directly.
xxx xxx xxx
Perusing the above arguments and comparing them with the settled ruling, the
plaintiffs-appellees [now petitioners], we believe had availed themselves of the wrong
remedy before the trial court. It is clear that they are collaterally attacking the various
orders of the intestate court in an action for the nullification of the subject mortgages,
and foreclosure proceedings in favor of PNB, and the deeds of sale in favor of
Arguna. Most of their arguments stemmed from their allegations that the various
orders of the intestate court were issued without a notification given to them. An
examination, however, of the July 18, 1973 order shows that the heirs of Melitona
have knowledge of the petition to increase mortgage filed by Agustin, thus:
`The petitioner testified that all his children including those who are of age have no
objection to this petition and, as matter of fact, Ana Pahamotang, one of the heirs of
Melitona Pahamotang, who is the vice-president of the logging corporation, is the one
at present negotiating for the increase of mortgage with the Philippine National Bank.'
The presumption arising from those statements of the intestate court is that the heirs
were notified of the petition for the increase of mortgage.
The same can be seen in the October 19, 1974 order:
`The records show that all the known heirs, namely Ana, Isabelita, Corazon, Susana,
including the incompetent Genoveva, and the minors Josephine, Eleanor and
Concepcion all surnamed were notified of the hearing of the petition.'
On the other hand, the February 25, 1980 order required Agustin to obtain first
express conformity from the heirs before the subject property be sold to Arguna. The
fact that this was reconsidered by the intestate court in its January 07, 1981 is of no
moment. The questioned orders are valid having been issued in accordance with law
and procedure. The problem with the plaintiffs-appellees is that, in trying to nullify
the subject mortgages and the foreclosure proceedings in favor of PNB and the deeds
of sale in favor of Arguna, they are assailing the aforesaid orders of the intestate court
and in attacking the said orders, they attached documents that they believe would
warrant the conclusion that the assailed orders are null and void. This is a clear
collateral attack of the orders of the intestate court which is not void on its face and
which cannot be allowed in the present action. The defects alleged by the plaintiff-
appellees are not apparent on the face of the assailed orders. Their recourse is to ask
for the declaration of nullity of the said orders, not in a collateral manner, but a direct
action to annul the same.
[8]

The same court added that petitioners failure to assail said orders at the most
opportune time constitutes laches:
"In their complaint below, plaintiffs, appellees are assailing in their present action,
four orders of the intestate court namely: July 18, 1973, October 19, 1974, February
25, 1980 and January 07, 1981 orders which were then issued by Judge Martinez. It
should be recalled that except for the January 07, 1981 order, Judge Jacinto, upon
taking over Sp. No. 1792, denied the motion of the plaintiffs-appellees to set aside the
aforesaid orders. Aside from their motion before Judge Jacinto, nothing on the
records would show that the plaintiffs-appellees availed of other remedies to set aside
the questioned orders. Further, the records would not show that the plaintiffs-
appellees appealed the order of Judge Jacinto. If an interval of two years, seven
months and ninety nine days were barred by laches, with more reason should the same
doctrine apply to the present case, considering that the plaintiffs-appellees did not
avail of the remedies provided by law in impugning the various orders of the intestate
court. Thus, the questioned orders of the intestate court, by operation of law became
final. It is a fundamental principle of public policy in every jural system that at the
risk of occasional errors, judgments of courts should become final at some definite
time fixed by law (interest rei publicae ut finis sit litum). The very object of which
the courts were constituted was to put an end to controversies. Once a judgment or an
order of a court has become final, the issues raised therein should be laid to rest. To
date, except as to the present action which we will later discuss as improper, the
plaintiff-appellees have not availed themselves of other avenues to have the orders
issued by Judge Martinez and Judge Jacinto annulled and set aside. In the present
case, when Judge Jacinto denied the motion of the plaintiffs-appellees, the latter had
remedies provided by the rules to assail such order. The ruling by Judge Jacinto
denying plaintiffs-appellees motion to set aside the questioned orders of Judge
Martinez has long acquired finality. It is well embedded in our jurisprudence, that
judgment properly rendered by a court vested with jurisdiction, like the RTC, and
which has acquired finality becomes immutable and unalterable, hence, may no longer
be modified in any respect except only to correct clerical errors or
mistakes. Litigation must have and always has an end. If not, judicial function will
lose its relevance.
In time, petitioners moved for a reconsideration but their motion was
denied by the appellate court in its Resolution of November 20, 2002.
Hence, petitioners present recourse, basically praying for the reversal of
the CA decision and the reinstatement of that of the trial court.
We find merit in the petition.
It is petitioners posture that the mortgage contracts dated July 6,
1973 and October 22, 1974 entered into by Agustin with respondent PNB, as
well as his subsequent sale of estate properties to PLEI and Arguna on March
4, 1981, are void because they [petitioners] never consented thereto. They
assert that as heirs of their mother Melitona, they are entitled to notice of
Agustin's several petitions in the intestate court seeking authority to mortgage
and sell estate properties. Without such notice, so they maintain, the four
orders of the intestate court dated July 18, 1973, October 19, 1974,
February 25, 1980 andJanuary 7, 1981, which allowed Agustin to mortgage
and sell estate properties, are void on account of Agustins non-compliance
with the mandatory requirements of Rule 89 of the Rules of Court.
Prescinding from their premise that said orders are completely void and
hence, could not attain finality, petitioners maintain that the same could be
attacked directly or collaterally, anytime and anywhere.
For its part, respondent PNB asserts that petitioners cannot raise as issue
in this proceedings the validity of the subject orders in their desire to invalidate
the contracts of mortgage entered into by Agustin. To PNB, the validity of the
subject orders of the intestate court can only be challenged in a direct action
for such purpose and not in an action to annul contracts, as the petitioners
have done. This respondent adds that the mortgage on the subject properties
is valid because the same was made with the approval of the intestate court
and with the knowledge of the heirs of Melitona, petitioners included.
[9]

Upon the other hand, respondent Heirs of Arturo Arguna likewise claim
that petitioners knew of the filing with the intestate court by Agustin of petitions
to mortgage and sell the estate properties. They reecho the CAs ruling that
petitioners are barred by laches in filing Civil Case No. 16,802.
[10]

As we see it, the determinative question is whether or not petitioners can
obtain relief from the effects of contracts of sale and mortgage entered into by
Agustin without first initiating a direct action against the orders of the intestate
court authorizing the challenged contracts.
We answer the question in the affirmative.
It bears emphasizing that the action filed by the petitioners before the trial
court in Civil Case No. 16,802 is for the annulment of several contracts
entered into by Agustin for and in behalf of the estate of Melitona, namely: (a)
contract of mortgage in favor of respondent PNB, (b) contract of sale in favor
of Arguna involving seven (7) parcels of land; and (c) contract of sale of a
parcel of land in favor of PLEI.
The trial court acquired jurisdiction over the subject matter of the case
upon the allegations in the complaint that said contracts were entered into
despite lack of notices to the heirs of the petition for the approval of those
contracts by the intestate court.
Contrary to the view of the Court of Appeals, the action which petitioners
lodged with the trial court in Civil Case No. 16,802 is not an action to annul the
orders of the intestate court, which, according to CA, cannot be done
collaterally. It is the validity of the contracts of mortgage and sale which is
directly attacked in the action.
And, in the exercise of its jurisdiction, the trial court made a factual finding
in its decision of August 7, 1998 that petitioners were, in fact, not notified by
their father Agustin of the filing of his petitions for permission to mortgage/sell
the estate properties. The trial court made the correct conclusion of law that
the challenged orders of the intestate court granting Agustins petitions were
null and void for lack of compliance with the mandatory requirements of Rule
89 of the Rules of Court, particularly Sections 2, 4, 7 thereof, which
respectively read:
Sec. 2. When court may authorize sale, mortgage, or other encumbrance of realty to
pay debts and legacies through personalty not exhausted. - When the personal estate
of the deceased is not sufficient to pay the debts, expenses of administration, and
legacies, or where the sale of such personal estate may injure the business or other
interests of those interested in the estate, and where a testator has not otherwise made
sufficient provision for the payment of such debts, expenses, and legacies, the court,
on the application of the executor or administrator and on written notice to the heirs,
devisees, and legatees residing in the Philippines, may authorize the executor or
administrator to sell, mortgage, or otherwise encumber so much as may be necessary
of the real estate, in lieu of personal estate, for the purpose of paying such debts,
expenses, and legacies, if it clearly appears that such sale, mortgage, or encumbrance
would be beneficial to the persons interested; and if a part cannot be sold, mortgaged,
or otherwise encumbered without injury to those interested in the remainder, the
authority may be for the sale, mortgage, or other encumbrance of the whole of such
real estate, or so much thereof as is necessary or beneficial under the circumstances.
Sec. 4. When court may authorize sale of estate as beneficial to interested persons.
Disposal of proceeds. - When it appears that the sale of the whole or a part of the real
or personal estate, will be beneficial to the heirs, devisees, legatees, and other
interested persons, the court may, upon application of the executor or administrator
and on written notice to the heirs, devisees and legatees who are interested in the
estate to be sold, authorize the executor or administrator to sell the whole or a part of
said estate, although not necessary to pay debts, legacies, or expenses of
administration; but such authority shall not be granted if inconsistent with the
provisions of a will. In case of such sale, the proceeds shall be assigned to the persons
entitled to the estate in the proper proportions.
Sec. 7. Regulations for granting authority to sell, mortgage, or otherwise encumber
estate. - The court having jurisdiction of the estate of the deceased may authorize the
executor or administrator to sell personal estate, or to sell, mortgage, or otherwise
encumber real estate; in cases provided by these rules and when it appears necessary
or beneficial, under the following regulations:
(a) The executor or administrator shall file a written petition setting forth the
debts due from the deceased, the expenses of administration, the legacies,
the value of the personal estate, the situation of the estate to be sold,
mortgaged, or otherwise encumbered, and such other facts as show that
the sale, mortgage, or other encumbrance is necessary or beneficial;
(b) The court shall thereupon fix a time and place for hearing such petition,
and cause notice stating the nature of the petition, the reason for the
same, and the time and place of hearing, to be given personally or by mail
to the persons interested, and may cause such further notice to be given,
by publication or otherwise, as it shall deem proper; (Emphasis
supplied).
xxx xxx xxx
Settled is the rule in this jurisdiction that when an order authorizing the
sale or encumbrance of real property was issued by the testate or intestate
court without previous notice to the heirs, devisees and legatees as required
by the Rules, it is not only the contract itself which is null and void but also the
order of the court authorizing the same.
[11]

Thus, in Maneclang vs. Baun,
[12]
the previous administrator of the estate
filed a petition with the intestate court seeking authority to sell portion of the
estate, which the court granted despite lack of notice of hearing to the heirs of
the decedent. The new administrator of the estate filed with the Regional Trial
Court an action for the annulment of the sales made by the previous
administrator. After trial, the trial court held that the order of the intestate court
granting authority to sell, as well as the deed of sale, were void. On appeal
directly to this Court, We held that without compliance with Sections 2, 4 and
7 of Rule 89 of the Rules of Court, the authority to sell, the sale itself and the
order approving it would be null and void ab initio.
In Liu vs. Loy, J r.,
[13]
while the decedent was still living, his son and
attorney-in-fact sold in behalf of the alleged decedent certain parcels of land
to Frank Liu. After the decedent died, the son sold the same properties to two
persons. Upon an ex parte motion filed by the 2
nd
set of buyers of estate
properties, the probate court approved the sale to them of said properties.
Consequently, certificates of title covering the estate properties were
cancelled and new titles issued to the 2
nd
set of buyers. Frank Liu filed a
complaint for reconveyance/ annulment of title with the Regional Trial Court.
The trial court dismissed the complaint and the Court of Appeals affirmed the
dismissal. When the case was appealed to us, we set aside the decision of
the appellate court and declared the probate court's approval of the sale as
completely void due to the failure of the 2
nd
set of buyers to notify the heir-
administratrix of the motion and hearing for the sale of estate property.
Clearly, the requirements of Rule 89 of the Rules of Court are mandatory
and failure to give notice to the heirs would invalidate the authority granted by
the intestate/probate court to mortgage or sell estate assets.
Here, it appears that petitioners were never notified of the several petitions
filed by Agustin with the intestate court to mortgage and sell the estate
properties of his wife.
According to the trial court, the [P]etition for Authority to Increase
Mortgage and [P]etition for Declaration of Heirs and for Authority to
Increase Indebtedness, filed by Agustin on July 16, 1973and October 5,
1974, respectively, do not contain information that petitioners were furnished
with copies of said petitions. Also, notices of hearings of those petitions were
not sent to the petitioners.
[14]
The trial court also found in Civil Case No.
16,802 that Agustin did not notify petitioners of the filing of his petitions for
judicial authority to sell estate properties to Arturo Arguna and PLEI.
[15]

As it were, the appellate court offered little explanation on why it did not
believe the trial court in its finding that petitioners were ignorant of Agustins
scheme to mortgage and sell the estate properties.
Aside from merely quoting the orders of July 18, 1973 and October 19,
1974 of the intestate court, the Court of Appeals leaves us in the dark on its
reason for disbelieving the trial court. The appellate court did not publicize its
appraisal of the evidence presented by the parties before the trial court in the
matter regarding the knowledge, or absence thereof, by the petitioners of
Agustins petitions. The appellate court cannot casually set aside the findings
of the trial court without stating clearly the reasons therefor. Findings of the
trial court are entitled to great weight, and absent any indication to believe
otherwise, we simply cannot adopt the conclusion reached by the Court of
Appeals.
Laches is negligence or omission to assert a right within a reasonable
time, warranting the presumption that the party entitled to assert it has either
abandoned or declined the right.
[16]
The essential elements of laches are: (1)
conduct on the part of the defendant, or of one under whom he claims, giving
rise to the situation of which complaint is made and for which the complaint
seeks a remedy; (2) delay in asserting the complainant's rights, the
complainant having had knowledge or notice of the defendant's conduct and
having been afforded an opportunity to institute a suit; (3) lack of knowledge
or notice on the part of the defendant that the complainant would assert the
right on which he bases his suit; and (4) injury or prejudice to the defendant in
the event relief is accorded to the complainant, or the suit is not held barred.
[17]

In the present case, the appellate court erred in appreciating laches
against petitioners. The element of delay in questioning the subject orders of
the intestate court is sorely lacking. Petitioners were totally unaware of the
plan of Agustin to mortgage and sell the estate properties. There is no
indication that mortgagor PNB and vendee Arguna had notified petitioners of
the contracts they had executed with Agustin. Although petitioners finally
obtained knowledge of the subject petitions filed by their father, and eventually
challenged the July 18, 1973, October 19, 1974, February 25, 1980 and
January 7, 1981 orders of the intestate court, it is not clear from the
challenged decision of the appellate court when they (petitioners) actually
learned of the existence of said orders of the intestate court. Absent any
indication of the point in time when petitioners acquired knowledge of those
orders, their alleged delay in impugning the validity thereof certainly cannot be
established. And the Court of Appeals cannot simply impute laches against
them.
WHEREFORE, the assailed issuances of the Court of Appeals are hereby
REVERSED and SET ASIDE and the decision dated August 7, 1998 of the
trial court in its Civil Case No. 16,802 REINSTATED.
SO ORDERED.
Panganiban, (Chairman), Sandoval-Gutierrez, Corona, and Carpio-
Morales, JJ., concur.

SECOND DIVISION


JOSEPHINE OROLA, MYRNA G.R. No. 158566
OROLA, ANGELINE OROLA,
MANUEL OROLA, ANTONIO
OROLA and ALTHEA OROLA, Present:
Petitioners,

PUNO, J., Chairman,
AUSTRIA-MARTINEZ,
- versus - CALLEJO, SR.,
TINGA, and
CHICO-NAZARIO, JJ.

THE RURAL BANK OF
PONTEVEDRA (CAPIZ), INC.,
EMILIO Q. OROLA, THE
REGISTER OF DEEDS OF CAPIZ
and THE EX-OFFI CI O
PROVINCIAL SHERIFF OF Promulgated:
CAPIZ,
Respondents. September 20, 2005
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N


CALLEJO, SR., J .:


Before us is a petition for review on certiorari of the Decision
[1]
of the Court
of Appeals (CA) in CA-G.R. CV No. 35724 reversing, on appeal, the Decision
[2]
of
the Regional Trial Court (RTC) of Roxas City, Branch 15, in Civil Case No. V-
5452.

On July 16, 1969, Trinidad Laserna Orola died intestate. She was survived
by her husband Emilio Orola and their six minor children, namely, 10-year-old
Antonio, 12-year-old Josephine, 16-year-old Manuel, and other siblings, Myrna,
Angeline and Althea.

The estate consisted of property located in Pontevedra, Capiz. It included
portions of Lots 1071 and 1088 (Lot 2-B) of the Pontevedra Cadastre, covered by
Tax Declaration (T.D.) No. 7197
[3]
under the names of the heirs of Trinidad Orola;
Lot 1088 (Lot 2) covered by T.D. No. 6901 under the name of Trinidad Orola; Lot
1071 and portions of Lot 1088 (Lot 2-A) of the same cadastre covered by T.D. No.
7196 under the names of the heirs of Trinidad Orola; and Lot 1050 of the same
cadastre covered by T.D. No. 2623
[4]
under the name of Trinidad Orola. Portions
of the property were devoted to the development and production of sugar. Some
portions were riceland, while some parts of the property were swampy.
[5]


Emilio Orola, who, in the meantime, had married anew, executed a waiver
of all his rights and interests over the said property in favor of his children by
Trinidad Laserna, namely, Josephine, Myrna, Angeline, Manuel, Antonio and
Althea, all surnamed Orola.
[6]


In 1973, Emilio Orola retired as cashier of the Philippine National Bank
(PNB).
[7]
He filed a petition for his appointment as guardian over the persons and
property of his minor children. The case was docketed as Special Proceedings (Sp.
Proc.) No. V-3526. The petition was granted, and Emilio Orola was appointed
guardian not only over the persons of his minor children but also over their
property. On November 6, 1973, Emilio filed a petition with the RTC for the
settlement of the estate of his deceased spouse, Trinidad Laserna, and his
appointment as administrator of her estate. The RTC issued an order appointing
Emilio Orola as administrator of the estate of his deceased spouse.

As such administrator of the estate, Emilio took possession of the said
parcels of land. He opened an account in the name of the estate with the PNB. He
embarked on a massive sugar production and, with prior approval of the court,
negotiated with banking institutions for financing loans to purchase the required
equipments. However, in 1976 and 1977, there was a sudden collapse of the sugar
industry. Emilio Orola found it necessary to develop the swampy portion of the
estate for the production of fish. To finance the endeavor, he needed at
least P600,000.00.

On September 11, 1980, Emilio Orola filed a motion
[8]
in Sp. Proc. No. V-
3639 for authority to negotiate a P600,000.00 loan from the Central Bank of the
Philippines for the full and complete development of the fishpond portion of the
estate, and to transfer the sugar account of the estate from the PNB to the Republic
Planters Bank (RPB).

On September 12, 1980, the court granted the motion of the administrator
and authorized him to negotiate the loan through the Rural Bank of Capiz (Rural
Bank of Pontevedra, Capiz) and to transfer the sugar account of the estate to the
RPB in Roxas City.
[9]
Emilio then filed an application with the Rural Bank for a
financing loan of P600,000.00. However, the bank informed him that the said loan
would have to be processed by the Central Bank and that it would take some
time. He was informed that there would be no need for the Central Bank to
intervene if the loan ofP600,000.00 would be broken down into three parts
of P200,000.00, each to be applied for by three applicants to whom the property to
be used as collateral would be leased by the estate. Emilio agreed and talked to his
children, Josephine, Manuel and Antonio, about the banks proposal. The three
siblings agreed.
[10]
The Estate of Trinidad Laserna, through its administrator,
Emilio, as lessor, and Josephine, Manuel and Antonio, all surnamed Orola, as
lessees, executed separate contracts of lease over the aforesaid property of the
estate. On September 20, 1982, the intestate estate court issued an Order
approving the contracts.

However, it turned out that the lessees would not qualify for the loans; the
bank required a lease period of at least 10 years from the time the court approved
the same. On May 20, 1982, Emilio, Antonio, Manuel and Josephine Orola filed a
Manifestation
[11]
with the intestate estate court, praying that its order be amended
to state that the periods of the leases were to commence from court approval of the
said contracts.

However, on December 15, 1982, the estate, through Emilio, as lessor, and
Josephine, Antonio and Manuel Orola, executed separate Amended Contracts of
Lease
[12]
covering the same property. The periods of the lease were extended to 12
years, to commence from their approval by the intestate estate court. The lessees
were also authorized to negotiate loans for the development of the leased premises
not to exceed P200,000.00, and to bind the leased premises by way of real estate
mortgage as security therefor.

On December 15, 1982, Emilio filed an Ex Parte Motion
[13]
in the intestate
estate court for the approval of the amended contracts of lease appended
thereto. On December 17, 1982, Angeline, Myrna and Althea Orola filed their
Joint Affidavit of Conformity
[14]
to the motion. On December 17, 1982, the court
granted the motion of Emilio and approved the amended contracts of lease.
[15]
On
December 20, 1982, the Rural Bank notified Emilio that the loan applications of
his children had been approved.
[16]


Antonio, Manuel and Josephine signed separate Promissory Notes
[17]
on
March 21, 1983 in which they promised and bound themselves to pay their
respective loans in 10 years in stated annual installments. Antonio
Orola, for and in behalf of his father Emilio Orola, executed a Real Estate
Mortgage over Lot 1088 as security for the payment of his loan.
[18]
Manuel Orola,
also as attorney-in-fact of the administrator of the estate, likewise, executed a real
estate mortgage in favor of the Rural Bank over the said lots as security for his
loan.
[19]
Josephine Orola, as attorney-in-fact of the administrator of the estate,
executed a separate real estate mortgage agreement over a portion of Lot 1088 and
Lot 1071 as security for her loan.
[20]
However, the real estate mortgage contracts
were not submitted to the guardianship and intestate estate courts for
approval. Neither were Myrna, Angeline and Althea aware of the said loans.

The net proceeds of the loan, in the total amount of P582,000.00, were
deposited in the Rural Bank on May 9, 1983 in Emilios account.
[21]
From the said
proceeds, the Rural Bank deducted the amount of P229,771.20, the
accommodation loan Emilio secured from the Rural Bank.
[22]
As of September 9,
1983, the balance of the said deposit amounted to onlyP4,292.79.
[23]
Emilio,
thereafter, failed to pay the amortizations of the loans to the Rural Bank.
[24]


This prompted the Rural Bank to write separate letters of demand to
Josephine, Manuel and Antonio, demanding payment of the balance of their
accounts within seven days from the receipt thereof, otherwise the Rural
Bank would cause the extrajudicial foreclosure of the real estate
mortgages.
[25]
Emilio Orola pleaded to the Rural Bank not to foreclose the
mortgages. However, on June 15, 1985, the Rural Bank filed an application with
the Ex-Officio Provincial Sheriff for the extrajudicial foreclosure of the real estate
mortgages over Lots 1071 and 1088.
[26]
The lots were sold at public auction on
April 14, 1986 with the Rural Bank as the winning bidder. The Ex-
Officio Provincial Sheriff executed separate certificates of sale in favor of the
Rural Bank.
[27]


On September 1, 1987, the guardianship court terminated the guardianship
and dismissed the case.
[28]
On September 21, 1987, Josephine, Myrna, Manuel and
Antonio Orola executed a Deed of Acceptance of Waiver or Donation in which
they accepted their fathers waiver of his rights, interests and participation over
their mothers estate.
[29]


On October 1, 1987, Josephine Orola and her siblings, Myrna, Angeline,
Manuel, Antonio and Althea, filed a Complaint against the Rural Bank, their father
Emilio and the Ex-OfficioProvincial Sheriff for the nullification of the Promissory
Notes and Real Estate Mortgages executed by Josephine, Manuel and Antonio
Orola, and the sale of the property subject of the said deed at public auction. They
alleged therein that they became the sole owners of Lots 1088 and 1071 when their
father executed a waiver of his rights over the said lots in their favor. They also
alleged that the real estate mortgage contracts were null and void because the same
were never submitted to and approved by the RTC in Sp. Proc. Nos. V-3526 and
V-3639. Moreover, they were hoodwinked by their father into signing the
contracts of lease and amended contracts of lease, promissory notes and deeds of
real estate mortgages as security for the P600,000.00 loan on the assurance that
they would be benefited therefrom; moreover, they did not receive the proceeds of
the said loans. As such, the extrajudicial foreclosure of the real estate mortgages
and the sale of the property covered by the said deeds were null and void. The
plaintiffs prayed that:

(1) A Temporary Restraining Order be issued restraining in
the meantime the defendant Ex-Officio Provincial Sheriff from executing
the Sheriffs Certificates of Sales arising out of Case No. 33 (1985),
Case No. 34 (1985) and Case No. 36 (1985), all of the Office of the
Provincial Sheriff.

(2) After hearing, a writ of preliminary injunction be issued
against the defendant Provincial Sheriff for the same purpose stated
above, and that the said Preliminary Injunction be made permanent after
trial on the merits.

(3) After trial, a Judgment be rendered -

(a) Declaring the contracts of loan and/or
Promissory Notes allegedly executed by plaintiffs
Josephine, Manuel and Antonio Orola in favor of the
defendant Rural Bank of Pontevedra (Capiz), Inc. null and
void ab initio.

(b) Declaring the real estate mortgages
purportedly signed by the same plaintiffs Josephine,
Manuel and Antonio Orola in favor of defendant Rural
Bank of Pontevedra (Capiz), Inc. null and void ab initio.

(c) Ordering defendant Emilio Q. Orola and
defendant Rural Bank of Pontevedra (Capiz), Inc., jointly
and severally, to pay the plaintiffs moral damages in the
sum of P600,000.00, actual damages in the sum
of P10,000.00, as and for attorneys fees in the amount
of P65,000.00, as exemplary damages in the sum
of P10,000.00, and to pay the costs of this suit.
(d) Ordering the Register of Deeds for the
Province of Capiz to cancel the registration of the real
estate mortgages illegally made under Section 113 of
Presidential Decree No. 1529 affecting Lots Nos. 1088 and
1050 of the Cadastral Survey of Pontevedra, Capiz.

The plaintiffs also pray for such other reliefs and remedies that
may be considered just and equitable under the premises.
[30]



In its answer to the complaint, Rural Bank averred that the RTC in Sp. Proc.
No. V-3639 authorized and even approved the amended contracts of sale executed
by Antonio, Manuel and Josephine Orola and the defendant Emilio Orola. It
further averred that the plaintiffs had agreed to the execution of the mortgages of
the property subject of the said deeds, and conformed to the said amended
contracts before the RTC in the intestate estate proceedings approved the same;
they were also notified of the balance of their account, and of the extrajudicial
foreclosure of the real estate mortgages, and the subsequent sale of the property
covered by the said mortgages at public auction after they refused to pay their
account despite demands. As such, the plaintiffs were estopped from assailing the
real estate mortgages and the extrajudicial foreclosure thereof and the sale of the
lots covered by the said deeds at public auction. Rural Bank prayed that:

WHEREFORE, premises considered, it is most respectfully
prayed of this Honorable Court that, after due notice and hearing, a
judgment be rendered in favor of defendant bank dismissing the
plaintiffs complaint and ordering the plaintiffs to pay defendant bank
the following:

1. As and for attorneys fees in the amount of P50,000.00;

2. As moral, compensatory and exemplary damages, an
amount to be fixed by this Honorable Court;

3. The costs of this suit.

Herein defendant bank, likewise, prays that the plaintiffs petition
for the Issuance of a Temporary Restraining Order against the
defendant Ex-Officio Provincial Sheriff restraining him from executing
the Certificates of Sheriff Sale arising out of Case No. 33 (1985), Case
No. 34 (1985) and Case No. 36 (1985), all of the Office of the Provincial
Sheriff of Capiz be denied for obvious lack of merit.

Herein defendant further prays that the extra-judicial foreclosure
of the Real Estate Mortgages recorded under Republic Act 3344 be
confirmed and declared binding and valid affecting the Original
Certificates of Title Nos. RO-801 (17658) and RO-802 (17682) covering
the mortgaged Lots Nos. 1088 and 1071 of the Cadastral Survey of
Capiz.

Herein defendant finally prays for such other reliefs or remedies
which are just and equitable in the premises.
[31]



In his answer to the complaint, Emilio Orola admitted that the guardianship
proceedings terminated on September 1, 1987 but specifically denied the
allegations in the complaint that the plaintiffs were the absolute owners of the lots
subject matter thereof. He alleged that he executed the Waiver of Right on
October 26, 1976 only because his brother and sister-in-law required him to do so
as a condition to their signing the partition agreement, with their assurance that the
said waiver would take effect only after his death. He further claimed that the
plaintiffs were aware of this because they accepted his waiver only on September
21, 1987 after they became of age. Moreover, the plaintiffs had agreed to the
execution of the amended contracts of lease to facilitate the early release of the
loans as required by the Rural Bank. He further alleged that the proceeds of the
loans were used for the development of the estate; the non-submission of the real
estate mortgages to the intestate estate and guardianship courts for approval was
due to the fault of Rural Bank; and his failure to pay the amortizations of the loan
was due to force majeure, namely, typhoon Undang.

On December 29, 1989, the Rural Bank presented the Real Estate Mortgage
in the Office of the Register of Deeds.
[32]


On April 19, 1991, the RTC rendered judgment in favor of the
plaintiffs. The fallo of the decision reads:

IN VIEW OF THE CONSIDERATIONS, judgment is rendered:

1. Declaring the loans of Josephine Orola, Antonio Orola,
Manuel Orola, all on March 21, 1983, with the defendant, Rural Bank,
at P200,000 each or a total of P600,000, null and void;

2. Declaring that the real estate mortgages of [the] above
three (3) plaintiffs on (a) Lot No. 1071-part and Lot No. 1088-part under
Tax Declaration No. 7196 in the name of [the] Heirs of Trinidad Laserna
Orola to secure the loan by Josephine Orola; (b) Lot No. 1088 known as
Lot No. 2-B of the parcellary plan under Tax Declaration No. 7197 in
the name of the Heirs of Trinidad Orola and Lot No. 1050 under Tax
Declaration No. 2623 in the name of Trinidad Orola to secure the loan
by Antonio Orola; and (c) Lot No. 1088 under Tax Declaration No. 6901
in the name of Trinidad Laserna Orola to secure the loan by Manuel
Orola, all as Attorney-in-fact of defendant Emilio Orola, administrator,
null and void;

Both (Nos. 1 and 2) for failure to comply with the mandatory
requirements of Section 7, Rule 89, Revised Rules of Court;

3. Ordering the Office of the Registry of Land Titles and
Deeds, Province of Capiz, to cancel its registration of the real estate
mortgages affecting [the] above parcels of land.

Claims of damages and attorneys fees as well as counterclaims
are denied.

Costs against the defendants, pro indiviso.
[33]



The trial court held that although the intestate estate court authorized Emilio
to negotiate a loan of P600,000.00 with Rural Bank, he was not authorized to
mortgage the real property of the estate to the Rural Bank. The court ruled that the
September 12, 1980 Order of the intestate estate court
was null and void because the motion of the administrator for authority to negotiate
a loan with the Rural Bank was made ex parte, that is, without notifying the
plaintiffs who were the heirs of the deceased. The court also held that the plaintiffs
were not estopped from assailing the real estate mortgage contracts, the same being
null and void. It also declared that the issue of whether or not the plaintiffs were
the co-owners of the property should be ventilated with the proper RTC in the
exercise of its general jurisdiction in an ordinary action for the said purpose.

Rural Banks motion for reconsideration of the decision was denied by the
trial court. It then appealed the decision to the CA, where it alleged that:

As to Assignment on Error No. I and II

A In ruling on the nullity of the loans and mortgages in
question, the lower court confined itself to the order of the intestate
court, dated December 12, 1980, totally ignoring the subsequent order
dated December 17, 1982 (Exhs. 36 & 37) which granted the authority to
encumber the estate in the manner required by the defendant Rural Bank
of Pontevedra.

B The non-presentation of the priorly authorized mortgages in
question in court after their execution, does not nullify said mortgages,
as what is required by Sec. 7, Rule 89 is only prior approval by the
intestate court.

As to Assignment of Error No. III

Estoppel [precludes] a party from [repudiating] an obligation
voluntarily assumed after having accepted benefits therefrom.

As to Assignment of Error No. IV

Because of their baseless complaint, defendant-appellant was
unnecessarily dragged into this litigation causing defendant-appellant
damages.
[34]


The appellant bank averred that the amended contracts of lease, which
contained provisions requiring the intestate estate courts approval, were approved
by the intestate estate court and conformed to by the other heirs of the
deceased. The bank posited that the court a quo had no jurisdiction to nullify the
order of the estate court, which was co-equal in rank with the estate court in
approving the amended contracts of lease. It further alleged that the administrator
of the estate is not required under Section 7, Rule 89 of the Rules of Court to
secure prior authority to mortgage the real properties or otherwise encumber the
same. Rural Bank alleged that the appellees were estopped from assailing the real
estate mortgages of the property after having been benefited by theP600,000.00
loan.

The appellees failed to file their brief. On October 18, 2002, the CA
rendered a Decision
[35]
granting the appeal and reversing the appealed decision.

The appellate court ruled that the intestate estate courts approval of the
amended contracts of lease carried with it the approval of the real estate mortgages
executed by Emilio Orola in favor of the Rural Bank. Angeline, Myrna and Althea
even conformed to the amended contracts of lease; hence, were estopped from
assailing them, as well as the real estate mortgage contracts.

After the appellate court denied their motion for reconsideration of the
decision, the Orola siblings, now the petitioners, filed the instant petition for
review on certiorari with this Court, alleging that:

-I-
THE SUBJECT MORTGAGES CONSTITUTED OVER THE REAL
ESTATE PROPERTIES OF PETITIONERS-APPELLEES UNDER
SECTION 7, RULE 89 OF THE RULES OF COURT ARE VOID FOR
NON-COMPLIANCE WITH THE MANDATORY REGULATIONS
(SIC) OF THE SAID PROVISION.

-II-
ASSUMING ARGUENDO SUBSTANTIAL COMPLIANCE WITH
THE PROVISIONS OF RULE 89, SECTION 7, THE SUBJECT
MORTGAGES ARE STILL VOID FOR LACK OF AUTHORITY
FROM THE PROBATE COURT, HAVING BEEN CONSTITUTED
BY PERSONS OTHER THAN THE ADMINISTRATOR OF THE
ESTATE OF TRINIDAD LASERNA OROLA.
[36]



The petitioners reiterate their argument that respondent Emilio Orola, then
administrator of the estate, failed to comply with Section 7, Rule 89 of the Rules of
Court. They aver that this provision is mandatory in nature, including the fixing of
a time and place for hearing of the motion for the approval of the amended
contracts of lease. They point out that respondent Orola failed to file a motion for
the approval of the real estate mortgages. The petitioners insist that even if it is
assumed that the December 17, 1982 Order of the intestate estate court approving
the amended contracts of lease authorized the constitution of real estate mortgages
over the real property of the estate, such order is void, as it authorized petitioners
Manuel, Antonio and Josephine Orola, and not the respondent Emilio Orola, to
mortgage the said property. They insist that they are not estopped from assailing a
void order issued by the intestate estate court.
Respondent Rural Bank insists that the petitioners had been benefited by the
loans granted to them; hence, are estopped from assailing the real estate mortgage
contracts. Respondent Orola, for his part, avers that the one-half undivided portion
of the property subject of the real estate mortgages was the exclusive property of
the deceased, and partly the conjugal property of the respondent and the
deceased. Moreover, respondent Orolas share in the conjugal property was not
the subject of the intestate case, as it was not included as part of the property given
as security for the loans of the petitioners-mortgagees.

The petition is meritorious.

Section 2, Rule 89 of the Rules of Court provides that, upon application of
the administrator and on written notice to the heirs, the court may authorize the
administrator to mortgage so much as may be necessary of the real estate for the
expenses of the administrator, or if it clearly appears that such mortgage would be
beneficial to the persons interested:

Sec. 2. When court may authorize sale, mortgage, or other
encumbrance of realty to pay debts and legacies through personality not
exhausted. When the personal estate of the deceased is not sufficient to
pay the debts, expenses of administration, and legacies, or where the sale
of such personal estate may injure the business or other interests of those
interested in the estate, and where a testator has not, otherwise, made
sufficient provision for the payment of such debts, expenses, and
legacies, the court, on the application of the executor or administrator
and on written notice to the heirs, devisees, and legatees residing in the
Philippines, may authorize the executor or administrator to sell,
mortgage, or otherwise, encumber so much as may be necessary of the
real estate, in lieu of personal estate, for the purpose of paying such
debts, expenses, and legacies, if it clearly appears that such sale,
mortgage, or encumbrance would be beneficial to the persons interested;
and if a part cannot be sold, mortgaged, or otherwise encumbered
without injury to those interested in the remainder, the authority may be
for the sale, mortgage, or other encumbrance of the whole of such real
estate, or so much thereof as is necessary or beneficial under the
circumstances.

Section 7 of Rule 89 provides the rules to obtain court approval for such
mortgage:

(a) The executor or administrator shall file a written petition
setting forth the debts due from the deceased, the expenses of
administration, the legacies, the value of the personal estate, the situation
of the estate to be sold, mortgaged, or otherwise encumbered, and such
other facts as show that the sale, mortgage, or other encumbrance is
necessary or beneficial;

(b) The court shall thereupon fix a time and place for hearing
such petition, and cause notice stating the nature of the petition, the
reason for the same, and the time and place of hearing, to be given
personally or by mail to the persons interested, and may cause such
further notice to be given, by publication or otherwise, as it shall deem
proper;

(c) If the court requires it, the executor or administrator shall
give an additional bond, in such sum as the court directs, conditioned
that such executor or administrator will account for the proceeds of the
sale, mortgage, or other encumbrance;

(d) If the requirements in the preceding subdivisions of this
section have been complied with, the court, by order stating such
compliance, may authorize the executor or administrator to sell,
mortgage, or otherwise encumber, in proper cases, such part of the estate
as is deemed necessary, and in case of sale the court may authorize it to
be public or private, as would be most beneficial to all parties
concerned. The executor or administrator shall be furnished with a
certified copy of such order;

(e) If the estate is to be sold at auction, the mode of giving
notice of the time and place of the sale shall be governed by the
provisions concerning notice of execution sale;

(f) There shall be recorded in the registry of deeds of the
province in which the real estate thus sold, mortgaged, or otherwise
encumbered is situated, a certified copy of the order of the court,
together with the deed of the executor or administrator for such real
estate, which shall be as valid as if the deed had been executed by the
deceased in his lifetime.


After the real estate mortgage is executed in accordance with the foregoing
regulations, the said deed must be submitted for the consideration and approval or
disapproval of the court.
[37]


The records show that respondent Emilio Orola notified the petitioners of his
motion for the approval of the amended contracts of lease. Although the motion
was ex parte, nonetheless, petitioners Angeline, Myrna and Althea Orola filed their
Joint Affidavit of Conformity, in which they declared that:

7. That on December 15, 1982, the administrator, thru
counsel, filed an ex parte motion for the admission and approval of the
amended contracts of lease in favor of our brothers and sister changing
the term from ten (10) to twelve (12) years, copy of the amended
contracts of lease [were] shown to us;

8. That we have no objection and we voluntarily conform to
the amendment of the term from ten (10) to twelve (12) years and freely
give our consent to having the Lessees execute a real estate mortgage
over the leased property in favor of the bank just to be able to avail with
the CB: IBRD financing loan to develop the property;

9. That we are jointly executing this affidavit for the
purpose of facilitating the immediate admission and approval of the
amended contracts of lease as prayed for in the ex parte motion dated
December 5, 1982.
[38]


However, the Court agrees with the petitioners contention that respondent
Orola failed to secure an order from the intestate estate court authorizing him to
mortgage the subject lots and execute a real estate mortgage contract in favor of
respondent Rural Bank. What the intestate estate court approved in its December
17, 1982 Order was the authority incorporated in the amended contracts of lease
respondent Orola gave to petitioners Josephine, Manuel and Antonio Orola so that
the said lots could be mortgaged to the respondent Rural Bank as security for
the P600,000.00 loan under their respective names. In fine, the intestate estate
court
authorized the petitioners, not respondent Orola, to mortgage the said lots to
respondent Rural Bank. Moreover, under Section 7 of Rule 89 of the Rules of
Court, only the executor or administrator of the estate may be authorized by the
intestate estate court to mortgage real estate belonging to the estate; hence, the
order of the estate court authorizing the petitioners to mortgage the realty of the
estate to the respondent Rural Bank is a nullity.

The respondents must have realized that the order of the intestate estate
court authorizing petitioners Manuel, Antonio and Josephine Orola to mortgage the
lots was void because respondent Emilio Orola caused the real estate mortgage
contracts in favor of respondent Rural Bank to be executed by his children,
petitioners Josephine, Manuel and Antonio Orola, acting as attorneys-in-fact of
the administrator of the estate. However, the estate court had not appointed
petitioners Antonio, Josephine and Manuel Orola as attorneys-in-fact of respondent
Emilio Orola empowered to execute the said contracts. Hence, they had no
authority to execute the said Real Estate Mortgage Contracts for and in behalf of
respondent Orola, in the latters capacity as administrator of the estate.

Worse, respondent Orola failed to submit the real estate mortgage contracts
to the intestate estate court for its consideration and approval. To give approval
means to confirm, ratify, or to consent to some act or thing done by
another.
[39]
Unless and until the said contracts are approved by the intestate estate
court, the same cannot have any binding effect upon the estate; nor serve as basis
for any action against the estate and against the parcels of land described in the
said contracts belonging to it.
[40]


It bears stressing that respondent Orola had no right or authority to mortgage
the realty belonging to the estate. He derived his authority from the order of the
estate court which had jurisdiction to authorize the real estate mortgage thereof
under such terms and conditions and upon proper application. Any mortgage of
realty of the estate without the appropriate authority of the estate court has no legal
support and is void.
[41]
The purchaser at public auction acquires no title over the
realty.
[42]
The real estate mortgage contracts, as well as the extrajudicial
foreclosure thereof and the sale of the property described therein at public auction,
can thus be attacked directly and collaterally.
[43]


Contrary to the contention of respondent Rural Bank, the petitioners were
not estopped from assailing the real estate mortgage contracts, the extrajudicial
foreclosure thereof and the sale of the property to respondent Rural Bank.

Although the records show that petitioners Josephine, Manuel and Antonio
Orola received the proceeds of the loan from respondent Rural Bank, the amount
was deposited by respondent Emilio Orola in his savings account with respondent
Rural Bank. He was obliged to deposit the said amount in the estates account
with the Republic Planters Bank, as ordered by the intestate estate court. Worse,
respondent Rural Bank applied P229,771.20 of the loan proceeds to liquidate the
accommodation loan it granted to respondent Emilio Orola. There is no showing
in the records that the intestate estate court ever authorized the use of the proceeds
of the loan to pay respondent Emilio Orolas accommodation loan. The loan
proceeds were to be used to develop property belonging to the estate into a
fishpond from which income could be generated. Of the net proceeds of
the P582,000.00 loan, only P4,292.79 remained as of September 9,
1983. Respondent Emilio Orola failed to pay the amortization of the loan for the
respondent Rural Bank of the estate.

Had the real estate mortgage contracts been submitted to the intestate estate
court for consideration and approval after proper notice to the petitioners, the court
would have been apprised of the terms and conditions contained therein, and that
about one-half of the loan would be used to pay the accommodation loan of
respondent Emilio Orola.

Petitioners Manuel, Josephine and Antonio Orola executed the amended
contracts of lease, the promissory notes and the real estate mortgages upon the
prodding of their father, respondent Emilio Orola, and upon the suggestion of
respondent Rural Bank, solely to facilitate the speedy approval of the loan of the
estate, which was to be the ultimate beneficiary thereof. The petitioners acted on
the belief that the loan would be used to develop the swampy portion of the realty
into an income-generating fishpond, impervious of the fact that almost one-half of
the proceeds of the loan had been used to pay the accommodation loan of
respondent Emilio Orola.

The claim of respondent Emilio Orola that part of the property used as
collateral for the loan was part of his and his deceased wifes conjugal property,
and that the waiver he executed was to take effect only upon his death, is belied by
the records. Indeed, in his Waiver of Rights dated October 26, 1976, respondent
Emilio Orola declared that:

1. That during the lifetime of my first wife, Trinidad Laserna,
we have acquired property by purchase from Mr. Manuel Laserna, in co-
ownership with Pedro Laserna, Dolores Deocampo, Jesus Laserna and
Emiliana Laserna affecting Lots Nos. 1070, 1071, 1074, 1075, 1088,
1050 & 1051, all of Pontevedra Cadastre;

2. That the said [properties] mentioned above are still under
co-ownership, pro indiviso, between and among the Vendees whose
names are mentioned above;

3. That during the marital relations between me and my
deceased wife, Trinidad Laserna, we have six (6) children, namely,
Josephine, Myrna, Angeline, Manuel, Antonio and Althea, all surnamed
Orola;

4. That the co-owners have decided to terminate the co-
ownership over the above-mentioned properties of which the
aforementioned children of the spouses, Emilio Orola and Trinidad
Laserna, became co-owners thereof in representation of their deceased
mother, Trinidad Laserna, by operation of law and the herein
undersigned desires to give protection to his children of the first
marriage which are named above.

NOW, THEREFORE, for and in consideration of the love,
affection and mutual agreements, I, EMILIO Q. OROLA, by these
presents, do hereby waive and relinquish all my shares, interests and
participations over all the above-mentioned properties in favor of my six
(6) children of the first marriage, namely, Josephine, Myrna, Angeline,
Manuel, Antonio and Althea.

It is understood that, upon the registration of the project of
partition which the co-owners will present that the shares and
participations of the undersigned shall be consolidated in the names of
the children mentioned above in equal right and participation.
[44]


IN LIGHT OF ALL THE FOREGOING, the petition
is GRANTED. The assailed Decision and Resolution of the Court of Appeals
are REVERSED AND SET ASIDE. The Decision of the Regional Trial Court
is REINSTATED. No costs.

SO ORDERED.

FIRST DIVISION
[G.R. No. 145982. July 3, 2003]
FRANK N. LIU, deceased, substituted by his surviving spouse Diana
Liu, and children, namely: Walter, Milton, Frank, Jr., Henry and
Jockson, all surnamed Liu, Rebecca Liu Shui and Pearl Liu
Rodriguez, petitioners, vs. ALFREDO LOY, JR., TERESITA A.
LOY and ESTATE OF JOSE VAO, respondents.
D E C I S I O N
CARPIO, J .:
The Case
This is a petition for review on certiorari of the Decision
[1]
dated 13 June
2000 and the Resolution dated 14 November 2002 of the Court of Appeals
which affirmed the Decision
[2]
of the Regional Trial Court, Branch 14, Cebu
City. The Court of Appeals agreed with the trial court that the sales by the late
Teodoro Vao to respondents Alfredo Loy, Jr. and Teresita A. Loy of Lot Nos.
5 and 6, respectively, were valid. The Court of Appeals also agreed with the
trial court that the unilateral extrajudicial rescission by the late Teodoro Vao
of the contract to sell involving five lots, including Lot Nos. 5 and 6, between
him and Benito Liu (predecessor-in-interest of Frank Liu) was valid.
The Facts
On 13 January 1950, Teodoro Vao, as attorney-in-fact of Jose Vao, sold
seven lots of the Banilad Estate located in Cebu City to Benito Liu and Cirilo
Pangalo.
[3]
Teodoro Vao dealt with Frank Liu, the brother of Benito Liu, in the
sale of the lots to Benito Liu and Cirilo Pangalo. The lots sold to Benito Liu
were Lot Nos. 5, 6, 13, 14, and 15 of Block 12 for a total price
of P4,900. Benito Liu gave a down payment of P1,000, undertaking to pay the
balance of P3,900 in monthly installments of P100 beginning at the end of
January 1950. The lots sold to Cirilo Pangalo were Lot Nos. 14 and 15 of
Block 11 for a total price ofP1,967.50. Cirilo Pangalo gave P400 as down
payment, undertaking to pay the balance of P1,567.50 in monthly installments
of P400 beginning at the end of January 1950. Meanwhile, Jose Vao passed
away.
Benito Liu subsequently paid installments totaling P2,900, leaving a
balance of P1,000.
[4]
Apparently, Benito Liu stopped further payments
because Teodoro Vao admitted his inability to transfer the lot titles to Benito
Liu. Later, in a letter
[5]
dated 16 October 1954, Teodoro Vao informed Frank
Liu
[6]
that the Supreme Court had already declared valid the will of his father
Jose Vao. Thus, Teodoro Vao could transfer the titles to the buyers names
upon payment of the balance of the purchase price.
When Frank Liu failed to reply, Teodoro Vao sent him another
letter,
[7]
dated 1 January 1955, reminding him of his outstanding balance. It
appears that it was only after nine years that Frank Liu responded through a
letter,
[8]
dated 25 January 1964. In the letter, Frank Liu informed Teodoro
Vao that he was ready to pay the balance of the purchase price of the seven
lots. He requested for the execution of a deed of sale of the lots in his name
and the delivery of the titles to him.
On 22 April 1966, Benito Liu sold to Frank Liu the five lots (Lot Nos. 5, 6,
13, 14 and 15 of Block 12) which Benito Liu purchased from Teodoro
Vao.
[9]
Frank Liu assumed the balance of P1,000 for the five lots. Cirilo
Pangalo likewise sold to Frank Liu the two lots (Lot Nos. 14 and 15 of Block
11) that Pangalo purchased from Teodoro Vao. Frank Liu likewise assumed
the balance of P417 for the two lots.
On 21 March 1968, Frank Liu reiterated in a letter
[10]
his request for
Teodoro Vao to execute the deed of sale covering the seven lots so he could
secure the corresponding certificates of title in his name. He also requested
for the construction of the subdivision roads pursuant to the original
contract. In the letter, Frank Liu referred to another letter, dated 25 June
1966, which he allegedly sent to Teodoro Vao. According to Frank Liu, he
enclosed PBC Check No. D-782290 dated 6 May 1966 for P1,417, which is
the total balance of the accounts of Benito Liu and Cirilo Pangalo on the
seven lots. However, Frank Liu did not offer in evidence the letter or the
check. Frank Liu sent two other letters,
[11]
dated 7 June 1968 and 29 July
1968, to Teodoro Vao reiterating his request for the execution of the deed of
sale in his favor but to no avail.
On 19 August 1968, Teodoro Vao sold Lot No. 6 to respondent Teresita
Loy for P3,930.
[12]
The Register of Deeds of Cebu City entered this sale in the
Daybook on 24 February 1969.
[13]

On 2 December 1968, Frank Liu filed a complaint against Teodoro Vao
for specific performance, execution of deed of absolute sale, issuance of
certificates of title and construction of subdivision roads, before the Court of
First Instance of Davao. The case was docketed as Civil Case No. 6300.
[14]

On 19 December 1968, Frank Liu filed with the Register of Deeds of Cebu
City a notice of lis pendens on the seven lots due to the pendency of Civil
Case No. 6300.
[15]
However, the Register of Deeds denied the registration of
the lis pendens on the ground that the property is under administration and
said claim must be filed in court.
[16]

On 16 December 1969, Teodoro Vao sold Lot No. 5 to respondent
Alfredo Loy for P3,910.
[17]
The Register of Deeds of Cebu City entered this
sale in the Daybook on 16 January 1970.
[18]

On 3 October 1970, the Court of First Instance of Davao, on motion of
Teodoro Vao, dismissed Civil Case No. 6300 on the ground that Frank Liu
should have filed the claim with the probate court.
[19]
Thus, on 17 February
1972, Frank Liu filed before the probate court a claim against the Estate of
Jose Vao for Specific Performance, Execution of Deed of Absolute Sale,
Issuance of Certificate of Title, and Construction of Subdivision Roads.
[20]

During the proceedings, Teodoro Vao died. His widow, Milagros Vao,
succeeded as administratrix of the Estate of Jose Vao.
On 24 February 1976, the probate court approved the claim of Frank Liu.
On 5 March 1976, Milagros Vao executed a deed of conveyance covering
the seven lots in favor of Frank Liu, in compliance with the probate courts
order.
[21]
The deed of conveyance included Lot Nos. 5 and 6, the same lots
Teodoro Vao sold respectively to Alfredo Loy, Jr. on 16 December 1969 and
to Teresita Loy on 19 August 1968.
On 19 March 1976, the probate court, upon an ex-parte motion filed by
Teresita Loy, issued an Order
[22]
approving the 16 August 1968 sale by
Teodoro Vao of Lot No. 6 in her favor. Likewise, upon an ex-parte motion
filed by Alfredo Loy, Jr., the probate court issued on 23 March 1976 an
Order
[23]
approving the 16 December 1969 sale of Lot No. 5 by Teodoro Vao
in his favor.
On 10 May 1976, the Register of Deeds of Cebu City cancelled TCT No.
44204 in the name of the Estate of Jose Vao covering Lot No. 5 and issued a
new title, TCT No. 64522, in the name of Alfredo Loy, Jr. and Perfeccion V.
Loy.
[24]
Likewise, on the same date, the Register of Deeds cancelled TCT No.
44205 in the name of the Estate of Jose Vao covering Lot No. 6, and issued
TCT No. 64523 in the name of Teresita A. Loy.
[25]

On 3 June 1976, Milagros Vao, as administratrix of the estate, filed a
motion for reconsideration of the Orders of the probate court dated 19 and 23
March 1976. She contended that she already complied with the probate
courts Order dated 24 February 1976 to execute a deed of sale covering the
seven lots, including Lot Nos. 5 and 6, in favor of Frank Liu. She also stated
that no one notified her of the motion of the Loys, and if the Loys or the court
notified her, she would have objected to the sale of the same lots to the Loys.
On 4 June 1976, Frank Liu filed a complaint for reconveyance or
annulment of title of Lot Nos. 5 and 6. Frank Liu filed the case in the Regional
Trial Court of Cebu City, Branch 14, which docketed it as Civil Case No. R-
15342.
On 5 August 1978, the probate court denied the motion for reconsideration
of Milagros Vao on the ground that the conflicting claims regarding the
ownership of Lot Nos. 5 and 6 were already under litigation in Civil Case No.
R-15342.
On 8 April 1991, the Regional Trial Court of Cebu City (trial court),
Branch 14, rendered judgment against Frank Liu as follows:
WHEREFORE, judgment is hereby rendered:
(1) Dismissing the complaint at bar; and
(2) Confirming the unilateral extrajudicial rescission of the contract Exhibit A by the late
Teodoro Vao, conditioned upon the refund by the Estate of Jose Vao of one-half
(1/2) of what the plaintiff had paid under that contract.
The counterclaims by the defendants Alfredo A. Loy, Jr. and Teresita A. Loy and by
the defendant Estate of Jose Vao, not having been substantiated, are hereby denied.
Without special pronouncement as to costs.
SO ORDERED.
[26]

Frank Liu appealed to the Court of Appeals, which affirmed in toto the
decision of the trial court. Frank Liu
[27]
filed a motion for reconsideration but
the Court of Appeals denied the same.
Hence, the instant petition.
The Trial Courts Ruling
The trial court held that the contract between Teodoro Vao and Benito
Liu was a contract to sell. Since title to Lot Nos. 5 and 6 never passed to
Benito Liu due to non-payment of the balance of the purchase price,
ownership of the lots remained with the vendor. Therefore, the trial court
ruled that the subsequent sales to Alfredo Loy, Jr. and Teresita Loy of Lot
Nos. 5 and 6, respectively, were valid.
The trial court viewed the letter of Teodoro Vao dated 1 January 1995
addressed to Frank Liu as a unilateral extrajudicial rescission of the contract
to sell. The trial court upheld the unilateral rescission subject to refund by the
Estate of Jose Vao of one-half (1/2) of what Frank Liu paid under the
contract.
The trial court ruled that Teodoro Vao, as administrator of the Estate of
Jose Vao and as sole heir of Jose Vao, acted both as principal and as
agent when he sold the lots to Alfredo Loy, Jr. and Teresita Loy. The probate
court subsequently approved the sales. The trial court also found that Alfredo
Loy, Jr. and Teresita Loy were purchasers in good faith.
The Court of Appeals Ruling
In affirming in toto the trial courts decision, the appellate court found no
evidence of fraud or ill-motive on the part of Alfredo Loy, Jr. and Teresita
Loy. The Court of Appeals cited the rule that the law always presumes good
faith such that any person who seeks to be awarded damages due to the acts
of another has the burden of proving that the latter acted in bad faith or ill-
motive.
The Court of Appeals also held that the sales to Alfredo Loy, Jr. and
Teresita Loy of Lot Nos. 5 and 6, respectively, were valid despite lack of prior
approval by the probate court. The Court of Appeals declared that Teodoro
Vao sold the lots in his capacity as heir of Jose Vao. The appellate court
ruled that an heir has a right to dispose of the decedents property, even if the
same is under administration, because the hereditary property is deemed
transmitted to the heir without interruption from the moment of the death of the
decedent.
The Court of Appeals held that there is no basis for the claim of moral
damages and attorneys fees. The appellate court found that Frank Liu failed
to prove that he suffered mental anguish due to the actuations of the Loys.
The Court of Appeals likewise disallowed the award of attorneys fees. The
fact alone that a party was compelled to litigate and incur expenses to protect
his claim does not justify an award of attorneys fees. Besides, the Court of
Appeals held that where there is no basis to award moral damages, there is
also no basis to award attorneys fees.
The Issues
Petitioners
[28]
raise the following issues:
[29]

1. Whether prior approval of the probate court is necessary to validate the sale of Lot
Nos. 5 and 6 to Loys;
2. Whether the Loys can be considered buyers and registrants in good faith despite the
notice of lis pendens;
3. Whether Frank Liu has a superior right over Lot Nos. 5 and 6;
4. Whether the Court of Appeals erred in not passing upon the trial courts declaration
that the extra-judicial rescission by Teodoro Vao of the sale in favor of Frank Liu is
valid;
5.Whether petitioners are entitled to moral damages and attorneys fees.
The Courts Ruling
The petition is meritorious.
Whether there was a valid cancellation of the
contract to sell
There was no valid cancellation of the contract to sell because there was
no written notice of the cancellation to Benito Liu or Frank Liu. There was
even no implied cancellation of the contract to sell. The trial court merely
viewed the alleged unilateral extrajudicial rescission from the letter of
Teodoro Vao, dated 1 January 1955, addressed to Frank Liu, stating that:
Two months, I believe, is ample for the allowance of delays caused by your (sic)
either too busy, or having been some place else, or for consultations. These are the
only reasons I can think of that could have caused the delay in your answer, unless
you do not think an answer is necessary at all, as you are not the party concerned in
the matter.
I shall therefor (sic) appreciate it very much, if you will write me within ten days from
receipt of this letter, or enterprete (sic) your silence as my mistake in having written
to the wrong party, and therefor (sic) proceed to write Misters: B. Liu and C.
Pangalo.
[30]
(Emphasis supplied)
Obviously, we cannot construe this letter as a unilateral extrajudicial
rescission of the contract to sell. As clearly stated in the letter, the only action
that Teodoro Vao would take if Frank Liu did not reply was that Teodoro
Vao would write directly to Benito Liu and Cirilo Pangalo. The letter does not
mention anything about rescinding or cancelling the contract to sell.
Although the law allows the extra-judicial cancellation of a contract to sell
upon failure of one party to comply with his obligation, notice of such
cancellation must still be given to the party who is at fault.
[31]
The notice of
cancellation to the other party is one of the requirements for a valid
cancellation of a contract to sell, aside from the existence of a lawful
cause. Even the case cited by the trial court emphasizes the importance of
such notice:
Of course, it must be understood that the act of a party in treating a contract as
cancelled or resolved on account of infractions by the other contracting party must
be made known to the other and is always provisional, being ever subject to scrutiny
and review by the proper court. If the other party denies that rescission is justified, it
is free to resort to judicial action in its own behalf, and bring the matter to
court. Then, should the court, after due hearing, decide that the resolution of the
contract was not warranted, the responsible party will be sentenced to damages; in the
contrary case, the resolution will be affirmed, and the consequent indemnity awarded
to the party prejudiced.
[32]
(Emphasis supplied)
The fact that Teodoro Vao advised Frank Liu to file his claim with the
probate court is certainly not the conduct of one who supposedly unilaterally
rescinded the contract with Frank Liu.
[33]

In this case, there was prior delay or default by the seller. As admitted by
Teodoro Vao, he could not deliver the titles because of a case questioning
the authenticity of the will of his father. In a letter
[34]
to Frank Liu dated 16
October 1954, Teodoro Vao stated:
Some time last May, if I remember correctly, you offered to settle the whole balance
of your account if I can have the Titles transferred immediately in your brothers
name, and to that of Mr. Pangalos. I cannot blame you if you were disappointed then,
to know that I could not have the titles transferred, even should you have paid in
full. (Emphasis supplied)
In the same letter of 16 October 1954, Teodoro Vao informed Frank Liu
that the titles were ready for transfer, thus:
However, last June 30, of this year, the Supreme Court, unanimously concurred in the
reversal of the decision of the Court of First Instance, as regard the legality of the Will
of my father. Now that the Will of my Father has been declared Legal, my opponents
have lost their personality in the case, and with it their power to harass me in
court. Also, sometime in the middle of July, also this year, the Supreme Court again
declared that all the sales I have made of the properties of my Father, were Legal, and
that I should be empowered to have the Titles transferred in the buyers names, should
they have paid in full. A few have already received their Titles. And yours can be
had too in two days time from the time you have paid in full.
Nevertheless, the subsequent approval by the probate court of the sale of
Lot Nos. 5 and 6 to Frank Liu rendered moot any question on the continuing
validity of the contract to sell.
Whether the lis pendens in the Davao case
served as notice to the Loys
The lis pendens in the Davao case did not serve as notice to the Loys.
The Register of Deeds of Cebu City denied registration of the lis pendens on
19 December 1968.
[35]
Frank Liu did not appeal to the Land Registration
Commission
[36]
to keep alive the lis pendens. Republic Act No. 1151,
[37]
which
took effect 17 June 1954, provides:
SEC. 4. Reference of doubtful matters to Commissioner of Land Registration.
When the Register of Deeds is in doubt with regard to the proper step to be taken or
memorandum to be made in pursuance of any deed, mortgage, or other instrument
presented to him for registration, or where any party in interest does not agree with
the Register of Deeds with reference to any such matter, the question shall be
submitted to the Commissioner of Land Registration either upon the certification of
the Register of Deeds, stating the question upon which he is in doubt, or upon the
suggestion in writing by the party in interest; and thereupon the Commissioner, after
consideration of the matter shown by the records certified to him, and in case of
registered lands, after notice to the parties and hearing, shall enter an order prescribing
the step to be taken or memorandum to be made. His decision in such cases shall be
conclusive and binding upon all Registers of Deeds: Provided, however, That when a
party in interest disagrees with a ruling or resolution of the Commissioner and the
issue involves a question of law, said decision may be appealed to the Supreme Court
within thirty days from and after receipt of the notice thereof. (Emphasis supplied)
Frank Lius failure to appeal
[38]
the denial of the registration rendered
the lis pendens ineffective. The Court of First Instance of Davao City
eventually dismissed Frank Lius complaint on 3 October 1970.
Whether the registration by the Loys of their
contracts of sale made them the first registrants
in good faith to defeat prior buyers
The registration by the Loys of their contracts of sale did not defeat the
right of prior buyers because the person who signed the Loys contracts was
not the registered owner. The registered owner of Lot Nos. 5 and 6 was the
Estate of Jose Vao. Teodoro Vao was the seller in the contract of sale
with Alfredo Loy, Jr. The Estate of Jose Vao was the seller in the contract of
sale with Teresita Loy. Teodoro Vao signed both contracts of sale. The rule
is well-settled that one who buys from a person who is not the registered
owner is not a purchaser in good faith.
[39]
As held in Toledo-Banaga v.
Court of Appeals:
[40]

To repeat, at the time of the sale, the person from whom petitioner Tan bought the
property is neither the registered owner nor was the former authorized by the latter to
sell the same. She knew she was not dealing with the registered owner or a
representative of the latter. One who buys property with full knowledge of the flaws
and defects in the title of his vendor is enough proof of his bad faith and cannot claim
that he acquired title in good faith as against the owner or of an interest therein. When
she nonetheless proceeded to buy the lot, petitioner Tan gambled on the result of
litigation. She is bound by the outcome of her indifference with no one to blame
except herself if she looses her claim as against one who has a superior right or
interest over the property. x x x.
The Loys were under notice to inquire why the land was not registered in
the name of the person who executed the contracts of sale. They were under
notice that the lots belonged to the Estate of Jose Vao and any sale of the
lots required court approval. Any disposition would be subject to the claims of
creditors of the estate who filed claims before the probate court.
[41]

The contracts of the Loys did not convey ownership of the lots to them as
against third persons. The contracts were binding only on the seller, Teodoro
Vao. The contracts of the Loys would become binding against third persons
only upon approval of the sale by the probate court and registration with the
Register of Deeds. Registration of the contracts without court approval would
be ineffective to bind third persons, especially creditors of the
estate. Otherwise, this will open the door to fraud on creditors of the estate.
Whether the probate courts ex-parte
approval of the contracts of the Loys was valid
Section 8, Rule 89 of the 1964 Rules of Court
[42]
specifically requires
notice to all interested parties in any application for court approval to convey
property contracted by the decedent in his lifetime. Thus:
SECTION 8. When court may authorize conveyance of realty which deceased
contracted to convey. Notice. Effect of deed. Where the deceased was in his
lifetime under contract, binding in law, to deed real property, or an interest therein,
the court having jurisdiction of the estate may, on application for that purpose,
authorize the executor or administrator to convey such property according to such
contract, or with such modifications as are agreed upon by the parties and approved
by the court; and if the contract is to convey real property to the executor or
administrator, the clerk of the court shall execute the deed. The deed executed by
such executor, administrator, or clerk of court shall be as effectual to convey the
property as if executed by the deceased in his lifetime; but no such conveyance shall
be authorized until notice of the application for that purpose has been given
personally or by mail to all persons interested, and such further notice has been
given, by publication or otherwise, as the court deems proper; nor if the assets in the
hands of the executor or administrator will thereby be reduced so as to prevent a
creditor from receiving his full debt or diminish his dividend. (Rule 89, 1964 Rules of
Court) (Emphasis supplied)
Despite the clear requirement of Section 8 of Rule 89, the Loys did not
notify the administratrix of the motion and hearing to approve the sale of the
lots to them. The administratrix, who had already signed the deed of sale to
Frank Liu as directed by the same probate court, objected to the sale of the
same lots to the Loys. Thus, as found by the trial court:
On June 3, 1976, Milagros H. Vao moved for the reconsideration of the Order issued
by Judge Ramolete on March 19, 1976 and March 23, 1976, contending that she had
not been personally served with copies of the motions presented to the Court by
Alfredo Loy, Jr. and by Teresita Loy seeking the approval of the sales of the lots in
their favor, as well as the Orders that were issued by the Court pursuant thereto; that
the Court in its Order of February 24, 1976 had ordered her (Milagros H. Vao), to
execute a deed of absolute sale in favor of the plaintiff, which sale had been approved
by the Court; that she had not known of the sale of Lots 5 and 6 to any other person
except to the plaintiff; that the sale of the two lots in favor of plaintiff was made
earlier, when there was yet no litigation with the Bureau of Internal Revenue, while
those in favor of the defendant Loys were made when there was already a prohibition
by the Court against any sale thereof; that the sales in favor of the Loys were made
without Court authority; and that if the approval of the sales had not been obtained ex-
parte she would have informed the Court of the complication arising therefrom, and
she would not have executed the sale in favor of plaintiff, and she would have asked
the Court to decide first as to who had preference over said lots.
[43]

The failure to notify the administratrix and other interested persons
rendered the sale to the Loys void. As explained by Justice J.B.L. Reyes in De
J esus v. De J esus:
[44]

Section 9, Rule 90, however, provides that authority can be given by the probate court
to the administrator to convey property held in trust by the deceased to the
beneficiaries of the trust only after notice given as required in the last preceding
section; i.e., that no such conveyance shall be authorized until notice of the
application for that purpose has been given personally or by mail to all persons
interested, and such further notice has been given, by publication or otherwise, as
the court deems proper (sec. 8, Rule 90). This rule makes it mandatory that notice
be served on the heirs and other interested persons of the application for approval
of any conveyance of property held in trust by the deceased, and where no such
notice is given, the order authorizing the conveyance, as well as the conveyance
itself, is completely void. (Emphasis supplied)
In this case, the administratrix, the wife of the deceased Teodoro Vao,
was not notified of the motion and hearing to approve the sale of the lots to
the Loys. Frank Liu did not also receive any notice, although he obviously
was an interested party. The issuance of new titles to the Loys on 10 May
1976 by the Registry of Deeds did not vest title to the Loys because the
conveyance itself was completely void. The consequences for the failure to
notify the administratrix and other interested parties must be borne by the
Loys.
Necessity of court approval of sales
Indisputably, an heir can sell his interest in the estate of the decedent, or
even his interest in specific properties of the estate. However, for such
disposition to take effect against third parties, the court must approve such
disposition to protect the rights of creditors of the estate. What the deceased
can transfer to his heirs is only the net estate, that is, the gross estate less the
liabilities. As held in Baun v. Heirs of Baun:
[45]

The heir legally succeeds the deceased, from whom he derives his right and title, but
only after the liquidation of the estate, the payment of the debts of the same, and the
adjudication of the residue of the estate of the deceased; and in the meantime the only
person in charge by law to attend to all claims against the estate of the deceased
debtor is the executor or administrator appointed by the court.
In Opulencia v. Court of Appeals,
[46]
an heir agreed to convey in a
contract to sell her share in the estate then under probate settlement. In an
action for specific performance filed by the buyers, the seller-heir resisted on
the ground that there was no approval of the contract by the probate
court. The Court ruled that the contract to sell was binding between the
parties, but subject to the outcome of the testate proceedings. The Court
declared:
x x x Consequently, although the Contract to Sell was perfected between the petitioner
(seller-heir) and private respondents (buyers) during the pendency of the probate
proceedings, the consummation of the sale or the transfer of ownership over the parcel
of land to the private respondents is subject to the full payment of the purchase
price and to the termination and outcome of the testate proceedings. x x x Indeed,
it is settled that the sale made by an heir of his share in an inheritance, subject to the
pending administration, in no wise stands in the way of such
administration. (Emphasis supplied)
In Alfredo Loys case, his seller executed the contract of sale after the
death of the registered owner Jose Vao. The seller was Teodoro Vao who
sold the lot in his capacity as sole heir of the deceased Jose
Vao. Thus, Opulencia applies to the sale of the lot to Alfredo Loy, Jr., which
means that the contract of sale was binding between Teodoro Vao and
Alfredo Loy, Jr., but subject to the outcome of the probate proceedings.
In Frank Lius case, as successor-in-interest of Benito Liu, his seller was
Jose Vao, who during his lifetime executed the contract to sell through an
attorney-in-fact, Teodoro Vao. This is a disposition of property contracted by
the decedent during his lifetime. Section 8 of Rule 89 specifically governs
this sale:
SECTION 8. When court may authorize conveyance of realty which deceased
contracted to convey. Notice. Effect of deed. Where the deceased was in his
lifetime under contract, binding in law, to deed real property, or an interest
therein, the court having jurisdiction of the estate may, on application for that
purpose, authorize the executor or administrator to convey such property
according to such contract, or with such modifications as are agreed upon by the
parties and approved by the court; x x x
Thus, Frank Liu applied to the probate court for the grant of authority to the
administratrix to convey the lots in accordance with the contract made by the
decedent Jose Vao during his lifetime. The probate court approved the
application.
In Teresita Loys case, her seller was the Estate of Jose Vao. Teodoro
Vao executed the contract of sale in his capacity as administrator of the
Estate of Jose Vao, the registered owner of the lots. The Court has held that
a sale of estate property made by an administrator without court authority is
void and does not confer on the purchaser a title that is available against a
succeeding administrator.
[47]

Manotok Realty, Inc. v. Court of Appeals
[48]
emphasizes the need for
court approval in the sale by an administrator of estate property. The Court
held in Manotok Realty:
We also find that the appellate court committed an error of law when it held that the
sale of the lot in question did not need the approval of the probate court.
Although the Rules of Court do not specifically state that the sale of an immovable
property belonging to an estate of a decedent, in a special proceeding, should be made
with the approval of the court, this authority is necessarily included in its capacity as a
probate court.
An administrator under the circumstances of this case cannot enjoy blanket authority
to dispose of real estate as he pleases, especially where he ignores specific directives
to execute proper documents and get court approval for the sales validity.
Section 91 of Act No. 496 (Land Registration Act) specifically requires
court approval for any sale of registered land by an executor or administrator,
thus:
SEC. 91. Except in case of a will devising the land to an executor to his own use or
upon some trust or giving to the executor power to sell, no sale or transfer of
registered land shall be made by an executor or by an administrator in the course of
administration for the payment of debts or for any other purpose, except in
pursuance of an order of a court of competent jurisdiction obtained as provided by
law. (Emphasis supplied)
Similarly, Section 88 of Presidential Decree No. 1529 (Property Registration
Decree) provides:
SEC. 88. Dealings by administrator subject to court approval. After a
memorandum of the will, if any, and order allowing the same, and letters testamentary
or letters of administration have been entered upon the certificate of title as
hereinabove provided, the executor or administrator may alienate or encumber
registered land belonging to the estate, or any interest therein, upon approval of the
court obtained as provided by the Rules of Court. (Emphasis supplied)
Clearly, both the law and jurisprudence expressly require court approval
before any sale of estate property by an executor or administrator can take
effect.
Moreover, when the Loys filed in March 1976 their ex-parte motions for
approval of their contracts of sale, there was already a prior order of the
probate court dated 24 February 1976 approving the sale of Lot Nos. 5 and 6
to Frank Liu. In fact, the administratrix had signed the deed of sale in favor of
Frank Liu on 5 March 1976 pursuant to the court approval. This deed of sale
was notarized on 5 March 1976, which transferred ownership of Lot Nos. 5
and 6 to Frank Liu on the same date.
[49]

Thus, when the probate court approved the contracts of the Loys on 19
and 23 March 1976, the probate court had already lost jurisdiction over Lot
Nos. 5 and 6 because the lots no longer formed part of the Estate of Jose
Vao.
In Dolar v. Sundiam,
[50]
an heir sold parcels of land that were part of the
estate of the decedent. The probate court approved the sale. Thereafter, the
probate court authorized the administrator to sell again the same parcels of
land to another person. The Court ruled that the probate court had already
lost jurisdiction to authorize the further sale of the parcels of land to another
person because such property no longer formed part of the estate of the
decedent. The Court declared:
In our opinion, where, as in this case, a piece of property which originally is a part of
the estate of a deceased person is sold by an heir of the deceased having a valid claim
thereto, and said piece of property is, by mistake, subsequently inventoried or
considered part of the deceaseds estate subject to settlement, and, thereafter, with the
authority and approval of the probate court, it sold once more to another person, a
receiver of the property so sold may, during the pendency of a motion to set aside the
second sale, be appointed by the court when in its sound judgment the grant of such
temporary relief is reasonably necessary to secure and protect the rights of its real
owner against any danger of loss or material injury to him arising from the use and
enjoyment thereof by another who manifestly cannot acquire any right of dominion
thereon because the approving surrogate court had already lost jurisdiction to
authorize the further sale of such property. (Emphasis supplied)
Similarly, in this case, the Loys cannot acquire any right of dominion over
Lot Nos. 5 and 6 because the probate court had already lost jurisdiction to
authorize the second sale of the same lots. Moreover, the probate courts
approval of the sale to the Loys was completely void due to the failure to notify
the administratrix of the motion and hearing on the sale.
Whether the Loys were in good faith when they
built on the Lots.
The Civil Code describes a possessor in good faith as follows:
Art. 526. He is deemed a possessor in good faith who is not aware that there exists in
his title or mode of acquisition any flaw which invalidates it.
He is deemed a possessor in bad faith who possesses in any case contrary to the
foregoing.
Mistake upon a doubtful or difficult question of law may be the basis of good faith.
Art. 1127. The good faith of the possessor consists in the reasonable belief that the
person from whom he received the thing was the owner thereof, and could transmit
his ownership.
In Duran v. Intermediate Appellate Court,
[51]
the Court explained
possession in good faith in this manner:
Guided by previous decisions of this Court, good faith consists in the possessors
belief that the person from whom he received the thing was the owner of the same and
could convey his title (Arriola vs. Gomez de la Serna, 14 Phil. 627). Good faith, while
it is always presumed in the absence of proof to the contrary, requires a well-founded
belief that the person from whom title was received was himself the owner of the land,
with the right to convey it (Santiago vs. Cruz, 19 Phil. 148). There is good faith
where there is an honest intention to abstain from taking unconscientious advantage
from another (Fule vs. Legare, 7 SCRA 351).
The Loys were not in good faith when they built on the lots because they
knew that they bought from someone who was not the registered owner. The
registered owner on the TCTs of the lots was the Estate of Jose Vao,
clearly indicating that the sale required probate court approval. Teodoro Vao
did not show any court approval to the Loys when they purchased the lots
because there was none. To repeat, any one who buys from a person who is
not the registered owner is not a purchaser in good faith.
[52]
If the Loys built on
the lots before the court approval, then they took the risk.
Contract to sell versus contract of sale
A prior contract to sell made by the decedent prevails over the subsequent
contract of sale made by the administrator without probate court approval. The
administrator cannot unilaterally cancel a contract to sell made by the
decedent in his lifetime.
[53]
Any cancellation must observe all legal requisites,
like written notice of cancellation based on lawful cause.
[54]

It is immaterial if the prior contract is a mere contract to sell and does not
immediately convey ownership.
[55]
If it is valid, then it binds the estate to
convey the property in accordance with Section 8 of Rule 89 upon full
payment of the consideration.
Frank Lius contract to sell became valid and effective upon its
execution.
[56]
The seller, Jose Vao, was then alive and thus there was no
need for court approval for the immediate effectivity of the contract to sell. In
contrast, the execution of the contracts of sale of the Loys took place after the
death of the registered owner of the lots. The law requires court approval for
the effectivity of the Loys contracts of sale against third parties. The probate
court did not validly give this approval since it failed to notify all interested
parties of the Loys motion for court approval of the sale. Besides, the probate
court had lost jurisdiction over the lots after it approved the earlier sale to
Frank Liu. Clearly, Frank Lius contract to sell prevails over the Loys
contracts of sale.
Whether petitioners are entitled to award of
moral damages and attorneys fees.
The Court upholds the ruling of the trial and appellate courts that
petitioners are not entitled to moral damages. Moral damages should not
enrich a complainant at the expense of the defendant.
[57]

Likewise, as found by the trial court and the appellate court, there is no
basis to award attorneys fees. The policy of the law is to put no premium on
the right to litigate.
[58]
The court may award attorneys fees only in the
instances mentioned in Article 2208 of the Civil Code. The award of
attorneys fees is the exception rather than the rule.
[59]
None of the instances
mentioned in Article 2208 apply to this case.
Conclusion
Since the Loys have no contract of sale validly approved by the probate
court, while Frank Liu has a contract of sale approved by the probate court in
accordance with Section 8 of Rule 89, Lot Nos. 5 and 6 belong to Frank
Liu. The Estate of Jose Vao should reimburse the Loys their payments on
Lot Nos. 5 and 6, with annual interest at 6% from 4 June 1976, the date of
filing of the complaint, until finality of this decision, and 12% thereafter until full
payment.
[60]

WHEREFORE, the Decision of the Court of Appeals is SET ASIDE and a
new one is RENDERED:
1. Declaring null and void the deeds of sale of Lot Nos. 5 and 6 executed by Teodoro
Vao in favor of Alfredo Loy, Jr. and Teresita Loy, respectively.
2.Ordering the Register of Deeds of Cebu City to cancel TCT Nos. 64522 and 64523
and to issue a new one in the name of petitioner Frank N. Liu;
3. Ordering the Estate of Jose Vao to reimburse to respondent Loys the amounts paid
on Lot Nos. 5 and 6, with interest at 6% per annum from 4 June 1976 until finality of
this decision, and 12% per annum thereafter until full payment.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Vitug, Ynares-Santiago, and Azcuna,
JJ., concur.

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 124862 December 22, 1998
FE D. QUITA, petitioner,
vs.
COURT OF APPEALS and BLANDINA DANDAN, * respondents.

BELLOSILLO, J .:
FE D. QUITA and Arturo T. Padlan, both Filipinos, were married in the Philippines on 18 May 1941.
They were not however blessed with children. Somewhere along the way their relationship soured.
Eventually Fe sued Arturo for divorce in San Francisco, California, U.S.A. She submitted in the
divorce proceedings a private writing dated 19 July 1950 evidencing their agreement to live
separately from each other and a settlement of their conjugal properties. On 23 July 1954 she
obtained a final judgment of divorce. Three (3) weeks thereafter she married a certain Felix Tupaz in
the same locality but their relationship also ended in a divorce. Still in the U.S.A., she married for the
third time, to a certain Wernimont.
On 16 April 1972 Arturo died. He left no will. On 31 August 1972 Lino Javier Inciong filed a petition
with the Regional Trial Court of Quezon City for issuance of letters of administration concerning the
estate of Arturo in favor of the Philippine Trust Company. Respondent Blandina Dandan (also
referred to as Blandina Padlan), claiming to be the surviving spouse of Arturo Padlan, and Claro,
Alexis, Ricardo, Emmanuel, Zenaida and Yolanda, all surnamed Padlan, named in the children of
Arturo Padlan opposed the petition and prayed for the appointment instead of Atty. Leonardo
Casaba, which was resolved in favor of the latter. Upon motion of the oppositors themselves, Atty.
Cabasal was later replaced by Higino Castillon. On 30 April 1973 the oppositors (Blandina and
Padlan children) submitted certified photocopies of the 19 July 1950 private writing and the final
judgment of divorce between petitioner and Arturo. Later Ruperto T. Padlan, claiming to be the sole
surviving brother of the deceased Arturo, intervened.
On 7 October 1987 petitioner moved for the immediate declaration of heirs of the decedent and the
distribution of his estate. At the scheduled hearing on 23 October 1987, private respondent as well
as the six (6) Padlan children and Ruperto failed to appear despite due notice. On the same day, the
trial court required the submission of the records of birth of the Padlan children within ten (10) days
from receipt thereof, after which, with or without the documents, the issue on the declaration of heirs
would be considered submitted for resolution. The prescribed period lapsed without the required
documents being submitted.
The trial court invoking Tenchavez v. Escao
1
which held that "a foreign divorce between Filipino citizens
sought and decreed after the effectivity of the present Civil Code (Rep. Act 386) was not entitled to
recognition as valid in this jurisdiction,"
2
disregarded the divorce between petitioner and Arturo.
Consecuently, it expressed the view that their marriage subsisted until the death of Arturo in 1972.
Neither did it consider valid their extrajudicial settlement of conjugal properties due to lack of judicial
approval.
3
On the other hand, it opined that there was no showing that marriage existed between private
respondent and Arturo, much less was it shown that the alleged Padlan children had been acknowledged
by the deceased as his children with her. As regards Ruperto, it found that he was a brother of Arturo. On
27 November 1987
4
only petitioner and Ruperto were declared the intestate heirs of Arturo. Accordingly,
equal adjudication of the net hereditary estate was ordered in favor of the two intestate heirs.
5

On motion for reconsideration, Blandina and the Padlan children were allowed to present proofs that the
recognition of the children by the deceased as his legitimate children, except Alexis who was recognized
as his illegitimate child, had been made in their respective records of birth. Thus on 15 February
1988
6
partial reconsideration was granted declaring the Padlan children, with the exception of Alexis,
entitled to one-half of the estate to the exclusion of Ruperto Padlan, and petitioner to the other
half.
7
Private respondent was not declared an heir. Although it was stated in the aforementioned records
of birth that she and Arturo were married on 22 April 1947, their marriage was clearly void since it was
celebrated during the existence of his previous marriage to petitioner.
In their appeal to the Court of Appeals, Blandina and her children assigned as one of the errors
allegedly committed by the trial court the circumstance that the case was decided without a hearing,
in violation of Sec. 1, Rule 90, of the Rules of Court, which provides that if there is a controversy
before the court as to who are the lawful heirs of the deceased person or as to the distributive
shares to which each person is entitled under the law, the controversy shall be heard and decided as
in ordinary cases.
Respondent appellate court found this ground alone sufficient to sustain the appeal; hence, on 11
September 1995 it declared null and void the 27 November 1987 decision and 15 February 1988 order of
the trial court, and directed the remand of the case to the trial court for further proceedings.
8
On 18 April
1996 it denied reconsideration.
9

Should this case be remanded to the lower court for further proceedings? Petitioner insists that there
is no need because, first, no legal or factual issue obtains for resolution either as to the heirship of
the Padlan children or as to the decedent; and, second, the issue as to who between petitioner and
private respondent is the proper hier of the decedent is one of law which can be resolved in the
present petition based on establish facts and admissions of the parties.
We cannot sustain petitioner. The provision relied upon by respondent court is clear: If there is
a controversy before the court as to who are the lawful heirs of the deceased person or as to the
distributive shares to which each person is entitled under the law, the controversy shall be heard and
decided as in ordinary cases.
We agree with petitioner that no dispute exists either as to the right of the six (6) Padlan children to inherit
from the decedent because there are proofs that they have been duly acknowledged by him and
petitioner herself even recognizes them as heirs of Arturo Padlan;
10
nor as to their respective hereditary
shares. But controversy remains as to who is the legitimate surviving spouse of Arturo. The trial court,
after the parties other than petitioner failed to appear during the scheduled hearing on 23 October 1987 of
the motion for immediate declaration of heirs and distribution of estate, simply issued an order requiring
the submission of the records of birth of the Padlan children within ten (10) days from receipt thereof,
after which, with or without the documents, the issue on declaration of heirs would be deemed submitted
for resolution.
We note that in her comment to petitioner's motion private respondent raised, among others, the issue as
to whether petitioner was still entitled to inherit from the decedent considering that she had secured a
divorce in the U.S.A. and in fact had twice remarried. She also invoked the above quoted procedural
rule.
11
To this, petitioner replied that Arturo was a Filipino and as such remained legally married to her in
spite of the divorce they obtained.
12
Reading between the lines, the implication is that petitioner was no
longer a Filipino citizen at the time of her divorce from Arturo. This should have prompted the trial court to
conduct a hearing to establish her citizenship. The purpose of a hearing is to ascertain the truth of the
matters in issue with the aid of documentary and testimonial evidence as well as the arguments of the
parties either supporting or opposing the evidence. Instead, the lower court perfunctorily settled her claim
in her favor by merely applying the ruling in Tenchavez v. Escao.
Then in private respondent's motion to set aside and/or reconsider the lower court's decision she stressed
that the citizenship of petitioner was relevant in the light of the ruling in Van Dorn v. Romillo Jr.
13
that
aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid
according to their national law. She prayed therefore that the case be set for hearing.
14
Petitioner
opposed the motion but failed to squarely address the issue on her citizenship.
15
The trial court did not
grant private respondent's prayer for a hearing but proceeded to resolve her motion with the finding that
both petitioner and Arturo were "Filipino citizens and were married in the Philippines."
16
It maintained that
their divorce obtained in 1954 in San Francisco, California, U.S.A., was not valid in Philippine jurisdiction.
We deduce that the finding on their citizenship pertained solely to the time of their marriage as the trial
court was not supplied with a basis to determine petitioner's citizenship at the time of their divorce. The
doubt persisted as to whether she was still a Filipino citizen when their divorce was decreed. The trial
court must have overlooked the materiality of this aspect. Once proved that she was no longer a Filipino
citizen at the time of their divorce, Van Dorn would become applicable and petitioner could very well lose
her right to inherit from Arturo.
Respondent again raised in her appeal the issue on petitioner's citizenship;
17
it did not merit
enlightenment however from petitioner.
18
In the present proceeding, petitioner's citizenship is brought
anew to the fore by private respondent. She even furnishes the Court with the transcript of stenographic
notes taken on 5 May 1995 during the hearing for the reconstitution of the original of a certain transfer
certificate title as well as the issuance of new owner's duplicate copy thereof before another trial court.
When asked whether she was an American citizen petitioner answered that she was since
1954.
19
Significantly, the decree of divorce of petitioner and Arturo was obtained in the same year.
Petitioner however did not bother to file a reply memorandum to erase the uncertainty about her
citizenship at the time of their divorce, a factual issue requiring hearings to be conducted by the trial court.
Consequently, respondent appellate court did not err in ordering the case returned to the trial court for
further proceedings.
We emphasize however that the question to be determined by the trial court should be limited only to the
right of petitioner to inherit from Arturo as his surviving spouse. Private respondent's claim to heirship was
already resolved by the trial court. She and Arturo were married on 22 April 1947 while the prior marriage
of petitioner and Arturo was subsisting thereby resulting in a bigamous marriage considered void from the
beginning under Arts. 80 and 83 of the Civil Code. Consequently, she is not a surviving spouse that can
inherit from him as this status presupposes a legitimate relationship.
20

As regards the motion of private respondent for petitioner and a her counsel to be declared in contempt of
court and that the present petition be dismissed for forum shopping,
21
the same lacks merit. For forum
shopping to exist the actions must involve the same transactions and same essential facts and
circumstances. There must also be identical causes of action, subject matter and issue.
22
The present
petition deals with declaration of heirship while the subsequent petitions filed before the three (3) trial
courts concern the issuance of new owner's duplicate copies of titles of certain properties belonging to the
estate of Arturo. Obviously, there is no reason to declare the existence of forum shopping.
WHEREFORE, the petition is DENIED. The decision of respondent Court of Appeals ordering the
remand of the case to the court of origin for further proceedings and declaring null and void its
decision holding petitioner Fe D. Quita and Ruperto T. Padlan as intestate heirs is AFFIRMED. The
order of the appellate court modifying its previous decision by granting one-half (1/2) of the net
hereditary estate to the Padlan children, namely, Claro, Ricardo, Emmanuel, Zenaida and Yolanda,
with the exception of Alexis, all surnamed Padlan, instead of Arturo's brother Ruperto Padlan, is
likewise AFFIRMED. The Court however emphasizes that the reception of evidence by the trial
court should he limited to the hereditary rights of petitioner as the surviving spouse of Arturo Padlan.
The motion to declare petitioner and her counsel in contempt of court and to dismiss the present
petition for forum shopping is DENIED.
SO ORDERED.
Puno, Mendoza and Martinez, JJ., concur.

SECOND DIVISION
[G.R. No. 118671. January 29, 1996]
THE ESTATE OF HILARIO M. RUIZ, EDMOND RUIZ,
Executor, petitioner, vs. THE COURT OF APPEALS (Former
Special Sixth Division), MARIA PILAR RUIZ-MONTES, MARIA
CATHRYN RUIZ, CANDICE ALBERTINE RUIZ, MARIA ANGELINE
RUIZ and THE PRESIDING JUDGE OF THE REGIONAL TRIAL
COURT OF PASIG, BRANCH 156, respondents.
D E C I S I O N
PUNO, J.:
This petition for review on certiorari seeks to annul and set aside the
decision dated November 10, 1994 and the resolution dated January 5,
1995 of the Court of Appeals in CA-G.R. SP No. 33045.
The facts show that on June 27, 1987, Hilario M. Ruiz
1
executed a
holographic will naming as his heirs his only son, Edmond Ruiz, his adopted
daughter, private respondent Maria Pilar Ruiz Montes, and his three
granddaughters, private respondents Maria Cathryn, Candice Albertine and
Maria Angeline, all children of Edmond Ruiz. The testator bequeathed to his
heirs substantial cash, personal and real properties and named Edmond Ruiz
executor of his estate.
2

On April 12, 1988, Hilario Ruiz died. Immediately thereafter, the cash
component of his estate was distributed among Edmond Ruiz and private
respondents in accordance with the decedents will. For unbeknown
reasons, Edmond, the named executor, did not take any action for the probate
of his fathers holographic will.
On June 29, 1992, four years after the testators death, it was private
respondent Maria Pilar Ruiz Montes who filed before the Regional Trial Court,
Branch 156, Pasig, a petition for the probate and approval of Hilario Ruizs will
and for the issuance of letters testamentary to Edmond
Ruiz.
3
Surprisingly, Edmond opposed the petition on the ground that the will
was executed under undue influence.
On November 2, 1992, one of the properties of the estate - the house and
lot at No. 2 Oliva Street, Valle Verde IV, Pasig which the testator bequeathed
to Maria Cathryn, Candice Albertine and Maria Angeline
4
- was leased out by
Edmond Ruiz to third persons.
On January 19, 1993, the probate court ordered Edmond to deposit with
the Branch Clerk of Court the rental deposit and payments totalling
P540,000.00 representing the one-year lease of the Valle Verde property. In
compliance, on January 25, 1993, Edmond turned over the amount
of P348,583.56, representing the balance of the rent after deducting
P191,416.14 for repair and maintenance expenses on the estate.
5

In March 1993, Edmond moved for the release of P50,000.00 to pay the
real estate taxes on the real properties of the estate. The probate court
approved the release of P7,722.00
6

On May 14, 1993, Edmond withdrew his opposition to the probate of the
will. Consequently, the probate court, on May 18, 1993, admitted the will to
probate and ordered the issuance of letters testamentary
to Edmond conditioned upon the filing of a bond in the amount of
P50,000.00. The letters testamentary were issued on June 23, 1993.
On July 28, 1993, petitioner Testate Estate of Hilario Ruiz as executor,
filed an Ex-Parte Motion for Release of Funds. It prayed for the release of
the rent payments deposited with the Branch Clerk of Court. Respondent
Montes opposed the motion and concurrently filed a Motion for Release of
Funds to Certain Heirs and Motion for Issuance of Certificate of Allowance of
Probate Will. Montes prayed for the release of the said rent payments to
Maria Cathryn, Candice Albertine and Maria Angeline and for the distribution
of the testators properties, specifically the Valle Verde property and the Blue
Ridge apartments, in accordance with the provisions of the holographic will.
On August 26, 1993, the probate court denied petitioners motion for
release of funds but granted respondent Montes motion in view of petitioners
lack of opposition. It thus ordered the release of the rent payments to the
decedents three granddaughters. It further ordered the delivery of the titleds
to and possession of the properties bequeathed to the three granddaughters
and respondent Montes upon the filing of a bond of P50,000.00.
Petitioner moved for reconsideration alleging that he actually filed his
opposition to respondent Montes motion for release of rent payments which
opposition the court failed to consider. Petitioner likewise reiterated his
previous motion for release of funds.
On November 23, 1993, petitioner, through counsel, manifested that he
was withdrawing his motion for release of funds in view of the fact that the
lease contract over Valle Verde property had been renewed for another year.
7

Despite petitioners manifestation, the probate court, on December 22,
1993, ordered the release of the funds to Edmond but only such amount as
may be necessary to cover the espenses of administration and allowanceas
for support of the testators three granddaughters subject to collation and
deductible from their share in the inheritance. The court, however, held in
abeyance the release of the titles to respondent Montes and the three
granddaughters until the lapse of six months from the date of firast publication
of the notice to creditors.
8
The Court stated thus:
xxx xxx xxx
After consideration of the arguments set forth thereon by the parties, the court
resolves to allow Administrator Edmond M. Ruiz to take possession of the rental
payments deposited with the Clerk of Court, Pasig Regional Trial Court, but only such
amount as may be necessary to cover the expenses of administration and allowances
for support of Maria Cathryn Veronique, Candice Albertine and Maria Angeli, which
are subject to collation and deductible from the share in the inheritance of said heirs
and insofar as they exceed the fruits or rents pertaining to them.
As to the release of the titles bequeathed to petitioner Maria Pilar Ruiz-Montes and
the above-named heirs, the same is hereby reconsidered and held in abeyance until
the lapse of six (6) months from the date of first publication of Notice to Creditors.
WHEREFORE, Administrator Edmond M. Ruiz is hereby ordered to submit an
accounting of the expenses necessary for administration including provisions for the
support Of Maria Cathryn Veronique Ruiz, Candice Albertine Ruiz and Maria Angeli
Ruiz before the amount required can be withdrawn and cause the publication of
the notice to creditors with reasonable dispatch.
9

Petitioner assailed this order before the Court of Appeals. Finding no grave abuse of
discretion on the part of respondent judge, the appellate court dismissed the petition
and sustained the probate courts order in a decision datedNovember 10, 1994
10
and a
resolution dated January 5, 1995.
11

Hence, this petition.
Petitioner claims that:
THE PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN AFFIRMING AND CONFIRMING THE ORDER OF
RESPONDENT REGIONAL TRIAL COURT OF PASIG, BRANCH 156, DATED
DECEMBER 22, 1993, WHICH WHEN GIVEN DUE COURSE AND IS
EFFECTED WOULD: (1) DISALLOW THE EXECUTOR/ADMINISTRATOR OF
THE ESTATE OF THE LATE HILARIO M. RUIZ TO TAKE POSSESSION OF
ALL THE REAL AND PERSONAL PROPERTIES OF THE ESTATE; (2) GRANT
SUPPORT, DURING THE PENDENCY OF THE SETTLEMENT OF AN ESTATE,
TO CERTAIN PERSONS NOT ENTITLED THERETO; AND (3) PREMATURELY
PARTITION AND DISTRIBUTE THE ESTATE PURSUANT TO THE
PROVISIONS OF THE HOLOGRAPHIC WILL EVEN BEFORE ITS INTRINSIC
VALIDITY HAS BEEN DETERMINED, AND DESPITE THE EXISTENCE OF
UNPAID DEBTS AND OBLIGATIONS OF THE ESTATE.
12

The issue for resolution is whether the probate court, after admitting the
will to probate but before payment of the estates debts and obligations, has
the authority: (1) to grant an allowance from the funds of the estate for the
support of the testators grandchildren; (2) to order the release of the titles to
certain heirs; and (3) to grant possession of all properties of the estate to the
executor of the will.
On the matter of allowance, Section 3 of Rule 83 of the Revised Rules of
Court provides:
Sec. 3. Allowance to widow and family. - The widow and minor or incapacitated
children of a deceased person, during the settlement of the estate, shall receive
therefrom under the direction of the court, such allowance as are provided by law.
Petitioner alleges that this provision only gives the widow and the minor or
incapacitated children of the deceased the right to receive allowances for
support during the settlement of estate proceedings. He contends that the
testators three granddaughters do not qualify for an allowance because they
are not incapacitated and are no longer minors but of legal age, married and
gainfully employed. In addition, the provision expressly states children of the
deceased which excludes the latters grandchildren.
It is settled that allowances for support under Section 3 of Rule 83 should
not be limited to the minor or incapacitated children of the deceased. Article
188
13
of the Civil Code of the Philippines, the substantive law in force at the
time of the testators death, provides that during the liquidation of the conjugal
partnership, the deceaseds legitimate spouse and children, regardless of their
age, civil status or gainful employment, are entitled to provisional support from
the funds of the estate.
14
The law is rooted on the fact that the right and duty to
support, especially the right to education, subsist even beyond the age of
majority.
15

Be that as it may, grandchildren are not entitled to provisional support from
the funds of the decedents estate. The law clearly limits the allowance to
widow and children and does not extend it to the deceaseds grandchildren,
regardless of their minority or incapacity.
16
It was error, therefore, for the
appellate court to sustain the probate courts order granting an allowance to
the grandchildren of the testator pending settlement of his estate.
Respondent courts also erred when they ordered the release of the titles
of the bequeathed properties to private respondents six months after the date
of first publication of notice to creditors. An order releasing titles to properties
of the estate amounts to an advance distribution of the estate which is allowed
only under the following conditions:
Sec. 2. Advance distribution in special proceedings. - Nothwithstanding a pending
controversy or appeal in proceedings to settle the estate of a decedent, the court may,
in its discretion and upon such terms as it may deem proper and just, permit that such
part of the estate as may not be affected by the controversy or appeal be distributed
among the heirs or legatees, upon compliance with the conditions set forth in Rule 90
of these Rules.
17

And Rule 90 provides that:
Sec. 1. When order for distribution of residue made. - When the debts, funeral
charges, and expenses of administration, the allowance to the widow, and inheritance
tax, if any, chargeable to the estate in accordance with law, have been paid, the court,
on the application of the executor or administrator, or of a person interested in the
estate, and after hearing upon notice, shall assign the residue of the estate to the
persons entitled to the same, naming them and the proportions, or parts, to which each
is entitled, and such persons may demand and recover their respective shares from the
executor or administrator, or any other person having the same in his possession. If
there is a controversy before the court as to who are the lawful heirs of the deceased
person or as to the distributive shares to which each person is entitled under the law,
the controversy shall be heard and decided as in ordinary cases.
No distribution shall be allowed until the payment of the obligations above-
mentioned has been made or provided for, unless the distributees, or any of
them, give a bond, in a sum to be fixed by the court, conditioned for the payment
of said obligations within such time as the court directs.
18

In settlement of estate proceedings, the distribution of the estate properties
can only be made: (1) after all the debts, funeral charges, expenses of
administration, allowance to the widow, and estate tax have been paid; or (2)
before payment of said obligations only if the distributees or any of them gives
a bond in a sum fixed by the court conditioned upon the payment of said
obligations within such time as the court directs, or when provision is made to
meet those obligations.
19

In the case at bar, the probate court ordered the release of the titles to the
Valle Verde property and the Blue Ridge apartments to the private
respondents after the lapse of six months from the date of first publication of
the notice to creditors. The questioned order speaks of notice to creditors,
not payment of debts and obligations. Hilario Ruiz allegedly left no debts when
he died but the taxes on his estate had not hitherto been paid, much less
ascertained. The estate tax is one of those obligations that must be paid
before distribution of the estate. If not yet paid, the rule requires that the
distributees post a bond or make such provisions as to meet the said tax
obligation in proportion to their respective shares in the inheritance.
20
Notably,
at the time the order was issued the properties of the estate had not yet been
inventoried and appraised.
It was also too early in the day for the probate court to order the release of
the titles six months after admitting the will to probate. The probate of a will is
conclusive as to its due execution and extrinsic validity
21
and settles only the
question of whether the testator, being of sound mind, freely executed it in
accordance with the formalities prescribed by law.
22
Questions as to the
intrinsic validity and efficacy of the provisions of the will, the legality of any
devise or legacy may be raised even after the will has been authenticated.
23

The intrinsic validity of Hilarios holographic will was controverted by
petitioner before the probate court in his Reply to Montes Opposition to his
motion for release of funds
24
and his motion for reconsideration of the August
26, 1993 order of the said court.
25
Therein, petitioner assailed the distributive
shares of the devisees and legatees inasmuch as his fathers will included the
estate of his mother and allegedly impaired his legitime as an intestate heir of
his mother. The Rules provide that if there is a controversy as to who are the
lawful heirs of the decedent and their distributive shares in his estate, the
probate court shall proceed to hear and decide the same as in ordinary
cases.
26

Still and all, petitioner cannot correctly claim that the assailed order
deprived him of his right to take possession of all the real and personal
properties of the estate. The right of an executor or administrator to the
possession and management of the real and personal properties of the
deceased is not absolute and can only be exercised so long as it is
necessary for the payment of the debts and expenses of
administration,
27
Section 3 of Rule 84 of the Revised Rules of Court explicitly
provides:
Sec. 3. Executor or administrator to retain whole estate to pay debts, and to
administer estate not willed. - An executor or administrator shall have the right to the
possession and management of the real as well as the personal estate of the
deceased so long as it is necessary for the payment of the debts and expenses for
administration.
28

When petitioner moved for further release of the funds deposited with the
clerk of court, he had been previously granted by the probate court certain
amounts for repair and maintenance expenses on the properties of the estate,
and payment of the real estate taxes thereon. But petitioner moved again for
the release of additional funds for the same reasons he previously cited. It
was correct for the probate court to require him to submit an accounting of
the necessary expenses for administration before releasing any further
money in his favor.
It was relevantly noted by the probate court that petitioner had deposited
with it only a portion of the one-year rental income from the Valle Verde
property. Petitioner did not deposit its succeeding rents after renewal of the
lease.
29
Neither did he render an accounting of such funds.
Petitioner must be reminded that his right of ownership over the properties
of his father is merely inchoate as long as the estate has not been fully settled
and partitioned.
30
As executor, he is a mere trustee of his fathers estate. The
funds of the estate in his hands are trust funds and he is held to the duties
and responsibilities of a trustee of the highest order.
31
He cannot unilaterally
assign to himself and possess all his parents properties and the fruits thereof
without first submitting an inventory and appraisal of all real and personal
properties of the deceased, rendering a true account of his administration, the
expenses of administration, the amount of the obligations and estate tax, all of
which are subject to a determination by the court as to their veracity, propriety
and justness.
32

IN VIEW WHEREOF, the decision and resolution of the Court of Appeals
in CA-G.R. SP No. 33045 affirming the order dated December 22, 1993 of the
Regional Trial Court, Branch 156, Pasig in SP Proc. No. 10259 are affirmed
with the modification that those portions of the order granting an allowance to
the testators grandchildren and ordering the release of the titles to the private
respondents upon notice to creditors are annulled and set aside.
Respondent judge is ordered to proceed with dispatch in the proceedings
below.
SO ORDERED.
Regalado (Chairman), Romero, and Mendoza, JJ., concur.

THIRD DIVISION


QUASHA ANCHETA PEA AND
NOLASCO LAW OFFICE FOR ITS
OWN BEHALF, AND
REPRESENTING THE HEIRS OF
RAYMOND TRIVIERE,
Petitioners,


- versus -


LCN CONSTRUCTION
CORP.,
Respondent.
G.R. No. 174873

Present:

YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.

Promulgated:

August 26, 2008
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x


D E C I S I O N


CHICO-NAZARIO, J.:


This is a Petition for Review under Rule 45 of the Revised Rules of Court with
petitioners Quasha Ancheta Pea and Nolasco Law Office (Quasha Law Office) and
the Heirs of Raymond Triviere praying for the reversal of the Decision
[1]
dated 11
May 2006 and Resolution
[2]
dated 22 September 2006 of the Court of Appeals
granting in part the Petition for Certiorari filed by respondent LCN Construction
Corporation (LCN) in CA-G.R. SP No. 81296.

The factual antecedents of the case are as follows:

Raymond Triviere passed away on 14 December 1987. On 13 January 1988,
proceedings for the settlement of his intestate estate were instituted by his
widow, Amy Consuelo Triviere, before the Regional Trial Court (RTC)
of Makati City, Branch 63 of the National Capital Region (NCR), docketed as
Special Proceedings Case No. M-1678. Atty. Enrique P. Syquia (Syquia) and Atty.
William H. Quasha (Quasha) of the Quasha Law Office, representing the widow
and children of the late Raymond Triviere, respectively, were appointed
administrators of the estate of the deceased in April 1988. As administrators,
Atty. Syquia and Atty. Quasha incurred expenses for the payment of real estate
taxes, security services, and the preservation and administration of the estate, as
well as litigation expenses.

In February 1995, Atty. Syquia and Atty. Quasha filed before the RTC a
Motion for Payment of their litigation expenses. Citing their failure to submit an
accounting of the assets and liabilities of the estate under administration, the RTC
denied in May 1995 the Motion for Payment of Atty. Syquia and Atty. Quasha.

In 1996, Atty. Quasha also passed away. Atty. Redentor Zapata (Zapata),
also of the Quasha Law Office, took over as the counsel of the Triviere
children, and continued to help Atty. Syquia in the settlement of the estate.

On 6 September 2002, Atty. Syquia and Atty. Zapata filed another Motion
for Payment,
[3]
for their own behalf and for their respective clients, presenting the
following allegations:

(1) That the instant Petition was filed on January 13, 1988; and Atty.
Enrique P. Syquia was appointed Administrator by the Order of this
Honorable Court dated April 12, 1988, and discharged his duties
starting April 22, 1988, after properly posting his administrators
bond up to this date, or more than fourteen (14) years later.
Previously, there was the co-administrator Atty. William H. Quasha,
but he has already passed away.

(2) That, together with Co-administrator Atty. William H. Quasha, they
have performed diligently and conscientiously their duties as Co-
administrators, having paid the required Estate tax and settled the
various claims against the Estate, totaling approximately twenty (20)
claims, and the only remaining claim is the unmeritorious claim of
LCN Construction Corp., now pending before this Honorable Court;

(3) That for all their work since April 22, 1988, up to July 1992, or for
four (4) years, they were only given the amount of P20,000.00 each
on November 28, 1988; and another P50,00.00 each on October
1991; and the amount of P100,000.00 each on July 1992; or a total
of P170,000.00 to cover their administration fees, counsel fees and
expenses;

(4) That through their work, they were able to settle all the testate (sic)
claims except the remaining baseless claim of LCN Construction
Corp., and were able to dismiss two (2) foreign claims, and were also
able to increase the monetary value of the estate from roughly
over P1Million to the present P4,738,558.63 as of August 25, 2002
and maturing on September 27, 2002; and the money has always
been with the Philippine National Bank, as per the Order of this
Honorable Court;

(5) That since July 1992, when the co-administrators were
paid P100,000.00 each, nothing has been paid to either
Administrator Syquia or his client, the widow Consuelo Triviere; nor
to the Quasha Law Offices or their clients, the children of the
deceased Raymond Triviere;

(6) That as this Honorable Court will notice, Administrator Syquia has
always been present during the hearings held for the many years of
this case; and the Quasha Law Offices has always been represented
by its counsel, Atty. Redentor C. Zapata; and after all these years,
their clients have not been given a part of their share in the estate;
(7) That Administrator Syquia, who is a lawyer, is entitled to additional
Administrators fees since, as provided in Section 7, Rule 85 of the
Revised Rules of Court:

x x x where the estate is large, and the settlement has
been attended with great difficulty, and has required a
high degree of capacity on the part of the executor or
administrator, a greater sum may be allowed

In addition, Atty. Zapata has also been present in all the years of this
case. In addition, they have spent for all the costs of litigation
especially the transcripts, as out-of-pocket expenses.

(8) That considering all the foregoing, especially the fact that neither
the Administrator or his client, the widow; and the Quasha Law
Offices or their clients, the children of the deceased, have received
any money for more than ten (10) years now, they respectfully
move that the amount of P1Million be taken from the Estate funds,
to be divided as follows:

a) P450,000.00 as share of the children of the deceased [Triviere]
who are represented by the Quasha Ancheta Pea & Nolasco Law
Offices;

b) P200,000.00 as attorneys fees and litigation expenses for the
Quasha Ancheta Pea & Nolasco Law Offices;

c) P150,000.00 as share for the widow of the deceased [Raymond
Triviere], Amy Consuelo Triviere; and

d) P200,000.00 for the administrator Syquia, who is also the
counsel of the widow; and for litigation costs and expenses.


LCN, as the only remaining claimant
[4]
against the Intestate Estate of the
Late Raymond Triviere in Special Proceedings Case No. M-1678, filed its Comment
on/Opposition to the afore-quoted Motion on 2 October 2002. LCN countered
that the RTC had already resolved the issue of payment of litigation expenses
when it denied the first Motion for Payment filed by Atty. Syquia and Atty.
Quasha for failure of the administrators to submit an accounting of the assets and
expenses of the estate as required by the court. LCN also averred that the
administrators and the heirs of the late Raymond Triviere had earlier agreed to fix
the formers fees at only 5% of the gross estate, based on which, per the
computation of LCN, the administrators were even overpaidP55,000.00. LCN
further asserted that contrary to what was stated in the second Motion for
Payment, Section 7, Rule 85 of the Revised Rules of Court was
inapplicable,
[5]
since the administrators failed to establish that the estate was
large, or that its settlement was attended with great difficulty, or required a high
degree of capacity on the part of the administrators. Finally, LCN argued that its
claims are still outstanding and chargeable against the estate of the late Raymond
Triviere; thus, no distribution should be allowed until they have been paid;
especially considering that as of 25 August 2002, the claim of LCN against the
estate of the late Raymond Triviere amounted to P6,016,570.65 as against the
remaining assets of the estate totalingP4,738,558.63, rendering the latter
insolvent.

On 12 June 2003, the RTC issued its Order
[6]
taking note that the widow
and the heirs of the deceased Triviere, after all the years, have not received their
respective share (sic) in the Estate x x x.

The RTC declared that there was no more need for accounting of the
assets and liabilities of the estate considering that:

[T]here appears to be no need for an accounting as the estate has no
more assets except the money deposited with the Union Bank of the
Philippines under Savings Account No. 12097-000656-0 x x x; on the
estate taxes, records shows (sic) that the BIR Revenue Region No. 4-B2
Makati had issued a certificate dated April 27, 1988 indicating that the
estate taxes has been fully paid.
[7]


As to the payment of fees of Atty. Syquia and the Quasha Law Office, the
RTC found as follows:

[B]oth the Co-Administrator and counsel for the deceased (sic) are
entitled to the payment for the services they have rendered and
accomplished for the estate and the heirs of the deceased as they have
over a decade now spent so much time, labor and skill to accomplish
the task assigned to them; and the last time the administrators
obtained their fees was in 1992.
[8]



Hence, the RTC granted the second Motion for Payment; however,
it reduced the sums to be paid, to wit:

In view of the foregoing considerations, the instant motion is
hereby GRANTED. The sums to be paid to the co-administrator and
counsel for the heirs of the deceased Triviere are however reduced.

Accordingly, the co-administrator Atty. Syquia and aforenamed
counsel are authorized to pay to be sourced from the Estate of the
deceased as follows:


a) P450,000.00 as share of the children of the deceased who are
represented by the Quasha, Ancheta, Pena, Nolasco Law Offices;

b) P100,000.00 as attorneys fees and litigation expenses for said
law firm;

c) P150,000.00 as share for the widow of the deceased Amy
Consuelo Triviere; and

d) P100,000.00 for the Co-administrator Atty. Enrique P. Syquia
and for litigation costs and expenses.
[9]



LCN filed a Motion for Reconsideration
[10]
of the foregoing Order on 2 July
2003, but it was denied by the RTC on 29 October 2003.
[11]


On 13 May 2004, LCN sought recourse from the Court of Appeals by
assailing in CA-G.R. SP No. 81296, a Petition for Certiorari, the RTC Orders
dated 12 June 2003 and 2 July 2003, for having been rendered with grave abuse
of discretion.
[12]
LCN maintained that:

(1) The administrators claim for attorneys fees, aside from being
prohibited under paragraph 3, Section 7 of Rule 85 is, together with
administration and litigation expenses, in the nature of a claim
against the estate which should be ventilated and resolved pursuant
to Section 8 of Rule 86;

(2) The awards violate Section 1, Rule 90 of the Rules of Court, as there
still exists its (LCNs) unpaid claim in the sum of P6,016,570.65; and

(3) The alleged deliberate failure of the co-administrators to submit an
accounting of the assets and liabilities of the estate does not
warrant the Courts favorable action on the motion for payment.
[13]



On 11 May 2006, the Court of Appeals promulgated a Decision essentially
ruling in favor of LCN.

While the Court of Appeals conceded that Atty. Syquia and the Quasha Law
Office, as the administrators of the estate of the late Raymond Triviere, were
entitled to administrators fees and litigation expenses, they could not claim the
same from the funds of the estate. Referring to Section 7, Rule 85 of the Revised
Rules of Court, the appellate court reasoned that the award of expenses and fees
in favor of executors and administrators is subject to the qualification that where
the executor or administrator is a lawyer, he shall not charge against the estate
any professional fees for legal services rendered by him. Instead, the Court of
Appeals held that the attorneys fees due Atty. Syquia and the Quasha Law Offices
should be borne by their clients, the widow and children of the late Raymond
Triviere, respectively.

The appellate court likewise revoked the P450,000.00 share
and P150,000.00 share awarded by the RTC to the children and widow of the late
Raymond Triviere, respectively, on the basis that Section 1, Rule 91 of the Revised
Rules of Court proscribes the distribution of the residue of the estate until all its
obligations have been paid.

The appellate court, however, did not agree in the position of LCN that the
administrators claims against the estate should have been presented and
resolved in accordance with Section 8 of Rule 86 of the Revised Rules of
Court. Claims against the estate that require presentation under Rule 86 refer to
debts or demands of a pecuniary nature which could have been enforced against
the decedent during his lifetime and which could have been reduced to simple
judgment and among which are those founded on contracts. The Court of
Appeals also found the failure of the administrators to render an accounting
excusable on the basis of Section 8, Rule 85 of the Revised Rules of Court.
[14]


Finding the Petition for Certiorari of LCN partly meritorious, the Court of
Appeals decreed:

WHEREFORE, premises considered, the instant petition is hereby
PARTLY GRANTED. The assailed Orders of the public respondent are
hereby AFFIRMED with MODIFICATION in that

(1) the shares awarded to the heirs of the deceased Triviere in the
assailed Order of June 12, 2003 are hereby DELETED; and

(2) the attorneys fees awarded in favor of the co-administrators are
hereby DELETED. However, inasmuch as the assailed order fails to
itemize these fees from the litigation fees/administrators fees
awarded in favor of the co-administrators, public respondent is
hereby directed to determine with particularity the fees pertaining
to each administrator.
[15]



Petitioner filed a Motion for Reconsideration
[16]
of the 11 May
2006 Decision of the Court of Appeals. The Motion, however, was denied by the
appellate court in a Resolution dated 22 September 2006,
[17]
explaining that:

In sum, private respondents did not earlier dispute [herein
respondent LCNs+ claim in its petition that the law firm and its lawyers
served as co-administrators of the estate of the late Triviere. It is thus
quite absurd for the said law firm to now dispute in the motion for
reconsideration its being a co-administrator of the estate.

[Herein petitioners], through counsel, likewise appear to be
adopting in their motion for reconsideration a stance conflicting with
their earlier theory submitted to this Court. Notably, the memorandum
for [petitioner] heirs states that the claim for attorneys fees is
supported by the facts and law. To support such allegation, they
contend that Section 7 (3) of Rule 85 of the 1997 Rules of Civil
Procedure finds no application to the instant case since what is being
charged are not professional fees for legal services rendered but
payment for administration of the Estate which has been under the
care and management of the co-administrators for the past fourteen
(14) years. Their allegation, therefore, in their motion for
reconsideration that Section 7 (3) of Rule 85 is inapplicable to the case
of Quasha Law Offices because it is merely seeking payment for legal
services rendered to the estate and for litigation expenses deserves
scant consideration.

x x x x

WHEREFORE, premises considered, private respondents motion
for reconsideration is hereby DENIED for lack of merit.
[18]



Exhausting all available legal remedies, petitioners filed the present Petition
for Review on Certiorari based on the following assignment of errors:


I.
THE HONORABLE COURT OF APPEALS ERRED IN RULING
THAT THE AWARD IN FAVOR OF THE HEIRS OF THE LATE
RAYMOND TRIVIERE IS ALREADY A DISTRIBUTION OF THE
RESIDUE OF THE ESTATE.

II.
THE HONORABLE COURT OF APPEALS ERRED IN NULLIFYING THE
AWARD OF ATTORNEYS FEES IN FAVOR OF THE CO-ADMINISTRATORS


I

The Court of Appeals modified the 12 June 2003 Order of the RTC by
deleting the awards of P450,000.00 and P150,000.00 in favor of the children and
widow of the late Raymond Triviere, respectively. The appellate court adopted
the position of LCN that the claim of LCN was an obligation of the estate which
was yet unpaid and, under Section 1, Rule 90 of the Revised Rules of Court, barred
the distribution of the residue of the estate.

Petitioners, though, insist that the awards in favor of the petitioner children
and widow of the late Raymond Triviere is not a distribution of the residue of the
estate, thus, rendering Section 1, Rule 90 of the Revised Rules of Court
inapplicable.

Section 1, Rule 90 of the Revised Rules of Court provides:

Section 1. When order for distribution of residue made. When
the debts, funeral charges, and expenses of administration, the
allowance to the widow, and inheritance tax, if any, chargeable to the
estate in accordance with law, have been paid, the court, on the
application of the executor or administrator, or of a person interested
in the estate, and after hearing upon notice, shall assign the residue of
the estate to the persons entitled to the same, naming them and the
proportions, or parts, to which each is entitled, and such persons may
demand and recover their respective shares from the executor or
administrator, or any other person having the same in his possession. If
there is a controversy before the court as to who are the lawful heirs of
the deceased person or as to the distributive shares to which each
person is entitled under the law, the controversy shall be heard and
decided as in ordinary cases.

No distribution shall be allowed until the payment of the
obligations above mentioned has been made or provided for, unless the
distributees, or any of them, give a bond, in a sum to be fixed by the
court, conditioned for the payment of said obligations within such time
as the court directs.


According to petitioners, the 12 June 2003 Order of the RTC should not be
construed as a final order of distribution. The 12 June 2003 RTC Order granting
the second Motion for Payment is a mere interlocutory order that does not end
the estate proceedings. Only an order of distribution directing the delivery of
the residue of the estate to the proper distributees brings the intestate
proceedings to a close and, consequently, puts an end to the administration and
relieves the administrator of his duties.

A perusal of the 12 June 2003 RTC Order would immediately reveal that it
was not yet distributing the residue of the estate. The said Order grants the
payment of certain amounts from the funds of the estate to the petitioner children
and widow of the late Raymond Triviere considering that they have not received
their respective shares therefrom for more than a decade. Out of the
reported P4,738,558.63 value of the estate, the petitioner children and widow were
being awarded by the RTC, in its 12 June 2003 Order, their shares in the collective
amount of P600,000.00. Evidently, the remaining portion of the estate still needs to
be settled. The intestate proceedings were not yet concluded, and the RTC still had
to hear and rule on the pending claim of LCN against the estate of the late
Raymond Triviere and only thereafter can it distribute the residue of the estate, if
any, to his heirs.

While the awards in favor of petitioner children and widow made in the
RTC Order dated 12 June 2003 was not yet a distribution of the residue of the
estate, given that there was still a pending claim against the estate, still, they did
constitute a partial and advance distribution of the estate. Virtually, the
petitioner children and widow were already being awarded shares in the estate,
although not all of its obligations had been paid or provided for.

Section 2, Rule 109 of the Revised Rules of Court expressly recognizes
advance distribution of the estate, thus:

Section 2. Advance distribution in special proceedings.
Notwithstanding a pending controversy or appeal in proceedings to
settle the estate of a decedent, the court may, in its discretion and
upon such terms as it may deem proper and just, permit that such part
of the estate as may not be affected by the controversy or appeal be
distributed among the heirs or legatees, upon compliance with the
conditions set forth in Rule 90 of these rules. (Emphases supplied.)


The second paragraph of Section 1 of Rule 90 of the Revised Rules of Court
allows the distribution of the estate prior to the payment of the obligations
mentioned therein, provided that the distributees, or any of them, gives a bond,
in a sum to be fixed by the court, conditioned for the payment of said obligations
within such time as the court directs.

In sum, although it is within the discretion of the RTC whether or not to
permit the advance distribution of the estate, its exercise of such discretion
should be qualified by the following: [1] only part of the estate that is not affected
by any pending controversy or appeal may be the subject of advance distribution
(Section 2, Rule 109); and [2] the distributees must post a bond, fixed by the
court, conditioned for the payment of outstanding obligations of the estate
(second paragraph of Section 1, Rule 90). There is no showing that the RTC, in
awarding to the petitioner children and widow their shares in the estate prior to
the settlement of all its obligations, complied with these two requirements or, at
the very least, took the same into consideration. Its Order of 12 June 2003 is
completely silent on these matters. It justified its grant of the award in a single
sentence which stated that petitioner children and widow had not yet received
their respective shares from the estate after all these years. Taking into account
that the claim of LCN against the estate of the late Raymond Triviere
allegedly amounted to P6,016,570.65, already in excess of theP4,738,558.63
reported total value of the estate, the RTC should have been more prudent in
approving the advance distribution of the same.

Petitioners earlier invoked Dael v. Intermediate Appellate Court
,
,
[19]
where
the Court sustained an Order granting partial distribution of an estate.

However, Dael is not even on all fours with the case at bar, given that the
Court therein found that:

Where, however, the estate has sufficient assets to ensure
equitable distribution of the inheritance in accordance with law and the
final judgment in the proceedings and it does not appear there are
unpaid obligations, as contemplated in Rule 90, for which provisions
should have been made or a bond required, such partial distribution
may be allowed. (Emphasis supplied.)


No similar determination on sufficiency of assets or absence of any
outstanding obligations of the estate of the late Raymond Triviere was made by
the RTC in this case. In fact, there is a pending claim by LCN against the estate,
and the amount thereof exceeds the value of the entire estate.

Furthermore, in Dael, the Court actually cautioned that partial distribution
of the decedents estate pending final termination of the testate or intestate
proceeding should as much as possible be discouraged by the courts, and, except
in extreme cases, such form of advances of inheritance should not be
countenanced. The reason for this rule is that courts should guard with utmost
zeal and jealousy the estate of the decedent to the end that the creditors thereof
be adequately protected and all the rightful heirs be assured of their shares in the
inheritance.

Hence, the Court does not find that the Court of Appeals erred in
disallowing the advance award of shares by the RTC to petitioner children and the
widow of the late Raymond Triviere.

II

On the second assignment of error, petitioner Quasha Law Office contends
that it is entitled to the award of attorneys fees and that the third paragraph of
Section 7, Rule 85 of the Revised Rules of Court, which reads:

Section 7. What expenses and fees allowed executor or
administrator. Not to charge for services as attorney. Compensation
provided by will controls unless renounced. x x x.

x x x x

When the executor or administrator is an attorney, he shall not
charge against the estate any professional fees for legal services
rendered by him. (Emphasis supplied.)


is inapplicable to it. The afore-quoted provision is clear and unequivocal and
needs no statutory construction. Here, in attempting to exempt itself from the
coverage of said rule, the Quasha Law Office presents conflicting arguments to
justify its claim for attorneys fees against the estate. At one point, it alleges that
the award of attorneys fees was payment for its administration of the estate of
the late Raymond Triviere; yet, it would later renounce that it was an
administrator.

In the pleadings filed by the Quasha Law Office before the Court of Appeals,
it referred to itself as co-administrator of the estate.

In the Comment submitted to the appellate court by Atty. Doronila, the
member-lawyer then assigned by the Quasha Law Office to the case, it stated
that:

The 12 June 2003 Order granted the Motion for Payment filed by Co-
Administrator and counsel Atty. Enrique P. Syquia and the counsel Atty.
Cirilo E. Doronila and Co-Administrator for the children of the late
Raymond Triviere. x x x.
[20]
(Emphasis supplied.)


It would again in the same pleading claim to be the co-administrator and
counsel for the heirs of the late Raymond Triviere.
[21]


Finally, the Memorandum it submitted to the Court of Appeals on behalf of
its clients, the petitioner-children of the late Raymond Triviere, the Quasha Law
Office alleged that:

2. The petition assails the Order of the Honorable Regional Trial
Court of Makati, Branch 63 granting the Motion for Payment filed
by Co-Administrators Atty. Enrique P. Syquia and the undersigned
counseltogether with the children of the deceased Raymond Triviere,
and the Order dated 29 October 2003 denying Petitioners Motion for
Reconsideration of the First Order.

x x x x

I. Statement of Antecedent Facts

x x x x

4. On 13 May 2004, Atty. Enrique Syquia, co-administrator and
counsel for respondent Amy Consuelo Triviere and the undersigned
counsel, co-administrator and counsel for the children of the late
Raymond Triviere filed their Comment.
[22]



Petitioner Quasha Law Office asserts that it is not within the purview of
Section 7, Rule 85 of the Revised Rules of Court since it is not an appointed
administrator of the estate.
[23]
When Atty. Quasha passed away in 1996, Atty.
Syquia was left as the sole administrator of the estate of the late Raymond
Triviere. The person of Atty. Quasha was distinct from that of petitioner
Quasha Law Office; and the appointment of Atty. Quasha as administrator of
the estate did not extend to his law office. Neither could petitioner Quasha
Law Office be deemed to have substituted Atty. Quasha as administrator upon
the latters death for the same would be in violation of the rules on the
appointment and substitution of estate administrators, particularly, Section 2,
Rule 82 of the Revised Rules of Court.
[24]
Hence, when Atty. Quasha died,
petitioner Quasha Law Office merely helped in the settlement of the estate as
counsel for the petitioner children of the late Raymond Triviere.

In its Memorandum before this Court, however, petitioner Quasha Law
Office argues that what is being charged are not professional fees for legal
services rendered but payment for administration of the Estate which has
been under the care and management of the co-administrators for the past
fourteen (14) years.
[25]


On the other hand, in the Motion for Payment filed with the RTC on 3
September 2002, petitioner Quasha Law Office prayed for P200,000.00 as
attorneys fees and litigation expenses. Being lumped together, and absent
evidence to the contrary, the P200,000.00 for attorneys fees and litigation
expenses prayed for by the petitioner Quasha Law Office can be logically and
reasonably presumed to be in connection with cases handled by said law office
on behalf of the estate. Simply, petitioner Quasha Law Office is seeking
attorneys fees as compensation for the legal services it rendered in these
cases, as well as reimbursement of the litigation expenses it incurred therein.

The Court notes with disfavor the sudden change in the theory by
petitioner Quasha Law Office. Consistent with discussions in the preceding
paragraphs, Quasha Law Office initially asserted itself as co-administrator of the
estate before the courts. The records do not belie this fact. Petitioner Quasha
Law Office later on denied it was substituted in the place of Atty. Quasha as
administrator of the estate only upon filing a Motion for Reconsideration with the
Court of Appeals, and then again before this Court. As a general rule, a party
cannot change his theory of the case or his cause of action on appeal.
[26]
When a
party adopts a certain theory in the court below, he will not be permitted to
change his theory on appeal, for to permit him to do so would not only be unfair
to the other party but it would also be offensive to the basic rules of fair play,
justice and due process.
[27]
Points of law, theories, issues and arguments not
brought to the attention of the lower court need not be, and ordinarily will not
be, considered by a reviewing court, as these cannot be raised for the first time at
such late stage.
[28]


This rule, however, admits of certain exceptions.
[29]
In the interest of
justice and within the sound discretion of the appellate court, a party may
change his legal theory on appeal, only when the factual bases thereof would
not require presentation of any further evidence by the adverse party in order
to enable it to properly meet the issue raised in the new theory.
[30]


On the foregoing considerations, this Court finds it necessary to exercise
leniency on the rule against changing of theory on appeal, consistent with the
rules of fair play and in the interest of justice. Petitioner Quasha Law Office
presented conflicting arguments with respect to whether or not it was co-
administrator of the estate. Nothing in the records, however, reveals that any
one of the lawyers of Quasha Law Office was indeed a substitute administrator
for Atty. Quasha upon his death.

The court has jurisdiction to appoint an administrator of an estate by
granting letters of administration to a person not otherwise disqualified or
incompetent to serve as such, following the procedure laid down in Section 6,
Rule 78 of the Rules of Court.

Corollary thereto, Section 2, Rule 82 of the Rules of Court provides in
clear and unequivocal terms the modes for replacing an administrator of an
estate upon the death of an administrator, to wit:

Section 2. Court may remove or accept resignation of executor or administrator.
Proceedings upon death, resignation, or removal. x x x.

When an executor or administrator dies, resigns, or is removed the remaining executor
or administrator may administer the trust alone, unless the court grants letters to
someone to act with him. If there is no remaining executor or administrator,
administration may be granted to any suitable person.


The records of the case are wanting in evidence that Quasha Law Office or
any of its lawyers substituted Atty. Quasha as co-administrator of the
estate. None of the documents attached pertain to the issuance of letters of
administration to petitioner Quasha Law Office or any of its lawyers at any time
after the demise of Atty. Quasha in 1996. This Court is thus inclined to give
credence to petitioners contention that while it rendered legal services for the
settlement of the estate of Raymond Triviere since the time of Atty. Quashas
death in 1996, it did not serve as co-administrator thereof, granting that it was
never even issued letters of administration.

The attorneys fees, therefore, cannot be covered by the
prohibition in the third paragraph of Section 7, Rule 85 of the Revised
Rules of Court against an attorney, to charge against the estate
professional fees for legal services rendered by them.


However, while petitioner Quasha Law Office, serving as counsel of the
Triviere children from the time of death of Atty. Quasha in 1996, is entitled to
attorneys fees and litigation expenses of P100,000.00 as prayed for in the
Motion for Payment dated 3 September 2002, and as awarded by the RTC in
its 12 June 2003 Order, the same may be collected from the shares of the
Triviere children, upon final distribution of the estate, in consideration of the
fact that the Quasha Law Office, indeed, served as counsel (not anymore as co-
administrator), representing and performing legal services for the Triviere
children in the settlement of the estate of their deceased father.

Finally, LCN prays that as the contractor of the house (which the decedent
caused to be built and is now part of the estate) with a preferred claim thereon, it
should already be awardedP2,500,000.00, representing one half (1/2) of the
proceeds from the sale of said house. The Court shall not take cognizance of and
rule on the matter considering that, precisely, the merits of the claim of LCN
against the estate are still pending the proper determination by the RTC in the
intestate proceedings below.

WHEREFORE, premises considered, the Petition for Review on Certiorari is
hereby PARTLY GRANTED. The Decision dated 11 May 2006 and Resolution
dated 22 September 2006of the Court of Appeals in CA-G.R. SP No.
81296 are AFFIRMED, with the following MODIFICATIONS:

1) Petitioner Quasha Law Office is entitled to attorneys fees of ONE
HUNDRED THOUSAND PESOS (P100,000.00), for legal services
rendered for the Triviere children in the settlement of the estate of
their deceased father, the same to be paid by the Triviere children in
the manner herein discussed; and

2) Attorneys Enrique P. Syquia and William H. Quasha are entitled to the
payment of their corresponding administrators fees, to be
determined by the RTC handling Special Proceedings Case No. M-
1678, Branch 63 of the Makati RTC, the same to be chargeable to the
estate of Raymond Trieviere.
SO ORDERED.

Republic of the Philippines
Supreme Court
Baguio City

FIRST DIVISION


NATIVIDAD ARIAGA VDA. DE GURREA, CARLOS
GURREA, JULIETA GURREA, TERESA GURREA-
RODRIGUEZ, RICARDO GURREA, Jr.,
MA. VICTORIA GURREA-CANDEL, and RAMONA
GURREA-MONTINOLA,

G.R. No. 144320
Petitioners,

Present:


PANGANIBAN, C.J., Chairperson,

YNARES-SANTIAGO,
- versus -
AUSTRIA-MARTINEZ,

CALLEJO, and

CHICO-NAZARIO, JJ.

Promulgated:
ENRIQUE SUPLICO,
Respondent.

April 26, 2006

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of
Court assailing the Decision
[1]
of the Court of Appeals (CA) dated February 24,
2000 in CA-G.R. CV No. 56210, which affirmed in toto the Decision
[2]
dated July 5,
1996 of the Regional Trial Court (RTC) of Pasig City, Branch 268, in Civil Case No.
47543; and the CA Resolution
[3]
dated August 7, 2000 which denied petitioners
motion for reconsideration.

The present petition arose from a complaint for annulment of title with
prayer for preliminary injunction filed with the Court of First Instance (CFI) of
Rizal, docketed as Civil Case No. 47543, by Rosalina Gurrea (plaintiff) in her
capacity as attorney-in-fact of the heirs of Ricardo Gurrea (Ricardo), namely:
Natividad, Carlos, Juliet and Ricardo, Jr., all surnamed Gurrea, and Teresa Gurrea
Colemenares.
[4]
The complaint was filed against Atty. Enrique Suplico
(defendant), Gen. Gaudencio Tobias, in his capacity as General Manager of the
National Housing Authority, and Joseph Estrada, in his capacity as Municipal
Mayor of San Juan, Rizal.
[5]


The CA adopted the facts of the case as summarized by the RTC, to wit:

The lot in question situated at 245 Marne Street, San Juan, Metro
Manila was originally owned by one of herein plaintiffs Attorney-in-
Fact, Rosalina Gurrea, as evidence (sic) by TCT No. 49767 (Exhibit
A). That sometime in 1958, Rosalina Gurrea transferred the
ownership of said lot to Adelina Gurrea, whose ownership was
evidenced by TCT No. 58253 (Exhibit
B). That Adelina Gurrea continued to be the owner of the lot until her
death. Thereafter, Special Proceedings No. 7185 was instituted to have
the will she executed during her lifetime probated and to settle her
estate. Under the said will, the San Juan lot was bequeathed to Pilar
and Luis Gurrea, while 700,000 pesetas, of the lot in Baguio City and a
one-hectare piece of land in Pontevedra, Negros Occidental were given
to Ricardo Gurrea.

Ricardo Gurrea, represented by and through his counsel Atty.
Enrique Suplico (the defendant), filed an Opposition in Special Proc. No.
7185. In consideration of said representation, Ricardo Gurrea agreed to
pay Atty. Suplico a contingent fee of twenty (20%) of whatever is due
me, either real or personal property (Exhibit 5). During
the pendency of the proceedings and upon the oral instructions of
Ricardo Gurrea, Atty. Suplico negotiated with the other heirs of Adelina
Gurrea regarding the transfer of the piso (apartment building)
in Spain to Ricardo Gurreas daughter, Juliet Gurrea
de Melendres. Ricardo Gurrea further instructed Atty. Suplico not to
enter into any settlement with the heirs unless the piso is transferred to
his daughter. Finally, the transfer of the piso worth P64,000.00 was
executed and the heirs arrived at an amicable settlement regarding the
estate of Adelina Gurrea. Hence, Ricardo Gurrea withdrew his
Opposition and the heirs then drew up a project of partition which was
eventually approved by the probate court. Pursuant to the project of
partition, the following properties were adjudicated to Ricardo Gurrea:
(1) the whole of the Baguio lot (with assessed value of P26,350.00); (2)
the whole of the San Juan lot (with assessed value of P9,630.00); and
(3) a parcel of land in Pontevedra, Negros Occidental (with assessed
value of P300.00). (Exhibit R for plaintiff and exhibit 19 for
defendant).

As payment of his attorneys fees, Ricardo Gurrea offered the San
Juan lot to Atty. Suplico who was initially hesitant to accept the same as
the property is occupied by squatters. However, in order not to
antagonize his client, Atty. Suplico agreed to Ricardo Gurreas proposal
with the further understanding that he will receive an additional
commission of 5% if he sells the Baguio property. Thereafter, the deed
of Transfer of Rights and Interest was drafted. The said deed was
presented to Ricardo Gurrea for his signature. That before signing the
same, the contents of the deed were first explained to Ricardo Gurrea
by Atty. Suplico and Atty. Manuel Pama, the notary public. On August
20, 1975, the deed was finally signed by Ricardo Gurrea at the office of
Atty. Pama, in the presence of the latter, Atty. Suplico, Victor Tupas and
another person, the last two acting as witnesses. Later, on October 7,
1980, Atty. Suplico registered the deed and obtained a title/TCT to
the San Juan property under his name. Ricardo Gurrea died on October
22, 1980. After his death, his heirs instituted Special Pro. No. 2722 for
the settlement of Ricardo Gurreas estate. In the said proceedings,
Atty. Suplico filed several claims for unpaid attorneys fees (no claim
was filed relative to Special Proc. No. 7185); however, all were
dismissed with finality (Exhibits I and J). Also in the same case, the
estates administrator, Carlos Gurrea, filed an Inventory of Properties
left by the decedent, which did not initially include the property subject
of this case. The said lot was included only subsequently in the
Amended Inventory (Exhibit G).
[6]



On July 11, 1985, the RTC issued an Order dismissing the complaint on the
ground that it does not state a cause of action because the plaintiff is not the real
party-in-interest.
[7]
The complaint-in-intervention was likewise
dismissed. Plaintiff filed an appeal with the CA questioning the July 11,
1985 Order of the RTC.
[8]
The case was docketed as CA-G.R. CV No. 14790.

Thereafter, defendant filed a Motion for Issuance of Writ of Execution
Pending Appeal.
[9]
In its Order dated May 20, 1986, the RTC granted defendants
motion.
[10]
Plaintiff then filed a petition for certiorari, prohibition and mandamus
with the CA seeking to annul the trial courts Order of May 20, 1986. The case
was docketed as CA-G.R. SP No. 09394.

Subsequently, CA-G.R. CV No. 14790 and CA-G.R. SP No. 09394 were
consolidated.

On November 21, 1989, the CA promulgated its Decision in the
consolidated cases, the dispositive portion of which reads as follows:


WHEREFORE, judgment is hereby rendered, as follows:

(1) REVERSING the order appealed from in CA-G.R. CV No. 14790
and GRANTING the appellant Rosalina Gurrea a period of sixty (60) days
from finality of this decision within which to implead in Civil Case No.
47543 the real parties-in-interest; after compliance herewith by the
appellant, the trial court shall proceed to hear and decide the case
accordingly; and

(2) GRANTING the petition for certiorari and prohibition in CA-
G.R. SP No. 09394, hereby ANNULLING and SETTING ASIDE the
respondent Courts order dated May 20, 1986, granting the respondent
Enrique Suplicos motion for execution pending appeal (Annex C,
petition), and the writ issued pursuant thereto (Annex D, petition).

Costs against the appellee and respondent Enrique Suplico in both
cases.

SO ORDERED.
[11]

Accordingly, an Amended Complaint was filed in the RTC impleading the
heirs of Ricardo as additional plaintiffs, to wit: Natividad Ariaga Vda. de Gurrea,
Carlos Gurrea, Julieta Gurrea, Teresa Gurrea-Rodriguez, Ricardo Gurrea, Jr., Ma.
Victoria Gurrea Candel and Ramona Gurrea-Montinola.
[12]
Thereafter, trial
ensued.

In the course of the trial, Gen. Gaudencio Tobias of the NHA and then
Mayor Joseph Estrada of San Juan, were dropped as defendants upon motion of
plaintiffs and without the objection of defendant.

After trial, the RTC rendered judgment the dispositive portion of which
reads:

WHEREFORE, taking all the foregoing into consideration, the
Court finds that the preponderance of evidence is in favor of the
defendant and against the plaintiffs, hence, orders the DISMISSAL of
the above entitled case. No pronouncement as to damages, costs and
attorneys fees.

SO ORDERED.
[13]


Plaintiffs and defendant appealed the case to the CA.

Plaintiffs-appellants contended that the RTC erred: in upholding the
validity of the supposed contract of attorneys fees between Ricardo and
defendant-appellant which provided for the payment of attorneys fees in the
form of real property because such an agreement is prohibited by Article 1491
of the Civil Code; in limiting its evaluation of the transfer of rights and interests
in defendant-appelants favor only on the basis of whether the deed
evidencing said transfer of rights and interests was forged, without regard to
the facts and circumstances surrounding its execution; in not finding that
defendant-appellant has been fully paid for all the services he had rendered
for Ricardo; in not declaring the payment of the subject lot as attorneys fees
to be unconscionable based on the guidelines for determining attorneys fees.

On the other hand, defendant-appellant asserted that the RTC erred in
refusing to dismiss the complaint for lack of cause of action; and in refusing to
award counterclaim in his favor.

On February 24, 2000, the CA rendered its Decision affirming, in toto, the
judgment of the RTC. The CA maintained the lower courts ruling that the
plaintiffs-appellants failed to present clear and convincing evidence that
defendant-appellant defrauded and exerted undue influence on Ricardo in the
latters execution of the deed of Transfer of Rights and Interest and in
consequently transferring his ownership of the San Juan lot in his (defendant-
appellants) favor; and that based on the evidence, the San Juan lot may be
considered as reasonable attorneys fees for defendant-appellant.

However, the CA did not discuss the issue of whether the contract of
attorneys fees between the late Ricardo and defendant-appellant and the
consequent transfer of rights and interest in favor of the latter is invalid for being
violative of Article 1491 of the Civil Code.

Plaintiffs-appellants (hereinafter petitioners), with the exception of
plaintiff-appellant Rosalina Gurrea, who died on June 2, 1999, filed a Motion for
Reconsideration, but the CA denied the same in a Resolution issued on August 7,
2000.

Hence, the present petition raising the following issues:


1. WHETHER OR NOT, ASSUMING WITHOUT ADMITTING, THAT THE
TRANSFER OF RIGHTS AND INTERESTS (EXHIBIT E; 1) WAS DULY
EXECUTED BY RICARDO GURREA, THE SAME VIOLATES ARTICLE 1491
OF THE NEW CIVIL CODE AND, THEREFORE, NULL AND VOID.

2. WHETHER OR NOT THE SUPPOSED CONTRACT FOR ATTORNEYS
FEES IN THE FORM OF THE MANIFESTATION DATED JUNE 24,
1972 (EXHIBIT 5) PROVIDING FOR THE PAYMENT OF ATTORNEYS
FEES OUT OF THE PROPERTIES IN LITIGATION, IS VALID;

3. WHETHER OR NOT, ASSUMING THAT THE MANIFESTATION AND
TRANSFER OF RIGHTS AND INTERESTS ARE VALID, AND FURTHER
ASSUMING THAT RESPONDENT-ATTORNEY HAS NOT YET BEEN PAID
HIS ATTORNEYS FEES IN SPECIAL PROCEEDINGS NO. 7185, THE
PAYMENT OF SAID FEES BY WAY OF THE WHOLE PROPERTY SUBJECT
MATTER OF THE INSTANT CASE IS UNCONSCIONABLE OR
UNREASONABLE CONSIDERING THE GUIDELINES FOR FIXING
ATTORNEYS FEES;

4. WHETHER OR NOT PETITIONERS ARE ENTITLED TO THE
CANCELLATION OF RESPONDENT ATTORNEYS TITLE OVER THE
SUBJECT PROPERTY AND THE RECONVEYANCE THEREOF TO THE
HEREIN PETITIONERS OR TO THE ESTATE OF THE LATE RICARDO
GURREA.

5. WHETHER OR NOT PETITIONERS ARE ENTITLED TO THE DAMAGES
CLAIMED IN THE ACTION SUBSTANTIATED BY THEIR EVIDENCE.
[14]



As to the first issue, petitioners argue on the premise that, under the
law, estate proceedings shall be deemed closed and terminated when the
court declares it to be so and only after delivery of the remaining estate to the
heirs entitled to receive the same. Petitioners contend that no evidence was
presented to show that the probate court issued an order declaring Special
Proceedings No. 7185 closed and terminated. In addition, when the Transfer
of Rights and Interest in favor of respondent was notarized on August 20,
1975, the title over the subject lot was still in the name of Adelina Gurrea and
that said title was transferred only in the name of Ricardo on October 7, 1980.
On these bases, petitioners conclude that at the time the Transfer of Rights
and Interest was notarized, there is no dispute that the subject property still
formed part of the estate of Adelina Gurrea and was, therefore, still the
subject of litigation. Hence, the transfer of rights and interest over the subject
property in favor of Atty. Suplico (respondent) is null and void.

Anent the second issue, petitioners contend that the Manifestation
dated June 24, 1972 executed by Ricardo providing for the payment in favor of
respondent of a contingent fee of twenty percent (20%) of whatever is due to
Ricardo, either real or personal property is invalid because based on
jurisprudence, attorneys fees, based on a contingent fee contract, may be
paid only out of a certain percentage of the value of the real property in
litigation; and that the real property itself may not be given as payment of
attorneys fees.

As to the third issue, petitioners assert that even assuming that the
above-mentioned Manifestation and Transfer of Rights and Interest are valid
and that respondent had not yet been paid his attorneys fees, the subject
property is an unreasonable and unconscionable payment for the actual
services that respondent had rendered for Ricardo, taking into consideration
the guidelines for fixing attorneys fees.

Petitioners did not elaborate on the fourth issue while, in the fifth issue,
they submitted to the discretion of the Court their entitlement to damages
and attorneys fees, as claimed before the trial court.

On his part, respondent contends that the issue as to whether Special
Proceedings No. 7185 was already closed and terminated at the time of
execution of the deed of Transfer of Rights and Interest, involves the
determination of factual matters and appreciation of pieces of evidence which
cannot be raised in a petition for review on certiorari before this Court. Even
assuming that petitioners may properly raise a factual issue in the present
petition, respondent submits that there is sufficient evidentiary basis for the
trial courts conclusion that the Transfer of Rights and Interest was executed
and entered into after the termination of Special Proceedings No. 7185.
Respondent also contends that based on jurisprudence, the Court has upheld
the validity of contingency fee contracts providing for the payment of
attorneys fees out of a portion or part of the property subject of litigation;
that the subject property is just, reasonable and equitable payment for the
services he rendered for the late Ricardo, consisting of the signing of the
Project of Partition, filing of an Opposition during the estate proceedings, and
negotiating with the other heirs which resulted in Ricardos recovery of three
parcels of land.

The Court finds the petition meritorious.

It is a fundamental rule that the Supreme Courts jurisdiction in a
petition for review on certiorari as a mode of appeal under Rule 45 of the Rules
of Court, as amended, such as the one at bar, is limited to reviewing only
errors of law, not of fact.
[15]
The rationale of this rule is founded on the fact
that the Court is not a trier of facts and does not normally undertake the re-
examination of the evidence presented by the contending parties during the
trial of the case considering that the findings of facts of the CA are conclusive
and binding on the Court.
[16]


However, there are recognized exceptions to this rule, to wit:

(1) when the findings are grounded entirely on speculation, surmises or
conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible;
(3) when there is grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in
making its findings the CA went beyond the issues of the case, or its findings are
contrary to the admissions of both the appellant and the appellee; (7) when the
findings are contrary to the trial court; (8) when the findings are conclusions without
citation of specific evidence on which they are based; (9) when the facts set forth in the
petition as well as in the petitioners main and reply briefs are not disputed by the
respondent; (10) when the findings of fact are premised on the supposed absence of
evidence and contradicted by the evidence on record; and (11) when the CA manifestly
overlooked certain relevant facts not disputed by the parties, which, if properly
considered, could justify a different conclusion.
[17]


The Court finds the present case falling under the second exception for
reasons discussed hereunder.

At the outset, it should be stressed that the question as to whether the
deed of Transfer of Rights and Interest was forged was resolved by the CA
when it affirmed the ruling of the RTC that herein petitioners failed to present
clear, convincing and satisfactory evidence that respondent defrauded
Ricardo. The CA also ruled that there is no evidence on record to show that
the signature of the late Ricardo on the questioned deed is simulated or
false. This matter is not assailed in the present petition.

However, despite having been specifically assigned as an error by
petitioners in their appellants brief filed with the CA, the appellate court failed
to rule on the question of whether the subject Transfer of Rights and Interest
was executed even before the estate proceedings were closed and terminated.

Anent the first issue, it is necessary to resolve whether the subject
property was still the object of litigation at the time the deed of Transfer of
Rights and Interest in favor of respondent was executed; and if so, whether
the same should be considered null and void for being violative of the
provisions of Article 1491 of the Civil Code.
Article 1491(5) of the Civil Code provides:

1491. The following persons cannot acquire by purchase, even at a public or
judicial auction, either in person or through the mediation of another:



(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts,
and other officers and employees connected with the administration of justice, the
property and rights in litigation or levied upon an execution before the court within
whose jurisdiction or territory they exercise their respective functions; this prohibition
includes the act of acquiring by assignment and shall apply to lawyers, with respect to
the property and rights which may be the object of any litigation in which they may
take part by virtue of their profession.

(emphasis supplied)

In its Decision, the RTC made the following disquisition:


[A]ccording to the evidence for the defendant, a Motion for Termination of
Proceeding and Discharge of the Executor and Bond dated June 20, 1975 was filed in the
case, alleging in paragraphs 3 and 5 thereof, that the executor Angel E. Ordoez has
already turned over to the respective heirs and devisees all their respective shares in
accordance with the Project of Partition duly approved by the Court. Thereafter, more
than one month from the filing thereof, the Transfer of Rights and Interest was
executed on August 20, 1975. Hence, at the time of the execution of the questioned
document, it may be concluded that Special Proceedings No. 7185 had been
terminated. The property in San Juan is no longer the subject of a litigation and may be
alienated by the client to his lawyer as payment of attorneys fees rendered. (emphasis
supplied)

It is clear from the above-quoted ruling of the trial court that its sole basis in
concluding that Special Proceedings No. 7185 had been terminated and that
the subject property is no longer the object of litigation at the time the deed of
Transfer of Rights and Interest was executed on August 20, 1975 is the
allegation of the executor, Angel E. Ordoez, in his Motion
[18]
for Termination
of Proceeding and Discharge of the Executor and Bond dated June 20, 1975,
that he had already turned over to the respective heirs and devisees all their
respective shares in accordance with the project of partition duly approved by
the probate court.

The Court finds the trial courts inference to be without sufficient basis.
How can the trial court conclude that Special Proceedings No. 7185 had been
terminated and the subject property no longer the object of litigation when no
evidence was presented to show that when the Transfer of Rights and Interest
was executed, the probate court had already issued an order declaring the
estate proceedings closed and terminated? A thing is said to be in litigation
not only if there is some contest or litigation over it in court, but also from the
moment that it becomes subject to the judicial action of the judge.
[19]
In the
present case, there is no proof to show that at the time the deed of Transfer of
Rights and Interest was executed, the probate court had issued an order
granting the Motion for Termination of Proceeding and Discharge of the
Executor and Bond. Since the judge has yet to act on the above-mentioned
motion, it follows that the subject property which is the subject matter of the
deed of Transfer of Rights and Interest, is still the object of litigation, that is
Special Proceedings No. 7185.

Furthermore, we agree with the petitioners undisputed contention that
when the deed of Transfer of Rights and Interest was executed, the title over
the subject lot was still in the name of Adelina Gurrea and that it was only
on October 7, 1980 that the title was transferred in the name of Ricardo. The
rule is that as long as the order for the distribution of the estate has not been
complied with, the probate proceedings cannot be deemed closed and
terminated.
[20]
The probate court loses jurisdiction of an estate under
administration only after the payment of all the debts and the remaining
estate delivered to the heirs entitled to receive the same.
[21]
In the present
case, while the subject lot was assigned as Ricardos share in the project of
partition executed by the heirs of Adelina Gurrea, the title over the subject lot
was still in the name of the latter and was not yet conveyed to Ricardo when
the Transfer of Rights and Interest was executed. As correctly cited by
petitioners, the Court held in Lucero v. Baaga
[22]
that:

*t+he term delivery or tradition has two aspects: (1) the de jure delivery or the
execution of deeds of conveyance and (2) the delivery of the material possession
(Florendo vs. Foz, 20 Phil. 388, 393). The usual practice is that, if the land to be
delivered is in the name of the decedent, the administrator executes a deed, conveying
the land to the distributee. That deed, together with the project of partition, the order
approving it, the letters of administration and the certification as to the payment of the
estate, inheritance and realty taxes, is registered in the corresponding Registry of
Deeds. Title would then be issued to the distributee. Thereafter, the administrator or
executor places him in material possession of the land if the same is in the custody of
the former.
[23]


It follows that, since at the time of execution of the deed of Transfer of Rights
and Interest, the subject property still formed part of the estate of Adelina,
and there being no evidence to show that material possession of the property
was given to Ricardo, the probate proceedings concerning Adelinas estate
cannot be deemed to have been closed and terminated and the subject
property still the object of litigation.

Having been established that the subject property was still the object of
litigation at the time the subject deed of Transfer of Rights and Interest was
executed, the assignment of rights and interest over the subject property in
favor of respondent is null and void for being violative of the provisions of
Article 1491 of the Civil Code which expressly prohibits lawyers from acquiring
property or rights which may be the object of any litigation in which they may
take part by virtue of their profession.

Article 1409 of the same Code provides, among others, that contracts
which are expressly prohibited or declared void by law are considered
inexistent and void from the beginning.

Anent the second issue, the Court has already held that the said
property is still the object of litigation at the time the subject Manifestation
and Transfer of Rights and Interest were executed and, thus, may not be
acquired by respondent pursuant to the provisions of Article 1491 of the Civil
Code.

Considering that the subject Transfer of Rights and Interest is null and
void, the Court no longer finds it necessary to resolve the third issue.

As to the fourth issue, it follows that respondents title over the subject
property should be cancelled and the property reconveyed to the estate of
Ricardo, the same to be distributed to the latters heirs. This is without
prejudice, however, to respondents right to claim his attorneys fees from the
estate of Ricardo, it being undisputed that he rendered legal services for the
latter.

Anent the last issue, the Court is not persuaded by petitioners prayer
for the grant of attorneys fees in an amount as the Court may determine. The
general rule is that attorneys fees cannot be recovered as part of damages
because no premium should be placed on the right to litigate.
[24]
Article 2208
of the Civil Code provides that in the absence of stipulation, attorneys fees
and expenses of litigation, other than judicial costs, cannot be recovered,
except:
(1) When exemplary damages are awarded;
(2) When the defendants act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the
plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing
to satisfy the plaintiffs plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers
and skilled workers;
(8) In actions for indemnity under workmens compensation and
employers liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that
attorneys fees and expenses of litigation should be recovered.

The Court finds that the present case does not fall under any of the
enumerated exceptions. It is settled that even if a claimant is compelled to
litigate with third persons or to incur expenses to protect its rights, still
attorneys fees may not be awarded where no sufficient showing of bad faith
could be reflected in a partys persistence in a case other than an erroneous
conviction of the righteousness of his cause.
[25]
In the present case, even
granting that petitioners were compelled to litigate and incur expenses to
protect their interests, attorneys fees may not be awarded in their favor
because there is no sufficient showing that respondent acted in gross and
evident bad faith in refusing to satisfy their claim, in view of his erroneous
belief and judgment that he has lawfully acquired the subject property.

As to petitioners entitlement to other forms of damages, while the
complaint filed by herein petitioners with the trial court contains a general
prayer for the grant of other reliefs, the rule is that evidence should be taken
of the damages claimed and the court should determine who are the persons
entitled to such indemnity.
[26]
The power of the courts to grant damages and
attorneys fees demands factual, legal and equitable justification; its basis
cannot be left to speculation or conjecture.
[27]
In the present case, no
allegation, much less, evidence was presented by petitioners to prove that
they are entitled to damages.

WHEREFORE, the assailed Decision and Resolution of the Court of
Appeals in CA-G.R. No. CV No. 56210 together with the Decision dated July 5,
1996 of the Regional Trial Court of Pasig City, Branch 268 in Civil Case No.
47543 are REVERSED and SET ASIDE. A new judgment is rendered canceling
Transfer Certificate of Title No. 24474 in the name of respondent Enrique P.
Suplico and reinstating Transfer Certificate of Title No. 24473 in the name of
Ricardo Gurrea.

No pronouncement as to costs.
SO ORDERED.

G.R. No. 45425 March 27, 1992
CELSA L. VDA. DE KILAYKO, ENCARNACION L. VDA.
DE PANLILIO and REMEDIOS L. VDA. DE
GUINTO, petitioners,
-versus-
HON. JUDGE ERNESTO TENGCO of the Court of First
Instance of Negros Occidental, Bacolod City, Branch IV and
RODOLFO LIZARES and AMELO LIZARES, as Judicial
Administrators of the Estate of the late EUSTAQUIA
LIZARES, respondents.
G.R. No. 45965 March 27, 1992
ROLDOFO LIZARES and AMELO LIZARES, as Judicial
Administrators of the ESTATE OF EUSTAQUIA
LIZARES, petitioners,
-versus-
HON. JUDGE ERNESTO TENGCO, CELSA L. VDA. DE
KILAYKO, ENCARNACION L. VDA. DE PANLILIO and
REMEDIOS VDA. DE GUINTO, respondents.

ROMERO, J .:
These consolidated cases seek to annul the orders
1
dated
September 20, 1976, January 7, 1977 and January 31, 1977 of
the then Court of First Instance of Negros Occidental, Branch,
IV respectively, cancelling the notice of lis pendens filed by
Celsa L. Vda. de Kilayko, et al. with the Register of Deeds of
Negros Occidental, denying the motion for reconsideration of
the order dated September 20, 1976 filed by Celsa L. Vda. de
Kilayko, et al., and holding in abeyance the resolution of
defendants' motion to dismiss.
The undisputed facts of the case are as follows:
On November 20, 1962, the late Maria Lizares y Alunan
executed a "Testamento"
2
which contains among its provisions,
the following:
DECIMA Asimismo, ordeno y dispongo que mi
participacion consistente en una tercera parte (1/3) de
una catorce (1/14) avas partes proindivisas de la Hda.
Minuluan, que he adquirido mediante permuta de mi
hermano Dr. Antonio A. Lizares, se adjudique, como
por el presente se adjudica, a mi sobrina Eustaquia
Lizares; ENTENDIENDOSE, sin embargo, que en el
caso de que mi citada sobrina Eustaquia Lizares
muera soltera o sin descendientes legitimos, mi
referida participacion en la Hda. Minuluan se
adjudicara a mi hermano Antonio A. Lizares que me
sobrevivan.
UNDECIMA Tambien ordeno y dispongo que el
resto de todas mis propiendades, incluyendo mis
participaciones, derechos e intereses (no dispuestos
mas arriba) an las Haciendas "Minuluan" (Lotes Nos.
439, 403, 1273, 1274, 1278, 1279 y 1280 del Catastro
de Talisay, Negros Occidental), y "Matab-ang" (Lotes
Nos. 514, 550, 552, 553 y 1287-C del Catastrado de
Talisay, Negros Occidental), situadas en el Municipio
de Talisay, Provincia de Negros Occidental, I.F., el
resto de mis acciones en la Central Talisay-Silay
Milling Co., Inc. (unas 2,860 acciones) y de la
Financing Corporation of the Philippines (unas 53,636
acciones), registradas a mi nombre y no heredadas de
mi difunta madre Da. Enrica A. Vda. de Lizares, mis
acciones en la Central Bacolod-Murcia Milling Co.,
Inc., Negros Navigation Co. y otras Compaas
Mineras, y todos los demas bienes no mencionados en
este testamento y que me pertenezcan en la fecha de
mi muerte, se adjudiquen, como por el presente
adjudico, a mi sobrina Srta. Eusaquia Lizares, hija de
mi difunto hermano Don Simplicio Lizares cuidados
que mi citada sobrina me ha prestado y signe
prestandome hasta ahora. Ordeno, sin embargo, a mi
referida sobrina, Srta. Eustaquia Lizares, que ella se
haga cargo de pagar todas las obligaciones que tengo y
que gravan sobre las propriedades adjudicadas a la
misma. Asimismo ordeno a mi citada sobrina que ella
mande celebrar una Misa Gregoriana cada ao en
sufragio de mi alma, y misas ordinarias en sufragio de
las almas de mi difunto Padre y de mi difunta Madre,
el 6 de Marzo y 17 de Deciembre de cada ao,
respectivamente, y mande celebrar todos los aos la
fiesta de San Jose en Talisay como lo hago hasta
ahora. En el caso de que mi citada sobrina, Srta.
Eustaquia Lizares, falleciere sin dejar descendientes
legitimos, ordeno y dispongo que mi participacion
consistente en una sexta parte (1/6) de la Hda. Matab-
ang, con su correspondiente cuota de azucar y otros
mejoras, se adjudique a mis hermanas y hermano
antes mencionados y que me sobrevivan (Emphasis
supplied)
On January 28, 1968, Maria Lizares y Alunan died without any
issue leaving said "testamento" in the possession and custody of
her niece, Eustquia Lizares.

3
On February 6, 1968, Eustaquia
filed a petition for the settlement of the testate estate of Maria
Lizares y Alunan, before the Court of First Instance of Negros
Occidental, Branch IV, docketed as Special Proceedings No.
8452.
4

The required publication of the notice of hearing of the petition
having been made, in due course, the probate court issued an
order declaring the will probated and appointing Eustaquia as
the executrix of the estate of Maria Lizares.
5

On July 10, 1968, Eustaquia filed a project of partition
6
which
was granted by the probate court in an order dated January 8,
1971. Simultaneously, said court declared the heirs, devisees,
legatees and usufructuaries mentioned in the project of partition
as the only heirs, devisees, legatees and usufructuaries of the
estate; adjudicated to them the properties repectively assigned to
each and every one of them, and ordered the Register of Deeds
of Negros Occidental and Bacolod City to effect the
corresponding transfer of the real properties to said heirs as well
as the transfer of shares, stocks, and dividends in different
corporations, companies and partnerships in the name of Maria
Lizares to the heirs and legatees, and the closure of the testate
proceedings of Maria Lizares.
7

Thereafter, Eustaquia filed an urgent motion to reopen the
testate proceedings in order that some properties of Maria
Lizares which had been omitted in the partition be adjudicated to
her.8 The Court granted the motion and correspondingly
reopened the testate proceedings. It adjudicated to Eustaquia
certain shares of stocks, a revolving fund certificate, plantation
credits and sugar quota allocations, and real or personal
properties of Maria Lizares which were not given by her to any
other person in her last will and testament.
9

On November 28, 1972, the heirs of Maria Lizares, namely:
Encarnacion L. Vda. de Panlilio, Remedios L. Vda. de Guinto,
Felicidad Paredes Llopez, Rosario Paredes Mendoza and
Eustaquia Lizares executed an agreement of partition and
subdivision, thereby terminating their co-ownership over Lots
Nos. 550, 514, 553, 1287-C of plan SWO-7446, and 552, all of
the Cadastral Survey of Talisay covered by Transfer Certificates
of Title Nos. T-65004, T-65005; T-65006, T-65007, and T-
65008.
10

A year later or on November 23, 1973, Eustquia Lizares died
single without any descendant.
11
In due time, Rodolfo Lizares
and Amelo Lizares were appointed joint administrators of
Eustquia's intestate estate.
On the strength of the testamentary provisions contained in
paragraphs 10 and 11 of the will of Maria Lizares, which were
allegedly in the nature of a simple substitution, Celsa Vda. de
Kilayko, Encarnacion Vda. de Panlilio, and Remedios Vda. de
Guinto (hereinafter collectively referred to as Celsa L. Vda. de
Kilayko, et al.) filed a motion in Special Proceedings No. 8452
to reopen once again the testate estate proceedings of Maria
Lizares. They prayed among others that a substitute
administrator be appointed; that the order dated January 8, 1971
be reconsidered and amended by declaring them as heirs to 1/3
of 1/14 of Hda. Minuluan and to 1/6 of Hda. Matab-ang, both of
which form an aggregate area of 33 hectares; that the Register of
Deeds of Negros Occidental, after such amendment, be ordered
to register at the back of their respective certificates of title, the
order of probate and a "declaration" that movants are the heirs of
said properties, and correspondingly issue new certificates of
title in their names.
12

Two (2) sets of intestate heirs of the deceased Eustaquia Lizares
namely: Socorro L. Vda. de Escario, Rodolfo Lizares, Mario
Lizares, Lucrecia Gustilo, and Aurora Lizares Wagner opposed
the aforesaid motion. They alleged that the court had no more
jurisdiction to reopen the testate estate proceedings of Maria
Lizares as the order of closure had long become final and that
the testamentary provisions sought to be enforced are null and
void.

13

On April 6, 1974, the Court issued an order denying the motion
to reopen the testate proceedings and holding that inasmuch as
the settlement of an estate is a proceeding in rem, the judgment
therein is binding against the whole world. It observed that
inspite of the fact that the movants knew that the court had
jurisdiction over them, they did not take part in the proceedings
nor did they appeal the order of January 8, 1971. Thus, the court
concluded, even if the said order was erroneous, and since the
error was not jurisdictional, the same could have been corrected
only by a regular appeal. The period for filing a motion for
reconsideration having expired, the court opined that the
movants could have sought relief from judgment under Rule 38
of the Rules of Court, but unfortunately for the movants, the
period for filing such remedy had also elapsed.
14

Celsa L. Vda. de Kilayko, et al. then filed a motion for
reconsideration of said order. It was denied on June 17,
1974.
15
Hence, on October 14, 1974, the said movants filed a
complaint for recovery of ownership and possession of real
property against the joining administrators of the estate of
Eustaquia Lizares, Rodolfo and Amelo Lizares. It was docketed
as Civil Case No. 11639 with the then Court of First Instance of
Negros Occidental, Branch IV.
16
On the same date, they availed
of their rights under Rule 14, Section 24 of Rules of Court
by filing a notice of lis pendens with the Register of Deeds of
Negros Occidental.
17

As duly appointed judicial joint administrators of the estate of
the late Eustaquia Lizares, Rodolfo Lizares and Amelo Lizares
(the joint administrators for brevity), filed a motion to dismiss
alleging that the court had no jurisdiction over the subject matter
or nature of the case; the cause of action was barred by prior
judgment, and the complaint stated no cause of action.
18
This
motion was opposed by the plaintiffs.
On January 23, 1975, the joint administrators filed a motion for
the cancellation of the notice of lis pendens on the contentions
that there existed exceptional circumstances which justified the
cancellation of the notice of lis pendens and that no prejudice
would be caused to the plaintiffs.
19
The latter opposed said
motion. The defendants having filed a reply thereto, the
plaintiffs filed a rejoinder reiterating their arguments in their
opposition to the motion for cancellation of notice of lis
pendens.
20

On September 20, 1976, respondent judge issued an order
granting the motion for cancellation of notice of lis
pendens.
21
The court simultaneously held in abeyance the
resolution of the motion to dismiss the complaint.
The joint administrators filed the answer to the complaint in
Civil Case No. 11639.
22
Thereafter, they filed a motion for
preliminary hearing on affirmative defenses.
23
Celsa L. Vda. de
Kilayko, et al. vigorously opposed said motion.
24

On November 3, 1976, Celsa L. Vda. de Kilayko, et al. filed a
motion praying for the reconsideration of the order dated
September 20, 1976.
25
The joint administrators having filed an
opposition thereto,
26
on January 7, 1977 the lower court denied
the aforesaid motion for reconsideration.
27
It held that while a
notice of lis pendens would serve as notice to strangers that a
particular property was under litigation, its annotation upon the
certificates of title to the properties involved was not necessary
because such properties, being in custodia legis, could not just
be alienated without the approval of the court. Moreover, the
court added, a notice of lis pendens would prejudice any effort of
the estate to secure crop loans which were necessary for the
viable cultivation and production of sugar to which the
properties were planted.
Upon receipt of a copy of said order, Celsa L. Vda. de Kilayko,
et al. filed in this Court a motion for extension of time to file a
petition for review on certiorari. Docketed as G.R No. L-45425,
the petition contends that the grounds of lis pendens, namely,
that the properties are in custodia legis and the lending
institutions would not grant crop loans to the estate, are not the
legal grounds provided for under Sec. 24, Rule 14 of the Rules of
Court for the cancellation of a notice of lis pendens.
Meanwhile, on January 31, 1977, the lower court issued an order
stating that since on September 21, 1976 it had held in abeyance
the resolution of the motion to dismiss, it was also proper to
suspend the resolution of the affirmative defenses interposed by
the defendants until after trial on the merits of the case.
Accordingly, the court set the date of pre-trial for March 24,
1977.
28

On April 13, 1977, the joint administrators filed before this
Court a petition for certiorari, prohibition and/or mandamus with
prayer for a writ of preliminary injunction. It was docketed as
G.R. No. L-45965. Petitioners contend that the lower court had
no jurisdiction over Civil Case No. 11639 as it involves the
interpretation of the will of Maria Lizares, its implementation
and/or the adjudication of her properties. They assert that the
matter had been settled in Special Proceedings No. become final
and unappealable long before the complaint in Civil Case No.
8452 which had become final and unappealable long before the
complaint in Civil Case No. 11639 was filed, and therefore, the
cause of action in the latter case was barred by the principle
of res judicata. They aver that the claim of Celsa, Encarnacion
and Remedios, sisters of Maria Lizares, over the properties left
by their niece Eustaquia and which the latter had inherited by
will from Maria Lizares, was groundless because paragraphs 10
and 11 of Maria's will on which Celsa L. Vda. de Kilayko, et al.
base their claim, conceived of a fideicommissary substitution of
heirs. Petitioners contend that said provisions of the will are not
valid because under Article 863 of the Civil code, they
constitute an invalid fideicommissary substitution of heirs.
On April 26, 1977, this Court issued a temporary restraining
order enjoining the lower court from further proceeding with the
trial of Civil Case No. 11639.
29
After both G.R. Nos. L-45425
and L-45965 had been given due course and submitted for
decision, on January 20, 1986, the two cases were consolidated.
The petition in G.R. No. L-45965 is impressed with merit.
In testate succession, there can be no valid partition among the
heirs until after the will has been probated.
30
The law enjoins the
probate of a will and the public requires it, because unless a will
is probated and notice thereof given to the whole world, the right
of a person to dispose of his property by will may be rendered
nugatory.
31
The authentication of a will decides no other
question than such as touch upon the capacity of the testator and
the compliance with those requirements or solemnities which the
law prescribes for the validity of a will.
32

Pertinent to the issue interposed by the petitioners in G.R. No.
L-45965 is Section 1, Rule 90 of the Rules of Court which
reads:
Sec. 1. When order for distribution of residue made.
When the debts, funeral charges, and expenses of
administration, the allowance to the widow, and
inheritance tax, if any, chargeable to the estate in
accordance with law, have been paid, the court, on
application of the executor or administrator, or of a
person interested in the estate, and after hearing upon
notice, shall assign the residue of the estate to the
persons entitled to the same, naming them and the
proportions or parts, to which each is entitled, and
such persons may demand and recover their respective
shares from the executor or administrator, or any other
person having the same in his possession. If there is a
controversy before the court as to who are the lawful
heirs of the deceased person or as to the distributive
shares to which each person is entitled under the law,
the controversy shall be heard and decided as in
ordinary cases.
No distribution shall be allowed until the payment of
the obligations above-mentioned has been made
or provided for, unless the distributees, or any of them
give a bond, in a sum to be fixed by the court,
conditioned for the payment of said obligations within
such time as the court directs.
Applying this rule, in the cases of De Jesus v.
Daza,
33
and Torres v. Encarnacion,
34
the Court said:
. . . (T)he probate court, having the custody and
control of the entire estate, is the most logical
authority to effectuate this provision, within the estate
proceeding, said proceeding being the most
convenient one in which this power and function of
the court can be exercised and performed without the
necessity of requiring the parties to undergo the
incovenience and litigate an entirely different action.
Some decisions of the Court pertinent to the issue that the
probate court has the jurisdiction to settle the claims of an heir
and the consequent adjudication of the properties, are worth
mentioning. In the cases of Arroyo v. Gerona,
35
and Benedicto v.
Javellana,
36
this Court said:
. . . any challenge to the validity of a will, any
objection to the authentication thereof, and
every demand or claim which any heir, legatee or
party interested in a testate or intestate succession
may make, must be acted upon and decided within the
same special proceedings, not in a separate
action, and the same judge having jurisdiction in the
administration of the estate shall take cognizance of
the question raised, inasmuch as when the day comes
he will be called upon to make distribution and
adjudication of the property to the interested parties. . .
. (Emphasis supplied)
The probate court, in the exercise of its jurisdiction to distribute
the estate, has the power to determine the proportion or parts to
which each distributee is entitled . . ..
37
A project of partition is
merely a proposal for the distribution of the heredity estate
which the court may accept or reject. It is the court that makes
that distribution of the estate and determines the persons entitled
thereto.
38

In the instant case, the records will show that in the settlement of
the testate estate of Maria Lizares, the executrix, Eustaquia
Lizares submitted on January 8, 1971, a project of partition in
which the parcels of land, subject matters of the complaint for
reconveyance, were included as property of the estate and
assigned exclusively to Eustaquia as a devisee of Maria Lizares.
In accordance with said project of partition which was approved
by the probate court, Encarnacion Lizares Vda. de Panlilio,
Remedios Lizares Vda. de Guinto, Felicidad Paredes Llopez,
Rosario Paredes Mendoza and Eustaquia Lizares executed an
Agreement of Partition and Subdivision on November 28, 1972,
whereby they agreed to terminate their co-ownership over Lots
Nos. 550, 514, 553, 1287-C of SWO-7446 and 552 covered by
Transfer Certificates of Title Nos. T-65004, T-65005, T-65006,
T-65007 and T-65008. These facts taken altogether show that
the Lizares sisters recognized the decree of partition sanctioned
by the probate court and in fact reaped the fruits thereof.
Hence, they are now precluded from attacking the validity of the
partition or any part of it in the guise of a complaint for
reconveyance. A party cannot, in law and in good conscience be
allowed to reap the fruits of a partition, agreement or judgment
and repudiate what does not suit him.
39
Thus, where a piece of
land has been included in a partition and there is no allegation
that the inclusion was affected through improper means or
without petitioner's knowledge, the partition barred any further
litigation on said title and operated to bring the property under
the control and jurisdiction of the court for its proper disposition
according to the tenor of the partition.
40
The question of private
respondents title over the lots in question has been concluded by
the partition and became a closed matter.
The admission made by Celsa L. Vda. de Kilayko, et al. in their
complaint, Civil Case No. 11639, that Eustaquia had been in
possession of the questioned lots since March 2, 1971 up to the
time of her death indicates that the distribution pursuant to the
decree of partition has already been carried out. Moreover, it
cannot be denied that when Celsa L. Vda. de Kilayko, et al.
moved for the reopening of the testate estate proceedings of
Maria Lizares, the judicial decree of partition and order of
closure of such proceedings was already final and executory,
then reglementary period of thirty (30) days having elapsed from
the time of its issuance, with no timely appeal having been filed
by them. Therefore, they cannot now be permitted to question
the adjudication of the properties left by will of Maria Lizares,
by filing an independent action for the reconveyance of the very
same properties subject of such partition.
A final decree of distribution of the estate of a deceased person
vests the title to the land of the estate in the distributees. If the
decree is erroneous, it should be corrected by opportune appeal,
for once it becomes final, its binding effect is like any other
judgment in rem, unless properly set aside for lack of jurisdiction
or fraud. Where the court has validly issued a decree of
distribution and the same has become final, the validity or
invalidity of the project of partition becomes irrelevant.
41

It is a fundamental concept in the origin of every jural system, a
principle of public policy, that at the risk of occasional errors,
judgments of courts should become final at some definite time
fixed by law, interest rei publicae ut finis sit litum. "The very
object of which the courts were constituted was to put an end to
controversies."
42
The only instance where a party interested in a
probate proceeding may have a final liquidation set aside is
when he is left out by reason of circumstances beyond his
control or through mistake or inadvertence not imputable to
negligence. Even then, the better practice to secure relief is the
opening of the same by proper motion within the reglementary
period, instead of an independent action, the effect of which if
successful, would be for another court or judge to throw out a
decision or order already final and executed and reshuffle
properties long ago distributed and disposed of.
43

The fundamental principle upon which the doctrine of res
judicata rests is that parties ought not to be permitted to litigate
the same issue more than once, that, when a right or fact has
been judicially tried and determined by a court of competent
jurisdiction, or an opportunity for such trial has been given, the
judgment of the court, so long as it remains unreversed, should
be conclusive upon the parties and those in privity with them in
law or estate.
44

All the requisites for the existence of res judicata are present.
Thus, the order approving the distribution of the estate of Maria
Lizares to the heirs instituted in said will has become final and
unappealable; the probate court that rendered judgment had
jurisdiction over the subject matter and over the parties; the
judgment or orders had been rendered on the merits; the special
proceedings for the settlement of the estate of Maria Lizares was
a proceeding in rem that was directed against the whole world
including Celsa L. Vda. de Kilayko, et al., so that it can be said
that there is a similarity of parties in Special Proceedings No.
8452 and Civil Case No. 11639, the judicial administrators of
Eustaquia being privy to Celsa L. Vda. de Kilayko, et al.; there
is identity of subject matter involved in both actions, namely, the
properties left by Maria Lizares; there is identity of causes of
action because in the first action there was a declaration of the
probate court in its order dated April 6, 1974 that although the
testatrix intended a fideicommissary substitution in paragraphs
10 and 11 of her will, the substitution can have no effect because
the requisites for it to be valid, had not been satisfied.
45

Granting that res judicata has not barred the institution of Civil
Case No. 11639, the contention of Celsa L. Vda. de Kilayko, et
al. that they are conditional substitute heirs of Eustaquia in the
testate estate of Maria Lizares
46
is not meritorious. While the
allegation of the joint administrators that paragraphs 10 and 11
of Maria Lizares' last will and testament conceives of a
fideicommissary substitution under Article 863 of the Civil
Code is also baseless as said paragraphs do not impose upon
Eustaquia a clear obligation to preserve the estate in favor of
Celsa L. Vda. de Kilayko, et al., neither may said paragraphs be
considered as providing for a vulgar or simple substitution.
It should be remembered that when a testator merely names an
heir and provides that if such heir should die a second heir also
designated shall succeed, there is no fideicommissary
substitution. The substitution should then be construed as a
vulgar or simple substitution under Art. 859 of the Civil Code
but it shall be effective only if the first heir dies before the
testator.
47
In this case, the instituted heir, Eustaquia, survived
the testatrix, Maria Lizares. Hence, there can be no substitution
of heirs for, upon Maria Lizares' death, the properties involved
unconditionally devolved upon Eustaquia. Under the
circumstances, the sisters of Maria Lizares could only inherit the
estate of Eustaquia by operation of the law of intestacy.
With respect to the cancellation of the notice of lis pendens on
the properties involved, there is no merit in the contention of
Celsa L. Vda. de Kilayko, et al., that the lower court acted
contrary to law and/or gravely abused its discretion in cancelling
the notice of lis pendens. The cancellation of such a
precautionary notice, being a mere incident in an action, may be
ordered by the court having jurisdiction over it at any given
time.
48
Under Sec. 24, Rule 14 of the Rules of Court, a notice
of lis pendens may be cancelled "after proper showing that the
notice is for the purpose of molesting the adverse party, or that it
is not necessary to protect the rights of the party who caused it
to be recorded."
49
In this case, the lower court ordered the
cancellation of said notice on the principal reason that the
administrators of the properties involved are subject to the
supervision of the court and the said properties are
under custodia legis. Therefore, such notice was not necessary to
protect the rights of Celsa L. Vda. de Kilayko, et al. More so in
this case where it turned out that their claim to the properties left
by Eustaquia is without any legal basis.
WHEREFORE, the petition for review on certiorari in L-45425
is hereby DENIED but the petition for certiorari and prohibition
and/or mandamus in L-45965 is GRANTED. The temporary
restraining order of April 26, 1977 which was issued by the
Court in L-45965 is made PERMANENT. Costs against the
petitioners in L-45425.
SO ORDERED.
THIRD DIVISION
[G.R. No. 108947. September 29, 1997]
ROLANDO SANCHEZ, FLORIDA MIERLY SANCHEZ, ALFREDO T.
SANCHEZ and MYRNA T. SANCHEZ, petitioners, vs. THE
HONORABLE COURT OF APPEALS, ROSALIA S. LUGOD,
ARTURO S. LUGOD, EVELYN LUGOD-RANISES and ROBERTO
S. LUGOD, respondents.
D E C I S I O N
PANGANIBAN, J .:
Is a petition for certiorari, in lieu of appeal, the proper remedy to correct
orders of a probate court nullifying certain deeds of sale and, thus, effectively
passing upon title to the properties subject of such deeds? Is a compromise
agreement partitioning inherited properties valid even without the approval of
the trial court hearing the intestate estate of the deceased owner?
The Case
These questions are answered by this Court as it resolves the petition for
review on certiorari before us assailing the November 23, 1992 Decision
[1]
of
the Court of Appeals
[2]
in CA-G.R. SP No. 28761 which annulled the
decision
[3]
of the trial court
[4]
and which declared the compromise agreement
among the parties valid and binding even without the said trial courts
approval. The dispositive portion of the assailed Decision reads:
WHEREFORE, for the reasons hereinabove set forth and discussed, the
instant petition is GRANTED and the challenged decision as well as the
subsequent orders of the respondent court are ANNULLED and SET
ASIDE. The temporary restraining order issued by this Court on October 14,
1992 is made PERMANENT. The compromise agreement dated October 30,
1969 as modified by the memorandum of agreement of April 13, 1970 is
DECLARED valid and binding upon herein parties. And Special Proceedings
No. 44-M and 1022 are deemed CLOSED and TERMINATED.
SO ORDERED.
[5]

The Antecedent Facts
The facts are narrated by the Court of Appeals as follows:
[Herein private respondent] Rosalia S. Lugod is the only child of spouses
Juan C. Sanchez and Maria Villafranca while [herein private respondents]
Arturo S. Lugod, Evelyn L. Ranises and Roberto S. Lugod are the legitimate
children of [herein private respondent] Rosalia.
[Herein petitioners] Rolando, Florida Mierly, Alfredo and Myrna, all
surnamed Sanchez, are the illegitimate children of Juan C. Sanchez.
Following the death of her mother, Maria Villafranca, on September 29, 1967,
[herein private respondent] Rosalia filed on January 22, 1968, thru counsel, a
petition for letters of administration over the estate of her mother and the
estate of her father, Juan C. Sanchez, who was at the time in state of senility
(Annex B, Petition).
On September 30, 1968, [herein private respondent] Rosalia, as administratrix
of the intestate estate of her mother, submitted an inventory and appraisal of
the real and personal estate of her late mother (Annex C, Petition).
Before the administration proceedings in Special Proceedings No. 44-M could
formally be terminated and closed, Juan C. Sanchez, [herein private
respondent] Rosalias father, died on October 21, 1968.
On January 14, 1969, [herein petitioners] as heirs of Juan C. Sanchez, filed a petition
for letters of administration (Special Proceedings No. 1022) over the intestate estate of
Juan C. Sanchez, which petition was opposed by (herein private respondent) Rosalia.
[6]

On October 30, 1969, however, [herein private respondent] Rosalia and
[herein petitioners] assisted by their respective counsels executed a
compromise agreement (Annex D, Petition) wherein they agreed to divide
the properties enumerated therein of the late Juan C. Sanchez.
On November 3, 1969, petitioner Rosalia was appointed by [the trial court],
and took her oath as the administratrix of her fathers intestate estate.
On January 19, 1970, [herein petitioners] filed a motion to require
administratrix, [herein private respondent] Rosalia, to deliver deficiency of 24
hectares and or to set aside compromise agreement (Annex E, Petition).
Under date of April 13, 1970, (herein private respondent) Rosalia and [herein
petitioners] entered into and executed a memorandum of agreement which
modified the compromise agreement (Annex F. Petition)
On October 25, 1979, or nine years later, [herein petitioners] filed, thru
counsel, a motion to require [herein private respondent] Rosalia to submit a
new inventory and to render an accounting over properties not included in the
compromise agreement (Annex G, Petition). They likewise filed a motion to
defer the approval of the compromise agreement (Annex H, Ibid), in which
they prayed for the annulment of the compromise agreement on the ground of
fraud.
On February 4, 1980, however, counsel for [herein petitioners] moved to
withdraw his appearance and the two motions he filed, Annex G and H
(Annex I, Petition).
On February 28, 1980, the [trial] court issued an order directing [herein
private respondent] Rosalia to submit a new inventory of properties under her
administration and an accounting of the fruits thereof, which prompted [herein
private respondent] Rosalia to file a rejoinder on March 31, 1980 (Annex K,
Petition).
On May 12, 1980, [herein petitioners], thru new counsel, filed a motion to
change administratrix (Annex L, Petition) to which [herein private
respondent] Rosalia filed an opposition (AnnexM, Ibid).
The parties were subsequently ordered to submit their respective position
papers, which they did (Annexes N and O, Petition). On September 14,
1989, former counsel of (herein petitioners) entered his re-appearance as
counsel for (herein petitioners).
On the bases of memoranda submitted by the parties, the [trial court], this time
presided by Judge Vivencio A. Galon, promulgated its decision on June 26,
1991, the dispositive portion of which states:
WHEREFORE, premises considered, judgment is hereby rendered as follows by
declaring and ordering:
1.That the entire intestate estate of Maria Villafranca Sanchez under Special
Proceedings No.44-M consists of all her paraphernal properties and one-half (1/2) of
the conjugal properties which must be divided equally between Rosalia Sanchez de
Lugod and Juan C. Sanchez;
2.That the entire intestate estate of Juan C. Sanchez under Special Proceedings No.
1022 consists of all his capital properties, one-half (1/2) from the conjugal partnership
of gains and one-half (1/2) of the intestate estate of Maria Villafranca under Special
Proceedings No. 44-M;
3.That one-half (1/2) of the entire intestate estate of Juan C. Sanchez shall be inherited
by his only legitimate daughter, Rosalia V. Sanchez de Lugod while the other one-half
(1/2) shall be inherited and be divided equally by, between and among the six (6)
illegitimate children, namely: Patricia Alburo, Maria Ramuso Sanchez, Rolando
Pedro T. Sanchez, Florida Mierly T. Sanchez, Alfredo T. Sanchez and Myrna T.
Sanchez;
4.That all the Deed (sic) of Absolute Sales executed by Juan C. Sanchez and Maria
Villafranca in favor of Rosalia Sanchez Lugod, Arturo S. Lugod, Evelyn S. Lugod
and Roberto S. Lugod on July 26, 1963 and June 26, 1967 are all declared simulated
and fictitious and must be subject to collation and partition among all heirs;
5.That within thirty (30) days from finality of this decision, Rosalia Sanchez Lugod is
hereby ordered to prepare a project of partition of the intestate estate of Juan C.
Sanchez under Special Proceedings No. 1022 and distribute and deliver to all heirs
their corresponding shares. If she fails to do so within the said thirty (30) days, then a
Board of Commissioners is hereby constituted, who are all entitled to honorarium and
per diems and other necessary expenses chargeable to the estate to be paid by
Administratrix Rosalia S. Lugod, appointing the Community Environment and
Natural Resources Officer (CENRO) of Gingoog City as members thereof, with the
task to prepare the project of partition and deliver to all heirs their respective shares
within ninety (90) days from the finality of said decision;
6.That within thirty (30) days from receipt of this decision, Administratrix Rosalia
Sanchez Vda. de Lugod is hereby ordered to submit two (2) separate certified true and
correct accounting, one for the income of all the properties of the entire intestate
estate of Maria Villafranca under Special Proceedings No. 44-M, and another for the
properties of the entire intestate estate of Juan C. Sanchez under Special Proceedings
No. 1022 duly both signed by her and both verified by a Certified Public Accountant
and distribute and deliver to her six (6) illegitimate brothers and sisters in equal
shares, one -half (1/2) of the net income of the estate of Juan C. Sanchez from October
21, 1968 up to the finality of this decision;
7.For failure to render an accounting report and failure to give cash advances to the
illegitimate children of Juan C. Sanchez during their minority and hour of need from
the net income of the estate of Juan C. Sanchez, which adversely prejudiced their
social standing and pursuit of college education, (the trial court) hereby orders Rosalia
Sanchez Vda. de Lugod to pay her six (6) illegitimate brothers and sisters the sum of
Five Hundred Thousand (P500,000.00) Pesos, as exemplary damages, and also the
sum of One Hundred Fifty Thousand (P150,000.00) Pesos for attorneys fees;
8.Upon release of this decision and during its pendency, should appeal be made, the
Register of Deeds and Assessors of the Provinces and Cities where the properties of
Juan C. Sanchez and Maria Villafranca are located, are all ordered to register and
annotate in the title and/or tax declarations, the dispositive portion of this decision for
the protection of all heirs and all those who may be concerned.
SO ORDERED.
[Herein private respondent] Rosalia filed a motion for reconsideration dated
July 17, 1991 (Annex P, Petition) on August 6, 1991.
On August 13, 1991, [herein petitioners] filed a motion for execution and
opposition to [herein private respondent] Rosalias motion for reconsideration
(Annex Q, Petition).
On September 3, 1991, [the trial court] issued an Omnibus Order (Annex S,
Petition) declaring, among other things, that the decision at issue had become
final and executory.
[Herein private respondent] Rosalia then filed a motion for reconsideration of
said Omnibus Order (Annex T, Petition). Said [herein private respondent]
was allowed to file a memorandum in support of her motion (Annex V,
Petition).
On June 26, 1991, [the trial court] issued and Order denying petitioner Rosalias motion for
reconsideration (Annex W, Petition).
[7]

Thereafter, private respondents elevated the case to the Court of Appeals
via a petition for certiorari and contended:
I
The [trial court] has no authority to disturb the compromise agreement.
II
The [trial court] has arbitrarily faulted [herein private respondent] Rosalia S.
Lugod for alleged failure to render an accounting which was impossible.
III
The [trial court] acted without jurisdiction in derogation of the constitutional
rights of [herein private respondents] Arturo S. Lugod, Evelyn L. Ranises and
Roberto S. Lugod when [the trial court] decided to annul the deed of sale between
the said [herein private respondents] and Juan C. Sanchez without affording them
their day in court.
IV
[The trial court judge] defied without rhyme or reason well-established and
entrenched jurisprudence when he determined facts sans any evidence thereon.
V
[The trial court] grossly misinterpreted [herein private respondent] Rosalia S. Lugods
right to appeal.
[8]

For claritys sake, this Court hereby reproduces verbatim the compromise
agreement
[9]
of the parties:
COMPROMISE AGREEMENT
COME NOW, the parties in the above-entitled case, motivated by their mutual
desire to preserve and maintain harmonious relations between and among
themselves, for mutual valuable considerations and in the spirit of good will
and fair play, and, for the purpose of this Compromise Agreement, agree to
the following:
1. That the deceased Juan C. Sanchez who died intestate on October 21, 1968 was
legally married to Maria Villafranca de Sanchez, who predeceased her on September
29, 1967, out of whose wedlock Rosalia Sanchez Lugod, Oppositor herein, was born,
thus making her the sole and only surviving legitimate heir of her deceased parents;
2. That the said deceased Juan C. Sanchez, left illegitimate children, Intervenors-
Oppositors and Petitioners, respectively, herein namely;
(1) Patricio Alburo, born out of wedlock on March 17, 1926 at Cebu
City, Philippines, to Emilia Alburo;
(2) Maria Ramoso Sanchez, born out of wedlock on May 9, 1937 at
Gingoog, Misamis Oriental, now, Gingoog City, to Alberta
Ramoso;
(3) (a) Rolando Pedro Sanchez, born on May 19, 1947,
(b) Florida Mierly Sanchez, born on February 16, 1949,
(c) Alfredo Sanchez, born on July 21, 1950,and
(d) Myrna Sanchez, born on June 16, 1952, all born out of
wedlock to Laureta Tampus in Gingoog City, Philippines.
3. That the deceased Juan C. Sanchez left the following properties, to wit:
I. SEPARATE CAPITAL OF JUAN C. SANCHEZ
NATURE, DESCRIPTION AND AREA ASSESSED VALUE
(1) Agricultural Land. Covered by Tax. Decl. No. 06458, Cad. Lot
No. 1041 C-2, located at Murallon, Gingoog City and bounded
on the North by Lot Nos. 1033, 1035, 1036, 1037, 1039, 1040,
1042 & 1043; South by Lot No. 1080, 1088, 1087 & 1084; East
by Lot Nos. 1089, 1061 & 2319; West by Lot Nos. 954, 1038,
1057 & 1056, containing an area of ONE HUNDRED EIGHTY
THREE THOUSAND SIX HUNDRED SEVENTY TWO (183,
672) sq. ms. more or less.
P21,690.00
II. CONJUGAL PROPERTY OF JUAN C. SANCHEZ AND MARIA
VILLAFRANCA DE SANCHEZ
(1) Agricultural Land. Covered by Tax Decl. No. 06447, Cad. Lot No.
2745, C-7 located at Agay-ayan, Gingoog City and bounded on the
North by Lot Nos. 2744, 2742, 2748; South by Lot No. 2739; East by
Lot No. 2746; West by Lot No. 2741, containing an area of FOURTEEN
THOUSAND SEVEN HUNDRED (14,700) sq. ms. more or less.
P1,900.0
0
(2) Agricultural Land. Covered by Tax Decl. No. 06449, Cad, Lot No.
3271 C-7 located at Panyangan, Lanao, Gingoog City and bounded on
the North by Lot No. 3270; South by Lot Nos. 2900 & 3462; East by
Panyangan River & F. Lumanao; and Part of Lot 3272; and West by
Samay Creek, containing an area of ONE HUNDRED FOUR
THOUSAND SIX HUNDRED (104,600) sq. ms. more or less.
P11,580.00
(3) Agricultural Land. Covered by Tax Decl. No. 06449, Cad. Lot No.
2319, Case 2, located at Murallon, Gingoog City and bounded on the
North by Lot No. 1061; South by Hinopolan Creek; East by Lot No.
1044; and West by Lot No. 1041, containing an area of THREE
THOUSAND TWO HUNDRED TWENTY FIVE (3,225) sq. ms. more
or less.
(4) Agricultural Land. Covered by Tax Decl. No. 06452, Cad. Lot No.
3272, C-7 Part 4 located at Panyangan, Lunao, Gingoog City and
bounded on the North by Lot Nos. 3270 & 3273; East by Panyangan
River; South by Panyangan River; and West by Lot Nos. 3270 & 3271,
containing an area of FIFTY FIVE THOUSAND SIX HUNDRED
(55,600) sq. ms. more or less, being claimed by Damian Querubin.
P2.370.00
(5) Agricultural Land. Covered by Tax Decl. No. 06453, Cad. Lot No.
3270 Case 7, located at Sunog, Lunao, Gingoog City and bounded on the
North by Samay Creek & Lot 3267; South by Lot Nos. 3271 & 3272;
East by Lot Nos. 3269 & 3273; and West by Samay Creek, containing an
area of FOUR HUNDRED EIGHT THREE THOUSAND SIX
HUNDRED (483,600) sq. ms. more or less.
P61,680.00
(6) Agricultural Land. Covered by Tax Decl. No. 06457, Cad. Lot No.
3273, C-7 Part 2 located at Panyangan, Lunao, Gingoog City and
bounded on the North by Lot No. 3269; South by Lot No. 3272; East by
Panyangan River; and West by Lot No. 3270, contaning an area of
THIRTY FOUR THOUSAND THREE HUNDRED (34,300) sq. ms.
more or less, being claimed by Miguel Tuto.
P3,880.00
(7) Agricultural Land. Covered by Tax Decl. No. 12000, Cad. Lot No.
2806, Case 7 located at Agayayan, Gingoog City and bounded on the
North by Agayayan River; South by Victoriano Barbac; East by Isabelo
Ramoso; and West by Restituto Baol, contaning an area of SIX
THOUSAND SIX HUNDRED SEVENTY SIX (6,676) sq. ms. more or
less.
P380.00
(8) Agricultural Land. Covered by Tax Decl. No. 12924, Cad. Lot No.
1206 C-1 located at Cahulogan, Gingoog City and bounded on the NW.,
by Lot No. 1209; SW., by Lot No. 1207; East by National Highway;
and West by Lot No. 1207; containing an area of FOUR THOUSAND
FIVE HUNDRED THIRTEEN (4,513) sq. ms. more or less.
P740.00
(9) Agricultural Land. Covered by Tax Decl. No. 12925, Cad. Lot No.
5554, located at Tinaytayan, Pigsalohan, Gingoog City and bounded on
the North by Lot Nos. 5559 & 5558; South by Lot No. 3486; East by Lot
No. 5555; and West by Lot No. 5355, containing an area of EIGHTEEN
THOUSAND FIVE HUNDRED TWENTY EIGHT (18,528) sq. ms.
more or less.
P320.00
(10) Agricultural Land. Covered by Tax Decl. No. 12926, Cad. Lot No.
5555 C-7 located at Tinaytayan, Pigsalojan, Gingoog City and bounded
on the North by Tinaytayan Creek & Lot Nos. 5557 & 5558; South by
Lot Nos. 3486, 3487, 3488, 3491 & 3496; East by Cr. & Lot No. 3496;
and West by Lot No. 5554, containing an area of SEVENTY SEVEN
THOUSAND SEVEN HUNDRED SEVENTY SIX (77,776) sq. ms.
more or less.
P1,350.00
(11) A Commercial Land. Covered by Tax Decl. No. 06454, Cad. Lot No.
61-C-1 located at Guno-Condeza Sts., Gingoog City and bounded on the
North by Lot 64; South by Road-Lot 613 Condeza St; East by Lot Nos.
63, and 62; West by Road-Lot 614-Guno St., containing an area of ONE
THOUSAND FORTY TWO (1,042) sq. ms. more or less.
P9,320.00
(12) A Commercial Land. Covered by Tax Decl. No. 06484, Lot No. 5,
Block 2, located at Cabuyoan, Gingoog City and bounded on the North
by Lot No. 4, block 2; South by Lot No. 8, block 2; East by Lot No. 6,
block 2, West by Subdivision Road, containing an area of FOUR
HUNDRED (400) sq. ms. more or less.
P12,240.00
(13) A Commercial Land. Covered by Tax Decl. No. 15798, Block No. 7-
A-16-0 located at Cabuyoan, Gingoog City and bounded on the North by
Lot No. 7-A-16-0; South by Lot No. 7-16-0; East by Lot No. 7-A-18-
Road; West by Lot No. 8, PSU-120704-Julito Arengo vs. Restituto Baol,
containing an area of TWO HUNDRED SIXTEEN (216) sq. ms. more
or less.
P1,050.00
(14) Agricultural Land. Covered by Tax, Decl. No. 06789, Cad. Lot No.
5157-C-7, located at Kiogat, Agayayan, Gingoog City and bounded on
the North by Lot No. 5158, 5159, 5156; South by SE-Steep Bank; East
by NW, by Lot No. 5158, Villafranca, containing an area of NINETY
SIX THOUSAND TWO HUNDRED (96,200) sq. ms. more or less.
P3,370.00
III. PERSONAL ESTATE (CONJUGAL)
NATURE AND
DESCRIPTION LOCATION APPRAISAL
1. Fifty (50) shares of stock
Rural Bank of Gingoog, Inc.
at P100.00 per
share P5,000.00
2. Four (4) shares of Preferred Stock
with San Miguel
Corporation 400.00
4. That, the parties hereto have agreed to divide the above-enumerated properties in
the following manner, to wit:
(a) To Patricio Alburo, Maria Ramoso Sanchez, Roland Pedro T. Sanchez,
Florida Mierly Sanchez, Alfredo T. Sanchez and Myrna T. Sanchez, in
equal pro-indiviso shares, considering not only their respective areas but
also the improvements existing thereon, to wit:
Agricultural Land. Covered by Tax Decl. No. 06453, Cad. Lot
No. 3270 Case 7, located at Sunog, Lunao, Gingoog City and
bounded on the North by Samay Creek & Lot 3267; South by Lot
Nos. 3271 and 3272; East by Lot Nos. 3269 & 3273; and West by
Samay Creek, containing an area of FOUR HUNDRED EIGHTY
THREE THOUSAND SIX HUNDRED (483,600) sq. ms. and
assessed in the sum ofP61,680.00.
(b) To Rosalia Sanchez Lugod all the rest of the properties, both real and
personal, enumerated above with the exception of the following:
(1) Two Preferred Shares of Stock in the San Miguel Corporation,
indicated in San Miguel Corporation Stock Certificate No. 30217,
which two shares she is ceding in favor of Patricio Alburo;
(2) The house and lot designated as Lot No. 5, Block 2 together
with the improvements thereon and identified as parcel No. II-12,
lot covered by Tax Decl. No. 15798 identified as Parcel No. II-13
in the above enumerated, and Cad. Lot No. 5157-C-7 together
with the improvements thereon, which is identified as parcel No.
II-14 of the above-enumeration of properties, which said Rosalia
S. Lugod is likewise ceding and renouncing in favor of Rolando
Pedro, Florida Mierly, Alfredo and Myrna, all surnamed Sanchez,
in equal pro-indiviso shares;
5. That Rolando Pedro, Florida Mierly, Alfredo and Myrna, all surnamed Sanchez
hereby acknowledge to have received jointly and severally in form of advances after
October 21, 1968 the aggregate sum of EIGHT THOUSAND FIVE HUNDRED
THIRTY-THREE PESOS (P8,533.94) and NINETY-FOUR CENTAVOS;
6. That the parties hereto likewise acknowledge and recognize in the indebtedness
of the deceased Juan G. Sanchez and his deceased wife Maria Villafranca Sanchez to
the Lugod Enterprises, Inc., in the sum of P43,064.99;
7. That the parties hereto shall be responsible for the payment of the estate and
inheritance taxes proportionate to the value of their respective shares as may be
determined by the Bureau of Internal Revenue and shall likewise be responsible for
the expenses of survey and segregation of their respective shares;
8. That Patricio Alburo, Maria Ramoso Sanchez, Roland Pedro Sanchez, Florida
Mierly Sanchez, Alfredo Sanchez and Myrna Sanchez hereby waive, relinquish and
renounce, jointly and individually, in a manner that is absolute and irrevocable, all
their rights and interests, share and participation which they have or might have in all
the properties, both real and personal, known or unknown and/or which may not be
listed herein, or in excess of the areas listed or mentioned herein, and/or which might
have been, at one time or another, owned by, registered or placed in the name of either
of the spouses Juan C. Sanchez or Maria Villafranca de Sanchez or both, and which
either one or both might have sold, ceded, transferred, or donated to any person or
persons or entity and which parties hereto do hereby confirm and ratify together with
all the improvements thereon, as well as all the produce and proceeds thereof, and
particularly of the properties, real and personal listed herein, as well as demandable
obligations due to the deceased spouses Juan C. Sanchez, before and after the death of
the aforementioned spouses Juan C. Sanchez and Maria Villafranca de Sanchez, in
favor of oppositor Rosalia S. Lugod;
9. That the expenses of this litigation including attorneys fees shall be borne
respectively by the parties hereto;
10. That Laureta Tampus for herself and guardian ad-litem of her minor children,
namely: Florida Mierly, Alfredo, and Myrna, all surnamed Sanchez, hereby declare
that she has no right, interest, share and participation whatsoever in the estate left by
Juan C. Sanchez and/or Maria Villafranca de Sanchez, or both, and that she likewise
waives, renounces, and relinquishes whatever rigid, share, participation or interest
therein which she has or might have in favor of Rosalia S. Lugod;
11. That, the parties hereto mutually waive and renounce in favor of each other any
whatever claims or actions, arising from, connected with, and as a result of Special
Proceedings Nos. 44-M and 1022 of the Court of First Instance of Misamis Oriental,
Rosalia S. Lugod, warranting that the parcel of land ceded to the other parties herein
contains 48 hectares and 36 acres.
12. That, Rosalia S. Lugod shall assume as she hereby assumes the payment to
Lugod Enterprises, Inc., of the sum of P51,598.93 representing the indebtedness of the
estate of Juan C. Sanchez and Maria Villafranca de Sanchez and the advances made to
Rolando Pedro, Mierly, Alfredo, and Myrna all surnamed Sanchez, mentioned in
paragraphs 5 and 6 hereof and, to give effect to this Agreement, the parties hereto
agree to have letters of administration issued in favor of Rosalia S. Lugod without any
bond.
That Rosalia S. Lugod likewise agrees to deliver possession and enjoyment of the
parcel of land herein ceded to petitioners and intervenors immediately after the
signing of this agreement and that the latter also mutually agree among themselves to
have the said lot subdivided and partitioned immediately in accordance with the
proportion of one sixth (1/6) part for every petitioner and intervenor and that in the
meantime that the partition and subdivision is not yet effected, the administrations of
said parcel of land shall be vested jointly with Laureta Tampos, guardian ad litem of
petitioners and Maria Ramoso, one of the intervenors who shall see to it that each
petitioner and intervenor is given one sixth (1/6) of the net proceeds of all agricultural
harvest made thereon.
WHEREFORE, it is most respectfully prayed that the foregoing compromise
agreement be approved.
Medina, Misamis Oriental, October 30, 1969.
(Sgd.) (Sgd.)
PATRICIO ALBURO ROSALIA S. LUGOD
Intervenor-Oppositor Oppositor
(Sgd.)
MARIA RAMOSO SANCHEZ ASSISTED BY:
Intervenor-Oppositor
(Sgd.)
ASSISTED BY: PABLO S. REYES
R-101-Navarro Bldg.
(Sgd.) Don A. Velez St.
REYNALDO L. FERNANDEZ Cagayan de Oro City
Gingoog City
(Sgd.) (Sgd.)
ROLANDO PEDRO T. SANCHEZ ALFREDO T. SANCHEZ
Petitioner Petitioner
(Sgd.) (Sgd.)
FLORIDA MIERLY T. SANCHEZ MYRNA T. SANCHEZ
Petitioner Petitioner
(Sgd.)
LAURETA TAMPUS
For herself and as Guardian
Ad-Litem of the minors
Florida Mierly, Alfredo, and
Myrna, all surnamed Sanchez
ASSISTED BY:
TEOGENES VELEZ, JR.
Counsel for Petitioners
Cagayan de Oro City

The Clerk of Court
Court of First Instance
Branch III, Medina, Mis. Or.
Greetings:
Please set the foregoing compromise agreement for the approval of the
Honorable Court today, Oct. 30, 1969.
(Sgd.) (Sgd.) (Sgd.)
PABLO S. REYES TEOGENES VELEZ, JR. REYNALDO L.
FERNANDEZ
The Memorandum of Agreement dated April 13, 1970, which the parties
entered into with the assistance of their counsel, amended the above
compromise. (It will be reproduced later in our discussion of the second issue
raised by the petitioners.)
The Court of Appeals, in a Resolution
[10]
dated September 4, 1992, initially
dismissed private respondents petition. Acting, however, on a motion for
reconsideration and a supplemental motion for reconsideration dated
September 14, 1992 and September 25, 1992, respectively,
[11]
Respondent
Court thereafter reinstated private respondents petition in a resolution
[12]
dated
October 14, 1992.
In due course, the Court of Appeals, as earlier stated, rendered its
assailed Decision granting the petition, setting aside the trial courts decision
and declaring the modified compromise agreement valid and binding.
Hence, this appeal to this Court under Rule 45 of the Rules of Court.
The Issues
In this appeal, petitioners invite the Courts attention to the following
issues:
I
The respondent court grossly erred in granting the petition for certiorari under
Rule 65 considering that the special civil action of certiorari may not be
availed of as a substitute for an appeal and that, in any event, the grounds
invoked in the petition are merely alleged errors of judgment which can no
longer be done in view of the fact that the decision of the lower court had long
become final and executory.
II
Prescinding from the foregoing, the respondent court erred in annulling the
decision of the lower court for the reason that a compromise agreement or
partition, as the court construed the same to be, executed by the parties on
October 30, 1969 was void and unenforceable the same not having been
approved by the intestate court and that the same having been seasonably
repudiated by petitioners on the ground of fraud.
III
The respondent court grossly erred in ignoring and disregarding findings of
facts of the lower court that the alleged conveyances of real properties made
by the spouses Juan C. Sanchez and Maria Villafranca just before their death
in favor of their daughter and grandchildren, private respondents herein, are
tainted with fraud or made in contemplation of death, hence, collationable.
IV
In any event, the respondent court grossly erred in treating the lower courts
declaration of fictitiousness of the deeds of sale as a final adjudication of
annulment.
V
The respondent court grossly erred in declaring the termination of the intestate
proceedings even as the lower court had not made a final and enforceable
distribution of the estate of the deceased Juan C. Sanchez.
VI
Prescinding from the foregoing, the respondent court grossly erred in not at
least directing respondent Rosalia S. Lugod to deliver the deficiency of eight
(8) hectares due petitioners under the compromise agreement and
memorandum of agreement, and in not further directing her to include in the
inventory properties conveyed under the deeds of sale found by the lower
court to be part of the estate of Juan C. Sanchez.
[13]

The salient aspects of some issues are closely intertwined; hence, they
are hereby consolidated into three main issues specifically dealing with the
following subjects: (1) the propriety of certiorari as a remedy before the Court
of Appeals, (2) the validity of the compromise agreement, and (3) the
presence of fraud in the execution of the compromise and/or collation of the
properties sold.
The Courts Ruling
The petition is not meritorious.
First Issue: Propriety of Certiorari
Before the Court of Appeals
Since private respondents had neglected or failed to file an ordinary
appeal within the reglementary period, petitioners allege that the Court of
Appeals erred in allowing private respondents recourse to Rule 65 of the
Rules of Court. They contend that private respondents invocation of certiorari
was procedurally defective.
[14]
They further argue that private respondents, in
their petition before the Court of Appeals, alleged errors of the trial court
which, being merely errors of judgment and not errors of jurisdiction, were not
correctable by certiorari.
[15]
This Court disagrees.
Doctrinally entrenched is the general rule that certiorari is not a substitute
for a lost appeal. However, Justice Florenz D. Regalado lists several
exceptions to this rule, viz.: (1) where the appeal does not constitute a
speedy and adequate remedy (Salvadades vs. Pajarillo, et al., 78 Phil.
77), as where 33 appeals were involved from orders issued in a single
proceeding which will inevitably result in a proliferation of more appeals (PCIB
vs. Escolin, et al., L-27860 and 27896, Mar. 29, 1974); (2) where the orders
were also issued either in excess of or without jurisdiction (Aguilar vs. Tan, L-
23600, Jun 30, 1970, Cf. Bautista, et al. vs. Sarmiento, et al., L-45137, Sept.
231985); (3) for certain special consideration, as public welfare or public
policy (See Jose vs. Zulueta, et al. -16598, May 31, 1961 and the cases
cited therein); (4) where in criminal actions, the court rejects rebuttal evidence
for the prosecution as, in case of acquittal, there could be no remedy (People
vs. Abalos, L029039, Nov. 28, 1968); (5) where the order is a patent nullity
(Marcelo vs. De Guzman, et al., L-29077, June 29, 1982); and (6) where the
decision in the certiorari case will avoid future litigations (St. Peter Memorial
Park, Inc. vs. Campos, et al., L-38280, Mar. 21, 1975).
[16]
Even in a case where
the remedy of appeal was lost, the Court has issued the writ of certiorari
where the lower court patently acted in excess of or outside its
jurisdiction,
[17]
as in the present case.
A petition for certiorari under Rule 65 of the Rules of Court is appropriate
and allowable when the following requisites concur: (1) the writ is directed
against a tribunal, board or officer exercising judicial or quasi-judicial
functions; (2) such tribunal, board or officer has acted without or in excess of
jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction; and (3) there is no appeal or any plain, speedy and adequate
remedy in the ordinary course of law.
[18]
After a thorough review of the case at
bar, we are convinced that all these requirements were met.
As a probate court, the trial court was exercising judicial functions when it
issued its assailed resolution. The said court had jurisdiction to act in the
intestate proceedings involved in this case with the caveat that, due to its
limited jurisdiction, it could resolve questions of title only provisionally.
[19]
It is
hornbook doctrine that in a special proceeding for the probate of a will, the
question of ownership is an extraneous matter which the probate court cannot
resolve with finality. This pronouncement no doubt applies with equal force to
an intestate proceeding as in the case at bar.
[20]
In the instant case, the trial
court rendered a decision declaring as simulated and fictitious all the deeds of
absolute sale which, on July 26, 1963 and June 26, 1967, Juan C. Sanchez
and Maria Villafranca executed in favor of their daughter, Rosalia Sanchez
Lugod; and grandchildren, namely, Arturo S. Lugod, Evelyn S. Lugod and
Roberto S. Lugod. The trial court ruled further that the properties covered by
the said sales must be subject to collation. Citing Article 1409 (2) of the Civil
Code, the lower court nullified said deeds of sale and determined with finality
the ownership of the properties subject thereof. In doing so, it clearly
overstepped its jurisdiction as a probate court. Jurisprudence teaches:
[A] probate court or one in charge of proceedings whether testate or intestate
cannot adjudicate or determine title to properties claimed to be a part of the
estate and which are claimed to belong to outside parties. All that the said
court could do as regards said properties is to determine whether they should
or should not be included in the inventory or list of properties to be
administered by the administrator. If there is not dispute, well and good, but if
there is, then the parties, the administrator, and the opposing parties have to
resort to an ordinary action for a final determination of the conflicting claims
of title because the probate court cannot do so.
[21]

Furthermore, the trial court committed grave abuse of discretion when it
rendered its decision in disregard of the parties compromise
agreement.
[22]
Such disregard, on the ground that the compromise agreement
was not approved by the court,
[23]
is tantamount to an evasion of positive
duty or to a virtual refusal to perform the duty enjoined or to act in
contemplation and within the bounds of law.
[24]

The foregoing issues clearly involve not only the correctness of the trial
courts decision but also the latters jurisdiction. They encompass plain errors
of jurisdiction and grave abuse of discretion, not merely errors of
judgment.
[25]
Since the trial court exceeded its jurisdiction, a petition for
certiorari is certainly a proper remedy. Indeed, it is well-settled that (a)n act
done by a probate court in excess of its jurisdiction may be corrected by
certiorari.
[26]

Consistent with the foregoing, the following disquisition by respondent
appellate court is apt:
As a general proposition, appeal is the proper remedy of petitioner Rosalia here
under Rule 109 of the Revised Rules of Court. But the availability of the ordinary
course of appeal does not constitute sufficient ground to [prevent] a party from
making use of the extraordinary remedy of certiorari where appeal is not an adequate
remedy or equally beneficial, speedy and sufficient (Echauz vs. Court of Appeals, 199
SCRA 381). Here, considering that the respondent court has disregarded the
compromise agreement which has long been executed as early as October, 1969 and
declared null and void the deeds of sale with finality, which, as a probate court, it has
no jurisdiction to do, We deem ordinary appeal is inadequate. Considering further the
[trial courts] granting of [herein petitioners] motion for execution of the assailed
decision,
[27]
[herein private respondent] Rosalias resort to the instant petition [for
review on certiorari] is all the more warranted under the circumstances.
[28]

We thus hold that the questioned decision and resolutions of the trial court
may be challenged through a special civil action for certiorari under Rule 65 of
the Rules of Court. At the very least, this case is a clear exception to the
general rule that certiorari is not a substitute for a lost appeal because the trial
courts decision and resolutions were issued without or in excess of
jurisdiction, which may thus be challenged or attacked at any time. A void
judgment for want of jurisdiction is no judgment at all. It cannot be the source
of any right nor the creator of any obligation. All acts performed pursuant to it
and all claims emanating from it have no legal effect. Hence, it can never
become final and any writ of execution based on it is void; x x x it may be
said to be a lawless thing which can be treated as an outlaw and slain at sight,
or ignored wherever and whenever it exhibits its head.
[29]

Second Issue: Validity of Compromise Agreement
Petitioners contend that, because the compromise agreement was
executed during the pendency of the probate proceedings, judicial approval is
necessary to shroud it with validity. They stress that the probate court had
jurisdiction over the properties covered by said agreement. They add that
Petitioners Florida Mierly, Alfredo and Myrna were all minors represented only
by their mother/natural guardian, Laureta Tampus.
[30]

These contentions lack merit. Article 2028 of the Civil Code defines a
compromise agreement as a contract whereby the parties, by making
reciprocal concessions, avoid a litigation or put an end to one already
commenced. Being a consensual contract, it is perfected upon the meeting
of the minds of the parties. Judicial approval is not required for its
perfection.
[31]
Petitioners argument that the compromise was not valid for lack
of judicial approval is not novel; the same was raised in Mayuga vs. Court of
Appeals,
[32]
where the Court, through Justice Irene R. Cortes, ruled:
It is alleged that the lack of judicial approval is fatal to the compromise. A
compromise is a consensual contract. As such, it is perfected upon the meeting
of the minds of the parties to the contract. (Hernandez v. Barcelon, 23 Phil.
599 [1912]; see also De los Reyes v. de Ugarte, 75 Phil. 505 [1945].) And
from that moment not only does it become binding upon the parties (De los
Reyes v. De Ugarte, supra ), it also has upon them the effect and authority
of res judicata (Civil Code, Art. 2037), even if not judicially
approved (Meneses v. De la Rosa, 77 Phil. 34 [1946]; Vda. De Guilas v.
David, 132 Phil. 241, L-24280, 23 SCRA 762 [May 27, 1968];
Cochingyan v.Cloribel, L-27070-71 [April 22, 1977], 76 SCRA 361). (Italics
found in the original.)
In the case before us, it is ineludible that the parties knowingly and freely
entered into a valid compromise agreement. Adequately assisted by their
respective counsels, they each negotiated its terms and provisions for four
months; in fact, said agreement was executed only after the fourth draft. As
noted by the trial court itself, the first and second drafts were prepared
successively in July, 1969; the third draft on September 25, 1969; and the
fourth draft, which was finally signed by the parties on October 30,
1969,
[33]
followed. Since this compromise agreement was the result of a long
drawn out process, with all the parties ably striving to protect their respective
interests and to come out with the best they could, there can be no doubt that
the parties entered into it freely and voluntarily. Accordingly, they should be
bound thereby.
[34]
To be valid, it is merely required under the law to be based on
real claims and actually agreed upon in good faith by the parties thereto.
[35]

Indeed, compromise is a form of amicable settlement that is not only
allowed but also encouraged in civil cases.
[36]
Article 2029 of the Civil Code
mandates that a court shall endeavor to persuade the litigants in a civil case
to agree upon some fair compromise.
In opposing the validity and enforcement of the compromise agreement,
petitioners harp on the minority of Florida Mierly, Alfredo and Myrna. Citing
Article 2032 of the Civil Code, they contend that the courts approval is
necessary in compromises entered into by guardians and parents in behalf of
their wards or children.
[37]

However, we observe that although denominated a compromise
agreement, the document in this case is essentially a deed of partition,
pursuant to Article 1082 of the Civil Code which provides that [e]very act
which is intended to put an end to indivision among co-heirs and legatees or
devisees is deemed to be a partition, although it should purport to be a sale,
an exchange, a compromise, or any other transaction.
For a partition to be valid, Section 1, Rule 74 of the Rules of Court,
requires the concurrence of the following conditions: (1) the decedent left no
will; (2) the decedent left no debts, or if there were debts left, all had been
paid; (3) the heirs and liquidators are all of age, or if they are minors, the latter
are represented by their judicial guardian or legal representatives; and (4) the
partition was made by means of a public instrument or affidavit duly filed with
the Register of Deeds.
[38]
We find that all the foregoing requisites are present in
this case. We therefore affirm the validity of the parties compromise
agreement/partition in this case.
In any event, petitioners neither raised nor ventilated this issue in the trial
court. This new question or matter was manifestly beyond the pale of the
issues or questions submitted and threshed out before the lower court which
are reproduced below, viz.:
I Are the properties which are the object of the sale by the deceased spouses to
their grandchildren collationable?
II Are the properties which are the object of the sale by the deceased spouses to
their legitimate daughter also collationable?
III The first and second issues being resolved, how much then is the rightful share of the
four (4) recognized illegitimate children?
[39]

Furthermore, the 27-page Memorandum dated February 17, 1990 filed by
petitioners before the Regional Trial Court
[40]
readily reveals that they never
questioned the validity of the compromise. In their comment before the Court
of Appeals,
[41]
petitioners based their objection to said compromise agreement
on the solitary reason that it was tainted with fraud and deception, zeroing
specifically on the alleged fraud committed by private respondent Rosalia S.
Lugod.
[42]
The issue of minority was first raised only in petitioners Motion for
Reconsideration of the Court of Appeals Decision;
[43]
thus, it is as if it was
never duly raised in that court at all.
[44]
Hence, this Court cannot now, for the
first time on appeal, entertain this issue, for to do so would plainly violate the
basic rule of fair play, justice and due process.
[45]
We take this opportunity to
reiterate and emphasize the well-settled rule that (a)n issue raised for the first
time on appeal and not raised timely in the proceedings in the lower court is
barred by estoppel. Questions raised on appeal must be within the issues
framed by the parties and, consequently, issues not raised in the trial court
cannot be raised for the first time on appeal.
[46]

The petitioners likewise assail as void the provision on waiver contained in
No. 8 of the aforequoted compromise, because it allegedly constitutes a
relinquishment by petitioners of a right to properties which were not
known.
[47]
They argue that such waiver is contrary to law, public policy, morals
or good custom. The Court disagrees. The assailed waiver pertained to their
hereditary right to properties belonging to the decedents estate which were
not included in the inventory of the estates properties. It also covered their
right to other properties originally belonging to the spouses Juan Sanchez and
Maria Villafranca de Sanchez which have been transferred to other
persons. In addition, the parties agreed in the compromise to confirm and
ratify said transfers. The waiver is valid because, contrary to petitioners
protestation, the parties waived a known and existing interest -- their
hereditary right which was already vested in them by reason of the death of
their father. Article 777 of the Civil Code provides that (t)he rights to the
succession are transmitted from the moment of death of the decedent.
Hence, there is no legal obstacle to an heirs waiver of his/her hereditary
share even if the actual extent of such share is not determined until the
subsequent liquidation of the estate.
[48]
At any rate, such waiver is consistent
with the intent and letter of the law advocating compromise as a vehicle for
the settlement of civil disputes.
[49]

Finally, petitioners contend that Private Respondent Rosalia T. Lugods
alleged fraudulent acts, specifically her concealment of some of the
decedents properties, attended the actual execution of the compromise
agreement.
[50]
This argument is debunked by the absence of any substantial
and convincing evidence on record showing fraud on her part. As aptly
observed by the appellate court:
[Herein petitioners] accuse [herein private respondent] Rosalia of fraud or
deception by alleging, inter alia, that the parcel of land given to them never
conformed to the stated area, i.e., forty-eight (48) hectares, as stated in the
compromise agreement. We find this argument unconvincing and
unmeritorious. [Herein petitioners] averment of fraud on the part of [herein
private respondent] Rosalia becomes untenable when We consider the
memorandum of agreement they later executed with [herein private
respondent] Rosalia wherein said compromise agreement was modified by
correcting the actual area given to [herein petitioners] from forty-eight (48)
hectares to thirty-six (36) hectares only. If the actual area allotted to them did
not conform to the 48 hectare area stated in the compromise agreement, then
why did they agree to the memorandum of agreement whereby their share in
the estate of their father was even reduced to just 36 hectares? Where is fraud
or deception there? Considering that [herein petitioners] were ably
represented by their lawyers in executing these documents and who
presumably had explained to them the import and consequences thereof, it is
hard to believe their charge that they were defrauded and deceived by [herein
private respondent] Rosalia.
If the parcel of land given to [herein petitioners], when actually surveyed, happened to
be different in area to the stated area of 48 hectares in the compromise agreement, this
circumstance is not enough proof of fraud or deception on [herein private respondent]
Rosalias part. Note that Tax Declaration No. 06453 plainly discloses that the land
transferred to [herein petitioners] pursuant to the compromise agreement contained an
area of 48 hectares (Annex A, Supplemental Reply). And when [herein petitioners]
discovered that the land allotted to them actually contained only 24 hectares, a
conference between the parties took place which led to the execution and signing of
the memorandum of agreement wherein [herein petitioners] distributive share was
even reduced to 36 hectares. In the absence of convincing and clear evidence to the
contrary, the allegation of fraud and deception cannot be successfully imputed to
[herein private respondent] Rosalia who must be presumed to have acted in good
faith.
[51]

The memorandum of agreement freely and validly entered into by the
parties on April 13, 1970 and referred to above reads:
MEMORANDUM OF AGREEMENT
The parties assisted by their respective counsel have agreed as they hereby agree:
1. To amend the compromise agreement executed by them on October 30, 1969 so as
to include the following:
a. Correction of the actual area being given to the petitioners and intervenors, all
illegitimate children of the late Juan C. Sanchez, forty-eight (48) hectares, thirty-six
(36) acres as embodied in the aforementioned compromise agreement to thirty-six
(36) hectares only, thus enabling each of them to get six (6) hectares each.
b. That the said 36-hectare area shall be taken from that parcel of land which is now
covered by O.C.T. No. 146 (Patent No. 30012) and the adjoining areas thereof
designated as Lot A and Lot C as reflected on the sketch plan attached to the record of
this case prepared by Geodetic Engineer Olegario E. Zalles pursuant to the Courts
commission of March 10, 1970 provided, however, that if the said 36-hectare area
could not be found after adding thereto the areas of said lots A and C, then the
additional area shall be taken from what is designated as Lot B, likewise also reflected
in the said sketch plan attached to the records;
c. That the partition among the six illegitimate children of the late Juan C. Sanchez
(petitioners and intervenors) shall be effective among themselves in such a manner to
be agreed upon by them, each undertaking to assume redemption of whatever plants
found in their respective shares which need redemption from the tenants thereof as
well as the continuity of the tenancy agreements now existing and covering the said
shares or areas.
d. The subdivision survey shall be at the expense of the said petitioners and
intervenors prorata.
e. That the administratrix agrees to deliver temporary administration of the area
designated as Lot 5 of the Valles Sketch Plan pending final survey of the said 36-
hectare area.
Cagayan de Oro City, April 13, 1970.
(Sgd.)
LAURETA TAMPOS
For herself and as Guardian
ad-litem of Rolando, Mierly,
Alfredo and Myrna, all
surnamed Sanchez
Assisted by:
(Sgd.)
TEOGENES VELEZ, Jr.
Counsel for Petitioners
(Sgd.)
ROSALIA S. LUGOD
Administratrix
Assisted by:
(Sgd.)
PABLO S. REYES
Counsel for Administratrix
(Sgd.)
MARIA RABOSO SANCHEZ
Intervenor
[52]

Not only did the parties knowingly enter into a valid compromise
agreement; they even amended it when they realized some errors in the
original. Such correction emphasizes the voluntariness of said deed.
It is also significant that all the parties, including the then minors, had
already consummated and availed themselves of the benefits of their
compromise.
[53]
This Court has consistently ruled that a party to a compromise
cannot ask for a rescission after it has enjoyed its benefits.
[54]
By their acts, the
parties are ineludibly estopped from questioning the validity of their
compromise agreement. Bolstering this conclusion is the fact that petitioners
questioned the compromise only nine years after its execution, when they filed
with the trial court their Motion to Defer Approval of Compromise Agreement,
dated October 26, 1979.
[55]
In hindsight, it is not at all farfetched that petitioners
filed said motion for the sole reason that they may have felt shortchanged in
their compromise agreement or partition with private respondents, which in
their view was unwise and unfair. While we may sympathize with this rueful
sentiment of petitioners, we can only stress that this alone is not sufficient to
nullify or disregard the legal effects of said compromise which, by its very
nature as a perfected contract, is binding on the parties. Moreover, courts
have no jurisdiction to look into the wisdom of a compromise or to render a
decision different therefrom.
[56]
It is a well-entrenched doctrine that the law
does not relieve a party from the effects of an unwise, foolish, or disastrous
contract, entered into with all the required formalities and with full awareness
of what he was doing
[57]
and a compromise entered into and carried out in
good faith will not be discarded even if there was a mistake of law or fact,
(McCarthy vs. Barber Steamship Lines, 45 Phil. 488) because courts have no
power to relieve parties from obligations voluntarily assumed, simply because
their contracts turned out to be disastrous deals or unwise
investments.
[58]
Volenti non fit injuria.
Corollarily, the petitioners contend that the Court of Appeals gravely
abused its discretion in deeming Special Proceedings Nos. 44-M and 1022
CLOSED and TERMINATED, arguing that there was as yet no order of
distribution of the estate pursuant to Rule 90 of the Rules of Court. They add
that they had not received their full share thereto.
[59]
We disagree. Under
Section 1, Rule 90 of the Rules of Court, an order for the distribution of the
estate may be made when the debts, funeral charges, and expenses of
administration, the allowance to the widow, and inheritance tax, if any, had
been paid. This order for the distribution of the estates residue must contain
the names and shares of the persons entitled thereto. A perusal of the whole
record, particularly the trial courts conclusion,
[60]
reveals that all the foregoing
requirements already concurred in this case. The payment of the
indebtedness of the estates of Juan C. Sanchez and Maria Villafranca in the
amount of P51,598.93 was shouldered by Private Respondent Rosalia, who
also absorbed or charged against her share the advances of Rolando T.
Lugod in the sum of P8,533.94, in compliance with Article 1061 of the Civil
Code on collation.
[61]
Furthermore, the compromise of the parties, which is the
law between them, already contains the names and shares of the heirs to the
residual estate, which shares had also been delivered. On this point, we
agree with the following discussion of the Court of Appeals:
But what the (trial court) obviously overlooked in its appreciation of the facts
of this case are the uncontroverted facts that (herein petitioners) have been in
possession and ownership of their respective distributive shares as early as
October 30, 1969 and they have received other properties in addition to their
distributive shares in consideration of the compromise agreement which they
now assail. Proofs thereof are Tax Declarations No. 20984, 20985, 20986,
20987, 20988, 20989 and 20990 (Annexes B to H, Supplemental Reply) in
the respective names of (herein petitioners), all for the year 1972. (Herein
petitioners) also retained a house and lot, a residential lot and a parcel of
agricultural land (Annexes I, J and K, Ibid.) all of which were not
considered in the compromise agreement between the parties. Moreover, in
the compromise agreement per se, it is undoubtedly stated therein that cash
advances in the aggregate sum of P8,533.94 were received by (herein
petitioners) after October 21, 1968 (Compromise Agreement, par. 5)
[62]

All the foregoing show clearly that the probate court had essentially
finished said intestate proceedings which, consequently, should be deemed
closed and terminated. In view of the above discussion, the Court sees no
reversible error on the part of the Court of Appeals.
Third Issue: Fraud and Collation
Petitioners fault Respondent Court for not ordering Private Respondent
Rosalia T. Lugod to deliver to them the deficiency as allegedly provided under
the compromise agreement. They further contend that said court erred in not
directing the provisional inclusion of the alleged deficiency in the inventory for
purposes of collating the properties subject of the questioned deeds of
sale.
[63]
We see no such error. In the trial court, there was only one hearing
conducted, and it was held only for the reception of the evidence of Rosalia S.
Lugod to install her as administratix of the estate of Maria Villafranca. There
was no other evidence, whether testimonial or otherwise, received, formally
offered to, and subsequently admitted by the probate court below; nor was
there a trial on the merits of the parties conflicting claims.
[64]
In fact, the
petitioners moved for the deferment of the compromise agreement on the
basis of alleged fraudulent concealment of properties -- NOT because of any
deficiency in the land conveyed to them under the agreements.
[65]
Hence,
there is no hard evidence on record to back up petitioners claims.
In any case, the trial court noted Private Respondent Rosalias willingness
to reimburse any deficiency actually proven to exist. It subsequently ordered
the geodetic engineer who prepared the certification and the sketch of the lot
in question, and who could have provided evidence for the petitioners, to
bring records of his relocation survey.
[66]
However, Geodetic Engineer Idulsa
did not comply with the courtssubpoena duces tecum and ad
testificandum. Neither did he furnish the required relocation survey.
[67]
No
wonder, even after a thorough scrutiny of the records, this Court cannot find
any evidence to support petitioners allegations of fraud against Private
Respondent Rosalia.
Similarly, petitioners allegations of fraud in the execution of the
questioned deeds of sale are bereft of substance, in view of the palpable
absence of evidence to support them. The legal presumption of validity of the
questioned deeds of absolute sale, being duly notarized public documents,
has not been overcome.
[68]
On the other hand, fraud is not presumed. It must
be proved by clear and convincing evidence, and not by mere conjectures or
speculations. We stress that these deeds of sale did not involve gratuitous
transfers of future inheritance; these were contracts of sale perfected by the
decedents during their lifetime.
[69]
Hence, the properties conveyed thereby are
not collationable because, essentially, collation mandated under Article 1061
of the Civil Code contemplates properties conveyed inter vivos by the
decedent to an heir by way of donation or other gratuitous title.
In any event, these alleged errors and deficiencies regarding the delivery
of shares provided in the compromise, concealment of properties and fraud in
the deeds of sale are factual in nature which, as a rule, are not reviewable by
this Court in petitions under Rule 45.
[70]
Petitioners have failed to convince us
that this case constitutes an exception to such rule. All in all, we find that the
Court of Appeals has sufficiently addressed the issues raised by
them. Indeed, they have not persuaded us that said Court committed any
reversible error to warrant a grant of their petition.
WHEREFORE, the petition is hereby DENIED and the assailed Decision
of the Court of Appeals is AFFIRMED.
SO ORDERED.
Narvasa, C.J. (Chairman), Romero, Melo and Francisco, JJ., concur.

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 76464 February 29, 1988
TESTATE ESTATE OF THE LATE ADRIANA MALOTO, ALDINA MALOTO CASIANO,
CONSTANCIO MALOTO, PURIFICACION MIRAFLOR, ROMAN CATHOLIC CHURCH OF MOLO,
AND ASILO DE MOLO, petitioners,
vs.
COURT OF APPEALS, PANFILO MALOTO AND FELINO MALOTO, respondents.

SARMIENTO, J .:
This is not the first time that the parties to this case come to us. In fact, two other cases directly
related to the present one and involving the same parties had already been decided by us in the
past. In G.R. No. L-30479,
1
which was a petition for certiorari and mandamus instituted by the
petitioners herein, we dismissed the petition ruling that the more appropriate remedy of the
petitioners is a separate proceeding for the probate of the will in question. Pursuant to the said
ruling, the petitioners commenced in the then Court of First Instance of Iloilo, Special Proceeding No.
2176, for the probate of the disputed will, which was opposed by the private respondents presently,
Panfilo and Felino both surnamed Maloto. The trial court dismissed the petition on April 30, 1970.
Complaining against the dismissal, again, the petitioners came to this Court on a petition for review
by certiorari.
2
Acting on the said petition, we set aside the trial court's order and directed it to
proceed to hear the case on the merits. The trial court, after hearing, found the will to have already
been revoked by the testatrix. Adriana Maloto, and thus, denied the petition. The petitioners
appealed the trial court's decision to the Intermediate Appellate Court which, on June 7, 1985,
affirmed the order. The petitioners' motion for reconsideration of the adverse decision proved to be
of no avail, hence, this petition.
For a better understanding of the controversy, a factual account would be a great help.
On October 20, 1963, Adriana Maloto died leaving as heirs her niece and nephews, the petitioners
Aldina Maloto-Casiano and Constancio, Maloto, and the private respondents Panfilo Maloto and
Felino Maloto. Believing that the deceased did not leave behind a last will and testament, these four
heirs commenced on November 4, 1963 an intestate proceeding for the settlement of their aunt's
estate. The case was instituted in the then Court of First Instance of Iloilo and was docketed as
Special Proceeding No. 1736. However, while the case was still in progress, or to be exact on
February 1, 1964, the parties Aldina, Constancio, Panfilo, and Felino executed an agreement
of extrajudicial settlement of Adriana's estate. The agreement provided for the division of the estate
into four equal parts among the parties. The Malotos then presented the extrajudicial settlement
agreement to the trial court for approval which the court did on March 21, 1964. That should have
signalled the end of the controversy, but, unfortunately, it had not.
Three years later, or sometime in March 1967, Atty. Sulpicio Palma, a former associate of Adriana's
counsel, the late Atty. Eliseo Hervas, discovered a document entitled "KATAPUSAN NGA
PAGBUBULAT-AN (Testamento)," dated January 3,1940, and purporting to be the last will and
testament of Adriana. Atty. Palma claimed to have found the testament, the original copy, while he
was going through some materials inside the cabinet drawer formerly used by Atty. Hervas. The
document was submitted to the office of the clerk of the Court of First Instance of Iloilo on April 1,
1967. Incidentally, while Panfilo and Felino are still named as heirs in the said will, Aldina and
Constancio are bequeathed much bigger and more valuable shares in the estate of Adriana than
what they received by virtue of the agreement of extrajudicial settlement they had earlier signed. The
will likewise gives devises and legacies to other parties, among them being the petitioners Asilo de
Molo, the Roman Catholic Church of Molo, and Purificacion Miraflor.
Thus, on May 24, 1967, Aldina and Constancio, joined by the other devisees and legatees named in
the will, filed in Special Proceeding No. 1736 a motion for reconsideration and annulment of the
proceedings therein and for the allowance of the will When the trial court denied their motion, the
petitioner came to us by way of a petition for certiorari and mandamus assailing the orders of the trial
court .
3
As we stated earlier, we dismissed that petition and advised that a separate proceeding for
the probate of the alleged will would be the appropriate vehicle to thresh out the matters raised by
the petitioners.
Significantly, the appellate court while finding as inconclusive the matter on whether or not the
document or papers allegedly burned by the househelp of Adriana, Guadalupe Maloto Vda. de
Coral, upon instructions of the testatrix, was indeed the will, contradicted itself and found that the will
had been revoked. The respondent court stated that the presence of animus revocandi in the
destruction of the will had, nevertheless, been sufficiently proven. The appellate court based its
finding on the facts that the document was not in the two safes in Adriana's residence, by the
testatrix going to the residence of Atty. Hervas to retrieve a copy of the will left in the latter's
possession, and, her seeking the services of Atty. Palma in order to have a new will drawn up. For
reasons shortly to be explained, we do not view such facts, even considered collectively, as
sufficient bases for the conclusion that Adriana Maloto's will had been effectively revoked.
There is no doubt as to the testamentary capacity of the testatrix and the due execution of the will.
The heart of the case lies on the issue as to whether or not the will was revoked by Adriana.
The provisions of the new Civil Code pertinent to the issue can be found in Article 830.
Art. 830. No will shall be revoked except in the following cases:
(1) By implication of law; or
(2) By some will, codicil, or other writing executed as provided in case of wills: or
(3) By burning, tearing, cancelling, or obliterating the will with the intention of
revoking it, by the testator himself, or by some other person in his presence, and by
his express direction. If burned, torn cancelled, or obliterated by some other person,
without the express direction of the testator, the will may still be established, and the
estate distributed in accordance therewith, if its contents, and due execution, and the
fact of its unauthorized destruction, cancellation, or obliteration are established
according to the Rules of Court. (Emphasis Supplied.)
It is clear that the physical act of destruction of a will, like burning in this case, does not per se
constitute an effective revocation, unless the destruction is coupled with animus revocandi on the
part of the testator. It is not imperative that the physical destruction be done by the testator himself. It
may be performed by another person but under the express direction and in the presence of the
testator. Of course, it goes without saying that the document destroyed must be the will itself.
In this case, while animus revocandi or the intention to revoke, may be conceded, for that is a state
of mind, yet that requisite alone would not suffice. "Animus revocandi is only one of the necessary
elements for the effective revocation of a last will and testament. The intention to revoke must be
accompanied by the overt physical act of burning, tearing, obliterating, or cancelling the will carried
out by the testator or by another person in his presence and under his express direction. There is
paucity of evidence to show compliance with these requirements. For one, the document or papers
burned by Adriana's maid, Guadalupe, was not satisfactorily established to be a will at all, much less
the will of Adriana Maloto. For another, the burning was not proven to have been done under the
express direction of Adriana. And then, the burning was not in her presence. Both witnesses,
Guadalupe and Eladio, were one in stating that they were the only ones present at the place where
the stove (presumably in the kitchen) was located in which the papers proffered as a will were
burned.
The respondent appellate court in assessing the evidence presented by the private respondents as
oppositors in the trial court, concluded that the testimony of the two witnesses who testified in favor
of the will's revocation appear "inconclusive." We share the same view. Nowhere in the records
before us does it appear that the two witnesses, Guadalupe Vda. de Corral and Eladio Itchon, both
illiterates, were unequivocably positive that the document burned was indeed Adriana's will.
Guadalupe, we think, believed that the papers she destroyed was the will only because, according to
her, Adriana told her so. Eladio, on the other hand, obtained his information that the burned
document was the will because Guadalupe told him so, thus, his testimony on this point is double
hearsay.
At this juncture, we reiterate that "(it) is an important matter of public interest that a purported win is
not denied legalization on dubious grounds. Otherwise, the very institution of testamentary
succession will be shaken to its very foundations ...."
4

The private respondents in their bid for the dismissal of the present action for probate instituted by
the petitioners argue that the same is already barred by res adjudicata. They claim that this bar was
brought about by the petitioners' failure to appeal timely from the order dated November 16, 1968 of
the trial court in the intestate proceeding (Special Proceeding No. 1736) denying their (petitioners')
motion to reopen the case, and their prayer to annul the previous proceedings therein and to allow
the last will and testament of the late Adriana Maloto. This is untenable.
The doctrine of res adjudicata finds no application in the present controversy. For a judgment to be a
bar to a subsequent case, the following requisites must concur: (1) the presence of a final former
judgment; (2) the former judgment was rendered by a court having jurisdiction over the subject
matter and the parties; (3) the former judgment is a judgment on the merits; and (4) there is,
between the first and the second action, Identity of parties, of subject matter, and of cause of
action.
5
We do not find here the presence of all the enumerated requisites.
For one, there is yet, strictly speaking, no final judgment rendered insofar as the probate of Adriana
Maloto's will is concerned. The decision of the trial court in Special Proceeding No. 1736, although
final, involved only the intestate settlement of the estate of Adriana. As such, that judgment could not
in any manner be construed to be final with respect to the probate of the subsequently discovered
will of the decedent. Neither is it a judgment on the merits of the action for probate. This is
understandably so because the trial court, in the intestate proceeding, was without jurisdiction to rule
on the probate of the contested will .
6
After all, an action for probate, as it implies, is founded on the
presence of a will and with the objective of proving its due execution and validity, something which
can not be properly done in an intestate settlement of estate proceeding which is predicated on the
assumption that the decedent left no will. Thus, there is likewise no Identity between the cause of
action in intestate proceeding and that in an action for probate. Be that as it may, it would be
remembered that it was precisely because of our ruling in G.R. No. L-30479 that the petitioners
instituted this separate action for the probate of the late Adriana Maloto's will. Hence, on these
grounds alone, the position of the private respondents on this score can not be sustained.
One last note. The private respondents point out that revocation could be inferred from the fact that
"(a) major and substantial bulk of the properties mentioned in the will had been disposed of: while an
insignificant portion of the properties remained at the time of death (of the testatrix); and,
furthermore, more valuable properties have been acquired after the execution of the will on January
3,1940."
7
Suffice it to state here that as these additional matters raised by the private respondents
are extraneous to this special proceeding, they could only be appropriately taken up after the will has
been duly probated and a certificate of its allowance issued.
WHEREFORE, judgment is hereby rendered REVERSING and SETTING ASIDE the Decision dated June
7, 1985 and the Resolution dated October 22, 1986, of the respondent Court of Appeals, and a new one
ENTERED for the allowance of Adriana Maloto's last will and testament. Costs against the private
respondents.
This Decision is IMMEDIATELY EXECUTORY.
SO ORDERED.