RULE 87

Actions By and Against Executors and Administrators

Section 1. Actions which may and which may not be brought against executor or
administrator. No action upon a claim for the recovery of money or debt or interest
thereon shall be commenced against the executor or administrator; but 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.
Section 2. Executor or administrator may bring or defend actions which survive. For the
recovery or protection of the property or rights of the deceased, an executor or
administrator may bring or defend, in the right of deceased, actions for causes which survive.
Section 3. Heir may not sue until shall assigned When an executor or administrator is
appointed and assumes the trust, no action to recover the title or possession of lands or for
damages done to such lands shall be maintained against him by an heir or devisee until there
is an order of the court assigning such lands to such heir or devisee or until the time allowed
for paying debts has expired.
Section 4. Executor or administrator may compound with debtor. Within the approval of
the court, an executor or administrator may compound with the debtor of the deceased for a
debt due, and may give a discharge of such debt on receiving a just dividend of the estate of
the debtor.
Section 5. Mortgage due estate may be foreclosed. A mortgage belonging to the estate of
a deceased person, as mortgagee or assignee of the right or a mortgage may be foreclosed
by the executor or administrator.
Section 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 or
discloses the right, title, interest, or claim of the deceased, the court may cite such suspected
person to appear before it any 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 any such
person, and his answers thereto, shall be in writing and shall be filed in the clerk's office.

Section 8. Embezzlement before letters issued If a person, before the granting of letters
testamentary or of administration on the estate of the deceased, embezzles or alienates any
of the money, goods, chattels, or effects of such deceased, such person shall be liable to an
action in favor of the executor or administrator of the estate for double the value of the
property sold, embezzled, or alienated, to be recovered for the benefit of such estate.
Section 9. Property fraudulently conveyed by deceased may be recovered. When executor or
administrator must bring action. When there is a deficiency of assets in the hands of an
executor or administrator for the payment of debts and expenses of administration, and the
deceased in his lifetime had conveyed real or personal property, or a right or interest therein,
or an debt or credit, with intent to defraud his creditors or to avoid any right, debt, or duty;
or had so
conveyed such property, right, interest, debt or credit that by law the conveyance would be
void as against his creditors, and the subject of the attempted conveyance would be liable to
attachment by any of them in his lifetime, the executor or administrator may commence and
prosecute to final judgment an action for the recovery of such property, right, interest, debt,
or credit for the benefit of the creditors; but he shall not be bound to commence the action
unless on application of the creditors of the deceased, not unless the creditors making the
application pay such part of the costs and expenses, or give security therefor to the executor
or administrator, as the court deems equitable.
Section 10. When creditor may bring action. Lien for costs. When there is such a deficiency
of assets, and the deceased in his lifetime had made or attempted such a conveyance, as is
stated in the last preceding section, and the executor or administrator has not commenced
the action therein provided for, any creditor of the estate may, with the permission of the
court, commence and prosecute to final judgment, in the name of the executor or
administrator, a like action for the recovery of the subject of the conveyance or attempted
conveyance for the benefit of the creditors. But the action shall not be commenced until the
creditor has filed in a court a bond executed to the executor or administrator, in an amount
approved by the judge, conditioned to indemnify the executor or administrator against the
costs and expenses incurred by reason of such action. Such creditor shall have a lien upon
any judgment recovered by him in the action for such costs and other expenses incurred
therein as the court deems equitable. Where the conveyance or attempted conveyance had
been made by the deceased in his lifetime in favor of the executor or administrator, the
action which a credit may bring shall be in the name of all the creditors, and permission of
the court and filing of bond as above prescribed, are not necessary.

Section 7. Person entrusted with estate compelled to render account. 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,
account, 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 the 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.

1.

VALERA V. INSERTO (1987)

Conflicting claims over a fishpond asserted by the administrators of the estate of deceased
spouses, on the one hand, and by the heirs of a daughter of said spouses and their lessee, on
the other, have given rise to the proceedings now docketed in this Court as (1) G.R. No.
56504 and (2) G.R. Nos. 59867-68.
Sp. Proc. No. 2223, CFI, Iloilo
In the proceedings for the settlement of the intestate estate of the decedent spouses, Rafael
Valera and Consolacion Sarrosa 1 in which Eumelia Cabado and Pompiro Valera had been
appointed administrators 2 the heirs of a deceased daughter of the spouses, Teresa Garin,
filed a motion asking that the Administratrix, Cabado, be declared in contempt for her failure
to render an accounting of her administration. 3 Cabado replied that no accounting could be
submitted unless Jose Garin, Teresa's husband and the movant heirs' father, delivered to the
administrator an 18-hectare fishpond in Baras, Barotoc Nuevo, Iloilo, belonging to the estate
and she in turn moved for the return thereof to the estate, 4 so that it might be partitioned
among the decedents' heirs. Jose Garin opposed the plea for the fishpond's return to the
estate, asserting that the property was owned by his children and this was why it had never
been included in any inventory of the estate.
The Court, presided over by Hon. Judge Midpantao Adil, viewed the Garin Heirs' motion for
contempt, as well as Cabado's prayer for the fishpond's return to the estate, as having given
rise to a claim for the recovery of an asset of the estate within the purview of Section 6, Rule
87 of the Rules of Court. 5 It accordingly set said incidents for hearing during which the
parties presentee evidence in substantiation of their positions. 6 Thereafter, the Court issued
an Order dated September 17, 1980 commanding the Heirs of Teresa Garin "to reconvey
immediately the fishpond in question * * to the intestate Estate of the Spouses. 7
The Order was predicated upon the Court's factual findings mainly derived from the
testimony of the two administrators that:
1.
the fishpond originally belonged to the Government, and had been given in lease to
Rafael Valera in his lifetime;
2.
Rafael Valera ostensibly sold all his leasehold rights in the fishpond to his daughter,
Teresa Garin; but the sale was fictitious, having been resorted to merely so that she might
use the property to provide for her children's support and education, and was subject to the
resolutory term that the fishpond should revert to Rafael Valera upon completion of the
schooling of Teresa Garin's Children; and
3.
with the income generated by the fishpond, the property was eventually purchased
from the Government by the Heirs of Teresa Garin, collectively named as such in the Original
Certificate of Title issued in their favor.
Upon these facts, Judge Adil ruled that an implied trust had been created, obligating Teresa
Garin's heirs to restore the property to the Valera Spouses' Estate, in accordance with
Articles 1453 and 1455 of the Civil Code providing as follows:

Article 1453. When property is conveyed to a person in reliance upon his declared intentions
to hold it for, or transfer it to another or the grantor, there is an implied trust in favor of the
person for whose benefit it is contemplated.
Article 1455. When any trustee, guardian or other person holding a fiduciary relationship
uses trust funds for the purchase of property and causes a conveyance to be made to him or
to a third person, a trust is established by operation of law in favor of the person to whom
the fund belongs.
The Court also held that the action for reconveyance based on constructive trust had not yet
prescribed, Cabado's motion for the fishpond's reversion to the estate having been filed well
within ten (10) years from June 30, 1980, the date on which Teresa Garin's heirs allegedly
acquired title over it. 8
There seems little doubt, however, that the Court's pronouncement regarding the estate's
title to the fishpond was merely provisional in character, made solely to determine whether
or not the fishpond should be included in the inventory of estate assets. So it was evidently
understood by the administrators who have more than once asserted that "the probate court
has jurisdiction to determine the ownership of the fishpond for purposes of inclusion in the
inventory of the properties. 9 So it was made clear by the Probate Court itself which, at the
outset, stated that the hearing on the matter 10 was meant "merely to determine whether
or not the fishpond should be included as part of the estate and whether or not the person
holding it should be made to deliver and/or return ** (it) to the estate. 11 And so it was
emphasized in another Order, denying reconsideration of the Order of September 17, 1980,
which states that:
**(i)t is never the intendment of this court to write a finish to the issue of ownership of the
fishpond in dispute. The movants may pursue their claim of ownership over the same in an
ordinary civil action. Meanwhile, however, it is the finding of this probate court that the
fishpond must be delivered to the estate.
Clearly, there is no incompatibility between the exercise of the power of this probate court
under Section 6 in relation to Section 7, both of Rule 87, and the contention of the movants
that the proper forum to settle the issue of ownership should be in a court of general
jurisdiction. 12
Judge Adil afterwards granted the administrators' motion for execution of the order pending
appeal, and directed the sheriff to enforce the direction for the Garin Heirs to reconvey the
fishpond to the estate. 13 The corresponding writ was served on Manuel Fabiana, the
supposed encargado or caretaker. Voicing no objection to the writ, and declaring to the
sheriff that he was a mere lessee, 14 Fabiana voluntarily relinquished possession of the
fishpond to the sheriff. The latter, in turn, delivered it to the administrators. 15
Later however, Fabiana filed a complaint-in-intervention with the Probate Court seeking
vindication of his right to the possession of the fishpond, based on a contract of lease
between himself, as lessee, and Jose Garin, as lessor. 16 But Judge Adil dismissed his
complaint on the following grounds, to wit:

(1)
it was filed out of time because not only had judgment been rendered, but
execution as regards transfer of possession had already taken place; and
(2)
the lease contract had not been registered and hence was not binding as against
the estate. 17
G.R. No. 56504
Fabiana thereupon instituted a separate action for injunction and damages, with application
for a preliminary injunction. This was docketed as Civil Case No. 13742 and assigned to
Branch I of the Iloilo CFI, Hon. Sancho Y. Inserto, presiding. 18 Judge Inserto issued a
temporary restraining order enjoining estate administrators from disturbing Fabiana in the
possession of the fishpond, as lessee. 19
The estate administrators filed a motion to dismiss the complaint and to dissolve the
temporary restraining order, averring that the action was barred by the Probate Court's prior
judgment which had exclusive jurisdiction over the issue of the lease, and that the act sought
to be restrained had already been accomplished, Fabiana having voluntarily surrendered
possession of the fishpond to the sheriff. 20 When Judge Inserto failed to act on their motion
within what the administrators believed to be a reasonable time, considering the
circumstances of the Case, the administrators filed with the Supreme Court a special civil
action for certiorari and mandamus, with a prayer for Preliminary mandatory injunction and
temporary restraining order, which was docketed as G.R. No. 56504. 21 In their petition, the
administrators contended that Branch I of the Iloilo CFI (Judge Inserto, presiding) could not
and should not interfere with the Probate Court (Branch I I, Judge Adil, presiding) in the
legitimate exercise of its j jurisdiction over the proceedings for the Settlement of the estate
of the Valera Spouses.
G.R. Nos. 59867-68
In the meantime, Jose Garin having filed a motion for reconsideration of the above
mentioned order of Judge Adil (declaring the estate to be the owner of the fishpond), in
which he asserted that the Probate Court, being of limited jurisdiction, had no competence
to decide the ownership of the fishpond, 22 which motion had been denied 23-filed a notice
of appeal from said Order. 24 But he quickly abandoned the appeal when, as aforestated 25
Judge Adil authorized execution of the order pending appeal, instead, he initiated a special
action for certiorari prohibition and mandamus )with prayer for preliminary injunction) in the
Court of Appeals, therein docketed as CA-G. R. No. SP-1154-R.
Fabiana followed suit. He instituted in the same Court of Appeals his own action for certiorari
and injunction, docketed as CA-G.R. No. SP-11577-R; this, notwithstanding the pendency in
judge Inserto's sala of the case he had earlier filed. 26
These two special civil actions were jointly decided by the Court of Appeals. The Court
granted the petitions and ruled in substance that:
1.
The Probate Court indeed possessed no jurisdiction to resolve the issue of
ownership based merely on evidence adduced at the hearing of a "counter-motion"
conducted under Section 6, Rule 87;

2.
The original and transfer certificates of title covering the fishpond stand in the
names of the Heirs of Teresa Garin as registered owners, and therefore no presumption that
the estate owns the fishpond is warranted to justify return of the property on the theory that
it had merely been borrowed; and
3.
Even assuming the Probate Court's competence to resolve the ownership question,
the estate administrators would have to recover possession of the fishpond by separate
action, in view of the lessee's claim of right to superior possession, as lessee thereof.
From this joint judgment, the administrators have taken separate appeals to this Court by
certiorari, 27 docketed as G.R. Nos. 59867 and 59868. They ascribe to the Appellate Court
the following errors, viz: Page 542
1)
in holding that the Probate Court (Judge Adil, Presiding) had no jurisdiction to take
cognizance of and decide the issue of title covering a fishpond being claimed by an heir
adversely to the decedent spouses;
2)
in ruling that it was needful for the administrators to file a separate action for the
recovery of the possession of the fishpond then in the hands of a third person; and
3)
in sanctioning the act of a CFI Branch in interfering with and overruling the final
judgment of another branch, acting as probate Court, and otherwise frustrating and
inhibiting the enforcement and implementation of said judgment.
Jurisdiction of Probate Court
As regards the first issue, settled is the rule that a Court of First Instance (now Regional Trial
Court), acting as a Probate Court, exercises but limited jurisdiction, 28 and thus has no power
to take cognizance of and determine the issue of title to property claimed by a third person
adversely to the decedent, unless the claimant and all the Other parties having legal interest
in the property consent, expressly or impliedly, to the submission of the question to the
Probate Court for adjudgment, or the interests of third persons are not thereby prejudiced,
29 the reason for the exception being that the question of whether or not a particular matter
should be resolved by the Court in the exercise of its general jurisdiction or of its limited
jurisdiction as a special court (e.g., probate, land registration, etc., is in reality not a
jurisdictional but in essence of procedural one, involving a mode of practice which may be
waived. 30
The facts obtaining in this case, however, do not call for the application of the exception to
the rule. As already earlier stressed, it was at all times clear to the Court as well as to the
parties that if cognizance was being taken of the question of title over the fishpond, it was
not for the purpose of settling the issue definitely and permanently, and writing "finis"
thereto, the question being explicitly left for determination "in an ordinary civil action," but
merely to determine whether it should or should not be included in the inventory. 31 This
function of resolving whether or not property should be included in the estate inventory is,
to be sure, one clearly within the Probate Court's competence, although the Court's
determination is only provisional in character, not conclusive, and is subject to the final
decision in a separate action that may be instituted by the parties. 32
3

The same norm governs the situation contemplated in Section 6, Rule 87 of the Rules of
Court, expressly invoked by the Probate Court in justification of its holding a hearing on the
issue arising from the parties' conflicting claims over the fishpond. 33 The examination
provided in the cited section is intended merely to elicit evidence relevant to property of the
decedent from persons suspected of having possession or knowledge thereof, or of having
concealed, embezzled, or conveyed away the same. Of course, if the latter lays no claim to
the property and manifests willingness to tum it over to the estate, no difficulty arises; the
Probate Court simply issues the appropriate direction for the delivery of the property to the
estate. On the other hand, if the third person asserts a right to the property contrary to the
decedent's, the Probate Court would have no authority to resolve the issue; a separate
action must be instituted by the administrator to recover the property. 34
Parenthetically, in the light of the foregoing principles, the Probate Court could have
admitted and taken cognizance of Fabiana's complaint in intervention after obtaining the
consent of all interested parties to its assumption of jurisdiction over the question of title to
the fishpond, or ascertaining the absence of objection thereto. But it did not. It dismissed the
complaint in intervention instead. And all this is now water under the bridge.

the authority of the court in which the separate action is filed over the issue of title, the
estate administrators may not now be heard to complain that in such a separate action, the
court should have issued orders necessarily involved in or flowing from the assumption of
that jurisdiction. Those orders cannot in any sense be considered as undue interference with
the jurisdiction of the Probate Court. Resulting from the exercise of primary jurisdiction over
the question of ownership involving estate property claimed by the estate, they must be
deemed superior to otherwise contrary orders issued by the Probate Court in the exercise of
what may be, regarded as merely secondary, or provisional, jurisdiction over the same
question.
WHEREFORE, the petition in G.R. No. 56504 is DISMISSED, for lack of merit. The petitions in
G.R. No. 59867 and G.R. No. 59868 are DENIED, and the judgment of the Appellate Court,
subject thereof, is affirmed in toto. The temporary restraining order dated April 1, 1981 is
lifted. Costs against petitioners.

Possession of Fishpond Pending

Determination of Title Thereto
Since the determination by the Probate Court of the question of title to the fishpond was
merely provisional, not binding on the property with any character of authority, definiteness
or permanence, having been made only for purposes of in. conclusion in the inventory and
upon evidence adduced at the hearing of a motion, it cannot and should not be subject of
execution, as against its possessor who has set up title in himself (or in another) adversely to
the decedent, and whose right to possess has not been ventilated and adjudicated in an
appropriate action. These considerations assume greater cogency where, as here, the
Torrens title to the property is not in the decedents' names but in others, a situation on
which this Court has already had occasion to rule.
In regard to such incident of inclusion or exclusion, We hold that if a property covered by
Torrens title is involved, the presumptive conclusiveness of such title should be given due
weight, and in the absence of strong compelling evidence to the contrary, the holder thereof
should be consider as the owner of the property in controversy until his title is nullified or
modified in an appropriate ordinary action, particularly, when as in the case at bar,
possession of the property itself is in the persons named in the title. 35
Primary Jurisdiction over Title issue in
Court Taking Cognizance of Separate Action
Since, too, both the Probate Court and the estate administrators are one in the recognition
of the proposition that title to the fishpond could in the premises only be appropriately
determined in a separate action, 36 the actual firing of such a separate action should have
been anticipated, and should not therefore have come as a surprise, to the latter. And since
moreover, implicit in that recognition is also the acknowledge judgment of the superiority of
4

2.

ABS-CBN V. OMBUDSMAN (2010)

Before us is a Motion for Reconsideration filed by petitioners Eugenio, Jr., Oscar and Augusto
Almeda, all surnamed Lopez, in their capacity as officers and on behalf of petitioner ABS-CBN
Broadcasting Corporation (ABS-CBN), of our Decision in G.R. No. 133347, dismissing their
petition for certiorari because of the absence of grave abuse of discretion in the Ombudsman
Resolution which, in turn, found no probable cause to indict respondents for the following
violations of the Revised Penal Code (RPC): (1) Article 298 Execution of Deeds by Means of
Violence or Intimidation; (2) Article 315, paragraphs 1[b], 2[a], and 3[a] Estafa; (3) Article
308 Theft; (4) Article 302 Robbery; (5) Article 312 Occupation of Real Property or
Usurpation of Real Rights in Property; and (6) Article 318 Other Deceits.
The assailed Decision disposed of the case on two (2) points: (1) the dropping of respondents
Roberto S. Benedicto and Salvador (Buddy) Tan as respondents in this case due to their
death, consistent with our rulings in People v. Bayotas1 and Benedicto v. Court of Appeals;2
and (2) our finding that the Ombudsman did not commit grave abuse of discretion in
dismissing petitioners criminal complaint against respondents.

Contrary to petitioners assertion, their motion for reconsideration does not contain a novel
question of law as would merit the attention of this Court sitting en banc. We also find no
cogent reason to reconsider our Decision.
First and foremost, there is, as yet, no criminal case against respondents, whether against
those who are living or those otherwise dead.
The question posed by petitioners on this long-settled procedural issue does not constitute a
novel question of law. Nowhere in People v. Bayotas7 does it state that a criminal complaint
may continue and be prosecuted as an independent civil action. In fact, Bayotas, once and for
all, harmonized the rules on the extinguished and on the subsisting liabilities of an accused
who dies. We definitively ruled:
From this lengthy disquisition, we summarize our ruling herein:

I.

1. Death of an 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."

WITH DUE RESPECT, THE EXECUTION AND VALIDITY OF THE LETTER-AGREEMENT DATED 8
JUNE 1973 ARE PLAINLY IRRELEVANT TO ASCERTAINING THE CRIMINAL LIABILITY OF THE
RESPONDENTS AND, THEREFORE, THE ISSUE AS TO WHETHER SAID AGREEMENT WAS
RATIFIED OR NOT IS IMMATERIAL IN THE PRESENT CASE.

2. Corollarily, the claim for civil liability survives notwithstanding the death of 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:

II.

a) Law
b) Contracts
c) Quasi-contracts
d) Delicts
e) Quasi-delicts

Undaunted, petitioners ask for a reconsideration of our Decision on the following grounds:

WITH DUE RESPECT, RESPONDENTS BENEDICTO AND TAN SHOULD NOT BE DROPPED AS
RESPONDENTS SIMPLY BECAUSE THEY MET THEIR UNTIMELY DEMISE DURING THE
PENDENCY OF THE CASE.3
Before anything else, we note that petitioners filed a Motion to Refer the Case to the Court
en banc.4 Petitioners aver that the arguments contained in their Motion for Reconsideration,
such as: (1) the irrelevance of the civil law concept of ratification in determining whether a
crime was committed; and (2) the continuation of the criminal complaints against
respondents Benedicto and Tan who have both died, to prosecute their possible civil liability
therefor, present novel questions of law warranting resolution by the Court en banc.
In the main, petitioners argue that the Decision is contrary to law because: (1) the ratification
of the June 8, 1973 letter-agreement is immaterial to the determination of respondents
criminal liability for the aforestated felonies in the RPC; and (2) the very case cited in our
Decision, i.e. People v. Bayotas,5 allows for the continuation of a criminal case to prosecute
civil liability based on law and is independent of the civil liability arising from the crime.
We disagree with petitioners. The grounds relied upon by petitioners in both motions, being
intertwined, shall be discussed jointly. Before we do so, parenthetically, the counsel for
respondent Miguel V. Gonzales belatedly informed this Court of his clients demise on July
20, 2007.6 Hence, as to Gonzales, the case must also be dismissed.1avvphi1

3. Where the civil liability survives, as explained in Number 2 above, an action for recovery
thereof may be pursued but only by filing a separate civil action and subject to Section 1,
Rule 111 of the 1985 Rules on Criminal Procedure as amended. This separate civil action may
be enforced either against the executor/administrator or 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 provisions of Article
1155 of the Civil Code, that should thereby avoid any apprehension on a possible
[de]privation of right by prescription.
From the foregoing, it is quite apparent that Benedicto, Tan, and Gonzales, who all died
during the pendency of this case, should be dropped as party respondents. If on this score
5

alone, our ruling does not warrant reconsideration. We need not even delve into the explicit
declaration in Benedicto v. Court of Appeals.8

partners of Benedicto who were either directors/officers KBS/RPN and who acted as
Benedictos alter egos whenever the latter was out of the country; x x x.

Second, and more importantly, we dismissed the petition for certiorari filed by petitioners
because they failed to show grave abuse of discretion on the part of the Ombudsman when
he dismissed petitioners criminal complaint against respondents for lack of probable cause.
We reiterate that our inquiry was limited to a determination of whether the Ombudsman
committed grave abuse of discretion when he found no probable cause to indict respondents
for various felonies under the RPC. The invocation of our certiorari jurisdiction over the act of
a constitutional officer, such as the Ombudsman, must adhere to the strict requirements
provided in the Rules of Court and in jurisprudence. The determination of whether there was
grave abuse of discretion does not, in any way, constitute a novel question of law.

xxxx

We first pointed out in our Decision that the complaint-affidavits of petitioners, apart from a
blanket charge that remaining respondents, Gonzales (who we thought was alive at that
time) and Exequiel Garcia, are officers of KBS/RPN and/or alter egos of Benedicto, are bereft
of sufficient ground to engender a well-founded belief that crimes have been committed and
that respondents, namely, Gonzales and Garcia, are probably guilty thereof and should be
held for trial. Certainly, no grave abuse of discretion can be imputed to the Ombudsman that
would warrant a reversal of his Resolution.

21.1. Barely two weeks from their entry into the ABS Broadcast Center, KBS personnel
started making unauthorized withdrawals from the ABS Stock Room. All these withdrawals of
supplies and equipment were made under the orders of Benedicto, Miguel Gonzales,
Exequiel Garcia, and Salvador Tan, the Chairman, the Vice-President, Treasurer, and the
General Manager of KBS, respectively. No payment was ever made by either Benedicto or
KBS for all the supplies and equipment withdrawn from the ABS Broadcast Center.

38. Senator Estanislao Fernandez, in representation of Benedicto, met with Senator Taada
at the Club Filipino on June 1976. Discussions were had on how to arrive at the "reasonable
rental" for the use of ABS stations and facilities. A second meeting at Club Filipino took place
on July 7, 1976 between Senators Taada and Fernandez, who brought along Atty. Mike
Gonzales, a close associate and friend of Benedicto and an officer of KBS.10
3. Complaint-affidavit of Augusto Almeda

xxxx
The charges of individual petitioners Eugenio, Jr., Oscar and Augusto Almeda against
respondents, Gonzales and Garcia, contained in their respective complaint-affidavits simply
consisted of the following:
1. Complaint-affidavit of Eugenio, Jr.
32.1. I was briefed that Senator Estanislao Fernandez in representation of Benedicto, met
with Senator Taada at the Club Filipino in June 1976. Discussions were had on how to arrive
at the "reasonable rental" for the use of ABS-CBN stations and facilities. A second meeting at
Club Filipino took place on July 7, 1976 between Senators Taada and Fernandez, who
brought along Atty. Miguel Gonzales, a close associate and lawyer of Benedicto and an
officer of KBS.
xxxx
38.2. The illegal takeover of ABS-CBN stations, studios and facilities, and the loss and/or
damages caused to our assets occurred while Benedicto, Exequiel Garcia, Miguel Gonzales,
and Salvador Tan were in possession, control and management of our network. Roberto S.
Benedicto was the Chairman of the Board of KBS-RPN and its Chief Executive Officer (CEO), to
whom most of the KBS-RPN officers reported while he was in Metro Manila. Miguel
Gonzales, the Vice-President of KBS, and Exequiel Garcia, the Treasurer, were the alter egos
of Benedicto whenever the latter was out of the country; x x x.9

31. Senator Estanislao Fernandez, in representation of Benedicto, met with Senator Taada
at the Club Filipino on June 1976. Discussions were had on how to arrive at the "reasonable
rental" for the use of ABS stations and facilities. A second meeting at Club Filipino took place
on July 7, 1976 between Senators Taada and Fernandez, who brought along Atty. Mike
Gonzales, a close associate and friend of Benedicto and an officer of KBS.11
From the foregoing, it is beyond cavil that there is no reason for us to depart from our policy
of non-interference with the Ombudsmans finding of probable cause or lack thereof. On the
strength of these allegations, we simply could not find any rational basis to impute grave
abuse of discretion to the Ombudsmans dismissal of the criminal complaints.
Third, we did not state in the Decision that ratification extinguishes criminal liability. We
simply applied ratification in determining the conflicting claims of petitioners regarding the
execution of the letter-agreement. Petitioners, desperate to attach criminal liability to
respondents acts, specifically to respondent Benedicto, alleged in their complaint-affidavits
that Benedicto forced, coerced and intimidated petitioners into signing the letter-agreement.
In other words, petitioners disown this letter-agreement that they were supposedly forced
into signing, such that this resulted in a violation of Article 298 of the RPC (Execution of
Deeds by means of Violence or Intimidation).
However, three elements must concur in order for an offender to be held liable under Article
298:

2. Complaint-affidavit of Oscar
(1) that the offender has intent to defraud another.
25. All the illegal activities as complained of above, were done upon the orders, instructions
and directives of Roberto S. Benedicto, the Chairman of the Board and Chief Executive Officer
of the KBS/RPN group; Miguel Gonzales and Exequiel Garcia, close colleagues and business

(2) that the offender compels him to sign, execute, or deliver any public instrument or
document.
6

(3) that the compulsion is by means of violence or intimidation.12

The element of intent to defraud is not present because, even if, initially, as claimed by
petitioners, they were forced to sign the letter-agreement, petitioners made claims based
thereon and invoked the provisions thereof. In fact, petitioners wanted respondents to honor
the letter-agreement and to pay rentals for the use of the ABS-CBN facilities. By doing so,
petitioners effectively, although they were careful not to articulate this fact, affirmed their
signatures in this letter-agreement.
True, ratification is primarily a principle in our civil law on contracts. Yet, their subsequent
acts in negotiating for the rentals of the facilities which translate into ratification of the
letter-agreement cannot be disregarded simply because ratification is a civil law concept.
The claims of petitioners must be consistent and must, singularly, demonstrate respondents
culpability for the crimes they are charged with. Sadly, petitioners failed in this regard
because, to reiterate, they effectively ratified and advanced the validity of this letteragreement in their claim against the estate of Benedicto.

executor or administrator of Benedictos estate forecloses all issues on the circumstances

surrounding the execution of this letter- agreement.
We are not oblivious of the fact that, in the milieu prevailing during the Marcos years,
incidences involving intimidation of businessmen were not uncommon. Neither are we
totally unaware of the reputed closeness of Benedicto to President Marcos. However, given
the foregoing options open to them under the Rules of Court, petitioners choice of remedies
by filing their claim under Section 5, Rule 86 after Marcos had already been ousted and full
democratic space restored works against their contention, challenging the validity of the
letter-agreement. Now, petitioners must live with the consequences of their choice.
WHEREFORE, in light of the foregoing, the Motion to Refer the Case to the Court en banc and
the Motion for Reconsideration are DENIED.

Finally, we take note of the conflicting claim of petitioners by filing a separate civil action to
enforce a claim against the estate of respondent Benedicto. Petitioners do not even
specifically deny this fact and simply sidestep this issue which was squarely raised in the
Decision. The Rules of Court has separate provisions for different claims against the estate of
a decedent under Section 5 of Rule 86 and Section 1 of Rule 87:
RULE 86.
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 and 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 counter claims in any action that the executor or administrator may bring
against the claimants. Xxx Claims not yet due, or contingent, may be approved at their
present value.
RULE 87.
SECTION 1. Actions which may and which may not be brought against executor or
administrator. No action upon a claim for the recovery of money or debt or interest
thereon shall be commenced against 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.
If, as insisted by petitioners, respondents committed felonies in forcing them to sign the
letter-agreement, petitioners should have filed an action against the executor or
administrator of Benedictos estate based on Section 1, Rule 87 of the Rules of Court. But
they did not. Instead they filed a claim against the estate based on contract, the
unambiguous letter-agreement, under Section 5, Rule 86 of the Rules of Court. The existence
of this claim against the estate of Benedicto as opposed to the filing of an action against the
7

RULE 88
PAYMENT OF THE DEBTS OF THE ESTATE
Section 1. Debts paid in full if estate sufficient. If, after hearing all the money claims against the estate,
and after ascertaining the amount of such claims, it appears that there are sufficient assets to pay the
debts, the executor or administrator pay the same within the time limited for that purpose.
Section 2. Part of estate from which debt paid when provision made by will. If the testator makes
provision by his will, or designates the estate to be appropriated for the payment of his debts, the
expenses of administration, or the family expenses, they shall be paid according to the provisions of the
will; but if the provision made by the will or the estate appropriated, is not sufficient for that purpose,
such part of the estate of the testator, real or personal, as is not disposed of by will, if any shall be
appropriated for that purpose.
Section 3. Personalty first chargeable for debts, then realty. The personal estate of the deceased not
disposed of by will shall be first chargeable with the payment of debts and expenses; and if said personal
estate is not sufficient for tat purpose, or its sale would redound to the detriment of the participants for
the estate, the whole of the real estate not dispose of by will, or so much thereof as is necessary, may be
sold, mortgaged, or otherwise encumbered for that purpose by the executor or administrator, after
obtaining the authority of the court therefor. Any deficiency shall be met by contributions in accordance
with the provisions of section 6 of this rule.
Section 4. Estate to be retained to meet contingent claims. If the court is satisfied that a contingent
claim duly filed is valid, it may order the executor or administrator to retain in his hands sufficient estate
to pay such contingent claim when the same becomes absolute, or if the estate is insolvent, sufficient to
pay a portion equal to the dividend of the other creditors.
Section 5. How contingent claim becoming absolute in two years allowed and paid. Action against
distributees later. If such contingent claim becomes absolute and is presented to the court, or to the
executor or administrator, within two (2) years from the time limited for other creditors to present their
claims, it may be allowed by the court if not disputed by the executor or administrator and, if disputed, it
may be proved and allowed or disallowed by the court as the facts may warrant. If the contingent claim
is allowed, the creditor shall receive payment to the same extent as the other creditors if the estate
retained by the executor or administrator is sufficient. But if the claim is not so presented, after having
become absolute, within said two (2) years, and allowed, the assets retained in the hands of the
executor or administrator, not exhausted in the payment of claims, shall be disturbed by the order of the
court to the persons entitled to the same; but the assets so distributed may still be applied to the
payment of the claim when established, and the creditor may maintain an action against the distributees
to recover the debt, and such distributees and their estates shall be liable for the debt in proportion to
the estate they have respectively received from the property of the deceased.
Section 6. Court to fix contributive shares where devisees, legalitees, or heirs have been possession.
Where devisees, legalitees, or heirs have entered into possession of portions of the estate before the
debts and expenses have been settled and paid, and have become liable to contribute for the payment
of such debts and expenses, 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 as circumstances require.
Section 7. Order of payment if estate insolvent If the assets which can be appropriated for the
payment of debts are not sufficient for that purpose, the executor or administrator shall pay the debts
against the estate, observing the provisions of Articles 1059 and 2239 to 2251 of the Civil Code.
Section 8. Dividends to be paid in proportion to claims. If there are no assets sufficient to pay the
credits of any once class of creditors after paying the credits entitled to preference over it, each creditor
within such class shall be paid a dividend in proportion to his claim. No creditor of any one class shall
receive any payment until those of the preceding class are paid.

Section 9. Estate of insolvent non-resident, how disposed of. In case administration is taken in the
Philippine of the estate of a person who was at the time of his death an inhabitant of another country,
and who died insolvent, hi estate found in the Philippines shall, as far as practicable, be so disposed of
that his creditors here and elsewhere may receive each an equal share, in proportion to their respective
credits.
Section 10. When and how claim proved outside the Philippines against insolvent resident's estate paid.
If it appears to the court having jurisdiction that claims have been duly proven in another country
against the estate of an insolvent who was at the time of his death an inhabitant of the Philippines, and
that the executor or administrator in the Philippines had knowledge of the presentation of such claims in
such country and an opportunity to contest their allowance, the court shall receive a certified list of such
claims, when perfected in such country, and add the same to the list of claims proved against the
deceased person in the Philippines so that a just distribution of the whole estate may be made equally
among all its creditors according to their respective claims; but the benefit of this and the preceding
sections shall not be extended to the creditors in another country if the property of such deceased
person there found is not equally apportioned to the creditors residing in the Philippines and the other
creditor, according to their respective claims.
Section 11. Order for payment of debts. Before the expiration of the time limited for the payment of
the debts, the court shall order the payment thereof, and the distribution of the assets received by the
executor or administrator for that purpose among the creditors, as the circumstances of the estate
require and in accordance with the provisions of this rule.
Section 12. Orders relating to payment of debts where appeal is taken. If an appeal has been taken
from a decision of the court concerning a claim, the court may suspend the order for the payment of the
debts or may order the distributions among the creditors whose claims are definitely allowed, leaving in
the hands of the executor or administrator sufficient assets to pay the claim disputed and appealed.
When a disputed claim is finally settled the court having jurisdiction of the estate shall order the same to
be paid out of the assets retained to the same extent and in the same proportion with the claims of
other creditors.
Section 13. When subsequent distribution of assets ordered. If the whole of the debts are not paid on
the first distribution, and if the whole assets are not distributed, or other assets afterwards come to the
hands of the executor or administrator, the court may from time to time make further orders for the
distributions of assets.
Section 14. Creditors to be paid in accordance with terms of order. When an order is made for the
distribution of assets among the creditors, the executor or administration shall, as soon as the time of
payment arrives, pay the creditors the amounts of their claims, or the dividend thereon, in accordance
with the terms of such order.
Section 15. Time for paying debts and legacies fixed, or extended after notice, within what periods. On
granting letters testamentary or administration the court shall allow to the executor or administrator a
time for disposing of the estate and paying the debts and legacies of the deceased, which shall not, in
the first instance, exceed one (1) year; but the court may, on application of the executor or administrator
and after hearing on such notice of the time and place therefor given to all persons interested as it shall
direct, extend the time as the circumstances of the estate require not exceeding six (6) months for a
single extension not so that the whole period allowed to the original executor or administrator shall
exceed two (2) years.
Section 16. Successor of dead executor or administrator may have time extended on notice within certain
period. When an executor or administrator dies, and a new administrator of the same estate is
appointed, the court may extend the time allowed for the payment of the debts or legacies beyond the
time allowed to the original executor or administrator, not exceeding six (6) months at a time and not
exceeding six (6) months beyond the time which the court might have allowed to such original executor
or administrator; and notice shall be given of the time and place for hearing such application, as required
in the last preceding section.
8

RULE 89
SALES, MORTGAGES, AND OTHER ENCUMBRANCES OF PROPERTY OF DECEDENT
Section 1. Order of sale of personalty. Upon the application of the executor or administrator, and on
written notice to the heirs and other persons interested, the court may order the whole or a part of the
personal estate to be sold, if it appears necessary for the purpose of paying debts, expenses of
administration, or legacies, or for the preservation of the property.
Section 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 of 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 3. Persons interested may prevent such sale, etc., by giving bond. No such authority to sell,
mortgage, or otherwise encumber real or personal estate shall be granted if any person interested in the
estate gives a bond, in a sum to be fixed by the court, conditioned to pay the debts, expenses of
administration, and legacies within such time as the court directs; and such bond shall be for the security
of the creditors, as well as of the executor or administrator, and may be prosecuted for the benefit of
either.
Section 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.
Section 5. When court may authorize sale, mortgage, or other encumbrance of estate to pay debts and
legacies in other countries. When the sale of personal estate, or the sale, mortgage, or other
encumbrance of real estate is not necessary to pay the debts, expenses of administration, or legacies in
the Philippines, but it appears from records and proceedings of a probate court in another country that
the estate of the deceased in such other country is not sufficient to pay the debts, expenses of
administration, and legacies there, the court here may authorize the executor or administrator to sell the
personal estate or to sell, mortgage, or otherwise encumber the real estate for the payment of debts or
legacies in the other country, in same manner as for the payment of debts or legacies in the Philippines.
Section 6. When court may authorize sale, mortgage, or other encumbrance of realty acquired on
execution or foreclosure. The court may authorize an executor or administrator to sell mortgage, or
otherwise encumber real estate acquired by him on execution or foreclosure sale, under the same
cicumstances and under the same regulations as prescribed in this rule for the sale, mortgage, or other
encumbrance of other real estate.

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 reasons 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,
mortgage, 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.
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 court
shall execute the deed. The deed executed by such executor, administrator, or clerk of court shall be as
affectual 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.
Section 9. When court may authorize conveyance of lands which deceased held in trust. Where the
deceased in his lifetime held real property in trust for another person, the court may after notice given
as required in the last preceding section, authorize the executor or administrator to deed such property
to the person, or his executor or administrator, for whose use and benefit it was so held; and the court
may order the execution of such trust, whether created by deed or by law.

Section 7. Regulation 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

1.

PAHAMATONG V. PNB (2005)

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 CAG.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.

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 Arguna the 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.

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

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.
10

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.

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;

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.

5.) For defendants to pay plaintiffs moral damages in such sums as may be found to be just
and equitable under the premises;

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.

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

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.

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.

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;

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?
11

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:

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.

"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.

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

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:

Perusing the above arguments and comparing them with the settled ruling, the plaintiffsappellees [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.'

1. Order dated July 18, 1973, granting Agustins Petition for Authority to Increase Mortgage;
12

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 and January 7, 1981, which
allowed Agustin to mortgage and sell estate properties, are void on account of Agustins noncompliance 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.

13

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, Jr.,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 2nd
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 2nd 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 2nd 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, 1973 and 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
14

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.

15

2.

OROLA V. RURAL BANK OF PONTEVEDRA (2005)

Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in
CA-G.R. CV No. 35724 reversing, on appeal, the Decision2 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.
71973 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. 26234 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 motion8 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 of P600,000.00 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 Manifestation11 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 Lease12 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 Motion13 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 Conformity14 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 Notes17 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 only
P4,292.79.23 Emilio, thereafter, failed to pay the amortizations of the loans to the Rural
Bank.24
16

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-Officio
Provincial 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:

(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;

(1) A Temporary Restraining Order be issued restraining in the meantime the defendant ExOfficio 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. As moral, compensatory and exemplary damages, an amount to be fixed by this Honorable

Court;
3. The costs of this suit.

(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.

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
17

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:

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.

IN VIEW OF THE CONSIDERATIONS, judgment is rendered:

As to Assignment of Error No. III
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.

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 the P600,000.00 loan.

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

The appellees failed to file their brief. On October 18, 2002, the CA rendered a Decision35
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
18

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:
-ITHE 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.

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.

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

(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
19

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;
20

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 abovementioned 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.

21

3.

AGGABAO V. RTC (2004)

This is a petition for review under Rule 45 of the Rules of Court seeking to reverse and set
aside the decision1 of the Court of Appeals, First Division, dated July 26, 2000, in CA G.R.
59736, which dismissed the petition for certiorari filed by petitioners Jose C. Lee and Alma
Aggabao (in their capacities as president and secretary, respectively, of Philippine
International Life Insurance Company) and Filipino Loan Assistance Group.
The antecedent facts follow.
Dr. Juvencio P. Ortaez incorporated the Philippine International Life Insurance Company,
Inc. on July 6, 1956. At the time of the companys incorporation, Dr. Ortaez owned ninety
percent (90%) of the subscribed capital stock.
On July 21, 1980, Dr. Ortaez died. He left behind a wife (Juliana Salgado Ortaez), three
legitimate children (Rafael, Jose and Antonio Ortaez) and five illegitimate children by Ligaya
Novicio (herein private respondent Ma. Divina Ortaez-Enderes and her siblings Jose, Romeo,
Enrico Manuel and Cesar, all surnamed Ortaez).2
On September 24, 1980, Rafael Ortaez filed before the Court of First Instance of Rizal,
Quezon City Branch (now Regional Trial Court of Quezon City) a petition for letters of
administration of the intestate estate of Dr. Ortaez, docketed as SP Proc. Q-30884 (which
petition to date remains pending at Branch 85 thereof).
Private respondent Ma. Divina Ortaez-Enderes and her siblings filed an opposition to the
petition for letters of administration and, in a subsequent urgent motion, prayed that the
intestate court appoint a special administrator.
On March 10, 1982, Judge Ernani Cruz Pao, then presiding judge of Branch 85, appointed
Rafael and Jose Ortaez joint special administrators of their fathers estate. Hearings
continued for the appointment of a regular administrator (up to now no regular
administrator has been appointed).
As ordered by the intestate court, special administrators Rafael and Jose Ortaez submitted
an inventory of the estate of their father which included, among other properties, 2,0293
shares of stock in Philippine International Life Insurance Company (hereafter Philinterlife),
representing 50.725% of the companys outstanding capital stock.
On April 15, 1989, the decedents wife, Juliana S. Ortaez, claiming that she owned 1,0144
Philinterlife shares of stock as her conjugal share in the estate, sold said shares with right to
repurchase in favor of herein petitioner Filipino Loan Assistance Group (FLAG), represented
by its president, herein petitioner Jose C. Lee. Juliana Ortaez failed to repurchase the shares
of stock within the stipulated period, thus ownership thereof was consolidated by petitioner
FLAG in its name.
On October 30, 1991, Special Administrator Jose Ortaez, acting in his personal capacity and
claiming that he owned the remaining 1,0115 Philinterlife shares of stocks as his inheritance
share in the estate, sold said shares with right to repurchase also in favor of herein petitioner
FLAG, represented by its president, herein petitioner Jose C. Lee. After one year, petitioner

FLAG consolidated in its name the ownership of the Philinterlife shares of stock when Jose
Ortaez failed to repurchase the same.
It appears that several years before (but already during the pendency of the intestate
proceedings at the Regional Trial Court of Quezon City, Branch 85), Juliana Ortaez and her
two children, Special Administrators Rafael and Jose Ortaez, entered into a memorandum
of agreement dated March 4, 1982 for the extrajudicial settlement of the estate of Dr.
Juvencio Ortaez, partitioning the estate (including the Philinterlife shares of stock) among
themselves. This was the basis of the number of shares separately sold by Juliana Ortaez on
April 15, 1989 (1,014 shares) and by Jose Ortaez on October 30, 1991 (1,011 shares) in favor
of herein petitioner FLAG.
On July 12, 1995, herein private respondent Ma. Divina OrtaezEnderes and her siblings
(hereafter referred to as private respondents Enderes et al.) filed a motion for appointment
of special administrator of Philinterlife shares of stock. This move was opposed by Special
Administrator Jose Ortaez.
On November 8, 1995, the intestate court granted the motion of private respondents
Enderes et al. and appointed private respondent Enderes special administratrix of the
Philinterlife shares of stock.
On December 20, 1995, Special Administratrix Enderes filed an urgent motion to declare void
ab initio the memorandum of agreement dated March 4, 1982. On January 9, 1996, she filed
a motion to declare the partial nullity of the extrajudicial settlement of the decedents
estate. These motions were opposed by Special Administrator Jose Ortaez.
On March 22, 1996, Special Administratrix Enderes filed an urgent motion to declare void ab
initio the deeds of sale of Philinterlife shares of stock, which move was again opposed by
Special Administrator Jose Ortaez.
On February 4, 1997, Jose Ortaez filed an omnibus motion for (1) the approval of the deeds
of sale of the Philinterlife shares of stock and (2) the release of Ma. Divina Ortaez-Enderes
as special administratrix of the Philinterlife shares of stock on the ground that there were no
longer any shares of stock for her to administer.
On August 11, 1997, the intestate court denied the omnibus motion of Special Administrator
Jose Ortaez for the approval of the deeds of sale for the reason that:
Under the Godoy case, supra, it was held in substance that a sale of a property of the estate
without an Order of the probate court is void and passes no title to the purchaser. Since the
sales in question were entered into by Juliana S. Ortaez and Jose S. Ortaez in their personal
capacity without prior approval of the Court, the same is not binding upon the Estate.
WHEREFORE, the OMNIBUS MOTION for the approval of the sale of Philinterlife shares of
stock and release of Ma. Divina Ortaez-Enderes as Special Administratrix is hereby denied.6
On August 29, 1997, the intestate court issued another order granting the motion of Special
Administratrix Enderes for the annulment of the March 4, 1982 memorandum of agreement
or extrajudicial partition of estate. The court reasoned that:
22

In consonance with the Order of this Court dated August 11, 1997 DENYING the approval of
the sale of Philinterlife shares of stocks and release of Ma. Divina Ortaez-Enderes as Special
Administratrix, the "Urgent Motion to Declare Void Ab Initio Memorandum of Agreement"
dated December 19, 1995. . . is hereby impliedly partially resolved insofar as the
transfer/waiver/renunciation of the Philinterlife shares of stock are concerned, in particular,
No. 5, 9(c), 10(b) and 11(d)(ii) of the Memorandum of Agreement.
WHEREFORE, this Court hereby declares the Memorandum of Agreement dated March 4,
1982 executed by Juliana S. Ortaez, Rafael S. Ortaez and Jose S. Ortaez as partially void ab
initio insofar as the transfer/waiver/renunciation of the Philinterlife shares of stocks are
concerned.7
Aggrieved by the above-stated orders of the intestate court, Jose Ortaez filed, on December
22, 1997, a petition for certiorari in the Court of Appeals. The appellate court denied his
petition, however, ruling that there was no legal justification whatsoever for the extrajudicial
partition of the estate by Jose Ortaez, his brother Rafael Ortaez and mother Juliana
Ortaez during the pendency of the settlement of the estate of Dr. Ortaez, without the
requisite approval of the intestate court, when it was clear that there were other heirs to the
estate who stood to be prejudiced thereby. Consequently, the sale made by Jose Ortaez and
his mother Juliana Ortaez to FLAG of the shares of stock they invalidly appropriated for
themselves, without approval of the intestate court, was void.8
Special Administrator Jose Ortaez filed a motion for reconsideration of the Court of Appeals
decision but it was denied. He elevated the case to the Supreme Court via petition for review
under Rule 45 which the Supreme Court dismissed on October 5, 1998, on a technicality. His
motion for reconsideration was denied with finality on January 13, 1999. On February 23,
1999, the resolution of the Supreme Court dismissing the petition of Special Administrator
Jose Ortaez became final and was subsequently recorded in the book of entries of
judgments.
Meanwhile, herein petitioners Jose Lee and Alma Aggabao, with the rest of the FLAGcontrolled board of directors, increased the authorized capital stock of Philinterlife, diluting
in the process the 50.725% controlling interest of the decedent, Dr. Juvencio Ortaez, in the
insurance company.9 This became the subject of a separate action at the Securities and
Exchange Commission filed by private respondent-Special Administratrix Enderes against
petitioner Jose Lee and other members of the FLAG-controlled board of Philinterlife on
November 7, 1994. Thereafter, various cases were filed by Jose Lee as president of
Philinterlife and Juliana Ortaez and her sons against private respondent-Special
Administratrix Enderes in the SEC and civil courts.10 Somehow, all these cases were
connected to the core dispute on the legality of the sale of decedent Dr. Ortaezs
Philinterlife shares of stock to petitioner FLAG, represented by its president, herein petitioner
Jose Lee who later became the president of Philinterlife after the controversial sale.
On May 2, 2000, private respondent-Special Administratrix Enderes and her siblings filed a
motion for execution of the Orders of the intestate court dated August 11 and August 29,
1997 because the orders of the intestate court nullifying the sale (upheld by the Court of
Appeals and the Supreme Court) had long became final. Respondent-Special Administratrix
Enderes served a copy of the motion to petitioners Jose Lee and Alma Aggabao as president
and secretary, respectively, of Philinterlife,11 but petitioners ignored the same.

On July 6, 2000, the intestate court granted the motion for execution, the dispositive portion
of which read:
WHEREFORE, premises considered, let a writ of execution issue as follows:
1. Confirming the nullity of the sale of the 2,029 Philinterlife shares in the name of the Estate
of Dr. Juvencio Ortaez to Filipino Loan Assistance Group (FLAG);
2. Commanding the President and the Corporate Secretary of Philinterlife to reinstate in the
stock and transfer book of Philinterlife the 2,029 Philinterlife shares of stock in the name of
the Estate of Dr. Juvencio P. Ortaez as the owner thereof without prejudice to other claims
for violation of pre-emptive rights pertaining to the said 2,029 Philinterlife shares;
3. Directing the President and the Corporate Secretary of Philinterlife to issue stock
certificates of Philinterlife for 2,029 shares in the name of the Estate of Dr. Juvencio P.
Ortaez as the owner thereof without prejudice to other claims for violations of pre-emptive
rights pertaining to the said 2,029 Philinterlife shares and,
4. Confirming that only the Special Administratrix, Ma. Divina Ortaez-Enderes, has the
power to exercise all the rights appurtenant to the said shares, including the right to vote and
to receive dividends.
5. Directing Philinterlife and/or any other person or persons claiming to represent it or
otherwise, to acknowledge and allow the said Special Administratrix to exercise all the
aforesaid rights on the said shares and to refrain from resorting to any action which may
tend directly or indirectly to impede, obstruct or bar the free exercise thereof under pain of
contempt.
6. The President, Corporate Secretary, any responsible officer/s of Philinterlife, or any other
person or persons claiming to represent it or otherwise, are hereby directed to comply with
this order within three (3) days from receipt hereof under pain of contempt.
7. The Deputy Sheriffs Adenauer Rivera and Pedro Borja are hereby directed to implement
the writ of execution with dispatch to forestall any and/or further damage to the Estate.
SO ORDERED.12
In the several occasions that the sheriff went to the office of petitioners to execute the writ
of execution, he was barred by the security guard upon petitioners instructions. Thus,
private respondent-Special Administratrix Enderes filed a motion to cite herein petitioners
Jose Lee and Alma Aggabao (president and secretary, respectively, of Philinterlife) in
contempt.13
Petitioners Lee and Aggabao subsequently filed before the Court of Appeals a petition for
certiorari, docketed as CA G.R. SP No. 59736. Petitioners alleged that the intestate court
gravely abused its discretion in (1) declaring that the ownership of FLAG over the Philinterlife
shares of stock was null and void; (2) ordering the execution of its order declaring such nullity
and (3) depriving the petitioners of their right to due process.
23

On July 26, 2000, the Court of Appeals dismissed the petition outright:
We are constrained to DISMISS OUTRIGHT the present petition for certiorari and prohibition
with prayer for a temporary restraining order and/or writ of preliminary injunction in the
light of the following considerations:
1. The assailed Order dated August 11, 1997 of the respondent judge had long become final
and executory;
2. The certification on non-forum shopping is signed by only one (1) of the three (3)
petitioners in violation of the Rules; and
3. Except for the assailed orders and writ of execution, deed of sale with right to repurchase,
deed of sale of shares of stocks and omnibus motion, the petition is not accompanied by
such pleadings, documents and other material portions of the record as would support the
allegations therein in violation of the second paragraph, Rule 65 of the 1997 Rules of Civil
Procedure, as amended.
Petition is DISMISSED.
SO ORDERED.14
The motion for reconsideration filed by petitioners Lee and Aggabao of the above decision
was denied by the Court of Appeals on October 30, 2000:
This resolves the "urgent motion for reconsideration" filed by the petitioners of our
resolution of July 26, 2000 dismissing outrightly the above-entitled petition for the reason,
among others, that the assailed Order dated August 11, 1997 of the respondent Judge had
long become final and executory.
Dura lex, sed lex.
WHEREFORE, the urgent motion for reconsideration is hereby DENIED, for lack of merit.
SO ORDERED.15
On December 4, 2000, petitioners elevated the case to the Supreme Court through a petition
for review under Rule 45 but on December 13, 2000, we denied the petition because there
was no showing that the Court of Appeals in CA G.R. SP No. 59736 committed any reversible
error to warrant the exercise by the Supreme Court of its discretionary appellate
jurisdiction.16
However, upon motion for reconsideration filed by petitioners Lee and Aggabao, the
Supreme Court granted the motion and reinstated their petition on September 5, 2001. The
parties were then required to submit their respective memoranda.
Meanwhile, private respondent-Special Administratrix Enderes, on July 19, 2000, filed a
motion to direct the branch clerk of court in lieu of herein petitioners Lee and Aggabao to
reinstate the name of Dr. Ortaez in the stock and transfer book of Philinterlife and issue the

corresponding stock certificate pursuant to Section 10, Rule 39 of the Rules of Court which
provides that "the court may direct the act to be done at the cost of the disobedient party by
some other person appointed by the court and the act when so done shall have the effect as
if done by the party." Petitioners Lee and Aggabao opposed the motion on the ground that
the intestate court should refrain from acting on the motion because the issues raised
therein were directly related to the issues raised by them in their petition for certiorari at the
Court of Appeals docketed as CA-G.R. SP No. 59736. On October 30, 2000, the intestate court
granted the motion, ruling that there was no prohibition for the intestate court to execute its
orders inasmuch as the appellate court did not issue any TRO or writ of preliminary
injunction.
On December 3, 2000, petitioners Lee and Aggabao filed a petition for certiorari in the Court
of Appeals, docketed as CA-G.R. SP No. 62461, questioning this time the October 30, 2000
order of the intestate court directing the branch clerk of court to issue the stock certificates.
They also questioned in the Court of Appeals the order of the intestate court nullifying the
sale made in their favor by Juliana Ortaez and Jose Ortaez. On November 20, 2002, the
Court of Appeals denied their petition and upheld the power of the intestate court to
execute its order. Petitioners Lee and Aggabao then filed motion for reconsideration which at
present is still pending resolution by the Court of Appeals.
Petitioners Jose Lee and Alma Aggabao (president and secretary, respectively, of Philinterlife)
and FLAG now raise the following errors for our consideration:
The Court of Appeals committed grave reversible ERROR:
A. In failing to reconsider its previous resolution denying the petition despite the fact that the
appellate courts mistake in apprehending the facts had become patent and evident from the
motion for reconsideration and the comment of respondent Enderes which had admitted the
factual allegations of petitioners in the petition as well as in the motion for reconsideration.
Moreover, the resolution of the appellate court denying the motion for reconsideration was
contained in only one page without even touching on the substantive merits of the
exhaustive discussion of facts and supporting law in the motion for reconsideration in
violation of the Rule on administrative due process;
B. in failing to set aside the void orders of the intestate court on the erroneous ground that
the orders were final and executory with regard to petitioners even as the latter were never
notified of the proceedings or order canceling its ownership;
C. in not finding that the intestate court committed grave abuse of discretion amounting to
excess of jurisdiction (1) when it issued the Omnibus Order nullifying the ownership of
petitioner FLAG over shares of stock which were alleged to be part of the estate and (2)
when it issued a void writ of execution against petitioner FLAG as present owner to
implement merely provisional orders, thereby violating FLAGs constitutional right against
deprivation of property without due process;
D. In failing to declare null and void the orders of the intestate court which nullified the sale
of shares of stock between the legitimate heir Jose S. Ortaez and petitioner FLAG because
of settled law and jurisprudence, i.e., that an heir has the right to dispose of the decedents
property even if the same is under administration pursuant to Civil Code provision that
24

possession of hereditary property is transmitted to the heir the moment of death of the
decedent (Acedebo vs. Abesamis, 217 SCRA 194);

Your Honor please, at that time, Your Honor, it is already known to them.
JUSTICE AQUINO:

E. In disregarding the final decision of the Supreme Court in G.R. No. 128525 dated
December 17, 1999 involving substantially the same parties, to wit, petitioners Jose C. Lee
and Alma Aggabao were respondents in that case while respondent Ma. Divina Enderes was
the petitioner therein. That decision, which can be considered law of the case, ruled that
petitioners cannot be enjoined by respondent Enderes from exercising their power as
directors and officers of Philinterlife and that the intestate court in charge of the intestate
proceedings cannot adjudicate title to properties claimed to be part of the estate and which
are equally CLAIMED BY petitioner FLAG.17
The petition has no merit.
Petitioners Jose Lee and Alma Aggabao, representing Philinterlife and FLAG, assail before us
not only the validity of the writ of execution issued by the intestate court dated July 7, 2000
but also the validity of the August 11, 1997 order of the intestate court nullifying the sale of
the 2,029 Philinterlife shares of stock made by Juliana Ortaez and Jose Ortaez, in their
personal capacities and without court approval, in favor of petitioner FLAG.

What can be your legal justification for extrajudicial settlement of a property subject of
intestate proceedings when there is an adverse claim of another set of heirs, alleged heirs?
What would be the legal justification for extra-judicially settling a property under
administration without the approval of the intestate court?
ATTY. CALIMAG:
Well, Your Honor please, in that extra-judicial settlement there is an approval of the
honorable court as to the propertys partition x x x. There were as mentioned by the
respondents counsel, Your Honor.
ATTY. BUYCO:
No
JUSTICE AQUINO:

We cannot allow petitioners to reopen the issue of nullity of the sale of the Philinterlife
shares of stock in their favor because this was already settled a long time ago by the Court of
Appeals in its decision dated June 23, 1998 in CA-G.R. SP No. 46342. This decision was
effectively upheld by us in our resolution dated October 9, 1998 in G.R. No. 135177
dismissing the petition for review on a technicality and thereafter denying the motion for
reconsideration on January 13, 1999 on the ground that there was no compelling reason to
reconsider said denial.18 Our decision became final on February 23, 1999 and was
accordingly entered in the book of entry of judgments. For all intents and purposes
therefore, the nullity of the sale of the Philinterlife shares of stock made by Juliana Ortaez
and Jose Ortaez in favor of petitioner FLAG is already a closed case. To reopen said issue
would set a bad precedent, opening the door wide open for dissatisfied parties to relitigate
unfavorable decisions no end. This is completely inimical to the orderly and efficient
administration of justice.
The said decision of the Court of Appeals in CA-G.R. SP No. 46342 affirming the nullity of the
sale made by Jose Ortaez and his mother Juliana Ortaez of the Philinterlife shares of stock
read:

The point is, there can be no adjudication of a property under intestate proceedings without
the approval of the court. That is basic unless you can present justification on that. In fact,
there are two steps: first, you ask leave and then execute the document and then ask for
approval of the document executed. Now, is there any legal justification to exclude this
particular transaction from those steps?
ATTY. CALIMAG:
None, Your Honor.
ATTY. BUYCO:
With that admission that there is no legal justification, Your Honor, we rest the case for the
private respondent. How can the lower court be accused of abusing its discretion? (pages 3335, TSN of January 29, 1998).
Thus, We find merit in the following postulation by private respondent:

Petitioners asseverations relative to said [memorandum] agreement were scuttled during

the hearing before this Court thus:
JUSTICE AQUINO:
Counsel for petitioner, when the Memorandum of Agreement was executed, did the children
of Juliana Salgado know already that there was a claim for share in the inheritance of the
children of Novicio?
ATTY. CALIMAG:

What we have here is a situation where some of the heirs of the decedent without securing
court approval have appropriated as their own personal property the properties of [the]
Estate, to the exclusion and the extreme prejudice of the other claimant/heirs. In other
words, these heirs, without court approval, have distributed the asset of the estate among
themselves and proceeded to dispose the same to third parties even in the absence of an
order of distribution by the Estate Court. As admitted by petitioners counsel, there was
absolutely no legal justification for this action by the heirs. There being no legal justification,
petitioner has no basis for demanding that public respondent [the intestate court] approve
the sale of the Philinterlife shares of the Estate by Juliana and Jose Ortaez in favor of the
Filipino Loan Assistance Group.
25

It is an undisputed fact that the parties to the Memorandum of Agreement dated March 4,
1982 (see Annex 7 of the Comment). . . are not the only heirs claiming an interest in the
estate left by Dr. Juvencio P. Ortaez. The records of this case. . . clearly show that as early as
March 3, 1981 an Opposition to the Application for Issuance of Letters of Administration was
filed by the acknowledged natural children of Dr. Juvencio P. Ortaez with Ligaya Novicio. . .
This claim by the acknowledged natural children of Dr. Juvencio P. Ortaez is admittedly
known to the parties to the Memorandum of Agreement before they executed the same.
This much was admitted by petitioners counsel during the oral argument. xxx

questioned deed of sale of the fishponds was executed between petitioner and private
respondent without notice and approval of the probate court. Even after the sale,
administratrix Aurora Carreon still included the three fishponds as among the real properties
of the estate in her inventory submitted on August 13, 1981. In fact, as stated by the Court of
Appeals, petitioner, at the time of the sale of the fishponds in question, knew that the same
were part of the estate under administration.

Given the foregoing facts, and the applicable jurisprudence, public respondent can never be
faulted for not approving. . . the subsequent sale by the petitioner [Jose Ortaez] and his
mother [Juliana Ortaez] of the Philinterlife shares belonging to the Estate of Dr. Juvencio P.
Ortaez." (pages 3-4 of Private Respondents Memorandum; pages 243-244 of the Rollo)

The subject properties therefore are under the jurisdiction of the probate court which
according to our settled jurisprudence has the authority to approve any disposition regarding
properties under administration. . . More emphatic is the declaration We made in Estate of
Olave vs. Reyes (123 SCRA 767) where We stated that when the estate of the deceased
person is already the subject of a testate or intestate proceeding, the administrator cannot
enter into any transaction involving it without prior approval of the probate court.

Amidst the foregoing, We found no grave abuse of discretion amounting to excess or want of
jurisdiction committed by respondent judge.19
From the above decision, it is clear that Juliana Ortaez, and her three sons, Jose, Rafael and
Antonio, all surnamed Ortaez, invalidly entered into a memorandum of agreement
extrajudicially partitioning the intestate estate among themselves, despite their knowledge
that there were other heirs or claimants to the estate and before final settlement of the
estate by the intestate court. Since the appropriation of the estate properties by Juliana
Ortaez and her children (Jose, Rafael and Antonio Ortaez) was invalid, the subsequent sale
thereof by Juliana and Jose to a third party (FLAG), without court approval, was likewise void.
An heir can sell his right, interest, or participation in the property under administration under
Art. 533 of the Civil Code which provides that possession of hereditary property is deemed
transmitted to the heir without interruption from the moment of death of the decedent.20
However, an heir can only alienate such portion of the estate that may be allotted to him in
the division of the estate by the probate or intestate court after final adjudication, that is,
after all debtors shall have been paid or the devisees or legatees shall have been given their
shares.21 This means that an heir may only sell his ideal or undivided share in the estate, not
any specific property therein. In the present case, Juliana Ortaez and Jose Ortaez sold
specific properties of the estate (1,014 and 1,011 shares of stock in Philinterlife) in favor of
petitioner FLAG. This they could not lawfully do pending the final adjudication of the estate
by the intestate court because of the undue prejudice it would cause the other claimants to
the estate, as what happened in the present case.
Juliana Ortaez and Jose Ortaez sold specific properties of the estate, without court
approval. It is well-settled that court approval is necessary for the validity of any disposition
of the decedents estate. In the early case of Godoy vs. Orellano,22 we laid down the rule
that the sale of the property of the estate by an administrator without the order of the
probate court is void and passes no title to the purchaser. And in the case of Dillena vs. Court
of Appeals,23 we ruled that:
[I]t must be emphasized that the questioned properties (fishpond) were included in the
inventory of properties of the estate submitted by then Administratrix Fausta Carreon
Herrera on November 14, 1974. Private respondent was appointed as administratrix of the
estate on March 3, 1976 in lieu of Fausta Carreon Herrera. On November 1, 1978, the

xxx

xxx

xxx

Only recently, in Manotok Realty, Inc. vs. Court of Appeals (149 SCRA 174), We held that the
sale of an immovable property belonging to the estate of a decedent, in a special
proceedings, needs court approval. . . This pronouncement finds support in the previous case
of Dolores Vda. De Gil vs. Agustin Cancio (14 SCRA 797) wherein We emphasized that it is
within the jurisdiction of a probate court to approve the sale of properties of a deceased
person by his prospective heirs before final adjudication. x x x
It being settled that property under administration needs the approval of the probate court
before it can be disposed of, any unauthorized disposition does not bind the estate and is
null and void. As early as 1921 in the case of Godoy vs. Orellano (42 Phil 347), We laid down
the rule that a sale by an administrator of property of the deceased, which is not authorized
by the probate court is null and void and title does not pass to the purchaser.
There is hardly any doubt that the probate court can declare null and void the disposition of
the property under administration, made by private respondent, the same having been
effected without authority from said court. It is the probate court that has the power to
authorize and/or approve the sale (Section 4 and 7, Rule 89), hence, a fortiori, it is said court
that can declare it null and void for as long as the proceedings had not been closed or
terminated. To uphold petitioners contention that the probate court cannot annul the
unauthorized sale, would render meaningless the power pertaining to the said court. (Bonga
vs. Soler, 2 SCRA 755). (emphasis ours)
Our jurisprudence is therefore clear that (1) any disposition of estate property by an
administrator or prospective heir pending final adjudication requires court approval and (2)
any unauthorized disposition of estate property can be annulled by the probate court, there
being no need for a separate action to annul the unauthorized disposition.
The question now is: can the intestate or probate court execute its order nullifying the invalid
sale?
We see no reason why it cannot. The intestate court has the power to execute its order with
regard to the nullity of an unauthorized sale of estate property, otherwise its power to annul
the unauthorized or fraudulent disposition of estate property would be meaningless. In other
26

words, enforcement is a necessary adjunct of the intestate or probate courts power to annul
unauthorized or fraudulent transactions to prevent the dissipation of estate property before
final adjudication.
Moreover, in this case, the order of the intestate court nullifying the sale was affirmed by the
appellate courts (the Court of Appeals in CA-G.R. SP No. 46342 dated June 23, 1998 and
subsequently by the Supreme Court in G.R. No. 135177 dated October 9, 1998). The finality
of the decision of the Supreme Court was entered in the book of entry of judgments on
February 23, 1999. Considering the finality of the order of the intestate court nullifying the
sale, as affirmed by the appellate courts, it was correct for private respondent-Special
Administratrix Enderes to thereafter move for a writ of execution and for the intestate court
to grant it.
Petitioners Jose Lee, Alma Aggabao and FLAG, however, contend that the probate court
could not issue a writ of execution with regard to its order nullifying the sale because said
order was merely provisional:
The only authority given by law is for respondent judge to determine provisionally whether
said shares are included or excluded in the inventory In ordering the execution of the
orders, respondent judge acted in excess of his jurisdiction and grossly violated settled law
and jurisprudence, i.e., that the determination by a probate or intestate court of whether a
property is included or excluded in the inventory of the estate being provisional in nature,
cannot be the subject of execution.24 (emphasis ours)

We are not persuaded. The title of the purchaser like herein petitioner FLAG can be struck
down by the intestate court after a clear showing of the nullity of the alienation. This is the
logical consequence of our ruling in Godoy and in several subsequent cases.26 The sale of
any property of the estate by an administrator or prospective heir without order of the
probate or intestate court is void and passes no title to the purchaser. Thus, in Juan Lao et al.
vs. Hon. Melencio Geneto, G.R. No. 56451, June 19, 1985, we ordered the probate court to
cancel the transfer certificate of title issued to the vendees at the instance of the
administrator after finding that the sale of real property under probate proceedings was
made without the prior approval of the court. The dispositive portion of our decision read:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the assailed Order dated February 18, 1981
of the respondent Judge approving the questioned Amicable Settlement is declared NULL
and VOID and hereby SET ASIDE. Consequently, the sale in favor of Sotero Dioniosio III and by
the latter to William Go is likewise declared NULL and VOID. The Transfer Certificate of Title
issued to the latter is hereby ordered cancelled.
It goes without saying that the increase in Philinterlifes authorized capital stock, approved
on the vote of petitioners non-existent shareholdings and obviously calculated to make it
difficult for Dr. Ortaezs estate to reassume its controlling interest in Philinterlife, was
likewise void ab initio.
Petitioners next argue that they were denied due process.
We do not think so.

Petitioners argument is misplaced. There is no question, based on the facts of this case, that
the Philinterlife shares of stock were part of the estate of Dr. Juvencio Ortaez from the very
start as in fact these shares were included in the inventory of the properties of the estate
submitted by Rafael Ortaez after he and his brother, Jose Ortaez, were appointed special
administrators by the intestate court.25
The controversy here actually started when, during the pendency of the settlement of the
estate of Dr. Ortaez, his wife Juliana Ortaez sold the 1,014 Philinterlife shares of stock in
favor petitioner FLAG without the approval of the intestate court. Her son Jose Ortaez later
sold the remaining 1,011 Philinterlife shares also in favor of FLAG without the approval of the
intestate court.
We are not dealing here with the issue of inclusion or exclusion of properties in the inventory
of the estate because there is no question that, from the very start, the Philinterlife shares of
stock were owned by the decedent, Dr. Juvencio Ortaez. Rather, we are concerned here
with the effect of the sale made by the decedents heirs, Juliana Ortaez and Jose Ortaez,
without the required approval of the intestate court. This being so, the contention of
petitioners that the determination of the intestate court was merely provisional and should
have been threshed out in a separate proceeding is incorrect.
The petitioners Jose Lee and Alma Aggabao next contend that the writ of execution should
not be executed against them because they were not notified, nor they were aware, of the
proceedings nullifying the sale of the shares of stock.

The facts show that petitioners, for reasons known only to them, did not appeal the decision
of the intestate court nullifying the sale of shares of stock in their favor. Only the vendor,
Jose Ortaez, appealed the case. A careful review of the records shows that petitioners had
actual knowledge of the estate settlement proceedings and that they knew private
respondent Enderes was questioning therein the sale to them of the Philinterlife shares of
stock.
It must be noted that private respondent-Special Administratrix Enderes filed before the
intestate court (RTC of Quezon City, Branch 85) a "Motion to Declare Void Ab Initio Deeds of
Sale of Philinterlife Shares of Stock" on March 22, 1996. But as early as 1994, petitioners
already knew of the pending settlement proceedings and that the shares they bought were
under the administration by the intestate court because private respondent Ma. Divina
Ortaez-Enderes and her mother Ligaya Novicio had filed a case against them at the
Securities and Exchange Commission on November 7, 1994, docketed as SEC No. 11-94-4909,
for annulment of transfer of shares of stock, annulment of sale of corporate properties,
annulment of subscriptions on increased capital stocks, accounting, inspection of corporate
books and records and damages with prayer for a writ of preliminary injunction and/or
temporary restraining order.27 In said case, Enderes and her mother questioned the sale of
the aforesaid shares of stock to petitioners. The SEC hearing officer in fact, in his resolution
dated March 24, 1995, deferred to the jurisdiction of the intestate court to rule on the
validity of the sale of shares of stock sold to petitioners by Jose Ortaez and Juliana Ortaez:
Petitioners also averred that. . . the Philinterlife shares of Dr. Juvencio Ortaez who died, in
1980, are part of his estate which is presently the subject matter of an intestate proceeding
27

of the RTC of Quezon City, Branch 85. Although, private respondents [Jose Lee et al.]
presented the documents of partition whereby the foregoing share of stocks were allegedly
partitioned and conveyed to Jose S. Ortaez who allegedly assigned the same to the other
private respondents, approval of the Court was not presented. Thus, the assignments to the
private respondents [Jose Lee et al.] of the subject shares of stocks are void.
xxx

xxx

xxx

With respect to the alleged extrajudicial partition of the shares of stock owned by the late Dr.
Juvencio Ortaez, we rule that the matter properly belongs to the jurisdiction of the regular
court where the intestate proceedings are currently pending.28
With this resolution of the SEC hearing officer dated as early as March 24, 1995 recognizing
the jurisdiction of the intestate court to determine the validity of the extrajudicial partition of
the estate of Dr. Ortaez and the subsequent sale by the heirs of the decedent of the
Philinterlife shares of stock to petitioners, how can petitioners claim that they were not
aware of the intestate proceedings?
Furthermore, when the resolution of the SEC hearing officer reached the Supreme Court in
1996 (docketed as G.R. 128525), herein petitioners who were respondents therein filed their
answer which contained statements showing that they knew of the pending intestate
proceedings:
[T]he subject matter of the complaint is not within the jurisdiction of the SEC but with the
Regional Trial Court; Ligaya Novicio and children represented themselves to be the common
law wife and illegitimate children of the late Ortaez; that on March 4, 1982, the surviving
spouse Juliana Ortaez, on her behalf and for her minor son Antonio, executed a
Memorandum of Agreement with her other sons Rafael and Jose, both surnamed Ortaez,
dividing the estate of the deceased composed of his one-half (1/2) share in the conjugal
properties; that in the said Memorandum of Agreement, Jose S. Ortaez acquired as his
share of the estate the 1,329 shares of stock in Philinterlife; that on March 4, 1982, Juliana
and Rafael assigned their respective shares of stock in Philinterlife to Jose; that contrary to
the contentions of petitioners, private respondents Jose Lee, Carlos Lee, Benjamin Lee and
Alma Aggabao became stockholders of Philinterlife on March 23, 1983 when Jose S. Ortaez,
the principal stockholder at that time, executed a deed of sale of his shares of stock to
private respondents; and that the right of petitioners to question the Memorandum of
Agreement and the acquisition of shares of stock of private respondent is barred by
prescription.29
Also, private respondent-Special Administratrix Enderes offered additional proof of actual
knowledge of the settlement proceedings by petitioners which petitioners never denied: (1)
that petitioners were represented by Atty. Ricardo Calimag previously hired by the mother of
private respondent Enderes to initiate cases against petitioners Jose Lee and Alma Aggabao
for the nullification of the sale of the shares of stock but said counsel made a conflicting turnaround and appeared instead as counsel of petitioners, and (2) that the deeds of sale
executed between petitioners and the heirs of the decedent (vendors Juliana Ortaez and
Jose Ortaez) were acknowledged before Atty. Ramon Carpio who, during the pendency of
the settlement proceedings, filed a motion for the approval of the sale of Philinterlife shares
of stock to the Knights of Columbus Fraternal Association, Inc. (which motion was, however,

later abandoned).30 All this sufficiently proves that petitioners, through their counsels, knew
of the pending settlement proceedings.
Finally, petitioners filed several criminal cases such as libel (Criminal Case No. 97-7179-81),
grave coercion (Criminal Case No. 84624) and robbery (Criminal Case No. Q-96-67919)
against private respondents mother Ligaya Novicio who was a director of Philinterlife,31 all
of which criminal cases were related to the questionable sale to petitioners of the
Philinterlife shares of stock.
Considering these circumstances, we cannot accept petitioners claim of denial of due
process. The essence of due process is the reasonable opportunity to be heard. Where the
opportunity to be heard has been accorded, there is no denial of due process.32 In this case,
petitioners knew of the pending instestate proceedings for the settlement of Dr. Juvencio
Ortaezs estate but for reasons they alone knew, they never intervened. When the court
declared the nullity of the sale, they did not bother to appeal. And when they were notified
of the motion for execution of the Orders of the intestate court, they ignored the same.
Clearly, petitioners alone should bear the blame.
Petitioners next contend that we are bound by our ruling in G.R. No. 128525 entitled Ma.
Divina Ortaez-Enderes vs. Court of Appeals, dated December 17, 1999, where we allegedly
ruled that the intestate court "may not pass upon the title to a certain property for the
purpose of determining whether the same should or should not be included in the inventory
but such determination is not conclusive and is subject to final decision in a separate action
regarding ownership which may be constituted by the parties."
We are not unaware of our decision in G.R. No. 128525. The issue therein was whether the
Court of Appeals erred in affirming the resolution of the SEC that Enderes et al. were not
entitled to the issuance of the writ of preliminary injunction. We ruled that the Court of
Appeals was correct in affirming the resolution of the SEC denying the issuance of the writ of
preliminary injunction because injunction is not designed to protect contingent rights. Said
case did not rule on the issue of the validity of the sale of shares of stock belonging to the
decedents estate without court approval nor of the validity of the writ of execution issued
by the intestate court. G.R. No. 128525 clearly involved a different issue and it does not
therefore apply to the present case.
Petitioners and all parties claiming rights under them are hereby warned not to further delay
the execution of the Orders of the intestate court dated August 11 and August 29, 1997.
WHEREFORE, the petition is hereby DENIED. The decision of the Court of Appeals in CA-G.R.
S.P. No. 59736 dated July 26, 2000, dismissing petitioners petition for certiorari and
affirming the July 6, 2000 order of the trial court which ordered the execution of its (trial
courts) August 11 and 29, 1997 orders, is hereby AFFIRMED.

28

RULE 90
DISTRIBUTION AND PARTITION OF THE ESTATE
Section 1. When order for distribution of reside 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 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.
Section 2. Questions as to advancement to be determined. Questions as to advancement
made, or alleged to have been made, by the deceased to any heir may be heard and
determined by the court having jurisdiction of the estate proceedings; and the final order of
the court thereon shall be binding on the person raising the questions and on the heir.
Section 3. By whom expenses of partition paid. If at the time of distribution the executor
or administrator has retained sufficient effects in his hands which may lawfully be applied for
the expenses of partition of the properties distributed, such expenses of partition may be
paid by such executor or administrator when it appears equitable to the court and not
inconsistent with the intention of the testator; otherwise, they shall be paid by the parties in
proportion to their respective shares or interest in the premises, and the apportionment shall
be settled and allowed by the court, and, if any person interested in the partition does not
pay his proportion or share, the court may issue an execution in the name of the executor or
administrator against the party not paying the sum assessed.
Section 4. Recording the order of partition of estate. Certified copies of final orders and
judgments of the court relating to the real estate or the partition thereof shall be recorded in
the registry of deeds of the province where the property is situated.

1.

QUASHA V. LCN CONSTRUCTION (2008)

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 Decision1 dated 11 May 2006 and Resolution2 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 administrator's bond
up to this date, or more than fourteen (14) years later. Previously, there was the coadministrator 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;
29

(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 Administrator's 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 attorney's 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 claimant4 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
former's fees at only 5% of the gross estate, based on which, per the computation of LCN, the
administrators were even overpaid P55,000.00. 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 totaling P4,738,558.63, rendering
the latter insolvent.
On 12 June 2003, the RTC issued its Order6 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. 12097000656-0 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 attorney's fees and litigation expenses for said law firm;
30

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

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

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

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

LCN filed a Motion for Reconsideration10 of the foregoing Order on 2 July 2003, but it was
denied by the RTC on 29 October 2003.11

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

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

(1) The administrator's claim for attorney's 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 (LCN's)
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 Court's 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 administrator's
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 attorney's 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.

(2) the attorney's 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/administrator's 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 Reconsideration16 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 LCN's] 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 attorney's 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 coadministrators 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.

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.

xxxx

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

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

WHEREFORE, premises considered, private respondents' motion for reconsideration is

hereby DENIED for lack of merit. 18

I.

31

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 ATTORNEY'S
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 the P4,738,558.63
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.
32

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.

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:

Furthermore, in Dael, the Court actually cautioned that partial distribution of the decedent's
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.

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 counsel together with the children of the deceased Raymond Triviere, and the
Order dated 29 October 2003 denying Petitioner's Motion for Reconsideration of the First
Order.

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.

I. Statement of Antecedent Facts

II

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

On the second assignment of error, petitioner Quasha Law Office contends that it is entitled
to the award of attorney's 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.
xxxx
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 attorney's fees
against the estate. At one point, it alleges that the award of attorney's 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.

xxxx

xxxx

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 latter's 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 coadministrators 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 "attorney's fees and litigation
33

expenses." Being lumped together, and absent evidence to the contrary, the P200,000.00 for
attorney's 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 attorney's 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.

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 petitioner's contention that while it rendered legal services for the
settlement of the estate of Raymond Triviere since the time of Atty. Quasha's death in 1996,
it did not serve as co-administrator thereof, granting that it was never even issued letters of
administration.
The attorney's 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 attorney's 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 coadministrator), 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 awarded
P2,500,000.00, 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 2006 of 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 attorney's 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.

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.
34

2.

GUY V. CA (2006)

This petition for review on certiorari assails the January 22, 2004 Decision1 of the Court of
Appeals in CA-G.R. SP No. 79742, which affirmed the Orders dated July 21, 20002 and July 17,
20033 of the Regional Trial Court of Makati City, Branch 138 in SP Proc. Case No. 4549
denying petitioner's motion to dismiss; and its May 25, 2004 Resolution4 denying petitioner's
motion for reconsideration.
The facts are as follows:
On June 13, 1997, private respondent-minors Karen Oanes Wei and Kamille Oanes Wei,
represented by their mother Remedios Oanes (Remedios), filed a petition for letters of
administration5 before the Regional Trial Court of Makati City, Branch 138. The case was
docketed as Sp. Proc. No. 4549 and entitled Intestate Estate of Sima Wei (a.k.a. Rufino Guy
Susim).
Private respondents alleged that they are the duly acknowledged illegitimate children of
Sima Wei, who died intestate in Makati City on October 29, 1992, leaving an estate valued at
P10,000,000.00 consisting of real and personal properties. His known heirs are his surviving
spouse Shirley Guy and children, Emy, Jeanne, Cristina, George and Michael, all surnamed
Guy. Private respondents prayed for the appointment of a regular administrator for the
orderly settlement of Sima Wei's estate. They likewise prayed that, in the meantime,
petitioner Michael C. Guy, son of the decedent, be appointed as Special Administrator of the
estate. Attached to private respondents' petition was a Certification Against Forum
Shopping6 signed by their counsel, Atty. Sedfrey A. Ordoez.
In his Comment/Opposition,7 petitioner prayed for the dismissal of the petition. He asserted
that his deceased father left no debts and that his estate can be settled without securing
letters of administration pursuant to Section 1, Rule 74 of the Rules of Court. He further
argued that private respondents should have established their status as illegitimate children
during the lifetime of Sima Wei pursuant to Article 175 of the Family Code.
The other heirs of Sima Wei filed a Joint Motion to Dismiss8 on the ground that the
certification against forum shopping should have been signed by private respondents and not
their counsel. They contended that Remedios should have executed the certification on
behalf of her minor daughters as mandated by Section 5, Rule 7 of the Rules of Court.
In a Manifestation/Motion as Supplement to the Joint Motion to Dismiss,9 petitioner and his
co-heirs alleged that private respondents' claim had been paid, waived, abandoned or
otherwise extinguished by reason of Remedios' June 7, 1993 Release and Waiver of Claim
stating that in exchange for the financial and educational assistance received from petitioner,
Remedios and her minor children discharge the estate of Sima Wei from any and all liabilities.
The Regional Trial Court denied the Joint Motion to Dismiss as well as the Supplemental
Motion to Dismiss. It ruled that while the Release and Waiver of Claim was signed by
Remedios, it had not been established that she was the duly constituted guardian of her
minor daughters. Thus, no renunciation of right occurred. Applying a liberal application of the
rules, the trial court also rejected petitioner's objections on the certification against forum
shopping.

Petitioner moved for reconsideration but was denied. He filed a petition for certiorari before
the Court of Appeals which affirmed the orders of the Regional Trial Court in its assailed
Decision dated January 22, 2004, the dispositive portion of which states:
WHEREFORE, premises considered, the present petition is hereby DENIED DUE COURSE and
accordingly DISMISSED, for lack of merit. Consequently, the assailed Orders dated July 21,
2000 and July 17, 2003 are hereby both AFFIRMED. Respondent Judge is hereby DIRECTED to
resolve the controversy over the illegitimate filiation of the private respondents (sic) minors
[-] Karen Oanes Wei and Kamille Oanes Wei who are claiming successional rights in the
intestate estate of the deceased Sima Wei, a.k.a. Rufino Guy Susim.
SO ORDERED.10
The Court of Appeals denied petitioner's motion for reconsideration, hence, this petition.
Petitioner argues that the Court of Appeals disregarded existing rules on certification against
forum shopping; that the Release and Waiver of Claim executed by Remedios released and
discharged the Guy family and the estate of Sima Wei from any claims or liabilities; and that
private respondents do not have the legal personality to institute the petition for letters of
administration as they failed to prove their filiation during the lifetime of Sima Wei in
accordance with Article 175 of the Family Code.
Private respondents contend that their counsel's certification can be considered substantial
compliance with the rules on certification of non-forum shopping, and that the petition raises
no new issues to warrant the reversal of the decisions of the Regional Trial Court and the
Court of Appeals.
The issues for resolution are: 1) whether private respondents' petition should be dismissed
for failure to comply with the rules on certification of non-forum shopping; 2) whether the
Release and Waiver of Claim precludes private respondents from claiming their successional
rights; and 3) whether private respondents are barred by prescription from proving their
filiation.
The petition lacks merit.
Rule 7, Section 5 of the Rules of Court provides that the certification of non-forum shopping
should be executed by the plaintiff or the principal party. Failure to comply with the
requirement shall be cause for dismissal of the case. However, a liberal application of the
rules is proper where the higher interest of justice would be served. In Sy Chin v. Court of
Appeals,11 we ruled that while a petition may have been flawed where the certificate of
non-forum shopping was signed only by counsel and not by the party, this procedural lapse
may be overlooked in the interest of substantial justice.12 So it is in the present controversy
where the merits13 of the case and the absence of an intention to violate the rules with
impunity should be considered as compelling reasons to temper the strict application of the
rules.
As regards Remedios' Release and Waiver of Claim, the same does not bar private
respondents from claiming successional rights. To be valid and effective, a waiver must be
35

couched in clear and unequivocal terms which leave no doubt as to the intention of a party
to give up a right or benefit which legally pertains to him. A waiver may not be attributed to a
person when its terms do not explicitly and clearly evince an intent to abandon a right.14
In this case, we find that there was no waiver of hereditary rights. The Release and Waiver of
Claim does not state with clarity the purpose of its execution. It merely states that Remedios
received P300,000.00 and an educational plan for her minor daughters "by way of financial
assistance and in full settlement of any and all claims of whatsoever nature and kind x x x
against the estate of the late Rufino Guy Susim."15 Considering that the document did not
specifically mention private respondents' hereditary share in the estate of Sima Wei, it
cannot be construed as a waiver of successional rights.
Moreover, even assuming that Remedios truly waived the hereditary rights of private
respondents, such waiver will not bar the latter's claim. Article 1044 of the Civil Code,
provides:
ART. 1044. Any person having the free disposal of his property may accept or repudiate an
inheritance.
Any inheritance left to minors or incapacitated persons may be accepted by their parents or
guardians. Parents or guardians may repudiate the inheritance left to their wards only by
judicial authorization.
The right to accept an inheritance left to the poor shall belong to the persons designated by
the testator to determine the beneficiaries and distribute the property, or in their default, to
those mentioned in Article 1030. (Emphasis supplied)
Parents and guardians may not therefore repudiate the inheritance of their wards without
judicial approval. This is because repudiation amounts to an alienation of property16 which
must pass the court's scrutiny in order to protect the interest of the ward. Not having been
judicially authorized, the Release and Waiver of Claim in the instant case is void and will not
bar private respondents from asserting their rights as heirs of the deceased.
Furthermore, it must be emphasized that waiver is the intentional relinquishment of a known
right. Where one lacks knowledge of a right, there is no basis upon which waiver of it can
rest. Ignorance of a material fact negates waiver, and waiver cannot be established by a
consent given under a mistake or misapprehension of fact.17

ART. 285. The action for the recognition of natural children may be brought only during the
lifetime of the presumed parents, except in the following cases:
(1) If the father or mother died during the minority of the child, in which case the latter may
file the action before the expiration of four years from the attainment of his majority;
(2) If after the death of the father or of the mother a document should appear of which
nothing had been heard and in which either or both parents recognize the child.
In this case, the action must be commenced within four years from the finding of the
document. (Emphasis supplied)
We ruled in Bernabe v. Alejo18 that illegitimate children who were still minors at the time
the Family Code took effect and whose putative parent died during their minority are given
the right to seek recognition for a period of up to four years from attaining majority age. This
vested right was not impaired or taken away by the passage of the Family Code.19
On the other hand, Articles 172, 173 and 175 of the Family Code, which superseded Article
285 of the Civil Code, provide:
ART. 172. The filiation of legitimate children is established by any of the following:
(1) The record of birth appearing in the civil register or a final judgment; or
(2) An admission of legitimate filiation in a public document or a private handwritten
instrument and signed by the parent concerned.
In the absence of the foregoing evidence, the legitimate filiation shall be proved by:
(1) The open and continuous possession of the status of a legitimate child; or
(2) Any other means allowed by the Rules of Court and special laws.
ART. 173. The action to claim legitimacy may be brought by the child during his or her
lifetime and shall be transmitted to the heirs should the child die during minority or in a state
of insanity. In these cases, the heirs shall have a period of five years within which to institute
the action.
The action already commenced by the child shall survive notwithstanding the death of either
or both of the parties.

In the present case, private respondents could not have possibly waived their successional
rights because they are yet to prove their status as acknowledged illegitimate children of the
deceased. Petitioner himself has consistently denied that private respondents are his coheirs. It would thus be inconsistent to rule that they waived their hereditary rights when
petitioner claims that they do not have such right. Hence, petitioner's invocation of waiver
on the part of private respondents must fail.

ART. 175. Illegitimate children may establish their illegitimate filiation in the same way and
on the same, evidence as legitimate children.

Anent the issue on private respondents' filiation, we agree with the Court of Appeals that a
ruling on the same would be premature considering that private respondents have yet to
present evidence. Before the Family Code took effect, the governing law on actions for
recognition of illegitimate children was Article 285 of the Civil Code, to wit:

Under the Family Code, when filiation of an illegitimate child is established by a record of
birth appearing in the civil register or a final judgment, or an admission of filiation in a public
document or a private handwritten instrument signed by the parent concerned, the action
for recognition may be brought by the child during his or her lifetime. However, if the action

The action must be brought within the same period specified in Article 173, except when the
action is based on the second paragraph of Article 172, in which case the action may be
brought during the lifetime of the alleged parent.

36

is based upon open and continuous possession of the status of an illegitimate child, or any
other means allowed by the rules or special laws, it may only be brought during the lifetime
of the alleged parent.
It is clear therefore that the resolution of the issue of prescription depends on the type of
evidence to be adduced by private respondents in proving their filiation. However, it would
be impossible to determine the same in this case as there has been no reception of evidence
yet. This Court is not a trier of facts. Such matters may be resolved only by the Regional Trial
Court after a full-blown trial.
While the original action filed by private respondents was a petition for letters of
administration, the trial court is not precluded from receiving evidence on private
respondents' filiation. Its jurisdiction extends to matters incidental and collateral to the
exercise of its recognized powers in handling the settlement of the estate, including the
determination of the status of each heir.20 That the two causes of action, one to compel
recognition and the other to claim inheritance, may be joined in one complaint is not new in
our jurisprudence.21 As held in Briz v. Briz:22
The question whether a person in the position of the present plaintiff can in any event
maintain a complex action to compel recognition as a natural child and at the same time to
obtain ulterior relief in the character of heir, is one which in the opinion of this court must be
answered in the affirmative, provided always that the conditions justifying the joinder of the
two distinct causes of action are present in the particular case. In other words, there is no
absolute necessity requiring that the action to compel acknowledgment should have been
instituted and prosecuted to a successful conclusion prior to the action in which that same
plaintiff seeks additional relief in the character of heir. Certainly, there is nothing so peculiar
to the action to compel acknowledgment as to require that a rule should be here applied
different from that generally applicable in other cases. x x x
The conclusion above stated, though not heretofore explicitly formulated by this court, is
undoubtedly to some extent supported by our prior decisions. Thus, we have held in
numerous cases, and the doctrine must be considered well settled, that a natural child
having a right to compel acknowledgment, but who has not been in fact acknowledged, may
maintain partition proceedings for the division of the inheritance against his coheirs
(Siguiong vs. Siguiong, 8 Phil., 5; Tiamson vs. Tiamson, 32 Phil., 62); and the same person may
intervene in proceedings for the distribution of the estate of his deceased natural father, or
mother (Capistrano vs. Fabella, 8 Phil., 135; Conde vs. Abaya, 13 Phil., 249; Ramirez vs. Gmur,
42 Phil., 855). In neither of these situations has it been thought necessary for the plaintiff to
show a prior decree compelling acknowledgment. The obvious reason is that in partition suits
and distribution proceedings the other persons who might take by inheritance are before the
court; and the declaration of heirship is appropriate to such proceedings.
WHEREFORE, the instant petition is DENIED. The Decision dated January 22, 2004 of the
Court of Appeals in CA-G.R. SP No. 79742 affirming the denial of petitioner's motion to
dismiss; and its Resolution dated May 25, 2004 denying petitioner's motion for
reconsideration, are AFFIRMED. Let the records be REMANDED to the Regional Trial Court of
Makati City, Branch 138 for further proceedings.

37