RULE 88: Payment of the Debts of the Estate

ARKONCEL VS The rule is that a judgment rendered in accordance with a compromise agreement is immediately
LAGAMON executory unless a motion is filed to set aside the agreement on the ground of fraud, mistake or duress in
which case an appeal may be taken against the order denying the motion. It then becomes ministerial for the
lower court to order the execution of its final executory judgment. Even more than a contract which may be
enforced by ordinary action for specific performance, the compromise agreement is part and parcel of the
judgment, and may therefore be enforced as such by a writ of execution.
Finally, when the terms of an amicable settlement are violated, as in the case at bar, the remedy of the
aggrieved party is to move for its execution
It is evident from the brief outline of the sections referred to above that the Code of Civil Procedure has established
Santos vs. Manarang a system for the allowance of claims against the estates of decedents. Those are atleast two restrictions
imposed by law upon the power of the testator to dispose of his property, and which pro tanto restrict the
maxim that "the will of the testator law: (1) His estate is liable for all legal obligations incurred by him; and
(2) he can not dispose of or encumber the legal portion due his heirs by force of law. The former take
precedence over the latter. (Sec. 640, Code Civ, Proc.) In case his estate is sufficient they must be paid. In
case the estate is insolvent they must be paid in the order named in section 735. It is hardly necessary to
say that a provision in aninsolvent's will that a certain debt be paid would not entitle it to preference over
other debts
WT Construction, Inc vs. It is but logical that probate/estate courts can enforce obligations under such a deed of sale. Otherwise,
Hon Ulric R. Canete they would not be able to secure the proceeds to pay for the taxes and this would defeat the purpose of the
proceedings to settle the estate. Stated otherwise, the power to enforce obligations under the deed of sale of a
property ordered sold to pay debts of the estate is but a necessary incident of the power of a
probate/estate court to order and effect such sale in the first place.
RULE 89: Sales, Mortgages, and Other Encumbrances of Property of Decedent
SILVERIO v SILVERIO An administrator can validly sell the intestate estate under administration ONLY by leave of court. While it is
true that petitioner was eventually reinstated as Administrator pursuant to the August 28, 2008), we agree with the CA
that the permanent injunction issued under the said decision, as explicitly stated in its fallo, pertained only to the portions
of the October 31, 2006 Omnibus Order upholding the grant of letters of administration to and taking of an oath of
administration by respondent Silverio, Jr., as otherwise the CA would have expressly set aside as well the directive in
the same Omnibus Order allowing the sale of the subject properties. Moreover, the CA Decision attained finality only on
February 11, 2011 when this Court denied with finality respondent Silverio, Jr.s motion for reconsideration.
GO ONG VS. CA Petitioner, asserting that the mortgage is void for want of judicial approval, quoted Section 7 of Rule 89 of
the Rules of Court . The CA aptly ruled that Section 7 of Rule 89 of the Rules of Court is not applicable, since the
mortgage was constituted in her personal capacity and not in her capacity as administratrix of the estate of her
husband. Sec. 7, Art. 89 of the Civil Code applies in a case where judicial approval has to be sought in
connection with, for instance, the sale or mortgage of property under administration for the payment, say
of a conjugal debt, and even here, the conjugal and hereditary shares of the wife are excluded from the
requisite judicial approval for the reason already adverted to hereinabove, provided of course no prejudice
is caused others, including the government.
Consequently, in the case at bar, the trial court and the CA cannot be faulted in ruling that the questioned
mortgage constituted on the property under administration, by authority of the petitioner, is valid, notwithstanding
the lack of judicial approval, with respect to her conjugal share and to her hereditary rights.
Petitioner cited cases arguing that in the settlement proceedings of the estate of the deceased spouse,
the entire conjugal partnership property of the marriage is under administration. While such may be in a sense true,
that fact alone is not sufficient to invalidate the whole mortgage, willingly and voluntarily entered into by the
petitioner.. Under similar circumstances, this Court applied the provisions of Article 493 of the Civil Code, where
the heirs as co-owners shall each have the full ownership of his part and the fruits and benefits pertaining thereto,
and he may therefore alienate, assign or mortgage it, and even effect of the alienation or mortgage, with respect to
the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of
the co-ownership
The reference to judicial approval in Sec. 7, Rule 89 of the Rules of Court cannot adversely affect
the substantive rights of private respondent to dispose of her Ideal [not inchoate, for the conjugal
partnership ended with her husbands death, and her hereditary rights accrued from the moment of the
death of the decedent (Art. 777, Civil Code) share in the co-heirship and/or co-ownership formed between
her and the other heirs/co-owners ( Art. 493 Civil Code)
ADELAIDA S. 5. ID.; ID.; ID.; DECEDENTS REPRESENTATIVE NOT ESTOPPED TO QUESTION VALIDITY OF HIS OWN
MANECLANG v. JUAN T. AND HIS PREDECESSORS ACTS. Estoppel is unavailable as an argument against the administratrix of the
BAUN and AMPARO S. estate and against the children. As to the former, this Court, in Boaga v. Soler, supra, reiterated the rule "that a
BAUN, ET AL. decedents representative is not estopped to question the validity of his own void deed purporting to convey land;
and if this be true of the administrator as to his own acts, a fortiori, his successor can not be estopped to question
the acts of predecessor are not conformable to law." Not being the party who petitioned the court for authority to
sell and who executed the sale, she cannot be held liable for any act or omission which could give rise to estoppel.
6. ID.; ID.; ID.; HEIR WHO AS JUDICIAL ADMINISTRATOR EXECUTED DEED OF SALE ESTOPPED FROM
QUESTIONING ITS VALIDITY; CASE AT BAR. As to the heirs, considering that, except as to Oscar Maneclang
who executed the deed of sale in his capacity as judicial administrator, the rest of the heirs did not participate in
such sale, and considering further that the action was filed solely by the administratrix without the children being
impleaded as parties plaintiffs or intervenors, there is neither rhyme nor reason to hold these heirs in estoppel. For
having executed the deed of sale, Oscar Maneclang is deemed to have assented to both the motion for and the
actual order granting the authority to sell. Estoppel operates solely against him.
14. REMEDIAL LAW; SPECIAL PROCEEDINGS; SETTLEMENT OF ESTATES OF DECEASED PERSONS;
NOTICE OF APPLICATION TO SELL PROPERTY OF DECEDENT MANDATORY AND ESSENTIAL; EFFECT OF
FAILURE TO COMPLY WITH REQUISITE; CASE AT BAR. It does not follow that for purposes of complying
with the requirement of notice under Rule 89 of the Rules of Court, notice to the father is notice to the children.
Sections 2, 4 and 7 of said Rule state explicitly that the notice, which must be in writing, must be given to the heirs,
devisees, and legatees and that the court shall fix a time and place for hearing such petition and cause notice to be
 given to the interested parties. There can be no dispute that if the heirs were duly represented by counsel or by a
guardian ad litem in the case of the minors, the notice may be given to such counsel or guardian ad litem. In this
case, however, only the surviving spouse, SeveroManeclang, was notified through his counsel. Two of the heirs,
Hector Maneclang and Oscar Maneclang, who were then of legal age, were not represented by counsel. The
remaining seven (7) children were still minors with no guardian ad litem having been appointed to represent them.
Obviously then, the requirement of notice was not satisfied. The requisite set forth in the aforesaid sections of Rule
89 are mandatory and essential. Without them, the authority to sell, the sale itself and the order approving it would
be null and void ab initio. Consequently, for want of notice to the children, the Order of 9 September 1949 granting
the application, the sale in question of 4 October 1952 and the Order of 15 March 1954 approving the sale are all
void ab initio as against said children. SeveroManeclang, however, stands on different ground altogether. Having
been duly notified of the application, he was bound by the said order, sale and approval of the latter. However, the
only interest which SeveroManeclang would have over the property is his right of usufruct which is equal to that
corresponding by way of legitime pertaining to each of the surviving children pursuant to Article 834 of the Civil
Code of Spain, the governing law at that time since Margarita Suri Santos died before the effectivity of the Civil
Code of the Philippines.
15. ID.; ID.; ID.; ID.; REASON THEREFOR. The reason behind this requirement is that the heirs, as the
presumptive owners since they succeed to all the rights and obligations of the deceased from the moment of the
latters death, are the persons directly affected by the sale or mortgage and therefore cannot be deprived of the
property except in the manner provided by law.
Article 320 of the Civil Code does not apply. While the petition for authority to sell was filed on 2 September 1949,
the Civil Code took effect only on 30 August 1950. 16 Thus, the governing law at the time of the filing of the
petition was Article 159 of the Civil Code of Spain which provides as follows:chanrobles virtual lawlibrary
"The father, or in his default, the mother, shall be the legal administrator of the property of the children
who are subject to parental authority."cralaw virtua1aw library
Article 320 of the present Civil Code, taken from the aforesaid Article 159, incorporates the amendment that if the
property under administration is worth more than two thousand pesos (P2,000.00), the father or the mother shall
give a bond subject to the approval of the Court of First Instance. This provision then restores the old rule which
made the father or mother, as such, the administrator of the childs property.
Be that as it may, it does not follow that for purposes of complying with the requirement of notice under
Rule 89 of the Rules of Court, notice to the father is notice to the children. Sections 2, 4 and 7 of said Rule
state explicitly that the notice, which must be in writing, must be given to the heirs, devisees, and legatees
and that the court shall fix a time and place for hearing such petition and cause notice to be given to the
interested parties.
There can be no dispute that if the heirs were duly represented by counsel or by a guardian ad litem in the case of
the minors, the notice may be given to such counsel or guardian ad litem. In this case, however, only the surviving
spouse, SeveroManeclang, was notified through his counsel. Two of the heirs, Hector Maneclang and Oscar
Maneclang, who were then of legal age, were not represented by counsel. The remaining seven (7) children were
still minors with no guardian ad litem having been appointed to represent them.
Obviously then, the requirement of notice was not satisfied. The requisite set forth in the aforesaid
sections of Rule 89 are mandatory and essential. Without them, the authority to sell, the sale itself and the
order approving it would be null and void ab initio.
The reason behind this requirement is that the heirs, as the presumptive owners since they succeed to all the
rights and obligations of the deceased from the moment of the latters death,
are the persons directly affected by the sale or mortgage and therefore cannot be deprived of the property except
in the manner provided by law.
Consequently, for want of notice to the children, the Order of 9 September 1949 granting the application, the sale
in question of 4 October 1952 and the Order of 15 March 1954 approving the sale are all void ab initio as against
said children. virtuallawlibrary
While the order granting the motion for authority to sell was actually issued on 9 September 1949, the same was
secured during the incumbency of the then judicial administrator Pedro Feliciano. Even if it is to be assumed that
Mayor Fernandez and CouncilorGuadiz induced Oscar Maneclang to sell the property, the fact remains that there
was already the order authorizing the sale.Having been issued by a judge who was lawfully appointed to his
position, he was disputably presumed to have acted in the lawful exercise of jurisdiction and that his
official duty was regularly performed. It was not incumbent upon them to go beyond the order to find out if
indeed there was a valid motion for authority to sell. Otherwise, no order of any court can be relied upon by the
parties. Under Article 526 of the Civil Code, a possessor in good faith is one who is not aware that there exists in
his title or mode of acquisition any flaw which invalidates it; furthermore, mistake upon a doubtful or difficult
question of law may be the basis of good faith. It implies freedom from knowledge and circumstances which ought
to put a person on inquiry.
We find no circumstance in this case to have alerted the vendee, the City of Dagupan, to a possible flaw or
defect in the authority of the judicial administrator to sell the property.
SANDEJAS VS LINA - Probate jurisdiction covers all matters relating to the settlement of estates (Rules 74 & 86-91) and the probate of
wills (Rules 75-77) of deceased persons, including the appointment and the removal of administrators and
executors (Rules 78-85). Italso extends to matters incidental and collateral to the exercise of a probate
court's recognized powers such as selling, mortgaging or otherwise encumbering realty belonging to
the estate. Indeed, the rules on this point are intended to settle the estate in a speedy manner, so that
the benefits that may flow from such settlement may be immediately enjoyed by the heirs and the
beneficiaries
- In the present case, the Motion for Approval was meant to settle the decedent's obligation to respondent;
hence, that obligation clearly falls under the jurisdiction of the settlement court. To require respondent to file a
separate action -- on whether petitioners should convey the title to Eliodoro Sr.'s share of the disputed realty --
will unnecessarily prolong the settlement of the intestate estates of the deceased spouses.
- The suspensive condition did not reduce the conditional sale between Eliodoro Sr. and respondent to one that
was "not a definite, clear and absolute document of sale," as contended by petitioners. Upon the occurrence of
the condition, the conditional sale became a reciprocally demandable obligation that is binding upon the parties
Halili vs. Lloret (1954) The court ruled in the negative.
The parties knew well that the properties were subject to judicial administration and that the sale could have no
valid effect until it merits the approval of the court, so much so that before the lands were opened for negotiation,
the judicial administrator, with the conformity of the heirs, secured from the court an authorization to that effect, and
yet, as will be stated elsewhere, the terms that were made to appear in the document (Exhibit D) differ substantially
from the conditions prescribed in the authorization given by the court, which indicates that said document cannot
have any binding effect upon the parties nor serve as basis for an action for specific performance, as now
pretended by the plaintiff, in the absence of such judicial approval.
And the court finally found that the authorization calls for the sale of six parcels of land belonging to the estate, but
in the document as drawn up by Sauco it appears that only five parcels would be sold to the plaintiff, and the other
parcel to Ricardo Gonzales Lloret. Undoubtedly, this cannot legally be done for, as we know, the law prohibits that
a land subject of administration be sold to its judicial administrator.
Opulencia vs. CA Section 7 of Rule 89 of the Rules of Court is not applicable in this case because petitioner entered into the contract
to sell in her capacity as an heiress, not as an executrix or administratrix of the estate. In the contract, she
represented herself as the lawful owner and seller of the subject parcel of land.
The Court emphasized that hereditary rights are vested in the heir or heirs from the moment of the decedents
death. Petitioner, therefore, became the owner of her hereditary share the moment her father died. Thus, the lack
of judicial approval does not invalidate the contract to sell, because the petitioner has the substantive right to sell
the whole or a part of her share in the estate of her late father.
JOSEPHINE OROLA, vs. Section 2, Rule 89 of the Rules of Court provides that, upon application of the administrator and on written notice to
THE RURAL BANK OF the heirs, the court may authorize the administrator to mortgage so much as may be necessary of the real estate
PONTEVEDRA (CAPIZ), for the expenses of the administrator, or if it clearly appears that such mortgage would be beneficial to the persons
INC interested:
Sec. 2. When court may authorize sale, mortgage, or other encumbrance of realty to pay debts and legacies
through personality not exhausted. When the personal estate of the deceased is not sufficient to pay the debts,
expenses of administration, and legacies, or where the sale of such personal estate may injure the business or
other interests of those interested in the estate, and where a testator has not, otherwise, made sufficient provision
for the payment of such debts, expenses, and legacies, the court, on the application of the executor or
administrator and on written notice to the heirs, devisees, and legatees residing in the Philippines, may authorize
the executor or administrator to sell, mortgage, or otherwise, encumber so much as may be necessary of the real
estate, in lieu of personal estate, for the purpose of paying such debts, expenses, and legacies, if it clearly appears
that such sale, mortgage, or encumbrance would be beneficial to the persons interested; and if a part cannot be
sold, mortgaged, or otherwise encumbered without injury to those interested in the remainder, the authority may be
for the sale, mortgage, or other encumbrance of the whole of such real estate, or so much thereof as is necessary
or beneficial under the circumstances.
Section 7 of Rule 89 provides the rules to obtain court approval for such mortgage:
(a) The executor or administrator shall file a written petition setting forth the debts due from the deceased, the
expenses of administration, the legacies, the value of the personal estate, the situation of the estate to be sold,
mortgaged, or otherwise encumbered, and such other facts as show that the sale, mortgage, or other
encumbrance is necessary or beneficial;
(b) The court shall thereupon fix a time and place for hearing such petition, and cause notice stating the nature of
the petition, the reason for the same, and the time and place of hearing, to be given personally or by mail to the
persons interested, and may cause such further notice to be given, by publication or otherwise, as it shall deem
proper;
(c) If the court requires it, the executor or administrator shall give an additional bond, in such sum as the court
directs, conditioned that such executor or administrator will account for the proceeds of the sale, mortgage, or other
encumbrance;
(d) If the requirements in the preceding subdivisions of this section have been complied with, the court, by order
stating such compliance, may authorize the executor or administrator to sell, mortgage, or otherwise encumber, in
proper cases, such part of the estate as is deemed necessary, and in case of sale the court may authorize it to be
public or private, as would be most beneficial to all parties concerned. The executor or administrator shall be
furnished with a certified copy of such order;
(e) If the estate is to be sold at auction, the mode of giving notice of the time and place of the sale shall be
governed by the provisions concerning notice of execution sale;
(f) There shall be recorded in the registry of deeds of the province in which the real estate thus sold, mortgaged, or
otherwise encumbered is situated, a certified copy of the order of the court, together with the deed of the executor
or administrator for such real estate, which shall be as valid as if the deed had been executed by the deceased in
his lifetime.
After the real estate mortgage is executed in accordance with the foregoing regulations, the said deed must be
submitted for the consideration and approval or disapproval of the court. 37
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
JOSEPHINE Settled is the rule in this jurisdiction that when an order authorizing the sale or encumbrance of real property was
PAHAMOTANG and, vs. issued by the testate or intestate court without previous notice to the heirs, devisees and legatees as required by
THE PHILIPPINE the Rules, it is not only the contract itself which is null and void but also the order of the court authorizing the
NATIONAL BANK (PNB) 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.
RULE 90: DISTRIBUTION AND PARTITION OF THE ESTATE
MARCELO INVESTMENT We are not convinced. The settlement of Jose, Sr.s estate is not yet through and complete albeit it is at the
AND MANAGEMENT liquidation, partition and distribution stage.
CORPORATION, , vs. Rule 90 of the Rules of Court provides for the Distribution and Partition of the Estate. The rule provides in pertinent
JOSE T. MARCELO, JR., part:
Respondent. SECTION 1. When order for distribution of residue made. x x x
No distribution shall be allowed until 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 tobe fixed by the court, conditioned for the payment
of said obligations within such time as the court directs.
xxxx
The third assigned error raised by [Jose, Jr.] "that both trial judges erred in not appointing Special Administrator
Jose T. Marcelo, Jr. as Regular Administrator considering his tested probity and competence as special
administrator, his good name and integrity in accordance with the evidence," is devoid of merit, as already
discussed earlier.
The findings of the lower court in this regard deserve full consideration x x x.24
Undoubtedly, there has been a declaration that Jose, Jr. is unfit and unsuitable to administer his fathers estate.
To obviate further delay in the settlement of Jose, Sr.s estate, we emphasize that such is already at the liquidation
and distribution stage which project of partition had long been conformed to by the parties.
We note that this case has been unnecessarily prolonged and resulted in added litigation by the non-payment of
estate taxes which is the ultimate responsibility of the heirs having inchoate right in the estate, should there be
assets remaining, to be partitioned and distributed. The inheritance tax is an obligation of the estate, indirectly the
heirs:
SECTION 1. When order for distribution of residue made. When the debts, xxx, and inheritance tax, if any,
chargeable to the estate in accordance with law, have been paid, xxx.
No distribution shall be allowed until 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.
PATRICIA NATCHER, Applying these principles, an action for reconveyance and annulment of title with damages is a civil action,
petitioner, whereas matters relating to settlement of the estate of a deceased person such as advancement of property made
vs. HON. COURT by the decedent, partake of the nature of a special proceeding, which concomitantly requires the application of
OFAPPEALS specific rules as provided for in the Rules of Court.
Clearly, matters which involve settlement and distribution of the estate of the decedent fall within the exclusive
province of the probate court in the exercise of its limited jurisdiction.
Thus, under Section 2, Rule 90 of the Rules of Court, 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.
While it may be true that the Rules used the word "may", it is nevertheless clear that the same provision 11
contemplates a probate court when it speaks of the "court having jurisdiction of the estate proceedings".
Corollarily, the Regional Trial Court in the instant case, acting in its general jurisdiction, is devoid of authority to
render an adjudication and resolve the issue of advancement of the real property in favor of herein petitioner
Natcher, inasmuch as Civil Case No. 471075 for reconveyance and annulment of title with damages is not, to our
mind, the proper vehicle to thresh out said question. Moreover, under the present circumstances, the RTC of
Manila, Branch 55 was not properly constituted as a probate court so as to validly pass upon the question of
advancement made by the decedent Graciano Del Rosario to his wife, herein petitioner Natcher.
EMILIA FIGURACION- Neither method specifies a procedure for determining expenses chargeable to the decedents estate. While
GERILLA, vs Section 8 of Rule 69 provides that there shall be an accounting of the real propertys income (rentals and
CAROLINA VDA. DE profits) in the course of an action for partition, there is no provision for the accounting of expenses for which
FIGURACION, property belonging to the decedents estate may be answerable, such as funeral expenses, inheritance taxes
and similar expenses enumerated under Section 1, Rule 90 of the Rules of Court.
In a situation where there remains an issue as to the expenses chargeable to the estate, partition is inappropriate.
While petitioner points out that the estate is allegedly without any debt and she and respondents
are Leandro Figuracions only legal heirs, she does not dispute the finding of the CA that certain expenses
including those related to her fathers final illness and burial have not been properly settled. Thus, the heirs
(petitioner and respondents) have to submit their fathers estate to settlement because the determination of these
expenses cannot be done in an action for partition.
THE HEIRS OF Petitioners are correct in alleging that the issue regarding the impairment of legitime of Fortunato Doronio must
MARCELINO be resolved in an action for the settlement of estates of spouses Simeon Doronio and Cornelia Gante. It may not
DORONIO vs be passed upon in an action for reconveyance and damages. A probate court, in the exercise of its limited
HEIRS OF FORTUNATO jurisdiction, is the best forum to ventilate and adjudge the issue of impairment of legitime as well as other related
DORONIO, matters involving the settlement of estate.
An action for reconveyance with damages is a civil action, whereas matters relating to settlement of the estate of a
deceased person such as advancement of property made by the decedent, partake of the nature of a special
proceeding. Special proceedings require the application of specific rules as provided for in the Rules of Court.
Xxx Clearly, matters which involve settlement and distribution of the estate of the decedent fall within the
exclusive province of the probate court in the exercise of its limited jurisdiction.
Thus, under Section 2, Rule 90 of the Rules of Court, 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.
While it may be true that the Rules used the word may, it is nevertheless clear that the same provision
contemplates a probate court when it speaks of the court having jurisdiction of the estate proceedings. Xxx
IN THE MATTER OF THE The above argument is without merit. In probate proceedings, the court orders the probate of the will of the
INTESTATE ESTATE OF decedent (Rule 80, See. 5); grants letters of administration to the party best entitled thereto or to any qualified
THE DECEASED applicant (Id., Sec. 6); supervises and controls all acts of administration; hears and approves claims against the
MERCEDES CANO. estate of the deceased (Rule 87, See. 13); orders payment of lawful debts (Rule 89, Sec. 14); authorizes sale,
FLORANTE C. TIMBOL, mortgage or any encumbrance of real estate (Rule 90, Sec. 2); directs the delivery of the estate to those entitled
administrator-appellee, thereto (Rule 91, See. 1). It has been held that the court acts as a trustee, and as such trustee, should jealously
vs. guard the estate and see that it is wisely and economically administered, not dissipated. (Tambunting vs. San
JOSE CANO, oppositor- Jose, G.R. No. L-8152.)
appellant Even the contract of lease under which the appellant holds the agricultural lands of the intestate and which he
now seeks to protect, was obtained with the court's approval. If the probate court has the right to approve the
lease, so may it order its revocation, or the reduction of the subject of the lease. The matter of giving the
property to a lessee is an act of administration, also subject to the approval of the court. Of course, if the court
abuses its discretion in the approval of the contracts or acts of the administrator, its orders may be subject to
appeal and may be reversed on appeal; but not because the court may make an error may it be said that it lacks
jurisdiction to control acts of administration of the administrator.
LEONIDA MARI Vs. Appellants citation do not fit into the facts of the present case. Good faith affords protection only to purchaser
ISAAC BONILLA. for value from the registered owner. Deogracias Evangelista, defendants grantor is not a registered owner. The
land was and still is registered in the name of Casimiro Evangelista. In no way does the certificate of title state that
Deogracias owned the land: consequently defendant cannot summon to their aid the theory of indefeasibility of
Torrens title. There is nothing in the certificate and in the circumstances of the transaction which them in supposing
that they needed not looked beyond the title. If anything it should have put them on their guard cautioned them to
ascertain and verify that vendor was the only heir of his father that there was no debt and that the latter was the
sole owner of the parcel.
If as is probably the case defendants relied on the court order adjudicating to Deogracias Evangelista the entire
estate in the distribution held under Rule 74 of the Rules of Court their innocence avails them less as against the
true owners of the land. That was a summary settlement made on the faith and strength of the distributes self-
serving affidavit; section 4 of the above-mentioned rule provides that, "If it shall appear at anything within two
year after the settlement and distribution of an estate . . . that an heir or other person has been unduly deprived of
his lawful participation in the estate such heir or other person may compel the settlement of the estate in the court
in the manner herein provided for purpose of satisfying such participation." Far from shielding defendants against
loss the adjudication and the rule under which it was made gave them a clear warning that they were acting at their
peril. "A judicial partition in probate proceeding does not bind the heir who were not parties thereon. No
partition judicial or extrajudicial could add one iota or particle to the interest which the partitioner had during the
joint possession. Partition is of the nature of a conveyance of ownership and certainly none of the co-owner may
convey to the other more than his own true right. A judicial partition in probate proceeding is not final and
conclusive and not being of such definitive as to stop all mean of redress for a co-heir who has been deprived of
his lawful share such co-heir may still within the prescriptive period bring an action for reivindicacion in the
province where any of the real property of the deceased may be situated. Broad perspective of public policy are set
out in the opinion of the court in support of the wisdom of allowing a co-heir the benefits of the law of prescription
even after a partition judicial or extrajudicial has been had."(Lajom vs. Viola, 73 Phil.,563.)The judgment is affirmed
with cost of this appeal against appellants.
OSCAR C. More than the matters of injury and redress, what Rodrigo clearly aims to accomplish through his allegations of
REYES, petitioner, illegal acquisition by Oscar is the distribution of Anastacias shareholdings without a prior settlement of her estate
vs. an objective that, by law and established jurisprudence, cannot be done. The RTC of Makati, acting as a special
HON. REGIONAL TRIAL commercial court, has no jurisdiction to settle, partition, and distribute the estate of a deceased. A relevant
COURT OF MAKATI, provision Section 2 of Rule 90 of the Revised Rules of Court that contemplates properties of the decedent held
by one of the heirs declares:
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. [Emphasis
supplied.]
Worth noting are this Courts statements in the case of Natcher v. Court of Appeals:32
Matters which involve settlement and distribution of the estate of the decedent fall within the
exclusive province of the probate court in the exercise of its limited jurisdiction.
xxxx
It is clear that trial courts trying an ordinary action cannot resolve to perform acts pertaining to a
special proceeding because it is subject to specific prescribed rules. [Emphasis supplied.]
That an accounting of the funds and assets of Zenith to determine the extent and value of Anastacias
shareholdings will be undertaken by a probate court and not by a special commercial court is completely consistent
with the probate courts limited jurisdiction. It has the power to enforce an accounting as a necessary means to its
authority to determine the properties included in the inventory of the estate to be administered, divided up, and
distributed. Beyond this, the determination of title or ownership over the subject shares (whether belonging to
 Anastacia or Oscar) may be conclusively settled by the probate court as a question of collation or advancement.
We had occasion to recognize the courts authority to act on questions of title or ownership in a collation or
advancement situation in Coca v. Pangilinan33 where we ruled:
It should be clarified that whether a particular matter should be resolved by the Court of First Instance in
the exercise of its general jurisdiction or of its limited probate jurisdiction is in reality not a jurisdictional
question. In essence, it is a procedural question involving a mode of practice "which may be waived."
As a general rule, the question as to title to property should not be passed upon in the testate or intestate
proceeding. That question should be ventilated in a separate action. That general rule has qualifications
or exceptions justified by expediency and convenience.
Thus, the probate court may provisionally pass upon in an intestate or testate proceeding the question of
inclusion in, or exclusion from, the inventory of a piece of property without prejudice to its final
determination in a separate action.
Although generally, a probate court may not decide a question of title or ownership, yet if the
interested parties are all heirs, or the question is one of collation or advancement, or the parties
consent to the assumption of jurisdiction by the probate court and the rights of third parties are not
impaired, the probate court is competent to decide the question of ownership. [Citations omitted.
Emphasis supplied.]
In sum, we hold that the nature of the present controversy is not one which may be classified as an intra-corporate
dispute and is beyond the jurisdiction of the special commercial court to resolve. In short, Rodrigos complaint also
fails the nature of the controversy test.
QUASHA ANCHETA Section 1, Rule 90 of the Revised Rules of Court provides:
PEA AND NOLASCO Section 1. When order for distribution of residue made.
LAW OFFICE X x x
vs. No distribution shall be allowed until the payment of the obligations above mentioned has been made or
LCN CONSTRUCTION provided for, unless the distributees, or any of them, give a bond, in a sum to be fixed by the court,
CORP., respondent. conditioned for the payment of said obligations within such time as the court directs.
A perusal of the 12 June 2003 RTC Order would immediately reveal that it was not yet distributing the residue of
the estate.
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.
RICARDO S. SILVERIO, In the instant case, Nelia Silverio-Dee appealed the May 31, 2005 Order of the RTC on the ground that it
JR. - versus - ordered her to vacate the premises of the property located at No. 3 Intsia Road, Forbes Park, Makati City. On that
COURT OF APPEALS aspect the order is not a final determination of the case or of the issue of distribution of the shares of the
(Fifth Division) and NELIA heirs in the estate or their rights therein. It must be borne in mind that until the estate is partitioned, each heir
S. SILVERIO-DEE, only has an inchoate right to the properties of the estate, such that no heir may lay claim on a particular property.
Respondents. Additionally, the above provision must be viewed in the context that the subject property is part of an
estate and subject to intestate proceedings before the courts. It is, thus, relevant to note that in Rule 84, Sec. 2 of
the Rules of Court, the administrator may only deliver properties of the estate to the heirs upon order of the Court.
Similarly, under Rule 90, Sec. 1 of the Rules of Court, the properties of the estate shall only be distributed after the
payment of the debts, funeral charges, and other expenses against the estate, except when authorized by the
Court.

Verily, once an action for the settlement of an estate is filed with the court, the properties included therein
are under the control of the intestate court. And not even the administrator may take possession of any property
that is part of the estate without the prior authority of the Court.

In the instant case, the purported authority of Nelia Silverio-Dee, which she allegedly secured from
Ricardo Silverio, Sr., was never approved by the probate court. She, therefore, never had any real interest in the
specific property located at No. 3 Intsia Road, Forbes Park, Makati City. As such, the May 31, 2005 Order of the
RTC must be considered as interlocutory and, therefore, not subject to an appeal.
Thus, private respondent employed the wrong mode of appeal by filing a Notice of Appeal with the RTC.
Hence, for employing the improper mode of appeal, the case should have been dismissed.
INTESTATE ESTATE OF Of vital importance is the fact that appellants' motion to reopen, as well as the petition attached thereto, is based
THE LATE EMILIO T. on their claim that they are illegitimate children of the deceased. On the face of such claim they are legal heirs of
LOPEZ. SATURNINA M. the deceased and hence entitled to share in his estate. Having been omitted in the partition presented by the
VDA. DE LOPEZ, vs. judicial administratrix and approved by the Court, they were not bound thereby. The following statement of this
DAHLIA LOPEZ and ROY Court in Vda. de Marbella vs. Kilayko, et al., 104 Phil. 41, citing Lajom vs. Viola, 73 Phil. 563, expresses the
LOPEZ, general governing principle:
A judicial partition in probate proceedings (and the same thing can be said of partition in
intestate proceedings) does not bind the heirs who were not parties thereto. No partition, judicial
or extrajudicial, could add one iota or particle to the interest which the petitioner had during the
joint possession. Partition is of the nature of a conveyance of ownership and certainly none of
the co-owners may convey to the others more than his own true right. A judicial partition in
probate proceedings is not final and conclusive, and not being of such definitive character to
stop all means of redress for a co-heir who has been deprived of his lawful share, such co-heir
may still, within the prescriptive period, bring an action for reivindication in the province where
any of the real property of the deceased may be situated.
The motion to reopen was not too late. The court's order declaring the intestate proceeding closed did not become
final immediately upon its issuance. It was no different from judgments or orders in ordinary actions. Thus, Section
2 of Rule 72 provides that "in the absence of special provisions, the rules provided for in ordinary actions shall be,
as far as practicable, applicable in Special Proceedings." And judgments or orders in ordinary actions become final
after thirty (30) days from notice to the party concerned. In this case appellants' motion to reopen was led only
seventeen (17) days from the date of the order of closure. The remedy was therefore invoked on time.
(2) YES, The remedy is proper.
In Arroyo vs. Gerona, 54 Phil. 909, this Court said:
Taking up the question of jurisdiction of the court to entertain the appellants' motion (to annul
the deed of partition and the order approving it) filed on July 9, 1929, it must be remembered
that in Benedicto vs. Javellana (10 Phil. 197) this Court held that an demands and claims filed
by any heir, legatee or party in interest to a testate or intestate succession, shall be acted upon
and decided in the same special proceedings, and not in a separate action, and the judge who
has jurisdiction over the administration of the inheritance, and who, when the time comes, will
be called upon to divide and adjudicate it to the interested parties, shall take cognizance of all
such questions.
In our opinion the court that approved the partition and the agreement in ratification thereof may
annul both whenever, as it is here alleged, the approval was obtained by deceit or fraud, and
the petition must be filed in the course of the intestate proceedings, for it is generally admitted
that the probate courts are authorized to vacate any decree or judgment procured by fraud, not
only while the proceedings in the course of which it was issued are pending, but even, as in this
case within a reasonable time thereafter. (as reiterated in Yusay vs. Yusay Gonzales, 106 Phil.
46).
More to the point here is the following statement of this Court in Ramos vs. Ortuzar, 89 Phil. 730:
The only instance that we can think of in which a party interested in a probate proceeding may
have a final liquidation set aside is when he is left out by reason of circumstances beyond his
control or through mistake or inadvertence not impotable to negligence. Even then, the better
practice to secure relief is reopening of the same case by proper motion within the reglementary
period, instead of an independent action the effect of which, if successful, would be, as in the
instant case, for another court or judge to throw out a decision or order already final and
executed and reshuffle properties long ago distributed and disposed of.
SALUD DIVINAGRACIA, We hold that the probate court erred in reopening the intestate proceeding, a proceeding in rem of which Camilo
EMILIA DIVINAGRACIA, Divinagracia is deemed to have had constructive notice. The order closing it was already final and executory. The
DOLORES motion to reopen it was not filed within the thirty-day reglementary period counted from the date the order of
DIVINAGRACIA, closure was served on the administratrix. The closure order could not be disturbed anymore, where the motion to
ROSARIO DIVINAGRACIA reopen the intestate proceeding was filed within the reglementary period).
vs. JUDGE VALERIO V. Moreover, the order for the reopening of the intestate proceeding was predicated on the false assumption that
ROVIRA there had been no liquidation of the conjugal partnership and no declaration of heirs. The truth is that the project of
partition and distribution, with final accounting, which was submitted by the administratrix and approved by the
probate court, contained a liquidation of the conjugal partnership and a statement as to who were the decedent's
heirs and what were their respective hereditary shares. That project of partition was a substantial compliance with
articles 179 et sequentia of the Civil Code.
It is true that under the aforequoted section 1 of Republic Act No. 4834 a case involving paternity and
acknowledgment may be ventilated as an incident in the intestate or testate proceeding. But that legal provision
presupposes that such an administration proceeding is pending or existing and has not been termindated.
JUANITA LOPEZ GUILAS, The probate court loses jurisdiction of an estate under administration only after the payment of all the debts and the
petitioner, remaining estate delivered to the heirs entitled to receive the same. The finality of the approval of the project of
vs. JUDGE OF THE partition by itself alone does not terminate the probate proceeding. As long as the order of the distribution of the
COURT OF FIRST estate has not been complied with, the probate proceedings cannot be deemed closed and terminated because a
INSTANCE OF judicial partition is not final and conclusive and does not prevent the heir from bringing an action to obtain his
PAMPANGA share, provided the prescriptive period therefor has not elapsed. The better practice, however, for the heir who has
not received his share, is to demand his share through a proper motion in the same probate or administration
proceedings, or for re-opening of the probate or administrative proceedings if it had already been closed, and not
through an independent action, which would be tried by another court or Judge which may thus reverse a decision
or order of the probate on intestate court already final and executed and re-shuffle properties long ago distributed
and disposed of.
Section 1 of Rule 90 of the Revised Rules of Court of 1964 as worded, which secures for the heirs or legatees the
right to "demand and recover their respective shares from the executor or administrator, or any other person
having the same in his possession", re-states the aforecited doctrines.
THE HEIRS OF THE LATE The probate judgment of 13 November 1972, long final and undisturbed by any attempt to unsettle it, had inevitably
JESUS FRAN and passed beyond the reach of the court below to annul or set the same aside, by mere motion, on the ground that the
CARMEN MEJIA will is a forgery. Settled is the rule that the decree of probate is conclusive with respect to the due execution of the
RODRIGUEZ, petitioners, will and it cannot be impugned on any of the grounds authorized by law, except that of fraud, in any separate or
vs. HON. BERNARDO LL. independent action or proceeding. 50 We wish also to advert to the related doctrine which holds that final judgments
SALAS, are entitled to respect and should not be disturbed; otherwise, there would be a wavering of trust in the courts.
The non-distribution of the estate, which is vigorously denied by the petitioners, is not a ground for the re-opening
of the testate proceedings. A seasonable motion for execution should have been filed. In De Jesus vs.
Daza, 57 this Court ruled that if the executor or administrator has possession of the share to be delivered, the
probate court would have jurisdiction within the same estate proceeding to order him to transfer that possession to
the person entitled thereto. This is authorized under Section 1, Rule 90 of the Rules of Court. However, if no
motion for execution is filed within the reglementary period, a separate action for the recovery of the shares would
be in order. As We see it, the attack of 10 September 1973 on the Order was just a clever ploy to give asemblance
of strength and substance to the Omnibus Motion for Reconsideration by depicting therein a probate court
committing a series of fatal, substantive and procedural blunders, which We find to be imaginary, if not deliberately
fabricated.
CELEDONIA SOLIVIO, It is the order of distribution directing the delivery of the residue of the estate to the persons entitled thereto that
petitioner, brings to a close the intestate proceedings, puts an end to the administration and thus far relieves the administrator
vs. THE HONORABLE from his duties.
COURT OF APPEALS In the interest of orderly procedure and to avoid confusing and conflicting dispositions of a decedent's estate, a
court should not interfere with probate proceedings pending in a co-equal court. Thus, did we rule in Guilas v.
Judge of the Court of First Instance of Pampanga, where a daughter filed a separate action to annul a project of
partition executed between her and her father in the proceedings for the settlement of the estate of her mother:
The probate court loses jurisdiction of an estate under administration only after the payment of all the debts and
the remaining estate delivered to the heirs entitled to receive the same. The finality of the approval of the
project of The probate court, in the exercise of its jurisdiction to make distribution, has power to determine the
proportion or parts to which each distributed is entitled. ... The power to determine the legality or illegality of the
testamentary provision is inherent in the jurisdiction of the court making a just and legal distribution of the
inheritance. ... To hold that a separate and independent action is necessary to that effect, would be contrary to
the general tendency of the jurisprudence of avoiding multiplicity of suits; and is further, expensive, dilatory,
and impractical.
A judicial declaration that a certain person is the only heir of the decedent is exclusively within the range of the
administratrix proceedings and can not properly be made an independent action.
A separate action for the declaration of heirs is not proper.
partition by itself alone does not terminate the probate proceeding. As long as the order of the distribution of the
estate has not been complied with, the probate proceedings cannot be deemed closed and terminated because
a judicial partition is not final and conclusive and does not prevent the heirs from bringing an action to obtain
his share, provided the prescriptive period therefore has not elapsed. The better practice, however, for the heir
who has not received his share, is to demand his share through a proper motion in the same probate or
administration proceedings, or for reopening of the probate or administrative proceedings if it had already been
closed, and not through an independent action, which would be tried by another court or Judge which may thus
reverse a decision or order of the probate or intestate court already final and executed and re-shuffle properties
long ago distributed and disposed of.
LUISA LYON NUAL, In the case of Manning International Corporation v. NLRC, We held that ". . ., nothing is more settled in the law
herein represented by than that when a final judgment becomes executory, it thereby becomes immutable and unalterable. The judgment
ALBERT NUAL et al may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an
vs.CA and EMMA LYON erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by the
DE LEON Court rendering it or by the highest Court of land. The only recognized exceptions are the correction of clerical
errors or the making of so-called nunc pro tunc entries which cause no prejudice to any party, and, of course,
where the judgment is void."
Furthermore, "(a)ny amendment. or alteration which substantially affects a final and executory judgment is null and
void for lack of jurisdiction, including the entire proceedings held for that purpose."
In the case at bar, the decision of the trial court in Civil Case No. 872 has become final and executory. Thus, upon
its finality, the trial judge lost his jurisdiction over the case. Consequently, any modification that he would make, as
in this case, the inclusion of Mary Lyon Martin would be in excess of his authority.
The remedy of Mary Lyon Martin is to file an independent suit against the parties in Civil Case No. 872 and all
other heirs for her share in the subject property, in order that all the parties in interest can prove their respective
claims. WHEREFORE, the petition is GRANTED.
RULE 98: Trustees
RESURRECCION DE To begin with, this document was executed by appellants about two years and six months from the time they
LEON, ET AL acquired title to the lands by virtue of the donation inter vivos executed in their favor by their foster mother Juana
vs. EMILIANA MOLO- Juan and six months after the death of the donor. There is nobody who could cajole them to execute it, nor is there
PECKSON, ET AL any force that could coerce them to make the declaration therein expressed, except the constraining mandate of
their conscience to comply with "the obligations repeatedly told to Emiliana Molo Peckson," one of appellants,
before their death, epitomized in the "verbal wish of the late Don Mariano Molo and the late Doa Molo" to convey
after their death said ten parcels of land at P1.00 a parcel to appellees. In fact, the acknowledgement appended to
the document they subscribed states that it was "their own free act and voluntary deed."
Indeed, it is to be supposed that appellants understood and comprehended the legal import of said documents
when they executed it more so when both of them had studied in reputable centers of learning, one being a
pharmacist and the other a member of the bar.
That the document represents a recognition of pre-existing trust or a declaration of an express trust
impressed on the ten parcels of land in question is evident.
A declaration of trust has been defined as an act by which a person acknowledges that the property, title
to which he holds, is held by him for the use of another. This is precisely the nature of the will of the donor: to
convey the titles of the lands to appellants with the duty to hold them in trust for the appellees. Appellants oblingly
 complied with this duty by executing the document under consideration.
True it is that to establish a trust the proof must be clear, satisfactory and convincing. It cannot rest on
vague, uncertain evidence, or on a loose, equivocal or indefinite declaration ; but here the document in
question clearly and unequivocally declares the existence of the trust even if the same was executed subsequent
to the death of the trustor, Juana Juan, for it has been held that the right creating or declaring a trust need not
be contemporaneous or inter-parties. It was even held that an express trust maybe declared by a writing
made after the legal estate has been vested in the trustees.
The contention, therefore, of appellants that the will and the donation executed by their predecessors-in-interest
were absolute for it did not contain a hint that the lots in question will be held in trust by them does not merit weight
because the fact that an express trust was created by a deed which was absolute on its face may be shown by a
writing separate from the deed itself.
The fact that the beneficiaries were not notified of the existence of the trust or that the latter have not been given
an opportunity to accept it is of no importance, for it is not essential to the existence of a valid trust and to the right
of the beneficiaries to enforce the same that they had knowledge thereof the time of its creation.
Neither is it necessary that the beneficiary should consent to the creation of the trust. In fact it has been held that in
case of a voluntary trust the assent of the beneficiary is not necessary to render itvalid because as a general rule
acceptance by the beneficiary is presumed (Article 1446, new Civil Code; Cristobal v. Gomez, 50 Phil. 810).
It is true, as appellants contend, that the alleged declaration of trust was revoked, and having been revoked it
cannot be accepted, but the attempted revocation did not have any legal effect. The rule is that in the absence of
any reservation of the power to revoke a voluntary trust is irrevocable without the consent of the
beneficiary. It cannot be revoked by the creator alone, nor by the trustee. Here, there is no such reservation.
In sum the SC held: (1) that the document executed on December 5, 1950 creates an express trust in favor of
appellees; (2) that appellants had no right to revoke it without the consent of the cestui que trust; (3) that appellants
must render an accounting of the fruits of the lands from the date the judgement became final and executory; and
(4)that appellants should free said lands from all liens and encumbrances.
TRUSTEESHIP OF THE Said Section 7 of Rule 86 refers only to "executors or administrators" of the estate of deceased persons, and does
MINORS all surnamed not necessarily apply to trustees. It is true that some functions of the former bear a close analogy with those of the
PEREZ Y TUASON, PNB, latter.
Judicial Guardian, J. Moreover, a trustee, like, an executor or administrator, holds an office of trust, particularly when, as in the case of
ANTONIO appellee herein, the trustee acts as such under judicial authority. Hence, generally, the policy set forth in said
ARANETA, trustee- Section 7 of Rule 86 basically sound and wise as it is should be applicable to trustees. The duties of
appellee, vs. ANTONIO M. executors or administrators are, however, fixed and/or limited by law, whereas those of trustee of an express trust
PEREZ, judicial guardian- like that which we have under consideration are, usually, governed by the intention of the trustor or of the
appellant.. parties, if established by contract (Art. 1441, Civil Code of the Philippines). Besides, the duties of trustees may
cover a much wider range than those of executors or administrators of the estate of deceased persons.
Again the application of Section 7 of Rule 86 to all trusteeships without distinction may dissuade deserving persons
from accepting the position of trustee and consequently have a deterrent effect upon the establishment of trusts, at
a time when a sizeable part of the burden to undertake important and even essential activities in advanced and/or
developing communities or states, particularly in the field of education, science and social welfare, is borne by
foundations or other similar organizations based upon the principles of trust.
We believe it, therefore, to be the better policy to acknowledge the authority of courts of justice to exercise a sound
judgment in determining, in the light of the peculiar circumstances obtaining in each case, whether or not a trustee
shall be allowed to pay attorney's fees and charge the same against the trust estate, independently of his
compensation as a trustee.
In the case at bar, considering that the appellee was merely defending himself in the proceedings that required the
services of counsel; that in each case the stand taken by the appellee was upheld by the court; that the will
creating the trust and designating the appellee as trustee explicitly grants him the right to collect for his services
such reasonable fees; that, in view of the nature of the relations between the trustor and the trustee, on the one
hand, and the trustor and appellant on the other, there can be little doubt but that the trustor would have
sanctioned the payment of the attorney's fees involved in this incident; and that it may have been more costly for
the trust estate to engage the services of a law firm other than that of Araneta & Araneta, we are not prepared to
hold that the lower court has erred in authorizing the payment of said attorney's fees by herein appellee.
For the rest, it is well settled that "a trustee may be indemnified out of the trust estate for his expenses in rendering
and proving his accounts and for costs and counsel fees" in connection therewith (54 Am. Jur. 415-416), apart from
the fact that the nature of the professional services in question appeared in the records before the lower court and
that the amount of P5,500 fixed by the same as compensation for such services is not excessive.
In G.R. No. L-16186 Appellee had bought for the trust estate, through a broker, a total of 118 common shares of
stock of the Philippine-American Drug Co. at P100 each, and that, upon submission of appellee's accounts for said
period, appellant objected to the items of expenses relative to the acquisition of said common shares, upon the
ground that the investment therein is "unwise in that (the operation of) said company has not, to our knowledge,
proved profitable and unlawful in that it is actually an act of self-dealing between the trustee and the beneficiaries
of the trust", because the former (appellee) is, also, a stockholder of said company.
Issue: WON the purchase of certain shares of stock nude by the appellee for the benefit of the trusteeship merits
judicial approval.
Held: YES It is not disputed that appellee holds, in his individual capacity, 199 out of 30,000 common shares of
stock of the Philippine-American Drug Co., whereas his children own 270 out of 5,000 preferred shares of stock of
the same enterprise. As a consequence, the interest of appellees and his children in said company is not such as
to warrant the charge that the purchase of 118 common stocks for the trust estate amounts to self-dealing by the
appellee with himself. What is more, said purchase by the trustee may be considered as an indication that he had
displayed in the management of the trust estate the same interest he had in the protection of his own property.
WHEREFORE, the orders appealed from are hereby affirmed.
PABLO LORENZO, as Issue: In determining the net value of the estate subject to tax, is it proper to deduct the compensation
trustee of the estate of due to trustees?
Thomas Hanley, Held: Certain items are required by law to be deducted from the appraised gross in arriving at the net value of the
deceased, plaintiff- estate on which the inheritance tax is to be computed.
appellant, vs. JUAN In the case at bar, the defendant and the trial court allowed a deduction of only P480.81. This sum represents the
POSADAS, JR expenses and disbursements of the executors until March 10, 1924, among which were their fees and the proven
debts of the deceased. The plaintiff contends that the compensation and fees of the trustees, which aggregate
P1,187.28, should also be deducted under section 1539 of the Revised Administrative Code which provides, in
part, as follows: "In order to determine the net sum which must bear the tax, when an inheritance is concerned,
there shall be deducted, in case of a resident, . . . the judicial expenses of the testamentary or intestate
proceedings, . . . ."
A trustee, no doubt, is entitled to receive a fair compensation for his services. But from this it does not follow that
the compensation due him may lawfully be deducted in arriving at the net value of the estate subject to tax.
There is no statute in the Philippines which requires trustees' commissions to be deducted in determining the net
value of the estate subject to inheritance tax.
Furthermore, though a testamentary trust has been created, it does not appear that the testator intended that the
duties of his executors and trustees should be separated. On the contrary, in paragraph 5 of his will, the testator
expressed the desire that his real estate be handled and managed by his executors until the expiration of the
period of ten years therein provided. Judicial expenses are expenses of administration but, in State vs. Hennepin
County Probate Court it was said:
". . . The compensation of a trustee, earned, not in the administration of the estate, but in the
management thereof for the benefit of the legatees or devises, does not come properly within the class or
reason for exempting administration expenses. . . . Service rendered in that behalf have no reference to
closing the estate for the purpose of a distribution thereof to those entitled to it, and are not required or
essential to the perfection of the rights of the heirs or legatees. . . . Trusts . . . of the character of that here
before the court, are created for the benefit of those to whom the property ultimately passes, are of
voluntary creation, and intended for the preservation of the estate. No sound reason is given to support
the contention that such expenses should be taken into consideration in fixing the value of the estate for
the purpose of this tax."
Issue: Has there been delinquency in the payment of inheritance tax?
Held: Yes. The plaintiff correctly states that the liability to pay a tax may arise at a certain time and the tax may be
paid within another given time. As stated by this court, "the mere failure to pay one's tax does not render one
delinquent until and unless the entire period has elapsed within which the taxpayer is authorized by law to make
such payment without being subjected to the payment of penalties for failure to pay his taxes within the prescribed
period."
The defendant maintains that it was the duty of the executor to pay the inheritance tax before the delivery of the
decedent's property to the trustee. Stated otherwise, the defendant contends that delivery to the trustee was
delivery to the cestui que trust, the beneficiery in this case, within the meaning of the first paragraph of subsection
(b) of section 1544 of the Revised Administrative Code.
This contention is well taken and is sustained. The appointment of Moore as trustee was made by the trial court in
conformity with the wishes of the testator as expressed in his will. It is true that the word "trust" is not
mentioned or used in the will but the intention to create one is clear. No particular or technical words are
required to create a testamentary trust.
The words "trust" and "trustee", though apt for the purpose, are not necessary. In fact, the use of these two words
is not conclusive on the question that a trust is created. "To create a trust by will the testator must indicate in the
will his intention so to do by using language sufficient to separate the legal from the equitable estate, and with
sufficient certainty designate the beneficiaries, their interest in the trust, the purpose or object of the trust, and the
property or subject matter thereof.
Stated otherwise, to constitute a valid testamentary trust there must be a concurrence of three
circumstances: (1) Sufficient words to raise a trust; (2) a definite subject; (3) a certain or ascertain object; statutes
in some jurisdictions expressly or in effect so providing."
There is no doubt that the testator intended to create a trust. He ordered in his will that certain of his properties be
kept together undisposed during a fixed period, for a stated purpose. The probate court certainly exercised sound
judgment in appointment a trustee to carry into effect the provisions of the will (see sec. 582, Code of Civil
Procedure).
Moore became trustee on March 10, 1924. On that date trust estate vested in him (sec. 582 in relation to sec. 590,
Code of Civil Procedure). The mere fact that the estate of the deceased was placed in trust did not remove it from
the operation of our inheritance tax laws or exempt it from the payment of the inheritance tax.
The corresponding inheritance tax should have been paid on or before March 10, 1924, to escape the penalties of
the laws.
This is so for the reason already stated that the delivery of the estate to the trustee was in esse delivery of the
same estate to the cestui que trust, the beneficiary in this case.
A trustee is but an instrument or agent for the cestui que trust. When Moore accepted the trust and took possesson
of the trust estate he thereby admitted that the estate belonged not to him but to his cestui que trust . He did not
acquire any beneficial interest in the estate. He took such legal estate only as the proper execution of the trust
required and, his estate ceased upon the fulfillment of the testator's wishes. The estate then vested absolutely in
the beneficiary.
It results that the estate which plaintiff represents has been delinquent in the payment of inheritance tax
and, therefore, liable for the payment of interest and surcharge provided by law in such cases.
The delinquency in payment occurred on March 10, 1924, the date when Moore became trustee. The interest due
should be computed from that date and it is error on the part of the defendant to compute it one month later. The
provisions cases is mandatory, and neither the Collector of Internal Revenuen or this court may remit or decrease
such interest, no matter how heavily it may burden the taxpayer.
EMILIA O'LACO and Yes. trust relations between parties may either be express or implied. Express trusts are those which are
HUCO LUNA, petitioners, created by the direct and positive acts of the parties, by some writing or deed, or will, or by words evincing an
vs. VALENTIN CO CHO intention to create a trust.
CHIT, O LAY KIA and Implied trusts are those which, without being express, are deducible from the nature of the transaction as matters
COURT OF APPEALS, of intent, or which are super induced on the transaction by operation of law as matters of equity, independently of
respondents. the particular intention of the parties. Implied trusts may either be resulting or constructive trusts, both coming into
 being by operation of law. Resulting trusts are based on the equitable doctrine that valuable consideration and not
legal title determines the equitable title or interest and are presumed always to have been contemplated by the
parties. They arise from the nature or circumstances of the consideration involved in a transaction whereby one
person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of
another. On the other hand, constructive trusts are created by the construction of equity in order to satisfy the
demands of justice and prevent unjust enrichment. They arise contrary to intention against one who, by fraud,
duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good
conscience, to hold. In this case, the court cited five instances that prove a trust relationship. First, sps O Lay
Kia were in possession of all the pertinent documents of the sale from the beginning until the end of
the transaction. Second, there is a previous case of similar facts involving O lay kia and her brother on a different
parcel of land decided in her favor. Third, the circumstances leading to Emilia acquiring a title to the land was
dubious. Fourth, until the sale to the church, Emilia actually recognized the trust(by promising to take care of the
transfer to the actual owners as soon as she is able.)
A resulting trust is repudiated if the following requisites concur: (a)the trustee has performed unequivocal acts of
repudiation amounting to an ouster of the cestui qui trust; (b) such positive acts of repudiation have been made known
to the cestui qui trust; and, (c) the evidence thereon is clear and convincing. And finally, fifth, Emilia actually had no source
of income to show how it was possible for her to purchase the land.
Torbela vs. Spouses ON EXPRESS TRUST
Rosario GR 140528 Dec. "x x x.
07, 2011 . There was an express trust between the Torbela siblings and Dr. Rosario.
Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in another. It is a fiduciary
relationship that obliges the trustee to deal with the property for the benefit of the beneficiary. Trust relations
between parties may either be express or implied. An express trust is created by the intention of the trustor or of
the parties, while an implied trust comes into being by operation of law.[61]
Express trusts are created by direct and positive acts of the parties, by some writing or deed, or will, or by words
either expressly or impliedly evincing an intention to create a trust. Under Article 1444 of the Civil Code, [n]o
particular words are required for the creation of an express trust, it being sufficient that a trust is clearly
intended.[62] It is possible to create a trust without using the word trust or trustee. Conversely, the mere fact
that these words are used does not necessarily indicate an intention to create a trust. The question in each case is
whether the trustor manifested an intention to create the kind of relationship which to lawyers is known as trust. It is
immaterial whether or not he knows that the relationship which he intends to create is called a trust, and whether or
not he knows the precise characteristics of the relationship which is called a trust.[63]
In Tamayo v. Callejo,[64] the Court recognized that a trust may have a constructive or implied nature in the
beginning, but the registered owners subsequent express acknowledgement in a public document of a previous
sale of the property to another party, had the effect of imparting to the aforementioned trust the nature of an
express trust. The same situation exists in this case. When Dr. Rosario was able to register Lot No. 356-A in his
name under TCT No. 52751 on December 16, 1964, an implied trust was initially established between him and the
Torbela siblings under Article 1451 of the Civil Code, which provides:
ART. 1451. When land passes by succession to any person and he causes the legal title to be put in the name of
another, a trust is established by implication of law for the benefit of the true owner.
Dr. Rosarios execution of the Deed of Absolute Quitclaim on December 28, 1964, containing his express
admission that he only borrowed Lot No. 356-A from the Torbela siblings, eventually transformed the nature of the
trust to an express one. The express trust continued despite Dr. Rosario stating in his Deed of Absolute Quitclaim
that he was already returning Lot No. 356-A to the Torbela siblings as Lot No. 356-A remained registered in Dr.
Rosarios name under TCT No. 52751 and Dr. Rosario kept possession of said property, together with the
improvements thereon.
RULE 91: Escheats
REPUBLIC OF THE We rule for the petitioner. Escheat is a proceeding, unlike that of succession or assignment, whereby the state, by
PHILIPPINES represented virtue of its sovereignty, steps in and claims the real or personal property of a person who dies intestate leaving no
by the REGISTER OF heir. In the absence of a lawful owner, a property is claimed by the state to forestall an open "invitation to self -
DEEDS OF PASAY CITY, service by the first comers."[5] Since escheat is one of the incidents of sovereignty, the state may, and usually
petitioner, vs. COURT OF does, prescribe the conditions and limits the time within which a claim to such property may be made. The
APPEALS (SPECIAL procedure by which the escheated property may be recovered is generally prescribed by statue, and a time limit is
FORMER 3RD DIVISION) imposed within which such action must be brought. In this jurisdiction, a claimant to an escheated property must
file his claim "within five (5) years from the date of such judgment, such person shall have possession of and title to
the same, or if sold, the municipality or city shall be accountable to him for the proceeds, after deducting the estate;
but a claim not made shall be barred forever."[6] The 5-year period is not a device capriciously conjured by the
state to defraud any claimant; on the contrary, it is decidedly prescribed to encourage would-be claimants to be
punctilious in asserting their claims, otherwise they may lose them forever in a final judgment. Incidentally, the
question may be asked: Does herein private respondent, not being an heir but allegedly a donee, have the
personality to be a claimant within the purview of Sec. 4, Rule 91, of the Revised Rules of Court? In this regard, we
agree with the Solicitor General that the case of Municipal Council of San Pedro, Laguna v. Colegio de San Jose,
Inc.,[7] is applicable at least insofar as it concerns the Court's discussion on who is an "interested party" in an
escheat proceeding -
In a special proceeding for escheat under sections 750 and 751 the petitioner is not the sole and exclusive
interested party. Any person alleging to have a direct right or interest in the property sought to be escheated is
likewise an interested party and may appear and oppose the petition for escheat. In the present case, the Colegio
de San Jose, Inc. and Carlos Young appeared alleging to have a material interest in the Hacienda de San Pedro
Tunasan; the former because it claims to be the exclusive owner of the hacienda, and the latter because he claims
to be the lessee thereof under a contract legally entered with the former (underscoring supplied).
In the instant petition, the escheat judgment was handed down by the lower court as early as 27 June 1989 but it
was only on 28 January 1997, more or less seven (7) years after, when private respondent decided to contest the
escheat judgment in the guise of a petition for annulment of judgment before the Court of Appeals. Obviously,
private respondent's belated assertion of her right over the escheated properties militates against recovery. A
judgment in escheat proceedings when rendered by a court of competent jurisdiction is conclusive against all
 persons with actual or constructive notice, but not against those who are not parties or privies thereto. As held in
Hamilton v. Brown,[8] "a judgment of escheat was held conclusive upon persons notified by advertisement to all
persons interested. Absolute lack on the part of petitioners of any dishonest intent to deprive the appellee of any
right, or in any way injure him, constitutes due process of law, proper notice having been observed." With the lapse
of the 5-year period therefore, private respondent has irretrievably lost her right to claim and the supposed
"discovery of the deeds of donation" is not enough justification to nullify the escheat judgment which has long
attained finality. In the mind of this Court the subject properties were owned by the decedent during the time that
the escheat proceedings were being conducted and the lower court was not divested of its jurisdiction to escheat
them in favor of Pasay City notwithstanding an allegation that they had been previously donated. We recall that a
motion for intervention was earlier denied by the escheat court for failure to show "valid claim or right to the
properties in question."[9] Where a person comes into an escheat proceeding as a claimant, the burden is on such
intervenor to establish his title to the property and his right to intervene. A fortiori, the certificates of title covering
the subject properties were in the name of the decedent indicating that no transfer of ownership involving the
disputed properties was ever made by the deceased during her lifetime. In the absence therefore of any clear and
convincing proof showing that the subject lands had been conveyed by Hankins to private respondent Solano, the
same still remained, at least before the escheat, part of the estate of the decedent and the lower court was right not
to assume otherwise. The Court of Appeals therefore cannot perfunctorily presuppose that the subject properties
were no longer part of the decedent's estate at the time the lower court handed down its decision on the strength of
a belated allegation that the same had previously been disposed of by the owner. It is settled that courts decide
only after a close scrutiny of every piece of evidence and analyze each case with deliberate precision and
unadulterated thoroughness, the judgment not being diluted by speculations, conjectures and unsubstantiated
assertions.
TAN VS CITY OF DAVAO With respect to the argument that only the Republic of the Philippines, represented by the Solicitor-General, may
file the escheat petition under Section 1, Rule 91 of the Revised (1964) Rules of Court, the CA correctly ruled that
the case did not come under Rule 91 because the petition was filed on September 12,1962, when the applicable
rule was still Rule 92 of the 1940 Rules of Court. Rule 91 of the Revised Rules of Court, which provides that only
the Republic of the Philippines, through the Solicitor General, may commence escheat proceedings, did not take
effect until January 1, 1964. Although the escheat proceedings were still pending then, the Revised Rules of Court
could not be applied to the petition because to do so would work injustice to the City of Davao.
The Court of Appeals did not err in affirming the trial court's ruling that Dominga Garcia and her heirs may be
presumed dead in the escheat proceedings as they are, in effect, proceedings to settle her estate. Indeed, while a
petition instituted for the sole purpose of securing a judicial declaration that a person is presumptively dead cannot
be entertained if that were the only question or matter involved in the case, the courts are not barred from declaring
an absentee presumptively dead as an incident of, or in connection with, an action or proceeding for the settlement
of the intestate estate.
EMILIA DIVINO vs. RULING: Publication of the notice of hearing is a jurisdictional requisite, non-compliance with which affects the
CEFERINO HILARIO validity of the proceedings
In the case under consideration, the procedure fixed by section 750 has neither been followed nor complied with,
wherefore, we hold that the respondent judge and the Court of First Instance of Davao did not acquire jurisdiction
either to take cognizance of the escheat case or to promulgate the order of August 24, 1935, whereby the sum of
P5,000 was escheated or adjudicated the municipality of Guianga. No petition was filed either by the required
publication made which was the essential step which should have conferred jurisdiction.
The petition is granted. The respondent judge or the presiding judge of the Court of First Instance of Davao is
instructed to immediately order the municipal president and the municipal council of the municipality of Guianga,
Province of Davao, to return forthwith the sum of P5,000 and deposit the same with the clerk of said court for
distribution among the legal heirs of the deceased Tan Chay. This is without prejudice to the petitioner's right, in
her capacity as administratrix, to present in the special proceeding No. 314 an amended petition for the
appointment of a regular administrator and that the amount of P5,000 with other properties left by the deceased
Tan Chay be distributed among his heirs, upon payment of his legal debts that might be established and other
expenses of administration.
The costs of this proceeding shall be assessed against the respondent municipality of Guianga. So ordered.
REPUBLIC OF THE ISSUE: 1. WON Pres. Roxas Rural Bank is a real party in interest in the escheat proceedings.
PHILIPPINES, petitioner, 2. WON venue of action in Civil Case No. 73707 has been properly laid in the City of Manila.
vs. 3. WON Section 2(b), Rule 4 of the Revised Rules of Court on venue, likewise, governs escheat
COURT OF FIRST proceedings instituted by the Republic in the Court of First Instance of Manila.
INSTANCE OF MANILA, RULING: We find these contentions unmeritorious.
1. A "real party in interest" has been defined as the party who would be benefitted or injured by the
judgment of the suit or the party entitled to avail of the suit. Under Section 2, Rule 3 of the Rules of
Court, private respondent bank is a real party in interest as its presence in the action is necessary for a
complete determination and settlement of the questions involved therein. Private respondent bank being
a real party in interest, it may and can file a motion to dismiss on the ground of improper venue.
2. The venue is not properly laid. The first sentence of Section 3 of Act No. 3936 directs the Attorney
General, now Solicitor General, to commence an action or actions in the name of the People of the
Philippines in the Court of First Instance of the province where the bank is located. The phrase "or
actions" in this section is very significant. It manifests awareness on the part of the legislators that a
single action to cover all banks wherever located in the Philippines would not be legally feasible in view of
the venue prescribed for such action under the same section, i.e., the province where the bank is located.
Thus, the addition of the last sentence, which the lower court had correctly interpreted to mean "that for
escheat of unclaimed bank balances all banks located in one and the same province where the Court of
First Instance concerned is located may be made parties defendant "in one action" was clearly intended
to save on litigation and publication expenses, but certainly not as authority for the lumping together of all
banks wherever found in the Philippines in one single escheat proceedings.
3. Section 2(b) of Rule 4 of the Revised Rules of Court cannot govern escheat proceedings principally
because said section refers to personal actions. Escheat proceedings are actions in rem which must be
brought in the province or city where the rem in this case the dormant deposits, is located.
In re Liquidation of the RULING: The so-called current account and savings deposits have lost their character of deposits, properly so-
Mercantile Bank of called and are convertible into simple commercial loans because, in cases of such deposits, the bank has made
China, use thereof in the ordinary course of its transactions as an institution engaged in the banking business, not
GOPOCO GROCERY because it so wishes, but precisely because of the authority deemed to have been granted to it by the appellants to
(GOPOCO), ET enable them to collect the interest which they had been and they are now collecting, and by virtue further of the
AL., claimants-appellants, authority granted to it by section 125 of the Corporation Law (Act No. 1459), as amended by Acts Nos. 2003 and
vs. 3610 and section 9 of the Banking Law (Act No. 3154), without considering of course the provisions of article 1768
PACIFIC COAST BISCUIT of the Civil Code.
CO., ET AL., oppositors- Wherefore, it is held that the deposits on current account of the appellants in the bank under liquidation, with the
appellees. right on their right on their part to collect interest, have not created and could not create a juridical relation between
them except that of creditors and debtor, they being the creditors and the bank the debtor.
Further, It is proper that set-offs be made, inasmuch as the appellants and the bank being reciprocally debtors and
creditors, the same is only just and according to law (art. 1195, Civil Code), particularly as none of the appellants
falls within the exceptions mentioned in section 58 of the Insolvency Law (Act No. 1956), reading:
SEC. 58. In all cases of mutual debts and mutual credits between the parties, the account between them
shall be stated, and one debt set off against the other, and the balance only shall be allowed and paid.
But no set-off or counterclaim shall be allowed of a claim in its nature not provable against the estate:
Provided, That no set-off on counterclaim shall be allowed in favor of any debtor to the insolvent of a
claim purchased by or transferred to such debtor within thirty days immediately preceding the filing, or
after the filing of the petition by or against the insolvent.
In view of the foregoing, we modify the appealed judgments by holding that the deposits claimed by the appellants,
and declared by the lower court to be ordinary credits; that their obligations to the bank under liquidation which
should be set off against said deposits, and we order that the set-offs in question be made in the manner stated in
this decision, that is, as of the date already indicated, December 4, 1931. In all other respects, we affirm the
aforesaid judgments, without special pronouncement as to costs. So ordered.
REPUBLIC OF THE RULING: No. In this case, subsequent circumstances militate against escheat proceedings because the
PHILIPPINES, land is now in the hands of Filipinos. The original vendee, Lee Liong, has since died and the land has been
represented by the inherited by his heirs and subsequently their heirs, petitioners herein [Elizabeth Lee and Pacita Yu Lee].
DIRECTOR OF Petitioners are Filipino citizens, a fact the Solicitor General does not dispute.
LANDS, Petitioner, vs. The law disregards the constitutional disqualification of the buyer to hold land if the land is subsequently
REGISTER OF DEEDS OF transferred to a qualified party, or the buyer himself becomes a qualified party.
ROXAS CITY, ELIZABETH Clearly, since Lot No. 398 has already been transferred to private respondents who are Filipino citizens, the prior
LEE, and PACITA YU- invalid sale to Lee Liong can no longer be assailed. Hence, reversion proceedings will no longer prosper since the
LEE, Respondents. land is now in the hands of Filipino citizens.
Rizal Commercial ISSUE: Whether or not the allocated funds may be escheated in favor of the Republic.
Banking RULING: No. The allocated funds may not be escheated in favour of the Republic.
Corporation, Petitioner, The Court find sufficient grounds to affirm the decision made by the CA on the exclusion of the funds allocated for
vs. the payment of the Managers Check in the escheat proceedings.
Hi-Tri Development Escheat proceedings refer to the judicial process in which the state, by virtue of its sovereignty, steps in and claims
Corporation and Luz R. abandoned, left vacant, or unclaimed property, without there being an interested person having a legal claim
Bakunawa, Respondents. thereto.15 In the case of dormant accounts, the state inquires into the status, custody, and ownership of the
unclaimed balance to determine whether the inactivity was brought about by the fact of death or absence of or
abandonment by the depositor.16 If after the proceedings the property remains without a lawful owner interested to
claim it, the property shall be reverted to the state "to forestall an open invitation to self-service by the first
comers."17 However, if interested parties have come forward and lain claim to the property, the courts shall
determine whether the credit or deposit should pass to the claimants or be forfeited in favor of the state.18 We
emphasize that escheat is not a proceeding to penalize depositors for failing to deposit to or withdraw from their
accounts. It is a proceeding whereby the state compels the surrender to it of unclaimed deposit balances when
there is substantial ground for a belief that they have been abandoned, forgotten, or without an owner.
General Guardians Case
MARTIN NERY and No. The sale of the disputed land is not valid.
LEONCIA L. DE It is settled that when a petition for the appointment of a general guardian is filed, the court shall fix a time and
LEON, petitioners, place for hearing the same, and shall cause reasonable notice thereof to be given to the persons mentioned in the
vs. petition residing in the province, including the minor if above 14 years of age or the incompetent himself, and may
ROSARIO, ALFREDO, direct other general or special notice thereof to be given. The late Chief Justice Moran was quite explicit as to its
MARIANO, PACIFICO, jurisdictional character. These are his words: "Service of the notice upon the minor if above 14 years of age or
ONOFRE, TEOFILO, upon the incompetent, is jurisdictional. Without such notice, the court acquires no jurisdiction to appoint a
LOLOY and TRINIDAD, all guardian."
surnamed The respondent Court of Appeals cannot therefore be sustained in its assumption that the probate court could have
LORENZO, respondents. authorized the sale in question. The jurisdictional infirmity was too patent to be overcome. It was the lower court
that acted correctly. There is the more reason for deciding as we do considering that the rights of minors are
involved. It is a distinctive feature of our law, one that is quite commendable, that whenever their welfare may be
affected, its solicitude is made manifest. The rights of young are not to be ignored. Precisely their stage of
immaturity calls for every procedural principle being observed before their interest in property to which they have a
claim could be adversely affected. It does not matter that their guardian is their mother.
LOLITA R. ALAMAYRI, , No. The Court of Appeals did not erred in holding that the finding that Nelly Nave was incompetent in Special
vs. Proceeding cannot retroact to affect the validity of the Deed of Sale she executed in favor of respondents Pabales.
ROMMEL, ELMER, Capacity to act is supposed to attach to a person who has not previously been declared incapable, and such
ERWIN, ROILER. capacity is presumed to continue so long as the contrary be not proved; that is, that at the moment of his acting he
was incapable, crazy, insane, or out of his mind.23 The burden of proving incapacity to enter into contractual
relations rests upon the person who alleges it; if no sufficient proof to this effect is presented, capacity will be
presumed.24
Nave was examined and diagnosed by doctors to be mentally incapacitated only in 1986, when the RTC started
hearing SP. PROC. No. 146-86-C; and she was not judicially declared an incompetent until 22 June 1988 when a
Decision in said case was rendered by the RTC, resulting in the appointment of Atty. Leonardo C. Paner as her
 guardian. Thus, prior to 1986, Nave is still presumed to be capacitated and competent to enter into contracts such
as the Deed of Sale over the subject property, which she executed in favor of the Pabale siblings on 20 February
1984. The burden of proving otherwise falls upon Alamayri, which she dismally failed to do, having relied entirely
on the 22 June 1988 Decision of the RTC in SP. PROC. No. 146-86-C.
All told, there being no identity of parties and issues between SP. PROC. No. 146-86-C and Civil Case No. 675-84-
C, the 22 June 1988 Decision in the former on Naves incompetency by the year 1986 should not bar, by
conclusiveness of judgment, a finding in the latter case that Nave still had capacity and was competent when she
executed on 20 February 1984 the Deed of Sale over the subject property in favor of the Pabale siblings.
NILO OROPESA, In Francisco v. Court of Appeals,10 we laid out the nature and purpose of guardianship in the following wise:
Petitioner, A guardianship is a trust relation of the most sacred character, in which one person, called a "guardian" acts for
vs. CIRILO OROPESA, another called the "ward" whom the law regards as incapable of managing his own affairs. A guardianship is
Respondent. designed to further the wards well-being, not that of the guardian. It is intended to preserve the wards property, as
well as to render any assistance that the ward may personally require. It has been stated that while custody
involves immediate care and control, guardianship indicates not only those responsibilities, but those of one in loco
parentis as well.11
In a guardianship proceeding, a court may appoint a qualified guardian if the prospective ward is proven to be a
minor or an incompetent.
A reading of Section 2, Rule 92 of the Rules of Court tells us that persons who, though of sound mind but by
reason of age, disease, weak mind or other similar causes, are incapable of taking care of themselves and their
property without outside aid are considered as incompetents who may properly be placed under guardianship. The
full text of the said provision reads:
Sec. 2. Meaning of the word "incompetent." Under this rule, the word "incompetent" includes persons suffering
the penalty of civil interdiction or who are hospitalized lepers, prodigals, deaf and dumb who are unable to read and
write, those who are of unsound mind, even though they have lucid intervals, and persons not being of unsound
mind, but by reason of age, disease, weak mind, and other similar causes, cannot, without outside aid, take care of
themselves and manage their property, becoming thereby an easy prey for deceit and exploitation.
We have held in the past that a "finding that a person is incompetent should be anchored on clear, positive and
definite evidence."12 We consider that evidentiary standard unchanged and, thus, must be applied in the case at
bar.
NAPOLEON D. NERI ISSUE: WON the Extra Judicial Settlement was Valid. WON the Minors were duly represented. WON the
vs. subsequent sale to Spouses Uy was valid.
HEIRS OF HADJI YUSOP RULING: Considering that Eutropia and Victoria were admittedly excluded and that then minors Rosa and Douglas
UY AND were not properly represented therein, the settlement was not valid and binding upon them and consequently, a
JULPHA* IBRAHIM UY total nullity. However, , the subsequent sale of the subject properties made by Enrique and his children, Napoleon,
Alicia and Visminda, in favor of the respondents is valid but only with respect to their proportionate shares therein.
It cannot be denied that these heirs have acquired their respective shares in the properties of Anunciacion from the
moment of her death and that, as owners thereof, they can very well sell their undivided share in the estate.
With respect to Rosa and Douglas who were minors, Enrique was merely clothed with powers of administration
and bereft of any authority to dispose of their 2/16 shares in the estate of their mother, Anunciacion.
ART. 326 of the NCC states that When the property of the child is worth more than two thousand pesos, the
father or mother shall be considered a guardian of the childs property, subject to the duties and obligations of
guardians under the Rules of Court
Corollarily, Section 7, Rule 93 of the Rules of Court also provides: SEC. 7. Parents as Guardians. When the
property of the child under parental authority is worth two thousand pesos or less, the father or the mother, without
the necessity of court appointment, shall be his legal guardian. When the property of the child is worth more than
two thousand pesos, the father or the mother shall be considered guardian of the childs property, with the duties
and obligations of guardians under these Rules, and shall file the petition required by Section 2 hereof. For good
reasons, the court may, however, appoint another suitable persons.
Thus, a father or mother, as the natural guardian of the minor under parental authority, does not have the
power to dispose or encumber the property of the latter. Such power is granted by law only to a judicial
guardian of the wards property and even then only with courts prior approval secured in accordance with
the proceedings set forth by the Rules of Court.
Consequently, the disputed sale entered into by Enrique in behalf of his minor children without the proper judicial
authority, unless ratified by them upon reaching the age of majority, is unenforceable in accordance with Articles
1317 and 1403(1) of the Civil Code. Records, however, show that Rosa had ratified the extrajudicial settlement of
the estate with absolute deed of sale.
Considering, thus, that the extrajudicial settlement with sale is invalid and therefore, not binding on Eutropia,
Victoria and Douglas, only the shares of Enrique, Napoleon, Alicia, Visminda and Rosa in the homestead
properties have effectively been disposed in favor of spouses Uy. "A person can only sell what he owns, or is
authorized to sell and the buyer can as a consequence acquire no more than what the seller can legally transfer."