G.R. No. L-14713 April 28, 1960 De Guzman has not sought permission to file the claim.
De Guzman has not sought permission to file the claim. Moreover, the same does not
Intestate Estate of ARSENIO R. AFAN, deceased. MARIAN AFAN, petitioner-appellee,
vs.
APOLINARIO S. DE GUZMAN, creditor-appellant.
Vicente L. Santiago for appellee.
Bausa Ampil & Suarez for appellant.
CONCEPCION, J.:
This is an appeal, taken by Apolinario S. de Guzman, from an order of the Court of First
Instance of Manila, dated July 27, 1957.
It appears that, on July 12, 1957, De Guzman filed, in this special proceeding for the
settlement of intestate estate of Arsenio R. Afan, a claim for P1,000, allegedly due
from the latter, with interest thereon, within 30 days from August 16, 1949, as set
forth in a promissory note then issued by Afan. On July 22, 1957, the administratrix of
his estate objected to the consideration of the claim upon the ground, among others,
that it had been filed long after the expiration of the period for the presentation of
claims against said estate. For this reason, the lower court issued the order appealed
from, refusing to entertain the aforementioned claim. De Guzman invokes, in support
of his appeal, section 2, Rule 87 of the Rules of Court, reading:
Time within which claims shall be filed.—In the notice provided in the
preceding section, the court shall state the time for the filing of claims against
the estate, which shall not be more than twelve nor less than six months after
the date of the first publication of the notice. However, at any time before
an order of distribution is entered, on application of a creditor who has failed
to file his claim within the time previously limited, the court may, for cause
shown and on such terms as are equitable, allow such claims to be filed within
a time not exceeding one month.
Relying upon this provision, De Guzman maintains that the lower court should have
entertained his claim, the same having been filed prior to the distribution of the estate
of the deceased. This pretense is not borne out, however, by the rule above quoted.
The second sentence thereof clothes the court with authority to permit the filing of a
claim after the lapse of the period stated in the first sentence, but prior to and
distribution, subject to the following conditions, namely(1) there must be tin
application therefor; (2) a cause must be shown why the permission should be
granted; and (3) the extension of time granted for the filing of the claim shall not
exceed one (1) month.
allege any reason why he should be excused for his failure to file the claim in this
proceeding within the period stated in the Rules of Court. Again, whether or not the
reasons given — and none were set forth in De Guzman's claim — are sufficient, rests
upon the discretion of the court (Roguera vs. Tanodra, 81 Phil., 404; Umpig, et al. vs.
De Gala, et al., 96 Phil., 77; 50 Off. Gaz., 5305), and the record before us does not
show that the lower court has abused its discretion in acting as it did in the present
case. De Guzman now alleges, for the first time, a "cause" why the lower court should
allegedly have considered his claim. He says, in his brief (p. 6, thereof) that "he had no
actual knowledge of the fact that the estate of the deceased . . . was then already in
the process of settlement . . . . " He did not explain why he refrained from making such
averment either in his claim or in the motion, filed by him in the lower court, for a
reconsideration of the order appealed from. The reason is, however, not difficult to
surmise — he had actual knowledge of the present proceeding long before the filing
of his claim therein on July 27, 1957. To be precise, he was aware of its existence as
early as August, 1955.
In this connection, it appears that, during the lifetime of Afan, or on May 24, 1950, De
Guzman instituted, against him, Civil Case No. 1148 of the Court of First Instance of
Rizal, to recover the amount of the promissory note above referred to. On appeal, the
decision of said court in favor of De Guzman was set aside, and a trial de novo ordered,
by the Court of Appeals, in case CA-G.R. No. 7340-R. Sometime after the records had
been remanded to the lower court, Afan died. On August 15, 1955, that court issued
an order requiring counsel for his heirs "to submit to the court the number of the
intestate estate proceedings of the deceased Arsenio R. Afan now pending in the Court
of First Instance of Manila." This order was complied with on August 30, 1955, by the
filing with the Court of First Instance of Rizal, in said Case No. 1148, of a "notification"
containing the required information, copy of which "notification" was served upon
counsel for De Guzman, as plaintiff therein. On January 18, 1956, his counsel filed in
said case a motion for the appointment of a legal representative of the deceased Afan,
to substitute him as defendant therein. Accordingly, on January 21, 1956, said court
gave De Guzman five (5) days within which to submit the names of the legal heirs of
Afan who may be appointed as his legal representative. On January 24, 1956 De
Guzman filed, therefore, with the aforementioned court, a statement, entitled
"compliance", setting forth the names, ages and addresses of the heirs of the
deceased, "as shown by the records in Special Proceedings No. 26858, entitled
'Instance estate of Arsenio R. Afan' before the Court of First Instance of Manila," with
the prayer that said "heirs be substituted as party defendants" in Case No. 1148, "in
place of the deceased Arsenio R. Afan." Yet, De Guzman choose not to file his claim in
such proceeding until July 27, 1957, one year and a half after the filing of his
aforementioned "compliance."
Instead of furnishing a "cause" for the extension of the reglementary period for the
filing of his claim, this omission on the part of De Guzman fully justifies the denial of
such extension and the order appealed from. We have already held that failure to file
a claim within the time provided therefor upon the sole ground that the claimant was
negotiating with one of the heirs for payment, is not sufficient to justify extension (In
Re: Estate of De Dios, 24 Phil., 573, 576; see also Santos vs. Manarang, 27 Phil., 209),
and that, where a claimant knew of the death of the decedent and for four (4) or five
(5) months thereafter he did nothing to present his claim, this can hardly be
considered as a good excuse for such neglect (In Re: Estate of Tiangco, 39 Phil., 967).

Wherefore, the order appealed from is hereby affirmed with costs against appellant
Apolinario S. de Guzman. It is so ordered.

Paras C. J. Bengzon, Montemayor, Bautista, Angelo, Labrador, Barrera, and Gutierrez

David, JJ., concur.
G.R. No. L-51278 May 9, 1988
HEIRS OF RAMON PIZARRO, SR., petitioners,
vs.
HON. FRANCISCO Z. CONSOLACION, CFI of Davao and LUIS TAN alias CHEN YEH-AN,
respondents.
Rogelio A. Barba for petitioners.
Oscar Breva for private respondent.
GANCAYCO, J.:
This is a petition for review on certiorari seeking the reversal of the Order of June 1,
1979, of the then Court of First Instance of Davao * dismissing petitioners' claim
against the estate of the late Dominga Garcia, and questioning the legality of the Order
of the same court dated July 17, 1979 which denied due course to the petitioners'
notice of appeal to the Court of Appeals and directed them to file instead a petition
for review before this Tribunal.
Petitioners are the oppositors in Special Proceeding No. 2116 in the then Court of First
Instance (CFI) of Davao City Branch II, for settlement of the estate of the deceased
Dominga Garcia, filed by private respondent herein, Luis Tan alias Chen Yeh-An.
The records disclose that on August 12,1977, Luis Tan filed a verified petition with the
CFI of Davao for the issuance of letters of administration in favor of a certain Alfonso
Atilano. The petition alleged, among others that private respondent is the only
surviving son of the deceased Dominga Garcia who died intestate sometime in 1930
in Canton, China; that the deceased left a parcel of land 1 located at C.M. Recto
Avenue, Davao City; and that the said lot is in the possession of the heirs of Ramon
Pizarro, 2 petitioners herein.
On October 4, 1977, petitioners filed an opposition to the said petition claiming that
they are the heirs of Ramon Pizarro who died intestate on June 16, 1974; and that the
deceased was the vendee of one-half (1/2) of the aforementioned lot by virtue of an
extrajudicial settlement of estate and deed of absolute sale executed by Vicente Tan
in Hongkong on May 27, 1966. Petitioners prayed that letters of administration of
Dominga Garcia's estate be issued in favor of anyone of them.
The respondent court set the petition for hearing. Said order and the petition were
duly published in the Mindanao Times. ** The City of Davao 3 was likewise served with
a copy of said petition. On December 6, 1977, after private respondent had begun
presentation of evidence in support of his petition, the parties herein entered into a
compromise whereby petitioners agreed, among others, to withdraw their opposition
to the appointment of private respondent's recommendee and for the intestate
proceedings to proceed in due course. Said agreement was approved in the order of
respondent court dated December 6,1977. 4
Accordingly, on March 27, 1978, after the judicial administrator had qualified and his
inventory of the assets of the late Dominga Garcia was approved, respondent court
issued an order requiring the filing of creditors' claim against the said estate within
the period of six (6) months from the date of the first publication. 5 Copy of said order
was received by petitioners through counsel on March 28, 1979. 6
Meanwhile, on January 23,1979, private respondent and the City of Davao filed a joint
motion asking respondent court to take notice of their agreement which in substance
provides for an agreement to file a joint motion in the CFI of Davao to proceed with
the determination of the heirs of the deceased Domingao Garcia which shall be
determinative of their respective claims against the estate. On February 19, 1979,
petitioners filed their opposition to the said joint motion on the sole ground that it is
without procedural basis. Private respondent filed his reply thereto on February 21,
1979. On February 22, 1979, respondent court issued an order taking note of the
agreement between private respondent and the City of Davao.
On February 28, 1979, private respondent filed a motion to drop and exclude the
petitioners on the ground that they do not even claim to be the heirs of the deceased
Dominga Garcia and that the extrajudicial deed of partition and deed of absolute sale
allegedly executed in Hongkong in favor of the petitioners' deceased father is spurious
and simulated. On March 5, 1979, petitioners filed their opposition to said motion.
They likewise filed a claim against the estate of the deceased Garcia in the amount of
P350,000.00 representing services allegedly rendered by their deceased father in
favor of Vicente Tan. On March 8, 1979, private respondent filed a reply to petitioners'
opposition and a motion to strike out or dismiss the claim on the ground that it is
spurious and barred for having been filed beyond the six (6) month period set in the
notice for the filing of creditors' claim. On March 29, 1979, petitioners filed another
claim against the estate for P200,000.00 allegedly advanced by their deceased father
for the payment of realty and income taxes of the said lot sometime in 1936, to which
claim private respondent filed an opposition on the ground that it is barred for having
been filed beyond the six (6) month period and that it was merely intended to delay
the proceedings.
In the Order of June 1, 1979, respondent court dismissed both claims of the petitioners
on the ground that they are barred for having been filed out of time. 7 On June 26,
1979, petitioners filed a notice of appeal stating that they are appealing the order of
June 1, 1979 to the Court of Appeals in so far as it declared their claims barred. 8 On
July 5, 1979, private respondent filed an opposition to the projected appeal on the
ground that the appeal involves a pure question of law and thus, the same should be
directed to the Supreme Court. 9 On July 17, 1979, respondent court issued an order
dismissing petitioners' appeal and directed petitioners to file instead a petition for
review on certiorari before this Court.10
Hence, the present petition. ***
It is the position of the petitioners that the order of June 1, 1979 of the respondent
court, which directed that the filing of claims against the estate of the late Dominga
Garcia be filed within six (6) months after the first publication of the notice thereof, is
null and void in that it is violative of Section 2, Rule 86 of the Revised Rules of Court.
They contend that said provision mandates that the filing of such claims should be for
a period of six (6) months starting from the sixth month after the date of the first
publication of the notice down to the twelfth month. 11 They argue that to require
filing of claims within the sixth month from publication of notice will shorten the
period in violation of the mandatory provisions of Section 2, Rule 86, which provides:
Sec. 2. Time within which claims shall be filed. — In the notice
provided in the preceding section, the court shall state the time for
the filing of claims against the estate, which shall not be more than
twelve (12) nor less than six (6) months after the date of the first
publication of the notice. However, at anytime before an order of
distribution is entered, on application of a creditor who has failed to
file his claim within the time previously limited, the court may, for
cause shown and on such terms as are equitable, allow such claim
to be filed within a time not exceeding one (1) months.
We agree. The range of the period specified in the rule is intended to give the probate
court the discretion to fix the period for the filing of claims. The probate court is
permitted by the rule to set the period provided it is not less than six (6) months nor
more than twelve (12) months from the date of the first publication of the notice
thereof. Such period once fixed by the court is mandatory.
The purpose of the law, in fixing a period within which claims against an estate must
be presented, is to insure a speedy settlement of the affairs of the deceased person
and the early delivery of the property to the person entitled to the same. 12
In Sikat vs. Vda. Mafincode Villanueva, 13 this Court ruled that the speedy settlement
of the estate of deceased persons for the benefit of creditors and those entitled to the
residue by way of inheritance or legacy after the debts and expenses of administration
have been paid is the ruling spirit of our probate law.
However, in this case the trial court set the period for the filing of the claims within six
(6) months from the date of the first publication of the notice. It was obviously short
of the minimum limit of six (6) months provided for by the law. Petitioner correctly
observed that the trial court thereby shortened the period set by the law.
Since the notice issued and the period set by the trial court was not in accordance with
the requirements of Section 2, Rule 86 of the Rules of Court, what should then apply
is the period as provided for by the rules which is not less than six months nor more
than twelve (12) months from the date of first publication of notice. The first
publication of the notice in the Mindanao Times was on March 30, 1978. Thus the two
claims of petitioners against the estate which were filed on March 5, 1979 and March
29, 1979 respectively were filed on time.
The other issue raised in the petition is the authority of the trial court to determine
whether the appeal involves a question of law or both questions of law and facts. The
petitioners cite Section 3, Rule 50 of the Rules of Court, which provides as follows:
Sec. 3. Where appealed case erroneously brought. — Where the
appealed case has been erroneously brought to the Court of
Appeals, it shall not dismiss the appeal, but shall certify the case to
the proper court, with a specific and clear statement of the grounds
therefor.
Petitioners contend that it is the Court of Appeals which has the authority to
determine whether the issue in the appeal is purely a question of law in which case it
shall certify the same to the proper court, which in this case is this Tribunal.
In the present case, when the lower court found that the order sought to be appealed
was its order of June 1, 1979, wherein it held that the claims filed by petitioners against
the estates were barred having been filed beyond the period fixed by the trial court in
the notice, which appeal involves an interpretation of Section 2, Rule 86 of the Rules
of Court, instead of giving due course to the notice of appeal to the Court of Appeals
filed by petitioners, the petitioners were instructed to file a petition for review with
this Court as the issue is a pure question of law.
We find the action taken by the trial court to be well-taken. Certainly, it is within the
competence and jurisdiction of the trial court to determine whether the appeal
interposed was based on pure questions of law or involves both questions of law and
facts in considering the appeal.14 The provision of Section 3, Rule 50 of the Rules of
Court applies only when the appeal is already brought to the Court of Appeals at which
time it may, instead of dismissing the appeal, upon determination that it involves a
pure question of law, order that the case be certified to this Court.
It must be noted that in the notice of appeal it is not even required that the appellant
indicate the court to which its appeal is being interposed. The requirement is merely
directory and failure to comply with it or error in the court indicated is not fatal to the
appeal. 15

WHEREFORE, the petition is GRANTED and the orders of the respondent court of June
1, 1979 and July 17, 1979 are reversed and set aside in so far as the claims filed by
petitioners were found to be barred, the same having been timely filed, without
pronouncement as to costs.

SO ORDERED.

Narvasa, Cruz, and Griño-Aquino, JJ., concur.

G.R. No. L-17175 July 31, 1962
RICARDO M. GUTIERREZ, plaintiff-appellant,
vs.
LUCIA MILAGROS BARRETTO-DATU, Executrix of the Testate Estate of the deceased
MARIA GERARDO VDA. DE BARRETTO, defendant-appellee.
Teofilo Sison and Mariano G. Bustos and Associates for plaintiff-appellant.
Deogracias T. Reyes and Luison and Associates for defendant-appellee.
MAKALINTAL, J.:
Ricardo M. Gutierrez appeals from the orders of Court of First Instance of Rizal (1)
dismissing his complaint against Lucia Milagros Barretto-Datu, as executive of the
estate of the deceased Maria Gerardo Vda. de Barreto, and (2) denying his motion for
reconsideration the dismissal.
The relevant facts alleged by appellant are as follows; In 1940, Maria Gerardo Vda. de
Barretto, owner of hectares of fishpond lands in Pampanga, leased the same to
appellant Gutierrez for a term to expire on May 1, 1947. On November 1, 1941,
pursuant to a decision of Department of Public Works rendered after due investigation
the dikes of the fishponds were opened at several points, resulting in their destruction
and in the loss great quantities of fish inside, to the damage and prejudice of the
lessee.
In 1956, the lessor having died in 1948 and the corresponding testate proceeding to
settle her estate having been opened (Sp. Proc. No. 5002, C.F.I., Manila), Gutierrez
filed a claim therein for two items: first, for the sum of P32,000.00 representing
advance rentals he had to the decedent (the possession of the leased property is
alleged, having been returned to her after the open of the dikes ordered by the
government); and second, the sum of P60,000.00 as damages in the concept of earned
profits, that is, profits which the claimant failed to realize because of the breach of the
lease contract allegedly committed by the lessor.
On June 7, 1957 appellant commenced the instant ordinary civil action in the Court of
First Instance of Rizal (Quezon City branch) against the executrix of the testate for the
recovery of the same amount of P60,000 referred to as the second item claimed in
the administration proceeding. The complaint specifically charges decedent Manila
Gerardo Vda. de Barretto, is lessor, was having violated a warranty in the lease
contract again any damages the lessee might suffer by reason of the claim of the
government that several rivers and creeks of the public domain were included in the
fishponds.
In July 1957 appellant amended his claim in the testate proceeding by withdrawing
therefrom the item of P60,000.00, leaving only the one for refund of advance rentals
in the sum of P32,000.00.
After the issues were joined in the present case with the filing of the defendant's
answer, together with a counterclaim, and after two postponements of the trial were
granted, the second of which was in January 1958, the court dismissed the action for
abandonment by both parties in an order dated July 31, 1959. Appellant moved to
reconsider; appellee opposed the motion; and after considerable written argument
the court, on March 7, 1960, denied the motion for reconsideration on the ground
that the claim should have been prosecuted in the testate proceeding and not by
ordinary civil action.
Appellant submits his case on this lone legal question: whether or not his claim for
damages based on unrealized profits is a money claim against the estate of the
deceased Maria Gerardo Vda. de Barretto within the purview of Rule 87, Section 5.
This section states:
SEC. 5. Claims which must be filed under the notice. If not filed, barred;
exception. — All claims for money against the decedent, arising from
contract, express or implied, whether the same be due, not due, or
contingent, all claims for funeral expenses and expenses of the last sickness
of the decedent, and judgment for money against the decedent, must be filed
within the time limited in the notice; otherwise they are barred forever,
except that they may be set forth as counterclaims in any action that the
executor or administrator may bring against the claimants. Where an
executor or administrator commences an action, or prosecutes an action
already commenced by the deceased in his lifetime, the debtor may set forth
by answer the claims he has against the decedent, instead of presenting them
independently to the court as herein provided, and mutual claims may be set
off against each other in such action; and if final judgment is rendered in
favor of the defendant, the amount so determined shall be considered the
true balance against the estate, as though the claim had been presented
directly before the court in the administration proceedings. Claims not yet
due, or contingent, may be approved at their present value.
The word "claims" as used in statutes requiring the presentation of claims against a
decedent's estate is generally construed to mean debts or demands of a pecuniary
nature which could have been enforced against the deceased in his lifetime and could
have been reduced to simple money judgments; and among these are those founded
upon contract. 21 Am. Jur. 579. The claim in this case is based on contract —
specifically, on a breach thereof. It falls squarely under section 5 of Rule 87 "Upon all
contracts by the decedent broken during his lifetime, even though they were personal
to the decedent in liability, the personal representative is answerable for the breach
out of the assets." 3 Schouler on Wills, Executors and Administrators, 6th Ed., 2395. A
claim for breach of a covenant in a deed of the decedent must be presented under a
statute requiring such presentment of all claims grounded on contract. Id. 2461;
Clayton v. Dinwoody, 93 P. 723; James v. Corvin, 51 P. 2nd 689.1

The only actions that may be instituted against the executor or administrator are those
to recover real or personal property from the estate, or to enforce a lien thereon, and
actions to recover damages for an injury to person or property, real or personal. Rule
88, section 1. The instant suit is not one of them.

Appellant invokes Gavin v. Melliza, 84 Phil. 794, in support of his contention that this
action is proper against the executrix. The citation is not in point. The claim therein,
which was filed in the testate proceeding, was based upon a breach of contract
committed by the executrix herself, in dismissing the claimant as administrator of the
hacienda of the deceased. While the contract was with the decedent, its violation was
by the executrix and hence personal to her. Besides, the claim was for indemnity in
the form of a certain quantity of palay every year for the unexpired portion of the
term of the contract. The denial of the claim was affirmed by this Court on the grounds
that it was not a money claim and that it arose after the decedent's demise, placing it
outside the scope of Rule 87, Section 5.

The orders appealed from are affirmed, with costs against appellant.

Bengzon, C.J., Labrador, Concepcion, Barrera, Paredes, Dizon and Regala, JJ., concur.
Padilla, J., took no part.
G.R. No. L-18107 August 30, 1962
MARIA G. AGUAS, FELIX GUARDINO and FRANCISCO SALINAS, plaintiffs-appellants,
vs.
HERMOGENES LLEMOS, deceased defendant substituted by his representatives,
PERPETUA YERRO-LLEMOS, HERMENEGILDO LLEMOS, FELINO LLEMOS and AMADO
LLEMOS, defendants-appellees.
Jesus M. Aguas for plaintiffs-appellants.
Serafin P. Ramento for defendants-appellees.
REYES, J.B.L., J.:
On 14 March 1960, Francisco Salinas and the spouses Felix Guardino and Maria Aguas
jointly filed an action in the Court of First Instance of Catbalogan, Samar (Civil Case No.
4824), to recover damages from Hermogenes Llemos, averring that the latter had
served them by registered mail with a copy of a petition for a writ of possession, with
notice that the same would be submitted to the said court of Samar on February 23,
1960 at 8: 00 a.m.; that in view of the copy and notice served, plaintiffs proceeded to
the court from their residence in Manila accompanied by their lawyers, only to
discover that no such petition had been filed; and that defendant Llemos maliciously
failed to appear in court, so that plaintiffs' expenditure and trouble turned out to be
in vain, causing them mental anguish and undue embarrassment.
On 1 April 1960, before he could answer the complaint, the defendant died. Upon
leave of court, plaintiffs amended their complaint to include the heirs of the deceased.
On 21 July 1960, the heirs filed a motion to dismiss, and by order of 12 August 1960,
the court below dismissed it, on the ground that the legal representative, and not the
heirs, should have been made the party defendant; and that anyway the action being
for recovery of money, testate or intestate proceedings should be initiated and the
claim filed therein (Rec. on Appeal, pp. 26-27).
Motion for reconsideration having been denied, the case was appealed to us on points
of law.1äwphï1.ñët
Plaintiffs argue with considerable cogency that contrasting the correlated provisions
of the Rules of Court, those concerning claims that are barred if not filed in the estate
settlement proceedings (Rule 87, sec. 5) and those defining actions that survive and
may be prosecuted against the executor or administrator (Rule 88, sec. 1), it is
apparent that actions for damages caused by tortious conduct of a defendant (as in
the case at bar) survive the death of the latter. Under Rule 87, section 5, the actions
that are abated by death are: (1) claims for funeral expenses and those for the last
sickness of the decedent; (2) judgments for money; and (3) "all claims for money
against the decedent, arising from contract express or implied". None of these includes
that of the plaintiffs-appellants; for it is not enough that the claim against the
deceased party be for money, but it must arise from "contract express or implied",
and these words (also used by the Rules in connection with attachments and derived
from the common law) were construed in Leung Ben vs. O'Brien, 38 Phil., 182, 189-
194.
to include all purely personal obligations other than those which have their
source in delict or tort.
Upon the other hand, Rule 88, section 1, enumerates actions that survive against a
decedent's executors or administrators, and they are: (1) actions to recover real and
personal property from the estate; (2) actions to enforce a lien thereon; and (3)
actions to recover damages for an injury to person or property. The present suit is one
for damages under the last class, it having been held that "injury to property" is not
limited to injuries to specific property, but extends to other wrongs by which personal
estate is injured or diminished (Baker vs. Crandall, 47 Am. Rep. 126; also 171 A.L.R.,
1395). To maliciously cause a party to incur unnecessary expenses, as charged in this
case, is certainly injurious to that party's property (Javier vs. Araneta, L-4369, Aug. 31,
1953).
Be that as it may, it now appears from a communication from the Court of First
Instance of Samar that the parties have arrived at an amicable settlement of their
differences, and that they have agreed to dismiss this appeal. The settlement has been
approved and embodied in an order of the Court of First Instance.
The case having thus become moot, it becomes unnecessary to resolve the questions
raised therein. This appeal is, therefore, ordered dismissed, without special
pronouncement as to costs.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Barrera, Paredes, Dizon,
Regala and Makalintal, JJ., concur.
G.R. No. L-27701 July 21, 1928 institution or to take up the mortgage myself at any time during the three
years period mentioned above, which I expect that I may be in a position to
THE BANK OF THE PHILIPPINE ISLANDS, plaintiff-appellant, do.
vs.
V. CONCEPCION E HIJOS, INC., and VENANCIO CONCEPCION, Yours very truly,
defendants-appellants. HENRY W. ELSER, defendant-appellee. (Sgd.) H. W. ELSER

Araneta & Zaragoza for plaintiff-appellant.
No appearance for defendants-appellants.
DeWitt, Perkins & Brady for defendant-appellee.
OSTRAND, J.:
It appears from the record that on July 6, 1921, the defendants Concepcion executed
a promissory note in favor of the plaintiff for the sum of P342,372.64, payable on
demand, and as security for payment, deposited 700 shares of the Philippine National
Bank as collateral with the plaintiff and gave it a mortgage on 5,680 square meters of
land, with improvements, situated on R. Hidalgo Street in Manila. The defendants
Concepcion defaulted in the payment of the note, and on February 3, 1922, the
plaintiff bank instituted the present foreclosure proceedings.
Shortly afterwards, Henry W. Elser entered into negotiations with the Concepcions
and offered to take over the mortgaged property and assume the mortgage debt. To
this the Concepcions agreed on the condition that they be relieved of all liability for
the debt.
On March 23, 1922, Elser wrote the plaintiff bank the following letter:
DEAR SIR: Confirming our conversation of this morning, I take pleasure in
advising you that I have made arrangements with Mssrs. Puno & Concepcion
to take over their property on Calle R. Hidalgo, consisting of 5,680 square
meters, including all improvements thereon, and also 700 shares in the
Philippine National Bank mortgaged to you in the total sum of P342,000, and
by which arrangement I am to be substituted in the place and stead of
Messrs. Puno & Concepcion in the obligation to your bank.
I have present prospects of renting the entire property and in consideration
thereof I will undertake to pay to the bank on the obligation thus undertaken
by me, the sum of not less than five thousand pesos (P5,000) monthly on the
principal, together with interest every six months. I will also reduce the
mortgage not less than 25 per cent during the first year, not less than 50 per
cent during the second year, and the balance within the third year, without
prejudice, however, to my right to mortgage the property to any bonding
No answer to this letter was given by the bank, and it clearly appears from the
allegations in its amended complaint, and from the evidence, that it was unwilling to
release the Concepcions from their liability for the mortgage debt and insisted on their
confessing a judgment in the foreclosure proceedings. This the Concepcions refused
to do unless the bank would agree to bid in the mortgage property for the full amount
of the judgment.
After further conversations with the representatives of the plaintiff bank, Elser on April
21, 1922, wrote in the following letter:
DEAR SIRS (Attention of Mr. Zaragoza): With reference to our recent
conversation regarding the R. Hidalgo property belonging to Venancio
Concepcion (Puno & Concepcion), I respectfully request that you confirm in
writing your verbal agreement that should the property in question become
the property of your bank, in the amount of P342,000 plus interest to date,
that you will sell the same to me for the same amount.
This information is desired by the Attorneys for Venancio Concepcion, Mr. R.
M. Calvo, in order to satisfy himself that in case Messrs. Puno & Concepcion
accept judgment, turning over the property to you, that you in return will sell
the property to me for the above mentioned sum, and not less than that sum.
Trusting you will see your way clear to furnish this confirmation, in
accordance with our conversation, we are
Very truly,
(Sgd.) H. W. ELSER
It must be inferred from this letter that Elser had been led to understand that the bank
would bid in the land at the foreclosure sale for the full amount of the judgment and
sell it to him for the same price. It will be readily seen that this proposition is entirely
different from that contained in the letter of March 23d.
The plaintiff made no direct reply to the letter of April 21st, but Calvo, testifying for
the plaintiff, stated that on April 28, Elser invited him to a conference with Nolting,
the president of the bank, in regard to the matter; that on meeting Nolting, Elser said:
"Mr. Nolting, do you still adhere to your acceptation of the offer I have made you in
writing?" to which Nolting answered that he did not think that there was any reason
for him to go back on his word. He thereupon referred Elser and Calvo to Zaragoza,
who in some matters appears to have acted as counsel for the bank, for further
conferences. The negotiations did not lead to any action on the part of the bank, but
on May 5, 1922, Elser entered into an agreement in the form of bilateral deed of sale,
with V. Concepcion & Hijos, Inc., and Venancio Concepcion which appears in the
record as Exhibit C and reads as follows in translation from Spanish:
DEED OF PURCHASE AND SALE
This deed of purchase and sale executed in the City of Manila, P.I., this fifth
day of May 1922 A. D., by and between V. Concepcion & Hijos, Inc., a
domestic corporation duly organized under the laws of Philippine Islands
domiciled at No. 861 Calle R. Hidalgo, District of Quiapo, City of Manila,
represented herein by the president, Mr. Venancio Concepcion, by virtue of
the powers granted him by the Board of Directors of said corporation in a
resolution dated May 2, 1922, a copy of which duly certified, is attached
hereto and made a part hereof, and Mr. Venancio Concepcion, of age,
married with Mrs. Rosario San Agustin and resident of City of Manila, his
place of residence being in the municipality of San Juan, Province of Rizal, P.I.,
as party of the first part, and Mr. Henry W. Elser, of age, married with Mrs.
Elaine Childs Elser, and a resident of City of Manila, with her place of
residence at No. 600 Calle M. H. del Pilar, District of Malate, as party of the
second part,
WITNESSETH:
Whereas, V. Concepcion e Hijos, Inc., is at present indebted to the Bank of
the Philippine Islands, in the sum of P342,372.64, Philippine currency with
interest thereon at the rate of 9 per cent per annum from September 30,
1921, to secure the payment of which, the firm of V. Concepcion e Hijos, Inc.,
and Mr. Venancio Concepcion as joint land several obligors, have executed in
favor of the creditor bank on the 6th of July, 1921, a deed of mortgage and
one of pledge upon the following properties:
A tract of land with the buildings of strong materials erected thereon,
situated on Calle Sa n Sebastian, District of Quiapo. Bounded on the N. by
Calle San Sebastian; on the E. by property Maximino Paterno and Manuel
Zamora; on the S. by property of the City of Manila; and on W. by the Estero
de Curtidor; containing an area of 5,686.80 square meters, more or less, of
which land, buildings and improvements, the aforesaid Venancio Concepcion
is the registered owner in accordance with the Land Registration Act,
according to transfer certificate of title No. 14019, issued by the registrar of
deeds of the City of Manila.
Seven hundred shares of stock of the Philippine National Bank, belonging to
Mr. Venancio Concepcion, issued to him and indorsed in the blank in favor of
the Bank of the Philippine Islands, described as follows: (Here follows the
numbers and amounts of the certificates of shares.)
Whereas on January 20, 1922, Mr. Venancio Concepcion, owner of the
property above described, in consideration of the fact that they were subject
to the payment of the sum of P342,372.64 with interest thereon at the rate
of 9 per cent per annum, which was owing from V. Concepcion e Hijos, Inc.,
to the Bank of Philippine Islands, as per deeds of mortgage and of pledge
executed on July 6, 1921, has sold, assigned, and transferred to said firm of
V. Concepcion e Hijos, Inc., the aforesaid properties for the sum of P290,000
Philippine currency, the agreed and stipulated price of the urban property
being P220,000, Philippine currency, and that of the 700 shares of stock of
the Philippine National Bank, the sum of P70,000 Philippine currency, as per
public document executed on said date before Mr. Recaredo Ma. Calvo, a
notary public in and for the City of Manila.
Whereas, on February 28, 1922 the Bank of the Philippine Islands, filed with
the clerk's office of the Court of First Instance of Manila, under No. 21537, a
complaint, against V. Concepcion e Hijos, Inc., and Venancio Concepcion for
the recovery of its mortgage credit evidenced by the deeds of mortgage and
of pledge executed on July 6, 1921, notwithstanding the offer made by V.
Concepcion e Hijos, Inc., to assign absolutely and forever to said creditor
entity the properties which are the subject matter of the mortgage and
pledge in full and total payment of their obligation.
Whereas, Mr. Henry W. Elser is willing to subrogate himself to the obligation
of V. Concepcion e Hijos, Inc., and Venancio Concepcion in favor of the Bank
of Philippine Islands and release them from the total of said obligation
contracted by them on July 6, 1921, as per deeds of mortgage and of pledge
executed on said date, in consideration of the sale, assignment and transfer
in his favor of all the rights, interest, action or share that they have or may
have upon the properties described in said deeds of mortgage and pledge;
Now, therefore, we, V. Concepcion e Hijos, Inc., and Venancio Concepcion, in
consideration of the sum of one peso (P1) Philippine currency, which we have
this day and which we declare was paid to us to our complete satisfaction,
and of other important considerations, especially the subrogation into our
 joint and several obligations in favor of the Bank of the Philippine Islands, obligations sued upon and asking for the dismissal of the case as to them on the
amounting to P342,372.64, Philippine currency, with interest thereon at the ground.
rate of 9 per cent per annum from September 30, 1921, which said Mr. Henry
W. Elser hereby makes, binding himself, moreover, to release us from our On October 16, 1922, the defendant Elser demurred to the amended complaint on
obligation contracted in favor of the Bank of the Philippine Islands on July 6, the ground that it failed to alleged that the plaintiff had consented to the substitution
1921, do hereby sell, assign, and transfer absolutely and forever to said Mr. of Elser in place of the Concepcions so as to render Elser personally liable to the
Henry W. Elser, his heirs and successors in interest the properties described plaintiff. This demurrer was sustained by the court and due exception was taken by
herein with the incumbrances created and existing in favor of the Bank of the the plaintiff.
Philippine Islands.
On November 1, 1922, the plaintiff presented a second amended complaint, in which
That I, Henry W. Elser, accept this contract upon the precise terms in which it is alleged that the sale from the Concepcions to Elser was with the knowledge and
it is executed. consent of the plaintiff but without waiver of it as right of action against the
Concepcions. The defendant Elser demurred on the ground that it did not appear from
In testimony whereof, we sign third presents in place and on the date above- the amended complaint that the plaintiff had accepted Elser as debtor and on the
mentioned. further ground that there was no showing therein as to the disposition of the collateral
security held by the plaintiff for the same debt. This demurrer was sustained on both
V. CONCEPCION E HIJOS, INC. grounds, on December 1, 1922.
(Sgd.) V. CONCEPCION
(Sgd.) V. CONCEPCION On December 6, 1922, the plaintiff presented its third amended complaint, without
(Sgd.) H. W. ELSER material change in the averments of the second amended complaint, and a third
demurrer thereto was sustained on December 28, 1922.
Signed in the presence of:
(Sgd.) ERNESTO Ma. CALVO The plaintiff thereupon filed a fourth amended complaint, reiterating the allegations
GREGORIO BUHAY of the third amended complaint, alleging that the defendant Elser entered into
possession of the mortgaged premises with plaintiff's consent; that plaintiff had not
The bank never gave notice of its conformity with the agreement above quoted but of sold the shares of the Philippine National Bank held by it as collateral, and asking for
June 15, 1922, it petitioned the court to include Henry W. Elser as defendant in the judgment decreeing that said shares and the mortgaged property be sold under order
complaint, on the strength of the obligations assumed by him in said agreement. of the court, and that the defendants Concepcion and Elser be condemned to pay the
deficiency, if any there should be. A demurrer to this complaint was sustained, on the
On June 23, 1922, the defendants Concepcion answered said petition praying that ground that it failed to show a contractual relationship between the plaintiff and the
instead of merely being included, said Elser be substituted in their place as defendants, defendant Elser.
on the ground that the plaintiff had accepted the substitution of Elser in their place as
its debtor. On March 2, 1923, the plaintiff presented a fifth amended complaint, similar to the
foregoing, but containing the additional allegation that the plaintiff accepted the
On June 27, 1922, the trial court entered an order including Henry W. Elser as assumption of the mortgage by the defendant Elser "without releasing the liability of
defendant and one month later, the plaintiff filed an amended complaint against the the defendants" Concepcion. This complaint was demurred to on the ground that it
defendants Concepcion and Elser asking for a joint and several judgment against them did not sufficiently state that the plaintiff had accepted the substitution of Elser in
in the amount prayed for in the original complaint and for the foreclosure of the place of the Concepcions, as the contract between them provided. The demurrer was
mortgage securing the same. overruled and the defendant Elser excepted.

On July 18, 1922, the defendants Concepcion filed a supplemental answer alleging the On April 2, 1923, the defendant Elser answered, denying generally and specifically the
consent of the plaintiff to the subrogation of Elser in their place with respect to the allegations of the plaintiff's complaint. On the same date, C. W. Rosenstock, as
guardian of the defendant Elser, filed a cross-complaint alleging that at the time Elser
is alleged to have assumed the obligations of the Concepcions to the plaintiff, he was
of unsound mind that he had been induced to sign the same by false representations
on the part of the Concepcion to the effect that the plaintiff had agreed that he be
substituted in place of Concepcions with respect to the obligations set up in the
plaintiff's complaint and that the plaintiff would accept payment of the same in
monthly installments on account of the principal of not less than P5,000, with interest
payable every six months, and that the mortgage should be reduced not less than 25
per cent the first year, not less than 50 per cent the second year, and the balance
within the third year, when, as a matter of fact, the plaintiff had not agreed hereto or
accepted said terms of payment, as the Concepcions well knew, and had never
accepted Elser's offer to the plaintiff made pursuant to said representations, and
praying for the reasons stated, that the deed from the Concepcions to Elser, wherein
he assumed the obligations of the former to the plaintiff be cancelled. These
allegations were denied by the plaintiff and the defendants Concepcion in their
replies.
Elser died on June 18, 1923, and on January 4, 1924, the plaintiff suggested the death
of the defendant Elser, and asked that the administrator of the estate, C. W.
Rosenstock, be substituted in his place as defendants, and that the action be
continued against Rosenstock in the capacity on the ground that this action is for the
foreclosure of a mortgage
On January 11, 1924, the attorneys of record for the defendant Elser filed an
opposition to the application to have the action continued against Rosenstock, in
substitution of Elser, this is not a foreclosure action, and hence this action, as to him,
abated by reason of his death, and any claim of the plaintiff against him should be
presented to the committee on claims and appraisals of his estate.
This objection was overruled and Rosenstock, as Elser's administrator, was substituted
in his place as defendant, by order of the court dated January 14, 1924, and exception
thereto was duly taken. Subsequently, Rosenstock became the executor of Elser's
estate, and as such, filed various amended answers and cross-complaints.
The last amended cross-complaint was filed by him on August 9, 1924 in case No.
24485 of the Court of First Instance of Manila, in which the estate of the deceased
Elser was being administered. He repeated therein the allegations and prayer of his
cross-complaint as guardian filed on April 2, 1923, and referred to above. The last
amended answer was filed by him on August 21, 1925. It consisted of denial of the
allegations of the complaint and of the authenticity of the document whereby Elser is
alleged to have assumed the obligations of the defendants Concepcion to the plaintiff;
an allegation that at the time of execution thereof, Elser was of unsound mind; and a
statement of willingness to relinquished and abandon any rights Elser might have
acquired under said document in favor of the plaintiff.
After a lengthy trial, the court below, on January 22, 1927, rendered its decision
absolving the Elser estate from the complaint, ordering the Concepcions to pay the
plaintiff the sum of P342,372.64, with interest of 9 per cent and costs, and providing
for the sale of the mortgaged property, in case of non-payment of the judgment.
Both the plaintiff and the defendants Concepcion excepted to this judgment and
moved for a new trial on the usual statutory grounds. The motions were denied and
exceptions noted.
The case is now before this court on a joint bill of exceptions presented by the plaintiff
and the defendants Concepcion pursuant to stipulation. No briefs have been filed by
the Concepcions.
From the facts stated and from the pleadings it will be readily seen that as far as the
defendant Elser is concerned, the plaintiff alleged cause of action rests exclusively on
the deed of contract Exhibit C. The well known general rule is that a contract affects
only the parties and privies thereto. But there are exceptions to this rule and the
plaintiff contends that though it is neither a party nor a privy to the contract here in
question, the subrogation of Elser to the obligations of the Concepcions in favor of the
plaintiff as provided for in the contract, is a stipulation pour autrui upon which the
plaintiff may maintain its action
The nature and reach of the doctrine of the stipulations pour autrui is so thoroughly
discussed in the case of Uy Tam and Uy Yet vs. Leonard (30 Phil., 471), that no further
discussion thereof is here necessary. We wish , however, to emphasize the fact that it
was there held that in order to constitute a valid stipulation pour autrui, it must be the
purpose and intent of the stipulating parties to benefit the third person may be
incidentally benefited by stipulation. This conclusion is supported by numerous
authorities and is in complete harmony with the second paragraph of article 1257 of
the Civil Code, which reads as follows:
Should the contract contain any stipulation in favor of the third person, he
may demand its fulfillment, provided he has given notice of his acceptance
to the person bound before the stipulation has been revoked.
Applying this test, it seems clear that neither Exhibit C nor any other agreement
between the Concepcion and the Elser contained any stipulation pour autrui in favor
of the plaintiff. As stated in the appellee's brief:
The Concepcion owed the plaintiff a large sum of money and wanted to be
relieved of that obligation. Elser wanted the property which he had been
mortgaged to secure that obligation, and had to assume the obligation and
agree to secure the discharge of the Concepcion therefrom, in order to get
 the property. Neither of them had any desire to confer any benefit to the
bank. Neither of them entered into the contract for the sake of the bank. It
is obvious that each entered into the contract impelled by the advantage
accruing to him personally as a result thereof.
We may add that the stipulation here in question is not merely for the assumption of
the mortgaged debt by Elser, but is a provision for the subrogation of Elser to the
Concepcion obligations to the plaintiff. Inasmuch as the mere assumption of the
mortgage debt by the purchaser of the mortgaged land does not relieved the
mortgagor from his liability, it might be said that some show of reason that by such an
arrangement the mortgagee will have two debtors for the same debt instead of only
one and that this furnishes additional security and is to the creditor's advantage and
for his benefit. But such is not the case where, as here, the stipulation is for the
subrogation of the purchasers to the obligation of the original debtor; if such a
stipulation is duly accepted by the creditor, it works a novation of the original
agreement and releases the original debtor from further liability. Such subrogation is
rarely for the benefit of the creditor and that, in the present case, it was not believed
to be of any advantage to the bank is well shown by the fact that the parties were
unable to obtain its written consent to the stipulation.
But assuming that the stipulation is for the benefit of a third person, the plaintiff is
nevertheless not in position to maintain its action against Elser. In order to be
enforceable, such stipulations must be accepted by the third person and not has not
been done here. The plaintiff asserts that it accepted the stipulations in part, but that
is not a sufficient acceptance. The ordinary rules of offer and acceptance are
applicable, and it is a cardinal rule of the law of contracts that in order to create a
binding agreement, the acceptance must be absolute, unconditional, and identical
with the terms of the offer; otherwise there is no meeting of the minds or an
expression of one and the same common intention, one of the essential elements of
a valid contract (Civil Code, art., 1257; Page on Contracts, sec. 1308, and authorities
there cited).
But the plaintiff argues that in American jurisprudence, the purchaser of the
mortgaged property who assumes the payment of the mortgage debt, may for the
reason alone sued for the debt by the creditor and that the rule is applicable in this
jurisdiction. Aside from the fact that we are not dealing with a mere assumption of the
debt, but with a subrogation, it may be noted that this court has already held that the
American doctrine in this respect is not in harmony with the spirit of our legislation
and has not been adopted in this country. In the case of E.C. McCullough & Co. vs.
Veloso and Serna (46 Phil., 1), the court. speaking through its present Chief Justice,
said:
The effects of transfer of a mortgaged property to a third person are well
determined by the Civil Code. According to article 1879 of this Code, the
creditor may demand of the third person in possession of the property
mortgaged payment of such part of the debt, as is secured by the property
in his possession, in the manner and form established by law. The Mortgage
Law in force at the promulgation of the Civil Code and referred to in the
latter, exacted, among other conditions, also the circumstance that after
judicial or notarial demand, the original debtor had failed to make payment
of the debt at maturity. (Art. 135 of the Mortgage Law of the Philippines of
1889.) According to this, the obligation of the new possessor to pay the debt
originated from the right of the creditor to demand payment of him, it being
necessary that a demand for payment should have previously been made
upon the debtor and the latter should have failed to pay. And even if these
requirements were complied with, still the third possessor might abandon the
property mortgaged, and in that case it is considered to be in the possession
of the debtor. (Art. 136 of the same law.) This clearly shows that the spirit of
the Civil Code is to let the obligation of the debtor to pay the debt stand
although the property mortgaged to secure payment of said debt may have
been transferred to a third person. While the Mortgage Law of 1893
eliminated this provisions, it contained nothing indicating any change in the
spirit of the law in this respect. Article 129 of this law, which provides for the
substitution of the debtor by the third person in possession of the property,
for the purposes of giving notice, does not show this change and has
reference to a case where the action is directed only against the property
burdened with the mortgage. (Art. 168 of the Regulation.)
From what we have said it follows that the plaintiff can have no cause of action against
Elser, or rather against his estate. Assuming that Elser was of sound mind at the time
of the execution of Exhibit C — and that is a much debated question — the
Concepcion, and not the plaintiff might have maintained an action against the Elser
state; but that action is now barred through their failure to present their claim and
appraisal in the probate proceedings, and the plaintiff can therefore, not successfully
invoked article 1111 of the Civil Code, which in effect provides that after exhausting
the property of which the debtor may be in possession, the creditor may have
recourse to the debtor's credit and choses an action for the collection of unpaid
portion of the debt.
Counsel for the appellee also argue that the bank, having failed to present its claim to
the committee on claims and appraisal, it must be regarded as having elected to rely
on its mortgage alone and therefore can have no personal judgement against the Elser
estate. That is good law. Section 708 of the Code of Civil Procedure provides as follows:
 SEC. 708. Mortgage debt due from estate. — A creditor holding a claim
against the deceased, secured by mortgage or other collateral security, may
abandon the security and prosecute his claim before the committee, and
share in the general distribution of the assets of the estate; or he may
foreclose his mortgage or realize upon security, by ordinary action in court,
making the executor or administrator a party defendant; and if there is a
judgment for a deficiency, after the sale of the mortgaged premises, or the
property pledge, in the foreclosure or other proceedings to realize upon the
security, he any prove his deficiency judgment before the committee against
the estate of the deceased; or he may rely upon his mortgage or other
security alone, and foreclose the same at any time, within the period of
statute of limitations, and in that event he shall not be admitted as an
creditor, and shall receive no share in the distribution of the other assets of
the estate;
As will be seen, the mortgagee has the election of one out of three courses: (1) He
may abandon his security and share in the general distribution of the assets of the
estate, or (2) he may foreclose, secure a deficiency judgment and prove his deficiency
judgment before the committee, or (3) he may rely upon his security alone, in which
case he can receive no share in the distribution of the assets of the estate.
In this case the bank did not abandon the security and took no steps of any sort before
the committee within the time limit provided by the sections 689 and 690 of the Code
of Civil Procedure. The committed ceased to function long ago, and the bank has now
nothing to rely on except the mortgage. Internationally or not, it has bought itself
within the third course provided for in section 708; it has no alternative.
But counsel for the plaintiff say that the amount of the deficiency, if any, could not be
proved before the foreclosure sale and had been effected; that section 708 expressly
provide for the proof of the deficiency judgment before the committee after the sale
of the mortgaged property; that this provisions must be construed to mean that the
presentation and prosecution of the claim of the deficiency must be made after, not
before, the sale; and that if the mortgagee presents his claim from a deficiency before
a deficiency judgment have been rendered, he will loose his rights under the mortgage
and be regarded as having abandon his security.
This clearly a misconception of the statute, and the cases cited by the appellant in
support for its contention are not in point. Until the foreclosure sale is made, the
demand for the payment of deficiency is a contingent claim within the meaning of
sections 746, 747, and 748 of the Code of Civil Procedure, which sections reads as
follows:
SEC. 746. Claims may be presented to committee. — If a person is liable as
surety for the deceased, or has other contingent claims against his estate
which cannot be proved as a debt before the committee, the same may be
presented with the proof, to the committee, who shall state in their report
that such claim was presented to them.
SEC. 747. Estate to be retained to meet claims. — If the court is satisfied from
the report of the committee, or from proofs exhibited to it, that such
contingent claim is valid, it may order the executor or administrator to retains
in his hands sufficient estate to pay such contingent claim, when the same
becomes absolute, or if the estate is insolvent, sufficient to pay a portion
equal to the dividend of the other creditors.
SEC. 748. Claim becoming absolute in two years, how allowed. — If such
contingent claims becomes absolute and is presented to the court, or to the
executor or administrator, within two years from the time limited for other
creditors to present their claims, it may be allowed by the court if not
disputed by the executor or administrator, and, if disputed, it may be proved
that the committee already appointed, or before others to be appointed, for
the purpose, as if presented for allowance before the committee had made
its report.
These sections are in entire harmony with section 708; the amount of the deficiency
cannot be ascertained or proven until the foreclosure proceedings have terminated,
but the claim for the deficiency must be presented to the committee within the period
fixed by sections 689 and 690 of the Code. The committee does not then pass upon
the validity of the claim but reports it to the court. If the court "from the report of the
committee" or from "the proofs exhibited to it" is satisfied that the contingent claim
is valid, the executor or administrator may be required to retain in his possession
sufficient assets to pay the claim when it becomes absolute, or enough to pay the
creditor his proportionate share if the assets of the estate are insufficient to pay the
debts. When the contingent claim has become absolute, its amount may be
ascertained and established in the manner indicated by sections 748 and 749. As will
be seen, the bank both could and should have presented its claim to the committee
within the time prescribed by the law. The concurring opinion of Justices Malcolm and
Fisher in the case of Jaucian vs. Querol (38 Phil., 707), contains a very lucid expositions
of the law on the subject and further comment is therefore unnecessary.
The appeal is without merit and the judgment of the court below is affirmed with the
costs against the plaintiff-appellant. So ordered.
Johnson, Street, Malcolm, Johns, Romualdez, and Villa-Real, JJ., concur.
G.R. No. L-32425 November 21, 1984
THE IMPERIAL INSURANCE, INC., plaintiff-appellee,
vs.
EMILIA T. DAVID, defendant-appellant.
RELOVA, J.:
Petition for review on certiorari of the decision rendered by the then Court of First
Instance of Manila in Civil Case No. 67713, sustaining the money claims of plaintiff-
appellee, The Imperial Insurance, Inc. against defendant-appellant Emilia T. David,
based on three (3) different causes of action in the complaint.
The first two causes of action involve the indemnity agreements which defendant-
appellant and her deceased husband, Felicisimo V. Reyes, jointly and severally,
executed in favor of herein appellee, for and in consideration of two (2) surety bonds
underwritten by it to lift the lift the writs of attachment in Civil Case No. 5213 of the
Rizal Court of First Instance for the amount of P60,000.00, and in Civil Case No. Q-
5214, also with the same court for the amount of P40,000.00
The third cause of action involves accrued premiums and documentary stamps for four
(4) years with legal interest therein from the filing of the complaint also underwritten
by appellee.
Records show that Felicisimo V. Reyes and his wife, herein appellant, executed two (2)
indemnity agreements in favor of appellee jointly and severally to assure
indemnification of the latter for whatever liability it may incur in connection with its
posting the security bonds to lift the attachments in Civil Case No. Q-5213 for the
amount of P60,000.00, and in Civil Case No. Q-5214 for the amount of P40,000.00, for
the benefit of Felicisimo V. Reyes.
Later, Felicisimo V. Reyes and his wife, jointly and severally, executed another
indemnity agreement in favor of appellee to assure indemnification of the latter under
a homestead bond for the sum of P7,500.00 it had executed jointly and severally with
them in favor of the Development Bank of the Philippines. On the same date,
Felicisimo V. Reyes and his wife paid to appellee the sum of P153.33 covering the
premium and other expenses for the homestead bond on the first year.
Felicisimo V.Reyes died and Special Proceedings No. 12948 of the then Court of First
Instance of Bulacan, entitled "In the Matter of the Instestate of Felicisimo V. Reyes,"
was commenced. His wife, herein appellant, qualified and took her oath of office as
the administratrix of said intestate estate. Corresponding notices to creditors were
issued and published for three (3) consecutive weeks in the "Manila Chronicle" and
were duly posted in the required places.
Meanwhile, judgment was rendered in the aforesaid two cases (Civil Cases Nos. Q-
5213 and Q-5214) against the spouses Felicisimo V. Reyes and appellant Emilia T.
David which has become final and executory. Writs of execution of the decision on the
said cases were returned unsatisfied. As a consequence, judgment was rendered
against the surety bonds for the sum of P60,000.00 in Civil Case No. Q-5213 and for
the sum of P40,000.00 in Civil Case No. Q-5214.
Appellee made demands on Emilia T. David to pay the amounts of P60,000.00 and
P40,000.00 under the surety bonds and arrears in premiums thereon. When appellant
David failed to make payments, appellee filed Civil Case No. 67713 in the then Court
of First Instance of Manila, Branch 1, for collection of sums of money under three (3)
different causes of action.
A motion to dismiss was filed by herein appellant on the following grounds. to wit: (1)
the court has no jurisdiction over the nature of the action or suit; (2) the complaint
states no cause of action; and (3) the plaintiff's causes of action, if there be any, have
been barred for its failure to file its claims against the estate of the deceased Felicisimo
V. Reyes in due time.
The lower court denied the motion for lack of merit. Thereafter, appellant, as
defendant in said Civil Case No. 67713, filed her answer.
After trial, the court rendered judgment ordering defendant Emilia T. David (herein
appellant)
1. to pay the plaintiff under the first cause of action, the amount of
P60,000.00 with interest at legal rate from the filing of the
complaint until fun payment shall be effected; and a further sum of
P1,522.50 annually from June 20, 1961 until termination of this
case, said amount representing premiums and documentary stamps
in the surety bond, Exh. "B", with interest at legal rate from the filing
of the complaint until full payment is made;
2. to pay the plaintiff under the second cause of action, the amount
of P40,000.00 with interest at the legal rate from the filing of the
complaint until full payment shag be made; and a further sum of
P1,105.00 annually from June 20, 1961 until termination of this
case, said amount representing premiums and documentary stamps
 on the surety bond Exh. "B", with interest at the legal rate from the
filing of the complaint until full payment is made;
3. to pay the plaintiff under the third cause of action the amount of
P153.33 annually for a period of 4 years from June 29, 1962
representing premiums and documentary stamps on the
Homestead Bond Exh. "C-1" with interest at the legal rate from the
filing of the complaint until full payment is made;
4. to pay the plaintiff in concept of attorney's fees the sum of
P20,000.00, representing 20% of the principal claim of plaintiff; plus
cost. (pp. 39-40, Rollo)
The principal issue raised by appellant Emilia T. David in this appeal is whether or not
the lower court has jurisdiction over plaintiff's causes of action. She contends that
appellee's claim should have been presented according to Rule 86 of the Revised Rules
of Court and its failure to do so operates to bar its claim forever; that the complaint
failed to state a cause of action; that the writ of attachment was improvidently issued;
and, that the lower court should have discharged the writs. Further, she argues that
the judgment on attorney's fees has neither legal nor factual basis.
We find no merit in this appeal. Under the law and well settled jurisprudence, when
the obligation is a solidary one, the creditor may bring his action in toto against any of
the debtors obligated in solidum. Thus, if husband and wife bound themselves jointly
and severally, in case of his death her liability is independent of and separate from her
husband s; she may be sued for the whole debt and it would be error to hold that the
claim against her as well as the claim against her husband should be made in the
decedent's estate. (Agcaoili vs. Vda. de Agcaoili, 90 Phil. 97)
procedure should the creditor desire to go against the. deceased
debtor, "but there is noting in the aid provision making compliance
with such procedure a condition precedent an ordinary action
against the solidary debtors. should the creditor choose to demand
payment from the latter, could be entertained to the extent that
failure to observe the same would deprive the court jurisdiction to
make cognizance of the action against the surviving debtors. Upon
lie other hand, the Civil Code expressly allows the creditor to
proceed against any one of the solidary debtors or some or all of
them simultaneously. Hence, there is nothing improper in the
creditor's filing of an action against the surviving solidary debtors
alone, instead of instituting a proceeding for the settlement of the
estate of the deceased debtor wherein his claim could be filed.
ACCORDINGLY, the decision of the court a quo is hereby AFFIRMED in toto with costs
against appellant.
SO ORDERED.
Teehankee (Chairman), Melencio-Herrera, Plana, Gutierrez, Jr. and De la Fuente, JJ.,
concur.

In the case at bar, appellant signed a joint and several obligation with her husband in
favor of herein appellee; as a consequence, the latter may demand from either of
them the whole obligation. As distinguished from a joint obligation where each of the
debtor is liable only for a proportionate part of the debt and the creditor is entitled
only to a proportionate part of the credit, in a solidary obligation the creditor may
enforce the entire obligation against one of the debtors.

Where the obligation assumed by several persons is joint and

several, each of the debtors is answerable for the whole obligation
with the right to seek contribution from his co-debtors. (Philippine
International Surety Co., Inc. vs. Gonzales, 3 SCRA 391)

And, in Manila Surety and Fidelity Co., Inc. vs. Villarama, et al., 107
Phil. 891, this Court ruled that the Rules of Court provide the
G.R. No. 147561 June 22, 2006
STRONGHOLD INSURANCE COMPANY, INC., Petitioner,
vs.
REPUBLIC-ASAHI GLASS CORPORATION, Respondent.
DECISION
PANGANIBAN, CJ:
Asurety company’s liability under the performance bond it issues is solidary. The death
of the principal obligor does not, as a rule, extinguish the obligation and the solidary
nature of that liability.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to
reverse the March 13, 2001 Decision2 of the Court of Appeals (CA) in CA-GR CV No.
41630. The assailed Decision disposed as follows:
"WHEREFORE, the Order dated January 28, 1993 issued by the lower court is
REVERSED and SET ASIDE. Let the records of the instant case be REMANDED to the
lower court for the reception of evidence of all parties."3
The Facts
The facts of the case are narrated by the CA in this wise:
"On May 24, 1989, [respondent] Republic-Asahi Glass Corporation (Republic-Asahi)
entered into a contract with x x x Jose D. Santos, Jr., the proprietor of JDS Construction
(JDS), for the construction of roadways and a drainage system in Republic-Asahi’s
compound in Barrio Pinagbuhatan, Pasig City, where [respondent] was to pay x x x JDS
five million three hundred thousand pesos (P5,300,000.00) inclusive of value added
tax for said construction, which was supposed to be completed within a period of two
hundred forty (240) days beginning May 8, 1989. In order ‘to guarantee the faithful
and satisfactory performance of its undertakings’ x x x JDS, shall post a performance
bond of seven hundred ninety five thousand pesos (P795,000.00). x x x JDS executed,
jointly and severally with [petitioner] Stronghold Insurance Co., Inc. (SICI) Performance
Bond No. SICI-25849/g(13)9769.
"On May 23, 1989, [respondent] paid to x x x JDS seven hundred ninety five thousand
pesos (P795,000.00) by way of downpayment.
"Two progress billings dated August 14, 1989 and September 15, 1989, for the total
amount of two hundred seventy four thousand six hundred twenty one pesos and one
centavo (P274,621.01) were submitted by x x x JDS to [respondent], which the latter
paid. According to [respondent], these two progress billings accounted for only
7.301% of the work supposed to be undertaken by x x x JDS under the terms of the
contract.
"Several times prior to November of 1989, [respondent’s] engineers called the
attention of x x x JDS to the alleged alarmingly slow pace of the construction, which
resulted in the fear that the construction will not be finished within the stipulated 240-
day period. However, said reminders went unheeded by x x x JDS.
"On November 24, 1989, dissatisfied with the progress of the work undertaken by x x
x JDS, [respondent] Republic-Asahi extrajudicially rescinded the contract pursuant to
Article XIII of said contract, and wrote a letter to x x x JDS informing the latter of such
rescission. Such rescission, according to Article XV of the contract shall not be
construed as a waiver of [respondent’s] right to recover damages from x x x JDS and
the latter’s sureties.
"[Respondent] alleged that, as a result of x x x JDS’s failure to comply with the
provisions of the contract, which resulted in the said contract’s rescission, it had to
hire another contractor to finish the project, for which it incurred an additional
expense of three million two hundred fifty six thousand, eight hundred seventy four
pesos (P3,256,874.00).
"On January 6, 1990, [respondent] sent a letter to [petitioner] SICI filing its claim under
the bond for not less than P795,000.00. On March 22, 1991, [respondent] again sent
another letter reiterating its demand for payment under the aforementioned bond.
Both letters allegedly went unheeded.
"[Respondent] then filed [a] complaint against x x x JDS and SICI. It sought from x x x
JDS payment of P3,256,874.00 representing the additional expenses incurred by
[respondent] for the completion of the project using another contractor, and from x x
x JDS and SICI, jointly and severally, payment of P750,000.00 as damages in
accordance with the performance bond; exemplary damages in the amount of
P100,000.00 and attorney’s fees in the amount of at least P100,000.00.
"According to the Sheriff’s Return dated June 14, 1991, submitted to the lower court
by Deputy Sheriff Rene R. Salvador, summons were duly served on defendant-appellee
SICI. However, x x x Jose D. Santos, Jr. died the previous year (1990), and x x x JDS
Construction was no longer at its address at 2nd Floor, Room 208-A, San Buena Bldg.
Cor. Pioneer St., Pasig, Metro Manila, and its whereabouts were unknown.
"On July 10, 1991, [petitioner] SICI filed its answer, alleging that the [respondent’s]
money claims against [petitioner and JDS] have been extinguished by the death of Jose
D. Santos, Jr. Even if this were not the case, [petitioner] SICI had been released from
its liability under the performance bond because there was no liquidation, with the
active participation and/or involvement, pursuant to procedural due process, of
herein surety and contractor Jose D. Santos, Jr., hence, there was no ascertainment of
the corresponding liabilities of Santos and SICI under the performance bond. At this
point in time, said liquidation was impossible because of the death of Santos, who as
such can no longer participate in any liquidation. The unilateral liquidation on the party
(sic) of [respondent] of the work accomplishments did not bind SICI for being violative
of procedural due process. The claim of [respondent] for the forfeiture of the
performance bond in the amount of P795,000.00 had no factual and legal basis, as
payment of said bond was conditioned on the payment of damages which
[respondent] may sustain in the event x x x JDS failed to complete the contracted
works. [Respondent] can no longer prove its claim for damages in view of the death of
Santos. SICI was not informed by [respondent] of the death of Santos. SICI was not
informed by [respondent] of the unilateral rescission of its contract with JDS, thus SICI
was deprived of its right to protect its interests as surety under the performance bond,
and therefore it was released from all liability. SICI was likewise denied due process
when it was not notified of plaintiff-appellant’s process of determining and fixing the
amount to be spent in the completion of the unfinished project. The procedure
contained in Article XV of the contract is against public policy in that it denies SICI the
right to procedural due process. Finally, SICI alleged that [respondent] deviated from
the terms and conditions of the contract without the written consent of SICI, thus the
latter was released from all liability. SICI also prayed for the award of P59,750.00 as
attorney’s fees, and P5,000.00 as litigation expenses.
"On August 16, 1991, the lower court issued an order dismissing the complaint of
[respondent] against x x x JDS and SICI, on the ground that the claim against JDS did
not survive the death of its sole proprietor, Jose D. Santos, Jr. The dispositive portion
of the [O]rder reads as follows:
‘ACCORDINGLY, the complaint against the defendants Jose D. Santos, Jr., doing
business under trade and style, ‘JDS Construction’ and Stronghold Insurance
Company, Inc. is ordered DISMISSED.
‘SO ORDERED.’
"On September 4, 1991, [respondent] filed a Motion for Reconsideration seeking
reconsideration of the lower court’s August 16, 1991 order dismissing its complaint.
[Petitioner] SICI field its ‘Comment and/or Opposition to the Motion for
Reconsideration.’ On October 15, 1991, the lower court issued an Order, the
dispositive portion of which reads as follows:
‘WHEREFORE, premises considered, the Motion for Reconsideration is hereby given
due course. The Order dated 16 August 1991 for the dismissal of the case against
Stronghold Insurance Company, Inc., is reconsidered and hereby reinstated (sic).
However, the case against defendant Jose D. Santos, Jr. (deceased) remains
undisturbed.
‘Motion for Preliminary hearing and Manifestation with Motion filed by [Stronghold]
Insurance Company Inc., are set for hearing on November 7, 1991 at 2:00 o’clock in
the afternoon.
‘SO ORDERED.’
"On June 4, 1992, [petitioner] SICI filed its ‘Memorandum for Bondsman/Defendant
SICI (Re: Effect of Death of defendant Jose D. Santos, Jr.)’ reiterating its prayer for the
dismissal of [respondent’s] complaint.
"On January 28, 1993, the lower court issued the assailed Order reconsidering its
Order dated October 15, 1991, and ordered the case, insofar as SICI is concerned,
dismissed. [Respondent] filed its motion for reconsideration which was opposed by
[petitioner] SICI. On April 16, 1993, the lower court denied [respondent’s] motion for
reconsideration. x x x."4
Ruling of the Court of Appeals
The CA ruled that SICI’s obligation under the surety agreement was not extinguished
by the death of Jose D. Santos, Jr. Consequently, Republic-Asahi could still go after SICI
for the bond.
The appellate court also found that the lower court had erred in pronouncing that the
performance of the Contract in question had become impossible by respondent’s act
of rescission. The Contract was rescinded because of the dissatisfaction of respondent
with the slow pace of work and pursuant to Article XIII of its Contract with JDS.
The CA ruled that "[p]erformance of the [C]ontract was impossible, not because of
[respondent’s] fault, but because of the fault of JDS Construction and Jose D. Santos,
Jr. for failure on their part to make satisfactory progress on the project, which
amounted to non-performance of the same. x x x [P]ursuant to the [S]urety [C]ontract,
SICI is liable for the non-performance of said [C]ontract on the part of JDS
Construction."5
Hence, this Petition.6
Issue
Petitioner states the issue for the Court’s consideration in the following manner:
"Death is a defense of Santos’ heirs which Stronghold could also adopt as its defense
against obligee’s claim."7
More precisely, the issue is whether petitioner’s liability under the performance bond
was automatically extinguished by the death of Santos, the principal.
The Court’s Ruling
The Petition has no merit.
Sole Issue:
Effect of Death on the Surety’s Liability
Petitioner contends that the death of Santos, the bond principal, extinguished his
liability under the surety bond. Consequently, it says, it is automatically released from
any liability under the bond.
As a general rule, the death of either the creditor or the debtor does not extinguish
the obligation.8 Obligations are transmissible to the heirs, except when the
transmission is prevented by the law, the stipulations of the parties, or the nature of
the obligation.9 Only obligations that are personal10 or are identified with the persons
themselves are extinguished by death.11
Section 5 of Rule 8612 of the Rules of Court expressly allows the prosecution of money
claims arising from a contract against the estate of a deceased debtor. Evidently, those
claims are not actually extinguished.13 What is extinguished is only the obligee’s action
or suit filed before the court, which is not then acting as a probate court.14
In the present case, whatever monetary liabilities or obligations Santos had under his
contracts with respondent were not intransmissible by their nature, by stipulation, or
by provision of law. Hence, his death did not result in the extinguishment of those
obligations or liabilities, which merely passed on to his estate.15 Death is not a defense
that he or his estate can set up to wipe out the obligations under the performance
bond. Consequently, petitioner as surety cannot use his death to escape its monetary
obligation under its performance bond.
The liability of petitioner is contractual in nature, because it executed a performance
bond worded as follows:
"KNOW ALL MEN BY THESE PRESENTS:
"That we, JDS CONSTRUCTION of 208-A San Buena Building, contractor, of Shaw Blvd.,
Pasig, MM Philippines, as principal and the STRONGHOLD INSURANCE COMPANY, INC.
a corporation duly organized and existing under and by virtue of the laws of the
Philippines with head office at Makati, as Surety, are held and firmly bound unto the
REPUBLIC ASAHI GLASS CORPORATION and to any individual, firm, partnership,
corporation or association supplying the principal with labor or materials in the penal
sum of SEVEN HUNDRED NINETY FIVE THOUSAND (P795,000.00), Philippine Currency,
for the payment of which sum, well and truly to be made, we bind ourselves, our heirs,
executors, administrators, successors and assigns, jointly and severally, firmly by these
presents.
"The CONDITIONS OF THIS OBLIGATION are as follows;
"WHEREAS the above bounden principal on the ___ day of __________, 19__ entered
into a contract with the REPUBLIC ASAHI GLASS CORPORATION represented by
_________________, to fully and faithfully. Comply with the site preparation works
road and drainage system of Philippine Float Plant at Pinagbuhatan, Pasig, Metro
Manila.
"WHEREAS, the liability of the Surety Company under this bond shall in no case exceed
the sum of PESOS SEVEN HUNDRED NINETY FIVE THOUSAND (P795,000.00) Philippine
Currency, inclusive of interest, attorney’s fee, and other damages, and shall not be
liable for any advances of the obligee to the principal.
"WHEREAS, said contract requires the said principal to give a good and sufficient bond
in the above-stated sum to secure the full and faithfull performance on its part of said
contract, and the satisfaction of obligations for materials used and labor employed
upon the work;
"NOW THEREFORE, if the principal shall perform well and truly and fulfill all the
undertakings, covenants, terms, conditions, and agreements of said contract during
the original term of said contract and any extension thereof that may be granted by
the obligee, with notice to the surety and during the life of any guaranty required
under the contract, and shall also perform well and truly and fulfill all the
undertakings, covenants, terms, conditions, and agreements of any and all duly
authorized modifications of said contract that may hereinafter be made, without
notice to the surety except when such modifications increase the contract price; and
such principal contractor or his or its sub-contractors shall promptly make payment to
any individual, firm, partnership, corporation or association supplying the principal of the substantive right of the solidary creditor. Evidently, despite the death of the
its sub-contractors with labor and materials in the prosecution of the work provided principal debtor, respondent may still sue petitioner alone, in accordance with the
for in the said contract, then, this obligation shall be null and void; otherwise it shall solidary nature of the latter’s liability under the performance bond.
remain in full force and effect. Any extension of the period of time which may be
granted by the obligee to the contractor shall be considered as given, and any WHEREFORE, the Petition is DENIED and the Decision of the Court of Appeals
modifications of said contract shall be considered as authorized, with the express AFFIRMED. Costs against petitioner.
consent of the Surety.
SO ORDERED.
"The right of any individual, firm, partnership, corporation or association supplying the
contractor with labor or materials for the prosecution of the work hereinbefore
stated, to institute action on the penal bond, pursuant to the provision of Act No.
3688, is hereby acknowledge and confirmed."16

As a surety, petitioner is solidarily liable with Santos in accordance with the Civil Code,
which provides as follows:

"Art. 2047. By guaranty a person, called the guarantor, binds himself to the creditor
to fulfill the obligation of the principal debtor in case the latter should fail to do so.

"If a person binds himself solidarily with the principal debtor, the provisions of Section
4,17 Chapter 3, Title I of this Book shall be observed. In such case the contract is called
a suretyship."

xxxxxxxxx

"Art. 1216. The creditor may proceed against any one of the solidary debtors or some
or all of them simultaneously. The demand made against one of them shall not be an
obstacle to those which may subsequently be directed against the others, so long as
the debt has not been fully collected."

Elucidating on these provisions, the Court in Garcia v. Court of Appeals18 stated thus:

"x x x. The surety’s obligation is not an original and direct one for the performance of
his own act, but merely accessory or collateral to the obligation contracted by the
principal. Nevertheless, although the contract of a surety is in essence secondary only
to a valid principal obligation, his liability to the creditor or promisee of the principal
is said to be direct, primary and absolute; in other words, he is directly and equally
bound with the principal. x x x."19

Under the law and jurisprudence, respondent may sue, separately or together, the
principal debtor and the petitioner herein, in view of the solidary nature of their
liability. The death of the principal debtor will not work to convert, decrease or nullify
G.R. No. 170498 January 9, 2013
METROPOLITAN BANK & TRUST COMPANY, Petitioner,
vs.
ABSOLUTE MANAGEMENT CORPORATION, Respondent.
DECISION
BRION, J.:
We resolve petitioner Metropolitan Bank & Trust Company's (Metro bank's) petition
for review on certiorari1 seeking the reversal of the decision2 dated August 25, 2005
and the resolution3 dated November 17, 2005 of the Court of Appeals (CA) in CA-G.R.
SP No. 86336. The assailed decision affirmed the order 4 dated May 7, 2004 of the
Regional Trial Court (RTC) of Quezon City, Branch 80. The RTC had denied the
admission of Metrobank's Fourth-Party Complaint5 against the Estate of Jose L. Chua
for being a money claim that falls under Section 5, Rule 86 of the Rules of Court; the
claim should have been filed in the pending judicial settlement of Chua’s estate before
the RTC of Pasay City. The CA affirmed the RTC’s order based on the same ground.
Factual Antecedents
On October 5, 2000, Sherwood Holdings Corporation, Inc. (SHCI) filed a complaint for
sum of money against Absolute Management Corporation (AMC). The complaint was
docketed as Civil Case No. Q-00-42105 and was assigned to the RTC of Quezon City,
Branch 80.6
SHCI alleged in its complaint that it made advance payments to AMC for the purchase
of 27,000 pieces of plywood and 16,500 plyboards in the sum of ₱12,277,500.00,
covered by Metrobank Check Nos. 1407668502, 140768507, 140768530, 140768531,
140768532, 140768533 and 140768534. These checks were all crossed, and were all
made payable to AMC. They were given to Chua, AMC’s General Manager, in 1998.7
Chua died in 1999, 8 and a special proceeding for the settlement of his estate was
commenced before the RTC of Pasay City. This proceeding was pending at the time
AMC filed its answer with counterclaims and third-party complaint.9
SHCI made demands on AMC, after Chua’s death, for allegedly undelivered items
worth ₱8,331,700.00. According to AMC, these transactions could not be found in its
records. Upon investigation, AMC discovered that in 1998, Chua received from SHCI
18 Metrobank checks worth ₱31,807,500.00. These were all payable to AMC and were
crossed or "for payee’s account only."10
In its answer with counterclaims and third-party complaint,11 AMC averred that it had
no knowledge of Chua’s transactions with SHCI and it did not receive any money from
the latter. AMC also asked the RTC to hold Metrobank liable for the subject checks in
case it is adjudged liable to SHCI.
Metrobank filed a motion for bill of particulars,12 seeking to clarify certain ambiguous
statements in AMC’s answer. The RTC granted the motion but AMC failed to submit
the required bill of particulars. Hence, Metrobank filed a motion to strike out the third-
party complaint.13
In the meantime, Metrobank filed a motion to dismiss14 against AMC on the ground
that the latter engaged in prohibited forum shopping. According to Metrobank, AMC’s
claim against it is the same claim that it raised against Chua’s estate in Special
Proceedings No. 99-0023 before the RTC of Pasay City, Branch 112. The RTC
subsequently denied this motion.15
The RTC of Quezon City opted to defer consideration16 of Metrobank’s motion to strike
out third-party complaint17 and it instead granted AMC’s motion for leave to serve
written interrogatories on the third-party defendant.18 While Metrobank filed its
answer to the written interrogatories, AMC was again directed by the RTC, in an
order19 dated August 13, 2003, to submit its bill of particulars. Instead, AMC filed a
motion for reconsideration20 which was denied in an order21 dated October 28, 2003.
AMC still did not file its bill of particulars. The RTC, on the other hand, did not act on
Metrobank’s motion to strike out AMC’s third-party complaint.22
In its answer23 dated December 1, 2003, Metrobank admitted that it deposited the
checks in question to the account of Ayala Lumber and Hardware, a sole
proprietorship Chua owned and managed. The deposit was allegedly done with the
knowledge and consent of AMC. According to
Metrobank, Chua then gave the assurance that the arrangement for the handling of
the checks carried AMC’s consent. Chua also submitted documents showing his
position and interest in AMC. These documents, as well as AMC’s admission in its
answer that it allowed Chua to manage AMC with a relative free hand, show that it
knew of Chua’s arrangement with Metrobank. Further, Chua’s records show that the
proceeds of the checks were remitted to AMC which cannot therefore now claim that
it did not receive these proceeds.
Metrobank also raised the defense of estoppel. According to Metrobank, AMC had
knowledge of its arrangements with Chua for several years. Despite this arrangement,
AMC did not object to nor did it call the attention of Metrobank about Chua’s alleged
lack of authority to deposit the checks in Ayala Lumber and Hardware’s account. At
this point, AMC is already estopped from questioning Chua’s authority to deposit
these checks in Ayala Lumber and Hardware’s account.
Lastly, Metrobank asserted that AMC gave Chua unbridled control in managing AMC’s
affairs. This measure of control amounted to gross negligence that was the proximate
cause of the loss that AMC must now bear.
24
Subsequently, Metrobank filed a motion for leave to admit fourth-party complaint
against Chua’s estate. It alleged that Chua’s estate should reimburse Metrobank in
case it would be held liable in the third-party complaint filed against it by AMC.
The RTC’s Ruling
25
In an order dated May 7, 2004, the RTC denied Metrobank’s motion. It likewise
denied Metrobank’s motion for reconsideration in an order 26 dated July 7, 2004.
The RTC categorized Metrobank’s allegation in the fourth-party complaint as a "cobro
de lo indebido"27 – a kind of quasi-contract that mandates recovery of what has been
improperly paid. Quasi-contracts fall within the concept of implied contracts that must
be included in the claims required to be filed with the judicial settlement of the
deceased’s estate under Section 5, Rule 86 of the Rules of Court. As such claim, it
should have been filed in Special Proceedings No. 99-0023, not before the RTC as a
fourth-party complaint. The RTC, acting in the exercise of its general jurisdiction, does
not have the authority to adjudicate the fourth-party complaint. As a trial court
hearing an ordinary action, it cannot resolve matters pertaining to special proceedings
because the latter is subject to specific rules.
Metrobank responded to the RTC ruling by filing a petition for certiorari 28 under Rule
65 before the CA.
The CA’s Ruling
The CA affirmed the RTC’s ruling that Metrobank’s fourth-party complaint should have
been filed in Special Proceedings No. 99-0023.29 According to the CA, the relief that
Metrobank prayed for was based on a quasi-contract and was a money claim
categorized as an implied contract that should be filed under Section 5, Rule 86 of the
Rules of Court.
Based on the statutory construction principle of lex specialis derogat generali, the CA
held that Section 5, Rule 86 of the Rules of Court is a special provision that should
prevail over the general provisions of Section 11, Rule 6 of the Rules of Court. The
latter applies to money claims in ordinary actions while a money claim against a person
already deceased falls under the settlement of his estate that is governed by the rules
on special proceedings. If at all, rules for ordinary actions only apply suppletorily to
special proceedings.
The Present Petition
In its present petition for review on certiorari,30 Metrobank asserts that it should be
allowed to file a fourth-party complaint against Chua’s estate in the proceedings
before the RTC; its fourth-party complaint was filed merely to enforce its right to be
reimbursed by Chua’s estate in case Metrobank is held liable to AMC. Hence, Section
11, Rule 6 of the Rules of Court should apply.
AMC, in its comment,31 maintains the line that the CA and the RTC rulings should be
followed, i.e., that Metrobank’s claim is a quasi-contract that should be filed as a claim
under Section 5, Rule 86 of the Rules of Court.
AMC also challenges the form of Metrobank’s petition for failure to comply with
Section 4, Rule 45 of the Rules of Court. This provision requires petitions filed before
the Supreme Court to be accompanied by "such material portions of the record as
would support the petition."
According to AMC, the petition’s annexes are mostly Metrobank’s pleadings and court
issuances. It did not append all relevant AMC pleadings before the RTC and the CA.
For this reason, the petition should have been dismissed outright.
Issues
The parties’ arguments, properly joined, present to us the following issues:
1) Whether the petition for review on certiorari filed by Metrobank before
the Supreme Court complies with Section 4, Rule 45 of the Rules of Court;
and
2) Whether Metrobank’s fourth-party complaint against Chua’s estate should
be allowed.
The Court’s Ruling
The Present Petition Complies With Section 4, Rule 45 of the Rules of Court
AMC posits that Metrobank’s failure to append relevant AMC pleadings submitted to
the RTC and to the CA violated Section 4, Rule 45 of the Rules of Court, 32 and is a
sufficient ground to dismiss the petition under Section 5, Rule 45 of the Rules of
Court.33
We disagree with AMC’s position.
In F.A.T. Kee Computer Systems, Inc. v. Online Networks International, Inc., 34 Online
Networks International, Inc. similarly assailed F.A.T. Kee Computer Systems, Inc.’s
failure to attach the transcript of stenographic notes (TSN) of the RTC proceedings,
and claimed this omission to be a violation of Section 4, Rule 45 of the Rules of Court
that warranted the petition’s dismissal. The Court held that the defect was not fatal,
as the TSN of the proceedings before the RTC forms part of the records of the case.
Thus, there was no incurable omission that warranted the outright dismissal of the
petition.
The Court significantly pointed out in F.A.T. Kee that the requirement in Section 4,
Rule 45 of the Rules of Court is not meant to be an absolute rule whose violation would
automatically lead to the petition’s dismissal.35 The Rules of Court has not been
intended to be totally rigid. In fact, the Rules of Court provides that the Supreme Court
"may require or allow the filing of such pleadings, briefs, memoranda or documents
as it may deem necessary within such periods and under such conditions as it may
consider appropriate";36 and "[i]f the petition is given due course, the Supreme Court
may require the elevation of the complete record of the case or specified parts thereof
within fifteen (15) days from notice."37 These provisions are in keeping with the
overriding standard that procedural rules should be liberally construed to promote
their objective and to assist the parties in obtaining a just, speedy and inexpensive
determination of every action or proceeding.38
Under this guiding principle, we do not see Metrobank’s omission to be a fatal one
that should warrant the petition’s outright dismissal. To be sure, the omission to
submit the adverse party’s pleadings in a petition before the Court is not a
commendable practice as it may lead to an unduly biased narration of facts and
arguments that masks the real issues before the Court. Such skewed presentation
could lead to the waste of the Court’s time in sifting through the maze of the parties’
narrations of facts and arguments and is a danger the Rules of Court seeks to avoid.
Our examination of Metrobank’s petition shows that it contains AMC’s opposition to
its motion to admit fourth-party complaint among its annexes. The rest of the
pleadings have been subsequently submitted as attachments in Metrobank’s Reply. A
reading of these pleadings shows that their arguments are the same as those stated
in the orders of the trial court and the Court of Appeals. Thus, even if Metrobank’s
petition did not contain some of AMC’s pleadings, the Court still had the benefit of a
clear narration of facts and arguments according to both parties’ perspectives. In this
broader view, the mischief that the Rules of Court seeks to avoid has not really been
present. If at all, the omission is not a grievous one that the spirit of liberality cannot
address.
The Merits of the Main Issue
The main issue poses to us two essential points that must be addressed. First, are
quasi-contracts included in claims that should be filed pursuant to Rule 86, Section 5
of the Rules of Court? Second, if so, is Metrobank’s claim against the Estate of Jose
Chua based on a quasi-contract?
Quasi-contracts are included in
claims that should be filed under Rule
86, Section 5 of the Rules of Court
In Maclan v. Garcia,39 Gabriel Maclan filed a civil case to recover from Ruben Garcia
the necessary expenses he spent as possessor of a piece of land. Garcia acquired the
land as an heir of its previous owner. He set up the defense that this claim should have
been filed in the special proceedings to settle the estate of his predecessor. Maclan,
on the other hand, contended that his claim arises from law and not from contract,
express or implied. Thus, it need not be filed in the settlement of the estate of Garcia’s
predecessor, as mandated by Section 5, Rule 87 of the Rules of Court (now Section 5,
Rule 86).
The Court held under these facts that a claim for necessary expenses spent as previous
possessor of the land is a kind of quasi-contract. Citing Leung Ben v. O’Brien,40 it
explained that the term "implied contracts," as used in our remedial law, originated
from the common law where obligations derived from quasi-contracts and from law
are both considered as implied contracts. Thus, the term quasi-contract is included in
the concept "implied contracts" as used in the Rules of Court. Accordingly, liabilities
of the deceased arising from quasi-contracts should be filed as claims in the
settlement of his estate, as provided in Section 5, Rule 86 of the Rules of Court.41
Metrobank’s fourth-party complaint is
based on quasi-contract
Both the RTC and the CA described Metrobank’s claim against Chua’s estate as one
based on quasi-contract. A quasi-contract involves a juridical relation that the law
creates on the basis of certain voluntary, unilateral and lawful acts of a person, to
avoid unjust enrichment.42 The Civil Code provides an enumeration of quasi-
contracts,43 but the list is not exhaustive and merely provides examples.44
According to the CA, Metrobank’s fourth-party complaint falls under the quasi-
contracts enunciated in Article 2154 of the Civil Code.45 Article 2154 embodies the
concept "solutio indebiti" which arises when something is delivered through mistake
to a person who has no right to demand it. It obligates the latter to return what has
been received through mistake.46
Solutio indebiti, as defined in Article 2154 of the Civil Code, has two indispensable
requisites: first, that something has been unduly delivered through mistake; and
second, that something was received when there was no right to demand it. 47
In its fourth-party complaint, Metrobank claims that Chua’s estate should reimburse
it if it becomes liable on the checks that it deposited to Ayala Lumber and Hardware’s
account upon Chua’s instructions.
This fulfills the requisites of solutio indebiti. First, Metrobank acted in a manner akin
to a mistake when it deposited the AMC checks to Ayala Lumber and Hardware’s
account; because of Chua’s control over AMC’s operations, Metrobank assumed that
the checks payable to AMC could be deposited to Ayala Lumber and Hardware’s
account. Second, Ayala Lumber and Hardware had no right to demand and receive the
checks that were deposited to its account; despite Chua’s control over AMC and Ayala
Lumber and Hardware, the two entities are distinct, and checks exclusively and
expressly payable to one cannot be deposited in the account of the other. This disjunct
created an obligation on the part of Ayala Lumber and Hardware, through its sole
proprietor, Chua, to return the amount of these checks to Metrobank.
The Court notes, however, that its description of Metrobank’s fourth-party complaint
as a claimclosely analogous to solutio indebiti is only to determine the validity of the
lower courts’ orders denying it. It is not an adjudication determining the liability of
Chua’s estate against Metrobank. The appropriate trial court should still determine
whether Metrobank has a lawful claim against Chua’s estate based on quasi-
contract.1âwphi1
Metrobank’s fourth-party complaint,
as a contingent claim, falls within the
claims that should be filed under
Section 5, Rule 86 of the Rules of
Court
A distinctive character of Metrobank’s fourth-party complaint is its contingent nature
– the claim depends on the possibility that Metrobank would be adjudged liable to
AMC, a future event that may or may not happen. This characteristic unmistakably
marks the complaint as a contingent one that must be included in the claims falling
under the terms of Section 5, Rule 86 of the Rules of Court:
Sec. 5. Claims which must be filed under the notice. If not filed, barred; exceptions. –
All claims for money against the decedent, arising from contract, express or implied,
whether the same be due, not due, or contingent, all claims for funeral expenses and
expenses for the last sickness of the decedent, and judgment for money against the
decedent, must be filed within the time limited in the notice. [italics ours]
Specific provisions of Section 5, Rule
86 of the Rules of Court prevail over
general provisions of Section 11, Rule
6 of the Rules of Court
Metrobank argues that Section 11, Rule 6 of the Rules of Court should apply because
it impleaded Chua’s estate for reimbursement in the same transaction upon which it
has been sued by AMC. On this point, the Court supports the conclusion of the CA, to
wit:
Notably, a comparison of the respective provisions of Section 11, Rule 6 and Section
5, Rule 86 of the Rules of Court readily shows that Section 11, Rule 6 applies to
ordinary civil actions while Section 5, Rule 86 specifically applies to money claims
against the estate. The specific provisions of Section 5, Rule 86 x x x must therefore
prevail over the general provisions of Section 11, Rule 6.48 We read with approval the
CA’s use of the statutory construction principle of lex specialis derogat generali,
leading to the conclusion that the specific provisions of Section 5, Rule 86 of the Rules
of Court should prevail over the general provisions of Section 11, Rule 6 of the Rules
of Court; the settlement of the estate of deceased persons (where claims against the
deceased should be filed) is primarily governed by the rules on special proceedings,
while the rules provided for ordinary claims, including Section 11, Rule 6 ofthe Rules
of Court, merely apply suppletorily.49
In sum, on all counts in the considerations material to the issues posed, the resolution
points to the affirmation of the assailed CA decision and resolution. Metrobank's claim
in its fourth-party complaint against Chua's estate is based on quasi-contract. It is also
a contingent claim that depends on another event. Both belong to the category of
claims against a deceased person that should be filed under Section 5, Rule 86 of the
Rules of Comi and, as such, should have been so filed in Special Proceedings No. 99-
0023.
WHEREFORE, premises considered, we hereby DENY the petition for lack of merit. The
decision of the Court of Appeals dated August 25, 2005, holding that the Regional Trial
Court of Quezon City, Branch 80, did not commit grave abuse of discretion in denying
Metropolitan Bank & Trust Company's motion for leave to admit fourth-party
complaint Is. AFFIRMED. Costs against Metropolitan Bank & Trust Company.
G.R. No. L-8235 March 19, 1914
ISIDRO SANTOS, plaintiff-appellant,
vs.
LEANDRA MANARANG, administratrix, defendant-appellee.
W. A. Kincaid and Thomas L. Hartigan for appellant.
Ramon Salinas for appellee.
TRENT, J.:
Don Lucas de Ocampo died on November 18, 1906, possessed of certain real and
personal property which, by his last will and testament dated July 26, 1906, he left to
his three children. The fourth clause of this will reads as follows:
I also declare that I have contracted the debts detailed below, and it is my
desire that they may be religiously paid by my wife and executors in the form
and at the time agreed upon with my creditors.
Among the debts mentioned in the list referred to are two in favor of the plaintiff,
Isidro Santos; one due on April 14, 1907, for P5,000, and various other described as
falling due at different dates (the dates are not given) amounting to the sum of P2,454.
The will was duly probated and a committee was regularly appointed to hear and
determine such claims against the estate as might be presented. This committee
submitted its report to the court on June 27, 1908. On July 14, 1908, the plaintiff,
Isidro Santos, presented a petition to the court asking that the committee be required
to reconvene and pass upon his claims against the estate which were recognized in
the will of testator. This petition was denied by the court, and on November 21, 1910,
the plaintiff instituted the present proceedings against the administratrix of the estate
to recover the sums mentioned in the will as due him. Relief was denied in the court
below, and now appeals to this court.
In his first assignment of error, the appellant takes exception to the action of the court
in denying his petition asking that the committee be reconvened to consider his claim.
In support of this alleged error counsel say that it does not appear in the committee's
report that the publications required by section 687 of the Code of Civil Procedure had
been duly made. With reference to this point the record affirmatively shows that the
committee did make the publications required by law. It is further alleged that at the
time the appellant presented his petition the court had not approved the report of the
committee. If this were necessary we might say that, although the record does not
contain a formal approval of the committee's report, such approval must undoubtedly
have been made, as will appear from an inspection of the various orders of the court
approving the annual accounts of the administratrix, in which claims allowed against
the estate by the committee were written off in accordance with its report. This is
shown very clearly from the court's order of August 1, 1912, in which the account of
the administratrix was approved after reducing final payments of some of the claims
against the estate to agree with the amounts allowed by the committee. It is further
alleged that at the time this petition was presented the administration proceedings
had not been terminated. This is correct.
In his petition of July 14, 1909, asking that the committee be reconvened to consider
his claims, plaintiff states that his failure to present the said claims to the committee
was due to his belief that it was unnecessary to do so because of the fact that the
testator, in his will, expressly recognized them and directed that they should be paid.
The inference is that had plaintiff's claims not been mentioned in the will he would
have presented to the committee as a matter of course; that plaintiff was held to
believe by this express mention of his claims in the will that it would be unnecessary
to present them to the committee; and that he did not become aware of the necessity
of presenting them to the committee until after the committee had made its final
report.
Under these facts and circumstances, did the court err in refusing to reconvene the
committee for the purpose of considering plaintiff's claim? The first step towards the
solution of this question is to determine whether plaintiff's claims were such as a
committee appointed to hear claims against an estate is, by law, authorized to pass
upon. Unless it was such a claim plaintiff's argument has no foundation. Section 686
empowers the committee to try and decide claims which survive against the executors
and administrators, even though they be demandable at a future day "except claims
for the possession of or title to real estate." Section 700 provides that all actions
commenced against the deceased person for the recovery of money, debt, or
damages, pending at the time the committee is appointed, shall be discontinued, and
the claims embraced within such actions presented to the committee. Section 703
provides that actions to recover title or possession of real property, actions to recover
damages for injury to person or property, real and personal, and actions to recover
the possession of specified articles of personal property, shall survive, and may be
commenced and prosecuted against the executor or administrator; "but all other
actions commenced against the deceased before his death shall be discontinued and
the claims therein involved presented before the committee as herein provided."
Section 708 provides that a claim secured by a mortgage or other collateral security
may be abandoned and the claim prosecuted before the committee, or the mortgage
may be foreclosed or the security be relied upon, and in the event of a deficiency
judgment, the creditor may, after the sale of mortgage or upon the insufficiency of
the security, prove such deficiency before the committee on claims. There are also
certain provisions in section 746 et seq., with reference to the presentation of
contingent claims to the committee after the expiration of the time allowed for the
presentation of claims not contingent. Do plaintiff's claims fall within any of these
sections? They are described in the will as debts. There is nothing in the will to indicate
that any or all of them are contingent claims, claims for the possession of or title to
real property, damages for injury to person or property, real or personal, or for the
possession of specified articles of personal property. Nor is it asserted by the plaintiff
that they do. The conclusion is that they were claims proper to be considered by the
committee.
This being true, the next point to determine is, when and under what circumstances
may the committee be recalled to consider belated claims? Section 689 provides:
That court shall allow such time as the circumstances of the case require for
the creditors to present their claims the committee for examination and
allowance; but not, in the first instance, more than twelve months, or less
than six months; and the time allowed shall be stated in the commission. The
court may extend the time as circumstances require, but not so that the
whole time shall exceed eighteen months.
It cannot be questioned that thus section supersedes the ordinary limitation of actions
provided for in chapter 3 of the Code. It is strictly confined, in its application, to claims
against the estate of deceased persons, and has been almost universally adopted as
part of the probate law of the United States. It is commonly termed the statute of
nonclaims, and its purpose is to settle the affairs of the estate with dispatch, so that
residue may be delivered to the persons entitled thereto without their being
afterwards called upon to respond in actions for claims, which, under the ordinary
statute of limitations, have not yet prescribed.
The object of the law in fixing a definite period within which claims must be
presented is to insure the speedy settling of the affairs of a deceased person
and the early delivery of the property of the estate in the hands of the
persons entitled to receive it. (Estate of De Dios, 24 Phil. Rep., 573.)
Due possibly to the comparative shortness of the period of limitation applying to such
claims as compared with the ordinary statute of limitations, the statute of nonclaims
has not the finality of the ordinary statute of limitations. It may be safely said that a
saving provision, more or less liberal, is annexed to the statute of nonclaims in every
jurisdiction where is found. In this country its saving clause is found in section 690,
which reads as follows:
On application of a creditor who has failed to present his claim, if made within
six months after the time previously limited, or, if a committee fails to give
the notice required by this chapter, and such application is made before the
final settlement of the estate, the court may, for cause shown, and on such
terms as are equitable, renew the commission and allow further time, not
exceeding one month, for the committee to examine such claim, in which
case it shall personally notify the parties of the time and place of hearing, and
as soon as may be make the return of their doings to the court.
If the committee fails to give the notice required, that is a sufficient cause for
reconvening it for further consideration of claims which may not have been presented
before its final report was submitted to the court. But, as stated above, this is not the
case made by the plaintiff, as the committee did give the notice required by law.
Where the proper notice has been given the right to have the committee recalled for
the consideration of a belated claim appears to rest first upon the condition that it is
presented within six months after the time previously limited for the presentation of
claims. In the present case the time previously limited was six months from July 23,
1907. This allowed the plaintiff until January 23, 1908, to present his claims to the
committee. An extension of this time under section 690 rested in the discretion of the
court. (Estate of De Dios, supra.) In other words, the court could extend this time and
recall the committee for a consideration of the plaintiff's claims against the estate of
justice required it, at any time within the six months after January 23, 1908, or until
July 23, 1908. Plaintiff's petition was not presented until July 14, 1909. The bar of the
statute of nonclaims is an conclusive under these circumstances as the bar of the
ordinary statute of limitations would be. It is generally held that claims are not barred
as to property not included in the inventory. (Waughop vs. Bartlett, 165 III., 124; Estate
of Reyes, 17 Phil. Rep., 188.) So also, as indicated by this court in the case last cited,
fraud would undoubtedly have the same effect. These exceptions to the operation of
the statute are, of course, founded upon the highest principles of equity. But what is
the plea of the plaintiff in this case? Simply this: That he was laboring under a mistake
of law — a mistake which could easily have been corrected had he sought to inform
himself; a lack of information as to the law governing the allowance of claims against
estate of the deceased persons which, by proper diligence, could have been remedied
in ample to present the claims to the committee. Plaintiff finally discovered his mistake
and now seeks to assert his right when they have been lost through his own
negligence. Ignorantia legis neminem excusat. We conclude that the learned trial
court made no error in refusing to reconvene the committee for the purpose of
considering plaintiff's claims against the estate.
In his second assignment of error the appellant insists that the court erred in
dismissing his petition filed on November 21, 1910, wherein he asks that the
administratrix be compelled to pay over to him the amounts mentioned in the will as
debts due him. We concede all that is implied in the maxim, dicat testor et erit lex. But
the law imposes certain restrictions upon the testator, not only as to the disposition
of his estate, but also as to the manner in which he may make such disposition. As
stated in Rood on Wills, sec. 412: "Some general rules have been irrevocably
established by the policy of the law, which cannot be exceeded or transgressed by any
intention of the testator, be it ever so clearly expressed."
It may be safely asserted that no respectable authority can be found which holds that
the will of the testator may override positive provisions of law and imperative
requirements of public policy. (Page on Wills, sec. 461.)
Impossible conditions and those contrary to law and good morals shall be
considered as not imposed, . . . (Art. 792, Civil Code.)
Conceding for the moment that it was the testator's desire in the present case that
the debts listed by him in his will should be paid without referring them to a committee
appointed by the court, can such a provision be enforced? May the provisions of the
Code of Civil Procedure relating to the settlement of claims against an estate by a
committee appointed by the court be superseded by the contents of a will?
It is evident from the brief outline of the sections referred to above that the Code of
Civil Procedure has established a system for the allowance of claims against the
estates of decedents. Those are at least two restrictions imposed by law upon the
power of the testator to dispose of his property, and which pro tanto restrict the
maxim that "the will of the testator law: (1) His estate is liable for all legal obligations
incurred by him; and (2) he can not dispose of or encumber the legal portion due his
heirs by force of law. The former take precedence over the latter. (Sec. 640, Code Civ,
Proc.) In case his estate is sufficient they must be paid. (Sec, 734, id.) In case the estate
is insolvent they must be paid in the order named in section 735. It is hardly necessary
to say that a provision in an insolvent's will that a certain debt be paid would not entitle
it to preference over other debts. But, if the express mention of a debt in the will
requires the administrator to pay it without reference to the committee, what
assurance is there, in the case of an insolvent estate, that it will not take precedence
over preferred debts?
If it is unnecessary to present such claim to the committee, the source of nonclaims is
not applicable. It is not barred until from four to ten years, according to its
classification in chapter 3 of the Code of Civil Procedure, establishing questions upon
actions. Under such circumstances, when then the legal portion is determined? If, in
the meantime the estate has been distributed, what security have the differences
against the interruption of their possession? Is the administrator required to pay the
amount stipulated in the will regardless of its correctness? And, if not, what authority
has he to vise the claim? Section 706 of the Code of Civil Procedure provides that an
executor may, with the approval of the court, compound with a debtor of deceased
for a debt due the estate, But he is nowhere permitted or directed to deal with a
creditor of the estate. On the contrary, he is the advocate of the estate before an
impartial committee with quasi-judicial power to determine the amount of the claims
against the estate, and, in certain cases, to equitably adjust the amounts due. The
administrator, representing the debtor estate, and the creditor appear before this
body as parties litigant and, if either is dissatisfied with its decision, an appeal to the
court is their remedy. To allow the administrator to examine and approve a claim
against the estate would put him in the dual role of a claimant and a judge. The law in
this jurisdiction has been so framed that this may not occur. The most important
restriction, in this jurisdiction, on the disposition of property by will are those
provisions of the Civil Code providing for the preservation of the legal portions due to
heirs by force of law, and expressly recognized and continued in force by sections 614,
684, and 753 of the Code of Civil Procedure. But if a debt is expressly recognized in
the will must be paid without its being verified, there is nothing to prevent a partial or
total alienation of the legal portion by means of a bequest under a guise of a debt,
since all of the latter must be paid before the amount of the legal portion can be
determined.
We are aware that in some jurisdictions executors and administrators are, by law,
obligated to perform the duties which, in this jurisdiction, are assign to the committee
on claims; that in some other jurisdictions it is the probate court itself that performs
these duties; that in some jurisdictions the limitation upon the presentment of claims
for allowance is longer and, possibly, in some shorter; and that there is a great
divergence in the classification of actions which survive and actions which do not
survive the death of the testator. It must be further remembered that there are but
few of the United States which provide for heirs by force of law. These differences
render useless as authorities in this jurisdiction many of the cases coming from the
United States. The restriction imposed upon the testator's power to dispose of his
property when they are heirs by force of law is especially important. The rights of
these heirs by force law pass immediately upon the death of the testator. (Art. 657,
Civil Code.) The state intervenes and guarantees their rights by many stringent
provisions of law to the extent mentioned in article 818 of the Civil Code. Having
undertaken the responsibility to deliver the legal portion of the net assets of the estate
to the heirs by force of law, it is idle to talk of substituting for the procedure provided
by law for determining the legal portion, some other procedure provided in the will of
the testator. The state cannot afford to allow the performance of its obligations to be
directed by the will of an individual. There is but one instance in which the settlement
of the estate according to the probate procedure provided in the Code of Civil
Procedure may be dispense with, and it applies only to intestate estates. (Sec. 596,
Code Civ. Proc.) A partial exemption from the lawful procedure is also contained in
section 644, when the executor or administrator is the sole residuary legatee. Even in
such case, and although the testator directs that no bond be given, the executor is
required to give a bond for the payment of the debts of the testator. The facts of the
present case do not bring it within either of this sections. We conclude that the claims
against the estate in the case at bar were enforceable only when the prescribed legal
procedure was followed.
But we are not disposed to rest our conclusion upon this phase of the case entirely
upon legal grounds. On the contrary we are strongly of the opinion that the application
of the maxim, "The will of the testator is the law of the case," but strengthens our
position so far as the present case is concerned.
It will ordinarily be presumed in construing a will that the testator is
acquainted with the rules of law, and that he intended to comply with them
accordingly. If two constructions of a will or a part thereof are possible, and
one of these constructions is consistent with the law, and the other is
inconsistent, the presumption that the testator intended to comply with the
law will compel that construction which is consistent with the law to be
adopted. (Page on Wills, sec. 465.)
Aside from this legal presumption, which we believe should apply in the present case
as against any construction of the will tending to show an intention of the testator
that the ordinary legal method of probating claims should be dispensed with, it must
be remembered that the testator knows that the execution of his will in no way affects
his control over his property. The dates of his will and of his death may be separated
by a period of time more or less appreciable. In the meantime, as the testator well
knows, he may acquire or dispose of property, pay or assume additional debts, etc. In
the absence of anything to the contrary, it is only proper to presume that the testator,
in his will, is treating of his estate at the time and in the condition it is in at his death.
Especially is this true of his debts. Debts may accrue and be paid in whole or in part
between the time the will is made and the death of the testator. To allow a debt
mentioned in the will in the amount expressed therein on the ground that such was
the desire of the testator, when, in fact, the debt had been wholly or partly paid, would
be not only unjust to the residuary heirs, but a reflection upon the good sense of the
testator himself. Take the present case for example. It would be absurd to say that the
testator knew what the amount of his just debt would be at a future and uncertain
date. A mere comparison of the list of the creditors of the testator and the amounts
due them as described in his will, with the same list and amounts allowed by the
committee on claims, shows that the testator had creditors at the time of his death
not mention in the will at all. In other instances the amounts due this creditors were
either greater or less than the amounts mentioned as due them in the will. In fact, of
those debts listed in the will, not a single one was allowed by the committee in the
amount named in the will. This show that the testator either failed to list in his will all
his creditors and that, as to those he did include, he set down an erroneous amount
opposite their names; or else, which is the only reasonable view of the matter, he
overlooked some debts or contracted new ones after the will was made and that as to
others he did include he made a partial payments on some and incurred additional
indebtedness as to others.
While the testator expresses the desire that his debts be paid, he also expressly leaves
the residue of his estate, in equal parts, to his children. Is it to be presumed that he
desired to overpay some of his creditors notwithstanding his express instructions that
his own children should enjoy the net assets of his estate after the debts were paid?
Again, is the net statement of the amount due some of his creditors and the omission
all together of some of his creditors compatible with his honorable and commendable
desire, so clearly expressed in his will, that all his debts be punctually paid? We cannot
conceive that such conflicting ideas were present in the testator's mind when he made
his will.
Again, suppose the testator erroneously charged himself with a debt which he was
under no legal or even moral obligation to pay. The present case suggests, if it does
not actually present, such a state of affairs. Among the assets of the estate mentioned
in the will is a parcel of land valued at P6,500; while in the inventory of the
administratrix the right to repurchase this land from one Isidro Santos is listed as an
asset. Counsel for the administratrix alleges that he is prepared to prove that this is
the identical plaintiff in the case at bar; that the testator erroneously claimed the fee
of this land in his last will and stated Santos' rights in the same as a mere debt due him
of P5,000; that in reality, the only asset of the testator regard to this land was the
value of the right to repurchase, while the ownership of the land, subject only to that
right of redemption, belonged to Santos; that the right to repurchase this land expired
in 1907, after the testator's death. Assuming, without in the least asserting, that such
are the underlying facts of this case, the unjust consequences of holding that a debt
expressly mentioned in the will may be recovered without being presented to the
committee on claims, is at once apparent. In this supposed case, plaintiff needed only
wait until the time for redemption of the land had expired, when he would acquired
an absolute title to the land, and could also have exacted the redemption price. Upon
such a state of facts, the one item of P5,000 would be a mere fictitious debt, and as
the total net value of the estate was less than P15,000, the legal portion of the
testator's children would be consumed in part in the payment of this item. Such a case
cannot occur if the prescribed procedure is followed of requiring of such claims be
viseed by the committee on claims.
The direction in the will for the executor to pay all just debts does not mean
that he shall pay them without probate. There is nothing in the will to indicate
that the testator in tended that his estate should be administered in any
other than the regular way under the statute, which requires "all demands
against the estates of the deceased persons," "all such demands as may be
exhibited," etc. The statute provides the very means for ascertaining whether
the claims against the estate or just debts. (Kaufman vs. Redwine, 97 Ark.,
546.)
See also Collamore vs. Wilder (19 Kan., 67); O'Neil vs. Freeman (45 N. J. L., 208).
The petition of the plaintiff filed on November 21, 1910, wherein he asks that the
administratrix be compelled to pay over to him the amounts mentioned in the will as
debts due him appears to be nothing more nor less than a complaint instituting an
action against the administratrix for the recovery of the sum of money. Obviously, the
plaintiff is not seeking possession of or title to real property or specific articles of
personal property.
When a committee is appointed as herein provided, no action or suit shall be
commenced or prosecute against the executor or administrator upon a claim
against the estate to recover a debt due from the state; but actions to recover
the seizing and possession of real estate and personal chattels claimed by the
estate may be commenced against him. (Sec. 699, Code Civ. Proc.)
A construction leading to a legal, just and sensible result is presumed to be
correct, as against one leading to an illegal, unnatural, or absurd effect. (Rood
on Wills, sec. 426.)
The testator, in so many words, left the total net assets of his estate, without
reservation of any kind, to his children per capita. There is no indication that he desired
to leave anything by way of legacy to any other person. These considerations clearly
refute the suggestion that the testator intended to leave plaintiff any thing by way of
legacy. His claim against the estate having been a simple debt, the present action was
improperly instituted against the administratrix. (Sec. 699, Code Civ. Proc.)

The sum of money prayed for in the complaint must be due the plaintiff either as a But it is said that the plaintiff's claims should be considered as partaking of the nature
debt of a legacy. If it is a debt, the action was erroneously instituted against the of a legacy and disposed of accordingly. If this be perfect then the plaintiff would
administratrix. Is it a legacy? receive nothing until after all debts had been paid and the heirs by force of law had
received their shares. From any point of view the inevitable result is that there must
Plaintiff's argument at this point becomes obviously inconsistent. Under his first be a hearing sometime before some tribunal to determine the correctness of the
assignment of error he alleges that the committee on claims should have been debts recognized in the wills of deceased persons. This hearing, in the first instance,
reconvened to pass upon his claim against the estate. It is clear that this committee can not be had before the court because the law does not authorize it. Such debtors
has nothing to do with legacies. It is true that a debt may be left as a legacy, either to must present their claims to the committee, otherwise their claims will be forever
the debtor (in which case it virtually amounts to a release), or to a third person. But barred.
this case can only arise when the debt is an asset of the estate. It would be absurd to
speak of a testator's leaving a bare legacy of his own debt. (Arts. 866, 878, Civil Code.) For the foregoing reasons the orders appealed from are affirmed, with costs against
The creation of a legacy depends upon the will of the testator, is an act of pure the appellant.
beneficence, has no binding force until his death, and may be avoided in whole or in
part by the mere with whim of the testator, prior to that time. A debt arises from an Torres, Carson and Araullo, JJ., concur.
obligation recognized by law (art. 1089, Civil Code) and once established, can only be
extinguished in a lawful manner. (Art. 1156, id.) Debts are demandable and must be
paid in legal tender. Legacies may, and often do, consist of specific articles of personal
property and must be satisfied accordingly. In order to collect as legacy the sum
mentioned in the will as due him, the plaintiff must show that it is in fact a legacy and
not a debt. As he has already attempted to show that this sum represents a debt, it is
an anomaly to urge now it is a legacy.

Was it the intention of the testator to leave the plaintiff a legacy of P7,454? We have
already touched upon this question. Plaintiff's claim is described by the testator as a
debt. It must be presumed that he used this expression in its ordinary and common
acceptation; that is, a legal liability existing in favor of the plaintiff at the time the will
was made, and demandable and payable in legal tender. Had the testator desired to
leave a legacy to the plaintiff, he would have done so in appropriate language instead
of including it in a statement of what he owed the plaintiff. The decedent's purpose in
listing his debts in his will is set forth in the fourth clause of the will, quoted above.
There is nothing contained in that clause which indicates, even remotely, a desire to
pay his creditors more than was legally due them.
G.R. No. L-29407 July 29, 1983
ESTATE OF AMADEO MATUTE OLAVE, as represented by JOSE S. MATUTE, Judicial Co-
Administrator in Sp. Proc. No. 25876, Court of First Instance of Manila, petitioner,
vs.
HONORABLE MANASES G. REYES, Presiding Judge of Branch III, Court of First Instance
of Davao, Davao City; SOUTHWEST AGRICULTURAL MARKETING CORPORATION also
known as (SAMCO); CARLOS V. MATUTE, as another Administrator of the Estate of
Amadeo Matute Olave, Sp. Proc. No. 25876 CFI, Manila; and MATIAS S. MATUTE, as
former Co-Administrator of the Estate of Amadeo Matute Olave, Sp. Proc. No. 25876,
CFI, Manila, respondents.
RELOVA, J.:
In this petition for certiorari, the estate of Amadeo Matute Olave, represented by Jose
S. Matute, Judicial Administrator in Sp. Proc. No. 25876, of the then Court of First
Instance of Manila, assails the Order, dated November 10, 1967, of the respondent
judge, approving the "Amicable Settlement" submitted by the parties in Civil Case No.
4623 of the then Court of First Instance of Davao, 16th Judicial District, Branch III, and
prays that the said Order be set aside.
The petition alleged that the estate of Amadeo Matute Olave is the owner in fee
simple of a parcel of land containing an area of 293,578 square meters, situated in
sitio Tibambam, barrio Tibambam, municipality of Sigaboy (now Governor Generoso),
province of Davao, and covered by Original Certificate of Title No. 0-27 of the Registry
of Deeds of Davao Province; that in April 1965 herein private respondent Southwest
Agricultural Marketing Corporation (SAMCO), as plaintiff, filed Civil Case No. 4623 with
the respondent Court of First Instance of Davao against respondents, Carlos V. Matute
and Matias S. Matute, as defendants, in their capacities as co-administrators of the
estate of Amadeo Matute Olave, for the collection of an alleged indebtedness of
P19,952.11 and for attorney's fees of P4,988.02; that on May 8, 1965, defendants
Carlos V. Matute and Matias S. Matute in said Civil Case No. 4623, filed an answer
denying their lack of knowledge and questioning the legality of the claim of SAMCO;
that on October 25, 1966 in Sp. Proc. No. 25876, the then Court of First Instance of
Manila, Branch IV, issued an order directing the administrators to secure the probate
court's approval before entering into any transaction involving the seventeen (17)
titles of the estate, of which the property described in OCT No. 0-27 is one of them;
that on October 20, 1967, the parties (plaintiff and defendants) in Civil Case No. 4623
of the Court of First Instance of Davao, submitted to the respondent court an Amicable
Settlement whereby the property of the estate covered by OCT No. 0-27 of Davao was
conveyed and ceded to SAMCO as payment of its claim; that the said Amicable
Settlement signed by the herein respondents was not submitted to and approved by
the then Court of First Instance of Manila, Branch IV, in Sp. Proc. No. 25876, nor notice
thereof made to the beneficiaries and heirs in said special proceedings; that on
November 10, 1967, respondent court, despite the opposition of the other parties
who sought to intervene in Civil Case No. 4623 and despite the utter lack of approval
of the probate court in Manila, approved the said Amicable Settlement and gave the
same the enforceability of a court decision which, in effect, ceded the property
covered by OCT No. 0-27, containing an area of 293,578 square meters and with an
assessed value of P31,700.00 to SAMCO in payment of its claim for only P19,952.11;
and, that if the said Order of respondent dated November 10, 1967 is not set aside,
the same will operate as a judgment that "conveys illegally and unfairly, the property
of petitioner-estate without the requisite approval of the probate court of Manila,
which has the sole jurisdiction to convey this property in custodia legis of the estate.
(par. 16, Petition).
Made to answer, herein respondent SAMCO and respondent judge, among others,
contend that the Amicable Settlement need not be approved by the probate court,
"the same having been entered into in another independent action and in another
court of co-equal rank. Article 2032 of the Civil Code applies only to extrajudicial
compromise entered into by the administrators of the estate. In the alternative, lack
of approval of the probate court of the Amicable Settlement does not render it null
and void, but at most voidable, which must be the subject matter of a direct
proceeding in the proper Court of First Instance." (p. 60, Rollo)
In said Civil Case No. 4623 for sum of money, plaintiff SAMCO and defendants Carlos
V. Matute and Matias S. Matute, in their capacities as judicial administrators of the
estate of Amado Matute Olave in Special Proceeding No. 25876, Court of First Instance
of Manila, Branch IV, submitted the following Amicable Settlement:
1. That defendants in their capacity as judicial administrators of the
Estate of Amadeo Matute, hereby submit and acknowledge that the
said Estate of Amadeo Matute is justly indebted to plaintiff in the
total sum of P28,403.02 representing the principal account of
P19,952.11 and in the sum of P8,450.91 as attorney's fees,
damages, interest and costs;
2. That at present the defendant estate is devoid of or does not have
any funds with which to pay or settle the aforestated obligation in
favor of the plaintiff, and that being so, the defendant estate
through the undersigned administrators, decides to pay the plaintiff
by way of conveying and ceding unto the plaintiff the ownership of
a certain real property owned by the defendant estate now under
the administration of the said undersigned administrators;
 3. That plaintiff hereby accepts the offer of defendants of conveying,
transferring and ceding the ownership of the above described
property as full and complete payment and satisfaction of the total
obligation of P28,403.02;
4. That the defendant estate, through the undersigned
administrators hereby agree and bind the defendant estate to pay
their counsel Atty. Dominador Zuho, of the Zufio Law Offices the
sum of Eight Thousand (P8,000.00) Pesos by way of Attorney's Fee;
5. That the parties herein waive an other claims which they might
have against one another.
WHEREFORE, premises considered, it is respectfully prayed that this
Honorable Court approves the foregoing settlement and that
judgment be rendered transferring the said real property covered
by Original Certificate of Title No. 0-27 to plaintiff Southwest
Agricultural Marketing Corporation and that a new transfer
certificate of title be issued to said plaintiff. (pp. 25-26, Rollo)
twenty-nine (29) hectares of land belonging to the estate of the deceased Amadeo
Matute Olave in payment of its claim, without prior authority of the probate court of
Manila, in Sp. Proc. No. 25876, which has the exclusive jurisdiction over the estate of
Amadeo Matute Olave. It was a mistake on the part of respondent court to have given
due course to Civil Case No. 4623, much less issue the questioned Order, dated
November 10, 1967, approving the Amicable Settlement.
Section 1, Rule 73 of the Rules of Court, expressly provides that "the court first taking
cognizance of the settlement of the estate of a decedent, shall exercise jurisdiction to
the exclusion of all other courts." (Emphasis supplied). The law is clear that where the
estate of the deceased person is already the subject of a testate or intestate
proceeding, the administrator cannot enter into any transaction involving it without
prior approval of the probate court.
WHEREFORE, the petition for certiorari is GRANTED, and the Order, dated November
10, 1967, of the respondent court approving the Amicable Settlement of the parties
in Civil Case No. 4623 of the then Court of First Instance of Davao, is hereby SET ASIDE.
SO ORDERED.

Section 1, Rule 87 of the Rules of Court, provides that "no action upon a claim for the Teehankee (Chairman), Melencio-Herrera, Plana, Escolin and Gutierrez, Jr., JJ., concur.
recovery of money or debt or interest thereon shall be commenced against the
executor or administrator; ..." The claim of private respondent SAMCO being one Vasquez, J., is on leave.
arising from a contract may be pursued only by filing the same in the administration
proceedings in the Court of First Instance of Manila (Sp. Proc. No. 25876) for the
settlement of the estate of the deceased Amadeo Matute Olave; and the claim must
be filed within the period prescribed, otherwise, the same shall be deemed "barred
forever." (Section 5, Rule 86, Rules of Court).

The purpose of presentation of claims against decedents of the estate in the probate
court is to protect the estate of deceased persons. That way, the executor or
administrator will be able to examine each claim and determine whether it is a proper
one which should be allowed. Further, the primary object of the provisions requiring
presentation is to apprise the administrator and the probate court of the existence of
the claim so that a proper and timely arrangement may be made for its payment in
full or by pro-rata portion in the due course of the administration, inasmuch as upon
the death of a person, his entire estate is burdened with the payment of all of his debts
and no creditor shall enjoy any preference or priority; all of them shag share pro-rata
in the liquidation of the estate of the deceased.

It is clear that the main purpose of private respondent SAMCO in filing Civil Case No.
4623 in the then Court of First Instance of Davao was to secure a money judgment
against the estate which eventually ended in the conveyance to SAMCO of more than
G.R. No. 127165 May 2, 2006
SALONGA HERNANDEZ & ALLADO, Petitioner,
vs.
OLIVIA SENGCO PASCUAL and THE HONORABLE COURT OF APPEALS, Respondents.
DECISION
TINGA, J.:
Petitioner, a professional law partnership, brings forth this Petition for Review
assailing the Decision1 of the Court of Appeals dated 22 December 1995. The appellate
court had affirmed two orders promulgated by the Malabon Regional Trial Court (RTC),
Branch 72 (Probate Court), in Sp. Proc. No. 136-MN, entitled "In the Matter of Testate
Estate of Doña Adela Pascual, Dr. Olivia S. Pascual, Executrix."
The case actually centers on two estate proceedings, that of Doña Adela Pascual (Doña
Adela) and the other, her husband Don Andres Pascual's (Don Andres), who
predeceased her. Don Andres died intestate, while Doña Adela left behind a last will
and testament. The dispute over the intestate estate of Don Andres has spawned at
least two cases already settled by this Court.2
On 1 December 1973, an intestate proceeding for the settlement of the estate of Don
Andres was commenced by his widow Doña Adela before the then Court of First
Instance, now Regional Trial Court of Pasig, Branch 23 (Intestate Court), docketed as
Sp. Proc. No. 7554. Apart from his wife, who bore him no children, Don Andres was
survived by several nephews and nieces from his full-blood and half-blood brothers.3
This proceeding proved to be the source of many controversies, owing to the attempts
of siblings Olivia and Hermes Pascual, acknowledged natural children of Don Andres's
brother, Eligio, to be recognized as heirs of Don Andres. Olivia and Hermes Pascual
procured the initial support of Doña Adela to their claims. However, on 16 October
1985, the other heirs of Don Andres entered into a Compromise Agreement over the
objections of Olivia and Hermes Pascual, whereby three-fourths (3/4) of the estate
would go to Doña Adela and one-fourth (1/4) to the other heirs of Don Andres, without
prejudice to the final determination by the court or another compromise agreement
as regards the claims of Olivia and Hermes Pascual.4 Subsequently, the Intestate Court
denied the claims of Olivia and Hermes Pascual. Said denial was eventually affirmed
by this Court in 1992 in Pascual v. Pascual-Bautista,5 applying Article 992 of the Civil
Code.
In the meantime, Doña Adela died on 18 August 1987, leaving behind a last will and
testament executed in 1978, designating Olivia Pascual as the executrix, as well as the
principal beneficiary of her estate. The will also bequeathed several legacies and
devises to several individuals and institutions.
Olivia Pascual then engaged the services of petitioner in connection with the
settlement of the estate of Doña Adela. Their agreement as to the professional fees
due to petitioner is contained in a letter dated 25 August 1987, signed by Atty. Esteban
Salonga in behalf of petitioner and Olivia Pascual. It is stipulated therein, among
others, that the final professional fee "shall be 3% of the total gross estate as well as
the fruits thereof based on the court approved inventory of the estate. Fruits shall be
reckoned from the time of [Olivia Pascual's] appointment as executrix of the estate.
The 3% final fee shall be payable upon approval by the court of the agreement for the
distribution of the properties to the court designated heirs of the estate." 6
On 26 August 1987, private respondent, represented by petitioner, commenced a
petition for the probate of the last will and testament of Doña Adela before the
Probate Court, docketed as Sp. Proc. No. 136-MN and raffled to Branch 72 presided
by Judge Benjamin M. Aquino, Jr. The petition was opposed by a certain Miguel
Cornejo, Jr. and his siblings, who in turn presented a purported will executed in 1985
by Doña Adela in their favor. 7
After due trial, on 1 July 1993, the Probate Court rendered a Decision 8 allowing
probate of the 1978 Last Will and Testament of Doña Adela and disallowing the
purported 1985 Will. Letters testamentary were issued to Olivia Pascual.9 Cornejo
attempted to appeal this decision of the Probate Court, but his notice of appeal was
denied due course by the Probate Court, said notice "not having been accompanied
by any record on appeal as required under the Interim Rules and by Rule 109 of the
Rules of Court."10
On 27 July 1993, petitioner filed a Notice of Attorney's Lien equivalent to three percent
(3%) of the total gross estate of the late Doña Adela S. Pascual as well as the fruits
thereof based on the court approved inventory of the estate, pursuant to the retainer
agreement signed by and between petitioner and Olivia S. Pascual, on 25 August 1987.
In an Order dated 4 November 1993, the Probate Court ruled that petitioner's "notice
of attorney's lien, being fully supported by a retainer's contract not repudiated nor
questioned by his client Olivia S. Pascual, is hereby noted as a lien that must be
satisfied chargeable to the share of Olivia S. Pascual."11 This was followed by another
Order, dated 11 November 1993, wherein it was directed "that notice be x x x given,
requiring all persons having claims for money against the decedent, Doña Adela S. Vda.
de Pascual, arising from contracts, express or implied, whether the same be due, not
due, or contingent, for funeral expenses and expenses of the last sickness of the said
decedent, and judgment for money against her, to file said claims with the Clerk of
Court at Malabon, Metro Manila, within six (6) months from November 4, 1993." 12
Accordingly, on 22 November 1993, petitioner filed a Motion to Annotate Attorney's
Lien on Properties of the Estate of Doña Adela Vda. de Pascual.13
It was at this stage, on 19 January 1994, that the Intestate Court rendered a Decision
in Sp. Proc. No. 7554, finally giving judicial approval to the aforementioned 1985
Compromise Agreement, and partitioning the estate of Don Andres by adjudicating
one-fourth (1/4) thereof to the heirs of Don Andres and three-fourths (3/4) thereof to
the estate of Doña Adela. The Intestate Court also awarded attorney's fees to Atty.
Jesus I. Santos, equivalent to 15% of the three-fourths (3/4) share of the estate of
Doña Adela.14 Olivia Pascual filed a petition for annulment of the award of attorney's
fees with the Court of Appeals, but the same was denied, first by the appellate court,
then finally by this Court in its 1998 decision in Pascual v. Court of Appeals.15
On 26 April 1994, petitioner filed a Motion for Writ of Execution for the partial
execution of petitioner's attorney's lien estimated at P1,198,097.02. The figure,
characterized as "tentative," was arrived at based on a Motion to Submit Project
Partition dated 26 October 1993 filed by Olivia Pascual, which alleged the gross
appraised value of Doña Adela's estate at P39,936,567.19. This sum was in turn
derived from the alleged value of the total estate of Don Andres, three-fourths (3/4)
of which had been adjudicated to Doña Adela. At the same time, petitioner noted that
the stated values must be considered as only provisional, considering that they were
based on a July 1988 appraisal report; thus, the claim for execution was, according to
petitioner, without prejudice to an updated appraisal of the properties comprising the
gross estate of Doña Adela.16
On 29 April 1994, Olivia Pascual, through Atty. Antonio Ravelo, filed her comment
and/or opposition to the motion for the issuance of a writ of execution on attorney's
fees. She argued that a lawyer of an administrator or executor should charge the
individual client, not the estate, for professional fees. Olivia Pascual also claimed,
citing jurisprudence17, that the counsel claiming attorney's fees should give sufficient
notice to all interested parties to the estate, and that such was not accomplished by
petitioner considering that no notices were given to the several legatees designated
in Doña Adela's will.18 It was further argued that the motion for execution was
premature, considering that the proceedings before the Intestate Court had not yet
been terminated; that the computation of the figure of P1,198,097.02 was erroneous;
and that the enforcement of the writ of execution on the undivided estate of Don
Andres would prejudice his other heirs entitled to one-fourth (1/4) thereof.
On 2 June 1994, the Probate Court issued the first assailed order denying the motion
for writ of execution in view of the fact that "the bulk of the estate of the late Doña
Adela S. Vda. De Pascual is still tied-up with the estate of the late Don Andres Pascual,
the proceedings over which and the final disposition thereof with respect to the
partition and segregation of what is to form part of the estate of the late Doña Adela
S. Vda. De Pascual is pending with another court sitting in Pasig, Metro Manila, and for
having been prematurely filed."19
On 14 November 1994, Olivia Pascual, filed with the Probate Court a Motion to Declare
General Default and Distribution of Testamentary Dispositions with Cancellation of
Administrator's Bond. It was noted therein that no creditor had filed a claim against
the estate of Doña Adela despite due notice published pursuant to Section 1, Rule 86
of the Rules of Court. The Probate Court was also informed of the fact that the
proceedings before the Intestate Court had already been terminated by reason of the
14 January 1994 Decision rendered by the latter court. It was also stated "that the
corresponding estate taxes had been paid as evidenced by the Estate Tax Return filed
with the Bureau of Internal Revenue, and of the Certificate of Authority issued by the
said agency."20 Interestingly, it was also manifested that two of the properties that
formed part of the estates of the spouses, "the Ongpin Property" and "the Valenzuela
Property," had in fact already been partitioned between the estate of Doña Adela and
the heirs of Don Andres at the ratio of three-fourths (3/4) and one-fourth (1/4),
respectively.
In response, petitioner filed a Comment/Manifestation praying that an order be
issued:
(1) ordering the annotation of the attorney's lien on the properties
comprising the estate of Doña Adela Pascual;
(2) a writ of partial execution be issued for the satisfaction of the attorney's
lien of the undersigned counsel [herein petitioner] in relation to the Ongpin
and Valenzuela properties for the amount of P635,368.14,without prejudice
to the issuance of a writ of execution after the re-appraisal of the present
market value of the estate and the determination of the amount due to
[petitioner] as attorney's fees;
(3) ordering the appointment of a reputable appraisal company to re-
appraise the present market value of the estate of Doña Adela Pascual
including the fruits thereof for the purpose of determining the value of the
attorney's fees of [petitioner]; and
(4) after the re-appraisal of the estate of Doña Adela Pascual a writ of
execution be issued for the full satisfaction and settlement of the attorney's
lien of [petitioner].21
On 17 March 1995, the Probate Court issued an order which denied petitioner's
motion for a re-appraisal of the property and the issuance of a partial writ of execution
"for being prematurely filed as there is no exact estate yet to be inventoried and re-
appraised, assuming re-appraisal would be proper, because the bulk of the estate
subject of this case, as far as this court is concerned, has not yet been turned over to
the executrix or to the court itself."22
Through a petition for certiorari and mandamus, petitioner assailed the two orders of
the Probate Court denying its motion for the immediate execution, partial or
otherwise, of its claim for attorney's fees: the 2 June 1994 Order and the 17 March
1995 Order. Nonetheless, the twin orders of the RTC were affirmed by the Court of
Appeals, effectively precluding petitioner's attempt to execute on its attorney's lien.
The appellate court noted that the attorney's lien issued by the Probate Court was
chargeable only to the share of Olivia Pascual, and not to the estate of Doña Adela,
since it was Olivia Pascual who entered into the agreement with petitioner for the
payment of attorney's fees in connection with the settlement of the estate of Doña
Adela. Citing Lacson v. Reyes,23 the Court of Appeals asserted that as a rule an
administrator or executor may be allowed fees for the necessary expenses he has
incurred but he may not recover attorney's fees from the estate.
The Court of Appeals likewise noted that in the retainer agreement between
petitioner and Olivia Pascual, it is stipulated that "the 3% final fee shall be payable
upon approval by the court of the agreement for the distribution of the properties to
the court designated heirs of the estate."24 On this score, the Court of Appeals ruled
that as the petition before it did not show "that an agreement on the distribution of
properties of the estate of Doña Adela S. Pascual has been submitted and approved
by the probate court,"25 the filing of the motion for execution and that of the motion
for re-appraisal of the market value of the estate were both premature.
Petitioner sought to reconsider the Decision of the Court of Appeals, but in vain. 26
Hence this petition.
Petitioner argues that as held in Occeña v. Marquez,27 the counsel seeking to recover
attorney's fees for legal services to the executor or administrator is authorized to file
a petition in the testate or intestate proceedings asking the court, after notice to all
the heirs and interested parties, to direct the payment of his fees as expenses of
administration.28 Lacson, it is alleged, was inappropriately cited, since that case
involved an executor who
concurrently was a lawyer who subsequently claimed attorney's fees as part of the
expenses of administration. Petitioner also claims that the decision of the probate
court admitting Doña Adela's will to probate sufficiently satisfies the condition in the
Retainer Agreement that the final fee be payable "upon approval by the court of the
agreement for the distribution of the properties to the court designated heirs of the
estate," the court-approved will comprising the agreement referred to in the contract.
Petitioner also takes exception to the Probate Court's finding that "the bulk of the
estate subject of this case, as far as this [c]ourt is concerned, has not been turned over
to the executrix or to the [c]ourt itself," on which the appellate court predicated its
ruling that the motion for a writ of execution was premature. Petitioner submits that
the Probate Court ineluctably has jurisdiction over the estate of Doña Adela, and has
necessarily assumed control over the properties belonging to the said estate. Thus,
petitioner continues, there is no longer need to await the turnover of the properties
involved in the intestate estate of Don Andres which constitute part of the testate
estate of Doña Adela since the Probate Court and the Intestate Court have concurrent
jurisdiction over these properties as they have not yet been physically divided.
Petitioner refers to the averment made by Olivia Pascual before the Probate Court
that the proceedings before the Intestate Court had already been terminated, and
that the proceeds of the sale of the Ongpin Property and the Valenzuela Property had
in fact been already divided based on the three-fourths (3/4) to one-fourth (1/4) ratio
between the estate of Doña Adela and the heirs of Don Andres. Petitioner further
points out that the Probate Court had authorized and approved the sale of the Ongpin
Property, yet refused to allow the partial execution of its claim for attorney's fees.
Finally, petitioner asserts that the Probate Court erred in refusing to grant the prayer
seeking the re-appraisal of the property of Doña Adela's estate. Such re-appraisal, so
it claims, is necessary in order to determine the three percent (3%) share in the total
gross estate committed to petitioner by reason of the Retainer Agreement.
It appears that the thrust of the assailed Decision of the Court of Appeals is along these
lines: that petitioner may directly claim attorney's fees only against Olivia Pascual and
not against the estate of Doña Adela; and that petitioner's claim is also premature
since contrary to the requisite stipulated in the Retainer Agreement, there is no court-
approved agreement for the distribution of the properties of the estate of Doña Adela
as yet.
As an initial premise, we consider whether a lawyer who renders legal services to the
executor or administrator of an estate can claim attorney's fees against the estate
instead of the executor or administrator. Petitioner correctly cites Occeña v.
Marquez29 as providing the governing rule on that matter as previously settled in the
1905 case of Escueta v. Sy-Juilliong,30 to wit:
The rule is that when a lawyer has rendered legal services to the executor or
administrator to assist him in the execution of his trust, his attorney's fees may be
allowed as expenses of administration. The estate is, however, not directly liable for
his fees, the liability for payment resting primarily on the executor or administrator. If
the administrator had paid the fees, he would be entitled to reimbursement from the
estate. The procedure to be followed by counsel in order to collect his fees is to
request the administrator to make payment, and should the latter fail to pay, either
to (a) file an action against him in his personal capacity, and not as administrator, or
(b) file a petition in the testate or intestate proceedings asking the court, after notice
to all the heirs and interested parties, to direct the payment of his fees as expenses of
administration. Whichever course is adopted, the heirs and other persons interested
in the estate will have the right to inquire into the value of the services of the lawyer
and on the necessity of his employment.31
We reiterate that as a general rule, it is the executor or administrator who is primarily
liable for attorney's fees due to the lawyer who rendered legal services for the
executor or administrator in relation to the settlement of the estate. The executor or
administrator may seek reimbursement from the estate for the sums paid in attorney's
fees if it can be shown that the services of the lawyer redounded to the benefit of the
estate.32 However, if the executor or administrator refuses to pay the attorney's fees,
the lawyer has two modes of recourse. First, the lawyer may file an action against the
executor or administrator, but in his/her personal capacity and not as administrator
or executor. Second, the lawyer may file a petition in the testate or intestate
proceedings, asking the court to direct the payment of attorney's fees as an expense
of administration. If the second mode is resorted to, it is essential that notice to all the
heirs and interested parties be made so as to enable these persons to inquire into the
value of the services of the lawyer and on the necessity of his employment.
Lacson v. Reyes,33 cited by the appellate court, involved an executor who also
happened to be the lawyer for the heirs who had filed the petition for probate. For
that reason, that case is not squarely in point to the case at bar. It was pronounced
therein that the administrator or executor of the estate cannot charge professional
fees for legal services against the same estate, as explicitly provided under Section 7,
Rule 85 of the Rules of Court of 1985.34 No such rule exists barring direct recovery of
professional legal fees from the estate by the lawyer who is not the executor or
administrator of the said estate. The limitations on such direct recovery are
nonetheless established by jurisprudence, as evinced by the rulings in Escueta and
Occeña.
The character of such claim for attorney's fees bears reiteration. As stated in Escueta,
it partakes the nature of an administration expense. Administration expenses include
attorney's fees incurred in connection with the administration of the estate. 35 It is an
expense attending the accomplishment of the purpose of administration growing out
of the contract or obligation entered into by the personal representative of the estate,
and thus the claim for reimbursement must be superior to the rights of the
beneficiaries.36
Notwithstanding, there may be instances wherein the estate should not be charged
with attorney's fees. If the costs of counsel's fees arise out of litigation among the
beneficiaries thereof themselves or in the protection of the interests of particular
persons, the estate generally cannot be held liable for such costs, although when the
administrator employs competent counsel on questions which affect his/her duties as
the administrator and on which he/she is in reasonable doubt, reasonable expenses
for such services may be charged against the estate subject to the approval of the
court.37 It has also been held that an administrator who brings on litigation for the
deliberate purpose of defrauding the legitimate heirs and for his own benefit is not
entitled to reimbursement for counsel's fees incurred in such litigation.381avvphil.net
Clearly then, while the direct recovery of attorney's fees from the estate may be
authorized if the executor refuses to pay such fees, and claimed through the filing of
the proper petition with the probate court, such claim remains controvertible. This is
precisely why Escueta and its progenies require that the petition be made with notice
to all the heirs and interested parties.
It is these perspectives that we apply to the case at bar. Notably, petitioner had filed
both a Notice of Attorney's Lien and a Motion for Writ of Execution. These two
pleadings have distinct character and must be treated as such.
After Doña Adela's will had been admitted to probate, petitioner had initially filed a
Notice of Attorney's Lien wherein it identified itself as "the attorney for the executrix
named in the said will, Dra. Olivia S. Pascual", and sought to file its "claim and/or lien
for attorney's fees equivalent to Three Percent (3%) of the total gross estate,"
pursuant to the 1987 Retainer Agreement. Copies of this Notice of Attorney's Lien
were furnished Attys. Fortunato Viray, Jr. and Crisanto Cornejo, who appear on record
to have served as counsels for the various oppositors to the probate of the 1978 will
of Doña Adela. This Notice of Attorney's Lien was noted by the Probate Court in its
Order of 4 November 1993, "as a lien that must be satisfied chargeable to the share
of Olivia S. Pascual."
It may be so that petitioner, in filing this Notice of Attorney's Lien, initially intended to
hold Olivia Pascual, and not Doña Adela's estate, liable for the attorney's fees. It did
identify itself as the lawyer of Olivia Pascual, and the Probate Court did note that the
lien be satisfied chargeable to the share of the executor. Yet it must also be noted that
such lien, as it is, is only contingent on the final settlement of the estate of Doña Adela,
at such time, since the Retainer Agreement on which the lien is hinged provides that
the final fee "be payable upon approval by the court of the agreement for the
distribution of the properties to the court designated heirs of the estate."39 This is also
made clear by the order noting the lien, which qualified that said lien was chargeable
only to the share of Olivia Pascual, hence implying that at the very least, it may be
claimed only after her share to Doña Adela's estate is already determinate.
In rendering its assailed Decision, the Court of Appeals relied on this qualification
made by the Probate Court that the lien for attorney's fees was chargeable only to the
share of Olivia Pascual. Yet the Notice of Attorney's Lien only seeks to serve notice of
the pendency of the claim for attorney's fees, and not the payment of such fees itself.
On its own, the Notice of Attorney's Lien cannot serve as the basis for the Probate Court
to authorize the payment to petitioner of attorney's fees.
On the other hand, Escueta and its kindred cases do explicitly recognize the recourse
for the lawyer to directly make the claim for attorney's fees against the estate, not the
executor or administrator. The filing of the Notice of Attorney's Lien and the
qualificatory character of the rulings thereon, do not preclude the resort to the mode
of recovery against the estate as authorized by jurisprudence. Clearly then, we disagree
with the opinion of the Court of Appeals that attorney's fees can be claimed only against
the share of Olivia Pascual.
The instant case is rooted in an incomplete attempt to resort to the second mode of
recovery of attorney's fees as authorized in Escueta, originating as it did from the
denial of petitioner's Motion for Writ of Execution, and not the Notice of Attorney's
Lien. The Motion did expressly seek the payment of attorney's fees to petitioner.
Escueta and Occeña, among other cases, did clearly lay down the manner under which
such fees may be paid out even prior to the final settlement of the estate as an
administration expense directly chargeable to the estate itself. The critical question in
the present petition is thus whether this Motion for Writ of Execution satisfies the
requisites set in Escueta for a claim for attorney's fees directly chargeable against the
estate. It does not.
The fact that the prayer for attorney's fees was cast in a motion and not a petition
should not impede such claim, considering that the motion was nonetheless filed with
the Probate Court. However, the record bears that the requisite notice to all heirs and
interested parties has not been satisfied. Doña Adela's will designated 19 other
individuals apart from Olivia Pascual, and four (4) different institutions as recipients of
devises or legacies consisting of real properties, jewelries, and cash amounts. Yet only
Olivia Pascual was served with a copy of the Motion for Writ of Execution, the motion
which effectively sought the immediate payment of petitioner's attorney's fees. As
early as 29 April 1994, Olivia Pascual, in opposing the Motion for Writ of Execution,
already pointed out that petitioner had failed to give sufficient notice to all interested
parties to the estate, particularly the several devisees and legatees so named in Doña
Adela's will.
Such notice is material to the other heirs to Doña Adela's estate. The payment of
attorney's fees, especially in the amount of 3% of the total gross estate as sought for
by petitioner, substantially diminishes the estate of Doña Adela and may consequently
cause the diminution of their devises and legacies. Since these persons were so named
in the very will itself and the action for probate which was filed by petitioner itself,
there is no reason why petitioner could not have given due notice to these persons on
its claim for attorney's fees.
The requisite notice to the heirs, devisees, and legatees is anchored on the
constitutional principle that no person shall be deprived of property without due
process of law.40 The fact that these persons were designated in the will as recipients
of the testamentary dispositions from the decedent establishes their rights to the
succession, which are transmitted to them from the moment of the death of the
decedent.41 The payment of such attorney's fees necessarily diminishes the estate of
the decedent, and may effectively diminish the value of the testamentary dispositions
made by the decedent. These heirs, devisees, and legatees acquire proprietary rights
by reason of the will upon the moment of the death of the decedent, incipient or
inchoate as such rights may be. Hence, notice to these interested persons of the claims
for attorney's fees is integral, so as to allow them to pose any objections or oppositions
to such claim which, after all, could lead to the reduction of their benefits from the
estate.
The failure to notify the other heirs, devisees or legatees, to the estate of Doña Adela
likewise deprives these interested persons of the right to be heard in a hearing geared
towards determining whether petitioner was entitled to the immediate payment of
attorney's fees. Notably, petitioner, in filing its Motion for Writ of Execution, had
initially set the hearing on the motion on 29 April 1994, but one day prior to the
scheduled hearing, gave notice instead that the motion was being submitted for the
consideration of the Probate Court without further argument. 42 Evidently, petitioner
did not intend a full-blown hearing to ensue on whether it was entitled to the payment
of attorney's fees. Yet the claim for attorney's fees is hardly incontrovertible.
That the Retainer Agreement set the attorney's fees at three percent (3%) of the gross
estate does not imply that the basis for attorney's fees is beyond controversy.
Attorney's fees in this case are in the nature of administration expenses, or necessary
expenses in the first place. Any party interested in the estate may very well, in theory,
posit a myriad of objections to the attorney's fees sought, such as for example, that
these fees were not necessary expenses in the care, management, and settlement of
the estate. Whether or not such basis for valid objections exists in this case is not
evident, but the fact remains that all the parties interested in the estate, namely the
other devisees and legatees, were deprived of the opportunity to raise such objections
as they were not served notice of the Motion for Writ of Execution.
The instant claim for attorney's fees is thus precluded by the absence of the requisite
notices by petitioner to all the interested persons such as the designated heirs,
devisees, legatees, as required by the jurisprudential rule laid down in Escueta.
However, the Court of Appeals held that it was the prematurity of the claim for
attorney's fees that served as the fatal impediment. On this point, the Court does not
agree.
Again, the remaining peripheral questions warrant clarification.
Escueta itself provides for two alternative approaches through which counsel may
proceed with his claim for attorney's fees. The first involves a separate suit against the
executor or administrator in the latter's personal capacity. The second approach is a
direct claim against the estate itself, with due notice to all interested persons, filed
with the probate court.
In the same vein, the existence of the Retainer Agreement between petitioner and
Olivia Pascual allows petitioner two possible causes of action on which to claim
attorney's fees in connection with the administration of the estate of Doña Adela. The
first possible cause of action pivots on the Retainer Agreement, which establishes an
obligation on the part of Olivia Pascual to pay the final fee of 3% of the gross total
estate of Doña Adela, payable upon approval by the Probate Court of the agreement
for the distribution of the properties to the court- designated heirs of the estate.
Necessarily, since the recovery of attorney's fees is premised on the Retainer
Agreement any award thereupon has to await the final ascertainment of value of the
gross total estate of Doña Adela, as well as the approval by the Probate Court of the
agreement for the distribution of the properties. The Retainer Agreement makes it
clear that the final payment of attorney's fees is contingent on these two conditions,43
and the claim for attorney's fees based on the Retainer Agreement cannot ripen until
these conditions are met.
Moreover, it cannot be escaped that the Retainer Agreement was entered into
between petitioner and Olivia Pascual prior to the filing of the probate petition, and
that at such time, she had no recognized right to represent the estate of Doña Adela
yet. This
circumstance further bolsters our opinion that if petitioner insists on the judicial
enforcement of the Retainer Agreement, its proper remedy, authorized by law and
jurisprudence, would be a personal action against Olivia Pascual, and not against the
estate of Doña Adela. If this were the recourse pursued by petitioner, and Olivia
Pascual is ultimately held liable under the Retainer Agreement for attorney's fees, she
may nonetheless seek reimbursement from the estate of Doña Adela if she were able
to establish that the attorney's fees paid to petitioner were necessary administration
expenses.
The second or alternative recourse is the direct claim for attorney's fees against the
estate, as authorized under Escueta. The character of this claim is not contractual in
nature, but rather, as a reimbursement for a necessary expense of administration, and
it will be allowed if it satisfies the criteria for necessary expenses of administration. Its
entitlement can be established by the actual services rendered by the lawyer
necessary to the accomplishment of the purposes of administration, and not
necessarily by the contract of engagement of the attorney's services.
By filing their claim directly against the estate of Doña Adela, petitioner has clearly
resorted to this second cause of action. There are consequent advantages and
disadvantages to petitioner. Since the claim arises irrespective of the contingencies as
stipulated in the Retainer Agreement, the attorney's fees may be collected against the
estate even before the final determination of its gross total value or the final approval
of the project of partition. As earlier stated, such claim for reimbursement is superior
to the right of the beneficiaries to the estate, and as such, there is need to finally
determine the respective shares of the beneficiaries before attorney's fees in the
nature of administration expenses may be paid out.
The one distinct disadvantage, however, is that the Retainer Agreement cannot be
deemed binding on the estate or the Probate Court since the estate is not a party to
such contract. This would not preclude the Probate Court from enforcing the
provisions of the Retainer Agreement if, in its sound discretion, the terms of payment
therein are commensurate to the value of the actual services necessary to the
administration of the estate actually rendered by petitioner. Yet if the Probate Court
does choose to adopt the Retainer Agreement as binding on the estate of Doña Adela,
petitioner may again be precluded from immediate recovery of attorney's fees in view
of the necessity or precondition of ascertaining the gross total value of the estate, as
well as the judicial approval of the final agreement of partition.
In any event, whether the claim for attorney's fees was pursued through a separate
suit against Olivia Pascual (in her personal capacity) for the enforcement of the
Retainer Agreement, or against the estate of Doña Adela as reimbursement for
necessary administration expenses, it remains essential that a hearing be conducted
on the claim. In either case too, the hearing will focus on the value of the services of
the petitioner and the necessity of engaging petitioner as counsel.
We reiterate that the direct claim against the estate for attorney's fees must be made
with due notice to the heirs, devisees, and legatees. The failure of petitioner to give
such notice renders its present claim inefficacious for now. Indeed, there is sufficient
cause to dismiss outright petitioner's Motion for Writ of Immediate Execution filed
with the Probate Court, for its failure to notify therein the other persons interested in
the estate of Doña Adela. Nonetheless, to authorize said outright denial at this stage
could unduly delay the settlement of the estate of Doña Adela, considering the
likelihood that petitioner would again pursue such claim for attorney's fees as the right
to which is affirmed by law and jurisprudence.
Hence, in order not to unduly protract further the settlement of the estate of Doña
Adela, the Court deems it proper instead to mandate the Probate Court to treat the
Motion for Writ of Immediate Execution as a petition seeking a court order to direct
the payment of attorney's fees as expenses of administration, but subject to the
condition that petitioner give due notice to the other designated devisees and
legatees so designated in the will of the claim prior to the requisite hearing thereon.
Petitioner may as well seize such opportunity to formally amend or reconfigure its
motion to a petition to direct payment of attorney's fees. Once this step is
accomplished, there should be no impediment to petitioner's claim for recovery of
attorney's fees as reimbursement for necessary administration expenses, within the
terms established by law, jurisprudence, and this decision.

One final note. Petitioner's final prayer before this court is that it be issued a partial
writ of execution, consistent with its position before the Probate Court that it is
already entitled to at least a partial payment of its attorney's fees. This prayer cannot
obviously be granted at this stage by the Court, considering the fatal absence of due
notice to the other designated beneficiaries to the estate of Doña Adela. Still, we do
not doubt that the Probate Court, within its discretion, is capacitated to render the
award of attorney's fees as administration expenses either partially or provisionally,
depending on the particular circumstances and its ultimate basis for the
determination of the appropriate attorney's fees.

WHEREFORE, the petition is GRANTED IN PART. The Decision of the Court of Appeals
dated 22 December 1995 and the Orders of the Regional Trial Court of Malabon,
Branch 72, dated 2 June 1994 and 17 March 1995 are hereby SET ASIDE insofar as said
orders denied petitioner's Motion for Writ of Immediate Execution dated 26 April
1994. Petitioner is hereby directed to set for hearing its claim for attorneys fees, giving
due notice thereof to all the heirs, devisees, and legatees designated in the 1978 Last
Will and Testament executed by Doña Adela Pascual. The Regional Trial Court is
directed to treat petitioner's aforesaid motion as a PETITION for the payment of
attorney's fees as expenses of administration, and after due hearing resolve the same
with DISPATCH, conformably with this decision. No pronouncement as to costs.

SO ORDERED.
G.R. No. L-27486 November 18, 1927
In the matter of the estate of J. H. Ankrom, deceased. HEIRS OF RAFAEL GREGOIRE,
claimants-appellants,
vs.
ALBERT L. BAKER, administrator-appellee.
Camus, Delgado and Recto for appellants.
No appearance for appellee.
STREET, J.:
This appeal has been brought to set aside an order entered on March 5, 1926, by Hon.
Pedro J. Rich, Judge of the Court of First Instance of Davao, authorizing the
administrator of J. H. Ankrom, deceased, to exclude a large tract of land, with
improvements, from the inventory of assets of the decedent.
It appears that J. H. Ankrom, resident of the Province of Davao, died on September 18,
1922; and on September 25, thereafter, the appellee, A. L. Baker, qualified as his
administrator. On December 13 of the same year, the administrator filed his inventory
of the assets pertaining to the estate of his decedent, in which inventory was included
a tract of land covered by Torrens certificate of title and containing an area of more
than 930 hectares. In this inventory, said tract of land, with the improvements
thereon, was estimated at nearly P60,000. On September 24, 1924, the heirs of Rafael
Gregoire, appellants herein, filed a claim against the estate of Ankrom for the sum of
$35,438.78, U. S. currency, or P70, 877.56, based upon a judgment rendered in the
Supreme Court of the Republic of Panama. This claim was allowed by the
commissioners in the estate of Ankrom, and no appeal was at any time taken against
the order so allowing it. It appears that the total recognized claims against the estate
amounted originally to P76,645.13, but four of the creditors, having claims in the
amount of P1,639.82, have been paid in full, leaving a balance owing by the estate of
P75,005.31, the greater part of which is comprised of the claim of the appellants.
As the affairs of the estate stood upon the original inventory, there appeared to be
sufficient assets to pay all claimants; but while these intestate proceedings were being
conducted the administrator discovered that on April 22, 1920, or about a year and a
half before his death, Ankrom had executed a mortgage on the property here in
question in favor of the Philippine Trust Company to secure that company from liability
on a note in the amount of P20,000.00, of the same date, upon which it had made
itself contigently liable. Two days after this mortgage had been executed Ankrom
appears to have made an assignment of all his interest in the mortgaged property to
one J. G. Jung, of Cincinnati, Ohio, for a purported consideration of the sum of P1 and
other good and valuable considerations. In view of these conveyances by his intestate,
the administrator presented an amended inventory, omitting therefrom the tract of
930 hectares with its improvements thereon, the same being the land covered by the
transfers above mentioned. The court, however, having its attention called to the fact
that the omission of this property from the inventory would leave the estate insolvent,
made an order on October 7, 1925, directing the administrator to restore said item to
his inventory. Nevertheless, upon a later motion of the administrator accompanied by
authenticated copies of the documents of transfer, the court made a new order, dated
march 5, 1926, approving of the omission by the administrator of said property from
the inventory; and its is from this order that the present appeal is here being
prosecuted.
From the foregoing statement it will be collected that the appellants have an
undeniable credit in a large amount against the estate of the decedent, and that upon
the showing of the last approved inventory the estate is insolvent. In view of these
facts that appellants, assuming apparently that the assignment to Jung by Ankrom of
the equity of redemption of the latter in the tract of land above mentioned was
affected in fraud of creditors, are desirous of reaching and subjecting this interest to
the payment of the appellant's claim. The appellants also insist that it was the duty of
the administrator to retain the possession of this tract of land and thereby place upon
Jung, or persons claiming under him, the burden of instituting any action that may be
necessary to maintain the rights of the transferee under said assignment. The
administrator, on the other hand, supposes the assignment to be valid and apparently
does not desire to enter into a contest over the question of its validity with the person
or persons claiming under it.
The precise remedy open to the appellants in the predicament above described is
clearly pointed pout in section 713 of our Code of Civil Procedure, which reads as
follows:
When there is a deficiency of assets in the hands of an executor or
administrator to pay debts and expenses, and when the deceased person
made in his life-time such fraudulent conveyance of such real or personal
estate or of a right or interest therein, as is stated in the preceding section,
any creditor of the estate may, by license of the court, if the executor or
administrator has not commenced such action, commence and prosecute to
final judgment, in the name of the executor or administrator, an action for
the recovery of the same and may recover for the benefit of the creditors,
such real or personal estate, or interest therein so conveyed. But such action
shall not be commenced until the creditor files in court a bond with sufficient
surety, to be approved by the judge, conditioned to indemnify the executor
or administrator against the costs of such action. Such creditor shall have a
 lien upon the judgment by him so recovered for the costs incurred and such
other expenses as the court deems equitable.

The remedy of the appellants is, therefore, to indemnify the administrator against
costs and, by leave of court, to institute an action in the name of the administrator to
set aside the assignment or other conveyance believed to have been made in fraud of
creditors.

For the appellants it is contended that, inasmuch as no appeal was taken from the
order of October 7, 1925, directing the administrator to include the land in question
in the inventory, said order became final, with the result that the appealed order of
March 5, 1926, authorizing the exclusion of said property from the inventory, should
be considered beyond the competence of the court. This contention is untenable.
Orders made by a court with reference to the inclusion of items of property in the
inventory or the exclusion of items therefrom are manifestly of a purely discretionary,
provisional, and interlocutory nature and are subject to modification or change at any
time during the course of the administration proceedings. Such order in question not
final in the sense necessary to make it appealable. In fact we note that the appealed
order was expressly made without prejudice to the rights of the creditors to proceed
in the manner indicated in the provision above quoted from the Code of Civil
Procedure. lawphil.net

The order appealed from not being of an appealable nature, it results that this appeal
must be dismissed, and it is so ordered, with costs against the appellants.

Avanceña, C.J., Johnson, Malcolm, Villamor, Ostrand, Johns and Villa-Real, JJ., concur.
G.R. No. L-48140 May 4, 1942
SINFOROSO PASCUAL, plaintiff-appellant,
vs.
PONCIANO S. PASCUAL, ET AL., defendants-appellees.
Celedonio Bernardo for appellant.
Ortega & Ortega for appellees.
MORAN, J.:
On September 14, 1940, while the proceedings for the probate of the will of the
deceased Eduarda de los Santos were pending in the Court of First Instance of Rizal
plaintiff, Sinforoso Pascual, instituted in the Court of First Instance of Pampanga
against Ponciano S. Pascual and others, an action for the annulment of a contract of
sale of a fishpond situated in Lubao, Pampanga, supposedly executed without
consideration by said deceased in her lifetime in favor of the defendants. The
complaint alleges that plaintiff and defendants are all residents of Malabon, Rizal, and
are legitimate children of the testratix, Eduarda de los Santos. Defendants filed of a
motion to dismiss, alleging want of cause of action, limitation of action, wrong venue
and pendency of another action. The trial court granted the motion on the ground
that the action should have been brought by the executor or administrator of the
estate left by the deceased, and directed the plaintiff to amend his complaint within
five days. Plaintiff filed an amended complaint, the amendment consisting in that "el
demandado Miguel S. Pascual ha sido nombrado por el Juzgado de Primera Instancia
de Rizal albacea testamentario de los bienes de la finada Eduarda de los Santos. en el
asunto de la testamentaria de dicha finada." The trial court declaring that such
amendment did not cure the insufficiency of the complaint, dismissed the action. It is
from this order of dismissal that plaintiff interposed his appeal.
Under Rule 86, section 1, of the new Rules of Court, actions for the recovery or
protection of the property or rights of the deceased for causes which survive may be
prosecuted or defended by his executor or administrator. Upon the commencement
of the testate or intestate proceedings the heirs have no standing in court in actions
of the above character, except when the executor or administrator is unwilling or fails
or refuses to act, in which event to heirs may act in his place. (Pomeroy on Code
Remedies, p. 158, 11 R C. L. p. 262; 21 Am. Jur., 940) Here, the fictitious sale is alleged
to have been made to the defendants, one of them, Miguel S. Pascual, being the
executor appointed by the probate court. Such executor naturally would not bring an
action against himself for recovery of the fishpond. His refusal to act may, therefore,
be implied. And this brings the case under the exception. It should be noted that in
the complaint the prayer is that the fishpond be delivered not to the plaintiff but to
the executor, thus indicating that the action is brought in behalf of the estate of the
deceased.
Appellees contend that there is here a wrong venue. They argue that an action for the
annulment of a contract of sale is a personal action which must be commenced at the
place of residence of either the plaintiff or the defendant, at the election of the
plaintiff (Rule 5, sec. 1, Rules of Court), and, in the instant case, both plaintiff and
defendants are residents of Malabon, Rizal, but the action was commenced in the
Court of First Instance of Pampanga. It appearing, however, that the sale is alleged to
be fictitious, with absolutely no consideration, it should be regarded as a non-existent,
not merely null, contract. (8 Manresa, Comentarios al Codigo Civil Español, 2nd ed.,
pp. 766-770.) And there being no contract between the deceased and the defendants,
there is in truth nothing to annul by action. The action brought cannot thus be for
annulment of contract, but is one for recovery of a fishpond, a real action that should
be, as it has been, brought in Pampanga, where the property is located (Rule 5, sec. 3,
Rules of Court.)
Appellees argue further that the action brought by the plaintiff is unnecessary, the
question involved therein being one that may properly be raised and decided in the
probate proceedings. The general rule is that questions as to title to property cannot
be passed upon in testate proceedings. (Bauermann vs. Casas, 10 Phil., 386; Devesa
vs. Arbes, 13 Phil., 273; Guzman vs. Anog, 37 Phil., 61; Lunsod vs. Ortega, 46 Phil., 664;
Adapon vs. Maralit, 40 Off. Gaz., 6th Sup., p. 84.) The court is, however, of the opinion
and so holds that, when as in the instant case, the parties interested are all heirs of
the deceased claiming title under him, the question as to whether the transfer made
by the latter to the former is or is not fictitious, may properly be brought by motion in
the testate or intestate proceedings on or before the distribution of the estate among
the heirs. This procedure is optional to the parties concerned who may choose to bring
a separate action as a matter of convenience in the preparation or presentation of
evidence, and accordingly, the action brought by the appellant is not improper.
Order is reversed, and the case is remanded the trial court for further proceedings,
with costs against appellees.
Yulo, C.J., Ozaeta, Paras and Bocobo, JJ., concur.
G.R. No. L-62376 October 27, 1983
MARIA VELASQUEZ, MARY GEORGE, NELLIE GEORGE, NOBLE GEORGE, and MAYBELLE
GEORGE, plaintiffs-appellants,
vs.
WILLIAM GEORGE, ROBERT GEORGE, ANDRES MUÑOZ, ISAGANI BRIAS and CIRILO
ASPERILLA defendants-appellees, ERLINDA VILLANUEVA, mortgagee-defendant-
appellee.
GUTIERREZ, JR., J:
Plaintiffs-appellants Maria Velasquez Vda. de George and her children, Mary, Nellie,
Noble and Maybelle, all surnamed George, appealed from the decision of the Court of
First Instance of Bulacan, which dismissed their complaint for lack of jurisdiction.
According to the trial court, the case falls within the original and exclusive jurisdiction
of the Securities and Exchange Commission. The appeal was certified to us by the
Court of Appeals as one involving a pure question of law.
The plaintiffs-appellants are the widow and legitimate children of the late Benjamin B.
George whose estate is under intestate proceedings. The case is docketed as Special
Proceedings Nos. 18820 before the then Court of First Instance of Rizal at Quezon City,
Branch XVIII.
In their complaint, the plaintiffs-appellants alleged that the five defendants-
mortgagors are officers of the Island Associates Inc. Andres Muñoz, aside from being
the treasurer-director of said corporation, was also appointed and qualified as
administrator of the estate of Benjamin George in the above special proceedings. In
life, the latter owned 64.8 percent or 636 shares out of the outstanding 980 shares of
stock in the corporation. Without the proper approval from the probate court and
without notice to the heirs and their counsel, the defendants-mortgagors executed a
Deed of First Real Estate Mortgage in favor of the defendant-mortgagee Erlinda
Villanueva, covering three parcels of land owned by Island Associates. In said Deed,
the defendants-mortgagors also expressly waived their right to redeem the said
parcels. Subsequently, a power of attorney was executed by the defendants-
mortgagors in favor of Villanueva whereby the latter was given the full power and
authority to cede, transfer, and convey the parcels of land within the reglementary
period provided by law for redemption.
A certificate of sale was executed in favor of Villanueva by the Provincial Sheriff of
Bulacan after she submitted the highest bids at the public auction. This led to the
execution of a Deed of Sale and Affidavit of Consolidation of Ownership by virtue of
which Transfer Certificates of Titles Nos. T-16717 and T-39162, covering the three
parcels of land, were cancelled and in lieu thereof, Transfer Certificates of Titles Nos.
T239675 and T-239674 were issued in favor of Villanueva. The plaintiffs-appellants,
therefore, filed the complaint for the annulment of the — 1.) Deed of First Real Estate
Mortgage; 2.) Power of Attorney; 3.) Certificate of Sale; 4.) Amended Certificate of
Sale; 5.) Affidavit of Consolidation of Ownership; and 6.) Transfer Certificates of Title
Nos. T-239674 and T-239675.
A motion to dismiss was filed by William George, Robert George, and administrator
Andres Muñoz on the ground that the trial court had no jurisdiction over the case. The
movants contended that the subject matter of the complaint referred to the corporate
acts of the Board of Directors of Island Associates, and, therefore, falls within the
exclusive jurisdiction of the Securities and Exchange Commission. The trial court
agreed with the movants and dismissed the complaint. The plaintiffs-appellants
contend that the resolution of the validity of a mortgage contract is within the original
and exclusive jurisdiction of civil courts, and certainly not within the jurisdiction of the
Securities and Exchange Commission and that once jurisdiction of the civil court
whether in a civil or a criminal case, has properly attached, the same cannot be ousted,
divested or removed. The appellants state that the questioned composition of the
board of directors, is merely incidental to the determination of the main issue and is
insufficient cause for the trial court to divest itself of its original and exclusive
jurisdiction that has already been acquired.
The defendants-appellees, on the other hand maintain that since the complaint
questions the validity of a corporate contract which the appellants contend to have
been entered into as a fraudulent and surreptitious scheme and devise to defraud
them, this issue places the entire case outside the jurisdiction of the civil courts.
According to them, Presidential Decree No. 902-A gives the SEC exclusive jurisdiction
over such a controversy. The relevant provision reads:
Sec. 5. In addition to the regulatory and adjudicative functions of
the Securities and Exchange Commission over corporations,
partnerships and other forms of associations registered with it as
expressly granted under existing laws and decrees, it shall have
original and exclusive jurisdiction to hear and decide cases involving:
a) Devices or schemes employed by any acts of
the board of directors, business associations, its
officers or partners amounting to fraud and
misrepresentation which may be detrimental to
the interest of the public and/or of the
stockholder, partner, members of associations or
organizations registered with the Commission ...
Villanueva further contends that the plaintiffs-appellants have no capacity to file the the heirs have no right to commence an action arising out of the rights belonging to
complaint because the general rule laid down in Rule 87, Section 3 of the Rules of the deceased." The case at bar falls under such an exception.
Court states that only the administrator or executor of the estate may bring actions of
such nature as the one in the case at bar. The only exception is when the executor or WHEREFORE, the order of the Court of First Instance of Bulacan, dated June 16, 1980,
administrator is unwilling or fails or refuses to act, which exception according to the dismissing the complaint and the order dated December 1, 1980 denying the motion
mortgagee-appellee does not apply in the present case. for reconsideration are SET ASIDE. The said court is hereby ordered to set the case for
trial on the merits as above indicated.
We agree with the plaintiffs-appellants. What the complaint sought to annul were
documents of title which vested ownership over the three parcels of land in question SO ORDERED.
to defendant-mortgagee Villanueva, who is neither an officer, a stockholder nor a
director of the corporation, but a third party. Clearly, the lower court had jurisdiction Teehankee (Chairman), Melencio-Herrera, Plana and Relova JJ., concur.
over the controversy. The fact that the plaintiffs-appellants subsequently questioned
the legality of the constitution of the board of directors of the corporation did not
divest the court of its jurisdiction to take cognizance of the case. What determines
jurisdiction of the court are the allegations in the complaint. If from the same, the
court has already acquired jurisdiction over the subject-matter, jurisdiction is retained
up to the end of the litigation. (See Lat v. Phil. Long Distance Co., 67 SCRA 425).

Whether or not the mortgage contract, with an unusual provision whereby the
mortgagors waived their right to redeem the mortgaged property, could be executed
without proper approval of the probate court and without notice to the widow and
legitimate children of the deceased is a matter clearly within the authority of a trial
court to decide. If in the course of trial, the court believes that the validity of the
composition of the board of directors is absolutely necessary for resolution of the
issues before it, the remedy is, at most, to require that one issue to be threshed out
before the Securities and Exchange Commission and to hold in abeyance, the trial on
the merits of the principal issues in the meantime. Certainly, the solution is not for the
lower court to surrender its judicial questions to an administrative agency for
resolution.

We also find without merit the defendant-mortgagee's contention that the proper
party to file the complaint is the administrator of the estate of Benjamin George. The
administrator, Andres Muñoz, is the same person charged by the plaintiffs-appellants
to have voted in the board of directors without securing the proper authority from the
probate court to which he is accountable as administrator. In Ramirez v. Baltazar (24
SCRA 918), we ruled that "since the ground for the present action to annul the
aforesaid foreclosure proceedings is the fraud resulting from such insidious
machinations and collusion in which the administrator has allegedly participated, it
would be far fetched to expect the said administrator himself to file the action in
behalf of the estate. And who else but the heirs, who have an interest to assert and to
protect, would bring the action? Inevitably, this case should fall under the exception,
rather than the general rule that pending proceedings for the settlement of the estate,
G.R. No. 129008 January 13, 2004
TEODORA A. RIOFERIO, VERONICA O. EVANGELISTA assisted by her husband ZALDY
EVANGELISTA, ALBERTO ORFINADA, and ROWENA O. UNGOS, assisted by her husband
BEDA UNGOS, petitioners,
vs.
COURT OF APPEALS, ESPERANZA P. ORFINADA, LOURDES P. ORFINADA, ALFONSO
ORFINADA, NANCY P. ORFINADA, ALFONSO JAMES P. ORFINADA, CHRISTOPHER P.
ORFINADA and ANGELO P. ORFINADA, respondents.
DECISION
TINGA, J.:
Whether the heirs may bring suit to recover property of the estate pending the
appointment of an administrator is the issue in this case.
This Petition for Review on Certiorari, under Rule 45 of the Rules of Court, seeks to set
aside the Decision1 of the Court of Appeals in CA-G.R. SP No. 42053 dated January 31,
1997, as well as its Resolution2 dated March 26, 1997, denying petitioners’ motion for
reconsideration.
On May 13, 1995, Alfonso P. Orfinada, Jr. died without a will in Angeles City leaving
several personal and real properties located in Angeles City, Dagupan City and
Kalookan City.3 He also left a widow, respondent Esperanza P. Orfinada, whom he
married on July 11, 1960 and with whom he had seven children who are the herein
respondents, namely: Lourdes P. Orfinada, Alfonso "Clyde" P. Orfinada, Nancy P.
Orfinada-Happenden, Alfonso James P. Orfinada, Christopher P. Orfinada, Alfonso
Mike P. Orfinada (deceased) and Angelo P. Orfinada.4
Apart from the respondents, the demise of the decedent left in mourning his
paramour and their children. They are petitioner Teodora Riofero, who became a part
of his life when he entered into an extra-marital relationship with her during the
subsistence of his marriage to Esperanza sometime in 1965, and co-petitioners
Veronica5, Alberto and Rowena.6
On November 14, 1995, respondents Alfonso James and Lourdes Orfinada discovered
that on June 29, 1995, petitioner Teodora Rioferio and her children executed an
Extrajudicial Settlement of Estate of a Deceased Person with Quitclaim involving the
properties of the estate of the decedent located in Dagupan City and that accordingly,
the Registry of Deeds in Dagupan issued Certificates of Titles Nos. 63983, 63984 and
63985 in favor of petitioners Teodora Rioferio, Veronica Orfinada-Evangelista, Alberto
Orfinada and Rowena Orfinada-Ungos. Respondents also found out that petitioners
were able to obtain a loan of P700,000.00 from the Rural Bank of Mangaldan Inc. by
executing a Real Estate Mortgage over the properties subject of the extra-judicial
settlement.7
On December 1, 1995, respondent Alfonso "Clyde" P. Orfinada III filed a Petition for
Letters of Administration docketed as S.P. Case No. 5118 before the Regional Trial
Court of Angeles City, praying that letters of administration encompassing the estate
of Alfonso P. Orfinada, Jr. be issued to him.8
On December 4, 1995, respondents filed a Complaint for the Annulment/Rescission of
Extra Judicial Settlement of Estate of a Deceased Person with Quitclaim, Real Estate
Mortgage and Cancellation of Transfer Certificate of Titles with Nos. 63983, 63985 and
63984 and Other Related Documents with Damages against petitioners, the Rural Bank
of Mangaldan, Inc. and the Register of Deeds of Dagupan City before the Regional Trial
Court, Branch 42, Dagupan City.9
On February 5, 1996, petitioners filed their Answer to the aforesaid complaint
interposing the defense that the property subject of the contested deed of extra-
judicial settlement pertained to the properties originally belonging to the parents of
Teodora Riofero10 and that the titles thereof were delivered to her as an advance
inheritance but the decedent had managed to register them in his name.11 Petitioners
also raised the affirmative defense that respondents are not the real parties-in-
interest but rather the Estate of Alfonso O. Orfinada, Jr. in view of the pendency of the
administration proceedings.12 On April 29, 1996, petitioners filed a Motion to Set
Affirmative Defenses for Hearing13 on the aforesaid ground.
The lower court denied the motion in its Order14 dated June 27, 1996, on the ground
that respondents, as heirs, are the real parties-in-interest especially in the absence of
an administrator who is yet to be appointed in S.P. Case No. 5118. Petitioners moved
for its reconsideration15 but the motion was likewise denied.16
This prompted petitioners to file before the Court of Appeals their Petition for
Certiorari under Rule 65 of the Rules of Court docketed as CA G.R. S.P. No. 42053.17
Petitioners averred that the RTC committed grave abuse of discretion in issuing the
assailed order which denied the dismissal of the case on the ground that the proper
party to file the complaint for the annulment of the extrajudicial settlement of the
estate of the deceased is the estate of the decedent and not the respondents.18
The Court of Appeals rendered the assailed Decision19 dated January 31, 1997, stating
that it discerned no grave abuse of discretion amounting to lack or excess of
jurisdiction by the public respondent judge when he denied petitioners’ motion to set
affirmative defenses for hearing in view of its discretionary nature.
A Motion for Reconsideration was filed by petitioners but it was denied.20 Hence, the
petition before this Court.
The issue presented by the petitioners before this Court is whether the heirs have
legal standing to prosecute the rights belonging to the deceased subsequent to the
commencement of the administration proceedings.21
Petitioners vehemently fault the lower court for denying their motion to set the case
for preliminary hearing on their affirmative defense that the proper party to bring the
action is the estate of the decedent and not the respondents. It must be stressed that
the holding of a preliminary hearing on an affirmative defense lies in the discretion of
the court. This is clear from the Rules of Court, thus:
SEC. 5. Pleadings grounds as affirmative defenses.- Any of the grounds for
dismissal provided for in this rule, except improper venue, may be pleaded
as an affirmative defense, and a preliminary hearing may be had thereon as
if a motion to dismiss had been filed.22 (Emphasis supplied.)
Certainly, the incorporation of the word "may" in the provision is clearly indicative of
the optional character of the preliminary hearing. The word denotes discretion and
cannot be construed as having a mandatory effect.23 Subsequently, the electivity of
the proceeding was firmed up beyond cavil by the 1997 Rules of Civil Procedure with
the inclusion of the phrase "in the discretion of the Court", apart from the retention
of the word "may" in Section 6,24 in Rule 16 thereof.
Just as no blame of abuse of discretion can be laid on the lower court’s doorstep for
not hearing petitioners’ affirmative defense, it cannot likewise be faulted for
recognizing the legal standing of the respondents as heirs to bring the suit.
Pending the filing of administration proceedings, the heirs without doubt have legal
personality to bring suit in behalf of the estate of the decedent in accordance with the
provision of Article 777 of the New Civil Code "that (t)he rights to succession are
transmitted from the moment of the death of the decedent." The provision in turn is
the foundation of the principle that the property, rights and obligations to the extent
and value of the inheritance of a person are transmitted through his death to another
or others by his will or by operation of law.25
Even if administration proceedings have already been commenced, the heirs may still
bring the suit if an administrator has not yet been appointed. This is the proper
modality despite the total lack of advertence to the heirs in the rules on party
representation, namely Section 3, Rule 3 26 and Section 2, Rule 8727 of the Rules of
Court. In fact, in the case of Gochan v. Young,28 this Court recognized the legal standing
of the heirs to represent the rights and properties of the decedent under
administration pending the appointment of an administrator. Thus:
The above-quoted rules,29 while permitting an executor or administrator to
represent or to bring suits on behalf of the deceased, do not prohibit the
heirs from representing the deceased. These rules are easily applicable to
cases in which an administrator has already been appointed. But no rule
categorically addresses the situation in which special proceedings for the
settlement of an estate have already been instituted, yet no administrator has
been appointed. In such instances, the heirs cannot be expected to wait for
the appointment of an administrator; then wait further to see if the
administrator appointed would care enough to file a suit to protect the rights
and the interests of the deceased; and in the meantime do nothing while the
rights and the properties of the decedent are violated or dissipated.
Even if there is an appointed administrator, jurisprudence recognizes two exceptions,
viz: (1) if the executor or administrator is unwilling or refuses to bring suit;30 and (2)
when the administrator is alleged to have participated in the act complained of31 and
he is made a party defendant.32 Evidently, the necessity for the heirs to seek judicial
relief to recover property of the estate is as compelling when there is no appointed
administrator, if not more, as where there is an appointed administrator but he is
either disinclined to bring suit or is one of the guilty parties himself.
All told, therefore, the rule that the heirs have no legal standing to sue for the recovery
of property of the estate during the pendency of administration proceedings has three
exceptions, the third being when there is no appointed administrator such as in this
case.
As the appellate court did not commit an error of law in upholding the order of the
lower court, recourse to this Court is not warranted.
WHEREFORE, the petition for review is DENIED. The assailed decision and resolution
of the Court of Appeals are hereby AFFIRMED. No costs.
SO ORDERED.
Puno, (Chairman), Quisumbing, Austria-Martinez, and Callejo, Sr., JJ., concur.
G.R. No. L-11801 June 30, 1959
CIRILO MODESTO, petitioner,
vs.
JESUS MODESTO, ET AL., ETC., respondents.
MONTEMAYOR, J.:
This is a petition for certiorari and for a writ of preliminary injunction filed by Cirilo
Modesto to set aside the order of the Court of First Instance of Leyte dated March 8,
1954, the writ of execution dated April 27, 1954 as well as the alias writ of execution
dated November 10, 1955.
The facts in this case are not in dispute. It would appear that Bruno Modesto died
leaving several heirs, among them, Cirilo Modesto and Jesus Modesto. In the course
of the intestate proceedings, Jesus Modesto, acting as administrator of the estate of
Bruno, filed on November 7, 1953, in the Court of First Instance of Tacloban, Leyte, a
motion to cite and examine under oath several persons, especially Cirilo Modesto,
regarding properties concealed, embezzled or fraudulently conveyed. On December
7, 1953 the court issued an order appointing the Provincial Sheriff of Leyte and the
Chief of Police of Tanawan, Leyte, as joint commissioners, to verify and ascertain
persons who were holding, claiming or possessing properties belonging to the estate
of the deceased Bruno Modesto. In said motion of Jesus Modesto he listed said
properties supposed to belong to the estate, classified as follows: jewels under items
1, 2 and 3; furniture and other personal properties under items 4-10; the 11th item is
supposed to be cash taken from a deposit in the Office of the Chief of Police of
Tanawan, Leyte, after taking funeral and other expenses, in the amount of P1,700; and
real properties under items 12-26.
On January 12, 1954, the joint commissioners submitted their report. On March 1,
1954 Jesus Modesto, administrator filed a motion in court to require Cirilo Modesto
to turn over to him as administrator the personal properties belonging to the intestate
supposed to be in Cirilo's possession. Pursuant to said motion, the trial court, on
March 8, 1954, issued an order requiring Cirilo Modesto to deliver to the administrator
personal properties listed in the order, such as one narra aparador, 1 desk, 1 looking
glass 5 x 3 ft., 1 trunk containing clothes, 1 bicycle, 11 pieces of steel matting and
money said to have been taken from a deposit made with the Chief of Police in the
amount of P1,700.00. Thereafter, on April 27, 1954, a writ of execution was issued and
on May 10, 1955 as alias writ of execution was also issued by the trial court. By virtue
of said writ of execution the provincial Sheriff issued a Notice of Attachment against
the real property described in Certificate of Title no. 30167 of the Register of Deeds
of Leyte and under Tax Assessment in the name of Cirilo Modesto.
On June 2, 1955 Cirilo Modesto filed an Urgent Motion to Set Aside the Writ of
Execution and for a Writ of Preliminary Injunction, which motion was opposed by
Jesus. On June 4, 1955 the Provincial Sheriff sold at public auction the real property
above-mentioned to the highest and only bidder Jesus Modesto for P2,454 and on
June 6, 1956, the Provincial Sheriff issued a Sheriff's Certificate of Final Sale in favor of
Jesus. On June 29, 1956 Jesus Modesto filed a motion for a writ of Possession. On July
11, 1956 Cirilo filed his Motion for Reconsideration of the order dated June 4 which
the trial court denied. On August 3, 1956, in pursuance of the motion for a Writ of
Possession, the Provincial Sheriff issued a notification to Cirilo placing Jesus in
possession of the real property sold to him. Cirilo then filed the present petition for
certiorari to annul the proceedings had before the Court of First Instance of Leyte.
The trial court, in issuing its order of March 8, 1954 requiring Cirilo to deliver the
properties listed therein to Jesus as administrator, supposedly acted under the
provisions of Section 6, Rule 88 of the Rules of Court which reads as follows:
SEC. 6. Proceedings when property concealed, embezzled, or fraudulently
conveyed. — If an executor or administrator, heir, legatee, creditor, or other
individual interested in the estate of the deceased, complains to the court
having jurisdiction of the estate that a person is suspected of having
concealed, embezzled, or conveyed away any of the money, goods or
chattels of the deceased, or that such person has in his possession or has
knowledge of any deed, conveyance, bond, contract, or other writing which
contains evidence of or tends to disclose the right, title, interest, or claim of
the deceased to real or personal estate, or the last will and testament of the
deceased, the court may cite such suspected person to appear before it and
may examine him on oath on the matter of such complaint; and if the person
so cited refused to appear, or to answer on such examination or such
interrogatories as are put to him, the court may punish him for contempt,
and may commit him to prison until he submits to the order to the court. The
interrogatories put to any such person, and his answers thereto, shall be in
writing and shall be filed in the clerk's office.
In this trial court committed error because the purpose of the section above-
reproduced, which section was taken from Section 709 of Act 190, is merely to elicit
information or to secure evidence from those persons suspected of having possessed
or having knowledge of the properties left by a deceased person, or of having
concealed, embezzled or conveyed any of the said properties of the deceased. In such
proceedings the trial court has no authority to decide whether or not said properties,
real or personal, belong to the estate or to the persons examined. if, after such
examination there is good reason to believe that said person or persons examined are
keeping properties belonging to the estate, then the next step to be taken should be
for the administrator to file an ordinary action in court to recover the same (Alafriz vs.
Mina, 28 Phil., 137; Cui vs. Piccio, 91 Phil., 713; 48 Off. Gaz. [7] 2769; Changco vs.
Madrelejos, 12 Phil., 543; Guanco vs. PNB, 54 Phil., 244, cited in Moran's Rules of
Court, Vol. 2 1957 Edition, pp. 443-444).

The order requiring Cirilo to deliver the properties and cash stated in the order, as
belonging to the estate, said that Cirilo was supposed to have admitted having
received or taken possession of said properties after the death of Bruno. This
statement or findings of the lower court is not supported by the evidence on record.
As a matter of fact, in the answer of Cirilo to the motion of the administrator, he
claimed that although he held the aparador mentioned in Item 4 in the list properties,
nevertheless, said furniture belonged to their parents and so Bruno Modesto had only
1/6 share; that he, Cirilo, did not have the looking glass mentioned in the motion
because the same had been taken by Jesus himself, neither did he have the desk in
question; that though he held a trunk, it was empty and only contained clothes which
were torn; that the bicycle in question was in the possession of Mauricio Modesto, the
nephew of Bruno; that he, Cirilo, did not keep the 11 pieces of steel matting; neither
did he ever receive the amount of P1,700.00 supposed to have been deposited in the
office of the Chief of Police. But, even if Cirilo had admitted possession of the
properties which he was required by the court to deliver to Jesus, still it was necessary
for the ordinary courts, not the probate court, to determine the title and ownership
of said properties.

In view of the foregoing, the petition for certiorari is hereby granted and the order of
the trial court of March 8, 1954, the Writ of Execution of April 27, 1954 and the alias
Writ of Execution of May 10, 1955, and of course the sale made by the Sheriff of the
real property covered by Certificate of Title No. 30167 are set aside. Respondent Jesus
Modesto will pay the costs.

Paras, C.J., Bengzon, Padilla, Bautista Angelo, Concepcion, Endencia and Barrera, JJ.,
concur.
G.R. No. L-56504 May 7, 1987
POMPILLO VALERA and EUMELIA VALERA CABADO, petitioners,
vs.
HON. JUDGE SANCHO Y. INSERTO, in his capacity as Presiding Judge, Court of First
Instance of Iloilo, Branch 1, and MANUEL R. FABIANA, respondents.
Nos. L-59867-68 May 7, 1987
EUMELIA V. CABADO, POMPILLO VALERA and HON. MIDPANTAO L. ADIL, petitioners-
appellants,
vs.
MANUEL FABIANA, JOSE GARIN and HON. COURT OF APPEALS (Tenth Division),
respondents-appellants.
NARVASA, J.:
Conflicting claims over a fishpond asserted by the administrators of the estate of
deceased spouses, on the one hand, and by the heirs of a daughter of said spouses
and their lessee, on the other, have given rise to the proceedings now docketed in this
Court as (1) G.R. No. 56504 and (2) G.R. Nos. 59867-68.
Sp. Proc. No. 2223, CFI, Iloilo
In the proceedings for the settlement of the intestate estate of the decedent spouses,
Rafael Valera and Consolacion Sarrosa 1 — in which Eumelia Cabado and Pompiro
Valera had been appointed administrators 2 — the heirs of a deceased daughter of
the spouses, Teresa Garin, filed a motion asking that the Administratrix, Cabado, be
declared in contempt for her failure to render an accounting of her administration. 3
Cabado replied that no accounting could be submitted unless Jose Garin, Teresa's
husband and the movant heirs' father, delivered to the administrator an 18-hectare
fishpond in Baras, Barotoc Nuevo, Iloilo, belonging to the estate and she in turn moved
for the return thereof to the estate, 4 so that it might be partitioned among the
decedents' heirs. Jose Garin opposed the plea for the fishpond's return to the estate,
asserting that the property was owned by his children and this was why it had never
been included in any inventory of the estate.
The Court, presided over by Hon. Judge Midpantao Adil, viewed the Garin Heirs'
motion for contempt, as well as Cabado's prayer for the fishpond's return to the
estate, as having given rise to a claim for the recovery of an asset of the estate within
the purview of Section 6, Rule 87 of the Rules of Court. 5 It accordingly set said
incidents for hearing during which the parties presentee evidence in substantiation of
their positions. 6 Thereafter, the Court issued an Order dated September 17, 1980
commanding the Heirs of Teresa Garin "to reconvey immediately the fishpond in
question * * to the intestate Estate of the Spouses. 7
The Order was predicated upon the Court's factual findings mainly derived from the
testimony of the two administrators that:
1. the fishpond originally belonged to the Government, and had been given in lease to
Rafael Valera in his lifetime;
2. Rafael Valera ostensibly sold all his leasehold rights in the fishpond to his daughter,
Teresa Garin; but the sale was fictitious, having been resorted to merely so that she
might use the property to provide for her children's support and education, and was
subject to the resolutory term that the fishpond should revert to Rafael Valera upon
completion of the schooling of Teresa Garin's Children; and
3. with the income generated by the fishpond, the property was eventually purchased
from the Government by the Heirs of Teresa Garin, collectively named as such in the
Original Certificate of Title issued in their favor.
Upon these facts, Judge Adil ruled that an implied trust had been created, obligating
Teresa Garin's heirs to restore the property to the Valera Spouses' Estate, in
accordance with Articles 1453 and 1455 of the Civil Code providing as follows:
Article 1453. When property is conveyed to a person in reliance
upon his declared intentions to hold it for, or transfer it to another
or the grantor, there is an implied trust in favor of the person for
whose benefit it is contemplated.
Article 1455. When any trustee, guardian or other person holding a
fiduciary relationship uses trust funds for the purchase of property
and causes a conveyance to be made to him or to a third person, a
trust is established by operation of law in favor of the person to
whom the fund belongs.
The Court also held that the action for reconveyance based on constructive trust had
not yet prescribed, Cabado's motion for the fishpond's reversion to the estate having
been filed well within ten (10) years from June 30, 1980, the date on which Teresa
Garin's heirs allegedly acquired title over it. 8
There seems little doubt, however, that the Court's pronouncement regarding the
estate's title to the fishpond was merely provisional in character, made solely to
determine whether or not the fishpond should be included in the inventory of estate
assets. So it was evidently understood by the administrators who have more than once
asserted that "the probate court has jurisdiction to determine the ownership of the
fishpond for purposes of inclusion in the inventory of the properties. 9 So it was made
clear by the Probate Court itself which, at the outset, stated that the hearing on the
matter 10 was meant "merely to determine whether or not the fishpond should be
included as part of the estate and whether or not the person holding it should be made
to deliver and/or return ** (it) to the estate. 11 And so it was emphasized in another
Order, denying reconsideration of the Order of September 17, 1980, which states that:
**(i)t is never the intendment of this court to write a finish to the
issue of ownership of the fishpond in dispute. The movants may
pursue their claim of ownership over the same in an ordinary civil
action. Meanwhile, however, it is the finding of this probate court
that the fishpond must be delivered to the estate.
Clearly, there is no incompatibility between the exercise of the
power of this probate court under Section 6 in relation to Section 7,
both of Rule 87, and the contention of the movants that the proper
forum to settle the issue of ownership should be in a court of
general jurisdiction. 12
Judge Adil afterwards granted the administrators' motion for execution of the order
pending appeal, and directed the sheriff to enforce the direction for the Garin Heirs
to reconvey the fishpond to the estate. 13 The corresponding writ was served on
Manuel Fabiana, the supposed encargado or caretaker. Voicing no objection to the
writ, and declaring to the sheriff that he was a mere lessee, 14 Fabiana voluntarily
relinquished possession of the fishpond to the sheriff. The latter, in turn, delivered it
to the administrators. 15
Later however, Fabiana filed a complaint-in-intervention with the Probate Court
seeking vindication of his right to the possession of the fishpond, based on a contract
of lease between himself, as lessee, and Jose Garin, as lessor. 16 But Judge Adil
dismissed his complaint on the following grounds, to wit:
(1) it was filed out of time because not only had judgment been rendered, but
execution as regards transfer of possession had already taken place; and
(2) the lease contract had not been registered and hence was not binding as against
the estate. 17
G.R. No. 56504
Fabiana thereupon instituted a separate action for injunction and damages, with
application for a preliminary injunction. This was docketed as Civil Case No. 13742 and
assigned to Branch I of the Iloilo CFI, Hon. Sancho Y. Inserto, presiding. 18 Judge
Inserto issued a temporary restraining order enjoining estate administrators from
disturbing Fabiana in the possession of the fishpond, as lessee. 19
The estate administrators filed a motion to dismiss the complaint and to dissolve the
temporary restraining order, averring that the action was barred by the Probate
Court's prior judgment which had exclusive jurisdiction over the issue of the lease, and
that the act sought to be restrained had already been accomplished, Fabiana having
voluntarily surrendered possession of the fishpond to the sheriff. 20 When Judge
Inserto failed to act on their motion within what the administrators believed to be a
reasonable time, considering the circumstances of the Case, the administrators filed
with the Supreme Court a special civil action for certiorari and mandamus, with a
prayer for Preliminary mandatory injunction and temporary restraining order, which
was docketed as G.R. No. 56504. 21 In their petition, the administrators contended
that Branch I of the Iloilo CFI (Judge Inserto, presiding) could not and should not
interfere with the Probate Court (Branch I I, Judge Adil, presiding) in the legitimate
exercise of its j jurisdiction over the proceedings for the Settlement of the estate of
the Valera Spouses.
G.R. Nos. 59867-68
In the meantime, Jose Garin — having filed a motion for reconsideration of the above
mentioned order of Judge Adil (declaring the estate to be the owner of the fishpond),
in which he asserted that the Probate Court, being of limited jurisdiction, had no
competence to decide the ownership of the fishpond,22 which motion had been
denied 23-filed a notice of appeal from said Order.24 But he quickly abandoned the
appeal when, as aforestated 25 Judge Adil authorized execution of the order pending
appeal, instead, he initiated a special action for certiorari prohibition and mandamus
)with prayer for preliminary injunction) in the Court of Appeals, therein docketed as
CA-G. R. No. SP-1154-R.
Fabiana followed suit. He instituted in the same Court of Appeals his own action for
certiorari and injunction, docketed as CA-G.R. No. SP-11577-R; this, notwithstanding
the pendency in judge Inserto's sala of the case he had earlier filed. 26
These two special civil actions were jointly decided by the Court of Appeals. The Court
granted the petitions and ruled in substance that:
1. The Probate Court indeed possessed no jurisdiction to resolve the issue of
ownership based merely on evidence adduced at the hearing of a "counter-motion"
conducted under Section 6, Rule 87;
2. The original and transfer certificates of title covering the fishpond stand in the
names of the Heirs of Teresa Garin as registered owners, and therefore no
presumption that the estate owns the fishpond is warranted to justify return of the
property on the theory that it had merely been borrowed; and
3. Even assuming the Probate Court's competence to resolve the ownership question,
the estate administrators would have to recover possession of the fishpond by
separate action, in view of the lessee's claim of right to superior possession, as lessee
thereof.
From this joint judgment, the administrators have taken separate appeals to this Court
by certiorari,27 docketed as G.R. Nos. 59867 and 59868. They ascribe to the Appellate
Court the following errors, viz: Page 542
1) in holding that the Probate Court (Judge Adil, Presiding) had no jurisdiction to take
cognizance of and decide the issue of title covering a fishpond being claimed by an
heir adversely to the decedent spouses;
2) in ruling that it was needful for the administrators to file a separate action for the
recovery of the possession of the fishpond then in the hands of a third person; and
3) in sanctioning the act of a CFI Branch in interfering with and overruling the final
judgment of another branch, acting as probate Court, and otherwise frustrating and
inhibiting the enforcement and implementation of said judgment.
Jurisdiction of Probate Court
As regards the first issue, settled is the rule that a Court of First Instance (now Regional
Trial Court), acting as a Probate Court, exercises but limited jurisdiction, 28 and thus
has no power to take cognizance of and determine the issue of title to property
claimed by a third person adversely to the decedent, unless the claimant and all the
Other parties having legal interest in the property consent, expressly or impliedly, to
the submission of the question to the Probate Court for adjudgment, or the interests
of third persons are not thereby prejudiced, 29 the reason for the exception being
that the question of whether or not a particular matter should be resolved by the
Court in the exercise of its general jurisdiction or of its limited jurisdiction as a special
court (e.g., probate, land registration, etc., is in reality not a jurisdictional but in
essence of procedural one, involving a mode of practice which may be waived. 30
The facts obtaining in this case, however, do not call for the application of the
exception to the rule. As already earlier stressed, it was at all times clear to the Court
as well as to the parties that if cognizance was being taken of the question of title over
the fishpond, it was not for the purpose of settling the issue definitely and
permanently, and writing "finis" thereto, the question being explicitly left for
determination "in an ordinary civil action," but merely to determine whether it should
or should not be included in the inventory. 31 This function of resolving whether or
not property should be included in the estate inventory is, to be sure, one clearly
within the Probate Court's competence, although the Court's determination is only
provisional in character, not conclusive, and is subject to the final decision in a
separate action that may be instituted by the parties. 32
The same norm governs the situation contemplated in Section 6, Rule 87 of the Rules
of Court, expressly invoked by the Probate Court in justification of its holding a hearing
on the issue arising from the parties' conflicting claims over the fishpond. 33 The
examination provided in the cited section is intended merely to elicit evidence
relevant to property of the decedent from persons suspected of having possession or
knowledge thereof, or of having concealed, embezzled, or conveyed away the same.
Of course, if the latter lays no claim to the property and manifests willingness to tum
it over to the estate, no difficulty arises; the Probate Court simply issues the
appropriate direction for the delivery of the property to the estate. On the other hand,
if the third person asserts a right to the property contrary to the decedent's, the
Probate Court would have no authority to resolve the issue; a separate action must be
instituted by the administrator to recover the property. 34
Parenthetically, in the light of the foregoing principles, the Probate Court could have
admitted and taken cognizance of Fabiana's complaint in intervention after obtaining
the consent of all interested parties to its assumption of jurisdiction over the question
of title to the fishpond, or ascertaining the absence of objection thereto. But it did not.
It dismissed the complaint in intervention instead. And all this is now water under the
bridge.
Possession of Fishpond Pending
Determination of Title Thereto
Since the determination by the Probate Court of the question of title to the fishpond
was merely provisional, not binding on the property with any character of authority,
definiteness or permanence, having been made only for purposes of in. conclusion in
the inventory and upon evidence adduced at the hearing of a motion, it cannot and
should not be subject of execution, as against its possessor who has set up title in
himself (or in another) adversely to the decedent, and whose right to possess has not
been ventilated and adjudicated in an appropriate action. These considerations
assume greater cogency where, as here, the Torrens title to the property is not in the
decedents' names but in others, a situation on which this Court has already had
occasion to rule.
 In regard to such incident of inclusion or exclusion, We hold that if
a property covered by Torrens title is involved, the presumptive
conclusiveness of such title should be given due weight, and in the
absence of strong compelling evidence to the contrary, the holder
thereof should be consider as the owner of the property in
controversy until his title is nullified or modified in an appropriate
ordinary action, particularly, when as in the case at bar, possession
of the property itself is in the persons named in the title. 35

Primary Jurisdiction over Title issue in

Court Taking Cognizance of Separate Action

Since, too, both the Probate Court and the estate administrators are one in the
recognition of the proposition that title to the fishpond could in the premises only be
appropriately determined in a separate action, 36 the actual firing of such a separate
action should have been anticipated, and should not therefore have come as a
surprise, to the latter. And since moreover, implicit in that recognition is also the
acknowledge judgment of the superiority of the authority of the court in which the
separate action is filed over the issue of title, the estate administrators may not now
be heard to complain that in such a separate action, the court should have issued
orders necessarily involved in or flowing from the assumption of that jurisdiction.
Those orders cannot in any sense be considered as undue interference with the
jurisdiction of the Probate Court. Resulting from the exercise of primary jurisdiction
over the question of ownership involving estate property claimed by the estate, they
must be deemed superior to otherwise contrary orders issued by the Probate Court in
the exercise of what may be, regarded as merely secondary, or provisional, jurisdiction
over the same question.

WHEREFORE, the petition in G.R. No. 56504 is DISMISSED, for lack of merit. The
petitions in G.R. No. 59867 and G.R. No. 59868 are DENIED, and the judgment of the
Appellate Court, subject thereof, is affirmed in toto. The temporary restraining order
dated April 1, 1981 is lifted. Costs against petitioners.

Yap (Chairman), Melencio-Herrera, Cruz, Feliciano, Gancayco and Sarmiento, JJ.,

concur.

G.R. No. 133347 April 23, 2010

ABS-CBN BROADCASTING CORPORATION, EUGENIO LOPEZ, JR., AUGUSTO ALMEDA-

LOPEZ, and OSCAR M. LOPEZ, Petitioners,
vs.
OFFICE OF THE OMBUDSMAN, ROBERTO S. BENEDICTO, EXEQUIEL B. GARCIA, MIGUEL
V. GONZALES, and SALVADOR (BUDDY) TAN, Respondents.
RESOLUTION
NACHURA, J.:
Before us is a Motion for Reconsideration filed by petitioners Eugenio, Jr., Oscar and
Augusto Almeda, all surnamed Lopez, in their capacity as officers and on behalf of
petitioner ABS-CBN Broadcasting Corporation (ABS-CBN), of our Decision in G.R. No.
133347, dismissing their petition for certiorari because of the absence of grave abuse
of discretion in the Ombudsman Resolution which, in turn, found no probable cause
to indict respondents for the following violations of the Revised Penal Code (RPC): (1)
Article 298 – Execution of Deeds by Means of Violence or Intimidation; (2) Article 315,
paragraphs 1[b], 2[a], and 3[a] – Estafa; (3) Article 308 – Theft; (4) Article 302 –
Robbery; (5) Article 312 – Occupation of Real Property or Usurpation of Real Rights in
Property; and (6) Article 318 – Other Deceits.
The assailed Decision disposed of the case on two (2) points: (1) the dropping of
respondents Roberto S. Benedicto and Salvador (Buddy) Tan as respondents in this
case due to their death, consistent with our rulings in People v. Bayotas1 and
Benedicto v. Court of Appeals;2 and (2) our finding that the Ombudsman did not
commit grave abuse of discretion in dismissing petitioners’ criminal complaint against
respondents.
Undaunted, petitioners ask for a reconsideration of our Decision on the following
grounds:
I.
WITH DUE RESPECT, THE EXECUTION AND VALIDITY OF THE LETTER-AGREEMENT
DATED 8 JUNE 1973 ARE PLAINLY IRRELEVANT TO ASCERTAINING THE CRIMINAL
LIABILITY OF THE RESPONDENTS AND, THEREFORE, THE ISSUE AS TO WHETHER SAID
AGREEMENT WAS RATIFIED OR NOT IS IMMATERIAL IN THE PRESENT CASE.
II.
WITH DUE RESPECT, RESPONDENTS BENEDICTO AND TAN SHOULD NOT BE DROPPED
AS RESPONDENTS SIMPLY BECAUSE THEY MET THEIR UNTIMELY DEMISE DURING THE
PENDENCY OF THE CASE.3
Before anything else, we note that petitioners filed a Motion to Refer the Case to the
Court en banc.4 Petitioners aver that the arguments contained in their Motion for
Reconsideration, such as: (1) the irrelevance of the civil law concept of ratification in
determining whether a crime was committed; and (2) the continuation of the criminal
complaints against respondents Benedicto and Tan who have both died, to prosecute
their possible civil liability therefor, present novel questions of law warranting
resolution by the Court en banc.
In the main, petitioners argue that the Decision is contrary to law because: (1) the
ratification of the June 8, 1973 letter-agreement is immaterial to the determination of
respondents’ criminal liability for the aforestated felonies in the RPC; and (2) the very
case cited in our Decision, i.e. People v. Bayotas, 5 allows for the continuation of a
criminal case to prosecute civil liability based on law and is independent of the civil
liability arising from the crime.
We disagree with petitioners. The grounds relied upon by petitioners in both motions,
being intertwined, shall be discussed jointly. Before we do so, parenthetically, the
counsel for respondent Miguel V. Gonzales belatedly informed this Court of his client’s
demise on July 20, 2007.6 Hence, as to Gonzales, the case must also be
dismissed.1avvphi1
Contrary to petitioners’ assertion, their motion for reconsideration does not contain
a novel question of law as would merit the attention of this Court sitting en banc. We
also find no cogent reason to reconsider our Decision.
First and foremost, there is, as yet, no criminal case against respondents, whether
against those who are living or those otherwise dead.
The question posed by petitioners on this long-settled procedural issue does not
constitute a novel question of law. Nowhere in People v. Bayotas 7 does it state that a
criminal complaint may continue and be prosecuted as an independent civil action. In
fact, Bayotas, once and for all, harmonized the rules on the extinguished and on the
subsisting liabilities of an accused who dies. We definitively ruled:
From this lengthy disquisition, we summarize our ruling herein:
1. Death of an accused pending appeal of his conviction extinguishes his
criminal liability as well as the civil liability based solely thereon. As opined by
Justice Regalado, in this regard, "the death of the accused prior to final
judgment terminates his criminal liability and only the civil liability directly
arising from and based solely on the offense committed, i.e., civil liability ex
delicto in senso strictiore."
 2. Corollarily, the claim for civil liability survives notwithstanding the death of
accused, if the same may also be predicated on a source of obligation other
than delict. Article 1157 of the Civil Code enumerates these other sources of
obligation from which the civil liability may arise as a result of the same act
or omission:
a) Law
b) Contracts
c) Quasi-contracts
d) xxx xxx xxx
e) Quasi-delicts
3. Where the civil liability survives, as explained in Number 2 above, an action
for recovery thereof may be pursued but only by filing a separate civil action
and subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure
as amended. This separate civil action may be enforced either against the
executor/administrator or the estate of the accused, depending on the
source of obligation upon which the same is based as explained above.
4. Finally, the private offended party need not fear a forfeiture of his right to
file this separate civil action by prescription, in cases where during the
prosecution of the criminal action and prior to its extinction, the private
offended party instituted together therewith the civil action. In such case, the
statute of limitations on the civil liability is deemed interrupted during the
pendency of the criminal case, conformably with provisions of Article 1155
of the Civil Code, that should thereby avoid any apprehension on a possible
[de]privation of right by prescription.
From the foregoing, it is quite apparent that Benedicto, Tan, and Gonzales, who all
died during the pendency of this case, should be dropped as party respondents. If on
this score alone, our ruling does not warrant reconsideration. We need not even delve
into the explicit declaration in Benedicto v. Court of Appeals. 8
Second, and more importantly, we dismissed the petition for certiorari filed by
petitioners because they failed to show grave abuse of discretion on the part of the
Ombudsman when he dismissed petitioners’ criminal complaint against respondents
for lack of probable cause. We reiterate that our inquiry was limited to a
determination of whether the Ombudsman committed grave abuse of discretion
when he found no probable cause to indict respondents for various felonies under the
RPC. The invocation of our certiorari jurisdiction over the act of a constitutional officer,
such as the Ombudsman, must adhere to the strict requirements provided in the Rules
of Court and in jurisprudence. The determination of whether there was grave abuse
of discretion does not, in any way, constitute a novel question of law.
We first pointed out in our Decision that the complaint-affidavits of petitioners, apart
from a blanket charge that remaining respondents, Gonzales (who we thought was
alive at that time) and Exequiel Garcia, are officers of KBS/RPN and/or alter egos of
Benedicto, are bereft of sufficient ground to engender a well-founded belief that
crimes have been committed and that respondents, namely, Gonzales and Garcia, are
probably guilty thereof and should be held for trial. Certainly, no grave abuse of
discretion can be imputed to the Ombudsman that would warrant a reversal of his
Resolution.
The charges of individual petitioners Eugenio, Jr., Oscar and Augusto Almeda against
respondents, Gonzales and Garcia, contained in their respective complaint-affidavits
simply consisted of the following:
1. Complaint-affidavit of Eugenio, Jr.
32.1. I was briefed that Senator Estanislao Fernandez in representation of Benedicto,
met with Senator Tañada at the Club Filipino in June 1976. Discussions were had on
how to arrive at the "reasonable rental" for the use of ABS-CBN stations and facilities.
A second meeting at Club Filipino took place on July 7, 1976 between Senators Tañada
and Fernandez, who brought along Atty. Miguel Gonzales, a close associate and lawyer
of Benedicto and an officer of KBS.
xxxx
38.2. The illegal takeover of ABS-CBN stations, studios and facilities, and the loss
and/or damages caused to our assets occurred while Benedicto, Exequiel Garcia,
Miguel Gonzales, and Salvador Tan were in possession, control and management of
our network. Roberto S. Benedicto was the Chairman of the Board of KBS-RPN and its
Chief Executive Officer (CEO), to whom most of the KBS-RPN officers reported while
he was in Metro Manila. Miguel Gonzales, the Vice-President of KBS, and Exequiel
Garcia, the Treasurer, were the alter egos of Benedicto whenever the latter was out
of the country; x x x.9
2. Complaint-affidavit of Oscar
25. All the illegal activities as complained of above, were done upon the orders,
instructions and directives of Roberto S. Benedicto, the Chairman of the Board and
Chief Executive Officer of the KBS/RPN group; Miguel Gonzales and Exequiel Garcia,
close colleagues and business partners of Benedicto who were either
directors/officers KBS/RPN and who acted as Benedicto’s alter egos whenever the
latter was out of the country; x x x.
xxxx
38. Senator Estanislao Fernandez, in representation of Benedicto, met with Senator
Tañada at the Club Filipino on June 1976. Discussions were had on how to arrive at
the "reasonable rental" for the use of ABS stations and facilities. A second meeting at
Club Filipino took place on July 7, 1976 between Senators Tañada and Fernandez, who
brought along Atty. Mike Gonzales, a close associate and friend of Benedicto and an
officer of KBS.10
3. Complaint-affidavit of Augusto Almeda
21.1. Barely two weeks from their entry into the ABS Broadcast Center, KBS personnel
started making unauthorized withdrawals from the ABS Stock Room. All these
withdrawals of supplies and equipment were made under the orders of Benedicto,
Miguel Gonzales, Exequiel Garcia, and Salvador Tan, the Chairman, the Vice-President,
Treasurer, and the General Manager of KBS, respectively. No payment was ever made
by either Benedicto or KBS for all the supplies and equipment withdrawn from the ABS
Broadcast Center.
xxxx
31. Senator Estanislao Fernandez, in representation of Benedicto, met with Senator
Tañada at the Club Filipino on June 1976. Discussions were had on how to arrive at
the "reasonable rental" for the use of ABS stations and facilities. A second meeting at
Club Filipino took place on July 7, 1976 between Senators Tañada and Fernandez, who
brought along Atty. Mike Gonzales, a close associate and friend of Benedicto and an
officer of KBS.11
From the foregoing, it is beyond cavil that there is no reason for us to depart from our
policy of non-interference with the Ombudsman’s finding of probable cause or lack
thereof. On the strength of these allegations, we simply could not find any rational
basis to impute grave abuse of discretion to the Ombudsman’s dismissal of the
criminal complaints.
Third, we did not state in the Decision that ratification extinguishes criminal liability.
We simply applied ratification in determining the conflicting claims of petitioners
regarding the execution of the letter-agreement. Petitioners, desperate to attach
criminal liability to respondents’ acts, specifically to respondent Benedicto, alleged in
their complaint-affidavits that Benedicto forced, coerced and intimidated petitioners
into signing the letter-agreement. In other words, petitioners disown this letter-
agreement that they were supposedly forced into signing, such that this resulted in a
violation of Article 298 of the RPC (Execution of Deeds by means of Violence or
Intimidation).
However, three elements must concur in order for an offender to be held liable under
Article 298:
(1) that the offender has intent to defraud another.
(2) that the offender compels him to sign, execute, or deliver any public
instrument or document.
(3) that the compulsion is by means of violence or intimidation.12
The element of intent to defraud is not present because, even if, initially, as claimed
by petitioners, they were forced to sign the letter-agreement, petitioners made claims
based thereon and invoked the provisions thereof. In fact, petitioners wanted
respondents to honor the letter-agreement and to pay rentals for the use of the ABS-
CBN facilities. By doing so, petitioners effectively, although they were careful not to
articulate this fact, affirmed their signatures in this letter-agreement.
True, ratification is primarily a principle in our civil law on contracts. Yet, their
subsequent acts in negotiating for the rentals of the facilities ― which translate into
ratification of the letter-agreement ― cannot be disregarded simply because
ratification is a civil law concept. The claims of petitioners must be consistent and
must, singularly, demonstrate respondents’ culpability for the crimes they are charged
with. Sadly, petitioners failed in this regard because, to reiterate, they effectively
ratified and advanced the validity of this letter-agreement in their claim against the
estate of Benedicto.
Finally, we take note of the conflicting claim of petitioners by filing a separate civil
action to enforce a claim against the estate of respondent Benedicto. Petitioners do
not even specifically deny this fact and simply sidestep this issue which was squarely
raised in the Decision. The Rules of Court has separate provisions for different claims
against the estate of a decedent under Section 5 of Rule 86 and Section 1 of Rule 87:
RULE 86.
SECTION 5. Claims which must be filed under the notice. If not filed, barred;
exceptions. – All claims for money against the decedent, arising from contract, express
or implied, whether the same be due, not due, or contingent, all claims for funeral
expenses and expenses for the last sickness of the decedent, and judgment for money
against the decedent, must be filed within the time limited in the notice; otherwise
they are barred forever, except that they may be set forth as counter claims in any
action that the executor or administrator may bring against the claimants. Xxx Claims
not yet due, or contingent, may be approved at their present value.

RULE 87.

SECTION 1. Actions which may and which may not be brought against executor or
administrator. – No action upon a claim for the recovery of money or debt or interest
thereon shall be commenced against the executor or administrator; but actions to
recover real or personal property, or an interest therein, from the estate, or to enforce
a lien thereon, and actions to recover damages for an injury to person or property,
real or personal, may be commenced against him.

If, as insisted by petitioners, respondents committed felonies in forcing them to sign

the letter-agreement, petitioners should have filed an action against the executor or
administrator of Benedicto’s estate based on Section 1, Rule 87 of the Rules of Court.
But they did not. Instead they filed a claim against the estate based on contract, the
unambiguous letter-agreement, under Section 5, Rule 86 of the Rules of Court. The
existence of this claim against the estate of Benedicto as opposed to the filing of an
action against the executor or administrator of Benedicto’s estate forecloses all issues
on the circumstances surrounding the execution of this letter- agreement.

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

WHEREFORE, in light of the foregoing, the Motion to Refer the Case to the Court en
banc and the Motion for Reconsideration are DENIED.

SO ORDERED.

G.R. No. L-2360 December 29, 1949

GAVINO ALDAMIZ, as administrator of the estate of the deceased Santiago Rementeria
y Aldamizcogeascoa, petitioner,
vs.
THE JUDGE OF THE COURT OF FIRST INSTANCE OF MINDORO, THE PROVINCIAL SHERIFF
OF MINDORO and JUAN L. LUNA, respondents.
MORAN, C.J.:
This is a petition for certiorari filed by Gavino Aldamiz, administrator of the testate of
the deceased Santiago Rementeria y Aldamizcogeascoa, to set aside the order of the
Court of First Instance of Mindoro issued in the said testate estate proceedings, fixing
the amount of fees for respondent Juan L. Luna, as attorney for said administrator.
The facts material to the issues raised in the petition are as follows:
Santiago Rementeria y Aldamizcogeascoa, the decedent was a Spaniard and member
of the commercial partnership "Aldamiz y Rementeria." The other members were the
brothers, Gavino and Jose, surnamed Aldamiz. Santiago Rementeria died in Spain in
1937, and probate proceeding No. 705 was instituted in the same year in the Court of
First Instance of Mindoro by Gavino Aldamiz represented by Atty. Juan L. Luna. Gavino
Aldamiz was appointed administrator and as such was represented by respondent
Atty. Juan Luna up to January 21, 1947, when the order complained for was issued. In
that order it is said that "said attorney is the one who instituted this testate proceeding
ten years ago and has from its incipiency to the present stage of the proceedings
actively intervened in the same."lawphi1.net
On January 15, 1947, After ten years from the date of his appointment, Gavino
Aldamiz, as administrator, through his attorney, Juan L. Luna, submitted his accounts
for the years 1944, 1945 and 1946 and also a project of partition with a view to closing
the proceedings. On said date, the court approved the accounts by refused to approve
the project of partition unless all debts including attorney's fees be first paid. In the
project of partition, it was expressly stated that attorney's fees, debts and incidental
expenses would be proportionately paid by the beneficiaries after the closure of the
testate proceedings, but the court refused to sanction this clause of the project. It is
for this reason that right then and there, Attorney Luna, to comply with the wishes of
the court, without previously preparing and filing a written petition to have his
professional fees fixed, and without previous notice to all the interested parties,
submitted evidence of his services and professional standing so that the court might
fix the amount of his compensation and the administrator may make payment thereof.
This failure to file a written claim and to notify the interested parties thereof was not
due to bad faith or fraudulent purpose but to an honest belief on the part of the
respondent attorney that such requirements were not necessary under the
circumstance.
In this connection, it must be stated, in justice to Attorney Luna, that during the ten
years he served as attorney for the administrator and during the 25 years as legal
consultants to Santiago Rementeria, Gavino Aldamiz and Jose Aldamiz individually and
as commercial partnership under the firm name "Aldamiz y Rementeria," he never
took the trouble of charging them for his professional services, thus showing
disinterested and extreme liberality on his part due to friendship and other personal
considerations toward his clients. And it is to be observed further that even after ten
years of active work in the testate proceedings, when he wanted to close the same
and it was then time for him to demand payment for his services, he showed no
interest in demanding preferring to leave the matter to the future negotiation or
understanding with the interested parties. And when the amount of his fees was fixed
by the court and Gavino Aldamiz asked him for a substantial reduction, he answered
that it was not he who had fixed the amount but the court, and advised his client to
file a motion for reconsideration, with the assurance that he would offer no objection
to any reduction in amount and to any extension of the time for paying what might be
granted by the court. And again, when Gavino Aldamiz paid him P5,000 on account,
respondent attorney told him that he would be satisfied with any additional amount
that Gavino might later desire to pay him. Only subsequent occurrences which proved
distasteful to the parties, led them to take steps which culminated in the filing of the
instant civil action.
At the time respondent's evidence was submitted to the court, the interested parties
who were residing in the Philippines were Gavino Aldamiz and his brother Jose
Aldamiz. The others were then residing in Spain. No written claim had ever been filed
for respondent's fees, and the interested parties had not been notified thereof nor of
the hearing, not even Gavino Aldamiz who did not know when he was called to testify
that he would testify in connection with respondent's fees. The Court, after
considering the whole evidence presented, issued its order of January 21, 1947,
awarding respondent Attorney Luna, in payment of his professional services, an
aggregate sum of P28,000 in the following manner:
1. For the institution, preparation of the pleadings in the voluminous probate
case, allowance of the will, project of partition and the final closing of this
proceeding, — P15,000;
2. For the registration of a parcel of land of seventy-eight hectares in favor of
the testate, — P5,000;
3. For three naturalization cases at the rate of P1,000 each, — P3,000; and
4. For services rendered in the deduction of inheritance tax from P28,000 to
P433.40 — P5,000.
The Court ordered payment of these amounts within thirty days. Petitioner Gavino
Aldamiz received copy of this order on February 21,1948. Out of the total amount of
P28,000, petitioner was able to pay P5,000 only, and upon his failure to pay the
balance of P23,000 after several demands made upon him by respondent attorney,
the latter on April 17, 1948, filed an ex-parte motion for execution which was granted
by the respondent Court on April 19,1948. Pursuant to the order of execution on two
parcels of land belonging, not to the testate estate of Santiago Rementeria y
Aldamizcogeascoa, but to the commercial partnership "Aldamiz y Rementeria" with a
total area of three hundred fifty seven(357) hectares, more or less, assessed at one
hundred eighty-two thousand, three hundred and sixty pesos (P182,360), which was
sold at a public auction on July 20,1948, in favor of respondent attorney for only
twenty thousand pesos(P20,000). This sale was made after preliminary injunction had
been issued by this court in the instant case.
We believe and so hold that the order of the respondent court issued on January
21,1948, fixing the amount of respondent attorney's fees is null and void. The correct
procedure for the collection of attorney's fees, is for the counsel to request the
administrator to make payment and file an actin against him in his personal capacity
and not as an administrator should he fail to pay (Palileo vs. Mendoza, G.R. No. 47106,
40 Off. Gaz. [8th Supp.], 132.) 1 If the judgment is rendered against the administrator
and he pays, he may include the fees so paid in his account to the court. (Uy Tioco vs.
Imperial, 53 Phil., 802.) The attorney also may, instead of bringing such an action, file
a [petition in the testate or intestate proceeding "asking that the court, after notice to
all persons interested, allow his claim and direct the administrator to pay it as an
expense of administration." (Emphasis ours.) (Escueta vs. Sy Juilliong, 5 Phil., 405.)
In the instance case, as above stated, no written petition for the payment of attorney's
fees has ever been filed by the respondent attorney and the interested parties had
not been previously notified thereof nor of the hearing held by the court.
Consequently, the order issued by the respondent court on January 21, 1947, and all
subsequent orders implementing it, are null and void, as having been issued an excess
of jurisdiction.
We also hold that the order of execution issued on April 19,1948, is null and void, not
only because it was intended to implement the order of January 21, 1947, which in
itself was null and void, but because a writ of execution is not the proper procedure
allowed by the Rules of the Court for the payment of debts and expenses of
administration. The proper procedure is for the court to order the sale of personal
estate or the sale of mortgaged of real property of the deceased and all debts or
expenses of administration should be paid out of the proceeds of the sale or mortgage.
The order for the sale or mortgage should be issued upon motion of the administrator
and with the written notice to all the heirs, legatees and devisees residing in the
Philippines, according to Rule 89, section 3, and Rule 90, section 2. And when sale or
mortgage of real estate is to be made, the regulations contained in Rule 90, section 7,
should be complied with.
Execution may issue only where the devisees, legatees or heirs have entered into
possession of their respective portions in the estate prior to settlement and payment
of the debts and expenses of administration and it is later ascertained that there are
such debts and expenses to be paid, in which case "the court having jurisdiction of the
estate may, by order for that purpose, after hearing, settle the amount of their several
liabilities, and order how much and in what manner each person shall contribute, and
may issue execution if circumstances require" (Rule 89, section 6; see also Rule 74,
section 4; Emphasis ours). And this is not the instant case.
It is alleged by respondent that petitioner is guilty of laches. True that petitioner failed
to appeal from the order of January 21, 1947, within the time provided by the Rules
and the instant petition for certiorari was filed one (1) year, four (4) months and
fourteen (14) days after petitioner had received a copy of said order. And we have
held in Prifeta vs. David, 40 Off. Gaz., 14th Supp., p. 152, 2 that orders issued without
previous notice to parties will be deemed cured if said parties fail to appeal within
time provided by the rules and their appeal is lost due to their own negligence. But
here, aside from petitioner, there are interested parties who have never been notified
of the order complained of, and as to them, said order has not become final and
executory . And with respect to petitioner, he has not lost his appeal through his own
negligence. When he received the notice of the order of the Court fixing respondent's
fees in the amount of P28,000, he immediately wrote his lawyer a letter asking for a
substantial reduction and extension of time to pay. The lawyer answered advising him
to file his motion for reconsideration within thirty days, but he received his lawyer's
letter after said period had expired. And petitioner had no other attorney to advice
him except respondent who was his adversary on the matter now in dispute. After
receiving said letter, he again sought equitable compromise with respondent attorney
and later paid him P5,000, and respondent then told him that he would be satisfied
with whatever additional amount petitioner might desire to pay him. And petitioner
would perhaps have taken no action were it not because without previous notice to
him, the respondent attorney asked authority from the court to sell two parcels of
land totalling 13 hectares, for the payment of said professional fees and later, on July
26, 1947, respondent attorney, again without previous notice to petitioner, filed a
motion for execution for the same purpose. Both motions were, however, abandoned.
But a second motion for execution was filed by respondent without petitioner's
knowledge, which was granted by the Court on April 19, 1948. Respondent Sheriff
levied on two parcels of land belonging to the partnership "Aldamiz y Rementeria"
with a total area of 357 hectares and assessed at P182,360 and the sale was
announced by the sheriff for July 20, 1948. Two motions for consideration were filed
by petitioner, one on June 16,1948, and the other on June 28, 1948, asking that the
order of January 21, 1947, and the order of execution of April 19,1948 be set aside,
but both motions were denied and the last order of denial is dated July 1,1948. The
petition in the instant case was filed on July 17, 1948. We hold that under the
circumstances, particularly the fiduciary relation between petitioner and respondent
attorney, the former is not guilty of laches.

Respondents maintain that the case for the petitioner is one of pure technicality,
premised upon a supposed failure of the respondent attorney to follow a supposed
procedure. It is said that the amount of P28,000 fixed and allowed by the respondent
court as professional fees of the respondent attorney is not unconscionable or
unreasonable because the entire estate was worth P315,112 and now it is worth about
half a million pesos because of many improvements existing thereon. It appears,
however, that due to lack of notice upon the interested parties mistakes have been
committed by but the court which could have been avoided. For instance, the court
awarded fees for services rendered not to the estate but to the other persons, such
as the supposed services in connection with the petitions for naturalization filed in
behalf of Gavino Aldamiz and Jose Aldamiz and the application for registration of a
parcel of land of 78 hectares filed not in favor of the testate estate but of the
partnership "Aldamiz y Rementeria." These services evidently could not be charged
against the estate of Santiago Rementeria. And furthermore, due to lack of
preparation on the part of respondent attorney, it appears that while he was testifying
to his professional services he was apparently not sure of being able to recite them all
for at the end of his testimony he said: "Son los servicios que me acuerdo ahora. . . ."
Had he been afforded ample time to recollect the nature and details of his long and
continuos services, considering his high professional standing as recited by the
respondent court in its disputed order and the increased value of the estate then,
perhaps, a more reasonable compensation would have been fixed, or at least, the
court could have rendered a decision with full knowledge of all the facts and with
justice to all the parties concerned.

For all the foregoing, the order of the respondent court of January 21,1947, and all
the subsequent orders implementing it, particularly the order of execution issued by
the court on April 19, 1948, and the sale made by the sheriff on July 20,1948, in favor
of respondent attorney, are null and void and are hereby set aside, with costs against
respondents. It is so ordered.

Ozaeta, Pablo, Bengzon, Padilla, Tuason, Reyes and Torres, JJ., concur.

G.R. No. L-7593 December 24, 1957

Intestate Estate of the late Florencio P. Buan and Rizalina Paras Buan, deceased.
BIENVENIDO P. BUAN and A. NATIVIDAD PARAS, Co-Administrators-appellees,
vs.
SYLVINA C. LAYA, ET AL., petitioners-appellants.
LABRADOR, J.:
Appeal from a decision of the Court of First Instance of Tarlac dated January 7, 1954,
setting aside the previous Order dated December 16, 1953, which had admitted a
contingent claim filed by petitioners-appellants but denied a petition to set aside an
amount to answer the contingent claim.
The record discloses that on December 15, 1953, petitioners herein filed a contingent
claim for more than P500,000 against the intestate estate of the deceased spouses
Florencio P. Buan and Rizalina Paras Buan. The contingent claim was based on the fact
that on August 3, 1952, a Philippine Rabbit Bus, owned and operated by the deceased
spouses Buan, collided with a car in which Juan C. Laya, Rodolfo Escosa, Jose S. Palma,
and Juan de Leon, were riding; that the collision was caused by the fact that the driver
of the bus managed and drove the vehicle in a negligent manner; that as a
consequence of the collision Juan C. Laya was killed and his companions suffered
physical injuries. The driver of the bus was Ernesto Triguero, and he was charged with
homicide and serious physical injuries through reckless imprudence and was
sentenced therefor. The heirs of Juan C. Laya, petitioners herein, reserved the civil
action for damages, and on October 12, 1953, they filed an independent civil action in
the Court of First Instance of Manila against the administrator of the deceased spouses
Buan. The petition for the admission of a contingent claim was accompanied with a
copy of the complaint filed in the civil case above-mentioned (No. 20867, CFI Manila)
and a sentence in the criminal case filed against Ernesto Triguero, driver of the
Philippine Rabbit Bus.
When the administrators learned of the filing of the contingent claim in the Court of
First Instance of Tarlac, they filed an opposition thereto on the ground that the same
was not filed before the death of the spouses Florencio Buan and Rizalina Paras Buan,
which took place on January 3, 1953, and that it was also not filed within the period
prescribed by Rule 89, Section 4 of the Rules of Court. The Court of First Instance of
Tarlac admitted the claim in an order dated December 16, 1953, but denied the prayer
that a portion of the estate be set aside to respond for the amount of the contingent.
Counsel for the administrators then moved to set aside the order. In an order dated
November 25, 1953, Judge Agustin P. Montesa, sitting as Judge for the Court of First
Instance of Manila, held that the civil action filed in Manila by the heirs of Laya,
petitioners herein, Civil Case No. 20867, was premature because the sentence of
conviction of the driver of the bus had not become final. The court also ordered the
plaintiffs to amend their complaint within 10 days. Thereupon, the plaintiffs in said
civil case (C.F.I. Manila, No. 20867) filed an amended complaint, dated December 18,
1953.lawphi1.net
In the meantime and on January 7, 1954, the Court of First Instance of Tarlac, on a
motion for reconsideration filed by the administrators dated January 2, 1954, set aside
its previous order of December 16, 1953, admitting the contingent claim of
petitioners. The reason for the admission of the claim, according to the court, had
ceased to exist and even the plaintiffs had filed the amended complaint in the Court
of First Instance of Manila, the same has not yet been acted upon by the said court. A
motion to reconsider this order of the Court of First Instance of Tarlac having been
denied, petitioners have prosecuted this appeal to Us.
A consideration of the facts and the proceedings set forth above will readily show that
the order of the Court of First Instance of Tarlac dismissing the contingent claim is
based on incorrect and erroneous conception of a contingent claim. A contingent
claim is one which, by its nature, is necessarily dependent upon an uncertain event for
its existence or validity. It may or may not develop into a valid and enforceable claim,
and its validity and enforceability depending upon an uncertain event. (E. Gaskell &
Co. vs. Tan Sit, 43 Phil. 810, 813; 2 Moran, Comments on the Rules of Court, 1957
edition, pp. 425-426.).
A 'contingent claim' against an estate within the statute providing for the
settlement hereof, as one where the absolute liability depends on some
future event which may never happen, and which therefore renders such
liability uncertain and indeterminable. . . It is where the liability depends on
some future event after the debtor's death which may or may not happen,
and therefore makes Words and Phrases, p. 113.).
A 'contingent claim' against an estate is one in which liability depends on
some future event which may or may not occur, so that duty to pay may
never become absolute. (In Re Flewell, 276 N. W. 732, 733; 9 Words and
Phrases, p. 114.).
Whether or not the heirs of the deceased, Juan C. Laya, would succeed in the action
brought in Manila against the administrators of the estate of the deceased spouses
Florencio Buan and Rizalina P. Buan, is the uncertain event or contingency upon which
the validity of the claim presented in the administration proceedings depends. While
the said action has not yet been finally decided or determined to the effect that the
petitioners herein, heirs of the deceased Juan C. Laya, have no right of action against
the estate of the deceased spouses Florencio P. Buan and Rizalina P. Buan, the
contingent claim that petitioners have filed in the Court of First Instance of Tarlac in
the proceedings for the administration of the deceased spouses Florencio P. Buan and
Rizalina P. Buan, may not be dismissed. The order of the court dismissing the claim
and declaring that the same may again be entertained if another valid complaint by
the petitioners herein is filed in the Court of First Instance of Manila, is inconsistent
with the nature and character of a contingent claim. A contingent claim does not
follow the temporary orders of dismissal of an action upon which it is based; it awaits
the final outcome thereof and only said final result can cause its termination. The rules
provide that a contingent claim is to be presented in the administration proceedings
in the same manner as any ordinary claim, and that when the contingency arises which
converts the contingent claim into a valid claim, the court should then be informed
that the claim had already matured. (Secs. 5. 9, Rule 87.) The order of the court subject
of the appeal should, therefore, be set aside.

The first order of the court admitted the claim but denied the petition for the setting
aside of a certain amount from the estate to respond therefor. The validity of the
contingent claim is apparent; as the driver of the bus belonging to the deceased
spouses, Florencio P. Buan and Rizalina P. Buan, was found guilty of negligence, as a
result of which Juan C. Laya died, the said deceased spouses—the employers of the
driver—can be made responsible, as masters of a servant, for damages for the death
of the petitioner's father. A portion of the estate should therefore, be set aside to
respond for such damages as petitioners herein may subsequently recover in the
action they have brought in the Court of First Instance of Manila. This amount should
be fixed in the court below.

For the foregoing considerations, the order of the court dismissing the contingent
claim filed by petitioners is hereby set aside. It is hereby ordered that the claim be
allowed to continue, and it is further ordered that the court fix an amount that may
be set aside to respond for the damages that the petitioners herein may ultimately
recover. Costs against the respondents.

Paras, Bengzon, C.J., Padilla, Montemayor, Reyes, A., Bautista Angelo, Concepcion,
Reyes, J.B.L., Endencia and Felix, JJ., concur.

G.R. No. L-3342 April 18, 1951

Intestate Estate of the deceased Lee Liong. RAFAEL A. DINGLASAN, ET ALS., petitioners- already entered into an extrajudicial partition of the estate. To this motion the
appellees, petitioners objected, whereupon the court issued on July 15, 1949, an order holding
vs. in abeyance the approval of the partition and the closing of the proceedings until after
ANG CHIA, as Administratrix of the above intestate, LEE BING HOO alias CLARO LEE, and the decision in said civil case has been rendered. From this order the administratrix
LEE BUN TING, respondents-appellants. and the heirs appealed and now assign the following errors:

BAUTISTA ANGELO, J.: I

This is an appeal by Ang Chia, her son Claro Lee, and Lee Bun Ting from an order of The lower court erred in taking cognizance of and being guided by the
the Court of First Instance of Capiz, issued in the intestate estate proceedings of the supposed "claim" of petitioners-appellees.
deceased Lee Liong, holding in abeyance the approval of their petition for an
extrajudicial partition and the closing of said proceedings until after the final II
termination of Civil Case No. V-331 of the same court, entitled Rafael Dinglasan, et al.,
vs. Lee Bun Ting, Claro Lee and Ang Chia, in her personal capacity and as administratrix The lower court erred in holding in abeyance the closing of the intestate
of the estate of Lee Liong. proceedings pending the termination of the separate civil action filed by the
petitioners-appellees.
Rafael Dinglasan et al. filed a case in the Court of First Instance of Capiz on February
16, 1948, against Ang Chia, her son Claro Lee and one Lee Bun Ting to recover the III
ownership and possession of a parcel of land located at Capiz, Capiz, and damages in
the amount of P1,000 a month. Subsequently, the plaintiffs filed a motion for the
The lower court erred in ordering the administratrix to file an increased bond
appointment of a receiver to which counsel for the defendants objected, and it was
of P5,000.
only at the hearing of said motion when plaintiffs discovered that there was pending
in the same court a case concerning the intestate estate of Lee Liong. In view thereof,
Under the first assignment of error, the appellants question the validity of the order
the motion for the appointment of a receiver was withdrawn and the plaintiffs filed
of the lower court of August 4, 1948, whereby the court took cognizance of the civil
an amended complaint seeking the inclusion as party-defendant of the administratrix
case filed by the appellees against the administratrix to recover possession of lot No.
of the estate, who is the same widow Ang Chia, who was already a party-defendant in
398 and damages, and required the administratrix to file a new bond of P5,000,
her personal capacity. In order to protect their interests, the plaintiffs also filed in the
contending that by taking such action the court assumed jurisdiction over the case
intestate proceedings a verified claim in intervention and a motion praying that a co-
which it cannot do because its jurisdiction as probate court is limited and especial
administrator of the estate be appointed and the bond of the administratrix in the
(Guzman vs. Anog and Anog, 37 Phil. 61). They claim further that probate proceedings
amount of P500 be increased to P20,000. By their claim in intervention, the plaintiffs
are purely statutory and their functions are limited to the control of the property upon
made of record the pendency of the aforesaid civil case No. V-331 and prayed that the
the death of its owner and cannot extend to the adjudication of collateral questions.
intestate proceedings be not closed until said civil case shall have been terminated.
(I Woermer, The American Law of Administration, 514, 662-663.) Appellees on the
other hand claim that said order of August 4, 1948, is not the subject of this appeal,
On June 21, 1948, the administratrix filed a motion to dismiss the claim in intervention
as no appeal has been taken by the appellants from said order and the same has long
and objected to the motion for the increase of her bond and for the appointment of a
become final; so that the present appeal is only from the order of the lower court
co-administrator. On August 4, 1948, the court issued an order denying the petition
dated July 15, 1949, which denies the motion of the appellees to terminate the
for a co-administrator but increasing the bond to P5,000, and as regards the petition
intestate proceedings on the ground that they have already agreed on the extrajudicial
not to close the intestate proceedings until after civil case No. V-331 shall have been
settlement of the estate and to relieve the administratrix of the obligation of filing an
decided, the court stated that it would act thereon if a motion to close the proceedings
increased bond.
is presented in due time and is objected to by petitioners. The court however took
cognizance of the pendency of said civil case No. V-331. The administratrix did not
There is merit in the claim of the appellees. It really appears from the record that the
appeal from said order nor file a new bond and instead moved for the closing of the
order increasing the bond of the administratrix to P5,000 was issued on August 4,
proceedings and her discharge as administratrix on the ground that the heirs had
1948, and from said order no appeal has been taken by the appellants which has
become final long ago and that the present appeal is only from the order of the lower intestate proceedings without first taking any step to settle the ordinary civil case?
court dated July 15, 1949. It is true that the lower court in its later order of July 15, This rule is but a corollary to the ruling which declares that questions concerning
1949, reiterated its order to the administratrix to file a new bond in the amount of ownership of property alleged to be part of the estate but claimed by another person
P5,000 within 30 days after receipt thereof, but this cannot have the effect of receiving should be determined in a separate action and should be submitted to the court in
the former order of August 4, 1948, nor does it give the appellants the right to the exercise of its general jurisdiction. (Guzman vs. Anog and Anog, supra). These rules
question in this instance the validity of said order, which has long become final. would be rendered nugatory if we are to hold that an intestate proceedings can be
Moreover, an order requiring the filing of a new bond by the administratrix is closed by any time at the whim and caprice of the heirs. Another rule of court provides
interlocutory in nature and is solely addressed to the sound discretion of the court. that "after a party dies and the claim is not thereby extinguished, the court shall order,
upon proper notice, the legal representative of the deceased to appear and to be
The act of the lower court in taking cognizance of civil case No. V-331 is not substituted for the deceased, within a period of thirty (30) days, or within such time
tantamount to assuming jurisdiction over said case nor does it violate the ruling of this as may be granted. If the legal representative fails to appear within said time, the court
court which says that "when questions arise as to the ownership of property, alleged may order the opposing party to procure the appointment of a legal representative of
to be part of the estate of a deceased person, but claimed by some other person to the deceased within a time to be specified by the court, and the representative shall
be his property, not by virtue of any right of inheritance from the deceased, but by immediately appear for and on behalf of the interest of the deceased." (Section 17,
title adverse to that of the deceased and his estate, such questions cannot be Rule 3.) This rule also implies that a probate case may be held in abeyance pending
determined in the course of administration proceedings. The Court of First Instance, determination of an ordinary case wherein an administrator is made a party. To hold
acting as probate court, has no jurisdiction to adjudicate such contentions, which must otherwise would be also to render said rule nugatory.
be submitted to the court in the exercise of its general jurisdiction as a Court of First
Instance to try and determine ordinary actions. . . ." (Guzman vs. Anog and Anog, 37 Wherefore, the Court affirms the order appealed from, with costs against appellants.
Phil., 61, 62-63.)
Paras, C.J., Feria, Pablo, Bengzon, Tuason, Montemayor and Jugo, JJ., concur.
If the appellants filed a claim in intervention in the intestate proceedings it was only
pursuant to their desire to protect their interests it appearing that the property in
litigation is involved in said proceedings and in fact is the only property of the estate
left subject of administration and distribution; and the court is justified in taking
cognizance of said civil case because of the unavoidable fact that whatever is
determined in said civil case will necessarily reflect and have a far reaching
consequence in the determination and distribution of the estate. In so taking
cognizance of civil case No. V-331 the court does not assume general jurisdiction over
the case but merely makes of record its existence because of the close interrelation
of the two cases and cannot therefore be branded as having acted in excess of its
jurisdiction.

Appellants' claim that the lower court erred in holding in abeyance the closing of the
intestate proceedings pending determination of the separate civil action for the
reason that there is no rule or authority justifying the extension of administration
proceedings until after the separate action pertaining to its general jurisdiction has
been terminated, cannot entertained. Section 1, Rule 88, of the Rules of Court,
expressly provides that "action to recover real or personal property from the estate or
to enforce a lien thereon, and actions to recover damages for an injury to person or
property, real or personal, may be commenced against the executor or administrator". G.R. No. L-16584 November 17, 1921
What practical value would this provision have if the action against the administrator
cannot be prosecuted to its termination simply because the heirs desire to close the
EUSEBIO A. GODOY, plaintiff-appellee,
vs.
GUILLERMO ORELLANO, ET AL., defendants.
FELISA PAÑGILINAN, PAZ ORELLANO assisted by her husband FRANCISCO MARTINEZ,
JOSE ORELLANO, and DEMETRIO ORELLANO, defendants-appellants.
VILLAMOR, J.:
On January 13, 1919, in consideration of the amount of P1,000 received by the
appellant, Felisa Pañgilinan, a document was executed by her giving the appellee,
Eusebio A. Godoy, an option to buy a dredge for the sum of P10,000. It appears from
that document that the dredge is the common property of the vendor and of the
brothers Demetrio, Jose, Guillermo, Alfredo, and Paz, all surnamed Orellano; that the
condition was that Godoy was to pay the whole price of the dredge within twenty
days; and that said option was granted in accordance with the power of attorney
executed by her coowners who reserved the right to ratify whatever sale might be
made, or option granted by Pañgilinan, their attorney-in-fact. The latter's coowners
did not ratify the option contract. Before the expiration of twenty days, the appelle
was ready to make complete payment of the price, but the appellant failed to deliver
the dredge. Then the appellee brought suit in the Court of First Instance against Feliza
Pañgilinan, Paz Orellano, Jose Orellano, Demetrio Orellano, Guillermo Orellano, and
Alfredo Orellano, praying that they be ordered to deliver the dredge, upon payment
by him of the sum of P9,000; to pay him the sum of P10,000 as damages, and to return
to the plaintiff the sum of P1,000 should the carrying out of the sale become
impossible.
The defendants Orellano set up in their answer a general denial of the facts alleged in
the complaint and, as a special defense, alleged that the dredge in question was the
property of the intestate estate of Julio Orellano, pending in the Court of First Instance
of Manila, and under the administration of Felisa Pangilinan; that the plaintiff perfectly
knows that said dredge is under judicial control and could not be disposed of without
judicial authority, and that the court has never authorized the sale mentioned in the
complaint filed herein; and that the defendants Jose, Guillermo, and Alfredo
surnamed Orellano are at present under age, and the defendant Paz Orellano is a
married woman who had not obtained the consent of her husband before executing
the power of attorney in favor of the administratrix.
The defendant Felisa Pañgilinan filed a separate answer, and a defense alleges: (a)
That the dredge which was the subject-matter of the option is property of the
intestate estate of Julio Orellano, of which she is the administratrix; (b) that the
plaintiff, as well as the defendants, and the notary who prepared the aforesaid option
sale, were all aware of these facts, and they led her to believe that she had the
authority to dispose of the dredge in her name and by themselves; (c) that believing
herself to be under obligation to comply with the aforesaid option deed, she applied
to the court of probate for permission to sell the dredge in the sum of P10,000; (d)
that on the day of the hearing of the motion, her codefendants who had themselves
authorized her by means of a power of attorney, opposed the motion through their
attorneys, Francisco and Lualhati, on the ground that there were higher bidders and
the best thing to do was to sell it at public auction; (e) that in view of this opposition,
the administratrix asked the court that it be sold at public auction, and the court
authorized said defendant to sell it at public auction, advertising the sale in
newspapers of general circulation, and the aforesaid dredge was sold for P10,000,
accordingly; ( f ) that the defendant did not at any time refuse to make delivery of the
dredge to the plaintiff, but that it was the court that would not give her the authority
to do so; and (g) that she is all times ready to return the P1,000 received from the
plaintiff and that she has tendered it several times, but that the plaintiff refused to
accept it.
The judge a quo rendered judgment, ordering the defendants to pay Eusebio A. Godoy
the sum of P2,000 with legal interest thereon from February 13, 1919, and the cost
and dismissing the complaint as against the defendants Guillermo Orellano and
Alfredo Orellano.
From this judgment the defendants have appealed to this court by bill of exceptions.
By a resolution of this court of September 14, 1920, the appeal of the defendants Paz
Orellano, Jose Orellano and Demetrio Orellano was declared abandoned for failure to
file their brief within the period prescribed by the rules of the court. Wherefore, this
decision concerns only the appeal taken by Felisa Pañgilinan.lawphil.net
It appears from the evidence that the dredge in question belongs to the intestate
estate of Julio Orellano, father of the defendants, which was pending in the Court of
First Instance of Manila, of which the judicial administratrix is the defendant herein,
Felisa Pañgilinan; that when this defendant contracted with the plaintiff Godoy the
sale of the aforesaid dredge, she had no authority of the court; and that the plaintiff
knew that the dredge, which was the subject-matter of that contract, belonged to the
intestate estate of Julio Orellano, under the control of the court.
In the sale of the property of an intestate estate for the benefit of the heirs, it is
necessary to comply with the provisions of sections 717, 718, and 722 of the Code of
Civil Procedure. The said sections prescribed the proceedings to be had before an
administrator of an intestate or testate estate may sell personal or real property and
also the conditions under which the personal or real property pertaining to an estate
may be sold or disposed of by the administrator. Unless compliance is had with the
provisions of these sections, the sale of the aforesaid dredge by the administratrix, or
her promise to sell it is null and void.
 A sale and conveyance by executors without an order of the probate court,
under a will devising property to them in trust, but not authorizing any sale
of the realty, otherwise than by a direction to pay the debts of the testator,
is void, and passes no title to the purchase. (Huse vs. Den, 85 Cal., 390.)

A sale by an administrator of the personal property of the estate, without the

authority of an order of court, or of a will, or under an order of court which
is void for want of jurisdiction, does not confer on the purchaser a title which
is available against a succeeding administrator. (Wyatt's Adm'r vs. Rambo, 29
Ala., 510.)

Under the law, the court has exclusive jurisdiction to authorize the sale of properties
like the one under consideration and the power of attorney executed by the heirs of
Orellano in favor of the administratrix, without authority of court, has no legal effect,
and this is the more so, since two of the said heirs are under age, and the others did
not ratify the option contract, as provided in the aforesaid power of attorney.

It is not necessary to dwell longer upon this point, as the appellee himself admits in
his brief "that the dredge in question being a part of the intestate estate of Julio
Orellano, it cannot be disposed of by any person without the proper authority of the
court, in accordance with the existing laws."lawphil.net

In view of the foregoing, we are of the opinion, and so hold, that the appellant was
not, in her capacity as judicial administratrix of the intestate estate of Julio Orellano,
legally authorized to sell, or contract to sell, any property belonging to said estate
without the authority of the court, and the contract entered into by her with the
plaintiff, without this authority, is null and void.

The judgment appealed from is reversed and the complaint against the appellant
Felisa Pañgilinan is hereby dismissed, without special finding as to costs. So ordered.

Johnson, Araullo, Street and Avanceña, JJ., concur.

G.R. No. L-28214 July 30, 1969

NATIVIDAD V. A. JARODA, petitioner,
vs.
THE HONORABLE VICENTE N. CUSI, JR., Presiding Judge, Branch I, Court of First Instance
of Davao, and ANTONIO V. A. TAN, in his capacity as judicial administrator of intestate
estate of Carlos Villa Abrille, Special Proc. No. 1391, Court of First Instance of Davao,
respondents.
REYES, J.B.L., J.:
Questioned as null and void in this petition for certiorari with preliminary injunction
are two (2) orders of the Court of First Instance of Davao, Branch I, issued in its Special
Proceeding No. 1391 entitled "In the Matter of the Intestate Estate of Carlos Villa
Abrille, deceased, Antonio V. A. Tan, petitioner."
The first of the said two orders, dated 5 May 1965, granted an ex-parte petition by
then special administrator Antonio V. A. Tan, the herein respondent, to withdraw from
the Philippine National Bank the amount of P182,531.08 deposited in savings and
checking accounts in the name, and during the lifetime, of Carlos Villa Abrille (now
deceased) but allegedly held in trust for the decedent's co-owners in the Juna
Subdivision.
The second order, dated 3 September 1965, approved ex-parte the power of attorney
executed by special administrator Tan appointing himself attorney-in-fact to sell the
share of the estate in the subdivision lots.
The aforesaid Special Proceeding No. 1391 was commenced by Antonio V. A. Tan on
22 April 1965, alleging in his petition filed with the respondent court that Carlos Villa
Abrille died intestate on 3 April 1965; that he left an estate consisting of his conjugal
share in real and personal properties, among which are:
p. Nineteen (19) Percent share in the co-ownership known as Juna
Subdivision;
xxx xxx xxx
xxx xxx xxx
t. Cash on Bank: BPI (Savings) D-1365 in the amount of P55,284.11; PNB
(Savings) 8189, in the amount of P9,047.74; and PCIB (Savings) 337, in the
amount of P416.24. (Annex "A" to Petition, Rollo, pages 1415);
that the heirs of the deceased are his surviving spouse, nine (9) children (among them
the herein petitioner, Natividad V. A. Jaroda), and four (4) grandsons, among them the
herein respondent, Antonio V. A. Tan.
On 26 April 1965, respondent Tan was appointed special administrator.
On 4 May 1965, respondent special administrator Tan fled an ex-parte petition for the
withdrawal of the sums of P109,886.42 and P72,644.66 from the Philippine National
Bank, Davao Branch, which sums were not listed in his petition for administration as
among the properties left by the deceased, alleging that these sums were deposited
in the name of the deceased but that they actually belong to, and were held in trust
for, the co-owners of the Juna Subdivision, and alleging as reason for the withdrawal
that it would be advantageous to the estate of the deceased. Annexed to the said
petition are powers of attorney purportedly signed by the co-owners in 1948 and 1949
authorizing the late Carlos Villa Abrille to sell the lots in the Juna Subdivision and to
deposit the proceeds thereof with the Philippine National Bank. The alleged co-owners
of the subdivision concurred in the petition, but not the heirs of the deceased (Annex
"C" to Petition, Rollo, page 19).
The respondent court found the petition for withdrawal of the bank deposits as
"meritorious", and granted the petition in an order on 5 May 1965.
On 7 May 1965, special administrator Tan executed, together with the other co-
owners of the Juna Subdivision, a power of attorney appointing himself as attorney-
in-fact to "sell (or) dispose upon terms and conditions as he deems wise" the lots in
the 99.546-hectare subdivision (Annex "F-1" to Petition, Rollo, pages 30-32).
On 9 September 1965, respondent Tan was issued letters of administration by the
respondent court.
On the same day, 9 September 1965, as regular administrator, respondent Tan filed a
petition with the respondent court, alleging that the deceased was the manager of
and a co-owner in the Juna Subdivision and that he had been engaged in the business
of selling the lots, and praying for the approval by the court of the power of attorney
executed by him, in behalf of the intestate estate, and appointing and authorizing
himself to sell the lots.
The court granted the petition, "as prayed for," on 3 September 1965.1äwphï1.ñët
On 29 November 1966, herein petitioner Natividad V. A. Jaroda moved to nullify the
order of 5 May 1965, that allowed the withdrawal of the bank deposits, as well as the
order of 3 September 1965, which approved the power of attorney.
The respondent court denied, on 25 February 1967, "for lack of merit" the aforesaid
motion.
Petitioner Jaroda appealed from the order of denial, but the respondent court
dismissed the appeal on the ground that the order appealed from was interlocutory.
Jaroda then filed before the Supreme Court a petition for certiorari and/or mandamus
on 8 July 1967, docketed as G.R. No. L-27831, but this Court dismissed the petition,
adding in its resolution that appeal in due time is the remedy.
On 28 October 1967, petitioner Jaroda filed the present petition for certiorari with
preliminary injunction. She alleged, among other things, that appeal would not be
speedy and adequate as respondent Tan has sold and continues to sell the subdivision
lots on the strength of the respondent court's order, to her irreparable prejudice and
that of the other heirs. This Court gave due course to the petition and issued
preliminary injunction on 3 November 1967, restraining the respondent from selling
the share of the intestate estate.
We agree with petitioner that the order of 5 May 1965 allowing the special
administrator to withdraw the bank deposits standing in the name of the decedent is
in abuse of discretion amounting to lack of jurisdiction. In the first place, said
withdrawal is foreign to the powers and duties of a special administrator, which, as
Section 2 of Rule 80 of the Rules of Court provides, are to —
take possession and charge of the goods, chattels, rights, credits and estate
of the decease and preserve the same for the executor or administrator
afterwards appointed, and for that purpose may commence and maintain
suits as administrator. He may sell only such perishable and other property
as the court orders sold. A special administrator shall not be liable to pay any
debts of the deceased unless so ordered by the court.
In the second place, the order was issued without notice to, and hearing of, the heirs
of the deceased. The withdrawal of the bank deposits may be viewed as a taking of
possession and charge of the credits of the estate, and apparently within the powers
and duties of a special administrator; but actually, said withdrawal is a waiver by the
special administrator of a prima facie exclusive right of the intestate estate to the bank
deposits in favor of the co-owners of the Juna Subdivision, who were allegedly
claiming the same as alleged by the administrator in his motion (Petition, Annex "C").
The bank deposits were in the name of the deceased; they, therefore, belong prima
facie to his estate after his death. And until the contrary is shown by proper evidence
at the proper stage, when money claims may be filed in the intestate proceedings, the
special administrator is without power to make the waiver or to hand over part of the
estate, or what appears to be a prima facie part of the estate, to other persons on the
ground that the estate is not the owner thereof. If even to sell for valuable
consideration property of the estate requires prior written notice of the application to
the heirs, legatees, or devisees under Rule 89 of the Rules of Court, such notice is
equally, if not more, indispensable for disposing gratuitously of assets of the decedent
in favor of strangers. Admittedly, no such notice was given, and without it the court's
authority is invalid and improper.
The order of 3 September 1965 approving the power of attorney executed by
administrator Tan and appointing himself as attorney-in-fact to sell the subdivision
lots for a price at his discretion is, likewise, void for want of notice and for approving
an improper contract or transaction.
The very rule, Section 4 of Rule 89 of the Rules of Court, relied on by respondent Tan
to sustain the power of attorney for the sale of the pro-indiviso share of the estate in
the subdivision requires "written notice to the heirs, devisees, and legatees who are
interested in the estate to be sold" and, admittedly, administrator Tan did not furnish
such notice. (Answer, pages 1 and 2, paragraph 3, Rollo, page 53) Without such notice,
the order of the court authorizing the sale is void. (Estate of Gamboa vs. Floranza, 12
Phil. 191; Gabriel vs. Encarnacion, 94 Phil. 917)
But respondent Tan holds petitioner Jaroda with actual knowledge of the questioned
order, and to show it he quotes the transcript of stenographic notes of a discussion by
a lawyer of Jaroda about the said order. The discussion, however, took place on 19
March 1966 while the order was issued on 13 September 1965, and there is nothing
in the discussion that may indicate knowledge by Jaroda of the order before, at or
immediately after its issuance.
It has been broadly stated that an administrator is not permitted to deal with himself
as an individual in any transaction concerning trust property. (Pesula's Estate, 64 ALR
2d 851, 150 Cal. App. 2d 462, 310 P 2d 39)
It is well settled that an executrix holds the property of her testator's estate
as a trustee. In re Heydenfeldt's Estate, 117 Cal. 551, 49 P. 713; Firebaugh v.
Burbank, 121 Cal. 186, 53 P. 560. It is equally well settled that an executrix
will not be permitted to deal with herself as an individual in any transaction
concerning the trust property. Civil Code, S 2230. In Davis v. Rock Creek L., F.
& M Co., 55 Cal. 359, at page 364, 36 Am. Rep. 40, it is said: 'The law, for wise
reasons, will not permit one who acts in a fiduciary capacity thus to deal with
himself in his individual capacity.' The following cases are to the same effect:
Wickersham v. Crittenden, 93 Cal. 17, 29, 28 P. 788; Sims v. Petaluma Gas
Light Co., 131 Cal. 656, 659, 63 P. 1011; Western States Life Ins. Co. v.
Lockwood, 166 Cal. 185, 191, 135 P. 496; In re Estate of Parker, 200 Cal. 132,
139, 251 P 907, 49 A. L. R. 1025. In Wickersham v. Crittenden, supra, 93 Cal.
at page 29, 28 P. at page 790, it is further stated in respect to a transaction
 wherein a trustee sought to deal with trust property: 'Courts will not permit
any investigation into the fairness of the transaction, or allow the trustee to
show that the dealing was for the best interest of the beneficiary.' This
language is quoted with approval in the case of Pacific Vinegar & Pickle Works
v. Smith, 145 Cal. 352, 365, 78 P. 550, 104 Am. St. Rep 42. (In re Bogg's Estate,
121 P. 2d 678, 683).
The opinion of some commentators that, as a general rule, auto-contracts are
permissible if not expressly prohibited (See Tolentino, Civil Code of the Philippines,
Vol. IV 1962, pages 375-377), and that there is no express provision of law prohibiting
an administrator from appointing himself as his own agent, even if correct, cannot and
should not apply to administrator of decedent's estates, in view of the fiduciary
relationship that they occupy with respect to the heirs of the deceased and their
responsibilities toward the probate court. A contrary ruling would open the door to
fraud and maladministration, and once the harm is done, it might be too late to correct
it. A concrete example would be for administrator Tan to authorize agent Tan to sell a
lot for P50, with the condition that if he can sell it for more he could keep the
difference; agent Tan sells the lot for P150.00; he retains P100.00 and deposits in the
bank P50.00 "in the name of Antonio V. A. Tan, in trust for Juna Subdivision" (as
worded in the power of attorney. Annex "F-1"); thus, administrator Tan's accounting
to the estate for the sale of the lot for P50 would be in order, but the estate would
have been actually cheated of the sum of P100, which went to agent Tan in his
individual capacity.
The court below also failed to notice that, as alleged in the administrator's petition
(Annex "F" herein), after the death of Carlos Villa Abrille the administrator Tan, in his
personal capacity, had replaced said deceased as manager of the Juna Subdivision by
authority of the other co-owners. By the court's questioned order of 3 September
1965 empowering him to represent the interest of the deceased in the management
of the subdivision, the administrator Tan came to be the agent or attorney-in-fact of
two different principals: the court and the heirs of the deceased on the one hand, and
the majority co-owners of the subdivision on the other, in managing and disposing of
the lots of the subdivision. This dual agency of the respondent Tan rendered him
incapable of independent defense of the estate's interests against those of the
majority co-owners. It is highly undesirable, if not improper, that a court officer and
administrator, in dealing with property under his administration, should have to look
to the wishes of strangers as well as to those of the court that appointed him. A judicial
administrator should be at all times subject to the orders of the appointing Tribunal
and of no one else.
That petitioner Jaroda, as heir of the late Carlos Villa Abrille, should hold a minor
interest (¹/¹¹ of 19%) in the co-ownership known as the Juna Subdivision and that the
early termination of said co-ownership would redound to the benefit of the co-
owners, including the heirs of Carlos Villa Abrille, are beside the point. Jaroda's interest
in the estate demands that she be heard by the court in all matters affecting the
disposal of her share, and that the administrator should primarily protect the interest
of the estate in which she is a participant rather than those of the decedent's co-
owners.
The resolution of this Court in L-27836 (Natividad V. A. Jaroda vs. the Hon. Vicente N.
Cusi, Jr., etc., et al.), dismissing the petition for certiorari and/or mandamus and
stating that appeal in due time is the remedy, is no bar to the present petition, for it
has not been shown that the allegations in both the dismissed petition and those of
the present one are substantially the same. Anyway, certiorari lies if appeal would not
be prompt enough to block the injurious effects of the orders of the lower court
(Silvestre vs. Torres, et al., 57 Phil. 885; Pachoco vs. Tumangday, L-14500, 25 May
1960; Mayormente vs. Robaco Corp., L-25337, 27 Nov. 1967, 21 SCRA 1080).
After the present case was submitted for decision, respondent Tan manifested that
the co-owners of the Juna Subdivision and the heirs of the late Carlos Villa Abrille,
including the petitioner Natividad V. A. Jaroda, had executed a partial partition and
the same has been approved by the probate court. Said approved partial partition has
no effect, one way or the other, upon the orders contested in the present case. For
one thing, it is not definite whether the lots described in the 57 pages of the partition
agreement correspond to those of the Juna Subdivision as described in the power of
attorney.
FOR THE FOREGOING REASONS, the order of 5 May 1965 and 3 September 1965 of
the Court of First Instance of Davao, Branch I, in its Special Proceeding No. 1391, are
hereby set aside and declared null and void. The preliminary injunction heretofore
issued is hereby made permanent. Costs against the respondent, Antonio V. A. Tan, in
his personal capacity.
Concepcion, C.J., Dizon, Makalintal, Sanchez, Castro, Fernando, Capistrano, Teehankee
and Barredo, JJ., concur.
G.R. No. 156403. March 31, 2005
JOSEPHINE PAHAMOTANG and ELEANOR PAHAMOTANG-BASA, Petitioners,
vs.
THE PHILIPPINE NATIONAL BANK (PNB) and the HEIRS OF ARTURO ARGUNA,
Respondents.
DECISION
GARCIA, J.:
Assailed and sought to be set aside in this appeal by way of a petition for review on
certiorari under Rule 45 of the Rules of Court are the following issuances of the Court
of Appeals in CA-G.R. CV No. 65290, to wit:
1
1. Decision dated March 20, 2002, granting the appeal and reversing the appealed
August 7, 1998 decision of the Regional Trial Court at Davao City; and
2. Resolution dated November 20, 2002, denying herein petitioners' motion for
reconsideration.2
The factual background:
On July 1, 1972, Melitona Pahamotang died. She was survived by her husband Agustin
Pahamotang, and their eight (8) children, namely: Ana, Genoveva, Isabelita, Corazon,
Susana, Concepcion and herein petitioners Josephine and Eleonor, all surnamed
Pahamotang.
On September 15, 1972, Agustin filed with the then Court of First Instance of Davao
City a petition for issuance of letters administration over the estate of his deceased
wife. The petition, docketed as Special Case No. 1792, was raffled to Branch VI of said
court, hereinafter referred to as the intestate court.
In his petition, Agustin identified petitioners Josephine and Eleonor as among the heirs
of his deceased spouse. It appears that Agustin was appointed petitioners' judicial
guardian in an earlier case - Special Civil Case No. 1785 – also of the CFI of Davao City,
Branch VI.
On December 7, 1972, the intestate court issued an order granting Agustin’s petition.
On July 6, 1973, respondent Philippine National Bank (PNB) and Agustin executed an
Amendment of Real and Chattel Mortgages with Assumption of Obligation. It appears
that earlier, or on December 14, 1972, the intestate court approved the mortgage to
PNB of certain assets of the estate to secure an obligation in the amount of
₱570,000.00. Agustin signed the document in behalf of (1) the estate of Melitona; (2)
daughters Ana and Corazon; and (3) a logging company named Pahamotang Logging
Enterprises, Inc. (PLEI) which appeared to have an interest in the properties of the
estate. Offered as securities are twelve (12) parcels of registered land, ten (10) of
which are covered by transfer certificates of title (TCT) No. 2431, 7443, 8035, 11465,
21132, 4038, 24327, 24326, 31226 and 37786, all of the Registry of Deeds of Davao
City, while the remaining two (2) parcels by TCTs No. (3918) 1081 and (T-2947) 562 of
the Registry of Deeds of Davao del Norte and Davao del Sur, respectively.
On July 16, 1973, Agustin filed with the intestate court a Petition for Authority To
Increase Mortgage on the above mentioned properties of the estate.
In an Order dated July 18, 1973, the intestate court granted said petition.
On October 5, 1974, Agustin again filed with the intestate court another petition,
Petition for Declaration of Heirs And For Authority To Increase Indebtedness,
whereunder he alleged the necessity for an additional loan from PNB to capitalize the
business of the estate, the additional loan to be secured by additional collateral in the
form of a parcel of land covered by Original Certificate of Title (OCT) No. P-7131
registered in the name of Heirs of Melitona Pahamotang. In the same petition, Agustin
prayed the intestate court to declare him and Ana, Genoveva, Isabelita, Corazon,
Susana, Concepcion and herein petitioners Josephine and Eleonor as the only heirs of
Melitona.
In an Order of October 19, 1974, the intestate court granted Agustin authority to seek
additional loan from PNB in an amount not exceeding ₱5,000,000.00 to be secured by
the land covered by OCT No. P-7131 of the Registry of Deeds of Davao Oriental, but
denied Agustin’s prayer for declaration of heirs for being premature.
On October 22, 1974, a real estate mortgage contract for ₱4,500,000.00 was executed
by PNB and Agustin in his several capacities as: (1) administrator of the estate of his
late wife; (2) general manager of PLEI; (3) attorney-in-fact of spouses Isabelita
Pahamotang and Orlando Ruiz, and spouses Susana Pahamotang and Octavio Zamora;
and (4) guardian of daughters Concepcion and Genoveva and petitioners Josephine
and Eleonor. Offered as securities for the additional loan are three (3) parcels of
registered land covered by TCTs No. T-21132, 37786 and 43264.
On February 19, 1980, Agustin filed with the intestate court a Petition (Request for
Judicial Authority To Sell Certain Properties of the Estate), therein praying for authority
to sell to Arturo Arguna the properties of the estate covered by TCTs No. 7443, 8035,
11465, 24326 and 31226 of the Registry of Deeds of Davao City, and also TCT No. (T-
3918) T-1081 of the Registry of Deeds of Davao del Norte.
On February 27, 1980, Agustin yet filed with the intestate court another petition, this
time a Petition To Sell the Properties of the Estate, more specifically referring to the
property covered by OCT No. P-7131, in favor of PLEI.
In separate Orders both dated February 25, 1980, the intestate court granted Agustin
authority to sell estate properties, in which orders the court also required all the heirs
of Melitona to give their express conformity to the disposal of the subject properties
of the estate and to sign the deed of sale to be submitted to the same court. Strangely,
the two (2) orders were dated two (2) days earlier than February 27, 1980, the day
Agustin supposedly filed his petition.
In a motion for reconsideration, Agustin prayed the intestate court for the amendment
of one of its February 25, 1980 Orders by canceling the requirement of express
conformity of the heirs as a condition for the disposal of the aforesaid properties.
In its Order of January 7, 1981, the intestate court granted Agustin’s prayer.
Hence, on March 4, 1981, estate properties covered by TCTs No. 7443,11465, 24326,
31226, 8035, (T-2947) 662 and (T-3918) T-1081, were sold to respondent Arturo
Arguna, while the property covered by OCT No. P-7131 was sold to PLEI. Consequent
to such sales, vendees Arguna and PLEI filed witt the intestate court a motion for the
approval of the corresponding deeds of sale in their favor. And, in an Order dated
March 9, 1981, the intestate court granted the motion.
Thereafter, three (3) daughters of Agustin, namely, Ana, Isabelita and Corazon
petitioned the intestate court for the payment of their respective shares from the
sales of estate properties, which was granted by the intestate court.
Meanwhile, the obligation secured by mortgages on the subject properties of the
estate was never satisfied. Hence, on the basis of the real estate mortgage contracts
dated July 6, 1973 and October 22, 1974, mortgagor PNB filed a petition for the
extrajudicial foreclosure of the mortgage.
Petitioner Josephine filed a motion with the intestate court for the issuance of an
order restraining PNB from extrajudicially foreclosing the mortgage. In its Order dated
August 19, 1983, the intestate court denied Josephine’s motion. Hence, PNB was able
to foreclose the mortgage in its favor.
Petitioners Josephine and Eleanor, together with their sister Susana Pahamatong-
Zamora, filed motions with the intestate court to set aside its Orders of December 14,
1972 [Note: the order dated July 18, 1973 contained reference to an order dated
December 14, 1972 approving the mortgage to PNB of certain properties of the
estate], July 18, 1973, October 19, 1974 and February 25, 1980.
In an Order dated September 5, 1983, the intestate court denied the motions,
explaining:
"Carefully analyzing the aforesaid motions and the grounds relied upon, as well as the
opposition thereto, the Court holds that the supposed defects and/or irregularities
complained of are mainly formal or procedural and not substantial, for which reason,
the Court is not persuaded to still disturb all the orders, especially that interests of the
parties to the various contracts already authorized or approved by the Orders sought
to be set aside will be adversely affected".3
Such was the state of things when, on March 20, 1984, in the Regional Trial Court at
Davao City, petitioners Josephine and Eleanor, together with their sister Susana, filed
their complaint for Nullification of Mortgage Contracts and Foreclosure Proceedings
and Damages against Agustin, PNB, Arturo Arguna, PLEI, the Provincial Sheriff of Mati,
Davao Oriental, the Provincial Sheriff of Tagum, Davao del Norte and the City Sheriff
of Davao City. In their complaint, docketed as Civil Case No. 16,802 which was raffled
to Branch 12 of the court, the sisters Josephine, Eleanor and Susana prayed for the
following reliefs:
"1.) The real estate mortgage contracts of July 6, 1973 and that of October 2, 1974,
executed by and between defendants PNB AND PLEI be declared null and void ab
initio;
2.) Declaring the foreclosure proceedings conducted by defendants-sheriffs, insofar
as they pertain to the assets of the estate of Melitona L. Pahamotang, including the
auction sales thereto, and any and all proceedings taken thereunder, as null and void
ab initio;
3.) Declaring the Deed of Absolute Sale, Doc. No. 473; Page No.96; Book No.VIII, Series
of 1981 of the Notarial Registry of Paquito G. Balasabas of Davao City evidencing the
sale/transfer of the real properties described therein to defendant Arturo S. Arguna,
as null and void ab initio;
4.) Declaring the Deed of Absolute Sale, Doc. No. 474; Page No. 96, Book No. VIII, series
of 1981 of the Notarial Registry of Paquito G. Balasabas of Davao City, evidencing the
sale/transfer of real properties to PLEI as null and void ab initio;
5.) For defendants to pay plaintiffs moral damages in such sums as may be found to
be just and equitable under the premises;
6.) For defendants to pay plaintiffs, jointly and severally, the expenses incurred in
connection with this litigation;
7.) For defendants to pay plaintiffs, jointly and severally attorney's fees in an amount
to be proven during the trial;
8.) For defendants to pay the costs of the suit".4
PNB moved to dismiss the complaint, which the trial court granted in its Order of
January 11, 1985.
However, upon motion of the plaintiffs, the trial court reversed itself and ordered
defendant PNB to file its answer.
Defendant PNB did file its answer with counterclaim, accompanied by a cross-claim
against co-defendants Agustin and PLEI.
During the ensuing pre-trial conference, the parties submitted the following issues for
the resolution of the trial court, to wit:
"1. Whether or not the Real Estate Mortgage contracts executed on July 6, 1973 and
October 2, 1974 (sic) by and between defendants Pahamotang Logging Enterprises,
Inc. and the Philippine National Bank are null and void?
2. Whether or not the foreclosure proceedings conducted by defendants-Sheriffs,
insofar as they affect the assets of the Estate of Melitona Pahamotang, including the
public auction sales thereof, are null and void?
3. Whether or not the Deed of Absolute Sale in favor of defendant Arturo Arguna
entered as Doc. No. 473; Page No. 96; Book No. VIII, series of 1981 of the Notarial
Register of Notary Public Paquito Balasabas is null and void?
4. Whether or not the Deed of Absolute Sale in favor of defendant Pahamotang
Logging Enterprises, Inc. entered as Doc. No. 474; Page No. 96; Book No. VIII, series of
1981 of the Notarial Register of Notary Public Paquito Balasabas is null and void?
5. On defendant PNB's cross-claim, in the event the mortgage contracts and the
foreclosure proceedings are declared null and void, whether or not defendant
Pahamotang Logging Enterprises, Inc. is liable to the PNB?
6. Whether or not the defendants are liable to the plaintiffs for damages?
7. Whether or not the plaintiffs are liable to the defendants for damages"?5
With defendant Arturo Arguna’s death on October 31, 1990, the trial court ordered
his substitution by his heirs: Heirs of Arturo Alguna.
In a Decision dated August 7, 1998, the trial court in effect rendered judgment for the
plaintiffs. We quote the decision’s dispositive portion:
"WHEREFORE, in view of all the foregoing, judgment is hereby rendered as follows:
1. Declaring the Mortgage Contracts of July 6, 1973 and October 22, 1974, as well as
the foreclosure proceedings, void insofar as it affects the share, interests and property
rights of the plaintiffs in the assets of the estate of Melitona Pahamotang, but valid
with respect to the other parties;
2. Declaring the deeds of sale in favor of defendants Pahamotang Logging Enterprises,
Inc. and Arturo Arguna as void insofar as it affects the shares, interests and property
rights of herein plaintiffs in the assets of the estate of Melitona Pahamotang but valid
with respect to the other parties to the said deeds of sale.
3. Denying all the other claims of the parties for lack of strong, convincing and
competent evidence.
No pronouncement as to costs.
SO ORDERED".6
From the aforementioned decision of the trial court, PNB, PLEI and the Heirs of Arturo
Arguna went on appeal to the Court of Appeals in CA-G.R. CV No. 65290. While the
appeal was pending, the CA granted the motion of Susana Pahamatong-Zamora to
withdraw from the case.
As stated at the threshold hereof, the Court of Appeals, in its Decision dated March 20,
2002,7 reversed the appealed decision of the trial court and dismissed the petitioners’
complaint in Civil Case No. 16,802, thus:
WHEREFORE, the appeal is hereby GRANTED. The assailed August 07, 1998 Decision
rendered by the Regional Trial Court of Davao City, Branch 12, is hereby REVERSED and
SET ASIDE and a new one is entered DISMISSING the complaint filed in Civil Case No.
16,802.
SO ORDERED.
The appellate court ruled that petitioners, while ostensibly questioning the validity of
the contracts of mortgage and sale entered into by their father Agustin, were
essentially attacking collaterally the validity of the four (4) orders of the intestate court
in Special Case No. 1792, namely:
1. Order dated July 18, 1973, granting Agustin’s Petition for Authority to Increase
Mortgage;
2. Order dated October 19, 1974, denying Agustin’s petition for declaration of heirs
but giving him authority to seek additional loan from PNB;
3. Order dated February 25, 1980, giving Agustin permission to sell properties of the
estate to Arturo Arguna and PLEI; and
4. Order dated January 7, 1981, canceling the requirement of express conformity by
the heirs as a condition for the disposal of estate properties.
To the appellate court, petitioners committed a fatal error of mounting a collateral
attack on the foregoing orders instead of initiating a direct action to annul them.
Explains the Court of Appeals:
"A null and void judgment is susceptible to direct as well as collateral attack. A direct
attack against a judgment is made through an action or proceeding the main object of
which is to annul, set aside, or enjoin the enforcement of such judgment, if not carried
into effect; or if the property has been disposed of, the aggrieved party may sue for
recovery. A collateral attack is made when, in another action to obtain a different
relief, an attack on the judgment is made as an incident in said action. This is proper
only when the judgment, on its fact, is null and void, as where it is patent that the
court which rendered such judgment has no jurisdiction. A judgment void on its face
may also be attacked directly.
xxx xxx xxx
Perusing the above arguments and comparing them with the settled ruling, the
plaintiffs-appellees [now petitioners], we believe had availed themselves of the wrong
remedy before the trial court. It is clear that they are collaterally attacking the various
orders of the intestate court in an action for the nullification of the subject mortgages,
and foreclosure proceedings in favor of PNB, and the deeds of sale in favor of Arguna.
Most of their arguments stemmed from their allegations that the various orders of the
intestate court were issued without a notification given to them. An examination,
however, of the July 18, 1973 order shows that the heirs of Melitona have knowledge
of the petition to increase mortgage filed by Agustin, thus:
`The petitioner testified that all his children including those who are of age have no
objection to this petition and, as matter of fact, Ana Pahamotang, one of the heirs of
Melitona Pahamotang, who is the vice-president of the logging corporation, is the one
at present negotiating for the increase of mortgage with the Philippine National Bank.'
The presumption arising from those statements of the intestate court is that the heirs
were notified of the petition for the increase of mortgage.
The same can be seen in the October 19, 1974 order:
`The records show that all the known heirs, namely Ana, Isabelita, Corazon, Susana,
including the incompetent Genoveva, and the minors Josephine, Eleanor and
Concepcion all surnamed were notified of the hearing of the petition.'
On the other hand, the February 25, 1980 order required Agustin to obtain first
express conformity from the heirs before the subject property be sold to Arguna. The
fact that this was reconsidered by the intestate court in its January 07, 1981 is of no
moment. The questioned orders are valid having been issued in accordance with law
and procedure. The problem with the plaintiffs-appellees is that, in trying to nullify the
subject mortgages and the foreclosure proceedings in favor of PNB and the deeds of
sale in favor of Arguna, they are assailing the aforesaid orders of the intestate court
and in attacking the said orders, they attached documents that they believe would
warrant the conclusion that the assailed orders are null and void. This is a clear
collateral attack of the orders of the intestate court which is not void on its face and
which cannot be allowed in the present action. The defects alleged by the plaintiff-
appellees are not apparent on the face of the assailed orders. Their recourse is to ask
for the declaration of nullity of the said orders, not in a collateral manner, but a direct
action to annul the same".8
The same court added that petitioners’ failure to assail said orders at the most
opportune time constitutes laches:
"In their complaint below, plaintiffs, appellees are assailing in their present action, four
orders of the intestate court namely: July 18, 1973, October 19, 1974, February 25,
1980 and January 07, 1981 orders which were then issued by Judge Martinez. It should
be recalled that except for the January 07, 1981 order, Judge Jacinto, upon taking over
Sp. No. 1792, denied the motion of the plaintiffs-appellees to set aside the aforesaid
orders. Aside from their motion before Judge Jacinto, nothing on the records would
show that the plaintiffs-appellees availed of other remedies to set aside the
questioned orders. Further, the records would not show that the plaintiffs-appellees
appealed the order of Judge Jacinto. If an interval of two years, seven months and
ninety nine days were barred by laches, with more reason should the same doctrine
apply to the present case, considering that the plaintiffs-appellees did not avail of the
remedies provided by law in impugning the various orders of the intestate court. Thus,
the questioned orders of the intestate court, by operation of law became final. It is a
fundamental principle of public policy in every jural system that at the risk of
occasional errors, judgments of courts should become final at some definite time fixed
by law (interest rei publicae ut finis sit litum). The very object of which the courts were
constituted was to put an end to controversies. Once a judgment or an order of a court
has become final, the issues raised therein should be laid to rest. To date, except as to
the present action which we will later discuss as improper, the plaintiff-appellees have
not availed themselves of other avenues to have the orders issued by Judge Martinez
and Judge Jacinto annulled and set aside. In the present case, when Judge Jacinto
denied the motion of the plaintiffs-appellees, the latter had remedies provided by the
rules to assail such order. The ruling by Judge Jacinto denying plaintiffs-appellees
motion to set aside the questioned orders of Judge Martinez has long acquired finality.
It is well embedded in our jurisprudence, that judgment properly rendered by a court
vested with jurisdiction, like the RTC, and which has acquired finality becomes
immutable and unalterable, hence, may no longer be modified in any respect except
only to correct clerical errors or mistakes. Litigation must have and always has an end.
If not, judicial function will lose its relevance".
In time, petitioners moved for a reconsideration but their motion was denied by the
appellate court in its Resolution of November 20, 2002.
Hence, petitioners’ present recourse, basically praying for the reversal of the CA
decision and the reinstatement of that of the trial court.
We find merit in the petition.
It is petitioners’ posture that the mortgage contracts dated July 6, 1973 and October
22, 1974 entered into by Agustin with respondent PNB, as well as his subsequent sale
of estate properties to PLEI and Arguna on March 4, 1981, are void because they
[petitioners] never consented thereto. They assert that as heirs of their mother
Melitona, they are entitled to notice of Agustin's several petitions in the intestate
court seeking authority to mortgage and sell estate properties. Without such notice,
so they maintain, the four orders of the intestate court dated July 18, 1973, October
19, 1974, February 25, 1980 and January 7, 1981, which allowed Agustin to mortgage
and sell estate properties, are void on account of Agustin’s non-compliance with the
mandatory requirements of Rule 89 of the Rules of Court.
Prescinding from their premise that said orders are completely void and hence, could
not attain finality, petitioners maintain that the same could be attacked directly or
collaterally, anytime and anywhere.
For its part, respondent PNB asserts that petitioners cannot raise as issue in this
proceedings the validity of the subject orders in their desire to invalidate the contracts
of mortgage entered into by Agustin. To PNB, the validity of the subject orders of the
intestate court can only be challenged in a direct action for such purpose and not in
an action to annul contracts, as the petitioners have done. This respondent adds that
the mortgage on the subject properties is valid because the same was made with the
approval of the intestate court and with the knowledge of the heirs of Melitona,
petitioners included.9
Upon the other hand, respondent Heirs of Arturo Arguna likewise claim that
petitioners knew of the filing with the intestate court by Agustin of petitions to
mortgage and sell the estate properties. They reecho the CA’s ruling that petitioners
are barred by laches in filing Civil Case No. 16,802.10
As we see it, the determinative question is whether or not petitioners can obtain relief
from the effects of contracts of sale and mortgage entered into by Agustin without
first initiating a direct action against the orders of the intestate court authorizing the
challenged contracts.
We answer the question in the affirmative.
It bears emphasizing that the action filed by the petitioners before the trial court in
Civil Case No. 16,802 is for the annulment of several contracts entered into by Agustin
for and in behalf of the estate of Melitona, namely: (a) contract of mortgage in favor
of respondent PNB, (b) contract of sale in favor of Arguna involving seven (7) parcels
of land; and (c) contract of sale of a parcel of land in favor of PLEI.
The trial court acquired jurisdiction over the subject matter of the case upon the
allegations in the complaint that said contracts were entered into despite lack of
notices to the heirs of the petition for the approval of those contracts by the intestate
court.
Contrary to the view of the Court of Appeals, the action which petitioners lodged with
the trial court in Civil Case No. 16,802 is not an action to annul the orders of the
intestate court, which, according to CA, cannot be done collaterally. It is the validity of
the contracts of mortgage and sale which is directly attacked in the action.
And, in the exercise of its jurisdiction, the trial court made a factual finding in its
decision of August 7, 1998 that petitioners were, in fact, not notified by their father
Agustin of the filing of his petitions for permission to mortgage/sell the estate
properties. The trial court made the correct conclusion of law that the challenged
orders of the intestate court granting Agustin’s petitions were null and void for lack of
compliance with the mandatory requirements of Rule 89 of the Rules of Court,
particularly Sections 2, 4, 7 thereof, which respectively read:
"Sec. 2. When court may authorize sale, mortgage, or other encumbrance of realty to
pay debts and legacies through personalty not exhausted. - When the personal estate
of the deceased is not sufficient to pay the debts, expenses of administration, and
legacies, or where the sale of such personal estate may injure the business or other
interests of those interested in the estate, and where a testator has not otherwise
made sufficient provision for the payment of such debts, expenses, and legacies, the
court, on the application of the executor or administrator and on written notice to the
heirs, devisees, and legatees residing in the Philippines, may authorize the executor or
administrator to sell, mortgage, or otherwise encumber so much as may be necessary
of the real estate, in lieu of personal estate, for the purpose of paying such debts,
expenses, and legacies, if it clearly appears that such sale, mortgage, or encumbrance
would be beneficial to the persons interested; and if a part cannot be sold, mortgaged,
or otherwise encumbered without injury to those interested in the remainder, the
authority may be for the sale, mortgage, or other encumbrance of the whole of such
real estate, or so much thereof as is necessary or beneficial under the circumstances".
"Sec. 4. When court may authorize sale of estate as beneficial to interested persons.
Disposal of proceeds. - When it appears that the sale of the whole or a part of the real
or personal estate, will be beneficial to the heirs, devisees, legatees, and other
interested persons, the court may, upon application of the executor or administrator
and on written notice to the heirs, devisees and legatees who are interested in the
estate to be sold, authorize the executor or administrator to sell the whole or a part
of said estate, although not necessary to pay debts, legacies, or expenses of
administration; but such authority shall not be granted if inconsistent with the
provisions of a will. In case of such sale, the proceeds shall be assigned to the persons
entitled to the estate in the proper proportions".
"Sec. 7. Regulations for granting authority to sell, mortgage, or otherwise encumber
estate. - The court having jurisdiction of the estate of the deceased may authorize the
executor or administrator to sell personal estate, or to sell, mortgage, or otherwise
encumber real estate; in cases provided by these rules and when it appears necessary
or beneficial, under the following regulations:
(a) The executor or administrator shall file a written petition setting forth the debts
due from the deceased, the expenses of administration, the legacies, the value of the
personal estate, the situation of the estate to be sold, mortgaged, or otherwise
encumbered, and such other facts as show that the sale, mortgage, or other
encumbrance is necessary or beneficial;
(b) The court shall thereupon fix a time and place for hearing such petition, and cause
notice stating the nature of the petition, the reason for the same, and the time and
place of hearing, to be given personally or by mail to the persons interested, and may
cause such further notice to be given, by publication or otherwise, as it shall deem
proper; (Emphasis supplied)".
xxx xxx xxx
Settled is the rule in this jurisdiction that when an order authorizing the sale or
encumbrance of real property was issued by the testate or intestate court without
previous notice to the heirs, devisees and legatees as required by the Rules, it is not
only the contract itself which is null and void but also the order of the court authorizing
the same.11
Thus, in Maneclang vs. Baun,12 the previous administrator of the estate filed a petition
with the intestate court seeking authority to sell portion of the estate, which the court
granted despite lack of notice of hearing to the heirs of the decedent. The new
administrator of the estate filed with the Regional Trial Court an action for the
annulment of the sales made by the previous administrator. After trial, the trial court
held that the order of the intestate court granting authority to sell, as well as the deed
of sale, were void. On appeal directly to this Court, We held that without compliance
with Sections 2, 4 and 7 of Rule 89 of the Rules of Court, "the authority to sell, the sale
itself and the order approving it would be null and void ab initio".
In Liu vs. Loy, Jr.,13 while the decedent was still living, his son and attorney-in-fact sold
in behalf of the alleged decedent certain parcels of land to Frank Liu. After the
decedent died, the son sold the same properties to two persons. Upon an ex parte
motion filed by the 2nd set of buyers of estate properties, the probate court approved
the sale to them of said properties. Consequently, certificates of title covering the
estate properties were cancelled and new titles issued to the 2nd set of buyers. Frank
Liu filed a complaint for reconveyance/ annulment of title with the Regional Trial
Court. The trial court dismissed the complaint and the Court of Appeals affirmed the
dismissal. When the case was appealed to us, we set aside the decision of the
appellate court and declared the probate court's approval of the sale as completely
void due to the failure of the 2nd set of buyers to notify the heir-administratrix of the
motion and hearing for the sale of estate property.
Clearly, the requirements of Rule 89 of the Rules of Court are mandatory and failure
to give notice to the heirs would invalidate the authority granted by the
intestate/probate court to mortgage or sell estate assets.
Here, it appears that petitioners were never notified of the several petitions filed by
Agustin with the intestate court to mortgage and sell the estate properties of his wife.
According to the trial court, the "[P]etition for Authority to Increase Mortgage" and
"[P]etition for Declaration of Heirs and for Authority to Increase Indebtedness", filed by
Agustin on July 16, 1973 and October 5, 1974, respectively, do not contain information
that petitioners were furnished with copies of said petitions. Also, notices of hearings
of those petitions were not sent to the petitioners.14 The trial court also found in Civil
Case No. 16,802 that Agustin did not notify petitioners of the filing of his petitions for
judicial authority to sell estate properties to Arturo Arguna and PLEI. 15
February 25, 1980 and January 7, 1981 orders of the intestate court, it is not clear
from the challenged decision of the appellate court when they (petitioners) actually
learned of the existence of said orders of the intestate court. Absent any indication of
the point in time when petitioners acquired knowledge of those orders, their alleged
delay in impugning the validity thereof certainly cannot be established. And the Court
of Appeals cannot simply impute laches against them.
WHEREFORE, the assailed issuances of the Court of Appeals are hereby REVERSED and
SET ASIDE and the decision dated August 7, 1998 of the trial court in its Civil Case No.
16,802 REINSTATED.

As it were, the appellate court offered little explanation on why it did not believe the SO ORDERED.
trial court in its finding that petitioners were ignorant of Agustin’s scheme to mortgage
and sell the estate properties. Panganiban, (Chairman), Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.

Aside from merely quoting the orders of July 18, 1973 and October 19, 1974 of the
intestate court, the Court of Appeals leaves us in the dark on its reason for disbelieving
the trial court. The appellate court did not publicize its appraisal of the evidence
presented by the parties before the trial court in the matter regarding the knowledge,
or absence thereof, by the petitioners of Agustin’s petitions. The appellate court
cannot casually set aside the findings of the trial court without stating clearly the
reasons therefor. Findings of the trial court are entitled to great weight, and absent
any indication to believe otherwise, we simply cannot adopt the conclusion reached
by the Court of Appeals.

Laches is negligence or omission to assert a right within a reasonable time, warranting

the presumption that the party entitled to assert it has either abandoned or declined
the right.16 The essential elements of laches are: (1) conduct on the part of the
defendant, or of one under whom he claims, giving rise to the situation of which
complaint is made and for which the complaint seeks a remedy; (2) delay in asserting
the complainant's rights, the complainant having had knowledge or notice of the
defendant's conduct and having been afforded an opportunity to institute a suit; (3)
lack of knowledge or notice on the part of the defendant that the complainant would
assert the right on which he bases his suit; and (4) injury or prejudice to the defendant
in the event relief is accorded to the complainant, or the suit is not held barred.17

In the present case, the appellate court erred in appreciating laches against
petitioners. The element of delay in questioning the subject orders of the intestate
court is sorely lacking. Petitioners were totally unaware of the plan of Agustin to
mortgage and sell the estate properties. There is no indication that mortgagor PNB
and vendee Arguna had notified petitioners of the contracts they had executed with
Agustin. Although petitioners finally obtained knowledge of the subject petitions filed
by their father, and eventually challenged the July 18, 1973, October 19, 1974,
G.R. No. L-14400 August 5, 1960 out. In view of the opposition, the hearing and consideration of the amended
inventory was, in an order dated April 29, 1957, postponed until further assignment.
FELICISIMO GATMAITAN, administrator, plaintiff-appellant,
vs. On April 2, 1957, the heirs of the deceased, through counsel, filed a "Motion for Partial
GORGONIO D. MEDINA, co-administrator, defendant-appellee. Partition and Distribution," stating that the estate had no debts and the heirs were all
of legal age; that some of them were necessitous and in need of cash; and praying that
REYES, J.B.L., J.: the share corresponding to each of the heirs in the palay produce for the agricultural
year 1956-1957, as well as the cash deposit in the different banks, be ordered partially
Appeal from the order dated April 5, 1957 of the Court of First Instance of Nueva Ecija distributed among the heirs pending the final distribution of the estate. The court
in Special Proceedings No. 972, which reads as follows: heard counsel for administrator Gatmaitan and for the heirs or oppositors, but
without receiving any evidence whatsoever, promulgated on April 5, 1957 the order
subject-matter of the instant appeal. On April 26, 1957, the administrator, Gatmaitan,
This is a motion for partial partition and distribution. The parties having
filed a motion for reconsideration, calling attention to the fact that, contrary to what
agreed that only the heirs Dominica Medina and Gorgonio Medina be given
the order states, "he has not agreed to the partial distribution of the estate in the
an advance payment of P1,000.00 from the cash deposit, and they, as well as
manner contained in the order", and urging that "the sums ordered to be partially
the other heirs twenty-five cavans of palay each for their subsistence, to be
distributed are not warranted by the circumstances obtaining" in the case and that,
included in the final distribution of the residue of the estate, the
moreover, "the manner of distribution will work difficulties to the estate and to the
administrator is hereby ordered to advance to Dominica Medina and
heirs themselves". As previously indicated, this motion was denied by Judge Agustin
Gorgonio Medina the amount of P1,000.00, each, from the cash deposit of
P. Montesa for lack of merit.
the estate, and twenty-five cavans each to all the five heirs for their
subsistence, pending the liquidation of the said estate, provided that the
same shall be collated in the final distribution of shares among the heirs; Gatmaitan filed a notice of appeal from the foregoing orders. On May 17, 1957,
appellant filed a record on appeal and notified counsel for the oppositors of the date
he would move for the approval thereof by the court. The order of Judge Felix
and from the order of April 29, 1957, denying for lack of merit appellant's motion for
Makasiar, dated July 15, 1957, approving the record on appeal presented by appellant,
reconsideration.
states that counsel for the oppositors had failed to file written opposition thereto as
required in the order of the court dated June 12, 1957, notwithstanding the length of
The records disclose that the following proceedings were had in the lower court:
time that had already elapsed. In his brief, appellant only made one assignment of
error, and it reads thus:
On March 10, 1956, Felicisimo Gatmaitan filed a petition, seeking his appointment as
administrator of the property of his wife, Veronica Medina, who died intestate. On
The lower court gravely abused its discretion in directing a partial distribution
April 2, 1956, Gorgonio Medina and Dominica Medina, as heirs of the deceased (she
of the intestate estate of the deceased Veronica Medina in favor of appellees,
being their full-blooded sister), filed an opposition, praying that Gorgonio Medina, or
under its order of April 5, 1957, without requiring the distributees to file the
a neutral third party, or Felicisimo Gatmaitan and Gorgonio Medina, jointly, be
proper bonds pursuant to the provisions of Rule 91, Section 1 of the Revised
appointed as administrator or administrators of the estate. In an order dated July 18,
Rules of Court.
1956, the court appointed Felicisimo Gatmaitan as administrator of the estate with a
bond in the amount of P2,000.00 and Gorgonio Medina as co-administrator without
This appeal was originally taken to the Court of Appeals, but, since there is no serious
compensation and bond.
issue of fact involved in the case, the same was certified to us pursuant to the
appellate court's resolution of August 28, 1958.
On March 14, 1957, administrator Gatmaitan filed an amended inventory of the estate
left by the deceased consisting of an undivided half of the conjugal partnership
The lower court, we believe, erred in rendering the order appealed from. A partial
properties and amounting all in all to P31,336.60. An opposition to the admission of
distribution1 of the decedent's estate pending the final termination of the testate or
said inventory was registered by the oppositors on the ground that the same did not
intestate proceedings should as much as possible be discouraged by the courts and,
represent the true and faithful list of the properties left by the deceased, and,
unless in extreme cases, such form of advances of inheritance should not be
particularly, that a parcel of twenty-two (22) hectares of land, more or less, was left
countenanced. The reason for this strict rule is obvious — courts should guard with
utmost zeal and jealousy the estate of the decedent to the end that the creditors
thereof be adequately protected and all the rightful heirs assured of their shares in
the inheritance.
Why the appealed order is unwarranted is evident on three counts. Firstly, to our
mind, the partial distribution was prematurely ordered by the lower court. It appears
that at the time the questioned order was rendered, the amended inventory and
appraisal filed by the administrator-appellant was not yet even accepted, and it was
still under consideration by the court, in view of an opposition to the admission
thereof by some of the heirs. Moreover, it seems that notices for the presentation of
claims by possible creditors of the estate had not yet been published, so that the
period for the presentation of claims had not as yet elapsed. Consequently, it cannot
be safely said that the court had a sufficient basis upon which to order a partial
distribution of the properties, having in mind the adverse effects that it might have on
the rights of the creditors and the heirs alike.2 As pointed out by the appellant, there
are indications that the fruits and cash amounts ordered to be partially distributed
would be in excess of the distributees' full inheritance from the estate. The inventory,
as filed, showed a total sum of P31,336.60 that actually represents the conjugal
partnership assets, half of which belongs to the surviving spouse. Said inventory does
not embody any deductions for such expenses as funeral charges, inheritance taxes,
expenses for administration or an estimate of probable debts of the estate. It is
worthwhile to state in this connection that besides the appellant, as the surviving
spouse of the decedent, there are about eight others, all claiming to be lawful heirs
and seeking respective shares in the estate, five of whom are alleged full-blood
brothers and sisters and three half-blood brothers3 of the deceased Medina. It should
be noted that appellees, being brothers and sisters of the deceased, are not entitled
to allowances for support, such as the court is authorized to provide, under Section 3
of Rule 84 of the Rules of Court, for the widow and the children 4 of the deceased
during the settlement of the estate proceedings, to be deducted from the respective
shares of the participants.
Second, and more important, no bond was fixed by the court as a condition precedent
to the partial distribution ordered by it, a bond which, because of the reasons already
adduced, becomes all the more imperative.
Rule 91, Section 1 of the Rules of Court, specifically provides as follows:
When the debts, funeral charges, and expenses of administration, the
allowances to the widow, and inheritance tax, if any, chargeable to the estate
in accordance with law, have been paid, the court, on the application of the
executor or administrator, or of a person interested in the estate, and after
hearing upon notice, shall assign the residue of the estate to the person
entitled to the same, naming them and the proportions, or parts, to which is
entitled, and such persons may demand and recover their respective shares
from the executor or administrator, or any other person having the same in
his possession. . . .
No distribution shall be allowed until the payment of the obligations above
mentioned has been made or provided for, unless the distributees or any of
them, give a bond, in the sum to be fixed by the court, conditioned for the
payment of said obligations within such time as the courts directs. (Emphasis
supplied)
Appellees contend that the order of partial distribution having been issued pursuant
to an agreement of the parties, the same could not now be assailed by the appellant.
While the wording of the appealed order seem to indicate that it was rendered with
the conformity of the heirs, there is reason to believe that it was just a mistaken
impression on the part of the court. Soon after the order was rendered, the
administrator-appellant filed a motion for reconsideration, among other things, calling
the attention of the court that he never agreed to the partial distribution of the estate
in the manner ordained in the appealed order. Although said motion was denied for
lack of merit, the court did not deny categorically appellant's imputation, which could
have been easily averred to by it; nor did the appellees at any time prior to this appeal
controvert the aforesaid allegation of the administrator. There is plausibility in
appellant's statement that the agreement referred to in the order was actually one
between the appellees among themselves.
It should be noted, furthermore, that the bond required by the Rules is not solely for
the protection of the heirs then appearing, but also for the benefit of creditors and
subsequent claimants who have not agreed to the advances.
As to the argument, that the order in question is merely interlocutory and therefore
not appealable, We find that the objection was not seasonably interposed by the
appellees. In Salazar vs. Salazar, G.R. No. L-5823, April 29, 1953, it was held, and we
quote:
The motion to dismiss filed by appellee during the pendency of this appeal
on the ground that the order appealed from is not appealable because it is
merely interlocutory, cannot be entertained. While an order denying or
granting alimony pendente lite is interlocutory and consequently non
appealable . . ., however, if appeal is taken therefrom, and no timely
objection is interposed thereto, the objection is deemed waived. Thus, when
the objection is founded on the ground that the judgment appealed from is
interlocutory, but the appellee, before making such objection, has allowed
the record on appeal to be approved and printed, and has allowed the
 appellant to print his brief, such objection is too late and is deemed waived
(Slade-Perkins vs. Perkins, 57 Phil., 223, 225; Linguengo and Martinez vs.
Herrero, 17 Phil., 29; Moran, Comments on the Rules of Court, Vol. 1, 1952,
ed., p. 987).
Lastly, appellees urged that this appeal was prematurely taken in that appellant has
not as yet formally objected to the proffered bond as mentioned in an alleged order
of the court, dated May 16, 1957, which appellees have quoted in their brief, as
follows:
paragraph 2, of Rule 91 is to protect not only the appellant but also the creditors and
subsequent claimants to the estate, in order that they may not be prejudiced by the
partial distribution, the amount of the bond could not be fixed without hearing such
interested parties, and there is no showing that they were consulted. Hence, the bond
offered could not affect the merits of this appeal, although the Court below is not
precluded for approving a new bond. Wherefore, the order of partial distribution
appealed from is set aside, without prejudice to the issue of another order after strict
compliance with the Rules of Court. The records are ordered remanded to the lower
court for further proceedings. Costs against appellees.

Atty. Cesar Francisco, counsel for the administrator, is hereby given one week Paras, C.J. Bengzon, Padilla, Bautista Angelo, Labrador, Concepcion, Barrera, and
from today within which to file his manifestation as to whether the Gutierrez David, JJ., concur.
administrator is willing to withdraw his appeal from the order dated April 5,
1957, provided Atty. V.M. Ruiz files a bond in the amount of P2,000.00 and
the value of 25 cavanes of palay granted to each of the two heirs Dominica
Medina and Gorgonio Medina in the aforesaid order of the Court to
guarantee the refund of the said amount and the value of the palay should
the same be found to be in excess of what is due to the said two heirs upon
the final distribution of the estates;

and upon which, they (appellees) filed the following manifestation dated May 23,
1957:

CONSIDERING that up to the present, the Court has not as yet ruled upon
counsel's opposition or objection to the administrator's appeal, nor have the
administrator or that of his counsel rejected the heir's offer of a bond to
answer for whatever excess they might receive as advance inheritance, the
undersigned counsel for the heirs above-named respectfully prays the Court
to hold in abeyance whatever action it shall take towards the approval or
non-approval of the Record on Appeal, until such time as it shall have ruled
upon their opposition or until the administrator shall have rejected formally
the offer of a bond aforesaid. Counsel shall then in time file his corresponding
opposition to the Record on Appeal.

The tenor of the order of May 16, 1957, as well as the fact that neither said order nor
the "constancia" of appellees are included in the Record on Appeal, indicates that the
belated offer to file a bond amounted to no more than an attempt of appellees to
settle the particular issue between the parties that was rejected by the appellant. That
the record on appeal was approved much later, on July 15, 1957, and yet without the
written opposition . . . required in the order of this Court dated June 12, 1957,
notwithstanding the length of time that has already elapsed (R.A. p. 23), and the
absence of proof that the bond offered was ever filed and approved by the Court,
fortify that conclusion. Anyway, since the purpose of the bond required by section 1,
G.R. No. 174873 August 26, 2008
QUASHA ANCHETA PEÑA AND NOLASCO LAW OFFICE FOR ITS OWN BEHALF, AND
REPRESENTING THE HEIRS OF RAYMOND TRIVIERE, petitioners,
vs.
LCN CONSTRUCTION CORP., respondent.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review under Rule 45 of the Revised Rules of Court with
petitioners Quasha Ancheta Peña and Nolasco Law Office (Quasha Law Office) and the
Heirs of Raymond Triviere praying for the reversal of the Decision1 dated 11 May 2006
and Resolution2 dated 22 September 2006 of the Court of Appeals granting in part the
Petition for Certiorari filed by respondent LCN Construction Corporation (LCN) in CA-
G.R. SP No. 81296.
The factual antecedents of the case are as follows:
Raymond Triviere passed away on 14 December 1987. On 13 January 1988,
proceedings for the settlement of his intestate estate were instituted by his widow,
Amy Consuelo Triviere, before the Regional Trial Court (RTC) of Makati City, Branch 63
of the National Capital Region (NCR), docketed as Special Proceedings Case No. M-
1678. Atty. Enrique P. Syquia (Syquia) and Atty. William H. Quasha (Quasha) of the
Quasha Law Office, representing the widow and children of the late Raymond Triviere,
respectively, were appointed administrators of the estate of the deceased in April
1988. As administrators, Atty. Syquia and Atty. Quasha incurred expenses for the
payment of real estate taxes, security services, and the preservation and
administration of the estate, as well as litigation expenses.
In February 1995, Atty. Syquia and Atty. Quasha filed before the RTC a Motion for
Payment of their litigation expenses. Citing their failure to submit an accounting of the
assets and liabilities of the estate under administration, the RTC denied in May 1995
the Motion for Payment of Atty. Syquia and Atty. Quasha.
In 1996, Atty. Quasha also passed away. Atty. Redentor Zapata (Zapata), also of the
Quasha Law Office, took over as the counsel of the Triviere children, and continued to
help Atty. Syquia in the settlement of the estate.
On 6 September 2002, Atty. Syquia and Atty. Zapata filed another Motion for
Payment,3 for their own behalf and for their respective clients, presenting the
following allegations:
(1) That the instant Petition was filed on January 13, 1988; and Atty. Enrique
P. Syquia was appointed Administrator by the Order of this Honorable Court
dated April 12, 1988, and discharged his duties starting April 22, 1988, after
properly posting his administrator's bond up to this date, or more than
fourteen (14) years later. Previously, there was the co-administrator Atty.
William H. Quasha, but he has already passed away.
(2) That, together with Co-administrator Atty. William H. Quasha, they have
performed diligently and conscientiously their duties as Co-administrators,
having paid the required Estate tax and settled the various claims against the
Estate, totaling approximately twenty (20) claims, and the only remaining
claim is the unmeritorious claim of LCN Construction Corp., now pending
before this Honorable Court;
(3) That for all their work since April 22, 1988, up to July 1992, or for four (4)
years, they were only given the amount of P20,000.00 each on November 28,
1988; and another P50,00.00 each on October 1991; and the amount of
P100,000.00 each on July 1992; or a total of P170,000.00 to cover their
administration fees, counsel fees and expenses;
(4) That through their work, they were able to settle all the testate (sic) claims
except the remaining baseless claim of LCN Construction Corp., and were
able to dismiss two (2) foreign claims, and were also able to increase the
monetary value of the estate from roughly over P1Million to the present
P4,738,558.63 as of August 25, 2002 and maturing on September 27, 2002;
and the money has always been with the Philippine National Bank, as per the
Order of this Honorable Court;
(5) That since July 1992, when the co-administrators were paid P100,000.00
each, nothing has been paid to either Administrator Syquia or his client, the
widow Consuelo Triviere; nor to the Quasha Law Offices or their clients, the
children of the deceased Raymond Triviere;
(6) That as this Honorable Court will notice, Administrator Syquia has always
been present during the hearings held for the many years of this case; and
the Quasha Law Offices has always been represented by its counsel, Atty.
Redentor C. Zapata; and after all these years, their clients have not been
given a part of their share in the estate;
 (7) That Administrator Syquia, who is a lawyer, is entitled to additional
Administrator's fees since, as provided in Section 7, Rule 85 of the Revised
Rules of Court:
"x x x where the estate is large, and the settlement has been
attended with great difficulty, and has required a high degree of
capacity on the part of the executor or administrator, a greater sum
may be allowed…"
In addition, Atty. Zapata has also been present in all the years of this case. In
addition, they have spent for all the costs of litigation especially the
transcripts, as out-of-pocket expenses.
(8) That considering all the foregoing, especially the fact that neither the
Administrator or his client, the widow; and the Quasha Law Offices or their
clients, the children of the deceased, have received any money for more than
ten (10) years now, they respectfully move that the amount of P1Million be
taken from the Estate funds, to be divided as follows:
a) P450,000.00 as share of the children of the deceased [Triviere]
who are represented by the Quasha Ancheta Peña & Nolasco Law
Offices;
b) P200,000.00 as attorney's fees and litigation expenses for the
Quasha Ancheta Peña & Nolasco Law Offices;
c) P150,000.00 as share for the widow of the deceased [Raymond
Triviere], Amy Consuelo Triviere; and
d) P200,000.00 for the administrator Syquia, who is also the counsel
of the widow; and for litigation costs and expenses.
LCN, as the only remaining claimant4 against the Intestate Estate of the Late Raymond
Triviere in Special Proceedings Case No. M-1678, filed its Comment on/Opposition to
the afore-quoted Motion on 2 October 2002. LCN countered that the RTC had already
resolved the issue of payment of litigation expenses when it denied the first Motion
for Payment filed by Atty. Syquia and Atty. Quasha for failure of the administrators to
submit an accounting of the assets and expenses of the estate as required by the
court. LCN also averred that the administrators and the heirs of the late Raymond
Triviere had earlier agreed to fix the former's fees at only 5% of the gross estate, based
on which, per the computation of LCN, the administrators were even overpaid
P55,000.00. LCN further asserted that contrary to what was stated in the second
Motion for Payment, Section 7, Rule 85 of the Revised Rules of Court was
inapplicable,5 since the administrators failed to establish that the estate was large, or
that its settlement was attended with great difficulty, or required a high degree of
capacity on the part of the administrators. Finally, LCN argued that its claims are still
outstanding and chargeable against the estate of the late Raymond Triviere; thus, no
distribution should be allowed until they have been paid; especially considering that
as of 25 August 2002, the claim of LCN against the estate of the late Raymond Triviere
amounted to P6,016,570.65 as against the remaining assets of the estate totaling
P4,738,558.63, rendering the latter insolvent.
On 12 June 2003, the RTC issued its Order6 taking note that "the widow and the heirs
of the deceased Triviere, after all the years, have not received their respective share
(sic) in the Estate x x x."
The RTC declared that there was no more need for accounting of the assets and
liabilities of the estate considering that:
[T]here appears to be no need for an accounting as the estate has no more
assets except the money deposited with the Union Bank of the Philippines
under Savings Account No. 12097-000656-0 x x x; on the estate taxes, records
shows (sic) that the BIR Revenue Region No. 4-B2 Makati had issued a
certificate dated April 27, 1988 indicating that the estate taxes has been fully
paid.7
As to the payment of fees of Atty. Syquia and the Quasha Law Office, the RTC found
as follows:
[B]oth the Co-Administrator and counsel for the deceased (sic) are entitled
to the payment for the services they have rendered and accomplished for the
estate and the heirs of the deceased as they have over a decade now spent
so much time, labor and skill to accomplish the task assigned to them; and
the last time the administrators obtained their fees was in 1992.8
Hence, the RTC granted the second Motion for Payment; however, it reduced the
sums to be paid, to wit:
In view of the foregoing considerations, the instant motion is hereby
GRANTED. The sums to be paid to the co-administrator and counsel for the
heirs of the deceased Triviere are however reduced.
Accordingly, the co-administrator Atty. Syquia and aforenamed counsel are
authorized to pay to be sourced from the Estate of the deceased as follows:
 a) P450,000.00 as share of the children of the deceased who are represented
by the Quasha, Ancheta, Pena, Nolasco Law Offices;
b) P100,000.00 as attorney's fees and litigation expenses for said law firm;
c) P150,000.00 as share for the widow of the deceased Amy Consuelo
Triviere; and
d) P100,000.00 for the Co-administrator Atty. Enrique P. Syquia and for
litigation costs and expenses.9
LCN filed a Motion for Reconsideration10 of the foregoing Order on 2 July 2003, but it
was denied by the RTC on 29 October 2003.11
On 13 May 2004, LCN sought recourse from the Court of Appeals by assailing in CA-
G.R. SP No. 81296, a Petition for Certiorari, the RTC Orders dated 12 June 2003 and 2
July 2003, for having been rendered with grave abuse of discretion.12 LCN maintained
that:
(1) The administrator's claim for attorney's fees, aside from being prohibited
under paragraph 3, Section 7 of Rule 85 is, together with administration and
litigation expenses, in the nature of a claim against the estate which should
be ventilated and resolved pursuant to Section 8 of Rule 86;
(2) The awards violate Section 1, Rule 90 of the Rules of Court, as there still
exists its (LCN's) unpaid claim in the sum of P6,016,570.65; and
(3) The alleged deliberate failure of the co-administrators to submit an
accounting of the assets and liabilities of the estate does not warrant the
Court's favorable action on the motion for payment. 13
On 11 May 2006, the Court of Appeals promulgated a Decision essentially ruling in
favor of LCN.
While the Court of Appeals conceded that Atty. Syquia and the Quasha Law Office, as
the administrators of the estate of the late Raymond Triviere, were entitled to
administrator's fees and litigation expenses, they could not claim the same from the
funds of the estate. Referring to Section 7, Rule 85 of the Revised Rules of Court, the
appellate court reasoned that the award of expenses and fees in favor of executors
and administrators is subject to the qualification that where the executor or
administrator is a lawyer, he shall not charge against the estate any professional fees
for legal services rendered by him. Instead, the Court of Appeals held that the
attorney's fees due Atty. Syquia and the Quasha Law Offices should be borne by their
clients, the widow and children of the late Raymond Triviere, respectively.
The appellate court likewise revoked the P450,000.00 share and P150,000.00 share
awarded by the RTC to the children and widow of the late Raymond Triviere,
respectively, on the basis that Section 1, Rule 91 of the Revised Rules of Court
proscribes the distribution of the residue of the estate until all its obligations have
been paid.
The appellate court, however, did not agree in the position of LCN that the
administrators' claims against the estate should have been presented and resolved in
accordance with Section 8 of Rule 86 of the Revised Rules of Court. Claims against the
estate that require presentation under Rule 86 refer to "debts or demands of a
pecuniary nature which could have been enforced against the decedent during his
lifetime and which could have been reduced to simple judgment and among which are
those founded on contracts." The Court of Appeals also found the failure of the
administrators to render an accounting excusable on the basis of Section 8, Rule 85 of
the Revised Rules of Court.14
Finding the Petition for Certiorari of LCN partly meritorious, the Court of Appeals
decreed:
WHEREFORE, premises considered, the instant petition is hereby PARTLY
GRANTED. The assailed Orders of the public respondent are hereby
AFFIRMED with MODIFICATION in that -
(1) the shares awarded to the heirs of the deceased Triviere in the assailed
Order of June 12, 2003 are hereby DELETED; and
(2) the attorney's fees awarded in favor of the co-administrators are hereby
DELETED. However, inasmuch as the assailed order fails to itemize these fees
from the litigation fees/administrator's fees awarded in favor of the co-
administrators, public respondent is hereby directed to determine with
particularity the fees pertaining to each administrator.15
Petitioner filed a Motion for Reconsideration16 of the 11 May 2006 Decision of the
Court of Appeals. The Motion, however, was denied by the appellate court in a
Resolution dated 22 September 2006,17 explaining that:
In sum, private respondents did not earlier dispute [herein respondent LCN's]
claim in its petition that the law firm and its lawyers served as co-
administrators of the estate of the late Triviere. It is thus quite absurd for the
 said law firm to now dispute in the motion for reconsideration its being a co-
administrator of the estate.
[Herein petitioners], through counsel, likewise appear to be adopting in their
motion for reconsideration a stance conflicting with their earlier theory
submitted to this Court. Notably, the memorandum for [petitioner] heirs
states that the claim for attorney's fees is supported by the facts and law. To
support such allegation, they contend that Section 7 (3) of Rule 85 of the
1997 Rules of Civil Procedure finds no application to the instant case since
"what is being charged are not professional fees for legal services rendered
but payment for administration of the Estate which has been under the care
and management of the co-administrators for the past fourteen (14) years."
Their allegation, therefore, in their motion for reconsideration that Section 7
(3) of Rule 85 is inapplicable to the case of Quasha Law Offices because it is
"merely seeking payment for legal services rendered to the estate and for
litigation expenses" deserves scant consideration.
xxxx
WHEREFORE, premises considered, private respondents' motion for
reconsideration is hereby DENIED for lack of merit. 18
Exhausting all available legal remedies, petitioners filed the present Petition for
Review on Certiorari based on the following assignment of errors:
I.
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE AWARD
IN FAVOR OF THE HEIRS OF THE LATE RAYMOND TRIVIERE IS ALREADY A
DISTRIBUTION OF THE RESIDUE OF THE ESTATE.
II.
THE HONORABLE COURT OF APPEALS ERRED IN NULLIFYING THE AWARD OF
ATTORNEY'S FEES IN FAVOR OF THE CO-ADMINISTRATORS
I
The Court of Appeals modified the 12 June 2003 Order of the RTC by deleting the
awards of P450,000.00 and P150,000.00 in favor of the children and widow of the late
Raymond Triviere, respectively. The appellate court adopted the position of LCN that
the claim of LCN was an obligation of the estate which was yet unpaid and, under
Section 1, Rule 90 of the Revised Rules of Court, barred the distribution of the residue
of the estate.
Petitioners, though, insist that the awards in favor of the petitioner children and
widow of the late Raymond Triviere is not a distribution of the residue of the estate,
thus, rendering Section 1, Rule 90 of the Revised Rules of Court inapplicable.
Section 1, Rule 90 of the Revised Rules of Court provides:
Section 1. When order for distribution of residue made. - When the debts,
funeral charges, and expenses of administration, the allowance to the widow,
and inheritance tax, if any, chargeable to the estate in accordance with law,
have been paid, the court, on the application of the executor or
administrator, or of a person interested in the estate, and after hearing upon
notice, shall assign the residue of the estate to the persons entitled to the
same, naming them and the proportions, or parts, to which each is entitled,
and such persons may demand and recover their respective shares from the
executor or administrator, or any other person having the same in his
possession. If there is a controversy before the court as to who are the lawful
heirs of the deceased person or as to the distributive shares to which each
person is entitled under the law, the controversy shall be heard and decided
as in ordinary cases.
No distribution shall be allowed until the payment of the obligations above
mentioned has been made or provided for, unless the distributees, or any of
them, give a bond, in a sum to be fixed by the court, conditioned for the
payment of said obligations within such time as the court directs.
According to petitioners, the 12 June 2003 Order of the RTC should not be construed
as a final order of distribution. The 12 June 2003 RTC Order granting the second
Motion for Payment is a mere interlocutory order that does not end the estate
proceedings. Only an order of distribution directing the delivery of the residue of the
estate to the proper distributees brings the intestate proceedings to a close and,
consequently, puts an end to the administration and relieves the administrator of his
duties.
A perusal of the 12 June 2003 RTC Order would immediately reveal that it was not yet
distributing the residue of the estate. The said Order grants the payment of certain
amounts from the funds of the estate to the petitioner children and widow of the late
Raymond Triviere considering that they have not received their respective shares
therefrom for more than a decade. Out of the reported P4,738,558.63 value of the
estate, the petitioner children and widow were being awarded by the RTC, in its 12
June 2003 Order, their shares in the collective amount of P600,000.00. Evidently, the
remaining portion of the estate still needs to be settled. The intestate proceedings
were not yet concluded, and the RTC still had to hear and rule on the pending claim
of LCN against the estate of the late Raymond Triviere and only thereafter can it
distribute the residue of the estate, if any, to his heirs.
While the awards in favor of petitioner children and widow made in the RTC Order
dated 12 June 2003 was not yet a distribution of the residue of the estate, given that
there was still a pending claim against the estate, still, they did constitute a partial and
advance distribution of the estate. Virtually, the petitioner children and widow were
already being awarded shares in the estate, although not all of its obligations had been
paid or provided for.
Section 2, Rule 109 of the Revised Rules of Court expressly recognizes advance
distribution of the estate, thus:
Section 2. Advance distribution in special proceedings. - Notwithstanding a
pending controversy or appeal in proceedings to settle the estate of a
decedent, the court may, in its discretion and upon such terms as it may deem
proper and just, permit that such part of the estate as may not be affected by
the controversy or appeal be distributed among the heirs or legatees, upon
compliance with the conditions set forth in Rule 90 of these rules. (Emphases
supplied.)
The second paragraph of Section 1 of Rule 90 of the Revised Rules of Court allows the
distribution of the estate prior to the payment of the obligations mentioned therein,
provided that "the distributees, or any of them, gives a bond, in a sum to be fixed by
the court, conditioned for the payment of said obligations within such time as the
court directs."
In sum, although it is within the discretion of the RTC whether or not to permit the
advance distribution of the estate, its exercise of such discretion should be qualified
by the following: [1] only part of the estate that is not affected by any pending
controversy or appeal may be the subject of advance distribution (Section 2, Rule 109);
and [2] the distributees must post a bond, fixed by the court, conditioned for the
payment of outstanding obligations of the estate (second paragraph of Section 1, Rule
90). There is no showing that the RTC, in awarding to the petitioner children and
widow their shares in the estate prior to the settlement of all its obligations, complied
with these two requirements or, at the very least, took the same into consideration.
Its Order of 12 June 2003 is completely silent on these matters. It justified its grant of
the award in a single sentence which stated that petitioner children and widow had
not yet received their respective shares from the estate after all these years. Taking
into account that the claim of LCN against the estate of the late Raymond Triviere
allegedly amounted to P6,016,570.65, already in excess of the P4,738,558.63 reported
total value of the estate, the RTC should have been more prudent in approving the
advance distribution of the same.
Petitioners earlier invoked Dael v. Intermediate Appellate Court,,19 where the Court
sustained an Order granting partial distribution of an estate.
However, Dael is not even on all fours with the case at bar, given that the Court therein
found that:
Where, however, the estate has sufficient assets to ensure equitable
distribution of the inheritance in accordance with law and the final judgment
in the proceedings and it does not appear there are unpaid obligations, as
contemplated in Rule 90, for which provisions should have been made or a
bond required, such partial distribution may be allowed. (Emphasis supplied.)
No similar determination on sufficiency of assets or absence of any outstanding
obligations of the estate of the late Raymond Triviere was made by the RTC in this
case. In fact, there is a pending claim by LCN against the estate, and the amount
thereof exceeds the value of the entire estate.
Furthermore, in Dael, the Court actually cautioned that partial distribution of the
decedent's estate pending final termination of the testate or intestate proceeding
should as much as possible be discouraged by the courts, and, except in extreme
cases, such form of advances of inheritance should not be countenanced. The reason
for this rule is that courts should guard with utmost zeal and jealousy the estate of the
decedent to the end that the creditors thereof be adequately protected and all the
rightful heirs be assured of their shares in the inheritance.
Hence, the Court does not find that the Court of Appeals erred in disallowing the
advance award of shares by the RTC to petitioner children and the widow of the late
Raymond Triviere.
II
On the second assignment of error, petitioner Quasha Law Office contends that it is
entitled to the award of attorney's fees and that the third paragraph of Section 7, Rule
85 of the Revised Rules of Court, which reads:
Section 7. What expenses and fees allowed executor or administrator. Not to
charge for services as attorney. Compensation provided by will controls
unless renounced. x x x.
 xxxx
When the executor or administrator is an attorney, he shall not charge
against the estate any professional fees for legal services rendered by him.
(Emphasis supplied.)
is inapplicable to it. The afore-quoted provision is clear and unequivocal and needs no
statutory construction. Here, in attempting to exempt itself from the coverage of said
rule, the Quasha Law Office presents conflicting arguments to justify its claim for
attorney's fees against the estate. At one point, it alleges that the award of attorney's
fees was payment for its administration of the estate of the late Raymond Triviere;
yet, it would later renounce that it was an administrator.
In the pleadings filed by the Quasha Law Office before the Court of Appeals, it referred
to itself as co-administrator of the estate.
In the Comment submitted to the appellate court by Atty. Doronila, the member-
lawyer then assigned by the Quasha Law Office to the case, it stated that:
The 12 June 2003 Order granted the Motion for Payment filed by Co-
Administrator and counsel Atty. Enrique P. Syquia and the counsel Atty. Cirilo
E. Doronila and Co-Administrator for the children of the late Raymond
Triviere. x x x.20 (Emphasis supplied.)
It would again in the same pleading claim to be the "co-administrator and counsel for
the heirs of the late Raymond Triviere."21
Finally, the Memorandum it submitted to the Court of Appeals on behalf of its clients,
the petitioner-children of the late Raymond Triviere, the Quasha Law Office alleged
that:
2. The petition assails the Order of the Honorable Regional Trial Court of
Makati, Branch 63 granting the Motion for Payment filed by Co-
Administrators Atty. Enrique P. Syquia and the undersigned counsel together
with the children of the deceased Raymond Triviere, and the Order dated 29
October 2003 denying Petitioner's Motion for Reconsideration of the First
Order.
xxxx
I. Statement of Antecedent Facts
xxxx
4. On 13 May 2004, Atty. Enrique Syquia, co-administrator and counsel for
respondent Amy Consuelo Triviere and the undersigned counsel, co-
administrator and counsel for the children of the late Raymond Triviere filed
their Comment.22
Petitioner Quasha Law Office asserts that it is not within the purview of Section 7, Rule
85 of the Revised Rules of Court since it is not an appointed administrator of the
estate.23 When Atty. Quasha passed away in 1996, Atty. Syquia was left as the sole
administrator of the estate of the late Raymond Triviere. The person of Atty. Quasha
was distinct from that of petitioner Quasha Law Office; and the appointment of Atty.
Quasha as administrator of the estate did not extend to his law office. Neither could
petitioner Quasha Law Office be deemed to have substituted Atty. Quasha as
administrator upon the latter's death for the same would be in violation of the rules
on the appointment and substitution of estate administrators, particularly, Section 2,
Rule 82 of the Revised Rules of Court.24 Hence, when Atty. Quasha died, petitioner
Quasha Law Office merely helped in the settlement of the estate as counsel for the
petitioner children of the late Raymond Triviere.
In its Memorandum before this Court, however, petitioner Quasha Law Office argues
that "what is being charged are not professional fees for legal services rendered but
payment for administration of the Estate which has been under the care and
management of the co-administrators for the past fourteen (14) years."25
On the other hand, in the Motion for Payment filed with the RTC on 3 September 2002,
petitioner Quasha Law Office prayed for P200,000.00 as "attorney's fees and litigation
expenses." Being lumped together, and absent evidence to the contrary, the
P200,000.00 for attorney's fees and litigation expenses prayed for by the petitioner
Quasha Law Office can be logically and reasonably presumed to be in connection with
cases handled by said law office on behalf of the estate. Simply, petitioner Quasha Law
Office is seeking attorney's fees as compensation for the legal services it rendered in
these cases, as well as reimbursement of the litigation expenses it incurred therein.
The Court notes with disfavor the sudden change in the theory by petitioner Quasha
Law Office. Consistent with discussions in the preceding paragraphs, Quasha Law
Office initially asserted itself as co-administrator of the estate before the courts. The
records do not belie this fact. Petitioner Quasha Law Office later on denied it was
substituted in the place of Atty. Quasha as administrator of the estate only upon filing
a Motion for Reconsideration with the Court of Appeals, and then again before this
Court. As a general rule, a party cannot change his theory of the case or his cause of
action on appeal.26 When a party adopts a certain theory in the court below, he will
not be permitted to change his theory on appeal, for to permit him to do so would not
only be unfair to the other party but it would also be offensive to the basic rules of fair
play, justice and due process.27 Points of law, theories, issues and arguments not
brought to the attention of the lower court need not be, and ordinarily will not be,
considered by a reviewing court, as these cannot be raised for the first time at such
late stage.28
This rule, however, admits of certain exceptions.29 In the interest of justice and within
the sound discretion of the appellate court, a party may change his legal theory on
appeal, only when the factual bases thereof would not require presentation of any
further evidence by the adverse party in order to enable it to properly meet the issue
raised in the new theory.30
On the foregoing considerations, this Court finds it necessary to exercise leniency on
the rule against changing of theory on appeal, consistent with the rules of fair play and
in the interest of justice. Petitioner Quasha Law Office presented conflicting
arguments with respect to whether or not it was co-administrator of the estate.
Nothing in the records, however, reveals that any one of the lawyers of Quasha Law
Office was indeed a substitute administrator for Atty. Quasha upon his death.
The court has jurisdiction to appoint an administrator of an estate by granting letters
of administration to a person not otherwise disqualified or incompetent to serve as
such, following the procedure laid down in Section 6, Rule 78 of the Rules of Court.
Corollary thereto, Section 2, Rule 82 of the Rules of Court provides in clear and
unequivocal terms the modes for replacing an administrator of an estate upon the
death of an administrator, to wit:
Section 2. Court may remove or accept resignation of executor or
administrator. Proceedings upon death, resignation, or removal. x x x.
When an executor or administrator dies, resigns, or is removed the remaining
executor or administrator may administer the trust alone, unless the court
grants letters to someone to act with him. If there is no remaining executor or
administrator, administration may be granted to any suitable person.
The records of the case are wanting in evidence that Quasha Law Office or any of its
lawyers substituted Atty. Quasha as co-administrator of the estate. None of the
documents attached pertain to the issuance of letters of administration to petitioner
Quasha Law Office or any of its lawyers at any time after the demise of Atty. Quasha
in 1996. This Court is thus inclined to give credence to petitioner's contention that
while it rendered legal services for the settlement of the estate of Raymond Triviere
since the time of Atty. Quasha's death in 1996, it did not serve as co-administrator
thereof, granting that it was never even issued letters of administration.
The attorney's fees, therefore, cannot be covered by the prohibition in the
third paragraph of Section 7, Rule 85 of the Revised Rules of Court against an
attorney, to charge against the estate professional fees for legal services
rendered by them.
However, while petitioner Quasha Law Office, serving as counsel of the Triviere
children from the time of death of Atty. Quasha in 1996, is entitled to attorney's fees
and litigation expenses of P100,000.00 as prayed for in the Motion for Payment dated
3 September 2002, and as awarded by the RTC in its 12 June 2003 Order, the same
may be collected from the shares of the Triviere children, upon final distribution of
the estate, in consideration of the fact that the Quasha Law Office, indeed, served as
counsel (not anymore as co-administrator), representing and performing legal
services for the Triviere children in the settlement of the estate of their deceased
father.
Finally, LCN prays that as the contractor of the house (which the decedent caused to
be built and is now part of the estate) with a preferred claim thereon, it should already
be awarded P2,500,000.00, representing one half (1/2) of the proceeds from the sale
of said house. The Court shall not take cognizance of and rule on the matter
considering that, precisely, the merits of the claim of LCN against the estate are still
pending the proper determination by the RTC in the intestate proceedings below.
WHEREFORE, premises considered, the Petition for Review on Certiorari is hereby
PARTLY GRANTED. The Decision dated 11 May 2006 and Resolution dated 22
September 2006 of the Court of Appeals in CA-G.R. SP No. 81296 are AFFIRMED, with
the following MODIFICATIONS:
1) Petitioner Quasha Law Office is entitled to attorney's fees of ONE
HUNDRED THOUSAND PESOS (P100,000.00), for legal services rendered for
the Triviere children in the settlement of the estate of their deceased father,
the same to be paid by the Triviere children in the manner herein discussed;
and
2) Attorneys Enrique P. Syquia and William H. Quasha are entitled to the
payment of their corresponding administrators' fees, to be determined by
the RTC handling Special Proceedings Case No. M-1678, Branch 63 of the
Makati RTC, the same to be chargeable to the estate of Raymond Trieviere.
SO ORDERED.
G.R. No. L-4681 July 31, 1951
MARCELA DE BORJA VDA. DE TORRES, SATURNINA DE BORJA VDA. DE ORTEGA,
EUFRACIA DE BORJA VDA. DE LIMACO, JACOBO DE BORJA, OLIMPIA DE BORJA, AND
JUAN DE BORJA, petitioners,
vs.
THE HONORABLE DEMETRIO B. ENCARNACION, Judge of the Court of First Instance of
Rizal, and CRISANTO DE BORJA, Administrator of the Intestate Estate of Marcelo de
Borja, respondents.
Amador E. Gomez for petitioners.
E. V. Filamor for respondents.
TUASON, J.:
The petitioners contest the jurisdiction of the respondent Judge to issue the order
herein sought to be reviewed directing them to deliver to the administrator of the
intestate estate of Marcelo de Borja, (Special Proceeding No. R-2414 of the Court of
First Instance of Rizal) a certain parcel of land which is in petitioners' possession and
to which they assert exclusive ownership. They contend that the administrator's
remedy to recover that property is an action at law and not by motion in the intestate
proceeding.
It appears that in the above-entitled intestate estate, the commissioners appointed by
the court submitted on February 8, 1944, a project of partition, in which the land in
question, which is and was then in the possession of the herein petitioners, was
included as property of the estate and assigned to one Miguel B. Dayco, one of
Marcelo de Borja's heirs. Over the objection of the petitioners, surviving children of
Quintin de Borja who was one of Marcelo's children, the proposed partition was
approved in February, 1946, and the order of approval on appeal was affirmed by this
Court in 1949. Although the administratrix of Quintin de Borja's estate was the party
named in the partition in behalf of the estate, the proceeding for the reason that they
had been declared their father's sole heirs in the settlement of their father's estate.
Moreover, one of these children was herself the duly appointed administratrix of the
last named intestate estate.
Pertinent to the question posed by the petitioners is section 1 of Rule 91 which
provides as follows:
When the debts, funeral charges, and expenses of administration, the
allowances to the widow, and inheritance tax, if any, chargeable to the estate
in accordance with law, have been paid, the court, on the application of the
executor or administrator, or of a person interested in the estate, and after
hearing upon notice, shall assign the residue of the estate to the persons
entitled to the same, naming them and the proportions, or parts, to which
each is entitled, such persons may demand and recover their respective
shares from the executor or administrator, or any other person having same
in his possession. If there is a controversy before the court as to who are the
lawful heirs of the deceased person or as to distributive share to which each
person is entitled under the law, the testimony as to such controversy shall
be taken in writing by the judge, under oath.
No distribution shall be allowed until the payment of the obligation above
mentioned has been made or provided for, unless the distributes, or any of
them, give a bond, in a sum to be fixed by the court, conditioned for the
payment of said obligations such time as the court directs.
Applying this Rule in the case of De Jesus vs. Daza,* 43 Off. Gaz., (No. 6), 2055, the
facts of which were in all essential particulars analogous to those of the present case,
this Court said: ". . . the probate court, having the custody and control of the entire
estate, is the most logical authority to effectuate this provision within the same estate
proceeding, said proceeding being the most convenient one in which this power and
function of the court can be exercised and performed without the necessity if
requiring the parties to undergo the inconvenience, delay and expense of having to
commence and litigate an entirely different action. There can be no question of the
share to be delivered the probate court would have jurisdiction within the same estate
proceeding to order him to deliver that possession to the person entitled thereto, and
we see no reason, legal or equitable, for denying the same power to the probate court
to be exercised within the same estate proceeding if the share to be delivered happens
to be in the possession of 'any other person,' especially when 'such other person' is
one of the heirs themselves who are already under the jurisdiction of the probate
court in the same estate proceeding."
There are factors present in the case at bar but not in the De Jesus vs. Daza case which
greatly reinforce the probate court's authority to make the order under review: The
partition here had not only been approved and thus become a judgment of the court,
but distribution of the petitioners had received the property assigned to them or their
father's estate. And this was not all. As the administrator had refused, on technical
grounds, to turn over to them their or their father's share, they moved for and secured
from the probate court an order for the execution of the partition. And when the
administrator elevated the case to this Court on certiorari, they as respondents in that
petition vigorously defended the probate court's action. They complained bitterly that
execution of the partition was long overdue and that the administrator was unduly
delaying the closing of the estate.
The order now before this Court has to be sustained if for no other reason than that
the petitioners are in estoppel. In the face of what they have done, they are precluded
from attacking the validity of the partition or any part of it. A party can not, in law and
in good conscience, be allowed to reap the fruits of a partition, agreement or
judgment and repudiate what does not suit him.

There is not much to the complaint that the respondent Judge issued the order under
consideration without affording the petitioners a hearing on the merits of their
pretended title to the land in their possession. The question of the petitioners' title
and possession has been concluded by the partition and become a closed matter. All
they could prove if allowed to call witnesses would be that the aforesaid property
belonged to them or to their father's estate and that they are in possession of it to the
exclusion of Marcelo de Borja's personal representative. Granting all such proofs to be
true, as indeed we may for the purpose of this decision, yet they would not detract
from the authority of the court to make the order under consideration. The court had
only the partition to examine, to see if the questioned land was included therein. The
inclusion being shown, and there being no allegation that the inclusion was effected
through improper means or without the petitioners' knowledge, the partition barred
any further litigation on said title and operated to bring the property under the control
and jurisdiction of the court for proper disposition according to the tenor of the
partition. To all intents and purposes, the property was in custodia legis. What the
petitioners could have done was to ask for a reconsideration or modification of the
partition on the grounds of fraud, excusable mistake, inadvertence, etc. if they could
substantiate such allegations. They can not attack the partition collaterally, as they are
trying to do in this case.

The petition is denied with costs against the petitioners.

Paras, C.J., Feria, Pablo, Bengzon, Padilla, Reyes, Jugo and Bautista Angelo, JJ., concur.
G.R. No. L-30787 August 29, 1974
PURIFICACION SANTOS IMPERIAL, petitioner,
vs.
HON. EMMANUEL M. MUÑOZ, and LUIS U. SANTOS, respondents.
ESGUERRA, J.:p
Petition for review on certiorari of the order of the Court of First Instance of Bulacan,
presided by respondent Judge, Hon. Emmanuel M. Muñoz, dated February 18, 1969,
setting aside its order of June 6, 1967, in Special Proceedings No. 1049 entitled
"Intestate Estate of Fermina Bello Santos", approving the Amended Project of Partition
dated September 22, 1966, and adjudicating the properties left by the decedent to
her forced heirs, Luis U. Santos, as surviving spouse, and Purificacion Santos Imperial,
as adopted daughter, in the sharing proportion of 5/8 and 3/8, respectively; and of
the order of July 17, 1969 denying the motion to set aside the order of February 18,
1969.
The factual background of the case is as follows:
On October 14, 1957, Luis U. Santos, as surviving spouse of the deceased Fermina
Bello Santos, who died intestate on June 9, 1957, filed and instituted Special
Proceeding No. 1049, entitled "Intestate Estate of Fermina Bello Santos", in the Court
of First Instance of Bulacan. Luis U. Santos was appointed regular Administrator on
January 16, 1958, as there was no opposition filed by the only other heir, herein
petitioner Purificacion Santos Imperial. It was only on April 9, 1965, when petitioner
Purificacion Santos Imperial entered her appearance in the abovementioned intestate
proceedings as Oppositor, and therein filed a motion to require the regular
administrator to render an accounting which resulted in the approval by the Court a
quo on June 6, 1967, of the project of partition dated September 22, 1966, with the
following awards and adjudication's:
1. To Dr. Luis U. Santos, citizen of the Philippines, of age, married to
Socorro Manankil and resident of Malolos, Bulacan, is hereby
awarded and adjudicated an undivided FIVE-EIGHTH(5/8) share in
each of the above-described properties; and
2. To Purificacion Santos-Imperial, citizen of the Philippines, of age,
married to Eloy Imperial and resident of Malolos, Bulacan, is hereby
awarded and adjudicated an undivided THREE-EIGHTH(3/8) share in
each of the properties described above;
The foregoing properties, as well as those realty situated in
Pamplona, Camarines Sur, and Manito, Albay, which have been
omitted or excluded from this project of partition to be dealt with
later, are the only ones which have come to the knowledge of the
administrator so far. However, should any other property be
discovered, the same shall be divided between the administrator
and Purification Santos-Imperial in the proportion above-stated.
WHEREFORE, it is most respectfully prayed that the herein
administrator, Luis U. Santos, and Purificacion Santos Imperial be
declared the only heirs of the deceased and entitled to the residuary
estate and the foregoing PROJECT OF PARTITION approved.
Malolos, Bulacan, September 22, 1966.
The assailed order of June 6, 1967, approving the Amended Project of Partition dated
September 22, 1966, is herein below quoted, to wit:
Upon agreement of the parties, the hearing of the statement of
accounts is hereby postponed to July 18, 1967, at 8:30 A.M.
However, the opposition to the project of partition having been
withdrawn and finding the same to be in order, said project of
partition is hereby APPROVED.
In connection with the consideration of the statement of accounts
submitted by the administrator, he is hereby directed to deliver to
the clerk of court all vouchers covering the income and
disbursements of the estate within 10 days from receipt of this
order.
SO ORDERED.
Malolos, Bulacan, June 6, 1967.
 petitioner Purificacion
N Santos Imperial, the only child (adopted), should get only the
remaining ¼ of
U the estate.
E
L
Oppositor-Petitioner filed a formal opposition to the motion for correction on the
M
following grounds, to wit:
.
M (a) The orders of June 6, 1967 and April 26, 1968, are already both
U final and executory as of June 18, 1968, the 30-day period for appeal
Ñ having lapsed, so cannot be subject to further correction;
O
Z
(b) That Purificacion Santos Imperial precisely withdrew her
J
opposition to the statements of accounts of Luis U. Santos from
U
June 9, 1957, to December 31, 1965, and relieved the administrator-
D
heir of submitting any accounting for the years, 1966 and 1967, by
G
virtue of the approval of the partition of September 22, 1966 on
E
June 6, 1967, and the promise or agreement that said partition will
be implemented immediately after said COMPROMISE
Copies of the order of June 6, 1967, were furnished counsel for the parties on the AGREEMENT, which served as basis of the order of the Court of
same date, June 6, 1967, in open court. (p. 3, Petition) January 16, 1968. The correction will therefore violate the
COMPROMISE AGREEMENT of the parties.
On January 16, 1968, the Court a quo approved the Compromise-Agreement of the
parties concerned, wherein the administrator, respondent Dr. Luis U. Santos, among (c) The orders of June 6, 1967 and April 26, 1968 are not
others, agreed to let Purificacion Santos Imperial, oppositor-petitioner, have the interlocutory in nature but FINAL ORDERS fixing the distributive
amount of P53,072.81 in full settlement of her 3/8 share in the income of the estate sharing ratio as intended by Rule 90, Section 1 of the Rules of Court,
from June 9, 1957, up to December 31, 1967, inclusive, exclusive of any other amount which was appealable by any heir who did not agree to the
she might have received in the past from the said administrator. This amount of distributive share fixed in such partition.
P53,072.81 was actually paid to said Purificacion Santos Imperial.
(d) As the AMENDED PROJECT OF PARTITION of September 22,
On April 26, 1968, the Court a quo again approved the final partial project of partition 1966, fixed the distributive share already as 5/8 to Luis U. Santos
filed by the administrator-respondent under date of March 22, 1968, with the same and 3/8 to Purificacion Santos-Imperial as basis of the withdrawal of
sharing ratio as in the one approved in its order of June 6, 1967. her opposition to the statement of accounts and further accounting
of any produce for 1966-1967, whatever disadvantage Luis U.
On June 18, 1968, herein respondent Luis U. Santos as administrator-heir of the Santos suffered, if true, in the partition had been fully compensated
intestate estate of Fermina Bello Santos filed a Motion for Correction of both the by the produce which were not reported correctly or where there
Amended Project of Partition of September 22, 1966, approved by the Court a quo on was no report at all. Hence, the partition can no longer be corrected.
June 6, 1967, and the Final Partial Project of Partition of March 22, 1968, likewise
approved by the same court on April 26, 1968, claiming that the partition submitted (e) The cited case, SC-G R. No. L-19281 is not in point because, there,
to the Court was erroneous, as the same did not conform with the ruling laid down in the Court had no judgment as yet which was final about the
the case of Santillon vs. Miranda, et al., G. R. No. L-19281, June 30, 1965, 14 SCRA 563, proportion of the division, while here two orders of final nature
where the Supreme Court held: "When intestacy occurs, a surviving spouse concurring already covered the partitions sought to be amended.
with only one legitimate child of the deceased is entitled to one-half of the estate of
the deceased spouse under Article 996 of the Civil Code." Therefore, administrator-
On February 18, 1969, the Court a quo granted the motion for correction, to wit:
respondent Luis Santos should get ¾ of the properties partitioned while oppositor-
 Acting upon the motion for correction dated June 18, 1968, filed by
the administrator, which motion had been overlooked due to the
numerous other motions and petitions filed by the parties, and in
the light of the decision of the Hon. Supreme Court in Santillon vs.
Miranda, G.R. No. L-19281, the order of June 6, 1967 approving the
amended projects of partition is hereby reconsidered and set aside,
and the administrator is allowed to re-amend the said projects of
partition as to embody therein the corrections sought.
SO ORDERED.
On March 20, 1969, oppositor-petitioner filed a Motion to Set Aside the order of
February 18, 1969, which was denied on July 19, 1969, by the Court a quo, as follows:
Malolos, Bulacan, February 18, 1969.
Acting upon the motion to set aside order of February 18, 1969 filed
by the oppositor and considering that, as rightly pointed out by the
administrator, the said order is merely interlocutory so that this
court has not lost jurisdiction to entertain any and all corrections of
the division; considering, further, that in order to put an end to this
litigation between the parties, a correct and legal partition of the
property of the estate is necessary, MOTION DENIED.
SO ORDERED.
Malolos, Bulacan, July 17, 1969.
Hence this petition for review on certiorari.
The issues for consideration are: (1) whether an order of a probate court in testate or
intestate proceedings approving a project of partition which clearly fixed the
distributive share to which each heir is entitled is merely interlocutory in nature so
that the probate court can correct and set aside the same anytime; or is final and,
therefore, appealable within the 30 day period for appeal; and (2) whether a court can
order the correction of an erroneous final decision after it had become final and
executory.
I. THE FIRST ISSUE
The contention of the petitioner to the effect that the orders of the court a quo dated
June 6, 1967 as well as that of April 26, 1968, are final as the same have determined
the distributive shares of the known forced heirs, finds support in the very same case
cited by the respondents as their authority. In that case of Santillon vs. Miranda, et al.,
G.R. No.
L-19281, June 30, 1965, 14 SCRA 563, this Court held: "Appeal in special proceedings;
Order of court determining distributive share of heirs appealable. — An order of the
Court of First Instance which determines the distributive shares of the heirs of a
deceased-person is appealable." This Court in deciding the issue as to whether the
order of the lower court is final and appealable, went on to say:
It is clear that the order of the lower court is final and, therefore,
appealable to this Court.
Under Rule 109, section 1, a person may appeal in special proceedings from an order
of the Court of First Instance where such order "determines ... the distributive share
of the estate to which such person is entitled." The two (2) questioned orders, being
final in character, should have been appealed by the party adversely affected within
the 30-day reglementary period provided for appeal. This was not done.
II. THE SECOND ISSUE
The contention of the petitioner that an order which has already become final and,
therefore, executory is not subject to correction, finds support in Chereau vs.
Fuentebella, et al., 43 Phil. 216, where it was held that an erroneous decree or
judgment although granted without legal authority and contrary to the express
provision of the statute, is not void. Here, as no appeal was taken, the decree must be
conceded to have full force and effect. An erroneous decree is not a void decree. This
Court held in the Fuentebella case:
... Erroneous the judgment undoubtedly was, and if the matter had
been brought by appeal to this Court, and error assigned on that
ground, the judgment granting the divorce would have been
reversed. But after the decree has become final and the community
property divided, the decree cannot now be changed in any
proceeding; and much less is it subject to the collateral attack which
is here made upon it. (Ibid, at p. 220) The questioned orders having
become final and, therefore, executory because of the failure of the
herein respondent Luis U. Santos to appeal on time by allowing the
period for appeal to lapse before filing his motion for correction on
June 18, 1968, he has to suffer the misfortune brought about by his
own negligence and fatal inadvertence. WHEREFORE, the orders of
the court of First Instance of Bulacan dated February 18, 1969, and
July 17, 1969, are hereby reversed and set aside. Costs against
respondents.
G.R. No. 163707 September 15, 2006
MICHAEL C. GUY, petitioner,
vs.
HON. COURT OF APPEALS, HON. SIXTO MARELLA, JR., Presiding Judge, RTC, Branch 138,
Makati City and minors, KAREN DANES WEI and KAMILLE DANES WEI, represented by
their mother, REMEDIOS OANES, respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari assails the January 22, 2004 Decision1 of the Court
of Appeals in CA-G.R. SP No. 79742, which affirmed the Orders dated July 21, 2000 2
and July 17, 20033 of the Regional Trial Court of Makati City, Branch 138 in SP Proc.
Case No. 4549 denying petitioner's motion to dismiss; and its May 25, 2004
Resolution4 denying petitioner's motion for reconsideration.
The facts are as follows:
On June 13, 1997, private respondent-minors Karen Oanes Wei and Kamille Oanes
Wei, represented by their mother Remedios Oanes (Remedios), filed a petition for
letters of administration5 before the Regional Trial Court of Makati City, Branch 138.
The case was docketed as Sp. Proc. No. 4549 and entitled Intestate Estate of Sima Wei
(a.k.a. Rufino Guy Susim).
Private respondents alleged that they are the duly acknowledged illegitimate children
of Sima Wei, who died intestate in Makati City on October 29, 1992, leaving an estate
valued at P10,000,000.00 consisting of real and personal properties. His known heirs
are his surviving spouse Shirley Guy and children, Emy, Jeanne, Cristina, George and
Michael, all surnamed Guy. Private respondents prayed for the appointment of a
regular administrator for the orderly settlement of Sima Wei's estate. They likewise
prayed that, in the meantime, petitioner Michael C. Guy, son of the decedent, be
appointed as Special Administrator of the estate. Attached to private respondents'
petition was a Certification Against Forum Shopping 6 signed by their counsel, Atty.
Sedfrey A. Ordoñez.
In his Comment/Opposition,7 petitioner prayed for the dismissal of the petition. He
asserted that his deceased father left no debts and that his estate can be settled
without securing letters of administration pursuant to Section 1, Rule 74 of the Rules
of Court. He further argued that private respondents should have established their
status as illegitimate children during the lifetime of Sima Wei pursuant to Article 175
of the Family Code.
The other heirs of Sima Wei filed a Joint Motion to Dismiss 8 on the ground that the
certification against forum shopping should have been signed by private respondents
and not their counsel. They contended that Remedios should have executed the
certification on behalf of her minor daughters as mandated by Section 5, Rule 7 of the
Rules of Court.
In a Manifestation/Motion as Supplement to the Joint Motion to Dismiss,9 petitioner
and his co-heirs alleged that private respondents' claim had been paid, waived,
abandoned or otherwise extinguished by reason of Remedios' June 7, 1993 Release
and Waiver of Claim stating that in exchange for the financial and educational
assistance received from petitioner, Remedios and her minor children discharge the
estate of Sima Wei from any and all liabilities.
The Regional Trial Court denied the Joint Motion to Dismiss as well as the
Supplemental Motion to Dismiss. It ruled that while the Release and Waiver of Claim
was signed by Remedios, it had not been established that she was the duly constituted
guardian of her minor daughters. Thus, no renunciation of right occurred. Applying a
liberal application of the rules, the trial court also rejected petitioner's objections on
the certification against forum shopping.
Petitioner moved for reconsideration but was denied. He filed a petition for certiorari
before the Court of Appeals which affirmed the orders of the Regional Trial Court in
its assailed Decision dated January 22, 2004, the dispositive portion of which states:
WHEREFORE, premises considered, the present petition is hereby DENIED
DUE COURSE and accordingly DISMISSED, for lack of merit. Consequently, the
assailed Orders dated July 21, 2000 and July 17, 2003 are hereby both
AFFIRMED. Respondent Judge is hereby DIRECTED to resolve the controversy
over the illegitimate filiation of the private respondents (sic) minors [-] Karen
Oanes Wei and Kamille Oanes Wei who are claiming successional rights in the
intestate estate of the deceased Sima Wei, a.k.a. Rufino Guy Susim.
SO ORDERED.10
The Court of Appeals denied petitioner's motion for reconsideration, hence, this
petition.
Petitioner argues that the Court of Appeals disregarded existing rules on certification
against forum shopping; that the Release and Waiver of Claim executed by Remedios
released and discharged the Guy family and the estate of Sima Wei from any claims or
liabilities; and that private respondents do not have the legal personality to institute
the petition for letters of administration as they failed to prove their filiation during
the lifetime of Sima Wei in accordance with Article 175 of the Family Code.
Private respondents contend that their counsel's certification can be considered
substantial compliance with the rules on certification of non-forum shopping, and that
the petition raises no new issues to warrant the reversal of the decisions of the
Regional Trial Court and the Court of Appeals.
The issues for resolution are: 1) whether private respondents' petition should be
dismissed for failure to comply with the rules on certification of non-forum shopping;
2) whether the Release and Waiver of Claim precludes private respondents from
claiming their successional rights; and 3) whether private respondents are barred by
prescription from proving their filiation.
The petition lacks merit.
Rule 7, Section 5 of the Rules of Court provides that the certification of non-forum
shopping should be executed by the plaintiff or the principal party. Failure to comply
with the requirement shall be cause for dismissal of the case. However, a liberal
application of the rules is proper where the higher interest of justice would be served.
In Sy Chin v. Court of Appeals,11 we ruled that while a petition may have been flawed
where the certificate of non-forum shopping was signed only by counsel and not by
the party, this procedural lapse may be overlooked in the interest of substantial
justice.12 So it is in the present controversy where the merits13 of the case and the
absence of an intention to violate the rules with impunity should be considered as
compelling reasons to temper the strict application of the rules.
As regards Remedios' Release and Waiver of Claim, the same does not bar private
respondents from claiming successional rights. To be valid and effective, a waiver must
be couched in clear and unequivocal terms which leave no doubt as to the intention
of a party to give up a right or benefit which legally pertains to him. A waiver may not
be attributed to a person when its terms do not explicitly and clearly evince an intent
to abandon a right.14
In this case, we find that there was no waiver of hereditary rights. The Release and
Waiver of Claim does not state with clarity the purpose of its execution. It merely
states that Remedios received P300,000.00 and an educational plan for her minor
daughters "by way of financial assistance and in full settlement of any and all claims
of whatsoever nature and kind x x x against the estate of the late Rufino Guy Susim." 15
Considering that the document did not specifically mention private respondents'
hereditary share in the estate of Sima Wei, it cannot be construed as a waiver of
successional rights.
Moreover, even assuming that Remedios truly waived the hereditary rights of private
respondents, such waiver will not bar the latter's claim. Article 1044 of the Civil Code,
provides:
ART. 1044. Any person having the free disposal of his property may accept or
repudiate an inheritance.
Any inheritance left to minors or incapacitated persons may be accepted by
their parents or guardians. Parents or guardians may repudiate the inheritance
left to their wards only by judicial authorization.
The right to accept an inheritance left to the poor shall belong to the persons
designated by the testator to determine the beneficiaries and distribute the
property, or in their default, to those mentioned in Article 1030. (Emphasis
supplied)
Parents and guardians may not therefore repudiate the inheritance of their wards
without judicial approval. This is because repudiation amounts to an alienation of
property16 which must pass the court's scrutiny in order to protect the interest of the
ward. Not having been judicially authorized, the Release and Waiver of Claim in the
instant case is void and will not bar private respondents from asserting their rights as
heirs of the deceased.
Furthermore, it must be emphasized that waiver is the intentional relinquishment of
a known right. Where one lacks knowledge of a right, there is no basis upon which
waiver of it can rest. Ignorance of a material fact negates waiver, and waiver cannot
be established by a consent given under a mistake or misapprehension of fact.17
In the present case, private respondents could not have possibly waived their
successional rights because they are yet to prove their status as acknowledged
illegitimate children of the deceased. Petitioner himself has consistently denied that
private respondents are his co-heirs. It would thus be inconsistent to rule that they
waived their hereditary rights when petitioner claims that they do not have such right.
Hence, petitioner's invocation of waiver on the part of private respondents must fail.
Anent the issue on private respondents' filiation, we agree with the Court of Appeals
that a ruling on the same would be premature considering that private respondents
have yet to present evidence. Before the Family Code took effect, the governing law
on actions for recognition of illegitimate children was Article 285 of the Civil Code, to
wit:
ART. 285. The action for the recognition of natural children may be brought
only during the lifetime of the presumed parents, except in the following
cases:
 (1) If the father or mother died during the minority of the child, in which case
the latter may file the action before the expiration of four years from the
attainment of his majority;
(2) If after the death of the father or of the mother a document should appear
of which nothing had been heard and in which either or both parents
recognize the child.
In this case, the action must be commenced within four years from the
finding of the document. (Emphasis supplied)
We ruled in Bernabe v. Alejo18 that illegitimate children who were still minors at the
time the Family Code took effect and whose putative parent died during their minority
are given the right to seek recognition for a period of up to four years from attaining
majority age. This vested right was not impaired or taken away by the passage of the
Family Code.19
On the other hand, Articles 172, 173 and 175 of the Family Code, which superseded
Article 285 of the Civil Code, provide:
ART. 172. The filiation of legitimate children is established by any of the
following:
(1) The record of birth appearing in the civil register or a final judgment; or
(2) An admission of legitimate filiation in a public document or a private
handwritten instrument and signed by the parent concerned.
In the absence of the foregoing evidence, the legitimate filiation shall be
proved by:
(1) The open and continuous possession of the status of a legitimate child; or
(2) Any other means allowed by the Rules of Court and special laws.
ART. 173. The action to claim legitimacy may be brought by the child during
his or her lifetime and shall be transmitted to the heirs should the child die
during minority or in a state of insanity. In these cases, the heirs shall have a
period of five years within which to institute the action.
The action already commenced by the child shall survive notwithstanding the
death of either or both of the parties.
ART. 175. Illegitimate children may establish their illegitimate filiation in the
same way and on the same, evidence as legitimate children.
The action must be brought within the same period specified in Article 173,
except when the action is based on the second paragraph of Article 172, in
which case the action may be brought during the lifetime of the alleged
parent.
Under the Family Code, when filiation of an illegitimate child is established by a record
of birth appearing in the civil register or a final judgment, or an admission of filiation
in a public document or a private handwritten instrument signed by the parent
concerned, the action for recognition may be brought by the child during his or her
lifetime. However, if the action is based upon open and continuous possession of the
status of an illegitimate child, or any other means allowed by the rules or special laws,
it may only be brought during the lifetime of the alleged parent.
It is clear therefore that the resolution of the issue of prescription depends on the type
of evidence to be adduced by private respondents in proving their filiation. However,
it would be impossible to determine the same in this case as there has been no
reception of evidence yet. This Court is not a trier of facts. Such matters may be
resolved only by the Regional Trial Court after a full-blown trial.
While the original action filed by private respondents was a petition for letters of
administration, the trial court is not precluded from receiving evidence on private
respondents' filiation. Its jurisdiction extends to matters incidental and collateral to
the exercise of its recognized powers in handling the settlement of the estate,
including the determination of the status of each heir.20 That the two causes of action,
one to compel recognition and the other to claim inheritance, may be joined in one
complaint is not new in our jurisprudence.21 As held in Briz v. Briz:22
The question whether a person in the position of the present plaintiff can in
any event maintain a complex action to compel recognition as a natural child
and at the same time to obtain ulterior relief in the character of heir, is one
which in the opinion of this court must be answered in the affirmative,
provided always that the conditions justifying the joinder of the two distinct
causes of action are present in the particular case. In other words, there is no
absolute necessity requiring that the action to compel acknowledgment
should have been instituted and prosecuted to a successful conclusion prior
to the action in which that same plaintiff seeks additional relief in the
character of heir. Certainly, there is nothing so peculiar to the action to
compel acknowledgment as to require that a rule should be here applied
different from that generally applicable in other cases. x x x
 The conclusion above stated, though not heretofore explicitly formulated by
this court, is undoubtedly to some extent supported by our prior decisions.
Thus, we have held in numerous cases, and the doctrine must be considered
well settled, that a natural child having a right to compel acknowledgment,
but who has not been in fact acknowledged, may maintain partition
proceedings for the division of the inheritance against his coheirs (Siguiong
vs. Siguiong, 8 Phil., 5; Tiamson vs. Tiamson, 32 Phil., 62); and the same
person may intervene in proceedings for the distribution of the estate of his
deceased natural father, or mother (Capistrano vs. Fabella, 8 Phil., 135;
Conde vs. Abaya, 13 Phil., 249; Ramirez vs. Gmur, 42 Phil., 855). In neither of
these situations has it been thought necessary for the plaintiff to show a prior
decree compelling acknowledgment. The obvious reason is that in partition
suits and distribution proceedings the other persons who might take by
inheritance are before the court; and the declaration of heirship is
appropriate to such proceedings.

WHEREFORE, the instant petition is DENIED. The Decision dated January 22, 2004 of
the Court of Appeals in CA-G.R. SP No. 79742 affirming the denial of petitioner's
motion to dismiss; and its Resolution dated May 25, 2004 denying petitioner's motion
for reconsideration, are AFFIRMED. Let the records be REMANDED to the Regional Trial
Court of Makati City, Branch 138 for further proceedings.

SO ORDERED.

Panganiban, C.J., Chairperson, Austria-Martinez, Callejo, Sr., Chico-Nazario, J.J.,

concur.
G.R. No. L-4824 February 13, 1912
In re estate of the deceased Chinaman
BERNARDO RAFANAN LAO SAYCO, alias SAYA. LAY CHUYTING, appellant.
Martin M. Levering for appellant.
TORRES, J.:
This is an appeal by the Chinaman Lao Chiama, administrator of the estate of the
decedent Bernardo Rafanan Lao Sayco, alias Saya, and guardian of the minor Lay
Chuyting, from the judgment rendered in these special proceedings by the Honorable
Judge, Ramon Avanceña.
Counsel for the municipal president of the pueblo of Mambajao, complying with a
resolution of the council of the said pueblo, set forth in an undate petition filed with
the Court of First Instance of Misamis:
That, on January 23, 1906, the municipal council of Mambajao appeared in the said
proceedings and prayed that, since Bernardo Rafanan died in that pueblo without
leaving any known legitimate successor, the real and personal property left by the said
decedent within the district of the property left by the said decedent within the district
of the aforementioned municipality be awarded to the latter, pursuant to the
provisions of section 571 (sic) of Act No. 190, which property was specified in the
inventory presented by the testamentary executor, Lao Chiaman, and that no ruling
had been made on the said petition; that on October 19 of the same year, the
administrator, Lao Chiaman, filed a written petition wherein he alleged that there
were no longer any debts to pay any debts to pay and therefore requested that, upon
the approval of his final account, his administration be closed, and, as the guardian of
the Chiaman Lay Chuyting, requested that the property referred to be delivered to the
latter as the son and sole heir of the decedent Rafanan; that the municipal council of
Mambajao, which believed that it was entitled to the said property, opposed its
delivery to the alleged heir, whose character as such was denied by the petitioner,
who therefore prayed that he admitted as a party to the proceedings and that a day
be set for the hearing of the case, in order that the alleged heir, Lay Chuyting, might
prove his right, and should he fail so to do, then that the right of the municipal council
of Mambajao be recognized, with such other findings, in addition, as law and justice
might demand.
Lao Chiaman, administrator of the property of the decedent Rafanan and guardian of
the minor Lay Chuyting, opposed in writing the petition of the municipality of
Mambajao, on the ground that the said decedent left a legal heir, the minor Lay
Chuyting, residing in China, who was a son of the deceased Lao Ta, the latter a brother
of the decedent Bernardo Rafanan Lao Sayco, and that, therefore, Lay Chuyting was
the latter's nephew, and not his son, as previously erroneously stated in the course of
these proceedings. Petitioner stated that he desired to take the depositions of
witnesses in the city of Cebu, in order to establish the facts set forth by him and asked
that the hearing of the case be set for the month of June, 1907.
A hearing in these proceedings was had on February 20, 1908, after notice had been
served on all who might have any interest in the intestate succession concerned, and
after the publication of the decrees for three weeks prior to the date set. In view of
the dispositions of witnesses presented at the trial, the court, on March 5, 1908,
rendered judgment ordering that the property left by the decedent, Bernardo Rafanan
Lao Sayco, known by the name of Saya, be assigned to the municipality of Mambajao,
Province of Misamis, to be administered by its municipal council and placed at the
disposal of the school in the same manner as other property intended for the same
use. It was further ordered that the administrator of the intestate estate, after paying
the actual expenses and debts chargeable thereto, deliver the remainder to the
municipality of Mambajao, and afterwards report to the Court of First Instance his
compliance with and fulfillment of the order. From this judgment the said
administrator and guardian of the minor Lay Chuyting appealed, for which purpose a
certified copy of the record was forwarded to the clerk of this court.
This case concerns the revision to the State of certain property which was left at death
by the Chinaman Bernardo Rafanan Lao Sayco, alias Saya, who died in the pueblo of
Mambajao, Province of Misamis apparently without having executed any will during
his lifetime and without leaving any known heirs in said locality.
Section 750 of the Code of Civil Procedure, applicable to the case, reads as follows:
When a person dies intestate, seized of real or personal property in the
Philippine Islands, leaving no heir or person by law entitled to the same, the
president and municipal council of the municipality where the deceased last
resided, if he was an inhabitant of these Islands, or of the municipality in
which he had estate, if he resided out of the Islands, may, on behalf of the
municipality, file a petition with the Court of First Instance of the province for
an inquisition in the premises; the court shall thereupon appoint a time and
place of hearing and deciding on such petition, and cause a notice thereof to
be published in some newspaper of general circulation in the province of
which the deceased was last an inhabitant, if within the Philippine Islands,
and if not in some newspaper of general circulation in the province in which
he had estate. The notice shall recite the substance of the facts and request
set forth in the petition, the time and place at which persons claiming the
estate may appear and be heard before the court, and shall be published at
 least six weeks successively, the last of which publications shall be at least six
weeks before the time appointed by the court to make inquisition.

From the record of these proceedings it does not appear that there was made, at the
request of counsel for the president and the municipal council of Mambajao, the
inquisition provided by law, specified in the preinserted section, for the record is not
accompanied by any certified copy of the investigatory of the real and personal
property that belonged to the said decedent, with a statement of the places where
the realty is located. Neither is it shown to have ascertained whether the deceased
Chinaman executed any will during his lifetime, or whether the deceased Chinaman
executed any will during his lifetime, or whether he left in Mambajao or in any other
place in these Islands any relative entitled to inherit from him, information in regard
to which points might be furnished by those who were his friends or with whom he
had friendly dealings during his lifetime. Moreover, the notice summoning the persons
who believed they were entitled to his property should have been published for at
least six consecutive weeks, and not for three as was directed in the order of
December 16, 1907.

In order that the property which belonged to the decedent Bernardo Rafanan Lao
Sayco, situated in these Islands, may be decreed to have reverted to the Senate,
pursuant to the provisions of section 751 of the Code of Civil Procedure, it is
indispensable that the requirements contained in the above-quoted section of the
said code should have been complied with by making the inquisition with regard to
the matters specified, at the instance of the interested municipality. Furthermore, the
person who lays claim to the property left by the decedent at death, as the latter's
successor or heir, must prove his identity and rights.

Counsel for the municipality of Mambajao merely prayed for an order of reversion and
for the adjudication in behalf of the municipality of the property aforementioned; he
did not comply with the provisions of the law by furnishing the required proofs in
regard to the matters hereinabove indicated, which must be the subject of an
investigation.

For the reasons aforestated, it is proper, in our opinion, to reverse the judgment
appealed from, and we dismiss those proceedings, without prejudice to any rights that
may pertain to the parties with respect to the property in question. No express finding
is made of the costs.

Arellano, C.J., Johnson, Carson, Moreland and Trent, JJ., concur.

G.R. No. 143483 January 31, 2002
REPUBLIC OF THE PHILIPPINES represented by the REGISTER OF DEEDS OF PASAY CITY,
petitioner,
vs.
COURT OF APPEALS (SPECIAL FORMER 3RD DIVISION) AND AMADA H. SOLANO, assisted
by her husband ROMEO SOLANO, respondents.
BELLOSILLO , J.:
This petition for certiorari seeks to nullify two (2) Resolutions of the Court of Appeals
dated 12 November 1998 and 4 May 2000 giving due course to the petition for
annulment of judgment filed by private respondent Amada H. Solano on 3 February
1997 and denying petitioner's motion for reconsideration.
For more than three (3) decades (from 1952 to 1985) private respondent Amada
Solano served as the all-around personal domestic helper of the late Elizabeth
Hankins, a widow and a French national. During Ms. Hankins' lifetime and most
especially during the waning years of her life, respondent Solano was her faithful girl
Friday and a constant companion since no close relative was available to tend to her
needs.
In recognition of Solano's faithful and dedicated service, Ms. Hankins executed in her
favor two (2) deeds of donation involving two (2) parcels of land covered by TCT Nos.
7807 and 7808 of the Registry of Deeds. Private respondent alleged that she misplaced
the deeds of donation and were nowhere to be found.
While the deeds of donation were missing, the Republic filed a petition for the escheat
of the estate of Elizabeth Hankins before the Regional Trial Court of Pasay City.1
During the proceedings, a motion for intervention was filed by Romeo Solano, spouse
of private respondent, and one Gaudencio Regosa, but on 24 June 1987 the motion
was denied by the trial court for the reason that "they miserably failed to show valid
claim or right to the properties in question."2 Since it was established that there were
no known heirs and persons entitled to the properties of decedent Hankins, the lower
court escheated the estate of the decedent in favor of petitioner Republic of the
Philippines.
By virtue of the decision of the trial court, the Registry of Deeds of Pasay City cancelled
TCT Nos. 7807 and 7808 and issued new ones, TCT Nos. 129551 and 129552, both in
the name of Pasay City.
In the meantime, private respondent claimed that she accidentally found the deeds of
donation she had been looking for a long time. In view of this development,
respondent Amada Solano filed on 28 January 1997 a petition before the Court of
Appeals for the annulment of the lower court's decision alleging, among other, that3
-
13.1. The deceased Elizabeth Hankins having donated the subject properties
to the petitioner in 1983 (for TCT No. 7807) and 1984 (for TCT No. 7808),
these properties did not and could not form part of her estate when she died
on September 20, 1985. Consequently, they could not validly be escheated
to the Pasay City Government;
13.2. Even assuming arguendo that the properties could be subject of
escheat proceedings, the decision is still legally infirm for escheating the
properties to an entity, the Pasay City Government, which is not authorized
by law to be the recipient thereof. The property should have been escheated
in favor of the Republic of the Philippines under Rule 91, Section 1 of the New
Rules of Court x x x x
On 17 March 1997 the Office of the Solicitor General representing public respondents
RTC and the Register of Deeds (herein petitioner) filed an answer setting forth their
affirmative defenses, to wit: (a) lack of jurisdiction over the nature of the action; and,
(b) the cause of action was barred by the statute of limitations.
Finding no cogent reason to justify the dismissal of the petition for annulment, the
Court of Appeals issued on 12 November 1998 the first of its assailed Resolutions
giving due course to the petition for annulment of judgment and setting the date for
trial on the merits. In upholding the theory of respondent Solano, the Appeals Court
ruled that -
Herein petitioner invokes lack of jurisdiction over the subject matter on the
part of respondent RTC to entertain the escheat proceedings x x x because
the parcels of land have been earlier donated to herein petitioner in 1983
and 1984 prior to the death of said Hankins; and therefore, respondent court
could not have ordered the escheat of said properties in favor of the Republic
of the Philippines, assign them to respondent Pasay City government, order
the cancellation of the old titles in the name of Hankins and order the
properties registered in the name of respondent Pasay City x x x x The 1997
Rules of Civil Procedure specifically laid down the grounds of annulment filed
before this Court, to wit: extrinsic fraud and lack of jurisdiction. Jurisdiction
over the subject matter is conferred by law and this jurisdiction is determined
by the allegations of the complaint. It is axiomatic that the averments of the
complaint determine the nature of the action and consequently the
jurisdiction of the courts. Thus whether or not the properties in question are
no longer part of the estate of the deceased Hankins at the time of her death;
 and, whether or not the alleged donations are valid are issues in the present
petition for annulment which can be resolved only after a full blown trial x x
xx
It is for the same reason that respondent’s espousal of the statute of
limitations against herein petition for annulment cannot prosper at this stage
of the proceedings. Indeed, Section 4, Rule 91 of the Revised Rules of Court
expressly provides that a person entitled to the estate must file his claim with
the court a quo within five (5) years from the date of said judgment. However,
it is clear to this Court that herein petitioner is not claiming anything from
the estate of the deceased at the time of her death on September 20, 1985;
rather she is claiming that the subject parcels of land should not have been
included as part of the estate of the said decedent as she is the owner thereof
by virtue of the deeds of donation in her favor.
In effect, herein petitioner, who alleges to be in possession of the premises
in question, is claiming ownership of the properties in question and the
consequent reconveyance thereof in her favor which cause of action
prescribes ten (10) years after the issuance of title in favor of respondent
Pasay City on August 7, 1990. Herein petition was seasonably filed on
February 3, 1997 under Article 1144, to wit:
Art. 1144. The following actions must be brought within ten years
from the time the right of action accrues: (1) Upon a written
contract; (2) Upon an obligation created by law; (3) Upon a
judgment.
And Article 1456, to wit:
Art. 1456. If property is acquired through mistake or fraud, the
person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the property
comes.4
In its Resolution of 4 May 2000 the Court of Appeals denied the motion for
reconsideration filed by public respondents Register of Deeds of Pasay City and the
Presiding judge of the lower court and set the trial on the merits for June 15 and 16,
2000.
In its effort to nullify the Resolutions herein before mentioned, petitioner points out
that the Court of Appeals committed grave abuse of discretion amounting to lack or
excess of jurisdiction (a) in denying petitioner's affirmative defenses set forth in its
answer and motion for reconsideration, and in setting the case for trial and reception
of evidence; and, (b) in giving due course to private respondent's petition for
annulment of decision despite the palpable setting-in of the 5-year statute of
limitations within which to file claims before the court a quo set forth in Rule 91 of the
Revised Rules of Court and Art. 1014 of the Civil Code.
Petitioner argues that the lower court had jurisdiction when it escheated the
properties in question in favor of the city government and the filing of a petition for
annulment of judgment on the ground of subsequent discovery of the deeds of
donation did not divest the lower court of its jurisdiction on the matter. It further
contends that Rule 47 of the 1997 Rules of Civil Procedure only provides for two (2)
grounds for the annulment of judgment, namely: extrinsic fraud and lack of
jurisdiction. As such the discovery of the deeds of donation seven (7) years after the
finality of the escheat proceedings is an extraneous matter which is clearly not an
instance of extrinsic fraud nor a ground to oust the lower court of its jurisdiction.
Petitioner also insists that notwithstanding the execution of the deeds of donation in
favor of private respondent, the 5-year statute of limitations within which to file claims
before the court a quo as set forth in Rule 91 of the Revised Rules of Court has set in.
The present controversy revolves around the nature of the parcels of land purportedly
donated to private respondent which will ultimately determine whether the lower
court had jurisdiction to declare the same escheated in favor of the state.
We rule for the petitioner. Escheat is a proceeding, unlike that of succession or
assignment, whereby the state, by virtue of its sovereignty, steps in and claims the
real or personal property of a person who dies intestate leaving no heir. In the absence
of a lawful owner, a property is claimed by the state to forestall an open "invitation to
self-service by the first comers."5 Since escheat is one of the incidents of sovereignty,
the state may, and usually does, prescribe the conditions and limits the time within
which a claim to such property may be made. The procedure by which the escheated
property may be recovered is generally prescribed by statue, and a time limit is
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.
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.
WHEREFORE, the petition is GRANTED. The assailed Resolution of the Court of Appeals
dated 12 November 1998 giving due course to the petition for annulment of
judgment, and its Resolution dated 4 May 2000 denying petitioner's motion for
reconsideration, are SET ASIDE. The decision of the RTC-Br. 114, Pasay City, dated 27
June 1989, is REINSTATED.
SO ORDERED.

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
[G.R. No. 138731. December 11, 2000]
TESTATE ESTATE OF MARIA MANUEL Vda. DE BIASCAN, petitioner, vs. ROSALINA C.
BIASCAN, respondent.
DECISION
GONZAGA-REYES, J.:
This is a petition for review of the decisioni[1] of the Court of Appeals in CA-G.R. SP
Case No. 44306 affirming the orders dated October 22, 1996 and February 12, 1997
of the Regional Trial Court, Branch 4, Manila. These orders dismissed the appeal of
petitioner from the orders dated April 2, 1981 and April 30, 1985 of the same Regional
Trial Court.
The facts of the case are as follows:
On June 3, 1975, private respondent Rosalina J. Biascan filed a petitionii[2]
denominated as Special Proceeding No. 98037 at the then Court of First Instance,
Branch 4, Manila praying for her appointment as administratrix of the intestate estate
of Florencio Biascan and Timotea Zulueta. In an Order dated August 13, 1975, private
respondent was appointed as regular administratrix of the estates.
On October 10, 1975, Maria Manuel Vda. De Biascan, the legal wife of Florencio
Biascan entered her appearance as Oppositor-Movant in SP. Proc. No. 98037.iii[3]
Simultaneous with her appearance, she filed a pleading containing several motions
including a motion for intervention, a motion for the setting aside of private
respondents appointment as special administratrix and administratrix, and a motion
for her appointment as administratrix of the estate of Florencio Biascan.iv[4]
After an exchange of pleadings between the parties, Judge Serafin Cuevas, then
presiding judge of CFI Manila, Branch 4, issued an Omnibus Orderv[5] dated November
13, 1975 which, among others, granted Marias intervention and set for trial the
motion to set aside the Orders appointing respondent as administratrix.
On April 2, 1981, the trial court issued an Ordervi[6] resolving that: (1) Maria is the
lawful wife of Florencio; (2) respondent and her brother are the acknowledged natural
children of Florencio; (3) all three are the legal heirs of Florencio who are entitled to
participate in the settlement proceedings; (4) the motion to set aside the order
appointing private respondent as administratrix is denied; and (5) the motion to
approve inventory and appraisal of private respondent be deferred. Maria, through
her counsel, received a copy of this April 2, 1981 Order on April 9, 1981.vii[7]
On June 6, 1981, or fifty-eight (58) days after he receipt of the April 2, 1981 Order,
Maria filed her motion for reconsiderationviii[8] which private respondent
opposed.ix[9]
On November 15, 1981, the fourth floor of the City Hall of Manila was completely
gutted by fire. The records of the settlement proceedings were among those lost in
the fire. Thus, on January 2, 1985, private respondent filed a Petition for
Reconstitutionx[10] of the said records.
Due to the delay caused by the fire and the reconstitution of the records, it was only
on April 30, 1985 that the Regional Trial Court of Manila, Branch 4 issued an
Orderxi[11] denying Marias June 6, 1981 Motion for Reconsideration.
Sometime thereafter, Maria died and her testate estate also became the subject of
settlement proceedings. Atty. Marcial F. Lopez was appointed as interim special
administrator and engaged the services of the Siguion Reyna Montecillo and Ongsiako
Law Offices on Behalf of the estate.
On August 21, 1996, the law firm was allegedly made aware of and given notice of the
April 30, 1985 Order when its associate visited Branch 4 of the Regional Trial Court of
Manila to inquire about the status of the case. The associate checked the records if
there was proof of service of the April 30, 1985 Order to the former counsel of Maria,
Atty. Marcial F. Lopez, but he discovered that there was none.xii[12] He was able to
secure a certificationxiii[13] from the Clerk of Court of the Regional Trial Court of
Manila, Branch 4 which stated that there was no proof of service of the Order dated
April 30, 1985 contained in the records of SP. Proc. No. 98037.
A Notice of Appealxiv[14] dated April 22, 1996 was filed by petitioner from the Orders
dated April 2, 1981 and April 30, 1985 of the trial court. While the said notice of appeal
was dated April 22, 1996, the stamp of the trial court on the first page of the notice
clearly indicated that the same was received by the trial court on September 20, 1996.
A Record of Appealxv[15] dated September 20, 1996 was likewise filed by petitioner.
On October 22, 1996, the trial court issued an Orderxvi[16] denying petitioners appeal
on the ground that the appeal was filed out of time. The trial court ruled that the April
2, 1981 Order which was the subject of the appeal already became final as the Motion
for Reconsideration thereof was filed sixty-five (65) days after petitioner received the
same. In addition, the court ruled that the notice of appeal itself was filed manifestly
late as the same was filed more than 11 years after the issuance of the June 11, 1985
Order denying petitioners Motion for Reconsideration. The Motion for
Reconsideration dated November 13, 1996 of petitioner was likewise denied by the
trial court in an Orderxvii[17] dated February 12, 1997.
Not satisfied with this decision, petitioner filed a Petition for Certiorari with Prayer for
Mandatory Injunctionxviii[18] with the Court of Appeals questioning the October 12,
1996 and February 12, 1997 Orders of the Regional Trial Court.
In a Decisionxix[19] dated February 16, 1999, the First Division of the Court of Appeals
denied the petition for certiorari of petitioner. Petitioners Motion for Reconsideration
was likewise denied by the appellate court in a Resolutionxx[20] dated May 18, 1999.
Hence, this Petition for Review on Certiorari where petitioner sets forth the following
ground for the reversal of the decision of the appellate court:
THE FIRST DIVISION OF THE COURT OF APPEALS (REVIEWING COURT) HAS
SANCTIONED THE DEPARTURE BY THE REGIONAL TRIAL COURT OF MANILA
BRANCH 4 (TRIAL COURT) FROM THE USUAL COURSE OF JUDICIAL PROCEEDING
IN ISSUING THE ASSAILED 16 FEBRUARY 1999 DECISION AND THE 18 MAY 1999
RESOLUTION WHEN IT AFFIRMED THE ERRONEOUS FINDING OF THE TRIAL
COURT THAT THE ORDER DATED APRIL 2, 1981 BECAME FINAL AND EXECUTORY
DESPITE THE FACT THAT NO OPPOSITION ON ITS TIMELINESS WAS FILED AND
MOREOVER NO RULING AS REGARDS ITS TIMELINESS WAS MADE.xxi[21]
There is no merit in the petition.
Section 1, Rule 109 of the Rules of Court enumerates the orders and judgments in
special proceedings which may be the subject of an appeal. Thus:
Section 1. Orders or judgments from which appeals may be taken. An interested
person may appeal in a special proceeding from an order or judgment rendered by a
Regional Trial Court or a Juvenile and domestic Relations Court, where such order or
judgment:
(a) Allows or disallows a will;
(b) Determines who are the lawful heirs of a deceased person, or the distributive
shares of the estate to which such person is entitled;
(c) Allows, or disallows, in whole or in part, any claim against the estate of a
deceased person, or any claim presented on behalf of the estate in offset to a claim
against it;
(d) Settles the account of an executor, administrator, trustee or guardian;
(e) Constitutes, in proceedings relating to the settlement of the estate of a
deceased person, or the administration of a trustee or guardian, a final determination
in the lower court of the rights of the party appealing, except that no appeal shall be
allowed from the appointment of a special administrator; and
(f) Is the final order or judgment rendered in the case, and affects the
substantial rights of the person appealing, unless it be an order granting or denying a
motion for new trial or for reconsideration.
An appeal is allowed in these aforesaid cases as these orders, decrees or judgments
issued by a court in a special proceeding constitute a final determination of the rights
of the parties so appealing.xxii[22] In contrast, interlocutory orders are not appealable
as these are merely incidental to judicial proceedings. In these cases, the court issuing
such orders retains control over the same and may thus modify, rescind, or revoke the
same on sufficient grounds at any time before the final judgment.xxiii[23]
In the instant case, the Order dated April 2, 1981 of the trial court decreed, among
others, that Maria Manuel Vda. De Biascan, the lawful wife of the deceased Florencio
Biascan, private respondent Rosalina Biascan and her brother, German Biascan, are
entitled to participate in the settlement proceedings. Moreover, the said Order
likewise denied Marias motion to set aside the order appointing private respondent
as regular administratrix of the estate. These rulings of the trial court were precisely
questioned by Maria in her Motion for Reconsideration dated June 6, 1981.
The ruling of the trial court that Maria, private respondent Rosalina Biascan and
German Biascan were entitled to participate in the settlement proceedings falls
squarely under paragraph (b), Section 1, Rule 109 of the Rules of Court as a proper
subject of appeal. By so ruling, the trial court has effectively determined that the three
persons are the lawful heirs of the deceased. As such, the same may be the proper
subject of an appeal.
Similarly, the ruling of the trial court denying petitioners motion to set aside the order
appointing private respondent as the regular administratrix of the estate of Florencio
Bisacan is likewise a proper subject of an appeal. We have previously held that an
order of the trial court appointing a regular administrator of a deceased persons estate
is a final determination of the rights of the parties thereunder, and is thus,
appealable.xxiv[24] This is in contrast with an order appointing a special administrator
who is appointed only for a limited time and for a specific purpose. Because of the
temporary character and special character of this appointment, the Rules deem it not
advisable for any party to appeal from said temporary appointment.xxv[25]
Considering however that private respondent has aleready been appointed as regular
administratrix of the estate of Florencio Biascan, her appointment as such may be
questioned before the appellate court by way of appeal.
It is thus clear that the Order dated April 2, 1981 may be the proper subject of an
appeal in a special proceeding. In special proceedings, such as the instant proceeding
for settlement of estate, the period of appeal from any decision or final order
rendered therein is thirty (30) days, a notice of appeal and a record on appeal being
required.xxvi[26] The appeal period may only be interrupted by the filing of a motion
for new trial or reconsideration. Once the appeal period expires without an appeal or
a motion for reconsideration or new trial being perfected, the decision or order
becomes final.
With respect to the Order dated April 2, 1981 issued by the trial court, petitioner
admits that Maria Manuel Vda. De Biascan, its predecessor-in-interest, received a
copy of the same of April 9, 1981. Applying these rules, Maria or her counsel had thirty
(30) days or until May 9 within which to file a notice of appeal with record on appeal.
She may also file a motion for reconsideration, in which case the appeal period is
deemed interrupted.
Considering that it was only June 6, 1981, or a full fifty-eight (58) days after receipt of
the order, that a motion for reconsideration was filed, it is clear that the same was
filed out of time. As such, when the said motion for reconsideration was filed, there
was no more appeal period to interrupt as the Order had already become final.
Petitioner insists, however, that the order dated April 2, 1981 of the trial court did not
become final and executory as no opposition on its timeliness was filed and no ruling
as regards its timeliness was made. Petitioner argues that although its motion for
reconsideration was denied in the Order dated April 30, 1985, the denial was made
on grounds other than its failure to ask for a reconsideration within the period
prescribed by law. As such, petitioner concludes, any procedural defect attending the
Motion for Reconsideration was deemed cured when the trial court, in its Order dated
April 30, 1985, took cognizance of the same and rendered its ruling thereon.
There is no merit in this argument.
It is well-settled that judgment or orders become final and executory by operation of
law and not by judicial declaration. Thus, finality of a judgment becomes a fact upon
the lapse of the reglementary period of appeal if no appeal is perfectedxxvii[27] or
motion for reconsideration or new trial is filed. The trial court need not even
pronounce the finality of the order as the same becomes final by operation of law. In
fact, the trial court could not even validly entertain a motion for reconsideration filed
after the lapse of the period for taking an appeal.xxviii[28] As such, it is of no moment
that the opposing party failed to object to the timeliness of the motion for
reconsideration or that the court denied the same on grounds other than timeliness
considering that at the time the motion was filed, the Order dated April 2, 1981 had
already become final and executory. Being final and executory, the trial court can no
longer alter, modify, or reverse the questioned order.xxix[29] The subsequent filing of
the motion for reconsideration cannot disturb the finality of the judgment or
order.xxx[30]
Even if we assume that the Motion for Reconsideration filed by petitioner had the
effect of suspending the running of the appeal period for the April 2, 1981 Order, it is
clear that petitioners notice of appeal of the orders of the trial court was still filed out
of time.
Under Section 3, Rule 41 of the Rules of Court then applicable, the time during which
a motion to set aside the judgment or order or for a new trial shall be deducted from
the period from which to make an appeal. The rule further states that where the
motion was filed during office hours of the last day of the appeal period, the appeal
must be perfected within the day following that in which the party appealing received
notice of the denial of said motion.
The Order of the trial court denying petitioners Motion for Reconsideration of the April
2, 1981 Order was issued on April 30, 1985. Allegedly, petitioner was only made aware
of this April 30, 1985 Order on August 21, 1996 when it inquired from the trial court
about the status of the case. Giving petitioner the benefit of the doubt that it had
indeed received notice of the order denying its motion for reconsideration on August
21, 1996, it follows that petitioner only had until the following day or on August 22,
1996 within which to perfect the appeal.
At this point, we note with disapproval petitioners attempt to pass off its Notice of
Appeal as having been filed on August 22, 1996. In all its pleadings before this Court
and the Court of Appeals, petitioner insists that its Notice of Appeal was filed the day
after it secured the August 21, 1996 Certification from the trial court. While the Notice
of Appeal was ostensibly dated August 22, 1996, it is clear from the stampxxxi[31] of
the trial court that the same was received only on September 20, 1996. Moreover, in
the Order dated October 22, 1996 of the trial court denying petitioners appeal, the
court clearly stated that the Notice of Appeal with accompanying Record on Appeal
was filed on September 20, 1996.
Considering that it is clear from the records that petitioners notice of appeal was filed
on September 20, 1996, the same was clearly filed out of time as it only had until
August 22, 1996 within which to file the said pleading. And while the rules on special
proceedings recognize that a motion for extension of time to file the notice of appeal
and record of appeal may be granted,xxxii[32]
WHEREFORE, premises considered, we hereby DISMISS the petition for lack of merit.
The decision dated February 16, 1999 and the Resolution dated May 18, 1999 of the
Court of Appeals are hereby AFFIRMED. SO ORDERED.
G.R. No. 186053 November 15, 2010
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
NISAIDA SUMERA NISHINA, represented by ZENAIDA SUMERA WATANABE,
Respondent.
DECISION
CARPIO MORALES, J.:
Nisaida Sumera Nishina (respondent), represented by her mother Zenaida Sumera
Watanabe (Zenaida), filed before the Regional Trial Court (RTC) of Malolos, Bulacan a
verified petition for cancellation of birth record and change of surname in the civil
registry of Malolos, Bulacan, docketed as Special Proceedings No. 106-M-2007.1
In her petition, respondent alleged the following:
She was born on October 31, 19872 in Malolos, Bulacan to her Filipino mother Zenaida
and Japanese father Koichi Nishina who were married on February 18, 1987.3 Her
father later died.4 On July 19, 1989, her mother married another Japanese, Kenichi
Hakamada.5
As they could not find any record of her birth at the Malolos civil registry, respondent’s
mother caused the late registration of her birth in 1993 under the surname of her
mother’s second husband, "Hakamada."6 Her mother and Hakamada eventually
divorced.7
On May 29, 1996, her mother married another Japanese, Takayuki Watanabe,8 who
later adopted her by a decree9 issued by the Tokyo Family Court of Japan on January
25, 2001. The adoption decree was filed and recorded in the civil registry of Manila in
2006.10
In 2007, it surfaced that her birth was in fact originally registered at the Malolos Civil
Registry under the name "Nisaida Sumera Nishina,"11 hence, her filing before the RTC
of her petition praying that her second birth certificate bearing the surname
"Hakamada," issued through late registration in 1993, be cancelled; and that in light
of the decree of adoption, her surname "Nishina" in the original birth certificate be
changed to "Watanabe."12
After hearing the petition, Branch 83 of the RTC, by Order13 of October 8, 2007,
granted respondent’s petition and directed the Local Civil Registry of Malolos "to
cancel the second birth record of Nisaida Sumera Hakamada issued in 1993 [bearing]
Registry No. 93-06684 and to change it [in its stead] Registry No. 87-04983,
particularly the surname of [respondent] from NISAIDA SUMERA NISHINA to NISAIDA
SUMERA WATANABE."14
A copy of the October 8, 2007 Order was received on December 13, 2007 by the OSG
which filed, on behalf of petitioner, a notice of appeal.15
Before the Court of Appeals, respondent filed a motion to dismiss16 the appeal,
alleging that petitioner adopted a wrong mode of appeal since it did not file a record
on appeal as required under Sections 2 and 3, Rule 41 (appeal from the RTCs) of the
1997 Rules of Civil Procedure reading:
SEC. 2. Modes of appeal. –
(a) Ordinary appeal. – The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a
notice of appeal with the court which rendered the judgment or final order appealed
from and serving a copy thereof upon the adverse party. No record on appeal shall be
required except in special proceedings and other cases of multiple or separate appeals
where the law or these Rules so require. In such cases, the record on appeal shall be
filed and served in like manner.
xxxx
SEC. 3. Period of ordinary appeal. – The appeal shall be taken within fifteen (15) days
from notice of the judgment or final order appealed from. Where a record on appeal
is required, the appellant shall file a notice of appeal and a record on appeal within
thirty (30) days from notice of the judgment or final order. However, an appeal in
habeas corpus cases shall be taken within forty-eight (48) hours from notice of the
judgment or final order appealed from. (A.M. No. 01-1-03- SC, June 19, 2001)
The period of appeal shall be interrupted by a timely motion for new trial or
reconsideration. No motion for extension of time to file a motion for new trial or
reconsideration shall be allowed. (emphasis, underscoring and italics supplied)
xxxx
SEC. 9. Perfection of appeal; effect thereof. – x x x.
A party’s appeal by record on appeal is deemed perfected as to him with respect to
the subject matter thereof upon the approval of the record on appeal filed in due time.
xxxx
Opposing the motion, petitioner countered that a record on appeal is required only in
proceedings where multiple appeals may arise, a situation not obtaining in the present
case.17
By Resolution18 of September 2, 2008, the appellate court dismissed petitioner’s
appeal, holding that since respondent’s petition before the RTC "is classified as a
special proceeding," petitioner should have filed both notice of appeal and a record
on appeal within 30 days from receipt of the October 8, 2007 Order granting
respondent’s petition, and by not filing a record on appeal, petitioner "never
perfected" its appeal.19
Its motion for reconsideration having been denied by Resolution20 of December 22,
2008, petitioner filed the present petition for review on certiorari.
The petition is meritorious.
Section 1, Rule 109 of the 1997 Rules of Civil Procedure specifies the orders or
judgments in special proceedings which may be the subject of an appeal, viz:
SECTION 1. Orders or judgments from which appeals may be taken. – An interested
person may appeal in special proceedings from an order or judgment rendered by a
Court of First Instance or a Juvenile and Domestic Relations Court, where such order
or judgment:
(a) Allows or disallows a will;
(b) Determines who are the lawful heirs of a deceased person, or the
distributive share of the estate to which such person is entitled;
(c) Allows or disallows, in whole or in part, any claim against the estate of a
deceased person, or any claim presented on behalf of the estate in offset to
a claim against it;
(d) Settles the account of an executor, administrator, trustee or guardian;
(e) Constitutes, in proceedings relating to the settlement of the estate of a
deceased person, or the administration of a trustee or guardian, a final
determination in the lower court of the rights of the party appealing, except
that no appeal shall be allowed from the appointment of a special
administrator; and
(f) Is the final order or judgment rendered in the case, and affects the
substantial rights of the person appealing unless it be an order granting or
denying a motion for a new trial or for reconsideration.
The above-quoted rule contemplates multiple appeals during the pendency of special
proceedings. A record on appeal – in addition to the notice of appeal – is thus required
to be filed as the original records of the case should remain with the trial court21 to
enable the rest of the case to proceed in the event that a separate and distinct issue
is resolved by said court and held to be final.22
In the present case, the filing of a record on appeal was not necessary since no other
matter remained to be heard and determined by the trial court after it issued the
appealed order granting respondent’s petition for cancellation of birth record and
change of surname in the civil registry.1avvphil
The appellate court’s reliance on Zayco v. Hinlo, Jr.23 in denying petitioner’s motion
for reconsideration is misplaced. In Zayco which was a petition for letters of
administration of a deceased person’s estate, the decedent’s children appealed the
trial court’s order appointing the grandson of the decedent as administrator of the
estate. Their notice of appeal and record on appeal were denied due course by the
trial court on the ground that the appealed order is interlocutory and not subject to
appeal. But even if the appeal were proper, it was belatedly filed. On certiorari by the
decedent’s children, the appellate court sustained the trial court. On petition for
review, this Court reversed the appellate court, holding that "[a]n order appointing an
administrator of a deceased person’s estate is a final determination of the rights of
the parties in connection with the administration, management and settlement of the
decedent’s estate," hence, the order is "final" and "appealable."24 The Court also held
that the appeal was filed on time.
In Zayco, unlike in the present case, a record on appeal was obviously necessary as the
proceedings before the trial court involved the administration, management and
settlement of the decedent’s estate– matters covered by Section 1 of Rule 109
wherein multiple appeals could, and did in that case, call for them.
WHEREFORE, the petition is GRANTED. The Court of Appeals Resolutions of September
2, 2008 and December 22, 2008 in CA G.R. CV No. 90346 are REVERSED and SET ASIDE.
The appeal of petitioners before the appellate court is REINSTATED. SO ORDERED.