Republic of the Philippines

Supreme Court
Manila
SECOND DIVISION
DALISAY E. OCAMPO, VINCE E. OCAMPO,
MELINDA CARLA E. OCAMPO, and LEONARDO
E. OCAMPO, JR.,
Petitioners,

G.R. No. 187879

Present:
CARPIO, J.,
Chairperson,
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.

- versus -

RENATO M. OCAMPO and ERLINDA M.

OCAMPO,
Respondents.

Promulgated:
July 5, 2010

x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:

This petition[1] for review on certiorari under Rule 45 of the Rules of Court
seeks to reverse and set aside the Decision [2] dated December 16, 2008 and the
Resolution[3]dated April 30, 2009 of the Court of Appeals (CA) in CA-G.R. SP No.
104683. The Decision annulled and set aside the Order dated March 13, 2008 [4] of
the Regional Trial Court (RTC), Branch 24, Bian, Laguna, in Sp. Proc. No. B-3089;
while the Resolution denied the motion for reconsideration of the Decision.
The Antecedents
Petitioners Dalisay E. Ocampo (Dalisay), Vince E. Ocampo (Vince), Melinda
Carla E. Ocampo (Melinda), and Leonardo E. Ocampo, Jr. (Leonardo, Jr.) are the
surviving wife and the children of Leonardo Ocampo (Leonardo), who died on

January 23, 2004. Leonardo and his siblings, respondents Renato M. Ocampo
(Renato) and Erlinda M. Ocampo (Erlinda) are the legitimate children and only heirs
of the spouses Vicente and Maxima Ocampo, who died intestate on December 19,
1972 and February 19, 1996, respectively. Vicente and Maxima left several
properties, mostly situated in Bian, Laguna. Vicente and Maxima left no will and
no debts.
On June 24, 2004, five (5) months after the death of Leonardo, petitioners
initiated a petition for intestate proceedings, entitled In Re: Intestate Proceedings
of the Estate of Sps. Vicente Ocampo and Maxima Mercado Ocampo, and Leonardo
M. Ocampo, in the RTC, Branch 24, Bian, Laguna, docketed as Spec. Proc. No. B3089.[5] The petition alleged that, upon the death of Vicente and Maxima,
respondents

and

their

brother

Leonardo

jointly

controlled,

managed,

and

administered the estate of their parents. Under such circumstance, Leonardo had
been receiving his share consisting of one-third (1/3) of the total income generated
from the properties of the estate. However, when Leonardo died, respondents took
possession, control and management of the properties to the exclusion of
petitioners. The petition prayed for the settlement of the estate of Vicente and
Maxima and the estate of Leonardo. It, likewise, prayed for the appointment of an
administrator to apportion, divide, and award the two estates among the lawful
heirs of the decedents.
Respondents filed their Opposition and Counter-Petition dated October 7,
2004,

[6]

contending that the petition was defective as it sought the judicial

settlement of two estates in a single proceeding. They argued that the settlement
of the estate of Leonardo was premature, the same being dependent only upon the
determination of his hereditary rights in the settlement of his parents estate. In
their counter-petition, respondents prayed that they be appointed as special joint
administrators of the estate of Vicente and Maxima.
In an Order dated March 4, 2005, [7] the RTC denied respondents opposition to
the settlement proceedings but admitted their counter-petition. The trial court also
clarified that the judicial settlement referred only to the properties of Vicente and
Maxima.

Through a Motion for Appointment of Joint Special Administrators dated

October 11, 2005,[8] respondents reiterated their prayer for appointment as special
joint administrators of the estate, and to serve as such without posting a bond.
In their Comment dated November 3, 2005,[9] petitioners argued that, since
April 2002, they had been deprived of their fair share of the income of the estate,
and that the appointment of respondents as special joint administrators would
further cause injustice to them. Thus, they prayed that, in order to avoid further
delay, letters of administration to serve as joint administrators of the subject estate
be issued to respondents and Dalisay.
In another Motion for Appointment of a Special Administrator dated
December 5, 2005,[10] petitioners nominated the Bian Rural Bank to serve as
special administrator pending resolution of the motion for the issuance of the letters
of administration.
In its June 15, 2006 Order,[11] the RTC appointed Dalisay and Renato
as special joint administrators of the estate of the deceased spouses, and required
them to post a bond of P200,000.00 each.[12]
Respondents filed a Motion for Reconsideration dated August 1, 2006 [13] of the
Order, insisting that Dalisay was incompetent and unfit to be appointed as
administrator of the estate, considering that she even failed to take care of her
husband Leonardo when he was paralyzed in 1997. They also contended that
petitioners prayer for Dalisays appointment as special administrator was already
deemed abandoned upon their nomination of the Bian Rural Bank to act as special
administrator of the estate.
In their Supplement to the Motion for Reconsideration, [14] respondents
asserted their priority in right to be appointed as administrators being the next of
kin of Vicente and Maxima, whereas Dalisay was a mere daughter-in-law of the
decedents and not even a legal heir by right of representation from her late
husband Leonardo.
Pending the resolution of the Motion for Reconsideration, petitioners filed a
Motion to Submit Inventory and Accounting dated November 20, 2006, [15] praying

that the RTC issue an order directing respondents to submit a true inventory of the
estate of the decedent spouses and to render an accounting thereof from the time
they took over the collection of the income of the estate.
Respondents filed their Comment and Manifestation dated January 15, 2007,
[16]

claiming that they could not yet be compelled to submit an inventory and render

an accounting of the income and assets of the estate inasmuch as there was still a
pending motion for reconsideration of the June 15, 2006 Order appointing Dalisay as
co-special administratrix with Renato.
In its Order dated February 16, 2007, the RTC revoked the appointment of
Dalisay as co-special administratrix, substituting her with Erlinda. The RTC took into
consideration the fact that respondents were the nearest of kin of Vicente and
Maxima. Petitioners did not contest this Order and even manifested in open court
their desire for the speedy settlement of the estate.
On April 23, 2007, or two (2) months after respondents appointment as joint
special administrators, petitioners filed a Motion for an Inventory and to Render
Account of the Estate,[17] reiterating their stance that respondents, as joint special
administrators, should be directed to submit a true inventory of the income and
assets of the estate.
Respondents then filed a Motion for Exemption to File Administrators
Bond[18] on May 22, 2007, praying that they be allowed to enter their duties as
special administrators without the need to file an administrators bond due to their
difficulty in raising the necessary amount. They alleged that, since petitioners
manifested in open court that they no longer object to the appointment of
respondents as special co-administrators, it would be to the best interest of all the
heirs that the estate be spared from incurring unnecessary expenses in paying for
the bond premiums. They also assured the RTC that they would faithfully exercise
their duties as special administrators under pain of contempt should they violate
any undertaking in the performance of the trust of their office.
In an Order dated June 29, 2007, [19] the RTC directed the parties to submit
their respective comments or oppositions to the pending incidents, i.e., petitioners

Motion for Inventory and to Render Account, and respondents Motion for Exemption
to File Administrators Bond.
Respondents filed their Comment and/or Opposition, [20] stating that they have
already filed a comment on petitioners Motion for Inventory and to Render
Account. They asserted that the RTC should, in the meantime, hold in abeyance the
resolution of this Motion, pending the resolution of their Motion for Exemption to File
Administrators Bond.
On October 15, 2007, or eight (8) months after the February 16, 2007 Order
appointing respondents as special joint administrators, petitioners filed a Motion to
Terminate or Revoke the Special Administration and to Proceed to Judicial Partition
or Appointment of Regular Administrator.[21] Petitioners contended that the special
administration was not necessary as the estate is neither vast nor complex, the
properties of the estate being identified and undisputed, and not involved in any
litigation necessitating the representation of special administrators. Petitioners,
likewise, contended that respondents had been resorting to the mode of special
administration merely to delay and prolong their deprivation of what was due
them. Petitioners cited an alleged fraudulent sale by respondents of a real property
for P2,700,000.00, which the latter represented to petitioners to have been sold
only for P1,500,000.00, and respondents alleged misrepresentation that petitioners
owed the estate for the advances to cover the hospital expenses of Leonardo, but,
in fact, were not yet paid.
Respondents filed their Opposition and Comment [22] on March 10, 2008, to
which, in turn, petitioners filed their Reply to Opposition/Comment [23] on March 17,
2008.
In its Order dated March 13, 2008, [24] the RTC granted petitioners Motion,
revoking and terminating the appointment of Renato and Erlinda as joint special
administrators, on account of their failure to comply with its Order, particularly the
posting of the required bond, and to enter their duties and responsibilities as special
administrators, i.e., the submission of an inventory of the properties and of an
income statement of the estate. The RTC also appointed Melinda as regular
administratrix, subject to the posting of a bond in the amount of P200,000.00, and
directed her to submit an inventory of the properties and an income statement of

the subject estate. The RTC likewise found that judicial partition may proceed after
Melinda had assumed her duties and responsibilities as regular administratrix.
Aggrieved, respondents filed a petition for certiorari[25] under Rule 65 of the
Rules of Court before the CA, ascribing grave abuse of discretion on the part of the
RTC in (a) declaring them to have failed to enter the office of special administration
despite lapse of reasonable time, when in truth they had not entered the office
because they were waiting for the resolution of their motion for exemption from
bond; (b) appointing Melinda as regular administratrix, a mere granddaughter of
Vicente and Maxima, instead of them who, being the surviving children of the
deceased spouses, were the next of kin; and (c) declaring them to have been
unsuitable for the trust, despite lack of hearing and evidence against them.
Petitioners filed their Comment to the Petition and Opposition to Application
for temporary restraining order and/or writ of preliminary injunction, [26] reiterating
their arguments in their Motion for the revocation of respondents appointment as
joint special administrators. Respondents filed their Reply.[27]
On December 16, 2008, the CA rendered its assailed Decision granting the
petition based on the finding that the RTC gravely abused its discretion in revoking
respondents appointment as joint special administrators without first ruling on their
motion

for exemption from bond, and

for appointing Melinda as regular

administratrix without conducting a formal hearing to determine her competency to

assume as such. According to the CA, the posting of the bond is a prerequisite
before respondents could enter their duties and responsibilities as joint special
administrators, particularly their submission of an inventory of the properties of the
estate and an income statement thereon.
Petitioners filed a Motion for Reconsideration of the Decision. [28] The CA,
however, denied it. Hence, this petition, ascribing to the CA errors of law and grave
abuse of discretion for annulling and setting aside the RTC Order dated March 13,
2008.
Our Ruling

The pertinent provisions relative to the special administration of the

decedents estate under the Rules of Court provide
Sec. 1. Appointment of special administrator. When there is
delay in granting letters testamentary or of administration by any
cause including an appeal from the allowance or disallowance of a will,
the court may appoint a special administrator to take possession and
charge of the estate of the deceased until the questions causing the
delay are decided and executors or administrators appointed. [29]
Sec. 2. Powers and duties of special administrator. Such special
administrator shall take possession and charge of goods, chattels,
rights, credits, and estate of the deceased 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. [30]
Sec. 1. Bond to be given before issuance of letters; Amount;
Conditions. Before an executor or administrator enters upon the
execution of his trust, and letters testamentary or of administration
issue, he shall give a bond, in such sum as the court directs,
conditioned as follows:
(a) To make and return to the court, within three (3) months, a
true and complete inventory of all goods, chattels, rights, credits, and
estate of the deceased which shall come to his possession or
knowledge or to the possession of any other person for him;
(b) To administer according to these rules, and, if an executor,
according to the will of the testator, all goods, chattels, rights, credits,
and estate which shall at any time come to his possession or to the
possession of any other person for him, and from the proceeds to pay
and discharge all debts, legacies, and charges on the same, or such
dividends thereon as shall be decreed by the court;
(c) To render a true and just account of his administration to the
court within one (1) year, and at any other time when required by the
court;
(d) To perform all orders of the court by him to be performed. [31]
Sec. 4. Bond of special administrator. A special administrator
before entering upon the duties of his trust shall give a bond, in such
sum as the court directs, conditioned that he will make and return a
true inventory of the goods, chattels, rights, credits, and estate of the
deceased which come to his possession or knowledge, and that he will
truly account for such as are received by him when required by the

court, and will deliver the same to the person appointed executor or
administrator, or to such other person as may be authorized to receive
them.[32]

Inasmuch as there was a disagreement as to who should be appointed as

administrator of the estate of Vicente and Maxima, the RTC, acting as a probate
court, deemed it wise to appoint joint special administrators pending the
determination of the person or persons to whom letters of administration may be
issued. The RTC was justified in doing so considering that such disagreement
caused undue delay in the issuance of letters of administration, pursuant to Section
1 of Rule 80 of the Rules of Court. Initially, the RTC, on June 15, 2006, appointed
Renato and Dalisay as joint special administrators, imposing upon each of them the
obligation to post an administrators bond of P200,000.00. However, taking into
account the arguments of respondents that Dalisay was incompetent and unfit to
assume the office of a special administratrix and that Dalisay, in effect, waived her
appointment when petitioners nominated Bian Rural Bank as special administrator,
the RTC, on February 16, 2007, revoked Dalisays appointment and substituted her
with Erlinda.
A special administrator is an officer of the court who is subject to its
supervision and control, expected to work for the best interest of the entire estate,
with a view to its smooth administration and speedy settlement. [33] When
appointed, he or she is not regarded as an agent or representative of the parties
suggesting the appointment.[34] The principal object of the appointment of a
temporary administrator is to preserve the estate until it can pass to the hands of a
person fully authorized to administer it for the benefit of creditors and heirs,
pursuant to Section 2 of Rule 80 of the Rules of Court. [35]
While the RTC considered that respondents were the nearest of kin to their
deceased parents in their appointment as joint special administrators, this is not a
mandatory requirement for the appointment. It has long been settled that the
selection or removal of special administrators is not governed by the rules regarding
the selection or removal of regular administrators. [36] The probate court may
appoint or remove special administrators based on grounds other than those
enumerated in the Rules at its discretion, such that the need to first pass upon and
resolve the issues of fitness or unfitness [37] and the application of the order of

preference under Section 6 of Rule 78, [38] as would be proper in the case of a regular
administrator, do not obtain. As long as the discretion is exercised without grave
abuse, and is based on reason, equity, justice, and legal principles, interference by
higher courts is unwarranted.[39] The appointment or removal
of special administrators, being discretionary, is thus interlocutory and may be
assailed through a petition for certiorari under Rule 65 of the Rules of Court.[40]
Granting the certiorari petition, the CA found that the RTC gravely abused its
discretion in revoking respondents appointment as joint special administrators, and
for failing to first resolve the pending Motion for Exemption to File Administrators
Bond, ratiocinating that the posting of the administrators bond is a pre-requisite to
respondents entering into the duties and responsibilities of their designated
office. This Court disagrees.
It is worthy of mention that, as early as October 11, 2005, in their Motion for
Appointment as Joint Special Administrators, respondents already prayed for their
exemption

to

post

bond

should

they

be

assigned

as

joint

special

administrators. However, the RTC effectively denied this prayer when it issued its
June 15, 2006 Order, designating Renato and Dalisay as special administrators and
enjoining them to post bond in the amount of P200,000.00 each. This denial was, in
effect, reiterated when the RTC rendered its February 16, 2007 Order substituting
Dalisay with Erlinda as special administratrix.
Undeterred by the RTCs resolve to require them to post their respective
administrators bonds, respondents filed anew a Motion for Exemption to File
Administrators Bond on May 22, 2007, positing that it would be to the best interest
of the estate of their deceased parents and all the heirs to spare the estate from
incurring the unnecessary expense of paying for their bond premiums since they
could not raise the money themselves. To note, this Motion was filed only after
petitioners filed a Motion for an Inventory and to Render Account of the Estate on
April 23, 2007. Respondents then argued that they could not enter into their duties
and responsibilities as special administrators in light of the pendency of their motion
for exemption. In other words, they could not yet submit an inventory and render
an account of the income of the estate since they had not yet posted their bonds.

Consequently,

the

RTC

revoked

respondents

appointment as special

administrators for failing to post their administrators bond and to submit an

inventory and accounting as required of them, tantamount to failing to comply with
its lawful orders. Inarguably, this was, again, a denial of respondents plea to
assume their office sans a bond. The RTC rightly did so.
Pursuant to Section 1 of Rule 81, the bond secures the performance of the
duties and obligations of an administrator namely: (1) to administer the estate and
pay the debts; (2) to perform all judicial orders; (3) to account within one (1) year
and at any other time when required by the probate court; and (4) to make an
inventory within three (3) months. More specifically, per Section 4 of the same Rule,
the bond is conditioned on the faithful execution of the administration of the
decedents estate requiring the special administrator to (1) make and return a true
inventory of the goods, chattels, rights, credits, and estate of the deceased which
come to his possession or knowledge; (2) truly account for such as received by him
when required by the court; and (3) deliver the same to the person appointed as
executor or regular administrator, or to such other person as may be authorized to
receive them.
Verily, the administration bond is for the benefit of the creditors and the
heirs, as it compels the administrator, whether regular or special, to perform the
trust reposed in, and discharge the obligations incumbent upon, him. Its object and
purpose is to safeguard the properties of the decedent, and, therefore, the bond
should not be considered as part of the necessary expenses chargeable against the
estate, not being included among the acts constituting the care, management, and
settlement of the estate. Moreover, the ability to post the bond is in the nature of a
qualification for the office of administration.[41]
Hence,

the

RTC

revoked

respondents

designation

as

joint

special

administrators, especially considering that respondents never denied that they have
been in possession, charge, and actual administration of the estate of Vicente and
Maxima since 2002 up to the present, despite the assumption of Melinda as regular
administratrix. In fact, respondents also admitted that, allegedly out of good faith
and sincerity to observe transparency, they had submitted a Statement of Cash
Distribution[42] for the period covering April 2002 to June 2006, [43] where they
indicated that Renato had received P4,241,676.00, Erlinda P4,164,526.96, and

petitioners P2,486,656.60, and that the estate had advancedP2,700,000.00 for the
hospital and funeral expenses of Leonardo. [44] The latter cash advance was
questioned by petitioners in their motion for revocation of special administration on
account

of

the

demand

letter[45] dated

June

20,

2007

of Asian Hospital and Medical Center addressed to Dalisay, stating that there still
remained unpaid hospital bills in the amount of P2,087,380.49 since January
2004. Undeniably, respondents had already been distributing the incomes or fruits
generated from the properties of the decedents estate, yet they still failed to post
their respective administrators bonds despite collection of the advances from their
supposed shares. This state of affairs continued even after a considerable lapse of
time from the appointment of Renato as a special administrator of the estate on
June 15, 2006 and from February 16, 2007 when the RTC substituted Erlinda, for
Dalisay, as special administratrix.
What is more, respondents insincerity in administering the estate was
betrayed by the Deed of Conditional Sale dated January 12, 2004 [46] discovered by
petitioners. This Deed was executed between respondents, as the only heirs of
Maxima, as vendors, thus excluding the representing heirs of Leonardo, and
Spouses Marcus Jose B. Brillantes and Amelita Catalan-Brillantes, incumbent lessors,
as vendees, over a real property situated in Bian, Laguna, and covered by Transfer
Certificate of Title No. T-332305 of the Registry of Deeds of Laguna, for a total
purchase

price

of P2,700,000.00. The

Deed

stipulated

for

payment

of P1,500,000.00 upon the signing of the contract, and the balance ofP1,200,000.00
to be paid within one (1) month from the receipt of title of the vendees. The
contract also stated that the previous contract of lease between the vendors and
the vendees shall no longer be effective; hence, the vendees were no longer
obligated to pay the monthly rentals on the property. And yet there is a purported
Deed of Absolute Sale[47] over the same realty between respondents, and including
Leonardo as represented by Dalisay, as vendors, and the same spouses, as
vendees, for a purchase price of onlyP1,500,000.00. Notably, this Deed of Absolute
Sale already had the signatures of respondents and vendee-spouses. Petitioners
claimed that respondents were coaxing Dalisay into signing the same, while
respondents said that Dalisay already got a share from this transaction in the
amount of P500,000.00. It may also be observed that the time of the execution of
this Deed of Absolute Sale, although not notarized as the Deed of Conditional Sale,
might not have been distant from the execution of the latter Deed, considering the

similar Community Tax Certificate Numbers of the parties appearing in both

contracts.
Given these circumstances, this Court finds no grave abuse of discretion on
the part of the RTC when it revoked the appointment of respondents as joint special
administrators, the removal being grounded on reason, equity, justice, and legal
principle. Indeed, even if special administrators had already been appointed, once
the probate court finds the appointees no longer entitled to its confidence, it is
justified in withdrawing the appointment and giving no valid effect thereto. [48]
On the other hand, the Court finds the RTCs designation of Melinda as
regular administratrix improper and abusive of its discretion.
In the determination of the person to be appointed as regular administrator,
the following provisions of Rule 78 of the Rules of Court, state
Sec. 1. Who are incompetent to serve as executors or
administrators. No person is competent to serve as executor or
administrator who:
(a)

Is a minor;

(b) Is not a resident of the Philippines; and

(c) Is in the opinion of the court unfit to execute the duties of the
trust by reason of drunkenness, improvidence, or want of
understanding or integrity, or by reason of conviction of an offense
involving moral turpitude.
xxxx
Sec. 6. When and to whom letters of administration granted. If
no executor is named in the will, or the executor or executors are
incompetent, refuse the trust, or fail to give bond, or a person dies
intestate, administration shall be granted:
(a) To the surviving husband or wife, as the case may be, or next
of kin, or both, in the discretion of the court, or to such person as such
surviving husband or wife, or next of kin, requests to have appointed, if
competent and willing to serve;
(b) If such surviving husband or wife, as the case may be, or
next of kin, or the person selected by them, be incompetent or

unwilling, or if the husband or widow, or next of kin, neglects for thirty

(30) days after the death of the person to apply for administration or to
request that administration be granted to some other person, it may
be granted to one or more of the principal creditors, if competent and
willing to serve;
(c) If there is no such creditor competent and willing to serve, it
may be granted to such other person as the court may select.

Further, on the matter of contest for the issuance of letters of administration,

the following provisions of Rule 79 are pertinent
Sec. 2. Contents of petition for letters of administration. A
petition for letters of administration must be filed by an interested
person and must show, so far as known to the petitioner:
(a)

The jurisdictional facts;

(b)
The names, ages, and residences of the heirs, and
the names and residences of the creditors, of the decedent;
(c)

The probable value and character of the property of the

estate;

(d)
The name of the person for whom letters of
administration are prayed.
But no defect in the petition shall render void the issuance of
letters of administration.
Sec. 3. Court to set time for hearing. Notice thereof. When a
petition for letters of administration is filed in the court having
jurisdiction, such court shall fix a time and place for hearing the
petition, and shall cause notice thereof to be given to the known heirs
and creditors of the decedent, and to any other persons believed to
have an interest in the estate, in the manner provided in Sections 3
and 4 of Rule 76.
Sec. 4. Opposition to petition for administration. Any interested
person may, by filing a written opposition, contest the petition on the
ground of the incompetency of the person for whom letters are prayed
therein, or on the ground of the contestants own right to the
administration, and may pray that letters issue to himself, or to any
competent person or persons named in the opposition.
Sec. 5. Hearing and order for letters to issue. At the hearing of
the petition, it must first be shown that notice has been given as
herein-above required, and thereafter the court shall hear the proofs of

the parties in support of their respective allegations, and if satisfied

that the decedent left no will, or that there is no competent and willing
executor, it shall order the issuance of letters of administration to the
party best entitled thereto.

Admittedly, there was no petition for letters of administration with respect to

Melinda, as the prayer for her appointment as co-administrator was embodied in the
motion for the termination of the special administration. Although there was a
hearing set for the motion on November 5, 2007, the same was canceled and reset
to February 8, 2008 due to the absence of the parties counsels. The February 8,
2008 hearing was again deferred to March 10, 2008 on account of the ongoing
renovation of the Hall of Justice. Despite the resetting, petitioners filed a
Manifestation/Motion dated February 29, 2008, [49] reiterating their prayer for
partition or for the appointment of Melinda as regular administrator and for the
revocation of the special administration. It may be mentioned that, despite the
filing by respondents of their Opposition and Comment to the motion to revoke the
special administration, the prayer for the appointment of Melinda as regular
administratrix

of

the

estate

was

not

specifically

traversed

in

the

said

pleading. Thus, the capacity, competency, and legality of Melindas appointment as

such was not properly objected to by respondents despite being the next of kin to
the decedent spouses, and was not threshed out by the RTC acting as a probate
court in accordance with the above mentioned Rules.
However, having in mind the objective of facilitating the settlement of the
estate of Vicente and Maxima, with a view to putting an end to the squabbles of the
heirs, we take into account the fact that Melinda, pursuant to the RTC Order dated
March 13, 2008, already posted the required bond of P200,000.00 on March 26,
2008, by virtue of which, Letters of Administration were issued to her the following
day, and that she filed an Inventory of the Properties of the Estate dated April 15,
2008.[50] These acts clearly manifested her intention to serve willingly as
administratrix of the decedents estate, but her appointment should be converted
into

one

of

special

administration,

pending

the

proceedings

for

regular

administration. Furthermore, since it appears that the only unpaid obligation is the
hospital bill due from Leonardos estate, which is not subject of this case, judicial
partition may then proceed with dispatch.

WHEREFORE, the

petition

is PARTIALLY

GRANTED. The

Decision

dated

December 16, 2008 and the Resolution dated April 30, 2009 of the Court of Appeals
in CA-G.R. SP No. 104683 are AFFIRMED with the MODIFICATION that the Order
dated March 13, 2008 of the Regional Trial Court, Branch 24, Bian, Laguna, with
respect to the revocation of the special administration in favor of Renato M. Ocampo
and Erlinda M. Ocampo, is REINSTATED. The appointment of Melinda Carla E.
Ocampo as regular administratrix is SET ASIDE. Melinda is designated instead as
special administratrix of the estate under the same administrators bond she had
posted. The trial court is directed to conduct with dispatch the proceedings for the
appointment of the regular administrator and, thereafter, to proceed with judicial
partition. No costs.
SECOND DIVISION

[G.R. No. 123924. December 11, 2003]

HEIRS OF MIGUEL FRANCO, namely: MODESTA, LEONIDES ROMULA, EMMA, JOHNNY,

RAMON, BERNARDO, PACITA, all surnamed FRANCO,petitioners, vs. COURT OF
APPEALS and HEIRS OF FAUSTINA CABADING, represented by VICTORIA
CABADING, respondents.
DECISION
Tinga, J.:
Before us is a Petition for Review on Certiorari seeking to overturn
a Decision rendered by the Fourteenth Division of the Court of Appeals [1] on 6
October 1995 in CA G.R. CV No. 37609. The Court of Appeals reversed the decision
of the Regional Trial Court of Dipolog City, Branch 7[2] (RTC) and ordered the
cancellation of TCT No. T-20203 issued in the name of Miguel Franco (whose heirs
are the petitioners herein), and the issuance of a new transfer certificate of title for
Lot
No.
5172-B,
PSD-64806,
in
favor
of
the
heirs
of
Quintin
Franco[3] (Quintin). Quintin was the patentee[4] of a parcel of public land, surveyed
as Lot No. 5172, Cad. 85 Ext. (subject property), located at Lianib, Dipolog,
Zamboanga del Norte, and containing an area of 70.6381 hectares. Being the
patentee, Original Certificate of Title No. P-436 covering subject property was issued
in Quintins name on 9 July 1954.
Quintin died intestate on 8 December 1967. His brother, Miguel Franco
(Miguel,), filed a Petition for Issuance of Letters of Administration on 17 October
1968, before the Court of First Instance of Zamboanga del Norte (intestate court),
praying that he be appointed as administrator of Quintins estate. This Petition,
docketed as Sp. Proc. No. R-531, was opposed by Faustina Franco Vda. De Cabading

(Faustina), the sister of the decedent, on the ground that Miguel was unfit to be
the administrator.[5] She prayed for her own appointment as administratrix instead
of Miguel. Upon motion of Miguel, the intestate court appointed him as special
administrator of the estate on 3 December 1969.[6] However, on 23 July 1971,
Faustina, then apparently joined by the other heirs of Quintin except Miguel,
[7]
moved for the latters removal as special administrator.
On 27 August 1973, the intestate court issued an Order[8] declaring inter
alia that, based on the evidence, Quintin was the absolute owner of the subject
property. This finding was subsequently used by the intestate court as one of the
grounds for granting the motion to remove Miguel as special administrator, per
the Order dated 1 September 1973. In the latter Order, the intestate court said that
since Miguel was claiming ownership over half of the subject property, his
conflicting interest rendered him incapable of rendering a true and faithful account
of the estate.[9]
Miguel filed a Motion for Reconsideration[10] of the 1 September 1973 Order,
wherein he alleged for the first time that one-half of the subject property was
transferred to him by virtue of a document entitled General Power of
Administration and executed by Quintin in 1967. It was also discovered that on the
basis of this General Power of Administration Miguel had filed a Petitiondated 2
January 1972 before Branch 1 of the Dipolog Court of First Instance, docketed as
Misc. Sp. No. 2993,[11] seeking the cancellation of OCT No. P-436. This Petition was
granted in theOrder[12] of 6 January 1973, wherein it was directed that the new
transfer certificates of title be issued, one in the name of the heirs of Quintin and
the other name of Miguel. Thus, Miguel was able to obtain Transfer Certificate of
Title No. (TCT) T-20203, covering half of the subject property, on 13 February 1973.
[13]

The other heirs asked the intestate court to cancel TCT No. T-20203 shortly after
learning about it through a Motion for Reconsideration filed in the estate
proceedings. On 4 May 1977, the intestate court issued an order [14] cancelling TCT
No. T-20203 issued in the name of Miguel, on the ground that Miguels acquisition of
the title was fraudulent. The Court of Appeals reversed theOrder in
its Decision[15] of 29 February 1984. According to the appellate court, the intestate
court had no jurisdiction to settle questions of property ownership. [16] This Court, in
a Resolution[17]dated 1 October 1984, affirmed the ruling of the Court of Appeals.
Consequently, private respondents as plaintiffs, filed before the RTC a
complaint, docketed as Civil Case No. 3847, seeking the cancellation of TCT No. T20203 in the name of Miguel, who had died in the meantime. [18] After trial, the RTC
rendered a decision dismissing the complaint. [19] The RTC found that the General
Power of Administration evinced an existing trust relation between Quintin and his
brother Miguel, with Quintin as the signatory thereof acknowledging that he was
holding half of the property titled in his name in trust for Miguel. Applying Article
1452[20] of the Civil Code, the RTC concluded that a trust had been created by force
of law in favor of Miguel to the extent of one-half of the property.
On appeal, the Court of Appeals rendered on 6 October 1995 the
challenged Decision[21] reversing the RTC decision, ordering the cancellation of TCT
No. T-20203 and directing the issuance of a new transfer certificate of title in the
name of the Heirs of Quintin. The appellate court concluded that Miguel had

succeeded in registering the property through fraud, surreptitious conduct, and bad
faith. As basis, it recited the following circumstances:
1. In his petition for the issuance of letters of administration, Miguel admitted
that the subject property in its entirety belonged to his brother, Quintin, with his
inclusion of the entire property in the list of properties left behind by Quintin,
without asserting ownership over it or any part thereof; [22]
2. The intestate court had declared that Quintin was the absolute owner of the
subject property and dismissed, for lack of sufficient evidence, the claim of Miguel
to half of the property;[23]
3. OCT No. P-436, covering the entire subject property, was registered as early
as 9 July 1954 but it was only on 13 February 1973 that Miguel Franco obtained the
TCT covering half of the property in his name. His silence for 19 years had militated
against his claim of ownership and may well be indicative of laches on his part; [24]
4. The subject property was solely declared for taxation purposes in the name
of Quintin;[25]
5. The General Power of Administration, on which Miguel anchored his claim
of ownership, had simply documented a delegated power to administer property
and could not be a source of ownership; [26]
6. The Order dated 6 January 1973 of Judge Rafael Mendoza in Misc. Sp. Proc.
No. 2993, which directed the cancellation of OCT No. P-436 was issued without
factual basis. Section 112 of the old Land Registration Act which was the apparent
basis of the Order contemplated only summary proceedings for non-controversial
erasures, alterations or amendment of entries in a certificate of title and therefore
could not be invoked if there is no unanimity among the parties, or if one of them
had posed an adverse claim or serious objection which would render the case
controversial.[27]
After their motion for reconsideration was denied by the Court of Appeals, the
petitioners brought forth the present petition. While asserting that the transfer and
registration of one-half of the subject property in the name of Miguel was not done
through fraud or in bad faith, they point out that at no time did the respondents
question the execution or genuineness of the General Power of Administration
which purportedly admits of the existence of a trust relation between Quintin and
Miguel. They also claim that the Court of Appeals failed to appreciate the
recognition which Quintin had accorded to the rights and interest of Miguel.
The findings of the RTC and the Court of Appeals are contradictory; hence, the
review of the case is in order. [28] After a thorough examination of the case, we hold
that the petition lacks merit and affirm the Decision of the Court of Appeals.
Miguels claim of ownership to half of the subject property is belied by his
statement in the Verified Petition[29] for issuance of letters administration that he
filed on 17 October 1968. Therein, he stated:
7. That said Quintin Franco left the following properties:
a A parcel of agricultural land located at Pinan, Zamboanga del Norte known as Lot
No. 5172, Dipolog Cadastre-85 Ext., Cad. Case No. 9. LRC Cad. Rec. No. 769,

(S.A. 7612), covered by Original Certificate of Title No. P-436, under Tax Dec. No.
676, assessed at P26,120.00, with an area of 706,381 sq. m. (citations omitted)
While he explicitly declared that the subject property belonged to Quintin, at the
same time he was remarkably silent about his claim that he acquired one-half
thereof during the lifetime of Quintin. He asserted his claim to the subject property
quite belatedly, i.e., four years after he stated under oath and in a court pleading
that it belonged in its entirety to his brother. Thus, the statement and the
accompanying silence may be appreciated in more than one context. It is a
declaration against interest[30] and a judicial admission combined.
A declaration against interest is the best evidence which affords the greatest
certainty of the facts in dispute.[31] In the same vein, a judicial admission binds the
person who makes the same, and absent any showing that this was made thru
palpable mistake, no amount of rationalization can offset it. [32]
In the case at bar, there is no showing of palpable mistake on the part of Miguel
when he made the admission. In his Motion to Admit Amended Petition, he merely
alleged inadvertence in failing to state his claim of co-ownership. Yet no evidence
was adduced to prove the alleged inadvertence. And even assuming there was
indeed such a mistake, Miguel had ample opportunity to make the rectification in
the initial stages of the intestate proceedings.
Bearing on the weight of the combined declaration against interest and judicial
admission is the assumption, arising from his duty as special administrator of the
estate of Quintin, that he had full knowledge of the status and extent of the
property holdings of the decedent.[33] The following observation of the Court of
Appeals is worth citing:
This tolerant silence militates against Miguel Francos claim of coownership. Juxtaposed with his previous judicial admission of Quintin Francos
absolute ownership of Lot No. 5172, it is not difficult to see that the act of Miguel
Franco in registering one-half of the property in his name was an insidious and
surreptitious, if not belated, maneuver to deprive the legal heirs of Quintin Franco of
their lawful share and interest in the property. As a matter of fact, Miguel Franco
may well be charged with laches.[34]
The statement under oath of Miguel was made in the intestate proceedings. It
was presented in evidence and utilized as such in Civil Case No. 3847. [35] Thus from
the substantive and procedural standpoints alike, the statement being both a
declaration against interest and judicial admission should be accorded the full
evidentiary value it deserves.
Another important point, albeit simply corollary. The intestate court in
its Order[36]dated 27 August 1973 declared that Quintin was the absolute owner of
the property and accordingly denied Miguels claim of ownership over half the
subject property. The Order was apparently issued for the purpose of determining
which properties should be included for the inventory of the estate of Miguel. While
the intestate court does not have the authority to rule with finality on questions of
ownership over the property of the decedent, it is not precluded from making a
provisional determination over such questions for purposes relevant to the
settlement of the estate, such as ruling whether or not to include properties in the

inventory of the estate. [37] And yet, at no time did Miguel file a motion for the
reconsideration of the 27 August 1973 Order of the intestate court which denied
Miguels claim of ownership. It was the 1 September 1973 Order of the intestate
court, by virtue of which Miguel was removed as special administrator, that he
contested.[38] While the 27 August 1973 Order is a provisional determination of
ownership over the subject property, yet conformably to ordinary experience any
prudent claimant is expected to dispute such an order which rejects his claim of
ownership. Miguels inaction unmistakably bolsters the unshakeable weight that
should be accorded the statement as a declaration against interest and a judicial
admission.
Now, the issue viewed from the perspective of the Torrens system of
registration. Under the Land Registration Act, title to the property covered by
a Torrens title becomes indefeasible after the expiration of one year from the entry
of the decree of registration. The decree is incontrovertible and becomes binding on
all persons whether or not they were notified of, or participated in, thein
rem registration process.[39] OCT No. P-436, covering the subject property in its
entirety, was registered as early as 9 July 1954 in the name of
Quintin. A Torrens title is the best evidence of ownership of registered land.
[40]
Whatever claim of ownership Miguel had raised should have been weighed
against Quintins title. Unfortunately, the Dipolog RTC, Branch 1 apparently ignored
this fundamental principle when on 6 January 1973 it issued the Order directing the
registration of half of the subject property in the name of Miguel.
The undue haste which characterized Miguels success in obtaining judicial
registration of his ownership over half of the subject property is noticeable. His
petition seeking the issuance of a title over his purported half of the property was
dated 2 January 1973, and yet incredibly, it was granted only four days later, or on 6
January 1973. As the Court of Appeals correctly noted:
The order dated January 6, 1973 of Judge Rafael T. Mendoza in Misc. Sp. Proc. No.
2993, directing the Register of Deeds to cancel OCT No. P-436 and to issue new
separate transfer certificates of title for Lot No. 5172-A and Lot No. 5172-B to the
Heirs of Quintin Franco and Miguel Franco, respectively, was therefore without
factual basis. Besides, it would appear that the order was based on Section 112 of
the Land Registration Act (Act No. 496) which contemplates summary proceeding
for non-controversial erasures, alterations, or amendments of entries in a certificate
of title. . . . [41]
It is clear from reading Section 112 of the old Land Registration Act [42] that the
same may be utilized only under limited circumstances. [43] Proceedings under
Section 112 are summary in nature, contemplating corrections or insertions of
mistakes which are only clerical but certainly not controversial issues. [44] More
importantly, resort to the procedure laid down in Section 112 would be available
only if there is a unanimity among the parties, or there is no adverse claim or
serious objection on the part of any party in interest. [45] Such unanimity among the
parties has been held to mean the absence of serious controversy between the
parties in interest as to the title of the party seeking relief under
said section.[46] Clearly, there was no such unanimity among the parties in interest,
namely, all the heirs of Quintin. The surreptitious registration by Miguel of the
property had worked to the prejudice of the other heirs of Quintin.

There is no document in existence whereby the ownership of any portion of the

subject property was conveyed by Quintin to Miguel. The General Power of
Administration does not suffice in that regard. Indeed, it does not contain any
language that operates as a conveyance of the subject property.
The RTC ruling, from which petitioners draw heavy support, maintained that
Miguel owned half of the property because the document entitled General Power of
Administration states that it admits of an existing trust relation between the
signatory Quintin Franco on the one hand, and Miguel Franco on the other
hand.[47] The RTC cited Article 1452 of the Civil Code which reads, thus:
ART. 1452. If two or more persons agree to purchase property and by common
consent the legal title is taken in the name of one of them for the benefit of all, a
trust is created by force of law in favor of the others in proportion to the interest of
each.
Article 1452 presupposes the concurrence of two requisites before an trust can
be created, namely: that two or more persons agree to purchase a property, and
that they consent that one should take the title in his name for everyones benefit.
[48]
The aforementioned provision is not applicable in this case, as it clearly speaks
of an instance when the property is acquired through a joint purchase by two or
more persons. That circumstance is not present in this case since the subject
property was acquired through Quintins application for a patent. There is no proof
that Miguel had joined Quintin in acquiring the property.
Lastly, as noted by the Court of Appeals, while tax receipts and declarations and
receipts and declarations of ownership for taxation purposes are not, in themselves,
incontrovertible evidence of ownership, they constitute at least proof that the holder
has a claim of title over the property. [49] The subject property had been consistently
declared for taxation purposes in the name of Quintin, and this fact taken in
conjunction with the other circumstances inexorably lead to the conclusion that
Miguels claim of ownership cannot be sustained.
Thus, even without having to inquire into the authenticity and due execution of
the General Power of Administration, it is safe to conclude that Miguel did not
have any ownership rights over any portion of the subject property and that the
registration of half of the property in his name was baseless and afflicted with fraud.
WHEREFORE, the above premises considered, the petition is DISMISSED for lack
of merit and the decision of the Court of appeals is AFFIRMED. Costs against
petitioners.
FIRST DIVISION
[G.R. No. 144881. October 16, 2003]
BETTY T. CHUA, JENNIFER T. CHUA-LOCSIN, BENISON T. CHUA, and BALDWIN T.
CHUA, petitioners, vs. ABSOLUTE MANAGEMENT CORPORATION and COURT
OF APPEALS, respondents.
DECISION

CARPIO, J.:
The Case
This is a petition for review on certiorari[1] to annul the Decision[2] dated 9 May
2000 of the Court of Appeals in CA-G.R. SP No. 57421, as well as the Resolution
dated 5 September 2000 denying the motion for reconsideration. The Court of
Appeals set aside the Order [3] dated 7 February 2000 issued by Branch 112 of the
Regional Trial Court of Pasay City which denied the petitioners Motion for the
Examination of the Administratrix and Others (Motion).
Antecedent Facts
The facts are not in dispute. As found by the Court of Appeals, the essential
antecedents are as follows:
Sometime in 1999, upon a petition for letters of administration filed by [herein
petitioners] Jennifer T. Chua-Locsin, Benison T. Chua, and Baldwin T. Chua with the
Regional Trial Court, Branch 112, Pasay City, presided by [Judge Manuel P. Dumatol],
xxx Betty T. Chua was appointed as administratrix of the intestate estate of the
deceased Jose L. Chua. Thereafter, she submitted to the trial court an inventory of
all the real and personal properties of the deceased.
One of the creditors of the deceased, [herein respondent] Absolute Management
Corporation, filed a claim on [sic] the estate in the amount of P63,699,437.74. As
administratrix, Betty T. Chua tentatively accepted said amount as correct, with a
statement that it shall be reduced or adjusted as additional evidences [sic] may
warrant.
In the interim, Absolute Management Corporation noticed that the deceaseds
shares of stocks with Ayala Sales Corporation and Ayala Construction Supply, Inc.
were not included in the inventory of assets. As a consequence, it filed a motion to
require Betty T. Chua to explain why she did not report these shares of stocks in the
inventory. Through a reply, Betty T. Chua alleged that these shares had already
been assigned and transferred to other parties prior to the death of her husband,
Jose L. Chua. She attached to her reply the deeds of assignment which allegedly
constituted proofs of transfer. Judge Dumatol accepted the explanation as
meritorious.
Absolute Management Corporation, suspecting that the documents attached to
Betty T. Chuas reply were spurious and simulated, filed a motion for the
examination of the supposed transferees. xxx It premised its motion on Section 6,
Rule 87, Revised Rules of Court, infra, which states that when a person is suspected
of having concealed, embezzled, or conveyed away any of the properties of the
deceased, a creditor may file a complaint with the trial court and the trial court may
cite the suspected person to appear before it and be examined under oath on the

matter of such complaint. Private respondents opposed the motion on the ground
that this provision bears no application to the case. On February 7, 2000, Judge
Dumatol issued the assailed order. [4]
The Ruling of the Trial Court
The trial courts order denying Absolute Management Corporations (Absolute)
Motion reads:
This resolves the undated Motion for the Examination of the Administratrix and
Others, filed on January 11, 2000 by claimant Absolute Management Corporation, to
which petitioners, through counsel filed their opposition, and claimant Absolute
Management Corporation in turn filed its reply.
Finding no merit in the motion filed by claimant Absolute Management Corporation,
as it in effect seeks to engage in a fishing expedition for evidence to be used
against the administratrix and others whom it seeks to examine, it being the
consensus of the Court that the Rules of Procedure does [sic] not allow the fishing of
evidence to use [sic] against the adverse party, claimant Absolute Management
Corporations motion is hereby DENIED.
SO ORDERED.[5]
Aggrieved, Absolute filed a petition for certiorari and mandamus with the Court
of Appeals.
The Ruling of the Court of Appeals
In its petition for certiorari and mandamus before the Court of Appeals, Absolute
claimed that the trial court committed grave abuse of discretion in denying its
Motion and in failing to act on its claim. Absolute alleged that the trial court
deprived it of the right to show that the documents presented by petitioners were
fictitious to the prejudice of Absolute.
During the hearing[6] conducted on 9 August 2000 before the members of the
Special Sixth Division of the Court of Appeals, counsel for Absolute presented the
following evidence to support its assertion that the transfers of the shares were
spurious:
1.

Exhibit A[7] - Certification from the Office of the Clerk of Court of the
Regional Trial Court of Pasay City that Atty. Hilarion A.D. Maagad (the notary
public who notarized the questioned Secretarys Certificate [8] and Deeds of
Assignment of Shares of Stock [9]) is not listed in the Roll of Notaries Public for
the City of Pasay particularly for the period of 1993-1994, 1994-1995, 19981999 and 1999-2000.

2.

Exhibit B[10] Certification from the Clerk of Court of the Regional Trial
Court of Makati City that the questioned Secretarys Certificate [11] was not
included in the Notarial Report of Atty. Lope M. Velasco for the years 19981999.

3.

Exhibits B-1, B-2, and B-3 [12] Certification from the Clerk of Court of
the Regional Trial Court of Makati City that the questioned Deeds of
Assignment of Shares of Stock [13] were not included in the Notarial Report of
Atty. Lope M. Velasco for the years 1998-1999.

In setting aside the trial courts order, the Court of Appeals pointed out that the
presentation of the deeds of assignment executed by the decedent in petitioners
favor does not automatically negate the existence of concealment. The appellate
court stated that it is a common occurrence in estate proceedings for heirs to
execute simulated deeds of transfer which conceal and place properties of the
decedent beyond the reach of creditors.
The dispositive portion of the decision of the Court of Appeals reads:
WHEREFORE, the petition is GRANTED. The order dated February 7, 2000 of
respondent Judge Manuel P. Dumatol is hereby SET ASIDE. He is hereby ORDERED
to give due course to petitioners Motion for the Examination of the Administratrix
and Others and thereafter, to dispose of the claim accordingly.
SO ORDERED.[14]
Hence, this petition.
Issue
Petitioners would like this Court to rule whether Section 6, Rule 87 of the Rules
of Court, which is the principal basis of Absolutes Motion, is mandatory or merely
directory on the trial court. This perspective misses the point. The issue in this case
is whether the Court of Appeals correctly ordered the trial court to give due course
to the Motion for Examination.
Petitioners also point out that the Court of Appeals should have dismissed
Absolutes petition because of these procedural infirmities:
1.

Counsel for Absolute, not the proper officers of Absolute, filed the
Certification against Forum Shopping;

2.

Absolute attached only a duplicate original copy of the challenged order of

the trial court to the petition submitted to the Court of Appeals; and

3.

No proper proof of service accompanied the petition submitted to the Court

of Appeals.[15]
The Ruling of the Court
The petition has no merit.
Whether the Court of Appeals correctly ordered the Trial Court
to give due course to Absolutes Motion for Examination
Section 6, Rule 87 of the Rules of Court provides:

SEC. 6. Proceedings when property concealed, embezzled, or fraudulently

conveyed. If an executor or administrator, heir, legatee, creditor, or other
individual interested in the estate of the deceased, complains to the court having
jurisdiction of the estate that a person is suspected of having concealed,
embezzled, or conveyed away any of the money, goods, or chattels of the
deceased, or that such person has in his possession or has knowledge of any deed,
conveyance, bond, contract, or other writing which contains evidence of or tends to
disclose the right, title, interest, or claim of the deceased, the court may cite such
suspected person to appear before it and may examine him on oath on the matter
of such complaint; and if the person so cited refuses to appear, or to answer on
such examination or such interrogatories as are put to him, the court may punish
him for contempt, and may commit him to prison until he submits to the order of
the court. The interrogatories put to any such person, and his answers thereto,
shall be in writing and shall be filed in the clerks office.
Section 6 of Rule 87 seeks to secure evidence from persons suspected of having
possession or knowledge of the properties left by a deceased person, or of having
concealed, embezzled or conveyed any of the properties of the deceased. [16]
The court which acquires jurisdiction over the properties of a deceased person
through the filing of the corresponding proceedings has supervision and control over
these properties. The trial court has the inherent duty to see to it that the inventory
of the administrator lists all the properties, rights and credits which the law requires
the administrator to include in his inventory. In compliance with this duty, the court
also has the inherent power to determine what properties, rights and credits of the
deceased the administrator should include or exclude in the inventory. An heir or
person interested in the properties of a deceased may call the courts attention that
certain properties, rights or credits are left out from the inventory. In such a case, it
is likewise the courts duty to hear the observations of such party. The court has the
power to determine if such observations deserve attention and if such properties
belong prima facie to the estate.[17]

However, in such proceedings the trial court has no authority to decide whether
the properties, real or personal, belong to the estate or to the persons examined. If
after such examination there is good reason to believe that the person examined is
keeping properties belonging to the estate, then the administrator should file an
ordinary action in court to recover the same. [18]Inclusion of certain shares of stock
by the administrator in the inventory does not automatically deprive the assignees
of their shares. They have a right to be heard on the question of ownership, when
that property is properly presented to the court. [19]
In the present case, some of the transferees of the shares of stock do not
appear to be heirs of the decedent. Neither do they appear to be parties to the
intestate proceedings.[20] Third persons to whom the decedents assets had been
conveyed may be cited to appear in court and examined under oath as to how they
came into possession of the decedents assets. In case of fraudulent conveyances,
a separate action is necessary to recover these assets. [21]
Taken in this light, there is no reason why the trial court should disallow the
examination of the alleged transferees of the shares of stocks. This is only for
purposes of eliciting information or securing evidence from persons suspected of
concealing or conveying some of the decedents properties to the prejudice of
creditors. Petitioners admission that these persons are the decedents assignees
does not automatically negate concealment of the decedents assets on their
part. The assignment might be simulated so as to place the shares beyond the
reach of creditors. In case the shares are eventually included in the estate, this
inventory is merely provisional and is not determinative of the issue of
ownership. A separate action is necessary for determination of ownership and
recovery of possession. [22]
Whether the Petition submitted to the Court of Appeals suffered
from procedural infirmities which merit its dismissal
The petition filed before the Court of Appeals contained a certificate of nonforum shopping executed by counsel and not by the authorized officer of Absolute.
However, the subsequent filing of an affidavit of non-forum shopping signed by the
corporate director cured this defect. In Maricalum Mining Corp. v. National Labor
Relations Commission,[23] the Court held that a slight delay in the filing of an
affidavit of non-forum shopping should not defeat the action. A liberal
interpretation of the rules is more in keeping with the objective to secure a just,
speedy and inexpensive disposition of every action and proceeding. As held
in Loyola v. Court of Appeals,[24] substantial compliance is sufficient. While
submission of the certificate of non-forum shopping is mandatory, nonetheless we
must not interpret the requirement too literally to defeat the objective of preventing
the undesirable practice of forum shopping. [25] Technical rules of procedure should
be used to promote, not frustrate, justice. While the swift unclogging of court

dockets is a laudable objective, the granting of substantial justice is an even more

urgent ideal.[26]
Petitioners claim that the attachment of a mere duplicate original copy of the
assailed order violates the express mandate of Section 1, Rule 65, of the 1997 Rules
of Civil Procedure. This rule states that the petition shall be accompanied by a
certified true copy of the judgment, order, or resolution subject thereof. However,
under Section 3, Rule 46 of the 1997 Rules of Civil Procedure, as amended by
Circular No. 39-98, either a certified true copy or a duplicate original copy may be
attached to the petition.
The affidavit of service executed by petitioners counsel stating that he served a
copy of the petition by registered mail to respondents with the corresponding
registry receipts constitutes sufficient proof of service. [27] This complies with Section
13, Rule 13 of the 1997 Rules of Civil Procedure.
Lastly, petitioners quote Arcega and Miranda v. Pecson and Arcega[28] to
question the propriety of filing a petition for certiorari before the Court of Appeals:
Without deciding whether the proceeding thus conducted complies with the
provision of Section 6 of Rule 88 [Section 6, Rule 87 under the 1997 Rules of Civil
Procedure], which says that the court may cite such suspected person to appear
before it and may examine him on oath on the matter of such complaint, and
without deciding whether the duty of the judge to make the examination is or not
mandatory, we are satisfied thatcertiorari is not an appropriate remedy under the
aforecited rule. (Emphasis supplied)
The facts in Arcega are not on all fours with the facts in the instant
case. In Arcega, the judge granted the examination but only with respect to three
of the several lots involved. In the present case, there was an absolute refusal by
the trial court to conduct an examination on the ground that it would constitute a
fishing
expedition
of
evidence
that
could
be
used
against
the
administratrix. In Arcega, the trial court issued an order in favor of the person
suspected of having concealed properties of the estate and against the special
administratrix and the judicial receiver. The special administratrix had the remedy
of filing another case to recover such properties in the name of thee state. [29]
In the present case, Absolute as a creditor of the decedent filed the petition
after the trial court denied its Motion for examination. Absolute questioned the
ruling in favor of the administratrix and heirs of the decedent. Although as a
creditor, Absolute does have the remedy of filing another case to recover such
properties,[30] its Motion for examination was intended merely to investigate and
take testimony in preparation for an independent action. [31] Aside from the
administratrix and the heirs of the decedent, Absolute also sought to examine the
supposed assignees of the decedents shares, who are third persons with respect to
the probate proceedings. The Motion was a preparatory move sanctioned by the

Rules of Court. The denial of Absolutes Motion was an interlocutory order not
subject to appeal. The order of denial may, however, be challenged before a
superior court through a petition for certiorari under Rule 65.
WHEREFORE, we DENY the petition for lack of merit. The Decision of the Court
of Appeals in CA-G.R. SP No. 57421 dated 9 May 2000 as well as the Resolution
dated 5 September 2000 denying the motion for reconsideration is AFFIRMED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

A.M. No. 2430 August 30, 1990

MAURO P. MANANQUIL, complainant,
vs.
ATTY. CRISOSTOMO C. VILLEGAS, respondent.
Geminiano M. Eleccion for complainant.
RESOLUTION

CORTES, J.:
In a verified complaint for disbarment dated July 5, 1982, Mauro P. Mananquil
charged respondent Atty. Crisostomo C. Villegas with gross misconduct or
malpractice committed while acting as counsel of record of one Felix Leong in the
latter's capacity as administrator of the Testate Estate of the late Felomina Zerna in
Special Proceedings No. 460 before then Court of First Instance of Negros
Occidental. The complainant was appointed special administrator after Felix Leong
died.
In compliance with a resolution of this Court, respondent filed his comment to the
complaint on January 20, 1983. After complainant filed his reply, the Court resolved
to refer the case to the Solicitor General for investigation, report and
recommendation.
In a hearing conducted on May 15, 1985 by the investigating officer assigned to the
case, counsel for the complainant proposed that the case be considered on the
basis of position papers and memoranda to be submitted by the parties.
Respondent agreed. Thus, the investigating officer required the parties to submit
their respective position papers and memoranda, with the understanding that with

or without the memoranda, the case will be deemed submitted for resolution after
the expiration of 30 days. In compliance, both parties submitted their respective
position papers; but no memorandum was filed by either party. Thereafter, the case
was deemed submitted.
In the pleadings submitted before the Court and the Office of the Solicitor General,
complainant alleges that over a period of 20 years, respondent allowed lease
contracts to be executed between his client Felix Leong and a partnership HIJOS DE
JOSE VILLEGAS, of which respondent is one of the partners, covering several parcels
of land of the estate, i.e. Lots Nos. 1124, 1228, 2221, 2402, 3939, 3942 and 3957 of
the Tanjay Cadastre, under iniquitous terms and conditions. Moreover, complainant
charges that these contracts were made without the approval of the probate court
and in violation of Articles 1491 and 1646 of the new Civil Code.
On the basis of the pleadings submitted by the parties, and other pertinent records
of the investigation, the Solicitor General submitted his report dated February 21,
1990, finding that respondent committed a breach in the performance of his duties
as counsel of administrator Felix Leong when he allowed the renewal of contracts of
lease for properties involved in the testate proceedings to be undertaken in favor of
HIJOS DE JOSE VILLEGAS without notifying and securing the approval of the probate
court. However, the Solicitor General opined that there was no sufficient evidence to
warrant a finding that respondent had allowed the properties to be leased in favor
of his family partnership at a very low rental or in violation of Articles 1491 and
1646 of the new Civil Code. Thus, the Solicitor General recommended that
respondent be suspended from the practice of law for a period of THREE (3) months
with a warning that future misconduct on respondent's part will be more severely
dealt with [Report and Recommendation of the Solicitor General, pp. 1-10; Rollo, pp.
37-46. Also, Complaint of the Solicitor General, pp. 1-3; Rollo, pp. 47-49].
As gleaned from the record of the case and the report and recommendation of the
Solicitor General, the following facts are uncontroverted:
That as early as March 21, 1961, respondent was retained as counsel
of record for Felix Leong, one of the heirs of the late Felomina Zerna,
who was appointed as administrator of the Testate Estate of the
Felomina Zerna in Special No. 460 on May 22, 1961;
That, a lease contract dated August 13, 1963 was executed between
Felix Leong and the "Heirs of Jose Villegas" represented by
respondent's brother-in-law Marcelo Pastrano involving, among others,
sugar lands of the estate designated as Lot Nos. 1124, 1228, 2221,
2402, 3939, 3942 and 3957 of the Tanjay Cadastre;
That Felix Leong was designated therein as administrator and "owner,
by testamentary disposition, of 5/6 of all said parcels of land";
That, the lifetime of the lease contract was FOUR (4) sugar crop years,
with a yearly rental of TEN PERCENT (10%) of the value of the sugar
produced from the leased parcels of land;

That, on April 20, 1965, the formal partnership of HIJOS DE JOSE

VILLEGAS was formed amongst the heirs of Jose Villegas, of which
respondent was a member;
That, on October 18, 1965, another lease contract was executed
between Felix Leong and the partnership HIJOS DE JOSE VILLEGAS,
containing basically the same terms and conditions as the first
contract, with Marcelo Pastrano signing once again as representative of
the lessee;
That, on March 14, 1968, after the demise of Marcelo Pastrano,
respondent was appointed manager of HIJOS DE JOSE VILLEGAS by the
majority of partners;
That, renewals of the lease contract were executed between Felix
Leong and HIJOS DE JOSE VILLEGAS on January 13, 1975 and on
December 4, 1978, with respondent signing therein as representative
of the lessee; and,
That, in the later part of 1980, respondent was replaced by his nephew
Geronimo H. Villegas as manager of the family partnership.
Under the above circumstances, the Court finds absolutely no merit to
complainant's charge, and the Solicitor General's finding, that respondent
committed acts of misconduct in failing to secure the approval of the court in
Special Proceedings No. 460 to the various lease contracts executed between Felix
Leong and respondent's family partnership.
Pursuant to Section 3 of Rule 84 of the Revised Rules of Court, a judicial executor or
administrator has the right to the possession and management of the real as well as
the personal estate of the deceased so long as it is necessary for the payment of
the debts and the expenses of administration. He may, therefore, exercise acts of
administration without special authority from the court having jurisdiction of the
estate. For instance, it has long been settled that an administrator has the power to
enter into lease contracts involving the properties of the estate even without prior
judicial authority and approval [See Ferraris v. Rodas, 65 Phil. 732 (1938); Jocson de
Hilado v. Nava, 69 Phil. 1 (1939); San Diego, Sr. v. Hombre, G.R No. L-19265, May
29, 1964, 11 SCRA 165].
Thus, considering that administrator Felix Leong was not required under the law and
prevailing jurisprudence to seek prior authority from the probate court in order to
validly lease real properties of the estate, respondent, as counsel of Felix Leong,
cannot be taken to task for failing to notify the probate court of the various lease
contracts involved herein and to secure its judicial approval thereto.
Nevertheless, contrary to the opinion of the Solicitor General, the Court finds
sufficient evidence to hold respondent subject to disciplinary sanction for having, as
counsel of record for the administrator in Special Proceedings No. 460, participated
in the execution in 1975 and 1978 of renewals of the lease agreement involving

properties of the estate in favor of the partnership HIJOS DE JOSE VILLEGAS, of

which respondent is a member and in 1968 was appointed managing partner.
By virtue of Article 1646 of the new Civil Code, the persons referred to in Article
1491 are prohibited from leasing, either in person or through the mediation of
another, the properties or things mentioned in that article, to wit:
xxx xxx xxx
(1) The guardian, the property of the person or persons who may be
under his guardianship;
(2) Agents, the property whose administration or sale may have been
intrusted to them, unless the consent of the principal have been given;
(3) Executors and administrators, the property of the estate under
administration
(4) Public officers and employees, the property of the State or of any
subdivision thereof, or of any government owned or controlled
corporation, or institution, the administration of which has been
intrusted to them; this provision shall apply to judges and government
experts who, in any manner whatsoever, take part in the sale;
(5) Justices, judges, prosecuting attorneys, clerks of superior and
inferior courts, and other officers and employees connected with the
administration of justice, the property or rights in litigation or levied
upon on execution before the court within whose jurisdiction or
territory they exercise their respective functions; this prohibition
includes the act of acquiring by assignment and shall apply to lawyers,
with respect to the property and rights which may be the object of any
litigation in which they may take part by virtue of their profession.
(6) Any others specially disqualified by law
xxx xxx xxx
[Article 1491 of the new Civil Code; Emphasis supplied.]
The above disqualification imposed on public and judicial officers and lawyers is
grounded on public policy considerations which disallow the transactions entered
into by them, whether directly or indirectly, in view of the fiduciary relationship
involved, or the peculiar control exercised by these individuals over the properties
or rights covered [See Rubias v. Batiller, G.R. No. L-35702, May 29, 1973, 51 SCRA
120; Maharlika Publishing Corporation v. Tagle, G.R. No. 65594, July 9, 1986, 142
SCRA 553; Fornilda v. The Branch 164, RTC Fourth Judicial Region, Pasig, G.R. No.
72306, October 5, 1988, 166 SCRA 281 and January 24, 1989, 169 SCRA 351].

Thus, even if the parties designated as lessees in the assailed lease contracts were
the "Heirs of Jose Villegas" and the partnership HIJOS DE JOSE VILLEGAS, and
respondent signed merely as an agent of the latter, the Court rules that the lease
contracts are covered by the prohibition against any acquisition or lease by a lawyer
of properties involved in litigation in which he takes part. To rule otherwise would be
to lend a stamp of judicial approval on an arrangement which, in effect, circumvents
that which is directly prohibited by law. For, piercing through the legal fiction of
separate juridical personality, the Court cannot ignore the obvious implication that
respondent as one of the heirs of Jose Villegas and partner, later manager of, in
HIJOS DE JOSE VILLEGAS stands to benefit from the contractual relationship created
between his client Felix Leong and his family partnership over properties involved in
the ongoing testate proceedings.
In his defense, respondent claims that he was neither aware of, nor participated in,
the execution of the original lease contract entered into between his client and his
family partnership, which was then represented by his brother-in-law Marcelo
Pastrano. And although he admits that he participated in the execution of
subsequent renewals of the lease contract as managing partner of HIJOS DE JOSE
VILLEGAS, he argues that he acted in good faith considering that the heirs of
Filomena Zerna consented or acquiesced to the terms and conditions stipulated in
the original lease contract. He further contends that pursuant to the ruling of the
Court in Tuason v.Tuason [88 Phil. 428 (1951)] the renewal contracts do not fall
within the prohibition of Articles 1491 and 1646 since he signed the same as a mere
agent of the partnership.
Respondent's contentions do not provide sufficient basis to escape disciplinary
action from this Court.
It taxes this Courts imagination that respondent disclaims any knowledge in the
execution of the original lease contract between his client and his family partnership
represented by his brother-in-law. Be that as it may, it cannot be denied that
respondent himself had knowledge of and allowed the subsequent renewals of the
lease contract. In fact, he actively participated in the lease contracts dated January
13, 1975 and December 4, 1978 by signing on behalf of the lessee HIJOS DE JOSE
VILLEGAS.
Moreover, the claim that the heirs of Filomena Zerna have acquiesced and
consented to the assailed lease contracts does not militate against respondent's
liability under the rules of professional ethics. The prohibition referred to in Articles
1491 and 1646 of the new Civil Code, as far as lawyers are concerned, is intended
to curtail any undue influence of the lawyer upon his client on account of his
fiduciary and confidential association [Sotto v. Samson, G.R. No. L-16917, July 31,
1962, 5 SCRA 733]. Thus, the law makes the prohibition absolute and permanent
[Rubias v. Batiller, supra]. And in view of
Canon
1 of the new Code of Professional Responsibility and Sections 3 & 27 of Rule 138 of
the Revised Rules of Court, whereby lawyers are duty-bound to obey and uphold the
laws of the land, participation in the execution of the prohibited contracts such as
those referred to in Articles 1491 and 1646 of the new Civil Code has been held to

constitute breach of professional ethics on the part of the lawyer for which
disciplinary action may be brought against him [See Bautista v. Gonzalez, Adm.
Matter No. 1625, February 12, 1990). Accordingly, the Court must reiterate the rule
that the claim of good faith is no defense to a lawyer who has failed to adhere
faithfully to the legal disqualifications imposed upon him, designed to protect the
interests of his client [See In re Ruste, 70 Phil. 243 (1940); Also, Severino v.
Severino, 44 Phil. 343 (1923)].
Neither is there merit in respondent's reliance on the case of Tuason
v. Tuason [supra.] It cannot be inferred from the statements made by the Court in
that case that contracts of sale or lease where the vendee or lessee is a
partnership, of which a lawyer is a member, over a property involved in a litigation
in which he takes part by virtue of his profession, are not covered by the prohibition
under Articles 1491 and 1646.
However, the Court sustains the Solicitor General's holding that there is no sufficient
evidence on record to warrant a finding that respondent allowed the properties of
the estate of Filomena Zerna involved herein to be leased to his family partnership
at very low rental payments. At any rate, it is a matter for the court presiding over
Special Proceedings No. 460 to determine whether or not the agreed rental
payments made by respondent's family partnership is reasonable compensation for
the use and occupancy of the estate properties.
Considering thus the nature of the acts of misconduct committed by respondent,
and the facts and circumstances of the case, the Court finds sufficient grounds to
suspend respondent from the practice of law for a period of three (3) months.
WHEREFORE, finding that respondent Atty. Crisostomo C. Villegas committed acts of
gross misconduct, the Court Resolved to SUSPEND respondent from the practice of
law for four (4) months effective from the date of his receipt of this Resolution, with
a warning that future misconduct on respondent's part will be more severely dealt
with. Let copies of this Resolution be circulated to all courts of the country for their
information and guidance, and spread in the personal record of Atty. Villegas.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-50277 February 14, 1980
TESTATE ESTATE OF THE LATE DOMINADOR TUMANG, MAGDALENA A.
TUMANG, administratrix-appellee,
vs.
GUIA T. LAGUIO AND HER MINOR CHILDREN, movants-appellants.

ANTONIO, J.:
This case was forwarded to this Court by the Court of Appeals on the ground that it
involves purely legal issues. The factual background, as found by the Court of
Appeals, is as follows:
In Special Proceeding No. 1953 involving the estate of the late Dominador Tumang
and pending before the Court of First Instance of Pampanga, the widow of the
deceased, namely Magdalena A. Tumang, administratrix and executrix of the will,
filed a petition to declare the testate proceedings definitely terminated and closed
with respect to herself and two of her children Melba Tumang Ticzon and Nestor
A. Tumang. The petition was premised on the fact that the aforesaid heirs had
already acknowledged receipt of the properties adjudicated to them, and in order
for such properties to be transferred in their names, there was need for an order of
the court declaring the proceedings closed with respect to the aforesaid heirs. The
petition was opposed by appenee's daughter, Guia T. Laguio and her children on the
ground that appellee, as administratrix and executrix, had not yet delivered all
properties adjudicated to them. Moreover, the oppositors contended that there
could be no partial termination of the proceedings. Thereafter, the administratrix
withdrew the aforementioned petition.
During the hearing of the motion to withdraw petition, Magdalena Tumang, as
required by the court, filed a pleading captioned "Compliance", alleging that as
shown by the attached receipts issued by the BIR, the estate and inheritance taxes
had been fully paid; that as certified by the Deputy Clerk of Court, no claim has
been presented that has not already delivered all the properties and dividends of
the shares of stock adjudicated to her and her minor children since the approval of
the original and amendatory projects of partition; and that with such admission, the
court no longer has jurisdiction to entertain the motion under consideration.
Resolving the foregoing, the court a quo issued the first questioned Order on
February 5, 1971, stating in part, the following:
Considering the opposition well founded, the court hereby considers
the motion to require administratrix to render an accounting
untenable, as the final accounting of the administratrix was already
approved and therefore denies the motion of oppositor and counterpetitioner dated Jan. 25, 1971. 2
A motion for reconsideration of the foregoing Order was filed by Guia T. Laguio and
her minor children. On August 16, 1971, the court a quo issued the second
questioned Order denying the motion for reconsideration in the following manner:
After a careful consideration of the grounds relied upon by the movant
counter-petitioner, this Court resolves to deny the motion for
reconsideration for the reason that in view of said counter-petitioner's

receipt of the cash dividends in question without first requiring the

administratrix the accounting now being sought to be rendered for
purposes of determining the correctness of the cash dividends
constitutes already a waiver on her part to question such correctness
of the aforesaid cash dividends. The counter-petitioner is being
assisted by counsel in the person of her own husband, and who being
well-versed in such legal process, could have rejected receipt of the
said cash dividends on the shares of stock if the correctness of the
same was at that time being doubted. To say the least, therefore, the
grounds for the motion for reconsideration are, in the honest opinion of
this Court, unmeritorious, and all the motion, in effect, is hereby
denied. 3
The sole issue is whether or not the court should have required the executrix to
render an accounting of the cash and stock dividends received after the approval of
her final accounts. A corollary issue is whether or not petitioners have waived their
right to demand such accounting.
Section 8 of Rule 85 provides that the "executor or administrator shall render an
account of his administration within one (1) year from the time of receiving letters
testamentary or of administration ..., and he shall render such further accounts as
the court may requite until the estate is wholly settled."
In the instant case, further accounts by the executrix appear to be in order, in view
of the fact that the dividends sought to be accounted for are not included in the
final accounts rendered by the executrix. It appears that the interests of all the
parties will be better served and the conflict between petitioners and respondent
will be resolved if such additional accounting is made. Further, "it has been held
that an executor or administrator who receives assets of the estate after he has
filed an account should file a supplementary account thereof, and may be
compelled to do so, but that it is only with respect to matters occuring after the
settlement of final account that representatives will be compelled to file
supplementary account." 4 It is only in a case where the petition to compel an
executor to account after he has accounted and has been discharged fails to allege
that any further sums came into the hands of the executor, and the executor
specifically denies the receipt of any further sums that the accounting should be
denied. 5
There is no question that in the instant case, the fact that the executrix received
funds of the estate after the approval of her final accounts and before the issuance
of an order finally closing the proceedings is admitted. She must, therefore, account
for the same, in consonance with her duty to account for all the assets of the
decedent's estate which have come into her possession by virtue of her office. 6 An
executor should account for all his receipts and disbursements since his last
accounting. 7

We disagree with the lower court's finding that petitioners, by receiving the
dividends without requiring an accounting, had waived their right to do so. The duty
of an executor or administrator to render an account is not a mere incident of an
administration proceeding which can be waived or disregarded. It is a duty that has
to be performed and duly acted upon by the court before the administration is
finally ordered closed and terminated, 8 to the end that no part of the decedent's
estate be left unaccounted for. The fact that the final accounts had been approved
does not divest the court of jurisdiction to require supplemental accounting for,
aside from the initial accounting, the Rules provide that "he shall render such
further accounts as the court may require until the estate is wholly settled." 9
WHEREFORE, in view of all the foregoing, the Orders of the lower court dated
February 5, 1971 and August 16, 1971 are set aside, and respondent executrix is
hereby ordered to render a supplemental accounting of all cash and stock dividends
as well as other properties of the estate which came into her possession after the
approval of her final accounts.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 174873

August 26, 2008

QUASHA ANCHETA PEA 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 Pea and Nolasco Law Office (Quasha Law Office) and
the Heirs of Raymond Triviere praying for the reversal of the Decision 1 dated 11 May
2006 and 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 Pea & Nolasco Law Offices;
b) P200,000.00 as attorney's fees and litigation expenses for the
Quasha Ancheta Pea & Nolasco Law Offices;
c) P150,000.00 as share for the widow of the deceased [Raymond
Triviere], Amy Consuelo Triviere; and
d) P200,000.00 for the administrator Syquia, who is also the counsel of
the widow; and for litigation costs and expenses.
LCN, as the only remaining claimant4 against the Intestate Estate of the Late
Raymond Triviere in Special Proceedings Case No. M-1678, filed its Comment

on/Opposition to the afore-quoted Motion on 2 October 2002. LCN countered that

the RTC had already resolved the issue of payment of litigation expenses when it
denied the first Motion for Payment filed by Atty. Syquia and Atty. Quasha for failure
of the administrators to submit an accounting of the assets and expenses of the
estate as required by the court. LCN also averred that the administrators and the
heirs of the late Raymond Triviere had earlier agreed to fix the former's fees at only
5% of the gross estate, based on which, per the computation of LCN, the
administrators were even overpaid P55,000.00. LCN further asserted that contrary
to what was stated in the second Motion for Payment, Section 7, Rule 85 of the
Revised Rules of Court was inapplicable,5 since the administrators failed to establish
that the estate was large, or that its settlement was attended with great difficulty,
or required a high degree of capacity on the part of the administrators. Finally, LCN
argued that its claims are still outstanding and chargeable against the estate of the
late Raymond Triviere; thus, no distribution should be allowed until they have been
paid; especially considering that as of 25 August 2002, the claim of LCN against the
estate of the late Raymond Triviere amounted to P6,016,570.65 as against the
remaining assets of the estate totaling P4,738,558.63, rendering the latter
insolvent.
On 12 June 2003, the RTC issued its Order6 taking note that "the widow and the
heirs of the deceased Triviere, after all the years, have not received their respective
share (sic) in the Estate x x x."
The RTC declared that there was no more need for accounting of the assets and
liabilities of the estate considering that:
[T]here appears to be no need for an accounting as the estate has no more
assets except the money deposited with the Union Bank of the Philippines
under Savings Account No. 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 CAG.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 Reconsideration 16 of the 11 May 2006 Decision of the
Court of Appeals. The Motion, however, was denied by the appellate court in a
Resolution dated 22 September 2006,17explaining 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 coadministrators 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 coadministrator 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 Certioraribased 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 ofP450,000.00 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 memberlawyer 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 CoAdministrator 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, coadministrator 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.
SECOND DIVISION
[G.R. No. 118655. April 12, 2000]
HEIRS OF ELIAS LORILLA, Namely: FE, ELIAS, JR. and SERVANDO, ALL SURNAMED
LORILLA, petitioners, vs. COURT OF APPEALS, COMMERCIAL CREDIT CORPORATION,
HON. FRANCISCO VILLANUEVA and SHERIFF HONORIO P. SANTOS, respondents.
DECISION
QUISUMBING, J.:
This petition for review assails the decision [1] of the Court of Appeals promulgated
on November 29, 1994, which dismissed the petition for annulment of the judgment
rendered on April 5, 1989, by the Regional Trial Court, Branch 58, of Makati in Civil
Case No. 5262.[2] The motion to reconsider the decision of the Court of Appeals was
denied by said Court in a Resolution promulgated on January 11, 1995. [3] Jj sc
The antecedent facts of this case as found by the Court of Appeals are as follows:
"(1) On September 10, 1983, private respondent Commercial Credit
Corporation (now known as Pentacapital Finance Corporation and
hereinafter referred to as PENCAPITAL) filed a complaint with the
Regional Trial Court of Makati, Metro Manila, (hereinafter referred to as
the Makati Court) for a sum of money against Sanyu Machineries
Agencies, Inc., Sanyu Chemical Corporation, and several other
defendants, among whom was Elias Lorilla, (now deceased) who had

acted as sureties for the two corporate debtors. The complaint was
docketed as Civil Case No. 5262 and was assigned by raffle to Branch
58 of said court.
(2) PENCAPITAL sought for, and obtained from the Makati Court, a writ
of attachment on the real property of defendant Elias L. Lorilla covered
by Transfer Certificate of Title No. 298986, and which levy was duly
annotated on the certificate of title concerned.
(3) Defendant Elias Lorilla, together with four other individual
defendants, was initially represented by one Atty. Danny Tablizo, but
who later on withdrew his appearance and was substituted by another
lawyer, Atty. Alfredo Concepcion.
(4) During the pendency of Civil Case No. 5262, Elias L. Lorilla
executed a dacion en pago over the property attached in favor of the
Joint Resources Management Development Corporation (hereinafter
referred to as JRMDC) by reason of which Transfer Certificate of Title
No. 298986 in the name of Elias L. Lorilla was cancelled and replaced
by Transfer Certificate of Title No. 114067 in the name of JRMDC. But
the levy caused to be made by PENCAPITAL over the property was
carried over to the new certificate of title.
(5) On June 9, 1986, JRMDC filed suit against PENCAPITAL for the
cancellation of the latters levy on the property in question with the
Regional Trial Court of Pasig, Metro Manila (hereinafter referred to as
the Pasig Court), which was docketed therein as Civil Case No. 63757
and assigned by raffle to its Branch 153.
(6) On April 5, 1989, the Makati Court, after due hearing, rendered
judgment in Civil Case No. 5262 in favor of PENCAPITAL and against
the defendants therein, including Elias L. Lorilla. The dispositive portion
of said judgment reads:
WHEREFORE, premises considered, judgment is rendered
in favor of plaintiff and against defendants who are
hereby ordered to pay to plaintiff, jointly and severally,
and solidarily the total principal amount of P421,596.28
plus interest at 12% per annum and a penalty of 3% per
month of default from the time it became due on July 1,
1981 until fully paid, and 20% of the entire amount due as
attorneys fees, plus the costs.
SO ORDERED.

(7) Despite receipt of a copy of the aforesaid decision by Alfredo

Concepcion, then counsel of record of defendant Elias L. Lorilla, no
appeal whatsoever was interposed from said judgment by said lawyer
in behalf of defendant Lorilla. Sc jj
(8) On March 3, 1993, upon motion of PENCAPITAL, the Makati Court
issued a writ of execution in Civil Case No. 5262 and PENCAPITAL
thereafter proceeded against the property covered by TCT No. 298986
in the name of defendant Lorilla.
(9) On May 26, 1993 the Pasig Court rendered decision in its Civil Case
No. 53757 dismissing JRMDCs complaint for the cancellation of the
levy on attachment on the Lorilla property, ruling that the dacion en
pago executed by defendant Lorilla in favor of JRMDC cannot prevail
over the prior writ of attachment duly annotated on the property in
favor of PENCAPITAL. No appeal from the decision in Civil Case No.
53757 having been made by JRMDC, the same became final and
executory (Annex "15", Reply Memorandum of PENCAPITAL).
(10) On September 15, 1993, petitioners herein as heirs of Elias L.
Lorilla, filed a motion in Civil Case No. 5262 to quash the writ of
execution issued by the Makati Court, arguing that since defendant
Elias L. Lorilla passed away on January 15, 1988, or one year and three
months before the Makati Court rendered decision in Civil Case No.
5262 on April 5, 1989, the case should have been dismissed insofar as
Elias L. Lorilla is concerned, in keeping with Section 21, Rule 3 of the
Rules of Court which provides:
Sec. 21. Where claim does not survive. - When the action
is for recovery of money, debt, or interest therein, and the
defendant dies before final judgment in the Court of First
Instance, it shall be dismissed to be presented in the
manner especially provided in these rules.
(11) On February 8, 1994, the Makati Court, through its Acting
Presiding Judge, the Honorable Francisco Donato Villanueva, denied the
motion to quash said writ of execution, ruling that the judgment in Civil
Case No. 5256 having become final, it is now beyond its authority to
amend it by dismissing the same insofar as defendant Elias L. Lorilla is
concerned, and that the suggested remedy, if at all, is a petition for its
annulment. Petitioners moved to reconsider the denial of their motion
to quash the writ of execution, but the Makati Court stood pat on its
ruling, hence, petitioners recourse to this Court for annulment of
judgment."[4]

Petitioners, thus, filed with the Court of Appeals a Petition for Annulment of
Judgment, Writ of Execution, and/or Levy on Execution with Preliminary Injunction
and Restraining Order to annul or enjoin enforcement of the judgment dated April 5,
1989 of the Makati Court in Civil Case No. 5262. In its decision promulgated on
November 29, 1994, the Court of Appeals resolved to deny the petition, hence
petitioners present recourse to this Court. They assign the following errors:
"I
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN
NOT ANNULLING THE DECISION OF THE TRIAL COURT, DATED 5 APRIL
1989, INSOFAR AS DECEASED DEFENDANT ELIAS LORILLA IS
CONCERNED, THEREBY VIOLATION (sic) PETITIONERS RIGHT TO DUE
PROCESS OF LAW.
II
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN
VIOLATING SECTION 21, RULE 3, AND SECTIONS 5 AND 7, RULE 86 OF
THE REVISED RULES OF COURT. Sj cj
III
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN
DENYING PETITIONERS THEIR CONSTITUTIONAL RIGHT TO DUE
PROCESS OF LAW."[5]
In our view, the main issue for resolution now is whether the respondent appellate
court erred and gravely abused its discretion in denying petitioners action for
annulment of judgment of the RTC of Makati, Branch 58, concerning the deceased
defendant Elias Lorilla. Pertinently, we have to consider whether Section 21 of Rule
3 and Sections 5 and 7of Rule 86 of the Revised Rules of Court are applicable in the
present case. Similarly, we have to inquire whether petitioners, heirs of Elias Lorilla,
were deprived of their right to due process of law.
Petitioners argue that the cause of action of private respondent Commercial Credit
Corp. (now known as Pentacapital Finance Corp. and hereinafter referred to as
PENTACAPITAL) did not survive for being in violation of Section 21 of Rule 3 of the
Revised Rules of Court. They claim that under this rule, the trial court lost
jurisdiction over the person of Elias Lorilla when he died, and consequently the
action against him should have been dismissed.
Section 21 of Rule 3 states:
"SEC. 21. Where claim does not survive. Where the action is for
recovery of money, debt or interest thereon, and the defendant dies

before final judgment in the Court of First Instance, it shall be

dismissed to be prosecuted in the manner especially provided in these
rules."
Section 21 of Rule 3 provides that upon the defendants death, the action "shall be
dismissed to be presented in the manner especially provided in these rules."
Petitioners argue that this manner is provided for in Sections 5 and 7 of Rule 86 of
the Revised Rules of Court.[6] As contemplated in Section 21 of Rule 3, the action has
to be dismissed without prejudice to the plaintiff thereafter presenting his claim as a
money claim in the settlement of the estate of the deceased defendant. [7] The claim
becomes a mere incident in the testamentary or intestate proceedings of the
deceased where the whole matter may be fully terminated jointly with the
settlement and distribution of the estate.[8] Supreme
In the present case, however, the records do not show if any notice of death was
filed by Atty. Alfredo Concepcion, counsel of record of Elias Lorilla in Civil Case No.
5262 before the Makati Court. Thus, neither the Makati Court nor PENTACAPITAL
were made aware of the death of Elias Lorilla. The trial court could not be expected
to know or take judicial notice of the death of Lorilla, absent such notice. Neither
could the petitioners have been made aware of the trial courts judgment adverse to
their father, for all notices and orders of the court were sent to Lorillas counsel of
record, who did not bother to inform the parties concerned of Elias Lorillas death.
Apparently, Lorillas counsel failed in his duty to promptly inform the court of the
death of his client, as the Rules require. [9]
As far as the Makati Court was concerned, until the Writ of Execution was issued and
the levy thereof on August 5, 1993, Lorilla continued to be represented by counsel
of record, Atty. Concepcion; and that upon service of a copy of the decision on said
counsel at the latters address, Lorilla was deemed to have been validly served
notice of the judgment.[10] The failure of Atty. Concepcion to serve notice on the
court and the adverse parties regarding his clients death binds herein petitioners as
much as the client himself could be so bound. Jurisprudence teems with
pronouncements that a client is bound by the conduct, negligence and mistakes of
his counsel.[11]
In this case, petitioners claim that their right to due process was violated when the
Court of Appeals did not annul the decision of the Makati Court dated April 5, 1989.
They claim that as heirs of Elias Lorilla, they would be deprived of their lawful
inheritance without due process, as they were not parties to the case where the
adverse decision against their father was rendered. Said judgment, they posit,
cannot be enforced against them because the court had not acquired jurisdiction
over them, nor over the estate of Elias Lorilla.
True, a judgment may be annulled for want of jurisdiction or lack of due process of
law.[12] But while petitioners were not properly substituted for Elias Lorilla as
defendants, absent any notice of his death, it could not be said that petitioners were

deprived of due process of law, for as far as the trial court was concerned, they
were not parties to the case. To rule otherwise would be, in fact, a more obvious and
grievous transgression of due process.
Moreover in this case, we find that the property which petitioners claim as their
lawful inheritance, was no longer part of the estate of Elias Lorilla at the time of his
death. For Elias Lorilla had earlier executed a dacion en pago over this property in
favor of the Joint Resources Management Development Corporation (JRMDC). By
reason thereof, Lorillas transfer certificate of title was cancelled, and a new one
was issued in favor of JRMDC.[13] The levy of PENTACAPITAL annotated on Lorillas
certificate of title was carried over onto the title of JRMDC. Elias Lorillas payment of
his obligation to JRMDC being one of dation in payment, it is governed by the law on
sales.[14] The subject property was validly transferred to JRMDC already. Hence
petitioners could not claim that they were deprived of their lawful inheritance
without due process of law. Court
Section 21 of Rule 3 of the Revised Rules of Court sets out the procedure that should
be followed after the death of the defendant in a case. If he died "before final
judgment in the Court of First Instance," the action should be dismissed without
prejudice to the plaintiff presenting his claim in the settlement of the estate of the
deceased in accordance with and as required by Section 5 of Rule 86 of the Revised
Rules of Court.[15] Here, however, the property in question had already been taken
out of the estate of Elias Lorilla, even before judgment in Civil Case No. 5262 was
rendered, and it was transferred to JRMDC by virtue of the dacion en pago executed
by Elias Lorilla. For this reason, Section 5 of Rule 86 loses its pertinence to the case
at bar.
Likewise, Section 7 of Rule 39 of the Revised Rules of Court [16] will not apply to the
present case. For it speaks of a situation where a party dies after the entry of the
judgment or order of the court. It does not cover a situation where the court was
reportedly informed of the death of a party only after final judgment.
Since there was no timely appeal taken from the judgment of the Regional Trial
Court of Makati dated April 5, 1989, in Civil Case No. 5262, that judgment had
properly become final and executory. As well said by respondent appellate court, to
adopt a view contrary would "open the floodgates to protracted and endless
litigations, because all that counsel for defendant has to do, in an action for
recovery of money, in case said defendant dies before final judgment in a regional
trial court, is to conceal such death from the court and thereafter pretend to go
through the motions of trial, and, after judgment is rendered against his client, to
question such judgment for being violative of Section 21, Rule 3 of the Rules of
Court. Thus, counsel for such defendant could unduly delay the rendering of a
judgment against his client. It is a fundamental concept in any jural system, that
even 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 litim."[17]

We see no reason, in the interest of justice, to disturb, much less annul, the
aforesaid judgment.
WHEREFORE, the assailed decision of the Court of Appeals promulgated on
November 29, 1994 and its Resolution promulgated on January 11, 1995 are hereby
AFFIRMED. Costs against petitioners.
SECOND DIVISION
[G.R. No. 149926. February 23, 2005]
UNION BANK OF THE PHILIPPINES, petitioner, vs. EDMUND SANTIBAEZ and
FLORENCE SANTIBAEZ ARIOLA, respondents.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari under Rule 45 of the Revised Rules
of Court which seeks the reversal of the Decision [1] of the Court of Appeals dated
May 30, 2001 in CA-G.R. CV No. 48831 affirming the dismissal [2] of the petitioners
complaint in Civil Case No. 18909 by the Regional Trial Court (RTC) of Makati City,
Branch 63.
The antecedent facts are as follows:
On May 31, 1980, the First Countryside Credit Corporation (FCCC) and Efraim M.
Santibaez entered into a loan agreement [3] in the amount of P128,000.00. The
amount was intended for the payment of the purchase price of one (1) unit Ford
6600 Agricultural All-Purpose Diesel Tractor. In view thereof, Efraim and his son,
Edmund, executed a promissory note in favor of the FCCC, the principal sum
payable in five equal annual amortizations of P43,745.96 due on May 31, 1981 and
every May 31st thereafter up to May 31, 1985.
On December 13, 1980, the FCCC and Efraim entered into another loan
agreement,[4] this time in the amount of P123,156.00. It was intended to pay the
balance of the purchase price of another unit of Ford 6600 Agricultural All-Purpose
Diesel Tractor, with accessories, and one (1) unit Howard Rotamotor Model AR 60K.
Again, Efraim and his son, Edmund, executed a promissory note for the said amount
in favor of the FCCC. Aside from such promissory note, they also signed a
Continuing Guaranty Agreement[5] for the loan dated December 13, 1980.
Sometime in February 1981, Efraim died, leaving a holographic will.
Subsequently in March 1981, testate proceedings commenced before the RTC of
Iloilo City, Branch 7, docketed as Special Proceedings No. 2706. On April 9, 1981,
Edmund, as one of the heirs, was appointed as the special administrator of the
[6]

estate of the decedent.[7] During the pendency of the testate proceedings, the
surviving heirs, Edmund and his sister Florence Santibaez Ariola, executed a Joint
Agreement[8] dated July 22, 1981, wherein they agreed to divide between
themselves and take possession of the three (3) tractors; that is, two (2) tractors for
Edmund and one (1) tractor for Florence. Each of them was to assume the
indebtedness of their late father to FCCC, corresponding to the tractor respectively
taken by them.
On August 20, 1981, a Deed of Assignment with Assumption of Liabilities [9] was
executed by and between FCCC and Union Savings and Mortgage Bank, wherein the
FCCC as the assignor, among others, assigned all its assets and liabilities to Union
Savings and Mortgage Bank.
Demand letters[10] for the settlement of his account were sent by petitioner
Union Bank of the Philippines (UBP) to Edmund, but the latter failed to heed the
same and refused to pay. Thus, on February 5, 1988, the petitioner filed a
Complaint[11] for sum of money against the heirs of Efraim Santibaez, Edmund and
Florence, before the RTC of Makati City, Branch 150, docketed as Civil Case No.
18909. Summonses were issued against both, but the one intended for Edmund was
not served since he was in the United States and there was no information on his
address or the date of his return to the Philippines. [12] Accordingly, the complaint
was narrowed down to respondent Florence S. Ariola.
On December 7, 1988, respondent Florence S. Ariola filed her Answer [13] and
alleged that the loan documents did not bind her since she was not a party thereto.
Considering that the joint agreement signed by her and her brother Edmund was
not approved by the probate court, it was null and void; hence, she was not liable to
the petitioner under the joint agreement.
On January 29, 1990, the case was unloaded and re-raffled to the RTC of Makati
City, Branch 63.[14] Consequently, trial on the merits ensued and a decision was
subsequently rendered by the court dismissing the complaint for lack of merit. The
decretal portion of the RTC decision reads:
WHEREFORE, judgment is hereby rendered DISMISSING the complaint for lack of
merit.[15]
The trial court found that the claim of the petitioner should have been filed with
the probate court before which the testate estate of the late Efraim Santibaez was
pending, as the sum of money being claimed was an obligation incurred by the said
decedent. The trial court also found that the Joint Agreement apparently executed
by his heirs, Edmund and Florence, on July 22, 1981, was, in effect, a partition of the
estate of the decedent. However, the said agreement was void, considering that it
had not been approved by the probate court, and that there can be no valid
partition until after the will has been probated. The trial court further declared that
petitioner failed to prove that it was the now defunct Union Savings and Mortgage

Bank to which the FCCC had assigned its assets and liabilities. The court also
agreed to the contention of respondent Florence S. Ariola that the list of assets and
liabilities of the FCCC assigned to Union Savings and Mortgage Bank did not clearly
refer to the decedents account. Ruling that the joint agreement executed by the
heirs was null and void, the trial court held that the petitioners cause of action
against respondent Florence S. Ariola must necessarily fail.
The petitioner appealed from the RTC decision and elevated its case to the
Court of Appeals (CA), assigning the following as errors of the trial court:
1. THE COURT A QUO ERRED IN FINDING THAT THE JOINT AGREEMENT
(EXHIBIT A) SHOULD BE APPROVED BY THE PROBATE COURT.
2. THE COURT A QUO ERRED IN FINDING THAT THERE CAN BE NO VALID
PARTITION AMONG THE HEIRS UNTIL AFTER THE WILL HAS BEEN
PROBATED.
3. THE COURT A QUO ERRED IN NOT FINDING THAT THE DEFENDANT HAD
WAIVED HER RIGHT TO HAVE THE CLAIM RE-LITIGATED IN THE ESTATE
PROCEEDING.[16]
The petitioner asserted before the CA that the obligation of the deceased had
passed to his legitimate children and heirs, in this case, Edmund and Florence; the
unconditional signing of the joint agreement marked as Exhibit A estopped
respondent Florence S. Ariola, and that she cannot deny her liability under the said
document; as the agreement had been signed by both heirs in their personal
capacity, it was no longer necessary to present the same before the probate court
for approval; the property partitioned in the agreement was not one of those
enumerated in the holographic will made by the deceased; and the active
participation of the heirs, particularly respondent Florence S. Ariola, in the present
ordinary civil action was tantamount to a waiver to re-litigate the claim in the estate
proceedings.
On the other hand, respondent Florence S. Ariola maintained that the money
claim of the petitioner should have been presented before the probate court. [17]
The appellate court found that the appeal was not meritorious and held that the
petitioner should have filed its claim with the probate court as provided under
Sections 1 and 5, Rule 86 of the Rules of Court. It further held that the partition
made in the agreement was null and void, since no valid partition may be had until
after the will has been probated. According to the CA, page 2, paragraph (e) of the
holographic will covered the subject properties (tractors) in generic terms when the
deceased referred to them as all other properties. Moreover, the active
participation of respondent Florence S. Ariola in the case did not amount to a
waiver. Thus, the CA affirmed the RTC decision, viz.:

WHEREFORE, premises considered, the appealed Decision of the Regional Trial Court
of Makati City, Branch 63, is hereby AFFIRMED in toto.
SO ORDERED.[18]
In the present recourse, the petitioner ascribes the following errors to the CA:
I.
THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THE JOINT
AGREEMENT SHOULD BE APPROVED BY THE PROBATE COURT.
II.
THE COURT OF APPEALS ERRED IN FINDING THAT THERE CAN BE NO VALID
PARTITION AMONG THE HEIRS OF THE LATE EFRAIM SANTIBAEZ UNTIL AFTER THE
WILL HAS BEEN PROBATED.
III.
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE RESPONDENT HAD
WAIVED HER RIGHT TO HAVE THE CLAIM RE-LITIGATED IN THE ESTATE PROCEEDING.
IV.
RESPONDENTS CAN, IN FACT, BE HELD JOINTLY AND SEVERALLY LIABLE WITH THE
PRINCIPAL DEBTOR THE LATE EFRAIM SANTIBAEZ ON THE STRENGTH OF THE
CONTINUING GUARANTY AGREEMENT EXECUTED IN FAVOR OF PETITIONERAPPELLANT UNION BANK.
V.
THE PROMISSORY NOTES DATED MAY 31, 1980 IN THE SUM OF P128,000.00 AND
DECEMBER 13, 1980 IN THE AMOUNT OF P123,000.00 CATEGORICALLY
ESTABLISHED THE FACT THAT THE RESPONDENTS BOUND THEMSELVES JOINTLY AND
SEVERALLY LIABLE WITH THE LATE DEBTOR EFRAIM SANTIBAEZ IN FAVOR OF
PETITIONER UNION BANK.[19]
The petitioner claims that the obligations of the deceased were transmitted to
the heirs as provided in Article 774 of the Civil Code; there was thus no need for the
probate court to approve the joint agreement where the heirs partitioned the
tractors owned by the deceased and assumed the obligations related thereto. Since
respondent Florence S. Ariola signed the joint agreement without any condition, she
is now estopped from asserting any position contrary thereto. The petitioner also
points out that the holographic will of the deceased did not include nor mention any
of the tractors subject of the complaint, and, as such was beyond the ambit of the

said will. The active participation and resistance of respondent Florence S. Ariola in
the ordinary civil action against the petitioners claim amounts to a waiver of the
right to have the claim presented in the probate proceedings, and to allow any one
of the heirs who executed the joint agreement to escape liability to pay the value of
the tractors under consideration would be equivalent to allowing the said heirs to
enrich themselves to the damage and prejudice of the petitioner.
The petitioner, likewise, avers that the decisions of both the trial and appellate
courts failed to consider the fact that respondent Florence S. Ariola and her brother
Edmund executed loan documents, all establishing the vinculum juris or the legal
bond between the late Efraim Santibaez and his heirs to be in the nature of a
solidary obligation. Furthermore, the Promissory Notes dated May 31, 1980 and
December 13, 1980 executed by the late Efraim Santibaez, together with his heirs,
Edmund and respondent Florence, made the obligation solidary as far as the said
heirs are concerned. The petitioner also proffers that, considering the express
provisions of the continuing guaranty agreement and the promissory notes
executed by the named respondents, the latter must be held liable jointly and
severally liable thereon. Thus, there was no need for the petitioner to file its money
claim before the probate court. Finally, the petitioner stresses that both surviving
heirs are being sued in their respective personal capacities, not as heirs of the
deceased.
In her comment to the petition, respondent Florence S. Ariola maintains that the
petitioner is trying to recover a sum of money from the deceased Efraim
Santibaez; thus the claim should have been filed with the probate court. She points
out that at the time of the execution of the joint agreement there was already an
existing probate proceedings of which the petitioner knew about. However, to avoid
a claim in the probate court which might delay payment of the obligation, the
petitioner opted to require them to execute the said agreement.
According to the respondent, the trial court and the CA did not err in declaring
that the agreement was null and void. She asserts that even if the agreement was
voluntarily executed by her and her brother Edmund, it should still have been
subjected to the approval of the court as it may prejudice the estate, the heirs or
third parties. Furthermore, she had not waived any rights, as she even stated in her
answer in the court a quo that the claim should be filed with the probate court.
Thus, the petitioner could not invoke or claim that she is in estoppel.
Respondent Florence S. Ariola further asserts that she had not signed any
continuing guaranty agreement, nor was there any document presented as
evidence to show that she had caused herself to be bound by the obligation of her
late father.
The petition is bereft of merit.

The Court is posed to resolve the following issues: a) whether or not the
partition in the Agreement executed by the heirs is valid; b) whether or not the
heirs assumption of the indebtedness of the deceased is valid; and c) whether the
petitioner can hold the heirs liable on the obligation of the deceased.
At the outset, well-settled is the rule that a probate court has the jurisdiction to
determine all the properties of the deceased, to determine whether they should or
should not be included in the inventory or list of properties to be administered.
[20]
The said court is primarily concerned with the administration, liquidation and
distribution of the estate.[21]
In our jurisdiction, the rule is that there can be no valid partition among the
heirs until after the will has been probated:
In testate succession, there can be no valid partition among the heirs until after the
will has been probated. The law enjoins the probate of a will and the public requires
it, because unless a will is probated and notice thereof given to the whole world, the
right of a person to dispose of his property by will may be rendered nugatory. The
authentication of a will decides no other question than such as touch upon the
capacity of the testator and the compliance with those requirements or solemnities
which the law prescribes for the validity of a will. [22]
This, of course, presupposes that the properties to be partitioned are the same
properties embraced in the will. [23] In the present case, the deceased, Efraim
Santibaez, left a holographic will [24] which contained, inter alia, the provision which
reads as follows:
(e)
All other properties, real or personal, which I own and may be discovered later
after my demise, shall be distributed in the proportion indicated in the immediately
preceding paragraph in favor of Edmund and Florence, my children.
We agree with the appellate court that the above-quoted is an all-encompassing
provision embracing all the properties left by the decedent which might have
escaped his mind at that time he was making his will, and other properties he may
acquire thereafter. Included therein are the three (3) subject tractors. This being so,
any partition involving the said tractors among the heirs is not valid. The joint
agreement[25] executed by Edmund and Florence, partitioning the tractors among
themselves, is invalid, specially so since at the time of its execution, there was
already a pending proceeding for the probate of their late fathers holographic will
covering the said tractors.
It must be stressed that the probate proceeding had already acquired
jurisdiction over all the properties of the deceased, including the three (3) tractors.
To dispose of them in any way without the probate courts approval is tantamount to
divesting it with jurisdiction which the Court cannot allow. [26] Every act intended to
put an end to indivision among co-heirs and legatees or devisees is deemed to be a

partition, although it should purport to be a sale, an exchange, a compromise, or

any other transaction.[27] Thus, in executing any joint agreement which appears to
be in the nature of an extra-judicial partition, as in the case at bar, court approval is
imperative, and the heirs cannot just divest the court of its jurisdiction over that
part of the estate. Moreover, it is within the jurisdiction of the probate court to
determine the identity of the heirs of the decedent. [28] In the instant case, there is
no showing that the signatories in the joint agreement were the only heirs of the
decedent. When it was executed, the probate of the will was still pending before the
court and the latter had yet to determine who the heirs of the decedent were. Thus,
for Edmund and respondent Florence S. Ariola to adjudicate unto themselves the
three (3) tractors was a premature act, and prejudicial to the other possible heirs
and creditors who may have a valid claim against the estate of the deceased.
The question that now comes to fore is whether the heirs assumption of the
indebtedness of the decedent is binding. We rule in the negative. Perusing the joint
agreement, it provides that the heirs as parties thereto have agreed to divide
between themselves and take possession and use the above-described chattel and
each of them to assume the indebtedness corresponding to the chattel taken as
herein after stated which is in favor of First Countryside Credit Corp.[29] The
assumption of liability was conditioned upon the happening of an event, that is, that
each heir shall take possession and use of their respective share under the
agreement. It was made dependent on the validity of the partition, and that they
were to assume the indebtedness corresponding to the chattel that they were each
to receive. The partition being invalid as earlier discussed, the heirs in effect did not
receive any such tractor. It follows then that the assumption of liability cannot be
given any force and effect.
The Court notes that the loan was contracted by the decedent. The petitioner,
purportedly a creditor of the late Efraim Santibaez, should have thus filed its
money claim with the probate court in accordance with Section 5, Rule 86 of the
Revised Rules of Court, which provides:
Section 5. Claims which must be filed under the notice. If not filed barred;
exceptions. All claims for money against the decedent, arising from contract,
express or implied, whether the same be due, not due, or contingent, all claims for
funeral expenses for the last sickness of the decedent, and judgment for money
against the decedent, must be filed within the time limited in the notice; otherwise
they are barred forever, except that they may be set forth as counterclaims in any
action that the executor or administrator may bring against the claimants. Where an
executor or administrator commences an action, or prosecutes an action already
commenced by the deceased in his lifetime, the debtor may set forth by answer the
claims he has against the decedent, instead of presenting them independently to
the court as herein provided, and mutual claims may be set off against each other
in such action; and if final judgment is rendered in favor of the defendant, the
amount so determined shall be considered the true balance against the estate, as
though the claim had been presented directly before the court in the administration

proceedings. Claims not yet due, or contingent, may be approved at their present
value.
The filing of a money claim against the decedents estate in the probate court is
mandatory.[30] As we held in the vintage case of Py Eng Chong v. Herrera:[31]
This requirement is for the purpose of protecting the estate of the deceased by
informing the executor or administrator of the claims against it, thus enabling him
to examine each claim and to determine whether it is a proper one which should be
allowed. The plain and obvious design of the rule is the speedy settlement of the
affairs of the deceased and the early delivery of the property to the distributees,
legatees, or heirs. `The law strictly requires the prompt presentation and disposition
of the claims against the decedent's estate in order to settle the affairs of the estate
as soon as possible, pay off its debts and distribute the residue. [32]
Perusing the records of the case, nothing therein could hold private respondent
Florence S. Ariola accountable for any liability incurred by her late father. The
documentary evidence presented, particularly the promissory notes and the
continuing guaranty agreement, were executed and signed only by the late Efraim
Santibaez and his son Edmund. As the petitioner failed to file its money claim with
the probate court, at most, it may only go after Edmund as co-maker of the
decedent under the said promissory notes and continuing guaranty, of course,
subject to any defenses Edmund may have as against the petitioner. As the court
had not acquired jurisdiction over the person of Edmund, we find it unnecessary to
delve into the matter further.
We agree with the finding of the trial court that the petitioner had not
sufficiently shown that it is the successor-in-interest of the Union Savings and
Mortgage Bank to which the FCCC assigned its assets and liabilities. [33] The
petitioner in its complaint alleged that by virtue of the Deed of Assignment dated
August 20, 1981 executed by and between First Countryside Credit Corporation and
Union Bank of the Philippines[34] However, the documentary evidence [35] clearly
reflects that the parties in the deed of assignment with assumption of liabilities
were the FCCC, and the Union Savings and Mortgage Bank, with the conformity of
Bancom Philippine Holdings, Inc. Nowhere can the petitioners participation therein
as a party be found. Furthermore, no documentary or testimonial evidence was
presented during trial to show that Union Savings and Mortgage Bank is now, in
fact, petitioner Union Bank of the Philippines. As the trial court declared in its
decision:
[T]he court also finds merit to the contention of defendant that plaintiff failed to
prove or did not present evidence to prove that Union Savings and Mortgage Bank is
now the Union Bank of the Philippines. Judicial notice does not apply here. The
power to take judicial notice is to [be] exercised by the courts with caution; care
must be taken that the requisite notoriety exists; and every reasonable doubt upon

the subject should be promptly resolved in the negative. (Republic vs. Court of
Appeals, 107 SCRA 504).[36]
This being the case, the petitioners personality to file the complaint is wanting.
Consequently, it failed to establish its cause of action. Thus, the trial court did not
err in dismissing the complaint, and the CA in affirming the same.
IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED. The assailed
Court of Appeals Decision is AFFIRMED. No costs.

THIRD DIVISION
SALONGA HERNANDEZ &
ALLADO,
Petitioner,

G.R. No. 127165

Present:
QUISUMBING, J.,
Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.

- versus -

OLIVIA SENGCO PASCUAL

Promulgated:
and THE HONORABLE COURT
OF APPEALS,
May 2, 2006
Respondents.
x----------------------------------------------------------------------------x
DECISION
TINGA, J.:
Petitioner, a professional law partnership, brings forth this Petition for Review
assailing the Decision[1] 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 Doa Adela Pascual, Dr. Olivia S. Pascual, Executrix.
The

case

actually

centers

of Doa Adela Pascual (Doa Adela)

and

on

two
the

estate
other,

proceedings,
her

husband

that
Don

Andres Pascuals (Don Andres), who predeceased her. Don Andres died intestate,

while Doa 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 Doa 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 fullblood 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 Andress brother, Eligio, to be recognized as
heirs of Don Andres. Olivia and Hermes Pascual procured the initial support
of Doa 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 Doa 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 HermesPascual. [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, Doa 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 Doa 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 Pascuals] 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,
commenced

petition

for

private respondent,
the

probate

of

represented

the

last

will

by petitioner,
and

testament

of Doa 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 MiguelCornejo, Jr. and his siblings, who in turn presented a
purported will executed in 1985 by Doa Adela in their favor. [7]
After

due

trial,

on

July

1993,

the

Probate

Court

rendered

Decision[8] allowing probate of the 1978 Last Will and Testament of Doa 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 Attorneys Lien equivalent to
three percent (3%) of the total gross estate of the late Doa 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 petitioners notice of attorneys lien, being fully supported by a
retainers 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, Doa 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
Attorneys Lien on Properties of the Estate of Doa 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 Doa Adela. The Intestate Court also awarded
attorneys fees to Atty. Jesus I. Santos, equivalent to 15% of the three-fourths (3/4)
share of the estate of Doa Adela.[14] Olivia Pascual filed a petition for annulment of
the award of attorneys 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 petitioners attorneys 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 Doa Adelas 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 Doa 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 Doa 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
attorneys 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 jurisprudence [17], that the counsel claiming attorneys 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 Doa Adelas 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
lateDoa 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 Doa 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 Administrators Bond. It was noted therein that no creditor had filed a
claim against the estate of Doa 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 ofDoa 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 attorneys lien on the properties
comprising the estate of Doa Adela Pascual;
(2) a writ of partial execution be issued for the satisfaction of the
attorneys 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 attorneys fees;
(3) ordering the appointment of a reputable appraisal company to reappraise
the
present
market
value
of
the
estate
of Doa Adela Pascual including the fruits thereof for the purpose of
determining the value of the attorneys fees of [petitioner]; and
(4) after the re-appraisal of the estate of Doa Adela Pascual a writ of
execution be issued for the full satisfaction and settlement of the
attorneys lien of [petitioner].[21]

On 17 March 1995, the Probate Court issued an order which denied

petitioners 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 attorneys 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 petitioners attempt to execute on its attorneys lien.
The appellate court noted that the attorneys lien issued by the Probate Court was
chargeable only to the share of Olivia Pascual, and not to the estate of Doa Adela,
since it was Olivia Pascual who entered into the agreement with petitioner for the
payment of attorneys fees in connection with the settlement of the estate
of Doa 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 attorneys 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 Doa 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 Occea v. Marquez,[27] the counsel seeking to

recover attorneys 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 attorneys fees as part of the
expenses of administration. Petitioner also claims that the decision of the probate
court admitting Doa Adelas 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 Courts 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 Doa 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 Doa 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 Doa Adela and the heirs of Don Andres. Petitioner
further points out that the Probate Court had authorized and approved the sale of
the OngpinProperty, yet refused to allow the partial execution of its claim for
attorneys fees.
Finally, petitioner asserts that the Probate Court erred in refusing to grant the
prayer seeking the re-appraisal of the property of Doa Adelas estate. Such reappraisal, 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 attorneys fees only against
OliviaPascual and not against the estate of Doa Adela; and that petitioners 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 Doa 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 attorneys fees against the
estate instead of the executor or administrator. Petitioner correctly cites Occea v.
Marquez[29] 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 attorneys 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 attorneys 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 attorneys 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 attorneys
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 Occea.

The character of such claim for attorneys fees bears reiteration. As stated
in Escueta, it partakes the nature of an administration expense. Administration
expenses include attorneys 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 attorneys fees. If the costs of counsels 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 counsels fees incurred
in such litigation.[38]
Clearly then, while the direct recovery of attorneys 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 withnotice 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 Attorneys Lien and a Motion for Writ of Execution. These
two pleadings have distinct character and must be treated as such.
After Doa Adelas will had been admitted to probate, petitioner had initially
filed a Notice of Attorneys 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 attorneys fees equivalent to Three Percent (3%) of the total gross
estate, pursuant to the 1987 Retainer Agreement. Copies of this Notice of
Attorneys 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 Doa Adela. This Notice of Attorneys 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 Attorneys Lien, initially

intended to hold Olivia Pascual, and not Doa Adelas estate, liable for the attorneys
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 Doa 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 Doa Adelas 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 attorneys fees was
chargeable only to the share of Olivia Pascual. Yet the Notice of Attorneys Lien only
seeks to serve notice of the pendency of the claim for attorneys fees, and not the
payment of such fees itself. On its own, the Notice of Attorneys Lien cannot serve as
the basis for the Probate Court to authorize the payment to petitioner of attorneys
fees.
On the other hand, Escueta and its kindred cases do explicitly recognize the
recourse for the lawyer to directly make the claim for attorneys fees against the
estate, not the executor or administrator. The filing of the Notice of Attorneys 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 attorneys 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 attorneys fees as authorized in Escueta, originating as it did
from the denial of petitioners Motion for Writ of Execution, and not the Notice of
Attorneys Lien. The Motion did expressly seek the payment of attorneys fees to
petitioner.Escueta and Occea, 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 attorneys fees
directly chargeable against the estate. It does not.
The fact that the prayer for attorneys 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. Doa Adelas 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
petitioners attorneys 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 Doa Adelas will.

Such notice is material to the other heirs to Doa Adelas estate. The
payment of attorneys fees, especially in the amount of 3% of the total gross estate
as sought for by petitioner, substantially diminishes the estate of Doa 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 attorneys 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 attorneys 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 attorneys 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 Doa 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 attorneys 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 attorneys fees. Yet the claim for attorneys fees is
hardly incontrovertible.
That the Retainer Agreement set the attorneys fees at three percent (3%) of
the gross estate does not imply that the basis for attorneys fees is beyond
controversy. Attorneys 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 attorneys 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 attorneys 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 attorneys 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 attorneys fees. The first involves a separate suit
against the executor or administrator in the latters 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
attorneys fees in connection with the administration of the estate of Doa 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 Doa 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 attorneys fees is premised on the
Retainer Agreement any award thereupon has to await the final ascertainment of
value of the gross total estate of Doa 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 attorneys fees is contingent on
these two conditions,[43]and the claim for attorneys 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 Doa 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 Doa Adela. If this were the recourse pursued by petitioner, and
OliviaPascual is ultimately held liable under the Retainer Agreement for attorneys
fees, she may nonetheless seek reimbursement from the estate of Doa Adela if she
were able to establish that the attorneys fees paid to petitioner were necessary
administration expenses.

The second or alternative recourse is the direct claim for attorneys 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 attorneys services.
By filing their claim directly against the estate of Doa 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 attorneys 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
attorneys 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 Doa Adela, petitioner may again be precluded from immediate recovery of
attorneys 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 attorneys 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 Doa 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 attorneys 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 petitioners 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 Doa Adela. Nonetheless, to authorize said
outright denial at this stage could unduly delay the settlement of the estate
of Doa Adela, considering the likelihood that petitioner would again pursue such
claim for attorneys 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 Doa 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 attorneys 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 attorneys fees. Once this
step is accomplished, there should be no impediment to petitioners claim for
recovery of attorneys fees as reimbursement for necessary administration
expenses, within the terms established by law, jurisprudence, and this decision.
One final note. Petitioners 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 attorneys 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 Doa Adela. Still, we do not doubt that the Probate Court, within its discretion, is
capacitated to render the award of attorneys fees as administration expenses either
partially or provisionally, depending on the particular circumstances and its ultimate
basis for the determination of the appropriate attorneys 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
ofMalabon, Branch 72, dated 2 June 1994 and 17 March 1995 are hereby SET ASIDE
insofar as said orders denied petitioners 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 Doa Adela Pascual.
The Regional Trial Court is directed to treat petitioners aforesaid motion as a
PETITION for the payment of attorneys fees as expenses of administration, and after
due hearing resolve the same with DISPATCH, conformably with this decision. No
pronouncement as to costs.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 147561

June 22, 2006

STRONGHOLD INSURANCE COMPANY, INC., Petitioner,

vs.
REPUBLIC-ASAHI GLASS CORPORATION, Respondent.
DECISION
PANGANIBAN, CJ:
Asurety companys 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-Asahis 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, [respondents] 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 [respondents] right to recover damages from x x x JDS
and the latters sureties.
"[Respondent] alleged that, as a result of x x x JDSs failure to comply with the
provisions of the contract, which resulted in the said contracts 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 thanP795,000.00. 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 ofP3,256,874.00 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 attorneys fees in the amount of at least P100,000.00.
"According to the Sheriffs Return dated June 14, 1991, submitted to the lower court
by Deputy Sheriff Rene R. Salvador, summons were duly served on defendantappellee 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 [respondents]
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-appellants 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 attorneys fees, andP5,000.00 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 courts 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 oclock 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 [respondents] 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 [respondents] motion for
reconsideration. x x x."4
Ruling of the Court of Appeals

The CA ruled that SICIs 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
respondents 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
[respondents] 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 Courts consideration in the following manner:
"Death is a defense of Santos heirs which Stronghold could also adopt as its
defense against obligees claim."7
More precisely, the issue is whether petitioners liability under the performance
bond was automatically extinguished by the death of Santos, the principal.
The Courts Ruling
The Petition has no merit.
Sole Issue:
Effect of Death on the Suretys 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 obligees 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, attorneys 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 its sub-contractors with labor and materials in the prosecution of the
work provided for in the said contract, then, this obligation shall be null and void;
otherwise it shall 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 modifications of said contract shall be considered as authorized, with the
express consent of the Surety.
"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 Appeals 18 stated
thus:
"x x x. The suretys 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 the substantive right of the solidary creditor. Evidently, despite the death of
the principal debtor, respondent may still sue petitioner alone, in accordance with
the solidary nature of the latters liability under the performance bond.
WHEREFORE, the Petition is DENIED and the Decision of the Court of Appeals
AFFIRMED. Costs against petitioner.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
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 haciendaof 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.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
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, petitionersappellants,
vs.
MANUEL FABIANA, JOSE GARIN and HON. COURT OF APPEALS (Tenth
Division), respondents-appellants.
Eduardo S. Baranda and Avelino T Javellana for petitioners.
Dominador G. Garin for private respondents.

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.

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

Republic of the Philippines

Supreme Court
Baguio City
SPECIAL THIRD DIVISION
ABS-CBN BROADCASTING CORPORATION,
EUGENIO LOPEZ, JR., AUGUSTO ALMEDALOPEZ, and OSCAR M. LOPEZ,
Petitioners,
- versus OFFICE OF THE OMBUDSMAN, ROBERTO S.
BENEDICTO, EXEQUIEL B. GARCIA, MIGUEL V.
GONZALES, and SALVADOR (BUDDY) TAN,

G.R. No. 133347

Present:
CARPIO MORALES, J.,*
VELASCO, JR.,**
NACHURA,
Chairperson,
VILLARAMA, JR.,*** and
MENDOZA, JJ.****

Respondents.

Promulgated:

April 23, 2010

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

Bayotas

[1]

due

to

their

death,

consistent

and Benedicto v. Court of Appeals;

with
[2]

our

rulings

in People

v.

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 LETTERAGREEMENT 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 clients demise on July 20, 2007. [6] Hence, as to Gonzales, the case
must also be dismissed.
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)
b)
c)
d)
e)

Law
Contracts
Quasi-contracts
xxx xxx xxx
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 ourcertiorari 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 wellfounded 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 complaintaffidavits simply consisted of the following:
1.

Complaint-affidavit of Eugenio, Jr.

32.1. I was briefed that Senator Estanislao Fernandez in

representation of Benedicto, met with Senator Taada at the Club
Filipino in June 1976. Discussions were had on how to arrive at the
reasonable rental for the use of ABS-CBN stations and facilities. A
second meeting at Club Filipino took place on July 7, 1976 between
Senators Taada and Fernandez, who brought along Atty. Miguel
Gonzales, a close associate and lawyer of Benedicto and an officer of
KBS.
xxxx
38.2. The illegal takeover of ABS-CBN stations, studios and
facilities, and the loss and/or damages caused to our assets occurred

while Benedicto, Exequiel Garcia, Miguel Gonzales, and Salvador Tan

were in possession, control and management of our network. Roberto
S. Benedicto was the Chairman of the Board of KBS-RPN and its Chief
Executive Officer (CEO), to whom most of the KBS-RPN officers
reported while he was in Metro Manila. Miguel Gonzales, the VicePresident 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 Benedictos 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 Taada at the Club Filipino on June 1976.
Discussions were had on how to arrive at the reasonable rental for
the use of ABS stations and facilities. A second meeting at Club Filipino
took place on July 7, 1976 between Senators Taada and Fernandez,
who brought along Atty. Mike Gonzales, a close associate and friend of
Benedicto and an officer of KBS.[10]
3.

Complaint-affidavit of Augusto Almeda

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 Taada at the Club Filipino on June 1976.
Discussions were had on how to arrive at the reasonable rental for
the use of ABS stations and facilities. A second meeting at Club Filipino
took place on July 7, 1976 between Senators Taada and Fernandez,
who brought along Atty. Mike Gonzales, a close associate and friend of
Benedicto and an officer of KBS.[11]

From the foregoing, it is beyond cavil that there is no reason for us to depart from
our policy of non-interference with the Ombudsmans finding of probable cause or
lack thereof. On the strength of these allegations, we simply could not find any
rational basis to impute grave abuse of discretion to the Ombudsmans dismissal of
the criminal complaints.
Third, we did not state in the Decision that ratification extinguishes criminal
liability. We simply applied ratification in determining the conflicting claims of
petitioners regarding the execution of the letter-agreement. Petitioners, desperate
to attach criminal liability to respondents acts, specifically to respondent Benedicto,
alleged in their complaint-affidavits that Benedicto forced, coerced and intimidated
petitioners into signing the letter-agreement. In other words, petitioners disown this
letter-agreement that they were supposedly forced into signing, such that this
resulted in a violation of Article 298 of the RPC (Execution of Deeds by means of
Violence or Intimidation).
However, three elements must concur in order for an offender to be held
liable under Article 298:

(1) that the offender has intent to defraud another.

(2)
that
the
offender compels him
or deliver any public instrument or document.

to sign, execute,

(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 Benedictos estate based on Section 1, Rule 87 of the
Rules of Court. But they did not. Instead they filed a claim against the estate based
on contract, the unambiguous letter-agreement, under Section 5, Rule 86 of the
Rules of Court. The existence of this claim against the estate of Benedicto as

opposed to the filing of an action against the executor or administrator of

Benedictos estate forecloses all issues on the circumstances surrounding the
execution of this letter- agreement.
We are not oblivious of the fact that, in the milieu prevailing during the
Marcos

years,

incidences

involving

intimidation

of

businessmen

were

not

uncommon. Neither are we totally unaware of the reputed closeness of Benedicto

to President Marcos. However, given the foregoing options open to them under the
Rules of Court, petitioners choice of remedies by filing their claim under Section 5,
Rule 86 after Marcos had already been ousted and full democratic space restored

works

against

their

contention,

challenging

the

validity

of

the

letter-

agreement. Now, petitioners must live with the consequences of their choice.
WHEREFORE, in light of the foregoing, the Motion to Refer the Case to the
Court en banc and the Motion for Reconsideration are DENIED.

THIRD DIVISION

[G.R. No. 156403. March 31, 2005]

JOSEPHINE PAHAMOTANG and ELEANOR PAHAMOTANG-BASA, petitioners, vs. THE

PHILIPPINE NATIONAL BANK (PNB) and the HEIRS OF ARTURO
ARGUNA, respondents.
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. Decision dated March 20, 2002,[1] granting the appeal and reversing the
appealed August 7, 1998 decision of the Regional Trial Court at Davao
City; and
2. Resolution dated November 20, 2002, denying herein petitioners' motion
for reconsideration.[2]
The factual background:

On July 1, 1972, Melitona Pahamotang died. She was survived by her

husband Agustin Pahamotang, and their eight (8) children, namely: Ana, Genoveva,
Isabelita,
Corazon,
Susana,
Concepcion
and
herein
petitioners Josephine and Eleonor, all surnamed Pahamotang.
On September 15, 1972, Agustin filed with the then Court of First Instance of
Davao City a petition for issuance of letters administration over the estate of his
deceased wife. The petition, docketed as Special Case No. 1792, was raffled to
Branch VI of said court, hereinafter referred to as the intestate court.
In his petition, Agustin identified petitioners Josephine and Eleonor as among
the heirs of his deceased spouse. It appears that Agustin was appointed petitioners'
judicial guardian in an earlier case - Special Civil Case No. 1785 also of the CFI of
Davao City, Branch VI.
On December 7, 1972, the intestate court issued an order granting Agustins
petition.
On July 6, 1973, respondent Philippine National Bank (PNB) and Agustin
executed an Amendment of Real and Chattel Mortgages with Assumption of
Obligation. It appears that earlier, or on December 14, 1972, the intestate court
approved the mortgage to PNB of certain assets of the estate to secure an
obligation in the amount of P570,000.00. Agustin signed the document in behalf of
(1) the estate of Melitona; (2) daughters Ana and Corazon; and (3) a logging
company named Pahamotang Logging Enterprises, Inc. (PLEI) which appeared to
have an interest in the properties of the estate. Offered as securities are twelve
(12) parcels of registered land, ten (10) of which are covered by transfer certificates
of title (TCT) No. 2431, 7443, 8035, 11465, 21132, 4038, 24327, 24326, 31226 and
37786, all of the Registry of Deeds of Davao City, while the remaining two (2)
parcels by TCTs No. (3918) 1081 and (T-2947) 562 of the Registry of Deeds of
Davao del Norte and Davao del Sur, respectively.
On July 16, 1973, Agustin filed with the intestate court a Petition for Authority To
Increase Mortgage on the above mentioned properties of the estate.
In an Order dated July 18, 1973, the intestate court granted said petition.
On October 5, 1974, Agustin again filed with the intestate court another
petition, Petition for Declaration of Heirs And For Authority To Increase
Indebtedness, whereunder he alleged the necessity for an additional loan from PNB
to capitalize the business of the estate, the additional loan to be secured by
additional collateral in the form of a parcel of land covered by Original Certificate of
Title (OCT) No. P-7131 registered in the name of Heirs of Melitona Pahamotang. In
the same petition, Agustin prayed the intestate court to declare him and Ana,
Genoveva, Isabelita, Corazon, Susana, Concepcion and herein petitioners Josephine
and Eleonor as the only heirs of Melitona.
In an Order of October 19, 1974, the intestate court granted Agustin authority to
seek additional loan from PNB in an amount not exceeding P5,000,000.00 to be
secured by the land covered by OCT No. P-7131 of the Registry of Deeds of Davao
Oriental, but denied Agustins prayer for declaration of heirs for being premature.
On October 22, 1974, a real estate mortgage contract for P4,500,000.00 was
executed by PNB and Agustin in his several capacities as: (1) administrator of the

estate of his late wife; (2) general manager of PLEI; (3) attorney-in-fact of spouses
Isabelita Pahamotang and Orlando Ruiz, and spouses Susana Pahamotang and
Octavio Zamora; and (4) guardian of daughters Concepcion and Genoveva and
petitioners Josephine and Eleonor. Offered as securities for the additional loan are
three (3) parcels of registered land covered by TCTs No. T-21132, 37786 and 43264.
On February 19, 1980, Agustin filed with the intestate court a Petition (Request
for Judicial Authority To Sell Certain Properties of the Estate), therein praying for
authority to sell toArturo Arguna the properties of the estate covered by TCTs No.
7443, 8035, 11465, 24326 and 31226 of the Registry of Deeds of Davao City, and
also TCT No. (T-3918) T-1081 of the Registry of Deeds of Davao del Norte.
On February 27, 1980, Agustin yet filed with the intestate court another petition,
this time a Petition To Sell the Properties of the Estate, more specifically referring to
the property covered by OCT No. P-7131, in favor of PLEI.
In separate Orders both dated February 25, 1980, the intestate court granted
Agustin authority to sell estate properties, in which orders the court also required all
the heirs of Melitona to give their express conformity to the disposal of the subject
properties of the estate and to sign the deed of sale to be submitted to the same
court. Strangely, the two (2) orders were dated two (2) days earlier than February
27, 1980, the day Agustin supposedly filed his petition.
In a motion for reconsideration, Agustin prayed the intestate court for the
amendment of one of its February 25, 1980 Orders by canceling the requirement of
express conformity of the heirs as a condition for the disposal of the aforesaid
properties.
In its Order of January 7, 1981, the intestate court granted Agustins prayer.
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 andOctober 22, 1974, mortgagor PNB filed a petition
for the extrajudicial foreclosure of the mortgage.
Petitioner Josephine filed a motion with the intestate court for the issuance of an
order restraining PNB from extrajudicially foreclosing the mortgage. In its Order
dated August 19, 1983, the intestate court denied Josephines motion. Hence, PNB
was able to foreclose the mortgage in its favor.
Petitioners Josephine and Eleanor, together with their sister Susana
Pahamatong-Zamora, filed motions with the intestate court to set aside its Orders of
December 14, 1972 [Note: the order dated July 18, 1973 contained reference to an

order dated December 14, 1972 approving the mortgage to PNB of certain
properties of the estate], July 18, 1973, October 19, 1974 andFebruary 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 forNullification 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 crossclaim 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 defendantsSheriffs, insofar as they affect the assets of the Estate of Melitona
Pahamotang, including the public auction sales thereof, are null and void?

3.

Whether or not the Deed of Absolute Sale in favor of defendant Arturo

Arguna entered as Doc. No. 473; Page No. 96; Book No. VIII, series of 1981
of the Notarial Register of Notary Public Paquito Balasabas is null and void?

4.

Whether or not the Deed of Absolute Sale in favor of defendant

Pahamotang Logging Enterprises, Inc. entered as Doc. No. 474; Page No. 96;
Book No. VIII, series of 1981 of the Notarial Register of Notary Public Paquito
Balasabas is null and void?

5.

On defendant PNB's cross-claim, in the event the mortgage contracts and

the foreclosure proceedings are declared null and void, whether or not
defendant Pahamotang Logging Enterprises, Inc. is liable to the PNB?

6.

Whether or not the defendants are liable to the plaintiffs for damages?

7.

Whether or not the plaintiffs are liable to the defendants for damages? [5]

With defendant Arturo Argunas death on October 31, 1990, the trial court
ordered his substitution by his heirs: Heirs of Arturo Alguna.
In a Decision dated August 7, 1998, the trial court in effect rendered judgment
for the plaintiffs. We quote the decisions dispositive portion:
"WHEREFORE, in view of all the foregoing, judgment is hereby rendered as follows:
1.
Declaring the Mortgage Contracts of July 6, 1973 and October 22, 1974, as
well as the foreclosure proceedings, void insofar as it affects the share, interests
and property rights of the plaintiffs in the assets of the estate of Melitona
Pahamotang, but valid with respect to the other parties;

2.
Declaring the deeds of sale in favor of defendants Pahamotang Logging
Enterprises, Inc. and Arturo Arguna as void insofar as it affects the shares, interests
and property rights of herein plaintiffs in the assets of the estate of Melitona
Pahamotang but valid with respect to the other parties to the said deeds of sale.
3.
Denying all the other claims of the parties for lack of strong, convincing and
competent evidence.
No pronouncement as to costs.
SO ORDERED.[6]
From the aforementioned decision of the trial court, PNB, PLEI and the Heirs of
Arturo Arguna went on appeal to the Court of Appeals in CA-G.R. CV No. 65290.
While the appeal was pending, the CA granted the motion of Susana PahamatongZamora to withdraw from the case.
As stated at the threshold hereof, the Court of Appeals, in its Decision dated
March 20, 2002,[7] reversed the appealed decision of the trial court and dismissed
the petitioners complaint in Civil Case No. 16,802, thus:
WHEREFORE, the appeal is hereby GRANTED. The assailed August 07, 1998 Decision
rendered by the Regional Trial Court of Davao City, Branch 12, is
hereby REVERSED and SET ASIDE and a new one is entered DISMISSING the
complaint filed in Civil Case No. 16,802.
SO ORDERED.
The appellate court ruled that petitioners, while ostensibly questioning the
validity of the contracts of mortgage and sale entered into by their father Agustin,
were essentially attacking collaterally the validity of the four (4) orders of the
intestate court in Special Case No. 1792, namely:
1. Order dated July 18, 1973, granting Agustins Petition for Authority to
Increase Mortgage;
2. Order dated October 19, 1974, denying Agustins petition for declaration of
heirs but giving him authority to seek additional loan from PNB;
3. Order dated February 25, 1980, giving Agustin permission to sell properties
of the estate to Arturo Arguna and PLEI; and
4. Order dated January 7, 1981, canceling the requirement of express
conformity by the heirs as a condition for the disposal of estate properties.
To the appellate court, petitioners committed a fatal error of mounting a collateral
attack on the foregoing orders instead of initiating a direct action to annul them.
Explains the Court of Appeals:

"A null and void judgment is susceptible to direct as well as collateral attack. A
direct attack against a judgment is made through an action or proceeding the main
object of which is to annul, set aside, or enjoin the enforcement of such judgment, if
not carried into effect; or if the property has been disposed of, the aggrieved party
may sue for recovery. A collateral attack is made when, in another action to obtain
a different relief, an attack on the judgment is made as an incident in said action.
This is proper only when the judgment, on its fact, is null and void, as where it is
patent that the court which rendered such judgment has no jurisdiction. A
judgment void on its face may also be attacked directly.
xxx

xxx

xxx

Perusing the above arguments and comparing them with the settled ruling, the
plaintiffs-appellees [now petitioners], we believe had availed themselves of the
wrong remedy before the trial court. It is clear that they are collaterally attacking
the various orders of the intestate court in an action for the nullification of the
subject mortgages, and foreclosure proceedings in favor of PNB, and the deeds of
sale in favor of Arguna. Most of their arguments stemmed from their allegations
that the various orders of the intestate court were issued without a notification
given to them. An examination, however, of the July 18, 1973 order shows that the
heirs of Melitona have knowledge of the petition to increase mortgage filed by
Agustin, thus:
`The petitioner testified that all his children including those who are of age have no
objection to this petition and, as matter of fact, Ana Pahamotang, one of the heirs of
Melitona Pahamotang, who is the vice-president of the logging corporation, is the
one at present negotiating for the increase of mortgage with the Philippine National
Bank.'
The presumption arising from those statements of the intestate court is that the
heirs were notified of the petition for the increase of mortgage.
The same can be seen in the October 19, 1974 order:
`The records show that all the known heirs, namely Ana, Isabelita, Corazon, Susana,
including the incompetent Genoveva, and the minors Josephine, Eleanor and
Concepcion all surnamed were notified of the hearing of the petition.'
On the other hand, the February 25, 1980 order required Agustin to obtain first
express conformity from the heirs before the subject property be sold to Arguna.
The fact that this was reconsidered by the intestate court in its January 07, 1981 is
of no moment. The questioned orders are valid having been issued in accordance
with law and procedure. The problem with the plaintiffs-appellees is that, in trying
to nullify the subject mortgages and the foreclosure proceedings in favor of PNB and
the deeds of sale in favor of Arguna, they are assailing the aforesaid orders of the
intestate court and in attacking the said orders, they attached documents that they
believe would warrant the conclusion that the assailed orders are null and void.
This is a clear collateral attack of the orders of the intestate court which is not void
on its face and which cannot be allowed in the present action. The defects alleged

by the plaintiff-appellees are not apparent on the face of the assailed orders. Their
recourse is to ask for the declaration of nullity of the said orders, not in a collateral
manner, but a direct action to annul the same. [8]
The same court added that petitioners failure to assail said orders at the most
opportune time constitutes laches:
"In their complaint below, plaintiffs, appellees are assailing in their present action,
four orders of the intestate court namely: July 18, 1973, October 19, 1974, February
25, 1980 and January 07, 1981 orders which were then issued by Judge Martinez. It
should be recalled that except for the January 07, 1981 order, Judge Jacinto, upon
taking over Sp. No. 1792, denied the motion of the plaintiffs-appellees to set aside
the aforesaid orders. Aside from their motion before Judge Jacinto, nothing on the
records would show that the plaintiffs-appellees availed of other remedies to set
aside the questioned orders. Further, the records would not show that the plaintiffsappellees appealed the order of Judge Jacinto. If an interval of two years, seven
months and ninety nine days were barred by laches, with more reason should the
same doctrine apply to the present case, considering that the plaintiffs-appellees
did not avail of the remedies provided by law in impugning the various orders of the
intestate court. Thus, the questioned orders of the intestate court, by operation of
law became final. It is a fundamental principle of public policy in every jural system
that at the risk of occasional errors, judgments of courts should become final at
some definite time fixed by law (interest rei publicae ut finis sit litum). The very
object of which the courts were constituted was to put an end to controversies.
Once a judgment or an order of a court has become final, the issues raised therein
should be laid to rest. To date, except as to the present action which we will later
discuss as improper, the plaintiff-appellees have not availed themselves of other
avenues to have the orders issued by Judge Martinez and Judge Jacinto annulled and
set aside. In the present case, when Judge Jacinto denied the motion of the
plaintiffs-appellees, the latter had remedies provided by the rules to assail such
order. The ruling by Judge Jacinto denying plaintiffs-appellees motion to set aside
the questioned orders of Judge Martinez has long acquired finality. It is well
embedded in our jurisprudence, that judgment properly rendered by a court vested
with jurisdiction, like the RTC, and which has acquired finality becomes immutable
and unalterable, hence, may no longer be modified in any respect except only to
correct clerical errors or mistakes. Litigation must have and always has an end. If
not, judicial function will lose its relevance.
In time, petitioners moved for a reconsideration but their motion was denied by
the appellate court in its Resolution of November 20, 2002.
Hence, petitioners present recourse, basically praying for the reversal of the CA
decision and the reinstatement of that of the trial court.
We find merit in the petition.
It is petitioners posture that the mortgage contracts dated July 6,
1973 and October 22, 1974 entered into by Agustin with respondent PNB, as well as
his subsequent sale of estate properties to PLEI and Arguna on March 4, 1981, are
void because they [petitioners] never consented thereto. They assert that as heirs
of their mother Melitona, they are entitled to notice of Agustin's several petitions in

the intestate court seeking authority to mortgage and sell estate properties.
Without such notice, so they maintain, the four orders of the intestate court
dated July 18, 1973, October 19, 1974, February 25, 1980 and January 7, 1981,
which allowed Agustin to mortgage and sell estate properties, are void on account
of Agustins non-compliance with the mandatory requirements of Rule 89 of the
Rules of Court.
Prescinding from their premise that said orders are completely void and hence,
could not attain finality, petitioners maintain that the same could be attacked
directly or collaterally, anytime and anywhere.
For its part, respondent PNB asserts that petitioners cannot raise as issue in this
proceedings the validity of the subject orders in their desire to invalidate the
contracts of mortgage entered into by Agustin. To PNB, the validity of the subject
orders of the intestate court can only be challenged in a direct action for such
purpose and not in an action to annul contracts, as the petitioners have done. This
respondent adds that the mortgage on the subject properties is valid because the
same was made with the approval of the intestate court and with the knowledge of
the heirs of Melitona, petitioners included. [9]
Upon the other hand, respondent Heirs of Arturo Arguna likewise claim that
petitioners knew of the filing with the intestate court by Agustin of petitions to
mortgage and sell the estate properties. They reecho the CAs ruling that petitioners
are barred by laches in filing Civil Case No. 16,802. [10]
As we see it, the determinative question is whether or not petitioners can obtain
relief from the effects of contracts of sale and mortgage entered into by Agustin
without first initiating a direct action against the orders of the intestate court
authorizing the challenged contracts.
We answer the question in the affirmative.
It bears emphasizing that the action filed by the petitioners before the trial court
in Civil Case No. 16,802 is for the annulment of several contracts entered into by
Agustin for and in behalf of the estate of Melitona, namely: (a) contract of mortgage
in favor of respondent PNB, (b) contract of sale in favor of Arguna involving seven
(7) parcels of land; and (c) contract of sale of a parcel of land in favor of PLEI.
The trial court acquired jurisdiction over the subject matter of the case upon the
allegations in the complaint that said contracts were entered into despite lack of
notices to the heirs of the petition for the approval of those contracts by the
intestate court.
Contrary to the view of the Court of Appeals, the action which petitioners lodged
with the trial court in Civil Case No. 16,802 is not an action to annul the orders of
the intestate court, which, according to CA, cannot be done collaterally. It is the
validity of the contracts of mortgage and sale which is directly attacked in the
action.
And, in the exercise of its jurisdiction, the trial court made a factual finding in its
decision of August 7, 1998 that petitioners were, in fact, not notified by their father
Agustin of the filing of his petitions for permission to mortgage/sell the estate
properties. The trial court made the correct conclusion of law that the challenged
orders of the intestate court granting Agustins petitions were null and void for lack

of compliance with the mandatory requirements of Rule 89 of the Rules of Court,

particularly Sections 2, 4, 7 thereof, which respectively read:
Sec. 2. When court may authorize sale, mortgage, or other encumbrance of realty
to pay debts and legacies through personalty not exhausted. - When the personal
estate of the deceased is not sufficient to pay the debts, expenses of
administration, and legacies, or where the sale of such personal estate may injure
the business or other interests of those interested in the estate, and where a
testator has not otherwise made sufficient provision for the payment of such debts,
expenses, and legacies, the court, on the application of the executor or
administrator and on written notice to the heirs, devisees, and legatees residing in
the Philippines, may authorize the executor or administrator to sell, mortgage, or
otherwise encumber so much as may be necessary of the real estate, in lieu of
personal estate, for the purpose of paying such debts, expenses, and legacies, if it
clearly appears that such sale, mortgage, or encumbrance would be beneficial to
the persons interested; and if a part cannot be sold, mortgaged, or otherwise
encumbered without injury to those interested in the remainder, the authority may
be for the sale, mortgage, or other encumbrance of the whole of such real estate, or
so much thereof as is necessary or beneficial under the circumstances.
Sec. 4. When court may authorize sale of estate as beneficial to interested
persons. Disposal of proceeds. - When it appears that the sale of the whole or a part
of the real or personal estate, will be beneficial to the heirs, devisees, legatees, and
other interested persons, the court may, upon application of the executor or
administrator and on written notice to the heirs, devisees and legatees who are
interested in the estate to be sold, authorize the executor or administrator to sell
the whole or a part of said estate, although not necessary to pay debts, legacies, or
expenses of administration; but such authority shall not be granted if inconsistent
with the provisions of a will. In case of such sale, the proceeds shall be assigned to
the persons entitled to the estate in the proper proportions.
Sec. 7. Regulations for granting authority to sell, mortgage, or otherwise
encumber estate. - The court having jurisdiction of the estate of the deceased may
authorize the executor or administrator to sell personal estate, or to sell, mortgage,
or otherwise encumber real estate; in cases provided by these rules and when it
appears necessary or beneficial, under the following regulations:
(a) The executor or administrator shall file a written petition setting forth
the debts due from the deceased, the expenses of administration, the
legacies, the value of the personal estate, the situation of the estate to
be sold, mortgaged, or otherwise encumbered, and such other facts as
show that the sale, mortgage, or other encumbrance is necessary or
beneficial;
(b) The court shall thereupon fix a time and place for hearing such
petition, and cause notice stating the nature of the petition, the reason
for the same, and the time and place of hearing, to be given personally
or by mail to the persons interested, and may cause such further notice
to be given, by publication or otherwise, as it shall deem proper;
(Emphasis supplied).

xxx

xxx

xxx

Settled is the rule in this jurisdiction that when an order authorizing the sale or
encumbrance of real property was issued by the testate or intestate court without
previous notice to the heirs, devisees and legatees as required by the Rules, it is not
only the contract itself which is null and void but also the order of the court
authorizing the same.[11]
Thus, in Maneclang vs. Baun,[12] the previous administrator of the estate filed a
petition with the intestate court seeking authority to sell portion of the estate, which
the court granted despite lack of notice of hearing to the heirs of the decedent. The
new administrator of the estate filed with the Regional Trial Court an action for the
annulment of the sales made by the previous administrator. After trial, the trial
court held that the order of the intestate court granting authority to sell, as well as
the deed of sale, were void. On appeal directly to this Court, We held that without
compliance with Sections 2, 4 and 7 of Rule 89 of the Rules of Court, the authority
to sell, the sale itself and the order approving it would be null and void ab initio.
In Liu vs. Loy, Jr.,[13] while the decedent was still living, his son and attorney-infact 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 2 nd set of
buyers. Frank Liu filed a complaint for reconveyance/ annulment of title with the
Regional Trial Court. The trial court dismissed the complaint and the Court of
Appeals affirmed the dismissal. When the case was appealed to us, we set aside the
decision of the appellate court and declared the probate court's approval of the sale
as completely void due to the failure of the 2 nd set of buyers to notify the heiradministratrix 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]
As it were, the appellate court offered little explanation on why it did not believe
the trial court in its finding that petitioners were ignorant of Agustins scheme to
mortgage and sell the estate properties.

Aside from merely quoting the orders of July 18, 1973 and October 19, 1974 of
the intestate court, the Court of Appeals leaves us in the dark on its reason for
disbelieving the trial court. The appellate court did not publicize its appraisal of the
evidence presented by the parties before the trial court in the matter regarding the
knowledge, or absence thereof, by the petitioners of Agustins petitions. The
appellate court cannot casually set aside the findings of the trial court without
stating clearly the reasons therefor. Findings of the trial court are entitled to great
weight, and absent any indication to believe otherwise, we simply cannot adopt the
conclusion reached by the Court of Appeals.
Laches is negligence or omission to assert a right within a reasonable time,
warranting the presumption that the party entitled to assert it has either abandoned
or declined the right.[16] The essential elements of laches are: (1) conduct on the
part of the defendant, or of one under whom he claims, giving rise to the situation
of which complaint is made and for which the complaint seeks a remedy; (2) delay
in asserting the complainant's rights, the complainant having had knowledge or
notice of the defendant's conduct and having been afforded an opportunity to
institute a suit; (3) lack of knowledge or notice on the part of the defendant that the
complainant would assert the right on which he bases his suit; and (4) injury or
prejudice to the defendant in the event relief is accorded to the complainant, or the
suit is not held barred.[17]
In the present case, the appellate court erred in appreciating laches against
petitioners. The element of delay in questioning the subject orders of the intestate
court is sorely lacking. Petitioners were totally unaware of the plan of Agustin to
mortgage and sell the estate properties. There is no indication that mortgagor PNB
and vendee Arguna had notified petitioners of the contracts they had executed with
Agustin. Although petitioners finally obtained knowledge of the subject petitions
filed by their father, and eventually challenged the July 18, 1973, October 19, 1974,
February 25, 1980 and January 7, 1981 orders of the intestate court, it is not clear
from the challenged decision of the appellate court when they (petitioners) actually
learned of the existence of said orders of the intestate court. Absent any indication
of the point in time when petitioners acquired knowledge of those orders, their
alleged delay in impugning the validity thereof certainly cannot be established. And
the Court of Appeals cannot simply impute laches against them.
WHEREFORE, the assailed issuances of the Court of Appeals are hereby
REVERSED and SET ASIDE and the decision dated August 7, 1998 of the trial court
in its Civil Case No. 16,802 REINSTATED.

SECOND DIVISION
JOSEPHINE OROLA, MYRNA

G.R. No. 158566

OROLA, ANGELINE OROLA,

MANUEL OROLA, ANTONIO
OROLA and ALTHEA OROLA,
Petitioners,

- versus -

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

THE RURAL BANK OF

PONTEVEDRA (CAPIZ), INC.,
EMILIO Q. OROLA, THE
REGISTER OF DEEDS OF CAPIZ
and THE EX-OFFICIO
PROVINCIAL SHERIFF OF
Promulgated:
CAPIZ,
Respondents.
September 20, 2005
x------------------------------------ --------------x
DECISION
CALLEJO, SR., J.:

Before us is a petition for review on certiorari of the Decision[1] of the Court of

Appeals (CA) in CA-G.R. CV No. 35724 reversing, on appeal, the Decision [2] of the
Regional Trial Court (RTC) of Roxas City, Branch 15, in Civil Case No. V-5452.

On July 16, 1969, Trinidad Laserna Orola died intestate. She was survived by
her husband Emilio Orola and their six minor children, namely, 10-year-old Antonio,
12-year-old Josephine, 16-year-old Manuel, and other siblings, Myrna, Angeline and
Althea.
The estate consisted of property located in Pontevedra, Capiz. It included
portions of Lots 1071 and 1088 (Lot 2-B) of the Pontevedra Cadastre, covered by Tax
Declaration (T.D.) No. 7197[3] under the names of the heirs of Trinidad Orola; Lot
1088 (Lot 2) covered by T.D. No. 6901 under the name of Trinidad Orola; Lot 1071
and portions of Lot 1088 (Lot 2-A) of the same cadastre covered by T.D. No. 7196
under the names of the heirs of Trinidad Orola; and Lot 1050 of the same cadastre
covered by T.D. No. 2623[4] under the name of Trinidad Orola. Portions of the
property were devoted to the development and production of sugar. Some portions
were riceland, while some parts of the property were swampy. [5]
Emilio Orola, who, in the meantime, had married anew, executed a waiver of
all his rights and interests over the said property in favor of his children by Trinidad
Laserna, namely, Josephine, Myrna, Angeline, Manuel, Antonio and Althea, all
surnamed Orola.[6]
In 1973, Emilio Orola retired as cashier of the Philippine National Bank (PNB).
[7]

He filed a petition for his appointment as guardian over the persons and property

of his minor children. The case was docketed as Special Proceedings (Sp. Proc.) No.
V-3526. The petition was granted, and Emilio Orola was appointed guardian not
only over the persons of his minor children but also over their property.

On

November 6, 1973, Emilio filed a petition with the RTC for the settlement of the
estate of his deceased spouse, Trinidad Laserna, and his appointment as

administrator of her estate. The RTC issued an order appointing Emilio Orola as
administrator of the estate of his deceased spouse.
As such administrator of the estate, Emilio took possession of the said parcels
of land. He opened an account in the name of the estate with the PNB. He
embarked on a massive sugar production and, with prior approval of the court,
negotiated with banking institutions for financing loans to purchase the required
equipments. However, in 1976 and 1977, there was a sudden collapse of the sugar
industry. Emilio Orola found it necessary to develop the swampy portion of the
estate for the production of fish.

To finance the endeavor, he needed at

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

On September 12, 1980, the court granted the motion of the administrator
and authorized him to negotiate the loan through the Rural Bank of Capiz (Rural
Bank of Pontevedra, Capiz) and to transfer the sugar account of the estate to the
RPB in Roxas City.[9] Emilio then filed an application with the Rural Bank for a
financing loan ofP600,000.00. However, the bank informed him that the said loan
would have to be processed by the Central Bank and that it would take some time.
He was informed that there would be no need for the Central Bank to intervene if
the loan of P600,000.00 would be broken down into three parts of P200,000.00,
each to be applied for by three applicants to whom the property to be used as
collateral would be leased by the estate. Emilio agreed and talked to his children,
Josephine, Manuel and Antonio, about the banks proposal.

The three siblings

agreed.[10] The Estate of Trinidad Laserna, through its administrator, Emilio, as

lessor, and Josephine, Manuel and Antonio, all surnamed Orola, as lessees, executed
separate contracts of lease over the aforesaid property of the estate.

On

September 20, 1982, the intestate estate court issued an Order approving the
contracts.
However, it turned out that the lessees would not qualify for the loans; the
bank required a lease period of at least 10 years from the time the court approved
the same. On May 20, 1982, Emilio, Antonio, Manuel and Josephine Orola filed a
Manifestation[11] with the intestate estate court, praying that its order be amended
to state that the periods of the leases were to commence from court approval of the
said contracts.
However, on December 15, 1982, the estate, through Emilio, as lessor, and
Josephine, Antonio and Manuel Orola, executed separate Amended Contracts of
Lease[12]covering the same property. The periods of the lease were extended to 12

years, to commence from their approval by the intestate estate court. The lessees
were also authorized to negotiate loans for the development of the leased premises
not to exceed P200,000.00, and to bind the leased premises by way of real estate
mortgage as security therefor.
On December 15, 1982, Emilio filed an Ex Parte Motion[13] in the intestate
estate court for the approval of the amended contracts of lease appended thereto.
On December 17, 1982, Angeline, Myrna and Althea Orola filed their Joint Affidavit
of Conformity[14] to the motion. On December 17, 1982, the court granted the
motion of Emilio and approved the amended contracts of lease. [15] On December
20, 1982, the Rural Bank notified Emilio that the loan applications of his children
had been approved.[16]

Antonio, Manuel and Josephine signed separate Promissory Notes [17] on March
21, 1983 in which they promised and bound themselves to pay their respective
loans in 10 years in stated annual installments. Antonio Orola, for and in behalf of
his father Emilio Orola, executed a Real Estate Mortgage over Lot 1088 as security
for the payment of his loan. [18]

Manuel Orola, also as attorney-in-fact of the

administrator of the estate, likewise, executed a real estate mortgage in favor of the
Rural Bank over the said lots as security for his loan. [19] Josephine Orola, as
attorney-in-fact of the administrator of the estate, executed a separate real estate
mortgage agreement over a portion of Lot 1088 and Lot 1071 as security for her
loan.[20] However, the real estate mortgage contracts were not submitted to the
guardianship and intestate estate courts for approval.

Neither were Myrna,

Angeline and Althea aware of the said loans.

The net proceeds of the loan, in the total amount of P582,000.00, were
deposited in the Rural Bank on May 9, 1983 in Emilios account. [21] From the said
proceeds, the Rural Bank deducted the amount of P229,771.20, the accommodation
loan Emilio secured from the Rural Bank. [22] As of September 9, 1983, the balance
of the said deposit amounted to only P4,292.79.[23] Emilio, thereafter, failed to pay
the amortizations of the loans to the Rural Bank. [24]

This prompted the Rural Bank to write separate letters of demand to

Josephine, Manuel and Antonio, demanding payment of the balance of their
accounts within seven days from the receipt thereof, otherwise the Rural Bank
would cause the extrajudicial foreclosure of the real estate mortgages. [25] Emilio
Orola pleaded to the Rural Bank not to foreclose the mortgages. However, on June
15, 1985, the Rural Bank filed an application with the Ex-Officio Provincial Sheriff for
the extrajudicial foreclosure of the real estate mortgages over Lots 1071 and 1088.
[26]

The lots were sold at public auction on April 14, 1986 with the Rural Bank as the

winning bidder. The Ex-Officio Provincial Sheriff executed separate certificates of

sale in favor of the Rural Bank.[27]
On September 1, 1987, the guardianship court terminated the guardianship
and dismissed the case.[28] On September 21, 1987, Josephine, Myrna, Manuel and
Antonio Orola executed a Deed of Acceptance of Waiver or Donation in which they
accepted their fathers waiver of his rights, interests and participation over their
mothers estate.[29]
On October 1, 1987, Josephine Orola and her siblings, Myrna, Angeline,
Manuel, Antonio and Althea, filed a Complaint against the Rural Bank, their father
Emilio and theEx-Officio Provincial Sheriff for the nullification of the Promissory
Notes and Real Estate Mortgages executed by Josephine, Manuel and Antonio Orola,
and the sale of the property subject of the said deed at public auction. They alleged
therein that they became the sole owners of Lots 1088 and 1071 when their father
executed a waiver of his rights over the said lots in their favor. They also alleged
that the real estate mortgage contracts were null and void because the same were
never submitted to and approved by the RTC in Sp. Proc. Nos. V-3526 and V-3639.
Moreover, they were hoodwinked by their father into signing the contracts of lease

and amended contracts of lease, promissory notes and deeds of real estate
mortgages as security for the P600,000.00 loan on the assurance that they would
be benefited therefrom; moreover, they did not receive the proceeds of the said
loans. As such, the extrajudicial foreclosure of the real estate mortgages and the
sale of the property covered by the said deeds were null and void. The plaintiffs
prayed that:
(1)
A Temporary Restraining Order be issued restraining in
the meantime the defendant Ex-Officio Provincial Sheriff from
executing the Sheriffs Certificates of Sales arising out of Case No. 33
(1985), Case No. 34 (1985) and Case No. 36 (1985), all of the Office of
the Provincial Sheriff.
(2)
After hearing, a writ of preliminary injunction be issued
against the defendant Provincial Sheriff for the same purpose stated
above, and that the said Preliminary Injunction be made permanent
after trial on the merits.
(3)

After trial, a Judgment be rendered -

(a)
Declaring the contracts of loan and/or
Promissory Notes allegedly executed by plaintiffs
Josephine, Manuel and Antonio Orola in favor of the
defendant Rural Bank of Pontevedra (Capiz), Inc. null and
void ab initio.
(b)
Declaring the real estate mortgages
purportedly signed by the same plaintiffs Josephine,
Manuel and Antonio Orola in favor of defendant Rural
Bank of Pontevedra (Capiz), Inc. null and void ab initio.
(c)
Ordering defendant Emilio Q. Orola and
defendant Rural Bank of Pontevedra (Capiz), Inc., jointly
and severally, to pay the plaintiffs moral damages in the
sum ofP600,000.00, actual damages in the sum
of P10,000.00, as and for attorneys fees in the amount
of P65,000.00, as exemplary damages in the sum
of P10,000.00, and to pay the costs of this suit.

(d)
Ordering the Register of Deeds for the
Province of Capiz to cancel the registration of the real
estate mortgages illegally made under Section 113 of
Presidential Decree No. 1529 affecting Lots Nos. 1088 and
1050 of the Cadastral Survey of Pontevedra, Capiz.
The plaintiffs also pray for such other reliefs and remedies that
may be considered just and equitable under the premises. [30]

In its answer to the complaint, Rural Bank averred that the RTC in Sp. Proc.
No. V-3639 authorized and even approved the amended contracts of sale executed
by Antonio, Manuel and Josephine Orola and the defendant Emilio Orola. It further
averred that the plaintiffs had agreed to the execution of the mortgages of the
property subject of the said deeds, and conformed to the said amended contracts
before the RTC in the intestate estate proceedings approved the same; they were
also notified of the balance of their account, and of the extrajudicial foreclosure of
the real estate mortgages, and the subsequent sale of the property covered by the
said mortgages at public auction after they refused to pay their account despite
demands. As such, the plaintiffs were estopped from assailing the real estate
mortgages and the extrajudicial foreclosure thereof and the sale of the lots covered
by the said deeds at public auction. Rural Bank prayed that:
WHEREFORE, premises considered, it is most respectfully
prayed of this Honorable Court that, after due notice and hearing, a
judgment be rendered in favor of defendant bank dismissing the
plaintiffs complaint and ordering the plaintiffs to pay defendant bank
the following:
1.

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

2.
As moral, compensatory and exemplary damages, an
amount to be fixed by this Honorable Court;
3.

The costs of this suit.

Herein defendant bank, likewise, prays that the plaintiffs

petition for the Issuance of a Temporary Restraining Order against the
defendant Ex-Officio Provincial Sheriff restraining him from executing
the Certificates of Sheriff Sale arising out of Case No. 33 (1985), Case

No. 34 (1985) and Case No. 36 (1985), all of the Office of the Provincial
Sheriff of Capiz be denied for obvious lack of merit.
Herein defendant further prays that the extra-judicial
foreclosure of the Real Estate Mortgages recorded under Republic Act
3344 be confirmed and declared binding and valid affecting the
Original Certificates of Title Nos. RO-801 (17658) and RO-802 (17682)
covering the mortgaged Lots Nos. 1088 and 1071 of the Cadastral
Survey of Capiz.
Herein defendant finally prays for such other reliefs or remedies
which are just and equitable in the premises. [31]

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

On December 29, 1989, the Rural Bank presented the Real Estate Mortgage in
the Office of the Register of Deeds.[32]
On April 19, 1991, the RTC rendered judgment in favor of the plaintiffs.
The fallo of the decision reads:
IN VIEW OF THE CONSIDERATIONS, judgment is rendered:
1.
Declaring the loans of Josephine Orola, Antonio Orola,
Manuel Orola, all on March 21, 1983, with the defendant, Rural Bank,
at P200,000 each or a total of P600,000, null and void;
2.
Declaring that the real estate mortgages of [the] above
three (3) plaintiffs on (a) Lot No. 1071-part and Lot No. 1088-part under
Tax Declaration No. 7196 in the name of [the] Heirs of Trinidad Laserna
Orola to secure the loan by Josephine Orola; (b) Lot No. 1088 known as
Lot No. 2-B of the parcellary plan under Tax Declaration No. 7197 in
the name of the Heirs of Trinidad Orola and Lot No. 1050 under Tax
Declaration No. 2623 in the name of Trinidad Orola to secure the loan
by Antonio Orola; and (c) Lot No. 1088 under Tax Declaration No. 6901
in the name of Trinidad Laserna Orola to secure the loan by Manuel
Orola, all as Attorney-in-fact of defendant Emilio Orola, administrator,
null and void;
Both (Nos. 1 and 2) for failure to comply with the mandatory
requirements of Section 7, Rule 89, Revised Rules of Court;
3.
Ordering the Office of the Registry of Land Titles and
Deeds, Province of Capiz, to cancel its registration of the real estate
mortgages affecting [the] above parcels of land.
Claims of damages and attorneys fees as well as counterclaims
are denied.
Costs against the defendants, pro indiviso.[33]

The trial court held that although the intestate estate court authorized Emilio
to negotiate a loan of P600,000.00 with Rural Bank, he was not authorized to
mortgage the real property of the estate to the Rural Bank. The court ruled that the
September 12, 1980 Order of the intestate estate court was null and void because
the motion of the administrator for authority to negotiate a loan with the Rural Bank
was made ex parte, that is, without notifying the plaintiffs who were the heirs of the
deceased. The court also held that the plaintiffs were not estopped from assailing
the real estate mortgage contracts, the same being null and void. It also declared
that the issue of whether or not the plaintiffs were the co-owners of the property
should be ventilated with the proper RTC in the exercise of its general jurisdiction in
an ordinary action for the said purpose.
Rural Banks motion for reconsideration of the decision was denied by the trial
court. It then appealed the decision to the CA, where it alleged that:
As to Assignment on Error No. I and II
A In ruling on the nullity of the loans and mortgages in
question, the lower court confined itself to the order of the intestate
court, dated December 12, 1980, totally ignoring the subsequent order
dated December 17, 1982 (Exhs. 36 & 37) which granted the authority
to encumber the estate in the manner required by the defendant Rural
Bank of Pontevedra.
B The non-presentation of the priorly authorized mortgages in
question in court after their execution, does not nullify said mortgages,
as what is required by Sec. 7, Rule 89 is only prior approval by the
intestate court.
As to Assignment of Error No. III
Estoppel [precludes] a party from [repudiating] an obligation
voluntarily assumed after having accepted benefits therefrom.
As to Assignment of Error No. IV
Because of their baseless complaint, defendant-appellant was
unnecessarily dragged into this litigation causing defendant-appellant
damages.[34]

The appellant bank averred that the amended contracts of lease, which
contained provisions requiring the intestate estate courts approval, were approved
by the intestate estate court and conformed to by the other heirs of the deceased.
The bank posited that the court a quo had no jurisdiction to nullify the order of the
estate court, which was co-equal in rank with the estate court in approving the
amended contracts of lease. It further alleged that the administrator of the estate
is not required under Section 7, Rule 89 of the Rules of Court to secure prior
authority to mortgage the real properties or otherwise encumber the same. Rural
Bank alleged that the appellees were estopped from assailing the real estate
mortgages of the property after having been benefited by the P600,000.00 loan.
The appellees failed to file their brief. On October 18, 2002, the CA rendered
a Decision[35] granting the appeal and reversing the appealed decision.
The appellate court ruled that the intestate estate courts approval of the
amended contracts of lease carried with it the approval of the real estate mortgages
executed by Emilio Orola in favor of the Rural Bank. Angeline, Myrna and Althea
even conformed to the amended contracts of lease; hence, were estopped from
assailing them, as well as the real estate mortgage contracts.
After the appellate court denied their motion for reconsideration of the
decision, the Orola siblings, now the petitioners, filed the instant petition for review
on certiorari with this Court, alleging that:
-ITHE SUBJECT MORTGAGES CONSTITUTED OVER THE REAL ESTATE
PROPERTIES OF PETITIONERS-APPELLEES UNDER SECTION 7, RULE 89
OF THE RULES OF COURT ARE VOID FOR NON-COMPLIANCE WITH THE
MANDATORY REGULATIONS (SIC) OF THE SAID PROVISION.
-II-

ASSUMING ARGUENDO SUBSTANTIAL

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

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

Section 2, Rule 89 of the Rules of Court provides that, upon application of the
administrator and on written notice to the heirs, the court may authorize the
administrator to mortgage so much as may be necessary of the real estate for the
expenses of the administrator, or if it clearly appears that such mortgage would be
beneficial to the persons interested:
Sec. 2. When court may authorize sale, mortgage, or other
encumbrance of realty to pay debts and legacies through personality
not exhausted. When the personal estate of the deceased is not
sufficient to pay the debts, expenses of administration, and legacies, or
where the sale of such personal estate may injure the business or
other interests of those interested in the estate, and where a testator
has not, otherwise, made sufficient provision for the payment of such
debts, expenses, and legacies, the court, on the application of the
executor or administrator and on written notice to the heirs, devisees,
and legatees residing in the Philippines, may authorize the executor or
administrator to sell, mortgage, or otherwise, encumber so much as
may be necessary of the real estate, in lieu of personal estate, for the
purpose of paying such debts, expenses, and legacies, if it clearly
appears that such sale, mortgage, or encumbrance would be beneficial
to the persons interested; and if a part cannot be sold, mortgaged, or
otherwise encumbered without injury to those interested in the
remainder, the authority may be for the sale, mortgage, or other
encumbrance of the whole of such real estate, or so much thereof as is
necessary or beneficial under the circumstances.
Section 7 of Rule 89 provides the rules to obtain court approval for such
mortgage:
(a)
The executor or administrator shall file a written
petition setting forth the debts due from the deceased, the expenses of
administration, the legacies, the value of the personal estate, the
situation of the estate to be sold, mortgaged, or otherwise
encumbered, and such other facts as show that the sale, mortgage, or
other encumbrance is necessary or beneficial;
(b)
The court shall thereupon fix a time and place for
hearing such petition, and cause notice stating the nature of the
petition, the reason for the same, and the time and place of hearing, to
be given personally or by mail to the persons interested, and may
cause such further notice to be given, by publication or otherwise, as it
shall deem proper;

(c)
If the court requires it, the executor or administrator
shall give an additional bond, in such sum as the court directs,
conditioned that such executor or administrator will account for the
proceeds of the sale, mortgage, or other encumbrance;
(d)
If the requirements in the preceding subdivisions of this
section have been complied with, the court, by order stating such
compliance, may authorize the executor or administrator to sell,
mortgage, or otherwise encumber, in proper cases, such part of the
estate as is deemed necessary, and in case of sale the court may
authorize it to be public or private, as would be most beneficial to all
parties concerned. The executor or administrator shall be furnished
with a certified copy of such order;
(e)
If the estate is to be sold at auction, the mode of giving
notice of the time and place of the sale shall be governed by the
provisions concerning notice of execution sale;
(f)
There shall be recorded in the registry of deeds of the
province in which the real estate thus sold, mortgaged, or otherwise
encumbered is situated, a certified copy of the order of the court,
together with the deed of the executor or administrator for such real
estate, which shall be as valid as if the deed had been executed by the
deceased in his lifetime.

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

The records show that respondent Emilio Orola notified the petitioners of his
motion for the approval of the amended contracts of lease. Although the motion
was ex parte, nonetheless, petitioners Angeline, Myrna and Althea Orola filed their
Joint Affidavit of Conformity, in which they declared that:
7.
That on December 15, 1982, the administrator, thru
counsel, filed an ex parte motion for the admission and approval of the
amended contracts of lease in favor of our brothers and sister
changing the term from ten (10) to twelve (12) years, copy of the
amended contracts of lease [were] shown to us;
8.
That we have no objection and we voluntarily conform
to the amendment of the term from ten (10) to twelve (12) years and
freely give our consent to having the Lessees execute a real estate
mortgage over the leased property in favor of the bank just to be able
to avail with the CB: IBRD financing loan to develop the property;
9.
That we are jointly executing this affidavit for the
purpose of facilitating the immediate admission and approval of the
amended contracts of lease as prayed for in the ex parte motion dated
December 5, 1982.[38]

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

However, the estate court had not appointed

petitioners Antonio, Josephine and Manuel Orola as attorneys-in-fact of respondent

Emilio Orola empowered to execute the said contracts.

Hence, they had no

authority to execute the said Real Estate Mortgage Contracts for and in behalf of
respondent Orola, in the latters capacity as administrator of the estate.

Worse, respondent Orola failed to submit the real estate mortgage contracts
to the intestate estate court for its consideration and approval. To give approval
means to confirm, ratify, or to consent to some act or thing done by another. [39]
Unless and until the said contracts are approved by the intestate estate court, the
same cannot have any binding effect upon the estate; nor serve as basis for any
action against the estate and against the parcels of land described in the said
contracts belonging to it.[40]
It bears stressing that respondent Orola had no right or authority to mortgage
the realty belonging to the estate. He derived his authority from the order of the
estate court which had jurisdiction to authorize the real estate mortgage thereof
under such terms and conditions and upon proper application. Any mortgage of
realty of the estate without the appropriate authority of the estate court has no
legal support and is void.[41] The purchaser at public auction acquires no title over
the realty.[42] The real estate mortgage contracts, as well as the extrajudicial
foreclosure thereof and the sale of the property described therein at public auction,
can thus be attacked directly and collaterally. [43]
Contrary to the contention of respondent Rural Bank, the petitioners were not
estopped from assailing the real estate mortgage contracts, the extrajudicial
foreclosure thereof and the sale of the property to respondent Rural Bank.
Although the records show that petitioners Josephine, Manuel and Antonio
Orola received the proceeds of the loan from respondent Rural Bank, the amount
was deposited by respondent Emilio Orola in his savings account with respondent
Rural Bank. He was obliged to deposit the said amount in the estates account with
the Republic Planters Bank, as ordered by the intestate estate court.

Worse,

respondent Rural Bank applied P229,771.20 of the loan proceeds to liquidate the

accommodation loan it granted to respondent Emilio Orola. There is no showing in

the records that the intestate estate court ever authorized the use of the proceeds
of the loan to pay respondent Emilio Orolas accommodation loan.

The loan

proceeds were to be used to develop property belonging to the estate into a

fishpond from which income could be generated.

Of the net proceeds of

the P582,000.00 loan, only P4,292.79 remained as of September 9, 1983.

Respondent Emilio Orola failed to pay the amortization of the loan for the
respondent Rural Bank of the estate.
Had the real estate mortgage contracts been submitted to the intestate
estate court for consideration and approval after proper notice to the petitioners,
the court would have been apprised of the terms and conditions contained therein,
and that about one-half of the loan would be used to pay the accommodation loan
of respondent Emilio Orola.
Petitioners Manuel, Josephine and Antonio Orola executed the amended
contracts of lease, the promissory notes and the real estate mortgages upon the
prodding of their father, respondent Emilio Orola, and upon the suggestion of
respondent Rural Bank, solely to facilitate the speedy approval of the loan of the
estate, which was to be the ultimate beneficiary thereof. The petitioners acted on
the belief that the loan would be used to develop the swampy portion of the realty
into an income-generating fishpond, impervious of the fact that almost one-half of
the proceeds of the loan had been used to pay the accommodation loan of
respondent Emilio Orola.
The claim of respondent Emilio Orola that part of the property used as
collateral for the loan was part of his and his deceased wifes conjugal property, and
that the waiver he executed was to take effect only upon his death, is belied by the

records. Indeed, in his Waiver of Rights dated October 26, 1976, respondent Emilio
Orola declared that:
1.
That during the lifetime of my first wife, Trinidad Laserna,
we have acquired property by purchase from Mr. Manuel Laserna, in
co-ownership with Pedro Laserna, Dolores Deocampo, Jesus Laserna
and Emiliana Laserna affecting Lots Nos. 1070, 1071, 1074, 1075,
1088, 1050 & 1051, all of Pontevedra Cadastre;
2.
That the said [properties] mentioned above are still
under co-ownership, pro indiviso, between and among the Vendees
whose names are mentioned above;
3.
That during the marital relations between me and my
deceased wife, Trinidad Laserna, we have six (6) children, namely,
Josephine, Myrna, Angeline, Manuel, Antonio and Althea, all surnamed
Orola;
4.
That the co-owners have decided to terminate the coownership over the above-mentioned properties of which the
aforementioned children of the spouses, Emilio Orola and Trinidad
Laserna, became co-owners thereof in representation of their deceased
mother, Trinidad Laserna, by operation of law and the herein
undersigned desires to give protection to his children of the first
marriage which are named above.
NOW, THEREFORE, for and in consideration of the love, affection
and mutual agreements, I, EMILIO Q. OROLA, by these presents, do
hereby waive and relinquish all my shares, interests and participations
over all the above-mentioned properties in favor of my six (6) children
of the first marriage, namely, Josephine, Myrna, Angeline, Manuel,
Antonio and Althea.
It is understood that, upon the registration of the project of
partition which the co-owners will present that the shares and
participations of the undersigned shall be consolidated in the names of
the children mentioned above in equal right and participation. [44]
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed
Decision and Resolution of the Court of Appeals are REVERSED AND SET ASIDE. The
Decision of the Regional Trial Court is REINSTATED. No costs.
THIRD DIVISION

[G.R. No. 146006. February 23, 2004]

JOSE C. LEE AND ALMA AGGABAO, in their capacities as President and Corporate
Secretary, respectively, of Philippines Internationl Life Insurance Company,
and FILIPINO LOAN ASSISTANCE GROUP, petitioners, vs. REGIONAL TRIAL
COURT OF QUEZON CITY BRANCH 85 presided by JUDGE PEDRO M. AREOLA,
BRANCH CLERK OF COURT JANICE Y. ANTERO, DEPUTY SHERIFFS ADENAUER
G. RIVERA and PEDRO L. BORJA, all of the Regional Trial Court of Quezon City
Branch 85, MA. DIVINA ENDERES claiming to be Special Administratrix, and
other persons/ public officers acting for and in their behalf, respondents.
DECISION
CORONA, J.:
This is a petition for review under Rule 45 of the Rules of Court seeking to
reverse and set aside the decision [1] of the Court of Appeals, First Division, dated
July 26, 2000, in CA G.R. 59736, which dismissed the petition for certiorari filed by
petitioners Jose C. Lee and Alma Aggabao (in their capacities as president and
secretary, respectively, of Philippine International Life Insurance Company) and
Filipino Loan Assistance Group.
The antecedent facts follow.
Dr. Juvencio P. Ortaez incorporated the Philippine International Life Insurance
Company, Inc. on July 6, 1956. At the time of the companys incorporation, Dr.
Ortaez owned ninety percent (90%) of the subscribed capital stock.
On July 21, 1980, Dr. Ortaez died. He left
Ortaez), three legitimate children (Rafael, Jose
illegitimate children by Ligaya Novicio (herein
Ortaez-Enderes and her siblings Jose, Romeo,
surnamed Ortaez).[2]

behind a wife (Juliana Salgado

and Antonio Ortaez) and five
private respondent Ma. Divina
Enrico Manuel and Cesar, all

On September 24, 1980, Rafael Ortaez filed before the Court of First Instance
of Rizal, Quezon City Branch (now Regional Trial Court of Quezon City) a petition for
letters of administration of the intestate estate of Dr. Ortaez, docketed as SP Proc.
Q-30884 (which petition to date remains pending at Branch 85 thereof).
Private respondent Ma. Divina Ortaez-Enderes and her siblings filed an
opposition to the petition for letters of administration and, in a subsequent urgent
motion, prayed that the intestate court appoint a special administrator.
On March 10, 1982, Judge Ernani Cruz Pao, then presiding judge of Branch 85,
appointed Rafael and Jose Ortaez joint special administrators of their fathers
estate. Hearings continued for the appointment of a regular administrator (up to
now no regular administrator has been appointed).
As ordered by the intestate court, special administrators Rafael and Jose
Ortaez submitted an inventory of the estate of their father which included, among
other properties, 2,029[3] shares of stock in Philippine International Life Insurance

Company (hereafter Philinterlife),

outstanding capital stock.

representing

50.725%

of

the

companys

On April 15, 1989, the decedents wife, Juliana S. Ortaez, claiming that she
owned 1,014[4] Philinterlife shares of stock as her conjugal share in the estate, sold
said shares with right to repurchase in favor of herein petitioner Filipino Loan
Assistance Group (FLAG), represented by its president, herein petitioner Jose C. Lee.
Juliana Ortaez failed to repurchase the shares of stock within the stipulated period,
thus ownership thereof was consolidated by petitioner FLAG in its name.
On October 30, 1991, Special Administrator Jose Ortaez, acting in his personal
capacity and claiming that he owned the remaining 1,011 [5] Philinterlife shares of
stocks as his inheritance share in the estate, sold said shares with right to
repurchase also in favor of herein petitioner FLAG, represented by its president,
herein petitioner Jose C. Lee. After one year, petitioner FLAG consolidated in its
name the ownership of the Philinterlife shares of stock when Jose Ortaez failed to
repurchase the same.
It appears that several years before (but already during the pendency of the
intestate proceedings at the Regional Trial Court of Quezon City, Branch 85), Juliana
Ortaez and her two children, Special Administrators Rafael and Jose Ortaez,
entered into a memorandum of agreement dated March 4, 1982 for the extrajudicial
settlement of the estate of Dr. Juvencio Ortaez, partitioning the estate (including
the Philinterlife shares of stock) among themselves. This was the basis of the
number of shares separately sold by Juliana Ortaez on April 15, 1989 (1,014
shares) and by Jose Ortaez on October 30, 1991 (1,011 shares) in favor of herein
petitioner FLAG.
On July 12, 1995, herein private respondent Ma. Divina OrtaezEnderes and her
siblings (hereafter referred to as private respondents Enderes et al.) filed a motion
for appointment of special administrator of Philinterlife shares of stock. This move
was opposed by Special Administrator Jose Ortaez.
On November 8, 1995, the intestate court granted the motion of private
respondents Enderes et al. and appointed private respondent Enderes special
administratrix of the Philinterlife shares of stock.
On December 20, 1995, Special Administratrix Enderes filed an urgent motion to
declare void ab initio the memorandum of agreement dated March 4, 1982. On
January 9, 1996, she filed a motion to declare the partial nullity of the extrajudicial
settlement of the decedents estate. These motions were opposed by Special
Administrator Jose Ortaez.
On March 22, 1996, Special Administratrix Enderes filed an urgent motion to
declare void ab initio the deeds of sale of Philinterlife shares of stock, which move
was again opposed by Special Administrator Jose Ortaez.
On February 4, 1997, Jose Ortaez filed an omnibus motion for (1) the approval
of the deeds of sale of the Philinterlife shares of stock and (2) the release of Ma.
Divina Ortaez-Enderes as special administratrix of the Philinterlife shares of stock
on the ground that there were no longer any shares of stock for her to administer.
On August 11, 1997, the intestate court denied the omnibus motion of Special
Administrator Jose Ortaez for the approval of the deeds of sale for the reason that:

Under the Godoy case, supra, it was held in substance that a sale of a property of
the estate without an Order of the probate court is void and passes no title to the
purchaser. Since the sales in question were entered into by Juliana S. Ortaez and
Jose S. Ortaez in their personal capacity without prior approval of the Court, the
same is not binding upon the Estate.
WHEREFORE, the OMNIBUS MOTION for the approval of the sale of Philinterlife
shares of stock and release of Ma. Divina Ortaez-Enderes as Special Administratrix
is hereby denied.[6]
On August 29, 1997, the intestate court issued another order granting the
motion of Special Administratrix Enderes for the annulment of the March 4, 1982
memorandum of agreement or extrajudicial partition of estate. The court reasoned
that:
In consonance with the Order of this Court dated August 11, 1997 DENYING the
approval of the sale of Philinterlife shares of stocks and release of Ma. Divina
Ortaez-Enderes as Special Administratrix, the Urgent Motion to Declare Void Ab
Initio Memorandum of Agreement dated December 19, 1995. . . is hereby impliedly
partially resolved insofar as the transfer/waiver/renunciation of the Philinterlife
shares of stock are concerned, in particular, No. 5, 9(c), 10(b) and 11(d)(ii) of the
Memorandum of Agreement.
WHEREFORE, this Court hereby declares the Memorandum of Agreement dated
March 4, 1982 executed by Juliana S. Ortaez, Rafael S. Ortaez and Jose S. Ortaez
as partially void ab initio insofar as the transfer/waiver/renunciation of the
Philinterlife shares of stocks are concerned. [7]
Aggrieved by the above-stated orders of the intestate court, Jose Ortaez filed,
on December 22, 1997, a petition for certiorari in the Court of Appeals. The
appellate court denied his petition, however, ruling that there was no legal
justification whatsoever for the extrajudicial partition of the estate by Jose Ortaez,
his brother Rafael Ortaez and mother Juliana Ortaez during the pendency of the
settlement of the estate of Dr. Ortaez, without the requisite approval of the
intestate court, when it was clear that there were other heirs to the estate who
stood to be prejudiced thereby. Consequently, the sale made by Jose Ortaez and
his mother Juliana Ortaez to FLAG of the shares of stock they invalidly appropriated
for themselves, without approval of the intestate court, was void. [8]
Special Administrator Jose Ortaez filed a motion for reconsideration of the
Court of Appeals decision but it was denied. He elevated the case to the Supreme
Court via petition for review under Rule 45 which the Supreme Court dismissed on
October 5, 1998, on a technicality. His motion for reconsideration was denied with
finality on January 13, 1999. On February 23, 1999, the resolution of the Supreme
Court dismissing the petition of Special Administrator Jose Ortaez became final and
was subsequently recorded in the book of entries of judgments.
Meanwhile, herein petitioners Jose Lee and Alma Aggabao, with the rest of the
FLAG-controlled board of directors, increased the authorized capital stock of
Philinterlife, diluting in the process the 50.725% controlling interest of the decedent,
Dr. Juvencio Ortaez, in the insurance company. [9] This became the subject of a

separate action at the Securities and Exchange Commission filed by private

respondent-Special Administratrix Enderes against petitioner Jose Lee and other
members of the FLAG-controlled board of Philinterlife on November 7, 1994.
Thereafter, various cases were filed by Jose Lee as president of Philinterlife and
Juliana Ortaez and her sons against private respondent-Special Administratrix
Enderes in the SEC and civil courts. [10] Somehow, all these cases were connected to
the core dispute on the legality of the sale of decedent Dr. Ortaezs Philinterlife
shares of stock to petitioner FLAG, represented by its president, herein petitioner
Jose Lee who later became the president of Philinterlife after the controversial sale.
On May 2, 2000, private respondent-Special Administratrix Enderes and her
siblings filed a motion for execution of the Orders of the intestate court dated
August 11 and August 29, 1997 because the orders of the intestate court nullifying
the sale (upheld by the Court of Appeals and the Supreme Court) had long became
final. Respondent-Special Administratrix Enderes served a copy of the motion to
petitioners Jose Lee and Alma Aggabao as president and secretary, respectively, of
Philinterlife,[11] but petitioners ignored the same.
On July 6, 2000, the intestate court granted the motion for execution, the
dispositive portion of which read:
WHEREFORE, premises considered, let a writ of execution issue as follows:
1.

Confirming the nullity of the sale of the 2,029 Philinterlife shares

in the name of the Estate of Dr. Juvencio Ortaez to Filipino Loan
Assistance Group (FLAG);

2.

Commanding the President and the Corporate Secretary of

Philinterlife to reinstate in the stock and transfer book of
Philinterlife the 2,029 Philinterlife shares of stock in the name of
the Estate of Dr. Juvencio P. Ortaez as the owner thereof without
prejudice to other claims for violation of pre-emptive rights
pertaining to the said 2,029 Philinterlife shares;

3.

Directing the President and the Corporate Secretary of Philinterlife

to issue stock certificates of Philinterlife for 2,029 shares in the
name of the Estate of Dr. Juvencio P. Ortaez as the owner thereof
without prejudice to other claims for violations of pre-emptive
rights pertaining to the said 2,029 Philinterlife shares and,

4.

Confirming that only the Special Administratrix, Ma. Divina

Ortaez-Enderes, has the power to exercise all the rights
appurtenant to the said shares, including the right to vote and to
receive dividends.

5.

Directing Philinterlife and/or any other person or persons claiming

to represent it or otherwise, to acknowledge and allow the said
Special Administratrix to exercise all the aforesaid rights on the
said shares and to refrain from resorting to any action which may
tend directly or indirectly to impede, obstruct or bar the free
exercise thereof under pain of contempt.

6.

The President, Corporate Secretary, any responsible officer/s of

Philinterlife, or any other person or persons claiming to represent it
or otherwise, are hereby directed to comply with this order within
three (3) days from receipt hereof under pain of contempt.

7.

The Deputy Sheriffs Adenauer Rivera and Pedro Borja are hereby
directed to implement the writ of execution with dispatch to
forestall any and/or further damage to the Estate.

SO ORDERED.[12]
In the several occasions that the sheriff went to the office of petitioners to
execute the writ of execution, he was barred by the security guard upon petitioners
instructions. Thus, private respondent-Special Administratrix Enderes filed a motion
to cite herein petitioners Jose Lee and Alma Aggabao (president and secretary,
respectively, of Philinterlife) in contempt.[13]
Petitioners Lee and Aggabao subsequently filed before the Court of Appeals a
petition for certiorari, docketed as CA G.R. SP No. 59736. Petitioners alleged that the
intestate court gravely abused its discretion in (1) declaring that the ownership of
FLAG over the Philinterlife shares of stock was null and void; (2) ordering the
execution of its order declaring such nullity and (3) depriving the petitioners of their
right to due process.
On July 26, 2000, the Court of Appeals dismissed the petition outright:
We are constrained to DISMISS OUTRIGHT the present petition for certiorari and
prohibition with prayer for a temporary restraining order and/or writ of preliminary
injunction in the light of the following considerations:
1.

The assailed Order dated August 11, 1997 of the respondent

judge had long become final and executory;

2.

The certification on non-forum shopping is signed by only one (1)

of the three (3) petitioners in violation of the Rules; and

3.

Except for the assailed orders and writ of execution, deed of sale
with right to repurchase, deed of sale of shares of stocks and
omnibus motion, the petition is not accompanied by such
pleadings, documents and other material portions of the record as
would support the allegations therein in violation of the second
paragraph, Rule 65 of the 1997 Rules of Civil Procedure, as
amended.

Petition is DISMISSED.
SO ORDERED.[14]
The motion for reconsideration filed by petitioners Lee and Aggabao of the
above decision was denied by the Court of Appeals on October 30, 2000:

This resolves the urgent motion for reconsideration filed by the petitioners of our
resolution of July 26, 2000 dismissing outrightly the above-entitled petition for the
reason, among others, that the assailed Order dated August 11, 1997 of the
respondent Judge had long become final and executory.
Dura lex, sed lex.
WHEREFORE, the urgent motion for reconsideration is hereby DENIED, for lack of
merit.
SO ORDERED.[15]
On December 4, 2000, petitioners elevated the case to the Supreme Court
through a petition for review under Rule 45 but on December 13, 2000, we denied
the petition because there was no showing that the Court of Appeals in CA G.R. SP
No. 59736 committed any reversible error to warrant the exercise by the Supreme
Court of its discretionary appellate jurisdiction. [16]
However, upon motion for reconsideration filed by petitioners Lee and Aggabao,
the Supreme Court granted the motion and reinstated their petition on September
5, 2001. The parties were then required to submit their respective memoranda.
Meanwhile, private respondent-Special Administratrix Enderes, on July 19, 2000,
filed a motion to direct the branch clerk of court in lieu of herein petitioners Lee and
Aggabao to reinstate the name of Dr. Ortaez in the stock and transfer book of
Philinterlife and issue the corresponding stock certificate pursuant to Section 10,
Rule 39 of the Rules of Court which provides that the court may direct the act to be
done at the cost of the disobedient party by some other person appointed by the
court and the act when so done shall have the effect as if done by the party.
Petitioners Lee and Aggabao opposed the motion on the ground that the intestate
court should refrain from acting on the motion because the issues raised therein
were directly related to the issues raised by them in their petition for certiorari at
the Court of Appeals docketed as CA-G.R. SP No. 59736. On October 30, 2000, the
intestate court granted the motion, ruling that there was no prohibition for the
intestate court to execute its orders inasmuch as the appellate court did not issue
any TRO or writ of preliminary injunction.
On December 3, 2000, petitioners Lee and Aggabao filed a petition for certiorari
in the Court of Appeals, docketed as CA-G.R. SP No. 62461, questioning this time
the October 30, 2000 order of the intestate court directing the branch clerk of court
to issue the stock certificates. They also questioned in the Court of Appeals the
order of the intestate court nullifying the sale made in their favor by Juliana Ortaez
and Jose Ortaez. On November 20, 2002, the Court of Appeals denied their petition
and upheld the power of the intestate court to execute its order. Petitioners Lee and
Aggabao then filed motion for reconsideration which at present is still pending
resolution by the Court of Appeals.
Petitioners Jose Lee and Alma Aggabao (president and secretary, respectively, of
Philinterlife) and FLAG now raise the following errors for our consideration:
THE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR:

A. IN FAILING TO RECONSIDER ITS PREVIOUS RESOLUTION DENYING THE

PETITION DESPITE THE FACT THAT THE APPELLATE COURTS MISTAKE
IN APPREHENDING THE FACTS HAD BECOME PATENT AND EVIDENT
FROM THE MOTION FOR RECONSIDERATION AND THE COMMENT OF
RESPONDENT ENDERES WHICH HAD ADMITTED THE FACTUAL
ALLEGATIONS OF PETITIONERS IN THE PETITION AS WELL AS IN THE
MOTION FOR RECONSIDERATION. MOREOVER, THE RESOLUTION OF
THE APPELLATE COURT DENYING THE MOTION FOR
RECONSIDERATION WAS CONTAINED IN ONLY ONE PAGE WITHOUT
EVEN TOUCHING ON THE SUBSTANTIVE MERITS OF THE EXHAUSTIVE
DISCUSSION OF FACTS AND SUPPORTING LAW IN THE MOTION FOR
RECONSIDERATION IN VIOLATION OF THE RULE ON ADMINISTRATIVE
DUE PROCESS;
B. IN FAILING TO SET ASIDE THE VOID ORDERS OF THE INTESTATE
COURT ON THE ERRONEOUS GROUND THAT THE ORDERS WERE
FINAL AND EXECUTORY WITH REGARD TO PETITIONERS EVEN AS THE
LATTER WERE NEVER NOTIFIED OF THE PROCEEDINGS OR ORDER
CANCELING ITS OWNERSHIP;
C. IN NOT FINDING THAT THE INTESTATE COURT COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO EXCESS OF JURISDICTION (1)
WHEN IT ISSUED THE OMNIBUS ORDER NULLIFYING THE OWNERSHIP
OF PETITIONER FLAG OVER SHARES OF STOCK WHICH WERE
ALLEGED TO BE PART OF THE ESTATE AND (2) WHEN IT ISSUED A
VOID WRIT OF EXECUTION AGAINST PETITIONER FLAG AS PRESENT
OWNER TO IMPLEMENT MERELY PROVISIONAL ORDERS, THEREBY
VIOLATING FLAGS CONSTITUTIONAL RIGHT AGAINST DEPRIVATION
OF PROPERTY WITHOUT DUE PROCESS;
D. IN FAILING TO DECLARE NULL AND VOID THE ORDERS OF THE
INTESTATE COURT WHICH NULLIFIED THE SALE OF SHARES OF STOCK
BETWEEN THE LEGITIMATE HEIR JOSE S. ORTAEZ AND PETITIONER
FLAG BECAUSE OF SETTLED LAW AND JURISPRUDENCE, I.E., THAT AN
HEIR HAS THE RIGHT TO DISPOSE OF THE DECEDENTS PROPERTY
EVEN IF THE SAME IS UNDER ADMINISTRATION PURSUANT TO CIVIL
CODE PROVISION THAT POSSESSION OF HEREDITARY PROPERTY IS
TRANSMITTED TO THE HEIR THE MOMENT OF DEATH OF THE
DECEDENT (ACEDEBO VS. ABESAMIS, 217 SCRA 194);
E. IN DISREGARDING THE FINAL DECISION OF THE SUPREME COURT IN
G.R. NO. 128525 DATED DECEMBER 17, 1999 INVOLVING
SUBSTANTIALLY THE SAME PARTIES, TO WIT, PETITIONERS JOSE C. LEE
AND ALMA AGGABAO WERE RESPONDENTS IN THAT CASE WHILE
RESPONDENT MA. DIVINA ENDERES WAS THE PETITIONER THEREIN.
THAT DECISION, WHICH CAN BE CONSIDERED LAW OF THE CASE,
RULED THAT PETITIONERS CANNOT BE ENJOINED BY RESPONDENT
ENDERES FROM EXERCISING THEIR POWER AS DIRECTORS AND
OFFICERS OF PHILINTERLIFE AND THAT THE INTESTATE COURT IN
CHARGE OF THE INTESTATE PROCEEDINGS CANNOT ADJUDICATE

TITLE TO PROPERTIES CLAIMED TO BE PART OF THE ESTATE AND

WHICH ARE EQUALLY CLAIMED BY PETITIONER FLAG. [17]
The petition has no merit.
Petitioners Jose Lee and Alma Aggabao, representing Philinterlife and FLAG,
assail before us not only the validity of the writ of execution issued by the intestate
court dated July 7, 2000 but also the validity of the August 11, 1997 order of the
intestate court nullifying the sale of the 2,029 Philinterlife shares of stock made by
Juliana Ortaez and Jose Ortaez, in their personal capacities and without court
approval, in favor of petitioner FLAG.
We cannot allow petitioners to reopen the issue of nullity of the sale of the
Philinterlife shares of stock in their favor because this was already settled a long
time ago by the Court of Appeals in its decision dated June 23, 1998 in CA-G.R. SP
No. 46342. This decision was effectively upheld by us in our resolution dated
October 9, 1998 in G.R. No. 135177 dismissing the petition for review on a
technicality and thereafter denying the motion for reconsideration on January 13,
1999 on the ground that there was no compelling reason to reconsider said denial.
[18]
Our decision became final on February 23, 1999 and was accordingly entered in
the book of entry of judgments. For all intents and purposes therefore, the nullity of
the sale of the Philinterlife shares of stock made by Juliana Ortaez and Jose
Ortaez in favor of petitioner FLAG is already a closed case. To reopen said issue
would set a bad precedent, opening the door wide open for dissatisfied parties to
relitigate unfavorable decisions no end. This is completely inimical to the orderly
and efficient administration of justice.
The said decision of the Court of Appeals in CA-G.R. SP No. 46342 affirming the
nullity of the sale made by Jose Ortaez and his mother Juliana Ortaez of the
Philinterlife shares of stock read:
Petitioners asseverations relative to said [memorandum] agreement were scuttled
during the hearing before this Court thus:
JUSTICE AQUINO:
Counsel for petitioner, when the Memorandum of Agreement was
executed, did the children of Juliana Salgado know already that there
was a claim for share in the inheritance of the children of Novicio?
ATTY. CALIMAG:
Your Honor please, at that time, Your Honor, it is already known to
them.
JUSTICE AQUINO:
What can be your legal justification for extrajudicial settlement of a
property subject of intestate proceedings when there is an adverse
claim of another set of heirs, alleged heirs? What would be the legal
justification for extra-judicially settling a property under administration
without the approval of the intestate court?
ATTY. CALIMAG:

Well, Your Honor please, in that extra-judicial settlement there is an

approval of the honorable court as to the propertys partition x x x.
There were as mentioned by the respondents counsel, Your Honor.
ATTY. BUYCO:
No
JUSTICE AQUINO:
The point is, there can be no adjudication of a property under
intestate proceedings without the approval of the court. That is basic
unless you can present justification on that. In fact, there are two steps:
first, you ask leave and then execute the document and then ask for
approval of the document executed. Now, is there any legal justification
to exclude this particular transaction from those steps?
ATTY. CALIMAG:
None, Your Honor.
ATTY BUYCO:
With that admission that there is no legal justification, Your Honor,
we rest the case for the private respondent. How can the lower court be
accused of abusing its discretion? (pages 33-35, TSN of January 29,
1998).
Thus, We find merit in the following postulation by private respondent:
What we have here is a situation where some of the heirs of the decedent without
securing court approval have appropriated as their own personal property the
properties of [the] Estate, to the exclusion and the extreme prejudice of the other
claimant/heirs. In other words, these heirs, without court approval, have distributed
the asset of the estate among themselves and proceeded to dispose the same to
third parties even in the absence of an order of distribution by the Estate Court. As
admitted by petitioners counsel, there was absolutely no legal justification for this
action by the heirs. There being no legal justification, petitioner has no basis for
demanding that public respondent [the intestate court] approve the sale of the
Philinterlife shares of the Estate by Juliana and Jose Ortaez in favor of the Filipino
Loan Assistance Group.
It is an undisputed fact that the parties to the Memorandum of Agreement dated
March 4, 1982 (see Annex 7 of the Comment). . . are not the only heirs claiming an
interest in the estate left by Dr. Juvencio P. Ortaez. The records of this case. . .
clearly show that as early as March 3, 1981 an Opposition to the Application for
Issuance of Letters of Administration was filed by the acknowledged natural children
of Dr. Juvencio P. Ortaez with Ligaya Novicio. . . This claim by the acknowledged
natural children of Dr. Juvencio P. Ortaez is admittedly known to the parties to the
Memorandum of Agreement before they executed the same. This much was
admitted by petitioners counsel during the oral argument. xxx

Given the foregoing facts, and the applicable jurisprudence, public respondent can
never be faulted for not approving. . . the subsequent sale by the petitioner [Jose
Ortaez] and his mother [Juliana Ortaez] of the Philinterlife shares belonging to the
Estate of Dr. Juvencio P. Ortaez. (pages 3-4 of Private Respondents Memorandum;
pages 243-244 of the Rollo)
Amidst the foregoing, We found no grave abuse of discretion amounting to excess
or want of jurisdiction committed by respondent judge. [19]
From the above decision, it is clear that Juliana Ortaez, and her three sons,
Jose, Rafael and Antonio, all surnamed Ortaez, invalidly entered into a
memorandum of agreement extrajudicially partitioning the intestate estate among
themselves, despite their knowledge that there were other heirs or claimants to the
estate and before final settlement of the estate by the intestate court. Since the
appropriation of the estate properties by Juliana Ortaez and her children (Jose,
Rafael and Antonio Ortaez) was invalid, the subsequent sale thereof by Juliana and
Jose to a third party (FLAG), without court approval, was likewise void.
An heir can sell his right, interest, or participation in the property under
administration under Art. 533 of the Civil Code which provides that possession of
hereditary property is deemed transmitted to the heir without interruption from the
moment of death of the decedent.[20] However, an heir can only alienate such
portion of the estate that may be allotted to him in the division of the estate by the
probate or intestate court after final adjudication, that is, after all debtors shall have
been paid or the devisees or legatees shall have been given their shares. [21] This
means that an heir may only sell his ideal or undivided share in the estate, not any
specific property therein. In the present case, Juliana Ortaez and Jose Ortaez sold
specific properties of the estate (1,014 and 1,011 shares of stock in Philinterlife) in
favor of petitioner FLAG. This they could not lawfully do pending the final
adjudication of the estate by the intestate court because of the undue prejudice it
would cause the other claimants to the estate, as what happened in the present
case.
Juliana Ortaez and Jose Ortaez sold specific properties of the estate, without
court approval. It is well-settled that court approval is necessary for the validity of
any disposition of the decedents estate. In the early case of Godoy vs. Orellano,
[22]
we laid down the rule that the sale of the property of the estate by an
administrator without the order of the probate court is void and passes no title to
the purchaser. And in the case of Dillena vs. Court of Appeals,[23] we ruled that:
[I]t must be emphasized that the questioned properties (fishpond) were included in
the inventory of properties of the estate submitted by then Administratrix Fausta
Carreon Herrera on November 14, 1974. Private respondent was appointed as
administratrix of the estate on March 3, 1976 in lieu of Fausta Carreon Herrera. On
November 1, 1978, the questioned deed of sale of the fishponds was executed
between petitioner and private respondent without notice and approval of the
probate court. Even after the sale, administratrix Aurora Carreon still included the
three fishponds as among the real properties of the estate in her inventory
submitted on August 13, 1981. In fact, as stated by the Court of Appeals, petitioner,
at the time of the sale of the fishponds in question, knew that the same were part of
the estate under administration.

x x x

x x x

x x x

The subject properties therefore are under the jurisdiction of the probate court
which according to our settled jurisprudence has the authority to approve any
disposition regarding properties under administration. . . More emphatic is the
declaration We made in Estate of Olave vs. Reyes (123 SCRA 767) where We stated
that when the estate of the deceased person is already the subject of a testate or
intestate proceeding, the administrator cannot enter into any transaction involving
it without prior approval of the probate court.
Only recently, in Manotok Realty, Inc. vs. Court of Appeals (149 SCRA 174), We held
that the sale of an immovable property belonging to the estate of a decedent, in a
special proceedings, needs court approval. . . This pronouncement finds support in
the previous case of Dolores Vda. De Gil vs. Agustin Cancio (14 SCRA 797) wherein
We emphasized that it is within the jurisdiction of a probate court to approve the
sale of properties of a deceased person by his prospective heirs before final
adjudication. x x x
It being settled that property under administration needs the approval of the
probate court before it can be disposed of, any unauthorized disposition does not
bind the estate and is null and void. As early as 1921 in the case of Godoy vs.
Orellano (42 Phil 347), We laid down the rule that a sale by an administrator of
property of the deceased, which is not authorized by the probate court is null and
void and title does not pass to the purchaser.
There is hardly any doubt that the probate court can declare null and void the
disposition of the property under administration, made by private respondent, the
same having been effected without authority from said court. It is the probate court
that has the power to authorize and/or approve the sale (Section 4 and 7, Rule 89),
hence, a fortiori, it is said court that can declare it null and void for as long as the
proceedings had not been closed or terminated. To uphold petitioners contention
that the probate court cannot annul the unauthorized sale, would render
meaningless the power pertaining to the said court. (Bonga vs. Soler, 2 SCRA 755).
(emphasis ours)
Our jurisprudence is therefore clear that (1) any disposition of estate property
by an administrator or prospective heir pending final adjudication requires court
approval and (2) any unauthorized disposition of estate property can be annulled by
the probate court, there being no need for a separate action to annul the
unauthorized disposition.
The question now is: can the intestate or probate court execute its order
nullifying the invalid sale?
We see no reason why it cannot. The intestate court has the power to execute
its order with regard to the nullity of an unauthorized sale of estate property,
otherwise its power to annul the unauthorized or fraudulent disposition of estate
property would be meaningless. In other words, enforcement is a necessary adjunct
of the intestate or probate courts power to annul unauthorized or fraudulent
transactions to prevent the dissipation of estate property before final adjudication.

Moreover, in this case, the order of the intestate court nullifying the sale was
affirmed by the appellate courts (the Court of Appeals in CA-G.R. SP No. 46342
dated June 23, 1998 and subsequently by the Supreme Court in G.R. No. 135177
dated October 9, 1998). The finality of the decision of the Supreme Court was
entered in the book of entry of judgments on February 23, 1999. Considering the
finality of the order of the intestate court nullifying the sale, as affirmed by the
appellate courts, it was correct for private respondent-Special Administratrix
Enderes to thereafter move for a writ of execution and for the intestate court to
grant it.
Petitioners Jose Lee, Alma Aggabao and FLAG, however, contend that the
probate court could not issue a writ of execution with regard to its order nullifying
the sale because said order was merely provisional:
The only authority given by law is for respondent judge to determine provisionally
whether said shares are included or excluded in the inventory In ordering the
execution of the orders, respondent judge acted in excess of his jurisdiction and
grossly violated settled law and jurisprudence, i.e., that the determination by a
probate or intestate court of whether a property is included or excluded in the
inventory of the estate being provisional in nature, cannot be the subject of
execution.[24] (emphasis ours)
Petitioners argument is misplaced. There is no question, based on the facts of
this case, that the Philinterlife shares of stock were part of the estate of Dr. Juvencio
Ortaez from the very start as in fact these shares were included in the inventory of
the properties of the estate submitted by Rafael Ortaez after he and his brother,
Jose Ortaez, were appointed special administrators by the intestate court. [25]
The controversy here actually started when, during the pendency of the
settlement of the estate of Dr. Ortaez, his wife Juliana Ortaez sold the 1,014
Philinterlife shares of stock in favor petitioner FLAG without the approval of the
intestate court. Her son Jose Ortaez later sold the remaining 1,011 Philinterlife
shares also in favor of FLAG without the approval of the intestate court.
We are not dealing here with the issue of inclusion or exclusion of properties in
the inventory of the estate because there is no question that, from the very start,
the Philinterlife shares of stock were owned by the decedent, Dr. Juvencio
Ortaez. Rather, we are concerned here with the effect of the sale made by the
decedents heirs, Juliana Ortaez and Jose Ortaez, without the required approval of
the intestate court. This being so, the contention of petitioners that the
determination of the intestate court was merely provisional and should have been
threshed out in a separate proceeding is incorrect.
The petitioners Jose Lee and Alma Aggabao next contend that the writ of
execution should not be executed against them because they were not notified, nor
they were aware, of the proceedings nullifying the sale of the shares of stock.
We are not persuaded. The title of the purchaser like herein petitioner FLAG can
be struck down by the intestate court after a clear showing of the nullity of the
alienation. This is the logical consequence of our ruling in Godoy and in several
subsequent cases.[26] The sale of any property of the estate by an administrator or
prospective heir without order of the probate or intestate court is void and passes

no title to the purchaser. Thus, in Juan Lao et al. vs. Hon. Melencio Geneto, G.R. No.
56451, June 19, 1985, we ordered the probate court to cancel the transfer
certificate of title issued to the vendees at the instance of the administrator after
finding that the sale of real property under probate proceedings was made without
the prior approval of the court. The dispositive portion of our decision read:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the assailed Order dated February
18, 1981 of the respondent Judge approving the questioned Amicable Settlement is
declared NULL and VOID and hereby SET ASIDE. Consequently, the sale in favor of
Sotero Dioniosio III and by the latter to William Go is likewise declared NULL and
VOID. The Transfer Certificate of Title issued to the latter is hereby ordered
cancelled.
It goes without saying that the increase in Philinterlifes authorized capital stock,
approved on the vote of petitioners non-existent shareholdings and obviously
calculated to make it difficult for Dr. Ortaezs estate to reassume its controlling
interest in Philinterlife, was likewise void ab initio.
Petitioners next argue that they were denied due process.
We do not think so.
The facts show that petitioners, for reasons known only to them, did not appeal
the decision of the intestate court nullifying the sale of shares of stock in their favor.
Only the vendor, Jose Ortaez, appealed the case. A careful review of the records
shows that petitioners had actual knowledge of the estate settlement proceedings
and that they knew private respondent Enderes was questioning therein the sale to
them of the Philinterlife shares of stock.
It must be noted that private respondent-Special Administratrix Enderes filed
before the intestate court (RTC of Quezon City, Branch 85) a Motion to Declare
Void Ab Initio Deeds of Sale of Philinterlife Shares of Stock on March 22, 1996. But
as early as 1994, petitioners already knew of the pending settlement proceedings
and that the shares they bought were under the administration by the intestate
court because private respondent Ma. Divina Ortaez-Enderes and her mother
Ligaya Novicio had filed a case against them at the Securities and Exchange
Commission on November 7, 1994, docketed as SEC No. 11-94-4909, for annulment
of transfer of shares of stock, annulment of sale of corporate properties, annulment
of subscriptions on increased capital stocks, accounting, inspection of corporate
books and records and damages with prayer for a writ of preliminary injunction
and/or temporary restraining order. [27] In said case, Enderes and her mother
questioned the sale of the aforesaid shares of stock to petitioners. The SEC hearing
officer in fact, in his resolution dated March 24, 1995, deferred to the jurisdiction of
the intestate court to rule on the validity of the sale of shares of stock sold to
petitioners by Jose Ortaez and Juliana Ortaez:
Petitioners also averred that. . . the Philinterlife shares of Dr. Juvencio Ortaez who
died, in 1980, are part of his estate which is presently the subject matter of an
intestate proceeding of the RTC of Quezon City, Branch 85. Although, private
respondents [Jose Lee et al.] presented the documents of partition whereby the
foregoing share of stocks were allegedly partitioned and conveyed to Jose S.
Ortaez who allegedly assigned the same to the other private respondents,

approval of the Court was not presented. Thus, the assignments to the private
respondents [Jose Lee et al.] of the subject shares of stocks are void.
x x x

x x x

x x x

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

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

G.R. No. L-14383

November 29, 1919

In re guardianship of the incompetent Jose R. de Inchausti.

CONSUELO RICO VDA. DE INCHAUSTI, petitioner-appellee,
vs.
J. R. DE INCHAUSTI, opponent-appellant.
Eduardo Gutierrez Repide and Felix Socias for appellant.
Claro M. Recto for appellee.

TORRES, J.:
This case was instituted in the Court of First Instance of the city of Manila thru a
petition filed by attorneys Crossfield and O'Brien in behalf of the petitioner,
Consuelo Rico viuda de Inchausti. On January 11, 1911, said petition (without date)
was verified before the notary public, C. W. O'Brien, by A. S. Crossfield and was
signed by the law firm of Crossfield & O'Brien.
Said petition alleges that Jose R. de Inchausti's mother is Maria de Consolacion Rico,
viuda de Inchausti; that Jose R. de Inchausti has become temporarily insane; that he
is now confined in San Lazaro Hospital; that he has considerable real and personal
property; that he is about to receive an inheritance from the partition of the estate
of Rafael de Inchausti; that he is not competent to receive said inheritance that he
requires a guardian for his person and property; that his inheritance, represented
primarily by an interest in the mercantile firm of Inchausti & Co. and secondarily by
real estate, is approximately one hundred seventy five thousand pesos (P175,000).
Wherefore the petitioner prays that, having fulfilled the requirement of law, she be
appointed guardian of the person and property of her said son, Jose R. de Inchausti,
after proceedings as required by law.
With the purpose of hearing said petition the trial court issued an order whose
dispositive and pertinent parts are:
It is ordered, in accordance with section 559 of the Code of Civil Procedure,
that in this court the petition be heard at 10 o'clock in the forenoon of the
18th day of January, 1915.
It is ordered also that on the day and at the hour above named the Director of
the San Lazaro Hospital appear before this court and if possible produce the
said Jose R. de Inchausti.
Let this order be made known immediately.
(Sgd.) JAMES A. OSTRAND,
Judge.
Received copy of the foregoing notice, Manila, P.I., January 12, 1915.

(Sgd.) F. S. BECK.
(Sgd.) CROSSFIELD & O'BRIEN,
Attorneys for Maria de la Consolacion Rico y Medina.
(Sgd.) A. S. CROSSFIELD as next friend of
Jose R. de Inchausti.
By an order of January 18, 1915, the court declared that the petitioner, Da. Maria de
la Consolacion Rico y Medina viuda de Inchausti (accompanied by Mr. Crossfield, her
counsel, and Dr. A. P. Goff), appeared at said hearing; that she duly proved the
petition; that she was appointed guardian of the demented Jose R. de Inchausti; and
that she was put under bond for one hundred thousand pesos (P100,000).
The said guardian C. R. de Inchausti and Dr. Goff of San Lazaro Hospital were
notified of this decree, and all the requisites for the filing of a bond as well as for the
oath of office and letters of guardianship were duly complied with.
On November 18, 1915, the Spanish Consul in Manila forwarded to the Court of First
Instance of this city a requisitory letter (exhorto) together with a copy of the
judgment from the judge of the Court of First Instance of the Northern District of
Barcelona, (Spain). According to said judgment, in a suit of Jose R. de Inchausti
against Consolacion Medina, involving considerable property, Jose R. de Inchausti
was held mentally sound (being restrained neither by insanity nor mental
perturbation) and therefore possessed of his juridical personality, of his civil
capacity and of the free administration of his property. Wherefore the court declared
that Consolacion Rico was no longer guardian; that she should deliver to him his
property; that as guardian she should present her accounts; and that she should
abstain from all administrative acts over said property.
In said requisitory letter the judge of the Court of First Instance of Barcelona
requests fulfillment in this capital of the foregoing judgment, subject to the
provisions of article 11 of the Treaty of Peace of December 10, 1898, between Spain
and the United States; of article 6 of the Treaty of July 3, 1902; and of sections 304
and 311 of the Code of Civil Procedure. However, said court in Manila refused in an
order of April 15, 1916, (fol. 43), and for the reasons therein assigned, the
aforementioned request of the judge of Barcelona.
The aforementioned guardian presented first her accounts (fol. 65) and next her
resignation. Both were duly approved. Afterwards another guardian was appointed
but presented his resignation shortly after assuming the duties of his office. Having
also approved this resignation, the court reinstated the petitioner, who then filed a
supplementary petition (fol. 74) as follows: That said Inchausti & Co's refusal to
deliver to her predecessor the part of the funds pertaining to Jose R. de Inchausti
was because the guardianship proceedings were unlawful, the aforementioned Jose
R. de Inchausti never having been notified of the hearing of the petition for the
appointment of a guardian; that this reason is groundless because on January 12,
1915, Dr. Goff, the Director of San Lazaro Hospital, received notice of the date of the
hearing of the aforesaid petition, because on that same day Dr. Goff informed Jose
R. de Inchausti of said notice, and because on the following day, January 13, 1915,
Jose R. de Inchausti being visited by A. S. Crossfield, informed and discussed with

this friend said notification; that in the beginning Jose R. de Inchausti had opposed
the appointment of a guardian but, learning the appointment was necessary for the
proper administration of his property, had consented and requested his mother be
appointed; that as Jose R. de Inchausti's representative said A. S. Crossfield is a
member of the law firm Crossfield & O'Brien; and that for these reasons the record
should show the notification to Jose R. de Inchausti and the proceedings had were
regular and in accordance with law.
Before the hearing of the supplementary petition counsel for Jose R. de Inchausti
prayed the court to declare all the proceedings null and Maria de la Consolacion's
petition of January 11, 1915, void as, the court having acquired no right or
jurisdiction over Jose R. de Inchausti, his property can not be considered in
"custodiae legis".
The court overruled this motion by order of May 9, 1918, (p. 83, bill of exceptions).
Jose R. de Inchausti's counsel excepted thereto, and, on May 14, 1918, appealed to
his High Court alleging that the lower court erred:
1. On March 26, 1918, in overruling the motion of the supposed incompetent
praying the proceedings had be declared null and void, and the original
petition dismissed.
2. In not declaring null and void of said proceedings and in not dismissing the
original petition giving rise to this controversy.
3. In not reciting in said order the facts duly proven whereon the decision was
based.
Said assignment is based on the fact that appellant was neither notified of the first
order issued by the lower court fixing the hearing of the petition, nor of the others
affecting directly his person and property; that the order of June 16, 1917, was the
first that the court had command be forthwith notified to the appellant; that the
appealed order partakes of the nature of a definite judgment; that in same the court
ought to have recited facts considered proven and a base for his conclusions; and
that by not having so done, the court rendered said order defective and revocable.
In his turn the appellee alleges that Dr. Goff, Director of the San Lazaro Hospital,
being notified of the aforesaid order and following the custom in said hospital,
transmitted said notification through its employees to Jose R. de Inchausti. This
allegation is corroborated both by Dr. Goff's certificate (page 130, record) stating
that, according to his true belief Jose R. de Inchausti was notified in accordance with
the custom of the hospital in analogous cases, and by an affidavit (page 132,
record) of A. S. Crossfield who testified to having visited Jose R. de Inchausti in San
Lazaro Hospital on January 13, 1915; to being told by Dr. Goff that said Jose R. de
Inchausti had been notified of the order of January 18, 1915, fixing the hearing of
the petition for the appointment of a guardian, and to Jose R. de Inchausti himself
having acknowledge the receipt of said notice.

The first and principal question that arises from all these allegations is whether, if
the officer of the court, charged with the notification of all order and decrees, had
failed to notify personally Jose R. de Inchausti, this fact does or does not constitute
sufficient ground for declaring null and void all the proceedings had in this cause, in
spite of the fact that the appellant, as an insane patient, was in accordance with
custom, notified by the director of said government institution, San Lazaro Hospital.
Section 559 of the Code of Civil Procedure reads:
When it is represented to a Court of First Instance, or a judge thereof, by
petition verified by oath of any relative or friend, that any person who is an
inhabitant or resident of the province, is insane or is a spendthrift,
incompetent to manage his estate, praying that a guardian may be appointed
for such person, such court or judge must cause a notice to be given to the
supposed insane or incompetent person of the time and place of hearing the
petition, not less than five days before the time so appointed; and such
person, if able to attend, must be produced on the hearing.
According to this statutory provision, the notice of time and place of hearing ought
to be given personally to the supposed demented or spendthrift so, for example, in
the case of Yangco vs. Court of First Instance of Manila and Yangco (29 Phil. Rep.,
183), the court declared null and void all the proceedings had in said case for the
reason that said notice was not given personally to the person alleged to be a
spendthrift and incompetent to manage his property.
However, in order to resolve definitely the present suit, it is necessary to examine
the provision of Act No. 2122, which establishes another procedure, whereby a
person may be declared insane, ordered confined in a hospital or an institution for
the insane and provided with guardian of his person.
Section 4 of the foregoing Act No. 2122 provides:
The Director of Health, in all cases where in his opinion it is for the public
welfare or for the welfare of any person who in his judgment is insane, and
when such person or the person having charged of the patient is opposed to
his being taken to a hospital or other place for the insane, shall present, or
cause to be presented, a petition to the Court of First Instance of the district
wherein the person alleged to be insane is found, alleging that such person is
insane, that it is for the welfare of the public or of the patient that he be
taken to a suitable place for treatment, and praying the court to commit such
person to a hospital or other place for the insane.
The judge of the Court of First Instance shall cause not less than five days'
notice to be given of the date of the hearing of the petition to such alleged
insane person or to the person having care of such alleged insane person,
and to such of his relatives residing in the province or the city of Manila as
the judge may deem proper, and shall order the sheriff to produce the alleged
insane person if able to attend on the hearing. If the judge finds, after due
hearing, that the person in question is insane, and that his relatives are

unable for any reason to take proper custody and care of the patient, he shall
order his commitment to such hospital or other place for the insane as may
be recommended by the Director of Health, and when it appears necessary or
convenient he may appoint a guardian for him as provided in section five
hundred and sixty of Act Numbered One hundred and ninety, entitled "An Act
providing a Code of Procedure in Civil Actions and Special Proceedings in the
Philippine Islands." . . . .
According to the provisions of the foregoing section an individual may be declared
insane and a guardian for his person and property may be appointed without
service of personal notice of the date of hearing of the petition for a judicial
declaration of judicial incapacity and for the appointment of a guardian of his
person and property, as the aforesaid law provides for notice to the person having
care of such alleged insane person, thereby considering same sufficient. Whereas,
according to section 559 of the Code of Civil Procedure, such notice must be served
personally upon the alleged insane person, thereby considering as insufficient null
and void all other proceedings outside.
Act No. 2122 was enacted after the Code of Civil Procedure for it was approved on
February 1, 1912, and if these laws are incompatible, Act No. 2122 must necessarily
be followed.
Said Act No. 2122 does not absolutely and expressly repeal section 559 of the Code
of Civil Procedure, but, regarding the transmittal of notice to a supposed demented,
these two Acts are clearly and manifestly incompatible and contradictory. While
section 559 of Act No. 190 requires of Act No. 2122 requires the service of a
personal notice either upon the insane person or upon the person having charge of
such incompetent insane.
The Director of Health's intervention in the case of the demented who requires an
urgent and quick administrative action may be preliminary but is entirely
independent and forms no part of the judicial proceedings in Chapter XXVII of said
Act No. 190 modified, as far as guardians of insane persons are concerned, by the
aforementioned Act No. 2122. (See sections 1043 to 1050 of the Administrative
Code of 1917.)
On account of the urgency of the case Jose R. de Inchausti having been attacked
so suddenly by insanity his mother had no time to call upon the Director of Health
and she had even difficulty in securing the assistance of the Director of San Lazaro
Hospital for the care of her son who was in need of immediate vigilance for his own
welfare and for the benefit of her family and of the public. However, in the Court of
First Instance her counsel filed a petition setting forth that which had taken place
and praying the appointment of a guardian for the incompetent. The court, after
hearing said petition, issued the order of January 18, 1915, which was served upon
Dr. A. P. Goff, director of the aforesaid hospital, and the mother-guardian.
If, according to section 4 of Act No. 2122 (supra), service of notice upon the person
in charge of the insane is sufficient and if the aforementioned order of January 18
was duly served upon the Director of the San Lazaro Hospital where Inchausti was
confined, then clearly the motion to declare null and void all proceedings had, upon

the ground of the trial judge having acted without his jurisdiction, had no legal
foundation. Act No. 2122, amending (by implication) section 559 of Act No. 190,
does not require absolutely the personal service of notice to the insane, but either
to the insane or to the person in charge of him.
The case of Yangco vs. Court of First Instance of Manila and Yangco (29 Phil. Rep.,
183) above mentioned deals with the appointment of a guardian for an alleged
spendthrift, a proposition quite different from the appointment of a guardian for an
alleged insane person who in the ordinary course of human events cannot possibly
be given a notice. True, the mere fact that a person is alleged insane is not
conclusive of insanity. However, if this principle be observed in theory for effecting
judicial intervention, in many instances, to follow same in practice would be
impossible, useless, prejudicial and even dangerous. On the other hand, the right of
the insane is not prejudiced by service of notice upon either the person or relative
having in charge. When section 559 of Act No. 190 was amended by Act No. 2122,
establishing a different practice for service upon an incompetent, the legislator had
this in mind. Therefore, the service upon the Director of the San Lazaro Hospital of
the notice of the order appointing a guardian for Jose R. de Inchausti is beyond a
doubt sufficient, and the provisions of the law now in force was thereby complied
with, and the trial judge acquired jurisdiction in the premises.
In fact it appears in the record, admitted by the appellant, that the order, fixing the
date of the hearing of the petition giving rise to this suit, was served upon the
Director of the San Lazaro Hospital wherein Jose R. de Inchausti was then confined
suffering from insanity. It also appears from said Director's certificate and Attorney
Crossfield's affidavit, at no time impugned by the appellant that the aforementioned
notice immediately delivered to said appellant who made no effort to deny or
contradict it. The Director of San Lazaro Hospital being the person having charge of
the appellant, then it is obvious that the law was duly complied with.
Nevertheless, the appellant alleges that the petition, being verified by Attorney A. S.
Crossfield and not by a relative or a friend, was not verified by oath as required by
law. But in same oath of A. S. Crossfield it appears that he is a friend of the
appellant alleged to be incompetent just what is required by the provision of section
559 of the Code of Civil Procedure. Therefore, the lower court acquired jurisdiction
over the appellant's person and committed no error both in dismissing the motion to
declare null and void all proceedings had and in declaring of no effect said petition,
the origin of this suit.
True, the facts and conclusion upon which the court's decision was based do not
appear in the order of May 9, 1918. But we have considered just the recital in this
opinion of what said court failed to do, in order to show the legality of the decree
appealed from, because said order, a resolution of a motion, has in effect judicially
decided all the proceedings had in this case, the previous decrees and orders of
January 18 and July 6, 1915, of April 15, 1916, and on February 16, 1918. Further, if
a return to the court of origin for the amendment of said judicial decree so as to
recite the facts and conclusions upon which same was based, were made, this case,
begun in January, 1915, would be unduly and unnecessarily prolonged; the
amended decree would be written upon the same consideration and; and a decree,

whose dispositive parts are in harmony with the merits of the case and of the law
similar to the one now appealed, would result.
For the foregoing reasons, the order of May 9, 1918, is hereby affirmed with costs.
Street, Malcolm, Avancea and Moir, JJ., concur.

Separate Opinions

ARAULLO, J., dissenting:

We do not agree to the foregoing decision, affirming the order of May 9, 1918, of the
Court of First Instance of the city of Manila, whereby the motion of the attorney of
the opponent, Jose R. de Inchausti, that all the proceedings had in this case be
annulled, was dismissed.
The basis of said motion was that the Court of First Instance had no jurisdiction over
the person of Jose R. de Inchausti, and that the property of the latter could not fully
be considered in custodiae legis. Appellant's principal assignment of error in his
brief, with reference to this order, is to the effect that the first order of the court
issued in these proceedings, by virtue of the petition of Consolacion Rico Viuda de
Inchausti, praying that she be appointed as guardian over the person and over the
property of her son, Jose R. de Inchausti, on the ground that he was insane, and
setting a day for the hearing therefore, was never served upon the said Jose R. de
Inchausti, nor was he served with the later orders that had direct bearing upon his
person and property, excepting that of June 16, 1917, of which we shall speak later,
all of which constitute a manifest violation of the provision of section 559 of the
Code of Civil Procedure.
This section reads:
APPOINTMENT OF GUARDIANS OF PERSONS OF UNSOUND MIND. When it is
represented to a Court of First Instance, or a judge thereof, by petition
verified by oath of any relative or friend, that any person who is an inhabitant
or resident of the province, is insane or is a spendthrift, incompetent to
manage his estate, praying that a guardian may be appointed for such
person, such court or judge must cause a notice to be given to the supposed
insane or incompetent person of the time and place of hearing the petition,
not less than five days before the time so appointed; and such person, if able
to attend, must be produced on the hearing.

In the foregoing decision the majority of the court acknowledges that, according to
this section, the notice of the time and place of hearing of the petition, in cases
where this section is applicable, must be given personally to the supposed insane or
spendthrift, and because of non-compliance with this requisite in the case of Yangco
vs. Court of First Instance of Manila and Yangco (29 Phil. Rep., 183) all the
proceedings had in said case were declared null and void; however, invoking section
4 of Act No. 2122, the majority hold, in the instant case, that the requisite of the
service of the notice to the supposed insane person, Jose R. de Inchausti, was
complied with, and that, therefore, there is no reason for sustaining the petition of
counsel for J. R. de Inchausti that the proceedings had in this case be declared null
and void.
Section 4 of Act No. 2122 reads:
The Director of Health, in all cases where in his opinion it is for the public
welfare or for the welfare of any person who in his judgment is insane, and
when such person or the person having charge of the patient is opposed to
his being taken to hospital or other place for the insane, shall present, or
cause to be presented, a petition to the Court of First Instance of the district
wherein the person alleged to be insane is found, alleging that such person is
insane, that it is for the welfare of the public or of the patient that he be
taken to a suitable place for treatment, and praying the court to commit such
person to a hospital or other place for the insane. The judge of the Court of
First Instance shall cause not less than five days notice to be given of the
date of the hearing of the petition to such alleged insane person or to the
person having care of such alleged insane person, and so such of his relatives
residing in the province or the city of Manila as the judge may deem proper,
and shall order the sheriff to produce the alleged insane person if able to
attend on the hearing. If the judge finds, after due hearing, that the person in
question is insane, and that his relatives are unable for any reason to take
proper custody and care of the patient, he shall order his commitment to
such hospital or other place for the insane as may be recommended by the
Director of Health, and when it appears necessary or convenient he may
appoint a guardian for him as provided in section five hundred and sixty of
Act Numbered One hundred and ninety, entitled "An Act providing a Code of
Procedure in Civil Actions and Special Proceedings in the Philippine
Islands." . . .
It is true, as the majority say that the above provision of law was enacted
subsequent to Act No. 190, that is, the Code of Civil Procedure, but in our opinion
said provision cannot in any manner be considered as modifying or amending in
part the aforesaid section 559 of the said Code of Procedure, as the majority hold.
Each of these two statutory provisions refers to cases distinct from each other. The
first, that is, section 4 of Act No. 2122, fixes the duty of the Director of Health in all
cases where in his opinion it is for the public welfare or for the welfare of any person
who, in his judgment, is insane, and when such person or the person having charge
of the patient is opposed to his being taken to a hospital or other place for the
insane, to cause to be presented to the court of first instance of the district a
petition praying said person be committed to a hospital or other place for the

insane. The said section also prescribes, in view of this petition, the procedure to be
followed in the court of first instance, in order that the supposed insane may be
committed to a hospital or asylum recommended by the Director of Health, as well
as for the appointment by the court of a guardian for the insane person, should it
appear necessary or convenient. The second, that is, section 559 of the Code of
Civil Procedure, refers to the case where a relative or friend of the supposed insane
prays for the appointment of a guardian for him, in other words, where a private
person interested in the welfare of the supposed insane, should appear in court
praying for the appointment of a guardian for the administration of his property.
This same section prescribes the procedure in court upon presentation of said
petition. It is not possible to confuse one case with the other; neither is it possible to
confuse the procedure of one with the other, in order that the proper declaration
and judicial order issue on the petition.
Wherefore, the majority could not help but acknowledge that "both of these legal
provisions, dealing concretely with insane or demented persons, are clearly and
manifestly incompatible and contradictory. Section 559 of Act No. 190 requires
service of a personal notice upon the insane person; section 4 of Act No. 2122
requires service of a personal notice either upon the insane person or upon the
person having care of same." The majority ought to have begun by declaring that
there is a clear and manifest difference in the first parts of both statutory
provisions; i.e., with reference to the petition, the object of the corresponding law,
which, in either case, may be filed subject to the procedure outlined in the court of
first instance, according to their nature. This being so, it is evident that, if the object
of the legislator was to fix a specified procedure that should be followed according
as to whether the petition was filed in court by the Director of Health in compliance
with his duty to cause the commitment of the alleged insane in a hospital or in an
asylum, or by a person interested in the welfare of the supposed insane, praying for
the appointment of a guardian to administer his property, the procedure prescribed
by the law in each of these two different cases must be followed in the manner
provided and no portion of one of said statutory provisions can be substituted with a
portion of another different from the former, thereby forming a heterogeneous
whole, without cohesion and relation. In a word, there is no similarity between the
petition of the Director of Health to commit an alleged insane person to an asylum
and to secure for him a guardian to administer his property, should it appear
necessary, and the petition of a mere private individual for the appointment of a
guardian for a friend or a relative alleged to be insane and incompetent to manage
his estate. The procedures prescribed by law in each case must necessarily be very
distinct. Upon this matter no extended discussion is necessary. The text of section 4
of Act No. 2122 clearly gives this interpretation because after dealing with the
procedure to be followed in the case of the petition of the Director of Health for the
commitment of an alleged insane to an asylum or hospital, said section then
provides that the judge shall order the commitment of the supposed insane person
to such hospital or place recommended by the Director of Health, and, when it
should appear necessary and convenient, may appoint a guardian as provided for in
section 560 of Act No. 190, or the Code of Civil Procedure; i.e., that the procedure
laid down in section 559 will be observed, namely, the procedure that when the
petition is filed by a relative or a friend of the alleged insane to obtain the
appointment of a guardian, which is not for the purpose of committing the alleged
insane to a hospital or an insane asylum to which section 4 of Act No. 2122 refers

and for which it provides a procedure distinct from that established in said section
559. There is, therefore, no way or manner whatsoever by which to harmonize the
first part of section 4 of Act No. 2122, relative to the petition of the Director of
Health for the commitment of an alleged insane to a hospital or asylum with section
559 of the Code of Civil Procedure, which refers only to the petition of a relative or
friend of the alleged insane or incompetent to manage his property for the
appointment of his guardian. If there be any connection at all between the provision
of the aforementioned section 4 of Act No. 2122 and the provision of the said Code
of Civil Procedure concerning guardianship of persons of unsound mind, it is only in
regard to the appointment of a guardian for the supposed insane person after the
latter had already been committed to the hospital or asylum at the Director of
Health's petition and recommendation, in which case that same section of the law
expressly provides that the appointment of a guardian must be in accordance with
the provision of section 560 of the Code of Civil Procedure a proviso which, taken
in connection with the absence in said section 4 of said Act No. 2122 of any
reference with section 559, clearly shows that the aforementioned Act did not take
into account this section of the Code when it imposed upon the Director of Health
the duty of petitioning the court, for the public welfare or for the good of a person,
whom he regards as insane, the commitment or placing of such person in a hospital
or asylum when such insane person or the persons in charge of him is opposed to
such commitment. And this silence is understood simply because it is not the same
that a public officer, like the Director of Health, should in the discharge of his duties,
petition the commitment or the placing of an alleged insane person in a hospital or
asylum, as when any other person should ask the appointment of a guardian for one
of his relatives or friends who may be in such sad status as to be incompetent to
manage his own person and property. As we have said, and it is imperative and
necessary to say it again, these are two different and distinct cases to which it is not
possible, nor did the statute attempt, to apply one and the same procedure.
The fact that, as stated in the majority opinion of the court, the intervention of the
Director of Health in the case of any insane person who by his status and condition
urgently requires quick administrative action, is completely independent of and is
not included in the judicial proceedings embraced in the chapter relative to the
guardianship of insane persons of the Code of Civil Procedure (Act No. 190),
constitutes the most convincing proof that the judicial proceedings comprised in the
said chapter, which treats of the guardianship of insane persons, cannot be
understood as having been modified by said Act No. 2122 in so far as the latter law
requires the intervention of the Director of Health in the form of a petition that he
must file with the court for the commitment to a hospital or an asylum of the person
of an alleged insane. The logical and inescapable consequence of the foregoing is
that the aforesaid section 559 of the Code of Civil Procedure has no bearing
whatever with such intervention of the Director of Health and cannot either be
considered, as having been modified in any manner by said section 4 of Act No.
2122.
What is more, said section 4, or better said Act No. 2122 itself is administrative in
character. According to its title, its objects is "for the confinement of insane persons
in Government hospitals or other institutions for the insane, and for the
appointment of a board of physicians to inquire into the mental condition of persons
alleged to be insane, when the evidence presented is not satisfactory to the court,

or when there exists a reasonable doubt as to the condition of any patient confined
in a hospital for the insane." The provisions of this Act relative to the confinement of
insane persons are found in sections 1043 to 1050 of the Administrative Code of
1917, cited in the majority opinion with reference to the modification by the
aforesaid Act No. 2122, according to the majority, of the judicial proceedings
regarding guardians comprehended in the Code of Civil Procedure. These sections
1043 to 1050 of the Administrative Code form part of article XIII "Government
hospitals for insane" one of the several articles in Chapter 37, "Philippine Health
Service," of the said Administrative Code, and the matter of said chapter
comprehended within articles one to sixteen, which includes said article 13,
constitutes the Public Health Law, according to section 396 of the same chapter.
The said section 1043 is entitled "Judicial proceedings for commitment of insane
persons," and is a reproduction of that part of section 4 of Act No. 2122 relative to
the commitment petition which the Director of Health must file with the court of first
instance for the confinement of an alleged insane person. But section 1043, supra,
does not speak what in section 4 of Act No. 2122 appears in the following term:
The judge of the Court of First Instance shall cause not less than five days'
notice to be given of the hearing of the petition to such alleged insane person
or to the person having care of such alleged insane person and to such of his
relatives residing in the province or the city of Manila as the judge may deem
proper, and shall order the sheriff to produce the alleged insane person if
able to attend on the hearing . . . .
Said section (1043, Adm. Code) limits itself to saying:
If the judge shall find, after due hearing, that the person in question is insane,
and that his relatives are unable for any reason to take proper custody and
care of the patient, he shall order his commitment to such hospital or other
place for the insane as may be recommended by the Director of Health . . . .
The omission in said section 1043 of the provision that not less than five days'
notice of the hearing of the Director of Health's petition shall be given either to such
insane or the person in charge of him shows that said judicial proceedings apply
only to the case mentioned in said section 1043, which is administrative in
character as is section 4 of Act No. 2122. Otherwise, said section 1043 would have
stated in detail the court's procedure to be followed upon presentation of the
Director of Health's petition. At all events, there being no special provision in the
Code of Civil Procedure and special proceedings to be followed when the Director of
Health files a petition in the Court of First Instance for the commitment of an alleged
insane person (in accordance with section 4 of Act No. 2122 as well as section 1043
of the Administrative Code) it follows, in our opinion, that it is useless and justifiable
to invoke said first section and in connection therewith the second sections in order
to maintain that section 559 of the Code of Civil Procedure has been modified
relative to the guardianship of persons of unsound mind. And this is untenable
inasmuch as in the second part of section 4 of Act No. 2122 as well as in section
1044 of the Administrative Code mention is made of the appointment of a guardian
for the insane that the court must make when it should appear convenient or
necessary or when his confinement involves the care of his estate or property,
because, as already said in the first of said sections, it is clearly stated that said

appointment of a guardian, after the commitment of the alleged insane to a hospital

or asylum at the recommendation of the Director of Health, must be made by the
court, as provided in section 560 of the same Code of Civil Procedure and
accordingly it goes without saying that the petition filed for the appointment of a
guardian must follow the procedure established in the foregoing section 559; i.e.,
that the petition for the appointment of a guardian must be filed in accordance with
the provision of the preceding section 559. In the second case, that is to say under
section 1044 of the Administrative Code, it is also expressly ordered that the
municipal president at the request of the provincial fiscal, or in the city of Manila the
chief of police at the request of the fiscal of the city of Manila, shall take charge of
the property of the alleged insane in confinement pending the court's appointment
of a guardian, following as it should, although the section does not so state, the
procedure laid down by the present Code of Civil Procedure.
Furthermore, it can be explained perfectly why there is and ought to be a difference
between the procedure which, according to section 4 of Act No. 2122, must be
followed in the given case where, in compliance with his duty, the Director of Health
asks the court of first instance to commit an alleged insane and that which,
according to section 559 of the Code of Civil Procedure, must be followed where a
relative or a friend asks the court's appointment of a guardian for the administration
of said person's estate. In the first case the Director of Health's petition must be
presented or caused to be presented in the court for the sake of the public welfare
or of the person whom he considers insane; and when such person or the person
having charge of the patient is opposed to his being taken to a hospital or an insane
asylum, that is to say before said petition may be filed, it is necessary that the
patient or the person having him in charge be opposed to said commitment
wherefore it is necessary that a previous notice of the hearing be given at least to
the person having charge of the patient, if it cannot be given to the patient himself,
and to such of his relatives as reside in the province or in the city of Manila, once
their opposition is known. In the second case, however, when the petition is filed by
a relative or a friend of the alleged insane in order that a guardian be appointed for
the administration of his property, though this petition be presumed beneficial for
the patient, it may happen to be prejudicial to him as it might deprive him of the
administration of his property upon the false and unjustifiable ground of his
incompetency to manage it and, for this reason, the law requires that the supposed
insane be notified thereof personally so as to give him an opportunity to oppose
said petition. And in both cases it is expressly required that, if possible, the alleged
insane person shall be produced in person to the end that the judge himself may
ascertain whether or not the facts upon which the petition is founded are true.
Coming now to an examination of the proceedings, as appear in the printed record
on appeal filed with this court for the determination of this appeal, we find that the
provision of section 4 of Act No. 2122 as well as that of section 559 of the Code of
Civil Procedure have not been complied with and that both provisions have been
disregarded.
In fact, these proceedings were commenced upon a petition filed with the Court of
First Insane of this city by Attorneys Crossfield and O'Brien in behalf of Seora Maria
de la Consolacion Rico viuda de Inchausti, in which, after alleging that her son Jose
R. de Inchausti of unsound mind and confined temporarily in San Lazaro Hospital

was incompetent to take charge of considerable property valued approximately at

P175,000 about to be delivered to him, which was his share of an inheritance from
Rafael Inchausti, prayed that, after fulfilling the proceedings required by law, she be
appointed guardian of the person and property of said insane. Said petition, which
bears no date, was not verified by petitioner's oath but by that of A. S. Crossfield, (a
member of the law firm of Crossfield & O'Brien) on January 11, 1915. On
presentation of said petition, the court issued an order on the following day,
(January 12) by which in consideration of said petition, it ordered, that, in
accordance with section 559 of the Code of Civil Procedure, the petition be heard at
10 o'clock a.m. of the 18th of January, 1915; and also that the Director of the San
Lazaro Hospital for the insane appear in court on the day and hour aforesaid and
produce the body of the said Jose R. de Inchausti, if possible, and finally that said
order be forthwith notified to interested parties. Appearing at the bottom of said
order, are found the signatures of F. S. Beck, Crossfield and O'Brien as attorneys for
the petitioner, and A. S. Crossfield as next friend of Jose R. de Inchausti
acknowledging receipt of copies thereof. It does not appear in the record who was
he that received a copy of the order and signed F. S. Beck, although it is very
probable that he was an employee of the San Lazaro Hospital, an assistant or
representative of Dr. A. P. Goff, the hospital director. But it should be noted that the
alleged insane does not appear to have been notified either of the order or of the
hearing of said petition as expressly required by the aforementioned section 559,
although on the other hand it appears that a copy was received by A. S. Crossfield,
(who called himself next friend of the alleged insane Jose R. de Inchausti), doubtless
because he was the one who swore to the petition stating that he was one of the
counsel for the petitioner and the next friend of Jose R. de Inchausti. But, as will be
readily understood, this can in no way justify the failure of personal service upon the
supposed insane Jose R. de Inchausti, for whose person and property the
appointment of a guardian was asked upon allegation that he was insane, because
the provision of section 559 is definite: it gives for granted that the petition for the
appointment of a guardian should be filed by a relative or a friend of the alleged
insane and provides that the judge shall order same to be notified to the supposed
insane
. . . for the same reason, as already said, that such a petition, although presented
presumably for his benefit by a relative or friend, may be prejudicial by attempting
to dispossess him of his property and of its free use and management. Moreover, in
proceedings of this nature, as can be plainly deduce from the provisions of the
aforementioned section 559, the supposed insane can and ought to be considered
as the party against whom said petition is filed and, for this reasons, ought to be
notified of same and its hearing, in order that he may be heard and given an
opportunity to defend himself duly before an adjudication, affecting in such an
essential and important manner his rights and interests, is made against him.
Wherefore the express provision of section 559 has been infringed.
The hearing of the aforementioned petition having been had on the said 18th day of
January, 1915, at 10 a.m., the court issued a decree on the same date, wherein he
set forth (1) that Seora Consolacion Rico viuda de Inchausti had petitioned that she
be appointed guardian of Jose R. de Inchausti on the ground that he was suffering a
mental derangement and was incompetent to administer his property; that
accompanied by Dr. A. P. Goff and her counsel Mr. Crossfield the petitioner appeared
in the day and hour set for said hearing; (2) that from Dr. A. P. Goff's testimony at

the hearing and from the two medical certificates presented as evidence and
attached to the record as Exhibits A and B, (the former from Drs. A. P. Goff himself
and J. W. Smith, chief of the prison sanitation division and a member of the
committee for the insane, the latter from Drs. W. E. Musgrave and C. Fitzpatrick) it
appears that Jose R. de Inchausti was then confined in the department for the
insane in San Lazaro Hospital suffering from a mental derangement of such a state
that his release would prove dangerous; that it had been proven to the court's
satisfaction that the said Jose R. de Inchausti could not in any way manage his
property, wherefore that the said petitioner was appointed guardian of the said Jose
R. de Inchausti with bond in the sum of P100,000 satisfactory to the court.
According to the certificate of the assistant clerk of court this decree was served on
the following day (January 19) upon the aforementioned guardian, Consolacion Rico
viuda de Inchausti and upon Dr. A. P. Goff of the San Lazaro Hospital, and, according
to another certificate of this same assistant clerk, dated January 18, 1915, the
guardian herein had furnished the said personal bond and having taken oath in
order to qualify herself for the office, the clerk of the Court of First Instance issued
to her the letters of administration on the same day. The decree in question,
however, was not served upon the alleged insane Jose R. de Inchausti nor upon any
person representing him in these proceedings, nor does it appear that same was
served upon him through the Director of the San Lazaro Hospital wherein he was
then confined. But, beside this omission which is very material, it should be
observed also, as far as the appearance of Jose R. de Inchausti at the hearing of the
petition is concerned, that it has not been shown, either before said hearing, or in
the order of the court appointing his guardian, or by any effort made afterwards,
that Jose R. de Inchausti's non-appearance at said hearing was due to an
impossibility. In his testimony at the hearing, in answer to the several questions
propounded to him concerning Jose R. de Inchausti's condition then on that date
(January 18) at the hospital, Dr. Goff said he was still in the ward for the insane,
suffering from a mental derangement, and that it was dangerous to let him loose. At
this hearing the two medical certificates, mentioned above, were also presented in
evidence. But Dr. Goff was not asked nor did he say anything to the effect that Jose
R. de Inchausti could not be produced on that occasion because his presence in
court would be dangerous or because his removal from the hospital, in order to be
present during the hearing, would be injurious to him. Thus, the presence of the
alleged insane Jose R. de Inchausti at the hearing was absolutely disregarded. No
effort whatever was made to justify his non-appearance or absence at the hearing.
Not one of the those ten present his mother, the petitioner Consolacion Rico
viuda de Inchausti, her counsel Mr. Crossfield, and Dr. Goff the only persons present
according to the court's own order made the slightest mention that Jose R. de
Inchausti's absence was due either to insanity or to danger to public order and
security. Furthermore, in Dr. Goff's testimony at the hearing the last question put to
him by attorney Crossfield was whether he had answered in writing the order of the
court, and Dr. Goff replied, "No, Sir." Therefore, Dr. Goff not only failed to answer in
writing the order of the court requiring if possible the production in person of Jose R.
de Inchausti at the hearing an answer which he ought to have given in writing as
implied by the petitioner's own counsel and the alleged insane's friend. Mr.
Crossfield, in asking that question but he even failed to answer said order
verbally; i.e., he did not obey the court's order to produce in person Jose R. de
Inchausti at the hearing, nor give any reason for not obeying it, the result being that
trial was had in the absence of Jose R. de Inchausti, an evident violation not only of

section 559 of the present Code of Civil Procedure but also of section 4 of Act No.
2122, cited by the majority as basis for affirming the order appealed from and in
holding that all the proceedings had in this cause are not null and void. So evident is
this violation, so notorious this silence, this carelessness and this neglect regarding
the unfortunate Jose R. de Inchausti, committed with or without reason to San
Lazaro Hospital as insane, and still so great the heedlessness of the provisions of
the statute that in the same order of the court of January 18, 1915, there is not a
word to show that the court was then informed by Dr. Goff or by any one else that,
for some justifiable cause, Jose R. de Inchausti could not be produced in person on
that occasion nor that the court had taken this into consideration in appointing the
petitioner guardian of the alleged incompetent. To be convinced of this, it is enough
to read the aforesaid decree reciting that, according to the evidence adduced, it
appears that Jose R. de Inchausti was then confined in the ward for the insane in
San Lazaro Hospital on account of a mental derangement of such a state that his
release would be dangerous and that it had been proven to the court's satisfaction
that he could not, in any way, administer his property; but it was not further stated,
as it ought and could have been if, in compliance with the order served upon him,
Dr. Goff had stated that Jose R. de Inchausti could not be produced that the latter in
spite of said order, had not appeared at the hearing for the reason already given.
There was no difficulty whatever in having this inserted in said order if Dr. Goff had
made any statement to that effect at the hearing. But, unfortunately, none of those
in this case said to be interested in the welfare of Jose R. de Inchausti, not even Dr.
Goff, has made an effort to comply with the law. Everything appears to have been
done to please the petitioner and her counsel and managers, in open violation of
the law, disregarding the lawful rights granted to Jose R. de Inchausti and depriving
him of his right to discuss and to impugn the certificates of Dr. Goff and the two
other physicians declaring him mentally deranged, to cross-examine the said Dr.
Goff and to oppose, by means of evidence which he might have been able to
adduce, to his deprivation of liberty, and not be confined as insane in the San
Lazaro Hospital, thus dispossessing him of the free disposition and administration of
his property.
The proceedings in this case followed their course, there having been issued, since
the order of January 18, 1915, several other orders and decrees concerning the
fixing of a monthly pension for the alleged incompetent, the approval of the
accounts presented by the guardian, the appointment of a new guardian, Don
Antonio Ma. Barretto, the approval of the final accounts presented by the old
guardian, and the reduction of the pension previously approved. But none of these
orders and decrees have been served upon the aforementioned Jose R. de Inchausti,
nor was there any attempt to notify or acquaint him with them, in spite of the fact
that the court, in fixing the date of the hearing of the guardian's petition which gave
rise to these proceedings, said in each: "Let the interested parties be notified
forthwith of this order" notification which was served in every case only upon
Crossfield & O'Brien, counsel for the guardian.
Things went on in this manner until October 1916 when Messrs. Inchausti & Co.,
who had possession of the inheritance of the alleged incompetent from his father,
refused to deliver to the guardian Antonio Ma. Barretto the monthly pension fixed by
the court, upon the ground that the proceedings in guardianship were unlawful as
Jose R. de Inchausti did not appear to have ever been notified of the hearing for the

appointment of a guardian, as required by law. Said Antonio Barretto, upon his own
motion, was relieved as guardian and the mother of the alleged insane was
reinstated as such guardian and on May 23, 1917, she presented to the court a
petition signed by her, wherein, after reciting Messrs. Inchausti & Co.'s refusal to
deliver the monthly pensions for the reasons already mentioned and alleging
several facts connected with the proceedings had for her appointment as guardian,
she prayed that the record be corrected so as to show now, as before, that the
aforementioned insane had been duly notified of the date of the hearing of the
petition and that the proceedings had were regular and in accordance with law. In
view of this petition the court issued an order fixing the 10th of November of the
same year, 1917, as the date of the hearing, and ordering sent by registered mail to
Jose R. de Inchausti a copy of the petition and of all the papers presented therewith
and also expressly ordered that, if possible, another copy of said petition and papers
be handed personally to said demented, notifying him likewise of said order for
hearing. This was the only order of the court which was served upon the alleged
insane Jose R. de Inchausti who was then in Barcelona, Spain; the hearing having
been continued until February 16, 1918, when it was again postponed to April 8,
1918. The court ordered the guardian on the date first mentioned to notify Jose R.
de Inchausti by cablegram of the postponement and of the date on which the
hearing would take place. But, Jose R. de Inchausti sent a cablegram to the Court of
First Instance through the American Consul General at Barcelona, stating that in the
following month of March his attorney in fact with full powers to represent him
would arrive in this city, and on the 26th of the same month of March, attorneys
Gutierrez Repide y Socias appeared in this case in behalf of Jose R. de Inchausti and
filed a motion (mentioned in the beginning hereof) to declare null and void all the
proceedings had in this case and to dismiss the petition filed by Maria Consolacion
Rico Viuda de Inchausti, mother of Jose R. de Inchausti, praying appointment as
guardian of their son. The court after hearing said motion, without stating any
ground other than that after due consideration he found that it ought to be denied,
did deny by the aforementioned order of May 9, 1918, an appeal from which by
counsel for Jose R. de Inchausti has been decided in the majority opinion to which
we have been referring and from which we dissent.
As appears from the foregoing, two years and four months had passed after the
hearing of the petition of Maria Consolacion Rico viuda de Inchausti's appointment
as guardian of the person and property of her son, Jose R. de Inchausti, alleged to
be insane, and after the Court of First Instance of this city had issued the order of
January 18, 1915, granting same by appointing her as guardian, and because
Messrs. Inchausti & Co., believing the guardianship proceedings illegal refused to
deliver the pension and necessary funds for the maintenance of her ward, the
supposed insane, said guardian tried to show the legality of said proceedings and
asked for the amendment thereof so as to make it appear of record. In order to
accomplish this object said guardian filed, with her petition of May 23, 1917, a
certificate from Dr. A. P. Goff, Director of the San Lazaro Hospital, dated April 26,
1917, and A. S. Crossfield's affidavit of April 27, of the same year 1917.
In his certificate, after stating that Jose R. de Inchausti was confined in the San
Lazaro Hospital in January 1915, because of mental derangement; that as Director
of said Hospital, on the 12th of the same month of January he received an order
signed by J. A. Ostrand, judge of the Court of First Instance of Manila, which stated

that a petition had been filed with the court alleging that the aforementioned Jose R.
de Inchausti was of unsound mind, that, therefore, in accordance with section 559
of the Code of Civil Procedure, said petition would be heard at 10 a.m. January 18,
1915, and that he was ordered to appear before said court at said day and hour and
to produce if possible the person of said Jose R. de Inchausti, Dr. Goff went on
saying that following the practice in the hospital in such cases according to his firm
belief, the aforesaid Jose R. de Inchausti was informed immediately, of said order;
that as aforesaid, on the day set for the hearing he appeared as ordered but he did
not produce the person of said Jose R. de Inchausti, not deeming it wise on account
of his mental condition; and that he believed that he had so informed the court at
the hearing.
In his affidavit, after alleging that he is an attorney at law practising in this city and
has been Jose R. de Inchausti's legal adviser from the end of 1904 to the beginning
of 1915; that Jose R. de Inchausti being so mentally deranged as to be incompetent
to handle his inheritance from his father, Rafael de Inchausti, a guardian was
necessary and as a friend and counselor, he filed the said petition with the Court of
First Instance; which issued an order fixing January 18, 1915, for the hearing, A. S.
Crossfield added that on the 13th of the same month, he, the affiant, visited, as a
friend, Jose R. de Inchausti confined as insane, in the San Lazaro Hospital; that Dr.
Goff, then the Director of said hospital, had mentioned the receipt of an order to
appear personally at the hearing for guardianship and the notification to the said
Jose R. de Inchausti of this order; that in the course of conversation later with the
affiant, Jose mentioned of his having been notified of said petition and hearing,
saying they were not necessary as he could attend to his own business; but that,
some time afterwards, having proved to him the necessity of his mother being his
guardian, Jose said that accompanied by a friend who was then in the hospital he
would go with his mother to Spain and requested the affiant to represent him as his
next friend and brother mason in all that concerned the partition of the estate and
the guardianship proceedings; that on this and other occasion before the hearing
Jose R. de Inchausti talked rationally about some things, and incoherently about
others; that he (the affiant) appeared at said hearing as Jose's friend; and that as
the fact of the notification to the said incompetent had been confirmed both by Dr.
Goff and the incapacitated himself he, the affiant, acknowledged receipt thereof as
it appeared in the record.
If the object of Jose R. de Inchausti's guardian as can be gathered from her motion
of May 23, 1917, presented, as we have said, two years and several months after
the hearing of her petition for appointment as such guardian and after the court's
order granting said petition, was to prove that the provision of section 559 of the
Code of Civil Procedure has been complied with in said hearing and said
appointment, such an object she has not obtained.
In the first place, everything set forth by A. S. Crossfield in his affidavit, relating to
the order and to the personal appearance of the insane Jose R. de Inchausti at the
hearing, is hearsay from the Director of the San Lazaro Hospital, Dr. A. P. Goff, who,
in his certificate, did not affirm positively and certainly Jose R. de Inchausti's
personal notification, merely stating that according to his best knowledge Jose R. de
Inchausti was immediately notified of said order in accordance with the custom
observed in the hospital in such cases. This certainly is not affirming that said

notification was carried out for the simple reason that founded as Dr. Goff's belief
was on the custom observed at the hospital in such cases, it cannot infer from this
that in this case such custom necessarily was followed. Undoubtedly Dr. Goff wished
to tell and told the whole truth and, that he might not falsify, neither affirmed nor
certified that he, as Director of the Hospital, had notified Jose R. de Inchausti of the
order in question, having merely taken for granted that same had been done; but
without even expressing who had served said notice upon his word. This, in
connection with the fact that the copy of the order fixing the date of the hearing of
the petition (as already said) appears to have been received by F. S. Beck it not
appearing who this person may be nor if he belong to the San Lazaro Hospital, there
being no mention of this, nor of the position said F. S. Beck held in said hospital
makes more vague and uncertain Dr. Goff's certification regarding this point in
question and, consequently it is of no use to the petitioner in establishing her object
in the aforementioned motion.
In the second place, regarding the said order of the court of January 12, 1915,
requiring the Director of the San Lazaro Hospital for the insane to produce the
person of Jose R. de Inchausti at the hearing, if possible, the said Dr. Goff, in his
certificate, confined himself to saying he did not produce the person of said Jose R.
de Inchausti because, taking into consideration his mental condition, he did not
believe it convenient and added that he believed this was what he had testified in
curt at the hearing; i.e., Dr. Goff did not assure, because he wanted to tell the whole
truth, that he made such testimony before the court at the hearing upon his failure
to produce in person said Jose R. de Inchausti in compliance with said order. He only
said that he believed he so testified, a statement which does not make certain that
he so did. That which Dr. Goff has so stated noticeably contradicts that which the
guardian said in her aforesaid motion of May 23, 1917, wherein she stated that Dr.
Goff testified at said hearing that the aforesaid Jose R. de Inchausti must not be
brought in court at the trial on account of his mental condition. Thus said guardian
has affirmed what Dr. Goff himself did not attempt to affirm, because he only
believed he stated before the court the impossibility to produce on that occasion
the person of Jose R. de Inchausti, as had been ordered. It should be noted too that
Dr. Goff himself in his certificate states that the order of the court, signed by Judge
Ostrand, mentioned that the petition for the appointment of a guardian would be
heard in accordance with section 559 of the Code of Civil Procedure, and that in fact
is what said order states. Wherefore appears more clear Dr. Goff's intention to say
no more than the pure truth and not to affirm, as a certain and positive fact, that
which he did not personally know to have been done and that which he was not
sure he had stated before the court at the hearing.
In the third place, in addition to the fact, as we have already said, that everything
stated by A. S. Crossfield in his affidavit relative to the notification of said order is
hearsay from Dr. Goff, said A. S. Crossfield declares in the same affidavit that, in
conversation, said Jose R. de Inchausti said he had been notified of the petition for
the appointment of a guardian and of the hearing thereof; that afterwards he said
such an appointment was unnecessary for he (Inchausti) could manage his own
business, but that when he (Crossfield) explained the necessity for appointing his
mother as guardian, he said he (Inchausti) would go to Spain with his mother; and
requested the affiant to represent him as his friend and brother mason in all the
guardianship proceedings as well as in the partition of his state. This conversation

must have taken place after the 13th but before the 18th of the same month of
January, 1915, the date of the hearing; and it is evident from what Jose R. de
Inchausti himself has said, according to the affiant A. S. Crossfield, that he was not
in such a condition as to be unable to make similar statement in court, and that his
mental condition was not of such a character as to have rendered him incompetent
to talk about, and look after, his own affairs and, certainly, this is not what would
have been said by a mad man whose presence in court would have been a danger
to public order and security. Furthermore, it is rather queer that what the alleged
insane Jose R. de Inchausti said to Crossfield concerning the appointment of his
mother as guardian and his request that Crossfield appear for him in the
guardianship proceedings had not been expressed by Jose R. de Inchausti to Dr. Goff
with whom he was constantly in contact. This would have been one of the reasons
which Dr. Goff could have alleged before the court for his failure to produce the
person of Jose R. de Inchausti as he had been ordered. Furthermore, it does not
appear elsewhere, except in A. S. Crossfield's own testimony, that he as friend was
authorized to appear for the aforesaid Jose R. de Inchausti in this guardianship
proceedings, and although as friend, it appears that on January 12, 1915, A. S.
Crossfield received a copy of the aforementioned order fixing the date of hearing of
the petition for the appointment of a guardian it should be observed, on the one
hand, that the same A. S. Crossfield was a member of the law firm Crossfield &
O'Brien, counsel for the petitioner Maria Consolacion Rico viuda de Inchausti who
signed said petition and that he was also the person who verified the petition, as a
member of the said law firm, and as the best friend of Jose R. de Inchausti. These
facts ought to be considered as legal impediments against Crossfield's appearing in
the guardianship proceedings for the person against whom said petition was filed,
though apparently for the welfare and best interest of such person. On the other,
the text of section 559 of the Code of Procedure in Civil Actions and Special
Proceedings, many times cited in this opinion, is very definite; it orders that the
supposed insane be notified five days before the date fixed of the time and place of
hearing of the petition for the appointment of a guardian when said petition is filed
by any relative or friend and it also orders that, if possible, said person must be
produced. Therefore, the supposed insane person, for whom a guardian is to be
appointed, is placed and considered not as on the side of the relative or friend who
filed the petition, but (graphically speaking) as opposed to said relative or friend,
which simply means that the same relative or friend who has petitioned for the
appointment of a guardian cannot represent nor appear at the hearing of said
petition or in the guardianship proceeding in behalf of said insane and incompetent
person. In a word, A. S. Crossfield, being one of the counsel for the petitioner and
calling himself friend of Jose R. de Inchausti as he has so stated in verifying the
petition made a part of these proceedings, could not and should have represented
Jose R. de Inchausti as friend in the proceedings for the appointment of guardian,
because this is equivalent to simultaneously representing two opposing parties,
defending different and antagonistic interests. Therefore, the fact that A. S.
Crossfield, who called himself Jose R. de Inchausti's friend, had received, as such
friend a copy of said order and had been present at the hearing is of no
consequence whatever; nor should it be taken into consideration at all in
determining whether the supposed insane person was previously notified of the
order fixing the date of the hearing and of the petition for the appointment of his
guardian and whether he was duly represented at the hearing and is in these
proceedings, since said Crossfield was also counsel for the petitioner and since, as

he stated in his affidavit, he pretended to be the representative of said Jose R. de

Inchausti in these proceedings. And this is perfectly understood because if A. S.
Crossfield is one of the counsel who signed the guardian's petition, verified it and
appeared at the hearing as petitioner's counsel, according to His Honor Judge
Ostrand himself, in the aforementioned order of January 18, 1915, he (Crossfield)
would not have opposed or impugned said petition nor would he have tried that Jose
R. de Inchausti was not suffering from insanity and indeed was competent to take
care of his person and property, but, on the contrary, as counsel for the petitioner,
he would have maintained at the hearing what was claimed by his said client, as in
fact he did by examining Dr. Goff, who was present as a witness for said petitioner,
regarding Jose R. de Inchausti`s mental condition and at the same time presenting
the two certificates Exhibits A and B aforementioned, the first of Dr. Goff's and the
second of Drs. Musgrave and Fitzpartrick.
Finally, in so far as concerned his relations with Jose R. de Inchausti for whom, as a
demented incapable of administering his property, a guardian was asked, A. S.
Crossfield was in the same state and situation as Maria Consolacion herself, viuda
de Inchausti and mother of said Jose R. de Inchausti, for as such friend of his and
petitioner's counsel, he verified said petition, wherefore he could not legally have
represented him either at the hearing or in the guardianship proceedings for the
same reason that the mother herself, the nearest relative of the alleged insane,
could not represent him, she being the person who, on the ground of the
incompetency of her son to administer his property, asked to be appointed as his
guardian.
In conclusion, after a careful study of the proceedings, the irregularities, the
anomalies and the violations of the law committed in this case stand out in bold
relief, and the petitioner's effort, two years and four months afterwards, to show
compliance with the law had been unfruitful. The very claim of the guardianpetitioner, that the record be corrected so as to show Jose R. de Inchausti as having
been duly notified of the hearing of her petition, is an implied admission that same
did not appear in the proceedings and, consequently, that said notice had not been
fulfilled. Regarding the presentation of the person of Jose R. de Inchausti (then in
San Lazaro Hospital) by the director of said hospital, expressly ordered by the court
on January 12, 1915, in accordance with section 559 of the Code of Civil Procedure
a production also required by section 4 of Act No. 2122 invoked in the majority
opinion it is evident that the correction of the record, asked by the guardian,
regarding this particular point, far from being carried out or being considered as
corrected through Dr. Goff's certificate and A. S. Crossfield's affidavit already
mentioned, has once more proven and confirmed the fact that in these proceedings
the precepts of the aforementioned statutory provisions have been openly infringed.
In view of this result, we do not believe it necessarily to go further into the legal
consideration of the consequences of said infraction. Enough for our purpose to
recall and reproduce herein what was said and decreed by this High Court in the
case of Yangco vs. Court of First Instance of Manila and Yangco (29 Phil. Rep., 183),
wherein petitioner Luis R. Yangco, adjudge a spendthrift by an order of said judge,
prayed that the proceedings had be declared null and void upon the ground that the
court had acted without jurisdiction in the premises, as the proceedings were had
and the decree entered without notice to the petitioner. lawphil.net

In one of the paragraphs of the said decision of this High Court, it was said, citing
cases and doctrines pertinent to the case:
To declare a person of full age to be incompetent to manage his affairs and
thereby deprive him of the possession of and right to hold and manage his
property is a serious thing. It takes from him one of the greatest privileges of
life in contravention of those fundamental rights which all men naturally have
to possess, control, manage, and enjoy their own property. It is for this reason
that the courts generally hold that the statute permitting a declaration of
incompetency and the appointment of guardians for the property of
incompetents must be strictly followed, and any material departure
therefrom, especially with respect to notice, results in a loss of jurisdiction. So
careful was the Legislature to see to it that no one should be declared an
incompetent and deprived of his property without full opportunity to be heard
that, in framing section 559 of the Code of Civil Procedure, it not only
required personal notice to the alleged incompetent but also provided that he
shall be present in court during the proceedings, if he be able to attend; and
ability to attend does not in our judgment, relate to absence but to physical
condition. . . .
And in the syllabus of that decision it was declared:
Where, in a proceeding to have the court declare that the person against
whom the proceeding is directed is a spendthrift and incompetent to manage
his property, the statute provides that on presentation, of a petition, duly
verified, alleging that a given person is a spendthrift and incompetent to
manage his estate, the court or judge must cause notice to be given to the
alleged incompetent of the time and place of the hearing on the petition, not
less than 5 days before the time set for the hearing and further requiring that
such person must be produced on the hearing if he is able to attend, such
notice is jurisdictional and the failure to give such notice deprives the court or
judge of power to make a valid decrees affecting the interest of the alleged
incompetent.
Where the statute in such a proceeding requires personal notice and there is
no provision for other notice, notice to a person other than the alleged
incompetent, although it may be a near relative or friend, does not comply
with the statute and confers no jurisdiction on the court or judge.
Persons cannot be deprived without due process of law of the right to hold
and manage their own property.
It is very clear that everything said about a spendthrift in the aforementioned
decision of this court is also applicable to the case of an alleged insane for whom
the appointment of a guardian is asked by a relative or a friend, because section
559 of the Code of Civil Procedure prescribes, as is well known, the same procedure
to be followed where the petition is filed for one case or the other.

Therefore, all the proceedings had in this case, since the decree of January 18,
1915, whereby Maria Consolacion Rico viuda de Inchausti was appointed guardian
of her son, the supposed insane Jose R. de Inchausti, are null and void, and it should
have been so held, and the decree of May 9, 1919, appealed from, should have
been reserved. Such is our opinion.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-33152 January 30, 1982
LUIS PARCO and VIRGINIA BAUTISTA, petitioners,
vs.
HONORABLE COURT OF APPEALS, HON. UNION C. KAYANAN, Judge, COURT OF FIRST
INSTANCE OF QUEZON (BRANCH IV), CALAUAG, and FRANCISCO RODRIGUEZ, JR.,
Legal Guardian of the Incompetent SOLEDAD RODRIGUEZ, respondents.

DE CASTRO, J.:
By this petition for review on certiorari, petitioners seek to set aside the Resolution
of the Court of Appeals dated January 20, 1971 1 which revived and declared in full
force and effect its decision on August 20, 1970 2 dismissing the petition for
certiorari with preliminary injunction in CA-G.R. No. 43732, entitled "Luis Parco, et
al. vs. Hon. Judge of the Court of First Instance of Quezon, Branch IV, Calauag, et al.,
" and pray that the decision dated April 15, 1969 3 and all subsequent
orders 4 issued by respondent Judge of Branch IV-Calauag, Court of First Instance of
Quezon in Special Proceedings No. 2641 be declared as null and void.
This case, G. R. No. L-33152, started from Special Proceedings No. 2641. a
guardianship proceedings for the incompetent Soledad Rodriguez of Sriaya, Quezon,
which originally pertained to Branch 1, Court of First Instance of Quezon, then
presided by the late Hon. Judge Vicente Arguelles, 5 later on succeded by Hon. Judge
Ameurfina Melencio-Herrera (now Associate Justice of the Supreme Court). In 1966,
respondent Judge of Branch IV-Calauag of the Court of First Instance of Quezon,
Hon. Union C. Kayanan, took cognizance of Special Proceedings No. 2641 when the
Secretary of Justice authorized respondent Judge to help unclog the docket of
Branch I at Lucena City, Quezon.
For clarity, We have hereunder summarized the sequence of events and material
dates as it appears in the records from the time respondent Judge of Branch IV of
the Court of First Instance of Quezon took cognizance of Special Proceedings No.
2641.

On December 20, 1966, respondent Judge authorized and approved, upon motion of
Fransisco Rodriguez, Jr. (guardian of Soledad Rodriguez), hereinafter referred to as
private respondent, the sale to Luis Parco and Virginia Bautista, hereinafter referred
to as the petitioners, of Lot Nos. 3437 (613 sq. meters) and 4389 (4,068 sq. meters)
covered by TCT Nos. 16939 and 18035, respectively, for the sum of P4,400.00 for
the support, maintenance and medical treatment of the ward Soledad Rodriguez.
On January 6, 1967, respondent Judge again approved and authorized, upon motion
of private respondent, the sale to petitioners of Lot No. 1207 covered by TCT No.
16944 containing an area of 63,598 sq. meters, more or less, for the same reason.
All the sales of the three (3) lots being absolute, new transfer certificates of title
were issued in the name of petitioners.
On May 13, 1968, or almost one year and five months from the approval of the sale
of Lot Nos. 3437, 4389, and 1207, private respondent filed an urgent petition in the
Court of First Instance of Quezon, Ninth Judicial District, invoking Section 6 Rule 96
of the Revised Rules of Court, praying that an order be immediately issued requiring
petitioners to appear before the court so that they can be examined as regards the
three (3) lots in question which are allegedly in danger of being lost, squandered,
concealed and embezzled and upon failure to do so or to comply with any order that
may be issued in relation therewith to hold them in contempt of court. The pertinent
allegations read as follows:
xxx xxx xxx
1. That as legal guardian (private respondent) of the abovenamed
incompetent and upon authorization by this Hon. Court he has
transferred in good faith to the spouses LUIS PARCO and VIRGINIA (UY)
BAUTISTA, both of Atimonan, Quezon, the titles over the following
realties belonging to his ward, namely:
a. A parcel of land (Lot No. 3437 of the Cadastral Survey
of Sariaya) with the improvements thereon situated in the
Municipality of Sariaya ... containing an area of Six
Hundred Thirteen (613) sq. meters, more or less;
b. A parcel of land (Lot No. 4389 of the Cadastral Survey
of Sariaya) situated in the Municipality of Sariaya ...
containing an area of Four Thousand And Sixty-Eight
(4,068) sq. meters, more or less;
c. A parcel of land (Lot No. 1207 of the Cadastral Survey
of Sariaya) situated in the Municipality of Sariaya ...
containing an area of Sixty-three Thousand Five Hundred
and Ninety-eight (63,598) sq. meters, more or less.

2. That anent the first TWO (2) PARCELS above-described he

transferred the titles thereto in favor of the recited spouses under a
loan agreement (not an absolute sale thereto and with the express
commitment in writing that he can recover the same within three (3)
months from December 19, 1966, ...
That prior to the expiration of the cited period of three months, he tried
to recover the stated two parcels of land from them, however, the
same was not carried out because he was then transacting with them
the sale of PARCEL THREE and under the Agreement that they will not
sell cede, or convey the mentioned two (2) lots to anyone (except to
petitioner now private respondent herein) and once the stated PARCEL
THREE has been sold at the price of P48,000.00 the borrowed amount
of P4,400.00 shall be deducted therefrom and said two parcels shall be
returned to him;
3. That recently, he discovered that the cited couple, in bad faith and
in violation of their agreement and of the trust and confidence which
he had reposed upon them, have fraudulently ceded and transferred
the titles over the stated two parcels of land to another person,
allegedly for a price of (over P30,000.00) and in spite of his repeated
request upon them to reconvey to him the titles thereto or to turn over
to him the total proceeds they have received (minus the sum of
P4,400.00), they have maliciously and unjustly refused to do so, and
are intending to keep and retain said amount for their own personal
use and benefit;
4. That as already adverted to in the previous paragraph hereof, the
mentioned couple induced him to transfer to them the title of parcel
three, so that they can sell the same for the agreed price of
P48,000.00 and believing in good faith that the cited spouses are
honest and trustworthy, he agreed and executed the requisite
document transferring the title to them subject to the following
conditions:
a. They shall pay to him the amount of Twelve Thousand
(Pl2,000.00) Pesos after they have secured a buyer of the
property, ...
b. They shall pay to NIEVES ALCALA and PURA AGCAOILE
(who are private respondent's agents and representatives
in negotiating the sale of parcel three) the sum of Fifteen
Thousand (P15,000.00) Pesos after they have sold the
realty, ...

5. That recently, he discovered that the cited couple have already sold
and ceded the mentioned parcel three to another person, and despite
his repeated request upon them to pay and deliver to him or to Nieves
Alcala the sum of money specified in the foregoing paragraph, they
have maliciously and unjustly failed and refused to do so, and have
fraudulently retained the said amount of money for thier own personal
use and benefit;
6. That the enumerated parcels of land together with all the proceeds
derived therefrom, undeniably belonged to his ward as trust properties,
which are subject to the disposition of this Hon. Court, and due to the
mentioned fraudulent, malicious and dishonest acts of the abovenamed couple, are in danger of being lost, squandered, concealed and
embezzled;
xxx xxx xxx
In an answer dated June 5, 1968, petitioners contended mainly, among others, that
the three lots have been conveyed to them by deeds of absolute sale which were
duly approved by the guardianship court.
Pre-trial hearings were set for possible amicable settlement beginning on
September 6, 1968 but was postponed and reset to October 9, 1968 on petitioners'
counsel motion. On October 9, 1968, both parties and their counsels appeared but
failed to reach any amicable settlement. Again, the pre-trial hearing was reset to
November 28 and 29, 1968 but was likewise postponed to January 8, 1969 at
petitioners' counsel motion.
On January 8, 1969, for failure to petitioners and their counsel to appear although
there was a telegram requesting for postponement, respondent Judge issued an
order, 6 authorizing private respondent to present evidence before the Clerk of Court
who was instructed to make the corresponding report which shall be made as the
basis of this decision.
In a petition dated January 30, 1969, petitioners prayed for the reconsideration of
the order of January 8, 1969 pointing out, among others, that there was a First
Order dated July 29, 1968, 7 issued by then Judge Ameurfina M. Herrera, Presiding
Judge of Branch I, Court of First Instance of Quezon that said branch "will henceforth
take cognizance of this case" and thus, asked for the transfer of the incident sought
before Branch IV to Branch I for proper action.
On February 20, 1969, respondent Judge, finding the petition for reconsideration
well-grounded, issued an order directing the Clerk of Court to transmit the records
of the case to the Court of First Instance, Branch I, Lucena City, quoted below:
ORDER

Acting on the Petition for Reconsideration filed by counsel for the

respondent on February 4, 1969, considering that Hon. A. MelencioHerrera, Presiding Judge of Branch 1, CFI, Lucena City, issued an order
on July 29, 1968, the dispositive portion of which is quoted as follows.
'WHEREFORE, it is hereby confirmed that this court will henceforth take
cognizance of this case,' and considering that this special proceedings
actually belongs to Branch I, although incidents therein were taken
cognizance of by the Presiding Judge of CFI, Branch IV when he was
holding court session in Lucena City and notwithstanding
Administrative Order No. 261 dated October 7, 1968 which states that
'This administrative order shall not apply to cases pending in the
different salas which have been partially tried and shall remain therein
for final disposition', because to case was originally filed during the
incumbency of the late Judge Vicente Arguelles, finding therefore the
said petition to be well-grounded, the Clerk of Court is hereby
authorized to transmit these records to the Deputy Clerk of Court, CFI,
Branch I, of Lucena City.
SO ORDERED.
Given at Calauag, Quezon this 20th day of February, 1969.
(SGD.) UNION C. KAYANAN Judge
On March 24, 1969, Private respondent, without the assistance of a counsel, filed
before Branch IV, Court of First Instance of Quezon an amended petition praying
that the three (3) lots subject matter of the original urgent petition be ordered
reconveyed to the ward in said Special Proceedings No. 2641 for he was informed
that petitioners win transfer and properties to third person.
On March 26, 1969, the Clerk of Court of Branch IV, Court of First Instance of
Quezon, issued the notice of hearing of the amended petition filed by private
respondent dated March 24, 1969 notifying counsel for both parties that the case
will be heard before Branch IV on April 10, 1969 at 2:30 p.m. at Calauag, Quezon.
On the date set for hearing, counsels for both parties appeared but for failure of the
petitioners to appear respondent Judge issued an order 8 reiterating its previous
order dated January 8, 1969 allowing private respondent to present his evidence exparte and considered the case submitted for resolution.
On April 15, 1969, respondent Judge rendered a decision 9 on the basis of the report
of the Clerk of Court dated February 19, 1969 ordering petitioners to reconvey the
three (3) parcels of land to private respondent.
On June 14, 1969, petitioners moved to reconsider the decision stating, among
others, that respondent Judge has no authority to take cognizance of the case
which, according to petitioners, is an issue raised in the petition for reconsideration

of the court order of January 8, 1969, and that the decision was without legal basis.
Petitioners prayed that the case or incident be transferred to the proper court which
had taken cognizance of this case.
On June 23, 1969, respondent Judge denied the petition for reconsideration for lack
of merit. Petitioners' counsel received the said order of denial on June 26, 1969.
Meanwhile, on June 21, 1969, private respondent filed an urgent motion in Branch IV
praying that petitioners be required to appear before the court to be examined as
regards the properties of the ward and to explain why they should not be cited for
contempt for not complying with a final order of the court directing the
reconveyance of the three (3) parcels of land to private respondent.
On June 23, 1969, respondent Judge, acting on the urgent motion, issued an
order 10 directing petitioners to explain why they should not be cited for contempt of
court pursuant to par. (b) Section 3 Rule 71 of the Revised Rules of Court.
On June 27, 1969, petitioners filed an urgent motion claiming that the urgent motion
for contempt of court was premature considering that the decision ordering the
reconveyance of the properties in question has not yet become final and executory
and is still subject to appeal. In their prayer for the setting aside of the order of June
23, 1969, petitioners informed the court that they win appeal the decision to the
Court of Appeals and that the corresponding notice of appeal, appeal bond and the
record on appeal will be filed in due time.
The following day, June 28, 1969, petitioners filed the notice of appeal and appeal
bond with a manifestation that the record on appeal will be filed in due time.
On July 3, 1963, respondent Judge issued an order 11 denying for lack of merit
petitioners' urgent motion of June 27, 1969, thus declaring that the order dated June
23, 1969 stands considering that petitioners' right to appeal has already lapsed. In
the same order, petitioners were given ten (10) days upon receipt to explain why
they should not be cited for contempt pursuant to Section 4, Rule 71 in relation to
Section 6, Rule 96 of the Revised Rules of Court.
On July 7, 1969, petitioners filed a petition for extension of ten (10) days to expire
on July 20, 1969 within which to file the record on appeal. In an order 12 dated July 9,
1969, respondent Judge denied the said petition for having been filed beyond the
reglementary period.
On July 10, 1969, petitioners filed an unverified second petition for reconsideration
of the decision dated April 15, 1969 and the order of July 3, 1969 contending that
Branch IV lost its jurisdiction over the raise from the time the order dated February
20, 1969 was issued by Judge A. Melencio- Herrera; that the proceedings under
Section 6 Rule 96 do not authorize the Hon. Court (Branch IV) to determine the
question of right over the property or to order delivery thereof; that the purpose is

merely to elicit information or secure evidence from the person suspected of having
embezzled, concealed or conveyed away any personal property of the ward; that if
the court finds sufficient evidence showing ownership on the part of the ward, it is
the duty of the guardian to bring the proper action.
On the other hand, on July 17, 1969, a motion for reconsideration of the order dated
July 9, 1969 was filed by petitioners claiming that all the pleadings related to the
intended appeal were filed within the period allowed by the Revised Rules of Court.
After an opposition was filed, respondent Judge issued an order on 13 July 18, 1969
denying the second petition for reconsideration for lack of basis and on the ground
that the period to appeal either the decision or any of the previous orders had
already expired.
On August 20, 1969, petitioners went to the Court of Appeals on a petition for
certiorari with preliminary injunction pleading nullity of the decision of the Court of
First Instance, Branch IV,
Quezon dated April 15, 1969 on grounds of lack of jurisdiction and grave abuse of
discretion in denying their right of appeal.
On September 27, 1969, the Court of Appeals dismissal the petition for lack of
merit. 14 On motion by petitioners, the dismissal was reconsidered in a split
resolution dated December 15, 1969 thereby giving due course to the petition, and
private respondent was required to answer.
After private respondent filed their answer and the parties submitted their
respective memoranda, the Court of Appeals, in a three-to-two vote
decision 15 dated August 21, 1970 dismissed the petition.
On motion for reconsideration filed by petitioners, the Court of Appeals, in a split
resolution 16 dated October 10, 1970 granted the motion for reconsideration and set
aside the decision dated August 20,1970.
However, upon motion for reconsideration filed by private respondent, the Court of
Appeals, in a three-to-two vote resolution 17 dated January 20, 1971, reverted to its
decision of August 21, 1970 dismissing the petition.
Hence, the instant petition for review on the following assignment of errors, to wit:
I
THE MAJORITY OF THE DIVISION OF FIVE JUSTICES OF THE COURT OF
APPEALS ERRED IN SUSTAINING THE RETENTION BY THE RESPONDENT
JUDGE OF BRANCH IV-CALAUAG OF THE CASE OF BRANCH I-LUCENA
CITY AFTER HE ORDERED THE RETURN OF THE CASE TO BRANCH
I,LUCENA CITY TO WHICH THE CASE BELONGS AND AFTER THE

PRESIDING JUDGE OF BRANCH I LUCENA CITY HAD RESUMED AND

EXERCISED HER JURISDICTION OVER SAID CASE.
II
ASSUMING THAT THE RESPONDENT JUDGE COULD LEGALLY AND
VALIDLY RETAIN JURISDICTION OVER THE CASE OF BRANCH I LUCENA
CITY DESPITE THE CIRCUMSTANCES ADVERTED TO IN THE FIRST
ASSIGNED ERROR, THE MAJORITY OF THE DIVISION OF FIVE JUSTICES
OF THE COURT OF APPEALS ERRED IN SANCTIONING THE RESPONDENT
JUDGE'S ASSUMPTION OF JURISDICTION TO ADJUDICATE THE ISSUE OF
OWNERSHIP AND/OR ORDER RECONVEYANCE OF PETITIONERS'
PROPERTY SOLD TO THEM AND TITLED IN THEIR NAMES,
NOTWITHSTANDING THE LIMITED JURISDICTION OF A GUARDIANSHIP
COURT.
III
THE MAJORITY OF THE DIVISION OF FIVE JUSTICES OF THE COURT OF
APPEALS ERRED IN NOT HOLDING THAT THE JUDICIAL AUTHORITY AND
APPROVAL OF THE SALES ARE CONCLUSIVE UPON THE VALIDITY AND
REGULARITY OF SAID SALES BETWEEN THE PARTIES AND THEIR
SUCCESSORS IN INTEREST.
IV
THE MAJORITY OF THE DIVISION OF FIVE JUSTICES OF THE COURT OF
APPEALS ERRED IN SANCTIONING BY SILENCE THE QUESTIONED
ORDER OF THE RESPONDENT JUDGE ENFORCING HIS DECISION BY
CONTEMPT PROCEEDINGS.
THE MAJORITY OF THE DIVISION OF FIVE JUSTICES OF THE COURT OF
APPEALS ERRED IN SANCTIONING DENIAL OF PETITIONERS' RIGHT TO
APPEAL.
This petition was given due course in view of the peculiar incidents during its trial
stage where, as borne out by the records, two (2) branches of the Court of First
Instance of Quezon Province, 9th Judicial District assert jurisdiction over Special
Proceedings No. 2641, which, when the decision rendered by one branch was
brought in the Court of Appeals on certiorari with preliminary injunction, the Special
Division of Five Justices, in a three-to-two vote resolution in four (4) occasions after
its dismissal for lack of merit on September 27, 1968, reconsidered the same and
was given due course on December 15, 1968, again dismissed on August 21, 1970,
but again reconsidered on October 10, 1970, until finally dismissed on January 20,
1971 when the Special Division of Five reverted to its August 21, 1970 resolution.
The Special Division was equally split on the issue whether or not the Court of First

Instance, Branch IV, Calauag, Quezon, acting with limited jurisdiction as a

guardianship court under Section 6 Rule 96 of the Rules of Court, has the authority
to adjudicate the question of ownership and order the reconveyance of the three (3)
parcels of land in question to private respondent, guardian of the ward Soledad
Rodriguez. On these two (2) principal issues, We are called upon to finally resolve
the legal controversy peculiar on this case.
After the parties submitted their respective briefs, the case was deemed submitted
for decision on October 28, 1971.
In a Resolution 18 of this Court dated November 29, 1978, the urgent manifestation
and motion of Leonisa S. Rodriguez, the surviving spouse of Mario Rodriguez
(brother of the ward) that the ward Soledad Rodriguez died on September 15, 1970
and private respondent Francisco Rodriguez, Jr. died on October 24, 1973; and that
the heirs of the ward be substituted as the private respondents in this case was
noted. To begin with, the principal issue al hand is whether or not respondent Judge
of the Court of First Instance of Quezon, Branch IV-Calauag has the authority or
power to take further action in Special Proceedings No. 2641 after the Presiding
Judge of the Court of First Instance of Quezon, Branch I-Lucena City asserted its
jurisdiction by issuing two (2) orders dated July 29, 1968 and respondent Judge
correspondingly ordered the return of the case to Branch I in an order dated
February 20,1969.
Petitioners maintain that respondent Judge of Branch IV, Court of First Instance of
Quezon has no power or authority to retain jurisdiction over Special Proceedings No.
2641 which, at its inception, originally pertained to Branch I-Lucena City, Court of
First Instance of Quezon. To support such chum, petitioners contend that the Second
Order dated July 29, 1968 requiring private respondent for an inventory and
accounting of the ward's property confirms that the Presiding Judge of Branch I has
resumed its jurisdiction over said case, more so, when respondent Judge ordered on
February 20, 1969 the transmittal of the records of the case to the Deputy Clerk of
Court, Court of First Instance, Branch I-Lucena City.
Private respondent, on the other hand, justifies the retention of jurisdiction by
respondent Judge over Special Proceedings No. 2641 contending, among others,
that the two (2) orders dated July 29, 1968 issued by then Judge A. Melencio-Herrera
are not sufficient bases for claiming that Branch IV has been deprived of its,
jurisdiction because jurisdiction is vested upon the court not upon any particular
branch or judge thereof and the issuance of such orders constitute undue
interference with the processes and proceedings already undertaken by respondent
Judge; that petitioners are guilty of estoppel when they failed to raise the issue of
jurisdiction from the very beginning and when they voluntarily appeared before
respondent Judge, filed their answer and other pleadings, and moved for
postponements of the scheduled dates of hearing.

We sustain petitioners' stand. Of course, jurisdiction is vested in the court not in any
particular branch or judge, and as a corollary rule, the various branches of the Court
of First Instance of a judicial district are a coordinate and co-equal courts 19 one
branch stands on the same level as the other. Undue interference by one on the
proceedings and processes of another is prohibited by law. In the language of this
Court, the various branches of the Court of First Instance of a province or city,
having as they have the same or equal authority and exercising as they do
concurrent and coordinate jurisdiction should not, cannot, and are not permitted to
interfere with their respective cases, much less with their orders or judgments. 20 A
contrary rule would obviously lead to confusion and might seriously hinder the
administration of justice. A judge is competent to act so long as the case remains
before him, but after it passed from his branch to the other, the case could be acted
upon by the judge of the latter branch. 21 Otherwise, an anomalous situation would
occur at the detriment of the party litigants who are likewise confused where to
appear and plead their cause.
In the case before Us, there is no dispute that both Branch I and Branch IV of the
Court of First Instance of Quezon, have jurisdiction over the subject matter, a
guardianship proceedings under Section 1, Rule 92 of the Rules of Court and Section
44(a) of the Judiciary Act of 1948. While it is recognized that when a case is filed in
one branch, jurisdiction over the case does not attach to the branch or judge alone,
to the exclusion of the other branches, 22 We are of the view however, considering
the unusual circumstances and incidents attendant in this case the situation in the
case at bar is different. Here, it must be noted that the Presiding Judge of Branch I
asserted and resumed its prior jurisdiction by issuing two (2) orders, one of which
requires private respondent to render an inventory and accounting of the property
of the ward. On the other hand, respondent Judge of Branch IV, in confirmation of
such resumption of jurisdiction, ordered the return of the records of Special
Proceedings No. 2641 to Branch I-Lucena City, Court of First Instance of Quezon,
but, instead of regularly relinquishing jurisdiction over the case, respondent Judge
continued to take further action on the case in total disregard of the two (2) orders
of the Presiding Judge of Branch I. Should one branch be permitted to equally assert,
assume or retain jurisdiction over a case or controversy over which another
coordinate or co-equal branch has already resumed its jurisdiction, We would then
sanction undue interference by one branch over another. With that, the judicial
stability of the decrees or orders of the courts would be a meaningless precept in a
well-ordered administration of justice.
There is no question that the prior proceedings had in Branch IV by respondent
Judge were valid and regular as they were admittedly authorized by the Secretary of
Justice. It must be emphasized however, that Branch IV lost its jurisdiction over
Special Proceedings No. 2641 when respondent Judge ordered the return of the
records to Branch I after having been informed in a motion for reconsideration filed
on January 30, 1969 of the existence of the two (2) orders issued by the Presiding
Judge of Branch 1. From that point of time, all subsequent proceedings and
processes in connection with or related to Special Proceedings No. 2641 undertaken

by the respondent Judge became irregular. It amounted to an undue interference

with the processes and proceedings of Branch I.
Nevertheless, from the standpoint of the pertinent law on the matter, it may be
observed that the detail of respondent Judge of Branch IV stationed permanently in
Calauag, Quezon to Branch I in Lucena City, Quezon authoritatively rests on the
provision of Section 51 of the Judiciary Act of 1948 which reads:
Section 51. Detail of judge to another district or province.-Whenever a
judge stationed in. any province or branch of a court in a province shag
certify to the Secretary of Justice that the condition of the docket in his
court is such as to require the assistance of an additional judge, or
when there is any vacancy in any court or branch of a court in a
province, the Secretary of Justice may, in the interest of justice, with
the approval of the Supreme Court and for a period of not more than
three months for each time, assign any judge of any court or province,
whose docket permits his temporary absence from said court, to hold
sessions in the court needing such assistance or whether such vacancy
exists. No judge so detailed shall take cognizance of any case when
any of the parties thereto objects and the objection is sustained by the
Supreme Court. (emphasis supplied)
xxx xxx xxx
Apparently, when the circumstances contemplated under Section 51 of the Judiciary
Act of 1948 occur, the detailed Judge holds sessions in the court needing such
assistance or where such vacancy exists as if he is the presiding judge of that
particular branch where the clogged docket or vacancy exists. The detailed Judge
does not hold sessions therein as if he is the Presiding Judge of the branch where he
is originally or permanently designated. In the case before Us, respondent Judge
Kayanan was duly authorized to help unclog the docket of Branch I stationed in
Lucena City, Quezon which at that time was rendered vacant due to the death of
Judge Vicente Arguelles. When respondent Judge Kayanan took cognizance of the
cases left by Judge Arguelles, pending the designation of a replacement, he merely
sits as a judge of Branch I, Court of First Instance of Quezon Province. In the event
of designation of a new Presiding Judge of Branch 1, accepted practice and
procedure of speedy administration of justice requires that the detailed judge turns
over the cases he took cognizance of to the new Presiding Judge. Justification for the
continued retention of jurisdiction over those cases in the case at bar appears to be
not convincing.
We find no plausible indication how estoppel could operate against petitioners. It is
true that petitioners filed their answer to the urgent petition of private respondent
and appeared before respondent Judge of Branch IV without questioning the latter's
authority to hear the case. The answer to the urgent petition of private respondent
dated May 13, 1968 was filed by petitioners on June 5, 1968 or almost two (2)

months before Judge Melencio-Herrera of Branch I issued the two (2) orders dated
July 29, 1968 asserting jurisdiction over the case. The appearances of petitioners
and counsel in the sala of respondent Judge during the intervening period from July
29, 1968 were apparently due to the fact that petitioners came to know only of the
two orders of Branch I when they examined the records of the case prompted by the
manifestation of the counsel of private respondent, in the course of the proceedings
in Branch IV, to submit for an accounting in connection with the administration of
the properties of the ward Soledad Rodriguez. Petitioners manifested such
information to respondent Judge in a petition for reconsideration of the order of
January 8, 1968 authorizing the presentation of evidence ex parte. The silence or
inaction of petitioners was therefore due to their lack of knowledge of respondent
Judge's lack of authority to retain or take further action on the case. Such lack of
authority was confirmed when respondent Judge, acting on the petition for
reconsideration dated January 30, 1969, issued on February 20, 1969 an order
authorizing the return of the records of the case to Branch I. In claiming that the
records referred to by the order concern the first portion of the records of Special
Proceedings No. 2641 and not the second portion containing the urgent petition
filed by private respondent on May 13, 1968, private respondent would then
encourage split jurisdiction of courts which is abhorred by the law.
Assuming that Branch IV-Calauag, Court of First Instance of Quezon has jurisdiction
over Special Proceedings No. 2641 notwithstanding the attendant circumstances
adverted to earlier, We now dwell on another issue, which standing alone would
decisively resolve the assigned errors raised in this petition, that is, whether or not
Branch IV exercising limited and special, jurisdiction as a guardianship court under
Section 6 Rule 96 of the Rules of Court has jurisdiction to order the delivery or
reconveyance of the three parcels of land in question to the ward, represented
herein by private respondent.
In two leading cases, Castillo vs. Bustamante, 64 Phil. 839 and Cui vs. Piccio et al,
91 Phil. 712, this Court laid the rule on the issue raised before Us as interpreted in
the light of Section 6 Rule 96 of the Rules of Court which reads:
Section 6. Proceedings when person suspected of embezzling or
concealing property of the ward. Upon complaint of the guardian or
ward, or of any person having actual or prospective interest in the
estate of the ward as creditor, heir, or otherwise, that anyone is
suspected of having embezzled, concealed, or conveyed away any
money, goods, or interest, or a written instrument, belonging to the
ward or his estate, the court may cite the suspected person to appear
for examination touching such money, goods, interests, or instrument,
and make such orders as will secure the estate against such
embezzlement, concealment or conveyance.
In Cui vs. Piccio et al., supra, this Court held that the jurisdiction of the court in
guardianship proceedings, ordinarily, is to cite persons suspected of having

embezzled, concealed or conveyed the property belonging to the ward for the
purpose of obtaining information which may be used in an action later to be
instituted by the guardian to protect the right of the ward. Generally, the
guardianship court exercising special and limited jurisdiction cannot actually order
the delivery of the property of the ward found to be embezzled, concealed or
conveyed. In a categorical language of this Court, only in extreme cases, where
property clearly belongs to the ward or where his title thereto has been already
judicially decided, may the court direct its delivery to the guardian. 23 In effect, there
can only be delivery or return of the embezzled, concealed or conveyed property of
the ward, where the right or title of said ward is clear and undisputable. However,
where title to any property said to be embezzled, concealed or conveyed is in
dispute, under the Cui case, the determination of said title or right whether in favor
of the person said to have embezzled, concealed or conveyed the property must be
determined in a separate ordinary action and not in guardianship proceedings.
In the case at bar, We are not prepared to say, at this premature stage, whether or
not, on the basis alone of the pleadings of the parties in the trial court, the title or
right of the ward Soledad Rodriguez over the three (3) parcels of land in question is
clear and undisputable. What is certain here is the fact that the sale of the
properties in question were duly approved by the respondent Judge in accordance
with the provisions on selling and encumbering of the property of the ward under
Rule 97 of the Rules of Court. It must be noted that while the original urgent petition
dated May 13, 1968 prayed for the examination of petitioners herein regarding the
alleged concealing, conveyancing and embezzling of the questioned properties, the
amended petition dated March 24, 1969 asked for reconveyance.
Moreover, it may be observed that private respondent contended that the sale of
the first two lots was actually a loan agreement with right of recovery while that of
the third lot was subject to condition, hence, a fictitious or simulated sale. On the
other hand, according to petitioners, the sales were all absolute and protected by
the Torrens System since new transfer certificate of titles were issued in their name.
Apparently, there is a cloud of doubt as to who has a better right or title to the
disputed properties. This, We believe, requires the determination of title or
ownership of the three parcels of land in dispute which is beyond the jurisdiction of
the guardianship court and should be threshed out in a separate ordinary action not
a guardianship proceedings as held in Cui vs. Piccio supra.
The ruling in Castillo vs. Bustamante, 64 Phil. 839, relied upon by private
respondent finds no application in the instant case. As differentiated from the case
at bar, in Castillo case, the right or title of the ward to the property in dispute was
clear and undisputable as the same was donated to her through compromise
agreement approved by the court which title had the authority of res judicata. As
enunciated above, the right or title of the ward to the properties in question is in
dispute and as such should be determined in a separate ordinary action.

Furthermore, private respondent's claim that petitioners are barred by laches to

raise the issue of jurisdiction is without merit. In support of such claim, private
respondent invoked the exception laid down in Tijam vs. Sibonghanoy, 23 SCRA 29,
to the rule that the lack of jurisdiction over the subject matter is fatal and may be
raised at any stage of the proceedings; that it is conferred only by law, and in the
manner prescribed by law and an objection on the lack of jurisdiction cannot be
waived by the parties; and the infirmity cannot be cured by silence, acquiescence,
or even by express consent, or win of the parties. 24
The doctrine laid down in Tijam vs. Sibonghanoy, supra, and in the latter case
of Rodriguez vs. Court of Appeals,29 SCRA 419 is not applicable in the case at bar.
In Tijam case, the appellant had all the opportunity to challenged the court's
jurisdiction in the court a quo as well as in the Court of Appeals but instead invoked
its jurisdiction to obtain affirmative relief and submitted its case for final
adjudication on the merits. It was only after an adverse decision was rendered by
the Court of Appeals and fifteen (15) years later from the inception of the case that
it finally chose to raise the question of j jurisdiction. I t is clear that t the
circumstances present in Tijam case are not present here. The petitioners in the
instant case challenged the authority of the trial court to take further cognizance of
the case the moment they become aware of Branch I assuming jurisdiction. The lack
of jurisdiction was raised in a petition for reconsideration of the order dated January
8, 1969, in a petition for reconsideration of the decision dated April 15, 1969, in a
second petition for reconsideration of the said decision, and alleged as an additional
ground in the petition for certiorari in the Court of Appeals. In any case, the
operation of the principle of estoppel on the question of jurisdiction seemingly
depends upon whether the lower court actually had jurisdiction. If it had no
jurisdiction, but the case was tried and decided upon the theory that it had
jurisdiction, the parties are not barred, on appeal, from assailing such jurisdiction,
for the same must exist as a matter of law, and may not be conferred by consent of
the parties or by estoppel. 25
As respondent trial court has no jurisdiction, We deem it unnecessary to pass upon
the assigned errors raised in the petition.
WHEREFORE, the Resolution of the Court of Appeals dated January 20, 1971 is
hereby reversed and set aside, and the decision rendered by respondent Judge of
Branch IV-Calauag, Court of First Instance of Quezon dated April 15, 1969 and the
orders issued thereafter are declared null and void, and the case is hereby
remanded to Branch I-Lucena City, Court of First Instance of Quezon for further
proceedings.
SO ORDERED.
Barredo (Chairman), Concepcion, Jr., Abad Santos, Ericta and Escolin, JJ., concur.

Separate Opinions

AQUINO, J.:, dissenting:

I dissent. I vote for the affirmance of the decision of Judge Union C. Kayanan,
Calauag Branch IV of the Court of First Instance of Quezon Province dated April 15,
1969 in Special Proceeding No. 2641, entitled "Guardianship of the Incompetent
Soledad Rodriguez, Francisco Rodriguez, Jr., Guardian".
In that decision, Judge Kayanan ordered the spouses Luis Parco and Virginia Bautista
to reconvey Lot No. 3437 (613 square meters), Lot No. 4389 (4,069 square meters)
and Lot No. 1207 (63,598 square meters), all of the Sariaya, Tayabas cadastre, to
the guardian Francisco Rodriguez, Jr. upon the latter's payment to the said spouses
of the sum of twelve thousand pesos which he had borrowed from them (p. 65,
Rollo).
Since the ward died intestate on September 15, 1970 and the guardian died on
October 24, 1973, the reconveyance should be made to the ward's heirs, namely,
her sisters, Concepcion Rodriguez- Sapalo and Milagros Rodriguez-Sanchez, and the
children of the ward's deceased brother Mario Rodriguez (who died on March 8,
1972), namely, Mario, Jr., Ramoncito, Liza and Rodulfo, all surnamed Rodriguez,
represented by their guardian, their mother, Leonisa S. Rodriguez (pp. 232-236,
Rollo). Said heirs should pay the Parco spouses the sum of twelve thousand pesos
as a condition for the reconveyance.
It should be noted that the said guardianship proceedings was assigned originally to
Branch I presided over by Judge Ameurfina Melencio-Herrera. It was transferred to
Branch IV presided over by Judge Kayanan who was detailed at Lucena City to assist
in decongesting the dockets of Branches I and II.
Judge Kayanan had authorized the sale of the three lots to the Parco spouses so that
the proceeds of the sale could be used for the maintenance of the ward. it turned
out that the sales or transfers were made under certain conditions which were
violated by the Parco spouses.
A copy of Judge Kayanan's decision was received by petitioners' counsel on May 29,
1969. Sixteen days later or on June 14, they filed a motion for reconsideration. The
order denying that motion was received by the petitioners on June 26. They filed
their notice of appeal and appeal bond on June 28 (pp- 86 and 92, CA Rollo).
The last day for submitting the record on appeal was July 10. The petitioners asked
for a ten-day extension within which to file their record on appeal Instead of

submitting it, they filed on July 10 a second motion for reconsideration on the
ground of lack of jurisdiction.
The lower court denied the motion for extension of time within which to file the
record on appeal It also denied the second motion for reconsideration in its order of
July 18, 1969.
The petitioners did not file any record on appeal They filed on August 20, 1969 a
petition for certiorari in the Court of Appeals to set aside the said decision of April
15. The Court of Appeals in its extended resolution of September 27, 1969
dismissed the petition on the ground that the petitioners' remedy was an appeal
which they had abandoned.
That resolution was reconsidered. The petition was given due course. The Court of
Appeals in its decision of August 21, 1970 dismissed the petition. (Per Justice
Eulogio Serrano with Alvendia and Nolasco JJ., concurring. Justice Enriquez and Yatco
dissented.)
Petitioners' motion for the reconsideration of that decision was denied in the
resolution of January 20, 197 1. (Per Justice Eulogio Serrano with Justices Nolasco
and Soriano concurring. Justices Enriquez and Alvendia dissented.)
The petitioners appealed to this Court. The decision of the Court of Appeals should
be affirmed because (1) the petitioners inexcusably did not file a record on appeal
(2) the question as to whether the guardianship court should set aside the
conveyances to the petitioners is not a jurisdictional question but merely a
procedural matter which could be waived (Lachenal vs. Salas, L-42257 June 14,
1976, 71 SCRA 262) and (3) the petitioners and the guardian hoodwinked the
guardianship court to the ward's prejudice.
It is the duty of the courts, in the exercise of the State's prerogative to protect
persons under disability (parents patriae) to set aside the transfers to the
petitioners and thus avoid unjust enrichment at the expense of the ward and do
justice in this case. Technicalities should be eschewed.
As to the power of a branch of the Court of First Instance to act in a case transferred
to it from another sala of the same court, see Eleazar vs. Zandueta, 48 Phil. 193;
Hizon Mercado vs. Ocampo, 72 Phil. 318; San Miguel Brewery, Inc. vs. Court of
Industrial Relations, 91 Phil. 178.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 132223

June 19, 2001

BONIFACIA P. VANCIL, petitioner,

vs.
HELEN G. BELMES, respondent.
SANDOVAL-GUTIERREZ, J.:
Petition for review on certiorari of the Decision of the Court of Appeals in CA-G.R. CV
No. 45650, "In the Matter of Guardianship of Minors Valerie Vancil and Vincent Vancil
Bonifacia P. Vancil, Petitioner-Appellee, vs. Helen G. Belmes, Oppositor-Appellant,"
promulgated on July 29, 1997, and its Resolution dated December 18, 1997 denying
the motion for reconsideration of the said Decision.
The facts of the case as summarized by the Court of Appeals in its Decision are:
"Petitioner, Bonifacia Vancil, is the mother of Reeder C. Vancil, a Navy
serviceman of the United States of America who died in the said country on
December 22, 1986. During his lifetime, Reeder had two (2) children named
Valerie and Vincent by his common-law wife, Helen G. Belmes.
"Sometime in May of 1987, Bonifacia Vancil commenced before the Regional
Trial Court of Cebu City a guardianship proceedings over the persons and
properties of minors Valerie and Vincent docketed as Special Proceedings No.
1618-CEB. At the time, Valerie was only 6 years old while Vincent was a 2year old child. It is claimed in the petition that the minors are residents of
Cebu City, Philippines and have an estate consisting of proceeds from their
fathers death pension benefits with a probable value of P100,000.00.
"Finding sufficiency in form and in substance, the case was set for hearing
after a 3-consecutive-weekly publications with the Sunstar Daily.
"On July 15, 1987, petitioner, Bonifacia Vancil was appointed legal and judicial
guardian over the persons and estate of Valerie Vancil and Vincent Vancil Jr.
"On August 13, 1987, the natural mother of the minors, Helen Belmes,
submitted an opposition to the subject guardianship proceedings
asseverating that she had already filed a similar petition for guardianship
under Special Proceedings No. 2819 before the Regional Trial Court of
Pagadian City.
"Thereafter, on June 27, 1988, Helen Belmes followed her opposition with a
motion for the Removal of Guardian and Appointment of a New One,
asserting that she is the natural mother in actual custody of and exercising
parental authority over the subject minors at Maralag, Dumingag,
Zamboanga del Sur where they are permanently residing; that the petition
was filed under an improper venue; and that at the time the petition was filed
Bonifacia Vancil was a resident of 140 Hurliman Court,
Canon
City, Colorado, U.S.A. being a naturalized American citizen.

"On October 12, 1988, after due proceedings, the trial court rejected and
denied Belmes motion to remove and/or to disqualify Bonifacia as guardian
of Valerie and Vincent Jr. and instead ordered petitioner Bonifacia Vancil to
enter the office and perform her duties as such guardian upon the posting of
a bond of P50,000.00. The subsequent attempt for a reconsideration was
likewise dismissed in an Order dated November 24, 1988." 1
On appeal, the Court of Appeals rendered its assailed Decision reversing the RTC
order of October 12, 1988 and dismissing Special Proceedings No. 1618-CEB.
The Court of Appeals held:
"Stress should likewise be made that our Civil Code considers parents, the
father, or in the absence, the mother, as natural guardian of her minor
children. The law on parental authority under the Civil Code or P.D. 603 and
now the New Family Code, (Article 225 of the Family Code) ascribe to the
same legal pronouncements. Section 7 of Rule 93 of the Revised Rules of
Court confirms the designation of the parents as ipso facto guardian of their
minor children without need of a court appointment and only for good reason
may another person be named. Ironically, for the petitioner, there is nothing
on record of any reason at all why Helen Belmes, the biological mother,
should be deprived of her legal rights as natural guardian of her minor
children. To give away such privilege from Helen would be an abdication and
grave violation of the very basic fundamental tenets in civil law and the
constitution on family solidarity."2
On March 10, 1998, Bonifacia Vancil filed with this Court the present petition, raising
the following "legal points":
"1. The Court of Appeals gravely erred in ruling that the preferential right of a
parent to be appointed guardian over the persons and estate of the minors is
absolute, contrary to existing jurisprudence.
"2. The Court of Appeals gravely erred in ruling that Oppositor Helen G.
Belmes, the biological mother, should be appointed the guardian of the
minors despite the undisputed proof that under her custody, her daughter
minor Valerie Vancil was raped seven times by Oppositors live-in partner.
"3. The respondent (sic) Court of Appeals gravely erred when it disqualified
petitioner Bonifacia P. Vancil to be appointed as judicial guardian over the
persons and estate of subject minors despite the fact that she has all the
qualifications and none of the disqualifications as judicial guardian, merely on
the basis of her U.S. citizenship which is clearly not a statutory requirement
to become guardian."
At the outset, let it be stressed that in her "Manifestation/Motion," dated September
15, 1998, respondent Helen Belmes stated that her daughter Valerie turned
eighteen on September 2, 1998 as shown by her Birth Certificate. 3Respondent thus
prayed that this case be dismissed with respect to Valerie, she being no longer a

proper subject of guardianship proceedings. The said "Manifestation/Motion" was

noted by this Court in its Resolution dated November 11, 1998.
Considering that Valerie is already of major age, this petition has become moot with
respect to her. Thus, only the first and third "legal points" raised by petitioner
should be resolved.
The basic issue for our resolution is who between the mother and grandmother of
minor Vincent should be his guardian.
We agree with the ruling of the Court of Appeals that respondent, being the natural
mother of the minor, has the preferential right over that of petitioner to be his
guardian. This ruling finds support in Article 211 of the Family Code which provides:
"Art. 211. The father and the mother shall jointly exercise parental authority
over the persons of their common children. In case of disagreement, the
fathers decision shall prevail, unless there is a judicial order to the contrary.
xxx."
Indeed, being the natural mother of minor Vincent, respondent has the
corresponding natural and legal right to his custody. In Sagala-Eslao vs. Court of
Appeals,4 this Court held:
"Of considerable importance is the rule long accepted by the courts that the
right of parents to the custody of their minor children is one of the natural
rights incident to parenthood, a right supported by law and sound public
policy. The right is an inherent one, which is not created by the state or
decisions of the courts, but derives from the nature of the parental
relationship."
Petitioner contends that she is more qualified as guardian of Vincent.
Petitioners claim to be the guardian of said minor can only be realized by way
of substitute parental authoritypursuant to Article 214 of the Family Code, thus:
"Art. 214. In case of death, absence or unsuitability of the parents, substitute
parental authority shall be exercised by the surviving grandparent. xxx."
In Santos, Sr. vs. Court of Appeals,5 this Court ruled:
"The law vests on the father and mother joint parental authority over the
persons of their common children. In case of absence or death of either
parent, the parent present shall continue exercising parental authority. Only
in case of the parents death, absence or unsuitability may substitute
parental authority be exercised by the surviving grandparent."
Petitioner, as the surviving grandparent, can exercise substitute parental authority
only in case of death, absence or unsuitability of respondent. Considering that
respondent is very much alive and has exercised continuously parental authority

over Vincent, petitioner has to prove, in asserting her right to be the minors
guardian, respondents unsuitability. Petitioner, however, has not proffered
convincing evidence showing that respondent is not suited to be the guardian of
Vincent. Petitioner merely insists that respondent is morally unfit as guardian of
Valerie considering that her (respondents) live-in partner raped Valerie several
times. But Valerie, being now of major age, is no longer a subject of this
guardianship proceeding.
Even assuming that respondent is unfit as guardian of minor Vincent, still petitioner
cannot qualify as a substitute guardian. It bears stressing that she is an American
citizen and a resident of Colorado. Obviously, she will not be able to perform the
responsibilities and obligations required of a guardian. In fact, in her petition, she
admitted the difficulty of discharging the duties of a guardian by an expatriate, like
her. To be sure, she will merely delegate those duties to someone else who may not
also qualify as a guardian.
Moreover, we observe that respondents allegation that petitioner has not set foot in
the Philippines since 1987 has not been controverted by her. Besides, petitioners
old age and her conviction of libel by the Regional Trial Court, Branch 6, Cebu City in
Criminal Case No. CBU-168846 filed by one Danilo R. Deen, will give her a second
thought of staying here. Indeed, her coming back to this country just to fulfill the
duties of a guardian to Vincent for only two years is not certain.
Significantly, this Court has held that courts should not appoint persons as
guardians who are not within the jurisdiction of our courts for they will find it difficult
to protect the wards. In Guerrero vs. Teran,7 this Court held:
"Doa Maria Muoz y Gomez was, as above indicated, removed upon the
theory that her appointment was void because she did not reside in the
Philippine Islands. There is nothing in the law which requires the courts to
appoint residents only as administrators or guardians. However,
notwithstanding the fact that there are no statutory requirements upon this
question, the courts, charged with the responsibilities of protecting the
estates of deceased persons, wards of the estate, etc., will find much
difficulty in complying with this duty by appointing administrators and
guardians who are not personally subject to their jurisdiction.
Notwithstanding that there is no statutory requirement, the courts should not
consent to the appointment of persons as administrators and guardians who
are not personally subject to the jurisdiction of our courts here."
WHEREFORE, the appealed Decision is hereby AFFIRMED, with modification in the
sense that Valerie, who has attained the age of majority, will no longer be under the
guardianship of respondent Helen Belmes.
SECOND DIVISION
[G.R. No. L-27402 : July 25, 1981.]
GUARDIANSHIP OF THE INCOMPETENT LEONORA NAVARRO AND THE MINORS
ADOLFO YUSON AND OTHERS, ELDEGARDES YUSON DE PUA, Judicial GuardianAppellant, vs. JUSTINIANO SAN AGUSTIN, Movant-Appellee.

DECISION
BARREDO, J.:
Appeal from the order dated November 12, 1966 approving the "Motion for
Confirmation of Deed Of Transfer of Right on Lots Nos. 632 and 633, Cadastre No.
102 in favor of Justiniano San Agustin" of the Court of First Instance of Davao,
Branch I, Hon. Vicente N. Cusi, Jr. presiding, in Special Proceedings cranad(Case) No.
282, entitled "Guardianship of the Incompetent Leonora Navarro and the Minors
Adolfo Yuson and Others."
The records disclose the following antecedents of this appeal:
The spouses Enrique Navarro and Maximina Bonleon died intestate in 1945 on
March 18 and February 15, 1945, respectively leaving as heirs the following:
a) Benita Navarro, legitimate daughter, of legal age, and residing at Lasang,
Davao City.
b) Leonora Navarro, legitimate daughter, of legal age, and residing in Lasang,
Davao City, under the judicial guardianship of Atty. Eriberto A. Unson later
Eldegardes Yuson de Pua Davao City.
c) Ramon Navarro and Delia Navarro, legitimate grandchildren cranad(children of
predeceased child Antonio Navarro), eight and seven years of age
respectively, represented by their mother Filipinas Catalan.
In the course of the settlement of the estate of the deceased spouses in Special
Proceeding No. 64-R, entitled "Intestate Estate of the Deceased Spouses Enrique
Navarro and Maximina Bonleon" of the Court of First Instance of Davao, Branch I,
Hon. Wenceslao L. Fernan then presiding, a Project of Partition dated June 11, 1956,
executed by all the above-named heirs with the assistance of their respective
guardian and counsel, was presented to the court for approval, which the court
approved in its order dated August 31, 1956. Among the properties awarded to
Leonora Navarro in said Project of Partition were:
xxx
"b) The parcel of land situated at Lasang, Davao City, designated as Lot 634-A,
with an area of 89,430 square meters, more or less . cra .
"c) All rights and interests under the portion of Lot No. cranad(632 and 633)
situated at Panabo, Davao with an area of 1.5 hectares, more or less adjacent
to the parcel of land described in Transfer Certificate of Title No. T-1297."
On October 13, 1958, Eldegardes Yuson de Pua, eldest legitimate daughter and
judicial guardian of the incompetent Leonora Navarro Yuson, filed a verified petition
with the court below, praying for authority to sell Lot No. 634-A. On October 25,
1958, the court issued an order granting the judicial guardian authority to sell Lot
No. 634-A on the ground that "the sale of the aforesaid property will be beneficial to
the ward and her minor children because the proceeds thereof could be expended
for their maintenance." Accordingly, Lot No. 634-A was sold to herein appellee,

Justiniano San Agustin, for P13,750.00 as evidenced by a Deed of Absolute Sale

dated January 19, 1959. This sale was approved by the court on January 23, 1959,
and Eldegardes Yuson de Pua was directed in the same order "to deposit with the
Philippine National Bank, Davao Branch, the amount of Thirteen Thousand Seven
Hundred Fifty Pesoscranad(P13,750.00), consideration of the aforesaid sale, in the
name of the above-entitled guardianship, to be withdrawn only upon previous
approval of the court."
Subsequently, or on January 20, 1959, the same guardian Mrs. de Pua filed a second
petition in the court a quo, praying for authority to sell Lots Nos. 632 and 633 on the
following ground, to wit:
"That in view of the standing account of the estate of the insane, Leonora
Yuson and the expenses for maintenance of her children, the herein petitioner
deems it wise that the above-mentioned property, which the estate cannot
maintain or improve, be sold. chanroblesvirtualawlibrary(Record on Appeal,
p. 2.)
However, the true area of the two lots i.e., eleven cranad(11) instead of only one
and one-half cranad(1-1/2) hectares was disclosed in this petition, thus:
"That among the properties of the insane, Leonora Navarro, as inheritance
from the deceased spouses, Enrique Navarro and Maximina Bonleon, are
two cranad(2) parcels of land known as Lots Nos. 632 and 633 Cad. 102,
consisting of 11 hectares, more or less, and situated at Lasang,
Davao. chanroblesvirtualawlibrary(Emphasis supplied) cranad(Id., p. 2)
On the same day that this second petition was filed, Mrs. de Pua also filed a "Motion
to Approve Sale of Property" because Lots Nos. 632 and 633 had in the meantime
been already sold by her to Dr. Justiniano San Agustin the day before, i.e., on
January 19, 1959, as evidenced by an instrument titled "Transfer of Rights", that is
to say, simultaneously with the other deed which was duly authorized and approved
by the court.
Acting on this second motion, on February 7, 1959, the Court denied the petition to
sell Lots Nos. 632 and 633, thus:
"Inasmuch as the judicial guardian sold just recently Lot No. 634-A, TCT No.
1296, belonging to the ward, in the amount of Thirteen Thousand Seven
Hundred Fifty Pesos cranad(P13,750.00), the sale of the property mentioned
in her petition filed on January 20, 1959, is not necessary or would not be
beneficial to the ward; hence, the petition to sell is hereby
denied. chanroblesvirtualawlibrary(Id., pp. 26-27).
Meanwhile, because the co-heirs of the ward, Leonora Navarro namely, Benita
Navarro, Delia Navarro and Ramon Navarro, in aforementioned Special Case No. 64R learned thru the sale by appellant guardian Mrs. de Pua to Dr. San Agustin that
Lots Nos. 632 and 633 consisted not merely of 1.5 hectares but 11, steps were
taken towards the return of the said properties and they were correspondingly
returned to the estate for proper disposition, and as a result, a Supplemental Project
of Partition dated June 9, 1960 was arrived at, submitted to the court but
subsequently amended on July 29, 1960. The amended Supplemental Project of
Partition was also approved by the court in Case No. 64-R on August 29, 1960.

Under the terms of the Supplemental Project of Partition and the amendment
thereto, the heirs agreed that
". cra . th(e) Estate shall recognize and confirm the conveyance of the rights
over said Lots Nos. 632-633, Cad. 102, with an area of 11 hectares, in favor of
JUSTINIANO SAN AGUSTIN, for the stipulated price of P8,250.00; and
". cra . the heirs Benita Navarro and the minors Ramon and Delia, both
surnamed Navarro, hereby cede and assign in favor of the heir Leonora
Navarro, all of their rights, interests in the aforecited lots nos. 632-633, Cad.
No. 102 and all its improvements under the consideration that said Leonora
Navarro shall pay to the aforenamed co-heirs, namely, Benita Navarro and
the minors Ramon and Delia, all surnamed Navarro, the sum of ONE
THOUSAND TWO HUNDRED PESOScranad(P1,200.00) and in addition, shall
release and rescind the respective mortgage obligations of the said co-heirs
in favor of said Leonora Navarro, and with the corresponding cancellation of
the annotation of mortgage encumbrance appearing in TCT No. T-8363 of
Benita Navarro and the titles in the name of the minors Ramon and Delia, all
surnamed Navarro, which properties were assigned to said co-heirs under the
project of partition dated June 11, 1956, approved by this Honorable Court in
its Order of August 31, 1956. chanroblesvirtualawlibrary(Id., pp. 47-48).
On August 21, 1962, Mrs. de Pua filed an "Ex-Parte Motion" manifesting her desire
to return to Dr. San Agustin the amount of P7,375.00 advanced by him, so that the
possession of Lots Nos. 632 and 633 may be returned to the guardianship. This
motion was granted in an order dated September 1, 1962, pertinent portion of
which provides:
xxx
". cra . conformably with her ex-parte motion filed on August 31, 1962,
P7,375.00 of said amount shall be paid to Justiniano San Agustin so that he
could return possession of Lots Nos. 632 and 633, Cad. 102, belonging to the
incompetent, to the judicial guardian . cra . . chanroblesvirtualawlibrary(Id.,
pp. 29-30)
On September 4, 1962, she followed this with an "Amended Ex-Parte Motion"
with the following relevant allegations:
xxx
"2. That since January 19, 1959, said Dr. San Agustin has been in continuous
possession of the said lots and has been enjoying the fruits thereof, which
fact was not alleged as it should be, in the aforestated ex-parte motion of
August 31st. cranad(should be 21st)
xxx
"WHEREFORE, it is respectfully prayed that the undersigned guardian be
allowed to return the sum of P7,375.00 to Dr. Justiniano San Agustin, less the
total value of the fruits he realized from his possession of the land in question
from January 19, 1959 until he returns the possession thereof to the
undersigned-movant, the amount of which may be ascertained from the
doctor's
record
of
production
and
sales
of
the
coconuts
thereon. chanroblesvirtualawlibrary(Id., p. 31)

The record does not disclose the lower court's action on this "Amended Ex-Parte
Motion," Neither does it appear there that appellee ever took any step to enforce
the sale to him of the two lots in question evidently because, as he very well knew,
the Court had disapproved the same. According to appellant on page 11 of her brief,
it was only after she filed a civil action, docketed as Civil Case No. 5160, seeking the
reconveyance of the said lots that appellee began to move by filing on September
28, 1966 a "Motion for Confirmation of Deed of Transfer of Rights Over Lots 632 and
633, Cad. 102" in his favor. He prayed that ". cra . in the interest of justice and
equity . cra . the Transfer of Rights over Lots 632 and 633 in favor of Justiniano San
Agustin be approved and confirmed by the Honorable Court." He based his alleged
right over the two lots on the "Supplemental Project of Partition" of June 9, 1960 and
the "Amendment to the Supplemental Project of Partition" of July 29, 1960, which
were executed by the Judicial Administrator and by the heirs, respectively, and
approved by the probate court in the intestate proceeding, to modify, as already
stated earlier, the original Project of Partition because of the discovery of the true
area of Lots Nos. 632 and 633, which is eleven cranad(11) hectares and not one and
one-half cranad(1.5) hectares only, and that all the heirs agreed in said
"Supplemental Project of Partition" and the amendment thereto, among other
things, to recognize and confirm the sale of Lots Nos. 632 and 633 in his favor,
instead of partitioning the same in some other manner.
On November 12, 1966, Mrs. de Pua filed an "Opposition to the Motion for
Confirmation, contending that:
"1. The transfer of rights over Lots Nos. 632 and 633, Cad. 102 had been
passed upon and disapproved by an order of this Honorable Court which
has become final. cranad(Referring to order of February 7, 1959
disapproving the sale of the same lots.)
"2. The petition cranad(motion for confirmation) is self-serving and states on
ground to warrant approval of the transfer of rights."
Over said opposition, the court issued the following order, granting Dr. San Agustin's
motion for confirmation:
"Finding the Motion for Confirmation of Deed of Transfer of Right over Lots
Nos. 632 and 633, Cad. 102 in favor of Justiniano San Agustin filed by his
counsel on September 28, 1966, meritorious, the Order of this Court of
February 7, 1959, based on erroneous facts, is hereby set aside and the
aforesaid transfer of rights signed by Justiniano San Agustin and Leanora
Navarro represented by Eldegardes Yuson de Pua, her judicial guardian . cra .
is hereby approved. chanroblesvirtualawlibrary(Emphasis supplied)
Her motion for reconsideration having been denied "for lack of merit," the judicial
guardian, Mrs. de Pua, is now before Us and urges the following assignment of
errors:
FIRST ASSIGNMENT OF ERROR
THE ORDER OF THE LOWER COURT APPROVING THE TRANSFER OF RIGHTS IN
FAVOR OF JUSTINIANO SAN AGUSTIN IS CONTRARY TO LAW ON THE
FOLLOWING GROUNDS:
I. THE TRANSFER OF RIGHTS IS VOID AB INITIO; HENCE, COULD NOT BE
APPROVED NOR CONFIRMED.

II. THE TRANSFER OF RIGHTS IS NOT NECESSARY NOR BENEFICIAL TO

THE WARD.
SECOND ASSIGNMENT OF ERROR
THE ORDER OF THE LOWER COURT IN SETTING ASIDE ITS ORDER DATED
FEBRUARY 7, 1959 IS CONTRARY TO LAW ON THE GROUND THAT IT SETS
ASIDE AN ORDER WHICH HAS BECOME FINAL AND EXECUTORY.
In support of the first assigned error, judicial guardian-appellant Mrs. de Pua argues
through counsel that the transfer of rights is void ab initio and cannot be approved
nor confirmed, because under Rule 95, Sec. 1 of the Rules of Court, property under
guardianship can be sold only by prior authority granted by the guardianship court;
that in the instant case "not only was the transfer of rights executed by the judicial
guardian without any authority, but the petition seeking authority to sell, which was
filed a day after the actual execution of the transfer of rights, was expressly denied
by the lower court"; and, therefore, the transfer of rights is void because "a sale of
the ward's realty by the guardian without authority from the court is void," citing
Inton vs. Quintana, cranad(81 Phil. 97). Furthermore, she adds that the transfer of
rights is not necessary nor beneficial to the ward. In fact, there is no allegation at all
to such effect in appellee's motion for confirmation.
Relative to the second assigned error, judicial guardian-appellant argues that the
Order of the lower court of February 7, 1959, which denied her petition to sell Lots
632 and 633 completely disposed of her petition and, therefore, the challenged
Order of November 12, 1966, which summarily set aside the said previous order is
contrary to law.
The foregoing assignment of errors/arguments raise only one decisive issue, which
is: Whether or not, under the circumstances related above, the lower court acted
correctly in issuing the order of November 12, 1966, approving the Motion for
Confirmation of Sale of Lots 632 and 633 filed by the appellee Dr. San Agustin and
setting aside its previous order of February 7, 1959, which earlier disapproved the
sale of the same lots.
We agree with appellant that the impugned order cannot stand legal scrutiny.
To start with, it must be emphasized that what appellee asked the court to confirm
was a sale in 1959, or seven years before the filing of said motion, and what is
more, it was a sale which the court refused to authorize in its order of February 7,
1959, for the simple reason that in its opinion, considering that a previous sale of
Lot 634-A for P13,750.00 had just been approved, it could not see why it would
again be "necessary," after just a few days, "or beneficial to the ward" that the two
lots, Lots 632 and 633 should still be sold.
Reiteratedly, this Court has ruled that under Sections 2 and 3 of Rule 96 cranad(now
Rule 95) that the properties of Leonora, the ward of appellant Mrs. de Pua could be
sold only under authority of the guardianship court in Special Proceedings No. 282.
Without such authority, any sale would necessarily be illegal. Indeed, even on the
assumption posited by appellee that the lack of authority from the guardianship
court resulted only in a voidable sale which could be ratified, there is no showing in
the record that there was any such ratification. We cannot go along with the
proposition that the approval by the probate court in Case No. 64-R of the amended

"Supplemental Project of Partition" may be deemed in law as tantamount to the

required ratification.
It is quite true that appellant-guardian Mrs. de Pua, did sign, assisted by her lawyer,
Atty. Pedro S. Castillo, the motion to approve said "Supplemental Project of Partition"
of July 29, 1960, and that said motion was approved by the probate court on August
29, 1960. It is further true that in the first "Supplemental Project of Partition" it was
specifically stipulated in paragraph 7(a) "that this Estate shall recognize and confirm
the conveyance of the rights over said Lots Nos. 632 and 633, Cad. 102, with an
area of 11 hectares, in favor of Justiniano San Agustin, for the stipulated price of
P8,250.00." But legally speaking, the approval by the probate court of such project
of partition cranad(the stipulation just quoted was specifically reiterated in the
amended project dated July 29, 1960), did not in any degree confer upon Mrs. de
Pua the power to dispose of the lots in question without prior permission of the
guardianship court. Indeed, the motion to approve referred to was signed only by
Flor A. Unson, the Judicial Administrator in the probate court in Case No. 64-R. We
hold that court had no jurisdiction to authorize the sale of any property belonging to
an heir who is under guardianship without first requiring the guardian to secure the
corresponding authority from the guardianship court. Worse, much less could the
probate court have any power to effectively approve a sale of an heir-ward which
had, as in this case, been actually disapproved by the guardianship court.
In arriving at this conclusion, We are not overlooking the fact that the same judge,
the Honorable Vicente N. Cusi, Jr. who had issued the order denying authority to sell
Lots 632 and 633 was the very one who in his order of November 12, 1966, here
being assailed, approved the motion for confirmation on the lame excuse, as We see
it, that his previous order of February 7, 1959 was "based on erroneous facts." What
"erroneous facts " he did not state, which circumstance readily places the order in
question subject to the omission to comply with the constitutional requirement that
final orders or decisions of courts of record should state the facts on which it is
based, which means, of course, that at least the main elemental facts must be
stated in a manner such as to enable the parties to comprehend intelligently what
they are.
Another equally important consideration lies in the way to Our giving Our sanction
to the questioned order. In the order of February 7, 1959, Judge Cusi held the sale
was neither necessary nor beneficial to the ward. The motion for confirmation of
appellee of September 28, 1966 had no allegation at all that could induce anyone to
alter the conclusion in the February 7, 1959 order. If indeed there was already need
on the part of the ward Leonora for additional funds in 1966, the court could not just
assume that such was the case, absent any allegation, much less any proof to such
effect before it.
Besides, We cannot but wonder how Lot 634-A with an area of a little less than
nine(9) hectares was sold for P13,750.00 and yet two lots, numbered 632 and 633,
indicating that they must be either contiguous to Lot 634-A or within its immediate
vicinity could be sold on the same day for only P8,250.00. A guardianship court is
designed purposely to see to it that the interests of wards under its jurisdiction are
taken care of by the court's appointed guardian with the diligence and prudence of
a bonus pater familiae. We are not convinced that such standard of care was
observed in the impugned order of November 12, 1966.

We hold that appellant had every right to require the reconveyance by deed of said
lots, without prejudice to her returning to appellee the P7,375.00 he appears to
have paid, but not before appellee San Agustin has accounted for the fruits of the
lots in question which have remained in his possession since 1959 and a proper setoff of the amount of any possible additional payment has been determined.:onad
WHEREFORE, judgment is hereby rendered setting aside the impugned order of
November 12, 1966, and ordering the guardianship court in Case No. 282 of the
Court of First Instance of Davao, Branch I, to proceed with the accounting pursuant
to the above opinion.
Fernandez, Abad Santos and De Castro, JJ., concur.
Concepcion, J., took no part.
Fernandez, J., member of the First Division, was designated to sit in the Second
Division.

Separate Opinions
AQUINO, J., concurring:
I concur. On January 20, 1959, Eldegardes Yuson de Pua, as guardian of her insane
mother, Leonora Navarro-Yuson, filed in the lower court cranad(1) a petition for
authority to sell Lots 632 and 633 with an area of eleven hectares located at
Panabo, Davao andcranad(2) another petition for the approval of the sales to
Justiniano San Agustin of the said two lots and of Lot 634-A, with an area of more
than eight hectares located at Lasang, Davao City as evidenced by two deeds of
sale executed the day before, or on January 19.
In one deed of sale, Lot 634-A was sold to San Agustin for P13,750, while in the
deed denominated "Transfer of Rights," Lots 632 and 633 were sold to him for
P8,250 of which the sum of P7,375 was paid. The sale of Lot 634-A was authorized
by the lower court in its order of October 25, 1958. That sale was approved in the
lower court's order of January 23, 1959.
On the other hand, the lower court in its order of February 7, 1959 denied the
petition to sell Lots 632 and 633 on the ground that the sale was not necessary and
that it would not be beneficial to the ward because on that same day, January 19,
1959, the guardian, as stated above, sold to San Agustin Lot 634-A.
At this juncture, it should be stated that in the intestate proceeding for the
settlement of the estates of the spouses, Enrique Navarro and Maximina Bonleon,
Lots 632 and 633 were adjudicated in the project of partition to the incompetent,
Mrs. Yuson, on the assumption that the area of the two lots was only one and a half
hectares with a value of three hundred pesos.
When in the guardianship proceeding it was discovered that the correct area of the
two lots was eleven hectares, a supplemental project of partition dated June 9, 1960
and an amendment thereto dated July 29, 1960 were filed in the intestate
proceeding with respect to Lots 632 and 633. It was clarified therein that the sale of
the two lots to San Agustin should be respected but the estate of the ward should

pay P1,200 to her co-heirs as consideration for the transfer of their interests in the
two lots.
The lower court, as a probate court, approved the amended supplemental project of
partition in its order of August 29, 1960.
However, notwithstanding the probate court's confirmation of the sale to San
Agustin, the guardian, Mrs. De Pua, filed two years later, or on August 21, 1962, in
the guardianship proceeding a motion wherein she manifested her desire to return
to San Agustin the sum of P7,375 which he had advanced to her for the sale of Lots
632 and 633.
The lower court, as a guardianship court, in its order of September 1, 1962 granted
her motion in order to enable her to recover the possession of the two lots from San
Agustin. The record does not show whether that order was implemented.
In spite of that order, San Agustin filed four years later or on September 28, 1966 a
motion for the confirmation of the deed of transfer of rights covering Lots 632 and
633, which, as already stated, was executed in his favor by Mrs. De Pua on January
19, 1959. He based his motion for confirmation on the amended supplemental
project of partition.
Mrs. De Pua, the guardian, opposed that motion on November 12, 1966. She
invoked the lower court's orders of February 7, 1959 and September 1, 1962
denying her motion for authority to sell Lots 632 and 633 to San Agustin and
allowing her to rescind the sale by returning the sum of P7,375 to San Agustin.
On that same date, November 12, 1966, the lower court overruled the opposition,
set aside its order of February 7, 1959 and granted the motion for confirmation.
That is the order under appeal in this case.
The lower court erred in setting aside its 1959 order disapproving the sale of the
two lots to San Agustin and in confirming the same sale seven years later or in
1966.
It should be recalled that the lower court in its 1962 order, which had not been set
aside, authorized Mrs. De Pua, the guardian, to return the price of the two lots to
San Agustin or to rescind the sale. In issuing that order, the lower court presumably
acted on the theory that the sale was not beneficial to the ward's estate since Lot
634-A, an eight-hectare land located in Davao City, had already been sold to San
Agustin on January 19, 1959 or on the same day that Lots 632 and 633 were also
sold to him.
Indeed, the lower court in its 1966 order had not made any finding that the sale of
the two lots would redound to the benefit of the ward or her estate.
After disauthorizing that sale in 1959, the lower court, as a guardianship court, if it
desired to reopen the matter in 1966, should have followed the requirements of
sections 2 and 3 of Rule 96, now Rule 95, regarding the sale of the real property
belonging to the ward.
Section 2 requires that the guardianship court should issue an order directing the
next of kin of the ward and all persons interested in the ward's estate to appear at a
reasonable time and place to show cause why the sale should not be allowed.

Section 3 requires the guardianship court to hold a hearing and hear the proofs and
allegations of the petitioner, the ward's next of kin and the other interested persons
as to whether the sale would be for the best interest of the ward.
The anomaly herein is that the guardianship court in 1966 approved a sale made in
1959 by the guardian for which there was no prior authority or license given to the
guardian, which the court had in fact disauthorized and whose rescission, at the
instance of the guardian, was sanctioned by the court, and which sale the guardian
later on opposed. The sale, as confirmed, was in effect, a sale made by the court
and not by the guardian.
It is odd for the guardianship court to confirm in 1966 a sale made by the guardian
in 1959 which the guardian later repudiated. The unorthodox procedure followed by
the court is in contravention of rule 96, now Rule 95, and is not within the
contemplation thereof.
I vote for the setting aside of the lower court's order of November 12, 1966 and to
order San Agustin to accept the sum of P7,375, to account for the fruits of the two
lots and to return the possession thereof to the guardian.

SECOND DIVISION
RICHARD B. LOPEZ, in his
Capacity as Trustee of the Trust
Estate of the late Juliana LopezManzano,
Petitioner,

- versus -

G.R. No. 157784

Present:
QUISUMBING, J.,
Chairperson,
CARPIO MORALES,
TINGA,
VELASCO, JR., and
BRION, JJ.

COURT OF APPEALS,
CORAZON LOPEZ, FERNANDO
LOPEZ, ROBERTO LOPEZ, represented
by LUZVIMINDA LOPEZ, MARIA
Promulgated:
ROLINDA MANZANO, MARIA
ROSARIO MANZANO SANTOS,
JOSE MANZANO, JR., NARCISO
MANZANO (all represented by
December 16, 2008
Attorney-in-fact, MODESTO RUBIO),
MARIA CRISTINA MANZANO RUBIO,
IRENE MONZON and ELENA MANZANO,
Respondents.
x--------------------------------------------------------------------------------x

DECISION
TINGA, J.:
This is a petition for review on certiorari
Civil Procedure, assailing the Decision

[2]

[1]

under Rule 45 of the 1997 Rules of

and Resolution[3] of the Court of Appeals in

CA-G.R. CV No. 34086. The Court of Appeals decision affirmed the summary
judgment of the Regional Trial Court (RTC), Branch 10, Balayan, Batangas,
dismissing petitioners action for reconveyance on the ground of prescription.
The instant petition stemmed from an action for reconveyance instituted by
petitioner Richard B. Lopez in his capacity as trustee of the estate of the late Juliana
LopezManzano (Juliana) to recover from respondents several large tracts of lands
allegedly belonging to the trust estate of Juliana.
The decedent, Juliana, was married to Jose Lopez Manzano (Jose). Their union
did not bear any children. Juliana was the owner of several properties, among them,
the properties subject of this dispute. The disputed properties totaling more than
1,500 hectares consist of six parcels of land, which are all located in Batangas. They
were the exclusive paraphernal properties of Juliana together with a parcel of land
situated in Mindoro known as Abra de Ilog and a fractional interest in a residential
land on Antorcha St.,Balayan, Batangas.
On 23 March 1968, Juliana executed a notarial will,[4] whereby she expressed
that she wished to constitute a trust fund for her paraphernal properties,
denominated

asFideicomiso de

Juliana

Lopez Manzano (Fideicomiso),

to

be

administered by her husband. If her husband were to die or renounce the obligation,
her nephew, Enrique Lopez, was to become administrator and executor of
the Fideicomiso. Two-thirds (2/3) of the income from rentals over these properties
were to answer for the education of deserving but needy honor students, while onethird 1/3 was to shoulder the expenses and fees of the administrator. As to her
conjugal properties, Juliana bequeathed the portion that she could legally dispose to
her husband, and after his death, said properties were to pass to her biznietos or
great grandchildren.

Juliana initiated the probate of her will five (5) days after its execution, but
she died on 12 August 1968, before the petition for probate could be heard. The
petition was pursued instead in Special Proceedings (S.P.) No. 706 by her husband,
Jose, who was the designated executor in the will. On 7 October 1968, the Court of
First Instance, Branch 3, Balayan, Batangas, acting as probate court, admitted the
will to probate and issued the letters testamentary to Jose. Jose then submitted an
inventory of Julianas real and personal properties with their appraised values, which
was approved by the probate court.
Thereafter, Jose filed a Report dated 16 August 1969, which included a
proposed project of partition. In the report, Jose explained that as the only
compulsory heir of Juliana, he was entitled by operation of law to one-half (1/2) of
Julianas paraphernal properties as his legitime, while the other one-half (1/2) was to
be constituted into theFideicomiso. At the same time, Jose alleged that he and
Juliana had outstanding debts totaling P816,000.00 excluding interests, and that
these debts were secured by real estate mortgages. He noted that if these debts
were liquidated, the residuary estate available for distribution would, value-wise,
be very small.
From these premises, Jose proceeded to offer a project of partition. The
relevant portion pertaining to the Fideicomiso stated, thus:
PROJECT OF PARTITION
14. Pursuant to the terms of the Will, one-half (1/2) of the
following properties, which are not burdened with any obligation, shall
be constituted into the Fidei-comiso de Juliana Lopez Manzano and
delivered to Jose Lopez Manzano as trustee thereof:
Location

Title No.

Abra de Ilog,
Mindoro

TCT - 540

Antorcha St.
Balayan, Batangas

TCT 1217-A

Area (Sq. M.)

Improvements

2,940,000

pasture, etc.

13,040

residential
(1/6 thereof)

and all those properties to be inherited by the decedent, by intestacy,

from her sister, Clemencia Lopez y Castelo.

15. The other half (1/2) of the aforesaid properties is

adjudicated to Jose Lopez Manzano as heir.
Then, Jose listed those properties which he alleged were registered in both his
and Julianas names, totaling 13 parcels in all. The disputed properties consisting of
six (6) parcels, all located in Balayan, Batangas, were included in said list. These
properties, as described in the project of partition, are as follows:
Location
Title No. Area (Sq. M.)
Improvements
Pantay, Calaca,
Batangas

91,283

Mataywanak,
Tuy, Batangas

OCT-29[6]94

Patugo, Balayan,
Batangas

OCT-2807

coconuts

485,486
16,757,615

sugar
coconut,
sugar,

citrus,
pasteur
Cagayan, Balayan,
Batangas

TCT-1220

411,331

Pook, Baayan
Batangas

TCT-1281

135,922

Bolbok, Balayan,
Batangas
Calzada, Balayan,
Batangas
Gumamela, Balayan,
Batangas
Bombon, Balayan,
Batangas
Paraaque, Rizal
Paraaque, Rizal
Modesto St., Manila

TCT-18845

444,998

TCT 1978

2,312

TCT-2575

829

sugar
sugar
sugar
sugar

4,532
TCT-282340
TCT-11577
TCT-52212

800
800
137.8

residential
residential
residential

and the existing sugar quota in the name of the deceased with the
Central Azucarera Don Pedro at Nasugbo.
16. The remaining shall likewise go to Jose Lopez Manzano,
with the condition to be annotated on the titles thereof, that upon his
death, the same shall pass on to Corazon Lopez, Ferdinand Lopez, and
Roberto Lopez:
Location

Title No.

Area (Sq. M.)

Improvements

Dalig, Balayan, TCT-10080

Batangas
San Juan, Rizal TCT-53690

482,872

sugar

523

residential

On 25 August 1969, the probate court issued an order approving the project
of partition. As to the properties to be constituted into the Fideicomiso, the probate
court ordered that the certificates of title thereto be cancelled, and, in lieu thereof,
new certificates be issued in favor of Jose as trustee of the Fideicomiso covering
one-half (1/2) of the properties listed under paragraph 14 of the project of partition;
and regarding the other half, to be registered in the name of Jose as heir of Juliana.
The properties which Jose had alleged as registered in his and Julianas names,
including the disputed lots, were adjudicated to Jose as heir, subject to the condition
that Jose would settle the obligations charged on these properties. The probate
court, thus, directed that new certificates of title be issued in favor of Jose as the
registered owner thereof in its Order dated 15 September 1969. On even date, the
certificates of title of the disputed properties were issued in the name of Jose.
The Fideicomiso was constituted in S.P No. 706 encompassing one-half (1/2)
of the Abra de Ilog lot on Mindoro, the 1/6 portion of the lot in Antorcha St.
in Balayan,Batangas and all other properties inherited ab intestato by Juliana from
her sister, Clemencia, in accordance with the order of the probate court in S.P. No.
706. The disputed lands were excluded from the trust.
Jose died on 22 July 1980, leaving a holographic will disposing of the disputed
properties to respondents. The will was allowed probate on 20 December 1983 in
S.P. No. 2675 before the RTC of Pasay City. Pursuant to Joses will, the RTC ordered
on 20 December 1983 the transfer of the disputed properties to the respondents as
the heirs of Jose. Consequently, the certificates of title of the disputed properties
were cancelled and new ones issued in the names of respondents.
Petitioners father, Enrique Lopez, also assumed the trusteeship of Julianas
estate. On 30 August 1984, the RTC of Batangas, Branch 9 appointed petitioner as
trustee of Julianas estate in S.P. No. 706. On 11 December 1984, petitioner
instituted an action for reconveyance of parcels of land with sum of money before
the RTC of Balayan,Batangas against respondents. The complaint[5] essentially

alleged that Jose was able to register in his name the disputed properties, which
were the paraphernal properties of Juliana, either during their conjugal union or in
the course of the performance of his duties as executor of the testate estate of
Juliana and that upon the death of Jose, the disputed properties were included in the
inventory as if they formed part of Joses estate when in fact Jose was holding them
only in trust for the trust estate of Juliana.
Respondents Maria Rolinda Manzano, Maria Rosario Santos, Jose Manzano,
Jr., Narciso Manzano, Maria Cristina Manzano Rubio and Irene Monzon filed a joint
answer[6]with counterclaim for damages. Respondents Corazon, Fernando and
Roberto, all surnamed Lopez, who were minors at that time and represented by their
mother, filed a motion to dismiss,[7] the resolution of which was deferred until trial
on the merits. The RTC scheduled several pre-trial conferences and ordered the
parties to submit pre-trial briefs and copies of the exhibits.
On 10 September 1990, the RTC rendered a summary judgment, [8] dismissing
the action on the ground of prescription of action. The RTC also denied respondents
motion to set date of hearing on the counterclaim.
Both petitioner and respondents elevated the matter to the Court of Appeals.
On 18 October 2002, the Court of Appeals rendered the assailed decision denying
the appeals filed by both petitioner and respondents. The Court of Appeals also
denied petitioners motion for reconsideration for lack of merit in its Resolution
dated 3 April 2003.
Hence, the instant petition attributing the following errors to the Court of
Appeals:
I. THE COURT OF APPEALS CONCLUSION THAT PETITIONERS
ACTION FOR [RECONVEYANCE] HAS PRESCRIBED TAKING AS
BASIS SEPTEMBER 15, 1969 WHEN THE PROPERTIES IN DISPUTE WERE
TRANSFERRED TO THE NAME OF THE LATE JOSE LOPEZ MANZANO IN
RELATION TO DECEMBER 12, 1984 WHEN THE ACTION FOR
RECONVEYANCE WAS FILED IS ERRONEOUS.
II. THE RESPONDENT COURT OF APPEALS CONCLUSION IN
FINDING THAT THE FIDUCIARY RELATION ASSUMED BY THE LATE JOSE
LOPEZ MANZANO, AS TRUSTEE, PURSUANT TO THE LAST WILL AND

TESTAMENT OF JULIANA LOPEZ MANZANO WAS IMPLIED TRUST,

INSTEAD OF EXPRESS TRUST IS EQUALLY ERRONEOUS.
None of the respondents filed a comment on the petition. The counsel for
respondents Corazon, Fernando and Roberto, all surnamed Lopez, explained that he
learned that respondents had migrated to the United States only when the case was
pending before the Court of Appeals. [9] Counsel for the rest of the respondents
likewise manifested that the failure by said respondents to contact or communicate
with him possibly signified their lack of interest in the case. [10] In a Resolution
dated 19 September 2005, the Court dispensed with the filing of a comment and
considered the case submitted for decision. [11]
The core issue of the instant petition hinges on whether petitioners action
for reconveyance has

prescribed.

The

resolution

of

this

issue

calls

for

determination of whether an implied trust was constituted over the disputed

properties when Jose, the trustee, registered them in his name.
Petitioner insists that an express trust was constituted over the disputed
properties; thus the registration of the disputed properties in the name of Jose as
trustee cannot give rise to prescription of action to prevent the recovery of the
disputed properties by the beneficiary against the trustee.
Evidently, Julianas testamentary intent was to constitute an express trust
over her paraphernal properties which was carried out when the Fideicomiso was
established in S.P. No. 706.[12] However, the disputed properties were expressly
excluded from the Fideicomiso. The probate court adjudicated the disputed
properties to Jose as the sole heir of Juliana. If a mistake was made in excluding the
disputed properties from the Fideicomiso and adjudicating the same to Jose as sole
heir, the mistake was not rectified as no party appeared to oppose or appeal the
exclusion of the disputed properties from the Fideicomiso. Moreover, the exclusion
of the disputed properties from the Fideicomiso bore the approval of the probate
court. The issuance of the probate courts order adjudicating the disputed properties
to Jose as the sole heir of Juliana enjoys the presumption of regularity. [13]

On the premise that the disputed properties were the paraphernal properties
of Juliana which should have been included in the Fideicomiso, their registration in
the name of Jose would be erroneous and Joses possession would be that of a
trustee in an implied trust. Implied trusts are those which, without being expressed,
are deducible from the nature of the transaction as matters of intent or which
are superinduced on the transaction by operation of law as matters of equity,
independently of the particular intention of the parties. [14]
The provision on implied trust governing the factual milieu of this case is
provided in Article 1456 of the Civil Code, which states:
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.
In Aznar Brothers Realty Company v. Aying,[15] the Court differentiated two
kinds of implied trusts, to wit:
x x x In turn, implied trusts are either resulting or constructive
trusts. These two are differentiated from each other as follows:
Resulting trusts are based on the equitable doctrine that
valuable consideration and not legal title determines the equitable title
or interest and are presumed always to have been contemplated by
the parties. They arise from the nature of circumstances of the
consideration involved in a transaction whereby one person thereby
becomes invested with legal title but is obligated in equity to hold his
legal title for the benefit of another. On the other hand, constructive
trusts are created by the construction of equity in order to satisfy the
demands of justice and prevent unjust enrichment. They arise contrary
to intention against one who, by fraud, duress or abuse of confidence,
obtains or holds the legal right to property which he ought not, in
equity and good conscience, to hold.[16]
A resulting trust is presumed to have been contemplated by the parties, the
intention as to which is to be found in the nature of their transaction but not
expressed in the deed itself. [17] Specific examples of resulting trusts may be found in
the Civil Code, particularly Arts. 1448,[18] 1449,[19] 1451,[20] 1452[21] and 1453.[22]

A constructive trust is created, not by any word evincing a direct intention to

create a trust, but by operation of law in order to satisfy the demands of justice and
to prevent unjust enrichment.[23] It is raised by equity in respect of property, which
has been acquired by fraud, or where although acquired originally without fraud, it
is against equity that it should be retained by the person holding it. [24] Constructive
trusts are illustrated in Arts. 1450,[25] 1454,[26] 1455[27] and 1456.[28]
The disputed properties were excluded from the Fideicomiso at the outset.
Jose registered the disputed properties in his name partly as his conjugal share and
partly as his inheritance from his wife Juliana, which is the complete reverse of the
claim of the petitioner, as the new trustee, that the properties are intended for the
beneficiaries of theFideicomiso. Furthermore, the exclusion of the disputed
properties

from

the Fideicomiso was

approved

by

the

probate

court

and,

subsequently, by the trial court having jurisdiction over the Fideicomiso. The
registration of the disputed properties in the name of Jose was actually pursuant to
a court order. The apparent mistake in the adjudication of the disputed properties to
Jose created a mere implied trust of the constructive variety in favor of the
beneficiaries of the Fideicomiso.
Now that it is established that only a constructive trust was constituted over
the disputed properties, may prescription for the recovery of the properties
supervene?
Petitioner asserts that, if at all, prescription should be reckoned only when
respondents caused the registration of the disputed properties in their names on 13
April 1984 and not on 15 September 1969, when Jose registered the same in his
name pursuant to the probate courts order adjudicating the disputed properties to
him as the sole heir of Juliana. Petitioner adds, proceeding on the premise that the
prescriptive period should be counted from the repudiation of the trust, Jose had not
performed any act indicative of his repudiation of the trust or otherwise declared an
adverse claim over the disputed properties.
The argument is tenuous.

The right to seek reconveyance based on an implied or constructive trust is

not

absolute.

It

is

subject

to

extinctive

prescription. [29] An

action

for reconveyance based on implied or constructive trust prescribes in 10 years. This

period is reckoned from the date of the issuance of the original certificate of title or
transfer certificate of title. Since such issuance operates as a constructive notice to
the whole world, the discovery of the fraud is deemed to have taken place at that
time.[30]
In the instant case, the ten-year prescriptive period to recover the disputed
property must be counted from its registration in the name of Jose on 15 September
1969, when petitioner was charged with constructive notice that Jose adjudicated
the disputed properties to himself as the sole heir of Juana and not as trustee of
the Fideicomiso.
It should be pointed out also that Jose had already indicated at the outset
that the disputed properties did not form part of the Fideicomiso contrary to
petitioners claim that no overt acts of repudiation may be attributed to Jose. It may
not be amiss to state that in the project of partition submitted to the probate court,
Jose had indicated that the disputed properties were conjugal in nature and, thus,
excluded from Julianas Fideicomiso. This act is clearly tantamount to repudiating
the trust, at which point the period for prescription is reckoned.
In any case, the rule that a trustee cannot acquire by prescription ownership
over property entrusted to him until and unless he repudiates the trust applies only
to express trusts and resulting implied trusts. However, in constructive implied
trusts, prescription may supervene even if the trustee does not repudiate the
relationship. Necessarily, repudiation of said trust is not a condition precedent to
the running of the prescriptive period. [31] Thus, for the purpose of counting the tenyear prescriptive period for the action to enforce the constructive trust, the
reckoning point is deemed to be on 15 September 1969 when Jose registered the
disputed properties in his name.
WHEREFORE, the instant petition for review on certiorari is DENIED and the
decision and resolution of the Court of Appeals in CA-G.R. CV No. 34086 are
AFFIRMED. Costs against petitioner.