G.R. No.
43351 February 26, 1937 issued in virtue thereof; (b) to accordingly vacate said order of November 4, 1932,
Intestate estate of the deceased Baldomero Cosme.
ROSARIO COSME DE MENDOZA, administratrix-appellee,
vs.
JANUARIO PACHECO and RAYMUNDO CORDERO, sureties-appellants.
LAUREL, J.:
The facts in this case are not disputed. Manuel Soriano was former administrator of
the estate of Baldomero Cosme in civil case No. 5494, Court of First Instance of
Laguna. To assure faithful performance of his duties as such administrator, he filed a
bond for P5,000, with the herein appellants, Januario Pacheco and Raymundo
Cordero, as sureties. Soriano's account, upon approval, showed him indebted to the
estate in the sum of P23,603.21. Unable to turn this amount over to the estate upon
demand of Rosario Cosme, the new administratrix, the lower court ordered the
execution of his bond on November 4, 1932, after notice duly served upon the sureties.
Sometime later, the court approved a settlement had between the adminstratrix and
the ex-administrator, whereby the latter ceded certain real properties to the estate
reducing on that account his indebtedness to the estate from P23,603.21 to P5,000. As
to this last amount, "La administradora se atiene a la orden de ejecucion de la fianza
suscrita por los fiadores Januario Pacheco y Raymundo Cordero" (Record on Appeal,
p. 2). Subsequently, the administratrix had the public sale thereof to collect this
amount of P5,000. Separate motions to he discharged from the bond were filed by
sureties Pacheco and Cordero. Both motions were denied. A motion by Cordero to
reconsider the order of denial met a like fate. Brought on appeal to this court, the
appeal was dismissed. The dispositive part of the decision of this court (G. R. No.
40998, Cosme de Mendoza vs. Pacheco and Cordero [60 Phil., 1057]) reads as
follows:
The motion of October 1, 1933, was filed only on behalf of Raymundo Cordero who
filed no motion for reconsideration of the order of execution of November 4, 1932,
and took no appeal therefrom. Being of the opinion that the trial court correctly held
that said order had become final, the motion of October 31, 1933, for reconsideration
(if such it may be called) came too late. The judgment is therefore affirmed with costs
against the appellants.
When the case was remanded to the lower court, the sureties filed a motion
challenging, for the first time, the jurisdiction of the trial court to issue the order of
November 4, 1932, executing the bond. The trial court denied the motion in view of
the decision of this court. The case is elevated here for the second time on appeal.
Appellants assign the following error:
The lower court erred in refusing: (a) To declare null and void its order of execution
of the ex-administrator's bond of November 4, 1932, as well as the writs of execution
and order the release of the properties of the herein sureties-appellants attached in
pursuance of the writs of execution issued against them by virtue of said order; and
(c) to order the suspension of the execution of the said order of November 4, 1932,
until this case is finally decide.
In the discussion of the foregoing assignment of error in their brief (pp. 9-23), the
appellants take in six propositions. One question, however, — that of jurisdiction of
the Court of First Instance of Laguna to order the execution of the administrator's
bond — is decisive of this appeal. Appellants, sureties upon the bond, press the point
that the order in suit is an absolute nullity for lack of power in the issuing court. "In
vain," they tell us, "have we searched our statute books, especially the part of our
Code of Civil Procedure regarding probate jurisdiction, to find whether our Courts of
First Instance, acting as probate courts, have the power to order the execution of an
administrator's bond." Neither their failure to assail that jurisdiction when they ought
nor the subsequent affirmance of the order by this court, they say, could revive an
order dead from its inception.
To begin with, it lies within discretion of the court to select an administrator of the
estate of a deceased person (Capistrano vs. Nadurata, 46 Phil., 726, 727). Before an
administrator, or an executor, enters upon the execution of his trust, and letters
testamentary or of administration are issued, the person to whom they are issued is
required to give a bond in such reasonable sum as the court directs, with one or more
sufficient sureties, conditioned upon the faithful performance of his trust (Code of
Civil Procedure, sec. 643, 662). The administrator is accountable on his bond along
with the sureties for the performance of certain legal obligations. (Tan vs. Go Chiong
Lee, 46 Phil., 200, 205. See also, Stovall vs. Banks, 10 Wall., 583, 588; 19 Law. ed.,
1036; Long vs. O'Fallon, 19 How., 116; 15 Law. ed., 550.)
It is clear that a Court of First Instance, exercising probate jurisdiction, is empowered
to require the filing of the administrator's bond, to fix the amount thereof, and to hold
it accountable for any breach of the administrator's duty. Possessed, as it is, with an
all-embracing power over the administrator's bond and over administration
proceedings, a Court of First Instance in a probate proceeding cannot be devoid of
legal authority to execute and make that bond answerable for the very purpose for
which it was filed. It is true that the law does not say expressly or in so many words
that such court has power to execute the bond of an administrator, but by necessary
and logical implication, the power is there as eloquently as if it were phrased in
unequivocal term. When the accountability of an administrator's bond is spoken of in
the very provisions dealing with and bearing directly on administration proceedings,
it would involve a strained construction to hold, as appellants would have us do, that
where an administrator is held liable for a devastravit for having squandered and
misapplied property which he was in duty bound to marshal and conserve, the estate
is without a remedy to go against the administrator's bond in the same probate
proceedings, but in an action outside of and separate from it. In this connection, it
should be observed that section 683 of the Code of Civil Procedure provides that
"Upon the settlement of the account of an executor or administrator, trustee, or
guardians, a person liable as surety in respect to such amount may, upon application,
be admitted as a party to such accounting, and may have the right to appeal as
hereinafter provided." There is here afforded to a person who may be held liable as
surety in respect to an administrator's account the right, upon application, to be
admitted as a party to their accounting, from which we may not unreasonably infer
that a surety, like the appellants in the case before us, may be charged with liability
upon the bond during the process of accounting, that is, within the recognized confines
of probate proceedings, and not in an action apart and distinct from such proceedings.
Appellants in their brief direct our attention to several cases decided by this court
holding that Courts of First Instance, as probate courts, have no power to adjudicate
on claims of other persons on property forming part of the estate, by title adverse to
the deceased (Guzman vs. Anog and Anog, 37 Phil., 61, 62); on the legal usufruct of
the widow (Sahagun vs. De Gorosita, 7 Phil., 347, 351), and on the validity of
testamentary dispositions (Castañeda vs.Alemany, 3 Phil., 426, 428). We have
carefully examined these cases in relation to the facts and circumstances of the case
at bar. We take the view, however, that the execution of an administrator's bond,
unlike the questions involved in the cited cases, clearly stands upon a different
footing, and is as necessary a part and incident of the administration proceeding as
the filing of such bond or the fixing of its amount. Particularly is this true in the present
case where Soriano's indebtedness to the sate in the amount of P23,603.21,
subsequently reduced to P5,000, is conceded on all sides, and all that the trial court
had to do was to see that said amount was turned over to the estate.
It is the duty of courts of probate jurisdiction to guard jealously the estates of the
deceased person by intervening in the administration thereof in order to remedy or
repair any injury that may be done thereto (Dariano vs. Fernandez Fidalgo, 14 Phil.,
62, 67; Sison vs. Azarraga, 30 Phil., 129, 134). "Probate and like courts have a special
jurisdiction only, and their powers as to ancillary or incidental questions must of
necessity to exercise within certain limitations; but such powers include the right to
try questions which arise incidentally in a cause over which such courts have
jurisdiction and the determination of which are necessary to a lawful exercise of the
powers expressly conferred in arriving at a decision. . . . There seems, however, to be
a general tendency, in the absence of express and specific restrictions to the contrary,
to uphold the exercise by these court of such incidental powers as are, within the
purview of their grant of authority, reasonably necessary to enable them to accomplish
the objects for which they were invested with jurisdiction and to perfect the same.
And it has been held that statutes conferring jurisdiction on such courts, being
remedial and for the advancement of justice, should receive a favorable construction,
such as will give them the force and efficiency intended by the legislature." (15 C. J.,
813, 814.) The tendency in the United States indeed has been towards the enlargement
of the powers of probate courts. In the beginning these courts were possessed but
limited powers. Having originated from the ecclesiastical courts of England, their
jurisdiction, following their English patterns was practically limited to the probate of
wills, the granting of administrators, and the suing for legacies (Plant vs. Harrion, 74
N. Y. Sup., 411, 441; 36 Misc. Rep., 649; Chadwick vs. Chadwick, 13 Pac., 385, 388;
6 Mont., 566; 3 Bl. Comm., pp. 95-98). But, though they still are often unadvisedly
described, particularly in Connecticut (Griffin vs. Pratt, 3 Conn., 513), as courts of
limited, inferior or special jurisdiction, they have outgrown their limitations and have
become courts with considerably increased powers (Woerner, The American Law of
Administration [2d], sec. 145; Plant vs. Harrison, supra).
What has been said sufficiently determinative of the appeal before us. We wish,
however, to say a word on a salutary consideration of policy which has been
invariably followed by this court in cases of this nature. We refer to the dispatch and
economy with which administration of the estates of deceased persons should be
terminated and settled. It will be recalled that the appellants could have raised the
question of jurisdiction now pressed upon us in civil case No. 5494 of the Court of
First Instance of Laguna and on appeal of that case to this court once before (G. R.
No. 40998 [60 Phil., 1057]). They not failed to avail of that right but failed to appeal
from the order complained of (Vide, Decision of this court in G. R. No. 40998, Cosme
de Mendoza vs. Pacheco and Cordero). The questions raised in the appeal at bar,
appellant's second attempt to go about and frustrate the order in question, could have
been passed upon once for all in the case referred to. We cannot encourage a practice
that trenches violently upon the settled jurisprudence of this court that the policy and
purpose of administration proceedings is ". . . to close up, and not to continue an estate
. . ." (Lizarraga Hermanos vs. Abada, 40 Phil., 124, 133), and that ". . . the State fails
wretchedly in its duty to its citizens if the machinery furnished by it for the division
and distribution of the property of a decedent is so cumbersome, unwidely and
expensive that a considerable portion of the sate is absorbed in the process of such
division. Where administration is necessary, it ought to be accomplished consumes
any considerable portion of the property which it was designed to distribute is a
failure. . . ." (McMicking vs. Sy Conbieng, 21 Phil., 211, 220.)
The order appealed from is hereby affirmed, with costs against the appellants. So
ordered.
G.R. No. L-6637 September 30, 1954
WARNER BARNES AND CO., LTD., plaintiff-appellee,
vs.
LUZON SURETY CO., INC., defendant-appellant.
Tolentino and Garcia and Domingo R. Cruz for appellant.
Hilado and Hilado and Reyes and Castro for appellee.
PARAS, C.J.:
On September 17, 1952, the plaintiffs, Warner, Barnes and Co., Ltd., filed a complaint
in the Court of First Instance of Negros Occidental against the defendant, Luzon
Surety Co., Inc., of the recovery of the sum of P6,000, plus the costs and P1,500 for
attorney's fees. The basis of the complaint was a bond in the sum of P6,000 filed by
Agueda Gonzaga as administratrix of the Intestate Estate of Agueda Gonzaga on or
about January 6, 1951, in Special Proceedings No. 452 of the Court of First Instance
of Negros Occidental, the condition being that said bond would be void if the
administratrix "faithfully prepares and presents to the Court, within three months from
the date of his appointment, a correct inventory of all the property of the deceased
which may have come into his possession or into the possession of any other person
representing him according to law, if he administers all the property of the deceased
which at any time comes into his possession or into the possession of any other person
representing him; faithfully pays all debts, legacies, and bequests which encumber
said estate, pays whatever dividends which the Court may decide should be paid, and
renders a just and true account of his administrations to the Court within a year or at
any other date that he may required so to do, and faithfully executes all orders and
decrees of said court." It was alleged in the complaint that the plaintiff had a duly
approved claim against the Estate of Aguedo Gonzaga in the sum of P6,485.02, plus
2 per cent annual interest compounded monthly from October 1, 1941; that the
administratrix violated the conditions of her bond "(a) by failing to file an inventory
of the assets and funds of the estate that had come into her hands, more particularly,
the sum of P67,861.22 that she had received form the United States Philippine War
Damage Commission; (b) by failing to pay or discharge the approved claim of the
plaintiff; (c) by failing to render a true and just account of her administration in
general, and of the said war damage payments in particular."; that the defendant, as
surety in the bond, failed to pay to the plaintiff, notwithstanding the latter's demand,
the sum of P6,000, in partial satisfaction of plaintiff's unpaid claim which, after
deduction the sum of P3,000 previously paid upon account by the administratrix,
amounted to P8,186.68 as of August 31, 1952.
The defendant filed an answer setting up the special defenses that the complaint did
not state a cause of action; that its maximum liability under the surety bond is P6,000;
that if it were not for the untimely death of the judicial administratrix, she would have
been able to fully comply with her duties and obligations; that the administratrix, up
to her death, had not yet been authorized by the court in Special Proceedings No. 452
to pay plaintiff's claim; that the defendant's liability had been extinguished; that
damages or attorney's fees cannot be recovered under the surety bond.
On January 6, 1953, the plaintiff filed a motion for summary judgment, alleging that
"the special defenses relied upon by the defendant in her Answer raise only questions
of law, and the plaintiff believes that said defendant cannot produce counter-affidavits
that would raise any 'genuine issues as to any material facts.' This motion was
accompanied by Exhibits "A" to "H", Exhibits "A" being an affidavit of Atty. Luis G.
Hilado who signed the complaint.
As the defendant did not file counter-affidavits so as to raise genuine issues as to any
material fact, although a copy of the motion for summary judgment was served upon
it eleven days prior to the date of the hearing thereon, the Court of First Instance of
Negros Occidental rendered on January 17, 1953, a summary judgment sentencing
the defendant to pay to the plaintiff the sum of P6,000, P900 for attorney's fees, plus
the costs. From this judgment the defendant appealed.
Under the first assignment of error, the appellant contends that the lower court had no
jurisdiction to pass upon its liability under the bond in question, because it is only the
probate court that can hold a surety accountable for any breach by the administratrix
of her duty, citing the case of Mendoza vs. Pacheco, 64 Phil., 134. It is, however,
noteworthy that while the citation is to the effect that the probate court has jurisdiction
over the forefeiture or enforcement of an administrator's bond, it was not held therein
that the same matter may not be litigated in an ordinary civil action brought before
the court of first instance.
Under the second assignment of error, the appellant claims that there are genuine
controversies between the parties litigant, and that, contrary to the allegations of the
complaint, the administratrix made a return to the court of the war damage payments
she received; the administratrix cannot be charged with having failed to pay plaintiff's
claim because there is no showing that she was ever authorized to pay approved
claims; the administratrix may be presumed to have rendered an accounting of her
administration, likely in 1948, in accordance with section 8 of Rule 86 of the Rules
of Court. In answer, it is sufficient to state that the allegations that the administratrix
failed to file an inventory, to pay the plaintiff's claim, and to render a true and just
account of her administration, are factual and remained uncontroverted by counter-
affidavits which the appellant could have easily filed.
It is also argued for the appellant that the supporting affidavit Exhibit "A" is
insufficient, being signed merely by the lawyer, and not by a party to the case or an
officer of the plaintiff firm. This is without merit, since Exhibit A contains an express
statement that the affiant, Atty. Luis G. Hilado, had "personal knowledge of the facts"
alleged therein; and this cannot be negatived by appellant's speculation to the
contrary.
Under the third and fourth assignments of error, it is insisted for the appellant that the
bond in question was executed in favor of the Republic of the Philippines and that the
proper procedure would seem to be that it might be enforced in the administration
proceedings were it was filed. This view is likewise not tenable. Though nominally
payable to the Republic of the Philippines, the bond is expressly for the benefit of the
heirs, legatees and creditors of the Estate of the deceased Aguedo Gonzaga. There is
no valid reason why a creditor may not directly in his name enforce said bond in so
far as he is concerned.

Under the fifth assignment of error, it is alleged that the plaintiffs should have first
filed a claim against the Estate of the deceased administratrix Agueda Gonzaga, in
conformity with section 6 of Rule 87 of the Rules of Court providing that "Where the
obligation of the decedent is joint and several with another debtor, the claim shall be
filed against the decedent as if he were the only debtor, without prejudice to the right
of the estate to recover contribution from the other debtor." Apart from the fact that
his defense was not pleaded either in a motion to dismiss or in the answer and was
therefore waived (section 10, Rule 9 of the Rules of Court), it appears that even as
late as September 17, 1952, when the present complaint was filed, (more than two
years after the death of Agueda Gonzaga), there were no proceedings for the
administration of her estate, with the result that section 6 of Rule 87 loses its
applicability. Moreover, it is to be noted that the appellant had also chosen to file a
third-party complaint in the present case against Romualdo Araneta, joint and several
counter-guarantor of the deceased administratrix, instead of presenting a claim against
the latter's estate.

In its sixth assignment of error, the lower court is alleged to have erred in sentencing
the appellant to pay attorney's fees in the sum of P900, in excess of the limit of its
bond. This contention is tenable. Under section 3 of Rule 36 of the Rules of Court, a
summary judgment may be rendered upon proper motion except as to the amount of
damages.1âwphïl.nêt

There being no proof regarding the amount of attorney's fees claimed by the plaintiff,
no judgment thereon may be rendered herein. It is, however, argued by the counsel
for appellee that said fees are in pursuance of article 2208 of the Civil Code, providing
that attorney's fees cannot be recovered except "where the defendant acted in gross
and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and
demandable claim"; and it alleged in the complaint that the appellant had so acted in
this case. While the provision cited authorizes the collection of attorney's fees under
the situation contemplated herein, it does not dispense with the effect of section 3 of
Rule 36.

Wherefore, it being understood that the defendant-appellant is sentenced to pay to the

plaintiff-appellee only the sum of P6,000, plus the cost, the same is hereby affirmed.
G.R. No. L-40517 January 31, 1984
LUZON SURETY COMPANY, INC., plaintiff-appellee,
vs.
PASTOR T. QUEBRAR and FRANCISCO KILAYKO, defendants-appellants.
Tolentino & Garcia & D. R. Cruz for plaintiff-appellee.
Zoilo V. dela Cruz, Jr. for defendants-appellants.
MAKASIAR, J.:
This is an appeal from the judgement of the Court of First Instance of Manila in Civil
Case No. 52790 dated November 3, 1964 which was certified to this Court by the
Court of Appeals in its resolution dated March 20, 1975.
On August 9, 1954, plaintiff-appellee issued two administrator's bond in the amount
of P15,000.00 each, in behalf of the defendant-appellant Pastor T. Quebrar, as
administrator in Special Proceedings Nos. 3075 and 3076 of the Court of First
Instance of Negros Occidental, entitled " Re Testate Estate of A. B. Chinsuy," and Re
Testate Estate of Cresenciana Lipa," respectively, (pp. 8-12, 17-21, ROA; p. 9 rec.).
In consideration of the suretyship wherein the plaintiff-appellee Luzon Surety
Company, Inc. was bound jointly and severally with the defendant appellant Pastor
T. Quebrar, the latter, together with Francisco Kilayko, executed two indemnity
agreements, where among other things, they agreed jointly and severally to pay the
plaintiff-appellee "the sum of Three Hundred Pesos (P300.00) in advance as premium
thereof for every 12 months or fraction thereof, this ... or any renewal or substitution
thereof is in effect" and to indemnify plaintiff-appellee against any and all damages,
losses, costs, stamps taxes, penalties, charges and expenses, whatsoever, including the
15% of the amount involved in any litigation, for attomey's fees (pp. 12-16, 21-25.
ROA; p. 9, rec.).
For the first year, from August 9, 1954 to August 9, 1955, the defendants-appellants
paid P304.50 under each indemnity agreement or a total of P609.00 for premiums and
documentary stamps.
On June 6, 1957, the Court of First Instance of Negros Occidental approved the
amended Project of Partition and Accounts of defendant-appellant (p. 87, ROA; p. 9,
rec.).
On May 8, 1962, the plaintiff-appellee demanded from the defendants-appellants the
payment of the premiums and documentary stamps from August 9,1955.
On October 17, 1962, the defendants-appellants ordered a motion for cancellation
and/or reduction of executor's bonds on the ground that "the heirs of these testate
estates have already received their respective shares" (pp. 69-70, ROA, p. 9, rec.).
On October 20, 1962, the Court of First Instance of Negros Occidental acting on the
motions filed by the defendants-appellants ordered the bonds cancelled.
Plaintiff-appellee's demand amounted to P2,436.00 in each case, hence, a total of
P4,872.00 for the period of August 9, 1955 to October 20, 1962. The defendants-
appellants to pay the said amount of P4,872.00.
On January 8, 1963, the plaintiff-appellee filed the case with the Court of First
Instance of Manila During the pre-trial the parties presented their documentary
evidences and agreed on the ultimate issue - "whether or not the administrator's bonds
were in force and effect from and after the year that they were filed and approved by
the court up to 1962, when they were cancelled." The defendants-appellants offered
P1,800.00 by way of amicable settlement which the plaintiff-appellee refused.
The lower court allowed the plaintiff to recover from the defendants-appellants,
holding that:
We find for the plaintiff it is clear from the terms of the Order of the Court in which
these bond were filed, that the same were in force and effect from and after filling
thereof up to and including 20 October, 1962, when the same werecancelled. It
follows that the defendants are liable under the terms of the Indemnity Agreements,
notwithstanding that they have not expressly sought the renewal of these bonds
bemuse the same were in force and effect until they were cancelled by order of the
Court. The renewal of said bonds is presumed from the fact that the defendants did
not ask for the cancellation of the same; and their liability springs from the fact that
defendant Administrator Pastor Quebrar, benefited from the bonds during their
lifetime.
We find no merit in defendants' claim that the Administrator's bonds in question are
not judicial bonds but legal or conventional bonds only, since they were constituted
by virtue of Rule 82, Sec. 1 of the Old Rule of Court. Neither is there merit in
defendants, claim that payments of premiums and documentary stamps were
conditions precedent to the effectivity of the bonds, since it was the defendants' duty
to pay for the premiums as long as the bonds were in force and effect. Finally,
defendants' claim that they are not liable under the Indemnity Agreements is also
without merit since the under of defendants under said Indemnity Agreements;
includes the payment of yearly pre for the bonds.
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendants, ordering the tsn the defendant to pay the plaintiff, jointly and severally,
the amount of P6,649.36 plus interest at the legal rate from 27 July 1964 until fully
paid and the sum equivalent to 10% of the total amount due as and or attorney's fees,
and costs (pp. 92-94, ROA; p. 9, rec.).
Defendants-appellants appealed to the Court of Appeals. On March 20, 1975, the
Court of Appeals in a resolution certified the herein case to this Court after finding
that this case involves only errors or questions of law.
1. The proper determination of the liability of the surety and of the principal on the
bond must depend primarily upon the language of the bond itself. The bonds herein
were required by Section 1 of Rule 81 of the Rules of Court. While a bond is
nonetheless a contract because it is required by statute (Midland Co. vs. Broat 52 NW
972), said statutory bonds are construed in the light of the statute creating the
obligation secured and the purposes for which the bond is required, as expressed in
the statute (Michael vs. Logan, 52 NW 972; Squires vs. Miller, 138 NW 1062). The
statute which requires the giving of a bond becomes a part of the bond and imparts
into the bond any conditions prescribed by the statute (Scott vs. United States Fidelity
Co., 252 Ala 373, 41 So 2d 298; Employer's Liability Assurance Corp. vs. Lunt, 82
Ariz 320, 313 P2d 393).
The bonds in question herein contain practically the very same conditions in Sec. 1,
Rule 81 of the Rules of Court. Pertinent provision of the administrator's bonds is as
follows:
Therefore, if the said Pastor T. Quebrar faithfully prepares and presents to the Court,
within three months from the date of his appointment, a correct inventory of all the
property of the deceased which may have come into his possession or into the
possession of any other person representing him according to law, if he administers
all the property of the deceased which at any time comes into his possession or into
the possession of any other person representing him; faithfully pays all the debts,
legacies, and bequests which encumber said estate, pays whatever dividends which
the Court may decide should be paid, and renders a just and true account of his
administrations to the Court within a year or at any other date that he may be required
so to do, and faithfully executes all orders and decrees of said Court, then in this case
this obligation shall be void, otherwise it shall remain full force and effect (p. 9, 18,
ROA p. 9, rec.).
Section 1 of Rule 81 of the Rules of Court requires the administrator/executor to put
up a bond for the purpose of indemnifying the creditors, heirs, legatees and the estate.
It is conditioned upon the faithful performance of the administrator's trust (Mendoza
vs. Pacheco, 64 Phil. 134).
Having in mind the purpose and intent of the law, the surety is then liable under the
administrator's bond, for as long as the administrator has duties to do as such
administrator/executor. Since the liability of the sureties is co-extensive with that of
the administrator and embraces the performance of every duty he is called upon to
perform in the course of administration (Deobold vs. Oppermann, 111 NY 531, 19
NE 94), it follows that the administrator is still duty bound to respect the indemnity
agreements entered into by him in consideration of the suretyship
It is shown that the defendant-appellant Pastor T. Quebrar, still had something to do
as an administrator/executor even after the approval of the amended project of
partition and accounts on June 6, 1957.
The contention of the defendants-appellants that the administrator's bond ceased to be
of legal force and effect with the approval of the project of partition and statement of
accounts on June 6, 1957 is without merit. The defendant-appellant Pastor T. Quebrar
did not cease as administrator after June 6, 1957, for administration is for the purpose
of liquidation of the estate and distribution of the residue among the heirs and legatees.
And liquidation means the determination of all the assets of the estate and payment of
all the debts and expenses (Flores vs. Flores, 48 Phil. 982). It appears that there were
still debts and expenses to be paid after June 6, 1957.
And in the case of Montemayor vs. Gutierrez (114 Phil. 95), an estate may be
partitioned even before the termination of the administration proceedings. Hence, the
approval of the project of partition did not necessarily terminate the administration
proceedings. Notwithstanding the approval of the partition, the Court of First Instance
of Negros Occidental still had jurisdiction over the administration proceedings of the
estate of A.B. Chinsuy and Cresenciana Lipa.
2. The sureties of an administration bond are liable only as a rule, for matters
occurring during the term covered by the bond. And the term of a bond does not
usually expire until the administration has been closed and terminated in the manner
directed by law (Hartford Accident and Indemnity Co. vs. White, 115 SW 2d 249).
Thus, as long as the probate court retains jurisdiction of the estate, the bond
contemplates a continuing liability (Deobold vs. Oppermann, supra) notwithstanding
the non-renewal of the bond by the defendants-appellants.
It must be remembered that the probate court possesses an all-embracing power over
the administrator's bond and over the administration proceedings and it cannot be
devoid of legal authority to execute and make that bond answerable for the every
purpose for which it was filed (Mendoza vs. Pacheco, 64 Phil. 1-05). It is the duty of
the courts of probate jurisdiction to guard jealously the estate of the deceased persons
by intervening in the administration thereof in order to remedy or repair any injury
that may be done thereto (Dariano vs. Fernandez Fidalgo, 14 Phil. 62, 67; Sison vs.
Azarraga, 30 Phil. 129, 134).
3. In cases like these where the pivotal point is the interpretation of the contracts
entered into, it is essential to scrutinize the very language used in the contracts. The
two Indemnity Agreements provided that:
The undersigned, Pastor T. Quebrar and Dr. Francisco Kilayko, jointly and severally,
bind ourselves unto the Luzon Surety Co., Inc. ... in consideration of it having become
SURETY upon Civil Bond in the sum of Fifteen Thousand Pesos (P15,000.00) ... in
favor of the Republic of the Philippines in Special Proceeding ... dated August 9,
1954, a copy of which is hereto attached and made an integral part hereof (emphasis
supplied; pp. 12-13, 21, ROA p. 9, rec.),
To separately consider these two agreements would then be contrary to the intent of
the parties in making them integrated as a whole.
The contention then of the defendants-appellants that both the Administrator's Bonds
and the Indemnity Agreements ceased to have any force and effect, the former since
June 6, 1957 with the approval of the project of partition and the latter since August
9, 1955 with the non-payment of the stated premiums, is without merit. Such
construction of the said contracts entered into would render futile the purpose for
which they were made.
To allow the defendants-appellants to evade their liability under the Indemnity
Agreements by non-payment of the premiums would ultimately lead to giving the
administrator the power to diminish or reduce and altogether nullify his liability under
the Administrator's Bonds. As already stated, this is contrary to the intent and purpose
of the law in providing for the administrator's bonds for the protection of the creditors,
heirs, legatees, and the estate.
4. Moreover, the lower court was correct in holding that there is no merit in the
defendants' claim that payments of premiums and documentary stamps are conditions
precedent to the effectivity of the bonds.
It is worthy to note that there is no provision or condition in the bond to the effect that
it will terminate at the end of the first year if the premium for continuation thereafter
is not paid. And there is no clause by which its obligation is avoided or even
suspended by the failure of the obligee to pay an annual premium (U.S. vs. Maryland
Casualty Co. DCMD 129 F. Supp; Dale vs. Continental Insurance Co., 31 SW 266;
Equitable Insurance C. vs. Harvey, 40 SW 1092).
It was held in the case of Fourth and First Bank and Trust Co. vs. Fidelity and Deposit
Co. (281 SW 785), that "at the end of the first year, the bond went on, whether or not
the premium was paid or not ... Even on a failure to pay an annual premium, the
contract ran on until affirmative action was taken to avoid it. The obligation of the
bond was therefore continuous." And in United States vs. American Surety Co. of
New York (172 F2d 135), it was held that "under a surety bond securing faithful
performance of duties by postal employee, liability for default of employee occurring
in any one year would continue, whether or not a renewal premium was paid for a
later year."
The payment of the annual premium is to be enforced as part of the consideration, and
not as a condition Woodfin vs. Asheville Mutual Insurance Co., 51 N.C. 558); for the
payment was not made a condition to the attaching or continuing of the contract
(National Bank vs. National Surety Co., 144 A 576). The premium is the consideration
for furnishing the bonds and the obligation to pay the same subsists for as long as the
liability of the surety shall exist (Reparations Commission vs. Universal Deep-Sea
Fishing Corp., L-21996, 83 SCRA 764, June 27, 1978). And in Arranz vs. Manila
Fidelity and Surety Co., Inc. (101 Phil. 272), the "premium is the consideration for
furnishing the bond or the guaranty. While the liability of the surety subsists the
premium is collectible from the principal. Lastly, in Manila Surety and Fidelity Co.,
Inc. vs. Villarama (107 Phil. 891), it was held that "the one-year period mentioned
therein refers not to the duration or lifetime of the bond, but merely to the payment of
premiums, and, consequently, does not affect at all the effectivity or efficacy of such
bond. But such non- payment alone of the premiums for the succeeding years ... does
not necessarily extinguish or terminate the effectivity of the counter-bond in the
absence of an express stipulation in the contract making such non-payment of
premiums a cause for the extinguishment or termination of the undertaking. ...There
is no necessity for an extension or renewal of the agreement because by specific
provision thereof, the duration of the counter-bond was made dependent upon the
existence of the original bond."
5. It is true that in construing the liability of sureties, the principle of strictissimi
juris applies (Asiatic Petroleum Co. vs, De Pio, 46 Phil. 167; Standard Oil Co. of N.Y.
vs. Cho Siong, 53 Phil. 205); but with the advent of corporate surety, suretyship
became regarded as insurance where, usually, provisions are interpreted most
favorably to the insured and against the insurer because ordinarily the bond is
prepared by the insurer who then has the opportunity to state plainly the term of its
obligation (Surety Co. vs. Pauly, 170 US 133, 18 S. Ct. 552.,42 L. Ed. 972).
This rule of construction is not applicable in the herein case because there is no
ambiguity in the language of the bond and more so when the bond is read in
connection with the statutory provision referred to.
With the payment of the premium for the first year, the surety already assumed the
risk involved, that is, in case defendant-appellant Pastor T. Quebrar defaults in his
administrative duties. The surety became liable under the bond for the faithful
administration of the estate by the administrator/executor. Hence, for as long as
defendant-appellant Pastor T. Quebrar was administrator of the estates, the bond was
held liable and inevitably, the plaintiff-appellee's liability subsists since the liability
of the sureties is co-extensive with that of the administrator.
WHEREFORE, THE DECISION OF THE COURT OF FIRST INSTANCE OF
MANILA DATED NOVEMBER 3, 1964 IS HEREBY AFFIRMED. WITH COSTS
AGAINST DEFENDANTS-APPELLANTS.
 G.R. No. L-6363 September 15, 1955
In the matter of the testate estate of Dr. Maximo Borromeo. JOHANNA
HOFER BORROMEO, widow-appelle,
vs.
CANUTO O. BORROMEO, executor-appellant.
BENGZON, Acting C. J.:
In July 1948, Dr. Maximo Borromeo, a resident of Cebu City, died without ascendants
or descendants, but leaving his widow Johanna Hofer Borromeo, and a will wherein
he designated the Borromeo Bros. Estate Inc. as his sole heir, even as he named his
brother Canuto O. Borromeo as the executor. The said corporation is owned entirely
by the deceased and his brothers and sisters.
Proceedings having been instituted, the court of first instance of that province
probated the will in due course, and granted letters testamentary to Canuto O.
Borromeo, who duly qualified as such executor.
Thereafter, on July 11, 1949, the attorneys for the widow submitted an "Urgent
Motion" whereby they prayed for the removal of the executor on the grounds of
negligence in the performance of his duties and unfitness to continue discharging the
powers of the office.
This motion was scheduled to be heard on July 13, 1949 but it was postponed upon
representations by the executor of possible amicable settlement between the opposing
parties. No settlement was carried out nor even attempted. However, taking advantage
of the postponement and after a subpoena had been served on the Bank of the
Philippine Islands seeking information on the cash deposits therein of the deceased
Maximo Borromeo, the executor withdrew, without any authority from the court, the
total amount of P23,930.39 from a joint current account, in said Bank, of Canuto
Borromeo and Maximo Borromeo, and then deposited P22,244.39 of the sum thus
withdrawn in the joint account of said Canuto Borromeo and his brother Exequiel.
In time the petition was heard, and voluminous evidence, oral and documentary, was
submitted. Thereafter on February 21, 1951 the Honorable Edmundo Piccio, Judge,
for several reasons, one of them the above withdrawal of funds, decreed the removal
of the executor. On motion for reconsideration the executor's attorney prayed that the
order be revoked or that at least, the executor be permitted to resign. (Record on
Appeal p. 251.)
On March 29, 1951 obviously to accommodate the executor—there being no practical
difference between removal and resignation—His Honor modified his order in the
sense that said executor was "relieved of (instead of removed from) his commitments
as such executor". Notwithstanding such modification the executor appealed,
contending that the modified order should be revoked.
There is no question that the order removing the executor or administrator is
appealable.1 But we fail to perceive the utility of the instant appeal,2 inasmuch as the
executor begged to be permitted to resign and the court all but granted his request
explaining, specifically, that the executor was not removed but only relieved of his
commitment—which is one way of accepting the proffered resignation. The executor
got substantially what he wanted.
Granting that the modified order was not literally what he desired, still the error, if
any, did not affect his substantial rights, and could not justify reversal under the Rules.
(cf. Rule 53 sec. 3.)
In any event, supposing he was removed, there were in our opinion sufficient grounds
therefor. Take the matter of withdrawals above described. Attempting to justify his
attitude, the executor point out that, according to the joint deposit agreement Exhibit
H signed by Canuto and Maximo Borromeo.
We, the undersigned, agree with one another and with the Bank of the Philippine
Islands hereinafter called the Bank, that all moneys heretofore, now, or hereafter
deposited, by us, or any of us, to the credit of this Savings Account or Current
Account, are and shall be received and held by the Bank with the understanding, and
upon the condition that said money deposited, without reference to previous
ownerships, and all interest, dividends and credits thereon shall be the property of all
of us, during our lifetimes and after the death of any one of us shall be the sole
property of and payable to the survivors, or survivor, provided that this last deposition
is not contrary to provisions of laws now in force or may hereafter be in force in the
Philippine Islands.(Emphasis our.)
He claims, in effect, that the money deposited was his at the time he withdrew it. But
would the Bank have allowed him to withdraw the whole amount if he were not the
executor? He got it then as executor. Instead, he deposited it in a joint account with
his brother Exequiel, thereby placing it at the latter's disposal, and hiding it from the
widow.
Furthermore, and this is important, the agreement says "provided that this last
disposition is not contrary to provisions of laws now in force . . . in the P.I." The
question arises: may a husband validly agree that upon his death certain conjugal
money deposited in the bank shall belong to his brother, and thereby deprive his wife
of her share in the conjugal partnership?
According to Art. 1413 of the Civil Code, no alienation or agreement which the
husband may make with respect to conjugal property in fraud of the wife shall
prejudice her or her heirs.3
There is at least some ground to doubt whether the stipulation could deprive the wife
of her share in the conjugal assets. The validity of the agreement could properly be
the subject of debate in court; yet this executor avoided or bypassed judicial
adjudication by getting the money, specially at a time when his actuations were
already being questioned, and his appointment as executor in danger of revocation.
And his conduct is aggravated by the circumstance that he took advantage of a
postponement, asked by him on the false pretense of possible amicable settlement, in
order to vest in himself money on which the corporate heir and the widow might have
a claim.
Another reason for the withdrawal is the fact that in his Report for March 1949 the
executor omitted to include, as income of the estate, the sum of P6,000 which he had
received from Hacienda Plaridel of the decedent. This in itself might be involuntary
error, as claimed by him. But considering that he received other sums of P13,010 and
P10,559.40 as proceeds from the farm of the deceased, but instead of depositing them
in his name as executor, placed them in his joint account with his brother Exequiel
Borromeo, it is not unreasonable to suspect a plan—inconsistent with his
trusteeship—to conceal the money of the deceased to back up his assertion, in
objecting to the widow's allowance, that the estate had no funds.
It becomes unnecessary to examine the other reasons which induced the trial court to
let this executor go. The record discloses sufficient data justifying the decree of
separation or vindicating the judge's exercise of discretion. This, apart from the
principle supported by the weight of authorities that, "An appellate court is disinclined
to interfere with the action taken by the probate court in the matter of the removal of
an executor or administrator unless positive error or gross abuse of discretion is
shown." (33 C. J. S. p. 1048.) (Citing many cases.)1âwphïl.nêt
Wherefore, the appealed order should be, as it is hereby, affirmed with double costs
against appellant. It should be stated in this connection that the obvious reasons, no
petition for extension of the time to file a motion for reconsideration will be favorably
entertained. So ordered.

A third reason is that the executor claimed as his own certain shares of the Interisland
Gas Service, in the name of Maximo Borromeo, valued at P12,000; he asserted that
Maximo was merely his "dummy". If we had any doubts about the rightness of the
trial judges determination, this circumstance should finally tip the judicial balance on
the side of removal or resignation. Conflict between the interest of the executor and
the interest of the deceased is ground for removal or resignation of the former, who
was thereby become insuitable to discharge the trust. (Section 2, Rule 83.)

An executor or administrator should be removed where his personal interests conflict

with his official duties, but a mere hostile feeling towards persons interested in the
estate is not ground for removal unless it prevents the management of the estate
according to the dictates of prudence. (33 C. J. S. P. 1036.) (Citing many cases.)

Reasons for rule.—"An executor is a quasi trustee, who should be indifferent between
the estate and claimant of the property, except to preserve it for due administration,
and when his interest conflicts with such right and duty the country court, in the
exercise of a sound discretion, may remove him." (In re Manser, 60 Or. 240, 246, 118,
p. 1024.)

An executor will be removed where it appears that he asserts claims against the estate
of the testator to the extent of two-thirds of the value of the estate, and such claims
are disputed by the beneficiary under the will." (Henry's Est., 54 Pa. Super. 274.)

Claim of gifts from decedents.—Where an executor, in answer to a petition for his

removal on the ground of maladministration in claiming property of the estate, alleged
a gift by decedent to him of the property, he manifested an interest adverse to the
beneficiaries, authorizing his removal; but the country court had no jurisdiction to
determine the question of gift. (In re Manser, 60 Or, 240, 118, p. 1024.)
 G.R. No. 187879 July 5, 2010
DALISAY E. OCAMPO, VINCE E. OCAMPO, MELINDA CARLA E.
OCAMPO, and LEONARDO E. OCAMPO, JR., Petitioners,
vs.
RENATO M. OCAMPO and ERLINDA M. OCAMPO, Respondents.
DECISION
NACHURA, J.:
This petition1 for review on certiorari under Rule 45 of the Rules of Court seeks to
reverse and set aside the Decision2 dated December 16, 2008 and the
Resolution3 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, 20084 of the
Regional Trial Court (RTC), Branch 24, Biñan, 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 Biñan, 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, Biñan, Laguna, docketed as Spec. Proc. No. B-3089.5The
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 Biñan 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 ₱200,000.00 each.12
Respondents filed a Motion for Reconsideration dated August 1, 200613 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 Dalisay’s
appointment as special administrator was already deemed abandoned upon their
nomination of the Biñan 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’ Bond18 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
₱2,700,000.00, which the latter represented to petitioners to have been sold only for
₱1,500,000.00, 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 Comment22 on March 10, 2008, to which, in
turn, petitioners filed their Reply to Opposition/Comment23 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 ₱200,000.00, 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 certiorari25 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 administrator’s
bond of ₱200,000.00. 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 Biñan
Rural Bank as special administrator, the RTC, on February 16, 2007, revoked
Dalisay’s 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
unfitness37 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.39The
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 ₱200,000.00 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 RTC’s 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 decedent’s 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
Distribution42 for the period covering April 2002 to June 2006,43 where they indicated
that Renato had received ₱4,241,676.00, Erlinda ₱4,164,526.96, and petitioners
₱2,486,656.60, and that the estate had advanced ₱2,700,000.00 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
letter45 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
₱2,087,380.49 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, 200446 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 Biñan, Laguna, and covered by Transfer Certificate of Title No.
T-332305 of the Registry of Deeds of Laguna, for a total purchase price of
₱2,700,000.00. The Deed stipulated for a payment of ₱1,500,000.00 upon the signing
of the contract, and the balance of ₱1,200,000.00 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 Sale47 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 only ₱1,500,000.00.
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 ₱500,000.00. 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 RTC’s 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 contestant’s
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.1avvphi1
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 Melinda’s 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 ₱200,000.00 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 Leonardo’s 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, Biñan, 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 administrator’s 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.

SO ORDERED.
G.R. No. L-23419 June 27, 1975
INTESTATE ESTATE OF THE DECEASED GELACIO SEBIAL.
BENJAMINA SEBIAL, petitioner-appellee,
vs.
ROBERTA SEBIAL, JULIANO SEBIAL and HEIRS OF BALBINA
SEBIAL, oppositors-appellants.
AQUINO, J.:
Gelacio Sebial died intestate in 1943 in Pinamungajan Cebu. According to the
appellants, Gelacio Sebial, by his first wife Leoncia Manikis, who allegedly died in
1919, begot three children named Roberta, Balbina and Juliano. By his second wife,
Dolores Enad, whom he allegedly married in 1927, he supposedly begot six children
named Benjamina, Valentina, Ciriaco, Gregoria, Esperanza and Luciano.
On June 17, 1960 Benjamina Sebial filed in the Court of First Instance of Cebu a
verified petition for the settlement of Gelacio Sebial's estate. She prayed that she be
appointed administratrix thereof (Spec. Proc. No. 2049-R). Roberta Sebial opposed
the petition on the ground that the estate of Gelacio Sebial had already been
partitioned among his children and that, if an administration proceeding was
necessary, she, Roberta Sebial, a resident of Guimbawian, a remote mountain barrio
of Pinamungajan, where the decedent's estate was supposedly located, should be the
one appointed administratrix and not Benjamina Sebial, a housemaid working at
Talisay, Cebu which is about seventy kilometers away from Pinamungajan. In a
supplemental opposition the children of the first marriage contended that the remedy
of Benjamina Sebial was an action to rescind the partition.
After hearing, the lower court in its order of January 16, 1961 appointed Benjamina
Sebial as administratrix. It found that the decedent left an estate consisting of lands
with an area of twenty-one hectares, valued at more than six thousand pesos, and that
the alleged partition of the decedent's estate was invalid and ineffective.
Letters of administration were issued to Benjamina Sebial on January 19, 1961. On
the same date, a notice to creditors was issued. The oppositors moved for the
reconsideration of the order appointing Benjamina Sebial as administratrix. They
insisted that the decedent's estate had been partitioned on August 29, 1945, as shown
in Exhibits 5, 6, 7 and I, and that the action to rescind the partition had already
prescribed. The lower court denied the motion in its order of February 11, 1961.
The oppositors filed on March 16, 1961 a motion to terminate the administration
proceeding on the grounds that the decedent's estate was valued at less than six
thousand pesos and that it had already been partitioned and, therefore, there was no
necessity for the administration proceeding.
On April 27, 1961 Benjamina Sebial filed an inventory and appraisal of the decedent's
estate allegedly consisting of seven unregistered parcels of land, covered by Tax
Declarations Nos. 04477, 04478, 04490, 04491, 04492, 04493 and 04500, with a total
value of nine thousand pesos, all located at Barrio Guimbawian, Pinamungajan. The
oppositors registered their opposition to the inventory on the ground that the seven
parcels of land enumerated in the inventory no longer formed part of the decedent's
estate.
On May 6, 1961, the administratrix filed a motion to require Lorenzo Rematado,
Demetrio Camillo and the spouses Roberta Sebial and Lazaro Recuelo to deliver to
her the parcels of land covered by Tax Declarations Nos. 04478, 04490,04491 and
04493.
On June 24, 1961 the probate court issued an order suspending action on the pending
incidents in view of the possibility of an amicable settlement. It ordered the parties to
prepare a complete list of the properties belonging to the decedent, with a segregation
of the properties belonging to each marriage. Orders of the same tenor were issued by
the lower court on July 8 and October 28, 1961.
On November 11, 1961 the oppositors, Roberta Sebial, Juliano Sebial and the heirs
of Balbina Sebial, submitted their own inventory of the conjugal assets of Gelacio
Sebial and Leoncia Manikis, consisting of two parcels of land acquired in 1912 and
1915. They alleged that the conjugal estate of Gelacio Sebial and Dolores Enad
consisted of only one parcel of land, containing an area of seven hectares, allegedly
purchased with money coming from the conjugal assets of Gelacio Sebial and Leoncia
Manikis. They further alleged that the said seven- hectare land was sold by the
children of the second marriage to Eduardo Cortado (Tax Declaration No.
2591).1äwphï1.ñët
The oppositors claimed that the aforementioned two parcels of land acquired during
the first marriage were partitioned in 1945 among (1) Roberta Sebial, (2) Juliano
Sebial, (3) Francisco Sebial as the representative of the estate of Balbina Sebial and
(4) Valentina Sebial as the representative of the six children of the second marriage,
some of whom were minors. They clarified that under that partition the three children
of the first marriage received a three-fourths share while the six children of second
marriage received a one-fourth share (Tax Declaration No. 06500). They also alleged
that Eduardo Cortado, Emilio Sialongo, Lorenzo Rematado and Lazaro Recuelo were
the third persons involved in the transfer of the lands pertaining to the estate of
Gelacio Sebial (Tax Declarations Nos. 04493, 06571 and 04471). To the inventory
submitted by the oppositors, the administratrix filed an opposition dated November
18, 1961.
In an order dated November 11, 1961 the lower court inexplicably required the
administratrix to submit another inventory. In compliance with that order she
submitted an inventory dated November 17, 1961, wherein she reproduced her
inventory dated April 17, 1961 and added two other items, namely, two houses
allegedly valued at P8,000 and the fruits of the properties amounting to P5,000
allegedly received by the children of the first marriage. The oppositor interposed an
opposition to the said inventory.
On November 24, 1961 the oppositors filed a "motion for revision of partition" which
was based on their own inventory dated November 7, 1961.
The lower court in its order of December 11, 1961 approved the second inventory
dated November, 7, 1961 because there was allegedly a "prima facie evidence to show
that" the seven parcels of land and two houses listed therein belonged to the decedent's
estate. In another order also dated December 11, 1961 the lower court granted the
motion of the administratrix dated May 4, 1961 for the delivery to her of certain
parcels of land and it directed that the heirs of Gelacio Sebial, who are in possession
of the parcels of land covered by Tax Declarations Nos. 04493, 04491, 04490 and
04478, should deliver those properties to the administratrix and should not disturb her
in her possession and administration of the same. The lower court denied the
oppositors' motion dated November 20, 1961 for "revision of partition".
On December 29, 1961 Roberta Sebial moved for the reconsideration of the two
orders on the grounds (1) that the court had no jurisdiction to approve an inventory
filed beyond the three-month period fixed in section 1, Rule 84 of the Rules of Court;
(2) that the said inventory is not supported by any documentary evidence because
there is no tax declaration at all in Gelacio Sebial's name; (3) that the two houses
mentioned in the inventory were nonexistent because they were demolished by the
Japanese soldiers in 1943 and the materials thereof were appropriated by the
administratrix and her brothers and sisters; (4) that the valuation of P17,000 indicated
in the inventory was fake, fictitious and fantastic since the total value of the seven
parcels of land amounted only to P3,080; (5) that Gelacio Sebial's estate should be
settled summarily because of its small value as provided in section 2, Rule 74 of the
Rules of Court and (6) that an ordinary action is necessary to recover the lands in the
possession of third persons.
The oppositors without awaiting the resolution of their motion for reconsideration
filed a notice of appeal from the two orders both dated December 11, 1961. The notice
of appeal was filed "without prejudice to the motion for reconsideration". Benjamina
Sebial opposed the motion for reconsideration. The lower court in its order of January
18, 1962 denied oppositors' motion for reconsideration. It approved Roberta Sebial's
amended record on appeal. The case was elevated to the Court of Appeals.
The Court of Appeals in its resolution of July 31, 1964 in CA-G.R. No. 31978.-R
certified the case to this Court because in its opinion the appeal involves only the legal
issues of (1) the construction to be given to section 2, Rule 74 and section 1, Rule 84
(now Rule 83) of the Rules of Court and (2) whether an ordinary civil action for
recovery of property and not an administration proceeding is the proper remedy,
considering oppositors' allegation that the estate of Gelacio Sebial was partitioned in
1945 and that some of his heirs had already sold their respective shares (Per Angeles,
Gatmaitan and Concepcion Jr., JJ.)
The Clerk of Court of the lower court in his letter of January 15, 1963, transmitting
the amended record on appeal, said "there was no presentation of evidence by either
parties concerning the two orders appealed from".
This case involves the conflicting claims of some humble folks from a remote rural
area in Cebu regarding some unregistered farm lands. Because of her poverty Roberta
Sebial wanted to appeal in forma pauperis. Her husband Lazaro Recuelo and her
nephew, Candelario Carrillo, in order to justify the filing of a mimeographed brief,
swore that their families subsisted on root crops because they could not afford to buy
corn grit or rice.
Oppositors' contention in their motion for reconsideration (not in their brief) that the
probate court had no jurisdiction to approve the inventory dated November 17, 1961
because the administratrix filed it after three months from the date of her appointment
is not well-taken. The three-month period prescribed in section 1, Rule 83 (formerly
Rule 84) of the Rules of Court is not mandatory. After the filing of a petition for the
issuance of letters of administration and the publication of the notice of hearing, the
proper Court of First Instance acquires jurisdiction over a decedent's estate and retains
that jurisdiction until the proceeding is closed. The fact that an inventory was filed
after the three-month period would not deprive the probate court of jurisdiction to
approve it. However, an administrator's unexplained delay in filing the inventory may
be a ground for his removal (Sec. 2, Rule 82, Rules of Court).
The other contention of the oppositors that inasmuch as the value of the decedent's
estate is less than five thousand pesos and he had no debts, the estate could be settled
summarily under section 2, Rule 74 of the Rules of Court or that an administration
proceeding was not necessary (the limit of six thousand pesos was increased to ten
thousand pesos in section 2, Rule 74 effective on January 1, 1964) rests on a
controversial basis. While in the verified petition for the issuance of letters of
administration, it was alleged that the gross value of the decedent's estate was "not
more than five thousand pesos", in the amended inventory the valuation was P17,000.
Indeed, one of the lower court's omissions was its failure to ascertain by
preponderance of evidence the actual value of the estate, if there was still an estate to
be administered. The approval of the amended inventory was not such a
determination.
Anyway, in the present posture of the proceeding, no useful purpose would be served
by dismissing the petition herein and ordering that a new petition for summary
settlement be filed. Inasmuch as a regular administrator had been appointed and a
notice to creditors had been issued and no claims were filed, the probate court could
still proceed summarily and expeditiously to terminate the proceeding. With the
cooperation of the lawyers of the parties, it should strive to effect an amicable
settlement of the case (See arts. 222 and 2029, Civil Code).
If the efforts to arrive at an amicable settlement prove fruitless, then the probate court
should ascertain what assets constituted the estate of Gelacio Sebial, what happened
to those assets and whether the children of the second marriage (the petitioner was a
child of the second marriage and the principal oppositor was a child of first marriage)
could still have a share, howsoever small, in the decedent's estate.
The lower court's order of December 11, 1961, approving the amended inventory of
November 11, 1961, is not a conclusive determination of what assets constituted the
decedent's estate and of the valuations thereof. Such a determination is only
provisional in character and is without prejudice to a judgment in a separate action on
the issue of title or ownership (3 Moran's Comments on the Rules of Court, 1970 Ed.,
448-449).1äwphï1.ñët
The other order dated December 11, 1961 requires the delivery to the administratrix
of (1) two parcels of land covered by Tax Declarations Nos. 04491 and 04493 in the
possession of the spouses Lazaro Recuelo and Roberta Sebial, an oppositor-appellant;
(2) the parcel of land covered by Tax Declaration No. 04490 in the possession of
Lorenzo Rematado and (3) the parcel of land described under Tax Declaration No.
04478 in the possession of Demetrio Camillo (Canillo), a child of the deceased
Balbina Sebial, one of the three children of the first marriage.
We hold that the said order is erroneous and should be set aside because the probate
court failed to receive evidence as to the ownership of the said parcels of land. The
general rule is that questions of title to property cannot be passed upon in a testate or
intestate proceeding. However, when the parties are all heirs of the decedent, it is
optional upon them to submit to the probate court the question of title to property and,
when so submitted, the probate court may definitely pass judgment thereon (3 Moran's
Comment's on the Rules of Court, 1970 Ed., pp. 448, 473; Alvarez vs. Espiritu, L-
18833, August 14, 1965, 14 SCRA 892).
Lorenzo Rematado and Lazaro Recuelo are not heirs of the decedent. They are third
persons. The rule is that matters affecting property under administration may be taken
cognizance of by the probate court in the course of the intestate proceedings provided
that the interests of third persons are not prejudiced (Cunanan vs. Amparo, 80 Phil.
227; Ibid, 3 Moran 473).
However, third persons to whom the decedent's assets had been fraudulently conveyed
may be cited to appear in court and be examined under oath as to how they came into
the possession of the decedent's assets (Sec. 6, Rule 87, Rules of Court) but a separate
action would be necessary to recover the said assets (Chanco vs. Madrilejos, 12 Phil.
543; Guanco vs. Philippine National Bank, 54 Phil. 244).
The probate court should receive evidence on the discordant contentions of the parties
as to the assets of decedent's estate, the valuations thereof and the rights of the
transferees of some of the assets. The issue of prescription should also be considered
(see p. 84, Record on Appeal). Generally prescription does not run in favor of a coheir
as long as he expressly or impliedly recognizes the coownership (Art. 494, Civil
Code).1äwphï1.ñët But from the moment that a coheir claims absolute and exclusive
ownership of the hereditary properties and denies the others any share therein, the
question involved is no longer one of partition but that of ownership (Bargayo vs.
Camumot, 40 Phil. 857).
At the hearing of the petition for letters of administration some evidence was already
introduced on the assets constituting the estate of Gelacio Sebial. The petitioner
testified and presented Exhibits A to J and X to Y-3. The oppositor also testified and
presented Exhibits 2 to 10-A. The stenographic notes for the said hearing should be
transcribed. In addition to that evidence. The probate court should require the parties
to present further proofs on the ownership of the seven parcels of land and the
materials of the two houses enumerated in the amended inventory of November 17,
1961, on the alleged partition effected in 1945 and on the allegations in oppositors'
inventory dated November 7, 1961.
After receiving evidence, the probate court should decide once and for all whether
there are still any assets of the estate that can be partitioned and, if so, to effect the
requisite partition and distribution. If the estate has no more assets and if a partition
had really been made or the action to recover the lands transferred to third person had
prescribed, it should dismiss the intestate proceeding.
WHEREFORE, (a) the probate court's order of December 11, 1961, granting the
administratrix's motion of May 4, 1961 for the delivery to her of certain properties is
set aside; (b) its other order of December 11, 1961 approving the amended inventory
should not be considered as a final adjudication on the ownership of the properties
listed in the inventory and (c) this case is remanded to the lower court for further
proceedings in accordance with the guidelines laid down in this decision. No costs.
SO ORDERED.
G.R. No. L-45430 April 15, 1939
In the matter of the estate of the deceased Paulina Vasquez Vda. de Garcia.
TERESA GARCIA, plaintiff-appellant,
vs.
LUISA GARCIA, MARIETA GARCIA, and PURIFICACION GARCIA, and
BRAULIO DE VERA, guardian of the minors Antonio, Lourdes and Ramon,
surnamed De Vera, defendants-appellees.
Anastasio R. Teodoro and Andres S. Nicolas for appellant.
Pablo Lorenzo, Delfin Joven and Eulalio Chaves for appellee.
VILLA-REAL, J.:
After Luisa Garcia was appointed special administratrix of the properties left by the
deceased Paulina Vasquez Vda. de Garcia, she filed with the competent court an
inventory thereof on May 13, 1936.
On May 23, 1936, the heir Teresa Garcia objected to said inventory, taking exception
to various items therein.
On June 20, 1936, the court issued the following order:
Without prejudice to the filing of an ordinary action by the heir Teresa Garcia de
Bartolome, the petition to include in the inventory certain properties of the estate,
filed by Teresa Garcia and others with the conformity of counsel for the
administratrix, is denied.
On July 28, 1936, Teresa Garcia filed a motion asking that she be appointed special
administratrix of the intestate for the sole purpose of bringing any action which she
may believe necessary to recover for the benefit of the intestate the properties and
credits set out in her motion, as well as other properties which might be discovered
from time to time belonging to the said intestate.
After hearing said motion and the administratrix' opposition thereto, the Court of First
Instance of Manila denied the motion by its order of August 19, 1936.
On motion for reconsideration filed by Teresa Garcia, which was opposed by the
administratrix, the court issued the following order of September 28, 1936:
This is a motion for reconsideration of the order of this Court of the 19th day of
August last, denying the petition of Teresa Garcia, one of the daughter of the
deceased, wherein she asked to be appointed special administratrix in order that she
might bring an action for the recovery of certain properties which she claims belong
to the estate and are in the possession of the regular administratrix and her other
sisters.
Before this petition was filed a hearing had been held to determine the ownership of
these properties as a direct result of Teresa Garcia's objection to the inventory filed
by the administratrix in which, it was alleged, those properties should be included.
Now the same party upon whose complaint that hearing was conducted repudiates the
steps taken by the court on the ground on the grounds of alleged lack of jurisdiction.
The interrupted proceeding which the motion under consideration would have set
aside was by no means irregular. It is in accordance with the general practice
constantly followed in this jurisdiction. The jurisdiction to try controversies between
heirs of a deceased person regarding the ownership of properties alleged to belong to
his estate is vested in probate courts. In the last analysis, the purpose of intestate
proceeding is the distribution of the decedent's estate among the persons entitled to
succeed him. It is in the nature of an action of partition, and in a suit of partition it is
proper that each party be required to bring into the mass whatever community
property he or she may have in his or her possession. To this end and as a necessary
corollary, the interested parties may introduce proofs relative to the ownership of the
properties in dispute. All the heirs who take part in the distribution of the decedent's
estate are before the court and subject to the jurisdiction thereof in all matters and
incidents necessary to the complete settlement of such estate, so long as no interests
of third parties are affected.
The cases relied upon by the movant have no bearing on the present case. In the cases
cited, not only were the persons alleged to have in their possession properties of the
estate strangers to the intestate, but their appearance had been ordered under different
provisions and for a different purpose. The court was not aware of the fact that a
proceeding under section 709 of the Code of Civil Procedure is no t to try title to
property.
However that may be, the jurisdiction involved here is one over the person, not over
the subject-matter; and it is a well-established rule that such jurisdiction may be
acquired by consent. A general appearance, let alone going into trial without
objection, has been always held to constitute a waiver of the party's right to object to
the authority of the court over his person. The administratrix and other heirs have not
objected.
The motion for reconsideration is denied. The movant may however ask, if she cares
to do so, that this proceeding be reset for the continuation of the hearing of her
inventory of the administratrix and the determination of whether the properties in
question belong to the estate and should be included in the said inventory for
disposition according to law.
So ordered.
From the foregoing order Teresa Garcia took this appeal, assigning our alleged errors
committed by the lower Court in its order, which errors boil down to the proposition
of whether or not a court has jurisdiction to hear and pass upon the exceptions which
an heir takes to an inventory of the properties left by a deceased referring to the
inclusion or exclusion of certain properties and credits.

It is the duty of every administrator, whether special or regular, imposed by section

668 of the Code of Civil Procedure, to return to the court within three months after
his appointment a true inventory of the real estate and all the goods, chattels, right,
and credits of the deceased which come into his possession or knowledge, unless he
is residuary legatee and has given the prescribed bond. The court which acquires
jurisdiction over the properties of a deceased person through the filing of the
corresponding proceedings, has supervision and control over the said properties, and
under the said power, it is its inherent duty to see that the inventory submitted by the
administrator appointed by it contains all the properties, rights and credits which the
law requires the administrator to set out in his inventory. In compliance with this duty
the court has also inherent power to determine what properties, rights and credits of
the deceased should be included in or excluded from the inventory. Should an heir or
person interested in the properties of a deceased persons duly call the court's attention
to the fact that certain properties, rights or credits have been left out in the inventory,
it is likewise the court's duty to hear the observations, with power to determine if such
observations should be attended to or not and if the properties referred to therein
belong prima facie to the intestate, but no such determination is final and ultimate in
nature as to the ownership of the said properties (23 C.J., p. 1163, par. 381).

The lower court, therefore, had jurisdiction to hear the opposition of the heir Teresa
Garcia to the inventory filed by the special administratrix Luisa Garcia, as well as the
observations made by the former as to certain properties and credits, and to determine
for purposes of the inventory alone if they should be included therein or excluded
therefrom. As Teresa Garcia withdrew her opposition after evidence was adduced
tending to show whether or not certain properties belonged to the intestate and, hence,
whether they should be included in the inventory, alleging that the lower court had no
jurisdiction to do so, she cannot be heard to complain that the court suspended the
trial of her opposition.

In the view of the foregoing, we are of the opinion and so hold, that a court takes
cognizance of testate on intestate proceedings has power and jurisdiction to determine
whether or not the properties included therein or excluded therefrom belong prima
facie to the deceased, although such a determination is not final or ultimate in nature,
and without prejudice to the right of the interested parties, in a proper action, to raise
the question bearing on the ownership or existence of the right or credit.

Wherefore, the appealed order is affirmed, reserving to Teresa Garcia the right to ask
for the reopening of the hearing of her opposition to the inventory, as well as to ask
for the appointment of a special administratrix in accordance with law, with the costs
to the appellant. So ordered.
G.R. No. L-51291 May 29, 1984
FRANCISCO CUIZON, ROSITA CUIZON, PURIFICATION C. GUIDO
married to TEODORO GUIDO, and JUAN ARCHE, petitioners,
vs.
HON. JOSE R. RAMOLETE, Presiding Judge of the Court of First Instance of
Cebu, Branch III, DOMINGO L. ANTIGUA and SEGUNDO
ZAMBO, respondents.
GUTIERREZ, JR., J.:
The sole issue in this petition for certiorari is whether or not a probate court has
jurisdiction over parcels of land already covered by a Transfer Certificate of Title
issued in favor of owners who are not parties to the intestate proceedings if the said
parcels have been included in the inventory of properties of the estate prepared by the
administrator.
For a clearer understanding of the present case, the background facts may be
appreciated. As far back as 1961, Marciano Cuizon applied for the registration of
several parcels of land located at Opao, Mandaue City then covered by certificates of
Tax Declaration in Land Registration Case No. N-179. In 1970, he distributed his
property between his two children, Rufina and Irene. Part of the property given to
Irene consisted largely of salt beds which eventually became the subject of this
controversy.
On December 29, 1971, Irene Cuizon executed a Deed of Sale with Reservation of
Usufruct involving the said salt beds in favor of the petitioners Francisco, Rosita and
Purificacion, all surnamed Cuizon. At that time, Francisco and Rosita were minors
and assisted by their mother, Rufina, only sister of Irene. However, the sale was not
registered because the petitioners felt it was unnecessary due to the lifetime
usufructuary rights of Irene.
Although the decision in L.R. Case No. N-179 was rendered way back in 1962, the
decree of registration No. N-161246 and the corresponding Original Certificate of
Title No. 0171 was issued only in 1976 in the name of Marciano Cuizon. In that same
year, Transfer Certificate of Title No. 10477 covering the property in question was
issued by the Register of Deeds to Irene Cuizon. The latter died in 1978. In the
extrajudicial settlement of the estate, her alleged half sister and sole heir Rufina
adjudicated to herself all the property of the decedent including the property in
question. After the notice of the extrajudicial settlement was duly published in a
newspaper of general circulation, Rufina thereafter, executed a deed of Confirmation
of Sale wherein she confirmed and ratified the deed of sale of December 29, 1971
executed by the late Irene and renounced and waived whatever rights, interest, and
participation she may have in the property in question in favor of the petitioners. The
deed was duly registered with the Registry of Deeds and annotated at the back of TCT
No. 10477. Subsequently, TCT No. 12665 was issued in favor of the petitioners.
On September 28, 1978, a petition for letters of administrator was filed before the
Court of First Instance of Cebu (Sp. Proc. No. 3864-R) by respondent Domingo
Antigua, allegedly selected by the heirs of Irene numbering seventeen (17) in all to
act as administrator of the estate of the decedent. The petition was granted.
Respondent Antigua as administrator filed an inventory of the estate of Irene. He
included in the inventory the property in question which was being administered by
Juan Arche, one of the petitioners. On June 27, 1979, respondent Antigua filed a
motion asking the court for authority to sell the salt from the property and praying
that petitioner Arche be ordered to deliver the salt to the administrator. The motion
was granted and respondent court issued the following order:
The administrator, thru this motion, informs the Court that the estate owns some beds
and fish pond located in Opao, Mandaue City that these salt beds are producing salt
which are now in the warehouse in Mandaue City, under the custody of Juan Arche
that the value of the salt in the warehouse is estimated to be worth P5,000.00 are
beginning to melt and, unless they are sold as soon as possible, they may depreciate
in value. It is likewise prayed in this motion that Juan Arche be ordered to deliver the
salt in question to the administrator such other products of the land now in his (Juan
Arche) possession.
Let this motion be, as it is hereby GRANTED. The administrator is hereby authorized
to sell the salt now in the custody of Juan Arche and the latter (Juan Arche) is hereby
ordered to deliver the salt in question to the administrator in order to effect the sale
thereof and he is likewise directed to deliver such other products of the land to the
administrator.
Subsequently, on three different occasions, respondent Segundo Zambo with the aid
of several men, sought to enforce the order of the respondent court, compelling the
petitioners to come to us on certiorari. On September 14, 1979, we issued a restraining
order enjoining the respondents from enforcing the above order of the respondent
court and from further interfering with the petitioners in their peaceful possession and
cultivation of the property in question.
The thrust of the petitioners' argument is that the respondent court, as a court handling
only the intestate proceedings, had neither the authority to adjudicate controverted
rights nor to divest them of their possession and ownership of the property in question
and hand over the same to the administrator. Petitioners further contend that the
proper remedy of the respondent administrator is to file a separate civil action to
recover the same.
On the other hand, the respondent administrator banked on the failure of the
petitioners to first apply for relief in the court of origin before filing the present
petition. According to him this was a fatal defect. In addition, the administrator stated
that the deed of sale of December 29, 1971 lost its efficacy upon the rendition of
judgment and issuance of the decree in favor of Irene Cuizon.
It is a well-settled rule that a probate court or one in charge of proceedings whether
testate or intestate cannot adjudicate or determine title to properties claimed to be a
part of the estate and which are equally (claimed to belong to outside parties. All that
the said court could do as regards said properties is to determine whether they should
or should not be included in the inventory or list of properties to be administered by
the administrator. If there is no dispute, well and good; but if there is, then the parties,
the administrator, and the opposing parties have to resort to an ordinary action for a
final determination of the conflicting claims of title because the probate court cannot
do so (Mallari v. Mallari, 92 Phil. 694; Baquial v. Amihan, 92 Phil. 501).
Similarly, in Valero Vda. de Rodriguez vs. CA., (91 SCRA 540) we held that for the
purpose of determining whether a certain property should or should not be included
in the inventory the probate court may pass upon the title thereto but such
determination is not conclusive and is subject to the final decision in a separate a
petition regarding ownership which may be instituted by the parties (3 Moran's
Comments on the Rules of Court, 1970 Edition, pages 448-9 and 473: Lachenal v.
Salas, L-42257, June 14, 1976, 71 SCRA 262, 266).
In the instant case, the property involved is not only claimed by outside parties but it,
was sold seven years before the death of the decedent and is duly titled in the name
of the vendees who are not party to the proceedings. In Bolisay vs. Alcid, (85 SCRA
213), this Court was confronted with a similar situation. The petitioners therein sought
to annul the order of the respondent court in a special proceeding which in effect ruled
that notwithstanding that the subject property was duly titled in the name of
petitioners, the administratrix of the intestate estate involved in said proceeding had
the right to collect the rentals of said property over the objection of the titled owners
just because it was included in the inventory of said estate and there was an ordinary
action in the regular court over the ownership thereof and the estate was one of the
parties therein. This Court viewed the petition as one seeking for a prima
facie determination and not a final resolution of the claim of ownership.
We held that: ... Considering that as aforestated the said property is titled under the
Torrens System in the names of the petitioners, it does appear strange, in the light of
the probate court's own ruling that it has no jurisdiction to pass on the issue of
ownership, that the same court deemed the same as part of the estate under
administration just because the administratrix, alleges it is still owned by the estate
and has in fact listed it in the inventory submitted by her to the court.
It does not matter that respondent - administratrix has evidence purporting to support
her claim of ownership, for, on the other hand, petitioners have a Torrens title in their
favor, which under the law is endowed with incontestability until after it has been set
aside in the manner indicated in the law itself, which, of course, does not include,
bringing up the matter as a mere incident in special proceedings for the settlement of
the estate of deceased persons. In other words, in Our considered view, the mere
inclusion in the inventory submitted by the administrator of the estate of a deceased
person of a given property does not of itself deprive the probate court of authority to
inquire into the property of such inclusion in case an heir or a third party claims
adverse title thereto. To hold otherwise would render inutile the power of that court
to make a prima facie determination of the issue of ownership recognized in the above
quoted precedents. The correct rule is that the probate court should resolve the issue
before it provisionally, as basis for its inclusion in or exclusion from the inventory. It
does not even matter that the issue is raised after approval of the inventory because
"apparently, it is not necessary that the inventory and appraisal be approved by the
Court." (Francisco on the Rules of Court Vol. V-B, p. 99, citing Siy Chong Keng vs.
Collector of Internal Revenue, 60 Phil. 494)
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 considered 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.
Having been apprised of the fact that the property in question was in the possession
of third parties and more important, covered by a transfer certificate of title issued in
the name of such third parties, the respondent court should have denied the motion of
the respondent administrator and excluded the property in question from the inventory
of the property of the estate. It had no authority to deprive such third persons of their
possession and ownership of the property. Respondent court was clearly without
jurisdiction to issue the order of June 27, 1979. Thus, it was unnecessary for the
petitioners to first apply for relief with the intestate court.
Even assuming the truth of the private respondents' allegations that the sale of
December 29, 1971 was effected under suspicious circumstances and tainted with
fraud and that the right of Rufina as alleged half-sister and sole heir of Irene remains
open to question, these issues may only be threshed out in a separate civil action filed
by the respondent administrator against the petitioners and not in the intestate
proceedings.
WHEREFORE, the petition for certiorari is GRANTED and the respondent court's
order dated June 27, 1979 is hereby set aside and declared void as issued in excess of
its jurisdiction. Our restraining order enjoining the enforcement of the June 27, 1979
order and the respondents from further interfering, through the intestate proceedings,
in the peaceful possession and cultivation of the land in question by the petitioners is
hereby made PERMANENT. SO ORDERED.
G.R. No. L-23035 October 13, 1925
In re will of Ignacio Abuton y Poncol, deceased.
TEODORA GUINGUING, petitioner-appellee,
vs.
AGAPITO ABUTON and CALIXTO ABUTON, opponents-appellants.
STREET, J.:
In the course of the administration of the estate of Ignacio Abuton, deceased, resident
of Oroquieta, Province of Misamis, it appeared that the deceased died testate on
March 8, 1916, leaving two sets of children by two different wives, the first of whom
was Dionisia Olarte, who died about twenty years ago, and by whom the deceased
had twelve, children, three of whom died without issue. The second wife was Teodora
Guinguing, to whom the testator was married on July 14, 1906, and by whom he had
four children, all still living. A will of the testator, executed on November 25, 1914,
was probated in court and allowed on October 9, 1917 (Exhibit A); and one Gabriel
Binaoro was appointed administrator. In due course of proceeding Binaoro submitted
to the court an inventory of the properties belonging to the deceased at the time of his
death. In this inventory he included only the lands which the testator had devised to
the children of the second marriage, omitting other lands possessed by him at the time
of his death and which were claimed by the children of the first marriage as having
been derived from their mother. Accordingly, on March 14, 1922, Teodoro
Guinguing, in representation of herself and her four minor children, presented a
motion in court, asking that the administrator be required to amend his inventory and
to include therein all property pertaining to the conjugal partnership of Ignacio
Abuton and Dionisia Olarte, including property actually in the hands of his children
by her which (the motion alleged) had been delivered to said children as an
advancement. The purpose of the motion was to force the first set of children to bring
into collation the properties that had been received by them, in conformity with article
1035 of the Civil Code; and the motion was based partly on the supposition that
Ignacio Abuton had never in fact effected a liquidation of the conjugal property
pertaining to himself and Dionisia Olarte. This motion was formally opposed by two
of the children of the first marriage, namely, Agapito and Calixto Abuton y Olarte.
Upon hearing the proof the trial judge found that no property had been acquired by
the testator during his second marriage and that the administration was concerned only
with property that had been acquired before the death of the first wife. The trial judge
further found that after the death of the first wife the testator had liquidated the
ganacial estate pertaining to them and had divided among the first set of children all
of the property that pertained to the first wife in the division, with the exception of
the home-place in the poblacion, in which the testator had continued to reside till
death. The share pertaining to the testator in said division was, so the court found,
retained in his own hands; and this property constituted the proper subject matter of
the present administration proceedings. Accordingly an order was entered to the effect
that the administrator should include in the inventory of the estate of Agapito Abuton
all of the property of which the testator was possessed at the time of his death. From
this order the two opponents of the motion appealed.
We entertain serious doubts as to whether the order in question here was really such
a final order as to be appealable under section 783 of the Code of Civil Procedure,
since the making of the inventory is necessarily of a preliminary and provisional
nature, and the improper inclusion of property therein or the improper omission of
property therefrom is not absolutely decisive of the rights of persons in interest. But,
passing this point without decision, we proceed to consider whether there is any merit
in the errors assigned to the order which is the subject of the appeal. 1awph!l.net
The contention made in the first assignment of error, to the effect that an order of the
character of that appealed from cannot be made by a court without formal notice being
given to all persons in interest, in the same manner as if a new action had been begun,
is clearly untenable, since all the heirs are already virtually represented in the
administration and are bound by all proper orders made therein, so far and so far only
as such orders have legal effect. This is not inconsistent with the proposition that
contested claims of ownership between the administrator and third persons should be
tried in separate proceedings, which is entirely true. The question here is merely
between some of the heirs and the administrator, as representative of all persons in
interest. Besides, it should be pointed out, the inclusion of a property in the inventory
does not deprive the occupant of possession; and if it is finally determined that the
property has been properly included in the estate, the occupant heir is liable for the
fruits and interest only from the date when the succession was opened (art. 1049, Civ.
Code). The provisions of the Civil Code with reference to collation clearly
contemplate that disputes between heirs with respect to the obligation to collate may
be determined in the course of the administration proceedings.
The second and third assignments are directed to the supposed errors of the court in
having based its findings as to the property belonging to the estate of Agapito Abuton
in part upon the recitals of his legalized will (Exhibit A) and in part upon the recitals
of a previous will (Exhibit 1), which had been superseded by the last. This older will
appears to have been produced by the representatives of the first set of children in the
proceedings for the probate of the will which was admitted, and was attached to
that expediente. It is said in appellants' brief that this document was not introduced in
evidence at the hearing of the present controversy.
It was not error, in our opinion, for the trial court to look to the recitals of the legalized
will for the purpose of determining prima facie whether a certain piece of property
should or should not be included in the inventory, without prejudice of course to any
person who may have an adverse title to dispute the point of ownership. The use made
of the superseded will (Exhibit 1) in the appealed order is of more questionable
propriety, but we are of the opinion that the facts stated by the court can be sufficiently
made out from the other evidence submitted at the hearing.
As we gather from the record, the crux of the controversy consists in the fact that
among the properties remaining in possession of Ignacio Abuton at the time of his
death was a piece of land covered by a composition title No. 11658, issued in 1894 in
the name of Dionisia Olarte. At the same time that this title was issued, Agapito
Abuton procured two other titles, Nos. 11651 and 11654, covering adjacent properties
to be issued in his own name. From the circumstance that title No. 11658 was issued
in the name of Dionisia Olarte the opponents appear to believe that this land was her
particular property and should now vest exclusively in her heirs. This conclusion is
erroneous. There is nothing to show that the land covered by title No. 11658 was not
acquired by the spouses during their marriage, and the circumstance that the title was
taken in the name of the wife does not defeat its presumed character as ganacial
property. Therefore, in liquidating the ganacial property of the first marriage it was
within the power of the surviving husband to assign other property to the first set of
children as their participation in the estate of their mother and to retain in his own
hands the property for which a composition title had been issued in the name of the
wife.

Upon the whole we are unable to discover any reversible error in the appealed order,
and the same is accordingly affirmed, with costs. So ordered.
G.R. No. L-31860 October 16, 1930 II. The lower court erred in refusing to allow the cross-examination and direct
examination of witnesses.
In the matter of the Estate of Charles C. Rear, deceased. J.J.
WILSON, administrator-appellee, III. The lower court erred in denying the request for a reasonable continuance in order
vs. to obtain depositions.
M. T. REAR, ET AL., heirs-appellants.

STATEMENT DECISION

July 14, 1925, Charles C. Rear was murdered by some Moros on his plantation situate JOHNS, J.:
in the interior of the Province of Cotabato at an isolated place, without communication
except by river, about 17 kilometers from the nearest settlement of Pikit, and about It appears from the first inventory of December 27, 1925, that the assets of the estate,
70 kilometers from the town of Cotabato. The whole plantation consisted of public including real property, coconut trees, and houses were P15,300, and that the personal
lands. J.J. Wilson qualified as special administrator of the estate on November property was valued at P5,250, which included 80 head of cattle, carabao and horses
17,1925. Later, the property of the estate was appraised at P20,800, of which the of the value of P4,000. Although he was appointed special administrator on November
commissioners filed an inventory and report, which was also signed by Wilson. 17, 1925, he never made any report or filed any account of any kind until 1927.
January 4,1927, the commisioners made and filed a report of claims against the estate, Neither did he apply to or obtain an order from the court of any nature during that
but by reasons of the fact that it was claimed and alleged that the administrator did period, and it appears that the attention of the court was for the first time called to the
not have any funds to pay, on March 30, 1927, the court ordered the administrator to administration of the estate when the commissioners on claims asked to have their
sell a portion of the property. April 26, 1927, and with the consent of the heirs, a fees paid; otherwise, the court never made any order of any kind from December 27,
petition was made for authority to sell, under sealed proposal, all the property of the 1925, to April, 1927. It also appears that at the time of his death, the only debts against
estate, with a view of closing the administration. October 10,1927, the court granted the deceased were one in favor of Sewal Fleming which then amounted to P800, and
this petition, and after due notice, the public sale took place, and the property was sold one in favor of J. S. Alano for P500. It appears from the amended final report that in
to Wm. Mannion for P7,600. April 26,1927, Wilson submitted a report covering his the course of administration, the administrator received the following amounts from
administration to that date, which was approved and later set aside on motion of the the specified sources:
heirs of the deceased. March 23, 1928, Wilson filed his final account which later was 1925
amended on June 20,1928, to which the heirs made numerous and specific objections, Nov. 30, Hogs sold (see plant. book) P108.50
and after a hearing, the court approved the account as filed. From which the heirs of
Sales store (see plant. book) 38.02
the deceased appealed and assign the following errors:
Dec. 31, Sundry products sold (see plant. book) 217.50
I. The lower court erred in approving the final amended account of the administrator Old debt collected 6.00
for the following reasons: 1926
Jan. 31, Sundry farm products 76.15
(a) That the alleged disbursements made by the special administrator and the Sales store 104.58
administrator were far in excess of the amount required to preserve the estate; Feb. 28, Sundry products 130.00
(b) That no authority being asked for or granted by the court, all loans or advances, Sales store 87.95
made to the estate, were made contrary to law and are not legal charges against the March 31, Sundry products 3.00
estate (Trs., p. 37). Sales store 53.12
April 30, Products 117.00
(c) The court erred in admitting, over objection, Exhibits D, E and F. Store .25
(d) That Wilson, as special administrator and as administrator, was neglectful and May None (Store discontinued)
imprudent and he committed waste. He is, therefore, liable. June 30, Products 2.20
July Do 29.75
Aug. Do 12.80
 Sept. Do 18.40 over his own signature was P5,800 which included 80 head of cattle, carabao and
Oct. None. horses of the value of P4,000. That is to say, at the time Wilson was appointed, his
Nov. Do. estate had personal property of the value of P5,800, and when the amended final
Dec. Do. account was filed the actual debts of the deceased, including interest and accumulated
1927 taxes, was P1,655.54.
Jan. Products 16.00
In this situation, it was the legal duty of the administrator to at once apply to the court
Feb. Do 166.60 for an order to sell the personal property to pay the debts of the deceased and the
Mar. Products 15.00 expenses of administration. It also appears from the amended final account that the
Cash received from Constabulary 20.91 expenses charged by the administrator was P750.94; that the court expenses, including
Apr. Products 13.50 attorney's fees was P693.20; and that the claims of the commisioners was P322.90,
May Do 5.00 the total of which is P1,767.04. That is to say, that the total of all claims against the
June Do 10.00 deceased, including interest and taxes was P1,655.54, and that the whole amount of
July Carabao sold 100.00 the court costs and expenses of administration was P1,767.04, the total of which is
Two steers sold 160.00 P3,422.58. That is to say, at the time of his appointment, it appears over the
Aug. Hogs sold 79.50 administrator's own signature that the value of the personal property of the deceased
Few nuts sold 8.00 which came into his possession was P5,800, and the whole amount of claims against
Sept. Two steers sold 180.00 Rear at the time of his death and the court costs and expenses of administration was
Nuts sold 12.00 P3,422.58. That is to say, if the personal property of the estate had been promptly
Oct. $50 U. S. Liberty Bond & Interest 127.52 sold, when it should have been, and sold for its appraised value, all the debts of the
The total of which is deceased and the court costs and expenses of administration would have been paid,
1,919.25 and the estate would have a balance left of P2,377.42. Instead of doing that, and
without any order, process or authority of the court the administrator, as appears from
his amended final account, continued the operation of the plantation and the
employment of Fleming as manager at a salary of P200 per month, and a large number
From which it appears that on November 30,1925, the administrator sold hogs for of men, so that at the time of the filing of the amended final account, the total expense
P108.50; in July, 1927, he sold one carabao for P100 and two steers for P160; in for labor was P2,863.62, and the amount of the manager's salary was P4,533.33, the
August he sold hogs for P79.50; and in September he sold two steers for P180. net result of which was that all of the property of the estate was consumed, lost, or
destroyed, leaving a deficit against the estate of P1,809.69. Whereas, if the
Strange as it may seem, the above is the only account which was ever rendered of the
administrator had followed the law and promptly sold the personal property, all of the
livestock which was appraised at P4,000, and yet no specific objection was ever made
debts of the estate would have been paid, and it would have a cash balance in its favor
or filed to the final account of the administrator for his failure to render any other or
of P2,377.42, and all of its real property left, which was appraised at P15,000.
different account of the livestock. Even so, it appears that the sale to Mannion was
made by and with the consent of the heirs, and that the deed was intended to convey It is but fair to say that Wilson's place of business, which was in Zamboanga, is at
all of the property to him described in the inventory, except that of a perishable nature least 300 kilometers from the plantation, and that he declined to serve as administrator
and some personal effects. It further appears from the amended account that the total and only accepted it under pressure. That in legal effect he operated and left the
amount of cash received by the administrator, including the sale to Mannion was management of the plantation largely in the discretion of Fleming, and that he
P9,519.25, and that the total amount of cash disbursed by the administrator was personally had but little, if anything, to do with the administration, and it does not
P11,328.94, leaving a deficit or balance due and owing from the estate of P1,809.69. appear that he was a party to any fraud. But even so, he was appointed and qualified
It also appears that the amount of Fleming's note at the time it was paid was P1,003.40, as administrator, and the law imposed upon him legal duties and obligations, among
and that the taxes for the years 1925,1926, and 1927 amounted to P152.14, and the which was to handle the estate in a business-like manner, marshal its assets, and close
claim of J. S. Alano amounted to P500. That is to say, at the time they were paid, the the estate without any unreasonable or unnecessary delay. He was not appointed to
actual claims against the deceased was P 1,655.54. Here, it will be noted that the value act for or on behalf of the creditors, or to represent the interests of the heirs only. He
of the personal property of the estate at the time of Wilson's appointment, appearing should have administered the affairs of the estate for the use and benefit alike of all
interested persons, as any prudent business man would handle his own personal
business. When appointed, it is the legal duty of the administrator to administer, settle,
and close the administration in the ordinary course of business, without any
unnecessary delay. Neither does an administrator, in particular, without a specific
showing or an order of the court, have any legal right to continue the operation of the
business in which the deceased was engaged, or to eat up and absorb the assets of the
estate in the payment of operating expenses. Yet, in the instant case, the administrator
on his own volition and without any authority or process of court continued the
operation of the plantation, and in the end, as shown by his own report, the estate,
which was appraised at P20,800, with actual debts of the deceased of only P1,655,54
was all wiped out and lost, and left with a deficit of P1,809.69. 1awph!l.net
The law does not impose upon an administrator a high degree of care in the
administration of an estate, but it does impose upon him ordinary and usual care, for
want of which he is personally liable. In the instant case there were no complications
of any kind and in the usual and ordinary course of business, the administrator should
have wound up and settled the estate within eight months from the date of his
appointment.
Ruling Case Law, vol. 11, section 142, says:
Winding up Business — An executor or administrator ordinarily has no power to
continue the business in which the decedent was engaged at the time of his death; and
this is true although he acts in the utmost good faith and believes that he is proceeding
for the best interests of the estate. The penalty for continuing a business of the
decedent without authority is the imposition of a personal liability on the executor or
administrator so doing for all debts of the business. The normal duty of the personal
representative in reference to such business is limited to winding it up, and even where
the beneficiaries are infants the court cannot authorize the administrator to carry on
the trade of the decedent. However, an exception to the general rule is sometimes
recognized; and so it has been held that in order to settle an estate the personal
representative may, in some cases , be permitted to continue a business for a
reasonable time. For example, such personal representative when authorized to
postpone the sale of the testator's effects may generally carry on the business for a
reasonable time with a view to its sale as a going concern. Even in such cases the
personal representatives are not, however, entitled to embark in the business more of
the testator's property than was employed in it at his death. (Citing numerous
authorities.)
The same principle is also laid down in Cyc., vol., 18,p. 241, where it is said:
C. Engaging in Business — 1. GENERAL RULE. The general rule is that neither an
executor nor an administrator is justified in placing or leaving assets in trade, for this
is a hazardous use to permit of trust moneys; and trading lies outside the scope of
administrative functions. So great a breach of trust is it for the representative to engage
in business with the funds of the estate that the law charges him with all the losses
thereby incurred without on the other hand allowing him to receive the benefit of any
profits that he may make, the rule being that the persons beneficially interested in the
estate may either hold the representative liable for the amount so used with interest,
or at their election take all the profits which the representative has made by such
unauthorized use of the funds of the estate.
Even so, considering the fact that Wilson's home and place of business was 300
kilometers from the plantation, and that in the very nature of things, he could not give
the business of the estate his personal attention, we are disposed to be more or less
lenient, and to allow him the actual operating expenses of the plantation for the first
eight months of his appointment amounting to P2,257.45. Although the expense
account of the administrator and the claims of the commissioners are somewhat high,
we are also disposed to allow those claims. That is to say, in his final account, the
administrator should have credit for the following items:
His personal charges and expenses P 750.94
Court expenses, including attorney's fee 693.20
Claims of the commissioners 322.90
Expenses for and on account of operation for the first
eight months 2,257.45
Debts against the deceased, including taxes 1,655.54
or a total of 5,680.03
As stated, it appears from his report that the administrator in the course of
administration received P1,919.25 from the sale of personal property. This with the
P7,600 which he received from the remaining assets sold to Mannion make a total of
P9,519.25 from which should be deducted P5,680.03 for and on account of the items
above stated, leaving a balance due and owing from the administrator to the heirs of
the deceased of P3,839.22.
As stated, it is the duty of the administrator of an estate to represent and protect the
interests of all interested persons, including the heirs of the deceased. It is very
apparent upon their face that the entries in Exhibits D and E were not made in the
ordinary course of business, and even if they were, they would not be evidence of the
payments without the corresponding receipts or vouchers. That is to say, to entitle the
administrator to credit for money paid out in the course of administration, he should
submit and file with the court a corresponding receipt or voucher. Even so, it appears
from the record that during his lifetime, the deceased employed a number of laborers
on the plantation, and that after Wilson was appointed as administrator, Fleming
personally took charge of and operated the plantation, and that the expenses of which
for the first eight months was P2,257.45.

The order of the lower court approving the final account of Wilson as administrator
is reversed and set aside, and a judgment will be entered in favor of the heirs and
against the administrator for P3,839.22, with interest thereon from November 7,1927,
at the rate of 6 per cent per annum, without prejudice to any remedy which the heirs
may have against the bondsmen of the administrator. The appellants to recover costs.
So ordered.
G.R. No. L-19265 May 29, 1964
MOISES SAN DIEGO, SR., petitioner,
vs.
ADELO NOMBRE and PEDRO ESCANLAR, respondents.
PAREDES, J.:
The case at bar had its origin in Special Proceedings No. 7279 of the CFI of Negros
Occidental wherein respondent Adelo Nombre was the duly constituted judicial
administrator. On May 1, 1960, Nombre, in his capacity was judicial administrator of
the intestate estate subject of the Sp. Proc. stated above, leased one of the properties
of the estate (a fishpond identified as Lot No. 1617 of the cadastral survey of
Kabankaban, Negros Occidental), to Pedro Escanlar, the other respondent. The terms
of the lease was for three (3) years, with a yearly rental of P3,000.00 to expire on May
1, 1963, the transaction having been done, admittedly, without previous authority or
approval of the Court where the proceedings was pending. On January 17, 1961,
Nombre was removed as administrator by Order of the court and one Sofronio
Campillanos was appointed in his stead. The appeal on the Order of Nombre's removal
is supposedly pending with the Court of Appeals. Respondent Escanlar was cited for
contempt, allegedly for his refusal to surrender the fishpond to the newly appointed
administrator. On March 20, 1961, Campillanos filed a motion asking for authority to
execute a lease contract of the same fishpond, in favor of petitioner herein, Moises
San Diego, Sr., for 5 years from 1961, at a yearly rental of P5,000.00. Escanlar was
not notified of such motion. Nombre, the deposed administrator, presented a written
opposition to the motion of Campillanos on April 11, 1964, pointing out that the
fishpond had been leased by him to Escanlar for 3 years, the period of which was
going to expire on May 1, 1963. In a supplemental opposition, he also invited the
attention of the Court that to grant the motion of the new administrator would in effect
nullify the contract in favor of Escanlar, a person on whom the Court had no
jurisdiction. He also intimated that the validity of the lease contract entered into by a
judicial administrator, must be recognized unless so declared void in a separate action.
The opposition notwithstanding, the Court on April 8, 1961, in effect declared that
the contract in favor of Escanlar was null and void, for want of judicial authority and
that unless he would offer the same as or better conditions than the prospective lessee,
San Diego, there was no good reason why the motion for authority to lease the
property to San Diego should not be granted. Nombre moved to reconsider the Order
of April 8, stating that Escanlar was willing to increase the rental of P5,000.00, but
only after the termination of his original contract. The motion for reconsideration was
denied on April 24, 1961, the trial judge stating that the contract in favor of Escanlar
was executed in bad faith and was fraudulent because of the imminence of Nombre's
removal as administrator, one of the causes of which was his indiscriminate pleasant,
of the property with inadequate rentals.
From this Order, a petition for Certiorari asking for the annulment of the Orders of
April 8 and 24, 1961 was presented by Nombre and Escanlar with the Court of
Appeals. A Writ of preliminary injunction was likewise prayed for to restrain the new
administrator Campillanos from possessing the fishpond and from executing a new
lease contract covering it; requiring him to return the possession thereof to Escanlar,
plus damages and attorney's fees in the amount of P10,000.00 and costs. The Court of
Appeals issued the injunctive writ and required respondents therein to Answer.
Campillanos insisted on the invalidity of the contract in favor of Escanlar; the lower
court alleged that it did not exactly annul or invalidate the lease in his questioned
orders but suggested merely that Escanlar "may file a separate ordinary action in the
Court of general jurisdiction."
The Court of Appeals, in dismissing the petition for certiorari, among others said —
The controlling issue in this case is the legality of the contract of lease entered into by
the former administrator Nombre, and Pedro Escanlar on May 1, 1960.
Respondents contend that this contract, not having been authorized or approved by
the Court, is null and void and cannot be an obstacle to the execution of another of
lease by the new administrator, Campillanos. This contention is without merit. ... . It
has been held that even in the absence of such special powers, a contract or lease for
more than 6 years is not entirely invalid; it is invalid only in so far as it exceeds the
six-year limit (Enrique v. Watson Company, et al., 6 Phil. 84). 1
No such limitation on the power of a judicial administrator to grant a lease of property
placed under his custody is provided for in the present law. Under Article 1647 of the
present Civil Code, it is only when the lease is to be recorded in the Registry of
Property that it cannot be instituted without special authority. Thus, regardless of the
period of lease, there is no need of special authority unless the contract is to be
recorded in the Registry of Property. As to whether the contract in favor of Escanlar
is to be so recorded is not material to our inquiry. 1äwphï1.ñët
On the contrary, Rule 85, Section 3, of the Rules of Court authorizes a judicial
administrator, among other things, to administer the estate of the deceased not
disposed of by will. Commenting on this Section in the light of several Supreme Court
decisions (Jocson de Hilado v. Nava, 69 Phil. 1; Gamboa v. Gamboa, 68 Phil. 304;
Ferraris v. Rodas, 65 Phil. 732; Rodriguez v. Borromeo, 43 Phil. 479), Moran says:
"Under this provision, the executor or administrator has the power of administering
the estate of the deceased for purposes of liquidation and distribution. He may,
therefore, exercise all acts of administration without special authority of the Court.
For instance, he may lease the property without securing previously any permission
from the court. And where the lease has formally been entered into, the court cannot,
in the same proceeding, annul the same, to the prejudice of the lessee, over whose
person it had no jurisdiction. The proper remedy would be a separate action by the
administrator or the heirs to annul the lease. ... .
On September 13, 1961, petitioner herein Moises San Diego, Sr., who was not a party
in the case, intervened and moved for a reconsideration of the above judgment. The
original parties (the new administrator and respondent judge) also filed Motions for
reconsideration, but we do not find them in the record. On November 18, 1961, the
Court of Appeals denied the motions for reconsideration. With the denial of the said
motions, only San Diego, appealed therefrom, raising legal questions, which center
on "Whether a judicial administrator can validly lease property of the estate without
prior judicial authority and approval", and "whether the provisions of the New Civil
Code on Agency should apply to judicial administrators."
The Rules of Court provide that —
An executor or administrator shall have the right to the possession 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, and shall administer the estate of the
deceased not disposed of by his will. (Sec. 3, Rule 85, old Rules).
Lease has been considered an act of administration (Jocson v. Nava; Gamboa v.
Gamboa; Rodriguez v. Borromeo; Ferraris v. Rodas, supra).
representative of said Court, but also the heirs and creditors of the estate (Chua Tan
v. Del Rosario, 57 Phil. 411). A judicial administrator before entering into his duties,
is required to file a bond. These circumstances are not true in case of agency. The
agent is only answerable to his principal. The protection which the law gives the
principal, in limiting the powers and rights of an agent, stems from the fact that control
by the principal can only be thru agreements, whereas the acts of a judicial
administrator are subject to specific provisions of law and orders of the appointing
court. The observation of former Chief Justice Moran, as quoted in the decision of the
Court of Appeals, is indeed sound, and We are not prone to alter the same, at the
moment.
We, likewise, seriously doubt petitioner's legal standing to pursue this appeal. And, if
We consider the fact that after the expiration of the original period of the lease contract
executed by respondent Nombre in favor of Escanlar, a new contract in favor of said
Escanlar, was executed on May 1, 1963, by the new administrator Campillanos. who,
incidentally, did not take any active participation in the present appeal, the right of
petitioner to the fishpond becomes a moot and academic issue, which We need not
pass upon.

The Civil Code, on lease, provides: WHEREFORE, the decision appealed from should be, as it is hereby affirmed, in all
respects, with costs against petitioner Moises San Diego, Sr.
If a lease is to be recorded in the Registry of Property, the following persons cannot
constitute the same without proper authority, the husband with respect to the wife's
paraphernal real estate, the father or guardian as to the property of the minor or ward,
and the manager without special power. (Art. 1647).

The same Code, on Agency, states:

Special powers of attorneys are necessary in the following cases:

(8) To lease any real property to another person for more than one year. (Art. 1878)

Petitioner contends, that No. 8, Art. 1878 is the limitation to the right of a judicial
administrator to lease real property without prior court authority and approval, if it
exceeds one year. The lease contract in favor of Escanlar being for 3 years and without
such court approval and authority is, therefore, null and void. Upon the other hand,
respondents maintain that there is no limitation of such right; and that Article 1878
does not apply in the instant case.

We believe that the Court of Appeals was correct in sustaining the validity of the
contract of lease in favor of Escanlar, notwithstanding the lack of prior authority and
approval. The law and prevailing jurisprudence on the matter militates in favor of this
view. While it may be admitted that the duties of a judicial administrator and an agent
(petitioner alleges that both act in representative capacity), are in some respects,
identical, the provisions on agency (Art. 1878, C.C.), should not apply to a judicial
administrator. A judicial administrator is appointed by the Court. He is not only the
 G.R. No. L-28214 July 30, 1969
NATIVIDAD V. A. JARODA, petitioner,
vs.
THE HONORABLE VICENTE N. CUSI, JR., Presiding Judge, Branch I,
Court of First Instance of Davao, and ANTONIO V. A. TAN, in his capacity as
judicial administrator of intestate estate of Carlos Villa Abrille, Special Proc.
No. 1391, Court of First Instance of Davao, respondents.
REYES, J.B.L., J.:
Questioned as null and void in this petition for certiorari with preliminary injunction
are two (2) orders of the Court of First Instance of Davao, Branch I, issued in its
Special Proceeding No. 1391 entitled "In the Matter of the Intestate Estate of Carlos
Villa Abrille, deceased, Antonio V. A. Tan, petitioner."
The first of the said two orders, dated 5 May 1965, granted an ex-parte petition by
then special administrator Antonio V. A. Tan, the herein respondent, to withdraw
from the Philippine National Bank the amount of P182,531.08 deposited in savings
and checking accounts in the name, and during the lifetime, of Carlos Villa Abrille
(now deceased) but allegedly held in trust for the decedent's co-owners in the Juna
Subdivision.
The second order, dated 3 September 1965, approved ex-parte the power of attorney
executed by special administrator Tan appointing himself attorney-in-fact to sell the
share of the estate in the subdivision lots.
The aforesaid Special Proceeding No. 1391 was commenced by Antonio V. A. Tan
on 22 April 1965, alleging in his petition filed with the respondent court that Carlos
Villa Abrille died intestate on 3 April 1965; that he left an estate consisting of his
conjugal share in real and personal properties, among which are:
p. Nineteen (19) Percent share in the co-ownership known as Juna Subdivision;
xxx xxx xxx
xxx xxx xxx
t. Cash on Bank: BPI (Savings) D-1365 in the amount of P55,284.11; PNB (Savings)
8189, in the amount of P9,047.74; and PCIB (Savings) 337, in the amount of P416.24.
(Annex "A" to Petition, Rollo, pages 1415);
that the heirs of the deceased are his surviving spouse, nine (9) children (among them
the herein petitioner, Natividad V. A. Jaroda), and four (4) grandsons, among them
the herein respondent, Antonio V. A. Tan.
On 26 April 1965, respondent Tan was appointed special administrator.
On 4 May 1965, respondent special administrator Tan fled an ex-parte petition for the
withdrawal of the sums of P109,886.42 and P72,644.66 from the Philippine National
Bank, Davao Branch, which sums were not listed in his petition for administration as
among the properties left by the deceased, alleging that these sums were deposited in
the name of the deceased but that they actually belong to, and were held in trust for,
the co-owners of the Juna Subdivision, and alleging as reason for the withdrawal that
it would be advantageous to the estate of the deceased. Annexed to the said petition
are powers of attorney purportedly signed by the co-owners in 1948 and 1949
authorizing the late Carlos Villa Abrille to sell the lots in the Juna Subdivision and to
deposit the proceeds thereof with the Philippine National Bank. The alleged co-
owners of the subdivision concurred in the petition, but not the heirs of the deceased
(Annex "C" to Petition, Rollo, page 19).
The respondent court found the petition for withdrawal of the bank deposits as
"meritorious", and granted the petition in an order on 5 May 1965.
On 7 May 1965, special administrator Tan executed, together with the other co-
owners of the Juna Subdivision, a power of attorney appointing himself as attorney-
in-fact to "sell (or) dispose upon terms and conditions as he deems wise" the lots in
the 99.546-hectare subdivision (Annex "F-1" to Petition, Rollo, pages 30-32).
On 9 September 1965, respondent Tan was issued letters of administration by the
respondent court.
On the same day, 9 September 1965, as regular administrator, respondent Tan filed a
petition with the respondent court, alleging that the deceased was the manager of and
a co-owner in the Juna Subdivision and that he had been engaged in the business of
selling the lots, and praying for the approval by the court of the power of attorney
executed by him, in behalf of the intestate estate, and appointing and authorizing
himself to sell the lots.
The court granted the petition, "as prayed for," on 3 September 1965.1äwphï1.ñët
On 29 November 1966, herein petitioner Natividad V. A. Jaroda moved to nullify the
order of 5 May 1965, that allowed the withdrawal of the bank deposits, as well as the
order of 3 September 1965, which approved the power of attorney.
The respondent court denied, on 25 February 1967, "for lack of merit" the aforesaid
motion.
Petitioner Jaroda appealed from the order of denial, but the respondent court
dismissed the appeal on the ground that the order appealed from was interlocutory.
Jaroda then filed before the Supreme Court a petition for certiorari and/or mandamus
on 8 July 1967, docketed as G.R. No. L-27831, but this Court dismissed the petition,
adding in its resolution that appeal in due time is the remedy.
On 28 October 1967, petitioner Jaroda filed the present petition for certiorari with
preliminary injunction. She alleged, among other things, that appeal would not be
speedy and adequate as respondent Tan has sold and continues to sell the subdivision
lots on the strength of the respondent court's order, to her irreparable prejudice and
that of the other heirs. This Court gave due course to the petition and issued
preliminary injunction on 3 November 1967, restraining the respondent from selling
the share of the intestate estate.
We agree with petitioner that the order of 5 May 1965 allowing the special
administrator to withdraw the bank deposits standing in the name of the decedent is
in abuse of discretion amounting to lack of jurisdiction. In the first place, said
withdrawal is foreign to the powers and duties of a special administrator, which, as
Section 2 of Rule 80 of the Rules of Court provides, are to —
take possession and charge of the goods, chattels, rights, credits and estate of the
decease and preserve the same for the executor or administrator afterwards appointed,
and for that purpose may commence and maintain suits as administrator. He may sell
only such perishable and other property as the court orders sold. A special
administrator shall not be liable to pay any debts of the deceased unless so ordered by
the court.
In the second place, the order was issued without notice to, and hearing of, the heirs
of the deceased. The withdrawal of the bank deposits may be viewed as a taking of
possession and charge of the credits of the estate, and apparently within the powers
and duties of a special administrator; but actually, said withdrawal is a waiver by the
special administrator of a prima facie exclusive right of the intestate estate to the bank
deposits in favor of the co-owners of the Juna Subdivision, who were allegedly
claiming the same as alleged by the administrator in his motion (Petition, Annex "C").
The bank deposits were in the name of the deceased; they, therefore, belong prima
facie to his estate after his death. And until the contrary is shown by proper evidence
at the proper stage, when money claims may be filed in the intestate proceedings, the
special administrator is without power to make the waiver or to hand over part of the
estate, or what appears to be a prima facie part of the estate, to other persons on the
ground that the estate is not the owner thereof. If even to sell for valuable
consideration property of the estate requires prior written notice of the application to
the heirs, legatees, or devisees under Rule 89 of the Rules of Court, such notice is
equally, if not more, indispensable for disposing gratuitously of assets of the decedent
in favor of strangers. Admittedly, no such notice was given, and without it the court's
authority is invalid and improper.
The order of 3 September 1965 approving the power of attorney executed by
administrator Tan and appointing himself as attorney-in-fact to sell the subdivision
lots for a price at his discretion is, likewise, void for want of notice and for approving
an improper contract or transaction.
The very rule, Section 4 of Rule 89 of the Rules of Court, relied on by respondent Tan
to sustain the power of attorney for the sale of the pro-indiviso share of the estate in
the subdivision requires "written notice to the heirs, devisees, and legatees who are
interested in the estate to be sold" and, admittedly, administrator Tan did not furnish
such notice. (Answer, pages 1 and 2, paragraph 3, Rollo, page 53) Without such
notice, the order of the court authorizing the sale is void. (Estate of Gamboa vs.
Floranza, 12 Phil. 191; Gabriel vs. Encarnacion, 94 Phil. 917)
But respondent Tan holds petitioner Jaroda with actual knowledge of the questioned
order, and to show it he quotes the transcript of stenographic notes of a discussion by
a lawyer of Jaroda about the said order. The discussion, however, took place on 19
March 1966 while the order was issued on 13 September 1965, and there is nothing
in the discussion that may indicate knowledge by Jaroda of the order before, at or
immediately after its issuance.
It has been broadly stated that an administrator is not permitted to deal with himself
as an individual in any transaction concerning trust property. (Pesula's Estate, 64 ALR
2d 851, 150 Cal. App. 2d 462, 310 P 2d 39)
It is well settled that an executrix holds the property of her testator's estate as a trustee.
In re Heydenfeldt's Estate, 117 Cal. 551, 49 P. 713; Firebaugh v. Burbank, 121 Cal.
186, 53 P. 560. It is equally well settled that an executrix will not be permitted to deal
with herself as an individual in any transaction concerning the trust property. Civil
Code, S 2230. In Davis v. Rock Creek L., F. & M Co., 55 Cal. 359, at page 364, 36
Am. Rep. 40, it is said: 'The law, for wise reasons, will not permit one who acts in a
fiduciary capacity thus to deal with himself in his individual capacity.' The following
cases are to the same effect: Wickersham v. Crittenden, 93 Cal. 17, 29, 28 P. 788; Sims
v. Petaluma Gas Light Co., 131 Cal. 656, 659, 63 P. 1011; Western States Life Ins.
Co. v. Lockwood, 166 Cal. 185, 191, 135 P. 496; In re Estate of Parker, 200 Cal. 132,
139, 251 P 907, 49 A. L. R. 1025. In Wickersham v. Crittenden, supra, 93 Cal. at page
29, 28 P. at page 790, it is further stated in respect to a transaction wherein a trustee
sought to deal with trust property: 'Courts will not permit any investigation into the
fairness of the transaction, or allow the trustee to show that the dealing was for the
best interest of the beneficiary.' This language is quoted with approval in the case of
Pacific Vinegar & Pickle Works v. Smith, 145 Cal. 352, 365, 78 P. 550, 104 Am. St.
Rep 42. (In re Bogg's Estate, 121 P. 2d 678, 683).
The opinion of some commentators that, as a general rule, auto-contracts are
permissible if not expressly prohibited (See Tolentino, Civil Code of the Philippines,
Vol. IV 1962, pages 375-377), and that there is no express provision of law
prohibiting an administrator from appointing himself as his own agent, even if correct,
cannot and should not apply to administrator of decedent's estates, in view of the
fiduciary relationship that they occupy with respect to the heirs of the deceased and
their responsibilities toward the probate court. A contrary ruling would open the door
to fraud and maladministration, and once the harm is done, it might be too late to
correct it. A concrete example would be for administrator Tan to authorize agent Tan the same has been approved by the probate court. Said approved partial partition has
to sell a lot for P50, with the condition that if he can sell it for more he could keep the no effect, one way or the other, upon the orders contested in the present case. For one
difference; agent Tan sells the lot for P150.00; he retains P100.00 and deposits in the thing, it is not definite whether the lots described in the 57 pages of the partition
bank P50.00 "in the name of Antonio V. A. Tan, in trust for Juna Subdivision" (as agreement correspond to those of the Juna Subdivision as described in the power of
worded in the power of attorney. Annex "F-1"); thus, administrator Tan's accounting attorney.
to the estate for the sale of the lot for P50 would be in order, but the estate would have
been actually cheated of the sum of P100, which went to agent Tan in his individual FOR THE FOREGOING REASONS, the order of 5 May 1965 and 3 September 1965
capacity. of the Court of First Instance of Davao, Branch I, in its Special Proceeding No. 1391,
are hereby set aside and declared null and void. The preliminary injunction heretofore
The court below also failed to notice that, as alleged in the administrator's petition issued is hereby made permanent. Costs against the respondent, Antonio V. A. Tan,
(Annex "F" herein), after the death of Carlos Villa Abrille the administrator Tan, in in his personal capacity.
his personal capacity, had replaced said deceased as manager of the Juna Subdivision
by authority of the other co-owners. By the court's questioned order of 3 September
1965 empowering him to represent the interest of the deceased in the management of
the subdivision, the administrator Tan came to be the agent or attorney-in-fact of two
different principals: the court and the heirs of the deceased on the one hand, and the
majority co-owners of the subdivision on the other, in managing and disposing of the
lots of the subdivision. This dual agency of the respondent Tan rendered him
incapable of independent defense of the estate's interests against those of the majority
co-owners. It is highly undesirable, if not improper, that a court officer and
administrator, in dealing with property under his administration, should have to look
to the wishes of strangers as well as to those of the court that appointed him. A judicial
administrator should be at all times subject to the orders of the appointing Tribunal
and of no one else.

That petitioner Jaroda, as heir of the late Carlos Villa Abrille, should hold a minor
interest (¹/¹¹ of 19%) in the co-ownership known as the Juna Subdivision and that the
early termination of said co-ownership would redound to the benefit of the co-owners,
including the heirs of Carlos Villa Abrille, are beside the point. Jaroda's interest in the
estate demands that she be heard by the court in all matters affecting the disposal of
her share, and that the administrator should primarily protect the interest of the estate
in which she is a participant rather than those of the decedent's co-owners.

The resolution of this Court in L-27836 (Natividad V. A. Jaroda vs. the Hon. Vicente
N. Cusi, Jr., etc., et al.), dismissing the petition for certiorari and/or mandamus and
stating that appeal in due time is the remedy, is no bar to the present petition, for it
has not been shown that the allegations in both the dismissed petition and those of the
present one are substantially the same. Anyway, certiorari lies if appeal would not be
prompt enough to block the injurious effects of the orders of the lower court (Silvestre
vs. Torres, et al., 57 Phil. 885; Pachoco vs. Tumangday, L-14500, 25 May 1960;
Mayormente vs. Robaco Corp., L-25337, 27 Nov. 1967, 21 SCRA 1080).

After the present case was submitted for decision, respondent Tan manifested that the
co-owners of the Juna Subdivision and the heirs of the late Carlos Villa Abrille,
including the petitioner Natividad V. A. Jaroda, had executed a partial partition and
 A.M. No. 2430 August 30, 1990
MAURO P. MANANQUIL, complainant,
vs.
ATTY. CRISOSTOMO C. VILLEGAS, respondent.
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. Proceedings No. 460 to determine whether or not the agreed rental payments made by
428 (1951)] the renewal contracts do not fall within the prohibition of Articles 1491 respondent's family partnership is reasonable compensation for the use and occupancy
and 1646 since he signed the same as a mere agent of the partnership. of the estate properties.

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.
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.

Moreover, the claim that the heirs of Filomena Zerna have acquiesced and consented SO ORDERED.
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
 G.R. No. L-9686 May 30, 1961
FELICISIMO C. JOSON, administrator-appellee,
vs.
EDUARDO JOSON, ET AL., heirs-appellants.
ANGELO, J.:
Tomas Joson died on July 5, 1945 in Quezon, Nueva Ecija leaving behind heirs and
properties. He married three times and was survived by nine (9) heirs: two (2) children
and grandchildren by his first wife Eufemia de la Cruz; two (2) daughters by his
second wife Pomposa Miguel and his third wife and surviving widow Dominga M.
Joson. Upon his death, his will was presented to the Court of First Instance of Nueva
Ecija by his son Felicisimo Joson for probate. In August, 1945, said will having been
duly probated, Felicisimo Joson was appointed administrator of the estate and,
accordingly, he filed an inventory of the properties left by the deceased.
On April 15, 1948, the administrator filed his first account for the year 1945-1946.
This was ordered by the court to be examined by the clerk of court but the same has
never been approved. On July 19, 1948, he filed his second account for the year 1946-
1947 which was also referred to the clerk of court for examination. The same has
never been also approved by the court. On November 11, 1948, the administrator filed
another account for the year 1947-1948 and, upon motion of the heirs, he was ordered
to file an accounting covering the properties under his administration. On September
7, 1954, Eduardo Joson, one of the heirs, filed an opposition to all the accounts filed
by the administrator where he alleged that the administrator diminished the shares of
the heirs in the yearly produce of the properties and had padded his expenses of
administration, and on September 29, 1954, the same heir filed another motion
praying the court to order the administrator to post a bond in the amount of P50,000.00
For the reason that from the accounts represented by him to be the true income of the
estate from 1947 to 1953 there was a big difference of P132,600.00 which the
administrator should account for to the heirs. On October 14, 1954, the administrator
submitted an amended statement of accounts for the same years which were objected
by two more heirs on the ground that the administrator had reported for the years
1947-1952 an income short of what was actually received and expenses much bigger
than those actually incurred by him.
In the meantime, or on December 30, 1952, the heirs were able to compromise their
differences and entered into an extrajudicial settlement and partition of the entire
estate under the provisions of Section 1, Rule 74, of the Rules of Court which provides
for the settlement of the estate without court intervention. This settlement was
contained in two documents executed on the same date wherein they manifested that
they are entering into it because of their desire to put an end to the judicial proceeding
and administration. But, as the court was never informed of this extrajudicial
settlement either by the administrator or by the heirs, it issued on May 19, 1954 an
order requiring the administrator to file an accounting of his administration from 1949
to 1954, which accordingly the administrator complied with by submitting an
amended statement of his accounts as already mentioned above.
However, on November 25, 1954, without said accounts having been heard or
approved, the administrator filed a motion to declare the proceedings closed and
terminated and to relieve him of his duties as such, which motion was amended by
him on January 15, 1955. Heir Eduardo Joson filed an opposition to said motion but,
after hearing, the court issued an order declaring the proceedings terminated and
relieving the administrator not only of his duties as such but also of his accounts
notwithstanding the heirs' opposition to said accounts. Hence this appeal:
In granting the motion of the administrator to declare the proceedings closed and
terminated and relieving him of his duties and of his accounts, the trial court made the
following pronouncement:
. . . It is claimed by the oppositor that the estate cannot be declared closed and
terminated for the reason that some of the accounts submitted by the administrator for
the years 1945 to 1948 have not been approved. The Court does not find any logic in
this contention. The heirs knew on December 30, 1952, when they entered into an
extra-judicial settlement of the estate, the existence of those accounts, but nothing is
mentioned in the said extra-judicial settlement regarding the same. They are,
therefore, presumed to have approved these accounts and have their opposition
thereto. There is, therefore, no reason to suspend the closing of this proceeding and
make the same depend upon the approval of these old accounts. To do so would be
like making the accessory more important than the principal. There is no doubt that
the report of the administrator of his administration is a mere incident in this
proceeding to wind up the estate of the deceased. If the parties concerned have already
entered into an extra-judicial settlement of the estate, the same should put an end to
this proceeding. Once this proceeding is terminated, the incidents thereto must yield,
since the only purpose of submitting a report of the accounts by the administrator is
to facilitate the liquidation. The administration of an estate cannot be an end but only
a means of settlement of the estate. It, therefore, becomes unnecessary and a mere
waste of time to call the administrator to account for, or to report on, his
administration from the moment that the heirs have already entered into an extra-
judicial settlement. To do so, would amount to a modification of the extra-judicial
settlement which is the law between the parties, which include the oppositors herein.
The issues now posed by appellants are: (1) Is the duty of an administrator to make
an accounting of his administration a mere incident which can be avoided once the
estate has been settled?; (2) Are the proceedings deemed terminated by the mere
execution of an extrajudicial partition of the estate without the necessity of having the
accounts of the administrator heard and approved by the court?; and (3) Is the
administrator ipso facto relieved of his duty of proving his account from the moment
said partition has been executed? Appellants answer these questions in the negative
with the argument that if the contrary is to be upheld as was done by the trial court according to the oppositors, the administrator has committed in his accounts a
the same would be contrary to the express provisions of our rules relative to the duties shortage in the amount of P132,600.00 which certainly cannot just be brushed aside
of a judicial administrator. Hence, they argue, the trial court committed an error in by a mere technicality.
closing the estate in disregard of the accounts submitted by the administrator.
WHEREFORE, the order appealed from is set aside. The case shall be remanded to
We find merit in this contention. To begin with, Section 1 of Rule 86 categorically the trial court for further proceedings in line with this decision. No costs.
charges an administrator "with the whole of the estate of the deceased which has come
into his possession at the value of appraisement contained in the inventory; with all
the interest, profit, and income of such an estate; and with the proceeds of so much of
the estate as is hold by him, at the price at which sold." Section 8 of the same rule
imposes upon him the duty to render an account of his administration within one year
from his appointment, unless the court otherwise directs, as well as to render such
further accounts as the court may require until the estate is fully settled. Section 10
likewise provides that before an account of the administrator is allowed notice shall
be given to all persons interested of the time and place of examining and allowing the
same. And finally Section 9 expressly directs that the court shall examine the
administrator upon oath with respect to every matter relating to his account except
when no objection is made to the allowance of the account and its correctness is
satisfactorily established by competent testimony.

It thus appears that the duty of an administrator to render an account is not a mere
incident of an administration proceeding which ran be waived or disregarded when
the same is terminated, but that 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.
Here the administrator has submitted his accounts for several years not only motu
proprio but upon requirement of the court, to which accounts the heirs have
seasonably submitted their opposition. And when the administrator moved the court
to close the proceedings and relieve him of his administration and of his accounts, the
heirs who objected thereto objected likewise to the closing of the proceedings
invoking their right to be heard but the court ignored their opposition and granted the
motion setting forth as reasons therefor what we quoted in the early part of this
decision. Verily, the trial court erred in acceding to the motion for in doing so it
disregarded the express provisions of our rules relative to the settlement of accounts
of a judicial administrator.

The fact that all the heirs of the estate have entered into an extrajudicial settlement
and partition in order to put an end to their differences cannot in any way be
interpreted as a waiver of the objections of the heirs to the accounts submitted by the
administrator not only because to so hold would be a derogation of the pertinent
provisions of our rules but also because there is nothing provided in said partition that
the aforesaid accounts shall be deemed waived or condoned. While the attitude of the
heirs in concluding said extrajudicial settlement is plausible and has contributed to
the early settlement of the estate, the same cannot however be considered as release
of the obligation of the administrator to prove his accounts. This is more so when,
 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 counter-petitioner 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.

SO ORDERED.
[G.R. No. L-4090. January 31, 1952.]
INTESTATE ESTATE OF THE DECEASED HONOFRE LEYSON, deceased.
VICTORIO L. RODRIGUEZ, administrator-appellant, and MARGARITA
LEYSON LAURENTE, heiress-appellant, v. PABLO M. SILVA, movant-
appellee.
SYLLABUS
1. EXECUTOR AND ADMINISTRATOR; ADMINISTRATOR’S FEE. — The
court may fix an administrator’s or executor’s fee in excess of the fees prescribed by
sec. 7, Rule 86 of the Rules of Court 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.
2. ID.; DISCRETION OF COURT IN FIXING AMOUNT OF
ADMINISTRATOR’S FEE. — The amount of an executor’s fee allowed by the
Court of First Instance in any special case under the provisions of Section 680 of the
Code of Civil Procedure is a matter largely in the discretion of the probate court,
which will not be disturbed on appeal, except for an abuse of discretion (Rosenstock
v. Elser, 48 Phil. 709).
3. ID.; ATTORNEY-AT-LAW; ADMINISTRATOR’S FEE. — Although being a
lawyer is by itself not a factor in the assessment of an adminstrator’s fee, it should
be otherwise when the administrator was able to stop what appeared to be an
improvident disbursement of a substantial amount without having to employ outside
legal help at an additional expense to the estate.
4. APPEAL; ESTOPPEL; QUESTION OF LAW; ALLEGATION IN
APPELLEE’S BRIEF. — Where the appeal was elevated to the Supreme Court on
the appellant’s manifestation that they would raise only questions of law and that no
question of fact would be discussed, the appellants are estopped from contesting the
facts alleged in the appellee’s brief regarding the work the latter performed, if the
order of which the appellants complain does not state such work.
5. EXECUTOR AND ADMINISTRATION; BOND; LIABILITY OF SURETIES
ON THE BOND. — Where the land did not come into the administrator’s hands in
pursuance or in the course of his administration and that it was not included in the
inventory prepared by or in conjunction with the administrator, the cancellation of
the bond should not be withheld. Even if the administrator has no valid title to the
lot, the sureties are not chargeable for it on the bond. The administrator’s liability is
personal and exclusive of the sureties.
DECISION
TUASON, J.:
This appeal is from an order of the Court of First Instance of Manila, Honorable
Rafael Amparo, Judge, authorizing the cancellation of the bond of Pablo M. Silva
who had resigned as joint administrator of the intestate estate of Honofre Leyson,
deceased, and allowing Silva P600 as compensation for his services. The appellants
are the remaining administrator and an heir of the deceased.
The appeal was elevated to this Court on the appellants’ manifestation that they
would raise only questions of law. Following are the assignments of
error:chanrob1es virtual 1aw library
The lower court erred in issuing its order of August 19, 1949, granting Pablo M.
Silva’s motion filed on August 9, 1949, and ordering the cancellation of his bond
and authorizing him to collect from the estate the sum of P600.00 as his
administrator’s fees, inasmuch as said order is not in accordance with the provisions
of section 7, Rule 86 of the Rules of Court.
That taking for granted, but without admitting that the compensation of the
administrators from their appointment up to the issuance of the order dated August
19, 1950, granting the resignation of Mr. Pablo M. Silva that the sum of P600 is
reasonable, the lower court, however, erred in not providing that, in view of the fact
that in this proceeding there are two administrators, said amount of P600.00 should
be apportioned between the two administrators according to the services actually
rendered by them respectively, in accordance with the provision of Section 7, par. 2,
Rule 86 of the Rules of Court, and that the sum of P100.00 already received by the
appellee be deducted from any amount that may finally be conceded to him.
Lastly, the lower court erred in cancelling Mr. Pablo M. Silva’s administrator bond,
inasmuch as few months before the issuance of said order dated August 19, 1950,
granting his resignation, he secured the cancellation of Transfer Certificate of Title
No. 13 (6947) Quezon City, and Transfer Certificate of Title No. 11778-Manila,
issued in the name of Honofre Leyson, and in their stead another titles were issued
in the name of Pablo M. Silva, the herein appellee, in a doubtful manner.
The first two assignments of error raise the same question or allied questions and
may well be considered together. This question is, may the court fix an
administrator’s or executor’s fee in excess of the fees prescribed by Section 7 of
Rule 86, which follows?
SEC. 7. What expenses and fees allowed executor or administrator. Not to charge
for services as attorney. Compensation provided by will controls unless renounced.
An executor or administrator shall be allowed the necessary expenses in the care,
management, and settlement of the estate, and for his services, four pesos per day
for the time actually and necessarily employed, or a commission upon the value of
so much of the estate as comes into his possession and is finally disposed of by him
in the payment of debts, expenses, legacies, or distributive shares, or by delivery to
heirs or devises, of two per centum of the first five thousand pesos of such value,
one per centum of so much of such value as exceeds five thousand pesos and does
not exceed thirty thousand pesos, one-half per centum of so much of such value as
exceeds thirty thousand pesos and does not exceed one hundred thousand pesos, and
one-quarter per centum of so much of such value as exceeds one hundred thousand
pesos. But in any special case, 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. If objection to the
fees allowed be taken, the allowance may be reexamined on appeal.
If there are two or more executors or administrators, the compensation shall be
apportioned among them by the court according to the services actually rendered by
them respectively.
When the executor or administrator is an attorney he shall not charge against the
estate any professional fees for legal services rendered by him.
When the deceased by will makes some other provision for the compensation of his
executor, that provision shall be a full satisfaction for his services unless by a
written instrument filed in the court he renounces all claim to the compensation
provided by the will.
It will be seen from this provision that a greater sum may be allowed "in any special
case, 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." And so it has been held that "the amount of an executor’s fee
allowed by the Court of First Instance in any special case under the provisions of
Section 680 of the Code of Civil Procedure is a matter largely in the discretion of
the probate court, which will not be disturbed on appeal, except for an abuse of
discretion." (Rosenstock, v. Elser, 48 Phil. 709.)
The order of which the appellants complain does not state the work performed by
the appellee, but the inventory shows the appraised value of the estate to be
P22,116.46, itemized as follows:
Cash on deposit in the Philippine National Bank P8,159.43
Accounts receivable 500.00
Real Estate 12,061.03
Personal Property 1,291.00
And it is stated in the appellee’s brief that prior to his appointment and that of
Victorio L. Rodriguez as joint administrators, Justa Gomez, the decedent’s cousin
with whom Leyson lived was special administratrix; that during Justa Gomez’s
incumbency which lasted till December 8, 1947, the lease holdings of the said estate
were renting about 900.00 a month; that after appellee’s appointment, and through
his initiative, their income was increased to P1,300.00 and two parcels of land
located in San Juan, Rizal, were paid for in full and the corresponding certificates of
title secured. It is also asserted, and not denied, that the appellee was instrumental in
the gathering of decedent’s personal effects, and that as the result of his motion a
court order, whereby Margarita Leyson Laurente, one of the now appellants, had
been authorized to withdraw from the bank P3,400 as advance payment of her share
of the inheritance, was reconsidered and set aside. The fact that the appellee is an
attorney-at-law has served the estate in good stead, and this ought not to be lost sight
of. Although being a lawyer is by itself not a factor in the assessment of an
administrator’s fee, it should be otherwise when as in this case the administrator was
able to stop what appeared to be an improvident disbursement of a substantial
amount without having to employ outside legal help at an additional expense to the
estate.
The appellant having announced that no questions of fact would be discussed is
estopped from contesting the above allegations. On the basis of the services thus
specified, coupled with the fact that the appellee worked as co-administrator for
about two years, we do not think that the probate court committed an abuse of
discretion in granting him P600.00 or P700.00 as fee independent of the fee that
might be allowed the other administrator.
As to the cancellation of the appellee’s bond, which is the subject of the third
ground for appeal, there is no showing that De Silva was guilty of misappropriation
or of any of the acts of commission or omission for which his bond could be held
liable under Rule 86. The sole ground for the insistence that this cancellation should
have been withheld is that the appellee is in possession of a residential lot in Cubao,
Quezon City, which belonged to the deceased Honofre Leyson. But the appellee
claims that this lot was sold to him by Leyson on March 2, 1945. Certainly it was
already in his possession when he and appellant Rodriguez took over the
administration from the special administratrix. This land therefore did not come into
De Silva’s hands in pursuance or in the course of his administration, and neither was
it included in the inventory prepared by or in conjunction with one of the appellants.
Even granting then, for the sake of argument, that De Silva has no valid title to this
lot, the sureties are not chargeable for it on the bond. De Silva’s liability is personal
and exclusive of the sureties who are the parties mostly affected by the third
assignment of error.

Moreover, there is a pending suit over this property and that suit affords the estate
ample protection against the said property being alienated pending final disposition
of the litigation.

Upon the foregoing consideration, the order appealed from is affirmed, with costs.
 .R. No. L-13031 May 30, 1961
INTESTATE ESTATE OF JAMES R. BURT, deceased. THE PHILIPPINE
TRUST CO., administrator-appellee,
vs.
LUZON SURETY CO., INC., surety-appellant.
DIZON, J.:
On February 14, 1946, the Court of First Instance of Manila appointed Francis R.
Picard, Sr. as Administrator the Intestate Estate of the deceased James R. Burt (Civil
Case No. 71872) upon a bond of P1,000.00. Thereafter he submitted and the Court
approved his bond in the required amount, with appellant Luzon Surety Co., Inc. as
his surety.
For reasons that do not fully appear of record, on May 1, 1948 the Court dismissed
Picard, as administrator and appointed the Philippine Trust Co. in his place. After
qualifying for the position, the latter, on July 19, 1948, submitted an inventory-report
showing that the only asset of the Intestate Estate of Burt that had come into its
possession was the sum of P57.75 representing the balance of the checking account
of said deceased with the Philippine National Bank. In view thereof, on July 26, 1948
the Court issued an order the pertinent portion of which reads as follows:
A review, however, of the record of the case reveals that former Administrator Francis
Picard, filed on February 6, 1941, an inventory of the estate of the deceased, from
which it appears that the sole property he found was the amount of P8,873.73 in
current account with the Philippine National Bank. This amount was reduced to
P7,986.53 after deducting therefrom his expenses in the amount of P887.22; and as
reported by him in his petition filed on June 8, 1948, the further expenses in the
amount of P865.20 were deducted, thereby leaving the balance of P7,121.33 as of
May 27, 1948.
In view of the foregoing, the Court hereby orders said Francis Picard, to deliver within
forty-eight hours (48) from the receipt of a copy of the order the difference of
P7,063.58 to the present Administrator, Philippine Trust Company; otherwise he will
be ordered committed to prison for contempt until he shall have complied with this
order.
In compliance with the above order, Picard, submitted an itemized statement of
disbursements made by him as administrator of the estate, showing that as of February
6, 1947 the estate funds amounted to P7,986.53; that on June 8, 1948 he reported to
the Court additional expenses incurred amounting to P865.20, thus leaving a balance
of P7,121.33; that thereafter he disbursed the sum of P250.00 to defray the burial
expenses of the deceased, thus leaving a balance of P6,871.33; that on several
occasions during the period from February 22, 1946 to May 14, 1947, he had delivered
to Feliciano Burt adoptive son of the deceased James R. Burt different sums of money
totalling P5,825.00, thus leaving a balance of P972.33. After considering this
statement, the Court, on September 18, 1948, issued an order finding Picard, guilty of
having disbursed funds of the estate amounting to about P8,000.00, without authority.
For this reason, the Court referred the matter to the City Fiscal of Manila for
investigation. Result of this was the prosecution of Picard, for estafa. Having pleaded
guilty to the charge, judgment of conviction was accordingly rendered, and he was,
besides, held civilly liable in the sum of P8,000.00.
On July 8, 1957 the Court issued an order requiring appellant Luzon Surety Co., Inc.
to show cause why the administrator's bond filed by it on behalf of Picard would not
be confiscated. Appellant filed a motion to set aside said order upon the following
grounds: firstly, that the Court cannot order the confiscation of the administrator's
bond, on prejudice or injury to creditors, legatees or heirs of the estate of James R.
Burt having been shown, and secondly, that "a probate court cannot, ex proprio motu,
prosecute the probate bond." On August 3, 1957 the Court denied appellant's motion
and ordered the confiscation of its bond. After the denial of appellant's lotion for
reconsideration, it took the present appeal.
Appellant's contention that the probate court, ex proprio motu, cannot order the
confiscation or forfeiture of an administrator's bond, is clearly without merit.
Whatever may be the rule prevailing in other jurisdictions, in ours probate court is
possessed with an all-embracing power not only in requiring but also in fixing the
amount, and executing or forfeiting an administrator's bond. The execution or
forfeiture of an administrator's bond, is deemed be a necessary part and incident of the
administration proceedings as much as its filing and the fixing of its amount. The rule,
therefore, is that the probate court may have said bond executed in the same probate
proceeding.
Moreover, the condition of the administrator's bond in question is that Francis L.
Picard shall faithfully execute the orders and decrees of the court; that if he did so,
the obligation shall become void, otherwise it shall remain in full force and effect. In
having been established that Picard disbursed funds of the estate without authority,
the conclusion follows that he had and his surety became bound upon the terms of
their bond.
Appellant also contends that it was not proper for the lower court to order the
confiscation of its bond because no prejudice or injury to any creditor, heir or other
interested person has been proved. This is also without merits. According to the
record, the claims against the estate filed by Antonio Gardiner and Jose Teruel for the
sum of P200.00 and P3,205.00, respectively, were approved by the probate court but
the same have remained unpaid because of lack of funds.
Finally, appellant claims that it had been released from liability as surety because it
received no notice of the proceedings for the determination of the accountability of
the administrator. This contention we also find to be untenable.
From the nature of the obligation entered into by the surety on an administrator's bond
— which makes him privy to the proceedings against his principal — he is bound and
concluded, in the absence of fraud and collusion, by a judgment against his principal,
even though said surety was not a party to the proceeding. In the case of the De
Mendoza vs. Pacheco, 64 Phil. 135, the sureties on the administrator's bond were held
liable thereon altho they were not parties to the proceeding against the administrator,
nor were they notified in connection therewith prior to the issuance of the court order
for the confiscation of the bond. Lastly, according to Section 11, Rule 86 of the Rules
of Court, upon the settlement of the account of an executor or administrator, his
sureties "may upon application, be admitted as a party to such accounting." The
import of this provision is that the sureties are not entitled to notice but may be
allowed to intervene in the settlement of the accounts of the executor or administrator
if they ask for leave to do so in due time.

WHEREFORE, the decision appealed from is hereby affirmed, with costs.

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

WHEREFORE, premises considered, the Petition for Review on Certiorari is

hereby PARTLY GRANTED. The Decision dated 11 May 2006 and Resolution
dated 22 September 2006 of the Court of Appeals in CA-G.R. SP No.
81296 are AFFIRMED, with the following MODIFICATIONS:

1) Petitioner Quasha Law Office is entitled to attorney's fees of ONE HUNDRED

THOUSAND PESOS (P100,000.00), for legal services rendered for the Triviere
children in the settlement of the estate of their deceased father, the same to be paid by
the Triviere children in the manner herein discussed; and

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

SO ORDERED.
G.R. No. L-9271 March 29, 1957
In the matter of the testate estate of the late DA. MARGARITA DAVID.
CARLOS MORAN SISON, Judicial Administrator, petitioner-appellant,
vs.
NARCISA F. TEODORO, heiress, oppositor-appellee.
Teodoro R. Dominguez for appellant.
Manuel O. Chan for appellee.
BAUTISTA ANGELO, J.:
On December 20, 1948, the Court of First Instance of Manila, which has jurisdiction
over the estate of the late Margarita David, issued an order appointing Carlos Moran
Sison as judicial administrator, without compensation, after filing a bond in the
amount of P5,000. The next day, Carlos Moran Sison took his oath of office and put
up the requisite bond which was duly approved by the court. On the same day, letters
of administration were issued to him.
On January 19, 1955, the judicial administrator filed an accounting of his
administration which contains, among others, the following disbursement items:
13. Paid to Visayan Surety & Insurance Corporation on P380.70
August 6, 1954, as renewal premiums on the
Administrator's bond of Judicial Administrator Carlos
Moran Sison covering the period from December 20,
1949 to December 20, 1954, inclusive
.................................
15. Paid to Visayan Surety & Insurance Corporation on 76.14
December 21, 1954, for premiums due on the
Administrator's bond of judicial Administrator Carlos
Moran Sison for the period from December 21, 1954 to
December 21, 1955
...............................................................
Narcisa F. Teodoro, one of the heirs, objected to the approval of the above- quoted
items on the grounds that they are not necessary expenses of administration and
should not be charged against the estate. On February 25, 1955, the court approved
the report of the administrator but disallowed the items objected to on the ground that
they cannot be considered as expenses of administration. The administrator filed a
motion for reconsideration and when the same was denied, he took the present appeal.
The only issue to be determined is "whether a judicial administrator, serving without
compensation, is entitled to charge as an expense of administration the premiums paid
on his bond."
The lower court did not consider the premiums paid on the bond filed by the
administrator as an expense of administration taking into account undoubtedly the
ruling laid down in the case of Sulit vs. Santos, 56 Phil., 626. That is a case which also
involves the payment of certain premium on the bond put up by the judicial
administrator and when he asked the court that the same be considered as an expense
of administration, it was disapproved for the same reasons advanced by the trial court.
In sustaining this finding, this Court ruled that the "expense incurred by an executor
or administrator to produce a bond is not a proper charge against the estate. Section
680 of the Code of Civil Procedure (similar to section 7, Rule 86) does not authorize
the executor or administrator to charge against the estate the money spent for the
presentation, filing, and substitution of a bond." And elaborating on this matter, the
Court made the following comment:
The aforementioned cases, in reality, seem superfluous in ascertaining the true
principle. The position of an executor or administrator is one of trust. In fact, the
Philippine Code of Civil Procedure so mentions it. It is proper for the law to safeguard
the estate of deceased persons by requiring the executor or administrator to give a
suitable bond. The ability to give this bond is in the nature of a qualification for the
office. The execution and approval of the bond constitute a condition precedent to
acceptance of the responsibilities of the trust. If an individual does not desire to
assume the position of executor of administrator, he may refuse to do so. On the other
hand, when the individual prefers an adequate bond and has it approved by the probate
court, he thereby admits the adequacy of the compensation which is permitted him
pursuant to law. It would be a very far-fetched construction to deduce the giving of a
bond in order to qualify for the office of executor or administrator is a necessary
expense in the care, management, and settlement of the estate within the meaning of
section 680 of the Code of Civil Procedure, for these are expenses incurred after the
executor of administrator has met the requirements of the law and has entered upon
the performance of his duties. (See In re Eby's Estate [1894], 30 Atl., 124.)
We feel that the orders of Judge Mapa in this case rested on a fine sense of official
duty, sometimes lacking in cases of this character, to protect the residue of the estate
of a deceased person from unjustifiable inroads by an executor, and that as these
orders conform to the facts and the law, they are entitled to be fortified by an explicit
pronouncement from this court. We rule that the expense incurred by an execution or
administrator to procure a bond is not a proper charge against the estate, and that
section 680 of the Code of Civil Procedure does not authorize the executor or
administrator to charge against the estate the money spent for the presentation, filing,
and substitution of a bond.
It is true that the Sulit case may be differentiated from the present in the sense that, in
the former the administrator accepted the trust with the emolument that the law
allows, whereas in the latter the administrator accepted the same without
compensation, but this difference is of no moment, for there is nothing in the decision
that may justify the conclusion that the allowance or disallowance of premiums paid
on the bond of the administrator is made dependent on the receipt of compensation.
On the contrary, a different conclusion may be inferred considering the ratio
decidendi on which the ruling is predicated. Thus, it was there stated that the position
of an executor or administrator is one of trust: that it is proper for the law to safeguard
the estates of deceased persons by requiring the administrator to give a suitable bond,
and that the ability to give this bond is in the nature of a qualification for the office. It
is also intimated therein that "If an individual does not desire to assume the position
of executor or administrator, he may refuse to do so," and it is far-fetched to conclude
that the giving of a bond by an administrator is an necessary expense in the care,
management and settlement of the estate within the meaning of the law, because these
expenses are incurred "after the executor or administrator has met the requirement of
the law and has entered upon the performance of his duties." Of course, a person may
accept the position of executor or administrator with all the incident appertaining
thereto having in mind the compensation which the law allows for the purpose, but he
may waive this compensation in the same manner as he may refuse to serve without
it. Appellant having waived compensation, he cannot now be heard to complain of the
expenses incident to his qualification.

The orders appealed from are hereby affirmed, without costs.

G.R. No. L-29414 July 17, 1928
TEODORICO UY TIOCO, petitioner,
vs.
CARLOS IMPERIAL, Judge of First Instance of Manila, and ALEJANDRO
M. PANIS, respondents.
OSTRAND, J.:
This is a petition for a writ of prohibition to restrain the respondent judge from
compelling the petitioner to pay the sum of P11,250 to the other respondent, Alejandro
Panis, out of the funds of the estate of the deceased Basilisa Yangco, of which estate
said petitioner is the administrator.
It appears from the record that the respondent Panis was counsel for the administration
of said estate and that he on October 31, 1927, before the final settlement of accounts,
presented a motion in the probate proceedings for the allowance of attorney's fees in
the sum of P15,000. On December 5, 1927, the respondent judge, over the objections
in writing presented by the administrator, granted the motion and allowed the fees
claimed by Panis. The administrator, the herein petitioner, did not appeal from the
order of the court, but on February 8, 1928, Jacinto Yangco, in his capacity as
guardian ad litem of the minors Pedro and Bruno Uy Tioco, the sons and then the only
heirs of the deceased, presented a motion for reconsideration under section 113 of the
Code of Civil Procedure on the grounds that he was not notified of the motion for the
allowance of fees and had no knowledge thereof or of the order granting the motion
until a few days before the filing of there motion for reconsideration; that the fees
allowed Panis were excessive and prejudicial to the interest of the estate; and that
considering the nature of the work performed, the services rendered with him did not
warrant the payment of the sum claimed. This motion was denied on February 15,
1928, the respondent judge holding that while the heirs of the deceased were not
notified by the hearing of the motion for allowance of attorney's fees, such notice was
duly served upon the administrator; that was a sufficient compliance with the law;
that curador ad litem might have the right to intervene in the case but have no absolute
right to be notified of the motion; that the provisions of section 113 of the Code of
Civil Procedure were not applicable to the case; and that, in any event, the motion for
reconsideration is entirely without merit.
On February 23, 1928, the guardian ad litem excepted to the order of February 15,
1928, and gave notice of his intention to appeal to the Supreme Court. On the 28th of
the same month, Attorney Felix Wijangco, on behalf of Panis, filed a motion in the
probated proceedings in which be set forth that the minor Bruno Uy Tioco is now
deceased and that his share of inheritance will go to his father, the herein petitioner;
that the property involved in the case is community property in which one-half
belongs to the petitioner; that consequently the minor Pedro Uy Tioco is only entitled
to a one-fourth of the property pertaining to the estate, and that therefore his appeal
from the order allowing the attorney's fees can only relate to one-fourth of the amount
allowed, wherefore the movent asked that the administrator be ordered to make
payments of three-fourths of the amount within five days from the presentation of the
motion. To this motion the guardian ad litem objected, but under the date of March 6,
1928, the respondent judge ordered the administrator to make payment of three-
fourths of P15,000 within five days. The administrator refused to make such payment,
and on March 17th the court, after citing him to show cause, again ordered him to pay
as provided for in the order of March 6, under penalty of removal from office. The
present action was thereupon brought. Upon filing the petition the respondent were
ordered to answer, as ordered, the respondents submitted a demurrer which we,
considering that there can be no dispute as to the essential facts, shall regard as a
sufficient answer to said petition.
In our opinion, the petition must be granted. The orders of March 6th and 7th for a
partial payment of the fees claimed were issued after an appeal had been taken and
perfected by the filing of an appeal bond approved by the court. The appeal was taken
from the order of February 15 denying the motion for reopening and reconsideration
of the allowance for attorney's fees and involves the validity of that order and the
finality of the order of December 5, 1927. Whether this orders were valid and final
need not be here determined, but they are appealable, and we are not aware of any
provision of law authorizing the lower court to enforce the immediate execution of
such orders and probate proceedings after an appeal has been perfected. The interest
of the appellee are supposed to be sufficiently protected by an adequate bond.
The arguments submitted indicate a misconception of the character of the liability for
the attorney's fees are claimed are supposed to have been rendered to the executor or
administrator to assist him in the execution of his trust. The attorney can therefore not
hold the estate directly liable for his fees; such fees are allowed to the executor or
administrator and not to the attorney. The liability for the payment rests on the
executor or administrator, but if the fees paid are beneficial to the estate and
reasonable, he is entitled to the reimbursement from the estate. Such payment should
be included in his accounts and the reimbursement therefore settled upon the notice
prescribed in section 682 of the Code of Civil Procedure. (See Church on Probate Law
and Practice, pp. 1570-1588 and authorities there cited; Woerner on the American
Law of Administration, 2d ed., sections 515 and 516.)
For the reasons stated the respondent judge is hereby prohibited from enforcing the
payment of the attorney's fees above-mentioned until the appeal taken by Jacinto
Yangco, as guardian ad litem for the minor Pedro Uy Tioco, has been passed upon by
this court or dismissed. No costs will be allowed. So ordered.
G.R. No. L-14713 April 28, 1960
Intestate Estate of ARSENIO R. AFAN, deceased. MARIAN AFAN, petitioner-
appellee,
vs.
APOLINARIO S. DE GUZMAN, creditor-appellant.
CONCEPCION, J.:
This is an appeal, taken by Apolinario S. de Guzman, from an order of the Court of
First Instance of Manila, dated July 27, 1957.
It appears that, on July 12, 1957, De Guzman filed, in this special proceeding for the
settlement of intestate estate of Arsenio R. Afan, a claim for P1,000, allegedly due
from the latter, with interest thereon, within 30 days from August 16, 1949, as set
forth in a promissory note then issued by Afan. On July 22, 1957, the administratrix
of his estate objected to the consideration of the claim upon the ground, among others,
that it had been filed long after the expiration of the period for the presentation of
claims against said estate. For this reason, the lower court issued the order appealed
from, refusing to entertain the aforementioned claim. De Guzman invokes, in support
of his appeal, section 2, Rule 87 of the Rules of Court, reading:
Time within which claims shall be filed.—In the notice provided in the preceding
section, the court shall state the time for the filing of claims against the estate, which
shall not be more than twelve nor less than six months after the date of the first
publication of the notice. However, at any time before an order of distribution is
entered, on application of a creditor who has failed to file his claim within the time
previously limited, the court may, for cause shown and on such terms as are equitable,
allow such claims to be filed within a time not exceeding one month.
Relying upon this provision, De Guzman maintains that the lower court should have
entertained his claim, the same having been filed prior to the distribution of the estate
of the deceased. This pretense is not borne out, however, by the rule above quoted.
The second sentence thereof clothes the court with authority to permit the filing of a
claim after the lapse of the period stated in the first sentence, but prior to and
distribution, subject to the following conditions, namely(1) there must be tin
application therefor; (2) a cause must be shown why the permission should be granted;
and (3) the extension of time granted for the filing of the claim shall not exceed one
(1) month.
De Guzman has not sought permission to file the claim. Moreover, the same does not
allege any reason why he should be excused for his failure to file the claim in this
proceeding within the period stated in the Rules of Court. Again, whether or not the
reasons given — and none were set forth in De Guzman's claim — are sufficient, rests
upon the discretion of the court (Roguera vs. Tanodra, 81 Phil., 404; Umpig, et al. vs.
De Gala, et al., 96 Phil., 77; 50 Off. Gaz., 5305), and the record before us does not
show that the lower court has abused its discretion in acting as it did in the present
case. De Guzman now alleges, for the first time, a "cause" why the lower court should
allegedly have considered his claim. He says, in his brief (p. 6, thereof) that "he had
no actual knowledge of the fact that the estate of the deceased . . . was then already in
the process of settlement . . . . " He did not explain why he refrained from making
such averment either in his claim or in the motion, filed by him in the lower court, for
a reconsideration of the order appealed from. The reason is, however, not difficult to
surmise — he had actual knowledge of the present proceeding long before the filing
of his claim therein on July 27, 1957. To be precise, he was aware of its existence as
early as August, 1955.
In this connection, it appears that, during the lifetime of Afan, or on May 24, 1950,
De Guzman instituted, against him, Civil Case No. 1148 of the Court of First Instance
of Rizal, to recover the amount of the promissory note above referred to. On appeal,
the decision of said court in favor of De Guzman was set aside, and a trial de novo
ordered, by the Court of Appeals, in case CA-G.R. No. 7340-R. Sometime after the
records had been remanded to the lower court, Afan died. On August 15, 1955, that
court issued an order requiring counsel for his heirs "to submit to the court the number
of the intestate estate proceedings of the deceased Arsenio R. Afan now pending in
the Court of First Instance of Manila." This order was complied with on August 30,
1955, by the filing with the Court of First Instance of Rizal, in said Case No. 1148, of
a "notification" containing the required information, copy of which "notification" was
served upon counsel for De Guzman, as plaintiff therein. On January 18, 1956, his
counsel filed in said case a motion for the appointment of a legal representative of the
deceased Afan, to substitute him as defendant therein. Accordingly, on January 21,
1956, said court gave De Guzman five (5) days within which to submit the names of
the legal heirs of Afan who may be appointed as his legal representative. On January
24, 1956 De Guzman filed, therefore, with the aforementioned court, a statement,
entitled "compliance", setting forth the names, ages and addresses of the heirs of the
deceased, "as shown by the records in Special Proceedings No. 26858, entitled
'Instance estate of Arsenio R. Afan' before the Court of First Instance of Manila," with
the prayer that said "heirs be substituted as party defendants" in Case No. 1148, "in
place of the deceased Arsenio R. Afan." Yet, De Guzman choose not to file his claim
in such proceeding until July 27, 1957, one year and a half after the filing of his
aforementioned "compliance."
Instead of furnishing a "cause" for the extension of the reglementary period for the
filing of his claim, this omission on the part of De Guzman fully justifies the denial
of such extension and the order appealed from. We have already held that failure to
file a claim within the time provided therefor upon the sole ground that the claimant
was negotiating with one of the heirs for payment, is not sufficient to justify extension
(In Re: Estate of De Dios, 24 Phil., 573, 576; see also Santos vs. Manarang, 27 Phil.,
209), and that, where a claimant knew of the death of the decedent and for four (4) or
five (5) months thereafter he did nothing to present his claim, this can hardly be
considered as a good excuse for such neglect (In Re: Estate of Tiangco, 39 Phil., 967).

Wherefore, the order appealed from is hereby affirmed with costs against appellant
Apolinario S. de Guzman. It is so ordered.
 G.R. No. L-51278 May 9, 1988
HEIRS OF RAMON PIZARRO, SR., petitioners,
vs.
HON. FRANCISCO Z. CONSOLACION, CFI of Davao and LUIS TAN alias
CHEN YEH-AN, respondents.
GANCAYCO, J.:
This is a petition for review on certiorari seeking the reversal of the Order of June 1,
1979, of the then Court of First Instance of Davao * dismissing petitioners' claim
against the estate of the late Dominga Garcia, and questioning the legality of the Order
of the same court dated July 17, 1979 which denied due course to the petitioners'
notice of appeal to the Court of Appeals and directed them to file instead a petition
for review before this Tribunal.
Petitioners are the oppositors in Special Proceeding No. 2116 in the then Court of
First Instance (CFI) of Davao City Branch II, for settlement of the estate of the
deceased Dominga Garcia, filed by private respondent herein, Luis Tan alias Chen
Yeh-An.
The records disclose that on August 12,1977, Luis Tan filed a verified petition with
the CFI of Davao for the issuance of letters of administration in favor of a certain
Alfonso Atilano. The petition alleged, among others that private respondent is the
only surviving son of the deceased Dominga Garcia who died intestate sometime in
1930 in Canton, China; that the deceased left a parcel of land 1 located at C.M. Recto
Avenue, Davao City; and that the said lot is in the possession of the heirs of Ramon
Pizarro, 2 petitioners herein.
On October 4, 1977, petitioners filed an opposition to the said petition claiming that
they are the heirs of Ramon Pizarro who died intestate on June 16, 1974; and that the
deceased was the vendee of one-half (1/2) of the aforementioned lot by virtue of an
extrajudicial settlement of estate and deed of absolute sale executed by Vicente Tan
in Hongkong on May 27, 1966. Petitioners prayed that letters of administration of
Dominga Garcia's estate be issued in favor of anyone of them.
The respondent court set the petition for hearing. Said order and the petition were duly
published in the Mindanao Times. ** The City of Davao 3 was likewise served with a
copy of said petition. On December 6, 1977, after private respondent had begun
presentation of evidence in support of his petition, the parties herein entered into a
compromise whereby petitioners agreed, among others, to withdraw their opposition
to the appointment of private respondent's recommendee and for the intestate
proceedings to proceed in due course. Said agreement was approved in the order of
respondent court dated December 6,1977. 4
Accordingly, on March 27, 1978, after the judicial administrator had qualified and his
inventory of the assets of the late Dominga Garcia was approved, respondent court
issued an order requiring the filing of creditors' claim against the said estate within
the period of six (6) months from the date of the first publication. 5 Copy of said order
was received by petitioners through counsel on March 28, 1979. 6
Meanwhile, on January 23,1979, private respondent and the City of Davao filed a
joint motion asking respondent court to take notice of their agreement which in
substance provides for an agreement to file a joint motion in the CFI of Davao to
proceed with the determination of the heirs of the deceased Domingao Garcia which
shall be determinative of their respective claims against the estate. On February 19,
1979, petitioners filed their opposition to the said joint motion on the sole ground that
it is without procedural basis. Private respondent filed his reply thereto on February
21, 1979. On February 22, 1979, respondent court issued an order taking note of the
agreement between private respondent and the City of Davao.
On February 28, 1979, private respondent filed a motion to drop and exclude the
petitioners on the ground that they do not even claim to be the heirs of the deceased
Dominga Garcia and that the extrajudicial deed of partition and deed of absolute sale
allegedly executed in Hongkong in favor of the petitioners' deceased father is spurious
and simulated. On March 5, 1979, petitioners filed their opposition to said motion.
They likewise filed a claim against the estate of the deceased Garcia in the amount of
P350,000.00 representing services allegedly rendered by their deceased father in favor
of Vicente Tan. On March 8, 1979, private respondent filed a reply to petitioners'
opposition and a motion to strike out or dismiss the claim on the ground that it is
spurious and barred for having been filed beyond the six (6) month period set in the
notice for the filing of creditors' claim. On March 29, 1979, petitioners filed another
claim against the estate for P200,000.00 allegedly advanced by their deceased father
for the payment of realty and income taxes of the said lot sometime in 1936, to which
claim private respondent filed an opposition on the ground that it is barred for having
been filed beyond the six (6) month period and that it was merely intended to delay
the proceedings.
In the Order of June 1, 1979, respondent court dismissed both claims of the petitioners
on the ground that they are barred for having been filed out of time. 7 On June 26,
1979, petitioners filed a notice of appeal stating that they are appealing the order of
June 1, 1979 to the Court of Appeals in so far as it declared their claims barred. 8 On
July 5, 1979, private respondent filed an opposition to the projected appeal on the
ground that the appeal involves a pure question of law and thus, the same should be
directed to the Supreme Court. 9 On July 17, 1979, respondent court issued an order
dismissing petitioners' appeal and directed petitioners to file instead a petition for
review on certiorari before this Court.10
Hence, the present petition. ***
It is the position of the petitioners that the order of June 1, 1979 of the respondent
court, which directed that the filing of claims against the estate of the late Dominga
Garcia be filed within six (6) months after the first publication of the notice thereof,
is null and void in that it is violative of Section 2, Rule 86 of the Revised Rules of
Court. They contend that said provision mandates that the filing of such claims should
be for a period of six (6) months starting from the sixth month after the date of the
first publication of the notice down to the twelfth month. 11 They argue that to require
filing of claims within the sixth month from publication of notice will shorten the
period in violation of the mandatory provisions of Section 2, Rule 86, which provides:
Sec. 2. Time within which claims shall be filed. — In the notice provided in the
preceding section, the court shall state the time for the filing of claims against the
estate, which shall not be more than twelve (12) nor less than six (6) months after the
date of the first publication of the notice. However, at anytime before an order of
distribution is entered, on application of a creditor who has failed to file his claim
within the time previously limited, the court may, for cause shown and on such terms
as are equitable, allow such claim to be filed within a time not exceeding one (1)
months.
We agree. The range of the period specified in the rule is intended to give the probate
court the discretion to fix the period for the filing of claims. The probate court is
permitted by the rule to set the period provided it is not less than six (6) months nor
more than twelve (12) months from the date of the first publication of the notice
thereof. Such period once fixed by the court is mandatory.
The purpose of the law, in fixing a period within which claims against an estate must
be presented, is to insure a speedy settlement of the affairs of the deceased person and
the early delivery of the property to the person entitled to the same. 12
In Sikat vs. Vda. Mafincode Villanueva, 13 this Court ruled that the speedy settlement
of the estate of deceased persons for the benefit of creditors and those entitled to the
residue by way of inheritance or legacy after the debts and expenses of administration
have been paid is the ruling spirit of our probate law.
However, in this case the trial court set the period for the filing of the claims within
six (6) months from the date of the first publication of the notice. It was obviously
short of the minimum limit of six (6) months provided for by the law. Petitioner
correctly observed that the trial court thereby shortened the period set by the law.
Since the notice issued and the period set by the trial court was not in accordance with
the requirements of Section 2, Rule 86 of the Rules of Court, what should then apply
is the period as provided for by the rules which is not less than six months nor more
than twelve (12) months from the date of first publication of notice. The first
publication of the notice in the Mindanao Times was on March 30, 1978. Thus the
two claims of petitioners against the estate which were filed on March 5, 1979 and
March 29, 1979 respectively were filed on time.
The other issue raised in the petition is the authority of the trial court to determine
whether the appeal involves a question of law or both questions of law and facts. The
petitioners cite Section 3, Rule 50 of the Rules of Court, which provides as follows:
Sec. 3. Where appealed case erroneously brought. — Where the appealed case has
been erroneously brought to the Court of Appeals, it shall not dismiss the appeal, but
shall certify the case to the proper court, with a specific and clear statement of the
grounds therefor.
Petitioners contend that it is the Court of Appeals which has the authority to determine
whether the issue in the appeal is purely a question of law in which case it shall certify
the same to the proper court, which in this case is this Tribunal.
In the present case, when the lower court found that the order sought to be appealed
was its order of June 1, 1979, wherein it held that the claims filed by petitioners
against the estates were barred having been filed beyond the period fixed by the trial
court in the notice, which appeal involves an interpretation of Section 2, Rule 86 of
the Rules of Court, instead of giving due course to the notice of appeal to the Court
of Appeals filed by petitioners, the petitioners were instructed to file a petition for
review with this Court as the issue is a pure question of law.
We find the action taken by the trial court to be well-taken. Certainly, it is within the
competence and jurisdiction of the trial court to determine whether the appeal
interposed was based on pure questions of law or involves both questions of law and
facts in considering the appeal.14 The provision of Section 3, Rule 50 of the Rules of
Court applies only when the appeal is already brought to the Court of Appeals at
which time it may, instead of dismissing the appeal, upon determination that it
involves a pure question of law, order that the case be certified to this Court.
It must be noted that in the notice of appeal it is not even required that the appellant
indicate the court to which its appeal is being interposed. The requirement is merely
directory and failure to comply with it or error in the court indicated is not fatal to the
appeal. 15
WHEREFORE, the petition is GRANTED and the orders of the respondent court of
June 1, 1979 and July 17, 1979 are reversed and set aside in so far as the claims filed
by petitioners were found to be barred, the same having been timely filed, without
pronouncement as to costs.
SO ORDERED.
 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.
MAKALINTAL, J.:
Ricardo M. Gutierrez appeals from the orders of Court of First Instance of Rizal (1)
dismissing his complaint against Lucia Milagros Barretto-Datu, as executive of the
estate of the deceased Maria Gerardo Vda. de Barreto, and (2) denying his motion for
reconsideration the dismissal.
The relevant facts alleged by appellant are as follows; In 1940, Maria Gerardo Vda.
de Barretto, owner of hectares of fishpond lands in Pampanga, leased the same to
appellant Gutierrez for a term to expire on May 1, 1947. On November 1, 1941,
pursuant to a decision of Department of Public Works rendered after due investigation
the dikes of the fishponds were opened at several points, resulting in their destruction
and in the loss great quantities of fish inside, to the damage and prejudice of the lessee.
In 1956, the lessor having died in 1948 and the corresponding testate proceeding to
settle her estate having been opened (Sp. Proc. No. 5002, C.F.I., Manila), Gutierrez
filed a claim therein for two items: first, for the sum of P32,000.00 representing
advance rentals he had to the decedent (the possession of the leased property is
alleged, having been returned to her after the open of the dikes ordered by the
government); and second, the sum of P60,000.00 as damages in the concept of earned
profits, that is, profits which the claimant failed to realize because of the breach of the
lease contract allegedly committed by the lessor.
On June 7, 1957 appellant commenced the instant ordinary civil action in the Court
of First Instance of Rizal (Quezon City branch) against the executrix of the testate for
the recovery of the same amount of P60,000 referred to as the second item claimed in
the administration proceeding. The complaint specifically charges decedent Manila
Gerardo Vda. de Barretto, is lessor, was having violated a warranty in the lease
contract again any damages the lessee might suffer by reason of the claim of the
government that several rivers and creeks of the public domain were included in the
fishponds.
In July 1957 appellant amended his claim in the testate proceeding by withdrawing
therefrom the item of P60,000.00, leaving only the one for refund of advance rentals
in the sum of P32,000.00.
After the issues were joined in the present case with the filing of the defendant's
answer, together with a counterclaim, and after two postponements of the trial were
granted, the second of which was in January 1958, the court dismissed the action for
abandonment by both parties in an order dated July 31, 1959. Appellant moved to
reconsider; appellee opposed the motion; and after considerable written argument the
court, on March 7, 1960, denied the motion for reconsideration on the ground that the
claim should have been prosecuted in the testate proceeding and not by ordinary civil
action.
Appellant submits his case on this lone legal question: whether or not his claim for
damages based on unrealized profits is a money claim against the estate of the
deceased Maria Gerardo Vda. de Barretto within the purview of Rule 87, Section 5.
This section states:
SEC. 5. Claims which must be filed under the notice. If not filed, barred; exception.
— All claims for money against the decedent, arising from contract, express or
implied, whether the same be due, not due, or contingent, all claims for funeral
expenses and expenses of the last sickness of the decedent, and judgment for money
against the decedent, must be filed within the time limited in the notice; otherwise
they are barred forever, except that they may be set forth as counterclaims in any
action that the executor or administrator may bring against the claimants. Where an
executor or administrator commences an action, or prosecutes an action already
commenced by the deceased in his lifetime, the debtor may set forth by answer the
claims he has against the decedent, instead of presenting them independently to the
court as herein provided, and mutual claims may be set off against each other in such
action; and if final judgment is rendered in favor of the defendant, the amount so
determined shall be considered the true balance against the estate, as though the claim
had been presented directly before the court in the administration proceedings. Claims
not yet due, or contingent, may be approved at their present value.
The word "claims" as used in statutes requiring the presentation of claims against a
decedent's estate is generally construed to mean debts or demands of a pecuniary
nature which could have been enforced against the deceased in his lifetime and could
have been reduced to simple money judgments; and among these are those founded
upon contract. 21 Am. Jur. 579. The claim in this case is based on contract —
specifically, on a breach thereof. It falls squarely under section 5 of Rule 87 "Upon
all contracts by the decedent broken during his lifetime, even though they were
personal to the decedent in liability, the personal representative is answerable for the
breach out of the assets." 3 Schouler on Wills, Executors and Administrators, 6th Ed.,
2395. A claim for breach of a covenant in a deed of the decedent must be presented
under a statute requiring such presentment of all claims grounded on contract. Id.
2461; Clayton v. Dinwoody, 93 P. 723; James v. Corvin, 51 P. 2nd 689.1
The only actions that may be instituted against the executor or administrator are those
to recover real or personal property from the estate, or to enforce a lien thereon, and
actions to recover damages for an injury to person or property, real or personal. Rule
88, section 1. The instant suit is not one of them.
Appellant invokes Gavin v. Melliza, 84 Phil. 794, in support of his contention that this
action is proper against the executrix. The citation is not in point. The claim therein,
which was filed in the testate proceeding, was based upon a breach of contract
committed by the executrix herself, in dismissing the claimant as administrator of
the hacienda of the deceased. While the contract was with the decedent, its violation
was by the executrix and hence personal to her. Besides, the claim was for indemnity
in the form of a certain quantity of palay every year for the unexpired portion of the
term of the contract. The denial of the claim was affirmed by this Court on the grounds
that it was not a money claim and that it arose after the decedent's demise, placing it
outside the scope of Rule 87, Section 5.

The orders appealed from are affirmed, with costs against appellant.
G.R. No. L-27701 July 21, 1928
THE BANK OF THE PHILIPPINE ISLANDS, plaintiff-appellant,
vs.
V. CONCEPCION E HIJOS, INC., and VENANCIO CONCEPCION,
defendants-appellants. HENRY W. ELSER, defendant-appellee.
OSTRAND, J.:
It appears from the record that on July 6, 1921, the defendants Concepcion executed
a promissory note in favor of the plaintiff for the sum of P342,372.64, payable on
demand, and as security for payment, deposited 700 shares of the Philippine National
Bank as collateral with the plaintiff and gave it a mortgage on 5,680 square meters of
land, with improvements, situated on R. Hidalgo Street in Manila. The defendants
Concepcion defaulted in the payment of the note, and on February 3, 1922, the
plaintiff bank instituted the present foreclosure proceedings.
Shortly afterwards, Henry W. Elser entered into negotiations with the Concepcions
and offered to take over the mortgaged property and assume the mortgage debt. To
this the Concepcions agreed on the condition that they be relieved of all liability for
the debt.
On March 23, 1922, Elser wrote the plaintiff bank the following letter:
DEAR SIR: Confirming our conversation of this morning, I take pleasure in advising
you that I have made arrangements with Mssrs. Puno & Concepcion to take over their
property on Calle R. Hidalgo, consisting of 5,680 square meters, including all
improvements thereon, and also 700 shares in the Philippine National Bank
mortgaged to you in the total sum of P342,000, and by which arrangement I am to be
substituted in the place and stead of Messrs. Puno & Concepcion in the obligation to
your bank.
I have present prospects of renting the entire property and in consideration thereof I
will undertake to pay to the bank on the obligation thus undertaken by me, the sum of
not less than five thousand pesos (P5,000) monthly on the principal, together with
interest every six months. I will also reduce the mortgage not less than 25 per cent
during the first year, not less than 50 per cent during the second year, and the balance
within the third year, without prejudice, however, to my right to mortgage the property
to any bonding institution or to take up the mortgage myself at any time during the
three years period mentioned above, which I expect that I may be in a position to do.
Yours very truly,
(Sgd.) H. W. ELSER
No answer to this letter was given by the bank, and it clearly appears from the
allegations in its amended complaint, and from the evidence, that it was unwilling to
release the Concepcions from their liability for the mortgage debt and insisted on their
confessing a judgment in the foreclosure proceedings. This the Concepcions refused
to do unless the bank would agree to bid in the mortgage property for the full amount
of the judgment.
After further conversations with the representatives of the plaintiff bank, Elser on
April 21, 1922, wrote in the following letter:
DEAR SIRS (Attention of Mr. Zaragoza): With reference to our recent conversation
regarding the R. Hidalgo property belonging to Venancio Concepcion (Puno &
Concepcion), I respectfully request that you confirm in writing your verbal agreement
that should the property in question become the property of your bank, in the amount
of P342,000 plus interest to date, that you will sell the same to me for the same
amount.
This information is desired by the Attorneys for Venancio Concepcion, Mr. R. M.
Calvo, in order to satisfy himself that in case Messrs. Puno & Concepcion accept
judgment, turning over the property to you, that you in return will sell the property to
me for the above mentioned sum, and not less than that sum.
Trusting you will see your way clear to furnish this confirmation, in accordance with
our conversation, we are
Very truly,
(Sgd.) H. W. ELSER
It must be inferred from this letter that Elser had been led to understand that the bank
would bid in the land at the foreclosure sale for the full amount of the judgment and
sell it to him for the same price. It will be readily seen that this proposition is entirely
different from that contained in the letter of March 23d.
The plaintiff made no direct reply to the letter of April 21st, but Calvo, testifying for
the plaintiff, stated that on April 28, Elser invited him to a conference with Nolting,
the president of the bank, in regard to the matter; that on meeting Nolting, Elser said:
"Mr. Nolting, do you still adhere to your acceptation of the offer I have made you in
writing?" to which Nolting answered that he did not think that there was any reason
for him to go back on his word. He thereupon referred Elser and Calvo to Zaragoza,
who in some matters appears to have acted as counsel for the bank, for further
conferences. The negotiations did not lead to any action on the part of the bank, but
on May 5, 1922, Elser entered into an agreement in the form of bilateral deed of sale,
with V. Concepcion & Hijos, Inc., and Venancio Concepcion which appears in the
record as Exhibit C and reads as follows in translation from Spanish:
DEED OF PURCHASE AND SALE
This deed of purchase and sale executed in the City of Manila, P.I., this fifth day of
May 1922 A. D., by and between V. Concepcion & Hijos, Inc., a domestic corporation
duly organized under the laws of Philippine Islands domiciled at No. 861 Calle R.
Hidalgo, District of Quiapo, City of Manila, represented herein by the president, Mr.
Venancio Concepcion, by virtue of the powers granted him by the Board of Directors
of said corporation in a resolution dated May 2, 1922, a copy of which duly certified,
is attached hereto and made a part hereof, and Mr. Venancio Concepcion, of age,
married with Mrs. Rosario San Agustin and resident of City of Manila, his place of
residence being in the municipality of San Juan, Province of Rizal, P.I., as party of
the first part, and Mr. Henry W. Elser, of age, married with Mrs. Elaine Childs Elser,
and a resident of City of Manila, with her place of residence at No. 600 Calle M. H.
del Pilar, District of Malate, as party of the second part,
WITNESSETH:
Whereas, V. Concepcion e Hijos, Inc., is at present indebted to the Bank of the
Philippine Islands, in the sum of P342,372.64, Philippine currency with interest
thereon at the rate of 9 per cent per annum from September 30, 1921, to secure the
payment of which, the firm of V. Concepcion e Hijos, Inc., and Mr. Venancio
Concepcion as joint land several obligors, have executed in favor of the creditor bank
on the 6th of July, 1921, a deed of mortgage and one of pledge upon the following
properties:
A tract of land with the buildings of strong materials erected thereon, situated on Calle
Sa n Sebastian, District of Quiapo. Bounded on the N. by Calle San Sebastian; on the
E. by property Maximino Paterno and Manuel Zamora; on the S. by property of the
City of Manila; and on W. by the Estero de Curtidor; containing an area of 5,686.80
square meters, more or less, of which land, buildings and improvements, the aforesaid
Venancio Concepcion is the registered owner in accordance with the Land
Registration Act, according to transfer certificate of title No. 14019, issued by the
registrar of deeds of the City of Manila.
Seven hundred shares of stock of the Philippine National Bank, belonging to Mr.
Venancio Concepcion, issued to him and indorsed in the blank in favor of the Bank
of the Philippine Islands, described as follows: (Here follows the numbers and
amounts of the certificates of shares.)
Whereas on January 20, 1922, Mr. Venancio Concepcion, owner of the property
above described, in consideration of the fact that they were subject to the payment of
the sum of P342,372.64 with interest thereon at the rate of 9 per cent per annum,
which was owing from V. Concepcion e Hijos, Inc., to the Bank of Philippine Islands,
as per deeds of mortgage and of pledge executed on July 6, 1921, has sold, assigned,
and transferred to said firm of V. Concepcion e Hijos, Inc., the aforesaid properties
for the sum of P290,000 Philippine currency, the agreed and stipulated price of the
urban property being P220,000, Philippine currency, and that of the 700 shares of
stock of the Philippine National Bank, the sum of P70,000 Philippine currency, as per
public document executed on said date before Mr. Recaredo Ma. Calvo, a notary
public in and for the City of Manila.
Whereas, on February 28, 1922 the Bank of the Philippine Islands, filed with the
clerk's office of the Court of First Instance of Manila, under No. 21537, a complaint,
against V. Concepcion e Hijos, Inc., and Venancio Concepcion for the recovery of its
mortgage credit evidenced by the deeds of mortgage and of pledge executed on July
6, 1921, notwithstanding the offer made by V. Concepcion e Hijos, Inc., to assign
absolutely and forever to said creditor entity the properties which are the subject
matter of the mortgage and pledge in full and total payment of their obligation.
Whereas, Mr. Henry W. Elser is willing to subrogate himself to the obligation of V.
Concepcion e Hijos, Inc., and Venancio Concepcion in favor of the Bank of Philippine
Islands and release them from the total of said obligation contracted by them on July
6, 1921, as per deeds of mortgage and of pledge executed on said date, in
consideration of the sale, assignment and transfer in his favor of all the rights, interest,
action or share that they have or may have upon the properties described in said deeds
of mortgage and pledge;
Now, therefore, we, V. Concepcion e Hijos, Inc., and Venancio Concepcion, in
consideration of the sum of one peso (P1) Philippine currency, which we have this
day and which we declare was paid to us to our complete satisfaction, and of other
important considerations, especially the subrogation into our joint and several
obligations in favor of the Bank of the Philippine Islands, amounting to P342,372.64,
Philippine currency, with interest thereon at the rate of 9 per cent per annum from
September 30, 1921, which said Mr. Henry W. Elser hereby makes, binding himself,
moreover, to release us from our obligation contracted in favor of the Bank of the
Philippine Islands on July 6, 1921, do hereby sell, assign, and transfer absolutely and
forever to said Mr. Henry W. Elser, his heirs and successors in interest the properties
described herein with the incumbrances created and existing in favor of the Bank of
the Philippine Islands.
That I, Henry W. Elser, accept this contract upon the precise terms in which it is
executed.
In testimony whereof, we sign third presents in place and on the date above-
mentioned.
V. CONCEPCION E HIJOS, INC.
(Sgd.) V. CONCEPCION
(Sgd.) V. CONCEPCION
(Sgd.) H. W. ELSER
Signed in the presence of:
(Sgd.) ERNESTO Ma. CALVO
GREGORIO BUHAY
The bank never gave notice of its conformity with the agreement above quoted but of
June 15, 1922, it petitioned the court to include Henry W. Elser as defendant in the
complaint, on the strength of the obligations assumed by him in said agreement.
On June 23, 1922, the defendants Concepcion answered said petition praying that
instead of merely being included, said Elser be substituted in their place as defendants,
on the ground that the plaintiff had accepted the substitution of Elser in their place as
its debtor.
On June 27, 1922, the trial court entered an order including Henry W. Elser as
defendant and one month later, the plaintiff filed an amended complaint against the
defendants Concepcion and Elser asking for a joint and several judgment against them
in the amount prayed for in the original complaint and for the foreclosure of the
mortgage securing the same.
On July 18, 1922, the defendants Concepcion filed a supplemental answer alleging
the consent of the plaintiff to the subrogation of Elser in their place with respect to
the obligations sued upon and asking for the dismissal of the case as to them on the
ground.
On October 16, 1922, the defendant Elser demurred to the amended complaint on the
ground that it failed to alleged that the plaintiff had consented to the substitution of
Elser in place of the Concepcions so as to render Elser personally liable to the plaintiff.
This demurrer was sustained by the court and due exception was taken by the plaintiff.
On November 1, 1922, the plaintiff presented a second amended complaint, in which
it is alleged that the sale from the Concepcions to Elser was with the knowledge and
consent of the plaintiff but without waiver of it as right of action against the
Concepcions. The defendant Elser demurred on the ground that it did not appear from
the amended complaint that the plaintiff had accepted Elser as debtor and on the
further ground that there was no showing therein as to the disposition of the collateral
security held by the plaintiff for the same debt. This demurrer was sustained on both
grounds, on December 1, 1922.
On December 6, 1922, the plaintiff presented its third amended complaint, without
material change in the averments of the second amended complaint, and a third
demurrer thereto was sustained on December 28, 1922.
The plaintiff thereupon filed a fourth amended complaint, reiterating the allegations
of the third amended complaint, alleging that the defendant Elser entered into
possession of the mortgaged premises with plaintiff's consent; that plaintiff had not
sold the shares of the Philippine National Bank held by it as collateral, and asking for
judgment decreeing that said shares and the mortgaged property be sold under order
of the court, and that the defendants Concepcion and Elser be condemned to pay the
deficiency, if any there should be. A demurrer to this complaint was sustained, on the
ground that it failed to show a contractual relationship between the plaintiff and the
defendant Elser.
On March 2, 1923, the plaintiff presented a fifth amended complaint, similar to the
foregoing, but containing the additional allegation that the plaintiff accepted the
assumption of the mortgage by the defendant Elser "without releasing the liability of
the defendants" Concepcion. This complaint was demurred to on the ground that it
did not sufficiently state that the plaintiff had accepted the substitution of Elser in
place of the Concepcions, as the contract between them provided. The demurrer was
overruled and the defendant Elser excepted.
On April 2, 1923, the defendant Elser answered, denying generally and specifically
the allegations of the plaintiff's complaint. On the same date, C. W. Rosenstock, as
guardian of the defendant Elser, filed a cross-complaint alleging that at the time Elser
is alleged to have assumed the obligations of the Concepcions to the plaintiff, he was
of unsound mind that he had been induced to sign the same by false representations
on the part of the Concepcion to the effect that the plaintiff had agreed that he be
substituted in place of Concepcions with respect to the obligations set up in the
plaintiff's complaint and that the plaintiff would accept payment of the same in
monthly installments on account of the principal of not less than P5,000, with interest
payable every six months, and that the mortgage should be reduced not less than 25
per cent the first year, not less than 50 per cent the second year, and the balance within
the third year, when, as a matter of fact, the plaintiff had not agreed hereto or accepted
said terms of payment, as the Concepcions well knew, and had never accepted Elser's
offer to the plaintiff made pursuant to said representations, and praying for the reasons
stated, that the deed from the Concepcions to Elser, wherein he assumed the
obligations of the former to the plaintiff be cancelled. These allegations were denied
by the plaintiff and the defendants Concepcion in their replies.
Elser died on June 18, 1923, and on January 4, 1924, the plaintiff suggested the death
of the defendant Elser, and asked that the administrator of the estate, C. W.
Rosenstock, be substituted in his place as defendants, and that the action be continued
against Rosenstock in the capacity on the ground that this action is for the foreclosure
of a mortgage
On January 11, 1924, the attorneys of record for the defendant Elser filed an
opposition to the application to have the action continued against Rosenstock, in
substitution of Elser, this is not a foreclosure action, and hence this action, as to him,
abated by reason of his death, and any claim of the plaintiff against him should be
presented to the committee on claims and appraisals of his estate.
This objection was overruled and Rosenstock, as Elser's administrator, was
substituted in his place as defendant, by order of the court dated January 14, 1924,
and exception thereto was duly taken. Subsequently, Rosenstock became the executor
of Elser's estate, and as such, filed various amended answers and cross-complaints.
The last amended cross-complaint was filed by him on August 9, 1924 in case No.
24485 of the Court of First Instance of Manila, in which the estate of the deceased
Elser was being administered. He repeated therein the allegations and prayer of his
cross-complaint as guardian filed on April 2, 1923, and referred to above. The last
amended answer was filed by him on August 21, 1925. It consisted of denial of the
allegations of the complaint and of the authenticity of the document whereby Elser is
alleged to have assumed the obligations of the defendants Concepcion to the plaintiff;
an allegation that at the time of execution thereof, Elser was of unsound mind; and a
statement of willingness to relinquished and abandon any rights Elser might have
acquired under said document in favor of the plaintiff.
After a lengthy trial, the court below, on January 22, 1927, rendered its decision
absolving the Elser estate from the complaint, ordering the Concepcions to pay the
plaintiff the sum of P342,372.64, with interest of 9 per cent and costs, and providing
for the sale of the mortgaged property, in case of non-payment of the judgment.
Both the plaintiff and the defendants Concepcion excepted to this judgment and
moved for a new trial on the usual statutory grounds. The motions were denied and
exceptions noted.
The case is now before this court on a joint bill of exceptions presented by the plaintiff
and the defendants Concepcion pursuant to stipulation. No briefs have been filed by
the Concepcions.
From the facts stated and from the pleadings it will be readily seen that as far as the
defendant Elser is concerned, the plaintiff alleged cause of action rests exclusively on
the deed of contract Exhibit C. The well known general rule is that a contract affects
only the parties and privies thereto. But there are exceptions to this rule and the
plaintiff contends that though it is neither a party nor a privy to the contract here in
question, the subrogation of Elser to the obligations of the Concepcions in favor of
the plaintiff as provided for in the contract, is a stipulation pour autrui upon which
the plaintiff may maintain its action
The nature and reach of the doctrine of the stipulations pour autrui is so thoroughly
discussed in the case of Uy Tam and Uy Yet vs. Leonard (30 Phil., 471), that no
further discussion thereof is here necessary. We wish , however, to emphasize the fact
that it was there held that in order to constitute a valid stipulation pour autrui, it must
be the purpose and intent of the stipulating parties to benefit the third person may be
incidentally benefited by stipulation. This conclusion is supported by numerous
authorities and is in complete harmony with the second paragraph of article 1257 of
the Civil Code, which reads as follows:
Should the contract contain any stipulation in favor of the third person, he may
demand its fulfillment, provided he has given notice of his acceptance to the person
bound before the stipulation has been revoked.
Applying this test, it seems clear that neither Exhibit C nor any other agreement
between the Concepcion and the Elser contained any stipulation pour autrui in favor
of the plaintiff. As stated in the appellee's brief:
The Concepcion owed the plaintiff a large sum of money and wanted to be relieved
of that obligation. Elser wanted the property which he had been mortgaged to secure
that obligation, and had to assume the obligation and agree to secure the discharge of
the Concepcion therefrom, in order to get the property. Neither of them had any desire
to confer any benefit to the bank. Neither of them entered into the contract for the
sake of the bank. It is obvious that each entered into the contract impelled by the
advantage accruing to him personally as a result thereof.
We may add that the stipulation here in question is not merely for the assumption of
the mortgaged debt by Elser, but is a provision for the subrogation of Elser to the
Concepcion obligations to the plaintiff. Inasmuch as the mere assumption of the
mortgage debt by the purchaser of the mortgaged land does not relieved the mortgagor
from his liability, it might be said that some show of reason that by such an
arrangement the mortgagee will have two debtors for the same debt instead of only
one and that this furnishes additional security and is to the creditor's advantage and
for his benefit. But such is not the case where, as here, the stipulation is for the
subrogation of the purchasers to the obligation of the original debtor; if such a
stipulation is duly accepted by the creditor, it works a novation of the original
agreement and releases the original debtor from further liability. Such subrogation is
rarely for the benefit of the creditor and that, in the present case, it was not believed
to be of any advantage to the bank is well shown by the fact that the parties were
unable to obtain its written consent to the stipulation.
But assuming that the stipulation is for the benefit of a third person, the plaintiff is
nevertheless not in position to maintain its action against Elser. In order to be
enforceable, such stipulations must be accepted by the third person and not has not
been done here. The plaintiff asserts that it accepted the stipulations in part, but that
is not a sufficient acceptance. The ordinary rules of offer and acceptance are
applicable, and it is a cardinal rule of the law of contracts that in order to create a
binding agreement, the acceptance must be absolute, unconditional, and identical with
the terms of the offer; otherwise there is no meeting of the minds or an expression of
one and the same common intention, one of the essential elements of a valid contract
(Civil Code, art., 1257; Page on Contracts, sec. 1308, and authorities there cited).
But the plaintiff argues that in American jurisprudence, the purchaser of the
mortgaged property who assumes the payment of the mortgage debt, may for the
reason alone sued for the debt by the creditor and that the rule is applicable in this
jurisdiction. Aside from the fact that we are not dealing with a mere assumption of
the debt, but with a subrogation, it may be noted that this court has already held that
the American doctrine in this respect is not in harmony with the spirit of our
legislation and has not been adopted in this country. In the case of E.C. McCullough
& Co. vs. Veloso and Serna (46 Phil., 1), the court. speaking through its present Chief
Justice, said:
The effects of transfer of a mortgaged property to a third person are well determined
by the Civil Code. According to article 1879 of this Code, the creditor may demand
of the third person in possession of the property mortgaged payment of such part of
the debt, as is secured by the property in his possession, in the manner and form
established by law. The Mortgage Law in force at the promulgation of the Civil Code
and referred to in the latter, exacted, among other conditions, also the circumstance
that after judicial or notarial demand, the original debtor had failed to make payment
of the debt at maturity. (Art. 135 of the Mortgage Law of the Philippines of 1889.)
According to this, the obligation of the new possessor to pay the debt originated from
the right of the creditor to demand payment of him, it being necessary that a demand
for payment should have previously been made upon the debtor and the latter should
have failed to pay. And even if these requirements were complied with, still the third
possessor might abandon the property mortgaged, and in that case it is considered to
be in the possession of the debtor. (Art. 136 of the same law.) This clearly shows that
the spirit of the Civil Code is to let the obligation of the debtor to pay the debt stand
although the property mortgaged to secure payment of said debt may have been
transferred to a third person. While the Mortgage Law of 1893 eliminated this
provisions, it contained nothing indicating any change in the spirit of the law in this
respect. Article 129 of this law, which provides for the substitution of the debtor by
the third person in possession of the property, for the purposes of giving notice, does
not show this change and has reference to a case where the action is directed only
against the property burdened with the mortgage. (Art. 168 of the Regulation.)
From what we have said it follows that the plaintiff can have no cause of action against
Elser, or rather against his estate. Assuming that Elser was of sound mind at the time
of the execution of Exhibit C — and that is a much debated question — the
Concepcion, and not the plaintiff might have maintained an action against the Elser
state; but that action is now barred through their failure to present their claim and
appraisal in the probate proceedings, and the plaintiff can therefore, not successfully
invoked article 1111 of the Civil Code, which in effect provides that after exhausting
the property of which the debtor may be in possession, the creditor may have recourse
to the debtor's credit and choses an action for the collection of unpaid portion of the
debt.
Counsel for the appellee also argue that the bank, having failed to present its claim to
the committee on claims and appraisal, it must be regarded as having elected to rely
on its mortgage alone and therefore can have no personal judgement against the Elser
estate. That is good law. Section 708 of the Code of Civil Procedure provides as
follows:
SEC. 708. Mortgage debt due from estate. — A creditor holding a claim against the
deceased, secured by mortgage or other collateral security, may abandon the security
and prosecute his claim before the committee, and share in the general distribution of
the assets of the estate; or he may foreclose his mortgage or realize upon security, by
ordinary action in court, making the executor or administrator a party defendant; and
if there is a judgment for a deficiency, after the sale of the mortgaged premises, or the
property pledge, in the foreclosure or other proceedings to realize upon the security,
he any prove his deficiency judgment before the committee against the estate of the
deceased; or he may rely upon his mortgage or other security alone, and foreclose the
same at any time, within the period of statute of limitations, and in that event he shall
not be admitted as an creditor, and shall receive no share in the distribution of the
other assets of the estate;
As will be seen, the mortgagee has the election of one out of three courses: (1) He
may abandon his security and share in the general distribution of the assets of the
estate, or (2) he may foreclose, secure a deficiency judgment and prove his deficiency
judgment before the committee, or (3) he may rely upon his security alone, in which
case he can receive no share in the distribution of the assets of the estate.
In this case the bank did not abandon the security and took no steps of any sort before
the committee within the time limit provided by the sections 689 and 690 of the Code
of Civil Procedure. The committed ceased to function long ago, and the bank has now
nothing to rely on except the mortgage. Internationally or not, it has bought itself
within the third course provided for in section 708; it has no alternative.
But counsel for the plaintiff say that the amount of the deficiency, if any, could not
be proved before the foreclosure sale and had been effected; that section 708 expressly
provide for the proof of the deficiency judgment before the committee after the sale
of the mortgaged property; that this provisions must be construed to mean that the
presentation and prosecution of the claim of the deficiency must be made after, not
before, the sale; and that if the mortgagee presents his claim from a deficiency before
a deficiency judgment have been rendered, he will loose his rights under the mortgage
and be regarded as having abandon his security.
This clearly a misconception of the statute, and the cases cited by the appellant in
support for its contention are not in point. Until the foreclosure sale is made, the
demand for the payment of deficiency is a contingent claim within the meaning of
sections 746, 747, and 748 of the Code of Civil Procedure, which sections reads as
follows:
SEC. 746. Claims may be presented to committee. — If a person is liable as surety for
the deceased, or has other contingent claims against his estate which cannot be proved
as a debt before the committee, the same may be presented with the proof, to the
committee, who shall state in their report that such claim was presented to them.

SEC. 747. Estate to be retained to meet claims. — If the court is satisfied from the
report of the committee, or from proofs exhibited to it, that such contingent claim is
valid, it may order the executor or administrator to retains in his hands sufficient estate
to pay such contingent claim, when the same becomes absolute, or if the estate is
insolvent, sufficient to pay a portion equal to the dividend of the other creditors.

SEC. 748. Claim becoming absolute in two years, how allowed. — If such contingent
claims becomes absolute and is presented to the court, or to the executor or
administrator, within two years from the time limited for other creditors to present
their claims, it may be allowed by the court if not disputed by the executor or
administrator, and, if disputed, it may be proved that the committee already appointed,
or before others to be appointed, for the purpose, as if presented for allowance before
the committee had made its report.

These sections are in entire harmony with section 708; the amount of the deficiency
cannot be ascertained or proven until the foreclosure proceedings have terminated,
but the claim for the deficiency must be presented to the committee within the period
fixed by sections 689 and 690 of the Code. The committee does not then pass upon
the validity of the claim but reports it to the court. If the court "from the report of the
committee" or from "the proofs exhibited to it" is satisfied that the contingent claim
is valid, the executor or administrator may be required to retain in his possession
sufficient assets to pay the claim when it becomes absolute, or enough to pay the
creditor his proportionate share if the assets of the estate are insufficient to pay the
debts. When the contingent claim has become absolute, its amount may be ascertained
and established in the manner indicated by sections 748 and 749. As will be seen, the
bank both could and should have presented its claim to the committee within the time
prescribed by the law. The concurring opinion of Justices Malcolm and Fisher in the
case of Jaucian vs. Querol (38 Phil., 707), contains a very lucid expositions of the law
on the subject and further comment is therefore unnecessary.

The appeal is without merit and the judgment of the court below is affirmed with the
costs against the plaintiff-appellant. So ordered.
 G.R. No. L-32425 November 21, 1984
THE IMPERIAL INSURANCE, INC., plaintiff-appellee,
vs.
EMILIA T. DAVID, defendant-appellant.
RELOVA, J.:
Petition for review on certiorari of the decision rendered by the then Court of First
Instance of Manila in Civil Case No. 67713, sustaining the money claims of plaintiff-
appellee, The Imperial Insurance, Inc. against defendant-appellant Emilia T. David,
based on three (3) different causes of action in the complaint.
The first two causes of action involve the indemnity agreements which defendant-
appellant and her deceased husband, Felicisimo V. Reyes, jointly and severally,
executed in favor of herein appellee, for and in consideration of two (2) surety bonds
underwritten by it to lift the lift the writs of attachment in Civil Case No. 5213 of the
Rizal Court of First Instance for the amount of P60,000.00, and in Civil Case No. Q-
5214, also with the same court for the amount of P40,000.00
The third cause of action involves accrued premiums and documentary stamps for
four (4) years with legal interest therein from the filing of the complaint also
underwritten by appellee.
Records show that Felicisimo V. Reyes and his wife, herein appellant, executed two
(2) indemnity agreements in favor of appellee jointly and severally to assure
indemnification of the latter for whatever liability it may incur in connection with its
posting the security bonds to lift the attachments in Civil Case No. Q-5213 for the
amount of P60,000.00, and in Civil Case No. Q-5214 for the amount of P40,000.00,
for the benefit of Felicisimo V. Reyes.
Later, Felicisimo V. Reyes and his wife, jointly and severally, executed another
indemnity agreement in favor of appellee to assure indemnification of the latter under
a homestead bond for the sum of P7,500.00 it had executed jointly and severally with
them in favor of the Development Bank of the Philippines. On the same date,
Felicisimo V. Reyes and his wife paid to appellee the sum of P153.33 covering the
premium and other expenses for the homestead bond on the first year.
Felicisimo V.Reyes died and Special Proceedings No. 12948 of the then Court of First
Instance of Bulacan, entitled "In the Matter of the Instestate of Felicisimo V. Reyes,"
was commenced. His wife, herein appellant, qualified and took her oath of office as
the administratrix of said intestate estate. Corresponding notices to creditors were
issued and published for three (3) consecutive weeks in the "Manila Chronicle" and
were duly posted in the required places.
Meanwhile, judgment was rendered in the aforesaid two cases (Civil Cases Nos. Q-
5213 and Q-5214) against the spouses Felicisimo V. Reyes and appellant Emilia T.
David which has become final and executory. Writs of execution of the decision on
the said cases were returned unsatisfied. As a consequence, judgment was rendered
against the surety bonds for the sum of P60,000.00 in Civil Case No. Q-5213 and for
the sum of P40,000.00 in Civil Case No. Q-5214.
Appellee made demands on Emilia T. David to pay the amounts of P60,000.00 and
P40,000.00 under the surety bonds and arrears in premiums thereon. When appellant
David failed to make payments, appellee filed Civil Case No. 67713 in the then Court
of First Instance of Manila, Branch 1, for collection of sums of money under three (3)
different causes of action.
A motion to dismiss was filed by herein appellant on the following grounds. to wit:
(1) the court has no jurisdiction over the nature of the action or suit; (2) the complaint
states no cause of action; and (3) the plaintiff's causes of action, if there be any, have
been barred for its failure to file its claims against the estate of the deceased Felicisimo
V. Reyes in due time.
The lower court denied the motion for lack of merit. Thereafter, appellant, as
defendant in said Civil Case No. 67713, filed her answer.
After trial, the court rendered judgment ordering defendant Emilia T. David (herein
appellant)
1. to pay the plaintiff under the first cause of action, the amount of P60,000.00 with
interest at legal rate from the filing of the complaint until fun payment shall be
effected; and a further sum of P1,522.50 annually from June 20, 1961 until
termination of this case, said amount representing premiums and documentary stamps
in the surety bond, Exh. "B", with interest at legal rate from the filing of the complaint
until full payment is made;
2. to pay the plaintiff under the second cause of action, the amount of P40,000.00 with
interest at the legal rate from the filing of the complaint until full payment shag be
made; and a further sum of P1,105.00 annually from June 20, 1961 until termination
of this case, said amount representing premiums and documentary stamps on the
surety bond Exh. "B", with interest at the legal rate from the filing of the complaint
until full payment is made;
3. to pay the plaintiff under the third cause of action the amount of P153.33 annually
for a period of 4 years from June 29, 1962 representing premiums and documentary
stamps on the Homestead Bond Exh. "C-1" with interest at the legal rate from the
filing of the complaint until full payment is made;
4. to pay the plaintiff in concept of attorney's fees the sum of P20,000.00, representing
20% of the principal claim of plaintiff; plus cost. (pp. 39-40, Rollo)
The principal issue raised by appellant Emilia T. David in this appeal is whether or
not the lower court has jurisdiction over plaintiff's causes of action. She contends that
appellee's claim should have been presented according to Rule 86 of the Revised
Rules of Court and its failure to do so operates to bar its claim forever; that the
complaint failed to state a cause of action; that the writ of attachment was
improvidently issued; and, that the lower court should have discharged the writs.
Further, she argues that the judgment on attorney's fees has neither legal nor factual
basis.

We find no merit in this appeal. Under the law and well settled jurisprudence, when
the obligation is a solidary one, the creditor may bring his action in toto against any
of the debtors obligated in solidum. Thus, if husband and wife bound themselves
jointly and severally, in case of his death her liability is independent of and separate
from her husband s; she may be sued for the whole debt and it would be error to hold
that the claim against her as well as the claim against her husband should be made in
the decedent's estate. (Agcaoili vs. Vda. de Agcaoili, 90 Phil. 97)

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

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

And, in Manila Surety and Fidelity Co., Inc. vs. Villarama, et al., 107 Phil. 891, this
Court ruled that the Rules of Court provide the procedure should the creditor desire
to go against the. deceased debtor, "but there is noting in the aid provision making
compliance with such procedure a condition precedent an ordinary action against the
solidary debtors. should the creditor choose to demand payment from the latter, could
be entertained to the extent that failure to observe the same would deprive the court
jurisdiction to make cognizance of the action against the surviving debtors. Upon lie
other hand, the Civil Code expressly allows the creditor to proceed against any one of
the solidary debtors or some or all of them simultaneously. Hence, there is nothing
improper in the creditor's filing of an action against the surviving solidary debtors
alone, instead of instituting a proceeding for the settlement of the estate of the
deceased debtor wherein his claim could be filed.

ACCORDINGLY, the decision of the court a quo is hereby AFFIRMED in toto with
costs against appellant.

SO ORDERED.
G.R. No. 147561 June 22, 2006
STRONGHOLD INSURANCE COMPANY, INC., Petitioner,
vs.
REPUBLIC-ASAHI GLASS CORPORATION, Respondent.
DECISION
PANGANIBAN, CJ:
Asurety company’s liability under the performance bond it issues is solidary. The
death of the principal obligor does not, as a rule, extinguish the obligation and the
solidary nature of that liability.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to
reverse the March 13, 2001 Decision2 of the Court of Appeals (CA) in CA-GR CV
No. 41630. The assailed Decision disposed as follows:
"WHEREFORE, the Order dated January 28, 1993 issued by the lower court is
REVERSED and SET ASIDE. Let the records of the instant case be REMANDED to
the lower court for the reception of evidence of all parties."3
The Facts
The facts of the case are narrated by the CA in this wise:
"On May 24, 1989, [respondent] Republic-Asahi Glass Corporation (Republic-Asahi)
entered into a contract with x x x Jose D. Santos, Jr., the proprietor of JDS
Construction (JDS), for the construction of roadways and a drainage system in
Republic-Asahi’s compound in Barrio Pinagbuhatan, Pasig City, where [respondent]
was to pay x x x JDS five million three hundred thousand pesos (P5,300,000.00)
inclusive of value added tax for said construction, which was supposed to be
completed within a period of two hundred forty (240) days beginning May 8, 1989.
In order ‘to guarantee the faithful and satisfactory performance of its undertakings’ x
x x JDS, shall post a performance bond of seven hundred ninety five thousand pesos
(P795,000.00). x x x JDS executed, jointly and severally with [petitioner] Stronghold
Insurance Co., Inc. (SICI) Performance Bond No. SICI-25849/g(13)9769.
"On May 23, 1989, [respondent] paid to x x x JDS seven hundred ninety five thousand
pesos (P795,000.00) by way of downpayment.
"Two progress billings dated August 14, 1989 and September 15, 1989, for the total
amount of two hundred seventy four thousand six hundred twenty one pesos and one
centavo (P274,621.01) were submitted by x x x JDS to [respondent], which the latter
paid. According to [respondent], these two progress billings accounted for only
7.301% of the work supposed to be undertaken by x x x JDS under the terms of the
contract.
"Several times prior to November of 1989, [respondent’s] engineers called the
attention of x x x JDS to the alleged alarmingly slow pace of the construction, which
resulted in the fear that the construction will not be finished within the stipulated 240-
day period. However, said reminders went unheeded by x x x JDS.
"On November 24, 1989, dissatisfied with the progress of the work undertaken by x
x x JDS, [respondent] Republic-Asahi extrajudicially rescinded the contract pursuant
to Article XIII of said contract, and wrote a letter to x x x JDS informing the latter of
such rescission. Such rescission, according to Article XV of the contract shall not be
construed as a waiver of [respondent’s] right to recover damages from x x x JDS and
the latter’s sureties.
"[Respondent] alleged that, as a result of x x x JDS’s failure to comply with the
provisions of the contract, which resulted in the said contract’s rescission, it had to
hire another contractor to finish the project, for which it incurred an additional
expense of three million two hundred fifty six thousand, eight hundred seventy four
pesos (P3,256,874.00).
"On January 6, 1990, [respondent] sent a letter to [petitioner] SICI filing its claim
under the bond for not less than P795,000.00. On March 22, 1991, [respondent] again
sent another letter reiterating its demand for payment under the aforementioned bond.
Both letters allegedly went unheeded.
"[Respondent] then filed [a] complaint against x x x JDS and SICI. It sought from x
x x JDS payment of P3,256,874.00 representing the additional expenses incurred by
[respondent] for the completion of the project using another contractor, and from x x
x JDS and SICI, jointly and severally, payment of P750,000.00 as damages in
accordance with the performance bond; exemplary damages in the amount
of P100,000.00 and attorney’s fees in the amount of at least P100,000.00.
"According to the Sheriff’s Return dated June 14, 1991, submitted to the lower court
by Deputy Sheriff Rene R. Salvador, summons were duly served on defendant-
appellee SICI. However, x x x Jose D. Santos, Jr. died the previous year (1990), and
x x x JDS Construction was no longer at its address at 2nd Floor, Room 208-A, San
Buena Bldg. Cor. Pioneer St., Pasig, Metro Manila, and its whereabouts were
unknown.
"On July 10, 1991, [petitioner] SICI filed its answer, alleging that the [respondent’s]
money claims against [petitioner and JDS] have been extinguished by the death of
Jose D. Santos, Jr. Even if this were not the case, [petitioner] SICI had been released
from its liability under the performance bond because there was no liquidation, with
the active participation and/or involvement, pursuant to procedural due process, of
herein surety and contractor Jose D. Santos, Jr., hence, there was no ascertainment of
the corresponding liabilities of Santos and SICI under the performance bond. At this
point in time, said liquidation was impossible because of the death of Santos, who as
such can no longer participate in any liquidation. The unilateral liquidation on the
party (sic) of [respondent] of the work accomplishments did not bind SICI for being
violative of procedural due process. The claim of [respondent] for the forfeiture of the
performance bond in the amount of P795,000.00 had no factual and legal basis, as
payment of said bond was conditioned on the payment of damages which [respondent]
may sustain in the event x x x JDS failed to complete the contracted works.
[Respondent] can no longer prove its claim for damages in view of the death of Santos.
SICI was not informed by [respondent] of the death of Santos. SICI was not informed
by [respondent] of the unilateral rescission of its contract with JDS, thus SICI was
deprived of its right to protect its interests as surety under the performance bond, and
therefore it was released from all liability. SICI was likewise denied due process when
it was not notified of plaintiff-appellant’s process of determining and fixing the
amount to be spent in the completion of the unfinished project. The procedure
contained in Article XV of the contract is against public policy in that it denies SICI
the right to procedural due process. Finally, SICI alleged that [respondent] deviated
from the terms and conditions of the contract without the written consent of SICI, thus
the latter was released from all liability. SICI also prayed for the award of P59,750.00
as attorney’s fees, and P5,000.00 as litigation expenses.
"On August 16, 1991, the lower court issued an order dismissing the complaint of
[respondent] against x x x JDS and SICI, on the ground that the claim against JDS did
not survive the death of its sole proprietor, Jose D. Santos, Jr. The dispositive portion
of the [O]rder reads as follows:
‘ACCORDINGLY, the complaint against the defendants Jose D. Santos, Jr., doing
business under trade and style, ‘JDS Construction’ and Stronghold Insurance
Company, Inc. is ordered DISMISSED.
‘SO ORDERED.’
"On September 4, 1991, [respondent] filed a Motion for Reconsideration seeking
reconsideration of the lower court’s August 16, 1991 order dismissing its complaint.
[Petitioner] SICI field its ‘Comment and/or Opposition to the Motion for
Reconsideration.’ On October 15, 1991, the lower court issued an Order, the
dispositive portion of which reads as follows:
‘WHEREFORE, premises considered, the Motion for Reconsideration is hereby
given due course. The Order dated 16 August 1991 for the dismissal of the case
against Stronghold Insurance Company, Inc., is reconsidered and hereby reinstated
(sic). However, the case against defendant Jose D. Santos, Jr. (deceased) remains
undisturbed.
‘Motion for Preliminary hearing and Manifestation with Motion filed by [Stronghold]
Insurance Company Inc., are set for hearing on November 7, 1991 at 2:00 o’clock in
the afternoon.
‘SO ORDERED.’
"On June 4, 1992, [petitioner] SICI filed its ‘Memorandum for Bondsman/Defendant
SICI (Re: Effect of Death of defendant Jose D. Santos, Jr.)’ reiterating its prayer for
the dismissal of [respondent’s] complaint.
"On January 28, 1993, the lower court issued the assailed Order reconsidering its
Order dated October 15, 1991, and ordered the case, insofar as SICI is concerned,
dismissed. [Respondent] filed its motion for reconsideration which was opposed by
[petitioner] SICI. On April 16, 1993, the lower court denied [respondent’s] motion
for reconsideration. x x x."4
Ruling of the Court of Appeals
The CA ruled that SICI’s obligation under the surety agreement was not extinguished
by the death of Jose D. Santos, Jr. Consequently, Republic-Asahi could still go after
SICI for the bond.
The appellate court also found that the lower court had erred in pronouncing that the
performance of the Contract in question had become impossible by respondent’s act
of rescission. The Contract was rescinded because of the dissatisfaction of respondent
with the slow pace of work and pursuant to Article XIII of its Contract with JDS.
The CA ruled that "[p]erformance of the [C]ontract was impossible, not because of
[respondent’s] fault, but because of the fault of JDS Construction and Jose D. Santos,
Jr. for failure on their part to make satisfactory progress on the project, which
amounted to non-performance of the same. x x x [P]ursuant to the [S]urety [C]ontract,
SICI is liable for the non-performance of said [C]ontract on the part of JDS
Construction."5
Hence, this Petition.6
Issue
Petitioner states the issue for the Court’s consideration in the following manner:
"Death is a defense of Santos’ heirs which Stronghold could also adopt as its defense
against obligee’s claim."7
More precisely, the issue is whether petitioner’s liability under the performance bond
was automatically extinguished by the death of Santos, the principal.
The Court’s Ruling
The Petition has no merit.
Sole Issue:
Effect of Death on the Surety’s Liability
Petitioner contends that the death of Santos, the bond principal, extinguished his
liability under the surety bond. Consequently, it says, it is automatically released from
any liability under the bond.
As a general rule, the death of either the creditor or the debtor does not extinguish the
obligation.8 Obligations are transmissible to the heirs, except when the transmission
is prevented by the law, the stipulations of the parties, or the nature of the
obligation.9 Only obligations that are personal10 or are identified with the persons
themselves are extinguished by death.11
Section 5 of Rule 8612 of the Rules of Court expressly allows the prosecution of
money claims arising from a contract against the estate of a deceased debtor.
Evidently, those claims are not actually extinguished.13 What is extinguished is only
the obligee’s action or suit filed before the court, which is not then acting as a probate
court.14
In the present case, whatever monetary liabilities or obligations Santos had under his
contracts with respondent were not intransmissible by their nature, by stipulation, or
by provision of law. Hence, his death did not result in the extinguishment of those
obligations or liabilities, which merely passed on to his estate.15 Death is not a defense
that he or his estate can set up to wipe out the obligations under the performance bond.
Consequently, petitioner as surety cannot use his death to escape its monetary
obligation under its performance bond.
The liability of petitioner is contractual in nature, because it executed a performance
bond worded as follows:
"KNOW ALL MEN BY THESE PRESENTS:
"That we, JDS CONSTRUCTION of 208-A San Buena Building, contractor, of Shaw
Blvd., Pasig, MM Philippines, as principal and the STRONGHOLD INSURANCE
COMPANY, INC. a corporation duly organized and existing under and by virtue of
the laws of the Philippines with head office at Makati, as Surety, are held and firmly
bound unto the REPUBLIC ASAHI GLASS CORPORATION and to any individual,
firm, partnership, corporation or association supplying the principal with labor or
materials in the penal sum of SEVEN HUNDRED NINETY FIVE THOUSAND
(P795,000.00), Philippine Currency, for the payment of which sum, well and truly to
be made, we bind ourselves, our heirs, executors, administrators, successors and
assigns, jointly and severally, firmly by these presents.
"The CONDITIONS OF THIS OBLIGATION are as follows;
"WHEREAS the above bounden principal on the ___ day of __________, 19__
entered into a contract with the REPUBLIC ASAHI GLASS CORPORATION
represented by _________________, to fully and faithfully. Comply with the site
preparation works road and drainage system of Philippine Float Plant at
Pinagbuhatan, Pasig, Metro Manila.
"WHEREAS, the liability of the Surety Company under this bond shall in no case
exceed the sum of PESOS SEVEN HUNDRED NINETY FIVE THOUSAND
(P795,000.00) Philippine Currency, inclusive of interest, attorney’s fee, and other
damages, and shall not be liable for any advances of the obligee to the principal.
"WHEREAS, said contract requires the said principal to give a good and sufficient
bond in the above-stated sum to secure the full and faithfull performance on its part
of said contract, and the satisfaction of obligations for materials used and labor
employed upon the work;
"NOW THEREFORE, if the principal shall perform well and truly and fulfill all the
undertakings, covenants, terms, conditions, and agreements of said contract during
the original term of said contract and any extension thereof that may be granted by
the obligee, with notice to the surety and during the life of any guaranty required under
the contract, and shall also perform well and truly and fulfill all the undertakings,
covenants, terms, conditions, and agreements of any and all duly authorized
modifications of said contract that may hereinafter be made, without notice to the
surety except when such modifications increase the contract price; and such principal
contractor or his or its sub-contractors shall promptly make payment to any individual,
firm, partnership, corporation or association supplying the principal of 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 Appeals18 stated thus:

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

Under the law and jurisprudence, respondent may sue, separately or together, the
principal debtor and the petitioner herein, in view of the solidary nature of their
liability. The death of the principal debtor will not work to convert, decrease or nullify
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 latter’s liability under the performance bond.

WHEREFORE, the Petition is DENIED and the Decision of the Court of Appeals
AFFIRMED. Costs against petitioner.

SO ORDERED.
G.R. No. L-8235 March 19, 1914
ISIDRO SANTOS, plaintiff-appellant,
vs.
LEANDRA MANARANG, administratrix, defendant-appellee.
W. A. Kincaid and Thomas L. Hartigan for appellant.
Ramon Salinas for appellee.
TRENT, J.:
Don Lucas de Ocampo died on November 18, 1906, possessed of certain real and
personal property which, by his last will and testament dated July 26, 1906, he left to
his three children. The fourth clause of this will reads as follows:
I also declare that I have contracted the debts detailed below, and it is my desire that
they may be religiously paid by my wife and executors in the form and at the time
agreed upon with my creditors.
Among the debts mentioned in the list referred to are two in favor of the plaintiff,
Isidro Santos; one due on April 14, 1907, for P5,000, and various other described as
falling due at different dates (the dates are not given) amounting to the sum of P2,454.
The will was duly probated and a committee was regularly appointed to hear and
determine such claims against the estate as might be presented. This committee
submitted its report to the court on June 27, 1908. On July 14, 1908, the plaintiff,
Isidro Santos, presented a petition to the court asking that the committee be required
to reconvene and pass upon his claims against the estate which were recognized in the
will of testator. This petition was denied by the court, and on November 21, 1910, the
plaintiff instituted the present proceedings against the administratrix of the estate to
recover the sums mentioned in the will as due him. Relief was denied in the court
below, and now appeals to this court.
In his first assignment of error, the appellant takes exception to the action of the court
in denying his petition asking that the committee be reconvened to consider his claim.
In support of this alleged error counsel say that it does not appear in the committee's
report that the publications required by section 687 of the Code of Civil Procedure
had been duly made. With reference to this point the record affirmatively shows that
the committee did make the publications required by law. It is further alleged that at
the time the appellant presented his petition the court had not approved the report of
the committee. If this were necessary we might say that, although the record does not
contain a formal approval of the committee's report, such approval must undoubtedly
have been made, as will appear from an inspection of the various orders of the court
approving the annual accounts of the administratrix, in which claims allowed against
the estate by the committee were written off in accordance with its report. This is
shown very clearly from the court's order of August 1, 1912, in which the account of
the administratrix was approved after reducing final payments of some of the claims
against the estate to agree with the amounts allowed by the committee. It is further
alleged that at the time this petition was presented the administration proceedings had
not been terminated. This is correct.
In his petition of July 14, 1909, asking that the committee be reconvened to consider
his claims, plaintiff states that his failure to present the said claims to the committee
was due to his belief that it was unnecessary to do so because of the fact that the
testator, in his will, expressly recognized them and directed that they should be paid.
The inference is that had plaintiff's claims not been mentioned in the will he would
have presented to the committee as a matter of course; that plaintiff was held to
believe by this express mention of his claims in the will that it would be unnecessary
to present them to the committee; and that he did not become aware of the necessity
of presenting them to the committee until after the committee had made its final
report.
Under these facts and circumstances, did the court err in refusing to reconvene the
committee for the purpose of considering plaintiff's claim? The first step towards the
solution of this question is to determine whether plaintiff's claims were such as a
committee appointed to hear claims against an estate is, by law, authorized to pass
upon. Unless it was such a claim plaintiff's argument has no foundation. Section 686
empowers the committee to try and decide claims which survive against the executors
and administrators, even though they be demandable at a future day "except claims
for the possession of or title to real estate." Section 700 provides that all actions
commenced against the deceased person for the recovery of money, debt, or damages,
pending at the time the committee is appointed, shall be discontinued, and the claims
embraced within such actions presented to the committee. Section 703 provides that
actions to recover title or possession of real property, actions to recover damages for
injury to person or property, real and personal, and actions to recover the possession
of specified articles of personal property, shall survive, and may be commenced and
prosecuted against the executor or administrator; "but all other actions commenced
against the deceased before his death shall be discontinued and the claims therein
involved presented before the committee as herein provided." Section 708 provides
that a claim secured by a mortgage or other collateral security may be abandoned and
the claim prosecuted before the committee, or the mortgage may be foreclosed or the
security be relied upon, and in the event of a deficiency judgment, the creditor may,
after the sale of mortgage or upon the insufficiency of the security, prove such
deficiency before the committee on claims. There are also certain provisions in section
746 et seq., with reference to the presentation of contingent claims to the committee
after the expiration of the time allowed for the presentation of claims not contingent.
Do plaintiff's claims fall within any of these sections? They are described in the will
as debts. There is nothing in the will to indicate that any or all of them are contingent
claims, claims for the possession of or title to real property, damages for injury to
person or property, real or personal, or for the possession of specified articles of
personal property. Nor is it asserted by the plaintiff that they do. The conclusion is
that they were claims proper to be considered by the committee.
This being true, the next point to determine is, when and under what circumstances
may the committee be recalled to consider belated claims? Section 689 provides:
That court shall allow such time as the circumstances of the case require for the
creditors to present their claims the committee for examination and allowance; but
not, in the first instance, more than twelve months, or less than six months; and the
time allowed shall be stated in the commission. The court may extend the time as
circumstances require, but not so that the whole time shall exceed eighteen months.
It cannot be questioned that thus section supersedes the ordinary limitation of actions
provided for in chapter 3 of the Code. It is strictly confined, in its application, to
claims against the estate of deceased persons, and has been almost universally adopted
as part of the probate law of the United States. It is commonly termed the statute of
nonclaims, and its purpose is to settle the affairs of the estate with dispatch, so that
residue may be delivered to the persons entitled thereto without their being afterwards
called upon to respond in actions for claims, which, under the ordinary statute of
limitations, have not yet prescribed.
The object of the law in fixing a definite period within which claims must be presented
is to insure the speedy settling of the affairs of a deceased person and the early delivery
of the property of the estate in the hands of the persons entitled to receive it. (Estate
of De Dios, 24 Phil. Rep., 573.)
Due possibly to the comparative shortness of the period of limitation applying to such
claims as compared with the ordinary statute of limitations, the statute of nonclaims
has not the finality of the ordinary statute of limitations. It may be safely said that a
saving provision, more or less liberal, is annexed to the statute of nonclaims in every
jurisdiction where is found. In this country its saving clause is found in section 690,
which reads as follows:
On application of a creditor who has failed to present his claim, if made within six
months after the time previously limited, or, if a committee fails to give the notice
required by this chapter, and such application is made before the final settlement of
the estate, the court may, for cause shown, and on such terms as are equitable, renew
the commission and allow further time, not exceeding one month, for the committee
to examine such claim, in which case it shall personally notify the parties of the time
and place of hearing, and as soon as may be make the return of their doings to the
court.
If the committee fails to give the notice required, that is a sufficient cause for
reconvening it for further consideration of claims which may not have been presented
before its final report was submitted to the court. But, as stated above, this is not the
case made by the plaintiff, as the committee did give the notice required by law.
Where the proper notice has been given the right to have the committee recalled for
the consideration of a belated claim appears to rest first upon the condition that it is
presented within six months after the time previously limited for the presentation of
claims. In the present case the time previously limited was six months from July 23,
1907. This allowed the plaintiff until January 23, 1908, to present his claims to the
committee. An extension of this time under section 690 rested in the discretion of the
court. (Estate of De Dios, supra.) In other words, the court could extend this time and
recall the committee for a consideration of the plaintiff's claims against the estate of
justice required it, at any time within the six months after January 23, 1908, or until
July 23, 1908. Plaintiff's petition was not presented until July 14, 1909. The bar of the
statute of nonclaims is an conclusive under these circumstances as the bar of the
ordinary statute of limitations would be. It is generally held that claims are not barred
as to property not included in the inventory. (Waughop vs. Bartlett, 165 III., 124;
Estate of Reyes, 17 Phil. Rep., 188.) So also, as indicated by this court in the case last
cited, fraud would undoubtedly have the same effect. These exceptions to the
operation of the statute are, of course, founded upon the highest principles of equity.
But what is the plea of the plaintiff in this case? Simply this: That he was laboring
under a mistake of law — a mistake which could easily have been corrected had he
sought to inform himself; a lack of information as to the law governing the allowance
of claims against estate of the deceased persons which, by proper diligence, could
have been remedied in ample to present the claims to the committee. Plaintiff finally
discovered his mistake and now seeks to assert his right when they have been lost
through his own negligence. Ignorantia legis neminem excusat. We conclude that the
learned trial court made no error in refusing to reconvene the committee for the
purpose of considering plaintiff's claims against the estate.
In his second assignment of error the appellant insists that the court erred in
dismissing his petition filed on November 21, 1910, wherein he asks that the
administratrix be compelled to pay over to him the amounts mentioned in the will as
debts due him. We concede all that is implied in the maxim, dicat testor et erit lex.
But the law imposes certain restrictions upon the testator, not only as to the disposition
of his estate, but also as to the manner in which he may make such disposition. As
stated in Rood on Wills, sec. 412: "Some general rules have been irrevocably
established by the policy of the law, which cannot be exceeded or transgressed by any
intention of the testator, be it ever so clearly expressed."
It may be safely asserted that no respectable authority can be found which holds that
the will of the testator may override positive provisions of law and imperative
requirements of public policy. (Page on Wills, sec. 461.)
Impossible conditions and those contrary to law and good morals shall be considered
as not imposed, . . . (Art. 792, Civil Code.)
Conceding for the moment that it was the testator's desire in the present case that the
debts listed by him in his will should be paid without referring them to a committee
appointed by the court, can such a provision be enforced? May the provisions of the
Code of Civil Procedure relating to the settlement of claims against an estate by a
committee appointed by the court be superseded by the contents of a will?
It is evident from the brief outline of the sections referred to above that the Code of
Civil Procedure has established a system for the allowance of claims against the
estates of decedents. Those are at least two restrictions imposed by law upon the
power of the testator to dispose of his property, and which pro tanto restrict the
maxim that "the will of the testator law: (1) His estate is liable for all legal obligations
incurred by him; and (2) he can not dispose of or encumber the legal portion due his
heirs by force of law. The former take precedence over the latter. (Sec. 640, Code Civ,
Proc.) In case his estate is sufficient they must be paid. (Sec, 734, id.) In case the
estate is insolvent they must be paid in the order named in section 735. It is hardly
necessary to say that a provision in an insolvent's will that a certain debt be paid would
not entitle it to preference over other debts. But, if the express mention of a debt in
the will requires the administrator to pay it without reference to the committee, what
assurance is there, in the case of an insolvent estate, that it will not take precedence
over preferred debts?
If it is unnecessary to present such claim to the committee, the source of nonclaims is
not applicable. It is not barred until from four to ten years, according to its
classification in chapter 3 of the Code of Civil Procedure, establishing questions upon
actions. Under such circumstances, when then the legal portion is determined? If, in
the meantime the estate has been distributed, what security have the differences
against the interruption of their possession? Is the administrator required to pay the
amount stipulated in the will regardless of its correctness? And, if not, what authority
has he to vise the claim? Section 706 of the Code of Civil Procedure provides that an
executor may, with the approval of the court, compound with a debtor of deceased for
a debt due the estate, But he is nowhere permitted or directed to deal with a creditor
of the estate. On the contrary, he is the advocate of the estate before an impartial
committee with quasi-judicial power to determine the amount of the claims against
the estate, and, in certain cases, to equitably adjust the amounts due. The
administrator, representing the debtor estate, and the creditor appear before this body
as parties litigant and, if either is dissatisfied with its decision, an appeal to the court
is their remedy. To allow the administrator to examine and approve a claim against
the estate would put him in the dual role of a claimant and a judge. The law in this
jurisdiction has been so framed that this may not occur. The most important
restriction, in this jurisdiction, on the disposition of property by will are those
provisions of the Civil Code providing for the preservation of the legal portions due
to heirs by force of law, and expressly recognized and continued in force by sections
614, 684, and 753 of the Code of Civil Procedure. But if a debt is expressly recognized
in the will must be paid without its being verified, there is nothing to prevent a partial
or total alienation of the legal portion by means of a bequest under a guise of a debt,
since all of the latter must be paid before the amount of the legal portion can be
determined.
We are aware that in some jurisdictions executors and administrators are, by law,
obligated to perform the duties which, in this jurisdiction, are assign to the committee
on claims; that in some other jurisdictions it is the probate court itself that performs
these duties; that in some jurisdictions the limitation upon the presentment of claims
for allowance is longer and, possibly, in some shorter; and that there is a great
divergence in the classification of actions which survive and actions which do not
survive the death of the testator. It must be further remembered that there are but few
of the United States which provide for heirs by force of law. These differences render
useless as authorities in this jurisdiction many of the cases coming from the United
States. The restriction imposed upon the testator's power to dispose of his property
when they are heirs by force of law is especially important. The rights of these heirs
by force law pass immediately upon the death of the testator. (Art. 657, Civil Code.)
The state intervenes and guarantees their rights by many stringent provisions of law
to the extent mentioned in article 818 of the Civil Code. Having undertaken the
responsibility to deliver the legal portion of the net assets of the estate to the heirs by
force of law, it is idle to talk of substituting for the procedure provided by law for
determining the legal portion, some other procedure provided in the will of the
testator. The state cannot afford to allow the performance of its obligations to be
directed by the will of an individual. There is but one instance in which the settlement
of the estate according to the probate procedure provided in the Code of Civil
Procedure may be dispense with, and it applies only to intestateestates. (Sec. 596,
Code Civ. Proc.) A partial exemption from the lawful procedure is also contained in
section 644, when the executor or administrator is the sole residuary legatee. Even in
such case, and although the testator directs that no bond be given, the executor is
required to give a bond for the payment of the debts of the testator. The facts of the
present case do not bring it within either of this sections. We conclude that the claims
against the estate in the case at bar were enforceable only when the prescribed legal
procedure was followed.
But we are not disposed to rest our conclusion upon this phase of the case entirely
upon legal grounds. On the contrary we are strongly of the opinion that the application
of the maxim, "The will of the testator is the law of the case," but strengthens our
position so far as the present case is concerned.
It will ordinarily be presumed in construing a will that the testator is acquainted with
the rules of law, and that he intended to comply with them accordingly. If two
constructions of a will or a part thereof are possible, and one of these constructions is
consistent with the law, and the other is inconsistent, the presumption that the testator
intended to comply with the law will compel that construction which is consistent
with the law to be adopted. (Page on Wills, sec. 465.)
Aside from this legal presumption, which we believe should apply in the present case
as against any construction of the will tending to show an intention of the testator that
the ordinary legal method of probating claims should be dispensed with, it must be
remembered that the testator knows that the execution of his will in no way affects
his control over his property. The dates of his will and of his death may be separated
by a period of time more or less appreciable. In the meantime, as the testator well
knows, he may acquire or dispose of property, pay or assume additional debts, etc. In
the absence of anything to the contrary, it is only proper to presume that the testator,
in his will, is treating of his estate at the time and in the condition it is in at his death.
Especially is this true of his debts. Debts may accrue and be paid in whole or in part
between the time the will is made and the death of the testator. To allow a debt
mentioned in the will in the amount expressed therein on the ground that such was the
desire of the testator, when, in fact, the debt had been wholly or partly paid, would be
not only unjust to the residuary heirs, but a reflection upon the good sense of the
testator himself. Take the present case for example. It would be absurd to say that the
testator knew what the amount of his just debt would be at a future and uncertain date.
A mere comparison of the list of the creditors of the testator and the amounts due them
as described in his will, with the same list and amounts allowed by the committee on
claims, shows that the testator had creditors at the time of his death not mention in the
will at all. In other instances the amounts due this creditors were either greater or less
than the amounts mentioned as due them in the will. In fact, of those debts listed in
the will, not a single one was allowed by the committee in the amount named in the
will. This show that the testator either failed to list in his will all his creditors and that,
as to those he did include, he set down an erroneous amount opposite their names; or
else, which is the only reasonable view of the matter, he overlooked some debts or
contracted new ones after the will was made and that as to others he did include he
made a partial payments on some and incurred additional indebtedness as to others.
While the testator expresses the desire that his debts be paid, he also expressly leaves
the residue of his estate, in equal parts, to his children. Is it to be presumed that he
desired to overpay some of his creditors notwithstanding his express instructions that
his own children should enjoy the net assets of his estate after the debts were paid?
Again, is the net statement of the amount due some of his creditors and the omission
all together of some of his creditors compatible with his honorable and commendable
desire, so clearly expressed in his will, that all his debts be punctually paid? We cannot
conceive that such conflicting ideas were present in the testator's mind when he made
his will.
Again, suppose the testator erroneously charged himself with a debt which he was
under no legal or even moral obligation to pay. The present case suggests, if it does
not actually present, such a state of affairs. Among the assets of the estate mentioned
in the will is a parcel of land valued at P6,500; while in the inventory of the
administratrix the right to repurchase this land from one Isidro Santos is listed as an
asset. Counsel for the administratrix alleges that he is prepared to prove that this is
the identical plaintiff in the case at bar; that the testator erroneously claimed the fee
of this land in his last will and stated Santos' rights in the same as a mere debt due
him of P5,000; that in reality, the only asset of the testator regard to this land was the
value of the right to repurchase, while the ownership of the land, subject only to that
right of redemption, belonged to Santos; that the right to repurchase this land expired
in 1907, after the testator's death. Assuming, without in the least asserting, that such
are the underlying facts of this case, the unjust consequences of holding that a debt
expressly mentioned in the will may be recovered without being presented to the
committee on claims, is at once apparent. In this supposed case, plaintiff needed only
wait until the time for redemption of the land had expired, when he would acquired
an absolute title to the land, and could also have exacted the redemption price. Upon
such a state of facts, the one item of P5,000 would be a mere fictitious debt, and as
the total net value of the estate was less than P15,000, the legal portion of the testator's
children would be consumed in part in the payment of this item. Such a case cannot
occur if the prescribed procedure is followed of requiring of such claims be viseed by
the committee on claims.
The direction in the will for the executor to pay all just debts does not mean that he
shall pay them without probate. There is nothing in the will to indicate that the testator
in tended that his estate should be administered in any other than the regular way
under the statute, which requires "all demands against the estates of the deceased
persons," "all such demands as may be exhibited," etc. The statute provides the very
means for ascertaining whether the claims against the estate or just debts.
(Kaufman vs. Redwine, 97 Ark., 546.)
See also Collamore vs. Wilder (19 Kan., 67); O'Neil vs. Freeman (45 N. J. L., 208).
The petition of the plaintiff filed on November 21, 1910, wherein he asks that the
administratrix be compelled to pay over to him the amounts mentioned in the will as
debts due him appears to be nothing more nor less than a complaint instituting an
action against the administratrix for the recovery of the sum of money. Obviously, the
plaintiff is not seeking possession of or title to real property or specific articles of
personal property.
When a committee is appointed as herein provided, no action or suit shall be
commenced or prosecute against the executor or administrator upon a claim against
the estate to recover a debt due from the state; but actions to recover the seizing and
possession of real estate and personal chattels claimed by the estate may be
commenced against him. (Sec. 699, Code Civ. Proc.)
The sum of money prayed for in the complaint must be due the plaintiff either as a
debt of a legacy. If it is a debt, the action was erroneously instituted against the
administratrix. Is it a legacy?
Plaintiff's argument at this point becomes obviously inconsistent. Under his first be a hearing sometime before some tribunal to determine the correctness of the debts
assignment of error he alleges that the committee on claims should have been recognized in the wills of deceased persons. This hearing, in the first instance, can not
reconvened to pass upon his claim against the estate. It is clear that this committee be had before the court because the law does not authorize it. Such debtors must
has nothing to do with legacies. It is true that a debt may be left as a legacy, either to present their claims to the committee, otherwise their claims will be forever barred.
the debtor (in which case it virtually amounts to a release), or to a third person. But
this case can only arise when the debt is an asset of the estate. It would be absurd to For the foregoing reasons the orders appealed from are affirmed, with costs against
speak of a testator's leaving a bare legacy of his own debt. (Arts. 866, 878, Civil the appellant.
Code.) The creation of a legacy depends upon the will of the testator, is an act of pure
beneficence, has no binding force until his death, and may be avoided in whole or in
part by the mere with whim of the testator, prior to that time. A debt arises from an
obligation recognized by law (art. 1089, Civil Code) and once established, can only
be extinguished in a lawful manner. (Art. 1156, id.) Debts are demandable and must
be paid in legal tender. Legacies may, and often do, consist of specific articles of
personal property and must be satisfied accordingly. In order to collect as legacy the
sum mentioned in the will as due him, the plaintiff must show that it is in fact a legacy
and not a debt. As he has already attempted to show that this sum represents a debt, it
is an anomaly to urge now it is a legacy.

Was it the intention of the testator to leave the plaintiff a legacy of P7,454? We have
already touched upon this question. Plaintiff's claim is described by the testator as a
debt. It must be presumed that he used this expression in its ordinary and common
acceptation; that is, a legal liability existing in favor of the plaintiff at the time the
will was made, and demandable and payable in legal tender. Had the testator desired
to leave a legacy to the plaintiff, he would have done so in appropriate language
instead of including it in a statement of what he owed the plaintiff. The decedent's
purpose in listing his debts in his will is set forth in the fourth clause of the will, quoted
above. There is nothing contained in that clause which indicates, even remotely, a
desire to pay his creditors more than was legally due them.

A construction leading to a legal, just and sensible result is presumed to be correct, as

against one leading to an illegal, unnatural, or absurd effect. (Rood on Wills, sec.
426.)

The testator, in so many words, left the total net assets of his estate, without
reservation of any kind, to his children per capita. There is no indication that he
desired to leave anything by way of legacy to any other person. These considerations
clearly refute the suggestion that the testator intended to leave plaintiff any thing by
way of legacy. His claim against the estate having been a simple debt, the present
action was improperly instituted against the administratrix. (Sec. 699, Code Civ.
Proc.)

But it is said that the plaintiff's claims should be considered as partaking of the nature
of a legacy and disposed of accordingly. If this be perfect then the plaintiff would
receive nothing until after all debts had been paid and the heirs by force of law had
received their shares. From any point of view the inevitable result is that there must
G.R. No. L-29407 July 29, 1983
ESTATE OF AMADEO MATUTE OLAVE, as represented by JOSE S.
MATUTE, Judicial Co-Administrator in Sp. Proc. No. 25876, Court of First
Instance of Manila, petitioner,
vs.
HONORABLE MANASES G. REYES, Presiding Judge of Branch III, Court of
First Instance of Davao, Davao City; SOUTHWEST AGRICULTURAL
MARKETING CORPORATION also known as (SAMCO); CARLOS V.
MATUTE, as another Administrator of the Estate of Amadeo Matute Olave, Sp.
Proc. No. 25876 CFI, Manila; and MATIAS S. MATUTE, as former Co-
Administrator of the Estate of Amadeo Matute Olave, Sp. Proc. No. 25876, CFI,
Manila, respondents.
RELOVA, J.:
In this petition for certiorari, the estate of Amadeo Matute Olave, represented by Jose
S. Matute, Judicial Administrator in Sp. Proc. No. 25876, of the then Court of First
Instance of Manila, assails the Order, dated November 10, 1967, of the respondent
judge, approving the "Amicable Settlement" submitted by the parties in Civil Case
No. 4623 of the then Court of First Instance of Davao, 16th Judicial District, Branch
III, and prays that the said Order be set aside.
The petition alleged that the estate of Amadeo Matute Olave is the owner in fee simple
of a parcel of land containing an area of 293,578 square meters, situated in sitio
Tibambam, barrio Tibambam, municipality of Sigaboy (now Governor Generoso),
province of Davao, and covered by Original Certificate of Title No. 0-27 of the
Registry of Deeds of Davao Province; that in April 1965 herein private respondent
Southwest Agricultural Marketing Corporation (SAMCO), as plaintiff, filed Civil
Case No. 4623 with the respondent Court of First Instance of Davao against
respondents, Carlos V. Matute and Matias S. Matute, as defendants, in their capacities
as co-administrators of the estate of Amadeo Matute Olave, for the collection of an
alleged indebtedness of P19,952.11 and for attorney's fees of P4,988.02; that on May
8, 1965, defendants Carlos V. Matute and Matias S. Matute in said Civil Case No.
4623, filed an answer denying their lack of knowledge and questioning the legality of
the claim of SAMCO; that on October 25, 1966 in Sp. Proc. No. 25876, the then Court
of First Instance of Manila, Branch IV, issued an order directing the administrators to
secure the probate court's approval before entering into any transaction involving the
seventeen (17) titles of the estate, of which the property described in OCT No. 0-27
is one of them; that on October 20, 1967, the parties (plaintiff and defendants) in Civil
Case No. 4623 of the Court of First Instance of Davao, submitted to the respondent
court an Amicable Settlement whereby the property of the estate covered by OCT No.
0-27 of Davao was conveyed and ceded to SAMCO as payment of its claim; that the
said Amicable Settlement signed by the herein respondents was not submitted to and
approved by the then Court of First Instance of Manila, Branch IV, in Sp. Proc. No.
25876, nor notice thereof made to the beneficiaries and heirs in said special
proceedings; that on November 10, 1967, respondent court, despite the opposition of
the other parties who sought to intervene in Civil Case No. 4623 and despite the utter
lack of approval of the probate court in Manila, approved the said Amicable
Settlement and gave the same the enforceability of a court decision which, in effect,
ceded the property covered by OCT No. 0-27, containing an area of 293,578 square
meters and with an assessed value of P31,700.00 to SAMCO in payment of its claim
for only P19,952.11; and, that if the said Order of respondent dated November 10,
1967 is not set aside, the same will operate as a judgment that "conveys illegally and
unfairly, the property of petitioner-estate without the requisite approval of the probate
court of Manila, which has the sole jurisdiction to convey this property in custodia
legis of the estate. (par. 16, Petition).
Made to answer, herein respondent SAMCO and respondent judge, among others,
contend that the Amicable Settlement need not be approved by the probate court, "the
same having been entered into in another independent action and in another court of
co-equal rank. Article 2032 of the Civil Code applies only to extrajudicial
compromise entered into by the administrators of the estate. In the alternative, lack of
approval of the probate court of the Amicable Settlement does not render it null and
void, but at most voidable, which must be the subject matter of a direct proceeding in
the proper Court of First Instance." (p. 60, Rollo)
In said Civil Case No. 4623 for sum of money, plaintiff SAMCO and defendants
Carlos V. Matute and Matias S. Matute, in their capacities as judicial administrators
of the estate of Amado Matute Olave in Special Proceeding No. 25876, Court of First
Instance of Manila, Branch IV, submitted the following Amicable Settlement:
1. That defendants in their capacity as judicial administrators of the Estate of Amadeo
Matute, hereby submit and acknowledge that the said Estate of Amadeo Matute is
justly indebted to plaintiff in the total sum of P28,403.02 representing the principal
account of P19,952.11 and in the sum of P8,450.91 as attorney's fees, damages,
interest and costs;
2. That at present the defendant estate is devoid of or does not have any funds with
which to pay or settle the aforestated obligation in favor of the plaintiff, and that being
so, the defendant estate through the undersigned administrators, decides to pay the
plaintiff by way of conveying and ceding unto the plaintiff the ownership of a certain
real property owned by the defendant estate now under the administration of the said
undersigned administrators;
3. That plaintiff hereby accepts the offer of defendants of conveying, transferring and
ceding the ownership of the above described property as full and complete payment
and satisfaction of the total obligation of P28,403.02;
4. That the defendant estate, through the undersigned administrators hereby agree and
bind the defendant estate to pay their counsel Atty. Dominador Zuho, of the Zufio
Law Offices the sum of Eight Thousand (P8,000.00) Pesos by way of Attorney's Fee;
5. That the parties herein waive an other claims which they might have against one
another.
WHEREFORE, premises considered, it is respectfully prayed that this Honorable
Court approves the foregoing settlement and that judgment be rendered transferring
the said real property covered by Original Certificate of Title No. 0-27 to plaintiff
Southwest Agricultural Marketing Corporation and that a new transfer certificate of
title be issued to said plaintiff. (pp. 25-26, Rollo)
the exclusion of all other courts." (Emphasis supplied). The law is clear that where the
estate of the deceased person is already the subject of a testate or intestate proceeding,
the administrator cannot enter into any transaction involving it without prior approval
of the probate court.
WHEREFORE, the petition for certiorari is GRANTED, and the Order, dated
November 10, 1967, of the respondent court approving the Amicable Settlement of
the parties in Civil Case No. 4623 of the then Court of First Instance of Davao, is
hereby SET ASIDE.
SO ORDERED.

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

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

It is clear that the main purpose of private respondent SAMCO in filing Civil Case
No. 4623 in the then Court of First Instance of Davao was to secure a money judgment
against the estate which eventually ended in the conveyance to SAMCO of more than
twenty-nine (29) hectares of land belonging to the estate of the deceased Amadeo
Matute Olave in payment of its claim, without prior authority of the probate court of
Manila, in Sp. Proc. No. 25876, which has the exclusive jurisdiction over the estate
of Amadeo Matute Olave. It was a mistake on the part of respondent court to have
given due course to Civil Case No. 4623, much less issue the questioned Order, dated
November 10, 1967, approving the Amicable Settlement.

Section 1, Rule 73 of the Rules of Court, expressly provides that "the court first taking
cognizance of the settlement of the estate of a decedent, shall exercise jurisdiction to
SALONGA HERNANDEZ & G.R. No. 127165 In the meantime, Doa Adela died on 18 August 1987, leaving behind a last will and
ALLADO, testament executed in 1978, designating Olivia Pascual as the executrix, as well as the
Petitioner, principal beneficiary of her estate. The will also bequeathed several legacies and
- versus - devises to several individuals and institutions.
OLIVIA SENGCO PASCUAL Promulgated:
and THE HONORABLE COURT
OF APPEALS, May 2, 2006 Olivia Pascual then engaged the services of petitioner in connection with the
Respondents. settlement of the estate of Doa Adela. Their agreement as to the professional fees due
x----------------------------------------------------------------------------x to petitioner is contained in a letter dated 25 August 1987, signed by Atty.
DECISION 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
TINGA, J.: 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
Petitioner, a professional law partnership, brings forth this Petition for Review estate. The 3% final fee shall be payable upon approval by the court of the agreement
assailing the Decision[1] of the Court of Appeals dated 22 December 1995. The for the distribution of the properties to the court designated heirs of the estate.[6]
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 On 26 August 1987, private respondent, represented by petitioner, commenced a
Matter of Testate Estate of Doa Adela Pascual, Dr. Olivia S. Pascual, Executrix. petition for the probate of the last will and testament of Doa Adela before the Probate
Court, docketed as Sp. Proc. No. 136-MN and raffled to Branch 72 presided by Judge
The case actually centers on two estate proceedings, that Benjamin M. Aquino, Jr. The petition was opposed by a certain Miguel Cornejo, Jr.
of Doa Adela Pascual (Doa Adela) and the other, her husband Don and his siblings, who in turn presented a purported will executed in 1985
Andres Pascuals (Don Andres), who predeceased her. Don Andres died intestate, by Doa Adela in their favor. [7]
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] After due trial, on 1 July 1993, the Probate Court rendered a Decision[8] allowing
probate of the 1978 Last Will and Testament of Doa Adela and disallowing the
On 1 December 1973, an intestate proceeding for the settlement of the estate of Don purported 1985 Will. Letters testamentary were issued to
Andres was commenced by his widow Doa Adela before the then Court of First Olivia Pascual.[9] Cornejo attempted to appeal this decision of the Probate Court, but
Instance, now Regional Trial Court of Pasig, Branch 23 (Intestate Court), docketed as his notice of appeal was denied due course by the Probate Court, said notice not
Sp. Proc. No. 7554. Apart from his wife, who bore him no children, Don Andres was having been accompanied by any record on appeal as required under the Interim Rules
survived by several nephews and nieces from his full-blood and half-blood and by Rule 109 of the Rules of Court.[10]
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 On 27 July 1993, petitioner filed a Notice of Attorneys Lien equivalent to three
Don Andress brother, Eligio, to be recognized as heirs of Don Andres. Olivia and percent (3%) of the total gross estate of the late Doa Adela S. Pascual as well as the
Hermes Pascual procured the initial support of Doa Adela to their claims. However, fruits thereof based on the court approved inventory of the estate, pursuant to the
on 16 October 1985, the other heirs of Don Andres entered into a Compromise retainer agreement signed by and between petitioner and Olivia S. Pascual, on 25
Agreement over the objections of Olivia and Hermes Pascual, whereby three-fourths August 1987. In an Order dated 4 November 1993, the Probate Court ruled that
(3/4) of the estate would go to Doa Adela and one-fourth (1/4) to the other heirs of petitioners notice of attorneys lien, being fully supported by a retainers contract not
Don Andres, without prejudice to the final determination by the court or another repudiated nor questioned by his client Olivia S. Pascual, is hereby noted as a lien that
compromise agreement as regards the claims of Olivia and must be satisfied chargeable to the share of Olivia S. Pascual.[11] This was followed
Hermes Pascual.[4] Subsequently, the Intestate Court denied the claims of Olivia and by another Order, dated 11 November 1993, wherein it was directed that notice be
Hermes Pascual. Said denial was eventually affirmed by this Court in 1992 x x x given, requiring all persons having claims for money against the
in Pascual v. Pascual-Bautista,[5] applying Article 992 of the Civil Code. 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
late Doa 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 of Doa 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 re-appraise 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 Ongpin Property, 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 re-appraisal, so it
claims, is necessary in order to determine the three percent (3%) share in the total
gross estate committed to petitioner by reason of the Retainer Agreement.
It appears that the thrust of the assailed Decision of the Court of Appeals is along
these lines: that petitioner may directly claim attorneys fees only against
Olivia Pascual 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
Olivia Pascual 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
of Malabon, 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.

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

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

The order appealed from not being of an appealable nature, it results that this appeal
must be dismissed, and it is so ordered, with costs against the appellants.
G.R. No. L-48140 May 4, 1942
SINFOROSO PASCUAL, plaintiff-appellant,
vs.
PONCIANO S. PASCUAL, ET AL., defendants-appellees.
Celedonio Bernardo for appellant.
Ortega & Ortega for appellees.
MORAN, J.:
On September 14, 1940, while the proceedings for the probate of the will of the
deceased Eduarda de los Santos were pending in the Court of First Instance of Rizal
plaintiff, Sinforoso Pascual, instituted in the Court of First Instance of Pampanga
against Ponciano S. Pascual and others, an action for the annulment of a contract of
sale of a fishpond situated in Lubao, Pampanga, supposedly executed without
consideration by said deceased in her lifetime in favor of the defendants. The
complaint alleges that plaintiff and defendants are all residents of Malabon, Rizal, and
are legitimate children of the testratix, Eduarda de los Santos. Defendants filed of a
motion to dismiss, alleging want of cause of action, limitation of action, wrong venue
and pendency of another action. The trial court granted the motion on the ground that
the action should have been brought by the executor or administrator of the estate left
by the deceased, and directed the plaintiff to amend his complaint within five days.
Plaintiff filed an amended complaint, the amendment consisting in that "el demandado
Miguel S. Pascual ha sido nombrado por el Juzgado de Primera Instancia de Rizal
albacea testamentario de los bienes de la finada Eduarda de los Santos. en el asunto
de la testamentaria de dicha finada." The trial court declaring that such amendment
did not cure the insufficiency of the complaint, dismissed the action. It is from this
order of dismissal that plaintiff interposed his appeal.
Under Rule 86, section 1, of the new Rules of Court, actions for the recovery or
protection of the property or rights of the deceased for causes which survive may be
prosecuted or defended by his executor or administrator. Upon the commencement of
the testate or intestate proceedings the heirs have no standing in court in actions of
the above character, except when the executor or administrator is unwilling or fails or
refuses to act, in which event to heirs may act in his place. (Pomeroy on Code
Remedies, p. 158, 11 R C. L. p. 262; 21 Am. Jur., 940) Here, the fictitious sale is
alleged to have been made to the defendants, one of them, Miguel S. Pascual, being
the executor appointed by the probate court. Such executor naturally would not bring
an action against himself for recovery of the fishpond. His refusal to act may,
therefore, be implied. And this brings the case under the exception. It should be noted
that in the complaint the prayer is that the fishpond be delivered not to the plaintiff
but to the executor, thus indicating that the action is brought in behalf of the estate of
the deceased.
Appellees contend that there is here a wrong venue. They argue that an action for the
annulment of a contract of sale is a personal action which must be commenced at the
place of residence of either the plaintiff or the defendant, at the election of the plaintiff
(Rule 5, sec. 1, Rules of Court), and, in the instant case, both plaintiff and defendants
are residents of Malabon, Rizal, but the action was commenced in the Court of First
Instance of Pampanga. It appearing, however, that the sale is alleged to be fictitious,
with absolutely no consideration, it should be regarded as a non-existent, not merely
null, contract. (8 Manresa, Comentarios al Codigo Civil Español, 2nd ed., pp. 766-
770.) And there being no contract between the deceased and the defendants, there is
in truth nothing to annul by action. The action brought cannot thus be for annulment
of contract, but is one for recovery of a fishpond, a real action that should be, as it has
been, brought in Pampanga, where the property is located (Rule 5, sec. 3, Rules of
Court.)
Appellees argue further that the action brought by the plaintiff is unnecessary, the
question involved therein being one that may properly be raised and decided in the
probate proceedings. The general rule is that questions as to title to property cannot
be passed upon in testate proceedings. (Bauermann vs. Casas, 10 Phil., 386;
Devesa vs.Arbes, 13 Phil., 273; Guzman vs. Anog, 37 Phil., 61; Lunsod vs. Ortega,
46 Phil., 664; Adapon vs. Maralit, 40 Off. Gaz., 6th Sup., p. 84.) The court is,
however, of the opinion and so holds that, when as in the instant case, the parties
interested are all heirs of the deceased claiming title under him, the question as to
whether the transfer made by the latter to the former is or is not fictitious, may
properly be brought by motion in the testate or intestate proceedings on or before the
distribution of the estate among the heirs. This procedure is optional to the parties
concerned who may choose to bring a separate action as a matter of convenience in
the preparation or presentation of evidence, and accordingly, the action brought by
the appellant is not improper.
Order is reversed, and the case is remanded the trial court for further proceedings,
with costs against appellees.