SECOND DIVISION

[G.R. No. 55750. November 8, 1989.]

RUBEN, BELLA, ARNULFO, CARUSO, ANITA, ELSIE, all surnamed

MELGAR, and ERLINA MELGAR ASECO, Petitioners, v. THE HON.
CARLOS R. BUENVIAJE, JUDGE, COURT OF FIRST INSTANCE OF
CAMARINES SUR, BR. VII, and the SPOUSES OSCAR PRADES and
VICTORIA PRADES, Respondents.

Rafael Triunfante, for Petitioners.

Romulo A. Badilla and Rolando Grageda Alberto for Respondents.

SYLLABUS

1. REMEDIAL LAW; SPECIAL PROCEEDINGS; CLAIMS AGAINST THE ESTATE;

ACTIONS ABATED BY DEATH OF PARTY. — Under Section 5 Rule 86 of the
Rules of Court, actions that are abated by death are: (1) All claims for money
against the decedent, arising from contract, express or implied, whether the
same be due, not due or contingent; (2) All claims for funeral expenses and
expenses for the last sickness of the decedent; and (3) Judgments for money
against the decedent (Aguas v. Llemos, 5 SCRA 959 [1962]).

2. ID.; CIVIL ACTIONS; DAMAGES CAUSED BY TORT, SURVIVES. — Actions

for damages caused by the tortious conduct of the defendant survive the death
of the latter.

3. ID.; ID.; DEATH OF PARTY; DAMAGE SUIT AGAINST THE ESTATE; LEGAL
REPRESENTATIVE MAY BE SUED WHERE STEPS HAVE BEEN TAKEN TOWARDS
THE SETTLEMENT OF THE ESTATE. — Thus, while the petitioners may have
correctly moved for the dismissal of the case and private respondents have
forthwith corrected the deficiency by filing an amended complaint, even before
the lower court could act on petitioner’s motion for reconsideration of the
denial of their motion to dismiss, the action under Section 17 of Rule 3 of the
Rules of Court, which allows the suit against the legal representative of the
deceased, that is, the executor or administrator of his estate, would still be
futile, for the same reason that there appears to be no steps taken towards
the settlement of the estate of the late Felicidad Balla, nor has an executor or
administrator of the estate been appointed.

4. ID.; ID.; ID.; ID.; ID.; EXCEPTIONS. — Note however the deceased Balla
apparently left the bus. Under the circumstances the absence of an estate
proceeding may be avoided by requiring the heirs to take the place of the
deceased (Javier v. Araneta, 90 Phil. 292 [1951]). As restated in a much later
case, in case of unreasonable delay in the appointment of an executor or
administrator of the estate or in case where the heirs resort to an extrajudicial
settlement of the estate, the court may adopt the alternative of allowing the
heirs of the deceased to be substituted for the deceased (Lawas v. Court of
Appeals, 146 SCRA 173 [1986]).

DECISION

PARAS, J.:

This is a petition for certiorari (not petition for review on certiorari)

seeking the annulment of the Order of Branch VII. * of the Court of
First Instance of Camarines Sur in Iriga City dated September 23,
1980 denying the motion to dismiss filed by the defendants, the
petitioners herein, in Civil Case No. IR-858, and its Order dated
November 11, 1980 denying the motion for reconsideration of the said
September 23, 1980 order, as well as admitting the amended
complaint filed by the plaintiffs therein.

The questioned Order of September 23, 1980 reads as

follows:jgc:chanrobles.com.ph

"Resolving the motion to dismiss filed by defendants on the ground of

lack of sufficient cause of action in the light of the averments stated in
the complaint, this Court is of the belief and so holds that the said
motion to dismiss cannot be granted for lack of merit." (p. 16, Rollo).

The equally questioned order of November 11, 1980

states:jgc:chanrobles.com.ph

"Resolving defendant’s motion for reconsideration filed on October 3,

1980 which, among other things, seeks dismissal of the complaint on
the ground that the ‘steps taken by the plaintiffs are procedurally
erroneous and substantially improper.’ In the light of the opposition
interposed by counsel for the plaintiff filed on November 10, 1980
which emphasized the argument that said defendants as heirs of the
estate of Felicidad Balla cannot properly argue that they can sue as
heirs and at the same time maintain that they cannot be used as such
heirs, and which opposition is found to be well taken, the motion for
reconsideration is, as it is, denied.

"The Amended Complaint filed by counsel for the plaintiffs on

November 7, 1980 is hereby admitted. Plaintiffs are required to furnish
sufficient copies of the Amended Complaint." (p. 27, Rollo).

The antecedents of the case are as follows:

In the early morning of January 11, 1980 a vehicular accident

happened along the National Highway of Barangay Agos, Polangui,
Albay, whereby a passenger bus bearing Plate No. PUB 4J-136 ‘79
owned and operated by the late Felicidad Balla and driven by Domingo
Casin swerved to the left lane and came into head-on-collision with
a Ford Fiera with Plate No. S 860 4F ‘79 owned by Mateo Lim Relucio
and driven by Ruben Lim Relucio coming from the opposite direction. Commented [A1]: First accident
It then swerved further to the left this time colliding head-on-with a
passenger bus, FUSO with Plate No. PUB 45 255 ‘79 owned by
Benjamin Flores and driven by Fabian Prades. As a result of the Commented [A2]: Second accident
accident, Felicidad Balla, owner and operator of the passenger bus
with Plate No. PUB 4J 136 ‘79, and mother of herein petitioners
together with Domingo Casin, driver of the bus, died on the spot.
Ruben Lim Relucio, driver of the service jeep and Fabian Prades, driver
of the other passenger bus died in the same accident. (Rollo, pp. 3,
10 & 19).chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph

On July 4, 1980 the spouses Oscar Prades and Victoria

Prades, private respondents herein as the only
surviving forced heirs of the deceased Fabian Prades,
filed a complaint in the Court of First Instance of
Camarines Sur against the children of deceased
Felicidad Balla, petitioners herein for damages, docketed
as Civil Case No. IR-858 (Rollo, p. 9). The complaint (Rollo, p. 9)
alleged, among others:jgc:chanrobles.com.ph

"5. That it was Felicidad Balla’s driver Domingo Casin of ‘Fuso’ with
Plate No. PUB 4J 136 Pil ‘79, who drove his vehicle in a reckless and
imprudent manner which was the sole, direct and proximate cause of
the incident which resulted to the death of Fabian Prades;
"6. That both driver Domingo Casin and owner Felicidad Balla of
passenger ‘Fuso’ with Plate No. PUB 4J 136 Pil ‘79 died in said
incident;

"7. That defendants’ mother, Felicidad Balla, for allowing her driver
Casin to drive recklessly and not observing the required diligence in
the selection and supervision of her employee, despite her presence in
the illfated passenger bus, the estate of deceased Felicidad Balla
should be held liable to the damages suffered by plaintiff."cralaw
virtua1aw library

The defendants in the complaint, petitioners herein, moved for the

dismissal of the case on the ground that the complaint states no
cause of action against them, arguing that it is entirely incorrect to
hold the children liable for the alleged negligence of their deceased
mother and to consider suing the heirs of a deceased person the same
as suing the estate of said deceased person inasmuch as the last
portion of Section 21 of Rule 3 of the Rules of Court means that the
creditor should institute the proper intestate proceedings wherein
which he may be able to interpose his claim (Rollo, p. 14).

Respondent court denied the motion to dismiss in its order of

September 23, 1980 for lack of merit (Rollo, p. 16). On September 30,
1989 the defendants, petitioners herein, filed a motion for
reconsideration (Rollo, p. 17) on the ground that:chanrobles lawlibrary
: rednad

"Distinction should be made between a suit against the estate of

Felicidad Balla and the present action which is a personal action
against the children of Felicidad Balla, considering that the children
have absolutely no participation directly or indirectly in the alleged
negligent acts of Felicidad Balla, and there is absolutely no logical
basis to hold the children liable for damages resulting from alleged
negligent acts of Felicidad Balla. In fact that second sentence of Article
1311 of the New Civil Code provides:jgc:chanrobles.com.ph

". . . The heir is not liable beyond the value of the property he received
from the decedent. . ."cralaw virtua1aw library

In their argument, the defendants adopted and cited the conclusion

and ruling of Branch V of the same court in two similar cases brought
against them by the owner of the 3rd vehicle that featured in the same
accident and by the widow of the deceased driver of the same vehicle
docketed as Civil Case Nos. 867-LV and 863-LV, respectively, wherein
the defendants also filed a motion to dismiss (Rollo, p. 19). Said court
concluded that "the steps taken by the plaintiffs are procedurally
erroneous and substantially improper." The same court directed the
plaintiffs therein to file their redress in accordance with the Rules of
Court.

On November 7, 1980, plaintiff spouses, private respondents herein,

filed their comment and motion to admit amended complaint (Rollo, p.
21) together with an amended complaint (Rollo, p. 23), amending the
title of the case naming as defendants the Estate of the late Felicidad
Balla as represented by the children named in the original
complaint.chanrobles virtual lawlibrary

On November 11, 1980 respondent court issued its order denying the
motion for reconsideration and admitting the amended complaint
(Rollo,

p. 27).

Hence this petition filed with this Court on December 23, 1980 (Rollo,
p. 3).

On June 5, 1981 the Court (Second Division) resolved to give due

course to the petition and required the parties to file their respective
memoranda within twenty days from notice (Rollo, p. 40).

On September 14, 1981 the Court (Second Division) resolved to

consider the case submitted for decision (Rollo, p. 66).

The sole issue in the instant case is whether or not the

Court of First Instance has the power to entertain a
suit for damages arising from the death of a person,
filed against the estate of another deceased person as
represented by the heirs.

As aforestated, what was originally filed was a complaint for

damages against petitioners herein, who are the children and
surviving forced heirs of the deceased Felicidad Balla, owner and
operator of the passenger bus "FUSO" which allegedly caused the
death of the deceased Fabian Prades.
Under Section 5 Rule 86 of the Rules of Court, actions that are abated
by death are:
(1) All claims for money against the decedent, arising from contract,
express or implied, whether the same be due, not due or contingent;
(2) All claims for funeral expenses and expenses for the last sickness
of the decedent; and
(3) Judgments for money against the decedent (Aguas v. Llemos, 5
SCRA 959 [1962]).
It is evident that the case at bar is not among
those enumerated. Otherwise stated, actions for damages
caused by the tortious conduct of the defendant survive the death of
the latter.

The action can therefore be properly brought under Section 1, Rule 87

of the Rules of Court, against an executor or administrator. The rule
provides:jgc:chanrobles.com.ph

"Section 1. Actions which may and which may not be brought against
executor or administrator. — No action upon a claim for the recovery
of money or debt or interest thereon shall be commenced against the
executor or administrator; but actions to recover real or personal
property, or an interest therein, from the state, or to enforce a lien
thereon, end actions to recover damages for an injury to person or
property, real or personal, may be commenced against him."cralaw
virtua1aw library

Hence, the inclusion of the "estate of Felicidad Balla" in the amended

complaint as defendant.chanrobles virtual lawlibrary

The point of controversy is however on the fact that no estate

proceedings exist for the reason that her children had not filed any
proceedings for the settlement of her estate, claiming that Balla left no
properties (Rollo, p. 6).

Thus, while petitioners may have correctly moved for the dismissal of
the case and private respondents have forthwith corrected the
deficiency by filing an amended complaint, even before the lower court
could act on petitioner’s motion for reconsideration of the denial of
their motion to dismiss, the action under Section 17 of Rule 3 of the
Rules of Court, which allows the suit against the legal representative of
the deceased, that is, the executor or administrator of his estate,
would still be futile, for the same reason that there appears to be
no steps taken towards the settlement of the estate of the late
Felicidad Balla, nor has an executor or administrator of the
estate been appointed. From the statement made by the petitioners
that "many persons die without leaving any asset at all" (Reply to
Respondents’ Comment, p. 78; Memorandum for Petitioners, Rollo, p.
5), which insinuates that the deceased left no assets, it is reasonable
to believe that the petitioners will not take any step to expedite the
early settlement of the estate, judicially or extrajudicially if only to
defeat the damage suit against the estate. (Note however the
deceased Balla apparently left the bus). Under the circumstances the
absence of an estate proceeding may be avoided by requiring the heirs
to take the place of the deceased (Javier v. Araneta, 90 Phil. 292
[1951]).

As restated in a much later case, in case of unreasonable delay in the

appointment of an executor or administrator of the estate or in case
where the heirs resort to an extrajudicial settlement of the estate, the
court may adopt the alternative of allowing the heirs of the deceased
to be substituted for the deceased (Lawas v. Court of Appeals, 146
SCRA 173 [1986]).cralawnad

PREMISES CONSIDERED, the petition is hereby dismissed and

petitioners are ordered substituted for the deceased Felicidad Balla.

SO ORDERED.
 Republic of the Philippines
Supreme Court
Baguio City

SPECIAL THIRD DIVISION

ABS-CBN BROADCASTING CORPORATION, G.R. No. 133347

EUGENIO LOPEZ, JR., AUGUSTO ALMEDA-
LOPEZ, and OSCAR M. LOPEZ, Present:
Petitioners,
CARPIO MORALES, J.,*
- versus - VELASCO, JR.,**
NACHURA,
Chairperson,
OFFICE OF THE OMBUDSMAN, ROBERTO S. VILLARAMA, JR.,*** and
BENEDICTO, EXEQUIEL B. GARCIA, MENDOZA, JJ.****
MIGUEL V. GONZALES, and SALVADOR
(BUDDY) TAN, Promulgated:
Respondents.
April 23, 2010
x------------------------------------------------------------------------------------x

RESOLUTION

NACHURA, J.:

Before us is a Motion for Reconsideration filed by petitioners Eugenio, Jr., Oscar and
Augusto Almeda, all surnamed Lopez, in their capacity as officers and on behalf of petitioner
ABS-CBN Broadcasting Corporation (ABS-CBN), of our Decision in G.R. No. 133347,
dismissing their petition for certiorari because of the absence of grave abuse of discretion in the
Ombudsman Resolution which, in turn, found no probable cause to indict respondents for the
following violations of the Revised Penal Code (RPC): (1) Article 298 Execution of Deeds by
Means of Violence or Intimidation; (2) Article 315, paragraphs 1[b], 2[a], and 3[a] Estafa; (3)
Article 308 Theft; (4) Article 302 Robbery; (5) Article 312 Occupation of Real Property or
Usurpation of Real Rights in Property; and (6) Article 318 Other Deceits.

The assailed Decision disposed of the case on two (2) points: (1) the dropping of respondents
Roberto S. Benedicto and Salvador (Buddy) Tan as respondents in this case due to their death,
consistent with our rulings in People v. Bayotas[1] and Benedicto v. Court of Appeals;[2] and (2)
our finding that the Ombudsman did not commit grave abuse of discretion in dismissing petitioners
criminal complaint against respondents.

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

I.

WITH DUE RESPECT, THE EXECUTION AND VALIDITY OF THE LETTER-

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

II.

WITH DUE RESPECT, RESPONDENTS BENEDICTO AND TAN SHOULD

NOT BE DROPPED AS RESPONDENTS SIMPLY BECAUSE THEY MET
THEIR UNTIMELY DEMISE DURING THE PENDENCY OF THE CASE.[3]

Before anything else, we note that petitioners filed a Motion to Refer the Case to the
Court en banc.[4] Petitioners aver that the arguments contained in their Motion for Reconsideration,
such as: (1) the irrelevance of the civil law concept of ratification in determining whether a crime
was committed; and (2) the continuation of the criminal complaints against respondents Benedicto
and Tan who have both died, to prosecute their possible civil liability therefor, present novel
questions of law warranting resolution by the Court en banc.

In the main, petitioners argue that the Decision is contrary to law because: (1) the ratification of
the June 8, 1973 letter-agreement is immaterial to the determination of respondents criminal
liability for the aforestated felonies in the RPC; and (2) the very case cited in our
Decision, i.e. People v. Bayotas,[5] allows for the continuation of a criminal case to prosecute civil
liability based on law and is independent of the civil liability arising from the crime.

We disagree with petitioners. The grounds relied upon by petitioners in both

motions, being intertwined, shall be discussed jointly. Before we do so, parenthetically, the counsel
for respondent Miguel V. Gonzales belatedly informed this Court of his clients demise on July 20,
2007.[6] Hence, as to Gonzales, the case must also be dismissed.
 Contrary to petitioners assertion, their motion for reconsideration does not contain a novel
question of law as would merit the attention of this Court sitting en banc. We also find no cogent
reason to reconsider our Decision.

First and foremost, there is, as yet, no criminal case against respondents, whether against
those who are living or those otherwise dead.

The question posed by petitioners on this long-settled procedural issue does not constitute
a novel question of law. Nowhere in People v. Bayotas[7] does it state that a criminal complaint
may continue and be prosecuted as an independent civil action. In fact, Bayotas, once and for all,
harmonized the rules on the extinguished and on the subsisting liabilities of an accused who dies.
We definitively ruled:

From this lengthy disquisition, we summarize our ruling herein:

1. Death of an accused pending appeal of his conviction extinguishes

his criminal liability as well as the civil liability based solely
thereon. As opined by Justice Regalado, in this regard, the death of the accused
prior to final judgment terminates his criminal liability and only the civil
liability directly arising from and based solely on the offense committed, i.e., civil
liability ex delicto in senso strictiore.

2. Corollarily, the claim for civil liability survives notwithstanding

the death of accused, if the same may also be predicated on a source
of obligation other than delict. Article 1157 of the Civil Code enumerates
these other sources of obligation from which the civil liability may arise as a result
of the same act or omission:

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

3. Where the civil liability survives, as explained in Number 2 above, an action for
recovery thereof may be pursued but only by filing a separate civil action and
subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as
amended. This separate civil action may be enforced either against the
executor/administrator or the estate of the accused, depending on the source of
obligation upon which the same is based as explained above.
 4. Finally, the private offended party need not fear a forfeiture of his right to file
this separate civil action by prescription, in cases where during the prosecution of
the criminal action and prior to its extinction, the private offended party instituted
together therewith the civil action. In such case, the statute of limitations on the
civil liability is deemed interrupted during the pendency of the criminal case,
conformably with provisions of Article 1155 of the Civil Code, that should thereby
avoid any apprehension on a possible [de]privation of right by prescription.
From the foregoing, it is quite apparent that Benedicto, Tan, and Gonzales, who all died during the
pendency of this case, should be dropped as party respondents. If on this score alone,
our ruling does not warrant reconsideration. We need not even delve into the explicit declaration
in Benedicto v. Court of Appeals.[8]

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

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

The charges of individual petitioners Eugenio, Jr., Oscar and Augusto Almeda against
respondents, Gonzales and Garcia, contained in their respective complaint-affidavits simply
consisted of the following:

1. Complaint-affidavit of Eugenio, Jr.

32.1. I was briefed that Senator Estanislao Fernandez in representation of
Benedicto, met with Senator Taada at the Club Filipino in June 1976. Discussions
were had on how to arrive at the reasonable rental for the use of ABS-CBN stations
 and facilities. A second meeting at Club Filipino took place on July 7, 1976 between
Senators Taada and Fernandez, who brought along Atty. Miguel Gonzales, a
close associate and lawyer of Benedicto and an officer of KBS.

xxxx

38.2. The illegal takeover of ABS-CBN stations, studios and facilities, and the loss
and/or damages caused to our assets occurred while Benedicto, Exequiel Garcia,
Miguel Gonzales, and Salvador Tan were in possession, control and management
of our network. Roberto S. Benedicto was the Chairman of the Board of KBS-RPN
and its Chief Executive Officer (CEO), to whom most of the KBS-RPN officers
reported while he was in Metro Manila. Miguel Gonzales, the Vice-President of
KBS, and Exequiel Garcia, the Treasurer, were the alter egos of Benedicto
whenever the latter was out of the country; x x x.[9]

2. Complaint-affidavit of Oscar

25. All the illegal activities as complained of above, were done upon the orders,
instructions and directives of Roberto S. Benedicto, the Chairman of the Board and
Chief Executive Officer of the KBS/RPN group; Miguel Gonzales and Exequiel
Garcia, close colleagues and business partners of Benedicto who were either
directors/officers KBS/RPN and who acted as Benedictos alter egos whenever
the latter was out of the country; x x x.

xxxx

38. Senator Estanislao Fernandez, in representation of Benedicto, met with Senator

Taada at the Club Filipino on June 1976. Discussions were had on how to arrive at
the reasonable rental for the use of ABS stations and facilities. A second meeting
at Club Filipino took place on July 7, 1976 between Senators Taada and Fernandez,
who brought along Atty. Mike Gonzales, a close associate and friend of
Benedicto and an officer of KBS.[10]

3. Complaint-affidavit of Augusto Almeda

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

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

From the foregoing, it is beyond cavil that there is no reason for us to depart from our policy of
non-interference with the Ombudsmans finding of probable cause or lack thereof. On the strength
of these allegations, we simply could not find any rational basis to impute grave abuse of discretion
to the Ombudsmans dismissal of the criminal complaints.

Third, we did not state in the Decision that ratification extinguishes criminal
liability. We simply applied ratification in determining the conflicting claims of petitioners
regarding the execution of the letter-agreement. Petitioners, desperate to attach criminal liability
to respondents acts, specifically to respondent Benedicto, alleged in their complaint-affidavits that
Benedicto forced, coerced and intimidated petitioners into signing the letter-agreement. In other
words, petitioners disown this letter-agreement that they were supposedly forced into signing, such
that this resulted in a violation of Article 298 of the RPC (Execution of Deeds by means of
Violence or Intimidation).

However, three elements must concur in order for an offender to be held liable under
Article 298:

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

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

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

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

Finally, we take note of the conflicting claim of petitioners by filing a separate civil
action to enforce a claim against the estate of respondent Benedicto. Petitioners do not even
specifically deny this fact and simply sidestep this issue which was squarely raised in the Decision.
The Rules of Court has separate provisions for different claims against the estate of a decedent
under Section 5 of Rule 86 and Section 1 of Rule 87:
RULE 86.
SECTION 5. Claims which must be filed under the notice. If not filed,
barred; exceptions. All claims for money against the decedent, arising from
contract, express or implied, whether the same be due, not due, or contingent, all
claims for funeral expenses and expenses for the last sickness of the decedent, and
judgment for money against the decedent, must be filed within the time limited in
the notice; otherwise they are barred forever, except that they may be set forth as
counter claims in any action that the executor or administrator may bring against
the claimants. Xxx Claims not yet due, or contingent, may be approved at their
present value.

RULE 87.

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

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

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

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

SO ORDERED.
We now turn to the remaining reliefs sought by petitioners; that a deadline be set for
the submission by administratrix Benedicto to submit a verified and complete
inventory of the estate, and upon submission thereof: the inheritance tax appraisers
of the Bureau of Internal Revenue be required to assist in the appraisal of the fair
market value of the same; and that the intestate court set a deadline for the
submission by the administratrix of her verified annual account, and, upon
submission thereof, set the date for her examination under oath with respect thereto,
with due notice to them and other parties interested in the collation, preservation and
disposition of the estate. We cannot grant said reliefs.

Section 1 of Rule 83 requires the administrator to return to the court a true inventory
and appraisal of all the real and personal estate of the deceased within three (3)
months from appointment, while Section 8 of Rule 85 requires the administrator
to render an account of his administration within one (1) year from receipt of the
letters testamentary or of administration. We do not doubt that there are reliefs
available to compel an administrator to perform either duty, but a person whose
claim against the estate is still contingent is not the party entitled to do so. Still, even
if the administrator did delay in the performance of these duties in the context of
dissipating the assets of the estate, there are protections enforced and available under
Rule 88 to protect the interests of those with contingent claims against the estate.

Concerning complaints against the general competence of the administrator,

the proper remedy is to seek the removal of the administrator in accordance with
Section 2, Rule 82. While the provision is silent as to who may seek with the court
the removal of the administrator, we do not doubt that a creditor, even a contingent
one, would have the personality to seek such relief. After all, the interest of the
creditor in the estate relates to the preservation of sufficient assets to answer for the
debt, and the general competence or good faith of the administrator is necessary to
fulfill such purpose.
All told, the ultimate disposition of the RTC and the Court of Appeals is correct.
Nonetheless, as we have explained, petitioners should not be deprived of their
prerogatives under the Rules on Special Proceedings as enunciated in this decision.

WHEREFORE, the petition is DENIED, subject to the qualification that

petitioners, as persons interested in the intestate estate of Roberto Benedicto, are
entitled to such notices and rights as provided for such interested persons in the Rules
on Settlement of Estates of Deceased Persons under the Rules on Special
Proceedings. No pronouncements as to costs.

SO ORDERED.
 EN BANC

[G.R. No. L-24093. November 18, 1967.]

BUENAVENTURA BELAMALA, Petitioner-Appellee, v. MARCELINO

POLINAR, administrator, Oppositor-Appellant.

Juvenal D. Osorio for Petitioner-Appellee.

Anastacio A. Mumar for administrator, Oppositor-Appellant.

SYLLABUS

1. CIVIL LAW; CIVIL LIABILITY IN PHYSICAL INJURIES NOT EXTINGUISHED

BY DEATH OF OFFENDER. — Where an accused has been convicted of physical injuries and
sentenced to pecuniary indemnification, and the conviction has been affirmed by the Court of
Appeals, but accused died before its promulgation, his demise did not extinguish his civil liability
and did not operate as a bar to any claim therefor against his estate, in view of the provisions of
Article 33 of the Civil Code establishing a civil action for damages on account of physical injuries,
entirely separate and distinct from the criminal action. Even assuming that for lack of express
reservation the civil action was to be considered instituted together with the criminal action, still,
since both proceedings were terminated without final adjudication, the civil action of the offended
party under Article 33 may yet be enforced separately.

2. ID.; CLAIM MUST BE PROSECUTED AGAINST ADMINISTRATOR IN

SEPARATE ACTION, NOT AGAINST OFFENDER’S ESTATE. — The petitioner’s claim must
be prosecuted by separate action against the administrator of the deceased’s estate, as permitted
by Sections 1 and 2 of Rule 37 of the Rules of Court, since such claim is patently one "to recover
damages for injury to person or property (Rule 87, Sec. 1). This action cannot be enforced by filing
a claim against the estate under Rule 86, Sec. 5 thereof explicitly limits the claims to those for
funeral expenses, expenses for last sickness, judgments for money and "claims against the
decedent, arising from contract, express or implied;" and this last category (the other three being
inapposite) includes only "all purely personal obligations other than those which have their source
in delict or tort" (Leung Ben v. O’Brien, 38 Phil., 182, 189-194); and here the claim for damages
manifestly has a tortious origin (Aguas v. Llemos, L-18107, August 30, 1962).

DECISION

REYES, J.B.L., J.:

Appeal from judgment of the Court of First Instance of Bohol (Sp. Proc. No. 369) allowing
a money claim of appellee Belamala against the estate of the deceased Mauricio Polinar, for
damages caused to the claimant. Originally taken to the Court of Appeals, the case was certified
to this Court as involving only questions of law.

Issue in the case is whether the civil liability of an accused of physical injuries who dies
before final judgment, is extinguished by his demise, to the extent of barring any claim therefore
against his estate.

There is no dispute as to the facts, which were stipulated, in the court of origin, to be as
follows (Rec. of Appeal, pp. 41-43):jgc:chanrobles.com.ph

"STIPULATED AGREEMENTS OF FACTS

x x x

"1. That the claimant Buenaventura Belamala is the same offended party in Criminal Case
No. 1922 filed before the COURT OF FIRST INSTANCE OF BOHOL, against the same Mauricio
Polinar above mentioned and against other accused, for Frustrated Murder;

"2. That the administrator Marcelino Polinar is one of the legitimate children of the above
mentioned Mauricio Polinar now deceased;

"3. That on May 24, 1954, the complaint for Frustrated Murder was filed in the Justice of
the Peace of Clarin, Bohol against said Mauricio Polinar, Et Al., and when said case was remanded
to the Court of First Instance of Bohol, the Information on said Criminal Case No. 1922 was filed
on March 12, 1955;

"4. That on May 23, 1956, the COURT OF FIRST INSTANCE OF BOHOL rendered a
decision thereof, convicting the said Mauricio Polinar of the crime of serious physical injuries and
sentenced him to pay to the offended party Buenaventura Belamala, now claimant herein, the
amount of P990.00, plus the amount of P35.80 as indemnity, the amount of P1,000.00 as moral
damages;

"5. That on June 18, 1956, the accused (the late Mauricio Polinar) appealed to the Court of
Appeals from the decision of the Court of First Instance of Bohol;

"6. That on July 27, 1956, while the appeal of said Mauricio Polinar was pending before
the Court of Appeals, he died; and that there was no Notice or Notification of his death has ever
been filed in the said Court of Appeals;

"7. That the decision of the Court of Appeals in said Criminal Case No. 1922, has affirmed
the decision of the Court of First Instance of Bohol, in toto, and said decision of the Court of
Appeals was promulgated on March 22, 1958; but said Mauricio Polinar has already died on July
27, 1956;

"8. That the late Mauricio Polinar is survived by his wife, Balbina Bongato and his children,
namely:

1. Narcisa Polinar, Davao

2. Geronimo Polinar, Pagadian

3. Mariano Polinar, Clarin, Bohol

4. Ireneo Polinar, Clarin, Bohol

5. Marcelino Polinar, Clarin, Bohol

6. Mauro Polinar, Clarin, Bohol

 7. Demetrio Polinar, Clarin, Bohol.

"9. That the parties have reserved to present in Court evidence on facts not agreed to herein
by the parties."cralaw virtua1aw library

It is to be observed that the reservation of additional evidence was waived by the parties at
the trial (see Decision of trial court, Rec. App. p. 54).

The Court a quo, overruling the contention of the administrator- appellant that the death of
the accused prior to final judgment extinguished all criminal and civil liabilities resulting from the
offense, in view of Article 89, paragraph 1 of the Revised Penal Code, admitted the claim against
the estate in the amount of P2,025.80 with legal interest from the date claim was filed (30 July
1959) until paid. No payment was ordered pending final determination of the sum total of claims
admitted against the estate.

Not satisfied with the ruling, the Administrator has appealed, insisting on his theory in the
Court below.

We see no merit in the plea that the civil liability has been extinguished, in view of the
provisions of the Civil Code of the Philippines of 1950 (Rep. Act No. 886) that became operative
eighteen years after the Revised Penal Code. As pointed out by the Court below, Article 88 of the
Civil Code establishes a civil action for damages on account of physical injuries, entirely separate
and distinct from the criminal action.

"ART. 33. In case of defamation, fraud, and physical injuries, a civil action for damages,
entirely separate and distinct from the criminal action, may be brought by the injured party. Such
civil action shall proceed independently of the criminal prosecution, and shall require only a
preponderance of evidence."cralaw virtua1aw library

Assuming that for lack of express reservation, Belamala’s civil action for damages was to
be considered instituted together with the criminal action, still, since both proceedings were
terminated without final adjudication, the civil action of the offended party under Article 33 may
yet be enforced separately. Such claim in no way contradicts Article 108, of the Penal Code, that
imposes the obligation to indemnify upon the deceased offender’s heirs, because the latter acquire
their decedent’s obligations only to the extent of the value of the inheritance (Civil Code, Art.
774). Hence, the obligation of the offender’s heirs under Article 108 ultimately becomes an
obligation of the offender’s estate.

The appellant, however, is correct in the contention that the claim should have been
prosecuted by separate action against the administrator, as permitted by sections 1 and 2 of Revised
Rule 87, since the claim is patently one "to recover damages for an injury to person or property
(Rule 87, sec. 1). Belamala’s action can not be enforced by filing a claim against the estate under
Rule 86, because section 5 of that rule explicitly limits the claims to those for funeral expenses,
expenses for last sickness, judgments for money and "claims against the decedent, arising from
contract, express or implied;" and this last category (the other three being inapposite) includes only
"all purely personal obligations other than those which have their source in delict or tort" (Leung
Ben v. O’Brien, 38 Phil. 182, 189-194) and Belamala’s damages manifestly have a tortious origin.
To this effect was our ruling in Aguas v. Llemos, L-18107, Aug. 30, 1962.

Furthermore, it does not appear that the award of the trial Court was based on evidence
submitted to it; apparently it relied merely on the findings in the criminal case, as embodied in
decisions that never became final because the accused died during the pendency of said case.

WHEREFORE, the decision under appeal is hereby reversed and set aside, but without
prejudice to the action of appellee Belamala against the Administrator of the Estate of Mauricio
Polinar. No costs. So ordered.
 EN BANC

[G.R. No. L-27745. October 18, 1977.]

MISAEL P. VERA, as Commissioner of Internal Revenue, Petitioner, v. Hon. Judge

PEDRO C. NAVARRO, in his capacity as Judge of the Court of First Instance of Pasig,
Rizal (Branch II); MAGDALENA ABANTO and CAMILO ERIBAL, as voluntary
residual heirs of the Estate of the deceased ELSIE M. GACHES; DELIA P. MEDINA, as
attorney-in-fact of said heirs; BIENVENIDO A. TAN, SR., as Executor of the Estate of
ELSIE M. GACHES; PHILIPPINE NATIONAL BANK; PHILIPPINE BANKING
CORPORATION; THE OVERSEAS BANK OF MANILA; and BANCO FILIPINO
SAVINGS AND MORTGAGE BANK, Respondents.

DECISION

CASTRO, C.J.:

This is a petition for certiorari, mandamus, prohibition and injunction filed by the herein
petitioner Misael P. Vera, in his capacity as Commissioner of Internal Revenue (hereinafter
referred to as "Commissioner"), against the Honorable Judge Pedro C. Navarro, in his capacity as
Judge of the Court of First Instance of Pasig, Rizal (hereinafter referred to as "respondent Judge"),
on account of three orders dated June 5, 8 and 9, 1967, which the latter issued in Special
Proceedings No. 5249 entitled "In the Matter of the Testate Estate of Elsie M. Gaches —
Bienvenido Tan, Executor," which the Commissioner maintains were issued without or in excess
of jurisdiction or with grave abuse of discretion.chanroblesvirtuallawlibrary

It appears that one Elsie M. Gaches died on March 9, 1966 without a child. The deceased,
however, left a last will and testament in which she made the following relevant disposition of her
estate, to wit:jgc:chanrobles.com.ph

"3. After payment of my just debts and funeral expenses I direct that the balance of my
property, both real and personal in the Philippines, be distributed as follows:jgc:chanrobles.com.ph
 "a) to my driver, PACITO TROCIO — Ten Thousand Pesos (P10,000.00);

"b) to my lavandero, VICENTE JERODIAS — One Thousand Pesos (P1,000.00);

"c) to my gardener, CRISANTO SALIPOT, JR. — Five Hundred Pesos (P500.00);

"d) the balance of my estate in the Philippines shall then be divided in half; One-half
(1/2) to be given to CAMILO ERIBAL and the other half to MISS MAGDALENA ABANTO;

"e) to MISS CONSUELO L. TAN — My office table and chair now in the library of
my house, and one of the carpets in my house to be selected by her;

"4. All my property in the United States consisting of furs, jewelry and stocks I leave
to my sister BESS LAUER, widow, and at present a resident of San Francisco, California."cralaw
virtua1aw library

On March 11, 1966, the herein respondent Judge Bienvenido Tan, Sr. (hereinafter referred
to as "Judge Tan") filed with the Court of First Instance of Pasig, Rizal a petition for the probate
of the aforesaid will. On April 21, Judge Tan was appointed as executor of the testate estate of
Elsie M. Gaches without a bond.

In a letter, dated June 3, 1966, Judge Tan informed the Commissioner that the testate estate
was worth about ten million (P10 million) pesos and that the estate and inheritance taxes due
thereon were about P9.5 million.

On June 11, 1966, the herein respondent Atty. Delia P. Medina (hereinafter referred to as
"Atty. Medina"), representing herself as the attorney-in-fact of the herein respondents Camilo
Eribal and Magdalena Abanto, filed with the probate court a motion praying that the executor of
the estate be authorized to give a monthly allowance to the voluntary heirs Abanto and Eribal from
the month of May, 1966 until "the receipt of the recommended advance of inheritance of
P100,000.00 each recommended by the Executor in his motion of June 6, 1966 and/or final
distribution has been made to said heirs of their respective shares in the estate." This prayer was
granted by the probate court in an order dated June 25, 1966 (subsequently clarified in an order
dated August 11, 1966).
 On July 9, 1966, the Commissioner filed with the probate court a proof of claim for the
sum "of P192,364.00 as income tax for 1965 and 1% monthly interest due from the deceased Elsie
M. Gaches."cralaw virtua1aw library

On July 19, 1966, Judge Tan filed with the probate court a motion praying for authority to
make the following additional advance payments — (1) To Abanto and Eribal, P150,000.00; (2)
To Bess Lauer, P75,000.00; (3) To Judge Tan as advance executor’s fees, P50,000.00; and (4) To
Attys. Medina and Bienvenido Tan, Jr., P75,000.00 each as advance attorney’s fees. In this motion,
Judge Tan claimed that the estate was very liquid and that "any claims whatsoever against the
Estate and the Government shall be amply protected since over P7,000,000.00 worth of shares
shall still remain to answer therefor (Sec. 1, Rule 90, Rules of Court)." The respondent Judge
granted Judge Tan’s prayer in an order dated July 23, 1966.

In a letter, dated November 4, 1966, the Commissioner advised Judge Tan to pay to the
Bureau of Internal Revenue the sum of P1,398,436.30 as estate tax and P7,140,060.69 as
inheritance tax, the investigation of his office having allegedly disclosed that the next value of the
testate estate was P10,212,899.20. 1 Judge Tan disputed the correctness of the assessment in a
letter sent to the Commissioner.

On November 26, 1966, the Commissioner filed with the probate court a proof of claim for
the death taxes stated in the assessment notice sent to Judge Tan. On the same date, the
Commissioner also submitted to the probate court for its resolution a motion praying: (1) for the
revocation of the court’s orders dated June 25, July 6, July 23 and August 11, 1966 and all other
orders granting the payment of advance inheritance, allowances and fees; (2) for the appointment
of a co-administrator of the estate to represent the Government; and (3) for the non-disbursement
of funds of the estate without prior notice to the Commissioner. Although the records do not
disclose that the probate court specifically disposed of this motion, the said court, from its
subsequent actuations, may be considered to have impliedly denied the Commissioner’s prayers
for the appointment of a co-administrator and the non-payment of advance allowances and fees.

On January 19, 1967, the probate court authorized the conversion of the amount of
P75,000.00 previously ruled to be paid to Atty. Medina as advance attorney’s fees in its order of
July 28, 1966 into allowances for Eribal and Abanto.

On April 14, 1967, with the probate court’s approval, Judge Tan paid to the Bureau of
Internal Revenue the amount of P185,286.93 as estate tax and, on April 24, 1967, the amount of
P1,055,776.00 as inheritance tax. These payments were based on a tax return filed by Atty. Medina
on March 8, 1967 with the Bureau of Internal Revenue.

On June 3, 1967, Judge Tan submitted to the probate court for approval a final accounting
and project of partition of the testate estate. Acting thereon, the respondent Judge issued an order,
dated June 5, 1967, for the partial distribution of the estate as follows:jgc:chanrobles.com.ph

"Submitted for resolution of this Court is the Amended Final Accounting and Project of
Partition dated May 27, 1967, presented by the executor.

"Atty. Paredes manifested that he has no objection to the approval thereof provided that
certain items enumerated therein be corrected or modified, as follows: the amount of shares in the
Lepanto Consolidated Mining Co. should be 6,105,429 instead of 6,015,429, as reported; the
amount of P11,537.60 reported as expenses made on January 30, 1967 should be cancelled or
excluded . . . and that the item appearing as expenses made on May 10, 1967 payable to Apolonio
Villegas should only be P114,000.00 instead of P135,000.00 . . . which manifestations were also
adopted by Atty. Virgilio Saldajeno of the Bureau of Internal Revenue, and in addition, he objected
in principle to the Executor Fees and to the Attorney’s Fees as excessive but left the matter to the
discretion of the Court.

"Considering, further, the manifestations of Atty. Saldajeno that he has no objection to the
partial distribution of the estate as long as it can be shown that the rights and interests of the
government can be fully protected, and it appearing from the subsequent manifestation of Atty.
Paredes, counsel for the heirs, that sufficient assets with a current market value of at least
P8,000,000.00 will be left to the estate even if a partial distribution in the amount of P3,000,000.00
is made, for which reason the rights of the government to collect whatever deficiency taxes, if any,
may be assessed in the future the heirs have already paid in good faith even ahead of its due dates
transfer taxes in the total amount of P1,241,062.93, the Amended Final Accounting and Project of
Partition dated May 27, 1967 may be approved, subject to the following terms and
conditions:jgc:chanrobles.com.ph

"1. The Executor is hereby discharged from any and all responsibilities that he has
pertaining to the estate;

"2. The voluntary heirs Magdalena Abanto and Camilo Eribal shall be responsible for
all taxes of any nature whatsoever which may be due the government arising out of the transaction
of the properties of the estate, and the government can, if it so desires, register its tax lien on the
remaining assets after a partial distribution of the estate;

"3. Bess Lauer, sister and heir of the deceased shall be fully responsible for all United
States taxes pertaining to her share in the estate.

"WHEREFORE, subject to the above terms and conditions, Amended Final Accounting
and Project of Partition dated May 27, 1967 submitted by the Executor, as modified in the
manifestation of Attys. Paredes and Saldajeno, is hereby approved.

"1. Pacita Trocio P10,000.00

"2. To Vicente Jerodias 1,000.00

"3. To Crisanto Salipot, Jr. 500. 00

"4. To Magdalena Abanto and Camilo Eribal, share

and share alike, thru their attorney-in-fact Delia

P. Medina, cash in the amount of 2,330,000.00

"5. To Judge Bienvenido A. Tan, Sr. 120,000.00

"6. To Atty. Bienvenido A. Tan, Jr. 150,000.00

"The aforesaid amount is hereby ordered to be taken from the funds of the estate deposited
with the Philippine National Bank.

"As to the other properties remaining after this partial distribution, consisting of the
following:jgc:chanrobles.com.ph

"A. BANK DEPOSITS:jgc:chanrobles.com.ph

"1. Philippine Banking Corporation 559,147.41

"2. Philippine National Bank 238,500.00

"3. Overseas Bank of Manila 700,000.00

"4. Banco Filipino Savings & Mortgage Bank 581.00

"5. Refund from expenses32,537.60

"B. HOUSE AND LOT LOCATED AT NO. 50

TAMARIND ROAD, FORBES PARK,

MAKATI, RIZAL;

"C. SHARES OF STOCK IN THE FOLLOWING:jgc:chanrobles.com.ph

"1. Lepanto Consolidated Mining Co. 1,105,429 shares

"2. San Miguel Corp. 16,692 shares

(common)

"3. San Miguel Corp. 5,00 shares

(preferred)

"4. Central Azucarera de Pilar 17,755 shares

"5. Manufacturas Textile Industriales de

Filipinas, Inc. 10,368 shares

"6. Consolidated Mines, Inc. 85,858 shares

"7. Mayon Metal Corporation 5,000 shares

 "8. Soliangco & Co., Inc. 25 shares

"9. San Juan Heights 5 shares

"10. Metropolitan Insurance Co. 443 shares

"11. Realty Investment Inc. 652 shares

(10 shares, management & 642 common)

"The same shall be turned over and delivered to the attorney-in-fact of the voluntary heirs,
Atty. Delia P. Medina, to be held by her to answer for whatever deficiency estate and inheritance
taxes may still be due from the estate and the heirs in favor of the government.

"SO ORDERED.

Pasig, Rizal, June 5, 1967.

"(Sgd.) PEDRO C. NAVARRO

Judge"

On the same day (that is, June 5, 1967), the Commissioner, having been informed in
advance about the foregoing order by certain undisclosed sources, issued warrants of garnishment
against the funds of the estate deposited with the Philippine National Bank, the Overseas Bank of
Manila, and the Philippine Banking Corporation, on the strength of Sections 315-330 of the
National Internal Revenue Code.

On June 7, 1967, Atty. Medina filed in the probate court a petition for the discharge of the
writs of garnishment issued by the Commissioner. On June 8, 1967, the respondent Judge issued
an order lifting the writs in question.

On June 9,1967, the Philippine National Bank filed a motion in the probate court praying
that it be authorized to deposit with the said court the money in its hands in view of the conflicting
claims of the parties over the funds in dispute. On the same day (that is, June 9, 1967), the
respondent Judge issued an order denying the said motion and threatening the bank officials who
refuse to implement its orders of June 5 and 8, 1967 with contempt. Atty. Medina was consequently
able to withdraw the sum of P2,330,000.00 from the PNB. A copy of this order of June 9, 1967 as
well as the orders of June 5 and 8, 1967 were received by the Commissioner on June 13, 1967.

On June 16, 1967, the Commissioner filed a motion for reconsideration (supplemented on
June 22, 1967) of the orders of the probate court dated June 5, 8 and 9, 1967. On July 6, 1967,
however, the Commissioner, on the belief that the probate court’s resolution on its motion was not
legally necessary, filed with this Court the instant petition for certiorari, mandamus, prohibition
and injunction against the aforesaid orders of the respondent Judge. The petition at bar is based on
the following propositions:

(1) That the distributive shares of an heir can only be paid after full payment of the
death taxes. As this case subsequently progressed before this Court, the position of the
Commissioner would seem to be that the deficiency income taxes due and payable during the
lifetime of the deceased should also be paid first.

(2) While partial distribution of the estate of a deceased may be allowed, a bond must
be filed by the distributees to secure the payment of the transfer taxes. Subsequently, however, the
Commissioner changed his position, stating that such distribution may be made so long as the
payment of the taxes due the government is "provided for," citing section 1, rule 90 of the Rules
of Court in relation to Sections 95 (c), 97, 103, 106 and 107 (c) of the National Internal Revenue
Code.

(3) That the executor of an estate cannot be discharged without the payment of estate
and inheritance taxes. The Commissioner later modified his stand on this proposition in line with
the view that it is sufficient if the payment of the said taxes is "provided for."cralaw virtua1aw
library

(4) That the delivery of properties of the estate to a stranger [that is, to the voluntary
heirs herein] is not sanctioned by law. Later, as the case at bar progressed, and in view of a
compromise offer made by the respondents Abanto and Eribal to pay the taxes being claimed by
the Bureau of Internal Revenue, the Commissioner advanced the view that this proposition is
already moot and academic.

(5) That the respondent Judge has no authority to quash or dissolve writs of
garnishment issued by the Commissioner. Subsequently, however, the Commissioner reversed his
stand on this point and stated that the probate court may so dissolve said writs of garnishment as
the assets in question were then in custodia legis, citing Collector v. Vda. de Codiñera, L-9675,
Sept. 28, 1957.

Taking stock of the Commissioner’s complaint that the disputed orders were issued without
or in excess of jurisdiction or with grave abuse of discretion, the herein respondents Atty. Medina
and Judge Tan put up a number of factual and legal arguments, the material ones of which may be
stated, in sum, as follows:

(1) The Commissioner’s notice of assessment, dated November 10, 1966, was based
on wrong premises and valuation of the assets in question; in fact, the Commissioner had agreed
during the pre-trial conference in the probate court to reconsider certain items therein;

(2) The allowance granted to Abanto and Eribal were taken solely from the income of
the estate, a fact admitted by Atty. Saldajeno of the Bureau of Internal Revenue; it is claimed that
in 1965 the estate had an income of P411,000.00 and over P750,000.00 in 1966, which could more
than cover the questioned allowances;

(3) Eribal and Abanto are willing and bound themselves to assume the responsibility
for the payment of the taxes due against the estate except for the properties located in the United
States which should be charged against Bess Lauer;

(4) The Commissioner does not object to the partition of the estate in question provided
that enough assets are left to pay the taxes against the estate;

(5) The estate has sufficient assets with which to pay the taxes being claimed by the
government;

(6) There was nothing unusual in the institution of Abanto and Eribal as residual heirs
of the deceased; Abanto was the testator’s special nurse, companion, secretary and cook from 1945
until Elsie M. Gaches’ death in March, 1966; Eribal, on the other hand, was the deceased’s cook,
caretaker, companion and driver since 1929;

(7) The grant of allowances was never contested below and cannot now be raised in
the instant proceedings;
 (8) Adequate safeguards were specified in the probate court’s order of June 5, 1967 to
cover the tax claims; and

(9) There had been no full distribution of the estate in question without payment of the
transfer taxes since the said taxes are being disputed by the heirs.

In a reply filed on September 7, 1967, the Commissioner stated that he had issued a revised
assessment dated August 24, 1967 and that, furthermore, there were due from the estate deficiency
income taxes for the years 1961 to 1965 in the total sum of P1,182,296.16, for which reason the
estate should not be ordered distributed until the same is fully satisfied. In a rejoinder, Judge Tan
claimed that the August 24, 1967 assessment could still be reduced considerably. The contents of
the mentioned revised assessment which was addressed to Atty. Medina are, inter alia, as
follows:jgc:chanrobles.com.ph

"Madam:jgc:chanrobles.com.ph

". . . I have the honor to advise that in a reinvestigation conducted by this Office, for transfer
tax purposes, it was ascertained that she left real and personal properties in the sums of
P377,912.50 and P8,963,822.31 respectively, or a gross estate of P9,341,734.81. The amounts of
P193,392.38, P462,022.83 and P1,226,783.53, representing accrued household and medical
expenses, funeral expenses and income taxes (1961-1965) payable, respectively, or a total of
P1,882,198.74, were allowed as deductions resulting in a net taxable estate in the sum of
P7,459.536.07 subject to estate and inheritance taxes.

"In view thereof, there are hereby further assessed the sums of P891,673.68 and
P4,353,972.87 as deficiency estate and inheritance taxes and penalty still due on the transmission
of the decedent’s estate, after crediting the sums of P185,286.73 and P1,055,776.00, which were
paid on April 4, 1967 and April 24, 1967, . . . details of which are shown
hereunder:jgc:chanrobles.com.ph

"Estate tax P1,076,960.41

"Less: Amount Paid 185,286.73

—————
 "Total P891,673.68

==========

"Inheritance tax P5,409,448.87

"Comp. No CPA Certificate 300.00

—————

"Total P5,409,748.87

—————

"Less: Amount Paid 1,055,776.00

"Deficiency Inheritance Tax & Penalty P4,353,972.87

=========

"x x x

The deadlines for the payment of the aforementioned transfer taxes without penalty were
December 9, 1967 for the estate tax and March 9, 1968 for the inheritance tax.

On September 9, 1967, Atty. Medina filed with this Court a pleading captioned
"Compliance and Offer of Compromise to Terminate this Case" in which she stated the
following:jgc:chanrobles.com.ph

"x x x

"4. Although respondents voluntary heirs intend to assail and question the correctness
of said assessment only insofar as the same has disallowed the deductions claimed by them for
personal services rendered by various persons in the total sum of P366,800.00, foregoing thereby
other possible objections to the other items just so this case can be earlier disposed of, said
respondents, nevertheless, are willing to pay even before these due dates the entire amount
specified in said assessment, but under protest insofar as the oftcited disallowance is concerned,
in order to already terminate and dispose of this case before this Honorable Court."cralaw
virtua1aw library

To pay the taxes in question, Atty. Medina prayed in her offer of compromise that she and
Abanto and Eribal be authorized to make use of the funds of the estate on deposit with the
Philippine National Bank (P238,500.00), the Philippine Banking Corporation (P559,147.41), the
Banco Filipino Savings and Mortgage Bank (P581.00), and the Overseas Bank of Manila
(P700,000.00), and to gradually dispose of and sell the shares of stock representing investments in
several corporations of the estate with an estimated market value of P2,154,026.36. Also included
among the assets for which authority to sell was being procured in the said offer of compromise
were 2,442,000 Lepanto Consolidated Mining Co. shares which Abanto and Eribal deposited with
the probate court after this Court issued a preliminary injunction in the case at bar on July 10, 1967
ordering, among others, Atty. Medina, Abanto and Eribal to restore to the court a quo the amount
of P2,330,000.00 withdrawn from the Philippine National Bank pursuant to the questioned orders
of the probate court, and every other money or property received by them by virtue of said
questioned orders. The mentioned Lepanto shares had then an estimated market value of
P2,588,520.00. It should bear mention, at this point, that the money withdrawn from the Philippine
National Bank was not returned by Atty. Medina, Abanto or Eribal to the probate court, these
respondents having prayed this Court that the deposit of the mentioned stocks be considered as
full compliance by them with the writ of preliminary injunction issued by this Court.

On September 19, 1967, this Court issued a resolution requiring the Commissioner to
submit a memorandum on how he arrived at his original assessment of more than P8.83 million
and the revised assessment of only about P6.48 million, showing a reduced difference of more than
P2 million. The Commissioner submitted to this Court the required memorandum on May 25,
1968, the important items and figures described in which may be summed up comparatively as
follows:

ESTATE OF ELSIE M. GACHES

ASSETS ORIGINAL REVISED

ASSESSMENT ASSESSMENT

Cash in bank
Philippine P1,172,635.62 P1,172.635.62

Foreign (US$ = P3.95) 559,335.00 559,335.00

Cars

Lincoln — P18,000.00

Volkswagen 7,000.00

(Vauxhall) 25,000.00 12,000.00

Furnitures 30,000.00 30,000.00

Shares of stock 7,923,576.23 7,189,851.69

Forbes Park lot

(at P144.73/sq.m.) 383,202.35

(at P97.50/sq.m.) 258,862.50

House P111,850.00

Swimming Pool — 5,000.00

Fence 2,200.00 119,050.00 119,050.00

————— —————

TOTAL ASSETS P10,212,899.20 P9,341,734.81

LIABILITIES AND DEDUCTIONS

Estimated Income Tax

Payable (1965) P192,364.00

(1961-1965) P1,882,783.53

Accrued medical expenses 13,480.00)

Funeral expenses 73,320.00) 193,392.38

Judicial expenses 331,026.40 462,022.83

————— —————

TOTAL LIABS. &

DEDUCTIONS P610,190.60 P1,882,198.74

========= ==========

TRANSFER TAXES PAYABLE

Gross Estate P10,212,899.20 P9,341,734.81

Less: Liabs. & Deductions 610,190.60 1,882,198.74

————— —————

Net Taxable Estate P9,602,708.60 P7,459,536.07

————— —————

Less: Estate Tax Due P1,398,436.30 P1,076,960.41

————— —————

Estate Subj. to Inh. Tax P8,204,272.30 P6,382,575.66

————— —————

Distribution of Hereditary

Estate

C. Salipot, Jr. P500.00 P500.00

V. Jerodias 1,000.00 1,000.00

P. Trocio 10,000.00 10,000.00

Bess Lauer 672,305.00 672,305.00

M. Abanto 3,760,233.65 2,849,385.33

C. Eribal 3,760,233.65 2,849,385.33

————— —————

Inheritance Tax Due

C. Salipot, Jr. P10.00 P10.00

V. Jerodias 20.00 20.00

P. Trocio 600.00 600.00

Bess Lauer 192,186.75 192,186.75

M. Abanto 3,473,621,97 2,608,316.06

C. Eribal 3,473,621.97 2,608,316.06

—————— ———————
 Total Inheritance Tax due P7,140,060.69 P5,409,448.87

Add: Estate Tax Due P1,398,436.30 P 1,076,960.41

————— —————

TOTAL TRANSFER

TAXES DUE P8,538,496.99 P6,486,409.28

========== ==========

On November 17, 1967, this Court authorized the herein respondents Abanto, Eribal and
Atty. Medina to withdraw funds of the estate deposited with the Philippine Banking Corporation
(P191,673.68) and the Overseas Bank of Manila (P700,000.00) in the form of cashier’s checks
payable to the Commissioner for the payment of the estate tax still unpaid under the terms of the
revised assessment. cdi

On November 23, 1967, the Solicitor General filed with this Court a manifestation
expressing his conformity, in behalf of the Commissioner, to the offer of compromise dated
September 9, 1967 made by Atty. Medina, subject to certain conditions, such as, that the cash in
the banks of the estate as well as the proceeds to be realized from the sale of the shares of stock
should be turned over to the Commissioner for the payment of the taxes due against the estate and
the heirs thereof. This manifestation was first opposed by the Acting Commissioner of Internal
Revenue on the ground that the Commissioner (who was then abroad) had actually requested the
Solicitor General not to agree to the mentioned offer of compromise; however, the Solicitor
General subsequently said that the Commissioner’s conformity was given to him orally.

On December 5, 1967, Atty. Medina filed with this Court a petition to declare the Overseas
Bank of Manila in contempt for allowing the renewal, without court authority, of the time deposit
of P700,000.00 with the said bank for another year. In a supplemental motion filed on December
8, 1967, Atty. Medina also prayed that the said bank and those responsible for extending the
maturity date of said time deposit be held liable for the payment of whatever surcharges, interest
and penalties may be imposed as a consequence of the late payment of the balance of the estate
tax assessed against the estate. It appears that the time deposit in question was held by the said
bank under two certificates, one for P100,000.00 to mature on May 12, 1967, and the other, for
P600,000.00 to mature on June 16, 1967. Judge Tan, however, extended the maturity date of said
time deposits to May 12, 1968. The certificates of time deposit covering the said funds had been
endorsed in favor of the Commissioner in payment of the unpaid balance of the estate which then
(December 7, 1967) amounted to P700,000.00. The Commissioner, however, informed the
respondents Eribal and Abanto through their counsel that his Office —

". . . regrets that the same cannot be accepted as payment of the deficiency estate tax in this
case since they cannot, at present or on or before December 9, 1967, be converted into cash.
However, we are holding said certificates of time deposit for possible application in payment of
the unpaid balance of the deficiency estate tax in this case as soon as said certificates can be
converted into cash. It will be understood in this connection that if the balance of the deficiency
estate tax in this case is not paid on or before December 9, 1967, the same shall be subject to the
interest on deficiency, 5% surcharge and 1% monthly interest for delinquency."cralaw virtua1aw
library

According to Judge Tan, he caused the extension of the maturity date of the said deposit
but that in doing so he acted in good faith in that the testate estate then had ample funds and assets
and the said time deposit earned a higher interest than a savings deposit; that he needed no specific
court authority for the purpose; and that he had a gentleman’s agreement with the officials of the
bank that said deposit could be withdrawn in advance, such being the custom in banking circles.
The Overseas Bank of Manila, on the other hand, in answer to Atty. Medina’s mentioned petition,
claimed that the deposit in question was renewed before the bank received any letter demanding
its release. In view of this impasse and the fast approaching deadline for the payment of the estate
tax, Atty. Medina requested the Commissioner to credit P700,000.00 to the amount previously
paid as inheritance tax; but, apparently, this request was not honored by the Commissioner.

On January 26, 1968, Atty. Medina filed with this Court a manifestation in which she
alleged that even as the proposed joint manifestation between the parties which was supposed to
describe the matters agreed upon between them and the Commissioner during a conference hearing
held on January 24, 1968 had not yet been shown to her, she already wished to express her
principals’ conformity to pay, but under protest, the deficiency estate tax of P700,000.00 plus
surcharges, interest and penalties due thereon and the inheritance tax in the amount of
P4,161,986.12 appearing, according to Atty. Medina, in the mentioned assessment notice dated
August 24, 1967; that she was likewise agreeable to pay, under protest however, the income taxes
for 1961 to 1965 assessed against the estate in the demand letter of the Commissioner dated August
29, 1967 in the amount of P1,175,974.51 plus whatever interest, surcharges and penalties were due
thereon; and that she was also agreeable to being authorized to sell such properties of the estate as
may be necessary for the mentioned purposes.

On the following day, however, that is, January 27, 1968, the herein respondents Eribal,
Abanto and Atty. Medina, on the one hand, and the Commissioner and the Solicitor General, on
the other, filed with this Court a joint manifestation which, inter alia, reads as
follows:jgc:chanrobles.com.ph

"1. That the respondent taxpayers will pay the estate, inheritance and deficiency
income taxes covered by existing assessments; which are due and collectible from the estate of
Elsie M. Gaches, including the delinquency penalties, thereon but without prejudice to any right
of the taxpayer to contest or protest the said assessments at the proper time and in the proper court;

"2. That the respondents Delia P. Medina, Magdalena Abanto and Camilo Eribal shall
submit to this Honorable Court an inventory of all the properties and assets of the estate . . .;

"3. That is order to generate the necessary funds for the purpose of paying the said
taxes and delinquency penalties, so much of the assets of the estate . . . shall be sold . . .,

"4. That respondent Delia P. Medina, . . . and Mr. Rodolfo U. Serrano, Supervising
Revenue Examiner of the Bureau of Internal Revenue . . . are hereby proposed to be constituted as
the authorized agents of the parties herein to effect the sale . . .,

"5. That the said agents shall be directed to sell the assets of the estate . . .;

"6. That all negotiations and transactions for the sale of the assets of the estate shall be
made jointly by the authorized agents . . .;

"7. That no disposition of any property or assets of the estate shall be effected except for
the foregoing purpose;

"8. That this case shall not be terminated until . . . the abovementioned . . . taxes and
delinquency penalties are fully paid and liquidated;
 "9. That the parties pray for the approval of the foregoing propositions . . ."cralaw
virtua1aw library

On February 6, 1968, this Court, acting on the above-mentioned manifestation of Atty.

Medina and the joint manifestation of the parties, issued a resolution authorizing Atty. Medina to
pay, albeit, under protest, the transfer and income taxes collectible from the estate, including the
accompanying delinquency penalties. Atty. Medina was given the necessary authority to collect
and receive all funds payable to the estate in question and to sell such assets thereof as may be
necessary.

On February 10, 1968, a motion to declare in contempt the Lepanto Consolidated Mining
Co. was filed by Atty. Medina on the ground that the said corporation refused to turn over to her
dividends payable to the testate estate unless the Commissioner first lifted his garnishment order
on said dividends.

On February 16, 1968, this Court issued a resolution suspending the writs of preliminary
injunction issued by this Court on July 10 and 17, 1967 and all warrants of garnishment issued by
the Commissioner relative to the estate of Elsie M. Gaches, said suspension to be effective until
such time that Atty. Medina, Eribal and Abanto shall have fully paid the transfer and income taxes,
including the penalties thereon, covered by existing assessments. Atty. Medina thereafter
submitted to this Court performance reports on her activities relative to the authority given her.

On March 9, 1968, Atty. Medina filed with this Court a manifestation stating that she
received a demand letter dated March 7, 1968 from the Commissioner for the payment of the
following: (1) P756,000.00 as estate tax, including penalties; (2) P192,186.75 as inheritance tax
corresponding to the share of Bess Lauer; and (3) P451,435.91 as balance of the income tax for
the years 1961 to 1965. Atty. Medina claimed the said demands to be erroneous for the following
reasons: (1) as to the estate tax, the time deposit in the Overseas Bank of Manila of P700,000.00
plus interest earned of P60,000.00 as of March 9, 1968 would more than cover the said tax and the
certificates of time deposits were already endorsed to the Commissioner on December 6, 1967; (2)
as to the inheritance tax, she (that is, her principals Abanto and Eribal) was not responsible therefor
as the resolution of this Court dated February 6, 1968 required her "to pay only the estate,
inheritance and income taxes, under protest, covered by existing assessments, against the Estate,
and against the heirs Magdalena Abanto and Camilo Eribal;" in a supplemental motion, Atty.
Medina further argued that Bess Lauer alone was solely responsible for the payment of the
inheritance tax on her share and not the decedent’s estate in the Philippines, and that the properties
of the testate estate in the United States of America which consisted of shares of stock and deposits
in banks, being personal properties, were to be excluded from the computation of the gross estate
of the deceased in the Philippines and the computation of the Philippine estate and inheritance
taxes because, under Philippine law, the situs of those properties is the place where they are
located, citing Article 16 of the new Civil Code which, she argued, abandoned the doctrine of
mobilia sequuntur personam embodied in Article 19 of the old Civil Code; and (3) as to the
deficiency income tax for 1961-1965, she had paid the same in the total amount of P1,182,296.16
as of March 9, 1968, which was the amount stated in the assessment letter of the Commissioner
dated August 9, 1967. According to Atty. Medina, the payment of those taxes was made in the
following manner: on February 27, 1968, she paid a total of P838,518.62 as follows: the income
tax proper (P715,619.46) in full; interest (P106,855.29) in full; compromise penalty (P5,000.00)
in full; and surcharges (P11,052.07) in part only; and, on March 8, 1968, the amount of
P343,773.54 as payment of the remaining surcharges. Consequently, she argued that the
surcharges and interest, if any were still due, could legally accrue only from September 29, 1967
up to February 27, 1968 and only on the tax proper.

On April 16, 1968, a counter-manifestation was filed with this Court by the Commissioner
to the above-mentioned manifestation. According to the Commissioner, under existing
assessments (that is, under the letter of demand of August 24 and 29, 1967), the estate, inheritance
and deficiency income (1961-1965) taxes due and collectible from the testate estate as of February
6, 1968 were as follows:jgc:chanrobles.com.ph

"Estate tax (Balance — P700,000.00 (x)

Inheritance tax4,353,972.87 (xx)

————————

Total Estate and

Inheritance taxes 5,053,972.87

Deficiency income taxes

for 1961 to 1965 P1,175,974.51 (xxx)

 Delinquency penalties for late filing

of income tax return and late payment of

income tax for 1965 per return filed 6,321.6 (xxxx)

Total deficiency income taxes for

1961 to 1965 and the delinquency

penalties of income tax for 1965

per return P1,182,296.16

—————

GRAND TOTAL P6,236,269.03

==========

"(x) plus 5% surcharge and 1% monthly interest thereon from December 9, 1967 until full
payment thereof; (xx) plus 5% surcharge and 1% monthly interest thereon, if the same is not paid
in full on or before March 9, 1968; (xxx) plus 5% surcharge and 1% monthly interest thereon from
August 29, 1967 until full payment thereof; and (xxxx) plus additional 1% monthly interest from
September 29, 1967 until full payment thereof."cralaw virtua1aw library

Further, the Commissioner alleged that after taking into consideration the payments made
by Atty. Medina, the balances as of March 9, 1968 of the death and income taxes still collectible
were as follows:jgc:chanrobles.com.ph

"Estate Tax

Balance of the estate tax P700,000.00

5% surcharge 35,000.00
1% monthly interest from

12/9/67 to 3/9/68 21,000.00

—————

Total P756,000.00

plus additional 1% monthly interest —————

from March 9, 1968 until full payment

thereof

"Inheritance Tax

Inheritance tax due and collectible

per letter of demand dated August 24,

1967 (Annex "A") P4,353,972.87

Less: Payments of inheritance Tax

on March 1 and March 6, 1968 per O.R.

2519938 and 2520026, respectively P4,161,986.12

——————

Inheritance tax still due and collectible P191,986.75

plus 5% surcharge and 1% monthly

interest thereon from March 8, 1968

 until full payment

"Deficiency Income Taxes

Deficiency income taxes from 1961

to 1965 per letter of demand dated

August 29, 1967 plus 5% surcharge and

1% monthly interest up to March 8, 1968 - P1,289,818.17

Less: Payments made on February

27, 1968 and March 8, 1968 under O.R.

207001 and 207002 - P1,182,296.16

—————

Deficiency income taxes still due

and collectible P107,522.01

—————

plus additional 1% monthly interest

thereon from March 8, 1968 until full payment."cralaw virtua1aw library

The Commissioner also explained that the income taxes paid by Atty. Medina in the total
amount of P1,182,296.16 "included only the 1/2% monthly interest on deficiency with respect to
the deficiency income taxes for 1961 to 1965 and the 1% monthly interest for delinquency up to
September 29, 1967 with respect to the income tax for 1965 which was paid per return, but did not
include the 5% surcharge and 1% monthly interest for delinquency from August 29, 1967 until full
payment with respect to the income tax for the 1965 return." The Commissioner consequently
prayed that Atty. Medina be ordered to pay:jgc:chanrobles.com.ph

"(1) The amount of P756,000.00 as balance of the estate tax, 5% surcharge and 1%
monthly interest from December 9, 1967 to March 9, 1968, plus additional 1% monthly interest
from March 9, 1968 until full payment;

"(2) The amount of P191,986.75 as balance of the inheritance tax, plus 5% surcharge
and 1% monthly interest thereon from March 9, 1968 until full payment; and

"(3) The amount of P107,522.01 as balance of the deficiency income taxes, 5%

surcharge and 1% monthly interest for delinquency up to March 8, 1968, plus additional 1%
monthly interest thereon from March 8, 1968 until full payment . . ." ;

On August 23, 1968, Atty. Medina filed a manifestation with this Court adverting to the
refusal of the Overseas Bank of Manila to permit the withdrawal of the time deposit of the testate
estate in the said bank in spite of the fact that the extended maturity date of said deposit had already
expired. Atty. Medina prayed that the bank officials as well as those who made possible the deposit
of the funds of the estate of Elsie M. Gaches with the said bank be declared in contempt. On
September 18, 1968, the Central Bank of the Philippines filed with this Court a comment on the
urgent manifestation of Atty. Medina concerning the deposit in question. The Central Bank, which
according to the Overseas Bank of Manila had restrained it from paying its time deposits to the
bank’s depositors, averred that this Court’s resolution of November 17, 1967 merely authorized
Atty. Medina to withdraw the deposit from the said bank and did not order the bank to pay the
time deposit in question. Moreover, according to the Central Bank, the non-payment of the said
deposit was not willful as the Overseas Bank of Manila was in a state of insolvency. A comment
was filed on October 11, 1968 by the Overseas Bank of Manila stating that the majority
stockholders of the bank filed a petition against the Central Bank for certiorari, prohibition and
mandamus in this Court in L-29352 entitled "Emerito M. Ramos, Et. Al. v. Central Bank;" 2 that
the time deposit in question was an unrecorded transaction; and that the Central Bank prohibited
the bank to do business due to its distressed financial condition, for which reason it could not give
preference to the payment of the said deposit as it might prejudice other creditors of the bank.

On November 11, 1968, Atty. Medina filed with this Court a motion reiterating a previous
one to allow the payment of the amount of P200,000.00 to Atty. Manuel M. Paredes whom she
and the other respondent herein — Abanto and Eribal — hired as counsel in connection with the
settlement proceedings of Elsie M. Gaches’ estate. On March 29, 1969, pursuant to a resolution of
this Court, Atty. Paredes submitted a memorandum on the nature and extent of the legal services
he had rendered to the herein respondents Atty. Medina, Eribal and Abanto.

On June 26, 1971, Abanto and Eribal jointly wrote the Chief Justice, expressing willingness
and agreement to pay the amount due the government as taxes against the estate and the heirs
thereof. However, the two respondents herein subsequently retracted their statement in the said
letter, claiming they signed and sent the same without knowing and understanding its effect and
consequences.

A perusal in depth of the facts of the instant case discloses quite plainly that the respondent
Judge committed a grave abuse of discretion amounting to lack of jurisdiction in issuing its orders
of June 5, 8 and 9, 1967. Section 103 of the National Internal Revenue Code (hereinafter referred
to as "Tax Code") unequivocally provides that "No judge shall authorize the executor or judicial
administrator to deliver a distributive share to any party interested in the estate unless it shall
appear that the estate tax has been paid." 3 The aforesaid orders of the respondent Judge are clearly
in diametric opposition to the mentioned Section 103 of the Tax Code and, consequently, the same
cannot merit approval of this Court.

While this Court thus holds that the questioned orders are not in accordance with statutory
requirements, the fundamental question raised herein regarding the objectionable character of the
probate court’s mentioned orders has opened other issues which, not alone their importance to
jurisprudence, but the indispensability of forestalling needless delays when those issues are raised
anew, have, perforce, persuaded this Court that their complete and final adjudication here and now
is properly called for. Said issues may be specifically framed as follows:

(1) Should the herein respondent heirs be required to pay first the inheritance tax before
the probate court may authorize the delivery of the hereditary share pertaining to each of them?

(2) Are the respondent heirs herein who are citizens and residents of the Philippines
liable for the payment of the Philippine inheritance tax corresponding to the hereditary share of
another heir who is a citizen and resident of the United States of America, the said share of the
latter consisting of personal (cash deposits and stock shares) properties located in the mentioned
country?
 (3) Does the assignment of a certificate of time deposit to the Commissioner of Internal
Revenue for the purpose of paying thereby the estate tax constitute payment of such tax?

(4) Should the herein respondent heirs be held liable for the payment of surcharge and
interest on the amount (P700,000.00) representing the face value of time deposit certificates
assigned to the Commissioner which could not be converted into cash?

Aside from the foregoing, there are also other incidental questions which are raised in the
present recourse, viz.,

(5) What should be the liability of the respondents herein on the contempt charges
respectively lodged against them?

(6) What should be a reasonable fee for the counsel of the respondents Atty. Medina,
Eribal and Abanto for professional services rendered in connection with the settlement of the estate
of Elsie M. Gaches?

1. On the matter of the authority of a probate court to allow distribution of an estate

prior to the complete liquidation of the inheritance tax, the Tax Code apparently lacks any
provision substantially identical to the mentioned Section 103 thereof. There are provisions of the
Tax Code, e.g., Section 104, which makes it the duty of registers of deeds not to register the transfer
to any new owner of a hereditary estate unless payment of the death taxes shall be shown; Section
106, which imposes a similar obligation on business establishments; and Section 107, which
penalizes the executor who delivers to an heir or devisee, and the officers and employees of
business establishments who transfer in their books to any new owner, any property forming part
of a hereditary estate without the payment of the death taxes first being shown; but those provisions
by themselves do not clearly establish that the purpose and object of the statute is to make the
payment of the inheritance tax a pre-condition to an order for the distribution and delivery of the
decedent’s estate to the lawful heirs thereof. The cloud of vagueness in the statute, however, is not
entirely unbreachable. Section 1, Rule 90 of the Rules of Court erases this hiatus in the statute by
providing thus:jgc:chanrobles.com.ph

"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 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."cralaw virtua1aw library

Under the provisions of the aforequoted Rule, the distribution of a decedent’s assets may
only be ordered under any of the following three circumstances, namely, (1) when the inheritance
tax, among others, is paid; (2) when a sufficient bond is given to meet the payment of the
inheritance tax and all the other obligations of the nature enumerated in the above-cited provision;
or (3) when the payment of the said tax and all the other obligations mentioned in the said Rule
has been provided for. None of these three cases, insofar as the satisfaction of the inheritance tax
due from the estate is concerned, were present when the questioned orders were issued in the case
at bar. Although the respondent Judge did make a condition in its order of June 5, 1967 that the
distribution of the estate of Elsie M. Gaches (except the cash deposits of more than P2 million)
shall be trusted to Atty. Medina for the payment of whatever taxes may be due to the government
from the estate and the heirs thereto, this Court cannot subscribe to the proposition that the payment
of the tax claims was thereby adequately provided for. In the first place, the order of June 5, 1967
was, for all practical intents and purposes, a complete distribution of the estate to the heirs, for, the
executor who is supposed to take care of the estate was absolutely discharged; the attorney’s fees
for the services of a lawyer who presumably acted as legal counsel for the estate in the court below
were ordered paid as were also the fees for the executor’s services; the cash funds of the estate
were ordered paid to the heirs; and the non-cash (real property and shares of stock) properties were
likewise ordered delivered to Atty. Medina whose participation in the said proceedings was in the
capacity of an attorney-in-fact of the herein respondent heirs Eribal and Abanto. In short, the
probate court virtually withdrew its custodial jurisdiction over the estate which is the subject of
settlement before it. In the second place, the respondent Judge, in ordering the distribution of the
properties of the estate in question, relief solely upon the mere manifestation of the counsel for the
heirs Eribal and Abanto that there were sufficient properties of the estate with which to pay the
taxes due to the government. There is no evidence on record that would show that the probate court
ever made a serious attempt to determine what the values of the different assets of the estate were
with the view to determining the correctness of the tax claims of the government and ascertaining
that such properties shall be preserved for the satisfaction of those claims. In the third place,
considering that millions of pesos in taxes were being claimed by the Bureau of Internal Revenue,
the least reasonable thing that the probate court should have done was to require the heirs to deposit
the amount of inheritance tax being claimed in a suitable institution or to authorize the sale of non-
cash assets under the court’s control and supervision.

The record is likewise bereft of any evidence to show that sufficient bond has been filed to
meet this particular outstanding obligation.

2. The liability of the herein respondents Eribal and Abanto to pay the inheritance tax
corresponding to the share of Bess Lauer in the inheritance must be negated. The inheritance tax
is an imposition created by law on the privilege to receive property. 4 Consequently, the scope and
subjects of this tax and other related matters in which it is involved must be traced and sought in
the law itself. An analysis of our tax statutes supplies no sufficient indication that the inheritance
tax, as a rule, was meant to be the joint and solidary liability of the heirs of a decedent. Section
95(c) of the Tax Code, in fact, indicates that the general presumption must be otherwise. The said
subsection reads thus:jgc:chanrobles.com.ph

"(c) ...

"The inheritance tax imposed by Section 86 shall, in the absence of contrary disposition by
the predecessor, be charged to the account of each beneficiary, in proportion to the value of the
benefit received, and in accordance with the scale fixed for the class or group to which he pertains:
Provided, That in cases where the heirs divide extrajudicially the property left to them by their
predecessor or otherwise convey, sell, transfer, mortgage, or encumber the same without paying
the estate or inheritance taxes within the period prescribed in the preceding subsections (a) and
(b), they shall be solidarily liable for the payment of the said taxes to the extent of the estate they
have received."cralaw virtua1aw library

The statute’s enumeration of the specific cases when the heirs may be held solidarily liable
for the payment of the inheritance tax is, in the opinion of this Court, a clear indication that beyond
those cases, the payment of the inheritance tax should be taken as the individual responsibility, to
the extent of the benefits received, of each heir.
 3. On the effect of the indorsement of the time deposit certificates to the
Commissioner, the same cannot be held to have extinguished the estate’s liability for the estate
tax. In the first place, in accepting the indorsement and delivery of the said certificates, the
Commissioner expressly gave notice that his Office —

". . . regrets that the same cannot be accepted as payment of the deficiency estate tax in this
case since they cannot, at present or on or before December 9, 1967, be converted into cash.
However, we are holding said certificates of time deposit for possible application in payment of
the unpaid balance of the deficiency estate tax in this case as soon as said certificates can be
converted into cash. . . ."cralaw virtua1aw library

In the second place, a time deposit certificate is a mercantile document and is essentially a
promissory note. 5 By the express terms of Article 1249 of the Civil Code of the Philippines, the
use of this medium to clear an obligation will "produce the effect of payment only when they have
been cashed, or when through the fault of the creditor they have been impaired." From the records
of the case at bar, the Commissioner as well as the herein respondents Atty. Medina, Eribal and
Abanto spared no time trying to collect the value of said certificates from the Overseas Bank of
Manila but all to no avail. Consequently, the value of the said certificates (P700,000.00) should
still be considered outstanding.

4. The estate of Elsie M. Gaches is likewise liable for the payment of the interest and
surcharges on the said amount of P700,000.00 imposed under Section 101 (a) (1) and (c),
respectively, of the Tax Code. 6

The interest charge of 1% per month imposed under Section 101 (a) (1) of the Tax Code is
essentially a compensation to the State for delay in the payment of the tax due thereto 7 and for
the concomitant use by the taxpayer of funds that rightfully should be in the government’s hands.
8 As the indorsement and delivery of the mentioned time deposit certificates to the Commissioner
did not result in the payment of the estate tax (for which it was intended), the decedent’s estate is
consequently liable for the interest charge imposed in the Tax Code.

The estate cannot likewise be exempted from the payment of the 5% surcharge imposed by
Section 101 (c) of the Tax Code.’While there are cases in this jurisdiction holding that a surcharge
shall not be visited upon a taxpayer whose failure to pay the tax on time is in good faith, 9 this
element does not appear to be present in the case at bar. The Commissioner, as aforesaid, fully
informed the respondents Atty. Medina, Eribal and Abanto of the condition to this acceptance of
the said time deposit certificates. The Commissioner, in fact, advised them in the same letter that
"It will be understood in this connection that if the balance of the deficiency estate tax in this case
is not paid on or before December 9, 1967, the same shall be subject to the interest on deficiency,
5% surcharge and 1% monthly interest for delinquency." Moreover, Judge Tan himself, as
executor of the estate of Elsie M. Gaches, specifically admitted that he was the one who caused
the extension (and consolidation) of the maturity dates of the two time deposit certificates in
question (one for P100,000.00 to mature on May 12, 1967 and the other for P600,000.00 to mature
on June 16, 1967) to May 12, 1968.

It will be worthwhile to mention also, in this connection, that when Atty. Medina applied
to this Court for authority to withdraw the amount of P700,000.00 from the Overseas Bank of
Manila on September 9, 1967, the resolution of this Court dated November 17, 1967, approving
her request, authorized her to withdraw the said amount in the form of cashier’s checks payable to
the Commissioner. Apparently, because the Overseas Bank of Manila refused to issue such checks
or to allow her to withdraw said amount in view of the extension of the maturity date of the deposit
in question, Atty. Medina thought that by simply assigning the time deposit certificates to the
Commissioner, she would be deemed to have paid the estate’s obligation in its corresponding
amount. However, as aforesaid, the Commissioner was also unable to convert said amount into
cash and he gave notice to that effect to Atty. Medina. Since the refusal of the Overseas Bank of
Manila to allow the withdrawal of the said deposit was then well-known to the parties, it stands to
reason that the representatives of the estate who stand to be benefited therefrom, such as the
respondents Eribal and Abanto, should have forthwith asked for authority to pay the same from
other funds of the estate. Atty. Medina was, in fact, given the authority by this Court to sell assets
of the estate for the payment of the taxes due to the State, but she never tried to pay the equivalent
amount of P700,000.00 in question from the proceeds of the sales she made afterwards. Moreover,
it will also be noted that the respondents Eribal and Abanto, during the pendency of this case, had
in their actual possession at least P2.3 million (the amount they were able to withdraw from the
Philippine National Bank on account of the questioned orders) which they could have very well
used for the payment of the estate tax. They, however, opted to put the same to other uses.

5. We now consider the several petitions for contempt filed in the case at bar, namely,
(a) against the Philippine National Bank officials for allowing Atty. Medina to withdraw
P2,330,000.00 in contravention of the writ of garnishment issued by the Commissioner; (b) against
the officers of the Overseas Bank of Manila for allowing the extension of the maturity date of the
mentioned time deposit of P700,000.00 and for refusing to pay the same after the extended term
expired; (c) against Judge Tan who renewed the maturity date of the said time deposits; (d) against
the Lepanto Consolidated Mining Co. for refusing to turn over dividends payable to the estate of
Elsie M. Gaches unless the Commissioner first lifted his garnishment order; and (e) against the
herein respondents Atty. Medina, Eribal and Abanto for depositing shares of stock with the probate
court instead of the cash amount of P2,330,000.00 which they withdrew from the Philippine
National Bank on account of the questioned orders of the probate court, contrary to the resolutions
of this Court dated July 10 and 17, 1967.

(a) The contempt charge against the officials of the Philippine National Bank is without
merit, it appearing to the satisfaction of this Court that they exerted reasonable efforts not to
disobey the writ of garnishment issued by the Commissioner. Indeed, said officials merely acted
in obedience to the order of the probate court which threatened them with contempt of court after
they moved to be allowed to deposit with the said probate court the money of the estate of Elsie
M. Gaches deposited with the said bank. The Commissioner himself, through the Solicitor General,
admitted later that its writ of garnishment cannot be superior to that of the probate court’s order as
the estate in question was then in custodia legis.

(b) The contempt charges against the officials of the Overseas Bank of Manila likewise
merit dismissal. In the case of the renewal of the term of the time deposits in question, the said
extension was made by no less than the executor of the estate himself. The renewal of said term
may be considered as purely an act of administration for the enhancement (due to the higher
interest rates) of the value of the estate, and the officials of the bank cannot consequently be blamed
for acting favorably on the executor’s application. Judge Tan himself explained that he did what
he did in the honest belief that it would redound to the benefit of the estate on account of the higher
interest rate on time deposits.

With reference to the refusal of the bank’s officials to allow the withdrawal of the time
deposit in question after the extended term expired on May 12, 1968, this Court takes notice of the
fact, as stated in our decision in Ramos v. Central Bank (L-293250, Oct. 4 1971; 41 SCRA 565),
that as early as November 20, 1967 the Central Bank required the Overseas Bank of Manila, in
view of its distressed financial condition, to execute a voting trust agreement in order to bail it out
through a change of management and the promise of fresh funds to replenish the bank’s financial
portfolio. The Overseas Bank of Manila was not able to normalize its operations in spite of the
voting trust agreement — for, on July 31, 1968, it was excluded by the Central Bank from inter-
bank clearing; on August 1, 1968, its operations were suspended; and on August 13, 1968, it was
completely forbidden by the Central Bank to do business preparatory to its forcible liquidation.
Under the circumstances, this Court is satisfied with the explanation that to allow Atty. Medina to
withdraw the said time deposits after the extended term would have worked an undue prejudice to
the other depositors and creditors of the bank.

(c) The contempt charge against Judge Tan is also not meritorious. There is no
sufficient and convincing evidence to show that he renewed the maturity date of the time deposits
in question maliciously or to the prejudice of the interest of the estate.

(d) The Lepanto Consolidated Mining Company is likewise entitled to exoneration

from the contempt charge lodged against it. In refusing to turn over to Atty. Medina stock
dividends payable to the estate of Elsie M. Gaches, it is evident that the said corporation acted in
good faith in view of the writ of garnishment issued to it by the Commissioner. Moreover, on
February 16, 1968, this Court passed a resolution suspending temporarily the warrants of
garnishment issued by the Commissioner, and it does not appear that thereafter the turnover of the
stock dividends to the estate was refused.

(e) With reference to the charge for contempt against the respondents Atty. Medina,
Eribal and Abanto, although admittedly the resolutions of this Court dated July 10 and 17, 1967
were not strictly complied with by the said respondents, it appears clearly that they immediately
deposited with the probate court shares of stock with a fairly stable liquidity value of
P2,588,520.00. In any case, the main objective of the instant petition is to assure the State that the
assessed tax obligations shall be paid and, from the records, more than P2 million had already been
paid to the State during the pendency of the instant proceedings in this Court.

6. With reference to the attorney’s fees to be paid to Atty. Manuel M. Paredes, this
Court is of the opinion, after a careful study of the statement of services rendered by said counsel
to the respondents Eribal and Abanto which was submitted to this Court, that the amount of Fifty
Thousand Pesos (P50,000,00) is fair and reasonable. The payment of this amount, however, is the
personal liability of the said respondents Eribal and Abanto, and not that of the estate of Elsie M.
Gaches, as the said counsel was hired by the said respondents to give legal aid to them in
connection with the settlement of the various claims proferred in the probate court and in this
Court.

7. The Court’s intended adjudication of the main issue has been rendered academic
by supervening events which dictate that the Court refrain from issuing any further order relating
thereto. On July 18, 1977 a "Manifestation and Compliance" was filed by the respondent Delia P.
Medina which states that a compromise payment of P700,000 as deficiency estate tax, evidenced
by an official receipt (annex A of the Manifestation), was accepted and duly approved by Acting
Commissioner of Internal Revenue Efren I. Plana (annex B of the same Manifestation), and that
"with the said compromise payment of P700,000, all estate, inheritance and deficiency income
taxes . . . including pertinent delinquency penalties thereof have been fully paid and liquidated,
aggregating to P7,929,498.55 . . ." No objection thereto was interposed by any of the parties
concerned despite due notice thereof. This was further supplemented by a communication, dated
July 19, 1977, of Deputy Commissioner Conrado P. Diaz, informing the Register of Deeds of
Pasig, Metro Manila, that the Gaches estate has already paid all the estate and inheritance taxes
assessed against it, and that, consequently, the notice of tax lien inscribed on the property and
property rights of the estate can now be considered cancelled. With the full settlement of the tax
claims, the requirements of the law have been fully met, and it has become unnecessary for the
Court to issue orders relative to the main issue.chanroblesvirtual|awlibrary

ACCORDINGLY, the respondent Delia P. Medina is directed to deliver the remaining

assets of the estate to the voluntary heirs in the proportions adjudicated in the will and to submit a
report of compliance.

On the incidental issues, the Court renders judgment as follows:

(1) The amount of FIFTY THOUSAND (P50,000.00) PESOS is hereby awarded to
Manuel M. Paredes as legal fee for his services, the same to be paid by the respondent Eribal and
the estate of Abanto, now deceased;

(2) The contempt charges against the officials of the Philippine National Bank and the
Overseas Bank of Manila, Judge Bienvenido Tan, Sr., and Lepanto Consolidated Mining Co. are
hereby ordered dismissed;

(3) The authority given to the respondent Delia P. Medina in the resolution of the Court
dated February 6, 1968, to pay the death and income taxes, including delinquency penalties,
claimed by the State and, for that purpose, to withdraw all cash deposits in various banks and sell
such properties of the estate as may be necessary, is hereby terminated; and

(4) The writs of preliminary injunction issued by the Court pursuant to its resolutions
dated July 10 and 17, 1967 are hereby dissolved.

No costs.
 Separate Opinions

TEEHANKEE, J., concurring:

I concur in the disposition of the incidental issues regarding the payment of Atty. Paredes’
attorney’s fees due from respondents Eribal and Abanto’s estate and the contempt charges as set
forth in the Court’s judgment.chanroblesvirtualawlibrary

I reserve my vote as to the Court’s "intended adjudication of the main issues (Nos. [1] to
[4] as discussed in the Chief Justice’s main opinion at pages 25-33), since as stated in the main
opinion itself (at page 36) the said issues have been rendered academic with the full settlement of
the Internal Revenue Commissioner’s tax claims and it has therefore become unnecessary to
advance an opinion thereon or resolve the same.
RICARDO S. SILVERIO, JR. G.R. No. 178933
Petitioner,
Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus –

COURT OF APPEALS (Fifth Division)

and NELIA S. SILVERIO-DEE,
Respondents. September 16, 2009
x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

The Case

This Petition for Review on Certiorari under Rule 65 seeks the reversal of the
May 4, 2007 Resolution[1] and July 6, 2007 Decision[2] of the Court of Appeals (CA)
in CA-G.R. SP No. 98764, entitled Nelia S. Silverio-Dee and Ricardo C. Silverio,
Sr. (impleaded as necessary party) v. Reinato G. Quilala, in his capacity as
Presiding Judge of the RTC of Makati, Branch 57, Ricardo S. Silverio, Jr., Edmundo
S. Silverio, represented by Nestor Dela Merced II, and Sheriff Villamor R. Villegas.

The assailed resolution granted private respondents prayer for the issuance of
a Temporary Restraining Order against public respondent Judge Quilala. On the
other hand, the assailed decision set aside the Writ of Execution dated April 17, 2007
and the Notice to Vacate dated April 19, 2007 while directing the respondent lower
court to give due course to the appeal of herein private respondent.

The Facts
 The instant controversy stemmed from the settlement of estate of the deceased
Beatriz Silverio. After her death, her surviving spouse, Ricardo Silverio, Sr., filed
an intestate proceeding for the settlement of her estate. The case was docketed as SP.
PROC. NO. M-2629 entitled In Re: Estate of the Late Beatriz D. Silverio, Ricardo
C. Silverio, Sr. v. Ricardo S. Silverio Jr., et al. pending before the Regional Trial
Court (RTC) of Makati City, Branch 57 (RTC).

On November 16, 2004, during the pendency of the case, Ricardo Silverio, Jr.
filed a petition to remove Ricardo C. Silverio, Sr. as the administrator of the subject
estate. On November 22, 2004, Edmundo S. Silverio also filed a
comment/opposition for the removal of Ricardo C. Silverio, Sr. as administrator of
the estate and for the appointment of a new administrator.

On January 3, 2005, the RTC issued an Order granting the petition and
removing Ricardo Silverio, Sr. as administrator of the estate, while appointing
Ricardo Silverio, Jr. as the new administrator.

On January 26, 2005, Nelia S. Silverio-Dee filed a Motion for

Reconsideration of the Order dated January 3, 2005, as well as all other related
orders.

On February 4, 2005, Ricardo Silverio Jr. filed an Urgent Motion for an Order
Prohibiting Any Person to Occupy/Stay/Use Real Estate Properties Involved in the
Intestate Estate of the Late Beatriz Silverio, Without Authority from this Honorable
Court.[3]
Then, on May 31, 2005, the RTC issued an Omnibus Order[4] affirming its
Order dated January 3, 2005 and denying private respondents motion for
reconsideration. In the Omnibus Order, the RTC also authorized Ricardo Silverio,
Jr. to, upon receipt of the order, immediately exercise his duties as administrator of
the subject estate. The Omnibus Order also directed Nelia S. Silverio-Dee to vacate
the property at No. 3, Intsia, Forbes Park, Makati City within fifteen (15) days from
receipt of the order.

Nelia Silverio-Dee received a copy of the Omnibus Order dated May 31,
2005 on June 8, 2005.
 On June 16, 2005, private respondent filed a Motion for Reconsideration
dated June 15, 2005[5] of the Omnibus Order. This was later denied by the RTC in
an Order dated December 12, 2005, which was received by private respondent on
December 22, 2005.

Notably, the RTC in its Order dated December 12, 2005[6] also recalled its
previous order granting Ricardo Silverio, Jr. with letters of administration over the
intestate estate of Beatriz Silverio and reinstating Ricardo Silverio, Sr. as the
administrator.
From the Order dated December 12, 2005, Ricardo Silverio, Jr. filed a motion
for reconsideration which was denied by the RTC in an Order dated October 31,
2006. In the same order, the RTC also allowed the sale of various properties of the
intestate estate of the late Beatriz Silverio to partially settle estate taxes, penalties,
interests and other charges due thereon. Among the properties authorized to be sold
was the one located at No. 3 Intsia Road, Forbes Park, Makati City.[7]

Meanwhile, on January 6, 2006, Nelia Silverio-Dee filed a Notice of Appeal

dated January 5, 2006[8] from the Order dated December 12, 2005 while the Record
on Appeal dated January 20, 2006[9] was filed on January 23, 2006.

Thereafter, on October 23, 2006, Ricardo Silverio, Jr. filed a Motion to

Dismiss Appeal and for Issuance of a Writ of Execution[10] against the appeal of
Nelia Silverio-Dee on the ground that the Record on Appeal was filed ten (10) days
beyond the reglementary period pursuant to Section 3, Rule 41 of the Rules of Court.

Thus, on April 2, 2007, the RTC issued an Order[11] denying the appeal on the
ground that it was not perfected within the reglementary period. The RTC further
issued a writ of execution for the enforcement of the Order dated May 31,
2005 against private respondent to vacate the premises of the property located at No.
3, Intsia, Forbes Park, Makati City. The writ of execution was later issued on April
17, 2007[12] and a Notice to Vacate[13] was issued on April 19, 2007 ordering private
respondent to leave the premises of the subject property within ten (10) days.
 Consequently, private respondent filed a Petition for Certiorari and
Prohibition (With Prayer for TRO and Writ of Preliminary Injunction) dated May 2,
2007[14] with the CA.

On May 4, 2007, the CA issued the assailed Resolution granting the prayer
for the issuance of a TRO. In issuing the TRO, the CA ruled that the Notice of Appeal
was filed within the reglementary period provided by the Rules of Court applying
the fresh rule period enunciated by this Court in Neypes v. Court of Appeals[15] as
reiterated in Sumaway v. Union Bank.[16]

Afterwards, on July 6, 2007, the CA issued the assailed decision granting the
petition of private respondent. The dispositive portion reads:

WHEREFORE, in view of the foregoing, the instant petition

is GRANTED and GIVEN DUE COURSE. Accordingly, the Order,
dated April 2, 2007, the writ of execution, dated April 17, 2007, and
the Notice to Vacate, dated April 19, 2007, are ANNULLED AND SET
ASIDE. Further, the court a quo is hereby directed to give due course to
the appeal of Nelia S. Silverio-Dee.

SO ORDERED.

Hence, the instant petition.

The Issues

-A-

The Omnibus Order dated May 31, 2005 (Annex G of Annex C) and the
Order dated December 12, 2005 are Interlocutory Orders which are not
subject to appeal under Sec. 1 of Rule 41;
 -B-

The respondent Court seriously erred and/or committed grave abuse of

discretion amounting to lack of or excess of jurisdiction, in deliberately
failing to decide that the basis of the occupancy of Nelia S. Silverio-Dee
are fraudulent documents, without any authority from the Intestate Court;

-C-

The respondent Court seriously erred and/or committed grave abuse of

discretion amounting to lack of or excess of jurisdiction, in issuing
precipitately the temporary restraining order (TRO) in its Resolution dated
May 4, 2007 (Annex A-1);

-D-

The respondent Court seriously erred and/or committed grave abuse of

discretion amounting to lack of or excess of jurisdiction in annulling the
Order dated April 2, 2007, the Writ of Execution dated April 17, 2007,
and the Notice to Vacate dated April 19, 2007 because the respondent
Silverio-Dees occupancy of the Intestate property located at No. 3 Intsia
Road, Forbes Park, Makati City (Annex N of Annex C) will prevent the
sale authorized by the Order dated October 31, 2006 to secure funds for
the payment of taxes due which are now high and rapidly increasing
payment of which must not be enjoined.[17]

The Courts Ruling

This petition is meritorious.

The May 31, 2005 Order of the RTC Is

an Interlocutory Order, Not Subject to an Appeal

To recapitulate, the relevant facts to the instant issue are as follows:

On May 31, 2005, the RTC issued an Omnibus Order ordering Nelia Silverio-
Dee to vacate the premises of the property located at No. 3, Intsia
Road, Forbes Park, MakatiCity. She received a copy of the said Order on June 8,
2005. Instead of filing a Notice of Appeal and Record on Appeal, private respondent
filed a motion for reconsideration of the Order. This motion for reconsideration was
denied in an Order dated December 12, 2005. This Order was received by private
respondent on December 22, 2005. On January 6, 2006, private respondent filed her
Notice of Appeal while she filed her Record on Appeal on January 23, 2006.

Thus, in denying due course to the Notice/Record on Appeal, the RTC, in its
Order dated April 2, 2007, ruled:

Verily, the appeal taken by the movant Nelia Silverio-Dee from the
Order of this Court dated December 12, 2005 denying the Motion for
Reconsideration is misplaced as no appeal may be taken from the order
denying the motion for reconsideration (see Section 1, Rule 41 of the 1997
Rules of Civil Procedure in relation to Section 1(f), Rule 109 of the Rules
of Court). Furthermore, assuming that what said movant had appealed is
the final Order dated May 31, 2005, still, the appeal cannot be given due
course as the Record on Appeal had been filed beyond the thirty-day
period to appeal (see Section 3 Rule 41 of the Rules of Court)

WHEREFORE, the appeal filed by Nelia Silverio is

hereby DENIED due course.

Let a writ of execution issue to enforce the Order dated May 31,
2005 against Nelia Silverio-Dee requiring her to vacate the premises at
No. 3 Intsia, Forbes Park, Makati City.

SO ORDERED.

Thus, the denial of due course by the RTC was based on two (2) grounds: (1)
that Nelia Silverio-Dees appeal was against an order denying a motion for
reconsideration which is disallowed under Sec. 1(a), Rule 41 of the Rules of Court;
and (2) that Nelia Silverio-Dees Record on Appeal was filed beyond the
reglementary period to file an appeal provided under Sec. 3 of Rule 41.

Sec. 1(a), Rule 41 of the Rules of Court provides:

RULE 41
APPEAL FROM THE REGIONAL TRIAL COURTS
 SECTION 1. Subject of appeal.An appeal may be taken from a
judgment or final order that completely disposes of the case, or of a
particular matter therein when declared by these Rules to be appealable.

No appeal may be taken from:

(a) An order denying a motion for new trial or reconsideration;

xxxx

In all the above instances where the judgment or final order is not
appealable, the aggrieved party may file an appropriate special civil action
under Rule 65.

Petitioner argues that because private respondent filed a Notice of Appeal

from the Order dated December 12, 2005 which denied her motion for
reconsideration of the Omnibus Order dated May 31, 2005, her appeal is of an order
denying a motion for reconsideration. Thus, petitioner alleges that private
respondent employed the wrong remedy in filing a notice of appeal and should have
filed a petition for certiorari with the CA under Rule 65 of the Rules of Court instead.

The CA, however, ruled that the filing of the Notice of Appeal in this case
was proper saying that the appeal pertained to the earlier Omnibus Order dated May
31, 2005. The CA, citing Apuyan v. Haldeman,[18] argued that an order denying a
motion for reconsideration may be appealed as such order is the final order which
disposes of the case. In that case, we stated:

In the recent case of Quelnan v. VHF Philippines, Inc., We held,

thus:

[T]his Court finds that the proscription against appealing

from an order denying a motion for reconsideration refers to an
interlocutory order, and not to a final order or judgment. That that
was the intention of the above-quoted rules is gathered from
Pagtakhan v. CIR, 39 SCRA 455 (1971), cited in above-quoted
 portion of the decision in Republic, in which this Court held that an
order denying a motion to dismiss an action is interlocutory, hence,
not appealable.

The rationale behind the rule proscribing the remedy of

appeal from an interlocutory order is to prevent undue delay,
useless appeals and undue inconvenience to the appealing party by
having to assail orders as they are promulgated by the court, when
they can be contested in a single appeal. The appropriate remedy is
thus for the party to wait for the final judgment or order and assign
such interlocutory order as an error of the court on appeal.

The denial of the motion for reconsideration of an order

of dismissal of a complaint is not an interlocutory order,
however, but a final order as it puts an end to the particular
matter resolved, or settles definitely the matter therein
disposed of, and nothing is left for the trial court to do other
than to execute the order.

Not being an interlocutory order, an order denying a motion

for reconsideration of an order of dismissal of a complaint is
effectively an appeal of the order of dismissal itself.

The reference by petitioner, in his notice of appeal, to the

March 12, 1999 Order denying his Omnibus MotionMotion for
Reconsideration should thus be deemed to refer to the January 17,
1999 Order which declared him non-suited and accordingly
dismissed his complaint.

If the proscription against appealing an order denying a

motion for reconsideration is applied to any order, then there would
have been no need to specifically mention in both above-quoted
sections of the Rules final orders or judgments as subject to appeal.
In other words, from the entire provisions of Rule 39 and 41, there
can be no mistaking that what is proscribed is to appeal from a
denial of a motion for reconsideration of an interlocutory order.
(Emphasis supplied.)

Thus, the question posed is whether the Omnibus Order dated May 31, 2005
is an interlocutory order.
 On this aspect, the CA ruled that the Omnibus Order dated May 31, 2005 was
a final order, to wit:

We note that the Order, dated December 12, 2005, is an offshoot of

the Omnibus Order, dated May 31, 2005. In the Omnibus Order, the court
a quo ruled that the petitioner, as an heir of the late Beatriz S. Silverio,
had no right to use and occupy the property in question despite authority
given to her by Ricardo Silverio, Sr. when it said, thus:

x x x In the first place, Nelia S. Silverio-Dee cannot occupy

the property in Intsia, Forbes Park, admittedly belonging to the
conjugal estate and subject to their proceedings without authority
of the Court. Based on the pretenses of Nelia Silverio-Dee in her
memorandum, it is clear that she would use and maintain the
premises in the concept of a distributee. Under her perception,
Section 1 Rule 90 of the Revised Rules of Court is violated. x x x

xxxx

For the property at Intsia, Forbes Park cannot be occupied or

appropriated by, nor distributed to Nelia S. Silverio-Dee, since no
distribution shall be allowed until the payment of the obligations
mentioned in the aforestated Rule is made. In fact, the said property
may still be sold to pay the taxes and/or other obligations owned by
the estate, which will be difficult to do if she is allowed to stay in
the property.

Moreover, the alleged authority given by SILVERIO, SR.

for Nelia S. Silverio-Dee to occupy the property dated May 4, 2004,
assuming it is not even antedated as alleged by SILVERIO, JR., is
null and void since the possession of estate property can only be
given to a purported heir by virtue of an Order from this Court (see
Sec. 1 Rule 90, supra; and Sec. 2 Rule 84, Revised Rules of Court).
In fact, the Executor or Administrator shall have the right to the
possession and management of the real as well as the personal
estate of the deceased only when it is necessary for the payment of
the debts and expenses of administration (See Sec. 3 Rule 84,
Revised Rules of Court). With this in mind, it is without an iota of
doubt that the possession by Nelia S. Silverio-Dee of the property
 in question has absolutely no legal basis considering that her
occupancy cannot pay the debts and expenses of administration, not
to mention the fact that it will also disturb the right of the new
Administrator to possess and manage the property for the purpose
of settling the estates legitimate obligations.

In the belated Memorandum of Nelia Silverio-Dee, she

enclosed a statement of the expenses she incurred pertaining to the
house renovation covering the period from May 26, 2004 to
February 28, 2005 in the total amount of Php12,434,749.55, which
supports this Courts conclusion that she is already the final
distributee of the property. Repairs of such magnitude require
notice, hearing of the parties and approval of the Court under the
Rules. Without following this process, the acts of Nelia Silverio-
Dee are absolutely without legal sanction.

To our mind, the court a quos ruling clearly constitutes a final

determination of the rights of the petitioner as the appealing party.
As such, the Omnibus Order, dated May 31, 2002 (the predecessor of
the Order dated December 12, 2002) is a final order; hence, the same
may be appealed, for the said matter is clearly declared by the rules
as appealable and the proscription does not apply.[19] (Emphasis
supplied.)

An interlocutory order, as opposed to a final order, was defined in Tan v.

Republic:[20]

A final order is one that disposes of the subject matter in its entirety
or terminates a particular proceeding or action, leaving nothing else to be
done but to enforce by execution what has been determined by the court,
while an interlocutory order is one which does not dispose of the case
completely but leaves something to be decided upon. (Emphasis
supplied.)

Additionally, it is only after a judgment has been rendered in the case that the
ground for the appeal of the interlocutory order may be included in the appeal of the
judgment itself. The interlocutory order generally cannot be appealed separately
from the judgment. It is only when such interlocutory order was rendered without or
in excess of jurisdiction or with grave abuse of discretion that certiorari under Rule
65 may be resorted to.[21]

In the instant case, Nelia Silverio-Dee appealed the May 31, 2005 Order of
the RTC on the ground that it ordered her to vacate the premises of the property
located at No. 3 Intsia Road, Forbes Park, Makati City. On that aspect the order is
not a final determination of the case or of the issue of distribution of the shares of
the heirs in the estate or their rights therein. It must be borne in mind that until the
estate is partitioned, each heir only has an inchoate right to the properties of the
estate, such that no heir may lay claim on a particular property. In Alejandrino v.
Court of Appeals, we succinctly ruled:

Art. 1078 of the Civil Code provides that where there are two or
more heirs, the whole estate of the decedent is, before partition, owned in
common by such heirs, subject to the payment of the debts of the deceased.
Under a co-ownership, the ownership of an undivided thing or right
belongs to different persons. Each co-owner of property which is held pro
indiviso exercises his rights over the whole property and may use and
enjoy the same with no other limitation than that he shall not injure the
interests of his co-owners. The underlying rationale is that until a
division is made, the respective share of each cannot be determined
and every co-owner exercises, together with his co-participants, joint
ownership over the pro indiviso property, in addition to his use and
enjoyment of the same.

Although the right of an heir over the property of the decedent is

inchoate as long as the estate has not been fully settled and partitioned, the
law allows a co-owner to exercise rights of ownership over such inchoate
right. Thus, the Civil Code provides:

Art. 493. Each co-owner shall have the full ownership of his
part and of the fruits and benefits pertaining thereto, and he may
therefore alienate, assign or mortgage it, and even substitute
another person in its enjoyment, except when personal rights are
involved. But the effect of the alienation or the mortgage, with
respect to the co-owners, shall be limited to the portion which may
be allotted to him in the division upon the termination of the co-
ownership.[22] (Emphasis supplied.)
 Additionally, the above provision must be viewed in the context that the
subject property is part of an estate and subject to intestate proceedings before the
courts. It is, thus, relevant to note that in Rule 84, Sec. 2 of the Rules of Court, the
administrator may only deliver properties of the estate to the heirs upon order of the
Court. Similarly, under Rule 90, Sec. 1 of the Rules of Court, the properties of the
estate shall only be distributed after the payment of the debts, funeral charges, and
other expenses against the estate, except when authorized by the Court.

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

In the instant case, the purported authority of Nelia Silverio-Dee, which she
allegedly secured from Ricardo Silverio, Sr., was never approved by the probate
court. She, therefore, never had any real interest in the specific property located
at No. 3 Intsia Road, Forbes Park, Makati City. As such, the May 31, 2005 Order of
the RTC must be considered as interlocutory and, therefore, not subject to an appeal.
Thus, private respondent employed the wrong mode of appeal by filing a
Notice of Appeal with the RTC. Hence, for employing the improper mode of appeal,
the case should have been dismissed.[23]

The implication of such improper appeal is that the notice of appeal did not
toll the reglementary period for the filing of a petition for certiorari under Rule 65,
the proper remedy in the instant case. This means that private respondent has now
lost her remedy of appeal from the May 31, 2005 Order of the RTC.

Therefore, there is no longer any need to consider the other issues raised in
the petition.

WHEREFORE, the May 4, 2007 Resolution and July 6, 2007 Decision of

the CA in CA-G.R. SP No. 98764 are REVERSED and SET ASIDE. Thus, the
Decision dated April 2, 2007 of the RTC denying due course to the appeal of Nelia
Silverio-Dee; the Writ of Execution dated April 17, 2007; and the Notice to Vacate
dated April 19, 2007 are hereby REINSTATED.
 [ GR No. L-17818, Jan 25, 1967 ]
REYES Y BARRETTO v. LUCIA MILAGROS BARRETTO-DATU +
DECISION
125 Phil. 501
REYES, J.B.L., J.:

Direct appeal from a Judgment of the Court of First Instance of Bulacan, in its Civil Case No. 1084,
dis-missing the complaint of appellant Tirso T. Reyes and ordering the same to deliver to the
defendant-appellee, Lucia Milagros Barretto Datu, the properties received by his deceased wife
under the terms of the will of the late Bibiano Barretto, consisting of lots in Manila, Rizal,
Pampanga and Bulacan, valued at more than P200,000.

The decision appealed from sets the antecedents of the case to be as follows:
"This is an action to recover one-half share in the fishpond, located in the barrio of San Roque,
Hagonoy, Bulacan, covered by Transfer Certificate of Title No. T-13734 of the Land Records of
this Province, being the share of plaintiff's wards as minor heirs of the deceased Salud Barretto,
widow of plaintiff Tirso Reyes, guardian of said minors.

It appears that Bibiano Barretto was married to Maria Gerardo. During their lifetime they
acquired a vast estate, consisting of real properties in Manila, Pampanga, and Bulacan, covered
by Transfer Certificates of Title Nos. 41423, 22443, 8858, 32989, 31046, 27285, 6277, 6500, 2057,
6501, 2991, 57403 and 12507/T-337.

When Bibiano Barretto died on February 18, 1936, in the City of Manila, he left his share of these
properties in a will to Salud Barretto, mother of plaintiff's wards, and Lucia Milagros Barretto and
a small portion as legacies to his two sisters Rosa Barretto and Felisa Barretto and his nephew
and nieces. The usufruct of the fishpond situated in barrio San Roque, Hagonoy, Bulacan, above-
mentioned, how-ever, was reserved for his widow, Maria Gerardo. In the meantime, Maria
Gerardo was appointed administratrix. By virtue thereof, she prepared a project of partition,
which was signed by her in her own behalf and as guardian of the minor Milagros Barretto. Said
project of partition was approved by the Court of First Instance of Manila on Nov-ember 22, 1939.
The distribution of the estate and the delivery of the shares of the heirs followed forthwith. As
a consequence, Salud Barretto took immediate possession of her share and secured the
cancellation of the original certificates of title and the issuance of new titles in her own name.
Everything went well since then. Nobody was heard to complain of any irregularity in the
distribution of the said estate until the widow, Maria Gerardo died on March 5, 1948. Upon her
death, it was discovered that she had exe-cuted two wills, in the first of which, she instituted
Salud and Milagros, both surnamed Barretto, as her heirs; and, in the second, she revoked the
same and left all her pro-perties in favor of Milagros Barretto alone. Thus, the later will was
allowed and the first rejected. In rejecting the first will presented by Tirso Reyes, as guardian of
the children of Salud Barretto, the lower court held that Salud was not the daughter of the
decedent Maria Gerardo by her husband Bibiano Barretto. This ruling was appealed to the
Supreme Court, which affirmed the same.[1]

Having thus lost this fight for a share in the estate of Maria Gerardo, as a legitimate heir of Maria
Gerardo, plaintiff now falls back upon the remnant of the estate of the deceased Bibiano
Barretto, which was given in usufruct to his widow Maria Gerardo. Hence, this action for the
recovery of one-half portion thereof.

This action afforded the defendant an opportunity to set up her right of ownership, not only of
the fishpond under litigation, but of all the other properties willed and delivered to Salud
Barretto, for being a spurious heir, and not entitled to any share in the estate of Bibiano Barretto,
thereby directly attacking the validity, not only of the project of partition, but of the decision of
the court based thereon as well.

The defendant contends that the Project of Partition from which Salud acquired the fishpond in
question is void AB-INITIO and Salud Barretto did not acquire any valid title thereto, and that the
court did not acquire any jurisdiction of the person of the defendant, who was then a minor.'"

Finding for the defendant (now appellee), Milagros Barretto, the lower court declared the project
of partition submitted in the proceedings for the settlement of the estate of Bibiano Barretto
(Civil Case No. 49629 of the Court of First Instance of Manila) to be null and void ab initio (not
merely voidable) because the distributee, Salud Barretto, predecessor of plaintiffs (now
appellants), was not a daughter of the spouses Bibiano Barretto and Maria Gerardo. The nullity
of the project of partition was decreed on the basis of Article 1081 of the Civil Code of 1889 (then
in force) providing as follows:
"A partition in which a person was believed to be an heir, without being so, has been included,
shall be null and void."

The court a quo further rejected the contention advanced by plaintiffs that since Bibiano Barretto
was free to dispose of one-third (1/3) of his estate under the old Civil Code, his will was valid in
favor of Salud Barretto (nee Lim Boco) to the extent, at least, of such free part. And it concluded
that, as defendant Milagros was the only true heir of Bibiano Barretto, she was entitled to recover
from Salud, and from the latter's children and successors, all the properties received by her from
Bibiano's estate, in view of the provisions of Article 1456 of the new Civil Code of the Philippines
establishing that property acquired by fraud or mistake is held by its acquirer in implied trust for
the real owner. Hence, as stated at the beginning of this opinion, the Court a quo not only
dismissed the plaintiffs' complaint but ordered them to return the properties received under the
project of partition previously mentioned as prayed for in defendant Milagros Barretto's
counterclaim. However, it denied defendant's prayer for damages. Hence, this appeal interposed
by both plaintiffs and defendant.

Plaintiffs-appellants correctly point out that Article 1081 of the old Civil Code has been
misapplied to the present case by the court below. The reason is obvious: Salud Barretto
admittedly had been instituted heir in the late Bibiano Barretto's last will and testament together
with defendant Milagros hence, the partition had between them could not be one such had with
a party who was believed to be an heir without really being one, and was not null and void under
said article. The legal precept (Article 1081) does not speak of children, or descendants, but of
heirs (without distinction between forced, voluntary or intestate ones), and the fact that Salud
happened not to be a daughter of the testator does not preclude her being one of the heirs
expressly named in his testament; for Bibiano Barretto was at liberty to assign the free portion
of his estate to whomsoever he chose. While the share (1/2) assigner to Salud impinged on the
legitime of Milagros, Salud did not for that reason a cease to be a testamentary heir of Bibiano
Barretto.

Nor does the fact that Milagros was allotted in her father's will a share smaller than her legitime
invalidate the institution of Salud as heir, since there was here no preterition, or total omission,
of a forced heir. For this reason, Neri vs. Akutin, 72 Phil. 322, invoked by appellee, is not at all
applicable, that case involving an instance of preterition or omission of children of the testator's
former marriage.

Appellee contends that the partition in question was void as a compromise on the civil status of
Salud in violation of Article 1814 of the old Civil Code. This view is erroneous, since a compromise
presupposes the settlement of a controversy through mutual concessions of the parties (Civil
Code of 1889, Article 1809; Civil Code of the Philippines, Art. 2028); and the condition of Salud as
daughter of the testator Bibiano Barretto, while untrue, was at no time disputed during the
settlement of the estate of the testator. There can be no compromise over issues not in dispute.
And while a compromise over civil status is prohibited, the law nowhere forbids a settlement by
the parties over the share that should correspond to a claimant to the estate.

At any rate, independently of a project of partition which, as its own name implies, is merely a
proposal for distribution of the estate, that the court may accept or reject, it is the court alone
that makes the distribution of the estate and determines the persons entitled thereto and the
parts to which each is entitled (Comia vs. Reyes, 63 Phil. 629, 643; Act 190, Section 750; Rule 90,
Rules of 1940; Rule 91, Revised Rules of Court), and it is that judicial decree of distribution, once
final, that vests title in the distributees. If the decree was erroneous or not in conformity with
law or the testament, the same should have been corrected by opportune appeal; but once it
had become final, its binding effect is like that of any other judgment in rem, unless properly set
aside for lack of jurisdiction or fraud.

It is thus apparent that where a court has validly issued a decree of distribution of the estate, and
the same has become final, the validity or invalidity of the project of partition becomes irrelevant.

It is, however, argued for the appellee that since the court's distribution of the estate of the late
Bibiano Barretto was predicated on the project of partition executed by Salud Barretto and the
widow, Maria Gerardo (who signed for herself and as guardian of the minor Milagros Barretto),
and since no evidence was taken of the filiation of the heirs, nor were any findings of fact or law
made, the decree of distribution can have no greater validity than that of the basic partition, and
must stand or fall with it, being in the nature of a judgment by consent, based on a compromise.
Saminiada vs. Mata, 92 Phil. 426, is invoked in support of the proposition. That case is authority
for the proposition that a judgment by compromise may be set aside on the ground of mistake
or fraud, upon petition filed in due time, where petition for "relief was filed before the
compromise agreement a proceeding, was consummated" (cas. cit. at p. 436). In the case before
us, however, the agreement of partition was not only ratified by the court's decree of
distribution, but actually consummated, so much so that the titles in the name of the deceased
were cancelled, and new certificates issued in favor of the heirs, long before the decree was
attacked. Hence, Saminiada vs. Mata does not apply.

Moreover, the defendant-appellee's argument would be plausible if it were shown that the sole
basis for the decree of distribution was the project of partition. But, in fact, even without it, the
distribution could stand, since it was in conformity with the probated will of Bibiano Barretto,
against the provisions whereof no objection had been made. In fact, it was the court's duty to
do so. Act 190, section 640, in force in 1939, provided:

"SEC. 640. Estate, How Administered. When a will is thus allowed, the court shall grant letters
testamentary, or letters of administration with the will annexed, and such letters testamentary
or of administration, shall extend to all the estate of the testator in the Philippine Islands. Such
estate, after the payment of just debts and expenses of administration, shall be disposed of
according to such will, so far as such will may operate upon it; and the residue, if any, shall be
disposed of as is provided by law in cases of estates in these Islands belonging to persons who
are inhabitants of another state or country." (Emphasis supplied)

That defendant Milagros Barretto was a minor at the time the probate court distributed the
estate of her father in 1939 does not imply that the said court was without jurisdiction to enter
the decree of distribution. Passing upon a like issue, this Court ruled in Ramos vs. Ortuzar, 89
Phil. Reports, pp. 741 and 742:

"If we are to assume that Richard Hill and Marvin Hill did not formally intervene, still they would
be concluded by the result of the proceedings, not only as to their civil status but as the
distribution of the estate as well. As this Court has held in Manolo vs. Paredes, 47 Phil. 938, 'The
proceed-ing for probate is one in rem (40 Cyc., 1265) and the court acquires jurisdiction over all
persons interested, through the publication of the notice prescribed by section 630 C.P.C.; and
any order that may be entered therein is binding against all of them.' (See also in re Estate of
Johnson, 39 Phil. 156.) 'A final order of distribution of the estate of a deceased person vests the
title to the land of the estate in the distributees.' (Santos vs. Roman Catholic Bishop of Nueva
Caceres, 45 Phil. 895.) There is no reason why, by analogy, these salutory doctrines should not
apply to intestate proceedings.

The only instance that we can think of in which a party interested in a probate proceeding may
have a final liquida-tion set aside is when he is left out by reason of circums-tances beyond his
control or through mistake or inadvertence not imputable to negligence. Even then, the better
practice to secure relief is reopening of the same case by proper motion within the reglementary
period, instead of an independ-ent action the effect of which, if successful, would be, as in the
instant case, for another court or judge to throw out a decision or order already final and
executed and reshuffle properties long ago distributed and disposed of."
It is well to observe, at this juncture, as this Court expressly declared in Reyes vs. Barretto Datu,
94 Phil. 446 (Am'd. Rec. Appeal, pp. 156,157), that:

"* * * It is argued that Lucia Milagros Barretto was a minor when she signed the partition, and
that Maria Gerardo was not her judicially appointed guardian. The claim is not true. Maria
Garardo signed as guardian of the minor. (Secs. 3 and 5, Rule 97, Rules of Court.) The mere
statement in the project of partition that the guardianship proceedings of the minor Lucia
Milagros Barretto are pending in the court, does not mean that the guardian had not yet been
appointed; it meant that the guardianship proceedings had not yet been terminated, and as a
guardianship proceedings begin with the appointment of a guardian, Maria Gerardo must have
been already appointed when she signed the project of partition. There is, therefore, no
irregularity or defect or error in the project of partition, apparent on the record of the testate
proceedings, which shows that Maria Gerardo had no power or authority to sign the project of
partition as guardian of the minor Lucia Milagros Barretto, and, consequently, no ground for the
contention that the order approving the project of partition is absolutely null and void and may
be attacked collaterally in these proceedings."

So that it is now incontestable that appellee Milagros Barretto was not only made a party by
publication but actually appeared and participated in the proceedings through her guardian: she,
therefore, can not escape the jurisdiction of the Manila Court of First Instance which settled her
father's estate.

Defendant-appellee further pleads that as her mother and guardian (Maria Gerardo) could not
have ignored that the distributee Salud was not her child, the act of said widow in agreeing to
the oft-cited partition and distribution was a fraud on appellee's rights and entitles her to relief.
In the first place, there is no evidence that when the estate of Bibiano Barretto was ju-dicially
settled and distributed appellants' predecessor, Salud Lim Boco Barretto, knew that she was not
Bibiano's child; so that if fraud was committed, it was the widow, Maria Gerardo, who was solely
responsible, and neither Salud nor her minor children, appellants herein, can be held liable
therefor. In the second place, granting that there was such fraud, relief therefrom can only be
obtained within 4 years from its discovery, and the record shows that this period had elapsed
long ago.

Because at the time of the distribution Milagros Barretto was only 16 years old (Exhibit 24), she
became of age five years later, in 1944. On that year, her cause of action accrued to contest on
the ground of fraud the court decree distributing her father's estate and the four-year period of
limitation started to run, to expire in 1948 (Section 43, Act 190). In fact, conceding that Milagros
only became aware of the true facts in 1946 (Appellee's Brief, p. 27), her action still became
extinct in 1950. Clearly, therefore, the action was already barred when in August 31, 1956 she
filed her counterclaim in this case contesting the decree of distribution of Bibiano Barretto's
estate.

In order to evade the statute of limitations, Milagros Barretto introduced evidence that appellant
Tirso Reyes had induced her to delay filing action by verbally promising to reconvey the
properties received by his deceased wife, Salud. There is no reliable evidence of the alleged
promise, which rests exclusively on the oral assertions of Milagros herself and her counsel. In
fact, the trial court made no mention of such promise in the decision under appeal. Even more:
granting arguendo that the promise was made, the same can not bind the wards, the minor
children of Salud, who are the real parties in interest. An abdicative waiver of rights by a
guardian, being an act of disposition, and not of administration, can not bind his wards, being
null and void as to them unless duly authorized by the proper court (Ledesma Hermanos vs.
Castro, 55 Phil. 136, 142).

In resume, we hold (1) that the partition had between Salud and Milagros Barretto in the
proceedings for the settlement of the estate of Bibiano Barretto, duly approved by the Court of
First Instance of Manila in 1939, in its Civil Case No. 49629, is not void for being contrary to either
articles 1081 or 1814 of the Civil Code of 1889; (2) that Milagros Barretto's action to contest said
parti-tion and decree of distribution is barred by the statute of limitations; and (3) that her claim
that plaintiff-appellant guardian is a possessor in bad faith and should account for the fruits
received from the properties inherited by Salud Barretto (nee Lim Boco) is legally untenable. It
follows that the plaintiffs' action for partition of the fishpond described in the complaint should
have been given due course.

Wherefore, the decision of the Court of First Instance of Bulacan now under appeal is reversed
and set aside in so far as it orders plaintiff-appellant to reconvey to appellee Milagros Barretto
Datu the properties enu-merated in said decision, and the same is affirmed in so far as it denies
any right of said appellee to accounting. Let the records be returned to the court of origin, with
instructions to proceed with the action for partition of the fishpond (Lot No. 4, Plan Psu-4709),
covered by TCT No. T-13734 of the Office of the Register of Deeds of Bulacan, and for the
accounting of the fruits thereof, as prayed for in the complaint. No costs.