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ALABAN VS. CA
G.R. NO. 156021, SEPT. 23, 2005
DOCTRINE:
Extrinsic Fraud. – An action to annul a final judgment on the ground of fraud lies only if the
fraud is extrinsic or collateral in character. Fraud is regarded as extrinsic where it prevents
a party from having a trial or from presenting his entire case to the court, or where it
operates upon matters pertaining no to the judgment itself but to the manner in which it is
procured. The overriding consideration when extrinsic fraud is alleged is that the fraudulent
scheme of the prevailing litigant prevented a party from having his day in court.
FACTS:
1. Respondent Francisco Provido (respondent) filed a petition for the probate of the
Last Will and Testament of the late Soledad Provido Elevencionado (decedent),
who died on Oct. 26, 2000 in Janjuay, Iloilo. Respondent that he was the heir of
the decedent and the executor of her will. The RTC allowed the probate of the
will of the decedent and directed the issuance of letters testamentary to
respondent.
2. More than 4 months later or on Oct. 4, 2001, petitioners filed a motion for
reopening of the probate proceedings. Likewise, they filed an opposition to the
allowance of the will of the decedent. As well as the issuance of letters
testamentary to respondent, claiming that they are the intestate heirs of the
decedent. On Jan. 11, 2002, RTC issued an order denying the petitioners’ motion
for being unmeritorious. Moreover, the RTC’s decision was already final and
executory even before petitioner’s filing of the motion to reopen.
3. Petitioners thereafter filed a petition with an application for preliminary
injunction with the CA, seeking the annulment of the RTC’s Decision and Order.
They argued that the RTC decision should be annulled and set aside on the ground
of extrinsic fraud and lack of jurisdiction on the part of the RTC.
4. CA dismissed the petition. It found that there was no showing that petitioners
failed to avail of or resort to the ordinary remedies of new trial, appeal, petition
for relief from judgment, or other appropriate remedies through no fault of their
own. Moreover, the CA declared as baseless petitioners’ claim that the
proceedings in the RTC was attended by extrinsic fraud. Neither was there any
showing that they availed of this ground in a motion for new trial or petition for
relief from judgment in the RTC. Petitioner sought reconsideration but the same
was denied.
5. Petitioner maintains that they were not made parties to the case in which the
decision sought to be annulled was rendered and, thus could not have availed of
the ordinary remedies of new trial, appeal, petition for relief from judgment and
other appropriate remedies, contrary to the ruling of the CA. They aver that
respondent’s offer of a false compromise and his failure to notify them of the
probate of the will constitute extrinsic fraud that necessitates the annulment of
the RTC’s judgment.
ISSUE: Whether or not the proceedings in the RTC was attended by extrinsic fraud that
necessitates the annulment of the RTC’s judgment.
HELD: Petition is devoid of merit.
An action for annulment of judgment is a remedy in law independent of the case where the
judgment sought to be annulled was rendered. The purpose of such action is to have the
final and executory judgment set aside so that there will be a renewal of litigation. It is
resorted to in cases where the ordinary remedies of new trial, appeal, petition for relief
from judgment, or other appropriate remedies are no longer available through no fault of
the petitioner, and is based only on two grounds: extrinsic fraud, and lack of jurisdiction or
denial of due process. A person need not be a party to the judgment sought to be annulled,
and it is only essential that he can prove his allegation that the judgment was obtained by
the use of fraud and collusion and he would be adversely affected thereby.
An action to annul a final judgment on the ground of fraud only lies if the fraud is extrinsic
or collateral in character. Fraud is regarded as extrinsic where it prevents a party from
having a trial or from presenting his entire case to the court, or where it operates upon
matters pertaining not to the judgment itself but to the manner in which it is procured. The
overriding consideration when extrinsic is alleged is that the fraudulent scheme of the
prevailing litigant prevented a party from having his day in court.
In the present case, to sustain their allegation of extrinsic fraud, petitioners assert that as a
result of respondent’s deliberate omission or concealment of their names, ages and
residences as the other heirs of the decedent in his petition for allowance of the will, they
were not notified of the proceedings, and thus they were denied their day in court. In
addition, they claim that respondent’s offer of a false compromise even before the filing of
the petition prevented them from appearing and opposing the petition for probate.
The Court is not convinced. According to the Rules, notice is required to be personally given
to known heirs, legatees, and devisees of the testator. A perusal of the will shows that
respondent was instituted as the sole heir of the decedent. Petitioners, as nephews and

nieces of the decedent, are neither compulsory nor testate heirs who are entitled to be
notified of the probate proceedings under the Rules. Respondent had no legal obligation to
mention petitioners in the petition for probate, or to personally notify them of the same.
Besides, assuming arguendo that petitioners are entitled to be so notified, the purported
infirmity is cured by the publication of the notice. After all, personal notice upon the heirs
is a matter of procedural convenience and not a jurisdictional requisite.
The non-inclusion of petitioners’ names in the petition and alleged failure to personally
notify them of the proceedings do not constitute extrinsic fraud. Petitioners were not
denied their day in court, as they were not prevented from participating in the proceedings
and presenting their case before the probate court.
Octavio Maloles II vs. Court of Appeals
G.R. No. 133359, January 31, 2000
FACTS:
On July 20, 1995, Dr. Arturo de Santos, Filipino and a resident of Makati City, filed a petition
for probate of his will 1 in the Regional Trial Court. He alleged that he had no compulsory
heirs; that he had named in his will as sole legatee and devisee the Arturo de Santos
Foundation, Inc.; that he disposed by his will his properties with an approximate value of
not less than P2,000,000.00; and that copies of said will were in the custody of the named
executrix, private respondent Pacita de los Reyes Phillips.
Petitioner Octavio S. Maloles II filed a motion for intervention claiming that, as the only
child of Alicia de Santos (testator’s sister) and Octavio L. Maloles, Sr., he was the sole full-
blooded nephew and nearest of kin of Dr. De Santos. He likewise alleged that he was a
creditor of the testator. Petitioner thus prayed for the reconsideration of the order allowing
the will and the issuance of letters of administration in his name.
ISSUE:
Whether or not the petitioner, being a creditor of the late Dr. Arturo de Santos, has a right
to intervene and oppose the petition for issuance of letters testamentary filed by the
respondent
RULING:
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No. The petitioner in this case avers that, as the nearest next of kin and creditor of the
testator, his interest in the matter is material and direct. Even if petitioner is the nearest
next of kin of Dr. De Santos, he cannot be considered an “heir” of the testator. It is
a fundamental rule of testamentary succession that one who has no compulsory or forced
heirs may dispose of his entire estate by will. Thus, Article 842 of the Civil Code provides:
“One who has no compulsory heirs may dispose by will of all his estate or any part of it in
favor of any person having capacity to succeed.”
“One who has compulsory heirs may dispose of his estate provided he does not contravene
the provisions of this Code with regard to the legitimate of said heirs.”
Compulsory heirs are limited to the testator’s —
1. Legitimate children and descendants, with respect to their legitimate
parents and ascendants;
2. In default of the foregoing, legitimate parents and ascendants, with respect to their
legitimate children and descendants;
3. The widow or widower;
4. Acknowledged natural children, and natural children by legal fiction;
5. Other illegitimate children referred to in Article 287 of the Civil Code.
Petitioner, as nephew of the testator, is not a compulsory heir who may have
been preterited in the testator’s will. Nor does he have any right to intervene in the
settlement proceedings based on his allegation that he is a creditor of the deceased. Since
the testator instituted or named an executor in his will, it is incumbent upon the Court
to respect the desires of the testator. Only if the appointed executor is
incompetent, refuses the trust, or fails to give bond may the court appoint other persons
to administer the estate. None of these circumstances is present in this case.
EMILIO A.M. SUNTAY III v. ISABEL COJUANGCO-SUNTAY, GR No. 183053, 2012-10-10
Facts:
The decedent Cristina Aguinaldo-Suntay (Cristina) died intestate on 4 June 1990. Cristina
was survived by her spouse, Dr. Federico Suntay (Federico) and five grandchildren: three
legitimate grandchildren, including herein respondent, Isabel; and two illegitimate...

grandchildren, including petitioner Emilio III, all by Federico's and Cristina's only child,
Emilio A. Suntay (Emilio I), who predeceased his parents.
The illegitimate grandchildren, Emilio III and Nenita, were both reared from infancy by the
spouses Federico and Cristina. Their legitimate grandchildren, Isabel and her siblings,
Margarita and Emilio II, lived with their mother Isabel Cojuangco, following the
separation... of Isabel's parents, Emilio I and Isabel Cojuangco. Isabel's parents, along with
her paternal grandparents, were involved in domestic relations cases, including a case for
parricide filed by Isabel Cojuangco against Emilio I. Emilio I was eventually... acquitted.
In retaliation, Emilio I filed a complaint for legal separation against his wife, charging her
among others with infidelity. The trial court declared as null and void and of no effect the
marriage of Emilio I and Isabel Cojuangco
Intent on maintaining a relationship with their grandchildren, Federico and Isabel filed a
complaint for visitation rights to spend time with Margarita, Emilio II, and Isabel in the
same special lower court. The Juvenile Domestic Relations Court in Quezon City (JDRC-
QC)... granted their prayer for one hour a month of visitation rights which was
subsequently reduced to thirty minutes, and ultimately stopped, because of respondent
Isabel's testimony in court that her grandparents' visits caused her and her siblings stress
and anxiety.
On 27 September 1993, more than three years after Cristina's death, Federico adopted his
illegitimate grandchildren, Emilio III and Nenita.
On 26 October 1995, respondent Isabel, filed before the Regional Trial Court (RTC),
Malolos, Bulacan, a petition for the issuance of letters of administration over Cristina's
estate
Federico, opposed the petition
Federico filed a Motion to Dismiss Isabel's petition for letters of administration on the
ground that Isabel had no right of representation to the estate of Cristina, she being an
illegitimate grandchild of the latter as a result of Isabel's parents' marriage being declared
null... and void. However, in Suntay v. Cojuangco-Suntay, we categorically declared that
Isabel and her siblings, having been born of a voidable marriage as opposed to a void
marriage based on paragraph 3, Article 85 of the Civil Code, were legitimate children of
Emilio I,... who can all represent him in the estate of their legitimate grandmother, the
decedent, Cristina.
Undaunted by the set back, Federico nominated Emilio III to administer the decedent's
estate on his behalf in the event letters of administration issues to Federico.
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On 13 November 2000, Federico died.
Almost a year thereafter or on 9 November 2001, the trial court rendered a decision
appointing Emilio III as administrator of decedent Cristina's intestate estate
On appeal, the Court of Appeals reversed and set aside the decision of the RTC, revoked
the Letters of Administration issued to Emilio III, and appointed respondent as
administratrix of the subject estate
As previously adverted to, on appeal by certiorari, we reversed and set aside the ruling of
the appellate court. We decided to include Emilio III as co-administrator of Cristina's
estate, giving weight to his interest in Federico's estate.
Isabel contends that the explicit provisions of Section 6, Rule 78 of the Rules of Court on
the order of preference for the issuance of letters of administration cannot be ignored
and that Article 992 of the Civil Code must be followed. Isabel further asserts that Emilio
III had demonstrated adverse interests and disloyalty to the estate, thus, he does not
deserve to become a co-administrator thereof.
Issues:
Isabel bewails that: (1) Emilio III is an illegitimate grandchild and therefore, not an heir of
the decedent; (2) corollary thereto, Emilio III, not being a "next of kin" of the decedent,
has no interest in the estate to justify his appointment as... administrator thereof; (3)
Emilio III's actuations since his appointment as administrator by the RTC on 9 November
2001 emphatically demonstrate the validity and wisdom of the order of preference in
Section 6, Rule 78 of the Rules of Court; and (4) there is no basis for joint... administration
as there are no "opposing parties or factions to be represented."
Ruling:
To begin with, the case at bar reached us on the issue of who, as between Emilio III and
Isabel, is better qualified to act as administrator of the decedent's estate. We did not
choose. Considering merely his demonstrable interest in the subject estate, we ruled that
Emilio III should likewise administer the estate of his illegitimate grandmother, Cristina, as
a co-administrator. In the context of this case, we have to make a choice and therefore,
reconsider our decision of 16 June 2010.
The general rule in the appointment of administrator of the estate of a decedent is laid
down in Section 6, Rule 78 of the Rules of Court

Textually, the rule lists a sequence to be observed, an order of preference, in the
appointment of an administrator. This order of preference, which categorically seeks out
the surviving spouse, the next of kin and the creditors in the appointment of an
administrator, has... been reinforced in jurisprudence.
The paramount consideration in the appointment of an administrator over the estate of a
decedent is the prospective administrator's interest in the estate.
The rationale behind the rule is that those who will reap the benefit of a wise, speedy and
economical administration of the estate, or, in the alternative, suffer the consequences of
waste,... improvidence or mismanagement, have the highest interest and most influential
motive to administer the estate correctly.[10] In all, given that the rule speaks of an order
of preference, the person to be appointed administrator of a decedent's estate... must
demonstrate not only an interest in the estate, but an interest therein greater than any
other candidate.
It is to this requirement of observation of the order of preference in the appointment of
administrator of a decedent's estate, that the appointment of co-administrators has been
allowed, but as an exception. We again refer to Section 6(a) of Rule 78 of the Rules of
Court... which specifically states that letters of administration may be issued to both the
surviving spouse and the next of kin. In addition and impliedly, we can refer to Section 2
of Rule 82 of the Rules of Court which say that "x x x [w]hen an executor or administrator
dies,... resigns, or is removed, the remaining executor or administrator may administer
the trust alone, x x x."
In a number of cases, we have sanctioned the appointment of more than one
administrator for the benefit of the estate and those interested therein.[13] We
recognized that the appointment of administrator of the estate of a decedent or the...
determination of a person's suitability for the office of judicial administrator rests, to a
great extent, in the sound judgment of the court exercising the power of appointment.
Under certain circumstances and for various reasons well-settled in Philippine and
American jurisprudence, we have upheld the appointment of co-administrators: (1) to
have the benefits of their judgment and perhaps at all times to have different interests
represented;[15] (2) where justice and equity demand that opposing parties or factions be
represented in the management of the estate of the deceased; (3) where the estate is
large or, from any cause, an intricate and perplexing one to settle;[16] (4) to... have all
interested persons satisfied and the representatives to work in harmony for the best
interests of the estate;[17] and when a person entitled to the administration of an estate
desires to have another competent person associated with him in the... office.[18]
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Hewing closely to the aforementioned cases is our ruling in Ventura v. Ventura[21] where
we allowed the appointment of the surviving spouse and legitimate children of the
decedent as co-administrators. However, we drew a distinction between the... heirs
categorized as next of kin, the nearest of kin in the category being preferred, thus:
The "next of kin" has been defined as those persons who are entitled under the statute...
of distribution to the decedent's property [citations omitted]. It is generally said that "the
nearest of kin, whose interest in the estate is more preponderant, is preferred in the
choice of administrator. 'Among members of a class the strongest ground for preference
is the... amount or preponderance of interest. As between next of kin, the nearest of kin is
to be preferred.'"
In our Decision under consideration, we zeroed in on Emilio III's demonstrable interest in
the estate and glossed over the order of preference set forth in the Rules. We gave
weight to Emilio III's demonstrable interest in Cristina's estate and without a closer
scrutiny of... the attendant facts and circumstances, directed co-administration thereof.
The collected teaching is that mere demonstration of interest in the estate to be settled
does not ipso facto entitle an interested person to co-administration thereof. Neither
does squabbling among the heirs nor adverse interests necessitate the discounting of
the... order of preference set forth in Section 6, Rule 78. Indeed, in the appointment of
administrator of the estate of a deceased person, the principal consideration reckoned
with is the interest in said estate of the one to be appointed as administrator.[31] Given
Isabel's unassailable interest in the estate as one of the decedent's legitimate
grandchildren and undoubted nearest "next of kin," the appointment of Emilio III as co-
administrator of the same estate, cannot be a demandable right. It is a... matter left
entirely to the sound discretion of the Court[32] and depends on the facts and the
attendant circumstances of the case.[33]
These considerations do not warrant the setting aside of the order of preference mapped
out in Section 6, Rule 78 of the Rules of Court. They compel that a choice be made of one
over the other.
1. The bitter estrangement and long-standing animosity between Isabel, on the
one hand, and Emilio III, on the other, traced back from the time their paternal
grandparents were alive, which can be characterized as adverse interest of
some kind by, or hostility of, Emilio III to
Isabel who is immediately interested in the estate;

2. Corollary thereto, the seeming impossibility of Isabel and Emilio III working
harmoniously as co-administrators may result in prejudice to the decedent's estate,
ultimately delaying settlement thereof; and
3. Emilio III, for all his claims of knowledge in the management of Cristina's estate, has
not looked after the estate's welfare and has acted to the damage and prejudice thereof.
Contrary to the assumption made in the Decision that Emilio III's demonstrable interest in
the estate makes him a suitable co-administrator thereof, the evidence reveals that Emilio
III has turned out to be an unsuitable administrator of the estate. Respondent Isabel...
points out that after Emilio III's appointment as administrator of the subject estate in
2001, he has not looked after the welfare of the subject estate and has actually acted to
the damage and prejudice thereof as evidenced by the following:
1. Emilio III, despite several orders from the probate court for a complete inventory,
omitted in the partial inventories[34] he filed therewith properties of the estate[35]
including several parcels of land, cash, bank deposits,... jewelry, shares of stock, motor
vehicles, and other personal properties, contrary to Section 1,[36] paragraph a, Rule 81 of
the Rules of Court.
2. Emilio III did not take action on both occasions against Federico's settlement of the
decedent's estate which adjudicated to himself a number of properties properly belonging
to said estate (whether wholly or partially), and which contained a declaration that the...
decedent did not leave any descendants or heirs, except for Federico, entitled to succeed
to her estate.[37]
In compliance to our Resolution dated 18 April 2012 requiring Emilio III to respond to the
following imputations of Isabel that:
[Emilio III] did not file an inventory of the assets until November 14, 2002;
[T]he inventory [Emilio III] submitted did not include several properties of the decedent;
[T]hat properties belonging to the decedent have found their way to different individuals
or persons; several properties to Federico Suntay himself; and
[W]hile some properties have found their way to [Emilio III], by reason of falsified
documents;[38]
Emilio III refutes Isabel's imputations that he was lackadaisical in assuming and performing
the functions of administrator of Cristina's estate:
1. From the time of the RTC's Order appointing Emilio III as administrator, Isabel, in
her pleadings before the RTC, had vigorously opposed Emilio III's assumption of
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that office, arguing that "[t]he decision of the [RTC] dated 9 November 2001 is
not among the judgments... authorized by the Rules of Court which may be
immediately implemented or executed;"
2. The delay in Emilio III's filing of an inventory was due to Isabel's vociferous
objections to Emilio III's attempts to act as administrator while the RTC decision
was under appeal to the Court of Appeals;
3. The complained partial inventory is only initiatory, inherent in the nature
thereof, and one of the first steps in the lengthy process of settlement of a
decedent's estate, such that it cannot constitute a complete and total listing of
the decedent's properties; and
4. The criminal cases adverted to are trumped-up charges where Isabel, as private
complainant, has been unwilling to appear and testify, leading the Judge of the
Regional Trial Court, Branch 44 of Mamburao, Occidental Mindoro, to warn the
prosecutor of a possible motu... propio dismissal of the cases.
While we can subscribe to Emilio III's counsel's explanation for the blamed delay in the
filing of an inventory and his exposition on the nature thereof, partial as opposed to
complete, in the course of the settlement of a decedent's estate, we do not find any
clarification on
Isabel's accusation that Emilio III had deliberately omitted properties in the inventory,
which properties of Cristina he knew existed and which he claims to be knowledgeable
about.
The general denial made by Emilio III does not erase his unsuitability as administrator
rooted in his failure to "make and return x x x a true and complete inventory" which
became proven fact when he actually filed partial inventories before the probate court
and by his... inaction on two occasions of Federico's exclusion of Cristina's other
compulsory heirs, herein Isabel and her siblings, from the list of heirs.
As administrator, Emilio III enters into the office, posts a bond and executes an oath to
faithfully discharge the duties of settling the decedent's estate with the end in view of
distribution to the heirs, if any. This he failed to do. The foregoing circumstances of Emilio
III's omission and inaction become even more significant and speak volume of his
unsuitability as administrator as it demonstrates his interest adverse to those immediately
interested in the estate of the decedent, Cristina.
In this case, palpable from the evidence on record, the pleadings, and the protracted
litigation, is the inescapable fact that Emilio III and respondent Isabel have a deep

aversion for each other. To our mind, it becomes highly impractical, nay, improbable, for
the two to... work as co-administrators of their grandmother's estate. The allegations of
Emilio III, the testimony of Federico and the other witnesses for Federico and Emilio III
that Isabel and her siblings were estranged from their grandparents further drive home
the point that
Emilio III bears hostility towards Isabel. More importantly, it appears detrimental to the
decedent's estate to appoint a co-administrator (Emilio III) who has shown an adverse
interest of some kind or hostility to those, such as herein respondent Isabel, immediately
interested... in the said estate.
Principles:
Rule 80 Case # 1DALISAY E. OCAMPO, VINCE E. OCAMPO, MELINDA CARLA E. OCAMPO,
and LEONARDO E. OCAMPO, JR., vs.RENATO M. OCAMPO and ERLINDA M. OCAMPOG.R.
No. 187879
July 5, 2010Nachura
Facts:
Petitioners are the surviving wife and the children of leonardo ocampo who died Jan. 23,
2004. Leonardoand his siblings respondents are the legitimate children and only heirs
of spouses Vicenta and Maxima Ocampowho died intestate.Petitioners initiated a petition
for intestate proceedings and alleged that upon the death of Vicente and
Maximarespondents and their brother Leonardo jointly controlled the estate of their
parents. however, when leonardodied, respondents took possession, control and mgt of
properties to the exclusion of petitioners.Respondent filed their opposition but was
denied by the rtc. respondent reiterated their prayer for appointment of joint special
administrators.Petitioners argued that they had been deprived of their fair share of
income of the estate and the appointment ofrespondents as special joint administrator
would further cause injustice to them.
Ruling
:A special administrator is an officer of the court who is subject to its supervision and
control, expected towork for the best interest of the entire estate, with a view to its
smooth administration and speedy settlement.When appointed, he or she is not regarded
as an agent or representative of the parties suggesting theappointment. The principal
object of the appointment of a temporary administrator is to preserve the estate untilit
can pass to the hands of a person fully authorized to administer it for the benefit of
creditors and heirs, pursuantto Section 2 of Rule 80 of the Rules of Court.
[ transferred to. Petitioner filed Motion to Declare Complaint as Nuisance or Harassment Suit
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While the rtc considered the respondents were the nearest kin of their deceased parents
in their appointment as joint special administrators, this is not a mandatory requirement
for the appointment. It has long been settled thatthe selection and removal of a special
administrators is not governed by the rules regarding the selection andremoval of regular
administrators. the probate court may appoint or remove special administrators based on
thegrounds other than those enumerated in the rules at its discretion.The appointment or
removal of a special administrators, being discretionary, is thus interlocutory and may
beassailed through a petition for certiorari under rule 65 of the rules of court.Wherefore,
the petition is partially granted, the decision with respect to the revocation of the
specialadministration in favor of renato ocampo and erlinda ocampo is reinstated.
The appointment of melinda carlaocampo as regular administratrix is set aside.
Reyes v. RTC of Makati [G.R. No. 165744. August 11, 2008]
03OCT
OSCAR C. REYES, petitioner,
vs.
HON. REGIONAL TRIAL COURT OF MAKATI, Branch 142, ZENITH INSURANCE
CORPORATION and RODRIGO C. REYES, respondents.
[G.R. No. 165744. August 11, 2008]
FACTS:
Petitioner and private respondent were siblings together with two others, namely Pedro
and Anastacia, in a family business established as Zenith Insurance Corporation (Zenith),
from which they owned shares of stocks. The Pedro and Anastacia subsequently died. The
former had his estate judicially partitioned among his heirs, but the latter had not made the
same in her shareholding in Zenith. Zenith and Rodrigo filed a complaint with the Securities
and Exchange Commission (SEC) against petitioner (1) a derivative suit to obtain accounting
of funds and assets of Zenith, and (2) to determine the shares of stock of deceased Pedro
and Anastacia that were arbitrarily and fraudulently appropriated [by Oscar, and were
unaccounted for]. In his answer with counterclaim, petitioner denied the illegality of the
acquisition of shares of Anastacia and questioned the jurisdiction of SEC to entertain the
complaint because it pertains to settlement of [Anastacia’s] estate. The case was

and must be dismissed. RTC denied the motion. The motion was elevated to the Court of
Appeals by way of petition for certiorari, prohibition and mandamus, but was again denied.
ISSUES:
Mercantile Law
(1) Whether or not Rodrigo may be considered a stockholder of Zenith with respect to the
shareholdings originally belonging to Anastacia.
(2) Whether or not there is an intra-corporate relationship between the parties that would
characterize the case as an intra-corporate dispute?
Remedial Law
(1) Whether or not the complaint is a mere nuisance or harassment suit that should be
dismissed under the Interim Rules of Procedure of Intra-Corporate Controversies;
(2) Whether or not the complaint is a derivative suit within the jurisdiction of the RTC acting
as a special commercial court.
RULINGS:
Mercantile Law
(1) No. Rodrigo must, hurdle two obstacles before he can be considered a stockholder of
Zenith with respect to the shareholdings originally belonging to Anastacia. First, he must
prove that there are shareholdings that will be left to him and his co-heirs, and this can be
determined only in a settlement of the decedent’s estate. No such proceeding has been
commenced to date. Second, he must register the transfer of the shares allotted to him to
make it binding against the corporation. He cannot demand that this be done unless and
until he has established his specific allotment (and prima facie ownership) of the
shares. Without the settlement of Anastacia’s estate, there can be no definite partition and
distribution of the estate to the heirs. Without the partition and distribution, there can be
no registration of the transfer. And without the registration, we cannot consider the
transferee-heir a stockholder who may invoke the existence of an intra-corporate
relationship as premise for an intra-corporate controversy within the jurisdiction of a
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special commercial court. The subject shares of stock (i.e., Anastacia’s shares) are
concerned – Rodrigo cannot be considered a stockholder of Zenith.
(2) No. Court cannot declare that an intra-corporate relationship exists that would serve as
basis to bring this case within the special commercial court’s jurisdiction under Section 5(b)
of PD 902-A, as amended because Rodrigo’s complaint failed the relationship test above.
Remedial Law
(1) Yes. The rule is that a complaint must contain a plain, concise, and direct statement of
the ultimate facts constituting the plaintiff’s cause of action and must specify the relief
sought. Section 5, Rule 8 of the Revised Rules of Court provides that in all averments of
fraud or mistake, the circumstances constituting fraud or mistake must be stated with
particularity. These rules find specific application to Section 5(a) of P.D. No. 902-A which
speaks of corporate devices or schemes that amount to fraud or misrepresentation
detrimental to the public and/or to the stockholders.
Allegations of deceit, machination, false pretenses, misrepresentation, and threats are
largely conclusions of law that, without supporting statements of the facts to which the
allegations of fraud refer, do not sufficiently state an effective cause of action. Fraud and
mistake are required to be averred with particularity in order to enable the opposing party
to controvert the particular facts allegedly constituting such fraud or mistake. Tested
against these standards, charges of fraud against Oscar were not properly supported by the
required factual allegations. While the complaint contained allegations of fraud
purportedly committed by him, these allegations are not particular enough to bring the
controversy within the special commercial court’s jurisdiction; they are not statements of
ultimate facts, but are mere conclusions of law: how and why the alleged appropriation of
shares can be characterized as “illegal and fraudulent” were not explained nor elaborated
on. The case must be dismissed.
(2) No. The allegations of the present complaint do not amount to a derivative suit. First,
as already discussed above, Rodrigo is not a shareholder with respect to the shareholdings
originally belonging to Anastacia; he only stands as a transferee-heir whose rights to the
share are inchoate and unrecorded. Second, in order that a stockholder may show a right
to sue on behalf of the corporation, he must allege with some particularity in his complaint
that he has exhausted his remedies within the corporation by making a sufficient demand
upon the directors or other officers for appropriate relief with the expressed intent to sue
if relief is denied. Lastly, Court found no injury, actual or threatened, alleged to have been
done to the corporation due to Oscar’s acts. If indeed he illegally and fraudulently
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transferred Anastacia’s shares in his own name, then the damage is not to the corporation
but to his co-heirs; the wrongful transfer did not affect the capital stock or the assets of
Zenith.

In summary, whether as an individual or as a derivative suit, the RTC – sitting as special

commercial court – has no jurisdiction to hear Rodrigo’s complaint since what is involved is
the determination and distribution of successional rights to the shareholdings of Anastacia
Reyes. Rodrigo’s proper remedy, under the circumstances, is to institute a special
proceeding for the settlement of the estate of the deceased Anastacia Reyes, a move that
is not foreclosed by the dismissal of his present complaint.