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Intestate Estate of ARSENIO R. AFAN, deceased. MARIAN AFAN, petitioner-appellee, vs.

proceeding long before the filing of his claim therein on July 27, 1957. To be precise, he was
APOLINARIO S. DE GUZMAN, creditor-appellant. aware of its existence as early as August, 1955.

CONCEPCION, J.: In this connection, it appears that, during the lifetime of Afan, or on May 24, 1950, De Guzman
instituted, against him, Civil Case No. 1148 of the Court of First Instance of Rizal, to recover the
amount of the promissory note above referred to. On appeal, the decision of said court in favor of
This is an appeal, taken by Apolinario S. de Guzman, from an order of the Court of First Instance
De Guzman was set aside, and a trial de novo ordered, by the Court of Appeals, in case CA-G.R.
of Manila, dated July 27, 1957.
No. 7340-R. Sometime after the records had been remanded to the lower court, Afan died. On
August 15, 1955, that court issued an order requiring counsel for his heirs "to submit to the court
It appears that, on July 12, 1957, De Guzman filed, in this special proceeding for the settlement of the number of the intestate estate proceedings of the deceased Arsenio R. Afan now pending in
intestate estate of Arsenio R. Afan, a claim for P1,000, allegedly due from the latter, with interest the Court of First Instance of Manila." This order was complied with on August 30, 1955, by the
thereon, within 30 days from August 16, 1949, as set forth in a promissory note then issued by filing with the Court of First Instance of Rizal, in said Case No. 1148, of a "notification" containing
Afan. On July 22, 1957, the administratrix of his estate objected to the consideration of the claim the required information, copy of which "notification" was served upon counsel for De Guzman, as
upon the ground, among others, that it had been filed long after the expiration of the period for the plaintiff therein. On January 18, 1956, his counsel filed in said case a motion for the appointment
presentation of claims against said estate. For this reason, the lower court issued the order of a legal representative of the deceased Afan, to substitute him as defendant therein.
appealed from, refusing to entertain the aforementioned claim. De Guzman invokes, in support of Accordingly, on January 21, 1956, said court gave De Guzman five (5) days within which to
his appeal, section 2, Rule 87 of the Rules of Court, reading: submit the names of the legal heirs of Afan who may be appointed as his legal representative. On
January 24, 1956 De Guzman filed, therefore, with the aforementioned court, a statement,
Time within which claims shall be filed.In the notice provided in the preceding entitled "compliance", setting forth the names, ages and addresses of the heirs of the deceased,
section, the court shall state the time for the filing of claims against the estate, which "as shown by the records in Special Proceedings No. 26858, entitled 'Instance estate of Arsenio
shall not be more than twelve nor less than six months after the date of the first R. Afan' before the Court of First Instance of Manila," with the prayer that said "heirs be
publication of the notice. However, at any time before an order of distribution is substituted as party defendants" in Case No. 1148, "in place of the deceased Arsenio R. Afan."
entered, on application of a creditor who has failed to file his claim within the time Yet, De Guzman choose not to file his claim in such proceeding until July 27, 1957, one year and
previously limited, the court may, for cause shown and on such terms as are equitable, a half after the filing of his aforementioned "compliance."
allow such claims to be filed within a time not exceeding one month.
Instead of furnishing a "cause" for the extension of the reglementary period for the filing of his
Relying upon this provision, De Guzman maintains that the lower court should have entertained claim, this omission on the part of De Guzman fully justifies the denial of such extension and the
his claim, the same having been filed prior to the distribution of the estate of the deceased. This order appealed from. We have already held that failure to file a claim within the time provided
pretense is not borne out, however, by the rule above quoted. therefor upon the sole ground that the claimant was negotiating with one of the heirs for payment,
is not sufficient to justify extension (In Re: Estate of De Dios, 24 Phil., 573, 576; see also Santos
vs. Manarang, 27 Phil., 209), and that, where a claimant knew of the death of the decedent and
The second sentence thereof clothes the court with authority to permit the filing of a claim after for four (4) or five (5) months thereafter he did nothing to present his claim, this can hardly be
the lapse of the period stated in the first sentence, but prior to and distribution, subject to the considered as a good excuse for such neglect (In Re: Estate of Tiangco, 39 Phil., 967).
following conditions, namely(1) there must be tin application therefor; (2) a cause must be shown
why the permission should be granted; and (3) the extension of time granted for the filing of the
claim shall not exceed one (1) month. Wherefore, the order appealed from is hereby affirmed with costs against appellant Apolinario S.
de Guzman. It is so ordered.

De Guzman has not sought permission to file the claim. Moreover, the same does not allege any
reason why he should be excused for his failure to file the claim in this proceeding within the
period stated in the Rules of Court. Again, whether or not the reasons given and none were set
forth in De Guzman's claim are sufficient, rests upon the discretion of the court (Roguera vs.
Tanodra, 81 Phil., 404; Umpig, et al. vs. De Gala, et al., 96 Phil., 77; 50 Off. Gaz., 5305), and the
record before us does not show that the lower court has abused its discretion in acting as it did in
the present case. De Guzman now alleges, for the first time, a "cause" why the lower court should
allegedly have considered his claim. He says, in his brief (p. 6, thereof) that "he had no actual
knowledge of the fact that the estate of the deceased . . . was then already in the process of
settlement . . . . " He did not explain why he refrained from making such averment either in his
claim or in the motion, filed by him in the lower court, for a reconsideration of the order appealed
from. The reason is, however, not difficult to surmise he had actual knowledge of the present
Accordingly, on March 27, 1978, after the judicial administrator had qualified and his inventory of
the assets of the late Dominga Garcia was approved, respondent court issued an order requiring
the filing of creditors' claim against the said estate within the period of six (6) months from the
date of the first publication. 5 Copy of said order was received by petitioners through counsel on
March 28, 1979. 6

Meanwhile, on January 23,1979, private respondent and the City of Davao filed a joint motion
asking respondent court to take notice of their agreement which in substance provides for an
agreement to file a joint motion in the CFI of Davao to proceed with the determination of the heirs
of the deceased Domingao Garcia which shall be determinative of their respective claims against
the estate. On February 19, 1979, petitioners filed their opposition to the said joint motion on the
sole ground that it is without procedural basis. Private respondent filed his reply thereto on
HEIRS OF RAMON PIZARRO, SR., petitioners, vs. HON. FRANCISCO Z. CONSOLACION, CFI February 21, 1979. On February 22, 1979, respondent court issued an order taking note of the
of Davao and LUIS TAN alias CHEN YEH-AN, respondents. agreement between private respondent and the City of Davao.

GANCAYCO, J.: On February 28, 1979, private respondent filed a motion to drop and exclude the petitioners on
the ground that they do not even claim to be the heirs of the deceased Dominga Garcia and that
This is a petition for review on certiorari seeking the reversal of the Order of June 1, 1979, of the the extrajudicial deed of partition and deed of absolute sale allegedly executed in Hongkong in
then Court of First Instance of Davao * dismissing petitioners' claim against the estate of the late favor of the petitioners' deceased father is spurious and simulated. On March 5, 1979, petitioners
Dominga Garcia, and questioning the legality of the Order of the same court dated July 17, 1979 filed their opposition to said motion. They likewise filed a claim against the estate of the deceased
which denied due course to the petitioners' notice of appeal to the Court of Appeals and directed Garcia in the amount of P350,000.00 representing services allegedly rendered by their deceased
them to file instead a petition for review before this Tribunal. father in favor of Vicente Tan. On March 8, 1979, private respondent filed a reply to petitioners'
opposition and a motion to strike out or dismiss the claim on the ground that it is spurious and
barred for having been filed beyond the six (6) month period set in the notice for the filing of
Petitioners are the oppositors in Special Proceeding No. 2116 in the then Court of First Instance
creditors' claim. On March 29, 1979, petitioners filed another claim against the estate for
(CFI) of Davao City Branch II, for settlement of the estate of the deceased Dominga Garcia, filed
P200,000.00 allegedly advanced by their deceased father for the payment of realty and income
by private respondent herein, Luis Tan alias Chen Yeh-An.
taxes of the said lot sometime in 1936, to which claim private respondent filed an opposition on
the ground that it is barred for having been filed beyond the six (6) month period and that it was
The records disclose that on August 12,1977, Luis Tan filed a verified petition with the CFI of merely intended to delay the proceedings.
Davao for the issuance of letters of administration in favor of a certain Alfonso Atilano. The
petition alleged, among others that private respondent is the only surviving son of the deceased
In the Order of June 1, 1979, respondent court dismissed both claims of the petitioners on the
Dominga Garcia who died intestate sometime in 1930 in Canton, China; that the deceased left a
ground that they are barred for having been filed out of time. 7 On June 26, 1979, petitioners filed
parcel of land 1 located at C.M. Recto Avenue, Davao City; and that the said lot is in the
a notice of appeal stating that they are appealing the order of June 1, 1979 to the Court of
possession of the heirs of Ramon Pizarro, 2 petitioners herein.
Appeals in so far as it declared their claims barred. 8 On July 5, 1979, private respondent filed an
opposition to the projected appeal on the ground that the appeal involves a pure question of law
On October 4, 1977, petitioners filed an opposition to the said petition claiming that they are the and thus, the same should be directed to the Supreme Court. 9 On July 17, 1979, respondent
heirs of Ramon Pizarro who died intestate on June 16, 1974; and that the deceased was the court issued an order dismissing petitioners' appeal and directed petitioners to file instead a
vendee of one-half (1/2) of the aforementioned lot by virtue of an extrajudicial settlement of estate petition for review on certiorari before this Court. 10
and deed of absolute sale executed by Vicente Tan in Hongkong on May 27, 1966. Petitioners
prayed that letters of administration of Dominga Garcia's estate be issued in favor of anyone of
Hence, the present petition. ***
them.

It is the position of the petitioners that the order of June 1, 1979 of the respondent court, which
The respondent court set the petition for hearing. Said order and the petition were duly published
directed that the filing of claims against the estate of the late Dominga Garcia be filed within six
in the Mindanao Times. ** The City of Davao 3 was likewise served with a copy of said petition.
(6) months after the first publication of the notice thereof, is null and void in that it is violative of
On December 6, 1977, after private respondent had begun presentation of evidence in support of
Section 2, Rule 86 of the Revised Rules of Court. They contend that said provision mandates that
his petition, the parties herein entered into a compromise whereby petitioners agreed, among
the filing of such claims should be for a period of six (6) months starting from the sixth month after
others, to withdraw their opposition to the appointment of private respondent's recommendee and
the date of the first publication of the notice down to the twelfth month. 11 They argue that to
for the intestate proceedings to proceed in due course. Said agreement was approved in the
order of respondent court dated December 6,1977. 4
require filing of claims within the sixth month from publication of notice will shorten the period in Petitioners contend that it is the Court of Appeals which has the authority to determine whether
violation of the mandatory provisions of Section 2, Rule 86, which provides: the issue in the appeal is purely a question of law in which case it shall certify the same to the
proper court, which in this case is this Tribunal.
Sec. 2. Time within which claims shall be filed. In the notice provided in
the preceding section, the court shall state the time for the filing of claims In the present case, when the lower court found that the order sought to be appealed was its
against the estate, which shall not be more than twelve (12) nor less than order of June 1, 1979, wherein it held that the claims filed by petitioners against the estates were
six (6) months after the date of the first publication of the notice. However, barred having been filed beyond the period fixed by the trial court in the notice, which appeal
at anytime before an order of distribution is entered, on application of a involves an interpretation of Section 2, Rule 86 of the Rules of Court, instead of giving due course
creditor who has failed to file his claim within the time previously limited, the to the notice of appeal to the Court of Appeals filed by petitioners, the petitioners were instructed
court may, for cause shown and on such terms as are equitable, allow such to file a petition for review with this Court as the issue is a pure question of law.
claim to be filed within a time not exceeding one (1) months.
We find the action taken by the trial court to be well-taken. Certainly, it is within the competence
We agree. The range of the period specified in the rule is intended to give the probate court the and jurisdiction of the trial court to determine whether the appeal interposed was based on pure
discretion to fix the period for the filing of claims. The probate court is permitted by the rule to set questions of law or involves both questions of law and facts in considering the appeal. 14 The
the period provided it is not less than six (6) months nor more than twelve (12) months from the provision of Section 3, Rule 50 of the Rules of Court applies only when the appeal is already
date of the first publication of the notice thereof. Such period once fixed by the court is brought to the Court of Appeals at which time it may, instead of dismissing the appeal, upon
mandatory. determination that it involves a pure question of law, order that the case be certified to this Court.

The purpose of the law, in fixing a period within which claims against an estate must be It must be noted that in the notice of appeal it is not even required that the appellant indicate the
presented, is to insure a speedy settlement of the affairs of the deceased person and the early court to which its appeal is being interposed. The requirement is merely directory and failure to
delivery of the property to the person entitled to the same. 12 comply with it or error in the court indicated is not fatal to the appeal. 15

In Sikat vs. Vda. Mafincode Villanueva, 13 this Court ruled that the speedy settlement of the estate WHEREFORE, the petition is GRANTED and the orders of the respondent court of June 1, 1979
of deceased persons for the benefit of creditors and those entitled to the residue by way of and July 17, 1979 are reversed and set aside in so far as the claims filed by petitioners were
inheritance or legacy after the debts and expenses of administration have been paid is the ruling found to be barred, the same having been timely filed, without pronouncement as to costs.
spirit of our probate law.

However, in this case the trial court set the period for the filing of the claims within six (6) months
from the date of the first publication of the notice. It was obviously short of the minimum limit of
six (6) months provided for by the law. Petitioner correctly observed that the trial court thereby
shortened the period set by the law.

Since the notice issued and the period set by the trial court was not in accordance with the
requirements of Section 2, Rule 86 of the Rules of Court, what should then apply is the period as
provided for by the rules which is not less than six months nor more than twelve (12) months from
the date of first publication of notice. The first publication of the notice in the Mindanao Times was
on March 30, 1978. Thus the two claims of petitioners against the estate which were filed on
March 5, 1979 and March 29, 1979 respectively were filed on time.

The other issue raised in the petition is the authority of the trial court to determine whether the
appeal involves a question of law or both questions of law and facts. The petitioners cite Section
3, Rule 50 of the Rules of Court, which provides as follows:

Sec. 3. Where appealed case erroneously brought. Where the appealed


case has been erroneously brought to the Court of Appeals, it shall not
dismiss the appeal, but shall certify the case to the proper court, with a
specific and clear statement of the grounds therefor.
(the possession of the leased property is alleged, having been returned to her after the open of
the dikes ordered by the government); and second, the sum of P60,000.00 as damages in the
concept of earned profits, that is, profits which the claimant failed to realize because of the breach
of the lease contract allegedly committed by the lessor.

On June 7, 1957 appellant commenced the instant ordinary civil action in the Court of First
Instance of Rizal (Quezon City branch) against the executrix of the testate for the recovery of the
same amount of P60,000 referred to as the second item claimed in the administration proceeding.
The complaint specifically charges decedent Manila Gerardo Vda. de Barretto, is lessor, was
having violated a warranty in the lease contract again any damages the lessee might suffer by
reason of the claim of the government that several rivers and creeks of the public domain were
included in the fishponds.

In July 1957 appellant amended his claim in the testate proceeding by withdrawing therefrom the
item of P60,000.00, leaving only the one for refund of advance rentals in the sum of P32,000.00.

After the issues were joined in the present case with the filing of the defendant's answer, together
with a counterclaim, and after two postponements of the trial were granted, the second of which
was in January 1958, the court dismissed the action for abandonment by both parties in an order
dated July 31, 1959. Appellant moved to reconsider; appellee opposed the motion; and after
considerable written argument the court, on March 7, 1960, denied the motion for reconsideration
on the ground that the claim should have been prosecuted in the testate proceeding and not by
ordinary civil action.

Appellant submits his case on this lone legal question: whether or not his claim for damages
based on unrealized profits is a money claim against the estate of the deceased Maria Gerardo
Vda. de Barretto within the purview of Rule 87, Section 5. This section states:
RICARDO M. GUTIERREZ, plaintiff-appellant, vs. LUCIA MILAGROS BARRETTO-DATU,
Executrix of the Testate Estate of the deceased MARIA GERARDO VDA. DE SEC. 5. Claims which must be filed under the notice. If not filed, barred; exception.
BARRETTO, defendant-appellee. 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
MAKALINTAL, J.: expenses of the last sickness of the decedent, and judgment for money against the
decedent, must be filed within the time limited in the notice; otherwise they are barred
forever, except that they may be set forth as counterclaims in any action that the
Ricardo M. Gutierrez appeals from the orders of Court of First Instance of Rizal (1) dismissing his executor or administrator may bring against the claimants. Where an executor or
complaint against Lucia Milagros Barretto-Datu, as executive of the estate of the deceased Maria administrator commences an action, or prosecutes an action already commenced by
Gerardo Vda. de Barreto, and (2) denying his motion for reconsideration the dismissal. the deceased in his lifetime, the debtor may set forth by answer the claims he has
against the decedent, instead of presenting them independently to the court as herein
The relevant facts alleged by appellant are as follows; In 1940, Maria Gerardo Vda. de Barretto, provided, and mutual claims may be set off against each other in such action; and if
owner of hectares of fishpond lands in Pampanga, leased the same to appellant Gutierrez for a final judgment is rendered in favor of the defendant, the amount so determined shall
term to expire on May 1, 1947. On November 1, 1941, pursuant to a decision of Department of be considered the true balance against the estate, as though the claim had been
Public Works rendered after due investigation the dikes of the fishponds were opened at several presented directly before the court in the administration proceedings. Claims not yet
points, resulting in their destruction and in the loss great quantities of fish inside, to the damage due, or contingent, may be approved at their present value.
and prejudice of the lessee.
The word "claims" as used in statutes requiring the presentation of claims against a decedent's
In 1956, the lessor having died in 1948 and the corresponding testate proceeding to settle her estate is generally construed to mean debts or demands of a pecuniary nature which could have
estate having been opened (Sp. Proc. No. 5002, C.F.I., Manila), Gutierrez filed a claim therein for been enforced against the deceased in his lifetime and could have been reduced to simple
two items: first, for the sum of P32,000.00 representing advance rentals he had to the decedent money judgments; and among these are those founded upon contract. 21 Am. Jur. 579. The
claim in this case is based on contract specifically, on a breach thereof. It falls squarely under be submitted to the said court of Samar on February 23, 1960 at 8: 00 a.m.; that in view of the
section 5 of Rule 87 "Upon all contracts by the decedent broken during his lifetime, even though copy and notice served, plaintiffs proceeded to the court from their residence in Manila
they were personal to the decedent in liability, the personal representative is answerable for the accompanied by their lawyers, only to discover that no such petition had been filed; and that
breach out of the assets." 3 Schouler on Wills, Executors and Administrators, 6th Ed., 2395. A defendant Llemos maliciously failed to appear in court, so that plaintiffs' expenditure and trouble
claim for breach of a covenant in a deed of the decedent must be presented under a statute turned out to be in vain, causing them mental anguish and undue embarrassment.
requiring such presentment of all claims grounded on contract. Id. 2461; Clayton v. Dinwoody, 93
P. 723; James v. Corvin, 51 P. 2nd 689.1
On 1 April 1960, before he could answer the complaint, the defendant died. Upon leave of court,
plaintiffs amended their complaint to include the heirs of the deceased. On 21 July 1960, the heirs
The only actions that may be instituted against the executor or administrator are those to recover filed a motion to dismiss, and by order of 12 August 1960, the court below dismissed it, on the
real or personal property from the estate, or to enforce a lien thereon, and actions to recover ground that the legal representative, and not the heirs, should have been made the party
damages for an injury to person or property, real or personal. Rule 88, section 1. The instant suit defendant; and that anyway the action being for recovery of money, testate or intestate
is not one of them. proceedings should be initiated and the claim filed therein (Rec. on Appeal, pp. 26-27).

Appellant invokes Gavin v. Melliza, 84 Phil. 794, in support of his contention that this action is Motion for reconsideration having been denied, the case was appealed to us on points of
proper against the executrix. The citation is not in point. The claim therein, which was filed in the law.1wph1.t
testate proceeding, was based upon a breach of contract committed by the executrix herself, in
dismissing the claimant as administrator of the hacienda of the deceased. While the contract was
Plaintiffs argue with considerable cogency that contrasting the correlated provisions of the Rules
with the decedent, its violation was by the executrix and hence personal to her. Besides, the claim
of Court, those concerning claims that are barred if not filed in the estate settlement proceedings
was for indemnity in the form of a certain quantity of palay every year for the unexpired portion of
(Rule 87, sec. 5) and those defining actions that survive and may be prosecuted against the
the term of the contract. The denial of the claim was affirmed by this Court on the grounds that it
executor or administrator (Rule 88, sec. 1), it is apparent that actions for damages caused by
was not a money claim and that it arose after the decedent's demise, placing it outside the scope
tortious conduct of a defendant (as in the case at bar) survive the death of the latter. Under Rule
of Rule 87, Section 5.
87, section 5, the actions that are abated by death are: (1) claims for funeral expenses and those
for the last sickness of the decedent; (2) judgments for money; and (3) "all claims for money
The orders appealed from are affirmed, with costs against appellant. against the decedent, arising from contract express or implied". None of these includes that of the
plaintiffs-appellants; for it is not enough that the claim against the deceased party be for money,
but it must arise from "contract express or implied", and these words (also used by the Rules in
connection with attachments and derived from the common law) were construed in Leung Ben vs.
O'Brien, 38 Phil., 182, 189-194.

to include all purely personal obligations other than those which have their source
in delict or tort.

Upon the other hand, Rule 88, section 1, enumerates actions that survive against a decedent's
executors or administrators, and they are: (1) actions to recover real and personal property from
the estate; (2) actions to enforce a lien thereon; and (3) actions to recover damages for an injury
to person or property. The present suit is one for damages under the last class, it having been
held that "injury to property" is not limited to injuries to specific property, but extends to other
MARIA G. AGUAS, FELIX GUARDINO and FRANCISCO SALINAS, plaintiffs-appellants, vs. wrongs by which personal estate is injured or diminished (Baker vs. Crandall, 47 Am. Rep. 126;
HERMOGENES LLEMOS, deceased defendant substituted by his representatives, also 171 A.L.R., 1395). To maliciously cause a party to incur unnecessary expenses, as charged
PERPETUA YERRO-LLEMOS, HERMENEGILDO LLEMOS, FELINO LLEMOS and AMADO in this case, is certainly injurious to that party's property (Javier vs. Araneta, L-4369, Aug. 31,
LLEMOS, defendants-appellees. 1953).

REYES, J.B.L., J.: Be that as it may, it now appears from a communication from the Court of First Instance of Samar
that the parties have arrived at an amicable settlement of their differences, and that they have
On 14 March 1960, Francisco Salinas and the spouses Felix Guardino and Maria Aguas jointly agreed to dismiss this appeal. The settlement has been approved and embodied in an order of
filed an action in the Court of First Instance of Catbalogan, Samar (Civil Case No. 4824), to the Court of First Instance.
recover damages from Hermogenes Llemos, averring that the latter had served them by
registered mail with a copy of a petition for a writ of possession, with notice that the same would
The case having thus become moot, it becomes unnecessary to resolve the questions raised THE BANK OF THE PHILIPPINE ISLANDS, plaintiff-appellant, vs. V. CONCEPCION E HIJOS,
therein. This appeal is, therefore, ordered dismissed, without special pronouncement as to costs. INC., defendants-appellants. HENRY W. ELSER, defendant-appellee.

OSTRAND, J.:

It appears from the record that on July 6, 1921, the defendants Concepcion executed a
promissory note in favor of the plaintiff for the sum of P342,372.64, payable on demand, and as
security for payment, deposited 700 shares of the Philippine National Bank as collateral with the
plaintiff and gave it a mortgage on 5,680 square meters of land, with improvements, situated on
R. Hidalgo Street in Manila. The defendants Concepcion defaulted in the payment of the note,
and on February 3, 1922, the plaintiff bank instituted the present foreclosure proceedings.

Shortly afterwards, Henry W. Elser entered into negotiations with the Concepcions and offered to
take over the mortgaged property and assume the mortgage debt. To this the Concepcions
agreed on the condition that they be relieved of all liability for the debt.

On March 23, 1922, Elser wrote the plaintiff bank the following letter:

DEAR SIR: Confirming our conversation of this morning, I take pleasure in advising
you that I have made arrangements with Mssrs. Puno & Concepcion to take over their
property on Calle R. Hidalgo, consisting of 5,680 square meters, including all
improvements thereon, and also 700 shares in the Philippine National Bank mortgaged
to you in the total sum of P342,000, and by which arrangement I am to be substituted
in the place and stead of Messrs. Puno & Concepcion in the obligation to your bank.

I have present prospects of renting the entire property and in consideration thereof I
will undertake to pay to the bank on the obligation thus undertaken by me, the sum of
not less than five thousand pesos (P5,000) monthly on the principal, together with
interest every six months. I will also reduce the mortgage not less than 25 per cent
during the first year, not less than 50 per cent during the second year, and the balance
within the third year, without prejudice, however, to my right to mortgage the property
to any bonding institution or to take up the mortgage myself at any time during the
three years period mentioned above, which I expect that I may be in a position to do.

Yours very truly,


(Sgd.) H. W. ELSER

No answer to this letter was given by the bank, and it clearly appears from the allegations in its
amended complaint, and from the evidence, that it was unwilling to release the Concepcions from
their liability for the mortgage debt and insisted on their confessing a judgment in the foreclosure
proceedings. This the Concepcions refused to do unless the bank would agree to bid in the
mortgage property for the full amount of the judgment.

After further conversations with the representatives of the plaintiff bank, Elser on April 21, 1922,
wrote in the following letter:
DEAR SIRS (Attention of Mr. Zaragoza): With reference to our recent conversation WITNESSETH:
regarding the R. Hidalgo property belonging to Venancio Concepcion (Puno &
Concepcion), I respectfully request that you confirm in writing your verbal agreement
Whereas, V. Concepcion e Hijos, Inc., is at present indebted to the Bank of the
that should the property in question become the property of your bank, in the amount
Philippine Islands, in the sum of P342,372.64, Philippine currency with interest thereon
of P342,000 plus interest to date, that you will sell the same to me for the same
at the rate of 9 per cent per annum from September 30, 1921, to secure the payment
amount.
of which, the firm of V. Concepcion e Hijos, Inc., and Mr. Venancio Concepcion as joint
land several obligors, have executed in favor of the creditor bank on the 6th of July,
This information is desired by the Attorneys for Venancio Concepcion, Mr. R. M. Calvo, 1921, a deed of mortgage and one of pledge upon the following properties:
in order to satisfy himself that in case Messrs. Puno & Concepcion accept judgment,
turning over the property to you, that you in return will sell the property to me for the
A tract of land with the buildings of strong materials erected thereon, situated on Calle
above mentioned sum, and not less than that sum.
Sa n Sebastian, District of Quiapo. Bounded on the N. by Calle San Sebastian; on the
E. by property Maximino Paterno and Manuel Zamora; on the S. by property of the City
Trusting you will see your way clear to furnish this confirmation, in accordance with our of Manila; and on W. by the Estero de Curtidor; containing an area of 5,686.80 square
conversation, we are meters, more or less, of which land, buildings and improvements, the aforesaid
Venancio Concepcion is the registered owner in accordance with the Land Registration
Act, according to transfer certificate of title No. 14019, issued by the registrar of deeds
Very truly,
of the City of Manila.
(Sgd.) H. W. ELSER

Seven hundred shares of stock of the Philippine National Bank, belonging to Mr.
It must be inferred from this letter that Elser had been led to understand that the bank would bid
Venancio Concepcion, issued to him and indorsed in the blank in favor of the Bank of
in the land at the foreclosure sale for the full amount of the judgment and sell it to him for the
the Philippine Islands, described as follows: (Here follows the numbers and amounts of
same price. It will be readily seen that this proposition is entirely different from that contained in
the certificates of shares.)
the letter of March 23d.

Whereas on January 20, 1922, Mr. Venancio Concepcion, owner of the property above
The plaintiff made no direct reply to the letter of April 21st, but Calvo, testifying for the plaintiff,
described, in consideration of the fact that they were subject to the payment of the sum
stated that on April 28, Elser invited him to a conference with Nolting, the president of the bank, in
of P342,372.64 with interest thereon at the rate of 9 per cent per annum, which was
regard to the matter; that on meeting Nolting, Elser said: "Mr. Nolting, do you still adhere to your
owing from V. Concepcion e Hijos, Inc., to the Bank of Philippine Islands, as per deeds
acceptation of the offer I have made you in writing?" to which Nolting answered that he did not
of mortgage and of pledge executed on July 6, 1921, has sold, assigned, and
think that there was any reason for him to go back on his word. He thereupon referred Elser and
transferred to said firm of V. Concepcion e Hijos, Inc., the aforesaid properties for the
Calvo to Zaragoza, who in some matters appears to have acted as counsel for the bank, for
sum of P290,000 Philippine currency, the agreed and stipulated price of the urban
further conferences. The negotiations did not lead to any action on the part of the bank, but on
property being P220,000, Philippine currency, and that of the 700 shares of stock of
May 5, 1922, Elser entered into an agreement in the form of bilateral deed of sale, with V.
the Philippine National Bank, the sum of P70,000 Philippine currency, as per public
Concepcion & Hijos, Inc., and Venancio Concepcion which appears in the record as Exhibit C and
document executed on said date before Mr. Recaredo Ma. Calvo, a notary public in
reads as follows in translation from Spanish:
and for the City of Manila.

DEED OF PURCHASE AND SALE


Whereas, on February 28, 1922 the Bank of the Philippine Islands, filed with the clerk's
office of the Court of First Instance of Manila, under No. 21537, a complaint, against V.
This deed of purchase and sale executed in the City of Manila, P.I., this fifth day of Concepcion e Hijos, Inc., and Venancio Concepcion for the recovery of its mortgage
May 1922 A. D., by and between V. Concepcion & Hijos, Inc., a domestic corporation credit evidenced by the deeds of mortgage and of pledge executed on July 6, 1921,
duly organized under the laws of Philippine Islands domiciled at No. 861 Calle R. notwithstanding the offer made by V. Concepcion e Hijos, Inc., to assign absolutely
Hidalgo, District of Quiapo, City of Manila, represented herein by the president, Mr. and forever to said creditor entity the properties which are the subject matter of the
Venancio Concepcion, by virtue of the powers granted him by the Board of Directors of mortgage and pledge in full and total payment of their obligation.
said corporation in a resolution dated May 2, 1922, a copy of which duly certified, is
attached hereto and made a part hereof, and Mr. Venancio Concepcion, of age,
Whereas, Mr. Henry W. Elser is willing to subrogate himself to the obligation of V.
married with Mrs. Rosario San Agustin and resident of City of Manila, his place of
Concepcion e Hijos, Inc., and Venancio Concepcion in favor of the Bank of Philippine
residence being in the municipality of San Juan, Province of Rizal, P.I., as party of the
Islands and release them from the total of said obligation contracted by them on July 6,
first part, and Mr. Henry W. Elser, of age, married with Mrs. Elaine Childs Elser, and a
1921, as per deeds of mortgage and of pledge executed on said date, in consideration
resident of City of Manila, with her place of residence at No. 600 Calle M. H. del Pilar,
of the sale, assignment and transfer in his favor of all the rights, interest, action or
District of Malate, as party of the second part,
share that they have or may have upon the properties described in said deeds of On October 16, 1922, the defendant Elser demurred to the amended complaint on the ground
mortgage and pledge; that it failed to alleged that the plaintiff had consented to the substitution of Elser in place of the
Concepcions so as to render Elser personally liable to the plaintiff. This demurrer was sustained
by the court and due exception was taken by the plaintiff.
Now, therefore, we, V. Concepcion e Hijos, Inc., and Venancio Concepcion, in
consideration of the sum of one peso (P1) Philippine currency, which we have this day
and which we declare was paid to us to our complete satisfaction, and of other On November 1, 1922, the plaintiff presented a second amended complaint, in which it is alleged
important considerations, especially the subrogation into our joint and several that the sale from the Concepcions to Elser was with the knowledge and consent of the plaintiff
obligations in favor of the Bank of the Philippine Islands, amounting to P342,372.64, but without waiver of it as right of action against the Concepcions. The defendant Elser demurred
Philippine currency, with interest thereon at the rate of 9 per cent per annum from on the ground that it did not appear from the amended complaint that the plaintiff had accepted
September 30, 1921, which said Mr. Henry W. Elser hereby makes, binding himself, Elser as debtor and on the further ground that there was no showing therein as to the disposition
moreover, to release us from our obligation contracted in favor of the Bank of the of the collateral security held by the plaintiff for the same debt. This demurrer was sustained on
Philippine Islands on July 6, 1921, do hereby sell, assign, and transfer absolutely and both grounds, on December 1, 1922.
forever to said Mr. Henry W. Elser, his heirs and successors in interest the properties
described herein with the incumbrances created and existing in favor of the Bank of
On December 6, 1922, the plaintiff presented its third amended complaint, without material
the Philippine Islands.
change in the averments of the second amended complaint, and a third demurrer thereto was
sustained on December 28, 1922.
That I, Henry W. Elser, accept this contract upon the precise terms in which it is
executed.
The plaintiff thereupon filed a fourth amended complaint, reiterating the allegations of the third
amended complaint, alleging that the defendant Elser entered into possession of the mortgaged
In testimony whereof, we sign third presents in place and on the date above- premises with plaintiff's consent; that plaintiff had not sold the shares of the Philippine National
mentioned. Bank held by it as collateral, and asking for judgment decreeing that said shares and the
mortgaged property be sold under order of the court, and that the defendants Concepcion and
Elser be condemned to pay the deficiency, if any there should be. A demurrer to this complaint
V. CONCEPCION E HIJOS, INC.
was sustained, on the ground that it failed to show a contractual relationship between the plaintiff
(Sgd.) V. CONCEPCION
and the defendant Elser.
(Sgd.) V. CONCEPCION
(Sgd.) H. W. ELSER
On March 2, 1923, the plaintiff presented a fifth amended complaint, similar to the foregoing, but
containing the additional allegation that the plaintiff accepted the assumption of the mortgage by
Signed in the presence of:
the defendant Elser "without releasing the liability of the defendants" Concepcion. This complaint
(Sgd.) ERNESTO Ma. CALVO
was demurred to on the ground that it did not sufficiently state that the plaintiff had accepted the
GREGORIO BUHAY
substitution of Elser in place of the Concepcions, as the contract between them provided. The
demurrer was overruled and the defendant Elser excepted.
The bank never gave notice of its conformity with the agreement above quoted but of June 15,
1922, it petitioned the court to include Henry W. Elser as defendant in the complaint, on the
On April 2, 1923, the defendant Elser answered, denying generally and specifically the allegations
strength of the obligations assumed by him in said agreement.
of the plaintiff's complaint. On the same date, C. W. Rosenstock, as guardian of the defendant
Elser, filed a cross-complaint alleging that at the time Elser is alleged to have assumed the
On June 23, 1922, the defendants Concepcion answered said petition praying that instead of obligations of the Concepcions to the plaintiff, he was of unsound mind that he had been induced
merely being included, said Elser be substituted in their place as defendants, on the ground that to sign the same by false representations on the part of the Concepcion to the effect that the
the plaintiff had accepted the substitution of Elser in their place as its debtor. plaintiff had agreed that he be substituted in place of Concepcions with respect to the obligations
set up in the plaintiff's complaint and that the plaintiff would accept payment of the same in
On June 27, 1922, the trial court entered an order including Henry W. Elser as defendant and one monthly installments on account of the principal of not less than P5,000, with interest payable
month later, the plaintiff filed an amended complaint against the defendants Concepcion and every six months, and that the mortgage should be reduced not less than 25 per cent the first
Elser asking for a joint and several judgment against them in the amount prayed for in the original year, not less than 50 per cent the second year, and the balance within the third year, when, as a
complaint and for the foreclosure of the mortgage securing the same. matter of fact, the plaintiff had not agreed hereto or accepted said terms of payment, as the
Concepcions well knew, and had never accepted Elser's offer to the plaintiff made pursuant to
said representations, and praying for the reasons stated, that the deed from the Concepcions to
On July 18, 1922, the defendants Concepcion filed a supplemental answer alleging the consent Elser, wherein he assumed the obligations of the former to the plaintiff be cancelled. These
of the plaintiff to the subrogation of Elser in their place with respect to the obligations sued upon allegations were denied by the plaintiff and the defendants Concepcion in their replies.
and asking for the dismissal of the case as to them on the ground.
Elser died on June 18, 1923, and on January 4, 1924, the plaintiff suggested the death of the here necessary. We wish , however, to emphasize the fact that it was there held that in order to
defendant Elser, and asked that the administrator of the estate, C. W. Rosenstock, be substituted constitute a valid stipulation pour autrui, it must be the purpose and intent of the stipulating
in his place as defendants, and that the action be continued against Rosenstock in the capacity parties to benefit the third person may be incidentally benefited by stipulation. This conclusion is
on the ground that this action is for the foreclosure of a mortgage supported by numerous authorities and is in complete harmony with the second paragraph of
article 1257 of the Civil Code, which reads as follows:
On January 11, 1924, the attorneys of record for the defendant Elser filed an opposition to the
application to have the action continued against Rosenstock, in substitution of Elser, this is not a Should the contract contain any stipulation in favor of the third person, he may demand
foreclosure action, and hence this action, as to him, abated by reason of his death, and any claim its fulfillment, provided he has given notice of his acceptance to the person bound
of the plaintiff against him should be presented to the committee on claims and appraisals of his before the stipulation has been revoked.
estate.
Applying this test, it seems clear that neither Exhibit C nor any other agreement between the
This objection was overruled and Rosenstock, as Elser's administrator, was substituted in his Concepcion and the Elser contained any stipulation pour autrui in favor of the plaintiff. As stated
place as defendant, by order of the court dated January 14, 1924, and exception thereto was duly in the appellee's brief:
taken. Subsequently, Rosenstock became the executor of Elser's estate, and as such, filed
various amended answers and cross-complaints.
The Concepcion owed the plaintiff a large sum of money and wanted to be relieved of
that obligation. Elser wanted the property which he had been mortgaged to secure that
The last amended cross-complaint was filed by him on August 9, 1924 in case No. 24485 of the obligation, and had to assume the obligation and agree to secure the discharge of the
Court of First Instance of Manila, in which the estate of the deceased Elser was being Concepcion therefrom, in order to get the property. Neither of them had any desire to
administered. He repeated therein the allegations and prayer of his cross-complaint as guardian confer any benefit to the bank. Neither of them entered into the contract for the sake of
filed on April 2, 1923, and referred to above. The last amended answer was filed by him on the bank. It is obvious that each entered into the contract impelled by the advantage
August 21, 1925. It consisted of denial of the allegations of the complaint and of the authenticity accruing to him personally as a result thereof.
of the document whereby Elser is alleged to have assumed the obligations of the defendants
Concepcion to the plaintiff; an allegation that at the time of execution thereof, Elser was of
We may add that the stipulation here in question is not merely for the assumption of the
unsound mind; and a statement of willingness to relinquished and abandon any rights Elser might
mortgaged debt by Elser, but is a provision for the subrogation of Elser to the Concepcion
have acquired under said document in favor of the plaintiff.
obligations to the plaintiff. Inasmuch as the mere assumption of the mortgage debt by the
purchaser of the mortgaged land does not relieved the mortgagor from his liability, it might be said
After a lengthy trial, the court below, on January 22, 1927, rendered its decision absolving the that some show of reason that by such an arrangement the mortgagee will have two debtors for
Elser estate from the complaint, ordering the Concepcions to pay the plaintiff the sum of the same debt instead of only one and that this furnishes additional security and is to the
P342,372.64, with interest of 9 per cent and costs, and providing for the sale of the mortgaged creditor's advantage and for his benefit. But such is not the case where, as here, the stipulation is
property, in case of non-payment of the judgment. for the subrogation of the purchasers to the obligation of the original debtor; if such a stipulation is
duly accepted by the creditor, it works a novation of the original agreement and releases the
original debtor from further liability. Such subrogation is rarely for the benefit of the creditor and
Both the plaintiff and the defendants Concepcion excepted to this judgment and moved for a new
that, in the present case, it was not believed to be of any advantage to the bank is well shown by
trial on the usual statutory grounds. The motions were denied and exceptions noted.
the fact that the parties were unable to obtain its written consent to the stipulation.

The case is now before this court on a joint bill of exceptions presented by the plaintiff and the
But assuming that the stipulation is for the benefit of a third person, the plaintiff is nevertheless
defendants Concepcion pursuant to stipulation. No briefs have been filed by the Concepcions.
not in position to maintain its action against Elser. In order to be enforceable, such stipulations
must be accepted by the third person and not has not been done here. The plaintiff asserts that it
From the facts stated and from the pleadings it will be readily seen that as far as the defendant accepted the stipulations in part, but that is not a sufficient acceptance. The ordinary rules of offer
Elser is concerned, the plaintiff alleged cause of action rests exclusively on the deed of contract and acceptance are applicable, and it is a cardinal rule of the law of contracts that in order to
Exhibit C. The well known general rule is that a contract affects only the parties and privies create a binding agreement, the acceptance must be absolute, unconditional, and identical with
thereto. But there are exceptions to this rule and the plaintiff contends that though it is neither a the terms of the offer; otherwise there is no meeting of the minds or an expression of one and the
party nor a privy to the contract here in question, the subrogation of Elser to the obligations of the same common intention, one of the essential elements of a valid contract (Civil Code, art., 1257;
Concepcions in favor of the plaintiff as provided for in the contract, is a stipulation pour Page on Contracts, sec. 1308, and authorities there cited).
autrui upon which the plaintiff may maintain its action

But the plaintiff argues that in American jurisprudence, the purchaser of the mortgaged property
The nature and reach of the doctrine of the stipulations pour autrui is so thoroughly discussed in who assumes the payment of the mortgage debt, may for the reason alone sued for the debt by
the case of Uy Tam and Uy Yet vs. Leonard (30 Phil., 471), that no further discussion thereof is the creditor and that the rule is applicable in this jurisdiction. Aside from the fact that we are not
dealing with a mere assumption of the debt, but with a subrogation, it may be noted that this court property pledge, in the foreclosure or other proceedings to realize upon the security,
has already held that the American doctrine in this respect is not in harmony with the spirit of our he any prove his deficiency judgment before the committee against the estate of the
legislation and has not been adopted in this country. In the case of E.C. McCullough & Co. vs. deceased; or he may rely upon his mortgage or other security alone, and foreclose the
Veloso and Serna (46 Phil., 1), the court. speaking through its present Chief Justice, said: same at any time, within the period of statute of limitations, and in that event he shall
not be admitted as an creditor, and shall receive no share in the distribution of the
other assets of the estate;
The effects of transfer of a mortgaged property to a third person are well determined
by the Civil Code. According to article 1879 of this Code, the creditor may demand of
the third person in possession of the property mortgaged payment of such part of the As will be seen, the mortgagee has the election of one out of three courses: (1) He may abandon
debt, as is secured by the property in his possession, in the manner and form his security and share in the general distribution of the assets of the estate, or (2) he may
established by law. The Mortgage Law in force at the promulgation of the Civil Code foreclose, secure a deficiency judgment and prove his deficiency judgment before the committee,
and referred to in the latter, exacted, among other conditions, also the circumstance or (3) he may rely upon his security alone, in which case he can receive no share in the
that after judicial or notarial demand, the original debtor had failed to make payment of distribution of the assets of the estate.
the debt at maturity. (Art. 135 of the Mortgage Law of the Philippines of 1889.)
According to this, the obligation of the new possessor to pay the debt originated from
In this case the bank did not abandon the security and took no steps of any sort before the
the right of the creditor to demand payment of him, it being necessary that a demand
committee within the time limit provided by the sections 689 and 690 of the Code of Civil
for payment should have previously been made upon the debtor and the latter should
Procedure. The committed ceased to function long ago, and the bank has now nothing to rely on
have failed to pay. And even if these requirements were complied with, still the third
except the mortgage. Internationally or not, it has bought itself within the third course provided for
possessor might abandon the property mortgaged, and in that case it is considered to
in section 708; it has no alternative.
be in the possession of the debtor. (Art. 136 of the same law.) This clearly shows that
the spirit of the Civil Code is to let the obligation of the debtor to pay the debt stand
although the property mortgaged to secure payment of said debt may have been But counsel for the plaintiff say that the amount of the deficiency, if any, could not be proved
transferred to a third person. While the Mortgage Law of 1893 eliminated this before the foreclosure sale and had been effected; that section 708 expressly provide for the
provisions, it contained nothing indicating any change in the spirit of the law in this proof of the deficiency judgment before the committee after the sale of the mortgaged property;
respect. Article 129 of this law, which provides for the substitution of the debtor by the that this provisions must be construed to mean that the presentation and prosecution of the claim
third person in possession of the property, for the purposes of giving notice, does not of the deficiency must be made after, not before, the sale; and that if the mortgagee presents his
show this change and has reference to a case where the action is directed only claim from a deficiency before a deficiency judgment have been rendered, he will loose his rights
against the property burdened with the mortgage. (Art. 168 of the Regulation.) under the mortgage and be regarded as having abandon his security.

From what we have said it follows that the plaintiff can have no cause of action against Elser, or This clearly a misconception of the statute, and the cases cited by the appellant in support for its
rather against his estate. Assuming that Elser was of sound mind at the time of the execution of contention are not in point. Until the foreclosure sale is made, the demand for the payment of
Exhibit C and that is a much debated question the Concepcion, and not the plaintiff might deficiency is a contingent claim within the meaning of sections 746, 747, and 748 of the Code of
have maintained an action against the Elser state; but that action is now barred through their Civil Procedure, which sections reads as follows:
failure to present their claim and appraisal in the probate proceedings, and the plaintiff can
therefore, not successfully invoked article 1111 of the Civil Code, which in effect provides that SEC. 746. Claims may be presented to committee. If a person is liable as surety for
after exhausting the property of which the debtor may be in possession, the creditor may have the deceased, or has other contingent claims against his estate which cannot be
recourse to the debtor's credit and choses an action for the collection of unpaid portion of the proved as a debt before the committee, the same may be presented with the proof, to
debt. the committee, who shall state in their report that such claim was presented to them.

Counsel for the appellee also argue that the bank, having failed to present its claim to the SEC. 747. Estate to be retained to meet claims. If the court is satisfied from the
committee on claims and appraisal, it must be regarded as having elected to rely on its mortgage report of the committee, or from proofs exhibited to it, that such contingent claim is
alone and therefore can have no personal judgement against the Elser estate. That is good law. valid, it may order the executor or administrator to retains in his hands sufficient estate
Section 708 of the Code of Civil Procedure provides as follows: to pay such contingent claim, when the same becomes absolute, or if the estate is
insolvent, sufficient to pay a portion equal to the dividend of the other creditors.
SEC. 708. Mortgage debt due from estate. A creditor holding a claim against the
deceased, secured by mortgage or other collateral security, may abandon the security SEC. 748. Claim becoming absolute in two years, how allowed. If such contingent
and prosecute his claim before the committee, and share in the general distribution of claims becomes absolute and is presented to the court, or to the executor or
the assets of the estate; or he may foreclose his mortgage or realize upon security, by administrator, within two years from the time limited for other creditors to present their
ordinary action in court, making the executor or administrator a party defendant; and if claims, it may be allowed by the court if not disputed by the executor or administrator,
there is a judgment for a deficiency, after the sale of the mortgaged premises, or the and, if disputed, it may be proved that the committee already appointed, or before
others to be appointed, for the purpose, as if presented for allowance before the
committee had made its report.

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

The appeal is without merit and the judgment of the court below is affirmed with the costs against
the plaintiff-appellant. So ordered.

THE IMPERIAL INSURANCE, INC., plaintiff-appellee, vs. EMILIA T. DAVID, defendant-appellant.


RELOVA, J.: A motion to dismiss was filed by herein appellant on the following grounds. to wit: (1) the court
has no jurisdiction over the nature of the action or suit; (2) the complaint states no cause of
action; and (3) the plaintiff's causes of action, if there be any, have been barred for its failure to
Petition for review on certiorari of the decision rendered by the then Court of First Instance of
file its claims against the estate of the deceased Felicisimo V. Reyes in due time.
Manila in Civil Case No. 67713, sustaining the money claims of plaintiff-appellee, The Imperial
Insurance, Inc. against defendant-appellant Emilia T. David, based on three (3) different causes of
action in the complaint. The lower court denied the motion for lack of merit. Thereafter, appellant, as defendant in said
Civil Case No. 67713, filed her answer.
The first two causes of action involve the indemnity agreements which defendant-appellant and
her deceased husband, Felicisimo V. Reyes, jointly and severally, executed in favor of herein After trial, the court rendered judgment ordering defendant Emilia T. David (herein appellant)
appellee, for and in consideration of two (2) surety bonds underwritten by it to lift the lift the writs
of attachment in Civil Case No. 5213 of the Rizal Court of First Instance for the amount of
1. to pay the plaintiff under the first cause of action, the amount of
P60,000.00, and in Civil Case No. Q-5214, also with the same court for the amount of P40,000.00
P60,000.00 with interest at legal rate from the filing of the complaint until
fun payment shall be effected; and a further sum of P1,522.50 annually
The third cause of action involves accrued premiums and documentary stamps for four (4) years from June 20, 1961 until termination of this case, said amount representing
with legal interest therein from the filing of the complaint also underwritten by appellee. premiums and documentary stamps in the surety bond, Exh. "B", with
interest at legal rate from the filing of the complaint until full payment is
made;
Records show that Felicisimo V. Reyes and his wife, herein appellant, executed two (2) indemnity
agreements in favor of appellee jointly and severally to assure indemnification of the latter for
whatever liability it may incur in connection with its posting the security bonds to lift the 2. to pay the plaintiff under the second cause of action, the amount of
attachments in Civil Case No. Q-5213 for the amount of P60,000.00, and in Civil Case No. Q- P40,000.00 with interest at the legal rate from the filing of the complaint
5214 for the amount of P40,000.00, for the benefit of Felicisimo V. Reyes. until full payment shag be made; and a further sum of P1,105.00 annually
from June 20, 1961 until termination of this case, said amount representing
premiums and documentary stamps on the surety bond Exh. "B", with
Later, Felicisimo V. Reyes and his wife, jointly and severally, executed another indemnity
interest at the legal rate from the filing of the complaint until full payment is
agreement in favor of appellee to assure indemnification of the latter under a homestead bond for
made;
the sum of P7,500.00 it had executed jointly and severally with them in favor of the Development
Bank of the Philippines. On the same date, Felicisimo V. Reyes and his wife paid to appellee the
sum of P153.33 covering the premium and other expenses for the homestead bond on the first 3. to pay the plaintiff under the third cause of action the amount of P153.33
year. annually for a period of 4 years from June 29, 1962 representing premiums
and documentary stamps on the Homestead Bond Exh. "C-1" with interest
at the legal rate from the filing of the complaint until full payment is made;
Felicisimo V.Reyes died and Special Proceedings No. 12948 of the then Court of First Instance of
Bulacan, entitled "In the Matter of the Instestate of Felicisimo V. Reyes," was commenced. His
wife, herein appellant, qualified and took her oath of office as the administratrix of said intestate 4. to pay the plaintiff in concept of attorney's fees the sum of P20,000.00,
estate. Corresponding notices to creditors were issued and published for three (3) consecutive representing 20% of the principal claim of plaintiff; plus cost. (pp. 39-40,
weeks in the "Manila Chronicle" and were duly posted in the required places. Rollo)

Meanwhile, judgment was rendered in the aforesaid two cases (Civil Cases Nos. Q-5213 and Q- The principal issue raised by appellant Emilia T. David in this appeal is whether or not the lower
5214) against the spouses Felicisimo V. Reyes and appellant Emilia T. David which has become court has jurisdiction over plaintiff's causes of action. She contends that appellee's claim should
final and executory. Writs of execution of the decision on the said cases were returned have been presented according to Rule 86 of the Revised Rules of Court and its failure to do so
unsatisfied. As a consequence, judgment was rendered against the surety bonds for the sum of operates to bar its claim forever; that the complaint failed to state a cause of action; that the writ
P60,000.00 in Civil Case No. Q-5213 and for the sum of P40,000.00 in Civil Case No. Q-5214. of attachment was improvidently issued; and, that the lower court should have discharged the
writs. Further, she argues that the judgment on attorney's fees has neither legal nor factual basis.
Appellee made demands on Emilia T. David to pay the amounts of P60,000.00 and P40,000.00
under the surety bonds and arrears in premiums thereon. When appellant David failed to make We find no merit in this appeal. Under the law and well settled jurisprudence, when the obligation
payments, appellee filed Civil Case No. 67713 in the then Court of First Instance of Manila, is a solidary one, the creditor may bring his action in toto against any of the debtors obligated in
Branch 1, for collection of sums of money under three (3) different causes of action. solidum. Thus, if husband and wife bound themselves jointly and severally, in case of his death
her liability is independent of and separate from her husband s; she may be sued for the whole
debt and it would be error to hold that the claim against her as well as the claim against her
husband should be made in the decedent's estate. (Agcaoili vs. Vda. de Agcaoili, 90 Phil. 97)

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

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

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

ACCORDINGLY, the decision of the court a quo is hereby AFFIRMED in toto with costs against
appellant.
JDS, shall post a performance bond of seven hundred ninety five thousand pesos ( P795,000.00).
x x x JDS executed, jointly and severally with [petitioner] Stronghold Insurance Co., Inc. (SICI)
Performance Bond No. SICI-25849/g(13)9769.

"On May 23, 1989, [respondent] paid to x x x JDS seven hundred ninety five thousand pesos
(P795,000.00) by way of downpayment.

"Two progress billings dated August 14, 1989 and September 15, 1989, for the total amount of
two hundred seventy four thousand six hundred twenty one pesos and one centavo
(P274,621.01) were submitted by x x x JDS to [respondent], which the latter paid. According to
[respondent], these two progress billings accounted for only 7.301% of the work supposed to be
undertaken by x x x JDS under the terms of the contract.

"Several times prior to November of 1989, [respondents] engineers called the attention of x x x
JDS to the alleged alarmingly slow pace of the construction, which resulted in the fear that the
construction will not be finished within the stipulated 240-day period. However, said reminders
STRONGHOLD INSURANCE COMPANY, INC., Petitioner, vs. REPUBLIC-ASAHI GLASS went unheeded by x x x JDS.
CORPORATION, Respondent.

"On November 24, 1989, dissatisfied with the progress of the work undertaken by x x x JDS,
PANGANIBAN, CJ: [respondent] Republic-Asahi extrajudicially rescinded the contract pursuant to Article XIII of said
contract, and wrote a letter to x x x JDS informing the latter of such rescission. Such rescission,
Asurety companys liability under the performance bond it issues is solidary. The death of the according to Article XV of the contract shall not be construed as a waiver of [respondents] right to
principal obligor does not, as a rule, extinguish the obligation and the solidary nature of that recover damages from x x x JDS and the latters sureties.
liability.
"[Respondent] alleged that, as a result of x x x JDSs failure to comply with the provisions of the
The Case contract, which resulted in the said contracts rescission, it had to hire another contractor to finish
the project, for which it incurred an additional expense of three million two hundred fifty six
thousand, eight hundred seventy four pesos (P3,256,874.00).
Before us is a Petition for Review 1 under Rule 45 of the Rules of Court, seeking to reverse the
March 13, 2001 Decision2 of the Court of Appeals (CA) in CA-GR CV No. 41630. The assailed
Decision disposed as follows: "On January 6, 1990, [respondent] sent a letter to [petitioner] SICI filing its claim under the bond
for not less than P795,000.00. On March 22, 1991, [respondent] again sent another letter
reiterating its demand for payment under the aforementioned bond. Both letters allegedly went
"WHEREFORE, the Order dated January 28, 1993 issued by the lower court is REVERSED and
unheeded.
SET ASIDE. Let the records of the instant case be REMANDED to the lower court for the
reception of evidence of all parties." 3
"[Respondent] then filed [a] complaint against x x x JDS and SICI. It sought from x x x JDS
payment of P3,256,874.00 representing the additional expenses incurred by [respondent] for the
The Facts
completion of the project using another contractor, and from x x x JDS and SICI, jointly and
severally, payment of P750,000.00 as damages in accordance with the performance bond;
The facts of the case are narrated by the CA in this wise: exemplary damages in the amount of P100,000.00 and attorneys fees in the amount of at
least P100,000.00.
"On May 24, 1989, [respondent] Republic-Asahi Glass Corporation (Republic-Asahi) entered into
a contract with x x x Jose D. Santos, Jr., the proprietor of JDS Construction (JDS), for the "According to the Sheriffs Return dated June 14, 1991, submitted to the lower court by Deputy
construction of roadways and a drainage system in Republic-Asahis compound in Barrio Sheriff Rene R. Salvador, summons were duly served on defendant-appellee SICI. However, x x
Pinagbuhatan, Pasig City, where [respondent] was to pay x x x JDS five million three hundred x Jose D. Santos, Jr. died the previous year (1990), and x x x JDS Construction was no longer at
thousand pesos (P5,300,000.00) inclusive of value added tax for said construction, which was its address at 2nd Floor, Room 208-A, San Buena Bldg. Cor. Pioneer St., Pasig, Metro Manila,
supposed to be completed within a period of two hundred forty (240) days beginning May 8, and its whereabouts were unknown.
1989. In order to guarantee the faithful and satisfactory performance of its undertakings x x x
"On July 10, 1991, [petitioner] SICI filed its answer, alleging that the [respondents] money claims "On June 4, 1992, [petitioner] SICI filed its Memorandum for Bondsman/Defendant SICI (Re:
against [petitioner and JDS] have been extinguished by the death of Jose D. Santos, Jr. Even if Effect of Death of defendant Jose D. Santos, Jr.) reiterating its prayer for the dismissal of
this were not the case, [petitioner] SICI had been released from its liability under the performance [respondents] complaint.
bond because there was no liquidation, with the active participation and/or involvement, pursuant
to procedural due process, of herein surety and contractor Jose D. Santos, Jr., hence, there was
"On January 28, 1993, the lower court issued the assailed Order reconsidering its Order dated
no ascertainment of the corresponding liabilities of Santos and SICI under the performance bond.
October 15, 1991, and ordered the case, insofar as SICI is concerned, dismissed. [Respondent]
At this point in time, said liquidation was impossible because of the death of Santos, who as such
filed its motion for reconsideration which was opposed by [petitioner] SICI. On April 16, 1993, the
can no longer participate in any liquidation. The unilateral liquidation on the party (sic) of
lower court denied [respondents] motion for reconsideration. x x x." 4
[respondent] of the work accomplishments did not bind SICI for being violative of procedural due
process. The claim of [respondent] for the forfeiture of the performance bond in the amount
of P795,000.00 had no factual and legal basis, as payment of said bond was conditioned on the Ruling of the Court of Appeals
payment of damages which [respondent] may sustain in the event x x x JDS failed to complete
the contracted works. [Respondent] can no longer prove its claim for damages in view of the The CA ruled that SICIs obligation under the surety agreement was not extinguished by the
death of Santos. SICI was not informed by [respondent] of the death of Santos. SICI was not death of Jose D. Santos, Jr. Consequently, Republic-Asahi could still go after SICI for the bond.
informed by [respondent] of the unilateral rescission of its contract with JDS, thus SICI was
deprived of its right to protect its interests as surety under the performance bond, and therefore it
was released from all liability. SICI was likewise denied due process when it was not notified of The appellate court also found that the lower court had erred in pronouncing that the performance
plaintiff-appellants process of determining and fixing the amount to be spent in the completion of of the Contract in question had become impossible by respondents act of rescission. The
the unfinished project. The procedure contained in Article XV of the contract is against public Contract was rescinded because of the dissatisfaction of respondent with the slow pace of work
policy in that it denies SICI the right to procedural due process. Finally, SICI alleged that and pursuant to Article XIII of its Contract with JDS.
[respondent] deviated from the terms and conditions of the contract without the written consent of
SICI, thus the latter was released from all liability. SICI also prayed for the award of P59,750.00 The CA ruled that "[p]erformance of the [C]ontract was impossible, not because of [respondents]
as attorneys fees, and P5,000.00 as litigation expenses. fault, but because of the fault of JDS Construction and Jose D. Santos, Jr. for failure on their part
to make satisfactory progress on the project, which amounted to non-performance of the same. x
"On August 16, 1991, the lower court issued an order dismissing the complaint of [respondent] x x [P]ursuant to the [S]urety [C]ontract, SICI is liable for the non-performance of said [C]ontract
against x x x JDS and SICI, on the ground that the claim against JDS did not survive the death of on the part of JDS Construction."5
its sole proprietor, Jose D. Santos, Jr. The dispositive portion of the [O]rder reads as follows:
Hence, this Petition.6
ACCORDINGLY, the complaint against the defendants Jose D. Santos, Jr., doing business under
trade and style, JDS Construction and Stronghold Insurance Company, Inc. is ordered Issue
DISMISSED.
Petitioner states the issue for the Courts consideration in the following manner:
SO ORDERED.
"Death is a defense of Santos heirs which Stronghold could also adopt as its defense against
"On September 4, 1991, [respondent] filed a Motion for Reconsideration seeking reconsideration obligees claim."7
of the lower courts August 16, 1991 order dismissing its complaint. [Petitioner] SICI field its
Comment and/or Opposition to the Motion for Reconsideration. On October 15, 1991, the lower
More precisely, the issue is whether petitioners liability under the performance bond was
court issued an Order, the dispositive portion of which reads as follows:
automatically extinguished by the death of Santos, the principal.

WHEREFORE, premises considered, the Motion for Reconsideration is hereby given due course.
The Courts Ruling
The Order dated 16 August 1991 for the dismissal of the case against Stronghold Insurance
Company, Inc., is reconsidered and hereby reinstated (sic). However, the case against defendant
Jose D. Santos, Jr. (deceased) remains undisturbed. The Petition has no merit.

Motion for Preliminary hearing and Manifestation with Motion filed by [Stronghold] Insurance Sole Issue:
Company Inc., are set for hearing on November 7, 1991 at 2:00 oclock in the afternoon.
Effect of Death on the Suretys Liability
SO ORDERED.
Petitioner contends that the death of Santos, the bond principal, extinguished his liability under "WHEREAS, said contract requires the said principal to give a good and sufficient bond in the
the surety bond. Consequently, it says, it is automatically released from any liability under the above-stated sum to secure the full and faithfull performance on its part of said contract, and the
bond. satisfaction of obligations for materials used and labor employed upon the work;

As a general rule, the death of either the creditor or the debtor does not extinguish the "NOW THEREFORE, if the principal shall perform well and truly and fulfill all the undertakings,
obligation.8 Obligations are transmissible to the heirs, except when the transmission is prevented covenants, terms, conditions, and agreements of said contract during the original term of said
by the law, the stipulations of the parties, or the nature of the obligation. 9 Only obligations that are contract and any extension thereof that may be granted by the obligee, with notice to the surety
personal10 or are identified with the persons themselves are extinguished by death. 11 and during the life of any guaranty required under the contract, and shall also perform well and
truly and fulfill all the undertakings, covenants, terms, conditions, and agreements of any and all
duly authorized modifications of said contract that may hereinafter be made, without notice to the
Section 5 of Rule 86 12 of the Rules of Court expressly allows the prosecution of money claims
surety except when such modifications increase the contract price; and such principal contractor
arising from a contract against the estate of a deceased debtor. Evidently, those claims are not
or his or its sub-contractors shall promptly make payment to any individual, firm, partnership,
actually extinguished.13 What is extinguished is only the obligees action or suit filed before the
corporation or association supplying the principal of its sub-contractors with labor and materials in
court, which is not then acting as a probate court. 14
the prosecution of the work provided for in the said contract, then, this obligation shall be null and
void; otherwise it shall remain in full force and effect. Any extension of the period of time which
In the present case, whatever monetary liabilities or obligations Santos had under his contracts may be granted by the obligee to the contractor shall be considered as given, and any
with respondent were not intransmissible by their nature, by stipulation, or by provision of law. modifications of said contract shall be considered as authorized, with the express consent of the
Hence, his death did not result in the extinguishment of those obligations or liabilities, which Surety.
merely passed on to his estate.15 Death is not a defense that he or his estate can set up to wipe
out the obligations under the performance bond. Consequently, petitioner as surety cannot use
"The right of any individual, firm, partnership, corporation or association supplying the contractor
his death to escape its monetary obligation under its performance bond.
with labor or materials for the prosecution of the work hereinbefore stated, to institute action on
the penal bond, pursuant to the provision of Act No. 3688, is hereby acknowledge and
The liability of petitioner is contractual in nature, because it executed a performance bond worded confirmed."16
as follows:

As a surety, petitioner is solidarily liable with Santos in accordance with the Civil Code, which
"KNOW ALL MEN BY THESE PRESENTS: provides as follows:

"That we, JDS CONSTRUCTION of 208-A San Buena Building, contractor, of Shaw Blvd., Pasig, "Art. 2047. By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the
MM Philippines, as principal and the STRONGHOLD INSURANCE COMPANY, INC. a obligation of the principal debtor in case the latter should fail to do so.
corporation duly organized and existing under and by virtue of the laws of the Philippines with
head office at Makati, as Surety, are held and firmly bound unto the REPUBLIC ASAHI GLASS
"If a person binds himself solidarily with the principal debtor, the provisions of Section 4, 17 Chapter
CORPORATION and to any individual, firm, partnership, corporation or association supplying the
3, Title I of this Book shall be observed. In such case the contract is called a suretyship."
principal with labor or materials in the penal sum of SEVEN HUNDRED NINETY FIVE
THOUSAND (P795,000.00), Philippine Currency, for the payment of which sum, well and truly to
be made, we bind ourselves, our heirs, executors, administrators, successors and assigns, jointly xxxxxxxxx
and severally, firmly by these presents.
"Art. 1216. The creditor may proceed against any one of the solidary debtors or some or all of
"The CONDITIONS OF THIS OBLIGATION are as follows; them simultaneously. The demand made against one of them shall not be an obstacle to those
which may subsequently be directed against the others, so long as the debt has not been fully
collected."
"WHEREAS the above bounden principal on the ___ day of __________, 19__ entered into a
contract with the REPUBLIC ASAHI GLASS CORPORATION represented by
_________________, to fully and faithfully. Comply with the site preparation works road and Elucidating on these provisions, the Court in Garcia v. Court of Appeals 18 stated thus:
drainage system of Philippine Float Plant at Pinagbuhatan, Pasig, Metro Manila.
"x x x. The suretys obligation is not an original and direct one for the performance of his own act,
"WHEREAS, the liability of the Surety Company under this bond shall in no case exceed the sum but merely accessory or collateral to the obligation contracted by the principal. Nevertheless,
of PESOS SEVEN HUNDRED NINETY FIVE THOUSAND (P795,000.00) Philippine Currency, although the contract of a surety is in essence secondary only to a valid principal obligation, his
inclusive of interest, attorneys fee, and other damages, and shall not be liable for any advances liability to the creditor or promisee of the principal is said to be direct, primary and absolute; in
of the obligee to the principal. other words, he is directly and equally bound with the principal. x x x." 19
Under the law and jurisprudence, respondent may sue, separately or together, the principal I also declare that I have contracted the debts detailed below, and it is my desire that
debtor and the petitioner herein, in view of the solidary nature of their liability. The death of the they may be religiously paid by my wife and executors in the form and at the time
principal debtor will not work to convert, decrease or nullify the substantive right of the solidary agreed upon with my creditors.
creditor. Evidently, despite the death of the principal debtor, respondent may still sue petitioner
alone, in accordance with the solidary nature of the latters liability under the performance bond.
Among the debts mentioned in the list referred to are two in favor of the plaintiff, Isidro Santos;
one due on April 14, 1907, for P5,000, and various other described as falling due at different
WHEREFORE, the Petition is DENIED and the Decision of the Court of Appeals AFFIRMED. dates (the dates are not given) amounting to the sum of P2,454. The will was duly probated and a
Costs against petitioner. committee was regularly appointed to hear and determine such claims against the estate as
might be presented. This committee submitted its report to the court on June 27, 1908. On July
14, 1908, the plaintiff, Isidro Santos, presented a petition to the court asking that the committee
be required to reconvene and pass upon his claims against the estate which were recognized in
the will of testator. This petition was denied by the court, and on November 21, 1910, the plaintiff
instituted the present proceedings against the administratrix of the estate to recover the sums
mentioned in the will as due him. Relief was denied in the court below, and now appeals to this
court.

In his first assignment of error, the appellant takes exception to the action of the court in denying
his petition asking that the committee be reconvened to consider his claim. In support of this
alleged error counsel say that it does not appear in the committee's report that the publications
required by section 687 of the Code of Civil Procedure had been duly made. With reference to
this point the record affirmatively shows that the committee did make the publications required by
law. It is further alleged that at the time the appellant presented his petition the court had not
approved the report of the committee. If this were necessary we might say that, although the
record does not contain a formal approval of the committee's report, such approval must
undoubtedly have been made, as will appear from an inspection of the various orders of the court
approving the annual accounts of the administratrix, in which claims allowed against the estate by
the committee were written off in accordance with its report. This is shown very clearly from the
court's order of August 1, 1912, in which the account of the administratrix was approved after
reducing final payments of some of the claims against the estate to agree with the amounts
allowed by the committee. It is further alleged that at the time this petition was presented the
administration proceedings had not been terminated. This is correct.

In his petition of July 14, 1909, asking that the committee be reconvened to consider his claims,
plaintiff states that his failure to present the said claims to the committee was due to his belief that
it was unnecessary to do so because of the fact that the testator, in his will, expressly recognized
them and directed that they should be paid. The inference is that had plaintiff's claims not been
mentioned in the will he would have presented to the committee as a matter of course; that
plaintiff was held to believe by this express mention of his claims in the will that it would be
ISIDRO SANTOS, plaintiff-appellant, vs. LEANDRA MANARANG, administratrix, defendant-
unnecessary to present them to the committee; and that he did not become aware of the
appellee.
necessity of presenting them to the committee until after the committee had made its final report.

TRENT, J.:
Under these facts and circumstances, did the court err in refusing to reconvene the committee for
the purpose of considering plaintiff's claim? The first step towards the solution of this question is
Don Lucas de Ocampo died on November 18, 1906, possessed of certain real and personal to determine whether plaintiff's claims were such as a committee appointed to hear claims against
property which, by his last will and testament dated July 26, 1906, he left to his three children. an estate is, by law, authorized to pass upon. Unless it was such a claim plaintiff's argument has
The fourth clause of this will reads as follows: no foundation. Section 686 empowers the committee to try and decide claims which survive
against the executors and administrators, even though they be demandable at a future day
"except claims for the possession of or title to real estate." Section 700 provides that all actions
commenced against the deceased person for the recovery of money, debt, or damages, pending
at the time the committee is appointed, shall be discontinued, and the claims embraced within On application of a creditor who has failed to present his claim, if made within six
such actions presented to the committee. Section 703 provides that actions to recover title or months after the time previously limited, or, if a committee fails to give the notice
possession of real property, actions to recover damages for injury to person or property, real and required by this chapter, and such application is made before the final settlement of the
personal, and actions to recover the possession of specified articles of personal property, shall estate, the court may, for cause shown, and on such terms as are equitable, renew the
survive, and may be commenced and prosecuted against the executor or administrator; "but all commission and allow further time, not exceeding one month, for the committee to
other actions commenced against the deceased before his death shall be discontinued and the examine such claim, in which case it shall personally notify the parties of the time and
claims therein involved presented before the committee as herein provided." Section 708 place of hearing, and as soon as may be make the return of their doings to the court.
provides that a claim secured by a mortgage or other collateral security may be abandoned and
the claim prosecuted before the committee, or the mortgage may be foreclosed or the security be
If the committee fails to give the notice required, that is a sufficient cause for reconvening it for
relied upon, and in the event of a deficiency judgment, the creditor may, after the sale of
further consideration of claims which may not have been presented before its final report was
mortgage or upon the insufficiency of the security, prove such deficiency before the committee on
submitted to the court. But, as stated above, this is not the case made by the plaintiff, as the
claims. There are also certain provisions in section 746 et seq., with reference to the presentation
committee did give the notice required by law. Where the proper notice has been given the right
of contingent claims to the committee after the expiration of the time allowed for the presentation
to have the committee recalled for the consideration of a belated claim appears to rest first upon
of claims not contingent. Do plaintiff's claims fall within any of these sections? They are described
the condition that it is presented within six months after the time previously limited for the
in the will as debts. There is nothing in the will to indicate that any or all of them are contingent
presentation of claims. In the present case the time previously limited was six months from July
claims, claims for the possession of or title to real property, damages for injury to person or
23, 1907. This allowed the plaintiff until January 23, 1908, to present his claims to the committee.
property, real or personal, or for the possession of specified articles of personal property. Nor is it
An extension of this time under section 690 rested in the discretion of the court. (Estate of De
asserted by the plaintiff that they do. The conclusion is that they were claims proper to be
Dios, supra.) In other words, the court could extend this time and recall the committee for a
considered by the committee.
consideration of the plaintiff's claims against the estate of justice required it, at any time within the
six months after January 23, 1908, or until July 23, 1908. Plaintiff's petition was not presented
This being true, the next point to determine is, when and under what circumstances may the until July 14, 1909. The bar of the statute of nonclaims is an conclusive under these
committee be recalled to consider belated claims? Section 689 provides: circumstances as the bar of the ordinary statute of limitations would be. It is generally held that
claims are not barred as to property not included in the inventory. (Waughop vs. Bartlett, 165 III.,
124; Estate of Reyes, 17 Phil. Rep., 188.) So also, as indicated by this court in the case last cited,
That court shall allow such time as the circumstances of the case require for the
fraud would undoubtedly have the same effect. These exceptions to the operation of the statute
creditors to present their claims the committee for examination and allowance; but not,
are, of course, founded upon the highest principles of equity. But what is the plea of the plaintiff in
in the first instance, more than twelve months, or less than six months; and the time
this case? Simply this: That he was laboring under a mistake of law a mistake which could
allowed shall be stated in the commission. The court may extend the time as
easily have been corrected had he sought to inform himself; a lack of information as to the law
circumstances require, but not so that the whole time shall exceed eighteen months.
governing the allowance of claims against estate of the deceased persons which, by proper
diligence, could have been remedied in ample to present the claims to the committee. Plaintiff
It cannot be questioned that thus section supersedes the ordinary limitation of actions provided finally discovered his mistake and now seeks to assert his right when they have been lost through
for in chapter 3 of the Code. It is strictly confined, in its application, to claims against the estate of his own negligence. Ignorantia legis neminem excusat. We conclude that the learned trial court
deceased persons, and has been almost universally adopted as part of the probate law of the made no error in refusing to reconvene the committee for the purpose of considering plaintiff's
United States. It is commonly termed the statute of nonclaims, and its purpose is to settle the claims against the estate.
affairs of the estate with dispatch, so that residue may be delivered to the persons entitled thereto
without their being afterwards called upon to respond in actions for claims, which, under the
In his second assignment of error the appellant insists that the court erred in dismissing his
ordinary statute of limitations, have not yet prescribed.
petition filed on November 21, 1910, wherein he asks that the administratrix be compelled to pay
over to him the amounts mentioned in the will as debts due him. We concede all that is implied in
The object of the law in fixing a definite period within which claims must be presented the maxim, dicat testor et erit lex. But the law imposes certain restrictions upon the testator, not
is to insure the speedy settling of the affairs of a deceased person and the early only as to the disposition of his estate, but also as to the manner in which he may make such
delivery of the property of the estate in the hands of the persons entitled to receive it. disposition. As stated in Rood on Wills, sec. 412: "Some general rules have been irrevocably
(Estate of De Dios, 24 Phil. Rep., 573.) established by the policy of the law, which cannot be exceeded or transgressed by any intention
of the testator, be it ever so clearly expressed."
Due possibly to the comparative shortness of the period of limitation applying to such claims as
compared with the ordinary statute of limitations, the statute of nonclaims has not the finality of It may be safely asserted that no respectable authority can be found which holds that the will of
the ordinary statute of limitations. It may be safely said that a saving provision, more or less the testator may override positive provisions of law and imperative requirements of public policy.
liberal, is annexed to the statute of nonclaims in every jurisdiction where is found. In this country (Page on Wills, sec. 461.)
its saving clause is found in section 690, which reads as follows:
Impossible conditions and those contrary to law and good morals shall be considered the limitation upon the presentment of claims for allowance is longer and, possibly, in some
as not imposed, . . . (Art. 792, Civil Code.) shorter; and that there is a great divergence in the classification of actions which survive and
actions which do not survive the death of the testator. It must be further remembered that there
are but few of the United States which provide for heirs by force of law. These differences render
Conceding for the moment that it was the testator's desire in the present case that the debts listed
useless as authorities in this jurisdiction many of the cases coming from the United States. The
by him in his will should be paid without referring them to a committee appointed by the court, can
restriction imposed upon the testator's power to dispose of his property when they are heirs by
such a provision be enforced? May the provisions of the Code of Civil Procedure relating to the
force of law is especially important. The rights of these heirs by force law pass immediately upon
settlement of claims against an estate by a committee appointed by the court be superseded by
the death of the testator. (Art. 657, Civil Code.) The state intervenes and guarantees their rights
the contents of a will?
by many stringent provisions of law to the extent mentioned in article 818 of the Civil Code.
Having undertaken the responsibility to deliver the legal portion of the net assets of the estate to
It is evident from the brief outline of the sections referred to above that the Code of Civil the heirs by force of law, it is idle to talk of substituting for the procedure provided by law for
Procedure has established a system for the allowance of claims against the estates of decedents. determining the legal portion, some other procedure provided in the will of the testator. The state
Those are at least two restrictions imposed by law upon the power of the testator to dispose of his cannot afford to allow the performance of its obligations to be directed by the will of an individual.
property, and which pro tanto restrict the maxim that "the will of the testator law: (1) His estate is There is but one instance in which the settlement of the estate according to the probate
liable for all legal obligations incurred by him; and (2) he can not dispose of or encumber the legal procedure provided in the Code of Civil Procedure may be dispense with, and it applies only
portion due his heirs by force of law. The former take precedence over the latter. (Sec. 640, Code to intestate estates. (Sec. 596, Code Civ. Proc.) A partial exemption from the lawful procedure is
Civ, Proc.) In case his estate is sufficient they must be paid. (Sec, 734, id.) In case the estate is also contained in section 644, when the executor or administrator is the sole residuary legatee.
insolvent they must be paid in the order named in section 735. It is hardly necessary to say that a Even in such case, and although the testator directs that no bond be given, the executor is
provision in an insolvent's will that a certain debt be paid would not entitle it to preference over required to give a bond for the payment of the debts of the testator. The facts of the present case
other debts. But, if the express mention of a debt in the will requires the administrator to pay it do not bring it within either of this sections. We conclude that the claims against the estate in the
without reference to the committee, what assurance is there, in the case of an insolvent estate, case at bar were enforceable only when the prescribed legal procedure was followed.
that it will not take precedence over preferred debts?

But we are not disposed to rest our conclusion upon this phase of the case entirely upon legal
If it is unnecessary to present such claim to the committee, the source of nonclaims is not grounds. On the contrary we are strongly of the opinion that the application of the maxim, "The
applicable. It is not barred until from four to ten years, according to its classification in chapter 3 of will of the testator is the law of the case," but strengthens our position so far as the present case
the Code of Civil Procedure, establishing questions upon actions. Under such circumstances, is concerned.
when then the legal portion is determined? If, in the meantime the estate has been distributed,
what security have the differences against the interruption of their possession? Is the
It will ordinarily be presumed in construing a will that the testator is acquainted with the
administrator required to pay the amount stipulated in the will regardless of its correctness? And,
rules of law, and that he intended to comply with them accordingly. If two constructions
if not, what authority has he to vise the claim? Section 706 of the Code of Civil Procedure
of a will or a part thereof are possible, and one of these constructions is consistent with
provides that an executor may, with the approval of the court, compound with a debtor of
the law, and the other is inconsistent, the presumption that the testator intended to
deceased for a debt due the estate, But he is nowhere permitted or directed to deal with a
comply with the law will compel that construction which is consistent with the law to be
creditor of the estate. On the contrary, he is the advocate of the estate before an impartial
adopted. (Page on Wills, sec. 465.)
committee with quasi-judicial power to determine the amount of the claims against the estate,
and, in certain cases, to equitably adjust the amounts due. The administrator, representing the
debtor estate, and the creditor appear before this body as parties litigant and, if either is Aside from this legal presumption, which we believe should apply in the present case as against
dissatisfied with its decision, an appeal to the court is their remedy. To allow the administrator to any construction of the will tending to show an intention of the testator that the ordinary legal
examine and approve a claim against the estate would put him in the dual role of a claimant and method of probating claims should be dispensed with, it must be remembered that the testator
a judge. The law in this jurisdiction has been so framed that this may not occur. The most knows that the execution of his will in no way affects his control over his property. The dates of his
important restriction, in this jurisdiction, on the disposition of property by will are those provisions will and of his death may be separated by a period of time more or less appreciable. In the
of the Civil Code providing for the preservation of the legal portions due to heirs by force of law, meantime, as the testator well knows, he may acquire or dispose of property, pay or assume
and expressly recognized and continued in force by sections 614, 684, and 753 of the Code of additional debts, etc. In the absence of anything to the contrary, it is only proper to presume that
Civil Procedure. But if a debt is expressly recognized in the will must be paid without its being the testator, in his will, is treating of his estate at the time and in the condition it is in at his death.
verified, there is nothing to prevent a partial or total alienation of the legal portion by means of a Especially is this true of his debts. Debts may accrue and be paid in whole or in part between the
bequest under a guise of a debt, since all of the latter must be paid before the amount of the legal time the will is made and the death of the testator. To allow a debt mentioned in the will in the
portion can be determined. amount expressed therein on the ground that such was the desire of the testator, when, in fact,
the debt had been wholly or partly paid, would be not only unjust to the residuary heirs, but a
reflection upon the good sense of the testator himself. Take the present case for example. It
We are aware that in some jurisdictions executors and administrators are, by law, obligated to
would be absurd to say that the testator knew what the amount of his just debt would be at a
perform the duties which, in this jurisdiction, are assign to the committee on claims; that in some
future and uncertain date. A mere comparison of the list of the creditors of the testator and the
other jurisdictions it is the probate court itself that performs these duties; that in some jurisdictions
amounts due them as described in his will, with the same list and amounts allowed by the The petition of the plaintiff filed on November 21, 1910, wherein he asks that the administratrix be
committee on claims, shows that the testator had creditors at the time of his death not mention in compelled to pay over to him the amounts mentioned in the will as debts due him appears to be
the will at all. In other instances the amounts due this creditors were either greater or less than nothing more nor less than a complaint instituting an action against the administratrix for the
the amounts mentioned as due them in the will. In fact, of those debts listed in the will, not a recovery of the sum of money. Obviously, the plaintiff is not seeking possession of or title to real
single one was allowed by the committee in the amount named in the will. This show that the property or specific articles of personal property.
testator either failed to list in his will all his creditors and that, as to those he did include, he set
down an erroneous amount opposite their names; or else, which is the only reasonable view of
When a committee is appointed as herein provided, no action or suit shall be
the matter, he overlooked some debts or contracted new ones after the will was made and that as
commenced or prosecute against the executor or administrator upon a claim against
to others he did include he made a partial payments on some and incurred additional
the estate to recover a debt due from the state; but actions to recover the seizing and
indebtedness as to others.
possession of real estate and personal chattels claimed by the estate may be
commenced against him. (Sec. 699, Code Civ. Proc.)
While the testator expresses the desire that his debts be paid, he also expressly leaves the
residue of his estate, in equal parts, to his children. Is it to be presumed that he desired to
The sum of money prayed for in the complaint must be due the plaintiff either as a debt of a
overpay some of his creditors notwithstanding his express instructions that his own children
legacy. If it is a debt, the action was erroneously instituted against the administratrix. Is it a
should enjoy the net assets of his estate after the debts were paid? Again, is the net statement of
legacy?
the amount due some of his creditors and the omission all together of some of his creditors
compatible with his honorable and commendable desire, so clearly expressed in his will, that all
his debts be punctually paid? We cannot conceive that such conflicting ideas were present in the Plaintiff's argument at this point becomes obviously inconsistent. Under his first assignment of
testator's mind when he made his will. error he alleges that the committee on claims should have been reconvened to pass upon his
claim against the estate. It is clear that this committee has nothing to do with legacies. It is true
that a debt may be left as a legacy, either to the debtor (in which case it virtually amounts to a
Again, suppose the testator erroneously charged himself with a debt which he was under no legal
release), or to a third person. But this case can only arise when the debt is an asset of the estate.
or even moral obligation to pay. The present case suggests, if it does not actually present, such a
It would be absurd to speak of a testator's leaving a bare legacy of his own debt. (Arts. 866, 878,
state of affairs. Among the assets of the estate mentioned in the will is a parcel of land valued at
Civil Code.) The creation of a legacy depends upon the will of the testator, is an act of pure
P6,500; while in the inventory of the administratrix the right to repurchase this land from one
beneficence, has no binding force until his death, and may be avoided in whole or in part by the
Isidro Santos is listed as an asset. Counsel for the administratrix alleges that he is prepared to
mere with whim of the testator, prior to that time. A debt arises from an obligation recognized by
prove that this is the identical plaintiff in the case at bar; that the testator erroneously claimed the
law (art. 1089, Civil Code) and once established, can only be extinguished in a lawful manner.
fee of this land in his last will and stated Santos' rights in the same as a mere debt due him of
(Art. 1156, id.) Debts are demandable and must be paid in legal tender. Legacies may, and often
P5,000; that in reality, the only asset of the testator regard to this land was the value of the right
do, consist of specific articles of personal property and must be satisfied accordingly. In order to
to repurchase, while the ownership of the land, subject only to that right of redemption, belonged
collect as legacy the sum mentioned in the will as due him, the plaintiff must show that it is in fact
to Santos; that the right to repurchase this land expired in 1907, after the testator's death.
a legacy and not a debt. As he has already attempted to show that this sum represents a debt, it
Assuming, without in the least asserting, that such are the underlying facts of this case, the unjust
is an anomaly to urge now it is a legacy.
consequences of holding that a debt expressly mentioned in the will may be recovered without
being presented to the committee on claims, is at once apparent. In this supposed case, plaintiff
needed only wait until the time for redemption of the land had expired, when he would acquired Was it the intention of the testator to leave the plaintiff a legacy of P7,454? We have already
an absolute title to the land, and could also have exacted the redemption price. Upon such a state touched upon this question. Plaintiff's claim is described by the testator as a debt. It must be
of facts, the one item of P5,000 would be a mere fictitious debt, and as the total net value of the presumed that he used this expression in its ordinary and common acceptation; that is, a legal
estate was less than P15,000, the legal portion of the testator's children would be consumed in liability existing in favor of the plaintiff at the time the will was made, and demandable and
part in the payment of this item. Such a case cannot occur if the prescribed procedure is followed payable in legal tender. Had the testator desired to leave a legacy to the plaintiff, he would have
of requiring of such claims be viseed by the committee on claims. done so in appropriate language instead of including it in a statement of what he owed the
plaintiff. The decedent's purpose in listing his debts in his will is set forth in the fourth clause of
the will, quoted above. There is nothing contained in that clause which indicates, even remotely, a
The direction in the will for the executor to pay all just debts does not mean that he
desire to pay his creditors more than was legally due them.
shall pay them without probate. There is nothing in the will to indicate that the testator
in tended that his estate should be administered in any other than the regular way
under the statute, which requires "all demands against the estates of the deceased A construction leading to a legal, just and sensible result is presumed to be correct, as
persons," "all such demands as may be exhibited," etc. The statute provides the very against one leading to an illegal, unnatural, or absurd effect. (Rood on Wills, sec. 426.)
means for ascertaining whether the claims against the estate or just debts.
(Kaufman vs. Redwine, 97 Ark., 546.) The testator, in so many words, left the total net assets of his estate, without reservation of any
kind, to his children per capita. There is no indication that he desired to leave anything by way of
See also Collamore vs. Wilder (19 Kan., 67); O'Neil vs. Freeman (45 N. J. L., 208). legacy to any other person. These considerations clearly refute the suggestion that the testator
intended to leave plaintiff any thing by way of legacy. His claim against the estate having been a
simple debt, the present action was improperly instituted against the administratrix. (Sec. 699,
Code Civ. Proc.)

But it is said that the plaintiff's claims should be considered as partaking of the nature of a legacy
and disposed of accordingly. If this be perfect then the plaintiff would receive nothing until after all
debts had been paid and the heirs by force of law had received their shares. From any point of
view the inevitable result is that there must be a hearing sometime before some tribunal to
determine the correctness of the debts recognized in the wills of deceased persons. This hearing,
in the first instance, can not be had before the court because the law does not authorize it. Such
debtors must present their claims to the committee, otherwise their claims will be forever barred.

ESTATE OF AMADEO MATUTE OLAVE, as represented by JOSE S. MATUTE, Judicial Co-


Administrator in Sp. Proc. No. 25876, Court of First Instance of Manila, petitioner, vs.
HONORABLE MANASES G. REYES, Presiding Judge of Branch III, Court of First Instance of
Davao, Davao City; SOUTHWEST AGRICULTURAL MARKETING CORPORATION also known
as (SAMCO); CARLOS V. MATUTE, as another Administrator of the Estate of Amadeo Matute
Olave, Sp. Proc. No. 25876 CFI, Manila; and MATIAS S. MATUTE, as former Co-Administrator of
the Estate of Amadeo Matute Olave, Sp. Proc. No. 25876, CFI, Manila, respondents.

RELOVA, J.:

In this petition for certiorari, the estate of Amadeo Matute Olave, represented by Jose S. Matute,
Judicial Administrator in Sp. Proc. No. 25876, of the then Court of First Instance of Manila, assails
the Order, dated November 10, 1967, of the respondent judge, approving the "Amicable
Settlement" submitted by the parties in Civil Case No. 4623 of the then Court of First Instance of Amadeo Matute is justly indebted to plaintiff in the total sum of P28,403.02
Davao, 16th Judicial District, Branch III, and prays that the said Order be set aside. representing the principal account of P19,952.11 and in the sum of
P8,450.91 as attorney's fees, damages, interest and costs;
The petition alleged that the estate of Amadeo Matute Olave is the owner in fee simple of a parcel
of land containing an area of 293,578 square meters, situated in sitio Tibambam, barrio 2. That at present the defendant estate is devoid of or does not have any
Tibambam, municipality of Sigaboy (now Governor Generoso), province of Davao, and covered funds with which to pay or settle the aforestated obligation in favor of the
by Original Certificate of Title No. 0-27 of the Registry of Deeds of Davao Province; that in April plaintiff, and that being so, the defendant estate through the undersigned
1965 herein private respondent Southwest Agricultural Marketing Corporation (SAMCO), as administrators, decides to pay the plaintiff by way of conveying and ceding
plaintiff, filed Civil Case No. 4623 with the respondent Court of First Instance of Davao against unto the plaintiff the ownership of a certain real property owned by the
respondents, Carlos V. Matute and Matias S. Matute, as defendants, in their capacities as co- defendant estate now under the administration of the said undersigned
administrators of the estate of Amadeo Matute Olave, for the collection of an alleged administrators;
indebtedness of P19,952.11 and for attorney's fees of P4,988.02; that on May 8, 1965,
defendants Carlos V. Matute and Matias S. Matute in said Civil Case No. 4623, filed an answer
3. That plaintiff hereby accepts the offer of defendants of conveying,
denying their lack of knowledge and questioning the legality of the claim of SAMCO; that on
transferring and ceding the ownership of the above described property as
October 25, 1966 in Sp. Proc. No. 25876, the then Court of First Instance of Manila, Branch IV,
full and complete payment and satisfaction of the total obligation of
issued an order directing the administrators to secure the probate court's approval before
P28,403.02;
entering into any transaction involving the seventeen (17) titles of the estate, of which the
property described in OCT No. 0-27 is one of them; that on October 20, 1967, the parties (plaintiff
and defendants) in Civil Case No. 4623 of the Court of First Instance of Davao, submitted to the 4. That the defendant estate, through the undersigned administrators
respondent court an Amicable Settlement whereby the property of the estate covered by OCT No. hereby agree and bind the defendant estate to pay their counsel Atty.
0-27 of Davao was conveyed and ceded to SAMCO as payment of its claim; that the said Dominador Zuho, of the Zufio Law Offices the sum of Eight Thousand
Amicable Settlement signed by the herein respondents was not submitted to and approved by the (P8,000.00) Pesos by way of Attorney's Fee;
then Court of First Instance of Manila, Branch IV, in Sp. Proc. No. 25876, nor notice thereof made
to the beneficiaries and heirs in said special proceedings; that on November 10, 1967, 5. That the parties herein waive an other claims which they might have
respondent court, despite the opposition of the other parties who sought to intervene in Civil Case against one another.
No. 4623 and despite the utter lack of approval of the probate court in Manila, approved the said
Amicable Settlement and gave the same the enforceability of a court decision which, in effect,
ceded the property covered by OCT No. 0-27, containing an area of 293,578 square meters and WHEREFORE, premises considered, it is respectfully prayed that this
with an assessed value of P31,700.00 to SAMCO in payment of its claim for only P19,952.11; Honorable Court approves the foregoing settlement and that judgment be
and, that if the said Order of respondent dated November 10, 1967 is not set aside, the same will rendered transferring the said real property covered by Original Certificate
operate as a judgment that "conveys illegally and unfairly, the property of petitioner-estate without of Title No. 0-27 to plaintiff Southwest Agricultural Marketing Corporation
the requisite approval of the probate court of Manila, which has the sole jurisdiction to convey this and that a new transfer certificate of title be issued to said plaintiff. (pp. 25-
property in custodia legis of the estate. (par. 16, Petition). 26, Rollo)

Made to answer, herein respondent SAMCO and respondent judge, among others, contend that Section 1, Rule 87 of the Rules of Court, provides that "no action upon a claim for the recovery of
the Amicable Settlement need not be approved by the probate court, "the same having been money or debt or interest thereon shall be commenced against the executor or administrator; ..."
entered into in another independent action and in another court of co-equal rank. Article 2032 of The claim of private respondent SAMCO being one arising from a contract may be pursued only
the Civil Code applies only to extrajudicial compromise entered into by the administrators of the by filing the same in the administration proceedings in the Court of First Instance of Manila (Sp.
estate. In the alternative, lack of approval of the probate court of the Amicable Settlement does Proc. No. 25876) for the settlement of the estate of the deceased Amadeo Matute Olave; and the
not render it null and void, but at most voidable, which must be the subject matter of a direct claim must be filed within the period prescribed, otherwise, the same shall be deemed "barred
proceeding in the proper Court of First Instance." (p. 60, Rollo) forever." (Section 5, Rule 86, Rules of Court).

In said Civil Case No. 4623 for sum of money, plaintiff SAMCO and defendants Carlos V. Matute The purpose of presentation of claims against decedents of the estate in the probate court is to
and Matias S. Matute, in their capacities as judicial administrators of the estate of Amado Matute protect the estate of deceased persons. That way, the executor or administrator will be able to
Olave in Special Proceeding No. 25876, Court of First Instance of Manila, Branch IV, submitted examine each claim and determine whether it is a proper one which should be allowed. Further,
the following Amicable Settlement: the primary object of the provisions requiring presentation is to apprise the administrator and the
probate court of the existence of the claim so that a proper and timely arrangement may be made
for its payment in full or by pro-rata portion in the due course of the administration, inasmuch as
1. That defendants in their capacity as judicial administrators of the Estate upon the death of a person, his entire estate is burdened with the payment of all of his debts and
of Amadeo Matute, hereby submit and acknowledge that the said Estate of
no creditor shall enjoy any preference or priority; all of them shag share pro-rata in the liquidation
of the estate of the deceased.

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

Section 1, Rule 73 of the Rules of Court, expressly provides that "the court first taking cognizance
of the settlement of the estate of a decedent, shall exercise jurisdiction to the exclusion of all
other courts." (Emphasis supplied). The law is clear that where the estate of the deceased person
is already the subject of a testate or intestate proceeding, the administrator cannot enter into any
transaction involving it without prior approval of the probate court.

WHEREFORE, the petition for certiorari is GRANTED, and the Order, dated November 10, 1967,
of the respondent court approving the Amicable Settlement of the parties in Civil Case No. 4623
of the then Court of First Instance of Davao, is hereby SET ASIDE.
of the total gross estate as well as the fruits thereof based on the court approved inventory of the
estate. Fruits shall be reckoned from the time of [Olivia Pascual's] appointment as executrix of the
estate. The 3% final fee shall be payable upon approval by the court of the agreement for the
distribution of the properties to the court designated heirs of the estate." 6

On 26 August 1987, private respondent, represented by petitioner, commenced a petition for the
probate of the last will and testament of Doa Adela before the Probate Court, docketed as Sp.
SALONGA HERNANDEZ & ALLADO, Petitioner, vs. OLIVIA SENGCO PASCUAL and THE Proc. No. 136-MN and raffled to Branch 72 presided by Judge Benjamin M. Aquino, Jr. The
HONORABLE COURT OF APPEALS, Respondents. petition was opposed by a certain Miguel Cornejo, Jr. and his siblings, who in turn presented a
purported will executed in 1985 by Doa Adela in their favor. 7
TINGA, J.:
After due trial, on 1 July 1993, the Probate Court rendered a Decision 8 allowing probate of the
Petitioner, a professional law partnership, brings forth this Petition for Review assailing the 1978 Last Will and Testament of Doa Adela and disallowing the purported 1985 Will. Letters
Decision1 of the Court of Appeals dated 22 December 1995. The appellate court had affirmed two testamentary were issued to Olivia Pascual. 9 Cornejo attempted to appeal this decision of the
orders promulgated by the Malabon Regional Trial Court (RTC), Branch 72 (Probate Court), in Probate Court, but his notice of appeal was denied due course by the Probate Court, said notice
Sp. Proc. No. 136-MN, entitled "In the Matter of Testate Estate of Doa Adela Pascual, Dr. Olivia "not having been accompanied by any record on appeal as required under the Interim Rules and
S. Pascual, Executrix." by Rule 109 of the Rules of Court."10

The case actually centers on two estate proceedings, that of Doa Adela Pascual (Doa Adela) On 27 July 1993, petitioner filed a Notice of Attorney's Lien equivalent to three percent (3%) of the
and the other, her husband Don Andres Pascual's (Don Andres), who predeceased her. Don total gross estate of the late Doa Adela S. Pascual as well as the fruits thereof based on the
Andres died intestate, while Doa Adela left behind a last will and testament. The dispute over the court approved inventory of the estate, pursuant to the retainer agreement signed by and
intestate estate of Don Andres has spawned at least two cases already settled by this Court. 2 between petitioner and Olivia S. Pascual, on 25 August 1987. In an Order dated 4 November
1993, the Probate Court ruled that petitioner's "notice of attorney's lien, being fully supported by a
retainer's contract not repudiated nor questioned by his client Olivia S. Pascual, is hereby noted
On 1 December 1973, an intestate proceeding for the settlement of the estate of Don Andres was as a lien that must be satisfied chargeable to the share of Olivia S. Pascual." 11 This was followed
commenced by his widow Doa Adela before the then Court of First Instance, now Regional Trial by another Order, dated 11 November 1993, wherein it was directed "that notice be x x x given,
Court of Pasig, Branch 23 (Intestate Court), docketed as Sp. Proc. No. 7554. Apart from his wife, requiring all persons having claims for money against the decedent, Doa Adela S. Vda. de
who bore him no children, Don Andres was survived by several nephews and nieces from his full- Pascual, arising from contracts, express or implied, whether the same be due, not due, or
blood and half-blood brothers. 3 This proceeding proved to be the source of many controversies, contingent, for funeral expenses and expenses of the last sickness of the said decedent, and
owing to the attempts of siblings Olivia and Hermes Pascual, acknowledged natural children of judgment for money against her, to file said claims with the Clerk of Court at Malabon, Metro
Don Andres's brother, Eligio, to be recognized as heirs of Don Andres. Olivia and Hermes Manila, within six (6) months from November 4, 1993." 12
Pascual procured the initial support of Doa Adela to their claims. However, on 16 October 1985,
the other heirs of Don Andres entered into a Compromise Agreement over the objections of Olivia
and Hermes Pascual, whereby three-fourths (3/4) of the estate would go to Doa Adela and one- Accordingly, on 22 November 1993, petitioner filed a Motion to Annotate Attorney's Lien on
fourth (1/4) to the other heirs of Don Andres, without prejudice to the final determination by the Properties of the Estate of Doa Adela Vda. de Pascual. 13
court or another compromise agreement as regards the claims of Olivia and Hermes
Pascual.4 Subsequently, the Intestate Court denied the claims of Olivia and Hermes Pascual. It was at this stage, on 19 January 1994, that the Intestate Court rendered a Decision in Sp. Proc.
Said denial was eventually affirmed by this Court in 1992 in Pascual v. Pascual- No. 7554, finally giving judicial approval to the aforementioned 1985 Compromise Agreement,
Bautista,5 applying Article 992 of the Civil Code. and partitioning the estate of Don Andres by adjudicating one-fourth (1/4) thereof to the heirs of
Don Andres and three-fourths (3/4) thereof to the estate of Doa Adela. The Intestate Court also
In the meantime, Doa Adela died on 18 August 1987, leaving behind a last will and testament awarded attorney's fees to Atty. Jesus I. Santos, equivalent to 15% of the three-fourths (3/4)
executed in 1978, designating Olivia Pascual as the executrix, as well as the principal beneficiary share of the estate of Doa Adela. 14 Olivia Pascual filed a petition for annulment of the award of
of her estate. The will also bequeathed several legacies and devises to several individuals and attorney's fees with the Court of Appeals, but the same was denied, first by the appellate court,
institutions. then finally by this Court in its 1998 decision in Pascual v. Court of Appeals.15

Olivia Pascual then engaged the services of petitioner in connection with the settlement of the On 26 April 1994, petitioner filed a Motion for Writ of Execution for the partial execution of
estate of Doa Adela. Their agreement as to the professional fees due to petitioner is contained petitioner's attorney's lien estimated at P1,198,097.02. The figure, characterized as "tentative,"
in a letter dated 25 August 1987, signed by Atty. Esteban Salonga in behalf of petitioner and was arrived at based on a Motion to Submit Project Partition dated 26 October 1993 filed by
Olivia Pascual. It is stipulated therein, among others, that the final professional fee "shall be 3% Olivia Pascual, which alleged the gross appraised value of Doa Adela's estate
at P39,936,567.19. This sum was in turn derived from the alleged value of the total estate of Don execution after the re-appraisal of the present market value of the estate and the
Andres, three-fourths (3/4) of which had been adjudicated to Doa Adela. At the same time, determination of the amount due to [petitioner] as attorney's fees;
petitioner noted that the stated values must be considered as only provisional, considering that
they were based on a July 1988 appraisal report; thus, the claim for execution was, according to
(3) ordering the appointment of a reputable appraisal company to re-appraise the
petitioner, without prejudice to an updated appraisal of the properties comprising the gross estate
present market value of the estate of Doa Adela Pascual including the fruits thereof
of Doa Adela.16
for the purpose of determining the value of the attorney's fees of [petitioner]; and

On 29 April 1994, Olivia Pascual, through Atty. Antonio Ravelo, filed her comment and/or
(4) after the re-appraisal of the estate of Doa Adela Pascual a writ of execution be
opposition to the motion for the issuance of a writ of execution on attorney's fees. She argued
issued for the full satisfaction and settlement of the attorney's lien of [petitioner]. 21
that a lawyer of an administrator or executor should charge the individual client, not the estate, for
professional fees. Olivia Pascual also claimed, citing jurisprudence 17, that the counsel claiming
attorney's fees should give sufficient notice to all interested parties to the estate, and that such On 17 March 1995, the Probate Court issued an order which denied petitioner's motion for a re-
was not accomplished by petitioner considering that no notices were given to the several legatees appraisal of the property and the issuance of a partial writ of execution "for being prematurely
designated in Doa Adela's will. 18 It was further argued that the motion for execution was filed as there is no exact estate yet to be inventoried and re-appraised, assuming re-appraisal
premature, considering that the proceedings before the Intestate Court had not yet been would be proper, because the bulk of the estate subject of this case, as far as this court is
terminated; that the computation of the figure of P1,198,097.02 was erroneous; and that the concerned, has not yet been turned over to the executrix or to the court itself." 22
enforcement of the writ of execution on the undivided estate of Don Andres would prejudice his
other heirs entitled to one-fourth (1/4) thereof. Through a petition for certiorari and mandamus, petitioner assailed the two orders of the Probate
Court denying its motion for the immediate execution, partial or otherwise, of its claim for
On 2 June 1994, the Probate Court issued the first assailed order denying the motion for writ of attorney's fees: the 2 June 1994 Order and the 17 March 1995 Order. Nonetheless, the twin
execution in view of the fact that "the bulk of the estate of the late Doa Adela S. Vda. De Pascual orders of the RTC were affirmed by the Court of Appeals, effectively precluding petitioner's
is still tied-up with the estate of the late Don Andres Pascual, the proceedings over which and the attempt to execute on its attorney's lien. The appellate court noted that the attorney's lien issued
final disposition thereof with respect to the partition and segregation of what is to form part of the by the Probate Court was chargeable only to the share of Olivia Pascual, and not to the estate of
estate of the late Doa Adela S. Vda. De Pascual is pending with another court sitting in Pasig, Doa Adela, since it was Olivia Pascual who entered into the agreement with petitioner for the
Metro Manila, and for having been prematurely filed." 19 payment of attorney's fees in connection with the settlement of the estate of Doa Adela.
Citing Lacson v. Reyes,23 the Court of Appeals asserted that as a rule an administrator or
executor may be allowed fees for the necessary expenses he has incurred but he may not
On 14 November 1994, Olivia Pascual, filed with the Probate Court a Motion to Declare General
recover attorney's fees from the estate.
Default and Distribution of Testamentary Dispositions with Cancellation of Administrator's Bond. It
was noted therein that no creditor had filed a claim against the estate of Doa Adela despite due
notice published pursuant to Section 1, Rule 86 of the Rules of Court. The Probate Court was The Court of Appeals likewise noted that in the retainer agreement between petitioner and Olivia
also informed of the fact that the proceedings before the Intestate Court had already been Pascual, it is stipulated that "the 3% final fee shall be payable upon approval by the court of the
terminated by reason of the 14 January 1994 Decision rendered by the latter court. It was also agreement for the distribution of the properties to the court designated heirs of the estate." 24 On
stated "that the corresponding estate taxes had been paid as evidenced by the Estate Tax Return this score, the Court of Appeals ruled that as the petition before it did not show "that an
filed with the Bureau of Internal Revenue, and of the Certificate of Authority issued by the said agreement on the distribution of properties of the estate of Doa Adela S. Pascual has been
agency."20 Interestingly, it was also manifested that two of the properties that formed part of the submitted and approved by the probate court," 25 the filing of the motion for execution and that of
estates of the spouses, "the Ongpin Property" and "the Valenzuela Property," had in fact already the motion for re-appraisal of the market value of the estate were both premature.
been partitioned between the estate of Doa Adela and the heirs of Don Andres at the ratio of
three-fourths (3/4) and one-fourth (1/4), respectively. Petitioner sought to reconsider the Decision of the Court of Appeals, but in vain. 26 Hence this
petition.
In response, petitioner filed a Comment/Manifestation praying that an order be issued:
Petitioner argues that as held in Occea v. Marquez,27 the counsel seeking to recover attorney's
(1) ordering the annotation of the attorney's lien on the properties comprising the fees for legal services to the executor or administrator is authorized to file a petition in the testate
estate of Doa Adela Pascual; or intestate proceedings asking the court, after notice to all the heirs and interested parties, to
direct the payment of his fees as expenses of administration. 28 Lacson, it is alleged, was
inappropriately cited, since that case involved an executor who
(2) a writ of partial execution be issued for the satisfaction of the attorney's lien of the
undersigned counsel [herein petitioner] in relation to the Ongpin and Valenzuela
properties for the amount of P635,368.14,without prejudice to the issuance of a writ of concurrently was a lawyer who subsequently claimed attorney's fees as part of the expenses of
administration. Petitioner also claims that the decision of the probate court admitting Doa Adela's
will to probate sufficiently satisfies the condition in the Retainer Agreement that the final fee be course is adopted, the heirs and other persons interested in the estate will have the right to
payable "upon approval by the court of the agreement for the distribution of the properties to the inquire into the value of the services of the lawyer and on the necessity of his employment. 31
court designated heirs of the estate," the court-approved will comprising the agreement referred
to in the contract.
We reiterate that as a general rule, it is the executor or administrator who is primarily liable for
attorney's fees due to the lawyer who rendered legal services for the executor or administrator in
Petitioner also takes exception to the Probate Court's finding that "the bulk of the estate subject of relation to the settlement of the estate. The executor or administrator may seek reimbursement
this case, as far as this [c]ourt is concerned, has not been turned over to the executrix or to the from the estate for the sums paid in attorney's fees if it can be shown that the services of the
[c]ourt itself," on which the appellate court predicated its ruling that the motion for a writ of lawyer redounded to the benefit of the estate. 32 However, if the executor or administrator refuses
execution was premature. Petitioner submits that the Probate Court ineluctably has jurisdiction to pay the attorney's fees, the lawyer has two modes of recourse. First, the lawyer may file an
over the estate of Doa Adela, and has necessarily assumed control over the properties action against the executor or administrator, but in his/her personal capacity and not as
belonging to the said estate. Thus, petitioner continues, there is no longer need to await the administrator or executor. Second, the lawyer may file a petition in the testate or intestate
turnover of the properties involved in the intestate estate of Don Andres which constitute part of proceedings, asking the court to direct the payment of attorney's fees as an expense of
the testate estate of Doa Adela since the Probate Court and the Intestate Court have concurrent administration. If the second mode is resorted to, it is essential that notice to all the heirs and
jurisdiction over these properties as they have not yet been physically divided. interested parties be made so as to enable these persons to inquire into the value of the services
of the lawyer and on the necessity of his employment.
Petitioner refers to the averment made by Olivia Pascual before the Probate Court that the
proceedings before the Intestate Court had already been terminated, and that the proceeds of the Lacson v. Reyes,33 cited by the appellate court, involved an executor who also happened to be
sale of the Ongpin Property and the Valenzuela Property had in fact been already divided based the lawyer for the heirs who had filed the petition for probate. For that reason, that case is not
on the three-fourths (3/4) to one-fourth (1/4) ratio between the estate of Doa Adela and the heirs squarely in point to the case at bar. It was pronounced therein that the administrator or executor
of Don Andres. Petitioner further points out that the Probate Court had authorized and approved of the estate cannot charge professional fees for legal services against the same estate, as
the sale of the Ongpin Property, yet refused to allow the partial execution of its claim for attorney's explicitly provided under Section 7, Rule 85 of the Rules of Court of 1985. 34No such rule exists
fees. barring direct recovery of professional legal fees from the estate by the lawyer who is not the
executor or administrator of the said estate. The limitations on such direct recovery are
nonetheless established by jurisprudence, as evinced by the rulings in Escueta and Occea.
Finally, petitioner asserts that the Probate Court erred in refusing to grant the prayer seeking the
re-appraisal of the property of Doa Adela's estate. Such re-appraisal, so it claims, is necessary
in order to determine the three percent (3%) share in the total gross estate committed to The character of such claim for attorney's fees bears reiteration. As stated in Escueta, it partakes
petitioner by reason of the Retainer Agreement. the nature of an administration expense. Administration expenses include attorney's fees incurred
in connection with the administration of the estate. 35 It is an expense attending the
accomplishment of the purpose of administration growing out of the contract or obligation entered
It appears that the thrust of the assailed Decision of the Court of Appeals is along these lines: that
into by the personal representative of the estate, and thus the claim for reimbursement must be
petitioner may directly claim attorney's fees only against Olivia Pascual and not against the estate
superior to the rights of the beneficiaries. 36
of Doa Adela; and that petitioner's claim is also premature since contrary to the requisite
stipulated in the Retainer Agreement, there is no court-approved agreement for the distribution of
the properties of the estate of Doa Adela as yet. Notwithstanding, there may be instances wherein the estate should not be charged with
attorney's fees. If the costs of counsel's fees arise out of litigation among the beneficiaries thereof
themselves or in the protection of the interests of particular persons, the estate generally cannot
As an initial premise, we consider whether a lawyer who renders legal services to the executor or
be held liable for such costs, although when the administrator employs competent counsel on
administrator of an estate can claim attorney's fees against the estate instead of the executor or
questions which affect his/her duties as the administrator and on which he/she is in reasonable
administrator. Petitioner correctly cites Occea v. Marquez29 as providing the governing rule on
doubt, reasonable expenses for such services may be charged against the estate subject to the
that matter as previously settled in the 1905 case of Escueta v. Sy-Juilliong,30 to wit:
approval of the court. 37 It has also been held that an administrator who brings on litigation for the
deliberate purpose of defrauding the legitimate heirs and for his own benefit is not entitled to
The rule is that when a lawyer has rendered legal services to the executor or administrator to reimbursement for counsel's fees incurred in such litigation. 381avvphil.net
assist him in the execution of his trust, his attorney's fees may be allowed as expenses of
administration. The estate is, however, not directly liable for his fees, the liability for payment
Clearly then, while the direct recovery of attorney's fees from the estate may be authorized if the
resting primarily on the executor or administrator. If the administrator had paid the fees, he would
executor refuses to pay such fees, and claimed through the filing of the proper petition with the
be entitled to reimbursement from the estate. The procedure to be followed by counsel in order to
probate court, such claim remains controvertible. This is precisely why Escueta and its progenies
collect his fees is to request the administrator to make payment, and should the latter fail to pay,
require that the petition be made with notice to all the heirs and interested parties.
either to (a) file an action against him in his personal capacity, and not as administrator, or (b) file
a petition in the testate or intestate proceedings asking the court, after notice to all the heirs and
interested parties, to direct the payment of his fees as expenses of administration. Whichever
It is these perspectives that we apply to the case at bar. Notably, petitioner had filed both a Notice The fact that the prayer for attorney's fees was cast in a motion and not a petition should not
of Attorney's Lien and a Motion for Writ of Execution. These two pleadings have distinct character impede such claim, considering that the motion was nonetheless filed with the Probate
and must be treated as such. Court. However, the record bears that the requisite notice to all heirs and interested parties has
not been satisfied. Doa Adela's will designated 19 other individuals apart from Olivia Pascual,
and four (4) different institutions as recipients of devises or legacies consisting of real properties,
After Doa Adela's will had been admitted to probate, petitioner had initially filed a Notice of
jewelries, and cash amounts. Yet only Olivia Pascual was served with a copy of the Motion for
Attorney's Lien wherein it identified itself as "the attorney for the executrix named in the said will,
Writ of Execution, the motion which effectively sought the immediate payment of petitioner's
Dra. Olivia S. Pascual", and sought to file its "claim and/or lien for attorney's fees equivalent to
attorney's fees. As early as 29 April 1994, Olivia Pascual, in opposing the Motion for Writ of
Three Percent (3%) of the total gross estate," pursuant to the 1987 Retainer Agreement. Copies
Execution, already pointed out that petitioner had failed to give sufficient notice to all interested
of this Notice of Attorney's Lien were furnished Attys. Fortunato Viray, Jr. and Crisanto Cornejo,
parties to the estate, particularly the several devisees and legatees so named in Doa Adela's
who appear on record to have served as counsels for the various oppositors to the probate of the
will.
1978 will of Doa Adela. This Notice of Attorney's Lien was noted by the Probate Court in its
Order of 4 November 1993, "as a lien that must be satisfied chargeable to the share of Olivia S.
Pascual." Such notice is material to the other heirs to Doa Adela's estate. The payment of attorney's fees,
especially in the amount of 3% of the total gross estate as sought for by petitioner, substantially
diminishes the estate of Doa Adela and may consequently cause the diminution of their devises
It may be so that petitioner, in filing this Notice of Attorney's Lien, initially intended to hold Olivia
and legacies. Since these persons were so named in the very will itself and the action for probate
Pascual, and not Doa Adela's estate, liable for the attorney's fees. It did identify itself as the
which was filed by petitioner itself, there is no reason why petitioner could not have given due
lawyer of Olivia Pascual, and the Probate Court did note that the lien be satisfied chargeable to
notice to these persons on its claim for attorney's fees.
the share of the executor. Yet it must also be noted that such lien, as it is, is only contingent on
the final settlement of the estate of Doa Adela, at such time, since the Retainer Agreement on
which the lien is hinged provides that the final fee "be payable upon approval by the court of the The requisite notice to the heirs, devisees, and legatees is anchored on the constitutional
agreement for the distribution of the properties to the court designated heirs of the estate." 39 This principle that no person shall be deprived of property without due process of law. 40 The fact that
is also made clear by the order noting the lien, which qualified that said lien was chargeable only these persons were designated in the will as recipients of the testamentary dispositions from the
to the share of Olivia Pascual, hence implying that at the very least, it may be claimed only after decedent establishes their rights to the succession, which are transmitted to them from the
her share to Doa Adela's estate is already determinate. moment of the death of the decedent. 41 The payment of such attorney's fees necessarily
diminishes the estate of the decedent, and may effectively diminish the value of the testamentary
dispositions made by the decedent. These heirs, devisees, and legatees acquire proprietary
In rendering its assailed Decision, the Court of Appeals relied on this qualification made by the
rights by reason of the will upon the moment of the death of the decedent, incipient or inchoate as
Probate Court that the lien for attorney's fees was chargeable only to the share of Olivia
such rights may be. Hence, notice to these interested persons of the claims for attorney's fees is
Pascual. Yet the Notice of Attorney's Lien only seeks to serve notice of the pendency of the claim
integral, so as to allow them to pose any objections or oppositions to such claim which, after all,
for attorney's fees, and not the payment of such fees itself. On its own, the Notice of Attorney's
could lead to the reduction of their benefits from the estate.
Lien cannot serve as the basis for the Probate Court to authorize the payment to petitioner of
attorney's fees.
The failure to notify the other heirs, devisees or legatees, to the estate of Doa Adela likewise
deprives these interested persons of the right to be heard in a hearing geared towards
On the other hand, Escueta and its kindred cases do explicitly recognize the recourse for the
determining whether petitioner was entitled to the immediate payment of attorney's fees. Notably,
lawyer to directly make the claim for attorney's fees against the estate, not the executor or
petitioner, in filing its Motion for Writ of Execution, had initially set the hearing on the motion on 29
administrator. The filing of the Notice of Attorney's Lien and the qualificatory character of the
April 1994, but one day prior to the scheduled hearing, gave notice instead that the motion was
rulings thereon, do not preclude the resort to the mode of recovery against the estate as
being submitted for the consideration of the Probate Court without further argument. 42 Evidently,
authorized by jurisprudence. Clearly then, we disagree with the opinion of the Court of Appeals
petitioner did not intend a full-blown hearing to ensue on whether it was entitled to the payment of
that attorney's fees can be claimed only against the share of Olivia Pascual.
attorney's fees. Yet the claim for attorney's fees is hardly incontrovertible.

The instant case is rooted in an incomplete attempt to resort to the second mode of recovery of
That the Retainer Agreement set the attorney's fees at three percent (3%) of the gross estate
attorney's fees as authorized in Escueta, originating as it did from the denial of petitioner's Motion
does not imply that the basis for attorney's fees is beyond controversy. Attorney's fees in this case
for Writ of Execution, and not the Notice of Attorney's Lien. The Motion did expressly seek the
are in the nature of administration expenses, or necessary expenses in the first place. Any party
payment of attorney's fees to petitioner. Escueta and Occea, among other cases, did clearly lay
interested in the estate may very well, in theory, posit a myriad of objections to the attorney's fees
down the manner under which such fees may be paid out even prior to the final settlement of the
sought, such as for example, that these fees were not necessary expenses in the care,
estate as an administration expense directly chargeable to the estate itself. The critical question
management, and settlement of the estate. Whether or not such basis for valid objections exists
in the present petition is thus whether this Motion for Writ of Execution satisfies the requisites set
in this case is not evident, but the fact remains that all the parties interested in the estate, namely
in Escueta for a claim for attorney's fees directly chargeable against the estate. It does not.
the other devisees and legatees, were deprived of the opportunity to raise such objections as
they were not served notice of the Motion for Writ of Execution.
The instant claim for attorney's fees is thus precluded by the absence of the requisite notices by attorney's fees may be collected against the estate even before the final determination of its gross
petitioner to all the interested persons such as the designated heirs, devisees, legatees, as total value or the final approval of the project of partition. As earlier stated, such claim for
required by the jurisprudential rule laid down in Escueta. However, the Court of Appeals held that reimbursement is superior to the right of the beneficiaries to the estate, and as such, there is
it was the prematurity of the claim for attorney's fees that served as the fatal impediment. On this need to finally determine the respective shares of the beneficiaries before attorney's fees in the
point, the Court does not agree. nature of administration expenses may be paid out.

Again, the remaining peripheral questions warrant clarification. The one distinct disadvantage, however, is that the Retainer Agreement cannot be deemed
binding on the estate or the Probate Court since the estate is not a party to such contract. This
would not preclude the Probate Court from enforcing the provisions of the Retainer Agreement if,
Escueta itself provides for two alternative approaches through which counsel may proceed with
in its sound discretion, the terms of payment therein are commensurate to the value of the actual
his claim for attorney's fees. The first involves a separate suit against the executor or
services necessary to the administration of the estate actually rendered by petitioner. Yet if the
administrator in the latter's personal capacity. The second approach is a direct claim against the
Probate Court does choose to adopt the Retainer Agreement as binding on the estate of Doa
estate itself, with due notice to all interested persons, filed with the probate court.
Adela, petitioner may again be precluded from immediate recovery of attorney's fees in view of
the necessity or precondition of ascertaining the gross total value of the estate, as well as the
In the same vein, the existence of the Retainer Agreement between petitioner and Olivia Pascual judicial approval of the final agreement of partition.
allows petitioner two possible causes of action on which to claim attorney's fees in connection
with the administration of the estate of Doa Adela. The first possible cause of action pivots on
In any event, whether the claim for attorney's fees was pursued through a separate suit against
the Retainer Agreement, which establishes an obligation on the part of Olivia Pascual to pay the
Olivia Pascual (in her personal capacity) for the enforcement of the Retainer Agreement, or
final fee of 3% of the gross total estate of Doa Adela, payable upon approval by the Probate
against the estate of Doa Adela as reimbursement for necessary administration expenses, it
Court of the agreement for the distribution of the properties to the court- designated heirs of the
remains essential that a hearing be conducted on the claim. In either case too, the hearing will
estate. Necessarily, since the recovery of attorney's fees is premised on the Retainer Agreement
focus on the value of the services of the petitioner and the necessity of engaging petitioner as
any award thereupon has to await the final ascertainment of value of the gross total estate of
counsel.
Doa Adela, as well as the approval by the Probate Court of the agreement for the distribution of
the properties. The Retainer Agreement makes it clear that the final payment of attorney's fees is
contingent on these two conditions, 43 and the claim for attorney's fees based on the Retainer We reiterate that the direct claim against the estate for attorney's fees must be made with due
Agreement cannot ripen until these conditions are met. notice to the heirs, devisees, and legatees. The failure of petitioner to give such notice renders its
present claim inefficacious for now. Indeed, there is sufficient cause to dismiss outright
petitioner's Motion for Writ of Immediate Execution filed with the Probate Court, for its failure to
Moreover, it cannot be escaped that the Retainer Agreement was entered into between petitioner
notify therein the other persons interested in the estate of Doa Adela. Nonetheless, to authorize
and Olivia Pascual prior to the filing of the probate petition, and that at such time, she had no
said outright denial at this stage could unduly delay the settlement of the estate of Doa Adela,
recognized right to represent the estate of Doa Adela yet. This
considering the likelihood that petitioner would again pursue such claim for attorney's fees as the
right to which is affirmed by law and jurisprudence.
circumstance further bolsters our opinion that if petitioner insists on the judicial enforcement of
the Retainer Agreement, its proper remedy, authorized by law and jurisprudence, would be a
Hence, in order not to unduly protract further the settlement of the estate of Doa Adela, the
personal action against Olivia Pascual, and not against the estate of Doa Adela. If this were the
Court deems it proper instead to mandate the Probate Court to treat the Motion for Writ of
recourse pursued by petitioner, and Olivia Pascual is ultimately held liable under the Retainer
Immediate Execution as a petition seeking a court order to direct the payment of attorney's fees
Agreement for attorney's fees, she may nonetheless seek reimbursement from the estate of Doa
as expenses of administration, but subject to the condition that petitioner give due notice to the
Adela if she were able to establish that the attorney's fees paid to petitioner were necessary
other designated devisees and legatees so designated in the will of the claim prior to the requisite
administration expenses.
hearing thereon. Petitioner may as well seize such opportunity to formally amend or reconfigure
its motion to a petition to direct payment of attorney's fees. Once this step is accomplished, there
The second or alternative recourse is the direct claim for attorney's fees against the estate, as should be no impediment to petitioner's claim for recovery of attorney's fees as reimbursement for
authorized under Escueta. The character of this claim is not contractual in nature, but rather, as a necessary administration expenses, within the terms established by law, jurisprudence, and this
reimbursement for a necessary expense of administration, and it will be allowed if it satisfies the decision.
criteria for necessary expenses of administration. Its entitlement can be established by the actual
services rendered by the lawyer necessary to the accomplishment of the purposes of
One final note. Petitioner's final prayer before this court is that it be issued a partial writ of
administration, and not necessarily by the contract of engagement of the attorney's services.
execution, consistent with its position before the Probate Court that it is already entitled to at least
a partial payment of its attorney's fees. This prayer cannot obviously be granted at this stage by
By filing their claim directly against the estate of Doa Adela, petitioner has clearly resorted to this the Court, considering the fatal absence of due notice to the other designated beneficiaries to the
second cause of action. There are consequent advantages and disadvantages to petitioner. Since estate of Doa Adela. Still, we do not doubt that the Probate Court, within its discretion, is
the claim arises irrespective of the contingencies as stipulated in the Retainer Agreement, the
capacitated to render the award of attorney's fees as administration expenses either partially or
provisionally, depending on the particular circumstances and its ultimate basis for the
determination of the appropriate attorney's fees.

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

In the matter of the estate of J. H. Ankrom, deceased. HEIRS OF RAFAEL


GREGOIRE, claimants-appellants, vs. ALBERT L. BAKER, administrator-appellee.

STREET, J.:

This appeal has been brought to set aside an order entered on March 5, 1926, by Hon. Pedro J.
Rich, Judge of the Court of First Instance of Davao, authorizing the administrator of J. H. Ankrom,
deceased, to exclude a large tract of land, with improvements, from the inventory of assets of the
decedent.

It appears that J. H. Ankrom, resident of the Province of Davao, died on September 18, 1922; and
on September 25, thereafter, the appellee, A. L. Baker, qualified as his administrator. On
December 13 of the same year, the administrator filed his inventory of the assets pertaining to the
estate of his decedent, in which inventory was included a tract of land covered by Torrens
certificate of title and containing an area of more than 930 hectares. In this inventory, said tract of
land, with the improvements thereon, was estimated at nearly P60,000. On September 24, 1924,
the heirs of Rafael Gregoire, appellants herein, filed a claim against the estate of Ankrom for the
sum of $35,438.78, U. S. currency, or P70, 877.56, based upon a judgment rendered in the
Supreme Court of the Republic of Panama. This claim was allowed by the commissioners in the
estate of Ankrom, and no appeal was at any time taken against the order so allowing it. It appears
that the total recognized claims against the estate amounted originally to P76,645.13, but four of
the creditors, having claims in the amount of P1,639.82, have been paid in full, leaving a balance
owing by the estate of P75,005.31, the greater part of which is comprised of the claim of the
appellants.

As the affairs of the estate stood upon the original inventory, there appeared to be sufficient
assets to pay all claimants; but while these intestate proceedings were being conducted the
administrator discovered that on April 22, 1920, or about a year and a half before his death,
Ankrom had executed a mortgage on the property here in question in favor of the Philippine Trust
Company to secure that company from liability on a note in the amount of P20,000.00, of the
same date, upon which it had made itself contigently liable. Two days after this mortgage had
been executed Ankrom appears to have made an assignment of all his interest in the mortgaged
property to one J. G. Jung, of Cincinnati, Ohio, for a purported consideration of the sum of P1 and items of property in the inventory or the exclusion of items therefrom are manifestly of a purely
other good and valuable considerations. In view of these conveyances by his intestate, the discretionary, provisional, and interlocutory nature and are subject to modification or change at
administrator presented an amended inventory, omitting therefrom the tract of 930 hectares with any time during the course of the administration proceedings. Such order in question not final in
its improvements thereon, the same being the land covered by the transfers above mentioned. the sense necessary to make it appealable. In fact we note that the appealed order was expressly
The court, however, having its attention called to the fact that the omission of this property from made without prejudice to the rights of the creditors to proceed in the manner indicated in the
the inventory would leave the estate insolvent, made an order on October 7, 1925, directing the provision above quoted from the Code of Civil Procedure. lawphil.net
administrator to restore said item to his inventory. Nevertheless, upon a later motion of the
administrator accompanied by authenticated copies of the documents of transfer, the court made
The order appealed from not being of an appealable nature, it results that this appeal must be
a new order, dated march 5, 1926, approving of the omission by the administrator of said property
dismissed, and it is so ordered, with costs against the appellants.
from the inventory; and its is from this order that the present appeal is here being prosecuted.

From the foregoing statement it will be collected that the appellants have an undeniable credit in
a large amount against the estate of the decedent, and that upon the showing of the last
approved inventory the estate is insolvent. In view of these facts that appellants, assuming
apparently that the assignment to Jung by Ankrom of the equity of redemption of the latter in the
tract of land above mentioned was affected in fraud of creditors, are desirous of reaching and
subjecting this interest to the payment of the appellant's claim. The appellants also insist that it
was the duty of the administrator to retain the possession of this tract of land and thereby place
upon Jung, or persons claiming under him, the burden of instituting any action that may be
necessary to maintain the rights of the transferee under said assignment. The administrator, on
the other hand, supposes the assignment to be valid and apparently does not desire to enter into
a contest over the question of its validity with the person or persons claiming under it.

The precise remedy open to the appellants in the predicament above described is clearly pointed
pout in section 713 of our Code of Civil Procedure, which reads as follows:

When there is a deficiency of assets in the hands of an executor or administrator to


pay debts and expenses, and when the deceased person made in his life-time such
fraudulent conveyance of such real or personal estate or of a right or interest therein,
as is stated in the preceding section, any creditor of the estate may, by license of the SINFOROSO PASCUAL, plaintiff-appellant, vs. PONCIANO S. PASCUAL, ET AL., defendants-
court, if the executor or administrator has not commenced such action, commence and appellees.
prosecute to final judgment, in the name of the executor or administrator, an action for
the recovery of the same and may recover for the benefit of the creditors, such real or MORAN, J.:
personal estate, or interest therein so conveyed. But such action shall not be
commenced until the creditor files in court a bond with sufficient surety, to be approved
by the judge, conditioned to indemnify the executor or administrator against the costs On September 14, 1940, while the proceedings for the probate of the will of the deceased
of such action. Such creditor shall have a lien upon the judgment by him so recovered Eduarda de los Santos were pending in the Court of First Instance of Rizal plaintiff, Sinforoso
for the costs incurred and such other expenses as the court deems equitable. Pascual, instituted in the Court of First Instance of Pampanga against Ponciano S. Pascual and
others, an action for the annulment of a contract of sale of a fishpond situated in Lubao,
Pampanga, supposedly executed without consideration by said deceased in her lifetime in favor
The remedy of the appellants is, therefore, to indemnify the administrator against costs and, by of the defendants. The complaint alleges that plaintiff and defendants are all residents of
leave of court, to institute an action in the name of the administrator to set aside the assignment Malabon, Rizal, and are legitimate children of the testratix, Eduarda de los Santos. Defendants
or other conveyance believed to have been made in fraud of creditors. filed of a motion to dismiss, alleging want of cause of action, limitation of action, wrong venue and
pendency of another action. The trial court granted the motion on the ground that the action
For the appellants it is contended that, inasmuch as no appeal was taken from the order of should have been brought by the executor or administrator of the estate left by the deceased, and
October 7, 1925, directing the administrator to include the land in question in the inventory, said directed the plaintiff to amend his complaint within five days. Plaintiff filed an amended complaint,
order became final, with the result that the appealed order of March 5, 1926, authorizing the the amendment consisting in that "el demandado Miguel S. Pascual ha sido nombrado por el
exclusion of said property from the inventory, should be considered beyond the competence of Juzgado de Primera Instancia de Rizal albacea testamentario de los bienes de la finada Eduarda
the court. This contention is untenable. Orders made by a court with reference to the inclusion of de los Santos. en el asunto de la testamentaria de dicha finada." The trial court declaring that
such amendment did not cure the insufficiency of the complaint, dismissed the action. It is from
this order of dismissal that plaintiff interposed his appeal.

Under Rule 86, section 1, of the new Rules of Court, actions for the recovery or protection of the
property or rights of the deceased for causes which survive may be prosecuted or defended by
his executor or administrator. Upon the commencement of the testate or intestate proceedings
the heirs have no standing in court in actions of the above character, except when the executor or
administrator is unwilling or fails or refuses to act, in which event to heirs may act in his place.
(Pomeroy on Code Remedies, p. 158, 11 R C. L. p. 262; 21 Am. Jur., 940) Here, the fictitious sale
is alleged to have been made to the defendants, one of them, Miguel S. Pascual, being the
executor appointed by the probate court. Such executor naturally would not bring an action
against himself for recovery of the fishpond. His refusal to act may, therefore, be implied. And this
brings the case under the exception. It should be noted that in the complaint the prayer is that the
fishpond be delivered not to the plaintiff but to the executor, thus indicating that the action is
brought in behalf of the estate of the deceased.

Appellees contend that there is here a wrong venue. They argue that an action for the annulment
of a contract of sale is a personal action which must be commenced at the place of residence of
either the plaintiff or the defendant, at the election of the plaintiff (Rule 5, sec. 1, Rules of Court),
and, in the instant case, both plaintiff and defendants are residents of Malabon, Rizal, but the
action was commenced in the Court of First Instance of Pampanga. It appearing, however, that
the sale is alleged to be fictitious, with absolutely no consideration, it should be regarded as a
non-existent, not merely null, contract. (8 Manresa, Comentarios al Codigo Civil Espaol, 2nd ed.,
pp. 766-770.) And there being no contract between the deceased and the defendants, there is in
truth nothing to annul by action. The action brought cannot thus be for annulment of contract, but
is one for recovery of a fishpond, a real action that should be, as it has been, brought in
Pampanga, where the property is located (Rule 5, sec. 3, Rules of Court.)

Appellees argue further that the action brought by the plaintiff is unnecessary, the question
involved therein being one that may properly be raised and decided in the probate proceedings.
The general rule is that questions as to title to property cannot be passed upon in testate
proceedings. (Bauermann vs. Casas, 10 Phil., 386; Devesa vs. Arbes, 13 Phil., 273;
Guzman vs. Anog, 37 Phil., 61; Lunsod vs. Ortega, 46 Phil., 664; Adapon vs. Maralit, 40 Off.
Gaz., 6th Sup., p. 84.) The court is, however, of the opinion and so holds that, when as in the
instant case, the parties interested are all heirs of the deceased claiming title under him, the
question as to whether the transfer made by the latter to the former is or is not fictitious, may
properly be brought by motion in the testate or intestate proceedings on or before the distribution
of the estate among the heirs. This procedure is optional to the parties concerned who may
choose to bring a separate action as a matter of convenience in the preparation or presentation of
evidence, and accordingly, the action brought by the appellant is not improper.
MARIA VELASQUEZ, plaintiffs-appellants, vs. WILLIAM GEORGE, defendants-appellees,
ERLINDA VILLANUEVA, mortgagee-defendant-appellee.
Order is reversed, and the case is remanded the trial court for further proceedings, with costs
against appellees.
GUTIERREZ, JR., J:

Plaintiffs-appellants Maria Velasquez Vda. de George and her children, Mary, Nellie, Noble and
Maybelle, all surnamed George, appealed from the decision of the Court of First Instance of
Bulacan, which dismissed their complaint for lack of jurisdiction. According to the trial court, the
case falls within the original and exclusive jurisdiction of the Securities and Exchange
Commission. The appeal was certified to us by the Court of Appeals as one involving a pure Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and
question of law. Exchange Commission over corporations, partnerships and other forms of associations
registered with it as expressly granted under existing laws and decrees, it shall have
original and exclusive jurisdiction to hear and decide cases involving:
The plaintiffs-appellants are the widow and legitimate children of the late Benjamin B. George
whose estate is under intestate proceedings. The case is docketed as Special Proceedings Nos.
18820 before the then Court of First Instance of Rizal at Quezon City, Branch XVIII. a) Devices or schemes employed by any acts of the board of
directors, business associations, its officers or partners amounting to fraud and
misrepresentation which may be detrimental to the interest of the public and/or of
In their complaint, the plaintiffs-appellants alleged that the five defendants- mortgagors are the stockholder, partner, members of associations or organizations registered with
officers of the Island Associates Inc. Andres Muoz, aside from being the treasurer-director of the Commission ...
said corporation, was also appointed and qualified as administrator of the estate of Benjamin
George in the above special proceedings. In life, the latter owned 64.8 percent or 636 shares out Villanueva further contends that the plaintiffs-appellants have no capacity to file the complaint because
of the outstanding 980 shares of stock in the corporation. Without the proper approval from the the general rule laid down in Rule 87, Section 3 of the Rules of Court states that only the administrator or
probate court and without notice to the heirs and their counsel, the defendants-mortgagors executor of the estate may bring actions of such nature as the one in the case at bar. The only exception
executed a Deed of First Real Estate Mortgage in favor of the defendant-mortgagee Erlinda is when the executor or administrator is unwilling or fails or refuses to act, which exception according to
Villanueva, covering three parcels of land owned by Island Associates. In said Deed, the the mortgagee-appellee does not apply in the present case.
defendants-mortgagors also expressly waived their right to redeem the said parcels.
Subsequently, a power of attorney was executed by the defendants-mortgagors in favor of
We agree with the plaintiffs-appellants. What the complaint sought to annul were documents of title
Villanueva whereby the latter was given the full power and authority to cede, transfer, and convey which vested ownership over the three parcels of land in question to defendant-mortgagee Villanueva,
the parcels of land within the reglementary period provided by law for redemption. who is neither an officer, a stockholder nor a director of the corporation, but a third party. Clearly, the
lower court had jurisdiction over the controversy. The fact that the plaintiffs-appellants subsequently
A certificate of sale was executed in favor of Villanueva by the Provincial Sheriff of Bulacan after questioned the legality of the constitution of the board of directors of the corporation did not divest the
she submitted the highest bids at the public auction. This led to the execution of a Deed of Sale court of its jurisdiction to take cognizance of the case. What determines jurisdiction of the court are the
allegations in the complaint. If from the same, the court has already acquired jurisdiction over the
and Affidavit of Consolidation of Ownership by virtue of which Transfer Certificates of Titles Nos.
subject-matter, jurisdiction is retained up to the end of the litigation.
T-16717 and T-39162, covering the three parcels of land, were cancelled and in lieu thereof,
Transfer Certificates of Titles Nos. T239675 and T-239674 were issued in favor of Villanueva. The
plaintiffs-appellants, therefore, filed the complaint for the annulment of the 1.) Deed of First Whether or not the mortgage contract, with an unusual provision whereby the mortgagors waived their
Real Estate Mortgage; 2.) Power of Attorney; 3.) Certificate of Sale; 4.) Amended Certificate of right to redeem the mortgaged property, could be executed without proper approval of the probate court
Sale; 5.) Affidavit of Consolidation of Ownership; and 6.) Transfer Certificates of Title Nos. T- and without notice to the widow and legitimate children of the deceased is a matter clearly within the
239674 and T-239675. authority of a trial court to decide. If in the course of trial, the court believes that the validity of the
composition of the board of directors is absolutely necessary for resolution of the issues before it, the
remedy is, at most, to require that one issue to be threshed out before the Securities and Exchange
A motion to dismiss was filed by William George, Robert George, and administrator Andres Commission and to hold in abeyance, the trial on the merits of the principal issues in the meantime.
Muoz on the ground that the trial court had no jurisdiction over the case. The movants Certainly, the solution is not for the lower court to surrender its judicial questions to an administrative
contended that the subject matter of the complaint referred to the corporate acts of the Board of agency for resolution.
Directors of Island Associates, and, therefore, falls within the exclusive jurisdiction of the
Securities and Exchange Commission. The trial court agreed with the movants and dismissed the We also find without merit the defendant-mortgagee's contention that the proper party to file the
complaint. The plaintiffs-appellants contend that the resolution of the validity of a mortgage complaint is the administrator of the estate of Benjamin George. The administrator, Andres Muoz, is the
contract is within the original and exclusive jurisdiction of civil courts, and certainly not within the same person charged by the plaintiffs-appellants to have voted in the board of directors without securing
jurisdiction of the Securities and Exchange Commission and that once jurisdiction of the civil court the proper authority from the probate court to which he is accountable as administrator. In Ramirez v.
whether in a civil or a criminal case, has properly attached, the same cannot be ousted, divested Baltazar, we ruled that "since the ground for the present action to annul the aforesaid foreclosure
or removed. The appellants state that the questioned composition of the board of directors, is proceedings is the fraud resulting from such insidious machinations and collusion in which the
merely incidental to the determination of the main issue and is insufficient cause for the trial court administrator has allegedly participated, it would be far fetched to expect the said administrator himself
to divest itself of its original and exclusive jurisdiction that has already been acquired. to file the action in behalf of the estate. And who else but the heirs, who have an interest to assert and to
protect, would bring the action? Inevitably, this case should fall under the exception, rather than the
general rule that pending proceedings for the settlement of the estate, the heirs have no right to
The defendants-appellees, on the other hand maintain that since the complaint questions the validity of a commence an action arising out of the rights belonging to the deceased." The case at bar falls under
corporate contract which the appellants contend to have been entered into as a fraudulent and such an exception.
surreptitious scheme and devise to defraud them, this issue places the entire case outside the
jurisdiction of the civil courts. According to them, Presidential Decree No. 902-A gives the SEC exclusive
jurisdiction over such a controversy. The relevant provision reads:
WHEREFORE, the order of the Court of First Instance of Bulacan, dated June 16, 1980, dismissing the On December 4, 1995, respondents filed a Complaint for the Annulment/Rescission of Extra
complaint and the order dated December 1, 1980 denying the motion for reconsideration are SET Judicial Settlement of Estate of a Deceased Person with Quitclaim, Real Estate Mortgage and
ASIDE. The said court is hereby ordered to set the case for trial on the merits as above indicated. Cancellation of Transfer Certificate of Titles with Nos. 63983, 63985 and 63984 and Other
Related Documents with Damages against petitioners, the Rural Bank of Mangaldan, Inc. and the
TEODORA A. RIOFERIO, VERONICA O. EVANGELISTA assisted by her husband ZALDY Register of Deeds of Dagupan City before the Regional Trial Court, Branch 42, Dagupan City. 9
EVANGELISTA, ALBERTO ORFINADA, and ROWENA O. UNGOS, assisted by her husband
BEDA UNGOS, petitioners, vs. COURT OF APPEALS, ESPERANZA P. ORFINADA, LOURDES On February 5, 1996, petitioners filed their Answer to the aforesaid complaint interposing the
P. ORFINADA, ALFONSO ORFINADA, NANCY P. ORFINADA, ALFONSO JAMES P. defense that the property subject of the contested deed of extra-judicial settlement pertained to
ORFINADA, CHRISTOPHER P. ORFINADA and ANGELO P. ORFINADA, respondents. the properties originally belonging to the parents of Teodora Riofero 10 and that the titles thereof
were delivered to her as an advance inheritance but the decedent had managed to register them
TINGA, J.: in his name.11 Petitioners also raised the affirmative defense that respondents are not the real
parties-in-interest but rather the Estate of Alfonso O. Orfinada, Jr. in view of the pendency of the
administration proceedings.12 On April 29, 1996, petitioners filed a Motion to Set Affirmative
Whether the heirs may bring suit to recover property of the estate pending the appointment of an Defenses for Hearing13 on the aforesaid ground.
administrator is the issue in this case.

The lower court denied the motion in its Order14 dated June 27, 1996, on the ground that
This Petition for Review on Certiorari, under Rule 45 of the Rules of Court, seeks to set aside respondents, as heirs, are the real parties-in-interest especially in the absence of an administrator
the Decision1 of the Court of Appeals in CA-G.R. SP No. 42053 dated January 31, 1997, as well who is yet to be appointed in S.P. Case No. 5118. Petitioners moved for its reconsideration 15 but
as its Resolution2 dated March 26, 1997, denying petitioners motion for reconsideration. the motion was likewise denied.16

On May 13, 1995, Alfonso P. Orfinada, Jr. died without a will in Angeles City leaving several This prompted petitioners to file before the Court of Appeals their Petition for Certiorari under
personal and real properties located in Angeles City, Dagupan City and Kalookan City. 3 He also Rule 65 of the Rules of Court docketed as CA G.R. S.P. No. 42053. 17 Petitioners averred that the
left a widow, respondent Esperanza P. Orfinada, whom he married on July 11, 1960 and with RTC committed grave abuse of discretion in issuing the assailed order which denied the
whom he had seven children who are the herein respondents, namely: Lourdes P. Orfinada, dismissal of the case on the ground that the proper party to file the complaint for the annulment of
Alfonso "Clyde" P. Orfinada, Nancy P. Orfinada-Happenden, Alfonso James P. Orfinada, the extrajudicial settlement of the estate of the deceased is the estate of the decedent and not the
Christopher P. Orfinada, Alfonso Mike P. Orfinada (deceased) and Angelo P. Orfinada. 4 respondents.18

Apart from the respondents, the demise of the decedent left in mourning his paramour and their The Court of Appeals rendered the assailed Decision19 dated January 31, 1997, stating that it
children. They are petitioner Teodora Riofero, who became a part of his life when he entered into discerned no grave abuse of discretion amounting to lack or excess of jurisdiction by the public
an extra-marital relationship with her during the subsistence of his marriage to Esperanza respondent judge when he denied petitioners motion to set affirmative defenses for hearing in
sometime in 1965, and co-petitioners Veronica5, Alberto and Rowena.6 view of its discretionary nature.

On November 14, 1995, respondents Alfonso James and Lourdes Orfinada discovered that on A Motion for Reconsideration was filed by petitioners but it was denied. 20 Hence, the petition
June 29, 1995, petitioner Teodora Rioferio and her children executed an Extrajudicial Settlement before this Court.
of Estate of a Deceased Person with Quitclaim involving the properties of the estate of the
decedent located in Dagupan City and that accordingly, the Registry of Deeds in Dagupan issued
Certificates of Titles Nos. 63983, 63984 and 63985 in favor of petitioners Teodora Rioferio, The issue presented by the petitioners before this Court is whether the heirs have legal standing
Veronica Orfinada-Evangelista, Alberto Orfinada and Rowena Orfinada-Ungos. Respondents also to prosecute the rights belonging to the deceased subsequent to the commencement of the
found out that petitioners were able to obtain a loan of P700,000.00 from the Rural Bank of administration proceedings.21
Mangaldan Inc. by executing a Real Estate Mortgage over the properties subject of the extra-
judicial settlement.7 Petitioners vehemently fault the lower court for denying their motion to set the case for
preliminary hearing on their affirmative defense that the proper party to bring the action is the
On December 1, 1995, respondent Alfonso "Clyde" P. Orfinada III filed a Petition for Letters of estate of the decedent and not the respondents. It must be stressed that the holding of a
Administration docketed as S.P. Case No. 5118 before the Regional Trial Court of Angeles City, preliminary hearing on an affirmative defense lies in the discretion of the court. This is clear from
praying that letters of administration encompassing the estate of Alfonso P. Orfinada, Jr. be the Rules of Court, thus:
issued to him.8
SEC. 5. Pleadings grounds as affirmative defenses.- Any of the grounds for dismissal
provided for in this rule, except improper venue, may be pleaded as an affirmative
defense, and a preliminary hearing may be had thereon as if a motion to dismiss had All told, therefore, the rule that the heirs have no legal standing to sue for the recovery of property
been filed.22 (Emphasis supplied.) of the estate during the pendency of administration proceedings has three exceptions, the third
being when there is no appointed administrator such as in this case.
Certainly, the incorporation of the word "may" in the provision is clearly indicative of the optional
character of the preliminary hearing. The word denotes discretion and cannot be construed as As the appellate court did not commit an error of law in upholding the order of the lower court,
having a mandatory effect. 23Subsequently, the electivity of the proceeding was firmed up beyond recourse to this Court is not warranted.
cavil by the 1997 Rules of Civil Procedure with the inclusion of the phrase "in the discretion of the
Court", apart from the retention of the word "may" in Section 6, 24in Rule 16 thereof.
WHEREFORE, the petition for review is DENIED. The assailed decision and resolution of the
Court of Appeals are hereby AFFIRMED. No costs.
Just as no blame of abuse of discretion can be laid on the lower courts doorstep for not hearing
petitioners affirmative defense, it cannot likewise be faulted for recognizing the legal standing of
the respondents as heirs to bring the suit.

Pending the filing of administration proceedings, the heirs without doubt have legal personality to
bring suit in behalf of the estate of the decedent in accordance with the provision of Article 777 of
the New Civil Code "that (t)he rights to succession are transmitted from the moment of the death
of the decedent." The provision in turn is the foundation of the principle that the property, rights
and obligations to the extent and value of the inheritance of a person are transmitted through his
death to another or others by his will or by operation of law.25

Even if administration proceedings have already been commenced, the heirs may still bring the
suit if an administrator has not yet been appointed. This is the proper modality despite the total
lack of advertence to the heirs in the rules on party representation, namely Section 3, Rule
326 and Section 2, Rule 87 27 of the Rules of Court. In fact, in the case of Gochan v. Young,28 this
Court recognized the legal standing of the heirs to represent the rights and properties of the
decedent under administration pending the appointment of an administrator. Thus:

The above-quoted rules,29 while permitting an executor or administrator to represent or


to bring suits on behalf of the deceased, do not prohibit the heirs from representing the
deceased. These rules are easily applicable to cases in which an administrator has
already been appointed. But no rule categorically addresses the situation in which
special proceedings for the settlement of an estate have already been instituted, yet no
administrator has been appointed. In such instances, the heirs cannot be expected to
wait for the appointment of an administrator; then wait further to see if the
administrator appointed would care enough to file a suit to protect the rights and the
interests of the deceased; and in the meantime do nothing while the rights and the
properties of the decedent are violated or dissipated.

Even if there is an appointed administrator, jurisprudence recognizes two exceptions, viz: (1) if
the executor or administrator is unwilling or refuses to bring suit; 30 and (2) when the administrator
is alleged to have participated in the act complained of 31 and he is made a party
defendant.32 Evidently, the necessity for the heirs to seek judicial relief to recover property of the
estate is as compelling when there is no appointed administrator, if not more, as where there is
an appointed administrator but he is either disinclined to bring suit or is one of the guilty parties
himself.
possession. Pursuant to said motion, the trial court, on March 8, 1954, issued an order requiring
Cirilo Modesto to deliver to the administrator personal properties listed in the order, such as one
narra aparador, 1 desk, 1 looking glass 5 x 3 ft., 1 trunk containing clothes, 1 bicycle, 11 pieces of
steel matting and money said to have been taken from a deposit made with the Chief of Police in
the amount of P1,700.00. Thereafter, on April 27, 1954, a writ of execution was issued and on
May 10, 1955 as alias writ of execution was also issued by the trial court. By virtue of said writ of
execution the provincial Sheriff issued a Notice of Attachment against the real property described
in Certificate of Title no. 30167 of the Register of Deeds of Leyte and under Tax Assessment in
the name of Cirilo Modesto.

On June 2, 1955 Cirilo Modesto filed an Urgent Motion to Set Aside the Writ of Execution and for
a Writ of Preliminary Injunction, which motion was opposed by Jesus. On June 4, 1955 the
Provincial Sheriff sold at public auction the real property above-mentioned to the highest and only
bidder Jesus Modesto for P2,454 and on June 6, 1956, the Provincial Sheriff issued a Sheriff's
Certificate of Final Sale in favor of Jesus. On June 29, 1956 Jesus Modesto filed a motion for a
writ of Possession. On July 11, 1956 Cirilo filed his Motion for Reconsideration of the order dated
June 4 which the trial court denied. On August 3, 1956, in pursuance of the motion for a Writ of
Possession, the Provincial Sheriff issued a notification to Cirilo placing Jesus in possession of the
real property sold to him. Cirilo then filed the present petition for certiorari to annul the
proceedings had before the Court of First Instance of Leyte.

The trial court, in issuing its order of March 8, 1954 requiring Cirilo to deliver the properties listed
therein to Jesus as administrator, supposedly acted under the provisions of Section 6, Rule 88 of
CIRILO MODESTO, petitioner, vs. JESUS MODESTO, ET AL., ETC., respondents. the Rules of Court which reads as follows:

MONTEMAYOR, J.: SEC. 6. Proceedings when property concealed, embezzled, or fraudulently conveyed.
If an executor or administrator, heir, legatee, creditor, or other individual interested
in the estate of the deceased, complains to the court having jurisdiction of the estate
This is a petition for certiorari and for a writ of preliminary injunction filed by Cirilo Modesto to set that a person is suspected of having concealed, embezzled, or conveyed away any of
aside the order of the Court of First Instance of Leyte dated March 8, 1954, the writ of execution the money, goods or chattels of the deceased, or that such person has in his
dated April 27, 1954 as well as the alias writ of execution dated November 10, 1955. possession or has knowledge of any deed, conveyance, bond, contract, or other
writing which contains evidence of or tends to disclose the right, title, interest, or claim
The facts in this case are not in dispute. It would appear that Bruno Modesto died leaving several of the deceased to real or personal estate, or the last will and testament of the
heirs, among them, Cirilo Modesto and Jesus Modesto. In the course of the intestate deceased, the court may cite such suspected person to appear before it and may
proceedings, Jesus Modesto, acting as administrator of the estate of Bruno, filed on November 7, examine him on oath on the matter of such complaint; and if the person so cited
1953, in the Court of First Instance of Tacloban, Leyte, a motion to cite and examine under oath refused to appear, or to answer on such examination or such interrogatories as are put
several persons, especially Cirilo Modesto, regarding properties concealed, embezzled or to him, the court may punish him for contempt, and may commit him to prison until he
fraudulently conveyed. On December 7, 1953 the court issued an order appointing the Provincial submits to the order to the court. The interrogatories put to any such person, and his
Sheriff of Leyte and the Chief of Police of Tanawan, Leyte, as joint commissioners, to verify and answers thereto, shall be in writing and shall be filed in the clerk's office.
ascertain persons who were holding, claiming or possessing properties belonging to the estate of
the deceased Bruno Modesto. In said motion of Jesus Modesto he listed said properties In this trial court committed error because the purpose of the section above-reproduced, which
supposed to belong to the estate, classified as follows: jewels under items 1, 2 and 3; furniture section was taken from Section 709 of Act 190, is merely to elicit information or to secure
and other personal properties under items 4-10; the 11th item is supposed to be cash taken from evidence from those persons suspected of having possessed or having knowledge of the
a deposit in the Office of the Chief of Police of Tanawan, Leyte, after taking funeral and other properties left by a deceased person, or of having concealed, embezzled or conveyed any of the
expenses, in the amount of P1,700; and real properties under items 12-26. said properties of the deceased. In such proceedings the trial court has no authority to decide
whether or not said properties, real or personal, belong to the estate or to the persons examined.
On January 12, 1954, the joint commissioners submitted their report. On March 1, 1954 Jesus if, after such examination there is good reason to believe that said person or persons examined
Modesto, administrator filed a motion in court to require Cirilo Modesto to turn over to him as are keeping properties belonging to the estate, then the next step to be taken should be for the
administrator the personal properties belonging to the intestate supposed to be in Cirilo's administrator to file an ordinary action in court to recover the same (Alafriz vs. Mina, 28 Phil., 137;
Cui vs. Piccio, 91 Phil., 713; 48 Off. Gaz. [7] 2769; Changco vs. Madrelejos, 12 Phil., 543; In the proceedings for the settlement of the intestate estate of the decedent spouses, Rafael
Guanco vs. PNB, 54 Phil., 244, cited in Moran's Rules of Court, Vol. 2 1957 Edition, pp. 443-444). Valera and Consolacion Sarrosa 1 in which Eumelia Cabado and Pompiro Valera had been
appointed administrators 2 the heirs of a deceased daughter of the spouses, Teresa Garin, filed
a motion asking that the Administratrix, Cabado, be declared in contempt for her failure to render
The order requiring Cirilo to deliver the properties and cash stated in the order, as belonging to
an accounting of her administration. 3 Cabado replied that no accounting could be submitted
the estate, said that Cirilo was supposed to have admitted having received or taken possession of
unless Jose Garin, Teresa's husband and the movant heirs' father, delivered to the administrator
said properties after the death of Bruno. This statement or findings of the lower court is not
an 18-hectare fishpond in Baras, Barotoc Nuevo, Iloilo, belonging to the estate and she in turn
supported by the evidence on record. As a matter of fact, in the answer of Cirilo to the motion of
moved for the return thereof to the estate, 4 so that it might be partitioned among the decedents'
the administrator, he claimed that although he held the aparador mentioned in Item 4 in the list
heirs. Jose Garin opposed the plea for the fishpond's return to the estate, asserting that the
properties, nevertheless, said furniture belonged to their parents and so Bruno Modesto had only
property was owned by his children and this was why it had never been included in any inventory
1/6 share; that he, Cirilo, did not have the looking glass mentioned in the motion because the
of the estate.
same had been taken by Jesus himself, neither did he have the desk in question; that though he
held a trunk, it was empty and only contained clothes which were torn; that the bicycle in question
was in the possession of Mauricio Modesto, the nephew of Bruno; that he, Cirilo, did not keep the The Court, presided over by Hon. Judge Midpantao Adil, viewed the Garin Heirs' motion for
11 pieces of steel matting; neither did he ever receive the amount of P1,700.00 supposed to have contempt, as well as Cabado's prayer for the fishpond's return to the estate, as having given rise
been deposited in the office of the Chief of Police. But, even if Cirilo had admitted possession of to a claim for the recovery of an asset of the estate within the purview of Section 6, Rule 87 of the
the properties which he was required by the court to deliver to Jesus, still it was necessary for the Rules of Court. 5 It accordingly set said incidents for hearing during which the parties presentee
ordinary courts, not the probate court, to determine the title and ownership of said properties. evidence in substantiation of their positions. 6 Thereafter, the Court issued an Order dated
September 17, 1980 commanding the Heirs of Teresa Garin "to reconvey immediately the
fishpond in question * * to the intestate Estate of the Spouses. 7
In view of the foregoing, the petition for certiorari is hereby granted and the order of the trial court
of March 8, 1954, the Writ of Execution of April 27, 1954 and the alias Writ of Execution of May
10, 1955, and of course the sale made by the Sheriff of the real property covered by Certificate of The Order was predicated upon the Court's factual findings mainly derived from the testimony of
Title No. 30167 are set aside. Respondent Jesus Modesto will pay the costs. the two administrators that:

1. the fishpond originally belonged to the Government, and had been given in lease to Rafael
Valera in his lifetime;

2. Rafael Valera ostensibly sold all his leasehold rights in the fishpond to his daughter, Teresa
Garin; but the sale was fictitious, having been resorted to merely so that she might use the
property to provide for her children's support and education, and was subject to the resolutory
term that the fishpond should revert to Rafael Valera upon completion of the schooling of Teresa
Garin's Children; and

3. with the income generated by the fishpond, the property was eventually purchased from the
Government by the Heirs of Teresa Garin, collectively named as such in the Original Certificate of
POMPILLO VALERA and EUMELIA VALERA CABADO, petitioners, vs. HON. JUDGE SANCHO Title issued in their favor.
Y. INSERTO, in his capacity as Presiding Judge, Court of First Instance of Iloilo, Branch 1, and
MANUEL R. FABIANA, respondents. Upon these facts, Judge Adil ruled that an implied trust had been created, obligating Teresa
Garin's heirs to restore the property to the Valera Spouses' Estate, in accordance with Articles
NARVASA, J.: 1453 and 1455 of the Civil Code providing as follows:

Conflicting claims over a fishpond asserted by the administrators of the estate of deceased Article 1453. When property is conveyed to a person in reliance upon his
spouses, on the one hand, and by the heirs of a daughter of said spouses and their lessee, on declared intentions to hold it for, or transfer it to another or the grantor, there
the other, have given rise to the proceedings now docketed in this Court as (1) G.R. No. 56504 is an implied trust in favor of the person for whose benefit it is
and (2) G.R. Nos. 59867-68. contemplated.

Sp. Proc. No. 2223, CFI, Iloilo Article 1455. When any trustee, guardian or other person holding a fiduciary
relationship uses trust funds for the purchase of property and causes a
conveyance to be made to him or to a third person, a trust is established by G.R. No. 56504
operation of law in favor of the person to whom the fund belongs.
Fabiana thereupon instituted a separate action for injunction and damages, with application for a
The Court also held that the action for reconveyance based on constructive trust had not yet preliminary injunction. This was docketed as Civil Case No. 13742 and assigned to Branch I of
prescribed, Cabado's motion for the fishpond's reversion to the estate having been filed well the Iloilo CFI, Hon. Sancho Y. Inserto, presiding. 18 Judge Inserto issued a temporary restraining
within ten (10) years from June 30, 1980, the date on which Teresa Garin's heirs allegedly order enjoining estate administrators from disturbing Fabiana in the possession of the fishpond,
acquired title over it. 8 as lessee. 19

There seems little doubt, however, that the Court's pronouncement regarding the estate's title to The estate administrators filed a motion to dismiss the complaint and to dissolve the temporary
the fishpond was merely provisional in character, made solely to determine whether or not the restraining order, averring that the action was barred by the Probate Court's prior judgment which
fishpond should be included in the inventory of estate assets. So it was evidently understood by had exclusive jurisdiction over the issue of the lease, and that the act sought to be restrained had
the administrators who have more than once asserted that "the probate court has jurisdiction to already been accomplished, Fabiana having voluntarily surrendered possession of the fishpond
determine the ownership of the fishpond for purposes of inclusion in the inventory of the to the sheriff. 20 When Judge Inserto failed to act on their motion within what the administrators
properties. 9 So it was made clear by the Probate Court itself which, at the outset, stated that the believed to be a reasonable time, considering the circumstances of the Case, the administrators
hearing on the matter 10 was meant "merely to determine whether or not the fishpond should be filed with the Supreme Court a special civil action for certiorari and mandamus, with a prayer for
included as part of the estate and whether or not the person holding it should be made to deliver Preliminary mandatory injunction and temporary restraining order, which was docketed as G.R.
and/or return ** (it) to the estate. 11 And so it was emphasized in another Order, denying No. 56504. 21 In their petition, the administrators contended that Branch I of the Iloilo CFI (Judge
reconsideration of the Order of September 17, 1980, which states that: Inserto, presiding) could not and should not interfere with the Probate Court (Branch I I, Judge
Adil, presiding) in the legitimate exercise of its j jurisdiction over the proceedings for the
Settlement of the estate of the Valera Spouses.
**(i)t is never the intendment of this court to write a finish to the issue of
ownership of the fishpond in dispute. The movants may pursue their claim
of ownership over the same in an ordinary civil action. Meanwhile, however, G.R. Nos. 59867-68
it is the finding of this probate court that the fishpond must be delivered to
the estate.
In the meantime, Jose Garin having filed a motion for reconsideration of the above mentioned
order of Judge Adil (declaring the estate to be the owner of the fishpond), in which he asserted
Clearly, there is no incompatibility between the exercise of the power of this that the Probate Court, being of limited jurisdiction, had no competence to decide the ownership
probate court under Section 6 in relation to Section 7, both of Rule 87, and of the fishpond, 22 which motion had been denied 23-filed a notice of appeal from said Order. 24 But
the contention of the movants that the proper forum to settle the issue of he quickly abandoned the appeal when, as aforestated 25 Judge Adil authorized execution of the
ownership should be in a court of general jurisdiction. 12 order pending appeal, instead, he initiated a special action for certiorari prohibition and
mandamus )with prayer for preliminary injunction) in the Court of Appeals, therein docketed as
CA-G. R. No. SP-1154-R.
Judge Adil afterwards granted the administrators' motion for execution of the order pending
appeal, and directed the sheriff to enforce the direction for the Garin Heirs to reconvey the
fishpond to the estate. 13 The corresponding writ was served on Manuel Fabiana, the Fabiana followed suit. He instituted in the same Court of Appeals his own action for certiorari and
supposed encargado or caretaker. Voicing no objection to the writ, and declaring to the sheriff injunction, docketed as CA-G.R. No. SP-11577-R; this, notwithstanding the pendency in judge
that he was a mere lessee, 14 Fabiana voluntarily relinquished possession of the fishpond to the Inserto's sala of the case he had earlier filed. 26
sheriff. The latter, in turn, delivered it to the administrators. 15
These two special civil actions were jointly decided by the Court of Appeals. The Court granted
Later however, Fabiana filed a complaint-in-intervention with the Probate Court seeking the petitions and ruled in substance that:
vindication of his right to the possession of the fishpond, based on a contract of lease between
himself, as lessee, and Jose Garin, as lessor. 16 But Judge Adil dismissed his complaint on the
1. The Probate Court indeed possessed no jurisdiction to resolve the issue of ownership based
following grounds, to wit:
merely on evidence adduced at the hearing of a "counter-motion" conducted under Section 6,
Rule 87;
(1) it was filed out of time because not only had judgment been rendered, but execution as
regards transfer of possession had already taken place; and
2. The original and transfer certificates of title covering the fishpond stand in the names of the
Heirs of Teresa Garin as registered owners, and therefore no presumption that the estate owns
(2) the lease contract had not been registered and hence was not binding as against the the fishpond is warranted to justify return of the property on the theory that it had merely been
estate. 17 borrowed; and
3. Even assuming the Probate Court's competence to resolve the ownership question, the estate suspected of having possession or knowledge thereof, or of having concealed, embezzled, or
administrators would have to recover possession of the fishpond by separate action, in view of conveyed away the same. Of course, if the latter lays no claim to the property and manifests
the lessee's claim of right to superior possession, as lessee thereof. willingness to tum it over to the estate, no difficulty arises; the Probate Court simply issues the
appropriate direction for the delivery of the property to the estate. On the other hand, if the third
person asserts a right to the property contrary to the decedent's, the Probate Court would have
From this joint judgment, the administrators have taken separate appeals to this Court
no authority to resolve the issue; a separate action must be instituted by the administrator to
by certiorari, 27 docketed as G.R. Nos. 59867 and 59868. They ascribe to the Appellate Court the
recover the property. 34
following errors, viz: Page 542

Parenthetically, in the light of the foregoing principles, the Probate Court could have admitted and
1) in holding that the Probate Court (Judge Adil, Presiding) had no jurisdiction to take cognizance
taken cognizance of Fabiana's complaint in intervention after obtaining the consent of all
of and decide the issue of title covering a fishpond being claimed by an heir adversely to the
interested parties to its assumption of jurisdiction over the question of title to the fishpond, or
decedent spouses;
ascertaining the absence of objection thereto. But it did not. It dismissed the complaint in
intervention instead. And all this is now water under the bridge.
2) in ruling that it was needful for the administrators to file a separate action for the recovery of
the possession of the fishpond then in the hands of a third person; and
Possession of Fishpond Pending

3) in sanctioning the act of a CFI Branch in interfering with and overruling the final judgment of
Determination of Title Thereto
another branch, acting as probate Court, and otherwise frustrating and inhibiting the enforcement
and implementation of said judgment.
Since the determination by the Probate Court of the question of title to the fishpond was merely
provisional, not binding on the property with any character of authority, definiteness or
Jurisdiction of Probate Court
permanence, having been made only for purposes of in. conclusion in the inventory and upon
evidence adduced at the hearing of a motion, it cannot and should not be subject of execution, as
As regards the first issue, settled is the rule that a Court of First Instance (now Regional Trial against its possessor who has set up title in himself (or in another) adversely to the decedent, and
Court), acting as a Probate Court, exercises but limited jurisdiction, 28 and thus has no power to whose right to possess has not been ventilated and adjudicated in an appropriate action. These
take cognizance of and determine the issue of title to property claimed by a third person considerations assume greater cogency where, as here, the Torrens title to the property is not in
adversely to the decedent, unless the claimant and all the Other parties having legal interest in the decedents' names but in others, a situation on which this Court has already had occasion to
the property consent, expressly or impliedly, to the submission of the question to the Probate rule.
Court for adjudgment, or the interests of third persons are not thereby prejudiced, 29 the reason
for the exception being that the question of whether or not a particular matter should be resolved
In regard to such incident of inclusion or exclusion, We hold that if a
by the Court in the exercise of its general jurisdiction or of its limited jurisdiction as a special court
property covered by Torrens title is involved, the presumptive
(e.g., probate, land registration, etc., is in reality not a jurisdictional but in essence of procedural
conclusiveness of such title should be given due weight, and in the absence
one, involving a mode of practice which may be waived. 30
of strong compelling evidence to the contrary, the holder thereof should be
consider as the owner of the property in controversy until his title is nullified
The facts obtaining in this case, however, do not call for the application of the exception to the or modified in an appropriate ordinary action, particularly, when as in the
rule. As already earlier stressed, it was at all times clear to the Court as well as to the parties that case at bar, possession of the property itself is in the persons named in the
if cognizance was being taken of the question of title over the fishpond, it was not for the purpose title. 35
of settling the issue definitely and permanently, and writing " finis" thereto, the question being
explicitly left for determination "in an ordinary civil action," but merely to determine whether it
Primary Jurisdiction over Title issue in
should or should not be included in the inventory. 31 This function of resolving whether or not
property should be included in the estate inventory is, to be sure, one clearly within the Probate
Court's competence, although the Court's determination is only provisional in character, not Court Taking Cognizance of Separate Action
conclusive, and is subject to the final decision in a separate action that may be instituted by the
parties. 32
Since, too, both the Probate Court and the estate administrators are one in the recognition of the
proposition that title to the fishpond could in the premises only be appropriately determined in a
The same norm governs the situation contemplated in Section 6, Rule 87 of the Rules of Court, separate action, 36 the actual firing of such a separate action should have been anticipated, and
expressly invoked by the Probate Court in justification of its holding a hearing on the issue arising should not therefore have come as a surprise, to the latter. And since moreover, implicit in that
from the parties' conflicting claims over the fishpond. 33 The examination provided in the cited recognition is also the acknowledge judgment of the superiority of the authority of the court in
section is intended merely to elicit evidence relevant to property of the decedent from persons which the separate action is filed over the issue of title, the estate administrators may not now be
heard to complain that in such a separate action, the court should have issued orders necessarily
involved in or flowing from the assumption of that jurisdiction. Those orders cannot in any sense
be considered as undue interference with the jurisdiction of the Probate Court. Resulting from the
exercise of primary jurisdiction over the question of ownership involving estate property claimed
by the estate, they must be deemed superior to otherwise contrary orders issued by the Probate
Court in the exercise of what may be, regarded as merely secondary, or provisional, jurisdiction
over the same question.

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

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


LOPEZ, and OSCAR M. LOPEZ, Petitioners, vs. OFFICE OF THE OMBUDSMAN, ROBERTO S.
BENEDICTO, EXEQUIEL B. GARCIA, MIGUEL V. GONZALES, and SALVADOR (BUDDY)
TAN, Respondents.

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 a) Law
AS RESPONDENTS SIMPLY BECAUSE THEY MET THEIR UNTIMELY DEMISE DURING THE
PENDENCY OF THE CASE.3
b) Contracts

Before anything else, we note that petitioners filed a Motion to Refer the Case to the Court en
c) Quasi-contracts
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 d) xxx xxx xxx
Tan who have both died, to prosecute their possible civil liability therefor, present novel questions
of law warranting resolution by the Court en banc. e) Quasi-delicts

In the main, petitioners argue that the Decision is contrary to law because: (1) the ratification of 3. Where the civil liability survives, as explained in Number 2 above, an action for
the June 8, 1973 letter-agreement is immaterial to the determination of respondents criminal recovery thereof may be pursued but only by filing a separate civil action and subject
liability for the aforestated felonies in the RPC; and (2) the very case cited in our Decision, i.e. to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as amended. This
People v. Bayotas,5 allows for the continuation of a criminal case to prosecute civil liability based separate civil action may be enforced either against the executor/administrator or the
on law and is independent of the civil liability arising from the crime. estate of the accused, depending on the source of obligation upon which the same is
based as explained above.
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 4. Finally, the private offended party need not fear a forfeiture of his right to file this
respondent Miguel V. Gonzales belatedly informed this Court of his clients demise on July 20, separate civil action by prescription, in cases where during the prosecution of the
2007.6 Hence, as to Gonzales, the case must also be dismissed.1avvphi1 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
Contrary to petitioners assertion, their motion for reconsideration does not contain a novel deemed interrupted during the pendency of the criminal case, conformably with
question of law as would merit the attention of this Court sitting en banc. We also find no cogent provisions of Article 1155 of the Civil Code, that should thereby avoid any
reason to reconsider our Decision. apprehension on a possible [de]privation of right by prescription.

First and foremost, there is, as yet, no criminal case against respondents, whether against those From the foregoing, it is quite apparent that Benedicto, Tan, and Gonzales, who all died during
who are living or those otherwise dead. 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
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, Second, and more importantly, we dismissed the petition for certiorari filed by petitioners because
harmonized the rules on the extinguished and on the subsisting liabilities of an accused who dies. they failed to show grave abuse of discretion on the part of the Ombudsman when he dismissed
We definitively ruled: 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
From this lengthy disquisition, we summarize our ruling herein:
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
1. Death of an accused pending appeal of his conviction extinguishes his criminal jurisprudence. The determination of whether there was grave abuse of discretion does not, in any
liability as well as the civil liability based solely thereon. As opined by Justice way, constitute a novel question of law.
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
We first pointed out in our Decision that the complaint-affidavits of petitioners, apart from a
the offense committed, i.e., civil liability ex delicto in senso strictiore."
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
2. Corollarily, the claim for civil liability survives notwithstanding the death of accused, sufficient ground to engender a well-founded belief that crimes have been committed and that
if the same may also be predicated on a source of obligation other than delict. Article respondents, namely, Gonzales and Garcia, are probably guilty thereof and should be held for
1157 of the Civil Code enumerates these other sources of obligation from which the trial. Certainly, no grave abuse of discretion can be imputed to the Ombudsman that would
civil liability may arise as a result of the same act or omission: warrant a reversal of his Resolution.
The charges of individual petitioners Eugenio, Jr., Oscar and Augusto Almeda against xxxx
respondents, Gonzales and Garcia, contained in their respective complaint-affidavits simply
consisted of the following:
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"
1. Complaint-affidavit of Eugenio, Jr. 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
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 From the foregoing, it is beyond cavil that there is no reason for us to depart from our policy of
Filipino took place on July 7, 1976 between Senators Taada and Fernandez, who brought along non-interference with the Ombudsmans finding of probable cause or lack thereof. On the
Atty. Miguel Gonzales, a close associate and lawyer of Benedicto and an officer of KBS. 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.
xxxx
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
38.2. The illegal takeover of ABS-CBN stations, studios and facilities, and the loss and/or
the letter-agreement. Petitioners, desperate to attach criminal liability to respondents acts,
damages caused to our assets occurred while Benedicto, Exequiel Garcia, Miguel Gonzales, and
specifically to respondent Benedicto, alleged in their complaint-affidavits that Benedicto forced,
Salvador Tan were in possession, control and management of our network. Roberto S. Benedicto
coerced and intimidated petitioners into signing the letter-agreement. In other words, petitioners
was the Chairman of the Board of KBS-RPN and its Chief Executive Officer (CEO), to whom most
disown this letter-agreement that they were supposedly forced into signing, such that this resulted
of the KBS-RPN officers reported while he was in Metro Manila. Miguel Gonzales, the Vice-
in a violation of Article 298 of the RPC (Execution of Deeds by means of Violence or Intimidation).
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
However, three elements must concur in order for an offender to be held liable under Article 298:
2. Complaint-affidavit of Oscar
(1) that the offender has intent to defraud another.
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 (2) that the offender compels him to sign, execute, or deliver any public instrument or
KBS/RPN group; Miguel Gonzales and Exequiel Garcia, close colleagues and business partners document.
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.
(3) that the compulsion is by means of violence or intimidation. 12

xxxx
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
38. Senator Estanislao Fernandez, in representation of Benedicto, met with Senator Taada at and invoked the provisions thereof. In fact, petitioners wanted respondents to honor the letter-
the Club Filipino on June 1976. Discussions were had on how to arrive at the "reasonable rental" agreement and to pay rentals for the use of the ABS-CBN facilities. By doing so, petitioners
for the use of ABS stations and facilities. A second meeting at Club Filipino took place on July 7, effectively, although they were careful not to articulate this fact, affirmed their signatures in this
1976 between Senators Taada and Fernandez, who brought along Atty. Mike Gonzales, a close letter-agreement.
associate and friend of Benedicto and an officer of KBS. 10
True, ratification is primarily a principle in our civil law on contracts. Yet, their subsequent acts in
3. Complaint-affidavit of Augusto Almeda 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
21.1. Barely two weeks from their entry into the ABS Broadcast Center, KBS personnel started
the crimes they are charged with. Sadly, petitioners failed in this regard because, to reiterate, they
making unauthorized withdrawals from the ABS Stock Room. All these withdrawals of supplies
effectively ratified and advanced the validity of this letter-agreement in their claim against the
and equipment were made under the orders of Benedicto, Miguel Gonzales, Exequiel Garcia, and
estate of Benedicto.
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.
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
GAVINO ALDAMIZ, as administrator of the estate of the deceased Santiago Rementeria y
works against their contention, challenging the validity of the letter-agreement. Now, petitioners
Aldamizcogeascoa, petitioner, vs. THE JUDGE OF THE COURT OF FIRST INSTANCE OF
must live with the consequences of their choice.
MINDORO, THE PROVINCIAL SHERIFF OF MINDORO and JUAN L. LUNA, respondents.

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

This is a petition for certiorari filed by Gavino Aldamiz, administrator of the testate of the
deceased Santiago Rementeria y Aldamizcogeascoa, to set aside the order of the Court of First
Instance of Mindoro issued in the said testate estate proceedings, fixing the amount of fees for At the time respondent's evidence was submitted to the court, the interested parties who were
respondent Juan L. Luna, as attorney for said administrator. residing in the Philippines were Gavino Aldamiz and his brother Jose Aldamiz. The others were
then residing in Spain. No written claim had ever been filed for respondent's fees, and the
interested parties had not been notified thereof nor of the hearing, not even Gavino Aldamiz who
The facts material to the issues raised in the petition are as follows:
did not know when he was called to testify that he would testify in connection with respondent's
fees. The Court, after considering the whole evidence presented, issued its order of January 21,
Santiago Rementeria y Aldamizcogeascoa, the decedent was a Spaniard and member of the 1947, awarding respondent Attorney Luna, in payment of his professional services, an aggregate
commercial partnership "Aldamiz y Rementeria." The other members were the brothers, Gavino sum of P28,000 in the following manner:
and Jose, surnamed Aldamiz. Santiago Rementeria died in Spain in 1937, and probate
proceeding No. 705 was instituted in the same year in the Court of First Instance of Mindoro by
1. For the institution, preparation of the pleadings in the voluminous probate case,
Gavino Aldamiz represented by Atty. Juan L. Luna. Gavino Aldamiz was appointed administrator
allowance of the will, project of partition and the final closing of this proceeding,
and as such was represented by respondent Atty. Juan Luna up to January 21, 1947, when the
P15,000;
order complained for was issued. In that order it is said that "said attorney is the one who
instituted this testate proceeding ten years ago and has from its incipiency to the present stage of
the proceedings actively intervened in the same."lawphi1.net 2. For the registration of a parcel of land of seventy-eight hectares in favor of the
testate, P5,000;
On January 15, 1947, After ten years from the date of his appointment, Gavino Aldamiz, as
administrator, through his attorney, Juan L. Luna, submitted his accounts for the years 1944, 3. For three naturalization cases at the rate of P1,000 each, P3,000; and
1945 and 1946 and also a project of partition with a view to closing the proceedings. On said
date, the court approved the accounts by refused to approve the project of partition unless all
4. For services rendered in the deduction of inheritance tax from P28,000 to P433.40
debts including attorney's fees be first paid. In the project of partition, it was expressly stated that
P5,000.
attorney's fees, debts and incidental expenses would be proportionately paid by the beneficiaries
after the closure of the testate proceedings, but the court refused to sanction this clause of the
project. It is for this reason that right then and there, Attorney Luna, to comply with the wishes of The Court ordered payment of these amounts within thirty days. Petitioner Gavino Aldamiz
the court, without previously preparing and filing a written petition to have his professional fees received copy of this order on February 21,1948. Out of the total amount of P28,000, petitioner
fixed, and without previous notice to all the interested parties, submitted evidence of his services was able to pay P5,000 only, and upon his failure to pay the balance of P23,000 after several
and professional standing so that the court might fix the amount of his compensation and the demands made upon him by respondent attorney, the latter on April 17, 1948, filed an ex-parte
administrator may make payment thereof. This failure to file a written claim and to notify the motion for execution which was granted by the respondent Court on April 19,1948. Pursuant to
interested parties thereof was not due to bad faith or fraudulent purpose but to an honest belief the order of execution on two parcels of land belonging, not to the testate estate of Santiago
on the part of the respondent attorney that such requirements were not necessary under the Rementeria y Aldamizcogeascoa, but to the commercial partnership "Aldamiz y Rementeria" with
circumstance. a total area of three hundred fifty seven(357) hectares, more or less, assessed at one hundred
eighty-two thousand, three hundred and sixty pesos (P182,360), which was sold at a public
auction on July 20,1948, in favor of respondent attorney for only twenty thousand
In this connection, it must be stated, in justice to Attorney Luna, that during the ten years he
pesos(P20,000). This sale was made after preliminary injunction had been issued by this court in
served as attorney for the administrator and during the 25 years as legal consultants to Santiago
the instant case.
Rementeria, Gavino Aldamiz and Jose Aldamiz individually and as commercial partnership under
the firm name "Aldamiz y Rementeria," he never took the trouble of charging them for his
professional services, thus showing disinterested and extreme liberality on his part due to We believe and so hold that the order of the respondent court issued on January 21,1948, fixing
friendship and other personal considerations toward his clients. And it is to be observed further the amount of respondent attorney's fees is null and void. The correct procedure for the collection
that even after ten years of active work in the testate proceedings, when he wanted to close the of attorney's fees, is for the counsel to request the administrator to make payment and file an
same and it was then time for him to demand payment for his services, he showed no interest in actin against him in his personal capacity and not as an administrator should he fail to pay
demanding preferring to leave the matter to the future negotiation or understanding with the (Palileo vs. Mendoza, G.R. No. 47106, 40 Off. Gaz. [8th Supp.], 132.) 1 If the judgment is rendered
interested parties. And when the amount of his fees was fixed by the court and Gavino Aldamiz against the administrator and he pays, he may include the fees so paid in his account to the
asked him for a substantial reduction, he answered that it was not he who had fixed the amount court. (Uy Tioco vs. Imperial, 53 Phil., 802.) The attorney also may, instead of bringing such an
but the court, and advised his client to file a motion for reconsideration, with the assurance that action, file a [petition in the testate or intestate proceeding "asking that the court, after notice to all
he would offer no objection to any reduction in amount and to any extension of the time for paying persons interested, allow his claim and direct the administrator to pay it as an expense of
what might be granted by the court. And again, when Gavino Aldamiz paid him P5,000 on administration." (Emphasis ours.) (Escueta vs. Sy Juilliong, 5 Phil., 405.)
account, respondent attorney told him that he would be satisfied with any additional amount that
Gavino might later desire to pay him. Only subsequent occurrences which proved distasteful to In the instance case, as above stated, no written petition for the payment of attorney's fees has
the parties, led them to take steps which culminated in the filing of the instant civil action. ever been filed by the respondent attorney and the interested parties had not been previously
notified thereof nor of the hearing held by the court. Consequently, the order issued by the
respondent court on January 21, 1947, and all subsequent orders implementing it, are null and June 28, 1948, asking that the order of January 21, 1947, and the order of execution of April
void, as having been issued an excess of jurisdiction. 19,1948 be set aside, but both motions were denied and the last order of denial is dated July
1,1948. The petition in the instant case was filed on July 17, 1948. We hold that under the
circumstances, particularly the fiduciary relation between petitioner and respondent attorney, the
We also hold that the order of execution issued on April 19,1948, is null and void, not only
former is not guilty of laches.
because it was intended to implement the order of January 21, 1947, which in itself was null and
void, but because a writ of execution is not the proper procedure allowed by the Rules of the
Court for the payment of debts and expenses of administration. The proper procedure is for the Respondents maintain that the case for the petitioner is one of pure technicality, premised upon a
court to order the sale of personal estate or the sale of mortgaged of real property of the supposed failure of the respondent attorney to follow a supposed procedure. It is said that the
deceased and all debts or expenses of administration should be paid out of the proceeds of the amount of P28,000 fixed and allowed by the respondent court as professional fees of the
sale or mortgage. The order for the sale or mortgage should be issued upon motion of the respondent attorney is not unconscionable or unreasonable because the entire estate was worth
administrator and with the written notice to all the heirs, legatees and devisees residing in the P315,112 and now it is worth about half a million pesos because of many improvements existing
Philippines, according to Rule 89, section 3, and Rule 90, section 2. And when sale or mortgage thereon. It appears, however, that due to lack of notice upon the interested parties mistakes have
of real estate is to be made, the regulations contained in Rule 90, section 7, should be complied been committed by but the court which could have been avoided. For instance, the court awarded
with. fees for services rendered not to the estate but to the other persons, such as the supposed
services in connection with the petitions for naturalization filed in behalf of Gavino Aldamiz and
Jose Aldamiz and the application for registration of a parcel of land of 78 hectares filed not in
Execution may issue only where the devisees, legatees or heirs have entered into possession of
favor of the testate estate but of the partnership "Aldamiz y Rementeria." These services
their respective portions in the estate prior to settlement and payment of the debts and expenses
evidently could not be charged against the estate of Santiago Rementeria. And furthermore, due
of administration and it is later ascertained that there are such debts and expenses to be paid, in
to lack of preparation on the part of respondent attorney, it appears that while he was testifying to
which case "the court having jurisdiction of the estate may, by order for that purpose, after
his professional services he was apparently not sure of being able to recite them all for at the end
hearing, settle the amount of their several liabilities, and order how much and in what manner
of his testimony he said: "Son los servicios que me acuerdo ahora. . . ." Had he been afforded
each person shall contribute, and may issue execution if circumstances require" (Rule 89, section
ample time to recollect the nature and details of his long and continuos services, considering his
6; see also Rule 74, section 4; Emphasis ours). And this is not the instant case.
high professional standing as recited by the respondent court in its disputed order and the
increased value of the estate then, perhaps, a more reasonable compensation would have been
It is alleged by respondent that petitioner is guilty of laches. True that petitioner failed to appeal fixed, or at least, the court could have rendered a decision with full knowledge of all the facts and
from the order of January 21, 1947, within the time provided by the Rules and the instant petition with justice to all the parties concerned.
for certiorari was filed one (1) year, four (4) months and fourteen (14) days after petitioner had
received a copy of said order. And we have held in Prifeta vs. David, 40 Off. Gaz., 14th Supp., p.
For all the foregoing, the order of the respondent court of January 21,1947, and all the
152, 2 that orders issued without previous notice to parties will be deemed cured if said parties fail
subsequent orders implementing it, particularly the order of execution issued by the court on April
to appeal within time provided by the rules and their appeal is lost due to their own negligence.
19, 1948, and the sale made by the sheriff on July 20,1948, in favor of respondent attorney, are
But here, aside from petitioner, there are interested parties who have never been notified of the
null and void and are hereby set aside, with costs against respondents. It is so ordered.
order complained of, and as to them, said order has not become final and executory . And with
respect to petitioner, he has not lost his appeal through his own negligence. When he received
the notice of the order of the Court fixing respondent's fees in the amount of P28,000, he
immediately wrote his lawyer a letter asking for a substantial reduction and extension of time to
pay. The lawyer answered advising him to file his motion for reconsideration within thirty days, but
he received his lawyer's letter after said period had expired. And petitioner had no other attorney
to advice him except respondent who was his adversary on the matter now in dispute. After
receiving said letter, he again sought equitable compromise with respondent attorney and later
paid him P5,000, and respondent then told him that he would be satisfied with whatever
additional amount petitioner might desire to pay him. And petitioner would perhaps have taken no
action were it not because without previous notice to him, the respondent attorney asked
authority from the court to sell two parcels of land totalling 13 hectares, for the payment of said
professional fees and later, on July 26, 1947, respondent attorney, again without previous notice
to petitioner, filed a motion for execution for the same purpose. Both motions were, however,
abandoned. But a second motion for execution was filed by respondent without petitioner's
knowledge, which was granted by the Court on April 19, 1948. Respondent Sheriff levied on two
parcels of land belonging to the partnership "Aldamiz y Rementeria" with a total area of 357
hectares and assessed at P182,360 and the sale was announced by the sheriff for July 20, 1948.
Two motions for consideration were filed by petitioner, one on June 16,1948, and the other on
1953, but denied the prayer that a portion of the estate be set aside to respond for the amount of
the contingent. Counsel for the administrators then moved to set aside the order. In an order
dated November 25, 1953, Judge Agustin P. Montesa, sitting as Judge for the Court of First
Instance of Manila, held that the civil action filed in Manila by the heirs of Laya, petitioners herein,
Civil Case No. 20867, was premature because the sentence of conviction of the driver of the bus
had not become final. The court also ordered the plaintiffs to amend their complaint within 10
days. Thereupon, the plaintiffs in said civil case (C.F.I. Manila, No. 20867) filed an amended
complaint, dated December 18, 1953.lawphi1.net

In the meantime and on January 7, 1954, the Court of First Instance of Tarlac, on a motion for
reconsideration filed by the administrators dated January 2, 1954, set aside its previous order of
December 16, 1953, admitting the contingent claim of petitioners. The reason for the admission of
the claim, according to the court, had ceased to exist and even the plaintiffs had filed the
amended complaint in the Court of First Instance of Manila, the same has not yet been acted
upon by the said court. A motion to reconsider this order of the Court of First Instance of Tarlac
having been denied, petitioners have prosecuted this appeal to Us.
Intestate Estate of the late Florencio P. Buan and Rizalina Paras Buan, deceased. BIENVENIDO
P. BUAN and A. NATIVIDAD PARAS, Co-Administrators-appellees, A consideration of the facts and the proceedings set forth above will readily show that the order of
vs. SYLVINA C. LAYA, ET AL., petitioners-appellants. the Court of First Instance of Tarlac dismissing the contingent claim is based on incorrect and
erroneous conception of a contingent claim. A contingent claim is one which, by its nature, is
necessarily dependent upon an uncertain event for its existence or validity. It may or may not
LABRADOR, J.:
develop into a valid and enforceable claim, and its validity and enforceability depending upon an
uncertain event.
Appeal from a decision of the Court of First Instance of Tarlac dated January 7, 1954, setting
aside the previous Order dated December 16, 1953, which had admitted a contingent claim filed
A 'contingent claim' against an estate within the statute providing for the settlement
by petitioners-appellants but denied a petition to set aside an amount to answer the contingent
hereof, as one where the absolute liability depends on some future event which may
claim.
never happen, and which therefore renders such liability uncertain and indeterminable.
. . It is where the liability depends on some future event after the debtor's death which
The record discloses that on December 15, 1953, petitioners herein filed a contingent claim for may or may not happen, and therefore makes Words and Phrases, p. 113.).
more than P500,000 against the intestate estate of the deceased spouses Florencio P. Buan and
Rizalina Paras Buan. The contingent claim was based on the fact that on August 3, 1952, a
A 'contingent claim' against an estate is one in which liability depends on some future
Philippine Rabbit Bus, owned and operated by the deceased spouses Buan, collided with a car in
event which may or may not occur, so that duty to pay may never become absolute.
which Juan C. Laya, Rodolfo Escosa, Jose S. Palma, and Juan de Leon, were riding; that the
collision was caused by the fact that the driver of the bus managed and drove the vehicle in a
negligent manner; that as a consequence of the collision Juan C. Laya was killed and his Whether or not the heirs of the deceased, Juan C. Laya, would succeed in the action brought in
companions suffered physical injuries. The driver of the bus was Ernesto Triguero, and he was Manila against the administrators of the estate of the deceased spouses Florencio Buan and
charged with homicide and serious physical injuries through reckless imprudence and was Rizalina P. Buan, is the uncertain event or contingency upon which the validity of the claim
sentenced therefor. The heirs of Juan C. Laya, petitioners herein, reserved the civil action for presented in the administration proceedings depends. While the said action has not yet been
damages, and on October 12, 1953, they filed an independent civil action in the Court of First finally decided or determined to the effect that the petitioners herein, heirs of the deceased Juan
Instance of Manila against the administrator of the deceased spouses Buan. The petition for the C. Laya, have no right of action against the estate of the deceased spouses Florencio P. Buan
admission of a contingent claim was accompanied with a copy of the complaint filed in the civil and Rizalina P. Buan, the contingent claim that petitioners have filed in the Court of First Instance
case above-mentioned (No. 20867, CFI Manila) and a sentence in the criminal case filed against of Tarlac in the proceedings for the administration of the deceased spouses Florencio P. Buan
Ernesto Triguero, driver of the Philippine Rabbit Bus. and Rizalina P. Buan, may not be dismissed. The order of the court dismissing the claim and
declaring that the same may again be entertained if another valid complaint by the petitioners
herein is filed in the Court of First Instance of Manila, is inconsistent with the nature and character
When the administrators learned of the filing of the contingent claim in the Court of First Instance
of a contingent claim. A contingent claim does not follow the temporary orders of dismissal of an
of Tarlac, they filed an opposition thereto on the ground that the same was not filed before the
action upon which it is based; it awaits the final outcome thereof and only said final result can
death of the spouses Florencio Buan and Rizalina Paras Buan, which took place on January 3,
cause its termination. The rules provide that a contingent claim is to be presented in the
1953, and that it was also not filed within the period prescribed by Rule 89, Section 4 of the Rules
administration proceedings in the same manner as any ordinary claim, and that when the
of Court. The Court of First Instance of Tarlac admitted the claim in an order dated December 16,
contingency arises which converts the contingent claim into a valid claim, the court should then in her personal capacity. In order to protect their interests, the plaintiffs also filed in the intestate
be informed that the claim had already matured. (Secs. 5. 9, Rule 87.) The order of the court proceedings a verified claim in intervention and a motion praying that a co-administrator of the
subject of the appeal should, therefore, be set aside. estate be appointed and the bond of the administratrix in the amount of P500 be increased to
P20,000. By their claim in intervention, the plaintiffs made of record the pendency of the aforesaid
civil case No. V-331 and prayed that the intestate proceedings be not closed until said civil case
The first order of the court admitted the claim but denied the petition for the setting aside of a
shall have been terminated.
certain amount from the estate to respond therefor. The validity of the contingent claim is
apparent; as the driver of the bus belonging to the deceased spouses, Florencio P. Buan and
Rizalina P. Buan, was found guilty of negligence, as a result of which Juan C. Laya died, the said On June 21, 1948, the administratrix filed a motion to dismiss the claim in intervention and
deceased spousesthe employers of the drivercan be made responsible, as masters of a objected to the motion for the increase of her bond and for the appointment of a co-administrator.
servant, for damages for the death of the petitioner's father. A portion of the estate should On August 4, 1948, the court issued an order denying the petition for a co-administrator but
therefore, be set aside to respond for such damages as petitioners herein may subsequently increasing the bond to P5,000, and as regards the petition not to close the intestate proceedings
recover in the action they have brought in the Court of First Instance of Manila. This amount until after civil case No. V-331 shall have been decided, the court stated that it would act thereon
should be fixed in the court below. if a motion to close the proceedings is presented in due time and is objected to by petitioners.
The court however took cognizance of the pendency of said civil case No. V-331. The
administratrix did not appeal from said order nor file a new bond and instead moved for the
For the foregoing considerations, the order of the court dismissing the contingent claim filed by
closing of the proceedings and her discharge as administratrix on the ground that the heirs had
petitioners is hereby set aside. It is hereby ordered that the claim be allowed to continue, and it is
already entered into an extrajudicial partition of the estate. To this motion the petitioners objected,
further ordered that the court fix an amount that may be set aside to respond for the damages
whereupon the court issued on July 15, 1949, an order holding in abeyance the approval of the
that the petitioners herein may ultimately recover. Costs against the respondents.
partition and the closing of the proceedings until after the decision in said civil case has been
rendered. From this order the administratrix and the heirs appealed and now assign the following
errors:

The lower court erred in taking cognizance of and being guided by the supposed
"claim" of petitioners-appellees.
Intestate Estate of the deceased Lee Liong. RAFAEL A. DINGLASAN, ET ALS., petitioners-
appellees, vs. ANG CHIA, as Administratrix of the above intestate, LEE BING HOO alias CLARO II
LEE, and LEE BUN TING, respondents-appellants.

The lower court erred in holding in abeyance the closing of the intestate proceedings
BAUTISTA ANGELO, J.: pending the termination of the separate civil action filed by the petitioners-appellees.

This is an appeal by Ang Chia, her son Claro Lee, and Lee Bun Ting from an order of the Court of III
First Instance of Capiz, issued in the intestate estate proceedings of the deceased Lee Liong,
holding in abeyance the approval of their petition for an extrajudicial partition and the closing of
The lower court erred in ordering the administratrix to file an increased bond of P5,000.
said proceedings until after the final termination of Civil Case No. V-331 of the same court,
entitled Rafael Dinglasan, et al., vs. Lee Bun Ting, Claro Lee and Ang Chia, in her personal
capacity and as administratrix of the estate of Lee Liong. Under the first assignment of error, the appellants question the validity of the order of the lower
court of August 4, 1948, whereby the court took cognizance of the civil case filed by the appellees
against the administratrix to recover possession of lot No. 398 and damages, and required the
Rafael Dinglasan et al. filed a case in the Court of First Instance of Capiz on February 16, 1948,
administratrix to file a new bond of P5,000, contending that by taking such action the court
against Ang Chia, her son Claro Lee and one Lee Bun Ting to recover the ownership and
assumed jurisdiction over the case which it cannot do because its jurisdiction as probate court is
possession of a parcel of land located at Capiz, Capiz, and damages in the amount of P1,000 a
limited and especial (Guzman vs. Anog and Anog, 37 Phil. 61). They claim further that probate
month. Subsequently, the plaintiffs filed a motion for the appointment of a receiver to which
proceedings are purely statutory and their functions are limited to the control of the property upon
counsel for the defendants objected, and it was only at the hearing of said motion when plaintiffs
the death of its owner and cannot extend to the adjudication of collateral questions. (I Woermer,
discovered that there was pending in the same court a case concerning the intestate estate of
The American Law of Administration, 514, 662-663.) Appellees on the other hand claim that said
Lee Liong. In view thereof, the motion for the appointment of a receiver was withdrawn and the
order of August 4, 1948, is not the subject of this appeal, as no appeal has been taken by the
plaintiffs filed an amended complaint seeking the inclusion as party-defendant of the
appellants from said order and the same has long become final; so that the present appeal is only
administratrix of the estate, who is the same widow Ang Chia, who was already a party-defendant
from the order of the lower court dated July 15, 1949, which denies the motion of the appellees to Anog, supra). These rules would be rendered nugatory if we are to hold that an intestate
terminate the intestate proceedings on the ground that they have already agreed on the proceedings can be closed by any time at the whim and caprice of the heirs. Another rule of court
extrajudicial settlement of the estate and to relieve the administratrix of the obligation of filing an provides that "after a party dies and the claim is not thereby extinguished, the court shall order,
increased bond. upon proper notice, the legal representative of the deceased to appear and to be substituted for
the deceased, within a period of thirty (30) days, or within such time as may be granted. If the
legal representative fails to appear within said time, the court may order the opposing party to
There is merit in the claim of the appellees. It really appears from the record that the order
procure the appointment of a legal representative of the deceased within a time to be specified by
increasing the bond of the administratrix to P5,000 was issued on August 4, 1948, and from said
the court, and the representative shall immediately appear for and on behalf of the interest of the
order no appeal has been taken by the appellants which has become final long ago and that the
deceased." (Section 17, Rule 3.) This rule also implies that a probate case may be held in
present appeal is only from the order of the lower court dated July 15, 1949. It is true that the
abeyance pending determination of an ordinary case wherein an administrator is made a party. To
lower court in its later order of July 15, 1949, reiterated its order to the administratrix to file a new
hold otherwise would be also to render said rule nugatory.
bond in the amount of P5,000 within 30 days after receipt thereof, but this cannot have the effect
of receiving the former order of August 4, 1948, nor does it give the appellants the right to
question in this instance the validity of said order, which has long become final. Moreover, an Wherefore, the Court affirms the order appealed from, with costs against appellants.
order requiring the filing of a new bond by the administratrix is interlocutory in nature and is solely
addressed to the sound discretion of the court.

The act of the lower court in taking cognizance of civil case No. V-331 is not tantamount to
assuming jurisdiction over said case nor does it violate the ruling of this court which says that
"when questions arise as to the ownership of property, alleged to be part of the estate of a
deceased person, but claimed by some other person to be his property, not by virtue of any right
of inheritance from the deceased, but by title adverse to that of the deceased and his estate, such
questions cannot be determined in the course of administration proceedings. The Court of First
Instance, acting as probate court, has no jurisdiction to adjudicate such contentions, which must
be submitted to the court in the exercise of its general jurisdiction as a Court of First Instance to
try and determine ordinary actions. . . ." (Guzman vs. Anog and Anog, 37 Phil., 61, 62-63.)

If the appellants filed a claim in intervention in the intestate proceedings it was only pursuant to
their desire to protect their interests it appearing that the property in litigation is involved in said
proceedings and in fact is the only property of the estate left subject of administration and
distribution; and the court is justified in taking cognizance of said civil case because of the
unavoidable fact that whatever is determined in said civil case will necessarily reflect and have a
far reaching consequence in the determination and distribution of the estate. In so taking
cognizance of civil case No. V-331 the court does not assume general jurisdiction over the case
but merely makes of record its existence because of the close interrelation of the two cases and
cannot therefore be branded as having acted in excess of its jurisdiction.

Appellants' claim that the lower court erred in holding in abeyance the closing of the intestate
proceedings pending determination of the separate civil action for the reason that there is no rule
or authority justifying the extension of administration proceedings until after the separate action
pertaining to its general jurisdiction has been terminated, cannot entertained. Section 1, Rule 88,
of the Rules of Court, expressly provides that "action to recover real or personal property from the
estate or to enforce a lien thereon, and actions to recover damages for an injury to person or
property, real or personal, may be commenced against the executor or administrator". What
practical value would this provision have if the action against the administrator cannot be
prosecuted to its termination simply because the heirs desire to close the intestate proceedings
without first taking any step to settle the ordinary civil case? This rule is but a corollary to the
ruling which declares that questions concerning ownership of property alleged to be part of the
estate but claimed by another person should be determined in a separate action and should be
submitted to the court in the exercise of its general jurisdiction. (Guzman vs. Anog and
EUSEBIO A. GODOY, plaintiff-appellee, vs. GUILLERMO ORELLANO, ET AL., defendants.
FELISA PAGILINAN, PAZ ORELLANO assisted by her husband FRANCISCO MARTINEZ,
JOSE ORELLANO, and DEMETRIO ORELLANO, defendants-appellants.

VILLAMOR, J.:

On January 13, 1919, in consideration of the amount of P1,000 received by the appellant, Felisa
Pagilinan, a document was executed by her giving the appellee, Eusebio A. Godoy, an option to
buy a dredge for the sum of P10,000. It appears from that document that the dredge is the
common property of the vendor and of the brothers Demetrio, Jose, Guillermo, Alfredo, and Paz,
all surnamed Orellano; that the condition was that Godoy was to pay the whole price of the
dredge within twenty days; and that said option was granted in accordance with the power of
attorney executed by her coowners who reserved the right to ratify whatever sale might be made,
or option granted by Pagilinan, their attorney-in-fact. The latter's coowners did not ratify the
option contract. Before the expiration of twenty days, the appelle was ready to make complete
payment of the price, but the appellant failed to deliver the dredge. Then the appellee brought suit
in the Court of First Instance against Feliza Pagilinan, Paz Orellano, Jose Orellano, Demetrio
Orellano, Guillermo Orellano, and Alfredo Orellano, praying that they be ordered to deliver the
dredge, upon payment by him of the sum of P9,000; to pay him the sum of P10,000 as damages,
and to return to the plaintiff the sum of P1,000 should the carrying out of the sale become
impossible.

The defendants Orellano set up in their answer a general denial of the facts alleged in the
complaint and, as a special defense, alleged that the dredge in question was the property of the
intestate estate of Julio Orellano, pending in the Court of First Instance of Manila, and under the
administration of Felisa Pangilinan; that the plaintiff perfectly knows that said dredge is under
judicial control and could not be disposed of without judicial authority, and that the court has
never authorized the sale mentioned in the complaint filed herein; and that the defendants Jose,
Guillermo, and Alfredo surnamed Orellano are at present under age, and the defendant Paz
Orellano is a married woman who had not obtained the consent of her husband before executing
the power of attorney in favor of the administratrix.

The defendant Felisa Pagilinan filed a separate answer, and a defense alleges: (a) That the
dredge which was the subject-matter of the option is property of the intestate estate of Julio
Orellano, of which she is the administratrix; (b) that the plaintiff, as well as the defendants, and
the notary who prepared the aforesaid option sale, were all aware of these facts, and they led her
to believe that she had the authority to dispose of the dredge in her name and by themselves; ( c)
that believing herself to be under obligation to comply with the aforesaid option deed, she applied
to the court of probate for permission to sell the dredge in the sum of P10,000; ( d) that on the day
of the hearing of the motion, her codefendants who had themselves authorized her by means of a
power of attorney, opposed the motion through their attorneys, Francisco and Lualhati, on the
ground that there were higher bidders and the best thing to do was to sell it at public auction; (e)
that in view of this opposition, the administratrix asked the court that it be sold at public auction,
and the court authorized said defendant to sell it at public auction, advertising the sale in
newspapers of general circulation, and the aforesaid dredge was sold for P10,000, accordingly;
( f ) that the defendant did not at any time refuse to make delivery of the dredge to the plaintiff,
but that it was the court that would not give her the authority to do so; and ( g) that she is all times
ready to return the P1,000 received from the plaintiff and that she has tendered it several times,
but that the plaintiff refused to accept it.
The judge a quo rendered judgment, ordering the defendants to pay Eusebio A. Godoy the sum In view of the foregoing, we are of the opinion, and so hold, that the appellant was not, in her
of P2,000 with legal interest thereon from February 13, 1919, and the cost and dismissing the capacity as judicial administratrix of the intestate estate of Julio Orellano, legally authorized to
complaint as against the defendants Guillermo Orellano and Alfredo Orellano. sell, or contract to sell, any property belonging to said estate without the authority of the court,
and the contract entered into by her with the plaintiff, without this authority, is null and void.
From this judgment the defendants have appealed to this court by bill of exceptions.
The judgment appealed from is reversed and the complaint against the appellant Felisa
Pagilinan is hereby dismissed, without special finding as to costs. So ordered.
By a resolution of this court of September 14, 1920, the appeal of the defendants Paz Orellano,
Jose Orellano and Demetrio Orellano was declared abandoned for failure to file their brief within
the period prescribed by the rules of the court. Wherefore, this decision concerns only the appeal JOSEPHINE PAHAMOTANG and ELEANOR PAHAMOTANG-BASA, Petitioners, vs. THE
taken by Felisa Pagilinan.lawphil.net PHILIPPINE NATIONAL BANK (PNB) and the HEIRS OF ARTURO ARGUNA, Respondents.

It appears from the evidence that the dredge in question belongs to the intestate estate of Julio GARCIA, J.:
Orellano, father of the defendants, which was pending in the Court of First Instance of Manila, of
which the judicial administratrix is the defendant herein, Felisa Pagilinan; that when this
Assailed and sought to be set aside in this appeal by way of a petition for review
defendant contracted with the plaintiff Godoy the sale of the aforesaid dredge, she had no
on certiorari under Rule 45 of the Rules of Court are the following issuances of the Court of
authority of the court; and that the plaintiff knew that the dredge, which was the subject-matter of
Appeals in CA-G.R. CV No. 65290, to wit:
that contract, belonged to the intestate estate of Julio Orellano, under the control of the court.

1. Decision dated March 20, 2002,1 granting the appeal and reversing the appealed August 7,
In the sale of the property of an intestate estate for the benefit of the heirs, it is necessary to
1998 decision of the Regional Trial Court at Davao City; and
comply with the provisions of sections 717, 718, and 722 of the Code of Civil Procedure. The said
sections prescribed the proceedings to be had before an administrator of an intestate or testate
estate may sell personal or real property and also the conditions under which the personal or real 2. Resolution dated November 20, 2002, denying herein petitioners' motion for reconsideration. 2
property pertaining to an estate may be sold or disposed of by the administrator. Unless
compliance is had with the provisions of these sections, the sale of the aforesaid dredge by the The factual background:
administratrix, or her promise to sell it is null and void.

On July 1, 1972, Melitona Pahamotang died. She was survived by her husband Agustin
A sale and conveyance by executors without an order of the probate court, under a will Pahamotang, and their eight (8) children, namely: Ana, Genoveva, Isabelita, Corazon, Susana,
devising property to them in trust, but not authorizing any sale of the realty, otherwise Concepcion and herein petitioners Josephine and Eleonor, all surnamed Pahamotang.
than by a direction to pay the debts of the testator, is void, and passes no title to the
purchase. (Huse vs. Den, 85 Cal., 390.)
On September 15, 1972, Agustin filed with the then Court of First Instance of Davao City a
petition for issuance of letters administration over the estate of his deceased wife. The petition,
A sale by an administrator of the personal property of the estate, without the authority docketed as Special Case No. 1792, was raffled to Branch VI of said court, hereinafter referred to
of an order of court, or of a will, or under an order of court which is void for want of as the intestate court.
jurisdiction, does not confer on the purchaser a title which is available against a
succeeding administrator. (Wyatt's Adm'r vs. Rambo, 29 Ala., 510.)
In his petition, Agustin identified petitioners Josephine and Eleonor as among the heirs of his
deceased spouse. It appears that Agustin was appointed petitioners' judicial guardian in an earlier
Under the law, the court has exclusive jurisdiction to authorize the sale of properties like the one case - Special Civil Case No. 1785 also of the CFI of Davao City, Branch VI.
under consideration and the power of attorney executed by the heirs of Orellano in favor of the
administratrix, without authority of court, has no legal effect, and this is the more so, since two of
the said heirs are under age, and the others did not ratify the option contract, as provided in the On December 7, 1972, the intestate court issued an order granting Agustins petition.
aforesaid power of attorney.
On July 6, 1973, respondent Philippine National Bank (PNB) and Agustin executed
It is not necessary to dwell longer upon this point, as the appellee himself admits in his brief "that an Amendment of Real and Chattel Mortgages with Assumption of Obligation. It appears that
the dredge in question being a part of the intestate estate of Julio Orellano, it cannot be disposed earlier, or on December 14, 1972, the intestate court approved the mortgage to PNB of certain
of by any person without the proper authority of the court, in accordance with the existing assets of the estate to secure an obligation in the amount of P570,000.00. Agustin signed the
laws."lawphil.net document in behalf of (1) the estate of Melitona; (2) daughters Ana and Corazon; and (3) a
logging company named Pahamotang Logging Enterprises, Inc. (PLEI) which appeared to have
an interest in the properties of the estate. Offered as securities are twelve (12) parcels of
registered land, ten (10) of which are covered by transfer certificates of title (TCT) No. 2431, In a motion for reconsideration, Agustin prayed the intestate court for the amendment of one of
7443, 8035, 11465, 21132, 4038, 24327, 24326, 31226 and 37786, all of the Registry of Deeds of its February 25, 1980 Orders by canceling the requirement of express conformity of the heirs as a
Davao City, while the remaining two (2) parcels by TCTs No. (3918) 1081 and (T-2947) 562 of the condition for the disposal of the aforesaid properties.
Registry of Deeds of Davao del Norte and Davao del Sur, respectively.
In its Order of January 7, 1981, the intestate court granted Agustins prayer.
On July 16, 1973, Agustin filed with the intestate court a Petition for Authority To Increase
Mortgage on the above mentioned properties of the estate.
Hence, on March 4, 1981, estate properties covered by TCTs No. 7443,11465, 24326, 31226,
8035, (T-2947) 662 and (T-3918) T-1081, were sold to respondent Arturo Arguna, while the
In an Order dated July 18, 1973, the intestate court granted said petition. property covered by OCT No. P-7131 was sold to PLEI. Consequent to such sales, vendees
Arguna and PLEI filed witt the intestate court a motion for the approval of the corresponding
deeds of sale in their favor. And, in an Order dated March 9, 1981, the intestate court granted the
On October 5, 1974, Agustin again filed with the intestate court another petition, Petition for
motion.
Declaration of Heirs And For Authority To Increase Indebtedness, whereunder he alleged the
necessity for an additional loan from PNB to capitalize the business of the estate, the additional
loan to be secured by additional collateral in the form of a parcel of land covered by Original Thereafter, three (3) daughters of Agustin, namely, Ana, Isabelita and Corazon petitioned the
Certificate of Title (OCT) No. P-7131 registered in the name of Heirs of Melitona Pahamotang. In intestate court for the payment of their respective shares from the sales of estate properties,
the same petition, Agustin prayed the intestate court to declare him and Ana, Genoveva, Isabelita, which was granted by the intestate court.
Corazon, Susana, Concepcion and herein petitioners Josephine and Eleonor as the only heirs of
Melitona.
Meanwhile, the obligation secured by mortgages on the subject properties of the estate was
never satisfied. Hence, on the basis of the real estate mortgage contracts dated July 6,
In an Order of October 19, 1974, the intestate court granted Agustin authority to seek additional 1973 and October 22, 1974, mortgagor PNB filed a petition for the extrajudicial foreclosure of the
loan from PNB in an amount not exceeding P5,000,000.00 to be secured by the land covered by mortgage.
OCT No. P-7131 of the Registry of Deeds of Davao Oriental, but denied Agustins prayer for
declaration of heirs for being premature.
Petitioner Josephine filed a motion with the intestate court for the issuance of an order restraining
PNB from extrajudicially foreclosing the mortgage. In its Order dated August 19, 1983, the
On October 22, 1974, a real estate mortgage contract for P4,500,000.00 was executed by PNB intestate court denied Josephines motion. Hence, PNB was able to foreclose the mortgage in its
and Agustin in his several capacities as: (1) administrator of the estate of his late wife; (2) general favor.
manager of PLEI; (3) attorney-in-fact of spouses Isabelita Pahamotang and Orlando Ruiz, and
spouses Susana Pahamotang and Octavio Zamora; and (4) guardian of daughters Concepcion
Petitioners Josephine and Eleanor, together with their sister Susana Pahamatong-Zamora, filed
and Genoveva and petitioners Josephine and Eleonor. Offered as securities for the additional
motions with the intestate court to set aside its Orders of December 14, 1972 [Note: the order
loan are three (3) parcels of registered land covered by TCTs No. T-21132, 37786 and 43264.
dated July 18, 1973 contained reference to an order dated December 14, 1972 approving the
mortgage to PNB of certain properties of the estate], July 18, 1973, October 19,
On February 19, 1980, Agustin filed with the intestate court a Petition (Request for Judicial 1974 and February 25, 1980.
Authority To Sell Certain Properties of the Estate), therein praying for authority to sell to Arturo
Arguna the properties of the estate covered by TCTs No. 7443, 8035, 11465, 24326 and 31226 of
In an Order dated September 5, 1983, the intestate court denied the motions, explaining:
the Registry of Deeds of Davao City, and also TCT No. (T-3918) T-1081 of the Registry of Deeds
of Davao del Norte.
"Carefully analyzing the aforesaid motions and the grounds relied upon, as well as the opposition
thereto, the Court holds that the supposed defects and/or irregularities complained of are mainly
On February 27, 1980, Agustin yet filed with the intestate court another petition, this time
formal or procedural and not substantial, for which reason, the Court is not persuaded to still
a Petition To Sell the Properties of the Estate, more specifically referring to the property covered
disturb all the orders, especially that interests of the parties to the various contracts already
by OCT No. P-7131, in favor of PLEI.
authorized or approved by the Orders sought to be set aside will be adversely affected". 3

In separate Orders both dated February 25, 1980, the intestate court granted Agustin authority to
Such was the state of things when, on March 20, 1984, in the Regional Trial Court at Davao City,
sell estate properties, in which orders the court also required all the heirs of Melitona to give their
petitioners Josephine and Eleanor, together with their sister Susana, filed their complaint
express conformity to the disposal of the subject properties of the estate and to sign the deed of
for Nullification of Mortgage Contracts and Foreclosure Proceedings and Damages against
sale to be submitted to the same court. Strangely, the two (2) orders were dated two (2) days
Agustin, PNB, Arturo Arguna, PLEI, the Provincial Sheriff of Mati, Davao Oriental, the Provincial
earlier than February 27, 1980, the day Agustin supposedly filed his petition.
Sheriff of Tagum, Davao del Norte and the City Sheriff of Davao City. In their complaint, docketed
as Civil Case No. 16,802 which was raffled to Branch 12 of the court, the sisters Josephine, 2. Whether or not the foreclosure proceedings conducted by defendants-Sheriffs, insofar as they
Eleanor and Susana prayed for the following reliefs: affect the assets of the Estate of Melitona Pahamotang, including the public auction sales thereof,
are null and void?
"1.) The real estate mortgage contracts of July 6, 1973 and that of October 2, 1974, executed by
and between defendants PNB AND PLEI be declared null and void ab initio; 3. Whether or not the Deed of Absolute Sale in favor of defendant Arturo Arguna entered as Doc.
No. 473; Page No. 96; Book No. VIII, series of 1981 of the Notarial Register of Notary Public
Paquito Balasabas is null and void?
2.) Declaring the foreclosure proceedings conducted by defendants-sheriffs, insofar as they
pertain to the assets of the estate of Melitona L. Pahamotang, including the auction sales thereto,
and any and all proceedings taken thereunder, as null and void ab initio; 4. Whether or not the Deed of Absolute Sale in favor of defendant Pahamotang Logging
Enterprises, Inc. entered as Doc. No. 474; Page No. 96; Book No. VIII, series of 1981 of the
Notarial Register of Notary Public Paquito Balasabas is null and void?
3.) Declaring the Deed of Absolute Sale, Doc. No. 473; Page No.96; Book No.VIII, Series of 1981
of the Notarial Registry of Paquito G. Balasabas of Davao City evidencing the sale/transfer of the
real properties described therein to defendant Arturo S. Arguna, as null and void ab initio; 5. On defendant PNB's cross-claim, in the event the mortgage contracts and the foreclosure
proceedings are declared null and void, whether or not defendant Pahamotang Logging
Enterprises, Inc. is liable to the PNB?
4.) Declaring the Deed of Absolute Sale, Doc. No. 474; Page No. 96, Book No. VIII, series of
1981 of the Notarial Registry of Paquito G. Balasabas of Davao City, evidencing the sale/transfer
of real properties to PLEI as null and void ab initio; 6. Whether or not the defendants are liable to the plaintiffs for damages?

5.) For defendants to pay plaintiffs moral damages in such sums as may be found to be just and 7. Whether or not the plaintiffs are liable to the defendants for damages"? 5
equitable under the premises;
With defendant Arturo Argunas death on October 31, 1990, the trial court ordered his substitution
6.) For defendants to pay plaintiffs, jointly and severally, the expenses incurred in connection with by his heirs: Heirs of Arturo Alguna.
this litigation;
In a Decision dated August 7, 1998, the trial court in effect rendered judgment for the plaintiffs.
7.) For defendants to pay plaintiffs, jointly and severally attorney's fees in an amount to be proven We quote the decisions dispositive portion:
during the trial;
"WHEREFORE, in view of all the foregoing, judgment is hereby rendered as follows:
8.) For defendants to pay the costs of the suit". 4
1. Declaring the Mortgage Contracts of July 6, 1973 and October 22, 1974, as well as the
PNB moved to dismiss the complaint, which the trial court granted in its Order of January 11, foreclosure proceedings, void insofar as it affects the share, interests and property rights of the
1985. plaintiffs in the assets of the estate of Melitona Pahamotang, but valid with respect to the other
parties;
However, upon motion of the plaintiffs, the trial court reversed itself and ordered defendant PNB
to file its answer. 2. Declaring the deeds of sale in favor of defendants Pahamotang Logging Enterprises, Inc. and
Arturo Arguna as void insofar as it affects the shares, interests and property rights of herein
plaintiffs in the assets of the estate of Melitona Pahamotang but valid with respect to the other
Defendant PNB did file its answer with counterclaim, accompanied by a cross-claim against co-
parties to the said deeds of sale.
defendants Agustin and PLEI.

3. Denying all the other claims of the parties for lack of strong, convincing and competent
During the ensuing pre-trial conference, the parties submitted the following issues for the
evidence.
resolution of the trial court, to wit:

No pronouncement as to costs.
"1. Whether or not the Real Estate Mortgage contracts executed on July 6, 1973 and October 2,
1974 (sic) by and between defendants Pahamotang Logging Enterprises, Inc. and the Philippine
National Bank are null and void? SO ORDERED".6
From the aforementioned decision of the trial court, PNB, PLEI and the Heirs of Arturo Arguna the nullification of the subject mortgages, and foreclosure proceedings in favor of PNB, and the
went on appeal to the Court of Appeals in CA-G.R. CV No. 65290. While the appeal was pending, deeds of sale in favor of Arguna. Most of their arguments stemmed from their allegations that the
the CA granted the motion of Susana Pahamatong-Zamora to withdraw from the case. various orders of the intestate court were issued without a notification given to them. An
examination, however, of the July 18, 1973 order shows that the heirs of Melitona have
knowledge of the petition to increase mortgage filed by Agustin, thus:
As stated at the threshold hereof, the Court of Appeals, in its Decision dated March 20,
2002,7 reversed the appealed decision of the trial court and dismissed the petitioners complaint in
Civil Case No. 16,802, thus: `The petitioner testified that all his children including those who are of age have no objection to
this petition and, as matter of fact, Ana Pahamotang, one of the heirs of Melitona Pahamotang,
who is the vice-president of the logging corporation, is the one at present negotiating for the
WHEREFORE, the appeal is hereby GRANTED. The assailed August 07, 1998 Decision
increase of mortgage with the Philippine National Bank.'
rendered by the Regional Trial Court of Davao City, Branch 12, is hereby REVERSED and SET
ASIDE and a new one is entered DISMISSING the complaint filed in Civil Case No. 16,802.
The presumption arising from those statements of the intestate court is that the heirs were
notified of the petition for the increase of mortgage.
SO ORDERED.

The same can be seen in the October 19, 1974 order:


The appellate court ruled that petitioners, while ostensibly questioning the validity of the contracts
of mortgage and sale entered into by their father Agustin, were essentially attacking collaterally
the validity of the four (4) orders of the intestate court in Special Case No. 1792, namely: `The records show that all the known heirs, namely Ana, Isabelita, Corazon, Susana, including
the incompetent Genoveva, and the minors Josephine, Eleanor and Concepcion all surnamed
were notified of the hearing of the petition.'
1. Order dated July 18, 1973, granting Agustins Petition for Authority to Increase Mortgage;

On the other hand, the February 25, 1980 order required Agustin to obtain first express
2. Order dated October 19, 1974, denying Agustins petition for declaration of heirs but giving him
conformity from the heirs before the subject property be sold to Arguna. The fact that this was
authority to seek additional loan from PNB;
reconsidered by the intestate court in its January 07, 1981 is of no moment. The questioned
orders are valid having been issued in accordance with law and procedure. The problem with the
3. Order dated February 25, 1980, giving Agustin permission to sell properties of the estate to plaintiffs-appellees is that, in trying to nullify the subject mortgages and the foreclosure
Arturo Arguna and PLEI; and proceedings in favor of PNB and the deeds of sale in favor of Arguna, they are assailing the
aforesaid orders of the intestate court and in attacking the said orders, they attached documents
4. Order dated January 7, 1981, canceling the requirement of express conformity by the heirs as that they believe would warrant the conclusion that the assailed orders are null and void. This is a
a condition for the disposal of estate properties. clear collateral attack of the orders of the intestate court which is not void on its face and which
cannot be allowed in the present action. The defects alleged by the plaintiff-appellees are not
apparent on the face of the assailed orders. Their recourse is to ask for the declaration of nullity
To the appellate court, petitioners committed a fatal error of mounting a collateral attack on the of the said orders, not in a collateral manner, but a direct action to annul the same". 8
foregoing orders instead of initiating a direct action to annul them. Explains the Court of Appeals:

The same court added that petitioners failure to assail said orders at the most opportune time
"A null and void judgment is susceptible to direct as well as collateral attack. A direct attack constitutes laches:
against a judgment is made through an action or proceeding the main object of which is to annul,
set aside, or enjoin the enforcement of such judgment, if not carried into effect; or if the property
has been disposed of, the aggrieved party may sue for recovery. A collateral attack is made "In their complaint below, plaintiffs, appellees are assailing in their present action, four orders of
when, in another action to obtain a different relief, an attack on the judgment is made as an the intestate court namely: July 18, 1973, October 19, 1974, February 25, 1980 and January 07,
incident in said action. This is proper only when the judgment, on its fact, is null and void, as 1981 orders which were then issued by Judge Martinez. It should be recalled that except for the
where it is patent that the court which rendered such judgment has no jurisdiction. A judgment January 07, 1981 order, Judge Jacinto, upon taking over Sp. No. 1792, denied the motion of the
void on its face may also be attacked directly. plaintiffs-appellees to set aside the aforesaid orders. Aside from their motion before Judge
Jacinto, nothing on the records would show that the plaintiffs-appellees availed of other remedies
to set aside the questioned orders. Further, the records would not show that the plaintiffs-
xxx xxx xxx appellees appealed the order of Judge Jacinto. If an interval of two years, seven months and
ninety nine days were barred by laches, with more reason should the same doctrine apply to the
Perusing the above arguments and comparing them with the settled ruling, the plaintiffs-appellees present case, considering that the plaintiffs-appellees did not avail of the remedies provided by
[now petitioners], we believe had availed themselves of the wrong remedy before the trial court. It law in impugning the various orders of the intestate court. Thus, the questioned orders of the
is clear that they are collaterally attacking the various orders of the intestate court in an action for intestate court, by operation of law became final. It is a fundamental principle of public policy in
every jural system that at the risk of occasional errors, judgments of courts should become final at As we see it, the determinative question is whether or not petitioners can obtain relief from the
some definite time fixed by law (interest rei publicae ut finis sit litum). The very object of which the effects of contracts of sale and mortgage entered into by Agustin without first initiating a direct
courts were constituted was to put an end to controversies. Once a judgment or an order of a action against the orders of the intestate court authorizing the challenged contracts.
court has become final, the issues raised therein should be laid to rest. To date, except as to the
present action which we will later discuss as improper, the plaintiff-appellees have not availed
We answer the question in the affirmative.
themselves of other avenues to have the orders issued by Judge Martinez and Judge Jacinto
annulled and set aside. In the present case, when Judge Jacinto denied the motion of the
plaintiffs-appellees, the latter had remedies provided by the rules to assail such order. The ruling It bears emphasizing that the action filed by the petitioners before the trial court in Civil Case No.
by Judge Jacinto denying plaintiffs-appellees motion to set aside the questioned orders of Judge 16,802 is for the annulment of several contracts entered into by Agustin for and in behalf of the
Martinez has long acquired finality. It is well embedded in our jurisprudence, that judgment estate of Melitona, namely: (a) contract of mortgage in favor of respondent PNB, (b) contract of
properly rendered by a court vested with jurisdiction, like the RTC, and which has acquired finality sale in favor of Arguna involving seven (7) parcels of land; and (c) contract of sale of a parcel of
becomes immutable and unalterable, hence, may no longer be modified in any respect except land in favor of PLEI.
only to correct clerical errors or mistakes. Litigation must have and always has an end. If not,
judicial function will lose its relevance". The trial court acquired jurisdiction over the subject matter of the case upon the allegations in the
complaint that said contracts were entered into despite lack of notices to the heirs of the petition
In time, petitioners moved for a reconsideration but their motion was denied by the appellate court for the approval of those contracts by the intestate court.
in its Resolution of November 20, 2002.
Contrary to the view of the Court of Appeals, the action which petitioners lodged with the trial
Hence, petitioners present recourse, basically praying for the reversal of the CA decision and the court in Civil Case No. 16,802 is not an action to annul the orders of the intestate court, which,
reinstatement of that of the trial court. according to CA, cannot be done collaterally. It is the validity of the contracts of mortgage and
sale which is directly attacked in the action.

We find merit in the petition.


And, in the exercise of its jurisdiction, the trial court made a factual finding in its decision of
August 7, 1998 that petitioners were, in fact, not notified by their father Agustin of the filing of his
It is petitioners posture that the mortgage contracts dated July 6, 1973 and October 22,
petitions for permission to mortgage/sell the estate properties. The trial court made the correct
1974 entered into by Agustin with respondent PNB, as well as his subsequent sale of estate
conclusion of law that the challenged orders of the intestate court granting Agustins petitions
properties to PLEI and Arguna on March 4, 1981, are void because they [petitioners] never
were null and void for lack of compliance with the mandatory requirements of Rule 89 of the
consented thereto. They assert that as heirs of their mother Melitona, they are entitled to notice of
Rules of Court, particularly Sections 2, 4, 7 thereof, which respectively read:
Agustin's several petitions in the intestate court seeking authority to mortgage and sell estate
properties. Without such notice, so they maintain, the four orders of the intestate court dated July
18, 1973, October 19, 1974, February 25, 1980 and January 7, 1981, which allowed Agustin to "Sec. 2. When court may authorize sale, mortgage, or other encumbrance of realty to pay debts
mortgage and sell estate properties, are void on account of Agustins non-compliance with the and legacies through personalty not exhausted. - When the personal estate of the deceased is
mandatory requirements of Rule 89 of the Rules of Court. not sufficient to pay the debts, expenses of administration, and legacies, or where the sale of
such personal estate may injure the business or other interests of those interested in the estate,
and where a testator has not otherwise made sufficient provision for the payment of such debts,
Prescinding from their premise that said orders are completely void and hence, could not attain
expenses, and legacies, the court, on the application of the executor or administrator and
finality, petitioners maintain that the same could be attacked directly or collaterally, anytime and
on written notice to the heirs, devisees, and legatees residing in the Philippines, may authorize
anywhere.
the executor or administrator to sell, mortgage, or otherwise encumber so much as may be
necessary of the real estate, in lieu of personal estate, for the purpose of paying such debts,
For its part, respondent PNB asserts that petitioners cannot raise as issue in this proceedings the expenses, and legacies, if it clearly appears that such sale, mortgage, or encumbrance would be
validity of the subject orders in their desire to invalidate the contracts of mortgage entered into by beneficial to the persons interested; and if a part cannot be sold, mortgaged, or otherwise
Agustin. To PNB, the validity of the subject orders of the intestate court can only be challenged in encumbered without injury to those interested in the remainder, the authority may be for the sale,
a direct action for such purpose and not in an action to annul contracts, as the petitioners have mortgage, or other encumbrance of the whole of such real estate, or so much thereof as is
done. This respondent adds that the mortgage on the subject properties is valid because the necessary or beneficial under the circumstances".
same was made with the approval of the intestate court and with the knowledge of the heirs of
Melitona, petitioners included.9
"Sec. 4. When court may authorize sale of estate as beneficial to interested persons. Disposal of
proceeds. - When it appears that the sale of the whole or a part of the real or personal estate, will
Upon the other hand, respondent Heirs of Arturo Arguna likewise claim that petitioners knew of be beneficial to the heirs, devisees, legatees, and other interested persons, the court may, upon
the filing with the intestate court by Agustin of petitions to mortgage and sell the estate properties. application of the executor or administrator and on written notice to the heirs, devisees and
They reecho the CAs ruling that petitioners are barred by laches in filing Civil Case No. 16,802. 10 legatees who are interested in the estate to be sold, authorize the executor or administrator to sell
the whole or a part of said estate, although not necessary to pay debts, legacies, or expenses of Clearly, the requirements of Rule 89 of the Rules of Court are mandatory and failure to give
administration; but such authority shall not be granted if inconsistent with the provisions of a will. notice to the heirs would invalidate the authority granted by the intestate/probate court to
In case of such sale, the proceeds shall be assigned to the persons entitled to the estate in the mortgage or sell estate assets.
proper proportions".
Here, it appears that petitioners were never notified of the several petitions filed by Agustin with
"Sec. 7. Regulations for granting authority to sell, mortgage, or otherwise encumber estate. - The the intestate court to mortgage and sell the estate properties of his wife.
court having jurisdiction of the estate of the deceased may authorize the executor or administrator
to sell personal estate, or to sell, mortgage, or otherwise encumber real estate; in cases provided
According to the trial court, the "[P]etition for Authority to Increase Mortgage" and "[P]etition for
by these rules and when it appears necessary or beneficial, under the following regulations:
Declaration of Heirs and for Authority to Increase Indebtedness", filed by Agustin on July 16,
1973 and October 5, 1974, respectively, do not contain information that petitioners were furnished
(a) The executor or administrator shall file a written petition setting forth the debts due from the with copies of said petitions. Also, notices of hearings of those petitions were not sent to the
deceased, the expenses of administration, the legacies, the value of the personal estate, the petitioners.14 The trial court also found in Civil Case No. 16,802 that Agustin did not notify
situation of the estate to be sold, mortgaged, or otherwise encumbered, and such other facts as petitioners of the filing of his petitions for judicial authority to sell estate properties to Arturo
show that the sale, mortgage, or other encumbrance is necessary or beneficial; Arguna and PLEI.15

(b) The court shall thereupon fix a time and place for hearing such petition, As it were, the appellate court offered little explanation on why it did not believe the trial court in
and cause notice stating the nature of the petition, the reason for the same, and the time and its finding that petitioners were ignorant of Agustins scheme to mortgage and sell the estate
place of hearing, to be given personally or by mail to the persons interested, and may cause such properties.
further notice to be given, by publication or otherwise, as it shall deem proper; (Emphasis
supplied)".
Aside from merely quoting the orders of July 18, 1973 and October 19, 1974 of the intestate
court, the Court of Appeals leaves us in the dark on its reason for disbelieving the trial court. The
xxx xxx xxx appellate court did not publicize its appraisal of the evidence presented by the parties before the
trial court in the matter regarding the knowledge, or absence thereof, by the petitioners of
Agustins petitions. The appellate court cannot casually set aside the findings of the trial court
Settled is the rule in this jurisdiction that when an order authorizing the sale or encumbrance of
without stating clearly the reasons therefor. Findings of the trial court are entitled to great weight,
real property was issued by the testate or intestate court without previous notice to the heirs,
and absent any indication to believe otherwise, we simply cannot adopt the conclusion reached
devisees and legatees as required by the Rules, it is not only the contract itself which is null and
by the Court of Appeals.
void but also the order of the court authorizing the same. 11

Laches is negligence or omission to assert a right within a reasonable time, warranting the
Thus, in Maneclang vs. Baun,12 the previous administrator of the estate filed a petition with the
presumption that the party entitled to assert it has either abandoned or declined the right. 16 The
intestate court seeking authority to sell portion of the estate, which the court granted despite lack
essential elements of laches are: (1) conduct on the part of the defendant, or of one under whom
of notice of hearing to the heirs of the decedent. The new administrator of the estate filed with the
he claims, giving rise to the situation of which complaint is made and for which the complaint
Regional Trial Court an action for the annulment of the sales made by the previous administrator.
seeks a remedy; (2) delay in asserting the complainant's rights, the complainant having had
After trial, the trial court held that the order of the intestate court granting authority to sell, as well
knowledge or notice of the defendant's conduct and having been afforded an opportunity to
as the deed of sale, were void. On appeal directly to this Court, We held that without compliance
institute a suit; (3) lack of knowledge or notice on the part of the defendant that the complainant
with Sections 2, 4 and 7 of Rule 89 of the Rules of Court, "the authority to sell, the sale itself and
would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in
the order approving it would be null and void ab initio".
the event relief is accorded to the complainant, or the suit is not held barred. 17

In Liu vs. Loy, Jr.,13 while the decedent was still living, his son and attorney-in-fact sold in behalf
In the present case, the appellate court erred in appreciating laches against petitioners. The
of the alleged decedent certain parcels of land to Frank Liu. After the decedent died, the son sold
element of delay in questioning the subject orders of the intestate court is sorely lacking.
the same properties to two persons. Upon an ex parte motion filed by the 2nd set of buyers of
Petitioners were totally unaware of the plan of Agustin to mortgage and sell the estate properties.
estate properties, the probate court approved the sale to them of said properties. Consequently,
There is no indication that mortgagor PNB and vendee Arguna had notified petitioners of the
certificates of title covering the estate properties were cancelled and new titles issued to the 2nd
contracts they had executed with Agustin. Although petitioners finally obtained knowledge of the
set of buyers. Frank Liu filed a complaint for reconveyance/ annulment of title with the Regional
subject petitions filed by their father, and eventually challenged the July 18, 1973, October 19,
Trial Court. The trial court dismissed the complaint and the Court of Appeals affirmed the
1974, February 25, 1980 and January 7, 1981 orders of the intestate court, it is not clear from the
dismissal. When the case was appealed to us, we set aside the decision of the appellate court
challenged decision of the appellate court when they (petitioners) actually learned of the
and declared the probate court's approval of the sale as completely void due to the failure of the
existence of said orders of the intestate court. Absent any indication of the point in time when
2nd set of buyers to notify the heir-administratrix of the motion and hearing for the sale of estate
petitioners acquired knowledge of those orders, their alleged delay in impugning the validity
property.
thereof certainly cannot be established. And the Court of Appeals cannot simply impute laches On April 2, 1957, the heirs of the deceased, through counsel, filed a "Motion for Partial Partition
against them. and Distribution," stating that the estate had no debts and the heirs were all of legal age; that
some of them were necessitous and in need of cash; and praying that the share corresponding to
each of the heirs in the palay produce for the agricultural year 1956-1957, as well as the cash
WHEREFORE, the assailed issuances of the Court of Appeals are hereby REVERSED and SET
deposit in the different banks, be ordered partially distributed among the heirs pending the final
ASIDE and the decision dated August 7, 1998 of the trial court in its Civil Case No. 16,802
distribution of the estate. The court heard counsel for administrator Gatmaitan and for the heirs or
REINSTATED.
oppositors, but without receiving any evidence whatsoever, promulgated on April 5, 1957 the
order subject-matter of the instant appeal. On April 26, 1957, the administrator, Gatmaitan, filed a
FELICISIMO GATMAITAN, administrator, plaintiff-appellant, vs. GORGONIO D. MEDINA, co- motion for reconsideration, calling attention to the fact that, contrary to what the order states, "he
administrator, defendant-appellee. has not agreed to the partial distribution of the estate in the manner contained in the order", and
urging that "the sums ordered to be partially distributed are not warranted by the circumstances
REYES, J.B.L., J.: obtaining" in the case and that, moreover, "the manner of distribution will work difficulties to the
estate and to the heirs themselves". As previously indicated, this motion was denied by Judge
Agustin P. Montesa for lack of merit.
Appeal from the order dated April 5, 1957 of the Court of First Instance of Nueva Ecija in Special
Proceedings No. 972, which reads as follows:
Gatmaitan filed a notice of appeal from the foregoing orders. On May 17, 1957, appellant filed a
record on appeal and notified counsel for the oppositors of the date he would move for the
This is a motion for partial partition and distribution. The parties having agreed that approval thereof by the court. The order of Judge Felix Makasiar, dated July 15, 1957, approving
only the heirs Dominica Medina and Gorgonio Medina be given an advance payment the record on appeal presented by appellant, states that counsel for the oppositors had failed to
of P1,000.00 from the cash deposit, and they, as well as the other heirs twenty-five file written opposition thereto as required in the order of the court dated June 12, 1957,
cavans of palay each for their subsistence, to be included in the final distribution of the notwithstanding the length of time that had already elapsed. In his brief, appellant only made one
residue of the estate, the administrator is hereby ordered to advance to Dominica assignment of error, and it reads thus:
Medina and Gorgonio Medina the amount of P1,000.00, each, from the cash deposit of
the estate, and twenty-five cavans each to all the five heirs for their subsistence,
pending the liquidation of the said estate, provided that the same shall be collated in The lower court gravely abused its discretion in directing a partial distribution of the
the final distribution of shares among the heirs; intestate estate of the deceased Veronica Medina in favor of appellees, under its order
of April 5, 1957, without requiring the distributees to file the proper bonds pursuant to
the provisions of Rule 91, Section 1 of the Revised Rules of Court.
and from the order of April 29, 1957, denying for lack of merit appellant's motion for
reconsideration.
This appeal was originally taken to the Court of Appeals, but, since there is no serious issue of
fact involved in the case, the same was certified to us pursuant to the appellate court's resolution
The records disclose that the following proceedings were had in the lower court: of August 28, 1958.

On March 10, 1956, Felicisimo Gatmaitan filed a petition, seeking his appointment as The lower court, we believe, erred in rendering the order appealed from. A partial distribution 1 of
administrator of the property of his wife, Veronica Medina, who died intestate. On April 2, 1956, the decedent's estate pending the final termination of the testate or intestate proceedings should
Gorgonio Medina and Dominica Medina, as heirs of the deceased (she being their full-blooded as much as possible be discouraged by the courts and, unless in extreme cases, such form of
sister), filed an opposition, praying that Gorgonio Medina, or a neutral third party, or Felicisimo advances of inheritance should not be countenanced. The reason for this strict rule is obvious
Gatmaitan and Gorgonio Medina, jointly, be appointed as administrator or administrators of the courts should guard with utmost zeal and jealousy the estate of the decedent to the end that the
estate. In an order dated July 18, 1956, the court appointed Felicisimo Gatmaitan as creditors thereof be adequately protected and all the rightful heirs assured of their shares in the
administrator of the estate with a bond in the amount of P2,000.00 and Gorgonio Medina as co- inheritance.
administrator without compensation and bond.

Why the appealed order is unwarranted is evident on three counts. Firstly, to our mind, the partial
On March 14, 1957, administrator Gatmaitan filed an amended inventory of the estate left by the distribution was prematurely ordered by the lower court. It appears that at the time the questioned
deceased consisting of an undivided half of the conjugal partnership properties and amounting all order was rendered, the amended inventory and appraisal filed by the administrator-appellant
in all to P31,336.60. An opposition to the admission of said inventory was registered by the was not yet even accepted, and it was still under consideration by the court, in view of an
oppositors on the ground that the same did not represent the true and faithful list of the properties opposition to the admission thereof by some of the heirs. Moreover, it seems that notices for the
left by the deceased, and, particularly, that a parcel of twenty-two (22) hectares of land, more or presentation of claims by possible creditors of the estate had not yet been published, so that the
less, was left out. In view of the opposition, the hearing and consideration of the amended period for the presentation of claims had not as yet elapsed. Consequently, it cannot be safely
inventory was, in an order dated April 29, 1957, postponed until further assignment. said that the court had a sufficient basis upon which to order a partial distribution of the
properties, having in mind the adverse effects that it might have on the rights of the creditors and It should be noted, furthermore, that the bond required by the Rules is not solely for the protection
the heirs alike.2 As pointed out by the appellant, there are indications that the fruits and cash of the heirs then appearing, but also for the benefit of creditors and subsequent claimants who
amounts ordered to be partially distributed would be in excess of the distributees' full inheritance have not agreed to the advances.
from the estate. The inventory, as filed, showed a total sum of P31,336.60 that actually represents
the conjugal partnership assets, half of which belongs to the surviving spouse. Said inventory
As to the argument, that the order in question is merely interlocutory and therefore not
does not embody any deductions for such expenses as funeral charges, inheritance taxes,
appealable, We find that the objection was not seasonably interposed by the appellees. In
expenses for administration or an estimate of probable debts of the estate. It is worthwhile to
Salazar vs. Salazar, G.R. No. L-5823, April 29, 1953, it was held, and we quote:
state in this connection that besides the appellant, as the surviving spouse of the decedent, there
are about eight others, all claiming to be lawful heirs and seeking respective shares in the estate,
five of whom are alleged full-blood brothers and sisters and three half-blood brothers 3 of the The motion to dismiss filed by appellee during the pendency of this appeal on the
deceased Medina. It should be noted that appellees, being brothers and sisters of the deceased, ground that the order appealed from is not appealable because it is merely
are not entitled to allowances for support, such as the court is authorized to provide, under interlocutory, cannot be entertained. While an order denying or granting
Section 3 of Rule 84 of the Rules of Court, for the widow and the children 4 of the deceased during alimony pendente lite is interlocutory and consequently non appealable . . ., however,
the settlement of the estate proceedings, to be deducted from the respective shares of the if appeal is taken therefrom, and no timely objection is interposed thereto, the objection
participants. is deemed waived. Thus, when the objection is founded on the ground that the
judgment appealed from is interlocutory, but the appellee, before making such
objection, has allowed the record on appeal to be approved and printed, and has
Second, and more important, no bond was fixed by the court as a condition precedent to the
allowed the appellant to print his brief, such objection is too late and is deemed waived
partial distribution ordered by it, a bond which, because of the reasons already adduced,
(Slade-Perkins vs. Perkins, 57 Phil., 223, 225; Linguengo and Martinez vs. Herrero, 17
becomes all the more imperative.
Phil., 29; Moran, Comments on the Rules of Court, Vol. 1, 1952, ed., p. 987).

Rule 91, Section 1 of the Rules of Court, specifically provides as follows:


Lastly, appellees urged that this appeal was prematurely taken in that appellant has not as yet
formally objected to the proffered bond as mentioned in an alleged order of the court, dated May
When the debts, funeral charges, and expenses of administration, the allowances to 16, 1957, which appellees have quoted in their brief, as follows:
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
Atty. Cesar Francisco, counsel for the administrator, is hereby given one week from
person interested in the estate, and after hearing upon notice, shall assign the residue
today within which to file his manifestation as to whether the administrator is willing to
of the estate to the person entitled to the same, naming them and the proportions, or
withdraw his appeal from the order dated April 5, 1957, provided Atty. V.M. Ruiz files a
parts, to which is entitled, and such persons may demand and recover their respective
bond in the amount of P2,000.00 and the value of 25 cavanes of palay granted to each
shares from the executor or administrator, or any other person having the same in his
of the two heirs Dominica Medina and Gorgonio Medina in the aforesaid order of the
possession. . . .
Court to guarantee the refund of the said amount and the value of the palay should the
same be found to be in excess of what is due to the said two heirs upon the final
No distribution shall be allowed until the payment of the obligations above distribution of the estates;
mentioned has been made or provided for, unless the distributees or any of them, give
a bond, in the sum to be fixed by the court, conditioned for the payment of said
and upon which, they (appellees) filed the following manifestation dated May 23, 1957:
obligations within such time as the courts directs. (Emphasis supplied)

CONSIDERING that up to the present, the Court has not as yet ruled upon counsel's
Appellees contend that the order of partial distribution having been issued pursuant to an
opposition or objection to the administrator's appeal, nor have the administrator or that
agreement of the parties, the same could not now be assailed by the appellant. While the wording
of his counsel rejected the heir's offer of a bond to answer for whatever excess they
of the appealed order seem to indicate that it was rendered with the conformity of the heirs, there
might receive as advance inheritance, the undersigned counsel for the heirs above-
is reason to believe that it was just a mistaken impression on the part of the court. Soon after the
named respectfully prays the Court to hold in abeyance whatever action it shall take
order was rendered, the administrator-appellant filed a motion for reconsideration, among other
towards the approval or non-approval of the Record on Appeal, until such time as it
things, calling the attention of the court that he never agreed to the partial distribution of the
shall have ruled upon their opposition or until the administrator shall have rejected
estate in the manner ordained in the appealed order. Although said motion was denied for lack of
formally the offer of a bond aforesaid. Counsel shall then in time file his corresponding
merit, the court did not deny categorically appellant's imputation, which could have been easily
opposition to the Record on Appeal.
averred to by it; nor did the appellees at any time prior to this appeal controvert the aforesaid
allegation of the administrator. There is plausibility in appellant's statement that the agreement
referred to in the order was actually one between the appellees among themselves. The tenor of the order of May 16, 1957, as well as the fact that neither said order nor the
"constancia" of appellees are included in the Record on Appeal, indicates that the belated offer to
file a bond amounted to no more than an attempt of appellees to settle the particular issue
between the parties that was rejected by the appellant. That the record on appeal was approved been declared their father's sole heirs in the settlement of their father's estate. Moreover, one of
much later, on July 15, 1957, and yet without the written opposition . . . required in the order of these children was herself the duly appointed administratrix of the last named intestate estate.
this Court dated June 12, 1957, notwithstanding the length of time that has already elapsed (R.A.
p. 23), and the absence of proof that the bond offered was ever filed and approved by the Court,
Pertinent to the question posed by the petitioners is section 1 of Rule 91 which provides as
fortify that conclusion. Anyway, since the purpose of the bond required by section 1, paragraph 2,
follows:
of Rule 91 is to protect not only the appellant but also the creditors and subsequent claimants to
the estate, in order that they may not be prejudiced by the partial distribution, the amount of the
bond could not be fixed without hearing such interested parties, and there is no showing that they When the debts, funeral charges, and expenses of administration, the allowances to
were consulted. Hence, the bond offered could not affect the merits of this appeal, although the the widow, and inheritance tax, if any, chargeable to the estate in accordance with law,
Court below is not precluded for approving a new bond. Wherefore, the order of partial have been paid, the court, on the application of the executor or administrator, or of a
distribution appealed from is set aside, without prejudice to the issue of another order after strict person interested in the estate, and after hearing upon notice, shall assign the residue
compliance with the Rules of Court. The records are ordered remanded to the lower court for of the estate to the persons entitled to the same, naming them and the proportions, or
further proceedings. Costs against appellees. parts, to which each is entitled, such persons may demand and recover their
respective shares from the executor or administrator, or any other person having same
in his possession. If there is a controversy before the court as to who are the lawful
heirs of the deceased person or as to distributive share to which each person is
entitled under the law, the testimony as to such controversy shall be taken in writing by
the judge, under oath.

No distribution shall be allowed until the payment of the obligation above mentioned
has been made or provided for, unless the distributes, or any of them, give a bond, in a
sum to be fixed by the court, conditioned for the payment of said obligations such time
as the court directs.

Applying this Rule in the case of De Jesus vs. Daza,* 43 Off. Gaz., (No. 6), 2055, the facts of
which were in all essential particulars analogous to those of the present case, this Court said: ". . .
MARCELA DE BORJA VDA. DE TORRES, SATURNINA DE BORJA VDA. DE ORTEGA, the probate court, having the custody and control of the entire estate, is the most logical authority
EUFRACIA DE BORJA VDA. DE LIMACO, JACOBO DE BORJA, OLIMPIA DE BORJA, AND to effectuate this provision within the same estate proceeding, said proceeding being the most
JUAN DE BORJA, petitioners, vs. THE HONORABLE DEMETRIO B. ENCARNACION, Judge of convenient one in which this power and function of the court can be exercised and performed
the Court of First Instance of Rizal, and CRISANTO DE BORJA, Administrator of the Intestate without the necessity if requiring the parties to undergo the inconvenience, delay and expense of
Estate of Marcelo de Borja, respondents. having to commence and litigate an entirely different action. There can be no question of the
share to be delivered the probate court would have jurisdiction within the same estate proceeding
TUASON, J.: to order him to deliver that possession to the person entitled thereto, and we see no reason, legal
or equitable, for denying the same power to the probate court to be exercised within the same
estate proceeding if the share to be delivered happens to be in the possession of 'any other
The petitioners contest the jurisdiction of the respondent Judge to issue the order herein sought person,' especially when 'such other person' is one of the heirs themselves who are already
to be reviewed directing them to deliver to the administrator of the intestate estate of Marcelo de under the jurisdiction of the probate court in the same estate proceeding."
Borja, (Special Proceeding No. R-2414 of the Court of First Instance of Rizal) a certain parcel of
land which is in petitioners' possession and to which they assert exclusive ownership. They
contend that the administrator's remedy to recover that property is an action at law and not by There are factors present in the case at bar but not in the De Jesus vs. Daza case which greatly
motion in the intestate proceeding. reinforce the probate court's authority to make the order under review: The partition here had not
only been approved and thus become a judgment of the court, but distribution of the petitioners
had received the property assigned to them or their father's estate. And this was not all. As the
It appears that in the above-entitled intestate estate, the commissioners appointed by the court administrator had refused, on technical grounds, to turn over to them their or their father's share,
submitted on February 8, 1944, a project of partition, in which the land in question, which is and they moved for and secured from the probate court an order for the execution of the partition. And
was then in the possession of the herein petitioners, was included as property of the estate and when the administrator elevated the case to this Court on certiorari, they as respondents in that
assigned to one Miguel B. Dayco, one of Marcelo de Borja's heirs. Over the objection of the petition vigorously defended the probate court's action. They complained bitterly that execution of
petitioners, surviving children of Quintin de Borja who was one of Marcelo's children, the the partition was long overdue and that the administrator was unduly delaying the closing of the
proposed partition was approved in February, 1946, and the order of approval on appeal was estate.
affirmed by this Court in 1949. Although the administratrix of Quintin de Borja's estate was the
party named in the partition in behalf of the estate, the proceeding for the reason that they had
The order now before this Court has to be sustained if for no other reason than that the Purificacion Santos Imperial, as adopted daughter, in the sharing proportion of 5/8 and 3/8,
petitioners are in estoppel. In the face of what they have done, they are precluded from attacking respectively; and of the order of July 17, 1969 denying the motion to set aside the order of
the validity of the partition or any part of it. A party can not, in law and in good conscience, be February 18, 1969.
allowed to reap the fruits of a partition, agreement or judgment and repudiate what does not suit
him.
The factual background of the case is as follows:

There is not much to the complaint that the respondent Judge issued the order under
On October 14, 1957, Luis U. Santos, as surviving spouse of the deceased Fermina Bello
consideration without affording the petitioners a hearing on the merits of their pretended title to
Santos, who died intestate on June 9, 1957, filed and instituted Special Proceeding No. 1049,
the land in their possession. The question of the petitioners' title and possession has been
entitled "Intestate Estate of Fermina Bello Santos", in the Court of First Instance of Bulacan. Luis
concluded by the partition and become a closed matter. All they could prove if allowed to call
U. Santos was appointed regular Administrator on January 16, 1958, as there was no opposition
witnesses would be that the aforesaid property belonged to them or to their father's estate and
filed by the only other heir, herein petitioner Purificacion Santos Imperial. It was only on April 9,
that they are in possession of it to the exclusion of Marcelo de Borja's personal representative.
1965, when petitioner Purificacion Santos Imperial entered her appearance in the
Granting all such proofs to be true, as indeed we may for the purpose of this decision, yet they
abovementioned intestate proceedings as Oppositor, and therein filed a motion to require the
would not detract from the authority of the court to make the order under consideration. The court
regular administrator to render an accounting which resulted in the approval by the Court a quo
had only the partition to examine, to see if the questioned land was included therein. The
on June 6, 1967, of the project of partition dated September 22, 1966, with the following awards
inclusion being shown, and there being no allegation that the inclusion was effected through
and adjudication's:
improper means or without the petitioners' knowledge, the partition barred any further litigation on
said title and operated to bring the property under the control and jurisdiction of the court for
proper disposition according to the tenor of the partition. To all intents and purposes, the property 1. To Dr. Luis U. Santos, citizen of the Philippines, of age, married to
was in custodia legis. What the petitioners could have done was to ask for a reconsideration or Socorro Manankil and resident of Malolos, Bulacan, is hereby awarded and
modification of the partition on the grounds of fraud, excusable mistake, inadvertence, etc. if they adjudicated an undivided FIVE-EIGHTH(5/8) share in each of the above-
could substantiate such allegations. They can not attack the partition collaterally, as they are described properties; and
trying to do in this case.
2. To Purificacion Santos-Imperial, citizen of the Philippines, of age, married
The petition is denied with costs against the petitioners. to Eloy Imperial and resident of Malolos, Bulacan, is hereby awarded and
adjudicated an undivided THREE-EIGHTH(3/8) share in each of the
properties described above;

The foregoing properties, as well as those realty situated in Pamplona,


Camarines Sur, and Manito, Albay, which have been omitted or excluded
from this project of partition to be dealt with later, are the only ones which
have come to the knowledge of the administrator so far. However, should
any other property be discovered, the same shall be divided between the
administrator and Purification Santos-Imperial in the proportion above-
stated.

WHEREFORE, it is most respectfully prayed that the herein administrator,


Luis U. Santos, and Purificacion Santos Imperial be declared the only heirs
PURIFICACION SANTOS IMPERIAL, petitioner, vs. HON. EMMANUEL M. MUOZ, and LUIS U. of the deceased and entitled to the residuary estate and the foregoing
SANTOS, respondents. PROJECT OF PARTITION approved.

ESGUERRA, J.:p Malolos, Bulacan, September 22, 1966.

Petition for review on certiorari of the order of the Court of First Instance of Bulacan, presided by The assailed order of June 6, 1967, approving the Amended Project of Partition dated September
respondent Judge, Hon. Emmanuel M. Muoz, dated February 18, 1969, setting aside its order of 22, 1966, is herein below quoted, to wit:
June 6, 1967, in Special Proceedings No. 1049 entitled "Intestate Estate of Fermina Bello
Santos", approving the Amended Project of Partition dated September 22, 1966, and adjudicating
Upon agreement of the parties, the hearing of the statement of accounts is
the properties left by the decedent to her forced heirs, Luis U. Santos, as surviving spouse, and
hereby postponed to July 18, 1967, at 8:30 A.M. However, the opposition to
the project of partition having been withdrawn and finding the same to be in (b) That Purificacion Santos Imperial precisely withdrew her opposition to
order, said project of partition is hereby APPROVED. the statements of accounts of Luis U. Santos from June 9, 1957, to
December 31, 1965, and relieved the administrator-heir of submitting any
accounting for the years, 1966 and 1967, by virtue of the approval of the
In connection with the consideration of the statement of accounts submitted
partition of September 22, 1966 on June 6, 1967, and the promise or
by the administrator, he is hereby directed to deliver to the clerk of court all
agreement that said partition will be implemented immediately after said
vouchers covering the income and disbursements of the estate within 10
COMPROMISE AGREEMENT, which served as basis of the order of the
days from receipt of this order.
Court of January 16, 1968. The correction will therefore violate the
COMPROMISE AGREEMENT of the parties.
SO ORDERED.

(c) The orders of June 6, 1967 and April 26, 1968 are not interlocutory in
Malolos, Bulacan, June 6, 1967. nature but FINAL ORDERS fixing the distributive sharing ratio as intended
by Rule 90, Section 1 of the Rules of Court, which was appealable by any
Copies of the order of June 6, 1967, were furnished counsel for the parties on the same date, heir who did not agree to the distributive share fixed in such partition.
June 6, 1967, in open court. (p. 3, Petition)
(d) As the AMENDED PROJECT OF PARTITION of September 22, 1966,
On January 16, 1968, the Court a quo approved the Compromise-Agreement of the parties fixed the distributive share already as 5/8 to Luis U. Santos and 3/8 to
concerned, wherein the administrator, respondent Dr. Luis U. Santos, among others, agreed to let Purificacion Santos-Imperial as basis of the withdrawal of her opposition to
Purificacion Santos Imperial, oppositor-petitioner, have the amount of P53,072.81 in full the statement of accounts and further accounting of any produce for 1966-
settlement of her 3/8 share in the income of the estate from June 9, 1957, up to December 31, 1967, whatever disadvantage Luis U. Santos suffered, if true, in the partition
1967, inclusive, exclusive of any other amount she might have received in the past from the said had been fully compensated by the produce which were not reported
administrator. This amount of P53,072.81 was actually paid to said Purificacion Santos Imperial. correctly or where there was no report at all. Hence, the partition can no
longer be corrected.

On April 26, 1968, the Court a quo again approved the final partial project of partition filed by the
administrator-respondent under date of March 22, 1968, with the same sharing ratio as in the one (e) The cited case, SC-G R. No. L-19281 is not in point because, there, the
approved in its order of June 6, 1967. Court had no judgment as yet which was final about the proportion of the
division, while here two orders of final nature already covered the partitions
sought to be amended.
On June 18, 1968, herein respondent Luis U. Santos as administrator-heir of the intestate estate
of Fermina Bello Santos filed a Motion for Correction of both the Amended Project of Partition of
September 22, 1966, approved by the Court a quo on June 6, 1967, and the Final Partial Project On February 18, 1969, the Court a quo granted the motion for correction, to wit:
of Partition of March 22, 1968, likewise approved by the same court on April 26, 1968, claiming
that the partition submitted to the Court was erroneous, as the same did not conform with the Acting upon the motion for correction dated June 18, 1968, filed by the
ruling laid down in the case of Santillon vs. Miranda, et al., G. R. No. L-19281, June 30, 1965, 14 administrator, which motion had been overlooked due to the numerous
SCRA 563, where the Supreme Court held: "When intestacy occurs, a surviving spouse other motions and petitions filed by the parties, and in the light of the
concurring with only one legitimate child of the deceased is entitled to one-half of the estate of the decision of the Hon. Supreme Court in Santillon vs. Miranda, G.R. No. L-
deceased spouse under Article 996 of the Civil Code." Therefore, administrator-respondent Luis 19281, the order of June 6, 1967 approving the amended projects of
Santos should get of the properties partitioned while oppositor-petitioner Purificacion Santos partition is hereby reconsidered and set aside, and the administrator is
Imperial, the only child (adopted), should get only the remaining of the estate. allowed to re-amend the said projects of partition as to embody therein the
corrections sought.
Oppositor-Petitioner filed a formal opposition to the motion for correction on the following
grounds, to wit: SO ORDERED.

(a) The orders of June 6, 1967 and April 26, 1968, are already both final On March 20, 1969, oppositor-petitioner filed a Motion to Set Aside the order of February 18,
and executory as of June 18, 1968, the 30-day period for appeal having 1969, which was denied on July 19, 1969, by the Court a quo, as follows:
lapsed, so cannot be subject to further correction;

Malolos, Bulacan, February 18, 1969.


Acting upon the motion to set aside order of February 18, 1969 filed by the The contention of the petitioner that an order which has already become final and, therefore,
oppositor and considering that, as rightly pointed out by the administrator, executory is not subject to correction, finds support in Chereau vs. Fuentebella, et al., 43 Phil.
the said order is merely interlocutory so that this court has not lost 216, where it was held that an erroneous decree or judgment although granted without legal
jurisdiction to entertain any and all corrections of the division; considering, authority and contrary to the express provision of the statute, is not void. Here, as no appeal was
further, that in order to put an end to this litigation between the parties, a taken, the decree must be conceded to have full force and effect. An erroneous decree is not a
correct and legal partition of the property of the estate is necessary, void decree. This Court held in the Fuentebella case:
MOTION DENIED.
... Erroneous the judgment undoubtedly was, and if the matter had been
SO ORDERED. brought by appeal to this Court, and error assigned on that ground, the
judgment granting the divorce would have been reversed. But after the
decree has become final and the community property divided, the decree
Malolos, Bulacan, July 17, 1969.
cannot now be changed in any proceeding; and much less is it subject to
the collateral attack which is here made upon it. (Ibid, at p. 220)
Hence this petition for review on certiorari.

The questioned orders having become final and, therefore, executory


The issues for consideration are: (1) whether an order of a probate court in testate or intestate because of the failure of the herein respondent Luis U. Santos to appeal on
proceedings approving a project of partition which clearly fixed the distributive share to which time by allowing the period for appeal to lapse before filing his motion for
each heir is entitled is merely interlocutory in nature so that the probate court can correct and set correction on June 18, 1968, he has to suffer the misfortune brought about
aside the same anytime; or is final and, therefore, appealable within the 30 day period for appeal; by his own negligence and fatal inadvertence.
and (2) whether a court can order the correction of an erroneous final decision after it had
become final and executory.
WHEREFORE, the orders of the court of First Instance of Bulacan dated February 18, 1969, and
July 17, 1969, are hereby reversed and set aside.
I. THE FIRST ISSUE

The contention of the petitioner to the effect that the orders of the court a quo dated June 6, 1967
as well as that of April 26, 1968, are final as the same have determined the distributive shares of
the known forced heirs, finds support in the very same case cited by the respondents as their
authority. In that case of Santillon vs. Miranda, et al., G.R. No.
L-19281, June 30, 1965, 14 SCRA 563, this Court held: "Appeal in special proceedings; Order of
court determining distributive share of heirs appealable. An order of the Court of First Instance
which determines the distributive shares of the heirs of a deceased-person is appealable." This
Court in deciding the issue as to whether the order of the lower court is final and appealable, went
on to say:

It is clear that the order of the lower court is final and, therefore, appealable
to this Court.

Under Rule 109, section 1, a person may appeal in special proceedings from an order of the
Court of First Instance where such order "determines ... the distributive share of the estate to
which such person is entitled."

The two (2) questioned orders, being final in character, should have been appealed by the party
adversely affected within the 30-day reglementary period provided for appeal. This was not done.

II. THE SECOND ISSUE


MICHAEL C. GUY, petitioner, vs. HON. COURT OF APPEALS, HON. SIXTO MARELLA, JR.,
Presiding Judge, RTC, Branch 138, Makati City and minors, KAREN DANES WEI and KAMILLE
DANES WEI, represented by their mother, REMEDIOS OANES, respondents.

YNARES-SANTIAGO, J.:

This petition for review on certiorari assails the January 22, 2004 Decision 1 of the Court of
Appeals in CA-G.R. SP No. 79742, which affirmed the Orders dated July 21, 2000 2 and July 17,
20033 of the Regional Trial Court of Makati City, Branch 138 in SP Proc. Case No. 4549 denying
petitioner's motion to dismiss; and its May 25, 2004 Resolution 4 denying petitioner's motion for
reconsideration.

The facts are as follows:

On June 13, 1997, private respondent-minors Karen Oanes Wei and Kamille Oanes Wei,
represented by their mother Remedios Oanes (Remedios), filed a petition for letters of
administration5 before the Regional Trial Court of Makati City, Branch 138. The case was
docketed as Sp. Proc. No. 4549 and entitled Intestate Estate of Sima Wei (a.k.a. Rufino Guy
Susim).

Private respondents alleged that they are the duly acknowledged illegitimate children of Sima
Wei, who died intestate in Makati City on October 29, 1992, leaving an estate valued at
P10,000,000.00 consisting of real and personal properties. His known heirs are his surviving
spouse Shirley Guy and children, Emy, Jeanne, Cristina, George and Michael, all surnamed Guy.
Private respondents prayed for the appointment of a regular administrator for the orderly
settlement of Sima Wei's estate. They likewise prayed that, in the meantime, petitioner Michael C.
Guy, son of the decedent, be appointed as Special Administrator of the estate. Attached to private
respondents' petition was a Certification Against Forum Shopping 6 signed by their counsel, Atty.
Sedfrey A. Ordoez.
In his Comment/Opposition, 7 petitioner prayed for the dismissal of the petition. He asserted that Private respondents contend that their counsel's certification can be considered substantial
his deceased father left no debts and that his estate can be settled without securing letters of compliance with the rules on certification of non-forum shopping, and that the petition raises no
administration pursuant to Section 1, Rule 74 of the Rules of Court. He further argued that private new issues to warrant the reversal of the decisions of the Regional Trial Court and the Court of
respondents should have established their status as illegitimate children during the lifetime of Appeals.
Sima Wei pursuant to Article 175 of the Family Code.
The issues for resolution are: 1) whether private respondents' petition should be dismissed for
The other heirs of Sima Wei filed a Joint Motion to Dismiss 8 on the ground that the certification failure to comply with the rules on certification of non-forum shopping; 2) whether the Release
against forum shopping should have been signed by private respondents and not their counsel. and Waiver of Claim precludes private respondents from claiming their successional rights; and 3)
They contended that Remedios should have executed the certification on behalf of her minor whether private respondents are barred by prescription from proving their filiation.
daughters as mandated by Section 5, Rule 7 of the Rules of Court.
The petition lacks merit.
In a Manifestation/Motion as Supplement to the Joint Motion to Dismiss, 9 petitioner and his co-
heirs alleged that private respondents' claim had been paid, waived, abandoned or otherwise
Rule 7, Section 5 of the Rules of Court provides that the certification of non-forum shopping
extinguished by reason of Remedios' June 7, 1993 Release and Waiver of Claim stating that in
should be executed by the plaintiff or the principal party. Failure to comply with the requirement
exchange for the financial and educational assistance received from petitioner, Remedios and her
shall be cause for dismissal of the case. However, a liberal application of the rules is proper
minor children discharge the estate of Sima Wei from any and all liabilities.
where the higher interest of justice would be served. In Sy Chin v. Court of Appeals,11 we ruled
that while a petition may have been flawed where the certificate of non-forum shopping was
The Regional Trial Court denied the Joint Motion to Dismiss as well as the Supplemental Motion signed only by counsel and not by the party, this procedural lapse may be overlooked in the
to Dismiss. It ruled that while the Release and Waiver of Claim was signed by Remedios, it had interest of substantial justice. 12 So it is in the present controversy where the merits 13 of the case
not been established that she was the duly constituted guardian of her minor daughters. Thus, no and the absence of an intention to violate the rules with impunity should be considered as
renunciation of right occurred. Applying a liberal application of the rules, the trial court also compelling reasons to temper the strict application of the rules.
rejected petitioner's objections on the certification against forum shopping.
As regards Remedios' Release and Waiver of Claim, the same does not bar private respondents
Petitioner moved for reconsideration but was denied. He filed a petition for certiorari before the from claiming successional rights. To be valid and effective, a waiver must be couched in clear
Court of Appeals which affirmed the orders of the Regional Trial Court in its assailed Decision and unequivocal terms which leave no doubt as to the intention of a party to give up a right or
dated January 22, 2004, the dispositive portion of which states: benefit which legally pertains to him. A waiver may not be attributed to a person when its terms do
not explicitly and clearly evince an intent to abandon a right. 14
WHEREFORE, premises considered, the present petition is hereby DENIED DUE
COURSE and accordingly DISMISSED, for lack of merit. Consequently, the assailed In this case, we find that there was no waiver of hereditary rights. The Release and Waiver of
Orders dated July 21, 2000 and July 17, 2003 are hereby both AFFIRMED. Claim does not state with clarity the purpose of its execution. It merely states that Remedios
Respondent Judge is hereby DIRECTED to resolve the controversy over the received P300,000.00 and an educational plan for her minor daughters "by way of financial
illegitimate filiation of the private respondents (sic) minors [-] Karen Oanes Wei and assistance and in full settlement of any and all claims of whatsoever nature and kind x x x against
Kamille Oanes Wei who are claiming successional rights in the intestate estate of the the estate of the late Rufino Guy Susim." 15 Considering that the document did not specifically
deceased Sima Wei, a.k.a. Rufino Guy Susim. mention private respondents' hereditary share in the estate of Sima Wei, it cannot be construed
as a waiver of successional rights.
SO ORDERED.10
Moreover, even assuming that Remedios truly waived the hereditary rights of private
respondents, such waiver will not bar the latter's claim. Article 1044 of the Civil Code, provides:
The Court of Appeals denied petitioner's motion for reconsideration, hence, this petition.

ART. 1044. Any person having the free disposal of his property may accept or
Petitioner argues that the Court of Appeals disregarded existing rules on certification against
repudiate an inheritance.
forum shopping; that the Release and Waiver of Claim executed by Remedios released and
discharged the Guy family and the estate of Sima Wei from any claims or liabilities; and that
private respondents do not have the legal personality to institute the petition for letters of Any inheritance left to minors or incapacitated persons may be accepted by their
administration as they failed to prove their filiation during the lifetime of Sima Wei in accordance parents or guardians. Parents or guardians may repudiate the inheritance left to their
with Article 175 of the Family Code. wards only by judicial authorization.
The right to accept an inheritance left to the poor shall belong to the persons On the other hand, Articles 172, 173 and 175 of the Family Code, which superseded Article 285
designated by the testator to determine the beneficiaries and distribute the property, or of the Civil Code, provide:
in their default, to those mentioned in Article 1030. (Emphasis supplied)
ART. 172. The filiation of legitimate children is established by any of the following:
Parents and guardians may not therefore repudiate the inheritance of their wards without judicial
approval. This is because repudiation amounts to an alienation of property 16 which must pass the
(1) The record of birth appearing in the civil register or a final judgment; or
court's scrutiny in order to protect the interest of the ward. Not having been judicially authorized,
the Release and Waiver of Claim in the instant case is void and will not bar private respondents
from asserting their rights as heirs of the deceased. (2) An admission of legitimate filiation in a public document or a private handwritten
instrument and signed by the parent concerned.

Furthermore, it must be emphasized that waiver is the intentional relinquishment of a known right.
Where one lacks knowledge of a right, there is no basis upon which waiver of it can rest. In the absence of the foregoing evidence, the legitimate filiation shall be proved by:
Ignorance of a material fact negates waiver, and waiver cannot be established by a consent given
under a mistake or misapprehension of fact. 17 (1) The open and continuous possession of the status of a legitimate child; or

In the present case, private respondents could not have possibly waived their successional rights (2) Any other means allowed by the Rules of Court and special laws.
because they are yet to prove their status as acknowledged illegitimate children of the deceased.
Petitioner himself has consistently denied that private respondents are his co-heirs. It would thus
be inconsistent to rule that they waived their hereditary rights when petitioner claims that they do ART. 173. The action to claim legitimacy may be brought by the child during his or her
not have such right. Hence, petitioner's invocation of waiver on the part of private respondents lifetime and shall be transmitted to the heirs should the child die during minority or in a
must fail. state of insanity. In these cases, the heirs shall have a period of five years within which
to institute the action.

Anent the issue on private respondents' filiation, we agree with the Court of Appeals that a ruling
on the same would be premature considering that private respondents have yet to present The action already commenced by the child shall survive notwithstanding the death of
evidence. Before the Family Code took effect, the governing law on actions for recognition of either or both of the parties.
illegitimate children was Article 285 of the Civil Code, to wit:
ART. 175. Illegitimate children may establish their illegitimate filiation in the same way
ART. 285. The action for the recognition of natural children may be brought only during and on the same, evidence as legitimate children.
the lifetime of the presumed parents, except in the following cases:
The action must be brought within the same period specified in Article 173, except
(1) If the father or mother died during the minority of the child, in which case the latter when the action is based on the second paragraph of Article 172, in which case the
may file the action before the expiration of four years from the attainment of his action may be brought during the lifetime of the alleged parent.
majority;
Under the Family Code, when filiation of an illegitimate child is established by a record of birth
(2) If after the death of the father or of the mother a document should appear of which appearing in the civil register or a final judgment, or an admission of filiation in a public document
nothing had been heard and in which either or both parents recognize the child. or a private handwritten instrument signed by the parent concerned, the action for recognition
may be brought by the child during his or her lifetime. However, if the action is based upon open
and continuous possession of the status of an illegitimate child, or any other means allowed by
In this case, the action must be commenced within four years from the finding of the the rules or special laws, it may only be brought during the lifetime of the alleged parent.
document. (Emphasis supplied)

It is clear therefore that the resolution of the issue of prescription depends on the type of evidence
We ruled in Bernabe v. Alejo18 that illegitimate children who were still minors at the time the to be adduced by private respondents in proving their filiation. However, it would be impossible to
Family Code took effect and whose putative parent died during their minority are given the right to determine the same in this case as there has been no reception of evidence yet. This Court is not
seek recognition for a period of up to four years from attaining majority age. This vested right was a trier of facts. Such matters may be resolved only by the Regional Trial Court after a full-blown
not impaired or taken away by the passage of the Family Code. 19 trial.
While the original action filed by private respondents was a petition for letters of administration,
the trial court is not precluded from receiving evidence on private respondents' filiation. Its
jurisdiction extends to matters incidental and collateral to the exercise of its recognized powers in
handling the settlement of the estate, including the determination of the status of each heir. 20 That
the two causes of action, one to compel recognition and the other to claim inheritance, may be
joined in one complaint is not new in our jurisprudence. 21 As held in Briz v. Briz:22

The question whether a person in the position of the present plaintiff can in any event
maintain a complex action to compel recognition as a natural child and at the same
time to obtain ulterior relief in the character of heir, is one which in the opinion of this
court must be answered in the affirmative, provided always that the conditions
justifying the joinder of the two distinct causes of action are present in the particular
case. In other words, there is no absolute necessity requiring that the action to compel
acknowledgment should have been instituted and prosecuted to a successful
conclusion prior to the action in which that same plaintiff seeks additional relief in the
character of heir. Certainly, there is nothing so peculiar to the action to compel
acknowledgment as to require that a rule should be here applied different from that
generally applicable in other cases. x x x

The conclusion above stated, though not heretofore explicitly formulated by this court,
is undoubtedly to some extent supported by our prior decisions. Thus, we have held in
numerous cases, and the doctrine must be considered well settled, that a natural child
having a right to compel acknowledgment, but who has not been in fact
acknowledged, may maintain partition proceedings for the division of the inheritance
against his coheirs (Siguiong vs. Siguiong, 8 Phil., 5; Tiamson vs. Tiamson, 32 Phil.,
62); and the same person may intervene in proceedings for the distribution of the
estate of his deceased natural father, or mother (Capistrano vs. Fabella, 8 Phil., 135;
Conde vs. Abaya, 13 Phil., 249; Ramirez vs. Gmur, 42 Phil., 855). In neither of these
situations has it been thought necessary for the plaintiff to show a prior decree
compelling acknowledgment. The obvious reason is that in partition suits and
distribution proceedings the other persons who might take by inheritance are before
the court; and the declaration of heirship is appropriate to such proceedings.

WHEREFORE, the instant petition is DENIED. The Decision dated January 22, 2004 of the Court
of Appeals in CA-G.R. SP No. 79742 affirming the denial of petitioner's motion to dismiss; and its
Resolution dated May 25, 2004 denying petitioner's motion for reconsideration, are AFFIRMED.
Let the records be REMANDED to the Regional Trial Court of Makati City, Branch 138 for further
proceedings.
The facts found by the lower court as basis for the declaration that the petitioner had been in an
uninterrupted possession of the status of natural child of the deceased are as follows:
In the matter of the Intestate Estate of the deceased Emeterio Lopez.
CONCEPCION LOPEZ, petitioner-appellee, vs. ADELA LOPEZ, ET AL., oppositors-appellants. De las pruebas practicadas por la representacion de dicha Concepcion Lopez se han
establecido los siguientes hechos: Que Concepcion Lopez es hija natural del finado
Emeterio Lopez habida con Juana Cuison, quienes desde el nacimiento de aquella
MORAN, J.:
han estado conviviendo como marido y mujer, siendo ambos solteros, hasta que
fallecio dicha Juana Cuison; que Concepcion Lopez nacio el ao 1890 en Lagonoy,
The primary issue raised in this appeal is whether or not Concepcion Lopez is an acknowledged Camarines Sur, habiendo sido desde entonces mantenida por su padre, quien durante
natural daughter of Emeterio Lopez who died intestate, leaving no legitimate descendants, su vida ha costeado todas las necesidades de Conception Lopez, tratandola como su
ascendants or widow. verdadera hija, pues cada vez que aquel le ilamaba a esta lo hacia ilamandola con el
apodo de "Siong" y Concepcion, a su vez, le contestaba a su padre "papa;" que dicha
Concepcion Lopez filed a petition in the intestate proceedings of the deceased Emeterio Lopez, Concepcion Lopez ha estado siempre viviendo con su difunto padre Emeterio Lopez
claiming to be an acknowledged natural daughter of the deceased and praying that she be hasta que este fallecio el 24 junio de 1931.
declared his universal heiress entitled to a summary award of his estate, same being valued at
less than six thousand pesos (P6,000). The oppositors-appellants, thru Attorney Simplicio B. In previous cases, similar facts were held to be sufficient to entitle a natural child to recognition.
Pea, filed an opposition, denying petitioner's claim and praying that, as they are nephews and (Cf. Dizon vs. Ullmann, 13 Phil., 88; Allarde vs. Abaya, supra; Dalistan vs. Armas, 32 Phil., 648;
nieces of the deceased, they be adjudged entitled to the property left by him. Concepcion Lopez see also decision of the Supreme Court of Spain of Nov. 7, 1986.)
filed later an amended petition, alleging that, according to a new assessment, the estate was
worth nine thousand pesos (P9,000) and that, therefore, its distribution could not be made
Appellants claim that they had no notice either of the petition for the declaration of heirs or of the
summarily but thru regular administration proceedings. Accordingly, an administrator was
date set for the hearing thereof. We find in the record no evidence affirmatively showing that they
appointed who, thru Attorney Simplicio B. Pea, filed later a motion for a declaration of heirs and
had no such notice; therefore, the presumption of regularity of proceedings should stand. In the
prayed that the oppositors-appellants be so adjudged. After hearing, the court issued an order
motion for reconsideration filed by them, the lack of notice is alleged; but the motion is not even
declaring the petitioner an acknowledged natural daughter of the deceased entitled to the rights
verified. Besides, according to the record Attorney Simplicio B. Pea was the counsel for both the
accorded her by law. The oppositors appealed.
administrator and the oppositors-appellants. The petition for declaration of heirs, although signed
by Attorney Simplicio B. Pea as "abogado del administrador", was, in fact, a petition filed in
Contrary to appellants' contention it is a well-settled rule that a person claiming to be an behalf of the oppositors-appellants as their right to succession is therein asserted and prayed for.
acknowledged natural child of a deceased need not maintain a separate action for recognition but Under this circumstances, there exists sufficient ground for holding, as we do hold, that the
may simply intervene in the intestate proceedings, by alleging and proving therein his or her oppositors-appellants had notice of the petition as well as of the hearing where the said attorney
status as such, and claiming accordingly the right to share in the inheritance. was present.

The petition filed by Concepcion Lopez in the intestate proceedings is alleged to be insufficient. It Order is affirmed, with costs against appellants.
is said that there is no prayer therein that she be declared an acknowledged natural child, but
only that she be adjudged universal heiress, of the deceased. In the body of the petition there is
an allegation that she is a natural child of the deceased and has been in an uninterrupted
possession of such status. And inasmuch as the recognition of her status is a prerequisite to her
right to heirship, her prayer that she be declared universal heiress implies a like prayer that she
be recognized as an acknowledged natural child. Furthermore, it is a well-settled rule of
pleadings, applicable to motions or petitions, that the prayer for relief, though part of the pleading, (Sgd) EMMANU
is no part of the cause of action or defense alleged therein, and the pleader is entitled to as much JU
relief as the facts duly pleaded may warrant.