THELMA M. ARANAS, Petitioner, vs. TERESITA V. MERCADO, FELIMON V.
Claiming that Emigdio had owned other properties that were excluded from the
MERCADO, CARMENCITA M. SUTHERLAND, RICHARD V. MERCADO, MA. TERESITA
M. ANDERSON, and FRANKLIN L. MERCADO, Respondents.
The probate court is authorized to determine the issue of ownership of properties for
purposes of their inclusion or exclusion from the inventory to be submitted by the
administrator, but its determination shall only be provisional unless the interested
parties are all heirs of the decedent, or the question is one of collation or
advancement, or the parties consent to the assumption of jurisdiction by the probate
court and the rights of third parties are not impaired. Its jurisdiction extends to
matters incidental or collateral to the settlement and distribution of the estate, such
as the determination of the status of each heir and whether property included in the
inventory is the conjugal or exclusive property of the deceased spouse.
Antecedents. Emigdio S. Mercado (Emigdio) died intestate on January 12, 1991,
survived by his second wife, Teresita V. Mercado (Teresita), and their five children,
namely: Allan V. Mercado, Felimon V. Mercado, Carmencita M. Sutherland, Richard
V. Mercado, and Maria Teresita M. Anderson; and his two children by his first
marriage, namely: respondent Franklin L. Mercado and petitioner Thelma M. Aranas
(Thelma).
Emigdio inherited and acquired real properties during his lifetime. He owned
corporate shares in Mervir Realty Corporation (Mervir Realty) and Cebu Emerson
Transportation Corporation (Cebu Emerson). He assigned his real properties in
exchange for corporate stocks of Mervir Realty, and sold his real property in Badian,
Cebu (Lot 3353 covered by Transfer Certificate of Title No. 3252) to Mervir Realty.
On June 3, 1991, Thelma filed in the Regional Trial Court (RTC) in Cebu City a petition
for the appointment of Teresita as the administrator of Emigdio’s estate (Special
Proceedings No. 3094-CEB).1 The RTC granted the petition considering that there
was no opposition. The letters of administration in favor of Teresita were issued on
September 7, 1992.
As the administrator, Teresita submitted an inventory of the estate of Emigdio on
December 14, 1992 for the consideration and approval by the RTC. She indicated in
the inventory that at the time of his death, Emigdio had "left no real properties but
only personal properties" worth ₱6,675,435.25 in all, consisting of cash of
₱32,141.20; furniture and fixtures worth ₱20,000.00; pieces of jewelry valued at
₱15,000.00; 44,806 shares of stock of Mervir Realty worth ₱6,585,585.80; and 30
shares of stock of Cebu Emerson worth ₱22,708.25.2
1
inventory, Thelma moved that the RTC direct Teresita to amend the inventory, and
to be examined regarding it. The RTC granted Thelma’s motion through the order of
January 8, 1993.
On January 21, 1993, Teresita filed a compliance with the order of January 8,
1993,3 supporting her inventory with copies of three certificates of stocks covering
the 44,806 Mervir Realty shares of stock;4 the deed of assignment executed by
Emigdio on January 10, 1991 involving real properties with the market value of
₱4,440,651.10 in exchange for 44,407 Mervir Realty shares of stock with total par
value of ₱4,440,700.00;5 and the certificate of stock issued on January 30, 1979 for
300 shares of stock of Cebu Emerson worth ₱30,000.00.6
On January 26, 1993, Thelma again moved to require Teresita to be examined under
oath on the inventory, and that she (Thelma) be allowed 30 days within which to file
a formal opposition to or comment on the inventory and the supporting documents
Teresita had submitted.
On February 4, 1993, the RTC issued an order expressing the need for the parties to
present evidence and for Teresita to be examined to enable the court to resolve the
motion for approval of the inventory.
On April 19, 1993, Thelma opposed the approval of the inventory, and asked leave of
court to examine Teresita on the inventory.
With the parties agreeing to submit themselves to the jurisdiction of the court on the
issue of what properties should be included in or excluded from the inventory, the
RTC set dates for the hearing on that issue.
Ruling of the RTC. After a series of hearings that ran for almost eight years, the RTC
issued on March 14, 2001 an order finding and holding that the inventory submitted
by Teresita had excluded properties that should be included, and accordingly ruled:
WHEREFORE, in view of all the foregoing premises and considerations, the Court
hereby denies the administratrix’s motion for approval of inventory. The Court
hereby orders the said administratrix to re-do the inventory of properties which are
supposed to constitute as the estate of the late Emigdio S. Mercado by including
therein the properties mentioned in the last five immediately preceding paragraphs
hereof and then submit the revised inventory within sixty (60) days from notice of
this order.
The Court also directs the said administratrix to render an account of her
administration of the estate of the late Emigdio S. Mercado which had come to her
possession. She must render such accounting within sixty (60) days from notice
hereof. SO ORDERED.9
On March 29, 2001, Teresita, joined by other heirs of Emigdio, timely sought the
reconsideration of the order of March 14, 2001 on the ground that one of the real
properties affected, Lot No. 3353 located in Badian, Cebu, had already been sold to
Mervir Realty, and that the parcels of land covered by the deed of assignment had
already come into the possession of and registered in the name of Mervir
Realty.10 Thelma opposed the motion.
On May 18, 2001, the RTC denied the motion for reconsideration,11 stating that
there was no cogent reason for the reconsideration, and that the movants’
agreement as heirs to submit to the RTC the issue of what properties should be
included or excluded from the inventory already estopped them from questioning its
jurisdiction to pass upon the issue.
Decision of the CA. Alleging that the RTC thereby acted with grave abuse of discretion
in refusing to approve the inventory, and in ordering her as administrator to include
real properties that had been transferred to Mervir Realty, Teresita, joined by her
four children and her stepson Franklin, assailed the adverse orders of the RTC
promulgated on March 14, 2001 and May 18, 2001 by petition for certiorari, stating:
I.THE HONORABLE RESPONDENT JUDGE HAS COMMITTED GRAVE ABUSE OF
JURISDICTION (sic) AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING
THAT THE REAL PROPERTY WHICH WAS SOLD BY THE LATE EMIGDIO S. MERCADO
DURING HIS LIFETIME TO A PRIVATE CORPORATION (MERVIR REALTY CORPORATION)
BE INCLUDED IN THE INVENTORY OF THE ESTATE OF THE LATE EMIGDIO S. MERCADO.
II.THE HONORABLE RESPONDENT JUDGE HAS COMMITTED GRAVE ABUSE OF
JURISDICTION (sic) AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING
THAT REAL PROPERTIES WHICH ARE IN THE POSSESSION OF AND ALREADY
REGISTERED IN THE NAME (OF) PRIVATE CORPORATION (MERVIR REALTY
CORPORATION) BE INCLUDED IN THE INVENTORY OF THE ESTATE OF THE LATE
EMIGDIO S. MERCADO.
III.THE HONORABLE RESPONDENT JUDGE HAS COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING THAT
PETITIONERS ARE NOW ESTOPPED FROM QUESTIONING ITS JURISDICTION IN
2
PASSING UPON THE ISSUE OF WHAT PROPERTIES SHOULD BE INCLUDED IN THE
INVENTORY OF THE ESTATE OF THE LATE EMIGDIO MERCADO.12
On May 15, 2002, the CA partly granted the petition for certiorari, disposing as
follows:WHEREFORE, FOREGOING PREMISES CONSIDERED, this petition is GRANTED
partially. The assailed Orders dated March 14, 2001 and May 18, 2001 are hereby
reversed and set aside insofar as the inclusion of parcels of land known as Lot No.
3353 located at Badian, Cebu with an area of 53,301 square meters subject matter of
the Deed of Absolute Sale dated November 9, 1989 and the various parcels of land
subject matter of the Deeds of Assignment dated February 17, 1989 and January 10,
1991 in the revised inventory to be submitted by the administratrix is concerned and
affirmed in all other respects. SO ORDERED.
The CA opined that Teresita, et al. had properly filed the petition for certiorari
because the order of the RTC directing a new inventory of properties was
interlocutory; that pursuant to Article 1477 of the Civil Code, to the effect that the
ownership of the thing sold "shall be transferred to the vendee" upon its "actual and
constructive delivery," and to Article 1498 of the Civil Code, to the effect that the sale
made through a public instrument was equivalent to the delivery of the object of the
sale, the sale by Emigdio and Teresita had transferred the ownership of Lot No. 3353
to Mervir Realty because the deed of absolute sale executed on November 9, 1989
had been notarized; that Emigdio had thereby ceased to have any more interest in
Lot 3353; that Emigdio had assigned the parcels of land to Mervir Realty as early as
February 17, 1989 "for the purpose of saving, as in avoiding taxes with the difference
that in the Deed of Assignment dated January 10, 1991, additional seven (7) parcels
of land were included"; that as to the January 10, 1991 deed of assignment, Mervir
Realty had been "even at the losing end considering that such parcels of land, subject
matter(s) of the Deed of Assignment dated February 12, 1989, were again given
monetary consideration through shares of stock"; that even if the assignment had
been based on the deed of assignment dated January 10, 1991, the parcels of land
could not be included in the inventory "considering that there is nothing wrong or
objectionable about the estate planning scheme"; that the RTC, as an intestate court,
also had no power to take cognizance of and determine the issue of title to property
registered in the name of third persons or corporation; that a property covered by
the Torrens system should be afforded the presumptive conclusiveness of title; that
the RTC, by disregarding the presumption, had transgressed the clear provisions of
law and infringed settled jurisprudence on the matter; and that the RTC also gravely
abused its discretion in holding that Teresita, et al. were estopped from questioning
its jurisdiction because of their agreement to submit to the RTC the issue of which
properties should be included in the inventory.
The CA further opined as follows:
In the instant case, public respondent court erred when it ruled that petitioners are
estopped from questioning its jurisdiction considering that they have already agreed
to submit themselves to its jurisdiction of determining what properties are to be
included in or excluded from the inventory to be submitted by the administratrix,
because actually, a reading of petitioners’ Motion for Reconsideration dated March
26, 2001 filed before public respondent court clearly shows that petitioners are not
questioning its jurisdiction but the manner in which it was exercised for which they
are not estopped, since that is their right, considering that there is grave abuse of
discretion amounting to lack or in excess of limited jurisdiction when it issued the
assailed Order dated March 14, 2001 denying the administratrix’s motion for
approval of the inventory of properties which were already titled and in possession
of a third person that is, Mervir Realty Corporation, a private corporation, which
under the law possessed a personality distinct and separate from its stockholders,
and in the absence of any cogency to shred the veil of corporate fiction, the
presumption of conclusiveness of said titles in favor of Mervir Realty Corporation
should stand undisturbed.
Besides, public respondent court acting as a probate court had no authority to
determine the applicability of the doctrine of piercing the veil of corporate fiction and
even if public respondent court was not merely acting in a limited capacity as a
probate court, private respondent nonetheless failed to adjudge competent evidence
that would have justified the court to impale the veil of corporate fiction because to
disregard the separate jurisdictional personality of a corporation, the wrongdoing
must be clearly and convincingly established since it cannot be presumed.14
On November 15, 2002, the CA denied the motion for reconsideration of Teresita, et
al.15
IssueDid the CA properly determine that the RTC committed grave abuse of
discretion amounting to lack or excess of jurisdiction in directing the inclusion of
certain properties in the inventory notwithstanding that such properties had been
either transferred by sale or exchanged for corporate shares in Mervir Realty by the
decedent during his lifetime?
Ruling of the Court The appeal is meritorious.
3
I.Was certiorari the proper recourseto assail the questioned orders of the RTC?
The first issue to be resolved is procedural. Thelma contends that the resort to the
special civil action for certiorari to assail the orders of the RTC by Teresita and her co-
respondents was not proper.
Thelma’s contention cannot be sustained.
The propriety of the special civil action for certiorari as a remedy depended on
whether the assailed orders of the RTC were final or interlocutory in nature. In Pahila-
Garrido v. Tortogo,16 the Court distinguished between final and interlocutory orders
as follows:
The distinction between a final order and an interlocutory order is well known. The
first disposes of the subject matter in its entirety or terminates a particular
proceeding or action, leaving nothing more to be done except to enforce by
execution what the court has determined, but the latter does not completely dispose
of the case but leaves something else to be decided upon. An interlocutory order
deals with preliminary matters and the trial on the merits is yet to be held and the
judgment rendered. The test to ascertain whether or not an order or a judgment is
interlocutory or final is: does the order or judgment leave something to be done in
the trial court with respect to the merits of the case? If it does, the order or judgment
is interlocutory; otherwise, it is final.
The order dated November 12, 2002, which granted the application for the writ of
preliminary injunction, was an interlocutory, not a final, order, and should not be the
subject of an appeal. The reason for disallowing an appeal from an interlocutory
order is to avoid multiplicity of appeals in a single action, which necessarily suspends
the hearing and decision on the merits of the action during the pendency of the
appeals. Permitting multiple appeals will necessarily delay the trial on the merits of
the case for a considerable length of time, and will compel the adverse party to incur
unnecessary expenses, for one of the parties may interpose as many appeals as there
are incidental questions raised by him and as there are interlocutory orders rendered
or issued by the lower court. An interlocutory order may be the subject of an appeal,
but only after a judgment has been rendered, with the ground for appealing the order
being included in the appeal of the judgment itself.
The remedy against an interlocutory order not subject of an appeal is an appropriate
special civil action under Rule 65, provided that the interlocutory order is rendered
without or in excess of jurisdiction or with grave abuse of discretion. Then is certiorari
under Rule 65 allowed to be resorted to.
The assailed order of March 14, 2001 denying Teresita’s motion for the approval of
the inventory and the order dated May 18, 2001 denying her motion for
reconsideration were interlocutory. This is because the inclusion of the properties in
the inventory was not yet a final determination of their ownership. Hence, the
approval of the inventory and the concomitant determination of the ownership as
basis for inclusion or exclusion from the inventory were provisional and subject to
revision at anytime during the course of the administration proceedings.
In Valero Vda. De Rodriguez v. Court of Appeals,17 the Court, in affirming the decision
of the CA to the effect that the order of the intestate court excluding certain real
properties from the inventory was interlocutory and could be changed or modified
at anytime during the course of the administration proceedings, held that the order
of exclusion was not a final but an interlocutory order "in the sense that it did not
settle once and for all the title to the San Lorenzo Village lots." The Court observed
there that:
The prevailing rule is that for the purpose of determining whether a certain property
should or should not be included in the inventory, the probate court may pass upon
the title thereto but such determination is not conclusive and is subject to the final
decision in a separate action regarding ownership which may be instituted by the
parties (3 Moran’s Comments on the Rules of Court, 1970 Edition, pages 448-9 and
473; Lachenal vs. Salas, L-42257, June 14, 1976, 71 SCRA 262, 266).18 (Bold emphasis
supplied)
To the same effect was De Leon v. Court of Appeals,19 where the Court declared that
a "probate court, whether in a testate or intestate proceeding, can only pass upon
questions of title provisionally," and reminded, citing Jimenez v. Court of Appeals,
that the "patent reason is the probate court’s limited jurisdiction and the principle
that questions of title or ownership, which result in inclusion or exclusion from the
inventory of the property, can only be settled in a separate action." Indeed, in the
cited case of Jimenez v. Court of Appeals,20 the Court pointed out:
All that the said court could do as regards the said properties is determine whether
they should or should not be included in the inventory or list of properties to be
administered by the administrator. If there is a dispute as to the ownership, then the
opposing parties and the administrator have to resort to an ordinary action for a final
determination of the conflicting claims of title because the probate court cannot do
so. (Bold emphasis supplied)
On the other hand, an appeal would not be the correct recourse for Teresita, et al. to
take against the assailed orders. The final judgment rule embodied in the first
4
paragraph of Section 1, Rule 41, Rules of Court,21 which also governs appeals in
special proceedings, stipulates that only the judgments, final orders (and resolutions)
of a court of law "that completely disposes of the case, or of a particular matter
therein when declared by these Rules to be appealable" may be the subject of an
appeal in due course. The same rule states that an interlocutory order or resolution
(interlocutory because it deals with preliminary matters, or that the trial on the
merits is yet to be held and the judgment rendered) is expressly made non-
appealable.
Multiple appeals are permitted in special proceedings as a practical recognition of
the possibility that material issues may be finally determined at various stages of the
special proceedings. Section 1, Rule 109 of the Rules of Court enumerates the specific
instances in which multiple appeals may be resorted to in special proceedings, viz:
Section 1. Orders or judgments from which appeals may be taken. - An interested
person may appeal in special proceedings from an order or judgment rendered by a
Court of First Instance or a Juvenile and Domestic Relations Court, where such order
or judgment:
(a) Allows or disallows a will;
(b) Determines who are the lawful heirs of a deceased person, or the distributive
share of the estate to which such person is entitled;
(c) Allows or disallows, in whole or in part, any claim against the estate of a deceased
person, or any claim presented on behalf of the estate in offset to a claim against it;
(d) Settles the account of an executor, administrator, trustee or guardian;
(e) Constitutes, in proceedings relating to the settlement of the estate of a deceased
person, or the administration of a trustee or guardian, a final determination in the
lower court of the rights of the party appealing, except that no appeal shall be
allowed from the appointment of a special administrator; and
(f) Is the final order or judgment rendered in the case, and affects the substantial
rights of the person appealing, unless it be an order granting or denying a motion for
a new trial or for reconsideration.
Clearly, the assailed orders of the RTC, being interlocutory, did not come under any
of the instances in which multiple appeals are permitted.
II.Did the RTC commit grave abuse of discretionin directing the inclusion of the
properties in the estate of the decedent?
In its assailed decision, the CA concluded that the RTC committed grave abuse of
discretion for including properties in the inventory notwithstanding their having been
transferred to Mervir Realty by Emigdio during his lifetime, and for disregarding the
registration of the properties in the name of Mervir Realty, a third party, by applying
the doctrine of piercing the veil of corporate fiction.
Was the CA correct in its conclusion?
The answer is in the negative. It is unavoidable to find that the CA, in reaching its
conclusion, ignored the law and the facts that had fully warranted the assailed orders
of the RTC.
Under Section 6(a), Rule 78 of the Rules of Court, the letters of administration may
be granted at the discretion of the court to the surviving spouse, who is competent
and willing to serve when the person dies intestate. Upon issuing the letters of
administration to the surviving spouse, the RTC becomes duty-bound to direct the
preparation and submission of the inventory of the properties of the estate, and the
surviving spouse, as the administrator, has the duty and responsibility to submit the
inventory within three months from the issuance of letters of administration
pursuant to Rule 83 of the Rules of Court, viz:
Section 1. Inventory and appraisal to be returned within three months. – Within three
(3) months after his appointment every executor or administrator shall return to the
court a true inventory and appraisal of all the real and personal estate of the
deceased which has come into his possession or knowledge. In the appraisement of
such estate, the court may order one or more of the inheritance tax appraisers to
give his or their assistance.
The usage of the word all in Section 1, supra, demands the inclusion of all the real
and personal properties of the decedent in the inventory.22 However, the word all is
qualified by the phrase which has come into his possession or knowledge, which
signifies that the properties must be known to the administrator to belong to the
decedent or are in her possession as the administrator. Section 1 allows no exception,
for the phrase true inventory implies that no properties appearing to belong to the
decedent can be excluded from the inventory, regardless of their being in the
possession of another person or entity.
5
The objective of the Rules of Court in requiring the inventory and appraisal of the
estate of the decedent is "to aid the court in revising the accounts and determining
the liabilities of the executor or the administrator, and in making a final and equitable
distribution (partition) of the estate and otherwise to facilitate the administration of
the estate."23 Hence, the RTC that presides over the administration of an estate is
vested with wide discretion on the question of what properties should be included in
the inventory. According to Peralta v. Peralta,24 the CA cannot impose its judgment
in order to supplant that of the RTC on the issue of which properties are to be
included or excluded from the inventory in the absence of "positive abuse of
discretion," for in the administration of the estates of deceased persons, "the judges
enjoy ample discretionary powers and the appellate courts should not interfere with
or attempt to replace the action taken by them, unless it be shown that there has
been a positive abuse of discretion."25 As long as the RTC commits no patently grave
abuse of discretion, its orders must be respected as part of the regular performance
of its judicial duty.
There is no dispute that the jurisdiction of the trial court as an intestate court is
special and limited. The trial court cannot adjudicate title to properties claimed to be
a part of the estate but are claimed to belong to third parties by title adverse to that
of the decedent and the estate, not by virtue of any right of inheritance from the
decedent. All that the trial court can do regarding said properties is to determine
whether or not they should be included in the inventory of properties to be
administered by the administrator. Such determination is provisional and may be still
revised. As the Court said in Agtarap v. Agtarap:26
The general rule is that the jurisdiction of the trial court, either as a probate court or
an intestate court, relates only to matters having to do with the probate of the will
and/or settlement of the estate of deceased persons, but does not extend to the
determination of questions of ownership that arise during the proceedings. The
patent rationale for this rule is that such court merely exercises special and limited
jurisdiction. As held in several cases, a probate court or one in charge of estate
proceedings, whether testate or intestate, cannot adjudicate or determine title to
properties claimed to be a part of the estate and which are claimed to belong to
outside parties, not by virtue of any right of inheritance from the deceased but by
title adverse to that of the deceased and his estate. All that the said court could do
as regards said properties is to determine whether or not they should be included in
the inventory of properties to be administered by the administrator. If there is no
dispute, there poses no problem, but if there is, then the parties, the administrator,
and the opposing parties have to resort to an ordinary action before a court
exercising general jurisdiction for a final determination of the conflicting claims of
title.
However, this general rule is subject to exceptions as justified by expediency and
convenience. First, the probate court may provisionally pass upon in an intestate or
a testate proceeding the question of inclusion in, or exclusion from, the inventory of
a piece of property without prejudice to final determination of ownership in a
separate action. Second, if the interested parties are all heirs to the estate, or the
question is one of collation or advancement, or the parties consent to the assumption
of jurisdiction by the probate court and the rights of third parties are not impaired,
then the probate court is competent to resolve issues on ownership. Verily, its
jurisdiction extends to matters incidental or collateral to the settlement and
distribution of the estate, such as the determination of the status of each heir and
whether the property in the inventory is conjugal or exclusive property of the
deceased spouse.27 (Italics in the original; bold emphasis supplied)
It is clear to us that the RTC took pains to explain the factual bases for its directive for
the inclusion of the properties in question in its assailed order of March 14, 2001, viz:
In the first place, the administratrix of the estate admitted that Emigdio Mercado was
one of the heirs of Severina Mercado who, upon her death, left several properties as
listed in the inventory of properties submitted in Court in Special Proceedings No.
306-R which are supposed to be divided among her heirs. The administratrix
admitted, while being examined in Court by the counsel for the petitioner, that she
did not include in the inventory submitted by her in this case the shares of Emigdio
Mercado in the said estate of Severina Mercado. Certainly, said properties
constituting Emigdio Mercado’s share in the estate of Severina Mercado should be
included in the inventory of properties required to be submitted to the Court in this
particular case.
In the second place, the administratrix of the estate of Emigdio Mercado also
admitted in Court that she did not include in the inventory shares of stock of Mervir
Realty Corporation which are in her name and which were paid by her from money
derived from the taxicab business which she and her husband had since 1955 as a
conjugal undertaking. As these shares of stock partake of being conjugal in character,
one-half thereof or of the value thereof should be included in the inventory of the
estate of her husband.
In the third place, the administratrix of the estate of Emigdio Mercado admitted, too,
in Court that she had a bank account in her name at Union Bank which she opened
when her husband was still alive. Again, the money in said bank account partakes of
6
being conjugal in character, and so, one-half thereof should be included in the
inventory of the properties constituting as estate of her husband.
In the fourth place, it has been established during the hearing in this case that Lot
No. 3353 of Pls-657-D located in Badian, Cebu containing an area of 53,301 square
meters as described in and covered by Transfer Certificate of Title No. 3252 of the
Registry of Deeds for the Province of Cebu is still registered in the name of Emigdio
S. Mercado until now. When it was the subject of Civil Case No. CEB-12690 which was
decided on October 19, 1995, it was the estate of the late Emigdio Mercado which
claimed to be the owner thereof. Mervir Realty Corporation never intervened in the
said case in order to be the owner thereof. This fact was admitted by Richard
Mercado himself when he testified in Court. x x x So the said property located in
Badian, Cebu should be included in the inventory in this case.
Fifthly and lastly, it appears that the assignment of several parcels of land by the late
Emigdio S. Mercado to Mervir Realty Corporation on January 10, 1991 by virtue of
the Deed of Assignment signed by him on the said day (Exhibit N for the petitioner
and Exhibit 5 for the administratrix) was a transfer in contemplation of death. It was
made two days before he died on January 12, 1991. A transfer made in contemplation
of death is one prompted by the thought that the transferor has not long to live and
made in place of a testamentary disposition (1959 Prentice Hall, p. 3909). Section 78
of the National Internal Revenue Code of 1977 provides that the gross estate of the
decedent shall be determined by including the value at the time of his death of all
property to the extent of any interest therein of which the decedent has at any time
made a transfer in contemplation of death. So, the inventory to be approved in this
case should still include the said properties of Emigdio Mercado which were
transferred by him in contemplation of death. Besides, the said properties actually
appeared to be still registered in the name of Emigdio S. Mercado at least ten (10)
months after his death, as shown by the certification issued by the Cebu City
Assessor’s Office on October 31, 1991 (Exhibit O).28
Thereby, the RTC strictly followed the directives of the Rules of Court and the
jurisprudence relevant to the procedure for preparing the inventory by the
administrator. The aforequoted explanations indicated that the directive to include
the properties in question in the inventory rested on good and valid reasons, and thus
was far from whimsical, or arbitrary, or capricious.
Firstly, the shares in the properties inherited by Emigdio from Severina Mercado
should be included in the inventory because Teresita, et al. did not dispute the fact
about the shares being inherited by Emigdio.
Secondly, with Emigdio and Teresita having been married prior to the effectivity of to validate and make binding an instrument never, in the first place, intended to have
the Family Code in August 3, 1988, their property regime was the conjugal any binding legal effect upon the parties thereto. The intention of the parties still and
partnership of gains.29 For purposes of the settlement of Emigdio’s estate, it was always is the primary consideration in determining the true nature of a contract.
unavoidable for Teresita to include his shares in the conjugal partnership of gains. (Bold emphasis supplied)
The party asserting that specific property acquired during that property regime did
It should likewise be pointed out that the exchange of shares of stock of Mervir Realty
not pertain to the conjugal partnership of gains carried the burden of proof, and that
with the real properties owned by Emigdio would still have to be inquired into. That
party must prove the exclusive ownership by one of them by clear, categorical, and
Emigdio executed the deed of assignment two days prior to his death was a
convincing evidence.30 In the absence of or pending the presentation of such proof,
circumstance that should put any interested party on his guard regarding the
the conjugal partnership of Emigdio and Teresita must be provisionally liquidated to
exchange, considering that there was a finding about Emigdio having been sick of
establish who the real owners of the affected properties were,31 and which of the
cancer of the pancreas at the time.34 In this regard, whether the CA correctly
properties should form part of the estate of Emigdio. The portions that pertained to
characterized the exchange as a form of an estate planning scheme remained to be
the estate of Emigdio must be included in the inventory.
validated by the facts to be established in court.
Moreover, although the title over Lot 3353 was already registered in the name of
The fact that the properties were already covered by Torrens titles in the name of
Mervir Realty, the RTC made findings that put that title in dispute. Civil Case No. CEB-
Mervir Realty could not be a valid basis for immediately excluding them from the
12692, a dispute that had involved the ownership of Lot 3353, was resolved in favor
inventory in view of the circumstances admittedly surrounding the execution of the
of the estate of Emigdio, and Transfer Certificate of Title No. 3252 covering Lot 3353
deed of assignment. This is because:
was still in Emigdio’s name.1âwphi1 Indeed, the RTC noted in the order of March 14,
2001, or ten years after his death, that Lot 3353 had remained registered in the name The Torrens system is not a mode of acquiring titles to lands; it is merely a system of
of Emigdio. registration of titles to lands.1âwphi1 However, justice and equity demand that the
titleholder should not be made to bear the unfavorable effect of the mistake or
Interestingly, Mervir Realty did not intervene at all in Civil Case No. CEB-12692. Such
negligence of the State’s agents, in the absence of proof of his complicity in a fraud
lack of interest in Civil Case No. CEB-12692 was susceptible of various interpretations,
or of manifest damage to third persons. The real purpose of the Torrens system is to
including one to the effect that the heirs of Emigdio could have already threshed out
quiet title to land and put a stop forever to any question as to the legality of the title,
their differences with the assistance of the trial court. This interpretation was
except claims that were noted in the certificate at the time of registration or that may
probable considering that Mervir Realty, whose business was managed by
arise subsequent thereto. Otherwise, the integrity of the Torrens system shall forever
respondent Richard, was headed by Teresita herself as its President. In other words,
be sullied by the ineptitude and inefficiency of land registration officials, who are
Mervir Realty appeared to be a family corporation.
ordinarily presumed to have regularly performed their duties.35
Also, the fact that the deed of absolute sale executed by Emigdio in favor of Mervir
Assuming that only seven titled lots were the subject of the deed of assignment of
Realty was a notarized instrument did not sufficiently justify the exclusion from the
January 10, 1991, such lots should still be included in the inventory to enable the
inventory of the properties involved. A notarized deed of sale only enjoyed the
parties, by themselves, and with the assistance of the RTC itself, to test and resolve
presumption of regularity in favor of its execution, but its notarization did not per se
the issue on the validity of the assignment. The limited jurisdiction of the RTC as an
guarantee the legal efficacy of the transaction under the deed, and what the contents
intestate court might have constricted the determination of the rights to the
purported to be. The presumption of regularity could be rebutted by clear and
properties arising from that deed,36 but it does not prevent the RTC as intestate
convincing evidence to the contrary.32 As the Court has observed in Suntay v. Court
court from ordering the inclusion in the inventory of the properties subject of that
of Appeals:33
deed. This is because the RTC as intestate court, albeit vested only with special and
x x x. Though the notarization of the deed of sale in question vests in its favor the limited jurisdiction, was still "deemed to have all the necessary powers to exercise
presumption of regularity, it is not the intention nor the function of the notary public such jurisdiction to make it effective."37

7
Lastly, the inventory of the estate of Emigdio must be prepared and submitted for
the important purpose of resolving the difficult issues of collation and advancement
to the heirs. Article 1061 of the Civil Code required every compulsory heir and the
surviving spouse, herein Teresita herself, to "bring into the mass of the estate any
property or right which he (or she) may have received from the decedent, during the
lifetime of the latter, by way of donation, or any other gratuitous title, in order that
it may be computed in the determination of the legitime of each heir, and in the
account of the partition." Section 2, Rule 90 of the Rules of Court also provided that
any advancement by the decedent on the legitime of an heir "may be heard and
determined by the court having jurisdiction of the estate proceedings, and the final
order of the court thereon shall be binding on the person raising the questions and
on the heir." Rule 90 thereby expanded the special and limited jurisdiction of the RTC
as an intestate court about the matters relating to the inventory of the estate of the
decedent by authorizing it to direct the inclusion of properties donated or bestowed
by gratuitous title to any compulsory heir by the decedent.38
The determination of which properties should be excluded from or included in the
inventory of estate properties was well within the authority and discretion of the RTC
as an intestate court. In making its determination, the RTC acted with circumspection,
and proceeded under the guiding policy that it was best to include all properties in
the possession of the administrator or were known to the administrator to belong to
Emigdio rather than to exclude properties that could turn out in the end to be actually
part of the estate. As long as the RTC commits no patent grave abuse of discretion,
its orders must be respected as part of the regular performance of its judicial duty.
Grave abuse of discretion means either that the judicial or quasi-judicial power was
exercised in an arbitrary or despotic manner by reason of passion or personal
hostility, or that the respondent judge, tribunal or board evaded a positive duty, or
virtually refused to perform the duty enjoined or to act in contemplation of law, such
as when such judge, tribunal or board exercising judicial or quasi-judicial powers
acted in a capricious or whimsical manner as to be equivalent to lack of jurisdiction.39
In light of the foregoing, the CA's conclusion of grave abuse of discretion on the part
of the RTC was unwarranted and erroneous.
WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and
SETS ASIDE the decision promulgated on May 15, 2002; REINSTATES the orders issued
on March 14, 2001 and May 18, 2001 by the Regional Trial Court in Cebu; DIRECTS
the Regional Trial Court in Cebu to proceed with dispatch in Special Proceedings No.
3094-CEB entitled Intestate Estate of the late Emigdio Mercado, Thelma Aranas,
8
petitioner, and to resolve the case; and ORDERS the respondents to pay the costs of
suit.
Intestate estate of Samuel William Allen. MOORE & SONS MERCANTILE CO.,
appellant, v. CARMEN WAGNER, Appellee.
1. HEREDITARY PROPERTY; WIDOW’S SUPPORT PENDING SETTLEMENT OF LATE
HUSBAND’S INTESTATE ESTATE. — It having been proven by the evidence of record
that the liabilities exceed the assets of the deceased husband’s intestate estate and
that his widow had not contributed any property to the marriage, she cannot be
granted support, pending the liquidation of the intestate estate, because said
support, having the character of an advance payment to be deducted from the
respective share of each participant is without legal basis under article 1430 of the
Civil Code when there is no property to be partitioned.
In the present proceeding for the settlement of the intestate estate of the deceased
Samuel William Allen, the court, upon petition of the widow of said deceased,
entered an order, dated March 5, 1925, requiring the administrator to give said
widow and her daughter Avelina Allen an allowance of P80. The special administrator
appointed in the case objected to the allowance of the widow upon the ground that
the estate is insolvent, in view of the claims presented and approved by the
committee on appraisal and claims. Attorney P. J. Moore, in behalf of several
creditors of the estate, also entered his opposition to said order of the court upon
the same ground.
There is no question that the estate is insolvent, inasmuch as it appears from the
report of the administrator, which is not contradicted by the widow, that the value
of the property of the estate sold by the said special administrator, excluding the
expenses amounts to only P899.79 from which must be deducted the sum of P28.82
for expenses incurred, leaving a balance of P870.97, and it must be noted that there
still remains to be paid the sum of P64 as commissioner’s fee plus the sum of P50 for
charges of administration.
It also appears from the record on appeal that the claims against the estate allowed
by the said committee amount to P2,457.99. Notwithstanding this insolvent
condition of the estate, the lower court entered the order referred to of March 5,
1925, citing in its support article 1430 of the Civil Code and section 684 of the Code
of Civil Procedure.
The only question submitted to this court for decision in the present case is the to the provision of said article which requires that support shall be paid only from the
legality of the order appealed from, in view of the insolvency of the estate of Samuel date of the filing of the complaint.
William Allen. According to section 684 of the Code of Civil Procedure, "The widow
"The Supreme Court denied the writ on the ground that it was not proven that the
and minor children of a deceased person, during the settlement of the estate, shall
liabilities exceed the assets of the estate, and because the provision of article 1430
receive therefrom, under the direction of the court, such allowances as are provided
of the Civil Code is entirely independent and has no connection with those contained
by the law in force in the Philippine Islands, on and immediately prior to the
in title 6, book 1, of the same Code, among which is article 148, because they each
thirteenth day of August, eighteen hundred and ninety-eight, and the descent of all
refer to different kind of rights, and the former cannot be understood as subordinate
property and estates to heirs shall be regulated by that law as to all property
to the rules and provisions contained in said title and book, which regulate support
belonging to intestate estates, and as to all property belonging to the testate estates,
between persons who, according to law, have the obligation to give it, and those who
but not disposed of by the will of the testator. A husband or wife of the deceased
have the right to receive the same."cralaw virtua1aw library
person shall receive such portion of his or her estate not disposed of by will as the
said law in force on the thirteenth day of August, eighteen hundred and ninety-eight,
Mr. Manresa, commenting on said article 1430 relative to the said judgment of May
gives to him or to her." And the law in force in the Philippine Islands prior to August
28, 1896, wisely observes "That the support does not encumber the property of the
13, 1898, is article 1430 of the Civil Code which says:
deceased spouse, but the general estate, and that by the general estate or the
inventoried estate is meant the dowry or capital of the wife; wherefore, even if the
"The surviving spouse and his or her children shall be given an allowance for their
indebtedness exceed the residue of the estate, the wife can always be allowed
support out of the general estate, pending the liquidation of the inventoried estate,
support as part payment of the income of her property. In any case, the support is
and until their share has been delivered to them, but it shall be deducted from their
given prior to the termination of the liquidation of the partnership, and it does not
portion in so far as it exceeds what they may have been entitled to as fruits or income.
seem logical to deny the same before knowing exactly the result of the liquidation,
just because of the fear that the liabilities will exceed the estate, or on the ground of
May support be demanded when the liabilities exceed the assets of the estate of the
estimates more or less uncertain, and without any sufficient proof of its reality. The
deceased spouse? The judgment of the Supreme Court of Spain of May 28, 1896,
judge or the administrator, as the case may be, must grant the support referred to in
resolves this question affirmatively.
article 1430, when the same is requested, and if the creditors believe that they are
"Sometime after the death of her husband, the widow applied for support from the prejudiced by such an action, by separating from the estate a part of its income, they
general inventoried estate of the property from the date of the death of the husband can appeal to the court therefrom, by satisfactorily proving that there is no property
until the delivery of her share. The court granted the application and the Audiencia or asset that may, in any case, be allotted to the interested parties. It having proven
affirmed its decision. The heirs sued a writ of error upon several grounds among that no property, either private or conjugal, pertains to the surviving spouse or the
which are the violations of the following articles: "1. Article 1430 of the Civil Code, heirs of the deceased, the support cannot be granted, because this, in effect,
inasmuch as its wording, letter and spirit show that the allowance granted the according to article 1430, is only an advance payment on account of the respective
surviving spouse is an advance payment to be deducted from such share as may be share of each partner.
allotted to him when the same is delivered, and the inventoried credits being greater
Such is the case now before us. It appears from the record that the liabilities exceed
than the estate left, to give allowance to the widow would be prejudicial to the
the assets of the estate of Samuel William Allen and that his widow, by her own
creditors who are entitled to recover them in their entirety.
admission, had not contributed any property to the marriage. Wherefore, it is
unlawful, in the present case, to grant the support which is under consideration,
"2. Article 148 of the same Code, inasmuch as the order grants support to the widow
because said support, having the character of an advance payment to be deducted
from the beginning of the liquidation of the inventoried estate, in spite of the fact
from the respective share of each partner, when there is no property to be
that the same had not been applied for until two years thereafter, which is contrary
partitioned, lacks the legal basis provided by article 1430.

9
PRINCESITA SANTERO, FEDERICO SANTERO and WILLIE SANTERO, petitioners,
vs. HON. COURT OF FIRST INSTANCE OF CAVITE, ANSELMA DIAZ, VICTOR, RODRIGO,
ANSELMINA, MIGUEL, all surnamed SANTERO, and REYNALDO EVARISTO, in his
capacity as Administrator of the Intestate Estate of PABLO SANTERO, respondents.
This is a Petition for certiorari which questions the order of the respondent court
granting the Motion for Allowance filed by private respondents. Said order reads as
follows: Acting on the Motion For Allowance dated June 30, 1982 filed by Victor,
Rodrigo, Anselmina and Miguel, all surnamed Santero, thru their guardian, Anselma
Diaz, the Opposition thereto dated July 8, 1982 filed by the oppositors, the Reply to
Opposition dated July 12, 1982 filed by movant Anselma Diaz and the Rejoinder dated
July 26, 1982 filed by the oppositors, the Court was constrained to examine the
Motion For Allowance filed by the herein movant last year wherein the ground cited
was for support which included educational expenses, clothing and medical
necessities, which was granted and said minors were given an allowance prayed for
in their motion.
In the Motion For Allowance in question guardian-movant Anselma Diaz only
followed the precedent of the Court which granted a similar motion last year to be
spent for the school expenses of her wards. In their opposition the oppositors
contend that the wards for whom allowance is sought are no longer schooling and
have attained majority age so that they are no longer under guardianship. They
likewise allege that the administrator does not have sufficient funds to cover the said
allowance because whatever funds are in the hands of the administrator, they
constitute funds held in trust for the benefit of whoever will be adjudged as owners
of the Kawit property from which said administrator derives the only income of the
intestate estate of Pablo Santero, et al.
In the Reply filed by the guardian-movant, she admitted some of her children are of
age and not enrolled for the first semester due to lack of funds but will be enrolled
as soon as they are given the requested allowances. She cited Article 290 of the Civil
Code providing that:
Support is everything that is indispensable for substance, dwelling, clothing and
medical attendance, according to the social position of the family.
Support also includes the education of the person entitled to be supported until he
completes his education or training for some trade or vocation, even beyond the age
of majority.'
citing also Section 3 of Rule 83 of the Rules of Court which provides:
10
Allowance to widow and family. The widow and minor or incapacitated children of a
deceased person, during the settlement of the estate, shall receive therefrom, under
the direction of the Court, such allowance as provided by law.'
From the foregoing discussion alone, the Court cannot deviate from its duty to give
the allowance sought by the wards, the fact that they need further education which
should have been provided to them if their deceased father were alive.
On the allegation that the funds from which the allowance would be derived are trust
funds, the Court, time and again had emphasized that the estate of the Santeros is
quite big and the amount to be released for allowances is indeed insignificant and
which can easily be replaced from its general fund if the so-called trust fund is
adjudicated to the oppositors.
WHEREFORE, Victor, Rodrigo, Anselmina and Miguel, all surnamed Santero are
hereby granted an allowance of two thousand (P2,000.00) pesos each for tuition fees,
clothing materials and subsistence out of any available funds in the hands of the
administrator who is ordered to reimburse to them the said amount after this order
shall have become final to enable the oppositors to file their appeal by certiorari if
they so desire within the reglementary period.
SO ORDERED.
Bacoor, Cavite, July 28, 1982.
ILDEFONSO M. BLEZA
Executive Judge
(pp. 35-36, Rollo)
It appears from the records that petitioners Princesita Santero-Morales, Federico
Santero and Winy Santero are the children begotten by the late Pablo Santero with
Felixberta Pacursa while private respondents Victor, Rodrigo, Anselmina and Miguel
all surnamed Santero are four of the seven children begotten by the same Pablo
Santero with Anselma Diaz. Both sets of children are the natural children of the late
Pablo Santero since neither of their mothers, was married to their father Pablo. Pablo
Santero in turn, who died on November 30, 1973 was the only legitimate son of
Pascual Santero who died in 1970 and Simona Pamuti Vda. de Santero who died in
1976.
Meanwhile before We could act on the instant petition private respondents filed
another Motion for Allowance dated March 25, 1985 with the respondent court to
include Juanita, Estelita and Pedrito all surnamed Santero as children of the late Pablo
Santero with Anselma Diaz praying that an order be granted directing the
administrator Reynaldo C. Evaristo, to deliver the sum of P6,000.00 to each of the
seven (7) children of Anselma Diaz as their allowance from the estate of Pablo
Santero. The respondent Court granted the motion of the private respondents but
oppositors (petitioners herein) asked the court to reconsider said Order.
On September 10, 1985, an Amended Order was issued by respondent Court
directing Anselma Diaz to submit her clarification or explanation as to the additional
three (3) children of Anselma Diaz included in the motion. In compliance therewith
Anselma Diaz filed her "Clarification" stating among others that in her previous
motions, only the last four minor children as represented by the mother, Anselma
Diaz were included in the motion for support and her first three (3) children who were
then of age should have been included since all her children have the right to receive
allowance as advance payment of their shares in the inheritance of Pablo Santero
under Art. 188, of the New Civil Code.
On October 15, 1985, petitioners herein filed their Motion to Admit Supplemental
Petition opposing the inclusion of three (3) more heirs. We denied that "Motion for
Extension of Time to file their Supplemental Petition" as per Our Resolution dated
October 23, 1985.
On November 11, 1985, another Order was issued by the respondent court directing
the administrator of the estate to get back the allowance of the three additional
recipients or children of Anselma Diaz apparently based on the oppositors'
(petitioners herein) "Urgent Motion to Direct the Administrator to Withhold
Disbursement of Allowance to the Movants."
The issues now being raised in this present Petition are: 1. Whether or not
respondent court acted with abuse of discretion amounting to lack of jurisdiction in
granting the allowance to the respondents Victor, Rodrigo, Anselmina and Miguel-
P2,000.00 each despite the fact that all of them are not minors and all are gainfully
employed with the exception of Miguel.
2. Whether or not respondent Court acted with abuse of discretion in granting the
allowance based on the allegations of the said respondents that the abovenamed
wards are still schooling and they are in actual need of money to defray their school
expenses for 1982-83 when the truth is that they are no longer schooling.
11
3. Whether or not respondent Court acted with abuse of discretion in granting the
motion for allowance without conducting a hearing thereon, to determine the truth
of allegations of the private respondents.
Petitioners argue that private respondents are not entitled to any allowance since
they have already attained majority age, two are gainfully employed and one is
married as provided for under Sec. 3 Rule 83, of the Rules of Court. Petitioners also
allege that there was misrepresentation on the part of the guardian in asking for
allowance for tuition fees, books and other school materials and other miscellaneous
expenses for school term 1982-83 because these wards have already attained
majority age so that they are no longer under guardianship. They further allege that
the administrator of the estate of Pablo Santero does not have sufficient funds to
cover said allowance because whatever funds are in the hands of the administrator
constitute funds held in trust for the benefit of whoever will be adjudged as owners
of the Kawit properties from where these funds now held by the administrator are
derived.
In this connection, the question of whether the private respondents are entitled to
allowance or not concerns only the intestate estate of the late Pablo Santero and not
the intestate estates of Pascual Santero and Simona Pamuti, parents of their late
legitimate son Pablo Santero. The reason for this is Art. 992 of the New Civil Code
which states that "An illegitimate child has no right to inherit ab intestato from the
legitimate children and relatives of his father or mother; nor shall such children or
relatives inherit in the same manner from the illegitimate child." The question of
whether or not the petitioners and private respondents are entitled to inherit by right
of representation from their grandparents more particularly from Simona Pamuti was
settled by Us in the related case of "Anselma Diaz, et al. vs. Felisa Pamuti-Jardin" (G.R.
No. 66574-R) wherein We held that in view of the barrier present in said Art. 992,
petitioners and private respondents are excluded from the intestate estate of Simona
Pamuti Vda. de Santero.
The present petition obviously lacks merit. The controlling provision of law is not Rule
83, Sec. 3 of the New Rules of Court but Arts. 290 and 188 of the Civil Code reading
as follows: Art. 290. Support is everything that is indispensable for sustenance,
dwelling, clothing and medical attendance, according tothe social position of the
family.
Support also includes the education of the person entitled to be supported until he
completes his education or training for some profession, trade or vocation, even
beyond the age of majority.
Art. 188. From the common mass of property support shall be given to the surviving
spouse and to the children during the liquidation of the inventoried property and
until what belongs to them is delivered; but from this shall be deducted that amount
received for support which exceeds the fruits or rents pertaining to them.

The fact that private respondents are of age, gainfully employed, or married is of no
moment and should not be regarded as the determining factor of their right to
allowance under Art. 188. While the Rules of Court limit allowances to the widow and
minor or incapacitated children of the deceased, the New Civil Code gives the
surviving spouse and his/her children without distinction. Hence, the private
respondents Victor, Rodrigo, Anselmina and Miguel all surnamed Santero are entitled
to allowances as advances from their shares in the inheritance from their father Pablo
Santero. Since the provision of the Civil Code, a substantive law, gives the surviving
spouse and to the children the right to receive support during the liquidation of the
estate of the deceased, such right cannot be impaired by Rule 83 Sec. 3 of the Rules
of Court which is a procedural rule. Be it noted however that with respect to
"spouse," the same must be the "legitimate spouse" (not common-law spouses who
are the mothers of the children here).

It is not true that the Motion for Allowance was granted by respondent Court without
hearing. The record shows that the "Motion for Allowance" dated June 30, 1982
contains a Notice of Hearing (p. 2, Annex "A") addressed to the lawyers for the
petitioners and setting the hearing thereof on July 8, 1982 at 9:00 in the morning.
Apparently a copy of said motion was duly received by the lawyer, Atty. Beltran as he
filed an opposition thereto on the same date of hearing of the motion. Furthermore
even the instant petition admits that the wards, (petitioners and private respondents
as represented by their respective guardians) "have been granted allowances for
school expenses for about 8 years now." The respondent court in granting the motion
for allowance merely "followed the precedent of the court which granted a similar
motion last year." (Annex "F") However in previous years (1979-1981) the "wards"
(petitioners and private respondents) only received P1,500.00 each depending upon
the availability of funds as granted by the court in several orders.

12
RULE 84
MOISES SAN DIEGO, SR., petitioner, vs. ADELO NOMBRE and PEDRO
ESCANLAR, respondents.
The case at bar had its origin in Special Proceedings No. 7279 of the CFI of Negros
Occidental wherein respondent Adelo Nombre was the duly constituted judicial
administrator. On May 1, 1960, Nombre, in his capacity was judicial administrator of
the intestate estate subject of the Sp. Proc. stated above, leased one of the properties
of the estate (a fishpond identified as Lot No. 1617 of the cadastral survey of
Kabankaban, Negros Occidental), to Pedro Escanlar, the other respondent. The terms
of the lease was for three (3) years, with a yearly rental of P3,000.00 to expire on May
1, 1963, the transaction having been done, admittedly, without previous authority or
approval of the Court where the proceedings was pending. On January 17, 1961,
Nombre was removed as administrator by Order of the court and one Sofronio
Campillanos was appointed in his stead. The appeal on the Order of Nombre's
removal is supposedly pending with the Court of Appeals. Respondent Escanlar was
cited for contempt, allegedly for his refusal to surrender the fishpond to the newly
appointed administrator. On March 20, 1961, Campillanos filed a motion asking for
authority to execute a lease contract of the same fishpond, in favor of petitioner
herein, Moises San Diego, Sr., for 5 years from 1961, at a yearly rental of P5,000.00.
Escanlar was not notified of such motion. Nombre, the deposed administrator,
presented a written opposition to the motion of Campillanos on April 11, 1964,
pointing out that the fishpond had been leased by him to Escanlar for 3 years, the
period of which was going to expire on May 1, 1963. In a supplemental opposition,
he also invited the attention of the Court that to grant the motion of the new
administrator would in effect nullify the contract in favor of Escanlar, a person on
whom the Court had no jurisdiction. He also intimated that the validity of the lease
contract entered into by a judicial administrator, must be recognized unless so
declared void in a separate action. The opposition notwithstanding, the Court on April
8, 1961, in effect declared that the contract in favor of Escanlar was null and void, for
want of judicial authority and that unless he would offer the same as or better
conditions than the prospective lessee, San Diego, there was no good reason why the
motion for authority to lease the property to San Diego should not be granted.
Nombre moved to reconsider the Order of April 8, stating that Escanlar was willing to
increase the rental of P5,000.00, but only after the termination of his original
contract. The motion for reconsideration was denied on April 24, 1961, the trial judge
stating that the contract in favor of Escanlar was executed in bad faith and was
fraudulent because of the imminence of Nombre's removal as administrator, one of
13
the causes of which was his indiscriminate pleasant, of the property with inadequate
rentals.
From this Order, a petition for Certiorari asking for the annulment of the Orders of
April 8 and 24, 1961 was presented by Nombre and Escanlar with the Court of
Appeals. A Writ of preliminary injunction was likewise prayed for to restrain the new
administrator Campillanos from possessing the fishpond and from executing a new
lease contract covering it; requiring him to return the possession thereof to Escanlar,
plus damages and attorney's fees in the amount of P10,000.00 and costs. The Court
of Appeals issued the injunctive writ and required respondents therein to Answer.
Campillanos insisted on the invalidity of the contract in favor of Escanlar; the lower
court alleged that it did not exactly annul or invalidate the lease in his questioned
orders but suggested merely that Escanlar "may file a separate ordinary action in the
Court of general jurisdiction."
The Court of Appeals, in dismissing the petition for certiorari, among others said —
The controlling issue in this case is the legality of the contract of lease entered into
by the former administrator Nombre, and Pedro Escanlar on May 1, 1960.
Respondents contend that this contract, not having been authorized or approved by
the Court, is null and void and cannot be an obstacle to the execution of another of
lease by the new administrator, Campillanos. This contention is without merit. ... . It
has been held that even in the absence of such special powers, a contract or lease for
more than 6 years is not entirely invalid; it is invalid only in so far as it exceeds the
six-year limit (Enrique v. Watson Company, et al., 6 Phil. 84).
No such limitation on the power of a judicial administrator to grant a lease of
property placed under his custody is provided for in the present law. Under Article
1647 of the present Civil Code, it is only when the lease is to be recorded in the
Registry of Property that it cannot be instituted without special authority. Thus,
regardless of the period of lease, there is no need of special authority unless the
contract is to be recorded in the Registry of Property. As to whether the contract in
favor of Escanlar is to be so recorded is not material to our inquiry. 1äwphï1.ñët
On the contrary, Rule 85, Section 3, of the Rules of Court authorizes a judicial
administrator, among other things, to administer the estate of the deceased not
disposed of by will. Commenting on this Section in the light of several Supreme Court
decisions (Jocson de Hilado v. Nava, 69 Phil. 1; Gamboa v. Gamboa, 68 Phil. 304;
Ferraris v. Rodas, 65 Phil. 732; Rodriguez v. Borromeo, 43 Phil. 479), Moran says:
"Under this provision, the executor or administrator has the power of administering
the estate of the deceased for purposes of liquidation and distribution. He may,
therefore, exercise all acts of administration without special authority of the Court.
For instance, he may lease the property without securing previously any permission
from the court. And where the lease has formally been entered into, the court
cannot, in the same proceeding, annul the same, to the prejudice of the lessee, over
whose person it had no jurisdiction. The proper remedy would be a separate action
by the administrator or the heirs to annul the lease. ... .
On September 13, 1961, petitioner herein Moises San Diego, Sr., who was not a party
in the case, intervened and moved for a reconsideration of the above judgment. The
original parties (the new administrator and respondent judge) also filed Motions for
reconsideration, but we do not find them in the record. On November 18, 1961, the
Court of Appeals denied the motions for reconsideration. With the denial of the said
motions, only San Diego, appealed therefrom, raising legal questions, which center
on "Whether a judicial administrator can validly lease property of the estate without
prior judicial authority and approval", and "whether the provisions of the New Civil
Code on Agency should apply to judicial administrators."
The Rules of Court provide that — An executor or administrator shall have the right
to the possession of the real as well as the personal estate of the deceased so long as
it is necessary for the payment of the debts and the expenses of administration, and
shall administer the estate of the deceased not disposed of by his will. (Sec. 3, Rule
85, old Rules).
Lease has been considered an act of administration (Jocson v. Nava; Gamboa v.
Gamboa; Rodriguez v. Borromeo; Ferraris v. Rodas, supra).
The Civil Code, on lease, provides: If a lease is to be recorded in the Registry of
Property, the following persons cannot constitute the same without proper
authority, the husband with respect to the wife's paraphernal real estate, the father
or guardian as to the property of the minor or ward, and the manager without special
power. (Art. 1647).
The same Code, on Agency, states: Special powers of attorneys are necessary in the
following cases:
(8) To lease any real property to another person for more than one year. (Art. 1878)
Petitioner contends, that No. 8, Art. 1878 is the limitation to the right of a judicial
administrator to lease real property without prior court authority and approval, if it
exceeds one year. The lease contract in favor of Escanlar being for 3 years and
without such court approval and authority is, therefore, null and void. Upon the other
14
hand, respondents maintain that there is no limitation of such right; and that Article
1878 does not apply in the instant case.
We believe that the Court of Appeals was correct in sustaining the validity of the
contract of lease in favor of Escanlar, notwithstanding the lack of prior authority and
approval. The law and prevailing jurisprudence on the matter militates in favor of this
view. While it may be admitted that the duties of a judicial administrator and an agent
(petitioner alleges that both act in representative capacity), are in some respects,
identical, the provisions on agency (Art. 1878, C.C.), should not apply to a judicial
administrator. A judicial administrator is appointed by the Court. He is not only the
representative of said Court, but also the heirs and creditors of the estate (Chua Tan
v. Del Rosario, 57 Phil. 411). A judicial administrator before entering into his duties,
is required to file a bond. These circumstances are not true in case of agency. The
agent is only answerable to his principal. The protection which the law gives the
principal, in limiting the powers and rights of an agent, stems from the fact that
control by the principal can only be thru agreements, whereas the acts of a judicial
administrator are subject to specific provisions of law and orders of the appointing
court. The observation of former Chief Justice Moran, as quoted in the decision of
the Court of Appeals, is indeed sound, and We are not prone to alter the same, at the
moment.
We, likewise, seriously doubt petitioner's legal standing to pursue this appeal. And, if
We consider the fact that after the expiration of the original period of the lease
contract executed by respondent Nombre in favor of Escanlar, a new contract in favor
of said Escanlar, was executed on May 1, 1963, by the new administrator
Campillanos. who, incidentally, did not take any active participation in the present
appeal, the right of petitioner to the fishpond becomes a moot and academic issue,
which We need not pass upon.
NATIVIDAD V. A. JARODA, petitioner, vs. THE HONORABLE VICENTE N. CUSI, JR.,
Presiding Judge, Branch I, Court of First Instance of Davao, and ANTONIO V. A. TAN,
in his capacity as judicial administrator of intestate estate of Carlos Villa Abrille,
Special Proc. No. 1391, Court of First Instance of Davao, respondents.
Questioned as null and void in this petition for certiorari with preliminary injunction
are two (2) orders of the Court of First Instance of Davao, Branch I, issued in its Special
Proceeding No. 1391 entitled "In the Matter of the Intestate Estate of Carlos Villa
Abrille, deceased, Antonio V. A. Tan, petitioner."
The first of the said two orders, dated 5 May 1965, granted an ex-parte petition by
then special administrator Antonio V. A. Tan, the herein respondent, to withdraw
from the Philippine National Bank the amount of P182,531.08 deposited in savings
and checking accounts in the name, and during the lifetime, of Carlos Villa Abrille
(now deceased) but allegedly held in trust for the decedent's co-owners in the Juna
Subdivision.
The second order, dated 3 September 1965, approved ex-parte the power of
attorney executed by special administrator Tan appointing himself attorney-in-fact
to sell the share of the estate in the subdivision lots.
The aforesaid Special Proceeding No. 1391 was commenced by Antonio V. A. Tan on
22 April 1965, alleging in his petition filed with the respondent court that Carlos Villa
Abrille died intestate on 3 April 1965; that he left an estate consisting of his conjugal
share in real and personal properties, among which are:
p. Nineteen (19) Percent share in the co-ownership known as Juna Subdivision;
t. Cash on Bank: BPI (Savings) D-1365 in the amount of P55,284.11; PNB (Savings)
8189, in the amount of P9,047.74; and PCIB (Savings) 337, in the amount of P416.24.
(Annex "A" to Petition, Rollo, pages 1415);
that the heirs of the deceased are his surviving spouse, nine (9) children (among them
the herein petitioner, Natividad V. A. Jaroda), and four (4) grandsons, among them
the herein respondent, Antonio V. A. Tan.
On 26 April 1965, respondent Tan was appointed special administrator.
On 4 May 1965, respondent special administrator Tan fled an ex-parte petition for
the withdrawal of the sums of P109,886.42 and P72,644.66 from the Philippine
National Bank, Davao Branch, which sums were not listed in his petition for
administration as among the properties left by the deceased, alleging that these sums
were deposited in the name of the deceased but that they actually belong to, and
were held in trust for, the co-owners of the Juna Subdivision, and alleging as reason
for the withdrawal that it would be advantageous to the estate of the deceased.
Annexed to the said petition are powers of attorney purportedly signed by the co-
owners in 1948 and 1949 authorizing the late Carlos Villa Abrille to sell the lots in the
Juna Subdivision and to deposit the proceeds thereof with the Philippine National
Bank. The alleged co-owners of the subdivision concurred in the petition, but not the
heirs of the deceased (Annex "C" to Petition, Rollo, page 19).
The respondent court found the petition for withdrawal of the bank deposits as
"meritorious", and granted the petition in an order on 5 May 1965.
15
On 7 May 1965, special administrator Tan executed, together with the other co-
owners of the Juna Subdivision, a power of attorney appointing himself as attorney-
in-fact to "sell (or) dispose upon terms and conditions as he deems wise" the lots in
the 99.546-hectare subdivision (Annex "F-1" to Petition, Rollo, pages 30-32).
On 9 September 1965, respondent Tan was issued letters of administration by the
respondent court.
On the same day, 9 September 1965, as regular administrator, respondent Tan filed
a petition with the respondent court, alleging that the deceased was the manager of
and a co-owner in the Juna Subdivision and that he had been engaged in the business
of selling the lots, and praying for the approval by the court of the power of attorney
executed by him, in behalf of the intestate estate, and appointing and authorizing
himself to sell the lots.
The court granted the petition, "as prayed for," on 3 September 1965.1äwphï1.ñët
On 29 November 1966, herein petitioner Natividad V. A. Jaroda moved to nullify the
order of 5 May 1965, that allowed the withdrawal of the bank deposits, as well as the
order of 3 September 1965, which approved the power of attorney.
The respondent court denied, on 25 February 1967, "for lack of merit" the aforesaid
motion.
Petitioner Jaroda appealed from the order of denial, but the respondent court
dismissed the appeal on the ground that the order appealed from was interlocutory.
Jaroda then filed before the Supreme Court a petition for certiorari and/or
mandamus on 8 July 1967, docketed as G.R. No. L-27831, but this Court dismissed
the petition, adding in its resolution that appeal in due time is the remedy.
On 28 October 1967, petitioner Jaroda filed the present petition for certiorari with
preliminary injunction. She alleged, among other things, that appeal would not be
speedy and adequate as respondent Tan has sold and continues to sell the
subdivision lots on the strength of the respondent court's order, to her irreparable
prejudice and that of the other heirs. This Court gave due course to the petition and
issued preliminary injunction on 3 November 1967, restraining the respondent from
selling the share of the intestate estate.
We agree with petitioner that the order of 5 May 1965 allowing the special
administrator to withdraw the bank deposits standing in the name of the decedent is
in abuse of discretion amounting to lack of jurisdiction. In the first place, said
withdrawal is foreign to the powers and duties of a special administrator, which, as
Section 2 of Rule 80 of the Rules of Court provides, are to — take possession and
charge of the goods, chattels, rights, credits and estate of the decease and preserve
the same for the executor or administrator afterwards appointed, and for that
purpose may commence and maintain suits as administrator. He may sell only such
perishable and other property as the court orders sold. A special administrator shall
not be liable to pay any debts of the deceased unless so ordered by the court.
In the second place, the order was issued without notice to, and hearing of, the heirs
of the deceased. The withdrawal of the bank deposits may be viewed as a taking of
possession and charge of the credits of the estate, and apparently within the powers
and duties of a special administrator; but actually, said withdrawal is a waiver by the
special administrator of a prima facie exclusive right of the intestate estate to the
bank deposits in favor of the co-owners of the Juna Subdivision, who were allegedly
claiming the same as alleged by the administrator in his motion (Petition, Annex "C").
The bank deposits were in the name of the deceased; they, therefore, belong prima
facie to his estate after his death. And until the contrary is shown by proper evidence
at the proper stage, when money claims may be filed in the intestate proceedings,
the special administrator is without power to make the waiver or to hand over part
of the estate, or what appears to be a prima facie part of the estate, to other persons
on the ground that the estate is not the owner thereof. If even to sell for valuable
consideration property of the estate requires prior written notice of the application
to the heirs, legatees, or devisees under Rule 89 of the Rules of Court, such notice is
equally, if not more, indispensable for disposing gratuitously of assets of the
decedent in favor of strangers. Admittedly, no such notice was given, and without it
the court's authority is invalid and improper.
The order of 3 September 1965 approving the power of attorney executed by
administrator Tan and appointing himself as attorney-in-fact to sell the subdivision
lots for a price at his discretion is, likewise, void for want of notice and for approving
an improper contract or transaction.
The very rule, Section 4 of Rule 89 of the Rules of Court, relied on by respondent Tan
to sustain the power of attorney for the sale of the pro-indiviso share of the estate in
the subdivision requires "written notice to the heirs, devisees, and legatees who are
interested in the estate to be sold" and, admittedly, administrator Tan did not furnish
such notice. (Answer, pages 1 and 2, paragraph 3, Rollo, page 53) Without such
notice, the order of the court authorizing the sale is void.
But respondent Tan holds petitioner Jaroda with actual knowledge of the questioned
order, and to show it he quotes the transcript of stenographic notes of a discussion
16
by a lawyer of Jaroda about the said order. The discussion, however, took place on
19 March 1966 while the order was issued on 13 September 1965, and there is
nothing in the discussion that may indicate knowledge by Jaroda of the order before,
at or immediately after its issuance.
It has been broadly stated that an administrator is not permitted to deal with himself
as an individual in any transaction concerning trust property. It is well settled that an
executrix holds the property of her testator's estate as a trustee. In re Heydenfeldt's
Estate, 117 Cal. 551, 49 P. 713; Firebaugh v. Burbank, 121 Cal. 186, 53 P. 560. It is
equally well settled that an executrix will not be permitted to deal with herself as an
individual in any transaction concerning the trust property. Civil Code, S 2230.
In Davis v. Rock Creek L., F. & M Co., 55 Cal. 359, at page 364, 36 Am. Rep. 40, it is
said: 'The law, for wise reasons, will not permit one who acts in a fiduciary capacity
thus to deal with himself in his individual capacity.' The following cases are to the
same effect: In Wickersham v. Crittenden, supra, 93 Cal. at page 29, 28 P. at page
790, it is further stated in respect to a transaction wherein a trustee sought to deal
with trust property: 'Courts will not permit any investigation into the fairness of the
transaction, or allow the trustee to show that the dealing was for the best interest of
the beneficiary.' This language is quoted with approval in the case of Pacific Vinegar
& Pickle Works v. Smith, 145 Cal. 352, 365, 78 P. 550, 104 Am. St. Rep 42.
The opinion of some commentators that, as a general rule, auto-contracts are
permissible if not expressly prohibited , and that there is no express provision of law
prohibiting an administrator from appointing himself as his own agent, even if
correct, cannot and should not apply to administrator of decedent's estates, in view
of the fiduciary relationship that they occupy with respect to the heirs of the
deceased and their responsibilities toward the probate court. A contrary ruling would
open the door to fraud and maladministration, and once the harm is done, it might
be too late to correct it. A concrete example would be for administrator Tan to
authorize agent Tan to sell a lot for P50, with the condition that if he can sell it for
more he could keep the difference; agent Tan sells the lot for P150.00; he retains
P100.00 and deposits in the bank P50.00 "in the name of Antonio V. A. Tan, in trust
for Juna Subdivision" (as worded in the power of attorney. Annex "F-1"); thus,
administrator Tan's accounting to the estate for the sale of the lot for P50 would be
in order, but the estate would have been actually cheated of the sum of P100, which
went to agent Tan in his individual capacity.
The court below also failed to notice that, as alleged in the administrator's petition
(Annex "F" herein), after the death of Carlos Villa Abrille the administrator Tan, in his
personal capacity, had replaced said deceased as manager of the Juna Subdivision by
authority of the other co-owners. By the court's questioned order of 3 September
1965 empowering him to represent the interest of the deceased in the management
of the subdivision, the administrator Tan came to be the agent or attorney-in-fact of
two different principals: the court and the heirs of the deceased on the one hand,
and the majority co-owners of the subdivision on the other, in managing and
disposing of the lots of the subdivision. This dual agency of the respondent Tan
rendered him incapable of independent defense of the estate's interests against
those of the majority co-owners. It is highly undesirable, if not improper, that a court
officer and administrator, in dealing with property under his administration, should
have to look to the wishes of strangers as well as to those of the court that appointed
him. A judicial administrator should be at all times subject to the orders of the
appointing Tribunal and of no one else.
That petitioner Jaroda, as heir of the late Carlos Villa Abrille, should hold a minor
interest (¹/¹¹ of 19%) in the co-ownership known as the Juna Subdivision and that the
early termination of said co-ownership would redound to the benefit of the co-
owners, including the heirs of Carlos Villa Abrille, are beside the point. Jaroda's
interest in the estate demands that she be heard by the court in all matters affecting
the disposal of her share, and that the administrator should primarily protect the
interest of the estate in which she is a participant rather than those of the decedent's
co-owners.
The resolution of this Court in L-27836 (Natividad V. A. Jaroda vs. the Hon. Vicente N.
Cusi, Jr., etc., et al.), dismissing the petition for certiorari and/or mandamus and
stating that appeal in due time is the remedy, is no bar to the present petition, for it
has not been shown that the allegations in both the dismissed petition and those of
the present one are substantially the same. Anyway, certiorari lies if appeal would
not be prompt enough to block the injurious effects of the orders of the lower court
(Silvestre vs. Torres, et al., 57 Phil. 885; Pachoco vs. Tumangday, L-14500, 25 May
1960; Mayormente vs. Robaco Corp., L-25337, 27 Nov. 1967, 21 SCRA 1080).
After the present case was submitted for decision, respondent Tan manifested that
the co-owners of the Juna Subdivision and the heirs of the late Carlos Villa Abrille,
including the petitioner Natividad V. A. Jaroda, had executed a partial partition and
the same has been approved by the probate court. Said approved partial partition
has no effect, one way or the other, upon the orders contested in the present case.
For one thing, it is not definite whether the lots described in the 57 pages of the
partition agreement correspond to those of the Juna Subdivision as described in the
power of attorney.
17
FOR THE FOREGOING REASONS, the order of 5 May 1965 and 3 September 1965 of
the Court of First Instance of Davao, Branch I, in its Special Proceeding No. 1391, are
hereby set aside and declared null and void. The preliminary injunction heretofore
issued is hereby made permanent. Costs against the respondent, Antonio V. A. Tan,
in his personal capacity.
MAURO P. MANANQUIL, complainant, vs. ATTY. CRISOSTOMO C.
VILLEGAS, respondent.
In a verified complaint for disbarment dated July 5, 1982, Mauro P. Mananquil
charged respondent Atty. Crisostomo C. Villegas with gross misconduct or
malpractice committed while acting as counsel of record of one Felix Leong in the
latter's capacity as administrator of the Testate Estate of the late Felomina Zerna in
Special Proceedings No. 460 before then Court of First Instance of Negros Occidental.
The complainant was appointed special administrator after Felix Leong died.
In compliance with a resolution of this Court, respondent filed his comment to the
complaint on January 20, 1983. After complainant filed his reply, the Court resolved
to refer the case to the Solicitor General for investigation, report and
recommendation.
In a hearing conducted on May 15, 1985 by the investigating officer assigned to the
case, counsel for the complainant proposed that the case be considered on the basis
of position papers and memoranda to be submitted by the parties. Respondent
agreed. Thus, the investigating officer required the parties to submit their respective
position papers and memoranda, with the understanding that with or without the
memoranda, the case will be deemed submitted for resolution after the expiration
of 30 days. In compliance, both parties submitted their respective position papers;
but no memorandum was filed by either party. Thereafter, the case was deemed
submitted.
In the pleadings submitted before the Court and the Office of the Solicitor General,
complainant alleges that over a period of 20 years, respondent allowed lease
contracts to be executed between his client Felix Leong and a partnership HIJOS DE
JOSE VILLEGAS, of which respondent is one of the partners, covering several parcels
of land of the estate, i.e. Lots Nos. 1124, 1228, 2221, 2402, 3939, 3942 and 3957 of
the Tanjay Cadastre, under iniquitous terms and conditions. Moreover, complainant
charges that these contracts were made without the approval of the probate court
and in violation of Articles 1491 and 1646 of the new Civil Code.
On the basis of the pleadings submitted by the parties, and other pertinent records
of the investigation, the Solicitor General submitted his report dated February 21,
1990, finding that respondent committed a breach in the performance of his duties
as counsel of administrator Felix Leong when he allowed the renewal of contracts of
lease for properties involved in the testate proceedings to be undertaken in favor of
HIJOS DE JOSE VILLEGAS without notifying and securing the approval of the probate
court. However, the Solicitor General opined that there was no sufficient evidence to
warrant a finding that respondent had allowed the properties to be leased in favor of
his family partnership at a very low rental or in violation of Articles 1491 and 1646 of
the new Civil Code. Thus, the Solicitor General recommended that respondent be
suspended from the practice of law for a period of THREE (3) months with a warning
that future misconduct on respondent's part will be more severely dealt with [Report
and Recommendation of the Solicitor General, pp. 1-10; Rollo, pp. 37-46. Also,
Complaint of the Solicitor General, pp. 1-3; Rollo, pp. 47-49].
As gleaned from the record of the case and the report and recommendation of the
Solicitor General, the following facts are uncontroverted:
That as early as March 21, 1961, respondent was retained as counsel of record for
Felix Leong, one of the heirs of the late Felomina Zerna, who was appointed as
administrator of the Testate Estate of the Felomina Zerna in Special No. 460 on May
22, 1961;
That, a lease contract dated August 13, 1963 was executed between Felix Leong and
the "Heirs of Jose Villegas" represented by respondent's brother-in-law Marcelo
Pastrano involving, among others, sugar lands of the estate designated as Lot Nos.
1124, 1228, 2221, 2402, 3939, 3942 and 3957 of the Tanjay Cadastre;
That Felix Leong was designated therein as administrator and "owner, by
testamentary disposition, of 5/6 of all said parcels of land";
That, the lifetime of the lease contract was FOUR (4) sugar crop years, with a yearly
rental of TEN PERCENT (10%) of the value of the sugar produced from the leased
parcels of land;
That, on April 20, 1965, the formal partnership of HIJOS DE JOSE VILLEGAS was
formed amongst the heirs of Jose Villegas, of which respondent was a member;
That, on October 18, 1965, another lease contract was executed between Felix Leong
and the partnership HIJOS DE JOSE VILLEGAS, containing basically the same terms
18
and conditions as the first contract, with Marcelo Pastrano signing once again as
representative of the lessee;
That, on March 14, 1968, after the demise of Marcelo Pastrano, respondent was
appointed manager of HIJOS DE JOSE VILLEGAS by the majority of partners;
That, renewals of the lease contract were executed between Felix Leong and HIJOS
DE JOSE VILLEGAS on January 13, 1975 and on December 4, 1978, with respondent
signing therein as representative of the lessee; and,
That, in the later part of 1980, respondent was replaced by his nephew Geronimo H.
Villegas as manager of the family partnership.
Under the above circumstances, the Court finds absolutely no merit to complainant's
charge, and the Solicitor General's finding, that respondent committed acts of
misconduct in failing to secure the approval of the court in Special Proceedings No.
460 to the various lease contracts executed between Felix Leong and respondent's
family partnership.
Pursuant to Section 3 of Rule 84 of the Revised Rules of Court, a judicial executor or
administrator has the right to the possession and management of the real as well as
the personal estate of the deceased so long as it is necessary for the payment of the
debts and the expenses of administration. He may, therefore, exercise acts of
administration without special authority from the court having jurisdiction of the
estate. For instance, it has long been settled that an administrator has the power to
enter into lease contracts involving the properties of the estate even without prior
judicial authority and approval.
Thus, considering that administrator Felix Leong was not required under the law and
prevailing jurisprudence to seek prior authority from the probate court in order to
validly lease real properties of the estate, respondent, as counsel of Felix Leong,
cannot be taken to task for failing to notify the probate court of the various lease
contracts involved herein and to secure its judicial approval thereto.
Nevertheless, contrary to the opinion of the Solicitor General, the Court finds
sufficient evidence to hold respondent subject to disciplinary sanction for having, as
counsel of record for the administrator in Special Proceedings No. 460, participated
in the execution in 1975 and 1978 of renewals of the lease agreement involving
properties of the estate in favor of the partnership HIJOS DE JOSE VILLEGAS, of which
respondent is a member and in 1968 was appointed managing partner.
By virtue of Article 1646 of the new Civil Code, the persons referred to in Article 1491
are prohibited from leasing, either in person or through the mediation of another,
the properties or things mentioned in that article, to wit: (1) The guardian, the
property of the person or persons who may be under his guardianship;
(2) Agents, the property whose administration or sale may have been intrusted to
them, unless the consent of the principal have been given;
(3) Executors and administrators, the property of the estate under administration
(4) Public officers and employees, the property of the State or of any subdivision
thereof, or of any government owned or controlled corporation, or institution, the
administration of which has been intrusted to them; this provision shall apply to
judges and government experts who, in any manner whatsoever, take part in the
sale;
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and
other officers and employees connected with the administration of justice, the
property or rights in litigation or levied upon on execution before the court within
whose jurisdiction or territory they exercise their respective functions; this
prohibition includes the act of acquiring by assignment and shall apply to lawyers,
with respect to the property and rights which may be the object of any litigation in
which they may take part by virtue of their profession.
(6) Any others specially disqualified by law [Article 1491 of the new Civil Code;
Emphasis supplied.]
The above disqualification imposed on public and judicial officers and lawyers is
grounded on public policy considerations which disallow the transactions entered
into by them, whether directly or indirectly, in view of the fiduciary relationship
involved, or the peculiar control exercised by these individuals over the properties or
rights covered.
Thus, even if the parties designated as lessees in the assailed lease contracts were
the "Heirs of Jose Villegas" and the partnership HIJOS DE JOSE VILLEGAS, and
respondent signed merely as an agent of the latter, the Court rules that the lease
contracts are covered by the prohibition against any acquisition or lease by a lawyer
of properties involved in litigation in which he takes part. To rule otherwise would be
to lend a stamp of judicial approval on an arrangement which, in effect, circumvents
that which is directly prohibited by law. For, piercing through the legal fiction of
separate juridical personality, the Court cannot ignore the obvious implication that
19
respondent as one of the heirs of Jose Villegas and partner, later manager of, in HIJOS
DE JOSE VILLEGAS stands to benefit from the contractual relationship created
between his client Felix Leong and his family partnership over properties involved in
the ongoing testate proceedings.
In his defense, respondent claims that he was neither aware of, nor participated in,
the execution of the original lease contract entered into between his client and his
family partnership, which was then represented by his brother-in-law Marcelo
Pastrano. And although he admits that he participated in the execution of subsequent
renewals of the lease contract as managing partner of HIJOS DE JOSE VILLEGAS, he
argues that he acted in good faith considering that the heirs of Filomena Zerna
consented or acquiesced to the terms and conditions stipulated in the original lease
contract. He further contends that pursuant to the ruling of the Court in Tuason
v. Tuason [88 Phil. 428 (1951)] the renewal contracts do not fall within the prohibition
of Articles 1491 and 1646 since he signed the same as a mere agent of the
partnership.
Respondent's contentions do not provide sufficient basis to escape disciplinary action
from this Court.
It taxes this Courts imagination that respondent disclaims any knowledge in the
execution of the original lease contract between his client and his family partnership
represented by his brother-in-law. Be that as it may, it cannot be denied that
respondent himself had knowledge of and allowed the subsequent renewals of the
lease contract. In fact, he actively participated in the lease contracts dated January
13, 1975 and December 4, 1978 by signing on behalf of the lessee HIJOS DE JOSE
VILLEGAS.
Moreover, the claim that the heirs of Filomena Zerna have acquiesced and consented
to the assailed lease contracts does not militate against respondent's liability under
the rules of professional ethics. The prohibition referred to in Articles 1491 and 1646
of the new Civil Code, as far as lawyers are concerned, is intended to curtail any
undue influence of the lawyer upon his client on account of his fiduciary and
confidential association [Sotto v. Samson, G.R. No. L-16917, July 31, 1962, 5 SCRA
733]. Thus, the law makes the prohibition absolute and permanent [Rubias v.
Batiller, supra]. And in view of Canon 1 of the new Code of Professional Responsibility
and Sections 3 & 27 of Rule 138 of the Revised Rules of Court, whereby lawyers are
duty-bound to obey and uphold the laws of the land, participation in the execution
of the prohibited contracts such as those referred to in Articles 1491 and 1646 of the
new Civil Code has been held to constitute breach of professional ethics on the part
of the lawyer for which disciplinary action may be brought against him [See Bautista
v. Gonzalez, Adm. Matter No. 1625, February 12, 1990). Accordingly, the Court must
reiterate the rule that the claim of good faith is no defense to a lawyer who has failed
to adhere faithfully to the legal disqualifications imposed upon him, designed to
protect the interests of his client [See In re Ruste, 70 Phil. 243 (1940); Also, Severino
v. Severino, 44 Phil. 343 (1923)].
Neither is there merit in respondent's reliance on the case of Tuason
v. Tuason [supra.] It cannot be inferred from the statements made by the Court in
that case that contracts of sale or lease where the vendee or lessee is a partnership,
of which a lawyer is a member, over a property involved in a litigation in which he
takes part by virtue of his profession, are not covered by the prohibition under
Articles 1491 and 1646.
However, the Court sustains the Solicitor General's holding that there is no sufficient
evidence on record to warrant a finding that respondent allowed the properties of
the estate of Filomena Zerna involved herein to be leased to his family partnership at
very low rental payments. At any rate, it is a matter for the court presiding over
Special Proceedings No. 460 to determine whether or not the agreed rental payments
made by respondent's family partnership is reasonable compensation for the use and
occupancy of the estate properties.
Considering thus the nature of the acts of misconduct committed by respondent, and
the facts and circumstances of the case, the Court finds sufficient grounds to suspend
respondent from the practice of law for a period of three (3) months.
WHEREFORE, finding that respondent Atty. Crisostomo C. Villegas committed acts of
gross misconduct, the Court Resolved to SUSPEND respondent from the practice of
law for four (4) months effective from the date of his receipt of this Resolution, with
a warning that future misconduct on respondent's part will be more severely dealt
with. Let copies of this Resolution be circulated to all courts of the country for their
information and guidance, and spread in the personal record of Atty. Villegas.
ILUMINADA DE GALA-SISON, As Administratrix of the Intestate Estate of the late
Generoso de Gala, petitioner, vs. HON. MANOLO L. MADDELA, as Judge of the Court
of First Instance of Quezon and SOCORRO MANALO, respondents.
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Petition for certiorari to annul the orders, dated August 21, 1964 and May 10, 1965,
in Special Proceeding No. 2887 of respondent Judge Manolo L. Maddela of the Court
of First Instance of Quezon insofar as said orders require petitioner-administratrix to
deposit the amount of P39,240.15 in her possession with a reputable banking
institution.
Prior to the afore-mentioned orders in question, the Court of First Instance of
Quezon, then presided over by Judge Vicente Santiago, issued an order on August 29,
1952, in Special Proceeding No. 2887, directing the administratrix (a) to include in her
inventory of properties left by the deceased certain pieces of jewelry described in
Exhibit "Y" of oppositor Socorro Manalo, and (b) to deposit cash in her possession
amounting to P40,998.56 with a reputable banking institution. On appeal, the Court
of Appeals in its decision of February 2, 1961 in case CA-G.R. No. 10711-R,1 affirmed
the lower court's order of August 29, 1952. However, on a petition for certiorari,2 this
Court, finding that the amount of P1,698.41 was spent by the petitioner Iluminada
de Gala-Sison, as administratrix, which expense was approved by the court on August
2, 1950, so that the amount ordered to be deposited should be reduced by P1,698.41
to P39,240.15, rendered on July 31, 1963 a decision modifying the appealed order of
August 29, 1952 to read as follows:
Considering that the balance of P40,938.56 existing at the time of the issuance of the
order appealed from, dated August 29, 1952, may no longer exist by virtue of the fact
that the administratrix must have already paid to the heirs their respective
allowances and shares in the inheritance, the disputed order should be modified to
include only such balance of the original amount of P40,938.56 as may be in the
possession of the administratrix, after deducting the expenses approved by the court
and the allowances and inheritances authorized by the court to be given to the widow
and the heirs.
On October 7, 1963, respondent Socorro Manalo moved for the execution of the
decision of July 31, 1963, and the respondent Judge issued on October 16, 1963 an
order requiring, within ten (10) days from the receipt of the order, the administratrix
Iluminada de Gala-Sison (1) "to file an amended inventory including therein the
pieces of jewelry listed in Socorro Manalo's Exhibit 'Y' "; and (2) "to deposit with any
reputable banking institution the remainder of the amount of P40,938.56, which may
be in her possession, after deducting the expenses approved by the court and the
allowances and inheritances authorized by the court, as specified in its order issued
in this case dated July 7, 1950, to be given to the widow and the heirs of the deceased
Generoso de Gala."
Under date of November 29, 1963, the petitioner filed an Amended Inventory in
compliance with the said order. However, the petitioner-administratrix did not
comply with the portion of said order which required her to deposit the remainder
of the amount of P40,938.56 which may be in her possession. Instead, she filed on
November 29, 1963 a Manifestation stating that "there is really no necessity for any
deposit to be made with a banking institution which the probate court then believed
was necessary way back on August 29, 1952 when the accountable fund was still a
sizable one," since from the remainder of said amount of P40,938.56 ordered to be
deposited, several deductions should be made consisting in the following:
(a) additional expenses in the sum of P1,698.41 which was approved by the probate
court per order of 3 August 1950;
(b) advances and allowances to petitioner as heir (she being the only surviving child
of the late Generoso de Gala in the sum of P22,000.00 (the other heirs through
respondent-oppositor and the surviving widow have already been given similar
advances and allowances in the sums of P21,815.88 and P19,151.39);
(c) expenses of litigation and attorney's fees already incurred and paid since 1952;
and .
(d) compensation of petitioner as administratrix of the intestate estate.
On August 21, 1964, the respondent Judge issued an order, the pertinent portion of
which reads: To resolve the foregoing contention of the administratrix, this court
examined carefully the records and finds that there is no merit in her contention.
First: The decision of the Supreme Court authorized the deduction of expenses,
allowances and inheritance already approved by the court; whereas the amounts
now sought to be deducted have never been so authorized by this court; and
Second: It now appears that the present contention of the administratrix was
already raised by her in the Supreme Court, and in spite of such claim, the decision
of said court did not authorize such deduction.
An examination of the records also reveals that from the amount of P40,935.56, only
the sum of P1,698.41 must be deducted specially considering that from the
manifestation aforesaid the administratrix failed to assert any other deductions as
justified by the decision of the Supreme Court. Hence, the amount that must be
deposited by the administratrix is the amount of P39,240.15.
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WHEREFORE, this court orders the administratrix to fully comply with its order dated
August 16, 1963 by depositing with any reputable banking institution the amount of
P39,240.15 within ten (10) days from the receipt of this order.
On September 17, 1964, petitioner filed simultaneously (1) a motion for
reconsideration of the order of August 21, 1964; (2) a motion for payment to herself
the amount of P22,000.00 as her advance or allowance against her distributive share
and for the approval thereof; (d) a petition for allowance and payment, from the
properties and assets of the estate, of the sum of P20,000.00 as her fees and
compensation as administratrix; and (4) a verified accounting of the petitioner-
administratrix for approval by the court.
On May 10, 1965, the respondent Judge issued an order the dispositive portion of
which reads: WHEREFORE, the motion for reconsideration dated September 17, 1964
is hereby denied, and the administratrix is hereby ordered anew to fully comply with
the order of this court dated August 21, 1964 by depositing with any reputable
banking institution the amount of P39,340.15 within a period of ten (10) days from
receipt of this order. The motion for payment of advances, dated September 17, 1964
and the petition for allowance and payment of compensation, also dated September
17, 1964 are both denied; and the accounting dated September 10, 1964 is hereby
disapproved.
On May 26, 1965, the petitioner filed a motion for new trial and/or reconsideration
of the order dated May 10, 1965, alleging, among others, that the lower court erred
in holding that the disbursements itemized in her verified accounting are
unsupported by receipts and that her payments of attorney's fees were for her
benefit as heir; and praying that said order of May 10, 1965, be set aside and
reconsidered to the end that the administratrix among others may be granted a day
in court for the presentation of her evidence or receipts supporting her verified
accounting and disbursements itemized therein and that thereafter her said
accounting be approved; that she be allowed payment of P22,000.00 as her advance
or allowance against the distributive share as similar advances and allowances had
been granted by the oppositor Socorro Manalo and the surviving spouse Felisa
Alabastro; and that she be granted allowance and payment of her administratrix'
compensation and fees for her administration of the intestate estate.
Before action could be taken by the lower court on petitioner's motion for new trial
and/or reconsideration, petitioner interposed the present petition
for certiorari before this Court, alleging that respondent Judge acted with grave
abuse of discretion amounting to lack or excess of jurisdiction in issuing the
challenged orders. The gist of petitioner's contention is that she cannot be compelled has been attended with great difficulty, and has required a high degree of capacity
to deposit in a bank what she no longer has, considering that she is entitled to the on the part of the executor or administrator". It must be noted that petitioner is
deductions which she made from the original amount, for (a) as sole surviving child seeking as her compensation as administratrix an amount greater than that ordinarily
of decedent, she is entitled to advances and allowances from the inheritance, and (b) allowed under the rules on the ground that the estate is large, its settlement "having
as administratrix, she is to be reimbursed for her expenditures and to deduct her fees been attended with great difficulty (since 1947 or almost 17 years ago) and required
as such administratrix. a high degree of capacity". In order to entitle the executor or administrator to
additional compensation, the estate must be large, the settlement extraordinarily
The instant petition must be dismissed. In the case at bar, there is pending before the
difficult, and a high degree of capacity demonstrated by him. The amount of his fee
court a quo a motion for new trial and/or reconsideration filed by the petitioner-
in special cases under the Rules is a matter largely in the discretion of the probate
administratrix. In said motion, she prays for a chance to submit "receipts proving the
court, which will not be disturbed on appeal, except for an abuse of
disbursements itemized in her verified accounting, and therefore begs leave for a
discretion.4 Whether or not the probate court abused its discretion would depend
new trial to offer such evidence". She also alleges therein that she will submit
on the attendant facts. We do not have before Us any competent evidence on the
evidence which will show that her disbursements "are properly and legally
basis of which We can ascertain the veracity of petitioner's claims. Upon the other
chargeable to the estate". She therefore prayed for the reconsideration of the denial
hand, such evidence could be presented before the court a quo. Similarly, any review
of her motion for payment of P22,000.00 "as her advance or allowance against her
of the order of the probate court denying petitioner's motions on the ground that the
distributive share" and the payment of her fees as administratrix. It is very obvious
different disbursements contained in her accounts "are not only unsupported by
that the court a quo should be given an opportunity to act on these matters because
receipts but likewise not properly and legally chargeable against the estate of the
the correctness of the order requiring petitioner to deposit the amount of P39,240.15
deceased ..." would involve a consideration of the supporting evidence which We do
with a banking institution is dependent upon the ascertainment by the court of the
not have before Us. Indeed, petitioner alleges in her petition that it is for the purpose
correctness of the account of the administratrix. Contrary to petitioner's contention,
of submitting the "supporting proofs" to her account that she filed the motion for
the matters relating to the advances to her as heir, her compensation as
new trial with the court a quo. It likewise appears from the records that the court
administratrix and her other disbursements cannot be considered separately from
below was given almost no time to pass upon the motion, the same being dated May
the order to deposit the amount of P39,240.15, for as the respondent court observed:
26, 1965 and this petition for certiorari being dated June 1, 1965. On the basis of the
"It is ... very obvious that should said petitions be granted, she shall be relieved
foregoing facts, the present petition for certiorari is indeed premature. We consider
thereby of her obligation to deposit the amount of P39,314.15 as ordered by this
it pertinent to state that:
Court." Our decision of July 31, 1963 which modified the appealed order of the
Quezon Court of First Instance in effect reaffirmed the authority of the probate court "... The office of the writ of certiorari has been reduced to the correction of defects
to pass upon the correctness of the disbursements made by the administratrix, as of jurisdiction solely and cannot legally be used for any other purpose. It is truly an
clearly shown by the dispositive portion thereof, which directed the deposit of the extraordinary remedy and, in this jurisdiction, its use is restricted to truly
balance of the original amount of P40,938.56 in the possession of the administratrix extraordinary cases-cases in which the action of the inferior court is wholly void;
after deducting the expenses, allowances and inheritances approved or authorized where any further steps in the case would result in a waste of time and money and
by the court. would produce no result whatever; where the parties, or their privies, would be
utterly deceived; where a final judgment or decree would be naught but a snare and
Pursuant to Section 7 of Rule 85 of the Rules, 3 a judicial administrator is entitled, by
a delusion, deciding nothing, protecting nobody, a judicial pretension, a recorded
way of compensation as such, to either (a) P4.00 per day "for the time actually and
falsehood, a standing menace. It is only to avoid such results as these that a writ
necessarily employed" by him as such administrator, or (b) a "commission upon the
of certiorari is issuable, and even here an appeal will lie if the aggrieved party prefers
value of so much of the estate as comes into his possession and was finally disposed
to prosecute it."
of by him" according to the schedule therein provided. The administrator may be
allowed a greater or additional sum "where the estate is large, and the settlement

22
And We have emphasized that before a petition for certiorari can be brought against
an order of the trial court, all remedies available in that court must first be exhausted.
Thus, a petition for certiorari may not be granted where there is an appeal or other
adequate remedy, like a motion for reconsideration, which is pending in the court
below.6 The lower court must be granted by the aggrieved party sufficient
opportunity to correct the error it may have committed.7 It is true that there are
several exceptions to this rule, such as where the order complained of is void for
being violative of due process;8 or there are special circumstances which warrant
immediate and more direct action; 9 or where execution had been ordered and the
need for relief is extremely urgent; 10 or the lower court has taken an unreasonably
long time to resolve the motions before it and further delay would prejudice the party
concerned; 11 or where the motion will raise the same point which has already been
squarely stated before the court; 12 or the proceeding in which the order occurred is
a patent nullity as the court acted without jurisdiction. 13 However, the case at bar
does not fall within any of the above exceptions.
TESTATE ESTATE OF THE LATE DOMINADOR TUMANG, MAGDALENA A.
TUMANG, administratrix-appellee, vs. GUIA T. LAGUIO AND HER MINOR
CHILDREN, movants-appellants.
This case was forwarded to this Court by the Court of Appeals on the ground that it
involves purely legal issues. The factual background, as found by the Court of Appeals,
is as follows:
In Special Proceeding No. 1953 involving the estate of the late Dominador Tumang
and pending before the Court of First Instance of Pampanga, the widow of the
deceased, namely Magdalena A. Tumang, administratrix and executrix of the will,
filed a petition to declare the testate proceedings definitely terminated and closed
with respect to herself and two of her children — Melba Tumang Ticzon and Nestor
A. Tumang. The petition was premised on the fact that the aforesaid heirs had already
acknowledged receipt of the properties adjudicated to them, and in order for such
properties to be transferred in their names, there was need for an order of the court
declaring the proceedings closed with respect to the aforesaid heirs. The petition was
opposed by appenee's daughter, Guia T. Laguio and her children on the ground that
appellee, as administratrix and executrix, had not yet delivered all properties
adjudicated to them. Moreover, the oppositors contended that there could be no
partial termination of the proceedings. Thereafter, the administratrix withdrew the
aforementioned petition.
23
During the hearing of the motion to withdraw petition, Magdalena Tumang, as
required by the court, filed a pleading captioned "Compliance", alleging that as
shown by the attached receipts issued by the BIR, the estate and inheritance taxes
had been fully paid; that as certified by the Deputy Clerk of Court, no claim has been
presented that has not already delivered all the properties and dividends of the
shares of stock adjudicated to her and her minor children since the approval of the
original and amendatory projects of partition; and that with such admission, the
court no longer has jurisdiction to entertain the motion under consideration.
Resolving the foregoing, the court a quo issued the first questioned Order on
February 5, 1971, stating in part, the following: Considering the opposition well
founded, the court hereby considers the motion to require administratrix to render
an accounting untenable, as the final accounting of the administratrix was already
approved and therefore denies the motion of oppositor and counter-petitioner dated
Jan. 25, 1971. 2
A motion for reconsideration of the foregoing Order was filed by Guia T. Laguio and
her minor children. On August 16, 1971, the court a quo issued the second
questioned Order denying the motion for reconsideration in the following manner:
After a careful consideration of the grounds relied upon by the movant counter-
petitioner, this Court resolves to deny the motion for reconsideration for the reason
that in view of said counter-petitioner's receipt of the cash dividends in question
without first requiring the administratrix the accounting now being sought to be
rendered for purposes of determining the correctness of the cash dividends
constitutes already a waiver on her part to question such correctness of the aforesaid
cash dividends. The counter-petitioner is being assisted by counsel in the person of
her own husband, and who being well-versed in such legal process, could have
rejected receipt of the said cash dividends on the shares of stock if the correctness of
the same was at that time being doubted. To say the least, therefore, the grounds for
the motion for reconsideration are, in the honest opinion of this Court,
unmeritorious, and all the motion, in effect, is hereby denied. 3
The sole issue is whether or not the court should have required the executrix to
render an accounting of the cash and stock dividends received after the approval of
her final accounts. A corollary issue is whether or not petitioners have waived their
right to demand such accounting.
Section 8 of Rule 85 provides that the "executor or administrator shall render an
account of his administration within one (1) year from the time of receiving letters
testamentary or of administration ..., and he shall render such further accounts as
the court may requite until the estate is wholly settled."
In the instant case, further accounts by the executrix appear to be in order, in view
of the fact that the dividends sought to be accounted for are not included in the final
accounts rendered by the executrix. It appears that the interests of all the parties will
be better served and the conflict between petitioners and respondent will be
resolved if such additional accounting is made. Further, "it has been held that an
executor or administrator who receives assets of the estate after he has filed an
account should file a supplementary account thereof, and may be compelled to do
so, but that it is only with respect to matters occuring after the settlement of final
account that representatives will be compelled to file supplementary account." 4 It is
only in a case where the petition to compel an executor to account after he has
accounted and has been discharged fails to allege that any further sums came into
the hands of the executor, and the executor specifically denies the receipt of any
further sums that the accounting should be denied. 5
There is no question that in the instant case, the fact that the executrix received funds
of the estate after the approval of her final accounts and before the issuance of an
order finally closing the proceedings is admitted. She must, therefore, account for
the same, in consonance with her duty to account for all the assets of the decedent's
estate which have come into her possession by virtue of her office. 6 An executor
should account for all his receipts and disbursements since his last accounting. 7
We disagree with the lower court's finding that petitioners, by receiving the dividends
without requiring an accounting, had waived their right to do so. The duty of an
executor or administrator to render an account is not a mere incident of an
administration proceeding which can be waived or disregarded. It is a duty that has
to be performed and duly acted upon by the court before the administration is finally
ordered closed and terminated, 8 to the end that no part of the decedent's estate be
left unaccounted for. The fact that the final accounts had been approved does not
divest the court of jurisdiction to require supplemental accounting for, aside from the
initial accounting, the Rules provide that "he shall render such further accounts as
the court may require until the estate is wholly settled." 9
WHEREFORE, in view of all the foregoing, the Orders of the lower court dated
February 5, 1971 and August 16, 1971 are set aside, and respondent executrix is
hereby ordered to render a supplemental accounting of all cash and stock dividends
as well as other properties of the estate which came into her possession after the
approval of her final accounts.
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QUASHA ANCHETA PEÑA AND NOLASCO LAW OFFICE FOR ITS OWN BEHALF, AND
REPRESENTING THE HEIRS OF RAYMOND TRIVIERE, petitioners,vs.
LCN CONSTRUCTION CORP., respondent.
This is a Petition for Review under Rule 45 of the Revised Rules of Court with
petitioners Quasha Ancheta Peña and Nolasco Law Office (Quasha Law Office) and
the Heirs of Raymond Triviere praying for the reversal of the Decision1 dated 11 May
2006 and Resolution2 dated 22 September 2006 of the Court of Appeals granting in
part the Petition for Certiorari filed by respondent LCN Construction Corporation
(LCN) in CA-G.R. SP No. 81296.
The factual antecedents of the case are as follows: Raymond Triviere passed away on
14 December 1987. On 13 January 1988, proceedings for the settlement of his
intestate estate were instituted by his widow, Amy Consuelo Triviere, before the
Regional Trial Court (RTC) of Makati City, Branch 63 of the National Capital Region
(NCR), docketed as Special Proceedings Case No. M-1678. Atty. Enrique P. Syquia
(Syquia) and Atty. William H. Quasha (Quasha) of the Quasha Law Office,
representing the widow and children of the late Raymond Triviere, respectively, were
appointed administrators of the estate of the deceased in April 1988. As
administrators, Atty. Syquia and Atty. Quasha incurred expenses for the payment of
real estate taxes, security services, and the preservation and administration of the
estate, as well as litigation expenses.
In February 1995, Atty. Syquia and Atty. Quasha filed before the RTC a Motion for
Payment of their litigation expenses. Citing their failure to submit an accounting of
the assets and liabilities of the estate under administration, the RTC denied in May
1995 the Motion for Payment of Atty. Syquia and Atty. Quasha.
In 1996, Atty. Quasha also passed away. Atty. Redentor Zapata (Zapata), also of the
Quasha Law Office, took over as the counsel of the Triviere children, and continued
to help Atty. Syquia in the settlement of the estate.
On 6 September 2002, Atty. Syquia and Atty. Zapata filed another Motion for
Payment,3 for their own behalf and for their respective clients, presenting the
following allegations:
(1) That the instant Petition was filed on January 13, 1988; and Atty. Enrique P. Syquia
was appointed Administrator by the Order of this Honorable Court dated April 12,
1988, and discharged his duties starting April 22, 1988, after properly posting his
administrator's bond up to this date, or more than fourteen (14) years later.
Previously, there was the co-administrator Atty. William H. Quasha, but he has
already passed away.
(2) That, together with Co-administrator Atty. William H. Quasha, they have
performed diligently and conscientiously their duties as Co-administrators, having
paid the required Estate tax and settled the various claims against the Estate, totaling
approximately twenty (20) claims, and the only remaining claim is the unmeritorious
claim of LCN Construction Corp., now pending before this Honorable Court;
(3) That for all their work since April 22, 1988, up to July 1992, or for four (4) years,
they were only given the amount of P20,000.00 each on November 28, 1988; and
another P50,00.00 each on October 1991; and the amount of P100,000.00 each on
July 1992; or a total of P170,000.00 to cover their administration fees, counsel fees
and expenses;
(4) That through their work, they were able to settle all the testate (sic) claims except
the remaining baseless claim of LCN Construction Corp., and were able to dismiss two
(2) foreign claims, and were also able to increase the monetary value of the estate
from roughly over P1Million to the present P4,738,558.63 as of August 25, 2002 and
maturing on September 27, 2002; and the money has always been with the Philippine
National Bank, as per the Order of this Honorable Court;
(5) That since July 1992, when the co-administrators were paid P100,000.00 each,
nothing has been paid to either Administrator Syquia or his client, the widow
Consuelo Triviere; nor to the Quasha Law Offices or their clients, the children of the
deceased Raymond Triviere;
(6) That as this Honorable Court will notice, Administrator Syquia has always been
present during the hearings held for the many years of this case; and the Quasha Law
Offices has always been represented by its counsel, Atty. Redentor C. Zapata; and
after all these years, their clients have not been given a part of their share in the
estate;
(7) That Administrator Syquia, who is a lawyer, is entitled to additional
Administrator's fees since, as provided in Section 7, Rule 85 of the Revised Rules of
Court:
"x x x where the estate is large, and the settlement has been attended with great
difficulty, and has required a high degree of capacity on the part of the executor or
administrator, a greater sum may be allowed…"
25
In addition, Atty. Zapata has also been present in all the years of this case. In addition,
they have spent for all the costs of litigation especially the transcripts, as out-of-
pocket expenses.
(8) That considering all the foregoing, especially the fact that neither the
Administrator or his client, the widow; and the Quasha Law Offices or their clients,
the children of the deceased, have received any money for more than ten (10) years
now, they respectfully move that the amount of P1Million be taken from the Estate
funds, to be divided as follows: a) P450,000.00 as share of the children of the
deceased [Triviere] who are represented by the Quasha Ancheta Peña & Nolasco Law
Offices;
b) P200,000.00 as attorney's fees and litigation expenses for the Quasha Ancheta
Peña & Nolasco Law Offices;
c) P150,000.00 as share for the widow of the deceased [Raymond Triviere], Amy
Consuelo Triviere; and
d) P200,000.00 for the administrator Syquia, who is also the counsel of the widow;
and for litigation costs and expenses.
LCN, as the only remaining claimant4 against the Intestate Estate of the Late
Raymond Triviere in Special Proceedings Case No. M-1678, filed its Comment
on/Opposition to the afore-quoted Motion on 2 October 2002. LCN countered that
the RTC had already resolved the issue of payment of litigation expenses when it
denied the first Motion for Payment filed by Atty. Syquia and Atty. Quasha for failure
of the administrators to submit an accounting of the assets and expenses of the
estate as required by the court. LCN also averred that the administrators and the
heirs of the late Raymond Triviere had earlier agreed to fix the former's fees at only
5% of the gross estate, based on which, per the computation of LCN, the
administrators were even overpaid P55,000.00. LCN further asserted that contrary to
what was stated in the second Motion for Payment, Section 7, Rule 85 of the Revised
Rules of Court was inapplicable,5 since the administrators failed to establish that the
estate was large, or that its settlement was attended with great difficulty, or required
a high degree of capacity on the part of the administrators. Finally, LCN argued that
its claims are still outstanding and chargeable against the estate of the late Raymond
Triviere; thus, no distribution should be allowed until they have been paid; especially
considering that as of 25 August 2002, the claim of LCN against the estate of the late
Raymond Triviere amounted to P6,016,570.65 as against the remaining assets of the
estate totaling P4,738,558.63, rendering the latter insolvent.
On 12 June 2003, the RTC issued its Order6 taking note that "the widow and the heirs
of the deceased Triviere, after all the years, have not received their respective share
(sic) in the Estate x x x."
The RTC declared that there was no more need for accounting of the assets and
liabilities of the estate considering that: [T]here appears to be no need for an
accounting as the estate has no more assets except the money deposited with the
Union Bank of the Philippines under Savings Account No. 12097-000656-0 x x x; on
the estate taxes, records shows (sic) that the BIR Revenue Region No. 4-B2 Makati
had issued a certificate dated April 27, 1988 indicating that the estate taxes has been
fully paid.7
As to the payment of fees of Atty. Syquia and the Quasha Law Office, the RTC found
as follows: [B]oth the Co-Administrator and counsel for the deceased (sic) are entitled
to the payment for the services they have rendered and accomplished for the estate
and the heirs of the deceased as they have over a decade now spent so much time,
labor and skill to accomplish the task assigned to them; and the last time the
administrators obtained their fees was in 1992.8
Hence, the RTC granted the second Motion for Payment; however, it reduced the
sums to be paid, to wit: In view of the foregoing considerations, the instant motion is
hereby GRANTED. The sums to be paid to the co-administrator and counsel for the
heirs of the deceased Triviere are however reduced.
Accordingly, the co-administrator Atty. Syquia and aforenamed counsel are
authorized to pay to be sourced from the Estate of the deceased as follows:
a) P450,000.00 as share of the children of the deceased who are represented by the
Quasha, Ancheta, Pena, Nolasco Law Offices;
b) P100,000.00 as attorney's fees and litigation expenses for said law firm;
c) P150,000.00 as share for the widow of the deceased Amy Consuelo Triviere; and
d) P100,000.00 for the Co-administrator Atty. Enrique P. Syquia and for litigation
costs and expenses.9
LCN filed a Motion for Reconsideration10 of the foregoing Order on 2 July 2003, but
it was denied by the RTC on 29 October 2003.11
On 13 May 2004, LCN sought recourse from the Court of Appeals by assailing in CA-
G.R. SP No. 81296, a Petition for Certiorari, the RTC Orders dated 12 June 2003 and 2
26
July 2003, for having been rendered with grave abuse of discretion.12 LCN
maintained that:
(1) The administrator's claim for attorney's fees, aside from being prohibited under
paragraph 3, Section 7 of Rule 85 is, together with administration and litigation
expenses, in the nature of a claim against the estate which should be ventilated and
resolved pursuant to Section 8 of Rule 86;
(2) The awards violate Section 1, Rule 90 of the Rules of Court, as there still exists its
(LCN's) unpaid claim in the sum of P6,016,570.65; and
(3) The alleged deliberate failure of the co-administrators to submit an accounting of
the assets and liabilities of the estate does not warrant the Court's favorable action
on the motion for payment.13
On 11 May 2006, the Court of Appeals promulgated a Decision essentially ruling in
favor of LCN.
While the Court of Appeals conceded that Atty. Syquia and the Quasha Law Office, as
the administrators of the estate of the late Raymond Triviere, were entitled to
administrator's fees and litigation expenses, they could not claim the same from the
funds of the estate. Referring to Section 7, Rule 85 of the Revised Rules of Court, the
appellate court reasoned that the award of expenses and fees in favor of executors
and administrators is subject to the qualification that where the executor or
administrator is a lawyer, he shall not charge against the estate any professional fees
for legal services rendered by him. Instead, the Court of Appeals held that the
attorney's fees due Atty. Syquia and the Quasha Law Offices should be borne by their
clients, the widow and children of the late Raymond Triviere, respectively.
The appellate court likewise revoked the P450,000.00 share and P150,000.00 share
awarded by the RTC to the children and widow of the late Raymond Triviere,
respectively, on the basis that Section 1, Rule 91 of the Revised Rules of Court
proscribes the distribution of the residue of the estate until all its obligations have
been paid.
The appellate court, however, did not agree in the position of LCN that the
administrators' claims against the estate should have been presented and resolved
in accordance with Section 8 of Rule 86 of the Revised Rules of Court. Claims against
the estate that require presentation under Rule 86 refer to "debts or demands of a
pecuniary nature which could have been enforced against the decedent during his
lifetime and which could have been reduced to simple judgment and among which
are those founded on contracts." The Court of Appeals also found the failure of the
administrators to render an accounting excusable on the basis of Section 8, Rule 85
of the Revised Rules of Court.14
Finding the Petition for Certiorari of LCN partly meritorious, the Court of Appeals
decreed: WHEREFORE, premises considered, the instant petition is hereby PARTLY
GRANTED. The assailed Orders of the public respondent are hereby AFFIRMED with
MODIFICATION in that -
(1) the shares awarded to the heirs of the deceased Triviere in the assailed Order of
June 12, 2003 are hereby DELETED; and (2) the attorney's fees awarded in favor of
the co-administrators are hereby DELETED. However, inasmuch as the assailed order
fails to itemize these fees from the litigation fees/administrator's fees awarded in
favor of the co-administrators, public respondent is hereby directed to determine
with particularity the fees pertaining to each administrator.1
Petitioner filed a Motion for Reconsideration16 of the 11 May 2006 Decision of the
Court of Appeals. The Motion, however, was denied by the appellate court in a
Resolution dated 22 September 2006,17 explaining that:
In sum, private respondents did not earlier dispute [herein respondent LCN's] claim
in its petition that the law firm and its lawyers served as co-administrators of the
estate of the late Triviere. It is thus quite absurd for the said law firm to now dispute
in the motion for reconsideration its being a co-administrator of the estate.
[Herein petitioners], through counsel, likewise appear to be adopting in their motion
for reconsideration a stance conflicting with their earlier theory submitted to this
Court. Notably, the memorandum for [petitioner] heirs states that the claim for
attorney's fees is supported by the facts and law. To support such allegation, they
contend that Section 7 (3) of Rule 85 of the 1997 Rules of Civil Procedure finds no
application to the instant case since "what is being charged are not professional fees
for legal services rendered but payment for administration of the Estate which has
been under the care and management of the co-administrators for the past fourteen
(14) years." Their allegation, therefore, in their motion for reconsideration that
Section 7 (3) of Rule 85 is inapplicable to the case of Quasha Law Offices because it is
"merely seeking payment for legal services rendered to the estate and for litigation
expenses" deserves scant consideration. WHEREFORE, premises considered, private
respondents' motion for reconsideration is hereby DENIED for lack of merit. 18
Exhausting all available legal remedies, petitioners filed the present Petition for
Review on Certiorari based on the following assignment of errors:
27
I.THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE AWARD IN
FAVOR OF THE HEIRS OF THE LATE RAYMOND TRIVIERE IS ALREADY A DISTRIBUTION
OF THE RESIDUE OF THE ESTATE.
II.THE HONORABLE COURT OF APPEALS ERRED IN NULLIFYING THE AWARD OF
ATTORNEY'S FEES IN FAVOR OF THE CO-ADMINISTRATORS
IThe Court of Appeals modified the 12 June 2003 Order of the RTC by deleting the
awards of P450,000.00 and P150,000.00 in favor of the children and widow of the
late Raymond Triviere, respectively. The appellate court adopted the position of LCN
that the claim of LCN was an obligation of the estate which was yet unpaid and, under
Section 1, Rule 90 of the Revised Rules of Court, barred the distribution of the residue
of the estate.
Petitioners, though, insist that the awards in favor of the petitioner children and
widow of the late Raymond Triviere is not a distribution of the residue of the estate,
thus, rendering Section 1, Rule 90 of the Revised Rules of Court inapplicable.
Section 1, Rule 90 of the Revised Rules of Court provides: Section 1. When order for
distribution of residue made. - When the debts, funeral charges, and expenses of
administration, the allowance to the widow, and inheritance tax, if any, chargeable
to the estate in accordance with law, have been paid, the court, on the application of
the executor or administrator, or of a person interested in the estate, and after
hearing upon notice, shall assign the residue of the estate to the persons entitled to
the same, naming them and the proportions, or parts, to which each is entitled, and
such persons may demand and recover their respective shares from the executor or
administrator, or any other person having the same in his possession. If there is a
controversy before the court as to who are the lawful heirs of the deceased person
or as to the distributive shares to which each person is entitled under the law, the
controversy shall be heard and decided as in ordinary cases.
No distribution shall be allowed until the payment of the obligations above
mentioned has been made or provided for, unless the distributees, or any of them,
give a bond, in a sum to be fixed by the court, conditioned for the payment of said
obligations within such time as the court directs.
According to petitioners, the 12 June 2003 Order of the RTC should not be construed
as a final order of distribution. The 12 June 2003 RTC Order granting the second
Motion for Payment is a mere interlocutory order that does not end the estate
proceedings. Only an order of distribution directing the delivery of the residue of the
estate to the proper distributees brings the intestate proceedings to a close and,
consequently, puts an end to the administration and relieves the administrator of his
duties.
A perusal of the 12 June 2003 RTC Order would immediately reveal that it was not
yet distributing the residue of the estate. The said Order grants the payment of
certain amounts from the funds of the estate to the petitioner children and widow of
the late Raymond Triviere considering that they have not received their respective
shares therefrom for more than a decade. Out of the reported P4,738,558.63 value
of the estate, the petitioner children and widow were being awarded by the RTC, in
its 12 June 2003 Order, their shares in the collective amount of P600,000.00.
Evidently, the remaining portion of the estate still needs to be settled. The intestate
proceedings were not yet concluded, and the RTC still had to hear and rule on the
pending claim of LCN against the estate of the late Raymond Triviere and only
thereafter can it distribute the residue of the estate, if any, to his heirs.
While the awards in favor of petitioner children and widow made in the RTC Order
dated 12 June 2003 was not yet a distribution of the residue of the estate, given that
there was still a pending claim against the estate, still, they did constitute a partial
and advance distribution of the estate. Virtually, the petitioner children and widow
were already being awarded shares in the estate, although not all of its obligations
had been paid or provided for.
Section 2, Rule 109 of the Revised Rules of Court expressly recognizes advance
distribution of the estate, thus: Section 2. Advance distribution in special
proceedings. - Notwithstanding a pending controversy or appeal in proceedings to
settle the estate of a decedent, the court may, in its discretion and upon such terms
as it may deem proper and just, permit that such part of the estate as may not be
affected by the controversy or appeal be distributed among the heirs or
legatees, upon compliance with the conditions set forth in Rule 90 of these rules.
(Emphases supplied.)
The second paragraph of Section 1 of Rule 90 of the Revised Rules of Court allows the
distribution of the estate prior to the payment of the obligations mentioned therein,
provided that "the distributees, or any of them, gives a bond, in a sum to be fixed by
the court, conditioned for the payment of said obligations within such time as the
court directs."
In sum, although it is within the discretion of the RTC whether or not to permit the
advance distribution of the estate, its exercise of such discretion should be qualified
by the following: [1] only part of the estate that is not affected by any pending
controversy or appeal may be the subject of advance distribution (Section 2, Rule
28
109); and [2] the distributees must post a bond, fixed by the court, conditioned for
the payment of outstanding obligations of the estate (second paragraph of Section 1,
Rule 90). There is no showing that the RTC, in awarding to the petitioner children and
widow their shares in the estate prior to the settlement of all its obligations, complied
with these two requirements or, at the very least, took the same into consideration.
Its Order of 12 June 2003 is completely silent on these matters. It justified its grant
of the award in a single sentence which stated that petitioner children and widow
had not yet received their respective shares from the estate after all these years.
Taking into account that the claim of LCN against the estate of the late Raymond
Triviere allegedly amounted to P6,016,570.65, already in excess of the P4,738,558.63
reported total value of the estate, the RTC should have been more prudent in
approving the advance distribution of the same.
Petitioners earlier invoked Dael v. Intermediate Appellate Court,,19 where the Court
sustained an Order granting partial distribution of an estate.
However, Dael is not even on all fours with the case at bar, given that the Court
therein found that: Where, however, the estate has sufficient assets to ensure
equitable distribution of the inheritance in accordance with law and the final
judgment in the proceedings and it does not appear there are unpaid obligations, as
contemplated in Rule 90, for which provisions should have been made or a bond
required, such partial distribution may be allowed. (Emphasis supplied.)
No similar determination on sufficiency of assets or absence of any outstanding
obligations of the estate of the late Raymond Triviere was made by the RTC in this
case. In fact, there is a pending claim by LCN against the estate, and the amount
thereof exceeds the value of the entire estate.
Furthermore, in Dael, the Court actually cautioned that partial distribution of the
decedent's estate pending final termination of the testate or intestate proceeding
should as much as possible be discouraged by the courts, and, except in extreme
cases, such form of advances of inheritance should not be countenanced. The reason
for this rule is that courts should guard with utmost zeal and jealousy the estate of
the decedent to the end that the creditors thereof be adequately protected and all
the rightful heirs be assured of their shares in the inheritance.
Hence, the Court does not find that the Court of Appeals erred in disallowing the
advance award of shares by the RTC to petitioner children and the widow of the late
Raymond Triviere.
II
On the second assignment of error, petitioner Quasha Law Office contends that it is
entitled to the award of attorney's fees and that the third paragraph of Section 7,
Rule 85 of the Revised Rules of Court, which reads:
Section 7. What expenses and fees allowed executor or administrator. Not to charge
for services as attorney. Compensation provided by will controls unless renounced.
When the executor or administrator is an attorney, he shall not charge against the
estate any professional fees for legal services rendered by him. (Emphasis supplied.)
is inapplicable to it. The afore-quoted provision is clear and unequivocal and needs
no statutory construction. Here, in attempting to exempt itself from the coverage of
said rule, the Quasha Law Office presents conflicting arguments to justify its claim for
attorney's fees against the estate. At one point, it alleges that the award of attorney's
fees was payment for its administration of the estate of the late Raymond Triviere;
yet, it would later renounce that it was an administrator.
In the pleadings filed by the Quasha Law Office before the Court of Appeals, it
referred to itself as co-administrator of the estate.
In the Comment submitted to the appellate court by Atty. Doronila, the member-
lawyer then assigned by the Quasha Law Office to the case, it stated that: The 12 June
2003 Order granted the Motion for Payment filed by Co-Administrator and counsel
Atty. Enrique P. Syquia and the counsel Atty. Cirilo E. Doronila and Co-
Administrator for the children of the late Raymond Triviere. x x x.20 (Emphasis
supplied.)
It would again in the same pleading claim to be the "co-administrator and counsel for
the heirs of the late Raymond Triviere."21
Finally, the Memorandum it submitted to the Court of Appeals on behalf of its clients,
the petitioner-children of the late Raymond Triviere, the Quasha Law Office alleged
that: 2. The petition assails the Order of the Honorable Regional Trial Court of Makati,
Branch 63 granting the Motion for Payment filed by Co-Administrators Atty. Enrique
P. Syquia and the undersigned counsel together with the children of the deceased
Raymond Triviere, and the Order dated 29 October 2003 denying Petitioner's Motion
for Reconsideration of the First Order.
I. Statement of Antecedent Facts 4. On 13 May 2004, Atty. Enrique Syquia, co-
administrator and counsel for respondent Amy Consuelo Triviere and the
undersigned counsel, co-administrator and counsel for the children of the late
Raymond Triviere filed their Comment.22
29
Petitioner Quasha Law Office asserts that it is not within the purview of Section 7,
Rule 85 of the Revised Rules of Court since it is not an appointed administrator of the
estate.23 When Atty. Quasha passed away in 1996, Atty. Syquia was left as the sole
administrator of the estate of the late Raymond Triviere. The person of Atty. Quasha
was distinct from that of petitioner Quasha Law Office; and the appointment of Atty.
Quasha as administrator of the estate did not extend to his law office. Neither could
petitioner Quasha Law Office be deemed to have substituted Atty. Quasha as
administrator upon the latter's death for the same would be in violation of the rules
on the appointment and substitution of estate administrators, particularly, Section 2,
Rule 82 of the Revised Rules of Court.24 Hence, when Atty. Quasha died, petitioner
Quasha Law Office merely helped in the settlement of the estate as counsel for the
petitioner children of the late Raymond Triviere.
In its Memorandum before this Court, however, petitioner Quasha Law Office argues
that "what is being charged are not professional fees for legal services rendered but
payment for administration of the Estate which has been under the care and
management of the co-administrators for the past fourteen (14) years."25
On the other hand, in the Motion for Payment filed with the RTC on 3 September
2002, petitioner Quasha Law Office prayed for P200,000.00 as "attorney's fees and
litigation expenses." Being lumped together, and absent evidence to the contrary,
the P200,000.00 for attorney's fees and litigation expenses prayed for by the
petitioner Quasha Law Office can be logically and reasonably presumed to be in
connection with cases handled by said law office on behalf of the estate. Simply,
petitioner Quasha Law Office is seeking attorney's fees as compensation for the legal
services it rendered in these cases, as well as reimbursement of the litigation
expenses it incurred therein.
The Court notes with disfavor the sudden change in the theory by petitioner Quasha
Law Office. Consistent with discussions in the preceding paragraphs, Quasha Law
Office initially asserted itself as co-administrator of the estate before the courts. The
records do not belie this fact. Petitioner Quasha Law Office later on denied it was
substituted in the place of Atty. Quasha as administrator of the estate only upon filing
a Motion for Reconsideration with the Court of Appeals, and then again before this
Court. As a general rule, a party cannot change his theory of the case or his cause of
action on appeal.26 When a party adopts a certain theory in the court below, he will
not be permitted to change his theory on appeal, for to permit him to do so would
not only be unfair to the other party but it would also be offensive to the basic rules
of fair play, justice and due process.27 Points of law, theories, issues and arguments
not brought to the attention of the lower court need not be, and ordinarily will not
be, considered by a reviewing court, as these cannot be raised for the first time at
such late stage.
This rule, however, admits of certain exceptions.29 In the interest of justice and
within the sound discretion of the appellate court, a party may change his legal theory
on appeal, only when the factual bases thereof would not require presentation of any
further evidence by the adverse party in order to enable it to properly meet the issue
raised in the new theory.
On the foregoing considerations, this Court finds it necessary to exercise leniency on
the rule against changing of theory on appeal, consistent with the rules of fair play
and in the interest of justice. Petitioner Quasha Law Office presented conflicting
arguments with respect to whether or not it was co-administrator of the estate.
Nothing in the records, however, reveals that any one of the lawyers of Quasha Law
Office was indeed a substitute administrator for Atty. Quasha upon his death.
The court has jurisdiction to appoint an administrator of an estate by granting letters
of administration to a person not otherwise disqualified or incompetent to serve as
such, following the procedure laid down in Section 6, Rule 78 of the Rules of Court.
Corollary thereto, Section 2, Rule 82 of the Rules of Court provides in clear and
unequivocal terms the modes for replacing an administrator of an estate upon the
death of an administrator, to wit: Section 2. Court may remove or accept resignation
of executor or administrator. Proceedings upon death, resignation, or removal. x x x.
The attorney's fees, therefore, cannot be covered by the prohibition in the third
paragraph of Section 7, Rule 85 of the Revised Rules of Court against an attorney, to
charge against the estate professional fees for legal services rendered by them.
However, while petitioner Quasha Law Office, serving as counsel of the Triviere
children from the time of death of Atty. Quasha in 1996, is entitled to attorney's fees
and litigation expenses of P100,000.00 as prayed for in the Motion for Payment dated
3 September 2002, and as awarded by the RTC in its 12 June 2003 Order, the same
may be collected from the shares of the Triviere children, upon final distribution of
the estate, in consideration of the fact that the Quasha Law Office, indeed, served as
counsel (not anymore as co-administrator), representing and performing legal
services for the Triviere children in the settlement of the estate of their deceased
father.
Finally, LCN prays that as the contractor of the house (which the decedent caused to
be built and is now part of the estate) with a preferred claim thereon, it should
already be awarded P2,500,000.00, representing one half (1/2) of the proceeds from
the sale of said house. The Court shall not take cognizance of and rule on the matter
considering that, precisely, the merits of the claim of LCN against the estate are still
pending the proper determination by the RTC in the intestate proceedings below.

When an executor or administrator dies, resigns, or is removed the remaining

executor or administrator may administer the trust alone, unless the court grants
letters to someone to act with him. If there is no remaining executor or administrator,
administration may be granted to any suitable person.

The records of the case are wanting in evidence that Quasha Law Office or any of its
lawyers substituted Atty. Quasha as co-administrator of the estate. None of the
documents attached pertain to the issuance of letters of administration to petitioner
Quasha Law Office or any of its lawyers at any time after the demise of Atty. Quasha
in 1996. This Court is thus inclined to give credence to petitioner's contention that
while it rendered legal services for the settlement of the estate of Raymond Triviere
since the time of Atty. Quasha's death in 1996, it did not serve as co-administrator
thereof, granting that it was never even issued letters of administration.

30
Intestate estate of Samuel William Allen. MOORE & SONS MERCANTILE CO., ninety-eight, and the descent of all property and estates to heirs shall be
appellant, v. CARMEN WAGNER, Appellee. G.R. No. 25842. March 18, 1927 regulated by that law as to all property belonging to intestate estates, and as
to all property belonging to the testate estates, but not disposed of by the
Doctrine: It having been proven by the evidence of record that the liabilities
will of the testator. A husband or wife of the deceased person shall receive
exceed the assets of the deceased husband’s intestate estate and that his
such portion of his or her estate not disposed of by will as the said law in force
widow had not contributed any property to the marriage, she cannot be
on the thirteenth day of August, eighteen hundred and ninety-eight, gives to
granted support, pending the liquidation of the intestate estate, because said
him or to her."
support, having the character of an advance payment to be deducted from
the respective share of each participant is without legal basis under article
1430 of the Civil Code when there is no property to be partitioned.

FACTS: In the present proceeding for the settlement of the intestate estate
of the deceased Samuel William Allen, the court, upon petition of the widow
of said deceased, entered an order, requiring the administrator to give said
widow and her daughter Avelina Allen an allowance of P80. The special
administrator appointed in the case objected to the allowance of the widow
upon the ground that the estate is insolvent, in view of the claims presented
and approved by the committee on appraisal and claims. Attorney P. J.
Moore, in behalf of several creditors of the estate, also entered his opposition
to said order of the court upon the same ground.

ISSUE: Whether or not a widow may validly demand for support or

allowance when the liabilities of the deceased's estate exceed its assets?

HELD: No. It appears from the record that the liabilities exceed the assets of
the estate of Samuel William Allen and that his widow, by her own admission,
had not contributed any property to the marriage. Wherefore, it is unlawful,
in the present case, to grant the support which is under consideration,
because said support, having the character of an advance payment to be
deducted from the respective share of each partner, when there is no
property to be partitioned, lacks the legal basis provided by article 1430.

Legal Basis: According to section 684 of the Code of Civil Procedure, "The
widow and minor children of a deceased person, during the settlement of the
estate, shall receive therefrom, under the direction of the court, such
allowances as are provided by the law in force in the Philippine Islands, on
and immediately prior to the thirteenth day of August, eighteen hundred and

31