G.R. No.

133743

February 6, 2007

EDGAR
SAN
vs.
FELICIDAD SAN LUIS, Respondent.

no children with respondent but lived with her for 18 years from the time of
their marriage up to his death on December 18, 1992.
LUIS, Petitioner,

x ---------------------------------------------------- x
G.R. No. 134029

February 6, 2007

RODOLFO
SAN
LUIS, Petitioner,
vs.
FELICIDAD SAGALONGOS alias FELICIDAD SAN LUIS, Respondent.
DECISION
YNARES-SANTIAGO, J.:
Before us are consolidated petitions for review assailing the February 4,
1998 Decision 1 of the Court of Appeals in CA-G.R. CV No. 52647, which
reversed and set aside the September 12, 1995 2 and January 31,
1996 3Resolutions of the Regional Trial Court of Makati City, Branch 134 in
SP. Proc. No. M-3708; and its May 15, 1998 Resolution 4 denying
petitioners motion for reconsideration.
The instant case involves the settlement of the estate of Felicisimo T. San
Luis (Felicisimo), who was the former governor of the Province of Laguna.
During his lifetime, Felicisimo contracted three marriages. His first
marriage was with Virginia Sulit on March 17, 1942 out of which were born
six children, namely: Rodolfo, Mila, Edgar, Linda, Emilita and Manuel. On
August 11, 1963, Virginia predeceased Felicisimo.
Five years later, on May 1, 1968, Felicisimo married Merry Lee Corwin, with
whom he had a son, Tobias. However, on October 15, 1971, Merry Lee, an
American citizen, filed a Complaint for Divorce 5 before the Family Court of
the First Circuit, State of Hawaii, United States of America (U.S.A.), which
issued a Decree Granting Absolute Divorce and Awarding Child Custody on
December 14, 1973. 6
On June 20, 1974, Felicisimo married respondent Felicidad San Luis, then
surnamed Sagalongos, before Rev. Fr. William Meyer, Minister of the United
Presbyterian at Wilshire Boulevard, Los Angeles, California, U.S.A. 7 He had

Thereafter, respondent sought the dissolution of their conjugal partnership

assets and the settlement of Felicisimos estate. On December 17, 1993,
she filed a petition for letters of administration 8 before the Regional Trial
Court of Makati City, docketed as SP. Proc. No. M-3708 which was raffled to
Branch 146 thereof.
Respondent alleged that she is the widow of Felicisimo; that, at the time of
his death, the decedent was residing at 100 San Juanico Street, New
Alabang Village, Alabang, Metro Manila; that the decedents surviving heirs
are respondent as legal spouse, his six children by his first marriage, and
son by his second marriage; that the decedent left real properties, both
conjugal and exclusive, valued at P30,304,178.00 more or less; that the
decedent does not have any unpaid debts. Respondent prayed that the
conjugal partnership assets be liquidated and that letters of administration
be issued to her.
On February 4, 1994, petitioner Rodolfo San Luis, one of the children of
Felicisimo by his first marriage, filed a motion to dismiss 9 on the grounds
of improper venue and failure to state a cause of action. Rodolfo claimed
that the petition for letters of administration should have been filed in the
Province of Laguna because this was Felicisimos place of residence prior to
his death. He further claimed that respondent has no legal personality to
file the petition because she was only a mistress of Felicisimo since the
latter, at the time of his death, was still legally married to Merry Lee.
On February 15, 1994, Linda invoked the same grounds and joined her
brother Rodolfo in seeking the dismissal 10 of the petition. On February 28,
1994, the trial court issued an Order 11 denying the two motions to dismiss.
Unaware of the denial of the motions to dismiss, respondent filed on March
5, 1994 her opposition 12 thereto. She submitted documentary evidence
showing that while Felicisimo exercised the powers of his public office in
Laguna, he regularly went home to their house in New Alabang Village,
Alabang, Metro Manila which they bought sometime in 1982. Further, she
presented the decree of absolute divorce issued by the Family Court of the
First Circuit, State of Hawaii to prove that the marriage of Felicisimo to
Merry Lee had already been dissolved. Thus, she claimed that Felicisimo
had the legal capacity to marry her by virtue of paragraph 2, 13 Article 26
of the Family Code and the doctrine laid down in Van Dorn v. Romillo, Jr. 14

Thereafter, Linda, Rodolfo and herein petitioner Edgar San Luis, separately
filed motions for reconsideration from the Order denying their motions to
dismiss. 15 They asserted that paragraph 2, Article 26 of the Family Code
cannot be given retroactive effect to validate respondents bigamous
marriage with Felicisimo because this would impair vested rights in
derogation of Article 256 16 of the Family Code.
On April 21, 1994, Mila, another daughter of Felicisimo from his first
marriage, filed a motion to disqualify Acting Presiding Judge Anthony E.
Santos from hearing the case.
On October 24, 1994, the trial court issued an Order 17 denying the motions
for reconsideration. It ruled that respondent, as widow of the decedent,
possessed the legal standing to file the petition and that venue was
properly laid. Meanwhile, the motion for disqualification was deemed moot
and academic 18 because then Acting Presiding Judge Santos was
substituted by Judge Salvador S. Tensuan pending the resolution of said
motion.
Mila filed a motion for inhibition 19 against Judge Tensuan on November 16,
1994. On even date, Edgar also filed a motion for reconsideration 20 from
the Order denying their motion for reconsideration arguing that it does not
state the facts and law on which it was based.
On November 25, 1994, Judge Tensuan issued an Order 21 granting the
motion for inhibition. The case was re-raffled to Branch 134 presided by
Judge Paul T. Arcangel.

Philippines and did not bind Felicisimo who was a Filipino citizen. It also
ruled that paragraph 2, Article 26 of the Family Code cannot be
retroactively applied because it would impair the vested rights of
Felicisimos legitimate children.
Respondent moved for reconsideration 26 and for the disqualification
Judge Arcangel but said motions were denied. 28

27

of

Respondent appealed to the Court of Appeals which reversed and set aside
the orders of the trial court in its assailed Decision dated February 4, 1998,
the dispositive portion of which states:
WHEREFORE, the Orders dated September 12, 1995 and January 31, 1996
are hereby REVERSED and SET ASIDE; the Orders dated February 28 and
October 24, 1994 are REINSTATED; and the records of the case is
REMANDED to the trial court for further proceedings. 29
The appellante court ruled that under Section 1, Rule 73 of the Rules of
Court, the term "place of residence" of the decedent, for purposes of fixing
the venue of the settlement of his estate, refers to the personal, actual or
physical habitation, or actual residence or place of abode of a person as
distinguished from legal residence or domicile. It noted that although
Felicisimo discharged his functions as governor in Laguna, he actually
resided in Alabang, Muntinlupa. Thus, the petition for letters of
administration was properly filed in Makati City.

On April 24, 1995, 22 the trial court required the parties to submit their
respective position papers on the twin issues of venue and legal capacity
of respondent to file the petition. On May 5, 1995, Edgar manifested 23 that
he is adopting the arguments and evidence set forth in his previous motion
for reconsideration as his position paper. Respondent and Rodolfo filed
their position papers on June 14, 24 and June 20, 25 1995, respectively.

The Court of Appeals also held that Felicisimo had legal capacity to marry
respondent by virtue of paragraph 2, Article 26 of the Family Code and the
rulings in Van Dorn v. Romillo, Jr. 30 and Pilapil v. Ibay-Somera. 31 It found
that the marriage between Felicisimo and Merry Lee was validly dissolved
by virtue of the decree of absolute divorce issued by the Family Court of
the First Circuit, State of Hawaii. As a result, under paragraph 2, Article 26,
Felicisimo was capacitated to contract a subsequent marriage with
respondent. Thus

On September 12, 1995, the trial court dismissed the petition for letters of
administration. It held that, at the time of his death, Felicisimo was the
duly elected governor and a resident of the Province of Laguna. Hence, the
petition should have been filed in Sta. Cruz, Laguna and not in Makati City.
It also ruled that respondent was without legal capacity to file the petition
for letters of administration because her marriage with Felicisimo was
bigamous, thus, void ab initio. It found that the decree of absolute divorce
dissolving Felicisimos marriage to Merry Lee was not valid in the

With the well-known rule express mandate of paragraph 2, Article 26, of

the Family Code of the Philippines, the doctrines in Van Dorn, Pilapil, and
the reason and philosophy behind the enactment of E.O. No. 227, there
is no justiciable reason to sustain the individual view sweeping
statement of Judge Arc[h]angel, that "Article 26, par. 2 of the Family
Code, contravenes the basic policy of our state against divorce in any form
whatsoever." Indeed, courts cannot deny what the law grants. All that the
courts should do is to give force and effect to the express mandate of the

law. The foreign divorce having been obtained by the Foreigner on

December 14, 1992,32 the Filipino divorcee, "shall x x x have capacity to
remarry under Philippine laws". For this reason, the marriage between the
deceased and petitioner should not be denominated as "a bigamous
marriage.
Therefore, under Article 130 of the Family Code, the petitioner as the
surviving spouse can institute the judicial proceeding for the settlement of
the estate of the deceased. x x x 33
Edgar,
Linda,
and
Rodolfo
filed
separate
motions
reconsideration 34 which were denied by the Court of Appeals.

for

On July 2, 1998, Edgar appealed to this Court via the instant petition for
review on certiorari. 35 Rodolfo later filed a manifestation and motion to
adopt the said petition which was granted. 36
In the instant consolidated petitions, Edgar and Rodolfo insist that the
venue of the subject petition for letters of administration was improperly
laid because at the time of his death, Felicisimo was a resident of Sta. Cruz,
Laguna. They contend that pursuant to our rulings in Nuval v. Guray 37 and
Romualdez v. RTC, Br. 7, Tacloban City, 38 "residence" is synonymous with
"domicile" which denotes a fixed permanent residence to which when
absent, one intends to return. They claim that a person can only have one
domicile at any given time. Since Felicisimo never changed his domicile,
the petition for letters of administration should have been filed in Sta. Cruz,
Laguna.
Petitioners also contend that respondents marriage to Felicisimo was void
and bigamous because it was performed during the subsistence of the
latters marriage to Merry Lee. They argue that paragraph 2, Article 26
cannot be retroactively applied because it would impair vested rights and
ratify the void bigamous marriage. As such, respondent cannot be
considered the surviving wife of Felicisimo; hence, she has no legal
capacity to file the petition for letters of administration.
The issues for resolution: (1) whether venue was properly laid, and (2)
whether respondent has legal capacity to file the subject petition for letters
of administration.
The petition lacks merit.

Under Section 1, 39 Rule 73 of the Rules of Court, the petition for letters of
administration of the estate of Felicisimo should be filed in the Regional
Trial Court of the province "in which he resides at the time of his death." In
the case of Garcia Fule v. Court of Appeals, 40 we laid down the doctrinal
rule for determining the residence as contradistinguished from domicile
of the decedent for purposes of fixing the venue of the settlement of his
estate:
[T]he term "resides" connotes ex vi termini "actual residence" as
distinguished from "legal residence or domicile." This term "resides," like
the terms "residing" and "residence," is elastic and should be interpreted in
the light of the object or purpose of the statute or rule in which it is
employed. In the application of venue statutes and rules Section 1, Rule
73 of the Revised Rules of Court is of such nature residence rather than
domicile is the significant factor. Even where the statute uses the word
"domicile" still it is construed as meaning residence and not domicile in the
technical sense. Some cases make a distinction between the terms
"residence" and "domicile" but as generally used in statutes fixing venue,
the terms are synonymous, and convey the same meaning as the term
"inhabitant." In other words, "resides" should be viewed or understood in
its popular sense, meaning, the personal, actual or physical habitation of a
person, actual residence or place of abode. It signifies physical presence in
a place and actual stay thereat. In this popular sense, the term means
merely residence, that is, personal residence, not legal residence or
domicile. Residence simply requires bodily presence as an inhabitant in a
given place, while domicile requires bodily presence in that place and also
an intention to make it ones domicile. No particular length of time of
residence is required though; however, the residence must be more than
temporary. 41 (Emphasis supplied)
It is incorrect for petitioners to argue that "residence," for purposes of
fixing the venue of the settlement of the estate of Felicisimo, is
synonymous with "domicile." The rulings in Nuval and Romualdez are
inapplicable to the instant case because they involve election cases.
Needless to say, there is a distinction between "residence" for purposes of
election laws and "residence" for purposes of fixing the venue of actions. In
election cases, "residence" and "domicile" are treated as synonymous
terms, that is, the fixed permanent residence to which when absent, one
has the intention of returning. 42 However, for purposes of fixing venue
under the Rules of Court, the "residence" of a person is his personal, actual
or physical habitation, or actual residence or place of abode, which may
not necessarily be his legal residence or domicile provided he resides
therein with continuity and consistency. 43 Hence, it is possible that a
person may have his residence in one place and domicile in another.

In the instant case, while petitioners established that Felicisimo was

domiciled in Sta. Cruz, Laguna, respondent proved that he also maintained
a residence in Alabang, Muntinlupa from 1982 up to the time of his death.
Respondent submitted in evidence the Deed of Absolute Sale 44 dated
January 5, 1983 showing that the deceased purchased the aforesaid
property. She also presented billing statements 45 from the Philippine Heart
Center and Chinese General Hospital for the period August to December
1992 indicating the address of Felicisimo at "100 San Juanico, Ayala
Alabang, Muntinlupa." Respondent also presented proof of membership of
the deceased in the Ayala Alabang Village Association 46 and Ayala Country
Club, Inc., 47 letter-envelopes 48from 1988 to 1990 sent by the deceaseds
children to him at his Alabang address, and the deceaseds calling
cards 49 stating that his home/city address is at "100 San Juanico, Ayala
Alabang Village, Muntinlupa" while his office/provincial address is in
"Provincial Capitol, Sta. Cruz, Laguna."
From the foregoing, we find that Felicisimo was a resident of Alabang,
Muntinlupa for purposes of fixing the venue of the settlement of his estate.
Consequently, the subject petition for letters of administration was validly
filed in the Regional Trial Court 50 which has territorial jurisdiction over
Alabang, Muntinlupa. The subject petition was filed on December 17, 1993.
At that time, Muntinlupa was still a municipality and the branches of the
Regional Trial Court of the National Capital Judicial Region which had
territorial jurisdiction over Muntinlupa were then seated in Makati City as
per Supreme Court Administrative Order No. 3. 51 Thus, the subject petition
was validly filed before the Regional Trial Court of Makati City.
Anent the issue of respondent Felicidads legal personality to file the
petition for letters of administration, we must first resolve the issue of
whether a Filipino who is divorced by his alien spouse abroad may validly
remarry under the Civil Code, considering that Felicidads marriage to
Felicisimo was solemnized on June 20, 1974, or before the Family Code
took effect on August 3, 1988. In resolving this issue, we need not
retroactively apply the provisions of the Family Code, particularly Art. 26,
par. (2) considering that there is sufficient jurisprudential basis allowing us
to rule in the affirmative.
The case of Van Dorn v. Romillo, Jr. 52 involved a marriage between a
foreigner and his Filipino wife, which marriage was subsequently dissolved
through a divorce obtained abroad by the latter. Claiming that the divorce
was not valid under Philippine law, the alien spouse alleged that his
interest in the properties from their conjugal partnership should be
protected. The Court, however, recognized the validity of the divorce and

held that the alien spouse had no interest in the properties acquired by the
Filipino wife after the divorce. Thus:
In this case, the divorce in Nevada released private respondent from the
marriage from the standards of American law, under which divorce
dissolves the marriage. As stated by the Federal Supreme Court of the
United States in Atherton vs. Atherton, 45 L. Ed. 794, 799:
"The purpose and effect of a decree of divorce from the bond of matrimony
by a competent jurisdiction are to change the existing status or domestic
relation of husband and wife, and to free them both from the bond. The
marriage tie, when thus severed as to one party, ceases to bind either. A
husband without a wife, or a wife without a husband, is unknown to the
law. When the law provides, in the nature of a penalty, that the guilty party
shall not marry again, that party, as well as the other, is still absolutely
freed from the bond of the former marriage."
Thus, pursuant to his national law, private respondent is no longer the
husband of petitioner. He would have no standing to sue in the case below
as petitioners husband entitled to exercise control over conjugal assets. As
he is bound by the Decision of his own countrys Court, which validly
exercised jurisdiction over him, and whose decision he does not repudiate,
he is estopped by his own representation before said Court from asserting
his right over the alleged conjugal property. 53
As to the effect of the divorce on the Filipino wife, the Court ruled that she
should no longer be considered married to the alien spouse. Further, she
should not be required to perform her marital duties and obligations. It
held:
To maintain, as private respondent does, that, under our laws,
petitioner
has
to
be
considered still
married to
private
respondent and still subject to a wife's obligations under Article
109, et. seq. of the Civil Code cannot be just. Petitioner should not be
obliged to live together with, observe respect and fidelity, and render
support to private respondent. The latter should not continue to be one of
her heirs with possible rights to conjugal property. She should not be
discriminated against in her own country if the ends of justice are
to be served. 54 (Emphasis added)
This principle was thereafter applied in Pilapil v. Ibay-Somera 55 where the
Court recognized the validity of a divorce obtained abroad. In the said
case, it was held that the alien spouse is not a proper party in filing the

adultery suit against his Filipino wife. The Court stated that "the severance
of the marital bond had the effect of dissociating the former spouses from
each other, hence the actuations of one would not affect or cast obloquy
on the other." 56

ART. 26. All marriages solemnized outside the Philippines in accordance

with the laws in force in the country where they were solemnized, and valid
there as such, shall also be valid in this country, except those prohibited
under Articles 35(1), (4), (5) and (6), 36, 37 and 38.

Likewise, in Quita v. Court of Appeals, 57 the Court stated that where a

Filipino is divorced by his naturalized foreign spouse, the ruling in Van
Dorn applies. 58 Although decided on December 22, 1998, the divorce in
the said case was obtained in 1954 when the Civil Code provisions were
still in effect.

Where a marriage between a Filipino citizen and a foreigner is validly

celebrated and a divorce is thereafter validly obtained abroad by the alien
spouse capacitating him or her to remarry, the Filipino spouse shall have
capacity to remarry under Philippine law. (Emphasis supplied)

The significance of the Van Dorn case to the development of limited

recognition of divorce in the Philippines cannot be denied. The ruling has
long been interpreted as severing marital ties between parties in a mixed
marriage and capacitating the Filipino spouse to remarry as a necessary
consequence of upholding the validity of a divorce obtained abroad by the
alien spouse. In his treatise, Dr. Arturo M. Tolentino cited Van Dorn stating
that "if the foreigner obtains a valid foreign divorce, the Filipino spouse
shall have capacity to remarry under Philippine law." 59 In Garcia v.
Recio, 60 the Court likewise cited the aforementioned case in relation to
Article 26. 61
In the recent case of Republic v. Orbecido III, 62 the historical background
and legislative intent behind paragraph 2, Article 26 of the Family Code
were discussed, to wit:
Brief Historical Background
On July 6, 1987, then President Corazon Aquino signed into law Executive
Order No. 209, otherwise known as the "Family Code," which took effect on
August 3, 1988. Article 26 thereof states:
All marriages solemnized outside the Philippines in accordance with the
laws in force in the country where they were solemnized, and valid there as
such, shall also be valid in this country, except those prohibited under
Articles 35, 37, and 38.
On July 17, 1987, shortly after the signing of the original Family Code,
Executive Order No. 227 was likewise signed into law, amending Articles
26, 36, and 39 of the Family Code. A second paragraph was added to
Article 26. As so amended, it now provides:

x
Legislative Intent

Records of the proceedings of the Family Code deliberations showed that

the intent of Paragraph 2 of Article 26, according to Judge Alicia SempioDiy, a member of the Civil Code Revision Committee, is to avoid the absurd
situation where the Filipino spouse remains married to the alien spouse
who, after obtaining a divorce, is no longer married to the Filipino spouse.
Interestingly, Paragraph 2 of Article 26 traces its origin to the
1985 case of Van Dorn v. Romillo, Jr. The Van Dorn case involved a
marriage between a Filipino citizen and a foreigner. The Court held
therein that a divorce decree validly obtained by the alien spouse
is valid in the Philippines, and consequently, the Filipino spouse is
capacitated to remarry under Philippine law. 63 (Emphasis added)
As such, the Van Dorn case is sufficient basis in resolving a situation where
a divorce is validly obtained abroad by the alien spouse. With the
enactment of the Family Code and paragraph 2, Article 26 thereof, our
lawmakers codified the law already established through judicial
precedent.1awphi1.net
Indeed, when the object of a marriage is defeated by rendering its
continuance intolerable to one of the parties and productive of no possible
good
to
the
community,
relief
in
some
way
should
be
obtainable. 64 Marriage, being a mutual and shared commitment between
two parties, cannot possibly be productive of any good to the society
where one is considered released from the marital bond while the other
remains bound to it. Such is the state of affairs where the alien spouse
obtains a valid divorce abroad against the Filipino spouse, as in this case.
Petitioners cite Articles 15 65 and 17 66 of the Civil Code in stating that the
divorce is void under Philippine law insofar as Filipinos are concerned.

However, in light of this Courts rulings in the cases discussed above, the
Filipino spouse should not be discriminated against in his own country if
the ends of justice are to be served. 67 In Alonzo v. Intermediate Appellate
Court, 68 the Court stated:
But as has also been aptly observed, we test a law by its results; and
likewise, we may add, by its purposes. It is a cardinal rule that, in seeking
the meaning of the law, the first concern of the judge should be to discover
in its provisions the intent of the lawmaker. Unquestionably, the law should
never be interpreted in such a way as to cause injustice as this is never
within the legislative intent. An indispensable part of that intent, in fact, for
we presume the good motives of the legislature, is to render justice.
Thus, we interpret and apply the law not independently of but in
consonance with justice. Law and justice are inseparable, and we must
keep them so. To be sure, there are some laws that, while generally valid,
may seem arbitrary when applied in a particular case because of its
peculiar circumstances. In such a situation, we are not bound, because
only of our nature and functions, to apply them just the same, in slavish
obedience to their language. What we do instead is find a balance between
the word and the will, that justice may be done even as the law is obeyed.
As judges, we are not automatons. We do not and must not unfeelingly
apply the law as it is worded, yielding like robots to the literal command
without regard to its cause and consequence. "Courts are apt to err by
sticking too closely to the words of a law," so we are warned, by Justice
Holmes again, "where these words import a policy that goes beyond
them."
xxxx
More than twenty centuries ago, Justinian defined justice "as the constant
and perpetual wish to render every one his due." That wish continues to
motivate this Court when it assesses the facts and the law in every case
brought to it for decision. Justice is always an essential ingredient of its
decisions. Thus when the facts warrants, we interpret the law in a way that
will render justice, presuming that it was the intention of the lawmaker, to
begin with, that the law be dispensed with justice. 69
Applying the above doctrine in the instant case, the divorce decree
allegedly obtained by Merry Lee which absolutely allowed Felicisimo to
remarry, would have vested Felicidad with the legal personality to file the
present petition as Felicisimos surviving spouse. However, the records

show that there is insufficient evidence to prove the validity of the divorce
obtained by Merry Lee as well as the marriage of respondent and Felicisimo
under the laws of the U.S.A. In Garcia v. Recio, 70 the Court laid down the
specific guidelines for pleading and proving foreign law and divorce
judgments. It held that presentation solely of the divorce decree is
insufficient and that proof of its authenticity and due execution must be
presented. Under Sections 24 and 25 of Rule 132, a writing or document
may be proven as a public or official record of a foreign country by either
(1) an official publication or (2) a copy thereof attested by the officer
having legal custody of the document. If the record is not kept in the
Philippines, such copy must be (a) accompanied by a certificate issued by
the proper diplomatic or consular officer in the Philippine foreign service
stationed in the foreign country in which the record is kept and (b)
authenticated by the seal of his office. 71
With regard to respondents marriage to Felicisimo allegedly solemnized in
California, U.S.A., she submitted photocopies of the Marriage Certificate
and the annotated text 72 of the Family Law Act of California which
purportedly show that their marriage was done in accordance with the said
law. As stated in Garcia, however, the Court cannot take judicial notice of
foreign laws as they must be alleged and proved. 73
Therefore, this case should be remanded to the trial court for further
reception of evidence on the divorce decree obtained by Merry Lee and the
marriage of respondent and Felicisimo.
Even assuming that Felicisimo was not capacitated to marry respondent in
1974, nevertheless, we find that the latter has the legal personality to file
the subject petition for letters of administration, as she may be considered
the co-owner of Felicisimo as regards the properties that were acquired
through their joint efforts during their cohabitation.
Section 6, 74 Rule 78 of the Rules of Court states that letters of
administration may be granted to the surviving spouse of the decedent.
However, Section 2, Rule 79 thereof also provides in part:
SEC. 2. Contents of petition for letters of administration. A petition for
letters of administration must be filed by an interested person and must
show, as far as known to the petitioner: x x x.
An "interested person" has been defined as one who would be benefited by
the estate, such as an heir, or one who has a claim against the estate, such

as a creditor. The interest must be material and direct, and not merely
indirect or contingent. 75

that proof of actual contribution in the acquisition of the property is

essential. x x x

In the instant case, respondent would qualify as an interested person who

has a direct interest in the estate of Felicisimo by virtue of their
cohabitation, the existence of which was not denied by petitioners. If she
proves the validity of the divorce and Felicisimos capacity to remarry, but
fails to prove that her marriage with him was validly performed under the
laws of the U.S.A., then she may be considered as a co-owner under Article
144 76 of the Civil Code. This provision governs the property relations
between parties who live together as husband and wife without the benefit
of marriage, or their marriage is void from the beginning. It provides that
the property acquired by either or both of them through their work or
industry or their wages and salaries shall be governed by the rules on coownership. In a co-ownership, it is not necessary that the property be
acquired through their joint labor, efforts and industry. Any property
acquired during the union is prima facie presumed to have been obtained
through their joint efforts. Hence, the portions belonging to the co-owners
shall be presumed equal, unless the contrary is proven. 77

As in other civil cases, the burden of proof rests upon the party who, as
determined by the pleadings or the nature of the case, asserts an
affirmative issue. Contentions must be proved by competent evidence and
reliance must be had on the strength of the partys own evidence and not
upon the weakness of the opponents defense. x x x81

Meanwhile, if respondent fails to prove the validity of both the divorce and
the marriage, the applicable provision would be Article 148 of the Family
Code which has filled the hiatus in Article 144 of the Civil Code by
expressly regulating the property relations of couples living together as
husband and wife but are incapacitated to marry. 78In Saguid v. Court of
Appeals, 79 we held that even if the cohabitation or the acquisition of
property occurred before the Family Code took effect, Article 148
governs. 80 The Court described the property regime under this provision as
follows:

SO ORDERED.

The regime of limited co-ownership of property governing the union of

parties who are not legally capacitated to marry each other, but who
nonetheless live together as husband and wife, applies to properties
acquired during said cohabitation in proportion to their respective
contributions. Co-ownership will only be up to the extent of the proven
actual contribution of money, property or industry. Absent proof of the
extent thereof, their contributions and corresponding shares shall be
presumed to be equal.

In view of the foregoing, we find that respondents legal capacity to file the
subject petition for letters of administration may arise from her status as
the surviving wife of Felicisimo or as his co-owner under Article 144 of the
Civil Code or Article 148 of the Family Code.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals
reinstating and affirming the February 28, 1994 Order of the Regional Trial
Court which denied petitioners motion to dismiss and its October 24, 1994
Order which dismissed petitioners motion for reconsideration is AFFIRMED.
Let this case be REMANDED to the trial court for further proceedings.

G.R. No. 189121

July 31, 2013

AMELIA GARCIA-QUIAZON, JENNETH QUIAZON and MARIA JENNIFER

QUIAZON, Petitioners,
vs.
MA. LOURDES BELEN, for and in behalf of MARIA LOURDES ELISE
QUIAZON, Respondent.
DECISION
PEREZ, J.:
This is a Petition for Review on Certiorari filed pursuant to Rule 45 of the
Revised Rules of Court, primarily assailing the 28 November 2008 Decision
rendered by the Ninth Division of the Court of Appeals in CA-G.R. CV No.
88589,1 the decretal portion of which states:

xxxx
In the cases of Agapay v. Palang, and Tumlos v. Fernandez, which involved
the issue of co-ownership of properties acquired by the parties to a
bigamous marriage and an adulterous relationship, respectively, we ruled

WHEREFORE, premises considered, the appeal is hereby DENIED. The

assailed Decision dated March 11, 2005, and the Order dated March 24,
2006 of the Regional Trial Court, Branch 275, Las Pias City are AFFIRMED
in toto.2

The Facts
This case started as a Petition for Letters of Administration of the Estate of
Eliseo Quiazon (Eliseo), filed by herein respondents who are Eliseos
common-law wife and daughter. The petition was opposed by herein
petitioners Amelia Garcia-Quaizon (Amelia) to whom Eliseo was married.
Amelia was joined by her children, Jenneth Quiazon (Jenneth) and Maria
Jennifer Quiazon (Jennifer).
Eliseo died intestate on 12 December 1992.
On 12 September 1994, Maria Lourdes Elise Quiazon (Elise), represented
by her mother, Ma. Lourdes Belen (Lourdes), filed a Petition for Letters of
Administration before the Regional Trial Court (RTC) of Las Pias City. 3 In
her Petition docketed as SP Proc. No. M-3957, Elise claims that she is the
natural child of Eliseo having been conceived and born at the time when
her parents were both capacitated to marry each other. Insisting on the
legal capacity of Eliseo and Lourdes to marry, Elise impugned the validity
of Eliseos marriage to Amelia by claiming that it was bigamous for having
been contracted during the subsistence of the latters marriage with one
Filipito Sandico (Filipito). To prove her filiation to the decedent, Elise,
among others, attached to the Petition for Letters of Administration her
Certificate of Live Birth4 signed by Eliseo as her father. In the same
petition, it was alleged that Eliseo left real properties worth P2,040,000.00
and personal properties worth P2,100,000.00. In order to preserve the
estate of Eliseo and to prevent the dissipation of its value, Elise sought her
appointment as administratrix of her late fathers estate.
Claiming that the venue of the petition was improperly laid, Amelia,
together with her children, Jenneth and Jennifer, opposed the issuance of
the letters of administration by filing an Opposition/Motion to Dismiss. 5 The
petitioners asserted that as shown by his Death Certificate, 6 Eliseo was a
resident of Capas, Tarlac and not of Las Pias City, at the time of his death.
Pursuant to Section 1, Rule 73 of the Revised Rules of Court, 7 the petition
for settlement of decedents estate should have been filed in Capas, Tarlac
and not in Las Pias City. In addition to their claim of improper venue, the
petitioners averred that there are no factual and legal bases for Elise to be
appointed administratix of Eliseos estate.
In a Decision8 dated 11 March 2005, the RTC directed the issuance of
Letters of Administration to Elise upon posting the necessary bond. The
lower court ruled that the venue of the petition was properly laid in Las
Pias City, thereby discrediting the position taken by the petitioners that

Eliseos last residence was in Capas, Tarlac, as hearsay. The dispositive of

the RTC decision reads:
Having attained legal age at this time and there being no showing of any
disqualification or incompetence to serve as administrator, let letters of
administration over the estate of the decedent Eliseo Quiazon, therefore,
be issued to petitioner, Ma. Lourdes Elise Quiazon, after the approval by
this Court of a bond in the amount of P100,000.00 to be posted by her.9
On appeal, the decision of the trial court was affirmed in toto in the 28
November 2008 Decision10 rendered by the Court of Appeals in CA-G.R.CV
No. 88589. In validating the findings of the RTC, the Court of Appeals held
that Elise was able to prove that Eliseo and Lourdes lived together as
husband and wife by establishing a common residence at No. 26
Everlasting Road, Phase 5, Pilar Village, Las Pias City, from 1975 up to the
time of Eliseos death in 1992. For purposes of fixing the venue of the
settlement of Eliseos estate, the Court of Appeals upheld the conclusion
reached by the RTC that the decedent was a resident of Las Pias City. The
petitioners Motion for Reconsideration was denied by the Court of Appeals
in its Resolution11 dated 7 August 2009.
The Issues
The petitioners now urge Us to reverse the assailed Court of Appeals
Decision and Resolution on the following grounds:
I. THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THAT ELISEO
QUIAZON WAS A RESIDENT OF LAS PIAS AND THEREFORE, THE PETITION
FOR LETTERS OF ADMINISTRATION WAS PROPERLY FILED WITH THE RTC OF
LAS PIAS;
II. THE COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT AMELIA
GARCIA-QUIAZON WAS NOT LEGALLY MARRIED TO ELISEO QUIAZON DUE
TO PREEXISTING MARRIAGE; AND
III. THE COURT OF APPEALS OVERLOOKED THE FACT THAT ELISE QUIAZON
HAS NOT SHOWN ANY INTEREST IN THE PETITION FOR LETTERS OF
ADMINISTRATION.12
The Courts Ruling
We find the petition bereft of merit.

Under Section 1, Rule 73 of the Rules of Court, the petition for letters of
administration of the estate of a decedent should be filed in the RTC of the
province where the decedent resides at the time of his death:
Sec. 1. Where estate of deceased persons settled. If the decedent is an
inhabitant of the Philippines at the time of his death, whether a citizen or
an alien, his will shall be proved, or letters of administration granted, and
his estate settled, in the Court of First Instance now Regional Trial Court in
the province in which he resides at the time of his death, and if he is an
inhabitant of a foreign country, the Court of First Instance now Regional
Trial Court of any province in which he had estate. The court first taking
cognizance of the settlement of the estate of a decedent, shall exercise
jurisdiction to the exclusion of all other courts. The jurisdiction assumed by
a court, so far as it depends on the place of residence of the decedent, or
of the location of his estate, shall not be contested in a suit or proceeding,
except in an appeal from that court, in the original case, or when the want
of jurisdiction appears on the record. (Emphasis supplied).
The term "resides" connotes ex vi termini "actual residence" as
distinguished from "legal residence or domicile." This term "resides," like
the terms "residing" and "residence," is elastic and should be interpreted in
the light of the object or purpose of the statute or rule in which it is
employed. In the application of venue statutes and rules Section 1, Rule
73 of the Revised Rules of Court is of such nature residence rather than
domicile is the significant factor. 13 Even where the statute uses word
"domicile" still it is construed as meaning residence and not domicile in the
technical sense.14 Some cases make a distinction between the terms
"residence" and "domicile" but as generally used in statutes fixing venue,
the terms are synonymous, and convey the same meaning as the term
"inhabitant."15 In other words, "resides" should be viewed or understood in
its popular sense, meaning, the personal, actual or physical habitation of a
person, actual residence or place of abode. 16 It signifies physical presence
in a place and actual stay thereat. 17 Venue for ordinary civil actions and
that for special proceedings have one and the same meaning. 18 As thus
defined, "residence," in the context of venue provisions, means nothing
more than a persons actual residence or place of abode, provided he
resides therein with continuity and consistency. 19
Viewed in light of the foregoing principles, the Court of Appeals cannot be
faulted for affirming the ruling of the RTC that the venue for the settlement
of the estate of Eliseo was properly laid in Las Pias City. It is evident from
the records that during his lifetime, Eliseo resided at No. 26 Everlasting
Road, Phase 5, Pilar Village, Las Pias City. For this reason, the venue for
the settlement of his estate may be laid in the said city.

In opposing the issuance of letters of administration, the petitioners harp

on the entry in Eliseos Death Certificate that he is a resident of Capas,
Tarlac where they insist his estate should be settled. While the recitals in
death certificates can be considered proofs of a decedents residence at
the time of his death, the contents thereof, however, is not binding on the
courts. Both the RTC and the Court of Appeals found that Eliseo had been
living with Lourdes, deporting themselves as husband and wife, from 1972
up to the time of his death in 1995. This finding is consistent with the fact
that in 1985, Eliseo filed an action for judicial partition of properties against
Amelia before the RTC of Quezon City, Branch 106, on the ground that their
marriage is void for being bigamous.20 That Eliseo went to the extent of
taking his marital feud with Amelia before the courts of law renders
untenable petitioners position that Eliseo spent the final days of his life in
Tarlac with Amelia and her children. It disproves rather than supports
petitioners submission that the lower courts findings arose from an
erroneous appreciation of the evidence on record. Factual findings of the
trial court, when affirmed by the appellate court, must be held to be
conclusive and binding upon this Court.21
Likewise unmeritorious is petitioners contention that the Court of Appeals
erred in declaring Amelias marriage to Eliseo as void ab initio. In a void
marriage, it was though no marriage has taken place, thus, it cannot be the
source of rights. Any interested party may attack the marriage directly or
collaterally. A void marriage can be questioned even beyond the lifetime of
the parties to the marriage.22 It must be pointed out that at the time of the
celebration of the marriage of Eliseo and Amelia, the law in effect was the
Civil Code, and not the Family Code, making the ruling in Nial v.
Bayadog23 applicable four-square to the case at hand. In Nial, the Court, in
no uncertain terms, allowed therein petitioners to file a petition for the
declaration of nullity of their fathers marriage to therein respondent after
the death of their father, by contradistinguishing void from voidable
marriages, to wit:
Consequently, void marriages can be questioned even after the death of
either party but voidable marriages can be assailed only during the lifetime
of the parties and not after death of either, in which case the parties and
their offspring will be left as if the marriage had been perfectly valid. That
is why the action or defense for nullity is imprescriptible, unlike voidable
marriages where the action prescribes. Only the parties to a voidable
marriage can assail it but any proper interested party may attack a void
marriage.24
It was emphasized in Nial that in a void marriage, no marriage has taken
place and it cannot be the source of rights, such that any interested party

may attack the marriage directly or collaterally without prescription, which

may be filed even beyond the lifetime of the parties to the marriage. 25

incompetent, refuse the trust, or fail to give bond, or a person dies

intestate, administration shall be granted:

Relevant to the foregoing, there is no doubt that Elise, whose successional

rights would be prejudiced by her fathers marriage to Amelia, may impugn
the existence of such marriage even after the death of her father. The said
marriage may be questioned directly by filing an action attacking the
validity thereof, or collaterally by raising it as an issue in a proceeding for
the settlement of the estate of the deceased spouse, such as in the case at
bar. Ineluctably, Elise, as a compulsory heir, 26 has a cause of action for the
declaration of the absolute nullity of the void marriage of Eliseo and
Amelia, and the death of either party to the said marriage does not
extinguish such cause of action.

(a) To the surviving husband or wife, as the case may be, or next of kin, or
both, in the discretion of the court, or to such person as such surviving
husband or wife, or next of kin, requests to have appointed, if competent
and willing to serve;

Having established the right of Elise to impugn Eliseos marriage to Amelia,

we now proceed to determine whether or not the decedents marriage to
Amelia is void for being bigamous.
Contrary to the position taken by the petitioners, the existence of a
previous marriage between Amelia and Filipito was sufficiently established
by no less than the Certificate of Marriage issued by the Diocese of Tarlac
and signed by the officiating priest of the Parish of San Nicolas de Tolentino
in Capas, Tarlac. The said marriage certificate is a competent evidence of
marriage and the certification from the National Archive that no
information relative to the said marriage exists does not diminish the
probative value of the entries therein. We take judicial notice of the fact
that the first marriage was celebrated more than 50 years ago, thus, the
possibility that a record of marriage can no longer be found in the National
Archive, given the interval of time, is not completely remote.
Consequently, in the absence of any showing that such marriage had been
dissolved at the time Amelia and Eliseos marriage was solemnized, the
inescapable conclusion is that the latter marriage is bigamous and,
therefore, void ab initio.27

(b) If such surviving husband or wife, as the case may be, or next of kin, or
the person selected by them, be incompetent or unwilling, or if the
husband or widow, or next of kin, neglects for thirty (30) days after the
death of the person to apply for administration or to request that
administration be granted to some other person, it may be granted to one
or more of the principal creditors, if competent and willing to serve;
(c) If there is no such creditor competent and willing to serve, it may be
granted to such other person as the court may select.
Upon the other hand, Section 2 of Rule 79 provides that a petition for
Letters of Administration must be filed by an interested person, thus:
Sec. 2. Contents of petition for letters of administration. A petition for
letters of administration must be filed by an interested person and must
show, so far as known to the petitioner:
(a) The jurisdictional facts;
(b) The names, ages, and residences of the heirs, and the names and
residences of the creditors, of the decedent;
(c) The probable value and character of the property of the estate;
(d) The name of the person for whom letters of administration are prayed.

Neither are we inclined to lend credence to the petitioners contention that

Elise has not shown any interest in the Petition for Letters of
Administration.
Section 6, Rule 78 of the Revised Rules of Court lays down the preferred
persons who are entitled to the issuance of letters of administration, thus:
Sec. 6. When and to whom letters of administration granted. If no
executor is named in the will, or the executor or executors are

But no defect in the petition shall render void the issuance of letters of
administration.
An "interested party," in estate proceedings, is one who would be benefited
in the estate, such as an heir, or one who has a claim against the estate,
such as a creditor. Also, in estate proceedings, the phrase "next of kin"
refers to those whose relationship with the decedent Is such that they are
entitled to share in the estate as distributees.28

In the instant case, Elise, as a compulsory heir who stands to be benefited

by the distribution of Eliseos estate, is deemed to be an interested party.
With the overwhelming evidence on record produced by Elise to prove her
filiation to Eliseo, the petitioners pounding on her lack of interest in the
administration of the decedents estate, is just a desperate attempt to
sway this Court to reverse the findings of the Court of Appeals. Certainly,
the right of Elise to be appointed administratix of the estate of Eliseo is on
good grounds. It is founded on her right as a compulsory heir, who, under
the law, is entitled to her legitimate after the debts of the estate are
satisfied.29Having a vested right in the distribution of Eliseos estate as one
of his natural children, Elise can rightfully be considered as an interested
party within the purview of the law.
WHEREFORE, premises considered, the petition is DENIED for lack of merit.
Accordingly, the Court of Appeals assailed 28 November 2008 Decision and
7 August 2009 Resolution, arc AFFIRMED in toto.

EDUARDO G. AGTARAP,
Petitioner,

G.R. No. 177099

- versus SEBASTIAN AGTARAP, JOSEPH AGTARAP, TERESA

AGTARAP, WALTER DE SANTOS, and ABELARDO
DAGORO,
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
SEBASTIAN G. AGTARAP,
Petitioner,

- versus -

SO ORDERED.
EDUARDO G. AGTARAP, JOSEPH AGTARAP, TERESA
AGTARAP, WALTER DE SANTOS, and ABELARDO
DAGORO,
Respondents.

Before us are the consolidated petitions for review on certiorari of

petitioners Sebastian G. Agtarap (Sebastian) [1] and Eduardo G. Agtarap
(Eduardo),[2] assailing the Decision dated November 21, 2006 [3]and the
Resolution dated March 27, 2007[4] of the Court of Appeals (CA) in CA-G.R.
CV No. 73916.

The antecedent facts and proceedings

On September 15, 1994, Eduardo filed with the Regional Trial Court (RTC),
Branch 114, Pasay City, a verified petition for the judicial settlement of the
estate of his deceased father Joaquin Agtarap (Joaquin).It was docketed as
Special Proceedings No. 94-4055.
The petition alleged that Joaquin died intestate on November 21, 1964
in Pasay City without any known debts or obligations. During his lifetime,
Joaquin contracted two marriages, first with Lucia Garcia (Lucia), [5] and
second with Caridad Garcia (Caridad). Lucia died on April 24, 1924. Joaquin
and Lucia had three childrenJesus (died without issue), Milagros, and Jose
(survived by three children, namely, Gloria, [6] Joseph, and Teresa[7]). Joaquin
married Caridad on February 9, 1926. They also had three childrenEduardo,
Sebastian, and Mercedes (survived by her daughter Cecile). At the time of
his death, Joaquin left two parcels of land with improvements in Pasay City,
covered by Transfer Certificates of Title (TCT) Nos. 873-(38254) and 874(38255). Joseph, a grandson of Joaquin, had been leasing and improving
the said realties and had been appropriating for himself P26,000.00 per
month since April 1994.
Eduardo further alleged that there was an imperative need to appoint him
as special administrator to take possession and charge of the estate assets
and their civil fruits, pending the appointment of a regular administrator. In
addition, he prayed that an order be issued (a) confirming and declaring
the named compulsory heirs of Joaquin who would be entitled to
participate in the estate; (b) apportioning and allocating unto the named
heirs their aliquot shares in the estate in accordance with law; and (c)
entitling the distributees the right to receive and enter into possession
those parts of the estate individually awarded to them.
On September 26, 1994, the RTC issued an order setting the petition for
initial hearing and directing Eduardo to cause its publication.
On December 28, 1994, Sebastian filed his comment, generally admitting
the allegations in the petition, and conceding to the appointment of
Eduardo as special administrator.
Joseph, Gloria, and Teresa filed their answer/opposition. They alleged that
the two subject lots belong to the conjugal partnership of Joaquin with
Lucia, and that, upon Lucias death in April 1924, they became the pro
indiviso owners of the subject properties. They said that their residence
was built with the exclusive money of their late father Jose, and the
expenses of the extensions to the house were shouldered by Gloria and
Teresa, while the restaurant (Manongs Restaurant) was built with the
exclusive money of Joseph and his business partner. They opposed the
appointment of Eduardo as administrator on the following grounds: (1) he
is not physically and mentally fit to do so; (2) his interest in the lots is
minimal; and (3) he does not possess the desire to earn. They claimed that
the best interests of the estate dictate that Joseph be appointed as special
or regular administrator.

On February 16, 1995, the RTC issued a resolution appointing Eduardo as

regular administrator of Joaquins estate. Consequently, it issued him
letters of administration.
On September 16, 1995, Abelardo Dagoro filed an answer in intervention,
alleging that Mercedes is survived not only by her daughter Cecile, but also
by him as her husband. He also averred that there is a need to appoint a
special administrator to the estate, but claimed that Eduardo is not the
person best qualified for the task.
After the parties were given the opportunity to be heard and to submit
their respective proposed projects of partition, the RTC, on October 23,
2000, issued an Order of Partition, [8] with the following disposition
In the light of the filing by the heirs of their respective proposed projects of
partition and the payment of inheritance taxes due the estate as early as
1965, and there being no claim in Court against the estate of the
deceased, the estate of JOAQUIN AGTARAP is now consequently ripe for
distribution among the heirs minus the surviving spouse Caridad Garcia
who died on August 25, 1999.
Considering that the bulk of the estate property were acquired during the
existence of the second marriage as shown by TCT No. (38254) and TCT
No. (38255) which showed on its face that decedent was married to
Caridad Garcia, which fact oppositors failed to contradict by evidence other
than their negative allegations, the greater part of the estate is perforce
accounted by the second marriage and the compulsory heirs thereunder.
The Administrator, Eduardo Agtarap rendered a true and just accounting of
his administration from his date of assumption up to the year ending
December 31, 1996 per Financial and Accounting Report dated June 2,
1997 which was approved by the Court. The accounting report included the
income earned and received for the period and the expenses incurred in
the administration, sustenance and allowance of the widow. In accordance
with said Financial and Accounting Report which was duly approved by this
Court in its Resolution dated July 28, 1998 the deceased JOAQUIN AGTARAP
left real properties consisting of the following:
I LAND:
Two lots and two buildings with one garage quarter located at #3030
Agtarap St., Pasay City, covered by Transfer Certificate of Title Nos. 38254
and 38255 and registered with the Registry of Deeds of Pasay City, Metro
Manila, described as follows:
TCT NO. LOT NO. AREA/SQ.M. ZONAL VALUE AMOUNT
38254 745-B-1 1,335 sq. m. P5,000.00 P6,675,000.00
38255 745-B-2 1,331 sq. m. P5,000.00 P6,655,000.00
TOTAL-------------------------------------------------------------P13,330,000.00

II BUILDINGS AND IMPROVEMENTS:

BUILDING I (Lot # 745-B-1) ------------------------------ P350,000.00
BUILDING II (Lot # 745-B-2) ----------------------------- 320,000.00
Building Improvements -------------------------------------- 97,500.00
Restaurant ------------------------------------------------------ 80,000.00
TOTAL --------------------------------------------------------- P847,500.00

Adding their share from Milagros Agtarap, the following heirs of the first
marriage stand to receive the total amount of:
HEIRS OF THE FIRST MARRIAGE:
1)
JOSEPH AGTARAP - P236,291.66 share from Milagros Agtarap
P295,364.57 as compulsory heir of
P531,656.23 Jose Agtarap

TOTAL NET WORTH ----------------------------------------- P14,177,500.00

WHEREFORE, the net assets of the estate of the late JOAQUIN AGTARAP
with a total value of P14,177,500.00, together with whatever interest from
bank deposits and all other incomes or increments thereof accruing after
the Accounting Report of December 31, 1996, after deducting therefrom
the compensation of the administrator and other expenses allowed by the
Court, are hereby ordered distributed as follows:
TOTAL ESTATE P14,177,500.00
CARIDAD AGTARAP of the estate as her conjugal share P7,088,750.00, the
other half of P7,088,750.00 to be divided among the compulsory heirs as
follows:
1)
2)
3)
4)
5)
6)

JOSE (deceased) - P1,181,548.30

MILAGROS (deceased) - P1,181,548.30
MERCEDES (deceased) - P1,181,548.30
SEBASTIAN - P1,181,548.30
EDUARDO - P1,181,548.30
CARIDAD - P1,181,548.30

The share of Milagros Agtarap as compulsory heir in the amount

of P1,181,548.30 and who died in 1996 will go to Teresa Agtarap and
Joseph Agtarap, Walter de Santos and half brothers Eduardo and Sebastian
Agtarap in equal proportions.
TERESA AGTARAP - P236,291.66
JOSEPH AGTARAP - P236,291.66
WALTER DE SANTOS - P236,291.66
SEBASTIAN AGTARAP - P236,291.66
EDUARDO AGTARAP - P236,291.66
Jose Agtarap died in 1967. His compulsory heirs are as follows:

2)
TERESA AGTARAP - P236,291.66 share from Milagros Agtarap
P295,364.57 as compulsory heir of
P531,656.23 Jose Agtarap
3) WALTER DE SANTOS - P236,291.66 share from Milagros Agtarap
P295,364.57 as compulsory heir of
P531,656.23 Jose Agtarap
HEIRS OF THE SECOND MARRIAGE:
a) CARIDAD AGTARAP - died on August 25, 1999
P7,088,750.00 - as conjugal share
P1,181,458.30 - as compulsory heir
Total of P8,270,208.30
b) SEBASTIAN AGTARAP - P1,181,458.38 as compulsory heir
P 236,291.66 share from Milagros
c) EDUARDO AGTARAP - P1,181,458.38 as compulsory heir
P 236,291.66 share from Milagros

d) MERCEDES - as represented by Abelardo Dagoro as the

surviving spouse of a compulsory heir
P1,181,458.38
REMAINING HEIRS OF CARIDAD AGTARAP:
1)
SEBASTIAN AGTARAP
2)
EDUARDO AGTARAP
MERCEDES AGTARAP (Predeceased Caridad Agtarap)

COMPULSORY HEIRS:
1)
GLORIA (deceased) represented by Walter de Santos
- P295,364.57
2)
JOSEPH AGTARAP - P295,364.57
3)
TERESA AGTARAP - P295,364.57
4)
PRISCILLA AGTARAP - P295,364.57

In sum, Sebastian Agtarap and Eduardo Agtarap stand to inherit:

Hence, Priscilla Agtarap will inherit P295,364.57.

EDUARDO P4,135,104.10 share from Caridad Garcia

P1,181,458.30 as compulsory heir

SEBASTIAN P4,135,104.10 share from Caridad Garcia

P1,181,458.30 as compulsory heir
P 236,291.66 share from Milagros
P5,522,854.06

P 236,291.66 share from Milagros

P5,522,854.06

Then, Joaquin Agtaraps estate, comprising three-fourths (3/4) of the

subject properties and its improvements, shall be distributed as follows:

SO ORDERED.[9]
Eduardo, Sebastian, and oppositors Joseph and Teresa filed their respective
motions for reconsideration.
On August 27, 2001, the RTC issued a resolution [10] denying the motions for
reconsideration of Eduardo and Sebastian, and granting that of Joseph and
Teresa. It also declared that the real estate properties belonged to the
conjugal partnership of Joaquin and Lucia. It also directed the modification
of the October 23, 2000 Order of Partition to reflect the correct sharing of
the heirs. However, before the RTC could issue a new order of partition,
Eduardo and Sebastian both appealed to the CA.
On November 21, 2006, the CA rendered its Decision, the dispositive
portion of which reads
WHEREFORE,
premises
considered,
the
instant
appeals
are DISMISSED for lack of merit. The assailed Resolution dated August 27,
2001 is AFFIRMED and pursuant thereto, the subject properties (Lot No.
745-B-1 [TCT No. 38254] and Lot No. 745-B-2 [TCT No. 38255]) and the
estate of the late Joaquin Agtarap are hereby partitioned as follows:
The two (2) properties, together with their improvements, embraced by
TCT No. 38254 and TCT No. 38255, respectively, are first to be distributed
among the following:
Lucia Mendietta - of the property. But since she is deceased, her share shall
be inherited by Joaquin, Jesus, Milagros and Jose in equal shares.

Caridad Garcia - 1/6 of the estate. But since she died in 1999, her share
shall be inherited by her children namely Mercedes Agtarap (represented
by her husband Abelardo Dagoro and her daughter Cecilia), Sebastian
Agtarap and Eduardo Agtarap in their own right, dividing the inheritance in
equal shares.
Milagros Agtarap - 1/6 of the estate. But since she died in 1996 without
issue, 5/8 of her inheritance shall be inherited by Gloria (represented by
her husband Walter de Santos and her daughter Samantha), Joseph
Agtarap and Teresa Agtarap, (in representation of Milagros brother Jose
Agtarap) and 1/8 each shall be inherited by Mercedes (represented by her
husband Abelardo Dagoro and her daughter Cecile), Sebastian and
Eduardo, all surnamed Agtarap.
Jose Agtarap - 1/6 of the estate. But since he died in 1967, his inheritance
shall be acquired by his wife Priscilla, and children Gloria (represented by
her husband Walter de Santos and her daughter Samantha), Joseph
Agtarap and Teresa Agtarap in equal shares.
Mercedes Agtarap - 1/6 of the estate. But since she died in 1984, her
inheritance shall be acquired by her husband Abelardo Dagoro and her
daughter Cecile in equal shares.
Sebastian Agtarap - 1/6 of the estate.
Eduardo Agtarap - 1/6 of the estate.
SO ORDERED.[11]

Joaquin Agtarap - of the property and of the other half of the property
which pertains to Lucia Mendiettas share.
Jesus Agtarap - of Lucia Mendiettas share. But since he is already deceased
(and died without issue), his inheritance shall, in turn, be acquired by
Joaquin Agtarap.
Milagros Agtarap - of Lucia Mendiettas share. But since she died in 1996
without issue, 5/8 of her inheritance shall be inherited by Gloria
(represented by her husband Walter de Santos and her daughter
Samantha), Joseph Agtarap and Teresa Agtarap, (in representation of
Milagros brother Jose Agtarap) and 1/8 each shall be inherited by Mercedes
(represented by her husband Abelardo Dagoro and her daughter Cecile),
Sebastian Eduardo, all surnamed Agtarap.
Jose Agtarap - of Lucia Mendiettas share. But since he died in 1967, his
inheritance shall be acquired by his wife Priscilla, and children Gloria
(represented by her husband Walter de Santos and her daughter
Samantha), Joseph Agtarap and Teresa in equal shares.

Aggrieved, Sebastian and Eduardo filed their respective motions for

reconsideration.
In its Resolution dated March 27, 2007, the CA denied both
motions. Hence, these petitions ascribing to the appellate court the
following errors:
G.R. No. 177192
1. The Court of Appeals erred in not considering the aforementioned
important facts[12] which alter its Decision;
2. The Court of Appeals erred in not considering the necessity of hearing
the issue of legitimacy of respondents as heirs;
3. The Court of Appeals erred in allowing violation of the law and in not
applying the doctrines of collateral attack, estoppel, and res judicata. [13]

G.R. No. 177099

THE COURT OF APPEALS (FORMER TWELFTH DIVISION) DID NOT ACQUIRE
JURISDICTION OVER THE ESTATE OF MILAGROS G. AGTARAP AND ERRED IN
DISTRIBUTING HER INHERITANCE FROM THE ESTATE OF JOAQUIN AGTARAP
NOTWITHSTANDING THE EXISTENCE OF HER LAST WILL AND TESTAMENT IN
VIOLATION OF THE DOCTRINE OF PRECEDENCE OF TESTATE PROCEEDINGS
OVER INTESTATE PROCEEDINGS.
II.
THE COURT OF APPEALS (FORMER TWELFTH DIVISION) ERRED IN
DISMISSING THE DECISION APPEALED FROM FOR LACK OF MERIT AND IN
AFFIRMING THE ASSAILED RESOLUTION DATED AUGUST 27, 2001 OF
THE LOWER COURT HOLDING THAT THE PARCELS OF LAND COVERED BY
TCT NO. 38254 AND TCT (NO.) 38255 OF THE REGISTRY OF DEEDS FOR THE
CITY OF PASAY BELONG TO THE CONJUGAL PARTNERSHIP OF JOAQUIN
AGTARAP MARRIED TO LUCIA GARCIA MENDIETTA NOTWITHSTANDING
THEIR REGISTRATION UNDER THEIR EXISTING CERTIFICATES OF TITLE AS
REGISTERED IN THE NAME OF JOAQUIN AGTARAP, CASADO CON CARIDAD
GARCIA. UNDER EXISTING JURISPRUDENCE, THE PROBATE COURT HAS NO
POWER TO DETERMINE THE OWNERSHIP OF THE PROPERTY DESCRIBED IN
THESE CERTIFICATES OF TITLE WHICH SHOULD BE RESOLVED IN AN
APPROPRIATE SEPARATE ACTION FOR A TORRENS TITLE UNDER THE LAW IS
ENDOWED WITH INCONTESTABILITY UNTIL IT HAS BEEN SET ASIDE IN THE
MANNER INDICATED IN THE LAW ITSELF.[14]
As regards his first and second assignments of error, Sebastian contends
that Joseph and Teresa failed to establish by competent evidence that they
are the legitimate heirs of their father Jose, and thus of their grandfather
Joaquin. He draws attention to the certificate of title (TCT No. 8026) they
submitted, stating that the wife of their father Jose is Presentacion Garcia,
while they claim that their mother is Priscilla. He avers that the marriage
contracts proffered by Joseph and Teresa do not qualify as the best
evidence of Joses marriage with Priscilla, inasmuch as they were not
authenticated and formally offered in evidence. Sebastian also asseverates
that he actually questioned the legitimacy of Joseph and Teresa as heirs of
Joaquin in his motion to exclude them as heirs, and in his reply to their
opposition to the said motion. He further claims that the failure of Abelardo
Dagoro and Walter de Santos to oppose his motion to exclude them as
heirs had the effect of admitting the allegations therein. He points out that
his motion was denied by the RTC without a hearing.
With respect to his third assigned error, Sebastian maintains that the
certificates of title of real estate properties subject of the controversy are
in the name of Joaquin Agtarap, married to Caridad Garcia, and as such are
conclusive proof of their ownership thereof, and thus, they are not subject
to collateral attack, but should be threshed out in a separate proceeding
for that purpose. He likewise argues that estoppel applies against the
children of the first marriage, since none of them registered any objection

to the issuance of the TCTs in the name of Caridad and Joaquin only. He
avers that the estate must have already been settled in light of the
payment of the estate and inheritance tax by Milagros, Joseph, and Teresa,
resulting to the issuance of TCT No. 8925 in Milagros name and of TCT No.
8026 in the names of Milagros and Jose. He also alleges that res judicata is
applicable as the court order directing the deletion of the name of Lucia,
and replacing it with the name of Caridad, in the TCTs had long become
final and executory.
In his own petition, with respect to his first assignment of error, Eduardo
alleges that the CA erroneously settled, together with the settlement of the
estate of Joaquin, the estates of Lucia, Jesus, Jose, Mercedes, Gloria, and
Milagros, in contravention of the principle of settling only one estate in one
proceeding. He particularly questions the distribution of the estate of
Milagros in the intestate proceedings despite the fact that a proceeding
was conducted in another court for the probate of the will of Milagros,
bequeathing all to Eduardo whatever share that she would receive from
Joaquins estate. He states that this violated the rule on precedence of
testate over intestate proceedings.
Anent his second assignment of error, Eduardo contends that the CA
gravely erred when it affirmed that the bulk of the realties subject of this
case belong to the first marriage of Joaquin to Lucia, notwithstanding that
the certificates of title were registered in the name of Joaquin
Agtarap casado con (married to) Caridad Garcia. According to him, the RTC,
acting as an intestate court with limited jurisdiction, was not vested with
the power and authority to determine questions of ownership, which
properly belongs to another court with general jurisdiction.

The Courts Ruling

As to Sebastians and Eduardos common issue on the ownership of the
subject real properties, we hold that the RTC, as an intestate court, had
jurisdiction to resolve the same.
The general rule is that the jurisdiction of the trial court, either as a
probate 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.[15] The patent rationale for this rule is that
such court merely exercises special and limited jurisdiction. [16] As held in
several cases,[17] 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 the final
determination of ownership in a separate action. [18] 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.[19] 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. [20]
We hold that the general rule does not apply to the instant case
considering that the parties are all heirs of Joaquin and that no rights of
third parties will be impaired by the resolution of the ownership issue. More
importantly, the determination of whether the subject properties are
conjugal is but collateral to the probate courts jurisdiction to settle the
estate of Joaquin.
It should be remembered that when Eduardo filed his verified petition for
judicial settlement of Joaquins estate, he alleged that the subject
properties were owned by Joaquin and Caridad since the TCTs state that
the lots were registered in the name of Joaquin Agtarap, married to Caridad
Garcia. He also admitted in his petition that Joaquin, prior to contracting
marriage with Caridad, contracted a first marriage with Lucia. Oppositors to
the petition, Joseph and Teresa, however, were able to present proof before
the RTC that TCT Nos. 38254 and 38255 were derived from a mother title,
TCT No. 5239, dated March 17, 1920, in the name of FRANCISCO VICTOR
BARNES Y JOAQUIN AGTARAP, el primero casado con Emilia Muscat, y el
Segundo
con
Lucia
Garcia
Mendietta (FRANCISCO
VICTOR
BARNES y JOAQUIN AGTARAP, the first married to Emilia Muscat, and the
second married to Lucia Garcia Mendietta). [21] When TCT No. 5239 was
divided between Francisco Barnes and Joaquin Agtarap, TCT No. 10864, in
the name of Joaquin Agtarap, married to Lucia Garcia Mendietta, was
issued for a parcel of land, identified as Lot No. 745 of the Cadastral Survey
of Pasay, Cadastral Case No. 23, G.L.R.O. Cadastral Record No. 1368,
consisting of 8,872 square meters. This same lot was covered by TCT No.
5577 (32184)[22] issued on April 23, 1937, also in the name of Joaquin
Agtarap, married to Lucia Garcia Mendietta.
The findings of the RTC and the CA show that Lucia died on April 24, 1924,
and subsequently, on February 9, 1926, Joaquin married Caridad. It is

worthy to note that TCT No. 5577 (32184) contained an annotation, which
reads
Ap-4966 NOTA: Se ha enmendado el presente certificado de titulo, tal
como aparece, tanchando las palabras con Lucia Garcia Mendiet[t]a y
poniendo en su lugar, entre lineas y en tinta encarnada, las palabras en
segundas nupcias con Caridad Garcia, en complimiento de un orden de
fecha 28 de abril de 1937, dictada por el Hon. Sixto de la Costa, juez del
Juzgado de Primera Instancia de Rizal, en el expediente cadastal No. 23,
G.L.R.O. Cad. Record No. 1368; copia de cual orden has sido presentada
con el No. 4966 del Libro Diario, Tomo 6.0 y, archivada en el Legajo T-No.
32184.
Pasig, Rizal, a 29 abril de 1937.[23]
Thus, per the order dated April 28, 1937 of Hon. Sixto de la Costa,
presiding judge of the Court of First Instance of Rizal, the phrase con Lucia
Garcia Mendiet[t]a was crossed out and replaced by en segundas nuptias
con Caridad Garcia, referring to the second marriage of Joaquin to
Caridad. It cannot be gainsaid, therefore, that prior to the replacement of
Caridads name in TCT No. 32184, Lucia, upon her demise, already left, as
her estate, one-half (1/2) conjugal share in TCT No. 32184. Lucias share in
the property covered by the said TCT was carried over to the properties
covered by the certificates of title derivative of TCT No. 32184, now TCT
Nos. 38254 and 38255. And as found by both the RTC and the CA, Lucia
was survived by her compulsory heirs Joaquin, Jesus, Milagros, and Jose.
Section 2, Rule 73 of the Rules of Court provides that when the marriage is
dissolved by the death of the husband or the wife, the community property
shall be inventoried, administered, and liquidated, and the debts thereof
paid; in the testate or intestate proceedings of the deceased spouse, and if
both spouses have died, the conjugal partnership shall be liquidated in the
testate or intestate proceedings of either.Thus, the RTC had jurisdiction to
determine whether the properties are conjugal as it had to liquidate the
conjugal partnership to determine the estate of the decedent. In fact,
should Joseph and Teresa institute a settlement proceeding for the
intestate estate of Lucia, the same should be consolidated with the
settlement proceedings of Joaquin, being Lucias spouse. [24] Accordingly, the
CA correctly distributed the estate of Lucia, with respect to the properties
covered by TCT Nos. 38254 and 38255 subject of this case, to her
compulsory heirs.
Therefore, in light of the foregoing evidence, as correctly found by the RTC
and the CA, the claim of Sebastian and Eduardo that TCT Nos. 38254 and
38255 conclusively show that the owners of the properties covered therein
were Joaquin and Caridad by virtue of the registration in the name of
Joaquin Agtarap casado con (married to) Caridad Garcia, deserves scant
consideration. This cannot be said to be a collateral attack on the said
TCTs. Indeed, simple possession of a certificate of title is not necessarily
conclusive of a holders true ownership of property. [25] A certificate of title
under the Torrens system aims to protect dominion; it cannot be used as

an instrument for the deprivation of ownership. [26] Thus, the fact that the
properties were registered in the name of Joaquin Agtarap, married to
Caridad Garcia, is not sufficient proof that the properties were acquired
during the spouses coverture.[27] The phrase married to Caridad Garcia in
the TCTs is merely descriptive of the civil status of Joaquin as the registered
owner, and does not necessarily prove that the realties are their conjugal
properties.[28]
Neither can Sebastians claim that Joaquins estate could have already been
settled in 1965 after the payment of the inheritance tax be
upheld. Payment of the inheritance tax, per se, does not settle the estate
of a deceased person. As provided in Section 1, Rule 90 of the Rules of
Court
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 share
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.
Thus, an estate is settled and distributed among the heirs only after the
payment of the debts of the estate, funeral charges, expenses of
administration, allowance to the widow, and inheritance tax. The records of
these cases do not show that these were complied with in 1965.
As regards the issue raised by Sebastian on the legitimacy of Joseph and
Teresa, suffice it to say that both the RTC and the CA found them to be the
legitimate children of Jose. The RTC found that Sebastian did not present
clear and convincing evidence to support his averments in his motion to
exclude them as heirs of Joaquin, aside from his negative allegations. The
RTC also noted the fact of Joseph and Teresa being the children of Jose was
never questioned by Sebastian and Eduardo, and the latter two even
admitted this in their petitions, as well as in the stipulation of facts in the
August 21, 1995 hearing.[29]Furthermore, the CA affirmed this finding of
fact in its November 21, 2006 Decision.[30]
Also, Sebastians insistence that Abelardo Dagoro and Walter de Santos are
not heirs to the estate of Joaquin cannot be sustained. Per its October 23,
2000 Order of Partition, the RTC found that Gloria Agtarap de Santos died

on May 4, 1995, and was later substituted in the proceedings below by her
husband Walter de Santos. Gloria begot a daughter with Walter de Santos,
Georgina Samantha de Santos. The RTC likewise noted that, on September
16, 1995, Abelardo Dagoro filed a motion for leave of court to intervene,
alleging that he is the surviving spouse of Mercedes Agtarap and the father
of Cecilia Agtarap Dagoro, and his answer in intervention. The RTC later
granted the motion, thereby admitting his answer on October 18, 1995.
[31]
The CA also noted that, during the hearing of the motion to intervene on
October 18, 1995, Sebastian and Eduardo did not interpose any objection
when the intervention was submitted to the RTC for resolution. [32]
Indeed, this Court is not a trier of facts, and there appears no compelling
reason to hold that both courts erred in ruling that Joseph, Teresa, Walter
de Santos, and Abelardo Dagoro rightfully participated in the estate of
Joaquin. It was incumbent upon Sebastian to present competent evidence
to refute his and Eduardos admissions that Joseph and Teresa were heirs of
Jose, and thus rightful heirs of Joaquin, and to timely object to the
participation of Walter de Santos and Abelardo Dagoro. Unfortunately,
Sebastian failed to do so. Nevertheless, Walter de Santos and Abelardo
Dagoro had the right to participate in the estate in representation of the
Joaquins compulsory heirs, Gloria and Mercedes, respectively. [33]
This Court also differs from Eduardos asseveration that the CA erred in
settling, together with Joaquins estate, the respective estates of Lucia,
Jesus, Jose, Mercedes, and Gloria. A perusal of the November 21, 2006 CA
Decision would readily show that the disposition of the properties related
only to the settlement of the estate of Joaquin. Pursuant to Section 1, Rule
90 of the Rules of Court, as cited above, the RTC was specifically granted
jurisdiction to determine who are the lawful heirs of Joaquin, as well as
their respective shares after the payment of the obligations of the estate,
as enumerated in the said provision. The inclusion of Lucia, Jesus, Jose,
Mercedes, and Gloria in the distribution of the shares was merely a
necessary consequence of the settlement of Joaquins estate, they being
his legal heirs.
However, we agree with Eduardos position that the CA erred in distributing
Joaquins estate pertinent to the share allotted in favor of Milagros. Eduardo
was able to show that a separate proceeding was instituted for the probate
of the will allegedly executed by Milagros before the RTC, Branch
108, Pasay City.[34] While there has been no showing that the alleged will of
Milagros, bequeathing all of her share from Joaquins estate in favor of
Eduardo, has already been probated and approved, prudence dictates that
this Court refrain from distributing Milagros share in Joaquins estate.
It is also worthy to mention that Sebastian died on January 15, 2010, per
his Certificate of Death.[35] He is survived by his wife Teresita B. Agtarap
(Teresita) and his children Joaquin Julian B. Agtarap (Joaquin Julian) and Ana
Ma. Agtarap Panlilio (Ana Ma.).
Henceforth, in light of the foregoing, the assailed November 21, 2006
Decision and the March 27, 2007 Resolution of the CA should be affirmed

with modifications such that the share of Milagros shall not yet be
distributed until after the final determination of the probate of her
purported will, and that Sebastian shall be represented by his compulsory
heirs.
WHEREFORE, the petition in G.R. No. 177192 is DENIED for lack of merit,
while the petition in G.R. No. 177099 is PARTIALLY GRANTED, such that
the Decision dated November 21, 2006 and the Resolution dated March 27,
2007
of
the
Court
of
Appeals
are AFFIRMED with
the
following MODIFICATIONS: that the share awarded in favor of Milagros
Agtarap shall not be distributed until the final determination of the probate
of her will, and that petitioner Sebastian G. Agtarap, in view of his demise
on January 15, 2010, shall be represented by his wife Teresita B. Agtarap
and his children Joaquin Julian B. Agtarap and Ana Ma. Agtarap Panlilio.
These cases are hereby remanded to the Regional Trial Court, Branch
114, Pasay City, for further proceedings in the settlement of the estate of
Joaquin Agtarap. No pronouncement as to costs.

Dr. Juvencio P. Ortaez incorporated the Philippine International Life

Insurance Company, Inc. on July 6, 1956. At the time of the companys
incorporation, Dr. Ortaez owned ninety percent (90%) of the subscribed
capital stock.
On July 21, 1980, Dr. Ortaez died. He left behind a wife (Juliana Salgado
Ortaez), three legitimate children (Rafael, Jose and Antonio Ortaez) and
five illegitimate children by Ligaya Novicio (herein private respondent Ma.
Divina Ortaez-Enderes and her siblings Jose, Romeo, Enrico Manuel and
Cesar, all surnamed Ortaez).[2]
On September 24, 1980, Rafael Ortaez filed before the Court of First
Instance of Rizal, Quezon City Branch (now Regional Trial Court of Quezon
City) a petition for letters of administration of the intestate estate of Dr.
Ortaez, docketed as SP Proc. Q-30884 (which petition to date remains
pending at Branch 85 thereof).

SO ORDERED.
[G.R. No. 146006. February 23, 2004]
JOSE C. LEE AND ALMA AGGABAO, in their capacities as President
and Corporate Secretary, respectively, of Philippines Internationl
Life Insurance Company, and FILIPINO LOAN ASSISTANCE
GROUP, petitioners, vs. REGIONAL TRIAL COURT OF QUEZON CITY
BRANCH 85 presided by JUDGE PEDRO M. AREOLA, BRANCH CLERK
OF COURT JANICE Y. ANTERO, DEPUTY SHERIFFS ADENAUER G.
RIVERA and PEDRO L. BORJA, all of the Regional Trial Court of
Quezon City Branch 85, MA. DIVINA ENDERES claiming to be
Special Administratrix, and other persons/ public officers acting
for and in their behalf, respondents.
DECISION
CORONA, J.:
This is a petition for review under Rule 45 of the Rules of Court seeking to
reverse and set aside the decision [1] of the Court of Appeals, First Division,
dated July 26, 2000, in CA G.R. 59736, which dismissed the petition for
certiorari filed by petitioners Jose C. Lee and Alma Aggabao (in their
capacities as president and secretary, respectively, of Philippine
International Life Insurance Company) and Filipino Loan Assistance Group.
The antecedent facts follow.

Private respondent Ma. Divina Ortaez-Enderes and her siblings filed an

opposition to the petition for letters of administration and, in a subsequent
urgent motion, prayed that the intestate court appoint a special
administrator.
On March 10, 1982, Judge Ernani Cruz Pao, then presiding judge of Branch
85, appointed Rafael and Jose Ortaez joint special administrators of their
fathers estate. Hearings continued for the appointment of a regular
administrator (up to now no regular administrator has been appointed).
As ordered by the intestate court, special administrators Rafael and Jose
Ortaez submitted an inventory of the estate of their father which included,
among other properties, 2,029[3] shares of stock in Philippine International
Life Insurance Company (hereafter Philinterlife), representing 50.725% of
the companys outstanding capital stock.
On April 15, 1989, the decedents wife, Juliana S. Ortaez, claiming that she
owned 1,014[4] Philinterlife shares of stock as her conjugal share in the
estate, sold said shares with right to repurchase in favor of herein
petitioner Filipino Loan Assistance Group (FLAG), represented by its
president, herein petitioner Jose C. Lee. Juliana Ortaez failed to repurchase
the shares of stock within the stipulated period, thus ownership thereof
was consolidated by petitioner FLAG in its name.
On October 30, 1991, Special Administrator Jose Ortaez, acting in his
personal capacity and claiming that he owned the remaining

1,011[5] Philinterlife shares of stocks as his inheritance share in the estate,

sold said shares with right to repurchase also in favor of herein petitioner
FLAG, represented by its president, herein petitioner Jose C. Lee. After one
year, petitioner FLAG consolidated in its name the ownership of the
Philinterlife shares of stock when Jose Ortaez failed to repurchase the
same.
It appears that several years before (but already during the pendency of
the intestate proceedings at the Regional Trial Court of Quezon City,
Branch 85), Juliana Ortaez and her two children, Special Administrators
Rafael and Jose Ortaez, entered into a memorandum of agreement dated
March 4, 1982 for the extrajudicial settlement of the estate of Dr. Juvencio
Ortaez, partitioning the estate (including the Philinterlife shares of stock)
among themselves. This was the basis of the number of shares separately
sold by Juliana Ortaez on April 15, 1989 (1,014 shares) and by Jose Ortaez
on October 30, 1991 (1,011 shares) in favor of herein petitioner FLAG.
On July 12, 1995, herein private respondent Ma. Divina OrtaezEnderes and
her siblings (hereafter referred to as private respondents Enderes et al.)
filed a motion for appointment of special administrator of Philinterlife
shares of stock. This move was opposed by Special Administrator Jose
Ortaez.
On November 8, 1995, the intestate court granted the motion of private
respondents Enderes et al. and appointed private respondent Enderes
special administratrix of the Philinterlife shares of stock.
On December 20, 1995, Special Administratrix Enderes filed an urgent
motion to declare void ab initio the memorandum of agreement dated
March 4, 1982. On January 9, 1996, she filed a motion to declare the partial
nullity of the extrajudicial settlement of the decedents estate. These
motions were opposed by Special Administrator Jose Ortaez.
On March 22, 1996, Special Administratrix Enderes filed an urgent motion
to declare void ab initio the deeds of sale of Philinterlife shares of stock,
which move was again opposed by Special Administrator Jose Ortaez.
On February 4, 1997, Jose Ortaez filed an omnibus motion for (1) the
approval of the deeds of sale of the Philinterlife shares of stock and (2) the
release of Ma. Divina Ortaez-Enderes as special administratrix of the
Philinterlife shares of stock on the ground that there were no longer any
shares of stock for her to administer.

On August 11, 1997, the intestate court denied the omnibus motion of
Special Administrator Jose Ortaez for the approval of the deeds of sale for
the reason that:
Under the Godoy case, supra, it was held in substance that a sale of a
property of the estate without an Order of the probate court is void and
passes no title to the purchaser. Since the sales in question were entered
into by Juliana S. Ortaez and Jose S. Ortaez in their personal capacity
without prior approval of the Court, the same is not binding upon the
Estate.
WHEREFORE, the OMNIBUS MOTION for the approval of the sale of
Philinterlife shares of stock and release of Ma. Divina Ortaez-Enderes as
Special Administratrix is hereby denied.[6]
On August 29, 1997, the intestate court issued another order granting the
motion of Special Administratrix Enderes for the annulment of the March 4,
1982 memorandum of agreement or extrajudicial partition of estate. The
court reasoned that:
In consonance with the Order of this Court dated August 11, 1997 DENYING
the approval of the sale of Philinterlife shares of stocks and release of Ma.
Divina Ortaez-Enderes as Special Administratrix, the Urgent Motion to
Declare Void Ab Initio Memorandum of Agreement dated December 19,
1995. . . is hereby impliedly partially resolved insofar as the
transfer/waiver/renunciation of the Philinterlife shares of stock are
concerned, in particular, No. 5, 9(c), 10(b) and 11(d)(ii) of the
Memorandum of Agreement.
WHEREFORE, this Court hereby declares the Memorandum of Agreement
dated March 4, 1982 executed by Juliana S. Ortaez, Rafael S. Ortaez and
Jose
S.
Ortaez
as
partially
void ab
initio insofar
as
the
transfer/waiver/renunciation of the Philinterlife shares of stocks are
concerned.[7]
Aggrieved by the above-stated orders of the intestate court, Jose Ortaez
filed, on December 22, 1997, a petition for certiorari in the Court of
Appeals. The appellate court denied his petition, however, ruling that there
was no legal justification whatsoever for the extrajudicial partition of the
estate by Jose Ortaez, his brother Rafael Ortaez and mother Juliana Ortaez
during the pendency of the settlement of the estate of Dr. Ortaez, without
the requisite approval of the intestate court, when it was clear that there
were other heirs to the estate who stood to be prejudiced thereby.

Consequently, the sale made by Jose Ortaez and his mother Juliana Ortaez
to FLAG of the shares of stock they invalidly appropriated for themselves,
without approval of the intestate court, was void.[8]

1. Confirming the nullity of the sale of the 2,029 Philinterlife shares in the
name of the Estate of Dr. Juvencio Ortaez to Filipino Loan Assistance Group
(FLAG);

Special Administrator Jose Ortaez filed a motion for reconsideration of the

Court of Appeals decision but it was denied. He elevated the case to the
Supreme Court via petition for review under Rule 45 which the Supreme
Court dismissed on October 5, 1998, on a technicality. His motion for
reconsideration was denied with finality on January 13, 1999. On February
23, 1999, the resolution of the Supreme Court dismissing the petition of
Special Administrator Jose Ortaez became final and was subsequently
recorded in the book of entries of judgments.

2. Commanding the President and the Corporate Secretary of Philinterlife

to reinstate in the stock and transfer book of Philinterlife the 2,029
Philinterlife shares of stock in the name of the Estate of Dr. Juvencio P.
Ortaez as the owner thereof without prejudice to other claims for violation
of pre-emptive rights pertaining to the said 2,029 Philinterlife shares;

Meanwhile, herein petitioners Jose Lee and Alma Aggabao, with the rest of
the FLAG-controlled board of directors, increased the authorized capital
stock of Philinterlife, diluting in the process the 50.725% controlling
interest of the decedent, Dr. Juvencio Ortaez, in the insurance company.
[9]
This became the subject of a separate action at the Securities and
Exchange Commission filed by private respondent-Special Administratrix
Enderes against petitioner Jose Lee and other members of the FLAGcontrolled board of Philinterlife on November 7, 1994. Thereafter, various
cases were filed by Jose Lee as president of Philinterlife and Juliana Ortaez
and her sons against private respondent-Special Administratrix Enderes in
the SEC and civil courts. [10] Somehow, all these cases were connected to
the core dispute on the legality of the sale of decedent Dr. Ortaezs
Philinterlife shares of stock to petitioner FLAG, represented by its
president, herein petitioner Jose Lee who later became the president of
Philinterlife after the controversial sale.
On May 2, 2000, private respondent-Special Administratrix Enderes and
her siblings filed a motion for execution of the Orders of the intestate court
dated August 11 and August 29, 1997 because the orders of the intestate
court nullifying the sale (upheld by the Court of Appeals and the Supreme
Court) had long became final. Respondent-Special Administratrix Enderes
served a copy of the motion to petitioners Jose Lee and Alma Aggabao as
president and secretary, respectively, of Philinterlife, [11] but petitioners
ignored the same.
On July 6, 2000, the intestate court granted the motion for execution, the
dispositive portion of which read:
WHEREFORE, premises considered, let a writ of execution issue as follows:

3. Directing the President and the Corporate Secretary of Philinterlife to

issue stock certificates of Philinterlife for 2,029 shares in the name of the
Estate of Dr. Juvencio P. Ortaez as the owner thereof without prejudice to
other claims for violations of pre-emptive rights pertaining to the said
2,029 Philinterlife shares and,
4. Confirming that only the Special Administratrix, Ma. Divina OrtaezEnderes, has the power to exercise all the rights appurtenant to the said
shares, including the right to vote and to receive dividends.
5. Directing Philinterlife and/or any other person or persons claiming to
represent it or otherwise, to acknowledge and allow the said Special
Administratrix to exercise all the aforesaid rights on the said shares and to
refrain from resorting to any action which may tend directly or indirectly to
impede, obstruct or bar the free exercise thereof under pain of contempt.
6. The President, Corporate Secretary, any responsible officer/s of
Philinterlife, or any other person or persons claiming to represent it or
otherwise, are hereby directed to comply with this order within three (3)
days from receipt hereof under pain of contempt.
7. The Deputy Sheriffs Adenauer Rivera and Pedro Borja are hereby
directed to implement the writ of execution with dispatch to forestall any
and/or further damage to the Estate.
SO ORDERED.[12]
In the several occasions that the sheriff went to the office of petitioners to
execute the writ of execution, he was barred by the security guard upon
petitioners instructions. Thus, private respondent-Special Administratrix
Enderes filed a motion to cite herein petitioners Jose Lee and Alma
Aggabao (president and secretary, respectively, of Philinterlife) in
contempt.[13]

Petitioners Lee and Aggabao subsequently filed before the Court of Appeals
a petition for certiorari, docketed as CA G.R. SP No. 59736. Petitioners
alleged that the intestate court gravely abused its discretion in (1)
declaring that the ownership of FLAG over the Philinterlife shares of stock
was null and void; (2) ordering the execution of its order declaring such
nullity and (3) depriving the petitioners of their right to due process.
On July 26, 2000, the Court of Appeals dismissed the petition outright:
We are constrained to DISMISS OUTRIGHT the present petition for certiorari
and prohibition with prayer for a temporary restraining order and/or writ of
preliminary injunction in the light of the following considerations:
1. The assailed Order dated August 11, 1997 of the respondent judge had
long become final and executory;
2. The certification on non-forum shopping is signed by only one (1) of the
three (3) petitioners in violation of the Rules; and
3. Except for the assailed orders and writ of execution, deed of sale with
right to repurchase, deed of sale of shares of stocks and omnibus motion,
the petition is not accompanied by such pleadings, documents and other
material portions of the record as would support the allegations therein in
violation of the second paragraph, Rule 65 of the 1997 Rules of Civil
Procedure, as amended.
Petition is DISMISSED.
SO ORDERED.[14]
The motion for reconsideration filed by petitioners Lee and Aggabao of the
above decision was denied by the Court of Appeals on October 30, 2000:
This resolves the urgent motion for reconsideration filed by the petitioners
of our resolution of July 26, 2000 dismissing outrightly the above-entitled
petition for the reason, among others, that the assailed Order dated August
11, 1997 of the respondent Judge had long become final and executory.
Dura lex, sed lex.
WHEREFORE, the urgent motion for reconsideration is hereby DENIED, for
lack of merit.

SO ORDERED.[15]
On December 4, 2000, petitioners elevated the case to the Supreme Court
through a petition for review under Rule 45 but on December 13, 2000, we
denied the petition because there was no showing that the Court of
Appeals in CA G.R. SP No. 59736 committed any reversible error to warrant
the exercise by the Supreme Court of its discretionary appellate
jurisdiction.[16]
However, upon motion for reconsideration filed by petitioners Lee and
Aggabao, the Supreme Court granted the motion and reinstated their
petition on September 5, 2001. The parties were then required to submit
their respective memoranda.
Meanwhile, private respondent-Special Administratrix Enderes, on July 19,
2000, filed a motion to direct the branch clerk of court in lieu of herein
petitioners Lee and Aggabao to reinstate the name of Dr. Ortaez in the
stock and transfer book of Philinterlife and issue the corresponding stock
certificate pursuant to Section 10, Rule 39 of the Rules of Court which
provides that the court may direct the act to be done at the cost of the
disobedient party by some other person appointed by the court and the act
when so done shall have the effect as if done by the party. Petitioners Lee
and Aggabao opposed the motion on the ground that the intestate court
should refrain from acting on the motion because the issues raised therein
were directly related to the issues raised by them in their petition for
certiorari at the Court of Appeals docketed as CA-G.R. SP No. 59736. On
October 30, 2000, the intestate court granted the motion, ruling that there
was no prohibition for the intestate court to execute its orders inasmuch as
the appellate court did not issue any TRO or writ of preliminary injunction.
On December 3, 2000, petitioners Lee and Aggabao filed a petition for
certiorari in the Court of Appeals, docketed as CA-G.R. SP No. 62461,
questioning this time the October 30, 2000 order of the intestate court
directing the branch clerk of court to issue the stock certificates. They also
questioned in the Court of Appeals the order of the intestate court
nullifying the sale made in their favor by Juliana Ortaez and Jose Ortaez. On
November 20, 2002, the Court of Appeals denied their petition and upheld
the power of the intestate court to execute its order. Petitioners Lee and
Aggabao then filed motion for reconsideration which at present is still
pending resolution by the Court of Appeals.
Petitioners Jose Lee and Alma Aggabao (president and secretary,
respectively, of Philinterlife) and FLAG now raise the following errors for our
consideration:

THE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR:

A. IN FAILING TO RECONSIDER ITS PREVIOUS RESOLUTION DENYING THE
PETITION DESPITE THE FACT THAT THE APPELLATE COURTS MISTAKE IN
APPREHENDING THE FACTS HAD BECOME PATENT AND EVIDENT FROM THE
MOTION FOR RECONSIDERATION AND THE COMMENT OF RESPONDENT
ENDERES WHICH HAD ADMITTED THE FACTUAL ALLEGATIONS OF
PETITIONERS IN THE PETITION AS WELL AS IN THE MOTION FOR
RECONSIDERATION. MOREOVER, THE RESOLUTION OF THE APPELLATE
COURT DENYING THE MOTION FOR RECONSIDERATION WAS CONTAINED IN
ONLY ONE PAGE WITHOUT EVEN TOUCHING ON THE SUBSTANTIVE MERITS
OF THE EXHAUSTIVE DISCUSSION OF FACTS AND SUPPORTING LAW IN THE
MOTION FOR RECONSIDERATION IN VIOLATION OF THE RULE ON
ADMINISTRATIVE DUE PROCESS;
B. IN FAILING TO SET ASIDE THE VOID ORDERS OF THE INTESTATE COURT
ON THE ERRONEOUS GROUND THAT THE ORDERS WERE FINAL AND
EXECUTORY WITH REGARD TO PETITIONERS EVEN AS THE LATTER WERE
NEVER NOTIFIED OF THE PROCEEDINGS OR ORDER CANCELING ITS
OWNERSHIP;
C. IN NOT FINDING THAT THE INTESTATE COURT COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO EXCESS OF JURISDICTION (1) WHEN IT
ISSUED THE OMNIBUS ORDER NULLIFYING THE OWNERSHIP OF PETITIONER
FLAG OVER SHARES OF STOCK WHICH WERE ALLEGED TO BE PART OF THE
ESTATE AND (2) WHEN IT ISSUED A VOID WRIT OF EXECUTION AGAINST
PETITIONER FLAG AS PRESENT OWNER TO IMPLEMENT MERELY
PROVISIONAL ORDERS, THEREBY VIOLATING FLAGS CONSTITUTIONAL
RIGHT AGAINST DEPRIVATION OF PROPERTY WITHOUT DUE PROCESS;
D. IN FAILING TO DECLARE NULL AND VOID THE ORDERS OF THE
INTESTATE COURT WHICH NULLIFIED THE SALE OF SHARES OF STOCK
BETWEEN THE LEGITIMATE HEIR JOSE S. ORTAEZ AND PETITIONER FLAG
BECAUSE OF SETTLED LAW AND JURISPRUDENCE, I.E., THAT AN HEIR HAS
THE RIGHT TO DISPOSE OF THE DECEDENTS PROPERTY EVEN IF THE SAME
IS UNDER ADMINISTRATION PURSUANT TO CIVIL CODE PROVISION THAT
POSSESSION OF HEREDITARY PROPERTY IS TRANSMITTED TO THE HEIR THE
MOMENT OF DEATH OF THE DECEDENT (ACEDEBO VS. ABESAMIS, 217
SCRA 194);
E. IN DISREGARDING THE FINAL DECISION OF THE SUPREME COURT IN G.R.
NO. 128525 DATED DECEMBER 17, 1999 INVOLVING SUBSTANTIALLY THE
SAME PARTIES, TO WIT, PETITIONERS JOSE C. LEE AND ALMA AGGABAO
WERE RESPONDENTS IN THAT CASE WHILE RESPONDENT MA. DIVINA

ENDERES WAS THE PETITIONER THEREIN. THAT DECISION, WHICH CAN BE

CONSIDERED LAW OF THE CASE, RULED THAT PETITIONERS CANNOT BE
ENJOINED BY RESPONDENT ENDERES FROM EXERCISING THEIR POWER AS
DIRECTORS AND OFFICERS OF PHILINTERLIFE AND THAT THE INTESTATE
COURT IN CHARGE OF THE INTESTATE PROCEEDINGS CANNOT ADJUDICATE
TITLE TO PROPERTIES CLAIMED TO BE PART OF THE ESTATE AND WHICH
ARE EQUALLY CLAIMED BY PETITIONER FLAG. [17]
The petition has no merit.
Petitioners Jose Lee and Alma Aggabao, representing Philinterlife and FLAG,
assail before us not only the validity of the writ of execution issued by the
intestate court dated July 7, 2000 but also the validity of the August 11,
1997 order of the intestate court nullifying the sale of the 2,029
Philinterlife shares of stock made by Juliana Ortaez and Jose Ortaez, in their
personal capacities and without court approval, in favor of petitioner FLAG.
We cannot allow petitioners to reopen the issue of nullity of the sale of the
Philinterlife shares of stock in their favor because this was already settled a
long time ago by the Court of Appeals in its decision dated June 23, 1998 in
CA-G.R. SP No. 46342. This decision was effectively upheld by us in our
resolution dated October 9, 1998 in G.R. No. 135177 dismissing the
petition for review on a technicality and thereafter denying the motion for
reconsideration on January 13, 1999 on the ground that there was no
compelling reason to reconsider said denial. [18] Our decision became final
on February 23, 1999 and was accordingly entered in the book of entry of
judgments. For all intents and purposes therefore, the nullity of the sale of
the Philinterlife shares of stock made by Juliana Ortaez and Jose Ortaez in
favor of petitioner FLAG is already a closed case. To reopen said issue
would set a bad precedent, opening the door wide open for dissatisfied
parties to relitigate unfavorable decisions no end. This is completely
inimical to the orderly and efficient administration of justice.
The said decision of the Court of Appeals in CA-G.R. SP No. 46342 affirming
the nullity of the sale made by Jose Ortaez and his mother Juliana Ortaez of
the Philinterlife shares of stock read:
Petitioners asseverations relative to said [memorandum] agreement were
scuttled during the hearing before this Court thus:
JUSTICE AQUINO:

Counsel for petitioner, when the Memorandum of Agreement was

executed, did the children of Juliana Salgado know already that there was a
claim for share in the inheritance of the children of Novicio?

With that admission that there is no legal justification, Your Honor, we rest
the case for the private respondent. How can the lower court be accused of
abusing its discretion? (pages 33-35, TSN of January 29, 1998).

ATTY. CALIMAG:

Thus, We find merit in the following postulation by private respondent:

Your Honor please, at that time, Your Honor, it is already known to them.

What we have here is a situation where some of the heirs of the decedent
without securing court approval have appropriated as their own personal
property the properties of [the] Estate, to the exclusion and the extreme
prejudice of the other claimant/heirs. In other words, these heirs, without
court approval, have distributed the asset of the estate among themselves
and proceeded to dispose the same to third parties even in the absence of
an order of distribution by the Estate Court. As admitted by petitioners
counsel, there was absolutely no legal justification for this action by the
heirs. There being no legal justification, petitioner has no basis for
demanding that public respondent [the intestate court] approve the sale of
the Philinterlife shares of the Estate by Juliana and Jose Ortaez in favor of
the Filipino Loan Assistance Group.

JUSTICE AQUINO:
What can be your legal justification for extrajudicial settlement of a
property subject of intestate proceedings when there is an adverse claim of
another set of heirs, alleged heirs? What would be the legal justification for
extra-judicially settling a property under administration without the
approval of the intestate court?
ATTY. CALIMAG:
Well, Your Honor please, in that extra-judicial settlement there is an
approval of the honorable court as to the propertys partition x x x. There
were as mentioned by the respondents counsel, Your Honor.
ATTY. BUYCO:
No
JUSTICE AQUINO:
The point is, there can be no adjudication of a property under intestate
proceedings without the approval of the court. That is basic unless you can
present justification on that. In fact, there are two steps: first, you ask
leave and then execute the document and then ask for approval of the
document executed. Now, is there any legal justification to exclude this
particular transaction from those steps?
ATTY. CALIMAG:

It is an undisputed fact that the parties to the Memorandum of Agreement

dated March 4, 1982 (see Annex 7 of the Comment). . . are not the only
heirs claiming an interest in the estate left by Dr. Juvencio P. Ortaez. The
records of this case. . . clearly show that as early as March 3, 1981 an
Opposition to the Application for Issuance of Letters of Administration was
filed by the acknowledged natural children of Dr. Juvencio P. Ortaez with
Ligaya Novicio. . . This claim by the acknowledged natural children of Dr.
Juvencio P. Ortaez is admittedly known to the parties to the Memorandum
of Agreement before they executed the same. This much was admitted by
petitioners counsel during the oral argument. xxx
Given the foregoing facts, and the applicable jurisprudence, public
respondent can never be faulted for not approving. . . the subsequent sale
by the petitioner [Jose Ortaez] and his mother [Juliana Ortaez] of the
Philinterlife shares belonging to the Estate of Dr. Juvencio P. Ortaez. (pages
3-4 of Private Respondents Memorandum; pages 243-244 of the Rollo)
Amidst the foregoing, We found no grave abuse of discretion amounting to
excess or want of jurisdiction committed by respondent judge. [19]

None, Your Honor.

ATTY BUYCO:

From the above decision, it is clear that Juliana Ortaez, and her three sons,
Jose, Rafael and Antonio, all surnamed Ortaez, invalidly entered into a
memorandum of agreement extrajudicially partitioning the intestate estate
among themselves, despite their knowledge that there were other heirs or

claimants to the estate and before final settlement of the estate by the
intestate court. Since the appropriation of the estate properties by Juliana
Ortaez and her children (Jose, Rafael and Antonio Ortaez) was invalid, the
subsequent sale thereof by Juliana and Jose to a third party (FLAG), without
court approval, was likewise void.
An heir can sell his right, interest, or participation in the property under
administration under Art. 533 of the Civil Code which provides that
possession of hereditary property is deemed transmitted to the heir
without interruption from the moment of death of the decedent.
[20]
However, an heir can only alienate such portion of the estate that may
be allotted to him in the division of the estate by the probate or intestate
court after final adjudication, that is, after all debtors shall have been paid
or the devisees or legatees shall have been given their shares. [21] This
means that an heir may only sell his ideal or undivided share in the estate,
not any specific property therein. In the present case, Juliana Ortaez and
Jose Ortaez sold specific properties of the estate (1,014 and 1,011 shares
of stock in Philinterlife) in favor of petitioner FLAG. This they could not
lawfully do pending the final adjudication of the estate by the intestate
court because of the undue prejudice it would cause the other claimants to
the estate, as what happened in the present case.
Juliana Ortaez and Jose Ortaez sold specific properties of the estate,
without court approval. It is well-settled that court approval is necessary
for the validity of any disposition of the decedents estate. In the early case
of Godoy vs. Orellano,[22] we laid down the rule that the sale of the property
of the estate by an administrator without the order of the probate court is
void and passes no title to the purchaser. And in the case of Dillena vs.
Court of Appeals,[23] we ruled that:
[I]t must be emphasized that the questioned properties (fishpond) were
included in the inventory of properties of the estate submitted by then
Administratrix Fausta Carreon Herrera on November 14, 1974. Private
respondent was appointed as administratrix of the estate on March 3, 1976
in lieu of Fausta Carreon Herrera. On November 1, 1978, the questioned
deed of sale of the fishponds was executed between petitioner and private
respondent without notice and approval of the probate court. Even after
the sale, administratrix Aurora Carreon still included the three fishponds as
among the real properties of the estate in her inventory submitted on
August 13, 1981. In fact, as stated by the Court of Appeals, petitioner, at
the time of the sale of the fishponds in question, knew that the same were
part of the estate under administration.
xxxxxxxxx

The subject properties therefore are under the jurisdiction of the probate
court which according to our settled jurisprudence has the authority to
approve any disposition regarding properties under administration. . . More
emphatic is the declaration We made in Estate of Olave vs. Reyes (123
SCRA 767) where We stated that when the estate of the deceased person
is already the subject of a testate or intestate proceeding, the
administrator cannot enter into any transaction involving it without prior
approval of the probate court.
Only recently, in Manotok Realty, Inc. vs. Court of Appeals (149 SCRA 174),
We held that the sale of an immovable property belonging to the estate of
a decedent, in a special proceedings, needs court approval. . . This
pronouncement finds support in the previous case of Dolores Vda. De Gil
vs. Agustin Cancio (14 SCRA 797) wherein We emphasized that it is within
the jurisdiction of a probate court to approve the sale of properties of a
deceased person by his prospective heirs before final adjudication. x x x
It being settled that property under administration needs the approval of
the probate court before it can be disposed of, any unauthorized
disposition does not bind the estate and is null and void. As early as 1921
in the case of Godoy vs. Orellano (42 Phil 347), We laid down the rule that
a sale by an administrator of property of the deceased, which is not
authorized by the probate court is null and void and title does not pass to
the purchaser.
There is hardly any doubt that the probate court can declare null and void
the disposition of the property under administration, made by private
respondent, the same having been effected without authority from said
court. It is the probate court that has the power to authorize and/or
approve the sale (Section 4 and 7, Rule 89), hence, a fortiori, it is said
court that can declare it null and void for as long as the proceedings had
not been closed or terminated. To uphold petitioners contention that the
probate court cannot annul the unauthorized sale, would render
meaningless the power pertaining to the said court. (Bonga vs. Soler, 2
SCRA 755). (emphasis ours)
Our jurisprudence is therefore clear that (1) any disposition of estate
property by an administrator or prospective heir pending final adjudication
requires court approval and (2) any unauthorized disposition of estate
property can be annulled by the probate court, there being no need for a
separate action to annul the unauthorized disposition.
The question now is: can the intestate or probate court execute its order
nullifying the invalid sale?

We see no reason why it cannot. The intestate court has the power to
execute its order with regard to the nullity of an unauthorized sale of
estate property, otherwise its power to annul the unauthorized or
fraudulent disposition of estate property would be meaningless. In other
words, enforcement is a necessary adjunct of the intestate or probate
courts power to annul unauthorized or fraudulent transactions to prevent
the dissipation of estate property before final adjudication.
Moreover, in this case, the order of the intestate court nullifying the sale
was affirmed by the appellate courts (the Court of Appeals in CA-G.R. SP
No. 46342 dated June 23, 1998 and subsequently by the Supreme Court in
G.R. No. 135177 dated October 9, 1998). The finality of the decision of the
Supreme Court was entered in the book of entry of judgments on February
23, 1999. Considering the finality of the order of the intestate court
nullifying the sale, as affirmed by the appellate courts, it was correct for
private respondent-Special Administratrix Enderes to thereafter move for a
writ of execution and for the intestate court to grant it.
Petitioners Jose Lee, Alma Aggabao and FLAG, however, contend that the
probate court could not issue a writ of execution with regard to its order
nullifying the sale because said order was merely provisional:
The only authority given by law is for respondent judge to determine
provisionally whether said shares are included or excluded in the inventory
In ordering the execution of the orders, respondent judge acted in excess
of his jurisdiction and grossly violated settled law and jurisprudence,
i.e., that the determination by a probate or intestate court of whether a
property is included or excluded in the inventory of the estate being
provisional in nature, cannot be the subject of execution.[24] (emphasis
ours)
Petitioners argument is misplaced. There is no question, based on the facts
of this case, that the Philinterlife shares of stock were part of the estate of
Dr. Juvencio Ortaez from the very start as in fact these shares were
included in the inventory of the properties of the estate submitted by
Rafael Ortaez after he and his brother, Jose Ortaez, were appointed special
administrators by the intestate court.[25]
The controversy here actually started when, during the pendency of
settlement of the estate of Dr. Ortaez, his wife Juliana Ortaez sold
1,014 Philinterlife shares of stock in favor petitioner FLAG without
approval of the intestate court. Her son Jose Ortaez later sold
remaining 1,011 Philinterlife shares also in favor of FLAG without
approval of the intestate court.

the
the
the
the
the

We are not dealing here with the issue of inclusion or exclusion of

properties in the inventory of the estate because there is no question that,
from the very start, the Philinterlife shares of stock were owned by the
decedent, Dr. Juvencio Ortaez. Rather, we are concerned here with the
effect of the sale made by the decedents heirs, Juliana Ortaez and
Jose Ortaez, without the required approval of the intestate
court. This being so, the contention of petitioners that the determination
of the intestate court was merely provisional and should have been
threshed out in a separate proceeding is incorrect.
The petitioners Jose Lee and Alma Aggabao next contend that the writ of
execution should not be executed against them because they were not
notified, nor they were aware, of the proceedings nullifying the sale of the
shares of stock.
We are not persuaded. The title of the purchaser like herein petitioner FLAG
can be struck down by the intestate court after a clear showing of the
nullity of the alienation. This is the logical consequence of our ruling
in Godoy and in several subsequent cases.[26] The sale of any property
of the estate by an administrator or prospective heir without order
of the probate or intestate court is void and passes no title to the
purchaser. Thus, in Juan Lao et al. vs. Hon. Melencio Geneto, G.R. No.
56451, June 19, 1985, we ordered the probate court to cancel the transfer
certificate of title issued to the vendees at the instance of the
administrator after finding that the sale of real property under probate
proceedings was made without the prior approval of the court. The
dispositive portion of our decision read:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the assailed Order dated
February 18, 1981 of the respondent Judge approving the questioned
Amicable Settlement is declared NULL and VOID and hereby SET ASIDE.
Consequently, the sale in favor of Sotero Dioniosio III and by the latter to
William Go is likewise declared NULL and VOID. The Transfer Certificate of
Title issued to the latter is hereby ordered cancelled.
It goes without saying that the increase in Philinterlifes authorized capital
stock, approved on the vote of petitioners non-existent shareholdings and
obviously calculated to make it difficult for Dr. Ortaezs estate to reassume
its controlling interest in Philinterlife, was likewise void ab initio.
Petitioners next argue that they were denied due process.
We do not think so.

The facts show that petitioners, for reasons known only to them, did not
appeal the decision of the intestate court nullifying the sale of shares of
stock in their favor. Only the vendor, Jose Ortaez, appealed the case. A
careful review of the records shows that petitioners had actual knowledge
of the estate settlement proceedings and that they knew private
respondent Enderes was questioning therein the sale to them of the
Philinterlife shares of stock.
It must be noted that private respondent-Special Administratrix Enderes
filed before the intestate court (RTC of Quezon City, Branch 85) a Motion to
Declare Void Ab Initio Deeds of Sale of Philinterlife Shares of Stock on
March 22, 1996. But as early as 1994, petitioners already knew of the
pending settlement proceedings and that the shares they bought were
under the administration by the intestate court because private
respondent Ma. Divina Ortaez-Enderes and her mother Ligaya Novicio had
filed a case against them at the Securities and Exchange Commission on
November 7, 1994, docketed as SEC No. 11-94-4909, for annulment of
transfer of shares of stock, annulment of sale of corporate properties,
annulment of subscriptions on increased capital stocks, accounting,
inspection of corporate books and records and damages with prayer for a
writ of preliminary injunction and/or temporary restraining order. [27] In said
case, Enderes and her mother questioned the sale of the aforesaid shares
of stock to petitioners. The SEC hearing officer in fact, in his resolution
dated March 24, 1995, deferred to the jurisdiction of the intestate court to
rule on the validity of the sale of shares of stock sold to petitioners by Jose
Ortaez and Juliana Ortaez:
Petitioners also averred that. . . the Philinterlife shares of Dr. Juvencio
Ortaez who died, in 1980, are part of his estate which is presently the
subject matter of an intestate proceeding of the RTC of Quezon City,
Branch 85. Although, private respondents [Jose Lee et al.] presented the
documents of partition whereby the foregoing share of stocks were
allegedly partitioned and conveyed to Jose S. Ortaez who allegedly
assigned the same to the other private respondents, approval of the Court
was not presented. Thus, the assignments to the private respondents [Jose
Lee et al.] of the subject shares of stocks are void.
xxxxxxxxx
With respect to the alleged extrajudicial partition of the shares of stock
owned by the late Dr. Juvencio Ortaez, we rule that the matter properly
belongs to the jurisdiction of the regular court where the intestate
proceedings are currently pending.[28]

With this resolution of the SEC hearing officer dated as early as March 24,
1995 recognizing the jurisdiction of the intestate court to determine the
validity of the extrajudicial partition of the estate of Dr. Ortaez and the
subsequent sale by the heirs of the decedent of the Philinterlife shares of
stock to petitioners, how can petitioners claim that they were not aware of
the intestate proceedings?
Futhermore, when the resolution of the SEC hearing officer reached the
Supreme Court in 1996 (docketed as G.R. 128525), herein petitioners who
were respondents therein filed their answer which contained statements
showing that they knew of the pending intestate proceedings:
[T]he subject matter of the complaint is not within the jurisdiction of the
SEC but with the Regional Trial Court; Ligaya Novicio and children
represented themselves to be the common law wife and illegitimate
children of the late Ortaez; that on March 4, 1982, the surviving spouse
Juliana Ortaez, on her behalf and for her minor son Antonio, executed a
Memorandum of Agreement with her other sons Rafael and Jose, both
surnamed Ortaez, dividing the estate of the deceased composed of his
one-half (1/2) share in the conjugal properties; that in the said
Memorandum of Agreement, Jose S. Ortaez acquired as his share of the
estate the 1,329 shares of stock in Philinterlife; that on March 4, 1982,
Juliana and Rafael assigned their respective shares of stock in Philinterlife
to Jose; that contrary to the contentions of petitioners, private respondents
Jose Lee, Carlos Lee, Benjamin Lee and Alma Aggabao became
stockholders of Philinterlife on March 23, 1983 when Jose S. Ortaez, the
principal stockholder at that time, executed a deed of sale of his shares of
stock to private respondents; and that the right of petitioners to question
the Memorandum of Agreement and the acquisition of shares of stock of
private respondent is barred by prescription.[29]
Also, private respondent-Special Administratrix Enderes offered additional
proof of actual knowledge of the settlement proceedings by petitioners
which petitioners never denied: (1) that petitioners were represented by
Atty. Ricardo Calimag previously hired by the mother of private respondent
Enderes to initiate cases against petitioners Jose Lee and Alma Aggaboa for
the nullification of the sale of the shares of stock but said counsel made a
conflicting turn-around and appeared instead as counsel of petitioners, and
(2) that the deeds of sale executed between petitioners and the heirs of
the decedent (vendors Juliana Ortaez and Jose Ortaez) were acknowledged
before Atty. Ramon Carpio who, during the pendency of the settlement
proceedings, filed a motion for the approval of the sale of Philinterlife
shares of stock to the Knights of Columbus Fraternal Association, Inc.
(which motion was, however, later abandoned).[30] All this sufficiently

proves that petitioners, through their counsels, knew of the pending

settlement proceedings.
Finally, petitioners filed several criminal cases such as libel (Criminal Case
No. 97-7179-81), grave coercion (Criminal Case No. 84624) and robbery
(Criminal Case No. Q-96-67919) against private respondents mother Ligaya
Novicio who was a director of Philinterlife, [31] all of which criminal cases
were related to the questionable sale to petitioners of the Philinterlife
shares of stock.

Petitioners and all parties claiming rights under them are hereby warned
not to further delay the execution of the Orders of the intestate court dated
August 11 and August 29, 1997.
WHEREFORE, the petition is hereby DENIED.
Appeals in CA-G.R. S.P. No. 59736 dated
petitioners petition for certiorari and affirming
trial court which ordered the execution of its
29, 1997 orders, is hereby AFFIRMED.

The decision of the Court of

July 26, 2000, dismissing
the July 6, 2000 order of the
(trial courts) August 11 and

Considering these circumstances, we cannot accept petitioners claim of

denial of due process. The essence of due process is the reasonable
opportunity to be heard. Where the opportunity to be heard has been
accorded, there is no denial of due process. [32] In this case, petitioners
knew of the pending instestate proceedings for the settlement of Dr.
Juvencio Ortaezs estate but for reasons they alone knew, they never
intervened. When the court declared the nullity of the sale, they did not
bother to appeal. And when they were notified of the motion for execution
of the Orders of the intestate court, they ignored the same. Clearly,
petitioners alone should bear the blame.

SO ORDERED.

Petitioners next contend that we are bound by our ruling in G.R. No.
128525 entitled Ma. Divina Ortaez-Enderes vs. Court of Appeals, dated
December 17, 1999, where we allegedly ruled that the intestate court may
not pass upon the title to a certain property for the purpose of determining
whether the same should or should not be included in the inventory but
such determination is not conclusive and is subject to final decision in a
separate action regarding ownership which may be constituted by the
parties.

DECISION

We are not unaware of our decision in G.R. No. 128525. The issue therein
was whether the Court of Appeals erred in affirming the resolution of the
SEC that Enderes et al. were not entitled to the issuance of the writ of
preliminary injunction. We ruled that the Court of Appeals was correct in
affirming the resolution of the SEC denying the issuance of the writ of
preliminary injunction because injunction is not designed to protect
contingent rights. Said case did not rule on the issue of the validity of the
sale of shares of stock belonging to the decedents estate without court
approval nor of the validity of the writ of execution issued by the intestate
court. G.R. No. 128525 clearly involved a different issue and it does not
therefore apply to the present case.

The facts show that on June 27, 1987, Hilario M. Ruiz1 executed a
holographic will naming as his heirs his only son, Edmond Ruiz, his adopted
daughter, private respondent Maria Pilar Ruiz Montes, and his three
granddaughters, private respondents Maria Cathryn, Candice Albertine and
Maria Angeline, all children of Edmond Ruiz. The testator bequeathed to his
heirs substantial cash, personal and real properties and named Edmond
Ruiz executor of his estate.2

[G.R. No. 118671. January 29, 1996]

THE
ESTATE
OF
HILARIO
M.
RUIZ,
EDMOND
RUIZ,
Executor, petitioner, vs. THE COURT OF APPEALS (Former Special
Sixth Division), MARIA PILAR RUIZ-MONTES, MARIA CATHRYN RUIZ,
CANDICE ALBERTINE RUIZ, MARIA ANGELINE RUIZ and THE
PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF PASIG,
BRANCH 156, respondents.

PUNO, J.:
This petition for review on certiorari seeks to annul and set aside the
decision dated November 10, 1994 and the resolution dated January 5,
1995 of the Court of Appeals in CA-G.R. SP No. 33045.

On April 12, 1988, Hilario Ruiz died. Immediately thereafter, the cash
component of his estate was distributed among Edmond Ruiz and private
respondents in accordance with the decedents will. For unbeknown
reasons, Edmond, the named executor, did not take any action for the
probate of his fathers holographic will.

On June 29, 1992, four years after the testators death, it was private
respondent Maria Pilar Ruiz Montes who filed before the Regional Trial
Court, Branch 156, Pasig, a petition for the probate and approval of Hilario
Ruizs will and for the issuance of letters testamentary to Edmond
Ruiz.3 Surprisingly, Edmond opposed the petition on the ground that the
will was executed under undue influence.
On November 2, 1992, one of the properties of the estate - the house and
lot at No. 2 Oliva Street, Valle Verde IV, Pasig which the testator
bequeathed to Maria Cathryn, Candice Albertine and Maria Angeline 4 - was
leased out by Edmond Ruiz to third persons.
On January 19, 1993, the probate court ordered Edmond to deposit with
the Branch Clerk of Court the rental deposit and payments totalling
P540,000.00 representing the one-year lease of the Valle Verde property. In
compliance, on January 25, 1993, Edmond turned over the amount
of P348,583.56, representing the balance of the rent after deducting
P191,416.14 for repair and maintenance expenses on the estate. 5
In March 1993, Edmond moved for the release of P50,000.00 to pay the
real estate taxes on the real properties of the estate. The probate court
approved the release of P7,722.006
On May 14, 1993, Edmond withdrew his opposition to the probate of the
will. Consequently, the probate court, on May 18, 1993, admitted the will to
probate
and
ordered
the
issuance
of
letters
testamentary
to Edmondconditioned upon the filing of a bond in the amount of
P50,000.00. The letters testamentary were issued on June 23, 1993.
On July 28, 1993, petitioner Testate Estate of Hilario Ruiz as executor, filed
an Ex-Parte Motion for Release of Funds. It prayed for the release of the
rent payments deposited with the Branch Clerk of Court.Respondent
Montes opposed the motion and concurrently filed a Motion for Release of
Funds to Certain Heirs and Motion for Issuance of Certificate of Allowance
of Probate Will. Montes prayed for the release of the said rent payments to
Maria Cathryn, Candice Albertine and Maria Angeline and for the
distribution of the testators properties, specifically the Valle Verde property
and the Blue Ridge apartments, in accordance with the provisions of the
holographic will.
On August 26, 1993, the probate court denied petitioners motion for
release of funds but granted respondent Montes motion in view of
petitioners lack of opposition. It thus ordered the release of the rent

payments to the decedents three granddaughters. It further ordered the

delivery of the titleds to and possession of the properties bequeathed to
the three granddaughters and respondent Montes upon the filing of a bond
of P50,000.00.
Petitioner moved for reconsideration alleging that he actually filed his
opposition to respondent Montes motion for release of rent payments
which opposition the court failed to consider. Petitioner likewise reiterated
his previous motion for release of funds.
On November 23, 1993, petitioner, through counsel, manifested that he
was withdrawing his motion for release of funds in view of the fact that the
lease contract over Valle Verde property had been renewed for another
year.7
Despite petitioners manifestation, the probate court, on December 22,
1993, ordered the release of the funds to Edmond but only such amount as
may be necessary to cover the espenses of administration and
allowanceas for support of the testators three granddaughters subject to
collation and deductible from their share in the inheritance. The court,
however, held in abeyance the release of the titles to respondent Montes
and the three granddaughters until the lapse of six months from the date
of firast publication of the notice to creditors.8 The Court stated thus:
xxx xxx xxx
After consideration of the arguments set forth thereon by the parties, the
court resolves to allow Administrator Edmond M. Ruiz to take possession of
the rental payments deposited with the Clerk of Court, Pasig Regional Trial
Court, but only such amount as may be necessary to cover the expenses
of administration and allowances for support of Maria Cathryn Veronique,
Candice Albertine and Maria Angeli, which are subject to collation and
deductible from the share in the inheritance of said heirs and insofar as
they exceed the fruits or rents pertaining to them.
As to the release of the titles bequeathed to petitioner Maria Pilar RuizMontes and the above-named heirs, the same is hereby reconsidered
and held in abeyance until the lapse of six (6) months from the date of
first publication of Notice to Creditors.
WHEREFORE, Administrator Edmond M. Ruiz is hereby ordered to submit an
accounting of the expenses necessary for administration including
provisions for the support Of Maria Cathryn Veronique Ruiz, Candice

Albertine Ruiz and Maria Angeli Ruiz before the amount required can be
withdrawn and cause the publication of the notice to creditors with
reasonable dispatch.9
Petitioner assailed this order before the Court of Appeals. Finding no grave
abuse of discretion on the part of respondent judge, the appellate court
dismissed the petition and sustained the probate courts order in a decision
dated November 10, 199410 and a resolution dated January 5, 1995.11
Hence, this petition.
Petitioner claims that:
THE PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN
AFFIRMING AND CONFIRMING THE ORDER OF RESPONDENT REGIONAL
TRIAL COURT OF PASIG, BRANCH 156, DATED DECEMBER 22, 1993, WHICH
WHEN GIVEN DUE COURSE AND IS EFFECTED WOULD: (1) DISALLOW THE
EXECUTOR/ADMINISTRATOR OF THE ESTATE OF THE LATE HILARIO M. RUIZ
TO TAKE POSSESSION OF ALL THE REAL AND PERSONAL PROPERTIES OF
THE ESTATE; (2) GRANT SUPPORT, DURING THE PENDENCY OF THE
SETTLEMENT OF AN ESTATE, TO CERTAIN PERSONS NOT ENTITLED
THERETO; AND (3) PREMATURELY PARTITION AND DISTRIBUTE THE ESTATE
PURSUANT TO THE PROVISIONS OF THE HOLOGRAPHIC WILL EVEN BEFORE
ITS INTRINSIC VALIDITY HAS BEEN DETERMINED, AND DESPITE THE
EXISTENCE OF UNPAID DEBTS AND OBLIGATIONS OF THE ESTATE. 12
The issue for resolution is whether the probate court, after admitting the
will to probate but before payment of the estates debts and obligations,
has the authority: (1) to grant an allowance from the funds of the estate for
the support of the testators grandchildren; (2) to order the release of the
titles to certain heirs; and (3) to grant possession of all properties of the
estate to the executor of the will.
On the matter of allowance, Section 3 of Rule 83 of the Revised Rules of
Court provides:
Sec. 3. 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 are provided by law.

Petitioner alleges that this provision only gives the widow and the minor or
incapacitated children of the deceased the right to receive allowances for
support during the settlement of estate proceedings. He contends that the
testators three granddaughters do not qualify for an allowance because
they are not incapacitated and are no longer minors but of legal age,
married and gainfully employed. In addition, the provision expressly states
children of the deceased which excludes the latters grandchildren.
It is settled that allowances for support under Section 3 of Rule 83 should
not be limited to the minor or incapacitated children of the deceased.
Article 18813 of the Civil Code of the Philippines, the substantive law in
force at the time of the testators death, provides that during the liquidation
of the conjugal partnership, the deceaseds legitimate spouse and children,
regardless of their age, civil status or gainful employment, are entitled to
provisional support from the funds of the estate. 14 The law is rooted on the
fact that the right and duty to support, especially the right to education,
subsist even beyond the age of majority.15
Be that as it may, grandchildren are not entitled to provisional support
from the funds of the decedents estate. The law clearly limits the
allowance to widow and children and does not extend it to the deceaseds
grandchildren, regardless of their minority or incapacity. 16 It was error,
therefore, for the appellate court to sustain the probate courts order
granting an allowance to the grandchildren of the testator pending
settlement of his estate.
Respondent courts also erred when they ordered the release of the titles of
the bequeathed properties to private respondents six months after the
date of first publication of notice to creditors. An order releasing titles to
properties of the estate amounts to an advance distribution of the estate
which is allowed only under the following conditions:
Sec. 2. Advance distribution in special proceedings. - Nothwithstanding 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.17
And Rule 90 provides that:

Sec. 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.18
In settlement of estate proceedings, the distribution of the estate
properties can only be made: (1) after all the debts, funeral charges,
expenses of administration, allowance to the widow, and estate tax have
been paid; or (2) before payment of said obligations only if the distributees
or any of them gives a bond in a sum fixed by the court conditioned upon
the payment of said obligations within such time as the court directs, or
when provision is made to meet those obligations.19
In the case at bar, the probate court ordered the release of the titles to the
Valle Verde property and the Blue Ridge apartments to the private
respondents after the lapse of six months from the date of first publication
of the notice to creditors. The questioned order speaks of notice to
creditors, not payment of debts and obligations. Hilario Ruiz allegedly left
no debts when he died but the taxes on his estate had not hitherto been
paid, much less ascertained. The estate tax is one of those obligations that
must be paid before distribution of the estate. If not yet paid, the rule
requires that the distributees post a bond or make such provisions as to
meet the said tax obligation in proportion to their respective shares in the
inheritance.20 Notably, at the time the order was issued the properties of
the estate had not yet been inventoried and appraised.
It was also too early in the day for the probate court to order the release of
the titles six months after admitting the will to probate. The probate of a
will is conclusive as to its due execution and extrinsic validity 21 and settles

only the question of whether the testator, being of sound mind, freely
executed it in accordance with the formalities prescribed by
law.22 Questions as to the intrinsic validity and efficacy of the provisions of
the will, the legality of any devise or legacy may be raised even after the
will has been authenticated.23
The intrinsic validity of Hilarios holographic will was controverted by
petitioner before the probate court in his Reply to Montes Opposition to his
motion for release of funds 24 and his motion for reconsideration of
the August 26, 1993 order of the said court. 25 Therein, petitioner assailed
the distributive shares of the devisees and legatees inasmuch as his
fathers will included the estate of his mother and allegedly impaired his
legitime as an intestate heir of his mother. The Rules provide that if there is
a controversy as to who are the lawful heirs of the decedent and their
distributive shares in his estate, the probate court shall proceed to hear
and decide the same as in ordinary cases.26
Still and all, petitioner cannot correctly claim that the assailed order
deprived him of his right to take possession of all the real and personal
properties of the estate. The right of an executor or administrator to the
possession and management of the real and personal properties of the
deceased is not absolute and can only be exercised so long as it is
necessary for the payment of the debts and expenses of
administration,27 Section 3 of Rule 84 of the Revised Rules of Court
explicitly provides:
Sec. 3. Executor or administrator to retain whole estate to pay debts, and
to administer estate not willed. - An executor or administrator shall have
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 expenses for administration.28
When petitioner moved for further release of the funds deposited with the
clerk of court, he had been previously granted by the probate court certain
amounts for repair and maintenance expenses on the properties of the
estate, and payment of the real estate taxes thereon. But petitioner moved
again for the release of additional funds for the same reasons he previously
cited. It was correct for the probate court to require him to submit an
accounting of the necessary expenses for administration before releasing
any further money in his favor.
It was relevantly noted by the probate court that petitioner had deposited
with it only a portion of the one-year rental income from the Valle Verde

property. Petitioner did not deposit its succeeding rents after renewal of the
lease.29 Neither did he render an accounting of such funds.
Petitioner must be reminded that his right of ownership over the properties
of his father is merely inchoate as long as the estate has not been fully
settled and partitioned.30 As executor, he is a mere trustee of his fathers
estate. The funds of the estate in his hands are trust funds and he is held
to the duties and responsibilities of a trustee of the highest order. 31 He
cannot unilaterally assign to himself and possess all his parents properties
and the fruits thereof without first submitting an inventory and appraisal of
all real and personal properties of the deceased, rendering a true account
of his administration, the expenses of administration, the amount of the
obligations and estate tax, all of which are subject to a determination by
the court as to their veracity, propriety and justness. 32
IN VIEW WHEREOF, the decision and resolution of the Court of Appeals in
CA-G.R. SP No. 33045 affirming the order dated December 22, 1993 of the
Regional Trial Court, Branch 156, Pasig in SP Proc. No. 10259 are affirmed
with the modification that those portions of the order granting an
allowance to the testators grandchildren and ordering the release of the
titles to the private respondents upon notice to creditors are annulled and
set aside.
Respondent judge is ordered to proceed with dispatch in the proceedings
below.
SO ORDERED.
[G.R. No. 149926. February 23, 2005]
UNION BANK OF THE PHILIPPINES, petitioner, vs. EDMUND
SANTIBAEZ and FLORENCE SANTIBAEZ ARIOLA, respondents.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari under Rule 45 of the Revised
Rules of Court which seeks the reversal of the Decision [1] of the Court of
Appeals dated May 30, 2001 in CA-G.R. CV No. 48831 affirming the
dismissal[2] of the petitioners complaint in Civil Case No. 18909 by the
Regional Trial Court (RTC) of Makati City, Branch 63.

The antecedent facts are as follows:

On May 31, 1980, the First Countryside Credit Corporation (FCCC) and
Efraim M. Santibaez entered into a loan agreement [3] in the amount
of P128,000.00. The amount was intended for the payment of the purchase
price of one (1) unit Ford 6600 Agricultural All-Purpose Diesel Tractor. In
view thereof, Efraim and his son, Edmund, executed a promissory note in
favor of the FCCC, the principal sum payable in five equal annual
amortizations of P43,745.96 due on May 31, 1981 and every May
31st thereafter up to May 31, 1985.
On December 13, 1980, the FCCC and Efraim entered into another loan
agreement,[4] this time in the amount of P123,156.00. It was intended to
pay the balance of the purchase price of another unit of Ford 6600
Agricultural All-Purpose Diesel Tractor, with accessories, and one (1) unit
Howard Rotamotor Model AR 60K. Again, Efraim and his son, Edmund,
executed a promissory note for the said amount in favor of the FCCC. Aside
from such promissory note, they also signed a Continuing Guaranty
Agreement[5] for the loan dated December 13, 1980.
Sometime in February 1981, Efraim died, leaving a holographic will.
[6]
Subsequently in March 1981, testate proceedings commenced before the
RTC of Iloilo City, Branch 7, docketed as Special Proceedings No. 2706. On
April 9, 1981, Edmund, as one of the heirs, was appointed as the special
administrator of the estate of the decedent. [7] During the pendency of the
testate proceedings, the surviving heirs, Edmund and his sister Florence
Santibaez Ariola, executed a Joint Agreement [8] dated July 22, 1981,
wherein they agreed to divide between themselves and take possession of
the three (3) tractors; that is, two (2) tractors for Edmund and one (1)
tractor for Florence. Each of them was to assume the indebtedness of their
late father to FCCC, corresponding to the tractor respectively taken by
them.
On August 20, 1981, a Deed of Assignment with Assumption of
Liabilities[9] was executed by and between FCCC and Union Savings and
Mortgage Bank, wherein the FCCC as the assignor, among others, assigned
all its assets and liabilities to Union Savings and Mortgage Bank.
Demand letters[10] for the settlement of his account were sent by petitioner
Union Bank of the Philippines (UBP) to Edmund, but the latter failed to
heed the same and refused to pay. Thus, on February 5, 1988, the
petitioner filed a Complaint [11] for sum of money against the heirs of Efraim
Santibaez, Edmund and Florence, before the RTC of Makati City, Branch
150, docketed as Civil Case No. 18909. Summonses were issued against

both, but the one intended for Edmund was not served since he was in the
United States and there was no information on his address or the date of
his return to the Philippines. [12] Accordingly, the complaint was narrowed
down to respondent Florence S. Ariola.
On December 7, 1988, respondent Florence S. Ariola filed her
Answer[13] and alleged that the loan documents did not bind her since she
was not a party thereto. Considering that the joint agreement signed by
her and her brother Edmund was not approved by the probate court, it was
null and void; hence, she was not liable to the petitioner under the joint
agreement.
On January 29, 1990, the case was unloaded and re-raffled to the RTC of
Makati City, Branch 63.[14] Consequently, trial on the merits ensued and a
decision was subsequently rendered by the court dismissing the complaint
for lack of merit. The decretal portion of the RTC decision reads:
WHEREFORE, judgment is hereby rendered DISMISSING the complaint for
lack of merit.[15]
The trial court found that the claim of the petitioner should have been filed
with the probate court before which the testate estate of the late Efraim
Santibaez was pending, as the sum of money being claimed was an
obligation incurred by the said decedent. The trial court also found that the
Joint Agreement apparently executed by his heirs, Edmund and Florence,
on July 22, 1981, was, in effect, a partition of the estate of the decedent.
However, the said agreement was void, considering that it had not been
approved by the probate court, and that there can be no valid partition
until after the will has been probated. The trial court further declared that
petitioner failed to prove that it was the now defunct Union Savings and
Mortgage Bank to which the FCCC had assigned its assets and liabilities.
The court also agreed to the contention of respondent Florence S. Ariola
that the list of assets and liabilities of the FCCC assigned to Union Savings
and Mortgage Bank did not clearly refer to the decedents account. Ruling
that the joint agreement executed by the heirs was null and void, the trial
court held that the petitioners cause of action against respondent Florence
S. Ariola must necessarily fail.

2. THE COURT A QUO ERRED IN FINDING THAT THERE CAN BE NO VALID

PARTITION AMONG THE HEIRS UNTIL AFTER THE WILL HAS BEEN
PROBATED.
3. THE COURT A QUO ERRED IN NOT FINDING THAT THE DEFENDANT HAD
WAIVED HER RIGHT TO HAVE THE CLAIM RE-LITIGATED IN THE ESTATE
PROCEEDING.[16]
The petitioner asserted before the CA that the obligation of the deceased
had passed to his legitimate children and heirs, in this case, Edmund and
Florence; the unconditional signing of the joint agreement marked as
Exhibit A estopped respondent Florence S. Ariola, and that she cannot deny
her liability under the said document; as the agreement had been signed
by both heirs in their personal capacity, it was no longer necessary to
present the same before the probate court for approval; the property
partitioned in the agreement was not one of those enumerated in the
holographic will made by the deceased; and the active participation of the
heirs, particularly respondent Florence S. Ariola, in the present ordinary
civil action was tantamount to a waiver to re-litigate the claim in the estate
proceedings.
On the other hand, respondent Florence S. Ariola maintained that the
money claim of the petitioner should have been presented before the
probate court.[17]
The appellate court found that the appeal was not meritorious and held
that the petitioner should have filed its claim with the probate court as
provided under Sections 1 and 5, Rule 86 of the Rules of Court. It further
held that the partition made in the agreement was null and void, since no
valid partition may be had until after the will has been probated. According
to the CA, page 2, paragraph (e) of the holographic will covered the subject
properties (tractors) in generic terms when the deceased referred to them
as all other properties. Moreover, the active participation of respondent
Florence S. Ariola in the case did not amount to a waiver. Thus, the CA
affirmed the RTC decision, viz.:
WHEREFORE, premises considered, the appealed Decision of the Regional
Trial Court of Makati City, Branch 63, is hereby AFFIRMED in toto.

The petitioner appealed from the RTC decision and elevated its case to the
Court of Appeals (CA), assigning the following as errors of the trial court:

SO ORDERED.[18]

1. THE COURT A QUO ERRED IN FINDING THAT THE JOINT AGREEMENT

(EXHIBIT A) SHOULD BE APPROVED BY THE PROBATE COURT.

In the present recourse, the petitioner ascribes the following errors to the
CA:

I.
THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THE JOINT
AGREEMENT SHOULD BE APPROVED BY THE PROBATE COURT.
II.
THE COURT OF APPEALS ERRED IN FINDING THAT THERE CAN BE NO VALID
PARTITION AMONG THE HEIRS OF THE LATE EFRAIM SANTIBAEZ UNTIL
AFTER THE WILL HAS BEEN PROBATED.
III.
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE RESPONDENT
HAD WAIVED HER RIGHT TO HAVE THE CLAIM RE-LITIGATED IN THE ESTATE
PROCEEDING.
IV.
RESPONDENTS CAN, IN FACT, BE HELD JOINTLY AND SEVERALLY LIABLE
WITH THE PRINCIPAL DEBTOR THE LATE EFRAIM SANTIBAEZ ON THE
STRENGTH OF THE CONTINUING GUARANTY AGREEMENT EXECUTED IN
FAVOR OF PETITIONER-APPELLANT UNION BANK.
V.
THE PROMISSORY NOTES DATED MAY 31, 1980 IN THE SUM OF P128,000.00
AND
DECEMBER
13,
1980
IN
THE
AMOUNT
OF P123,000.00
CATEGORICALLY ESTABLISHED THE FACT THAT THE RESPONDENTS BOUND
THEMSELVES JOINTLY AND SEVERALLY LIABLE WITH THE LATE DEBTOR
EFRAIM SANTIBAEZ IN FAVOR OF PETITIONER UNION BANK. [19]
The petitioner claims that the obligations of the deceased were transmitted
to the heirs as provided in Article 774 of the Civil Code; there was thus no
need for the probate court to approve the joint agreement where the heirs
partitioned the tractors owned by the deceased and assumed the
obligations related thereto. Since respondent Florence S. Ariola signed the
joint agreement without any condition, she is now estopped from asserting
any position contrary thereto. The petitioner also points out that the
holographic will of the deceased did not include nor mention any of the
tractors subject of the complaint, and, as such was beyond the ambit of
the said will. The active participation and resistance of respondent Florence
S. Ariola in the ordinary civil action against the petitioners claim amounts

to a waiver of the right to have the claim presented in the probate

proceedings, and to allow any one of the heirs who executed the joint
agreement to escape liability to pay the value of the tractors under
consideration would be equivalent to allowing the said heirs to enrich
themselves to the damage and prejudice of the petitioner.
The petitioner, likewise, avers that the decisions of both the trial and
appellate courts failed to consider the fact that respondent Florence S.
Ariola and her brother Edmund executed loan documents, all establishing
the vinculum juris or the legal bond between the late Efraim Santibaez and
his heirs to be in the nature of a solidary obligation. Furthermore, the
Promissory Notes dated May 31, 1980 and December 13, 1980 executed by
the late Efraim Santibaez, together with his heirs, Edmund and respondent
Florence, made the obligation solidary as far as the said heirs are
concerned. The petitioner also proffers that, considering the express
provisions of the continuing guaranty agreement and the promissory notes
executed by the named respondents, the latter must be held liable jointly
and severally liable thereon. Thus, there was no need for the petitioner to
file its money claim before the probate court. Finally, the petitioner
stresses that both surviving heirs are being sued in their respective
personal capacities, not as heirs of the deceased.
In her comment to the petition, respondent Florence S. Ariola maintains
that the petitioner is trying to recover a sum of money from the deceased
Efraim Santibaez; thus the claim should have been filed with the probate
court. She points out that at the time of the execution of the joint
agreement there was already an existing probate proceedings of which the
petitioner knew about. However, to avoid a claim in the probate court
which might delay payment of the obligation, the petitioner opted to
require them to execute the said agreement.
According to the respondent, the trial court and the CA did not err in
declaring that the agreement was null and void. She asserts that even if
the agreement was voluntarily executed by her and her brother Edmund, it
should still have been subjected to the approval of the court as it may
prejudice the estate, the heirs or third parties. Furthermore, she had not
waived any rights, as she even stated in her answer in the court a quo that
the claim should be filed with the probate court. Thus, the petitioner could
not invoke or claim that she is in estoppel.
Respondent Florence S. Ariola further asserts that she had not signed any
continuing guaranty agreement, nor was there any document presented as
evidence to show that she had caused herself to be bound by the
obligation of her late father.

The petition is bereft of merit.

The Court is posed to resolve the following issues: a) whether or not the
partition in the Agreement executed by the heirs is valid; b) whether or not
the heirs assumption of the indebtedness of the deceased is valid; and c)
whether the petitioner can hold the heirs liable on the obligation of the
deceased.
At the outset, well-settled is the rule that a probate court has the
jurisdiction to determine all the properties of the deceased, to determine
whether they should or should not be included in the inventory or list of
properties to be administered.[20] The said court is primarily concerned with
the administration, liquidation and distribution of the estate. [21]
In our jurisdiction, the rule is that there can be no valid partition among the
heirs until after the will has been probated:
In testate succession, there can be no valid partition among the heirs until
after the will has been probated. The law enjoins the probate of a will and
the public requires it, because unless a will is probated and notice thereof
given to the whole world, the right of a person to dispose of his property by
will may be rendered nugatory. The authentication of a will decides no
other question than such as touch upon the capacity of the testator and
the compliance with those requirements or solemnities which the law
prescribes for the validity of a will.[22]
This, of course, presupposes that the properties to be partitioned are the
same properties embraced in the will. [23] In the present case, the deceased,
Efraim Santibaez, left a holographic will [24] which contained, inter alia, the
provision which reads as follows:
(e) All other properties, real or personal, which I own and may be
discovered later after my demise, shall be distributed in the proportion
indicated in the immediately preceding paragraph in favor of Edmund and
Florence, my children.
We agree with the appellate court that the above-quoted is an allencompassing provision embracing all the properties left by the decedent
which might have escaped his mind at that time he was making his will,
and other properties he may acquire thereafter. Included therein are the
three (3) subject tractors. This being so, any partition involving the said
tractors among the heirs is not valid. The joint agreement [25] executed by
Edmund and Florence, partitioning the tractors among themselves, is

invalid, specially so since at the time of its execution, there was already a
pending proceeding for the probate of their late fathers holographic will
covering the said tractors.
It must be stressed that the probate proceeding had already acquired
jurisdiction over all the properties of the deceased, including the three (3)
tractors. To dispose of them in any way without the probate courts
approval is tantamount to divesting it with jurisdiction which the Court
cannot allow.[26] Every act intended to put an end to indivision among coheirs and legatees or devisees is deemed to be a partition, although it
should purport to be a sale, an exchange, a compromise, or any other
transaction.[27] Thus, in executing any joint agreement which appears to be
in the nature of an extra-judicial partition, as in the case at bar, court
approval is imperative, and the heirs cannot just divest the court of its
jurisdiction over that part of the estate. Moreover, it is within the
jurisdiction of the probate court to determine the identity of the heirs of
the decedent.[28] In the instant case, there is no showing that the
signatories in the joint agreement were the only heirs of the decedent.
When it was executed, the probate of the will was still pending before the
court and the latter had yet to determine who the heirs of the decedent
were. Thus, for Edmund and respondent Florence S. Ariola to adjudicate
unto themselves the three (3) tractors was a premature act, and prejudicial
to the other possible heirs and creditors who may have a valid claim
against the estate of the deceased.
The question that now comes to fore is whether the heirs assumption of
the indebtedness of the decedent is binding. We rule in the negative.
Perusing the joint agreement, it provides that the heirs as parties
thereto have agreed to divide between themselves and take possession
and use the above-described chattel and each of them to assume the
indebtedness corresponding to the chattel taken as herein after stated
which is in favor of First Countryside Credit Corp. [29] The assumption of
liability was conditioned upon the happening of an event, that is, that each
heir shall take possession and use of their respective share under the
agreement. It was made dependent on the validity of the partition, and
that they were to assume the indebtedness corresponding to the chattel
that they were each to receive. The partition being invalid as earlier
discussed, the heirs in effect did not receive any such tractor. It follows
then that the assumption of liability cannot be given any force and effect.
The Court notes that the loan was contracted by the decedent. The
petitioner, purportedly a creditor of the late Efraim Santibaez, should have
thus filed its money claim with the probate court in accordance with
Section 5, Rule 86 of the Revised Rules of Court, which provides:

Section 5. Claims which must be filed under the notice. If not filed barred;
exceptions. All claims for money against the decedent, arising from
contract, express or implied, whether the same be due, not due, or
contingent, all claims for funeral expenses for the last sickness of the
decedent, and judgment for money against the decedent, must be filed
within the time limited in the notice; otherwise they are barred forever,
except that they may be set forth as counterclaims in any action that the
executor or administrator may bring against the claimants. Where an
executor or administrator commences an action, or prosecutes an action
already commenced by the deceased in his lifetime, the debtor may set
forth by answer the claims he has against the decedent, instead of
presenting them independently to the court as herein provided, and mutual
claims may be set off against each other in such action; and if final
judgment is rendered in favor of the defendant, the amount so determined
shall be considered the true balance against the estate, as though the
claim had been presented directly before the court in the administration
proceedings. Claims not yet due, or contingent, may be approved at their
present value.
The filing of a money claim against the decedents estate in the probate
court is mandatory.[30] As we held in the vintage case of Py Eng Chong v.
Herrera:[31]

We agree with the finding of the trial court that the petitioner had not
sufficiently shown that it is the successor-in-interest of the Union Savings
and Mortgage Bank to which the FCCC assigned its assets and liabilities.
[33]
The petitioner in its complaint alleged that by virtue of the Deed of
Assignment dated August 20, 1981 executed by and between First
Countryside
Credit
Corporation
and
Union
Bank
of
the
Philippines[34] However, the documentary evidence[35] clearly reflects that
the parties in the deed of assignment with assumption of liabilities were
the FCCC, and the Union Savings and Mortgage Bank, with the conformity
of Bancom Philippine Holdings, Inc. Nowhere can the petitioners
participation therein as a party be found. Furthermore, no documentary or
testimonial evidence was presented during trial to show that Union Savings
and Mortgage Bank is now, in fact, petitioner Union Bank of the Philippines.
As the trial court declared in its decision:
[T]he court also finds merit to the contention of defendant that plaintiff
failed to prove or did not present evidence to prove that Union Savings and
Mortgage Bank is now the Union Bank of the Philippines. Judicial notice
does not apply here. The power to take judicial notice is to [be] exercised
by the courts with caution; care must be taken that the requisite notoriety
exists; and every reasonable doubt upon the subject should be promptly
resolved in the negative. (Republic vs. Court of Appeals, 107 SCRA 504). [36]

This requirement is for the purpose of protecting the estate of the

deceased by informing the executor or administrator of the claims against
it, thus enabling him to examine each claim and to determine whether it is
a proper one which should be allowed. The plain and obvious design of the
rule is the speedy settlement of the affairs of the deceased and the early
delivery of the property to the distributees, legatees, or heirs. `The law
strictly requires the prompt presentation and disposition of the claims
against the decedent's estate in order to settle the affairs of the estate as
soon as possible, pay off its debts and distribute the residue. [32]

This being the case, the petitioners personality to file the complaint is
wanting. Consequently, it failed to establish its cause of action. Thus, the
trial court did not err in dismissing the complaint, and the CA in affirming
the same.

Perusing the records of the case, nothing therein could hold private
respondent Florence S. Ariola accountable for any liability incurred by her
late father. The documentary evidence presented, particularly the
promissory notes and the continuing guaranty agreement, were executed
and signed only by the late Efraim Santibaez and his son Edmund. As the
petitioner failed to file its money claim with the probate court, at most, it
may only go after Edmund as co-maker of the decedent under the said
promissory notes and continuing guaranty, of course, subject to any
defenses Edmund may have as against the petitioner. As the court had not
acquired jurisdiction over the person of Edmund, we find it unnecessary to
delve into the matter further.

G.R. No. 171206

IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED. The

assailed Court of Appeals Decision is AFFIRMED. No costs.
SO ORDERED.
September 23, 2013

HEIRS OF THE LATE SPOUSES FLA VIANO MAGLASANG and SALUD

ADAZA-MAGLASANG, namely, OSCAR A. MAGLASANG, EDGAR A.
MAGLASANG, CONCEPCION CHONA A. MAGLASANG, GLENDA A.
MAGLASANG-ARNAIZ, LERMA A. MAGLASANG, FELMA A.
MAGLASANG, FE DORIS A. MAGLASANG, LEOLINO A. MAGLASANG,
MARGIE LEILA A. MAGLASANG,MA. MILALIE A. MAGLASANG, SALUD
A. MAGLASANG, and MA. FLASALIE A. MAGLASANG, REPRESENTING
THE
ESTATES
OF
THEIR
AFORE-NAMEDDECEASED

PARENTS, Petitioners,
vs.
MANILA BANKING CORPORATION, now substituted by
SOVEREIGN
ASSET
MANAGEMENT
SPV-AMC,
FSAMI, Respondent.

FIRST
INC.

DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari 1 are the Decision2 dated July
20, 2005 and Resolution3 dated January 4, 2006 of the Court of Appeals
(CA) in CA-G.R. CV No. 50410 which dismissed petitioners appeal and
affirmed the Decision4 dated April 6, 1987 of the Regional Trial Court of
Ormoc City, Branch 12 (RTC) directing petitioners to jointly and severally
pay respondent Manila Banking Corporation the amount of P434,742.36,
with applicable interests, representing the deficiency of the formers total
loan obligation to the latter after the extra-judicial foreclosure of the real
estate mortgage subject of this case, including attorneys fees and costs of
suit.
The Facts
On June 16, 1975, spouses Flaviano and Salud Maglasang (Sps.Maglasang)
obtained a credit line from respondent 5 in the amount of P350,000.00
which was secured by a real estate mortgage 6 executed over seven of their
properties7 located in Ormoc City and the Municipality of Kananga, Province
of Leyte.8 They availed of their credit line by securing loans in the amounts
of P209,790.50 and P139,805.83 on October 24, 1975and March 15, 1976,
respectively,9 both of which becoming due and demandable within a period
of one year. Further, the parties agreed that the said loans would earn
interest at 12% per annum (p.a.) and an additional 4% penalty would be
charged upon default.10

1604-0.13 On August 9, 1977, the probate court issued an Order 14 granting

the petition, thereby appointing Edgar as the administrator 15 of Flavianos
estate.
In view of the issuance of letters of administration, the probate court, on
August 30, 1977, issued a Notice to Creditors 16 for the filing of money
claims against Flavianos estate. Accordingly, as one of the creditors of
Flaviano, respondent notified17 the probate court of its claim in the amount
of P382,753.19 as of October 11, 1978, exclusive of interests and charges.
During the pendency of the intestate proceedings, Edgar and Oscar were
able to obtain several loans from respondent, secured by promissory
notes18 which they signed.
In an Order19 dated December 14, 1978 (December 14, 1978 Order),the
probate court terminated the proceedings with the surviving heirs
executing an extra-judicial partition of the properties of Flavianos estate.
The loan obligations owed by the estate to respondent, however, remained
unsatisfied due to respondents certification that Flavianos account was
undergoing a restructuring. Nonetheless, the probate court expressly
recognized the rights of respondent under the mortgage and promissory
notes executed by the Sps. Maglasang, specifically, its "right to foreclose
the same within the statutory period."20
In this light, respondent proceeded to extra-judicially foreclose the
mortgage covering the Sps. Maglasangs properties and emerged as the
highest
bidder
at
the
public
auction
for
the
amount
of P350,000.00.21 There, however, remained a deficiency on Sps.
Maglasangs obligation to respondent. Thus, on June 24, 1981, respondent
filed a suit to recover the deficiency amount of P250,601.05 as of May 31,
1981 against the estate of Flaviano, his widow Salud and petitioners,
docketed as Civil Case No. 1998-0.22
The RTC Ruling and Subsequent Proceedings

After Flaviano Maglasang (Flaviano) died intestate on February 14,1977,

his widow Salud Maglasang (Salud) and their surviving children, herein
petitioners Oscar (Oscar), Concepcion Chona, Lerma, Felma, FeDoris,
Leolino, Margie Leila, Ma. Milalie, Salud and Ma. Flasalie, all surnamed
Maglasang, and Glenda Maglasang-Arnaiz, appointed 11 their brother
petitioner Edgar Maglasang (Edgar) as their attorney-in-fact. 12 Thus, on
March 30, 1977, Edgar filed a verified petition for letters of administration
of the intestate estate of Flaviano before the then Court of First Instance of
Leyte, Ormoc City, Branch 5 (probate court), docketed as Sp. Proc. No.

After trial on the merits, the RTC (formerly, the probate court) 23 rendered a
Decision24 on April 6, 1987 directing the petitioners to pay respondent,
jointly and severally, the amount of P434,742.36 with interest at the rate of
12% p.a., plus a 4% penalty charge, reckoned from September 5,1984 until
fully paid.25 The RTC found that it was shown, by a preponderance of
evidence, that petitioners, after the extra-judicial foreclosure of all the
properties mortgaged, still have an outstanding obligation in the amount
and as of the date as above-stated. The RTC also found in order the

payment of interests and penalty charges as above-mentioned as well as

attorneys fees equivalent to 10% of the outstanding obligation. 26
Dissatisfied, petitioners elevated the case to the CA on appeal,
contending,27 inter alia, that the remedies available to respondent under
Section 7, Rule 86 of the Rules of Court (Rules) are alternative and
exclusive, such that the election of one operates as a waiver or
abandonment of the others. Thus, when respondent filed its claim against
the estate of Flaviano in the proceedings before the probate court, it
effectively abandoned its right to foreclose on the mortgage. Moreover,
even on the assumption that it has not so waived its right to foreclose, it is
nonetheless barred from filing any claim for any deficiency amount.
During the pendency of the appeal, Flavianos widow, Salud, passed away
on July 25, 1997.28

and exclusive remedies for the satisfaction of respondents claim against

the estate of Flaviano.37 Corollarily, having filed its claim against the estate
during the intestate proceedings, petitioners argue that respondent had
effectively waived the remedy of foreclosure and, even assuming that it
still had the right to do so, it was precluded from filing a suit for the
recovery of the deficiency obligation.38
Likewise, petitioners maintain that the extra-judicial foreclosure of the
subject properties was null and void, not having been conducted in the
capital of the Province of Leyte in violation of the stipulations in the real
estate mortgage contract.39 They likewise deny any personal liability for
the loans taken by their deceased parents.40
The Courts Ruling
The petition is partly meritorious.

The CA Ruling
In a Decision29 dated July 20, 2005, the CA denied the petitioners appeal
and affirmed the RTCs Decision. At the outset, it pointed out that the
probate court erred when it, through the December 14, 1978 Order, closed
and terminated the proceedings in Sp. Proc. No. 1604-0 without first
satisfying the claims of the creditors of the estate in particular,
respondent in violation of Section 1, Rule 90 of the Rules. 30 As a
consequence, respondent was not able to collect from the petitioners and
thereby was left with the option of foreclosing the real estate
mortgage.31 Further, the CA held that Section 7, Rule 86 of the Rules does
not apply to the present case since the same does not involve a mortgage
made by the administrator over any property belonging to the estate of the
decedent.32 According to the CA, what should apply is Act No. 3135 33 which
entitles respondent to claim the deficiency amount after the extra-judicial
foreclosure of the real estate mortgage of Sps. Maglasangs properties. 34
Petitioners motion for reconsideration was subsequently denied in a
Resolution35 dated January 4, 2006. Hence, the present recourse.
The Issue Before the Court
The essential issue in this case is whether or not the CA erred in affirming
the RTCs award of the deficiency amount in favor of respondent.
Petitioners assert36 that it is not Act No. 3135 but Section 7, Rule 86of the
Rules which applies in this case. The latter provision provides alternative

Claims against deceased persons should be filed during the settlement

proceedings of their estate.41 Such proceedings are primarily governed by
special rules found under Rules 73 to 90 of the Rules, although rules
governing ordinary actions may, as far as practicable, apply
suppletorily.42 Among these special rules, Section 7, Rule 86 of the Rules
(Section 7, Rule86) provides the rule in dealing with secured claims against
the estate:
SEC. 7. Mortgage debt due from estate. A creditor holding a claim against
the deceased secured by a mortgage or other collateral security, may
abandon the security and prosecute his claim in the manner provided in
this rule, and share in the general distribution of the assets of the estate;
or he may foreclose his mortgage or realize upon his security, by action in
court, making the executor or administrator a party defendant, and if there
is a judgment for a deficiency, after the sale of the mortgaged premises, or
the property pledged, in the foreclosure or other proceeding to realize
upon the security, he may claim his deficiency judgment in the manner
provided in the preceding section; or he may rely upon his mortgage or
other security alone, and foreclose the same at any time within the period
of the statute of limitations, and in that event he shall not be admitted as a
creditor, and shall receive no share in the distribution of the other assets of
the estate; but nothing herein contained shall prohibit the executor or
administrator from redeeming the property mortgaged or pledged, by
paying the debt for which it is held as security, under the direction of the
court, if the court shall adjudged it to be for the best interest of the estate
that such redemption shall be made. (Emphasis and underscoring
supplied)

As the foregoing generally speaks of "a creditor holding a claim against the
deceased secured by a mortgage or other collateral security" as abovehighlighted, it may be reasonably concluded that the aforementioned
section covers all secured claims, whether by mortgage or any other form
of collateral, which a creditor may enforce against the estate of the
deceased debtor. On the contrary, nowhere from its language can it be
fairly deducible that the said section would as the CA interpreted
narrowly apply only to mortgages made by the administrator over any
property belonging to the estate of the decedent. To note, mortgages of
estate property executed by the administrator, are also governed by Rule
89 of the Rules, captioned as "Sales, Mortgages, and Other Encumbrances
of Property of Decedent."
In this accord, it bears to stress that the CAs reliance on Philippine
National Bank v. CA43 (PNB) was misplaced as the said case did not, in any
manner, limit the scope of Section 7, Rule 86. It only stated that the
aforesaid section equally applies to cases where the administrator
mortgages the property of the estate to secure the loan he
obtained.44 Clearly, the pronouncement was a ruling of inclusion and not
one which created a distinction. It cannot, therefore, be doubted that it is
Section 7, Rule 86which remains applicable in dealing with a creditors
claim against the mortgaged property of the deceased debtor, as in this
case, as well as mortgages made by the administrator, as that in the PNB
case.
Jurisprudence breaks down the rule under Section 7, Rule 86 and explains
that the secured creditor has three remedies/options that he may
alternatively adopt for the satisfaction of his indebtedness. In particular, he
may choose to: (a) waive the mortgage and claim the entire debt from the
estate of the mortgagor as an ordinary claim; (b) foreclose the mortgage
judicially and prove the deficiency as an ordinary claim; and (c) rely on the
mortgage exclusively, or other security and foreclose the same before it is
barred by prescription, without the right to file a claim for any
deficiency.45 It must, however, be emphasized that these remedies are
distinct, independent and mutually exclusive from each other; thus, the
election of one effectively bars the exercise of the others. With respect to
real properties, the Court in Bank of America v. American Realty
Corporation46 pronounced:
In our jurisdiction, the remedies available to the mortgage creditor are
deemed alternative and not cumulative. Notably, an election of one
remedy operates as a waiver of the other. For this purpose, a remedy is
deemed chosen upon the filing of the suit for collection or upon the filing of
the complaint in an action for foreclosure of mortgage, pursuant to the

provision of Rule 68 of the 1997 Rules of Civil Procedure. As to extrajudicial

foreclosure, such remedy is deemed elected by the mortgage creditor upon
filing of the petition not with any court of justice but with the Office of the
Sheriff of the province where the sale is to be made, in accordance with
the provisions of Act No. 3135, as amended by Act No.4118. 47 (Emphasis
supplied)
Anent the third remedy, it must be mentioned that the same includes the
option of extra-judicially foreclosing the mortgage under Act No. 3135,as
availed of by respondent in this case. However, the plain result of adopting
the last mode of foreclosure is that the creditor waives his right to recover
any deficiency from the estate.48 These precepts were discussed in the PNB
case, citing Perez v. Philippine National Bank 49 which overturned the earlier
Pasno v. Ravina ruling:50
Case law now holds that this rule grants to the mortgagee three distinct,
independent and mutually exclusive remedies that can be alternatively
pursued by the mortgage creditor for the satisfaction of his credit in case
the mortgagor dies, among them:
(1) to waive the mortgage and claim the entire debt from the estate of the
mortgagor as an ordinary claim;
(2) to foreclose the mortgage judicially and prove any deficiency as an
ordinary claim; and
(3) to rely on the mortgage exclusively, foreclosing the same at anytime
before it is barred by prescription without right to file a claim for any
deficiency
In Perez v. Philippine National Bank, reversing Pasno vs. Ravina, we held:
The ruling in Pasno v. Ravina not having been reiterated in any other case,
we have carefully reexamined the same, and after mature deliberation
have reached the conclusion that the dissenting opinion is more in
conformity with reason and law. Of the three alternative courses that
section 7, Rule 87 (now Rule 86), offers the mortgage creditor, to wit, (1) to
waive the mortgage and claim the entire debt from the estate of the
mortgagor as an ordinary claim; (2) foreclose the mortgage judicially and
prove any deficiency as an ordinary claim; and (3) to rely on the mortgage
exclusively, foreclosing the same at any time before it is barred by
prescription, without right to file a claim for any deficiency, the majority
opinion in Pasno v. Ravina, in requiring a judicial foreclosure, virtually wipes

out the third alternative conceded by the Rules to the mortgage creditor,
and which would precisely include extra-judicial foreclosures by contrast
with the second alternative.
The plain result of adopting the last mode of foreclosure is that the creditor
waives his right to recover any deficiency from the estate. Following the
Perez ruling that the third mode includes
extrajudicial foreclosure sales, the result of extrajudicial foreclosure is that
the creditor waives any further deficiency claim. x x x. 51 (Emphases and
underscoring supplied; italics in the original)
To obviate any confusion, the Court observes that the operation of Act No.
3135 does not entirely discount the application of Section 7, Rule 86, or
vice-versa. Rather, the two complement each other within their respective
spheres of operation. On the one hand, Section 7, Rule 86 lays down the
options for the secured creditor to claim against the estate and, according
to jurisprudence, the availment of the third option bars him from claiming
any deficiency amount. On the other hand, after the third option is chosen,
the procedure governing the manner in which the extra-judicial foreclosure
should proceed would still be governed by the provisions of Act No.
3135.Simply put, Section 7, Rule 86 governs the parameters and the
extent to which a claim may be advanced against the estate, whereas Act
No. 3135sets out the specific procedure to be followed when the creditor
subsequently chooses the third option specifically, that of extra-judicially
foreclosing real property belonging to the estate. The application of the
procedure under Act No. 3135 must be concordant with Section 7, Rule 86
as the latter is a special rule applicable to claims against the estate, and at
the same time, since Section 7, Rule 86 does not detail the procedure for
extra-judicial foreclosures, the formalities governing the manner of availing
of the third option such as the place where the application for extrajudicial foreclosure is filed, the requirements of publication and posting and
the place of sale must be governed by Act No. 3135.
In this case, respondent sought to extra-judicially foreclose the mortgage
of the properties previously belonging to Sps. Maglasang (and now, their
estates) and, therefore, availed of the third option. Lest it be
misunderstood, it did not exercise the first option of directly filing a claim
against the estate, as petitioners assert, since it merely notified 52 the
probate court of the outstanding amount of its claim against the estate of
Flaviano and that it was currently restructuring the account. 53 Thus, having
unequivocally opted to exercise the third option of extra-judicial foreclosure
under Section 7, Rule 86, respondent is now precluded from filing a suit to
recover any deficiency amount as earlier discussed.

As a final point, petitioners maintain that the extra-judicial foreclosure of

the subject properties was null and void since the same was conducted in
violation of the stipulation in the real estate mortgage contract stating that
the auction sale should be held in the capital of the province where the
properties are located, i.e., the Province of Leyte.
The Court disagrees.
As may be gleaned from the records, the stipulation under the real estate
mortgage54 executed by Sps. Maglasang which fixed the place of the
foreclosure sale at Tacloban City lacks words of exclusivity which would bar
any other acceptable for a wherein the said sale may be conducted, to wit:
It is hereby agreed that in case of foreclosure of this mortgage under Act
3135, the auction sale shall be held at the capital of the province if the
property is within the territorial jurisdiction of the province concerned, or
shall be held in the city if the property is within the territorial jurisdiction of
the city concerned; x x x.55
Case law states that absent such qualifying or restrictive words to indicate
the exclusivity of the agreed forum, the stipulated place should only be as
an additional, not a limiting venue. 56 As a consequence, the stipulated
venue and that provided under Act No. 3135 can be applied alternatively.
In particular, Section 2 of Act No. 3135 allows the foreclosure sale to be
done within the province where the property to be sold is situated, viz.:
SEC. 2. Said sale cannot be made legally outside of the province which the
property sold is situated; and in case the place within said province in
which the sale is to be made is subject to stipulation, such sale shall be
made in said place or in the municipal building of the municipality in which
the property or part thereof is situated. (Italics supplied) ..
In this regard, since the auction sale was conducted in Ormoc City, which is
within the territorial jurisdiction of the Province of Leyte, then the Court
finds sufficient compliance with the above-cited requirement.
All told, finding that the extra-judicial foreclosure subject of this case was
properly conducted in accordance with the formalities of Act No. 3135,the
Court upholds the same as a valid exercise of respondent's third option
under Section 7, Rule 86. To reiterate, respondent cannot, however, file any
suit to recover any deficiency amount since it effectively waived its right

thereto when it chose to avail of extra-judicial foreclosure as jurisprudence

instructs.
WHEREFORE, the petition is PARTLY GRANTED. The complaint for the
recovery of the deficiency amount after extra-judicial foreclosure filed by
respondent Manila Banking Corporation is hereby DISMISSED. The extrajudicial foreclosure of the mortgaged properties, however, stands.
SO ORDERED.
ERLINDA PILAPIL and HEIRS OF DONATA
ORTIZ
BRIONES,
namely:
ESTELA,
ERIBERTO AND VIRGILIO SANTOS, ANA
SANTOS
CULTURA,
ELVIRA
SANTOS
INOCENTES,
ERNESTO
MENDOZA,
RIZALINA SANTOS, ADOLFO MENDOZA
and PACITA MENDOZA,
Petitioners,
- versus-

G.R. No. 150175

Present:
YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,*
CALLEJO, SR., and
CHICO-NAZARIO, JJ.

HEIRS
OF
MAXIMINO
R.
BRIONES,
namely: SILVERIO S. BRIONES, PETRA
BRIONES, BONIFACIO CABAHUG, JR.,
ANITA TRASMONTE, CIRILITA FORTUNA,
CRESENCIA
BRIONES,
FUGURACION
MEDALLE and MERCEDES LAGBAS,
Respondents.
Promulgated:
February 5, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
RESOLUTION
CHICO-NAZARIO, J.:

On 10 March 2006, this Court promulgated its Decision [1] in the aboveentitled
case,
ruling
in
favor
of
the
petitioners. The dispositive portion[2] reads as follows:

IN VIEW OF THE FOREGOING, the assailed Decision of the Court of Appeals

in CA-GR CV No. 55194, dated 31 August 2001, affirming the Decision of
the Cebu City RTC in Civil Case No. CEB-5794, dated 28 September 1986, is
hereby REVERSED and SET ASIDE; and the Complaint for partition,
annulment, and recovery of possession filed by the heirs of Maximino in
Civil Case No. CEB-5794 is hereby DISMISSED.
On 10 May 2006, a Motion for Reconsideration [3] of the foregoing Decision
was filed by Atty. Celso C. Reales of the Reales Law Office on behalf of the
respondents,
heirs
of Maximino R. Briones. On 19
May
2006,
petitioners Erlinda Pilapil and the other co-heirs of Donata Ortiz Vda.
de Briones, through counsel, filed an Opposition to Respondents Motion for
Reconsideration,[4] to which the respondents filed a Rejoinder [5] on 23 May
2006. Thereafter, Atty. Amador F. Brioso, Jr. of the Canto Brioso Arnedo Law
Office entered his appearance as collaborating counsel for the
respondents.[6] Atty. Brioso then filed on 11 June 2006 and 16 June 2006,
respectively, a Reply[7] and Supplemental Reply[8] to the petitioners
Opposition to respondents Motion for Reconsideration. Finally, petitioners
filed a Rejoinder[9] to the respondents Reply and Supplemental Reply on 5
July 2006.
The facts of the case, as recounted in the Decision, [10] are as follows
Petitioners are the heirs of the late Donata Ortiz-Briones (Donata),
consisting
of
her
surviving
sister, Rizalina OrtizAguila (Rizalina); Rizalinas daughter, Erlinda Pilapil (Erlinda); and the other
nephews and nieces of Donata, in representation of her two other sisters
who had also passed away. Respondents, on the other hand, are the heirs
of the late Maximino Briones (Maximino), composed of his nephews and
nieces, and grandnephews and grandnieces, in representation of the
deceased siblings of Maximino.
xxxx
Maximino was married to Donata but their union did not produce any
children. When Maximino died on 1 May 1952, Donata instituted intestate
proceedings to settle her husbands estate with the CebuCity Court of First
Instance (CFI), 14th Judicial District, designated as Special Proceedings No.
928-R. On 8 July 1952, the CFI issued Letters of Administration
appointing Donata as
the administratrix of Maximinos estate. She
submitted an Inventory of Maximinos properties, which included, among
other things, the following parcels of land x x x.
xxxx
The CFI would subsequently issue an Order, dated 2 October 1952,
awarding
ownership
of
the
aforementioned
real
properties
to Donata. On 27 June 1960, Donata had the said CFI Order recorded in the
Primary Entry Book of the Register of Deeds, and by virtue thereof,
received new TCTs, covering the said properties, now in her name.

Donata died on 1 November 1977. Erlinda, one of Donatas nieces,

instituted with the RTC a petition for the administration of the intestate
estate of Donata. Erlinda and her husband, Gregorio, were appointed by
the RTC as administrators of Donatas intestate estate. Controversy arose
among Donatas heirs when Erlinda claimed exclusive ownership of three
parcels of land, covered by TCTs No. 21542, 21545, and 58684, based on
two Deeds of Donation, both dated 15 September 1977, allegedly executed
in
her
favor
by
her
aunt Donata. The
other
heirs
of Donata opposed Erlindas claim. This Court, however, was no longer
informed of the subsequent development in the intestate proceedings of
the estate of Donata; and as far as this Petition is concerned, all the heirs
of Donata, including Erlinda, appear to be on the same side.
On 21 January 1985, Silverio Briones (Silverio), a nephew of Maximino, filed
a Petition with the RTC for Letters of Administration for the intestate estate
of Maximino, which was initially granted by the RTC. The RTC also issued an
Order, dated 5 December 1985, allowing Silverio to collect rentals
from Maximinos properties. But then, Gregorio filed with the RTC a Motion
to Set Aside the Order, dated 5 December 1985, claiming that the said
properties were already under his and his wifes administration as part of
the intestate estate of Donata. Silverios Letters of Administration for the
intestate estate of Maximino was subsequently set aside by the RTC.
On 3 March 1987, the heirs of Maximino filed a Complaint with the RTC
against the heirs of Donata for the partition, annulment, and recovery of
possession of real property, docketed as Civil Case No. CEB-5794. They
later filed an Amended Complaint, on 11 December 1992. They alleged
that Donata, as administratrix of the estate of Maximino, through fraud and
misrepresentation, in breach of trust, and without the knowledge of the
other heirs, succeeded in registering in her name the real properties
belonging to the intestate estate of Maximino.
xxxx
After trial in due course, the RTC rendered its Decision, dated 8 April 1986,
in favor of the heirs of Maximino x x x.
xxxx
x x x[T]he RTC declared that the heirs of Maximino were entitled to of the
real properties covered by TCTs No. 21542, 21543, 21544, 21545, 21546,
and 58684. It also ordered Erlinda to reconvey to the heirs of Maximino the
said properties and to render an accounting of the fruits thereof.
The heirs of Donata appealed the RTC Decision, dated 8 April 1986, to the
Court of Appeals. The Court of Appeals, in its Decision, promulgated on 31
August 2001, affirmed the RTC Decision, x x x.
xxxx

Unsatisfied with the afore-quoted Decision of the Court of Appeals, the

heirs of Donata filed the present Petition, x x x.
In its Decision, dated 10 March 2006, this Court found the Petition
meritorious and, reversing the Decisions of the Court of Appeals and the
Regional Trial Court (RTC), dismissed the Complaint for partition,
annulment, and recovery of possession of real property filed by the heirs
of Maximino in Civil Case No. CEB-5794. This Court summed up its findings,
[11]
thus
In summary, the heirs of Maximino failed to prove by clear and convincing
evidence that Donata managed, through fraud, to have the real properties,
belonging to the intestate estate of Maximino, registered in her name. In
the
absence
of
fraud,
no
implied
trust
was
established
between Donata and the heirs of Maximino under Article 1456 of the New
Civil Code. Donata was able to register the real properties in her name, not
through fraud or mistake, but pursuant to an Order, dated 2 October 1952,
issued by the CFI in Special Proceedings No. 928-R. The CFI Order,
presumed to be fairly and regularly issued, declared Donata as the sole,
absolute, and exclusive heir of Maximino; hence, making Donata the
singular owner of the entire estate of Maximino, including the real
properties, and not merely a co-owner with the other heirs of her deceased
husband. There being no basis for the Complaint of the heirs
of Maximino in Civil Case No. CEB-5794, the same should have been
dismissed.
Respondents move for the reconsideration of the Decision of this Court
raising still the arguments that Donata committed fraud in securing the
Court of First Instance Order, dated 2 October 1952, which declared her as
the sole heir of her deceased husband Maximino and authorized her to
have Maximinos properties registered exclusively in her name; that
respondents right to succession to the disputed properties was transmitted
or vested from the moment of Maximinos death and which they could no
longer be deprived of; that Donata merely possessed and held the
properties in trust for her co-heirs/owners; and that, by virtue of this Courts
ruling in Quion v. Claridad[12] and Sevilla, et al. v. De Los Angeles,
[13]
respondents action to recover title to and possession of their shares
in Maximinos estate, held in trust for their benefit by Donata, and
eventually, by petitioners as the latters successors-in-interest,
is imprescriptible. Respondents also advance a fresh contention that the
CFI Order, dated 2 October 1952, being based on the fraudulent
misrepresentation of Donata that she was Maximinos sole heir, was a void
order, which produced no legal effect. Lastly, respondents asseverate that,
by relying on certain procedural presumptions in its Decision, dated 10
March 2006, this Court has sacrificed their substantive right to succession,
thus, making justice subservient to the dictates of mere procedural fiats. [14]
While this Court is persuaded to reexamine and clarify some points in its
previous Decision in this case, it does not find any new evidence or
argument that would adequately justify a change in its previous position.

On the finding of fraud

As this Court declared in its Decision, the existence of any trust relations
between petitioners and respondents shall be examined in the light of
Article 1456 of the New Civil Code, which provides that, [i]f property is
acquired through mistake or fraud, the person obtaining it is, by force of
law, considered a trustee of an implied trust for the benefit of the person
from whom the property comes. Hence, the foremost question to be
answered is still whether an implied trust under Article 1456 of the New
Civil Code had been sufficiently established in the present case.
In the Decision, this Court ruled in the negative, since there was
insufficient evidence to establish that Donata committed fraud. It should be
remembered that Donata was able to secure certificates of title to the
disputed properties by virtue of the CFI Order in Special Proceedings No.
928-R (the proceedings she instituted to settle Maximinos intestate
estate), which declared her as Maximinos sole heir. In the absence of proof
to the contrary, the Court accorded to Special Proceedings No. 928-R the
presumptions of regularity and validity. Reproduced below are the relevant
portions[15] of the Decision

validity pursuant to the Section 3(m) and (n) of Rule 131 of the Revised
Rules of Court, reproduced below
SEC. 3. Disputable presumptions. The following presumptions are
satisfactory if uncontradicted, but may be contradicted and overcome by
other evidence:
xxxx
(m) That official duty has been regularly performed;
(n) That a court, or judge acting as such, whether in the Philippines or
elsewhere, was acting in the lawful exercise of jurisdiction.
By reason of the foregoing provisions, this Court must presume, in the
absence of any clear and convincing proof to the contrary, that the CFI in
Special Proceedings No. 928-R had jurisdiction of the subject matter and
the parties, and to have rendered a judgment valid in every respect; and it
could not give credence to the following statements made by the Court of
Appeals in its Decision.
xxxx

At the onset, it should be emphasized that Donata was able to secure

the TCTs covering the real properties belonging to the estate
of Maximino by virtue of a CFI Order, dated 2 October 1952. It is
undisputed that the said CFI Order was issued by the CFI in Special
Proceedings No. 928-R, instituted by Donata herself, to settle the intestate
estate of Maximino. The petitioners, heirs of Donata, were unable to
present a copy of the CFI Order, but this is not surprising considering that it
was issued 35 years prior to the filing by the heirs of Maximino of their
Complaint in Civil Case No. CEB-5794 on 3 March 1987. The existence of
such CFI Order, nonetheless, cannot be denied. It was recorded in the
Primary Entry Book of the Register of Deeds on 27 June 1960, at 1:10 p.m.,
as Entry No. 1714. It was annotated on the TCTs covering the real
properties as having declared Donata the sole, absolute, and exclusive heir
of Maximino. The non-presentation of the actual CFI Order was not fatal to
the cause of the heirs of Donata considering that its authenticity and
contents were never questioned. The allegation of fraud by the heirs
of Maximino did not pertain to the CFI Order, but to the manner or
procedure by which it was issued in favor of Donata.Moreover, the nonpresentation of the CFI Order, contrary to the declaration by the RTC, does
not amount to a willful suppression of evidence that would give rise to the
presumption that it would be adverse to the heirs of Donata if produced.
x x x.

There
was
totally
no
evidentiary
basis
for
the
foregoing
pronouncements. First of all, the Petition filed by Donata for Letters of
Administration in Special Proceedings No. 928-R before the CFI was not
even referred to nor presented during the course of the trial of Civil Case
No. CEB-5794 before the RTC. How then could the Court of Appeals make a
finding that Donata willfully excluded from the said Petition the names,
ages, and residences of the other heirs of Maximino? Second, there was
also no evidence showing that the CFI actually failed to send notices of
Special Proceedings No. 928-R to the heirs of Maximino or that it did not
require presentation of proof of service of such notices. It should be
remembered that there stands a presumption that the CFI Judge had
regularly performed his duties in Special Proceedings No. 928-R, which
included sending out of notices and requiring the presentation of proof of
service of such notices; and, the heirs of Maximino did not propound
sufficient evidence to debunk such presumption. They only made a general
denial of knowledge of Special Proceedings No. 928-R, at least until
1985. There was no testimony or document presented in which the heirs
of Maximino categorically denied receipt of notice from the CFI of
the pendency of Special Proceedings No. 928-R. The only evidence on
record in reference to the absence of notice of such proceedings was the
testimony of Aurelia Briones (Aurelia), one of the heirs of Maximino, x x x.

xxxx

xxxx

The CFI Order, dated 2 October 1952, issued in Special Proceedings No.
928-R,
effectively
settled
the
intestate
estate
of Maximino by
declaring Donata as the sole, absolute, and exclusive heir of her deceased
husband. The issuance by the CFI of the said Order, as well as its conduct
of the entire Special Proceedings No. 928-R, enjoy the presumption of

Aurelias testimony deserves scant credit considering that she was not
testifying on matters within her personal knowledge. The phrase I dont
think is a clear indication that she is merely voicing out her opinion on how
she believed her uncles and aunts would have acted had they received
notice of Special Proceedings No. 928-R.

It is worth noting that, in its foregoing ratiocination, the Court was

proceeding from an evaluation of the evidence on record, which did not
include an actual copy of the CFI Order in Special Proceedings No. 928R. Respondents only submitted a certified true copy thereof on 15 June
2006, annexed to their Supplemental Reply to petitioners opposition to
their motion for reconsideration of this Courts Decision.Respondents did
not offer any explanation as to why they belatedly produced a copy of the
said Order, but merely claimed to have been fortunate enough to obtain a
copy thereof from the Register of Deeds of Cebu.[16]
Respondents should be taken to task for springing new evidence so late
into the proceedings of this case. Parties should present all their available
evidence at the courts below so as to give the opposing party the
opportunity to scrutinize and challenge such evidence during the course of
the trial. However, given that the existence of the CFI Order in Special
Proceedings No. 928-R was never in issue and was, in fact, admitted by the
petitioners; that the copy submitted is a certified true copy of the said
Order; and that the said Order may provide new information vital to a just
resolution of the present case, this Court is compelled to consider the same
as part of the evidence on record.
The CFI Order[17] in question reads in full as
ORDER
This is with reference to the Motion of the Administratrix, dated January 5,
1960, that she be declared the sole heir of her deceased
husband, Maximino Suico Briones, the latter having died without any
legitimate ascendant nor descendant, nor any legitimate brother or
sister, nephews or nieces.
At the hearing of this incident today, nobody appeared to resist the motion,
and based on the uncontradicted testimony of Donata G. Ortiz that she
was
the
nearest
surviving
relative
of
the
deceased Maximino Suico Brionesat the time of the latters death, and
pursuant to the pertinent provisions of the new Civil Code of the
Philippines, the Court hereby declares the aforesaid Donata G. Ortiz the
sole,
absolute
and
exclusive
heir
of
the
estate
of
the
deceased Maximino Suico Briones, and she is hereby entitled to inherit all
the residue of this estate after paying all the obligations thereof, which
properties are those contained in the Inventory, dated October 2, 1952.
Cebu City, January 15, 1960.
From the contents of the afore-quoted Order, this Court is able to deduce
that the CFI Order was in fact issued on 15 January 1960 and not 2 October
1952, as earlier stated in the Decision. It was the inventory of properties,
submitted
by Donata as administratrix of Maximinos intestate
estate,
which was dated 2 October 1952.[18] Other than such observation, this
Court finds nothing in the CFI Order which could change its original position
in the Decision under consideration.

While it is true that since the CFI was not informed that Maximino still had
surviving siblings and so the court was not able to order that these siblings
be given personal notices of the intestate proceedings, it should be borne
in mind that the settlement of estate, whether testate or intestate, is a
proceeding in rem,[19] and that the publication in the newspapers of the
filing of the application and of the date set for the hearing of the same, in
the manner prescribed by law, is a notice to the whole world of the
existence of the proceedings and of the hearing on the date and time
indicated in the publication. The publication requirement of the notice in
newspapers is precisely for the purpose of informing all interested parties
in the estate of the deceased of the existence of the settlement
proceedings, most especially those who were not named as heirs or
creditors in the petition, regardless of whether such omission was
voluntarily or involuntarily made.
This Court cannot stress enough that the CFI Order was the result of the
intestate proceedings instituted by Donata before the trial court. As this
Court pointed out in its earlier Decision, the manner by which the CFI judge
conducted the proceedings enjoys the presumption of regularity, and
encompassed in such presumption is the order of publication of the notice
of the intestate proceedings. A review of the records fails to show any
allegation or concrete proof that the CFI also failed to order the publication
in newspapers of the notice of the intestate proceedings and to require
proof from Donata of compliance therewith. Neither can this Court find any
reason or explanation as to why Maximinos siblings could have missed the
published notice of the intestate proceedings of their brother.
In relying on the presumptions of the regular performance of official duty
and lawful exercise of jurisdiction by the CFI in rendering the questioned
Order, dated 15 January 1960, this Court is not, as counsel for respondents
allege, sacrificing the substantive right of respondents to their share in the
inheritance in favor of mere procedural fiats. There is a rationale for the
establishment of rules of procedure, as amply explained by this Court
in De Dios v. Court of Appeals[20]
Procedural rules are designed to insure the orderly and expeditious
administration of justice by providing for a practical system by which the
parties to a litigation may be accorded a full and fair opportunity to present
their respective positions and refute each other's submissions under the
prescribed requirements, conditions and limitations. Adjective law is not
the counterfoil of substantive law. In fact, there is a symbiotic relationship
between them. By complying faithfully with the Rules of Court, the bench
and the bar are better able to discuss, analyze and understand substantive
rights and duties and consequently to more effectively protect and enforce
them. The other alternative is judicial anarchy.
Thus, compliance with the procedural rules is the general rule, and
abandonment thereof should only be done in the most exceptional
circumstances. The presumptions relied upon by this Court in the instant
case are disputable presumptions, which are satisfactory, unless

contradicted or overcome by evidence. This Court finds that the evidence

presented by respondents failed to overcome the given presumptions.
Although Donata may have alleged before the CFI that she was her
husbands sole heir, it was not established that she did so knowingly,
maliciously and in bad faith, so as for this Court to conclude that she
indeed committed fraud. This Court again brings to the fore the delay by
which respondents filed the present case, when the principal actors
involved, particularly, Donata and Maximinos siblings, have already passed
away and their lips forever sealed as to what truly transpired between
them. On the other hand, Special Proceedings No. 928-R took place when
all these principal actors were still alive and each would have been capable
to act to protect his or her own right to Maximinos estate. Letters of
Administration of Maximinos estate were issued in favor of Donata as early
as 8 July 1952, and the CFI Order in question was issued only on 15 January
1960. The intestate proceedings for the settlement of Maximinos estate
were thus pending for almost eight years, and it is the burden of the
respondents
to
establish
that
their
parents
or
grandparents, Maximinos surviving siblings, had absolutely no knowledge
of the said proceedings all these years. As established in R a m o s v.
R a m o s ,[21] the degree of proof to establish fraud in a case where the
principal actors to the transaction have already passed away is proof
beyond reasonable doubt, to wit
"x x x But length of time necessarily obscures all human evidence;
and as it thus removes from the parties all the immediate means
to verify the nature of the original transactions, it operates by
way of presumption, in favor of innocence, and against imputation
of fraud. It would be unreasonable, after a great length of time, to require
exact proof of all the minute circumstances of any transaction, or to expect
a satisfactory explanation of every difficulty, real or apparent, with which it
may be encumbered. The most that can fairly be expected, in such cases,
if the parties are living, from the frailty of memory, and human infirmity, is,
that the material facts can be given with certainty to a common intent;
and, if the parties are dead, and the cases rest in confidence, and
in parol agreements, the most that we can hope is to arrive at probable
conjectures, and to substitute general presumptions of law, for exact
knowledge. Fraud, or breach of trust, ought not lightly to be
imputed to the living; for, the legal presumption is the other way;
as to the dead, who are not here to answer for themselves, it
would be the height of injustice and cruelty, to disturb their
ashes, and violate the sanctity of the grave, unless the evidence
of fraud be clear, beyond a reasonable doubt (Prevost vs. Gratz, 6
Wheat. [U.S.], 481, 498).
Moreover, even if Donatas allegation that she was Maximinos sole heir
does constitute fraud, it is insufficient to justify abandonment of the CFI
Order, dated 15 January 1960, [ 2 2 ] considering the nature of intestate
proceedings as being in rem and the disputable presumptions of the
regular performance of official duty and lawful exercise of jurisdiction by
the CFI in rendering the questioned Order, dated 15 January 1960, in
Special Proceedings No. 928-R.

On prescription of the right to recover based on implied trust

Assuming, for the sake of argument, that Donatas misrepresentation
constitutes fraud that would impose upon her the implied trust provided in
Article 1456 of the Civil Code, this Court still cannot sustain respondents
contention that their right to recover their shares in Maximinos estate
is imprescriptible. It is already settled in jurisprudence that an implied
trust, as opposed to an express trust, is subject to prescription and laches.
The case of Ramos v. Ramos[23] already provides an elucidating discourse
on the matter, to wit
"Trusts are either express or implied. Express trusts are created by the
intention of the trustor or of the parties. Implied trusts come into being by
operation of law" (Art. 1441, Civil Code). "No express trusts concerning an
immovable or any interest therein may be proven by oral evidence. An
implied trust may be proven by oral evidence" (Ibid; Arts. 1443 and 1457).
"No particular words are required for the creation of an express trust, it
being sufficient that a trust is clearly intended" (Ibid; Art. 1444; Tuason de
Perez vs. Caluag, 96 Phil. 981; Julio vs. Dalandan, L-19012, October 30,
1967, 21 SCRA 543, 546). "Express trusts are those which are created by
the direct and positive acts of the parties, by some writing or deed, or will,
or by words either expressly or impliedly evincing an intention to create a
trust" (89 C.J. S. 122).
"Implied trusts are those which, without being expressed, are deducible
from the nature of the transaction as matters of intent, or which
are superinduced on the transaction by operation of law as matters of
equity, independently of the particular intention of the parties" (89 C.J.S.
724). They are ordinarily subdivided into resulting and constructive trusts
(89 C.J.S. 722).
"A resulting trust is broadly defined as a trust which is raised or created by
the act or construction of law, but in its more restricted sense it is a trust
raised by implication of law and presumed always to have been
contemplated by the parties, the intention as to which is to be found in the
nature of their transaction, but not expressed in the deed or instrument of
conveyance" (89 C.J.S. 725). Examples of resulting trusts are found in
Article 1448 to 1455 of the Civil Code. See Padilla vs. Court of Appeals, L31569, September 28, 1973, 53 SCRA 168, 179).
On the other hand, a constructive trust is a trust "raised by construction
of law, or arising by operation of law." In a more restricted sense and as
contradistinguished from a resulting trust, a constructive trust is "a trust
not created by any words, either expressly or impliedly evincing a direct
intention to create a trust, but by the construction of equity in order to
satisfy the demands of justice. It does not arise by agreement or intention
but by operation of law." (89 C.J.S. 726-727). "If a person obtains legal title
to property by fraud or concealment, courts of equity will impress upon the
title a so-called constructive trust in favor of the defrauded party." A

constructive trust is not a trust in the technical sense (Gayondato vs.

Treasurer of the P.I., 49 Phil. 244; See Art. 1456, Civil Code).
There is a rule that a trustee cannot acquire by prescription the ownership
of property entrusted to him (Palma vs. Cristobal, 77 Phil. 712), or that an
action to compel a trustee to convey property registered in his name in
trust for the benefit of the cestui qui trust does not prescribe
(Manalang vs. Canlas, 94 Phil. 776; Cristobal vs. Gomez, 50 Phil. 810), or
that the defense of prescription cannot be set up in an action to recover
property held by a person in trust for the benefit of another (Sevilla vs.
De los Angeles, 97 Phil. 875), or that property held in trust can be
recovered by the beneficiary regardless of the lapse of time (Marabilles vs.
Quito, 100 Phil. 64; Bancairen vs. Diones, 98 Phil. 122, 126; Juan vs. Zuiga,
62 O.G. 1351; 4 SCRA 1221; Jacinto vs. Jacinto, L-17957, May 31, 1962.
See Tamayo vs. Callejo, 147 Phil. 31, 37).
That rule applies squarely to express trusts. The basis of the rule is that the
possession of a trustee is not adverse. Not being adverse, he does not
acquire by prescription the property held in trust. Thus, Section 38 of Act
190 provides that the law of prescription does not apply "in the case of a
continuing and subsisting trust" (Diaz vs. Gorricho and Aguado, 103 Phil.
261, 266; Laguna vs. Levantino, 71 Phil. 566; Sumira vs. Vistan, 74 Phil.
138; Golfeo vs. Court of Appeals, 63 O.G. 4895, 12 SCRA 199; Caladiao vs.
Santos, 63 O.G. 1956, 10 SCRA 691).
The rule of imprescriptibility of the action to recover property held in trust
may possibly apply to resulting trusts as long as the trustee has not
repudiated the trust (Heirs of Candelaria vs. Romero, 109 Phil. 500, 5023; Martinez vs. Grao, 42 Phil. 35; Buencamino vs. Matias, 63 O. G. 11033,
16 SCRA 849).

supra; Claridad vs. Henares, 97 Phil. 973; Gonzales vs. Jimenez, L-19073,
January 30, 1965, 13 SCRA 80; Boaga vs. Soler, 112 Phil. 651; J.
M. Tuason & Co., vs. Magdangal, L-15539, January 30, 1962, 4 SCRA
84). Prescription may supervene in an implied trust (Bueno vs.
Reyes, L-22587, April 28, 1969, 27 SCRA 1179; Fabian vs. Fabian, L-20449,
January 29, 1968; Jacinto vs. Jacinto, L-17957, May 31, 1962, 5 SCRA 371).
And whether the trust is resulting or constructive, its enforcement
may be barred by laches (90 C.J.S. 887-889; 54 Am Jur. 449-450; Diaz
vs. Gorricho and Aguado, supra; Compare with Mejia vs. Gampona, 100
Phil. 277). [Emphases supplied.]
A present reading of the Quion[24] and Sevilla[25] cases, invoked by
respondents, must be made in conjunction with and guided accordingly by
the principles established in the afore-quoted case. Thus, while
respondents right to inheritance was transferred or vested upon them at
the time of Maximinos death, their enforcement of said right by
appropriate legal action may be barred by the prescription of the action.
Prescription of the action for reconveyance of the disputed properties
based on implied trust is governed by Article 1144 of the New Civil Code,
which reads
ART. 1144. The following actions must be brought within ten years from the
time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.

The rule of imprescriptibility was misapplied to constructive

trusts (Geronimo and Isidoro vs. Nava and Aquino, 105 Phil. 145, 153.
Compare with Cuison vs. Fernandez and Bengzon, 105 Phil. 135,
139; De Pasion vs. De Pasion, 112 Phil. 403, 407).
Acquisitive prescription may bar the action of the beneficiary against the
trustee in an express trust for the recovery of the property held in trust
where (a) the trustee has performed unequivocal acts of repudiation
amounting to an ouster of the cestui qui trust; (b) such positive acts of
repudiation have been made known to the cestui qui trust and (c) the
evidence thereon is clear and conclusive (Laguna vs. Levantino,
supra; Salinas vs. Tuason, 55 Phil. 729. Compare with the rule regarding
co-owners found in the last paragraph of Article 494, Civil
Code; Casaas vs. Rosello, 50 Phil. 97; Gerona vs. De Guzman, L-19060,
May 29, 1964, 11 SCRA 153, 157).
With respect to constructive trusts, the rule is different.
The prescriptibility of an action for reconveyance based on
constructive trust is now settled (Alzona vs. Capunitan, L-10228,
February
28,
1962,
4
SCRA
450; Gerona
vs.
De
Guzman,

Since an implied trust is an obligation created by law (specifically, in this

case, by Article 1456 of the New Civil Code), then respondents had 10
years within which to bring an action for reconveyance of their shares
in Maximinos properties. The next question now is when should the tenyear prescriptive period be reckoned from. The general rule is that an
action for reconveyance of real property based on implied trust prescribes
ten years from registration and/or issuance of the title to the property,
[26]
not only because registration under the Torrens system is a constructive
notice of title,[27] but also because by registering the disputed properties
exclusively in her name, Donata had already unequivocally repudiated any
other claim to the same.
By virtue of the CFI Order, dated 15 January 1960, in Special Proceedings
No. 928-R, Donata was able to register and secure certificates of title over
the disputed properties in her name on 27 June 1960.The respondents filed
with the RTC their Complaint for partition, annulment, and recovery of
possession of the disputed real properties, docketed as Civil Case No. CEB5794, only on 3 March 1987, almost 27 years after the registration of the

said properties in the name of Donata. Therefore, respondents action for

recovery of possession of the disputed properties had clearly prescribed.
Moreover, even though respondents Complaint before the RTC in Civil Case
No. CEB-5794 also prays for partition of the disputed properties, it does not
make
their
action
to
enforce
their
right
to
the
said
properties imprescriptible. While as a general rule, the action for partition
among co-owners does not prescribe so long as the co-ownership is
expressly or impliedly recognized, as provided for in Article 494, of the New
Civil Code, it bears to emphasize that Donata had never recognized
respondents as co-owners or co-heirs, either expressly or impliedly. [28] Her
assertion before the CFI in Special Proceedings No. 928-R that she
was Maximinos sole heir necessarily excludes recognition of some other
co-owner or co-heir to the inherited properties; Consequently, the rule on
non-prescription of action for partition of property owned in common does
not apply to the case at bar.

possession of the real properties, and continued to manage the same and
collect the rental fees thereon. Donata and, subsequently, Erlinda, were so
obviously exercising rights of ownership over the real properties, in
exclusion of all others, which must have already put the heirs
of Maximino on guard if they truly believed that they still had rights
thereto.
The heirs of Maximino knew he died on 1 May 1952. They even attended
his wake. They did not offer any explanation as to why they had waited 33
years from Maximinos death before one of them, Silverio, filed a Petition
for Letters of Administration for the intestate estate of Maximino on 21
January 1985. After learning that the intestate estate of Maximino was
already settled in Special Proceedings No. 928-R, they waited another two
years, before instituting, on 3 March 1987, Civil Case No. CEB-5794, the
Complaint for partition, annulment and recovery of the real property
belonging to the estate of Maximino. x x x

On laches as bar to recovery

Other than prescription of action, respondents right to recover possession
of the disputed properties, based on implied trust, is also barred
by laches. The defense of laches, which is a question of inequity in
permitting a claim to be enforced, applies independently of prescription,
which is a question of time. Prescription is statutory; laches is equitable.[29]
Laches is defined as the failure to assert a right for an unreasonable and
unexplained length of time, warranting a presumption that the party
entitled to assert it has either abandoned or declined to assert it. This
equitable defense is based upon grounds of public policy, which requires
the discouragement of stale claims for the peace of society. [30]

Considering the circumstances in the afore-quoted paragraphs, as well as

respondents conduct before this Court, particularly the belated submission
of evidence and argument of new issues, respondents are consistently
displaying a penchant for delayed action, without any proffered reason or
justification for such delay.
It is well established that the law serves those who are vigilant and diligent
and not those who sleep when the law requires them to act. The law does
not encourage laches, indifference, negligence or ignorance. On the
contrary, for a party to deserve the considerations of the courts, he must
show that he is not guilty of any of the aforesaid failings. [32]
On void judgment or order

This Court has already thoroughly discussed in its Decision the basis for
barring respondents action for recovery of the disputed properties because
of laches. This Court pointed out therein[31] that
In further support of their contention of fraud by Donata, the heirs
of Maximino even emphasized that Donata lived along the same street as
some of the siblings of Maximino and, yet, she failed to inform them of the
CFI Order, dated [15 January 1960], in Special Proceedings No. 928-R, and
the issuance in her name of new TCTs covering the real properties which
belonged to the estate of Maximino. This Court, however, appreciates such
information
differently. It
actually
works
against
the
heirs
of Maximino. Since they only lived nearby, Maximinos siblings had ample
opportunity to inquire or discuss with Donata the status of the estate of
their deceased brother. Some of the real properties, which belonged to the
estate of Maximino, were also located within the same area as their
residences in Cebu City, and Maximinossiblings could have regularly
observed the actions and behavior of Donata with regard to the said real
properties. It is uncontested that from the time of Maximinos death on 1
May 1952, Donata had possession of the real properties. She managed the
real properties and even collected rental fees on some of them until her
own death on 1 November 1977. After Donatas death, Erlinda took

Respondents presented only in their Reply and Supplemental Reply to the

petitioners Opposition to their Motion for Reconsideration the argument
that the CFI Order, dated 15 January 1960, in Special Proceedings No. 928R is void and, thus, it cannot have any legal effect. Consequently, the
registration of the disputed properties in the name of Donata pursuant to
such Order was likewise void.
This Court is unconvinced.
In the jurisprudence referred to by the respondents, [33] an order or
judgment is considered void when rendered by the court without or in
excess of its jurisdiction or in violation of a mandatory duty, circumstances
which are not present in the case at bar.
Distinction must be made between a void judgment and a voidable one,
thus
"* * * A voidable judgment is one which, though not a mere nullity, is liable
to be made void when a person who has a right to proceed in the matter

takes the proper steps to have its invalidity declared. It always contains
some defect which may become fatal. It carries within it the means of its
own overthrow. But unless and until it is duly annulled, it is attended with
all the ordinary consequences of a legal judgment. The party against whom
it is given may escape its effect as a bar or an obligation, but only by a
proper application to have it vacated or reversed. Until that is done, it will
be efficacious as a claim, an estoppel, or a source of title. If no proceedings
are ever taken against it, it will continue throughout its life to all intents a
valid sentence. If emanating from a court of general jurisdiction, it will be
sustained by the ordinary presumptions of regularity, and it is not open to
impeachment in any collateral action. * * *"
But it is otherwise when the judgment is void. "A void judgment is in legal
effect no judgment. By it no rights are divested. From it no rights can be
obtained. Being worthless in itself, all proceedings founded upon it are
equally worthless. It neither binds nor bars any one. All acts performed
under it and all claims flowing out of it are void. The parties attempting to
enforce it may be responsible as trespassers. The purchaser at a sale by
virtue of its authority finds himself without title and without redress."
(Freeman on Judgments, sec. 117, citing Campbell vs. McCahan, 41 Ill., 45;
Roberts vs. Stowers,
7
Bush,
295, Huls vs. Buntin,
47
Ill.,
396; Sherrell vs. Goodrum, 3 Humph., 418; Andrews vs. State, 2 Sneed,
549; Hollingsworth vs. Bagley, 35 Tex., 345; Morton vs. Root, 2 Dill., 312;
Commercial Bank of Manchester vs. Martin, 9 Smedes & M., 613; Hargis vs.
Morse, 7 Kan., 259. See also Cornell vs. Barnes, 7 Hill, 35; Dawson and
Another vs. Wells, 3 Ind., 399; Meyer vs. Mintonye, 106 Ill., 414;
Olson vs. Nunnally, 47 Kan., 391; White vs. Foote L. & M. Co., 29 W. Va.,
385.)

the disputed properties. The annulment sought in the Complaint was not
that of the CFI Order, dated 15 January 1960, but of the certificates of title
over the properties issued in Donatas name. So until and unless
respondents bring a direct action to nullify the CFI Order, dated 15 January
1960, in Special Proceedings No. 928-R, and attain a favorable judgment
therein, the assailed Order remains valid and binding.
Nonetheless, this Court also points out that an action to annul an order or
judgment based on fraud must be brought within four years from the
discovery of the fraud.[36] If it is conceded that the respondents came to
know of Donatas fraudulent acts only in 1985, during the course of the RTC
proceedings which they instituted for the settlement of Maximinos estate,
then their right to file an action to annul the CFI Order, dated 15 January
1960, in Special Proceedings No. 928-R (earlier instituted by Donata for the
settlement of Maximinos estate), has likewise prescribed by present time.
In view of the foregoing, the Motion for Reconsideration is DENIED.
A.M.
No.
P-01-1448
(Formerly OCA IPI No. 99-664-P)

June

25,

2013

RODOLFO
C.
SABIDONG, Complainant,
vs.
NICOLASITO S. SOLAS (Clerk of Court IV), Respondent.
DECISION

It is not always easy to draw the line of demarcation between a void

judgment and a voidable one, but all authorities agree that jurisdiction
over the subject-matter is essential to the validity of a judgment and that
want of such jurisdiction renders it void and a mere nullity. In the eye of the
law it is non-existent. (Fisher vs. Harnden, 1 Paine, 55; Towns vs. Springer,
9 Ga., 130; Mobley vs. Mobley, 9 Ga., 247; Beverly and McBride vs. Burke,
9 Ga., 440; Central Bank of Georgia vs. Gibson, 11 Ga., 453; Johnson vs.
Johnson, 30 Ill., 215; St. Louis and Sandoval Coal and Mining Co. vs.
Sandoval Coal and Mining Co., 111 Ill., 32; Swiggart vs. Harber, 4 Scam.,
364; Miller vs. Snyder, 6 Ind., 1; Seely vs. Reid, 3 Greene [Iowa], 374.)[34]

VILLARAMA, JR., J.:

The fraud and misrepresentation fostered by Donata on the CFI in Special

Proceedings No. 928-R did not deprive the trial court of jurisdiction over
the subject-matter of the case, namely, the intestate estate
of Maximino. Donatas fraud and misrepresentation may have rendered the
CFI Order, dated 15 January 1960, voidable, but not void on its
face. Hence, the said Order, which already became final and executory,
can only be set aside by direct action to annul and enjoin its enforcement.
[35]
It cannot be the subject of a collateral attack as is being done in this
case. Note that respondents Complaint before the RTC in Civil Case No.
CEB-5794 was one for partition, annulment, and recovery of possession of

Trinidad Sabidong, complainants mother, is one of the longtime occupants

of a parcel of land, designated as Lot 11 (Lot 1280-D-4-11 of consolidationsubdivision plan [LRC] Pcs-483) originally registered in the name of C. N.
Hodges and situated at Barangay San Vicente, Jaro, Iloilo City. 2 The
Sabidongs are in possession of one-half portion of Lot 11 of the said Estate
(Hodges Estate), as the other half-portion was occupied by Priscila
Saplagio. Lot 11 was the subject of an ejectment suit filed by the Hodges
Estate, docketed as Civil Case No. 14706 of the MTCC Iloilo City, Branch 4

The present administrative case stemmed from a sworn lettercomplaint1 dated May 29, 1999 filed before this Court by Rodolfo C.
Sabidong (complainant) charging respondent Nicolasito S. Solas, Clerk of
Court IV, Municipal Trial Court in Cities (MTCC), Iloilo City with grave and
serious misconduct, dishonesty, oppression and abuse of authority.
The Facts

("Rosita R. Natividad in her capacity as Administratrix of C.N. Hodges

Estate, plaintiff vs. Priscila Saplagio, defendant"). On May 31, 1983, a
decision was rendered in said case ordering the defendant to immediately
vacate the portion of Lot 11 leased to her and to pay the plaintiff rentals
due, attorneys fees, expenses and costs. 3 At the time, respondent was the
Clerk of Court III of MTCC, Branch 3, Iloilo City.

corresponding titles (TCT Nos. T-116467 and T-116468), also in the name of
respondent, were issued on February 28, 1997.6

Sometime in October 1984, respondent submitted an Offer to Purchase on

installment Lots 11 and 12. In a letter dated January 7, 1986, the
Administratrix of the Hodges Estate rejected respondents offer in view of
an application to purchase already filed by the actual occupant of Lot 12,
"in line with the policy of the Probate Court to give priority to the actual
occupants in awarding approval of Offers". While the check for initial down
payment tendered by respondent was returned to him, he was
nevertheless informed that he may file an offer to purchase Lot 11 and that
if he could put up a sufficient down payment, the Estate could immediately
endorse it for approval of the Probate Court so that the property can be
awarded to him "should the occupant fail to avail of the priority given to
them."4

On June 14, 1999, this Court received the sworn letter-complaint asserting
that as court employee respondent cannot buy property in litigation
(consequently he is not a buyer in good faith), commit deception,
dishonesty, oppression and grave abuse of authority. Complainant
specifically alleged the following:

The following day, January 8, 1986, respondent again submitted an Offer to

Purchase Lot 11 with an area of 234 square meters for the amount
of P35,100. Under the Order dated November 18, 1986 issued by the
probate court (Regional Trial Court of Iloilo, Branch 27) in Special
Proceedings No. 1672 ("Testate Estate of the Late Charles Newton Hodges,
Rosita R. Natividad, Administratrix"), respondents Offer to Purchase Lot 11
was approved upon the courts observation that the occupants of the
subject lots "have not manifested their desire to purchase the lots they are
occupying up to this date and considering time restraint and considering
further, that the sales in favor of the x x x offerors are most beneficial to
the estate x x x". On January 21, 1987, the probate court issued another
Order granting respondents motion for issuance of a writ of possession in
his favor. The writ of possession over Lot 11 was eventually issued on June
27, 1989.5
On November 21, 1994, a Deed of Sale With Mortgage covering Lot 11 was
executed between respondent and the Hodges Estate represented by its
Administratrix, Mrs. Ruth R. Diocares. Lot 11 was thereby conveyed to
respondent on installment for the total purchase price of P50,000.
Consequently, Transfer Certificate of Title (TCT) No. T-11836 in the name of
C. N. Hodges was cancelled and a new certificate of title, TCT No. T-107519
in the name of respondent was issued on December 5, 1994. Lot 11 was
later subdivided into two lots, Lots 11-A and 11-B for which the

On motion of Ernesto Pe Benito, Administrator of the Hodges Estate, a writ

of demolition was issued on March 3, 1998 by the probate court in favor of
respondent and against all adverse occupants of Lot 11. 7

3. Complainant and his siblings, are possessors and occupants of a parcel

of land situated at Brgy. San Vicente, Jaro, Iloilo City, then identified as Lot
No. 1280-D-4-11, later consolidated and subdivided and became known as
Lot 11, then registered and titled in the name of Charles Newton Hodges.
The Sabidong family started occupying this lot in 1948 and paid their
monthly rentals until sometime in 1979 when the Estate of Hodges stopped
accepting rentals. x x x
4. Upon knowing sometime in 1987 that the property over which their
house is standing, was being offered for sale by the Estate, the mother of
complainant, TRINIDAD CLAVERIO SABIDONG (now deceased), took interest
in buying said property, Lot 11;
5. TRINIDAD CLAVERIO SABIDONG, was then an ordinary housekeeper and
a laundrywoman, who never received any formal education, and did not
even know how to read and write. When Trinidad Claverio Sabidong,
together with her children and the complainant in this case, tried to
negotiate with the Estate for the sale of the subject property, they were
informed that all papers for transaction must pass through the respondent
in this case, Nicolasito Solas. This is unusual, so they made inquiries and
they learned that, Nicolasito Solas was then the Clerk of Court 111, Branch
3, Municipal Trial Court in Cities, Iloilo City and presently, the City Sheriff of
Iloilo City;
6. The respondent Nicolasito Solas, then Clerk of Court III, MTCC, Iloilo City,
has knowledge, by reason of his position that in 1983 Hodges Estate was
ejecting occupants of its land. x x x Taking advantage of this inside
information that the land subject of an ejectment case in the Municipal Trial
Court in Cities, Iloilo City, whom respondent is a Clerk of Court III, the
respondent surreptitiously offered to buy the said lot in litigation. x x x

7. Complainant nor any member of his family did not know that as early as
1984, the respondent had offered to purchase the subject lot from the
estate x x x. After receiving the notice of denial of his offer to purchase,
dated January 7, 1986, respondent made a second offer to purchase the
subject property the following day, January 8, 1986, knowing fully well that
the subject property was being occupied. x x x
8. Because of this denial, respondent met with the family of the
complainant and negotiated for the sale of the property and transfer of the
title in favor of the latter. Respondent made the complainant and his family
believed that he is the representative of the estate and that he needed a
downpayment right away. All the while, the Sabidong family (who were
carpenters, laundrywomen, a janitor, persons who belong to the
underprivileged) relied on the representations of the respondent that he
was authorized to facilitate the sale, with more reason that respondent
represented himself as the City Sheriff;
9. That between 1992-1993, a sister of the complainant who was fortunate
to have worked abroad, sent the amount of Ten Thousand (P10,000.00)
Pesos to complainants mother, to be given to respondent Nicolasito Solas.
x x x After receiving the money, respondent assured the Sabidong family
that they will not be ejected from the lot, he being the City Sheriff will take
care of everything, and taking advantage of the illiteracy of Trinidad
Claverio Sabidong, he did not issue any receipt;
10. True enough, they were not ejected instead it took the respondent
some time to see them again and demanded additional payment. In the
meanwhile, the complainant waited for the papers of the supposed sale
and transfer of title, which respondent had promised after receiving the
downpayment of P10,000.00;
11. That sometime again in 1995, respondent again received from the
mother of complainant the amount of Two Thousand (P2,000.00) Pesos,
allegedly for the expenses of the documentation of sale and transfer of
title, and again respondent promised that the Sabidong family will not be
ejected;
12. To the prejudice and surprise of the complainant and his family,
respondent was able to secure an order for the approval of his offer to
purchase x x x in Special Proceedings No. 1672 x x x;

13. Worse, respondent moved for the issuance of a Writ of Possession in his
favor, which the probate court acted favorably x x x. A writ of possession
was issued on June 27, 1989 x x x;
14. x x x respondent took advantage of the trust and confidence which the
Sabidong family has shown, considering that respondent was an officer of
the court and a City Sheriff at that. The complainant and his family thought
that respondent, being a City Sheriff, could help them in the transfer of the
title in their favor. Never had they ever imagined that while respondent
had been receiving from them hard-earned monies purportedly for the sale
of the subject property, respondent was also exercising acts of ownership
adverse to the interest of the complainant and his family;
15. Being an officer of the court and supposed to be an embodiment of
fairness and justice, respondent acted with malice, with grave abuse of
confidence and deceit when he represented that he can facilitate the sale
and titling of the subject property in favor of the complainant and his
family;
16. That when several thousands of pesos were given to the respondent as
payment for the same and incidental expenses relative thereto, he was
able to cause the transfer of the title in his favor. x x x;
17. After the death of Trinidad Claverio Sabidong x x x the respondent
received from the complainant the amount of Five Thousand (P5,000.00)
Pesos x x x When a receipt was demanded, respondent refused to issue
one, and instead promised and assured the complainant that they will not
be ejected;
xxxx
19. The complainant again, through his sister-in-law, Socorro Sabidong,
delivered and gave to the respondent the amount of Three Thousand
(P3,000.00) Pesos as expenses for the subdivision of the subject lot. The
respondent facilitated the subdivision and after the same was approved,
the complainant did not know that two (2) titles were issued in the name of
the respondent. x x x;
20. Meanwhile, respondent prepared a Contract to Sell, for the complainant
and his neighbor Norberto Saplagio to affix their signatures, pursuant to
their previous agreement for the buyers to avail of a housing loan with the
Home Development Mutual Fund (PAG-IBIG). Complainant attended the
seminar of the HDMF for seven (7) times, in his desire to consummate the

sale. However, when the complainant affixed his signature in the contract,
he was surprised that the owner of the subject property was the
respondent. When complainant raised a question about this, respondent
assured complainant that everything was alright and that sooner
complainant will be the owner of the property. Complainant and his family,
all these years, had believed and continued to believe that the owner was
the estate of Hodges and that respondent was only the representative of
the estate;
21. The Contract to Sell, appeared to have been notarized on June 3, 1996,
however, no copy thereof was given to the complainant by the respondent.
Respondent then, took the papers and documents required by the HDMF to
be completed, from the complainant allegedly for the purpose of personally
filing the same with the HDMF. Complainant freely and voluntarily delivered
all pertinent documents to the respondent, thinking that respondent was
helping in the fast and easy release of the loan. While the said documents
were in the possession of the respondent, he never made any transaction
with the HDMF, worse, when complainant tried to secure a copy of the
Contract to Sell, the copy given was not signed by the Notary Public, x x x;
22. The complainant [was] shocked to learn that respondent had canceled
the sale and that respondent refused to return the documents required by
the HDMF. Respondent claimed that as Sheriff, he can cause the demolition
of the house of the complainant and of his family. Respondent threatened
the complainant and he is capable of pursuing a demolition order and
serve the same with the assistance of the military. x x x;
23. After learning of the demolition order, complainant attempted to settle
the matter with the respondent, however, the same proved futile as
respondent boasted that the property would now cost at Four Thousand
Five Hundred (P4,500.00) Pesos;
24. The threats of demolition is imminent. Clearly, complainant and his
family were duped by the respondent and are helpless victims of an officer
of the court who took advantage of their good faith and trust. Complainant
later was informed that the subject property was awarded to the
respondent as his Sheriffs Fees, considering that respondent executed the
decisions in ejectment cases filed by the Hodges estate against the
adverse occupants of its vast properties;

25. A civil case for the Annulment of Title of the respondent over the
subject property is pending before the Regional Trial Court of Iloilo, Branch
37 and a criminal complaint for Estafa is also pending preliminary
investigation before the Office of the City Prosecutor of Iloilo City, known as
I.S. No. 1559-99, both filed [by] the complainant against the respondent. 8
Acting on the complaint, Court Administrator Alfredo L. Benipayo issued a
1st Indorsement9 dated July 8, 1999, requiring respondent to file his
comment on the Complaint dated May 29, 1999. On October 21, 1999,
respondent submitted his Comment.10
In a Resolution11 dated July 19, 1999, Public Prosecutor Constantino C.
Tubilleja dismissed the Estafa charge against respondent for insufficiency
of evidence.
On November 29, 2000, Court Administrator Benipayo issued an Evaluation
and Recommendation12 finding respondent guilty of violating Article
149113 of the Civil Code. Said rule prohibits the purchase by certain court
officers of property and rights in litigation within their jurisdiction. Court
Administrator Benipayo recommended that:
1. this administrative complaint be treated as an administrative matter;
2. respondent Nicolasito S. Solas, Clerk of Court IV, OCC, MTCC, Iloilo City
be SUSPENDED for six (6) months, with warning that a repetition of the
same offense in the future will be dealt with more severely;
3. inasmuch as there are factual issues regarding the delivery of
substantial amounts which complainant alleged and which defendant
denied, this issue should be investigated and the Executive Judge of the
Regional Trial Court of Iloilo City should be designated to hear the evidence
and to make a report and recommendation within sixty (60) days from
receipt.14
In a Resolution15 dated January 22, 2001, this Court adopted the
recommendation of the Court Administrator to treat the present
administrative action as a regular administrative matter and to designate
the Executive Judge of the RTC of Iloilo City to hear the evidence of the
parties.
The Court, however, noted without action the Court Administrators
recommendation to suspend respondent for six months.

On March 13, 2001, Acting Court Administrator Zenaida N. Elepao

forwarded the records of this case to Executive Judge Tito G. Gustilo of the
Iloilo City RTC.16 In a Resolution17 dated July 18, 2001, the Court referred
this case to the Executive Judge of the RTC of Iloilo City for investigation,
report and recommendation within 60 days from notice. By Order 18 dated
August 30, 2001, Executive Judge Gustilo set the case for reception of
evidence.
On March 19, 2004, the RTC of Iloilo, Branch 37, dismissed the case for
annulment of title, damages and injunction against respondent for lack of
merit.19
In a Resolution20 dated June 15, 2005, the Court resolved to reassign the
instant administrative case to Executive Judge Rene S. Hortillo for
investigation, report and recommendation within 60 days from notice. In a
Letter21dated September 15, 2005, Executive Judge Hortillo informed the
Court that per the records, the parties have presented their testimonial
and documentary evidence before retired Executive Judge Tito G. Gustilo.
On September 12, 2005, Executive Judge Hortillo required the parties to
file their respective memoranda within 60 days from notice, upon
submission of which the case shall be deemed submitted for resolution. 22
In his Memorandum,23 respondent maintained that his purchase of the
subject land is not covered by the prohibition in paragraph 5, Article 1491
of the Civil Code. He pointed out that he bought Lot 11-A a decade after
the MTCC of Iloilo, Branch 3, had ordered the ejectment of Priscila Saplagio
and Trinidad Sabidong from the subject lot. He insisted that public trust
was observed when complainant was accorded his right of first refusal in
the purchase of Lot 11-A, albeit the latter failed to avail said right.
Asserting that he is a buyer in good faith and for value, respondent cited
the dismissal of the cases for Estafa and annulment of title and damages
which complainant filed against him.
On September 10, 2007, respondent compulsorily retired from service.
Prior to this, he wrote then Senior Deputy Court Administrator Zenaida N.
Elepao, requesting for the release of his retirement benefits pending
resolution
of
the
administrative
cases
against
him. 24 In
a
25
Memorandum dated September 24, 2007, Senior Deputy Court
Administrator Elepao made the following recommendations:
a) The request of Nicolasito S. Solas, former Clerk of Court, MTCC, Iloilo City
for partial release of his retirement benefits be GRANTED; and

b) Atty. Lilian Barribal Co, Chief, Financial Management Office, Office of the
Court Administrator be DIRECTED to (1) WITHHOLD the amount of Two
Hundred Thousand Pesos (P200,000.00) from the retirement benefits of
Nicolasito S. Solas to answer for any administrative liability that the Court
may find against him in A.M. No. P-01-1448 (Formerly Administrative
Matter OCA IPI No. 99-664-P); OCA IPI No. 99-659-P; OCA IPI No. 99-670-P;
and OCA IPI No. 99-753-P; and (2) RELEASE the balance of his retirement
benefits.26
Eventually, the case was assigned to Judge Roger B. Patricio, the new
Executive Judge of the Iloilo City RTC for investigation, report and
recommendation.
On June 2, 2008, Judge Patricio submitted his final Report and
Recommendation27 finding respondent liable for grave misconduct and
dishonesty under A.M. No. 03-06-13-SC or the Code of Conduct for Court
Personnel. Based on the evidence presented, Judge Patricio concluded that
respondent misappropriated the money which he received for the filing of
complainants loan application. Such money could not have been used for
the partition of Lot No. 1280-D-4-11 since the same was already subdivided
into Lots 11-A and 11-B when respondent presented the Contract to Sell to
complainant. And despite respondents promise to keep complainant and
his family in peaceful possession of the subject property, respondent
caused the issuance of a writ of demolition against them. Thus, Judge
Patricio recommended the forfeiture of respondents salary for six months
to be deducted from his retirement benefits.
In a Resolution28 dated September 29, 2008, the Court noted Judge
Patricios Investigation Report and referred the same to the Office of the
Court Administrator (OCA) for evaluation, report and recommendation.
Findings and Recommendation of the OCA
In a Memorandum29 dated January 16, 2009, then Court Administrator Jose
P. Perez found respondent liable for serious and grave misconduct and
dishonesty and recommended the forfeiture of respondents salary for six
months, which shall be deducted from his retirement benefits.
The Court Administrator held that by his unilateral acts of extinguishing the
contract to sell and forfeiting the amounts he received from complainant
and Saplagio without due notice, respondent failed to act with justice and
equity. He found respondents denial to be anchored merely on the fact
that he had not issued receipts which was belied by his admission that he

had asked money for the expenses of partitioning Lot 11 from complainant
and Saplagio. Since their PAG-IBIG loan applications did not materialize,
complainant should have returned the amounts given to him by
complainant and Saplagio.

For the prohibition to apply, the sale or assignment of the property must
take place during the pendency of the litigation involving the
property.34 Where the property is acquired after the termination of the
case, no violation of paragraph 5, Article 1491 of the Civil Code attaches. 35

On February 11, 2009, the Court issued a Resolution 30 requiring the parties
to manifest whether they are willing to submit the case for decision on the
basis of the pleadings and records already filed with the Court. However,
the copy of the Resolution dated February 11, 2009 which was sent to
complainant was returned unserved with the postal carriers notation "RTSDeceased." Meanwhile, in a Compliance31 dated August 24, 2009,
respondent expressed his willingness to submit the case for decision and
prayed for an early resolution of the case.

In the case at bar, when respondent purchased Lot 11-A on November 21,
1994, the Decision in Civil Case No. 14706 which was promulgated on May
31, 1983 had long become final. Be that as it may, it can not be said that
the property is no longer "in litigation" at that time considering that it was
part of the Hodges Estate then under settlement proceedings (Sp. Proc. No.
1672).

Our Ruling
Article 1491, paragraph 5 of the Civil Code prohibits court officers such as
clerks of court from acquiring property involved in litigation within the
jurisdiction or territory of their courts. Said provision reads:
Article 1491. The following persons cannot acquire by purchase, even at a
public or judicial auction, either in person or through the mediation of
another:
xxxx
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior
courts, and other officers and employees connected with the
administration of justice, the property and rights in litigation or levied upon
an 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.
x x x x (Emphasis supplied.)
The rationale advanced for the prohibition is that public policy disallows
the transactions in view of the fiduciary relationship involved, i.e., the
relation of trust and confidence and the peculiar control exercised by these
persons.32 "In so providing, the Code tends to prevent fraud, or more
precisely, tends not to give occasion for fraud, which is what can and must
be done."33

A thing is said to be in litigation not only if there is some contest or

litigation over it in court, but also from the moment that it becomes subject
to the judicial action of the judge. 36 A property forming part of the estate
under judicial settlement continues to be subject of litigation until the
probate court issues an order declaring the estate proceedings closed and
terminated. The rule is that as long as the order for the distribution of the
estate has not been complied with, the probate proceedings cannot be
deemed closed and terminated. 37 The probate court loses jurisdiction of an
estate under administration only after the payment of all the debts and the
remaining estate delivered to the heirs entitled to receive the
same.38 Since there is no evidence to show that Sp. Proc. No. 1672 in the
RTC of Iloilo, Branch 27, had already been closed and terminated at the
time of the execution of the Deed of Sale With Mortgage dated November
21, 1994, Lot 11 is still deemed to be "in litigation" subject to the operation
of Article 1491 (5) of the Civil Code.
This notwithstanding, we hold that the sale of Lot 11 in favor of respondent
did not violate the rule on disqualification to purchase property because
Sp. Proc. No. 1672 was then pending before another court (RTC) and not
MTCC where he was Clerk of Court.
On the charges against the respondent, we find him liable for dishonesty
and grave misconduct.
Misconduct is a transgression of some established and definite rule of
action, more particularly, unlawful behavior as well as gross negligence by
a public officer. To warrant dismissal from service, the misconduct must be
grave, serious, important, weighty, momentous and not trifling. The
misconduct must imply wrongful intention and not a mere error of
judgment. The misconduct must also have a direct relation to and be
connected with the performance of the public officers official duties

amounting either to maladministration or willful, intentional neglect, or

failure to discharge the duties of the office.39
Dishonesty is the "disposition to lie, cheat, deceive, defraud or betray;
untrustworthiness; lack of integrity; lack of honesty, probity, or integrity in
principle; and lack of fairness and straightforwardness."40
In this case, respondent deceived complainants family who were led to
believe that he is the legal representative of the Hodges Estate, or at least
possessed of such power to intercede for overstaying occupants of the
estates properties like complainant. Boasting of his position as a court
officer, a City Sheriff at that, complainants family completely relied on his
repeated assurance that they will not be ejected from the premises. Upon
learning that the lot they were occupying was for sale and that they had to
negotiate for it through respondent, complainants family readily gave the
amounts he demanded and, along with Saplagio, complied with the
requirements for a loan application with PAG-IBIG. All the while and
unknown to complainants family, respondent was actually working to
acquire Lot 11 for himself.
Thus, while respondent was negotiating with the Hodges Estate for the sale
of the property to him, he collected as down payment P5,000 from
complainants family in July 1986. Four months later, on November 18,
1986, the probate court approved respondents offer to purchase Lot 11.
The latter received further down payment from complainant in the amount
of P10,000 between 1992 and 1993, or before the Deed of Sale with
Mortgage41dated November 21, 1994 could be executed in respondents
favor.
Thereafter, respondent demanded P3,000 from complainant supposedly for
the subdivision of Lot 11 between the latter and the Saplagios. Yet, it was
not until respondent obtained title over said lot that the same was
subdivided into Lots 11-A and 11-B. The records 42 of the case show that the
Subdivision Plan dated April 25, 1996, duly approved by the Land
Management Services (DENR) subdividing Lot 11 into sublots 11-A and 11B, was inscribed on February 28, 1997 two years after TCT No. T-107519
covering Lot 11 was issued in respondents name on December 5, 1994.
Finally, in 1995, respondent received the amount of P2,000 to defray the
expenses for documentation and transfer of title in complainants name. In
the latter instance, while it may be argued that respondent already had the
capacity to sell the subject property, the sum of all the circumstances belie
an honest intention on his part to convey Lot 11-A to complainant. We note
the inscription in TCT No. T-1183643 in the name of C.N. Hodges that

respondent executed a Request dated February 19, 1997 "for the issuance
of separate titles in the name of the registered owner."44 Soon after, TCT
No. T-11646745 covering Lot 11-A and TCT No. T-116468 46 covering Lot 11-B
were issued in the name of respondent on February 28, 1997 only eight
months after he executed the Contract to Sell 47 in favor of complainant on
June 3, 1996.
Respondents bare denials were correctly disregarded by the Court
Administrator in the light of his own admission that he indeed asked money
from both complainant and Saplagio. The evidence on record clearly
established that by misrepresenting himself as the estates representative
and as a court officer having the power to protect complainants family
from eviction, respondent was able to collect sums totaling P20,000 from
complainants family. Even after the latter realized they were duped since
respondent was already the owner of Lot 11, they still offered to buy the
property from him. Respondent, however, changed his mind and no longer
wanted to sell the property after nothing happened to the loan applications
of complainant and Saplagio. This subsequent unilateral cancellation by
respondent of the contract to sell with complainant may have been an
afterthought, and plainly unjustified, based merely on his own assumption
that complainant could not make full payment. But it did not negate the
deception and fraudulent acts perpetrated against complainants family
who were forced into submission by the constant threat of eviction. Such
acts constitute grave misconduct for which respondent should be held
answerable.
In Re: Complaint Filed by Paz De Vera Lazaro Against Edna Magallanes,
Court Stenographer III, RTC Br. 28 and Bonifacio G. Magallanes, Process
Server, RTC Br. 30, Bayombong, Nueva Vizcaya, 48 the Court stressed that to
preserve decency within the judiciary, court personnel must comply with
just contractual obligations, act fairly and adhere to high ethical standards.
In that case, we said that court employees are expected to be paragons of
uprightness, fairness and honesty not only in their official conduct but also
in their personal dealings, including business and commercial transactions
to avoid becoming the courts albatross of infamy. 49
More importantly, Section 4(c) of Republic Act No. 6713 50 or the Code of
Conduct and Ethical Standards for Public Officials and Employees
mandates that public officials and employees shall remain true to the
people at all times. They must act with justness and sincerity and shall not
discriminate
against
anyone,
especially
the
poor
and
the
underprivileged.1wphi1 They shall at all times respect the rights of
others, and shall refrain from doing acts contrary to law, good morals, good
customs, public policy, public order, public safety and public interest.

Under Section 52,51 Rule IV of the Uniform Rules on Administrative Cases in

the Civil Service, dishonesty and grave misconduct are classified as grave
offenses with the corresponding penalty of dismissal for the first offense.
Section 58(a) states that the penalty of dismissal shall carry with it the
cancellation of eligibility, forfeiture of retirement benefits, and the
perpetual disqualification for reemployment in the government service.

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.

Section 53 further provides that mitigating circumstances attendant to the

commission of the offense should be considered in the determination of
the penalty to be imposed on the erring government employee. However,
no such mitigating circumstance had been shown. On the contrary,
respondent had been previously held administratively liable for
irregularities in the performance of his duties as Clerk of Court. In A.M. No.
P-01-1484,52 this Court imposed on respondent a fine of P5,000 for acting
imprudently in notarizing documents and administering oath on matters
alien to his official duties. And in A.M. Nos. P-08-2567 (formerly OCA IPI No.
99-670-P) and P-08-2568 (formerly OCA IPI No. 99-753-P), 53 respondent was
found liable for simple misconduct and ordered to pay a fine equivalent to
his three (3) months salary to be deducted from his retirement benefits.

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).

Since respondent had compulsorily retired from service on September 10,

2007, for this additional administrative case he should be fined in an
amount equivalent to his salary for six months which shall likewise be
deducted from his retirement benefits.
WHEREFORE, the Court finds respondent Nicolasito S. Solas, retired Clerk
of Court IV, Municipal Trial Court in Cities, Iloilo City, LIABLE FOR GRAVE
MISCONDUCT AND DISHONESTY. Respondent is FINED in an amount
equivalent to his salary for six (6) months to be deducted from his
retirement benefits.
SO ORDERED.
G.R. No. 156407, January 15, 2014
THELMA M. ARANAS, Petitioner, v. TERESITA V. MERCADO, FELIMON
V. MERCADO, CARMENCITA M. SUTHERLAND, RICHARD V.
MERCADO, MA. TERESITA M. ANDERSON, AND FRANKLIN L.
MERCADO, Respondents.
DECISION
BERSAMIN, J.:
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

Antecedents

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 Emigdios
estate (Special Proceedings No. 3094CEB). 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
P6,675,435.25 in all, consisting of cash of P32,141.20; furniture and
fixtures worth P20,000.00; pieces of jewelry valued at P15,000.00; 44,806
shares of stock of Mervir Realty worth P6,585,585.80; and 30 shares of
stock
of
Cebu
Emerson
worth
P22,708.25. 2
Claiming that Emigdio had owned other properties that were excluded from
the inventory, Thelma moved that the RTC direct Teresita to amend the
inventory, and to be examined regarding it. The RTC granted Thelmas
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 P4,440,651.10 in exchange for 44,407
Mervir Realty shares of stock with total par value of P4,440,700.00; 5 and
the certificate of stock issued on January 30, 1979 for 300 shares of stock
of
Cebu
Emerson
worth
P30,000.00. 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. 7cralawred
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.8cralawlawlibrary
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 administratrixs motion for approval of inventory.
The Court hereby orders the said administratrix to redo 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.9ChanRoblesVirtualawlibrary
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.

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 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:13
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.

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

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.

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

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 administratrixs 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.

Thelmas

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

On November 15, 2002, the CA denied the motion for reconsideration of

Teresita, et al.15
Issue
Did 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.
I
Was certiorari the
proper
to assail the questioned orders of the RTC?

recourse

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
corespondents
was
not
proper.
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 PahilaGarrido
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 Teresitas 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 Morans Comments on the Rules of Court, 1970 Edition, pages
4489 and 473; Lachenal vs. Salas, L42257, 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 courts 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 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
nonappealable.
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

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
in
directing
the
inclusion
in the estate of the decedent?

abuse
of
of
the

discretion
properties

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 dutybound 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.
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. 306R 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 Mercados 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, onehalf 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 being conjugal in character, and
so, onehalf 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 Pls657D 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. CEB12690 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 Assessors 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 the Family Code in August 3, 1988, their property regime was
the conjugal partnership of gains. 29 For purposes of the settlement of
Emigdios estate, it was unavoidable for Teresita to include his shares in
the conjugal partnership of gains. The party asserting that specific
property acquired during that property regime did not pertain to the
conjugal partnership of gains carried the burden of proof, and that party
must prove the exclusive ownership by one of them by clear, categorical,
and convincing evidence.30 In the absence of or pending the presentation
of such proof, the conjugal partnership of Emigdio and Teresita must be
provisionally liquidated to establish who the real owners of the affected
properties were,31 and which of the properties should form part of the
estate of Emigdio. The portions that pertained to the estate of Emigdio
must
be
included
in
the
inventory.
Moreover, although the title over Lot 3353 was already registered in the
name of Mervir Realty, the RTC made findings that put that title in dispute.
Civil Case No. CEB12692, a dispute that had involved the ownership of Lot
3353, was resolved in favor of the estate of Emigdio, and Transfer
Certificate of Title No. 3252 covering Lot 3353 was still in Emigdios name.
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 of Emigdio.
Interestingly, Mervir Realty did not intervene at all in Civil Case No. CEB
12692. Such lack of interest in Civil Case No. CEB12692 was susceptible
of various interpretations, including one to the effect that the heirs of
Emigdio could have already threshed out their differences with the
assistance of the trial court. This interpretation was probable considering
that Mervir Realty, whose business was managed by respondent Richard,
was headed by Teresita herself as its President. In other words, Mervir
Realty
appeared
to
be
a
family
corporation.
Also, the fact that the deed of absolute sale executed by Emigdio in favor
of Mervir Realty was a notarized instrument did not sufficiently justify the
exclusion from the inventory of the properties involved. A notarized deed
of sale only enjoyed the presumption of regularity in favor of its execution,
but its notarization did not per se guarantee the legal efficacy of the
transaction under the deed, and what the contents purported to be. The
presumption of regularity could be rebutted by clear and convincing
evidence to the contrary.32 As the Court has observed in Suntay v. Court of
Appeals:33
x x x. Though the notarization of the deed of sale in question vests in its
favor the presumption of regularity, it is not the intention nor the function
of the notary public to validate and make binding an instrument never, in
the first place, intended to have any binding legal effect upon the parties
thereto. The intention of the parties still and always is the primary
consideration in determining the true nature of a contract. (Bold
emphasis supplied)
It should likewise be pointed out that the exchange of shares of stock of
Mervir Realty with the real properties owned by Emigdio would still have to
be inquired into. That Emigdio executed the deed of assignment two days
prior to his death was a circumstance that should put any interested party
on his guard regarding the exchange, considering that there was a finding
about Emigdio having been sick of cancer of the pancreas at the time. 34 In
this regard, whether the CA correctly characterized the exchange as a form
of an estate planning scheme remained to be validated by the facts to be
established
in
court.
The fact that the properties were already covered by Torrens titles in the
name of Mervir Realty could not be a valid basis for immediately excluding
them from the inventory in view of the circumstances admittedly
surrounding the execution of the deed of assignment. This is because:
The Torrens system is not a mode of acquiring titles to lands; it is merely a
system of registration of titles to lands. However, justice and equity
demand that the titleholder should not be made to bear the unfavorable
effect of the mistake or negligence of the States agents, in the absence of
proof of his complicity in a fraud or of manifest damage to third persons.
The real purpose of the Torrens system is to quiet title to land and put a
stop forever to any question as to the legality of the title, except claims
that were noted in the certificate at the time of registration or that may
arise subsequent thereto. Otherwise, the integrity of the Torrens system

shall forever be sullied by the ineptitude and inefficiency of land

registration officials, who are ordinarily presumed to have regularly
performed their duties.35
Assuming that only seven titled lots were the subject of the deed of
assignment of January 10, 1991, such lots should still be included in the
inventory to enable the parties, by themselves, and with the assistance of
the RTC itself, to test and resolve the issue on the validity of the
assignment. The limited jurisdiction of the RTC as an intestate court might
have constricted the determination of the rights to the properties arising
from that deed,36 but it does not prevent the RTC as intestate court from
ordering the inclusion in the inventory of the properties subject of that
deed. This is because the RTC as intestate court, albeit vested only with
special and limited jurisdiction, was still deemed to have all the necessary
powers to exercise such jurisdiction to make it effective. 37
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 quasijudicial 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 CAs 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,
petitioner, and to resolve the case; and ORDERS the respondents to pay
the
costs
of
suit.ChanRoblesVirtualawlibrary