BOSTON EQUITY RESOURCES v CA over the person of Manuel pursuant to Section 5, Rule 86 of ROC (3)

June 19, 2013 | Perez, J. | Petition for Review on Certiorari | Rule 86 – TC erred in ordering the substitution of the deceased Manuel by his
Claims Against Estate heirs; and (4) Court must also dismiss the case against Lolita Toledo
in accordance with Section 6, Rule 86 ROC.
PETITIONER: Boston Equity Resources, Inc. 5. TC denied the MTD for being filed out of time, citing Sec 1, R16
RESPONDENTS: CA, and Lolita Toledo ROC which states that MTD may be filed within the time for but
SUMMARY: BEC filed a complaint against Spouses Manuel and before filing the answer to the complaint or pleading asserting a
Lolita Toledo. At that time, Manuel was already dead, so he was claim. Lolita filed MR; denied on the ground that "defendants’ attack
substituted by his children. After presenting evidence, Lolita, 6 years on the jurisdiction of this Court is barred by estoppel by laches" since
after, filed a motion to dismiss alleging, among others, that the Court Lolita failed to raise the issue despite several chances to do so.
has no jurisdiction over the person of Manuel, and the complaint 6. Lolita filed petition for certiorari with CA, alleging that the TC
failed to implead the estate of Manuel which was an indispensable committed GAD in denying her MTD despite discovery, during the trial
party. The TC denied the MTD, but the CA reversed. SC reinstated of the case, of evidence that would constitute a ground for dismissal.
the RTC decision and held that the estate was not an indispensable 7. CA granted the petition: “In this case, it is undisputed that when
party. BEC filed the complaint on December 24, 1997, defendant Manuel
DOCTRINE: If Sec 6, R86 were applied literally, Article 1216 NCC Toledo was already dead, x x x. Such being the case, the court a quo
would be repealed since under the ROC, petitioner has no choice but could not have acquired jurisdiction over the person of defendant
to proceed against the estate of [the deceased debtor only. This Manuel xxx Issue on jurisdiction may be raised at any stage of the
provision diminishes the creditor’s right under the NCC to proceed proceeding, even for the first time on appeal. By timely raising the
against any one, some or all of the solidary debtors. Such a issue on jurisdiction in her MTD, x x x respondent is not estopped
construction is not sanctioned by principle, which is too well settled from raising the question on jurisdiction. Moreover, the court has not
to require citation, that a substantive law cannot be amended by a yet decided the case yet. It should be stressed that when the
procedural rule. Otherwise stated, Section 6, Rule 86 of the Revised complaint was filed, defendant Manuel was already dead. The
Rules of Court cannot be made to prevail over Article 1216 NCC, the complaint should have impleaded the estate of Manuel S.
former being merely procedural, while the latter, substantive. | See Toledo as defendant, not only the wife, considering that the
Ratio 6-8. estate of Manuel S. Toledo is an indispensable party, which
FACTS: stands to be benefited or be injured in the outcome of the case.
1. December 24, 1997, Petitioner Boston Equity Resources (BEC) filed xxx Considering that the obligation of Manuel S. Toledo is solidary
a complaint for sum of money against the spouses Manuel and Lolita with another debtor, x x x, the claim x x x should be filed against the
Toledo. estate of Manuel S. Toledo, in conformity with the provision of
2. Respondent Lolita filed an Answer on March 19, 1998 but on May Section 6, Rule 86 ROC x x x.”
7, 1998, she filed a Motion for Leave to Admit Amended Answer in
which she alleged, among others, that her husband and co-defendant, ISSUE: WON Lolita is already estopped from questioning TC’s
Manuel Toledo (Manuel), is already dead. The death certificate of jurisdiction – NO, but WAIVED
Manuel states "July 13, 1995" as the date of death. WON estate of Manuel is an indispensable party – NO
3. As a result, BEC filed a motion to require Lolita to disclose the heirs WON inclusion of Manuel as party-defendant is a mere misjoinder of
of Manuel and Lolita submitted the required names and addresses of party not warranting the dismissal of the case before the TC – NO
the heirs. BEC then filed a Motion for Substitution praying that WON it is necessary for BEC to file its claim against the estate of
Manuel be substituted by his children as party-defendants; granted. Manuel –
Trial commenced, and BEC presented its evidence and exhibits.
4. May 26, 2004, reception of evidence for Lolita was cancelled upon RULING: Petition granted. CA Decision reversed and set aside. RTC
agreement of the parties. September 24, 2004, counsel for Lolita was Decision reinstated. RTC directed to proceed with the case against
given 15 days within which to file a demurrer to evidence. However, Lolita only.
on October 7, 2004, Lolita instead filed a MTD the complaint on the
following grounds: (1) Complaint failed to implead an indispensable RATIO:
party or a real party in interest; hence, the case must be dismissed for 1. CA erred in granting certiorari to begin with. The rule is that
failure to state a cause of action; (2) TC did not acquire jurisdiction special civil action for certiorari is not the proper remedy to assail the
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denial by the trial court of a MTD. The order of the trial court denying between them. It is not a sufficient reason to declare a person to be an
a MTD is merely interlocutory, as it neither terminates nor finally indispensable party simply because his or her presence will avoid
disposes of a case and still leaves something to be done by the court multiple litigations.
before a case is finally decided on the merits. The proper remedy in 7. Applying the foregoing pronouncements, it is clear that the estate
such a case is to appeal after a decision has been rendered. of Manuel is not an indispensable party to the collection case, for the
2. MTD filed out of time: Lolita’s MTD was filed 6 years and 5 simple reason that the obligation of Manuel and his wife is solidary.
months after she filed her amended answer. This alone warranted the The contract between BEC and the spouses states “jointly and
outright dismissal of the motion for being contrary to Sec1, R16 ROC. severally.” Pursuant to Article 1216 CC, the collection case can
Moreover, the MTD was filed after BEC has completed the proceed and the demands of petitioner can be satisfied by Lolita only,
presentation of its evidence in the TC, which showed that the filing of even without impleading the estate of Manuel.
the MTD was a mere ploy to delay the resolution of the case. Further 8. CA erred in its interpretation of Sections 5 and 6 R86. In construing
it appears that she had filed an earlier MTD on the sole ground of Section 6, Rule 87 of old ROC (now Section 6, Rule 86), the SC ruled
unenforceability of petitioner’s claim under the Statute of Frauds, in a previous case that: where two persons are bound in solidum for
which was denied. Lolita’s act of filing multiple motions, lends the same debt and one of them dies, the whole indebtedness can be
credibility to the position taken by BEC, that Lolita is deliberately proved against the estate of the latter, the decedent’s liability being
impeding the early disposition of this case. . absolute and primary; Section 6 of Rule 87 provides the procedure
3. Issue of Estoppel: The aspect of jurisdiction which may be barred should the creditor desire to go against the deceased debtor, but there
from being assailed as a result of estoppel by laches is jurisdiction is certainly nothing in the provision making compliance with such
over the subject matter. Here, what respondent was questioning in procedure a condition precedent before an ordinary action against the
her MTD was the TC’s jurisdiction over the person of Manuel. Thus, surviving solidary debtors, should the creditor choose to demand
the principle of estoppel by laches finds no application in this case. payment from the latter, could be entertained to the extent that
Instead, the principles relating to jurisdiction over the person of the failure to observe the same would deprive the court jurisdiction to
parties are pertinent. take cognizance of the action against the surviving debtors. The CC
4. Based on Sec 1, R9, and Sec 8, R15, lack of jurisdiction over the expressly allows the creditor to proceed against any one of the
subject matter is not waived even if not alleged in the MTD, and can solidary debtors or some or all of them simultaneously. There is
be raised anytime, even for the first time on appeal. Since the defense nothing improper in the creditor’s filing of an action against the
of lack of jurisdiction over the person of a party to a case is not one of surviving solidary debtors alone, instead of instituting a proceeding
those defenses which are not deemed waived under Sec1, R9, such for the settlement of the estate of the deceased debtor. (See
must be invoked when an answer or MTD is filed in order to prevent a Doctrine)
waiver of the defense. CA erred when it made a sweeping 6. Issue of misjoinder: Based on the last sentence of Section 11,
pronouncement that issue on jurisdiction may be raised at any stage. Rule 3, a misjoined party must have the capacity to sue or be sued in
As the question of jurisdiction involved here is that over the person of the event that the claim by or against the misjoined party is pursued
Manuel, the same is deemed waived if not raised in the answer or in a separate case. In this case, the inclusion of Manuel in the
MTD. complaint cannot be considered a misjoinder, as in fact, the action
5. Jurisdiction over the person of a defendant is acquired through a would have proceeded against him had he been alive at the time the
valid service of summons; the TC did not acquire jurisdiction over the collection case was filed by petitioner. The case against Manuel must
person of Manuel in the first place since there was no valid service of be dismissed. This is further warranted by Section 1 Rule 3, which
summons upon him, precisely because he was already dead. states that only natural or juridical persons, or entities authorized by
6. Issue of Estate of Manuel as an Indispensable Party: An law may be parties in a civil action. Since the proper course of action
indispensable party is one who has such an interest in the controversy against the wrongful inclusion of Manuel as party-defendant is the
or subject matter of a case that a final adjudication cannot be made in dismissal of the case as against him, the TC erred when it ordered the
his or her absence, without injuring or affecting that interest. S/He is substitution of Manuel by his heirs. Substitution is proper only where
one who must be included in an action before it may properly the party to be substituted died during the pendency of the case.
proceed. On the other hand, a person is not an indispensable party if Since Manuel was already dead at the time of the filing of the
his interest in the controversy or subject matter is separable from the complaint, there was no party to be substituted.
interest of the other parties, so that it will not necessarily be directly
or injuriously affected by a decree which does complete justice METROBANK V ABSOLUTE MANAGEMENT CORPORATION

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 9 Jan. 2013 | Brion, J. | Rule 86 – Claims Against Estate 5. Metrobank filed a motion for leave to admit 4th-party complaint
PETITIONER: Metropolitan Bank & Trust Company against Chua’s estate, alleging that the latter should reimburse
RESPONDENT: Absolute Management Corporation Metrobank in case it would be held liable in the 3 rd party complaint
AMC had filed against it.
SUMMARY: Metrobank deposited checks from SHCI payable to AMC 6. The RTC denied said motion on the ground that Metrobank’s
into the accounts of ALH, a sole proprietorship owned and managed allegation in the 4th-party complaint as “cobro de lo indebido”, a type
by Chua, who was also AMC’s Gen. Manager. When SHCI demanded of quasi-contract that mandates recovery of what has been improperly
delivery from AMC pursuant to said checks, AMC asked that paid, which falls under the concept of implied contracts that must be
Metrobank be held liable in the event such liability was adjudged included in the claims required to be filed with the judicial settlement
against AMC. Metrobank sought leave to file a 4 th-party complaint of the deceased’s estate under Sec 5, Rule 86, RoC. As such claim, it
against the estate of Chua. The SC held that it should be allowed to should be filed as special proceedings, not before the RTC as a 4 th-
file such 4th-party complaint. party complaint. The CA affirmed said ruling.

DOCTRINE: the term quasi-contract is included in the concept ISSUE: WoN Metrobank should be allowed to file a 4th-party
“implied contracts” as used in the RoC. Accordingly, liabilities of the complaint against Chua’s estate in the RTC proceedings – YES
deceased arising from quasi-contracts should be filed as claims in the HELD: Petition denied. CA decision affirmed.
settlement of his estate,a s provided in Sec 5, Rule 86, RoC.
FACTS: RATIO:
1. Sherwood Holdings Corporation, Inc. (SHCI) filed a complained for 1. Maclan v Garcia, citing Leung Ben v O’Brien: The term ‘implied
sum of money against Absolute Management Corporation (AMC), contracts as used in our remedial law originated from the common
alleging that it had made advance payments to AMC for the purchase law where obligations derived from quasi-contracts and from law are
of plywood and plyboards, covered several crossed checks payable to both considered as implied contracts. Thus, the term quasi-contract is
AMC and given to Chua, AMC’s Gen. Manager. included in the concept “implied contracts” as used in the RoC.
2. Chua died in 1999, and a special proceeding for the settlement of Accordingly, liabilities of the deceased arising from quasi-contracts
his estate was commenced before the RTC of Pasay City. Said should be filed as claims in the settlement of his estate, as provided in
proceeding was pending when AMC filed its answer with Sec 5, Rule 86, RoC.
counterclaims and third-party complaint. 2. Both the RTC and CA described Metrobank’s claim against Chua’s
3. SHCI made demands on AMC after Chua’s death for allegedly estate as one based on quasi-contract, which involves a juridical
undelivered items. AMC claimed said transactions could not be found relation that the law creates on the basis of certain voluntary,
on its records. On investigation, AMC discovered that Chua received unilateral and lawful acts of a person, to avoid unjust enrichment.
from SHCI 18 Metrobank checks worth about P31M, all payable to According to the CA, Metrobank’s 4th-party complaint falls under the
AMC and crossed or “for payee’s accounts only”. In its answer with quasi-contracts in Art. 2154, CC, which embodies the concept “solutio
counterclaims and third-party complaint, AMC averred that it had no indebiti”, which has two indispensable requisites: (1) that something
knowledge of Chua’s transactions with SHCI and did not receive any has been unduly delivered through mistake; and (2) that something
money from the latter. It asked the RTC to hold Metrobank liable for was received when there was no right to demand it. Metrobank’s
the subject checks in case it was adjudged liable to SHCI. claims in its 4th-party complaint fulfills the requisites of solutio
4. Metrobank admitted depositing the checks to the account of Ayala indebiti, since Metrobank acted in a manner akin to mistake when it
Lumber and Hardware, a sole proprietorship Chua owned and deposited the checks to the Ayala Lumber account and assumed that
managed, allegedly done with AMC’s knowledge and consent. it could do so because of Chua’s control over AMC; and Ayala Lumber
Metrobank claimed that Chua gave the assurance that the had no right to demand and receive the checks deposited to its
arrangement for the handline of the checks carried AMC’s consent, account. This disjunct created an obligation on Ayala Lumber’s part,
and had submitted documents showing his position and interest in through Chua, to return the amount of the checks to Metrobank.
AMC. Metrobank claimed that said documents, and AMC’s admission 3. However, the SC qualified its description of Metrobank’s 4 th party-
in its answer tha tit allowed Chua to freely manage AMC, showed that complaint as a claim analogous to solution indebiti. It was not an
it knew of Chua’s arrangement with Metrobank. Moreover, Chua’s adjudication determining the liability of Chua’s estate but merely to
records showed that the checks’ proceeds were remitted to AMC. determine the TC and CA’s orders denying it.

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4. A distinctive character of Metrobank’s 4 th-party complaint is its cough up money for them; so he deducts the amount due from
contingent nature, i.e. it depends on the possibility that Metrobank their pay.
would be adjudged liable to AMC, a future event that may or may not 3. Meanwhile, Bacoor Transport Service Cooperative, Inc.
happen. This unmistakably marks the complaint as a contingent one (BTSCI) declared that it should not be made a party to the
that must be included under Sec 5, Rule 86, RoC. case because it has nothing to do with the employment of its
5. Metrobank argued that Sec. 11, Rule 6, RoC should apply because member-drivers, among other assertions made.
it impleaded Chua’s estate for reimbursement in the same transaction 4. The LA ruled that there was illegal dismissal. But before a
upon which it has been sued by AMC. However, Sec 5, Rule 86 copy of the decision was served on petitioner, he passed away.
prevails over Sec 11, Rule 6, as the latter applies to ordinary civil The bailiff tried to serve upon the surviving wife and daughter,
actions while the former specifically applies to money claims against but the latter, after speaking with their counsel, refused to
the estate. receive it, so the decision was only tendered to them.
GABRIEL v BRILON 5. They appealed, and the NLRC reversed the LA decision and
FEB 7, 2007| AZCUNA, J | RULE 86 dismissed the case, on the ground that there was no EE-ER
relationship.
SUMMARY: Consolidated cases on illegal dismissal were filed 6. An MR was filed by respondents, and the 2nd decision of the
against Melencio Gabriel who died before the LA decision was NLRC likewise dismissed the case, but on different ground:
served upon him. It was tendered on his surviving wife and because Gabriel was already dead when ‘service’ was made,
daughter. The NLRC reversed the adverse LA decision, saying that there was no valid service of the decision to speak of, and that
the actions filed by the complainants should be dismissed and complainants are directed to pursue their claim against the
instead be brought in the estate proceedings. The SC, applying proceedings for the settlement of the estate of the deceased
Rule 3 Sec 20 in conjunction with Rule 86 Sec 5, ruled in favor of Melencio Gabriel.
respondents. 7. The CA reversed this decision, saying that: boundary system
used in jeepney and (taxi) operations presupposes an
DOCTRINE: see Ratio on 2nd issue. employer-employee relationship; and that Section 3, Rule III of
the NLRC Manual on Execution of Judgment 1 is point; further,
that reinstatement, not payment of separation pay, is proper.
FACTS:
1. respondents filed their separate complaints for illegal
ISSUES:
dismissal, illegal deductions, and separation pay against
1) WoN petitioner’s appeal was filed out of time—NO.
petitioner with the NLRC which were consolidated. They later
2) WoN the claim survives—YES. But the money judgment,
impleaded Bacoor Transport Service Cooperative, Inc. as
to enforce it, shall be filed in the estate proceedings.
defendant. They alleged that they were regular drivers of
3) WoN petitioner’s surety bond was defective for being in the
Gabriel Jeepney, That they were required/forced to pay
name of BTSCI which did not appeal and for having been
additional P55.00 per day for the following: a) P20.00 police
entered into by Mrs. Gabriel without BTSCI’s authority—NO.
protection; b) P20.00 washing; c) P10.00 deposit; and [d)]
P5.00 garage fees; that one day they were dismissed from 4) WoN an employer-employee relationship existed between
work. Further, That boundary drivers, which they are, of
passenger jeepneys are considered regular employees of the 1 SECTION 3. Execution in Case of Death of Party.∙Where a party dies after
jeepney operators. the finality of the decision/entry of judgment of order, execution thereon may
2. On the other hand, petitioner says that He does not remember issue or one already issued may be enforced in the following cases:
if the respondents were ever under his employ as drivers of his a) x x x ;
passenger jeepneys. If they were, he never allowed his drivers b) In case of death of the losing party, against his successor-ininterest,
to be idle. That if these drivers really wanted work, he would executor or administrator;
have lent them units to drive; As long as they obtained the c) In case of death of the losing party after execution is actually levied
necessary licenses and references, they would have been upon any of his property, the same may be sold for the satisfaction
accommodated and placed on schedule. As regards alleged thereof, and the sheriff making the sale shall account to his
deductions from his drivers’ salaries, it was because successor-in-interest, executor or administrator for any surplus in his
sometimes they get into trouble with the police and he had to hands.
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 petitioner and respondents—YES. was within the ten-day reglementary period prescribed under Section
5) WoN they were illegally dismissed—YES. 223 of the Labor Code.
As regards the 3rd issue: moot and academic by the certification
RULING: Petition GRANTED. issued by the Vice-President of the bonding company to the effect that
RATIO: Eastern Assurance and Surety Corporation Bond No. 2749 was posted
As regards 1st issue: service of a copy of the decision could not have for and on behalf appellant Melencio Gabriel and/or his heirs and that
been validly effected on April 18, 1997 because petitioner passed (T)he name BTSCI was indicated in said bond due merely
away on April 4, 1997. inadvertently.
Section 4, Rule III of the New Rules of Procedure of the NLRC As regards 4th issue: [T]he relationship between jeepney
provides: SEC. 4. Service of Notices and Resolutions.·(a) Notices or owners/operators and jeepney drivers under the boundary system is
summons and copies of orders, resolutions or decisions shall be that of employer-employee and not of lessor-lessee because in the
served on the parties to the case personally by the bailiff or lease of chattels the lessor loses complete control over the chattel
authorized public officer within three (3) days from receipt thereof or leased although the lessee cannot be reckless in the use thereof,
by registered mail; Provided, That where a party is represented by otherwise he would be responsible for the damages to the lessor. In
counsel or authorized representative, service shall be made on such the case of jeepney owners/operators and jeepney drivers, the former
counsel or authorized representative; Provided further, That in cases exercises supervision and control over the latter. The fact that the
of decision and final awards, copies thereof shall be served on both drivers do not receive fixed wages but get only that in excess of the
parties and their counsel ⁄. For the purpose of computing the period of so-called “boundary” [that] they pay to the owner/operator is not
appeal, the same shall be counted from receipt of such decisions, sufficient to withdraw the relationship between them from that of
awards or orders by the counsel of record. (b) The bailiff or officer employer and employee. Thus, private respondents were employees ⁄
personally serving the notice, order resolution or decision shall submit because they had been engaged to perform activities which were
his return within two (2) days from date of service thereof, stating usually necessary or desirable in the usual business or trade of the
legibly in his return, his name, the names of the persons served and employer.
the date of receipt which return shall be immediately attached and As regards 5th issue: Respondents were not accorded due process.
shall form part of the records of the case. If no service was effected, Moreover, petitioner failed to show that the cause for termination falls
the serving officer shall state the reason therefore in the return. under any of the grounds enumerated in Article 282 (then Article 283)
Section 6, Rule 132 of the Rules of Court is suppletory to the NLRC of the Labor Code. Consequently, respondents are entitled to
Rules of Procedure. reinstatement without loss of seniority rights and other privileges and
However, those rules contemplate a situation wherein the party to the to their full backwages computed from the date of dismissal up to the
action is alive upon the delivery of a copy of the tribunal’s decision. In time of their actual reinstatement in accordance with Article 279 of
the present case, however, petitioner died before a copy of the labor the Labor Code. Reinstatement is obtainable in this case because it
arbiter’s decision was served upon him. Hence, the above provisions has not been shown that there is an ensuing “strained relations”
do not apply.contemplate a situation wherein the party to the action is between petitioner and respondents.
alive upon the delivery of a copy of the tribunal’s decision. In the As regards the 2nd issue: respondents’ monetary claim shall be
present case, however, petitioner died before a copy of the labor governed by Section 20 (then Section 21), Rule 3 of the Rules of Court
arbiter’s decision was served upon him. Hence, the above provisions which provides:
do not apply. SEC. 20. Action on contractual money claims.·When the action is
Thus, the appeal filed on behalf of petitioner on June 5, 1997 after for recovery of money arising from contract, express or implied,
receipt of a copy of the decision via registered mail on May 28, 1997 and the defendant dies before entry of final judgment in the
court in which the action was pending at the time of such death, it
shall not be dismissed but shall instead be allowed to
2 “[s]ervice of the papers may be made by delivering personally a copy to the continue until entry of final judgment. A favorable judgment
party or his counsel, or by leaving it in his office with his clerk or with a obtained by the plaintiff therein shall be enforced in the manner
person having charge thereof. If no person is found in his office, or his office provided in these Rules for prosecuting claims against the estate
is not known, or he has no office, then by leaving the copy, between the hours of a deceased person.
of eight in the morning and six in the evening, at the party’s or counsel’s In relation to this, Section 5, Rule 86 of the Rules of Court states:
residence, if known, with a person of sufficient age and discretion then
residing therein.”
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 SEC. 5. Claims which must be filed under the notice. If not filed, commenced. Edmund, as one of the heirs, was appointed as the special
barred; exceptions.·All claims for money against the decedent administrator of the estate of the decedent. During the pendency of the
arising from contract, express or implied, whether the same be
due, not due, or contingent, ... and judgment for money against
testate proceedings, the surviving heirs, Edmund and his sister Florence
the decedent, must be filed within the time limited in the Santibañez Ariola, executed a Joint Agreement wherein they agreed to
notice; otherwise they are barred forever, except that they divide between themselves and take possession of the three (3) tractors;
may be set forth as counterclaims in any action that the executor that is, two (2) tractors for Edmund and one (1) tractor for Florence. Each of
or administrator may bring against the claimants. them was to assume the indebtedness of their late father to FCCC,
Thus, in accordance with the above Rules, the money claims of
respondents must be filed against the estate of petitioner Melencio corresponding to the tractor respectively taken by them.
Gabriel. 3. FCCC assigned all its assets and liabilities to Union Savings and Mortgage
Union Bank v. Santibañez Bank. Subsequently, petitioner Union Bank of the Philippines (UBP; not the
Feb. 23, 2005 | Callejo, Sr., J. | Transfer of Property, Rights and Obligations same as Union Savings and Mortgage Bank) sent demand letters to
SUMMARY: FCCC loaned the decedent money for the purchase of tractors. In view Edmund, but the latter refused to pay. Hence, UBP filed a complaint for sum
thereof, the decedent and his son issued promissory notes in favor of the FCCC. of money against the heirs of Efraim, Edmund and Florence. However, the
When the decedent died, the son and his sister (decedent’s daughter) entered into summons for Edmund was not served since he was in the US. Accordingly,
a Joint Agreement whereby they would divide between themselves and take the complaint was narrowed down to Florence.
possession of the three (3) tractors, and each of them was to assume the 4. Florence alleged that the loan documents did not bind her since she was
indebtedness of their late father to FCCC corresponding to the tractors. Thereafter, not a party thereto. Considering that the joint agreement signed by her and
FCCC allegedly assigned its assets and liabilities to UBP; hence, UBP instituted this her brother Edmund was not approved by the probate court, it was null and
collection suit against the son as well as the daughter, being the heirs of the void; hence, she was not liable to the petitioner under the joint agreement.
decedent. The Court held that 1) the claim should have been filed with the probate
5. RTC: The claim should have been filed with the probate court before which
court and 2) the Joint Agreement was void, being a partition of the estate of the
the testate estate of the decedent was pending. Moreover, the Joint
decedent which had not been approved by the probate court.
Agreement was, in effect, a partition of the estate of the decedent.
However, the said agreement was void, considering that it had not been
DOCTRINE: 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,
approved by the probate court, and that there can be no valid partition until
because unless a will is probated and notice thereof given to the whole world, the after the will has been probated.
right of a person to dispose of his property by will may be rendered nugatory. When 6. CA: Affirmed the RTC in toto.
the probate proceeding has already acquired jurisdiction over all the properties of
the deceased, to dispose of them in any way without the probate court’s approval is ISSUE/S:
tantamount to divesting it with jurisdiction which the Court cannot allow. 1. WON the partition in the Joint Agreement is valid – NO
2. WON the heirs’ assumption of the indebtedness of the deceased is
FACTS: valid – NO
1. The First Countryside Credit Corporation (FCCC) and Efraim M. Santibañez 3. WON UBP can hold the heirs liable on the obligation of the deceased
entered into 2 loan agreements. The first loan was intended for the
payment of the purchase price of one tractor, while the second loan was RATIO:
intended for the purchase of two more tractors. In view thereof, Efraim and 1.
his son, Edmund, executed a promissory note for each loan in favor of the a. The rule is that there can be no valid partition among the heirs until
FCCC. Aside from this, they also signed a Continuing Guaranty Agreement after the will has been probated. The law enjoins the probate of a
for the second loan. will and the public requires it, because unless a will is probated and
2. Efraim died, leaving a holographic will. Subsequently, testate proceedings notice thereof given to the whole world, the right of a person to
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 dispose of his property by will may be rendered nugatory. Hence, UBP should have thus filed its money claim with the
b. This, of course, presupposes that the properties to be partitioned probate court in accordance with Section 5, Rule 86 of the Revised
are the same properties embraced in the will. In this case, the Rules of Court.
holographic will contained the provision which reads as follows: 3.
i. All other properties … which I own and may be discovered a. Nothing in the records of the case could hold Florence accountable
later after my demise, shall be distributed in the for any liability incurred by her late father. The promissory notes
proportion indicated in the immediately preceding and the continuing guaranty agreement were executed and signed
paragraph in favor of Edmund and Florence, my children. only by the decedent and Edmund. As the petitioner failed to file its
c. The above-quoted is an all-encompassing provision including the money claim with the probate court, at most, it may only go after
three (3) subject tractors. Edmund as co-maker of the decedent. As the court had not
d. The joint agreement is invalid, since at the time of its execution, acquired jurisdiction over the person of Edmund, it is unnecessary
there was already a pending proceeding for the probate of their to delve into the matter further.
late father’s holographic will covering the said tractors.
e. The probate proceeding had already acquired jurisdiction over all
the properties of the deceased, including the three (3) tractors. To
Heirs of Maglasang v. Manila Banking Corp
dispose of them in any way without the probate court’s approval is
tantamount to divesting it with jurisdiction which the Court cannot September 23, 2013 | Perlas-Bernabe | Petition for review on
allow. Every act intended to put an end to indivision among co- certiorari | Rule 45
heirs and legatees or devisees is deemed to be a partition, although
it should purport to be a sale, an exchange, a compromise, or any PETITIONER: Heirs of Spouses Maglasang
other transaction. Thus, in executing any joint agreement which RESPONDENT: Manila Banking Corporation (MBC) now First
Sovereign Asset Management SPV-AMC, Inc.
appears to be in the nature of an extra-judicial partition, court
SUMMARY: Spouses Maglasang obtained loans from Manila
approval is imperative. Banking Corporation which were secured with Real Estate
f. Moreover, it is within the jurisdiction of the probate court to Mortgages. Upon the death of the spouses, the heirs extra-
determine the identity of the heirs of the decedent. There is no judicially partitioned the estate so the loans to MBC remained
showing that the signatories in the joint agreement were the only unsatisfied. MBC foreclosed the mortgages extra-judicially but
there was a deficiency. MBC filed a suit to recover the deficiency
heirs. When it was executed, the probate of the will was still amount.
pending before the court and the latter had yet to determine who
the heirs of the decedent were. The joint agreement was DOCTRINE: Section 7, Rule 86 offers the mortgage-creditor three
prejudicial to the other possible heirs and creditors who may have options:
a valid claim against the estate of the deceased. (1) to waive the mortgage and claim the entire debt from the
estate of the mortgagor as an ordinary claim;
2.
a. The assumption of liability was conditioned upon the happening of (2) foreclose the mortgage judicially and prove any deficiency as
an event, that is, that each heir shall take possession and use of an ordinary claim; and
their respective share under the agreement. The partition being
(3) to rely on the mortgage exclusively, foreclosing the same at
invalid, the heirs in effect did not receive any such tractor. It follows
any time before it is barred by prescription, without right to
then that the assumption of liability cannot be given any force and file a claim for any deficiency.
effect.
b. The Court notes that the loan was contracted by the decedent. These remedies are distinct, independent and mutually exclusive

7
 from each other; thus, the election of one effectively bars the
exercise of the others. Having unequivocally opted to exercise the CA: Denied the petitioners’ appeal and affirmed the RTC’s Decision.
third option of extra-judicial foreclosure under Section 7, Rule 86, The probate court erred when it closed and terminated the
respondent is now precluded from filing a suit to recover any proceedings without first satisfying the claims of the creditors of the
deficiency amount. estate. Respondent was not able to collect from the petitioners and
thereby was left with the option of foreclosing the real estate
mortgage. Section 7, Rule 86 of the Rules does not apply to the
FACTS:
present case since the same does not involve a mortgage made by the
administrator over any property belonging to the estate of the
1. Spouses Flaviano and Salud Maglasang (Sps.Maglasang) obtained a
decedent. What should apply is Act No. 313533 which entitles
credit line from respondent Manila Banking Corporation which was
respondent to claim the deficiency amount after the extra-judicial
secured by a real estate mortgage over seven properties.
foreclosure of the real estate mortgage
2. They availed of the credit line by obtaining several loans amounting
to P349,596.33.00 at 12% interest p.a. and with a 4% penalty. The
ISSUE: W/N the CA erred in affirming the RTC’s award of the
loans became due and demandable.
deficiency amount in favor of respondent. YES. Petitioner’s choice
of exercising its option to extra-judicially foreclose the
3. After Flaviano died, the widow Salud and the other children
mortgage precluded it from filing a suit to receover any
appointed Edgar (one of the children) as their attorney-in-fact. He
deficiency amount.
filed a petition for letters of administration which was granted.

4. The probate court issued a Notice to Creditors for filing of money 1. Section 7, Rule 863 speaks of "a creditor holding a claim
claims and Metro Banking Corporation notified the probate court of against the deceased secured by a mortgage or other
its claims. collateral security". It covers all secured claims, whether by
mortgage or any other form of collateral, which a creditor may
5. In December 1978, the probate court terminated the proceedings enforce against the estate of the deceased debtor.
with the surviving heirs executing an extra-judicial partition of the
properties of Flaviano’s estate. The loan obligations owed by the 2. The rule under Section 7, Rule 86 says that the secured
estate to respondent Metro Banking Corporation, however, remained creditor has three remedies/options that he may alternatively
unsatisfied due to respondent’s certification that Flaviano’s account adopt for the satisfaction of his indebtedness. In particular, he
was undergoing a restructuring. may choose to:

6. However, the probate court expressly recognized the rights of a. waive the mortgage and claim the entire debt from the
respondent under the mortgage and promissory notes executed by the estate of the mortgagor as an ordinary claim;
Sps. Maglasang, specifically, its "right to foreclose the same within the
statutory period." 3 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
7. Respondent proceeded to extra-judicially foreclose the mortgage claim in the manner provided in this rule, and share in the general distribution of the assets of
however, remained a deficiency on Sps. Maglasang’s obligation to the estate; or he may foreclose his mortgage or realize upon his security, by action in court,
respondent. Respondent filed a suit to recover the deficiency amount making the executor or administrator a party defendant, and if there is a judgment for a
against the estate of Flaviano. 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
RTC: Directed the petitioners to pay respondent. The RTC found that alone, and foreclose the same at any time within the period of the statute of limitations, and in
it was shown, by a preponderance of evidence, that petitioners, after that event he shall not be admitted as a creditor, and shall receive no share in the distribution
the extra-judicial foreclosure of all the properties mortgaged, still of the other assets of the estate; but nothing herein contained shall prohibit the executor or
have an outstanding obligation. 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
8. Petitioners appealed to the CA. for the best interest of the estate that such redemption shall be made.
8
 requirements of publication and posting and the place of sale –
b. foreclose the mortgage judicially and prove the must be governed by Act No. 3135
deficiency as an ordinary claim; and
7. Respondent sought to extra-judicially foreclose the mortgage
c. rely on the mortgage exclusively, or other security and of the properties previously belonging to Sps. Maglasang.
foreclose the same before it is barred by prescription, having unequivocally opted to exercise the third option of
without the right to file a claim for any deficiency. extra-judicial foreclosure under Section 7, Rule 86, respondent
is now precluded from filing a suit to recover any deficiency
These remedies are distinct, independent and mutually amount.
exclusive from each other; thus, the election of one effectively
bars the exercise of the others.
Philippine National Bank v. Court of Appeals
3. Anent the third remedy, it must be mentioned that the same June 21, 2001 | Quisumbing, J. | Rule | Claims Against the Estate
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 FACTS:
foreclosure is that the creditor waives his right to recover any The spouses Antonio and Asuncion Chua were the owners of a parcel
deficiency from the estate. of land covered by a TCT and registered in their names. Upon the
husband’s death, the probate court appointed his son, private
4. The operation of Act No. 3135 does not entirely discount the respondent Allan as special administrator of the deceased’s intestate
application of Section 7, Rule 86, or vice-versa. Rather, the two estate. The court also authorized Allan to obtain a loan
complement each other within their respective spheres of accommodation from PNB to be secured by a real estate mortgage
operation. over the above-mentioned parcel of land, which Allan did for
P450,000.00 on June 1989, with interest set at 18% per annum.
a. On the one hand, Section 7, Rule 86 lays down the
options for the secured creditor to claim against the For failure to pay the loan in full, the bank extrajudicially foreclosed
estate and, according to jurisprudence, the availment the real estate mortgage in December 1990. By this time, the total
of the third option bars him from claiming any indebtedness was P679,185. During the auction, PNB was the highest
deficiency amount. bidder with a bid price of P303,360/ However, the loan still had a
payable balance of P372,852. To claim this deficiency, PNB instituted
b. On the other hand, after the third option is chosen, the an action with the RTC, Balayan, Batangas, against both Mrs. Chua
procedure governing the manner in which the extra- and Allan. Summons were served to them but they did not answer the
judicial foreclosure should proceed would still be complaint and were declared in default. The trial court received
governed by the provisions of Act No. 3135. evidence ex parte.

RTC – dismissed the complaint.

5. Simply put, Section 7, Rule 86 governs the parameters and the CA – dismissed PNB’s appeal for lack of merit.
extent to which a claim may be advanced against the estate,
whereas Act No. 3135 sets out the specific procedure to be Hence, the present petition for review on certiorari under Rule 45 of
followed when the creditor subsequently chooses the third the Rules of Court.
option – specifically, that of extra-judicially foreclosing real
property belonging to the estate Arguments of Chua:
(1) Having chosen the remedy of extrajudicial foreclosure of the
6. Since Section 7, Rule 86 does not detail the procedure for mortgaged property of the deceased, petitioner is precluded
extra-judicial foreclosures, the formalities governing the from pursuing its deficiency claim against the estate of
manner of availing of the third option – such as the place Antonio M. Chua under Sec. 7, Rule 86 of the Rules of Court.
where the application for extra-judicial foreclosure is filed, the
9
Argument of PNB: (2) to foreclose the mortgage judicially and prove any deficiency as an
(1) Under prevailing jurisprudence, (specifically Prudential Bank ordinary claim; and
v. Martinez) when the proceeds of the sale are insufficient to (3) to rely on the mortgage exclusively, foreclosing the same at
pay the debt, the mortgagee has a right to recover the any time before it is barred by prescription without right to file
deficiency from the debtor. Act 31354 is the applicable law, not a claim for any deficiency.
the Rules of Court.
PNB has chosen the option of extrajudicially foreclosing the mortgage
ISSUES: property which bars any subsequent claim against the estate. No
1. Whether or not the CA erred in holding that PNB can no further liability remains on the part of the descendants or the estate.
longer pursue its deficiency claim against the estate by civil This the doctrine in Perez v. PNB which reversed the earlier case of
action having elected one of its alternative right pursuant to Pasno v. Ravina.
Sec. 7 Rule 86 of the Rules of Court. NO.
PETITION IS DENIED.
RATIO: CABUGAO V. PEOPLE
The case cited by PNB involved an ordinary debt secured by a July 30, 2014 | J. Peralta | Appeals via Rule 45 | Rule 86
mortgage. The present case involves a foreclosure of a mortgage
arising out of a settlement of the estate, wherein the administrator PETITIONERS: Dr. Antonio P. Cabugao And Dr. Clenio Ynzon
mortgaged a property belonging to the estate of the decedent,
pursuant to an authority given by the probate court thus the Rules of RESPONDENTS: People and Sps. Rodolfo and Rosario Palma
Court on Special Proceedings are applicable. It is clear from the text
of Section 7, Rule 89 that once the deed of real estate mortgage is SUMMARY: 10-yr-old Rodolfo Jr. died two days under the medical
recorded in the proper Registry of Deeds, together with the care of
corresponding court order authorizing the administrator to mortgage
the property, said deed shall be valid as if it has been executed by the DOCTRINE: The death of the accused Dr. Ynzon pending appeal
deceased himself. of his conviction extinguishes his criminal liability. However, the
recovery of civil liability subsists as the same is not based on
In the present case it is undisputed that the conditions under Sec. 7 of delictbut by contract and the reckless imprudence he was guilty of
Rule 895 has been complied with. It follows that Sec. 7 of Rule 86 under Article 365 of the RPC.
comes into play. Under this rule, the mortgagee is granted three
distinct, independent and mutually exclusive remedies that can
be alternatively pursued by the mortgage creditor for the FACTS:
satisfaction of his credit in case the mortgagor dies, among them: 1. June 14, 4pm: 10-year old Rodolfo F. Palma, Jr. complained of
(1) to waive the mortgage and claim the entire debt from the estate of abdominal pain to his mother.
the mortgagor as an ordinary claim; 2. 5pm: JR was brought to the clinic of accused Dr. Cabugao. Dr.
Cabugao [GENERAL PRACTITIONER] gave medicines for the pain
and told Palma's parents to call him up if his stomach pains
4 An Act to Regulate the Sale of Property under Specia continue.
3. June 15, 4:30am: they returned to Dr. Cabugao, who advised them
l Powers Inserted in or Annexed to Real Estate Mortgages to bring JR to the Nazareth General Hospital for confinement. JR
5 Section 7. Regulation for granting authority to sell, mortgage, or otherwise encumber estate. — The was admitted at the said hospital at 5:30am.
court having jurisdiction of the estate of the deceased may authorize the executor or administrator to sell 4. Dr. Cabugao performed several tests (blood and rectal exam) and
personal estate, or to sell, mortgage, or otherwise encumber real estate, in cases provided by these rules
and when it appears necessary or beneficial under the following regulations.
made the initial diagnosis of Acute Appendicities. Hence, he
… referred the case to Dr. Ynzon [SURGEON].
(f) There shall be recorded in the registry of deeds of the province in which the real estate thus sold, 5. June 16: JR vomited greenish stuff. The nurses on-duty relayed
mortgage, or otherwise encumbered is situated, a certified copy of the order of the court, together with the JR's condition to Dr. Ynzon who merely gaveorders via telephone.
deed of the executor or administrator for such real estate, which shall be as valid as if the deed had been 6. June 17: JR died.
executed by the deceased in his lifetime.

10
7. An Info was filed against accused for RECKLESS IMPRUDENCE 2. Dr. Ynzon revealed want of reasonable skill and care in attending
RESULTING TO HOMICIDE against to the needs of JR by neglecting to monitor effectively the
developmentsand changes on JR's condition during the
8. RTC: Both Guilty. The accused, as the attending physicians, observation period, and to act upon the situation after the 24-
did not personally monitor JR in order to check on subtle hour period when his abdominal pain persisted and his condition
changes that may occur. Rather, they left the monitoring and worsened.
actual observation to resident physicians who are just on [RELEVANT PART] ISSUE #3: What is the effect of death of DR.
residency training. YNZON?
9. CA affirmed. The inaction, neglect and indifference of appellants
1. Due to the death of accused Dr. Clenio Ynzon prior to the
who, after the day of admission only briefly visited JR once during
disposition of this case, his criminal liability is extinguished;
regular rounds and gave medication orders by telephone –
however, his civil liability subsists. A separate civil action may be
constitutes gross negligence.
filed either against the executor/administrator, or the estateof Dr.
ISSUE #1: WON DR. CABUGAO'S is guilty of reckless Ynzon, depending on the source of obligation upon which the same
imprudence? NO. are based.
1. The Court is not convinced with moral certainty that Dr. Cabugao 2. The effect of death, pending appeal of his conviction of Dr. Ynzon
isguilty of reckless imprudence as the elements thereof were not with regard to his criminal and pecuniary liabilities should be in
proven by the prosecution beyond a reasonable doubt. accordance to People v. Bayotas:
2. The referral of JR to Dr. Ynzon, a surgeon, is actually an exercise 1. Death of the accused pending appeal of his conviction
of precaution as he knew that appendicitis is not within his scope extinguishes his criminal liability as well as the civil
of expertise. This clearly showed that he employed the best of his liability based solely thereon.
knowledge and skill in attending to JR's condition, even after the 2. Corollarily, the claim for civil liability survives
referral of JR to Dr. Ynzon. To be sure, the calculated assessment notwithstanding the death of accused, if the same may also
of Dr. Cabugao to refer JRto a surgeon who has sufficient training be predicated on a source of obligation other than delict.
and experience to handle JR’s case belies the finding that he Article 1157 of the Civil Code enumerates these other sources
displayed inexcusable lack of precaution in handling his of obligation fromwhich the civil liability may arise as a result
patient.http://www.lawphil.net/judjuris/juri2014/jul2014/gr_16387 of the same act or omission:
9_2014.html - fnt31 a) Law
3. We likewise note that Dr. Cabugao was out of town when JR's
b) Contracts
condition began to deteriorate. Even so, before he left, he made
endorsement and notified the resident-doctor and nurses-on-duty c) Quasi-contracts
that he will be on leave. e) Quasi-delicts
ISSUE #2: WON DR. YNZON'S is guilty of reckless imprudence? 3. Where the civil liability survives, an action for recovery
YES. therefor may be pursued but only by way of filing a separate
1. The elements of reckless imprudence are: civil action. This separate civil action may be enforced either
a. that the offender does or fails to do an act; against the executor/administrator or the estate of the
b. that the doing or the failure to do that act is voluntary; accused, depending on the source of obligation.
c. that it bewithout malice; 4. Finally, the private offended party need not fear a forfeiture
d. that material damage results from the reckless of his right to file this separate civil action by prescription, in
imprudence; and cases where during the prosecution of the criminal action and
e. that there is inexcusable lack of precaution on the part of prior to its extinction, the private-offended party instituted
the offender, taking into consideration his employment or together therewith the civil action. In such case, the statute of
occupation, degree of intelligence, physical condition, and limitationson the civil liability is deemed interrupted during
other circumstances regarding persons, time and the pendency of the criminal case, conformably with provisions
place.http://www.lawphil.net/judjuris/juri2014/jul2014/gr_1 of Article 1155 of the Civil Code, that should thereby avoid any
63879_2014.html - fnt14 apprehension on a possible privation of right by

11
 prescription.http://www.lawphil.net/judjuris/juri2014/jul2014/g action already commenced by the deceased in his lifetime, the
r_163879_2014.html - fnt35 debtor may set forth by answer the claims he has against the
3. A separate civil action may be enforced either against the decedent, instead of presenting them independently to the court
as herein provided, and mutual claims may be set off against each
executor/administrator or the estate of the accused, depending on
other in such action; and if final judgment is rendered in favor of
the source of obligation upon which the same is based,36 and in
the defendant, the amount so determined shall be considered the
accordance with Sec 4, Rule 111:
true balance against the estate, as though the claim had been
Sec. 4. Effect of death on civil actions. – The death of the accused
presented directly beforethe court in the administration
after arraignment and during the pendency of the criminal action
proceedings. Claims not yet due, or contingent, may be approved
shall extinguish the civil liability arising from the delict. However,
at their present value.
the independent civil action instituted under Sec 3 of this Rule or
6. The policy against double recovery requires that only one action
which thereafter is instituted to enforce liability arising from other
be maintained for the same act or omission whether the action is
sources of obligation may be continued against the estate or legal
brought against the executor or administrator, or the estate. The
representative of the accused after proper substitution or against
heirs of JR must choose which of the available causes of action for
said estate, as the case may be. The heirs of the accused may be
damages they will bring.
substituted for the deceased without requiring the appointment of
an executor or administrator and the court may appoint a
guardian ad litem for the minor heirs. ATTY. SARSABA vs. VDA. DE TE
July 30, 2009| Peralta, J. | Petition for Review on Certiorari | Actions
4. If the same act or omission complained of arises from quasi- by and Against Executors and Administrators – R87
delict,as in this case, a separate civil action must be filed against
the executor or administrator of the estate of the accused, PETITIONER: Atty. Rogelio E. Sarsaba (counsel for Sereno)
pursuant to Sec 1, Rule 87 of the Rules of RESPONDENT: Fe Vda. De Te
Court:http://www.lawphil.net/judjuris/juri2014/jul2014/gr_163879_
2014.html - fnt38 Sec 1. Actions which may and which may not be SUMMARY: Sereno won a labor case (Illegal Dismissal) in the
brought against executor or administrator. — No action upon a NLRC against Gasing. A truck in the possession of Gasing was
claim for the recovery of money or debtor interest thereon shall be levied upon. Vda. De Te filed with the RTC a complaint for
commenced against the executor or administrator; but to recover recovery of the truck, claiming that the truck was really hers, and
real or personal property, or an interest therein, from the estate, that it should not be levied upon since she was not even part of the
or to enforce a lien thereon, and actions to recover damages for an labor case. Sereno’s counsel, Atty. Sarsaba, filed a MTD Vda. De
injury to person or property, real or personal, may be commenced Te’s complaint. Both Sereno and Te died at some point in the
against him. proceedings. Sarsaba claims that Te’s atty-in-fact, Castaeda, can
no longer sue on Te’s behalf in view of her death. The SC allowed
5. Conversely, if the offended party desires to recover damages from Castaeda to sue on Te’s behalf.
the same act or omission complained of arising from contract, the
filing of a separate civil action must be filed against the estate, DOCTRINE: SEE Ratio in BOLD.
pursuant to Sec 5, Rule 86 of the Rules of Court, to wit:
Sec 5. Claims which must be filed under the notice. If not filed, FACTS:
barred; exceptions. — All claims for money against the decent, 1. Feb. 14, 1995: a Decision was rendered in the NLRC finding
arising from contract, express or implied, whether the same be Sereno to have been illegally dismissed and ordering Gasing
due, not due, or contingent, all claims for funeral expenses and (truck operator) to pay him P43k.
expense for the last sickness of the decedent, and judgment for 2. After the Writ of Execution was returned unsatisfied, Labor
money against the decent, must be filed within the time limited in Arbiter Sancho issued an Alias Writ, directing Sherriff Lavarez
the notice; otherwise they are barred forever, except that they (the Sheriff) of the NLRC to satisfy the judgment award.
may be set forth as counterclaims in any action that the executor 3. The Sheriff, accompanied by Sereno and his counsel, Petitioner
or administrator may bring against the claimants. Where an Atty. Sarsaba, levied a Fuso Truck, which at the time was in the
executor or administrator commencesan action, or prosecutes an possession of Gasing.

12
 a. The truck was sold at public auction with Sereno as 14. March 22, 2006: The RTC issued the assailed Order, denying
highest bidder. Atty. Sarsaba’s motion (SEE Fact 12).
4. Respondent Fe Vde. De Te (Te) filed with the RTC a Complaint 15. Atty. Sarsaba filed an MR with Motion for Inhibition.
for recovery of motor vehicle against Sereno, the Sheriff, and a. Claimed that the judge was biased (that her husband
the NLRC of Davao was the defendant in a petition for judicial recognition
a. She alleged that she is the wife of the late Pedro Te, of which he was the counsel).
the registered owner of the truck, that Gasing merely 16. Judge Sarno-Davin granted it and ordered the case to be re-
rented the truck from her, that the Sheriff erroneously raffled to Branch 18.
assumed that Gasing owned the truck, and that since 17. October 16, 2006: RTC Branch 18 denied Atty. Sarsaba’s MR
neither she nor her husband were parties to the labor (SEE Fact 15).
case between Sereno and Gasing, she should not have 18. Hence, Atty. Sarsaba directly sought recourse from the SC
to bear the loss. (pure questions of law).
5. Atty. Sarsaba filed an MTD. The NLRC also filed a MTD. The
Sheriff, however, filed an Answer. ISSUE: CivPro Issue: WoN failure to serve summons on Sereno on
6. January 21, 2000: The RTC denied Atty. Sarsaba’s MTD. account of his death is a ground for dismissal of the complaint (SEE
7. Atty. Sarsaba (counsel for Sereno) denied the material Fact 13.a.) – NO.
allegations in the complaint. SpecPro Issue: WoN Respondent Vda de Te may still sue
a. That there was no showing that the heirs have filed notwithstanding her death during the pendency of the case (SEE Fact
intestate proceedings (for the estate of Pedro Te), or 13.b.) – YES.
that Te was authorized by her co-heirs to file the case,
or that the truck was already sold to Gasing by one *NOTE: BOTH Sereno and Te died at some point.
Matias (who bought it from Sps. Te).
8. The Sheriff filed a Motion for Inhibition, which was opposed by RULING: Petition DENIED.
Te.
9. October 13, 2000: RTC Branch 18 issued an Order of inhibition RATIO:
and directed the transfer of the records to Branch 19. CivPro Issue:
10. RTC Branch 19 returned the records to Branch 18 in view of 1. The RTC Order denying Atty. Sarsaba’s Omnibus MTD (SEE Fact
the appointment of a new judge in place of Judge Escovilla 14) is not appealable even on pure questions of law since is it
(Branch 18’s original judge). Yet, Branch 19 issued another interlocutory (since an interlocutory order is not appealable).
Order retaining the case in said branch. Sarsaba should have proceeded with the trial of the case, and
11. May 19, 2003: The RTC denied the MTD filed by the NLRC and should the RTC eventually render an unfavourable verdict, he
set Pre-trial Conference. should assail the Order as part of an appeal that may be taken
12. October 17, 2005: Petitioner Atty. Sarsaba filed an Omnibus from the final judgment to be rendered in this case.
MTD the Case. 2. Sarsaba raises the issue of lack of jurisdiction over the person of
13. April 12, 2005: Respondent Vda. De Te died. Sereno, not in his MTD or in his Answer but only in his Omnibus
a. Through her lawyer, Respondent filed an Opposition, MTD. Having failed to invoke this ground at the proper time, that
contending that failure to serve summons upon Sereno is, in a MTD, he cannot raise it now for the first time on appeal.
(on account of his death) is not a ground for dismissing 3. Also, the court’s failure to acquire jurisdiction over one’s person
the complaint because the other defendants have is a defense, which is personal to the person claiming it.
already submitted their respective responsive Obviously, it is now impossible for Sereno to invoke the same in
pleadings. view of his death.
b. Also claimed that Respondent Vda. De Te’s death 4. Failure to serve summons on Sereno’s person will not be a cause
did not render functus officio her right to sue for the dismissal of the complaint against the other defendants,
since her atty-in-fact, Castaeda, had long testified considering that they have been served with copies of the
on the complaint on March 13, 1998 for an on her summons and complaints and have long submitted their
behalf and submitted documentary exhibits in respective responsive pleadings.
support of the complaint. 5. Hence, only the case against Sereneo will be dismissed.

13
 12. In this case, a perusal of the SPA shows that it was
SpecPro Issue: constituted for the benefit solely of Te. Nowhere can it be
6. When a party to a pending action dies and the claim is not inferred that it was created for the common interest of Te
extinguished, the Rules of Court require a substitution of and Castaeda. Neither was there any mentiond that it was
the deceased. Section 1, Rule 87 of the Rules of Court to benefit a third person that has accepted it.
enumerates the actions that survived and may be filed 13. On that ground (SEE Ratio 12 above), the SC agreed with
against the decedent's representatives as follows: (1) Sarsaba. HOWEVER, such ground should not cause the
actions to recover real or personal property or an interest dismissal of the complaint. The action was for recovery of
thereon, (2) actions to enforce liens thereon, and (3) personal property (motor vehicle) (SEE Fact 4), and it is an
actions to recover damages for an injury to a person or a action that survives pursuant to Section 1 of Rule 87. As
property. In such cases, a counsel is obliged to inform the such, it is not extinguished by the death of a party.
court of the death of his client and give the name and 14. The SC cited Gonzales vs. Phil. Amusement and Gaming Corp.,
address of the latter's legal representative. where it laid down the criteria for determining whether an action
7. Strictly speaking, the rule on substitution by heirs is not a matter survives the death of a plaintiff/petitioner.6
of jurisdiction, but a requirement of due process. It was designed 15. The Court also noted that when the case was initiated/filed by the
to ensure that the deceased party would continue to be properly Attorney-in-fact Castaeda, the plaintiff Te was still very much
represented in the suit through his heirs or the duly appointed alive. Records reveal that the Castaeda had testified long before
legal representative of his estate. It is only when there is a denial in behalf of Te and more particularly during the state when Te
of due process, as when the deceased is not represented by any was vehemently opposing the dismissal of the complaint.
legal representative or heir, that the court nullifies the trial Subsequently thereto, Castaeda even offered documentary
proceedings and the resulting judgment therein. evidence in support of the complaint, and the lower court
8. Te's counsel did not make any manifestation before the admitted the same.
RTC as to her death. In fact, he had actively participated in 16. Thus, the proper remedy here is the Substitution of Heirs
the proceedings. Neither had he shown any proof that he and not the dismissal of this case which would work
had been retained by respondent's legal representative or injustice to plaintiff Te.
any one who succeeded her. (Romero vs. CA - supra)
9. HOWEVER, such failure of Te’s counsel would not lead the
CHUA v. ABSOLUTE MNGT. CORP.
Court to invalidate the proceedings that have long taken Oct. 16, 2003 | Carpio, J. | Petition for Review on Certiorari | Rule 87
place before the RTC. The Court has repeatedly declared
that failure of the counsel to comply with his duty to inform PETITIONERS: BETTY T. CHUA, JENNIFER T. CHUA-LOCSIN,
the court of the death of his client, such that no BENISON T. CHUA, and BALDWIN T. CHUA
substitution is effected, will not invalidate the proceedings RESPONDENTS: ABSOLUTE MNGT. CORP. and CA
and the judgment rendered thereon if the action survives SUMMARY: Betty Chua was appointed the Administratix of her
the death of such party. The trial court's jurisdiction over late husband’s intestate estate. Absolute Mngt. Corp. (AMC), one
the case subsists despite the death of the Te. of the creditors of her husband, noted that the shares of stock of
10. Atty. Sarsaba claimed that the SPA executed by Te in favor of the deceased in two companies were not included in the inventory
Castaeda (SEE Fact 13.b.) has become functus officio and that the that Betty submitted to the trial court. Suspecting that the
agency constituted between them had been extinguished upon documents Betty submitted to explain the non-inclusion (transfer
Te’s death. Thus, according to Sarsaba, Castaeda had no more by the decedent) were spurious, AMC filed a Motion to Examine
personality to appear and prosecute the case on Te’s behalf.
11. The Court said that while as a general rule agency is
extinguished by the death of the principal, the exception 6 "The question as to whether an action survives or not depends on the nature of the action 
where the agency will remain effective even after the death and the damage sued for. If the causes of action which survive the wrong complained [of] 
of the principal is when if it had been constituted in the affects primarily and principally property and property rights, the injuries to the person being 
common interest of the latter and of the agent, or in the merely incidental, while in the causes of action which do not survive the injury complained of 
interest of a third person who has accepted the stipulation is to the person the property and rights of property affected being incidental.”
in his favor.
14
 the Supposed Transferees, based on Rule 87, Sec. 6. The RTC trial court deprived AMC of the right to show that the documents
denied such motion, ruling it to be a fishing expedition, which is presented by petitioners were fictitious to the prejudice of AMC.
not allowed. AMC filed a petition for certiorari with the CA, 7. During the hearing, counsel for AMC presented the following
imputing GAD to the RTC Judge. Both the CA and the SC ruled in evidence to support its assertion that the transfers of the shares
AMC’s favor. were spurious:
DOCTRINE: Ratio1-3. a. Certification from the Office of the Clerk of Court of RTC Pasay
City that Atty. Maagad (the notary public who notarized the
questioned Secretary’s Certificate and Deeds of Assignment of
FACTS: Shares of Stock) is not listed in the Roll of Notaries Public for the
1. Sometime in 1999, upon a petition for letters of administration
City of Pasay particularly for the period of 1993-1995 and 1998-
filed by the Chuas with the RTC Pasay, Betty Chua was 2000.
appointed as administratrix of the intestate estate of her
b. Certification from the Clerk of Court of RTC Makati City that the
husband, the deceased Jose Chua. Thereafter, she submitted to questioned Secretary’s Certificate was not included in the
the trial court an inventory of all the real and personal
Notarial Report of Atty. Velasco for the years 1998-1999.
properties of the deceased. c. Certification from the Clerk of Court of RTC Makati City that the
2. One of the creditors of the deceased, Absolute Management
questioned Deeds of Assignment of Shares of Stock were not
Corporation (AMC), filed a claim with the estate in the amount included in the Notarial Report of Atty. Velasco for the years
of P63,699,437.74. As administratrix, Betty tentatively accepted
1998-1999.
said amount as correct, with a statement that it shall be reduced or 8. The CA ruled in AMC’s favor, pointing out that the presentation of
adjusted as additional evidence may warrant.
the deeds of assignment executed by the decedent does not
3. In the interim, AMC noticed that the deceased’s shares of stocks automatically negate the existence of concealment. The CA stated
with Ayala Sales Corporation and Ayala Construction Supply, Inc.
that it is a common occurrence in estate proceedings for heirs to
were not included in the inventory of assets. As a consequence, it execute simulated deeds of transfer which conceal and place
filed a motion to require Betty to explain why she did not report
properties of the decedent beyond the reach of creditors. The CA
these shares of stocks in the inventory. Through a reply, Betty thus ordered the RTC Judge to give due course to AMC’s Motion
alleged that these shares had already been assigned and
for the Examination of the Administratrix and Others.
transferred to other parties prior to the death of her husband. She 9. Chua’s arguments:
attached the deeds of assignment which allegedly constituted
a. Wanted the SC to rule on WON Sec 6, Rule 87, which is the
proofs of transfer. The Judge accepted the explanation as principal basis of AMC’s Motion, is mandatory or merely
meritorious.
directory on the trial court. SC said this perspective misses the
4. AMC, suspecting that the documents were spurious and simulated, point. (See issue for real issue)
filed a motion for the examination of the supposed transferees
b. CA should have dismissed Absolutes petition because of
(administratix and others). It premised its motion on Sec. 6, Rule procedural infirmities: (a) Counsel for AMC, not the proper
87, Revised Rules of Court, which states that when a person is officers of AMC, filed the Certification against Forum Shopping;
suspected of having concealed, embezzled, or conveyed away any (2) AMC attached only a duplicate original copy of the challenged
of the properties of the deceased, a creditor may file a complaint order of the trial court to the petition submitted to the CA; and
with the trial court and the trial court may cite the suspected (c) No proper proof of service accompanied the petition
person to appear before it and be examined under oath on the submitted to the CA.
matter of such complaint. The Chuas opposed the motion on the
ground that this provision bears no application to the case. ISSUE: WON the CA correctly ordered the trial court to give due
5. The RTC Judge denied AMC’s motion, ruling that it found no merit course to the Motion for Examination.—YES
in the motion as it in effect seeks to engage in a fishing expedition
for evidence to be used against the administratrix and others whom RULING: Petition denied. CA decision affirmed.
it seeks to examine, it being the consensus of the Court that the
RATIO:
Rules of Procedure do not allow the fishing of evidence to be used
against the adverse party.
6. Aggrieved, AMC filed a petition for certiorari and mandamus with
the CA, claiming that the trial court committed GAD in that the
15
1. Sec. 6 Rule 877 seeks to secure evidence from persons suspected of court and examined under oath as to how they came into
having possession or knowledge of the properties left by a possession of the decedents assets. In case of fraudulent
deceased person, or of having concealed, embezzled or conveyed conveyances, a separate action is necessary to recover these
any of the properties of the deceased. assets.
2. The court which acquires jurisdiction over the properties of a 5. Taken in this light, there is no reason why the trial court
deceased person through the filing of the corresponding should disallow the examination of the alleged transferees of
proceedings has supervision and control over these properties. The the shares of stocks. This is only for purposes of eliciting
trial court has the inherent duty to see to it that the inventory of information or securing evidence from persons suspected of
the administrator lists all the properties, rights and credits which concealing or conveying some of the decedents properties to
the law requires the administrator to include in his inventory. In the prejudice of creditors. Petitioners’ admission that these
compliance with this duty, the court also has the inherent power to persons are the decedent’s assignees does not automatically
determine what properties, rights and credits of the deceased the negate concealment of the decedent’s assets on their part. The
administrator should include or exclude in the inventory. An heir or assignment might be simulated so as to place the shares beyond
person interested in the properties of a deceased may call the the reach of creditors. In case the shares are eventually included in
courts attention that certain properties, rights or credits are left the estate, this inventory is merely provisional and is not
out from the inventory. In such a case, it is likewise the courts duty determinative of the issue of ownership. A separate action is
to hear the observations of such party. The court has the power to necessary for determination of ownership and recovery of
determine if such observations deserve attention and if such possession.
properties belong prima facie to the estate.
3. However, in such proceedings the trial court has no authority to OTHERS: WON the petition submitted to the CA suffered from
decide whether the properties, real or personal, belong to the procedural infirmities which merits its dismissal—NO
estate or to the persons examined. If after such examination there 6. The petition filed before the CA contained a certificate of non-
is good reason to believe that the person examined is keeping forum shopping executed by counsel and not by the authorized
properties belonging to the estate, then the administrator should officer of AMC. However, the subsequent filing of an affidavit of
file an ordinary action in court to recover the same. Inclusion of non-forum shopping signed by the corporate director cured this
certain shares of stock by the administrator in the inventory does defect. A slight delay in the filing of an affidavit of non-forum
not automatically deprive the assignees of their shares. They have shopping should not defeat the action. While submission of the
a right to be heard on the question of ownership, when that certificate of non-forum shopping is mandatory, a liberal
property is properly presented to the court. interpretation of the rules is more in keeping with the objective to
4. In the present case, some of the transferees of the shares of stock secure a just, speedy and inexpensive disposition of every action
do not appear to be heirs of the decedent. Neither do they appear and proceeding. Substantial compliance is sufficient.
to be parties to the intestate proceedings. Third persons to whom 7. Petitioners claim that the attachment of a mere duplicate original
the decedent’s assets had been conveyed may be cited to appear in copy of the assailed order violates the express mandate of Sec. 1,
Rule 65, which states that the petition shall be accompanied by a
7 Proceedings when property concealed, embezzled, or fraudulently conveyed. If an executor certified true copy of the judgment, order, or resolution subject
or   administrator,   heir,   legatee,   creditor,   or   other   individual   interested   in   the   estate   of   the thereof. However, under Section 3, Rule 46, as amended by
Circular No. 39-98, either a certified true copy or a duplicate
deceased, complains to the court having jurisdiction of the estate that a person is suspected of
original copy may be attached to the petition.
having concealed, embezzled, or conveyed away any of the money, goods, or chattels of the 8. The affidavit of service executed by petitioners’ counsel stating
deceased, or that such person has in his possession or has knowledge of any deed, conveyance, that he served a copy of the petition by registered mail to
bond, contract, or other writing which contains evidence of or tends to disclose the right, title, respondents with the corresponding registry receipts constitutes
interest, or claim of the deceased, the court may cite such suspected person to appear before it sufficient proof of service. This complies with Sec. 13, Rule 13.
and may examine him on oath on the matter of such complaint; and if the person so cited 9. Lastly, petitioners quote Arcega v. Pecson to question the
refuses to appear, or to answer on such examination or such interrogatories as are put to him, propriety of filing a petition for certiorari before the CA. The facts
the court may punish him for contempt, and may commit him to prison until he submits to the in Arcega are not on all fours with the facts in the instant
order of the court. The interrogatories put to any such person, and his answers thereto, shall be
case. In Arcega, the judge granted the examination but only with
respect to three of the several lots involved. In the present case,
in writing and shall be filed in the clerks office.
16
 there was an absolute refusal by the trial court to conduct an PETITIONER: Sotero A. Punongbayan
examination on the ground that it would constitute a fishing RESPONDENT: Danilo G. Punongbayan
expedition of evidence that could be used against the
administratrix. In Arcega, the trial court issued an order in favor SUMMARY: Escolastica died and was survived by her relatives.
of the person suspected of having concealed properties of the Those in dispute in this case are Sotero (brother) and Danilo
estate and againstthe special administratrix and the judicial (nephew). Proceedings for the settlement of her estate were initiated
receiver. The special administratrix had the remedy of filing and Danilo was appointed co-admistrator (he subsequently became
another case to recover such properties in the name of thee state. the sole administrator because his co-administrator relinquished his
10. In the present case, AMC as a creditor of the decedent filed right. The heirs executed a compromise agreement which was
the petition after the trial court denied its Motion for approved by the court. The case, however, became dormant for almost
examination. AMC questioned the ruling in favor of the 20 years so Sotero and two other sisters moved for the immediate
administratrix and heirs of the decedent. Although as a creditor, distribution of the estate in accordance with the compromise
AMC does have the remedy of filing another case to recover such agreement. This went all the way up to the SC which approved of the
properties, its Motion for examination was intended merely to same. SC issued a writ of execution. Sotero moved for his
investigate and take testimony in preparation for an independent appointment as co-administrator of the estate on the grounds that
action. Aside from the administratrix and the heirs of the decedent, Danilo failed to discharge his duties. Danilo filed a Motion to Order
AMC also sought to examine the supposed assignees of the Sotero Punongbayan to Render an Accounting. This motion was
decedents shares, who are third persons with respect to the denied in an ORDER. Danilo went to the CA via petition for certiorari.
probate proceedings. The Motion was a preparatory move The issue is WON the ORDER is interlocutory.
sanctioned by the Rules of Court. The denial of AMC’s Motion was
an interlocutory order not subject to appeal. The order of denial DOCTRINE: With the denial of Danilo’s motion, Sotero’s
may, however, be challenged before a superior court through a accountability as co-administrator was in no way settled as it did not
petition for certiorari under Rule 65. preclude or forestall future accountings by him which he is obliged to
render within 1 year from receiving letters of administration, or as
PUNONGBAYAN v PUNONGBAYAN required by the court until the estate is settled. Neither an accounting
December 10, 2004 | Puno, J. | Petition for Review | Rule 87 Actions by or an examination of petitioner under Section 7, Rule 87, definitely
and Against Executors and Administrators settle the issue of his alleged illegal transfers and lease since a
proceeding under this section, like that under Sec. 6 of the same Rule,
is merely in the nature of fact-finding inquiries. It is intended to elicit
information or evidence relative to estate properties. Therefore, filing
a petition for certiorari is the proper remedy.

FACTS:
1. July 31, 1969: Escolastica Punongbayan-Paguio died intestate
leaving behind considerable properties in Misamis Oriental, Iligan
City and Bulacan.
2. She was survived by her husband, Miguel Paguio, brothers Nicolas
(deceased) and Sotero (petitioner), sisters Leonila and Leonora
(both deceased), all surnamed Punongbayan, nephews Danilo
(respondent), Restituto, Perfecto and Alfredo, nieces Brigida,
Lilia, Marilou, Adeluisa, and Grace (children of Escolastica’s
brother, Perfecto, who predeceased her)
3. Proceedings for the settlement of her estate were initiated in the
CFI of Misamis Oriental. Miguel Paguio was appointed
administrator and later, Danilo as co-administrator.
4. September 30, 1974: Heirs executed a compromise agreement
distributing among themselves the said estate (41 parcels of land
17
 in Misamis Oriental, Iligan City, and Bulacan). They authorized the transfers and lease before Danilo could render the full accounting
administrator to sell 5 parcels to pay the liabilities of the estate. required by the intestate court. The motion was denied (ORDER)
5. Intestate court approved the agreement. The proceedings, as well as a subsequent motion for reconsideration thereof. Danilo
however, were left dormant from 1976-1993. On August 4, 1994, again filed a special civil action for certiorari and mandamus with
Sotero, Leonila and Leonora moved for the immediate distribution the CA to assail the order.
of the said estate in accordance with the above compromise 11. CA: granted the petition and ordered Sotero to render an
agreement. They asked that Danilo (Miguel Paguio relinquished accounting of all the properties and monies belonging to the
his right to act as administrator) be ordered to deposit proceeds estate that came into his possession and to deposit the proceeds of
from the sales of the properties with the Clerk of Court and to the sale.
render an accounting of his administration for the past 20 years.
6. Intestate court: granted motion and directed Danilo to effect the ISSUE: WON the ORDER was a final order which should have been
immediate distribution of the Estate in accordance with the appealed by Danilo, or an interlocutory one which was properly
Compromise Agreement, deposit with the Clerk of Court the assailed in a petition for certiorari - INTERLOCUTORY
proceeds of the sale and render an accounting of his WON CA erred in granting the petition – YES
administration.
7. Danilo assailed the order in a special civil action but the CA RATIO:
dismissed it. SC affirmed and the corresponding writ of execution 1. A court order is final in character if it puts an end to the particular
was issued. The writ was served upon his wife but not upon matter resolved, or settles definitely the matter therein disposed
himself as he was always absent from his residence and place of of, such that no further questions can come before the court
work whenever the sheriff came to serve the writ. A warrant of except the execution of the order. On the other hand, a court order
arrest was issued and Danilo filed a motion to recall the warrant. is merely interlocutory if it is provisional and leaves substantial
During the pendency of the petition, he was arrested. He was proceeding to be had in connection with its subject.
subsequently released upon his manifestation that he will comply 2. In this case, the Order, which denied respondents motion for
with the intestate court’s writ of execution and he will attend the petitioner to render an accounting was an interlocutory order.
next hearing and submit the certificates of placement of the The motion was filed under Section 8, Rule 85 of the Rules of
proceeds from the sales of a substantial portion of the estate Court, which provides
under his administration. However, he did not appear during said
hearing so his release order was recalled by the CA and NBI was “Every executor or administrator shall render an account of his
directed to arrest him. administration within one (1) year from the time of receiving
8. CA dismissed the petition for lack of merit. Danilo’s clear and letters testamentary or of administration, unless the court
contumacious refusal to obey the writ of execution should no otherwise directs because of extensions of time for presenting
longer be countenanced. claims against, or paying the debts of, the estate, or of disposing
9. Sotero moved for his appointment as co-administrator of the of the estate; and he shall render such further accounts as the
estate on the grounds that Danilo failed to discharge his duties as court may require until the estate is wholly settled.”
such, to render an accounting and to turn over P25M in proceeds
from the sales of a substantial portion of the estate. This motion and Sec. 7, Rule 87, of the same Rules, which provides
was granted and he took his oath.
10. Danilo filed a Motion to Order Sotero Punongbayan to Render an “The court, on complaint of an executor or administrator, may cite
Accounting alleging that Sotero appropriated 5 lots of the estate a person entrusted by an executor or administrator with any part
to the exclusion of the other heirs; that 2 of the 5 lots were of the estate of the deceased to appear before it, and may require
illegally sold to third persons while 2 others were illegally such person to render a full account, on oath, of the money, goods,
transferred in his own name; and, that the 5 th lot was leased to a chattels, bonds, accounts, or other papers belonging to such
third person without turning over lease rentals to the estate. He estate as came to his possession in trust for such executor or
alleged that he encountered difficulties in rendering an accounting administrator, and of his proceedings thereon; and if a person so
of estate income and properties because of the illegal sales and cited refuses to appear to render such account, the court may
lease made by Sotero. Hence, he alleged that Sotero should be punish him for contempt as having disobeyed a lawful order of the
made to account first for the income derived from such illegal court.”

18
3. Applying Sec. 8, Rule 85, the intestate court denied the motion on 9. The issue of Sotero’s alleged illegal transfers are, in fact, pending
the ground that it was premature considering that petitioner has before the RTC of Malolos, Bulacan where cases for their
been co-administrator for only one (1) day at the time it was filed. annulment have been filed by Danilo. He admits that they involve
4. With the denial, Sotero’s accountability as co-administrator was in the very same properties in respect to which the motion for
no way settled as it did not preclude or forestall future accounting was filed. Thus, there is no more reason for him to
accountings by him which he is obliged to render within 1 year further delay the accounting of his administration of the estate for
from receiving letters of administration, or as required by the even the petition for certiorari which he filed to question the
court until the estate is settled. warrant of arrest that had to be issued for his non-compliance was
5. Neither an accounting or an examination of petitioner under dismissed by the CA wherein his clear and contumacious refusal to
Section 7, Rule 87, definitely settle the issue of his alleged illegal obey court processes was condemned.
transfers and lease since a proceeding under this section, like that 10. Clearly, respondent was not entitled to the writ of certiorari
under Sec. 6 of the same Rule, is merely in the nature of fact- erroneously issued by the CA. Certiorari, being an equitable
finding inquiries. It is intended to elicit information or evidence remedy, will not issue where the petitioner is in bad faith.
relative to estate properties. OROLA V THE RURAL BANK OF PONTEVEDRA
6. The RTC which has jurisdiction over the administration and September 20, 2005 | Callejo, Sr., J. | Petition for Review on Certiorari
settlement of the estate has limited jurisdiction and is without | Rule 89
authority to resolve issues of ownership with finality especially
when third persons are involved. Separate actions should be PETITIONERS: Josephine, Myrna, Angeline, Manuel, Mosephine,
instituted by the administrator for the purpose. In fine, denial of Antonio and Althea (all surnamed Orola)
Danilo’s motion for Sotero to render an accounting is an RESPONDENTS: The Rural Bank of Pontevedra Capiz, Inc. Emilio
interlocutory order not subject to appeal but may be challenged Orola, The Register of Deeds of Capiz and The Ex-officio Provincial
before a superior court through a petition for certiorari under Sheriff of Capiz
Rule 65.
7. CA erred in granting the writ of certiorari. Certiorari under Rule SUMMARY: Emilio, as administrator of his wife’s estate, took
65 will lie only where a GAD or an act without or in excess of possession of the parcels of land and embarked on a massive sugar
jurisdiction is clearly shown. The intestate court correctly denied production. When the sugar industry collapsed, he wanted to develop
Danilo’s motion for accounting. It is obvious that the motion was some portions which were swampy for the production of fish. He
just another ploy to delay his compliance with the Order directing needed a loan for P600k to do it. However, the Central Bank would
him to render an accounting of his administration of the estate only lend him the money if the loan was secured by the lands and the
and to turn over the certificates of placement of the proceeds from loan would be divided into 3 parts to be applied for by his children
the sales of estate properties amounting to millions of pesos, (petitioners). The Estate of Trinidad (lessor) and the children (lessees)
which has long become final and executory. entered into separate contracts of lease over the property of the
8. The ground resurrected by Danilo in the motion, that Sotero estate. The intestate court approved such. However, the Bank
should be made to account first for the alleged illegal transfers of required a lease period of at least 10 years from the time the court
estate properties made by him before he (Danilo) could render his approved the same. So, the parties extended the lease contract to 12
own accounting, was already passed upon and rejected by the CA, yrs and the lessees were also authorized to bind the properties by
viz: REM. The intestate court approved the amended contracts of lease.
The loan applications were subsequently approved. The children then
“[P]etitioner’s argument that the intestate court should first signed separate PNs and REMs over the properties but these were
declare illegal sales of estate properties made by Sotero never submitted to the court for approval. Eventually, the Rural Bank
Punongbayan and other heirs, is incorrect for two reasons: (1) the moved for foreclosure of the properties and it was sold and
petitioner has already initiated cases for the annulment of the said transferred to the Bank as the purchaser. The children filed a petition
sales x x x hence, the intestate court will be barred from to annul the foreclosure, sale of the lots, and the PNs and REMs that
entertaining and resolving the same controversies by the principle they signed. SC ruled in their favor. See doctrine.
of lis pendens, and (2) questions of title to real property cannot be
determined in testate or intestate proceedings.” DOCTRINE: Ratio 5, 8, 9

19
 12. The Estate of Trinidad (Emilio as lessor) and Josephine,
Manuel and Antonio (lessees) executed separate contracts of
lease over the property of the estate.
13. The intestate estate court approved the contracts. However, it
FACTS: turned out that the lessees would not qualify for the loans; the
1. Trinidad Orola died intestate. She was survived by her bank required a lease period of at least 10 years from the time
husband Emilio and their 6 minor children (Antonio, Josephine, the court approved the same.
Manuel, Myrna, Angeline and Althea). 14. Emilio, Antonio, Manuel and Josephine filed a Manifestation
2. Her estate consisted of property located in Pontevedra, Capiz. with the intestate estate court, praying that its order be
Portions of the property were devoted to the development and amended to state that the periods of the leases were to
production of sugar. Some portions were rice land, while some commence from court approval of the said contracts.
parts of the property were swampy. 15. The estate (Emilio as lessor) and Josephine, Antonio and
3. Emilio executed a waiver of all his rights and interests over Manuel executed separate Amended Contracts of Lease
the said property in favor of his children. (period extended to 12 yrs) covering the same property. The
4. Emilio filed a petition for his appointment as guardian over the lessees were also authorized to negotiate loans for the
persons and property of his minor children. Granted. development of the leased premises not to exceed P200k and
5. Emilio filed a petition for the settlement of the estate of to bind the leased premises by way of real estate mortgage as
Trinidad and his appointment as administrator of her estate. security therefor.
6. RTC: appointed Emilio as administrator. 16. Emilio filed an Ex Parte Motion in the intestate estate court for
7. As administrator, he took possession of the said parcels of the approval of the amended contracts of lease. Angeline,
land. He opened an account in the name of the estate with the Myrna and Althea filed their Joint Affidavit of Conformity 8 to
PNB. He embarked on a massive sugar production and, with the motion. Court approved.
prior approval of the court, negotiated with banking 17. The loans applications of the children had been approved.
institutions for financing loans to purchase the required 18. Antonio, Manuel and Josephine signed separate PNs (they will
equipments. pay their respective loans in 10 years in stated annual
8. Due to the sudden collapse of the sugar industry, Emilio found installments) and REMs as security to pay their respective
it necessary to develop the swampy portion of the estate for loans. However, the REM contracts were not submitted to the
the production of fish. To finance the endeavor, he needed at guardianship and intestate estate courts for approval. Neither
least P600k. were Myrna, Angeline and Althea aware of the said loans.
9. Emilio filed a motion for authority to negotiate a P600k loan 19. The net proceeds of the loan (total of P582k) were deposited in
from the Central Bank for the full and complete development the Rural Bank in Emilio’s account. From the said proceeds,
of the fishpond portion of the estate, and to transfer the sugar the Bank deducted P229,771.20, the accommodation loan
account of the estate from the PNB to the Republic Planters Emilio secured from the Rural Bank. Eventually, the balance of
Bank. the said deposit amounted to only P4,292.79 since Emilio
10. Court granted and authorized Emilio to negotiate the loan failed to pay the amortizations of the loans.
through the Rural Bank of Pontevedra, Capiz and to transfer http://www.lawphil.net/judjuris/juri2005/sep2005/gr_158566_2
the sugar account of the estate to the RPB in Roxas City. 005.html - fnt24
11. Emilio then filed an application with the Rural Bank for a
financing loan of P600k. However, the bank informed him that
the loan would have to be processed by the Central Bank and
that it would take some time. He was informed that there 8 7. That on December 15, 1982, the administrator, thru counsel, filed an ex parte motion for the
admission and approval of the amended contracts of lease in favor of our brothers and sister changing the
would be no need for the CB to intervene if the loan of P600k
term from ten (10) to twelve (12) years, copy of the amended contracts of lease [were] shown to us;
would be broken down into 3 parts of P200k each to be applied
8. That we have no objection and we voluntarily conform to the amendment of the term from ten (10) to
for by 3 applicants to whom the property to be used as twelve (12) years and freely give our consent to having the Lessees execute a real estate mortgage over the
collateral would be leased by the estate. Emilio talked to his leased property in favor of the bank just to be able to avail with the CB: IBRD financing loan to develop
children (Josephine, Manuel and Antonio) about the bank’s the property;
proposal. The three siblings agreed. 9. That we are jointly executing this affidavit for the purpose of facilitating the immediate admission and
approval of the amended contracts of lease as prayed for in the ex parte motion dated December 5, 1982.
20
20. Rural Bank wrote separate letters of demand to Josephine, condition to their signing the partition agreement, with
Manuel and Antonio, demanding payment of the balance. They their assurance that the said waiver would take effect
failed to pay. only after his death.
21. Subsequently, the Rural Bank filed an application with the Ex- b. The siblings were aware of this because they accepted
Officio Provincial Sheriff for the extrajudicial foreclosure of the his waiver after they became of age. They agreed to the
REM over Lots 1071 and 1088. The lots were sold at public execution of the amended contracts of lease to
auction and the Rural Bank was the winning bidder. The Ex- facilitate the early release of the loans as required by
Officio Provincial Sheriff executed separate certificates of sale the Rural Bank.
in favor of the Rural Bank. c. The proceeds of the loans were used for the
22. The guardianship court terminated the guardianship and development of the estate.
dismissed the case. Josephine, Myrna, Manuel and Antonio
executed a Deed of Acceptance of Waiver or Donation in which d. The non-submission of the REMs to the intestate estate
they accepted their father’s waiver of his rights, interests and and guardianship courts for approval was due to the
participation over their mother’s estate. fault of Rural Bank; and his failure to pay the
23. The children filed a Complaint against the Rural Bank, Emilio amortizations of the loan was due to force majeure
and the Ex-Officio Provincial Sheriff for the nullification of the (typhoon Undang).
PNs and REMs executed by them, and the sale of the property 26. RTC: ruled in favor of the siblings; all their loans and the
subject of the said deed at public auction. REMs with the Rural Bank were null and void for failure to
a. They became the sole owners of Lots 1088 and 1071 comply with the mandatory requirements of Sec 7, Rule 89 9;
when their father executed a waiver of his rights over ordering the Office of the Registry of Land Titles and Deeds,
the said lots in their favor. Province of Capiz, to cancel its registration of the REMs
b. The REM contracts were null and void because the affecting the parcels of land.
same were never submitted to and approved by the
RTC.
c. They were tricked by their father into signing the 9 Section 7. Regulation for granting authority to sell, mortgage, or otherwise encumber estate. — The
contracts and amended contracts of lease, PNs, and court having jurisdiction of the estate of the deceased may authorize the executor or administrator to sell
REMs as security for the P600k loan on the assurance personal estate, or to sell, mortgage, or otherwise encumber real estate, in cases provided by these rules
that they would be benefited therefrom; they did not and when it appears necessary or beneficial under the following regulations.
receive any proceeds. As such, the extrajudicial (a) The executor or administrator shall file a written petition setting forth the debts due from the deceased,
the expenses of administration, the legacies, the value of the personal estate, the situation of the estate to
foreclosure of the real estate mortgages and the sale of be sold, mortgaged, or otherwise encumbered, and such other facts as show that the sale, mortgage, or
the property covered by the said deeds were null and other encumbrance is necessary or beneficial.
void. (b) The court shall thereupon fix a time and place for hearing such petition, and cause notice stating the
24. Rural Bank’s defense: nature of the petition, the reasons for the same, and the time and place of hearing, to be given personally
or by mail to the persons interested, and may cause such further notice to be given, by publication or
a. The RTC authorized and even approved the amended otherwise, as it shall deem proper;
contracts of sale executed by Antonio, Manuel, (c) If the court requires it, the executor or administrator shall give an additional bond, in such sum as the
Josephine, and Emilio. court directs, conditioned that such executor or administrator will account for the proceeds of the sale,
mortgage, or other encumbrance;
b. They agreed to the execution of the REMs and (d) If the requirements in the preceding subdivisions of this section have been complied with, the court, by
conformed to the amended contracts in the intestate order stating such compliance, may authorize the executor or administrator to sell, mortgage, or otherwise
proceedings. encumber, in proper cases, such part of the estate as is deemed necessary, and in case of sale the court may
authorize it to be public or private, as would be most beneficial to all parties concerned. The executor or
c. They were also notified of the balance of their account, administrator shall be furnished with a certified copy of such order;
and of the extrajudicial foreclosure of the REMs, and (e) If the estate is to be sold at auction, the mode of giving notice of the time and place of the sale shall be
the subsequent sale of the property. As such, they were governed by the provisions concerning notice of execution sale;
estopped. (f) There shall be recorded in the registry of deeds of the province in which the real estate thus sold,
mortgage, or otherwise encumbered is situated, a certified copy of the order of the court, together with the
25. Emilio’s defense: deed of the executor or administrator for such real estate, which shall be as valid as if the deed had been
a. He executed the Waiver of Right only because his executed by the deceased in his lifetime.
brother and sister-in-law required him to do so as a
21
 27. TC: Although the intestate estate court authorized Emilio to court, having been constituted by persons other than Emilio, the
negotiate a loan of P600k with Rural Bank, he was not administrator of the estate of Trinidad.
authorized to mortgage the real property of the estate; the 1. Sec 2, Rule 89 provides that, upon application of the
Order of the intestate estate court was null and void because administrator and on written notice to the heirs, the court may
the motion of the administrator for authority to negotiate a authorize the administrator to mortgage so much as may be
loan with the Rural Bank was made ex parte; the siblings were necessary of the real estate for the expenses of the
not estopped from assailing the REM (null and void); the issue administrator, or if it clearly appears that such mortgage
of won the plaintiffs were the co-owners of the property should would be beneficial to the persons interested.
be ventilated with the proper RTC in the exercise of its general 2. Sec 7 of Rule 89 provides the rules to obtain court approval for
jurisdiction in an ordinary action for the said purpose. such mortgage. After the REM is executed in accordance with
28. CA: the intestate estate court’s approval of the amended the foregoing regulations, the said deed must be submitted for
contracts of lease carried with it the approval of the REMs the consideration and approval or disapproval of the court.
executed by Emilio in favor of the Rural Bank; Angeline, Myrna 3. The records show that Emilio notified the petitioners of his
and Althea conformed to the amended contracts of lease (they motion for the approval of the amended contracts of lease.
were estopped). Although the motion was ex parte, nonetheless, Angeline,
Myrna and Althea Orola filed their Joint Affidavit of Conformity
29. Petitioners: Emilio failed to comply with Sec 7, Rule 89.
(Fact #16).
a. Provision is mandatory in nature, including the fixing of 4. However, Orola failed to secure an order from the intestate
a time and place for hearing of the motion for the estate court authorizing him to mortgage the subject lots and
approval of the amended contracts of lease. execute a real estate mortgage contract in favor of respondent
b. Orola failed to file a motion for the approval of the real Rural Bank. What the intestate estate court approved was the
estate mortgages. authority for Josephine, Manuel and Antonio to mortgage said
c. Even if it is assumed that the Order of the intestate lots.
estate court approving the amended contracts of lease 5. Under Sec 7 of Rule 89, only the executor or administrator of
authorized the constitution of REM, such order is void, the estate may be authorized by the intestate estate court to
as it authorized Manuel, Antonio and Josephine Orola, mortgage real estate belonging to the estate; hence, the order
and not Emilio, to mortgage the said property. of the estate court authorizing the petitioners to mortgage the
30. Rural Bank’s defense: Petitioners are estopped as they had realty of the estate to the respondent Rural Bank is a nullity.
been benefited by the loans granted to them. 6. The respondents must have realized that the order of the
31. Emilio’s defense: ½ undivided portion of the REM property intestate estate court authorizing the Petitioners was void
was the exclusive property of the deceased, and partly the because Emilio caused the REM contracts in favor of Rural
conjugal property of the spouses. Moreover, his share in the Bank to be executed by his children "acting as attorneys-in-
conjugal property was not the subject of the intestate case, as fact of the administrator of the estate." However, the estate
it was not included as part of the property given as security for court had not appointed the children Emilio’s attorneys-in-fact
the loans of the petitioners-mortgagees. empowered to execute the said contracts. Hence, they had no
ISSUES: authority to execute the said REM contracts for and in behalf
1. WON the REMs are void for non-compliance with the of their father, in the latter’s capacity as administrator of the
mandatory provisions of Sec 7, Rule 89 – Court assumed that estate.
there was substantial compliance 7. Emilio also failed to submit the REM contracts to the intestate
2. WON the petitioners had authority to mortgage the property – estate court for its consideration and approval.
NO, only Emilio as the administrator does 8. To give approval means to confirm, ratify, or to consent to
3. WON the petitioners were estopped from assailing the REM some act or thing done by another. Unless and until the said
contracts - NO contracts are approved by the intestate estate court, the same
HELD: Petition GRANTED. cannot have any binding effect upon the estate; nor serve as
RATIO: basis for any action against the estate and against the parcels
Assuming that there was substantial compliance with Sec 7, Rule 89, of land described in the said contracts belonging to it.
the mortgages are still void for lack of authority from the probate
22
 9. Emilio had no right or authority to mortgage the realty and Emiliana Laserna affecting Lots Nos. 1070,
belonging to the estate. He derived his authority from the 1071, 1074, 1075, 1088, 1050 & 1051, all of
order of the estate court which had jurisdiction to authorize Pontevedra Cadastre;
the real estate mortgage thereof under such terms and 2. That the said [properties] mentioned above are
conditions and upon proper application. Any mortgage of still under co-ownership, pro indiviso, between and
realty of the estate without the appropriate authority of the among the Vendees whose names are mentioned
estate court has no legal support and is void. The purchaser at above;
public auction acquires no title over the realty. The real estate
3. That during the marital relations between me and
mortgage contracts, as well as the extrajudicial foreclosure
my deceased wife, Trinidad Laserna, we have six (6)
thereof and the sale of the property described therein at public
children, namely, Josephine, Myrna, Angeline,
auction, can thus be attacked directly and collaterally.
Manuel, Antonio and Althea, all surnamed Orola;
Petitioners were not estopped from assailing the REM contracts, the 4. That the co-owners have decided to terminate the
extra-judicial foreclosure and sale of the property to Rural Bank. co-ownership over the above-mentioned properties
1. Although the records show that petitioners received the of which the aforementioned children of the
proceeds of the loan from Rural Bank, the amount was spouses, Emilio Orola and Trinidad Laserna, became
deposited by Emilio in his savings account with Rural Bank. He co-owners thereof in representation of their
was obliged to deposit the said amount in the estate’s account deceased mother, Trinidad Laserna, by operation of
with the Republic Planters Bank, as ordered by the intestate law and the herein undersigned desires to give
estate court. protection to his children of the first marriage which
2. Rural Bank applied P229,771.20 of the loan proceeds to are named above.
liquidate the accommodation loan it granted to Emilio. NOW, THEREFORE, for and in consideration of the
3. There is no showing in the records that the intestate estate love, affection and mutual agreements, I, EMILIO Q.
court ever authorized the use of the proceeds of the loan to OROLA, by these presents, do hereby waive and
pay Emilio’s accommodation loan. The loan proceeds were to relinquish all my shares, interests and participations
be used to develop property belonging to the estate into a over all the above-mentioned properties in favor of
fishpond from which income could be generated. my six (6) children of the first marriage, namely,
Josephine, Myrna, Angeline, Manuel, Antonio and
4. Had the REM contracts been submitted to the intestate estate Althea.
court for consideration and approval after proper notice to the
petitioners, the court would have been apprised of the terms It is understood that, upon the registration of the
and conditions contained therein, and that about ½ of the loan project of partition which the co-owners will present
would be used to pay Emilio’s accommodation loan. that the shares and participations of the
undersigned shall be consolidated in the names of
5. The petitioners acted on the belief that the loan would be used the children mentioned above in equal right and
to develop the swampy portion of the realty into an income- participation.
generating fishpond, impervious of the fact that almost ½ of
the proceeds of the loan had been used to pay Emilio’s
accommodation loan. (Lebin vs. Mirasol - supra)
6. Emilio’s claim that part of the property used as collateral for
PAHAMOTANG v. PNB
the loan was part of his and his deceased wife’s conjugal
March 31, 2005 | Garcia, J. | Pet for review | Rule 89 – Sales,
property, and that the waiver he executed was to take effect
Mortgages, etc
only upon his death, is belied by the records. Indeed, in his
Waiver of Rights dated October 26, 1976, Emilio declared that: PETITIONER: Josephine Pahamotang and Eleanor Pahamotang-
Basa
1. That during the lifetime of my first wife, Trinidad
RESPONDENT: PNB and Heirs of Arguna
Laserna, we have acquired property by purchase
from Mr. Manuel Laserna, in co-ownership with
SUMMARY: Several contracts were entered into by Agustin for
Pedro Laserna, Dolores Deocampo, Jesus Laserna
23
 and in behalf of the estate of Melitona and granted by the intestate land of the estate.
court: (a) contract of mortgage in favor of respondent PNB, (b) 12. Agustin filed with the intestate court a Petition for Authority To
contract of sale in favor of Arguna involving 7 parcels of land; and Increase Mortgage on the properties of the estate—Granted.
(c) contract of sale of a parcel of land in favor of PLEI. However, Afterwards, he filed a Petition for Declaration of Heirs And For
the heirs (children) contend that the contracts are void because Authority To Increase Indebtedness, where he alleged the
they never consented thereto. As heirs, they are entitled to notice necessity for an additional loan from PNB to capitalize the
of Agustin’s several petitions in the intestate court seeking business of the estate, the additional loan to be secured by
authority to mortgage and sell estate properties. SC: Without such additional collateral in the form of a parcel of land registered in
notice, the orders of the intestate court which allowed Agustin to the name of Heirs of Melitona Pahamotang—Granted. In an
mortgage and sell estate properties, are void on account of Order, the intestate court granted Agustin authority to seek
Agustin’s non-compliance with the mandatory requirements of additional loan from PNB (P5,000,000) to be secured by the land.
Rule 89, ROC. A real estate mortgage contract for P4,500,000 was executed by
PNB and Agustin in his several capacities as: (1) administrator of
DOCTRINE: Settled is the rule in this jurisdiction that when an the estate of his late wife; (2) general manager of PLEI; and (3)
order authorizing the sale or encumbrance of real property was guardian of daughters Concepcion and Genoveva and petitioners
issued by the testate or intestate court without previous notice to Josephine and Eleonor. Offered as securities for the additional
the heirs, devisees and legatees as required by the Rules, it is not loan are 3 parcels of registered land.
only the contract itself which is null and void but also the order of 13. Agustin then filed with the intestate court a Petition (Request for
the court authorizing the same. Thus, in Maneclang vs. Baun, the Judicial Authority To Sell Certain Properties of the Estate),
previous administrator of the estate filed a petition with the praying for authority to sell to Arturo Arguna the properties of
intestate court seeking authority to sell portion of the estate, the estate; and a Petition To Sell the Properties of the Estate in
which the court granted despite lack of notice of hearing to the favor of PLEI—Granted. In separate Orders, the intestate court
heirs of the decedent. The new administrator of the estate filed granted Agustin authority to sell estate properties, in which
with the RTC an action for the annulment of the sales made by the orders the court also required all the heirs of Melitona to give
previous administrator. After trial, the trial court held that the their express conformity to the disposal of the subject properties
order of the intestate court granting authority to sell, as well as of the estate and to sign the deed of sale. In a MOR, Agustin
the deed of sale, were void. We held that without compliance with prayed the amendment of its Order by canceling the requirement
Sections 2, 4 and 7 of Rule 89 of the Rules of Court, the authority of express conformity of the heirs as a condition for the disposal
to sell, the sale itself and the order approving it would be null and of the aforesaid properties—Granted.
void ab initio. 14. Hence, estate properties were sold to Arturo Arguna and PLEI.
Meanwhile, the obligation secured by mortgages on the subject
properties of the estate was never satisfied. Hence, mortgagor
FACTS:
PNB filed a petition for the extrajudicial foreclosure of the
10. Melitona Pahamotang died, survived by her husband Agustin
mortgage. Petitioner Josephine filed a motion with the intestate
Pahamotang, and their 8 children. Agustin filed with the intestate
court for the issuance of an order restraining PNB from
court of Davao City a petition for issuance of letters
extrajudicially foreclosing the mortgage—Denied. Petitioners
administration over the estate of his deceased wife. In his
Josephine and Eleanor, together with their sister Susana, filed
petition, Agustin identified petitioners Josephine and Eleonor
motions with the intestate court to set aside its Orders approving
(children) as among the heirs of his deceased spouse. The
the mortgage—DENIED. Thus, petitioners filed their complaint
intestate court issued an order granting Agustin’s petition.
for Nullification of Mortgage Contracts and Foreclosure
11. PNB and Agustin executed an Amendment of Real and Chattel
Proceedings and Damages against Agustin, PNB, Arturo Arguna,
Mortgages with Assumption of Obligation. Earlier, the intestate
PLEI, etc.
court approved the mortgage to PNB of certain assets of the
15. Petitioners: the mortgage contracts entered into by Agustin with
estate to secure an obligation (P570,000). Agustin signed the
respondent PNB, as well as his subsequent sale of estate
document in behalf of (1) the estate of Melitona; (2) daughters
properties to PLEI and Arguna, are void because the petitioners
Ana and Corazon; and (3) a logging company Pahamotang
never consented thereto. As heirs of their mother Melitona, they
Logging Enterprises, Inc. (PLEI) which had an interest in the
are entitled to notice of Agustin’s several petitions in the intestate
properties of the estate. Offered as securities are 12 parcels of
24
 court seeking authority to mortgage and sell estate properties. lack of compliance with the mandatory requirements of Rule 89 of
Without such notice, the 4 orders of the intestate court which the Rules of Court, particularly Sections 210, 411, 712.
allowed Agustin to mortgage and sell estate properties, are void 3. (DOCTRINE). Clearly, the requirements of Rule 89 of the Rules of
on account of Agustin’s non-compliance with the mandatory Court are mandatory and failure to give notice to the heirs would
requirements of Rule 89 of the Rules of Court. invalidate the authority granted by the intestate/probate court to
16. PNB: petitioners cannot raise as issue in this proceedings the mortgage or sell estate assets. Here, it appears that petitioners
validity of the subject orders in their desire to invalidate the were never notified of the several petitions filed by Agustin with
contracts of mortgage entered into by Agustin. The validity of the the intestate court to mortgage and sell the estate properties of
orders of the intestate court can only be challenged in a direct his wife. According to the trial court, the Petition for Authority to
action and not in an action to annul contracts, as the petitioners Increase Mortgage and Petition for Declaration of Heirs and for
have done. The mortgage on the subject properties is valid Authority to Increase Indebtedness, filed by Agustin do not
because the same was made with the approval of the intestate contain information that petitioners were furnished with copies of
court and with the knowledge of the heirs of Melitona, petitioners said petitions. Also, notices of hearings of those petitions were
included. not sent to the petitioners. The trial court also found that Agustin
17. Heirs of Arguna: petitioners knew of the filing with the intestate did not notify petitioners of the filing of his petitions for judicial
court by Agustin of petitions to mortgage and sell the estate authority to sell estate properties to Arturo Arguna and PLEI. CA
properties. They reecho the CA’s ruling that petitioners are did not explain why it did not believe the findings of the lower
barred by laches.
10 Sec. 2. When court may authorize sale, mortgage, or other encumbrance of realty to pay debts and
ISSUE: WoN petitioners can obtain relief from the effects of contracts legacies through personalty not exhausted. When the personal estate of the deceased is not sufficient to
of sale and mortgage entered into by Agustin without first initiating a pay the debts, expenses of administration, and legacies, or where the sale of such personal estate may
direct action against the orders of the intestate court authorizing the injure the business or other interests of those interested in the estate, and where a testator has not
otherwise made sufficient provision for the payment of such debts, expenses, and legacies, the court, on
challenged contracts—YES.
the application of the executor or administrator and on written notice to the heirs, devisees, and
legatees residing in the Philippines, may authorize the executor or administrator to sell, mortgage, or
RULING: CA decision reversed and set aside. otherwise encumber so much as may be necessary of the real estate, in lieu of personal estate, for the
purpose of paying such debts, expenses, and legacies, if it clearly appears that such sale, mortgage, or
RATIO: encumbrance would be beneficial to the persons interested; and if a part cannot be sold, mortgaged, or
1. The action filed by the petitioners before the trial court is for the otherwise encumbered without injury to those interested in the remainder, the authority may be for the
annulment of several contracts entered into by Agustin for and in sale, mortgage, or other encumbrance of the whole of such real estate, or so much thereof as is
necessary or beneficial under the circumstances.
behalf of the estate of Melitona, namely: (a) contract of mortgage
in favor of respondent PNB, (b) contract of sale in favor of Arguna 11 Sec. 4. When court may authorize sale of estate as beneficial to interested persons. Disposal of
involving 7 parcels of land; and (c) contract of sale of a parcel of proceeds. When it appears that the sale of the whole or a part of the real or personal estate, will be
beneficial to the heirs, devisees, legatees, and other interested persons, the court may, upon application of
land in favor of PLEI. The trial court acquired jurisdiction over the executor or administra tor and on written notice to the heirs, devisees and legatees who are
the subject matter of the case upon the allegations in the interested in the estate to be sold, authorize the executor or administrator to sell the whole or a part of said
complaint that said contracts were entered into despite lack of estate, although not necessary to pay debts, legacies, or expenses of administration; but such authority
notices to the heirs of the petition for the approval of those shall not be granted if inconsistent with the provisions of a will. In case of such sale, the proceeds shall be
contracts by the intestate court. assigned to the persons entitled to the estate in the proper proportions
2. Contrary to the view of the CA, the action which petitioners 12 Sec. 7. Regulations for granting authority to sell, mortgage, or otherwise encumber estate. The court
lodged with the trial court is not an action to annul the orders of having jurisdiction of the estate of the deceased may authorize the executor or administrator to sell
the intestate court, which, according to CA, cannot be done personal estate, or to sell, mortgage, or otherwise encumber real estate; in cases provided by these rules
and when it appears necessary or beneficial, under the following regulations:
collaterally. It is the validity of the contracts of mortgage and sale
(a) The executor or administrator shall file a written petition setting forth the debts due from the
which is directly attacked in the action. The trial court made a deceased, the expenses of administration, the legacies, the value of the personal estate, the situation of
factual finding in its decision that petitioners were not notified by the estate to be sold, mortgaged, or otherwise encumbered, and such other facts as show that the sale,
their father Agustin of the filing of his petitions for permission to mortgage, or other encumbrance is necessary or beneficial;
mortgage/sell the estate properties. The trial court made the (b) The court shall thereupon fix a time and place for hearing such petition, and cause notice stating the
correct conclusion of law that the challenged orders of the nature of the petition, the reason for the same, and the time and place of hearing, to be given personally
intestate court granting Agustin’s petitions were null and void for or by mail to the persons interested, and may cause such further notice to be given, by publication or
otherwise, as it shall deem proper…
25
 court. died)
3. Benito Liu subsequently paid installments totaling Php 2,900,
LIU v. LOY, JR. leaving a balance of Php 1,000. Apparently, Benito Liu stopped
July 3, 2003 | Carpio, J. | Petition for Review | Rule 89 further payments because Vaño admitted his inability to
transfer the lot titles.
PETITIONER:Frank Liu (deceased)(substituted by surviving spouse 4. Later, in a letter (dated Oct. 16, 1954), Teodoro Vaño informed
and children) Frank Liu that the SC had already declared valid the will of his
RESPONDENT/S: Alfredo Loy, Jr., Teresita Loy, Estate of Jose Vaño father. Thus, Teodoro Vaño could transfer the titles to the
SUMMARY: During the lifetime of Jose Vaño, he entered into buyers’ names upon payment of balance of purchase price.
contracts to sell over several lots with Frank Liu, through his son and 5. When Frank Liu failed to reply, Teodoro Vaño sent him another
attorney-in-fact Teodoro Vaño. Ultimately he filed in the settlement letter, dated Jan. 1, 1955, reminding him of his outstanding
court. However, before his claim was approved, Teodoro executed balance. It appears that it was only after 9 years that Frank
contracts of sale over two of the lots with the Loys. Later, the court Liu responded through a letter (dated Jan. 25, 1964). In the
approved the Frank Liu’s claim. However, subsequent to this, the Loys letter, Frank Liu informed Teodoro Vaño that he was ready to
filed ex parte motions (no notice to administratrix) before the pay the balance of the purchase price of the seven lots. He
settlement court to have the contracts of sale in their favor approved, requested for the execution of a deed of sale of the lots in his
and this was granted. The question is who has superior right over the name and the delivery of the titles to him.
subject lots. SC ruled in favor of Frank Liu. 6. April 22, 1966: Benito Liu sold to Frank Liu the 5 lots (Lot Nos.
DOCTRINE:Registration of the contracts without court approval 5, 6, 13, 14 and 15 of Block 12) which Benito Liu purchased
would be ineffective to bind third persons, especially creditors of the from Teodoro Vaño.
estate; 7. Frank Liu assumed the Php 1000 balance for the five lots. Cirilo
It is mandatory that notice be served on the heirs and other Pangalo likewise sold to Frank Liu the two lots (Lot Nos. 14
interested persons of the application for approval of any conveyance and 15 of Block 11) that Pangalo purchased from Teodoro
of property held in trust by the deceased otherwise the order Vaño, the latter likewise assumed the Php 417 balance for the
authorizing the conveyance, as well as the conveyance itself, is two lots.
completely void; 8. March 21 1968: Frank Liu reiterated in a letter his request for
A sale of estate property made by an administrator without court Teodoro Vaño to execute the deed of sale covering the seven
authority is void and does not confer on the purchaser a title that is lots so he could secure the corresponding certificates of title in
available against a succeeding administrator; his name. He also requested for the construction of the
An administrator cannot unilaterally cancel a contract to sell made by subdivision roads pursuant to the original contract. In the
the decedent in his lifetime letter, Frank Liu referred to another letter, dated 25 June
1966, which he allegedly sent to Teodoro Vaño. According to
FACTS: Frank Liu, he enclosed a check dated May 6, 1966 for Php
1. On 13 January 1950, Teodoro Vaño, as attorney-in-fact of Jose 1,417, which is the total balance of the accounts of Benito Liu
Vaño (his father), sold 7 lots of the Banilad Estate (Cebu City) and Cirilo Pangalo on the seven lots. However, Frank Liu did
to Benito Liu and Cirilo Pangalo. not offer in evidence the letter or the check. Frank Liu sent
2. Teodoro Vaño dealt with Frank Liu (Benito Liu’s brother), in the two other letters, dated June 7, 1968 and July 29, 1968, to
sale of the lots to Benito Liu and Cirilo Pangalo. The lots sold Teodoro Vaño reiterating his request for the execution of the
to Benito Liu were Lot Nos. 5, 6, 13, 14, and 15 of Block 12 for deed of sale in his favor but to no avail.
a total price of Php 4,900. Benito Liu gave a down payment of 9. Aug. 19, 1968: Teodoro Vaño sold Lot No. 6 to Teresita Loy for
Php 1,000, undertaking to pay the balance of Php 3,900 in Php 3,930. The Register of Deeds of Cebu City entered this
monthly installments of Php 100 beginning at the end of Jan., sale in the Daybook on February 1969. On 2 December 1968,
1950. The lots sold to Cirilo Pangalo were Lot Nos. 14 and 15 Frank Liu filed a complaint against Teodoro Vaño for specific
of Block 11 for a total price of Php 1,967.50. Cirilo Pangalo performance, execution of deed of absolute.
gave Php 400 as down payment, undertaking to pay the 10. Dec. 2, 1968, Frank Liu filed a complaint vs. Teodoro Vaño for
balance of P1,567.50 in monthly installments of Php 400 specific performance, execution of deed of absolute sale,
beginning at the end of January 1950. (Meanwhile, Jose Vaño issuance of certificates of title and construction of subdivision

26
 roads. On 19 December 1968, Frank Liu filed with the Register her, she would have objected to the sale of the same lots to the
of Deeds (RD) of Cebu City a notice of lis pendens on the seven Loys.
lots due to the pendency of the civil case filed by Liu vs. Vaño. 20. June 4, 1976, Frank Liu filed a complaint for reconveyance or
11. However, RD denied the registration of the lis pendens on the annulment of title of Lot Nos. 5 and 6.
ground that the property is under administration and said 21. Aug. 5, 1978: the probate court denied Milagros’ MR on the
claim must be filed in court. ground that the conflicting claims regarding the ownership of
12. Dec. 16, 1969, Teodoro Vaño sold Lot No. 5 to Alfredo Lot Nos. 5 and 6 were already under litigation in the civil case
Loy for Php 3,910. RD entered this sale in the Daybook filed by Frank Liu (see Fact 20).
on Jan. 16, 1970. 22. RTC ruled against Frank. CA affirmed RTC
13. Oct. 3, 1970: CFI of Davao, on motion of Teodoro Vaño,
dismissed the civil case filed by Liu on the ground that Frank RTC Ruling
Liu should have filed the claim with the probate court. (1) Contract between Teodoro Vaño and Benito Liu was a contract
14. Feb. 17, 1972, Frank Liu filed before the probate court a to sell - since title to Lot Nos. 5 and 6 never passed to Benito
claim against the Estate of Jose Vaño for Specific Liu due to nonpayment of the balance of the purchase price,
Performance, Execution of Deed of Absolute Sale, ownership of the lots remained with the vendor;
Issuance of Certificate of Title, and Construction of (2) Thus, the subsequent sales to Alfredo Loy, Jr. and Teresita Loy
Subdivision Roads. of Lot Nos. 5 and 6, respectively, were valid;
15. During the proceedings, Teodoro Vaño died. His widow, (3) Teodoro Vaño’s letter dated Jan. 1, 1955 addressed to Frank
Milagros Vaño, succeeded as administratrix of the Estate of Liu was a unilateral extrajudicial rescission of the contract to
Jose Vaño. sell;
16. Feb. 24, 1976: probate court approved Frank Liu’s claim. (4) Unilateral rescission was upheld subject to refund by the
On March 5, 1976, Milagros executed a deed of Estate of Jose Vaño of one-half (1/2) of what Frank Liu paid
conveyance covering the seven lots in favor of Frank Liu, under the contract;
in compliance with the probate court's order. The deed (5) Teodoro Vaño, as administrator of the Estate of Jose Vaño and
of conveyance included Lot Nos. 5 and 6, the same lots as sole heir of Jose Vaño, acted both as principal and as agent
Teodoro Vaño sold respectively to Alfredo Loy, Jr. on Dec. when he sold the lots to Alfredo Loy, Jr. and Teresita Loy. The
16, 1969 and to Teresita Loy on Aug. 19, 1968. probate court subsequently approved the sales.
17. March 19, 1976: the probate court, upon an ex-parte (6) Alfredo Loy, Jr. and Teresita Loy were purchasers in good faith
motion filed by Teresita Loy, issued an Order approving
the Aug. 16, 1968 sale by Teodoro Vaño of Lot No. 6 in CA Ruling
her favor. Likewise, upon an ex-parte motion filed by (1) No evidence of fraud or ill-motive on the part of Alfredo, Jr. and
Alfredo Loy, Jr., the probate court issued on March 23, Teresita
1976 an Order approving the Dec. 16, 1969 sale of Lot (2) Sales to Alfredo Loy, Jr. and Teresita Loy of Lot Nos. 5 and 6,
No. 5 by Teodoro Vaño in his favor. respectively, were valid despite lack of prior approval by the
18. On 10 May 1976, the RD of Cebu City cancelled the TCT in the probate court - Teodoro Vaño sold the lots in his capacity as
name of the Estate of Jose Vaño covering Lot No. 5 and issued heir of Jose Vaño - an heir has a right to dispose of the
a new title in the name of Alfredo Loy, Jr. and Perfeccion V. decedent's property, even if the same is under administration,
Loy. Likewise, on the same date, RD cancelled TCT in the because the hereditary property is deemed transmitted to the
name of the Estate of Jose Vaño covering Lot No. 6, and issued heir without interruption from the moment of the death of the
a TCT in the name of Teresita A. Loy. decedent.
19. June 3, 1976: Milagros Vaño, as administratrix of the estate,
filed MR of the Orders of the probate court approving the sale ISSUE/S: WoN prior approval of the probate court is necessary to
to Alfredo and Teresita Loy . She contended that she already validate the sale of Lot Nos. 5 and 6 to Loys - YES
complied with the probate court's Order to execute a deed of WoN the Loys can be considered buyers and registrants in good faith
sale covering the seven lots, including Lot Nos. 5 and 6, in despite the notice of lis pendens - NO
favor of Frank Liu. She also stated that no one notified her of WoN Frank Liu has a superior right over Lot Nos. 5 and 6 - YES
the motion of the Loys, and if the Loys or the court notified WoN Liu is entitled to moral damages & atty’s fees - NO

27
 7. Nevertheless, the subsequent approval by the probate court of
RULING: Petition granted . CA decision set aside. the sale of Lot Nos. 5 and 6 to Frank Liu rendered moot any
New Decision: question on the continuing validity of the contract to sell.
(1) Declaring null and void the deeds of sale of Lot Nos. 5 and 6
executed by Teodoro Vaño in favor of Alfredo Loy, Jr. and Lis Pendens
Teresita Loy, respectively. 8. The lis pendens in the Davao case did not serve as notice to the
(2) Ordering the Register of Deeds of Cebu City to cancel TCT Loys. The Register of Deeds of Cebu City denied registration of
Nos. 64522 and 64523 and to issue a new one in the name of the lis pendens on Dec. 19, 1968. Frank Liu did not appeal to
petitioner Frank N. Liu; the Land Registration Commission to keep alive the lis
(3) Ordering the Estate of Jose Vaño to reimburse to respondent pendens. Frank LiuÊs failure to appeal the denial of the
Loys the amounts paid on Lot Nos. 5 and 6, with interest at 6% registration rendered the lis pendens ineffective. The CFI of
per annum from 4 June 1976 until finality of this decision, and Davao City eventually dismissed Frank Liu’s complaint on Oct.
12% per annum thereafter until full payment 3, 1970.

RATIO: Registration by the Loys of their contracts of sale did not made
Valid Cancellation of Contract to Sell them the first registrants in good faith that may defeat prior
1. There was no valid cancellation of the contract to sell because buyers
there was no written notice of the cancellation to Benito Liu or 9. The registration by the Loys of their contracts of sale did not
Frank Liu. There was even no implied cancellation of the defeat the right of prior buyers because the person who signed
contract to sell. The trial court merely “viewed” the alleged the LoysÊ contracts was not the registered owner. The
unilateral extrajudicial rescission from the letter of Teodoro registered owner of Lot Nos. 5 and 6 was the “Estate of Jose
Vaño, dated Jan. 1, 1955, addressed to Frank Liu. Vaño.” Teodoro Vaño was the seller in the contract of sale with
2. As clearly stated in the letter, the only action that Teodoro Vaño Alfredo Loy, Jr. The Estate of Jose Vaño was the seller in the
would take if Frank Liu did not reply was that Teodoro Vaño contract of sale with Teresita Loy. Teodoro Vaño signed both
would write directly to Benito Liu and Cirilo Pangalo. The contracts of sale. One who buys from a person who is not the
letter does not mention anything about rescinding or registered owner is not a purchaser in good faith.
cancelling the contract to sell. 10. The Loys were under notice to inquire why the land was not
3. Although the law allows the extrajudicial cancellation of a registered in the name of the person who executed the
contract to sell upon failure of one party to comply with his contracts of sale. They were under notice that the lots
obligation, notice of such cancellation must still be given to the belonged to the “Estate of Jose Vaño” and any sale of the lots
party who is at fault. The notice of cancellation to the other required court approval. Any disposition would be subject to
party is one of the requirements for a valid cancellation of a the claims of creditors of the estate who filed claims before the
contract to sell, aside from the existence of a lawful cause. probate court.
4. A contract to sell upon failure of one party to comply with his 11. The contracts of the Loys did not convey ownership of the lots
obligation, notice of such cancellation must still be given to the to them as against third persons. The contracts were binding
party who is at fault. only on the seller, Teodoro Vaño. The contracts of the Loys
5. The fact that Teodoro Vaño advised Frank Liu to file his claim would become binding against third persons only upon
with the probate court is certainly not the conduct of one who approval of the sale by the probate court and registration with
supposedly unilaterally rescinded the contract with Frank Liu. RD. Registration of the contracts without court approval would
6. In this case, there was prior delay or default by the seller. As be ineffective to bind third persons, especially creditors of the
admitted by Teodoro Vaño, he could not deliver the titles estate.
because of a case questioning the authenticity of the will of his 12. Section 8, Rule 89 of the 1964 Rules of Court specifically
father, as stated in the Oct. 16, 1954 letter. In that same letter, requires notice to all interested parties in any application for
Teodoro Vaño informed Frank Liu that the titles were ready for court approval to convey property contracted by the decedent
transfer. in his lifetime.
13. Despite the clear requirement of Section 8 of Rule 89, the Loys
did not notify the administratrix of the motion and hearing to

28
 approve the sale of the lots to them. The administratrix, who contract, or with such modifications as are agreed upon by the
had already signed the deed of sale to Frank Liu as directed by parties and approved by the court; x x x)
the same probate court, objected to the sale of the same lots to 19. Frank Liu applied to the probate court for the grant of
the Loys. authority to the administratrix to convey the lots in accordance
14. The failure to notify the administratrix and other interested with the contract made by the decedent Jose Vaño during his
persons rendered the sale to the Loys void. In this case, the lifetime. The probate court approved the application.
administratrix, the wife of the deceased Teodoro Vaño, was not 20. Teresita Loy: her seller was the Estate of Jose Vaño. Teodoro
notified of the motion and hearing to approve the sale of the Vaño executed the contract of sale in his capacity as
lots to the Loys. Frank Liu did not also receive any notice, administrator of the Estate of Jose Vaño, the registered
although he obviously was an interested party. The issuance of owner of the lots. The Court has held that a sale of estate
new titles to the Loys on May 10, 1976 by the Registry of property made by an administrator without court authority is
Deeds did not vest title to the Loys because the “conveyance void and does not confer on the purchaser a title that is
itself” was “completely void.” available against a succeeding administrator. Both the law
(Sec. 91, Act No. 496; Sec. 88, PD 529) and jurisprudence
Probate Court's ex-parte Approval of the Contracts of the Loys expressly require court approval before any sale of estate
Not Valid property by an executor or administrator can take effect.
15. Indisputably, an heir can sell his interest in the estate of the 21. Moreover, when the Loys filed in March 1976 their ex-parte
decedent, or even his interest in specific properties of the motions for approval of their contracts of sale, there was
estate. However, for such disposition to take effect against already a prior order of the probate court dated Feb. 24, 1976
third parties, the court must approve such disposition to approving the sale of Lot Nos. 5 and 6 to Frank Liu. In fact,
protect the rights of creditors of the estate. What the deceased the administratrix had signed the deed of sale in favor of
can transfer to his heirs is only the net estate, that is, the Frank Liu on March 5, 1976 pursuant to the court approval.
gross estate less the liabilities. This deed of sale was notarized on March 5, 1976, which
16. Opulencia v. CA: an heir agreed to convey in a contract to sell transferred ownership of Lot Nos. 5 and 6 to Frank Liu on the
her share in the estate then under probate settlement. In an same date.
action for specific performance filed by the buyers, the seller- 22. Thus, when the probate court approved the contracts of the
heir resisted on the ground that there was no approval of the Loys on March 19 and 23, 1976, the probate court had already
contract by the probate court. SC ruled that the contract to lost jurisdiction over Lot Nos. 5 and 6 because the lots no
sell was binding between the parties, but subject to the longer formed part of the Estate of Jose Vaño.
outcome of the testate proceedings. 23. The Loys cannot acquire any right of dominion over Lot Nos. 5
17. Alfredo Loy, Jr.: his seller executed the contract of sale after and 6 because the probate court had already lost jurisdiction
the death of the registered owner Jose Vaño. The seller was to authorize the second sale of the same lots. Moreover, the
Teodoro Vaño who sold the lot in his capacity as sole heir probate courtÊs approval of the sale to the Loys was
of the deceased Jose Vaño. Opulencia applies to the sale to completely void due to the failure to notify the administratrix
Alfredo Loy, Jr., which means that the contract of sale was of the motion and hearing on the sale.
binding between Teodoro Vaño and Alfredo Loy, Jr., but subject
to the outcome of the probate proceedings. Loys Not Possessors in Good Faith
18. Frank Liu: as successor-in-interest of Benito Liu, his 24. The Loys were not in good faith when they built on the lots
seller was Jose Vaño, who during his lifetime executed because they knew that they bought from someone who was
the contract to sell through an attorney-in-fact, Teodoro not the registered owner. The registered owner on the TCTs of
Vaño. This is a disposition of property contracted by the the lots was the “Estate of Jose Vaño” clearly indicating that
decedent during his lifetime. Section 8 of Rule 89 specifically the sale required probate court approval.
governs this sale (Where the deceased was in his lifetime 25. Teodoro Vaño did not show any court approval to the Loys
under contract, binding in law, to deed real property, or an when they purchased the lots because there was none. Any
interest therein, the court having jurisdiction of the estate one who buys from a person who is not the registered owner is
may, on application for that purpose, authorize the executor or not a purchaser in good faith.
administrator to convey such property according to such

29
 Frank Liu’s Prior Contract to Sell Prevails Over Loys’
Subsequent Contracts of Sale conditional sale and directed him to pay the balance of the purchase price.
26. A prior contract to sell made by the decedent prevails over the CA reversed saying that it was only a contract to sell and that an approval
subsequent contract of sale made by the administrator without of the sale must be obtained from the settlement court. That approval was
probate court approval. The administrator cannot unilaterally a positive suspensive condition, the nonfulfillment of which was not
cancel a contract to sell made by the decedent in his lifetime. tantamount to a breach. Moreover, CA said that Sec 1, Rule 89 ROC was
27. Any cancellation must observe all legal requisites, like written inapplicable, because the lack of written notice to the other heirs showed
notice of cancellation based on lawful cause. It is immaterial if the lack of consent of those heirs other than Eliodoro. For this reason, bad
the prior contract is a mere contract to sell and does not faith was imputed to him. SC: When a contract is subj to a suspensive
immediately convey ownership.If it is valid, then it binds the condition, its birth or effectivity can take place only if and when the
estate to convey the property in accordance with Section 8 of condition happens or is fulfilled. Thus, the intestate courts grant of the
Rule 89 upon full payment of the consideration. Motion for Approval of the sale filed by Lina resulted in the heirs’
28. Frank Liu’s contract to sell became valid and effective upon its obligation to execute the Deed of Sale of the disputed lots in his favor. The
execution. The seller, Jose Vaño, was then alive and thus there condition having been satisfied, the contract was perfected. But because
was no need for court approval for the immediate effectivity of the heirs did not consent to the sale of their ideal shares in the disputed
the contract to sell. In contrast, the execution of the contracts lots, the CA correctly limited the scope of the Receipt to the pro-
of sale of the Loys took place after the death of the registered indiviso share of Eliodoro Sr. Thus, it correctly modified the intestate
owner of the lots. The law requires court approval for the courts ruling by excluding their shares from the ambit of the transaction.
effectivity of the Loys’ contracts of sale against third parties.
DOCTRINE: A contract of sale is not invalidated by the fact that it is
The probate court did not validly give this approval since it
subject to probate court approval. The transaction remains binding on the
failed to notify all interested parties of the Loys’ motion for
seller-heir, but not on the other heirs who have not given their consent to
court approval of the sale. Besides, the probate court had lost
it. In settling the estate of the deceased, a probate court has jurisdiction
jurisdiction over the lots after it approved the earlier sale to
over matters incidental and collateral to the exercise of its recognized
Frank Liu.
powers. Such matters include selling, mortgaging or otherwise
29. CA ruling affirmed insofar as the refusal to award moral
encumbering realty belonging to the estate. Rule 89, Sec 8 ROC, deals
damages and atty’s fees are concerned. Frank Liu failed to
with the conveyance of real property contracted by the decedent while still
prove that he suffered mental anguish due to the actuations of
alive. In contrast with Sec 2 and 4 of the same Rule, the said provision
the Loys. The fact alone that a party was compelled to litigate
does not limit to the executor/administrator the right to file the application
and incur expenses to protect his claim does not justify an
for authority to sell, mortgage or otherwise encumber realty under
award of attorney's fees. Where there is no basis to award
administration. The standing to pursue such course of action before the
moral damages, there is also no basis to award attorney's fees.
probate court inures to any person who stands to be benefited or injured
HEIRS of SPS SANDEJAS v LINA
by the judgment or to be entitled to the avails of the suit.
Feb 5 2001 | Panganiban, J. | Petition for Review | Rule 89
FACTS:
PETITIONER: Heirs Of Spouses Remedios R. Sandejas And Eliodoro P.
1. Eliodoro Sandejas, Sr. filed a petition in the lower court praying
Sandejas Sr. -- Roberto R. Sandejas, Antonio R. Sandejas, Cristina
that letters of administration be issued in his favor for the settlement
Sandejas Moreland, Benjamin R. Sandejas, Remedios R. Sandejas; And
of the estate of his wife, REMEDIOS, who died on Apr 17, 1955.
Heirs Of Sixto S. Sandejas Ii, Ramon R. Sandejas, Teresita R. Sandejas,
Letters of Administration were issued appointing him as administrator
And Eliodoro R. Sandejas Jr., All Represented By Roberto R. Sandejas
of the estate. On the same date, he took his oath as administrator.
RESPONDENT: Alex Lina
2. An Omnibus Pleading for motion to intervene and petition-in-
intervention was filed by Lina alleging among others that Eliodoro, in
SUMMARY: Lina alleged that the administrator of Remedios’ estate, his capacity as seller, bound and obligated himself, his heirs,
Eliodoro, in his capacity a s s e l l e r, o b l i g a t e d h i m s e l f to sell 4 administrators, and assigns, to sell forever and absolutely and in their
parcels of land which formed part of the estate of the late Remedios. It entirety 4 parcels of land wc formed part of the estate of the late
was showed that there was receipt of money with promise to sell and to Remedios for 1M total where partial payment/earnest money has been
buy. Heirs said that the claim of Lina was converted to a monetary claim paid by Lina thru cash and check. Motion of intervention GRANTED.
against Eliodoro’s estate. RTC granted Lina’s motion for approval of the

30
3. The counsel for Eliodoro filed a [M]anifestation alleging that 10. Overturning the RTC ruling, the CA held that the contract
Eliodoro died in Nov 1984 in Canada and that he is still waiting for between Eliodoro and Lina was merely a contract to sell, not a
official word on the fact of the death. He also alleged, among others perfected contract of sale. It ruled that the ownership of the 4 lots
that the matter of the claim of Lina becomes a money claim to be filed was to remain in the intestate estate of Remedios until the approval of
in the estate of the late Eliodoro. RTC directed the counsel for the 4 the sale was obtained from the settlement court. That approval was a
heirs and other heirs of Teresita R. Sandejas to move for the positive suspensive condition, the nonfulfillment of which was not
appointment of a new administrator. tantamount to a breach. It was simply an event that prevented the
obligation from maturing or becoming effective. If the condition did
4. Lina as petitioner filed with RTC an Omnibus Pleading for (1)
not happen, the obligation would not arise or come into existence.
petition for letters of administration & (2) to consolidate instant case
(re Remedios’ estate) with IN RE: INTESTATE ESTATE OF ELIODORO 11. Moreover, CA said that Sec 1, Rule 89 ROC was inapplicable,
P. SANDEJAS, SR., LINA PETITIONER, [for letters of administration]. because the lack of written notice to the other heirs showed the lack
Consolidation was ordered. of consent of those heirs other than Eliodoro. For this reason, bad
faith was imputed to him, for no one is allowed to enjoy a claim
5. Lina filed a Motion for his appointment as a new administrator of
arising from one’s own wrongdoing. Thus, Eliodoro was bound, as a
the Intestate Estate of Remedios on the ff reasons: (1) intervenor has
matter of justice and good faith, to comply with his contractual
not received any motion on the part of the heirs for the appointment
commitments as an owner and heir. When he entered into the
of a new [a]dministrator in place of their father, Eliodoro; (2) wherein
agreement with respondent, he bound his conjugal and successional
the cases are already consolidated then the appointment of Lina as
shares in the property.
[a]dministrator of the Intestate Estate of Remedios would be
beneficial to the heirs and also to the Intervenor; (3) Lina would be ISSUE: WoN the CA erred in modifying the RTC Decision and in
willing to give way at anytime to any [a]dministrator who may be obligating the heirs to sell 3/5 of the properties to Lina, even if the
proposed by the heirs, so long as such [a]dministrator is qualified. suspensive condition had not been fulfilled – YES
RTC GRANTED such motion.
RULING: Petition PARTIALLY GRANTED. The appealed Decision and
6. Heirs Sixto, Roberto, Antonio and Benjamin, all surnamed
Resolution are AFFIRMED with the MODIFICATION that respondent
Sandejas filed MR and the appointment of another administrator Mr.
is entitled to only a pro-indiviso share = 11/20 of the disputed lots.
Sixto Sandejas, in lieu of Lina stating among others that it was only
lately that Sixto, a son and heir, expressed his willingness to act as a
RATIO:
new administrator.
Main issue – Obligation w a suspensive condition
7. Lina: no objection to the appointment of Sixto as [a]dministrator
of the [i]ntestate [e]state of his mother Remedios, provided that Sixto 1. The heirs argue that the CA erred in ordering the conveyance of
be also appointed as administrator of the [i]ntestate [e]state of his the disputed 3/5 of the parcels of land, despite the non-fulfillment of
father, Eliodoro, which 2 cases have been consolidated. GRANTED by the suspensive condition -- court approval of the sale -- as contained in
the lower court. Sixto took his oath and letters of administration were the Receipt of Earnest Money with Promise to Sell and to Buy. They
issued. assert that because this condition had not been satisfied, their
obligation to deliver the parcels of land was converted into a money
8. Lina filed [an] Omnibus Motion (a) to approve the deed of claim.
conditional sale executed between Lina and Elidioro on June 7, 1982;
(b) to compel the heirs of Sps Sandejas thru their administrator, to 2. SC: disagrees. Heirs admit that the agreement between Eliodoro
execute a DOAS in favor of him pursuant to said conditional deed of and Lina was a contract to sell but in a contract to sell, the payment of
sale to which the Sixto filed an MTD. the purchase price is a positive suspensive condition. The vendor’s
obligation to convey the title does not become effective in case of
9. RTC: rendered the questioned order granting Lina’s [M]otion for failure to pay. On the other hand, the agreement between Eliodoro
the [A]pproval of the Receipt of Earnest Money with promise to buy and Lina is subj to a suspensive condition -- the procurement of a
between Lina and Eliodoro. Lina is directed to pay the balance of the court approval, not full payment. There was no reservation of
purchase price = 729K. ownership in the agreement. In accordance with par 1 of the Receipt,
the heirs were supposed to deed the disputed lots over to Lina. This
they could do upon the courts approval, even before full
31
payment. Hence, their contract was a conditional sale, rather child of the decedent; and in Acebedo, a clear sale had been made,
than a contract to sell as determined by the CA. and all the heirs consented to the disposition of their shares in the
realty in administration.
3. When a contract is subj to a suspensive condition, its birth or
effectivity can take place only if and when the condition happens or is 8. SC: not persuaded. Sec 8 of Rule 89 allows this action to
fulfilled. Thus, the intestate courts grant of the Motion for Approval proceed. The factual differences alleged by the heirs have no bearing
of the sale filed by Lina resulted in the heirs’ obligation to execute the on the intestate courts jurisdiction over the approval of the subj
Deed of Sale of the disputed lots in his favor. The condition having conditional sale. Probate jurisdiction covers all matters relating to the
been satisfied, the contract was perfected. settlement of estates (Rules 74 & 86-91) and the probate of wills
(Rules 75-77) of deceased persons, including the appointment and the
4. Court approval is req’d in any disposition of the decedents estate removal of administrators and executors (Rules 78-85). It also extends
per Rule 89 ROC. Reference to judicial approval, however, cannot to matters incidental and collateral to the exercise of a probate courts
adversely affect the substantive rights of heirs to dispose of their recognized powers such as selling, mortgaging or otherwise
own pro indiviso shares in the co-heirship or co-ownership. In other encumbering realty belonging to the estate. Indeed, the rules on this
words, they can sell their rights, interests or participation in the point are intended to settle the estate in a speedy manner, so that the
property under administration. A stipulation requiring court approval benefits that may flow from such settlement may be immediately
does not affect the validity and the effectivity of the sale as regards enjoyed by the heirs and the beneficiaries.
the selling heirs. It merely implies that the property may be taken out
of custodia legis, but only with the courts permission. It would seem 9. In the present case, the Motion for Approval was meant to settle
that the suspensive condition in the present conditional sale was the decedent’s obligation to Lina; hence, that obligation clearly falls
imposed only for this reason. under the jurisdiction of the settlement court. To require Lina to file a
separate action -- on whether the heirs should convey the title to
5. Thus, SC is not persuaded by the heirs’ argument that the Eliodoro’s share of the disputed realty -- will unnecessarily prolong
obligation was converted into a mere monetary claim. Par. 4 of the the settlement of the intestate estates of the deceased spouses. The
Receipt, which the heirs rely on, refers to a situation wherein the sale suspensive condition did not reduce the conditional sale between
has not materialized. In such a case, the seller is bound to return to Eliodoro and Lina to 1 that was not a definite, clear and absolute
the buyer the earnest money paid + interest at 14%. But the sale was document of sale, as contended by the heirs. Upon the occurrence of
approved by the intestate court; hence, the proviso does not apply. the condition, the conditional sale became a reciprocally demandable
6. Because the heirs did not consent to the sale of their ideal shares obligation that is binding upon the parties. That Acebedo also
in the disputed lots, the CA correctly limited the scope of the involved a conditional sale of real property proves that the existence
Receipt to the pro-indiviso share of Eliodoro Sr. Thus, it correctly of the suspensive condition did not remove that property from the
modified the intestate courts ruling by excluding their shares from the jurisdiction of the intestate court.
ambit of the transaction. 2nd collateral issue – intervenor’s standing
1st collateral issue – jurisdiction of settlement court 10. The heirs contend that under Rule 89, only the executor or
7. Heirs also fault the CA Decision by arguing, inter alia, (a) administrator is authorized to apply for the approval of a sale of realty
jurisdiction over ordinary civil action seeking not merely to enforce a under administration.
sale but to compel performance of a contract falls upon a civil court, 11. SC read no such limitation. Sec 8, Rule 89 should be
not upon an intestate court; and (b) that Sec 8 of Rule 89 allows the differentiated from Sec 2 and 4 of the same Rule, specifically
executor or administrator, and no one else, to file an application for requiring only the executor/administrator to file the application for
approval of a sale of the property under administration. Citing Gil v. authority to sell, mortgage or otherwise encumber real estate for the
Cancio and Acebedo v. Abesamis, they contend that the CA erred in purpose of paying debts, expenses and legacies (Sec 2); or for
clothing the settlement court with the jurisdiction to approve the sale authority to sell real or personal estate beneficial to the heirs,
and to compel them to execute the DOS. They allege factual devisees or legatees and other interested persons, although such
differences between these cases and the instant case, as follows: authority is not necessary to pay debts, legacies or expenses of
in Gil, the sale of the realty in administration was a clear and an administration (Sec 4). Sec 8 mentions only an application to
unequivocal agreement for the support of the widow and the adopted authorize the conveyance of realty under a contract that the deceased
32
entered into while still alive. While this Rule does not specify who
should file the application, it stands to reason that the proper party (Reyes – Masugas vs. Reyes)
must be one who is to be benefited or injured by the judgment, or one
who is to be entitled to the avails of the suit. RCBC v Hi-Tri Dev. Corp
June 13, 2012 | Sereno, J | Petition for review on certitorari | Rule 91:
3rd collateral issue – Bad faith Escheats
12. The heirs assert that Eliodoro was not in bad faith, because (a) he
informed Lina of the need to secure court approval prior to the sale of Petitioner: RCBC
the lots, and (2) he did not promise that he could obtain the approval. Respondent: Hi-Tri Dev. Corp and Sps Bakunawa

13. SC: no bad faith. Eliodoro did not misrepresent these lots to Lina Summary: Respondents negotiated with a certain Milan for the latter
as his own properties to which he alone had a title in fee simple. The to buy some land of Respondents. Milan made a downpayment of
fact that he failed to obtain the approval of the conditional sale did not P1m+. It failed to consummate the contract hence Respondents were
automatically imply bad faith on his part. The CA held him in bad faith rescinding the contract. Respondents then issued a Manager’s check
only for the purpose of binding him to the conditional sale. This was worth P1m+ through RCBC and Milan as payee. RCBC without
unnecessary because his being bound to it is, as already shown, informing the parties, included the said check in the escheat
beyond cavil. proceedings. SC said that Bakunawa spouses were deprived of due
process when they were not notified. They said that Petitioners claim
4th collateral issue – Computation of Eliodoro’s share
that the Manager’s check already transferred the credit to the payee
14. The heirs aver that the CA’s computation of Eliodoro’s share in and making the Respondents herein uninterested persons. SC said
the disputed parcels of land was erroneous because, as the conjugal that there is no transfer because there was no delivery of the check.
partner of Remedios, he owned 1/2 of these lots plus a further 1/10 of
the remaining half, in his capacity as a one of her legal heirs. Hence, Doctrine: Escheat proceedings refer to the judicial process in which
Eliodoro’s share should be 11/20 of the entire property. the state, by virtue of its sovereignty, steps in and claims abandoned,
left vacant, or unclaimed property, without there being an interested
15. On the other hand, the CA held that, at the very least, the person having a legal claim thereto. In the case of dormant accounts,
conditional sale should cover the ½ pro indiviso conjugal share of the state inquires into the status, custody, and ownership of the
Eliodoro plus his 1/10 hereditary share as 1 of the 10 legal heirs of the unclaimed balance to determine whether the inactivity was brought
decedent, or a total of 3/5 of the lots in administration. about by the fact of death or absence of or abandonment by the
depositor. If after the proceedings the property remains without a
16. SC: Heirs’ computation is correct. The CA computed Eliodoro’s
lawful owner interested to claim it, the property shall be reverted to
share as an heir based on 1/10 of the entire disputed property. It
the state „to forestall an open invitation to self- service by the first
should be based only on the remaining half, after deducting the
comers.‰ However, if interested parties have come forward and lain
conjugal share.
claim to the property, the courts shall determine whether the credit or
17. The proper determination of the seller-heirs shares requires deposit should pass to the claimants or be forfeited in favor of the
further explanation. Succession laws and jurisprudence require that state. We emphasize that escheat is not a proceeding to penalize
when a marriage is dissolved by the death of the husband/wife, the depositors for failing to deposit to or withdraw from their accounts. It
decedent’s entire estate under the concept of CPG -- must be divided is a proceeding whereby the state compels the surrender to it of
equally, with 1/2 going to the surviving spouse and the other 1/2 to the unclaimed deposit balances when there is substantial ground for a
heirs of the deceased. After the settlement of the debts and belief that they have been abandoned, forgotten, or without an owner.
obligations, the remaining 1/2 of the estate is then distributed to the
legal heirs, legatees and devices. We assume, however, that this
preliminary determination of the decedent’s estate has already been
taken into account by the parties, since the only issue raised in this FACTS: Bakunawa spouses owned a land and then they sold this to a
case is whether Eliodoro’s share is 11/20 or 3/5 of the disputed lots. certain Milan. Milan here made a downpayment of P1,019,514.29.
They agreed that Milan will clear all the obstacles in completing the
(De Leon vs. CA)

33
sale. Milan failed hence Bakunawa is trying to rescind. Milan refused Ratio:
to accept the downpayment back. Petitioner Bank: Respondents were not owners of the unclaimed
balances and were thus not entitled to notice from RTC Clerk of
Oct 1991:The spouses Bakunawa then through their company Hi-Tri Court. It is deemed that the payee is the owner thereof.
Development Corp (Hi-Tri) took out a Manager’s check from RCBC-
Ermita in the amount of P1,019,514.29, payable to Millan’s company SC: Act No. 3936 sec 3. States that insofar as depositors or other
Rosmil Realty. claimants of the unclaimed balances, service made by publication of a
copy of the summons in a newspaper. CA made an error when it said
Jan 2003: RCBC, during the pedency of the case and with Hi-Tri and that individual notices were a jurisdictional requirement. Escheat
Spouses Bakunawa knowledge, reported the the said amount as proceedings are actions in rem, whereby an action is brought against
unclaimed balances to the the Bureau of Treasury. the thing itself and not the person. Judgment of escheat is conclusive
upon persons notified by advertisement, as publication is considered a
Dec 2006: Republic, through the OSG, filed with the RTC the action general and constructive notice to all persons interested.
below for Escheat.
Nevertheless, CA is affirmed on the exclusion of the funds allocated
April 2008: Sps. Bakunawa settled their dispute with the Millans and for the payment of the Manager’s check in the escheat proceedings.
the former agreed to pay 3 million (inclusive of the P1,019m). But
before they were able to agree with the settlement, Sps Bakunawa The law provides that depositors must be notified of unclaimed
inquired about the Manager’s check of RCBC worth P1,019m.They balances. The purpose of this initial notice is for a bank to determine
were dismayed when they were informed that the amount was already whether an inactive account has indeed been unclaimed, abandoned,
subject of the escheat proceedings. forgotten or left without an owner. If depositor simply does not wish to
touch the funds but still claims ownership over it then the bank is not
Sps Bakunawa sent a letter to the RCBC demanding the P1,019m. obligated to include the account in the escheat proceedings.
RCBC replied that they informed Hi-Tri Corp and its officers of the
escheat proceedings. [Read doctrine]

RTC: in favor of the Republic when it explained that the Republic was Petitioner: funds represented by the Manager’s check were deemed
able to prove compliance with the requirements of publication and transferred to the payee upon issuance of the check, the proper party
notice, which served as notice to all those who may be affected by the to be notified is him. Petitioner also claims that they cannot be liable
Escheat proceedings. for failing to notify payee because they don’t have the address of
payee.
CA: reversed RTC. RCBC failed to prove that they notified the
purchaser of the Manager Check (Hi-Tri and Sps Bakunawa) or the SC: mere issuance of the manager’s check does not ipso facto work as
payee (Millan). The RTC of Makati failed to issue individual notices. an automatic transfer of funds to the account of payee. In case the
Violation of due process procurer of the manager’s or cashier’s check retains custody of the
instrument, does not tender it to be intended payee, or fails to make
ISSUES: an effective delivery (nego). Since there was no delivery, presentment
1) WON the Decision of the RTC were void for failure to send of the check to the bank for payment did not occur. An order to debit
separate notices to respondent by personal service - NO the account of respondents was never made. In fact, petitioner
2) WON petitioner had the obligation to notify respondents confirms that Manager’s check was never made. The doctrine that the
immediately before it filed its Sworn statement with the deposit represented by a Manager’s check automatically passes to the
treasurer - Yes payee is inapplicable, because the instrument – although accepted in
3) WON the allocated funds may be escheated in favor of the advance – remains undelivered. Hence, Respondents should have
Republic - No been informed that the deposit had been left inactive for more than
10 years, and that it may be subjected to escheat proceedings if left
RULING: Petition Denied. CA affirmed unclaimed.

34
 RP v. REGISTER OF DEEDS OF ROXAS CITY accordance with law. Respondents invoked the following as
July 16, 2008 | Carpio, J. | Petition for Review on Certiorari | Rule 91 affirmative defenses: prescription, private ownership of Lot No.
398, and Lee Liong’s being a buyer in good faith and for value.
PETITIONER: Republic of the Philippines, represented by Director Furthermore, respondents claimed that, being Filipino citizens,
of Lands they are qualified to acquire Lot No. 398 by succession.
RESPONDENT: Register of Deeds of Roxas City, Elizabeth Lee, 5. TC ordered reversion, ruling that respondents could not acquire
Pacita Yu-Lee title to the land, the sale to their predecessor-in-interest being null
and void. CA reversed, ruling that the transfer to respondents of
SUMMARY: A Chinese citizen bought Lot No. 398, which passed the lot cured the flow in the orig transaction.
by succession to his wife and 2 sons. During the son’s lifetime, the
Court refused to nullify the sale on the doctrine of in pari delicto. ISSUE: WoN reversion proceedings is still viable, considering that the
40 years after, after the lot has passed by succession to the sons’ lot has already been transferred to Filipino citizens—NO.
widows, the OSG filed a complaint for reversion of title. SC ruled
against the OSG. RULING: Petition DENIED.

DOCTRINE: If land is invalidly transferred to an alien who RATIO:

subsequently becomes a citizen or transfers it to a citizen, the flaw 1. This case is similar to De Castro v. Teng Queen Tan,
in the original transaction is considered cured and the title of the where the Court, independently of the doctrine of in pari delicto,
transferee is rendered valid. sustained the sale, holding that while the vendee was an alien at
the time of the sale, the land has since become the property of a
naturalized Filipino citizen.
FACTS:
2. As the Court held in Dinglasan v. Lee Bun Ting,
1. In March 1936, Lee Liong, a Chinese citizen, bought Lot No. 398
although ownership of the land cannot revert to the original
(1,574 m2) from Vicenta Arcenas and 7 Dinglasan’s. In Feb. 1944,
sellers because of the doctrine of in pari delicto, the OSG may
Lee Liong died intestate and was survived by his widow Ang Chia
initiate an action for reversion/escheat of the land to the State.
and his sons Lee Bing Ho and Lee Bun Ting. On June 30, 1947, the
But in this case, subsequent circumstances militate against
surviving heirs of Lee Liong extrajudicially settled the estate of the
escheat proceedings because the land is now in the Filipinos’
deceased and partitioned among themselves Lot No. 398. When the
hands. The constitutional proscription on alien ownership of lands
sons died, the lot was then transferred by succession to their
was intended to protect lands from falling in the hands of non-
respective wives Elizabeth Lee and Pacita Yu-Lee.
Filipinos. In this case, however, there would be no more public
2. In the case of Dinglasan v. Lee Bun Ting, involving the same lot,
policy violated since the land is in the hands of Filipinos qualified
the Court held that even if the sale of the property was null and
to acquire and own such land. If land is invalidly transferred to an
void for violating the constitutional prohibition on the sale of land
alien who subsequently becomes a citizen or transfers it to a
to an alien, still the doctrine of in pari delicto barred the sellers
citizen, the flaw in the original transaction is considered cured
from recovering title to the property. A subsequent case over the
and the title of the transferee is rendered valid.
same land was dismissed applying the doctrine of res judicata.
3. In this case, the reversion proceedings was initiated
3. On Sept. 7, 1993, Elizabeth and Pacita filed a petition for
only after 40 years from Dinglasan v. Lee Bun Ting, and the land
reconstitution of title of Lot No. 398 because the records of the
has already been transferred by succession to Filipino citizens. In
Register of Deeds, Roxas City were burned during the war. On Oct.
Chavez v. PEA, the law disregards the constitutional
3, 2001, the Court held that the TC’s order of reconstitution was
disqualification of the buyer to hold land if the land is
void for lack of factual support because it was based merely on the
subsequently transferred to a qualified party, or the buyer himself
plan & technical description approved by the Land Registration
becomes a qualified party.
Authority.
4. Meanwhile, on Jan. 26, 1995, the RP filed with the RTC a
REPUBLIC v CA, SOLANO
Complaint for Reversion of Title, praying that the sale of Lot No.
Jan 31 2002 | Bellosillo, J. | Rule 91: Escheats
398 to Lee Liong be set aside for being null and void ab initio, thus
never forming part of the deceased’s estate, and that the lot be
reverted to the public domain for the State’s disposal in
35
P: Republic of the Philippines (represented by Register of Deeds decision is legally infirm for escheating the properties to the Pasay
Pasay City) City Government, which is not authorized by law to be the
R: CA, Amada Solano (assisted by husband Romeo) recipient; should’ve been in favor of the Republic under Rule 91,
SUMMARY: Republic initiated escheat proceedings w/ regard to Section 1. OSG’s affirmative defenses: (a) lack of jurisdiction over
Hankin’s estate before the RTC. Private respondent Amada Solano, the nature of the action (b) cause of action barred by statute of
through her husband, filed for a motion for intervention, claiming limitations.
that 2 parcels of land in the estate were donated to her by Hankin 4. CA: Petition for annulment of judgment given due course. WON
during the latter’s lifetime, but at the time of the proceedings Amada the properties in question are no longer part of the estate of the
allegedly couldn’t find the deeds of donation, so the RTC dismissed deceased Hankins at the time of her death, and WON the alleged
the motion for failure to establish a valid claim or right on the donations are valid are issues in the present petition which can
properties. 7 years later, Amada filed a petition for annulment of only be resolved with a full blown trial. While Rule 91 Sec 4
judgment, claiming that she found the deeds of donation. CA granted provides a 5 year period from the date of the judgment to file a
such, but SC reversed. claim, petitioner isn’t claiming anything from the deceased’s
DOCTRINE:. A claimant to an escheated property must file his claim estate – she is claiming that the parcels of land should not have
within 5 years from the date of such judgment,; but a claim not made been included as part of the estate of decedent since Amada was
shall be barred forever.// Where a person comes into an escheat the owner thereof by virtue of the deeds of donation.
proceeding as a claimant, the burden is on such intervenor to
establish his title to the property and his right to intervene. ISSUE: WON petition for annulment of judgment should be given due
course – NO.
FACTS:
1. For more than 3 decades (1952-1985), private respondent Amada RULING: Petition GRANTED. CA Resolutions set aside. RTC decision
Solano served as the all-round personal domestic helper and girl reinstated.
Friday (female helper/personal assistant) of the late Elizabeth
Hankins, a widow and French national. Amada attended to her RATIO:
needs since no close relative was available, especially during the 1. Interested party w/ regard to escheat proceedings: Any person
waning years of her life. In recognition of Amada’s faithful and alleging to have a direct right or interest in the property sought
dedicated service, Ms. Hankins executed in her favor 2 deeds of to be escheated (Municipal Council of San Pedro v Colegio de San
donation covering 2 parcels of land covered by TCTs. Private Jose Inc.)
respondent claims she misplaced the deeds and were nowhere to 2. A claimant to an escheated property must file his claim "within 5
be found. years from the date of such judgment, such person shall have
2. While the deeds of donation were missing, the Republic filed a possession of and title to the same, or if sold, the municipality or
petition for the escheat of Hankin’s estate before the RTC. A city shall be accountable to him for the proceeds, after deducting
motion for intervention was filed by Amada’s spouse, Romeo, and the estate; but a claim not made shall be barred forever. The 5-
one Regosa, but the motion was denied for failing to show a valid year period is to encourage would-be claimants to be punctilious
claim or right to the properties in question. Since it was in asserting their claims. Here, the escheat judgment was handed
established that there were no known heirs and persons entitled down by the RTC as early as 27 June 1989 but it was only on 28
to the properties of deceden Hankins, TC on June 27 1989 January 1997, more or less 7 years after, when Amada decided to
escheated the estate in favor of the Republic. By virtue of the contest the escheat judgment in the guise of a petition for
decision, the Registry of Deeds of Pasay City cancelled the TCTs annulment of judgment before the CA. Obviously, private
and issued new ones in the name of Pasay City. respondent's belated assertion of her right over the escheated
3. In the meantime, Amada claimed she accidentally found the deeds properties militates against recovery. A judgment in escheat
of donation, so on Jan 28 1997 she filed a petition before the CA proceedings when rendered by a court of competent jurisdiction is
for annulment of the TC’s decision, alleging that (1) the decedent, conclusive against all persons with actual or constructive notice,
having donated the 2 parcels of land, said properties did not form but not against those who are not parties or privies thereto. With
part of her estate when she died and hence, couldn’t be validly the lapse of the 5-year period, Amada has irretrievably lost her
escheated to Pasay City Govt; and (2) even assuming arguendo right to claim and the supposed "discovery of the deeds of
that the properties could be subject of escheat proceedings, the
36
 donation" is not enough justification to nullify the escheat
judgment which has long attained finality.
3. The subject properties were owned by the decedent during the
time that the escheat proceedings were being conducted and the
lower court was not divested of its jurisdiction to escheat them in
favor of Pasay City notwithstanding an allegation that they had
been previously donated. A motion for intervention was earlier
denied by the escheat court for failure to show "valid claim or
right to the properties in question." Where a person comes into an
escheat proceeding as a claimant, the burden is on such
intervenor to establish his title to the property and his right to
intervene. Here, the certificates of title covering the properties
were in the name of the decedent, indicating that no transfer of
ownership involving the disputed properties was ever made by the
deceased during her lifetime. In the absence of any clear and
convincing proof showing that the subject lands had been
conveyed by Hankins to private respondent Amada, the same still
remained, at least before the escheat, part of the estate of the
decedent and the lower court was right not to assume otherwise.
CA therefore cannot perfunctorily presuppose that the subject
properties were no longer part of the decedent's estate at the time
the lower court handed down its decision on the strength of a
belated allegation that the same had previously been disposed of
by the owner. Courts decide only after a close scrutiny of every
piece of evidence and analyze each case with deliberate precision
and unadulterated thoroughness, the judgment not being diluted
by speculations, conjectures and unsubstantiated assertions.

37