Rule 85 Republic of the Philippines SUPREME COURT Manila EN BANC DECISION September 17, 1919 G.R. No.

13910 SOCIEDAD DE LIZARRAGA HERMANOS, plaintiffs-appellants, vs. FELICISIMA ABADA, ET AL., defendants-appellants. Charles C. Cohn for plaintiff and appellant. Crossfield and O'Brien for defendants and appellants. MOIR, J.: This case is before the court on appeal by plaintiffs from a judgment of the Court of First Instance of Occidental Negros, Honorable Norberto Romualdez, judge. For a better understanding of the facts the history of the case is given. Francisco Caponong died in October, 1906, owing the plaintiffs a sum of money which was then less than the amount allowed by the commissioners. His widow, Felicisima Abada, was appointed administratrix of the estate, commissioners to appraise the estate and to pass on the claims against the estate were duly appointed, and plaintiffs presented their claim which was allowed by the commissioners in the sum of P12,783.74. The commissioner's report was dated in February, 1909. The administratrix leased the hacienda [farm] known as "Coronacion" to Hilario Zayco for a term of years, but afterwards she married Vicente Alvarez, one of the defendants, and the lease was transferred to Alvarez by Zayco, October 2, 1908. On the 11th of April, 1913, nearly seven years after the death of Caponong, the plaintiffs herein filed a suit in the Court of First Instance of Occidental Negros against Felicisima Abada personally and as administratrix of the estate of Francisco Caponong, alleging that Francisco Caponong owed plaintiffs P12,783.74, and that Felicisima Abada in her own name and as administratrix, had been receiving from the plaintiffs money and effects from 1908 to 1912 which money and effects were used by the defendant in "the expense of cultivation and the exploitation of the Hacienda 'Coronacion,' "and that defendant had delivered to plaintiffs the sugar produced until the last crop which she refused to deliver to them. And that due to "los contratiempos agricolas y a la poca produccion de la hacienda [drought and poor crops of the farm],' and after deducting for the sugar delivered, the account of the defendant showed a balance in favor of plaintiffs on the 27th of August, 1912, of P62,437.15; that of this amount they were informed the defendant recognized as due from the estate only "about P14,000" which

however had not been paid; that it had been agreed by Francisco Caponong that the "amounts" taken should draw interest at the rate of 12 per cent from the date of each, and that in case it was necessary to bring suit P1,500 would be paid by defendant to plaintiffs for their expenses and attorney's fees, and they asked for judgment for P62,437.15 with interest at 12 per cent and P1,500 for attorney's fee. A copy of the account of the administratrix, dated August 27, 1912, showing the same balance due plaintiffs, seems to have been filed with that suit. The defendant's answer in that case (No. 969, Neg. Occi.) admits she owed P8,555.78 as administratrix, and alleges that the balance was due by her personally. The guardian of the minor children of Francisco Caponong asked permission of the court to intervene in that suit, and this being granted, he denied the claim under oath, and alleged that the estate of Francisco Caponong did not owe plaintiffs anything. On the 25th of August, 1914, the parties, including the guardian of the minors, presented a motion in court stating that they had made an amicable settlement of the litigation, and prayed the court to dismiss the action, which was done. The record shows that the plaintiffs in that suit had a motion pending in the intestate proceedings of Francisco Caponong, petitioning the court to the same effect as the complaint in suit No. 969. The settlement agreed upon was, briefly, that the defendants, including the guardian of the minor children, "recognized that the deceased Francisco Caponong's estate was indebted to the plaintiffs, according to a liquidation of the accounts on the 30th of June, 1913, in the sum of P68,611.01, which was to be paid with 10 per cent interest in seven equal annual installments;" and to secure this debt, the defendants agreed to give plaintiffs a first mortgage on all the property of Francisco Caponong, except the growing sugar cane, and on all the property belonging exclusively to Felicisima Abada, and the defendants agreed to secure judicial approval of the settlement. The defendants also agreed to mortgage the carabaos then on the hacienda to plaintiffs. The contract is dated the 27th of April, 1914. The mortgage of the hacienda was duly executed by Felicisima Abada for herself and as administratrix, and the guardian of the children and Vicente Alvarez, the husband of Felicisima Abada, signed the mortgage which is also dated the 27th of April, 1914. The carabaos were not mortgaged. The compromise was approved by the court as well as the mortgage. The mortgage given was not recorded in the registry of property up to time of the institution of this suit, June 24, 1916. Coming now to the present action, the plaintiffs allege in the complaint in this suit, the former suit and its settlement with judicial approval; the amount due thereunder; i. e., P68,611.01; that

defendants had let two installments go by without paying anything; that the amount due them with accrued interest was P90,383.49; that besides the property mortgaged, as per Exhibit B, another parcel of land was mortgaged, and that defendants promised to mortgage the carabaos on the hacienda 'Coronacion," and that this promise was one of the motives and considerations including the plaintiffs to accept the compromise agreement, but that defendants refused to sign the agreement mortgaging the carabaos with the object and intent of reducing the security of plaintiffs; that defendants were about to transfer their property not mortgaged, and they prayed for an attachment on property of defendants not to exceed P20,000 in value, and for judgment for P90, 383.49 with interest, and that if this amount should not be paid that the mortgaged property be sold, and if not sufficient to pay the debts, that the property levied on under the attachment be sold. The court granted the attachment order the 24th of July, 1916, and the provincial sheriff attached one parcel of land, the growing crops, certain products of the soil, and various animals. On the 16th of February, 1917, the plaintiffs filed a motion in court alleging that the property mortgaged to secure their debt was not sufficient to secure the debt; that defendants, with the intention of prejudicing the interest of the plaintiffs, were negligent in the conservation and care of the property, and they asked the court to appoint a receiver for the property that was mortgaged. The court granted this motion on the 20th of February, 1917, as to all the property attached, and on the 26th of February, extended the receivership to all the mortgaged property. The receiver took charge of the property and the defendants were ousted from the house they had been occupying on the premises. The defendants, Felicisima Abada, administratrix, and Januario Granada, the guardian, filed an amended answer in which they allege their representative capacity; that the claim of the plaintiffs against the intestate proceedings of Francisco Caponong had been allowed in the sum of P12,783.74 by the commissioners; that the property belonged to the children of the deceased; that the only interest of Felicisima Abada personally was her usufructuary interest in one-sixth of the property; that all the property was in custodia legis, and could not lawfully be attached; that the administratrix had not contracted any other obligation, and that, if any existed, it was the personal debt of her present husband, Vicente Alvarez; that Exhibits A and B, (the compromise agreement and the mortgage executed in conformity therewith) made a part of the complaint, were obtained through fraud and false representation; that the approval of the court was obtained through fraud and deceit, and was illegal and of no value; that defendants have never attempted to sell or conceal their property, and prayed the court to declare Exhibits A and B null and void; and that the attachment was malicious and illegal, and they presented a counterclaim based on the wrongful issuance, on false affidavits of the attachment, laying their damages in the sum of P89,960 for which they asked judgment. And a second counterclaim was presented based on the unwarranted appointment of a receiver for property already in custody of the court, through the administratrix and they alleged their damages in this count in the sum of P28,120. The Honorable Norberto Romualdez, judge, in his decision largely sustained defendants' claim, and declared that plaintiffs should pay as damages

For improperly causing the appointment of a receiver P 500.00

For the attachment of carabaos, etc 500.00

For damages to the sugar because of the attachment and the appointment of a receiver 4,462.50

For damages to land by reason of being left to grow up in bushes 5,000.00

For damages to palay crop 2,800.00

13,262.50

A further sum of P1,000 damages was awarded to Felicisima Abada for having been put out of her house when the receiver was appointed. The attachment was dissolved and the receiver discharged, and he was ordered to return the property to defendants. Judgment was given for the plaintiffs to recover from defendant administratrix the sum of P8,555.78 with interest which, added to the principal, brought the amount to P11,392.99 with 10 per cent interest on that sum till paid. A personal judgment was also given plaintiffs against the defendants Abada and Alvarez for P79,970.21. The plaintiffs' claim against the guardian of the children was dismissed.

From this judgment Felicisima Abada appealed personally and as administratrix alleging that the trial court should have granted greater damages. The questions presented by her appeal will be sufficiently treated in the appeal of plaintiffs. The plaintiffs allege nineteen different errors of the trial court. It seems that all the questions are involved in errors Nos. 1, 2, 4, 5, 10, 12, 13 and 18, which are as follows: 1. The court erred in holding that the obligation set forth in Exhibits A and B should be understood as limited to the sum of P8,555.78, instead of the sum of P68, 611.01 therein stated. 2. The court erred in reducing the amount of the mortgage, Exhibit B, from P68,611.01 to P8,555,78. 4. The court erred in finding that just and sufficient grounds did not exist for the attachment of the properties which are the subject-matter of this action. 5. The court erred in finding that just and sufficient grounds did not exist for the appointment of a receiver for the properties which are the subject-matter of this action. 10. The court erred in finding that the defendants, or either or any of them, were damaged in the sum of P5,000 by reason of injury to the sugar lands which are the subject-matter of this action. 12. The court erred in declining and refusing to foreclose the mortgages which are the subjectmatter of the present action. 13. The court erred in reducing the indebtedness of the Estate of Francisco Caponong from P90,383.49 to P11,392.99. 18. The court erred in absolving from the complaint herein the defendant Januario Granada as guardian of the minors, Juan Buenaventura, Jose, Nicanor and Carlos Caponong y Abada. As to the first error. - Exhibit A was the compromise agreement made in action No. 969, Lizarraga Hermanos against Felicisima Abada personally and as administratrix, in which the guardian of the minor children intervened, as defendant, by permission of the court. Exhibit B was the mortgage given to secure the amount agreed upon in that settlement. The claim of the plaintiffs herein against the estate of Francisco Caponong had been fixed by the commissioners. The amount so determined was all the estate owed plaintiffs. The court says in its decision that in approving the settlement of action No. 969, its approval was meant to include only the amount actually due by the estate, and that the balance of the claim was intended to be approved as against Felicisima Abada personally. It is argued that "this is sheer and unequivocal repudiation of a solemn and formal act" of the court. The record in case No. 969 is presented as Exhibit C by plaintiffs. In their complaint in that action (which suit should never have been filed as all the property was in the custody of the court), plaintiffs allege that their original claim against the estate of Francisco Caponong was

only P12,783.74, and that the balance of the claim was due from Felicisima Abada as administratrix and personally without stating how much was owed by her personally and how much was owed by her as administratrix. Whether the court in approving the compromise intended to hold the defendant estate liable only for the original debt, and defendant Abada for the balance, is not material. The language used by the court is very clear and seems to be an outright approval of the "transaccion" (compromise), and would, so far as the language goes, leave no room for doubt of the court's approval of the agreement in full and as written. But could the court approve such an agreement? Could the court authorize a mortgage of the state? The law declares that commissioners shall pass upon all claims against the estate. They had done so in this case. The law fixed the limit of the estate's liability. The court could not charge it with debts that were never owed by it. The administratrix could only charge the estate with the reasonable and proper expenses of administration. The estate owed plaintiffs less than P13,000 when the commissioners passed on their claim. Part of this has been paid, and there was a balance due plaintiffs of P8,555.78 at the time of the trial, plus interest. The plaintiffs, after their claim had been presented and allowed by the commissioners, made advances to the administratrix till their claim was more than P68,000. It is urged that the major part of this debt of P68,000 is administration expenses, and as such is chargeable against the assets of the estate. No reason is given why the expense of administration should be so great, and the evidence fails to sustain this position. The administration expense would be the necessary expenses of handling the property, of protecting it against destruction or deterioration, and possibly producing a crop, but if plaintiffs, holding a claim originally for less than P13,000 against the estate, let the administratrix have money and effects till their claim grow to P68,000 they can not be permitted to charge this amount as expense of administration. They might be allowed to charge it against the current revenue from the hacienda or the net proceeds of the "exploitation of the hacienda" for which it was obtained and used, as plaintiffs allege, but it cannot relate back to the presenting of their claim to the commissioners, and be a charge against the inheritance of the heirs, or even a claim to prorate with other creditors' claims allowed by the commissioners. By expense of administration we understand to be the reasonable and necessary expense of caring for the property and managing it till the debts are paid, as provided by law, and of dividing it, if necessary, so as to partition it and deliver to the heirs. The court could not approve a settlement saddling upon the estate debts it never owed, and if it did, its approval would be a nullity. To give effect to the compromise as written would result in great wrong, and destroy every chance the minor children had to participate in the inheritance of their father.

The contract was clearly a dead letter, and the approval of the court could not breathe the breath of life into it. That the mortgage given at the same time and as a result of the agreement was without legal warrant is equally clear. No mortgage can be placed by an administrator on the estate of a descendant, unless it is specifically authorized by statute. There is no statute in the Philippine Islands authorizing it. It may be stated as a general proposition, that neither executors, unless specially authorized by will, nor administrators, have the power to bind the estate of the deceased by borrowing money. (The American Law of Administration, Woerner, Vol. 2, sec. 345.) In the case of Johnson vs. Davidson, the Supreme Court of Illinois (Vol. 162, at page 235) said: The argument on behalf of appellants seems to proceed upon the supposition that an administrator may bind the heirs by his mortgage of real estate for the purpose of raising money with which to pay the debts of the ancestors, and that a court of equity will sustain the mortgage, or a title derived under it, if it be shown that the borrowed money was honestly applied to the payment of debts. No authority is cited in support of this position, and none, we believe, can be found. (See also Smith vs. Hutchinson, 108 Ill., at p. 668.) In the case of Black vs. Dressel's Heirs, the Supreme Court of Kansas (Vol. 20, at page 154) said: . . . That the statute grants no power to an administrator to borrow money upon a mortgage of the real estate of the decedent, is not controverted. Indeed, such an act is foreign to the policy and purpose of administration, which aims to close up, not to continue an estate. . . . In 151 N. Y. Reports, Duryea vs. Mackey, it is said at p. 207: The mortgage executed by the temporary administrator in this case which purported to bind the whole estate, was therefore ineffectual to charge the interest of the devises in remainder, unless the order of the surrogate authorizing the mortgage was a lawful exercise of his jurisdiction or unless they have estopped themselves from questioning its validity. It is very clear that the order of the surrogate was without jurisdiction. The learned counsels for appellants in their brief do not cite a single authority for the placing of a mortgage on an estate in administration, and none has been found. It must be held that the mortgage was void. The court should have closed up the estate. So many courts seem to violate the law on this point that it may serve a useful purpose to call attention to our statutes on the subject of estates. Section 743 of the Code of Civil Procedure declares:

The court, at the time of granting letters testamentary or of administration, shall allow to the executor or administrator a time for disposing of the estate and paying the debts and legacies of the deceased person, which time shall not, in the first instance, exceed one year; but the court may, on application of the executor or administrator, from time to time, as the circumstances of the estate require, extend the time not exceeding six months at a time, nor so that the whole time allowed to the original executor or administrator shall exceed three years. Section 745 provides that if the executor or administrator dies, the new administrator appointed shall give the same notice for an extension of time which shall not exceed six months beyond the time which might have been allowed the first administrator. While these sections may be considered as only directory, all Courts of First Instance should exert themselves to close up estates within twelve months from the time they are presented, and they may refuse to allow any compensation to executors and administrators who do not actively labor to that end, and they may even adopt harsher measures. The second assignment of error is that the court should not have reduced the amount of the mortgage (Exhibit B) from P68,611.01 to P8,555.78. The court did err, but its error consisted in not declaring the mortgage void. The court was without jurisdiction to approve the mortgage in the first place, and its approval was a nullity. Plaintiff's claim against the estate was P8,555.78 with interest as added by the court. This claim should be paid pro rata with any other unpaid claims against the estate. The other errors of appellant need only brief consideration. That an attachment should not have been levied on the carabaos in administration is too plain to need discussion. If they were in the name and possession of the administratrix, they were in custodia legis, and could not be lawfully attached. The plaintiffs as creditors of the estate could have petitioned the court to compel the administratrix to take any steps necessary and proper to protect the interest of all concerned. The appointment of a receiver was equally unjustified and improper. The property being under the court's control, the court should have removed the administratrix, if necessary, and it could have taken other means to protect the creditors and wind up the estate. The plaintiffs assign as error No. 10 that the court should not have allowed the sum of P5,000 damages for injury to the sugar lands. The evidence as to this damage is not considered as clear and satisfactory as it should be. It seems this claim should have been wholly denied by the trial court, and we think the judgment in favor of the administratrix and against the plaintiffs should be reduced from P13,262.50 to P8,262.50 with interest as provided therein. The other damages allowed by the trial court are so fully sustained by the evidence, it is not necessary to discuss them. With the above modification and with a declaration that the mortgage, exhibit B, was absolutely void, the judgment appealed from is affirmed, with costs against the appellants. So ordered.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-29276 May 18, 1978 Testate Estate of the Late Felix J. de Guzman. VICTORINO G. DE GUZMAN, administratorappellee, vs. CRISPINA DE GUZMAN-CARILLO, ARSENIO DE GUZMAN and HONORATA DE GUZMANMENDIOLA,oppositors-appellants. Emiliano Samson & R. Balderama-Samson for appellants. Cezar Paralejo for appellee.

AQUINO, J.: This case is about the propriety of allowing as administration expenses certain disbursements made by the administrator of the testate estate of the late Felix J. de Guzman of Gapan, Nueva Ecija. The deceased testator was survived by eight children named Victorino, Librada, Severino, Margarita, Josefina, Honorata, Arsenio and Crispina. His will was duly probated. Letters of administration were issued to his son, Doctor Victorino G. de Guzman, pursuant to the order dated September 17, 1964 of the Court of First Instance of Nueva Ecija in Special Proceeding No. 1431. One of the properties left by the dent was a residential house located in the poblacion. In conformity with his last will, that house and the lot on which it stands were adjudicated to his eight children, each being given a one-eighthproindiviso share in the project of partition dated March 19, 1966, which was signed by the eight heirs and which was approved in the lower court's order of April 14, 1967 but without prejudice to the final outcome of the accounting. The administrator submitted four accounting reports for the period from June 16, 1964 to September, 1967. Three heirs Crispina de Guzmans-Carillo Honorata de Guzman-Mendiola and Arsenio de Guzman interposed objections to the administrator's disbursements in the total sum of P13,610.48, broken down as follows: I. Expense for the improvement and renovation of the decedent's residential house. 1. Construction of fence P3,082.07 2. Renovation of bathroom P1,389.52

3. Repair of terrace and interior of house P5,928.00 P10,399.59 II. Living expenses of Librada de Guzman while occupying the family home without paying rent: 1. For house helper P1,170.00 2. Light bills 227.41 3. Water bills 150.80 4. Gas oil, floor wax and switch nail 54.90 P 1,603.11 III. Other expenses: 1. Lawyer's subsistence P 19.30 2. Gratuity pay in lieu of medical fee 144.00 3. For stenographic notes 100.00 4. For food served on decedent's first death anniversary 166.65 5. Cost of publication of death anniversary of decedent 102.00 6. Representation expenses 26.25 P558.20 IV. Irrigation fee P1.049.58 TOTAL P13,610.48 It should be noted that the probate court in its order of August 29, 1966 directed the administrator "to refrain from spending the assets of the estate for reconstructing and

remodeling the house of the deceased and to stop spending (sic) any asset of the estate without first during authority of the court to do so" (pp. 26-27, Record on Appeal). The lower court in its order of April 29, 1968 allowed the d items as legitimate expenses of administration. From that order, the three oppositors appealed to this Court. Their contention is that the probate court erred in approving the utilization of the income of the estate (from rice harvests) to defray those expenditures which allegedly are not allowable under the Rules of Court. An executor or administrator is allowed the necessary expenses in the care, management, and settlement of the estate. He is entitled to possess and manage the decedent's real and personal estate as long as it is necessary for the payment of the debts and the expenses of administration. He is accountable for the whole decedent's estate which has come into his possession, with all the interest, profit, and income thereof, and with the proceeds of so much of such estate as is sold by him, at the price at which it was sold (Sec. 3, Rule 84; Secs. 1 and 7, Rule 85, Rules of Court). One of the Conditions of the administrator's bond is that he should render a true and just account of his administration to the court. The court may examine him upon oath With respect to every matter relating to his accounting 't and shall so examine him as to the correctness of his account before the same is allowed, except when no objection is made to the allowance of the account and its correctness is satisfactorily established by competent proof. The heirs, legatees, distributes, and creditors of the estate shall have the same privilege as the executor or administrator of being examined on oath on any matter relating to an administration account." (Sec. 1[c] Rule 81 and secs. 8 and 9, Rule 85, Rules of Court). A hearing is usually held before an administrator's account is approved, especially if an interested Party raises objections to certain items in the accounting report (Sec. 10, Rule 85). At that hearing, the practice is for the administrator to take the witness stand, testify under oath on his accounts and Identify the receipts, vouchers and documents evidencing his disbursements which are offered as exhibits. He may be interrogated by the court and crossed by the oppositors's counsel. The oppositors may present proofs to rebut the ad. administrator's evidence in support of his accounts. I. Expenses for the renovation and improvement of the family residence P10,399.59. As already shown above, these expenses consisted of disbursements for the repair of the terrace and interior of the family home, the renovation of the bathroom, and the construction of a fence. The probate court allowed those expenses because an administrator has the duty to "maintain in tenantable repair the houses and other structures and fences belonging to the estate, and deliver the same in such repair to the heirs or devises" when directed to do so by the court (Sec. 2, Rule 84, Rules of Court). On the other hand, the oppositors-appellants contend that the trial court erred in allowing those expenses because the same did not come within the category of necessary expenses of administration which are understood to be the reasonable and necessary expenses of caring for the property and managing it until the debts are paid and the estate is partitioned and distributed among the heirs (Lizarraga Hermanos vs. Abada, 40 Phil. 124).

As clarified in the Lizarraga case, administration expenses should be those which are necessary for the management of the estate, for protecting it against destruction or deterioration, and, possibly, for the production of fruits. They are expenses entailed for the preservation and productivity of the estate and its management for purposes of liquidation, payment of debts, and distribution of the residue among the persons entitled thereto. It should be noted that the family residence was partitioned proindiviso among the decedent's eight children. Each one of them was given a one-eighth share in conformity with the testator's will. Five of the eight co-owners consented to the use of the funds of the estate for repair and improvement of the family home. It is obvious that the expenses in question were incurred to preserve the family home and to maintain the family's social standing in the community. Obviously, those expenses redounded to the benefit of an the co- owners. They were necessary for the preservation and use of the family residence. As a result of those expenses, the coowners, including the three oppositors, would be able to use the family home in comfort, convenience and security. We hold that the probate court did not err in approving the use of the income of the estate to defray those ex II. Expenses incurred by Librada de Guzman as occupant of the family residence without paying rent P1 603.11 The probate court allowed the income of the estate to be used for those expenses on the theory that the occupancy of the house by one heir did not deprive the other seven heirs from living in it. Those expenses consist of the salaries of the house helper, light and water bills, and the cost of gas, oil floor wax and switch nail We are of the opinion that those expenses were personal expenses of Librada de Guzman, inuring y to her benefit. Those expenses, not being reasonable administration expenses incurred by the administrator, should not be charged against the income of the estate. Librada de Guzman, as an heir, is entitled to share in the net income of the estate. She occupied the house without paying rent. She should use her income for her living expenses while occupying the family residence. The trial court erred in approving those expenses in the administrator's accounts. They should be, as they are hereby, disallowed (See 33 C.J.S 1239-40). III. Other expenses P558.20. Among these expenses is the sum of P100 for stenographic notes which, as admitted by the administrator on page 24 of his brief, should be disallowed. Another item, "representation expenses" in the sum of P26.25 (2nd accounting), was not explained. it should likewise be disallowed. The probate court erred in allowing as expenses of ad. administration the sum of P268.65 which was incurred during the celebration of the first death anniversary of the deceased. Those expenses are disallowed because they have no connection with the care, management and settlement of the decedent's estate (Nicolas vs. Nicolas 63 Phil 332). The other expenses, namely, P19.30 for the lawyer's subsistence and P144 as the cost of the gift to the physician who attended to the testator during his last s are allowable expenses.

IV. Irrigation fee P1,049.58. The appellants question the deductibility of that expense on the ground that it seems to be a duplication of the item of P1,320 as irrigation fee for the same 1966-67 crop-year. The administrator in his comment filed on February 28, 1978 explained that the item of P1,320 represented the "allotments" for irrigation fees to eight tenants who cultivated the Intan crop, which allotments were treated as "assumed expenses" deducted as farming expenses from the value of the net harvests. The explanation is not quite clear but it was not disputed by the appellants. The fact is that the said sum of P1,049.58 was paid by the administrator to the Penaranda Irrigation System as shown in Official Receipt No. 3596378 dated April 28, 1967. It was included in his accounting as part of the farming expenses. The amount was properly allowed as a legitimate expense of administration. WHEREFORE, the lower court's order of April 29, 1968 is affirmed with the modifications that the sum of (a) P1,603.11 as the living expenses of Librada de Guzman. (b) P100 for stenographic notes, (c) P26.25 as representation expenses, and (d) P268.65 as expenses for the celebration of the first anniversary of the decedent's death are disallowed in the administrator's accounts. No costs. SO ORDERED. Fernando (Chairman), Barredo, Antonio, Concepcion, Jr., and Santos, JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC December 29, 1949 G.R. No. L-2360 GAVINO ALDAMIZ, as administrator of the estate of the deceased Santiago Rementeria y Aldamizcogeascoa, petitioner, vs. THE JUDGE OF THE COURT OF FIRST INSTANCE OF MINDORO, THE PROVINCIAL SHERIFF OF MINDORO and JUAN L. LUNA, respondents. Jose W. Diokno and Daniel Romualdez for petitioner. Laurel, Sabido, Almario and Laurel and Juan L. Luna for respondents. MORAN, C.J.: This is a petition for certiorari filed by Gavino Aldamiz, administrator of the testate of the deceased Santiago Rementeria y Aldamizcogeascoa, to set aside the order of the Court of First Instance of Mindoro issued in the said testate estate proceedings, fixing the amount of fees for respondent Juan L. Luna, as attorney for said administrator. The facts material to the issues raised in the petition are as follows: Santiago Rementeria y Aldamizcogeascoa, the decedent was a Spaniard and member of the commercial partnership "Aldamiz y Rementeria." The other members were the brothers, Gavino and Jose, surnamed Aldamiz. Santiago Rementeria died in Spain in 1937, and probate proceeding No. 705 was instituted in the same year in the Court of First Instance of Mindoro by Gavino Aldamiz represented by Atty. Juan L. Luna. Gavino Aldamiz was appointed administrator and as such was represented by respondent Atty. Juan Luna up to January 21, 1947, when the order complained for was issued. In that order it is said that "said attorney is the one who instituted this testate proceeding ten years ago and has from its incipiency to the present stage of the proceedings actively intervened in the same." On January 15, 1947, After ten years from the date of his appointment, Gavino Aldamiz, as administrator, through his attorney, Juan L. Luna, submitted his accounts for the years 1944, 1945 and 1946 and also a project of partition with a view to closing the proceedings. On said date, the court approved the accounts by refused to approve the project of partition unless all debts including attorney's fees be first paid. In the project of partition, it was expressly stated that attorney's fees, debts and incidental expenses would be proportionately paid by the beneficiaries after the closure of the testate proceedings, but the court refused to sanction this clause of the project. It is for this reason that right then and there, Attorney Luna, to comply with the wishes of the court, without previously preparing and filing a written petition to have his professional fees fixed, and without previous notice to all the interested parties, submitted evidence of his services and professional standing so that the court might fix the amount of his compensation and the administrator may make payment thereof. This failure to file a written claim and to notify the interested parties thereof was not due to bad faith or fraudulent purpose but to an honest belief on the part of the respondent attorney that such requirements were not necessary under the circumstance.

In this connection, it must be stated, in justice to Attorney Luna, that during the ten years he served as attorney for the administrator and during the 25 years as legal consultants to Santiago Rementeria, Gavino Aldamiz and Jose Aldamiz individually and as commercial partnership under the firm name "Aldamiz y Rementeria," he never took the trouble of charging them for his professional services, thus showing disinterested and extreme liberality on his part due to friendship and other personal considerations toward his clients. And it is to be observed further that even after ten years of active work in the testate proceedings, when he wanted to close the same and it was then time for him to demand payment for his services, he showed no interest in demanding preferring to leave the matter to the future negotiation or understanding with the interested parties. And when the amount of his fees was fixed by the court and Gavino Aldamiz asked him for a substantial reduction, he answered that it was not he who had fixed the amount but the court, and advised his client to file a motion for reconsideration, with the assurance that he would offer no objection to any reduction in amount and to any extension of the time for paying what might be granted by the court. And again, when Gavino Aldamiz paid him P5,000 on account, respondent attorney told him that he would be satisfied with any additional amount that Gavino might later desire to pay him. Only subsequent occurrences which proved distasteful to the parties, led them to take steps which culminated in the filing of the instant civil action. At the time respondent's evidence was submitted to the court, the interested parties who were residing in the Philippines were Gavino Aldamiz and his brother Jose Aldamiz. The others were then residing in Spain. No written claim had ever been filed for respondent's fees, and the interested parties had not been notified thereof nor of the hearing, not even Gavino Aldamiz who did not know when he was called to testify that he would testify in connection with respondent's fees. The Court, after considering the whole evidence presented, issued its order of January 21, 1947, awarding respondent Attorney Luna, in payment of his professional services, an aggregate sum of P28,000 in the following manner: 1. For the institution, preparation of the pleadings in the voluminous probate case, allowance of the will, project of partition and the final closing of this proceeding, P15,000; 2. For the registration of a parcel of land of seventy-eight hectares in favor of the testate, P5,000; 3. For three naturalization cases at the rate of P1,000 each, P3,000; and 4. For services rendered in the deduction of inheritance tax from P28,000 to P433.40 P5,000. The Court ordered payment of these amounts within thirty days. Petitioner Gavino Aldamiz received copy of this order on February 21,1948. Out of the total amount of P28,000, petitioner was able to pay P5,000 only, and upon his failure to pay the balance of P23,000 after several demands made upon him by respondent attorney, the latter on April 17, 1948, filed an ex-parte motion for execution which was granted by the respondent Court on April 19,1948. Pursuant to the order of execution on two parcels of land belonging, not to the testate estate of Santiago Rementeria y Aldamizcogeascoa, but to the commercial partnership "Aldamiz y Rementeria" with a total area of three hundred fifty seven(357) hectares, more or less, assessed at one hundred eighty-two thousand, three hundred and sixty pesos (P182,360), which was sold at a

public auction on July 20,1948, in favor of respondent attorney for only twenty thousand pesos(P20,000). This sale was made after preliminary injunction had been issued by this court in the instant case. We believe and so hold that the order of the respondent court issued on January 21,1948, fixing the amount of respondent attorney's fees is null and void. The correct procedure for the collection of attorney's fees, is for the counsel to request the administrator to make payment and file an actin against him in his personal capacity and not as an administrator should he fail to pay (Palileo vs. Mendoza, G.R. No. 47106, 40 Off. Gaz. [8th Supp.], 132.)[[1]] If the judgment is rendered against the administrator and he pays, he may include the fees so paid in his account to the court. (Uy Tioco vs. Imperial, 53 Phil., 802.) The attorney also may, instead of bringing such an action, file a [petition in the testate or intestate proceeding "asking that the court, after notice to all persons interested, allow his claim and direct the administrator to pay it as an expense of administration." (Emphasis ours.) (Escueta vs. Sy Juilliong, 5 Phil., 405.) In the instance case, as above stated, no written petition for the payment of attorney's fees has ever been filed by the respondent attorney and the interested parties had not been previously notified thereof nor of the hearing held by the court. Consequently, the order issued by the respondent court on January 21, 1947, and all subsequent orders implementing it, are null and void, as having been issued an excess of jurisdiction. We also hold that the order of execution issued on April 19,1948, is null and void, not only because it was intended to implement the order of January 21, 1947, which in itself was null and void, but because a writ of execution is not the proper procedure allowed by the Rules of the Court for the payment of debts and expenses of administration. The proper procedure is for the court to order the sale of personal estate or the sale of mortgaged of real property of the deceased and all debts or expenses of administration should be paid out of the proceeds of the sale or mortgage. The order for the sale or mortgage should be issued upon motion of the administrator and with the written notice to all the heirs, legatees and devisees residing in the Philippines, according to Rule 89, section 3, and Rule 90, section 2. And when sale or mortgage of real estate is to be made, the regulations contained in Rule 90, section 7, should be complied with. Execution may issue only where the devisees, legatees or heirs have entered into possession of their respective portions in the estate prior to settlement and payment of the debts and expenses of administration and it is later ascertained that there are such debts and expenses to be paid, in which case "the court having jurisdiction of the estate may, by order for that purpose, after hearing, settle the amount of their several liabilities, and order how much and in what manner each person shall contribute, and may issue execution if circumstances require" (Rule 89, section 6; see also Rule 74, section 4; Emphasis ours). And this is not the instant case. It is alleged by respondent that petitioner is guilty of laches. True that petitioner failed to appeal from the order of January 21, 1947, within the time provided by the Rules and the instant petition for certiorari was filed one (1) year, four (4) months and fourteen (14) days after petitioner had received a copy of said order. And we have held in Prifeta vs. David, 40 Off. Gaz., 14th Supp., p. 152,[[2]] that orders issued without previous notice to parties will be deemed cured if said parties fail to appeal within time provided by the rules and their appeal is lost due to their own negligence. But here, aside from petitioner, there are interested parties who have never

been notified of the order complained of, and as to them, said order has not become final and executory . And with respect to petitioner, he has not lost his appeal through his own negligence. When he received the notice of the order of the Court fixing respondent's fees in the amount of P28,000, he immediately wrote his lawyer a letter asking for a substantial reduction and extension of time to pay. The lawyer answered advising him to file his motion for reconsideration within thirty days, but he received his lawyer's letter after said period had expired. And petitioner had no other attorney to advice him except respondent who was his adversary on the matter now in dispute. After receiving said letter, he again sought equitable compromise with respondent attorney and later paid him P5,000, and respondent then told him that he would be satisfied with whatever additional amount petitioner might desire to pay him. And petitioner would perhaps have taken no action were it not because without previous notice to him, the respondent attorney asked authority from the court to sell two parcels of land totalling 13 hectares, for the payment of said professional fees and later, on July 26, 1947, respondent attorney, again without previous notice to petitioner, filed a motion for execution for the same purpose. Both motions were, however, abandoned. But a second motion for execution was filed by respondent without petitioner's knowledge, which was granted by the Court on April 19, 1948. Respondent Sheriff levied on two parcels of land belonging to the partnership "Aldamiz y Rementeria" with a total area of 357 hectares and assessed at P182,360 and the sale was announced by the sheriff for July 20, 1948. Two motions for consideration were filed by petitioner, one on June 16,1948, and the other on June 28, 1948, asking that the order of January 21, 1947, and the order of execution of April 19,1948 be set aside, but both motions were denied and the last order of denial is dated July 1,1948. The petition in the instant case was filed on July 17, 1948. We hold that under the circumstances, particularly the fiduciary relation between petitioner and respondent attorney, the former is not guilty of laches. Respondents maintain that the case for the petitioner is one of pure technicality, premised upon a supposed failure of the respondent attorney to follow a supposed procedure. It is said that the amount of P28,000 fixed and allowed by the respondent court as professional fees of the respondent attorney is not unconscionable or unreasonable because the entire estate was worth P315,112 and now it is worth about half a million pesos because of many improvements existing thereon. It appears, however, that due to lack of notice upon the interested parties mistakes have been committed by but the court which could have been avoided. For instance, the court awarded fees for services rendered not to the estate but to the other persons, such as the supposed services in connection with the petitions for naturalization filed in behalf of Gavino Aldamiz and Jose Aldamiz and the application for registration of a parcel of land of 78 hectares filed not in favor of the testate estate but of the partnership "Aldamiz y Rementeria." These services evidently could not be charged against the estate of Santiago Rementeria. And furthermore, due to lack of preparation on the part of respondent attorney, it appears that while he was testifying to his professional services he was apparently not sure of being able to recite them all for at the end of his testimony he said: "Son los servicios que me acuerdo ahora. . . ." Had he been afforded ample time to recollect the nature and details of his long and continuos services, considering his high professional standing as recited by the respondent court in its disputed order and the increased value of the estate then, perhaps, a more reasonable compensation would have been fixed, or at least, the court could have rendered a decision with full knowledge of all the facts and with justice to all the parties concerned.

For all the foregoing, the order of the respondent court of January 21,1947, and all the subsequent orders implementing it, particularly the order of execution issued by the court on April 19, 1948, and the sale made by the sheriff on July 20,1948, in favor of respondent attorney, are null and void and are hereby set aside, with costs against respondents. It is so ordered. Ozaeta, Pablo, Bengzon, Padilla, Tuason, Reyes and Torres, JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC November 11, 1908 G.R. No. 4777 SUILIONG & CO., as liquidators of The Yek Tong Lim Fire, Marine, and Insurance Co., Ltd., plaintiffs-appellees, vs. SILVINA CHIO-TAYSAN, defendant, FRANCISCA JOSE, intervener-appellant. Leodegario Azarraga, for appellant. Carlos Ledesma, and Ramon Fernandez, for appellees. CARSON, J.: Avelina Caballero, deceased, owned during her lifetime a certain tract of land, which was duly inscribed in her name in the land registry of the city of Manila. On March 27, 1903, she borrowed from Francisca Jose, the intervener and appellant in this action, 1,000 pesos, Mexican currency, and turned over her title deeds to this tract of land to the lender as security for the loan, but no entry touching the transaction was noted in the land registry. Avelina Caballero died on the 5th day of June, 1903, and thereafter Silvina Chio-Taysan, the defendant in this action, instituted in the Court of First Instance of Manila an action, known, under the system of civil procedure in existence prior to the adoption of the present code, as an "action for the declaration of heirship" and on the 5th day of August, 1903, the following order declaring her to be the only and exclusive heir of Avelina Caballero, deceased, was issued in that proceeding: [United States of America, Philippine Islands. In the Court of First Instance of Manila. Part III.] It having been proven by both documental and oral evidence introduced in the above-cited case, that the petitioner Silvina Chio-Taysan y Caballero is the daughter of Jose Chio-Taysan and Avelina Caballero, who died on the 29th of April, 1895, and on the 5th of June, 1903, respectively, without leaving any other descendant or having executed any will; and there being no objection whatever to the claim of the petitioner, it is hereby declared that the said Silvina Chio-Taysan y Caballero is the legal heir abintestato of her deceased parents, the said Jose Chio-Taysan and Avelina Caballero, in conformity with the provisions of the Civil Code now in force. Let a certificate of this decision be issued to the interested party and those who may hereafter apply for the same. So ordered. A.S. CROSSFIELD, Judge. On March 9, 1904, the registrar of deeds of the city of Manila by virtue of this order entered the following inscription in the land registry whereby the said Silvina Chio-Taysan is made to appear as the owner of the land in question:

Ninth inscription. Urban property. A parcel of land and a house of a strong materials, tile roofed, built thereon, marked number eight, situated in Calle Lavezares of the district of Binondo, this city, the remaining description of which appears in the first inscription of this number. It has no encumbrances. Doa Avelina Caballero y Bugnot, of age, widow, of this vicinity, is the owner of this property under a title of repurchase, according to the proceeding inscription. Said lady and her husband, Don Jose Chio-Taysan, died on June 5, 1903, and April 29, 1895, respectively, and neither of them having executed a will, the corresponding intestate proceedings were instituted, in which an order was issued on August 5, 1903, by A.S. Crossfield, judge of the third sala of the Court of First Instance of this city, declaring their daughter, Silvina Chio-Taysan y Caballero, their intestate heir. By virtue thereof, I inscribe, in favor of the said Silvina Chio-Taysan y Caballero, the right she was acquired over the property of this number, under title by intestate inheritance. All the above appears from the previous records and from the copy of the above judicial order, issued by Don Salvador Chofre, assistant clerk of the Court of First Instance of this city, on August 5, 1903, which document was presented to this registry at 8:50 a. m. on the 25th day of February last, as per record No. 452, page 266, of the 7th volume of the Diario. And all the above being in accordance with the document above referred to, I sign these presents in Manila, on March 9, 1904 Fees: $7.50, No. 7, Tariff of Fees. Alberto Barretto. On the 26th day of May, 1904, the said Silvina Chio-Taysan borrowed the sum of P2,500 from the Fire and Marine Insurance and Loan Co., of which the plaintiff is the lawfully appointed liquidator, and mortgaged the land in question as security for the repayment of the loan. Thereafter the husband of Silvina Chio-Taysan instituted special proceedings under the provisions of the present Code of Civil Procedure, for the administration of the estate of Avelina Caballero, deceased, and on the 16th day of October, 1905, he was, in accordance with his petition, appointed administrator; and thereupon, submitted as such administrator, an inventory of the property of the estate, in which was included the land in question; and on the 28th of November, 1905, Francisca Jose, the intervener in this action, submitted her claim to the commissioner appointed in these proceedings, for the sum of 1,000 pesos, Mexican currency, loaned the deceased, as above set out, on the 28th day of March, 1904, which claim was duly approved on the 31st of August, 1906. On the 10th day of October, 1906, the plaintiff in this action filed its complaint against the defendant, Silvina Chio-Taysan, praying for judgment for the amount loaned her as above set out, and the foreclosure of its mortgage upon the land. To this complaint the defendant, Silvina Chio-Taysan, filed her answer, admitting the facts alleged in the complaint and declining to interpose any objection to the prayer of the complaint; but on the 30th of October, 1907, Francisca Jose was permitted to intervene and file her separate "complaint in intervention" wherein she set out the facts touching the loan made by her to Avelina Caballero, deceased, and prayed that the court declare the mortgage executed by Silvina Chio-Taysan rescinded and of no effect; and further that it annul the inscription in the land registry of the title of Silvina ChioTaysan to the land in question; and declare this land subject to her claim against the estate of Avelina Caballero, deceased. The trial court entered judgment in favor of the plaintiff and against both the defendant and the intervener in conformity with the prayer of the complaint, and the intervener brings that judgment before this court for review upon her bill of exceptions duly signed and certified.

We do not think that the judgment of the trial court can be sustained in so far as it wholly denies relief to the intervener, Francisca Jose. The trial judge denied the relief prayed for by the intervener, on the ground that her intervention in this action was for the purpose of the written title deeds on the land, and that, since she admitted that she had admitted her claim against the estate of Avelina Caballero, deceased, to the committee appointed in the administration proceedings, she must be taken to have abandoned, whatever lien she may have held as security therefor, in accordance with the provisions of section 708 of the Code of Civil Procedure. The prayer of her complaint in intervention, however, is merely for the rescission and annulment of the mortgage contract between the loan company and the defendant and of the inscription in the land registry of the title of the defendant, and a declaration that as a creditor of the estate she has a superior right to that of the plaintiff company in the proceeds of any sale of the land in question. She does not seek to enforce her claim and recover her debt in this proceeding, but merely to prevent the plaintiff from securing a judgment in this action which would take out of the estate property which she believes to be subject to her claim set up in the administration proceedings. If her contentions are well founded, and if the estate of the deceased is subject to the payment of the debts of the deceased in such form that the heirs of the deceased could not alienate this land free of the claims of the creditors of the deceased against the land, for the payment of their claims against the deceased, the intervener is clearly entitled to at least so much of the relief she seeks in this action as will have the effect of preventing the sale of this land under the plaintiff's foreclosure proceedings, free of the claims of creditors of the deceased, because, if the plaintiffs in this action were permitted to foreclosure their mortgage and to recover their debt from the sale of the land in question, it might well be that there would not be sufficient property in the estate to pay the amount of the claim of the intervener against the estate. Had the transactions above set out in taken place under the system of law in force in these Islands immediately prior to the 1st day of October, 1901, when the new Code of Civil Procedure went into effect, there would be no difficulty in determining the respective rights of the various parties to this action. Article 657 of the Civil Code provides that Los derechos a la succession de una persona se transmiten desde el momento de su muerte. (The rights to the succession of another are transmitted from the moment of his death); and article 661 provides that Los herederos suceden al difunto por el hecho solo de su muerte en todos sus derechos y obligaciones. (Heirs succeed the deceased by the mere fact of his death, in all rights and obligations). Under these, and co-related provisions of the Civil Code, a sole and exclusive heir (as defined in article 660 of the Civil Code) became the owner of the property and was charged with the obligations of the deceased at the moment of his death, upon precisely the same terms and conditions as the property was held and as the obligations had been incurred by the deceased prior to his death, save only that when he accepted the inheritance, "with benefit of an inventory" he was not held liable for the debts and obligations of the deceased beyond the value of the property which came into his hands. The property of the deceased, both real and personal, became the property of the heir by the mere fact of death of his prodecessor in interest, and he could deal with it in precisely the same way in which the deceased could have dealt with it, subject only to the limitations which by law or by contract were imposed upon the deceased himself. He could alienate or mortgage it with the same freedom as could the deceased in his lifetime; the unsecured debts and other

personal obligations of the deceased becoming the unsecured debts and personal obligations of the heir for which he was held personally responsible in precisely the same manner as the deceased, save only, as has been said before, where he availed himself of the privilege of taking the estate "with the benefit of an inventory," in which case the extent of his liability was limited to the value of the estate which came into his hands, though in other respects its character as a personal liability remained unchanged. Thus death created no new lien in favor of creditors upon the property of the deceased, which was not in existence at the time of his death; personal debts and obligations of the deceased becoming the personal debts and obligations of the heir, to whom the creditor was compelled to look for payment, with no new right in or to the property of the decease, in the hands of the heir, which he did not have in or to such property in the hands of the deceased. (Title 3, Book of the Civil Code.) Spanish procedural law provided an action known as an action for the declaration of heirship (declaracion de herederos) whereby one claiming the status of heir could have his right thereto judicially declared, and this judicial declaration of heirship unless and until set aside or modified in a proper judicial proceeding, was evidence of the fact of heirship which the officials charged with the keeping of the public records, including the land registry, were bound to accept as a sufficient basis for the formal entry, in the name of the heir, of ownership of the property of the deceased. It is evident therefore that, unless the provisions of Spanish procedural and substantive law, in force when the new Code of Civil Procedure went into effect, have been repealed or modified thereby, the defendant in this action, Silvina Chio-Taysan, who was judicially declared to be the sole and universal heir of Avelina Caballero, deceased, became, by the mere fact of the death of Caballero, the absolute owner of the tract of land in question, subject only to such liens thereon as may have existed prior thereto, the personal obligations of the deceased also passing to her at the same time; that, upon proof of such judicial declaration of heirship, the register of deeds of the city of Manila properly entered Chio-Taysan in the land registry as the owner of this land by right of inheritance; and that the Loan Company, of which the plaintiffs are the duly appointed liquidators, was entitled to rely on the properly noted entries in the land registry and that the company's mortgage deed from Chio-Taysan, in whose name the land is registered, could not be affected by the unrecorded claim of the indebtedness of the intervener, who must look to the heirs for the recovery of her debt. But both the substantive and procedural law touching rights of succession and their enforcement, which were in force in these Islands when the new Code of Civil Procedure went into effect, have, to a greater or less degree, been repealed or modified by its enactment; and we are of opinion that, under the provisions of the new code, the heir is not a such personally responsible for the debts of the deceased, in whole or in part; and on the other hand, the property of the deceased comes to him charged with the debts of the deceased, so that he can not alienate or charge it free of such debts,until and unless they are extinguished either by payment, prescription, or satisfaction in one or other of the modes recognized by law. It must be admitted that we can not point out the specific section of the new Code of Civil Procedure which in express terms repeals the old law and formally enacts the new doctrine of succession just laid down; but we think that an examination of the various provisions of that code touching the administration of the estates of deceased person leaves no room for doubt that they do so by necessary implication.

The legislators who enacted this code were more especially acquainted with the American and English systems of legislation, and in most of its provisions closely adhered to American precedent. It substantially repeals in toto the proceedings prescribed under the old law for the administration of estates of deceased persons, and substitutes therefor a system similar to that generally adopted in the United States; most of its provisions having been borrowed word for word from the codes of one or other of the various States. The substantive law in force in these Islands being in many respects, and especially in regard to rights of inheritance, wholly different from that in force in the various States from which the new system of administration of the estates of deceased persons was adopted, many irreconcilable conflicts are to be found between the provisions of the new and the old law, so that it becomes necessary either to declare a great part of the provisions of the new Code of Procedure void and no effect, as wholly inapplicable, or to hold that in such cases the provisions of substantive as well as procedural law in conflict or inconsistent with the provisions of the new Code of Procedure are repealed, or amended by the substitution of such other provisions as are clearly necessary as a basis upon which the new provisions of procedural law are predicated. An examination more especially of sections 597, 644, 695, 727, 729, 731, 733, and 749 of the Code of Civil Procedure, read together with the remaining provisions for the administration of the estates of deceased persons, clearly indicates that the provisions of articles 660 and 661 of the Civil Code have been abrogated. These provisions of the new code clearly demonstrate that the terms heredero and legatario, as defined in the Civil Code (art. 660), are not synonymous with the words "heir" and "legatee," as used in the new code; the word "heir" in the new code being technically and applicable only to a relative taking property of an intestate by virtue of the laws of descent, devisee and legatee being reserved for all persons whether relatives or not, taking respectively real or personal property by virtue of a will; while heredero in the Civil Code was applicable not only to one who would be called an "heir," under the provisions of the new code, but also to one, whether relative or not, who took what might be called "a residuary estate under a will" (el que sucede a titulo universal). It appears also from an examination of these provisions that the legislature has provided no machinery whereby an absolute right on the part of the heir to succeed by the mere fact of death to all the rights and property of the deceased may be enforced, without previous payment or provision of the payment of the debts; and on the other hand, it has provided machinery for the enforcement of the debts and other obligations of the deceased, not as debts or obligations of the heir, but as debt or obligations of the deceased, to the payment of which the property of the deceased may be subjected wherever it be found. Thus section 597 expressly provides that, in those cases where settlement of an intestate estate may be made without legal proceedings, either by a family council, as known under the Spanish law, or by an agreement in writing executed by all the heirs, the real estate of the deceased remains charged with liability to creditors of the deceased for two years after the settlement, "notwithstanding any transfers thereof that may have been made;" and we think the inference is clear that the legislator in this section recognizes and affirms the doctrine that, prior to the date of such settlement, the real estate at least was charged in like manner with the debts of the deceased. So it will be found that, where the legal proceedings are had looking to the settlement of testate or intestate estates, provision is made for the recovery of claims against the deceased, not by proceedings directed against the heir, but by proceedings looking directly to the subjection of the property of the deceased to the payment of such claims; the property both real and personal being, in

express terms, made chargeable with the payment of these debts, the executor or administrator having the right to the possession of the real as well as the personal property, to the exclusion of the heirs, so long as may be necessary for that purpose (secs. 727 and 729). For practical purposes it may well be said that in the eye of the law, where there is no remedy to enforce an alleged right when it is invaded, the existence of the right may safely be denied; and where the law furnishes a remedy whereby one may enforce a claim, that claim is a right recognized and established by the law. The new Code of Procedure furnishing no remedy whereby the provisions of article 661 of the of the Civil Code may be enforced, in so far as they impose upon the heredero (heir) the duty of assuming as a personal obligation all the debts of the deceased, at least to the extent of the value of the property received from the estate; or in so far as they give to the heredero the reciprocal right to receive the property of the deceased, without such property being specifically subjected to the payment of the debts to the deceased by the very fact of his deceased, these provisions of article 661 may properly be held to have been abrogated; and the new code having provided a remedy whereby the property of the deceased may always be subjected to the payment of his debts in whatever hands it may be found, the right of a creditor to a lien upon the property of the deceased, for the payment of the debts of the deceased, created by the mere fact of his death, may be said to be recognized and created by the provisions of the new code. (Pavia vs. De la Rosa, 8 Phil. Rep., 70). It is evident, therefore, that a judgement in an action for the declaration of heirship in favor of one or more heirs could not entitle such persons to be recognized as the owner or owners of the property of the deceased on the same terms as such property was held by the deceased, for it passes to the heir, under the new code, burdened with all the debts of the deceased, his death having created a lien thereon for the benefit of creditor; and indeed an examination of the proceedings prescribed in the new Code of Civil Procedure for the administration and distribution of the estates of deceased persons leaves no room for doubt that those proceedings are exclusive of all other judicial proceedings looking to that end, and supersede the judicial proceeding for the declaration of heirship, as recognized in the old procedure, at least so far as that proceeding served as a remedy whereby the right of specific persons to succeed to the rights and obligations of the deceased as his heirs might be judicially determined and enforced. Examining the facts in the case at bar, in the light of the doctrine as to the law of succession as thus modified and amended by the new Code of Civil Procedure, which went into effect prior to the death of Avelina Caballero, it is evident that her death created a lien upon her property in favor of the intervener Francisca Jose, for the payment of the debt contracted by her during her lifetime, and that this lien ought to have and has priority to any lien created upon this property by the heir of the deceased; that the judicial declaration of heirship in favor of Silvina Chio-Taysan, could not and did not furnish a basis for an entry in the land registry of the name of Silvina ChioTaysan as the absolute owner of the property of Avelina Caballero; that such entry, improperly made, could not and did not prejudice the lien of the intervener, Francisca Jose, for the debt due her by the deceased (Mortgage Law, art. 33); and that the mortgage of the property of the deceased by her heir, Silvina Chio-Taysan, was subject to the prior lien of the intervener, Francisca Jose, for the payment of her debt. It is not necessary for us to consider the action of the court below in ordering the foreclosure of the mortgage, in so far as it affects the defendant Silvina Chio-Taysan who did not appeal; but we think that the intervener, who is seeking to subject the property of the deceased to the payment of her debt in the administration proceedings now pending, is clearly entitled to so much of the relief prayed for as will have the effect of preventing the application of the proceeds

of the sale of this land under foreclosure proceedings to the payment of debts contracted by the heir until and unless it shall appear that the residue of the estate of the deceased is sufficient to satisfy her claim. Such provision for the protection of her rights having been made, the other relief prayed for by her may properly be denied, since a provision subjecting the land in question to the payment of her claim against the estate of Avelina Caballero, deceased, fully and sufficiently protects her rights in the premises, and her rights having been secured, she has no proper interest in the rescission of the mortgage contract between plaintiff and defendant, or the cancellation of the inscription of the defendant's title as heir in the land registry. The judgment of the trial court should, therefore, be modified in accordance with the foregoing principles, and the record will be returned to the trial court where judgment will be entered modifying the judgment, by providing that the proceeds of the sale of the land under the foreclosure proceedings will be deposited with the clerk of the court, where it will be retained until the amount of the debt due the intervener and unpaid in the course of the administration of the estate of Avelina Caballero shall have been ascertained, whereupon the said funds shall be applied: first, to extinguish the unpaid residue, if any, of the claim of the intervener; second, to pay the debt due the plaintiff in this action; and finally, the residue, if any, to be paid to the estate of the deceased; the intervener to have her costs in this action in both instances. So ordered. Arellano, C.J., Torres, Mapa, and Willard, JJ., concur. Tracey, J., concurs in the result.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-18403 September 30, 1961

IN RE ADMINISTRATION OF THE ESTATE OF PASCUAL VILLANUEVA. MAURICIA G. DE VILLANUEVA,petitioner, vs. PHILIPPINE NATIONAL BANK, defendant-appellant. Ramon B. de los Reyes for defendant-appellant. Marcos M. Calo for petitioners.

PAREDES, J.: A case certified by the Court of Appeals on the ground that the issues involved are purely of law. For the administration of the estate of her deceased husband, Pascual Villanueva, the widow Mauricia G. Villanueva, on December 19, 1949, petitioned the Court of First Instance of Agusan, for letters of Administration (Sp. Proc. No. 67). The petition was set for hearing and Notice thereof was published on February 25, March 4, and 11, 1950, in the Manila Daily Bulletin. At the hearing, other heirs while agreeing to the placing of estate under administration, opposed the appointment the widow. The name of Atty. Teodulo R. Ricaforte, suggested and all the parties agreed. After the taking the required oath, Atty. Ricaforte entered upon the performance of his duties. Under date of November 9, 1950 the Clerk of the Agusan CFI, issued the following Notice to Creditors: Letters of administration having been issued in the above entitled case in favor of Teodulo R. Ricaforte for the settle of the intestate of Pascual Villanueva, deceased; Notice is hereby given to all persons having claims for money against the decedent, the said Pascual Villanueva, arising from contract, express or implied, whether the same be due, not due or contingent, for funeral expenses and expenses of last sickness of the deceased, and Judgment for money against him, requiring them to file their claims with the clerk of court within six but not beyond twelve months after date of the first publication of this notice, serving copies of such claims upon administrator, the said Teodulo R. Ricaforte. The above notice contained the usual order for publication thereof (once a week for three consecutive weeks) which was effected, thru the Morning Times of City, a newspaper of general circulation, on Nov. 16, 23 and 30, 1950, which expired on November 16, 1951.

On July 20, 1953, the defendant-appellant Philippine National Bank filed in the administration proceedings, Creditor's Claim of the following tenor The Philippine National Bank, Creditor of Pascual Villanueva, deceased, respectfully presents its claim against the estate of the said deceased for Approval as follows: Original amount thru Agusan Agency on Dec. 20, 1939 ........................................................ P600.00 To int. at 10%: on P600.00 fr. 12-20-39 to 6-5-53 ...................................................................... 747.45 Total due as of June 5, 1953 (Daily int. of P0.1644 after June 5, 1953) .......................... P1,347.45 That the said obligation has been due demandable since Dec. 20, 1940; that the same is true and just claim and that it is still unpaid without any set-off. On October 12, 1954, the Philippine National Bank filed a Motion for Admission of claim, stating 1. That the Philippine National Bank filed its claim dated July 20, 1953; 2. That the last action taken on the claim was an ordered this Honorable Court issued on March 20, 1954, transferring the hearing of the claim until the next calendar of the court, without objection of the administrator; 3. That the administrator has not answered the claim nor denied the same.1awphl.nt WHEREFORE, it is respectfully prayed that an order be issued admitting and approving the claim and ordering the administrator to pay the Bank the amount of the claim. The administrator, on November 5, 1954, opposed the alleging that he had no knowledge or information sufficient to form a belief as to the truth of the allegations therein. As special defenses, he interposed That the same indebtedness, if it existed, has already been paid; That the caused action for the recovery of the aforesaid amount of P1,847.45 is barred by the statute of limitations, for more than ten (10) Years have elapsed since the cause of action accrued up to present time; That the said claim is barred forever on the ground that notice to creditors having been published in the MORNING TIMES of Cebu City, a newspaper of general circulation in on November 16, 23 and 30, 1950, ... the Philippine National Bank failed to file its claim within the time limited in the notice, .... The appellant PNB, on November 14, 1958, more than four (4) Years after the opposition of the claim presented by the administrator, filed a pleading captioned "Petition for an Extension of

time within which to File the Claim of Philippine National Bank", alleging, among others, that Sec. 2, Rule 87 of the Rules, allows the filing of claims even if the period stated in the notice to creditors elapsed, upon cause shown and on such terms as equitable; that its failure to present the claiming with the period stated in the notice, was its lack of knowledge of administration proceedings, for while said maintains a branch office in Agusan, the employees did not come to know of the proceedings, the notice has been published in the Morning Times, a newspaper very limited circulation. On January 16, 1959, the CFI issued the following Order It appearing that the claim of the Philippine National Bank against the estate of the deceased Pascual Villanueva already barred by the statute of limitations because the claim was due and demandable since December 20, 1940, but filed on July 20, 1953, after the expiration of ten years, considering that said filing was furthermore not present court within the period fixed by Sec. 2, Rule 87 of the Rules of Court, and no reason having been shown to justify the tension of time for its filing, the Court resolves to deny it as it hereby denies the petition for an extension of time for filing of the claim by the Philippine National Bank. The failure of the Bank to present on time the claim was due its own fault and can hardly be considered excusable negligence. Appellant Bank moved to reconsider the above Order, arguing that the statute of limitations had been suspended by the Moratorium Law, and that the courts can extend the period limited in the notice, under special circumstances, and on grounds of equity (Velasquez v. Teod 46 Phil. 757). The PNB listed five incidents, which considered special circumstances to warrant the of the extension to present the claim, among which the lack of knowledge of the pendency of the administration proceedings; the legitimacy of the loan secured the deceased; that when it filed the claim, it did know that the period stated in the notice had already expired. In disposing the motion for reconsideration, the lower court, on March 3,1959, said The Court believes that the filing of money claim on July 20, 1953 in the Office of the Clerk of Court did not suspend running of the period of prescription because said claim was filed out of time and therefore invalid for all legal purposes. A careful revision of the record shows that the Philippine National Bank, contrary to the pretension of its counsel, had knowledge of the present administration proceedings long before July 20, 1953, because the second payment of the claim due to the deceased Pascual Villanueva from the Philippine War Damage Commission in the amount of P6,441.30, was deposited in the Agusan Agency of the Bank in June, 1951. And in the inventory filed by the new administrator Francisco S. Conde, on February 27, 1957, the following item appears: Money belonging to the said deceased which came into the hands of the administrator on December 1, 1951, appearing in the Bank A-1114, Agusan Agency deposited by the late administrator Teodulo R. Ricaforte. P6,897.52. WHEREFORE, the motion for reconsideration is denied for lack of merits. The order of January 16, 1959 was the subject of the appeal to the Court of Appeals which, as stated at the threshold of this opinion, certified the same to this Court.

The important issue presented is whether or not the in question is already barred. Admittedly, the claim was filed outside of the period provided for in the Order of the lower court, within which to present claims against the estate. The period fixed in the notice lapsed on November 16, 1951 and the claim was filed on July 20, 1953 or about 1 year and 8 months late. This notwithstanding, appellant contends that it did not know of such administration proceedings, not even its employees in the Branch Office in Butuan City, Agusan. It is to be noted that the petition for Letters of Administration and the Notice to Creditors were duly published in the Manila Daily Bulletin and in the Morning Times, respectively, which was a full compliance with the requirements of the Rules. Moreover, the supposed lack of knowledge of the proceedings on the part of appellant and its employees had been belied by uncontested and eloquent evidence, consisting of a deposit of an amount of money by the administrator Of the estate in said Bank (Agusan Agency). The deposit was made on December 1, 1951, inspite of which the appellant Bank only filed its claim on July 20, 1953. It is quite true that the Courts can extend the period within Which to present claims against the estate, even after the period limited has elapsed; but such extension should be granted under special circumstances. The lower did not find any justifiable reason to give the extension and for one thing, there was no period to extend, the same had elapsed. Having reached the above conclusions, We deem it necessary to determine the question as to whether or not the Moratorium Law had suspended the prescriptive period for filing of the claim under consideration. WHEREFORE, the order subject of the appeal is hereby affirmed, with costs against appellant Philippine National Bank, in both instances. Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Dizon, Regala and Makalintal, JJ., concur. Concepcion, Reyes, J.B.L., and Barrera, took no part.

Republic of the Philippines SUPREME COURT Manila EN BANC August 28, 1925 G.R. No. 23718 In the matter of estate of Henry w. Elser, deceased. VICENTE E. REYES, claimnant-appellant, vs. C.W. ROSENSTOCK, executor-appelant. STATEMENT On or about April 30, 1923, the plaintiff obtained a judgment against Henry W. Elser, who was then living, for the sum of P64,242.69, and for the foreclosure of a certain real mortgage on property in Manila and the sale thereof to satisfy the judgment. Pending proceedings to appeal to this court from the judgment, Elser died June 18, 1923, and in the ordinary course of business C.W. Rosenstock was appointed as executor of his estate, and later the appeal was perfected by him as executor, and the judgment of the lower court was affirmed by this court and the case returned to the court of its origin for further proceedings.1 Execution was issued, and on May 17, 1924, the mortgaged property was sold by the sheriff of Manila at public auction for P13,000. On June 2, 1924, the sale was duly confirmed, and no appeal was taken from the order of confirmation. The plaintiff duly applied for and on July 25, 1924, obtained a deficiency judgment against the Elser estate for the sum of P68,700.88 with interest at 12 per centper annum on P64,242.69 of said sum from July 8, 1924. After obtaining the deficiency judgment, the plaintiff at once applied to the Court of First Instance for the appointment of a committee on claims to examine and approve his claim against the Elser estate, of which the defendant was duly notified, and to which he duly objected. After a hearing the court appointed Jose de Guzman and P.D. Carman as commissioners. August 29, 1924, the plaintiff, based upon his deficiency judgment, filed with the commissioners his proof of claim, to which the defendant objected. September 19, 1924, the plaintiff's claim was allowed in full by the commissioners, as a claim against the Elser estate, to which the defendant excepted. December 8, 1924, the defendant filed a motion for a reconsideration, which was denied, and from an order approving the allowance of the committee on claims, the defendant prosecutes this appeal, assigning the following errors:. I. The Court of First Instance erred and exceeded its jurisdiction in entering the order of August 21, 1924, reappointing the committee on claims and appraisals in the above-entitled proceeding, for the purpose of hearing and deciding the claim of Vicente E. Reyes against the estate. II. The Court of First Instance erred in entering the order of November 18, 1924, declaring the appeal of the executor from the decision of the committee allowing the claim of Vicente E. Reyes to have been presented out of time, and ordering the executor to pay the said claim of Vicente E. Reyes out of the funds of the estate.

JOHNS, J.: There is no dispute about any material fact. The question presented is a legal one which involves the construction of section 708 of the Code of Civil Procedure, which is as follows: Mortgage debt due from estate. A creditor holding a claim against the deceased, secured by mortgage or other collateral security, may abandon the security and prosecute his claim before the committee, and share in the general distribution of the assets of the estate; or he may foreclose his mortgage or realize upon his security, by ordinary action in court, making the executor or administrator a party defendant; and if there is a judgment for a deficiency, after the sale of the mortgaged premises, or the property pledged, in the foreclosure or other proceeding to realize upon the security, he may prove his deficiency judgment before the committee against the estate of the deceased; or he may rely upon his mortgage or other security alone, and foreclose the same at any time, within the period of the statute of limitations, and in that event he shall not be admitted as a creditor, and shall receive no share in the distribution of the other assets of the estate; but nothing herein contained shall prohibit the executor or administrator from redeeming the property mortgaged or pledged, by paying the debt for which it is held as security, under the direction of the court, if the court shall adjudge it to be for the best interest of the estate that such redemption shall be made. It is important to note that the original judgment against Elser was rendered on April 30, 1923, and that he was living at the time it was rendered, and that he died on June 18, 1923, pending his appeal to this court, or forty-nine days after the rendition of the judgment. This section provides for three separate distinct proceedings. First, a creditor holding a claim against the deceased, secured by mortgage or other collateral security, may abandon his security and prosecute his claim before the committee and share in the general distribution of the assets of the estate; or, second, he may foreclose his mortgage or realize upon his security, by an ordinary action in court, making the executor or administrator a party defendant; and if there is a deficiency judgment, after the sale of the mortgaged property, he may prove his deficiency judgment before the committee on claims against the estate of the deceased, or, third, he may rely exclusively upon his mortgage and foreclose it at any time, within the period of the statute of limitations, and if he relies exclusively upon the mortgage, he shall not be admitted as a creditor of the estate, and shall not share in the distribution of the assets of the estate. In the instant case, the plaintiff proceeded under and fully complied with all of the requirements of the second provision. He obtained his judgment and decree of foreclosure during the lifetime of the deceased.On his own motion and as executor of the estate, Rosenstock was substituted as a defendant and prosecuted the appeal. After the judgment was affirmed, the plaintiff promptly issued an execution and sold the property. After applying the proceeds of the sale to the satisfaction of the judgment, the plaintiff promptly applied for and obtained a deficiency judgment. When the deficiency judgment was obtained, the plaintiff petitioned the court to appoint a committee on claims. His petition was granted and the committee was appointed. The plaintiff then appeared before the committee and presented his claim based upon the deficiency judgment, and it was allowed, and the allowance of his claim was confirmed by the court. The defendant had notice of all of such proceedings, to all of which he objected and duly excepted.

Hence, plaintiff's claim comes squarely under the second provision of section 708 of the Code of Civil Procedure above quoted. Defendant contends that the claim in question is a contingent claim, and that as such it should have been presented to the original committee on claims of the estate, and that because it was not presented it is barred. In his brief appellant says: At all times prior to May 17, 1924, his deficiency judgment, his present claim, was a mere contingent claim. The holder of a contingent claim is not a creditor and it is not known until the happening of the contingency, that he will become one; the Code nowhere calls him a "creditor;" he is merely "a person" who has a contingent claim (see section 746, Code of Civil Procedure). It is true that claimant-appellee during all of "the time previously limited" was a mortgage creditor of the estate, but as such creditor, he elected not to surrender and prove his claim as he might have done under section 708, or to present the possibility of his requiring a deficiency judgment, to the committee in the form of a contingent claim. But claimant-appellee, on August 2, 1924, when he applied to the court to have the committee recommissioned did not apply as a creditor with a mortgage credit which he had failed to present, but he applied as the holder of a claim which had been contingent during all of "the time previously limited" and had not been presented as required by section 746 of the Code of Civil Procedure, and which had then become absolute, after the expiration of the "time previously limited." There is no remedy in section 690 for a holder of a contingent claim who has not presented it before the "time previously limited" has expired. Section 690, as we have seen, is a remedy for a "creditor" of an estate, who was a creditor before the expiration of the "time previously limited;" but to have been a creditor, he must have had a claim which he could have presented and proved, before the committee; moreover, it must have been the same claim which he now seeks to have allowed and not a mere contingent claim. The holder of a contingent claim is not a creditor. Therefore it must be concluded that section 690 does not provide for recommissioning the committee to hear a contingent claim that has become absolute. Provision for that proceeding is made in section 748 of the Code of Civil Procedure, but a jurisdictional fact required by that section is that the contingent claim must have been presented to the committee before the expiration of the "time previously limited" and mentioned in the committee's report as provided in section 746 of the Code. Let it be said again that before the court can have jurisdiction under section 690 to recommission the committee, an application must be made by a creditor who was a creditor before the expiration of "the time previously limited," and is a creditor at the time the application is made, by virtue of one and the same claim. But claimant-appellee does not fit that requirement. In so far his present claim was concerned, he was a mere contingent claimant and therefore not a creditor of the estate, prior to the expiration of "the time previously limited." Words & Phrases, volume 2, page 1498, says: A "contingent claim" is one which has not accrued, and which is dependent on the happening of some future event. A "contingent claim," within the rule that claims against an estate which are not contingent are barred if not presented within a certain time, is one depending upon something thereafter to happen. Such a claim is not contingent after the happening of the event.

A "contingent claim," within Comp. St., c. 23, secs. 258 et seq., is a claim against a decedent, not absolute or certain, but depending upon some event after the death of the testator or intestate which may or may not happen. A subsisting demand against the estate of a deceased person which had matured and was capable of being enforced during the lifetime of the deceased is not a contingent claim. Plaintiff's claim comes squarely within the last definition. Defendant's contention that the claim of the plaintiff is a contingent one is not tenable. In Hinlo vs. De Leon (18 Phil., 221), this court, on page 230 of the opinion, says: If there is a judgment for a deficiency, continues the section above quoted, "after the sale of the mortgaged premises, or the property pledged, in the foreclosure or other proceeding to realize upon the security, he may prove his deficiency judgment, before the committee against the estate of the deceased. . . ." In Osorio vs. San Agustin (25 Phil., 404), this court, on page 409 of the opinion, says:. . . . . In view of the fact that the plaintiff had elected to abandon the security given him by his mortgage and to prosecute his claim before the committee, he forfeited his right to bring an action upon the security in another separate and distinct action. . . . There is a clear distinction between the facts in that and this case. In pointing out the distinction, Justice Carson, in his concurring opinion on page 409 says: I concur in the disposition of this case. Merely to avoid possibility of misunderstanding, I think it well to point out that under the provisions of section 708 of Act No. 190, part of which is quoted in the opinion, it would appear that in case a creditor elects to rely upon his mortgage he may foreclose his mortgage or realize upon the security by an ordinary action in court, making the executor or administrator a party defendant; and if there is a judgment for a deficiency after the sale of the mortgaged premises or the other property pledged in the foreclosure or other proceeding, he may prove his deficiency judgment before the committee and to that amount he may share in the general assets of the estate of the deceased. In other words, a creditor holding a claim against the deceased person secured by mortgage or other collateral security may rely upon his security and institute an ordinary action based thereon without abandoning his right to present his claim to the committee should the security not be sufficient to pay the debt. That is this case. The construction for which the defendant contends would nullify the second provision of section 708 of the Code of Civil Procedure, and leave it without any legal force and effect.The Code of Civil Procedure provides as follows:. Sec. 689. Court to limit time for presenting claims. The court shall allow such time as the circumstances of the case require for the creditors to present their claims to the committee for examination and allowance; but not, in the first instance, more than twelve months, or less than six months; and the time allowed shall be stated in the commission. The court may extend the time as circumstances require, but not so that the whole time shall exceed eighteen months. Sec. 690. When time may be extended. On application of a creditor who has failed to present his claim, if made within six months after the time previously limited, or, if a committee fails to give the notice required by this chapter, and such application is made before the final settlement

of the estate, the court may, for cause shown, and on such terms as are equitable, renew the commission and allow further time, not exceeding one month, for the committee to examine such claim, in which case it shall personally notify the parties of the time and place of hearing, and as soon as may be make the return of their doings to the court.. The contention of the defendant that the petitioner was not a creditor within the meaning of section 690 is not tenable. Petitioner's claim was based upon a judgment rendered in a court of competent jurisdiction forty-nine days before the death of Elser, and pending the appeal Rosenstock, as executor, on his own motion, was made defendant as such, and the final judgment upon which the property was sold was rendered against Rosenstock as executor of the Elser estate.The defendant has filed an able and exhaustive brief, but has overlooked the fundamental fact that the original judgment in this case was personally rendered against the deceased while he was still living. The judgment of the lower court is affirmed, with costs. So ordered. Avancea, C.J., Street, Malcolm, Villamor, Ostrand, and Villa-Real, JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC July 21, 1928 G.R. No. 27701 THE BANK OF THE PHILIPPINE ISLANDS, plaintiff-appellant, vs. V. CONCEPCION E HIJOS, INC., and VENANCIO CONCEPCION, defendants-appellants. HENRY W. ELSER, defendant-appellee. Araneta & Zaragoza for plaintiff-appellant. No appearance for defendants-appellants. DeWitt, Perkins & Brady for defendant-appellee. OSTRAND, J.: It appears from the record that on July 6, 1921, the defendants Concepcion executed a promissory note in favor of the plaintiff for the sum of P342,372.64, payable on demand, and as security for payment, deposited 700 shares of the Philippine National Bank as collateral with the plaintiff and gave it a mortgage on 5,680 square meters of land, with improvements, situated on R. Hidalgo Street in Manila. The defendants Concepcion defaulted in the payment of the note, and on February 3, 1922, the plaintiff bank instituted the present foreclosure proceedings. Shortly afterwards, Henry W. Elser entered into negotiations with the Concepcions and offered to take over the mortgaged property and assume the mortgage debt. To this the Concepcions agreed on the condition that they be relieved of all liability for the debt. On March 23, 1922, Elser wrote the plaintiff bank the following letter: DEAR SIR: Confirming our conversation of this morning, I take pleasure in advising you that I have made arrangements with Mssrs. Puno & Concepcion to take over their property on Calle R. Hidalgo, consisting of 5,680 square meters, including all improvements thereon, and also 700 shares in the Philippine National Bank mortgaged to you in the total sum of P342,000, and by which arrangement I am to be substituted in the place and stead of Messrs. Puno & Concepcion in the obligation to your bank. I have present prospects of renting the entire property and in consideration thereof I will undertake to pay to the bank on the obligation thus undertaken by me, the sum of not less than five thousand pesos (P5,000) monthly on the principal, together with interest every six months. I will also reduce the mortgage not less than 25 per cent during the first year, not less than 50 per cent during the second year, and the balance within the third year, without prejudice, however, to my right to mortgage the property to any bonding institution or to take up the mortgage myself at any time during the three years period mentioned above, which I expect that I may be in a position to do. Yours very truly, (Sgd.) H. W. ELSER

No answer to this letter was given by the bank, and it clearly appears from the allegations in its amended complaint, and from the evidence, that it was unwilling to release the Concepcions from their liability for the mortgage debt and insisted on their confessing a judgment in the foreclosure proceedings. This the Concepcions refused to do unless the bank would agree to bid in the mortgage property for the full amount of the judgment. After further conversations with the representatives of the plaintiff bank, Elser on April 21, 1922, wrote in the following letter: DEAR SIRS (Attention of Mr. Zaragoza): With reference to our recent conversation regarding the R. Hidalgo property belonging to Venancio Concepcion (Puno & Concepcion), I respectfully request that you confirm in writing your verbal agreement that should the property in question become the property of your bank, in the amount of P342,000 plus interest to date, that you will sell the same to me for the same amount. This information is desired by the Attorneys for Venancio Concepcion, Mr. R. M. Calvo, in order to satisfy himself that in case Messrs. Puno & Concepcion accept judgment, turning over the property to you, that you in return will sell the property to me for the above mentioned sum, and not less than that sum. Trusting you will see your way clear to furnish this confirmation, in accordance with our conversation, we are Very truly, (Sgd.) H. W. ELSER It must be inferred from this letter that Elser had been led to understand that the bank would bid in the land at the foreclosure sale for the full amount of the judgment and sell it to him for the same price. It will be readily seen that this proposition is entirely different from that contained in the letter of March 23d. The plaintiff made no direct reply to the letter of April 21st, but Calvo, testifying for the plaintiff, stated that on April 28, Elser invited him to a conference with Nolting, the president of the bank, in regard to the matter; that on meeting Nolting, Elser said: "Mr. Nolting, do you still adhere to your acceptation of the offer I have made you in writing?" to which Nolting answered that he did not think that there was any reason for him to go back on his word. He thereupon referred Elser and Calvo to Zaragoza, who in some matters appears to have acted as counsel for the bank, for further conferences. The negotiations did not lead to any action on the part of the bank, but on May 5, 1922, Elser entered into an agreement in the form of bilateral deed of sale, with V. Concepcion & Hijos, Inc., and Venancio Concepcion which appears in the record as Exhibit C and reads as follows in translation from Spanish: DEED OF PURCHASE AND SALE This deed of purchase and sale executed in the City of Manila, P.I., this fifth day of May 1922 A. D., by and between V. Concepcion & Hijos, Inc., a domestic corporation duly organized under the laws of Philippine Islands domiciled at No. 861 Calle R. Hidalgo, District of Quiapo, City of

Manila, represented herein by the president, Mr. Venancio Concepcion, by virtue of the powers granted him by the Board of Directors of said corporation in a resolution dated May 2, 1922, a copy of which duly certified, is attached hereto and made a part hereof, and Mr. Venancio Concepcion, of age, married with Mrs. Rosario San Agustin and resident of City of Manila, his place of residence being in the municipality of San Juan, Province of Rizal, P.I., as party of the first part, and Mr. Henry W. Elser, of age, married with Mrs. Elaine Childs Elser, and a resident of City of Manila, with her place of residence at No. 600 Calle M. H. del Pilar, District of Malate, as party of the second part, WITNESSETH: Whereas, V. Concepcion e Hijos, Inc., is at present indebted to the Bank of the Philippine Islands, in the sum of P342,372.64, Philippine currency with interest thereon at the rate of 9 per cent per annum from September 30, 1921, to secure the payment of which, the firm of V. Concepcion e Hijos, Inc., and Mr. Venancio Concepcion as joint land several obligors, have executed in favor of the creditor bank on the 6th of July, 1921, a deed of mortgage and one of pledge upon the following properties: A tract of land with the buildings of strong materials erected thereon, situated on Calle Sa n Sebastian, District of Quiapo. Bounded on the N. by Calle San Sebastian; on the E. by property Maximino Paterno and Manuel Zamora; on the S. by property of the City of Manila; and on W. by the Estero de Curtidor; containing an area of 5,686.80 square meters, more or less, of which land, buildings and improvements, the aforesaid Venancio Concepcion is the registered owner in accordance with the Land Registration Act, according to transfer certificate of title No. 14019, issued by the registrar of deeds of the City of Manila. Seven hundred shares of stock of the Philippine National Bank, belonging to Mr. Venancio Concepcion, issued to him and indorsed in the blank in favor of the Bank of the Philippine Islands, described as follows: (Here follows the numbers and amounts of the certificates of shares.) Whereas on January 20, 1922, Mr. Venancio Concepcion, owner of the property above described, in consideration of the fact that they were subject to the payment of the sum of P342,372.64 with interest thereon at the rate of 9 per cent per annum, which was owing from V. Concepcion e Hijos, Inc., to the Bank of Philippine Islands, as per deeds of mortgage and of pledge executed on July 6, 1921, has sold, assigned, and transferred to said firm of V. Concepcion e Hijos, Inc., the aforesaid properties for the sum of P290,000 Philippine currency, the agreed and stipulated price of the urban property being P220,000, Philippine currency, and that of the 700 shares of stock of the Philippine National Bank, the sum of P70,000 Philippine currency, as per public document executed on said date before Mr. Recaredo Ma. Calvo, a notary public in and for the City of Manila. Whereas, on February 28, 1922 the Bank of the Philippine Islands, filed with the clerk's office of the Court of First Instance of Manila, under No. 21537, a complaint, against V. Concepcion e Hijos, Inc., and Venancio Concepcion for the recovery of its mortgage credit evidenced by the deeds of mortgage and of pledge executed on July 6, 1921, notwithstanding the offer made by V. Concepcion e Hijos, Inc., to assign absolutely and forever to said creditor entity the

properties which are the subject matter of the mortgage and pledge in full and total payment of their obligation. Whereas, Mr. Henry W. Elser is willing to subrogate himself to the obligation of V. Concepcion e Hijos, Inc., and Venancio Concepcion in favor of the Bank of Philippine Islands and release them from the total of said obligation contracted by them on July 6, 1921, as per deeds of mortgage and of pledge executed on said date, in consideration of the sale, assignment and transfer in his favor of all the rights, interest, action or share that they have or may have upon the properties described in said deeds of mortgage and pledge; Now, therefore, we, V. Concepcion e Hijos, Inc., and Venancio Concepcion, in consideration of the sum of one peso (P1) Philippine currency, which we have this day and which we declare was paid to us to our complete satisfaction, and of other important considerations, especially the subrogation into our joint and several obligations in favor of the Bank of the Philippine Islands, amounting to P342,372.64, Philippine currency, with interest thereon at the rate of 9 per cent per annum from September 30, 1921, which said Mr. Henry W. Elser hereby makes, binding himself, moreover, to release us from our obligation contracted in favor of the Bank of the Philippine Islands on July 6, 1921, do hereby sell, assign, and transfer absolutely and forever to said Mr. Henry W. Elser, his heirs and successors in interest the properties described herein with the incumbrances created and existing in favor of the Bank of the Philippine Islands. That I, Henry W. Elser, accept this contract upon the precise terms in which it is executed. In testimony whereof, we sign third presents in place and on the date above-mentioned. V. CONCEPCION E HIJOS, INC. (Sgd.) V. CONCEPCION (Sgd.) V. CONCEPCION (Sgd.) H. W. ELSER Signed in the presence of: (Sgd.) ERNESTO Ma. CALVO GREGORIO BUHAY The bank never gave notice of its conformity with the agreement above quoted but of June 15, 1922, it petitioned the court to include Henry W. Elser as defendant in the complaint, on the strength of the obligations assumed by him in said agreement. On June 23, 1922, the defendants Concepcion answered said petition praying that instead of merely being included, said Elser be substituted in their place as defendants, on the ground that the plaintiff had accepted the substitution of Elser in their place as its debtor. On June 27, 1922, the trial court entered an order including Henry W. Elser as defendant and one month later, the plaintiff filed an amended complaint against the defendants Concepcion and Elser asking for a joint and several judgment against them in the amount prayed for in the original complaint and for the foreclosure of the mortgage securing the same.

On July 18, 1922, the defendants Concepcion filed a supplemental answer alleging the consent of the plaintiff to the subrogation of Elser in their place with respect to the obligations sued upon and asking for the dismissal of the case as to them on the ground. On October 16, 1922, the defendant Elser demurred to the amended complaint on the ground that it failed to alleged that the plaintiff had consented to the substitution of Elser in place of the Concepcions so as to render Elser personally liable to the plaintiff. This demurrer was sustained by the court and due exception was taken by the plaintiff. On November 1, 1922, the plaintiff presented a second amended complaint, in which it is alleged that the sale from the Concepcions to Elser was with the knowledge and consent of the plaintiff but without waiver of it as right of action against the Concepcions. The defendant Elser demurred on the ground that it did not appear from the amended complaint that the plaintiff had accepted Elser as debtor and on the further ground that there was no showing therein as to the disposition of the collateral security held by the plaintiff for the same debt. This demurrer was sustained on both grounds, on December 1, 1922. On December 6, 1922, the plaintiff presented its third amended complaint, without material change in the averments of the second amended complaint, and a third demurrer thereto was sustained on December 28, 1922. The plaintiff thereupon filed a fourth amended complaint, reiterating the allegations of the third amended complaint, alleging that the defendant Elser entered into possession of the mortgaged premises with plaintiff's consent; that plaintiff had not sold the shares of the Philippine National Bank held by it as collateral, and asking for judgment decreeing that said shares and the mortgaged property be sold under order of the court, and that the defendants Concepcion and Elser be condemned to pay the deficiency, if any there should be. A demurrer to this complaint was sustained, on the ground that it failed to show a contractual relationship between the plaintiff and the defendant Elser. On March 2, 1923, the plaintiff presented a fifth amended complaint, similar to the foregoing, but containing the additional allegation that the plaintiff accepted the assumption of the mortgage by the defendant Elser "without releasing the liability of the defendants" Concepcion. This complaint was demurred to on the ground that it did not sufficiently state that the plaintiff had accepted the substitution of Elser in place of the Concepcions, as the contract between them provided. The demurrer was overruled and the defendant Elser excepted. On April 2, 1923, the defendant Elser answered, denying generally and specifically the allegations of the plaintiff's complaint. On the same date, C. W. Rosenstock, as guardian of the defendant Elser, filed a cross-complaint alleging that at the time Elser is alleged to have assumed the obligations of the Concepcions to the plaintiff, he was of unsound mind that he had been induced to sign the same by false representations on the part of the Concepcion to the effect that the plaintiff had agreed that he be substituted in place of Concepcions with respect to the obligations set up in the plaintiff's complaint and that the plaintiff would accept payment of the same in monthly installments on account of the principal of not less than P5,000, with interest payable every six months, and that the mortgage should be reduced not less than 25 per cent the first year, not less than 50 per cent the second year, and the balance within the

third year, when, as a matter of fact, the plaintiff had not agreed hereto or accepted said terms of payment, as the Concepcions well knew, and had never accepted Elser's offer to the plaintiff made pursuant to said representations, and praying for the reasons stated, that the deed from the Concepcions to Elser, wherein he assumed the obligations of the former to the plaintiff be cancelled. These allegations were denied by the plaintiff and the defendants Concepcion in their replies. Elser died on June 18, 1923, and on January 4, 1924, the plaintiff suggested the death of the defendant Elser, and asked that the administrator of the estate, C. W. Rosenstock, be substituted in his place as defendants, and that the action be continued against Rosenstock in the capacity on the ground that this action is for the foreclosure of a mortgage On January 11, 1924, the attorneys of record for the defendant Elser filed an opposition to the application to have the action continued against Rosenstock, in substitution of Elser, this is not a foreclosure action, and hence this action, as to him, abated by reason of his death, and any claim of the plaintiff against him should be presented to the committee on claims and appraisals of his estate. This objection was overruled and Rosenstock, as Elser's administrator, was substituted in his place as defendant, by order of the court dated January 14, 1924, and exception thereto was duly taken. Subsequently, Rosenstock became the executor of Elser's estate, and as such, filed various amended answers and cross-complaints. The last amended cross-complaint was filed by him on August 9, 1924 in case No. 24485 of the Court of First Instance of Manila, in which the estate of the deceased Elser was being administered. He repeated therein the allegations and prayer of his cross-complaint as guardian filed on April 2, 1923, and referred to above. The last amended answer was filed by him on August 21, 1925. It consisted of denial of the allegations of the complaint and of the authenticity of the document whereby Elser is alleged to have assumed the obligations of the defendants Concepcion to the plaintiff; an allegation that at the time of execution thereof, Elser was of unsound mind; and a statement of willingness to relinquished and abandon any rights Elser might have acquired under said document in favor of the plaintiff. After a lengthy trial, the court below, on January 22, 1927, rendered its decision absolving the Elser estate from the complaint, ordering the Concepcions to pay the plaintiff the sum of P342,372.64, with interest of 9 per cent and costs, and providing for the sale of the mortgaged property, in case of non-payment of the judgment. Both the plaintiff and the defendants Concepcion excepted to this judgment and moved for a new trial on the usual statutory grounds. The motions were denied and exceptions noted. The case is now before this court on a joint bill of exceptions presented by the plaintiff and the defendants Concepcion pursuant to stipulation. No briefs have been filed by the Concepcions. From the facts stated and from the pleadings it will be readily seen that as far as the defendant Elser is concerned, the plaintiff alleged cause of action rests exclusively on the deed of contract Exhibit C. The well known general rule is that a contract affects only the parties and privies

thereto. But there are exceptions to this rule and the plaintiff contends that though it is neither a party nor a privy to the contract here in question, the subrogation of Elser to the obligations of the Concepcions in favor of the plaintiff as provided for in the contract, is a stipulation pour autrui upon which the plaintiff may maintain its action The nature and reach of the doctrine of the stipulations pour autrui is so thoroughly discussed in the case of Uy Tam and Uy Yet vs. Leonard (30 Phil., 471), that no further discussion thereof is here necessary. We wish , however, to emphasize the fact that it was there held that in order to constitute a valid stipulation pour autrui, it must be the purpose and intent of the stipulating parties to benefit the third person may be incidentally benefited by stipulation. This conclusion is supported by numerous authorities and is in complete harmony with the second paragraph of article 1257 of the Civil Code, which reads as follows: Should the contract contain any stipulation in favor of the third person, he may demand its fulfillment, provided he has given notice of his acceptance to the person bound before the stipulation has been revoked. Applying this test, it seems clear that neither Exhibit C nor any other agreement between the Concepcion and the Elser contained any stipulation pour autrui in favor of the plaintiff. As stated in the appellee's brief: The Concepcion owed the plaintiff a large sum of money and wanted to be relieved of that obligation. Elser wanted the property which he had been mortgaged to secure that obligation, and had to assume the obligation and agree to secure the discharge of the Concepcion therefrom, in order to get the property. Neither of them had any desire to confer any benefit to the bank. Neither of them entered into the contract for the sake of the bank. It is obvious that each entered into the contract impelled by the advantage accruing to him personally as a result thereof. We may add that the stipulation here in question is not merely for the assumption of the mortgaged debt by Elser, but is a provision for the subrogation of Elser to the Concepcion obligations to the plaintiff. Inasmuch as the mere assumption of the mortgage debt by the purchaser of the mortgaged land does not relieved the mortgagor from his liability, it might be said that some show of reason that by such an arrangement the mortgagee will have two debtors for the same debt instead of only one and that this furnishes additional security and is to the creditor's advantage and for his benefit. But such is not the case where, as here, the stipulation is for the subrogation of the purchasers to the obligation of the original debtor; if such a stipulation is duly accepted by the creditor, it works a novation of the original agreement and releases the original debtor from further liability. Such subrogation is rarely for the benefit of the creditor and that, in the present case, it was not believed to be of any advantage to the bank is well shown by the fact that the parties were unable to obtain its written consent to the stipulation. But assuming that the stipulation is for the benefit of a third person, the plaintiff is nevertheless not in position to maintain its action against Elser. In order to be enforceable, such stipulations must be accepted by the third person and not has not been done here. The plaintiff asserts that it accepted the stipulations in part, but that is not a sufficient acceptance. The ordinary rules of offer and acceptance are applicable, and it is a cardinal rule of the law of contracts that in order to create a binding agreement, the acceptance must be absolute, unconditional, and identical

with the terms of the offer; otherwise there is no meeting of the minds or an expression of one and the same common intention, one of the essential elements of a valid contract (Civil Code, art., 1257; Page on Contracts, sec. 1308, and authorities there cited). But the plaintiff argues that in American jurisprudence, the purchaser of the mortgaged property who assumes the payment of the mortgage debt, may for the reason alone sued for the debt by the creditor and that the rule is applicable in this jurisdiction. Aside from the fact that we are not dealing with a mere assumption of the debt, but with a subrogation, it may be noted that this court has already held that the American doctrine in this respect is not in harmony with the spirit of our legislation and has not been adopted in this country. In the case of E.C. McCullough & Co. vs. Veloso and Serna (46 Phil., 1), the court. speaking through its present Chief Justice, said: The effects of transfer of a mortgaged property to a third person are well determined by the Civil Code. According to article 1879 of this Code, the creditor may demand of the third person in possession of the property mortgaged payment of such part of the debt, as is secured by the property in his possession, in the manner and form established by law. The Mortgage Law in force at the promulgation of the Civil Code and referred to in the latter, exacted, among other conditions, also the circumstance that after judicial or notarial demand, the original debtor had failed to make payment of the debt at maturity. (Art. 135 of the Mortgage Law of the Philippines of 1889.) According to this, the obligation of the new possessor to pay the debt originated from the right of the creditor to demand payment of him, it being necessary that a demand for payment should have previously been made upon the debtor and the latter should have failed to pay. And even if these requirements were complied with, still the third possessor might abandon the property mortgaged, and in that case it is considered to be in the possession of the debtor. (Art. 136 of the same law.) This clearly shows that the spirit of the Civil Code is to let the obligation of the debtor to pay the debt stand although the property mortgaged to secure payment of said debt may have been transferred to a third person. While the Mortgage Law of 1893 eliminated this provisions, it contained nothing indicating any change in the spirit of the law in this respect. Article 129 of this law, which provides for the substitution of the debtor by the third person in possession of the property, for the purposes of giving notice, does not show this change and has reference to a case where the action is directed only against the property burdened with the mortgage. (Art. 168 of the Regulation.) From what we have said it follows that the plaintiff can have no cause of action against Elser, or rather against his estate. Assuming that Elser was of sound mind at the time of the execution of Exhibit C ? and that is a much debated question ? the Concepcion, and not the plaintiff might have maintained an action against the Elser state; but that action is now barred through their failure to present their claim and appraisal in the probate proceedings, and the plaintiff can therefore, not successfully invoked article 1111 of the Civil Code, which in effect provides that after exhausting the property of which the debtor may be in possession, the creditor may have recourse to the debtor's credit and choses an action for the collection of unpaid portion of the debt. Counsel for the appellee also argue that the bank, having failed to present its claim to the committee on claims and appraisal, it must be regarded as having elected to rely on its mortgage alone and therefore can have no personal judgement against the Elser estate. That is good law. Section 708 of the Code of Civil Procedure provides as follows:

SEC. 708. Mortgage debt due from estate. ? A creditor holding a claim against the deceased, secured by mortgage or other collateral security, may abandon the security and prosecute his claim before the committee, and share in the general distribution of the assets of the estate; or he may foreclose his mortgage or realize upon security, by ordinary action in court, making the executor or administrator a party defendant; and if there is a judgment for a deficiency, after the sale of the mortgaged premises, or the property pledge, in the foreclosure or other proceedings to realize upon the security, he any prove his deficiency judgment before the committee against the estate of the deceased; or he may rely upon his mortgage or other security alone, and foreclose the same at any time, within the period of statute of limitations, and in that event he shall not be admitted as an creditor, and shall receive no share in the distribution of the other assets of the estate; As will be seen, the mortgagee has the election of one out of three courses: (1) He may abandon his security and share in the general distribution of the assets of the estate, or (2) he may foreclose, secure a deficiency judgment and prove his deficiency judgment before the committee, or (3) he may rely upon his security alone, in which case he can receive no share in the distribution of the assets of the estate. In this case the bank did not abandon the security and took no steps of any sort before the committee within the time limit provided by the sections 689 and 690 of the Code of Civil Procedure. The committed ceased to function long ago, and the bank has now nothing to rely on except the mortgage. Internationally or not, it has bought itself within the third course provided for in section 708; it has no alternative. But counsel for the plaintiff say that the amount of the deficiency, if any, could not be proved before the foreclosure sale and had been effected; that section 708 expressly provide for the proof of the deficiency judgment before the committee after the sale of the mortgaged property; that this provisions must be construed to mean that the presentation and prosecution of the claim of the deficiency must be made after, not before, the sale; and that if the mortgagee presents his claim from a deficiency before a deficiency judgment have been rendered, he will loose his rights under the mortgage and be regarded as having abandon his security. This clearly a misconception of the statute, and the cases cited by the appellant in support for its contention are not in point. Until the foreclosure sale is made, the demand for the payment of deficiency is a contingent claim within the meaning of sections 746, 747, and 748 of the Code of Civil Procedure, which sections reads as follows: SEC. 746. Claims may be presented to committee. ? If a person is liable as surety for the deceased, or has other contingent claims against his estate which cannot be proved as a debt before the committee, the same may be presented with the proof, to the committee, who shall state in their report that such claim was presented to them. SEC. 747. Estate to be retained to meet claims. ? If the court is satisfied from the report of the committee, or from proofs exhibited to it, that such contingent claim is valid, it may order the executor or administrator to retains in his hands sufficient estate to pay such contingent claim, when the same becomes absolute, or if the estate is insolvent, sufficient to pay a portion equal to the dividend of the other creditors. SEC. 748. Claim becoming absolute in two years, how allowed. ? If such contingent claims becomes absolute and is presented to the court, or to the executor or administrator, within two years from the time limited for other creditors to present their claims, it may be allowed by the

court if not disputed by the executor or administrator, and, if disputed, it may be proved that the committee already appointed, or before others to be appointed, for the purpose, as if presented for allowance before the committee had made its report. These sections are in entire harmony with section 708; the amount of the deficiency cannot be ascertained or proven until the foreclosure proceedings have terminated, but the claim for the deficiency must be presented to the committee within the period fixed by sections 689 and 690 of the Code. The committee does not then pass upon the validity of the claim but reports it to the court. If the court "from the report of the committee" or from "the proofs exhibited to it" is satisfied that the contingent claim is valid, the executor or administrator may be required to retain in his possession sufficient assets to pay the claim when it becomes absolute, or enough to pay the creditor his proportionate share if the assets of the estate are insufficient to pay the debts. When the contingent claim has become absolute, its amount may be ascertained and established in the manner indicated by sections 748 and 749. As will be seen, the bank both could and should have presented its claim to the committee within the time prescribed by the law. The concurring opinion of Justices Malcolm and Fisher in the case of Jaucian vs. Querol (38 Phil., 707), contains a very lucid expositions of the law on the subject and further comment is therefore unnecessary. The appeal is without merit and the judgment of the court below is affirmed with the costs against the plaintiff-appellant. So ordered. Johnson, Street, Malcolm, Johns, Romualdez, and Villa-Real, JJ., concur.

SECOND DIVISION

[G.R. No. 149926. February 23, 2005]

UNION BANK OF THE PHILIPPINES, petitioner, vs. EDMUND SANTIBAEZ and FLORENCE SANTIBAEZ ARIOLA, respondents. DECISION CALLEJO, SR., J.: Before us is a petition for review on certiorari under Rule 45 of the Revised Rules of Court which seeks the reversal of the Decision[1] of the Court of Appeals dated May 30, 2001 in CAG.R. CV No. 48831 affirming the dismissal[2] of the petitioners complaint in Civil Case No. 18909 by the Regional Trial Court (RTC) of Makati City, Branch 63. The antecedent facts are as follows: On May 31, 1980, the First Countryside Credit Corporation (FCCC) and Efraim M. Santibaez entered into a loan agreement[3] in the amount of P128,000.00. The amount was intended for the payment of the purchase price of one (1) unit Ford 6600 Agricultural AllPurpose Diesel Tractor. In view thereof, Efraim and his son, Edmund, executed a promissory note in favor of the FCCC, the principal sum payable in five equal annual amortizations of P43,745.96 due on May 31, 1981 and every May 31st thereafter up to May 31, 1985. On December 13, 1980, the FCCC and Efraim entered into another loan agreement, [4] this time in the amount of P123,156.00. It was intended to pay the balance of the purchase price of another unit of Ford 6600 Agricultural All-Purpose Diesel Tractor, with accessories, and one (1) unit Howard Rotamotor Model AR 60K. Again, Efraim and his son, Edmund, executed a promissory note for the said amount in favor of the FCCC. Aside from such promissory note, they also signed a Continuing Guaranty Agreement[5] for the loan dated December 13, 1980. Sometime in February 1981, Efraim died, leaving a holographic will.[6] Subsequently in March 1981, testate proceedings commenced before the RTC of Iloilo City, Branch 7, docketed as Special Proceedings No. 2706. On April 9, 1981, Edmund, as one of the heirs, was appointed as the special administrator of the estate of the decedent.[7] During the pendency of the testate proceedings, the surviving heirs, Edmund and his sister Florence Santibaez Ariola, executed a Joint Agreement[8]dated July 22, 1981, wherein they agreed to divide between themselves and take possession of the three (3) tractors; that is, two (2) tractors for Edmund and one (1) tractor for Florence. Each of them was to assume the indebtedness of their late father to FCCC, corresponding to the tractor respectively taken by them. On August 20, 1981, a Deed of Assignment with Assumption of Liabilities[9] was executed by and between FCCC and Union Savings and Mortgage Bank, wherein the FCCC as the assignor, among others, assigned all its assets and liabilities to Union Savings and Mortgage Bank. Demand letters[10] for the settlement of his account were sent by petitioner Union Bank of the Philippines (UBP) to Edmund, but the latter failed to heed the same and refused to pay. Thus, on February 5, 1988, the petitioner filed a Complaint[11] for sum of money against the heirs

of Efraim Santibaez, Edmund and Florence, before the RTC of Makati City, Branch 150, docketed as Civil Case No. 18909. Summonses were issued against both, but the one intended for Edmund was not served since he was in the United States and there was no information on his address or the date of his return to the Philippines.[12] Accordingly, the complaint was narrowed down to respondent Florence S. Ariola. On December 7, 1988, respondent Florence S. Ariola filed her Answer[13] and alleged that the loan documents did not bind her since she was not a party thereto. Considering that the joint agreement signed by her and her brother Edmund was not approved by the probate court, it was null and void; hence, she was not liable to the petitioner under the joint agreement. On January 29, 1990, the case was unloaded and re-raffled to the RTC of Makati City, Branch 63.[14] Consequently, trial on the merits ensued and a decision was subsequently rendered by the court dismissing the complaint for lack of merit. The decretal portion of the RTC decision reads: WHEREFORE, judgment is hereby rendered DISMISSING the complaint for lack of merit. [15] The trial court found that the claim of the petitioner should have been filed with the probate court before which the testate estate of the late Efraim Santibaez was pending, as the sum of money being claimed was an obligation incurred by the said decedent. The trial court also found that the Joint Agreement apparently executed by his heirs, Edmund and Florence, on July 22, 1981, was, in effect, a partition of the estate of the decedent. However, the said agreement was void, considering that it had not been approved by the probate court, and that there can be no valid partition until after the will has been probated. The trial court further declared that petitioner failed to prove that it was the now defunct Union Savings and Mortgage Bank to which the FCCC had assigned its assets and liabilities. The court also agreed to the contention of respondent Florence S. Ariola that the list of assets and liabilities of the FCCC assigned to Union Savings and Mortgage Bank did not clearly refer to the decedents account. Ruling that the joint agreement executed by the heirs was null and void, the trial court held that the petitioners cause of action against respondent Florence S. Ariola must necessarily fail. The petitioner appealed from the RTC decision and elevated its case to the Court of Appeals (CA), assigning the following as errors of the trial court: 1. THE COURT A QUO ERRED IN FINDING THAT THE JOINT AGREEMENT (EXHIBIT A) SHOULD BE APPROVED BY THE PROBATE COURT. 2. THE COURT A QUO ERRED IN FINDING THAT THERE CAN BE NO VALID PARTITION AMONG THE HEIRS UNTIL AFTER THE WILL HAS BEEN PROBATED. 3. THE COURT A QUO ERRED IN NOT FINDING THAT THE DEFENDANT HAD WAIVED HER RIGHT TO HAVE THE CLAIM RE-LITIGATED IN THE ESTATE PROCEEDING.[16] The petitioner asserted before the CA that the obligation of the deceased had passed to his legitimate children and heirs, in this case, Edmund and Florence; the unconditional signing of the joint agreement marked as Exhibit A estopped respondent Florence S. Ariola, and that she cannot deny her liability under the said document; as the agreement had been signed by both heirs in their personal capacity, it was no longer necessary to present the same before the probate court for approval; the property partitioned in the agreement was not one of those enumerated in the holographic will made by the deceased; and the active participation of the

heirs, particularly respondent Florence S. Ariola, in the present ordinary civil action was tantamount to a waiver to re-litigate the claim in the estate proceedings. On the other hand, respondent Florence S. Ariola maintained that the money claim of the petitioner should have been presented before the probate court.[17] The appellate court found that the appeal was not meritorious and held that the petitioner should have filed its claim with the probate court as provided under Sections 1 and 5, Rule 86 of the Rules of Court. It further held that the partition made in the agreement was null and void, since no valid partition may be had until after the will has been probated. According to the CA, page 2, paragraph (e) of the holographic will covered the subject properties (tractors) in generic terms when the deceased referred to them as all other properties. Moreover, the active participation of respondent Florence S. Ariola in the case did not amount to a waiver. Thus, the CA affirmed the RTC decision, viz.: WHEREFORE, premises considered, the appealed Decision of the Regional Trial Court of Makati City, Branch 63, is hereby AFFIRMED in toto. SO ORDERED.[18] In the present recourse, the petitioner ascribes the following errors to the CA: I. THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THE JOINT AGREEMENT SHOULD BE APPROVED BY THE PROBATE COURT. II. THE COURT OF APPEALS ERRED IN FINDING THAT THERE CAN BE NO VALID PARTITION AMONG THE HEIRS OF THE LATE EFRAIM SANTIBAEZ UNTIL AFTER THE WILL HAS BEEN PROBATED. III. THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE RESPONDENT HAD WAIVED HER RIGHT TO HAVE THE CLAIM RE-LITIGATED IN THE ESTATE PROCEEDING. IV. RESPONDENTS CAN, IN FACT, BE HELD JOINTLY AND SEVERALLY LIABLE WITH THE PRINCIPAL DEBTOR THE LATE EFRAIM SANTIBAEZ ON THE STRENGTH OF THE CONTINUING GUARANTY AGREEMENT EXECUTED IN FAVOR OF PETITIONERAPPELLANT UNION BANK. V. THE PROMISSORY NOTES DATED MAY 31, 1980 IN THE SUM OF P128,000.00 AND DECEMBER 13, 1980 IN THE AMOUNT OF P123,000.00 CATEGORICALLY ESTABLISHED THE FACT THAT THE RESPONDENTS BOUND THEMSELVES JOINTLY AND SEVERALLY

LIABLE WITH THE LATE DEBTOR EFRAIM SANTIBAEZ IN FAVOR OF PETITIONER UNION BANK.[19] The petitioner claims that the obligations of the deceased were transmitted to the heirs as provided in Article 774 of the Civil Code; there was thus no need for the probate court to approve the joint agreement where the heirs partitioned the tractors owned by the deceased and assumed the obligations related thereto. Since respondent Florence S. Ariola signed the joint agreement without any condition, she is now estopped from asserting any position contrary thereto. The petitioner also points out that the holographic will of the deceased did not include nor mention any of the tractors subject of the complaint, and, as such was beyond the ambit of the said will. The active participation and resistance of respondent Florence S. Ariola in the ordinary civil action against the petitioners claim amounts to a waiver of the right to have the claim presented in the probate proceedings, and to allow any one of the heirs who executed the joint agreement to escape liability to pay the value of the tractors under consideration would be equivalent to allowing the said heirs to enrich themselves to the damage and prejudice of the petitioner. The petitioner, likewise, avers that the decisions of both the trial and appellate courts failed to consider the fact that respondent Florence S. Ariola and her brother Edmund executed loan documents, all establishing the vinculum juris or the legal bond between the late Efraim Santibaez and his heirs to be in the nature of a solidary obligation. Furthermore, the Promissory Notes dated May 31, 1980 and December 13, 1980 executed by the late Efraim Santibaez, together with his heirs, Edmund and respondent Florence, made the obligation solidary as far as the said heirs are concerned. The petitioner also proffers that, considering the express provisions of the continuing guaranty agreement and the promissory notes executed by the named respondents, the latter must be held liable jointly and severally liable thereon. Thus, there was no need for the petitioner to file its money claim before the probate court. Finally, the petitioner stresses that both surviving heirs are being sued in their respective personal capacities, not as heirs of the deceased. In her comment to the petition, respondent Florence S. Ariola maintains that the petitioner is trying to recover a sum of money from the deceased Efraim Santibaez; thus the claim should have been filed with the probate court. She points out that at the time of the execution of the joint agreement there was already an existing probate proceedings of which the petitioner knew about. However, to avoid a claim in the probate court which might delay payment of the obligation, the petitioner opted to require them to execute the said agreement. According to the respondent, the trial court and the CA did not err in declaring that the agreement was null and void. She asserts that even if the agreement was voluntarily executed by her and her brother Edmund, it should still have been subjected to the approval of the court as it may prejudice the estate, the heirs or third parties. Furthermore, she had not waived any rights, as she even stated in her answer in the court a quo that the claim should be filed with the probate court. Thus, the petitioner could not invoke or claim that she is in estoppel. Respondent Florence S. Ariola further asserts that she had not signed any continuing guaranty agreement, nor was there any document presented as evidence to show that she had caused herself to be bound by the obligation of her late father. The petition is bereft of merit. The Court is posed to resolve the following issues: a) whether or not the partition in the Agreement executed by the heirs is valid; b) whether or not the heirs assumption of the

indebtedness of the deceased is valid; and c) whether the petitioner can hold the heirs liable on the obligation of the deceased. At the outset, well-settled is the rule that a probate court has the jurisdiction to determine all the properties of the deceased, to determine whether they should or should not be included in the inventory or list of properties to be administered.[20] The said court is primarily concerned with the administration, liquidation and distribution of the estate.[21] In our jurisdiction, the rule is that there can be no valid partition among the heirs until after the will has been probated: In testate succession, there can be no valid partition among the heirs until after the will has been probated. The law enjoins the probate of a will and the public requires it, because unless a will is probated and notice thereof given to the whole world, the right of a person to dispose of his property by will may be rendered nugatory. The authentication of a will decides no other question than such as touch upon the capacity of the testator and the compliance with those requirements or solemnities which the law prescribes for the validity of a will.[22] This, of course, presupposes that the properties to be partitioned are the same properties embraced in the will.[23] In the present case, the deceased, Efraim Santibaez, left a holographic will[24] which contained, inter alia, the provision which reads as follows: (e) All other properties, real or personal, which I own and may be discovered later after my demise, shall be distributed in the proportion indicated in the immediately preceding paragraph in favor of Edmund and Florence, my children. We agree with the appellate court that the above-quoted is an all-encompassing provision embracing all the properties left by the decedent which might have escaped his mind at that time he was making his will, and other properties he may acquire thereafter. Included therein are the three (3) subject tractors. This being so, any partition involving the said tractors among the heirs is not valid. The joint agreement[25] executed by Edmund and Florence, partitioning the tractors among themselves, is invalid, specially so since at the time of its execution, there was already a pending proceeding for the probate of their late fathers holographic will covering the said tractors. It must be stressed that the probate proceeding had already acquired jurisdiction over all the properties of the deceased, including the three (3) tractors. To dispose of them in any way without the probate courts approval is tantamount to divesting it with jurisdiction which the Court cannot allow.[26] Every act intended to put an end to indivision among co-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 other transaction.[27] Thus, in executing any joint agreement which appears to be in the nature of an extra-judicial partition, as in the case at bar, court approval is imperative, and the heirs cannot just divest the court of its jurisdiction over that part of the estate. Moreover, it is within the jurisdiction of the probate court to determine the identity of the heirs of the decedent.[28] In the instant case, there is no showing that the signatories in the joint agreement were the only heirs of the decedent. When it was executed, the probate of the will was still pending before the court and the latter had yet to determine who the heirs of the decedent were. Thus, for Edmund and respondent Florence S. Ariola to adjudicate unto themselves the three (3) tractors was a premature act, and prejudicial to the other possible heirs and creditors who may have a valid claim against the estate of the deceased.

The question that now comes to fore is whether the heirs assumption of the indebtedness of the decedent is binding. We rule in the negative. Perusing the joint agreement, it provides that the heirs as parties thereto have agreed to divide between themselves and take possession and use the above-described chattel and each of them to assume the indebtedness corresponding to the chattel taken as herein after stated which is in favor of First Countryside Credit Corp.[29] The assumption of liability was conditioned upon the happening of an event, that is, that each heir shall take possession and use of their respective share under the agreement. It was made dependent on the validity of the partition, and that they were to assume the indebtedness corresponding to the chattel that they were each to receive. The partition being invalid as earlier discussed, the heirs in effect did not receive any such tractor. It follows then that the assumption of liability cannot be given any force and effect. The Court notes that the loan was contracted by the decedent. The petitioner, purportedly a creditor of the late Efraim Santibaez, should have thus filed its money claim with the probate court in accordance with Section 5, Rule 86 of the Revised Rules of Court, which provides: Section 5. Claims which must be filed under the notice. If not filed barred; exceptions. All claims for money against the decedent, arising from contract, express or implied, whether the same be due, not due, or contingent, all claims for funeral expenses for the last sickness of the decedent, and judgment for money against the decedent, must be filed within the time limited in the notice; otherwise they are barred forever, except that they may be set forth as counterclaims in any action that the executor or administrator may bring against the claimants. Where an executor or administrator commences an action, or prosecutes an action already commenced by the deceased in his lifetime, the debtor may set forth by answer the claims he has against the decedent, instead of presenting them independently to the court as herein provided, and mutual claims may be set off against each other in such action; and if final judgment is rendered in favor of the defendant, the amount so determined shall be considered the true balance against the estate, as though the claim had been presented directly before the court in the administration proceedings. Claims not yet due, or contingent, may be approved at their present value. The filing of a money claim against the decedents estate in the probate court is mandatory.[30] As we held in the vintage case of Py Eng Chong v. Herrera:[31] This requirement is for the purpose of protecting the estate of the deceased by informing the executor or administrator of the claims against it, thus enabling him to examine each claim and to determine whether it is a proper one which should be allowed. The plain and obvious design of the rule is the speedy settlement of the affairs of the deceased and the early delivery of the property to the distributees, legatees, or heirs. `The law strictly requires the prompt presentation and disposition of the claims against the decedent's estate in order to settle the affairs of the estate as soon as possible, pay off its debts and distribute the residue.[32] Perusing the records of the case, nothing therein could hold private respondent Florence S. Ariola accountable for any liability incurred by her late father. The documentary evidence presented, particularly the promissory notes and the continuing guaranty agreement, were executed and signed only by the late Efraim Santibaez and his son Edmund. As the petitioner failed to file its money claim with the probate court, at most, it may only go after Edmund as comaker of the decedent under the said promissory notes and continuing guaranty, of course, subject to any defenses Edmund may have as against the petitioner. As the court had not acquired jurisdiction over the person of Edmund, we find it unnecessary to delve into the matter further.

We agree with the finding of the trial court that the petitioner had not sufficiently shown that it is the successor-in-interest of the Union Savings and Mortgage Bank to which the FCCC assigned its assets and liabilities.[33] The petitioner in its complaint alleged that by virtue of the Deed of Assignment dated August 20, 1981 executed by and between First Countryside Credit Corporation and Union Bank of the Philippines[34] However, the documentary evidence[35] clearly reflects that the parties in the deed of assignment with assumption of liabilities were the FCCC, and the Union Savings and Mortgage Bank, with the conformity of Bancom Philippine Holdings, Inc. Nowhere can the petitioners participation therein as a party be found. Furthermore, no documentary or testimonial evidence was presented during trial to show that Union Savings and Mortgage Bank is now, in fact, petitioner Union Bank of the Philippines. As the trial court declared in its decision: [T]he court also finds merit to the contention of defendant that plaintiff failed to prove or did not present evidence to prove that Union Savings and Mortgage Bank is now the Union Bank of the Philippines. Judicial notice does not apply here. The power to take judicial notice is to [be] exercised by the courts with caution; care must be taken that the requisite notoriety exists; and every reasonable doubt upon the subject should be promptly resolved in the negative. (Republic vs. Court of Appeals, 107 SCRA 504).[36] This being the case, the petitioners personality to file the complaint is wanting. Consequently, it failed to establish its cause of action. Thus, the trial court did not err in dismissing the complaint, and the CA in affirming the same. IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED. The assailed Court of Appeals Decision is AFFIRMED. No costs. SO ORDERED. Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC December 28, 1929 G.R. No. 31454 Estate of the deceased Francisco Arquiza. ISIDRA GAAS, ET AL., petitioners-appellees, vs. PILAR FORTICH, administratrix-appellant. Orbeta and Ozamiz, Rodriguez and Zacarias, and Camus and Delgado for appellant. MacVean and Ingalls for appellees. STATEMENT January 23, 1926, Francisco Arquiza, of Cebu, made his last will and testament in which, subject to certain devises, he bequeathed all of his property to Pilar Fortich his then wife. Later, upon his death, this will was admitted to probate as his last will and testament. Pending the administration of his estate, Isidra Gaas filed the following petition: 1. That she is of legal age and a resident of the municipality of Oroquieta, Province of Misamis, Philippine Islands. 2. That the petitioner was married to one Federico Arquiza now deceased, during the year 1908 as appears by a true copy of a marriage certificate filed herewith and made a part hereof marked Exhibit A, and as a result of said marriage there were born to said Federico Arquiza and this petitioner three children namely Felicisimo Arquiza, Dioscoro Arquiza deceased, and Soledad Arquiza. 3. That Federico Arquiza died intestate in the municipality of Aluran, Province of Misamis, Philippine Islands, during the month of January, 1914, leaving surviving him as his heirs at law Felicisimo Arquiza, Dioscoro Arquiza and Soledad Arquiza. 4. That the said Dioscoro Arquiza died at the age of 2 years and said Felicisimo Arquiza is now 18 years of age and the said Soledad Arquiza is now 13 years of age. 5. That the said Federico Arquiza was born out of wedlock the son of the deceased Francisco Arquiza and Antolia Asilo, both of whom at the time of the conception of the said Federico Arquiza were single and could have married with or without dispensation and that the said Francisco Arquiza formally recognized the said Federico Arquiza as his natural son as appears by a birth certificate of date November 6, 1880, a copy of which is filed herewith, made a part hereof and marked Exhibit B and also a certificate of recognition of date November 6, 1880, a copy of which is filed herewith, made a part hereof and marked Exhibit C. 6. That the deceased Francisco Arquiza is survived by his widow, Pilar Fortich but left no legitimate children or descendants nor did the said deceased leave legitimate parents or ascendants.

7. That the minors, Felicisimo Arquiza and Soledad Arquiza are therefore the legitimate children of the deceased, Federico Arquiza and the petitioner herein, Isidra Gaas and as such are by representation the duly constituted legal heirs of the deceased Don Francisco Arquiza as provided by the Civil Code. Wherefore, petitioner as natural guardian of the minors, Felicisimo Arquiza and Soledad Arquiza, respectfully prays this honorable court to declare said minors to be the legal heirs of the deceased Francisco Arquiza and for such other and further relief to which they may be entitled. To which the executrix made a general and specific denial, and alleged the following special defenses: First special defense, alleges: That the petitioners Soledad and Felicisimo, surnamed Arquiza, alleged acknowledged natural children of the deceased Francisco Arquiza, represented by their guardian ad litem Isidra Gaas, have no right to succeed in the properties of the herein deceased Francisco Arquiza; and as Second special defense, alleges: That assuming that there is merit in the petition which is objected to by this pleading, the action to acknowledge the aforesaid minors Soledad and Felicisimo, surnamed Arquiza, as natural children, has prescribed. In view of the foregoing, it is hereby prayed to the court that the petition of Isidra Gaas on behalf of the aforesaid minors Soledad and Felicisimo, surnamed Arquiza, be dismissed, with costs. In a well considered and exhaustive opinion, the lower court sustained the petition and found that all of the legal rights of Federico Arquiza was vested in the petitioners, who were his legitimate children, and that, as such, they were entitled to one-third of the estate left by Francisco Arquiza, from which on appeal, the executrix and appellant assigns the following errors: I. The lower court erred in reopening the case motu propio so as to enable the petitionersappellees to introduce further evidence to cure the insufficiency of their evidence already presented after they had already voluntarily rested their case and the appellant has moved for the dismissal of the petition for lack of sufficient evidence to support the same. II. The lower court erred in holding that the alleged signature of Francisco Arquiza in the original Exhibit C is genuine. III. The lower court erred in holding that Federico Arquiza, father of the appellees Felicisimo and Soledad Arquiza, was a natural son of the deceased Francisco Arquiza. IV. The lower court erred in holding that Francisco Arquiza had duly and legally acknowledged Federico Arquiza as his natural son. V. The lower court erred in declaring them entitled to one-third of the estate left by him, and in not dismissing the petition of the appellees.

JOHNS, J.: The reopening of the case by the court on its own motion was largely a matter in its discretion and for the orderly administration of justice, and there is no merit in the first assignment of error. The storm center of this case is whether or not the signature of Francisco Arquiza which appears on Exhibit C is true and genuine. Exhibit B, which is a certified copy of the archives of the Catholic Church, is as follows: I, Father Gregorio Lofranco, Parish Priest of Calape, Province of Bohol, Diocese of Cebu, P. I. Certify: That the following entry appears on page 89 of Baptismal Book 8 of this parish: Upon the sixth day of November, eighteen hundred and eighty, in the Church under my charge, I, the undersigned Parish Priest of Calape, solemnly christened and anointed a boy named Federico Arquiza, born at seven o'clock in the morning of the first day of this month, to Francisco Arquiza, single, a normal teacher and a native of La Mercedes, Province of Zamboanga, and Anatolia Asilo, single, a weaver residing in this town, belonging to clan (Caveseria) No. 35 of Pablo Bulala. Grandparents on the father's side: Francisco Arquiza and Eugenia Sapanta, natives, now deceased. Grandparents on the mother's side: Gregorio Asilo, native, and Cornelia Enriquez, half Spaniard, belonging to the clan (Caveseria) of Pablo Bulala. Godfather: Eusebio Gonzalez, a native farmer who was advised of the spiritual relationship and obligations he contracted. Witnesses of the baptism and of this entry: Romualdo Cuario, a native of this parish, and Hilario Crusit, a native and resident of this town, and chief sexton of this church. In witness whereof, I sign. Fr. BERNARDO MENENDEZ DE LA DOLOROSA. I certify that this is a faithful copy of the original, and at the request of the interested party, I sign and issue these presents, in the presbytery of Calape, Bohol, on the ninth day of September, 1927. (Sgd.) GREGORIO LOFRANCO Parish Priest (One 20-cents documentary stamp affixed) Seal of the Church. As to the authenticity of Exhibit C, there was a sharp conflict in the evidence. Professor Jose I. del Rosario, who qualified as an expert, testified that in his opinion it was a forgery. A. D. Calhoun, the manager of the Cebu branch of the International Banking Corporation, and a man, who through his business, has had a large experience in the matter of signatures, testified that the signature was true and genuine, and even Professor Del Rosario admitted that there was a similarity between the writing in the body of Exhibit C and that of the unquestioned signature of Francisco Arquiza of about forty years later. Upon the question of the signature, the lower court says:

Although Professor Del Rosario may have given greater study to certain phases of the subject of handwriting than Mr. Calhoun, the court regards the testimony of the latter as more trustworthy in the present case, because Professor Del Rosario is an expert witness by profession and was brought from Manila to Cebu to uphold the theory of the opponent and is no more disinterested than the opponent's attorneys, while Mr. Calhoun is a banker living in Cebu and has absolutely no interest in the present case of the parties thereto. Professor Del Rosario did confine himself to a statement of the facts, and his opinion thereon, with his reasons for his opinion, but his testimony is really a brief for the opponent. In the light of these facts, the court cannot but regard his opinion as strongly biassed. It only remains to be added that the court was no more favorably impressed by the unjustifiable structures of the petitioners' attorney upon Professor Del Rosario than by the attempt of the attorney for the opponent to be facetious at the expense of Mr. Calhoun. But quite independently of the opinion of the experts, the court has compared the original of Exhibit C with the many different authentic examples of Francisco Arquiza's writing offered in evidence, and making allowance for variations due to the lapse of many years, the court is satisfied that this document, Exhibit C, was written and signed by Francisco Arquiza. This analysis of the lower court was confirmed by an ocular inspection of the same writing by all of the members of this court who are clearly of the opinion that the signature on Exhibit C is the true and genuine signature of Francisco Arquiza. In that instrument, dated November 7, 1880, Francisco Arquiza declared that he is engaged to marry Anatolia Asilo by whom "I have already had a child by her, named Federico who was born on the first instant." This instrument was found pinned and attached to Exhibit B which, among other things, recites that on the sixth day of November, eighteen hundred and eighty, the Parish Priest christened and anointed a boy named Federico Arquiza, who was born at 7 a.m. on November first, to Francisco Arquiza, single, a normal teacher, and Anatolia Asilo, single, a weaver, and that the witnesses of the baptism and of this instrument were Romualdo Cuario, a native of the Parish, and Hilario Crusit, also a native and chief sexton of the church. Under the law then existing, these archives of the church, as to the parentage, birth and baptism of Federico Arquiza are authentic, and, in the absence of any other evidence, must be deemed and taken as conclusive of the recitals therein made, all of which are materially strengthened and corroborated by Exhibit C. In the third assignment of error, it is vigorously contended that the boy, Federico Arquiza, was not a natural son of the deceased, Francisco Arquiza. Here, again, it will be noted that Exhibit C, which was signed by Francisco Arquiza on November 7, 1880, specifically recites "that I have already had a child by her, named Federico who was born on the first instant," and Exhibit B specifically recites that Federico Arquiza was born at 7 a. m. on November first, to Francisco Arquiza, single, a normal teacher, and Anatolia Asilo, single, a weaver. That is to say, that both the father and the mother were then single, and the fact that the father was a normal teacher, and the mother a weaver, would clearly indicate that there was no valid reason why they could not marry each other. It also appears that the only reason why they were not then married was on account of parental objections. Law 11 of the Laws of Toro, which were then in force, provides:

And for the purpose of avoiding doubt as to who are natural children, we order and decree that natural children are those, who, at the time of their birth or conception were of fathers who could have married their mothers properly and justly and without dispensation; provided that the father acknowledged such issue as his child, although he would not have had the woman with whom he had such relations in his house, or any other one. We decree that the child having the qualifications above mentioned is a natural child. And the appellant concedes that under this law: A child is deemed natural when at the time of its birth or conception, its parents could have married without dispensation. In the instant case, the record is conclusive that the father acknowledged Federico Arquiza as his child, and it is also conclusive that at the time of his birth or conception, his parents were single. Even so, the appellant contends that there is no evidence that they could have been then married "without dispensation." Neither is there any evidence that they could not have been married "without despensation," Conceding that to be true, there is no evidence tending to show that they could not have been married "without dispensation," and in the ordinary course of business, a single man and woman of legal age have the legal right to marry "without dispensation," and the denial of a marriage "without dispensation" is an exception to the general rule. The finding of the lower court that Federico Arquiza was a natural son of Francisco Arquiza is well sustained by the evidence. As to the fourth assignment of error, the lower court says: The fact that Federico Arquiza was the natural child of Francisco Arquiza and Anatolia Asilo and that he was recognized as such by his father is fully established by the testimony of Melchora Ponce, a pupil of Francisco Arquiza and a schoolmate of Antolia Asilo, and that of Fernando Bismonte, who taught in the same school with Francisco Arquiza and was messenger of Francisco Arquiza and Anatolia Asilo, and by the testimony of Juana Asilo, a sister of Anatolia Asilo, and that of Potenciana Rianbanansa, a pupil of Francisco Arquiza and a schoolmate of Anatolia Asilo. The authenticity of the baptismal certificate cannot be doubted. The evidence clearly shows that Francisco Arquiza was present when the child was baptized. Furthermore, no one else could have furnished the facts as to his parents, as he was not a native of Calape, but of Zamboanga. At the age of thirteen Federico Arquiza was removed by his father from Calape, Bohol, to Oroquieta, Misamis, and there brought up in the house of Francisco Arquiza and educated by him, and acknowledged and treated by Francisco Arquiza as his son. The treatment accorded by Francisco Arquiza to Federico Arquiza in Oroquieta serves to confirm the tacit recognition which he had given his son in Bohol. That finding is also well sustained by the evidence, and is in all things and respects approved.

As to the fifth assignment of error, the lower court cites and relies upon the case ofLarena and Larena vs. Rubio (43 Phil., 1017), and says: This is not an action to compel the recognition of Federico Arquiza under the provisions of the Civil Code. Such an action is barred. This is a proceeding to obtain a declaration of the rights of the petitioners as the legitimate children of Federico Arquiza to inherit in representation of their father from their grandfather. It was not necessary for Federico Arquiza to bring an action for recognition because he had acquired the status of a recognized natural child under Law 11 of Toro by the tacit recognition of his father. His vested rights were transmitted to his legitimate children, and they had no need to bring an action against Francisco Arquiza or his heirs to compel the recognition of their father, Federico Arquiza, as the natural son of Francisco Arquiza. If Federico Arquiza were still living, he could intervene in these proceedings for the distribution of the estate of his natural father, without the necessity of a proceeding to compel his recognition, as is required by the Civil Code; and Francisco Arquiza having left no legitimate descendants, or ascendants, Federico Arquiza, if he had survived his father, would have been entitled to one-third of the latter's estate. Article 842 of the Civil Code provides: If the testator leaves no legitimate ascendants or descendants, the acknowledged natural children shall be entitled to a third of the estate. And article 843 provides: The rights granted natural children by the preceding articles are transmitted on their death to their legitimate descendants. The facts found by the trial court and sustained by the evidence bring the appellees within those provisions. The well written opinion of the lower court in all things and respects is affirmed, with costs. So ordered. Avancea, C.J., Johnson, Street, Malcolm, Ostrand, Romualdez and Villa-Real, JJ., concur.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 163707 September 15, 2006

MICHAEL C. GUY, petitioner, vs. HON. COURT OF APPEALS, HON. SIXTO MARELLA, JR., Presiding Judge, RTC, Branch 138, Makati City and minors, KAREN DANES WEI and KAMILLE DANES WEI, represented by their mother, REMEDIOS OANES, respondents. DECISION YNARES-SANTIAGO, J.: This petition for review on certiorari assails the January 22, 2004 Decision1 of the Court of Appeals in CA-G.R. SP No. 79742, which affirmed the Orders dated July 21, 20002 and July 17, 20033 of the Regional Trial Court of Makati City, Branch 138 in SP Proc. Case No. 4549 denying petitioner's motion to dismiss; and its May 25, 2004 Resolution4 denying petitioner's motion for reconsideration. The facts are as follows: On June 13, 1997, private respondent-minors Karen Oanes Wei and Kamille Oanes Wei, represented by their mother Remedios Oanes (Remedios), filed a petition for letters of administration5 before the Regional Trial Court of Makati City, Branch 138. The case was docketed as Sp. Proc. No. 4549 and entitled Intestate Estate of Sima Wei (a.k.a. Rufino Guy Susim). Private respondents alleged that they are the duly acknowledged illegitimate children of Sima Wei, who died intestate in Makati City on October 29, 1992, leaving an estate valued at P10,000,000.00 consisting of real and personal properties. His known heirs are his surviving spouse Shirley Guy and children, Emy, Jeanne, Cristina, George and Michael, all surnamed Guy. Private respondents prayed for the appointment of a regular administrator for the orderly settlement of Sima Wei's estate. They likewise prayed that, in the meantime, petitioner Michael C. Guy, son of the decedent, be appointed as Special Administrator of the estate. Attached to private respondents' petition was a Certification Against Forum Shopping6 signed by their counsel, Atty. Sedfrey A. Ordoez. In his Comment/Opposition,7 petitioner prayed for the dismissal of the petition. He asserted that his deceased father left no debts and that his estate can be settled without securing letters of administration pursuant to Section 1, Rule 74 of the Rules of Court. He further argued that private respondents should have established their status as illegitimate children during the lifetime of Sima Wei pursuant to Article 175 of the Family Code. The other heirs of Sima Wei filed a Joint Motion to Dismiss8 on the ground that the certification against forum shopping should have been signed by private respondents and not their counsel.

They contended that Remedios should have executed the certification on behalf of her minor daughters as mandated by Section 5, Rule 7 of the Rules of Court. In a Manifestation/Motion as Supplement to the Joint Motion to Dismiss,9 petitioner and his coheirs alleged that private respondents' claim had been paid, waived, abandoned or otherwise extinguished by reason of Remedios' June 7, 1993 Release and Waiver of Claim stating that in exchange for the financial and educational assistance received from petitioner, Remedios and her minor children discharge the estate of Sima Wei from any and all liabilities. The Regional Trial Court denied the Joint Motion to Dismiss as well as the Supplemental Motion to Dismiss. It ruled that while the Release and Waiver of Claim was signed by Remedios, it had not been established that she was the duly constituted guardian of her minor daughters. Thus, no renunciation of right occurred. Applying a liberal application of the rules, the trial court also rejected petitioner's objections on the certification against forum shopping. Petitioner moved for reconsideration but was denied. He filed a petition for certiorari before the Court of Appeals which affirmed the orders of the Regional Trial Court in its assailed Decision dated January 22, 2004, the dispositive portion of which states: WHEREFORE, premises considered, the present petition is hereby DENIED DUE COURSE and accordingly DISMISSED, for lack of merit. Consequently, the assailed Orders dated July 21, 2000 and July 17, 2003 are hereby both AFFIRMED. Respondent Judge is hereby DIRECTED to resolve the controversy over the illegitimate filiation of the private respondents (sic) minors [-] Karen Oanes Wei and Kamille Oanes Wei who are claiming successional rights in the intestate estate of the deceased Sima Wei, a.k.a. Rufino Guy Susim. SO ORDERED.10 The Court of Appeals denied petitioner's motion for reconsideration, hence, this petition. Petitioner argues that the Court of Appeals disregarded existing rules on certification against forum shopping; that the Release and Waiver of Claim executed by Remedios released and discharged the Guy family and the estate of Sima Wei from any claims or liabilities; and that private respondents do not have the legal personality to institute the petition for letters of administration as they failed to prove their filiation during the lifetime of Sima Wei in accordance with Article 175 of the Family Code. Private respondents contend that their counsel's certification can be considered substantial compliance with the rules on certification of non-forum shopping, and that the petition raises no new issues to warrant the reversal of the decisions of the Regional Trial Court and the Court of Appeals. The issues for resolution are: 1) whether private respondents' petition should be dismissed for failure to comply with the rules on certification of non-forum shopping; 2) whether the Release and Waiver of Claim precludes private respondents from claiming their successional rights; and 3) whether private respondents are barred by prescription from proving their filiation. The petition lacks merit.

Rule 7, Section 5 of the Rules of Court provides that the certification of non-forum shopping should be executed by the plaintiff or the principal party. Failure to comply with the requirement shall be cause for dismissal of the case. However, a liberal application of the rules is proper where the higher interest of justice would be served. InSy Chin v. Court of Appeals,11 we ruled that while a petition may have been flawed where the certificate of non-forum shopping was signed only by counsel and not by the party, this procedural lapse may be overlooked in the interest of substantial justice.12 So it is in the present controversy where the merits13 of the case and the absence of an intention to violate the rules with impunity should be considered as compelling reasons to temper the strict application of the rules. As regards Remedios' Release and Waiver of Claim, the same does not bar private respondents from claiming successional rights. To be valid and effective, a waiver must be couched in clear and unequivocal terms which leave no doubt as to the intention of a party to give up a right or benefit which legally pertains to him. A waiver may not be attributed to a person when its terms do not explicitly and clearly evince an intent to abandon a right.14 In this case, we find that there was no waiver of hereditary rights. The Release and Waiver of Claim does not state with clarity the purpose of its execution. It merely states that Remedios received P300,000.00 and an educational plan for her minor daughters "by way of financial assistance and in full settlement of any and all claims of whatsoever nature and kind x x x against the estate of the late Rufino Guy Susim."15 Considering that the document did not specifically mention private respondents' hereditary share in the estate of Sima Wei, it cannot be construed as a waiver of successional rights. Moreover, even assuming that Remedios truly waived the hereditary rights of private respondents, such waiver will not bar the latter's claim. Article 1044 of the Civil Code, provides: ART. 1044. Any person having the free disposal of his property may accept or repudiate an inheritance. Any inheritance left to minors or incapacitated persons may be accepted by their parents or guardians. Parents or guardians may repudiate the inheritance left to their wards only by judicial authorization. The right to accept an inheritance left to the poor shall belong to the persons designated by the testator to determine the beneficiaries and distribute the property, or in their default, to those mentioned in Article 1030. (Emphasis supplied) Parents and guardians may not therefore repudiate the inheritance of their wards without judicial approval. This is because repudiation amounts to an alienation of property16 which must pass the court's scrutiny in order to protect the interest of the ward. Not having been judicially authorized, the Release and Waiver of Claim in the instant case is void and will not bar private respondents from asserting their rights as heirs of the deceased. Furthermore, it must be emphasized that waiver is the intentional relinquishment of a known right. Where one lacks knowledge of a right, there is no basis upon which waiver of it can rest. Ignorance of a material fact negates waiver, and waiver cannot be established by a consent given under a mistake or misapprehension of fact.17

In the present case, private respondents could not have possibly waived their successional rights because they are yet to prove their status as acknowledged illegitimate children of the deceased. Petitioner himself has consistently denied that private respondents are his co-heirs. It would thus be inconsistent to rule that they waived their hereditary rights when petitioner claims that they do not have such right. Hence, petitioner's invocation of waiver on the part of private respondents must fail. Anent the issue on private respondents' filiation, we agree with the Court of Appeals that a ruling on the same would be premature considering that private respondents have yet to present evidence. Before the Family Code took effect, the governing law on actions for recognition of illegitimate children was Article 285 of the Civil Code, to wit: ART. 285. The action for the recognition of natural children may be brought only during the lifetime of the presumed parents, except in the following cases: (1) If the father or mother died during the minority of the child, in which case the latter may file the action before the expiration of four years from the attainment of his majority; (2) If after the death of the father or of the mother a document should appear of which nothing had been heard and in which either or both parents recognize the child. In this case, the action must be commenced within four years from the finding of the document. (Emphasis supplied) We ruled in Bernabe v. Alejo18 that illegitimate children who were still minors at the time the Family Code took effect and whose putative parent died during their minority are given the right to seek recognition for a period of up to four years from attaining majority age. This vested right was not impaired or taken away by the passage of the Family Code.19 On the other hand, Articles 172, 173 and 175 of the Family Code, which superseded Article 285 of the Civil Code, provide: ART. 172. The filiation of legitimate children is established by any of the following: (1) The record of birth appearing in the civil register or a final judgment; or (2) An admission of legitimate filiation in a public document or a private handwritten instrument and signed by the parent concerned. In the absence of the foregoing evidence, the legitimate filiation shall be proved by: (1) The open and continuous possession of the status of a legitimate child; or (2) Any other means allowed by the Rules of Court and special laws. ART. 173. The action to claim legitimacy may be brought by the child during his or her lifetime and shall be transmitted to the heirs should the child die during minority or in a

state of insanity. In these cases, the heirs shall have a period of five years within which to institute the action. The action already commenced by the child shall survive notwithstanding the death of either or both of the parties. ART. 175. Illegitimate children may establish their illegitimate filiation in the same way and on the same, evidence as legitimate children. The action must be brought within the same period specified in Article 173, except when the action is based on the second paragraph of Article 172, in which case the action may be brought during the lifetime of the alleged parent. Under the Family Code, when filiation of an illegitimate child is established by a record of birth appearing in the civil register or a final judgment, or an admission of filiation in a public document or a private handwritten instrument signed by the parent concerned, the action for recognition may be brought by the child during his or her lifetime. However, if the action is based upon open and continuous possession of the status of an illegitimate child, or any other means allowed by the rules or special laws, it may only be brought during the lifetime of the alleged parent. It is clear therefore that the resolution of the issue of prescription depends on the type of evidence to be adduced by private respondents in proving their filiation. However, it would be impossible to determine the same in this case as there has been no reception of evidence yet. This Court is not a trier of facts. Such matters may be resolved only by the Regional Trial Court after a full-blown trial. While the original action filed by private respondents was a petition for letters of administration, the trial court is not precluded from receiving evidence on private respondents' filiation. Its jurisdiction extends to matters incidental and collateral to the exercise of its recognized powers in handling the settlement of the estate, including the determination of the status of each heir.20 That the two causes of action, one to compel recognition and the other to claim inheritance, may be joined in one complaint is not new in our jurisprudence.21 As held in Briz v. Briz:22 The question whether a person in the position of the present plaintiff can in any event maintain a complex action to compel recognition as a natural child and at the same time to obtain ulterior relief in the character of heir, is one which in the opinion of this court must be answered in the affirmative, provided always that the conditions justifying the joinder of the two distinct causes of action are present in the particular case. In other words, there is no absolute necessity requiring that the action to compel acknowledgment should have been instituted and prosecuted to a successful conclusion prior to the action in which that same plaintiff seeks additional relief in the character of heir. Certainly, there is nothing so peculiar to the action to compel acknowledgment as to require that a rule should be here applied different from that generally applicable in other cases. x x x The conclusion above stated, though not heretofore explicitly formulated by this court, is undoubtedly to some extent supported by our prior decisions. Thus, we have held in numerous cases, and the doctrine must be considered well settled, that a natural child

having a right to compel acknowledgment, but who has not been in fact acknowledged, may maintain partition proceedings for the division of the inheritance against his coheirs (Siguiong vs. Siguiong, 8 Phil., 5; Tiamson vs. Tiamson, 32 Phil., 62); and the same person may intervene in proceedings for the distribution of the estate of his deceased natural father, or mother (Capistrano vs. Fabella, 8 Phil., 135; Conde vs. Abaya, 13 Phil., 249; Ramirez vs. Gmur, 42 Phil., 855). In neither of these situations has it been thought necessary for the plaintiff to show a prior decree compelling acknowledgment. The obvious reason is that in partition suits and distribution proceedings the other persons who might take by inheritance are before the court; and the declaration of heirship is appropriate to such proceedings. WHEREFORE, the instant petition is DENIED. The Decision dated January 22, 2004 of the Court of Appeals in CA-G.R. SP No. 79742 affirming the denial of petitioner's motion to dismiss; and its Resolution dated May 25, 2004 denying petitioner's motion for reconsideration, are AFFIRMED. Let the records be REMANDED to the Regional Trial Court of Makati City, Branch 138 for further proceedings. SO ORDERED. Panganiban, C.J., Chairperson, Austria-Martinez, Callejo, Sr., Chico-Nazario, J.J., concur.

Rule 87 Republic of the Philippines SUPREME COURT Manila EN BANC March 21, 1910 G.R. No. 5480 RICARDO LOPEZ, ET AL., plaintiffs-appellants, vs. ADOLFO OLBES, executor of the estate of Martina Lopez, defendant-appellee. C. M. Villareal, for appellants. Manly & McMahon, for appellees. TORRES, J.: On October 13, 1908, Ricardo Lopez, in his own behalf Josefina Lopez y Jaucian and her husband, Ceferino M. Villareal, and Encarnacion, Jose, and Amparo Lopez y Jaucian brought suit against Adolfo Olbes, the testamentary executor of the deceased Martina Lopez, alleging in their complaint that the latter, on the 14th of May, 1907, executed a public instrument before the notary Felix Samson whereby she donated to the plaintiffs a parcel of hemp land situated at the place called Ali, in the pueblo of Guinobatan, Albay, containing an area of 162 hectares, 2 areas, and 50 centares, the boundaries of which are expressed in the said instrument; that this property was inscribed in the registry of property of Albay in the name of the deceased Antonio Lopez, the predecessor in interest of the said Martina Lopez, also deceased; that, by virtue of the said donation, Ricardo Lopez was entitled to the usufruct of the real property concerned, and that the other plaintiffs, Josefina, Encarnacion, Jose, and Amparo, all surnamed Lopez y Jaucian, were the equal owners thereof in fee simple; that on the same date, May 14, 1907, the said donation was accepted by Ricardo Lopez on his own behalf and in representation of the minor children above designated, and the donor, Martina Lopez, on the same date, was duly notified of the said acceptance; that the said Martina Lopez was the legitimate mother of the plaintiff Ricardo Lopez, and the other plaintiffs, Josefina, Encarnacion, Jose, and Amparo, the legitimate children of Ricardo Lopez, were her ligitimate grandchildren; that Adolfo Olbes was the testamentary executor duly appointed by order issued by the Court of First Instance, on April 22, 1908, in proceedings No. 918, entitled: In the matter of the estate of the deceased Martina Lopez; that the said Olbes, as executor, claimed to have rights of ownership and possession to the aforementioned land adverse to those then held by the plaintiffs, inasmuch as the said estate still continued to belong to the deceased Martina Lopez and was then in charge of a trustee by virtue of an agreement had between the attorneys of the executor and the plaintiff Ricardo Lopez, on April 18, and of the order issued by the court on the same date in the aforesaid probate proceedings; and the complaint concluded by asking that a guardian ad litem be appointed, who should be the plaintiffs; that judgment be rendered in the latter's favor and against the defendant for the ownership and possession of the said land, and that the trusteeship over the same be declared dissolved and the trustee be ordered to render an accounting, and that the amounts or products which he might have in his possession be adjudicated to the plaintiffs, with the costs against the defendant.

The defendant, having been summoned, filed a demurrer in writing, on November 23, 1908, alleging that the facts set forth in the complaint did not constitute a right of action, inasmuch as the plaintiffs, as the heirs or donees, could not maintain any suit against the testamentary executor to recover the title or possession of the land so long as the court had not adjudicated the estate to them or until the time allowed for paying the debts should have expired, unless they be give possession of the said land by the executor. Counsel for the plaintiffs, in answer to the demurrer, set forth that the terms of section 704 of the Code of Civil Procedure do not comprise donees, but merely heirs or devisees, because, although in the first part of the said section the word donatario (donee) appears, the subsequent paragraphs contain only the words heredero o' legatario (heir or devisee), it appearing to be evident that the Spanish translation of the said section is not correct; the English text thereof is given wherein the word "donee" does not appear, only the words "heir" and "devisee," which mean heredero and legatario; this is apparently confirmed by the precedents of existing legislation, quoted by counsel, and therefore the prohibition contained in the aforesaid section of the Code of Civil Procedure only refers to the heir or devisee, and in nowise to the donee, whose title is derived from a donation inter vivos, the legal effects of which are those of a real contract which is binding on the donor from the moment of its acceptance; that the donations which are to become effective inter vivos are governed by the provisions concerning contracts and obligations (art. 621, Civil Code), and that the rule that the plaintiffs' right cannot be enforced in an ordinary action, but in probate proceedings only, solely refers to the questions involving the status of heirs and their share in the inheritance and not to that class of actions provided for in section 699 of the Code of Civil Procedure, counsel citing decisions rendered in suits against testamentary executors or administrators, as the case of Hijos de I. de la Rama vs. The Estate of Benedicto (5 Phil. Rep., 512), and that of Sunico vs. Chuidian (9 Phil. Rep., 625); and for all the foregoing reasons the plaintiffs requested that the demurrer interposed by the defendant be dismissed and that he be ordered to answer the complaint within the period allowed by law. The demurrer having been heard, the judge, on February 26, 1909, issued an order sustaining the said demurrer and directing that the same, as an incidental proceeding, be attached to the record of the probate proceedings of the deceased Martina Lopez. By virtue of the petition presented by the plaintiffs asking for final judgment and the appointment of Ricardo Lopez as guardian ad litem of the other plaintiff minors, the judge issued an order on March 6, 1909, amending the preceding one by admitting the demurrer authorizing the plaintiff to amend his complaint, with the understanding that should be not file an amended complaint within the time allowed by law the case would be dismissed, with the costs against the plaintiff; this order was attached to the record of the said probate proceedings, and he appointed Ricardo Lopez guardian ad litem to represent the minor plaintiffs in the litigation. On March 9, 1909, the plaintiffs filed a written amended complaint, a reproduction of the previous one, although this was done by Ricardo Lopez on his own behalf and in representation of his minor children, also plaintiffs, as their guardian ad litem, and by Ceferino M. Villareal as the husband of the plaintiff Josefina Lopez. The defendant, being informed of the foregoing amended complaint, again demurred to the same on the grounds that the facts therein alleged did not constitute a right of action, inasmuch as in the amended complaint, which is a reproduction of the previous one, no new allegation

was made that might supply the deficiency of right of action on the part of the plaintiffs in their endeavor to obtain a reversal of the judgment rendered, without employing legal remedies against the order of March 6; wherefore the defendant prated the court to allow this new demurrer, to dismiss the amended complaint, and to adjudge the plaintiffs to pay the costs. The hearing on this demurrer having been had, the judge, by order of March 24, 1909, sustained the same and dismissed the case with the costs against the plaintiffs, and provided that this question should be determined in the hearing on the said probate proceedings. In another document of the date of March 26, 1909, counsel for the plaintiffs stated to the court that the latter desired to appeal from the said ruling to the Supreme Court, and prayed that final judgment be rendered in the case in conformity with section 101 of the Code of Civil Procedure and the doctrine established in the case of Serrano vs. Serrano (Phil. Rep., 142), in order that he might perfect and duly submit his appeal; but court, by an order of the 27th of the same month, ruled that the case having been dismissed, with the costs against the plaintiffs, in the ruling on the last demurrer of March 24, this decision was final and appealable. From this ruling counsel for the plaintiffs appeal and stated in writing that the latter also appealed from the rulings of February 26 and March 24, 1909, and announced their intention to file the requisite bill of exceptions. The court, by order of May 8, 1909, on the grounds therein set fourth and in view of plaintiffs' written petition of March 26, rendered judgment against the plaintiffs and in favor of the defendant, and, finding that the allegations made in the complaint were not sufficient to constitute an action, dismissed the complaint with the costs against the plaintiffs, and ordered, moreover, that after the parties had been notified of this judgment a copy thereof, as an integral part of the bill of exceptions submitted, be forwarded to the Supreme Court. This is question of maintaining the rights acquired by the plaintiffs by virtue of a donation of land situated at the place called Ali, in the pueblo of Guinobatan, Albay, the boundaries of which are expressed in the complaint, against the claims of the testamentary administrator of the property left by the late Martina Lopez, who was the donor of the said land. Although in paragraph No. 5 of the amended complaint the donees affirm that they took possession of the land in question, it is certain that the executor, who claims to have rights as such to the possession of the said land, succeeded in having the same placed in trust, inasmuch as one of the petitions of the plaintiffs is to request that the trusteeship over the property be declared dissolved. The Civil Code provides as follows: ART. 618 A gift is an act of liberality by which a person disposes gratuitously of a thing in favor of another, who accepts it. ART. 624 All persons who can contract and dispose of their property may bestow gifts. ART. 625 All persons who are not especially disqualified by law therefor may accept gifts. ART. 620 Gifts which are to become effective upon the death of the donor partake of the nature of provisions by last will and shall be governed by the laws established for testamentary succession.

(These gifts are denominated in law mortis causa.) ART. 621 Gifts which are to produce their effects inter vivos shall be governed by the general provisions of contracts and obligations in all that is not determined in this title. ART. 623 A gift is consummated upon the donor having knowledge of its acceptance by the donee. ART. 633 In order that a gift of real property may be valid it shall be made in a public instrument, stating therein in detail the property bestowed as a gift and the amount of the charges, which the donee must satisfy. The acceptance may be made in the same instrument bestowing the gift or in a different one; but it shall produce no effect if not made during the life of the donor. If made in a different instrument the acceptance shall be communicated to the donor in an authentic manner, and this proceeding shall be recorded in both instruments. The action exercised by Ricardo Lopez in his own behalf and as guardian of his minor children, and by Josefina Lopez, assisted by her husband Ceferino M. Villareal, in their character of donees, is based on the rights which as such donees they had acquired by virtue of the donation inter vivos made by Martina Lopez during her lifetime in favor of the plaintiffs by an instrument executed by the donor before a notary on May 14, 1907, a donation expressly accepted on the same date by the donees and of which acceptance the donor was also informed on the same date; wherefore, these requirements of the law having been complied with, it is unquestionable that the dominion over the land donated was property transmitted to the donees who in fact and by operation of the law acquired the ownership of the property, as customarily occurs in all contracts of transfer of dominion. The said action with its motive and grounds may be impugned for any reason based on the nullity or on the irregular nature of the donation, tending to make it inefficacious or to reduce it; but these exceptions, as well as those founded on some defect or vice, which affect the essential nature and formalities of the act or contract or the main questions relative thereto, must be heard and argued in an ordinary action, and must be decided in accordance with law by a final judgment, and not by a ruling on a demurrer which ordinarily occurs in connection with an incidental motion concerning mere formalities of procedure and not in a full trial or due process of law wherein the rights of the contestant have been examined, argued, and proved. Property of the testate estate of the deceased Martina Lopez is not here concerned. During her lifetime she gave away the land mentioned, in the exercise of a right that pertained to her as owner thereof. By virtue of the said donation the sole and true owners of the land donated are the plaintiffs, so long as the said donation is not proven to be null, inefficacious, or irregular. All the questions which by reason of the same are raised by the interested parties must be heard in a regular trial and decided by a final judgmet absolutely independent of the probate proceedings concerning the estate of the deceased, who was the previous owner of the land concerned; and therefore the complaint of the donees should not have been dismissed, but the trial should have been proceeded with to final judgment. The prima facie donation inter vivos and its acceptance by the donees having been proved by means of a public instrument, and the donor having been duly notified of said acceptance, the contract is perfect and obligatory and its perfectly in order

to demand its fulfillment, unless an exception is proved which is based on some legal reason opportunely alleged by the donor or her heirs. So long as the donation in question has not been judicially proved and declared to be null, inefficacious, or irregular, the land donated is of the absolute ownership of the donees and, consequently, does not form a part of the property of the estate of the deceased Martina Lopez; wherefore the action instituted demanding compliance with the contract, the delivery by the deforciant of the land donated, or that it be prohibited to disturb the right of the donees, should not be considered as incidental to the probate proceedings aforementioned. The question as to whether the provisions of articles 634, 636, and 643 of the Civil Code were observed or violated should be tried and decided in an ordinary action. With respect to whether the donees inter vivos are or are not comprised within the provisions of section 704 of the Code of Civil Procedure , the English text of the said section, which, in case of disagreement with the Spanish, is the one that must prevail and be observed, in accordance with Act. No. 63 of the Philippine Commission, conclusively proves that an important mistake was made in the draft of the Spanish text, by using the word donatario (donee), which is not expressed in the English text, the exact translation of which into Spanish could not comprise the donee among the heirs and devisees, as was improperly done; wherefore the demurrer should have been overruled, as it is based on an error so notably unmaintainable under the general principles of law, and in particular taking into account the legal provisions relative to the respective character, condition, and juridical conception of heir, devisee, and donee. For the foregoing reasons, we hold that the orders of February 26, March 6, 24, and 27, together with the additional order of May 8, 1909, should be and are hereby revoked, and the case shall be returned to the Court of First Instance in order that the defendant may answer the amended complaint within the regular legal period and the trial may them be had in all its proceedings and in accordance with law. So ordered. Johnson, Carson and Moreland, JJ., concur.

Rule 88 Republic of the Philippines SUPREME COURT Manila EN BANC March 18, 1907 G.R. No. 3083 RAFAELA PAVIA, ET AL., plaintiffs-appellees, vs. BIBIANA DE LA ROSA, ET AL., defendants-appellants. R. Salinas for appellants. Thos. D. Aitken for appellees. TORRES, J.: By an amended complaint filed on the 23rd of November, 1904, in the Court of First Instance of Manila, the plaintiffs prayed that a judgment be rendered in their favor and against the defendants for the sum of 15,000 pesos, Philippine Currency, as damages, together with costs of action, alleging in effect that by reason of the death of the testator, Pablo Linart e Iturralde, Francisco Granda e Iturralde was appointed executor under the will of the said deceased, in which will the minor Carmen Linart y Pavia was made the only universal heir, and that owing to the death of the executor Francisco Granda toward the end of December, 1893, there was substituted as executor Jose de la Rosa, who took possession of the personal property of the state, amounting to 10,673 pesos, Mexican Currency, as well as the property situated at No. 27 Calle Solana, Walled City, likewise the property of the testator; that during the month of April, 1904, the plaintiff, Rafaela Pavia, in her own behalf, and as guardian of Carmen Linart y Pavia, executed a power of attorney in behalf of the aforesaid Jose de la Rosa with the powers therein expressed, and the attorney having accepted such power proceeded to administer the aforesaid estate in a careless manner until the 20th of August, 1903, neglecting the interests of the plaintiffs and wasting the capital, and causing damages amounting to over 15,000 pesos, Philippine currency, owing to the fact of having retired or disposed of without any necessity the sum of 7,207 pesos Mexican currency, together with interest thereon amounting to 360.25 pesos, which amounts would have produced 12,321.90 pesos, Mexican currency, for the plaintiffs; that the executor and attorney De la Rosa neglected to appraise, count, and divide the estate of Linart, deceased, notwithstanding it was his duty to do so, and leased the aforesaid house No. 27 Calle Solana to his relatives from December, 1893, to August, 1903, at a much lower rental than could have been obtained, thereby causing the plaintiffs losses amounting to 6,570 pesos, Mexican Currency; that the aforesaid Jose de la Rosa died on the 14th of September, 1903, leaving the defendants Bibiana and Salud de la Rosa as his only heirs and representatives, Eusebio Canals being the husband of the said Bibiana. The demurrer filed by the defendants was overruled and through their attorney, Ramon Salinas, they answered the former amended complaint praying judgment in their behalf, as against the plaintiffs for the payment of the sum of 1,794.42 5/8 pesos, Mexican currency, as a counterclaim, and for the costs, and denying specifically facts 1, 2, and 9 of the amended complaint; admitting facts 3, 4, 6, 7, 10, and 11 of the same; that they admit the facts stated in

paragraph 5 and 8, respectively, in that the said De la Rosa at the death of said Granda substituted him, the said Granda, as executor, and the fact regarding the omission of the making of the partition of the properties pertaining to the estate deceased, and denying all others referring to the properties taken charge of by the said De la Rosa and the rendering of accounts; that in their special defense they allege that they, the defendants, are not responsible for the personal actions of the person from whom they deprived their possession and title, against whom the plaintiffs neglected to bring action during his lifetime, and even then being without any justifiable reason as they now actually pretented; that the deceased De la Rosa upon his taking charge of the properties of the said estate only received from the window of the former execution the draft of payment on the Caja de Depositos (Savings Bank) for the said sum of 7,207 pesos together with interest at the rate of 5 per cent, and not the amount referred to by the plaintiffs, as well as taking over the charge of the said property at No. 27. They further admitted that in 1894, De al Rosa, duly authorized by the plaintiff Rafaela Pavia and with the formalities of law and in order to attend to the maintenance or subsistence of same (the plaintiffs) who were them in Spain, withdrew from the Caja de Depositos (Saving Bank) the said capital, together with interest thereon, which two sums together with the rentals of the aforesaid house have been paid out in full by De la Rosa in the maintenance and support of the plaintiffs and in the care of the building and property and other expenses well known to the same plaintiffs; that, during the time of his administration, De la Rosa rendered accounts on two different occasions, which said accounts showed all transactions had during the entire period of his administration; that Seora Pavia did not object to the first account rendered although she had the same in her possession for three years; that the rents mentioned were adequate with respect to the value of the building erected on land belonging to some other person; that having paid out in expenses all of the money belonging to the estate, of which estate the daughter of the testator is the only heir and the owner of the said house, the partition of same was therefore impracticable, and that the plaintiffs were then indebted to De la Rosa in the amount claimed in the counterclaim and which amount is the balance due to De la Rosa and mentioned in the last account rendered. After hearing the oral testimony presented by both parties, including the documentary evidence attached to the record herein, the court below, on October 13, 1905, rendered judgment in favor of the plaintiffs and against the defendants for 3,488.27 pesos, Mexican currency, equivalent to P3,171.09, Philippine currency, together with interest thereon at rate of 6 per cent per annum from the 27th day of June, 1904, and the costs of the action, from which judgment the defendants filed an exceptions and moved for a new trial, which motion was also denied. The action brought by the plaintiffs, as has been seen, has for its object that of making effective, or of collecting by means of a judgment of the court, the amount of damages alleged to have been caused by De la Rosa, now deceased, to the plaintiffs in the performance of his duties during his lifetime, as attorney for Rafaela Pavia, guardian of the minor Carmen Linart. The defendants, Bibiana and Salud de la Rosa and her husband, in answering the complaints filed by the plaintiffs allege, among other reasons, that they are not responsible for the personal acts of De la Rosa, now deceased, and from whom they derived their right and title; and perhaps owing to this allegation the plaintiffs, with the consent of the court, filed in writing the additional pleading on March 10, 1905, in the Court of First Instance, amending their amended complaint in the following terms:

That the aforesaid Jose de la Rosa on September 14, 1903, leaving as his only heirs and representatives the defendants Bibiana and Salud de la Rosa and that said defendants Bibiana and Salud de la Rosa received and accepted from the estate of the said Jose de la Rosa the aforesaid inheritance without benefit of inventory and received and divided among and between themselves, as such heirs, all of the estate, property, and effects left by the aforesaid deceased Jose de la Rosa. It has not been shown, as appears by the record in this cause, that the estate or the intestate succession of the deceased, Jose de la Rosa, was ever opened or that an such inventory ever been presented in evidence in this cause, notwithstanding that at the time of the death of De la Rosa, on the 14th day of September, 1903, the Code of Civil Procedure that is, Act No. 190 was already in force, and that in accordance with its provisions the estate of the deceased should have been administered and liquidated. The provisions of this law of procedure have abrogated, among others, the provisions of article 1003 of the Civil Code and other in relation to the same article with regard to the simple acceptance of the estate of a deceased person, or to that made with benefit of inventory and the consequences thereof. In accordance with the provisions of the aforesaid Act No. 190 it is understood that a estate or intestate succession of a deceased person is always accepted and received with benefit of inventory, and his heirs, even after having taken possession of the estate of the deceased, do not make themselves responsible for the debts of said deceased with their own property, but solely with that property coming from the estate or intestate succession of said deceased. The Code of Civil Procedure now in force makes necessary the opening of a testate or intestate succession immediately after the death of the person whose estate is to be administered, the appointment of an executor or administrator, the taking of an inventory of the estate of the deceased, and the appointment of two or more commissioners for the purpose of appraising the property of the estate and deciding as to the claims against said estate (Secs. 641, 642, 656, 660, 668, 669, Code of Civil Procedure.) Section 596 of the aforesaid code provides, nevertheless, for the extrajudicial division of an intestate estate among the heirs of legal age, whether the succession is free from debts or whenever such debts have been paid by the heirs, without proceedings in court, and without prejudice to the right of any creditor therein within the period of two years commencing from the date of the partition of the property belonging to the estate, a right recognized in section 597 of the said code. The powers and duties of the commissioners are established in section 686, and those following, of the Code of Civil Procedure, which sections determine the proceedings which must be followed to admit, hear, and examine all claims filed against the estate of the deceased. With regard to the executor or administrator of the estate of the deceased, section 702 of the Code of Civil Procedure provides: An executor or administrator may commence, prosecute, or defend, in the right of the deceased, actions which survive to such executor or administrator and are necessary for the recovery and protection of the property or rights of the deceased, and may prosecute or defend such actions or suits commenced in the lifetime of the deceased.

From the above-quoted, as well as from the following sections and others included in Part II of the aforesaid Code of Civil Procedure, it is deduced that after the death of a person the only entity which may lawfully represent a testate or intestate succession is the executor or administrator appointed by the court charged to care for, maintain, and administer the estate of the deceased in such of lands, or for damages done to such lands, shall be instituted or maintained against him by an heir or devisee, until such time as there is entered s decree of the court assigning such lands to the heir or devisee, or until the time or period allowed for paying the debts of the estate has expired, unless the executor or administrator surrenders the possession of the lands to the heir or devisee. (Sec. 704, Code of Civil Procedure.) And lastly for the partition of the properties belonging to the estate, section 753 of said code provides: After payment of the debts, funeral charges, and expenses of administration, and the allowances, if any, made for the expense of maintenance of the family of the deceased, the court shall assign the residue of the estate to the person entitled to the same, and the court in its decree shall name the persons and proportions or parts to which each is entitled, and such persons may demand and recover their respective shares from the executor or administrator, or from any other person having the same in his possession. From the legal provisions contained in the aforesaid code with regard to estate or intestate succession, it is deduced that the heir lawfully succeeds the deceased from whom he derives his inheritance only after the liquidation of the estate, the payment of the debts of same and the adjudication of the residue of the estate of said deceased, and in the meantime the only person in charge by law to consider all claims against the estate of the deceased and to attend to or consider the same is the executor or administrator appointed by a competent judge or court. From the above it appears evident that whatever may be the rights of action on the part of Rafaela Pavia and the minor, Carmen Linart, the latter represented by the former as guardian, as to the obligations assumed by Jose de la Rosa, now deceased, it must be prosecuted against the executor or administrator of the estate of said deceased Jose de la Rosa, whose executor or administrator is at this time the only representative of the estate or intestate succession of said deceased; and that in view of this fact and considering the law before us, they should not have brought action against Bibiana and Salud de la Rosa for the mere fact that they were the sisters of said deceased Jose de la Rosa, inasmuch as it is actually shown that the defendant De la Rosa died intestate or left during his lifetime any will, or that the two defendants are the heirs of the deceased by virtue of an executed will or by reason of existing law, or whether or not the deceased has left properties, or who is the executor or administrator of the said properties, or whether the properties belonging to the estate of the deceased brother of the defendants were ever adjudicated or partitioned by virtue of an order of court in favor of the defendants. Wherefore, taking into consideration the reasons and facts hereinbefore given, we reverse the judgment appealed from, and find for the defendants Bibiana and Salud de la Rosa, and Eusebio Canals, without special finding as to the costs herein, reserving to the plaintiffs to right to institute proper action against the executor or administrator of the properties of the estate of the deceased, Jose de la Rosa, in accordance with the provisions of the Code of Civil Procedure now in force covering the subject-matter herein.

After the expiration of twenty days from the date of the notification of this decision, let judgment be entered in accordance herewith, and ten days thereafter let the case be remanded to the court from whence it came for proper action. So ordered. Arellano, C.J., Mapa, Johnson, Willard, and Tracey, JJ., concur.

Rule 89 THIRD DIVISION

[G.R. No. 156403. March 31, 2005]

JOSEPHINE PAHAMOTANG and ELEANOR PAHAMOTANG-BASA, petitioners, vs. THE PHILIPPINE NATIONAL BANK (PNB) and the HEIRS OF ARTURO ARGUNA, respondents. DECISION GARCIA, J.: Assailed and sought to be set aside in this appeal by way of a petition for review on certiorari under Rule 45 of the Rules of Court are the following issuances of the Court of Appeals in CA-G.R. CV No. 65290, to wit: 1. Decision dated March 20, 2002,[1] granting the appeal and reversing the appealed August 7, 1998 decision of the Regional Trial Court at Davao City; and 2. Resolution dated November 20, 2002, denying herein petitioners' motion for reconsideration.[2] The factual background: On July 1, 1972, Melitona Pahamotang died. She was survived by her husband Agustin Pahamotang, and their eight (8) children, namely: Ana, Genoveva, Isabelita, Corazon, Susana, Concepcion and herein petitioners Josephine and Eleonor, all surnamed Pahamotang. On September 15, 1972, Agustin filed with the then Court of First Instance of Davao City a petition for issuance of letters administration over the estate of his deceased wife. The petition, docketed as Special Case No. 1792, was raffled to Branch VI of said court, hereinafter referred to as the intestate court. In his petition, Agustin identified petitioners Josephine and Eleonor as among the heirs of his deceased spouse. It appears that Agustin was appointed petitioners' judicial guardian in an earlier case - Special Civil Case No. 1785 also of the CFI of Davao City, Branch VI. On December 7, 1972, the intestate court issued an order granting Agustins petition. On July 6, 1973, respondent Philippine National Bank (PNB) and Agustin executed an Amendment of Real and Chattel Mortgages with Assumption of Obligation. It appears that earlier, or on December 14, 1972, the intestate court approved the mortgage to PNB of certain assets of the estate to secure an obligation in the amount of P570,000.00. Agustin signed the document in behalf of (1) the estate of Melitona; (2) daughters Ana and Corazon; and (3) a logging company named Pahamotang Logging Enterprises, Inc. ( PLEI) which appeared to have an interest in the properties of the estate. Offered as securities are twelve (12) parcels of registered land, ten (10) of which are covered by transfer certificates of title (TCT) No. 2431, 7443, 8035, 11465, 21132, 4038, 24327, 24326, 31226 and 37786, all of the

Registry of Deeds of Davao City, while the remaining two (2) parcels by TCTs No. (3918) 1081 and (T-2947) 562 of the Registry of Deeds of Davao del Norte and Davao del Sur, respectively. On July 16, 1973, Agustin filed with the intestate court a Petition for Authority To Increase Mortgage on the above mentioned properties of the estate. In an Order dated July 18, 1973, the intestate court granted said petition. On October 5, 1974, Agustin again filed with the intestate court another petition, Petition for Declaration of Heirs And For Authority To Increase Indebtedness, whereunder he alleged the necessity for an additional loan from PNB to capitalize the business of the estate, the additional loan to be secured by additional collateral in the form of a parcel of land covered by Original Certificate of Title (OCT) No. P-7131 registered in the name of Heirs of Melitona Pahamotang. In the same petition, Agustin prayed the intestate court to declare him and Ana, Genoveva, Isabelita, Corazon, Susana, Concepcion and herein petitioners Josephine and Eleonor as the only heirs of Melitona. In an Order of October 19, 1974, the intestate court granted Agustin authority to seek additional loan from PNB in an amount not exceeding P5,000,000.00 to be secured by the land covered by OCT No. P-7131 of the Registry of Deeds of Davao Oriental, but denied Agustins prayer for declaration of heirs for being premature. On October 22, 1974, a real estate mortgage contract for P4,500,000.00 was executed by PNB and Agustin in his several capacities as: (1) administrator of the estate of his late wife; (2) general manager of PLEI; (3) attorney-in-fact of spouses Isabelita Pahamotang and Orlando Ruiz, and spouses Susana Pahamotang and Octavio Zamora; and (4) guardian of daughters Concepcion and Genoveva and petitioners Josephine and Eleonor. Offered as securities for the additional loan are three (3) parcels of registered land covered by TCTs No. T-21132, 37786 and 43264. On February 19, 1980, Agustin filed with the intestate court a Petition (Request for Judicial Authority To Sell Certain Properties of the Estate), therein praying for authority to sell to Arturo Arguna the properties of the estate covered by TCTs No. 7443, 8035, 11465, 24326 and 31226 of the Registry of Deeds of Davao City, and also TCT No. (T-3918) T-1081 of the Registry of Deeds of Davao del Norte. On February 27, 1980, Agustin yet filed with the intestate court another petition, this time a Petition To Sell the Properties of the Estate, more specifically referring to the property covered by OCT No. P-7131, in favor of PLEI. In separate Orders both dated February 25, 1980, the intestate court granted Agustin authority to sell estate properties, in which orders the court also required all the heirs of Melitona to give their express conformity to the disposal of the subject properties of the estate and to sign the deed of sale to be submitted to the same court. Strangely, the two (2) orders were dated two (2) days earlier than February 27, 1980, the day Agustin supposedly filed his petition. In a motion for reconsideration, Agustin prayed the intestate court for the amendment of one of its February 25, 1980 Orders by canceling the requirement of express conformity of the heirs as a condition for the disposal of the aforesaid properties. In its Order of January 7, 1981, the intestate court granted Agustins prayer. Hence, on March 4, 1981, estate properties covered by TCTs No. 7443,11465, 24326, 31226, 8035, (T-2947) 662 and (T-3918) T-1081, were sold to respondentArturo Arguna, while the property covered by OCT No. P-7131 was sold to PLEI. Consequent to such sales,

vendees Arguna and PLEI filed witt the intestate court a motion for the approval of the corresponding deeds of sale in their favor. And, in an Order dated March 9, 1981, the intestate court granted the motion. Thereafter, three (3) daughters of Agustin, namely, Ana, Isabelita and Corazon petitioned the intestate court for the payment of their respective shares from the sales of estate properties, which was granted by the intestate court. Meanwhile, the obligation secured by mortgages on the subject properties of the estate was never satisfied. Hence, on the basis of the real estate mortgage contracts dated July 6, 1973 and October 22, 1974, mortgagor PNB filed a petition for the extrajudicial foreclosure of the mortgage. Petitioner Josephine filed a motion with the intestate court for the issuance of an order restraining PNB from extrajudicially foreclosing the mortgage. In its Order dated August 19, 1983, the intestate court denied Josephines motion. Hence, PNB was able to foreclose the mortgage in its favor. Petitioners Josephine and Eleanor, together with their sister Susana Pahamatong-Zamora, filed motions with the intestate court to set aside its Orders of December 14, 1972 [Note: the order dated July 18, 1973 contained reference to an order dated December 14, 1972 approving the mortgage to PNB of certain properties of the estate], July 18, 1973, October 19, 1974 and February 25, 1980. In an Order dated September 5, 1983, the intestate court denied the motions, explaining: "Carefully analyzing the aforesaid motions and the grounds relied upon, as well as the opposition thereto, the Court holds that the supposed defects and/or irregularities complained of are mainly formal or procedural and not substantial, for which reason, the Court is not persuaded to still disturb all the orders, especially that interests of the parties to the various contracts already authorized or approved by the Orders sought to be set aside will be adversely affected.[3] Such was the state of things when, on March 20, 1984, in the Regional Trial Court at Davao City, petitioners Josephine and Eleanor, together with their sister Susana, filed their complaint for Nullification of Mortgage Contracts and Foreclosure Proceedings and Damages against Agustin, PNB, Arturo Arguna, PLEI, the Provincial Sheriff of Mati, Davao Oriental, the Provincial Sheriff of Tagum, Davao del Norte and the City Sheriff of Davao City. In their complaint, docketed as Civil Case No. 16,802 which was raffled to Branch 12 of the court, the sisters Josephine, Eleanor and Susana prayed for the following reliefs: "1.) The real estate mortgage contracts of July 6, 1973 and that of October 2, 1974, executed by and between defendants PNB AND PLEI be declared null and void ab initio; Declaring the foreclosure proceedings conducted by defendants-sheriffs, insofar as they pertain to the assets of the estate of Melitona L. Pahamotang, including the auction sales thereto, and any and all proceedings taken thereunder, as null and void ab initio; Declaring the Deed of Absolute Sale, Doc. No. 473; Page No.96; Book No.VIII, Series of 1981 of the Notarial Registry of Paquito G. Balasabas of Davao City evidencing the

2.)

3.)

sale/transfer of the real properties described therein to defendant Arturo S. Arguna, as null and void ab initio; 4.) Declaring the Deed of Absolute Sale, Doc. No. 474; Page No. 96, Book No. VIII, series of 1981 of the Notarial Registry of Paquito G. Balasabas of Davao City, evidencing the sale/transfer of real properties to PLEI as null and void ab initio; For defendants to pay plaintiffs moral damages in such sums as may be found to be just and equitable under the premises; For defendants to pay plaintiffs, jointly and severally, the expenses incurred in connection with this litigation; For defendants to pay plaintiffs, jointly and severally attorney's fees in an amount to be proven during the trial; For defendants to pay the costs of the suit.[4]

5.)

6.)

7.)

8.)

PNB moved to dismiss the complaint, which the trial court granted in its Order of January 11, 1985. However, upon motion of the plaintiffs, the trial court reversed itself and ordered defendant PNB to file its answer. Defendant PNB did file its answer with counterclaim, accompanied by a cross-claim against co-defendants Agustin and PLEI. During the ensuing pre-trial conference, the parties submitted the following issues for the resolution of the trial court, to wit: "1. Whether or not the Real Estate Mortgage contracts executed on July 6, 1973 and October 2, 1974 (sic) by and between defendants Pahamotang Logging Enterprises, Inc. and the Philippine National Bank are null and void? 2. Whether or not the foreclosure proceedings conducted by defendants-Sheriffs, insofar as they affect the assets of the Estate of Melitona Pahamotang, including the public auction sales thereof, are null and void? Whether or not the Deed of Absolute Sale in favor of defendant Arturo Arguna entered as Doc. No. 473; Page No. 96; Book No. VIII, series of 1981 of the Notarial Register of Notary Public Paquito Balasabas is null and void? Whether or not the Deed of Absolute Sale in favor of defendant Pahamotang Logging Enterprises, Inc. entered as Doc. No. 474; Page No. 96; Book No. VIII, series of 1981 of the Notarial Register of Notary Public Paquito Balasabas is null and void? On defendant PNB's cross-claim, in the event the mortgage contracts and the foreclosure proceedings are declared null and void, whether or not defendant Pahamotang Logging Enterprises, Inc. is liable to the PNB? Whether or not the defendants are liable to the plaintiffs for damages?

3.

4.

5.

6.

7.

Whether or not the plaintiffs are liable to the defendants for damages?[5]

With defendant Arturo Argunas death on October 31, 1990, the trial court ordered his substitution by his heirs: Heirs of Arturo Alguna. In a Decision dated August 7, 1998, the trial court in effect rendered judgment for the plaintiffs. We quote the decisions dispositive portion: "WHEREFORE, in view of all the foregoing, judgment is hereby rendered as follows: 1. Declaring the Mortgage Contracts of July 6, 1973 and October 22, 1974, as well as the foreclosure proceedings, void insofar as it affects the share, interests and property rights of the plaintiffs in the assets of the estate of Melitona Pahamotang, but valid with respect to the other parties; 2. Declaring the deeds of sale in favor of defendants Pahamotang Logging Enterprises, Inc. and Arturo Arguna as void insofar as it affects the shares, interests and property rights of herein plaintiffs in the assets of the estate of Melitona Pahamotang but valid with respect to the other parties to the said deeds of sale. 3. Denying all the other claims of the parties for lack of strong, convincing and competent evidence. No pronouncement as to costs. SO ORDERED.[6] From the aforementioned decision of the trial court, PNB, PLEI and the Heirs of Arturo Arguna went on appeal to the Court of Appeals in CA-G.R. CV No. 65290. While the appeal was pending, the CA granted the motion of Susana Pahamatong-Zamora to withdraw from the case. As stated at the threshold hereof, the Court of Appeals, in its Decision dated March 20, 2002,[7] reversed the appealed decision of the trial court and dismissed the petitioners complaint in Civil Case No. 16,802, thus: WHEREFORE, the appeal is hereby GRANTED. The assailed August 07, 1998 Decision rendered by the Regional Trial Court of Davao City, Branch 12, is hereby REVERSED andSET ASIDE and a new one is entered DISMISSING the complaint filed in Civil Case No. 16,802. SO ORDERED. The appellate court ruled that petitioners, while ostensibly questioning the validity of the contracts of mortgage and sale entered into by their father Agustin, were essentially attacking collaterally the validity of the four (4) orders of the intestate court in Special Case No. 1792, namely: 1. Order dated July 18, 1973, granting Agustins Petition for Authority to Increase Mortgage;

2. Order dated October 19, 1974, denying Agustins petition for declaration of heirs but giving him authority to seek additional loan from PNB; 3. Order dated February 25, 1980, giving Agustin permission to sell properties of the estate to Arturo Arguna and PLEI; and 4. Order dated January 7, 1981, canceling the requirement of express conformity by the heirs as a condition for the disposal of estate properties. To the appellate court, petitioners committed a fatal error of mounting a collateral attack on the foregoing orders instead of initiating a direct action to annul them. Explains the Court of Appeals: "A null and void judgment is susceptible to direct as well as collateral attack. A direct attack against a judgment is made through an action or proceeding the main object of which is to annul, set aside, or enjoin the enforcement of such judgment, if not carried into effect; or if the property has been disposed of, the aggrieved party may sue for recovery. A collateral attack is made when, in another action to obtain a different relief, an attack on the judgment is made as an incident in said action. This is proper only when the judgment, on its fact, is null and void, as where it is patent that the court which rendered such judgment has no jurisdiction. A judgment void on its face may also be attacked directly. xxx xxx xxx

Perusing the above arguments and comparing them with the settled ruling, the plaintiffsappellees [now petitioners], we believe had availed themselves of the wrong remedy before the trial court. It is clear that they are collaterally attacking the various orders of the intestate court in an action for the nullification of the subject mortgages, and foreclosure proceedings in favor of PNB, and the deeds of sale in favor of Arguna. Most of their arguments stemmed from their allegations that the various orders of the intestate court were issued without a notification given to them. An examination, however, of the July 18, 1973 order shows that the heirs of Melitona have knowledge of the petition to increase mortgage filed by Agustin, thus: `The petitioner testified that all his children including those who are of age have no objection to this petition and, as matter of fact, Ana Pahamotang, one of the heirs of Melitona Pahamotang, who is the vice-president of the logging corporation, is the one at present negotiating for the increase of mortgage with the Philippine National Bank.' The presumption arising from those statements of the intestate court is that the heirs were notified of the petition for the increase of mortgage. The same can be seen in the October 19, 1974 order: `The records show that all the known heirs, namely Ana, Isabelita, Corazon, Susana, including the incompetent Genoveva, and the minors Josephine, Eleanor and Concepcion all surnamed were notified of the hearing of the petition.' On the other hand, the February 25, 1980 order required Agustin to obtain first express conformity from the heirs before the subject property be sold to Arguna. The fact that this was reconsidered by the intestate court in its January 07, 1981 is of no moment. The questioned

orders are valid having been issued in accordance with law and procedure. The problem with the plaintiffs-appellees is that, in trying to nullify the subject mortgages and the foreclosure proceedings in favor of PNB and the deeds of sale in favor of Arguna, they are assailing the aforesaid orders of the intestate court and in attacking the said orders, they attached documents that they believe would warrant the conclusion that the assailed orders are null and void. This is a clear collateral attack of the orders of the intestate court which is not void on its face and which cannot be allowed in the present action. The defects alleged by the plaintiff-appellees are not apparent on the face of the assailed orders. Their recourse is to ask for the declaration of nullity of the said orders, not in a collateral manner, but a direct action to annul the same.[8] The same court added that petitioners failure to assail said orders at the most opportune time constitutes laches: "In their complaint below, plaintiffs, appellees are assailing in their present action, four orders of the intestate court namely: July 18, 1973, October 19, 1974, February 25, 1980 and January 07, 1981 orders which were then issued by Judge Martinez. It should be recalled that except for the January 07, 1981 order, Judge Jacinto, upon taking over Sp. No. 1792, denied the motion of the plaintiffs-appellees to set aside the aforesaid orders. Aside from their motion before Judge Jacinto, nothing on the records would show that the plaintiffs-appellees availed of other remedies to set aside the questioned orders. Further, the records would not show that the plaintiffs-appellees appealed the order of Judge Jacinto. If an interval of two years, seven months and ninety nine days were barred by laches, with more reason should the same doctrine apply to the present case, considering that the plaintiffs-appellees did not avail of the remedies provided by law in impugning the various orders of the intestate court. Thus, the questioned orders of the intestate court, by operation of law became final. It is a fundamental principle of public policy in every jural system that at the risk of occasional errors, judgments of courts should become final at some definite time fixed by law (interest rei publicae ut finis sit litum). The very object of which the courts were constituted was to put an end to controversies. Once a judgment or an order of a court has become final, the issues raised therein should be laid to rest. To date, except as to the present action which we will later discuss as improper, the plaintiff-appellees have not availed themselves of other avenues to have the orders issued by Judge Martinez and Judge Jacinto annulled and set aside. In the present case, when Judge Jacinto denied the motion of the plaintiffs-appellees, the latter had remedies provided by the rules to assail such order. The ruling by Judge Jacinto denying plaintiffs-appellees motion to set aside the questioned orders of Judge Martinez has long acquired finality. It is well embedded in our jurisprudence, that judgment properly rendered by a court vested with jurisdiction, like the RTC, and which has acquired finality becomes immutable and unalterable, hence, may no longer be modified in any respect except only to correct clerical errors or mistakes. Litigation must have and always has an end. If not, judicial function will lose its relevance. In time, petitioners moved for a reconsideration but their motion was denied by the appellate court in its Resolution of November 20, 2002. Hence, petitioners present recourse, basically praying for the reversal of the CA decision and the reinstatement of that of the trial court. We find merit in the petition. It is petitioners posture that the mortgage contracts dated July 6, 1973 and October 22, 1974 entered into by Agustin with respondent PNB, as well as his subsequent sale of estate properties to PLEI and Arguna on March 4, 1981, are void because they [petitioners] never consented thereto. They assert that as heirs of their mother Melitona, they are entitled to notice

of Agustin's several petitions in the intestate court seeking authority to mortgage and sell estate properties. Without such notice, so they maintain, the four orders of the intestate court dated July 18, 1973, October 19, 1974, February 25, 1980 and January 7, 1981, which allowed Agustin to mortgage and sell estate properties, are void on account of Agustins non compliance with the mandatory requirements of Rule 89 of the Rules of Court. Prescinding from their premise that said orders are completely void and hence, could not attain finality, petitioners maintain that the same could be attacked directly or collaterally, anytime and anywhere. For its part, respondent PNB asserts that petitioners cannot raise as issue in this proceedings the validity of the subject orders in their desire to invalidate the contracts of mortgage entered into by Agustin. To PNB, the validity of the subject orders of the intestate court can only be challenged in a direct action for such purpose and not in an action to annul contracts, as the petitioners have done. This respondent adds that the mortgage on the subject properties is valid because the same was made with the approval of the intestate court and with the knowledge of the heirs of Melitona, petitioners included.[9] Upon the other hand, respondent Heirs of Arturo Arguna likewise claim that petitioners knew of the filing with the intestate court by Agustin of petitions to mortgage and sell the estate properties. They reecho the CAs ruling that petitioners are barred by laches in filing Civil Case No. 16,802.[10] As we see it, the determinative question is whether or not petitioners can obtain relief from the effects of contracts of sale and mortgage entered into by Agustin without first initiating a direct action against the orders of the intestate court authorizing the challenged contracts. We answer the question in the affirmative. It bears emphasizing that the action filed by the petitioners before the trial court in Civil Case No. 16,802 is for the annulment of several contracts entered into by Agustin for and in behalf of the estate of Melitona, namely: (a) contract of mortgage in favor of respondent PNB, (b) contract of sale in favor of Arguna involving seven (7) parcels of land; and (c) contract of sale of a parcel of land in favor of PLEI. The trial court acquired jurisdiction over the subject matter of the case upon the allegations in the complaint that said contracts were entered into despite lack of notices to the heirs of the petition for the approval of those contracts by the intestate court. Contrary to the view of the Court of Appeals, the action which petitioners lodged with the trial court in Civil Case No. 16,802 is not an action to annul the orders of the intestate court, which, according to CA, cannot be done collaterally. It is the validity of the contracts of mortgage and sale which is directly attacked in the action. And, in the exercise of its jurisdiction, the trial court made a factual finding in its decision of August 7, 1998 that petitioners were, in fact, not notified by their father Agustin of the filing of his petitions for permission to mortgage/sell the estate properties. The trial court made the correct conclusion of law that the challenged orders of the intestate court granting Agustins petitions were null and void for lack of compliance with the mandatory requirements of Rule 89 of the Rules of Court, particularly Sections 2, 4, 7 thereof, which respectively read: Sec. 2. When court may authorize sale, mortgage, or other encumbrance of realty to pay debts and legacies through personalty not exhausted. - When the personal estate of the deceased is not sufficient to pay the debts, expenses of administration, and legacies, or where the sale of

such personal estate may injure the business or other interests of those interested in the estate, and where a testator has not otherwise made sufficient provision for the payment of such debts, expenses, and legacies, the court, on 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 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 encumbrance would be beneficial to the persons interested; and if a part cannot be sold, mortgaged, or otherwise encumbered without injury to those interested in the remainder, the authority may be for the sale, mortgage, or other encumbrance of the whole of such real estate, or so much thereof as is necessary or beneficial under the circumstances. Sec. 4. When court may authorize sale of estate as beneficial to interested persons. Disposal of proceeds. - When it appears that the sale of the whole or a part of the real or personal estate, will be beneficial to the heirs, devisees, legatees, and other interested persons, the court may, upon application of the executor or administrator and on written notice to the heirs, devisees and legatees who are interested in the estate to be sold, authorize the executor or administrator to sell the whole or a part of said estate, although not necessary to pay debts, legacies, or expenses of administration; but such authority shall not be granted if inconsistent with the provisions of a will. In case of such sale, the proceeds shall be assigned to the persons entitled to the estate in the proper proportions. Sec. 7. Regulations for granting authority to sell, mortgage, or otherwise encumber estate. The court having jurisdiction of the estate of the deceased may authorize the executor or administrator to sell personal estate, or to sell, mortgage, or otherwise encumber real estate; in cases provided by these rules and when it appears necessary or beneficial, under the following regulations: (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 be sold, mortgaged, or otherwise encumbered, and such other facts as show that the sale, mortgage, or other encumbrance is necessary or beneficial; (b) The court shall thereupon fix a time and place for hearing such petition, and cause notice stating the nature of the petition, the reason 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 otherwise, as it shall deem proper; (Emphasis supplied). xxx xxx xxx

Settled is the rule in this jurisdiction that when an order authorizing the sale or encumbrance of real property was issued by the testate or intestate court without previous notice to the heirs, devisees and legatees as required by the Rules, it is not only the contract itself which is null and void but also the order of the court authorizing the same.[11] Thus, in Maneclang vs. Baun,[12] the previous administrator of the estate filed a petition with the intestate court seeking authority to sell portion of the estate, which the court granted despite lack of notice of hearing to the heirs of the decedent. The new administrator of the estate filed with the Regional Trial Court an action for the annulment of the sales made by the

previous administrator. After trial, the trial court held that the order of the intestate court granting authority to sell, as well as the deed of sale, were void. On appeal directly to this Court, We held that without compliance with Sections 2, 4 and 7 of Rule 89 of the Rules of Court, the authority to sell, the sale itself and the order approving it would be null and void ab initio. In Liu vs. Loy, Jr.,[13] while the decedent was still living, his son and attorney-in-fact sold in behalf of the alleged decedent certain parcels of land to Frank Liu. After the decedent died, the son sold the same properties to two persons. Upon an ex parte motion filed by the 2nd set of buyers of estate properties, the probate court approved the sale to them of said properties. Consequently, certificates of title covering the estate properties were cancelled and new titles issued to the 2nd set of buyers. Frank Liu filed a complaint for reconveyance/ annulment of title with the Regional Trial Court. The trial court dismissed the complaint and the Court of Appeals affirmed the dismissal. When the case was appealed to us, we set aside the decision of the appellate court and declared the probate court's approval of the sale as completely void due to the failure of the 2nd set of buyers to notify the heir-administratrix of the motion and hearing for the sale of estate property. Clearly, the requirements of Rule 89 of the Rules of Court are mandatory and failure to give notice to the heirs would invalidate the authority granted by the intestate/probate court to mortgage or sell estate assets. Here, it appears that petitioners were never notified of the several petitions filed by Agustin with the intestate court to mortgage and sell the estate properties of his wife. According to the trial court, the [P]etition for Authority to Increase Mortgage and [P]etition for Declaration of Heirs and for Authority to Increase Indebtedness, filed by Agustin on July 16, 1973 and October 5, 1974, respectively, do not contain information that petitioners were furnished with copies of said petitions. Also, notices of hearings of those petitions were not sent to the petitioners.[14] The trial court also found in Civil Case No. 16,802 that Agustin did not notify petitioners of the filing of his petitions for judicial authority to sell estate properties to Arturo Arguna and PLEI.[15] As it were, the appellate court offered little explanation on why it did not believe the trial court in its finding that petitioners were ignorant of Agustins scheme to mortgage and sell the estate properties. Aside from merely quoting the orders of July 18, 1973 and October 19, 1974 of the intestate court, the Court of Appeals leaves us in the dark on its reason for disbelieving the trial court. The appellate court did not publicize its appraisal of the evidence presented by the parties before the trial court in the matter regarding the knowledge, or absence thereof, by the petitioners of Agustins petitions. The appellate court cannot casually set aside the findings of the trial court without stating clearly the reasons therefor. Findings of the trial court are entitled to great weight, and absent any indication to believe otherwise, we simply cannot adopt the conclusion reached by the Court of Appeals. Laches is negligence or omission to assert a right within a reasonable time, warranting the presumption that the party entitled to assert it has either abandoned or declined the right. [16] The essential elements of laches are: (1) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation of which complaint is made and for which the complaint seeks a remedy; (2) delay in asserting the complainant's rights, the complainant having had knowledge or notice of the defendant's conduct and having been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held barred.[17]

In the present case, the appellate court erred in appreciating laches against petitioners. The element of delay in questioning the subject orders of the intestate court is sorely lacking. Petitioners were totally unaware of the plan of Agustin to mortgage and sell the estate properties. There is no indication that mortgagor PNB and vendee Arguna had notified petitioners of the contracts they had executed with Agustin. Although petitioners finally obtained knowledge of the subject petitions filed by their father, and eventually challenged the July 18, 1973, October 19, 1974, February 25, 1980 and January 7, 1981 orders of the intestate court, it is not clear from the challenged decision of the appellate court when they (petitioners) actually learned of the existence of said orders of the intestate court. Absent any indication of the point in time when petitioners acquired knowledge of those orders, their alleged delay in impugning the validity thereof certainly cannot be established. And the Court of Appeals cannot simply impute laches against them. WHEREFORE, the assailed issuances of the Court of Appeals are hereby REVERSED and SET ASIDE and the decision dated August 7, 1998 of the trial court in its Civil Case No. 16,802 REINSTATED. SO ORDERED. Panganiban, (Chairman), Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.

Rule 90 Republic of the Philippines SUPREME COURT Manila

THIRD DIVISION RICARDO S. SILVERIO, JR. Petitioner, G.R. No. 178933 Present: YNARES-SANTIAGO, J., Chairperson, VELASCO, JR., NACHURA, LEONARDO-DE CASTRO,* and PERALTA, JJ.

- versus -

COURT OF APPEALS (Fifth Division) Promulgated: and NELIA S. SILVERIO-DEE, Respondents. September 16, 2009 x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.: The Case

This Petition for Review on Certiorari under Rule 65 seeks the reversal of the May 4, 2007 Resolution[1] and July 6, 2007 Decision[2] of the Court of Appeals (CA) in CA-G.R. SP No. 98764, entitled Nelia S. Silverio-Dee and Ricardo C. Silverio, Sr. (impleaded as necessary party) v. Reinato G. Quilala, in his capacity as Presiding Judge of the RTC of Makati, Branch 57, Ricardo S. Silverio, Jr., Edmundo S. Silverio, represented by Nestor Dela Merced II, and Sheriff Villamor R. Villegas. The assailed resolution granted private respondents prayer for the issuance of a Temporary Restraining Order against public respondent Judge Quilala. On the other hand, the assailed decision set aside the Writ of Execution dated April 17, 2007 and the Notice to Vacate dated April 19, 2007 while directing the respondent lower court to give due course to the appeal of herein private respondent. The Facts

The instant controversy stemmed from the settlement of estate of the deceased Beatriz Silverio. After her death, her surviving spouse, Ricardo Silverio, Sr., filed an intestate proceeding for the settlement of her estate. The case was docketed as SP. PROC. NO. M-2629 entitled In Re: Estate of the Late Beatriz D. Silverio, Ricardo C. Silverio, Sr. v. Ricardo S. Silverio Jr., et al. pending before the Regional Trial Court (RTC) of Makati City, Branch 57 (RTC). On November 16, 2004, during the pendency of the case, Ricardo Silverio, Jr. filed a petition to remove Ricardo C. Silverio, Sr. as the administrator of the subject estate. On November 22, 2004, Edmundo S. Silverio also filed a comment/opposition for the removal of Ricardo C. Silverio, Sr. as administrator of the estate and for the appointment of a new administrator. On January 3, 2005, the RTC issued an Order granting the petition and removing Ricardo Silverio, Sr. as administrator of the estate, while appointing Ricardo Silverio, Jr. as the new administrator.

On January 26, 2005, Nelia S. Silverio-Dee filed a Motion for Reconsideration of the Order dated January 3, 2005, as well as all other related orders. On February 4, 2005, Ricardo Silverio Jr. filed an Urgent Motion for an Order Prohibiting Any Person to Occupy/Stay/Use Real Estate Properties Involved in the Intestate Estate of the Late Beatriz Silverio, Without Authority from this Honorable Court.[3] Then, on May 31, 2005, the RTC issued an Omnibus Order[4] affirming its Order dated January 3, 2005 and denying private respondents motion for reconsideration. In the Omnibus Order, the RTC also authorized Ricardo Silverio, Jr. to, upon receipt of the order, immediately exercise his duties as administrator of the subject estate. The Omnibus Order also directed Nelia S. Silverio-Dee to vacate the property at No. 3, Intsia, Forbes Park, Makati City within fifteen (15) days from receipt of the order. Nelia Silverio-Dee received a copy of the Omnibus Order dated May 31, 2005 on June 8, 2005. On June 16, 2005, private respondent filed a Motion for Reconsideration dated June 15, 2005[5] of the Omnibus Order. This was later denied by the RTC in an Order dated December 12, 2005, which was received by private respondent on December 22, 2005. Notably, the RTC in its Order dated December 12, 2005[6] also recalled its previous order granting Ricardo Silverio, Jr. with letters of administration over the intestate estate of Beatriz Silverio and reinstating Ricardo Silverio, Sr. as the administrator. From the Order dated December 12, 2005, Ricardo Silverio, Jr. filed a motion for reconsideration which was denied by the RTC in an Order dated October 31, 2006. In the same order, the RTC also allowed the sale of various properties of the intestate estate of the late Beatriz Silverio to partially settle estate taxes, penalties, interests and other charges due thereon. Among the properties authorized to be sold was the one located at No. 3 Intsia Road, Forbes Park, Makati City.[7]

Meanwhile, on January 6, 2006, Nelia Silverio-Dee filed a Notice of Appeal dated January 5, 2006[8] from the Order dated December 12, 2005 while the Record on Appeal dated January 20, 2006[9] was filed on January 23, 2006. Thereafter, on October 23, 2006, Ricardo Silverio, Jr. filed a Motion to Dismiss Appeal and for Issuance of a Writ of Execution[10] against the appeal of Nelia Silverio-Dee on the ground that the Record on Appeal was filed ten (10) days beyond the reglementary period pursuant to Section 3, Rule 41 of the Rules of Court. Thus, on April 2, 2007, the RTC issued an Order[11] denying the appeal on the ground that it was not perfected within the reglementary period. The RTC further issued a writ of execution for the enforcement of the Order dated May 31, 2005 against private respondent to vacate the premises of the property located at No. 3, Intsia, Forbes Park, Makati City. The writ of execution was later issued on April 17, 2007[12] and a Notice to Vacate[13] was issued on April 19, 2007 ordering private respondent to leave the premises of the subject property within ten (10) days. Consequently, private respondent filed a Petition for Certiorari and Prohibition (With Prayer for TRO and Writ of Preliminary Injunction) dated May 2, 2007[14] with the CA. On May 4, 2007, the CA issued the assailed Resolution granting the prayer for the issuance of a TRO. In issuing the TRO, the CA ruled that the Notice of Appeal was filed within the reglementary period provided by the Rules of Court applying the fresh rule period enunciated by this Court in Neypes v. Court of Appeals[15] as reiterated in Sumaway v. Union Bank.[16] Afterwards, on July 6, 2007, the CA issued the assailed decision granting the petition of private respondent. The dispositive portion reads: WHEREFORE, in view of the foregoing, the instant petition is GRANTED and GIVEN DUE COURSE. Accordingly, the Order, dated April 2, 2007, the writ of execution, dated April 17, 2007, and the Notice to Vacate, dated April 19, 2007, are ANNULLED AND SET ASIDE. Further, the court a quo is hereby directed to give due course to the appeal of Nelia S. Silverio-Dee. SO ORDERED.

Hence, the instant petition.

The Issues

-AThe Omnibus Order dated May 31, 2005 (Annex G of Annex C) and the Order dated December 12, 2005 are Interlocutory Orders which are not subject to appeal under Sec. 1 of Rule 41;

-BThe respondent Court seriously erred and/or committed grave abuse of discretion amounting to lack of or excess of jurisdiction, in deliberately failing to decide that the basis of the occupancy of Nelia S. Silverio-Dee are fraudulent documents, without any authority from the Intestate Court; -CThe respondent Court seriously erred and/or committed grave abuse of discretion amounting to lack of or excess of jurisdiction, in issuing precipitately the temporary restraining order (TRO) in its Resolution dated May 4, 2007 (Annex A-1); -DThe respondent Court seriously erred and/or committed grave abuse of discretion amounting to lack of or excess of jurisdiction in annulling the Order dated April 2, 2007, the Writ of Execution dated April 17, 2007, and the Notice to Vacate dated April 19, 2007 because the respondent Silverio-Dees occupancy of the Intestate property located at No. 3 Intsia Road, Forbes Park, Makati City (Annex N of Annex C) will prevent the sale authorized by the Order dated October 31, 2006 to secure funds for the payment of taxes due which are now high and rapidly increasing payment of which must not be enjoined.[17]

The Courts Ruling This petition is meritorious. The May 31, 2005 Order of the RTC Is an Interlocutory Order, Not Subject to an Appeal To recapitulate, the relevant facts to the instant issue are as follows: On May 31, 2005, the RTC issued an Omnibus Order ordering Nelia Silverio-Dee to vacate the premises of the property located at No. 3, Intsia Road,Forbes Park, Makati City. She received a copy of the said Order on June 8, 2005. Instead of filing a Notice of Appeal and Record on Appeal, private respondent filed a motion for reconsideration of the Order. This motion for reconsideration was denied in an Order dated December 12, 2005. This Order was received by private respondent on December 22, 2005. On January 6, 2006, private respondent filed her Notice of Appeal while she filed her Record on Appeal on January 23, 2006. Thus, in denying due course to the Notice/Record on Appeal, the RTC, in its Order dated April 2, 2007, ruled:

Verily, the appeal taken by the movant Nelia Silverio-Dee from the Order of this Court dated December 12, 2005 denying the Motion for Reconsideration is misplaced as no appeal may be taken from the order denying the motion for reconsideration (see Section 1, Rule 41 of the 1997 Rules of Civil Procedure in relation to Section 1(f), Rule 109 of the Rules of Court). Furthermore, assuming that what said movant had appealed is the final Order dated May 31, 2005, still, the appeal cannot be given due course as the Record on Appeal had been filed beyond the thirty-day period to appeal (see Section 3 Rule 41 of the Rules of Court) WHEREFORE, the appeal filed by Nelia Silverio is hereby DENIED due course. Let a writ of execution issue to enforce the Order dated May 31, 2005 against Nelia Silverio-Dee requiring her to vacate the premises at No. 3 Intsia, Forbes Park,Makati City. SO ORDERED. Thus, the denial of due course by the RTC was based on two (2) grounds: (1) that Nelia Silverio-Dees appeal was against an order denying a motion for reconsideration which is disallowed under Sec. 1(a), Rule 41 of the Rules of Court; and (2) that Nelia Silverio-Dees Record on Appeal was filed beyond the reglementary period to file an appeal provided under Sec. 3 of Rule 41. Sec. 1(a), Rule 41 of the Rules of Court provides: RULE 41 APPEAL FROM THE REGIONAL TRIAL COURTS SECTION 1. Subject of appeal.An appeal may be taken from a judgment or final order that completely disposes of the case, or of a particular matter therein when declared by these Rules to be appealable.

No appeal may be taken from: (a) An order denying a motion for new trial or reconsideration; xxxx In all the above instances where the judgment or final order is not appealable, the aggrieved party may file an appropriate special civil action under Rule 65.

Petitioner argues that because private respondent filed a Notice of Appeal from the Order dated December 12, 2005 which denied her motion for reconsideration of the Omnibus Order dated May 31, 2005, her appeal is of an order denying a motion for reconsideration. Thus, petitioner alleges that private respondent employed the wrong remedy in filing a notice of

appeal and should have filed a petition for certiorari with the CA under Rule 65 of the Rules of Court instead. The CA, however, ruled that the filing of the Notice of Appeal in this case was proper saying that the appeal pertained to the earlier Omnibus Order dated May 31, 2005. The CA, citing Apuyan v. Haldeman,[18] argued that an order denying a motion for reconsideration may be appealed as such order is the final order which disposes of the case. In that case, we stated:

In the recent case of Quelnan v. VHF Philippines, Inc., We held, thus: [T]his Court finds that the proscription against appealing from an order denying a motion for reconsideration refers to an interlocutory order, and not to a final order or judgment. That that was the intention of the above-quoted rules is gathered from Pagtakhan v. CIR, 39 SCRA 455 (1971), cited in above-quoted portion of the decision in Republic, in which this Court held that an order denying a motion to dismiss an action is interlocutory, hence, not appealable. The rationale behind the rule proscribing the remedy of appeal from an interlocutory order is to prevent undue delay, useless appeals and undue inconvenience to the appealing party by having to assail orders as they are promulgated by the court, when they can be contested in a single appeal. The appropriate remedy is thus for the party to wait for the final judgment or order and assign such interlocutory order as an error of the court on appeal. The denial of the motion for reconsideration of an order of dismissal of a complaint is not an interlocutory order, however, but a final order as it puts an end to the particular matter resolved, or settles definitely the matter therein disposed of, and nothing is left for the trial court to do other than to execute the order. Not being an interlocutory order, an order denying a motion for reconsideration of an order of dismissal of a complaint is effectively an appeal of the order of dismissal itself. The reference by petitioner, in his notice of appeal, to the March 12, 1999 Order denying his Omnibus MotionMotion for Reconsideration should thus be deemed to refer to the January 17, 1999 Order which declared him non-suited and accordingly dismissed his complaint. If the proscription against appealing an order denying a motion for reconsideration is applied to any order, then there would have been no need to specifically mention in both above-quoted sections of the Rules final orders or judgments as subject to appeal. In other words, from the entire provisions of Rule 39 and 41, there can be no mistaking that what is proscribed is to appeal from a denial of a motion for reconsideration of an interlocutory order. (Emphasis supplied.)

Thus, the question posed is whether the Omnibus Order dated May 31, 2005 is an interlocutory order. On this aspect, the CA ruled that the Omnibus Order dated May 31, 2005 was a final order, to wit: We note that the Order, dated December 12, 2005, is an offshoot of the Omnibus Order, dated May 31, 2005. In the Omnibus Order, the court a quo ruled that the petitioner, as an heir of the late Beatriz S. Silverio, had no right to use and occupy the property in question despite authority given to her by Ricardo Silverio, Sr. when it said, thus: x x x In the first place, Nelia S. Silverio-Dee cannot occupy the property in Intsia, Forbes Park, admittedly belonging to the conjugal estate and subject to their proceedings without authority of the Court. Based on the pretenses of Nelia Silverio-Dee in her memorandum, it is clear that she would use and maintain the premises in the concept of a distributee. Under her perception, Section 1 Rule 90 of the Revised Rules of Court is violated. x x x xxxx For the property at Intsia, Forbes Park cannot be occupied or appropriated by, nor distributed to Nelia S. Silverio-Dee, since no distribution shall be allowed until the payment of the obligations mentioned in the aforestated Rule is made. In fact, the said property may still be sold to pay the taxes and/or other obligations owned by the estate, which will be difficult to do if she is allowed to stay in the property. Moreover, the alleged authority given by SILVERIO, SR. for Nelia S. Silverio-Dee to occupy the property dated May 4, 2004, assuming it is not even antedated as alleged by SILVERIO, JR., is null and void since the possession of estate property can only be given to a purported heir by virtue of an Order from this Court (see Sec. 1 Rule 90, supra; and Sec. 2 Rule 84, Revised Rules of Court). In fact, the Executor or Administrator shall have the right to the possession and management of the real as well as the personal estate of the deceased only when it is necessary for the payment of the debts and expenses of administration (See Sec. 3 Rule 84, Revised Rules of Court). With this in mind, it is without an iota of doubt that the possession by Nelia S. Silverio-Dee of the property in question has absolutely no legal basis considering that her occupancy cannot pay the debts and expenses of administration, not to mention the fact that it will also disturb the right of the new Administrator to possess and manage the property for the purpose of settling the estates legitimate obligations. In the belated Memorandum of Nelia Silverio-Dee, she enclosed a statement of the expenses she incurred pertaining to the house renovation covering the period from May 26, 2004 to February 28, 2005 in the total amount of Php12,434,749.55, which supports this Courts

conclusion that she is already the final distributee of the property. Repairs of such magnitude require notice, hearing of the parties and approval of the Court under the Rules. Without following this process, the acts of Nelia Silverio-Dee are absolutely without legal sanction. To our mind, the court a quos ruling clearly constitutes a final determination of the rights of the petitioner as the appealing party. As such, the Omnibus Order, dated May 31, 2002 (the predecessor of the Order dated December 12, 2002) is a final order; hence, the same may be appealed, for the said matter is clearly declared by the rules as appealable and the proscription does not apply.[19] (Emphasis supplied.) An interlocutory order, as opposed to a final order, was defined in Tan v. Republic:[20] A final order is one that disposes of the subject matter in its entirety or terminates a particular proceeding or action, leaving nothing else to be done but to enforce by execution what has been determined by the court, while an interlocutory order is one which does not dispose of the case completely but leaves something to be decided upon. (Emphasis supplied.) Additionally, it is only after a judgment has been rendered in the case that the ground for the appeal of the interlocutory order may be included in the appeal of the judgment itself. The interlocutory order generally cannot be appealed separately from the judgment. It is only when such interlocutory order was rendered without or in excess of jurisdiction or with grave abuse of discretion that certiorari under Rule 65 may be resorted to.[21] In the instant case, Nelia Silverio-Dee appealed the May 31, 2005 Order of the RTC on the ground that it ordered her to vacate the premises of the property located at No. 3 Intsia Road, Forbes Park, Makati City. On that aspect the order is not a final determination of the case or of the issue of distribution of the shares of the heirs in the estate or their rights therein. It must be borne in mind that until the estate is partitioned, each heir only has an inchoate right to the properties of the estate, such that no heir may lay claim on a particular property. In Alejandrino v. Court of Appeals, we succinctly ruled: Art. 1078 of the Civil Code provides that where there are two or more heirs, the whole estate of the decedent is, before partition, owned in common by such heirs, subject to the payment of the debts of the deceased. Under a coownership, the ownership of an undivided thing or right belongs to different persons. Each co-owner of property which is held pro indiviso exercises his rights over the whole property and may use and enjoy the same with no other limitation than that he shall not injure the interests of his co-owners. The underlying rationale is that until a division is made, the respective share of each cannot be determined and every co-owner exercises, together with his coparticipants, joint ownership over the pro indiviso property, in addition to his use and enjoyment of the same. Although the right of an heir over the property of the decedent is inchoate as long as the estate has not been fully settled and partitioned, the law allows a co-owner to exercise rights of ownership over such inchoate right. Thus, the Civil Code provides:

Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership.[22] (Emphasis supplied.) Additionally, the above provision must be viewed in the context that the subject property is part of an estate and subject to intestate proceedings before the courts. It is, thus, relevant to note that in Rule 84, Sec. 2 of the Rules of Court, the administrator may only deliver properties of the estate to the heirs upon order of the Court. Similarly, under Rule 90, Sec. 1 of the Rules of Court, the properties of the estate shall only be distributed after the payment of the debts, funeral charges, and other expenses against the estate, except when authorized by the Court. Verily, once an action for the settlement of an estate is filed with the court, the properties included therein are under the control of the intestate court. And not even the administrator may take possession of any property that is part of the estate without the prior authority of the Court. In the instant case, the purported authority of Nelia Silverio-Dee, which she allegedly secured from Ricardo Silverio, Sr., was never approved by the probate court. She, therefore, never had any real interest in the specific property located at No. 3 Intsia Road, Forbes Park, Makati City. As such, the May 31, 2005 Order of the RTC must be considered as interlocutory and, therefore, not subject to an appeal. Thus, private respondent employed the wrong mode of appeal by filing a Notice of Appeal with the RTC. Hence, for employing the improper mode of appeal, the case should have been dismissed.[23] The implication of such improper appeal is that the notice of appeal did not toll the reglementary period for the filing of a petition for certiorari under Rule 65, the proper remedy in the instant case. This means that private respondent has now lost her remedy of appeal from the May 31, 2005 Order of the RTC. Therefore, there is no longer any need to consider the other issues raised in the petition. WHEREFORE, the May 4, 2007 Resolution and July 6, 2007 Decision of the CA in CAG.R. SP No. 98764 are REVERSED and SET ASIDE. Thus, the Decision dated April 2, 2007 of the RTC denying due course to the appeal of Nelia Silverio-Dee; the Writ of Execution dated April 17, 2007; and the Notice to Vacate dated April 19, 2007 are hereby REINSTATED. No costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-10010 October 31, 1957

Intestate Estate of Antonio Zuzuarregui. PILAR I. DE ZUZUARREGUI administratrix, BEATRIZ Z. DE REYES, ET AL., appellees, vs. ENRIQUE ZUZUARREGUI ET AL., appellants. Bausa and Ampil and Mariano Z. Sunga for appellants. Engracio F. Clemena for appellees. BAUTISTA ANGELO, J.: On March 3, 1953, a petition was filed in the Court of First Instance of Quezon City by Pilar Ibaez de Zuzuarregui for the administration and settlement of the estate of Antonio de Zuzuarregui who died intestate on February 22, 1953. In said petition it was prayed that letters of administration be issued in favor of Antonio de Zuzuarregui, Jr., but due to the opposition of Beatriz de Zuzuarregui, the court appointed Pilar Ibaez, the widow, as regular administratrix. On August 25, 1954, Enrique de Zuzuarregui, brother of the deceased, Maria Theresa San Mateo, Mercedes San Mateo and Jose San Mateo, half sisters and half brother, respectively, of the deceased, filed their opposition impugning the declaration of Beatriz, Antonio, Jr., Enrique and Jose, all surnamed De Zuzuarregui, as heirs contending that they are not related to the deceased either by affinity or by consanguinity. The latter filed their reply and a motion to dismiss the opposition. This motion was denied for lack of merit. Forthwith, an amended answer to the opposition was filed by the alleged heirs, to which the oppositors filed a reply. After the oppositors had made of record their opposition to the prosecution of any evidence tending to show that the alleged heirs were related by affinity or consanguinity to the deceased, the case was tried on the merits during which the parties presented their evidence. On August 22, 1955, the court rendered decision declaring Beatriz, Antonio, Jr., Enrique and Jose, all surnamed De Zuzuarregui, as the illegitimate (spurious) children of the deceased and heirs of his estate in conjunction with the widow Pilar Ibaez to the exclusion of the collateral relatives. In due time, the oppositors took the present appeal. Antonio de Zuzuarregui died without a will in Quezon City, Philippines, on February 22, 1953. On April 12, 1917, he contracted marriage with Pilar Ibaez who did not bear him any issue. He is survived by his widow and the herein claimants Beatriz, Antonio, Jr., Enrique and Jose, who claim to be his illegitimate (spurious) children. The evidence shows that Beatriz is the illegitimate (spurious) child of the deceased had with a woman who was then his tenant; that when she was born the widow took her from the custody of her mother and since then she lived continuously in the family residence until she reached the age of the majority when she got married and lived with her husband; that since her childhood, Beatriz was considered as a member of the family, was given the family name, was supported and sent to school at the expense of the deceased. In the income tax returns

submitted by the deceased. In the income tax returns submitted by the deceased for the years 1938, 1947 and 1948, he declared under oath that Beatriz was one of his children (Exhibits H, H-1, and I). The evidence further shows that claimants Antonio Jr., Enrique and Jose, all surnamed De Zuzuarregui, were the children of Pacita Javier had with the deceased. Pacita Javier is a cousin of the widow Pilar Ibaez. When she became orphan, the widow invited her and her mother to live them in the conjugal residence sometime in 1930. While living with them she gave birth to a baby boy on August 17, 1931 in a maternity hospital who was given by the deceased the name of Antonio, Jr., and the family name of De Zuzuarregui. This boy was reared and brought up as a member of the family by the spouses. He was supported and educated by the deceased. On May 5, 1948, Pacita also gave birth to a twin had with the deceased, who arranged for their baptism and gave them the names of Jose and Enrique and the family name of De Zuzuarregui. These twins also lived the spouses in the conjugal dwelling and were always considered as members of the family. In the baptismal certificate of Antonio de Zuzuarregui, Jr., the deceased declared under his signature that he was his father (Exhibit A). The same admission was made by the deceased into two public documents executed by him before a notary public where he stated under his signature that Antonio, Jr., was his son (Exhibits D and E). And in the income tax returns the deceased submitted for the years 1937, 1938, 1946, 1947 and 1948 he likewise stated under oath that Antonio, Jr. was his son. With regard to Jose and Enrique, the deceased also stated under his signature in their certificates of birth that he was their father (Exhibits B and C). Likewise, in the income tax returns the deceased submitted for 1949, 1950, 1951 and 1952, he stated under oath that he was the father of said Jose and Enrique. The question to be determined is whether the claimants can be considered as heirs of the estate upon the claim that they are the legitimate (spurious) children of the deceased. Previous to the approval of the new Civil Code, illegitimate children who did not have the status of natural, like spurious, were entitled to support only. They were not entitled to succeed as compulsory heirs as were the acknowledged natural children. Under the present law however, they are not only given support but are, entitled to a certain share of the inheritance, the law according to them the same liberal attitude accorded to natural children. In introducing this innovation, the Code Commission gives this justification. "The transgressions of social conventions committed by the parents should not be the illegitimate children. The law should not be too severe upon these illegitimate children, be they natural or otherwise, because they do need the special protection of the State. They are born with a social handicap and the law should help them to surmount the disadvantages facing them through the misdeeds of their parent." (Report of the Code Commission on the Proposed Civil Code of the Philippines, p. 89.) Thus, article 287 of the new Civil Code provides "Illegitimate children other than natural in accordance with article 269 and other than natural children by legal fiction are entitled to support and such successional rights as are granted in this Code." And in article 887 these illegitimate children are considered as compulsory heirs, although they come fifth in the order therein mentioned. It appearing from the overwhelming evidence submitted by the claimants which was not in any way contradicted by the oppositors that from their birth they had enjoyed the status of illegitimate (spurious) children of the deceased, it is evident that the lower court did not err in declaring them as heirs entitled to inherit from the deceased under the law.

Appellants, however, claim that before these illegitimate children may inherit under the present law it is yet necessary that they establish that they were recognized by their putative father, or that they had brought an action for recognition has not been established and their action to establish it has already prescribed, it is contended that they cannot now claim any successional right under the law. This claim is disputed by appellees who contended that, to establish their right to inherit, their recognition is not necessary, it being sufficient that their filiation be proved. We find merit in this contention of appellees. There is nothing in the new law from which we may infer that in order that an illegitimate child may enjoy his successional right he must first bring an action for recognition during the lifetime of the putative father as required by article 285 with regard to natural children. Neither is there any provision which requires that he be recognized as such before he can be accorded such successional right. All what the law provides concerning recognition refers to natural children (Chapter 4 Title VIII, new Civil Code.) On the other hand, article 887, when speaking of illegitimate children as compulsory heirs, contains only the following condition: "their filiation must be duly proved." It does not say that they must first be recognized by their putative parents. The reason perhaps behind this liberal treatment is that, because they are spurious or offsprings of illicit relations, it would be obnoxious to oblige them to bring an action for recognition during the lifetime of their putative parents, let alone the embarrassment and scandal that such action would bring to all parties concerned. That such interpretation is correct can be inferred from the following comment of the Code Commission on the matter: "in the proposed Code, illegitimate children other than natural may succeed as compulsory heirs provided that their filiation is duly proved" (Report of the Code Commission on the Proposed Civil Code of the Philippines, p. 113). (Emphasis supplied.) And Mr. Arturo M. Tolentino, a former member of the Code Commissioner makes this comment on the same point: "This article merely allows investigation of paternity or maternity of the illegitimate child, but does not require that these should be a recognition before such child can claim his rights. Apparently, this places the illegitimate child in a better position than a natural child. In reality, however, such difference can hardly be said to exist, because the natural child can always bring a complex action in which he asks both for recognition and for his rights, either to support or to inheritance" (Tolentino, Civil Code of the Philippines, Vol. I, p. 567). (Emphasis supplied.). But, even if we uphold the theory that recognition still necessary to accord to appellate the right to inherit, we may say that the evidence on record more than sufficiently establishes that appellees had been recognized by the deceased as his illegitimate children. As we have already stated elsewhere, the deceased has in more than one occasion acknowledged under oath declared under his signature in public or official documents that appellees are his children. This evidence is sufficient to entitle them to the successional rights granted by law. Wherefore, the decision appealed from is affirmed, with costs against appellants. Paras, C. J., Bengzon, Padilla, Endencia, and Felix, JJ., concur. Labrador, J., concurs in the result.

REYES, A., J., concurring:

I concur in so far as the majority opinion holds that those of the appellees who claim to be spurious children of the deceased Antonio de Zuzuarregui should be adjudged entitled to the successional rights given to illegitimate children of that class by Article 287 of the New Civil Code, it appearing that their filiation is acknowledged in the authentic writing by their presumed father, But I must reserve my vote on the broader question of whether spurious children not so acknowledged may, after the death of their alleged parents, bring an action for declaration of paternity under article 289. Resolution of that question is not necessary to the adjudication of the present case, and anyway the members of the Court are divided on that point.

CONCEPCION, J., concurring in part and dissenting in part: I share the opinion of the majority and that of Mr. Justice Reyes (J.B.L.) to the effect that appellees Antonio Jr., Jose, Enrique and Beatriz, all surnamed Zuzuarregui, are entitled to the successional rights granted by the Civil Code of the Philippines to illegitimate children who are not natural, it appearing that their father Antonio Zuzuarregui had, during his lifetime, voluntarily acknowledged them, in public instruments, as his children. However, I do not deem it advisable to pass, in the case at bar, upon the question whether spurious children, not so acknowledged voluntarily, may bring all action for declaration or investigation of paternity, after the death of their parents much less to decide such question in the affirmative. To begin with, it is not necessary for Us to do so, in view of said voluntary acknowledgment made in public instruments. Secondly, the issue is transcendental in character and far reaching in its consequences it affects the philosophy of our law on Persons and Family Relations and is fraught with possibilities of the gravest nature. Thirdly, the reasons given in the concurring and dissenting opinion of Mr. Justice Reyes (J. B. L.), in support of the negative view, are so strong that the Court should, to my mind, give itself more time to deliberate on said issue, consider it from a long range view point and get the right perspective thereof, as well as wait for a more propitious occasion to decide it. Personally, I am not prepared, as yet, to vote thereon in the affirmative.

MONTEMAYOR, J., concurring: I concur in the concurring and dissenting opinion of Mr. Justice Concepcion.

REYES, J.B.L., concurring in part and dissenting in part:

I agree that since the paternity of Antonio Zuzuarregui has been voluntarily admitted by him in public documents executed his lifetime, such as his income tax return the appellees herein, Antonio, Jr., Jose, Enrique and Beatriz Zuzuarregui, albeit illegitimate children not natural of said deceased, have become entitled to the successional rights granted them as such by the Civil Code (Article 278). While the Code is silent as to the forms of voluntary acknowledgment by a parent of the filiation of his spurious children (illegitimates not natural) there is no good reason to doubt that the forms of voluntary acknowledgment that suffice for illegitimate natural children under Article 278 of the new Civil Code (i.e., record of birth, will or testament, statement a court of record or authentic writing) should also suffice for children that are illegitimates not natural, the rights conferred upon the latter being inferior to those of natural children. An action to establish paternity is totally superflous where the parent spontaneously and publicly admits the illegitimate relationship. But I can not subscribe to the ruling that spurious children who are already of age, but have not been voluntarily acknowledged as such, may bring an action for declaration or investigation of their paternity even after the death of their progenitors. Such a holding seems to me subversive of the principles and plan of the Civil Code on the matter. Like its predecessor, the Spanish Code of 1889, the new Civil Code of the Philippines establishes a gradation in the rights of children according to the circumstances that surround their conception. The greatest sum of rights corresponds to the legitimates, i,e., those, conceived in valid matrimony; while of the illegitimates, those that are natural (actually or by fiction) enjoy greater rights than the illigitimate not natural (adulterous or incestuous). Thus, the successional rights of the three classes of children vary in the proportions 10:5:4, since the legitime of the acknowledged natural children is merely one half of that of the legitimates; while the legitime of an illegitimate child not natural is four fifths (4/5ths) of that of an acknowledged natural child (Article 895), i,e., it is only 2/5ths as large as the legitime child. These proportions are preserved even in intestate succession (Article 983). And this graduation is followed other rights as well. The right of action to claim legitimacy lasts during the whole lifetime of the child and can be brought against the presumed parents, if alive, and against their heirs if the parents are no longer living (Article 268); while the action to compel acknowledgment of an illegitimate natural child may be brought only during the lifetime of the presumed parents and therefore not against the parent's heirs) except two cases: (1) where the parent has died during the minority of the child, or (2) when a hitherto unknown document of recognition is discovered after the parent's death (Article 285). Furthermore, while an action to claim legitimacy may exceptionally pass to the heirs of the child claimant (as when he dies insane or still a minor) (Article 268), the right to compel recognition never passes to the heirs of the natural child (Conde vs. Abaya, 13 Phil. 249). On the other hand, as between the two classes of illegitimates, only those that are natural can be elevated to the category of legitimates by the process of legitimation; while those that are not natural are denied this improvement of their condition (Article 269). Let us now examine the question of the time for the exercise by legitimates not natural of their right to assert their filiation bearing in mind this progressive diminution of the rights of illegitimate children. The new Code only provides in this regard:

ART. 289. Investigation of the paternity or maternity of children mentioned in the two proceeding articles is permitted under the circumstances specified in articles 283 and 284. The articles thus referred to bring as follows: ART. 283. Any of the following cases, the father is obliged to recognized the child as his natural child. (1) In cases of rape, abduction or seduction, when the period of the offense coincides more or less with that of the conception; (2) When the child is in continuous possession of status of a child of the alleged father by the direct acts of the latter or of his family; (3) When the child was conceived during the time when the mother cohabited with the supposed father; (4) Where the child has in his favor any evidence or proof that the defendant is his father. ART. 284. The mother is obliged to recognized her natural child; (1) In any of the cases referred to in the preceding article, as between the child and the mother; (2) When the birth and the identity of the child are clearly proved. It will be seen that the Code nowhere specifies the period within which the action to investigate spurious paternity under Article 289 should be brought. That in the absence of a competent voluntary and admission of the parent, such action must be instituted, and the paternity of the defendant shown, before the spurious child (illegitimately not natural) may claim a right to the parental support and succession is readily apparent for both support and inheritance in our law are rooted in, and flow from, blood relationship, with the sole exception of the spouse (Article 291). Does the silence of the Code warrant the conclusion that this action may be brought at any time, even after the demise of the parent? I submit that, at the very least, the spurious child must be required to file the action to establish his paternity or maternity during the lifetime of the presumed parent, as in the case of the natural child. It is to me inconceivable that the illegitimate child not natural child, enjoy a longer right of action than the natural child, when the law clearly tends to favor the natural issue as against the non-natural one. If the latter may sue to establish his filiation even after of the presumed parents, then he is practically placed on a par with the legitimate child, who is given right to do so during his (the child's) lifetime. That appears contrary to the plan and intent of the Code. Just as there is no express provision of the Code conferring upon illegitimates any rights denied to those that are legitimate1 (Conde vs. Abaya, 13 Phil. 249, 254), we find no article expressly giving to illegitimate children not natural any right or privilege that is not granted to illegitimate

natural children. Likewise, what the Code denies to illegitimate natural children, it denies to those illegitimates not natural. Wherefore, the silence of the Code on the period during which the illegitimate children not natural may bring an action to investigate (and prove) their paternity can not be said to authorize a longer period of action than in the case of illegitimate natural children, since the Civil Code favors the latter over the former class. We should not overlook that a natural child's conception may take place under circumstances that render it practically indistinguishable from that of a legitimate child, except for the absence of a marriage ceremony between the parents. In fact a natural child may be "natus et conceptus ex unica concubina, in domo retenta et utroque soluta, ex quibus indubitanter videatur procreatus", as formulated in the Authenticum cited by Pacheco in his commentary to the Law XI of Toro. To hold that such a child's action to claim his due is limited by the life span of the parent, while the claims of a child conceived in adultery or incest are not so limited is to step from the bounds of law into the realm of sentimental romance. A second factor to be borne in mind is that illegitimate children (natural or not natural) are the result of extra-matrimonial activities usually kept hidden from the legitimate family. Hence it is but just that the investigation of the parental relation should take place while the alleged parent is alive; for only the parent is in a position to reveal the true facts surrounding the claimant's conception. To allow the action to be brought against the heirs of the parent is to open the door to false claims and blackmail suits. There is nothing in the Report of the Code Commission to indicate that the new Civil Code intended to make actions for investigation of the paternity (or maternity) of illegitimate children not natural survive the presumed parent. As we have shown, precisely the same reason exists to grant the parents an opportunity to defend the action in person when the claimant is a natural child as when he is not natural. The new Civil Code allows an unlimited investigation of paternity, predicated on "any evidence or proof that the defendant is his (the claimant's) father" Article 283). This very facility demands that the action should not be directed against the parent's heirs, who are ordinarily kept in the dark as to the extra-matrimonial activities of their predecessor. It should be recalled that, historically, the refusal of the Code Napoleon and the Spanish Civil Code of 1889 to allow a free investigation of illegitimate paternity was not motivated by a desire to cover up the debaucharies of the ruling aristocracy, as is commonly believed, but to avoid its being used as a weapon for extortion. Under the French monarchy, that regime of privilege, illegitimate paternity could be investigated practically without restriction. It was the French Revolution, the revolution of the guillotine and the Rights of Man, the destroyer of feudal and aristocratic privileges, that prohibited inquires on illegitimate paternity by the Law of the 12 Brumaire, An II, at the same time that it enlarged the successional rights of bastards; and the then restrictive spirit of that Law was carried into the subsequent Codes of France and Spain. The underlying reasons were expressed in the deliberations on the Code Napoleon as preserved in the collections (Recueils of Fenet and Locre (2 Planiol-Ripert, Derecho Civil Frances, p. 567; I De Page, Droit, Civil Belge, p. 1124-1125). Scaevola (Codigo Civil, Vol. III, 2d ed.) pp. 400-401) quotes from Bigot Preameneu, Lahary and Duveyrier, their denunciations against the system of unlimited investigations of paternity during the ancien regime: Desde largo tiempo, en el antiguo regimen, un grito general se elevo contra dichas investigaciones. Estas exponian a los Tribunales a los pleitos mas escandalosos, a los juicios mas arbitrarios y a la jurisprudencia mas variable. El hombre de conducta mas

intachable, aquel cuyos cabellos habian encanecido en el ejercicio de todos las virtudes, no estaba al abrigo del ataque de una mujer impudica o de hijos que le eran extranos. Este genero de calumnia dejaba siempre consecuencias dolorosas. Las investigaciones de la paternidad se consideraban como una plaga de la sociedad. Nada mas frecuente en otros tiempos que estas audaces reclamaciones de estado que asediaban por todas partes a los Tribunales. Cuintas mujeres impudicas osaban publicar su debilidad bajo el pretexto de recobrar su honor! Cuantos intrigantes, nacidos en la condicion mas abyecta, tenian el inconcebible atrevimiento de istentar introducirse en las familias mas distirguidas y, sobre todo mas opulentas! . . ., Al lado de una desgraciada que reclamaba auxilios en ombre y a expensas del honor, mil prostitutas especulaban con la publicidad de su vida licenciosa y subastaban la paternidad de que disponian. Se buscaba un padre al hijo que podia ser reclamado por veinte, y se elegia siempre que era posible al mas virtuoso, al mas honrado y rico, para fijar el precio de susilencio por la importancia del escandalo. These ideas are echoed in the decision of this Supreme Court in Serrano vs. Aragon, 22 Phil. p. 18: Illegitimate children should not be admitted into the home of a legitimate family unless the proof is strong and convincing, showing that every requirement of the law has been strictly complied with. The writers of the code no doubt had in mind that there would arise instances where certain illegitimate children, on account of the strong temptation due to the large estates left by deceased persons, would attempt to establish that they were natural children of such persons in order to get part of the property; and furthermore, they considered that it is nothing but just and right that alleged parents should have a personal opportunity to be heard. It was for these reasons and others equally as well founded that article 137 was enacted. Certainly the dangers pointed out apply to all illegitimate paternity actions, whether the plaintiff claims to be a natural child or one not natural. In truth, a charge of adulterous or incestuous relations involves more danger ofchantage, because the greater threatened scandal heightens the natural desire of the family of the alleged parent to protect his memory. It is argued in the appealed decision that the time limitation established by natural children to compel their acknowledgment or recognition, can not apply to spurious children for the reason that the latter can not be, or do not need to be, acknowledged or recognized. This argument stops at the terminology of the Code and does not look at the facts that lie behind the words. It is thinking at a purely verbalistic level. What, in fact, is the voluntary acknowledgment or recognition of a natural child? Nothing but an admission of the fact of paternity or maternity by the presumed parent, expressed in the form prescribed by the Code. Its essence lies in the avowal of the parent of that the child is his; the formality is added to make the admission incontestable, in view of its consequences. If in certain cases (Article 281) the law demands the admission of the paternity or maternity approved by the Court, it does so merely to assure that the effects of the acknowledgment will not be detrimental to the child. But there is nothing in the nature of a voluntary acknowledgment or recognition that would make its application to illegitimate children not natural contrary to law, morals or public policy. If the Code fails to mention such recognition in connection with these children it is not

because their voluntary acknowledgment is forbidden, but because it is seldom encountered, since an admission of paternity of a spurious child involves an admission of their adultery, concubinage or incest. Similarly, between the action for compulsory recognition of natural children under Article 285, and the action for investigation of paternity or maternity of illegitimate children not natural, authorized by Article 289, there is no substantial difference. Both are actions whereby the child may prove that the defendant is in fact the father or mother of the plaintiff, notwithstanding the refusal of the parent to admit the generative link. The grounds upon which either action must be premised are the same, as is apparent from the text of Article 289. ART. 289. Investigation of the paternity or maternity of children mentioned in the two preceding articles is permitted under the circumstances specified in articles 283 and 284 And when the court is satisfied that, denials notwithstanding, the plaintiff is the defendant's child, the court eo motuso declares, and thereupon the child assumes his proper status, and acquires automatically the support and successional rights granted by the Code. The parent is not compelled to execute a formal recognition of the relationship that he has denied: the court's, decision is self sufficient, without any other compulsion on the parent. Thus the term "compulsory recognition" applied to these actions to establish filiation is plainly a misnomer that should not deceive anyone as to their true nature, which does not vary whether the child is natural or not natural. Logically, the same limitation should apply to both actions, in the absence of express legal provision to the contrary. The doctrine that a natural child not recognized has no rights to support or succession is not peculiar to natural children but applies to all illegitimate children, natural or not natural. The failure to obtain recognition, whether voluntary or by a court's decision, necessarily means that the illegitimate child is not able to establish the identity of his father or mother. This is especially true under the new Civil Code, which the court may declare the existence of the relationship on any adequate evidence. And if despite such latitude the child is unable to convince the court that the defendant is his parent, it is but natural that he should be denied any support or inheritance from the defendant, since these rights are predicated on the existence of the relationship of father and child. Finally, I see no substantial difference in principle between this case and that of Conde vs. Abaya, 13 Phil. 249, decided by this Court through the late Chief Justice Arellano. In that case we held that in view of the silence of the Civil Code on whether the natural child's action for recognition was transmissible or not to the heirs of the child, such silence is proof that the Code intended to make the action strictly non-transmissible, as otherwise, the natural child would obtain better rights than a legitimate child, whose action to claim legitimacy was transmissible only in exceptional cases. By the same token, the silence of the Code as to whether the paternity action of an illegitimate child not natural survived the death of the parent must be construed against such survival, because otherwise, illegitimates not natural would have better rights than natural children, whose right to demand recognition is extinguished upon the parent's demise, save in the two exceptional instances given in Article 268. Wherefore, my conclusion is that said Article 268 limits not only the so-called actions for recognition by natural children but also actions for investigation of paternity by illegitimate children not natural.

FIRST DIVISION

CORAZON M. GREGORIO, as administratrix of the estate litigated in the case below, RAMIRO T. MADARANG, and the heirs of CASIMIRO R. MADARANG, JR., namely: Estrelita L. Madarang, Consuelo P. Madarang, Casimiro Madarang IV, and Jane Margaret Madarang-Crabtree, Petitioners,

G.R. No. 185226 Present: PUNO, C.J., Chairperson, CARPIO MORALES, LEONARDO-DE CASTRO, BERSAMIN, and VILLARAMA, JR., JJ.

- versus ATTY. JOSE R. MADARANG and VICENTE R. MADARANG, Respondents.

Promulgated:

February 11, 2010 x-------------------------------------------------x DECISION

CARPIO MORALES, J. Casimiro V. Madarang, Sr. (Casimiro, Sr. or the decedent) died intestate on June 3, 1995, leaving real and personal properties with an estimated value ofP200,000.00.[1] He was survived by his wife Dolores and their five children, namely Casimiro, Jr., Jose, Ramiro, Vicente and Corazon. In the intestate proceedings filed by the couples son Jose which was lodged before the Regional Trial Court (RTC) of Cebu City, Branch 57, Dolores was appointed as administratrix of the intestate estate of Casimiro, Sr.[2] Dolores submitted an Inventory Report listing the properties of the decedents estate. Jose filed his Comment on the Report, alleging that it omitted six lots including Lot 829B-4-B located in Cebu City which is covered by Transfer Certificate of Title No. 125429. A hearing was thus conducted to determine whether the six lots formed part of the estate of the decedent. By Order of April 5, 2002, [3] the RTC, noting the following:

x x x The said properties appear to have been acquired by the spouses after [their marriage on] December 27, 1931 and during their marriage or coverture.

Article 160 of the New Civil Code of the Philippines (which is the governing law in this particular case) is very explicit in providing that all properties of the marriage are presumed to belong to the conjugal partnership. This presumption, to the mind of the Court, has not been sufficiently rebutted by the special administratrix. [Dolores] This presumption applies and holds even if the land is registered under the wifes name as long as it was acquired during marriage (De Guinoo vs. Court of Appeals. G.R. No. L-5541, June 26, 1955) or even if the wife purchased the land alone (Flores, et.al. Vs. Escudero, et.al., G.R. No. L-5302, March 11, 1953).[4] (underscoring supplied),

instructed Dolores to revise her Inventory Report to include the six lots. Dolores and her children, except Jose who suggested that the former be referred to as oppositors,[5] questioned the RTC order of inclusion of the six lots via motion for reconsideration during the pendency of which motion the court appointed herein petitioner Corazon as co-administratrix of her mother Dolores. As Dolores and her co-oppositors alleged that the six lots had been transferred during the lifetime of the decedent, they were ordered to submit their affidavits, in lieu of oral testimony, to support the allegation. Only herein respondent Vicente complied. In his Affidavit, Vicente declared that one of the six lots, Lot 829-B-4-B, was conveyed to him by a Deed of Donation executed in August 1992 by his parents Dolores and Casimiro, Sr.[6] It appears that petitioners later manifested that the provisional inclusion of the six lots, except Lot 829-B-4-B. they no longer oppose

The RTC, by Order of January 20, 2003,[7] thus modified its April 5, 2002 Order as follows: Of the six lots directed included in the inventory, Lot 829 B-4-B should be excluded. The administratrix is directed within sixty (60) days: (1) to submit a revised inventory in accordance with the Order dated April 5, 2002, as here modified; and (2) to render an accounting of her administration of the estate of Casimiro V. Madarang. (underscoring supplied),

Jose moved to reconsider the RTC January 20, 2003 Order, arguing that since the title to Lot 829-B-4-B remained registered in the name of his parents, it should not be excluded from the Inventory; and that the Deed of Donation in Vicentes favor was not notarized nor registered with the Register of Deeds. Joses motion for reconsideration having been denied by Order of February 5, 2003, he filed a Notice of Appeal. In his Brief filed before the Court of Appeals, Jose claimed that the RTC erred in excluding Lot 829-B-4-B from the Inventory as what the lower court should have done was to . . . maintain the order including said lot in the inventory of the estate so Vicente can file an ordinary action where its ownership can be threshed out.

Jose later filed before the appellate court a Motion to Withdraw Petition which his coheirs-oppositors-herein petitioners opposed on the ground that,inter alia, a grant thereof would end the administration proceedings. The appellate court, by Resolution of January 18, 2008,[8] granted the withdrawal on the ground that it would not prejudice the rights of the oppositors. Petitioners motion for reconsideration of the appellate courts grant of Joses Motion to Withdraw Petition was, by Resolution of November 6, 2008,[9]denied in this wise: xxxx In the instant case, the Probate Court found that the parties of the case interposed no objection to the non-inclusion of Lot No. 829-B-4-B in the inventory of the estate of Casimiro V. Madarang, in effect, they have consented thereto. x x x xxxx Moreover, [herein petitioners] in their appeal brief, ha[ve] extensively argued that . . . Vicente Madarang [to whom the questioned lot was donated] and his family have been in continuous, actual and physical possession of the donated lot for over twenty (20) years, even before the execution of the so called donation inter vivos in 1992. . . . Vicente Madarang has his residential house thereon and that his ownership over the donated lot has been fully recognized by the entire Madarang Clan, including all his brothers and sisters, except the much belated objection by the appellant (Jose), allegedly resorted to as an act of harassment. [10] (emphasis and underscoring supplied), thus affirming the RTC order of exclusion of the questioned lot. Hence, the present petition for review filed by the oppositors-herein petitioners. Casimiro, Jr. having died during the pendency of the case, he was substituted by his wife petitioner Estrelita and co-petitioners children Consuelo, Casimiro IV, and Jane Margaret. Petitioners contend that since the only issue for consideration by the appellate court was the merit of Joses Motion to Withdraw Petition, it exceeded its jurisdiction when it passed upon the merits of Joses appeal from the RTC order excluding Lot 829-B-4-B from the Inventory. Petitioners contention does not lie. In their Motion for Reconsideration of the appellate courts grant of Joses Motion to Withdraw Petition, petitioners, oddly denying the existence of a petition, raised the issue of the propriety of the RTC Order excluding Lot 829-B-4-B from the Inventory. Their prayer in their Motion clearly states so:

WHEREFORE, premises considered, Oppositors-Appellees [petitioners] respectfully PRAY for this Honorable Court to RECONSIDER its questioned Resolution and rendering [sic], forthwith, a decision resolving the merits of the Partial Appeal of petitioner-appellant Jose Madarang.[11] (capitalization in the original; emphasis supplied) The appellate court did not thus err in passing on the said issue. More specifically, petitioners question the appellate courts finding that as the parties interposed no objection to the non-inclusion of Lot No. 829-B-4-B in the inventory of the estate of Casimiro V. Madarang, in effect, they have consented thereto.[12] A review of the voluminous records of the case shows that, indeed, there was no accord among the parties respecting the exclusion of Lot 829-B-4-B. While a probate court, being of special and limited jurisdiction, cannot act on questions of title and ownership, it can, for purposes of inclusion or exclusion in the inventory of properties of a decedent, make a provisional determination of ownership, without prejudice to a final determination through a separate action in a court of general jurisdiction. The facts obtaining in the present case, however, do not call for the probate court to make a provisional determination of ownership of Lot 829-B-4-B. It bears stress that the question is one of collation or advancement by the decedent to an heir over which the question of title and ownership can be passed upon by a probate court.[13] As earlier reflected, Vicentes claim of ownership over Lot 829-B-4-B rests upon a deed of donation by his father (decedent) and his mother. Article 1061 of the Civil Code expressly provides: Article 1061. Every compulsory heir, who succeeds with other compulsory heirs, must bring into the mass of the estate any property or right which he may have received from the decedent, during the lifetime of the latter, by way of donation, or any other gratuitous title, in order that it may be computed in the determination of the legitime of each heir and in the account of partition. (underscoring supplied)

in relation to which, Section 2, Rule 90 of the Rules of Court provides: Sec. 2. Questions as to advancement to be determined. Questions as to advancement made, or alleged to have been made, by the deceased to any heir may be heard and determined by the court having jurisdiction of the estate proceedings; and the final order of the court thereon shall be binding on the person raising the questions and on the heir. (emphasis and underscoring supplied)

By express provision of law then, Lot 829-B-4-B, which was alleged to have been donated by the decedent and his wife to their son-respondent Vicente, should not be excluded from the inventory of the properties of the decedent. WHEREFORE, the petition is GRANTED. The assailed November 6, 2008 Resolution of the Court of Appeals is SET ASIDE. Petitioner Corazon M. Gregorio and her co-administratrix Dolores Madarang are DIRECTED to include Lot 829-B-4-B in the Inventory of the properties of the intestate estate of Casimiro V. Madarang, Sr. Let the records of the case be remanded to the court of origin, the Regional Trial Court of Cebu City, Branch 57, which is DIRECTED to proceed with the disposition of the case with dispatch. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. 45425 March 27, 1992 CELSA L. VDA. DE KILAYKO, ENCARNACION L. VDA. DE PANLILIO and REMEDIOS L. VDA. DE GUINTO,petitioners, vs. HON. JUDGE ERNESTO TENGCO of the Court of First Instance of Negros Occidental, Bacolod City, Branch IV and RODOLFO LIZARES and AMELO LIZARES, as Judicial Administrators of the Estate of the late EUSTAQUIA LIZARES, respondents. G.R. No. 45965 March 27, 1992 ROLDOFO LIZARES and AMELO LIZARES, as Judicial Administrators of the ESTATE OF EUSTAQUIA LIZARES, petitioners, vs. HON. JUDGE ERNESTO TENGCO, CELSA L. VDA. DE KILAYKO, ENCARNACION L. VDA. DE PANLILIO and REMEDIOS VDA. DE GUINTO, respondents.

ROMERO, J.: These consolidated cases seek to annul the orders 1 dated September 20, 1976, January 7, 1977 and January 31, 1977 of the then Court of First Instance of Negros Occidental, Branch, IV respectively, cancelling the notice of lis pendens filed by Celsa L. Vda. de Kilayko, et al. with the Register of Deeds of Negros Occidental, denying the motion for reconsideration of the order dated September 20, 1976 filed by Celsa L. Vda. de Kilayko, et al., and holding in abeyance the resolution of defendants' motion to dismiss. The undisputed facts of the case are as follows: On November 20, 1962, the late Maria Lizares y Alunan executed a "Testamento" 2 which contains among its provisions, the following: DECIMA Asimismo, ordeno y dispongo que mi participacion consistente en una tercera parte (1/3) de una catorce (1/14) avas partes proindivisas de la Hda. Minuluan, que he adquirido mediante permuta de mi hermano Dr. Antonio A. Lizares, se adjudique, como por el presente se adjudica, a mi sobrina Eustaquia Lizares; ENTENDIENDOSE, sin embargo, que en el caso de que mi citada sobrina Eustaquia Lizares muera soltera o sin descendientes legitimos, mi referida participacion en la Hda. Minuluan se adjudicara a mi hermano Antonio A. Lizares que me sobrevivan.

UNDECIMA Tambien ordeno y dispongo que el resto de todas mis propiendades, incluyendo mis participaciones, derechos e intereses (no dispuestos mas arriba) an las Haciendas "Minuluan" (Lotes Nos. 439, 403, 1273, 1274, 1278, 1279 y 1280 del Catastro de Talisay, Negros Occidental), y "Matabang" (Lotes Nos. 514, 550, 552, 553 y 1287-C del Catastrado de Talisay, Negros Occidental), situadas en el Municipio de Talisay, Provincia de Negros Occidental, I.F., el resto de mis acciones en la Central Talisay-Silay Milling Co., Inc. (unas 2,860 acciones) y de la Financing Corporation of the Philippines (unas 53,636 acciones), registradas a mi nombre y no heredadas de mi difunta madre Da. Enrica A. Vda. de Lizares, mis acciones en la Central Bacolod-Murcia Milling Co., Inc., Negros Navigation Co. y otras Compaas Mineras, y todos los demas bienes no mencionados en este testamento y que me pertenezcan en la fecha de mi muerte, se adjudiquen, como por el presente adjudico, a mi sobrina Srta. Eusaquia Lizares, hija de mi difunto hermano Don Simplicio Lizares cuidados que mi citada sobrina me ha prestado y signe prestandome hasta ahora. Ordeno, sin embargo, a mi referida sobrina, Srta. Eustaquia Lizares, que ella se haga cargo de pagar todas las obligaciones que tengo y que gravan sobre las propriedades adjudicadas a la misma. Asimismo ordeno a mi citada sobrina que ella mande celebrar una Misa Gregoriana cada ao en sufragio de mi alma, y misas ordinarias en sufragio de las almas de mi difunto Padre y de mi difunta Madre, el 6 de Marzo y 17 de Deciembre de cada ao, respectivamente, y mande celebrar todos los aos la fiesta de San Jose en Talisay como lo hago hasta ahora. En el caso de que mi citada sobrina, Srta. Eustaquia Lizares, falleciere sin dejar descendientes legitimos, ordeno y dispongo que mi participacion consistente en una sexta parte (1/6) de la Hda. Matab-ang, con su correspondiente cuota de azucar y otros mejoras, se adjudique a mis hermanas y hermano antes mencionados y que me sobrevivan (Emphasis supplied) On January 28, 1968, Maria Lizares y Alunan died without any issue leaving said "testamento" in the possession and custody of her niece, Eustquia Lizares. 3 On February 6, 1968, Eustaquia filed a petition for the settlement of the testate estate of Maria Lizares y Alunan, before the Court of First Instance of Negros Occidental, Branch IV, docketed as Special Proceedings No. 8452. 4 The required publication of the notice of hearing of the petition having been made, in due course, the probate court issued an order declaring the will probated and appointing Eustaquia as the executrix of the estate of Maria Lizares. 5 On July 10, 1968, Eustaquia filed a project of partition 6 which was granted by the probate court in an order dated January 8, 1971. Simultaneously, said court declared the heirs, devisees, legatees and usufructuaries mentioned in the project of partition as the only heirs, devisees, legatees and usufructuaries of the estate; adjudicated to them the properties repectively assigned to each and every one of them, and ordered the Register of Deeds of Negros Occidental and Bacolod City to effect the corresponding transfer of the real properties to said heirs as well as the transfer of shares, stocks, and dividends in different corporations, companies and partnerships in the name of Maria Lizares to the heirs and legatees, and the closure of the testate proceedings of Maria Lizares. 7 Thereafter, Eustaquia filed an urgent motion to reopen the testate proceedings in order that some properties of Maria Lizares which had been omitted in the partition be adjudicated to

her. 8 The Court granted the motion and correspondingly reopened the testate proceedings. It adjudicated to Eustaquia certain shares of stocks, a revolving fund certificate, plantation credits and sugar quota allocations, and real or personal properties of Maria Lizares which were not given by her to any other person in her last will and testament. 9 On November 28, 1972, the heirs of Maria Lizares, namely: Encarnacion L. Vda. de Panlilio, Remedios L. Vda. de Guinto, Felicidad Paredes Llopez, Rosario Paredes Mendoza and Eustaquia Lizares executed an agreement of partition and subdivision, thereby terminating their co-ownership over Lots Nos. 550, 514, 553, 1287-C of plan SWO-7446, and 552, all of the Cadastral Survey of Talisay covered by Transfer Certificates of Title Nos. T-65004, T-65005; T65006, T-65007, and T-65008. 10 A year later or on November 23, 1973, Eustquia Lizares died single without any descendant. 11 In due time, Rodolfo Lizares and Amelo Lizares were appointed joint administrators of Eustquia's intestate estate. On the strength of the testamentary provisions contained in paragraphs 10 and 11 of the will of Maria Lizares, which were allegedly in the nature of a simple substitution, Celsa Vda. de Kilayko, Encarnacion Vda. de Panlilio, and Remedios Vda. de Guinto (hereinafter collectively referred to as Celsa L. Vda. de Kilayko, et al.) filed a motion in Special Proceedings No. 8452 to reopen once again the testate estate proceedings of Maria Lizares. They prayed among others that a substitute administrator be appointed; that the order dated January 8, 1971 be reconsidered and amended by declaring them as heirs to 1/3 of 1/14 of Hda. Minuluan and to 1/6 of Hda. Matab-ang, both of which form an aggregate area of 33 hectares; that the Register of Deeds of Negros Occidental, after such amendment, be ordered to register at the back of their respective certificates of title, the order of probate and a "declaration" that movants are the heirs of said properties, and correspondingly issue new certificates of title in their names. 12 Two (2) sets of intestate heirs of the deceased Eustaquia Lizares namely: Socorro L. Vda. de Escario, Rodolfo Lizares, Mario Lizares, Lucrecia Gustilo, and Aurora Lizares Wagner opposed the aforesaid motion. They alleged that the court had no more jurisdiction to reopen the testate estate proceedings of Maria Lizares as the order of closure had long become final and that the testamentary provisions sought to be enforced are null and void. 13 On April 6, 1974, the Court issued an order denying the motion to reopen the testate proceedings and holding that inasmuch as the settlement of an estate is a proceeding in rem, the judgment therein is binding against the whole world. It observed that inspite of the fact that the movants knew that the court had jurisdiction over them, they did not take part in the proceedings nor did they appeal the order of January 8, 1971. Thus, the court concluded, even if the said order was erroneous, and since the error was not jurisdictional, the same could have been corrected only by a regular appeal. The period for filing a motion for reconsideration having expired, the court opined that the movants could have sought relief from judgment under Rule 38 of the Rules of Court, but unfortunately for the movants, the period for filing such remedy had also elapsed. 14 Celsa L. Vda. de Kilayko, et al. then filed a motion for reconsideration of said order. It was denied on June 17, 1974. 15 Hence, on October 14, 1974, the said movants filed a complaint for recovery of ownership and possession of real property against the joining administrators of the estate of Eustaquia Lizares, Rodolfo and Amelo Lizares. It was docketed as Civil Case No. 11639 with the then Court of First Instance of Negros Occidental, Branch IV. 16 On the same

date, they availed of their rights under Rule 14, Section 24 of Rules of Court by filing a notice of lis pendens with the Register of Deeds of Negros Occidental.

17

As duly appointed judicial joint administrators of the estate of the late Eustaquia Lizares, Rodolfo Lizares and Amelo Lizares (the joint administrators for brevity), filed a motion to dismiss alleging that the court had no jurisdiction over the subject matter or nature of the case; the cause of action was barred by prior judgment, and the complaint stated no cause of action. 18 This motion was opposed by the plaintiffs. On January 23, 1975, the joint administrators filed a motion for the cancellation of the notice of lis pendens on the contentions that there existed exceptional circumstances which justified the cancellation of the notice of lis pendens and that no prejudice would be caused to the plaintiffs. 19 The latter opposed said motion. The defendants having filed a reply thereto, the plaintiffs filed a rejoinder reiterating their arguments in their opposition to the motion for cancellation of notice of lis pendens. 20 On September 20, 1976, respondent judge issued an order granting the motion for cancellation of notice of lis pendens. 21 The court simultaneously held in abeyance the resolution of the motion to dismiss the complaint. The joint administrators filed the answer to the complaint in Civil Case No. 11639. 22 Thereafter, they filed a motion for preliminary hearing on affirmative defenses. 23 Celsa L. Vda. de Kilayko, et al. vigorously opposed said motion. 24 On November 3, 1976, Celsa L. Vda. de Kilayko, et al. filed a motion praying for the reconsideration of the order dated September 20, 1976. 25 The joint administrators having filed an opposition thereto, 26 on January 7, 1977 the lower court denied the aforesaid motion for reconsideration. 27 It held that while a notice of lis pendens would serve as notice to strangers that a particular property was under litigation, its annotation upon the certificates of title to the properties involved was not necessary because such properties, being in custodia legis, could not just be alienated without the approval of the court. Moreover, the court added, a notice of lis pendens would prejudice any effort of the estate to secure crop loans which were necessary for the viable cultivation and production of sugar to which the properties were planted. Upon receipt of a copy of said order, Celsa L. Vda. de Kilayko, et al. filed in this Court a motion for extension of time to file a petition for review on certiorari. Docketed as G.R No. L-45425, the petition contends that the grounds of lis pendens, namely, that the properties are in custodia legis and the lending institutions would not grant crop loans to the estate, are not the legal grounds provided for under Sec. 24, Rule 14 of the Rules of Court for the cancellation of a notice of lis pendens. Meanwhile, on January 31, 1977, the lower court issued an order stating that since on September 21, 1976 it had held in abeyance the resolution of the motion to dismiss, it was also proper to suspend the resolution of the affirmative defenses interposed by the defendants until after trial on the merits of the case. Accordingly, the court set the date of pre-trial for March 24, 1977. 28 On April 13, 1977, the joint administrators filed before this Court a petition for certiorari, prohibition and/ormandamus with prayer for a writ of preliminary injunction. It was docketed as G.R. No. L-45965. Petitioners contend that the lower court had no jurisdiction over Civil Case

No. 11639 as it involves the interpretation of the will of Maria Lizares, its implementation and/or the adjudication of her properties. They assert that the matter had been settled in Special Proceedings No. become final and unappealable long before the complaint in Civil Case No. 8452 which had become final and unappealable long before the complaint in Civil Case No. 11639 was filed, and therefore, the cause of action in the latter case was barred by the principle of res judicata. They aver that the claim of Celsa, Encarnacion and Remedios, sisters of Maria Lizares, over the properties left by their niece Eustaquia and which the latter had inherited by will from Maria Lizares, was groundless because paragraphs 10 and 11 of Maria's will on which Celsa L. Vda. de Kilayko, et al. base their claim, conceived of a fideicommissary substitution of heirs. Petitioners contend that said provisions of the will are not valid because under Article 863 of the Civil code, they constitute an invalid fideicommissary substitution of heirs. On April 26, 1977, this Court issued a temporary restraining order enjoining the lower court from further proceeding with the trial of Civil Case No. 11639. 29 After both G.R. Nos. L-45425 and L45965 had been given due course and submitted for decision, on January 20, 1986, the two cases were consolidated. The petition in G.R. No. L-45965 is impressed with merit. In testate succession, there can be no valid partition among the heirs until after the will has been probated. 30 The law enjoins the probate of a will and the public requires it, because unless a will is probated and notice thereof given to the whole world, the right of a person to dispose of his property by will may be rendered nugatory. 31 The authentication of a will decides no other question than such as touch upon the capacity of the testator and the compliance with those requirements or solemnities which the law prescribes for the validity of a will. 32 Pertinent to the issue interposed by the petitioners in G.R. No. L-45965 is Section 1, Rule 90 of the Rules of Court which reads: Sec. 1. When order for distribution of residue made. When the debts, funeral charges, and expenses of administration, the allowance to the widow, and inheritance tax, if any, chargeable to the estate in accordance with law, have been paid, the court, on application of the executor or administrator, or of a person interested in the estate, and after hearing upon notice, shall assign the residue of the estate to the persons entitled to the same, naming them and the proportions or parts, to which each is entitled, and such persons may demand and recover their respective shares from the executor or administrator, or any other person having the same in his possession. If there is a controversy before the court as to who are the lawful heirs of the deceased person or as to the distributive shares to which each person is entitled under the law, the controversy shall be heard and decided as in ordinary cases. No distribution shall be allowed until the payment of the obligations abovementioned has been made or provided for, unless the distributees, or any of them give a bond, in a sum to be fixed by the court, conditioned for the payment of said obligations within such time as the court directs. Applying this rule, in the cases of De Jesus v. Daza, 33 and Torres v. Encarnacion, 34 the Court said:

. . . (T)he probate court, having the custody and control of the entire estate, is the most logical authority to effectuate this provision, within the estate proceeding, said proceeding being the most convenient one in which this power and function of the court can be exercised and performed without the necessity of requiring the parties to undergo the incovenience and litigate an entirely different action. Some decisions of the Court pertinent to the issue that the probate court has the jurisdiction to settle the claims of an heir and the consequent adjudication of the properties, are worth mentioning. In the cases of Arroyo v. Gerona,35 and Benedicto v. Javellana, 36 this Court said: . . . any challenge to the validity of a will, any objection to the authentication thereof, and everydemand or claim which any heir, legatee or party interested in a testate or intestate succession may make, must be acted upon and decided within the same special proceedings, not in a separate action, and the same judge having jurisdiction in the administration of the estate shall take cognizance of the question raised, inasmuch as when the day comes he will be called upon to make distribution and adjudication of the property to the interested parties. . . . (Emphasis supplied) The probate court, in the exercise of its jurisdiction to distribute the estate, has the power to determine the proportion or parts to which each distributee is entitled . . .. 37 A project of partition is merely a proposal for the distribution of the heredity estate which the court may accept or reject. It is the court that makes that distribution of the estate and determines the persons entitled thereto. 38 In the instant case, the records will show that in the settlement of the testate estate of Maria Lizares, the executrix, Eustaquia Lizares submitted on January 8, 1971, a project of partition in which the parcels of land, subject matters of the complaint for reconveyance, were included as property of the estate and assigned exclusively to Eustaquia as a devisee of Maria Lizares. In accordance with said project of partition which was approved by the probate court, Encarnacion Lizares Vda. de Panlilio, Remedios Lizares Vda. de Guinto, Felicidad Paredes Llopez, Rosario Paredes Mendoza and Eustaquia Lizares executed an Agreement of Partition and Subdivision on November 28, 1972, whereby they agreed to terminate their co-ownership over Lots Nos. 550, 514, 553, 1287-C of SWO-7446 and 552 covered by Transfer Certificates of Title Nos. T65004, T-65005, T-65006, T-65007 and T-65008. These facts taken altogether show that the Lizares sisters recognized the decree of partition sanctioned by the probate court and in fact reaped the fruits thereof. Hence, they are now precluded from attacking the validity of the partition or any part of it in the guise of a complaint for reconveyance. A party cannot, in law and in good conscience be allowed to reap the fruits of a partition, agreement or judgment and repudiate what does not suit him. 39 Thus, where a piece of land has been included in a partition and there is no allegation that the inclusion was affected through improper means or without petitioner's knowledge, the partition barred any further litigation on said title and operated to bring the property under the control and jurisdiction of the court for its proper disposition according to the tenor of the partition. 40 The question of private respondents title over the lots in question has been concluded by the partition and became a closed matter. The admission made by Celsa L. Vda. de Kilayko, et al. in their complaint, Civil Case No. 11639, that Eustaquia had been in possession of the questioned lots since March 2, 1971 up to

the time of her death indicates that the distribution pursuant to the decree of partition has already been carried out. Moreover, it cannot be denied that when Celsa L. Vda. de Kilayko, et al. moved for the reopening of the testate estate proceedings of Maria Lizares, the judicial decree of partition and order of closure of such proceedings was already final and executory, then reglementary period of thirty (30) days having elapsed from the time of its issuance, with no timely appeal having been filed by them. Therefore, they cannot now be permitted to question the adjudication of the properties left by will of Maria Lizares, by filing an independent action for the reconveyance of the very same properties subject of such partition. A final decree of distribution of the estate of a deceased person vests the title to the land of the estate in the distributees. If the decree is erroneous, it should be corrected by opportune appeal, for once it becomes final, its binding effect is like any other judgment in rem, unless properly set aside for lack of jurisdiction or fraud. Where the court has validly issued a decree of distribution and the same has become final, the validity or invalidity of the project of partition becomes irrelevant. 41 It is a fundamental concept in the origin of every jural system, a principle of public policy, that at the risk of occasional errors, judgments of courts should become final at some definite time fixed by law, interest rei publicae ut finis sit litum. "The very object of which the courts were constituted was to put an end to controversies." 42 The only instance where a party interested in a probate proceeding may have a final liquidation set aside is when he is left out by reason of circumstances beyond his control or through mistake or inadvertence not imputable to negligence. Even then, the better practice to secure relief is the opening of the same by proper motion within the reglementary period, instead of an independent action, the effect of which if successful, would be for another court or judge to throw out a decision or order already final and executed and reshuffle properties long ago distributed and disposed of. 43 The fundamental principle upon which the doctrine of res judicata rests is that parties ought not to be permitted to litigate the same issue more than once, that, when a right or fact has been judicially tried and determined by a court of competent jurisdiction, or an opportunity for such trial has been given, the judgment of the court, so long as it remains unreversed, should be conclusive upon the parties and those in privity with them in law or estate. 44 All the requisites for the existence of res judicata are present. Thus, the order approving the distribution of the estate of Maria Lizares to the heirs instituted in said will has become final and unappealable; the probate court that rendered judgment had jurisdiction over the subject matter and over the parties; the judgment or orders had been rendered on the merits; the special proceedings for the settlement of the estate of Maria Lizares was a proceedingin rem that was directed against the whole world including Celsa L. Vda. de Kilayko, et al., so that it can be said that there is a similarity of parties in Special Proceedings No. 8452 and Civil Case No. 11639, the judicial administrators of Eustaquia being privy to Celsa L. Vda. de Kilayko, et al.; there is identity of subject matter involved in both actions, namely, the properties left by Maria Lizares; there is identity of causes of action because in the first action there was a declaration of the probate court in its order dated April 6, 1974 that although the testatrix intended a fideicommissary substitution in paragraphs 10 and 11 of her will, the substitution can have no effect because the requisites for it to be valid, had not been satisfied. 45 Granting that res judicata has not barred the institution of Civil Case No. 11639, the contention of Celsa L. Vda. de Kilayko, et al. that they are conditional substitute heirs of Eustaquia in the testate estate of Maria Lizares 46 is not meritorious. While the allegation of the joint

administrators that paragraphs 10 and 11 of Maria Lizares' last will and testament conceives of a fideicommissary substitution under Article 863 of the Civil Code is also baseless as said paragraphs do not impose upon Eustaquia a clear obligation to preserve the estate in favor of Celsa L. Vda. de Kilayko, et al., neither may said paragraphs be considered as providing for a vulgar or simple substitution. It should be remembered that when a testator merely names an heir and provides that if such heir should die a second heir also designated shall succeed, there is no fideicommissary substitution. The substitution should then be construed as a vulgar or simple substitution under Art. 859 of the Civil Code but it shall be effective only if the first heir dies before the testator. 47 In this case, the instituted heir, Eustaquia, survived the testatrix, Maria Lizares. Hence, there can be no substitution of heirs for, upon Maria Lizares' death, the properties involved unconditionally devolved upon Eustaquia. Under the circumstances, the sisters of Maria Lizares could only inherit the estate of Eustaquia by operation of the law of intestacy. With respect to the cancellation of the notice of lis pendens on the properties involved, there is no merit in the contention of Celsa L. Vda. de Kilayko, et al., that the lower court acted contrary to law and/or gravely abused its discretion in cancelling the notice of lis pendens. The cancellation of such a precautionary notice, being a mere incident in an action, may be ordered by the court having jurisdiction over it at any given time. 48 Under Sec. 24, Rule 14 of the Rules of Court, a notice of lis pendens may be cancelled "after proper showing that the notice is for the purpose of molesting the adverse party, or that it is not necessary to protect the rights of the party who caused it to be recorded." 49 In this case, the lower court ordered the cancellation of said notice on the principal reason that the administrators of the properties involved are subject to the supervision of the court and the said properties are under custodia legis. Therefore, such notice was not necessary to protect the rights of Celsa L. Vda. de Kilayko, et al. More so in this case where it turned out that their claim to the properties left by Eustaquia is without any legal basis. WHEREFORE, the petition for review on certiorari in L-45425 is hereby DENIED but the petition for certiorari and prohibition and/or mandamus in L-45965 is GRANTED. The temporary restraining order of April 26, 1977 which was issued by the Court in L-45965 is made PERMANENT. Costs against the petitioners in L-45425. SO ORDERED. Gutierrez, Jr., Bidin and Davide, Jr., JJ., concur. Feliciano, J., is on leave.

Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. L-26695 January 31, 1972 JUANITA LOPEZ GUILAS, petitioner, vs. JUDGE OF THE COURT OF FIRST INSTANCE OF PAMPANGA AND ALEJANDRO LOPEZ respondents . Filemon Cajator for petitioner. Eligio G. Lagman for respondent Alejandro Lopez.

MAKASIAR, J.:p It appears from the records that Jacinta Limson de Lopez, of Guagua, Pampanga was married to Alejandro Lopez y Siongco. They had no children. On April 28, 1936, Jacinta executed a will instituting her husband Alejandro as her sole heir and executor (pp. 20-21, rec.). In a Resolution dated October 26, 1953 in Sp. Proc. No. 894 entitled "En el Asunto de la Adopcion de la Menor Juanita Lopez y Limson" (pp. 92-94, 103, rec.), herein petitioner Juanita Lopez, then single and now married to Federico Guilas, was declared legally adopted daughter and legal heir of the spouses Jacinta and Alejandro. After adopting legally herein petitioner Juanita Lopez, the testatrix Doa Jacinta did not execute another will or codicil so as to include Juanita Lopez as one of her heirs. In an order dated March 5, 1959 in Testate Proceedings No. 1426, the aforementioned will was admitted to probate and the surviving husband, Alejandro Lopez y Siongco, was appointed executor without bond by the Court of First Instance of Pampanga (Annexes "A" and "B", pp. 18-23, rec.). Accordingly, Alejandro took his oath of office as executor (Annex "C", p. 24, rec.). Nevertheless, in a project of partition dated March 19, 1960 executed by both Alejandro Lopez and Juanita Lopez Guilas, the right of Juanita Lopez to inherit from Jacinta was recognized and Lots Nos. 3368 and 3441 (Jacinta's paraphernal property), described and embraced in Original Certificate of Title No. 13092, both situated in Bacolor Pampanga Lot 3368 with an area of 68,141 square meters and Lot 3441 with an area of 163,231 square meters, then assessed respectively at P3,070.00 and P5,800.00 (Annex "D", pp. 27-36, rec.) were adjudicated to Juanita Lopez-Guilas as her share free from all liens, encumbrances and charges, with the executor Alejandro Lopez, binding himself to free the said two parcels from such liens,

encumbrances and charges. The rest of the estate of the deceased consisting of 28 other parcels of lands with a total assessed valuation of P69,020.00 and a combined area of 743,924.67 square meters, as well as personal properties including a 1953 Buick car valued at P2,500.00 were allotted to Don Alejandro who assumed all the mortgage liens on the estate (Annex "D", pp. 25-37, rec.). In an order dated April 23, 1960, the lower court approved the said project of partition and directed that the records of the case be sent to the archives, upon payment of the estate and inheritance taxes (Annex "E", p. 38, rec.). Upon ex-parte petition of the adjudicatees Alejandro Lopez and Juanita Lopez-Guilas dated August 25, 1961 (Annex "F", pp. 39-40, rec.), the lower court in an order dated August 28, 1961, approved the correction of clerical errors appearing in the project of partition (Annex "G", p. 41, rec.). On April 10, 1964, herein petitioner Juanita Lopez-Guilas filed a separate ordinary action to set aside and annul the project of partition, which case was docketed as Civil Case 2539 entitled "Juanita Lopez-Guilas vs. Alejandro Lopez" in the Court of First Instance of Pampanga, on the ground of lesion, perpetration and fraud, and pray further that Alejandro Lopez be ordered to submit a statement of accounts of all the crops and to deliver immediately to Juanita lots nos. 3368 and 3441 of the Bacolor Cadastre, which were allocated to her under the project of partition (p. 132, rec.). Meanwhile, in Testate Proceedings No. 1426, Juanita filed a petition dated July 20, 1964 praying that Alejandro Lopez be directed to deliver to her the actual possession of said lots nos. 3368 and 3441 as well as the 1,216 caverns of palay that he collected from the ten (10) tenants or lessees of the said two lots (Annex "H", pp. 42-44, rec.). In his opposition dated August 5, 1964 to the said petition, Alejandro Lopez claims that, by virtue of the order dated April 23, 1960 which approved the project of partition submitted by both Alejandro and Juanita and directed that the records of the case be archived upon payment of the estate and inheritance taxes, and the order of December 15, 1960 which "ordered closed and terminated the present case", the testate proceedings had already been closed and terminated; and that he ceased as a consequence to be the executor of the estate of the deceased; and that Juanita Lopez is guilty of laches and negligence in filing the petition of the delivery of her share 4 years after such closure of the estate, when she could have filed a petition for relief of judgment within sixty (60) days from December 15, 1960 under Rule 38 of the old Rules of Court (Annex "I") citing A. Austria vs. Heirs of Antonio Ventenilla, L-100808, Sept. 18, 1956 (pp. 45-48, rec.). In her reply dated November 17, 1965 to said opposition, Juanita contends that the actual delivery and distribution of the hereditary shares to the heirs, and not the order of the court declaring as closed and terminated the proceedings, determines the termination of the probate proceedings (citing Intestate estate of the deceased Mercedes Cano, Timbol vs. Cano, 59 O.G. No. 30, pp. 46-73, April 29, 1961, where it was ruled that "the probate court loses jurisdiction of an estate under administration only after the payment of all the taxes, and after the remaining estate is delivered to the heirs entitled to receive the same"); that the executor Alejandro is estopped from opposing her petition because he was the one who prepared, filed and secured court approval of, the aforesaid project of partition, which she seeks to be implemented; that she is not guilty of laches, because when she filed on July 20, 1964, her petition for he delivery of her share allocated to her under the project of partition, less than 3 years had elapsed from

August 28, 1961 when the amended project of partition was approved, which is within the 5-year period for the execution of judgment by motion (Annex "J", pp. 49-52, rec.). In its order dated October 2, 1964, the lower court after a "pre-trial" stated that because the civil action for the annulment of the project of partition was filed on April 13, 1964, before the filing on July 2, 1964 of the petition for delivery of the shares of Juanita Lopez, "the parties have agreed to suspend action or resolution upon the said petition for the delivery of shares until; after the civil action aforementioned has been finally settled and decided", and forthwith set the civil action for annulment for trial on November 25, and December 2, 1964 (Annex "K", pp. 53-54, rec.). On June 11, 1965, Juanita filed an amended complaint in Civil Case 2539 (pp. 78-110, rec.), where she acknowledges the partial legality and validity of the project of partition insofar as the allocation in her favor of the Lots Nos. 3368 and 3441, the delivery of which she is seeking (pp. 106-107, rec.). In her motion dated November 17, 1965, Juanita sought the setting aside of the order dated October 2, 1964 on the ground that while the said order considered her action for annulment of the project of partition as a prejudicial question, her filing an amended complaint on June 11, 1965 in civil case No. 2539 wherein she admitted the partial legality and validity of the project of partition with respect to the adjudication to her of the two lots as her share, rendered said civil case No. 2539 no longer a prejudicial question to her petition of July 20, 1964 for the delivery of her share (Annex "L", pp. 55-59, rec.). Alejandro filed his opposition dated December 1, 1965 to the aforesaid motion of Juanita to set aside the order dated October 2, 1964 (Annex "M", pp. 60-61, rec.), to which Juanita filed her rejoinder dated December 6, 1965 wherein she stated among others that pursuant to the project of partition, executor Alejandro secured the cancellation of OCT. No. 13093 covering the two parcels of land adjudicated to her under the project of partition and the issuance in his exclusive name on August 4, 1961 TCT No. 26638-R covering the said Lots Nos. 3368 and 3441 of the Bacolor Cadastre (Annex "N", pp. 62-71, rec.). In an order dated April 27, 1966, the lower court denied Juanita's motion to set aside the order of October 2, 1964 on the ground that the parties themselves agreed to suspend resolution of her petition for the delivery of her shares until after the civil action for annulment of the project of partition has been finally settled and decided (Annex "O", p. 72, rec.). Juanita filed a motion dated May 9, 1966 for the reconsideration of the order dated April 27, 1966 (Annex "P" pp. 73-77, rec.), to which Alejandro filed an opposition dated June 8, 1966 (Annex "Q", pp. 112-113, rec.). Subsequently, Alejandro filed a motion dated July 25, 1966 praying that the palay deposited with Fericsons and Ideal Rice Mill by the ten (10) tenants of the two parcels in question be delivered to him (Annex "R", pp. 114-116, rec.),to which Juanita filed an opposition dated July 26, 1966 (Annex "S", pp. 117-121, rec.). In an order dated September 8, 1966, the lower court denied the motion for reconsideration of the order dated April 27, 1966, and directed Fericsons Inc. and the Ideal Rice Mills to deliver to Alejandro or his representative the 229 cavans and 46 kilos and 325 and 1/2 cavans and 23 kilos of palay respectively deposited with the said rice mills upon the filing by Alejandro of a bond in the amount of P12,000.00 duly approved by the court (Annex "T", pp. 122-127, rec.). Hence, this petition for certiorari and mandamus.

The position of petitioner Juanita Lopez-Guilas should be sustained and the writs prayed for granted. The probate court loses jurisdiction of an estate under administration only after the payment of all the debts and the remaining estate delivered to the heirs entitled to receive the same. The finality of the approval of the project of partition by itself alone does not terminate the probate proceeding (Timbol vs. Cano, 1 SCRA 1271, 1276, L-15445, April 29, 1961; Siguiong vs. Tecson, 89 Phil., pp. 28-30). As long as the order of the distribution of the estate has not been complied with, the probate proceedings cannot be deemed closed and terminated Siguiong vs. Tecson, supra.); because a judicial partition is not final and conclusive and does not prevent the heir from bringing an action to obtain his share, provided the prescriptive period therefor has not elapsed (Mari vs. Bonilla, 83 Phil., 137). The better practice, however, for the heir who has not received his share, is to demand his share through a proper motion in the same probate or administration proceedings, or for re-opening of the probate or administrative proceedings if it had already been closed, and not through an independent action, which would be tried by another court or Judge which may thus reverse a decision or order of the probate on intestate court already final and executed and re-shuffle properties long ago distributed and disposed of (Ramos vs. Ortuzar, 89 Phil., 730, 741-742; Timbol vs. Cano, supra.; Jingco vs. Daluz, L-5107, April 24, 1953, 92 Phil. 1082; Roman Catholic vs. Agustines, L-14710, March 29, 1960, 107 Phil., 455, 460-461). Section 1 of Rule 90 of the Revised Rules of Court of 1964 as worded, which secures for the heirs or legatees the right to "demand and recover their respective shares from the executor or administrator, or any other person having the same in his possession", re-states the aforecited doctrines. The case of Austria vs. Heirs of Ventenilla (99 Phil. 1068) does not control the present controversy; because the motion filed therein for the removal of the administratrix and the appointment of a new administrator in her place was rejected by the court on the ground of laches as it was filed after the lapse of about 38 years from October 5, 1910 when the court issued an order settling and deciding the issues raised by the motion (L-10018, September 19, 1956, 99 Phil., 1069-1070). In the case at bar, the motion filed by petitioner for the delivery of her share was filed on July 20, 1964, which is just more than 3 years from August 28, 1961 when the amended project of partition was approve and within 5 years from April 23, 1960 when the original project of partition was approved. Clearly, her right to claim the two lots allocated to her under the project of partition had not yet expired. And in the light of Section 1 of Rule 90 of the Revised Rules of Court of 1964 and the jurisprudence above cited, the order dated December 15, 1960 of the probate court closing and terminating the probate case did not legally terminate the testate proceedings, for her share under the project of partition has not been delivered to her. While it is true that the order dated October 2, 1964 by agreement of the parties suspended resolution of her petition for the delivery of her shares until after the decision in the civil action for the annulment of the project of partition (Civil Case 2539) she filed on April 10, 1964; the said order lost its validity and efficacy when the herein petitioner filed on June 11, 1965 an amended complaint in said Civil Case 2539 wherein she recognized the partial legality and validity of the said project of partition insofar as the allocation in her favor of lots Nos. 3368 and 3441 in the delivery of which she has been insisting all along (pp. 106-107, rec.). WHEREFORE, judgment is hereby rendered:

1. Granting the writs prayed for; 2. Setting aside the orders of the respondent court dated October 2, 1964 and April 27, 1966, as null and void; and, without prejudice to the continuance of Civil Case No. 2539, which, by reason of this decision, involves no longer Lots 3368 and 3441 of the Bacolor Cadastre, . 3. Directing. (a) the Register of Deeds of Pampanga to cancel TCT No. 26638-R covering the aforesaid lots Nos. 3368 and 3441 of the Bacolor Cadastre and to issue anew Transfer Certificate of Title covering the said two lots in the name of herein petitioner Juanita Lopez Guilas; and (b) the respondent Alejandro Lopez (1) to deliver to herein petitioner Juanita Lopez Guilas the possession of lots Nos. 3368 and 3441; (2) to deliver and/or pay to herein, petitioner all the rents, crops or income collected by him from said lots Nos. 3368 and 3441 from April 23, 1960 until the possession of the two aforementioned lots is actually delivered to her, or their value based on the current market price; and (3) to pay the costs. So ordered. Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Castro, Fernando, Teehankee, Barredo and Villamor, JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 124862 December 22, 1998 FE D. QUITA, petitioner, vs. COURT OF APPEALS and BLANDINA DANDAN, * respondents.

BELLOSILLO, J.: FE D. QUITA and Arturo T. Padlan, both Filipinos, were married in the Philippines on 18 May 1941. They were not however blessed with children. Somewhere along the way their relationship soured. Eventually Fe sued Arturo for divorce in San Francisco, California, U.S.A. She submitted in the divorce proceedings a private writing dated 19 July 1950 evidencing their agreement to live separately from each other and a settlement of their conjugal properties. On 23 July 1954 she obtained a final judgment of divorce. Three (3) weeks thereafter she married a certain Felix Tupaz in the same locality but their relationship also ended in a divorce. Still in the U.S.A., she married for the third time, to a certain Wernimont. On 16 April 1972 Arturo died. He left no will. On 31 August 1972 Lino Javier Inciong filed a petition with the Regional Trial Court of Quezon City for issuance of letters of administration concerning the estate of Arturo in favor of the Philippine Trust Company. Respondent Blandina Dandan (also referred to as Blandina Padlan), claiming to be the surviving spouse of Arturo Padlan, and Claro, Alexis, Ricardo, Emmanuel, Zenaida and Yolanda, all surnamed Padlan, named in the children of Arturo Padlan opposed the petition and prayed for the appointment instead of Atty. Leonardo Casaba, which was resolved in favor of the latter. Upon motion of the oppositors themselves, Atty. Cabasal was later replaced by Higino Castillon. On 30 April 1973 the oppositors (Blandina and Padlan children) submitted certified photocopies of the 19 July 1950 private writing and the final judgment of divorce between petitioner and Arturo. Later Ruperto T. Padlan, claiming to be the sole surviving brother of the deceased Arturo, intervened. On 7 October 1987 petitioner moved for the immediate declaration of heirs of the decedent and the distribution of his estate. At the scheduled hearing on 23 October 1987, private respondent as well as the six (6) Padlan children and Ruperto failed to appear despite due notice. On the same day, the trial court required the submission of the records of birth of the Padlan children within ten (10) days from receipt thereof, after which, with or without the documents, the issue on the declaration of heirs would be considered submitted for resolution. The prescribed period lapsed without the required documents being submitted. The trial court invoking Tenchavez v. Escao 1 which held that "a foreign divorce between Filipino citizens sought and decreed after the effectivity of the present Civil Code (Rep. Act 386) was not entitled to recognition as valid in this jurisdiction," 2 disregarded the divorce between

petitioner and Arturo. Consecuently, it expressed the view that their marriage subsisted until the death of Arturo in 1972. Neither did it consider valid their extrajudicial settlement of conjugal properties due to lack of judicial approval. 3 On the other hand, it opined that there was no showing that marriage existed between private respondent and Arturo, much less was it shown that the alleged Padlan children had been acknowledged by the deceased as his children with her. As regards Ruperto, it found that he was a brother of Arturo. On 27 November 1987 4 only petitioner and Ruperto were declared the intestate heirs of Arturo. Accordingly, equal adjudication of the net hereditary estate was ordered in favor of the two intestate heirs. 5 On motion for reconsideration, Blandina and the Padlan children were allowed to present proofs that the recognition of the children by the deceased as his legitimate children, except Alexis who was recognized as his illegitimate child, had been made in their respective records of birth. Thus on 15 February 1988 6 partial reconsideration was granted declaring the Padlan children, with the exception of Alexis, entitled to one-half of the estate to the exclusion of Ruperto Padlan, and petitioner to the other half. 7 Private respondent was not declared an heir. Although it was stated in the aforementioned records of birth that she and Arturo were married on 22 April 1947, their marriage was clearly void since it was celebrated during the existence of his previous marriage to petitioner. In their appeal to the Court of Appeals, Blandina and her children assigned as one of the errors allegedly committed by the trial court the circumstance that the case was decided without a hearing, in violation of Sec. 1, Rule 90, of the Rules of Court, which provides that if there is a controversy before the court as to who are the lawful heirs of the deceased person or as to the distributive shares to which each person is entitled under the law, the controversy shall be heard and decided as in ordinary cases. Respondent appellate court found this ground alone sufficient to sustain the appeal; hence, on 11 September 1995 it declared null and void the 27 November 1987 decision and 15 February 1988 order of the trial court, and directed the remand of the case to the trial court for further proceedings. 8 On 18 April 1996 it denied reconsideration.9 Should this case be remanded to the lower court for further proceedings? Petitioner insists that there is no need because, first, no legal or factual issue obtains for resolution either as to the heirship of the Padlan children or as to the decedent; and, second, the issue as to who between petitioner and private respondent is the proper hier of the decedent is one of law which can be resolved in the present petition based on establish facts and admissions of the parties. We cannot sustain petitioner. The provision relied upon by respondent court is clear: If there is a controversybefore the court as to who are the lawful heirs of the deceased person or as to the distributive shares to which each person is entitled under the law, the controversy shall be heard and decided as in ordinary cases. We agree with petitioner that no dispute exists either as to the right of the six (6) Padlan children to inherit from the decedent because there are proofs that they have been duly acknowledged by him and petitioner herself even recognizes them as heirs of Arturo Padlan; 10 nor as to their respective hereditary shares. But controversy remains as to who is the legitimate surviving spouse of Arturo. The trial court, after the parties other than petitioner failed to appear during the scheduled hearing on 23 October 1987 of the motion for immediate declaration of heirs and distribution of estate, simply issued an order requiring the submission of the records of birth of

the Padlan children within ten (10) days from receipt thereof, after which, with or without the documents, the issue on declaration of heirs would be deemed submitted for resolution. We note that in her comment to petitioner's motion private respondent raised, among others, the issue as to whether petitioner was still entitled to inherit from the decedent considering that she had secured a divorce in the U.S.A. and in fact had twice remarried. She also invoked the above quoted procedural rule. 11 To this, petitioner replied that Arturo was a Filipino and as such remained legally married to her in spite of the divorce they obtained. 12Reading between the lines, the implication is that petitioner was no longer a Filipino citizen at the time of her divorce from Arturo. This should have prompted the trial court to conduct a hearing to establish her citizenship. The purpose of a hearing is to ascertain the truth of the matters in issue with the aid of documentary and testimonial evidence as well as the arguments of the parties either supporting or opposing the evidence. Instead, the lower court perfunctorily settled her claim in her favor by merely applying the ruling in Tenchavez v. Escao. Then in private respondent's motion to set aside and/or reconsider the lower court's decision she stressed that the citizenship of petitioner was relevant in the light of the ruling in Van Dorn v. Romillo Jr. 13 that aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid according to their national law. She prayed therefore that the case be set for hearing. 14 Petitioner opposed the motion but failed to squarely address the issue on her citizenship. 15 The trial court did not grant private respondent's prayer for a hearing but proceeded to resolve her motion with the finding that both petitioner and Arturo were "Filipino citizens and were married in the Philippines." 16 It maintained that their divorce obtained in 1954 in San Francisco, California, U.S.A., was not valid in Philippine jurisdiction. We deduce that the finding on their citizenship pertained solely to the time of their marriage as the trial court was not supplied with a basis to determine petitioner's citizenship at the time of their divorce. The doubt persisted as to whether she was still a Filipino citizen when their divorce was decreed. The trial court must have overlooked the materiality of this aspect. Once proved that she was no longer a Filipino citizen at the time of their divorce, Van Dorn would become applicable and petitioner could very well lose her right to inherit from Arturo. Respondent again raised in her appeal the issue on petitioner's citizenship; 17 it did not merit enlightenment however from petitioner. 18 In the present proceeding, petitioner's citizenship is brought anew to the fore by private respondent. She even furnishes the Court with the transcript of stenographic notes taken on 5 May 1995 during the hearing for the reconstitution of the original of a certain transfer certificate title as well as the issuance of new owner's duplicate copy thereof before another trial court. When asked whether she was an American citizen petitioner answered that she was since 1954.19 Significantly, the decree of divorce of petitioner and Arturo was obtained in the same year. Petitioner however did not bother to file a reply memorandum to erase the uncertainty about her citizenship at the time of their divorce, a factual issue requiring hearings to be conducted by the trial court. Consequently, respondent appellate court did not err in ordering the case returned to the trial court for further proceedings. We emphasize however that the question to be determined by the trial court should be limited only to the right of petitioner to inherit from Arturo as his surviving spouse. Private respondent's claim to heirship was already resolved by the trial court. She and Arturo were married on 22 April 1947 while the prior marriage of petitioner and Arturo was subsisting thereby resulting in a bigamous marriage considered void from the beginning under Arts. 80 and 83 of the Civil Code. Consequently, she is not a surviving spouse that can inherit from him as this status presupposes a legitimate relationship. 20

As regards the motion of private respondent for petitioner and a her counsel to be declared in contempt of court and that the present petition be dismissed for forum shopping, 21 the same lacks merit. For forum shopping to exist the actions must involve the same transactions and same essential facts and circumstances. There must also be identical causes of action, subject matter and issue. 22 The present petition deals with declaration of heirship while the subsequent petitions filed before the three (3) trial courts concern the issuance of new owner's duplicate copies of titles of certain properties belonging to the estate of Arturo. Obviously, there is no reason to declare the existence of forum shopping. WHEREFORE, the petition is DENIED. The decision of respondent Court of Appeals ordering the remand of the case to the court of origin for further proceedings and declaring null and void its decision holding petitioner Fe D. Quita and Ruperto T. Padlan as intestate heirs is AFFIRMED. The order of the appellate court modifying its previous decision by granting onehalf (1/2) of the net hereditary estate to the Padlan children, namely, Claro, Ricardo, Emmanuel, Zenaida and Yolanda, with the exception of Alexis, all surnamed Padlan, instead of Arturo's brother Ruperto Padlan, is likewise AFFIRMED. The Court however emphasizes that the reception of evidence by the trial court should he limited to the hereditary rights of petitioner as the surviving spouse of Arturo Padlan. The motion to declare petitioner and her counsel in contempt of court and to dismiss the present petition for forum shopping is DENIED. SO ORDERED. Puno, Mendoza and Martinez, JJ., concur.

THIRD DIVISION

[G.R. No. 127920. August 9, 2005]

EMILIO B. PACIOLES, JR., IN HIS CAPACITY AS ADMINISTRATOR AND HEIR OF THE INTESTATE ESTATE OF MIGUELITA CHING-PACIOLES, petitioner, vs. MIGUELA CHUATOCO-CHING, respondent. DECISION SANDOVAL-GUTIERREZ, J.: Oftentimes death brings peace only to the person who dies but not to the people he leaves behind. For in death, a persons estate remains, providing a fertile ground for discords that break the familial bonds. Before us is another case that illustrates such reality. Here, a husband and a mother of the deceased are locked in an acrimonious dispute over the estate of their loved one. This is a petition for review on certiorari filed by Emilio B. Pacioles, Jr., herein petitioner, against Miguela Chuatoco-Ching, herein respondent, assailing the Court of Appeals Decision[1] dated September 25, 1996 and Resolution[2] dated January 27, 1997 in CA-G.R. SP No. 41571.[3] The Appellate Court affirmed the Order dated January 17, 1996 of the Regional Trial Court (RTC), Branch 99, Quezon City denying petitioners motion for partition and distribution of the estate of his wife, Miguelita Ching-Pacioles; and his motion for reconsideration. The facts are undisputed. On March 13, 1992, Miguelita died intestate, leaving real properties with an estimated value of P10.5 million, stock investments worth P518,783.00, bank deposits amounting to P6.54 million, and interests in certain businesses. She was survived by her husband, petitioner herein, and their two minor children. Consequently, on August 20, 1992, petitioner filed with the RTC a verified petition[4] for the settlement of Miguelitas estate. He prayed that (a) letters of administration be issued in his name, and (b) that the net residue of the estate be divided among the compulsory heirs. Miguelitas mother, Miguela Chuatoco-Ching, herein respondent, filed an opposition, specifically to petitioners prayer for the issuance of letters of administration on the grounds that (a) petitioner is incompetent and unfit to exercise the duties of an administrator; and (b) the bulk of Miguelitas estate is composed of paraphernalproperties. Respondent prayed that the letters of administration be issued to her instead.[5] Afterwards, she also filed a motion for her appointment as special administratrix.[6] Petitioner moved to strike out respondents opposition, alleging that the latter has no direct and material interest in the estate, she not being a compulsory heir, and that he, being the surviving spouse, has the preferential right to be appointed as administrator under the law.[7] Respondent countered that she has direct and material interest in the estate because she gave half of her inherited properties to Miguelita on condition that both of them would

undertake whatever business endeavor they decided to, in the capacity of business partners.[8] In her omnibus motion[9] dated April 23, 1993, respondent nominated her son Emmanuel Ching to act as special administrator. On April 20, 1994, the intestate court issued an order appointing petitioner and Emmanuel as joint regular administrators of the estate.[10] Both were issued letters of administration after taking their oath and posting the requisite bond. Consequently, Notice to Creditors was published in the issues of the Manila Standard on September 12, 19, and 26, 1994. However, no claims were filed against the estate within the period set by the Revised Rules of Court. Thereafter, petitioner submitted to the intestate court an inventory of Miguelitas estate.[11] Emmanuel did not submit an inventory. On May 17, 1995, the intestate court declared petitioner and his two minor children as the only compulsory heirs of Miguelita.[12] On July 21, 1995, petitioner filed with the intestate court an omnibus motion[13] praying, among others, that an Order be issued directing the: 1) payment of estate taxes; 2) partition and distribution of the estate among the declared heirs; and 3) payment of attorneys fees. Respondent opposed petitioners motion on the ground that the partition and distribution of the estate is premature and precipitate, considering that there is yet no determination whether the properties specified in the inventory are conjugal, paraphernal or owned in a joint venture.[14] Respondent claimed that she owns the bulk of Miguelitas estate as an heir and co-owner. Thus, she prayed that a hearing be scheduled. On January 17, 1996, the intestate court allowed the payment of the estate taxes and attorneys fees but denied petitioners prayer for partition and distribution of the estate, holding that it is indeed premature. The intestate court ratiocinated as follows: On the partition and distribution of the deceaseds properties, among the declared heirs, the Court finds the prayer of petitioner in this regard to be premature. Thus, a hearing on oppositors claim as indicated in her opposition to the instant petition is necessary to determine whether the properties listed in the amended complaint filed by petitioner are entirely conjugal or the paraphernal properties of the deceased, or a co-ownership between the oppositor and the petitioner in their partnership venture. Petitioner filed a motion for reconsideration but it was denied in the Resolution dated May 7, 1996. Forthwith, petitioner filed with the Court of Appeals a petition for certiorari seeking to annul and set aside the intestate courts Order dated January 17, 1996 and Resolution dated May 7, 1996 which denied petitioners prayer for partition and distribution of the estate for being premature, indicating that it (intestate court) will first resolve respondents claim of ownership. The Appellate Court dismissed the petition for certiorari, holding that in issuing the challenged Order and Resolution, the intestate court did not commit grave abuse of discretion. The Appellate Court ruled:

Regarding the second issue raised, respondent judge did not commit grave abuse of discretion in entertaining private respondents unsupported claim of ownership against the estate. In fact, there is no indication that the probate court has already made a finding of title or ownership. It is inevitable that in probate proceedings, questions of collation or of advancement are involved for these are matters which can be passed upon in the course of the proceedings. The probate court in exercising its prerogative to schedule a hearing, to inquire into the propriety of private respondents claim, is being extremely cautious in determining the composition of the estate. This act is not tainted with an iota of grave abuse of discretion. Petitioner moved for a reconsideration but it was likewise denied. Hence, this petition for review on certiorari anchored on the following assignments of error: I RESPONDENT COURTS DECISION WHICH AFFIRMS THE INTESTATE COURTS ORDER IS A GRAVE ERROR FOR BEING CONTRARY TO THE SETTLED JURISPRUDENCE AND POLICY OF THE LAW THAT ESTATE PROCEEDINGS MUST BE SETTLED EXPEDITIOUSLY. II RESPONDENT COURT COMMITTED GRAVE ERROR IN SUSTAINING THE INTESTATE COURTS ORDER TO CONDUCT HEARING ON THE ISSUE OF OWNERSHIP CLAIM AGAINST THE ESTATE, AS SAID FUNCTION IS OUTSIDE AND BEYOND THE JURISDICTION OF THE INTESTATE COURT. III RESPONDENT COURT GRAVELY ERRED IN AFFIRMING THE INTESTATE COURTS ORDER AND RESOLUTION NOTWITHSTANDING THAT RESPONDENT CHINGS OWNERSHIP CLAIMS ARE CONFLICTING, FRIVOLOUS AND BASELESS. The fundamental issue for our resolution is: May a trial court, acting as an intestate court, hear and pass upon questions of ownership involving properties claimed to be part of the decedents estate? The general rule is that the jurisdiction of the trial court either as an intestate or a probate court relates only to matters having to do with the settlement of the estate and probate of will of deceased persons but does not extend to the determination of questions of ownership that arise during the proceedings.[15] The patent rationale for this rule is that such court exercises special and limited jurisdiction.[16] A well-recognized deviation to the rule is the principle that an intestate or a probate court may hear and pass upon questions of ownership when its purpose is to determine whether or not a property should be included in the inventory. In such situations the adjudication is merely incidental and provisional. Thus, in Pastor, Jr. vs. Court of Appeals,[17] we held: x x x As a rule, the question of ownership is an extraneous matter which the probate court cannot resolve with finality. Thus, for the purpose of determining whether a certain property should or should not be included in the inventory of estate properties, the

probate court may pass upon the title thereto, but such determination is provisional, not conclusive, and is subject to the final decision in a separate action to resolve title. The Court of Appeals relied heavily on the above principle in sustaining the jurisdiction of the intestate court to conduct a hearing on respondents claim. Such reliance is misplaced. Under the said principle, the key consideration is that the purpose of the intestate or probate court in hearing and passing upon questions of ownership is merely to determine whether or not a property should be included in the inventory. The facts of this case show that such was not the purpose of the intestate court. First, the inventory was not disputed. In fact, in her Manifestation and Opposition[18] dated September 18, 1995, respondent expressly adopted the inventory prepared by petitioner, thus: 6. She adopts the inventory submitted by the petitioner in his Amended Compliance dated October 6, 1994, and filed only on November 4, 1994 not October 5, 1995 as erroneously asserted in Par. 12 of the Omnibus Motion. Oppositor, however, takes exception to the low valuation placed on the real estate properties and reserves her right to submit a more accurate and realistic pricing on each. Respondent could have opposed petitioners inventory and sought the exclusion of the specific properties which she believed or considered to be hers. But instead of doing so, she expressly adopted the inventory, taking exception only to the low valuation placed on the real estate properties. And second, Emmanuel, respondents son and representative in the settlement of Miguelitas estate, did not submit his own inventory. His mandate, as co-administrator, is to submit within three (3) months after his appointment a true inventory and appraisal of all the real and personal estate of the deceased which have come into his possession or knowledge.[19] He could have submitted an inventory, excluding therefrom those properties which respondent considered to be hers. The fact that he did not endeavor to submit one shows that he acquiesced with petitioners inventory. Obviously, respondents purpose here was not to obtain from the intestate court a ruling of what properties should or should not be included in the inventory. She wanted something else, i.e., to secure from the intestate court a final determination of her claim of ownership over properties comprising the bulk of Miguelitas estate. The intestate court went along with respondent on this point as evident in its Resolution[20] dated May 7, 1996, thus: On petitioners motion for partition and distribution of the estate of the late Miguelita Ching Pacioles, it is believed that since oppositor had interposed a claim against the subject estate, the distribution thereof in favor of the heirs could not possibly be implemented as there is still a need for appropriate proceedings to determine the propriety of oppositors claim. It must be mentioned that if it is true that oppositor owns the bulk of the properties, which she allegedly placed/registered in the name of the deceased for convenience, Oppositor, therefore, has a material and direct interest in the estate and hence, should be given her day in Court. It is apparent from the foregoing Resolution that the purpose of the hearing set by the intestate court was actually to determine the propriety of oppositors (respondents) claim. According to the intestate court, if it is true that the oppositor (respondent) owns the bulk of (Miguelitas) properties, then it means that she has a material and direct interest in the estate and, hence, she should be given her day in court. The intended day in court or

hearing is geared towards resolving the propriety of respondents contention that she is the true owner of the bulk of Miguelitas estate. Surely, we cannot be deluded by respondents ingenious attempt to secure a proceeding for the purpose of resolving her blanket claim against Miguelitas estate. Although, she made it appear that her only intent was to determine the accuracy of petitioners inventory, however, a close review of the facts and the pleadings reveals her real intention. Clearly, the RTC, acting as an intestate court, had overstepped its jurisdiction. Its proper course should have been to maintain a hands-off stance on the matter. It is well-settled in this jurisdiction, sanctioned and reiterated in a long line of decisions, that when a question arises as to ownership of property alleged to be a part of the estate of the deceased person, but claimed by some other person to be his property, not by virtue of any right of inheritance from the deceased but by title adverse to that of the deceased and his estate, such question cannot be determined in the course of an intestate or probate proceedings. The intestate or probate court has no jurisdiction to adjudicate such contentions, which must be submitted to the court in the exercise of its general jurisdiction as a regional trial court .[21]Jurisprudence teaches us that: [A] probate court or one in charge of proceedings whether testate or intestate cannot adjudicate or determine title to properties claimed to be a part of the estate and which are claimed to belong to outside parties. All that the said court could do as regards said properties is to determine whether they should or should not be included in the inventory or list of properties to be administered by the administrator. If there is no dispute, well and good, but if there is, then the parties, the administrator, and the opposing parties have to resort to an ordinary action for a final determination of the conflicting claims of title because the probate court cannot do so.[22] Hence, respondents recourse is to file a separate action with a court of general jurisdiction. The intestate court is not the appropriate forum for the resolution of her adverse claim of ownership over properties ostensibly belonging to Miguelita's estate. Now, even assuming that the intestate court merely intended to make a provisional or prima facie determination of the issue of ownership, still respondents claim cannot prosper. It bears stressing that the bulk of Miguelitas estate, as stated in petitioners inventory, comprises real estates covered by the Torrens System which are registered either in the name of Miguelita alone or with petitioner. As such, they are considered the owners of the properties until their title is nullified or modified in an appropriate ordinary action. We find this Courts pronouncement in Bolisay vs. Alcid[23] relevant, thus: It does not matter that respondent-administratrix has evidence purporting to support her claim of ownership, for, on the other hand, petitioners have a Torrens title in their favor, which under the law is endowed with incontestability until after it has been set aside in the manner indicated in the law itself, which, of course, does not include, bringing up the matter as a mere incident in special proceedings for the settlement of the estate of deceased persons. x x x x x x In regard to such incident of inclusion or exclusion, We hold that if a property covered by Torrens Title is involved, the presumptive conclusiveness of such title should be given due weight, and in the absence of strong compelling evidence to the contrary, the holder thereof should be considered as the owner of the property in controversy until his title is

nullified or modified in an appropriate ordinary action, particularly, when as in the case at bar, possession of the property itself is in the persons named in the title. x x x Corrolarily, P.D. 1529, otherwise known as, The Property Registration Decree, proscribes collateral attack against Torrens Title, hence: Section 48. Certificate not subject to collateral attack. A certificate of title shall not be subject to collateral attack. It cannot be altered, modified or cancelled except in a direct proceeding in accordance with law. Significantly, a perusal of the records reveals that respondent failed to present convincing evidence to bolster her bare assertion of ownership. We quote her testimony, thus: Q: I now direct your attention to paragraph (5) appearing on page 1 of this sworn statement of yours which I quote: In accordance with the Chinese tradition and culture in the distribution of properties to the legal heirs, we decided to give only a token to our daughter Miguelita and leave the rest to our only son Emmanuel, with the undertaking that being the son he will take full responsibility of the rest of the family despite his marriage. Madame witness, do you recall having stated that in your sworn statement? A: Q A: Yes sir, but it was not carried out. What was actually given to your daughter Miguelita is only a token, is that right? Not a token, sir, but one half of the share of the estate was given to Lita and the other half was given to Emmanuel.

Q: What went to Emmanuel was also , is that right? A: Yes, sir.

Q: What makes up the one half share of Lita, if you recall? A: What was given to her were all checks, sir, but I cannot remember any more the amount. x x x x x x

Q: Summing up your testimony, Madame, you cannot itemize the one half share of the estate of Miguelita, is that right? A: Yes, sir.

Q: Was there any document covering this partition of the estate among you, Emmanuel and Miguelita with respect to the estate of your late husband? A: If I only knew that this will happen Wala po.[24]

Q: Samakatuwid po ay walang dokumento? A:

She further testified as follows:

Q: Among the properties listed like the various parcels of land, stocks, investments, bank accounts and deposits both here and abroad, interests and participation in IFS Pharmaceuticals and Medical Supplies, Inc. and various motor vehicles, per your pleasure, Madam Witness, how should these properties be partitioned or what should be done with these properties? According to you earlier, you are agreeable for the partition of the said properties with Emil on a 50-50 basis, is that right? A: Q Kung ano po ang sa akin, iyon ang dapat na bumalik sa akin, sir. Halimbawa ay ano po iyon? Real estate properties, parcels of land located in Pag-Asa, in Silangan, in San Lazaro, in Sta. Cruz, in San Francisco del Monte and shares of stock. Alinsunod sa inyo, paano po ang dapat na partihan o hatian ninyo ni Emil? Kung ano ang sa akin x x x Q A: x x x

A:

Ang tanong ko po sa inyo ay ganito, ito po ba ang inyong iminungkahi kay Emil? Ito po ba ang inyong paghahatian or hindi? Iyo akin talaga na hindi nila pinaghirapan, sir.[25]

Unfortunately, respondent could not even specify which of the properties listed in petitioners inventory belong to her. Neither could she present any document to prove her claim of ownership. The consistently changing basis of her claim did nothing to improve her posture. Initially, she insisted that the bulk of Miguelitas estate is composed of paraphernal properties.[26] Sensing that such assertion could not strengthen her claim of ownership, she opted to change her submission and declare that she and Miguelita were business partners and that she gave to the latter most of her properties to be used in a joint business venture.[27] Respondent must have realized early on that if the properties listed in petitioners inventory are paraphernal, then Miguelita had the absolute title and ownership over them and upon her death, such properties would be vested to her compulsory heirs, petitioner herein and their two minor children.[28] At any rate, we must stress that our pronouncements herein cannot diminish or deprive respondent of whatever rights or properties she believes or considers to be rightfully hers. We reiterate that the question of ownership of properties alleged to be part of the estate must be submitted to the Regional Trial Court in the exercise of its general jurisdiction.[29] WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 41571 are hereby REVERSED. SO ORDERED. Panganiban, (Chairman), Carpio-Morales, and Garcia, JJ., concur. Corona, J., on leave.