G.R. No.

L-8162 August 30, 1955

JULIETA TAMBUNTING DE TENGCO, petitioner, vs. Honorable RAMON R.
SAN JOSE, as Judge of First Instance of Manila, SALVADOR BARRIOS,
JOSE S. SARTE and EDUARDO D. GUTIERREZ, respondents.
MONTEMAYOR, J.:
Clara Tambunting died on April 2, 1950, leaving properties, real and personal, of
great value. Her will was probated on August 21, 1950. Survived by her husband
Vicente L. Legarda, she left as sole and direct heir her grandson Vicente Legarda
Price, an only child of her only child and daughter Clarita Tambunting married to
Walter Scott Price. Clarita died during the Liberation in 1945; her surviving spouse
Walter Scott Price later remarried and returned to the United States. His sister
Pacifica Price de Barrios married to a brother of Atty. Salvador Barrios was later
appointed guardian of the minor Vicente Legarda Price who by now must be around
ten or eleven years old. Clara's will disposed of her estate in the following manner:
1. 4/6 to her grandson Vicente Legarda Price;
2. 1/6 to her husband Vicente L. Legarda (who later married a daughter of
Atty. Jose S. Sarte); and
3. 1/6 to her nephews and nieces named Benjamin, Augusto, Romeo, and
Julieta, all surnamed Tambunting, children of her brother Manuel
Tambunting.
Three co-administrators were appointed—Vicente L. Legarda, represented by his
father-in-law Atty. Sarte; Pacifica Price de Barrios, represented by her brother-in-
law Atty. Barrios; and Augusto Tambunting, represented by Atty. Eduardo D.
Gutierrez. Each co-administrator filed a bond in the sum of P10,000. At the time the
estate was valued at P200,000.

By order of the probate court of October 14, 1950 for payment of the fees of said
three attorneys Barrios, Sarte and Gutierrez, Judge Pecson authorized them to
collect from the estate P50,000, P25,000, and P25,000, respectively. This order was
based on an omnibus petition filed by all the heirs, co-administrators and their
attorneys asking for said payment and informing the court that the estate was
actually worth P3,000,000.

Walter Scott Price, father of the minor Vicente Legarda Price was also given a
legacy in the sum of P25,000 on condition that he relinquished the administration of
the estate. He evidently accepted the condition and he was paid the amount of the
legacy. It should be stated in this connection that each of the co-administrators was
awarded by the court a fee of P30,000 and the total award of P90,000 seems to have
also been paid to said co-administrators.
 On June 15, 1951, Attys. Sarte and Gutierrez filed a joint petition asking the
probate court that their authorized attorney's fees of P25,000 each be equalized to
that of Atty. Barrios which was P50,000. Pacifica Price, co-administrator and her
counsel Atty. Barrios opposed the petition but later withdrew their opposition
provided that the additional fees of P25,000 each sought by Attys. Sarte and
Gutierrez be paid from the share of their clients, namely, Benjamin, Augusto,
Romeo and Julieta, represented by Atty. Gutierrez and Vicente L. Legarda
represented Atty. Sarte. Because of the conformity of the parties this petition for
increase was granted by the probate court, and to be paid from the estate, but with
the understanding that the fee of P50,000 given to Atty. Barrios and the fees of
Atty. Sarte and Gutierrez of P25,000 each plus the additional P25,000 to each
should be the limit to the amounts of attorney's fees chargeable to the estate, and
that any additional attorney's fees sought and awarded should come from the estate
of their respective clients and with the consent of the latter.

The probate court was informed that the estate had around P1,000,000 in cash
deposited in Philippine and United States Banks from which the attorney's fees
already mentioned could be paid, and cash advances to the heirs and legatees could
be made. From the record we gather that these funds were withdrawn from the
banks and were presumably distributed and paid out roughly as follows:

To Vicente Legarda Price, minor P250,000.00

To Vicente Legarda, surviving spouse 225,000.00
To children of Manuel Tambunting, named Benjamin, Augusto, Romeo and
Julieta 185,000.00
To legatees enumerated in the will in different amounts 49,000.00
Legacy to Walter Scott Price, father of minor Vicente Legarda Price provided
he relinquished administration of the estate 25,000.00
Paid to various creditors 7,186.95
Administration fees, 3 per cent of value of estate or 1 per cent to each co-
administrator, per order of October 6, 1950. (Certainty of payment does not
appear in the record.) 90,000.00
Attorney's fees, P50,000 to each attorney of each co-administrator, as of the
order of February 3, 1951 150,000.00
Total P981,168.95.
Partial distribution:
On January 16, 1951, Atty. Gutierrez filed a proof of claim for P30,000 "for study,
preparation and drawing of the last will and testament" of Clara Tambunting which
will is said to consist of only three pages. The amount claimed was based on the
alleged value of the estate, namely, P3,000,000 that is to say, 1% thereof.

On February 6,1952, an omnibus petition filed by all the heirs, principal legatees
and co-administrators and their attorneys was filed asking the court to fix and
approve the cash value of the usufruct of the surviving spouse Vicente L. Legarda in
the amount of P50,000; to pay an additional attorney's fees to the three lawyers
Sarte, Barrios and Gutierrez in the amount of P100,000 each; to pay an account of
said additional attorney's fees the sum of P20,000,000 to each attorney and that in
order to pay said amounts of P50,000, cash value of the usufruct, P60,000 advance
to the attorneys and P50,000 as partial payment of the taxes to the Government,
the three co-administrators be authorized to procure a loan from the trust funds
deposited in the name of Vicente Legarda Price in the amount of P160,000.

In an order dated February 29, 1952, Judge San Jose denied the prayer for
authority to secure a loan; denied the prayer for the payment of additional
attorney's fees in the amount of P100,000 each, but approved the agreement of the
parties fixing the cash value of the usufruct of Vicente L. Legarda in the sum of
P50,000. This amount was paid to Vicente Legarda and is included in the P225,000
paid to him according to the partial distribution already stated. In the same other
Judge San Jose directed the administrators to wind up the probate proceedings
within 30 days.

In an omnibus petition dated March 20,1952 filed by the heirs, co-administrators

and their attorneys the reconsideration of the order of the Judge San Jose of
February 29, 1952, was asked, alleging as an important ground for said
reconsideration the assertion and claim that the state may conservatively valued at
P7,000,000.

By order of April 9, 1952 Judge Ibañez, apparently acting as vacation Judge in the
sala of Judge San Jose, granted in part the motion for reconsideration and allowed
each of the three attorneys an additional fee of P70,000 instead of P100,000 as
previously sought, and that instead of the P20,000 desired to be advanced to each
attorney on account of the P70,000 increase in fees, only P17,500 be paid each
attorney. This order of April 9, 1952, granting the petition for the payment of
P70,000 additional fee to each attorney is one of the orders involved in the present
case before this Court.
In a petition dated November 25, 1952, Atty. Gutierrez reminded the probate court
of his previous petition of January 15, 1951 claiming the sum of P30,000 for
drawing up the will of Clara Tambunting and of the omnibus petition filed by the
heirs, administrators and their attorneys agreeing to said claim. In an order
dated November 26, 1952, Judge San Jose granted said claim for P30,000. This is
the other order involved in the present petition for mandamus.

On December 2, 1952 Julieta Tambunting dismissed Atty. Gutierrez as her lawyer

and employed the law firm of Ozaeta, Roxas, Lichauco & Picazo who filed their
appearance on the same date.

Presumably, because of the claims and representations made by the three attorneys
Sarte, Barrios & Gutierrez that the estate had a conservative value of P7,000,000,
the Government on April 27, 1953, filed a claim for taxes, estate and inheritance,
including surcharges, in the amount of P1,581,671.80, based apparently on the
value of the estate as stated in the petition for increase of attorney's fees dated
January 31, 1952. Subsequently, however, his claim of the Government for taxes
was reconsidered presumably upon representation of the co-administrators and
attorneys that the estate was worth much less than P70,000,000 and the
Government accordingly reduced its claim for taxes from P1,581,671.80 to
P493,734.26, and from this latter amount one may estimate the actual value of the
estate at between two and two and a half million pesos.

On August 14, 1953, Julieta Tambunting thru her new attorneys petitioned the
probate court to set aside its order of April 9, 1952, granting to each of three
respondent attorneys P70,000 as additional attorney's fees and its order of
November 26, 1952, granting to Atty. Gutierrez a separate fee of P30,000 for
preparing the will of Clara Tambunting, all on the ground that the said fees were
procured through fraudulent misrepresentation that the value of the estate was
P7,000,000 when in fact said attorneys knew it to be only two million pesos, this,
with the collusion of the administrators and their respective attorneys, to the
prejudice of the estate especially of the minor Vicente Legarda Price under the
guardianship of one of the co-administrators. In its order of December 28, 1953
Judge San Jose denied said petition apparently on the ground that it was filed out
of time, well beyond the period fixed by Rule 38 of the Rules of Court relative to
petitions for relief; he also denied a motion for reconsideration of this order of
denial.
On April 20, 1954, petitioner Julieta Tambunting filed a notice of appeal and an
appeal bond and the record on appeal, but respondent Judge San Jose in his order
of August 27, 1954, denied the appeal. Because of that order denying the appeal,
Julieta Tambunting filed the present petition for mandamus against Judge San
Jose and attorneys Barrios, Sarte and Gutierrez, to compel the former to approve
and certify to this Court the record on appeal presented by petitioner on April 20,
1954.

The reason given by respondent Judge in his order of August 27, 1954 refusing to
give due course to the appeal is that his order of December 28, 1953 sought to be
appealed did not constitute a final determination of the rights of petitioner Julieta
with respect to the orders of April 9, 1952 and November 26, 1952 for the reason
that she had an adequate remedy granted to her by law, namely, a separate action
to annul said two orders on the ground of fraud, if filed within four years after the
discovery of the fraud. We believe that the order of December 28, 1953, denying the
petition of August 14, 1953 on the ground that it was filed beyond the period
required by Rule 38, is appealable (Paner vs. Yatco,* G.R. No. L-2042, 48 Off. Gaz.,
No. 1, p. 59). Being appealable, the lower court may not deny the appeal if perfected
on time as apparently it was so perfected. Even assuming for a moment that it was
a mere interlocutory order, as claimed by respondents and so not appealable under
Rule 41, Section 2 of the Rules of Court, nevertheless, it has been held in the case
of Dais vs. Garduño, 49 Phil., 169, that this rule is not applicable to probate
proceedings.

But the lower court says that the order sought to be appealed did not constitute a
final determination of the rights of petitioner with respect to the two orders sought
to be set aside. We do not agree. If not appealed, then there was nothing to stop or
prevent the probate court from enforcing and carrying out the terms of the two
orders in question and paying out the large sums involved in them. In other words,
within the probate proceedings, the order of December 28, 1953, would constitute a
final determination of the rights of appellant-petitioner with respect to the payment
of said sums, thereby coming within the purview of Rule 105, section 1 (e) which
provides that an interested person may appeal in special proceedings from an order
or judgment rendered by a Court of First Instance, where such order or judgment:

Constitutes, in proceedings relating to the settlement of the estate of a

deceased person, or the administration of a trustee or guardian, a final
determination in the lower court of the rights of the party appealing, except
 that no appeal shall be allowed from the appointment of a special
administrator.

The lower court further claims that appellant had another adequate remedy
granted to her by law, namely, a separate action to annul said two orders on the
ground of fraud. But why compel appellant to resort to another remedy, assuming
that it was available, when the remedy by appeal which she is now invoking is not
only adequate but the most speedy, convenient and least expensive? Moreover, the
adequate remedy referred to by the probate court meant filing a separate action not
before the same probate court but before the regular Court of First Instance,
perhaps presided over by another judge who would have no knowledge whatsoever
of the facts and circumstances involved in the probate proceedings, particularly
those surrounding the issuance of the two orders in question. Aside from the
pleadings required in said separate action, evidence would have to be presented,
and by the time that the separate action is finally terminated, not excluding appeal
by the party dissatisfied with the decision of the lower court, the remedy sought
may prove to be too late and empty because the sums whose disbursement was
sought to be stopped and prevented, may in the meantime have been paid, and
spent by the payees, thereby rendering recovery difficult, if not impossible.

After a probate case is definitely closed, then is the time to consider a separate
action to set aside an order or judgment of the probate court, this, in order not to
reopen the probate proceedings already terminated. But while the probate
proceedings are still open, then the logical tribunal called upon to consider and
grant the remedy is the probate court itself.

One would naturally inquire into and it is necessary to ascertain the nature and
status of the two orders in question dated April 9, 1952 and November 26, 1952,
granting attorney's fees, and whether or not they were such orders or judgments
which were covered by Rule 38 of the Rules of Court regarding petitions for relief.
Rule 38, particularly sections 2 and 3 thereof refer to orders and judgments which
have become final or executory. Do the two orders aforementioned come under this
category?
We believe and hold that the two orders in question granting attorney's fees are
merely incidental to the probate proceedings and may be regarded as interlocutory
in nature, subject to modification or setting aside by the probate court until the
proceedings are terminated and the case definitely closed, after which said orders
become final and executory. As a rule, during the pendency of special proceedings,
the probate court retains control and jurisdiction over incidents connected with it,
including its orders not affecting third parties who may by such orders, have
acquired vested rights. This control and jurisdiction is particularly extensive to and
effective against its own officers, such as administrators appointed by it, and
attorneys representing them or representing parties included in the preceedings. As
this Court has said in the case of Oñas vs. Javillo, 54 Phil., 604, "In probate
proceedings considerable latitude is allowed a Court of First Instance in modifying
or revoking its own orders as long as the proceedings are pending in the same Court
and timely application or motions for such modifications or revocations are made by
the interested parties." Just as the probate court may increase as it had increased
the fees of the attorneys in the present case, it could equally and with the same
authority decrease said attorney's fees when so warranted, as for instance, if it is
found that the value of the estate is much less than what was originally assessed,
and on which erroneous assessment, the original fees were awarded. The same
thing is true with regards to fees to be allowed administrators. In other words, an
order fixing the fees of an administrator or of an attorney rendering professional
services to an administrator, continues to be under the control of the probate court
until the case is closed, and until then, the court may modify or set it aside in the
sense that it may decrease or increase the same accordingly to the facts and
circumstances as they develop and unfold in the course of the probate proceedings;
and even if said fees have already been partially or fully paid, they may yet be
ordered returned or reimbursed to the estate, or a bond may be required of the court
officer receiving them, to guarantee the return or reimbursement if later found to be
necessary (Dais vs. Carduño, 49 Phil., 165). Respondent Judge therefore erred in
denying the petition of Julieta Tambunting dated August 14, 1953 to set aside the
two orders of April 9, 1952 and November 26, 1952, in the mistaken belief that said
orders had become final and executory and so came under the provisions of Rule 38,
and because the petition for relief was filed beyond the period prescribed by said
Rule 38.

In this connection, it may be stated that we have carefully gone over the record,
particularly the different fees awarded to the rather numerous court officers
intervening in these probate proceedings, and we cannot get away from the
impression that the estate cannot be said to have been administered economically.
For instance, we are not convinced that it was necessary to have three co-
administrators to administer the estate, and each of them being paid P30,000, and
on top of that to have each co-administrator represented by a separate attorney
who, excluding the P70,000 additional fees now in question, have already been
granted and paid P50,000 each. This does not seem to be a case involving much if
any litigation, or of numerous claims or complicated accounts. So far, the amount
paid to creditors is only about seven thousand pesos. There are no children or heirs
of several marriages, with conflicting and adverse interests which should be
represented and protected by perhaps separate administrators and counsel. There
is only one forced and direct heir and a minor at that. The rest are legatees whose
rights and interests can have no possible, much less serious conflict with those of
the direct heir. True, most of the awards and grants of fees to the court officers
intervening were based on omnibus petitions and bolstered by the conformity of the
co-administrators, the heirs, legatees, and the attorneys themselves, but one might
consider the special relationship between the heirs, legatees, co-administrators and
their attorneys. As already stated, as co-administrator Vicente Legarda is
represented by Atty. Sarte, his father-in-law; co-administratrix Pacifica Price
Barrios is represented by Atty. Barrios, her brother-in-law; and as to the minor
Vicente Legarda Price now about 10 or 11 years old, he could have been represented
by his own father Walter Scott Price his natural guardian but said father after
being given a legacy of P25,000 but said father after being given a legacy of P25,000
had left the Islands and remarried. The minor could also have been under the
guardianship of his grandfather Vicente Legarda but the latter has also remarried
and as already said, in his capacity as co-administrator, has engaged as his lawyer
his father-in-law. So, the minor is now under the guardianship of his aunt Pacifica
Price Barrios but she is also married and in her capacity as co-administratrix, has
engaged as her counsel her brother-in-law Atty. Barrios. Considering this special
relationships above referred to, which may have effect of divided loyalty, the
omnibus petition agreed to by the legatees, heirs, co-administrators and their
attorneys would appear not have the weight and merit usually accorded such
petitions, especially when we bear in mind that the conformity to such omnibus
petitions on the part of the minor Vicente Legarda Price, was given not by him
personally for he was only about nine or ten years old, but by guardian Pacifica
Price de Barrios. Another point not to be lost sight of is that inasmuch as the minor
is entitled to 4/5 or 2/3 of the whole estate, naturally, for every amount disbursed as
attorney's fees and co-administrators fees, he would have to bear 2/3 of the same. By
these observations, it is neither our intention nor our desire to prejudge the merits
of the case as regards the propriety or reasonableness of the two orders of April 9,
1952 and November 26, 1952, granting attorney's fees, which will eventually and in
due time, be considered and passed upon by the proper court.

We may add that in probate proceedings the probate court acts as a trustee of the
estate and as such trustee it should jealousy guard the estate under administration
(Dariano vs. Fidalgo, 14 Phil., 67) and see to it that it is wisely and economically
administered and not dissipated. In the case of Mendoza vs. Pacheco, 64 Phil., 142,
this Court said:

. . . This State fails wretchedly in its duty to its citizens if the machinery furnished
by it for the division and distribution of the property of a decedent is so
cumbersome, unwieldy and expensive that a considerable portion of the estate is
absorbed in the process of such division. Where administration is necessary, it
ought to be accomplished quickly and at very small expense; and a system which
consumes any considerable portion of the property which it was designated to
distribute is a failure. . . . (McMicking vs. Sy Conbieng, 21 Phil., 211, 220)

Here, although the estate was originally valued at P200,000 the assessment was
later raised to P3,000,000 and still later to P7,000,000, and it seems that the fees of
the court officials intervening here were based on this apparently inflated
valuation. The three lawyers would appear to have already been paid a total of
P202,500, and under existing orders of the probate court, they still have P187,500
coming to them or a total of P390,000. This does not include the P90,000 already
paid to the three co-administrators, all of which would give a grand total of
P480,000. And yet the probate court proceedings are not yet terminated. Another
thing, up to the present, it seems that nothing has been paid for taxes; and although
the tax assessment of the Bureau of Internal Revenue has been reduced from
P1,581,671.80 to P493,734.26, the latter sum includes surcharges and penalties
which otherwise would not have been incurred had the taxes been paid on time. We
repeat that it is the duty of the probate court to jealousy guard the estate and see to
it that it is administered wisely and economically and also see to it that the expense
incurred in the administration, including the fees of the administrators and
attorneys are commensurate with the actual value of the estate and the extent and
value of the services rendered, so that at the end of the proceedings the bulk and
the greater portion of the estate will remain, to be distributed among those entitled
to the same.

As already stated, the present petition for mandamus was presented for the purpose
of compelling the respondent Judge to give due course to the appeal of petitioner.
We agree with petitioner that she has a right to appeal from the order denying her
petition to set aside the orders of April 9, 1952 and November 26, 1952. By merely
granting the petition for mandamus, the appeal would be given due course and
when the case is elevated to us on appeal, the question or questions to be submitted
and discussed would revolve around the nature of said two orders of April 9 and
November 26, whether they had become final and executory and therefore beyond
the power of the probate court to amend or to set aside, even under a petition for
relief under Rule 38, for the reason that said petition was filed beyond the period
prescribed by said rule, or whether said two orders may be considered as merely
incidental in the special proceedings and consequently, interlocutory in nature,
subject to the control of the probate court until the case is finally closed, during
which time they may be amended or set aside. This same questions were
exhaustively presented and discussed by counsel for both parties and we have
carefully considered and passed upon them, our opinion and ruling being that said
orders are interlocutory in character and may be modified or even set aside by the
probate court when so warranted. For this reason, we have decided in the interest of
justice, and to save time, expense and labor to the parties, and avoid further
expense to the estate, and also so as not to unduly prolong these probate
proceedings, to dispense with the appeal and to consider the present petition as one
for certiorari to set aside and annul the order of the probate court of December 28,
1953 denying the petition to set aside two orders in question, solely on the ground
that it was filed out of time.

In view of the foregoing, not only the order of the probate court dated August 27,
1954 denying the appeal is set aside but also its order of December 28, 1953, and
respondent Judge is directed to consider and pass upon the petition of August 14,
1953, anew and on its merits. It is also suggested that respondent Judge examine
and review the whole proceedings from the beginning to determine whether the
expenses incurred in the administration, including the awards of the different
amounts to the co-administrators and the attorneys were warranted, and if not, to
fix the amounts which in its opinion are reasonable and proper considering the real
and actual value of the estate, the extent and value of the services rendered, etc.
and take whatever action is necessary. No costs.

[G.R. No. L-59592. February 29, 1984.]

BLESILO BUAN and FLORENCIO BUAN, JR., Petitioners, v. HON.

FERNANDO S. ALCANTARA, as Judge of the Court of First Instance of
Tarlac, and A. NATIVIDAD PARAS-NISCE, Respondents.

1. MERCANTILE LAW; CORPORATIONS; WHERE ESTATE IS THE MAJORITY

STOCKHOLDER, ADMINISTRATOR AND CORPORATION ARE ALTER EGOS.
— The glaring problem in this case is that the intestate case below, which was
instituted in 1953, is still pending despite the lapse of 30 years, mainly on the
proposition that damage suits filed against the administrators in connection with
the land transportation business of the decedents have prevented the settlement of
the estate. No account has been taken of the fact that the land transportation
business was incorporated in 1957 as the Philippine Rabbit Bus Lines, Inc. Since
the estate became the owner of practically all the shares of stock of the corporation,
the damage suits, thereafter, should have also become the responsibility of the
corporation. At the time of incorporation, the administrators and the corporation
technically became "alter egos", each in respect of the other. The administrators
would still be liable for obligations of the corporation. Similarly, the corporation
would have to be liable for the debts of the administrators.

2. CIVIL LAW; SUCCESSION; PARTITION AND DISTRIBUTION OF ESTATE;

PENDENCY OF DAMAGE SUITS FILED AGAINST ADMINISTRATORS IN
CONNECTION WITH DECEDENTS’ TRANSPORTATION BUSINESS, NOT A
VALID REASON TO DEFER SETTLEMENT OF ESTATE; DINGLASAN CASE
NOT APPLICABLE IN CASE AT BAR. — The case of Dinglasan v. Ang Chia, 88
Phil, 476 (1951), upon which respondent Court relied in denying closure, will not
apply, first, because the litigation involved therein was for the recovery of real
property and, second, it was the only property of the estate left subject of
administration such that whatever was determined in the civil case would have had
far-reaching effects in the determination and distribution of the estate. In this case,
however, the damage suits bear no intimate connection or close interrelation with
the estate per se, specially after incorporation. It should also be borne in mind that
vehicular accidents are a risk inherent in transportation business, and as long as
this business continues in operation, accidents are bound to occur from time to time
with the consequent filing of suits by persons who may be injured. To await the
termination or settlement of all these suits before closing the intestate proceedings
will virtually place the estate under perpetual administration contrary to the
intendment of the law.

D E C I S I O N MELENCIO-HERRERA, J.:

Assailed in this petition is the Order dated October 15, 1981 of the then Court of
First Instance of Tarlac, Branch I, in Special Proceedings No. 766 covering the
Intestate Estate of Florencio P. Buan and Rizalina Paras-Buan, denying the
Omnibus Motion filed by petitioners Blesilo Buan and Florencio Buan, Jr.
principally praying for the closure of the intestate estate proceedings of their
deceased parents, and their applications for precautionary measures against
respondent Administratix A. Natividad Paras-Nisce.chanrobles.com : virtual law
library
The antecedent facts, in brief, are:

On January 3, 1953, petitioners’ parents, Florencio P. Buan and Rizalina Paras-

Buan, owners of Philippine Rabbit Bus Lines and several other properties, died in a
motor vehicle accident. They were survived by their five then minor children:
Jesusa Janina, 12 years old; Lourdes Palmyra, 5; Florencio, 4; Valentino, 3; and
Blesilo, 11 months.

On January 9, 1953, intestate proceedings were commenced Respondent Natividad

Paras, younger sister of the orphans’ mother, still single then, and Bienvenido
Buan, younger brother of their father, were appointed co-administrators of the
estate of the deceased spouses. They were also appointed guardians of the children
in Special Proceeding No. 1099.

In 1957, the Philippine Rabbit Bus Lines was incorporated. The Buan estate was
the majority stockholder with 1,992 shares of stock with a par value of P100.00 per
share, or 99.67%, with the co-administrators and the other stockholders, Ricardo L.
Paras, Mariano P. Buan, Simplicio P. Buan, Diosdado L. Paras, Alejandro Paras, Jr.
and Lauro P. Pascual, subscribing to one share of stock each. 1

Upon authorization to increase its capital stock from two million to five million
pesos 2 having been obtained, the administrators filed on May 25, 1964, a Petition
to Waive Estate’s Pre-emptive Right to Subscribe to the Increase of Capital Stock. 3
This was granted by respondent Court on May 27, 1964. 4 The Certificate of
Increase of Capital Stock of Philippine Rabbit Bus Lines, Inc. shows that
administrators Bienvenido Buan and Natividad Paras-Nisce subscribed to 9,100
shares of stock each in the total amount of P1,820,000.00. The six remaining
stockholders also bought additional shares: Ricardo L. Paras and Mariano P. Buan,
1,000 shares each; Simplicio P. Buan, Diosdado L. Paras, Alejandro Paras, Jr. and
Lauro P. Pascual, 500 shares each. 5 The controlling interest of the estate was
thereby reduced to barely 35% as against the co-administrators and other relatives
65 % interest in the outstanding capital.cralawnad

In the interim, the co-administrators formed other corporations, the Tarlac

Development Bank and Bupar Motors Corporation.

Tarlac Development Bank was organized on July 5, 1961. It has an authorized

capital of P2 million and an actual subscription of P1,070,000.00. The Development
Bank of the Philippines subscribed and paid for P500,000.00 in preferred stock. Of
the common stock. the Buan estate subscribed and paid for shares worth
P350,000.00; respondent administratrix and her husband Ramon Nisce to
P600,000.00; Bienvenido P. Buan and his wife to P65,000.00; the co-administrators,
respective brothers, Ricardo L. Paras and Mariano P. Buan, to P10,000.00 each. The
capitalization was later increased to P3 million. Petitioners have no knowledge of
the present status of the stockholdings. 6

Bupar Motors Corporation was put up on March 25, 1963 for the purpose of
engaging in the business of assembly (including bus body building), sale and
distribution of motor trucks, spare parts and tire recapping. The Buan estate
subscribed to P50,000.00; worth of shares; from the authorized capital of P1 million.
Co-administrator Bienvenido P. Buan subscribed to P50,000.00 worth of shares;
respondent administratrix and her husband to P50,000.00; Ricardo L. Paras and
Mariano P. Buan to P25,000.00 each.

On August 21, 1964, the capitalization was increased to P3 million. The estate
subscribed to P850,000.00 worth of shares respondent administratrix and her
husband to P700,000.00, co-administrator Bienvenido P. Buan to P175,000.00;
Ricardo L. Paras to P175,000.00; Mariano P. Buan to P100,000.00; and Diosdado L.
Paras to P100,000.00.

Bupar Motors Corporation became the purchasing arm of Philippine Rabbit Bus
Lines Inc. An entire tire section of the bus company was transferred to Bupar. A
parcel of land with a concrete building belonging to the Buan estate was sold to
Bupar Motors for P135,000.00. In the petition to waive pre-emptive right to
subscribe to the increase of the capital stock of Philippine Rabbit Bus Lines Inc., the
co-administrators gave as reason therefor, the estate’s alleged controlling interest in
this Bupar corporation. 7

On March 26, 1965, the heirs Jesusa Janina Buan-Monteyro and Lourdes Palmyra
Buan-Tabamo, filed an Omnibus Motion praying among others, for their
appointment, either solely or jointly, as administratrices of the estate of their late
parents, and on April 11, 1965, an Alternative Motion to Close Administration
Proceedings on the ground that the administrators were not taking positive steps to
close the intestate proceedings instituted some twelve years back. 8

On October 20, 1965, the sisters filed a Supplemental Omnibus Motion for (1)
Immediate Removal of Co-Administrators, (2) Annulment of Illegal Subscription, (3)
Return of Shares, (4) Setting Aside Order, (5) Contempt, principally assailing the
actuations of the co-administrators in filing the Petition to Waive Estate’s Pre-
emptive Right to Subscribe to the Increase of Capital Stock, and their subsequent
purchase themselves of additional stock, which reduced the estate into a minority
stockholder. The administrators filed an opposition thereto.chanrobles virtual
lawlibrary

On February 24, 1970, administrator Bienvenido Buan died, and respondent

Administratrix continued managing the estate alone.

Another corporation was organized by respondent Administratrix on May 11, 1970,

the Ledi Realty Enterprises Inc., with an authorized capital of P1 million. The
principal stockholders are respondent Administratrix and her husband, with a
subscription of P280,000.00. Her brother Diosdado L. Paras, subscribed to
P1,000.00 worth of shares. The heirs Florencio Buan, Jr. and Valentino Buan were
made to appear to have subscribed to P160,000.00 and P59,000.00 worth of shares
of stocks, respectively. On May 20, 1970, the corporation bought the inheritance
rights in the estate of petitioners’ sisters and co-heirs, Janina and Palmyra. 9

On October 2, 1974, the sisters finally moved to withdraw the pleadings they had
filed. 10 The lower Court granted the same on October 7, 1974. 11

On February 23, 1981, petitioner Blesilo Buan, with the conformity of his co-heirs
Janina Buan-Monteyro, Lourdes Palmyra Buan and Florencio P. Buan, Jr., filed a
Petition for Letters of Co-Administration. 12 Their brother Valentino died on
February 27, 1970. Respondent Administratrix expressed her conformity to the
same in a Manifestation filed on April 3, 1981. 13 After hearing, the Court, on April
9, 1981, appointed Blesilo P. Buan as co-administrator of the estate of the deceased
spouses upon filing of a bond of P25,000.00. 14

On June 19, 1981, Blesilo and Florencio, Jr., filed an Omnibus Motion praying,
principally, for the closure of the intestate proceedings, having been long deprived of
the possession of their inheritance, and, subsidiarily, for some precautionary
remedies by reason of alleged breaches of trust committed by respondent
Administratrix.

In particular, the precautionary or provisional orders prayed for

are:jgc:chanrobles.com.ph

"(1) In an order immediately suspending respondent A. Natividad Paras-Nisce as

administratrix of the estate, enjoining her exercise of its powers and performance of
its duties;
(2) an order enjoining respondent A. Natividad Paras-Nisce from disposing or in any
way encumbering any of her stockholding interests whether held in her name or in
the names of her trustees or nominees in Philippine Rabbit Bus Lines, Inc., Bupar
Motors Corporation, Tarlac Development Corporation and Ledi Realty Enterprises
Inc. charged to have been ‘seized and developed at the expense and with the
facilities of’ the estates;

(3) an order enjoining respondent A. Natividad Paras-Nisce from causing Philippine

Rabbit Bus Lines Inc., Bupar Motors Corporation and Ledi Realty Enterprises, Inc.
charged to have been ‘seized and developed at the expense and with the facilities of’
the estates to effect any disposition or encumbrance of their assets or to incur any
new obligations without prior authority from the court;

(4) an order instructing and directing the respondent A. Natividad Paras-Nisce to

deliver to petitioner-administrator Blesilo Buan all the properties of the estate
including real properties, the stockholding interests in Philippine Rabbit Bus Lines
Inc., Bupar Motors Corporation, Tarlac Development Bank, and Ledi Realty
Enterprises Inc. for him to take and receive said properties and hold and administer
them as such administrator; and

(5) since the properties of the estate particularly the real properties have been
mortgaged by respondent A. Natividad Paras-Nisce to secure loans for the use of the
Philippine Rabbit Bus Lines Inc., an order enjoining said respondent A. Natividad
Paras-Nisce or petitioner administrator Blesilo Buan to see to it that the Philippine
Rabbit Bus Lines, Inc. regularly service its obligations obtained on the security of
the properties of the estate and, for the purpose, to order them to cause Philippine
Rabbit Bus Lines Inc. to retain the services of an established auditing firm to take
charge of daily collections from the buses and the other sources of income like the
canteen and to control the disbursements of funds so that only legitimate expenses
of operations are met and the balance kept and preserved to pay the obligations of
the corporation obtained on the security of the properties of the estate." 15

Respondent Administratrix opposed the Motion denying the charges of breach of

trust and stating that the delay in the closure of the estate was not caused by her,
but was due to the pendency of actions for damages filed against the administrators
of the estate, which have remained pending over the years, and that the heirs
Janina Buan-Monteyro and Lourdes Palmyra Buan had already sold, transferred
and conveyed their hereditary rights over the estate to the Ledi Realty Enterprises,
Inc.chanrobles law library
On October 15, 1981, respondent Court issued the challenged Order,
decreeing:jgc:chanrobles.com.ph

". . . this Court resolved and hereby declares and holds that:chanrob1es virtual 1aw
library

(1) There is no necessity of issuing an order enjoining the administratrix Natividad

Paras-Nisce from performing any act of administration whether involving
disposition or mere administration of any and all of the properties of the estate, not
only because there is no ground for the issuance of said order but also because based
on the records, the administratrix has heretofore invariably sought and obtained
the approval of this Court for the acts of administration involving the disposition of
the properties of the estate;

(2) For insufficiency of evidence and lack of legal basis (see Secs. 3 and 5[b] P.D.
902-A), the prayer in the Omnibus Motion that the administratrix Natividad Paras-
Nisce be enjoined from disposing or in any way encumbering any of her
stockholding interests whether held by her in her name or in the name of her
alleged trustees, her husband Ramon Nisce, Ricardo L. Paras, Diosdado L. Paras
and Mariano P. Buan in Philippine Rabbit Bus Lines, Inc., Bupar Motors
Corporation, Tarlac Development Bank, and Ledi Realty Enterprises, Inc. is hereby
denied;

(3) The prayer in the Omnibus Motion that an order be issued enjoining the
administratrix Natividad Paras-Nisce from causing Philippine Rabbit Bus Lines,
Inc., Bupar Motors Corporation, Ledi Realty Enterprises, Inc. to effect any
disposition or encumbrance of their assets or to incur any new obligation without
prior authority from this Court is denied for lack of merit and for the added reason
that this Court is of the opinion that under the present law (Secs. 3 and 5 [b] P.D.
902-A), it has no jurisdiction to issue such an order;

(4) The prayer in the Omnibus Motion that an order be immediately issued
instructing and directing the administratrix Natividad Paras-Nisce to deliver all
the properties of the estate including real properties, the stockholding interests in
Philippine Rabbit Bus Lines, Inc. Bupar Motors Corporation, Tarlac Development
Bank, Ledi Realty Enterprises, Inc. and all other businesses and properties
allegedly seized and developed at the expense and with the facilities of the estate
and instructing and directing the co-administrator Blesilo Buan to take and receive
said properties and hold and administer them as such administratrix is hereby
denied for lack of merit and for insufficiency of evidence;

(5) The prayer in the Omnibus Motion that an order be issued enjoining the
administratrix Natividad Paras-Nisce and the co-administrator Blesilo Buan to see
to it that the Philippine Rabbit Bus Lines, Inc. regularly service its obligations
obtained on the security of the properties of the estate and, for this purpose, to
order them to cause Philippine Rabbit Bus Lines, Inc. to retain the services of an
established auditing firm to take charge of daily collection from the buses and to
control the disbursement of funds so that legitimate expenses of operations are met
and the balance kept and preserved to pay the obligations of the corporation
obtained on the security of the properties of the estate is likewise denied for lack of
merit and for insufficiency of evidence;

(6) The prayer in the Omnibus Motion that an order be issued after hearing to
approve the alleged partial project of partition that the administrator Blesilo Buan
shall submit pursuant to the alleged extra-judicial agreement entered into among
the heirs and to order the administrator Blesilo Buan to effect such alleged partial
distribution of the estate is hereby denied, no such partial project of partition
having been submitted to this Court;

(7) The prayer in the Omnibus Motion that an order be issued requiring the
Administratrix Natividad Paras-Nisce to submit accounting of her administration
within fifteen (15) days from date of the order has become moot and academic, it
appearing from the records that the aforesaid Administratrix had on July 1, 1981
filed and already submitted her accounting from the year 1976 to 1980. Let the
accounting submitted by the Administratrix for the years 1976 to 1980 be set for
hearing on December 7, 1981, at 8:30 in the morning;

(8) The Administratrix having filed her opposition to the Omnibus Motion
embodying therein and in her Rejoinder her answer to the charges of alleged breach
of trust, let the hearing of the charges of trust filed by the movants Blesilo Buan
and Florencio Buan, Jr. be set for hearing on November 23, 1981, at 8:30 o’clock in
the morning;

For the same reasons already stated in the order of this Court of October 4, 1965
and more specifically because of the prevailing doctrine laid down by a unanimous
Court in Ang Chia v. Dinglasan, 88 Phil. 476, the petition to close this estate not
being legally feasible at this time is hereby denied.

Resolution of paragraphs 9 and 10 of the petitory portion of the Omnibus Motion of

June 18, 1981 is hereby held in abeyance until after the charges on alleged breach
of trust shall have been heard and submitted for resolution and as requested by
counsel for movants heirs."cralaw virtua1aw library

Petitioners sought reconsideration of the foregoing Order but respondent Court

denied it on February 2, 1982: 16

Petitioners allege:chanrob1es virtual 1aw library

I
"Respondent Court erred in not ordering the closure of administration now twenty
eight years too long.

II
The Probate Court erred in denying closure of administration already twenty eight
years long just for a few remaining pending separate damage suits against the
estate arising from vehicular accidents.

III
Respondent Court erred in citing the first order denying closure issued sixteen
years ago.

IV
Respondent Court erred in denying the precautionary remedies applied for
notwithstanding prima-facie showing of breach of trust."cralaw virtua1aw library

The glaring problem in this case is that the intestate case below, which was
instituted in 1953, is still pending despite the lapse of 30 years, mainly on the
proposition that damage suits filed against the administrators in connection with
the land transportation business of the decedents have prevented the settlement of
the estate. No account has been taken of the fact that the land transportation
business was incorporated in 1957 as the Philippine Rabbit Bus Lines, Inc. Since
the estate became the owner of practically all the shares of stock of the corporation,
the damage suits, thereafter, should have also become the responsibility of the
corporation.chanrobles.com : virtual law library
At the time of incorporation, the administrators and the corporation technically
became "alter egos", each in respect of the other. The administrators would still be
liable for obligations of the corporation. 17 Similarly, the corporation would have to
be liable for the debts of the administrators.

"A new corporation taking over all of mortgaged assets of old corporation in
exchange for all of old corporation’s capital stock and continuing to operate business
formerly operated by old corporation was ‘alter ego’ of old corporation so as to be
obligated to pay annual patent royalty which old corporation was required to pay,
notwithstanding that old corporation retained title to mortgaged assets. Dummer v.
Wheeler Osgood Sales Corp., 88 P. 2d 453, 458, 198 Wash. 381." 1

It should be rather clear that, as between the estate and the corporation, the
intention of incorporation was to make the corporation liable for past and pending
obligations of the estate as the transportation business itself was being transferred
to and placed in the name of, the corporation. That liability on the part of the
corporation, vis-a-vis the estate, should continue to remain with it even after the
percentage of the estate’s shares of stock in the corporation should be diluted.

The case of Dinglasan v. Ang Chia, 88 Phil, 476 (1951), upon which respondent
Court relied in denying closure, will not apply, first, because the litigation involved
therein was for the recovery of real property and, second, it was the only property of
the estate left subject of administration such that whatever was determined in the
civil case would have had far-reaching effects in the determination and distribution
of the estate. In this case, however, the damage suits bear no intimate connection or
close interrelation with the estate per se, specially after incorporation.

It should also be borne in mind that vehicular accidents are a risk inherent in
transportation business, and as long as this business continues in operation,
accidents are bound to occur from time to time with the consequent filing of suits by
persons who may be injured. To await the termination or settlement of all these
suits before closing the intestate proceedings will virtually place the estate under
perpetual administration contrary to the intendment of the law.

WHEREFORE, 1) a) the lower Court Order, dated October 15, 1981, denying the
closure of the estate is hereby SET ASIDE and, presuming that estate and
inheritance taxes have been paid, said Court or the corresponding Regional Trial
Court to which this case is assigned, is hereby ordered, not later than three (3)
months after receipt hereof, to distribute the assets of the estate to the heirs or
their assignees, or their successors-in-interest, according to the rules on intestate
succession or as the heirs may agree;
b) The lower Court shall continue hearings, until final disposition of the exceptions
of the heirs to actions previously taken by the administrator(s), with the Court
taking account of Article 2029 of the Civil Code. 19

c) The lower Court shall see to it that the lawyers of Philippine Rabbit Bus Lines,
Inc. shall defend all pending suits against the former administrators, in the
understanding that any judgment rendered in favor of plaintiffs shall be satisfied by
said corporation. Should the corporation refuse to pay the judgment, the
administrator may file corresponding complaints against the corporation, and the
Court may also authorize the heirs to sue said corporation, if necessary;
d) The lower Court shall submit a report to this Court within ten (10) days from
expiration of the period in paragraph 1(a) above on the steps it has taken in
implementation of this decision.
2) (a) The co-administrators, private-respondent A. Natividad Paras-Nisce, and
petitioner Blesilo Buan, are hereby directed to implement immediately the directive
to close the estate within the period given in paragraph 1(a) above, and to submit a
report to this Court within ten (10) days from the expiration of said period;
b) Private respondent A. Natividad Paras-Nisce, shall render a final accounting to
the lower Court not later than three (3) months after receipt hereof, with copy
furnished this Court.

Without pronouncement as to costs.SO ORDERED.