G.R. No.

156407, January 15, 2014

THELMA M. ARANAS, Petitioner, v. TERESITA V. MERCADO, FELIMON V.

MERCADO, CARMENCITA M. SUTHERLAND, RICHARD V. MERCADO, MA.
TERESITA M. ANDERSON, AND FRANKLIN L. MERCADO, Respondents.

DECISION

BERSAMIN, J.:

The probate court is authorized to determine the issue of ownership of properties for
purposes of their inclusion or exclusion from the inventory to be submitted by the
administrator, but its determination shall only be provisional unless the interested
parties are all heirs of the decedent, or the question is one of collation or advancement,
or the parties consent to the assumption of jurisdiction by the probate court and the
rights of third parties are not impaired. Its jurisdiction extends to matters incidental or
collateral to the settlement and distribution of the estate, such as the determination of
the status of each heir and whether property included in the inventory is the conjugal
or exclusive property of the deceased spouse.

Antecedents

Emigdio S. Mercado (Emigdio) died intestate on January 12, 1991, survived by his
second wife, Teresita V. Mercado (Teresita), and their five children, namely: Allan V.
Mercado, Felimon V. Mercado, Carmencita M. Sutherland, Richard V. Mercado, and
Maria Teresita M. Anderson; and his two children by his first marriage, namely:
respondent Franklin L. Mercado and petitioner Thelma M. Aranas (Thelma).

Emigdio inherited and acquired real properties during his lifetime. He owned corporate
shares in Mervir Realty Corporation (Mervir Realty) and Cebu Emerson Transportation
Corporation (Cebu Emerson). He assigned his real properties in exchange for corporate
stocks of Mervir Realty, and sold his real property in Badian, Cebu (Lot 3353 covered by
Transfer Certificate of Title No. 3252) to Mervir Realty.

On June 3, 1991, Thelma filed in the Regional Trial Court (RTC) in Cebu City a petition
for the appointment of Teresita as the administrator of Emigdio’s estate (Special
Proceedings No. 3094–CEB).1 The RTC granted the petition considering that there was
no opposition. The letters of administration in favor of Teresita were issued on
September 7, 1992.

As the administrator, Teresita submitted an inventory of the estate of Emigdio on

December 14, 1992 for the consideration and approval by the RTC. She indicated in the
inventory that at the time of his death, Emigdio had “left no real properties but only
personal properties” worth P6,675,435.25 in all, consisting of cash of P32,141.20;
furniture and fixtures worth P20,000.00; pieces of jewelry valued at P15,000.00;
44,806 shares of stock of Mervir Realty worth P6,585,585.80; and 30 shares of stock of
Cebu Emerson worth P22,708.25.2

Claiming that Emigdio had owned other properties that were excluded from the
inventory, Thelma moved that the RTC direct Teresita to amend the inventory, and to
be examined regarding it. The RTC granted Thelma’s motion through the order of
January 8, 1993.

On January 21, 1993, Teresita filed a compliance with the order of January 8,
1993,3 supporting her inventory with copies of three certificates of stocks covering the
44,806 Mervir Realty shares of stock;4 the deed of assignment executed by Emigdio on
January 10, 1991 involving real properties with the market value of P4,440,651.10 in
exchange for 44,407 Mervir Realty shares of stock with total par value of
P4,440,700.00;5 and the certificate of stock issued on January 30, 1979 for 300 shares
of stock of Cebu Emerson worth P30,000.00.6

On January 26, 1993, Thelma again moved to require Teresita to be examined under
oath on the inventory, and that she (Thelma) be allowed 30 days within which to file a
formal opposition to or comment on the inventory and the supporting documents
Teresita had submitted.

On February 4, 1993, the RTC issued an order expressing the need for the parties to
present evidence and for Teresita to be examined to enable the court to resolve the
motion for approval of the inventory.7cralawred

On April 19, 1993, Thelma opposed the approval of the inventory, and asked leave of
court to examine Teresita on the inventory.

With the parties agreeing to submit themselves to the jurisdiction of the court on the
issue of what properties should be included in or excluded from the inventory, the RTC
set dates for the hearing on that issue.8cralawlawlibrary

Ruling of the RTC

After a series of hearings that ran for almost eight years, the RTC issued on March 14,
2001 an order finding and holding that the inventory submitted by Teresita had
excluded properties that should be included, and accordingly ruled:

WHEREFORE, in view of all the foregoing premises and considerations, the Court hereby
denies the administratrix’s motion for approval of inventory. The Court hereby orders
the said administratrix to re–do the inventory of properties which are supposed to
constitute as the estate of the late Emigdio S. Mercado by including therein the
properties mentioned in the last five immediately preceding paragraphs hereof and then
submit the revised inventory within sixty (60) days from notice of this order.

The Court also directs the said administratrix to render an account of her administration
of the estate of the late Emigdio S. Mercado which had come to her possession. She
must render such accounting within sixty (60) days from notice hereof.

SO ORDERED.9ChanRoblesVirtualawlibrary

On March 29, 2001, Teresita, joined by other heirs of Emigdio, timely sought the
reconsideration of the order of March 14, 2001 on the ground that one of the real
properties affected, Lot No. 3353 located in Badian, Cebu, had already been sold to
Mervir Realty, and that the parcels of land covered by the deed of assignment had
already come into the possession of and registered in the name of Mervir
Realty.10 Thelma opposed the motion.

On May 18, 2001, the RTC denied the motion for reconsideration,11 stating that there
was no cogent reason for the reconsideration, and that the movants’ agreement as
heirs to submit to the RTC the issue of what properties should be included or excluded
from the inventory already estopped them from questioning its jurisdiction to pass upon
the issue.

Decision of the CA

Alleging that the RTC thereby acted with grave abuse of discretion in refusing to
approve the inventory, and in ordering her as administrator to include real properties
that had been transferred to Mervir Realty, Teresita, joined by her four children and her
stepson Franklin, assailed the adverse orders of the RTC promulgated on March 14,
2001 and May 18, 2001 by petition for certiorari, stating:

THE HONORABLE RESPONDENT JUDGE HAS COMMITTED GRAVE ABUSE OF

JURISDICTION (sic) AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING
THAT THE REAL PROPERTY WHICH WAS SOLD BY THE LATE EMIGDIO S. MERCADO
DURING HIS LIFETIME TO A PRIVATE CORPORATION (MERVIR REALTY CORPORATION)
BE INCLUDED IN THE INVENTORY OF THE ESTATE OF THE LATE EMIGDIO S.
MERCADO.

II

THE HONORABLE RESPONDENT JUDGE HAS COMMITTED GRAVE ABUSE OF

JURISDICTION (sic) AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING
THAT REAL PROPERTIES WHICH ARE IN THE POSSESSION OF AND ALREADY
REGISTERED IN THE NAME (OF) PRIVATE CORPORATION (MERVIR REALTY
CORPORATION) BE INCLUDED IN THE INVENTORY OF THE ESTATE OF THE LATE
EMIGDIO S. MERCADO.

III

THE HONORABLE RESPONDENT JUDGE HAS COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING THAT
PETITIONERS ARE NOW ESTOPPED FROM QUESTIONING ITS JURISDICTION IN
PASSING UPON THE ISSUE OF WHAT PROPERTIES SHOULD BE INCLUDED IN THE
INVENTORY OF THE ESTATE OF THE LATE EMIGDIO MERCADO.12

On May 15, 2002, the CA partly granted the petition for certiorari, disposing as
follows:13

WHEREFORE, FOREGOING PREMISES CONSIDERED, this petition is GRANTED

partially. The assailed Orders dated March 14, 2001 and May 18, 2001 are hereby
reversed and set aside insofar as the inclusion of parcels of land known as Lot No. 3353
located at Badian, Cebu with an area of 53,301 square meters subject matter of the
Deed of Absolute Sale dated November 9, 1989 and the various parcels of land subject
matter of the Deeds of Assignment dated February 17, 1989 and January 10, 1991 in
the revised inventory to be submitted by the administratrix is concerned
and affirmed in all other respects.

SO ORDERED.

The CA opined that Teresita, et al.  had properly filed the petition for  certiorari  because
the order of the RTC directing a new inventory of properties was interlocutory; that
pursuant to Article 1477 of the Civil Code, to the effect that the ownership of the thing
sold “shall be transferred to the vendee” upon its “actual and constructive delivery,”
and to Article 1498 of the Civil Code, to the effect that the sale made through a public
instrument was equivalent to the delivery of the object of the sale, the sale by Emigdio
and Teresita had transferred the ownership of Lot No. 3353 to Mervir Realty because
the deed of absolute sale executed on November 9, 1989 had been notarized; that
Emigdio had thereby ceased to have any more interest in Lot 3353; that Emigdio had
assigned the parcels of land to Mervir Realty as early as February 17, 1989 “for the
purpose of saving, as in avoiding taxes with the difference that in the Deed of
Assignment dated January 10, 1991, additional seven (7) parcels of land were
included”; that as to the January 10, 1991 deed of assignment, Mervir Realty had been
“even at the losing end considering that such parcels of land, subject matter(s) of the
Deed of Assignment dated February 12, 1989, were again given monetary consideration
through shares of stock”; that even if the assignment had been based on the deed of
assignment dated January 10, 1991, the parcels of land could not be included in the
inventory “considering that there is nothing wrong or objectionable about the estate
planning scheme”; that the RTC, as an intestate court, also had no power to take
cognizance of and determine the issue of title to property registered in the name of
third persons or corporation; that a property covered by the Torrens system should be
afforded the presumptive conclusiveness of title; that the RTC, by disregarding the
presumption, had transgressed the clear provisions of law and infringed settled
jurisprudence on the matter; and that the RTC also gravely abused its discretion in
holding that Teresita,  et al. were estopped from questioning its jurisdiction because of
their agreement to submit to the RTC the issue of which properties should be included
in the inventory.

The CA further opined as follows:

In the instant case, public respondent court erred when it ruled that petitioners are
estopped from questioning its jurisdiction considering that they have already agreed to
submit themselves to its jurisdiction of determining what properties are to be included
in or excluded from the inventory to be submitted by the administratrix, because
actually, a reading of petitioners’ Motion for Reconsideration dated March 26, 2001 filed
before public respondent court clearly shows that petitioners are not questioning its
jurisdiction but the manner in which it was exercised for which they are not estopped,
since that is their right, considering that there is grave abuse of discretion amounting to
lack or in excess of limited jurisdiction when it issued the assailed Order dated March
14, 2001 denying the administratrix’s motion for approval of the inventory of properties
which were already titled and in possession of a third person that is, Mervir Realty
Corporation, a private corporation, which under the law possessed a personality distinct
and separate from its stockholders, and in the absence of any cogency to shred the veil
of corporate fiction, the presumption of conclusiveness of said titles in favor of Mervir
Realty Corporation should stand undisturbed.

Besides, public respondent court acting as a probate court had no authority to

determine the applicability of the doctrine of piercing the veil of corporate fiction and
even if public respondent court was not merely acting in a limited capacity as a probate
court, private respondent nonetheless failed to adjudge competent evidence that would
have justified the court to impale the veil of corporate fiction because to disregard the
separate jurisdictional personality of a corporation, the wrongdoing must be clearly and
convincingly established since it cannot be presumed.14

On November 15, 2002, the CA denied the motion for reconsideration of Teresita, et
al.15

Issue

Did the CA properly determine that the RTC committed grave abuse of discretion
amounting to lack or excess of jurisdiction in directing the inclusion of certain properties
in the inventory notwithstanding that such properties had been either transferred by
sale or exchanged for corporate shares in Mervir Realty by the decedent during his
lifetime?

Ruling of the Court

The appeal is meritorious.

Was certiorari the proper recourse

to assail the questioned orders of the RTC?

The first issue to be resolved is procedural. Thelma contends that the resort to the
special civil action for certiorari to assail the orders of the RTC by Teresita and her co–
respondents was not proper.

Thelma’s contention cannot be sustained.

The propriety of the special civil action for certiorari as a remedy depended on whether
the assailed orders of the RTC were final or interlocutory in nature. In Pahila–Garrido v.
Tortogo,16 the Court distinguished between final and interlocutory orders as follows:

The distinction between a final order and an interlocutory order is well known. The first
disposes of the subject matter in its entirety or terminates a particular proceeding or
action, leaving nothing more to be done except to enforce by execution what the court
has determined, but the latter does not completely dispose of the case but leaves
something else to be decided upon.  An interlocutory order deals with preliminary
matters and the trial on the merits is yet to be held and the judgment rendered. The
test to ascertain whether or not an order or a judgment is interlocutory or final is: does
the order or judgment leave something to be done in the trial court with respect to the
merits of the case? If it does, the order or judgment is interlocutory; otherwise, it is
final.

The order dated November 12, 2002, which granted the application for the writ of
preliminary injunction, was an interlocutory, not a final, order, and should not be the
subject of an appeal. The reason for disallowing an appeal from an interlocutory order is
to avoid multiplicity of appeals in a single action, which necessarily suspends the
hearing and decision on the merits of the action during the pendency of the appeals.
Permitting multiple appeals will necessarily delay the trial on the merits of the case for
a considerable length of time, and will compel the adverse party to incur unnecessary
expenses, for one of the parties may interpose as many appeals as there are incidental
questions raised by him and as there are interlocutory orders rendered or issued by the
lower court. An interlocutory order may be the subject of an appeal, but only after a
judgment has been rendered, with the ground for appealing the order being included in
the appeal of the judgment itself.

The remedy against an interlocutory order not subject of an appeal is an appropriate

special civil action under Rule 65, provided that the interlocutory order is rendered
without or in excess of jurisdiction or with grave abuse of discretion. Then
is certiorari under Rule 65 allowed to be resorted to.

The assailed order of March 14, 2001 denying Teresita’s motion for the approval of the
inventory and the order dated May 18, 2001 denying her motion for reconsideration
were interlocutory. This is because the inclusion of the properties in the inventory was
not yet a final determination of their ownership.  Hence, the approval of the inventory
and the concomitant determination of the ownership as basis for inclusion or exclusion
from the inventory were provisional and subject to revision at anytime during the
course of the administration proceedings.

In Valero Vda. De Rodriguez v. Court of Appeals,17 the Court, in affirming the decision

of the CA to the effect that the order of the intestate court excluding certain real
properties from the inventory was interlocutory and could be changed or modified at
anytime during the course of the administration proceedings, held that the order of
exclusion was not a final but an interlocutory order “in the sense that it did not settle
once and for all the title to the San Lorenzo Village lots.” The Court observed there
that:

The prevailing rule is that for the purpose of determining whether a certain property
should or should not be included in the inventory, the probate court may pass upon
the title thereto but such determination is not conclusive and is subject to the
final decision in a separate action regarding ownership which may be
instituted by the parties (3 Moran’s Comments on the Rules of Court, 1970 Edition,
pages 448–9 and 473; Lachenal vs. Salas, L–42257, June 14, 1976, 71 SCRA 262,
266).18 (Bold emphasis supplied)

To the same effect was De Leon v. Court of Appeals,19 where the Court declared that a
“probate court, whether in a testate or intestate proceeding, can only pass upon
questions of title provisionally,” and reminded, citing Jimenez v. Court of Appeals, that
the “patent reason is the probate court’s limited jurisdiction and the principle that
questions of title or ownership, which result in inclusion or exclusion from the inventory
of the property, can only be settled in a separate action.” Indeed, in the cited case
of Jimenez v. Court of Appeals,20 the Court pointed out:

All that the said court could do as regards the said properties is determine whether they
should or should not be included in the inventory or list of properties to be administered
by the administrator. If there is a dispute as to the ownership, then the opposing
parties and the administrator have to resort to an ordinary action for a final
determination of the conflicting claims of title because the probate court
cannot do so. (Bold emphasis supplied)

On the other hand, an appeal would not be the correct recourse for Teresita, et al. to
take against the assailed orders. The final judgment rule embodied in the first
paragraph of Section 1, Rule 41, Rules of Court,21 which also governs appeals in special
proceedings, stipulates that only the judgments, final orders (and resolutions) of a
court of law “that completely disposes of the case, or of a particular matter therein
when declared by these Rules to be appealable” may be the subject of an appeal in due
course. The same rule states that an interlocutory order or resolution (interlocutory
because it deals with preliminary matters, or that the trial on the merits is yet to be
held and the judgment rendered) is expressly made non–appealable.

Multiple appeals are permitted in special proceedings as a practical recognition of the

possibility that material issues may be finally determined at various stages of the
special proceedings. Section 1, Rule 109 of the Rules of Court  enumerates the specific
instances in which multiple appeals may be resorted to in special proceedings, viz:

Section 1. Orders or judgments from which appeals may be taken. – An interested

person may appeal in special proceedings from an order or judgment rendered by a
Court of First Instance or a Juvenile and Domestic Relations Court, where such order or
judgment:

(a) Allows or disallows a will;

(b) Determines who are the lawful heirs of a deceased person, or the distributive share
of the estate to which such person is entitled;

(c) Allows or disallows, in whole or in part, any claim against the estate of a deceased
person, or any claim presented on behalf of the estate in offset to a claim against it;

(d) Settles the account of an executor, administrator, trustee or guardian;

(e) Constitutes, in proceedings relating to the settlement of the estate of a deceased

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

(f) Is the final order or judgment rendered in the case, and affects the substantial rights
of the person appealing, unless it be an order granting or denying a motion for a new
trial or for reconsideration.
Clearly, the assailed orders of the RTC, being interlocutory, did not come under any of
the instances in which multiple appeals are permitted.

II
Did the RTC commit grave abuse of discretion
in directing the inclusion of the properties
in the estate of the decedent?

In its assailed decision, the CA concluded that the RTC committed grave abuse of
discretion for including properties in the inventory notwithstanding their having been
transferred to Mervir Realty by Emigdio during his lifetime, and for disregarding the
registration of the properties in the name of Mervir Realty, a third party, by applying
the doctrine of piercing the veil of corporate fiction.

Was the CA correct in its conclusion?

The answer is in the negative. It is unavoidable to find that the CA, in reaching its
conclusion, ignored the law and the facts that had fully warranted the assailed orders of
the RTC.

Under Section 6(a), Rule 78 of the Rules of Court, the letters of administration may be
granted at the discretion of the court to the surviving spouse, who is competent and
willing to serve when the person dies intestate. Upon issuing the letters of
administration to the surviving spouse, the RTC becomes duty–bound to direct the
preparation and submission of the inventory of the properties of the estate, and the
surviving spouse, as the administrator, has the duty and responsibility to submit the
inventory within three months from the issuance of letters of administration pursuant to
Rule 83 of the Rules of Court, viz:

Section 1.  Inventory and appraisal to be returned within three months. – Within three
(3) months after his appointment every executor or administrator shall return to the
court a true inventory and appraisal of all the real and personal estate of the
deceased which has come into his possession or knowledge. In the appraisement
of such estate, the court may order one or more of the inheritance tax appraisers to
give his or their assistance.

The usage of the word all in Section 1, supra, demands the inclusion of all the real and
personal properties of the decedent in the inventory.22 However, the word all is qualified
by the phrase which has come into his possession or knowledge, which signifies that
the properties must be known to the administrator to belong to the decedent or are in
her possession as the administrator. Section 1 allows no exception, for the phrase  true
inventory implies that no properties appearing to belong to the decedent can be
excluded from the inventory, regardless of their being in the possession of another
person or entity.

The objective of the Rules of Court in requiring the inventory and appraisal of the estate
of the decedent is “to aid the court in revising the accounts and determining the
liabilities of the executor or the administrator, and in making a final and equitable
distribution (partition) of the estate and otherwise to facilitate the administration of the
estate.”23 Hence, the RTC that presides over the administration of an estate is vested
with wide discretion on the question of what properties should be included in the
inventory. According to Peralta v. Peralta,24 the CA cannot impose its judgment in order
to supplant that of the RTC on the issue of which properties are to be included or
excluded from the inventory in the absence of “positive abuse of discretion,” for in the
administration of the estates of deceased persons, “the judges enjoy ample
discretionary powers and the appellate courts should not interfere with or attempt to
replace the action taken by them, unless it be shown that there has been a positive
abuse of discretion.”25 As long as the RTC commits no patently grave abuse of
discretion, its orders must be respected as part of the regular performance of its judicial
duty.

There is no dispute that the jurisdiction of the trial court as an intestate court is special
and limited. The trial court cannot adjudicate title to properties claimed to be a part of
the estate but are claimed to belong to third parties by title adverse to that of the
decedent and the estate, not by virtue of any right of inheritance from the decedent. All
that the trial court can do regarding said properties is to determine whether or not they
should be included in the inventory of properties to be administered by the
administrator. Such determination is provisional and may be still revised. As the Court
said in Agtarap v. Agtarap:26

The general rule is that the jurisdiction of the trial court, either as a probate court or an
intestate court, relates only to matters having to do with the probate of the will and/or
settlement of the estate of deceased persons, but does not extend to the determination
of questions of ownership that arise during the proceedings. The patent rationale for
this rule is that such court merely exercises special and limited jurisdiction. As held in
several cases, a probate court or one in charge of estate proceedings, whether testate
or intestate, cannot adjudicate or determine title to properties claimed to be a part of
the estate and which are claimed to belong to outside parties, not by virtue of any right
of inheritance from the deceased but by title adverse to that of the deceased and his
estate. All that the said court could do as regards said properties is to determine
whether or not they should be included in the inventory of properties to be
administered by the administrator. If there is no dispute, there poses no problem, but if
there is, then the parties, the administrator, and the opposing parties have to resort to
an ordinary action before a court exercising general jurisdiction for a final determination
of the conflicting claims of title.

However, this general rule is subject to exceptions as justified by expediency and

convenience.

First, the probate court may provisionally pass upon in an intestate or a testate

proceeding the question of inclusion in, or exclusion from, the inventory of a
piece of property without prejudice to final determination of ownership in a
separate action. Second, if the interested parties are all heirs to the estate, or the
question is one of collation or advancement, or the parties consent to the
assumption of jurisdiction by the probate court and the rights of third parties
are not impaired, then the probate court is competent to resolve issues on
ownership. Verily, its jurisdiction extends to matters incidental or collateral to the
settlement and distribution of the estate, such as the determination of the status of
each heir and whether the property in the inventory is conjugal or exclusive
property of the deceased spouse.27 (Italics in the original; bold emphasis supplied)

It is clear to us that the RTC took pains to explain the factual bases for its directive for
the inclusion of the properties in question in its assailed order of March 14, 2001, viz:

In the first place, the administratrix of the estate admitted that Emigdio Mercado was
one of the heirs of Severina Mercado who, upon her death, left several properties as
listed in the inventory of properties submitted in Court in Special Proceedings No. 306–
R which are supposed to be divided among her heirs. The administratrix admitted, while
being examined in Court by the counsel for the petitioner, that she did not include in
the inventory submitted by her in this case the shares of Emigdio Mercado in the said
estate of Severina Mercado. Certainly, said properties constituting Emigdio Mercado’s
share in the estate of Severina Mercado should be included in the inventory of
properties required to be submitted to the Court in this particular case.

In the second place, the administratrix of the estate of Emigdio Mercado also admitted
in Court that she did not include in the inventory shares of stock of Mervir Realty
Corporation which are in her name and which were paid by her from money derived
from the taxicab business which she and her husband had since 1955 as a conjugal
undertaking. As these shares of stock partake of being conjugal in character, one–half
thereof or of the value thereof should be included in the inventory of the estate of her
husband.

In the third place, the administratrix of the estate of Emigdio Mercado admitted, too, in
Court that she had a bank account in her name at Union Bank which she opened when
her husband was still alive. Again, the money in said bank account partakes of being
conjugal in character, and so, one–half thereof should be included in the inventory of
the properties constituting as estate of her husband.

In the fourth place, it has been established during the hearing in this case that Lot No.
3353 of Pls–657–D located in Badian, Cebu containing an area of 53,301 square meters
as described in and covered by Transfer Certificate of Title No. 3252 of the Registry of
Deeds for the Province of Cebu is still registered in the name of Emigdio S. Mercado
until now. When it was the subject of Civil Case No. CEB–12690 which was decided on
October 19, 1995, it was the estate of the late Emigdio Mercado which claimed to be
the owner thereof. Mervir Realty Corporation never intervened in the said case in order
to be the owner thereof. This fact was admitted by Richard Mercado himself when he
testified in Court. x x x So the said property located in Badian, Cebu should be included
in the inventory in this case.

Fifthly and lastly, it appears that the assignment of several parcels of land by the late
Emigdio S. Mercado to Mervir Realty Corporation on January 10, 1991 by virtue of the
Deed of Assignment signed by him on the said day (Exhibit N for the petitioner and
Exhibit 5 for the administratrix) was a transfer in contemplation of death. It was made
two days before he died on January 12, 1991. A transfer made in contemplation of
death is one prompted by the thought that the transferor has not long to live and made
in place of a testamentary disposition (1959 Prentice Hall, p. 3909). Section 78 of the
National Internal Revenue Code of 1977 provides that the gross estate of the decedent
shall be determined by including the value at the time of his death of all property to the
extent of any interest therein of which the decedent has at any time made a transfer in
contemplation of death. So, the inventory to be approved in this case should still
include the said properties of Emigdio Mercado which were transferred by him in
contemplation of death. Besides, the said properties actually appeared to be still
registered in the name of Emigdio S. Mercado at least ten (10) months after his death,
as shown by the certification issued by the Cebu City Assessor’s Office on October 31,
1991 (Exhibit O).28

Thereby, the RTC strictly followed the directives of the Rules of Court and the
jurisprudence relevant to the procedure for preparing the inventory by the
administrator. The aforequoted explanations indicated that the directive to include the
properties in question in the inventory rested on good and valid reasons, and thus was
far from whimsical, or arbitrary, or capricious.

Firstly, the shares in the properties inherited by Emigdio from Severina Mercado should
be included in the inventory because Teresita, et al. did not dispute the fact about the
shares being inherited by Emigdio.

Secondly, with Emigdio and Teresita having been married prior to the effectivity of
the Family Code in August 3, 1988, their property regime was the conjugal partnership
of gains.29 For purposes of the settlement of Emigdio’s estate, it was unavoidable for
Teresita to include his shares in the conjugal partnership of gains. The party asserting
that specific property acquired during that property regime did not pertain to the
conjugal partnership of gains carried the burden of proof, and that party must prove
the exclusive ownership by one of them by clear, categorical, and convincing
evidence.30 In the absence of or pending the presentation of such proof, the conjugal
partnership of Emigdio and Teresita must be provisionally liquidated to establish who
the real owners of the affected properties were,31 and which of the properties should
form part of the estate of Emigdio. The portions that pertained to the estate of Emigdio
must be included in the inventory.

Moreover, although the title over Lot 3353 was already registered in the name of Mervir
Realty, the RTC made findings that put that title in dispute. Civil Case No. CEB–12692,
a dispute that had involved the ownership of Lot 3353, was resolved in favor of the
estate of Emigdio, and Transfer Certificate of Title No. 3252 covering Lot 3353 was still
in Emigdio’s name. Indeed, the RTC noted in the order of March 14, 2001, or ten years
after his death, that Lot 3353 had remained registered in the name of Emigdio.

Interestingly, Mervir Realty did not intervene at all in Civil Case No. CEB–12692. Such
lack of interest in Civil Case No. CEB–12692 was susceptible of various interpretations,
including one to the effect that the heirs of Emigdio could have already threshed out
their differences with the assistance of the trial court. This interpretation was probable
considering that Mervir Realty, whose business was managed by respondent Richard,
was headed by Teresita herself as its President. In other words, Mervir Realty appeared
to be a family corporation.

Also, the fact that the deed of absolute sale executed by Emigdio in favor of Mervir
Realty was a notarized instrument did not sufficiently justify the exclusion from the
inventory of the properties involved. A notarized deed of sale only enjoyed the
presumption of regularity in favor of its execution, but its notarization did not per
se guarantee the legal efficacy of the transaction under the deed, and what the
contents purported to be. The presumption of regularity could be rebutted by clear and
convincing evidence to the contrary.32 As the Court has observed in Suntay v. Court of
Appeals:33

x x x. Though the notarization of the deed of sale in question vests in its favor the
presumption of regularity, it is not the intention nor the function of the notary public to
validate and make binding an instrument never, in the first place, intended to have any
binding legal effect upon the parties thereto. The intention of the parties still and
always is the primary consideration in determining the true nature of a
contract. (Bold emphasis supplied)

It should likewise be pointed out that the exchange of shares of stock of Mervir Realty
with the real properties owned by Emigdio would still have to be inquired into. That
Emigdio executed the deed of assignment two days prior to his death was a
circumstance that should put any interested party on his guard regarding the exchange,
considering that there was a finding about Emigdio having been sick of cancer of the
pancreas at the time.34 In this regard, whether the CA correctly characterized the
exchange as a form of an estate planning scheme remained to be validated by the facts
to be established in court.

The fact that the properties were already covered by Torrens titles in the name of
Mervir Realty could not be a valid basis for immediately excluding them from the
inventory in view of the circumstances admittedly surrounding the execution of the
deed of assignment. This is because:

The Torrens system is not a mode of acquiring titles to lands; it is merely a system of
registration of titles to lands. However, justice and equity demand that the titleholder
should not be made to bear the unfavorable effect of the mistake or negligence of the
State’s agents, in the absence of proof of his complicity in a fraud or of manifest
damage to third persons. The real purpose of the Torrens system is to quiet title to land
and put a stop forever to any question as to the legality of the title, except claims that
were noted in the certificate at the time of registration or that may arise subsequent
thereto. Otherwise, the integrity of the Torrens system shall forever be sullied by the
ineptitude and inefficiency of land registration officials, who are ordinarily presumed to
have regularly performed their duties.35

Assuming that only seven titled lots were the subject of the deed of assignment of
January 10, 1991, such lots should still be included in the inventory to enable the
parties, by themselves, and with the assistance of the RTC itself, to test and resolve the
issue on the validity of the assignment. The limited jurisdiction of the RTC as an
intestate court might have constricted the determination of the rights to the properties
arising from that deed,36 but it does not prevent the RTC as intestate court from
ordering the inclusion in the inventory of the properties subject of that deed. This is
because the RTC as intestate court, albeit vested only with special and limited
jurisdiction, was still “deemed to have all the necessary powers to exercise such
jurisdiction to make it effective.”37

Lastly, the inventory of the estate of Emigdio must be prepared and submitted for the
important purpose of resolving the difficult issues of collation and advancement to the
heirs. Article 1061 of the Civil Code required every compulsory heir and the surviving
spouse, herein Teresita herself, to “bring into the mass of the estate any property or
right which he (or she) may have received from the decedent, during the lifetime of the
latter, by way of donation, or any other gratuitous title, in order that it may be
computed in the determination of the legitime of each heir, and in the account of the
partition.” Section 2, Rule 90 of the Rules of Court also provided that any advancement
by the decedent on the legitime of an heir “may be heard and determined by the court
having jurisdiction of the estate proceedings, and the final order of the court thereon
shall be binding on the person raising the questions and on the heir.” Rule 90 thereby
expanded the special and limited jurisdiction of the RTC as an intestate court about the
matters relating to the inventory of the estate of the decedent by authorizing it to direct
the inclusion of properties donated or bestowed by gratuitous title to any compulsory
heir by the decedent.38

The determination of which properties should be excluded from or included in the

inventory of estate properties was well within the authority and discretion of the RTC as
an intestate court. In making its determination, the RTC acted with circumspection, and
proceeded under the guiding policy that it was best to include all properties in the
possession of the administrator or were known to the administrator to belong to
Emigdio rather than to exclude properties that could turn out in the end to be actually
part of the estate. As long as the RTC commits no patent grave abuse of discretion, its
orders must be respected as part of the regular performance of its judicial duty. Grave
abuse of discretion means either that the judicial or quasi–judicial power was exercised
in an arbitrary or despotic manner by reason of passion or personal hostility, or that the
respondent judge, tribunal or board evaded a positive duty, or virtually refused to
perform the duty enjoined or to act in contemplation of law, such as when such judge,
tribunal or board exercising judicial or quasi–judicial powers acted in a capricious or
whimsical manner as to be equivalent to lack of jurisdiction.39

In light of the foregoing, the CA’s conclusion of grave abuse of discretion on the part of
the RTC was unwarranted and erroneous.

WHEREFORE, the Court GRANTS the petition for review

on certiorari; REVERSES and SETS ASIDE the decision promulgated on May 15,
2002; REINSTATES the orders issued on March 14, 2001 and May 18, 2001 by the
Regional Trial Court in Cebu; DIRECTS the Regional Trial Court in Cebu to proceed with
dispatch in Special Proceedings No. 3094–CEB entitled Intestate Estate of the late
Emigdio Mercado, Thelma Aranas, petitioner, and to resolve the case; and ORDERS the
respondents to pay the costs of suit.

G.R. No. L-25842 March 18, 1927

Intestate estate of Samuel William Allen.

MOORE & SONS MERCANTILE CO., appellant, vs. CARMEN WAGNER, appellee.

P.J. Moore for appellant.

Gregorio Perfecto for appellee.
 VILLAMOR, J.:

In the present proceeding for the settlement of the intestate estateof the deceased
Samuel William Allen, the court, upon petition of the widow of said deceased, entered
an order, dated March 5, 1925, requiring the administrator to give said widow and her
daughter Avelina Allen an allowance of P80. The special administrator appointed in the
case objected to the allowance of the widow upon the ground that the estate is
insolvent, in view of the claims presented and apporved by the committee on appraisal
and claims. Attorney P. J. Moore, in behalf of severall creditors of the estate, also
entered his opposition to said order of the court upon the same
ground.chanroblesvirtualawlibrary chanrobles virtual law library

There is no question that the estate is insolvent, inasmuch as it appears from the report
of the administrator, which is not contradicted by the widow, that the value of the
property of the estate sold by the said special administrator, excluding the expenses
amounts to only P899.79 from which must be deducted the sum of P28.82 for expenses
incurred, leaving a balance of P870.97, and it must be noted that there still remains to
be paid the sum of P64 as commissioner's fee plus the sum of P50 for charges of
administration.chanroblesvirtualawlibrary chanrobles virtual law library

It is also appears from the record on appeal that the claims against the estate allowed
by the said committee amount to P2,457.99.chanroblesvirtualawlibrary chanrobles
virtual law library

Notwithstanding this insolvent condition of the estate, the lower court entered the order
referred to of March 5, 1925, citing in its support article 1430 of the Civil Code and
section 684 of the Code of Civil Procedure.chanroblesvirtualawlibrary chanrobles virtual
law library

The only question submitted to this court for decision in the present case is the legality
of the order appealed from, in view of the insolvency of the estate of Samuel William
Allen. According to section 684 of the Code of Civil Procedure, "The widow and minor
children of a deceased person, during the settlement of the estate, shall receive
therefrom, under the direction of the court, such allowances as are provided by the law
in force in the Philippine Islands, on and immediately prior to the thirteenth day of
August, eighteen hundred and ninety-eight, and the descent of all property and estate
to heirs shall be regulated by that law as to all property belonging to intestate estates,
and as to all property belonging totestate estates, but not disposed of by the will of the
testator. A huband or wife of the deceased person shall receive such portion of his or
her estate not disposed of by will as the said law in force on the thirteenth day of
August, eighteen hundred and ninety-eight, givesto him or to her." And the law in force
in the Philippine Islands prior to August 13, 1898, is article 1430 of the Civil Code which
says:

The surviving spouse and his or her children shall be given an allowance for their
support out of the general estate, pending the liquidation of the inventoried estate, and
until their share has been delivered to them, but it shall be deducted from their portion
in so far as it exceeds what they may have been entitled to as fruits or income.
May support be demanded when the liabilities exceed the assets of the estate of the
deceased spouse? The judgment of the Supreme Court of Spain of May 28, 1896,
resolves this question affirmatively.

Sometime after the death of her husband, the widow applied for support from the
general inventoried estate of the property from the date of the death of the husband
until the delivery of her share. The court granted the application and
the Audiencia affirmed its decision. The heirs sued a writ of error upon several grounds
among which are the violations of the following articles:chanrobles virtual law library

1. Article 1430 of the Civil Code, inasmuch as its wording, letter and spirit show that
the allowance granted the surviving spouse is an advance payment to be deducted from
such share as may be allotted to him when the same is delivered, and the inventoried
credits being greater than the estate left, to give allowance to the widow would be
prejudicial to the creditors who are entitled to recover them in their
entirety.chanroblesvirtualawlibrary chanrobles virtual law library

2. Article 148 of the same Code, inasmuch as the order grants support to the widow
from the beginning of the liquidation of the inventoried estate, in spite of the fact that
the same had not been applied for until two years thereafter, which is contrary to the
provision of said article which requires tha support shall be paidonly from the date of
the filling of the complaint.chanroblesvirtualawlibrary chanrobles virtual law library

The Supreme Court denied the writ on the ground that it was notproven that the
liabilities exceed the assets of the estate, and because the provision of article 1430 of
the Civil Code is entirely independent and has no connection with those contained in
title 6, book 1, of the same Code, among which is article 148, because they each refer
to different kind of rights, and the former cannot be understood as subordinate to the
rules and provisions contained in said title and book, which regulate support between
persons who, according to law, have the obligation to give it, and those who have the
right to receive the same.

Mr. Manresa, commenting on said article 1430 relative to the said judgment of May 28,
1896, wisely observes "That the support does not encumber the property of the
deceased spouse, but the general estate, and that by the general estate or the
inventoried estate is meant the dowry or capital of the wife; wherefore, even if the
indebtedness exceed the residue of the estate, the wife can always be allowed support
as part payment of the income of her property. In any case, the support is given prior
to the termination of the liquidation of the partnership, and it does not seem logical to
deny the same before knowing exactly the result of the liquidation, just because of the
fear that the liabilities will exceed the estate, or on the ground of estimates more or
less uncertain, and without any sufficient proof of its reality. The judge or the
administrator, as the case may be, must grant the support referred to in article 1430,
when the same is requested, and if the creditors believe that they are prejudiced by
such an action, by separating from the estate a part of its income, they can appeal to
the court therefrom, by satisfactorily proving that there is no property or asset that
may, in any case, be allotted to the interested parties. It having proven that no
property, eitherprivate or conjugal, pertains to the surviving spouse or the heirs of the
deceased, the support cannot be granted, because this, in effect, according to article
1430, is only an advance payment on accoount of the respective share of each
partner."chanrobles virtual law library

Such is the case now before us. It appears from the record that the liabilities exceed
the assets of the estate of Samuel William Allen and that his widow, by her own
admission, had not contributed any property to the marriage. Wherefore, it is unlawful,
in the present case, to grant the support, having the character of an advance payment
to be deducted from the respective share of each partner, when there is no property to
be partitioned, lacks the legal basis provided byarticle
1430.chanroblesvirtualawlibrary chanrobles virtual law library

The order appealed from is reversed, and the record is remanded to thecourt of origin
for further proceedings, without special finding as to costs.

G.R. No. L-61700 September 14, 1987

PRINCESITA SANTERO, FEDERICO SANTERO and WILLIE SANTERO, petitioners,

vs.
HON. COURT OF FIRST INSTANCE OF CAVITE, ANSELMA DIAZ, VICTOR,
RODRIGO, ANSELMINA, MIGUEL, all surnamed SANTERO, and REYNALDO
EVARISTO, in his capacity as Administrator of the Intestate Estate of PABLO
SANTERO, respondents.

PARAS, J.:

This is a Petition for certiorari which questions the order of the respondent court
granting the Motion for Allowance filed by private respondents. Said order reads as
follows:

Acting on the Motion For Allowance dated June 30, 1982 filed by Victor,
Rodrigo, Anselmina and Miguel, all surnamed Santero, thru their guardian,
Anselma Diaz, the Opposition thereto dated July 8, 1982 filed by the
oppositors, the Reply to Opposition dated July 12, 1982 filed by movant
Anselma Diaz and the Rejoinder dated July 26, 1982 filed by the
oppositors, the Court was constrained to examine the Motion For
Allowance filed by the herein movant last year wherein the ground cited
was for support which included educational expenses, clothing and
medical necessities, which was granted and said minors were given an
allowance prayed for in their motion.

In the Motion For Allowance in question guardian-movant Anselma Diaz

only followed the precedent of the Court which granted a similar motion
last year to be spent for the school expenses of her wards. In their
opposition the oppositors contend that the wards for whom allowance is
sought are no longer schooling and have attained majority age so that
they are no longer under guardianship. They likewise allege that the
administrator does not have sufficient funds to cover the said allowance
 because whatever funds are in the hands of the administrator, they
constitute funds held in trust for the benefit of whoever will be adjudged
as owners of the Kawit property from which said administrator derives the
only income of the intestate estate of Pablo Santero, et al.

In the Reply filed by the guardian-movant, she admitted some of her

children are of age and not enrolled for the first semester due to lack of
funds but will be enrolled as soon as they are given the requested
allowances. She cited Article 290 of the Civil Code providing that:

Support is everything that is indispensable for substance,

dwelling, clothing and medical attendance, according to the
social position of the family.

Support also includes the education of the person entitled to

be supported until he completes his education or training for
some trade or vocation, even beyond the age of majority.'

citing also Section 3 of Rule 83 of the Rules of Court which provides:

Allowance to widow and family. The widow and minor or

incapacitated children of a deceased person, during the
settlement of the estate, shall receive therefrom, under the
direction of the Court, such allowance as provided by law.'

From the foregoing discussion alone, the Court cannot deviate from its
duty to give the allowance sought by the wards, the fact that they need
further education which should have been provided to them if their
deceased father were alive.

On the allegation that the funds from which the allowance would be
derived are trust funds, the Court, time and again had emphasized that
the estate of the Santeros is quite big and the amount to be released for
allowances is indeed insignificant and which can easily be replaced from
its general fund if the so-called trust fund is adjudicated to the oppositors.

WHEREFORE, Victor, Rodrigo, Anselmina and Miguel, all surnamed

Santero are hereby granted an allowance of two thousand (P2,000.00)
pesos each for tuition fees, clothing materials and subsistence out of any
available funds in the hands of the administrator who is ordered to
reimburse to them the said amount after this order shall have become
final to enable the oppositors to file their appeal by certiorari if they so
desire within the reglementary period.

SO ORDERED.

Bacoor, Cavite, July 28, 1982.

 ILDEF
ONSO
M.
BLEZA

Execut
ive
Judge

(pp. 35-36, Rollo)

It appears from the records that petitioners Princesita Santero-Morales, Federico

Santero and Winy Santero are the children begotten by the late Pablo Santero with
Felixberta Pacursa while private respondents Victor, Rodrigo, Anselmina and Miguel all
surnamed Santero are four of the seven children begotten by the same Pablo Santero
with Anselma Diaz. Both sets of children are the natural children of the late Pablo
Santero since neither of their mothers, was married to their father Pablo. Pablo Santero
in turn, who died on November 30, 1973 was the only legitimate son of Pascual Santero
who died in 1970 and Simona Pamuti Vda. de Santero who died in 1976.

Meanwhile before We could act on the instant petition private respondents filed another
Motion for Allowance dated March 25, 1985 with the respondent court to include
Juanita, Estelita and Pedrito all surnamed Santero as children of the late Pablo Santero
with Anselma Diaz praying that an order be granted directing the administrator
Reynaldo C. Evaristo, to deliver the sum of P6,000.00 to each of the seven (7) children
of Anselma Diaz as their allowance from the estate of Pablo Santero. The respondent
Court granted the motion of the private respondents but oppositors (petitioners herein)
asked the court to reconsider said Order.

On September 10, 1985, an Amended Order was issued by respondent Court directing
Anselma Diaz to submit her clarification or explanation as to the additional three (3)
children of Anselma Diaz included in the motion. In compliance therewith Anselma Diaz
filed her "Clarification" stating among others that in her previous motions, only the last
four minor children as represented by the mother, Anselma Diaz were included in the
motion for support and her first three (3) children who were then of age should have
been included since all her children have the right to receive allowance as advance
payment of their shares in the inheritance of Pablo Santero under Art. 188, of the New
Civil Code.

On October 15, 1985, petitioners herein filed their Motion to Admit Supplemental

Petition opposing the inclusion of three (3) more heirs. We denied that "Motion for
Extension of Time to file their Supplemental Petition" as per Our Resolution dated
October 23, 1985.

On November 11, 1985, another Order was issued by the respondent court directing
the administrator of the estate to get back the allowance of the three additional
recipients or children of Anselma Diaz apparently based on the oppositors' (petitioners
herein) "Urgent Motion to Direct the Administrator to Withhold Disbursement of
Allowance to the Movants."
The issues now being raised in this present Petition are:

1. Whether or not respondent court acted with abuse of discretion

amounting to lack of jurisdiction in granting the allowance to the
respondents Victor, Rodrigo, Anselmina and Miguel-P2,000.00 each
despite the fact that all of them are not minors and all are gainfully
employed with the exception of Miguel.

2. Whether or not respondent Court acted with abuse of discretion in

granting the allowance based on the allegations of the said respondents
that the abovenamed wards are still schooling and they are in actual need
of money to defray their school expenses for 1982-83 when the truth is
that they are no longer schooling.

3. Whether or not respondent Court acted with abuse of discretion in

granting the motion for allowance without conducting a hearing thereon,
to determine the truth of allegations of the private respondents.

Petitioners argue that private respondents are not entitled to any allowance since they
have already attained majority age, two are gainfully employed and one is married as
provided for under Sec. 3 Rule 83, of the Rules of Court. Petitioners also allege that
there was misrepresentation on the part of the guardian in asking for allowance for
tuition fees, books and other school materials and other miscellaneous expenses for
school term 1982-83 because these wards have already attained majority age so that
they are no longer under guardianship. They further allege that the administrator of the
estate of Pablo Santero does not have sufficient funds to cover said allowance because
whatever funds are in the hands of the administrator constitute funds held in trust for
the benefit of whoever will be adjudged as owners of the Kawit properties from where
these funds now held by the administrator are derived.

In this connection, the question of whether the private respondents are entitled to
allowance or not concerns only the intestate estate of the late Pablo Santero and not
the intestate estates of Pascual Santero and Simona Pamuti, parents of their late
legitimate son Pablo Santero. The reason for this is Art. 992 of the New Civil Code
which states that "An illegitimate child has no right to inherit ab intestato from the
legitimate children and relatives of his father or mother; nor shall such children or
relatives inherit in the same manner from the illegitimate child." The question of
whether or not the petitioners and private respondents are entitled to inherit by right of
representation from their grandparents more particularly from Simona Pamuti was
settled by Us in the related case of "Anselma Diaz, et al. vs. Felisa Pamuti-Jardin" (G.R.
No. 66574-R) wherein We held that in view of the barrier present in said Art. 992,
petitioners and private respondents are excluded from the intestate estate of Simona
Pamuti Vda. de Santero.

The present petition obviously lacks merit.

The controlling provision of law is not Rule 83, Sec. 3 of the New Rules of Court but
Arts. 290 and 188 of the Civil Code reading as follows:
 Art. 290. Support is everything that is indispensable for sustenance,
dwelling, clothing and medical attendance, according tothe social position
of the family.

Support also includes the education of the person entitled to be supported

until he completes his education or training for some profession, trade or
vocation, even beyond the age of majority.

Art. 188. From the common mass of property support shall be given to
the surviving spouse and to the children during the liquidation of the
inventoried property and until what belongs to them is delivered; but from
this shall be deducted that amount received for support which exceeds the
fruits or rents pertaining to them.

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

It is not true that the Motion for Allowance was granted by respondent Court without
hearing. The record shows that the "Motion for Allowance" dated June 30, 1982
contains a Notice of Hearing (p. 2, Annex "A") addressed to the lawyers for the
petitioners and setting the hearing thereof on July 8, 1982 at 9:00 in the morning.
Apparently a copy of said motion was duly received by the lawyer, Atty. Beltran as he
filed an opposition thereto on the same date of hearing of the motion. Furthermore
even the instant petition admits that the wards, (petitioners and private respondents as
represented by their respective guardians) "have been granted allowances for school
expenses for about 8 years now." The respondent court in granting the motion for
allowance merely "followed the precedent of the court which granted a similar motion
last year." (Annex "F") However in previous years (1979-1981) the "wards" (petitioners
and private respondents) only received P1,500.00 each depending upon the availability
of funds as granted by the court in several orders. (Annex 1 to Annex 4).

WHEREFORE, in the light of the aforementioned circumstances, the instant Petition is

hereby DISMISSED and the assailed judgment is AFFIRMED.

G.R. No. L-19265             May 29, 1964

MOISES SAN DIEGO, SR., petitioner,

vs.
ADELO NOMBRE and PEDRO ESCANLAR, respondents.
A. R. Castañeda and M. S. Roxas for petitioner.
Amado B. Parreño Law Office for respondents.

PAREDES, J.:

The case at bar had its origin in Special Proceedings No. 7279 of the CFI of Negros
Occidental wherein respondent Adelo Nombre was the duly constituted judicial
administrator. On May 1, 1960, Nombre, in his capacity was judicial administrator of
the intestate estate subject of the Sp. Proc. stated above, leased one of the properties
of the estate (a fishpond identified as Lot No. 1617 of the cadastral survey of
Kabankaban, Negros Occidental), to Pedro Escanlar, the other respondent. The terms of
the lease was for three (3) years, with a yearly rental of P3,000.00 to expire on May 1,
1963, the transaction having been done, admittedly, without previous authority or
approval of the Court where the proceedings was pending. On January 17, 1961,
Nombre was removed as administrator by Order of the court and one Sofronio
Campillanos was appointed in his stead. The appeal on the Order of Nombre's removal
is supposedly pending with the Court of Appeals. Respondent Escanlar was cited for
contempt, allegedly for his refusal to surrender the fishpond to the newly appointed
administrator. On March 20, 1961, Campillanos filed a motion asking for authority to
execute a lease contract of the same fishpond, in favor of petitioner herein, Moises San
Diego, Sr., for 5 years from 1961, at a yearly rental of P5,000.00. Escanlar was not
notified of such motion. Nombre, the deposed administrator, presented a written
opposition to the motion of Campillanos on April 11, 1964, pointing out that the
fishpond had been leased by him to Escanlar for 3 years, the period of which was going
to expire on May 1, 1963. In a supplemental opposition, he also invited the attention of
the Court that to grant the motion of the new administrator would in effect nullify the
contract in favor of Escanlar, a person on whom the Court had no jurisdiction. He also
intimated that the validity of the lease contract entered into by a judicial administrator,
must be recognized unless so declared void in a separate action. The opposition
notwithstanding, the Court on April 8, 1961, in effect declared that the contract in favor
of Escanlar was null and void, for want of judicial authority and that unless he would
offer the same as or better conditions than the prospective lessee, San Diego, there
was no good reason why the motion for authority to lease the property to San Diego
should not be granted. Nombre moved to reconsider the Order of April 8, stating that
Escanlar was willing to increase the rental of P5,000.00, but only after the termination
of his original contract. The motion for reconsideration was denied on April 24, 1961,
the trial judge stating that the contract in favor of Escanlar was executed in bad faith
and was fraudulent because of the imminence of Nombre's removal as administrator,
one of the causes of which was his indiscriminate pleasant, of the property with
inadequate rentals.

From this Order, a petition for Certiorari asking for the annulment of the Orders of April
8 and 24, 1961 was presented by Nombre and Escanlar with the Court of Appeals. A
Writ of preliminary injunction was likewise prayed for to restrain the new administrator
Campillanos from possessing the fishpond and from executing a new lease contract
covering it; requiring him to return the possession thereof to Escanlar, plus damages
and attorney's fees in the amount of P10,000.00 and costs. The Court of Appeals issued
the injunctive writ and required respondents therein to Answer. Campillanos insisted on
the invalidity of the contract in favor of Escanlar; the lower court alleged that it did not
exactly annul or invalidate the lease in his questioned orders but suggested merely that
Escanlar "may file a separate ordinary action in the Court of general jurisdiction."

The Court of Appeals, in dismissing the petition for certiorari, among others said —

The controlling issue in this case is the legality of the contract of lease entered
into by the former administrator Nombre, and Pedro Escanlar on May 1, 1960.

Respondents contend that this contract, not having been authorized or approved
by the Court, is null and void and cannot be an obstacle to the execution of
another of lease by the new administrator, Campillanos. This contention is
without merit. ... . It has been held that even in the absence of such special
powers, a contract or lease for more than 6 years is not entirely invalid; it is
invalid only in so far as it exceeds the six-year limit (Enrique v. Watson
Company, et al., 6 Phil. 84). 1

No such limitation on the power of a judicial administrator to grant a lease of

property placed under his custody is provided for in the present law. Under
Article 1647 of the present Civil Code, it is only when the lease is to be recorded
in the Registry of Property that it cannot be instituted without special authority.
Thus, regardless of the period of lease, there is no need of special authority
unless the contract is to be recorded in the Registry of Property. As to whether
the contract in favor of Escanlar is to be so recorded is not material to our
inquiry. 1äwphï1.ñët

On the contrary, Rule 85, Section 3, of the Rules of Court authorizes a judicial
administrator, among other things, to administer the estate of the deceased not
disposed of by will. Commenting on this Section in the light of several Supreme
Court decisions (Jocson de Hilado v. Nava, 69 Phil. 1; Gamboa v. Gamboa, 68
Phil. 304; Ferraris v. Rodas, 65 Phil. 732; Rodriguez v. Borromeo, 43 Phil. 479),
Moran says: "Under this provision, the executor or administrator has the power
of administering the estate of the deceased for purposes of liquidation and
distribution. He may, therefore, exercise all acts of administration without special
authority of the Court. For instance, he may lease the property without securing
previously any permission from the court. And where the lease has formally been
entered into, the court cannot, in the same proceeding, annul the same, to the
prejudice of the lessee, over whose person it had no jurisdiction. The proper
remedy would be a separate action by the administrator or the heirs to annul the
lease. ... .

On September 13, 1961, petitioner herein Moises San Diego, Sr., who was not a party
in the case, intervened and moved for a reconsideration of the above judgment. The
original parties (the new administrator and respondent judge) also filed Motions for
reconsideration, but we do not find them in the record. On November 18, 1961, the
Court of Appeals denied the motions for reconsideration. With the denial of the said
motions, only San Diego, appealed therefrom, raising legal questions, which center on
"Whether a judicial administrator can validly lease property of the estate without prior
judicial authority and approval", and "whether the provisions of the New Civil Code on
Agency should apply to judicial administrators."
The Rules of Court provide that —

An executor or administrator shall have the right to the possession of the real as
well as the personal estate of the deceased so long as it is necessary for the
payment of the debts and the expenses of administration, and shall administer
the estate of the deceased not disposed of by his will. (Sec. 3, Rule 85, old
Rules).

Lease has been considered an act of administration (Jocson v. Nava; Gamboa v.

Gamboa; Rodriguez v. Borromeo; Ferraris v. Rodas, supra).

The Civil Code, on lease, provides:

If a lease is to be recorded in the Registry of Property, the following persons

cannot constitute the same without proper authority, the husband with respect
to the wife's paraphernal real estate, the father or guardian as to the property of
the minor or ward, and the manager without special power. (Art. 1647).

The same Code, on Agency, states:

Special powers of attorneys are necessary in the following cases:

(8) To lease any real property to another person for more than one year. (Art.
1878)

Petitioner contends, that No. 8, Art. 1878 is the limitation to the right of a judicial
administrator to lease real property without prior court authority and approval, if it
exceeds one year. The lease contract in favor of Escanlar being for 3 years and without
such court approval and authority is, therefore, null and void. Upon the other hand,
respondents maintain that there is no limitation of such right; and that Article 1878
does not apply in the instant case.

We believe that the Court of Appeals was correct in sustaining the validity of the
contract of lease in favor of Escanlar, notwithstanding the lack of prior authority and
approval. The law and prevailing jurisprudence on the matter militates in favor of this
view. While it may be admitted that the duties of a judicial administrator and an agent
(petitioner alleges that both act in representative capacity), are in some respects,
identical, the provisions on agency (Art. 1878, C.C.), should not apply to a judicial
administrator. A judicial administrator is appointed by the Court. He is not only the
representative of said Court, but also the heirs and creditors of the estate (Chua Tan v.
Del Rosario, 57 Phil. 411). A judicial administrator before entering into his duties, is
required to file a bond. These circumstances are not true in case of agency. The agent
is only answerable to his principal. The protection which the law gives the principal, in
limiting the powers and rights of an agent, stems from the fact that control by the
principal can only be thru agreements, whereas the acts of a judicial administrator are
subject to specific provisions of law and orders of the appointing court. The observation
of former Chief Justice Moran, as quoted in the decision of the Court of Appeals, is
indeed sound, and We are not prone to alter the same, at the moment.
We, likewise, seriously doubt petitioner's legal standing to pursue this appeal. And, if
We consider the fact that after the expiration of the original period of the lease contract
executed by respondent Nombre in favor of Escanlar, a new contract in favor of said
Escanlar, was executed on May 1, 1963, by the new administrator Campillanos. who,
incidentally, did not take any active participation in the present appeal, the right of
petitioner to the fishpond becomes a moot and academic issue, which We need not pass
upon.

WHEREFORE, the decision appealed from should be, as it is hereby affirmed, in all
respects, with costs against petitioner Moises San Diego, Sr.

G.R. No. L-28214             July 30, 1969

NATIVIDAD V. A. JARODA, petitioner,
vs.
THE HONORABLE VICENTE N. CUSI, JR., Presiding Judge, Branch I, Court of
First Instance of Davao, and ANTONIO V. A. TAN, in his capacity as judicial
administrator of intestate estate of Carlos Villa Abrille, Special Proc. No. 1391,
Court of First Instance of Davao, respondents.

Dario C. Rama for petitioner.

Jose R. Madrazo, Jr. for respondents.

REYES, J.B.L., J.:

Questioned as null and void in this petition for certiorari with preliminary injunction are
two (2) orders of the Court of First Instance of Davao, Branch I, issued in its Special
Proceeding No. 1391 entitled "In the Matter of the Intestate Estate of Carlos Villa
Abrille, deceased, Antonio V. A. Tan, petitioner."

The first of the said two orders, dated 5 May 1965, granted an ex-parte  petition by
then special administrator Antonio V. A. Tan, the herein respondent, to withdraw from
the Philippine National Bank the amount of P182,531.08 deposited in savings and
checking accounts in the name, and during the lifetime, of Carlos Villa Abrille (now
deceased) but allegedly held in trust for the decedent's co-owners in the Juna
Subdivision.

The second order, dated 3 September 1965, approved ex-parte  the power of attorney
executed by special administrator Tan appointing himself attorney-in-fact to sell the
share of the estate in the subdivision lots.

The aforesaid Special Proceeding No. 1391 was commenced by Antonio V. A. Tan on 22
April 1965, alleging in his petition filed with the respondent court that Carlos Villa
Abrille died intestate on 3 April 1965; that he left an estate consisting of his conjugal
share in real and personal properties, among which are:

p. Nineteen (19) Percent share in the co-ownership known as Juna Subdivision;

xxx     xxx     xxx
 xxx     xxx     xxx

t. Cash on Bank: BPI (Savings) D-1365 in the amount of P55,284.11; PNB

(Savings) 8189, in the amount of P9,047.74; and PCIB (Savings) 337, in the
amount of P416.24. (Annex "A" to Petition, Rollo, pages 1415);

that the heirs of the deceased are his surviving spouse, nine (9) children (among them
the herein petitioner, Natividad V. A. Jaroda), and four (4) grandsons, among them the
herein respondent, Antonio V. A. Tan.

On 26 April 1965, respondent Tan was appointed special administrator.

On 4 May 1965, respondent special administrator Tan fled an ex-parte  petition for the
withdrawal of the sums of P109,886.42 and P72,644.66 from the Philippine National
Bank, Davao Branch, which sums were not listed in his petition for administration as
among the properties left by the deceased, alleging that these sums were deposited in
the name of the deceased but that they actually belong to, and were held in trust for,
the co-owners of the Juna Subdivision, and alleging as reason for the withdrawal that it
would be advantageous to the estate of the deceased. Annexed to the said petition are
powers of attorney purportedly signed by the co-owners in 1948 and 1949 authorizing
the late Carlos Villa Abrille to sell the lots in the Juna Subdivision and to deposit the
proceeds thereof with the Philippine National Bank. The alleged co-owners of the
subdivision concurred in the petition, but not the heirs of the deceased (Annex "C" to
Petition, Rollo, page 19).

The respondent court found the petition for withdrawal of the bank deposits as
"meritorious", and granted the petition in an order on 5 May 1965.

On 7 May 1965, special administrator Tan executed, together with the other co-owners
of the Juna Subdivision, a power of attorney appointing himself as attorney-in-fact to
"sell (or) dispose upon terms and conditions as he deems wise" the lots in the 99.546-
hectare subdivision (Annex "F-1" to Petition, Rollo, pages 30-32).

On 9 September 1965, respondent Tan was issued letters of administration by the

respondent court.

On the same day, 9 September 1965, as regular administrator, respondent Tan filed a
petition with the respondent court, alleging that the deceased was the manager of and
a co-owner in the Juna Subdivision and that he had been engaged in the business of
selling the lots, and praying for the approval by the court of the power of attorney
executed by him, in behalf of the intestate estate, and appointing and authorizing
himself to sell the lots.

The court granted the petition, "as prayed for," on 3 September 1965.1äwphï1.ñët

On 29 November 1966, herein petitioner Natividad V. A. Jaroda moved to nullify the

order of 5 May 1965, that allowed the withdrawal of the bank deposits, as well as the
order of 3 September 1965, which approved the power of attorney.
The respondent court denied, on 25 February 1967, "for lack of merit" the aforesaid
motion.

Petitioner Jaroda appealed from the order of denial, but the respondent court dismissed
the appeal on the ground that the order appealed from was interlocutory. Jaroda then
filed before the Supreme Court a petition for certiorari and/or mandamus on 8 July
1967, docketed as G.R. No. L-27831, but this Court dismissed the petition, adding in its
resolution that appeal in due time is the remedy.

On 28 October 1967, petitioner Jaroda filed the present petition for certiorari with
preliminary injunction. She alleged, among other things, that appeal would not be
speedy and adequate as respondent Tan has sold and continues to sell the subdivision
lots on the strength of the respondent court's order, to her irreparable prejudice and
that of the other heirs. This Court gave due course to the petition and issued
preliminary injunction on 3 November 1967, restraining the respondent from selling the
share of the intestate estate.

We agree with petitioner that the order of 5 May 1965 allowing the special
administrator to withdraw the bank deposits standing in the name of the decedent is in
abuse of discretion amounting to lack of jurisdiction. In the first place, said withdrawal
is foreign to the powers and duties of a special administrator, which, as Section 2 of
Rule 80 of the Rules of Court provides, are to —

take possession and charge of the goods, chattels, rights, credits and estate of
the decease and preserve the same for the executor or administrator afterwards
appointed, and for that purpose may commence and maintain suits as
administrator. He may sell only such perishable and other property as the court
orders sold. A special administrator shall not be liable to pay any debts of the
deceased unless so ordered by the court.

In the second place, the order was issued without notice to, and hearing of, the heirs of
the deceased. The withdrawal of the bank deposits may be viewed as a taking of
possession and charge of the credits of the estate, and apparently within the powers
and duties of a special administrator; but actually, said withdrawal is a waiver by the
special administrator of a  prima facie  exclusive right of the intestate estate to the bank
deposits in favor of the co-owners of the Juna Subdivision, who were allegedly claiming
the same as alleged by the administrator in his motion (Petition, Annex "C"). The bank
deposits were in the name of the deceased; they, therefore, belong prima facie to his
estate after his death. And until the contrary is shown by proper evidence at the proper
stage, when money claims may be filed in the intestate proceedings, the special
administrator is without power to make the waiver or to hand over part of the estate, or
what appears to be a prima facie part of the estate, to other persons on the ground
that the estate is not the owner thereof. If even to sell for valuable consideration
property of the estate requires prior written notice of the application to the heirs,
legatees, or devisees under Rule 89 of the Rules of Court, such notice is equally, if not
more, indispensable for disposing gratuitously of assets of the decedent in favor of
strangers. Admittedly, no such notice was given, and without it the court's authority is
invalid and improper.
The order of 3 September 1965 approving the power of attorney executed by
administrator Tan and appointing himself as attorney-in-fact to sell the subdivision lots
for a price at his discretion is, likewise, void for want of notice and for approving an
improper contract or transaction.

The very rule, Section 4 of Rule 89 of the Rules of Court, relied on by respondent Tan
to sustain the power of attorney for the sale of the pro-indiviso share of the estate in
the subdivision requires "written notice to the heirs, devisees, and legatees who are
interested in the estate to be sold" and, admittedly, administrator Tan did not furnish
such notice. (Answer, pages 1 and 2, paragraph 3, Rollo, page 53) Without such notice,
the order of the court authorizing the sale is void. (Estate of Gamboa vs. Floranza, 12
Phil. 191; Gabriel vs. Encarnacion, 94 Phil. 917)

But respondent Tan holds petitioner Jaroda with actual knowledge of the questioned
order, and to show it he quotes the transcript of stenographic notes of a discussion by a
lawyer of Jaroda about the said order. The discussion, however, took place on 19 March
1966 while the order was issued on 13 September 1965, and there is nothing in the
discussion that may indicate knowledge by Jaroda of the order before, at or
immediately after its issuance.

It has been broadly stated that an administrator is not permitted to deal with himself as
an individual in any transaction concerning trust property. (Pesula's Estate, 64 ALR 2d
851, 150 Cal. App. 2d 462, 310 P 2d 39)

It is well settled that an executrix holds the property of her testator's estate as a
trustee. In re Heydenfeldt's Estate, 117 Cal. 551, 49 P. 713; Firebaugh v.
Burbank, 121 Cal. 186, 53 P. 560. It is equally well settled that an executrix will
not be permitted to deal with herself as an individual in any transaction
concerning the trust property. Civil Code, S 2230. In Davis v. Rock Creek L., F. &
M Co., 55 Cal. 359, at page 364, 36 Am. Rep. 40, it is said: 'The law, for wise
reasons, will not permit one who acts in a fiduciary capacity thus to deal with
himself in his individual capacity.' The following cases are to the same
effect: Wickersham v. Crittenden, 93 Cal. 17, 29, 28 P. 788; Sims v. Petaluma
Gas Light Co., 131 Cal. 656, 659, 63 P. 1011; Western States Life Ins. Co. v.
Lockwood, 166 Cal. 185, 191, 135 P. 496; In re Estate of Parker, 200 Cal. 132,
139, 251 P 907, 49 A. L. R. 1025. In Wickersham v. Crittenden, supra, 93 Cal. at
page 29, 28 P. at page 790, it is further stated in respect to a transaction
wherein a trustee sought to deal with trust property: 'Courts will not permit any
investigation into the fairness of the transaction, or allow the trustee to show
that the dealing was for the best interest of the beneficiary.' This language is
quoted with approval in the case of Pacific Vinegar & Pickle Works v. Smith, 145
Cal. 352, 365, 78 P. 550, 104 Am. St. Rep 42. (In re Bogg's Estate, 121 P. 2d
678, 683).

The opinion of some commentators that, as a general rule, auto-contracts are

permissible if not expressly prohibited (See Tolentino, Civil Code of the Philippines, Vol.
IV 1962, pages 375-377), and that there is no express provision of law prohibiting an
administrator from appointing himself as his own agent, even if correct, cannot and
should not apply to administrator of decedent's estates, in view of the fiduciary
relationship that they occupy with respect to the heirs of the deceased and their
responsibilities toward the probate court. A contrary ruling would open the door to
fraud and maladministration, and once the harm is done, it might be too late to correct
it. A concrete example would be for administrator Tan to authorize agent Tan to sell a
lot for P50, with the condition that if he can sell it for more he could keep the
difference; agent Tan sells the lot for P150.00; he retains P100.00 and deposits in the
bank P50.00 "in the name of Antonio V. A. Tan, in trust for Juna Subdivision" (as
worded in the power of attorney. Annex "F-1"); thus, administrator Tan's accounting to
the estate for the sale of the lot for P50 would be in order, but the estate would have
been actually cheated of the sum of P100, which went to agent Tan in his individual
capacity.

The court below also failed to notice that, as alleged in the administrator's petition
(Annex "F" herein), after the death of Carlos Villa Abrille the administrator Tan, in his
personal capacity, had replaced said deceased as manager of the Juna Subdivision by
authority of the other co-owners. By the court's questioned order of 3 September 1965
empowering him to represent the interest of the deceased in the management of the
subdivision, the administrator Tan came to be the agent or attorney-in-fact of two
different principals: the court and the heirs of the deceased on the one hand, and the
majority co-owners of the subdivision on the other, in managing and disposing of the
lots of the subdivision. This dual agency of the respondent Tan rendered him incapable
of independent defense of the estate's interests against those of the majority co-
owners. It is highly undesirable, if not improper, that a court officer and administrator,
in dealing with property under his administration, should have to look to the wishes of
strangers as well as to those of the court that appointed him. A judicial administrator
should be at all times subject to the orders of the appointing Tribunal and of no one
else.

That petitioner Jaroda, as heir of the late Carlos Villa Abrille, should hold a minor
interest (¹/¹¹ of 19%) in the co-ownership known as the Juna Subdivision and that the
early termination of said co-ownership would redound to the benefit of the co-owners,
including the heirs of Carlos Villa Abrille, are beside the point. Jaroda's interest in the
estate demands that she be heard by the court in all matters affecting the disposal of
her share, and that the administrator should primarily protect the interest of the estate
in which she is a participant rather than those of the decedent's co-owners.

The resolution of this Court in L-27836 (Natividad V. A. Jaroda vs. the Hon. Vicente N.
Cusi, Jr., etc., et al.), dismissing the petition for certiorari and/or mandamus and
stating that appeal in due time is the remedy, is no bar to the present petition, for it
has not been shown that the allegations in both the dismissed petition and those of the
present one are substantially the same. Anyway, certiorari lies if appeal would not be
prompt enough to block the injurious effects of the orders of the lower court (Silvestre
vs. Torres, et al., 57 Phil. 885; Pachoco vs. Tumangday, L-14500, 25 May 1960;
Mayormente vs. Robaco Corp., L-25337, 27 Nov. 1967, 21 SCRA 1080).

After the present case was submitted for decision, respondent Tan manifested that the
co-owners of the Juna Subdivision and the heirs of the late Carlos Villa Abrille, including
the petitioner Natividad V. A. Jaroda, had executed a partial partition and the same has
been approved by the probate court. Said approved partial partition has no effect, one
way or the other, upon the orders contested in the present case. For one thing, it is not
definite whether the lots described in the 57 pages of the partition agreement
correspond to those of the Juna Subdivision as described in the power of attorney.

FOR THE FOREGOING REASONS, the order of 5 May 1965 and 3 September 1965 of the
Court of First Instance of Davao, Branch I, in its Special Proceeding No. 1391, are
hereby set aside and declared null and void. The preliminary injunction heretofore
issued is hereby made permanent. Costs against the respondent, Antonio V. A. Tan, in
his personal capacity.

A.M. No. 2430 August 30, 1990

MAURO P. MANANQUIL, complainant,
vs.
ATTY. CRISOSTOMO C. VILLEGAS, respondent.

Geminiano M. Eleccion for complainant.

RESOLUTION

CORTES, J.:

In a verified complaint for disbarment dated July 5, 1982, Mauro P. Mananquil charged
respondent Atty. Crisostomo C. Villegas with gross misconduct or malpractice
committed while acting as counsel of record of one Felix Leong in the latter's capacity
as administrator of the Testate Estate of the late Felomina Zerna in Special Proceedings
No. 460 before then Court of First Instance of Negros Occidental. The complainant was
appointed special administrator after Felix Leong died.

In compliance with a resolution of this Court, respondent filed his comment to the
complaint on January 20, 1983. After complainant filed his reply, the Court resolved to
refer the case to the Solicitor General for investigation, report and recommendation.

In a hearing conducted on May 15, 1985 by the investigating officer assigned to the
case, counsel for the complainant proposed that the case be considered on the basis of
position papers and memoranda to be submitted by the parties. Respondent agreed.
Thus, the investigating officer required the parties to submit their respective position
papers and memoranda, with the understanding that with or without the memoranda,
the case will be deemed submitted for resolution after the expiration of 30 days. In
compliance, both parties submitted their respective position papers; but no
memorandum was filed by either party. Thereafter, the case was deemed submitted.

In the pleadings submitted before the Court and the Office of the Solicitor General,
complainant alleges that over a period of 20 years, respondent allowed lease contracts
to be executed between his client Felix Leong and a partnership HIJOS DE JOSE
VILLEGAS, of which respondent is one of the partners, covering several parcels of land
of the estate, i.e. Lots Nos. 1124, 1228, 2221, 2402, 3939, 3942 and 3957 of the
Tanjay Cadastre, under iniquitous terms and conditions. Moreover, complainant charges
that these contracts were made without the approval of the probate court and in
violation of Articles 1491 and 1646 of the new Civil Code.

On the basis of the pleadings submitted by the parties, and other pertinent records of
the investigation, the Solicitor General submitted his report dated February 21, 1990,
finding that respondent committed a breach in the performance of his duties as counsel
of administrator Felix Leong when he allowed the renewal of contracts of lease for
properties involved in the testate proceedings to be undertaken in favor of HIJOS DE
JOSE VILLEGAS without notifying and securing the approval of the probate court.
However, the Solicitor General opined that there was no sufficient evidence to warrant
a finding that respondent had allowed the properties to be leased in favor of his family
partnership at a very low rental or in violation of Articles 1491 and 1646 of the new
Civil Code. Thus, the Solicitor General recommended that respondent be suspended
from the practice of law for a period of THREE (3) months with a warning that future
misconduct on respondent's part will be more severely dealt with [Report and
Recommendation of the Solicitor General, pp. 1-10; Rollo, pp. 37-46.  Also, Complaint
of the Solicitor General, pp. 1-3; Rollo, pp. 47-49].

As gleaned from the record of the case and the report and recommendation of the
Solicitor General, the following facts are uncontroverted:

That as early as March 21, 1961, respondent was retained as counsel of

record for Felix Leong, one of the heirs of the late Felomina Zerna, who
was appointed as administrator of the Testate Estate of the Felomina
Zerna in Special No. 460 on May 22, 1961;

That, a lease contract dated August 13, 1963 was executed between Felix
Leong and the "Heirs of Jose Villegas" represented by respondent's
brother-in-law Marcelo Pastrano involving, among others, sugar lands of
the estate designated as Lot Nos. 1124, 1228, 2221, 2402, 3939, 3942
and 3957 of the Tanjay Cadastre;

That Felix Leong was designated therein as administrator and "owner, by

testamentary disposition, of 5/6 of all said parcels of land";

That, the lifetime of the lease contract was FOUR (4) sugar crop years,
with a yearly rental of TEN PERCENT (10%) of the value of the sugar
produced from the leased parcels of land;

That, on April 20, 1965, the formal partnership of HIJOS DE JOSE

VILLEGAS was formed amongst the heirs of Jose Villegas, of which
respondent was a member;

That, on October 18, 1965, another lease contract was executed between
Felix Leong and the partnership HIJOS DE JOSE VILLEGAS, containing
basically the same terms and conditions as the first contract, with Marcelo
Pastrano signing once again as representative of the lessee;
 That, on March 14, 1968, after the demise of Marcelo Pastrano,
respondent was appointed manager of HIJOS DE JOSE VILLEGAS by the
majority of partners;

That, renewals of the lease contract were executed between Felix Leong
and HIJOS DE JOSE VILLEGAS on January 13, 1975 and on December 4,
1978, with respondent signing therein as representative of the lessee;
and,

That, in the later part of 1980, respondent was replaced by his nephew
Geronimo H. Villegas as manager of the family partnership.

Under the above circumstances, the Court finds absolutely no merit to complainant's
charge, and the Solicitor General's finding, that respondent committed acts of
misconduct in failing to secure the approval of the court in Special Proceedings No. 460
to the various lease contracts executed between Felix Leong and respondent's family
partnership.

Pursuant to Section 3 of Rule 84 of the Revised Rules of Court, a judicial executor or

administrator has the right to the possession and management of the real as well as
the personal estate of the deceased so long as it is necessary for the payment of the
debts and the expenses of administration. He may, therefore, exercise acts of
administration without special authority from the court having jurisdiction of the estate.
For instance, it has long been settled that an administrator has the power to enter into
lease contracts involving the properties of the estate even without prior judicial
authority and approval [See Ferraris v. Rodas, 65 Phil. 732 (1938); Jocson de Hilado v.
Nava, 69 Phil. 1 (1939); San Diego, Sr. v. Hombre, G.R No. L-19265, May 29, 1964, 11
SCRA 165].

Thus, considering that administrator Felix Leong was not required under the law and
prevailing jurisprudence to seek prior authority from the probate court in order to
validly lease real properties of the estate, respondent, as counsel of Felix Leong, cannot
be taken to task for failing to notify the probate court of the various lease contracts
involved herein and to secure its judicial approval thereto.

Nevertheless, contrary to the opinion of the Solicitor General, the Court finds sufficient
evidence to hold respondent subject to disciplinary sanction for having, as counsel of
record for the administrator in Special Proceedings No. 460, participated in the
execution in 1975 and 1978 of renewals of the lease agreement involving properties of
the estate in favor of the partnership HIJOS DE JOSE VILLEGAS, of which respondent is
a member and in 1968 was appointed managing partner.

By virtue of Article 1646 of the new Civil Code, the persons referred to in Article 1491
are prohibited from leasing, either in person or through the mediation of another, the
properties or things mentioned in that article, to wit:

xxx xxx xxx

 (1) The guardian, the property of the person or persons who may be
under his guardianship;

(2) Agents, the property whose administration or sale may have been
intrusted to them, unless the consent of the principal have been given;

(3) Executors and administrators, the property of the estate under

administration

(4) Public officers and employees, the property of the State or of any
subdivision thereof, or of any government owned or controlled
corporation, or institution, the administration of which has been intrusted
to them; this provision shall apply to judges and government experts
who, in any manner whatsoever, take part in the sale;

(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior

courts, and other officers and employees connected with the
administration of justice, the property or rights in litigation or levied upon
on execution before the court within whose jurisdiction or territory they
exercise their respective functions; this prohibition includes the act of
acquiring by assignment and shall apply to lawyers, with respect to the
property and rights which may be the object of any litigation in which
they may take part by virtue of their profession.

(6) Any others specially disqualified by law

xxx xxx xxx

[Article 1491 of the new Civil Code; Emphasis supplied.]

The above disqualification imposed on public and judicial officers and lawyers is
grounded on public policy considerations which disallow the transactions entered into by
them, whether directly or indirectly, in view of the fiduciary relationship involved, or the
peculiar control exercised by these individuals over the properties or rights covered
[See Rubias v. Batiller, G.R. No. L-35702, May 29, 1973, 51 SCRA 120; Maharlika
Publishing Corporation v. Tagle, G.R. No. 65594, July 9, 1986, 142 SCRA 553; Fornilda
v. The Branch 164, RTC Fourth Judicial Region, Pasig, G.R. No. 72306, October 5, 1988,
166 SCRA 281 and January 24, 1989, 169 SCRA 351].

Thus, even if the parties designated as lessees in the assailed lease contracts were the
"Heirs of Jose Villegas" and the partnership HIJOS DE JOSE VILLEGAS, and respondent
signed merely as an agent of the latter, the Court rules that the lease contracts are
covered by the prohibition against any acquisition or lease by a lawyer of properties
involved in litigation in which he takes part. To rule otherwise would be to lend a stamp
of judicial approval on an arrangement which, in effect, circumvents that which is
directly prohibited by law. For, piercing through the legal fiction of separate juridical
personality, the Court cannot ignore the obvious implication that respondent as one of
the heirs of Jose Villegas and partner, later manager of, in HIJOS DE JOSE VILLEGAS
stands to benefit from the contractual relationship created between his client Felix
Leong and his family partnership over properties involved in the ongoing testate
proceedings.

In his defense, respondent claims that he was neither aware of, nor participated in, the
execution of the original lease contract entered into between his client and his family
partnership, which was then represented by his brother-in-law Marcelo Pastrano. And
although he admits that he participated in the execution of subsequent renewals of the
lease contract as managing partner of HIJOS DE JOSE VILLEGAS, he argues that he
acted in good faith considering that the heirs of Filomena Zerna consented or
acquiesced to the terms and conditions stipulated in the original lease contract. He
further contends that pursuant to the ruling of the Court in Tuason v. Tuason  [88 Phil.
428 (1951)] the renewal contracts do not fall within the prohibition of Articles 1491 and
1646 since he signed the same as a mere agent of the partnership.

Respondent's contentions do not provide sufficient basis to escape disciplinary action

from this Court.

It taxes this Courts imagination that respondent disclaims any knowledge in the
execution of the original lease contract between his client and his family partnership
represented by his brother-in-law. Be that as it may, it cannot be denied that
respondent himself had knowledge of and allowed the subsequent renewals of the lease
contract. In fact, he actively participated in the lease contracts dated January 13, 1975
and December 4, 1978 by signing on behalf of the lessee HIJOS DE JOSE VILLEGAS.

Moreover, the claim that the heirs of Filomena Zerna have acquiesced and consented to
the assailed lease contracts does not militate against respondent's liability under the
rules of professional ethics. The prohibition referred to in Articles 1491 and 1646 of the
new Civil Code, as far as lawyers are concerned, is intended to curtail any undue
influence of the lawyer upon his client on account of his fiduciary and confidential
association [Sotto v. Samson, G.R. No. L-16917, July 31, 1962, 5 SCRA 733]. Thus, the
law makes the prohibition absolute and permanent [Rubias v. Batiller, supra]. And in
view of Canon 1 of the new Code of Professional Responsibility and Sections 3 & 27 of
Rule 138 of the Revised Rules of Court, whereby lawyers are duty-bound to obey and
uphold the laws of the land, participation in the execution of the prohibited contracts
such as those referred to in Articles 1491 and 1646 of the new Civil Code has been held
to constitute breach of professional ethics on the part of the lawyer for which
disciplinary action may be brought against him [See Bautista v. Gonzalez, Adm. Matter
No. 1625, February 12, 1990). Accordingly, the Court must reiterate the rule that the
claim of good faith is no defense to a lawyer who has failed to adhere faithfully to the
legal disqualifications imposed upon him, designed to protect the interests of his client
[See In re Ruste, 70 Phil. 243 (1940); Also, Severino v. Severino, 44 Phil. 343 (1923)].

Neither is there merit in respondent's reliance on the case of Tuason v.  Tuason [supra.]
It cannot be inferred from the statements made by the Court in that case that contracts
of sale or lease where the vendee or lessee is a partnership, of which a lawyer is a
member, over a property involved in a litigation in which he takes part by virtue of his
profession, are not covered by the prohibition under Articles 1491 and 1646.

However, the Court sustains the Solicitor General's holding that there is no sufficient
evidence on record to warrant a finding that respondent allowed the properties of the
estate of Filomena Zerna involved herein to be leased to his family partnership at very
low rental payments. At any rate, it is a matter for the court presiding over Special
Proceedings No. 460 to determine whether or not the agreed rental payments made by
respondent's family partnership is reasonable compensation for the use and occupancy
of the estate properties.

Considering thus the nature of the acts of misconduct committed by respondent, and
the facts and circumstances of the case, the Court finds sufficient grounds to suspend
respondent from the practice of law for a period of three (3) months.

WHEREFORE, finding that respondent Atty. Crisostomo C. Villegas committed acts of

gross misconduct, the Court Resolved to SUSPEND respondent from the practice of law
for four (4) months effective from the date of his receipt of this Resolution, with a
warning that future misconduct on respondent's part will be more severely dealt with.
Let copies of this Resolution be circulated to all courts of the country for their
information and guidance, and spread in the personal record of Atty. Villegas.

G.R. No. L-24584 October 30, 1975

ILUMINADA DE GALA-SISON, As Administratrix of the Intestate Estate of the

late Generoso de Gala, petitioner,
vs.
HON. MANOLO L. MADDELA, as Judge of the Court of First Instance of Quezon
and SOCORRO MANALO, respondents.

Norberto J. Quimsibing for petitioner.

Agcaoili and Dimaano for private respondent.

ANTONIO, J.:

Petition for certiorari to annul the orders, dated August 21, 1964 and May 10, 1965, in
Special Proceeding No. 2887 of respondent Judge Manolo L. Maddela of the Court of
First Instance of Quezon insofar as said orders require petitioner-administratrix to
deposit the amount of P39,240.15 in her possession with a reputable banking
institution.

Prior to the afore-mentioned orders in question, the Court of First Instance of Quezon,
then presided over by Judge Vicente Santiago, issued an order on August 29, 1952, in
Special Proceeding No. 2887, directing the administratrix (a) to include in her inventory
of properties left by the deceased certain pieces of jewelry described in Exhibit "Y" of
oppositor Socorro Manalo, and (b) to deposit cash in her possession amounting to
P40,998.56 with a reputable banking institution. On appeal, the Court of Appeals in its
decision of February 2, 1961 in case CA-G.R. No. 10711-R,1 affirmed the lower court's
order of August 29, 1952. However, on a petition for certiorari,2 this Court, finding that
the amount of P1,698.41 was spent by the petitioner Iluminada de Gala-Sison, as
administratrix, which expense was approved by the court on August 2, 1950, so that
the amount ordered to be deposited should be reduced by P1,698.41 to P39,240.15,
rendered on July 31, 1963 a decision modifying the appealed order of August 29, 1952
to read as follows:

Considering that the balance of P40,938.56 existing at the time of the

issuance of the order appealed from, dated August 29, 1952, may no
longer exist by virtue of the fact that the administratrix must have already
paid to the heirs their respective allowances and shares in the inheritance,
the disputed order should be modified to include only such balance of the
original amount of P40,938.56 as may be in the possession of the
administratrix, after deducting the expenses approved by the court and
the allowances and inheritances authorized by the court to be given to the
widow and the heirs.

On October 7, 1963, respondent Socorro Manalo moved for the execution of the
decision of July 31, 1963, and the respondent Judge issued on October 16, 1963 an
order requiring, within ten (10) days from the receipt of the order, the administratrix
Iluminada de Gala-Sison (1) "to file an amended inventory including therein the pieces
of jewelry listed in Socorro Manalo's Exhibit 'Y' "; and (2) "to deposit with any reputable
banking institution the remainder of the amount of P40,938.56, which may be in her
possession, after deducting the expenses approved by the court and the allowances and
inheritances authorized by the court, as specified in its order issued in this case dated
July 7, 1950, to be given to the widow and the heirs of the deceased Generoso de
Gala."

Under date of November 29, 1963, the petitioner filed an Amended Inventory in
compliance with the said order. However, the petitioner-administratrix did not comply
with the portion of said order which required her to deposit the remainder of the
amount of P40,938.56 which may be in her possession. Instead, she filed on November
29, 1963 a Manifestation stating that "there is really no necessity for any deposit to be
made with a banking institution which the probate court then believed was necessary
way back on August 29, 1952 when the accountable fund was still a sizable one," since
from the remainder of said amount of P40,938.56 ordered to be deposited, several
deductions should be made consisting in the following:

(a) additional expenses in the sum of P1,698.41 which was approved by

the probate court per order of 3 August 1950;

(b) advances and allowances to petitioner as heir (she being the only
surviving child of the late Generoso de Gala in the sum of P22,000.00 (the
other heirs through respondent-oppositor and the surviving widow have
already been given similar advances and allowances in the sums of
P21,815.88 and P19,151.39);

(c) expenses of litigation and attorney's fees already incurred and paid
since 1952; and .

(d) compensation of petitioner as administratrix of the intestate estate.

On August 21, 1964, the respondent Judge issued an order, the pertinent portion of
which reads:

To resolve the foregoing contention of the administratrix, this court

examined carefully the records and finds that there is no merit in her
contention. First: The decision of the Supreme Court authorized the
deduction of expenses, allowances and inheritance already approved by
the court; whereas the amounts now sought to be deducted have never
been so authorized by this court; and Second: It now appears that the
present contention of the administratrix was already raised by her in the
Supreme Court, and in spite of such claim, the decision of said court did
not authorize such deduction.

An examination of the records also reveals that from the amount of

P40,935.56, only the sum of P1,698.41 must be deducted specially
considering that from the manifestation aforesaid the administratrix failed
to assert any other deductions as justified by the decision of the Supreme
Court. Hence, the amount that must be deposited by the administratrix is
the amount of P39,240.15.

WHEREFORE, this court orders the administratrix to fully comply with its
order dated August 16, 1963 by depositing with any reputable banking
institution the amount of P39,240.15 within ten (10) days from the receipt
of this order.

On September 17, 1964, petitioner filed simultaneously (1) a motion for reconsideration
of the order of August 21, 1964; (2) a motion for payment to herself the amount of
P22,000.00 as her advance or allowance against her distributive share and for the
approval thereof; (d) a petition for allowance and payment, from the properties and
assets of the estate, of the sum of P20,000.00 as her fees and compensation as
administratrix; and (4) a verified accounting of the petitioner-administratrix for
approval by the court.

On May 10, 1965, the respondent Judge issued an order the dispositive portion of which
reads:

WHEREFORE, the motion for reconsideration dated September 17, 1964 is

hereby denied, and the administratrix is hereby ordered anew to fully
comply with the order of this court dated August 21, 1964 by depositing
with any reputable banking institution the amount of P39,340.15 within a
period of ten (10) days from receipt of this order. The motion for payment
of advances, dated September 17, 1964 and the petition for allowance
and payment of compensation, also dated September 17, 1964 are both
denied; and the accounting dated September 10, 1964 is hereby
disapproved.

On May 26, 1965, the petitioner filed a motion for new trial and/or reconsideration of
the order dated May 10, 1965, alleging, among others, that the lower court erred in
holding that the disbursements itemized in her verified accounting are unsupported by
receipts and that her payments of attorney's fees were for her benefit as heir; and
praying that said order of May 10, 1965, be set aside and reconsidered to the end that
the administratrix among others may be granted a day in court for the presentation of
her evidence or receipts supporting her verified accounting and disbursements itemized
therein and that thereafter her said accounting be approved; that she be allowed
payment of P22,000.00 as her advance or allowance against the distributive share as
similar advances and allowances had been granted by the oppositor Socorro Manalo and
the surviving spouse Felisa Alabastro; and that she be granted allowance and payment
of her administratrix' compensation and fees for her administration of the intestate
estate.

Before action could be taken by the lower court on petitioner's motion for new trial
and/or reconsideration, petitioner interposed the present petition for certiorari before
this Court, alleging that respondent Judge acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in issuing the challenged orders. The gist of
petitioner's contention is that she cannot be compelled to deposit in a bank what she no
longer has, considering that she is entitled to the deductions which she made from the
original amount, for (a) as sole surviving child of decedent, she is entitled to advances
and allowances from the inheritance, and (b) as administratrix, she is to be reimbursed
for her expenditures and to deduct her fees as such administratrix.

The instant petition must be dismissed. In the case at bar, there is pending before the
court a quo a motion for new trial and/or reconsideration filed by the petitioner-
administratrix. In said motion, she prays for a chance to submit "receipts proving the
disbursements itemized in her verified accounting, and therefore begs leave for a new
trial to offer such evidence". She also alleges therein that she will submit evidence
which will show that her disbursements "are properly and legally chargeable to the
estate". She therefore prayed for the reconsideration of the denial of her motion for
payment of P22,000.00 "as her advance or allowance against her distributive share"
and the payment of her fees as administratrix. It is very obvious that the court a
quo should be given an opportunity to act on these matters because the correctness of
the order requiring petitioner to deposit the amount of P39,240.15 with a banking
institution is dependent upon the ascertainment by the court of the correctness of the
account of the administratrix. Contrary to petitioner's contention, the matters relating
to the advances to her as heir, her compensation as administratrix and her other
disbursements cannot be considered separately from the order to deposit the amount of
P39,240.15, for as the respondent court observed: "It is ... very obvious that should
said petitions be granted, she shall be relieved thereby of her obligation to deposit the
amount of P39,314.15 as ordered by this Court." Our decision of July 31, 1963 which
modified the appealed order of the Quezon Court of First Instance in effect reaffirmed
the authority of the probate court to pass upon the correctness of the disbursements
made by the administratrix, as clearly shown by the dispositive portion thereof, which
directed the deposit of the balance of the original amount of P40,938.56 in the
possession of the administratrix after deducting the expenses, allowances and
inheritances approved or authorized by the court.

Pursuant to Section 7 of Rule 85 of the Rules, 3 a judicial administrator is entitled, by

way of compensation as such, to either (a) P4.00 per day "for the time actually and
necessarily employed" by him as such administrator, or (b) a "commission upon the
value of so much of the estate as comes into his possession and was finally disposed of
by him" according to the schedule therein provided. The administrator may be allowed
a greater or additional sum "where the estate is large, and the settlement has been
attended with great difficulty, and has required a high degree of capacity on the part of
the executor or administrator". It must be noted that petitioner is seeking as her
compensation as administratrix an amount greater than that ordinarily allowed under
the rules on the ground that the estate is large, its settlement "having been attended
with great difficulty (since 1947 or almost 17 years ago) and required a high degree of
capacity". In order to entitle the executor or administrator to additional compensation,
the estate must be large, the settlement extraordinarily difficult, and a high degree of
capacity demonstrated by him. The amount of his fee in special cases under the Rules
is a matter largely in the discretion of the probate court, which will not be disturbed on
appeal, except for an abuse of discretion.4 Whether or not the probate court abused its
discretion would depend on the attendant facts. We do not have before Us any
competent evidence on the basis of which We can ascertain the veracity of petitioner's
claims. Upon the other hand, such evidence could be presented before the court a quo.
Similarly, any review of the order of the probate court denying petitioner's motions on
the ground that the different disbursements contained in her accounts "are not only
unsupported by receipts but likewise not properly and legally chargeable against the
estate of the deceased ..." would involve a consideration of the supporting evidence
which We do not have before Us. Indeed, petitioner alleges in her petition that it is for
the purpose of submitting the "supporting proofs" to her account that she filed the
motion for new trial with the court  a quo. It likewise appears from the records that the
court below was given almost no time to pass upon the motion, the same being dated
May 26, 1965 and this petition for certiorari being dated June 1, 1965. On the basis of
the foregoing facts, the present petition for certiorari is indeed premature. We consider
it pertinent to state that:

"... The office of the writ of certiorari has been reduced to the correction
of defects of jurisdiction solely and cannot legally be used for any other
purpose. It is truly an extraordinary remedy and, in this jurisdiction, its
use is restricted to truly extraordinary cases-cases in which the action of
the inferior court is wholly void; where any further steps in the case would
result in a waste of time and money and would produce no result
whatever; where the parties, or their privies, would be utterly deceived;
where a final judgment or decree would be naught but a snare and a
delusion, deciding nothing, protecting nobody, a judicial pretension, a
recorded falsehood, a standing menace. It is only to avoid such results as
these that a writ of certiorari is issuable, and even here an appeal will lie
if the aggrieved party prefers to prosecute it."5

And We have emphasized that before a petition for certiorari can be brought against an

order of the trial court, all remedies available in that court must first be exhausted.
Thus, a petition for certiorari may not be granted where there is an appeal or other
adequate remedy, like a motion for reconsideration, which is pending in the court
below.6 The lower court must be granted by the aggrieved party sufficient opportunity
to correct the error it may have committed.7 It is true that there are several exceptions
to this rule, such as where the order complained of is void for being violative of due
process;8 or there are special circumstances which warrant immediate and more direct
action; 9 or where execution had been ordered and the need for relief is extremely
urgent; 10 or the lower court has taken an unreasonably long time to resolve the
motions before it and further delay would prejudice the party concerned; 11 or where
the motion will raise the same point which has already been squarely stated before the
court; 12 or the proceeding in which the order occurred is a patent nullity as the court
acted without jurisdiction. 13 However, the case at bar does not fall within any of the
above exceptions.

WHEREFORE, the instant petition is hereby dismissed, with costs against the petitioner.

G.R. No. L-50277 February 14, 1980

TESTATE ESTATE OF THE LATE DOMINADOR TUMANG, MAGDALENA A.

TUMANG, administratrix-appellee,
vs.
GUIA T. LAGUIO AND HER MINOR CHILDREN, movants-appellants.

ANTONIO, J.:

This case was forwarded to this Court by the Court of Appeals on the ground that it
involves purely legal issues. The factual background, as found by the Court of Appeals,
is as follows:

In Special Proceeding No. 1953 involving the estate of the late Dominador Tumang and
pending before the Court of First Instance of Pampanga, the widow of the deceased,
namely Magdalena A. Tumang, administratrix and executrix of the will, filed a petition
to declare the testate proceedings definitely terminated and closed with respect to
herself and two of her children — Melba Tumang Ticzon and Nestor A. Tumang. The
petition was premised on the fact that the aforesaid heirs had already acknowledged
receipt of the properties adjudicated to them, and in order for such properties to be
transferred in their names, there was need for an order of the court declaring the
proceedings closed with respect to the aforesaid heirs. The petition was opposed by
appenee's daughter, Guia T. Laguio and her children on the ground that appellee, as
administratrix and executrix, had not yet delivered all properties adjudicated to them.
Moreover, the oppositors contended that there could be no partial termination of the
proceedings. Thereafter, the administratrix withdrew the aforementioned petition.

During the hearing of the motion to withdraw petition, Magdalena Tumang, as required
by the court, filed a pleading captioned "Compliance", alleging that as shown by the
attached receipts issued by the BIR, the estate and inheritance taxes had been fully
paid; that as certified by the Deputy Clerk of Court, no claim has been presented that
has not already delivered all the properties and dividends of the shares of stock
adjudicated to her and her minor children since the approval of the original and
amendatory projects of partition; and that with such admission, the court no longer has
jurisdiction to entertain the motion under consideration.

Resolving the foregoing, the court a quo issued the first questioned Order on February
5, 1971, stating in part, the following:
 Considering the opposition well founded, the court hereby considers the
motion to require administratrix to render an accounting untenable, as the
final accounting of the administratrix was already approved and therefore
denies the motion of oppositor and counter-petitioner dated Jan. 25,
1971. 2

A motion for reconsideration of the foregoing Order was filed by Guia T. Laguio and her
minor children. On August 16, 1971, the court a quo issued the second questioned
Order denying the motion for reconsideration in the following manner:

After a careful consideration of the grounds relied upon by the movant

counter-petitioner, this Court resolves to deny the motion for
reconsideration for the reason that in view of said counter-petitioner's
receipt of the cash dividends in question without first requiring the
administratrix the accounting now being sought to be rendered for
purposes of determining the correctness of the cash dividends constitutes
already a waiver on her part to question such correctness of the aforesaid
cash dividends. The counter-petitioner is being assisted by counsel in the
person of her own husband, and who being well-versed in such legal
process, could have rejected receipt of the said cash dividends on the
shares of stock if the correctness of the same was at that time being
doubted. To say the least, therefore, the grounds for the motion for
reconsideration are, in the honest opinion of this Court, unmeritorious,
and all the motion, in effect, is hereby denied. 3

The sole issue is whether or not the court should have required the executrix to render
an accounting of the cash and stock dividends received after the approval of her final
accounts. A corollary issue is whether or not petitioners have waived their right to
demand such accounting.

Section 8 of Rule 85 provides that the "executor or administrator shall render an

account of his administration within one (1) year from the time of receiving letters
testamentary or of administration ..., and he shall render such further accounts as the
court may requite until the estate is wholly settled."

In the instant case, further accounts by the executrix appear to be in order, in view of
the fact that the dividends sought to be accounted for are not included in the final
accounts rendered by the executrix. It appears that the interests of all the parties will
be better served and the conflict between petitioners and respondent will be resolved if
such additional accounting is made. Further, "it has been held that an executor or
administrator who receives assets of the estate after he has filed an account should file
a supplementary account thereof, and may be compelled to do so, but that it is only
with respect to matters occuring after the settlement of final account that
representatives will be compelled to file supplementary account." 4 It is only in a case
where the petition to compel an executor to account after he has accounted and has
been discharged fails to allege that any further sums came into the hands of the
executor, and the executor specifically denies the receipt of any further sums that the
accounting should be denied. 5
There is no question that in the instant case, the fact that the executrix received funds
of the estate after the approval of her final accounts and before the issuance of an
order finally closing the proceedings is admitted. She must, therefore, account for the
same, in consonance with her duty to account for all the assets of the decedent's estate
which have come into her possession by virtue of her office. 6 An executor should
account for all his receipts and disbursements since his last accounting. 7

We disagree with the lower court's finding that petitioners, by receiving the dividends
without requiring an accounting, had waived their right to do so. The duty of an
executor or administrator to render an account is not a mere incident of an
administration proceeding which can be waived or disregarded. It is a duty that has to
be performed and duly acted upon by the court before the administration is finally
ordered closed and terminated, 8 to the end that no part of the decedent's estate be left
unaccounted for. The fact that the final accounts had been approved does not divest
the court of jurisdiction to require supplemental accounting for, aside from the initial
accounting, the Rules provide that "he shall render such further accounts as the court
may require until the estate is wholly settled." 9

WHEREFORE, in view of all the foregoing, the Orders of the lower court dated February
5, 1971 and August 16, 1971 are set aside, and respondent executrix is hereby ordered
to render a supplemental accounting of all cash and stock dividends as well as other
properties of the estate which came into her possession after the approval of her final
accounts.

G.R. No. 174873             August 26, 2008

QUASHA ANCHETA PEÑA AND NOLASCO LAW OFFICE FOR ITS OWN BEHALF,
AND REPRESENTING THE HEIRS OF RAYMOND TRIVIERE, petitioners,
vs.
LCN CONSTRUCTION CORP., respondent.

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review under Rule 45 of the Revised Rules of Court with petitioners
Quasha Ancheta Peña and Nolasco Law Office (Quasha Law Office) and the Heirs of
Raymond Triviere praying for the reversal of the Decision1 dated 11 May 2006 and
Resolution2 dated 22 September 2006 of the Court of Appeals granting in part the
Petition for Certiorari filed by respondent LCN Construction Corporation (LCN) in CA-
G.R. SP No. 81296.

The factual antecedents of the case are as follows:

Raymond Triviere passed away on 14 December 1987. On 13 January 1988,

proceedings for the settlement of his intestate estate were instituted by his widow, Amy
Consuelo Triviere, before the Regional Trial Court (RTC) of Makati City, Branch 63 of
the National Capital Region (NCR), docketed as Special Proceedings Case No. M-1678.
Atty. Enrique P. Syquia (Syquia) and Atty. William H. Quasha (Quasha) of the Quasha
Law Office, representing the widow and children of the late Raymond Triviere,
respectively, were appointed administrators of the estate of the deceased in April 1988.
As administrators, Atty. Syquia and Atty. Quasha incurred expenses for the payment of
real estate taxes, security services, and the preservation and administration of the
estate, as well as litigation expenses.

In February 1995, Atty. Syquia and Atty. Quasha filed before the RTC a Motion for
Payment of their litigation expenses. Citing their failure to submit an accounting of the
assets and liabilities of the estate under administration, the RTC denied in May 1995
the Motion for Payment of Atty. Syquia and Atty. Quasha.

In 1996, Atty. Quasha also passed away. Atty. Redentor Zapata (Zapata), also of the
Quasha Law Office, took over as the counsel of the Triviere children, and continued to
help Atty. Syquia in the settlement of the estate.

On 6 September 2002, Atty. Syquia and Atty. Zapata filed another Motion for
Payment,3 for their own behalf and for their respective clients, presenting the following
allegations:

(1) That the instant Petition was filed on January 13, 1988; and Atty. Enrique P.
Syquia was appointed Administrator by the Order of this Honorable Court dated
April 12, 1988, and discharged his duties starting April 22, 1988, after properly
posting his administrator's bond up to this date, or more than fourteen (14)
years later. Previously, there was the co-administrator Atty. William H. Quasha,
but he has already passed away.

(2) That, together with Co-administrator Atty. William H. Quasha, they have
performed diligently and conscientiously their duties as Co-administrators,
having paid the required Estate tax and settled the various claims against the
Estate, totaling approximately twenty (20) claims, and the only remaining claim
is the unmeritorious claim of LCN Construction Corp., now pending before this
Honorable Court;

(3) That for all their work since April 22, 1988, up to July 1992, or for four (4)
years, they were only given the amount of P20,000.00 each on November 28,
1988; and another P50,00.00 each on October 1991; and the amount
of P100,000.00 each on July 1992; or a total of P170,000.00 to cover their
administration fees, counsel fees and expenses;

(4) That through their work, they were able to settle all the testate (sic) claims
except the remaining baseless claim of LCN Construction Corp., and were able to
dismiss two (2) foreign claims, and were also able to increase the monetary
value of the estate from roughly over P1Million to the present P4,738,558.63 as
of August 25, 2002 and maturing on September 27, 2002; and the money has
always been with the Philippine National Bank, as per the Order of this Honorable
Court;

(5) That since July 1992, when the co-administrators were paid P100,000.00
each, nothing has been paid to either Administrator Syquia or his client, the
 widow Consuelo Triviere; nor to the Quasha Law Offices or their clients, the
children of the deceased Raymond Triviere;

(6) That as this Honorable Court will notice, Administrator Syquia has always
been present during the hearings held for the many years of this case; and the
Quasha Law Offices has always been represented by its counsel, Atty. Redentor
C. Zapata; and after all these years, their clients have not been given a part of
their share in the estate;

(7) That Administrator Syquia, who is a lawyer, is entitled to additional

Administrator's fees since, as provided in Section 7, Rule 85 of the Revised Rules
of Court:

"x x x where the estate is large, and the settlement has been attended
with great difficulty, and has required a high degree of capacity on the
part of the executor or administrator, a greater sum may be allowed…"

In addition, Atty. Zapata has also been present in all the years of this case. In
addition, they have spent for all the costs of litigation especially the transcripts,
as out-of-pocket expenses.

(8) That considering all the foregoing, especially the fact that neither the
Administrator or his client, the widow; and the Quasha Law Offices or their
clients, the children of the deceased, have received any money for more than ten
(10) years now, they respectfully move that the amount of P1Million be taken
from the Estate funds, to be divided as follows:

a) P450,000.00 as share of the children of the deceased [Triviere] who

are represented by the Quasha Ancheta Peña & Nolasco Law Offices;

b) P200,000.00 as attorney's fees and litigation expenses for the Quasha

Ancheta Peña & Nolasco Law Offices;

c) P150,000.00 as share for the widow of the deceased [Raymond

Triviere], Amy Consuelo Triviere; and

d) P200,000.00 for the administrator Syquia, who is also the counsel of

the widow; and for litigation costs and expenses.

LCN, as the only remaining claimant4 against the Intestate Estate of the Late Raymond
Triviere in Special Proceedings Case No. M-1678, filed its Comment on/Opposition to
the afore-quoted Motion on 2 October 2002. LCN countered that the RTC had already
resolved the issue of payment of litigation expenses when it denied the first Motion for
Payment filed by Atty. Syquia and Atty. Quasha for failure of the administrators to
submit an accounting of the assets and expenses of the estate as required by the court.
LCN also averred that the administrators and the heirs of the late Raymond Triviere had
earlier agreed to fix the former's fees at only 5% of the gross estate, based on which,
per the computation of LCN, the administrators were even overpaid P55,000.00. LCN
further asserted that contrary to what was stated in the second Motion for Payment,
Section 7, Rule 85 of the Revised Rules of Court was inapplicable,5 since the
administrators failed to establish that the estate was large, or that its settlement was
attended with great difficulty, or required a high degree of capacity on the part of the
administrators. Finally, LCN argued that its claims are still outstanding and chargeable
against the estate of the late Raymond Triviere; thus, no distribution should be allowed
until they have been paid; especially considering that as of 25 August 2002, the claim
of LCN against the estate of the late Raymond Triviere amounted to P6,016,570.65 as
against the remaining assets of the estate totaling P4,738,558.63, rendering the latter
insolvent.

On 12 June 2003, the RTC issued its Order6 taking note that "the widow and the heirs
of the deceased Triviere, after all the years, have not received their respective share
(sic) in the Estate x x x."

The RTC declared that there was no more need for accounting of the assets and
liabilities of the estate considering that:

[T]here appears to be no need for an accounting as the estate has no more

assets except the money deposited with the Union Bank of the Philippines under
Savings Account No. 12097-000656-0 x x x; on the estate taxes, records shows
(sic) that the BIR Revenue Region No. 4-B2 Makati had issued a certificate dated
April 27, 1988 indicating that the estate taxes has been fully paid.7

As to the payment of fees of Atty. Syquia and the Quasha Law Office, the RTC found as
follows:

[B]oth the Co-Administrator and counsel for the deceased (sic) are entitled to
the payment for the services they have rendered and accomplished for the
estate and the heirs of the deceased as they have over a decade now spent so
much time, labor and skill to accomplish the task assigned to them; and the last
time the administrators obtained their fees was in 1992.8

Hence, the RTC granted the second Motion for Payment; however, it reduced the sums
to be paid, to wit:

In view of the foregoing considerations, the instant motion is hereby GRANTED.

The sums to be paid to the co-administrator and counsel for the heirs of the
deceased Triviere are however reduced.

Accordingly, the co-administrator Atty. Syquia and aforenamed counsel are

authorized to pay to be sourced from the Estate of the deceased as follows:

a) P450,000.00 as share of the children of the deceased who are represented by

the Quasha, Ancheta, Pena, Nolasco Law Offices;

b) P100,000.00 as attorney's fees and litigation expenses for said law firm;

c) P150,000.00 as share for the widow of the deceased Amy Consuelo Triviere;
and
 d) P100,000.00 for the Co-administrator Atty. Enrique P. Syquia and for litigation
costs and expenses.9

LCN filed a Motion for Reconsideration10 of the foregoing Order on 2 July 2003, but it
was denied by the RTC on 29 October 2003.11

On 13 May 2004, LCN sought recourse from the Court of Appeals by assailing in CA-
G.R. SP No. 81296, a Petition for Certiorari, the RTC Orders dated 12 June 2003 and 2
July 2003, for having been rendered with grave abuse of discretion.12 LCN maintained
that:

(1) The administrator's claim for attorney's fees, aside from being prohibited
under paragraph 3, Section 7 of Rule 85 is, together with administration and
litigation expenses, in the nature of a claim against the estate which should be
ventilated and resolved pursuant to Section 8 of Rule 86;

(2) The awards violate Section 1, Rule 90 of the Rules of Court, as there still
exists its (LCN's) unpaid claim in the sum of P6,016,570.65; and

(3) The alleged deliberate failure of the co-administrators to submit an

accounting of the assets and liabilities of the estate does not warrant the Court's
favorable action on the motion for payment.13

On 11 May 2006, the Court of Appeals promulgated a Decision essentially ruling in

favor of LCN.

While the Court of Appeals conceded that Atty. Syquia and the Quasha Law Office, as
the administrators of the estate of the late Raymond Triviere, were entitled to
administrator's fees and litigation expenses, they could not claim the same from the
funds of the estate. Referring to Section 7, Rule 85 of the Revised Rules of Court, the
appellate court reasoned that the award of expenses and fees in favor of executors and
administrators is subject to the qualification that where the executor or administrator is
a lawyer, he shall not charge against the estate any professional fees for legal services
rendered by him. Instead, the Court of Appeals held that the attorney's fees due Atty.
Syquia and the Quasha Law Offices should be borne by their clients, the widow and
children of the late Raymond Triviere, respectively.

The appellate court likewise revoked the P450,000.00 share and P150,000.00 share

awarded by the RTC to the children and widow of the late Raymond Triviere,
respectively, on the basis that Section 1, Rule 91 of the Revised Rules of Court
proscribes the distribution of the residue of the estate until all its obligations have been
paid.

The appellate court, however, did not agree in the position of LCN that the
administrators' claims against the estate should have been presented and resolved in
accordance with Section 8 of Rule 86 of the Revised Rules of Court. Claims against the
estate that require presentation under Rule 86 refer to "debts or demands of a
pecuniary nature which could have been enforced against the decedent during his
lifetime and which could have been reduced to simple judgment and among which are
those founded on contracts." The Court of Appeals also found the failure of the
administrators to render an accounting excusable on the basis of Section 8, Rule 85 of
the Revised Rules of Court.14

Finding the Petition for Certiorari of LCN partly meritorious, the Court of Appeals
decreed:

WHEREFORE, premises considered, the instant petition is hereby PARTLY

GRANTED. The assailed Orders of the public respondent are hereby AFFIRMED
with MODIFICATION in that -

(1) the shares awarded to the heirs of the deceased Triviere in the assailed
Order of June 12, 2003 are hereby DELETED; and

(2) the attorney's fees awarded in favor of the co-administrators are

hereby DELETED. However, inasmuch as the assailed order fails to itemize these
fees from the litigation fees/administrator's fees awarded in favor of the co-
administrators, public respondent is hereby directed to determine with
particularity the fees pertaining to each administrator.15

Petitioner filed a Motion for Reconsideration16 of the 11 May 2006 Decision of the Court
of Appeals. The Motion, however, was denied by the appellate court in a Resolution
dated 22 September 2006,17 explaining that:

In sum, private respondents did not earlier dispute [herein respondent LCN's]
claim in its petition that the law firm and its lawyers served as co-administrators
of the estate of the late Triviere. It is thus quite absurd for the said law firm to
now dispute in the motion for reconsideration its being a co-administrator of the
estate.

[Herein petitioners], through counsel, likewise appear to be adopting in their

motion for reconsideration a stance conflicting with their earlier theory submitted
to this Court. Notably, the memorandum for [petitioner] heirs states that the
claim for attorney's fees is supported by the facts and law. To support such
allegation, they contend that Section 7 (3) of Rule 85 of the 1997 Rules of Civil
Procedure finds no application to the instant case since "what is being charged
are not professional fees for legal services rendered but payment for
administration of the Estate which has been under the care and management of
the co-administrators for the past fourteen (14) years." Their allegation,
therefore, in their motion for reconsideration that Section 7 (3) of Rule 85 is
inapplicable to the case of Quasha Law Offices because it is "merely seeking
payment for legal services rendered to the estate and for litigation expenses"
deserves scant consideration.

xxxx

WHEREFORE, premises considered, private respondents' motion for

reconsideration is hereby DENIED for lack of merit. 18
Exhausting all available legal remedies, petitioners filed the present Petition for Review
on Certiorari based on the following assignment of errors:

I.

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE AWARD IN

FAVOR OF THE HEIRS OF THE LATE RAYMOND TRIVIERE IS ALREADY A
DISTRIBUTION OF THE RESIDUE OF THE ESTATE.

II.

THE HONORABLE COURT OF APPEALS ERRED IN NULLIFYING THE AWARD OF

ATTORNEY'S FEES IN FAVOR OF THE CO-ADMINISTRATORS

The Court of Appeals modified the 12 June 2003 Order of the RTC by deleting the
awards of P450,000.00 and P150,000.00 in favor of the children and widow of the late
Raymond Triviere, respectively. The appellate court adopted the position of LCN that
the claim of LCN was an obligation of the estate which was yet unpaid and, under
Section 1, Rule 90 of the Revised Rules of Court, barred the distribution of the residue
of the estate.

Petitioners, though, insist that the awards in favor of the petitioner children and widow
of the late Raymond Triviere is not a distribution of the residue of the estate, thus,
rendering Section 1, Rule 90 of the Revised Rules of Court inapplicable.

Section 1, Rule 90 of the Revised Rules of Court provides:

Section 1. When order for distribution of residue made. - When the debts,
funeral charges, and expenses of administration, the allowance to the widow,
and inheritance tax, if any, chargeable to the estate in accordance with law,
have been paid, the court, on the application of the executor or administrator, or
of a person interested in the estate, and after hearing upon notice, shall assign
the residue of the estate to the persons entitled to the same, naming them and
the proportions, or parts, to which each is entitled, and such persons may
demand and recover their respective shares from the executor or administrator,
or any other person having the same in his possession. If there is a controversy
before the court as to who are the lawful heirs of the deceased person or as to
the distributive shares to which each person is entitled under the law, the
controversy shall be heard and decided as in ordinary cases.

No distribution shall be allowed until the payment of the obligations above

mentioned has been made or provided for, unless the distributees, or any of
them, give a bond, in a sum to be fixed by the court, conditioned for the
payment of said obligations within such time as the court directs.

According to petitioners, the 12 June 2003 Order of the RTC should not be construed as
a final order of distribution. The 12 June 2003 RTC Order granting the second Motion
for Payment is a mere interlocutory order that does not end the estate proceedings.
Only an order of distribution directing the delivery of the residue of the estate to the
proper distributees brings the intestate proceedings to a close and, consequently, puts
an end to the administration and relieves the administrator of his duties.

A perusal of the 12 June 2003 RTC Order would immediately reveal that it was not yet
distributing the residue of the estate. The said Order grants the payment of certain
amounts from the funds of the estate to the petitioner children and widow of the late
Raymond Triviere considering that they have not received their respective shares
therefrom for more than a decade. Out of the reported P4,738,558.63 value of the
estate, the petitioner children and widow were being awarded by the RTC, in its 12 June
2003 Order, their shares in the collective amount of P600,000.00. Evidently, the
remaining portion of the estate still needs to be settled. The intestate proceedings were
not yet concluded, and the RTC still had to hear and rule on the pending claim of LCN
against the estate of the late Raymond Triviere and only thereafter can it distribute the
residue of the estate, if any, to his heirs.

While the awards in favor of petitioner children and widow made in the RTC Order dated
12 June 2003 was not yet a distribution of the residue of the estate, given that there
was still a pending claim against the estate, still, they did constitute a partial and
advance distribution of the estate. Virtually, the petitioner children and widow were
already being awarded shares in the estate, although not all of its obligations had been
paid or provided for.

Section 2, Rule 109 of the Revised Rules of Court expressly recognizes advance
distribution of the estate, thus:

Section 2. Advance distribution in special proceedings. - Notwithstanding a

pending controversy or appeal in proceedings to settle the estate of a
decedent, the court may, in its discretion and upon such terms as it may
deem proper and just, permit that such part of the estate as may not be
affected by the controversy or appeal be distributed among the heirs or
legatees, upon compliance with the conditions set forth in Rule 90 of
these rules. (Emphases supplied.)

The second paragraph of Section 1 of Rule 90 of the Revised Rules of Court allows the
distribution of the estate prior to the payment of the obligations mentioned therein,
provided that "the distributees, or any of them, gives a bond, in a sum to be fixed by
the court, conditioned for the payment of said obligations within such time as the court
directs."

In sum, although it is within the discretion of the RTC whether or not to permit the
advance distribution of the estate, its exercise of such discretion should be qualified by
the following: [1] only part of the estate that is not affected by any pending
controversy or appeal may be the subject of advance distribution (Section 2, Rule 109);
and [2] the distributees must post a bond, fixed by the court, conditioned for the
payment of outstanding obligations of the estate (second paragraph of Section 1, Rule
90). There is no showing that the RTC, in awarding to the petitioner children and widow
their shares in the estate prior to the settlement of all its obligations, complied with
these two requirements or, at the very least, took the same into consideration. Its
Order of 12 June 2003 is completely silent on these matters. It justified its grant of the
award in a single sentence which stated that petitioner children and widow had not yet
received their respective shares from the estate after all these years. Taking into
account that the claim of LCN against the estate of the late Raymond Triviere allegedly
amounted to P6,016,570.65, already in excess of the P4,738,558.63 reported total
value of the estate, the RTC should have been more prudent in approving the advance
distribution of the same.

Petitioners earlier invoked Dael v. Intermediate Appellate Court,,19 where the Court

sustained an Order granting partial distribution of an estate.

However, Dael is not even on all fours with the case at bar, given that the Court therein
found that:

Where, however, the estate has sufficient assets to ensure equitable

distribution of the inheritance in accordance with law and the final judgment in
the proceedings and it does not appear there are unpaid obligations, as
contemplated in Rule 90, for which provisions should have been made or a bond
required, such partial distribution may be allowed. (Emphasis supplied.)

No similar determination on sufficiency of assets or absence of any outstanding

obligations of the estate of the late Raymond Triviere was made by the RTC in this
case. In fact, there is a pending claim by LCN against the estate, and the amount
thereof exceeds the value of the entire estate.

Furthermore, in Dael, the Court actually cautioned that partial distribution of the
decedent's estate pending final termination of the testate or intestate proceeding
should as much as possible be discouraged by the courts, and, except in extreme cases,
such form of advances of inheritance should not be countenanced. The reason for this
rule is that courts should guard with utmost zeal and jealousy the estate of the
decedent to the end that the creditors thereof be adequately protected and all the
rightful heirs be assured of their shares in the inheritance.

Hence, the Court does not find that the Court of Appeals erred in disallowing the
advance award of shares by the RTC to petitioner children and the widow of the late
Raymond Triviere.

II

On the second assignment of error, petitioner Quasha Law Office contends that it is
entitled to the award of attorney's fees and that the third paragraph of Section 7, Rule
85 of the Revised Rules of Court, which reads:

Section 7. What expenses and fees allowed executor or administrator. Not to

charge for services as attorney. Compensation provided by will controls unless
renounced. x x x.

xxxx
 When the executor or administrator is an attorney, he shall not charge against
the estate any professional fees for legal services rendered by him. (Emphasis
supplied.)

is inapplicable to it. The afore-quoted provision is clear and unequivocal and needs no
statutory construction. Here, in attempting to exempt itself from the coverage of said
rule, the Quasha Law Office presents conflicting arguments to justify its claim for
attorney's fees against the estate. At one point, it alleges that the award of attorney's
fees was payment for its administration of the estate of the late Raymond Triviere; yet,
it would later renounce that it was an administrator.

In the pleadings filed by the Quasha Law Office before the Court of Appeals, it referred
to itself as co-administrator of the estate.

In the Comment submitted to the appellate court by Atty. Doronila, the member-lawyer
then assigned by the Quasha Law Office to the case, it stated that:

The 12 June 2003 Order granted the Motion for Payment filed by Co-
Administrator and counsel Atty. Enrique P. Syquia and the counsel Atty. Cirilo
E. Doronila and Co-Administrator for the children of the late Raymond
Triviere. x x x.20 (Emphasis supplied.)

It would again in the same pleading claim to be the "co-administrator and counsel for
the heirs of the late Raymond Triviere."21

Finally, the Memorandum it submitted to the Court of Appeals on behalf of its clients,
the petitioner-children of the late Raymond Triviere, the Quasha Law Office alleged
that:

2. The petition assails the Order of the Honorable Regional Trial Court of Makati,
Branch 63 granting the Motion for Payment filed by Co-Administrators Atty.
Enrique P. Syquia and the undersigned counsel together with the children
of the deceased Raymond Triviere, and the Order dated 29 October 2003
denying Petitioner's Motion for Reconsideration of the First Order.

xxxx

I. Statement of Antecedent Facts

xxxx

4. On 13 May 2004, Atty. Enrique Syquia, co-administrator and counsel for

respondent Amy Consuelo Triviere and the undersigned counsel, co-
administrator and counsel for the children of the late Raymond
Triviere filed their Comment.22

Petitioner Quasha Law Office asserts that it is not within the purview of Section 7, Rule
85 of the Revised Rules of Court since it is not an appointed administrator of the
estate.23 When Atty. Quasha passed away in 1996, Atty. Syquia was left as the sole
administrator of the estate of the late Raymond Triviere. The person of Atty. Quasha
was distinct from that of petitioner Quasha Law Office; and the appointment of Atty.
Quasha as administrator of the estate did not extend to his law office. Neither could
petitioner Quasha Law Office be deemed to have substituted Atty. Quasha as
administrator upon the latter's death for the same would be in violation of the rules on
the appointment and substitution of estate administrators, particularly, Section 2, Rule
82 of the Revised Rules of Court.24 Hence, when Atty. Quasha died, petitioner Quasha
Law Office merely helped in the settlement of the estate as counsel for the petitioner
children of the late Raymond Triviere.

In its Memorandum before this Court, however, petitioner Quasha Law Office argues
that "what is being charged are not professional fees for legal services rendered but
payment for administration of the Estate which has been under the care and
management of the co-administrators for the past fourteen (14) years."25

On the other hand, in the Motion for Payment filed with the RTC on 3 September 2002,
petitioner Quasha Law Office prayed for P200,000.00 as "attorney's fees and litigation
expenses." Being lumped together, and absent evidence to the contrary,
the P200,000.00 for attorney's fees and litigation expenses prayed for by the petitioner
Quasha Law Office can be logically and reasonably presumed to be in connection with
cases handled by said law office on behalf of the estate. Simply, petitioner Quasha Law
Office is seeking attorney's fees as compensation for the legal services it rendered in
these cases, as well as reimbursement of the litigation expenses it incurred therein.

The Court notes with disfavor the sudden change in the theory by petitioner Quasha
Law Office. Consistent with discussions in the preceding paragraphs, Quasha Law Office
initially asserted itself as co-administrator of the estate before the courts. The records
do not belie this fact. Petitioner Quasha Law Office later on denied it was substituted in
the place of Atty. Quasha as administrator of the estate only upon filing a Motion for
Reconsideration with the Court of Appeals, and then again before this Court. As a
general rule, a party cannot change his theory of the case or his cause of action on
appeal.26 When a party adopts a certain theory in the court below, he will not be
permitted to change his theory on appeal, for to permit him to do so would not only be
unfair to the other party but it would also be offensive to the basic rules of fair play,
justice and due process.27 Points of law, theories, issues and arguments not brought to
the attention of the lower court need not be, and ordinarily will not be, considered by a
reviewing court, as these cannot be raised for the first time at such late stage.28

This rule, however, admits of certain exceptions.29 In the interest of justice and within
the sound discretion of the appellate court, a party may change his legal theory on
appeal, only when the factual bases thereof would not require presentation of any
further evidence by the adverse party in order to enable it to properly meet the issue
raised in the new theory.30

On the foregoing considerations, this Court finds it necessary to exercise leniency on

the rule against changing of theory on appeal, consistent with the rules of fair play and
in the interest of justice. Petitioner Quasha Law Office presented conflicting arguments
with respect to whether or not it was co-administrator of the estate. Nothing in the
records, however, reveals that any one of the lawyers of Quasha Law Office was indeed
a substitute administrator for Atty. Quasha upon his death.
The court has jurisdiction to appoint an administrator of an estate by granting letters of
administration to a person not otherwise disqualified or incompetent to serve as such,
following the procedure laid down in Section 6, Rule 78 of the Rules of Court.

Corollary thereto, Section 2, Rule 82 of the Rules of Court provides in clear and
unequivocal terms the modes for replacing an administrator of an estate upon the
death of an administrator, to wit:

Section 2. Court may remove or accept resignation of executor or administrator.

Proceedings upon death, resignation, or removal. x x x.

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

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

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

The attorney's fees, therefore, cannot be covered by the prohibition in the third
paragraph of Section 7, Rule 85 of the Revised Rules of Court against an
attorney, to charge against the estate professional fees for legal services
rendered by them.

However, while petitioner Quasha Law Office, serving as counsel of the Triviere children
from the time of death of Atty. Quasha in 1996, is entitled to attorney's fees and
litigation expenses of P100,000.00 as prayed for in the Motion for Payment dated 3
September 2002, and as awarded by the RTC in its 12 June 2003 Order, the same may
be collected from the shares of the Triviere children, upon final distribution of the
estate, in consideration of the fact that the Quasha Law Office, indeed, served as
counsel (not anymore as co-administrator), representing and performing legal
services for the Triviere children in the settlement of the estate of their deceased
father.

Finally, LCN prays that as the contractor of the house (which the decedent caused to be
built and is now part of the estate) with a preferred claim thereon, it should already be
awarded P2,500,000.00, representing one half (1/2) of the proceeds from the sale of
said house. The Court shall not take cognizance of and rule on the matter considering
that, precisely, the merits of the claim of LCN against the estate are still pending the
proper determination by the RTC in the intestate proceedings below.

WHEREFORE, premises considered, the Petition for Review on Certiorari is

hereby PARTLY GRANTED. The Decision dated 11 May 2006 and Resolution dated 22
September 2006 of the Court of Appeals in CA-G.R. SP No. 81296  are AFFIRMED, with
the following MODIFICATIONS:

1) Petitioner Quasha Law Office is entitled to attorney's fees of ONE HUNDRED

THOUSAND PESOS (P100,000.00), for legal services rendered for the Triviere
children in the settlement of the estate of their deceased father, the same to be
paid by the Triviere children in the manner herein discussed; and

2) Attorneys Enrique P. Syquia and William H. Quasha are entitled to the

payment of their corresponding administrators' fees, to be determined by the
RTC handling Special Proceedings Case No. M-1678, Branch 63 of the Makati
RTC, the same to be chargeable to the estate of Raymond Trieviere.