Sebial vs Sebial

FACTS:
Gelacio Sebial died intestate in 1943. Oppositors are his children from his first marriage. On June
17, 1960 Benjamina, a child from Gelacios second marriage, filed in the CFI of Cebu a petition for
the settlement of his estate. The lower court appointed her as administratrix. On November 17, 1961,
she submitted a second inventory wherein she reproduced her first inventory and added two other
properties. The lower court approved the second inventory. The oppositors contend that the probate
court had no jurisdiction to approve the said inventory because the administratrix filed it after three
months from the date of her appointment.
ISSUE:

Whether the court had jurisdiction to approve an inventory filed beyond the threemonth period fixed in section 1, Rule 84 of the Rules of Court
HELD:
Yes. The three-month period prescribed in section 1, Rule 83 of the Rules of Court is not mandatory.
After the filing of a petition for the issuance of letters of administration and the publication of the
notice of hearing, the proper CFI acquires jurisdiction over a decedent's estate and retains that
jurisdiction until the proceeding is closed. The fact that an inventory was filed after the three-month
period would not deprive the probate court of jurisdiction to approve it. However, an administrator's
unexplained delay in filing the inventory may be a ground for his removal.

De Parreo vs Aranzanso

116 SCRA 156

FACTS:
Juliana Reyes died intestate. Her estate had only special administrators until Gregoria Aranzanso
who claims to be a first cousin of the decedent asked that she be appointed regular administrator.
On January 29, 1966, the Court issued an order appointing Gregoria Aranzanso as regular
administrator and relieving Araceli A. Pilapil as special administrator. Oppositions were filed
against her appointment. On June 20, 1966, the court issued an order revoking the appointment
of Gregoria Aranzanso as regular administratrix and appointing the petitioner Paulina R. Santos
de Parreno special administratrix of the intestate estate of the decedent
ISSUE:
Whether the lower court was justified in revoking the appointment of Gregoria Aranzanso as the
administrator of the intestate estate of Juliana Reyes.
HELD:
No. It stands to reason that the appellant having been appointed regular administrator of the
intestate estate of Juliana Reyes may be removed from her office but only for a cause or causes
provided by law in Rule 82, Section 2, of the Rules of Court which are not present in the given
case. The decision of this Court, cited in the appealed order, that Gregoria Aranzanso, among
other persons, is without right to intervene as heir in the settlement of the estate in question is not
one of the grounds provided by the Rules of Court.

Santero vs CFI of Cavite

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
Executi
ve
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 precedentof
the court which granted a similar motion last year." (Annex "F") However in previous years (19791981) 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.
SO ORDERED.

G.R. No. L-23419 June 27, 1975

INTESTATE ESTATE OF THE DECEASED GELACIO SEBIAL. BENJAMINA SEBIAL, petitionerappellee,
vs.
ROBERTA SEBIAL, JULIANO SEBIAL and HEIRS OF BALBINA SEBIAL, oppositors-appellants.
C. de la Victoria & L. de la Victoria for appellants.
Robustiano D. Dejaresco for appellee.

AQUINO, J.:
Gelacio Sebial died intestate in 1943 in Pinamungajan Cebu. According to the appellants, Gelacio
Sebial, by his first wife Leoncia Manikis, who allegedly died in 1919, begot three children named
Roberta, Balbina and Juliano. By his second wife, Dolores Enad, whom he allegedly married in
1927, he supposedly begot six children named Benjamina, Valentina, Ciriaco, Gregoria, Esperanza
and Luciano.
On June 17, 1960 Benjamina Sebial filed in the Court of First Instance of Cebu a verified petition for
the settlement of Gelacio Sebial's estate. She prayed that she be appointed administratrix thereof
(Spec. Proc. No. 2049-R). Roberta Sebial opposed the petition on the ground that the estate of
Gelacio Sebial had already been partitioned among his children and that, if an administration
proceeding was necessary, she, Roberta Sebial, a resident of Guimbawian, a remote mountain
barrio of Pinamungajan, where the decedent's estate was supposedly located, should be the one
appointed administratrix and not Benjamina Sebial, a housemaid working at Talisay, Cebu which is
about seventy kilometers away from Pinamungajan. In a supplemental opposition the children of the
first marriage contended that the remedy of Benjamina Sebial was an action to rescind the partition.
After hearing, the lower court in its order of January 16, 1961 appointed Benjamina Sebial as
administratrix. It found that the decedent left an estate consisting of lands with an area of twenty-one
hectares, valued at more than six thousand pesos, and that the alleged partition of the decedent's
estate was invalid and ineffective.
Letters of administration were issued to Benjamina Sebial on January 19, 1961. On the same date, a
notice to creditors was issued. The oppositors moved for the reconsideration of the order appointing
Benjamina Sebial as administratrix. They insisted that the decedent's estate had been partitioned on
August 29, 1945, as shown in Exhibits 5, 6, 7 and I, and that the action to rescind the partition had
already prescribed. The lower court denied the motion in its order of February 11, 1961.
The oppositors filed on March 16, 1961 a motion to terminate the administration proceeding on the
grounds that the decedent's estate was valued at less than six thousand pesos and that it had
already been partitioned and, therefore, there was no necessity for the administration proceeding.

On April 27, 1961 Benjamina Sebial filed an inventory and appraisal of the decedent's estate
allegedly consisting of seven unregistered parcels of land, covered by Tax Declarations Nos. 04477,
04478, 04490, 04491, 04492, 04493 and 04500, with a total value of nine thousand pesos, all
located at Barrio Guimbawian, Pinamungajan. The oppositors registered their opposition to the
inventory on the ground that the seven parcels of land enumerated in the inventory no longer formed
part of the decedent's estate.
On May 6, 1961, the administratrix filed a motion to require Lorenzo Rematado, Demetrio Camillo
and the spouses Roberta Sebial and Lazaro Recuelo to deliver to her the parcels of land covered by
Tax Declarations Nos. 04478, 04490,04491 and 04493.
On June 24, 1961 the probate court issued an order suspending action on the pending incidents in
view of the possibility of an amicable settlement. It ordered the parties to prepare a complete list of
the properties belonging to the decedent, with a segregation of the properties belonging to each
marriage. Orders of the same tenor were issued by the lower court on July 8 and October 28, 1961.
On November 11, 1961 the oppositors, Roberta Sebial, Juliano Sebial and the heirs of Balbina
Sebial, submitted their own inventory of the conjugal assets of Gelacio Sebial and Leoncia Manikis,
consisting of two parcels of land acquired in 1912 and 1915. They alleged that the conjugal estate of
Gelacio Sebial and Dolores Enad consisted of only one parcel of land, containing an area of seven
hectares, allegedly purchased with money coming from the conjugal assets of Gelacio Sebial and
Leoncia Manikis. They further alleged that the said seven- hectare land was sold by the children of
the second marriage to Eduardo Cortado (Tax Declaration No. 2591).
1wph1.t

The oppositors claimed that the aforementioned two parcels of land acquired during the first
marriage were partitioned in 1945 among (1) Roberta Sebial, (2) Juliano Sebial, (3) Francisco Sebial
as the representative of the estate of Balbina Sebial and (4) Valentina Sebial as the representative of
the six children of the second marriage, some of whom were minors. They clarified that under that
partition the three children of the first marriage received a three-fourths share while the six children
of second marriage received a one-fourth share (Tax Declaration No. 06500). They also alleged that
Eduardo Cortado, Emilio Sialongo, Lorenzo Rematado and Lazaro Recuelo were the third persons
involved in the transfer of the lands pertaining to the estate of Gelacio Sebial (Tax Declarations Nos.
04493, 06571 and 04471). To the inventory submitted by the oppositors, the administratrix filed an
opposition dated November 18, 1961.
In an order dated November 11, 1961 the lower court inexplicably required the administratrix to
submit another inventory. In compliance with that order she submitted an inventory dated November
17, 1961, wherein she reproduced her inventory dated April 17, 1961 and added two other items,
namely, two houses allegedly valued at P8,000 and the fruits of the properties amounting to P5,000
allegedly received by the children of the first marriage. The oppositor interposed an opposition to the
said inventory.
On November 24, 1961 the oppositors filed a "motion for revision of partition" which was based on
their own inventory dated November 7, 1961.

The lower court in its order of December 11, 1961 approved the second inventory dated November,
7, 1961 because there was allegedly a "prima facie evidence to show that" the seven parcels of land
and two houses listed therein belonged to the decedent's estate. In another order also dated
December 11, 1961 the lower court granted the motion of the administratrix dated May 4, 1961 for
the delivery to her of certain parcels of land and it directed that the heirs of Gelacio Sebial, who are
in possession of the parcels of land covered by Tax Declarations Nos. 04493, 04491, 04490 and
04478, should deliver those properties to the administratrix and should not disturb her in her
possession and administration of the same. The lower court denied the oppositors' motion dated
November 20, 1961 for "revision of partition".
On December 29, 1961 Roberta Sebial moved for the reconsideration of the two orders on the
grounds (1) that the court had no jurisdiction to approve an inventory filed beyond the three-month
period fixed in section 1, Rule 84 of the Rules of Court; (2) that the said inventory is not supported by
any documentary evidence because there is no tax declaration at all in Gelacio Sebial's name; (3)
that the two houses mentioned in the inventory were nonexistent because they were demolished by
the Japanese soldiers in 1943 and the materials thereof were appropriated by the administratrix and
her brothers and sisters; (4) that the valuation of P17,000 indicated in the inventory was fake,
fictitious and fantastic since the total value of the seven parcels of land amounted only to P3,080; (5)
that Gelacio Sebial's estate should be settled summarily because of its small value as provided in
section 2, Rule 74 of the Rules of Court and (6) that an ordinary action is necessary to recover the
lands in the possession of third persons.
The oppositors without awaiting the resolution of their motion for reconsideration filed a notice of
appeal from the two orders both dated December 11, 1961. The notice of appeal was filed "without
prejudice to the motion for reconsideration". Benjamina Sebial opposed the motion for
reconsideration. The lower court in its order of January 18, 1962 denied oppositors' motion for
reconsideration. It approved Roberta Sebial's amended record on appeal. The case was elevated to
the Court of Appeals.
The Court of Appeals in its resolution of July 31, 1964 in CA-G.R. No. 31978.-R certified the case to
this Court because in its opinion the appeal involves only the legal issues of (1) the construction to
be given to section 2, Rule 74 and section 1, Rule 84 (now Rule 83) of the Rules of Court and (2)
whether an ordinary civil action for recovery of property and not an administration proceeding is the
proper remedy, considering oppositors' allegation that the estate of Gelacio Sebial was partitioned in
1945 and that some of his heirs had already sold their respective shares (Per Angeles, Gatmaitan
and Concepcion Jr., JJ.)
The Clerk of Court of the lower court in his letter of January 15, 1963, transmitting the amended
record on appeal, said "there was no presentation of evidence by either parties concerning the two
orders appealed from".
This case involves the conflicting claims of some humble folks from a remote rural area in Cebu
regarding some unregistered farm lands. Because of her poverty Roberta Sebial wanted to appeal in
forma pauperis. Her husband Lazaro Recuelo and her nephew, Candelario Carrillo, in order to justify
the filing of a mimeographed brief, swore that their families subsisted on root crops because they
could not afford to buy corn grit or rice.

Oppositors' contention in their motion for reconsideration (not in their brief) that the probate court
had no jurisdiction to approve the inventory dated November 17, 1961 because the administratrix
filed it after three months from the date of her appointment is not well-taken. The three-month period
prescribed in section 1, Rule 83 (formerly Rule 84) of the Rules of Court is not mandatory. After the
filing of a petition for the issuance of letters of administration and the publication of the notice of
hearing, the proper Court of First Instance acquires jurisdiction over a decedent's estate and retains
that jurisdiction until the proceeding is closed. The fact that an inventory was filed after the threemonth period would not deprive the probate court of jurisdiction to approve it. However, an
administrator's unexplained delay in filing the inventory may be a ground for his removal (Sec. 2,
Rule 82, Rules of Court).
The other contention of the oppositors that inasmuch as the value of the decedent's estate is less
than five thousand pesos and he had no debts, the estate could be settled summarily under section
2, Rule 74 of the Rules of Court or that an administration proceeding was not necessary (the limit of
six thousand pesos was increased to ten thousand pesos in section 2, Rule 74 effective on January
1, 1964) rests on a controversial basis. While in the verified petition for the issuance of letters of
administration, it was alleged that the gross value of the decedent's estate was "not more than five
thousand pesos", in the amended inventory the valuation was P17,000. Indeed, one of the lower
court's omissions was its failure to ascertain by preponderance of evidence the actual value of the
estate, if there was still an estate to be administered. The approval of the amended inventory was
not such a determination.
Anyway, in the present posture of the proceeding, no useful purpose would be served by dismissing
the petition herein and ordering that a new petition for summary settlement be filed. Inasmuch as a
regular administrator had been appointed and a notice to creditors had been issued and no claims
were filed, the probate court could still proceed summarily and expeditiously to terminate the
proceeding. With the cooperation of the lawyers of the parties, it should strive to effect an amicable
settlement of the case (See arts. 222 and 2029, Civil Code).
If the efforts to arrive at an amicable settlement prove fruitless, then the probate court should
ascertain what assets constituted the estate of Gelacio Sebial, what happened to those assets and
whether the children of the second marriage (the petitioner was a child of the second marriage and
the principal oppositor was a child of first marriage) could still have a share, howsoever small, in the
decedent's estate.
The lower court's order of December 11, 1961, approving the amended inventory of November 11,
1961, is not a conclusive determination of what assets constituted the decedent's estate and of the
valuations thereof. Such a determination is only provisional in character and is without prejudice to a
judgment in a separate action on the issue of title or ownership (3 Moran's Comments on the Rules
of Court, 1970 Ed., 448-449).
1wph1.t

The other order dated December 11, 1961 requires the delivery to the administratrix of (1) two
parcels of land covered by Tax Declarations Nos. 04491 and 04493 in the possession of the spouses
Lazaro Recuelo and Roberta Sebial, an oppositor-appellant; (2) the parcel of land covered by Tax
Declaration No. 04490 in the possession of Lorenzo Rematado and (3) the parcel of land described

under Tax Declaration No. 04478 in the possession of Demetrio Camillo (Canillo), a child of the
deceased Balbina Sebial, one of the three children of the first marriage.
We hold that the said order is erroneous and should be set aside because the probate court failed to
receive evidence as to the ownership of the said parcels of land. The general rule is that questions
of title to property cannot be passed upon in a testate or intestate proceeding. However, when the
parties are all heirs of the decedent, it is optional upon them to submit to the probate court the
question of title to property and, when so submitted, the probate court may definitely pass judgment
thereon (3 Moran's Comment's on the Rules of Court, 1970 Ed., pp. 448, 473; Alvarez vs. Espiritu, L18833, August 14, 1965, 14 SCRA 892).
Lorenzo Rematado and Lazaro Recuelo are not heirs of the decedent. They are third persons. The
rule is that matters affecting property under administration may be taken cognizance of by the
probate court in the course of the intestate proceedings provided that the interests of third persons
are not prejudiced (Cunanan vs. Amparo, 80 Phil. 227; Ibid, 3 Moran 473).
However, third persons to whom the decedent's assets had been fraudulently conveyed may be
cited to appear in court and be examined under oath as to how they came into the possession of the
decedent's assets (Sec. 6, Rule 87, Rules of Court) but a separate action would be necessary to
recover the said assets (Chanco vs. Madrilejos, 12 Phil. 543; Guanco vs. Philippine National Bank,
54 Phil. 244).
The probate court should receive evidence on the discordant contentions of the parties as to the
assets of decedent's estate, the valuations thereof and the rights of the transferees of some of the
assets. The issue of prescription should also be considered (see p. 84, Record on Appeal).
Generally prescription does not run in favor of a coheir as long as he expressly or impliedly
recognizes the coownership (Art. 494, Civil Code). But from the moment that a coheir claims
absolute and exclusive ownership of the hereditary properties and denies the others any share
therein, the question involved is no longer one of partition but that of ownership (Bargayo vs.
Camumot, 40 Phil. 857).
1wph1.t

At the hearing of the petition for letters of administration some evidence was already introduced on
the assets constituting the estate of Gelacio Sebial. The petitioner testified and presented Exhibits A
to J and X to Y-3. The oppositor also testified and presented Exhibits 2 to 10-A. The stenographic
notes for the said hearing should be transcribed. In addition to that evidence. The probate court
should require the parties to present further proofs on the ownership of the seven parcels of land
and the materials of the two houses enumerated in the amended inventory of November 17, 1961,
on the alleged partition effected in 1945 and on the allegations in oppositors' inventory dated
November 7, 1961.
After receiving evidence, the probate court should decide once and for all whether there are still any
assets of the estate that can be partitioned and, if so, to effect the requisite partition and distribution.
If the estate has no more assets and if a partition had really been made or the action to recover the
lands transferred to third person had prescribed, it should dismiss the intestate proceeding.

WHEREFORE, (a) the probate court's order of December 11, 1961, granting the administratrix's
motion of May 4, 1961 for the delivery to her of certain properties is set aside; (b) its other order of
December 11, 1961 approving the amended inventory should not be considered as a final
adjudication on the ownership of the properties listed in the inventory and (c) this case is remanded
to the lower court for further proceedings in accordance with the guidelines laid down in this
decision. No costs.
SO ORDERED.

Advincula vs. Teodoro R 82 1 99 phil 413

Emilio Advincula was appointed special administrator, then later regular
administrator of his
deceased wifes estate. After he qualified as administrator, his brothers-inlaw submitted a
document purporting to be the deceasedd will. Emilio opposed the
probate of the will on the ground that the signature was not his wifes and
even if it was, the same was procured by fraud. One of the brothers-in-law,
Enrique Lacson, prayed that he (Enrique) be appointed administrator in lieu
of Emilio. During the hearing, it was alleged that Emilio was incompetent,
incapable and unsuitable to act as administrator because Emilio is foreign to
the estate. The court ruled in favor of Enriques motion. Emilio filed an MR
but the same was denied so he instituted the present action for certiorari to
annul the lower courts order.
ISSUE:
WON the lower court acted with GADLEJ in granting Lacsons motion
HELD:
Yes. The appointment of Lacson as administrator in lieu of Advincula is
predicated on the fact that Lacson was named executor of the deceasedd
will. This provision, however cannot be enforced until the said will is admitted
to probate. The discovery of a will of the deceased does not ipso facto
nullify letters of administration already issued or even authorize the
revocation thereof until the alleged will is proved and allowed by the court.
Further more, the lower court appears to have followed the argument of the
respondents that Emilio, being foreign to the deceaseds estate is incapable
of being an administrator. This argument is untenable because from the
viewpoint of logic and experience, a stranger may be competent,
capable and fit to be administrator of the estate in the same way that a
family member can be incompetent, incapable and unfit to do so. Besides,
Emilio as the surviving spouse if a forced heir of the deceased. He is entitled
to of all property apart from his share of the other half thereof as heir of
the deceased since all property of the marriage is presumed to belong to
the conjugal partnership

[G.R. No. 118655. April 12, 2000]

HEIRS OF ELIAS LORILLA, Namely: FE, ELIAS, JR. and SERVANDO, ALL
SURNAMED LORILLA, petitioners, vs. COURT OF APPEALS,
COMMERCIAL CREDIT CORPORATION, HON. FRANCISCO VILLANUEVA
and SHERIFF HONORIO P. SANTOS, respondents.
DECISION
QUISUMBING, J.:
This petition for review assails the decision of the Court of Appeals
promulgated on November 29, 1994, which dismissed the petition for
annulment of the judgment rendered on April 5, 1989, by the Regional Trial
Court, Branch 58, of Makati in Civil Case No. 5262. The motion to reconsider
the decision of the Court of Appeals was denied by said Court in a Resolution
promulgated on January 11, 1995. Jj sc
[1]

[2]

[3]

The antecedent facts of this case as found by the Court of Appeals are as
follows:
"(1) On September 10, 1983, private respondent Commercial
Credit Corporation (now known as Pentacapital Finance
Corporation and hereinafter referred to as PENCAPITAL) filed a
complaint with the Regional Trial Court of Makati, Metro Manila,
(hereinafter referred to as the Makati Court) for a sum of money
against Sanyu Machineries Agencies, Inc., Sanyu Chemical
Corporation, and several other defendants, among whom was
Elias Lorilla, (now deceased) who had acted as sureties for the
two corporate debtors. The complaint was docketed as Civil Case
No. 5262 and was assigned by raffle to Branch 58 of said court.
(2) PENCAPITAL sought for, and obtained from the Makati Court,
a writ of attachment on the real property of defendant Elias L.
Lorilla covered by Transfer Certificate of Title No. 298986, and
which levy was duly annotated on the certificate of title concerned.
(3) Defendant Elias Lorilla, together with four other individual
defendants, was initially represented by one Atty. Danny Tablizo,
but who later on withdrew his appearance and was substituted by
another lawyer, Atty. Alfredo Concepcion.

(4) During the pendency of Civil Case No. 5262, Elias L. Lorilla
executed a dacion en pago over the property attached in favor of
the Joint Resources Management Development Corporation
(hereinafter referred to as JRMDC) by reason of which Transfer
Certificate of Title No. 298986 in the name of Elias L. Lorilla was
cancelled and replaced by Transfer Certificate of Title No. 114067
in the name of JRMDC. But the levy caused to be made by
PENCAPITAL over the property was carried over to the new
certificate of title.
(5) On June 9, 1986, JRMDC filed suit against PENCAPITAL for
the cancellation of the latters levy on the property in question with
the Regional Trial Court of Pasig, Metro Manila (hereinafter
referred to as the Pasig Court), which was docketed therein as
Civil Case No. 63757 and assigned by raffle to its Branch 153.
(6) On April 5, 1989, the Makati Court, after due hearing,
rendered judgment in Civil Case No. 5262 in favor of
PENCAPITAL and against the defendants therein, including Elias
L. Lorilla. The dispositive portion of said judgment reads:
WHEREFORE, premises considered, judgment is
rendered in favor of plaintiff and against defendants
who are hereby ordered to pay to plaintiff, jointly and
severally, and solidarily the total principal amount of
P421,596.28 plus interest at 12% per annum and a
penalty of 3% per month of default from the time it
became due on July 1, 1981 until fully paid, and 20%
of the entire amount due as attorneys fees, plus the
costs.
SO ORDERED.
(7) Despite receipt of a copy of the aforesaid decision by Alfredo
Concepcion, then counsel of record of defendant Elias L. Lorilla,
no appeal whatsoever was interposed from said judgment by said
lawyer in behalf of defendant Lorilla. Sc jj
(8) On March 3, 1993, upon motion of PENCAPITAL, the Makati
Court issued a writ of execution in Civil Case No. 5262 and
PENCAPITAL thereafter proceeded against the property covered
by TCT No. 298986 in the name of defendant Lorilla.

(9) On May 26, 1993 the Pasig Court rendered decision in its Civil
Case No. 53757 dismissing JRMDCs complaint for the
cancellation of the levy on attachment on the Lorilla property,
ruling that the dacion en pago executed by defendant Lorilla in
favor of JRMDC cannot prevail over the prior writ of attachment
duly annotated on the property in favor of PENCAPITAL. No
appeal from the decision in Civil Case No. 53757 having been
made by JRMDC, the same became final and executory (Annex
"15", Reply Memorandum of PENCAPITAL).
(10) On September 15, 1993, petitioners herein as heirs of Elias
L. Lorilla, filed a motion in Civil Case No. 5262 to quash the writ of
execution issued by the Makati Court, arguing that since
defendant Elias L. Lorilla passed away on January 15, 1988, or
one year and three months before the Makati Court rendered
decision in Civil Case No. 5262 on April 5, 1989, the case should
have been dismissed insofar as Elias L. Lorilla is concerned, in
keeping with Section 21, Rule 3 of the Rules of Court which
provides:
Sec. 21. Where claim does not survive. - When the
action is for recovery of money, debt, or interest
therein, and the defendant dies before final judgment
in the Court of First Instance, it shall be dismissed to
be presented in the manner especially provided in
these rules.
(11) On February 8, 1994, the Makati Court, through its Acting
Presiding Judge, the Honorable Francisco Donato Villanueva,
denied the motion to quash said writ of execution, ruling that the
judgment in Civil Case No. 5256 having become final, it is now
beyond its authority to amend it by dismissing the same insofar as
defendant Elias L. Lorilla is concerned, and that the suggested
remedy, if at all, is a petition for its annulment. Petitioners moved
to reconsider the denial of their motion to quash the writ of
execution, but the Makati Court stood pat on its ruling, hence,
petitioners recourse to this Court for annulment of judgment."
[4]

Petitioners, thus, filed with the Court of Appeals a Petition for Annulment of
Judgment, Writ of Execution, and/or Levy on Execution with Preliminary
Injunction and Restraining Order to annul or enjoin enforcement of the
judgment dated April 5, 1989 of the Makati Court in Civil Case No. 5262. In its

decision promulgated on November 29, 1994, the Court of Appeals resolved

to deny the petition, hence petitioners present recourse to this Court. They
assign the following errors:
"I
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN NOT ANNULLING THE DECISION OF THE
TRIAL COURT, DATED 5 APRIL 1989, INSOFAR AS DECEASED
DEFENDANT ELIAS LORILLA IS CONCERNED, THEREBY
VIOLATION (sic) PETITIONERS RIGHT TO DUE PROCESS OF
LAW.
II
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN VIOLATING SECTION 21, RULE 3, AND
SECTIONS 5 AND 7, RULE 86 OF THE REVISED RULES OF
COURT. Sj cj
III
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN DENYING PETITIONERS THEIR
CONSTITUTIONAL RIGHT TO DUE PROCESS OF LAW."
[5]

In our view, the main issue for resolution now is whether the respondent
appellate court erred and gravely abused its discretion in denying petitioners
action for annulment of judgment of the RTC of Makati, Branch 58, concerning
the deceased defendant Elias Lorilla. Pertinently, we have to consider whether
Section 21 of Rule 3 and Sections 5 and 7of Rule 86 of the Revised Rules of
Court are applicable in the present case. Similarly, we have to inquire whether
petitioners, heirs of Elias Lorilla, were deprived of their right to due process of
law.
Petitioners argue that the cause of action of private respondent Commercial
Credit Corp. (now known as Pentacapital Finance Corp. and hereinafter
referred to as PENTACAPITAL) did not survive for being in violation of Section
21 of Rule 3 of the Revised Rules of Court. They claim that under this rule, the
trial court lost jurisdiction over the person of Elias Lorilla when he died, and
consequently the action against him should have been dismissed.

Section 21 of Rule 3 states:

"SEC. 21. Where claim does not survive. Where the action is for
recovery of money, debt or interest thereon, and the defendant
dies before final judgment in the Court of First Instance, it shall be
dismissed to be prosecuted in the manner especially provided in
these rules."
Section 21 of Rule 3 provides that upon the defendants death, the action
"shall be dismissed to be presented in the manner especially provided in
these rules." Petitioners argue that this manner is provided for in Sections 5
and 7 of Rule 86 of the Revised Rules of Court. As contemplated in Section
21 of Rule 3, the action has to be dismissed without prejudice to the plaintiff
thereafter presenting his claim as a money claim in the settlement of the
estate of the deceased defendant. The claim becomes a mere incident in the
testamentary or intestate proceedings of the deceased where the whole
matter may be fully terminated jointly with the settlement and distribution of
the estate. Supreme
[6]

[7]

[8]

In the present case, however, the records do not show if any notice of death
was filed by Atty. Alfredo Concepcion, counsel of record of Elias Lorilla in Civil
Case No. 5262 before the Makati Court. Thus, neither the Makati Court nor
PENTACAPITAL were made aware of the death of Elias Lorilla. The trial court
could not be expected to know or take judicial notice of the death of Lorilla,
absent such notice. Neither could the petitioners have been made aware of
the trial courts judgment adverse to their father, for all notices and orders of
the court were sent to Lorillas counsel of record, who did not bother to inform
the parties concerned of Elias Lorillas death. Apparently, Lorillas counsel
failed in his duty to promptly inform the court of the death of his client, as the
Rules require.
[9]

As far as the Makati Court was concerned, until the Writ of Execution was
issued and the levy thereof on August 5, 1993, Lorilla continued to be
represented by counsel of record, Atty. Concepcion; and that upon service of
a copy of the decision on said counsel at the latters address, Lorilla was
deemed to have been validly served notice of the judgment. The failure of
Atty. Concepcion to serve notice on the court and the adverse parties
regarding his clients death binds herein petitioners as much as the client
himself could be so bound. Jurisprudence teems with pronouncements that a
client is bound by the conduct, negligence and mistakes of his counsel.
[10]

[11]

In this case, petitioners claim that their right to due process was violated when
the Court of Appeals did not annul the decision of the Makati Court dated April
5, 1989. They claim that as heirs of Elias Lorilla, they would be deprived of
their lawful inheritance without due process, as they were not parties to the
case where the adverse decision against their father was rendered. Said
judgment, they posit, cannot be enforced against them because the court had
not acquired jurisdiction over them, nor over the estate of Elias Lorilla.
True, a judgment may be annulled for want of jurisdiction or lack of due
process of law. But while petitioners were not properly substituted for Elias
Lorilla as defendants, absent any notice of his death, it could not be said that
petitioners were deprived of due process of law, for as far as the trial court
was concerned, they were not parties to the case. To rule otherwise would be,
in fact, a more obvious and grievous transgression of due process.
[12]

Moreover in this case, we find that the property which petitioners claim as
their lawful inheritance, was no longer part of the estate of Elias Lorilla at the
time of his death. For Elias Lorilla had earlier executed a dacion en pago over
this property in favor of the Joint Resources Management Development
Corporation (JRMDC). By reason thereof, Lorillas transfer certificate of title
was cancelled, and a new one was issued in favor of JRMDC. The levy of
PENTACAPITAL annotated on Lorillas certificate of title was carried over onto
the title of JRMDC. Elias Lorillas payment of his obligation to JRMDC being
one of dation in payment, it is governed by the law on sales. The subject
property was validly transferred to JRMDC already. Hence petitioners could
not claim that they were deprived of their lawful inheritance without due
process of law. Court
[13]

[14]

Section 21 of Rule 3 of the Revised Rules of Court sets out the procedure that
should be followed after the death of the defendant in a case. If he died
"before final judgment in the Court of First Instance," the action should be
dismissed without prejudice to the plaintiff presenting his claim in the
settlement of the estate of the deceased in accordance with and as required
by Section 5 of Rule 86 of the Revised Rules of Court. Here, however, the
property in question had already been taken out of the estate of Elias Lorilla,
even before judgment in Civil Case No. 5262 was rendered, and it was
transferred to JRMDC by virtue of the dacion en pagoexecuted by Elias
Lorilla. For this reason, Section 5 of Rule 86 loses its pertinence to the case at
bar.
[15]

Likewise, Section 7 of Rule 39 of the Revised Rules of Court will not apply to
the present case. For it speaks of a situation where a party dies after the entry
[16]

of the judgment or order of the court. It does not cover a situation where the
court was reportedly informed of the death of a party only after final judgment.
Since there was no timely appeal taken from the judgment of the Regional
Trial Court of Makati dated April 5, 1989, in Civil Case No. 5262, that judgment
had properly become final and executory. As well said by respondent
appellate court, to adopt a view contrary would "open the floodgates to
protracted and endless litigations, because all that counsel for defendant has
to do, in an action for recovery of money, in case said defendant dies before
final judgment in a regional trial court, is to conceal such death from the court
and thereafter pretend to go through the motions of trial, and, after judgment
is rendered against his client, to question such judgment for being violative of
Section 21, Rule 3 of the Rules of Court. Thus, counsel for such defendant
could unduly delay the rendering of a judgment against his client. It is a
fundamental concept in any jural system, that even at the risk of occasional
errors, judgments of courts should become final at some definite time fixed by
law. Interest rei publicae ut finis sit litim."
[17]

We see no reason, in the interest of justice, to disturb, much less annul, the
aforesaid judgment.
WHEREFORE, the assailed decision of the Court of Appeals promulgated on
November 29, 1994 and its Resolution promulgated on January 11, 1995 are
hereby AFFIRMED. Costs against petitioners.
SO ORDERED. J l

G.R. No. L-21118

April 27, 1967

LEON CLIMACO, plaintiff-appellant,

vs.
CARLOS SIY UY, ET AL., defendants-appellees.
Climaco & Climaco for plaintiff-appellant.
Paredes, Gan & Associates for defendants-appellees.
DIZON, J.:
Appeal taken by Leon Climaco from the order of the Court of First Instance of Zamboanga dated
January 12, 1959 in Civil Case No. 740 entitled "Leon Climaco, plaintiff, vs. Carlos Siy Uy and
Manuel Co defendants," denying the admission of his amended complaint for the substitution of a
deceased party-defendant, and dismissing the action.
On August 21, 1958 Climaco filed with the lower court an action for damages against (1) Carlos Siy
Uy and (2) Manuel Co his complaint alleging: that sometime in May, 1957, defendants maliciously
charged him with the crime of estafa before the City Fiscal of Manila; that, conspiring with each
other, they gave the latter a false Manila address for plaintiff in order to mislead said officer into filing,
as he did file, Criminal Case No. 399622 with the Court of First Instance of Manila against him,
without giving him an opportunity to present his side of the case; that, besides, defendants had
arranged to have plaintiff arrested and taken to Manila, without giving him a chance to file a bond,
albeit this part of the plan failed; that to defend himself, plaintiff and his counsel had to make several
trips to Manila by plane and boat, thus, incurring extraordinary expenses; that, after trial, the Court of
First Instance of Manila dismissed the case; that the said prosecution hurt the business credit and
reputation of plaintiff, wounded his feelings and caused him suffering, anguish, humiliation, and
damages in the total amount of P19,000.00.
On September 8, 1958 defendants filed a motion to dismiss the complaint on the ground that it
stated no cause of action and that the Court had not acquired jurisdiction over the person of
defendant Carlos Siy Uy who died on August 27, 1958 before summons could be served upon him.
Pending resolution of this motion, plaintiff filed a motion for leave to amend his complaint to
substitute the heirs of Carlos Siy Uy and eventually, the Executor of his Estate as defendants
in the action. On October 11, 1958, the lower court issued an order granting the motion, but
subsequently, defendants moved for a reconsideration of said order and, on January 12, 1959, the
court issued the appealed order not only setting aside its previous; order of October 11, 1958 but
also dismissing the complaint.
Thereupon the plaintiff took the present appeal.
Upon the facts alleged in the complaint, it is clear that Climaco had a cause of action against the
persons named as defendants therein. It was, however, a cause of action for the recovery of
damages, that is, a sum of money, and the corresponding action is, unfortunately, one that does not
survive upon the death of the defendant, in accordance with the provisions of Section 21, Rule 3 of
the Rules of Court.
1wph1.t

Neither could the action as against the deceased Siy Uy be maintained under Section 1, Rule 87 of
the Rules of Court because this legal provision only authorizes actions against the Executor or
Administrator when they are for the recovery of real or personal property, or an interest therein, from

the estate, or to enforce a lien thereon, or when the action is to recover damages for an injury to
person or property, real or personal. In this case the damages which Climaco sought to recover from
the deceased Siy Uy did not spring from any injury caused to his person. Therefore, in so far as the
appealed order denied Climaco's motion for leave to amend his complaint in the sense stated
therein, the same is correct.
However, the deceased Siy Uy was not the only defendant. Manuel Co was also named defendant in
the complaint. Obviously, therefore, the order appealed from is erroneous insofar as it dismissed the
case against Co.
Wherefore, the order appealed from is set aside insofar as it dismissed the case against defendant
Manuel Co and the record of this case is remanded to the lower court for further proceedings. With
costs.

G.R. No. L-28298 November 25, 1983

ROSITA SANTIAGO DE BAUTISTA, ET AL., plaintiffs-appellees,
vs.
VICTORIA DE GUZMAN, ET AL., defendants-appellants.
Jose D. Villena for plaintiffs-appellees.
Antonio Gonzales for defendants-appellants.

GUTIERREZ, JR., J.:

This is an appeal from the decision of the Court of First Instance of Rizal, Pasay City branch, in Civil
Case No. 3530, ordering the defendants-appellants to pay the plaintiffs-appellees damages and
attorney's fees and dismissing the former's counterclaim. As no questions of facts were raised by the
appellants in their brief, the Court of Appeals certified this case to us for decision.
The facts, as stated in the resolution of the appellate court, are as follows:

t.hqw

On May 10, 1952, Numeriano Bautista, husband and father of the plaintiffsappellees, respectively, was a passenger of jeepney bearing Plate No. TPU-4013,
owned and operated by Rosendo de Guzman, deceased husband and father of
defendants-appellants, respectively, as one of the jeepneys used in his transportation
business. Eugenio Medrano y Torres was employed by said Rosendo de Guzman as
the driver of said jeepney. Said driver drove and managed said jeepney at that time
along Taft Avenue, Pasay City, in a negligent and reckless manner and, as a result,
the jeepney turned turtle and, consequently, passenger Numeriano Bautista
sustained physical injuries which caused his death. Eugenio Medrano, the driver,
was accused and convicted of homicide through reckless imprudence by the trial
court in a decision promulgated on May 27, 1952 and sentenced to a penalty of
imprisonment of four (4) months and one (1) day of arresto mayor and to indemnify
the heirs of Numeriano Bautista, plaintiffs-appellees herein, in the sum of P3,000.00.
A writ of execution was issued against said driver, Eugenio Medrano for the said sum
of P3,000.00 but the same was returned to the Court unsatisfied.
On May 12, 1952, Rosendo de Guzman died.
Because of their failure to collect the said sum of P3,000.00 from the driver, Eugenio
Medrano, plaintiffs-appellees filed a complaint (Civil Case No. 2050) dated October
7, 1952, with the Court of First Instance of Rizal, Pasay City Branch, against
defendants-appellants alleging, among other things besides the above-mentioned
incidents, that they demanded from Rosendo de Guzman and from the defendantsappellants the payment of the sums of P3,000.00 as subsidiary liability; P10,000.00
as actual exemplary and moral damages and Pl,000.00 as attorney's fees for the suit
by reason of the death of Numeriano Bautista as related above, but Rosendo de
Guzman and later the herein defendants-appellants refused to pay the same.
Plaintiffs-appellees therefore prayed that the defendants-appellants be ordered to
pay the said sums as well as the costs of suit.

Defendants-appellants through counsel filed a motion to dismiss predicated on two

grounds, namely, that the lower court had no jurisdiction over the subject matter of
the litigation and that the complaint stated no cause of action. In support of said
motion, they maintained that the suit was for a money claim against the supposed
debtor who was already dead and as such it should be filed in testate or intestate
proceedings or, in the absence of such proceedings, after the lapse of thirty (30)
days, the creditors should initiate such proceedings, that the heirs could not be held
liable therefor since there was no allegation that they assumed the alleged obligation.
The lower court sustained the motion to dismiss in an order dated May 11, 1953,
stating, among other things, that:
t.hqw

The procedure thus opened for a money claimant against a deceased

person, as in the instant case, is for said claimant to file proceedings
for the opening of the judicial administration of the estate of said
deceased person and to present his claim in said proceedings. The
claimant may only proceed to sue the heirs of the deceased directly
where such heirs have entered into an extra-judicial partition of such
estate and have distributed the latter among themselves, in which
case, the heirs become liable to the claimant in proportion to the
share which they have received as inheritance. Plaintiffs' complaint
does not state that the defendants have received any such
inheritance from their said deceased father, Rosendo de Guzman,
and hence, there is no cause of action against aforesaid defendants.
This order became final.
Then on December 14, 1954, plaintiffs-appellees filed with the same trial court Civil
Case No. 3530 (subject of this appeal) against the same defendants in the former
case, the complaint containing analogous allegations as those embodied in the first
complaint but in this second complaint they further allege that on June 12, 1952,
Rosendo de Guzman died intestate and that intestate proceedings were filed in the
same court and docketed therein as Special Proceedings No. 1303-P, wherein on
April 20, 1953, a project of partition was presented in and approved by said Court
with the five heirs receiving their shares valued at P2,294.05 each, and on May 14,
1953, said intestate proceedings were closed. They also alleged that Numeriano
Bautista during his lifetime was the only one supporting them and his death caused
them shock, sufferings and anxiety and therefore defendants-appellants should pay
to them, aside from the P3,000.00, an additional amount of P15,000.00 as moral,
exemplary and compensatory damages, plus the sum of P2,000.00 as attorney's
fees for the prosecution of this case, besides the costs of suit.
Defendants-appellants again filed a motion to dismiss on May 5, 1955, alleging the
same grounds as those interposed in the first complaint but adding the further ground
of res judicata in view of the dismissal of the first case which became final as no
appeal or any other action was taken thereon by the appellees. On August 22, 1955,
the lower court denied the motion to dismiss for lack of sufficient merit.
xxx xxx xxx
Then on July 11, 1961, the parties through their respective counsel submitted a
partial stipulation of facts found on pages 63 to 67 of the amended record on appeal

which stipulation of facts, was made the basis of the decision of the lower court
which was rendered on August 26, 1961 (should be August 14, 1961), aside from the
testimony of the widow of Numeriano Bautista, appellee Rosita Bautista, who
testified on the same incidents already recited herein and on the sufferings and
shock she and her children, all appellees in this case, suffered. From said decision,
the present appeal has been interposed ...
Defendants-appellants assign the following errors:
I

t.hqw

THE COURT BELOW ERRED IN NOT SUSTAINING THE MOTION TO DISMISS

MOCION DE SOBRESIMIENTO) FILED BY THE DEFENDANTS-APPELLANTS ON
OR ABOUT MAY, 1955, APPEARING ON PAGE 10 ET SEQ. OF THE AMENDED
RECORD ON APPEAL.
II

t.hqw

THE COURT BELOW ERRED IN NOT DECLARING THAT THE CLAIM OF THE
PLAINTIFFS-APPELLEES IS ALREADY BARRED FOR FAILURE ON THEIR PART
TO FILE THEIR CLAIM IN THE INTESTATE PROCEEDINGS OF THE DECEASED
ROSENDO DE GUZMAN (SPECIAL PROCEEDINGS NO. 1303-P) OF THE COURT
OF FIRST INSTANCE OF RIZAL.
III

t.hqw

THE COURT ERRED IN NOT SUSTAINING THE DEFENSE OF RES JUDICATA

INTERPOSED BY DEFENDANTS-APPELLANTS BY VIRTUE OF THE FINAL
ORDER RENDERED OR ISSUED BY THE COURT OF FIRST INSTANCE OF
RIZAL IN CIVIL CASE NO. 2050, DATED MAY 11, 1953, COPY OF SAID ORDER IS
ATTACHED AS EXHIBIT "F" AND MADE AN INTEGRAL PART OF THE PARTIAL
STIPULATION OF FACTS.
IV

t.hqw

THE COURT BELOW ERRED IN RENDERING A DECISION ORDERING THE

HEREIN DEFENDANTS-APPELLANTS TO JOINTLY AND SEVERALLY PAY THE
PLAINTIFFS-APPELLEES THE SUM OF THREE THOUSAND PESOS (p3,000.00),
WITH INTERESTS AND COSTS.
V

t.hqw

HE COURT BELOW ERRED IN DISMISSING DEFENDANTS-APPELLANTS'

COUNTER-CLAIM AND IN NOT RENDERING A DECISION IN ACCORDANCE
THEREWITH.
The only question presented in the assigned errors is whether or not the trial court erred in giving
due course to the complaint on the grounds stated above. We sympathize with the plight of the
plaintiffs-appellees but they have lost their right to recover because of negligence and a failure to
observe mandatory provisions of the law and the Rules. They overlooked the fact that they were no
longer suing Rosendo de Guzman who died shortly after the accident but his heirs.

Section 5, Rule 86 of the Rules of Court provides:

t.hqw

All claims for money against the decedent arising from contract, express or implied,
whether the same be due, not due, or contingent, all claims for funeral expenses and
expenses for the last sickness of the decedents, and judgment for money against the
decedent, must be filed within the time in the notice; otherwise they are barred
forever; except that they may be set forth as counterclaims in any action that the
executor or administrator may bring against the claimants ... Claims not yet due, or
contingent, may be approved at their present value.
The above-quoted rule is mandatory. The requirement therein is for the purpose of protecting the
estate of the deceased. The executor or administrator is informed of the claims against it, thus
enabling him to examine each claim and to determine whether it is a proper one which should be
allowed. Therefore, upon the dismiss of the first complaint of herein plaintiffs-appellees in Civil Case
No. 2050, they should have presented their claims before the intestate proceedings filed in the same
court and docketed as Special Proceedings No. 1303-P. Instead of doing so, however. the plaintiffsappellees slept on their right. They allowed said proceedings to terminate and the properties to be
distributed to the heirs pursuant to a project of partition before instituting this separate action. Such
do not sanctioned by the above rule for it strictly requires the prompt presentation and disposition of
claims against the decedent's estate in order to settle the affairs of the estate as soon as possible,
pay off its debts and distribute the residue. (See Py Eng Chong v. Herrera, 70 SCRA 130). With the
exception provided for in the above rule, the failure of herein plaintiffs-appellees to present their
claims before the intestate proceedings of the estate of Rosendo de Guzman within the prescribed
period constituted a bar to a subsequent claim against the estate or a similar action of the same
import.
Therefore, it was an error on the part of the trial court to hold that the plaintiffs-appellees had a
cause of action against the defendants-appellants who are the heirs of the deceased against whom
the liability is sought to be enforced, much less take cognizance of the complaint. As in the first
complaint, said court could not have assumed jurisdiction over the second case for the simple
reason that it was no longer acting as a probate court which was the proper forum to file such
complaint. The termination of the intestate proceedings and the distribution of the estate to the heirs
did not alter the fact that plaintiffs-appellees' claim was a money claim which should have been
presented before the probate court. The liability of the late Rosendo de Guzman arose from the
breach of his obligations under the contract of carriage between him and the unfortunate passenger.
The obligations are spelled out by law but the liability arose from a breach of contractual obligations.
The resulting claim is a money claim.
The only instance wherein a creditor can file an action against a distributee of the debtor's asset is
under Section 5, Rule 88 of the Rules of Court which provides:
t.hqw

If such contingent claim becomes absolute and is presented to the court, or to the
executor or administrator, within two (2) years from the time limited for other creditors
to present their claims, it may be allowed by the court if not disputed by the executor
or administrator, and, if disputed, it may be proved and allowed or disallowed by the
court as the facts may warrant. If the contingent claim is allowed, the creditor shall
receive payment to the same extent as the other creditors if the estate retained by
the executor or administrator is sufficient. But if the claim is not so presented, after
having become absolute, within said two (2) years, and allowed, the assets retained
in the hands of the executor or administrator, not exhausted in the payment of claims,
shall be distributed by the order of the court to the persons entitled to the same; but
the assets so distributed may still be applied to the payment of the claim when

established, and the creditor may maintain an action against the distributees to
recover the debt, and such distributees and their estates shall be liable for the debt in
proportion to the estate they have respectively received from the property of the
deceased.
Even under the above rule, the contingent claims must first have been established and allowed in
the probate court before the creditors can file an action directly, against the distributees. Such is not
the situation, however, in the case at bar. The complaint herein was filed after the intestate
proceedings had terminated and the estate finally distributed to the heirs. If we are to allow the
complaint to prosper and the trial court to take cognizance of the same, then the rules providing for
the claims against the estate in a testate or intestate proceedings within a specific period would be
rendered nugatory as a subsequent action for money against the distributees may be filed
independently of such proceedings. This precisely is what the rule seeks to prevent so as to avoid
further delays in the settlement of the estate of the deceased and in the distribution of his property to
the heirs, legatees or devisees.
Furthermore, even assuming that the plaintiffs-appellees had no knowledge of the intestate
proceedings which is not established, the law presumes that they had such knowledge because the
settlement of estate is a proceeding in remark and therefore the failure to file their claims before
such proceedings barred them from subsequently filing the same claims outside said proceedings.
WHEREFORE, the decision of the Court of First Instance appealed from is hereby reversed and set
aside and another one entered dismissing the complaint and the counterclaim. No costs.
SO ORDERED.

1wph1.t

Plana and Relova, JJ., concur.

Teehankee (Chairman), J., concur in the result.

Separate Opinions

MELENCIO-HERRERA, J., concurring in the result:

I concur in the result.
In this case, the deceased Numeriano Bautista was a passenger in a public utility jeepney owned by
the deceased Rosendo de Guzman and whose driver was Eugenio Medrano. It was a vehicular
accident involving the jeep which caused the death of Numeriano.
The driver was prosecuted for criminal negligence resulting in death, and he was sentenced, inter
alia, to pay a civil liability of P3,000.00 to the heirs of Numeriano. Since the driver could not pay that
civil liability adjudged in the criminal case, Rosendo, or his estate, became subsidiary liable for the
amount.

In the case at bar, after the estate of Rosendo de Guzman had been judicially settled and closed,
plaintiff heirs of Numeriano had sued defendant heirs of Rosendo de Guzman in a separate action,
before the then Court of First Instance in Pasay City (a) for settlement of the subsidiary liability of
P3,000.00, (b) as well as for damages resulting from the death of Numeriano. The Trial Court gave
judgment to the plaintiffs for the P3,000.00. but did not grant the claim for damages for the death of
Numeriano pursuant to the provisions of Section 5, Rule 86. The heirs of the deceased passenger
accepted the judgment of the trial Court, but the heirs of Rosendo de Guzman appealed to the
Intermediate Appellate Court which subsequently endorsed the case to us as only a question of law
was involved.
The civil liability adjudged in the criminal case, and for which Rosendo de Guzman or his estate
became subsidiary liable, is plainly a money claim. On the other hand, any direct liability of Rosendo
de Guzman or his estate, for damages for the death of the passenger Numeriano, is not a claim for
damages for injury to person, which should be filed under Section 1, Rule 87. Rosendo de Guzman
was not personally responsible for the death of Numeriano. The claim of the heirs of Numeriano is
one arising from the contract of transportation (Vda. de Medina, et al. v. Cresencia, et al., 99 Phil.
506). In the case of Gutierrez vs. Barreto Datu (115 Phil. 741), it was held that a claim for damages
arising from breach of contract is within the purview of Section 5, Rule 86.
The claim of plaintiff heirs of Numeriano should have been presented in the judicial proceedings for
the settlement of the estate of Rosendo de Guzman and, not having been so presented, has already
been barred. It was clear error on the part of the Trial Court not to have summarily dismissed the
complaint for lack of cause of action.

Separate Opinions
MELENCIO-HERRERA, J., concurring:
I concur in the result.
In this case, the deceased Numeriano Bautista was a passenger in a public utility jeepney owned by
the deceased Rosendo de Guzman and whose driver was Eugenio Medrano. It was a vehicular
accident involving the jeep which caused the death of Numeriano.
The driver was prosecuted for criminal negligence resulting in death, and he was sentenced, inter
alia, to pay a civil liability of P3,000.00 to the heirs of Numeriano. Since the driver could not pay that
civil liability adjudged in the criminal case, Rosendo, or his estate, became subsidiary liable for the
amount.
In the case at bar, after the estate of Rosendo de Guzman had been judicially settled and closed,
plaintiff heirs of Numeriano had sued defendant heirs of Rosendo de Guzman in a separate action,
before the then Court of First Instance in Pasay City (a) for settlement of the subsidiary liability of
P3,000.00, (b) as well as for damages resulting from the death of Numeriano. The Trial Court gave
judgment to the plaintiffs for the P3,000.00. but did not grant the claim for damages for the death of
Numeriano pursuant to the provisions of Section 5, Rule 86. The heirs of the deceased passenger
accepted the judgment of the trial Court, but the heirs of Rosendo de Guzman appealed to the
Intermediate Appellate Court which subsequently endorsed the case to us as only a question of law
was involved.

The civil liability adjudged in the criminal case, and for which Rosendo de Guzman or his estate
became subsidiary liable, is plainly a money claim. On the other hand, any direct liability of Rosendo
de Guzman or his estate, for damages for the death of the passenger Numeriano, is not a claim for
damages for injury to person, which should be filed under Section 1, Rule 87. Rosendo de Guzman
was not personally responsible for the death of Numeriano. The claim of the heirs of Numeriano is
one arising from the contract of transportation (Vda. de Medina, et al. v. Cresencia, et al., 99 Phil.
506). In the case of Gutierrez vs. Barreto Datu (115 Phil. 741), it was held that a claim for damages
arising from breach of contract is within the purview of Section 5, Rule 86.
The claim of plaintiff heirs of Numeriano should have been presented in the judicial proceedings for
the settlement of the estate of Rosendo de Guzman and, not having been so presented, has already
been barred. It was clear error on the part of the Trial Court not to have summarily dismissed the
complaint for lack of cause of action.

ANTONIA TORRES, assisted by her husband, ANGELO TORRES; and

EMETERIA BARING, petitioners, vs. COURT OF APPEALS and
MANUEL TORRES, respondents.
DECISION
PANGANIBAN, J.:

Courts may not extricate parties from the necessary consequences of their
acts. That the terms of a contract turn out to be financially disadvantageous to them
will not relieve them of their obligations therein. The lack of an inventory of real
property will not ipso facto release the contracting partners from their respective
obligations to each other arising from acts executed in accordance with their
agreement.
The Case

The Petition for Review on Certiorari before us assails the March 5, 1998
Decision[1] Second Division of the Court of Appeals[2] (CA) in CA-GR CV No. 42378
and its June 25, 1998 Resolution denying reconsideration. The assailed Decision
affirmed the ruling of the Regional Trial Court (RTC) of Cebu City in Civil Case No.
R-21208, which disposed as follows:
WHEREFORE, for all the foregoing considerations, the Court, finding for the
defendant and against the plaintiffs, orders the dismissal of the plaintiffs
complaint. The counterclaims of the defendant are likewise ordered dismissed. No
pronouncement as to costs.[3]
The Facts

Sisters Antonia Torres and Emeteria Baring, herein petitioners, entered into a
"joint venture agreement" with Respondent Manuel Torres for the development of a
parcel of land into a subdivision. Pursuant to the contract, they executed a Deed of
Sale covering the said parcel of land in favor of respondent, who then had it registered
in his name. By mortgaging the property, respondent obtained from Equitable Bank a
loan of P40,000 which, under the Joint Venture Agreement, was to be used for the

development of the subdivision.[4] All three of them also agreed to share the proceeds from the sale of the
subdivided lots.

The project did not push through, and the land was subsequently foreclosed by the
bank.
According to petitioners, the project failed because of respondents lack of funds
or means and skills. They add that respondent used the loan not for the development
of the subdivision, but in furtherance of his own company, Universal Umbrella
Company.
On the other hand, respondent alleged that he used the loan to implement the
Agreement. With the said amount, he was able to effect the survey and the subdivision
of the lots. He secured the Lapu Lapu City Councils approval of the subdivision
project which he advertised in a local newspaper. He also caused the construction of
roads, curbs and gutters. Likewise, he entered into a contract with an engineering firm
for the building of sixty low-cost housing units and actually even set up a model
house on one of the subdivision lots. He did all of these for a total expense
of P85,000.
Respondent claimed that the subdivision project failed, however, because
petitioners and their relatives had separately caused the annotations of adverse claims
on the title to the land, which eventually scared away prospective buyers.Despite his
requests, petitioners refused to cause the clearing of the claims, thereby forcing him to
give up on the project.[5]
Subsequently, petitioners filed a criminal case for estafa against respondent and
his wife, who were however acquitted. Thereafter, they filed the present civil case
which, upon respondent's motion, was later dismissed by the trial court in an Order
dated September 6, 1982. On appeal, however, the appellate court remanded the case
for further proceedings. Thereafter, the RTC issued its assailed Decision, which, as
earlier stated, was affirmed by the CA.
Hence, this Petition.[6]
Ruling of the Court of Appeals

In affirming the trial court, the Court of Appeals held that petitioners and
respondent had formed a partnership for the development of the subdivision. Thus,
they must bear the loss suffered by the partnership in the same proportion as their
share in the profits stipulated in the contract. Disagreeing with the trial courts
pronouncement that losses as well as profits in a joint venture should be distributed
equally,[7] the CA invoked Article 1797 of the Civil Code which provides:
Article 1797 - The losses and profits shall be distributed in conformity with the
agreement. If only the share of each partner in the profits has been agreed upon, the
share of each in the losses shall be in the same proportion.
The CA elucidated further:
In the absence of stipulation, the share of each partner in the profits and losses shall be
in proportion to what he may have contributed, but the industrial partner shall not be
liable for the losses. As for the profits, the industrial partner shall receive such share
as may be just and equitable under the circumstances. If besides his services he has
contributed capital, he shall also receive a share in the profits in proportion to his
capital.
The Issue

Petitioners impute to the Court of Appeals the following error:

x x x [The] Court of Appeals erred in concluding that the transaction x x x between
the petitioners and respondent was that of a joint venture/partnership, ignoring
outright the provision of Article 1769, and other related provisions of the Civil Code
of the Philippines.[8]
The Courts Ruling

The Petition is bereft of merit.

Main Issue: Existence of a Partnership

Petitioners deny having formed a partnership with respondent. They contend that
the Joint Venture Agreement and the earlier Deed of Sale, both of which were the
bases of the appellate courts finding of a partnership, were void.

In the same breath, however, they assert that under those very same contracts,
respondent is liable for his failure to implement the project. Because the agreement
entitled them to receive 60 percent of the proceeds from the sale of the subdivision
lots, they pray that respondent pay them damages equivalent to 60 percent of the value
of the property.[9]
The pertinent portions of the Joint Venture Agreement read as follows:
KNOW ALL MEN BY THESE PRESENTS:
This AGREEMENT, is made and entered into at Cebu City, Philippines, this 5th day
of March, 1969, by and between MR. MANUEL R. TORRES, x x x the FIRST
PARTY, likewise, MRS. ANTONIA B. TORRES, and MISS EMETERIA BARING, x
x x the SECOND PARTY:
W I T N E S S E T H:
That, whereas, the SECOND PARTY, voluntarily offered the FIRST PARTY, this
property located at Lapu-Lapu City, Island of Mactan, under Lot No. 1368 covering
TCT No. T-0184 with a total area of 17,009 square meters, to be sub-divided by the
FIRST PARTY;
Whereas, the FIRST PARTY had given the SECOND PARTY, the sum of: TWENTY
THOUSAND (P20,000.00) Pesos, Philippine Currency, upon the execution of this
contract for the property entrusted by the SECOND PARTY, for sub-division projects
and development purposes;
NOW THEREFORE, for and in consideration of the above covenants and promises
herein contained the respective parties hereto do hereby stipulate and agree as follows:
ONE: That the SECOND PARTY signed an absolute Deed of Sale x x x dated March
5, 1969, in the amount of TWENTY FIVE THOUSAND FIVE HUNDRED
THIRTEEN & FIFTY CTVS. (P25,513.50) Philippine Currency, for 1,700 square
meters at ONE [PESO] & FIFTY CTVS. (P1.50) Philippine Currency, in favor of the
FIRST PARTY, but the SECOND PARTY did not actually receive the payment.
SECOND: That the SECOND PARTY, had received from the FIRST PARTY, the
necessary amount of TWENTY THOUSAND (P20,000.00) pesos, Philippine

currency, for their personal obligations and this particular amount will serve as an
advance payment from the FIRST PARTY for the property mentioned to be subdivided and to be deducted from the sales.
THIRD: That the FIRST PARTY, will not collect from the SECOND PARTY, the
interest and the principal amount involving the amount of TWENTY THOUSAND
(P20,000.00) Pesos, Philippine Currency, until the sub-division project is terminated
and ready for sale to any interested parties, and the amount of TWENTY
THOUSAND (P20,000.00) pesos, Philippine currency, will be deducted accordingly.
FOURTH: That all general expense[s] and all cost[s] involved in the sub-division
project should be paid by the FIRST PARTY, exclusively and all the expenses will not
be deducted from the sales after the development of the sub-division project.
FIFTH: That the sales of the sub-divided lots will be divided into SIXTY
PERCENTUM 60% for the SECOND PARTY and FORTY PERCENTUM 40% for
the FIRST PARTY, and additional profits or whatever income deriving from the sales
will be divided equally according to the x x x percentage [agreed upon] by both
parties.
SIXTH: That the intended sub-division project of the property involved will start the
work and all improvements upon the adjacent lots will be negotiated in both parties[']
favor and all sales shall [be] decided by both parties.
SEVENTH: That the SECOND PARTIES, should be given an option to get back the
property mentioned provided the amount of TWENTY THOUSAND (P20,000.00)
Pesos, Philippine Currency, borrowed by the SECOND PARTY, will be paid in full to
the FIRST PARTY, including all necessary improvements spent by the FIRST PARTY,
and the FIRST PARTY will be given a grace period to turnover the property
mentioned above.
That this AGREEMENT shall be binding and obligatory to the parties who executed
same freely and voluntarily for the uses and purposes therein stated. [10]
A reading of the terms embodied in the Agreement indubitably shows the
existence of a partnership pursuant to Article 1767 of the Civil Code, which provides:

ART. 1767. By the contract of partnership two or more persons bind themselves to
contribute money, property, or industry to a common fund, with the intention of
dividing the profits among themselves.
Under the above-quoted Agreement, petitioners would contribute property to the
partnership in the form of land which was to be developed into a subdivision; while
respondent would give, in addition to his industry, the amount needed for general
expenses and other costs. Furthermore, the income from the said project would be
divided according to the stipulated percentage. Clearly, the contract manifested the
intention of the parties to form a partnership. [11]
It should be stressed that the parties implemented the contract. Thus, petitioners
transferred the title to the land to facilitate its use in the name of the respondent. On
the other hand, respondent caused the subject land to be mortgaged, the proceeds of
which were used for the survey and the subdivision of the land. As noted earlier, he
developed the roads, the curbs and the gutters of the subdivision and entered into a
contract to construct low-cost housing units on the property.
Respondents actions clearly belie petitioners contention that he made no
contribution to the partnership. Under Article 1767 of the Civil Code, a partner may
contribute not only money or property, but also industry.
Petitioners Bound by Terms of Contract

Under Article 1315 of the Civil Code, contracts bind the parties not only to what
has been expressly stipulated, but also to all necessary consequences thereof, as
follows:
ART. 1315. Contracts are perfected by mere consent, and from that moment the
parties are bound not only to the fulfillment of what has been expressly stipulated but
also to all the consequences which, according to their nature, may be in keeping with
good faith, usage and law.
It is undisputed that petitioners are educated and are thus presumed to have
understood the terms of the contract they voluntarily signed. If it was not in
consonance with their expectations, they should have objected to it and insisted on the
provisions they wanted.

Courts are not authorized to extricate parties from the necessary consequences of
their acts, and the fact that the contractual stipulations may turn out to be financially
disadvantageous will not relieve parties thereto of their obligations. They cannot now
disavow the relationship formed from such agreement due to their supposed
misunderstanding of its terms.
Alleged Nullity of the Partnership Agreement

Petitioners argue that the Joint Venture Agreement is void under Article 1773 of
the Civil Code, which provides:
ART. 1773. A contract of partnership is void, whenever immovable property is
contributed thereto, if an inventory of said property is not made, signed by the parties,
and attached to the public instrument.
They contend that since the parties did not make, sign or attach to the public
instrument an inventory of the real property contributed, the partnership is void.
We clarify. First, Article 1773 was intended primarily to protect third
persons. Thus, the eminent Arturo M. Tolentino states that under the aforecited
provision which is a complement of Article 1771, [12] the execution of a public
instrument would be useless if there is no inventory of the property contributed,
because without its designation and description, they cannot be subject to inscription
in the Registry of Property, and their contribution cannot prejudice third persons. This
will result in fraud to those who contract with the partnership in the belief [in] the
efficacy of the guaranty in which the immovables may consist. Thus, the contract is
declared void by the law when no such inventory is made. The case at bar does not
involve third parties who may be prejudiced.
Second, petitioners themselves invoke the allegedly void contract as basis for their
claim that respondent should pay them 60 percent of the value of the property.[13] They
cannot in one breath deny the contract and in another recognize it, depending on what
momentarily suits their purpose. Parties cannot adopt inconsistent positions in regard
to a contract and courts will not tolerate, much less approve, such practice.
In short, the alleged nullity of the partnership will not prevent courts from
considering the Joint Venture Agreement an ordinary contract from which the parties
rights and obligations to each other may be inferred and enforced.

Partnership Agreement Not the Result of an Earlier Illegal Contract

Petitioners also contend that the Joint Venture Agreement is void under Article
1422[14] of the Civil Code, because it is the direct result of an earlier illegal contract,
which was for the sale of the land without valid consideration.
This argument is puerile. The Joint Venture Agreement clearly states that the
consideration for the sale was the expectation of profits from the subdivision
project. Its first stipulation states that petitioners did not actually receive payment for
the parcel of land sold to respondent. Consideration, more properly denominated
as cause, can take different forms, such as the prestation or promise of a thing or
service by another.[15]
In this case, the cause of the contract of sale consisted not in the stated peso value
of the land, but in the expectation of profits from the subdivision project, for which
the land was intended to be used. As explained by the trial court, the land was in effect
given to the partnership as [petitioners] participation therein. x x x There was
therefore a consideration for the sale, the [petitioners] acting in the expectation that,
should the venture come into fruition, they [would] get sixty percentof the net profits.
Liability of the Parties

Claiming that respondent was solely responsible for the failure of the subdivision
project, petitioners maintain that he should be made to pay damages equivalent to 60
percent of the value of the property, which was their share in the profits under the
Joint Venture Agreement.
We are not persuaded. True, the Court of Appeals held that petitioners acts were
not the cause of the failure of the project. [16] But it also ruled that neither was
respondent responsible therefor.[17] In imputing the blame solely to him, petitioners
failed to give any reason why we should disregard the factual findings of the appellate
court relieving him of fault. Verily, factual issues cannot be resolved in a petition for
review under Rule 45, as in this case. Petitioners have not alleged, not to say shown,
that their Petition constitutes one of the exceptions to this doctrine. [18] Accordingly, we
find no reversible error in the CA's ruling that petitioners are not entitled to damages.
WHEREFORE, the Petition is hereby DENIED and
Decision AFFIRMED. Costs against petitioners.

the

challenged

SO ORDERED.

G.R. No. L-7593

December 24, 1957

Intestate Estate of the late Florencio P. Buan and Rizalina Paras Buan, deceased.
BIENVENIDO P. BUAN and A. NATIVIDAD PARAS, Co-Administrators-appellees,
vs.
SYLVINA C. LAYA, ET AL., petitioners-appellants.
Jose W. Diokno and Augusto M. Ilagan for appellees.
Rufino F. Mejia for appellants.

LABRADOR, J.:
Appeal from a decision of the Court of First Instance of Tarlac dated January 7, 1954, setting aside
the previous Order dated December 16, 1953, which had admitted a contingent claim filed by
petitioners-appellants but denied a petition to set aside an amount to answer the contingent claim.
The record discloses that on December 15, 1953, petitioners herein filed a contingent claim for more
than P500,000 against the intestate estate of the deceased spouses Florencio P. Buan and Rizalina
Paras Buan. The contingent claim was based on the fact that on August 3, 1952, a Philippine Rabbit
Bus, owned and operated by the deceased spouses Buan, collided with a car in which Juan C. Laya,
Rodolfo Escosa, Jose S. Palma, and Juan de Leon, were riding; that the collision was caused by the
fact that the driver of the bus managed and drove the vehicle in a negligent manner; that as a
consequence of the collision Juan C. Laya was killed and his companions suffered physical injuries.
The driver of the bus was Ernesto Triguero, and he was charged with homicide and serious physical
injuries through reckless imprudence and was sentenced therefor. The heirs of Juan C. Laya,
petitioners herein, reserved the civil action for damages, and on October 12, 1953, they filed an
independent civil action in the Court of First Instance of Manila against the administrator of the
deceased spouses Buan. The petition for the admission of a contingent claim was accompanied with
a copy of the complaint filed in the civil case above-mentioned (No. 20867, CFI Manila) and a
sentence in the criminal case filed against Ernesto Triguero, driver of the Philippine Rabbit Bus.
When the administrators learned of the filing of the contingent claim in the Court of First Instance of
Tarlac, they filed an opposition thereto on the ground that the same was not filed before the death of
the spouses Florencio Buan and Rizalina Paras Buan, which took place on January 3, 1953, and
that it was also not filed within the period prescribed by Rule 89, Section 4 of the Rules of Court. The
Court of First Instance of Tarlac admitted the claim in an order dated December 16, 1953, but denied
the prayer that a portion of the estate be set aside to respond for the amount of the contingent.
Counsel for the administrators then moved to set aside the order. In an order dated November 25,
1953, Judge Agustin P. Montesa, sitting as Judge for the Court of First Instance of Manila, held that
the civil action filed in Manila by the heirs of Laya, petitioners herein, Civil Case No. 20867, was
premature because the sentence of conviction of the driver of the bus had not become final. The
court also ordered the plaintiffs to amend their complaint within 10 days. Thereupon, the plaintiffs in
said civil case (C.F.I. Manila, No. 20867) filed an amended complaint, dated December 18, 1953.
lawphi1.net

In the meantime and on January 7, 1954, the Court of First Instance of Tarlac, on a motion for
reconsideration filed by the administrators dated January 2, 1954, set aside its previous order of
December 16, 1953, admitting the contingent claim of petitioners. The reason for the admission of
the claim, according to the court, had ceased to exist and even the plaintiffs had filed the amended
complaint in the Court of First Instance of Manila, the same has not yet been acted upon by the said

court. A motion to reconsider this order of the Court of First Instance of Tarlac having been denied,
petitioners have prosecuted this appeal to Us.
A consideration of the facts and the proceedings set forth above will readily show that the order of
the Court of First Instance of Tarlac dismissing the contingent claim is based on incorrect and
erroneous conception of a contingent claim. A contingent claim is one which, by its nature, is
necessarily dependent upon an uncertain event for its existence or validity. It may or may not
develop into a valid and enforceable claim, and its validity and enforceability depending upon an
uncertain event. (E. Gaskell & Co. vs. Tan Sit, 43 Phil. 810, 813; 2 Moran, Comments on the Rules
of Court, 1957 edition, pp. 425-426.).
A 'contingent claim' against an estate within the statute providing for the settlement hereof,
as one where the absolute liability depends on some future event which may never happen,
and which therefore renders such liability uncertain and indeterminable. . . It is where the
liability depends on some future event after the debtor's death which may or may not
happen, and therefore makes Words and Phrases, p. 113.).
A 'contingent claim' against an estate is one in which liability depends on some future event
which may or may not occur, so that duty to pay may never become absolute. (In Re Flewell,
276 N. W. 732, 733; 9 Words and Phrases, p. 114.).
Whether or not the heirs of the deceased, Juan C. Laya, would succeed in the action brought in
Manila against the administrators of the estate of the deceased spouses Florencio Buan and
Rizalina P. Buan, is the uncertain event or contingency upon which the validity of the claim
presented in the administration proceedings depends. While the said action has not yet been finally
decided or determined to the effect that the petitioners herein, heirs of the deceased Juan C. Laya,
have no right of action against the estate of the deceased spouses Florencio P. Buan and Rizalina P.
Buan, the contingent claim that petitioners have filed in the Court of First Instance of Tarlac in the
proceedings for the administration of the deceased spouses Florencio P. Buan and Rizalina P. Buan,
may not be dismissed. The order of the court dismissing the claim and declaring that the same may
again be entertained if another valid complaint by the petitioners herein is filed in the Court of First
Instance of Manila, is inconsistent with the nature and character of a contingent claim. A contingent
claim does not follow the temporary orders of dismissal of an action upon which it is based; it awaits
the final outcome thereof and only said final result can cause its termination. The rules provide that a
contingent claim is to be presented in the administration proceedings in the same manner as any
ordinary claim, and that when the contingency arises which converts the contingent claim into a valid
claim, the court should then be informed that the claim had already matured. (Secs. 5. 9, Rule 87.)
The order of the court subject of the appeal should, therefore, be set aside.
The first order of the court admitted the claim but denied the petition for the setting aside of a certain
amount from the estate to respond therefor. The validity of the contingent claim is apparent; as the
driver of the bus belonging to the deceased spouses, Florencio P. Buan and Rizalina P. Buan, was
found guilty of negligence, as a result of which Juan C. Laya died, the said deceased spousesthe
employers of the drivercan be made responsible, as masters of a servant, for damages for the
death of the petitioner's father. A portion of the estate should therefore, be set aside to respond for
such damages as petitioners herein may subsequently recover in the action they have brought in the
Court of First Instance of Manila. This amount should be fixed in the court below.
For the foregoing considerations, the order of the court dismissing the contingent claim filed by
petitioners is hereby set aside. It is hereby ordered that the claim be allowed to continue, and it is
further ordered that the court fix an amount that may be set aside to respond for the damages that
the petitioners herein may ultimately recover. Costs against the respondents.

POMPILLO VALERA and EUMELIA VALERA CABADO, petitioners,

vs.
HON. JUDGE SANCHO Y. INSERTO, in his capacity as Presiding Judge, Court of First
Instance of Iloilo, Branch 1, and MANUEL R. FABIANA, respondents.
Nos. L-59867-68 May 7, 1987
EUMELIA V. CABADO, POMPILLO VALERA and HON. MIDPANTAO L. ADIL, petitionersappellants,
vs.
MANUEL FABIANA, JOSE GARIN and HON. COURT OF APPEALS (Tenth
Division), respondents-appellants.
Eduardo S. Baranda and Avelino T Javellana for petitioners.
Dominador G. Garin for private respondents.

NARVASA, J.:
Conflicting claims over a fishpond asserted by the administrators of the estate of deceased spouses,
on the one hand, and by the heirs of a daughter of said spouses and their lessee, on the other, have
given rise to the proceedings now docketed in this Court as (1) G.R. No. 56504 and (2) G.R. Nos.
59867-68.
Sp. Proc. No. 2223, CFI, Iloilo
In the proceedings for the settlement of the intestate estate of the decedent spouses, Rafael Valera
and Consolacion Sarrosa 1 in which Eumelia Cabado and Pompiro Valera had been appointed administrators 2 the heirs
of a deceased daughter of the spouses, Teresa Garin, filed a motion asking that the Administratrix,
Cabado, be declared in contempt for her failure to render an accounting of her administration. 3 Cabado
replied that no accounting could be submitted unless Jose Garin, Teresa's husband and the movant heirs'
father, delivered to the administrator an 18-hectare fishpond in Baras, Barotoc Nuevo, Iloilo, belonging to
the estate and she in turn moved for the return thereof to the estate, 4 so that it might be partitioned
among the decedents' heirs. Jose Garin opposed the plea for the fishpond's return to the estate, asserting
that the property was owned by his children and this was why it had never been included in any inventory
of the estate.
The Court, presided over by Hon. Judge Midpantao Adil, viewed the Garin Heirs' motion for
contempt, as well as Cabado's prayer for the fishpond's return to the estate, as having given rise to a
claim for the recovery of an asset of the estate within the purview of Section 6, Rule 87 of the Rules
of Court. 5 It accordingly set said incidents for hearing during which the parties presentee evidence in
substantiation of their positions. 6 Thereafter, the Court issued an Order dated September 17, 1980
commanding the Heirs of Teresa Garin "to reconvey immediately the fishpond in question * * to the
intestate Estate of the Spouses. 7
The Order was predicated upon the Court's factual findings mainly derived from the testimony of the
two administrators that:

1. the fishpond originally belonged to the Government, and had been given in lease to Rafael Valera
in his lifetime;
2. Rafael Valera ostensibly sold all his leasehold rights in the fishpond to his daughter, Teresa Garin;
but the sale was fictitious, having been resorted to merely so that she might use the property to
provide for her children's support and education, and was subject to the resolutory term that the
fishpond should revert to Rafael Valera upon completion of the schooling of Teresa Garin's Children;
and
3. with the income generated by the fishpond, the property was eventually purchased from the
Government by the Heirs of Teresa Garin, collectively named as such in the Original Certificate of
Title issued in their favor.
Upon these facts, Judge Adil ruled that an implied trust had been created, obligating Teresa Garin's
heirs to restore the property to the Valera Spouses' Estate, in accordance with Articles 1453 and
1455 of the Civil Code providing as follows:
Article 1453. When property is conveyed to a person in reliance upon his declared
intentions to hold it for, or transfer it to another or the grantor, there is an implied trust
in favor of the person for whose benefit it is contemplated.
Article 1455. When any trustee, guardian or other person holding a fiduciary
relationship uses trust funds for the purchase of property and causes a conveyance
to be made to him or to a third person, a trust is established by operation of law in
favor of the person to whom the fund belongs.
The Court also held that the action for reconveyance based on constructive trust had not yet
prescribed, Cabado's motion for the fishpond's reversion to the estate having been filed well within
ten (10) years from June 30, 1980, the date on which Teresa Garin's heirs allegedly acquired title
over it. 8
There seems little doubt, however, that the Court's pronouncement regarding the estate's title to the
fishpond was merely provisional in character, made solely to determine whether or not the fishpond
should be included in the inventory of estate assets. So it was evidently understood by the
administrators who have more than once asserted that "the probate court has jurisdiction to
determine the ownership of the fishpond for purposes of inclusion in the inventory of the
properties. 9 So it was made clear by the Probate Court itself which, at the outset, stated that the hearing
on the matter 10 was meant "merely to determine whether or not the fishpond should be included as part of the estate and whether or
not the person holding it should be made to deliver and/or return ** (it) to the estate. 11 And so it was emphasized in another Order, denying
reconsideration of the Order of September 17, 1980, which states that:

**(i)t is never the intendment of this court to write a finish to the issue of ownership of
the fishpond in dispute. The movants may pursue their claim of ownership over the
same in an ordinary civil action. Meanwhile, however, it is the finding of this probate
court that the fishpond must be delivered to the estate.
Clearly, there is no incompatibility between the exercise of the power of this probate
court under Section 6 in relation to Section 7, both of Rule 87, and the contention of
the movants that the proper forum to settle the issue of ownership should be in a
court of general jurisdiction. 12

Judge Adil afterwards granted the administrators' motion for execution of the order pending appeal,
and directed the sheriff to enforce the direction for the Garin Heirs to reconvey the fishpond to the
estate. 13 The corresponding writ was served on Manuel Fabiana, the supposed encargado or caretaker. Voicing no objection to the writ,
and declaring to the sheriff that he was a mere lessee, 14 Fabiana voluntarily relinquished possession of the fishpond to the sheriff. The
latter, in turn, delivered it to the administrators. 15

Later however, Fabiana filed a complaint-in-intervention with the Probate Court seeking vindication
of his right to the possession of the fishpond, based on a contract of lease between himself, as
lessee, and Jose Garin, as lessor. 16 But Judge Adil dismissed his complaint on the following grounds, to wit:
(1) it was filed out of time because not only had judgment been rendered, but execution as regards
transfer of possession had already taken place; and
(2) the lease contract had not been registered and hence was not binding as against the estate.

17

G.R. No. 56504

Fabiana thereupon instituted a separate action for injunction and damages, with application for a
preliminary injunction. This was docketed as Civil Case No. 13742 and assigned to Branch I of the
Iloilo CFI, Hon. Sancho Y. Inserto, presiding. 18 Judge Inserto issued a temporary restraining order enjoining estate
administrators from disturbing Fabiana in the possession of the fishpond, as lessee. 19

The estate administrators filed a motion to dismiss the complaint and to dissolve the temporary
restraining order, averring that the action was barred by the Probate Court's prior judgment which
had exclusive jurisdiction over the issue of the lease, and that the act sought to be restrained had
already been accomplished, Fabiana having voluntarily surrendered possession of the fishpond to
the sheriff. 20 When Judge Inserto failed to act on their motion within what the administrators believed to
be a reasonable time, considering the circumstances of the Case, the administrators filed with the
Supreme Court a special civil action for certiorari and mandamus, with a prayer for Preliminary mandatory
injunction and temporary restraining order, which was docketed as G.R. No. 56504. 21 In their petition, the
administrators contended that Branch I of the Iloilo CFI (Judge Inserto, presiding) could not and should
not interfere with the Probate Court (Branch I I, Judge Adil, presiding) in the legitimate exercise of its j
jurisdiction over the proceedings for the Settlement of the estate of the Valera Spouses.
G.R. Nos. 59867-68
In the meantime, Jose Garin having filed a motion for reconsideration of the above mentioned
order of Judge Adil (declaring the estate to be the owner of the fishpond), in which he asserted that
the Probate Court, being of limited jurisdiction, had no competence to decide the ownership of the
fishpond, 22 which motion had been denied23-filed a notice of appeal from said Order. 24 But he quickly
abandoned the appeal when, as aforestated 25 Judge Adil authorized execution of the order pending
appeal, instead, he initiated a special action for certiorari prohibition and mandamus )with prayer for
preliminary injunction) in the Court of Appeals, therein docketed as CA-G. R. No. SP-1154-R.
Fabiana followed suit. He instituted in the same Court of Appeals his own action for certiorari and
injunction, docketed as CA-G.R. No. SP-11577-R; this, notwithstanding the pendency in judge
Inserto's sala of the case he had earlier filed. 26
These two special civil actions were jointly decided by the Court of Appeals. The Court granted the
petitions and ruled in substance that:

1. The Probate Court indeed possessed no jurisdiction to resolve the issue of ownership based
merely on evidence adduced at the hearing of a "counter-motion" conducted under Section 6, Rule
87;
2. The original and transfer certificates of title covering the fishpond stand in the names of the Heirs
of Teresa Garin as registered owners, and therefore no presumption that the estate owns the
fishpond is warranted to justify return of the property on the theory that it had merely been borrowed;
and
3. Even assuming the Probate Court's competence to resolve the ownership question, the estate
administrators would have to recover possession of the fishpond by separate action, in view of the
lessee's claim of right to superior possession, as lessee thereof.
From this joint judgment, the administrators have taken separate appeals to this Court
by certiorari, 27 docketed as G.R. Nos. 59867 and 59868. They ascribe to the Appellate Court the
following errors, viz: Page 542
1) in holding that the Probate Court (Judge Adil, Presiding) had no jurisdiction to take cognizance of
and decide the issue of title covering a fishpond being claimed by an heir adversely to the decedent
spouses;
2) in ruling that it was needful for the administrators to file a separate action for the recovery of the
possession of the fishpond then in the hands of a third person; and
3) in sanctioning the act of a CFI Branch in interfering with and overruling the final judgment of
another branch, acting as probate Court, and otherwise frustrating and inhibiting the enforcement
and implementation of said judgment.
Jurisdiction of Probate Court
As regards the first issue, settled is the rule that a Court of First Instance (now Regional Trial Court),
acting as a Probate Court, exercises but limited jurisdiction, 28 and thus has no power to take
cognizance of and determine the issue of title to property claimed by a third person adversely to the
decedent, unless the claimant and all the Other parties having legal interest in the property consent,
expressly or impliedly, to the submission of the question to the Probate Court for adjudgment, or the
interests of third persons are not thereby prejudiced, 29 the reason for the exception being that the
question of whether or not a particular matter should be resolved by the Court in the exercise of its
general jurisdiction or of its limited jurisdiction as a special court (e.g., probate, land registration, etc., is in
reality not a jurisdictional but in essence of procedural one, involving a mode of practice which may be
waived. 30
The facts obtaining in this case, however, do not call for the application of the exception to the rule.
As already earlier stressed, it was at all times clear to the Court as well as to the parties that if
cognizance was being taken of the question of title over the fishpond, it was not for the purpose of
settling the issue definitely and permanently, and writing "finis" thereto, the question being explicitly
left for determination "in an ordinary civil action," but merely to determine whether it should or should
not be included in the inventory. 31 This function of resolving whether or not property should be included
in the estate inventory is, to be sure, one clearly within the Probate Court's competence, although the
Court's determination is only provisional in character, not conclusive, and is subject to the final decision in
a separate action that may be instituted by the parties. 32

The same norm governs the situation contemplated in Section 6, Rule 87 of the Rules of Court,
expressly invoked by the Probate Court in justification of its holding a hearing on the issue arising
from the parties' conflicting claims over the fishpond. 33 The examination provided in the cited section is
intended merely to elicit evidence relevant to property of the decedent from persons suspected of having
possession or knowledge thereof, or of having concealed, embezzled, or conveyed away the same. Of
course, if the latter lays no claim to the property and manifests willingness to tum it over to the estate, no
difficulty arises; the Probate Court simply issues the appropriate direction for the delivery of the property
to the estate. On the other hand, if the third person asserts a right to the property contrary to the
decedent's, the Probate Court would have no authority to resolve the issue; a separate action must be
instituted by the administrator to recover the property. 34
Parenthetically, in the light of the foregoing principles, the Probate Court could have admitted and
taken cognizance of Fabiana's complaint in intervention after obtaining the consent of all interested
parties to its assumption of jurisdiction over the question of title to the fishpond, or ascertaining the
absence of objection thereto. But it did not. It dismissed the complaint in intervention instead. And all
this is now water under the bridge.
Possession of Fishpond Pending
Determination of Title Thereto
Since the determination by the Probate Court of the question of title to the fishpond was merely
provisional, not binding on the property with any character of authority, definiteness or permanence,
having been made only for purposes of in. conclusion in the inventory and upon evidence adduced
at the hearing of a motion, it cannot and should not be subject of execution, as against its possessor
who has set up title in himself (or in another) adversely to the decedent, and whose right to possess
has not been ventilated and adjudicated in an appropriate action. These considerations assume
greater cogency where, as here, the Torrens title to the property is not in the decedents' names but
in others, a situation on which this Court has already had occasion to rule.
In regard to such incident of inclusion or exclusion, We hold that if a property covered
by Torrens title is involved, the presumptive conclusiveness of such title should be
given due weight, and in the absence of strong compelling evidence to the contrary,
the holder thereof should be consider as the owner of the property in controversy
until his title is nullified or modified in an appropriate ordinary action, particularly,
when as in the case at bar, possession of the property itself is in the persons named
in the title. 35
Primary Jurisdiction over Title issue in
Court Taking Cognizance of Separate Action
Since, too, both the Probate Court and the estate administrators are one in the recognition of the
proposition that title to the fishpond could in the premises only be appropriately determined in a
separate action, 36 the actual firing of such a separate action should have been anticipated, and should
not therefore have come as a surprise, to the latter. And since moreover, implicit in that recognition is also
the acknowledge judgment of the superiority of the authority of the court in which the separate action is
filed over the issue of title, the estate administrators may not now be heard to complain that in such a
separate action, the court should have issued orders necessarily involved in or flowing from the
assumption of that jurisdiction. Those orders cannot in any sense be considered as undue interference
with the jurisdiction of the Probate Court. Resulting from the exercise of primary jurisdiction over the
question of ownership involving estate property claimed by the estate, they must be deemed superior to

otherwise contrary orders issued by the Probate Court in the exercise of what may be, regarded as
merely secondary, or provisional, jurisdiction over the same question.

WHEREFORE, the petition in G.R. No. 56504 is DISMISSED, for lack of merit. The petitions in G.R.
No. 59867 and G.R. No. 59868 are DENIED, and the judgment of the Appellate Court, subject
thereof, is affirmed in toto. The temporary restraining order dated April 1, 1981 is lifted. Costs against
petitioners.

G.R. No. L-39044 January 3, 1985

MANOTOK REALTY, INC., petitioner,
vs.
THE HON. COURT OF APPEALS and FELIPE CARILLO, respondents.

GUTIERREZ, JR., J.:

In this petition for review, the petitioner asks that we reverse the decision of the Court of Appeals,
now the Intermediate Appellate Court, which declared respondent Felipe Carillo a builder in good
faith with the right to remain in the questioned premises, free of rent, until reimbursed by the
petitioner for the necessary and useful expenses introduced on the land.
The dispositive portion of the Court of Appeals' decision reads:
WHEREFORE, the appealed judgment is hereby modified in the sense that the
appellant being a builder in good faith is entitled to the right of retention of the lot
introduced thereon, and he is not hable to pay rentals for the occupation thereof
pending payment of the indemnity for such improvements. In all other respects, the
appealed judgment is affirmed, without pronouncement as to costs.
The background facts of the case are found in the decision of the respondent court
as follows:
There is no dispute that herein appellee is the registered owner of a parcel of land
covered by Tax Declaration Nos. 2455 and 2456 issued by the City Assessor's Office
of Manila with a total assessed value of P3,059,180.00 and by TCT 55125 (Exh. A)
and TCT No. 76130 of the Register of Deeds of the City of Manila. It acquired the
aforementioned property from the Testate Estate of Clara Tambunting de Legarda,
being the highest bidder in a sale conducted by the Probate Court (Exhs. C-7 & C-7A).
After having acquired said property, the appellee subdivided it, but could not take
possession thereof because the whole area is occupied by several houses among
which is the one belonging to the herein appellant Felipe Carillo, Lot 143, Block 2 of
the subdivision plan (Exh. A-4 Carillo).
Demands to vacate and to surrender possession of the property were made by the
appellee verbally and by publication (Exhs. D, D-1 & D-2) and by circulars served to
the appellant. In spite of such demands, the appellant continued to occupy the
disputed lot and refused to surrender possession thereof to the appellee.
On the other hand, appellant's evidence tends to show that he acquired the lot in
dispute from a certain Delfin Dayrit on September 25, 1962, pursuant to a deed of
assignment (Exh. 1-Carillo); that Dayrit in turn had acquired the property from the
late Carla Tambunting by virtue of a Contract of Sale on Installment Basis (EXIL 2Carillo); that Dayrit had religiously paid the monthly installments as they fell due, his
last payment being on May 25, 1954, in the sum of P200.00, then leaving an unpaid

balance of Pl,306.00 when the said parcel was conveyed to defendant Carino, for
which receipts were duly issued (Exhs. 3-Carillo to 24-Carillo); that Dayrit could not
continue paying the succeeding installments as they fen due because Vicente
Legarda, the surviving spouse of Clara Tambunting, refused to receive any payment
for the same and that it was only lately, more specifically on September 25, 1962,
when Dayrit conveyed the lot to appellant Carillo.
After the petitioner failed in its attempts to take possession of the lot, it filed the reivindicatory action
against the respondent.
The trial court decided the case in favor of the petitioner. The dispositive portion of its decision
reads:
In Civil Case No. 64578:
(1) Ordering defendant Felipe Carino to vacate and/or surrender possession to
plaintiff Manotok Realty Inc. of the parcel of land subject matter of the complaint
described in paragraph 2 thereof;
(2) To pay plaintiff the sum of P75.50 per month from January 21, 1961 up to the time
he actually surrenders possession of the said parcel to the plaintiff; and
(3) To pay plaintiff the sum of Pl,000.00 as attorney's fees and to pay costs.
On August 15, 1984, we required the parties to show whether or not the disputed lot falls within the
area expropriated under P.D. No. 1669 and P.D. No. 1670. It appears that the expropriated portion of
the Tambunting Estate is the area located at the east side adjacent to the Chinese Cemetery. The lot
is on the unexpropriated and mainly commercial portion on the west side, across from Rizal Avenue.
In this petition, the petitioner maintains that the appellate court erred in considering the respondent a
possessor and builder in good faith. It argues that at the time of the execution of the deed of
assignment in favor of the respondent, the land was already registered in its name; and that if the
respondent were really acting in good faith, he should have verified from the Register of Deeds of
Manila who was the registered owner of the land in question.
We agree.
A possessor in good faith is one who is not aware that there exists in his title or mode of acquisition
any flaw which invalidates it. (Caram v. Laureta, 103 SCRA 7, Art. 526, Civil Code). One who
acquires real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has
acquired title thereto in good faith as against the true owner of the land or of an interest therein; and
the same rule must be applied to one who has knowledge of facts which should put a reasonable
man upon his guard, and then claims that he acted in good faith under the belief that there was no
defect in the title of the vendor. (See Leung Yee v. FL Strong Machinery Co., 37 Phil. 644).
The records show that when Dayrit executed the deed of' assignment in favor of the respondent, the
disputed lot was already registered and titled in the name of the petitioner. Such an act of
registration served as a constructive notice to the whole world and the title issued in favor of
petitioner made his ownership conclusive upon and against all persons including Dayrit and. herein
respondent, although no personal notice was served on either of the latter. (See Garcia v. Bello, 13
SCRA 769; Demontano v. Court of Appeals, 81 SCRA 286). Therefore, the presumption of good faith

in favor of the respondent cannot apply because as far as the law is concerned, he had notice of the
ownership by the petitioner over said lot. It is also unthinkable that in the big Tambunting Estate
beset with one of the most serious squatter problems in Metro Manila, any tenant or prospective
buyer would be unaware that the petitioner acquired the estate as highest bidder at the sale ordered
by the probate court. Furthermore, the respondent did not even bother to inquire about the certificate
of title covering the lot in question to verify who was the real owner thereof, despite the fact that his
transferor, Dayrit, never showed him any title thereto; a circumstance which should have put him
upon such inquiry or investigation. His failure to exercise that measure of precaution which was
reasonably required of a prudent man in order to acquaint him with the defects in the title of his
vendor precludes him from claiming possession in good faith.
We agree with the following observations of Justice Guillermo S. Santos in his separate concurring
and dissenting opinion:
The issue now is whether appellant may be considered as a possessor in good faith
of the property in question. Article 256 of the Civil Code defines a possessor in good
faith as one who is not aware that there exists in his title or mode of acquisition any
flaw which invalidates it.
In this case, it was shown that under the contract of sale on installment basis, Delfin
Dayrit had only paid a total of P4,917.30, leaving an unpaid balance of P3,860.20 as
of August 9, 1954 (Dec. RA p. 43). The said contract specifically provides that ". . . if
for some reason or other the purchaser cannot pay a certain installment on the date
agreed upon, it is hereby agreed that said purchaser will be given a maximum limit of
two months' grace in which to pay his arrears, after which the property will revert to
the original owner hereof: the Clara Tambunting Subdivision, No. 50 Reina Regente
St., Binondo, Manila, P.I." The subsequent installment after August 9, 1954, not
having been paid, the property, therefore, reverted to Clara Tambunting and therefore
formed part of her estate, which was subsequently acquired by appellee. Thus, when
appellant purchased the parcel of land in question from Dayrit on August 25, 1962
or eight (8) years after the defaultthe latter had no more right over the same.
It was incumbent on appellant to inquire into the title of his vendor over the property.
Had appellant demanded from his vendor, Dayrit, the certificate of his ownership of
the property subject of the negotiation, he would have learned that the latter had no
right, much less, title over the same because of his default in the payment of the
monthly installments. A purchaser cannot close his eyes to facts which should put a
reasonable man upon his guard and then claim that he acted in good faith under the
behef that there was no defect in the title of the vendor (Leung Yee v. Strong
Machinery Co., 37 Phil. 644). Consequently, appellant cannot be deemed a
possessor in good faith and is not, therefore, entitled to reimbursement for the
improvements he had introduced in the property in question.
No installments and rentals have been paid for the lot since 1954 or for more than thirty (30) years.
While Dayrit transferred to Carillo whatever rights he may have had to the lot and its improvements
on September 25, 1962, the claim for back rentals was from March 20, 1959 while the trial court
ordered payment as of January 21, 1961 or twenty four (24) years ago. Considering the facts,
applicable law, and equities of this case, the decision of the trial court appears to be correct and is,
therefore, reinstated.

WHEREFORE, the questioned decision of the Court of Appeals is hereby SET ASIDE and another
one is entered AFFIRMING in toto the decision of the Court of First Instance of Manila in Civil Case
No. 64578.
SO ORDERED.

G.R. No. L-27876 April 22, 1992

ADELAIDA S. MANECLANG, in her capacity as Administrator of the Intestate Estate of the late
Margarita Suri Santos, plaintiff-appellee,
vs.
JUAN T. BAUN and AMPARO S. BAUN, ET AL., defendants. CITY OF DAGUPAN, defendantappellant.

DAVIDE, JR., J.:

The issue presented in this case is the validity of a sale of a parcel of land by the administrator of an
intestate estate made pursuant to a petition for authority to sell and an order granting it which were
filed and entered, respectively, without notice to the heirs of the decedents.
The records disclose that on 12 June 1947, Margarita Suri Santos died intestate. She was survived
by her husband Severo Maneclang and nine (9) children. On 30 July 1947, a petition for the
settlement of her estate was filed by Hector S. Maneclang, one of her legitimate children, with the
Court of First Instance at Dagupan City, Pangasinan; the case was docketed as Special Proc. No.
3028. At the time of the filing of the petition, the ages of her children were as follows:
Hector Maneclang 21 years old
Cesar Maneclang 19
Oscar Maneclang 17
Amanda Maneclang 16
Adelaida Meneclang 13
Linda Maneclang 7
Priscila Maneclang 6
Natividad Maneclang 3
Teresita Maneclang 2
No guardian ad litem was appointed by the court for the minor children.
Margarita left several parcels of land, among which is Lot No. 203 of the Cadastral Survey of
Dagupan City containing an area of 7, 401 square meters, more or less , and covered by Transfer
Certificate of Title No. 1393.
On 2 September 1949, Pedro M. Feliciano, the administrator of the intestate estate of Margarita,
filed a petition in SP Proc. No. 3028 asking the court to give him "the authority to dispose of so much
of the estate that is necessary to meet the debts enumerated" in the petition. While notice thereof
was given to the surviving spouse, Severo Maneclang, through his counsel, Atty. Teofilo Guadiz, no
such notice was sent to the heirs of Margarita.
On 9 September 1949, despite the absence of notice to the heirs, the intestate court issued an Order
"authorizing the administrator to mortgage or sell so much of the properties of the estate for the
purposes (sic) of paying off the obligations" referred to in the petition.
Pursuant to this Order, Oscar Maneclang, the new administrator of the intestate estate, executed on
4 October 1952 a deed of sale 1 in favor of the City of Dagupan, represented by its mayor, Angel B.

Fernandez, of a portion consisting of 4,415 square meters of the aforementioned Lot No. 203 for and in
consideration of P11,687.50. This sale was approved by the intestate court on 15 March 1954.

The City of Dagupan immediately took possession of the land and constructed thereon a public
market, known as the Perez Boulevard Public Market, at a cost of P100,00.00, more or less. It has
been in continuous and uninterrupted possession of the property since the construction of the
market. 2
Some other parcels of land belonging to the intestate estate were sold by the administrator pursuant
of the same authority granted by the 9 September 1949 Order. 3
On 28 September 1965, the new judicial administratrix of the intestate estate, Adelaida S.
Maneclang, daughter of the late Margarita Suri Santos, filed with the Court of First Instance of
Pangasinan an action for the annulment of the sales made by the previous administrator pursuant to
the order of 9 September 1949, cancellation of titles, recovery of possession and damages against
the vendees Juan T. Baun and Amparo Baun, Marcelo Operaa and Aurora Pagurayan, Crispino
Tandoc and Brigida Tandoc, Jose Infante and Mercedes Uy Santos, Roberto Cabugao, Basilisa
Callanta and Fe Callanta, Ricardo Bravo and Francisca Estrada, the City of Dagupan, and
Constantino Daroya and Marciana Caramat. 4 The complaint was docketed as Civil Case No. D-1785.
The cause of action against the City of Dagupan centers around the deed of sale executed in its favor on
4 October 1952 by former judicial administrator Oscar S. Maneclang. In its Answer filed on 5 November
1965, 5 the City of Dagupan interposed the following affirmative defenses: (a) the sale in its favor is valid,
legal and above board; (b) plaintiff has no cause of action against it, or that the same, if any, had
prescribed since the complaint was filed thirteen (13) years after the execution of the sale; (c) plaintiff is
barred by estoppel and laches; (d) it is a buyer in good faith; and (e) it has introduced necessary and
useful improvements and contructed a supermarket worth P200,000.00; hence, assuming arguendo that
the sale was illegal, it has the right to retain the land and the improvements until it is reimbursed for the
said improvements.
On 30 March 1966, plaintiff and the City of Dagupan entered into a Stipulation of Facts wherein they
agreed on the facts earlier adverted to. They, however, agreed: (a) to adduce evidence concerning
the reasonable rental of the property in question and other facts not embodied therein but which are
material and vital to the final determination of the case, and (b) to request the court to take judicial
notice of SP Proc. No. 3028.
The evidence adduced by plaintiff discloses that Oscar Maneclang was induced by its then
incumbent Mayor, Atty. Angel B. Fernandez, to sell the property to the City of Dagupan and that the
said City has been leasing the premises out to numerous tenants at the rate of P0.83 per square
meter per month, or a total monthly rental of P3,747.45, since 4 October 1952. 6
On 9 November 1966, the trial court rendered a partial decision in Civil Case No. D-1785 against the
City of Dagupan, the dispositive portion of which reads as follows:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court hereby renders
judgment:
(a) Annulling (sic) the Deed of Sale executed by the Administrator on October 4,
1952 (Exh. F) being null and void ab initio;
(b) Ordering the cancellation of the Certificate of Title issued in favor of the defendant
City of Dagupan by virtue of said Deed of Sale, and directing the Register of Deeds

of said City to issue a new Certificate of Title in favor of the plaintiff as Administratrix
covering the property in question;
(c) Ordering the defendant City of Dagupan to restore the possession to the plaintiff
in her capacity as Judicial Administratrix of the Intestate Estate of Margarita Suri
Santos of the parcel of land in question, together with all the improvements thereon
existing;
(d) Ordering the defendant City of Dagupan City to pay the plaintiff the sum of
P584,602.20 as accumulated rentals or reasonable value of the use of the property
in question from October 4, 1952 up to the filing of the complaint in 1985, plus
interest thereon at the rate of 6% per annum from the later date;
(e) Ordering the defendant City of Dagupan to pay a monthly rental or reasonable
value of its occupation of the premises in the amount of P3,747.45 from October 9,
1985 up to the date the possession of the premises is delivered (sic) the plaintiff by
said defendant, and
(f) Ordering the plaintiff to reimburse the defendant City of Dagupan the sums of
P100,000.00 and P11,687.50 both amounts to be deducted from the amount due the
plaintiff from said defendant.
Defendant shall also pay the costs.
SO ORDERED. 7
In arriving at the said disposition, the trial court held that:
(a) Under Rule 90 of the Rules of Court,

8 which is similar to the provisions of Section 722 of the Code

of Civil Procedure, it is essential and mandatory that the interested parties be given notices of the application for
authority to sell the estate or any portion thereof which is pending settlement in a probate court. As held in the early
case of Estate of Gamboa vs. Floranza, 9 an order issued by a probate court for the sale of real

property belonging to the estate of a deceased person would be void if no notice for the
hearing of the petition for such sale is given as required by said Section 722. Under this
section, when such a petition is made, the court shall designate a time and place for the
hearing and shall require notice of such hearing to be given in a newspaper of general
circulation; moreover, the court may require the giving of such further notice as it deems
proper.

In the instant case, no notice of the application was given to the heirs; hence, both
the order granting authority to sell and the deed of sale executed in favor of the City
of Dagupan pursuant thereto, are null and void.
(b) Estoppel does not lie against plaintiff as no estoppel can be predicated on an
illegal act and estoppel is founded on ignorance. In the instant case, the nullity is by
reason of the non-observance of the requirements of law regarding notice; this legal
defect or deficiency deprived the probate court of its jurisdiction to dispose of the
property of the estate. Besides, the City of Dagupan was represented in the
transaction by lawyers who are presumed to know the law. This being the case, they
should not be allowed to plead estoppel; finally, estoppel cannot give validity to an
act which is prohibited by law or is against public policy. 10

(c) Laches and prescription do not apply. The deed of sale being void ab initio, it is in
contemplation of law inexistent and therefore the right of the plaintiff to bring the
action for the declaration of inexistence of such contract does not prescribe. 11
(d) The City of Dagupan is not a purchaser in good faith and for value as the former
judicial administrator, Oscar Maneclang, testified that he was induced by then
incumbent Mayor of the City Councilor Atty. Teofilo Guadiz, Sr. to sell the property;
moreover, the City Fiscal signed as witness to the deed of sale. These lawyers are
presumed to know the law.
Not satisfied with the decision, the City of Dagupan appealed to this Court 12 alleging that said
decision is contrary to law, the facts and the evidence on record, and that the amount involved exceeds
P500,000.00.
In its Brief, the City of Dagupan submits the following assigned errors:
FIRST ERROR
THE LOWER COURT ERRED IN HOLDING THAT THE SALE EXECUTED BY THE
JUDICIAL ADMINISTRATOR TO THE CITY OF DAGUPAN IS NULL AND VOID AB
INITIO.
SECOND ERROR
THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFF IS NOT IN
ESTOPPEL FROM ASSAILING THE LEGALITY OF THE SALE.
THIRD ERROR
THE LOWER COURT ERRED IN HOLDING THAT THE INSTANT ACTION IS NOT
BARRED BY LACHES AND PRESCRIPTION.
FOURTH ERROR
THE LOWER COURT ERRED IN DECLARING THAT DEFENDANT CITY OF
DAGUPAN IS NOT A PURCHASER IN GOOD FAITH AND FOR VALUE.
FIFTH ERROR
THE LOWER COURT ERRED IN ORDERING DEFENDANT CITY OF DAGUPAN
TO PAY THE PLAINTIFF THE SUM OF P584,602.20 AS ACCUMULATED RENTALS
OR REASONABLE VALUE OF (sic) THE USE OF THE PROPERTY IN QUESTION
FROM OCTOBER 4, 1952 UP TO THE FILING OF THE COMPLAINT IN 1965,
PLUS INTEREST THEREON AT THE RATE OF 6% PER ANNUM FROM THE
LATER DATE.
SIXTH ERROR
THE LOWER COURT ERRED IN ORDERING THE DEFENDANT CITY OF
DAGUPAN TO PAY A MONTHLY RENTAL OR REASONABLE VALUE OF (sic) ITS
OCCUPATION OF THE PREMISES IN THE AMOUNT OF P3,747,45 FROM

OCTOBER 9, 1965 UP TO THE DATE THE POSSESSION OF THE PREMISES IS

DELIVERED TO THE PLAINTIFF BY SAID DEFENDANT.
We shall consider these assigned errors sequentially.
1. In support of the first, appellant maintains that notice of the application for authority to sell was
given to Severo Maneclang, surviving spouse of Margarita. As the designated legal representative of
the minor children in accordance with Article 320 of the Civil Code, notice to him is deemed sufficient
notice to the latter; moreover, after Oscar Maneclang signed the deed of sale 13 in his capacity as
judicial administrator, he "sent copies of his annual report and the deed of sale to Severo Maneclang, and
his brothers Hector Maneclang and Oscar Maneclang and sister Amanda Maneclang, all of legal ages
(sic), while the other minor heirs received theirs through his lawyer." 14 Besides, perFlores vs. Ang
Bansing, 15 the sale of property by the judicial administrator cannot be set aside on the sole ground of lack
of notice.
These contentions are without merit.
Article 320 of the Civil Code does not apply. While the petition for authority to sell was filed on 2
September 1949, the Civil Code took effect only on 30 August 1950. 16 Thus, the governing law at the
time of the filing of the petition was Article 159 of the Civil Code of Spain which provides as follows:
The father, or in his default, the mother, shall be the legal administrator of the
property of the children who are subject to parental authority.
However, the provisions of the Code of Civil Procedure on guardianship impliedly repealed those of
the Civil Code relating to that portion of the patria potestad (parental authority) which gave to the
parents the administration and usufruct of their minor children's property; said parents were however
entitled, under normal conditions, to the custody and care of the persons of their minor children. 17
Article 320 of the present Civil Code, taken from the aforesaid Article 159, incorporates the
amendment that if the property under administration is worth more than two thousand pesos
(P2,000.00), the father or the mother shall give a bond subject to the approval of the Court of First
Instance. This provision then restores the old rule 18which made the father or mother, as such, the
administrator of the child's property. Be that as it may, it does not follow that for purposes of complying
with the requirement of notice under Rule 89 of the Rules of the Court, notice to the father is notice to the
children. Sections 2, 4 and 7 of said Rule state explicitly that the notice, which must be in be writing, must
be given to the heirs, devisees, and legatees and that the court shall fix a time and place for hearing such
petition and cause notice to be given to the interested parties.
There can be no dispute that if the heirs were duly represented by counsel or by a guardian ad
litem in the case of the minors, the notice may be given to such counsel or guardian ad litem. In this
case, however, only the surviving spouse, Severo Maneclang, was notified through his counsel. Two
of the heirs, Hector Maneclang and Oscar Maneclang, who were then of legal age, were not
represented by counsel. The remaining seven (7) children were still minors with no guardian ad
litem having been appointed to represent them. Obviously then, the requirement of notice was not
satisfied. The requisite set forth in the aforesaid sections of Rule 89 are mandatory and essential.
Without them, the authority to sell, the sale itself and the order approving it would be null and voidab
initio. 19 The reason behind this requirement is that the heirs, as the presumptive owners 20 since they
succeed to all the rights and obligations of the deceased from the moment of the latter's death, 21 are the
persons directly affected by the sale or mortage and therefore cannot be deprived of the property except
in the manner provided by law.

Consequently, for want of notice to the children, the Order of 9 September 1949 granting the
application, the sale in question of 4 October 1952 and the Order of 15 March 1954 approving the
sale are all void ab initio as against said children. Severo Maneclang, however, stands on different
ground altogether. Having been duly notified of the application, he was bound by the said order, sale
and approval of the latter. However, the only interest which Severino Maneclang would have over the
property is his right of usufruct which is equal to that corresponding by way of legitime pertaining to
each of the surviving children pursuant to Article 834 of the Civil Code of Spain, the governing law at
that time since Margarita Suri Santos died before the effectivity of the Civil Code of the Philippines.
2 Estoppel is unavailable as an argument against the administratrix of the estate and against the
children.
As to the former, this Court, in Boaga vs. Soler, supra, reiterated the rule "that a decedent's
representative is not estopped to question the validity of his own void deed purporting to convey
land; 22 and if this be true of the administrator as to his own acts, a fortiori, his successor can not be
estopped to question the acts of his predecessor are not conformable to law." 23 Not being the party who
petitioned the court for authority to sell and who executed the sale, she cannot be held liable for any act
or omission which could give rise to estoppel. Under Article 1431 of the Civil Code, through estoppel an
admission or representation is rendered conclusive upon the person making it, and cannot be denied or
disproved as against the person relying thereon. In estoppel by pais, as related to the party sought to be
estopped, it is necessary that there be a concurrence of the following requisites: (a) conduct amounting to
false representation or concealment of material facts or at least calculated to convey the impression that
the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert;
(b) intent, or at least expectation that this conduct shall be acted upon, or at least influenced by the other
party; and (c) knowledge, actual or constructive of the actual facts. 24 In estoppel by conduct, on the other
hand, (a) there must have been a representation or concealment of material facts; (c) the party to whom it
was made must have been ignorant of the truth of the matter; and (d) it must have been made with the
intention that the other party would act upon it. 25
As to the latter, considering that, except as to Oscar Maneclang who executed the deed of sale in his
capacity as judicial administrator, the rest of the heirs did not participate in such sale, and
considering further that the action was filed solely by the administratrix without the children being
impleaded as parties plaintiffs or intervenors, there is neither rhyme nor reason to hold these heirs in
estoppel. For having executed the deed of sale, Oscar Maneclang is deemed to have assented to
both the motion for and the actual order granting the authority to sell. Estoppel operates solely
against him.
3 As to prescription, this Court ruled in the Boaga case that "[a]ctions to declare the inexsistence of
contracts do not prescribe (Art. 1410, N.C.C.), a principle applied even before the effectivity of the
new Civil Code (Eugenio, et al. vs. Perdido, et al., supra, citing Tipton vs. Velasco, 6 Phil. 67, and
Sabas vs. Germa , 66 Phil. 471 )."
4. Laches is different from prescription. As the court held in Nielsen & Co. Inc . vs. Lepanto
Consolidated Mining Co., 26 the defense of laches applies independently of prescription. While
prescription is concerned with the fact of delay, laches is concerned with the effect of delay. Prescription is
a matter of time; laches is principally a question of inequity of permitting a claim to be enforced, this
inequity being founded on some change in the condition of the property or the relation of the parties.
Prescription is statutory; laches is not. Laches applies in equity, whereas prescription applies at law.
Prescription is based on fixed time, laches is not.
The essential elements of laches are the following: (1) conduct on the part of the defendant, or of
one under whom he claims, giving rise to the situation of which complaint is made and for which the
complaint seeks a remedy; (2) delay in asserting the complainant's rights, the complainant having

been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of the
defendant that the complainant would assert the right on which he bases his suit; and (4) injury or
prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held
barred. 27
In the instant case, from time the deed of sale in favor of the City of Dagupan was executed on 4
October 1952, up to the time of the filing of the complaint for annulment on 28 September 1965,
twelve (12) years, ten (10) months and twenty-four (24) days had elapsed.
The respective ages of the children of Margarita Suri Santos on these two dates were, more or less,
as follows:
Upon execution At the filing
of the deed of sale of the complaint
Hector Maneclang 26 39
Cesar Maneclang 24 37
Oscar Maneclang 22 35
Amanda Maneclang 21 34
Adelaida Maneclang 18 31
Linda Maneclang 12 25
Priscila Maneclang 11 24
Natividad Maneclang 8 20
Teresita Maneclang 7 20
It is an undisputed fact that the City of Dagupan immediately took possession of the property and
constructed thereon a public market; such possession was open, uninterrupted and continuous.
Obviously, Hector, Cesar, Oscar and Amanda were already of legal age when the deed of sale was
executed. As it was Oscar who executed the deed of sale, he cannot be expected to renounce his
own act. With respect to Hector, Cesar and Amanda, they should have taken immediate steps to
protect their rights. Their failure to do so for thirteen (13) years amounted to such inaction and delay
as to constitute laches. This conclusion, however, cannot apply to the rest of the children who
were then minors and not represented by any legal representative. They could not have filed an
action to protect their interests; hence, neither delay nor negligence could be attributed to them as a
basis for laches. Accordingly, the estate is entitled to recover 5/9 of the questioned property.
5. In ruling out good faith, the trial court took into account the testimony of Oscar Maneclang to the
effect that it was Mayor Fernandez of Dagupan City and Councilor Teofilo Guadiz, Sr., both lawyers,
who induced him to sell the property and that the execution of the sale was witnessed by the City
Fiscal.
We are unable to agree.
While the order granting the motion for authority to sell was actually issued on 9 September 1949,
the same was secured during the incumbency of the then judicial administrator Pedro Feliciano.
Even if it is to be assumed that Mayor Fernandez and Councilor Guadiz induced Oscar Maneclang
to sell the property, the fact remains that there was already the order authorizing the sale. Having
been issued by a Judge who was lawfully appointed to his position, he was disputably presumed to
have acted in the lawful exercise of jurisdiction and that his official duty was regularly performed. 28 It
was not incumbent upon them to go beyond the order to find out if indeed there was a valid motion for
authority to sell. Otherwise, no order of any court can be relied upon by the parties. Under Article 526 of
the Civil Code, a possessor in good faith is one who is not aware that there exists in his title or mode of

acquisition any flaw which invalidates it; furthermore, mistake upon a doubtful or difficult question of law
may be the basis of good faith. It implies freedom from knowledge and circumstances which ought to put
a person on inquiry. 29 We find no circumstance in this case to have alerted the vendee, the City of
Dagupan, to a possible flaw or defect in the authority of the judicial administrator to sell the property.
Since good faith is always presumed, and upon him who alleges bad faith on the part of the possessor
rests the burden of proof, 30 it was incumbent upon the administrator to established such proof, which We
find to be wanting. However, Article 528 of the Civil Code provides that: "Possession acquired in good
faith does not lose this character except in the case and from the moment facts exist which show that the
possessor is not unaware that he possesses the thing improperly or wrongfully." The filing of a case
alleging bad faith on the part of a vendee gives cause for cessation of good faith.

In Tacas vs. Tobon, 31 this Court held that if there are no other facts from which the interruption of good
faith may be determined, and an action is filed to recover possession, good faith ceases from the date of
receipt of the summons to appear at the trial and if such date does not appear in the record, that of the
filing of the answer would control. 32
The date of service of summons to the City of Dagupan in Civil Case No. D-1785 is not clear from
the record. Its Answer, however, was filed on 5 November 1965. Accordingly, its possession in good
faith must be considered to have lasted up to that date. As a possessor in good faith, it was entitled
to all the fruits of the property and was under no obligation to pay rental to the intestate of Margarita
for the use thereof. Under Article 544 of the Civil Code, a possessor in good faith is entitled to the
fruits received before the possession is legally interrupted. Thus, the trial court committed an error
when it ordered the City of Dagupan to pay accumulated rentals in the amount of P584,602.20 from
4 October 1952 up to the filing of the complaint.
6. However, upon the filing of the Answer, the City of Dagupan already became a possessor in bad
faith. This brings Us to the issue of reasonable rentals, which the trial court fixed at P3,747.45 a
month. The basis thereof is the monthly earnings of the city from the lessees of the market stalls
inside the Perez Boulevard Supermarket. The lesses were paying rental at the rate of P0.83 per
square meter. Appellant maintains that this is both unfair and unjust. The property in question is
located near the Chinese cemetery and at the time of the questioned sale, it had no access to the
national road, was located "in the hinterland" and, as admitted by the former judicial administrator,
Oscar Maneclang, the persons who built houses thereon prior to the sale paid only P6.00 to P8.00
as monthly rentals and the total income from them amounted only to P40.00 a month. Appellant
contends that it is this income which should be made the basis for determining the reasonable rental
for the use of the property.
There is merit in this contention since indeed, if the rental value of the property had increased, it
would be because of the construction by the City of Dagupan of the public market and not as a
consequence of any act imputable to the intestate estate. It cannot, however, be denied that
considering that the property is located within the city, its value would never decrease; neither can it
be asserted that its price remained constant. On the contrary, the land appreciated in value at least
annually, if not monthly. It is the opinion of this Court that the reasonable compensation for the use of
the property should be fixed at P1,000.00 a month. Taking into account the fact that Severo
Maneclang, insofar as his usufructuary right is concerned, but only until his death, is precluded from
assailing the sale, having been properly notified of the motion for authority to sell and considering
further that the heirs, Hector, Cesar, Oscar and Amanda, all surnamed Maneclang, are, as discussed
above, barred by laches, only those portions of the monthly rentals which correspond to the
presumptive shares of Adelaida, Linda, Priscila, Natividad and Teresita, all surnamed Maneclang, to
the extent untouched by the usufructuary right of Severo Maneclang, should be paid by the City of
Dagupan. There is no showing as to when Severo Maneclang died; this date of death is necessary
to be able to determine the cessation of his usufructuary right and the commencement of the full
enjoyment of the fruits of the property by the unaffected heirs. Under the circumstances, and for

facility of computation, We hereby fix the presumptive shares in the rentals of the aforenamed
unaffected heirs at P500.00 a month, or at P100.00 each, effective 5 November 1965 until the City of
Dagupan shall have effectively delivered to the intestate estate 5/9 of the property in question. The
latter, however, shall reimburse the City of Dagupan of that portion of the real estate taxes it had
paid on the land corresponding to 5/9 of the lot commencing from taxable year 1965 until said 5/9
part is effectively delivered to the intestate estate.
Pursuant to Article 546 of the Civil Code, the City of Dagupan may retain possession of the property
until it shall have been fully reimbursed the value of the building in the amount of P100,000.00 and
5/9 of the purchase price amounting to P6,493.05
WHEREFORE, judgment is hereby rendered AFFIRMING the decision in all respects, except to the
extent as above modified. As modified, (a) the sale in favor of the City of Dagupan, executed on 4
October 1952 (Exhibit "F"), is hereby declared null and void; however, by reason of estoppel and
laches as abovestated, only 5/9 of the subject property representing the presumptive shares of
Adelaida, Linda, Priscila, Natividad and Teresita, all surnamed Maneclang, may be recovered; (b)
subject, however, to its right to retain the property until it shall have been refunded the amounts of
P100,000.00 and P6,493.05, the City of Dagupan is hereby ordered to reconvey to the intestate
estate of Margarita Suri Santos 5/9 of the property in question, for which purpose said parties shall
cause the appropriate partition thereof, expenses for which shall be borne by them proportionately;
and (c) the City of Dagupan is further ordered to pay reasonable compensation for the use of 5/9 of
the property in question at the rate of P500.00 a month from 5 November 1965 until it shall have
effectively delivered the possession of the property to the intestate estate of Margarita Suri Santos.
Upon the other hand, said intestate estate is hereby ordered to refund to the City of Dagupan that
portion of the real estate taxes the latter had paid for the lot corresponding to 5/9 thereof effective
taxable year 1965 and until the latter shall have delivered to said intestate estate.
SO ORDERED.

JULIAN BOAGA, plaintiff-appellant,

vs.
ROBERTO SOLER, ET AL., defendants-appellants.
Luis Contreras for plaintiff-appellant.
Segismundo Garga, Luis Isaac and Augusto Pardalis for defendants-appellants.
REYES, J.B.L., J.:
From the order dated April 30, 1959 dismissing the complaint in Civil Case No. 2123 of the Court of
First Instance f Camarines Sur, Julian Boaga, Administrator of the state of the deceased spouses
Alejandro Ros and Maria Isaac, appeals directly to this Court.
It appears that following the death of the spouses Alejandro Ros and Maria Isaac in 1935 and 1940,
respectively, intestate proceedings for the settlement of their estate were commenced in the Court of
First Instance of Camarines Sur, Special Proceeding No. 7194 of that court. In time Juan Garza was
appointed administrator of the estate Upon application, Juan Garza was authorized by he probate
court on August 29, 1944 (Annex "X") to sell certain parcels of land pertaining to the estate. Pursuant
hereto, Garza sold said parcels of land on August 30, 944 in favor of appellee Roberto Soler (Annex
"A"), which sale was subsequently approved on October 9, 1944 (Annex "B"). On October 14, 1944,
the heirs of the deceased wife, Maria Isaac, after having been declared as such (Annex "B"), sold all
their shares and interests over certain parcels of land in favor of appellee Soler (Annex "C").
Sometime during the war, the records of Special Proceeding No. 7194 were destroyed. Upon
reconstitution of these records by court order, Julian Boaga was issued letters of administration on
September 6, 1951. On May 1952, the instant action was filed by Boaga in his capacity as
administrator, seeking to annul the sales of August 30, 1944 and October 14, 1944 in favor of
Roberto Soler on the ground that said transactions were fraudulent made without notice to the heirs
of Alejandro Ros of the hearing of the application to sell, and that the sales were not beneficial to the
heirs for various reasons, and praying for reconveyance of the lands sold, since they were
fraudulently registered under Act 496 in the name of Roberto Soler on December 17, 1949 and on
January 2, 1952, and for recovery of damages.
A motion to dismiss interposed by Soler on August 29, 1952, alleging lack of legal capacity to sue
and failure to state a cause of action as grounds, was denied on September 17, 1952. Soler then
filed his answer and counter-claim on September 26, 1952. On June 11, 1953, Soler filed
his second motion to dismiss, raising the same grounds contained in the first motion; this was again
denied on August 29, 1953. On July 18, 1955, Soler filed histhird motion to dismiss, for the first time
raising estoppel, prescription of the action, and non-inclusion of necessary parties, as grounds. Upon
an order for plaintiff to include the vendors in the sales as parties to the case, the court, on August
22, 1955, denied the motion to dismiss, but apparently without resolving the issues of estoppel and
prescription. On February 9, 1959, Soler sought a resolution of his third motion to dismiss. On April
30, 1959, and over plaintiff's objections, the court ordered the dismissal of the action, sustaining the
contention that as administrator of the estate succeeding Juan Garza, plaintiff was estopped to file
an action to annul the sales, and, moreover, that the action had prescribed. Hence, this appeal.
The sale on August 30, 1944 appears to be of 21 parcels of abaca, coconut, forest and pasture
lands, covering an aggregate area of more than 1,001 hectares for the lump sum of P142,800,
Japanese currency (Annex "A"). Plaintiff-appellant alleges (and the record nowhere indicates the
contrary), that these lands comprised almost the entire estate. Nothing in the record would show
whether, as required by Rule 90, sections 4 and 7, the application for authority to sell was set for

hearing, or that the court ever caused notice thereof to be issued to the heirs of Alejandro Ros
Incidentally, these heirs seem not to have gotten any part of the purchase price since they were then
allegedly in Spain. Yet, in the order of declaration of heirs of the wife and approving the sale to Soler
(Annex "B"), the declaration of the heirs of the husband Alejandro Ros was expressly held in
abeyance, indicating a recognition of their existence. Appellees maintain that the sale was made for
the purpose of paying debts, but this, at lease, is controversial. Appellant asserts that the total
outstanding debts of the estate at the time of the sale amounted to only P4,641.48, a relatively
meager sum compared to the large tracts of land sold.
We think the lower court erred in dismissing the action without a hearing on the merits. A sale of
properties of an estate as beneficial to the interested parties, under Sections 4 and 7, Rule 90, must
comply with the requisites therein provided, which are mandatory. Among these requisites, the fixing
of the time and place of hearing for an application to sell, and the notice thereof to the heirs, are
essential; and without them, the authority to sell, the sale itself, and the order approving it, would
be null and void ab initio (Arcilla vs. David, 77 Phil. 718; Gabriel, et al. vs. Encarnacion, et al., L6736, May 4, 1954, and others cited therein). Rule 90, Section 4, does not distinguish between heirs
residing in and those residing outside the Philippines. Therefore, its requirements should apply
regardless of the place of residence of those required to be notified under said rule.
The contention that the sale was made under Section 2, Rule 90 (wherein notice is required only to
those heirs, etc., residing in the Philippines), is not substantiated by the record. Neither the deed of
sale on August 30, 1944, nor the orders issued by the probate court in connection there with, show
whether, as required by said Section 2, the personal properties were insufficient to pay the debts and
expenses of administration. There is not even a showing, to start with, that the sale was made for the
purpose of paying debts or expenses of administration (or legacies), a condition which circumscribes
the applicability of that section. On the face of the reamended complaint at any rate, it does not
appear that the contested sale was one under section 2 of Rule 90; and the same can not be
invoked to sustain the motion to dismiss. Without reception of further evidence to determine whether
the requisites of the applicable provisions of the Rules had been followed, the dismissal of the action
was erroneous and improvident. Plaintiff should at least have been given a chance to prove his
case.
As to the plea of estoppel, the rule is that a decedent's representative is not estopped to question the
validity of his own void deed purporting to convey land (Chase vs. Cartwright, 22 Am. St. Rep. 207,
and cases cited; Meeks vs. Olpherts, 25 L. Ed. (U.S.) 735; 21 Am. Jur. 756, s. 667); and if this be
true of the administrator as to his own acts, a fortiori, his successor can not be estopped to question
the acts of his predecessor are not conformable to law (cf. Walker vs. Portland Savings Bank, L.R.A.
1915 E, p. 840; 21 Am. Jur. p. 820, s. 785).
We also find untenable the claim of prescription of the action. Actions to declare the inexistence of
contracts do not prescribe (Art. 1410, N.C.C.), a principle applied even before the effectivity of the
new Civil Code (Eugenio, et al. vs. Perdido, et al., supra., citing Tipton vs. Velasco, 6 Phil. 67 and
Sabas vs. Germa, 66 Phil. 471). The sale on October 14, 1944 by the heirs of Maria Isaac of
whatever interests or participation they might have in the four parcels of land covered by the deed
may be valid (De Guanzon vs. Jalandoni and Ramos, L-5049, October 31, 1953; De Jesus vs. Daza,
77 Phil. 152; Cea vs. C.A., 84 Phil. 798), yet it could not have effected an immediate absolute
transfer of title to appellee Soler over any part of the parcels of land themselves, much less over
their entirety. Necessarily, the sale was subject to the result of the administration proceedings, a
contingency upon which the deed of sale itself expressly founded the transaction. By its terms, not
only was the existence of possible heirs of Alejandro Ros recognized, but it also provided for the
contingency that said heirs could yet be declared or adjudicated in the administration proceedings as
the sole owners of the four parcels being sold.

The subsequent registration of those lands covered by the sale of October 14, 1944 and that of
August 30, 1944, allegedly in the exclusive name of appellee Roberto Soler, gave rise to an action
for reconveyance based on trust. Assuming that this case is one of constructive trust, and under the
theory that actions to recover property held in constructive trust would prescribe, there is here no
showing as to when the alleged fraud was discovered (Article 1391, N.C.C.). Hence, it cannot be
said that prescription has tolled the action.
Finally, neither in the first motion to dismiss on August 29, 1952; nor in the Answer on September 26,
1952; nor in the second motion to dismiss on June 11, 1953, was the defense of prescription raised.
From the time the Complaint was filed on May 9, 1952 to the third motion to dismiss on July 18,
1955, was a period of more than three (3) years in which it took Soler just to raise prescription as an
issue. Not having been set up in the two (2) motions to dismiss or in the answer as affirmative
defense, it is deemed to have been waived (Rule 9, See. 10; Rule 26, Sec. 8; Pascua vs. Copuyoc,
L-9595, November 28, 1958). Obviously, prescription in this case does not appear on the face of the
pleadings, where failure to plead it would not have constituted a waiver (Chua Lamko vs. Diego, et
al., L-5279, October 31, 1955). On the contrary, it would appear to raise an issue of fact not
contained in the pleadings, i.e., the time the fraud was discovered. And this, furthermore,
necessitates reception of evidence.
WHEREFORE, the appealed order dismissing the complaint in Civil Case No. 2123 of the court
below is reversed, and the case remanded, with instructions to proceed in accordance with this
decision. Costs against appellee Roberto Soler.

Spouses Alejandro Ros and Maria Isaac died in 1935 and 1940, respectively. The
probate court appointed Juan Garza as administrator of the estate. Upon
application, the probate court authorized Garza to sell certain parcels of land
pertaining to the estate. Garza sold parcels of land (consisting of 21 parcels of
abaca, coconut, pasture and forest lands with an aggregate area of more than 1,001
hectares) to Roberto Soler.

During World War II, the records of the case were destroyed. Upon reconstitution,
the court appointed Julian Bonaga as administrator. Bonaga filed suit, in his capacity
as administrator, to annul the sales in favor of Soler. He alleged that said
transactions were fraudulent, made without notice to the heirs of Alejandro Ros of
the hearing of the application to sell, and that the sales were not beneficial to the
heirs for various reasons.

Soler filed three motions to dismiss, the first two were dismissed. He alleged in the
third motion to dismiss various grounds including estoppel, prescription, and noninclusion of necessary parties. The trial court dismissed the case.

ISSUE: Whether the trial court erred in dismissing the action without trial on the
merits considering that there is allegation that the sale of the parcels of land to
Soler did not comply with the requirements under the Rules of Court?

HELD: Yes, the trial court erred in dismissing the action without a hearing on the
merits. The sale did not comply with requisites under the Rules of Court. Among
these requisites, the fixing of the time and place of hearing for an application to sell,
and the notice thereof to the heirs are essential; and without them, the authority to
sell, the sale itself, and the order approving it would be null and void ab initio.
This requirement should apply regardless of the place of residence of those required
to be notified under said rule.

Moreover, neither the deed of sale nor the orders issued by the probate court in
connection therewith show whether the personal properties were insufficient to pay
the debts and expenses of administration. Neither is there showing that the sale
was made for the purpose of paying the debts or expenses of administration

G.R. No. L-15445

April 29, 1961

IN THE MATTER OF THE INTESTATE ESTATE OF THE DECEASED MERCEDES CANO.

FLORANTE C. TIMBOL, administrator-appellee,
vs.
JOSE CANO, oppositor-appellant.
Jose P. Fausto for administrator-appellee.
Filemon Cajator for oppositor-appellant.
LABRADOR, J.:
Appeal from an order of the Court of First Instance of Pampanga, Hon. Arsenio Santos, presiding,
dated August 25, 1958, approving petitions of the administrator Florante C. Timbol dated January 6
and 8, 1958. The order appealed from authorizes the administrator to increase the area of a
subdivision to be formed out of the lands under administration from 30 hectares to 41.9233 hectares
and approves the plan of such increased area.
The intestate Mercedes Cano died in August, 1945, leaving as her only heir her son Florante C.
Timbol then only 11 years old. On September 27, 1946, Jose Cano, brother of the intestate, was
appointed administrator. On April 13, 1951 Jose Cano, filed a petition, thru his counsel Atty. Filemon
Cajator, also an uncle of the minor Florante C. Timbol, proposing that the agricultural lands of the
intestate be leased to the administrator Jose Cano for an annual rental of P4,000, this rental to be
used for the maintenance of the minor and the payment of land taxes and dues to the government.
Judge Edilberto Barot, then presiding the court, approved the motion in an order dated April 27,
1951, which reads:
WHEREFORE, the motion of the administrator and his lawyer dated April 13,1951, is hereby
granted under the conditions therein set forth and the further condition that all previous
obligations of the administration including the previous deficits are assumed by said
administrator, and that the arrangement will continue only as long as, in the judgment of
contageous to the heir, the Court, the same continues to be advantageous to the heir,
Florante C. Timbol. (p. 27, Rec. on Appeal)
On January 14, 1956 the court, upon motion of the administrator and the conformity of the minor heir
and his uncles, approved the reduction of the annual rental of the agricultural lands of the intestate
leased to the administrator from P4,000 to P2,400 and the conversion of 30 hectares of the
agricultural lands into a subdivision.
On April 2, 1957, upon motion of the administrator, a project of partition was approved, designating
Florante C. Timbol the sole and exclusive heir of all the properties of the intestate.
On June 6, 1957 Florante C. Timbol was appointed administrator in place of Jose Cano and on
January 6, 1958 he presented a motion, which he modified ina subsequent one of January 8, 1958,
alleging among other things (a) that the area destined for the projected subdivision be increased
from 30 hectares to 41.9233 hectares and (b) that the plan submitted be approved. The motions
were approved but the approval was immediately thereafter set aside to give opportunity to the
former administrator and lessee Jose Cano to formulate his objections to the motions. Cano's
objections are (1) that the enlargement of the subdivision would reduce the land leased to him and
would deprive his tenants of their landholdings, and (b) that he is in possession under express

authority of the court, under a valid contract, and may not be deprived of his leasehold summarily
upon a simple petition.
The court granted the motions of the administrator, overruling the objections of Jose Cano, in the
order now subject of appeal, which reads:
The said contract of lease is on all forms illegal. Under article 1646 of the Civil Code of the
Philippines, a new provision, "the persons disqualified to buy referred to in articles
1490 and 1491, are also disqualified to become lessee of the things mentioned therein," and
under article 1491 (3) o the same Code, executors and administrators cannot acquire by
purchase the property of the estate under administration.
If, as already stated, Florante C. Timbol was only pointed administrator on June 6, 1957 and
the said contract of lease having been executed on July 9, 1956, the same fall within the
prohibition provided by law. However, Jose C. Cano avers that this Court, in the instant
proceedings, cannot pass upon the legality of the aforesaid lease contract, but in its general
jurisdiction. There is no need for the court to declare such contract illegal and, therefore, null
and void as the law so expressly provides.
WHEREFORE, in view of the foregoing considerations the court hereby grants Florante C.
Timbol's petitions date January 6 and 8, 1958, approving the amended plan for sub division,
attached thereto, and overrules Jose C. Cano's motion for reconsideration dated May 9,
same year. (pp. 151-152 Record on Appeal) The above is the subject of the present appeal.
The above is the subject of the present appeal.
In the first assignment of error appellant claims that the consideration of the motions of the
administrator July 6 and 8, 1958, without due notice to him, who is lessee is a violation of the Rules
of Court. This objection lost its force when the court, motu proprio set aside it first order of approval
and furnished copy of the motion to appellant and gave him all the opportunity to present his
objections thereto.
In the second and third assignments of error appellant argues that the court below, as a probate
court, has no jurisdiction to deprive the appellant of his rights under the lease, because these rights
may be annulled or modified only by a court of general jurisdiction. The above arguments are without
merit. In probate proceedings the court orders the probate of the will of the decedent (Rule 80, See.
5); grants letters of administration to the party best entitled thereto or to any qualified applicant (Id.,
Sec. 6); supervises and controls all acts of administration; hears and approves claims against the
estate of the deceased (Rule 87, See. 13); orders payment of lawful debts (Rule 89, Sec. 14);
authorizes sale, mortgage or any encumbrance of real estate (Rule 90, Sec. 2); directs the delivery
of the estate to those entitled thereto (Rule 91, See. 1). It has been held that the court acts as a
trustee, and as such trustee, should jealously guard the estate and see that it is wisely and
economically administered, not dissipated. (Tambunting vs. San Jose, G.R. No. L-8152.) .
Even the contract of lease under which the appellant holds the agricultural lands of the intestate and
which he now seeks to protect, was obtained with the court's approval. If the probate court has the
right to approve the lease, so may it order its revocation, or the reduction of the subject of the lease.
The matter of giving the property to a lessee is an act of administration, also subject to the approval
of the court. Of course, if the court abuses its discretion in the approval of the contracts or acts of the
administrator, its orders may be subject to appeal and may be reversed on appeal; but not because
the court may make an error may it be said that it lacks jurisdiction to control acts of administration of
the administrator.

In the fourth assignment of error, appellant argues that the effect of the reduction of the area under
lease would be to deprive the tenants of appellant of their landholdings. In the first place, the tenants
know ought to know that the lands leased are lands under administration, subject to be sold, divided
or finally delivered to the heir, according to the progress of the administration of the lands of the
intestate. The order appealed from does not have the effect of immediately depriving them of their
landholdings; the order does not state so, it only states that the lands leased shall be reduced and
subdivided. If they refuse to leave their landholdings, the administrator will certainly proceed as the
law provides. But in the meanwhile, the lessee cannot allege the rights of his tenants as an excuse
for refusing the reduction ordered by the court.
In the fifth assignment of error, appellant claims that his rights as lessee would be prejudiced
because the land leased would be reduced without a corresponding reduction in the rentals. This
would be a matter to be litigate between the administrator and himself before the probate court. But
the fact of the prejudice alone cannot bar reduction of the land leased, because such reduction is
necessary to raise funds with which to pay and liquidate the debts of the estate under administration.
The sixth assignment of error merits no attention on our part; it is appellant himself who, as
administrator since 1945, has delayed the settlement of the estate.
In the seventh assignment of error, appellant argues that since the project of partition had already
been approved and had become final, the lower court has lost jurisdiction to appoint a new
administrator or to authorize the enlargement of the land to be converted into a subdivision. This
assignment of error needs but a passing mention. The probate court loses jurisdiction of an estate
under administration only after the payment of all the debts the remaining estate delivered to the
heirs entitled to receive the same. In the case at bar, the debts had not yet been paid, and the estate
had not yet been delivered to the heirs as such heir.
We have taken pains to answer all the arguments adduced by the appellant on this appeal. But all
said arguments are squarely laid to naught by the declaration of the court that the lease of the
agricultural lands of the estate to the appellant Cano, who was the administrator at the time the
lease was granted, is null and void not only because it is immoral but also because the lease by the
administrator to himself is prohibited by law.(See Arts. 1646 and 1491, Civil Code of the Philippines).
And in view of the declaration of the court below that the lease is null and void, which declaration we
hereby affirm, it would seem proper for the administrator under the direction of the court, to take
steps to get back the lands leased from the appellant herein, or so much thereof as is needed in the
course of administration.
The court order appealed from is hereby affirmed, with costs against the appellant.

G.R. No. 83484 February 12, 1990

CELEDONIA SOLIVIO, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and CONCORDIA JAVELLANA
VILLANUEVA, respondents.
Rex Suiza Castillon for petitioner.
Salas & Villareal for private respondent.
MEDIALDEA, J.:
This is a petition for review of the decision dated January 26, 1988 of the Court of Appeals in CA GR
CV No. 09010 (Concordia Villanueva v. Celedonia Solivio) affirming the decision of the trial court in
Civil Case No. 13207 for partition, reconveyance of ownership and possession and damages, the
dispositive portion of which reads as follows:
WHEREFORE, judgment is hereby rendered for the plaintiff and against defendant:
a) Ordering that the estate of the late Esteban Javellana, Jr. be divided into two (2)
shares: one-half for the plaintiff and one-half for defendant. From both shares shall
be equally deducted the expenses for the burial, mausoleum and related
expenditures. Against the share of defendants shall be charged the expenses for
scholarship, awards, donations and the 'Salustia Solivio Vda. de Javellana Memorial
Foundation;'
b) Directing the defendant to submit an inventory of the entire estate property,
including but not limited to, specific items already mentioned in this decision and to
render an accounting of the property of the estate, within thirty (30) days from receipt
of this judgment; one-half (1/2) of this produce shall belong to plaintiff;
c) Ordering defendant to pay plaintiff P5,000.00 as expenses of litigation; P10,000.00
for and as attorney's fees plus costs.
SO ORDERED. (pp. 42-43, Rollo)
This case involves the estate of the late novelist, Esteban Javellana, Jr., author of the first post-war
Filipino novel "Without Seeing the Dawn," who died a bachelor, without descendants, ascendants,
brothers, sisters, nephews or nieces. His only surviving relatives are: (1) his maternal aunt, petitioner
Celedonia Solivio, the spinster half-sister of his mother, Salustia Solivio; and (2) the private
respondent, Concordia Javellana-Villanueva, sister of his deceased father, Esteban Javellana, Sr.
He was a posthumous child. His father died barely ten (10) months after his marriage in December,
1916 to Salustia Solivio and four months before Esteban, Jr. was born.
Salustia and her sister, Celedonia (daughter of Engracio Solivio and his second wife Josefa
Fernandez), a teacher in the Iloilo Provincial High School, brought up Esteban, Jr.

Salustia brought to her marriage paraphernal properties (various parcels of land in Calinog, Iloilo
covered by 24 titles) which she had inherited from her mother, Gregoria Celo, Engracio Solivio's first
wife (p. 325, Record), but no conjugal property was acquired during her short-lived marriage to
Esteban, Sr.
On October 11, 1959, Salustia died, leaving all her properties to her only child, Esteban, Jr.,
including a house and lot in La Paz, Iloilo City, where she, her son, and her sister lived. In due time,
the titles of all these properties were transferred in the name of Esteban, Jr.
During his lifetime, Esteban, Jr. had, more than once, expressed to his aunt Celedonia and some
close friends his plan to place his estate in a foundation to honor his mother and to help poor but
deserving students obtain a college education. Unfortunately, he died of a heart attack on February
26,1977 without having set up the foundation.
Two weeks after his funeral, Concordia and Celedonia talked about what to do with Esteban's
properties. Celedonia told Concordia about Esteban's desire to place his estate in a foundation to be
named after his mother, from whom his properties came, for the purpose of helping indigent students
in their schooling. Concordia agreed to carry out the plan of the deceased. This fact was admitted by
her in her "Motion to Reopen and/or Reconsider the Order dated April 3, 1978" which she filed on
July 27, 1978 in Special Proceeding No. 2540, where she stated:
4. That petitioner knew all along the narrated facts in the immediately preceding
paragraph [that herein movant is also the relative of the deceased within the third
degree, she being the younger sister of the late Esteban Javellana, father of the
decedent herein], because prior to the filing of the petition they (petitioner Celedonia
Solivio and movant Concordia Javellana) have agreed to make the estate of the
decedent a foundation, besides they have closely known each other due to their
filiation to the decedent and they have been visiting each other's house which are not
far away for (sic) each other. (p. 234, Record; Emphasis supplied.)
Pursuant to their agreement that Celedonia would take care of the proceedings leading to the
formation of the foundation, Celedonia in good faith and upon the advice of her counsel, filed on
March 8, 1977 Spl. Proceeding No. 2540 for her appointment as special administratrix of the estate
of Esteban Javellana, Jr. (Exh. 2). Later, she filed an amended petition (Exh. 5) praying that letters of
administration be issued to her; that she be declared sole heir of the deceased; and that after
payment of all claims and rendition of inventory and accounting, the estate be adjudicated to her (p.
115, Rollo).
After due publication and hearing of her petition, as well as her amended petition, she was declared
sole heir of the estate of Esteban Javellana, Jr. She explained that this was done for three reasons:
(1) because the properties of the estate had come from her sister, Salustia Solivio; (2) that she is the
decedent's nearest relative on his mother's side; and (3) with her as sole heir, the disposition of the
properties of the estate to fund the foundation would be facilitated.
On April 3, 1978, the court (Branch II, CFI, now Branch 23, RTC) declared her the sole heir of
Esteban, Jr. Thereafter, she sold properties of the estate to pay the taxes and other obligations of
the deceased and proceeded to set up the "SALUSTIA SOLIVIO VDA. DE JAVELLANA
FOUNDATION" which she caused to be registered in the Securities and Exchange Commission on
July 17,1981 under Reg. No. 0100027 (p. 98, Rollo).
Four months later, or on August 7, 1978, Concordia Javellana Villanueva filed a motion for
reconsideration of the court's order declaring Celedonia as "sole heir" of Esteban, Jr., because she

too was an heir of the deceased. On October 27, 1978, her motion was denied by the court for
tardiness (pp. 80-81, Record). Instead of appealing the denial, Concordia filed on January 7, 1980
(or one year and two months later), Civil Case No. 13207 in the Regional Trial Court of Iloilo, Branch
26, entitled "Concordia Javellana- Villanueva v. Celedonia Solivio" for partition, recovery of
possession, ownership and damages.
On September 3, 1984, the said trial court rendered judgment in Civil Case No. 13207, in favor of
Concordia Javellana-Villanueva.
On Concordia's motion, the trial court ordered the execution of its judgment pending appeal and
required Celedonia to submit an inventory and accounting of the estate. In her motions for
reconsideration of those orders, Celedonia averred that the properties of the deceased had already
been transferred to, and were in the possession of, the 'Salustia Solivio Vda. de Javellana
Foundation." The trial court denied her motions for reconsideration.
In the meantime, Celedonia perfected an appeal to the Court of Appeals (CA GR CV No. 09010). On
January 26, 1988, the Court of Appeals, Eleventh Division, rendered judgment affirming the decision
of the trial court in toto.Hence, this petition for review wherein she raised the following legal issues:
1. whether Branch 26 of the RTC of Iloilo had jurisdiction to entertain Civil Case No.
13207 for partition and recovery of Concordia Villanueva's share of the estate of
Esteban Javellana, Jr. even while the probate proceedings (Spl. Proc. No. 2540)
were still pending in Branch 23 of the same court;
2. whether Concordia Villanueva was prevented from intervening in Spl. Proc. No.
2540 through extrinsic fraud;
3. whether the decedent's properties were subject to reserva troncal in favor of
Celedonia, his relative within the third degree on his mother's side from whom he had
inherited them; and
4. whether Concordia may recover her share of the estate after she had agreed to
place the same in the Salustia Solivio Vda. de Javellana Foundation, and
notwithstanding the fact that conformably with said agreement, the Foundation has
been formed and properties of the estate have already been transferred to it.
I. The question of jurisdiction
After a careful review of the records, we find merit in the petitioner's contention that the Regional
Trial Court, Branch 26, lacked jurisdiction to entertain Concordia Villanueva's action for partition and
recovery of her share of the estate of Esteban Javellana, Jr. while the probate proceedings (Spl,
Proc. No. 2540) for the settlement of said estate are still pending in Branch 23 of the same court,
there being as yet no orders for the submission and approval of the administratix's inventory and
accounting, distributing the residue of the estate to the heir, and terminating the proceedings (p. 31,
Record).
It is the order of distribution directing the delivery of the residue of the estate to the persons entitled
thereto that brings to a close the intestate proceedings, puts an end to the administration and thus
far relieves the administrator from his duties (Santiesteban v. Santiesteban, 68 Phil. 367, Philippine
Commercial and Industrial Bank v. Escolin, et al., L-27860, March 29, 1974, 56 SCRA 266).

The assailed order of Judge Adil in Spl. Proc. No. 2540 declaring Celedonia as the sole heir of the
estate of Esteban Javellana, Jr. did not toll the end of the proceedings. As a matter of fact, the last
paragraph of the order directed the administratrix to "hurry up the settlement of the estate." The
pertinent portions of the order are quoted below:
2. As regards the second incident [Motion for Declaration of Miss Celedonia Solivio
as Sole Heir, dated March 7, 1978], it appears from the record that despite the
notices posted and the publication of these proceedings as required by law, no other
heirs came out to interpose any opposition to the instant proceeding. It further
appears that herein Administratrix is the only claimant-heir to the estate of the late
Esteban Javellana who died on February 26, 1977.
During the hearing of the motion for declaration as heir on March 17, 1978, it was
established that the late Esteban Javellana died single, without any known issue, and
without any surviving parents. His nearest relative is the herein Administratrix, an
elder [sic] sister of his late mother who reared him and with whom he had always
been living with [sic] during his lifetime.
xxxxxxxxx
2. Miss Celedonia Solivio, Administratrix of this estate, is hereby declared as the sole
and legal heir of the late Esteban S. Javellana, who died intestate on February 26,
1977 at La Paz, Iloilo City.
The Administratrix is hereby instructed to hurry up with the settlement of this estate
so that it can be terminated. (pp, 14-16, Record)
In view of the pendency of the probate proceedings in Branch 11 of the Court of First Instance (now
RTC, Branch 23), Concordia's motion to set aside the order declaring Celedonia as sole heir of
Esteban, and to have herself (Concordia) declared as co-heir and recover her share of the
properties of the deceased, was properly filed by her in Spl. Proc. No. 2540. Her remedy when the
court denied her motion, was to elevate the denial to the Court of Appeals for review on certiorari.
However, instead of availing of that remedy, she filed more than one year later, a separate action for
the same purpose in Branch 26 of the court. We hold that the separate action was improperly filed
for it is the probate court that has exclusive jurisdiction to make a just and legal distribution of the
estate.
In the interest of orderly procedure and to avoid confusing and conflicting dispositions of a
decedent's estate, a court should not interfere with probate proceedings pending in a co-equal court.
Thus, did we rule in Guilas v. Judge of the Court of First Instance of Pampanga, L-26695, January
31, 1972, 43 SCRA 111, 117, where a daughter filed a separate action to annul a project of partition
executed between her and her father in the proceedings for the settlement of the estate of her
mother:
The probate court loses jurisdiction of an estate under administration only after the
payment of all the debts and the remaining estate delivered to the heirs entitled to
receive the same. The finality of the approval of the project of The probate court, in
the exercise of its jurisdiction to make distribution, has power to determine the
proportion or parts to which each distributed is entitled. ... The power to determine
the legality or illegality of the testamentary provision is inherent in the jurisdiction of
the court making a just and legal distribution of the inheritance. ... To hold that a
separate and independent action is necessary to that effect, would be contrary to the

general tendency of the jurisprudence of avoiding multiplicity of suits; and is further,

expensive, dilatory, and impractical. (Marcelino v. Antonio, 70 Phil. 388)
A judicial declaration that a certain person is the only heir of the decedent is
exclusively within the range of the administratrix proceedings and can not properly be
made an independent action. (Litam v. Espiritu, 100 Phil. 364)
A separate action for the declaration of heirs is not proper. (Pimentel v. Palanca, 5
Phil. 436)
partition by itself alone does not terminate the probate proceeding (Timbol v. Cano, 1
SCRA 1271, 1276, L-15445, April 29, 1961; Siguiong v. Tecson, 89 Phil. pp. 28, 30).
As long as the order of the distribution of the estate has not been complied with, the
probate proceedings cannot be deemed closed and terminated Siguiong v.
Tecson, supra); because a judicial partition is not final and conclusive and does not
prevent the heirs from bringing an action to obtain his share, provided the
prescriptive period therefore has not elapsed (Mari v. Bonilia, 83 Phil. 137). The
better practice, however, for the heir who has not received his share, is to demand
his share through a proper motion in the same probate or administration
proceedings, or for reopening of the probate or administrative proceedings if it had
already been closed, and not through an independent action,which would be tried by
another court or Judge which may thus reverse a decision or order of the probate or
intestate court already final and executed and re-shuffle properties long ago
distributed and disposed of. (Ramos v. Ortuzar, 89 Phil. 730, 741-742; Timbol v.
Cano, supra; Jingco v. Daluz, L-5107, April 24, 1953, 92 Phil. 1082; Roman Catholic
v. Agustines, L-14710, March 29, 1960, 107 Phil. 455, 460-461; Emphasis supplied)
In Litam et al., v. Rivera, 100 Phil. 364, where despite the pendency of the special proceedings for
the settlement of the intestate estate of the deceased Rafael Litam the plaintiffs-appellants filed a
civil action in which they claimed that they were the children by a previous marriage of the deceased
to a Chinese woman, hence, entitled to inherit his one-half share of the conjugal properties acquired
during his marriage to Marcosa Rivera, the trial court in the civil case declared that the plaintiffsappellants were not children of the deceased, that the properties in question were paraphernal
properties of his wife, Marcosa Rivera, and that the latter was his only heir. On appeal to this Court,
we ruled that "such declarations (that Marcosa Rivera was the only heir of the decedent) is improper,
in Civil Case No. 2071, it being within the exclusive competence of the court in Special Proceedings
No. 1537, in which it is not as yet, in issue, and, will not be, ordinarily, in issue until the presentation
of the project of partition. (p. 378).
However, in the Guilas case, supra, since the estate proceedings had been closed and terminated
for over three years, the action for annulment of the project of partition was allowed to continue.
Considering that in the instant case, the estate proceedings are still pending, but nonetheless,
Concordia had lost her right to have herself declared as co-heir in said proceedings, We have opted
likewise to proceed to discuss the merits of her claim in the interest of justice.
The orders of the Regional Trial Court, Branch 26, in Civil Case No. 13207 setting aside the probate
proceedings in Branch 23 (formerly Branch 11) on the ground of extrinsic fraud, and declaring
Concordia Villanueva to be a co-heir of Celedonia to the estate of Esteban, Jr., ordering the partition
of the estate, and requiring the administratrix, Celedonia, to submit an inventory and accounting of
the estate, were improper and officious, to say the least, for these matters he within the exclusive
competence of the probate court.

II. The question of extrinsic fraud

Was Concordia prevented from intervening in the intestate proceedings by extrinsic fraud employed
by Celedonia? It is noteworthy that extrinsic fraud was not alleged in Concordia's original complaint
in Civil Case No. 13207. It was only in her amended complaint of March 6, 1980, that extrinsic fraud
was alleged for the first time.
Extrinsic fraud, as a ground for annulment of judgment, is any act or conduct of the
prevailing party which prevented a fair submission of the controversy (Francisco v.
David, 38 O.G. 714). A fraud 'which prevents a party from having a trial or presenting
all of his case to the court, or one which operates upon matters pertaining, not to the
judgment itself, but to the manner by which such judgment was procured so much so
that there was no fair submission of the controversy. For instance, if through
fraudulent machination by one [his adversary], a litigant was induced to withdraw his
defense or was prevented from presenting an available defense or cause of action in
the case wherein the judgment was obtained, such that the aggrieved party was
deprived of his day in court through no fault of his own, the equitable relief against
such judgment may be availed of. (Yatco v. Sumagui, 44623-R, July 31, 1971). (cited
in Philippine Law Dictionary, 1972 Ed. by Moreno; Varela v. Villanueva, et al., 96 Phil.
248)
A judgment may be annulled on the ground of extrinsic or collateral fraud, as
distinguished from intrinsic fraud, which connotes any fraudulent scheme executed
by a prevailing litigant 'outside the trial of a case against the defeated party, or his
agents, attorneys or witnesses, whereby said defeated party is prevented from
presenting fully and fairly his side of the case. ... The overriding consideration is that
the fraudulent scheme of the prevailing litigant prevented a party from having his day
in court or from presenting his case. The fraud, therefore, is one that affects and
goes into the jurisdiction of the court. (Libudan v. Gil, L-21163, May 17, 1972, 45
SCRA 17, 27-29; Sterling Investment Corp. v. Ruiz, L-30694, October 31, 1969, 30
SCRA 318, 323)
The charge of extrinsic fraud is, however, unwarranted for the following reasons:
1. Concordia was not unaware of the special proceeding intended to be filed by
Celedonia. She admitted in her complaint that she and Celedonia had agreed that
the latter would "initiate the necessary proceeding" and pay the taxes and obligations
of the estate. Thus paragraph 6 of her complaint alleged:
6. ... for the purpose of facilitating the settlement of the estate of the late Esteban
Javellana, Jr. at the lowest possible cost and the least effort, the plaintiff and the
defendant agreed that the defendant shall initiate the necessary proceeding, cause
the payment of taxes and other obligations, and to do everything else required by
law, and thereafter, secure the partition of the estate between her and the plaintiff,
[although Celedonia denied that they agreed to partition the estate, for their
agreement was to place the estate in a foundation.] (p. 2, Record; emphasis
supplied)
Evidently, Concordia was not prevented from intervening in the proceedings. She stayed away by
choice.Besides, she knew that the estate came exclusively from Esteban's mother, Salustia Solivio,
and she had agreed with Celedonia to place it in a foundation as the deceased had planned to do.

2. The probate proceedings are proceedings in rem. Notice of the time and place of
hearing of the petition is required to be published (Sec. 3, Rule 76 in relation to Sec.
3, Rule 79, Rules of Court). Notice of the hearing of Celedonia's original petition was
published in the "Visayan Tribune" on April 25, May 2 and 9, 1977 (Exh 4, p. 197,
Record). Similarly, notice of the hearing of her amended petition of May 26, 1977 for
the settlement of the estate was, by order of the court, published in "Bagong
Kasanag" (New Light) issues of May 27, June 3 and 10, 1977 (pp. 182-305, Record).
The publication of the notice of the proceedings was constructive notice to the whole
world. Concordia was not deprived of her right to intervene in the proceedings for she
had actual, as well as constructive notice of the same. As pointed out by the probate
court in its order of October 27, 1978:
... . The move of Concordia Javellana, however, was filed about five months after
Celedonia Solivio was declared as the sole heir. ... .
Considering that this proceeding is one in rem and had been duly published as
required by law, despite which the present movant only came to court now, then she
is guilty of laches for sleeping on her alleged right. (p. 22, Record)
The court noted that Concordia's motion did not comply with the requisites of a petition for relief from
judgment nor a motion for new trial.
The rule is stated in 49 Corpus Juris Secundum 8030 as follows:
Where petition was sufficient to invoke statutory jurisdiction of probate court
and proceeding was in rem no subsequent errors or irregularities are available on
collateral attack. (Bedwell v. Dean 132 So. 20)
Celedonia's allegation in her petition that she was the sole heir of Esteban within the third degree on
his mother's side was not false. Moreover, it was made in good faith and in the honest belief that
because the properties of Esteban had come from his mother, not his father, she, as Esteban's
nearest surviving relative on his mother's side, is the rightful heir to them. It would have been selfdefeating and inconsistent with her claim of sole heirshipif she stated in her petition that Concordia
was her co-heir. Her omission to so state did not constitute extrinsic fraud.
Failure to disclose to the adversary, or to the court, matters which would defeat one's
own claim or defense is not such extrinsic fraud as will justify or require vacation of
the judgment. (49 C.J.S. 489, citing Young v. Young, 2 SE 2d 622; First National
Bank & Trust Co. of King City v. Bowman, 15 SW 2d 842; Price v. Smith, 109 SW 2d
1144, 1149)
It should be remembered that a petition for administration of a decedent's estate may be filed by any
"interested person" (Sec. 2, Rule 79, Rules of Court). The filing of Celedonia's petition did not
preclude Concordia from filing her own.
III. On the question of reserva troncal
We find no merit in the petitioner's argument that the estate of the deceased was subject to reserva
troncal and that it pertains to her as his only relative within the third degree on his mother's side.
The reserva troncalprovision of the Civil Code is found in Article 891 which reads as follows:

ART. 891. The ascendant who inherits from his descendant any property which the
latter may have acquired by gratuitous title from another ascendant, or a brother or
sister, is obliged to reserve such property as he may have acquired by operation of
law for the benefit of relatives who are within the third degree and who belong to the
line from which said property came.
The persons involved in reserva troncal are:
1. The person obliged to reserve is the reservor (reservista)the ascendant who
inherits by operation of law property from his descendants.
2. The persons for whom the property is reserved are the reservees (reservatarios)
relatives within the third degree counted from the descendant (propositus), and
belonging to the line from which the property came.
3. The propositusthe descendant who received by gratuitous title and died without
issue, making his other ascendant inherit by operation of law. (p. 692, Civil Law by
Padilla, Vol. II, 1956 Ed.)
Clearly, the property of the deceased, Esteban Javellana, Jr., is not reservable property, for Esteban,
Jr. was not an ascendant, but the descendant of his mother, Salustia Solivio, from whom he inherited
the properties in question. Therefore, he did not hold his inheritance subject to a reservation in favor
of his aunt, Celedonia Solivio, who is his relative within the third degree on his mother's side.
The reserva troncal applies to properties inherited by an ascendant from a descendant who inherited
it from another ascendant or 9 brother or sister. It does not apply to property inherited by a
descendant from his ascendant, the reverse of the situation covered by Article 891.
Since the deceased, Esteban Javellana, Jr., died without descendants, ascendants, illegitimate
children, surviving spouse, brothers, sisters, nephews or nieces, what should apply in the distribution
of his estate are Articles 1003 and 1009 of the Civil Code which provide:
ART. 1003. If there are no descendants, ascendants, illegitimate children, or a
surviving spouse, the collateral relatives shall succeed to the entire estate of the
deceased in accordance with the following articles.
ART. 1009. Should there be neither brothers nor sisters, nor children of brothers or
sisters, the other collateral relatives shall succeed to the estate.
The latter shall succeed without distinction of lines or preference among them by
reason of relationship by the whole blood.
Therefore, the Court of Appeals correctly held that:
Both plaintiff-appellee and defendant-appellant being relatives of the decedent within
the third degree in the collateral line, each, therefore, shall succeed to the subject
estate 'without distinction of line or preference among them by reason of relationship
by the whole blood,' and is entitled one-half (1/2) share and share alike of the estate.
(p. 57, Rollo)
IV. The question of Concordia's one-half share

However, inasmuch as Concordia had agreed to deliver the estate of the deceased to the foundation
in honor of his mother, Salustia Solivio Vda. de Javellana (from whom the estate came), an
agreement which she ratified and confirmed in her "Motion to Reopen and/or Reconsider Order
dated April 3, 1978" which she filed in Spl. Proceeding No. 2540:
4. That ... prior to the filing of the petition they (petitioner Celedonia Solivio and
movant Concordia Javellana) have agreed to make the estate of the decedent a
foundation, besides they have closely known each other due to their filiation to the
decedent and they have been visiting each other's house which are not far away for
(sic) each other. (p. 234, Record; Emphasis supplied)
she is bound by that agreement. It is true that by that agreement, she did not waive her inheritance
in favor of Celedonia, but she did agree to place all of Esteban's estate in the "Salustia Solivio Vda.
de Javellana Foundation" which Esteban, Jr., during his lifetime, planned to set up to honor his
mother and to finance the education of indigent but deserving students as well.
Her admission may not be taken lightly as the lower court did. Being a judicial admission, it is
conclusive and no evidence need be presented to prove the agreement (Cunanan v. Amparo, 80
Phil. 227; Granada v. Philippine National Bank, L-20745, Sept. 2, 1966, 18 SCRA 1; Sta. Ana v.
Maliwat, L-23023, Aug. 31, 1968, 24 SCRA 1018; People v. Encipido, G.R.70091, Dec. 29, 1986,
146 SCRA 478; and Rodillas v. Sandiganbayan, G.R. 58652, May 20, 1988, 161 SCRA 347).
The admission was never withdrawn or impugned by Concordia who, significantly, did not even
testify in the case, although she could have done so by deposition if she were supposedly
indisposed to attend the trial. Only her husband, Narciso, and son-in-law, Juanito Domin, actively
participated in the trial. Her husband confirmed the agreement between his wife and Celedonia, but
he endeavored to dilute it by alleging that his wife did not intend to give all, but only one-half, of her
share to the foundation (p. 323, Record).
The records show that the "Salustia Solivio Vda. de Javellana Foundation" was established and duly
registered in the Securities and Exchange Commission under Reg. No. 0100027 for the following
principal purposes:
1. To provide for the establishment and/or setting up of scholarships for such
deserving students as the Board of Trustees of the Foundation may decide of at least
one scholar each to study at West Visayas State College, and the University of the
Philippines in the Visayas both located in Iloilo City.
2. To provide a scholarship for at least one scholar for St. Clements Redemptorist
Community for a deserving student who has the religious vocation to become a
priest.
3. To foster, develop, and encourage activities that will promote the advancement
and enrichment of the various fields of educational endeavors, especially in literary
arts. Scholarships provided for by this foundation may be named after its benevolent
benefactors as a token of gratitude for their contributions.
4. To direct or undertake surveys and studies in the community to determine
community needs and be able to alleviate partially or totally said needs.

5. To maintain and provide the necessary activities for the proper care of the SolivioJavellana mausoleum at Christ the King Memorial Park, Jaro, Iloilo City, and the
Javellana Memorial at the West Visayas State College, as a token of appreciation for
the contribution of the estate of the late Esteban S. Javellana which has made this
foundation possible. Also, in perpetuation of his Roman Catholic beliefs and those of
his mother, Gregorian masses or their equivalents will be offered every February and
October, and Requiem masses every February 25th and October llth, their death
anniversaries, as part of this provision.
6. To receive gifts, legacies, donations, contributions, endowments and financial aids
or loans from whatever source, to invest and reinvest the funds, collect the income
thereof and pay or apply only the income or such part thereof as shall be determined
by the Trustees for such endeavors as may be necessary to carry out the objectives
of the Foundation.
7. To acquire, purchase, own, hold, operate, develop, lease, mortgage, pledge,
exchange, sell, transfer, or otherwise, invest, trade, or deal, in any manner permitted
by law, in real and personal property of every kind and description or any interest
herein.
8. To do and perform all acts and things necessary, suitable or proper for the
accomplishments of any of the purposes herein enumerated or which shall at any
time appear conducive to the protection or benefit of the corporation, including the
exercise of the powers, authorities and attributes concerned upon the corporation
organized under the laws of the Philippines in general, and upon domestic
corporation of like nature in particular. (pp. 9-10, Rollo)
As alleged without contradiction in the petition' for review:
The Foundation began to function in June, 1982, and three (3) of its eight Esteban
Javellana scholars graduated in 1986, one (1) from UPV graduated Cum Laude and
two (2) from WVSU graduated with honors; one was a Cum Laude and the other was
a recipient of Lagos Lopez award for teaching for being the most outstanding student
teacher.
The Foundation has four (4) high school scholars in Guiso Barangay High School,
the site of which was donated by the Foundation. The School has been selected as
the Pilot Barangay High School for Region VI.
The Foundation has a special scholar, Fr. Elbert Vasquez, who would be ordained
this year. He studied at St. Francis Xavier Major Regional Seminary at Davao City.
The Foundation likewise is a member of the Redemptorist Association that gives
yearly donations to help poor students who want to become Redemptorist priests or
brothers. It gives yearly awards for Creative writing known as the Esteban Javellana
Award.
Further, the Foundation had constructed the Esteban S. Javellana Multi-purpose
Center at the West Visayas State University for teachers' and students' use, and has
likewise contributed to religious civic and cultural fund-raising drives, amongst
other's. (p. 10, Rollo)

Having agreed to contribute her share of the decedent's estate to the Foundation, Concordia is
obligated to honor her commitment as Celedonia has honored hers.
WHEREFORE, the petition for review is granted. The decision of the trial court and the Court of
Appeals are hereby SET ASIDE. Concordia J. Villanueva is declared an heir of the late Esteban
Javellana, Jr. entitled to one-half of his estate. However, comformably with the agreement between
her and her co-heir, Celedonia Solivio, the entire estate of the deceased should be conveyed to the
"Salustia Solivio Vda. de Javallana Foundation," of which both the petitioner and the private
respondent shall be trustees, and each shall be entitled to nominate an equal number of trustees to
constitute the Board of Trustees of the Foundation which shall administer the same for the purposes
set forth in its charter. The petitioner, as administratrix of the estate, shall submit to the probate court
an inventory and accounting of the estate of the deceased preparatory to terminating the
proceedings therein.
SO ORDERED.

FRANCISCO I. CHAVEZ, petitioner, vs. PUBLIC ESTATES AUTHORITY

and
AMARI
COASTAL
BAY
DEVELOPMENT
CORPORATION, respondents.
RESOLUTION
CARPIO, J.:

For resolution of the Court are the following motions: (1) Motion to Inhibit
and for Re-Deliberation filed by respondent Amari Coastal Bay Development
Corporation (Amari for brevity) on September 13, 2002; (2) Motion to Set
Case for Hearing on Oral Argument filed by Amari on August 20, 2002; (3)
Motion for Reconsideration and Supplement to Motion for Reconsideration
filed by Amari on July 26, 2002 and August 20, 2002, respectively; (4) Motion
for Reconsideration and Supplement to Motion for Reconsideration filed by
respondent Public Estates Authority (PEA for brevity) on July 26, 2002 and
August 8, 2002, respectively; and (5) Motion for Reconsideration and/or
Clarification filed by the Office of the Solicitor General on July 25, 2002.
Petitioner Francisco I. Chavez filed on November 13, 2002 his Consolidated
Opposition to the main and supplemental motions for reconsideration.
To recall, the Courts decision of July 9, 2002 (Decision for brevity) on the
instant case states in its summary:
We can now summarize our conclusions as follows:
1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now
covered by certificates of title in the name of PEA, are alienable lands of the
public domain. PEA may lease these lands to private corporations but may not sell
or transfer ownership of these lands to private corporations. PEA may only sell
these lands to Philippine citizens, subject to the ownership limitations in the 1987
Constitution and existing laws.
2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural
resources of the public domain until classified as alienable or disposable lands open
to disposition and declared no longer needed for public service. The government
can make such classification and declaration only after PEA has reclaimed these
submerged areas. Only then can these lands qualify as agricultural lands of the
public domain, which are the only natural resources the government can alienate. In
their present state, the 592.15 hectares of submerged areas are inalienable and
outside the commerce of man.
3. Since the Amended JVA seeks to transfer to AMARI, a private corporation,
ownership of 77.34 hectares of the Freedom Islands, such transfer is void for being
contrary to Section 3, Article XII of the 1987 Constitution which prohibits private
corporations from acquiring any kind of alienable land of the public domain.

4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156
hectares of still submerged areas of Manila Bay, such transfer is void for being
contrary to Section 2, Article XII of the 1987 Constitution which prohibits the
alienation of natural resources other than agricultural lands of the public domain.
PEA may reclaim these submerged areas. Thereafter, the government can classify
the reclaimed lands as alienable or disposable, and further declare them no longer
needed for public service. Still, the transfer of such reclaimed alienable lands of the
public domain to AMARI will be void in view of Section 3, Article XII of the 1987
Constitution which prohibits private corporations from acquiring any kind of alienable
land of the public domain.

Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987
Constitution. Under Article 1409 of the Civil Code, contracts whose object or purpose
is contrary to law, or whose object is outside the commerce of men, are inexistent and
void from the beginning. The Court must perform its duty to defend and uphold the
Constitution, and therefore declares the Amended JVA null and void ab initio.
Amari seeks the inhibition of Justice Antonio T. Carpio, ponente of the
Decision, on the ground that Justice Carpio, before his appointment to the
Court, wrote in his Manila Times column of July 1, 1997, I have always
maintained that the law requires the public bidding of reclamation projects.
Justice Carpio, then a private law practitioner, also stated in the same column,
The Amari-PEA reclamation contract is legally flawed because it was not bid
out by the PEA. Amari claims that because of these statements Justice Carpio
should inhibit himself on the grounds of bias and prejudgment and that the
instant case should be re-deliberated after being assigned to a new ponente.
The motion to inhibit Justice Carpio must be denied for three
reasons. First, the motion to inhibit came after Justice Carpio had already
rendered his opinion on the merits of the case. The rule is that a motion to
inhibit must be denied if filed after a member of the Court had already given
an opinion on the merits of the case,[1] the rationale being that a litigant cannot
be permitted to speculate upon the action of the Court xxx (only to) raise an
objection of this sort after a decision has been rendered. Second, as can be
readily gleaned from the summary of the Decision quoted above, the absence
of public bidding is not one of the ratio decidendi of the Decision which is
anchored on violation of specific provisions of the Constitution. The absence
of public bidding was not raised as an issue by the parties. The absence of
public bidding was mentioned in the Decision only to complete the discussion
on the law affecting reclamation contracts for the guidance of public officials.
At any rate, the Office of the Solicitor General in its Motion for
Reconsideration concedes that the absence of public bidding in the
disposition of the Freedom Islands rendered the Amended JVA null and void.
[2]
Third, judges and justices are not disqualified from participating in a case

just because they have written legal articles on the law involved in the case.
As stated by the Court in Republic v. Cocofed,[3] The mere fact that, as a former columnist, Justice Carpio has written on the coconut
levy will not disqualify him, in the same manner that jurists will not be disqualified
just because they may have given their opinions as textbook writers on the question
involved in a case.
Besides, the subject and title of the column in question was The CCP
reclamation project and the column referred to the Amari-PEA contract only in
passing in one sentence.
Amaris motion to set the case for oral argument must also be denied since
the pleadings of the parties have discussed exhaustively the issues involved
in the case.
The motions for reconsideration reiterate mainly the arguments already
discussed in the Decision. We shall consider in this Resolution only the new
arguments raised by respondents.
In its Supplement to Motion for Reconsideration, Amari argues that the
Decision should be made to apply prospectively, not retroactively to cover the
Amended JVA. Amari argues that the existence of a statute or executive order
prior to its being adjudged void is an operative fact to which legal
consequences are attached, citing De Agbayani v. PNB,[4] thus:
x x x. It does not admit of doubt that prior to the declaration of nullity such challenged
legislative or executive act must have been in force and had to be complied with. This
is so as until after the judiciary, in an appropriate case, declares its invalidity, it is
entitled to obedience and respect. Parties may have acted under it and may have
changed their positions. What could be more fitting than that in a subsequent litigation
regard be had to what has been done while such legislative or executive act was in
operation and presumed to be valid in all respects. It is now accepted as a doctrine that
prior to its being nullified, its existence as a fact must be reckoned with. This is
merely to reflect awareness that precisely because the judiciary is the governmental
organ which has the final say on whether or not a legislative or executive measure is
valid, a period of time may have elapsed before it can exercise the power of judicial
review that may lead to a declaration of nullity. It would be to deprive the law of its
quality of fairness and justice then, if there be no recognition of what had transpired
prior to such adjudication.
In the language of an American Supreme Court decision: "The actual existence of a
statute, prior to such a determination [of unconstitutionality], is an operative fact and

may have consequences which cannot justly be ignored. The past cannot always be
erased by a new judicial declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects, - with respect to particular
relations, individual and corporate, and particular conduct, private and official." This
language has been quoted with approval in a resolution in Araneta v. Hill and the
decision in Manila Motor Co., Inc. v. Flores. x x x.
xxx
x x x That before the decision they were not constitutionally infirm was admitted
expressly. There is all the more reason then to yield assent to the now prevailing
principle that the existence of a statute or executive order prior to its being adjudged
void is an operative fact to which legal consequences are attached.
Amari now claims that assuming arguendo that Presidential Decree Nos. 1084
and 1085, and Executive Order Nos. 525 and 654 are inconsistent with the
1987 Constitution, the limitation imposed by the Decision on these decrees
and executive orders should only be applied prospectively from the finality of
the Decision.
Amari likewise asserts that a new doctrine of the Court cannot operate
retroactively if it impairs vested rights. Amari maintains that the new doctrine
embodied in the Decision cannot apply retroactively on those who relied on
the old doctrine in good faith, citing Spouses Benzonan v. Court of Appeals,
[5]
thus:
At that time, the prevailing jurisprudence interpreting section 119 of R.A. 141 as
amended was that enunciated in Monge and Tupas cited above. The petitioners
Benzonan and respondent Pe and the DBP are bound by these decisions for pursuant
to Article 8 of the Civil Code "judicial decisions applying or interpreting the laws or
the Constitution shall form a part of the legal system of the Philippines." But while
our decisions form part of the law of the land, they are also subject to Article 4 of the
Civil Code which provides that "laws shall have no retroactive effect unless the
contrary is provided." This is expressed in the familiar legal maxim lex prospicit, non
respicit, the law looks forward not backward. The rationale against retroactivity is
easy to perceive. The retroactive application of a law usually divests rights that have
already become vested or impairs the obligations of contract and hence, is
unconstitutional (Francisco v. Certeza, 3 SCRA 565 [1961]).
The same consideration underlies our rulings giving only prospective effect to
decisions enunciating new doctrines. Thus, we emphasized in People v. Jabinal, 55
SCRA 607 [1974] "x x x when a doctrine of this Court is overruled and a different

view is adopted, the new doctrine should be applied prospectively and should not
apply to parties who had relied on the old doctrine and acted on the faith thereof.
There may be special cases where weighty considerations of equity and social justice
will warrant a retroactive application of doctrine to temper the harshness of statutory
law as it applies to poor farmers or their widows and orphans. In the present petitions,
however, we find no such equitable considerations. Not only did the private
respondent apply for free agricultural land when he did not need it and he had no
intentions of applying it to the noble purposes behind the law, he would now
repurchase for only P327,995.00, the property purchased by the petitioners in good
faith for P1,650,000.00 in 1979 and which, because of improvements and the
appreciating value of land must be worth more than that amount now.
The buyers in good faith from DBP had a right to rely on our rulings
in Monge and Tupas when they purchased the property from DBP in 1979 or thirteen
(13) years ago. Under the rulings in these two cases, the period to repurchase the
disputed lot given to respondent Pe expired on June 18, 1982. He failed to exercise his
right. His lost right cannot be revived by relying on the 1988 case of Belisario. The
right of petitioners over the subject lot had already become vested as of that time and
cannot be impaired by the retroactive application of the Belisario ruling.
Amaris reliance on De Agbayani and Spouses Benzonan is misplaced.
These cases would apply if the prevailing law or doctrine at the time of the
signing of the Amended JVA was that a private corporation could acquire
alienable lands of the public domain, and the Decision annulled the law or
reversed this doctrine. Obviously, this is not the case here.
Under the 1935 Constitution, private corporations were allowed to acquire
alienable lands of the public domain. But since the effectivity of the 1973
Constitution, private corporations were banned from holding, except by lease,
alienable lands of the public domain. The 1987 Constitution continued this
constitutional prohibition. The prevailing law before, during and after the
signing of the Amended JVA is that private corporations cannot hold, except
by lease, alienable lands of the public domain. The Decision has not annulled
or in any way changed the law on this matter. The Decision, whether made
retroactive or not, does not change the law since the Decision merely
reiterates the law that prevailed since the effectivity of the 1973 Constitution.
Thus, De Agbayani, which refers to a law that is invalidated by a decision of
the Court, has no application to the instant case.
Likewise, Spouses Benzonan is inapplicable because it refers to a
doctrine of the Court that is overruled by a subsequent decision which adopts
a new doctrine. In the instant case, there is no previous doctrine that is

overruled by the Decision. Since the case of Manila Electric Company v.

Judge Castro-Bartolome,[6] decided on June 29, 1982, the Court has applied
consistently the constitutional provision that private corporations cannot hold,
except by lease, alienable lands of the public domain. The Court reiterated
this in numerous cases, and the only dispute in the application of this
constitutional provision is whether the land in question had already become
private property before the effectivity of the 1973 Constitution. [7] If the land was
already private land before the 1973 Constitution because the corporation had
possessed it openly, continuously, exclusively and adversely for at least thirty
years since June 12, 1945 or earlier, then the corporation could apply for
judicial confirmation of its imperfect title. But if the land remained public land
upon the effectivity of the 1973 Constitution, then the corporation could never
hold, except by lease, such public land. Indisputably, the Decision does not
overrule any previous doctrine of the Court.
The prevailing doctrine before, during and after the signing of the
Amended JVA is that private corporations cannot hold, except by lease,
alienable lands of the public domain. This is one of the two main reasons why
the Decision annulled the Amended JVA. The other main reason is that
submerged areas of Manila Bay, being part of the sea, are inalienable and
beyond the commerce of man, a doctrine that has remained immutable since
the Spanish Law on Waters of 1886. Clearly, the Decision merely reiterates,
and does not overrule, any existing judicial doctrine.
Even on the characterization of foreshore lands reclaimed by the
government, the Decision does not overrule existing law or doctrine. Since the
adoption of the Regalian doctrine in this jurisdiction, the sea and its foreshore
areas have always been part of the public domain. And since the enactment of
Act No. 1654 on May 18, 1907 until the effectivity of the 1973 Constitution,
statutory law never allowed foreshore lands reclaimed by the government to
be sold to private corporations. The 1973 and 1987 Constitution enshrined
and expanded the ban to include any alienable land of the public domain.
There are, of course, decisions of the Court which, while recognizing a
violation of the law or Constitution, hold that the sale or transfer of the land
may no longer be invalidated because of weighty considerations of equity and
social justice.[8] The invalidation of the sale or transfer may also be superfluous
if the purpose of the statutory or constitutional ban has been achieved. But
none of these cases apply to Amari.
Thus, the Court has ruled consistently that where a Filipino citizen sells
land to an alien who later sells the land to a Filipino, the invalidity of the first
transfer is corrected by the subsequent sale to a citizen. [9] Similarly, where the

alien who buys the land subsequently acquires Philippine citizenship, the sale
is validated since the purpose of the constitutional ban to limit land ownership
to Filipinos has been achieved.[10] In short, the law disregards the constitutional
disqualification of the buyer to hold land if the land is subsequently transferred
to a qualified party, or the buyer himself becomes a qualified party. In the
instant case, however, Amari has not transferred the Freedom Islands, or any
portion of it, to any qualified party. In fact, Amari admits that title to the
Freedom Islands still remains with PEA.[11]
The Court has also ruled consistently that a sale or transfer of the land
may no longer be questioned under the principle of res judicata, provided the
requisites for res judicata are present.[12] Under this principle, the courts and
the parties are bound by a prior final decision, otherwise there will be no end
to litigation. As the Court declared in Toledo-Banaga v. Court of Appeals,
[13]
once a judgement has become final and executory, it can no longer be
disturbed no matter how erroneous it may be. In the instant case, there is no
prior final decision adjudicating the Freedom Islands to Amari.
There are, moreover, special circumstances that disqualify Amari from
invoking equity principles. Amari cannot claim good faith because even before
Amari signed the Amended JVA on March 30, 1999, petitioner had already
filed the instant case on April 27, 1998 questioning precisely the qualification
of Amari to acquire the Freedom Islands. Even before the filing of this petition,
two Senate Committees[14] had already approved on September 16, 1997
Senate Committee Report No. 560. This Report concluded, after a wellpublicized investigation into PEAs sale of the Freedom Islands to Amari, that
the Freedom Islands are inalienable lands of the public domain. Thus, Amari
signed the Amended JVA knowing and assuming all the attendant risks,
including the annulment of the Amended JVA.
Amari has also not paid to PEA the full reimbursement cost incurred by
PEA in reclaiming the Freedom Islands. Amari states that it has paid PEA
only P300,000,000.00[15] out of the P1,894,129,200.00 total reimbursement
cost agreed upon in the Amended JVA. Moreover, Amari does not claim to
have even initiated the reclamation of the 592.15 hectares of submerged
areas covered in the Amended JVA, or to have started to construct any
permanent infrastructure on the Freedom Islands. In short, Amari does not
claim to have introduced any physical improvement or development on the
reclamation project that is the subject of the Amended JVA. And yet Amari
claims that it had already spent a whopping P9,876,108,638.00 as its total
development cost as of June 30, 2002.[16] Amari does not explain how it spent
the rest of the P9,876,108,638.00 total project cost after paying

PEA P300,000,000.00. Certainly, Amari cannot claim to be an innocent

purchaser in good faith and for value.
In its Supplement to Motion for Reconsideration, PEA claims that it is
similarly situated as the Bases Conversion Development Authority (BCDA)
which under R.A. No. 7227 is tasked to sell portions of the Metro Manila
military camps and other military reservations. PEAs comparison is incorrect.
The Decision states as follows:
As the central implementing agency tasked to undertake reclamation projects
nationwide, with authority to sell reclaimed lands, PEA took the place of DENR as the
government agency charged with leasing or selling reclaimed lands of the public
domain. The reclaimed lands being leased or sold by PEA are not private lands, in the
same manner that DENR, when it disposes of other alienable lands, does not dispose
of private lands but alienable lands of the public domain. Only when qualified private
parties acquire these lands will the lands become private lands. In the hands of the
government agency tasked and authorized to dispose of alienable or disposable
lands of the public domain, these lands are still public, not private lands.
PEA is the central implementing agency tasked to undertake
reclamation projects nationwide. PEA took the place of Department of
Environment and Natural Resources (DENR for brevity) as the government
agency charged with leasing or selling all reclaimed lands of the public
domain. In the hands of PEA, which took over the leasing and selling
functions of DENR, reclaimed foreshore lands are public lands in the
same manner that these same lands would have been public lands in the
hands of DENR. BCDA is an entirely different government entity. BCDA is
authorized by law to sell specific government lands that have long been
declared by presidential proclamations as military reservations for use by the
different services of the armed forces under the Department of National
Defense. BCDAs mandate is specific and limited in area, while PEAs mandate
is general and national. BCDA holds government lands that have been
granted to end-user government entities the military services of the armed
forces. In contrast, under Executive Order No. 525, PEA holds the reclaimed
public lands, not as an end-user entity, but as the government agency
primarily responsible for integrating, directing, and coordinating all reclamation
projects for and on behalf of the National Government.
In Laurel v. Garcia,[17] cited in the Decision, the Court ruled that land
devoted to public use by the Department of Foreign Affairs, when no longer
needed for public use, may be declared patrimonial property for sale to private
parties provided there is a law authorizing such act. Well-settled is the

doctrine that public land granted to an end-user government agency for a

specific public use may subsequently be withdrawn by Congress from public
use and declared patrimonial property to be sold to private parties. R.A. No.
7227 creating the BCDA is a law that declares specific military reservations no
longer needed for defense or military purposes and reclassifies such lands as
patrimonial property for sale to private parties.
Government owned lands, as long they are patrimonial property, can be
sold to private parties, whether Filipino citizens or qualified private
corporations. Thus, the so-called Friar Lands acquired by the government
under Act No. 1120 are patrimonial property[18] which even private corporations
can acquire by purchase. Likewise, reclaimed alienable lands of the public
domain if sold or transferred to a public or municipal corporation for a
monetary consideration become patrimonial property in the hands of the
public or municipal corporation. Once converted to patrimonial property, the
land may be sold by the public or municipal corporation to private parties,
whether Filipino citizens or qualified private corporations.
We reiterate what we stated in the Decision is the rationale for treating
PEA in the same manner as DENR with respect to reclaimed foreshore lands,
thus:
To allow vast areas of reclaimed lands of the public domain to be transferred to PEA
as private lands will sanction a gross violation of the constitutional ban on private
corporations from acquiring any kind of alienable land of the public domain. PEA will
simply turn around, as PEA has now done under the Amended JVA, and transfer
several hundreds of hectares of these reclaimed and still to be reclaimed lands to a
single private corporation in only one transaction. This scheme will effectively nullify
the constitutional ban in Section 3, Article XII of the 1987 Constitution which was
intended to diffuse equitably the ownership of alienable lands of the public domain
among Filipinos, now numbering over 80 million strong.
This scheme, if allowed, can even be applied to alienable agricultural lands of the
public domain since PEA can acquire x x x any and all kinds of lands. This will open
the floodgates to corporations and even individuals acquiring hundreds, if not
thousands, of hectares of alienable lands of the public domain under the guise that in
the hands of PEA these lands are private lands. This will result in corporations
amassing huge landholdings never before seen in this country - creating the very evil
that the constitutional ban was designed to prevent. This will completely reverse the
clear direction of constitutional development in this country. The 1935 Constitution
allowed private corporations to acquire not more than 1,024 hectares of public lands.
The 1973 Constitution prohibited private corporations from acquiring any kind of
public land, and the 1987 Constitution has unequivocally reiterated this prohibition.

Finally, the Office of the Solicitor General and PEA argue that the cost of
reclaiming deeply submerged areas is enormous and it would be difficult for
PEA to accomplish such project without the participation of private
corporations.[19] The Decision does not bar private corporations from
participating in reclamation projects and being paid for their services in
reclaiming lands. What the Decision prohibits, following the explicit
constitutional mandate, is for private corporations to acquire reclaimed lands
of the public domain. There is no prohibition on the directors, officers and
stockholders of private corporations, if they are Filipino citizens, from
acquiring at public auction reclaimed alienable lands of the public domain.
They can acquire not more than 12 hectares per individual, and the land thus
acquired becomes private land.
Despite the nullity of the Amended JVA, Amari is not precluded from
recovering from PEA in the proper proceedings, on a quantum meruit basis,
whatever Amari may have incurred in implementing the Amended JVA prior to
its declaration of nullity.
WHEREFORE, finding the Motions for Reconsideration to be without
merit, the same are hereby DENIED with FINALITY. The Motion to Inhibit and
for Re-Deliberation and the Motion to Set Case for Hearing on Oral Argument
are likewise DENIED.
SO ORDERED.