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FIRST DIVISION

[G.R. No. 31860. October 16, 1930.]

In the matter of the Estate of Charles C. Rear, deceased. J.J. WILSON, administrator-appellee,v. M. T. REAR ET AL., heirs-appellants.

J. A. Wolfson and Lionel D. Hargis, forAppellants.

Juan S. Alano and Pastor Kimpo, forAppellee.

SYLLABUS

1. Law Imposes Ordinary and Usual Care. The law does not impose upon an administrator a highdegree of care in the administration of the estate, but it does impose upon him ordinary and usual care,

for the want of which he is personally liable.

2. When administrator is without authority. An administrator, without an order of court, even thoughtacting in good faith, has no authority to continue the business in which the deceased was engaged at the

time of his death.

3. Liability of Administrator. So great is it a breach of trust for the representative to engage in businesswith the funds of the estate that the law charges him with all the losses incurred thereby without allowing

him to receive the benefit of any profit that he may make.

4. Duty of Administrator. It is the duty of an administrator to handle land marshal the assets of theestate in a business-like manner, and with his bondsmen, he is liable for any unreasonable or unnecessary

delay in settling and closing the estate.

STATEMENT

July 14, 1925, Charles C. Rear was murdered by some Moros on his plantation situate in the interior of theProvince of Cotabato at an isolated place, without communication except by river, about 17 kilometersfrom the nearest settlement of Pikit, and about 17 70 kilometers from the town of Cotabato. The whole

plantation consisted of public lands. J.J. Wilson qualified as special administrator of the estate onNovember 17, 1925. Later, the property of the estate was appraised at P20,800, of which the

commissioners filed an inventory and report, which was also signed by Wilson. January 4, 1927, thecommissioners made and filed a report of claims against the estate, but by reason of the fact that it wasclaimed and alleged that the administrator did not have any funds to pay, on March 30, 1927, the courtordered the administrator to sell a portion of the property. April 26, 1927, and with the consent of the

heirs, a petition was made for authority to sell, under sealed proposal, all the property of the estate, witha view of closing the administration. October 10, 1927, the court granted this petition, and after due

notice, the public sale took place, and the property was sold to Wm. Mannion for P7,600. April 26, 1927,Wilson submitted a report covering his administration to that date, which was approved and later set aside

on motion of the heirs of the deceased. March 23, 1928, Wilson filed his final account which later wasamended on June 10, 1928, to which the heirs made numerous and specific objections, and after a

hearing, the court approved the account as filed. From which the heirs of the deceased appealed and

assign the following errors:jgc:chanrobles.com.ph

"I. The Lower court erred in approving the final amended account of the administrator for the followingreasons:jgc:chanrobles.com.ph

"(a) That the alleged disbursements made by the special administrator and the administrator were far inexcess of the amount required to preserve the estate;

"(b) That no authority being asked for or granted by the court, all loans or advances, made to the estate,were made contrary to law and are not legal charges against the estate (Trs., p. 37).

"(c) The court erred in admitting, over objection, Exhibits D, E and F.

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"(d) That Wilson, as special administrator and as administrator, was neglectful and imprudent and he

committed waste. He is, therefore, liable.

"II. The lower court erred in refusing to allow the cross- examination and direct examination of witnesses.

"III. The lower court erred in denying the request for a reasonable continuance in order to obtaindepositions."

D E C I S I O N

JOHNS,J.

It appears from the first inventory of December 27, 1925, that the assets of the estate, including realproperty, coconut trees, and houses were P15,300, and that the personal property was valued at P5,250,which included 80 head of cattle, carabao and horses of the value of P4,000. Although he was appointedspecial administrator on November 17, 1925, he never made any report or filed any account of any kinduntil 1927. Neither did he apply to or obtain an order from the court of any nature during that period, andit appears that the attention of the court was for the first time called to the administration of the estatewhen the commissioners on claims asked to have their fees paid; otherwise, the court never made anyorder of any kind from December 27, 1925, to April 1927. It also appears that at the time of his death,the only debts against the deceased were one in favor of Sewal Fleming which then amounted to P800,and one in favor of J. S. Alano for P500. It appears from the amended final report that in the course ofadministration, the administrator received the following amounts from the specifiedsources:jgc:chanrobles.com.ph

________

The total of which is 1,919.25"

From which it appears that on November 30, 1925, the administrator sold hogs for P108.50; in July, 1927,

he sold one carabao for P100 and two steers for P160; in August he sold hogs for P79.50; and inSeptember he sold two steers for P180.

Strange as it may seem, the above is the only account which was ever rendered of the livestock whichwas appraised at P4,000, and yet no specific objection was ever made or filed to the final account of theadministrator for his failure to render any other or different account of the livestock. Even so, it appearsthat the sale to Mannion was made by and with the consent of the heirs, and that the deed was intendedto convey all of the property to him described in the inventory, except that of a perishable nature andsome personal effects. It further appears from the amended account that the total amount of cashreceived by the administrator, including the sale to Mannion was P9,519.25, and that the total amount ofcash disbursed by the administrator was P11,328.94, leaving a deficit or balance due and owing from theestate of P1,809,69. It also appears that the amount of Flemings note at the time it was paid wasP1,003.40, and that the taxes for the years 1925, 1926, and 1927 amounted to P152.14, and the claim of

J.S. Alano amounted to P500. That is to say, at the time they were paid, the actual claims against thedeceased was P1,655.54. Here, it will be noted that the value of the personal property of the estate at thetime of Wilsons appointment, appearing over his own signature was P5,800 which included 80 head ofcattle, carabao and horses of the value of P4,000. That is to say, at the time Wilson was appointed, hisestate had personal property of the value of P5,800, and when the amended final account was filed theactual debts of the deceased, including interest and accumulated taxes, was P1,655.54.

In this situation, it was the legal duty of the administrator to at once apply to the court for an order to sellthe personal property to pay the debts of the deceased and the expenses of administration. It alsoappears from the amended final account that the expenses charged by the administrator was P750.94;that the court expenses, including attorneys fees was P693.20; and that the claims of the commissionerswas P322.90, the total of which is P1,767.04. That is to say, that the total of all claims against the

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deceased, including interest and taxes was P1,655.54, and that the whole amount of the court costs andexpenses of administration was P1,767.04, the total of which is P3,422.58. That is to say, at the time ofhis appointment, it appears over the administrators own signature that the value of the personal propertyof the deceased which came into his possession was P5,800, and the whole amount of claims against Rearat the time of his death and the court costs and expenses of administration was P3,422.58. That is to say,if the personal property of the estate had been promptly sold, when it should have been, and sold for itsappraised value, all the debts of the deceased and the court costs and expenses of administration wouldhave been paid, and the estate would have a balance left of P2,377.42. Instead of doing that, and withoutany order, process or authority of the court, the administrator, as appears from his amended final

account, continued the operation of the plantation and the employment of Fleming as manager at a salaryof P200 per month, and a large number of men, so that at the time of the filing of the amended finalaccount, the total expense for labor was P2,863.62, and the amount of the managers salary wasP4,533.33, the net result of which was that all of the property of the estate was consumed, lost ordestroyed, leaving a deficit against the estate of P1,809.69. Whereas, if the administrator had followedthe law and promptly sold the personal property, all of the debts of the estate would have been paid, andit would have a cash balance in its favor of P2,377.42, and all of its real property left, which was appraisedat P15,000.

It is but fair to say that Wilsons place of business, which was in Zamboanga, is at least 300 kilometersfrom the plantation, and that he declined to serve as administrator and only accepted it under pressure.That in legal effect he operated and left the management of the plantation largely in the discretion ofFleming, and that he personally had but little of anything, to do with the administration, and it does notappear that he was a party to any fraud. But even so, he was appointed and qualified as administrator,and the law imposed upon him legal duties and obligations, among which was to handle the estate in abusiness-like manner, marshal its assets, and close the estate without any unreasonable or unnecessarydelay. He was not appointed to act for or on behalf of the creditors, or to represent the interests of theheirs only. He should have administered the affairs of the estate for the use and benefit alike of allinterested persons, as any prudent business man would handle his own personal business. Whenappointed, it is the legal duty of the administrator to administer, settle, and close the administration in theordinary course of business, without any unnecessary delay. Neither does an administrator, in particular,without a specific showing or an order of the court, have any legal right to continue the operation of thebusiness in which the deceased was engaged, or to eat up and absorb the assets of the estate in thepayment of operating expenses. Yet, in the instant case, the administrator on his own volition and withoutany authority or process of court continued the operation of the plantation, and in the end, as shown by

his own report, the estate, which was appraised at P20,800, with actual debts of the deceased of onlyP1,655.54, was all wiped out and lost, and left with a deficit of P1,809.69.

The law does not impose upon an administrator a high degree of care in the administration of an estate,but it does impose upon him ordinary and usual care, for want of which he is personally liable. In theinstant case there were no complications of any kind and in the usual and ordinary course of business, theadministrator should have wound up and settled the estate within eight months from the date of hisappointment.

Ruling Case Law, vol. 11, section 142 says:jgc:chanrobles.com.ph

"Winding up Business. An executors or administrator ordinarily has no power to continue the businessin which the decedent was engaged at the time of his death; and this is true although he acts in the

utmost good faith and believes that he is proceeding for the best interests of the estate. The penalty forcontinuing a business of the decedent without authority is the imposition of a personal liability on theexecutor or administrator so doing for all debts of the business. The normal duty of the personalrepresentative in reference to such business is limited to winding it up, and even where the beneficiariesare infants the court cannot authorize the administrator to carry on the trade of the decedent. However,an exception to the general rule is sometimes recognized; and so it has been held that in order to settlean estate the personal representative may, in some cases, be permitted to continue a business for areasonable time. For example, such personal representative when authorized to postpone the sale of thetestators effects may generally carry on the business for a reasonable time with a view to its sale as agoing concern. Even in such cases the personal representatives are not, however, entitled to embark inthe business more of the testators property than was employed in it at his death." (Citing numerousauthorities.)

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The same principle is also laid down in Cyc., vol. 18, p. 241, where it is said:jgc:chanrobles.com.ph

"C. Engaging in Business 1. GENERAL RULE. The general rule is that neither an executor nor anadministrator is justified in placing or leaving assets in trade, for this is a hazardous use to permit of trustmoneys; and trading lies outside the scope of administrative functions. So great a breach of trust is it forthe representative to engage in business with the funds of the estate that the law charges him with all thelosses thereby incurred without on the other hand allowing him too receive the benefit of any profits thathe may make, the rule being that the persons beneficially interested in the estate may either hold the

representative liable for the amount so used with interest, or at their election take all the profits which therepresentative has made by such unauthorized use of the funds of the estate."cralaw virtua1aw library

Even so, considering the fact that Wilsons home and place of business was 300 kilometers from theplantation, and that in the very nature of things, he could not give the business of the estate his personalattention, we are disposed to be more or less lenient, and to allow him the actual operating expenses ofthe plantation for the first eight months of his appointment amounting to P2,257.45. Although theexpense account of the administrator and the claims of the commissioners are somewhat high, we arealso disposed to allow those claims. That is to say, in his final account, the administrator should havecredit for the following items:chanrob1es virtual 1aw library

His personal charges and expenses P750.94

Court expenses, including attorneys fees 693.20

Claims of the commissioners 322.90

Expenses for and on account of operations for the first eight

months 2,257.45

Debts against the deceased, including taxes 1,655.54

________

or as a total of 5,680.03

As stated, it appears from his report that the administrator in the course of administration receivedP1,919.25 from the sale of personal property. This with the P7,600 which he received from the remainingassets sold to Mannion make a total of P9,519.25 from which should be deducted P5,680.03 for and onaccount of the items above stated, leaving a balance due and owing from the administrator to the heirs ofthe deceased of P3,839.22.

As stated, it is the duty of the administrator of an estate to represent and protect in interests of allinterested persons, including the heirs of the deceased. It is very apparent upon their face that the entriesin Exhibits D and E were not made in the ordinary course of business, and even if they were, they wouldnot be evidence of the payments without the corresponding receipts or vouchers. That is to say, to entitlethe administrator to credit for money paid out in the course of administration, he should submit and fi le

with the court a corresponding receipt or voucher. Even so, it appears from the record that during hislifetime, the deceased employed a number of laborers on one plantation, and that after Wilson wasappointed as administrator, Fleming personally took charge of and operated the plantation, and that theexpense of which for the first eight months was P2,257.45.

The order of the lower court approving the final account of Wilson as administrator is reversed and setaside, and a judgment will be entered in favor of the heirs and against the administrator for P3,839.22,with interest thereon from November 7, 1927, at the rate of 6 per cent per annum, without prejudice toany remedy which the heirs may have against the bondsmen of the administrator. The appellants torecover costs. So ordered.

Avancea, C.J., Johnson, Street, Malcolm, Villamor, Romualdez and Villa-Real,JJ., concur.

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

MOISES SAN DIEGO, SR.,Petitioner, vs. ADELO NOMBRE and PEDRO ESCANLAR,Respondents.

A. R. Castaeda and M. S. Roxas for petitioner.Amado B. Parreo Law Office for respondents.

PAREDES,J.:chanrobles virtual law library

The case at bar had its origin in Special Proceedings No. 7279 of the CFI of Negros Occidental whereinrespondent Adelo Nombre was the duly constituted judicial administrator. On May 1, 1960, Nombre, in hiscapacity was judicial administrator of the intestate estate subject of the Sp. Proc. stated above, leasedone of the properties of the estate (a fishpond identified as Lot No. 1617 of the cadastral survey ofKabankaban, Negros Occidental), to Pedro Escanlar, the other respondent. The terms of the lease was forthree (3) years, with a yearly rental of P3,000.00 to expire on May 1, 1963, the transaction having beendone, admittedly, without previous authority or approval of the Court where the proceedings was pending.On January 17, 1961, Nombre was removed as administrator by Order of the court and one SofronioCampillanos was appointed in his stead. The appeal on the Order of Nombre's removal is supposedlypending with the Court of Appeals. Respondent Escanlar was cited for contempt, allegedly for his refusalto surrender the fishpond to the newly appointed administrator. On March 20, 1961, Campillanos filed amotion asking for authority to execute a lease contract of the same fishpond, in favor of petitioner herein,

Moises San Diego, Sr., for 5 years from 1961, at a yearly rental of P5,000.00. Escanlar was not notified ofsuch motion. Nombre, the deposed administrator, presented a written opposition to the motion ofCampillanos on April 11, 1964, pointing out that the fishpond had been leased by him to Escanlar for 3years, the period of which was going to expire on May 1, 1963. In a supplemental opposition, he alsoinvited the attention of the Court that to grant the motion of the new administrator would in effect nullifythe contract in favor of Escanlar, a person on whom the Court had no jurisdiction. He also intimated thatthe validity of the lease contract entered into by a judicial administrator, must be recognized unless sodeclared void in a separate action. The opposition notwithstanding, the Court on April 8, 1961, in effectdeclared that the contract in favor of Escanlar was null and void, for want of judicial authority and thatunless he would offer the same as or better conditions than the prospective lessee, San Diego, there wasno good reason why the motion for authority to lease the property to San Diego should not be granted.Nombre moved to reconsider the Order of April 8, stating that Escanlar was willing to increase the rentalof P5,000.00, but only after the termination of his original contract. The motion for reconsideration wasdenied on April 24, 1961, the trial judge stating that the contract in favor of Escanlar was executed in badfaith and was fraudulent because of the imminence of Nombre's removal as administrator, one of thecauses of which was his indiscriminate pleasant, of the property with inadequaterentals.chanroblesvirtualawlibrarychanrobles virtual law library

From this Order, a petition for Certiorari asking for the annulment of the Orders of April 8 and 24, 1961was presented by Nombre and Escanlar with the Court of Appeals. A Writ of preliminary injunction waslikewise prayed for to restrain the new administrator Campillanos from possessing the fishpond and fromexecuting a new lease contract covering it; requiring him to return the possession thereof to Escanlar, plusdamages and attorney's fees in the amount of P10,000.00 and costs. The Court of Appeals issued theinjunctive writ and required respondents therein to Answer. Campillanos insisted on the invalidity of thecontract in favor of Escanlar; the lower court alleged that it did not exactly annul or invalidate the lease in

his questioned orders but suggested merely that Escanlar "may file a separate ordinary action in the Courtof general jurisdiction." chanrobles virtual law library

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

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

Respondents contend that this contract, not having been authorized or approved by the Court, is null andvoid and cannot be an obstacle to the execution of another of lease by the new administrator,Campillanos. This contention is without merit. ... . It has been held that even in the absence of such

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special powers, a contract or lease for more than 6 years is not entirely invalid; it is invalid only in so faras it exceeds the six-year limit (Enrique v. Watson Company, et al., 6 Phil. 84).1 chanrobles virtual lawlibrary

No such limitation on the power of a judicial administrator to grant a lease of property placed under hiscustody is provided for in the present law. Under Article 1647 of the present Civil Code, it is only when thelease is to berecorded in the Registry of Propertythat it cannot be instituted without special authority.Thus, regardless of the period of lease, there is no need of special authority unless the contract is to berecorded in the Registry of Property. As to whether the contract in favor of Escanlar is to be so recorded is

not material to our inquiry.chanroblesvirtualawlibrarychanrobles virtual law library

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

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

The Rules of Court provide that -

An executor or administrator shall have the right to the possession of the real as well as the personalestate of the deceased so long as it is necessary for the payment of the debts and the expenses ofadministration, and shalladminister the estateof the deceased not disposed of by his will. (Sec. 3, Rule85, old Rules).

Lease has been considered an act of administration (Jocson v. Nava; Gamboa v. Gamboa; Rodriguez v.Borromeo; Ferraris v. Rodas, supra).chanroblesvirtualawlibrarychanrobles virtual law library

The Civil Code, on lease, provides:

If a lease is to be recorded in the Registry of Property, the following persons cannot constitute the samewithout proper authority, the husband with respect to the wife's paraphernal real estate, the father orguardian as to the property of the minor or ward, and the manager without special power. (Art. 1647).

The same Code, on Agency, states:

Special powers of attorneys are necessary in the following cases:chanrobles virtual law library

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

Petitioner contends, that No. 8, Art. 1878 is the limitation to the right of a judicial administrator to leasereal property without prior court authority and approval, if it exceeds one year. The lease contract in favorof Escanlar being for 3 years and without such court approval and authority is, therefore, null and void.

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Upon the other hand, respondents maintain that there is no limitation of such right; and that Article 1878does not apply in the instant case.chanroblesvirtualawlibrarychanrobles virtual law library

We believe that the Court of Appeals was correct in sustaining the validity of the contract of lease in favorof Escanlar, notwithstanding the lack of prior authority and approval. The law and prevailing jurisprudenceon the matter militates in favor of this view. While it may be admitted that the duties of a judicialadministrator and an agent (petitioner alleges that both act in representative capacity), are in somerespects, identical, the provisions on agency (Art. 1878, C.C.), should not apply to a judicial administratorA judicial administrator is appointed by the Court. He is not only the representative of said Court, but also

the heirs and creditors of the estate (Chua Tan v. Del Rosario, 57 Phil. 411). A judicial administratorbefore entering into his duties, is required to file a bond. These circumstances are not true in case ofagency. The agent is only answerable to his principal. The protection which the law gives the principal, inlimiting the powers and rights of an agent, stems from the fact that control by the principal can only bethru agreements, whereas the acts of a judicial administrator are subject to specific provisions of law andorders of the appointing court. The observation of former Chief Justice Moran, as quoted in the decision ofthe Court of Appeals, is indeed sound, and We are not prone to alter the same, at themoment.chanroblesvirtualawlibrarychanrobles virtual law library

We, likewise, seriously doubt petitioner's legal standing to pursue this appeal. And, if We consider the factthat after the expiration of the original period of the lease contract executed by respondent Nombre infavor of Escanlar, a new contract in favor of said Escanlar, was executed on May 1, 1963, by the new

administrator Campillanos. who, incidentally, did not take any active participation in the present appeal,the right of petitioner to the fishpond becomes a moot and academic issue, which We need not passupon.chanroblesvirtualawlibrarychanrobles virtual law library

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

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Regala and Makalintal, JJ., concur.Padilla, Labrador and Dizon, JJ., took no part.

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

NATIVIDAD V. A. JARODA,Petitioner, vs. THE HONORABLE VICENTE N. CUSI, JR., PresidingJudge, Branch I, Court of First Instance of Davao, and ANTONIO V. A. TAN, in his capacity as

judicial administrator of intestate estate of Carlos Villa Abrille, Special Proc. No. 1391, Court ofFirst Instance of Davao,Respondents.

Dario C. Rama for petitioner.Jose R. Madrazo, Jr. for respondents.

REYES, J.B.L.,J.:chanrobles virtual law library

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

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

Subdivision.chanroblesvirtualawlibrarychanrobles virtual law library

The second order, dated 3 September 1965, approved ex-parte the power of attorney executed byspecial administrator Tan appointing himself attorney-in-fact to sell the share of the estate in thesubdivision lots.chanroblesvirtualawlibrarychanrobles virtual law library

The aforesaid Special Proceeding No. 1391 was commenced by Antonio V. A. Tan on 22 April 1965,alleging in his petition filed with the respondent court that Carlos Villa Abrille died intestate on 3 April1965; that he left an estate consisting of his conjugal share in real and personal properties, among whichare:

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

x x x x x x x x x

x x x x x x x x xchanrobles virtual law library

t. Cash on Bank: BPI (Savings) D-1365 in the amount of P55,284.11; PNB (Savings) 8189, in theamount of P9,047.74; and PCIB (Savings) 337, in the amount of P416.24. (Annex "A" to Petition, Rollo,pages 1415);

that the heirs of the deceased are his surviving spouse, nine (9) children (among them the hereinpetitioner, Natividad V. A. Jaroda), and four (4) grandsons, among them the herein respondent, AntonioV. A. Tan.chanroblesvirtualawlibrarychanrobles virtual law library

On 26 April 1965, respondent Tan was appointed specialadministrator.chanroblesvirtualawlibrarychanrobles virtual law library

On 4 May 1965, respondent special administrator Tan fled an ex-parte petition for the withdrawalof the sums of P109,886.42 and P72,644.66 from the Philippine National Bank, Davao Branch, which sumswere not listed in his petition for administration as among the properties left by the deceased, allegingthat these sums were deposited in the name of the deceased but that they actually belong to, and wereheld in trust for, the co-owners of the Juna Subdivision, and alleging as reason for the withdrawal that itwould be advantageous to the estate of the deceased. Annexed to the said petition are powers of attorneypurportedly signed by the co-owners in 1948 and 1949 authorizing the late Carlos Villa Abrille to sell thelots in the Juna Subdivision and to deposit the proceeds thereof with the Philippine National Bank. The

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alleged co-owners of the subdivision concurred in the petition, but not the heirs of the deceased (Annex"C" to Petition, Rollo, page 19).chanroblesvirtualawlibrarychanrobles virtual law library

The respondent court found the petition for withdrawal of the bank deposits as "meritorious", andgranted the petition in an order on 5 May 1965.chanroblesvirtualawlibrarychanrobles virtual law library

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

Rollo, pages 30-32).chanroblesvirtualawlibrarychanrobles virtual law library

On 9 September 1965, respondent Tan was issued letters of administration by the respondentcourt.chanroblesvirtualawlibrarychanrobles virtual law library

On the same day, 9 September 1965, as regular administrator, respondent Tan filed a petition withthe respondent court, alleging that the deceased was the manager of and a co-owner in the JunaSubdivision and that he had been engaged in the business of selling the lots, and praying for the approvalby the court of the power of attorney executed by him, in behalf of the intestate estate, and appointingand authorizing himself to sell the lots.chanroblesvirtualawlibrarychanrobles virtual law library

The court granted the petition, "as prayed for," on 3 September

1965.chanroblesvirtualawlibrarychanrobles virtual law library

On 29 November 1966, herein petitioner Natividad V. A. Jaroda moved to nullify the order of 5 May1965, that allowed the withdrawal of the bank deposits, as well as the order of 3 September 1965, whichapproved the power of attorney.chanroblesvirtualawlibrarychanrobles virtual law library

The respondent court denied, on 25 February 1967, "for lack of merit" the aforesaidmotion.chanroblesvirtualawlibrarychanrobles virtual law library

Petitioner Jaroda appealed from the order of denial, but the respondent court dismissed the appealon the ground that the order appealed from was interlocutory. Jaroda then filed before the Supreme Courta petition for certiorari and/or mandamus on 8 July 1967, docketed as G.R. No. L-27831, but this Court

dismissed the petition, adding in its resolution that appeal in due time is theremedy.chanroblesvirtualawlibrarychanrobles virtual law library

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

We agree with petitioner that the order of 5 May 1965 allowing the special administrator towithdraw the bank deposits standing in the name of the decedent is in abuse of discretion amounting to

lack of jurisdiction. In the first place, said withdrawal is foreign to the powers and duties of a specialadministrator, which, as Section 2 of Rule 80 of the Rules of Court provides, are to -

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

In the second place, the order was issued without notice to, and hearing of, the heirs of thedeceased. The withdrawal of the bank deposits may be viewed as a taking of possession and charge of thecredits of the estate, and apparently within the powers and duties of a special administrator; but actually,

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said withdrawal is a waiver by the special administrator of aprima facie exclusive right of the intestateestate to the bank deposits in favor of the co-owners of the Juna Subdivision, who were allegedly claimingthe same as alleged by the administrator in his motion (Petition, Annex "C"). The bank deposits were inthe name of the deceased; they, therefore, belongprima facie to his estate after his death. And until thecontrary is shown by proper evidence at the proper stage, when money claims may be filed in theintestate proceedings, the special administrator is without power to make the waiver or to hand over partof the estate, or what appears to be a prima facie part of the estate, to other persons on the ground thatthe estate is not the owner thereof. If even to sell for valuable consideration property of the estaterequires prior written notice of the application to the heirs, legatees, or devisees under Rule 89 of the

Rules of Court, such notice is equally, if not more, indispensable for disposing gratuitously of assets of thedecedent in favor of strangers. Admittedly, no such notice was given, and without it the court's authorityis invalid and improper.chanroblesvirtualawlibrarychanrobles virtual law library

The order of 3 September 1965 approving the power of attorney executed by administrator Tanand appointing himself as attorney-in-fact to sell the subdivision lots for a price at his discretion is,likewise, void for want of notice and for approving an improper contract ortransaction.chanroblesvirtualawlibrarychanrobles virtual law library

The very rule, Section 4 of Rule 89 of the Rules of Court, relied on by respondent Tan to sustain thepower of attorney for the sale of thepro-indiviso share of the estate in the subdivision requires "writtennotice to the heirs, devisees, and legatees who are interested in the estate to be sold" and, admittedly,

administrator Tan did not furnish such notice. (Answer, pages 1 and 2, paragraph 3, Rollo, page 53)Without such notice, the order of the court authorizing the sale is void. (Estate of Gamboa vs. Floranza, 12Phil. 191; Gabriel vs. Encarnacion, 94 Phil. 917)chanrobles virtual law library

But respondent Tan holds petitioner Jaroda with actual knowledge of the questioned order, and toshow it he quotes the transcript of stenographic notes of a discussion by a lawyer of Jaroda about the saidorder. The discussion, however, took place on 19 March 1966 while the order was issued on 13 September1965, and there is nothing in the discussion that may indicate knowledge by Jaroda of the order before, ator immediately after its issuance.chanroblesvirtualawlibrarychanrobles virtual law library

It has been broadly stated that an administrator is not permitted to deal with himself as anindividual in any transaction concerning trust property. (Pesula's Estate, 64 ALR 2d 851, 150 Cal. App. 2d462, 310 P 2d 39)

It is well settled that an executrix holds the property of her testator's estate as a trustee. In reHeydenfeldt's Estate, 117 Cal. 551, 49 P. 713;Firebaugh v. Burbank,121 Cal. 186, 53 P. 560. It is equallywell settled that an executrix will not be permitted to deal with herself as an individual in any transactionconcerning the trust property. Civil Code, S 2230. In Davis v. Rock Creek L., F. & M Co., 55 Cal. 359, atpage 364, 36 Am. Rep. 40, it is said: 'The law, for wise reasons, will not permit one who acts in a fiduciarycapacity thus to deal with himself in his individual capacity.' The following cases are to the sameeffect: Wickersham v. Crittenden, 93 Cal. 17, 29, 28 P. 788; Sims v. Petaluma Gas Light Co., 131 Cal.656, 659, 63 P. 1011; Western States Life Ins. Co. v. Lockwood, 166 Cal. 185, 191, 135 P. 496; In reEstate of Parker, 200 Cal. 132, 139, 251 P 907, 49 A. L. R. 1025. In Wickersham v. Crittenden,supra, 93Cal. at page 29, 28 P. at page 790, it is further stated in respect to a transaction wherein a trustee soughtto deal with trust property: 'Courts will not permit any investigation into the fairness of the transaction, or

allow the trustee to show that the dealing was for the best interest of the beneficiary.' This language isquoted with approval in the case of Pacific Vinegar & Pickle Works v. Smith, 145 Cal. 352, 365, 78 P. 550,104 Am. St. Rep 42. (In re Bogg's Estate, 121 P. 2d 678, 683).

The opinion of some commentators that, as a general rule, auto-contracts are permissible if notexpressly prohibited (See Tolentino, Civil Code of the Philippines, Vol. IV 1962, pages 375-377), and thatthere is no express provision of law prohibiting an administrator from appointing himself as his own agent,even if correct, cannot and should not apply to administrator of decedent's estates, in view of the fiduciaryrelationship that they occupy with respect to the heirs of the deceased and their responsibilities towardthe probate court. A contrary ruling would open the door to fraud and maladministration, and once theharm is done, it might be too late to correct it. A concrete example would be for administrator Tan toauthorize agent Tan to sell a lot for P50, with the condition that if he can sell it for more he could keep the

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difference; agent Tan sells the lot for P150.00; he retains P100.00 and deposits in the bank P50.00 "in thename of Antonio V. A. Tan, in trust for Juna Subdivision" (as worded in the power of attorney. Annex "F-1"); thus, administrator Tan's accounting to the estate for the sale of the lot for P50 would be in order,but the estate would have been actually cheated of the sum of P100, which went to agent Tan in hisindividual capacity.chanroblesvirtualawlibrarychanrobles virtual law library

The court below also failed to notice that, as alleged in the administrator's petition (Annex "F"herein), after the death of Carlos Villa Abrille the administrator Tan, in his personal capacity, had replacedsaid deceased as manager of the Juna Subdivision by authority of the other co-owners. By the court's

questioned order of 3 September 1965 empowering him to represent the interest of the deceased in themanagement of the subdivision, the administrator Tan came to be the agent or attorney-in-fact of twodifferent principals: the court and the heirs of the deceased on the one hand, and the majority co-ownersof the subdivision on the other, in managing and disposing of the lots of the subdivision. This dual agencyof the respondent Tan rendered him incapable of independent defense of the estate's interests againstthose of the majority co-owners. It is highly undesirable, if not improper, that a court officer andadministrator, in dealing with property under his administration, should have to look to the wishes ofstrangers as well as to those of the court that appointed him. A judicial administrator should be at alltimes subject to the orders of the appointing Tribunal and of no oneelse.chanroblesvirtualawlibrarychanrobles virtual law library

That petitioner Jaroda, as heir of the late Carlos Villa Abrille, should hold a minor interest (/ of

19%) in the co-ownership known as the Juna Subdivision and that the early termination of said co-ownership would redound to the benefit of the co-owners, including the heirs of Carlos Villa Abrille, arebeside the point. Jaroda's interest in the estate demands that she be heard by the court in all mattersaffecting the disposal of her share, and that the administrator should primarily protect the interest of theestate in which she is a participant rather than those of the decedent's co-owners.chanroblesvirtualawlibrarychanrobles virtual law library

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

vs. Robaco Corp., L-25337, 27 Nov. 1967, 21 SCRA 1080).chanroblesvirtualawlibrarychanrobles virtuallaw library

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

FOR THE FOREGOING REASONS, the order of 5 May 1965 and 3 September 1965 of the Court of

First Instance of Davao, Branch I, in its Special Proceeding No. 1391, are hereby set aside and declarednull and void. The preliminary injunction heretofore issued is hereby made permanent. Costs against therespondent, Antonio V. A. Tan, in his personal capacity.

Concepcion, C.J., Dizon, Makalintal, Sanchez, Castro, Fernando, Capistrano, Teehankee and Barredo, JJ.,concur.

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EN BANC

G.R. No. L-9686 May 30, 1961

FELICISIMO C. JOSON,administrator-appellee, vs. EDUARDO JOSON, ET AL.,heirs-appellants.

Lavides, Sicat & Lavides for administrator-appellee.Mario S. Garcia for heirs-appellants.

ANGELO,J.:chanrobles virtual law library

Tomas Joson died on July 5, 1945 in Quezon, Nueva Ecija leaving behind heirs and properties. He marriedthree times and was survived by nine (9) heirs: two (2) children and grandchildren by his first wifeEufemia de la Cruz; two (2) daughters by his second wife Pomposa Miguel and his third wife and survivingwidow Dominga M. Joson. Upon his death, his will was presented to the Court of First Instance of NuevaEcija by his son Felicisimo Joson for probate. In August, 1945, said will having been duly probated,Felicisimo Joson was appointed administrator of the estate and, accordingly, he filed an inventory of theproperties left by the deceased.chanroblesvirtualawlibrarychanrobles virtual law library

On April 15, 1948, the administrator filed his first account for the year 1945-1946. This was ordered bythe court to be examined by the clerk of court but the same has never been approved. On July 19, 1948,

he filed his second account for the year 1946-1947 which was also referred to the clerk of court forexamination. The same has never been also approved by the court. On November 11, 1948, theadministrator filed another account for the year 1947-1948 and, upon motion of the heirs, he was orderedto file an accounting covering the properties under his administration. On September 7, 1954, EduardoJoson, one of the heirs, filed an opposition to all the accounts filed by the administrator where he allegedthat the administrator diminished the shares of the heirs in the yearly produce of the properties and hadpadded his expenses of administration, and on September 29, 1954, the same heir filed another motionpraying the court to order the administrator to post a bond in the amount of P50,000.00 For the reasonthat from the accounts represented by him to be the true income of the estate from 1947 to 1953 therewas a big difference of P132,600.00 which the administrator should account for to the heirs. On October14, 1954, the administrator submitted an amended statement of accounts for the same years which wereobjected by two more heirs on the ground that the administrator had reported for the years 1947-1952 an

income short of what was actually received and expenses much bigger than those actually incurred byhim.chanroblesvirtualawlibrarychanrobles virtual law library

In the meantime, or on December 30, 1952, the heirs were able to compromise their differences andentered into an extrajudicial settlement and partition of the entire estate under the provisions of Section1, Rule 74, of the Rules of Court which provides for the settlement of the estate without courtintervention. This settlement was contained in two documents executed on the same date wherein theymanifested that they are entering into it because of their desire to put an end to the judicial proceedingand administration. But, as the court was never informed of this extrajudicial settlement either by theadministrator or by the heirs, it issued on May 19, 1954 an order requiring the administrator to file anaccounting of his administration from 1949 to 1954, which accordingly the administrator complied with bysubmitting an amended statement of his accounts as already mentionedabove.chanroblesvirtualawlibrarychanrobles virtual law library

However, on November 25, 1954, without said accounts having been heard or approved, the administratorfiled a motion to declare the proceedings closed and terminated and to relieve him of his duties as such,which motion was amended by him on January 15, 1955. Heir Eduardo Joson filed an opposition to saidmotion but, after hearing, the court issued an order declaring the proceedings terminated and relievingthe administrator not only of his duties as such but also of his accounts notwithstanding the heirs'opposition to said accounts. Hence this appeal:chanrobles virtual law library

In granting the motion of the administrator to declare the proceedings closed and terminated and relievinghim of his duties and of his accounts, the trial court made the following pronouncement:

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. . . It is claimed by the oppositor that the estate cannot be declared closed and terminated for the reasonthat some of the accounts submitted by the administrator for the years 1945 to 1948 have not beenapproved. The Court does not find any logic in this contention. The heirs knew on December 30, 1952,when they entered into an extra-judicial settlement of the estate, the existence of those accounts, butnothing is mentioned in the said extra-judicial settlement regarding the same. They are, therefore,presumed to have approved these accounts and have their opposition thereto. There is, therefore, noreason to suspend the closing of this proceeding and make the same depend upon the approval of theseold accounts. To do so would be like making the accessory more important than the principal. There is nodoubt that the report of the administrator of his administration is a mere incident in this proceeding to

wind up the estate of the deceased. If the parties concerned have already entered into an extra-judicialsettlement of the estate, the same should put an end to this proceeding. Once this proceeding isterminated, the incidents thereto must yield, since the only purpose of submitting a report of the accountsby the administrator is to facilitate the liquidation. The administration of an estate cannot be an end butonly a means of settlement of the estate. It, therefore, becomes unnecessary and a mere waste of time tocall the administrator to account for, or to report on, his administration from the moment that the heirshave already entered into an extra-judicial settlement. To do so, would amount to a modification of theextra-judicial settlement which is the law between the parties, which include the oppositors herein.

The issues now posed by appellants are: (1) Is the duty of an administrator to make an accounting of hisadministration a mere incident which can be avoided once the estate has been settled?; (2) Are theproceedings deemed terminated by the mere execution of an extrajudicial partition of the estate withoutthe necessity of having the accounts of the administrator heard and approved by the court?; and (3) Isthe administrator ipso factorelieved of his duty of proving his account from the moment said partition hasbeen executed? Appellants answer these questions in the negative with the argument that if the contraryis to be upheld as was done by the trial court the same would be contrary to the express provisions of ourrules relative to the duties of a judicial administrator. Hence, they argue, the trial court committed anerror in closing the estate in disregard of the accounts submitted by theadministrator.chanroblesvirtualawlibrarychanrobles virtual law library

We find merit in this contention. To begin with, Section 1 of Rule 86 categorically charges an administrator"with the whole of the estate of the deceased which has come into his possession at the value ofappraisement contained in the inventory; with all the interest, profit, and income of such an estate; andwith the proceeds of so much of the estate as is hold by him, at the price at which sold." Section 8 of thesame rule imposes upon him the duty to render an account of his administration within one year from his

appointment, unless the court otherwise directs, as well as to render such further accounts as the courtmay require until the estate is fully settled. Section 10 likewise provides that before an account of theadministrator is allowed notice shall be given to all persons interested of the time and place of examiningand allowing the same. And finally Section 9 expressly directs that the court shall examine theadministrator upon oath with respect to every matter relating to his account except when no objection ismade to the allowance of the account and its correctness is satisfactorily established by competenttestimony.chanroblesvirtualawlibrarychanrobles virtual law library

It thus appears that the duty of an administrator to render an account is not a mere incident of anadministration proceeding which ran be waived or disregarded when the same is terminated, but that it isa duty that has to be performed and duly acted upon by the court before the administration is finallyordered closed and terminated. Here the administrator has submitted his accounts for several years not

only motu propriobut upon requirement of the court, to which accounts the heirs have seasonablysubmitted their opposition. And when the administrator moved the court to close the proceedings andrelieve him of his administration and of his accounts, the heirs who objected thereto objected likewise tothe closing of the proceedings invoking their right to be heard but the court ignored their opposition andgranted the motion setting forth as reasons therefor what we quoted in the early part of this decision.Verily, the trial court erred in acceding to the motion for in doing so it disregarded the express provisionsof our rules relative to the settlement of accounts of a judicialadministrator.chanroblesvirtualawlibrarychanrobles virtual law library

The fact that all the heirs of the estate have entered into an extrajudicial settlement and partition in orderto put an end to their differences cannot in any way be interpreted as a waiver of the objections of theheirs to the accounts submitted by the administrator not only because to so hold would be a derogation of

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the pertinent provisions of our rules but also because there is nothing provided in said partition that theaforesaid accounts shall be deemed waived or condoned. While the attitude of the heirs in concluding saidextrajudicial settlement is plausible and has contributed to the early settlement of the estate, the samecannot however be considered as release of the obligation of the administrator to prove his accounts. Thisis more so when, according to the oppositors, the administrator has committed in his accounts a shortagein the amount of P132,600.00 which certainly cannot just be brushed aside by a meretechnicality.chanroblesvirtualawlibrarychanrobles virtual law library

WHEREFORE, the order appealed from is set aside. The case shall be remanded to the trial court for

further proceedings in line with this decision. No costs.chanroblesvirtualawlibrarychanrobles virtual lawlibrary

Bengzon, C.J., Padilla, Labrador, Concepcion, Reyes, J.B.L., Paredes, Dizon, De Leon and Natividad,JJ.,concur.Barrera, J., took no part.

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EN BANC

G.R. No. L-4090 January 31, 1952

INTESTATE ESTATE OF THE DECEASED HONOFRE LEYSON, deceased. VICTORIO L.RODRIGUEZ,administrator-appellant, and

MARGARITA LEYSON LAURENTE,heiress-appellant, vs. PABLO M. SILVA,movant-appellee.

Eliseo Caunca for appellants.Fidel J. Silva for appellee.

TUASON,J.

This appeal is from an order of the Court of First Instance of Manila, Honorable Rafael Amparo, Judgeauthorizing the cancellation of the bond of Pablo M. Silva who had resigned as joint administrator of theintestate estate of Honofre Leyson, deceased, and allowing Silva P600 as compensation for his services.The appellants are the remaining administrator and an heir of thedeceased.chanroblesvirtualawlibrary chanrobles virtual law library

The appeal was elevated to this Court on the appellant's manifestation that they would raise onlyquestions of law. Following are the assignments of error:

The lower court erred in issuing its order of August 19, 1949, granting Pablo M. Silva's motion filed onAugust 9, 1949, and ordering the cancellation of his bond and authorizing him to collect from the estatethe sum of P600.00 as his administrator's fees, inasmuch as said order is not in accordance with theprovisions section 7, Rule 86 of the rules of Court.chanroblesvirtualawlibrary chanrobles virtual law library

That taking for granted, but without admitting that the compensation of the administrators from theirappointment up to the issuance of the order dated August 19, 1950, granting the resignation of Mr. PabloM. Silva that the sum of P600 is reasonable, the lower court, however, erred in not providing that, in viewof the fact that in this proceeding there are two administrators according to the services actually renderedby them respectively, in accordance with the provision of Section 7, paragraph 2, Rule 86 of the Rules ofcourt, and that the sum of P100.00 already received by the appellee be deducted from any amount that

may finally be conceded to him.chanroblesvirtualawlibrary chanrobles virtual law library

Lastly, the lower court erred in cancelling Mr. Pablo M. Silva's administrators bond, inasmuch as fewmonths before the issuance of said order dated August 19, 1950, granting his resignation, he secured thecancellation of Transfer Certificate of Title No. 13 (6947) Quezon City, and Transfer Certificate of Title No.11778 Manila, issued in the name of Honofre Leyson, and in their stead another titles were issued in thename of Mr. Pablo M. Silva, the herein appellee, in a doubtful manner.

The first two assignments of error raise the same question or allied questions and may well be consideredtogether. This question is, may the court fix an administrator's or executor's fee in excess of the feesprescribed by section 7 of Rule 86, which follows?

SEC. 7. What expenses and fees allowed executor or administrator. Not to charge for services as attorney.Compensation provided by will controls unless renounced. An executor or administrator shall be allowedthe necessary expenses in the care, management, and settlement of the estate, and for his services, fourpesos per day for the time actually and necessarily employed, or a commission upon the value of so muchof the estate as comes into his possession and is finally disposed of by him in the payment of debts,expenses, legacies, or distributive shares, or by delivery to heirs or devises, of two per centum of the firstfive thousand pesos of such value, one per centum of such value as exceeds five thousand pesos and doesnot exceed thirty thousand pesos, one-half per centum of so much of such value as exceeds thirtythousands pesos and does not exceed one hundred thousand pesos, and one-quarter per centum of somuch of such value as exceeds one hundred thousand pesos. But in any special case, where the estate islarge, and the settlement has been attended with great difficulty, and has required a high degree ofcapacity on the part of the executor or administrator, a greater sum may be allowed. If objection to the

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fees allowed be taken, the allowance may be reexamined on appeal.chanroblesvirtualawlibrary chanroblesvirtual law library

If there are two or more executors or administrators, the compensation shall be apportioned among themby the court according to the services actually rendered by themrespectively.chanroblesvirtualawlibrary chanrobles virtual law library

When the executor or administrator is an attorney he shall not charge against the estate any professionalfees for legal services rendered by him.chanroblesvirtualawlibrary chanrobles virtual law library

When the deceased by will makes some other provision for the compensation of his executor, thatprovision shall be a full satisfaction for his services unless by a written instrument filed in the court herenounces all claim to the compensation provided by the will.

It will be seen from this provision that a greater sum may be allowed "in any special case, where theestate is large, and the settlement has been attended with great difficulty, and has required a high degreeof capacity on the part of the executor or administrator." And so it has been held that "the amount of anexecutor's fee allowed by the Court of first Instance in any special case under the provisions of Section680 of the Code of Civil Procedure is a matter largely in the discretion of the probate court, which will notbe disturbed on appeal, except for an abuse of discretion." (Rosentock, vs.Elser, 48 Phil. 709.)chanroblesvirtual law library

The order of which the appellants complain does not state the work performed by the appellee, but theinventory shows the appraised value of the estate to be P22,116.46, itemized as follows:

Cash on deposit in the Philippine National Bank.......................

P8,159.43

Accounts receivable.......................................................................

500.00

Real Estate........................................................................................

12,061.03

Personal Property

............................................................................

1,291.00

And it is stated in the appellee's brief that prior to his appointment and that of Victorio L. Rodriguez asjoint administrators, Justa Gomez, the decedent's cousin with whom Leyson lived was specialadministratrix; that during Justa Gomez's incumbency which lasted till December 8, 1947, the leaseholdings of the said estate were renting about 900.00 a month; that after appellee's appointment, andthrough his initiative, their income was increased to P1,300.00 and two parcels of land located in SanJuan, Rizal, were paid for in full and the corresponding certificates of title secured. It also asserted, andnot denied, that the appellee was instrumental in the gathering of decedent's personal effects, and that asthe result of his motion a court order, whereby Margarita Leyson Laurente, one of the now appellants, hadbeen authorized to withdraw from the bank P3,400 as advance payment of her share of the inheritance,was reconsidered and set aside. The fact that the appellee is an attorney-at-law has served the estate in

good stead, has served the estate in good stead, and this ought not be lost sight it. Although being alawyer is by itself not a factor in the assessment of an administrator's fee, it should be otherwise as in thiscase the administrator was able to stop what appeared to be an improvident disbursement of a substantialamount without having to employ outside legal help at an additional expense toestate.chanroblesvirtualawlibrary chanrobles virtual law library

The appellant having announced that no questions of fact would be discussed is estopped from contestingthe above allegations. On the basis of the services thus specified, coupled with the fact that the appelleeworked as co-probate court committed an abuse of discretion in granting him P600.00 or P700.00, as feeindependent of the fee that might be allowed the otheradministrator.chanroblesvirtualawlibrary chanrobles virtual law library

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As to the cancellation of the appellee's bond, which is the subject of the third ground for appeal, there isno showing that De Silva was guilty of misappropriation or any of the acts of commission or omission forwhich his bond could be held liable under Rule 86. The sole ground for the insistence that this cancellationshould have been withheld is that the appellee is in possession of a residential lot in Cubao, Quezon City,which belonged to the deceased Honofre Leyson. But the appellee claims that this lot was sold to him byLeyson on March 2, 1945. Certainly it was already in possession when he and appellant Rodriguez tookover the administration from the special administratrix. This land therefore did not come into De Silva'shands in pursuance or in the inventory prepared by or in conjunction with one of the appellants. Evengranting then, for the sake of argument, that De Silva has no valid title to this lot, the sureties are not

chargeable for it on the bond. De Silva's liability is personal and exclusive of the sureties who are theparties mostly affected by the third assignment of error.chanroblesvirtualawlibrary chanrobles virtual lawlibrary

Moreover, there is a pending suit over this property and that suit affords the estate ample protectionagainst the said property being alienated pending final disposition of thelitigation.chanroblesvirtualawlibrary chanrobles virtual law library

Upon the foregoing consideration, the order appealed from is affirmed, withcosts.chanroblesvirtualawlibrary chanrobles virtual law library

Paras, C.J., Pablo, Bengzon, Padilla, Montemayor, Reyes, Jugo and Bautista Angelo, JJ.,concur.

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[G.R. NO. 174873 : August 26, 2008]

QUASHA ANCHETA PEA AND NOLASCO LAW OFFICE FOR ITS OWN BEHALF, ANDREPRESENTING THE HEIRS OF RAYMOND TRIVIERE, Petitioners, v.LCN CONSTRUCTION

CORP.,Respondent.

D E C I S I O N

CHICO-NAZARIO,J.

This is a Petition for Review under Rule 45 of the Revised Rules of Court with petitioners Quasha AnchetaPea and Nolasco Law Office (Quasha Law Office) and the Heirs of Raymond Triviere praying for thereversal of the Decision1dated 11 May 2006 and Resolution2dated 22 September 2006 of the Court ofAppeals granting in part the Petition for Certiorarifiled by respondent LCN Construction Corporation (LCN)in CA-G.R. SP No. 81296.

The factual antecedents of the case are as follows:

Raymond Triviere passed away on 14 December 1987. On 13 January 1988, proceedings for thesettlement of his intestate estate were instituted by his widow, Amy Consuelo Triviere, before the RegionaTrial Court (RTC) of Makati City, Branch 63 of the National Capital Region (NCR), docketed as Special

Proceedings Case No. M-1678. Atty. Enrique P. Syquia (Syquia) and Atty. William H. Quasha (Quasha) ofthe Quasha Law Office, representing the widow and children of the late Raymond Triviere, respectively,were appointed administrators of the estate of the deceased in April 1988. As administrators, Atty. Syquiaand Atty. Quasha incurred expenses for the payment of real estate taxes, security services, and thepreservation and administration of the estate, as well as litigation expenses.

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

In 1996, Atty. Quasha also passed away. Atty. Redentor Zapata (Zapata), also of the Quasha Law Office,

took over as the counsel of the Triviere children, and continued to help Atty. Syquia in the settlement ofthe estate.

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

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

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

(3) That for all their work since April 22, 1988, up to July 1992, or for four (4) years, they were only giventhe amount of P20,000.00 each on November 28, 1988; and another P50,00.00 each on October 1991;and the amount ofP100,000.00 each on July 1992; or a total of P170,000.00 to cover their administrationfees, counsel fees and expenses;

(4) That through their work, they were able to settle all the testate (sic) claims except the remainingbaseless claim of LCN Construction Corp., and were able to dismiss two (2) foreign claims, and were also

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able to increase the monetary value of the estate from roughly over P1Million to the presentP4,738,558.63as of August 25, 2002 and maturing on September 27, 2002; and the money has always been with thePhilippine National Bank, as per the Order of this Honorable Court;

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

(6) That as this Honorable Court will notice, Administrator Syquia has always been present during the

hearings held for the many years of this case; and the Quasha Law Offices has always been representedby its counsel, Atty. Redentor C. Zapata; and after all these years, their clients have not been given a partof their share in the estate;

(7) That Administrator Syquia, who is a lawyer, is entitled to additional Administrator's fees since, asprovided in Section 7, Rule 85 of the Revised Rules of Court:

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

In addition, Atty. Zapata has also been present in all the years of this case. In addition, they have spent

for all the costs of litigation especially the transcripts, as out-of-pocket expenses.

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

a) P450,000.00 as share of the children of the deceased [Triviere] who are represented by the QuashaAncheta Pea & Nolasco Law Offices;

b) P200,000.00 as attorney's fees and litigation expenses for the Quasha Ancheta Pea & Nolasco LawOffices;

c) P150,000.00 as share for the widow of the deceased [Raymond Triviere], Amy Consuelo Triviere;andcralawlibrary

d) P200,000.00 for the administrator Syquia, who is also the counsel of the widow; and for litigation costsand expenses.

LCN, as the only remaining claimant4against the Intestate Estate of the Late Raymond Triviere in SpecialProceedings Case No. M-1678, filed its Comment on/Opposition to the afore-quoted Motion on 2 October2002. LCN countered that the RTC had already resolved the issue of payment of litigation expenses whenit denied the first Motion for Payment filed by Atty. Syquia and Atty. Quasha for failure of theadministrators to submit an accounting of the assets and expenses of the estate as required by the court.

LCN also averred that the administrators and the heirs of the late Raymond Triviere had earlier agreed tofix the former's fees at only 5% of the gross estate, based on which, per the computation of LCN, theadministrators were even overpaid P55,000.00. LCN further asserted that contrary to what was stated inthe second Motion for Payment, Section 7, Rule 85 of the Revised Rules of Court was inapplicable,5sincethe administrators failed to establish that the estate was large, or that its settlement was attended withgreat difficulty, or required a high degree of capacity on the part of the administrators. Finally, LCNargued that its claims are still outstanding and chargeable against the estate of the late Raymond Triviere;thus, no distribution should be allowed until they have been paid; especially considering that as of 25August 2002, the claim of LCN against the estate of the late Raymond Triviere amountedto P6,016,570.65 as against the remaining assets of the estate totaling P4,738,558.63, rendering thelatter insolvent.

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On 12 June 2003, the RTC issued its Order6taking note that "the widow and the heirs of the deceasedTriviere, after all the years, have not received their respective share (sic) in the Estate x x x."

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

[T]here appears to be no need for an accounting as the estate has no more assets except the moneydeposited with the Union Bank of the Philippines under Savings Account No. 12097-000656-0 x x x; onthe estate taxes, records shows (sic) that the BIR Revenue Region No. 4-B2 Makati had issued a

certificate dated April 27, 1988 indicating that the estate taxes has been fully paid.7

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

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

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

In view of the foregoing considerations, the instant motion is hereby GRANTED. The sums to be paid to

the co-administrator and counsel for the heirs of the deceased Triviere are however reduced.

Accordingly, the co-administrator Atty. Syquia and aforenamed counsel are authorized to pay to besourced from the Estate of the deceased as follows:

a) P450,000.00 as share of the children of the deceased who are represented by the Quasha, Ancheta,Pena, Nolasco Law Offices;

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

c) P150,000.00 as share for the widow of the deceased Amy Consuelo Triviere; andcralawlibrary

d) P100,000.00 for the Co-administrator Atty. Enrique P. Syquia and for litigation costs and expenses.9

LCN filed a Motion for Reconsideration10of the foregoing Order on 2 July 2003, but it was denied by theRTC on 29 October 2003.11

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

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

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

(3) The alleged deliberate failure of the co-administrators to submit an accounting of the assets andliabilities of the estate does not warrant the Court's favorable action on the motion for payment.13

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

While the Court of Appeals conceded that Atty. Syquia and the Quasha Law Office, as the administratorsof the estate of the late Raymond Triviere, were entitled to administrator's fees and litigation expenses,

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

The appellate court likewise revoked the P450,000.00 share and P150,000.00 share awarded by the RTCto the children and widow of the late Raymond Triviere, respectively, on the basis that Section 1, Rule 91

of the Revised Rules of Court proscribes the distribution of the residue of the estate until all its obligationshave been paid.

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

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

WHEREFORE, premises considered, the instant petition is hereby PARTLY GRANTED. The assailed Ordersof the public respondent are hereby AFFIRMED with MODIFICATION in that -

(1) theshares awarded to the heirsof the deceased Triviere in the assailed Order of June 12, 2003 arehereby DELETED; andcralawlibrary

(2) the attorney's feesawarded in favor of the co-administrators are herebyDELETED. However,inasmuch as the assailed order fails to itemize these fees from the litigation fees/administrator's feesawarded in favor of the co-administrators, public respondent is hereby directed to determine withparticularity the fees pertaining to each administrator.15

Petitioner filed a Motion for Reconsideration16

of the 11 May 2006 Decision of the Court of Appeals. TheMotion, however, was denied by the appellate court in a Resolution dated 22 September2006,17explaining that:

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

[Herein petitioners], through counsel, likewise appear to be adopting in their motion for reconsideration astance conflicting with their earlier theory submitted to this Court. Notably, the memorandum for[petitioner] heirs states that the claim for attorney's fees is supported by the facts and law. To support

such allegation, they contend that Section 7 (3) of Rule 85 of the 1997 Rules of Civil Procedure finds noapplication to the instant case since "what is being charged are not professional fees for legal servicesrendered but payment for administration of the Estate which has been under the care and management ofthe co-administrators for the past fourteen (14) years." Their allegation, therefore, in their motion forreconsideration that Section 7 (3) of Rule 85 is inapplicable to the case of Quasha Law Offices because it is"merely seeking payment for legal services rendered to the estate and for litigation expenses" deservesscant consideration.

x x x

WHEREFORE, premises considered, private respondents' motion for reconsideration is hereby DENIED forlack of merit.18

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Exhausting all available legal remedies, petitioners filed the present Petition for Review on Certioraribasedon the following assignment of errors:

I.

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE AWARD IN FAVOR OF THE HEIRS OFTHE LATE RAYMOND TRIVIERE IS ALREADY A DISTRIBUTION OF THE RESIDUE OF THE ESTATE.

II.

THE HONORABLE COURT OF APPEALS ERRED IN NULLIFYING THE AWARD OF ATTORNEY'S FEES IN FAVOROF THE CO-ADMINISTRATORS

I

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

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

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

Section 1. When order for distribution of residue made. - When the debts, funeral charges, and expensesof administration, the allowance to the widow, and inheritance tax, if any, chargeable to the estate inaccordance with law, have been paid, the court, on the applicatio