RULE 87 Specpro

8/10/2019 RULE 87 Specpro

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RULE 87

Actions By and Against Executors and Administrators

Section 1. Actions which may and which may not be brought against executor or

administrator. No action upon a claim for the recovery of money or debt or interest

thereon shall be commenced against the executor or administrator; but to recover real or

personal property, or an interest therein, from the estate, or to enforce a lien thereon, and

actions to recover damages for an injury to person or property, real or personal, may be

commenced against him.

Section 2.Executor or administrator may bring or defend actions which survive . For the

recovery or protection of the property or rights of the deceased, an executor or

administrator may bring or defend, in the right of deceased, actions for causes which survive.

Section 3. Heir may not sue until shall assigned When an executor or administrator is

appointed and assumes the trust, no action to recover the title or possession of lands or for

damages done to such lands shall be maintained against him by an heir or devisee until there

is an order of the court assigning such lands to such heir or devisee or until the time allowed

for paying debts has expired.

Section 4.Executor or administrator may compound with debtor. Within the approval of

the court, an executor or administrator may compound with the debtor of the deceased for a

debt due, and may give a discharge of such debt on receiving a just dividend of the estate of

the debtor.

Section 5.Mortgage due estate may be foreclosed. A mortgage belonging to the estate of

a deceased person, as mortgagee or assignee of the right or a mortgage may be foreclosed

by the executor or administrator.

Section 6.Proceedings when property concealed, embezzled, or fraudulently conveyed. If

an executor or administrator, heir, legatee, creditor or other individual interested in the

estate of the deceased, complains to the court having jurisdiction of the estate that a person

is suspected of having concealed, embezzled, or conveyed away any of the money, goods, or

chattels of the deceased, or that such person has in his possession or has knowledge of any

deed, conveyance, bond, contract, or other writing which contains evidence of or tends or

discloses the right, title, interest, or claim of the deceased, the court may cite such suspected

person to appear before it any may examine him on oath on the matter of such complaint;and if the person so cited refuses to appear, or to answer on such examination or such

interrogatories as are put to him, the court may punish him for contempt, and may commit

him to prison until he submits to the order of the court. The interrogatories put any such

person, and his answers thereto, shall be in writing and shall be filed in the clerk's office.

Section 7. Person entrusted with estate compelled to render account. The court, on

complaint of an executor or administrator, may cite a person entrusted by an executor or

administrator with any part of the estate of the deceased to appear before it, and may

require such person to render a full account, on oath, of the money, goods, chattels, bonds,

account, or other papers belonging to such estate as came to his possession in trust for such

executor or administrator, and of his proceedings thereon; and if the person so cited refuses

to appear to render such account, the court may punish him for contempt as having

disobeyed a lawful order of the court.

Section 8.Embezzlement before letters issued If a person, before the granting of letters

testamentary or of administration on the estate of the deceased, embezzles or alienates any

of the money, goods, chattels, or effects of such deceased, such person shall be liable to an

action in favor of the executor or administrator of the estate for double the value of the

property sold, embezzled, or alienated, to be recovered for the benefit of such estate.

Section 9.Property fraudulently conveyed by deceased may be recovered. When executor oradministrator must bring action. When there is a deficiency of assets in the hands of an

executor or administrator for the payment of debts and expenses of administration, and the

deceased in his lifetime had conveyed real or p ersonal property, or a right or interest therein,

or an debt or credit, with intent to defraud his creditors or to avoid any right, debt, or duty;

or had so

conveyed such property, right, interest, debt or credit that by law the conveyance would be

void as against his creditors, and the subject of the attempted co nveyance would be liable to

attachment by any of them in his lifetime, the executor or administrator may commence and

prosecute to final judgment an action for the recovery of such property, right, interest, debt,

or credit for the benefit of the creditors; but he shall not be bound to commence the action

unless on application of the creditors of the deceased, not unless the creditors making the

application pay such part of the costs and expenses, or give security therefor to the executoror administrator, as the court deems equitable.

Section 10.When creditor may bring action.Lien for costs. When there is such a deficiency

of assets, and the deceased in his lifetime had made or attempted such a conveyance, as is

stated in the last preceding section, and the executor or administrator has not commenced

the action therein provided for, any creditor of the estate may, with the permission of the

court, commence and prosecute to final judgment, in the name of the executor or

administrator, a like action for the recovery of the subject of the conveyance or attempted

conveyance for the benefit of the creditors. But the action shall not be commenced until the

creditor has filed in a court a bond executed to the executor or administrator, in an amount

approved by the judge, conditioned to indemnify the executor or administrator against the

costs and expenses incurred by reason of such action. Such creditor shall have a lien upon

any judgment recovered by him in the action for such costs and other expenses incurred

therein as the court deems equitable. Where the conveyance or attempted conveyance had

been made by the deceased in his lifetime in favor of the executor or administrator, the

action which a credit may bring shall be in the name of all the creditors, and permission of

the court and filing of bond as above prescribed, are not necessary.


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1.

VALERA V. INSERTO (1987)

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 s pouses 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 s ettlement of the intestate estate of the decedent spouses, RafaelValera 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 c onveyed 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 yetprescribed, 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:


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(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 toBranch 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 denied 23-filed a notice

of appeal from said Order. 24 But he quickly abandoned the appeal when, as aforestated 25Judge 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 t heory 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 o f 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 limitedjurisdiction 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 finaldecision in a separate action that may be instituted by the parties. 32


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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 thedecedent'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 o ccasion 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 dueweight, and in the absence of stro ng 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 sincemoreover, 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.


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2.

ABS-CBN V. OMBUDSMAN (2010)

Before us is a Motion for Reconsideration filed by petitioners Eugenio, Jr., Oscar and Augusto

Almeda, all surnamed Lopez, in their capacity as officers and on behalf of petitioner ABS -CBN

Broadcasting Corporation (ABS-CBN), of our Decision in G.R. No. 133347, dismissing their

petition for certiorari because of the absence of grave abuse of discretion in the Ombudsman

Resolution which, in turn, found no probable cause to indict respondents for the following

violations of the Revised Penal Code (RPC): (1) Article 298 Execution of Deeds by Means of

Violence or Intimidation; (2) Article 315, paragraphs 1[b], 2[a], and 3[a] Estafa; (3) Article

308 Theft; (4) Article 302 Robbery; (5) Article 312 Occupation of Real Property orUsurpation of Real Rights in Property; and (6) Article 318Other Deceits.

The assailed Decision disposed of the case on two (2) points: (1) the dropping of respondents

Roberto S. Benedicto and Salvador (Buddy) Tan as respondents in this case due to their

death, consistent with our rulings in People v. Bayotas1 and Benedicto v. Court of Appeals;2

and (2) our finding that the Ombudsman did not commit grave abuse of discretion in

dismissing petitioners criminal complaint against respondents.

Undaunted, petitioners ask for a reconsideration of our Decision on the following grounds:

I.

WITH DUE RESPECT, THE EXECUTION AND VALIDITY OF THE LETTER-AGREEMENT DATED 8

JUNE 1973 ARE PLAINLY IRRELEVANT TO ASCERTAINING THE CRIMINAL LIABILITY OF THE

RESPONDENTS AND, THEREFORE, THE ISSUE AS TO WHETHER SAID AGREEMENT WAS

RATIFIED OR NOT IS IMMATERIAL IN THE PRESENT CASE.

II.

WITH DUE RESPECT, RESPONDENTS BENEDICTO AND TAN SHOULD NOT BE DROPPED AS

RESPONDENTS SIMPLY BECAUSE THEY MET THEIR UNTIMELY DEMISE DURING THE

PENDENCY OF THE CASE.3

Before anything else, we note that petitioners filed a Motion to Refer the Case to the Court

en banc.4 Petitioners aver that the arguments contained in their Motion for Reconsideration,such as: (1) the irrelevance of the civil law concept of ratification in determining whether a

crime was committed; and (2) the continuation of the criminal complaints against

respondents Benedicto and Tan who have both died, to prosecute their possible civil liability

therefor, present novel questions of law warranting resolution by t he Court en banc.

In the main, petitioners argue that the Decision is contrary to law because: (1) the ratification

of the June 8, 1973 letter-agreement is immaterial to the determination of respondents

criminal liability for the aforestated felonies in the RPC; and (2) the very case cited in our

Decision, i.e. People v. Bayotas,5 allows for the continuation of a criminal case to prosecute

civil liability based on law and is independent of the civil liability arising from the crime.

We disagree with petitioners. The grounds relied upon by petitioners in both motions, being

intertwined, shall be discussed jointly. Before we do so, parenthetically, the counsel for

respondent Miguel V. Gonzales belatedly informed this Court of his clients demise on July20, 2007.6 Hence, as to Gonzales, the case must also be dismissed.1avvphi1

Contrary to petitioners assertion, their motion for reconsideration does not contain a novel

question of law as would merit the attention of this Court sitting en banc. We also find no

cogent reason to reconsider our Decision.

First and foremost, there is, as yet, no criminal case against respondents, whether against

those who are living or those otherwise dead.

The question posed by petitioners on this long-settled procedural issue does not constitute a

novel question of law. Nowhere in People v. Bayotas7 does it state that a criminal complaintmay continue and be prosecuted as an independent civil action. In fact, Bayotas, once and for

all, harmonized the rules on the extinguished and on the subsisting liabilities of an accused

who dies. We definitively ruled:

From this lengthy disquisition, we summarize our ruling herein:

1. Death of an accused pending appeal of his conviction extinguishes his criminal liability as

well as the civil liability based solely thereon. As opined by Justice Regalado, in this regard,

"the death of the accused prior to final judgment terminates his criminal liability and only the

civil liability directly arising from and based solely on the offense committed, i.e., civil liability

ex delicto in senso strictiore."

2. Corollarily, the claim for civil liability survives notwithstanding the death of accused, if the

same may also be predicated on a source of obligation other than delict. Article 1157 of the

Civil Code enumerates these other sources of obligation from which the civil liability may

arise as a result of the same act or omission:

a) Law

b) Contracts

c) Quasi-contracts

d) Delicts

e) Quasi-delicts

3. Where the civil liability survives, as explained in Number 2 above, an action for recovery

thereof may be pursued but only by filing a separate civil action and subject to Section 1,Rule 111 of the 1985 Rules o n Criminal Procedure as amended. This separate civil action may

be enforced either against the executor/administrator or the estate of the accused,

depending on the source of obligation upon which the same is based as explained above.

4. Finally, the private offended party need not fear a forfeiture of his right to file this

separate civil action by prescription, in cases where during the prosecution of the criminal

action and prior to its extinction, the private offended party instituted together therewith

the civil action. In such case, the statute of limitations on the civil liability is deemed

interrupted during the pendency of the criminal case, conformably with provisions of Article

1155 of the Civil Code, that should thereby avoid any apprehension on a possible

[de]privation of right by prescription.

From the foregoing, it is quite apparent that Benedicto, Tan, and Gonzales, who all diedduring the pendency of this case, should be dropped as party respondents. If on this score


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alone, our ruling does not warrant reconsideration. We need not even delve into the explicit

declaration in Benedicto v. Court of Appeals.8

Second, and more importantly, we dismissed the petition for certiorari filed by petitioners

because they failed to show grave abuse of discretion on the part of the Ombudsman when

he dismissed petitioners criminal complaint against respondents for lack of probable cause.

We reiterate that our inquiry was limited to a determination of whether the Ombudsman

committed grave abuse of discretion when he found no probable cause to indict respondents

for various felonies under the RPC. The invocation of our certiorari jurisdiction over the act of

a constitutional officer, such as the Ombudsman, must adhere to the strict requirementsprovided in the Rules of Court and in jurisprudence. The determination of whether there was

grave abuse of discretion does not, in any way, constitute a novel question of law.

We first pointed out in our Decision that the complaint-affidavits of petitioners, apart from a

blanket charge that remaining respondents, Gonzales (who we thought was alive at that

time) and Exequiel Garcia, are officers of KBS/RPN and/or alter egos of Benedicto, are bereft

of sufficient ground to engender a well-founded belief that crimes have been committed and

that respondents, namely, Gonzales and Garcia, are probably guilty thereof and should be

held for trial. Certainly, no grave abuse of discretion can be imputed to the Ombudsman that

would warrant a reversal of his Resolution.

The charges of individual petitioners Eugenio, Jr., Oscar and Augusto Almeda against

respondents, Gonzales and Garcia, contained in their respective complaint-affidavits simply

consisted of the following:

1. Complaint-affidavit of Eugenio, Jr.

32.1. I was briefed that Senator Estanislao Fernandez in representation of Benedicto, met

with Senator Taada at the Club Filipino in June 1976. Discussions were had on how to arrive

at the "reasonable rental" for the use of ABS-CBN stations and facilities. A second meeting at

Club Filipino took place on July 7, 1976 between Senators Taada and Fernandez, who

brought along Atty. Miguel Gonzales, a close associate and lawyer of Benedicto and an

officer of KBS.

x x x x

38.2. The illegal takeover of ABS-CBN stations, studios and facilities, and the loss and/or

damages caused to our assets occurred while Benedicto, Exequiel Garcia, Miguel Gonzales,

and Salvador Tan were in possession, control and management of our network. Roberto S.

Benedicto was the Chairman of the Board of KBS-RPN and its Chief Executive Officer (CEO), to

whom most of the KBS-RPN officers reported while he was in Metro Manila. Miguel

Gonzales, the Vice-President of KBS, and Exequiel Garcia, the Treasurer, were the alter egos

of Benedicto whenever the latter was out of the country; x x x.9

2. Complaint-affidavit of Oscar

25. All the illegal activities as complained of above, were done upon the orders, instructions

and directives of Roberto S. Benedicto, the Chairman of the Board and Chief Executive Officerof the KBS/RPN group; Miguel Gonzales and Exequiel Garcia, close colleagues and business

partners of Benedicto who were either directors/officers KBS/RPN and who acted as

Benedictos alter egos whenever the latter was out of the country; x x x.

x x x x

38. Senator Estanislao Fernandez, in representation of Benedicto, met with Senator Taada

at the Club Filipino on June 1976. Discussions were had on how to arrive at the "reasonable

rental" for the use of ABS stations and facilities. A second meeting at Club Filipino took place

on July 7, 1976 between Senators Taada and Fernandez, who brought along Atty. Mike

Gonzales, a close associate and friend of Benedicto and an officer of KBS.10

3. Complaint-affidavit of Augusto Almeda

21.1. Barely two weeks from their entry into the ABS Broadcast Center, KBS personnel

started making unauthorized withdrawals from the ABS Stock Room. All these withdrawals of

supplies and equipment were made under the orders of Benedicto, Miguel Gonzales,

Exequiel Garcia, and Salvador Tan, the Chairman, the Vice-President, Treasurer, and the

General Manager of KBS, respectively. No payment was ever made by either Benedicto or

KBS for all the supplies and equipment withdrawn from the ABS Broadcast Center.

x x x x

31. Senator Estanislao Fernandez, in representation of Benedicto, met with Senator Taada

at the Club Filipino on June 1976. Discussions were had on how to arrive at the "reasonable

rental" for the use of ABS stations and facilities. A second meeting at Club Filipino took place

on July 7, 1976 between Senators Taada and Fernandez, who brought along Atty. Mike

Gonzales, a close associate and friend of Benedicto and an officer of KBS.11

From the foregoing, it is beyond cavil that there is no reason for us to depart from our policy

of non-interference with the Ombudsmans finding of probable cause or lack thereof. On the

strength of these allegations, we simply could not find any rational basis to impute grave

abuse of discretion to the Ombudsmans dismissal of the criminal complaints.

Third, we did not state in the Decision that ratification extinguishes criminal liability. We

simply applied ratification in determining the conflicting claims of petitioners regarding theexecution of the letter-agreement. Petitioners, desperate to attach criminal liability to

respondents acts, specifically to respondent Benedicto, alleged in their complaint-affidavits

that Benedicto forced, coerced and intimidated petitioners into signing the letter-agreement.

In other words, petitioners disown this letter-agreement that they were supposedly forced

into signing, such that this resulted in a violation of Article 298 of the RPC (Execution of

Deeds by means of Violence or Intimidation).

However, three elements must concur in order for an offender to be held liable under Article

298:

(1) that the offender has intent t o defraud another.

(2) that the offender compels him to sign, execute, or deliver any public instrument ordocument.


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(3) that the compulsion is by m eans of violence or intimidation.12

The element of intent to defraud is not present because, even if, initially, as claimed by

petitioners, they were forced to sign the letter-agreement, petitioners made claims based

thereon and invoked the provisions thereof. In fact, petitioners wanted respondents to honor

the letter-agreement and to pay rentals for the use of the ABS-CBN facilities. By doing so,

petitioners effectively, although they were careful not to articulate this fact, affirmed their

signatures in this letter-agreement.

True, ratification is primarily a principle in our civil law on contracts. Yet, their subsequentacts in negotiating for the rentals of the facilities which translate into ratification of the

letter-agreement cannot be disregarded simply because ratification is a civil law concept.

The claims of petitioners must be consistent and must, singularly, demonstrate respondents

culpability for the crimes they are charged with. Sadly, petitioners failed in this regard

because, to reiterate, they effectively ratified and advanced the validity of this letter-

agreement in their claim against the estate of Benedicto.

Finally, we take note of the conflicting claim of petitioners by filing a separate civil action to

enforce a claim against the estate of respondent Benedicto. Petitioners do not even

specifically deny this fact and simply sidestep this issue which was squarely raised in the

Decision. The Rules of Court has separate provisions for different claims against the estate of

a decedent under Section 5 of Rule 86 and Section 1 of Rule 87:

RULE 86.

SECTION 5. Claims which must be filed under the notice. If not filed, barred; exceptions.All

claims for money against the decedent, arising from contract, express or implied, whether

the same be due, not due, or contingent, all claims for funeral expenses and expenses for the

last sickness of the decedent, and judgment for money against the decedent, must be filed

within the time limited in the notice; otherwise they are barred forever, except that they

may be set forth as counter claims in any action that the executor or administrator may bring

against the claimants. Xxx Claims not yet due, or contingent, may be approved at their

present value.

RULE 87.

SECTION 1. Actions which may and which may not be brought against executor or

administrator. No action upon a claim for the recovery of money or debt or interest

thereon shall be commenced against the executor or administrator; but actions to recover

real or personal property, or an interest therein, from the estate, or to enforce a lien

thereon, and actions to recover damages for an injury to person or property, real or

personal, may be commenced against him.

If, as insisted by petitioners, respondents committed felonies in forcing them to sign the

letter-agreement, petitioners should have filed an action against the executor or

administrator of Benedictos estate based on Section 1, Rule 87 of the Rules of Cou rt. But

they did not. Instead they filed a claim against the estate based on contract, the

unambiguous letter-agreement, under Section 5, Rule 86 of the Rules of Co urt. The existenceof this claim against the estate of Benedicto as opposed to the filing of an action against the

executor or administrator of Benedictos estate forecloses all issues on the circumstances

surrounding the execution of this letter- agreement.

We are not oblivious of the fact that, in the milieu prevailing during the Marcos years,

incidences involving intimidation of businessmen were not uncommon. Neither are we

totally unaware of the reputed closeness of Benedicto to President Marcos. However, given

the foregoing options open to them under the Rules of Court, petitioners choice of remedies

by filing their claim under Section 5, Rule 86 after Marcos had already been ousted and full

democratic space restored works against their contention, challenging the validity of the

letter-agreement. Now, petitioners must live with the consequences of their choice.

WHEREFORE, in light of the foregoing, the Motion to Refer the Case to the Court en banc and

the Motion for Reconsideration are DENIED.


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RULE 88

PAYMENT OF THE DEBTS OF THE ESTATE

Section 1.Debts paid in full if estate sufficient. If, after hearing all the money claims against the estate,

and after ascertaining the amount of such claims, it appears that there are sufficient assets to pay the

debts, the executor or administrator pay the same within the time limited for that purpose.

Section 2. Part of estate from which debt paid when provision made by will. If the testator makes

provision by his will, or designates the estate to be appropriated for the payment of his debts, the

expenses of administration, or the family expenses, they shall be paid according to the provisions of the

will; but if the provision made by the will or the estate appropriated, is not sufficient for that purpose,such part of the estate of the testator, real or personal, as is not disposed of by will, if any shall be

appropriated for that purpose.

Section 3.Personalty first chargeable for debts, then realty. The personal estate of the deceased not

disposed of by will shall be first chargeable with the payment of debts and expenses; and if said personal

estate is not sufficient for tat purpose, or its sale would redound to the detriment of the participants for

the estate, the whole of the real estate not dispose of by will, or so much thereof as is necessary, may be

sold, mortgaged, or otherwise encumbered for that purpose by the executor or administrator, after

obtaining the authority of the court therefor. Any deficiency shall be met by contributions in accordance

with the provisions of section 6 of this rule.

Section 4.Estate to be retained to meet contingent claims . If the court is satisfied that a contingent

claim duly filed is valid, it may order the executor or administrator to retain in his hands sufficient estate

to pay such contingent claim when the same becomes absolute, or if the estate is insolvent, sufficient to

pay a portion equal to the dividend of the other creditors.

Section 5. How contingent claim becoming absolute in two years allowed and paid.Action against

distributees later. 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 disturbed 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.

Section 6. Court to fix contributive shares where devisees, legalitees, or heirs have been possession .

Where devisees, legalitees, or heirs have entered into possession of portions of the estate before the

debts and expenses have been settled and paid, and have become liable to contribute for the payment

of such debts and expenses, the court having jurisdiction of the estate may, by order for that purpose,

after hearing, settle the amount of their several liabilities, and order how much and in what manner each

person shall contribute, and may issue execution as circumstances require.

Section 7. Order of payment if estate insolvent If the assets which can be appropriated for the

payment of debts are not sufficient for that purpose, the executor or administrator shall pay the debts

against the estate, observing the provisions of Articles 1059 and 2239 to 2251 of the Civil Code.

Section 8. Dividends to be paid in proportion to claims . If there are no assets sufficient to pay the

credits of any once class of creditors after paying the credits entitled to preference over it, each creditor

within such class shall be paid a dividend in proportion to his claim. No creditor of any one class shall

receive any payment until those of the preceding class are paid.

Section 9. Estate of insolvent non-resident, how disposed of. In case administration is taken in the

Philippine of the estate of a person who was at the time of his death an inhabitant of another country,

and who died insolvent, hi estate found in the Philippines shall, as far as practicable, be so disposed of

that his creditors here and elsewhere may receive each an equal share, in proportion to their respective

credits.

Section 10.When and how claim proved outside the Philippines against insolvent resident's estate paid.

If it appears to the court having jurisdiction that claims have been duly proven in another country

against the estate of an insolvent who was at the time of his death an inhabitant of the Philippines, and

that the executor or administrator in the Philippines had knowledge of the presentation of such claims in

such country and an opportunity to contest their allowance, the court shall receive a certified list of such

claims, when perfected in such country, and add the same to the list of claims proved against the

deceased person in the Philippines so that a just distribution of the whole estate may be made equally

among all its creditors according to their respective claims; but the benefit of this and the preceding

sections shall not be extended to the creditors in another country if the property of such deceased

person there found is not equally apportioned to the creditors residing in the Philippines and the other

creditor, according to their respective claims.

Section 11.Order for payment of debts. Before the expiration of the time limited for the payment of

the debts, the court shall order the payment thereof, and the distribution of the assets received by the

executor or administrator for that purpose among the creditors, as the circumstances of the estate

require and in accordance with the provisions of this rule.

Section 12.Orders relating to payment of debts where appeal is taken . If an appeal has been taken

from a decision of the court concerning a claim, the court may suspend the order for the payment of the

debts or may order the distributions among the creditors whose claims are definitely allowed, leaving inthe hands of the executor or administrator sufficient assets to pay the claim disputed and appealed.

When a disputed claim is finally settled the court having jurisdiction of the estate shall order the same to

be paid out of the assets retained to the same extent and in the same proportion with the claims of

other creditors.

Section 13.When subsequent distribution of assets ordered. If the whole of the debts are not paid on

the first distribution, and if the whole assets are not distributed, or other assets afterwards come to the

hands of the executor or administrator, the court may from time to time make further orders for the

distributions of assets.

Section 14.Creditors to be paid in accordance with terms of order. When an order is made for the

distribution of assets among the creditors, the executor or administration shall, as soon as the time of

payment arrives, pay the creditors the amounts of their claims, or the dividend thereon, in accordance

with the terms of such order.

Section 15.Time for paying debts and legacies fixed,or extended after notice,within what periods. On

granting letters testamentary or administration the court shall allow to the executor or administrator a

time for disposing of the estate and paying the debts and legacies of the deceased, which shall not, in

the first instance, exceed one (1) year; but the court may, on application of the executor or administrator

and after hearing on such notice of the time and place therefor given to all persons interested as it shall

direct, extend the time as the circumstances of the estate require not exceeding six (6) months for a

single extension not so that the whole period allowed to the original executor or administrator shall

exceed two (2) years.

Section 16.Successor of dead executor or administrator may have time extended on notice within certain

period. When an executor or administrator dies, and a new administrator of the same estate is

appointed, the court may extend the time allowed for the payment of the debts or legacies beyond the

time allowed to the original executor or administrator, not exceeding six (6) months at a time and not

exceeding six (6) months beyond the time which the court might have allowed to such original executor

or administrator; and notice shall be given of the time and place for hearing such application, as requiredin the last preceding section.


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RULE 89

SALES, MORTGAGES, AND OTHER ENCUMBRANCES OF PROPERTY OF DECEDENT

Section 1.Order of sale of personalty. Upon the application of the executor or administrator, and on

written notice to the heirs and other persons interested, the court may order the whole or a part of the

personal estate to be sold, if it appears necessary for the purpose of paying debts, expenses of

administration, or legacies, or for the preservation of the property.

Section 2.When court may authorize sale, mortgage, or other encumbrance of realty to pay debts and

legacies through personalty not exhausted. When the personal estate of the deceased is not sufficient

to pay the debts, expenses of administration, and legacies, or where the sale of such personal estate mayinjure the business or other interests of those interested in the estate, and where a testator has not

otherwise made sufficient provision for the payment of such debts, expenses, and legacies, the court, on

the application of the executor or administrator and on written notice of the heirs, devisees, and

legatees residing in the Philippines, may authorize the executor or administrator to sell, mortgage, or

otherwise encumber so much as may be necessary of the real estate, in lieu of personal estate, for the

purpose of paying such debts, expenses, and legacies, if it clearly appears that such sale, mortgage, or

encumbrance would be beneficial to the persons interested; and if a part cannot be sold, mortgaged, or

otherwise encumbered without injury to those interested in the remainder, the authority may be for the

sale, mortgage, or other encumbrance of the whole of such real estate, or so much thereof as is

necessary or beneficial under the circumstances.

Section 3.Persons interested may prevent such sale, etc.,by giving bond. No such authority to sell,

mortgage, or otherwise encumber real or personal estate shall be granted if any person interested in the

estate gives a bond, in a sum to be fixed by the court, conditioned to pay the debts, expenses of

administration, and legacies within such time as the court directs; and such bond shall be for the securityof the creditors, as well as of the executor or administrator, and may be prosecuted for the benefit of

either.

Section 4. When court may authorize sale of estate as beneficial to interested persons . Disposal of

proceeds. When it appears that the sale of the whole or a part of the real or personal estate, will be

beneficial to the heirs, devisees, legatees, and other interested persons, the court may, upon application

of the executor or administrator and on written notice to the heirs, devisees, and legatees who are

interested in the estate to be sold, authorize the executor or administrator to sell the whole or a part of

said estate, although not necessary to pay debts, legacies, or expenses of administration; but such

authority shall not be granted if inconsistent with the provisions of a will. In case of such sale, the

proceeds shall be assigned to the persons entitled to the estate in the proper proportions.

Section 5.When court may authorize sale, mortgage, or other encumbrance of estate to pay debts and

legacies in other countries. When the sale of personal estate, or the sale, mortgage, or other

encumbrance of real estate is not necessary to pay the debts, expenses of administration, or legacies in

the Philippines, but it appears from records and proceedings of a probate court in another country that

the estate of the deceased in such other country is not sufficient to pay the debts, expenses of

administration, and legacies there, the court here may authorize the executor or administrator to sell the

personal estate or to sell, mortgage, or otherwise encumber the real estate for the payment of debts or

legacies in the other country, in same manner as for the payment of debts or legacies in the Philippines.

Section 6. When court may authorize sale, mortgage, or other encumbrance of realty acquired on

execution or foreclosure. The court may authorize an executor or administrator to sell mortgage, or

otherwise encumber real estate acquired by him on execution or foreclosure sale, under the same

cicumstances and under the same regulations as prescribed in this rule for the sale, mortgage, or other

encumbrance of other real estate.

Section 7. Regulation for granting authority to sell, mortgage, or otherwise encumber estate . The

court having jurisdiction of the estate of the deceased may authorize the executor or administrator to

sell personal estate, or to sell, mortgage, or otherwise encumber real estate, in cases provided by these

rules and when it appears necessary or beneficial under the following regulations.

(a) The executor or administrator shall file a written petition setting forth the debts due from the

deceased, the expenses of administration, the legacies, the value of the personal estate, the situation of

the estate to be sold, mortgaged, or otherwise encumbered, and such other facts as show that the sale,

mortgage, or other encumbrance is necessary or beneficial.

(b) The court shall thereupon fix a time and place for hearing such petition, and cause notice stating thenature of the petition, the reasons for the same, and the time and place of hearing, to be given

personally or by mail to the persons interested, and may cause such further notice to be given, by

publication or otherwise, as it shall deem proper;

(c) If the court requires it, the executor or administrator shall give an additional bond, in such sum as the

court directs, conditioned that such executor or administrator will account for the proceeds of the sale,

mortgage, or other encumbrance;

(d) If the requirements in the preceding subdivisions of this section have been complied with, the court,

by order stating such compliance, may authorize the executor or administrator to sell, mortgage, or

otherwise encumber, in proper cases, such part of the estate as is deemed necessary, and in case of sale

the court may authorize it to be public or private, as would be most beneficial to all parties concerned.

The executor or administrator shall be furnished with a certified copy of such order;

(e) If the estate is to be sold at auction, the mode of giving notice of the time and place of the sale shallbe governed by the provisions concerning notice of execution sale;

(f) There shall be recorded in the registry of deeds of the province in which the real estate thus sold,

mortgage, or otherwise encumbered is situated, a certified copy of the order of the court, together with

the deed of the executor or administrator for such real estate, which shall be as valid as if the deed had

been executed by the deceased in his lifetime.

Section 8. When court may authorize conveyance of realty which deceased contracted to

convey.Notice.Effect of deed. Where the deceased was in his lifetime under contract, binding in law,

to deed real property, or an interest therein, the court having jurisdiction of the estate may, on

application for that purpose, authorize the executor or administrator to convey such property according

to such contract, or with such modifications as are agreed upon by the parties and approved by the

court; and if the contract is to convey real property to the executor or administrator, the clerk of court

shall execute the deed. The deed executed by such executor, administrator, or clerk of court shall be as

affectual to convey the property as if executed by the deceased in his lifetime; but no such conveyanceshall be authorized until notice of the application for that purpose has been given personally or by mail

to all persons interested, and such further notice has been given, by publication or otherwise, as the

court deems proper; nor if the assets in the hands of the executor or administrator will thereby be

reduced so as to prevent a creditor from receiving his full debt or diminish his dividend.

Section 9.When court may authorize conveyance of lands which deceased held in trust. Where the

deceased in his lifetime held real property in trust for another person, the court may after notice given

as required in the last preceding section, authorize the executor or administrator to deed such property

to the person, or his executor or administrator, for whose use and benefit it was so held; and the court

may order the execution of such trust, whether created by deed or by law.


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1.

PAHAMATONG V. PNB (2005)

Assailed and sought to be set aside in this appeal by way of a petition for review on certiorari

under Rule 45 of the Rules of Court are the following issuances of the Court of Appeals in CA-

G.R. CV No. 65290, to wit:

1. Decision dated March 20, 2002,1 granting the appeal and reversing the appealed August 7,

1998 decision of the Regional Trial Court at Davao City; and

2. Resolution dated November 20, 2002, denying herein petitioners' motion forreconsideration.2

The factual background:

On July 1, 1972, Melitona Pahamotang died. She was survived by her husband Agustin

Pahamotang, and their eight (8) children, namely: Ana, Genoveva, Isabelita, Corazon, Susana,

Concepcion and herein petitioners Josephine and Eleonor, all surnamed Pahamotang.

On September 15, 1972, Agustin filed with the then Court of First Instance of Davao City a

petition for issuance of letters administration over the estate of his deceased wife. The

petition, docketed as Special Case No. 1792, was raffled to Branch VI of said court,

hereinafter referred to as the intestate court.

In his petition, Agustin identified petitioners Josephine and E leonor as among the heirs o f his

deceased spouse. It appears that Agustin was appointed petitioners' judicial guardian in an

earlier case - Special Civil Case No. 1785 also of the CFI of Davao City, Branch VI.

On December 7, 1972, the intestate court issued an order granting Agustins petition.

On July 6, 1973, respondent Philippine National Bank (PNB) and Agustin executed an

Amendment of Real and Chattel Mortgages with Assumption of Obligation. It appears that

earlier, or on December 14, 1972, the intestate court approved the mortgage to PNB of

certain assets of the estate to secure an obligation in the amount of P570,000.00. Agustin

signed the document in behalf of (1) the estate of Melitona; (2) daughters Ana and Corazon;

and (3) a logging company named Pahamotang Logging Enterprises, Inc. (PLEI) whichappeared to have an interest in the properties of the estate. Offered as securities are twelve

(12) parcels of registered land, ten (10) of which are covered by transfer certificates of title

(TCT) No. 2431, 7443, 8035, 11465, 21132, 4038, 24327, 24326, 31226 and 37786, all of the

Registry of Deeds of Davao City, while the remaining two (2) parcels by TCTs No. (3918) 1081

and (T-2947) 562 of the Registry of Deeds of Davao del Norte and Davao del Sur, respectively.

On July 16, 1973, Agustin filed with the intestate court a Petition for Authority To Increase

Mortgage on the above mentioned properties of the es tate.

In an Order dated July 18, 1973, the intestate court granted said petition.

On October 5, 1974, Agustin again filed with the intestate court another petition, Petition for

Declaration of Heirs And For Authority To Increase Indebtedness, whereunder he alleged th enecessity for an additional loan from PNB to capitalize the business of the estate, the

additional loan to be secured by additional collateral in the form of a parcel of land covered

by Original Certificate of Title (OCT) No. P-7131 registered in the name of Heirs of Melitona

Pahamotang. In the same petition, Agustin prayed the intestate court to declare him and

Ana, Genoveva, Isabelita, Corazon, Susana, Concepcion and herein petitioners Josephine and

Eleonor as the only heirs of Melitona.

In an Order of October 19, 1974, the intestate court granted Agustin authority to seek

additional loan from PNB in an amount not exceeding P5,000,000.00 to be secured by the

land covered by OCT No. P-7131 of the Registry of Deeds of Davao Oriental, but denied

Agustins prayer for declaration of heirs for being premature.

On October 22, 1974, a real estate mortgage contract for P4,500,000.00 was executed by

PNB and Agustin in his several capacities as: (1) administrator of the estate of his late wife;

(2) general manager of PLEI; (3) attorney-in-fact of spouses Isabelita Pahamotang and

Orlando Ruiz, and spouses Susana Pahamotang and Octavio Zamora; and (4) guardian of

daughters Concepcion and Genoveva and petitioners Josephine and Eleonor. Offered as

securities for the additional loan are three (3) parcels of registered land covered by TCTs No.

T-21132, 37786 and 43264.

On February 19, 1980, Agustin filed with the intestate court a Petition (Request for Judicial

Authority To Sell Certain Properties of the Estate), therein praying for authority to sell to

Arturo Arguna the properties of the estate covered by TCTs No. 7443, 8035, 11465, 24326

and 31226 of the Registry of Deeds of Davao City, and also TCT No. (T-3918) T-1081 of the

Registry of Deeds of Davao del No rte.

On February 27, 1980, Agustin yet filed with the intestate court another petition, this time a

Petition To Sell the Properties of the Estate, more specifically referring to the property

covered by OCT No. P-7131, in favor of PLEI.

In separate Orders both dated February 25, 1980, the intestate court granted Agustin

authority to sell estate properties, in which orders the court also required all the heirs of

Melitona to give their express conformity to the disposal of the subject properties of the

estate and to sign the deed of sale to be submitted to the same court. Strangely, the two (2)

orders were dated two (2) days earlier than February 27, 1980, the day Agustin supposedly

filed his petition.

In a motion for reconsideration, Agustin prayed the intestate court for the amendment of

one of its February 25, 1980 Orders by canceling the requirement of express conformity of

the heirs as a condition for the disposal of the aforesaid properties.

In its Order of January 7, 1981, the intestate court granted Agustins prayer.

Hence, on March 4, 1981, estate properties covered by TCTs No. 7443,11465, 24326, 31226,

8035, (T-2947) 662 and (T-3918) T-1081, were sold to respondent Arturo Arguna, while the

property covered by OCT No. P-7131 was sold to PLEI. Consequent to such sales, vendees

Arguna and PLEI filed witt the intestate court a motion for the approval of the corresponding

deeds of sale in their favor. And, in an Order dated March 9, 1981, the intestate court

granted the motion.


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Thereafter, three (3) daughters of Agustin, namely, Ana, Isabelita and Corazon petitioned the

intestate court for the payment of their respective shares from the sales of estate properties,

which was granted by the intestate court.

Meanwhile, the obligation secured by mortgages on the subject properties of the estate was

never satisfied. Hence, on the basis of the real estate mortgage contracts dated July 6, 1973

and October 22, 1974, mortgagor PNB filed a petition for the extrajudicial foreclosure of the

mortgage.

Petitioner Josephine filed a motion with the intestate court for the issuance of an orderrestraining PNB from extrajudicially foreclosing the mortgage. In its Order dated August 19,

1983, the intestate court denied Josephines motion. Hence, PNB was able to foreclose the

mortgage in its favor.

Petitioners Josephine and Eleanor, together with their sister Susana Pahamatong-Zamora,

filed motions with the intestate court to set aside its Orders of December 14, 1972 [Note: the

order dated July 18, 1973 contained reference to an order dated December 14, 1972

approving the mortgage to PNB of certain properties of the estate], July 18, 1973, October

19, 1974 and February 25, 1980.

In an Order dated September 5, 1983, the intestate court denied the motions, explaining:

"Carefully analyzing the aforesaid motions and the grounds relied upon, as well as the

opposition thereto, the Court holds that the supposed defects and/or irregularities

complained of are mainly formal or procedural and not substantial, for which reason, the

Court is not persuaded to still disturb all the orders, especially that interests of the parties to

the various contracts already authorized or approved by the Orders sought to be set aside

will be adversely affected".3

Such was the state of things when, on March 20, 1984, in the Regional Trial Court at Davao

City, petitioners Josephine and Eleanor, together with their sister Susana, filed their

complaint for Nullification of Mortgage Contracts and Foreclosure Proceedings and Damages

against Agustin, PNB, Arturo Arguna, PLEI, the Provincial Sheriff of Mati, Davao Oriental, the

Provincial Sheriff of Tagum, Davao del Norte and the City Sheriff of Davao City. In their

complaint, docketed as Civil Case No. 16,802 which was raffled to Branch 12 of the court, thesisters Josephine, Eleanor and Susana prayed for the following reliefs:

"1.) The real estate mortgage contracts of July 6, 1973 and that of October 2, 1974, executed

by and between defendants PNB AND PLEI be declared null and vo id ab initio;

2.) Declaring the foreclosure proceedings conducted by defendants-sheriffs, insofar as they

pertain to the assets of the estate of Melitona L. Pahamotang, including the auction sales

thereto, and any and all proceedings taken thereunder, as null and void ab initio;

3.) Declaring the Deed of Absolute Sale, Doc. No. 473; Page No.96; Book No.VIII, Series of

1981 of the Notarial Registry of Paquito G. Balasabas of Davao City evidencing the

sale/transfer of the real properties described therein to defendant Arturo S. Arguna, as null

and void ab initio;

4.) Declaring the Deed of Absolute Sale, Doc. No. 474; Page No. 96, Book No. VIII, series of

1981 of the Notarial Registry of Paquito G. Balasabas of Davao City, evidencing the

sale/transfer of real properties to PLEI as null and void ab initio;

5.) For defendants to pay plaintiffs moral damages in such sums as may be found to be just

and equitable under the premises;

6.) For defendants to pay plaintiffs, jointly and severally, the expenses incurred in connection

with this litigation;

7.) For defendants to pay plaintiffs, jointly and severally attorney's fees in an amount to be

proven during the trial;

8.) For defendants to pay the costs of the suit".4

PNB moved to dismiss the complaint, which the trial court granted in its Order of January 11,

1985.

However, upon motion of the plaintiffs, the trial court reversed itself and ordered defendant

PNB to file its answer.

Defendant PNB did file its answer with counterclaim, accompanied by a cross-claim against

co-defendants Agustin and PLEI.

During the ensuing pre-trial conference, the parties submitted the following issues for the

resolution of the trial court, to wit:

"1. Whether or not the Real Estate Mortgage contracts executed on July 6, 1973 and October

2, 1974 (sic) by and between defendants Pahamotang Logging Enterprises, Inc. and the

Philippine National Bank are null and void?

2. Whether or not the foreclosure proceedings conducted by defendants-Sheriffs, insofar as

they affect the assets of the Estate of Melitona Pahamotang, including the public auction

sales thereof, are null and void?

3. Whether or not the Deed of Absolute Sale in favor of defendant Arturo Arguna entered as

Doc. No. 473; Page No. 96; Book No. VIII, series of 1981 of the Notarial Register of Notary

Public Paquito Balasabas is null and void?

4. Whether or not the Deed of Absolute Sale in favor of defendant Pahamotang Logging

Enterprises, Inc. entered as Doc. No. 474; Page No. 96; Book No. VIII, series of 1981 of the

Notarial Register of Notary Public Paquito Balasabas is null and void?

5. On defendant PNB's cross-claim, in the event the mortgage contracts and the foreclosure

proceedings are declared null and void, whether or not defendant Pahamotang Logging

Enterprises, Inc. is liable to the PNB?

6. Whether or not the d efendants are liable to the plaintiffs for damages?


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7. Whether or not the plaintiffs are liable to the defendants for damages"?5

With defendant Arturo Argunas death on October 31, 1990, the trial court ordered his

substitution by his heirs: Heirs of Arturo Alguna.

In a Decision dated August 7, 1998, the trial court in effect rendered judgment for the

plaintiffs. We quote the decisions dispositive portion:

"WHEREFORE, in view of all the foregoing, judgment is hereby rendered as follows:

1. Declaring the Mortgage Contracts of July 6, 1973 and October 22, 1974, as well as the

foreclosure proceedings, void insofar as it affects the share, interests and property rights of

the plaintiffs in the assets of the estate of Melitona Pahamotang, but valid with respect to

the other parties;

2. Declaring the deeds of sale in favor of defendants Pahamotang Logging Enterprises, Inc.

and Arturo Arguna as void insofar as it affects the shares, interests and property rights of

herein plaintiffs in the assets of the estate of Melitona Pahamotang but valid with respect to

the other parties to the said deeds of sale.

3. Denying all the other claims of the parties for lack of strong, convincing and competent

evidence.

No pronouncement as to costs.

SO ORDERED".6

From the aforementioned decision of the trial court, PNB, PLEI and the Heirs of Arturo

Arguna went on appeal to the Court of Appeals in CA-G.R. CV No. 65290. While the appeal

was pending, the CA granted the motion of Susana Pahamatong-Zamora to withdraw from

the case.

As stated at the threshold hereof, the Court of Appeals, in its Decision dated March 20,

2002,7 reversed the appealed decision of the trial court and dismissed the petitioners

complaint in Civil Case No. 16,802, thus:

WHEREFORE, the appeal is hereby GRANTED. The assailed August 07, 1998 Decision

rendered by the Regional Trial Court of Davao City, Branch 12, is hereby REVERSED and SET

ASIDE and a new one is entered DISMISSING the complaint filed i n Civil Case No. 16,802.

SO ORDERED.

The appellate court ruled that petitioners, while ostensibly questioning the validity of the

contracts of mortgage and sale entered into by their father Agustin, were essentially

attacking collaterally the validity of the four (4) orders of the intestate court in Special Case

No. 1792, namely:

1. Order dated July 18, 1973, granting Agustins Petition for Authority to Increase Mortgage;

2. Order dated October 19, 1974, denying Agustins petition for declaration of heirs but

giving him authority to seek additional loan from PNB;

3. Order dated February 25, 1980, g iving Agustin permission to sell properties of the estate to

Arturo Arguna and PLEI; and

4. Order dated January 7, 1981, canceling the requirement of express conformity by th e heirs

as a condition for the disposal of estate properties.

To the appellate court, petitioners committed a fatal error of mounting a collateral attack onthe foregoing orders instead of initiating a direct action to annul them. Explains the Court of

Appeals:

"A null and void judgment is susceptible to direct as well as collateral attack. A direct attack

against a judgment is made through an action or proceeding the main object of which is to

annul, set aside, or enjoin the enforcement of such judgment, if not carried into effect; or if

the property has been disposed of, the aggrieved party may sue for recovery. A collateral

attack is made when, in another action to obtain a different relief, an attack on t he judgment

is made as an incident in said action. This is proper only when the judgment, on its fact, is

null and void, as where it is patent that the court which rendered such judgment has no

jurisdiction. A judgment void on its face may also be attacked directly.

xxx xxx xxx

Perusing the above arguments and comparing them with the settled ruling, the plaintiffs-

appellees [now petitioners], we believe had availed themselves of the wrong remedy before

the trial court. It is clear that they are collaterally attacking the various orders of the intestate

court in an action for the nullification of the subject mortgages, and foreclosure proceedings

in favor of PNB, and the deeds of sale in favor of Arguna. Most of their arguments stemmed

from their allegations that the various orders of the intestate court were issued without a

notification given to them. An examination, however, of the July 18, 1973 order shows that

the heirs of Melitona have knowledge of the petition to increase mortgage filed by Agustin,

thus:

`The petitioner testified that all his children including those who are of age have no objectionto this petition and, as matter of fact, Ana Pahamotang, one of the heirs of Melitona

Pahamotang, who is the vice-president of the logging corporation, is the one at present

negotiating for the increase of mortgage with th e Philippine National Bank.'

The presumption arising from those statements of the intestate court is that the heirs were

notified of the petition for the increase of mortgage.

The same can be seen in the October 19, 1974 order:

`The records show that all the known heirs, namely Ana, Isabelita, Corazon, Susana, including

the incompetent Genoveva, and the minors Jo sephine, Eleanor and Concepcion all surnamed

were notified of the hearing of the petition.'


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On the other hand, the February 25, 1980 order required Agustin to obtain first express

conformity from the heirs before the subject property be sold to Arguna. The fact that this

was reconsidered by the intestate court in its January 07, 1981 is of no moment. The

questioned orders are valid having been issued in accordance with law and procedure. The

problem with the plaintiffs-appellees is that, in trying to nullify the subject mortgages and

the foreclosure proceedings in favor of PNB and the deeds of sale in favor of Arguna, they are

assailing the aforesaid orders of the intestate court and in attacking the said orders, they

attached documents that they believe would warrant the conclusion that the assailed orders

are null and void. This is a clear collateral attack of the orders of the intestate court which is

not void on its face and which cannot be allowed in the present action. The defects allegedby the plaintiff-appellees are not apparent on the face of the assailed orders. Their recourse

is to ask for the declaration of nullity of the said orders, not in a collateral manner, but a

direct action to annul the same".8

The same court added that petitioners failure to assail said orders at the most opportune

time constitutes laches:

"In their complaint below, plaintiffs, appellees are assailing in their present action, four

orders of the intestate court namely: July 18, 1973, October 19, 1974, February 25, 1980 and

January 07, 1981 orders which were then issued by Judge Martinez. It should be recalled that

except for the January 07, 1981 order, Judge Jacinto, upon taking over Sp. No. 1792, denied

the motion of the plaintiffs-appellees to set aside the aforesaid orders. Aside from their

motion before Judge Jacinto, nothing on the records would show that the plaintiffs-appellees

availed of other remedies to set aside the questioned orders. Further, the records would not

show that the plaintiffs-appellees appealed the order of Judge Jacinto. If an interval of two

years, seven months and ninety nine days were barred by laches, with more reason should

the same doctrine apply to the present case, considering that the plaintiffs-appellees did not

avail of the remedies provided by law in impugning the various orders of the intestate court.

Thus, the questioned orders of the intestate court, by operation of law became final. It is a

fundamental principle of public policy in every jural system that at the risk of occasional

errors, judgments of courts should become final at some definite time fixed by law (interest

rei publicae ut finis sit litum). The very object of which the courts were constituted was to

put an end to controversies. Once a judgment or an order of a court has become final, the

issues raised therein should be laid to rest. To date, except as to the present action which we

will later discuss as improper, the plaintiff-appellees have not availed themselves of otheravenues to have the orders issued by Judge Martinez and Judge Jacinto annulled and set

aside. In the present case, when Judge Jacinto denied the motion of the plaintiffs-appellees,

the latter had remedies provided by the rules to assail such order. The ruling by Judge Jacinto

denying plaintiffs-appellees motion to set aside the questioned orders of Judge Martinez has

long acquired finality. It is well embedded in our jurisprudence, that judgment properly

rendered by a court vested with jurisdiction, like the RTC, and which has acquired finality

becomes immutable and unalterable, hence, may no longer be modified in any respect

except only to correct clerical errors or mistakes. Litigation must have and always has an end.

If not, judicial function will lose its relevance".

In time, petitioners moved for a reconsideration but their motion was denied by the

appellate court in its Resolution of November 20, 2002.

Hence, petitioners present recourse, basically praying for the reversal of the CA decision and

the reinstatement of that of the trial court.

We find merit in the petition.

It is petitioners posture that the mortgage contracts dated July 6, 1973 and October 22, 1974

entered into by Agustin with respondent PNB, as well as his subsequent sale of estate

properties to PLEI and Arguna on March 4, 1981, are void because they [petitioners] never

consented thereto. They assert that as heirs of their mother Melitona, they are entitled to

notice of Agustin's several petitions in the intestate court seeking authority to mortgage andsell estate properties. Without such notice, so they maintain, the four orders of the intestate

court dated July 18, 1973, October 19, 1974, February 25, 1980 and January 7, 1981, which

allowed Agustin to mortgage and sell estate properties, are void on account of Agustins non -

compliance with the mandatory requirements of Rule 89 of the Rules of Court.

Prescinding from their premise that said orders are completely void and hence, could not

attain finality, petitioners maintain that the same could be attacked directly or collaterally,

anytime and anywhere.

For its part, respondent PNB asserts that petitioners cannot raise as issue in this proceedings

the validity of the subject orders in their desire to invalidate the contracts of mortgage

entered into by Agustin. To PNB, the validity of the subject orders of the intestate court can

only be challenged in a direct action for such purpose and not in an action to annul contracts,

as the petitioners have done. This respondent adds that the mortgage on the subject

properties is valid because the same was made with the approval of the intestate court and

with the knowledge of the heirs of Melitona, petitioners included.9

Upon the other hand, respondent Heirs of Arturo Arguna likewise claim that petitioners knew

of the filing with the intestate court by Agustin of petitions to mortgage and sell the estate

properties. They reecho the CAs ruling that petitioners are barred by laches in filing Civil

Case No. 16,802.10

As we see it, the determinative question is whether or not petitioners can obtain relief from

the effects of contracts of sale and mortgage entered into by Agustin without first initiating a

direct action against the orders of the intestate court authorizing the challenged contracts.

We answer the question in the affirmative.

It bears emphasizing that the action filed by the petitioners before the trial court in Civil Case

No. 16,802 is for the annulment of several contracts entered into by Agustin for and in behalf

of the estate of Melitona, namely: (a) contract of mortgage in favor of respondent PNB, (b)

contract of sale in favor of Arguna involving seven (7) parcels of land; and (c) contract of sale

of a parcel of land in favor of PLEI.

The trial court acquired jurisdiction over the subject matter of the case upon the allegations

in the complaint that said contracts were entered into despite lack of notices to the heirs of

the petition for the approval of those contracts by the intestate court.


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Contrary to the view of the Court of Appeals, the action which petitioners lodged with the

trial court in Civil Case No. 16,802 is not an action to annul the orders of the intestate court,

which, according to CA, cannot be done collaterally. It is the validity of the contracts of

mortgage and sale which is directly attacked in t he action.

And, in the exercise of its jurisdiction, the trial court made a factual finding in its decision of

August 7, 1998 that petitioners were, in fact, not notified by their father Agustin of the filing

of his petitions for permission to mortgage/sell the estate properties. The trial court made

the correct conclusion of law that the challenged orders of the intestate court granting

Agustins petitions were null and void for lack of compliance with the mandatoryrequirements of Rule 89 of the Rules of Court, particularly Sections 2, 4, 7 thereof, which

respectively read:

"Sec. 2. When court may authorize sale, mortgage, or other encumbrance of realty to pay

debts and legacies through personalty not exhausted. - When the personal estate of the

deceased is not sufficient to pay the debts, expenses of administration, and legacies, or

where the sale of such personal estate may injure the business or other interests of those

interested in the estate, and where a testator has not otherwise made sufficient provision for

the payment of such debts, expenses, and legacies, the court, on the application of the

executor or administrator and on written notice to the heirs, devisees, and legatees residing

in the Philippines, may authorize the executor or administrator to sell, mortgage, or

otherwise encumber so much as may be necessary of the real estate, in lieu of personal

estate, for the purpose of paying such debts, expenses, and legacies, if it clearly appears that

such sale, mortgage, or encumbrance would be beneficial to the persons interested; and if a

part cannot be sold, mortgaged, or otherwise encumbered without injury to those interested

in the remainder, the authority may be for the sale, mortgage, or other encumbrance of the

whole of such real estate, or so much thereof as is necessary or beneficial under the

circumstances".

"Sec. 4. When court may authorize sale of estate as beneficial to intere

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