1.

San Luis vs San Luis (2007)

G.R. No. 133743 | 2007-02-06
Subject: For purposes of fixing the venue of the settlement of his estate, the residence of
decedent refers to actual residence; In the application of venue statutes and rules,
residence rather than domicile is the significant factor; Residence for purposes of election
laws vs. Residence for purposes of fixing the venue of actions; Petition for letters of
administration was validly filed before the RTC of Makati City; Divorce obtained abroad by
alien spouse shall enable the Filipino spouse to remarry; Proof of foreign divorce and foreign
law; Felicidad has the legal personality to file the petition for letters of administration as an
interested person, being a co-owner of the properties subject of the estate proceedings
Facts:
The case involves the settlement of the estate of Felicisimo T. San Luis (Felicisimo), who was
the former governor of the Province of Laguna. During his lifetime, Felicisimo contracted three
marriages.
His first marriage was with Virginia Sulit on March 17, 1942 , with whom he had six children. In
1963, Virginia predeceased Felicisimo.
On May 1, 1968, Felicisimo married Merry Lee Corwin, with whom he had a son, Tobias.
However, in 1971, Merry Lee, an American citizen, filed for and was granted a Decree of
Absolute Divorce by the family court of Hawaii, USA.
On June 20, 1974, Felicisimo married respondent FelicidadSagalongos, before Rev. Fr. William
Meyer, Minister of the United Presbyterian in Los Angeles, California, USA. He had no children
with Felicidad but lived with her for 18 years from the time of their marriage up to his death
on December 18, 1992.
Thereafter, Felicidad filed a petition for letters of administration before the Regional Trial Court
(RTC) of Makati City for the settlement of Felicisimo's estate.
Petitioner Rodolfo San Luis, one of the children of Felicisimo by his first marriage (to Virginia),
filed a motion to dismiss on the grounds of improper venue and failure to state a cause of
action. Rodolfo claimed that the petition for letters of administration should have been filed in
the Province of Laguna because this was Felicisimo's place of residence prior to his death. He
further claimed that respondent has no legal personality to file the petition because she was
only a mistress of Felicisimo since the latter, at the time of his death, was still legally married
to Merry Lee Corwin. Linda later joined her brother Rodolfo in seeking the dismissal.
The RTC issued an Order denying both motions to dismiss. Meanwhile, Felicidad submitted
documentary evidence showing that while Felicisimo exercised the powers of his public office
in Laguna, he regularly went home to their house in New Alabang Village, Alabang, Metro
Manila which they bought sometime in 1982. Further, she presented the decree of absolute
divorce issued by the Family Court of Hawaii to prove that the marriage of Felicisimo to Merry
Lee had already been dissolved. Thus, she claimed that Felicisimo had the legal capacity to
marry her by virtue of Article 26 (2) of the Family Code and the doctrine laid down in Van Dorn
v. Romillo, Jr.
Petitioner filed a motion for reconsideration of the Order asserting that Article 26 (2) of the
Family Code cannot be given retroactive effect to validate respondent's bigamous marriage
with Felicisimo because this would impair vested rights in derogation of Article 256 of the
Family Code.
The RTC (Branch 146) ruled that Felicidad, as widow of the decedent, possessed the legal
standing to file the petition and that venue was properly laid. However, the case was re1

raffled and the RTC (Branch 134) dismissed the petition for letters of administration. It held
that, at the time of his death, Felicisimo was the duly elected governor and a resident of the
Province of Laguna. Hence, the petition should have been filed in Sta. Cruz, Laguna and not in
Makati City. It also ruled that respondent was without legal capacity to file the petition for
letters of administration because her marriage with Felicisimo was bigamous, thus, void ab
initio. It found that the decree of absolute divorce dissolving Felicisimo's marriage to Merry
Lee was not valid in the Philippines and did not bind Felicisimo who was a Filipino citizen. It
also ruled that paragraph 2, Article 26 of the Family Code cannot be retroactively applied
because it would impair the vested rights of Felicisimo's legitimate children.
The Court of Appeals (CA) reversed RTC Branch 134 and reinstated the decision of RTC Branch
146. The CA ruled that the term "place of residence" of the decedent, for purposes of fixing
the venue of the settlement of his estate, refers to the actual residence or place of abode of a
person. It noted that although Felicisimo discharged his functions as governor in Laguna, he
actually resided in Alabang, Muntinlupa. Thus, the petition for letters of administration was
properly filed in Makati City. The CA also held that Felicisimo had legal capacity to marry
respondent under Art 26(2), reasoning that, the foreign divorce having been obtained by the
foreigner, the Filipino divorcee shall have capacity to remarry under Philippine laws".
Hence, Edgar San Luis (with Rodolfo) filed the present petition for review on certiorari.
The issues for resolution are : (1) whether venue was properly laid, and (2) whether
respondent has legal capacity to file the subject petition for letters of administration.
Held:
For purposes of fixing the venue of the settlement of his estate, the residence of decedent
refers to actual residence
1. Under Section 1, Rule 73 of the Rules of Court, the petition for letters of administration of
the estate of Felicisimo should be filed in the Regional Trial Court of the province "in which
he resides at the time of his death.
2. For purposes of fixing the venue of the settlement of his estate, the term "resides"
connotes ex vi termini "actual residence" as distinguished from "legal residence or
domicile." (see Garcia Fule v. Court of Appeals)
In the application of venue statutes and rules, residence rather than domicile is the significant
factor
3. The term "resides" should be interpreted in the light of the object or purpose of the
statute or rule in which it is employed. In the application of venue statutes and rules - Section
1, Rule 73 of the Revised Rules of Court is of such nature - residence rather thandomicile is
the significant factor. Even where the statute uses the word "domicile" still it is construed as
meaning residence and not domicile in the technical sense. Some cases make a distinction
between the terms "residence" and "domicile" but as generally used in statutes fixing venue,
the terms are synonymous, and convey the same meaning as the term "inhabitant." In other
words, "resides" should be viewed or understood in its popular sense, meaning, the personal,
actual or physical habitation of a person, actual residence or place of abode. It signifies
physical presence in a place and actual stay thereat. In this popular sense, the term means
merely residence, that is, personal residence, not legal residence or domicile. Residence
simply requires bodily presence as an inhabitant in a given place, while domicile requires
bodily presence in that place and also an intention to make it one's domicile. No particular
length of time of residence is required though; however, the residence must be more than
temporary. (see Garcia Fule v. Court of Appeals)
4. It is incorrect for petitioners to argue that "residence," for purposes of fixing the venue of
the settlement of the estate of Felicisimo, is synonymous with "domicile."
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Residence for purposes of election laws vs. Residence for purposes of fixing the venue of
actions
5. The rulings in Nuval and Romualdez are inapplicable to the instant case because they
involve election cases. Needless to say, there is a distinction between "residence" for
purposes of election laws and "residence" for purposes of fixing the venue of actions.
6. In election cases, "residence" and "domicile" are treated as synonymous terms, that is,
the fixed permanent residence to which when absent, one has the intention of returning.
However, for purposes of fixing venue under the Rules of Court, the "residence" of a person is
his personal, actual or physical habitation, or actual residence or place of abode, which may
not necessarily be his legal residence or domicile provided he resides therein with continuity
and consistency. Hence, it is possible that a person may have his residence in one place and
domicile in another.
Petition for letters of administration was validly filed before the RTC of Makati City
7. While petitioners established that Felicisimo was domiciled in Sta. Cruz, Laguna,
respondent Felicidad proved that he also maintained a residence in Alabang, Muntinlupa from
1982 up to the time of his death. Felicidad submitted billing statements, letters of his children
to Felicisimo, calling cards, all indicating his address of at "100 San Juanico, Ayala Alabang,
Muntinlupa." Respondent also presented proof of membership of the deceased in the Ayala
Alabang Village Association.
8. Felicisimo was a resident of Alabang, Muntinlupa for purposes of fixing the venue of the
settlement of his estate. Consequently, the subject petition for letters of administration was
validly filed in the Regional Trial Court which has territorial jurisdiction over Alabang,
Muntinlupa. The subject petition was filed on December 17, 1993. At that time, Muntinlupa
was still a municipality and the branches of the Regional Trial Court of the National Capital
Judicial Region which had territorial jurisdiction over Muntinlupa were then seated in Makati
City as per Supreme Court Administrative Order No. 3. Thus, the subject petition was validly
filed before the Regional Trial Court of Makati City.
Divorce obtained abroad by alien spouse shall enable the Filipino spouse to remarry
9. Considering that Felicidad's marriage to Felicisimo was solemnized on June 20, 1974, or
before the Family Code took effect on August 3, 1988, the court must first resolve the issue of
whether a Filipino who is divorced by his alien spouse abroad may validly remarry under the
Civil Code.
10. The 1985 ruling in Van Dorn v. Romillo, Jr capacitates the Filipino spouse to remarry as a
necessary consequence of upholding the validity of a divorce obtained abroad by the alien
spouse. In other words, if the foreigner obtains a valid foreign divorce, the Filipino spouse shall
have capacity to remarry under Philippine law. As such, the Van Dorn case is sufficient basis in
resolving a situation where a divorce is validly obtained abroad by the alien spouse. With the
enactment of the Family Code and paragraph 2, Article 26 thereof, our lawmakers merely
codified the law already established through judicial precedent.(see Pilapil v. IbaySomera, Quita v. Court of Appeals, Republic v. Orbecido III, Garcia v. Recio)
11. Consequently, the divorce decree allegedly obtained by Merry Lee which absolutely
allowed Felicisimo to remarry, would have vested Felicidad with the legal personality to file
the present petition as Felicisimo's surviving spouse.
Proof of foreign divorce and foreign law
12. However, the records show that there is insufficient evidence to prove the validity of the
divorce obtained by Merry Lee as well as the marriage of Felicidad and Felicisimo under the
3

laws of the U.S.A.

13. In Garcia v. Recio, the Court laid down the specific guidelines for pleading and proving
foreign law and divorce judgments. It held that presentation solely of the divorce decree is
insufficient and that proof of its authenticity and due execution must be presented.
14. Under Sections 24 and 25 of Rule 132, a writing or document may be proven as a public
or official record of a foreign country by either (1) an official publication or (2) a copy thereof
attested by the officer having legal custody of the document. If the record is not kept in the
Philippines, such copy must be (a) accompanied by a certificate issued by the proper
diplomatic or consular officer in the Philippine foreign service stationed in the foreign country
in which the record is kept and (b) authenticated by the seal of his office.
15. With regard to Felicidad's marriage to Felicisimo allegedly solemnized in California, U.S.A.,
she submitted photocopies of the Marriage Certificate and the annotated text of the Family
Law Act of California which purportedly show that their marriage was done in accordance with
the said law. However, the Court cannot take judicial notice of foreign laws as they must be
alleged and proved. Therefore, this case should be remanded to the trial court for further
reception of evidence on the divorce decree obtained by Merry Lee and the marriage of
respondent and Felicisimo.
Felicidad has the legal personality to file the petition for letters of administration as an
interested person, being a co-owner of the properties subject of the estate proceedings
16. Even assuming that Felicisimo was not capacitated to marry Felicidad in 1974,
nevertheless, she has the legal personality to file the subject petition for letters of
administration, as she may be considered the co-owner of Felicisimo as regards the properties
that were acquired through their joint efforts during their cohabitation.
17. Section 6, Rule 78 of the Rules of Court states that letters of administration may be
granted to the surviving spouse of the decedent. However, Section 2, Rule 79 thereof also
provides that: A petition for letters of administration must be filed by an interested
person xxx.
18. An "interested person" has been defined as one who would be benefited by the estate,
such as an heir, or one who has a claim against the estate, such as a creditor. The interest
must be material and direct, and not merely indirect or contingent.
19. Felicidad would qualify as an interested person who has a direct interest in the estate of
Felicisimo by virtue of their cohabitation, the existence of which was not denied by
petitioners. If she proves the validity of the divorce and Felicisimo's capacity to remarry, but
fails to prove that her marriage with him was validly performed under the laws of the U.S.A.,
then she may be considered as a co-owner under Article 144 of the Civil Code. This provision
governs the property relations between parties who live together as husband and wife without
the benefit of marriage, or their marriage is void from the beginning. It provides that the
property acquired by either or both of them through their work or industry or their wages and
salaries shall be governed by the rules on co-ownership. In a co-ownership, it is not necessary
that the property be acquired through their joint labor, efforts and industry. Any property
acquired during the union is prima facie presumed to have been obtained through their joint
efforts. Hence, the portions belonging to the co-owners shall be presumed equal, unless the
contrary is proven.
20. Meanwhile, if she fails to prove the validity of both the divorce and the marriage, the
applicable provision would be Article 148 of the Family Code which has filled the hiatus in
Article 144 of the Civil Code by expressly regulating the property relations of couples living
together as husband and wife but are incapacitated to marry. In Saguid v. Court of
Appeals, the court held that even if the cohabitation or the acquisition of property occurred
before the Family Code took effect, Article 148 governs. Under the limited co-ownership of Art
4

148, co-ownership will only be up to the extent of the proven actual contribution of money,
property or industry. Absent proof of the extent thereof, their contributions and corresponding
shares shall be presumed to be equal.
21. Hence, Felicidad's legal capacity to file the subject petition for letters of administration
may arise from her status as the surviving wife of Felicisimo or as his co-owner under Article
144 of the Civil Code or Article 148 of the Family Code.
2. GARCIA-QUIAZON V. BELEN
FACTS:
If a person dies intestate, who are entitled to administer his/her estate? This is thequestion
answered in this case of Leo.
Leo married Amy in their hometown and begot two daughters with her, Zeny and Lani.As a
businessman, he used to travel to Manila on a business trip. In one of thosebusiness trips he
met Malou and fell in love with her. So about ten years after theirmarriage, Leo left his family
and transferred his residence to a suburban town in Manilawhere he asked Malou to stay
with him. Malou agreed, so they lived together ashusband and wife and eventually begot
a daughter, Lisa.
Somehow Leos business flourished and he was able to amass real and
personalproperties with his common law wife. But after about 18 years, Leo died without
leavingany will. When Malou and Lisa was gathering and compiling all the
papers anddocuments left behind by Leo for purposes of settling his estate, they discovered
thatLeos legal wife Amy was already married to another man (Lito) when she married Leoas
evidenced by a Marriage Certificate issued 50 years ago.
So Lisa as represented by her mother Malou filed a petition before the Regional TrialCourt
(RTC) for issuance of Letters of Administration praying that she be appointed asAdministratrix
of Leos properties. Lisa claimed that she is the natural child of Leohaving been conceived
and born at the time when her parents were both capacitated tomarry each other since Leos
supposed marriage to Amy was bigamous and null andvoid from the beginning. Thus she also
asked that Leos marriage to Amy be declaredvoid.
Amy and her two daughters, Zeny and Lani opposed this petition. They claimed thatthey are
the legitimate heirs of Leo and better entitled to administer his estate. Theycontended that
Leos marriage to Amy can no longer be questioned beyond the lifetimeof the parties to the
marriage.
The RTC however ruled in favor of Lisa and Malou. It directed the issuance of Letters
ofAdministration to Lisa upon posting of the necessary bond. On appeal, the Court ofAppeals
(CA) affirmed this decision. The CA likewise declared Amys marriage to Leo asvoid from the
beginning for being bigamous since Amy was previously married to a certain Lito when she
married Leo. The CA said that in a void marriage, it was asthough no marriage has taken
place, thus it cannot be the source of rights and can beattacked directly or collaterally by any
interested party even beyond the lifetimes of thehusband or wife.
ISSUES: Were the RTC and the CA correct?
HELD:Yes. The existence of Amys previous marriage to another man named Lito
celebratedsome 50 years ago was sufficiently established by the Certificate of Marriage
issued bythe parish priest in their hometown. Consequently in the absence of any showing
thatsuch marriage had been dissolved at the time Amy married Leo, the
inescapableconclusion is that the latter marriage is void ab initio. The CA is correct in
declaring itvoid because void marriages can be attacked directly or collaterally at any time,
evenbeyond the death of any party to such marriage.
On the other hand, the letters of administration in the estate proceedings can be issuedin
favor of of one who would be benefitted in the estate such as an heir or one who hasa claim
5

against the estate.In this case, Lisa has overwhelmingly established that she is the natural
child of Leoand Malou as she was conceived and born at the time her parents
were bothcapacitated to marry each other. So she is a compulsory heir of Leo who, under the
lawis entitled to her legitime after the debts of the estate are satisfied. She is therefore
aninterested party to whom letters of administration can be issued
3. AGTARAP V. AGTARAP

EDUARDO G. AGTARAP vs. SEBASTIAN AGTARAP

G.R. No. 177099 June 8, 2011
FACTS: Joaquin Agtarap died intestate on November 21, 1964 in Pasay City without any known debts or
obligations. During his lifetime, Joaquin contracted two marriages, first with Lucia Garcia (Lucia) and second with
Caridad Garcia (Caridad). Lucia died on April 24, 1924. Joaquin and Lucia had three children Jesus (died
without issue), Milagros, and Jose (survived by three children, namely, Gloria, Joseph, and Teresa). Joaquin
married Caridad on February 9, 1926. They also had three childrenEduardo, Sebastian, and Mercedes
(survived by her daughter Cecile). At the time of his death, Joaquin left two parcels of land with improvements in
Pasay City, covered by Transfer Certificates of Title (TCT) Nos. 873-(38254) and 874-(38255). Joseph, a
grandson of Joaquin, had been leasing and improving the said realties and had been appropriating for
himself P26,000.00 per month since April 1994. Eduardo asked to be appointed administrator. He was latter
appointed by the probate court and was issued with letters of administrator. Joseph, Gloria, and Teresa filed their
answer/opposition. They alleged that the two subject lots belong to the conjugal partnership of Joaquin with
Lucia, and that, upon Lucias death in April 1924, they became the pro indiviso owners of the subject
properties. They said that their residence was built with the exclusive money of their late father Jose, and the
expenses of the extensions to the house were shouldered by Gloria and Teresa, while the restaurant
(Manongs Restaurant) was built with the exclusive money of Joseph and his business partner. Thereafter,
the RTC issued an Order of Partition,holding that considering that the bulk of the estate property were acquired
during the existence of the second marriage as shown by TCT No. (38254) and TCT No. (38255) which showed
on its face that decedent was married to Caridad Garcia, which fact oppositors failed to contradict by evidence
other than their negative allegations, the greater part of the estate is perforce accounted by the second marriage
and the compulsory heirs thereunder. It also declared that the real estate properties belonged to the conjugal
partnership of Joaquin and Lucia. It also directed the modification of the October 23, 2000 Order of Partition to
reflect the correct sharing of the heirs. However, before the RTC could issue a new order of partition, Eduardo
and Sebastian both appealed to the CA. The CA settled, together with the settlement of the estate of Joaquin,
the estates of Lucia, Jesus, Jose, Mercedes, Gloria, and Milagros. Moreover, the CA the estate of Milagros in the
intestate proceedings despite the fact that a proceeding was conducted in another court for the probate of the
will of Milagros, bequeathing all to Eduardo whatever share that she would receive from Joaquin s estate.
CA also affirmed that the bulk of the realties subject of this case belong to the first marriage of Joaquin to Lucia,
notwithstanding that the certificates of title were registered in the name of Joaquin Agtarap casado con ("married
to") Caridad Garcia.
ISSUE: Whether or not the RTC, acting as an intestate court with limited jurisdiction, is vested with the power
and authority to determine questions of ownership.
HELD: Yes. The general rule is that the jurisdiction of the trial court, either as a probate or an intestate court,
relates only to matters having to do with the probate of the will and/or settlement of the estate of deceased
persons, but does not extend to the determination of questions of ownership that arise during the
proceedings.The patent rationale for this rule is that such court merely exercises special and limited
jurisdiction.As held in several cases, probate court or one in charge of estate proceedings, whether testate or
intestate, cannot adjudicate or determine title to properties claimed to be a part of the estate and which are
claimed to belong to outside parties, not by virtue of any right of inheritance from the deceased but by title
adverse to that of the deceased and his estate. All that the said court could do as regards said properties is to
determine whether or not they should be included in the inventory of properties to be administered by the
administrator. If there is no dispute, there poses no problem, but if there is, then the parties, the administrator,
and the opposing parties have to resort to an ordinary action before a court exercising general jurisdiction for a
final determination of the conflicting claims of title. However, this general rule is subject to exceptions as justified
by expediency and convenience. First, the probate court may provisionally pass upon in an intestate or a testate
proceeding the question of inclusion in, or exclusion from, the inventory of a piece of property without prejudice
to the final determination of ownership in a separate action. Second, if the interested parties are all heirs to the
estate, or the question is one of collation or advancement, or the parties consent to the assumption of jurisdiction
by the probate court and the rights of third parties are not impaired, then the probate court is competent to

resolve issues on ownership. Verily, its jurisdiction extends to matters incidental or collateral to the settlement
and distribution of the estate, such as the determination of the status of each heir and whether the property in
the inventory is conjugal or exclusive property of the deceased spouse. We hold that the general rule does not
apply to the instant case considering that the parties are all heirs of Joaquin and that no rights of third parties will
be impaired by the resolution of the ownership issue. More importantly, the determination of whether the subject
properties are conjugal is but collateral to the probate courts jurisdiction to settle the estate of Joaquin.
4. SUNTAY III V. COJUANGCO-SUNTAY

5. LEE V. RTC OF QC

6. HEIRS OF HILARIO RUIZ V. EDMOND RUIZ

Heirs of Hilario Ruiz vs. Court of Appeals (1996)
G.R. No. 118671 | 1996-01-29
Subject:
Grandchildren are not entitled to provisional support; Estate should be distributed only after
all the obligations are paid, including estate tax; Possession and management of the
properties is not absolute; only when necessary for the payment of the debts and expenses of
administration
Facts:
Hilario Ruiz executed a holographic will where he named Edmond Ruiz his only son, Maria Pilar
Ruiz Montes his adopted daughter and his three granddaughters (all daughters of Edmond
Ruiz) as heirs. Hilario bequeathed to his heirs substantial cash, personal and real properties
and named Edmond as the executor of his estate. When Hilario died, the cash component of
his estate was immediately distributed to his heirs. Edmond however, did not take any action
for the probate of his fathers holographic will. Four years after, Pilar filed before the Regional
Trial Court (RTC) a petition for the probate and approval of Hilarios will and for the issuance of
letters testamentary to Edmond. The latter however surprisingly opposed the petition on the
ground that the will was executed under undue influence. It was eventually found out that
Hilarios house and lot in Valle Verde which he bequeathed to his three granddaughters were
leased out by Edmond to third persons. Because of this, the probate court ordered him to
deposit with the Branch Clerk of Court the rental deposit and payments totaling P540,000.00.
He moved for the release of P50,000.00 to pay the real estate taxes on the real properties but
the court merely approved the release of P7,722.
Edmond eventually withdrew his opposition to the probate of the will. The probate court
admitted the will to probate and ordered the issuance of letters testamentary upon the filing
of the bond amounting to P50,000.00. The testate estate of Hilario, with Edmond Ruiz as
executor, filed an Ex-Parte Motion for Release of Funds. The probate court ordered the release
of the funds to Edmond but only such amount as may be necessary to cover the expenses of
administration and allowances for support of the three granddaughters subject to collation
and deductible from their share in the inheritance. It also ordered the release of the titles to
the Valle Verde property and Blue Ridge apartments to certain heirs six months after the date
of first publication of notice to creditors. Edmond opposed the same and said that the court
erred in disallowing him as the executor to take possession of all the real and personal
properties of the estate, in granting support to persons not entitled, and in distributing the
titles to some of the heirs.
Held:
7

Grandchildren are not entitled to provisional support

1. Grandchildren are not entitled to provisional support from the funds of the decedent's
estate. Section 3, Rule 86 clearly limits the allowance to "widow and children" and does not
extend it to the deceased's grandchildren, regardless of their minority or incapacity. Thus the
court erred in granting the release of administration and allowances for support to them.
Estate should be distributed only after all the obligations are paid, including estate tax

2. On the distribution of the estate, the law provides that the court may, in its discretion and
upon such terms as it may deem proper and just, permit that such part of the estate as may
not be affected by any controversy or appeal be distributed among the heirs or legatees, upon
compliance with the conditions set forth in Rule 90 of the Rules of Court.
3. In settlement of estate proceedings, the distribution of the estate properties can only be
made: (1) after all the debts, funeral charges, expenses of administration, allowance to the
widow, and estate tax have been paid; or (2) before payment of said obligations only if the
distributees or any of them gives a bond in a sum fixed by the court conditioned upon the
payment of said obligations within such time as the court directs, or when provision is made
to meet those obligations. (Section 90, Rules of Court)
4. In this case, the court ordered the release of the said titles after the lapse of six months
from the date of first publication of the notice to creditors. The questioned order speaks of
"notice" to creditors, not payment of debts and obligations, which is the one required by law.
Although Hilario did not leave any debts when he died, his estate isrequired to settle the
estate tax, being one of the obligations that must be paid before the distribution of the estate.
If not yet paid, the rule requires that the distributees post a bond or make such provisions as
to meet the said tax obligation, any of which were not done in this case.
Possession and management of the properties is not absolute; only when necessary for the
payment of the debts and expenses of administration
5. Edmond cannot raise that he was deprived of his right to take possession of all the real and
personal properties because he can exercise the same only when it is necessary for the
payment of the debts and expenses for administration.
6. His right of ownership over the properties of his father is merely inchoate as long as the
estate has not been fully settled and partitioned. As executor, he is a mere trustee of his
father's estate. The funds of the estate in his hands are trust funds and he is held to the
duties and responsibilities of a trustee of the highest order. He cannot unilaterally assign to
himself and possess all his parents' properties and the fruits thereof without first submitting
an inventory and appraisal of all real and personal properties of Hilario, rendering a true
account of his administration, the expenses of administration, the amount of the obligations
and estate tax, all of which are subject to a determination by the court as to their veracity,
propriety and justness.
7. union bank v santi banez

8. HEIRS OF MAGLASANG V. MBC

Heirs of the Late Spouses Maglasang v. Manila Banking Corp
September 23, 2013
Heirs of the Late Spouses Flaviano Maglasang and Salud Adaza-Maglasang, representing the Estates of the aforenamed Deceased
Parents (Oscar A. Maglasang, Edgar A. Maglasang, Concepcion Chona A. Magalasang, Glenda A. Maglasang-Arnaiz,
Lerma A.
Maglasang, Felma A. Maglasang, Fe Doris A. Maglasang, Leolino A. Maglasang, Margie Leila A. Maglasang, Ma.
Milalie A. Maglasang,
Salud Maglasang and Ma. Flasalie A. Maglasang)
vs.
Manila Banking Corporation, Now Substituted by First Sovereign Asset Management (SPV-AMC), Inc, INC. (FSAMI)
PERLAS-BERNABE, J.:
SUMMARY:
Sps. Maglasang obtained a credit line fromMBC secured by REM. When Flaviano Maglasang died, his son Edgar was
appointed as atty-in- fact by Flavianos heirs. He filed a petition for letters of administration of Flavianos intestate
estate w/c the probate court granted. Court issued a Notice to Creditors for filing of money claims against the estate.
MBC notified the court of its claim. When Court terminated the proceedings and executed an extra-judicial partition
over the properties, the loan obligations owed to MBC remained unsatisfied though the court recognized the rights of
MBC to foreclose the mortgage. MBC extrajudicially foreclosed the mortgage; however, after auction sale, a deficiency
remained on Maglasangs obligation. Thus, it filed a suit to recover the deficiency.
RTC ruled in their favor so Maglasangs appealed to CA contending that under Remedies available to Manila Banking
Corp. under Sec.7, Rule 86 of ROC are alternative and exclusive, such that the election of one operates as a waiver
of the others and since MBC filed a claim in the probate court, it has abandoned its right to foreclose the property and
is barred from recovering any deficiency. CA denied the appeal and contended that Act. 3135 applies w/c allows MBC
to extrajudicially foreclose and recover the deficiency.
HELD: MBC had a right to extrajudicially foreclose the property but it cannot recover the deficiency. Both Sec. 7, Rule
86 of ROC and Act. 3135 apply complementarily in the case at bar. Foreclosure under the 3 rd remedy in Sec. 7, Rule
86 of ROC includes extrajudicial foreclosure under Act. 3135. However, upon choosing said remedy, creditor waives
his right to recover the deficiency. When MBC sought to extra-judicially foreclose the mortgage of the properties
previously belonging to Sps. Maglasang and it therefore, availed of the third option waiving its right to recover the
deficiency.
DOCTRINE:
There are 3 remedies/options by secured creditor under Sec. 7, Rule 86: (a) waive the mortgage and claim the entire
debt from the estate of the mortgagor as an ordinary claim; (b) foreclose the mortgage judicially and prove the
deficiency as an ordinary claim; and (c) rely on the mortgage exclusively, or other security and foreclose the same
before it is barred by prescription, without the right to file a claim for any deficiency. These may be ALTERNATIVELY
adopted for the satisfaction of his indebtedness. However, these remedies are distinct, independent and mutually
EXCLUSIVE from each other; the election of one effectively BARS the exercise of the others.
Sec. 7, Rule 86 of ROC lays down the options for the secured creditor to claim against the estate and, according to
jurisprudence, the availment of the 3rd option BARS HIM FROM CLAIMING ANY DEFICIENCY amount. After 3rd

10

option is chosen (under Sec. 7, Rule 86), the procedure governing the manner in which the extra-judicial foreclosure
should proceed would still be governed by the provisions of Act No. 3135.
FACTS:
June 16, 75: Sps. Flaviano and Salud Maglasang obtained a credit line from Manila Banking Corp. for P350,000
which was secured by a real estate mortgage executed over 7 of their properties in Ormoc City and Kananga, Leyte.
They availed of their credit line by securing loans of P209,790.50 (Oct. 24, 75) & P139,805.83 (Mar. 15, 1976)
Both due and demandable w/n 1 year with interest @ 12% per annum & additional 4% penalty charged
upon default
Feb. 14, 1977: Flaviano Maglasang died intestate
Thus, his widow Salud Maglasang and their surviving children, herein petitioners, appointed their brother petitioner
Edgar Maglasang as their attorney-in- fact.
Other petitioners: Oscar, Concepcion Chona, Lerma, Felma, Fe Doris, Leolino, Margie Leila, Ma. Milalie,
Salud and Ma.
Mar. 30, 1977: Edgar filed a verified petition for letters of administration of the intestate estate of Flaviano before
CFI of Leyte, Ormoc City (probate court).
CFI-probate court (Aug. 9, 1977): Granted petition appointing Edgar as the administrator of Flavianos estate.
CFI-probate court (Aug. 30, 1977): In view of the issuance of letters of administration, probate court issued a Notice
to Creditors for the filing of money claims against Flavianos estate.
As one of the creditors of Flaviano, Manila Banking Corp. notified the probate court of its claim for P382,753.19 (as
of Oct. 11, 1978, exclusive of interests and charges).
During the pendency of the intestate proceedings, Edgar and Oscar were able to obtain several loans from Manila
Banking Corp, secured by promissory notes which they signed.
CFI-probate court (Dec. 14, 1978): Terminated the proceedings with the surviving heirs, executing an extra-judicial
partition of the properties of Flavianos estate.
o Loan obligations owed by the estate to Manila Banking Corp., however, remained unsatisfied due to Manila
o Nonetheless, probate court expressly recognized the rights of Manila Banking Corp. under the mortgage
and
Manila Banking Corp. proceeded to extra-judicially foreclose the mortgage covering the Sps. Maglasangs
properties and emerged as the highest bidder at the public auction for P350k done at Ormoc City.
There, however, remained a deficiency on Sps. Maglasangs obligation to Manila Banking Corp.
June 24, 1981: Manila Banking Corp. filed a suit to recover the deficiency of P250,601.05 as of May 31, 81 against
the estate ofFlaviano, his widow Salud and their children. Flasalie, all surnamed Maglasang, and Glenda MaglasangArnaiz. Banking Corp.s certification that Flavianos account was undergoing a restructuring. promissory notes
executed by the Sps. Maglasang, specifically, its right to foreclose the same within the statutory period.
RTC-former probate court (Apr. 6, 1987): Directed the Maglasangs to pay Manila Banking Corp. jointly and
severally, P434,742.36 representing the deficiency of the formers total loan obligation to the latter after the extrajudicial foreclosure of the REM with interest at the rate of 12% p.a., plus a 4% penalty charge, reckoned from Sept. 5,
1984 until fully paid + attys. fees (10% of the outstanding obligation)
Maglasangs elevated the case to CA on appeal, contending that:
o Remedies available to Manila Banking Corp. under Sec. 7, Rule 86 of ROC are alternative and exclusive,
such that the

11

o When Manila Banking Corp. filed its claim against the estate of Flaviano in the proceedings before the
probate court, it
o Even on the assumption that it has not so waived its right to foreclose, it is nonetheless barred from filing
any claim for
July 25, 97: During the pendency of the appeal, Flavianos widow, Salud, passed away.
CA (July 20, 2005): Denied Maglasangs appeal and affirmed RTCs Decision.
o Probate court erred when it closed and terminated the intestate proceedings (as seen in its Dec. 14, 78
Order) without
o As a consequence, Manila Banking Corp. was not able to collect from the Maglasangs and thereby was left
with the
o Sec. 7, Rule 86 of ROC does not apply since the case does not involve a mortgage made by the
administrator
o Act No. 3135 (An Act to Regulate the Sale of Property under Special Powers inserted or annexed to RealEstate
Maglasangs MR was subsequently denied; hence, this petition for review on certiorari by Heirs of Sps. Maglasang
o It is not Act No. 3135 but Sec. 7, Rule 86 of ROC which applies in this case. (same claims as that raised in
CA)
o The extra-judicial foreclosure of the subject properties was null and void, not having been conducted in the
capital of the
ISSUES:
1) Whether or not the CA erred in affirming the RTCs award of the deficiency amount in favor of Manila Banking
Corporation? (YES)
[corollarily, Whether Sec. 7, Rule 86 of ROC and not Act. 3135 applies in this case? (Both apply concordantly)]
2) Whether extrajudicial foreclosure of the subject properties was null and void? (NO)
HELD: The petition is partly meritorious.
RATIO:
(1) Both Sec. 7, Rule 86 of ROC and Act. 3135 apply complementarily in the case at bar. Foreclosure under the 3 rd
remedy in Sec. 7,
Rule 86 of ROC includes extrajudicial foreclosure under Act. 3135. However, upon choosing said remedy, creditor
waives his right to recover the deficiency.
Claims against deceased persons should be filed during the settlement proceedings of their estate. Such
proceedings are primarily governed by special rules found under Rules 73 to 90 of the Rules, although rules governing
ordinary actions may, as far as practicable, apply suppletorily
Among these special rules, Sec. 7, Rule 86 of ROC provides the rule in dealing with secured claims against the
estate.
Sec. 7, Rule 86 of ROC: Mortgage debt due from estate. A creditor holding a claim against the deceased secured
by a mortgage or other collateral security, may abandon the security and PROSECUTE his claim in the manner
provided in this rule, and share in the general distribution of the assets of the estate; OR he may FORECLOSE his
mortgage or realize upon his security, by ACTION in court, making the executor or administrator a party defendant,
and if there is a judgment for a deficiency, after the sale of the mortgaged premises, or the property pledged, in the
foreclosure or other proceeding to realize upon the security, he may CLAIM HIS DEFICIENCY judgment in the manner
provided in the preceding section; OR he may rely upon his mortgage or other security alone, and FORECLOSE the
same at any time within the period of the statute of limitations, and in that event he shall not be admitted as a creditor,

12

and shall receive no share in the distribution of the other assets of the estate; but nothing herein contained shall
prohibit the executor or administrator from redeeming the property mortgaged or pledged, by paying the debt for which
it is held as security, under the direction of the court, if the court shall adjudged it to be for the best interest of the
estate that such redemption shall be made.
COVERAGE OF THE RULE: The rule speaks of A creditor holding a claim against the deceased secured by a
mortgage or other collateral security, thus it covers all secured claims, whether by mortgage or any other form of
collateral, which a creditor may enforce against the estate of the deceased debtor.
o It does not narrowly apply only to mortgages made by the administrator over any property belonging to the
estate of
PNB v. CA relied by CA did not limit the scope of the rule as it only stated that Sec. 7, Rule 86 equally applies to
cases where the administrator mortgages the property of the estate to secure the loan he obtained. It was a ruling of
inclusion and not one which created a distinction.
Thus, Sec. 7, Rule 86 applies to: A creditors claim against the mortgaged property of the deceased debtor, as in
this case AND mortgages made by the administrator, as that in the PNB case.
3 Remedies/Options by Secured Creditor under Sec. 7, Rule 86
(a) waive the mortgage and claim the entire debt from the estate of the mortgagor as an ordinary claim;
(b) foreclose the mortgage judicially and prove the deficiency as an ordinary claim; and
(c) rely on the mortgage exclusively, or other security and foreclose the same before it is barred by prescription,
without the right to file a claim for any deficiency election of one operates as a waiver or abandonment of the others.
effectively abandoned its right to foreclose on the mortgage. any deficiency amount. first satisfying the claims of the
creditors of the estate (ie. Manila Banking Corp.) in violation of Sec. 1, Rule 90 of ROC option of foreclosing the real
estate mortgage over any property belonging to the estate of the decedent pursuant to PNB v CA. Mortgages) is
applicable which entitles Manila Banking Corp. to claim the deficiency amount after the extra-judicial foreclosure of the
real estate mortgage of Sps. Maglasangs properties.
Province of Leyte in violation of the stipulations in the real estate mortgage contract. the decedent (as claimed by CA).
Note though that mortgages of estate property executed by the administrator are also governed by Rule 89, captioned
as Sales, Mortgages, and Other Encumbrances of Property of Decedent.
RULE: These may be ALTERNATIVELY adopted for the satisfaction of his indebtedness. However, these remedies
are distinct, independent and mutually EXCLUSIVE from each other; the election of one effectively BARS the exercise
of the others.
Bank of America v. American Realty Corporation (w/ respect to real properties): In our jurisdiction, the remedies
available to the mortgage creditor are deemed ALTERNATIVE and not cumulative. Notably, an election of one remedy
operates as a WAIVER of the other.
When Remedy Deemed Elected by Mortgage Creditor
o JUDICIAL FORECLOSURE: Upon the filing of the suit for collection OR upon the filing of the complaint in an
action for foreclosure of mortgage, pursuant to Rule 68 of the 1997 Rules of Civil Procedure.
o EXTRAJUDICIAL FORECLOSURE: Upon filing of the petition not with any court of justice but with the Office
of the Sheriff
of the province where the sale is to be made, in accordance with the provisions of Act No. 3135, as amended
by Act No. 4118.
Third Option includes Extrajudicial Foreclosure
Third remedy includes the option of extra-judicially foreclosing the mortgage under Act No. 3135, as availed of by
Manila
Banking Corp. in this case.
Under Extrajudicial Foreclosure by Creditor: No right to Deficiency

13

 However, the plain result of adopting the last mode of foreclosure is that the creditor waives his right to recover any
deficiency from the estate.
PNB v CA case, citing Perez v. PNB which overturned earlier Pasno v. Ravina ruling:
o Perez v. PNB reversing Pasno vs. Ravina: After examination, we observe that the dissenting opinion in our
ruling in
Pasno v. Ravina is more in conformity with reason and law.
3 rd remedy to wit: (3) to rely on the mortgage exclusively, foreclosing the same at any time before it is barred by
Majority opinion in Pasno v. Ravina, in requiring a judicial foreclosure, virtually wipes out the 3rd alternative
o The plain result of adopting the last mode of foreclosure is that the creditor waives his right to recover any
deficiency from the estate.
o Following the Perez ruling that the 3rd mode includes extrajudicial foreclosure sales, the result of
extrajudicial foreclosure is that the creditor waives any further deficiency claim. prescription, without right to
file a claim for any deficiency, conceded by the Rules to the mortgage creditor, and which would precisely
include extra-judicial foreclosures by contrast with the 2nd alternative.
Act. 3135 vs. Sec. 7, Rule 86: In Tandem (hehe)
Operation of Act No. 3135 does not entirely discount the application of Sec. 7, Rule 86, or vice-versa. Rather, the 2
complement each other within their respective spheres of operation.
Sec. 7, Rule 86, ROC Act. No. 3135
Lays down the options for the secured creditor to claim against the estate and, according to jurisprudence, the
availment of the 3rd option bars him from claiming any deficiency amount Governs the parameters and the extent to
which a claim may be advanced against the estate
The application of the procedure under Act No. 3135 must be concordant with Sec. 7, Rule 86 as the latter is a
special rule applicable to claims against the estate.
At the same time, since Sec. 7, Rule 86 does not detail the procedure for extra-judicial foreclosures, the formalities
governing the manner of availing of the 3rd option such as the place where the application for extra-judicial
foreclosure is filed, the requirements of publication and posting and the place of sale must be governed by Act No.
3135.
Case at Bar
Manila Banking Corp. sought to extra-judicially foreclose the mortgage of the properties previously belonging to
Sps. Maglasang and, therefore, availed of the third option. Thus, it is now precluded from filing a suit to recover any
deficiency amount as earlier discussed.
It did not exercise the first option of directly filing a claim against the estate, as Heirs of Maglasang assert, since it
merely notified the probate court of the outstanding amount of its claim against the estate of Flaviano and that it was
currently restructuring the account. (sinama ko lang yung footnote pero di relevant; yung nakabold ata yung dapat
ginawa ng Manila Banking Corp. Para sabihing 1st option)
After 3rd option is chosen (under Sec. 7, Rule 86), the procedure governing the manner in which the extra-judicial
foreclosure should proceed would still be governed by the provisions of Act No. 3135.
Sets out the specific procedure to be followed when the creditor subsequently chooses the 3rd option specifically,
that of extra-judicially foreclosing real property belonging to the estate.
o FOOTNOTE: Manila Banking Corp. did not file a claim against the estate since its notice deviates from the
proper characterization under Sec. 9, Rule 86 of ROC which sets forth the manner through which a claim
against the estate may be filed:

14

o A claim may be filed by delivering the same with the necessary vouchers to the clerk of court and by serving
a copy thereof on the executor or administrator.
o If the claim be founded on a bond, bill, note, or any other instrument, the original need not be filed, but a
copy thereof with all indorsements shall be attached to the claim and filed therewith.
On demand, however, of the executor or administrator, or by order of the court or judge, the original shall be
exhibited, unless it be lost or destroyed, in which case the claimant must accompany his claim with affidavit or
affidavits containing a copy or particular description of the instrument and stating its loss or destruction.
o When the claim is due, it must be supported by affidavit stating the amount justly due, that no payments
have
o If the claim is not due, or is contingent, when filed, it must also be supported by affidavit stating the
particulars thereof.
o When the affidavit is made by a person other than the claimant, he must set forth therein the reason why it is
not made by
o The claim once filed shall be attached to the record of the case in which the letters testamentary or of
administration were
(2) Extra-judicial foreclosure is valid. (di masyado related sa topic but read na din)
Heirs of Maglasang: Extra-judicial foreclosure of the subject properties was null and void since the same was
conducted in violation of the stipulation in the REM contract stating that the auction sale should be held in the capital
of the province where the properties are located, i.e., Province of Leyte (Tacloban City sabi sa baba-capital ba to ng
Leyte?).
o STIPULATION: It is hereby agreed that in case of foreclosure of this mortgage under Act 3135, the auction
sale shall be
SC: Disagrees. The stipulation under the REM contract lacks words of exclusivity which would bar any other
acceptable fora wherein the said sale may be conducted. Absent such qualifying or restrictive words to indicate the
exclusivity of the agreed forum, the stipulated place should only be as an additional, not a limiting venue.
The venue then would be alternative between that stated in the law or rule governing the action or the one agreed
in the contract.
Thus, the stipulated venue and that provided under Act No. 3135 can be applied alternatively.
Sec. 2 of Act No. 3135 allows the foreclosure sale to be done within the province where the property to be sold is
situated.
SEC. 2 of Act No. 3135: Said sale cannot be made legally outside of the province which the property sold is
situated; and in case
the place within said province in which the sale is to be made is subject to stipulation, such sale shall be made in said
place or in the municipal building of the municipality in which the property or part thereof is situated.
Case at Bar: Auction sale was conducted in Ormoc City, which is within the territorial jurisdiction of the Province of
Leyte, thus there is sufficient compliance with the above-cited requirement.
SUMMARY
Extra-judicial foreclosure subject of this case was properly conducted in accordance with the formalities of Act No.
3135. The same was a valid exercise of Manila Banking's third option under Section 7, Rule 86.
Manila Banking cannot, however, file any suit to recover any deficiency amount since it effectively waived its right
thereto when it chose to avail of extra-judicial foreclosure as jurisprudence instructs.
DISPOSITIVE: Petition PARTLY GRANTED. The complaint for the recovery of the deficiency amount after extrajudicial foreclosure filed by Manila Banking Corporation DISMISSED. The extra-judicial foreclosure of the mortgaged
properties, however, stands. been made thereon which are not credited, and that there are no offsets to the same, to

15

the knowledge of the affiant. the claimant. issued, although the court, in its discretion, and as a matter of convenience,
may order all the claims to be collected in a separate folder. held at the capital of the province if the property is within
the territorial jurisdiction of the province concerned, OR shall be held in the city if the property is within the territorial
jurisdiction of the city concerned.
9. PILAPIL V HEIRS OF BRIONES

16

10. Sabidong vs. Solas A.M. No. P-01-1448, June 25, 2013

Facts: Trinidad Sabidong, complainants mother, is one of the longtime occupants of a parcel of land,
designated as Lot 11 originally registered in the name of C. N. Hodges and situated at Jaro, Iloilo City. The
Sabidongs are in possession of one-half portion of Lot 11 of the said Hodges Estate, as the other half-portion
was occupied by Priscila Saplagio. In 1983 ejectment suit however Saplagio was ordered to vacate the portion
of Lot 11 leased to her. In 1984, respondent who was the Clerk of Court III of MTCC, Branch 3, Iloilo City Offered
to Purchase on installment Lots 11 and 12. The Administratrix of the Hodges Estate rejected respondent s
because the actual occupant of Lot 12 manifested their intention to buy it. He was nevertheless informed that he
may file an offer to purchase Lot 11 "should the occupant fail to avail of the priority given to them which the
respondent immediately made. The probate court (Regional Trial Court of Iloilo, Branch 27) in Special
Proceedings No. 1672 ("Testate Estate of the Late Charles Newton Hodges, Rosita R. Natividad,
Administratrix"), approved the offer upon the courts observation that the occupants of the subject lots "have
not manifested their desire to purchase the lots they are occupying up to this date and considering time restraint
and considering further, that the sales in favor of the x x x offerors are most beneficial to the estate x x x".
Consequently the title of the lot was transferred to the respondent. Later on a writ of demolition was issued by
the probate court in favor of respondent and against all adverse occupants of Lot 11. In 1999, a complaint was
initiated against the respondent in the Supreme Court alleging the prohibition for court personnel to buy
properties in litigation. The complaint likewise alleged that the respondent committed deception, dishonesty,
oppression and grave abuse of authority. It was alleged that complainant and his family were made to believe by
the respondent that he is the representative of the Estate. The complainant relied on the representations of the
respondent that he was authorized to facilitate the sale, with more reason that respondent represented himself
as the City Sheriff;
Issue: Whether or not the respondent is prohibited to purchase the property subject of probate.
Held: NO. For the prohibition to apply, the sale or assignment of the property must take place during the
pendency of the litigation involving the property.34 Where the property is acquired after the termination of the
case, no violation of paragraph 5, Article 1491 of the Civil Code attaches. In the case at bar, when respondent
purchased Lot 11-A on November 21, 1994, the Decision in Civil Case No. 14706 which was promulgated on
May 31, 1983 had long become final. Be that as it may, it can not be said that the property is no longer "in
litigation" at that time considering that it was part of the Hodges Estate then under settlement proceedings (Sp.
Proc. No. 1672). A thing is said to be in litigation not only if there is some contest or litigation over it in court, but
also from the moment that it becomes subject to the judicial action of the judge.36 A property forming part of
the estate under judicial settlement continues to be subject of litigation until the probate court issues an order
declaring the estate proceedings closed and terminated. The rule is that as long as the order for the distribution
of the estate has not been complied with, the probate proceedings cannot be deemed closed and
terminated.37 The probate court loses jurisdiction of an estate under administration only after the payment of
all the debts and the remaining estate delivered to the heirs entitled to receive the same.38 Since there is no
evidence to show that Sp. Proc. No. 1672 in the RTC of Iloilo, Branch 27, had already been closed and

17

terminated at the time of the execution of the Deed of Sale With Mortgage dated November 21, 1994, Lot 11 is
still deemed to be "in litigation" subject to the operation of Article 1491 (5) of the Civil Code. This
notwithstanding, we hold that the sale of Lot 11 in favor of respondent did not violate the rule on disqualification
to purchase property because Sp. Proc. No. 1672 was then pending before another court (RTC) and not MTCC
where he was Clerk of Court.
11. ARANAS V. ARANAS
FACTS:
Emigdio S. Mercado (Emigdio) died intestate on January 12, 1991, survived by his
second wife, Teresita V. Mercado (Teresita), and their five children, namely: Allan V. Mercado,
Felimon V. Mercado, Carmencita M. Sutherland, Richard V. Mercado, and Maria Teresita M.
Anderson; and his two children by his first marriage, namely: respondent Franklin L. Mercado
and petitioner Thelma M. Aranas (Thelma).
Emigdio inherited and acquired real properties during his lifetime. He owned corporate
shares in Mervir Realty Corporation (Mervir Realty) and Cebu Emerson Transportation
Corporation (Cebu Emerson). He assigned his real properties in exchange for corporate stocks of
Mervir Realty, and sold his real property in Badian, Cebu (Lot 3353 covered by Transfer
Certificate of Title No. 3252) to Mervir Realty.
Thelma filed in the Regional Trial Court (RTC) in Cebu City a petition for the
appointment of Teresita as the administrator of Emigdio's estate. The RTC granted the petition
considering that there was no opposition. The letters of administration in favor of Teresita.
As the administrator, Teresita submitted an inventory of the estate of Emigdio for the
consideration and approval by the RTC. She indicated in the inventory that at the time of his
death, Emigdio had "left no real properties but only personal properties" worth P6,675,435.25 in
all, consisting of cash of P32,141.20; furniture and fixtures worth P20,000.00; pieces of jewelry
valued at P15,000.00; 44,806 shares of stock of Mervir Realty worth P6,585,585.80; and 30
shares of stock of Cebu Emerson worth P22,708.25.
Claiming that Emigdio had owned other properties that were excluded from the
inventory, Thelma moved that the RTC direct Teresita to amend the inventory, and to be
examined regarding it. Teresita filed a compliance with the order of January 8, 1993, 3
supporting her inventory with copies of three certificates of stocks covering the 44,806 Mervir
Realty shares of stock; 4 the deed of assignment executed by Emigdio on January 10, 1991
involving real properties with the market value of P4,440,651.10 in exchange for 44,407 Mervir
Realty shares of stock with total par value of P4,440,700.00; 5 and the certificate of stock issued
on January 30, 1979 for 300 shares of stock of Cebu Emerson worth P30,000.00.
Thelma again moved to require Teresita to be examined under oath on the inventory. The
RTC issued an order expressing the need for the parties to present evidence and for Teresita to be
examined to enable the court to resolve the motion for approval of the inventory. Thelma
opposed the approval of the inventory, and asked leave of court to examine Teresita on the
inventory
The RTC issued on March 14, 2001 an order finding and holding that the inventory
submitted by Teresita had excluded properties that should be included. The RTC denied the
administratrix's motion for approval of inventory and orders the said administratrix to re-do the
inventory of properties which are supposed to constitute as the estate of the late Emigdio S.
Mercado. The RTC also directed the administratrix to render an account of her administration of
the estate of the late Emigdio S. Mercado which had come to her possession.
Teresita, joined by other heirs of Emigdio, timely sought the reconsideration of the order
of March 14, 2001 on the ground that one of the real properties affected, Lot No. 3353 located in
Badian, Cebu, had already been sold to Mervir Realty,
On appeal, the CA reversed the RTC decision insofar as the inclusion of the inclusion of
parcels of land known as Lot No. 3353 located at Badian, Cebu with an area of 53,301 square
meters subject matter of the Deed of Absolute Sale dated November 9, 1989 and the various
parcels of land subject matter of the Deeds of Assignment dated February 17, 1989 and January
10, 1991 in the revised inventory to be submitted by the administratrix is concerned.
ISSUE:
Whether or not he RTC committed grave abuse of discretion amounting to lack or excess
of jurisdiction in directing the inclusion of certain properties in the inventory notwithstanding
that such properties had been either transferred by sale or exchanged for corporate shares in
Mervir Realty by the decedent during his lifetime?
RULING: No. The CA's conclusion of grave abuse of discretion on the part of the RTC was
unwarranted and erroneous.
WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES
and SETS ASIDE the decision promulgated on May 15, 2002; REINSTATES the orders issued

18

on March 14, 2001 and May 18, 2001 by the Regional Trial Court in Cebu; DIRECTS the
Regional Trial Court in Cebu to proceed with dispatch in Special Proceedings No. 3094-CEB
entitled Intestate Estate of the late Emigdio Mercado, Thelma Aranas, petitioner, and to resolve
the case; and ORDERS the respondents to pay the costs of suit.
RATIO:
The probate court is authorized to determine the issue of ownership of properties for
purposes of their inclusion or exclusion from the inventory to be submitted by the administrator,
but its determination shall only be provisional unless the interested parties are all heirs of the
decedent, or the question is one of collation or advancement, or the parties consent to the
assumption of jurisdiction by the probate court and the rights of third parties are not impaired. Its
jurisdiction extends to matters incidental or collateral to the settlement and distribution of the
estate, such as the determination of the status of each heir and whether property included in the
inventory is the conjugal or exclusive property of the deceased spouse.
Under Section 6 (a), Rule 78 of the Rules of Court, the letters of administration may be
granted at the discretion of the court to the surviving spouse, who is competent and willing to
serve when the person dies intestate. Upon issuing the letters of administration to the surviving
spouse, the RTC becomes duty-bound to direct the preparation and submission of the inventory
of the properties of the estate, and the surviving spouse, as the administrator, has the duty and
responsibility to submit the inventory within three months from the issuance of letters of
administration pursuant to Rule 83 of the Rules of Court, viz.:
Section 1. Inventory and appraisal to be returned within three
months. Within three (3) months after his appointment every
executor or administrator shall return to the court a true inventory
and appraisal of all the real and personal estate of the deceased
which has come into his possession or knowledge. In the
appraisement of such estate, the court may order one or more of
the inheritance tax appraisers to give his or their assistance.
The usage of the word all in Section 1, supra, demands the inclusion of all the real and
personal properties of the decedent in the inventory. However, the word all is qualified by the
phrase which has come into his possession or knowledge, which signifies that the properties
must be known to the administrator to belong to the decedent or are in her possession as the
administrator. Section 1 allows no exception, for the phrase true inventory implies that no
properties appearing to belong to the decedent can be excluded from the inventory, regardless of
their being in the possession of another person or entity.
The objective of the Rules of Court in requiring the inventory and appraisal of the estate
of the decedent is "to aid the court in revising the accounts and determining the liabilities of the
executor or the administrator, and in malting a final and equitable distribution (partition) of the
estate and otherwise to facilitate the administration of the estate." Hence, the RTC that presides
over the administration of an estate is vested with wide discretion on the question of what
properties should be included in the inventory. According to Peralta v. Peralta, the CA cannot
impose its judgment in order to supplant that of the RTC on the issue of which properties are to
be included or excluded from the inventory in the absence of "positive abuse of discretion," for
in the administration of the estates of deceased persons, "the judges enjoy ample discretionary
powers and the appellate courts should not interfere with or attempt to replace the action taken
by them, unless it be shown that there has been a positive abuse of discretion." As long as the
RTC commits no patently grave abuse of discretion, its orders must be respected as part of the
regular performance of its judicial duty.
There is no dispute that the jurisdiction of the trial court as an intestate court is special
and limited. The trial court cannot adjudicate title to properties claimed to be a part of the estate
but are claimed to belong to third parties by title adverse to that of the decedent and the estate,
not by virtue of any right of inheritance from the decedent. All that the trial court can do
regarding said properties is to determine whether or not they should be included in the inventory
of properties to be administered by the administrator. Such determination is provisional and may
be still revised. As the Court said in Agtarap v. Agtarap:
The general rule is that the jurisdiction of the trial court, either as a probate court or an
intestate court, relates only to matters having to do with the probate of the will and/or settlement
of the estate of deceased persons, but does not extend to the determination of questions of
ownership that arise during the proceedings. The patent rationale for this rule is that such court
merely exercises special and limited jurisdiction. As held in several cases, a probate court or one
in charge of estate proceedings, whether testate or intestate, cannot adjudicate or determine title
to properties claimed to be a part of the estate and which are claimed to belong to outside parties,
not by virtue of any right of inheritance from the deceased but by title adverse to that of the

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deceased and his estate. All that the said court could do as regards said properties is to determine
whether or not they should be included in the inventory of properties to be administered by the
administrator. If there is no dispute, there poses no problem, but if there is, then the parties, the
administrator, and the opposing parties have to resort to an ordinary action before a court
exercising general jurisdiction for a final determination of the conflicting claims of title.
However, this general rule is subject to exceptions as justified by expediency and
convenience.
The probate court may provisionally pass upon in an intestate or a testate proceeding the
question of inclusion in, or exclusion from, the inventory of a piece of property without prejudice
to final determination of ownership in a separate action. Second, if the interested parties are all
heirs to the estate, or the question is one of collation or advancement, or the parties consent to the
assumption of jurisdiction by the probate court and the rights of third parties are not impaired,
then the probate court is competent to resolve issues on ownership. Verily, its jurisdiction
extends to matters incidental or collateral to the settlement and distribution of the estate, such as
the determination of the status of each heir and whether the property in the inventory is conjugal
or exclusive property of the deceased spouse.
The inventory of the estate of Emigdio must be prepared and submitted for the important
purpose of resolving the difficult issues of collation and advancement to the heirs. Article 1061
of the Civil Code required every compulsory heir and the surviving spouse, herein Teresita
herself, to "bring into the mass of the estate any property or right which he (or she) may have
received from the decedent, during the lifetime of the latter, by way of donation, or any other
gratuitous title, in order that it may be computed in the determination of the legitime of each heir,
and in the account of the partition." Section 2, Rule 90 of the Rules of Court also provided that
any advancement by the decedent on the legitime of an heir "may be heard and determined by
the court having jurisdiction of the estate proceedings, and the final order of the court thereon
shall be binding on the person raising the questions and on the heir." Rule 90 thereby expanded
the special and limited jurisdiction of the RTC as an intestate court about the matters relating to
the inventory of the estate of the decedent by authorizing it to direct the inclusion of properties
donated or bestowed by gratuitous title to any compulsory heir by the decedent.
The determination of which properties should be excluded from or included in the
inventory of estate properties was well within the authority and discretion of the RTC as an
intestate court. In making its determination, the RTC acted with circumspection, and proceeded
under the guiding policy that it was best to include all properties in the possession of the
administrator or were known to the administrator to belong to Emigdio rather than to exclude
properties that could turn out in the end to be actually part of the estate. As long as the RTC
commits no patent grave abuse of discretion, its orders must be respected as part of the regular
performance of its judicial duty. Grave abuse of discretion means either that the judicial or quasijudicial power was exercised in an arbitrary or despotic manner by reason of passion or personal
hostility, or that the respondent judge, tribunal or board evaded a positive duty, or virtually
refused to perform the duty enjoined or to act in contemplation of law, such as when such judge,
tribunal or board exercising judicial or quasi-judicial powers acted in a capricious or whimsical
manner as to be equivalent to lack of jurisdiction.

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