cases- estate tax

7/21/2019 Cases- Estate Tax

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G.R. No. L-34937 March 13, 1933

CONCEPCION VIDAL DE ROCES and her h!"and,

MARCOS ROCES, and ELVIRA VIDAL DE RIC#ARDS, plaintif-appellants,

vs.

$%AN POSADAS, $R., Co&&ec'or o( In'erna& Re)ene, deendant-appellee.

Feria and La O for appellants. Attorney-General Jaranilla for appellee.

IMPERIAL, J.:

The plaintifs herein brought this action to recover rom the deendant, Collector o

Internal Revenue, certain sums o money paid by them under protest as inheritance

tax. They appealed rom the judgment rendered by the Court o irst Instance o

!anila dismissing the action, "ithout costs.

#n !arch $% and $&, $'&(, )speran*a Tua*on, by means o public documents,

donated certain parcels o land situated in !anila to the plaintifs herein, "ho, "ith

their respective husbands, accepted them in the same public documents, "hich

"ere duly recorded in the registry o deeds. +y virtue o said donations, the plaintifs

too possession o the said lands, received the ruits thereo and obtained the

corresponding transer certicates o title.

#n anuary (, $'&/, the donor died in the City o !anila "ithout leaving any orced

heir and her "ill "hich "as admitted to probate, she be0ueathed to each o thedonees the sum o 1(,%%%. 2ter the estate had been distributed among the

instituted legatees and beore delivery o their respective shares, the appellee

herein, as Collector o Internal Revenue, ruled that the appellants, as donees and

legatees, should pay as inheritance tax the sums o 1$/,/34 and 1$4,'($.5(,

respectively. # these sums 1$(,$'$.56 "as levied as tax on the donation to

Concepcion 7idal de Roces and 1$,56$.(& on her legacy, and, lie"ise, 1$&,466.'(

"as imposed upon the donation made to )lvira 7idal de Richards and 1$,5/&.(% on

her legacy. 2t rst the appellants reused to pay the aorementioned taxes but, at

the insistence o the appellee and in order not to delay the adjudication o the

legacies, they agreed at last, to pay them under protest.

The appellee led a demurrer to the complaint on the ground that the acts alleged

therein "ere not su8cient to constitute a cause o action. 2ter the legal 0uestions

raised therein had been discussed, the court sustained the demurrer and orderedthe amendment o the complaint "hich the appellants ailed to do, "hereupon the

trial court dismissed the action on the ground that the aorementioned appellants

did not really have a right o action.

In their brie, the appellants assign only one alleged error, to "it9 that the demurrerinterposed by the appellee "as sustained "ithout su8cient ground.

The judgment appealed rom "as based on the provisions o section $(5%2dministrative Code "hich reads as ollo"s9

:)C. $(5%. Additions of gifts and advances. ; 2ter the aorementioned deductionshave been made, there shall be added to the resulting amount the value o all gits

or advances made by the predecessor to any those "ho, ater his death, shall prove

to be his heirs, devisees, legatees, or donees mortis causa.

The appellants contend that the above-mentioned legal provision does not include

donations inter vivos and i it does, it is unconstitutional, null and void or the

ollo"ing reasons9 rst, because it violates section 4 o the ones <a" "hich provides

that no la" should embrace more than one subject, and that subject should be

expressed in the title thereo= second that the <egislature has no authority to impose

inheritance tax on donations inter vivos= and third, because a legal provision o this

character contravenes the undamental rule o uniormity o taxation. The appellee,

in turn, contends that the "ords >all gits> reer clearly to donations inter vivos and,

in support o his theory, cites the doctrine laid in the case o Tuason and Tuason vs.Posadas ?(5 1hil., &6'@. 2ter a careul study o the la" and the authorities

applicable thereto, "e are the opinion that neither theory reAects the true spirit o the aorementioned provision. The gits reerred to in section $(5% o the Revised

2dministration Code are, obviously, those donations inter vivos that tae efect

immediately or during the lietime o the donor but are made in consideration or in

contemplation o death. Bits inter vivos, the transmission o "hich is not made in

contemplation o the donors death should not be understood as included "ithin the

said legal provision or the reason that it "ould amount to imposing a direct tax on

property and not on the transmission thereo, "hich act does not come "ithin the

scope o the provisions contained in 2rticle DI o Chapter 5% o the 2dministrative

Code "hich deals expressly "ith the tax on inheritances, legacies and other

ac0uisitions mortis causa.

#ur interpretation o the la" is not in conAict "ith the rule laid do"n in the case

o Tuason and Tuason vs. Posadas, supra. Ee said therein, as "e say no", that the

expression >all gits> reers to gits inter vivos inasmuch as the la" considers themas advances on inheritance, in the sense that they are gits inter vivos made in

contemplation or in consideration o death. In that case, it "as not held that that

ind o gits consisted in those made completely independent o death or "ithout

regard to it.

:aid legal provision is not null and void on the alleged ground that the subject

matter thereo is not embraced in the title o the section under "hich it is

enumerated. #n the contrary, its provisions are perectly summari*ed in the

heading, >Tax on Inheritance, etc.> "hich is the title o 2rticle DI. urthermore, the

constitutional provision cited should not be strictly construed as to mae it

necessary that the title contain a ull index to all the contents o the la". It is

su8cient i the language used therein is expressed in such a "ay that in case o

doubt it "ould aford a means o determining the legislators intention. ?<e"is

:utherland :tatutory Construction, 7ol. II, p. /($.@ <astly, the circumstance that the2dministrative Code "as prepared and compiled strictly in accordance "ith the

provisions o the ones <a" on that matter should not be overlooed and that, in a

compilation o la"s such as the 2dministrative Code, it is but natural and proper that

provisions reerring to diverse matters should be ound. ?2yson and Ignacio vs.

1rovincial +oard o Ri*al and !unicipal Council o Favotas, 4' 1hil., '4$.@

The appellants 0uestion the po"er o the <egislature to impose taxes on the

transmission o real estate that taes efect immediately and during the lietime o

the donor, and allege as their reason that such tax partaes o the nature o the land

tax "hich the la" has already created in another part o the 2dministrative Code.

Eithout maing express pronouncement on this 0uestion, or it is unnecessary, "e

"ish to state that such is not the case in these instance. The tax collected by the

appellee on the properties donated in $'&( really constitutes an inheritance tax

imposed on the transmission o said properties in contemplation or in considerationo the donors death and under the circumstance that the donees "ere later



instituted as the ormers legatees. or this reason, the la" considers such

transmissions in the orm o gits inter vivos, as advances on inheritance and

nothing therein violates any constitutional provision, inasmuch as said legislation is

"ithin the po"er o the <egislature.

Property Subect to !n"eritance Ta# . ; The inheritance tax ordinarily applies to all

property "ithin the po"er o the state to reach passing by "ill or the la"s regulating

intestate succession or by git inter vivos in the manner designated by statute,

"hether such property be real or personal, tangible or intangible, corporeal or

incorporeal. ?&/ R.C.<., p. &%6, par. $33.@

In the case o Tuason and Tuason vs. Posadas, supra, it "as also held that section

$(5% o the 2dministrative Code did not violate the constitutional provision

regarding uniormity o taxation. It cannot be null and void on this ground because it

e0ually subjects to the same tax all o those donees "ho later become heirs,

legatees or donees mortis causa by the "ill o the donor. There "ould be a

repugnant and arbitrary exception i the provisions o the la" "ere not applicable to

all donees o the same ind. In the case cited above, it "as said9 >2t any rate the

argument adduced against its constitutionality, "hich is the lac o Gniormity, does

not seem to be "ell ounded. It "as said that under such an interpretation, "hile a

donee inter vivos "ho, ater the predecessors death proved to be an heir, a legatee,

or a donee mortis causa, "ould have to pay the tax, another donee inter vivos "ho

did not prove to he an heir, a legatee, or a donee mortis causa o the predecessor,"ould be exempt rom such a tax. +ut as these are t"o diferent cases, the principle

o uniormity is inapplicable to them.>

The last 0uestion o a procedural nature arising rom the case at bar, "hich should

be passed upon, is "hether the case, as it no" stands, can be decided on the merits

or should be remanded to the court a $uo or urther proceedings. 2ccording to our

vie" o the case, it ollo"s that, i the gits received by the appellants "ould have

the right to recover the sums o money claimed by them. Hence the necessity o

ascertaining "hether the complaint contains an allegation to that efect. Ee have

examined said complaint and ound nothing o that nature. #n the contrary, it be

may be inerred rom the allegations contained in paragraphs & and 3 thereo that

said donations inter vivos "ere made in consideration o the donors death. Ee reer

to the allegations that such transmissions "ere efected in the month o !arch,

$'&(, that the donor died in anuary, $'&/, and that the donees "ere instituted

legatees in the donors "ill "hich "as admitted to probate. It is rom these

allegations, especially the last, that "e iner a presumption uris tantum that saiddonations "ere made mortis causa and, as such, are subject to the payment o

inheritance tax.

Ehereore, the demurrer interposed by the appellee "as "ell-ounded because it

appears that the complaint did not allege act su8cient to constitute a cause o

action. Ehen the appellants reused to amend the same, spite o the courts order to

that efect, they voluntarily "aived the opportunity ofered them and they are not

no" entitled to have the case remanded or urther proceedings, "hich "ould serve

no purpose altogether in vie" o the insu8ciency o the complaint.

Ehereore, the judgment appealed rom is hereby a8rmed, "ith costs o this

instance against the appellants. :o ordered.

Avance%a& '.J.& (illamor& Ostrand& Abad Santos& )ull& (ic*ers and +uttes& JJ.& concur.



G.R. No. L-3*77+ No)e"er 4, 193

L%IS . DISON, plaintif-appellant,

vs.

$%AN POSADAS, $R., Co&&ec'or o( In'erna& Re)ene, deendant-appellant.

,arcelino Aguas for plainti-appellant. Attorney-General Jaranilla for defendant-appellant.

/%00E, J.:

This is an appeal rom the decision o the Court o irst Instance o 1ampanga in

avor o the deendant uan 1osadas, r., Collector o Internal Revenue, in a suit led

by the plaintifs, <uis E. ison, or the recovery o an inheritance tax in the sum o

1&,6%6.34 paid under protest. The petitioner alleged in his complaint that the tax is

illegal because he received the property, "hich is the basis o the tax, rom his

ather beore his death by a deed o git inter vivos "hich "as duly accepted and

registered beore the death o his ather. The deendant ans"ered "ith a general

denial and "ith a counterdemand or the sum o 1$,&5(.(/ "hich it "as alleged is a

balance still due and unpaid on account o said tax. The plaintif replied to the

counterdemand "ith a general denial. The courta $uo held that the cause o action

set up in the counterdemand "as not proven and dismissed the same. +oth sides

appealed to this court, but the cross-complaint and appeal o the Collector o

Internal Revenue "ere dismissed by this court on !arch $3, $'4&, on motion o the

2ttorney-Beneral.a/p"il.net

The only evidence introduced at the trial o this cause "as the proo o payment o

the tax under protest, as stated, and the deed o git executed by elix ison on

2pril ', $'&6, in avor o his sons <uis E. ison, the plaintif-appellant. This deed o

git transerred t"enty-t"o tracts o land to the donee, reserving to the donor or his

lie the usuruct o three tracts. This deed "as acno"ledged by the donor beore a

notary public on 2pril $/, $'&6. <uis E. ison, on 2pril $3, $'&6, ormally accepted

said git by an instrument in "riting "hich he acno"ledged beore a notary public

on 2pril &%, $'&6.

2t the trial the parties agreed to and led the ollo"ing ingenious stipulation o act9

$. That on elix ison died on 2pril &$, $'&6=

&. That on elix ison, beore his death, made a git inter vivos in avor o the

plaintif <uis E. ison o all his property according to a deed o git ?)xhibit @ "hich

includes all the property o on elix i*on=

4. That the plaintif did not receive property o any ind o on elix ison upon the

death o the latter=

5. That on <uis E. ison "as the legitimate and only child o on elix ison.

It is inerred rom )xhibit that elix ison "as a "ido"er at the time o his death.

The theory o the plaintif-appellant is that he received and holds the property

mentioned by a consummated git and that 2ct Fo. &/%$ ?Chapter 5% o the

2dministrative Code@ being the inheritance tax statute, does not tax gits. The

provision directly here involved is section $(5% o the 2dministrative Code "hich

reads as ollo"s9

Additions of Gifts and Advances. ; 2ter the aorementioned deductions have been

made, there shall be added to the resulting amount the value o all gits or advances

made by the predecessor to any o those "ho, ater his death, shall prove to be his

heirs, devises, legatees, or donees mortis causa.

The 0uestion to be resolved may be stated thus9 oes section $(5% o the

2dministrative Code subject the plaintif-appellant to the payment o an inheritance

taxJ

The appellant argues that there is no evidence in this case to support a nding that

the git "as simulated and that it "as an artice or evading the payment o the

inheritance tax, as is intimated in the decision o the court belo" and the brie o the

2ttorney-Beneral. Ee see no reason "hy the court may not go behind the language

in "hich the transaction is mased in order to ascertain its true character and

purpose. In this case the scanty acts beore us may not "arrant the inerence that

the conveyance, acno"ledged by the donor ve days beore his death and

accepted by the donee one day beore the donors death, "as raudulently made or

the purpose o evading the inheritance tax. +ut the acts, in our opinion, do "arrant

the inerence that the transer "as an advancement upon the inheritance "hich the

donee, as the sole and orced heir o the donor, "ould be entitled to receive upon

the death o the donor.

The argument advanced by the appellant that he is not an heir o his deceased

ather "ithin the meaning o section $(5% o the 2dministrative Code because his

ather in his lietime had given the appellant all his property and let no property to

be inherited, is so allacious that the urging o it here casts a suspicion upon theappellants reason or completing the legal ormalities o the transer on the eve o

the latters death. Ee do not no" "hether or not the ather in this case let a "ill= in

any event, this appellant could not be deprived o his share o the inheritance

because the Civil Code coners upon him the status o a orced heir. Ee construe the

expression in section $(5% >any o those "ho, ater his death, shall prove to be his

heirs>, to include those "ho, by our la", are given the status and rights o heirs,

regardless o the 0uantity o property they may receive as such heirs. That the

appellant in this case occupies the status o heir to his deceased ather cannot be

0uestioned. Construing the conveyance here in 0uestion, under the acts presented,

as an advance made by elix ison to his only child, "e hold section $(5% to beapplicable and the tax to have been properly assessed by the Collector o Internal

Revenue.

This appeal "as originally assigned to a ivision o ve but reerred to the court inbanc by reason o the appellants attac upon the constitutionality o section $(5%.

This attac is based on the sole ground that insoar as section $(5% levies a tax

upon gits inter vivos, it violates that provision o section 4 o the organic 2ct o the

1hilippine Islands ?4' :tat. <., (5(@ "hich reads as ollo"s9 >That no bill "hich may

be enacted into la" shall embraced more than one subject, and that subject shall be

expressed in the title o the bill.> Feither the title o 2ct Fo. &/%$ nor chapter 5% o

the 2dministrative Code maes any reerence to a tax on gits. 1erhaps it is enough

to say o this contention that section $(5% plainly does not tax gits per se but only

"hen those gits are made to those "ho shall prove to be the heirs, devisees,

legatees or donees mortis causa o the donor. This court said in the case o Tuasonand Tuason vs. 1osadas '(5 1hil., &6'@9la/p"il.net



Ehen the la" says all gifts, it doubtless reers to gits inter vivos, and not mortiscausa. +oth the letter and the spirit o the la" leave no room or any other

interpretation. :uch, clearly, is the tenor o the language "hich reers to donations

that too efect beore the donors death, and not to mortis causa donations, "hich

can only be made "ith the ormalities o a "ill, and can only tae efect ater the

donors death. 2ny other construction "ould virtually change this provision into9

>. . . there shall be added to the resulting amount the value o all gits mortis causa .

. . made by the predecessor to those "ho, ater his death, shall prove to be his . . .

donees mortis causa.> Ee cannot give to the la" an interpretation that "ould so

vitiate its language. The truth o the matter is that in this section ?$(5%@ the la"presumes that such gits have been made in anticipation o inheritance, devise,

be0uest, or git mortis causa, "hen the donee, ater the death o the donor proves

to be his heir, devisee or donee mortis causa, or the purpose o evading the tax,

and it is to prevent this that it provides that they shall be added to the resulting

amount.> Ho"ever much appellants argument on this point may t his preconceived

notion that the transaction bet"een him and his ather "as a consummated git "ith

no relation to the inheritance, "e hold that there is not merit in this attac upon the

constitutionality o section $(5% under our vie" o the acts. Fo other constitutional

0uestions "ere raised in this case.

The judgment belo" is a8rmed "ith costs in this instance against the appellant. :o

ordered.

Avance%a& '.J.& Street& ,alcolm& Ostrand& Abad Santos& (ic*ers and !mperial& JJ.&concur.



G. R. No. 139*. A2r& 4, ++3

%RS%LINA GAN%ELAS, ME0ODIO GAN%ELAS and AN0ONIO

GAN%ELAS, vs. #ON. RO/ER0 0. CAED, $d5e o( 'he Re5ona& 0ra& Cor'

o( San 6ernando, La %non /ranch 98, LEOCADIA G. 6LORES,

6ELICI0ACION G. AG0ARAP, CORAON G. SIPALA: and ES0A0E O6 ROMANA

GAN%ELAS DE LA ROSA, re2re!en'ed "; GREGORIO DELA ROSA,

Adn!'ra'or, respondent .

D E C I S I O N

CARPIO-MORALES, J.<

The present petition or revie" under Rule 5( o the Rules o Court assails, on a

0uestion o la", the ebruary &&, $''/ decision K$L o the Regional Trial Court o :an

ernando, <a Gnion, +ranch &', in Civil Case Fo. 4'53, an action or declaration o

nullity o a deed o donation.

The acts, as culled rom the records o the case, are as ollo"s9

#n 2pril $$, $'(6, Celestina Banuelas 7da. de 7alin ?Celestina@ executed a eed o

onation o Real 1ropertyK&L covering seven parcels o land in avor o her niece

Grsulina Banuelas ?Grsulina@, one o herein petitioners.

The pertinent provision o the deed o donation reads, 0uoted verbatim9

x x x

That, or and in consideration o the love and afection "hich the #F#R has or the

#F)), and o the aithul services the latter has rendered in the past to the ormer,

the said #F#R does by these presents transer and convey, by "ay o #F2TI#F,

unto the #F)) the property above, described, to become efective upon the death

o the #F#R= but in the event that the #F)) should die beore the #F#R, the

present donation shall be deemed rescinded and o no urther orce and efect.

x x x.K4L

#n une $%, $'/3, Celestina executed a document denominated as Revocation o

onationK5L purporting to set aside the deed o donation. !ore than a month later or

on 2ugust $6, $'/3, Celestina died "ithout issue and any surviving ascendants and

siblings.

2ter Celestinas death, Grsulina had been sharing the produce o the donated

properties "ith private respondents <eocadia B. lores, et al., nieces o Celestina.

In $'6&, or t"enty-our years ater the execution o the eed o onation, Grsulina

secured the corresponding tax declarations, in her name, over the donated

properties, to "it9 Tax eclarations Fos. $6$%6, $6$%', $6$$%, $6$$$, $6$$&, $6$$4

and $6$$5, and since then, she reused to give private respondents any share in the

produce o the properties despite repeated demands.

1rivate respondents "ere thus prompted to le on !ay &/, $'6/ "ith the RTC o :an

ernando, <a Gnion a complaintK(L against Grsulina, along "ith !etodio Banuelas and

2ntonio Banuelas "ho "ere alleged to be un"illing plaintifs. The complaint alleged

that the eed o onation executed by Celestina in avor o Grsulina "as void orlac o acno"ledgment by the attesting "itnesses thereto beore notary public 2tty.

Henry 7almonte, and the donation "as a disposition mortis causa "hich ailed to

comply "ith the provisions o the Civil Code regarding ormalities o "ills and

testaments, hence, it "as void. The plaintifs-herein private respondents thus prayed

that judgment be rendered ordering Grsulina to return to them as intestate heirs the

possession and o"nership o the properties. They lie"ise prayed or the

cancellation o the tax declarations secured in the name o Grsulina, the partition o

the properties among the intestate heirs o Celestina, and the rendering by Grsulina

o an accounting o all the ruits o the properties since $'6& and or her to return or

pay the value o their shares.

The deendants-herein petitioners alleged in their 2ns"erK/L that the donation inavor o Grsulina "as inter vivos as contemplated under 2rticle 3&' o the Civil Code,K3L hence, the deed did not have to comply "ith the re0uirements or the execution o

a valid "ill= the Revocation o onation is null and void as the ground mentioned

therein is not among those provided by la" to be the basis thereo= and at any rate,

the revocation could only be legally enorced upon ling o the appropriate

complaint in court "ithin the prescriptive period provided by la", "hich period had,

at the time the complaint "as led, already lapsed.

+y ecision o ebruary &&, $''/, the trial court, holding that the provision in the

eed o onation that in the event that the #F)) should predecease the #F#R,

the donation shall be deemed rescinded and o no urther orce and efect is an

explicit indication that the deed is a donation mortis causa,K6L ound or the plaintifs-herein private respondents, thus9

EH)R)#R) the Court renders judgment declaring null and void the eed o onation o Real 1roperty executed by Celestina Banuelas, and orders the partition

o the estate o Celestina among the intestate heirs. :# #R)R).K'L

The trial court also held that the absence o a reservation clause in the deed implied

that Celestina retained complete dominion over her properties, thus supporting the

conclusion that the donation is mortis causa,K$%L and that "hile the deed contained

an attestation clause and an acno"ledgment sho"ing the intent o the donor to

efect a postmortem disposition, the acno"ledgment "as deective as only the

donor and donee appear to have acno"ledged the deed beore the notary public,

thereby rendering the entire document void. K$$L

<astly, the trial court held that the subse0uent execution by Celestina o the

Revocation o onation sho"ed that the donor intended the revocability o the

donation ad nutum, thus sustaining its nding that the conveyance "as mortiscausa.K$&L

#n herein petitioners argument that the Revocation o onation "as void as the

ground mentioned therein is not one o those allo"ed by la" to be a basis or

revocation, the trial court held that the legal grounds or such revocation as

provided under the Civil Code arise only in cases o donations inter vivos& but not in

donations mortis causa "hich are revocable at "ill during the lietime o the donor.

The trial court held, in any event, that given the nullity o the disposition mortis

causa in vie" o a ailure to comply "ith the ormalities re0uired thereor, the eed

o Revocation "as a superAuity. K$4L

Hence, the instant petition or revie", petitioners contending that the trial court

erred9

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1etitioners argue that the donation contained in the deed is inter vivos as the main

consideration or its execution "as the donors afection or the donee rather than

the donors death=K$(Lthat the provision on the efectivity o the donationater the

donors deathsimply meant that absolute o"nership "ould pertain to the donee on

the donors death=K$/L and that since the donation is inter vivos, it may be revoed

only or the reasons provided in 2rticles 3/%, K$3L 3/5K$6L and 3/(K$'L o the Civil Code.

In a letter o !arch $/, $''6,K&%L private respondent Cora*on :ipalay, reacting to this

Courts anuary &6, $''6 Resolution re0uiring private respondents to :H#E C2G:)

"hy they should not be disciplinarily dealt "ith or held in contempt or ailure to

submit the name and address o their ne" counsel, explains that they are no longer

interested in pursuing the case and are "illing and ready to "aive "hatever rights

they have over the properties subject o the donation. 1etitioners, "ho "ere re0uired

to comment on the letter, by Comment o #ctober &6, $''6,K&$L "elcome private

respondents gesture but pray that or the sae o enriching jurisprudence, their

KpLetition be given due course and resolved.

The issue is thus "hether the donation is inter vivos or mortis causa.

Crucial in the resolution o the issue is the determination o "hether the donor

intended to transer the o"nership over the properties upon the execution o the

deed.K&&L

onation inter vivos difers rom donation mortis causa in that in the ormer, the act

is immediately operative even i the actual execution may be deerred until the

death o the donor, "hile in the latter, nothing is conveyed to or ac0uired by the

donee until the death o the donor-testator.K&4L The ollo"ing ruling o this Court

in Alejandro v. Geraldez is illuminating9K&5L

I the donation is made in contemplation o the donors death, meaning that the ull

or naed o"nership o the donated properties "ill pass to the donee only because o

the donors death, then it is at that time that the donation taes efect, and it is adonation mortis causa "hich should be embodied in a last "ill and testament.

+ut i the donation taes efect during the donors lietime or independently o the

donors death, meaning that the ull or naed o"nership ? nuda proprietas@ o the

donated properties passes to the donee during the donors lietime, not by reason o

his death but because o the deed o donation, then the donation is inter vivos.

The distinction bet"een a transer inter vivos and mortis causa is important as the

validity or revocation o the donation depends upon its nature. I the donation

is inter vivos, it must be executed and accepted "ith the ormalities prescribed by

2rticles 356K&(L and 35'K&/L o the Civil Code, except "hen it is onerous in "hich casethe rules on contracts "ill apply. I it is mortis causa& the donation must be in the

orm o a "ill, "ith all the ormalities or the validity o "ills, other"ise it is void and

cannot transer o"nership.

K&3L

The distinguishing characteristics o a donation mortis causa are the ollo"ing9

$. It conveys no title or o"nership to the transeree beore the death o the

transeror= or, "hat amounts to the same thing, that the transeror should retain the

o"nership ?ull or naed@ and control o the property "hile alive=

&. That beore his death, the transer should be revocable by the transeror at "ill,

ad nutum= but revocability may be provided or indirectly by means o a reserved

po"er in the donor to dispose o the properties conveyed=

4. That the transer should be void i the transeror should survive the transeree.K&6L

In the donation subject o the present case, there is nothing therein "hich indicates

that any right, title or interest in the donated properties "as to be transerred to

Grsulina prior to the death o Celestina.

The phrase to become efective upon the death o the #F#R admits o no other

interpretation but that Celestina intended to transer the o"nership o the properties

to Grsulina on her death, not during her lietime. K&'L

!ore importantly, the provision in the deed stating that i the donee should die

beore the donor, the donation shall be deemed rescinded and o no urther orce

and efect sho"s that the donation is a postmortem disposition.

2s stated in a long line o cases, one o the decisive characteristics o a

donation mortis causa is that the transer should be considered void i the donor

should survive the donee.K4%L

!ore. The deed contains an attestation clause expressly conrming the donation

as mortis causa9

:IBF) by the above-named donor, Celestina Banuelas, at the oot o 'h! deed o(

dona'on or'! ca!a, consisting o t"o ?&@ pages and on the let margin o each

and every page thereo in the joint presence o all o us "ho at her re0uest and in

her presence and that o each other have in lie manner subscribed our names as

"itnesses.K4$L ?)mphasis supplied@

To classiy the donation as inter vivos simply because it is ounded on considerations

o love and afection is erroneous. That the donation "as prompted by the afection

o the donor or the donee and the services rendered by the latter is o no particular

signicance in determining "hether the deed constitutes a transer inter vivos or

not, because a legacy may have an identical motivation.

K4&L

In other "ords, love andafection may also underline transers mortis causa.K44L

In Maglasang v. Heirs of Cabatingan,K45L the deeds o donation contained

provisions almost identical to those ound in the deed subject o the present case9

That or and in consideration o the love and afection o the #F#R or the #F)),

x x x the #F#R does hereby, by these presents, transer, convey, by "ay o

donation, unto the #F)) the above-described property, together "ith the buildings

and all improvements existing thereon, to become efective upon the death o the

#F#R= 1R#7I), H#E)7)R, that in the event that the #F)) should die beore

the #F#R, the present donation shall be deemed automatically rescinded and o

no urther orce and efect. ?Gnderscoring supplied@

In that case, this Court held that the donations "ere mortis causa, or the above-

0uoted provision conclusively establishes the donors intention to transer theo"nership and possession o the donated property to the donee only ater the



























http://sc.judiciary.gov.ph/jurisprudence/2002/jun2002/131953.htm




























ormers death. <ie in the present case, the deeds therein did not contain any clear

provision that purports to pass proprietary rights to the donee prior to the donors

death.

2s the subject deed then is in the nature o a mortis causa disposition, the

ormalities o a "ill under 2rticle 3&6 o the Civil Code should have been complied

"ith, ailing "hich the donation is void and produces no efect.K4(L

2s noted by the trial court, the attesting "itnesses ailed to acno"ledge the deed

beore the notary public, thus violating 2rticle 6%/ o the Civil Code "hich provides9

2rt. 6%/. )very "ill must be acno"ledged beore a notary public by the

testator and 'he ='ne!!e!. The notary public shall not be re0uired to retain a

copy o the "ill, or le another "ith the o8ce o the Cler o Court. ?)mphasis

supplied@

The trial court did not thus commit any reversible error in declaring the eed o

onation to be mortis causa. #ERE6ORE, the petition is hereby )FI) or lac o

merit.SO ORDERED.

G.R. No. 1391+ Se2'e"er 17, 1919

SOCIEDAD DE LIARRAGA #ERMANOS, plaintifs-appellants,

vs.

6ELICISIMA A/ADA, E0 AL., deendants-appellants.

'"arles '. 'o"n for plainti and appellant.'ross0eld and O1+rien for defendants and appellants.

MOIR, J.:

This case is beore the court on appeal by plaintifs rom a judgment o the Court o

irst Instance o #ccidental Fegros, Honorable Forberto Romualde*, judge.

or a better understanding o the acts the history o the case is given.

rancisco Caponong died in #ctober, $'%/, o"ing the plaintifs a sum o money

"hich "as then less than the amount allo"ed by the commissioners.

His "ido", elicisima 2bada, "as appointed administratrix o the estate,

commissioners to appraise the estate and to pass on the claims against the estate"ere duly appointed, and plaintifs presented their claim "hich "as allo"ed by the

commissioners in the sum o P2&345.36. The commissioners report "as dated in

ebruary, $'%'.

The administratrix leased the "acienda KarmL no"n as 7'oronacion7 to Hilario

Nayco or a term o years, but ater"ards she married 7icente 2lvare*, one o the

deendants, and the lease "as transerred to 2lvare* by Nayco, #ctober &, $'%6.

#n the $$th o 2pril, $'$4, nearly seven years ater the death o Caponong, the

plaintifs herein led a suit in the Court o irst Instance o #ccidental Fegros against

elicisima 2bada personally and as administratrix o the estate o rancisco

Caponong, alleging that rancisco Caponong o"ed plaintifs 1$&,364.35, and that

elicisima 2bada in her o"n name and as administratrix, had been receiving rom

the plaintifs money and efects rom $'%6 to $'$& "hich money and efects "ereused by the deendant in >the expense o cultivation and the exploitation o the

Hacienda 'oronacion& >and that deendant had delivered to plaintifs the sugar

produced until the last crop "hich she reused to deliver to them. 2nd that due

to 7los contratiempos agricolas y a la poca produccion de la "acienda Kdrought and

poor crops o the armL, and ater deducting or the sugar delivered, the account o

the deendant sho"ed a balance in avor o plaintifs on the &3th o 2ugust, $'$&, o

1/&,543.$(= that o this amount they "ere inormed the deendant recogni*ed as

due rom the estate only >about 1$5,%%%> "hich ho"ever had not been paid= that it

had been agreed by rancisco Caponong that the >amounts> taen should dra"

interest at the rate o $& per cent rom the date o each, and that in case it "as

necessary to bring suit 1$,(%% "ould be paid by deendant to plaintifs or their

expenses and attorneys ees, and they ased or judgment or 1/&,543.$( "ithinterest at $& per cent and 1$,(%% or attorneys ee.

2 copy o the account o the administratrix, dated 2ugust &3, $'$&, sho"ing the

same balance due plaintifs, seems to have been led "ith that suit.

The deendants ans"er in that case ?Fo. '/', Feg. #cci.@ admits she o"ed

16,(((.36 as administratrix, and alleges that the balance "as due by her personally.

The guardian o the minor children o rancisco Caponong ased permission o the

court to intervene in that suit, and this being granted, he denied the claim under

oath, and alleged that the estate o rancisco Caponong did not o"e plaintifs

anything.

#n the &(th o 2ugust, $'$5, the parties, including the guardian o the minors,

presented a motion in court stating that they had made an amicable settlement o

the litigation, and prayed the court to dismiss the action, "hich "as done.

The record sho"s that the plaintifs in that suit had a motion pending in the intestate

proceedings o rancisco Caponong, petitioning the court to the same efect as the

complaint in suit Fo. '/'.

The settlement agreed upon "as, brieAy, that the deendants, including the

guardian o the minor children, >recogni*ed that the deceased rancisco Caponongs

estate "as indebted to the plaintifs, according to a li0uidation o the accounts on

the 4%th o une, $'$4, in the sum o 1/6,/$$.%$, "hich "as to be paid "ith $% per

cent interest in seven e0ual annual installments=> and to secure this debt, the

deendants agreed to give plaintifs a rst mortgage on all the property o rancisco

Caponong, except the gro"ing sugar cane, and on all the property belonging

exclusively to elicisima 2bada, and the deendants agreed to secure judicialapproval o the settlement. The deendants also agreed to mortgage the carabaos

then on the hacienda to plaintifs.

The contract is dated the &3th o 2pril, $'$5.

The mortgage o the hacienda "as duly executed by elicisima 2bada or hersel and

as administratrix, and the guardian o the children and 7icente 2lvare*, the husband

o elicisima 2bada, signed the mortgage "hich is also dated the &3th o 2pril, $'$5.

The carabaos "ere not mortgaged.

The compromise "as approved by the court as "ell as the mortgage.

The mortgage given "as not recorded in the registry o property up to time o the

institution o this suit, une &5, $'$/.






Coming no" to the present action, the plaintifs allege in the complaint in this suit,

the ormer suit and its settlement "ith judicial approval= the amount due

thereunder= i. e.& 1/6,/$$.%$= that deendants had let t"o installments go by "ithout

paying anything= that the amount due them "ith accrued interest "as 1'%,464.5'=

that besides the property mortgaged, as per )xhibit +, another parcel o land "as

mortgaged, and that deendants promised to mortgage the carabaos on the

hacienda 1'oronacion&7 and that this promise "as one o the motives and

considerations including the plaintifs to accept the compromise agreement, but that

deendants reused to sign the agreement mortgaging the carabaos "ith the object

and intent o reducing the security o plaintifs= that deendants "ere about to

transer their property not mortgaged, and they prayed or an attachment onproperty o deendants not to exceed 1&%,%%% in value, and or judgment or 1'%,

464.5' "ith interest, and that i this amount should not be paid that the mortgaged

property be sold, and i not su8cient to pay the debts, that the property levied on

under the attachment be sold.

The court granted the attachment order the &5th o uly, $'$/, and the provincial

sherif attached one parcel o land, the gro"ing crops, certain products o the soil,

and various animals.

#n the $/th o ebruary, $'$3, the plaintifs led a motion in court alleging that the

property mortgaged to secure their debt "as not su8cient to secure the debt= that

deendants, "ith the intention o prejudicing the interest o the plaintifs, "erenegligent in the conservation and care o the property, and they ased the court to

appoint a receiver or the property that "as mortgaged. The court granted thismotion on the &%th o ebruary, $'$3, as to all the property attac"ed& and on the

&/th o ebruary, extended the receivership to all the mortgaged property.

The receiver too charge o the property and the deendants "ere ousted rom the

house they had beenoccupying on the premises.

The deendants, elicisima 2bada, administratrix, and anuario Branada, the

guardian, led an amended ans"er in "hich they allege their representative

capacity= that the claim o the plaintifs against the intestate proceedings o

rancisco Caponong had been allo"ed in the sum o 1$&,364.35 by the

commissioners= that the property belonged to the children o the deceased= that the

only interest o elicisima 2bada personally "as her usuructuary interest in one-

sixth o the property= that all the property "as in custodia legis& and could not

la"ully be attached= that the administratrix had not contracted any otherobligation, and that, i any existed, it "as the personal debt o her present husband,

7icente 2lvare*= that )xhibits 2 and +, ?the compromise agreement and the

mortgage executed in conormity there"ith@ made a part o the complaint, "ere

obtained through raud and alse representation= that the approval o the court "as

obtained through raud and deceit, and "as illegal and o no value= that deendants

have never attempted to sell or conceal their property, and prayed the court to

declare )xhibits 2 and + null and void= and that the attachment "as malicious and

illegal, and they presented a counterclaim based on the "rongul issuance, on alse

a8davits o the attachment, laying their damages in the sum o 16','/% or "hich

they ased judgment. 2nd a second counterclaim "as presented based on the

un"arranted appointment o a receiver or property already in custody o the court,

through the administratrix and they alleged their damages in this count in the sum

o 1&6,$&%.

The Honorable Forberto Romualde*, judge, in his decision largely sustained

deendants claim, and declared that plaintifs should pay as damages

or improperly causing the appointment o a receiver 1 (%%.%%

or the attachment o carabaos, etc (%%.%%

or damages to the sugar because o the attachment and the

appointment o a receiver

5,5/&.(%

or damages to land by reason o being let to gro" up in bushes (,%%%.%%

or damages to palay crop &,6%%.%%

$4,&/&.(%

2 urther sum o 1$,%%% damages "as a"arded to elicisima 2bada or having been

put out o her house "hen the receiver "as appointed.

The attachment "as dissolved and the receiver discharged, and he "as ordered to

return the property to deendants.

udgment "as given or the plaintifs to recover rom deendant administratrix the

sum o 16,(((.36 "ith interest "hich, added to the principal, brought the amount to

1$$,4'&.'' "ith $% per cent interest on that sum till paid.

2 personal judgment "as also given plaintifs against the deendants 2bada and

2lvare* or 13','3%.&$.

The plaintifs claim against the guardian o the children "as dismissed.

rom this judgment elicisima 2bada appealed personally and as administratrix

alleging that the trial court should have granted greater damages. The 0uestions

presented by her appeal "ill be su8ciently treated in the appeal o plaintifs.

The plaintifs allege nineteen diferent errors o the trial court. It seems that all the

0uestions are involved in errors Fos. $, &, 5, (, $%, $&, $4 and $6, "hich are as

ollo"s9

$. The court erred in holding that the obligation set orth in )xhibits 2 and + should

be understood as limited to the sum o 16,(((.36, instead o the sum o 1/6, /$$.%$

therein stated.

&. The court erred in reducing the amount o the mortgage, )xhibit +, rom

1/6,/$$.%$ to 16,(((,36.

5. The court erred in nding that just and su8cient grounds did not exist or the

attachment o the properties "hich are the subject-matter o this action.



(. The court erred in nding that just and su8cient grounds did not exist or the

appointment o a receiver or the properties "hich are the subject-matter o this

action.

$%. The court erred in nding that the deendants, or either or any o them, "ere

damaged in the sum o 1(,%%% by reason o injury to the sugar lands "hich are the

subject-matter o this action.

$&. The court erred in declining and reusing to oreclose the mortgages "hich are

the subject-matter o the present action.

$4. The court erred in reducing the indebtedness o the )state o rancisco

Caponong rom 1'%,464.5' to 1$$,4'&.''.

$6. The court erred in absolving rom the complaint herein the deendant anuario

Branada as guardian o the minors, uan +uenaventura, ose, Ficanor and Carlos

Caponong y 2bada.

As to t"e 0rst error . ; )xhibit 2 "as the compromise agreement made in action Fo.

'/', <i*arraga Hermanos against elicisima 2bada personally and as administratrix,

in "hich the guardian o the minor children intervened, as deendant, by permission

o the court. )xhibit + "as the mortgage given to secure the amount agreed upon in

that settlement.

The claim o the plaintifs herein against the estate o rancisco Caponong had been

xed by the commissioners. The amount so determined "as all the estate o"edplaintifs. The court says in its decision that in approving the settlement o action Fo.

'/', its approval "as meant to include only the amount actually due by the estate,

and that the balance o the claim "as intended to be approved as against elicisima

2bada personally.

It is argued that >this is sheer and une0uivocal repudiation o a solemn and ormal

act> o the court.

The record in case Fo. '/' is presented as )xhibit C by plaintifs. In their complaint

in that action ?"hich suit should never have been led as all the property "as in the

custody o the court@, plaintifs allege that their original claim against the estate o

rancisco Caponong "as only 1$&,364.35, and that the balance o the claim "as due

rom elicisima 2bada as administratri# and personally "ithout stating ho" much

"as o"ed by her personally and ho" much "as o"ed by her as administratrix.

Ehether the court in approving the compromise intended to hold the defendant estate liable only or the original debt, and defendant Abada or the balance, is not

material. The language used by the court is very clear and seems to be an outright

approval o the 7transaccion7 ?compromise@, and "ould, so ar as the language goes,

leave no room or doubt o the courts approval o the agreement in ull and as

"ritten.

+ut could the court approve such an agreementJ Could the court authori*e a

mortgage o the stateJ

The la" declares that commissioners shall pass upon all claims against the estate.

They had done so in this case. The la" xed the limit o the estates liability. The

court could not charge it "ith debts that "ere never o"ed by it. The administratrix

could only charge the estate "ith the reasonable and proper expenses o

administration.

The estate o"ed plaintifs less than 1$4,%%% "hen the commissioners passed on

their claim. 1art o this has been paid, and there "as a balance due plaintifs o

16,(((.36 at the time o the trial, plus interest. The plaintifs, ater their claim had

been presented and allo"ed by the commissioners, made advances to the

administratrix till their claim "as more than 1/6,%%%.

It is urged that the major part o this debt o 1/6,%%% is administration e#penses,

and as such is chargeable against the assets o the estate. Fo reason is given "hy

the expense o administration should be so great, and the evidence ails to sustain

this position.

The administration expense "ould be the necessary expenses o handling the

property, o protecting it against destruction or deterioration, and possibly producing

a crop, but i plaintifs, holding a claim originally or less than 1$4,%%% against the

estate, let the administratrix have money and efects till their claim gro" to 1/6,%%%

they can not be permitted to charge this amount as e#pense of administration. They

might be allo"ed to charge it against the current revenue rom the hacienda or the

net proceeds o the >exploitation o the hacienda> or "hich it "as obtained and

used, as plaintifs allege, but it cannot relate bac to the presenting o their claim to

the commissioners, and be a charge against the inheritance o the heirs, or even a

claim to prorate "ith other creditors claims allo"ed by the commissioners. +y

expense o administration "e understand to be the reasonable and necessary

expense o caring or the property and managing it till the debts are paid, asprovided by la", and o dividing it, i necessary, so as to partition it and deliver to

the heirs.

The court could not approve a settlement saddling upon the estate debts it never

o"ed, and i it did, its approval "ould be a nullity.

To give efect to the compromise as "ritten "ould result in great "rong, and destroy

every chance the minor children had to participate in the inheritance o their ather.

The contract "as clearly a dead letter, and the approval o the court could not

breathe the breath o lie into it.

That the mortgage given at the same time and as a result o the agreement "as

"ithout legal "arrant is e0ually clear. Fo mortgage can be placed by an

administrator on the estate o a descendant, unless it is specically authori*ed by

statute.

There is no statute in the 1hilippine Islands authori*ing it.

It may be stated as a general proposition, that neither executors, unless specially

authori*ed by "ill, nor administrators, have the po"er to bind the estate o the

deceased by borro"ing money. ?The 2merican <a" o 2dministration, Eoerner, 7ol.&, sec. 45(.@

In the case o ohnson vs. avidson, the :upreme Court o Illinois ?7ol. $/&, at page&4(@ said9

The argument on behal o appellants seems to proceed upon the supposition thatan administrator may bind the heirs by his mortgage o real estate or the purpose

o raising money "ith "hich to pay the debts o the ancestors, and that a court o

e0uity "ill sustain the mortgage, or a title derived under it, i it be sho"n that the

borro"ed money "as honestly applied to the payment o debts. Fo aut"ority is cited



in support of t"is position& and none& /e believe& can be found. ?See also :mith vs.

Hutchinson, $%6 Ill., at p. //6.@

In the case o +lac vs. ressels Heirs, the :upreme Court o Oansas ?7ol. &%, at

page $(5@ said9

. . . That the statute grants no po"er to an administrator to borro" money upon a

mortgage o the real estate o the decedent, is not controverted. Indeed, such an act

is oreign to the policy and purpose o administration, "hich aims to close up, not to

continue an estate. . . .

In $($ F. M. Reports, uryea vs. !acey& it is said at p. &%39

The mortgage executed by the temporary administrator in this case "hich purported

to bind the "hole estate, "as thereore inefectual to charge the interest o the

devises in remainder, unless the order o the surrogate authori*ing the mortgage

"as a la"ul exercise o his jurisdiction or unless they have estopped themselves

rom 0uestioning its validity. !t is very clear t"at t"e order of t"e surrogate /as/it"out urisdiction.

The learned counsels or appellants in their brie do not cite a single authority or

the placing o a mortgage on an estate in administration, and none has been ound.

It must be held that the mortgage "as void.

The court should have closed up the estate.

:o many courts seem to violate the la" on this point that it may serve a useul

purpose to call attention to our statutes on the subject o estates.

:ection 354 o the Code o Civil 1rocedure declares9

The court, at the time o granting letters testamentary or o administration, shall

allo" to the executor or administrator a time or disposing o the estate and paying

the debts and legacies o the deceased person, "hich time shall not, in the rst

instance, exceed one year= but the court may& on application o the executor or

administrator, rom time to time, as the circumstances o the estate re0uire, extend

the time not exceeding six months at a time, nor so that the "hole time allo"ed to

the original executor or administrator shall exceed t"ree years.

:ection 35( provides that i the executor or administrator dies, the ne"

administrator appointed shall give the same notice or an extension o time "hich

shall not exceed six months beyond the time "hich might have been allo"ed the

rst administrator.

Ehile these sections may be considered as only directory, all Courts o irst Instance

should exert themselves to close up estates "ithin t"elve months rom the time

they are presented, and they may reuse to allo" any compensation to executors

and administrators "ho do not actively labor to that end, and they may even adopt

harsher measures.

The second assignment o error is that the court should not have reduced the

amount o the mortgage ?)xhibit +@ rom 1/6,/$$.%$ to 16,(((.36. The court did err,

but its error consisted in not declaring the mortgage void.

The court "as "ithout jurisdiction to approve the mortgage in the rst place, and itsapproval "as a nullity. 1laintifs claim against the estate "as 16,(((.36 "ith interest

as added by the court. This claim should be paid pro rata "ith any other unpaid

claims against the estate.

The other errors o appellant need only brie consideration.

That an attachment should not have been levied on the carabaos in administration

is too plain to need discussion. I they "ere in the name and possession o the

administratrix, they "ere in custodia legis& and could not be la"ully attached. The

plaintifs as creditors o the estate could have petitioned the court to compel the

administratrix to tae any steps necessary and proper to protect the interest o all

concerned.

The appointment o a receiver "as e0ually unjustied and improper. The property

being under the courts control, the court should have removed the administratrix, i

necessary, and it could have taen other means to protect the creditors and "ind up

the estate.

The plaintifs assign as error Fo. $% that the court should not have allo"ed the sum

o 1(,%%% damages or injury to the sugar lands.

The evidence as to this damage is not considered as clear and satisactory as it

should be.

It seems this claim should have been "holly denied by the trial court, and "e thin

the judgment in avor o the administratrix and against the plaintifs should be

reduced rom 1$4,&/&.(% to 16,&/&.(% "ith interest as provided therein. The otherdamages allo"ed by the trial court are so ully sustained by the evidence, it is not

necessary to discuss them.

Eith the above modication and "ith a declaration that the mortgage, exhibit +,

"as absolutely void, the judgment appealed rom is a8rmed, "ith costs against the

appellants. :o ordered.

Arellano& '.J.& Torres& Jo"nson& Araullo& Street& ,alcolm and Avance%a& JJ.& concur.



G.R. No. L-97* Ma; 1, 197

0e!'a'e E!'a'e o( 'he La'e 6e&> $. de G?an. VIC0ORINO G. DE

G%MAN, administrator-appellee,

vs.

CRISPINA DE G%MAN-CARILLO, ARSENIO DE G%MAN and #ONORA0A DE

G%MAN-MENDIOLA,oppositors-appellants.

8miliano Samson 9 :. +alderama-Samson for appellants.

'e;ar Paraleo for appellee.

A@%INO, J.:

This case is about the propriety o allo"ing as administration expenses certain

disbursements made by the administrator o the testate estate o the late elix . de

Bu*man o Bapan, Fueva )cija.

The deceased testator "as survived by eight children named 7ictorino, <ibrada,

:everino, !argarita, osena, Honorata, 2rsenio and Crispina. His "ill "as duly

probated. <etters o administration "ere issued to his son, octor 7ictorino B. de

Bu*man, pursuant to the order dated :eptember $3, $'/5 o the Court o irst

Instance o Fueva )cija in :pecial 1roceeding Fo. $54$.

#ne o the properties let by the dent "as a residential house located in the

poblacion. In conormity "ith his last "ill, that house and the lot on "hich it stands

"ere adjudicated to his eight children, each being given a one-

eighth proindiviso share in the project o partition dated !arch $', $'//, "hich "as

signed by the eight heirs and "hich "as approved in the lo"er courts order o 2pril

$5, $'/3 but "ithout prejudice to the nal outcome o the accounting.

The administrator submitted our accounting reports or the period rom une $/,

$'/5 to :eptember, $'/3. Three heirs Crispina de Bu*mans-Carillo Honorata de

Bu*man-!endiola and 2rsenio de Bu*man interposed objections to the

administrators disbursements in the total sum o 1$4,/$%.56, broen do"n as

ollo"s9

I. )xpense or the improvement and renovation o the decedents residential house.

$. Construction o ence ; 14,%6&.%3

&. Renovation o bathroom ; 1$,46'.(&

4. Repair o terrace and

interior o house ; 1(,'&6.%% ; 1$%,4''.('

II. <iving expenses o <ibrada de Bu*man "hile occupying the amily home "ithout

paying rent9

$. or house helper ; 1$,$3%.%%

&. <ight bills ; &&3.5$

4. Eater bills ; $(%.6%

5. Bas oil, Aoor "ax

and s"itch nail ; (5.'% ; 1 $,/%4.$$

III. #ther expenses9

$. <a"yers subsistence ; 1 $'.4%

&. Bratuity pay in lieu

o medical ee ; $55.%%

4. or stenographic notes ; $%%.%%

5. or ood served on

decedents rst

death anniversary ; $//./(

(. Cost o publication o

death anniversary

o decedent ; $%&.%%

/. Representation

expenses ; &/.&( ; 1((6.&%

I7. Irrigation ee 1$.%5'.(6

T#T2< 1$4,/$%.56

It should be noted that the probate court in its order o 2ugust &', $'// directed the

administrator >to rerain rom spending the assets o the estate or reconstructing

and remodeling the house o the deceased and to stop spending ?sic@ any asset o

the estate "ithout rst during authority o the court to do so> ?pp. &/-&3, Record on

2ppeal@.

The lo"er court in its order o 2pril &', $'/6 allo"ed the d items as legitimate

expenses o administration. rom that order, the three oppositors appealed to thisCourt. Their contention is that the probate court erred in approving the utili*ation o

the income o the estate ?rom rice harvests@ to deray those expenditures "hich

allegedly are not allo"able under the Rules o Court.

2n executor or administrator is allo"ed the necessary expenses in the care,

management, and settlement o the estate. He is entitled to possess and manage

the decedents real and personal estate as long as it is necessary or the payment o

the debts and the expenses o administration. He is accountable or the "hole

decedents estate "hich has come into his possession, "ith all the interest, prot,

and income thereo, and "ith the proceeds o so much o such estate as is sold by

him, at the price at "hich it "as sold ?:ec. 4, Rule 65= :ecs. $ and 3, Rule 6(, Rules

o Court@.

#ne o the Conditions o the administrators bond is that he should render a true and

just account o his administration to the court. The court may examine him upon



oath Eith respect to every matter relating to his accounting t and shall so examine

him as to the correctness o his account beore the same is allo"ed, except "hen no

objection is made to the allo"ance o the account and its correctness is satisactorily

established by competent proo. The heirs, legatees, distributes, and creditors o the

estate shall have the same privilege as the executor or administrator o being

examined on oath on any matter relating to an administration account.> ?:ec. $KcL

Rule 6$ and secs. 6 and ', Rule 6(, Rules o Court@.

2 hearing is usually held beore an administrators account is approved, especially i

an interested 1arty raises objections to certain items in the accounting report ?:ec.

$%, Rule 6(@.

2t that hearing, the practice is or the administrator to tae the "itness stand,

testiy under oath on his accounts and Identiy the receipts, vouchers and

documents evidencing his disbursements "hich are ofered as exhibits. He may be

interrogated by the court and crossed by the oppositorss counsel. The oppositors

may present proos to rebut the ad. administrators evidence in support o his

accounts.

I. )xpenses or the renovation and improvement o the amily residence ;

1$%,4''.('. ; 2s already sho"n above, these expenses consisted o disbursements

or the repair o the terrace and interior o the amily home, the renovation o the

bathroom, and the construction o a ence. The probate court allo"ed those

expenses because an administrator has the duty to >maintain in tenantable repair

the houses and other structures and ences belonging to the estate, and deliver thesame in such repair to the heirs or devises> "hen directed to do so by the court?:ec. &, Rule 65, Rules o Court@.

#n the other hand, the oppositors-appellants contend that the trial court erred inallo"ing those expenses because the same did not come "ithin the category o

necessary expenses o administration "hich are understood to be the reasonable

and necessary expenses o caring or the property and managing it until the debts

are paid and the estate is partitioned and distributed among the heirs ?<i*arraga

Hermanos vs. 2bada, 5% 1hil. $&5@.

2s claried in the Li;arraga case, administration expenses should be those "hich are

necessary or the management o the estate, or protecting it against destruction or

deterioration, and, possibly, or the production o ruits. They are expenses entailed

or the preservation and productivity o the estate and its management or purposes

o li0uidation, payment o debts, and distribution o the residue among the persons

entitled thereto.

It should be noted that the amily residence "as partitioned proindiviso among the

decedents eight children. )ach one o them "as given a one-eighth share in

conormity "ith the testators "ill. ive o the eight co-o"ners consented to the use

o the unds o the estate or repair and improvement o the amily home. It is

obvious that the expenses in 0uestion "ere incurred to preserve the amily home

and to maintain the amilys social standing in the community.

#bviously, those expenses redounded to the benet o an the co- o"ners. They "ere

necessary or the preservation and use o the amily residence. 2s a result o those

expenses, the co-o"ners, including the three oppositors, "ould be able to use the

amily home in comort, convenience and security.

Ee hold that the probate court did not err in approving the use o the income o the

estate to deray those ex

II. 8#penses incurred by Librada de Gu;man as occupant of t"e family residence/it"out paying rent < P =>5. ; The probate court allo"ed the income o the

estate to be used or those expenses on the theory that the occupancy o the house

by one heir did not deprive the other seven heirs rom living in it. Those expenses

consist o the salaries o the house helper, light and "ater bills, and the cost o gas,

oil Aoor "ax and s"itch nail

Ee are o the opinion that those expenses "ere personal expenses o <ibrada deBu*man, inuring y to her benet. Those expenses, not being reasonable

administration expenses incurred by the administrator, should not be charged

against the income o the estate.

<ibrada de Bu*man, as an heir, is entitled to share in the net income o the estate.

:he occupied the house "ithout paying rent. :he should use her income or her

living expenses "hile occupying the amily residence.

The trial court erred in approving those expenses in the administrators accounts.

They should be, as they are hereby, disallo"ed ?:ee 44 C..: $&4'-5%@.

III. Ot"er e#penses ; P??4.2>. ; 2mong these expenses is the sum o 1$%% or

stenographic notes "hich, as admitted by the administrator on page &5 o his brie,

should be disallo"ed. 2nother item, >representation expenses> in the sum o 1&/.&(

?&nd accounting@, "as not explained. it should lie"ise be disallo"ed.

The probate court erred in allo"ing as expenses o ad. administration the sum o

1&/6./( "hich "as incurred during the celebration o the rst death anniversary o

the deceased. Those expenses are disallo"ed because they have no connection "ith

the care, management and settlement o the decedents estate ?Ficolas vs. Ficolas

/4 1hil 44&@.

The other expenses, namely, 1$'.4% or the la"yers subsistence and 1$55 as the

cost o the git to the physician "ho attended to the testator during his last s are

allo"able expenses.

I7. !rrigation fee ; P&>6@.?4. ;The appellants 0uestion the deductibility o that

expense on the ground that it seems to be a duplication o the item o 1$,4&% as

irrigation ee or the same $'//-/3 crop-year.

The administrator in his comment led on ebruary &6, $'36 explained that the item

o 1$,4&% represented the >allotments> or irrigation ees to eight tenants "ho

cultivated the Intan crop, "hich allotments "ere treated as >assumed expenses>

deducted as arming expenses rom the value o the net harvests.

The explanation is not 0uite clear but it "as not disputed by the appellants. The act

is that the said sum o 1$,%5'.(6 "as paid by the administrator to the 1enaranda

Irrigation :ystem as sho"n in #8cial Receipt Fo. 4('/436 dated 2pril &6, $'/3. It

"as included in his accounting as part o the arming expenses. The amount "as

properly allo"ed as a legitimate expense o administration.

EH)R)#R), the lo"er courts order o 2pril &', $'/6 is a8rmed "ith the

modications that the sum o ?a@ 1$,/%4.$$ as the living expenses o <ibrada de

Bu*man. ?b@ 1$%% or stenographic notes, ?c@ 1&/.&( as representation expenses,



and ?d@ 1&/6./( as expenses or the celebration o the rst anniversary o the

decedents death are disallo"ed in the administrators accounts. Fo costs.

:# #R)R).



G.R. No. L-44+3 Ma; 1, 193

E!'a'e o( 'he decea!ed C&ade E. #a;5ood.

0#E COLLEC0OR O6 IN0ERNAL REVEN%E, claimant-appellee,

vs.

ANNIE LA%RIE #A:GOOD, administratrix-appellant.

Gibbs& ,conoug" and O;aeta for appellant.OBce of t"e Solicitor-General )ilado for appellee.

VILLA-REAL, J.:

2nnie <aurie Haygood appeals to this court rom an order o the Court o irst

Instance o Ri*al, dated !ay &3, $'4(, in "hich appellant, as administratrix o the

estate o her deceased spouses Claude ). Haygood, "as ordered to pay to the

Collector o Internal Revenue, "ithin ten days rom receipt o said order, the sum o

1/,&'(.3', ailing "hich, said amount "ould be declared preerred claim against the

estate o the deceased.

The parties admit, "ithout discussion, the ollo"ing acts9

#n #ctober ', $'45, Claude ). Haygood, resident o the municipality o 1araPa0ue,

1rovince o Ri*al, died in Rochester, !innesota, Gnited :tates o 2merica, leaving a

"ill "hich duly probated by the Court o irst Instance o Ri*al.

#n ecember $(, $'45, the provincial scal o Ri*al, in behal o the appellee,Collector o Internal Revenue, led in the testamentary proceedings o the said

deceased, a s"orn motion claiming the amount o 14,%63.'' "hich represent the

merchants sale tax o one and a hal per cent, unpaid by the deceased, plus a

surcharge o $&( per cent on undeclared sales, maing a total o 1'$,5'/.$/.

#n ecember $3, $'45, the Court o irst Instance o Ri*al appointed 2nnie <aurie

Haygood administratrix o the estate o the deceased Claude ). Haygood.

In an order dated anuary 5, $'4( the same court denied the above-mentioned

motion o the provincial scal o Ri*al, on the ground that the same should be

presented to the committed on claims and appraisals, "hich, at the time, had not

yet been appointed.

#n anuary $5, $'4(, the said provincial scal led a motion "ith supporting reasons

asing or the reconsideration o the said order. #n anuary $3, $'4(, theadministratrix, 2nnie <aurie Haygood, led an opposition to this motion in "hich, or

the reason therein stated, she insisted that the claim alls "ithin the competence o

the committee on claims and appraisals.

#n anuary &4, $'4(, the provincial scal o Ri*al led under oath another motion

amending the original, accompanied by a s"orn statement o the Collector o

Internal Revenue ?)xh. 2@, in "hich, aside rom the amount o 14,%63.'%' claimed as

merchants sales tax, an additional amount o 14,&%3.6% "as also claimed as income

tax unpaid by the deceased Claude ). Haygood, including a surcharge o $%% per

cent or the years $'4% and $'44, maing a total claim o 1/,&'(.3'.

#n !arch $5, $'4(, the Court o irst Instance o Ri*al, presided over by udge 1edro

Tuason, entered an order setting aside its o"n order o anuary 5, $'4(, and

re0uiring the administratrix to ans"er, "ithin teen days, the amended motion o anuary &4, $'4(, and to state her reasons "hy the same should not be granted.

#n !arch &', $'4(, the administratrix, 2nnie <aurie Haygood, in compliance "ith

the above order o the court, led her ans"er to the amended motion insisting, or

the reasons stated therein, that the claim o the Collector o Internal Revenue should

be presented the committee on claims and appraisals and should thereore not be

allo"ed in the testamentary proceedings o the deceased Claude ). Haygood.

#n !ay $$, $'4(, the provincial scal o Ri*al, in a reply to the ans"er o the

administratrix, insisted that the case o Pineda vs. 'ourt of First !nstance of Tayabasand 'ollector of !nternal :evenue ?(& 1hil., 6%4@ is applicable to the instant case and

thereore his claim should be approved.

#n may &3, $'4(, ater considering the ans"er o the administratrix dated !arch

&', $'4(, and the reply thereto o the provincial scal dated !ay $$, $'4(, the Court

o irst Instance o Ri*al, then presided over by udge ernando ugo, rendered the

order no" subject o the present appeal.

It is alleged by the appellant and admitted by the appellee on page 3 o his brie

that the tax in 0uestion "as discovered ater three years rom the date it should

have been declared.

The rst 0uestion to be decided in the present appeal, in the light o the evidence

beore us, is "hether or not the lo"er court erred in entering the order appealed

rom "ithout any other evidence than the s"orn statement ?)xh. 2@ o the appellee,

Collector o Internal Revenue, not"ithstanding the opposition o the administratrix

and "ithout re0uiring both parties to present evidence.

The administratrix and appellant, 2nnie <aurie Haygood, sustains the a8rmative and

relies on the case o Cno/les vs. Government of t"e P"ilippines !slands ?/% 1hil., 5/$@

in "hich this court said the ollo"ing9

The second point is decisive and resolves the appeal in avor o the administrator.

Ee are o the opinion that it "as incumbent upon the Collector o Internal Revenue

to prove the certainly o the items constituting his claim, particularly the alleged net

income said to have been committed in the return led by the deceased and

subse0uently discovered, according to the a8rmative o the Collector o Internal

Revenue, upon investigation by an o8cial o his bureau. This allegedly omitted net

income, or the same reason that it did not appear in any boo or documents

orming part o the les o the +ureau o Internal Revenue, necessarily had to be

proved by means o the testimony o said o8cial. Inasmuch as the latter "as not

presented or did not testiy at the trial, it is clear that the administrator "asdeprived o his substantial right to cross-examine him. The oregoing conclusion o

course, is based upon the premise that the a8davit presented in support o the

claim is competent evidence, a 0uality "hich "e doubt in vie" o the opposition

originally led by the administrator. Ehen the administrator led his opposition to

the claim and generally and specically denied its allegations, the character

o prima facie evidence o the a8davit attached to the claim "as destroyed and it

became upon the claimant to prove his claim means o material and competent

evidence. This duty has not been complied "ith in vie" o the act that no other

evidence has been presented and the claim "as based solely on said a8davit.

#n his part, the appellee, Collector o Internal Revenue sustains the negative and

relies on "hat this court held in the case o Pineda vs. First !nstance of Tayabas ad'ollector of !nternal :evenue ?(& 1hil., 6%4, 6%/@, as ollo"s9



2s it is the duty o an administrator to pay taxes assessed against the estate o the

decedent, "here unds are available or that purpose, the court, in the exercise o its

administrative control over the administrator, undoubtedly has authority to direct

the payment o assessed taxes. !oreover, it is evident that the act o the court in

directing the petitioner to pay this tax not to have the efect o depriving the

petitioners o the remedy, open to every taxpayer, o paying the tax under protest

and bringing an action to recover the money= and assuming that leave o the court

might properly be re0uired or the institution o such action, it is to be assumed that

such leave "ould be granted i the petitioners should be able to sho"s to the court

any plausible ground or concluding that tax had been improperly collected.

It "ill be seen that "hile the t"o decision above 0uoted are in accord in holding that

the assessment made by the Collector o Internal Revenue, contained in his s"orn

declaration, constitutes prima facie evidence o the existence o the unpaid taxes,

they, nevertheless, difer in this respect9 that in the case o Ono"les this evidence is

said to be destroyed by the mere objection to the allegations contained in the claim

and by the general and specic denial o the alleged acts, the burden o proo

alling on the Collector o Internal Revenue, "ho must substantiate his claim by

material and competent evidence= and in the case o 1ineda it is held the duty o the

administrator o the estate o the deceased to prove that the claim or taxes due the

government, made under oath is unjustied. The discrepancy, i any, is more

apparent than real, considering the act that in the case o Ono"les the ailure to

declare the income tax "as discovered ater three years ollo"ing the expiration o

the term "ithin "hich to le such declaration= "hile in the case o 1ineda the error in

the declaration "as discovered "ithin three rom the date the declaration "as made.

In accordance "ith section ', paragraph ?a@ o 2ct Fo. &644, the assessment made

by the Collector o Internal Revenue "ithin three years ater the discovery o an

erroneous declaration shall be paid by the maer o the return immediately upon

being o the assessment. The procedure prescribed by la" is, thereo, summary, and

collection must be made rom the person liable or the tax. :ince this cannot be

done "hen the person liable is already dead, collection must necessarily be mad

rom the estate o the deceased, either in a testate or intestate proceedings

instituted beore a competent court, by motion together "ith a s"orn statement o

the taxes due led "ith said court, so that it may re0uire the administrator to pay

the claim i the latter has unds available thereor, that is, ollo"ing the order o

preerence in section 34( o the Code o Civil 1rocedure in case the said estate

should be insolvent. I the testate or intestate estate is solvent, the court may order

the payment o the claim "ithout necessity o its being substantiate by evidencesince the s"orn statement constitutes prima facie evidence o the existence o the

unpaid taxes, and the administrator is under obligations to pay such claim, under

protest i he is not agreeable, "ithout prejudice to his right later to recover the taxes

so paid, in the manner by la". ?2ct Fo. &3$$, sec $(3', as amended by 2ct Fo.

4/6(@. This procedure is sanctioned by the court in the case o 1ineda cited above.

In the case o Ono"les, supra, the discovery o the error in the return o the taxpayertoo place ater three years rom the date the return "as led. The probate court

acted correctly in re0uiring the judicial administrator to ans"er the claim presented

by the Collector o Internal Revenue or taxes due and unpaid by the deceased,

during his lietime, considering the act that the motion presented by said Collector

o Internal Revenue "as tantamount to a judicial action, in accordance "ith the

ruling o this court in the case o 'ollector of !nternal :evenue vs. (illegas ?(/ 1hil.,

((5, (('@, and as such, it should have proceeded substantially lie an ordinary civil

suit through the ling o a "ritten ans"er and the presentation o evidence.

The act in the case o 1ineda, supra, difer rom those in the case o Ono"les and

since the la" provides a diferent procedure in each case, there is no conAict in the

decision rendered in t"o cases.

In the case beore us the acts as to the date o the discovery o the so in the return,

"hich "as ater the lapse o three years rom the date the erroneous return "as

led, are identical "ith those in the case o Ono"les= thereore, the rule established

in the latter case should be ollo"ed "ith respect to the procedure in collecting a

claim or taxes due and unpaid presented by the Collector o Internal Revenue in a

testate or intestate proceedings. The appealed order is, thereore, erroneous.

In vie" o the oregoing, "e are o the opinion and so hold that9 rst, "hen the

discovery o erroneous tax returns is made "ithin three years ater the date such

returns should have been led, and the declarant dies, the claim or payment o the

tax assessed by the Collector o Internal Revenue must be made in the testate or

intestate proceedings by ling a motion accompanied by a statement o the taxes

duly s"orn to by the Collector o Internal Revenue, and a competent court may

summarily order, "ithout previous trial, the judicial administrator to pay the claim i

unds are available, taing into consideration the order o payment established in

section 3(4 o the Code o Civil 1rocedure, and the administrator may pay the claim

under protest in order to recover in a separate suit "hat he may have erroneously

paid= and, secondly, "hen the discovery o erroneous return tae place ater three

years rom the date the return are led, the Collector o Internal Revenue shallpresent the claim by ling a motion accompanied by a statement under oath o the

unpaid taxes, said motion being in the nature o a civil suit should be prosecutedthrough the ling o a "ritten ans"er and the presentation o evidence.

Ehereore, the appealed order is revoed and the record is remanded to the court o

origin so that the same may proceed to hear the evidence in support o the claim o

the Collector o Internal Revenue and the opposition thereto o the administratrix

and appellant, 2nnie <aurie Haygood, respectively, and render judgement

accordingly "ithout special pronouncement as to costs. :o ordered.

Abad Santos& !mperial& ia;& Laurel and 'oncepcion& JJ.& concur.



G.R. No. L-1949 No)e"er 4, 19**

COMMISSIONER O6 IN0ERNAL REVEN%E, petitioner,

vs.

LILIA :%SA: GONALES and 0#E CO%R0 O6 0AB APPEALS, respondents.

OBce of t"e Solicitor General for t"e petitioner.:amon A. Gon;ales for respondent Lilia Dusay Gon;ales.

/ENGON, $.P., J.:

!atias Musay, a resident o 1ototan, Iloilo, died intestate on !ay $4, $'56, leavingt"o heirs, namely, ose :. Musay, a legitimate child, and <ilia Musay Bon*ales, an

acno"ledged natural child. Intestate proceedings or the settlement o his estate

"ere instituted in the Court o irst Instance o Iloilo ?:pecial 1roceedings Fo. 5('@.

ose :. Musay "as therein appointed administrator.

#n !ay $$, $'5' ose :. Musay led "ith the +ureau o Internal Revenue an estate

and inheritance tax return declaring therein the ollo"ing properties9

1ersonal properties

1alay

Carabaos

1/,555.%%

$,%%%.%% 13,555.%%

Real properties9

Capital, 35 parcels @

Conjugal $' parcels@ assessed at 1$3',3/%.%%

Total gross estate 1$63,&%5.%%

The return mentioned no heir.

Gpon investigation ho"ever the +ureau o Internal Revenue ound the ollo"ing

properties9

1ersonal properties9

1alay

Carabaos

1acard 2utomobile& 2paradors

1/,555.%%

$,(%%.%%

&,%%%.%%(%%.%% 1$%,555.%%

Real properties9

Capital , &( parcels assessed at 163,3$(.4&

$Q& o Conjugal, $4% parcels 1$&$,5&(.%% 1&%',$5%.4&

assessed at

Total 1&$',(65.4&

The air maret value o the real properties "as computed by increasing the

assessed value by orty percent.

+ased on the above ndings, the +ureau o Internal Revenue assessed on #ctober

&', $'(4 estate and inheritance taxes in the sums o 1/,65'.36 and 1$/,'3%./4,respectively.

#n anuary &(, $'(( the +ureau o Internal Revenue increased the assessment to

16,&&(.6' as estate tax and 1&&,$$3.$% as inheritance tax plus delin0uency interest

and demanded payment thereo on or beore ebruary &6, $'((. !ean"hile, on

ebruary $/, $'((, the Court o irst Instance o Iloilo re0uired ose :. Musay to sho"

proo o payment o said estate and inheritance taxes.

#n !arch 4, $'(( ose :. Musay re0uested an extension o time "ithin "hich to pay

the tax. He posted a surety bond to guarantee payment o the taxes in 0uestion

"ithin one year. The Commissioner o Internal Revenue ho"ever denied the re0uest.

Then he issued a "arrant o distraint and levy "hich he transmitted to the !unicipal

Treasurer o 1ototan or execution. This "arrant "as not enorced because all the

personal properties subject to distraint "ere located in Iloilo City.

#n !ay &%, $'(( the 1rovincial Treasurer o Iloilo re0uested the +IR 1rovincial

Revenue #8cer to urnish him copies o the assessment notices to support a motion

or payment o taxes "hich the 1rovincial iscal "ould le in :pecial 1roceedings Fo.

5(' beore the Court o irst Instance o Iloilo. The papers re0uested "ere sent by

the Commissioner o Internal Revenue to the 1rovincial Revenue #8cer o Iloilo to

be transmitted to the 1rovincial Treasurer. The records do not ho"ever sho" "hether

the 1rovincial iscal led a claim "ith the Court o irst Instance or the taxes due.

#n !ay 4%, $'(/ the commissioner appointed by the Court o irst Instance or the

purpose, submitted a reamended project o partition "hich listed the ollo"ing

properties9

1ersonal properties9

+uic :edan

1acard car

2paradors

Cash in +an ?1F+@

1alay

Carabaos

16,$%%.%%

&,%%%.%%

(%%.%%

6,6(6.5/

/,555.%%

$,(%%.%% 1&3,5%&.5/

Real properties9

<and, $35 parcels

assessed at

14&5,3'3.&$ 14&',&'3.&$



+uildings 5,(%%.%%

Total 14(/,/''./3

!ore than a year later, particularly on uly $&, $'(3, an agent o the +ureau o

Internal Revenue apprised the Commissioner o Internal Revenue o the existence o

said reamended project o partition. Ehereupon, the Internal Revenue Commissioner

caused the estate o !atias Musay to be reinvestigated or estate and inheritance tax

liability. 2ccordingly, on ebruary $4, $'(6 he issued the ollo"ing assessment9

)state tax 1$/,&5/.%5

( surcharge 5$$.&'

elin0uency interest $$,6/6.'%

Compromise

Fo notice o death

<ate payment

1$(.%%

5%.%% ((.%%

Total 1&6,(6$.&4

Inheritance Tax 146,$36.$&

( surcharge $,$%(.6/

elin0uency interest &6,6%6.3(

Compromise or late payment (%.%%

Total 1/',$5&.34

Total estate and inheritance taxes 1'3,3&4.'/

<ie in previous assessments, the air maret value o the real properties "as arrived

at by adding 5% to the assessed value.

In vie" o the demise o ose :. Musay, said assessment "as sent to his "ido", !rs.

lorencia 1iccio 7da. de Musay, "ho succeeded him in the administration o the

estate o !atias Musay.

Fo payment having been made despite repeated demands, the Commissioner o

Internal Revenue led a proo o claim or the estate and inheritance taxes due and

a motion or its allo"ance "ith the settlement court in voting priority o lien

pursuant to :ection 4$( o the Tax Code.

#n une $, $'(', <ilia Musay, through her counsel, Ramon Bon*ales, led an ans"er

to the proo o claim alleging non-receipt o the assessment o ebruary $4, $'(6,

the existence o t"o administrators, namely lorencia 1iccio 7da. de Musay "ho

administered t"o-thirds o the estate, and <ilia Musay, "ho administered the

remaining one-third, and her "illingness to pay the taxes corresponding to her

share, and praying or deerment o the resolution on the motion or the payment o

taxes until ater a ne" assessment corresponding to her share "as issued.

#n Fovember $3, $'(' <ilia Musay disputed the legality o the assessment dated

ebruary $4, $'(6. :he claimed that the right to mae the same had prescribed

inasmuch as more than ve years had elapsed since the ling o the estate and

inheritance tax return on !ay $$, $'5'. :he thereore re0uested that the

assessment be declared invalid and "ithout orce and efect. This re0uest "as

rejected by the Commissioner in his letter dates anuary &%, $'/%, received by <ilia

Musay on !arch $5, $'/%, or the reasons, namely, ?$@ that the right to assess the

taxes in 0uestion has not been lost by prescription since the return "hich did not

name the heirs cannot be considered a true and complete return su8cient to start

the running o the period o limitations o ve years under :ection 44$ o the Tax

Code and pursuant to :ection 44& o the same Code he has ten years "ithin "hich

to mae the assessment counted rom the discovery on :eptember &5, $'(4 o theidentity o the heirs= and ?&@ that the estates administrator "aived the deense o

prescription "hen he led a surety bond on !arch 4, $'(( to guarantee payment o the taxes in 0uestion and "hen he re0uested postponement o the payment o the

taxes pending determination o "ho the heirs are by the settlement court.

#n 2pril $4, $'/% <ilia Musay led a petition or revie" in the Court o Tax 2ppeals

assailing the legality o the assessment dated ebruary $4, $'(6. 2ter hearing the

parties, said Court declared the right o the Commissioner o Internal Revenue to

assess the estate and inheritance taxes in 0uestion to have prescribed and rendered

the ollo"ing judgment9

EH)R)#R), the decision o respondent assessing against the estate o the late

!atias Musay estate and inheritance taxes is hereby reversed. Fo costs.

The Commissioner o Internal Revenue appealed to this Court and raises the

ollo"ing issues9

$. Eas the petition or revie" in the Court o Tax 2ppeals "ithin the 4%-day period

provided or in :ection $$ o Republic 2ct $$&(J

&. Could the Court o Tax 2ppeals tae cogni*ance o <ilia Musays appeal despite the

pendency o the >1roo o Claim> and >!otion or 2llo"ance o Claim and or an

#rder o 1ayment o Taxes> led by the Commissioner o Internal Revenue in :pecial

1roceedings Fo. 5(' beore the Court o irst Instance o IloiloJ

4. Has the right o the Commissioner o Internal Revenue to assess the estate and

inheritance taxes in 0uestion prescribedJ

#n Fovember $3, $'(' <ilia Musay disputed the legality o the assessment o

ebruary $4, $'(6. #n !arch $5, $'/% she received the decision o the

Commissioner o Internal Revenue on the disputed assessment. #n 2pril $4, $'/%she led her petition or revie" in the Court o Tax 2ppeals. :aid Court correctly held



that the appeal "as seasonably interposed pursuant to :ection $$ o Republic 2ct

$$&(. Ee already ruled in St. Step"en1s Association v. 'ollector of !nternal:evenue,$ that the counting o the thirty days "ithin "hich to institute an appeal in

the Court o Tax 2ppeals should commence rom the date o receipt o the decision

o the Commissioner on the disputed assessment, not rom the date the assessment

"as issued.

2ccordingly, the thirty-day period should begin running rom !arch $5, $'/%, the

date <ilia Musay received the appealable decision. rom said date to 2pril $4, $'/%,

"hen she led her appeal in the Court o Tax 2ppeals, is exactly thirty days. Hence,

the appeal "as timely.

Fext, the Commissioner attacs the jurisdiction o the Court o Tax 2ppeals to tae

cogni*ance o <ilia Musays appeal on the ground o lis pendens. He maintains that

the pendency o his motion or allo"ance o claim and or order o payment o taxes

in the Court o irst Instance o I loilo "ould preclude the Court o Tax 2ppeals rom

ac0uiring jurisdiction over <ilia Musays appeal. This contention lacs merit.

<ilia Musays cause sees to resist the legality o the assessment in 0uestion. :hould

she maintain it in the settlement court or should she elevate her cause to the Court

o Tax 2ppealsJ Ee say, she acted correctly by appealing to the latter court. 2n

action involving a disputed assessment or internal revenue taxes alls "ithin the

exclusive jurisdiction o the Court o Tax 2ppeals.& It is in that orum, to the exclusion

o the Court o irst Instance,4 "here she could ventilate her deenses against the

assessment.

!oreover, the settlement court, "here the Commissioner "ould "ish <ilia Musay to

contest the assessment, is o limited jurisdiction. 2nd under the Rules, 5 its authority

relates only to matters having to do "ith the settlement o estates and probate o "ills o deceased persons.( :aid court has no jurisdiction to adjudicate the

contentions in 0uestion, "hich ; assuming they do not come exclusively under the

Tax Courts cogni*ance ; must be submitted to the Court o irst Instance in the

exercise o its general jurisdiction./

Ee no" come to the issue o prescription. <ilia Musay claims that since the latest

assessment "as issued only on ebruary $4, $'(6 or eight years, nine months and

t"o days rom the ling o the estate and inheritance tax return, the Commissioners

right to mae it has expired. :he "ould rest her stand on :ection 44$ o the Tax

Code "hich limits the right o the Commissioner to assess the tax "ithin ve years

rom the ling o the return.

The Commissioner claims that raud attended the ling o the return= that this being

so, :ection 44&?a@ o the Tax Code "ould apply.3 It may be "ell to note that the

assessment letter itsel ?)xhibit &&@ did not impute raud in the return "ith intent to

evade payment o tax. 1recisely, no surcharge or raud "as imposed. In his ans"er

to the petition or revie" led by <ilia Musay in the Court o Tax 2ppeals, the

Commissioner alleged no raud. Instead, he broached the insu8ciency o the return

as barring the commencement o the running o the statute o limitations. He raised

the point o raud or the rst time in the proceedings, only in his memorandum led

"ith the Tax Court subse0uent to resting his case. :aid Court rejected the plea o

raud or lac o allegation and proo, and ruled that the return, although not

accurate, "as su8cient to start the period o prescription.

raud is a 0uestion o act. 6 The circumstances constituting it must be alleged andproved in the court belo".'2nd the nding o said court as to its existence and non-

existence is nal unless clearly sho"n to be erroneous.$%2s the court a $uo ound

that no raud "as alleged and proved therein, Ee see no reason to entertain the

Commissioners assertion that the return "as raudulent.

The conclusion, ho"ever, that the return led by ose :. Musay "as su8cient to

commence the running o the prescriptive period under :ection 44$ o the Tax Code

rests on no solid ground.

1aragraph ?a@ o :ection '4 o the Tax Code lists the re0uirements o a valid return. It

states9

?a@ :e$uirements.;In all cases o inheritance or transers subject to either theestate tax or the inheritance tax, or both, or "here, though exempt rom both taxes,

the gross value o the estate exceeds three thousand pesos, the executor,

administrator, or anyone o the heirs, as the case may be, shall le a return under

oath in duplicate, setting orth ?$@ the value o the gross estate o the decedent at

the time o his death, or, in case o a nonresident not a citi*en o the 1hilippines = ?&@

the deductions allo"ed rom gross estate in determining net estate as dened in

section eighty-nine= ?4@ such part o such inormation as may at the time be

ascertainable and such supplemental data as may be necessary to establish the

correct taxes.

2 return need not be complete in all particulars. It is su8cient i it complies

substantially "ith the la". There is substantial compliance ?$@ "hen the return is

made in good aith and is not alse or raudulent= ?&@ "hen it covers the entire period

involved= and ?4@ "hen it contains inormation as to the various items o income,deduction and credit "ith such deniteness as to permit the computation and

assessment o the tax.$$

There is no 0uestion that the state and inheritance tax return led by ose :. Musay

"as substantially deective.

irst, it "as incomplete. It declared only ninety-three parcels o land representing

about 5%% hectares and let out ninety-t"o parcels covering (%4 hectares. :aid huge

under declaration could not have been the result o an over-sight or mistae. 2s

ound in <-$$436, supra note 3, ose :. Musay very "ell ne" o the existence o the

ommited properties. 1erhaps his motive in under declaring the inventory o

properties attached to the return "as to deprive <ilia Musay rom inheriting her legal

share in the hereditary estate, but certainly not because he honestly believed that

they did not orm part o the gross estate.

:econd, the return mentioned no heir. Thus, no inheritance tax could be assessed.

2s a matter o la", on the basis o the return, there "ould be no occasion or the

imposition o estate and inheritance taxes. Ehen there is no heir - the return sho"ed

none - the intestate estate is escheated to the :tate.$& The :tate taxes not itsel.

In a case "here the return "as made on the "rong orm, the :upreme Court o the

Gnited :tates held that the ling thereo did not start the running o the period o

limitations.$4 The reason is that the return submitted did not contain the necessary

inormation re0uired in the correct orm. In this jurisdiction, ho"ever, the :upreme

Court rerained rom applying the said ruling o the Gnited :tates :upreme Court

in 'ollector of !nternal :evenue v. 'entral A;ucarera de Tarlac, <-$$3/%-/$, uly 4$,

$'(6, on the ground that the return "as complete in itsel although inaccurate. To

our mind, it "ould not mae much diference "here a return is made on the correctorm prescribed by the +ureau o Internal Revenue i the data therein re0uired are



not supplied by the taxpayer. ust the same, the necessary inormation or the

assessment o the tax "ould be missing.

The return led in this case "as so decient that it prevented the Commissioner

rom computing the taxes due on the estate. It "as as though no return "as made.

The Commissioner had to determine and assess the taxes on data obtained, not

rom the return, but rom other sources. Ee thereore hold the vie" that the return

in 0uestion "as no return at all as re0uired in :ection '4 o the Tax Code.

The la" imposes upon the taxpayer the burden o supplying by the return the

inormation upon "hich an assessment "ould be based.$5 His duty complied "ith,

the taxpayer is not bound to do anything more than to "ait or the Commissioner to

assess the tax. Ho"ever, he is not re0uired to "ait orever. :ection 44$ o the Tax

Code gives the Commissioner ve years "ithin "hich to mae his

assessment.$( )xcept, o course, i the taxpayer ailed to observe the la", in "hich

case :ection 44& o the same Code grants the Commissioner a longer period. Fon-

observance consists in ling a alse or raudulent return "ith intent to evade the tax

or in ling no return at all.

2ccordingly, or purposes o determining "hether or not the Commissioners

assessment o ebruary $4, $'(6 is barred by prescription, :ection 44&?a@ "hich is

an exception to :ection 44$ o the Tax Code nds application. $/Ee 0uote :ection

44&?a@9

:)C. 44&. 8#ceptions as to period of limitation of assessment and collection of ta#es.

; ?a@ In the case o a alse or raudulent return "ith intent to evade tax or o aailure to le a return, the tax may be assessed, or a proceeding in court or the

collection o such tax may be begun "ithout assessment, at any time "ithin ten

years ater the discovery o the alsity, raud or omission.

2s stated, the Commissioner came to no" o the identity o the heirs on :eptember

&5, $'(4 and the huge underdeclaration in the gross estate on uly $&, $'(3. romthe latter date, :ection '5 o the Tax Code obligated him to mae a return or amend

one already led based on his o"n no"ledge and inormation obtained through

testimony or other"ise, and subse0uently to assess thereon the taxes due. The

running o the period o limitations under :ection 44&?a@ o the Tax Code should

thereore be reconed rom said date or, as aoresaid, it is rom that time that the

Commissioner "as expected by la" to mae his return and assess the tax due

thereon. rom uly $&, $'(3 to ebruary $4, $'(6, the date o the assessment no" in

dispute, less than ten years have elapsed. Hence, prescription did not abate theCommissioners right to issue said assessment.

2nent the Commissioners contention that <ilia Musay is estopped rom raising the

deense o prescription because she ailed to raise the same in her ans"er to the

motion or allo"ance o claim and or the payment o taxes led in the settlement

court ?Court o irst Instance o Iloilo@, su8ce it to state that it "ould be unjust to the

taxpayer i Ee "ere to sustain such a vie". The Court o irst Instance acting as a

settlement court is not the proper tribunal to pass upon such deense, thereore it

"ould be but utile to raise it therein. !oreover, the Tax Code does not bar the right

to contest the legality o the tax ater a taxpayer pays it. Gnder :ection 4%/ thereo,

he can pay the tax and claim a reund thereor. 2 fortiori his "illingness to pay the

tax is no "aiver to raise deenses against the taxs legality.

EH)R)#R), the judgment appealed rom is set aside and another entereda8rming the assessment o the Commissioner o Internal Revenue dated ebruary

$4, $'(6. <ilia Musay Bon*ales, as administratrix o the intestate estate o !atias

Musay, is hereby ordered to pay the sums o 1$/,&5/.%5 and 14',$36.$& as estate

and inheritance taxes, respectively, plus interest and surcharge or delin0uency in

accordance "ith :ection $%$ o the Fational Internal Revenue Code, "ithout

prejudice to reimbursement rom her co-administratrix, lorencia 1iccio 7da. de

Musay or the latters corresponding tax liability. Fo costs. :o ordered.

'oncepcion& '.J.& :eyes& J.+.L.& +arrera& i;on& :egala& ,a*alintal& Sanc"e; and'astro& JJ.& concur.

Ealdivar& J.& too no part.

R E S O L % 0 I O N

2pril &5, $'/3

/ENGON, $.P., J.:

Respondent <ilia Musay Bon*ales sees reconsideration o our decision holding her

liable or the payment o 1'3,3&4.'/ as estate and inheritance taxes plus

delin0uency penalties as administratrix o the intestate estate o !atias Musay. The

grounds raised by her deserve this extended resolution.

irstly, movant maintains that the issue o "hether or not the estate and inheritancetax return led by ose Musay on !ay $4, $'5' "as su8cient to start the running o

the statute o limitations on assessment, "as neither raised in the Court o Tax

2ppeals nor assigned as error beore this Court. The records in the Court o Tax

2ppeals ho"ever sho" the contrary. 1aragraph & o the ans"er led by the

Commissioner o Internal Revenue states9

&. That he lie"ise admits, as alleged in paragraph $ thereo having received the

letter o the petitioner dated Fovember &3, $'(' ?2nnex >2> o the 1etition or

Revie"@, contesting the assessment o estate and inheritance taxes levied against

the Intestate )state o the late !atias Musay, :pecial 1roceedings Fo. 5(', Court o irst Instance o Iloilo, on the ground that the said assessment has already

prescribed, but specically denies the allegation that the assessment have already

prescribed, the truth o the matter being that the returns led on !ay $$, $'5'

cannot be considered as a true, and complete return su8cient to start the running o the period o ve ?(@ years prescribed in :ec. 44$ o the Tax Code=

This point "as discussed in the memorandum o the Commissioner o Internal

Revenue, thus9

In the estate and inheritance tax return led by ose :. Musay ?)xhibits + S $, pp. $5-

&%, +.I.R. records@ the net value o the estate o the deceased "as claimed to be

1&%4,4(5.%% and no inheritance tax "as sho"n as the heirs "ere not indicated. In

the nal computation o the estate by an examiner o the respondent, the net estate

"as ound to be "orth 15$%,($6.46 ?p. $%(, +.I.R. records@ or about more than t"ice

the original amount declared in the return. In the subse0uent investigation o this

case, it "as also determined that the heirs o the deceased "ere ose :. Musay, a

legitimate son, and <ilia Musay, an acno"ledged natural child, ?petitioner herein@.



Gnder the circumstances, "e believe the return led on !ay $$, $'5' "as alse or

raudulent in the sense that the value o the properties "ere underdeclared and that

the said return "as also incomplete as the heirs to the estate "ere not specied.

Inasmuch as the respondent "as not urnished ade0uate data upon "hich to base

an assessment, the said return cannot be considered a true and complete return

su8cient to start the running o the period o limitations o ve ?(@ years prescribed

in :ection 44$ o the Tax Code.

In the lo"er court the deense o the Commissioner o Internal Revenue against <ilia

Musay Bon*ales plea o prescription, centered on the insu8ciency and raudulence

or alsity o the return led by ose Musay. The Court o Tax 2ppeals overruled theCommissioner o Internal Revenue. :aid the Tax Code9

The provision o :ection 44&?a@ o the Tax Code cannot be invoed in this case as it

"as neither alleged in respondents ans"er, nor proved during the hearing that the

return "as alse or raudulent "ith intent to evade the payment o tax. !oreover,

the ailure o respondent to charge raud and impose the penalty thereo in the

assessments made in $'(4, $'(( and $'(/ is an elo0uent demonstration that the

ling o petitioners transer tax return "as not attended by alsity or raud "ith

intent to evade tax.

xxx xxx xxx

+ut respondent urges upon us that the ling o the return did not start the running o

the ve ?(@ year period or the reason that the return did not disclose the heirs o the

deceased !atias Musay, and contained inade0uate data regarding the value o theestate. Ee believe that these mere omissions do not re0uire additional returns or

the same. 2ltho incomplete or being decient on these matters, the return cannot

be regarded as a case o ailure to le a return "here "ant o good aith and intentto evade the tax on the part o petitioner are not charged. It served as a su8cient

notice to the Commissioner o Internal Revenue to mae his assessment and start

the running, o the period o limitation. In this connection, it must be borne in mind

that the Commissioner is not conned to the taxpayers return in maing

assessment o the tax, and or this purpose he may secure additional inormation

rom other sources. 2s "as done in the case at bar, he sends investigators to

examine the taxpayers records and other pertinent data. His assessment is based

upon the acts uncovered by the investigation ?Collector vs. Central 2*ucarera de

Tarlac, B.R. Fos. <-$$3/% and <-$$3/$, uly 4$, $'(6@.

urthermore, the ailure to state the heirs in the return can be attributed to the thenunsettled conAict raging beore the probate court as to "ho are the heirs o the

estate. :uch ailure could not have been a deliberate attempt to mislead the

government in the assessment o the correct taxes.

In his appeal, the Commissioner o Internal Revenue assigned as third error o the

Court o Tax 2ppeals the nding that the assessment in 0uestion "as >made beyond

the ve-year statutory period provided in :ection 44& ?a@ o the Tax Code,> and that

the right o the Commissioner o Internal Revenue to assess the estate and

inheritance taxes has already prescribed. To sustain his side, the Commissioner

ventilated in his brie, raud in the ling o the return, absence o certain data rom

the return "hich prevented him rom assessing thereon the tax due and the

pendency in this Court o <-$$435 entitled >Intestate )state o the late !atias Musay,

ose C. Musay, 2dministrator vs. <ilia Musay Bon*ales> "hich allegedly had the efect

o suspending the running o the period o limitations on assessment.

Clearly, thereore, it "ould be incorrect to say that the 0uestion o "hether or not

the return led by ose Musay "as su8cient to start the running o the statute o

limitations to assess the corresponding tax, /as not raised by the Commissioner in

the Court o Tax 2ppeals and in this Court.

:econd. !ovant contend that contrary to #ur ruling, the return led by ose Musay

"as su8cient to start the statute o limitations on assessment. Inasmuch as this

0uestion "as amply discussed in #ur decision sought to be reconsidered, and no

ne" argument "as advanced, Ee deem it unnecessary to pass upon the same.

There is no reason or any change on #ur stand on this point.

Third. !ovant insists that since she administers only one-third o the estate o

!atias Musay, she should not be liable or the "hole tax. 2nd she suggests that Ee

hold the intestate estate o !atias Musay liable or said taxes, one-third to be paid by

<ilia Musay Bon*ales and t"o-thirds to be paid by lorencia 1. 7da. de Musay.

The oregoing suggestion to re0uire payment o t"o-thirds o the total taxes by

lorencia 1. 7da. de Musay is not acceptable, or she ?lorencia 1. 7da. de Musay@ is

not a party in this case.

It should be pointed out that <ilia Musay Bon*ales appealed the "hole assessment to

the Court o Tax 2ppeals. Thereupon, the Commissioner o Internal Revenue

0uestioned her legal capacity to institute the appeal on the ground that she

administered only one-third o the estate o !atias Musay. In opposition, she

espoused the vie", "hich "as sustained by the Tax Court, that in co-administration,

the administratrices are regarded as one person and the acts o one o them inrelation to the regular administration o the estate are deemed to be the acts o all=

hence, each administratrix can represent the "hole estate. In advancing such

proposition, <ilia Musay Bon*ales represented the "hole estate and hoped to benetrom the avorable outcome o the case. or the same reason that she represented

her co-administratrix and the "hole estate o !atias Musay, she rised being ordered

to pay the "hole assessment, should the assessment be sustained.

Her change o stand adopted in the motion or reconsideration to the efect that she

should be made liable or only one-third o the total tax, "ould negate her aoresaid

proposition beore the Court o Tax 2ppeals. :he is no" estopped rom denying

liability or the "hole tax.

2t any rate, estate and inheritance taxes are satis0ed from t"e estate and are to be

paid by the executor or administrator.$ Ehere there are t"o or more executors, all o them are severally liable or the payment o the estate tax. & The inheritance tax,

although charged against the account o each beneciary, should be paid by the

executor or administrator.4 ailure to pay the estate and inheritance taxes beore

distribution o the estate "ould subject the executor or administrator to criminal

liability under :ection $%3?c@ o the Tax Code.

It is immaterial thereore that <ilia Musay Bon*ales administers only one-third o the

estate and "ill receive as her share only said portion, or her right to the estate

comes ater taxes.5 2s an administratrix, she is liable or the entire estate tax. 2s an

heir, she is liable or the entire inheritance tax although her liability "ould not

exceed the amount o her share in the estate. ( The entire inheritance tax "hich

amounts to 14',$36.$& excluding penalties is obviously much less than her

distributive share.

!otion or reconsideration denied.



'oncepcion& '.J.& :eyes& J.+.L.& i;on& :egala& ,a*alintal& Sanc"e; and 'astro& JJ.& concur.

Ealdivar& J.& too no part.



G.R. No. L-774 Oc'o"er 1, 1977

MISAEL P. VERA, a! Co!!oner o( In'erna& Re)ene, petitioner,

vs.

#on. $d5e PEDRO C. NAVARRO, n h! ca2ac'; a! $d5e o( 'he Cor' o(

6r!' In!'ance o( Pa!5, R?a& /ranch V MAGDALENA A/AN0O and CAMILO

ERI/AL, a! )o&n'ar; re!da& her! o( 'he E!'a'e o( 'he decea!ed ELSIE M.

GAC#ES DELIA P. MEDINA, a! a''orne;-n-(ac' o( !ad her! /IENVENIDO A.0AN, SR., a! E>ec'or o( 'he E!'a'e o( ELSIE M. GAC#ES P#ILIPPINE

NA0IONAL /AN P#ILIPPINE /ANING CORPORA0ION 0#E OVERSEAS

/AN O6 MANILA and /ANCO 6ILIPINO SAVINGS AND MOR0GAGE/AN, respondents.

CAS0RO, C.J.:têñ.£îh!"£

This is a petition or certiorari, mandamus, prohibition and injunction led by the

herein petitioner !isael 1. 7era, in his capacity as Commissioner o Internal Revenue

?hereinater reerred to as >Commissioner>@, against the Honorable udge 1edro C.

Favarro, in his capacity as udge o the Court o irst Instance o 1asig, Ri*al

?hereinater reerred to as >respondent udge>@, on account o three orders dated

une (, 6 and ', $'/3, "hich the latter issued in :pecial 1roceedings Fo. (&5'

entitled >In the !atter o the Testate )state o )lsie !. Baches ; +ienvenido Tan,

)xecutor,> "hich the Commissioner maintains "ere issued "ithout or in excess o

jurisdiction or "ith grave abuse o discretion.

It appears that one )lsie !. Baches died on !arch ', $'// "ithout a child. The

deceased, ho"ever, let a last "ill and testament in "hich she made the ollo"ing

relevant disposition o her estate, to "it9 %.HI/p"

4. 2ter payment o my just debts and uneral expenses I intact that the balance o

my property, both real and personal in the 1hilippines, he distributed as

ollo"s9 %.HI/p"

a@ to my driver, 12CIT# TR#CI# ; Ten Thousand 1esos ?1$%,%%%.%%@=

b@ to my lavandero, 7IC)FT) )R#I2: ; #ne Thousand 1esos ?1$,%%%.%%@=

c@ to my gardener, CRI:2FT# :2<I1#T, R. ; ive Hundred 1esos ?1(%%.%%@=

d@ the balance o my estate in the 1hilippines shall then be divided in hal= #ne-hal

?$Q&@ to be given to C2!I<# )RI+2< and the other hal to !I:: !2B2<)F2 2+2FT#=

e@ to !I:: C#F:G)<# <. T2F ; !y o8ce table and chair no" in the library o my

house, and one o the carpets in my house to be selected by her=

5. 2ll my property in the Gnited :tates consisting o urs, je"elry and stocs I leave

to my sister +):: <2G)R "ido", and at present a resident o :an rancisco,

Caliornia.

#n !arch $$, $'//, the herein respondent udge +ienvenido Tan, :r. ?hereinater

reerred to as >udge Tan>@ led "ith the Court o irst instance o 1asig, Ri*al a

petition or the probate o the aoresaid "ill #n 2ped &$, udge Tan "as appointed as

executor o the testate estate o )lsie !. Baches "ithout a bond.

In a letter, dated une 4, $'//, udge Tan inormed the Commissioner that the

testate estate "as "orth about ten million ?1$% million@ pesos and that the estate

and inheritance taxes due thereon "ere about 1'.( million.

#n une $$, $'//, the herein respondent 2tty. elia 1. !edina ?hereinater reerred

to as >2tty. !edina>@, representing hersel as the attorney-in-act o the herein

respondents Camilo )ribal and !agdalena 2banto, led "ith the probate court a

motion praying that the executor o the estate be authority to give a monthly

allo"ance to the voluntary heirs 2banto and )ribal rom the month o !ay, $'//

until >the receipt o the recommended advance o inheritance o 1$%%,%%%.%% each

recommended by the )xecutor in his motion o une /, $'// andQor nal distributionhas been made to said heirs o their respective shares in the estate.> This prayer

"as granted by the probate court in an order dated une &(, $'// ?subse0uently

claried in an order dated 2ugust $$, $'//@.

#n uly ', $'//, the Commissioner led "ith the probate court a proo o claim or

the sum >o 1$'&,4/5.%% as income tax or $'/( and $ monthly interest due rom

the d )lsie !. Baches.>

#n uly $', $'//, udge Tan led "ith the probate court a motion praying or

authority to mae the ollo"ing additional advance payments ; ?$@ To 2banto and

)ribal, 1$(%,%%%.%%= ?&@ To +ess <auer, 3(,%%%.%%= ?4@ To udge Tan as advance

executors ees, 1(%,%%%.%%= and ?5@ To 2ttys. !edina and +ienvenido Tan, r.,

13(,%%%.%% each as advance attomeys ees. In this motion, udge Tan claimed that

the estate "as very li0uid and that >any claims "hatsoever against the )state and

the Bovernment shall be amply protected since over 13,%%%,%%%.%% "orth o sharesshall still remain to ans"er thereor ?:ec. $, Rule '%, Rules o Court@.> The

respondent udge granted udge Tans prayer in an order dated uly &4, $'//,

In a letter, dated Fovember 5, $'//, the Commissioner advised udge Tan to 1ay to

the +ureau o Internal Revenue the sum o 1$,4'6,54/.4% as estate tax and

13,$5%,%/%./' as inheritance tax, the investigation o his o8ce having allegedly

disclosed that the next value o the testate estate "as 1$%,&$&,6''.&%. 1 udge Tan

disputed the correctness o the assessment in a letter sent to the Commissioner.

#n Fovember &/, $'//, the Commissioner led "ith the probate court a proo o

claim or the death taxes stated in the assessment notice sent to udge Tan. #n the

same date, the Commissioner also submitted to the probate court or its resolution a

motion praying9 ?$@ or the revocation o the courts orders dated une &(, uly /, uly

&4 and 2ugust $$, $'// and all other orders granting the payment o advanceinheritance, allo"ances and ees= ?&@ or the appointment o a co-administrator o

the estate to represent the Bovernment= and ?4@ or the non-disbursement o unds

o the estate "ithout prior notice to the Commissioner. 2lthough the records do not

disclose that the probate court specically disposed o this motion, the said court,

rom its subse0uent actuations, may be considered to have impliedly denied the

Commissioners prayers or the appointment o a co-administrator and the non-

payment o advance allo"ances and ees.

#n anuary $', $'/3, the probate court authori*ed the conversion o the amount o

13(,%%%.%% previously ruled to be paid to 2tty. !edina as advance attomeys ees in

its order o uly &4, $'// into allo"ances or )ribal and 2banto.

#n 2pril $5, $'/3, "ith the 1robate courts approval, udge Tan paid to the +ureau o

Internal Revenue the amount o J$6(,&6/.'4 as estate tax and, on 2pril &5, $'/3,the amount o 1$,%((,33/.%% as inheritance tax. These payments "ere based on a



tax return led by 2tty. !edina on !arch 6, $'/3 "ith the +ureau o Internal

Revenue.

#n une 4, $'/3, udge Tan submitted to the probate court or approval a nal

accounting and project o partition o the testate estate. 2cting thereon, the

respondent udge issued an order, dated une (, $'/3, or the partial distribution o

the estate as ollo"s9 %.HI/p"

:ubmitted or resolution o this Court is the 2mended inal 2ccounting and 1roject o

1artition dated !ay &3, $'/3, presented by The executor.

2tty. 1aredes maniested that he has no objection to the approval thereo providedthat certain items enumerated therein be corrected or modied, as ollo"s9 the

amount o shares in the <epanto consolidated !ining Co. should be /,$%(,5&'

instead o /,%$(,5&', as reported= the amount o 1$$,(43./% reported as expenses

made on anuary 4%, $'/3 should be cancelled or excluded . . . and that the time

appearing as expenses made on !ay $%, $'/3 payable to 2polonio maniastation

illegal should be only 1$$5,%%%.%% instead o 1$4(,%%%.%% . . . "hich maniestations

"ere also adopted by 2tty. 7irgilio :aldajeno o the +ureau o Internal Revenue, and

in addition, he objected in principle to the )xecutor ees and to the 2ttorneys ees

as excessive but let the matter to the discretion o the Court.

Considering, urther, the maniestations o 2tty. :aidajeno that him has no objection

to the partial distribution o the estate as long as it an he sho"n that the rights and

interests o the government can be ull protected, and it appearing rom the

subse0uent maniestation o 2tty. 1aredes, counsel or the heirs, that su8cientassets "ith a nutrient maret value o at least 16,%%%,%%%.%% "ill be let to the

estate even i a partial distribution in the amount o 14,%%%,%%%.%% is made or

"hich reason the rights o the government to collect "hatever deciency, taxes, i any may be asses it may be assessed in the uture the heirs have already paid in

good aith even ahead o its due dates transer taxes in the total amount o

1$,&5$,%/&.'4, the 2mended inal 2ccounting and 1roject o 1artition dated !ay &3,

$'/3 may be approved, subject <o this ollo"ing, terms and conditions9

$. The )xecutor is hereby discharged rom any and all responsibilities that lie has

pertaining to the estate=

&. The voluntary heirs !agdalena 2banto and Camilo )ribal shill be responsible or

all taxes o any nature "hatsoever "hich may be due the government arising out o

the transaction o the properties ol the estate and the environment can, i it sodesires, register its tax lien in the remaining assets ater a partial distribution o the

estate=

4. +ess <auer, sister and heir o the deceased shall be ully or, all Gnited :tates

taxes pertaining to her share in the estate.

EH)R)#R), subject to the above terms and conditions, entitled inal 2ccounting

and 1roject o 1artition dated !ay &3, $'/3 submitted by the )xecutor. as modied

in the, maniestation o 2tty. 1aredes and :aidajeno, is hereby approved.

$. 1acita Trocio 1$%,%%%.%%

&. To 7icente erodias $,%%%.%%

4. To 7icente Crisanto salipot, r. (%%.%%

5. To !agdalena 2banto and Camilo )ribal, share and

share alie thru their attorney-in-act elia 1. !edina, cash

in the amont o

&,44%.%%

(. To udge +ienvenido 2. Tan, :r. $&%,%%%.%%

/. To 2tty. +ienvenido 2. Tan, r. $(%,%%%.%%

The aoresaid amount is hereby ordered to be taen rom the unds o the estate

deposited "ith the 1hilippine Fational ban.

2s to the other properties remaining ater this partial distribution, consisting o the

ollo"ing9

2. +2FO )1#:IT:9

$. 1hilippine +aning Corporation ((',$53.5$

&. 1hilippine Fational +an &46,(%%%.%%

4. #verseas +an o !anila 3%%,%%%.%%

5. +anco ilipino :avings S !ortgage +an (6$.%%

(. Reund rom expenses 4&,(43./%

+. H#G:) 2F <#T <#C2T) 2T F#. (% T2!2RIF R#2, #R+): 12RO, !2O2TI,

RIN2<=

C. :H2R): # :T#CO IF TH) #<<#EIFB9

$. <epanto Consolidated !ining Co. $,$%(,5&' shares

&. :an !iguel Corp. $/,/'& shares

?common@

4. :an !iguel Corp. (%% shares

?preerred@



5. Central 2*ucarera del 1ilar $3,3(( shares

(. !anuacturas Textile Industriales de ilipinas, Inc. $%,4/6 shares

/. Consolidated !ines, Inc. 6(,6(6 shares

3. !ayon !etal Corporation (,%%% shares

6. :oliangco S Co Inc. &( shares

'. :an uan Heights ( shares

$%. !etropolitan Insurance Co. 554 shares

$$. Realty Investment Inc. /(& shares

?$% shares, management S /5& common@

The same shall be turned over and delivered to the attorney-in-act o the voluntaryheirs. 2tty. elia 1. !edina, to be held by her to ans"er or "hatever deciencyestate and inheritance taxes may still be due rom the estate and the heirs in avor

o the government.

:# #R)R).

1asig, Ri*al, une (,$'/3.%.HI/p"

?:gd.@ 1)R# C. F272RR#%.HI/p"

udge

#n the same day ?that is, une (, $'/3@, the Commissioner, having been inormed in

advance about the oregoing order by certain undisclosed sources, issued "arrants

o garnishment against the unds o the estate deposited "ith the 1hilippine Fational!anial, the overseas +an o !anila, and the 1hilippine +aning Corporation, on the

strength o sections 4$(-44% o the Fational Internal Revenue Code.

#n une 3, $'/3, 2tty. !edina led in the probate court a petition or the discharge

o the "rits o punishment issued by the commissioner. #n une 6, $'/3, the

respondent udge issued an order liting the "ants in 0uestion.

#n une ', $'/3, the 1hilippine Fational +an led a motion in the probate court

praying that it be authority to deposit "ith the said court the money in its hands in

vie" o the conAicting claims o the parties over the unds in dispute. #n the same

day ?that is, une ', $'/3@, the respondent udge issued an order denying the said

motion and threatening the ban o8cials "ho reuse to implement its orders o une

( and 6, $'/3 "ith contempt. 2tty. !edina "as conse0uently able to "ithdra" the

sum o 1&,44%,%%%.%% rom the 1F+. 2 copy o this order o une ', $'/3 as "ell as

the orders o une ( and 6, $'/3 "ere received by the Commissioner on une $4,

$'/3.

#n une $/, $'/3, the Commissioner led a motion or reconsideration

?supplemented on une &&, $'/3@ o the orders o the probate court dated une (, 6

and ', $'/3. #n uly /, $'/3, ho"ever, the Commissioner, on the belie that the

probate courts resolution on its motion "as not legally necessary, led "ith this

Court the instant petition or certiorari, mandamus, prohibition and injunction

against the aoresaid orders o the respondent udge. The petition at bar is based on

the ollo"ing propositions9

?$@ That the distributive shares o an heir can only be paid ater ull payment o the

death taxes. 2s this case subse0uently progressed beore this Court, the position o

the Commissioner "ould seem to be that the deciency income taxes due and

payable during the lietime o the deceased should also be paid rst.

?&@ Ehile partial distribution o the estate o a deceased may allo"ed, a bond must

be led by the distributees to secure the payment o the transer taxes.

:ubse0uently, ho"ever, the Commissioner changed his position, stating that such

distribute may be made so long as the payment o the taxes due the government is

>provided or,> citing section $, rule go o the Rules o Court in relation to sections '(

?c@, '3, $%4, $%/ and $%3 ?c@ the Fational lnternal Revenue Code.

?4@ That the executor o an estate cannot be discharged "ithout the payment o

estate and inheritance taxes. The Commissioner later modied his stand on this

1ro1osition in line "ith the vie" that it is su8cient i the payment o the said taxes is>1rovided or.,,

?5@ That the delivery o properties o the estate to a stranger Kthat is, to the

voluntary heirs hereinL is not sanctioned by la". <ater, as the case at bar

1rogressed, and in vie" o a compromise ofer made by the respondents 2banto and

)ribal to pay the taxes being claimed by the +ureau o Internal Revenue, theCommissioner advanced the vie" that this proposition is already moot and

academic.

?(@ That the respondent udge has no authority to 0uash or dissolve "rits o

garnishment issued by the Commissioner. :ubse0uently, ho"ever, the

Commissioner reversed his stand on this point and stated that the probate court

may so dissolve said "rits o punishment as the assets in 0uestion "ere then in

custodia legis, citing Collector vs. 7da. de Codeniera <-'/3(, :ept. &6, $'(3.

Taing stoc o the Commissioners complaint that the disputed orders Eere issued

"ithout or in excess o jurisdiction or "ith grave abuse o discretion, the herein

respondents 2tty. !edina and udge Tan put up a number o actual and legal

arguments, the material ones o "hich may be stated, in sum, as ollo"s9

?$@ The Commissioners notice o assessment, dated Fovember $%, '//, "as based

on "rong premises and valuation o the assets in 0uestion= in act, the

Commissioner had agreed during the pretrial conerence in the probate court to

reconsider certain items therein=

?&@ The allo"ance granted to 2banto and )ribal "ere taen solely rom the income o

the estate, a act admitted by 2tty. :aldajeno o the +ureau o Internal Revenue= it is

claimed that in $'/( the estate had an income o 15$ $,%%%.%% and over

13(%,%%%.%% in $'//, "hich could more than cover the 0uestioned allo"ances=



?4@ )ribal and 2banto are "illing and bound themselves to assume the responsibility

or the payment o the taxes due against the estate except or the properties

located in the Gnited :tates "hich should be charged against +ess <auer=

?5@ The Commissioner does not object to the partition o the estate in 0uestion

provided that enough assets are let to pay the taxes against the estate=

?(@ The estate has su8cient assets "ith "hich to pay the taxes being claimed by the

government=

?/@ There "as nothing unusual in the institution o 2banto and )ribal as residual

heirs o the deceased= 2banto "as the testators special nurse, companion,secretary and coo rom $'5( until )lsie !. Baches death in !arch, $'//= )ribal, on

the other hand, "as the deceaseds coo, caretaer, companion and driver since

$'&'=

?3@ The grant o allo"ances "as never contested belo" and cannot no" be raised in

the-instant proceedings=

?6@ 2de0uate saeguards "ere specied in the probate courts order o une (, $'/3

to cover the tax claims= and

?'@ There had been no ull distribution o the estate in 0uestion "ithout payment o

the transer taxes since the said taxes are being disputed by the heirs.

In a reply led on :eptember 3, $'/3, the Commissioner stated that he had issued a

revised assessment dated 2ugust &5, $'/3 and that, urthermore, there "ere due

rom the estate deciency income taxes or the years $'/$ to $'/( in the total sum

o 1$,$6&,&'/.$/, or "hich reason the estate should not be ordered distributed until

the same is ully satised. In a rejoinder, udge Tan claimed that the 2ugust &5, $'/3

assessment could still be reduced considerably. The contents o the mentioned

revised assessment "hich "as addressed to 2tty. !edina are, inter alia, as

ollo"s9 %.HI/p"

!adam9

... I have the honor to advise that in a reinvestigation conducted by this #8ce, or

transer tax purposes, it "as ascertained that she let real and personal properties in

the sums o 1433,'$&.(% and 1(,'/4,6&&.4$ respectively, or a gross estate o

1',45$,345.6$. The amounts o 1$'4,6'&.46, 15/&,%&&.64 and 1l,&&/,364.(4,

representing accrued household and medical expenses, uneral expenses andincome taxes ?$'/$-$'/(@ payable, respectively, or a total o 1$,66&,$'6.35, "ere

allo"ed as deductions resulting in a net taxable estate in,the sum o 13,5('.(4/.%3

subject to estate and inheritance taxes.

In vie" thereo, there are hereby urther assessed the sums o 16'$,/34./6 and

15,4(4,'3&.63 as deciency estate and inheritance taxes and penalty still due on

the transmission o the decedents estate, ater, crediting the sums o 1$6(,&6/.34

and 1$,%((,33/.%%, "hich "ere paid on 2pril 5, $'/3 and 2pril &5, $'/3, details o

"hich are sho"n hereunder9

)state tax 1l,%3/.'/%.5$

<ess9 2mount 1aid $6(,&6/.3

Total 16'$,/34./'

Inheritance tax (,556.63

Corporation C12 Certicate 4%%.%%

Total 1(,5%',356.63

<ess 2mount 1aid $,%((,33/.%%

eciency Inheritance Tax S 1enalty 15,4(4,'3&.63

xxx xxx xxx

The deadlines or the payment o the aorementioned transer taxes "ithout penalty

"ere ecember ', $'/3 or the estate tax and !arch ', $'/6 or the inherit tax.

#n :epember ', $'/3, 2tty. !edina riled "ith this Court a pleading captioned

>Compliance and #fer o Compromise to Terminate this Case> in "hich she stated

the ollo"ing9%.HI/p"

xxx xxx xxx

5. 2lthough respondents voluntary heirs intend to assail and 0uestion the

correctness o said assessment only insoar as the same has disallo"ed the

deductions claimed by them or personal services rendered by various persons inthe total sum o 14//,6%%.%%, oregoing thereby other possible objections to the

other items just so this case can be earlier disposed o, said repondents,

nevertheless, are "illing to pay even beore these due dates the entire amount-

specied in said assessment, but under protest insoar as the same has

disallo"ance is concerned, in order to already terminate and dispose o this case

beore this Honorable Court.

To pay the taxes in 0uestion, 2tty. !edina prayed in her ofer o that she and 2banto

and )ribal be authori*e to mae use o the unds o the estate on deposit "ith the

1hilippine Fational ?1&46,(%%.%%@, the +aning Corporation ?1((',$53.5$@, the

+anco ilipino savings and !ortgage +an ?1(6$.%%@, and the +an o !anila

?13%%,%%%.%%@, and to gradually dispose o and sell the shares o stoc representing

o the delegate "ith an estimated maret value o 1&,$(5,%&/.4/. 2lso included

among the assets or "hich authority to sell "as being procured in the said ofer o "ere &,55&,%%% <epanto Consolidated Co. "hich 2banto and )ribal "ith the probate



court niether this Court issued a pre injunction in the case at bar on july $%, $'/3

ordering, among others, 2tty. !edina, 2banto and )ribal to restore to the court a$uo the amount o 1&,44%,%%%.%% "ithdra"n rom the 1hilippine Fational +an

pursuant to the 0uestioned orders o the probate court, and every other money or

property revived by them by o said 0uestioned orders. The mentioned <epanto

shares had then an estimated maret value o 1&,(66,(&%.%%. It should bear

mention, at this point, that the money "ithdra"n rom the 1hilippine Fational +an

"as not returned by 2tty. !edina, 2banto or )ribal to the probate court, these

respondents having prayed this Court that the deposit o the mentioned stocs be as

ull compliance by them "ith the "rit o pre injunction issued by this Court.

#n :eptember $', $'/3, this Court issued a resolution re0uiring the Commissioner

to submit a memorandum on ho" he arrived at his original assessment o more than

J6.64 million and the revised assessment o only about J/.56 million, sho"ing a

reduced diference o more than 1& million. The Commissioner submitted to this

Court the re0uired memorandum on !ay &(, $'/6, the important items and gures

described in "hich may be summed up comparatively as ollo"s9 %.HI/p"

8STAT8 OF 8LS!8: GA')8S

2::)T: #RIBIF2< R)7I:)

2::)::!)FT 2::)::!)FT

Cash in ban -

1hilippine 1l,$3&./4(./& 1$,$3&,/4(./&

oreign ?G: 14.'(@ ((',44(.%% ((',44(.%%

Cars-

<incoln ; 1l6,%%%.%%

7ols"agen 3,%%%.%%

?7auxhalll@ &(.%%%.%% $&,%%%.%%

urnitures 4%,%%%.%% 4%,%%%.%%

:hares o stoc 3,'&4,(3/.&4 3,$6',6($./'

orbes 1ar lot ;

?at 1$55.34Qs0. in.@ 464,&%&.4(

?at 1'3.(%Qs0.m.@ &(6,6/&.(%

House ------- 1$$$,6(%.%%

:"imming 1ool ; (,%%%.%%

ence -------- &,&%%.%% $$',%(%.%% $$',%(%.%%

T#T2< 2::)T: 1$%,&$&,6''.&% 1',45$,345.6$

%.HI/p"L!A+!L!T!8S AK 8'T!OKS

)stimated Income Tax

1ayable ?$'/(@ 1$'&,4/5.%%

?$'/$-$'/(@ 1$,66&,364.(4

2accrued medicalexpenses

$4,%%%.%%@

uneral expenses 34,4&%.%%@ $'4,4'&.46

udicial exercises 44$,%&/.5% 5/&,%&&.64

T#T2< <I2+:. S

)GCTI#F: 1/$%,$'%./% 1$,66&,$'6.35

T:AKSF8: TAM8S PADA+L8

Bross )state 1$%,&$&,6''.&

%

1',45$,345.6$

<ess9 <aibs. S eductions /$%,$'%./% $,66&,$'6.35

Fet Taxable )state 1',/%&,3%6./% 13,5(',(4/.%3

<ess )statetax ue 1

$,4'6,54/.4%

1l,%3/,'/%.5$

)state :ubj. to Inh. Tax 16,&%5,&3&.4%

1/,46&,(3(.//

istribution o Hereditary

)state

C. :alipot, r. 1 (%%.%% 1 (%%.%%

7. erodias $,%%%.%% $,%%%.%%

1. Trocio $%,%%%.%% $%,%%%.%%

+ess <auer /3&,4%(.%% /3&,4%(.%%

!. 2banto 4,3/%,&44./( &,65',46(.44

C. )ribal 4,3/%,&44./( &,65',46(.44

Inheritance Tax ue

C. :alipot, r. 1$%.%% 1 $%.%%



7. erodias &%.%% &%.%%

1. Trocio /%%.%% /%%.%%

+ess <auer $'&,$6/.3( $'&,$6/.3(

!. 2banto 4,534,/&$.'3 &,/%6,4$/.%/

C. )ribal 4,534,/&$.'3 &,/'6,4$/.%/

Total inheritance Taxdue

1 3,$5%,%/%./' 1(,5%',556.63

2dd9 )state Tax ue 1 $,4'6,54/.4% 1l,%3/,'/%.5$

T#T2< TR2F:)R

T2D): G) 16,(46,5'/.'' 1/,56/,5%'.&6

#n Fovember $3, $'/3, this Court authori*ed the herein respondents 2banto, )ribal

and 2tty. !edina to "ithdra" unds o the estate deposited "ith the 1hilippine

+aning Corporation ?1$'$,/34,/6@ and the #verseas +an o !anila ?13%%,%%%.%%@

in the orm o cashiers checs payable to the Commissioner or the payment o the

estate tax still unpaid under the terms o the revised assessment.

#n Fovember &4, $'/3, the :olicitor Beneral led "ith this court a maniestation

expressing his conormity, in behal o the Commissioner, to the ofer o compromise

dated :eptember ', $'/3 made by 2tty. !edina, subject to certain conditions, such

as, that the cash in the bans o the estate as "ell as the proceeds to be reali*ed

rom the sale o the shares o stoc should be turned over to the Commissioner or

the payment o the taxes due against the estate and the heirs thereo. This

maniestation "as rst opposed by the 2cting Commissioner o Internal Revenue on

the ground that the Commissioner ?"ho "as then abroad@ had actually re0uested

the :olicitor Beneral not to agree to the mentioned ofer o compromise= ho"ever,

the :olicitor Beneral subse0uently said that the Commissioners conormity "as

given to him orally.

#n ecember (, $'/3, 2tty. !edina led "ith this Court a petition to declare the

#verseas +an o !anila in contempt or allo"ing the rene"al, "ithout court

authority, o the time deposit o 13%%,%%%.%% "ith the said ban or another year. In

a supplemental motion led on ecember 6, $'/3, 2tty. !edina also prayed that the

said ban and those responsible or extending the maturity date o said time deposit

be held liable or the payment o "hatever surcharges, interest and penalties may

be imposed as a conse0uence o the late payment o the balance o the estate taxassessed against the estate. It appears that the time deposit in 0uestion "as held by

the said ban under t"o certicates, one or 1$%%,%%%.%% to mature on !ay $&,

$'/3, and the other, or 1/%%,%%%.%% to mature on une $/, $'/3. udge Tan,

ho"ever, extended the maturity date o said time deposits to !ay $&, $'/6. The

certicates o time deposit covering the said unds had been endorsed in avor o

the Commissioner in payment o the unpaid balance o the estate then ecember 3,

$'/3@ amounted to 13%%,%%%.%%.

Commmoner, ho"ever. mentioned the respondents )nd an 2banto through their

counsel that his #8ce - %.HI/p"

... regrets that the same cannot be accepted as payment o the deciency estate tax

in this case since they cannot, at present or on beore ecember ', $'/3, be.

converted into cash. Ho"ever, "e are holding said certicates o time deposit or

possible application in payment o the unpaid balance o the deciency estate tax in

this case as soon as said certicates can be converted into cash. It "ill be

understood in this connection that i the balance o the deciency estate tax in this

case is not paid on or beore ecember ', $'/3, the same shall be subject to the

interest on deciency, ( surcharge and $ monthly interest or deli0uency.

2ccording to udge Tan, he caused the extension o the maturity date o the said

deposit but that in doing so he acted in good aith in that the testate estate thenhad ample unds and assets and the said time deposit earned a higher interest than

a savings deposit= that he needed no specic court authority or the purpose= and

that he had a gentlemans agreement "ith the o8cials o the ban that said deposit

could be "ithdra"n in advance, such being the custom in baning circles. The

#verseas +an o !anila, on the other hand, in ans"er to 2tty. !edinas mentioned

petition, claimed that the deposit in 0uestion "as rene"ed beore the ban received

any letter demanding its release. In vie" o this impasse and the ast approaching

deadline or the payment o the estate tax, 2tty. !edina re0uested the

Commissioner to credit 13%%,%%%.%% to the amount previously paid as inheritance

tax= but, apparently, this re0uest "as not honored by the Commissioner.

#n anuary &/, $'/6, 2tty. !edina led "ith this Court a maniestation in "hich shealleged that even as the proposed joint maniestation bet"een the parties "hich

"as supposed to describe the matters agreed upon bet"een them and the

Commissioner during a conerence hearing held on anuary &5, $'/6 had not yet

been sho"n to her, she already "ished to express her principals, conormity to pay,

but under protest, the deciency estate tax o 13%%,%%%.%% plus surcharges, interest

and penalties due thereon and the inheritance tax in the amount o 15,$/$,'6/.$&

appearing, to 2tty. !edina, in the mentioned assessment notice dated 2ugust &5,

$'/3= that she "as lie"ise agreeable to pay, under protest ho"ever, the income

taxes or $'/$ to $'/( against the estate in the demand letter o the Commissioner

dated 2ugust &', $'/3 in the amount o 1$,$3(,'35.($ plus "hatever interest,

surcharges and penalties "ere duethereon= and that she "as also agreeable to

being authority to sell such properties o the estate as may be necessary or the

mentioned -

#n the ollo"ing day, ho"ever, that is, anuary &3, $'/6, the herein respondents

)ribal, 2banto and 2tty. !edina, on the one hand, and the Commissioner and the

:olicitor Beneral, on the other, led "ith this Court a joint maniestation "hich, inter

alia, reads as ollo"s9%.HI/p"

l. That the respondent taxpayers "ill pay the estate, inheritance and deciency

income taxes covered by existing assessments= "hich are due and collectible rom

the estate o )lsie !. Baches, including the delin0uency penaltiesthereon, but

"ithout prejudice to any right o the taxpayer to contest or protest the said

assessments at the proper time and in the proper court=

&. That the respondents elia 1. !edina, !agdalena 2banto and Camilo )ribal shall

submit to this Honorable Court an inventory o all the properties and assets o the

estate ... =

4. That is order to generate the necessary unds or the purpose o paying the said

taxes and delin0uency penalties, so much o the assets o the estate ... shall besold ...



5. That respondent elia 1. !edina, . and. !r. Rodolo G. 2rrano :upervising Revenue

)xaminer o the +ureau o Internal Revenue, ... are hereby proposed to be

constituted as the authori*ed agents o the parties herein to efect the sale ...=

(. That the said agents shall be direct to sell the assets o the estate ... =

/. That all negotiations and transactions or the sale o the assets o the estate shall

be made jointly by the authori*ed agents ... =

3. That no disposition o any property or assets o the estate shall be efected except

or the oregoing purpose=

6. That this case shall not be terminated until ... the above mentioned ... taxes and

delin0uency penalties are ully paid= and li0uidated=

'. That the parties pray or the approval o the oregoing propositions.

#n ebruary /, $'/6, this Court, acting on the abovement maniestation o 2tty.

!edina and the at maniestation o the 1arties, issued a resolution authori*ing 2tty.

!edina to pay, amt, under at, the transer and in taxes collectible rom the estate,

including the accopanying delin0uency penalties. 2 !edina "as given the necessary

authority to collect and receive unds payable to the estate in 0uestion and to sell

such a thereo as may be necessary.

#n ebruary $%, $'/6, a motion to declare in contempt <epanto Consolidated !ining

Co. "as led by 2tty. !edina on t ground that the said corporation reused to tum

over to dividends payable to the testate estate unless the Commissioner rst lited

his garnishment order on said dividends.

#n ebruary $/, $'/6, this Court issued a resolution suspendi the "rits to

preliminary junction issued by this Court on uly and $3, $'/3 and all "arrants o

garnishment issued by the Commissioner relative to the estate o )lsie !. Baches,

said suspension to be efective until such time that 2tty. !edina, )nd and 2banto

shall save ully paid the transer and income tax including the penalties thereon,

covered by existing assessment 2tty. !edina thereater submitted to this Court

perormance reports on her activities relative to the authority given her.

#n !arch ', $'/6, 2tty. !edina led "ith this Court maniestation stating that she

received a demand letter dated !arch ', $'/6 rom the Commissioner or the

payment o the ollo"ing $3(/ '%%- %% as estate tax, including penalties= ?&@

1$'&,$6/.3( as inheritance tax corresponding to the share o +ess <auer= and ?4@15($.54(.'$ as balance o the income tax or the years $'/$ to $'/( 2tty. !edina

claimed the said demands to be erroneous or the ollo"ing reasons ?$@ as to the

estate tax, the time deposit in the #verseas +an o !anila o 13%%,%%%.%% plus

interest earned o 1/%,%%%.%% as o !arch ', $'/6 "ould more than cover the said

tax and the certicates o time deposits "ere already endorsed to the Cmmissioner

on ecember /, $'/3= ?&@ as to the inheritance tax, she ?that is. he principals 2banto

and )ribal@ "as not responsible thereore, as the resolution o this Court datedebruary /, $'/6 re0uired her >to pay only the estate, inheritance and in income

taxes, under protest covered by existing assessments, against the )state, and

against the heirs !agdalena 2banto and Camilo )ribal=> in a supplemental motion,

2tty. medina urther argued that +ess <auer alone "as solely responsible or the

payment o the inheritance tax on her share and not the decedents estate in the

1hilippines, and that the properties o the testate estate in the Gnited :tates o

2merica "hich consisted o shares o stoc and deposits in bans, being personal

properties, "ere to be excluded rom the computation o the gross estate o the

deceased in the 1hilippines and the computation o the 1hilippine estate and

inheritance taxes because, under philippine la", the sites o those properties is the

place "here they are located, citing 2rticle $/ o the ne" Civil Code "hich she she

argued, abandoned the doctrine o mobilia se0uuntur personal embodied in 2rticle

$' o the old Civil Code= and ?4@ as to tile deciency income tax or $'/$-$'/(, she

had paid the same in the total amount o 1$,$6&,&'/.$/ as o !arch ', $'/6, "hich

"as the amount stated in the assessment letter o the Commissioner cited 2ugust ',

$'/3. 2ccording to 2tty. !edina, the payment o the taxes "as made in the ollo"ing

manner9 on ebruary &3, she paid a total o J646,($6./& as ollo"s9 the income tax

?13$(,/$'.5/@ in ull= interest ?1$%/,6((.&'@ in ull, compromise penalty ?1(.,%%%.%%@in ull and surcharges 1$,%(&.%3@ in. part only= and, on !arch 6, $'/6. the amount o

1454,334.(5 as payment o the remaining surcharges, Conse0uently, she argued the

the surcharges and interest, i any "ere still due, could legally, accrue only rom

:eptember &', $'/3 up to ebruary &3, $'/6 and only on the tax proper.

#n 2pril $/, $'/6, a counter-maniestation "as led "ith this court by the

Commissiorner to the above-metioned maniestation according to the

Commissioner, ?that is under existing assessments that is under the letter o

demand o 2ugust &5 and &', $'/3@

)state tax ?+alance- 13%%,%%%.%% ?x@

Inheritance tax 5,4(4,'&3.63 ?xx@

Total )state and

Inheritance taxes 1(,%(4,'&3.63

eciency income taxes

or $'/$ to $'/( 1$,$3(,'35.($

?xxx@

elin0uency penalties or late ling

o income tax return and late payment o

income tax or $'/( per return led- /,4&$./( ?xxxx@

Total deciency income taxes or

$'/$ to $'/( and the delin0uency

penalties o income tax $'/( per

return 1$,$6&,&'/.$/

BR2F T#T2< 1/,&4/,&/'.%4

%.HI/p"

?x@ pIus ( surcharge and $ monthly interest thereon rom ecember ', $'/3 until

ull payment thereo= ?xx@ plus ( surcharge and $, monthly interest thereon, i



the same is not paid in ull on or beore !arch ', $'/6= ?xxx@ plus ( surcharge and

$ monthly interest thereon rom 2ugust &', $'/3 until ull payment thereo= and

?xxxx@ pIus additional $ monthly interest rom :eptember &', $'/3 until ull

payment thereo.

urther, the Commissioner alleged that ater taing into consideration the payments

made by 2tty. !edina, the balances as o !arch ', $'/6 o the death and income

taxes still compatible "ere as ollo"s9

)state Tax

+alance o the estate tax 13%%,%%%.%%

(, surcharge 4(,%%%.%%

$ monthly interest rom

$&Q'Q/3 to 4Q'Q/6 &$,%%%.%%

Total 1 3(/,%%%.%%

plus additional $ monthly interest

rom !arch ', $'/6 until ull payment

thereo.

Inheritance Tax

Inheritance tax due and collectible

per letter o demand dated 2ugust &5,

$'/3 ?2nnex >2>@ 15,4(4,'3&.63

<ess9 1ayments o inheritance Tax

on !arch $ and !arch /, $'/6 per #.R.

&($''46 and &(&%%&/, respectively 5,$/$,'6/.$&

Inheritance taxs due and collectible 1$'$,'6/.3(

plus ( surcharge and $ monthly

interest thereon rom !arch 6, $'/6

until ull payment.

eciency Income Taxes

eciency income taxes rom $'/$

to $'/( per letter o demand dated

2ugust &', $'/3 plus ( surcharge and

$ monthly interest up to !arch $'/6 1$,&6',6$6.$3

<ess9 1ayments made on ebruary

&3, $'/6 and !arch 6, $'/6 under #.R.

&%3%%$ and &%3%%& 1$,$6&,&'/.$/

eciency income taxes still due

and collectivele 1$%3,(&&.%$

plus additional $ monthly interest

thereon rom !arch 6, $'/6 until ull

payment.

The Commissioner also explained that the i taxes paid by 2tty. !edina in the total

amount o 1$,$6&,&'/.$/ >included only the $Q& monthly interest #n deciency"ith respect to the deciency income taxes or $'/$ to $'/( and the $ monthly

Interest or delin0uency up to :eptember &', $'/3 "ith respect to the income tax

or $'/( "hich "as paid per return, #ut did not include the ( surcharge and $

monthly interest or delin0uency rom 2ugust &', $'/3 until ull 1ayment "ith

respect to the income tax or the $'/( return.> The Commissioner conse0uently

prayed that 2tty. !edina be ordered to pay9 %.HI/p"

?$@ The amount o 13(/,%%%.%% as balance o the estate tax, ( surcharge and $

monthly interest rom ecember ', $'/3 to !arch ', $'/6, plus additional $

monthly interest rom !arch ', $'/6 until ull payment=

?&@ The amount o 1$'$,'6/.3( as balance o the inheritance tax, plus ( surcharge

and $ monthly interest thereon rom !arch ', $'/6 until ull payment= and

?4@ The amount o 1$%3,(&&.%$ as balance o the deciency income taxes, (surcharge and $ monthly interest or delin0uency up to ! arch 6, $'/6, plus

additional $ monthly interest thereon rom !arch 6, $'/6 until ull payment ... =

#n 2ugust &4, $'/6, 2tty. !edina led a maniestation "ith this Court adverting to

the reusal o the #verseas +an o !anila to permit the "ithdra"al o the time

deposit o the testate estate in the said ban in spite o the act that the extended

maturity date o said deposit had may expired. 2tty. !edina payed that the ban Ida

as one boss able the deposit o the unds o is "ell as the "ho made i o the estate

o )lsie !. Baches "ith the said ban be declared in contempt. on :eptember $6,

$'/6, the Central +an # the 1hilippines led "ith this Court a comment on the

urgent maniestation o 2tty. !edina concerning the deposit in 0uestion. The Central

+an, "hich according to the #verseas +an o !anila had restrained it rom paying

its time deposits to the bans depositors, averred that this Courts resolution o

Fovember $3, $'/3 merely authori*ed 2tty. !edina to "ithdra" the deposit rom the



said ban and did not order the ban to pay the time deposit in 0uestion. !oreover,

according to the Central +an, the nonpayment o the said deposit "as not "ilul as

the #verseas +an o !anila "as in a state o insolvency. 2 comment "as led on

#ctober $$ $'/6 by the #verseas +an o !anila stating that the majority

stocholders o the ban led a petition against the Central +an or certiorari.

prohibition and mandamus in this Court in <-&'4(& entitled > 8merito ,. :amos& et at. vs. 'entral +an* => that the time deposit in 0uestion "as an unrecorded

transaction= and that the Central +an prohibited the ban to do business due to its

distressed nancial condition, or "hich reason it could not give preerence o the

payment o the said deposit as it might prejudice other creditors o the ban.

#n Fovember $$, $'/6$, 2tty. !edina led "ith this Court a !. motion ,- reiterating

a previous one to allo" the payment o the announced o 1/.%%%.%% to 2tty. !anuel

!. 1aredes "hom she and tile other herein respondent herein ; 2banto and )ribal

; hired as counsel in collection "ith the settlement proceedings o )lsie !. Baches

estate. #n !arch &', $'/'. pursuant to a resolution o this Court, 2tty. 1aredes

ssubmitted nitted a memorandum on the nature and extent or the legal services

he had rendered to tile herein respondents 2tty. !edina )ribal and 2banto.

#n une &/, $'3$, 2banto and )ribal ointly "rote the Chie ustice, expressing

"illingness and agreement to pay the amount due tile government as taxes against

the estate and the heirs thereo, ho"ever, the t"o respondents herein subse0uently

retracted their statement in the said letter, claiming they signed and sent the same"ithout no"ing and understanding its efect and conse0uences.

2 perusal in depth o the acts o the instant case discloses 0uite plainly that therespondent udge committed a grave abuse o discretion amounting to lac o

jurisdiction in issuing its orders o une (, 6 and ', $'/3. :ection $%4 o the Fational

Internal Revenue Code ?hereinater reerred to as >Tax Code>@ une0uivocally provides

that >Fo judge shall authori*e the executor or judicial administrator to deliver a

distributive share to any party interested in the estate unless it shall appear that the

estate tax has been paid.> 3 The aoresaid orders o the respondent udge are clearly

in diametric opposition to the mentioned :ection $%4 o the Tax Code and,

conse0uently, the same cannot merit approval o this Court.

Ehile this Court thus holds that the 0uestioned orders are not in accordance "ith

statutory re0uirements, the undamental 0uestion raised herein regarding the

objectionable character o the probate courts mentioned orders has opened other

issues "hich, not alone their importance to jurisprudence, but the indispensability o

orestalling needless delays "hen those issues are raised ane", have, perorce,persuaded this Court that their complete and nal adjudication here and no" is

properly called or. :aid issues may be specicaly ramed as ollo"s9

?$@ :hould the herein respondent heirs be re0uired to pay rst the inheritance tax

beore the probate court may authori*e the delivery o the hereditary share

pertaining to each o themJ

?&@ 2re the respondent heirs herein "ho are citi*ens and residents o the 1hilippines

liable or the payment o the 1hilippine inheritance tax corresponding to the

hereditary share o another heir "ho is a citi*en and resident o the Gnited :tates o

2merica. said share o the latter consisting o personal ?cash deposits and, shares@

properties located in the mentioned court

?4@ oes the assignment o a certicate o time deposit to the comissioner o

Internal Revenue or the purpose o paying t I hereby the estate tax constitute

payment o such taxJ

?5@ :hould the herein respondent heirs be held liable or the payment o surcharge

and interest on the amount ?13%%,%%%.%%@ representing the ace value o time

deposit certicates assigned to the Commissioner "hich could not be converted into

cashJ

2side rom the oregoing, there are also other incidental 0uestions "hich are raised

in the present recourse, vi; .,

?(@ Ehat should be the liability o the respondents herein on the contempt charges

respectively lodged against themJ

?/@ Ehat should be a reasonable ee or the counsel o the respondents 2tty. !edina,

)ribal and 2banto or proessional services rendered In connection "ith the

settlement o the estate o )lsie !. BachesJ

$. #n the matter o the authority o a probate court to allo" distribution o an estate

prior to the complete Fuidation o the inheritance tax, the Tax Code apparently lacs

any provision substantially Identical to the mentioned :ection $%4 thereo. There are

provisions o the Tax Code, e.g.& :ection $%5, "hich maes it the duty o registers o

deeds not to register the transer to any ne" o"ner o a hereditary estate unless

payment o the death taxes sham be sho"n= :ection $%/, "hich imposes a similar

obligation on business establishments= and :ection $%3, "hich penali*es theexecutor "ho delivers to an heir or devise, and the o8cers and employees o

business establishments "ho transer in their boos to any ne" o"ner, any property

orming part o a hereditary estate "ithout the payment o the death taxes rst

being sho"n= but those provisions by themselves do not clearly establish that the

purchase and object o the statute is to mae the payment o the inheritance tax a

pre-condition to an order or the distribution and delivery o the decedents estate tothe la"ul heirs there. The cloud o vagueness in the statute, ho"ever, is not entirely

unreachable. :ection $, Rule '% o the Rules o Court erases this hiatus in the statute

by providing thus9 %.HI/p"

:ection $. N"en order for distribution of residue made. ; Ehen the debts, uneral

charges, and expenses o administration, the allo"ance to the "ido", and

inheritance tax, i any, chargeable to the estate in accordance "ith la", have been

paid, the court, on the application o the executor or administrator, or o a personinterested in the estate, and ater hearing upon notice, shall assign the residue o

the estate to the persons entitled to the same, naming them and the proportions, or

parts, to "hich each is entitled, and such persons may demand and recover their

respective shares rom the executor or administrator, or any person having the

same in his possession. I there is a controversy beore the court as to "ho are the

la"ul heirs o the deceased person or as to the distributive shares to "hich each

person is entitled under the la", the controversy shall be beard and decided as in

ordinary cases.

Fo distribution shall be allo"ed until the payment o the obligations above

mentioned has been made or provided or, unless the distributees, or any o them,

give a bond, in a sum to be xed by the court, conditioned or the payment o said

obligations "ithin such time as the court directs.



Gnder the provisions # the aore0uoted Rule, the distribution o a decedents assets

may only be ordered under any o the ollo"ing three circumstances, namely, ?$@

"hen the inheritance tax, among others, is paid= ?&@ "ho bond a sufered bond is

given to meet the payment o the tax and all the other options o the nature

enumerated in the above-cited provision= or ?4@ "hen the payment o the said tax

and at the other obligations mentioned in the said Rule has been provided or one o

these thru camar as the satisaction o the "hen tax due rom the estate is "ere

present "hen the 0uestion orders "ere issued in the case at bar. 2lthough the

respondent udo did mae a condition in its order o une (, $'/3 that the

distribution o the estate o )lsie !. Baches ?except the cash deposits o more than

1& million@ shall be trusted to 2tty. !edina or the payment o "hatever taxes maybe due to the government rom the estate and the heirs them to, this Court cannot

subscribe to the proposition that the payment o the tax due "as thereby

ade0uately provided or. In the rst place, the order o une (, l'/3 "as, or all

intents and , a complete distribution o the estate to the heirs or, the executor "ho

is supposed to tae care o the estate "as absolutely discharged the attorneys ees

or the o a la"yer "ho presumably acted as legal counsel or the estate in the court

belo" "ere ordered paid as "ere also the ees or the executors the cash unds o

the estate "ere red paid to the cash and the non-cash ?real property and shares o

stoc@ properties "ere lie"ise ordered delivered to 2tty. !edina "hose participation

in the said proceedings "as in the capacity o an attorney-in-act o the herein

respondent )ribal and 2banto. In short, the probate court virtually "ithdre" its

custodial jurisdiction over the estate "hich is the subject o settlement beore it. In

the second place the respondent udge, in the distribution o the properties o the

estate in 0uestion, relie solely upon the mere mandestation o the counsel or theheirs )ribal and 2banto that them "ere a8ant o the estate "ith "hich to pay the

taxes due to the government. There is no evidence on record that "ould sho" that

the probate court ever made a serious attempt to de "hat the values o the diferent

assets the correctness o that such properties shall be preserved or the satisaction

o those case In the third place that main o pesos taxes "ere being called by the

+ureau o Inc. Revenue, the least reasonable thing that the probate court should

have done "as to re0uire the heirs to deposit the amount o inheritance tax being

claimed in a suitable institution or to authori*e the sale o non-cash assets under the

courts control and supervision.

The record is lie"ise beret o any evidence to sho" that su8cient bond has been

led to meet this particular outstanding obligation.

&. The liability o the herein respondents )ribal and 2banto to pay the inheritancetax corresponding to the share o +ess <auer in the inheritance must be negated,

The inheritance tax is an imposition created by la" on the privilege to receive

property. 4 Conse0uently, the scope and subjects o this tax and other related

matters in "hich it is involved must be traced and sought in the la" itsel. 2n

analysis o our tax statutes supplies no su8cient indication that the inheritance tax,

as a rule, "as meant to be the joint and solidary liability o the heirs o a decedent.:ection '(?c@ o the Tax Code, in act, indicates that the general presumption must

be other"ise. The said subsection reads thus9 %.HI/p"

?c@ xxx xxx xxx

The inheritance tax imposed by :ection 6/ shall, in the absence o contrary

disposition by the predecessor, be charged to the account o each beneciary, in

proportion to the value o the benet received, and in accordance "ith the scale

xed or the class or group to "hich is pertains9 Provided, That in cases "here the

heirs divide extrajudicially the property let to them by their predecessor or

other"ise convey, sell, transer, mortgage, or encumber the same "ithout being the

estate or inheritance taxes "ithin the period prescribed in the preceding subsections

?a@ and ?b@, they shall be solidarity liable or the payment o the said taxes to the

extent o the estate they have received.

The statutes enumeration o the specic cases "hen the heirs may be held

solidarity liable or the payment o the inheritance tax is, in the opinion o this Court,

a clear indication that beyond those cases, the payment o the inheritance tax

should be taen asthe individual responsibility, to the extent o the benets

received, o each heir.

4. 2nd the efect o the indorsement o the time deposit certicates to the

Commissioner, the same cannot be held to have extinguished the estates liability

or the estate tax. In the rst place,in accepting the indorsement and delivery o the

said certicates, the Commissioner expressly gave notice that his #8ce ; %.HI/p"

... Regrets that the same cannot be accepted as payment o the deciency estate

tax in this case may they cannot, at present or on or thereore ecember ', $'/3,

be converted into cash. Ho"ever, "e are holding said certicates o time deposit or

possible application in payment o the unpaid balance o the deciency estate tax in

this case ,is soon as said certicates can be converted into cash. ...

In the second place, a time deposit certicate is a mercantile document and is

essentially a promissory note. +y the express terms o 2rticle $&5' o the CivilCode o the 1hilippines, the use o this medium to clear an obligation "ill >produce

the efect o payment only "hen they have been cashed, or "hen through the ault

o the creditor they have been impaired.> rom the records o the case at bar, theCommissioner as "ell as the herein respondents 2tty. !edina, )ribal and 2banto

spared no time trying to collect the value o said certicates rom the #verseas +an

o !anila but all to no avail. Conse0uently, the value o the said certicates

?13%%,%%%.%%@ should still be considered outstanding.

5. The estate o )lsie !. Baches is lie"ise liable or the payment o the interest and

surcharges on the said amount o 13%%.%%%.%% imposed under :ection $%$ ?a@ ?$@

and ?c@, respectively, o the Tax Code. *

The Interest charge or $ per month imposed under :ection $%$ ?a@ ?$@ o the Tax

Code is essentially a commotion to the :tate or delay in the payment o the tax duethereto7 2s or the accountant use by the tax payer o unds that nightday shall be

in the governments unds. 2s the indorsement and delivery o the mentioned time

deposit certicates to the did not result in the payment o the estate tax ?or "hich it

"as in the respondents estate is Auently liable or the interest charge imposed in the

Tax Code.

The estate cannot lie"ise be exempted rom the payment o the ( surcharge

imposed by :ection $%$ ?c@ o the Tax Code. Ehile there are cases in this jurisdiction

holding that a surcharge shall not be visited upon a taxpayer "hose ailure to pay

the tax on time is in good aith, 9 this element does not appear to be present in the

case at bar. The Commissioner, as aoresaid, ully inormed the respondents 2tty.

!edina, )ribal and 2banto o the condition to this acceptance o the said time

deposit certicates. The Commissioner, in act, advised them in the same letter that

>It "ill be understood in this connection that i the balance o the deciency estatetax in this case is not paid on or beore ecember ', $'/3, the name shall be



subject to the interest on deciency, ( surcharge and $ monthly interest or

deciency.> !oreover, udge Tan himsel, as executor o the estate o )lsie !.

Baches, specically admitted that he "as the one "ho caused the extension ?and

consolidation@ o the maturity dates o the t"o time deposit certicates in 0uestion

?one or 1$%%,%%%.%% to mature on !ay $&, $'/3 and the other or 1/%%,%%%.%% to

mature on une $/, $'/3@ to !ay $&, $'/6,

It "ill be "orth"hile to mention also, in this connection, that "hen 2tty. !edina

applied to this Court or authori*e to the amount o 13%%,%%%.%% rom the #verseas

+an o !anila on :eptember ', $'/3, the resolution o this Court dated Fovember

$3, $'/3, approve her re0uest authori*ed her to "ithdra" the said amount in the

orm o cashiers checs payable to the Commissioner. 2pparently, because the

#verseas +an o !anila reused to issue such checs or to allo" her to "ithdra"

said amount in vie" o the extension o the nuturity date o the deposit in 0uestion,

2tty. !edina thought that by simply assigning the time deposit certicates to the

Commissioner, she "ould be deemed to have paid the estates obligation in its

corresponding amount. Ho"ever, as aoresaid the Commissioner "as also unable to

convert said amount to cash and he gave announce to that efect to 2tty. !edina.

:ince the reusal o the #verseas +an o !anila to sno" the "ithdra"al o the said

deposit "as then "ell-no"n to the parties, it sa" to reas that the tentatives o the

estate "ho stand to be beneted. thererom, such as the respondents )ribal and

2banto, should have orth"ith ased or authority to pay the rom other unds o the

estate. 2tty. !edina "as, in act, given the authority by this Court to sell assets o

the estate or the payment o the taxes due to the :tate, but she never tried to pay

the e0uivalent amount o 13%%,%%%.%% in 0uestion rom the proceeds o the Em shemade ater"ards. !oreover, it "ill also be noted that the respondents )2bal and

2banto, during the pendency o this case, had in their actual ion at least 1&.4 million

?the amount they "ere able to "ithdra" rom the 1hilippine Fational +an on

account o the 0uestioned orders@ "hich they could have very "ell used or the

payment o the estate tax. They, ho"ever, opted to put the same to other uses.

(. Ee no" consider the several petitions or contempt riled in the case at bar,

namely, ?a@ against the 1hilippine Fational +an on account or allo"ing 2tty. !edina

to "ithdra" 1&,44%,%%%.%% in contravention o the "rit o punishment issued by the

Commissioner= ?b@ against the o8cer o the #verseas +an o !anila or allo"ing the

extension o the maturity date o the mentioned time deposit o 13%%,%%%.%% and or

reusing to pay the same ater the extended term expired= ?c@ against udge Tan "ho

rene"ed the maturity date o the said time deposits= ?d@ against the <epanto

Consolidated !ining Co. or reusing to turn over dividends payable to the estate o )lsie !. Baches unless the Commissioner rst lited his punishment order= and ?e@

against the herein respondents 2tty. !edina, )ribal and 2bonto or citing shares o

stoc "ith the probate court instead o the cash amount o 1&,44%,%%%.%% "hich

they "ithdre" rom the rene"ed Fational +an on account o the 0uestioned orders

o the probate court, contrary to the resolutions o this Court dated uly $% and $3,

$'/3.

?a@ The contempt charge against the o8cials o the 1hilippine Fational +an is

"ithout merit, it appearing to the satisaction o this Court that they excited

reasonable eforts not to disobey the "rit o garnishing issued by the Commissioner.

Indeed, said o8cials merely acted in obedience to the order o the probate court

"hich threatened them "ith contempt o court ater they moved to be allo"ed to

deposit "ith the said probate court the money o the o )lsie Baches deposited "ith

the said ban. The commssioner himsel, through the :olicitor Beneral, admitted

later that its "rit o garnishment cannot be superior to that o the probate court,s

order as the estate in Uuestion "as then in custodia legis.

?b@ The contempt charges against the o8cials o the #verseas +an o !anila

lie"ise merit dismissal. In the case o the rene"al o the term o the time deposits

in 0uestion, the said extension "as made by no less than the executor o the estate

himsel- The rene"al o said term may be considered as purely an act o

administration or the enhancement ?due to the higher interest rates@ o the value o

the estate, and the o8cials o the ban cannot conse0uently be blamed or acting

avorably on the executors application. udge Tan himsel explained that he did "hat

he did honest the belie that it "ould redound to the benet o the estate on the

account o the higher interest rate on time deposits.

Eith reerence, to the reuse o the bans o8cials to allo" the "itldra"al o time

deposit in 0uestion ater the extended term expired on !ay $&, $'/6, this Court

taes notice o the act, as stated in our decision in :amos vs. 'entral +an* ?<-

&'4&(%, #ct. 5, $'3$= 5$ :CR2 (/(@, that as early as Fovember &%, $'/3 the

Central +an re0uired the #verseas +an o !anila, in vie" o its distressed nancial

condition, to execute a voting trust agreement in order to bail it out through a

change o management and the promise o resh unds to replenish the bans

nancial portolio. The #verseas +an o !anila "as not able to normali*e its

operations in spite o the voting trust agreement ; or, on uly 4$, $'/6, it "as

excluded by the Central +an rom inter-ban clearing= on 2ugust $, $'/6, itsoperations "ere suspended= and on 2ugust $4, $'/6, it "as completely orbidden by

the Central +an to do business preparatory to its orcible li0uidation. Gnder the

circumstances, this Court is satised "ith the explanation that to allo" 2tty. !edina

to "ithdra" the said time deposits ater the extended term "ould have "ored an

undue prejudice to the other depositors and creditors o the ban.

?c@ The contempt charge against udge Tan is also not meritorious. There is no

su8cient and convincing evidence to sho" that he rene"ed the maturity date o the

time deposits in 0uestion maliciously or to the prejudice o the interest o the estate.

?d@ The <epanto Consolidated !ining Company is lie"ise entitled to exoneration

rom the contempt charge lodged against it. It is reusing to turn over to 2tty. !edina

stoc dividends payable to the estate o )lsie !. Baches, it is evident that the said

corporation acted in good aith in vie" o the "rit o garnishment issued to it by the

Commissioner. !oreover, on ebruary $/, $'/6, this Court passed a resolution

suspending temporarily the "arrants o punishment issued by the Commissioner,

and it does not appear that thereater the turnover o the stoc dividends to theestate "as reused.

?e@ Eith reerence to the charge or contempt against the respondents 2tty. !edina,

)ribal and 2banto, although admittedly the resolutions o this Court dated uly $%

and $3, $'/3 "ere not strictly complied "ith by the said respondents, it appears

clearly that they immediately deposited "ith the probate court shares o stoc "ith

a airly stable li0uidity value o 1&,(66,(&%.%%. In any case, the main objective o the

instant petition is to assure the :tate that the assessed tax obligations shall be paid

and, rom the records, more than 1& million had already been paid to the :tate

during the pendency o the instant proceeding, in this Court.

/. Eith reerence to the attorneys ees to be paid to 2tty. !anuel !. 1aredes, this

court is o the opinion, ater a careul study o the statement o services rendered by

said counsel to the respondents )ribal and 2banto "hich "as submitted to thisCourt, that the amount o ity Thousand 1esos ?1(%,%%%.%%@ is air and reasonable.



The payment o this amount, ho"ever, is the personal liability o the said

respondents )ribal and 2banto. and not that o the estate o )lsie !. Baches, as the

said counsel "as hired by the said respondents to give legal aid to them in

connection "ith the settlement o the various claims preerred in the probate court

and in this Court.

3. The Courts intended adjudication o the main issue has been rendered academic

by supervening events "hich dictate that the court rerain rom issuing any urther

order relating thereto. #n uly $6, $'33 a >!aniestation and Compliance> "as led

by the, respondent elia 1. !edina "hich states that a compromise payment o

13%%,%%% as all estate tax, evidence by an o8cial receipt ?annex 2 o the

!aniestation@, "as accepted and duly approved by 2cting Commissioner o Internal

Revenue )ren I. 1lana ?annex + o the same !aniestation@, and that >"ith the said

compromise payment o 13%%,%%%, all estate, inheritance and deciency income

taxes . . . including pertinent delin0uency penalties thereo have been ully paid and

li0uidated, aggregating to 13,'&',5'6.(( ...> Fo objection thereto "as interpored by

any o this parties concerned despite due notice thereo. This "as urther

supplemented by a communication, dated uly $', $'33, o eputy Commissioner

Conrado 1. ia*, inorming the Register o eeds o 1asig, !etro !anila, that the

Baches estate has already paid all the estate and inheritance taxes assessed

against it, and that, conse0uently, the notice o tax then inscribed on the property

and property rights o the estate can no" be considered cancelled. Eith the ull

settlement o the tax claims, the re0uirements o the la" have been ully met, and it

has unnecessary or the Court to issue orders relative to the main issue.

2CC#RIFB<M, the respondent elia 1. !edina is to deliver the remaining assets o

the estate to the voluntary heirs in the proportions adjudicated in the "ill and to

submit a report o compliance. #n the incidental issues, the Court renders judgment

as or9

?$@ The amount o ITM TH#G:2F ?1(%,%%%.%%@ 1):#: is hereby a"arded to

!anuel !. 1aredes as legal ee or his services,

the same to be 1aid by the respondent )nd "ill the estate o 2banto, no"

?&@ The contempt charges against the o8cials o the 1hilippine Fational +an and

the #verseas +an o !anila, udge +ienvenido Tan, :r., and <epanto Consolidated

Co. are hereby ordered dismissed=

?4@ The authority given to the respondent elia 1. !edina in the resolution o thecourt dated ebruary /, $'/6, to pay the death and income taxes, including

delin0uency penalties, claimed by the :tate and, or that, to "ithdra" all cash

deposits in various bans and sell such properties o the estate as my be necessary,

is hereby terminated= and

?5@ The "rits o preliminary injunction issued by the Court pursuant to its resolutions

dated uly $% and $3, $'/3 are hereby dissolved.

Fo costs.

Antonio& ,u%o; Palma& 'oncepcion Jr.& ,artin& Santos& Fernande; and Guerrero& JJ.&concur./p"Q.%Rt

Fernando& J.& is on leave.

A$uino& ,a*asiar& JJ.& too* no part.



G.R. No. L-33139 Oc'o"er 11, 193+

0#E GOVERNMEN0 O6 0#E P#ILIPPINE ISLANDS, plaintif-appellants,

vs.

$OSE MA. PAMIN0%AN, E0 AL., deendants-appellees.

Attorney-General Jaranilla for appellant. Jose ,a.'avanna for appellees.

VILLA-REAL, J.:

This is an appeal taen by the Bovernment o the 1hilippine Islands rom the

judgment o the Court o irst Instance o !anila dismissing its complaint and

absolving the deendants, "ithout costs. In support o the appeal the ollo"ing

alleged errors have been assigned to the court belo" in its judgment9

$. The lo"er court erred in holding that the ailure o the plaintif to le its claim "ith

the committee on claims and appraisals barred it rom collecting the tax in 0uestions

in this action.

&. The lo"er court erred in holding that this case is governed by the principle laid

do"n in the case o the Bovernment o the 1hilippine Islands vs. Inchausti S Co. ?&5

1hil., 4$(@.

4. The lo"er court erred in absolving the deendants rom the complaint and indenying the plaintifs motion or ne" trial.

The present case "as submitted to the court belo" upon the ollo"ing agreed

statement o acts9

I. That on ebruary &3, $'&%, lorentino 1amintuan, represented by . 7. Ramire* or

his attorney-in-act charged "ith the administration o his property, led income-tax

return or the year $'$', paying the amount o 1 /3&.'' on the basis o said return,

and the additional sum o 1$($.%$ as a result o a subse0uent assessment received

rom the Collector o Internal Revenue.

II. That on 2pril &5, $'&(, lorentino 1amintuan died in Eashington, . C., G. :. 2.,

leaving the deendants herein as his heirs.

III. That on 2pril &5, $'&(, intestate proceedings "ere instituted in the Court o irst

Instance o !anila in civil case Fo. &3'56, intestate o the late lorentino 1amintuan.

I7. That on 2pril &6,$'&(, the Court o irst Instance o !anila appointed !aximo de

la 1a* and Candido Ilagan commissioners o appraisal o the property let by the

deceased 1amintuan, the said appointees taing their oaths o o8ce on !ay 5 and

!ay ', $'&(, respectively, and letters o appointment to the committee on claims

and appraisals "ere made on !ay ',$'&(. a/p"l.net

7. That the said committee on claims and appraisals ater the publications o the

notices re0uired by la" held the necessary sessions in accordance "ith said notices

or the presentation and determination o all claims and credits against the estate o

the deceased 1amintuan.

7I. That on ecember $, $'&(, the above-mentioned committee rendered its report

"hich "as duly approved by the court, and in "hich report it appears that he only

claims presented and that "ere approved "ere those o Tomasa Centeno, ose, 1a*,

Caridad, and Fatividad 1amintuan and Cavanna, 2boiti* and 2gan.

7II. That on une $&, $'&/, ose 7. Ramire*, the duly appointed judicial administrator

o the estate o the deceased lorentino 1amintuan presented a proposed partition

o the decedents estate "hich proposed partition "as approved by the court on uly

/,$'&/, the court ordering the delivery to the heirs, the deendants herein, o their

respective shares o the inheritance ater paying the corresponding inheritance

taxes "hich "ere duly paid on :eptember &, $'&/, in the amount o 1&(,%53.$' as

appears on the o8cial receipt Fo. 55&$4/$.

7III. That the deendants herein inherited rom the deceased lorentino 1amintuan in

the ollo"ing proportions9 Tomasa 1amintuan inherited %.%(3$ per cent o the

decedents estate and the other deendants %.%365 per cent each according to the

partition approved by the court in civil case Fo. &3'56.

ID. That during the pendency o the intestate proceedings, the administrator led

income-tax returns or the estate o the deceased corresponding to the years $'&(

and $'&/.

D. That the intestate proceedings in civil case Fo. &3'56 "ere denitely closed on

#ctober &3, $'&/, by order o the court o the same date.

DI. That subse0uent to the distribution o the decedents estate to the deendantsherein, that is, on ebruary $/, $'&3, the plaintif discovered the act that the

deceased lorentino 1amintuan has not paid the amount o our hundred and sixty-

t"o pesos ?15/&@ as additional income tax and surcharge or the calendar year

$'$', on account o the sale made by him on Fovember $5, $'$', o his house and

lot located at '&& !. H. del 1ilar, !anila, rom "hich sale he reali*ed a net prot or

income o 1$$,%%%, "hich "as not included in his income-tax return led or saidyear $'$'.

DII. That the deendants cannot disprove that the deceased lorentino 1amintuan

made a prot o 1$$,%%% in the sale o the house reerred to in paragraph Dl hereo

because they have destroyed the voluminous records and evidences regarding the

sale in 0uestion and other similar transactions "hich might sho" repairs on the

house, commissions, and other expenses tending to reduce the prot obtained as

mentioned above.

DIII. That demand or the payment o the income tax reerred to herein "as made on

ebruary &5, $'&3, on the deendants but they reused and still reuse to pay the

same either in ull or in part.

Eith regard to the rst assignment o error, this court held in 1ineda vs. Court o

irst Instance o Tayabas and Collector o Internal Revenue ?(& 1hil., 6%4@9

To reply to these contentions in turn , "e observe that, "hile there are a e" courts

that have expressed themselves to the efect that a claim or taxes due to the

Bovernment should be presented lie other claims to the committee appointed or

the purpose o passing upon claims, the clear "eight o judicial authority is to the

efect that claims or taxes and assessments, "hether assessed beore or ater the

death o the decedent, are not re0uired to be presented to the committee. ?&5 C. .,

4&(= 1eople vs. #lvera, 54 Cal., 5'&= Hancoc vs.Ehittemore, (% Cal., (&&= indley



vs. Taylor, '3 Io"a, 5&%= +ogue vs.<aughlin,$5' Eis., &3$= 5% <. R. 2. KF.:.L, '&3=

2nn. Cas.$'$4 C.,p.$4/3.@

See also !n re )state o ran H.Boulette ?B. R. Fo. 4&4/$, $ decided on :eptember

&&,$'4%.@

The administration proceedings o the late lorentino 1amintuan having been closed,

and his estate distributed among his heirs, the deendants herein, the latter are

responsible or the payment o the income tax here in 0uestion in proportion to the

share o each in said estate, in accordance "ith section 34$ o the Code o Civil

1rocedure, and the doctrine o this court laid do"n in <ope* vs. )nri0ue* ?$/

1hil.,44/@ as ollo"s9

):T2T)= <I2+I<ITM # H)IR: 2F I:TRI+GT)):. ; Heirs are not re0uired to respond

"ith their o"n property or the debts o their deceased ancestors. +ut even ater the

partition o an estate, heirs and distributees are liable individually or the payment

o all la"ul outstanding claims against the estate in proportion to the amount or

value o the property they have respectively received rom the estate. The

hereditary property consists only o that part "hich remains ater the settlement o

all la"ul claims against the estate, or the settlement o "hich the entire estate is

rst liable. The heirs cannot, by any act o their o"n or by agreement among

themselves, reduce the creditors security or the payment o their claims. ?1avia vs.

e la Rosa, 6 1hil.,3%= secs. 34$, 35', Code o Civil 1rocedure= art,$&(3, Civil Code.@

or the reasons stated, "e are o opinion and so hold that claims or income taxes

need not be led "ith the committee on claims and appraisals appointed in thecourse o testate proceedings and may be collected even ater the distribution o the

decedents estate among his heirs, "ho shall be liable thereor in proportion to their

share in the inheritance.

Ehereore, let the deendants pay the plaintif the sum o 15/&, "ith $ per centum

monthly interest rom 2ugust $', $'&3 until ully paid, as ollo"s9 Tomasa Centeno%.%(3$ per cent, and each one o the other deendants %.%365 per cent, "ith costs

against the appellees. :o ordered.

Avance%a& '.J.& Street& ,alcolm& Ostrand& Ostrand& Jo"ns and :omualde;& JJ.& concur.



G.R. No. L-*34+ $ne 4, 193

SPO%SES ALVARO PAS0OR, $R. and MA. ELENA AC#AVAL DE

PAS0OR, petitioners,

vs.

0#E CO%R0 O6 APPEALS, $%AN :. RE:ES, $%DGE O6 /RANC# I, CO%R0 O6

6IRS0 INS0ANCE O6 CE/% and LEELL:N /ARLI0O @%EMADA, respondents.

Pelae;& Pelae;& 9 Pelae; La/ OBce for petitioners.

'eni;a& :ama 9 Associates for private respondents.

PLANA, J.:

I. 2CT:9

This is a case o hereditary succession.

2lvaro 1astor, :r. ?12:T#R, :R.@, a :panish subject, died in Cebu City on une (,

$'//, survived by his :panish "ie :oa +ossio ?"ho also died on #ctober &$, $'//@,

their t"o legitimate children 2lvaro 1astor, r. ?12:T#R, R.@ and :oa 1astor de

!idgely ?:#I2@, and an illegitimate child, not natural, by the name o <e"ellyn

+arlito Uuemada UG)!22 12:T#R, R. is a 1hilippine citi*en, having been

naturali*ed in $'4/. :#I2 is a :panish subject. UG)!22 is a ilipino by his

mothers citi*enship.

#n Fovember $4, $'3%, UG)!22 led a petition or the probate and allo"ance o

an alleged holographic "ill o 12:T#R, :R. "ith the Court o irst Instance o Cebu,

+ranch I ?1R#+2T) C#GRT@, doceted as :1 Fo. 4$&6-R. The "ill contained only one

testamentary disposition9 a legacy in avor o UG)!22 consisting o 4% o

12:T#R, :R.s 5& share in the operation by 2tlas Consolidated !ining and

evelopment Corporation ?2T<2:@ o some mining claims in 1ina-+arot, Cebu.

#n Fovember &$, $'3%, the 1R#+2T) C#GRT, upon motion o UG)!22 and ater

an ex parte hearing, appointed him special administrator o the entire estate o

12:T#R, :R., "hether or not covered or afected by the holographic "ill. He

assumed o8ce as such on ecember 5, $'3% ater ling a bond o 1 (,%%%.%%.

#n ecember 3, $'3%, UG)!22 as special administrator, instituted against12:T#R, R. and his "ie an action or reconveyance o alleged properties o the

estate, "hich included the properties subject o the legacy and "hich "ere in the

names o the spouses 12:T#R, R. and his "ie, !aria )lena 2chaval de 1astor, "ho

claimed to be the o"ners thereo in their o"n rights, and not by inheritance. The

action, doceted as Civil Case Fo. &35-R, "as led "ith the Court o irst Instance o

Cebu, +ranch ID.

#n ebruary &, $'3$, 12:T#R, R. and his sister :#I2 led their opposition to the

petition or probate and the order appointing UG)!22 as special administrator.

#n ecember (, $'3&, the 1R#+2T) C#GRT issued an order allo"ing the "ill to

probate. 2ppealed to the Court o 2ppeals in C2-B.R. Fo. (&'/$- R, the order "as

a8rmed in a decision dated !ay ', $'33. #n petition or revie", the :upreme Court

in B.R. Fo. <-5//5( dismissed the petition in a minute resolution dated Fovember $,

$'33 and remanded the same to the 1R#+2T) C#GRT ater denying reconsideration

on anuary $$, $'36.

or t"o years ater remand o the case to the 1R#+2T) C#GRT, UG)!22 led

pleading ater pleading asing or payment o his legacy and sei*ure o the

properties subject o said legacy. 12:T#R, R. and :#I2 opposed these pleadings on

the ground o pendency o the reconveyance suit "ith another branch o the Cebu

Court o irst Instance. 2ll pleadings remained unacted upon by the 1R#+2T) C#GRT.

#n !arch (, $'6%, the 1R#+2T) C#GRT set the hearing on the intrinsic validity o

the "ill or !arch &(, $'6%, but upon objection o 12:T#R, R. and :#I2 on the e

ground o pendency o the reconveyance suit, no hearing "as held on !arch &(.Instead, the 1R#+2T) C#GRT re0uired the parties to submit their respective position

papers as to ho" much inheritance UG)!22 "as entitled to receive under the "ig.

1ursuant thereto, 12:T#R. R. and :#I2 submitted their !emorandum o authorities

dated 2pril $%, "hich in efect sho"ed that determination o ho" much UG)!22

should receive "as still premature. UG)!22 submitted his 1osition paper dated

2pril &%, $'6%. 2T<2:, upon order o the Court, submitted a s"orn statement o

royalties paid to the 1astor Broup o tsn rom une $'// ?"hen 1astor, :r. died@ to

ebruary $'6%. The statement revealed that o the mining claims being operated by

2T<2:, /% pertained to the 1astor Broup distributed as ollo"s9

$. 2. 1astor, r. ...................................5%.(

&. ). 1elae*, :r. ...................................$(.%

4. +. Uuemada .......................................5.(

#n 2ugust &%, $'6%, "hile the reconveyance suit "as still being litigated in +ranch

ID o the Court o irst Instance o Cebu, the 1R#+2T) C#GRT issued the no"

assailed #rder o )xecution and Barnishment, resolving the 0uestion o o"nership o

the royalties payable by 2T<2: and ruling in efect that the legacy to UG)!22 "as

not ino8cious. KThere "as absolutely no statement or claim in the #rder that the

1robate #rder o ecember (, $'3& had previously resolved the issue o o"nership

o the mining rights o royalties thereon, nor the intrinsic validity o the holographic

"ill.L

The order o 2ugust &%, $'6% ound that as per the holographic "ill and a "ritten

acno"ledgment o 12:T#R, R. dated une $3, $'/&, o the above /% interest in

the mining claims belonging to the 1astor Broup, 5& belonged to 12:T#R, :R. and

only 44 belonged to 12:T#R, R. The remaining &( belonged to ). 1elae*, also o

the 1astor Broup. The 1R#+2T) C#GRT thus directed 2T<2: to remit directly to

UG)!22 the 5& royalties due decedents estate, o "hich UG)!22 "as

authori*ed to retain 3( or himsel as legatee and to deposit &( "ith a reputable

baning institution or payment o the estate taxes and other obligations o the

estate. The 44 share o 12:T#R, R. andQor his assignees "as ordered garnished to

ans"er or the accumulated legacy o UG)!22 rom the time o 12:T#R, :R.s

death, "hich amounted to over t"o million pesos.

The order being >immediately executory>, UG)!22 succeeded in obtaining a Erit

o )xecution and Barnishment on :eptember 5, $'6%, and in serving the same on

2T<2: on the same day. Fotied o the #rder on :eptember /, $'6%, the oppositors

sought reconsideration thereo on the same date primarily on the ground that the

1R#+2T) C#GRT gravely abused its discretion "hen it resolved the 0uestion o

o"nership o the royalties and ordered the payment o UG)!22s legacy ater



prematurely passing upon the intrinsic validity o the "ill. In the meantime, the

1R#+2T) C#GRT ordered suspension o payment o all royalties due 12:T#R, R.

andQor his assignees until ater resolution o oppositors motion or reconsideration.

+eore the !otion or Reconsideration could be resolved, ho"ever, 12:T#R, R., this

time joined by his "ie !a. )<)F2 2CH272< ) 12:T#R, led "ith the Court o

2ppeals a 1etition or certiorari and 1rohibition "ith a prayer or "rit o preliminary

injunction ?C2-B.R. Fo. :1- $$434-R@. They assailed the #rder dated 2ugust &%, $'6%

and the "rit o execution and garnishment issued pursuant thereto. The petition "as

denied on Fovember $6, $'6% on the grounds ?$@ that its ling "as premature

because the !otion or Reconsideration o the 0uestioned #rder "as still pending

determination by the 1R#+2T) C#GRT= and ?&@ that although >the rule that a motion

or reconsideration is prere0uisite or an action or certiorari is never an absolute

rule,> the #rder assailed is >legally valid. >

#n ecember ', $'6%, 12:T#R, R. and his "ie moved or reconsideration o the

Court o 2ppeals decision o Fovember $6, $'6%, calling the attention o the

appellate court to another order o the 1robate Court dated Fovember $$, $'6% ?i.e.,

"hile their petition or certiorari "as pending decision in the appellate court@, by

"hich the oppositors motion or reconsideration o the 1robate Courts #rder o

2ugust &%, $'6% "as denied. KThe Fovember $$ #rder declared that the 0uestions

o intrinsic validity o the "ill and o o"nership over the mining claims ?not the

royalties alone@ had been nally adjudicated by the nal and executory #rder o ecember (, $'3&, as a8rmed by the Court o 2ppeals and the :upreme Court,

thereby rendering moot and academic the suit or reconveyance then pending in the

Court o irst Instance o Cebu, +ranch ID. It claried that only the 44 share o

12:T#R, R. in the royalties ?less than 3.( share "hich he had assigned to

UG)!22 beore 12:T#R, :R. died@ "as to be garnished and that as regards

12:T#R, :R.s 5& share, "hat "as ordered "as just the transer o its possession to

the custody o the 1R#+2T) C#GRT through the special administrator. urther, the

#rder granted UG)!22 / interest on his unpaid legacy rom 2ugust $'6% until

ully paid.L Fonetheless, the Court o 2ppeals denied reconsideration.

Hence, this 1etition or Revie" by certiorari "ith prayer or a "rit o pre y injunction,

assailing the decision o the Court o 2ppeals dated Fovember $6, $'6% as "ell as

the orders o the 1robate Court dated 2ugust &%, $'6%, Fovember $$, $'6% and

ecember $3, $'6%, !ed by petitioners on !arch &/, $'6$, ollo"ed by a

:upplemental 1etition "ith Grgent 1rayer or Restraining #rder.

In 2pril $'6$, the Court ?irst ivision@ issued a "rit o preliminary injunction, theliting o "hich "as denied in the Resolution o the same ivision dated #ctober $6,

$'6&, although the bond o petitioners "as increased rom 1(%,%%%.%% to

1$%%,%%%.%%.

+et"een ecember &$, $'6$ and #ctober $&, $'6&, private respondent led seven

successive motions or early resolution. ive o these motions expressly prayed or

the resolution o the 0uestion as to "hether or not the petition should be given due

course.

#n #ctober $6, $'6&, the Court ?irst ivision@ adopted a resolution stating that >the

petition in act and in efect "as given due course "hen this case "as heard on the

merits on :eptember 3, ?should be #ctober &$, $'6$@ and concise memoranda in

amplication o their oral arguments on the merits o the case "ere led by the

parties pursuant to the resolution o #ctober &$, $'6$ . . . > and denied in aresolution dated ecember $4, $'6&, private respondents >#mnibus motion to set

aside resolution dated #ctober $6, $'6& and to submit the matter o due course to

the present membership o the ivision= and to reassign the case to another

ponente.>

Gpon !otion or Reconsideration o the #ctober $6, $'6& and ecember $4, $'6&

Resolutions, the Court en banc resolved to C#FIR! the 0uestioned resolutions

insoar as hey resolved that the petition in act and in efect had been given due

course.

II. I::G):9

2ssailed by the petitioners in these proceedings is the validity o the #rder o execution and garnishment dated 2ugust &%, $'6% as "ell as the #rders

subse0uently issued allegedly to implement the 1robate #rder o ecember (, $'3&,

to "it9 the #rder o Fovember $$, $'6% declaring that the 1robate #rder o $'3&

indeed resolved the issues o o"nership and intrinsic validity o the "ill, and

reiterating the #rder o )xecution dated 2ugust &%, $'6%= and the #rder o

ecember $3, $'6% reducing to 1&,&($,($/.35 the amount payable to UG)!22

representing the royalties he should have received rom the death o 12:T#R, :R. in

$'// up to ebruary $'6%.

The 1robate #rder itsel, insoar as it merely allo"ed the holographic "ill in probate,

is not 0uestioned. +ut petitioners denounce the 1robate Court or having acted

beyond its jurisdiction or "ith grave abuse o discretion "hen it issued the assailed

#rders. Their argument runs this "ay9 +eore the provisions o the holographic "in

can be implemented, the 0uestions o o"nership o the mining properties and theintrinsic validity o the holographic "ill must rst be resolved "ith nality. Fo",

contrary to the position taen by the 1robate Court in $'6% ; i.e., almost eight

years ater the probate o the "ill in $'3& ; the 1robate #rder did not resolve thet"o said issues. Thereore, the 1robate #rder could not have resolved and actually

did not decide UG)!22s entitlement to the legacy. This being so, the #rders or

the payment o the legacy in alleged implementation o the 1robate #rder o $'3&

are un"arranted or lac o basis.

Closely related to the oregoing is the issue raised by UG)!22 The 1robate #rder

o $'3& having become nal and executory, ho" can its implementation ?payment

o legacy@ be restrainedJ # course, the 0uestion assumes that UG)!22s

entitlement to the legacy "as nally adjudged in the 1robate #rder.

#n the merits, thereore, the basic issue is "hether the 1robate #rder o ecember(, $'3& resolved "ith nality the 0uestions o o"nership and intrinsic validity. 2

negative nding "ill necessarily render moot and academic the other issues raised

by the parties, such as the jurisdiction o the 1robate Court to conclusively resolve

title to property, and the constitutionality and repercussions o a ruling that the

mining properties in dispute, although in the name o 12:T#R, R. and his "ie, really

belonged to the decedent despite the latters constitutional dis0ualication as an

alien.

#n the procedural aspect, placed in issue is the propriety o certiorari as a means to

assail the validity o the order o execution and the implementing "rit.

III. I:CG::I#F9

$. !ssue of O/ners"ip <



?a@ In a special proceeding or the probate o a "ill, the issue by and large is

restricted to the extrinsic validity o the "ill, i.e., "hether the testator, being o

sound mind, reely executed the "ill in accordance "ith the ormalities prescribed by

la". ?Rules o Court, Rule 3(, :ection $= Rule 3/, :ection '.@ 2s a rule, the 0uestion o

o"nership is an extraneous matter "hich the 1robate Court cannot resolve "ith

nality. Thus, or the purpose o determining "hether a certain property should or

should not be included in the inventory o estate properties, the 1robate Court may

pass upon the title thereto, but such determination is provisional, not conclusive,

and is subject to the nal decision in a separate action to resolve title. K4 !oran,

Comments on the Rules o Court ?$'6% ed.@, p. 5(6= 7alero 7da. de Rodrigue* vs.

Court o 2ppeals, '$ :CR2 (5%.L

?b@ The rule is that execution o a judgment must conorm to that decreed in the

dispositive part o the decision. ?1hilippine-2merican Insurance Co. vs. Honorable

lores, '3 :CR2 6$$.@ Ho"ever, in case o ambiguity or uncertainty, the body o the

decision may be scanned or guidance in construing the judgment. ?Heirs o 1resto

vs. Balang, 36 :CR2 (45= abular vs. Court o 2ppeals, $$' :CR2 4&'= Robles vs.

Timario. $%3 1hil. 6%'.@

The #rder sought to be executed by the assailed #rder o execution is the 1robate

#rder o ecember (, $'3& "hich allegedly resolved the 0uestion o o"nership o

the disputed mining properties. The said 1robate #rder enumerated the issues

beore the 1robate Court, thus9

Gnmistaably, there are three aspects in these proceedings9 ?$@ the probate o the

holographic "ill ?&@ the intestate estate aspect= and ?4@ the administrationproceedings or the purported estate o the decedent in the 1hilippines.

In its broad and total perspective the "hole proceedings are being impugned by theoppositors on jurisdictional grounds, i.e., that the act o the decedents residence

and existence o properties in the 1hilippines have not been established.

:pecically placed in issue "ith respect to the probate proceedings are9 ?a@ "hether

or not the holographic "ill ?)xhibit >>@ has lost its e8cacy as the last "ill and

testament upon the death o 2lvaro 1astor, :r. on une (, $'//, in Cebu City,

1hilippines= ?b@ Ehether or not the said "ill has been executed "ith all the

ormalities re0uired by la"= and ?c@ id the late presentation o the holographic "ill

afect the validity o the sameJ

Issues In the 2dministration 1roceedings are as ollo"s9 ?$@ Eas the ex- parteappointment o the petitioner as special administrator valid and properJ ?&@ Is there

any indispensable necessity or the estate o the decedent to be placed under

administrationJ ?4@ Ehether or not petition is 0ualied to be a special administrator

o the estate= and ?5@ Ehether or not the properties listed in the inventory

?submitted by the special administrator but not approved by the 1robate Court@ are

to be excluded.

Then came "hat purports to be the dispositive portion9

Gpon the oregoing premises, this Court rules on and resolves some o the problems

and issues presented in these proceedings, as ollo"s9

?a@ The Court has ac0uired jurisdiction over the probate proceedings as it "ereby

allo/s and approves t"e so-called "olograp"ic /ill o testator 2lvaro 1astor, :r.,

executed on uly 4$, $'/$ "ith respect to its extrinsic validity, the same having been

duly authenticated pursuant to the re0uisites or solemnities prescribed by la". <et,

thereore, a certicate o its allo"ance be prepared by the +ranch Cler o this Court

to be signed by this 1residing udge, and attested by the seal o the Court, and

thereater attached to the "ill, and the "ill and certicate led and recorded by the

cler. <et attested copies o the "ill and o the certicate o allo"ance thereo be

sent to 2tlas Consolidated !ining S evelopment Corporation, Boodrich +ldg., Cebu

City, and the Register o eeds o Cebu or o Toledo City, as the case may be, or

recording.

?b@ There "as a delay in the granting o the letters testamentary or o administration

or as a matter o act, no regular executor andQor administrator has been appointed

up to this time and - t"e appointment of a special administrator /as& and still is& usti0ed under t"e circumstances to ta*e possession and c"arge of t"e estate o the

deceased in the 1hilippines ?particularly in Cebu@ until the problems causing the

delay are decided and the regular executor andQor administrator appointed.

?c@ T"ere is a necessity and propriety of a special administrator and later on ane#ecutor andor administrator in t"ese proceedings, in spite o this Courts

declaration that the oppositors are the orced heirs and the petitioner is merely

vested "ith the character o a voluntary heir to the extent o the bounty given to

him ?under@ the "ill insofar as t"e same /ill not preudice t"e legitimes of t"eoppositor or the ollo"ing reasons9

$. To submit a complete inventory o the estate o the decedent-testator 2lvaro

1astor, :r.

&. To administer and to continue to put to prolic utili*ation o the properties o the

decedent=

4. To eep and maintain the houses and other structures and belonging to the

estate, since the orced heirs are residing in :pain, and prepare them or delivery to

the heirs in good order ater partition and "hen directed by the Court, but only aterthe payment o estate and inheritance taxes=

?d@ Subect to t"e outcome of t"e suit for reconveyance of o/ners"ip and possessionof real and personal properties in Civil Case Fo. &35-T beore +ranch ID o the Court

o irst Instance o Cebu,t"e intestate estate administration aspect must proceed&unless, ho"ever, it is duly proven by the oppositors that debts o the decedent have

already been paid, that there had been an extrajudicial partition or summary one

bet"een the orced heirs, t"at t"e legacy to be given and delivered to t"e petitioner does not e#ceed t"e free portion of t"e estate of t"e testator , that the respective

shares o the orced heirs have been airly apportioned, distributed and delivered to

the t"o orced heirs o 2lvaro 1astor, :r., ater deducting the property "illed to the

petitioner, and the estate and inheritance taxes have already been paid to the

Bovernment thru the +ureau o Internal Revenue.

The suitability and propriety o allo"ing petitioner to remain as special administrator

or administrator o the other properties o the estate o the decedent, "hich

properties are not directly or indirectly afected by the provisions o the holographic

"ill ?such as ban deposits, land in !actan etc.@, "ill be resolved in another order as

separate incident, considering t"at t"is order s"ould "ave been properly issued

solely as a resolution on t"e issue of /"et"er or not to allo/ and approve t"eaforestated /ill. ?)mphasis supplied.@



Fo"here in the dispositive portion is there a declaration o o"nership o specic

properties. #n the contrary, it is maniest therein that o"nership "as not resolved.

or it conned itsel to the 0uestion o extrinsic validity o the "in, and the need or

and propriety o appointing a special administrator. Thus it allo"ed and approved

the holographic "in >"ith respect to its extrinsic validity, the same having been duly

authenticated pursuant to the re0uisites or solemnities prescribed by la".> It

declared that the intestate estate administration aspect must proceed > subject to

the outcome o the suit or reconveyance o o"nership and possession o real and

personal properties in Civil Case &35-T beore +ranch ID o the CI o Cebu.>

K1arenthetically, although the statement reers only to the >intestate> aspect, it

dees understanding ho" o"nership by the estate o some properties could bedeemed 0nally resolved or purposes o testate administration, but not so

or intestate purposes. Can the estate be the o"ner o a property or testate but not

or intestate purposesJL Then again, the 1robate #rder ?"hile indeed it does not

direct the implementation o the legacy@ conditionally stated that the intestate

administration aspect must proceed >unless . . . it is proven . . . that the legacy to be

given and delivered to the petitioner does not exceed the ree portion o the estate

o the testator,> "hich clearly implies that the issue o impairment o legitime ?an

aspect o intrinsic validity@ "as in act not resolved. inally, the 1robate #rder did not

rule on the propriety o allo"ing UG)!22 to remain as special administrator o

estate properties not covered by the holographic "ill, >considering that this

?1robate@ #rder should have been properly issued solely as a resolution on the issue

o "hether or not to allo" and approve the aorestated "ill. >

?c@ That the 1robate #rder did not resolve the 0uestion o o"nership o the

properties listed in the estate inventory "as appropriate, considering that the issue

o o"nership "as the very subject o controversy in the reconveyance suit that "as

still pending in +ranch ID o the Court o irst Instance o Cebu.

?d@ Ehat, thereore, the Court o 2ppeals and, in efect, the :upreme Court

a8rmed en toto "hen they revie"ed the 1robable #rder "ere only the matters

properly adjudged in the said #rder.

?e@ In an attempt to justiy the issuance o the #rder o execution dated 2ugust &%,

$'6%, the 1robate Court in its #rder o Fovember $$, $'6% explained that the basis

or its conclusion that the 0uestion o o"nership had been ormally resolved by the

1robate #rder o $'3& are the ndings in the latter #rder that ?$@ during the lietime

o the decedent, he "as receiving royalties rom 2T<2:= ?&@ he had resided in the

1hilippines since pre-"ar days and "as engaged in the mine prospecting business

since $'43 particularly in the City o Toledo= and ?4@ 12:T#R, R. "as only acting asdummy or his ather because the latter "as a :paniard.

+ased on the premises laid, the conclusion is obviously ar-etched.

?@ It "as, thereore, error or the assailed implementing #rders to conclude that the

1robate #rder adjudged "ith nality the 0uestion o o"nership o the mining

properties and royalties, and that, premised on this conclusion, the dispositive

portion o the said 1robate #rder directed the special administrator to pay the

legacy in dispute.

&. !ssue of !ntrinsic (alidity of t"e )olograp"ic Nill -

?a@ Ehen 12:T#R, :R. died in $'//, he "as survived by his "ie, aside rom his t"o

legitimate children and one illegitimate son. There is thereore a need to li0uidatethe conjugal partnership and set apart the share o 12:T#R, :R.s "ie in the

conjugal partnership preparatory to the administration and li0uidation o the estate

o 12:T#R, :R. "hich "ill include, among others, the determination o the extent o

the statutory usuructuary right o his "ie until her death. Ehen the disputed

1robate order "as issued on ecember (, $'3&, there had been no li0uidation o the

community properties o 12:T#R, :R. and his "ie.

?b@ :o, also, as o the same date, there had been no prior denitive determination o

the assets o the estate o 12:T#R, :R. There "as an inventory o his properties

presumably prepared by the special administrator, but it does not appear that it "as

ever the subject o a hearing or that it "as judicially approved. The reconveyance or

recovery o properties allegedly o"ned but not in the name o 12:T#R, :R. "as still

being litigated in another court.

?c@ There "as no appropriate determination, much less payment, o the debts o the

decedent and his estate. Indeed, it "as only in the 1robate #rder o ecember (,

$'3& "here the 1robate Court ordered that-

... a notice be issued and published pursuant to the provisions o Rule 6/ o the

Rules o Court, re0uiring all persons having money claims against the decedent to

le them in the o8ce o the +ranch Cler o this Court.>

?d@ For had the estate tax been determined and paid, or at least provided or, as o

ecember (, $'3&.

?e@ The net assets o the estate not having been determined, the legitime o the

orced heirs in concrete gures could not be ascertained.

?@ 2ll the oregoing deciencies considered, it "as not possible to determine

"hether the legacy o UG)!22 - a xed share in a specic property rather than an

ali0uot part o the entire net estate o the deceased - "ould produce an impairment

o the legitime o the compulsory heirs.

?g@ inally, there actually "as no determination o the intrinsic validity o the "ill in

other respects. It "as obviously or this reason that as late as !arch (, $'6% - more

than 3 years ater the 1robate #rder "as issued the 1robate Court scheduled on

!arch &(, $'6% a hearing on the intrinsic validity o the "ill.

4. Propriety of certiorari <

1rivate respondent challenges the propriety o certiorari as a means to assail the

validity o the disputed #rder o execution. He contends that the error, i any, is oneo judgment, not jurisdiction, and properly correctible only by appeal, not certiorari.

Gnder the circumstances o the case at bar, the challenge must be rejected. Brave

abuse o discretion amounting to lac o jurisdiction is much too evident in the

actuations o the probate court to be overlooed or condoned.

?a@ Eithout a nal, authoritative adjudication o the issue as to "hat properties

compose the estate o 12:T#R, :R. in the ace o conAicting claims made by heirs

and a non-heir ?!2. )<)F2 2CH272< ) 12:T#R@ involving properties not in the

name o the decedent, and in the absence o a resolution on the intrinsic validity o

the "ill here in 0uestion, there "as no basis or the 1robate Court to hold in its

1robate #rder o $'3&, "hich it did not, that private respondent is entitled to the

payment o the 0uestioned legacy. Thereore, the #rder o )xecution o 2ugust &%,

$'6% and the subse0uent implementing orders or the payment o UG)!22s



legacy, in alleged implementation o the dispositive part o the 1robate #rder o

ecember (, $'3&, must all or lac o basis.

?b@ The ordered payment o legacy "ould be violative o the rule re0uiring prior

li0uidation o the estate o the deceased, i.e., the determination o the assets o the

estate and payment o all debts and expenses, beore apportionment and

distribution o the residue among the heirs and legatees. ?+ernardo vs. Court o

2ppeals, 3 :CR2 4/3.@

?c@ Feither has the estate tax been paid on the estate o 12:T#R, :R. 1ayment

thereore o the legacy to UG)!22 "ould collide "ith the provision o the Fational

Internal Revenue Code re0uiring payment o estate tax beore delivery to anybeneciary o his distributive share o the estate ?:ection $%3 KcL@

?d@ The assailed order o execution "as unauthori*ed, having been issued

purportedly under Rule 66, :ection / o the Rules o Court "hich reads9

:ec. /. Court to x contributive shares "here devisees, legatees, or heirs have been

in possession. ; Ehere devisees& legatees, or "eirs have entered into possession o

portions o the estate beore the debts and expenses have been settled and paid

and have become liable to contribute or the payment o such debts and expenses,

the court having jurisdiction o the estate may, by order or that purpose, ater

hearing, settle the amount o their several liabilities, and order ho" much and in

"hat manner each person shall contribute, and may issue execution as

circumstances re0uire.

The above provision clearly authori*es execution to enorce payment o debts o

estate. 2 legacy is not a debt o the estate= indeed, legatees are among those

against "hom execution is authori*ed to be issued.

... there is merit in the petitioners contention that the probate court generally

cannot issue a "rit o execution. It is not supposed to issue a "rit o execution

because its orders usually reer to the adjudication o claims against the estate

"hich the executor or administrator may satisy "ithout the necessity o resorting to

a "rit o execution. The probate court, as such, does not render any judgment

enorceable by execution.

The circumstances that the Rules o Court expressly species that the probate court

may issue execution ?a@ to satisy ?debts o the estate out o@ the contributive shares

o devisees, legatees and heirs in possession o the decedents assets ?:ec. /. Rule

66@, ?b@ to enorce payment o the expenses o partition ?:ec. 4, Rule '%@, and ?c@ to

satisy the costs "hen a person is cited or examination in probate proceedings ?:ec.

$4, Rule $5&@ may mean, under the rule o inclusion unius est exclusion alterius, that

those are the only instances "hen it can issue a "rit o execution. ?7da. de 7alera

vs. #lada, (' :CR2 '/, $%6.@

?d@ It is "ithin a courts competence to order the execution o a nal judgment= but

to order the execution o a nal order ?"hich is not even meant to be executed@ by

reading into it terms that are not there and in utter disregard o existing rules and

la", is maniest grave abuse o discretion tantamount to lac o jurisdiction.

Conse0uently, the rule that certiorari may not be invoed to deeat the right o a

prevailing party to the execution o a valid and nal judgment, is inapplicable. or

"hen an order o execution is issued "ith grave abuse o discretion or is at variance

"ith the judgment sought to be enorced ?17T2 vs. Honorable Bon*ales, '& :CR2

$3&@, certiorari "ill lie to abate the order o execution.

?e@ 2side rom the propriety o resorting to certiorari to assail an order o execution

"hich varies the terms o the judgment sought to be executed or does not nd

support in the dispositive part o the latter, there are circumstances in the instant

case "hich justiy the remedy applied or.

1etitioner !2. )<)F2 2CH272< ) 12:T#R, "ie o 12:T#R, R., is the holder in hero"n right o three mining claims "hich are one o the objects o conAicting claims o

o"nership. :he is not an heir o 12:T#R, :R. and "as not a party to the probate

proceedings. Thereore, she could not appeal rom the #rder o execution issued by

the 1robate Court. #n the other hand, ater the issuance o the execution order, the

urgency o the relie she and her co-petitioner husband see in the petition or

certiorari states against re0uiring her to go through the cumbersome procedure o

asing or leave to intervene in the probate proceedings to enable her, i leave is

granted, to appeal rom the challenged order o execution "hich has ordered

the immediate transer andQor garnishment o the royalties derived rom mineral

properties o "hich she is the duly registered o"ner andQor grantee together "ith

her husband. :he could not have intervened beore the issuance o the assailedorders because she had no valid ground to intervene. The matter o o"nership over

the properties subject o the execution "as then still being litigated in another court

in a reconveyance suit led by the special administrator o the estate o 12:T#R, :R.

<ie"ise, at the time petitioner 12:T#R, R. !ed the petition or certiorari "ith the

Court o 2ppeals, appeal "as not available to him since his motion or

reconsideration o the execution order "as still pending resolution by the 1robate

Court. +ut in the ace o actual garnishment o their major source o income,

petitioners could no longer "ait or the resolution o their motion or reconsideration.

They needed prompt relie rom the injurious efects o the execution order. Gnder

the circumstances, recourse to certiorari "as the easible remedy.

EH)R)#R), the decision o the Court o 2ppeals in C2 B.R. Fo. :1-$$434-R is

reversed. The #rder o execution issued by the probate Court dated 2ugust &%,

$'6%, as "ell as all the #rders issued subse0uent thereto in alleged implementation

o the 1robate #rder dated ecember (, $'3&, particularly the #rders dated

Fovember $$, $'6% and ecember $3, $'6%, are hereby set aside= and this case isremanded to the appropriate Regional Trial Court or proper proceedings, subject to

the judgment to be rendered in Civil Case Fo. &35-R.

:# #R)R).

Tee"an*ee '"airmanU& ,elencio-)errera (as$ue; and :elova JJ.& concur.

Gutierre;& J.& too* no part.

cases- estate tax

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