CASE DIGEST : VALERA VS INSERTO

FIRST DIVISION

G.R. No. L-56504 May 7, 1987

POMPILLO VALERA and EUMELIA VALERA CABADO, petitioners,

vs.

HON. JUDGE SANCHO Y. INSERTO, in his capacity as Presiding Judge, Court of First Instance of Iloilo, Branch 1, and MANUEL R. FABIANA, respondents.

Nos. L-59867-68  May 7, 1987

EUMELIA V. CABADO, POMPILLO VALERA and HON. MIDPANTAO L. ADIL, petitioners-appellants,

vs.

MANUEL FABIANA, JOSE GARIN and HON. COURT OF APPEALS (Tenth Division)

FACTS :  the fishpond originally belonged to the Government, and had been given in lease to Rafael Valera in his lifetime. Rafael Valera ostensibly sold all his leasehold rights in the fishpond to his daughter, Teresa Garin; but the sale was fictitious, having been resorted to merely so that she might use the property to provide for her children's support and education, and was subject to the resolutory term that the fishpond should revert to Rafael Valera upon completion of the schooling of Teresa Garin's Children; and with the income generated by the fishpond, the property was eventually purchased from the Government by the Heirs of Teresa Garin, collectively named as such in the Original Certificate of Title issued in their favor.

In the proceedings for the settlement of the intestate estate of the decedent spouses, Rafael Valera and Consolacion Sarrosa 1 — in which Eumelia Cabado and Pompiro Valera had been appointed administrators 2 — the heirs of a deceased daughter of the spouses, Teresa Garin, filed a motion asking that the Administratrix, Cabado, be declared in contempt for her failure to render an accounting of her administration. Cabado replied that no accounting could be submitted unless Jose Garin, Teresa's husband and the movant heirs' father, delivered to the administrator an 18-hectare fishpond in Baras, Barotoc Nuevo, Iloilo, belonging to the estate and she in turn moved for the return thereof to the estate, 4 so that it might be partitioned among the decedents' heirs. Jose Garin opposed the plea for the fishpond's return to the estate, asserting that the property was owned by his children and this was why it had never been included in any inventory of the estate

The Court, presided over by Hon. Judge Midpantao Adil, viewed the Garin Heirs' motion for contempt, as well as Cabado's prayer for the fishpond's return to the estate, as having given rise to a claim for the recovery of an asset of the estate within the purview of Section 6, Rule 87 of the Rules of Court. Thereafter, the Court issued an Order dated September 17, 1980 commanding the Heirs of Teresa Garin "to reconvey immediately the fishpond in question * * to the intestate Estate of the Spouses.

Thereafter, the Court issued an Order dated September 17, 1980 commanding the Heirs of Teresa Garin "to reconvey immediately the fishpond in question * * to the intestate Estate of the Spouses. Judge Adil afterwards granted the administrators' motion for execution of the order pending appeal, and directed the sheriff to enforce the direction for the Garin Heirs to reconvey the fishpond to the estate.

Later however, Fabiana filed a complaint-in-intervention with the Probate Court seeking vindication of his right to the possession of the fishpond, based on a contract of lease between himself, as lessee, and Jose Garin, as lessor

G.R. No. 56504

Fabiana thereupon instituted a separate action for injunction and damages, with application for a preliminary injunction. This was docketed as Civil Case No. 13742 and assigned to Branch I of the Iloilo CFI, Hon. Sancho Y. Inserto, presiding. The estate administrators filed a motion to dismiss the complaint and to dissolve the temporary restraining order, averring that the action was barred by the Probate Court's prior judgment which had exclusive jurisdiction over the issue of the lease, and that the act sought to be restrained had already been accomplished, Fabiana having voluntarily surrendered possession of the fishpond to the sheriff

G.R. Nos. 59867-68

In the meantime, Jose Garin — having filed a motion for reconsideration of the above mentioned order of Judge Adil (declaring the estate to be the owner of the fishpond), in which he asserted that the Probate Court, being of limited jurisdiction, had no competence to decide the ownership of the fishpond,

These two special civil actions were jointly decided by the Court of Appeals. The Court granted the petitions

ISSUE: WON   Probate   Court   had   authority   to   order reconveyance of the fishpond?

HELD : As regards the first issue, settled is the rule that a Court of First Instance (now Regional Trial Court), acting as a Probate Court, exercises but limited jurisdiction, 28 and thus has no power to take cognizance of and determine the issue of title to property claimed by a third person adversely to the decedent, unless the claimant and all the Other parties having legal interest in the property consent, expressly or impliedly, to the submission of the question to the Probate Court for adjudgment, or the interests of third persons are not thereby prejudiced

The facts obtaining in this case, however, do not call for the application of the exception to the rule. As already earlier stressed, it was at all times clear to the Court as well as to the parties that if cognizance was being taken of the question of title over the fishpond, it was not for the purpose of settling the issue definitely and permanently, and writing "finis" thereto, the question being explicitly left for determination "in an ordinary civil action," but merely to determine whether it should or should not be included in the inventory. Parenthetically, in the light of the foregoing principles, the Probate Court could have admitted and taken cognizance of Fabiana's complaint in intervention after obtaining the consent of all interested parties to its assumption of jurisdiction over the question of title to the fishpond, or ascertaining the absence of objection thereto. But it did not. It dismissed the complaint in intervention instead. And all this is now water under the bridge.

Since the determination by the Probate Court of the question of title to the fishpond was merely provisional, not binding on the property with any character of authority, definiteness or permanence, having been made only for purposes of in. conclusion in the inventory and upon evidence adduced at the hearing of a motion, it cannot and should not be subject of execution, as against its possessor who has set up title in himself (or in another) adversely to the decedent, and whose right to possess has not been ventilated and adjudicated in an appropriate action. These considerations assume greater cogency where, as here, the Torrens title to the property is not in the decedents' names but in others, a situation on which this Court has already had occasion to rule Since, too, both the Probate Court and the estate administrators are one in the recognition of the proposition that title to the fishpond could in the premises only be appropriately determined in a separate action, 36 the actual firing of such a separate action should have been anticipated, and should not therefore have come as a surprise, to the latter. And since moreover, implicit in that recognition is also the acknowledge judgment of the superiority of the authority of the court in which the separate action is filed over the issue of title, the estate administrators may not now be heard to complain that in such a separate action, the court should have issued orders necessarily involved in or flowing from the assumption of that jurisdiction.

CASE DIGEST : LUZON SURETY COMPANY, INC vs PASTOR T. QUEBRAR and FRANCISCO KILAYKO

G.R. No. L-40517 January 31, 1984

LUZON SURETY COMPANY, INC., plaintiff-appellee, 
vs.
PASTOR T. QUEBRAR and FRANCISCO KILAYKO, defendants-appellants.

FACTS: On August 9, 1954, plaintiff-appellee issued two administrator's bond in the amount of P15,000.00 each, in behalf of the defendant-appellant Pastor T. Quebrar, as administrator in Special Proceedings Nos. 3075 and 3076 of the Court of First Instance of Negros Occidental. In consideration of the suretyship wherein the plaintiff-appellee Luzon Surety Company, Inc. was bound jointly and severally with the defendant appellant Pastor T. Quebrar, the latter, together with Francisco Kilayko, executed two indemnity agreements, where among other things, they agreed jointly and severally to pay the plaintiff-appellee "the sum of Three Hundred Pesos (P300.00) in advance as premium thereof for every 12 months or fraction thereof, this ... or any renewal or substitution thereof is in effect" and to indemnify plaintiff-appellee against any and all damages, losses, costs, stamps taxes, penalties, charges and expenses, whatsoever, including the 15% of the amount involved in any litigation, for attomey's fees

For the first year, from August 9, 1954 to August 9, 1955, the defendants-appellants paid P304.50 under each indemnity agreement or a total of P609.00 for premiums and documentary stamps. On June 6, 1957, the Court of First Instance of Negros Occidental approved the amended Project of Partition and Accounts of defendant-appellant (p. 87, ROA; p. 9, rec.).

On May 8, 1962, the plaintiff-appellee demanded from the defendants-appellants the payment of the premiums and documentary stamps from August 9,1955.On October 17, 1962, the defendants-appellants ordered a motion for cancellation and/or reduction of executor's bonds on the ground that "the heirs of these testate estates have already received their respective shares" (pp. 69-70, ROA, p. 9, rec.).

On October 20, 1962, the Court of First Instance of Negros Occidental acting on the motions filed by the defendants-appellants ordered the bonds cancelled. Plaintiff-appellee's demand amounted to P2,436.00 in each case, hence, a total of P4,872.00 for the period of August 9, 1955 to October 20, 1962. The defendants-appellants to pay the said amount of P4,872.00. On January 8, 1963, the plaintiff-appellee filed the case with the Court of First Instance of Manila During the pre-trial the parties presented their documentary evidences and agreed on the ultimate issue

The lower court allowed the plaintiff to recover from the defendants-appellants

Defendants-appellants appealed to the Court of Appeals. On March 20, 1975, the Court of Appeals in a resolution certified the herein case to the supreme court  after finding that this case involves only errors or questions of law.

ISSUE: whether or not the administrator's bonds were in force and effect from and after the year that they were filed and approved by the court up to 1962, when they were cancelled

HELD : The proper determination of the liability of the surety and of the principal on the bond must depend primarily upon the language of the bond itself. The bonds herein were required by Section 1 of Rule 81 of the Rules of Court. While a bond is nonetheless a contract because it is required by statute. The bonds in question herein contain practically the very same conditions in Sec. 1, Rule 81 of the Rules of Court

Section 1 of Rule 81 of the Rules of Court requires the administrator/executor to put up a bond for the purpose of indemnifying the creditors, heirs, legatees and the estate. It is conditioned upon the faithful performance of the administrator's trust

Having in mind the purpose and intent of the law, the surety is then liable under the administrator's bond, for as long as the administrator has duties to do as such administrator/executor. Since the liability of the sureties is co-extensive with that of the administrator and embraces the performance of every duty he is called upon to perform in the course of administration

The defendant-appellant Pastor T. Quebrar did not cease as administrator after June 6, 1957, for administration is for the purpose of liquidation of the estate and distribution of the residue among the heirs and legatees. And liquidation means the determination of all the assets of the estate and payment of all the debts and expenses (Flores vs. Flores, 48 Phil. 982). It appears that there were still debts and expenses to be paid after June 6, 1957 The sureties of an administration bond are liable only as a rule, for matters occurring during the term covered by the bond. And the term of a bond does not usually expire until the administration has been closed and terminated in the manner directed by law

With the payment of the premium for the first year, the surety already assumed the risk involved, that is, in case defendant-appellant Pastor T. Quebrar defaults in his administrative duties. The surety became liable under the bond for the faithful administration of the estate by the administrator/executor. Hence, for as long as defendant-appellant Pastor T. Quebrar was administrator of the estates, the bond was held liable and inevitably, the plaintiff-appellee's liability subsists since the liability of the sureties is co-extensive with that of the administrator.