NATIVIDAD V. A. JARODA, PETITIONER, VS. THE HONORABLE VICENTE N. CUSI, JR., PRESIDING JUDGE, BRANCH I, COURT OF FIRST INSTANCE OF DAVAO, AND ANTONIO V. A. TAN, IN HIS CAPACITY A…

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

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

The second order, dated 3 September 1965, approved ex-parte the power of attorney executed by special
administrator Tan appointing himself attorney-in-fact to sell the share of the
estate in the sub­division lots.

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

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

—— x —— x ——
x ——

—— x —— x ——
x ——

“t.   Cash on Bank:  BPI (Savings)
D-1365 in the amount of P55,284.11; PNB (Savings)
8189, in the amount of P9,047.74; and PCIB (Savings) 337, in the amount of
P416.24.” (Annex “A” to Petition, Rollo,
pages 14 – 15);

that the heirs
of the deceased are his surviving spouse, nine (9) children (among them the
herein petitioner, Natividad V. A. Jaroda), and four (4) grandsons, among them the herein
respondent, Antonio V. A. Tan.

On 26 April 1965, respondent Tan was appointed special
administrator.

On 4 May 1965, respondent special administrator Tan filed an ex-parte petition for the withdrawal of the sums of
P109,886.42 and P72,644.66 from the Philippine National Bank, Davao Branch, which sums were not listed in his petition
for administration as among the properties left by the deceased, alleging that
these sums were deposited in the name of the deceased but that they actually
belong to, and were held in trust for, the co-owners of the Juna
Subdivision, and alleging as reason for the withdrawal that it would be
advantageous to the estate of the deceased. 
Annexed to the said petition are powers of attorney purportedly signed
by the co-owners in 1948 and 1949 authorizing the late Carlos Villa Abrille to sell the lots in the Juna
Subdivision and to deposit the proceeds thereof with the Philippine National Bank.  The alleged
co-owners of the subdivision concurred in the petition, but not the heirs of
the deceased (Annex “C” to Petition, Rollo,
page 19).

The respondent court found the petition for withdrawal of the
bank deposits as “meritorious”, and granted the petition in an order
on 5 May 1965.

On 7 May 1965, special administrator Tan executed, together with
the other co-owners of the Juna Subdivision, a power
of attorney appointing himself as attorney-in-fact to “sell (or) dispose
upon terms and conditions as he deems wise” the lots in the 99.546-hectare
subdivision (Annex “F-1” to Petition, Rollo,
pages 30-32).

On 9 September 1965,
respondent Tan was issued letters of administration by the respondent court.

On the same day, 9 September 1965, as regular administrator, respondent
Tan filed a petition with the respondent court, alleging that the deceased was
the manager of and a co-owner in the Juna Subdivision
and that he had been engaged in the business of selling the lots, and praying
for the approval by the court of the power of attorney executed by him, in
behalf of the intestate estate, and appointing and authorizing himself to sell
the lots.

The court granted the petition, “as prayed for”, on 3
September 1965.

On 29 November 1966, herein petitioner Natividad
V. A. Jaroda moved to nullify the order of 5 May
1965, that allowed the withdrawal of the bank deposits, as well as the order of
3 September 1965, which approved the power of attorney.

The respondent court denied, on 25 February 1967, “for lack
of merit” the aforesaid motion.

Petitioner Jaroda appealed from the
order of denial, but the respondent court dismissed the appeal on the ground
that the order appealed from was interlocutory. 
Jaroda then filed before the Supreme Court a
petition for certiorari and/or mandamus on 8 July 1967, docketed as G. R. No.
L-27831, but this Court dismissed the petition, adding in its resolution that
appeal in due time is the remedy.

On 28 October 1967, petitioner Jaroda
filed the present petition for certiorari with preliminary injunction.  She alleged, among other things, that appeal
would not be speedy and adequate as respondent Tan has sold and continues to
sell the subdivision lots on the strength of the respondent court’s order, to
her irreparable prejudice and that of the other heirs.  This Court gave due course to the petition
and issued preliminary injunction on 3 November 1967, restraining the respondent
from selling the share of the intestate estate.

We agree with petitioner that the order of 5 May 1965 allowing the special administrator to
withdraw the bank deposits standing in the name of the decedent is in abuse of
discretion amounting to lack of jurisdiction. 
In the first place, said withdrawal is foreign to the powers and duties
of a special administrator, which, as Section 2 of Rule 80 of the Rules of
Court provides, are to –

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

In the second place, the order was issued without notice to, and
hearing of, the heirs of the deceased. 
The withdrawal of the bank deposits may be viewed as a taking of
possession and charge of the credits of the estate, and apparently within the
powers and duties of a special administrator; but actually, said withdrawal is
a waiver by the special administrator of a prima facie exclusive
right of the intestate estate to the bank deposits in favor of the co-owners of
the Juna Subdivision, who were al­legedly claiming
the same as alleged by the administrator in his motion (Petition, Annex
“C”).  The bank deposits were
in the name of the deceased; they, therefore, belong prima facie
to his estate after his death.  And until
the contrary is shown by proper evidence at the proper stage, when money claims
may be filed in the intestate proceedings, the special administrator is without
power to make the waiver or to hand over part of the estate, or what appears to
be a prima facie part of the estate, to other persons on the
ground that the estate is not the owner thereof.  If even to sell for valuable consideration
property of the estate requires prior written notice of the application to the
heirs, legatees or devisees under Rule 89 of the Rules of Court, such notice is
equally, if not more, indispensable for disposing gratuitously of assets of the
decedent in favor of strangers. 
Admittedly, no such notice was given, and without it the court’s
authority is invalid and improper.

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

The very rule, Section 4 of Rule 89 of the Rules of Court, relied
on by respondent Tan to sustain the power of attorney for the sale of the pro-indiviso share of the estate in the subdivision
requires “written notice to the heirs, devisees, and legatees who are
interested in the estate to be sold” and, admittedly, administrator Tan
did not furnish such notice.  (Answer,
pages 1 and 2, paragraph 3, Rollo, page 53) Without such notice, the order of the court
authorizing the sale is void.  (Estate of
Gamboa vs. Floranza, 12
Phil. 191; Gabriel vs. Encarnacion, 94 Phil. 917)

But respondent Tan holds petitioner Jaroda
with actual knowledge of the questioned order, and to show it he quotes the transcript
of stenographic notes of a discussion by a lawyer of Jaroda
about the said order.  The discussion,
however, took place on 19 March 1966
while the order was issued on 13
September 1965, and there is nothing in the discus­sion that may
indicate knowledge by Jaroda of the order before, at
or immediately after its issuance.

It has been broadly stated that an administrator is not permitted
to deal with himself as an individual in any transaction concerning trust
property.  (Pesula’s
Estate, 64 ALR 2d 851, 150 Cal.
App. 2d 462, 310 P 2d 39)

“It is well settled that an executrix holds the property of
her testator’s estate as a trustee.  In re Heydenfeldt’s Estate, 117 Cal. 551, 49 P.
713; Firebaugh v. Burbank, 121 Cal. 186, 53 P. 560.  It
is equally well settled that an
executrix will not be permitted to deal with herself as an individual in any
transaction concerning the trust property. 
Civil Code, S 2230.  In Davis v. Rock Creek L., F. & M Co., 55
Cal. 359, at page 364, 36 Am. Rep. 40, it
is said:  ‘The law, for wise reasons,
will not permit one who acts in a fiduciary capacity thus to deal with himself
in his individual capacity.’ The following cases are to the same effect:  Wickersham v.
Crittenden, 93 Cal. 17, 29, 28 P. 788; Sims v. Petaluma Gas Light Co., 131 Cal.
656, 659, 63 P. 1011; Western States Life Ins. Co. v. Lockwood, 166 Cal. 185,
191, 135 P. 496; In re Estate of Parker, 200 Cal. 132, 139, 251 P. 907, 49 A.
L. R. 1025.  In Wickersham
v. Crittenden, supra, 93 Cal. at page 29, 28 P. at page 790, it is further
stated in respect to a transaction wherein a trustee sought to deal with trust
property:  ‘Courts will not permit any
investigation into the fairness of the transaction, or allow the trustee to show
that the dealing was for the best interest of the beneficiary.’ This language
is quoted with approval in the case of Pacific Vinegar & Pickle Works v.
Smith, 145 Cal. 352, 365, 78 P.
550, 104 Am. St. Rep.
42.” (In re Bogg’s Estate, 121 P. 2d 678, 683)

The opinion of some commentators that, as a general rule,
auto-contracts are permissible if not expressly prohibited (See Tolentino, Civil Code of the Philippines, Vol. IV (1962,
pages 375-377), and that there is no express provision of law prohibiting an
administrator from appointing himself as his own agent, even if correct, can
not and should not apply to administrators of decedent’s estates, in view of
the fiduciary relationship that they occupy with respect to the heirs of the
deceased and their responsibilities toward the probate court.  A contrary ruling would open the door to
fraud and maladministration, and once the harm is done, it might be too late to
correct it.  A concrete example would be
for administrator Tan to authorize agent Tan to sell a lot for P50, with the
condition that if he can sell it for more he could keep the difference; agent
Tan sells the lot for P150.00; he retains P100.00 and deposits in the bank
P50.00 “in the name of Antonio V. A. Tan, in trust for Juna
Subdivision” (as worded in the power of attorney, Annex “F-1”);
thus, administrator Tan’s accounting to the estate for the sale of the lot for
P50 would be in order, but the estate would have been actually cheated of the
sum of P100, which went to agent Tan in his individual capacity.

The court below also failed to notice that, as alleged in the
administrator’s petition (Annex “F” herein), after the death of
Carlos Villa Abrille the administrator Tan, in his
personal capacity, had replaced said deceased as manager of the Juna Subdivision by authority of the other co-owners.  By the court’s questioned order of 3
September 1965 empowering him to re­present the interest of the deceased in the
management of the subdivision, the administrator Tan came to be the agent or
attorney-in-fact of two different principals: 
the court and the heirs of the deceased on the one hand, and the
majority co-owners of the subdivision on the other, in managing and disposing
of the lots of the subdivision.  This
dual agency of the respondent Tan rendered him incapable of independent defense
of the estate’s interests against those of the majority co-owners.  It is highly undesirable, if not improper,
that a court officer and administrator, in dealing with property under his
administration, should have to look to the wishes of strangers as well as to
those of the court that appointed him.  A
judicial administrator should be at all times subject to the orders of the
appointing Tribunal and of no one else.

That petitioner Jaroda, as heir of the
late Carlos Villa Abrille, should hold a minor interest
(1/11 of 19%) in the co-ownership known as the Juna
Subdivision, and that the early termination of said co-ownership would redound
to the benefit of the co-owners, including the heirs of Carlos Villa Abrille, are beside the point.  Jaroda’s interest in
the estate demands that she be heard by the court in all matters affecting the
disposal of her share, and that the administrator should primarily protect the
interest of the estate in which she is a participant rather than those of the
decedent’s co-owners.

The resolution of this Court in L-27836 (Natividad
V. A. Jaroda vs. the Hon. Vicente N. Cusi, Jr., etc., et al.), dismissing the petition for
certiorari and/or mandamus and stating that appeal in due time is the remedy,
is no bar to the present petition, for it has not been shown that the
allegations in both the dismissed petition and those of the present one are
substantially the same.  Anyway,
certiorari lies if appeal would not be prompt enough to block the injurious
effects of the orders of the lower court (Silvestre vs. Torres, et al., 57
Phil. 885; Pachoco vs. Tumangday,
L-14500, 25 May 1960; Mayormente vs. Robaco Corp., L-25337, 27 Nov. 1967, 21 SCRA 1080).

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

FOR THE FOREGOING REASONS, the orders of 5 May 1965 and 3 September 1965 of the Court of First Instance of
Davao, Branch I, in its Special Proceeding No. 1391,
are hereby set aside and declared null and void.  The preliminary injunction heretofore issued
is hereby made permanent.  Costs against the respondent, Antonio V. A. Tan, in his personal
capacity.

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

Zaldivar, J., did not take part.