JOSE S. MATUTE, PETITIONER, VS. THE COURT OF APPEALS (THIRD DIVISION) AND MATIAS S. MATUTE, RESPONDENTS.

Matute versus Court of Appeals

The Case

This is Jose Matute against the Court of Appeals and his half-brother Matias Matute. Jose asks the Supreme Court to undo the appellate court's intervention in a bitter family quarrel over who shall administer the large estate of their deceased father, Amadeo Matute Olave. The case matters because it fixes a clean jurisdictional rule for estate contests: when heirs fight over the administration of an estate, the amount in controversy is the value of the whole estate, not the value of any one parcel or any one stream of income. It also reminds us that removal of an administrator, though discretionary with the probate court, cannot be done without due process.

Procedural History

In the settlement proceeding before the probate court, Branch Four of the Court of First Instance of Manila, Carlos Matute and the Candelario Matute heirs moved to remove Matias Matute as co-administrator and to appoint a replacement. After receiving evidence, the probate court issued an order removing Matias, directing him to render a final accounting, and appointing Jose Matute as co-administrator. Matias went up to the Court of Appeals by petition for certiorari with preliminary mandatory injunction, and that court gave the petition due course and issued a preliminary injunction. Jose moved to dismiss on the ground that the Court of Appeals had no jurisdiction because the estate was worth more than 200,000 pesos, but the appellate court required an answer instead of resolving the jurisdictional question. Jose then filed this petition for certiorari with preliminary injunction before the Supreme Court, challenging the jurisdiction of the Court of Appeals. In later pleadings both parties asked the Supreme Court to rule on the merits of the removal order as well, and the Court agreed to do so.

Facts

Amadeo Matute Olave left a vast estate, and his fifteen heirs fell into prolonged strife that delayed settlement for more than a decade. Matias Matute had been serving as co-administrator since May 1963. In August 1965 Carlos Matute asked the probate court to remove Matias, alleging that he had failed for more than two years to render a true and complete account of his administration, and that he was incompetent and negligent in managing five haciendas, partly because a criminal charge for murder was occupying his time. Matias opposed, insisting he had filed his accounts for 1963 and 1964, that these had been approved by heirs holding sixty-three percent of the estate, and that his competence had already been settled by the final order of appointment.

Other heirs then joined the attack, seeking Matias's removal and the appointment of Agustina Matute Candelario, Carlos Matute, or Jose Matute as co-administrators. They alleged failure to pay real property taxes for 1964 and 1965, financial statements not properly signed and authenticated by a certified public accountant, delayed inventories and accounts filed only when ordered, and unauthorized disbursements. Evidence was received in December 1965. Matias objected to the movants' exhibits as hearsay, self-serving, irrelevant, and mere photostatic copies never properly identified, and then filed a motion to dismiss or demurrer to evidence, reserving the right to present his own evidence should the motion be denied.

On January 31, 1966 the probate court removed Matias as co-administrator, ordered him to submit a final accounting together with his unapproved past accounts, and appointed Jose Matute in his place, requiring a bond of 15,000 pesos. Matias challenged that order before the Court of Appeals. On the jurisdictional side, Matias argued that the real controversy was merely the collection of a monthly rental of 5,000 pesos under a lease he had executed over the five haciendas in favor of Mariano Nasser, so that this rental, not the whole estate, should measure the jurisdictional amount. Jose replied that the estate was worth more than 200,000 pesos, and that the Court of Appeals had itself earlier refused jurisdiction over the same estate on that very ground.

Issues

• Whether or not the Court of Appeals had jurisdiction to entertain the petition and to issue the writs of certiorari and preliminary injunction concerning the removal and appointment of a co-administrator of an estate valued at more than 200,000 pesos.
• Whether or not the amount in controversy in a contest over the administration of an estate is the value of the whole estate rather than the value of a particular portion or of a monthly rental.
• Whether or not the probate court's order removing Matias Matute as co-administrator and appointing Jose Matute in his place is valid.

Applicable Provisions

Section 2 of Rule 82 of the Rules of Court, on the removal of an executor or administrator, provides:

An executor or administrator may be removed by the court appointing him, when he becomes insane, or is incapacitated to act, or fails to render an account of his administration, or to pay over the money or property of the estate, or to perform any order of the court, or for any other cause which, in the opinion of the court, is sufficient to warrant his removal.

This provision is the source of the probate court's power to remove Matias, and the Court measures the challenged order against it, while stressing that the power must be exercised with due process.

Ruling

On the first issue, the Court ruled that the Court of Appeals had no jurisdiction. The record showed a bitter fight for co-administration, not a mere contest over a 5,000 peso rental; the prayer of Matias's own petition sought to restrain Jose from exercising acts of administration over the haciendas. The Court applied its earlier ruling in Fernandez versus Maravilla, quoting it:

It is therefore, a contest for the administration of the estate and, consequently, the amount or value of the assets of the whole estate is the value in controversy.

Since the estate was worth more than 200,000 pesos, the Court of Appeals had no appellate jurisdiction over the settlement proceeding and therefore no original jurisdiction to issue writs merely incidental to it.

On the second issue, the Court rejected the rental theory. The jurisdictional amount is determined by the total value of the estate, not by the value of the particular property or portion under separate administration, because the question of administration is merely incidental to the principal proceeding for settlement and distribution of the whole estate. A co-administrator assigned to a portion is no less an administrator of the whole, since his good management enhances and his bad management diminishes the entire estate, and co-administrators must work in close cooperation. The Court cited Sison versus Teodoro to the effect that where an estate is large, two or more administrators are appointed to represent different interests and to work in harmony for the best interests of the estate.

On the third issue, the Court held that removal of an administrator under Section 2 of Rule 82 lies within the discretion of the appointing court, and appellate tribunals are disinclined to interfere absent positive error or gross abuse of discretion. Nevertheless, the Court nullified the removal order because the probate judge ousted Matias without affording him the full benefit of a day in court. Matias had objected to the exhibits and filed a motion to dismiss or demurrer to evidence with leave of court, reserving the right to present his own evidence if the motion were denied, yet the order of removal came without giving him that opportunity. The denial of due process made the order of removal invalid.

Doctrine

In a contest for the administration of an estate, the amount in controversy is the value of the whole estate, and that total value is the proper basis of the jurisdictional amount. Where the principal probate or settlement proceeding falls outside the appellate jurisdiction of the Court of Appeals because the estate exceeds 200,000 pesos, that court has no original jurisdiction to issue writs of certiorari or prohibition that are merely incidental to the settlement. The trust of a co-administrator is co-extensive with that of the other administrators and covers the entire estate, regardless of the value of the particular portion separately administered. Removal of an administrator under Section 2 of Rule 82 is addressed to the sound discretion of the appointing court, but it must be exercised with due process; an administrator cannot be removed without being given the full opportunity to present his evidence.

Disposition

The Supreme Court granted Jose Matute's petition, declared that the Court of Appeals had no jurisdiction over the challenged petition and no power to issue the writs, and nullified the probate court's order of removal for want of due process.

Remember This

Memorize this line: in a contest over administration, the amount in controversy is the value of the whole estate. Examiners use this case on jurisdiction over probate incidents and on the due process limits of removing an administrator under Rule 82.