BLESILO BUAN AND FLORENCIO BUAN, JR., PETITIONERS, VS. HON. FERNANDO S. ALCANTARA, AS JUDGE OF THE COURT OF FIRST INSTANCE OF TARLAC, AND A. NATIVIDAD PARASNISCE, RESPONDENTS.

Assailed in this petition is the Order dated October 15, 1981 of the
then Court of First Instance of Tarlac, Branch I, in Special Proceedings
No. 766 covering the Intestate Estate of Florencio P. Buan and Rizalina
Paras-Buan, denying the Omnibus Motion filed by petitioners Blesilo
Buan and Florencio Buan, Jr. principally praying for the closure of the
intestate estate proceedings of their deceased parents, and their
applications for precautionary measures against respondent
Administratrix A. Natividad Paras-Nisce.

The antecedent facts, in brief, are:

On January 3, 1953, petitioners’ parents, Florencio P. Buan and
Rizalina Paras-Buan, owners of Philippine Rabbit Bus Lines and several
other properties, died in a motor vehicle accident. They were survived
by their five then minor children: Jesusa Janina, 12 years old; Lourdes
Palmyra, 5; Florencio, 4; Valentino, 3; and Blesilo, 11 months.

On January 9, 1953, intestate proceedings were commenced.
Respondent Natividad Paras, younger sister of the orphans’ mother, still
single then, and Bienvenido Buan, younger brother of their father, were
appointed co-administrators of the estate of the deceased spouses.
They were also appointed guardians of the children in Special Proceeding
No. 1099.

In 1957, the Philippine Rabbit Bus Lines was in­corporated. The
Buan estate was the majority stockholder with 1,992 shares of stock with
a par value of P100.00 per share, or 99.67%, with the co-administrators
and the other stockholders, Ricardo L. Paras, Mariano P. Buan,
Simplicio P. Buan, Diosdado L. Paras, Alejandro Paras, Jr. and Lauro P.
Pascual, subscribing to one share of stock each.^[1]

Upon authorization to increase its capital stock from two million to five million pesos^[2]
having been obtained, the administrators filed on May 25, 1964, a
Petition to Waive Estate’s Pre-emptive Right to Subscribe to the
Increase of Capital Stock.^[3] This was granted by respondent Court on May 27, 1964.^[4]
The Certificate of Increase of Capital Stock of Philippine Rabbit Bus
Lines, Inc. shows that administrators Bienvenido Buan and Natividad
Paras-Nisce subscribed to 9,100 shares of stock each in the total amount
of P1,820,000.00. The six remaining stockholders also bought
additional shares: Ricardo L. Paras and Mariano P. Buan, 1,000 shares
each; Simplicio P. Buan, Diosdado L. Paras, Alejandro Paras, Jr. and
Lauro P. Pascual, 500 shares each.^[5]
The controlling interest of the estate was thereby reduced to barely
35% as against the co-administrators and other relatives 65% interest in
the outstanding capital.

In the interim, the co-administrators formed other corporations, the Tarlac Development Bank and Bupar Motors Corporation.

Tarlac Development Bank was organized on July 5, 1961. It has an
authorized capital of P2 million and an actual subscription of
P1,070,000.00. The Development Bank of the Philippines subscribed and
paid for P500,000.00 in preferred stock. Of the common stock, the Buan
estate subscribed and paid for shares worth P350,000.00; respondent
administratrix and her husband Ramon Nisce to P65,000.00; Bienvenido P.
Buan and his wife to P65,000.00; the co-administrators’ respective
brothers, Ricardo L. Paras and Mariano P. Buan, to P10,000.00 each. The
capitalization was later increased to P3 million. Petitioners have no
knowledge of the present status of the stockholdings.^[6]

Bupar Motors Corporation was put up on March 25, 1963 for the
purpose of engaging in the business of assembly (including bus body
building), sale and distribution of motor trucks, spare parts and tire
recapping. The Buan estate subscribed to P50,000.00 worth of shares
from the authorized capital of P1 million. Co-administrator Bienvenido
P. Buan subscribed to P50,000.00 worth of shares; respondent
administratrix and her husband to P50,000.00; Ricardo L. Paras and
Mariano P. Buan to P25,000.00 each.

On August 21, 1964, the capitalization was increased to P3 million.
The estate subscribed to P850,000.00 worth of shares; respondent
administratrix and her husband to P700,000.00; co-administrator
Bienvenido P. Buan to P175,000.00; Ricardo L. Paras to P175,000.00;
Mariano P. Buan to P100,000.00; and Diosdado L. Paras to P100,000.00.

Bupar Motors Corporation became the purchasing arm of Philippine
Rabbit Bus Lines Inc. An entire tire section of the bus company was
transferred to Bupar. A parcel of land with a concrete building
belonging to the Buan estate was sold to Bupar Motors for P135,000.00.
In the petition to waive pre-emptive right to subscribe to the increase
of the capital stock of Philippine Rabbit Bus Lines Inc., the
co-administrators gave as reason therefor, the estate’s alleged
controlling interest in this Bupar corporation.^[7]

On March 26, 1965, the heirs Jesusa Janina Buan-Monteyro and
Lourdes Palmyra Buan-Tabamo, filed an Omni­bus Motion praying among
others, for their appointment, either, solely or jointly, as
administratrices of the estate of their late parents, and on April 11,
1965, an Alternative Motion to Close Administration Proceedings on the
ground that the administrators were not taking positive steps to close
the intestate proceedings instituted some twelve years back.^[8]

On October 20, 1965, the sisters filed a Supplemental Omnibus Motion
for (1) Immediate Removal of Co-Administrators, (2) Annulment of
Illegal Subscription, (3) Return of Shares, (4) Setting Aside Order, (5)
Contempt, principally assailing the actuations of the co-administrators
in filing the Petition to Waive Estate’s Pre-emptive Right to Subscribe
to the Increase of Capital Stock, and their subsequent purchase
themselves of additional stock, which reduced the estate into a minority
stockholder. The administrators filed an opposition thereto.

On February 24, 1970, administrator Bienvenido Buan died, and respondent Administratrix continued managing the estate alone.

Another corporation was organized by respondent Administratrix on
May 11, 1970, the Ledi Realty Enterprises Inc., with an authorized
capital of P1 million. The principal stockholders are respondent
Administratrix and her husband, with a subscription of P280,000.00. Her
brother Diosdado L. Paras, subscribed to P1,000.00 worth of shares.
The heirs Florencio Buan, Jr. and Valentino Buan were made to appear to
have subscribed to P160,000.00 and P59,000.00 worth of shares of stocks,
respectively. On May 20, 1970, the corporation bought the inheritance
rights in the estate of petitioners’ sisters and co-heirs, Janina and
Palmyra.^[9]

On October 2, 1974, the sisters finally moved to withdraw the pleadings they had filed.^[10] The lower Court granted the same on October 7, 1974.^[11]

On February 23, 1981, petitioner Blesilo Buan, with the conformity
of his co-heirs Janina Buan-Monteyro, Lourdes Palmyra Buan and Florencio
P. Buan, Jr., filed a Petition for Letters of Co-Administration.^[12]
Their brother Valentino died on February 27, 1970. Respondent
Administratrix expressed her conformity to the same in a Manifestation
filed on April 3, 1981.^[13]
After hearing, the Court, on April 9, 1981, appointed Blesilo P. Buan as
co-administrator of the estate of the deceased spouses upon filing of a
bond of P25,000.00.^[14]

On June 19, 1981, Blesilo and Florencio, Jr., filed an Omnibus
Motion praying, principally, for the closure of the intestate
proceedings, having been long deprived of the possession of their
inheritance, and, subsidiarily, for some precautionary remedies by
reason of alleged breaches of trust committed by respondent
Administratrix.

In particular, the precautionary or provisional orders prayed for are:

“(1) an order immediately suspending respondent A. Natividad
Paras-Nisce as administratrix of the estate, enjoining her exercise of
its powers and performance of its duties;

(2) an order enjoining respondent A. Natividad Paras-Nisce from
disposing or in any way encumbering any of her stockholding interests
whether held in her name or in the names of her trustees or nominees in
Philippine Rabbit Bus Lines, Inc., Bupar Motors Corporation, Tarlac
Development Corporation and Ledi Realty Enterprises Inc. charged to have
been ‘seized and developed at the expense and with the facilities of’
the estates;

(3) an order enjoining, respondent A. Natividad Paras-Nisce from
causing Philippine Rabbit Bus Lines Inc., Bupar Motors Corporation and
Ledi Realty Enterprises Inc. charged to have been ‘seized and developed
at the expense and with the facilities of’ the estates to effect any
disposition or encumbrance of their assets or to incur any new
obligations without prior authority from the court;

(4) an order instructing and directing the respondent A. Natividad
Paras-Nisce to deliver to petitioner-administrator Blesilo Buan all the
properties of the estate including real properties, the stockholding
interests in Philippine Rabbit Bus Lines Inc., Bupar Motors Corporation,
Tarlac Development Bank, and Ledi Realty Enterprises Inc. for him to
take and receive said properties and hold and administer than as such
administrator; and

(5) since the properties of the estate particularly the real
properties have been mortgaged by respondent A. Natividad Paras-Nisce to
secure loans for the use of the Philippine Rabbit Bus Lines Inc., an
order enjoining said respondent A. Natividad Paras-Nisce or petitioner
administrator Blesilo Buan to see to it that the Philippine Rabbit Bus
Lines Inc. regularly service its obligations obtained on the security of
the properties of the estate and, for the purpose, to order them to
cause Philippine Rabbit Bus Lines Inc. to retain the services of an
established auditing firm to take charge of daily collections from the
buses and the other sources of income like the canteen and to control
the disbursements of funds so that only legitimate expenses of
operations are met and the balance kept and preserved to pay the
obligations of the corporation obtained on the security of the
properties of the estate.”^[15]

Respondent Administratrix opposed the Motion denying the charges of
breach of trust and stating that the delay in the closure of the estate
was not caused by her, but was due to the pendency of actions for
damages filed against the administrators of the estate, which have
remained pending over the years, and that the heirs Janina Buan-Monteyro
and Lourdes Palmyra Buan had already sold, transferred and conveyed
their hereditary rights over the estate to the Ledi Realty Enterprises,
Inc..

On October 15, 1981, respondent Court issued the challenged Order, decreeing:

“xxx xxx this Court resolved and hereby declares and holds that:

(1) There is no necessity of issuing an order enjoining the
administratrix Natividad Paras-Nisce from performing any act of
administration whether involving disposition or mere administration of
any and all of the properties of the estate, not only because there is
no ground for the issuance of said order but also because based on the
records, the administratrix has heretofore invariably sought and
obtained the approval of this Court for the acts of administration
involving the disposition of the properties of the estate;

(2) For insufficiency of evidence and lack of legal basis (see
Secs. 3 and 5[b] P.D. 902-A), the prayer in the Omnibus Motion that the
administratrix Natividad Paras-Nisce be enjoined from disposing or in
any way encumbering any of her stockholding interests whether held by
her in her name or in the name of her alleged trustees, her husband
Ramon Nisce, Ricardo L. Paras, Diosdado L. Paras and Mariano P. Buan
in Philippine Rabbit Bus Lines, Inc., Bupar Motors Corporation, Tarlac
Development Bank, and Ledi Realty Enterprises, Inc. is hereby denied;

(3) The prayer in the Omnibus Motion that an order be issued
enjoining the administratrix Natividad Paras-Nisce from causing
Philippine Rabbit Bus Lines, Inc., Bupar Motors Corporation, Ledi Realty
Enterprises, Inc. to effect any disposition or encumbrance of their
assets or to incur any new obligation without prior authority from this
Court is denied for lack of merit and for the added reason that this
Court is of the opinion that under the present law (Secs. 3 and 5 [b]
P.D. 902-A), it has no jurisdiction to issue such an order;

(4) The prayer in the Omnibus Motion that an order be
immediately issued instructing and directing the administratrix
Natividad Paras-Nisce to deliver all the properties of the estate
including real properties, the stockholding interests in Philippine
Rabbit Bus Lines, Inc. Bupar Motors Corporation, Tarlac Development
Bank, Ledi Realty Enterprises, Inc. and all other businesses and
properties allegedly seized and developed at the ex­pense and With the
facilities of the estate and instructing and directing the
co-administrator Blesilo Buan to take and receive said properties and
hold and administer them as such administratrix is hereby denied for
lack of merit and for insufficiency of evidence;

(5) The prayer in the Omnibus Motion that an order be issued
enjoining the administratrix Natividad Paras-Nisce and the
co-administrator Blesilo Buan to see to it that the Philippine Rabbit
Bus Lines, Inc. regularly service its obligations obtained on the
security of the properties of the estate and, for this purpose, to order
them to cause Philippine Rabbit Bus Lines, Inc. to retain the services
of an established auditing firm to take charge of daily collection from
the buses and to control the disbursement of funds so that legitimate
expenses of operations are met and the balance kept and preserved to pay
the obligations of the corporation obtained on the security of the
properties of the estate is likewise denied for lack of merit and for
insufficiency of evidence;

(6) The prayer in the Omnibus Motion that an order be issued
after hearing to approve the alleged partial project of partition that
the admi­nistrator Blesilo Buan shall submit pursuant to the alleged
extra-judicial agreement entered into among the heirs and to order the
administrator Blesilo Buan to effect such alleged partial distribution
of the estate is hereby denied, no such partial project of partition
having been submitted to his Court;

(7) The prayer in the Omnibus Motion that an order be issued
requiring the administratrix Natividad Paras-Nisce to submit accounting
of her, administration within fifteen (15) days from date of the order
has become moot and academic, it appearing from the records that the
aforesaid Administratrix had on July 1, 1981 filed and already submitted
her accounting from the year 1976 to 1980. Let the accounting
submitted by the Administratrix for the years 1976 to 1980 be set for
hearing on December 7, 1981, at 8:30 in the morning;

(8) The Administratrix having filed her opposition to the
Omnibus Motion embodying therein and in her Rejoinder her answer to the
charges of alleged breach of trust, let the hearing of the charges of
trust filed by the movants Blesilo Buan and Florencio Buan, Jr. be set
for hearing on November 23, 1981, at 8:30 o’clock in the morning.

For the same reasons already stated in the order of this Court of
October 4, 1965 and more specifically because of the prevailing doctrine
laid down by a unanimous Court in Ang Chia vs. Dinglasan, 88 Phil. 476,
the petition to close this estate not being legally feasible at this
time is hereby denied.

Resolution of paragraphs 9 and 10 of the petitory portion of the Omnibus
Motion of June 18, 1981 is hereby held in abeyance until after the
charges on alleged breach of trust shall have been heard and submitted
for resolution and as requested by counsel for movants-heirs.”

Petitioners sought reconsideration of the foregoing Order but respondent Court denied it on February 2, 1982.^[16]

Petitioners allege:

I

“Respondent Court erred in not ordering the closure of administration now twenty eight years too long.

II

The Probate Court erred in denying closure of administration already
twenty eight years long just for a few remaining pending separate damage
suits against the estate arising from vehicular accidents.

III

Respondent Court erred in citing the first order denying closure issued sixteen years ago.

IV

Respondent Court erred in denying the precautionary remedies applied for
notwithstanding prima-facie showing of breach of trust.”

The glaring problem in this case is that the intestate case below, which
was instituted in 1953, is still pending despite the lapse of 30 years,
mainly on the proposition that damage suits filed against the
administrators in connection with the land transportation business of
the decedents have prevented the settlement of the estate. No account
has been taken of the fact that the land transportation business was
incorporated in 1957 as the Philippine Rabbit Bus Lines, Inc. Since the
estate became the owner of practically all the shares of stock of the
corporation, the damage suits, thereafter, should have also become the
responsibility of the corporation.

At the time of incorporation, the administrators and the corporation
technically became “alter egos”, each in respect of the other. The
administrators would still be liable for obligations of the corporation.^[17] Similarly, the corporation would have to be liable for the debts of the administrators.

“A new corporation taking over all of mortgaged assets of old
corporation in exchange for all of old corporation’s capital stock and
continuing to operate business formerly operated by old corporation was
‘alter ego’ of old corporation so as to be obligated to pay annual
patent royalty which old corporation was required to pay,
notwithstanding that old corporation retained title to mortgaged assets.
Dummer v. Wheeler Osgood Sales Corp., 88 P.2d 453, 458, 198 Wash.
381.”^[18]

It should be rather clear that, as between the estate and the
corporation, the intention of incorporation was to make the corporation
liable for past and pending obligations of the estate as the
transportation business itself was being transferred to and placed in
the name of, the corporation. That liability on the part of the
corporation, vis-a-vis the estate, should continue to remain with it
even after the percentage of the estate’s shares of stock in the
corporation should be diluted.

The case of Dinglasan vs. Ang Chia, 88 Phil. 476 (1951), upon which
respondent Court relied in denying closure, will not apply, first,
because the litigation involved therein was for the recovery of real
property and, second, it was the only property of the estate left
subject of administration such that whatever was determined in the civil
case would have had far-reaching effects in the determination and
distribution of the estate. In this case, however, the damage suits
bear no intimate connection or close interrelation with the estate per se, specially after incorporation.

It should also be borne in mind that vehicular accidents are a risk
inherent in transportation business, and as long as this business
continues in operation, accidents are bound to occur from time to time
with the consequent filing of suits by persons who may be injured. To
await the termination or settlement of all these suits before closing
the intestate proceedings will virtually place the estate under
perpetual administration contrary to the intendment of the law.

WHEREFORE, 1) a) the lower Court Order, dated October 15, 1981, denying
the closure of the estate is hereby SET ASIDE and, presuming that estate
and inheritance taxes have been paid, said Court or the corresponding
Regional Trial Court to which this case is as­signed, is hereby ordered,
not liter than three (3) months after receipt hereof, to distribute the
assets of the estate to the heirs or their assignees, or their
successors-in-interest, according to the rules on intestate succession
or as the heirs may agree;

b) The lower Court shall continue hearings, until final disposition
of the exceptions of the heirs to actions previously taken by the
administrator(s), with the Court taking account of Article 2029 of the
Civil Code.^[19]

c) The lower Court shall see to it that the lawyers of Philippine
Rabbit Bus Lines, Inc. shall defend all pending suits against the former
administrators, in the understanding that any judgment rendered in
favor of plaintiffs shall be satisfied by said corporation. Should the
corporation refuse to pay the judgment, the administrator may file
corresponding complaints against the corporation, and the Court may also
authorize the heirs to sue said corporation, if necessary;

d) The lower Court shall submit a report to this Court within ten
(10) days from expiration of the period in paragraph 1(a) above on the
steps it has taken in implementation of this decision.

2) a) The co-administrators, private-respondent A. Natividad
Paras-Nisce, and petitioner Blesilo Buan, are hereby directed to
implement immediately the directive to close the estate within the
period given in paragraph 1(a) above, and to submit a report to this
Court within ten (10) days from the expiration of said period;

b) Private respondent A. Natividad Paras Nisce, shall render a
final accounting to the lower Court not later than three (3) months
after receipt hereof, with copy furnished this Court.

Without pronouncement as to costs.
SO ORDERED.

Teehankee, (Chairman), Plana, Gutierrez, Jr., and De La Fuente, JJ., concur.

Relova, J., in the result.

---

^[1] pp. 285-288, Vol. I, Records of Sp. Proc. No. 766.

^[2] pp. 662-664, ibid.

^[3] pp. 659-660, ibid.

^[4] p. 687, Vol. II, ibid.

^[5] pp. 868-869, ibid.

^[6] pp. 16-17, Rollo.

^[7] pp. 14-15, ibid.

^[8] 844-850; Vol. II, Records of Sp. Proc. No. 766.

^[9] p. 17, Rollo.

^[10] pp. 2159-2161, Vol. III, Records of Sp. Proc.No.766.

^[11] p. 4162, ibid.

^[12] pp, 2469-2470, ibid.

^[13] p. 2475, ibid.

^[14] p. 2476, ibid.

^[15] pp 31-32, Rollo.

^[16] p. 2769, Vol. IV, Records of Sp. Proc. No. 766.

^[17] Ramirez Telephone Corp. vs. Bank of America, 29 SCRA 191 (1969).

^[18] 3 Words & Phrases 425.

^[19] “Art. 2029. The court shall endeavor to persuade the litigants in a civil case to agree upon some fair compromise.”