JOSE C.

LEE AND ALMA AGGABAO, in their capacities as President and Corporate Secretary, respectively, of Philippines International Life Insurance Company, and FILIPINO LOAN ASSISTANCE GROUP, petitioners V. REGIONAL TRIAL COURT OF QUEZON CITY DOCTRINE: The sale of any property of the estate by an administrator or prospective heir without order of the probate or intestate court is void and passes no title to the purchaser. FACTS: Dr. Juvencio P. Ortaez incorporated the Philippine International Life Insurance Company, Inc. At the time of the company s incorporation, Dr. Ortaez owned 90% of the subscribed capital stock. On July 21, 1980, Dr. Ortaez died. He left behind a wife (Juliana Salgado Ortaez), three legitimate children (Rafael, Jose and Antonio Ortaez) and five illegitimate children by Ligaya Novicio (herein private respondent Ma. Divina Ortaez-Enderes and her siblings Jose, Romeo, Enrico Manuel and Cesar, all surnamed Ortaez). On September 24, 1980, Rafael Ortaez filed before the CFI of Rizal, Quezon City Branch (now RTC of QC) a petition for letters of administration of the intestate estate of Dr. Ortaez. Private respondent Ma. Divina Ortaez-Enderes and her siblings filed an opposition to the petition for letters of administration and, in a subsequent urgent motion, prayed that the intestate court appoint a special administrator. On March 10, 1982, Judge Ernani Cruz Pao, appointed Rafael and Jose Ortaez joint special administrators of their father s estate. Hearings continued for the appointment of a regular administrator. The decedent s wife, Juliana S. Ortaez, claiming that she owned 1,014 Philinterlife shares of stock as her conjugal share in the estate and Jose Ortaez, acting in his personal capacity and claiming that he owned the remaining 1,011 Philinterlife shares of stocks as his inheritance share in the estate sold said shares with right to repurchase in favor of herein petitioner Filipino Loan Assistance Group (FLAG), represented by its president, herein petitioner Jose C. Lee. Both Juliana and Jose Ortaez failed to repurchase the shares of stock within the stipulated period, thus ownership thereof was consolidated by petitioner FLAG in its name. It appears that several years before (during the pendency of the intestate proceedings), Juliana Ortaez and her two children, Rafael and Jose Ortaez, entered into a memorandum of agreement (MOA) dated March 4, 1982 for the extrajudicial settlement of the estate of Dr. Juvencio Ortaez, partitioning the estate (including the Philinterlife shares of stock) among themselves. This was the basis of the number of shares separately sold by Juliana Ortaez on April 15, 1989 and by Jose Ortaez on October 30, 1991 in favor of herein petitioner FLAG. Herein, private respondent Ma. Divina Ortaez Enderes and her siblings filed a motion for appointment of special administrator of Philinterlife shares of stock. Such motion was granted by the intestate court. On August 29, 1997 the intestate court ordered the Nullification of the sale of the Philinterlife shares of stocks and declared Void Ab Initio the MOA entered into by Juliana, Rafael and Jose Ortaez. Special Administratrix Enderes and her siblings filed a motion for execution of the Orders of the intestate court dated August 11 and August 29, 1997 because the orders of the intestate court nullifying the sale Petitioners Lee and Aggabao subsequently filed before the Court of Appeals a petition for certiorari and was instantly DENIED. ISSUES: 1. Whether intestate court committed grave abuse of discretion amounting to excess of jurisdiction when it issued the Omnibus Order nullifying the ownership of petitioner FLAG over shares of stock which were alleged to be part of the estate . 2. Whether can the Intestate Court or Probate Court execute its order nullifying the invalid sale? RULING:

First Issue: No. The court did not committed grave abuse of discretion. The Probate Court can declare the sale Null and Void. It being settled that property under administration needs the approval of the probate court before it can be disposed of, any unauthorized disposition does not bind the estate and is null and void. As early as 1921 in the case of Godoy vs. Orellano (42 Phil 347), We laid down the rule that a sale by an administrator of property of the deceased, which is not authorized by the probate court is null and void and title does not pass to the purchaser. There is hardly any doubt that the probate court can declare null and void the disposition of the property under administration, made by private respondent, the same having been effected without authority from said court. It is the probate court that has the power to authorize and/or approve the sale (Section 4 and 7, Rule 89), hence, a fortiori, it is said court that can declare it null and void for as long as the proceedings had not been closed or terminated. To uphold petitioner s contention that the probate court cannot annul the unauthorized sale, would render meaningless the power pertaining to the said court. (Bonga vs. Soler, 2 SCRA 755). Our jurisprudence is therefore clear that (1) any disposition of estate property by an administrator or prospective heir pending final adjudication requires court approval and (2) any unauthorized disposition of estate property can be annulled by the probate court, there being no need for a separate action to annul the unauthorized disposition. Second Issue: Yes. The intestate or probate court can execute its order nullifying the invalid sale. The SC sees no reason why it cannot. The intestate court has the power to execute its order with regard to the nullity of an unauthorized sale of estate property; otherwise its power to annul the unauthorized or fraudulent disposition of estate property would be meaningless. In other words, enforcement is a necessary adjunct of the intestate or probate court s power to annul unauthorized or fraudulent transactions to prevent the dissipation of estate property before final adjudication.

THE ESTATE OF HILARIO M. RUIZ, EDMOND RUIZ (Executor) V. THE COURT OF APPEALS DOCTRINE: Grandchildren are not entitled to provisional support from the funds of the decedent s estate. The law clearly limits the allowance to widow and children and does not extend it to the deceased s grandchildren, regardless of their minority or incapacity FACTS: Hilario M. Ruiz executed a holographic will naming the following as heirs: 1. Edmond Ruiz 2. his adopted daughter, private respondent (PR) Maria Pilar Ruiz Montes, 3. Three granddaughters, private respondents Maria Cathryn, Candice Albertine and Maria Angeline, all children of Edmond Ruiz. The testator bequeathed to his heirs substantial cash, personal and real properties and named Edmond Ruiz executor of his estate. On April 12, 1988, Hilario Ruiz died. Immediately thereafter, the cash component of his estate was distributed among Edmond Ruiz and private respondents in accordance with the decedent's will. Edmond, the named executor, did not take any action for the probate of his father's holographic will. Four years after the testator's death (1992), it was PR Maria Pilar Ruiz Montes who filed before the Pasig RTC, a petition for the probate and approval of Hilario Ruiz's will and for the issuance of letters testamentary to Edmond Ruiz, Surprisingly, Edmond opposed the petition on the ground that the will was executed under undue influence. In 1992 one of the properties of the estate located at Valle Verde IV Pasig, which the testator bequeathed to Maria Cathryn, Candice Albertine and Maria Angeline, was leased out by Edmond Ruiz to third persons. On May 14, 1993, Edmond withdrew his opposition to the probate of the will. Consequently, the probate court, on May 18, 1993, admitted the will to probate and issued letters testamentary to Edmond upon the filing of a bond in the amount of P50,000.00. On July 1993, Edmond Ruiz as executor, filed an "Ex-Parte Motion for Release of Funds." It prayed for the release of the rent payments deposited with the Branch Clerk of Court. PR Montes opposed the motion and concurrently filed a "Motion for Release of Funds to Certain Heirs" and "Motion for Issuance of Certificate of Allowance of Probate Will." Montes prayed for the release of the said rent payments to the grand daughters and for the distribution of the testator's properties, specifically the Valle Verde property and the Blue Ridge apartments, in accordance with the provisions of the holographic will. The Probate court denied petitioner's (Ruiz) motion for release of funds but granted respondent Montes' motion in view of petitioner's lack of opposition. It thus ordered the release of the rent payments to the decedent's three granddaughters. It further ordered the delivery of the titles to and possession of the properties bequeathed to the three granddaughters and respondent Montes ISSUES: Whether the Probate Court has the authority to: (1) grant an allowance from the funds of the estate for the support of the testator's grandchildren; (2) order the release of the titles to certain heirs. RULING: First Issue: The Probate Court has no authority to grant allowances to the testator's granchildren from the funds of the estate.

Under Section 3 of Rule 83 of the Revised Rules of Court: Allowance to widow and family. The widow and minor or incapacitated children of a deceased person, during the settlement of the estate, shall receive therefrom under the direction of the court, such allowance as are provided by law. Grandchildren are not entitled to provisional support from the funds of the decedent's estate. The law clearly limits the allowance to "widow and children" and does not extend it to the deceased's grandchildren, regardless of their minority or incapacity. It was error, therefore, for the appellate court to sustain the probate court's order granting an allowance to the grandchildren of the testator pending settlement of his estate. Second Issue: The Probate court erred in ordering the release of the titles to the private Respondents. In settlement of estate proceedings, the distribution of the estate properties can only be made: (1) after all the debts, funeral charges, expenses of administration, allowance to the widow, and estate tax have been paid; or (2) before payment of said obligations only if the distributees or any of them gives a bond in a sum fixed by the court conditioned upon the payment of said obligations within such time as the court directs, or when provision is made to meet those obligations In the case at bar, decedent allegedly left no debts when he died but the taxes on his estate had not hitherto been paid, much less ascertained. The estate tax is one of those obligations that must be paid before distribution of the estate. If not yet paid, the rule requires that the distributees post a bond or make such provisions as to meet the said tax obligation in proportion to their respective shares in the inheritance. Notably, at the time the order was issued the properties of the estate had not yet been inventoried and appraised. It was also too early in the day for the probate court to order the release of the titles six months after admitting the will to probate. The probate of a will is conclusive as to its due execution and extrinsic validity and settles only the question of whether the testator, being of sound mind, freely executed it in accordance with the formalities prescribed by law. Questions as to the intrinsic validity and efficacy of the provisions of the will, the legality of any devise or legacy may be raised even after the will has been authenticated. The intrinsic validity of Hilario's holographic will was controverted by petitioner before the probate court in his Reply to Montes' Opposition to his motion for release of funds and his motion for reconsideration of the August 26, 1993 order of the said court.Therein, petitioner assailed the distributive shares of the devisees and legatees inasmuch as his father's will included the estate of his mother and allegedly impaired his legitime as an intestate heir of his mother. The Rules provide that if there is a controversy as to who are the lawful heirs of the decedent and their distributive shares in his estate, the probate court shall proceed to hear and decide the same as in ordinary cases.